SAN DIEGO, Aug. 2, 2005 – Sempra Energy today reported unaudited second-quarter 2005 earnings of $121 million, or $0.48 per diluted share, compared with $121 million, or $0.52 per diluted share, in the second quarter 2004.
For the first six months of 2005, Sempra Energy’s earnings were $344 million, or $1.40 per diluted share, up approximately 8 percent from $318 million, or $1.37 per diluted share, during the same period last year. Earnings per share in 2005 have been affected by a greater number of shares outstanding.
Sempra Energy today also increased its 2005 earnings-per-share guidance to a range of $3.20 to $3.40 from a range of $3.10 to $3.30. The increase is based on expected earnings improvements primarily at the company’s utility and commodities businesses during the second half of the year.
“We are pleased with our second-quarter performance and expect improved results from our California utilities, Sempra Commodities and other businesses over the next two quarters to meet our increased earnings guidance for the year,” said Stephen L. Baum, chairman and chief executive officer of Sempra Energy. “In addition to our reported earnings, at the end of the second quarter, our commodities group had approximately $50 million of unrecognized mark-to-market, after-tax profits, most of which will be recognized as GAAP net income by the end of this year. Also, during the second half of the year, our California utilities’ net income should benefit from approximately $55 million in expected performance-based-ratemaking incentives and a pending settlement with the California Independent System Operator.”
Revenues for Sempra Energy were $2.3 billion in the second quarter 2005, compared with $2 billion in the year-ago quarter, due primarily to higher natural gas commodity prices at the California utilities and increased power and natural gas sales by other Sempra Energy businesses.
Net income for Southern California Gas Co. rose to $58 million during the second quarter 2005 from $50 million in the year-earlier period, due primarily to lower operating expenses.
Net income for San Diego Gas & Electric (SDG&E) in the second quarter 2005 was $29 million, compared with $30 million in last year’s second quarter, as a result of reduced revenues and higher operating costs attributable to the company’s share of the San Onofre Nuclear Generating Station.
Baum said that, during the final half of the year, the utilities expect approval by the California Public Utilities Commission of performance-based-ratemaking incentive awards for demand-side-management programs, resulting in approximately $30 million in net income. Also in the second half of the year, SDG&E expects to benefit from the favorable settlement of a dispute with the California Independent System Operator over grid-management charges, resulting in approximately $25 million in net income.
Sempra Commodities recorded $26 million in net income during the second quarter 2005, compared with $46 million during the year-ago period. At the end of the second quarter, Sempra Commodities had significant inventories of natural gas and oil that had been sold for future delivery. The company expects most of the approximately $50 million in after-tax profits from these transactions to be recognized before the end of 2005.
Sempra Generation’s second-quarter net income increased to $27 million in 2005 from $19 million last year. The company benefited from increased power sales from its Texas generating facilities, including the Coleto Creek power plant, which was acquired in July 2004. Second-quarter 2004 results included a provision for litigation expense.
Last week, Sempra Generation completed its acquisition of Reliant Energy’s 50-percent interest in the 480-megawatt El Dorado Energy power plant in Boulder City, Nev. Sempra Generation now owns the entire plant.
Sempra Pipelines & Storage
Net income for Sempra Pipelines & Storage in the second quarter 2005 was $16 million, compared with $17 million in the year-ago quarter. During the quarter, Sempra Pipelines & Storage recorded a $3 million gain from the sale of a 25-percent ownership interest in its Liberty Gas Storage, a natural gas storage facility under development in Louisiana. In last year’s second quarter, the company benefited from $5 million in net income from the sale of a portion of the common stock in its jointly owned Peruvian utility, Luz del Sur.
Sempra LNG reported a net loss of $5 million in the second quarter 2005, compared with a net loss of $2 million in the second quarter 2004.
Yesterday, Sempra LNG announced that it had executed a 20-year agreement to provide Eni S.p.A. with approximately 40 percent, or 600 million cubic feet per day, of the capacity of Sempra LNG’s Cameron liquefied natural gas (LNG) receipt terminal under development near Lake Charles, La. The terminal is expected to begin operations in 2008.
“With the Eni agreement finalized and additional commercial negotiations underway, we will commence construction on the Cameron LNG terminal this quarter,” said Baum. “Construction on our Mexico terminal, Energía Costa Azul, is progressing and it will be the first LNG receipt terminal on the West Coast of North America.”
Sempra Energy will broadcast a live discussion of its earnings results over the Internet today at 1 p.m. EDT with key company executives. Access is available by logging onto the Web site at www.sempra.com. For those unable to log onto the live Webcast, the teleconference will be available on replay a few hours after its conclusion by dialing (706) 645-9291 and entering the passcode 7177131.
Sempra Energy (NYSE: SRE), based in San Diego, is a Fortune 500 energy services holding company with 2004 revenues of $9.4 billion. The Sempra Energy companies’ 13,000 employees serve more than 29 million consumers in the United States, Europe, Canada, Mexico, South America and Asia.
Income-statement information by business unit is available on Sempra Energy’s Web site at http://www.sempra.com/downloads/2Q2005_Table_F.pdf.
This press release contains statements that are not historical fact and constitute forward-looking statements within the meaning of the Private Securities Litigation Reform Act of 1995. When the company uses words like “believes,” “expects,” “anticipates,” “intends,” “plans,” “estimates,” “may,” “would,” “should” or similar expressions, or when the company discusses its strategy or plans, the company is making forward-looking statements. Forward-looking statements are not guarantees of performance. They involve risks, uncertainties and assumptions. Future results may differ materially from those expressed in the forward-looking statements. Forward-looking statements are necessarily based upon various assumptions involving judgments with respect to the future and other risks, including, among others: local, regional, national and international economic, competitive, political, legislative and regulatory conditions and developments; actions by the California Public Utilities Commission, the California State Legislature, the California Department of Water Resources, the Federal Energy Regulatory Commission and other regulatory bodies in the United States and other countries; capital markets conditions, inflation rates, interest rates and exchange rates; energy and trading markets, including the timing and extent of changes in commodity prices; the availability of natural gas; weather conditions and conservation efforts; war and terrorist attacks; business, regulatory, environmental, and legal decisions and requirements; the status of deregulation of retail natural gas and electricity delivery; the timing and success of business development efforts; the resolution of litigation; and other uncertainties, all of which are difficult to predict and many of which are beyond the control of the company. These risks and uncertainties are further discussed in the company’s reports filed with the Securities and Exchange Commission that are available through the EDGAR system without charge at its Web site, www.sec.gov and on the company’s Web site, www.sempra.com.
Sempra LNG and Sempra Pipelines & Storage are not the same companies as the utilities, SDG&E or SoCalGas, and are not regulated by the California Public Utilities Commission. Sempra Energy Trading, doing business as Sempra Commodities, and Sempra Generation are not the same companies as the utilities, SDG&E or SoCalGas, and the California Public Utilities Commission does not regulate the terms of their products and services.
Dennis Arriola/Karen Sedgwick