Sempra Energy Reports First-Quarter 2012 Earnings

- Company Reaffirms 2012 Earnings-per-share Guidance Range of $4 to $4.30

- Cameron LNG Export Project Development Advances

May 03, 2012, 09:00 ET from Sempra Energy

SAN DIEGO, May 3, 2012 /PRNewswire/ -- Sempra Energy (NYSE: SRE) today reported first-quarter 2012 earnings of $236 million, or $0.97 per diluted share, compared with $254 million, or $1.05 per diluted share in the first quarter 2011.

Effective Jan. 1, the company changed its accounting treatment for investment tax credits related to solar-power projects from the flow-through method to the deferral method.  Sempra Energy's 2011 results have been restated to reflect this change in accounting method.   

As previously reported, the General Rate Cases for both Southern California Gas Co. (SoCalGas) and San Diego Gas & Electric (SDG&E) currently are in process at the California Public Utilities Commission (CPUC).  The revenue requirement established in these proceedings will be retroactive to Jan. 1, 2012.  Until the Commission reaches a final decision, both utilities are recording revenues based on 2011 authorized levels, as adjusted for the recovery of actual incremental wildfire insurance premiums.  When the final decision is reached, SoCalGas and SDG&E will record the cumulative change in revenues, retroactive to the beginning of the year.  

"Our solid first-quarter results put us on track to meet our 2012 earnings-per-share guidance range of $4 to $4.30," said Debra L. Reed, chief executive officer of Sempra Energy.  "We also made significant progress in developing a liquefied natural gas export facility at our Cameron LNG terminal."

Yesterday, Sempra Energy announced that its Cameron LNG subsidiary signed a third and final commercial development agreement with a subsidiary of GDF SUEZ Ltd. to develop a natural gas liquefaction export facility at the site of the Cameron LNG receipt terminal in Louisiana.  In April, Cameron LNG signed commercial development agreements with Mitsubishi Corporation and Mitsui & Co., Ltd.  The three agreements bind the parties to fund all development expenses, including design, permitting and engineering, as well as to negotiate 20-year tolling agreements, based on key terms outlined in the commercial development agreements. 

The completed liquefaction facility is expected to be comprised of three liquefaction trains with a total export capability of 12 million tonnes per annum of liquefied natural gas, or approximately 1.7 billion cubic feet per day.  Pending regulatory approvals and achievement of other key milestones, the company plans to start construction of the facility next year and begin operations in late 2016.

As announced previously, on Jan. 1, Sempra Energy consolidated Sempra Generation, Sempra Pipelines & Storage and Sempra LNG into two new operating units:  Sempra International and Sempra U.S. Gas & Power.   Beginning in the first quarter 2012, Sempra Energy began reporting financial results under the following segments:  San Diego Gas & Electric, Southern California Gas Co., Sempra South American Utilities, Sempra Mexico, Sempra Renewables and Sempra Natural Gas.

CALIFORNIA UTILITIES

San Diego Gas & Electric

First-quarter earnings for SDG&E increased to $105 million in 2012 from $89 million in 2011, primarily due to earnings from construction work in progress.

Southern California Gas Co.

Earnings for SoCalGas in the first quarter 2012 were $66 million, compared with $68 million in last year's first quarter.  

SEMPRA INTERNATIONAL

Sempra South American Utilities

Sempra South American Utilities recorded earnings of $40 million in the first quarter 2012, up from $22 million in the first quarter 2011.  The increase was primarily due to the acquisition of the controlling interests in Chilquinta Energía and Luz del Sur in April 2011.  

Sempra Mexico

Sempra Mexico recorded first-quarter earnings of $37 million in 2012, compared with $39 million last year.

A 20-year contract to sell SDG&E wind power from Sempra Mexico's 156-megawatt (MW) first phase of the Energia Sierra Juarez wind project under development in Baja California was approved by the CPUC March 22.  Pending receipt of all regulatory permits, construction on the project is expected to begin this year.

SEMPRA U.S. GAS & POWER

Sempra Renewables

Sempra Renewables recorded earnings of $10 million in the first quarter 2012, up from $4 million in the first quarter 2011.  The increase was primarily due to deferred income-tax benefits as a result of placing solar and wind generating assets in service in 2012.

Sempra Natural Gas

Sempra Natural Gas, which includes results from natural gas and gas-fired power operations in the U.S., recorded first-quarter earnings of $1 million in 2012, compared with $63 million in 2011.  The decrease in earnings was primarily due to the expiration of the 10-year California Department of Water Resources power-supply contract in September 2011.

INTERNET BROADCAST

Sempra Energy will broadcast a live discussion of its earnings results over the Internet today at 1 p.m. EDT with senior management of the company.  Access is available by logging onto the website 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 (888) 203-1112 and entering passcode 4152078.

Sempra Energy, based in San Diego, is a Fortune 500 energy services holding company with 2011 revenues of $10 billion.  The Sempra Energy companies' 17,500 employees serve more than 31 million consumers worldwide.

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.  These statements can be identified by words like "believes," "expects," "anticipates," "intends," "plans," "estimates," "may," "will," "would," "could," "should," "potential," "target," "outlook", "depends," "pursue" or similar expressions, or discussions of guidance, strategies, plans, goals, initiatives, objectives or intentions.  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, California State Legislature, Federal Energy Regulatory Commission, U.S. Department of Energy, Nuclear Regulatory Commission, California Energy Commission, California Air Resources Board, and other regulatory, governmental and environmental bodies in the United States and other countries where the company does business; capital market conditions, including the availability of credit and the liquidity of investments; inflation, interest and exchange rates; the impact of benchmark interest rates, generally the U.S. Treasury bond and Moody's A-rated utility bond yields, on the California utilities' cost of capital; the timing and success of business development efforts and construction, maintenance and capital projects, including risks inherent in the ability to obtain, and the timing of the granting of, permits, licenses, certificates and other authorizations; energy markets, including the timing and extent of changes and volatility in commodity prices; the availability of electric power, natural gas and liquefied natural gas, including disruptions caused by failures in the North American transmission grid, pipeline explosions and equipment failures; weather conditions, natural disasters, catastrophic accidents, and conservation efforts; risks inherent in nuclear power generation and radioactive materials storage, including catastrophic release of such materials; risks posed by decisions and actions of third parties who control the operations of investments in which the company does not have a controlling interest; wars, terrorist attacks and cyber security threats; business, regulatory, environmental and legal decisions and requirements; expropriation of assets by foreign governments and title and other property disputes; the status of deregulation of retail natural gas and electricity delivery; the inability or determination not to enter into long-term supply and sales agreements or long-term firm capacity agreements; 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 reports that Sempra Energy has filed with the Securities and Exchange Commission.  These reports are available through the EDGAR system free-of-charge on the SEC's website, www.sec.gov, and on the company's website at www.sempra.com.

These forward-looking statements speak only as of the date hereof, and the company undertakes no obligation to update or revise these forecasts or projections or other forward-looking statements, whether as a result of new information, future events or otherwise.

Sempra International, LLC, and Sempra U.S. Gas & Power, LLC, are not the same companies as San Diego Gas & Electric (SDG&E) or Southern California Gas Company (SoCalGas) and Sempra International and Sempra U.S. Gas & Power are not regulated by the California Public Utilities Commission. 

Note: Formerly known entities Sempra Generation, Sempra LNG and Sempra Pipelines & Storage have now been realigned under Sempra International and Sempra U.S. Gas & Power.

 

SEMPRA ENERGY

Table A

CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS

Three months ended

March 31,

(Dollars in millions, except per share amounts)

2012

2011(1)

(unaudited)

REVENUES

Utilities

$         2,091

$         1,946

Energy-related businesses

292

488

    Total revenues

2,383

2,434

EXPENSES AND OTHER INCOME

Utilities:

    Cost of natural gas

(431)

(642)

    Cost of electric fuel and purchased power

(388)

(171)

Energy-related businesses:

    Cost of natural gas, electric fuel and purchased power

(129)

(230)

    Other cost of sales

(33)

(23)

Operation and maintenance

(671)

(639)

Depreciation and amortization

(257)

(230)

Franchise fees and other taxes

(96)

(95)

Equity earnings, before income tax 

12

1

Other income, net

75

43

Interest income

5

3

Interest expense

(113)

(108)

Income before income taxes and equity earnings 

    of certain unconsolidated subsidiaries

357

343

Income tax expense

(117)

(114)

Equity earnings, net of income tax

11

31

Net income

251

260

Earnings attributable to noncontrolling interests

(13)

(4)

Preferred dividends of subsidiaries

(2)

(2)

Earnings

$            236

$            254

Basic earnings per common share

$           0.98

$           1.06

Weighted-average number of shares outstanding, basic (thousands)

240,566

240,128

Diluted earnings per common share

$           0.97

$           1.05

Weighted-average number of shares outstanding, diluted (thousands)

243,761

241,903

Dividends declared per share of common stock

$           0.60

$           0.48

(1) As adjusted for the retrospective effect of a change in accounting principle.

SEMPRA ENERGY

Table B

CONDENSED CONSOLIDATED BALANCE SHEETS

March 31,

December 31,

(Dollars in millions)

2012

2011(1)(2)

(unaudited)

Assets

Current assets:

Cash and cash equivalents

$               404

$               252

Restricted cash

23

24

Accounts receivable

1,239

1,345

Inventories

222

346

Regulatory balancing accounts – undercollected

71

38

Regulatory assets 

105

89

Fixed-price contracts and other derivatives

83

85

Settlement receivable related to wildfire litigation

5

10

Other

146

143

Total current assets

2,298

2,332

Investments and other assets:

Restricted cash

24

22

Regulatory assets arising from pension and other postretirement 

    benefit obligations

1,074

1,126

Regulatory assets arising from wildfire litigation costs

603

594

Other regulatory assets

1,070

1,060

Nuclear decommissioning trusts

865

804

Investments

1,722

1,671

Goodwill 

1,071

1,036

Other intangible assets

443

448

Sundry

799

691

Total investments and other assets

7,671

7,452

Property, plant and equipment, net

24,076

23,465

Total assets

$           34,045

$           33,249

Liabilities and Equity

Current liabilities:

Short-term debt

$               426

$               449

Accounts payable

1,013

1,107

Income taxes payable

53

5

Deferred income taxes

172

173

Dividends and interest payable

297

219

Accrued compensation and benefits

203

323

Regulatory balancing accounts – overcollected

240

105

Current portion of long-term debt

713

336

Fixed-price contracts and other derivatives

92

92

Customer deposits

148

142

Reserve for wildfire litigation

441

586

Other

682

615

Total current liabilities

4,480

4,152

Long-term debt

10,180

10,078

Deferred credits and other liabilities:

Customer advances for construction

143

142

Pension and other postretirement benefit obligations, net of plan assets

1,373

1,423

Deferred income taxes

1,601

1,520

Deferred investment tax credits

48

49

Regulatory liabilities arising from removal obligations

2,621

2,551

Asset retirement obligations

1,927

1,905

Other regulatory liabilities

80

87

Fixed-price contracts and other derivatives

281

301

Deferred credits and other 

862

784

Total deferred credits and other liabilities

8,936

8,762

Contingently redeemable preferred stock of subsidiary

79

79

Equity:

Total Sempra Energy shareholders' equity

9,952

9,775

Preferred stock of subsidiaries 

20

20

Other noncontrolling interests

398

383

Total equity

10,370

10,178

Total liabilities and equity

$           34,045

$           33,249

(1)

As adjusted for the retrospective effect of a change in accounting principle.

(2)

Derived from audited financial statements.

SEMPRA ENERGY

Table C

CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS 

Three months ended March 31,

(Dollars in millions)

2012

2011 (1)

(unaudited)

Cash Flows from Operating Activities

Net income

$     251

$     260

Adjustments to reconcile net income to net cash provided

  by operating activities:

Depreciation and amortization

257

230

Deferred income taxes and investment tax credits

31

82

Equity earnings

(23)

(32)

Fixed-price contracts and other derivatives

(12)

(9)

Other

14

(13)

Net change in other working capital components

168

297

Changes in other assets

12

(5)

Changes in other liabilities

1

(5)

Net cash provided by operating activities

699

805

Cash Flows from Investing Activities

Expenditures for property, plant and equipment

(811)

(607)

Expenditures for investments

(51)

(4)

Distributions from investments

8

21

Purchases of nuclear decommissioning and other trust assets

(134)

(45)

Proceeds from sales by nuclear decommissioning and other trusts

135

46

Decrease in restricted cash

39

160

Increase in restricted cash

(40)

(320)

Other 

(5)

(7)

Net cash used in investing activities

(859)

(756)

Cash Flows from Financing Activities

Common dividends paid

(115)

(94)

Preferred dividends paid by subsidiaries

(2)

(2)

Issuances of common stock

13

15

Repurchases of common stock

(16)

(18)

Issuances of debt (maturities greater than 90 days)

1,008

803

Payments on debt (maturities greater than 90 days)

(347)

(260)

Decrease in short-term debt, net

(224)

(192)

Other 

(7)

6

Net cash provided by financing activities

310

258

Effect of exchange rate changes on cash and cash equivalents

2

-

Increase in cash and cash equivalents

152

307

Cash and cash equivalents, January 1

252

912

Cash and cash equivalents, March 31

$     404

$   1,219

(1) As adjusted for the retrospective effect of a change in accounting principle.

SEMPRA ENERGY

Table D

SEGMENT EARNINGS AND CAPITAL EXPENDITURES & INVESTMENTS 

Three months ended 

March 31,

(Dollars in millions)

2012

2011

    (unaudited)

Earnings (Losses) 

California Utilities:

San Diego Gas & Electric

$     105

$       89

Southern California Gas

66

68

Sempra International:

Sempra South American Utilities

40

22

Sempra Mexico

37

39

Sempra U.S. Gas & Power:

Sempra Renewables

10

4

Sempra Natural Gas

1

63

Parent and other

(23)

(31)

Earnings

$     236

$     254

 Three months ended  

March 31,

(Dollars in millions)

2012

2011

    (unaudited)

Capital Expenditures and Investments

California Utilities:

San Diego Gas & Electric

$     398

$     348

Southern California Gas

165

168

Sempra International:

Sempra South American Utilities

20

-

Sempra Mexico

5

3

Sempra U.S. Gas & Power:

Sempra Renewables

251

46

Sempra Natural Gas

22

46

Parent and other

1

-

Consolidated Capital Expenditures and Investments

$     862

$611

 

SEMPRA ENERGY

Table E

OTHER OPERATING STATISTICS (Unaudited)

Three months ended March 31,

UTILITIES

2012

2011

California Utilities - SDG&E and SoCalGas

Gas Sales (bcf)(1)

134

138

Transportation (bcf)(1)

171

157

Total Deliveries (bcf)(1)

305

295

Total Gas Customers (Thousands)

6,660

6,639

Electric Sales (Millions of kWhs)(1)

4,089

4,148

Direct Access (Millions of kWhs)

752

786

Total Deliveries (Millions of kWhs)(1)

4,841

4,934

Total Electric Customers (Thousands)

1,395

1,388

Other Utilities(2)

Natural Gas Sales (bcf)

Argentina

73

70

Mexico

6

6

Mobile Gas

15

10

Natural Gas Customers (Thousands)

Argentina

1,819

1,766

Mexico

90

89

Mobile Gas

90

92

Electric Sales (Millions of kWhs)

Peru

1,690

1,594

Chile

745

661

Electric Customers (Thousands)

Peru

934

899

Chile

613

598

ENERGY-RELATED BUSINESSES

Sempra International

Power Sold (Millions of kWhs)

Sempra Mexico(3)

1,078

916

Sempra U.S. Gas & Power

Power Sold (Millions of kWhs)

Sempra Renewables(4)

273

122

Sempra Natural Gas

1,940

3,235

(1) Includes intercompany sales

(2) Represents 100% of the distribution operations of the subsidiary, although the subsidiary in Argentina is not consolidated within Sempra Energy and the related investments are accounted for under the equity method.  The subsidiaries in Peru and Chile were also accounted for under the equity method until April 6, 2011, when they became consolidated entities upon our acquisition of additional ownership interests.

(3) Sales to Sempra Natural Gas

(4) Includes 50% of total power sold related to wind projects in which Sempra Energy has a 50% ownership. These subsidiaries are not consolidated within Sempra Energy and the related investments are accounted for under the equity method.

 

         SEMPRA ENERGY

           Table F (Unaudited)

Statement of Operations Data by Segment

Three Months Ended March 31, 2012

(Dollars in millions)

SDG&E

SoCalGas

Sempra South American Utilities

Sempra Mexico

Sempra Renewables

Sempra Natural Gas

Consolidating Adjustments, Parent & Other

Total

Revenues

$          834

$          880

$          357

$          135

$             8

$          269

$            (100)

$       2,383

Cost of Sales and Other Expenses

(544)

(674)

(281)

(77)

(9)

(245)

82

(1,748)

Depreciation & Amortization

(112)

(87)

(13)

(15)

(3)

(23)

(4)

(257)

Equity Earnings Recorded Before Income Tax

-

-

-

-

1

11

-

12

Other Income, Net

30

4

2

4

-

-

35

75

Income (Loss) Before Interest & Tax (1)

208

123

65

47

(3)

12

13

465

Net Interest Expense (2)

(37)

(17)

(6)

(1)

(4)

(9)

(36)

(110)

Income Tax (Expense) Benefit

(60)

(40)

(13)

(20)

17

(2)

1

(117)

Equity Earnings Recorded Net of Income Tax

-

-

-

11

-

-

-

11

Earnings Attributable to Noncontrolling Interests

(6)

-

(6)

-

-

-

(1)

(13)

Earnings (Losses)

$          105

$           66

$           40

$           37

$           10

$             1

$             (23)

$          236

Three Months Ended March 31, 2011

(Dollars in millions)

SDG&E

SoCalGas

Sempra South American Utilities