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Sempra Energy Reports Operating Results (10-Q)

August 03, 2010 | About:

10qk

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Sempra Energy (SRE) filed Quarterly Report for the period ended 2010-06-30.

Sempra Energy has a market cap of $12.49 billion; its shares were traded at around $50.45 with a P/E ratio of 11.7 and P/S ratio of 1.5. The dividend yield of Sempra Energy stocks is 3.1%. Sempra Energy had an annual average earning growth of 2.1% over the past 10 years.SRE is in the portfolios of Richard Pzena of Pzena Investment Management LLC, Steven Cohen of SAC Capital Advisors, Pioneer Investments, Jim Simons of Renaissance Technologies LLC, James Barrow of Barrow, Hanley, Mewhinney & Strauss, Bruce Kovner of Caxton Associates, Kenneth Fisher of Fisher Asset Management, LLC, David Dreman of Dreman Value Management, George Soros of Soros Fund Management LLC, Jean-Marie Eveillard of First Eagle Investment Management, LLC.

Highlight of Business Operations:

In the three months ended June 30, 2010, our earnings increased by $24 million (12%) to $222 million primarily due to improved results at Sempra Pipelines & Storage, Sempra LNG and Sempra Generation. Diluted earnings per share for the three-month period increased by $0.09 (11%) per share to $0.89 per share, primarily from the higher earnings.

In the six months ended June 30, 2010, our earnings decreased by $186 million (36%) to $328 million primarily due to losses at Sempra Commodities and Sempra Generation in 2010 compared to earnings in 2009. In the first quarter of 2010, Sempra Generation and Sempra Commodities recorded after-tax litigation expense of $84 million and $12 million, respectively, related to the agreement in principle to settle certain energy crisis litigation, as we discuss in Note 10 of the Notes to Condensed Consolidated Financial Statements herein. Diluted earnings per share for the six months decreased by $0.78 (37%) per share to $1.31 per share, primarily from the lower earnings in 2010.

§$1 million income tax benefit related to Mexican currency translation and inflation adjustments in 2010 compared to $4 million income tax expense in 2009; offset by

The improvement in earnings of $64 million in the first six months of 2010 was primarily from higher earnings from operations, of which $11 million relates to revenues that are not expected to recur over the long-term related to contractual counterparty obligations for non-delivery of cargoes. Results for 2010 also include $9 million mark-to-market gains.

During the three months ended June 30, 2010, our natural gas revenues increased by $144 million (18%) to $926 million, and the cost of natural gas increased by $110 million (44%) to $359 million. During the six months ended June 30, 2010, our natural gas revenues increased by $403 million (22%) to $2.3 billion, and the cost of natural gas increased by $328 million (42%) to $1.1 billion. The primary factor contributing to the increased natural gas revenues and cost of natural gas in both the second quarter and year-to-date periods was higher natural gas prices in 2010. We discuss the increase in the cost of natural gas individually for SDG&E and SoCalGas below.

During the three months ended June 30, 2010, SDG&E's natural gas revenues increased by $7 million (7%) to $103 million, and the cost of natural gas increased by $7 million (19%) to $44 million. During the six months ended June 30, 2010, SDG&E's natural gas revenues increased by $7 million (3%) to $282 million, and the cost of natural gas increased by $9 million (7%) to $133 million. The average cost of natural gas for the three months ended June 30, 2010 was $4.29 per thousand cubic feet (Mcf) compared to $3.57 per Mcf for the corresponding period in 2009, a 20-percent increase of $0.72 per Mcf, resulting in higher revenues and cost of $7 million. For the first six months of 2010, SDG&Es average cost of natural gas was $5.03 per Mcf compared to $4.59 per Mcf for the corresponding period in 2009, a 10-percent increase of $0.44 per Mcf, resulting in higher revenues and cost of $12 million.

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