• E-mail
• Print
• Comment
• Font Size
• Digg
• del.icio.us
• Discuss article

Sempra Energy Reports Record Income From Continuing Operations in 2007

Posted on: Tuesday, 26 February 2008, 09:01 CST

Sempra Energy (NYSE: SRE) today reported 2007 income from continuing operations of $1.13 billion, or $4.26 per diluted share, up from $1.09 billion, or $4.17 per diluted share, in 2006.

Income from continuing operations in 2006 included a $204 million gain on asset sales and a fourth-quarter write-down of $221 million on the company's Argentine utility investments.

Sempra Energy's 2007 net income was $1.10 billion, or $4.16 per diluted share, compared with 2006 net income of $1.41 billion, or $5.38 per diluted share. The company's 2006 results included $315 million in after-tax income from discontinued operations primarily related to asset sales.

Fourth-quarter 2007 net income was $289 million, or $1.10 per diluted share, compared with $125 million, or $0.47 per diluted share, in 2006.

"We are pleased that we achieved record results and exceeded our financial goals in 2007," said Donald E. Felsinger, chairman and chief executive officer of Sempra Energy. "In 2008, Sempra Energy will mark its 10th anniversary and we will complete several of our major natural gas infrastructure projects. We also expect to launch our joint venture with The Royal Bank of Scotland. This transaction will significantly expand the global footprint of our commodities business, while, at the same time, enable us to raise our dividend and begin our share-repurchase program."

Revenues for Sempra Energy in 2007 were $11.4 billion, compared with $11.8 billion in 2006, due primarily to lower revenues from commodity operations. Fourth-quarter 2007 revenues were $3.1 billion, compared with $3.2 billion in the prior year's quarter.

SUBSIDIARY OPERATING RESULTS

Sempra Utilities

Sempra Utilities -- San Diego Gas & Electric (SDG&E) and Southern California Gas Co. (SoCalGas) -- had net income of $513 million in 2007, up 12 percent from $460 million in 2006. The utilities' fourth-quarter 2007 net income was $105 million, compared with $110 million in 2006.

Net income for SDG&E rose to $283 million in 2007, from $237 million in 2006, due primarily to the favorable resolution of tax issues, and higher electric transmission and generation earnings. SDG&E's fourth-quarter 2007 net income was $47 million, compared with $55 million quarterly net income in 2006, primarily due to lower taxes in 2006.

SoCalGas' 2007 net income increased to $230 million from $223 million in 2006, due primarily to higher operating margin. Fourth-quarter net income for SoCalGas was $58 million in 2007, compared with $55 million in 2006.

Sempra Commodities

Sempra Commodities' 2007 net income was $499 million, compared with the prior-year's net income of $504 million. Fourth-quarter 2007 net income for Sempra Commodities was $186 million, compared with $214 million in the fourth quarter 2006, primarily due to reduced margins in natural gas.

In the third quarter 2007, Sempra Energy and The Royal Bank of Scotland announced their intention to form a global commodities-marketing joint venture, RBS Sempra Commodities, which will absorb the operations of Sempra Commodities. The transaction is expected to be completed in April 2008. RBS will provide the joint venture with all growth capital, credit and liquidity.

Sempra Generation

Sempra Generation's net income in 2007 was $162 million, compared with $375 million in 2006. The company's 2006 net income included $204 million from the sale of its jointly owned Texas power plants. Fourth-quarter 2007 net income for Sempra Generation was $40 million, compared with $53 million in the fourth quarter 2006, due primarily to higher taxes and a three-month outage at the company's El Dorado Energy plant in Nevada.

Sempra Pipelines & Storage

Sempra Pipelines & Storage earned $64 million in 2007 net income, compared with a net loss of $165 million in 2006. In the fourth quarter 2007, Sempra Pipelines & Storage had $14 million in net income, compared with a net loss of $223 million in the fourth quarter 2006. Both the quarter and full-year results for Sempra Pipelines & Storage in 2006 were impacted by the company's write-down on its Argentine investments.

REX-West, the western leg of the Rockies Express Pipeline -- a joint-venture project of Kinder Morgan Energy Partners, Sempra Pipelines & Storage and ConocoPhilips -- has been put into interim service. Permitting is underway on the eastern leg of the 1,600-mile transcontinental pipeline project. During the quarter, the project partners completed a successful non-binding open-season solicitation that could extend the pipeline from its original eastern terminus in Clarington, Ohio, to Princeton, N.J.

Sempra LNG

Sempra LNG recorded a net loss of $46 million in 2007, compared with a net loss of $42 million in 2006. For the fourth quarter, Sempra LNG's 2007 net loss was $19 million, compared with $7 million in 2006, due primarily to a mark-to-market loss on an inter-company marketing agreement.

For its Energia Costa Azul receipt terminal in Baja California, Mexico, Sempra LNG expects to receive start-up liquefied natural gas (LNG) cargoes early in the second quarter 2008, with commercial operations beginning later in the same quarter. Construction on the Cameron LNG receipt terminal in Louisiana is expected to be complete and ready for commercial operations by year-end.

2008 Outlook

Sempra Energy today reaffirmed its prior 2008 earnings-per-share guidance of $3.65 to $3.85. The 2008 guidance reflects the company's reduced ownership in the commodity-marketing business when the joint venture with RBS commences, partially offset by the anticipated improved performance at other operating units and the positive impact of the share-repurchase program.

As announced previously, following the close of the transaction with RBS, Sempra Energy intends to increase its quarterly dividend to $0.35, or $1.40 annually, from the current quarterly dividend of $0.32, or $1.28 annually, and maintain a targeted dividend payout ratio of 35 percent to 40 percent of net income. Additionally, in 2008, Sempra Energy intends to repurchase $1 billion of its common stock, the first phase of its $1.5 billion to $2 billion stock-repurchase program.

Internet Broadcast

Sempra Energy will broadcast a live discussion of its earnings results over the Internet today at 1 p.m. EST with senior management of the company. 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 (888) 203-1112 and entering the passcode 3144385.

Sempra Energy, based in San Diego, is a Fortune 500 energy services holding company with 2007 revenues of more than $11 billion. The Sempra Energy companies' 14,000 employees serve more than 29 million consumers worldwide.

Complete financial tables, including income-statement information by business unit, is available on Sempra Energy's Web site at http://www.sempra.com/downloads/4Q2007.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,""could,""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, California State Legislature, California Department of Water Resources, Federal Energy Regulatory Commission, Federal Reserve Board, U.K. Financial Services Authority, and other regulatory bodies in the United States and other countries; capital market 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, electric power and liquefied 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.

                               SEMPRA ENERGY                                  Table A STATEMENTS OF CONSOLIDATED INCOME                                           Three months                                               ended         Years ended                                           December 31,      December 31,                                         ----------------  ---------------- (Dollars in millions, except per share   2007     2006     2007     2006 amounts)                                -------  -------  -------  -------                                           (Unaudited) Operating revenues Sempra Utilities                        $ 1,859  $ 1,709  $ 7,053  $ 6,899 Sempra Global and parent                  1,251    1,536    4,385    4,862                                         -------  -------  -------  -------   Total operating revenues                3,110    3,245   11,438   11,761                                         -------  -------  -------  ------- Operating expenses Sempra Utilities:   Cost of natural gas                       721      679    2,763    2,756   Cost of electric fuel and purchased    power                                    203      155      699      721 Sempra Global and parent:   Cost of natural gas, electric fuel    and purchased power                      357      358    1,302    1,221   Other cost of sales                       192      395      988    1,468 Litigation expense                            4       13       73       56 Other operating expenses                    883      838    2,954    2,814 Depreciation and amortization               172      166      686      657 Franchise fees and other taxes               74       67      295      275 Gains on sale of assets, net                  -       (2)      (6)      (1) Impairment losses                             5        6        5        9                                         -------  -------  -------  -------   Total operating expenses                2,611    2,675    9,759    9,976                                         -------  -------  -------  ------- Operating income                            499      570    1,679    1,785 Other income, net                            20        6       81      381 Interest income                              10       36       72      109 Interest expense                            (68)     (78)    (272)    (351) Preferred dividends of subsidiaries          (3)      (3)     (10)     (10)                                         -------  -------  -------  ------- Income from continuing operations  before income taxes and equity in  earnings (losses) of certain  unconsolidated subsidiaries                458      531    1,550    1,914 Income tax expense                          183      180      524      641 Equity in earnings (losses) of certain  unconsolidated subsidiaries                 13     (222)      99     (182)                                         -------  -------  -------  ------- Income from continuing operations           288      129    1,125    1,091 Discontinued operations, net of income  tax                                          1       (4)     (26)     315                                         -------  -------  -------  ------- Net income                              $   289  $   125  $ 1,099  $ 1,406                                         =======  =======  =======  ======= Basic earnings per share:   Income from continuing operations     $  1.12  $  0.50  $  4.34  $  4.25   Discontinued operations, net of    income tax                                 -    (0.02)   (0.10)    1.23                                         -------  -------  -------  -------   Net income                            $  1.12  $  0.48  $  4.24  $  5.48                                         =======  =======  =======  ======= Weighted-average number of shares  outstanding (thousands)                257,864  258,385  259,269  256,477                                         =======  =======  =======  ======= Diluted earnings per share:   Income from continuing operations     $  1.10  $  0.49  $  4.26  $  4.17   Discontinued operations, net of    income tax                                 -    (0.02)   (0.10)    1.21                                         -------  -------  -------  -------   Net income                            $  1.10  $  0.47  $  4.16  $  5.38                                         =======  =======  =======  ======= Weighted-average number of shares  outstanding (thousands)                262,839  263,429  264,004  261,368                                         =======  =======  =======  ======= Dividends declared per share of common  stock                                  $  0.31  $  0.30  $  1.24  $  1.20                                         =======  =======  =======  ======= As a result of the decisions in 2006 to dispose of the Twin Oaks power plant, Sempra Energy Production Company, and the Energy Services and Facilities Management businesses, all within Sempra Generation, and Bangor Gas and Frontier Energy, both within Sempra Pipelines & Storage, these operations have been reflected above as discontinued operations in all periods presented.                               SEMPRA ENERGY                                  Table B CONSOLIDATED BALANCE SHEETS                                                   December 31, December 31, (Dollars in millions)                                 2007         2006                                                   ------------ ------------ Assets Current assets:    Cash and cash equivalents                      $        668 $        920    Restricted cash                                           1            4    Accounts receivable, net                              1,074        1,035    Income taxes receivable                                  99            -    Deferred income taxes                                   247          270    Interest receivable                                       4           40    Trading-related receivables and deposits, net         2,887        3,047    Derivative trading instruments                        3,367        4,068    Commodities owned                                     2,231        1,845    Inventories                                             224          215    Regulatory assets                                       106          193    Other                                                   430          317                                                   ------------ ------------      Current assets of continuing operations            11,338       11,954      Current assets of discontinued operations               -           62                                                   ------------ ------------        Total current assets                             11,338       12,016                                                   ------------ ------------ Investments and other assets:    Regulatory assets arising from fixed-price     contracts and other derivatives                        309          353    Regulatory assets arising from pension and     other postretirement benefit obligations               162          356    Other regulatory assets                                 460          472    Nuclear decommissioning trusts                          739          702    Investments                                           1,243        1,086    Sundry                                                  956          789                                                   ------------ ------------        Total investments and other assets                3,869        3,758                                                   ------------ ------------ Property, plant and equipment, net                      14,884       13,175                                                   ------------ ------------ Total assets                                      $     30,091 $     28,949                                                   ============ ============ Liabilities and Shareholders' Equity Current liabilities:    Short-term debt                                $      1,064 $        252    Accounts payable                                      1,563        1,587    Due to unconsolidated affiliate                          60            -    Income taxes payable                                      -            9    Trading-related payables                              3,328        3,211    Derivative trading instruments                        1,974        2,304    Commodities sold with agreement to repurchase           500          537    Dividends and interest payable                          145          145    Regulatory balancing accounts, net                      481          332    Fixed-price contracts and other derivatives              62           87    Current portion of long-term debt                         7          681    Other                                                 1,210        1,197                                                   ------------ ------------      Current liabilities of continuing operations       10,394       10,342      Current liabilities of discontinued       operations                                             -            7                                                   ------------ ------------        Total current liabilities                        10,394       10,349                                                   ------------ ------------ Long-term debt                                           4,553        4,525                                                   ------------ ------------ Deferred credits and other liabilities:    Due to unconsolidated affiliate                         102          162    Customer advances for construction                      153          126    Pension and other postretirement benefit     obligations, net of plan assets                        434          609    Deferred income taxes                                   531          412    Deferred investment tax credits                          61           67    Regulatory liabilities arising from removal     obligations                                          2,522        2,330    Asset retirement obligations                          1,129        1,128    Other regulatory liabilities                            265          221    Fixed-price contracts and other derivatives             332          358    Deferred credits and other                              949          961                                                   ------------ ------------        Total deferred credits and other         liabilities                                      6,478        6,374                                                   ------------ ------------ Preferred stock of subsidiaries                            179          179                                                   ------------ ------------ Minority interests                                         148           11                                                   ------------ ------------ Shareholders' equity                                     8,339        7,511                                                   ------------ ------------ Total liabilities and shareholders' equity        $     30,091 $     28,949                                                   ============ ============ As a result of the decisions in 2006 to dispose of the Twin Oaks power plant, Sempra Energy Production Company, and the Energy Services and Facilities Management businesses, all within Sempra Generation, and Bangor Gas and Frontier Energy, both within Sempra Pipelines & Storage, these operations have been reflected above as discontinued operations in all periods presented.                               SEMPRA ENERGY                                  Table C CONDENSED STATEMENTS OF CONSOLIDATED CASH FLOWS                                                             Years ended                                                             December 31,                                                           ---------------- (Dollars in millions)                                       2007     2006                                                           -------  ------- Cash Flows from Operating Activities: Net income                                                $ 1,099  $ 1,406 Adjustments to reconcile net income to net cash  provided by operating activities:   Discontinued operations                                      26     (315)   Depreciation and amortization                               686      657   Gains on sale of assets, net                                 (6)      (1)   Impairment losses                                             5        9   Deferred income taxes and investment tax credits            149       77   Noncash rate-reduction bond expense                          55       60   Equity in income of unconsolidated subsidiaries             (90)    (156)   Other                                                        41       38 Quasi-reorganization resolution                                 -       12 Net changes in other working capital components                25     (183) Changes in other assets                                        22       20 Changes in other liabilities                                   79       42                                                           -------  -------   Net cash provided by continuing operations                2,091    1,666   Net cash used in discontinued operations                     (3)     (37)                                                           -------  -------   Net cash provided by operating activities                 2,088    1,629                                                           -------  ------- Cash Flows from Investing Activities: Expenditures for property, plant and equipment             (2,011)  (1,907) Proceeds from sale of assets from continuing operations       103       40 Expenditures for investments                                 (121)    (257) Distributions from investments                                 18      104 Purchases of nuclear decommissioning and other trust  assets                                                      (646)    (546) Proceeds from sales by nuclear decommissioning and other  trusts                                                       613      503 Dividends received from unconsolidated affiliates               -      431 Other                                                         (29)     (27)                                                           -------  -------   Net cash used in continuing operations                   (2,073)  (1,659)   Net cash provided by discontinued operations                  -      793                                                           -------  -------   Net cash used in investing activities                    (2,073)    (866)                                                           -------  ------- Cash Flows from Financing Activities: Common dividends paid                                        (316)    (283) Issuances of common stock                                      40       97 Repurchases of common stock                                  (185)     (37) Issuance of long-term debt                                    404      552 Payments on long-term debt                                 (1,072)    (263) Increase (decrease) in short-term debt, net                   812     (791) Financing transaction related to Sempra Financial               -       83 Other                                                          21       28                                                           -------  -------   Net cash used in continuing operations                     (296)    (614)   Net cash provided by discontinued operations                  -        2                                                           -------  -------   Net cash used in financing activities                      (296)    (612)                                                           -------  ------- Increase (decrease) in cash and cash equivalents             (281)     151 Cash and cash equivalents, January 1                          920      769 Cash assumed in connection with FIN 46(R) initial  consolidation                                                 29        -                                                           -------  ------- Cash and cash equivalents, December 31                    $   668  $   920                                                           =======  ======= As a result of the decisions in 2006 to dispose of the Twin Oaks power plant, Sempra Energy Production Company, and the Energy Services and Facilities Management businesses, all within Sempra Generation, and Bangor Gas and Frontier Energy, both within Sempra Pipelines & Storage, these operations have been reflected above as discontinued operations in all periods presented.                               SEMPRA ENERGY                                  Table D BUSINESS UNIT EARNINGS AND CAPITAL  EXPENDITURES & INVESTMENTS                                     Three months ended     Years ended                                        December 31,        December 31,                                     ------------------  ------------------ (Dollars in millions)                 2007      2006      2007      2006                                     --------  --------  --------  -------- Net Income                              (unaudited) Sempra Utilities:   San Diego Gas & Electric          $     47  $     55  $    283  $    237   Southern California Gas                 58        55       230       223                                     --------  --------  --------  --------     Total Sempra Utilities               105       110       513       460 Sempra Global:   Sempra Commodities                     186       214       499       504   Sempra Generation*                      40        53       162       375   Sempra Pipelines & Storage*             14      (223)       64      (165)   Sempra LNG                             (19)       (7)      (46)      (42)                                     --------  --------  --------  --------     Total Sempra Global                  221        37       679       672 Parent & Other                           (38)      (18)      (67)      (41)                                     --------  --------  --------  -------- Continuing Operations                    288       129     1,125     1,091 Discontinued Operations, Net of  Income Tax                                1        (4)      (26)      315                                     --------  --------  --------  -------- Consolidated Net Income             $    289  $    125  $  1,099  $  1,406                                     ========  ========  ========  ========   * Excludes amounts now classified as discontinued operations.                                     Three months ended      Years ended                                         December 31,        December 31,                                     ------------------  ------------------ (Dollars in millions)                 2007      2006      2007      2006                                     --------  --------  --------  -------- Capital Expenditures and Investments  (unaudited) Sempra Utilities:   San Diego Gas & Electric          $    235  $    190  $    714  $  1,070   Southern California Gas                157       129       457       413                                     --------  --------  --------  --------      Total Sempra Utilities              392       319     1,171     1,483                                     --------  --------  --------  -------- Sempra Global:   Sempra Commodities                      15        10        64        53   Sempra Generation                        5         3        13        40   Sempra Pipelines & Storage             187       202       367       414   Sempra LNG                             152       153       498       619                                     --------  --------  --------  --------      Total Sempra Global                 359       368       942     1,126                                     --------  --------  --------  -------- Parent & Other                             7        10        19   (445)(1)                                     --------  --------  --------  -------- Consolidated Capital Expenditures  and Investments                    $    758  $    697  $  2,132  $  2,164                                     ========  ========  ========  ======== (1) Reflects the transfer of the Palomar plant to SDG&E from Sempra Generation. As a result of the decisions in 2006 to dispose of the Twin Oaks power plant, Sempra Energy Production Company, and the Energy Services and Facilities Management businesses, all within Sempra Generation, and Bangor Gas and Frontier Energy, both within Sempra Pipelines & Storage, these operations have been reflected above as discontinued operations in all periods presented.                               SEMPRA ENERGY                                  Table E OTHER OPERATING STATISTICS (Unaudited)                                     Three months ended     Years ended                                        December 31,        December 31,                                     ------------------- ------------------ SEMPRA UTILITIES                      2007      2006      2007      2006                                     --------- --------  --------- -------- Revenues (Dollars in millions)     SDG&E (excludes intercompany      sales)                         $     765 $    692  $   2,839 $  2,770     SoCalGas (excludes intercompany      sales)                         $   1,094 $  1,017  $   4,214 $  4,129 Gas Sales (Bcf)                           114      110        404      402 Transportation and Exchange (Bcf)         145      127        566      546                                     --------- --------  --------- -------- Total Deliveries (Bcf)                    259      237        970      948                                     --------- --------  --------- -------- Total Gas Customers (Thousands)                             6,531    6,468 Electric Sales (Millions of kWhs)       4,198    3,939     17,045   16,836 Direct Access (Millions of kWhs)          819      821      3,220    3,390                                     --------- --------  --------- -------- Total Deliveries (Millions of kWhs)     5,017    4,760     20,265   20,226                                     --------- --------  --------- -------- Total Electric Customers  (Thousands)                                                1,365    1,355 SEMPRA GENERATION                                     --------- --------  --------- -------- Power Sold (Millions of kWhs)           5,613  5,734(1)    20,856 19,760(1)  (1) Revised to exclude the Twin Oaks, Coleto Creek and Topaz power plants. SEMPRA PIPELINES & STORAGE (Represents 100% of these subsidiaries, although only the Mexican  subsidiaries are 100% owned by Sempra Energy.) Natural Gas Sales (Bcf)     Argentina                              79       70        320      278     Mexico                                 11       10         46       44     Chile                                   -        -          1        2 Natural Gas Customers (Thousands)     Argentina                                               1,603    1,542     Mexico                                                     96      101     Chile                                                      39       39 Electric Sales (Millions of kWhs)     Peru                                1,278    1,620      5,078    5,108     Chile                                 632      762      2,500    2,324 Electric Customers (Thousands)     Peru                                                      809      788     Chile                                                     549      534                               SEMPRA ENERGY                             Table E (Continued) SEMPRA COMMODITIES                       Three months ended                  Years ended                          December 31,                     December 31,                      --------------------             -------------------- Margin* (Dollars in  millions)             2007       2006                  2007       2006                      ---------  ---------             ---------  --------- Geographical:   North America      $     422  $     474             $   1,202  $   1,313   Europe/Asia              120        173                   359        325                      ---------  ---------             ---------  ---------     Total            $     542  $     647             $   1,561  $   1,638                      ---------  ---------             ---------  --------- Product Line:   Gas                $     234  $     362             $     570  $     792   Power                    170        104                   460        431   Oil - Crude &    Products                 46         85                   195        198   Metals                    88         60                   292        138   Other                      4         36                    44         79                      ---------  ---------             ---------  ---------     Total            $     542  $     647             $   1,561  $   1,638                      ---------  ---------             ---------  --------- * Margin is a non-GAAP financial measure, consisting of operating revenues less cost of sales (primarily transportation and storage costs), both GAAP financial measures, reduced by certain transaction-related execution costs (primarily brokerage and other fees) and net interest income/expense, as follows:                       Three months ended                  Years ended                          December 31,                     December 31,                      --------------------             -------------------- (Dollars in millions)   2007       2006                  2007       2006                      ---------  ---------             ---------  ---------   Revenues           $     773  $   1,078             $   2,674  $   3,256   Cost of sales           (192)      (395)                 (988)    (1,468)                      ---------  ---------             ---------  ---------                            581        683                 1,686      1,788   Other related    costs                   (39)       (36)                 (125)      (150)                      ---------  ---------             ---------  ---------   Margin             $     542  $     647             $   1,561  $   1,638                      ---------  ---------             ---------  ---------                       Three months ended                  Years ended                          December 31,                     December 31,                      --------------------             -------------------- Effect of EITF 02-3   (Dollars in    millions)           2007       2006                  2007       2006                      ---------  ---------             ---------  ---------   Mark-to-Market    Earnings *        $     139  $     158             $     494  $     487   Effect of EITF    02-3 **                  47         56                     5         17                      ---------  ---------             ---------  ---------   GAAP Net Income    $     186  $     214             $     499  $     504                      ---------  ---------             ---------  --------- * Represents earnings from the fair market value of all commodities transactions.  This metric is a useful measurement of profitability because it simultaneously recognizes changes in the various components of transactions and reflects how the business is managed. ** Consists of the income statement effect of not recognizing changes in the fair market value of certain physical inventories, capacity contracts for transportation and storage, and derivative hedging activities related to synthetic fuels tax credits.                        Fair                        Market                         Value        Scheduled Maturity (in months)                                 ------------------------------------------ Net Unrealized        December  Revenue (Dollars in     31,  millions)              2007     0 - 12    13 - 24    25 - 36       > 36                      ---------  ---------  ---------  ---------  --------- OTC Fair Value of  forwards, swaps and  options (1)         $   1,381  $   1,074  $      95  $      23  $     189                      ---------  ---------  ---------  ---------  ---------   Maturity of OTC    Fair Value -    Cumulative    Percentages                       77.8%      84.6%      86.3%     100.0%                                 ---------  ---------  ---------  --------- Exchange Contracts(2)     (178)      (274)       118         (7)       (15)                      ---------  ---------  ---------  ---------  ---------   Total Net    Unrealized    Revenue at    December 31, 2007 $   1,203  $     800  $     213  $      16  $     174                      ---------  ---------  ---------  ---------  ---------   Net Unrealized    Revenue -    Cumulative    Percentages                       66.5%      84.2%      85.5%     100.0%                                 ---------  ---------  ---------  --------- (1) The present value of unrealized revenue to be received or (paid) from     outstanding OTC contracts (2) Cash received or (paid) associated with open Exchange Contracts Credit Quality of  Unrealized Trading   December   December  Assets (net of          31,        31,  margin)                2007       2006                      ---------  --------- Commodity Exchanges          9%        13% Investment Grade            54%        57% Below Investment  Grade                      37%        30%                       Three months ended                  Years ended                          December 31,                     December 31,                      --------------------             -------------------- Risk Adjusted  Performance  Indicators  (Mark-to-Market  Basis)                2007       2006                  2007       2006                      ---------  ---------             ---------  --------- VaR at 95% (Dollars  in millions) (1)    $    16.5  $    17.3             $    13.9  $    16.2 VaR at 99% (Dollars  in millions) (2)    $    23.3  $    24.3             $    19.7  $    22.8 (1) Average Daily Value-at-Risk for the period using a 95% confidence level (2) Average Daily Value-at-Risk for the period using a 99% confidence level                       Three months ended                  Years ended                          December 31,                     December 31,                      --------------------             -------------------- Physical Statistics     2007       2006                  2007       2006                      ---------  ---------             ---------  --------- Natural Gas  (Bcf/Day)                  15       12.2                  13.4       12.0 Electric (Billions  of kWhs)                141.4      125.5                 519.1      475.5 Oil & Liquid  Products (Millions  Bbls/Day)                 0.7        0.7                   0.7        0.7 

 Media Contact: Doug Kline Sempra Energy (877) 866-2066 www.sempra.com  Financial Contact: Glen Donovan Sempra Energy (877) 736-7727 Email Contact

SOURCE: Sempra Energy

Source: MARKET WIRE

More News in this Category