Sempra Sees Q1 Boost
US utility Sempra Energy has sidestepped the sea of red ink washing around its peers, reporting a Q1 2020 profit of $760mn April 5, up from $441mn in 2019. On an adjusted basis, the company's first-quarter 2020 earnings were $932mn, up from $534mn year on year.
CEO Jeffrey Martin said despite the pandemic, the company was "focused on advancing our strategic priorities and committed to delivering safe and reliable energy to over 35mn consumers.... Our strong financial results this quarter reflect the focused execution of our strategic plan," added Martin. "We plan to continue to strengthen our balance sheet and maintain solid liquidity across our companies, while pursuing our disciplined growth plan."
Sempra announced the completion of the sale of its Peruvian businesses in April, including its 83.6% interest in Luz del Sur, to an affiliate of China Yangtze Power International, generating some $3.6bn in total cash proceeds, subject to post-closing adjustments. Sempra is also selling its Chilean assets, including its 100% interest in Chilquinta Energía S.A., to China State Grid International Development for $2.23bn in total cash proceeds, subject to adjustments and satisfaction of closing conditions.
The completion of these transactions will conclude Sempra Energy's planned sale of its South American businesses. Proceeds from the sales will be used to further strengthen the company's balance sheet and help fund the company's record capital plan.
Cameron LNG has reached the final commissioning stage for the third and last train of Phase 1 of the liquefaction-export project in Hackberry, Louisiana, enabling commercial operations to begin in Q3. Cameron LNG achieved commercial operations of Train 1 and Train 2 under its tolling agreements in August 2019 and February 2020, respectively.
Sempra expects its share of full-year earnings to be between $400mn and $450mn/yr starting in 2021 when all three trains are in commercial operations under Cameron LNG's tolling agreements. Sempra Energy indirectly owns 50.2% of Cameron LNG, other owners being French Total and Japanese Mitsui & Co and Japan LNG Investment, a company jointly owned by Mitsubishi Corporation and Nippon Yusen Kabushiki Kaisha.
In March, Port Arthur LNG and Bechtel Oil, Gas, and Chemicals signed a fixed-price EPC contract for the Port Arthur LNG liquefaction project under development in Jefferson County, Texas. Given current market dynamics, a final investment decision is now expected for the project in 2021.
In Mexico, Infraestructura Energetica Nova (IEnova) continues to develop pipelines that provide consumers in Mexico access to cleaner, more reliable energy. IEnova is actively monitoring the current situation but as a result of the current pandemic, it is reasonable to expect that some of the construction capital will be deferred from 2020 to 2021.
Sempra Energy's updated full-year 2020 GAAP EPS guidance range is $11.88 to $13.02. The updated range reflects a revision to the estimated gain on the sale of the company's South American businesses and litigation-related charges at SoCalGas and the company's prior investment in RBS Sempra Commodities LLP. The company reaffirmed its full-year 2020 adjusted earnings per share (EPS) guidance range of $6.70 to $7.50, which it issued in November; and is reaffirming its full-year 2021 EPS guidance range of $7.50 to $8.10.