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Sempra Energy

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2019 Vault Rankings

About Sempra Energy

Sempra Energy makes sure the lights are always on. The company provides natural gas to nearly 7 million customers and electricity to nearly 3.5 million in California via its two primary subsidiaries, Southern California Gas (SoCalGas) and San Diego Gas & Electricity (SDG&E). SoCalGas operates more than 100,000 miles of combined pipeline and four natural gas storage facilities, while SDG&E operates 15,000 miles of pipeline. Sempra also owns Oncor, the largest electricity transmission firm in Texas. Sempra is selling its South America holdings, which include Chilquinta Energia in Chile and Luz del Sur in Peru, to focus exclusively on North America.

 

Operations

Sempra Energy operates five main segments: San Diego Gas & Electricity (SDG&E), Southern California Gas Company (SoCalGas), Sempra Mexico, Sempra Texas Utility, and Sempra LNG & Midstream.

SDG&E is the largest, generating around 40% of revenue, and provides electricity to San Diego and Orange County, as well as natural gas to San Diego. It serves 1.3 million residential, more than 150,000 commercial, and 400 industrial customers, covering 4,1000 square miles.

SoCalGas distributes natural gas throughout most of Southern California, as well as bits of Central California. It owns four natural gas storage facilities (the largest being the Aliso Canyon facility) with a combined capacity of 137 billion cu. ft. and over 200 injection, withdrawal, and observation wells. It brings in about a third of company sales.

Sempra Mexico includes mainly the activities of subsidiary IEnova, while develops, builds, and operates energy infrastructure in the Mexican gas and power markets. Its pipelines carry natural gas, liquefied petroleum gas, and ethane while it also operates land and marine storage terminals. Sempra Mexico accounts for 5% of sales.

Sempra LNG & Midstream operates natural gas pipelines and storage facilities in the US, as well as a LNG import and export terminal. It brings in about 5%.

A sixth segment, Sempra Renewables, consisting of wind and solar generation plants, was sold off in 2018. A seventh segment, Sempra South America Utilities, is being sold.

Geographic Reach

Sempra has operations in the US, Chile, Peru, and Mexico. The US accounts for three-quarters of Sempra Energy's net sales each year. South America (Chile and Peru) account for 15% and Mexico accounts for the rest.

SDG&E owns four natural gas-fired power plants, three of which are in California and one in Nevada.

Sales and Marketing

Sempra Energy distributes electricity via distribution lines, transmission lines, overhead and underground lines. In the US Sempra Energy distributes natural gas and electricity to primarily residential customers through its SoCalGas and SDG&E utilities.

SDG&E provides electricity to a population of 3.7 million and natural gas to a population of 3.4 million.

Southern California Gas Company serve Residential, commercial, industrial, utility electric generation and wholesale customers. It covers a population of more than 21.9 million (about 6 million meters).

Financial Performance

Sempra has reversed several years of declining sale and has posted consecutive years of strong revenue growth. Net income is likewise in recovery after a very poor 2017 that saw profits fall by more than $1 billion.

In 2018 Sempra's sales grew 4% to $11.7 billion thanks to highers sales in all three main businesses, electric utility, natural gas utility, and its energy-related businesses. Growth came from numerous sources, the main ones being higher pass-through electricity and gas costs and higher recovery of costs connected with CPUC (California Public Utilities Commission)-authorized refundable programs.

Net income jumped more than 300% to $1.1 billion due to a gain on the sale of its renewables assets, the contribution from its minority stake in its Texas holdings, and the absence of the $1.2 billion tax expense Sempra booked in 2017.

Sempra's cash on hand fell $118 million during 2018, ending the year at $246 million. The company's operations generated $3.4 billion and its financing generated $9.0 billion, while investing activities used $12.6 billion. Sempra's main cash uses were investments and acquisitions, capital expenditures, debt repayments, and dividends. Additional sources of liquidity, besides operating cash, included a debt issue and a public share offering. 

Strategy

Sempra's goal is to become North America's top energy infrastructure company. Achieving that means jettisoning non-core operations and buying up energy infrastructure companies in new geographies. Sempra is seeking a buyer for its South American operations, which include Chilquinta Energia in Chile, Luz del Sur in Peru, and two energy-services companies. Additionally, in 2018 the company divested its renewables business, which includes solar, wind, and battery storage assets.

Concurrently, Sempra raised $4.5 billion via a stock offering to help finance the $9.5 billion acquisition of Oncor, the largest electricity transmission firm in Texas. The acquisition diversifies and strengthens Sempra's US holdings and also helped Sempra sign a huge 20-year LNG import deal with Saudi Aramco.

 

In 2018, Sempra Energy completed registered public offerings of our common stock (including shares offered pursuant to forward sale agreements), series A preferred stock, series B preferred stock and long-term debt. These offerings, including settlement of a portion of the forward sale agreements, provided total net proceeds of approximately $4.5 billion in equity and $4.9 billion in debt. A portion of these proceeds were used to partially fund the acquisition of an indirect, 100-percent interest in Oncor Holdings,

 

The company pursues three disciplined growth platforms: U.S. utilities South American utilities and Mexican midstream, U.S. natural gas midstream, including LNG, and renewables.

Operating within these areas, Sempra Energy is focused on generating stable, predictable earnings and cash flows by investing in assets that are primarily regulated or contracted long-term. It is committed to build a new energy infrastructure that is contracted for the long term.

In 2017 Sempra agreed to buy Texan energy company Oncor Energy, whose parent company Future Holdings went bankrupt. The deal will expand Sempra's regulated earnings base and acting as a launchpad into the Texas and Gulf of Mexico energy market.

The company is also responding to a California state mandate (and accompanying financial incentives) to increase the amount of energy generated by utilities from non-fossil fuel sources. It gained approval in 2016 to build and own up to 3,500 electric vehicle charging units up to 2019, which it hopes to expand to 90,000 homes, as well as public locations.

In 2016, the company made capital expenditures and investments of $4.2 billion. The bulk of the expenditure went on pipeline safety improvements.

It is also selling assets to free up cash. In 2015-16, Sempra sold its interest in the Rockies Express Pipeline and its interest in Rosamond Solar, a development project located in Antelope Valley, California.

In August 2018, the company announced it will sell off all its wind and solar assets and investments in the US, leading to a $755 million in impairment charges from midstream assets, as well as $145 million in impairment charges from wind asset investments. 

Mergers and Acquisitions

In 2018 Sempra spent $9.5 billion on acquiring an 80% indirect ownership stake in Oncor from stricken Energy Future Holdings. Oncor is the largest electricity transmission company in Texas and its acquisition makes Sempra the utility company with the largest US customer base. The acquisition also paves the way for future expansion. 

Sempra Energy

488 8TH AVE
San Diego, CA 92101-7123
Phone: 1 (619) 696-2000

Stats

Employer Type: Publicly Owned
Stock Symbol: SRE
Stock Exchange: , NYSE
CIO: P. Kevin Chase
EVP and CFO: Jeffrey W. Martin
Chairman, President, and CEO: Debra L. Reed
Employees (This Location): 1,000
Employees (All Locations): 16,823

Major Office Locations

San Diego, CA

Other Locations

Alhambra, CA
Aliso Viejo, CA
Anaheim, CA
Bakersfield, CA
Beaumont, CA
Carlsbad, CA
Chatsworth, CA
Chula Vista, CA
City Of Industry, CA
Compton, CA
Corona, CA
Downey, CA
El Cajon, CA
Escondido, CA
Imperial, CA
Indio, CA
Los Angeles, CA
Montclair, CA
Monterey Park, CA
Moreno Valley, CA
Needles, CA
Palm Desert, CA
Pico Rivera, CA
Redlands, CA
Romoland, CA
San Bernardino, CA
San Clemente, CA
San Diego, CA
San Dimas, CA
San Francisco, CA
Santa Maria, CA
Valencia, CA
Venice, CA
Ventura, CA
Whittier, CA
Washington, DC
Cohasset, MA
Mount Olive, MS
Austin, TX
Bremond, TX
Colorado City, TX
Graham, TX
Granbury, TX
Irving, TX
Sunnyvale, TX
Waco, TX
Ciudad De Buenos Aires, Argentina