(Adds comments from CFO interview, updates share price)
By Shirleen Dorman and Christine Buurma Of DOW JONES NEWSWIRES NEW YORK -(Dow Jones)- Sempra Energy (SRE) reported a 1% increase in third-quarter net income as the utilities provider and commodities trader saw gains from rate increases offset by steep declines in commodities prices.
The parent company of San Diego Gas & Electric posted net income of $308 million, or $1.24 a share, up from $305 million, or $1.15 a share, a year earlier. The prior-year included a 9-cent loss from discontinued operations.
Revenue climbed 1.1% to $2.69 billion for the company, which owns natural-gas pipelines, two utilities in California and power plants that sell electricity on the open market.
The latest estimates of analysts polled by Thomson Reuters were for earnings of $1.06 a share on $2.34 billion in revenue.
Chief Executive Donald E. Felsinger said, "Given the turmoil and dislocation in the financial markets, we are pleased" with the result, noting the company's disparate assets.
The total cost of Sempra's Rockies Express natural-gas pipeline has risen 36% from $4.4 billion to $6 billion on rising steel, labor and permitting costs, Mark Snell, Sempra's chief financial officer, said. Sempra's portion of the project costs is $750 million.
"We had a more difficult routing process through a more populated area for the eastern portion," Snell said. "But we're at the tail end of the project now, and I don't think much will change beyond this point."
In October, the start-up date on the eastern portion of the 1,678-mile pipeline was pushed back five months to November 2009. Snell said Sempra doesn't expect further significant delays, although "we might be off by a month."
Sempra said it expects its investments from distributions in the pipeline to earn $80 to $90 million a year. When completed, the pipeline, a joint venture between Sempra, Kinder Morgan Energy Partners LP (KMP) and ConocoPhillips (COP), will extend from Rio Blanco, Colorado to Monroe County, Ohio.
At the company's utilities, SDG&E earnings were flat amid year-earlier gains from the resolution of regulatory and income-tax issues. At SoCalGas, earnings climbed 22% on similar gains this year.
But Sempra's commodities business, now part of a joint venture with Royal Bank of Scotland Group PLC (RBS), swung to a small loss as commodity prices had a steep drop during the quarter. Generation earnings rose 62% due to an increase in mark-to-market earnings on long-term contracts with RBS Sempra Commodities and other counterparties. Sempra LNG, the company's liquefied-natural-gas segment, swung to a profit on a mark-to-market gain related to a deal with RBS Sempra.
In August 2007, Sempra agreed to create the joint venture, shifting the credit burden of the trading business to Royal Bank of Scotland and freeing up $1 billion in cash that was returned to Sempra.
The power sector is vulnerable to tightening credit markets because it relies on debt to finance capital projects, but Sanford Bernstein late last month cited Sempra and Duke Energy Corp. (DUK) as having the soundest long-term credit quality.
Sempra shares traded recently at $40.88, down $1.82, or 4.26%.
-By Christine Buurma and Shirleen Dorman, Dow Jones Newswires; 201-938-2310; shirleen.dorman@dowjones.com
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(END) Dow Jones Newswires
November 10, 2008 16:26 ET (21:26 GMT)

Publié le 10 novembre 2008 Copyright © 2008 Dowjones