Sempra Profit Falls 12% After Sale of Commodities-Trading Unit

By Jim Polson

Aug. 7 (Bloomberg) -- Sempra Energy, owner of the largest U.S. natural-gas utility, said second-quarter profit fell 12 percent after the sale of a majority stake in its commodities- trading business to Royal Bank of Scotland Group Plc.

Net income fell to $244 million, or 98 cents a share, from $277 million, or $1.05, a year earlier, the San Diego-based company said today in a statement.

Sempra on April 2 said it would buy back as much as $1 billion of its shares this year after completing the sale of the majority stake in the trading business for $1.35 billion, creating the RBS Sempra Commodities LLP joint venture with Edinburgh-based Royal Bank. The transaction freed up another $1 billion in cash used by Sempra to cover trades.

The trading unit accounted for 26 percent of sales and 54 percent of net income second quarter of 2007, according to information compiled by Bloomberg from company filings.

Sempra's Southern California Gas is the larges U.S. gas utility. The company is expanding with investments in liquefied- natural-gas, or LNG, import terminals in Mexico and Louisiana and gas pipeline and storage projects.

The company's LNG terminal in Mexico's Baja California Peninsula received its first two cargoes in May. The facility, the first such LNG site on the West Coast of North America, can process 1 billion cubic feet of gas per day for use in the U.S. Southwest and Mexico. Sempra expects to complete a second terminal, in Cameron Parish, Louisiana, by year-end.

Rockies Express

It's joining Kinder Morgan Energy Partners LP and ConocoPhillips in building the $5.6 billion Rockies Express pipeline to transport gas from the Rocky Mountains to markets in the U.S. East. On July 28, the company agreed to buy Mobile, Alabama-based gas distributor EnergySouth Inc. for $510 million to add storage capacity near Gulf Coast supply hubs.

The statement was issued before the start of regular trading on U.S. stock markets. Sempra rose 28 cents to $55.98 yesterday in New York Stock Exchange composite trading. The stock, which has 11 buy recommendations from analysts and 2 holds, has dropped 9.5 percent this year.

(Sempra will hold an earnings conference call for investors and analysts, starting at 1 p.m. New York time. To listen, access a broadcast at http://www.sempra.com.)

To contact the reporter on this story: Jim Polson in New York at jpolson@bloomberg.net.