Sempra Misses Profit Estimates on LNG Expenses; Gasoducto Rosarito Pipeline Nears Commercial Launch
(Reuters) — Sempra missed Wall Street estimates for third-quarter profit on Wednesday, hurt by higher interest expenses and lower earnings from its utility businesses in Texas and California.
Utilities are ramping up investments in their projects amid booming demand from data centers to power the artificial-intelligence wave, but elevated interest rates in the United States are eating into the companies' margins.
San Diego, California-based Sempra said its interest expense rose to $328 million for the third quarter, compared with $312 million a year earlier. The company, which serves about 40 million customers, posted an adjusted profit of 89 cents per share in the quarter ended Sept. 30, compared with analysts' average estimate of $1.05 per share, according to data compiled by LSEG.
Still, to support its growth plans, Sempra launched a $3 billion at-the-market equity offering on Wednesday. The company said its Texas unit, Oncor, anticipates a 40% to 50% increase to its previously announced $24 billion five-year capital plan. This despite earnings from its Texas utilities falling about 14.4%, and those from its California unit declining 14.8% to $247 million. The states contribute more than half of the company's earnings.
Electric Reliability Council of Texas, the operator of the electricity grid in the state, predicts a need for 152 gigawatts (GW) of power generation by 2030, a 78% increase from 2023.
Sempra Infrastructure, which continues to advance its expansion projects, benefits from global trends in energy security and decarbonization. Its U.S. liquefied natural gas (LNG) exports remain a key component of the energy security for U.S. allies and a means of diversifying energy mixes away from coal. The company's dual-coast LNG strategy distinguishes it in the market.
Construction at Energía Costa Azul (ECA) LNG Phase 1 is progressing, with commercial operations expected to begin in spring 2026. The Gasoducto Rosarito Expansion Pipeline, which supports gas supply to ECA LNG, is anticipated to reach commercial operations by the fourth quarter of 2024. Additionally, the Port Arthur LNG Phase 1 project remains on schedule and on budget, while work has commenced on the 72-mile Port Arthur Pipeline Louisiana Connector to support gas supply to this facility.
Despite the challenges in utility earnings, Sempra continues to make strides in infrastructure development, responding to the global demand for cleaner fuels and enhanced energy security.
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