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Sempra Profits Soar as Growth Strategy Pays Off

Citing its share of one-time gains on asset sales and other items, along with strong results from merchant energy operations, San Diego-based Sempra Energy Thursday reported third-quarter and nine-month earnings that nearly tripled compared with the same periods in 2005. Net income for the third quarter ended last Sept. 30 was $653 million, or $2.54 cents/diluted share, compared to $221 million, or 87 cents/diluted share, for the same period last year; and for the first nine months of the year, net income was $1.2 billion, or $5.01/diluted share, compared with $565 million, or $2.32/diluted share.

With the windfall and continuing strong results from ongoing businesses, Sempra raised its earnings guidance for the full year in 2006. Overall revenues in the third quarter were unchanged essentially from the same period a year earlier -- about $2.7 billion.

Sempra said third-quarter profits were $332 million, or $1.27/diluted share, when excluding asset sales. Overall net income benefited from several one-time items totaling $141 million, the energy holding company said, and those totals were offset by a $189 million after-tax effect from an increase in litigation reserves by the company. Excluding the impact of the sale of its Texas power plants, nine-month income from continuing operations this year was $758 million, or $2.91/diluted share.

In his first year at the helm, CEO Donald Felsinger said the company's strategy remains to grow both its natural gas infrastructure (liquefied natural gas (LNG) terminals, interstate pipelines and merchant underground storage operations) and its California utilities -- San Diego Gas and Electric Co. and Southern California Gas Co. At the same time, he said Sempra will continue to sell what he called "noncore assets."

"Execution of this plan has been very successful to date. Given our strong results through the first nine months of the year, we are increasing our earning guidance for 2006 (from a range of $3.40-$3.60/share to $3.50-$3.70/share)," Felsinger said.

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