In a two-part deal involving North American natural gas and electricity assets as one part, along with its little-talked-about retail energy services unit, Sempra Energy should exit its joint venture energy trading business by the end of the third quarter, according to senior company officials.

Executives made the remarks Tuesday during a second quarter earnings conference call. Sempra reported increased quarter-over-quarter profits, but only break-even for the remainder of its joint trading business with the Royal Bank of Scotland, RBS Sempra Commodities.

The San Diego-based energy holding company reported second quarter earnings of $222 million, or 89 cents/share, compared with $198 million, or 80 cents/share, for the same period in 2009. (Second quarter results last year included a $64 million, or 26 cents/share, asset writedown related to independent pipeline and storage operations.)

Both CEO Donald Felsinger and CFO Mark Snell said the disposition of the rest of the joint venture trading business has been delayed by the uncertainty over what was happening in Congress regarding financial industry reform. Now that legislation has been passed and signed into law, Sempra expects to wrap up two separate sales of the remaining assets and to realize close to another $1 billion in net proceeds as it did in its July 1 announcement on the sale of the RBS Sempra metals, oil and European power/gas businesses (see Daily GPI, July 2).

Felsinger characterized the national debate on financial reform as now "all clear and behind us," noting that the joint venture has "had a lot of people look at our books." He sensed everything now would be sold "within the next month or two."

Felsinger said he did not think that Sempra would buy back any portion of the assets, and the sale should be for book value, or $2 billion out of its portion of the deal. Snell also acknowledged that in recent periods the profitability of the North American gas and power operations has been low, and therefore Sempra reported a break-even result in the second quarter.

Along with the financial reform debate in Washington, DC, the softer nature of the markets for gas and power also had something to do with potential buyers taking more time in reassessing the trading landscape, Snell said. "But the biggest thing was probably the financial reform."

Sempra said on the call it was going to move ahead with a $500 million share buy-back program funded by proceeds from the joint venture trading sale.

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