Even after experiencing a rare loss in its joint venture energy trading business, San Diego-based Sempra Energy senior executives talked bullishly about the prospects for the fourth quarter and next year during a conference call with financial analysts Monday in which the utility holding company reported essentially flat third quarter results ($308 million, or $1.24/diluted share, compared with net income of $305 million, or $1.15/diluted share, in the same period in 2007).

All of Sempra’s units except its joint venture trading operation with part of the Royal Bank of Scotland, RBS Sempra Commodities, reported increased profits for the third quarter compared with the same period last year. The trading unit reported a loss of $3 million, compared with profits of $87 million for the 2007 third quarter, but Sempra CEO Don Felsinger and CFO Mark Snell emphasized that the red ink is unlikely to continue this quarter or in 2009.

Felsinger said his optimism was based the commodity unit’s results this past October, which he called “one of the best Octobers we’ve had in the 10 years in this business.” In response to questions, he also reiterated that even with the British government taking a stake in RBS as part of a nationwide propping up of the UK banks as the U.S. government is doing in the midst of global financial turmoil, the joint venture with Sempra will not be adversely affected.

He stressed that the Scotland-based global bank can’t unilaterally pull out of the joint venture, and would not want to, in responding to follow-up questions from analysts who probed more than normally into the trading space.

“Nothing is a guarantee in life,” Felsinger told one analyst. “RBS will do what it wants to do, but it has a contractual arrangement with us, and every signal we have seen is very positive about this business, it is something that will enhance RBS’s basic banking business, so it is our expectation and the expectation of all the people at RBS that we interface with that they want to capitalize on the opportunities in the marketplace right now to grow this business. And we have seen nothing to the contrary.”

In October in the midst of the global panic in the financial community, Sempra filed with the federal Securities and Exchange Commission to assure that the RBS joint venture’s net trading liabilities and credit facilities were being supported and guaranteed by Sempra, responding to some concerns that the joint venture might collapse because RBS, like the rest of the global financial giants, had seen its fortunes fall as the UK government announced its intention to help infuse capital into private-sector banks (see Daily GPI, Oct. 13).

Felsinger and Snell emphasized Sempra’s strong liquidity and cash positions, estimating that even in a worst case scenario, at the end of 2009 Sempra should have $1.5 billion of liquidity. They said the company currently has about $2.5 billion of liquidity.

“I’m pleased with the performance, particularly coming as it does in these very difficult times,” Felsinger said.

Generally profits were up for the two California utilities, Sempra Generation, Sempra LNG and Sempra Pipeline and Storage. The only potential problems relate to higher costs and project delays, the Sempra executives said.

©Copyright 2008Intelligence Press Inc. All rights reserved. The preceding news reportmay not be republished or redistributed, in whole or in part, in anyform, without prior written consent of Intelligence Press, Inc.