An economic reality of the energy sector’s ongoing woes is that companies with cash and creditworthiness will be buying the assets of troubled companies who have been forced to sell to restore their tattered balance sheets. San Diego-based Sempra Energy’s CEO said his company will be among the buyers.

“We’re not under any pressure to sell assets, unlike others in our energy sector are,” said Stephen Baum, Sempra’s CEO, during a financial analysts conference call Tuesday. “We have $2.6 billion in cash and an investment-grade credit rating. We’re studying a whole lot of opportunities.

“Although we prefer to have healthy competitors because that makes for a more robust market, the distress of many others will cause assets to be sold,” Baum said. “Things are developing rapidly and I think you will see some firms forced to sell assets. So we’re looking at a number of opportunities that we can go about doing without issuing stock in this distressed market.”

Baum also stressed his strong belief in Sempra’s trading business, which was down compared to last year in its second quarter results announced Tuesday. He said the trading unit is “differentiated” from the many other energy trading units now experiencing deep problems in the post-Enron times. Sempra’s trading unit, he said, is different on five basic points:

In addition, Baum said he thinks that Sempra Energy Trading, which is headquartered in Connecticut, has “the best people in the business — experienced, focused and compensated properly and prudently. We do not execute trades that we do not understand or can’t get out of if market conditions change unfavorably.”

Baum said investors should — and he thinks eventually will — value these attributes he applies to Sempra’s trading. He is sticking by the lower-end of his May estimate that trading would have profits in the $150 to $170 million range for this year, which now will require a better second half than the first-half-year results of $63 million cumulatively.

“The current energy market may make it difficult for us to hit the high-end of that range, but based upon the first-half performance, I still think we can meet the lower-end of the range this year,” Baum said. “We will need to see an increase in volatility and continued improvement from our European gas, power and metals businesses in the second half, if we are to hit these numbers.”

©Copyright 2002 Intelligence Press Inc. All rights reserved. The preceding news report may not be republished or redistributed, in whole or in part, in any form, without prior written consent of Intelligence Press, Inc.