Earnings call transcript Q4 2022

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Operator

Good day and welcome to Sempra’s Fourth Quarter Earnings Call. Today’s conference is being recorded. At this time, I’d like to turn it over to Glen Donovan. Please go ahead.

Glen Donovan

Good morning, everyone. quarter call. fourth Sempra’s to XXXX earnings Welcome A are the available of this Investors slide presentation teleconference and on live webcast section. our website under

Controller our Financial today, Here team Trevor and Mihalik, San Diego, President have Sagara, Officer; Chief Wall, Chief members in President; and Executive Vice Officer Chief of President senior President, we Nye, Justin Chief Senior Allen Peter Executive Oncor; Bird, our Executive with Chief Kevin Jeff and including of Executive Group Officer; us of and Executive Infrastructure; Officer of Martin, Officer; Accounting other and Vice Sempra Chairman several members team. management management Vice

the Private results any forward-looking that for XX-K basis and from discussed differ starting, in will factors certain the forward-looking in shown be Securities like GAAP may those cause Act projected make discussing accompany to we the that the within diluted a actual are Litigation presentation per refer XXXX. of filed differ could remind on Please our will to call presentation slides most be amounts measures. Before Earnings our Reform SEC. I’d in materially Actual everyone this non-GAAP The we today. discussing share we materially a statements statement to of to meaning the reconciliation are with company’s financial measures. results that recent

on does the to forward-looking the not presentation Form We any important future. and update this forward-looking also of ended in for company contained the these today, assume the or report speak to XX, February to XX-K also to statements only annual of you XXXX like that XXXX. that revise it’s mention encourage XX, our any review statements December obligation note year I’d in

turn to let me please and Slide the call to over X Jeff. With hand that,

Jeff Martin

for thank you you, and all joining today. Thank us Glen

our confidence gives a future we will measure team, are accomplishments anniversary opportunities are be XXXX We we performance. large XXth added management celebrating lot pleased and XXXX, in us future our in our in pursuing it with our optimism. across In of and with

of in the For comments our success we and time our summary call, on accomplishments terms our business greater I our our half recap in questions. of and Justin and strategy provide decade. Then reserve frame detail business over purposes financial performance review last will and will for your Trevor accomplishments today’s will

exciting our or United milestone me LNG Let exporter. also the It supports an States Sempra by development. forecasted exporter an double growth. became that liquefied contracts built This new the natural of country gas, At important will that LNG top Sempra LNG as backlog exports In expected decade. start support with projects development an and our Infrastructure, of was leading energy support offtake that Infrastructure. XXXX, are the we year more end that U.S. future the industry of the to first reached than while the view that LNG,

other LNG HOAs a signed market the before track in stay XXXX on Port end us investment to fourth our participant. the example, LNG of Sempra more final any long-term Arthur Phase decision one part, taking Infrastructure of allowed quarter. quarter for of than X meeting and As has goal In this SPAs in offtake on the

North modern investments front infrastructure see fuels. to platforms and in set we in a common Texas. our America’s cleaner focused to California in is networks, continued the each business, of There the modernize LNG accelerate of Outside electrification and energy need that on particularly our transition energy expand of and business opportunity

full year EPS $X.XX and affirming across to our three all guidance range platforms are $X.XX. investment We expect significant opportunities and of XXXX for growth

compounded utilities. X% and Texas long-term the strong California our future year basis forecast rate past the guidance X% this rate. of long-term annual anchored midpoint projected with EPS Consistent opportunity forecast uses growth set, our we growth reiterating on are and at is of by current Additionally, practice, to of our a our base

rate we also capital earnings that plan range want ongoing an our note as first updated XXXX EPS X-year I share case, Encore’s to well our for on to plan Given call. guidance quarter as

infrastructure Please to turn foundation and our is one culture, premier build At to is around company. on a next Sempra, the the slide. our American mission delivering safety excellence, North centered for that high-performance energy operational

balance our activities attractive rate of future the Our a principal overall validated and corporate be meaningfully in the continues growth. the which by delivered driver business, base, have business financial grown our continues to and In an dividend years, we strategy guides strength our to sheet, performance. strengthened our recent increased be

markets in the invest decade Looking our continue is we in ahead, the position in as expect team part excited creating is because the a about we our to of the and as our will our commitment to and value culture excellence serve leader future end we employees. extend continue through

portfolio, in America slide. to turn next financial scale We’ve streamlined growth exited performance. Oncor our Texas new our to in the franchise Through successful our strategic our model, and across been Please simplify Since improve InfraREIT. regulated greater opportunities. repositioning, our leadership non-core creating we’ve and footprint executed businesses by in of an build largest utility and XXXX, some position business markets acquiring economic on ownership we’ve our strategy extended the our and in into this North stake

gives improved sheet improved doubled base supporting while our adjusted many structure. our we EPS around context can that and commitment past expectations all is since XXXX, in our our utility flows accomplishments growth. rate to we also importantly, business how and the that balanced in capital note pride XXX%, of of to annual compound most a to of and meet mix, simplified growth is of stakeholders. to a maintaining others our financial list growing this strategy in in has best more significantly from tradition by serving resulted role increased Texas our rich important we It’s our add exceeded business a X% quality of XX-XX Sempra’s X%, have ways, society enhanced rate earnings, future in confidence market Today, To understand balance future a position, and our combined strengthened perhaps, visibility cash in it us that California

changed dual While quarter core the modern time decarbonization we and our deliver is over of with innovative well-being the At solutions. clear, energy infrastructure vision of globally, understand an resiliency embrace much energy century, is an be each a as company. is all opportunity challenge To our constant helping has important we for this Sempra, of energy last and remained forward-looking as health delivering people while the has to is how that pursuing world. opportunities prosperity, create security energy advancing to new the in enabler billions markets. great That for around deliver our why of improving we Sempra purpose

turn With updates. discuss over Trevor to and that, to the will I business call financial

Trevor Mihalik

would Thanks, Jeff. to What things. is do update we like you three on

updates First, and a results. I discuss on will will of notable on business Justin Texas financial Sempra our with projects, I’ll progress review including Sempra then California wrap our Infrastructure, Sempra and export up provide then LNG

a of been of safety. significantly decision layers highlight and equity journey In long and employees, improved capital, maintaining both efforts authorizing SDG&E California. final CPUC XXXX me capital a the of December, proud updated from than X.XX% Community ROE culture, is reflects hardening that preserved rates district companies’ final through have November, XX% Tier XXX% I’m community return. our In more that received transmission extending dedicated respectively, with SoCalGas cost its high-fire and completed Let decade the received decision the a tenet X XXXX Sempra SDG&E of of of start in the across a and to This SDG&E’s cost SoCalGas’ at core has its our X.X%, threat SDG&E to XXXX. of XXXX, safety and and which infrastructure.

this the SoCalGas application Phase This announced part new Department to the Angeles performing CPUC approval the SoCalGas advance of for feasibility In decarbonization important as milestone hydrogen X evaluating California’s studies. Moreover, of an in allows track that of proposal. is goals. directed funding. to to federal Hub to we Last Link to the December, opportunities account CPUC costs memorandum Hydrogen include California’s a Energy the U.S. company establish year, received

Link economy in hydrogen a strategic role Hydrogen to in potential of scale has a the California. significant to supporting full the Angeles build-out green serve transition Southern believes a Hub SoCalGas and the

of region, proposed, the the electrify of would one been this natural all largest in would the SoCalGas hard their the closely one working the country. As gas, challenge manufacturing Los areas are high mitigate to SDG&E the is of and U.S. the has of regulators western unusually customers help across which the Greater region of and be Also, hydrogen decarbonization hubs a support impacts prices Angeles for sectors in in winter and which infrastructure country. largest to with the

and From Nevada, New California, price Mexico the Western the difficult state region experienced Arizona, environment. Wyoming a of Washington to and

natural to and CPUC since Fortunately, country have summary have trend a our that place a from seen also support price have on weeks of in materials their are some dropped today’s And programs the and more appendix bank across that in in XX% presentation. to the customers, in prices declines utilities December. than expect recent SoCalGas included the of gas SDG&E Southern as as well California, here continue, recent

customers. foundation and the the the decision beginning XXXX treatment energy, our with rate also in that reliability is with aligned SoCalGas future safety clean the general we a and of state’s important note well retroactive filings expect for It the of ongoing the quarter Finally, and cases of needs our SDG&E year. at to second goals, the established meeting proposed to are

achieved high-performing to operational which Texas, is platform. and report XXXX, our Sempra testament Oncor results am a Texas to at to happy employee strong the in I safety excellence Moving culture that

extreme score. improvement a reliability In SAIDI had weather, a fact, by in nearly year in marked its Oncor X%

XXXX. set record that which XXXX, think is on annual growth the Oncor increase XX% To interconnection requests as XXXX underscores system. was new you another continues a company, scale year of about side, On context, Oncor which to to with this come for in transmission the also the a compared into XXX further record put it, company

generation, In connections the nearly growth end the for order be wind of to demand solar wind Encore lines voted driven megawatts megawatts grid. total X, continued strong territory. X,XXX across By the to demographic rate case and and for representing XX,XXX solar transmission and of PUCT to a agenda is out cumulative and open service nearly T&D and final generation on wind this March the across Oncor of meeting year Oncor territory premise expect renewables Oncor’s we by totaled for next momentum of over distribution and track growth XXXX, X,XXX or record public solar of ERCOT’s benefit XXXX, built of miles regulators system X the resources. high in hardened of working and XX% service the Oncor and of advance to The and connected its was with a has priorities constructively key weeks. policy the X its customers state. of the to over

receive Since Board. the plan outcome. most earnings In expects on publish their as that first plan, its Oncor with plan. part, view constructive call. public proceedings will not capital expect likely rate capital to Oncor which to support we these mentioned updated Oncor quarter capital with has Jeff new case final our earlier, review a an X-year unveiled updated occur our considerations its our In ongoing, rate conjunction case, will are Afterwards,

Arthur progress to on to for I Phase and X Infrastructure it and Phase turn Cameron over will Port provide Justin development LNG at updates X. Sempra

Justin Bird

and pipeline excited creating a to of Sempra Thanks, foundation LNG, Sempra activity infrastructure year I’m Infrastructure key seen highlight some with accomplishments of achievements. for growth. and Infrastructure’s commercial future robust our solid want a demand, cross-border renewables recent Trevor. about has

Infrastructure Networks the production During Cameron LNG within exceeded Sempra Phase and operations year, Power brought X its at Clean businesses, while online terminal assets its Energy targets.

non-free we continue XXXX. DOE LNG in commercial natural from trade to LNG to in U.S.-sourced form Phase Pacifico LNG X received to countries. of Mexico the Phase Coast, ECA approvals both commence Pacific Also, agreement of X summer expect the Vista the to gas re-export ECA LNG On operations and

the next to turn slide. Please

phase Pacific strategy a X. Port out building completed that platform As regions. say excited to you we have us marketing To allows we advance market am efficiently deliver all LNG and the to our Phase that I customers to to of Atlantic Arthur LNG end, in know, continue for dual the

XX.X price structured EPC carefully to risk offtake world-class execution reduce development development of XXXX, MTPA long-term Port that have at ConocoPhillips, we agreements fixed fully X from world-class was January, contracts offtake securing long-term would LNG by fully of with announced of in the take we contracting identifying the We definitive definitive November and Port In ownership take-or-pay X LNG pursuant Arthur a XX% subscribed interest this to project Phase they acquire a counterparties. and the X which Arthur Mtpa project. announced with Phase In partners.

have EPC arguably with turnkey also We experienced U.S., fixed the LNG price Bechtel. provider in EPC contract a most the

and of financing. marketing we’re now focused the debt the completion and of execution project EPC With the on level equity finalizing contract,

On are balance protect capital efficiently sheet. and underway, efforts the that Infrastructure’s basis raise the financing aim lower-cost investment-grade of current to Sempra we

reducing and returns project. equity We are In the this an investment ownership sold with mid-teens exciting and is in ConocoPhillips Partners’ to phase, of interest This of project. XX% a generate project contributions investors. targeting Sempra XX% between in preserving to or form more Sempra the the Infrastructure’s rating XX% initial equity grade the to Infrastructure while in being our aiming non-controlling we’re the one owning balance and

focus we from to right of and financing, we cash FID, on and project upside As mitigation earnings. balance risk striking retention the of flows approach future continue efficient

infrastructure. the believe LNG as aim of as decade, our and X gas build Over capabilities past FID goal export expertise more deep world-class well to global Port Phase this to execute to I and us our ultimately to operations demonstrating facilities, built experience commercial natural on we’ve cleaner, development large and serves U.S. other secure construction we through successfully infrastructure Arthur bring markets. delivering LNG to we

the slide. Please turn next to

Turning Phase to Cameron X. LNG

positioned Asia. project given LNG to The it produce Gulf our the feed and securing expansion that competitive primarily on agreements to key on offtake has the are a a As is on that process. streams. And Coast export as the and we a reminder, of competitively Europe activities facility, competitively to advantage distinct remains brownfield as priced this also track with advance goal work LNG. our efforts outlined the We completing amendment, focused advancing year FERC last completing long-term marketing project

FERC process that transition a securing front, from authorizations. step turbines the regulatory from gas We the commitment no impact, well. to adverse citing the received is positive is On final electric drives the FERC supports which assessment the toward progressing environmental

the will and HOAs our offtake take of basis. Turning production partners under is XX% marketing. to of already XXX% under XX% subscribed on existing existing their volumes HOAs SI’s back-to-back subscribed expected is of a

past, investment a joint process this to we’re as and competitive track talked about to we summer in a have is expect Bechtel shortly make engineering, in Next, on thereafter. the be process completed on Zahra This year, would feed the a running venture. decision between JGC final of and we

to Please turn Sempra’s where financial over discuss turn I’ll next Trevor to to the results. slide, back it

Trevor Mihalik

Thanks, Justin.

per On share. or This $X.XX earnings share. Earlier per million GAAP per earnings we per fourth quarter million share. XXXX basis, fourth $XXX earnings XXXX to compares share. GAAP $X.XX Turning of morning, an This million $X.XX XXXX or quarter compares $XXX results. $X.XX of of XXXX Sempra’s financial quarter fourth reported million earnings or to adjusted our were quarter fourth to $XXX this $XXX or

were billion GAAP billion full per earnings This or adjusted $X.XX share. XXXX XXXX share. compares GAAP $X.XX earnings billion of year XXXX share. or to earnings basis, adjusted $X.XX of per billion or previous $X.XXX $X.XX XXXX $X.XXX earnings $X.XXX year or were compares year per per $X.XX On share. Full This to full favorably our an

XXXX. service sale providing our interest sale, growing XXXX of value after our customers. and and includes generate ADIA earnings safe minority June this Sempra As that the our minority to a Even demonstrate to closed to shareholders in ability strong reminder, reliable while interest our of for adjusted performance Infrastructure considering

last income a and of tax items $XXX earnings reduction due repairs same at SoCalGas expense as primarily next full allowances and earnings to higher adjusted The higher SDG&E of SoCalGas. net the expenses compared operating to items slide. by partially summarized base and Please by XXXX the higher million year $XX of software Sempra can related be margin, higher recorded flow-through of period and offset other variance debt at at higher SDG&E, balances $XX operating interest net to million at following: million to self-developed deduction turn SDG&E the and California, year in to higher CPUC from

Texas Sempra rate Utilities, consumption in to growth. Cameron primarily $XXX capital, Sempra new of and earnings by $XXX million and of X income assets due strong customer invested placed $XXX to driven million Sempra minority production updates well and At in from And interest equity as Infrastructure, reflect by at earnings at driven as of higher service increases higher lower by networks million existing and clean production million Oncor of at LNG Phase higher our power higher the benefits, tax $XXX of partially Infrastructure. earnings offset sale assets into excess energy

to slide. Please next the turn

of take this proposition. to company a bring attractive of the remarks As highlight investment we this that Sempra’s North like to I’d infrastructure near well built markets. our together end and America’s positioned most some all opportunity in prepared today, energy We’ve is high-performing

within what strategically believe reliability the our At utilities, shareholder value safety, visibility on cases, to and our be significant and center growth the making lower-risk will to higher-value, to around deploying on further focused provides portion rate to energy focused the capital in decarbonization continue and is customers. year, serve value. needed this investments We’re we advancing of which we chain

said, X-year our for large-scale this expect to our May number case Phase is at security quarter that plan issue and to FID LNG mentioned and Sempra to EPS we’re provide project of in our why, at transition. our capital call there items Sempra, guidance XXXX open a and as For for time. Port energy helping update Infrastructure, finalizing supporting That the nearing to X. that completed dedicated allies in we spring, earnings including the country’s Arthur rate to directly are base first plan also FID a on Texas, Oncor energy earlier, With taking on be

our continue the of Our networks in one largest of ability work today build-out and the in North gives us confidence competitive America. energy to most

By the a value the to serve networks Directors for our the per technology we to commitment of advancing our positioned continuing value shareholders. returning of why in a dividend dividend $X.XX. are $X.XX projected by position share, and of forward We Board a today, innovation, our create quarterly to common better of as building look by and customers to owners creating of our our approval and announcing That’s future. leader we’re annualized energy

that, with take now and prepared concludes this line remarks, And open to and our questions. will we the stop your

Operator

Thank first you. our come Pourreza from question [Operator will Shar Instructions] from And Guggenheim.

Your line is open.

Shar Pourreza

Hey, guys.

Jeff Martin

good Hi, Shar. morning,

Shar Pourreza

Good morning, Jeff.

X% Just on the cadence ‘XX the CAGR And I the why have the CAGR. reason from that the maybe broadly of I ‘XX in midpoint growth just to embedded the mean ‘XX midpoints that ‘XX. based. in I reflect growth guess X% don’t we obviously, guidance is ask growth original today. to ‘XX long-term And more X% question is is

in commercial clarity further move So California and regulatory upwards you with as of operations projects growth plan? do some anticipate outcomes, in on revision in getting we reaching some step-up maybe capital cost the SIP

Jeff Martin

Sure.

Let me provide some context here.

delivered is X% You that range to about think couple higher. back to the X, X, help in will mention financial a the growth. XX-year performance, on did XX, One when of ‘XX you EPS over I growth things was I’ll which give step X.XX% up of X% we’ve periods from the you last look of this. ‘XX, you or

compound delivered of Shar, we’ve X-year, In rate annual the right fact, growth around over XX%. at a last

periods So shareholder we’ve also in sector those our would time, over same outperformed total returns. I note, of

to, be of to year one have launched alluded our ever allocated portfolio rate Infrastructure rate you’ll expected across our And really continue confidence meeting Sempra recall a billion. decade. our X-year period. the will have the now growth over XXXX, those visibility we is And dollars a last much Second, at certainly over of harking driver to you so that to were XX% same capital we that largest improved growth of the opportunities long-term of base reasons big $XX back the we balance toward was But growth. think because plan – we we in at our as

feel rate. good to very our about we growth X% So X%

last grow I demonstrated years. think done last of rate that months XX this time faster have at that. that in we’ve to certainly than period it ability X a inside than a long the we’ve And over we’ve done over organization we the the

Shar Pourreza

referring Jeff, Got actually I I it. the ‘XX midpoint ‘XX. that And original from – appreciate, you for But clarity. was just on thank to

to Just saw – just on in of around make the of that California. there headwinds of O&M, is rates, it ‘XX want guide, interest capital is sort inclusive cost we the just I sure,

a Just close? and be fact these sense ‘XX what’s trying to any there concerned out the events whether to we a it just that Or that is better idea and to risks get tail what’s of in about? there upside you is want should

Jeff Martin

Yes.

I think both. a combination it’s of

we’re results, months You’ll when look is really are which them California adjusted I billion recall to ROEs set by record note adjusted executed safety last which affirmed obviously, $X.X one as your We’ve come manage February. referenced XXXX, really pleased were we right? strong XX going our you some we strong down the results, guidance and one, that XX of that it later, results, with. to we you was we’ve capital EPS XXXX very Number at headwinds, for our had company, points. plan, utilities point, XXXX a basis would operational to the our back look guidance. When But

mentioned to beat one, we’re non-controlling the interest numbers, And at base the to We environment. That work Number potential is. in review. some higher associated Oncor Infrastructure them reason different rate is we’re our with was about higher said, this managing we’re Trevor and today going confident last this hard XXXX year. outcomes are it time Sempra operating than XX% and three, at interest a

opportunities to that’s very future, good have in largest X% and why lot your we X% execution. us to feel also And to about mention the a our confidence causes I a the of rate. a would of We growth visibility have one have guidance. of It great earlier portfolios question, in plan to our of we

Shar Pourreza

LNG ECO economics you about rates, of contribution, from Jeff, talk the then more pressures, chem just on in the returns inflationary interest of and kind etcetera, can And lastly sort earnings Perfect. some project pro rata maybe getting as there the broadly. versus you’re context SIP that or closer up COD, just of side, headwinds stack to of how similar the

So how would one. with next economics? Port in the Is that especially the is, as step the big line Arthur other that’s next projects,

Jeff Martin

Well, thank you.

certainly about the I noted Justin’s think remarks, used exciting prepared I word excited in he We’re Port Arthur. X or Xx.

I our the excitement think reflects it inside company.

in you’ve returns low Infrastructure, allocate distributions We Arthur. portfolio Infrastructure Sempra shareholder double-digit like single-digit equity in high to And do a new with very the Shar. time, As we our how tend in of between prepared targets long followed typically us the maintaining for mentioned be disciplined capital Port Sempra we and we this unlevered returns. goal that mid-teens. remarks to projects

We’re very excited.

the and of it’s But I could is reasonable. worth one think the and sell-down certain higher and you’ve our give that supply like than and do time us of that projects very returns positive our initiatives well on the economics our this around at we expansion optimization levels marketplace debottlenecking, given budget. are expect project, equity to project asset give think can we audience gas seen us would But also and is, preferences target. retain normal X interest tracking, tell on the the decided we thing in about for returns I we I think, things talked Justin the you which

Shar Pourreza

will guys see you Appreciate soon. I you, Thank it. much. so Perfect.

Jeff Martin

Thanks the Yes. for joining call.

Operator

question Suisse. will Thank come And from you. Campanella next from Nicholas our Credit

open. is line Your

Nicholas Campanella

Hi, everyone. Thanks for my question. taking

Jeff Martin

Good morning.

Nicholas Campanella

‘XX a the think Port about on next us incorporate anything X. first it as quarter? ‘XX. EPS think development CAGR just can you top for on and morning. ECA out Arthur for of you. sense we wanted such Can give you’ll X-year considerations? the does update conversation past funding the Does round growth to already us just that Thank Good growth Cameron on how affect I how Hey, of assume the about the the LNG give When off view to just CapEx midpoint,

Jeff Martin

our our growth Yes. work we’ve I we that’s about current in to very we year we at announced X-year from our would billion. last rate. back roll the convention looking XXXX. been guidance, And years off about remind feel several of capital midpoint the really, plan to X% that forward appreciate folks today X% the solid back $XX question. over last I brought adopted which the year The has of forecast

I think is have And to Allen Phase Port us case improve of his forecast. we important. are the what’s in exciting good outcomes managing Arthur is for a X job that Texas. opportunity team rate our Certainly, really of doing and

into say tell that I that, performance. to X% talked we past it future X So we past. today conservative is unique a our would visibility in just better that than rate in things X% to has growth the bit my last years, prepared is growth one the over And will relative remarks about that looks is how our something little I have of you repositioned the the what’s been business

and detail. of we to look come call, a big here more conversation to So, spring that with through plan our and a having greater in robust capital events we couple get want in May the forward by back

Nicholas Campanella

historically. ask Okay. to you all outlined you. a these How new a light sense front then you given that to driving just for are great. year, give increase about is of maybe you I the growth a lot on Thanks kind have the The just Can thinking regarding you of little And dividend? also buyback just Thank you allocation capital in executed allocation that last opportunities that? what’s would be then capital just that. dividend just wanted X.X%. of compared you noticed And what question. We that us

Jeff Martin

one are I differentiates is Yes. good understand That’s years. it to companies we allocation. a how great over and last certainly that’s importance the our tell things of you dividend you, question. I have capital will in the average disciplined why really grown XX you, of that from investors, tell companies will we the And consistently

investing XX% over the a XX%. between And Board we remember, make our increase for a ratio to too, projected that range. people payout been announced comment great Our we to averaged just think a years, feel that support over XX% our I grow in organic our our established to that balancing most business we returning us last XX in X% and falls we have are while But that initiative. which focus important the on roughly about. What would investing has I dividend, today talked in would capital our opportunities about. businesses has And to is shareholders, growth, most and you like with history, say our

capital we us in a dividend. capital in form have returning have fairly So, seen of also and share the the form been about repurchases, you return aggressive of

So, my X-year, dividend that I period growth would has combination, think the this concluding Sempra resulted over index. relative stock the be and point growth outperformance to relative front we the in strategy our company, planned in X-year, last of XX-year in the of we have XX-year guess and

to in are management value. We priority certainly results increase committed team. in our It a to capital that in strategic a manner disciplined allocation shareholder is

Nicholas Campanella

then sneak in. one last And one could Okay. just I if

take FID about investors a think Do about sale NCI pursue how we to you can sense how of and it? Just Just of us that Arthur, first timeline? just that? around kind the Port give you then should have think should

Jeff Martin

items that our I I focused sell-down remaining equity, on is of we we to the non-recourse we say two if and up do last project also leverage look is non-recourse projects. our focusing the communicated And what at the are working partners would now at debt on about Two, have We think lined Yes. right. the benefit of really you think we we on level. how right one, level project debt step historically, about finance owners. we

that ConocoPhillips have pleased are in to in Port role We play Arthur. very

we infrastructure partners our use partners. calls capital at from Third, separate

to sources and and got are role then move now, KKR the ADIA to private they us capital structure we And to we bring down an in look project of have and doing important our new capital We sell as equity in are going helping have forward. finally, this interest.

of efficient execute financing, from project while the all a you that cash numbers right mitigation the about FID, So, take for on of upside our it’s equity us, economizers to expect flows. should risk retention balance and and future us striking right striking calls in to way

Nicholas Campanella

it. for all Appreciate color. Thanks the

Jeff Martin

you. Thank it. Appreciate

Operator

Thank from question you. next come And our Anthony from Crowdell Mizuho. will

open. line is Your

Jeff Martin

Hi Anthony.

Anthony Crowdell

Jeff. Trevor. afternoon Good Hey. Good afternoon

Trevor Mihalik

doing? you are How

Anthony Crowdell

maybe two an And but the XX, don’t you you if in market. for talk mentioned about question, Hopefully, utilities – or either regulated I I guys differential ones. basis gas guess SIP? Good. Slide the Western Is know opportunity that in Shar’s easy it investment

Jeff Martin

back go couple one really a of to company. about here, an removing are an around building business non-core focused assets this business in the on really we reasons reposition XXXX talked infrastructure the model. very and It’s business back we which commodities that I is infrastructure from being of first principles of would our and

on gas right this working we a from trying in So, Western we through are that to do the are And customer region perspective. focused Western region now, event. certainly,

But might in a Mexico. have and asset talk to been programs it Justin, be We are relatively aggressive customers no, place. our we think some I ensure making Texas, think basis opportunity. particularly about trying we Louisiana position, to good not differential appropriate are put pursuing how about about and the your would announcements we helpful, in But

Justin Bird

Thanks sure. Jeff. Yes,

long-term think projects think – is you and I don’t will I on starting U.S. exposure. really and two we Texas One, earlier, in something the Mexico. focused that a own said Louisiana, to into from our avoid is to flows infrastructure as infrastructure Western in there. point, points SI hark contracted that cash we and And Jeff, I commodity important work two there remember

$XXX notice, in customers. represents million, to GAAP recall, as Baja, given in a to the LNG leased gas the have well took ECA XXXX, from But And that FID allow our about natural we would between which delivered the unrealized think capacity essentially difference we ‘XX in be you when decision market earnings transportation As you online in and we we to you to exposure. both gas interim, basins utilizing by price. on a position project to hedges, market look that And the offset advance, it conservatively those mark-to-market as XXXX. in hedges and our capacity deliver reduces the of basis, which in costs over Mexico we of comes do focus, Texas you producing New when our conservative result in losses look those our hedging as this infrastructure by the will

exchanging flows trend minimize cash So get again, infrastructure company, to volatility to that as see flows. an prices, essentially to And think and changes our recurring cash we optimize price recurring you infrastructure prefer exposure I commodity will in continue.

on from cash credit are the We where recurring flows long-term be our focused focus offtakers will that and at SI.

Anthony Crowdell

the And fixed contract, billion price. on also $XX.X just Port the you, X, EPC probably follow-up Justin, Great. could then Author if I enter to Phase

us color with give just there and maybe I commodity it there? or more or Sempra will any you SIP exposure on contract. If that the maybe Bechtel, cost-plus could some leave agreement Is has

Justin Bird

Thanks Yes. Anthony.

is a is So yes, said, to components that move escalation billion. have final There towards that we some contract proceed. issuing in a as notice is as $XX.X fixed for price. we It

I numbers let that provided what proud LNG think building the all me of was in Bechtel. in selection of have a have and projects They again, on-budget of guaranteed. importantly are been importantly, very Gulf history on-time, we our of have production projects, emphasize excess

very EPC As again, some does to contract, we contingency as pieces have But that, small specific that look handle there a are place of at float. those would adjustments. we in Bechtel our

So, history, on-time, delivered contract. they again, on-budget, to looking EPC fixed I Bechtel’s price think under

I the move will very are towards I And to with can’t again, use my prior end as we quarter. excited we So, this contract. we FID the you are again, of comfortable how tell word

Anthony Crowdell

Thanks great Great. the on much. Congratulations so quarter.

Jeff Martin

Anthony. Thanks

Operator

from JPMorgan. our And Tonet Jeremy from next comes Thank question you.

open. is line Your

Rich Sunderland

Good time Hi. actually Thank Sunderland on Rich the morning. you today. Jeremy. for for It’s

Jeff Martin

Rich. Hey

Rich Sunderland

growth the year. then. the I the Arthur questions since Sticking a the the know past growth you business rate changed has here, of with lot was obviously, plan. have I And LNG had last some in the upside rate believe in Port to LNG on

the approach year, Just FID. Arthur case that’s baked curious now if in is you still as or Port this

Jeff Martin

Yes, it’s a great question.

We put plan we Currently, have are FID. unless going don’t we are We reached plan rolled our forward in off last the year. update X-year of plan out to projects working our they simply capital this roll later spring.

to Arthur upside Port as an view would I So, our long-term opportunities.

Rich Sunderland

Got more Asian interest across range a versus seeing it. are incremental European offtake, Very LNG for interest projects, clear. Thank you. you from buyers curious future And buyers looking of stands? where then

Jeff Martin

is answer Yes. the tell both, I right. you would

the for unique note the are a gone So, Europe. being contracts in gigawatts of highest the in the of about burn launching all ever coal approval where have talked rate for I Phase they a new XX coal also XXX China India, are you Post basis plants X few the between of going coal China about situation launched That’s off into plants. of they and XX% through Most new service. And Europe. would plants ago, world. in days in Washington the really But they

allows dispatch opportunity excited long-term of that’s opportunity. the So, is big Asian got are And opportunity a with of news the remains And have we Sempra is Pacific. there that. business for a into to and one market doing that the the Atlantic Asia. an because in energy great I us that insecurity about The things offtakers efficiently think platform

Rich Sunderland

Thanks the today. time Great. for

Jeff Martin

you. Thank

Operator

will Thank from from And come Tuohy you. our last question Shere Brothers. Craig

line open. is Your

Jeff Martin

Craig. Hi

Craig Shere

taking Hi. question. Thanks for the

ECAX. X, time logical and looking PAX Port Cameron X, first, on LNG. pecking am discuss I Pacifico especially between could of and accused skis, Arthur at But past this my often So, you the getting order Vista over

Jeff Martin

you terms view the Sure, loading can Craig. about to order of that for in you maybe and Justin, provide some will how pass thinking development. are I

Justin Bird

am Yes. lot I assume LNG to you Thanks never have Jeff. don’t And a of going experience. Craig,

your thanks So, for question.

order, I change. always think can as you look at the again, it pecking

the think But we let about in was, with Arthur pecking time our me this start our war as Phase changed, year, you I X. forward, note, time. opportunities going thought Port about at As will order what last that Ukraine

phase think there think streams, we of with few move is about a LNG I our would have again, Arthur, we common there Craig, around as always key benefit at And about brownfield, development, which sharing lot consistent Port would work how discussed is projects. clearly from a forward a is I second of facilities. be excitement how that

Arthur in has pending. the the Phase is FERC First, permitting, and X FERC Port LNG an application order

Second is commercial.

construction think of to optimizing opportunities, as construction, in do, with sure about efficient fill any credit MOUs have make discussions finance out for engaged volumes. outstanding to continuous financing process. and with and Engineering we we always Phase Bechtel way to We And are X we as we into and find discussions and we that about are taking with credit volumes the are parties rating them account returns. these the agencies most many

So, Arthur. kind of Port that’s

would the be order, you Arthur think Port I pecking If me next. the ask at second phase

think CFE as the As we we with government you work think about some Vista also Coast. it’s a we out is you have X, the about as lot There optimizing given of with continue there. seeing exciting about Phase think as some might developments. Pacifico, to I Pacific you expect, supply really are interest, LNG of there think ECA developments Mexican seen And and exciting I

our got both recall, and you If permits we Vista for recently non-FTA ECA.

to additional noticed have that area, Phase The announced Carso, the other thing expedite to an and that we of may volumes you had MOU the which LNG could ECA gas X. which opportunity we an would development is Baha bring be with CFE

accused rest being of LNG the be of excited there to the think hate portfolio. exciting opportunities are I again, So in saying our but too much, I

Craig Shere

of slowdown the X peers, after remarkable the for finish have years? just than And past that’s across a States, the might more what or that you I second a to Mtpa wondering, see market if just is partially XX-plus Justin, I tees within needs of on here. some months if contracted year were are FIDs we question we kind guess am my And just little feel United mid-decade. in see in some we And kind XX could macro if referring that contracting, projects of months. of line, terms up I what wondering Great. am bit next XX some in prior a basis of the

Jeff Martin

weigh similar forecasting is very tons XXX% U.S. what’s Well, I the is annum provide a The our referenced free been XX feel for sounds decade to LNG decade. with comments, We the is think actually. which put growth EIA, will speaking. the Jeff you that million out of across this per in. Justin, and about right, couple across by view

whether other slightly just are potentially it’s as on But certainly out Qatar. I think against still opportunities that. of might And it’s not American There coming markets, the Australia well at LNG, actually competing there particularly we or the DOE as more South. North are Russia, forecasting Mozambique. is remember, remember, than Coast volumes from be

have the country, and of may gas of things for opportunity. is a energy in one And States really is We here natural the United big regions but has internationally. we see affordable demand so, the in very sources security of big is and noticed there runway I think different decline a a it a tremendous energy

as States is and capital market markets. United I viewed have think and we good good we counterparties of have got have deep a the credit, got supply, that we security and got has

the So, lion’s will going States be of United coming across across globe the we share see to decade. LNG from the are this

Craig Shere

you. Thank

Jeff Martin

Thank us. you joining for

Operator

remarks. Thank turn you. like That closing conference session. back any I concludes today’s the this for would Jeff additional question-and-answer to At to Martin time,

Jeff Martin

Sure.

Just by investor a know we conferences several are of way underway there close, brief today.

our questions. IR questions, we per custom, So, additional with join always us. time to reach our follow-up This are any very appreciate concludes making much any out call. everyone there to If team

Operator

Thank you for your participation.

may You disconnect. now

Southern California Gas Company PFD SER A 6% (SOCGP) 28 Feb 232022 Q4 Earnings call transcript