In today's distinguished daily paper, Onell Soto reports that Sempra Energy is looking to sell off pieces of its share of RBS Sempra Commodities, a joint venture with Royal Bank of Scotland.

News of the pending sales comes as Sempra Energy executives admit that finding a buyer for the entire Sempra Energy stake in the joint venture may be "impossible to find", and a repurchase of the RBS share of the joint venture would dilute Sempra Energy investor shares with the issuance of an additional $2 billion in Sempra Energy stock to fund the now-dead repurchase plan.

Sempra Energy did announce a 2009 profit of $1.12 billion on revenues of only $8.1 billion for the year. By comparison, Sempra Energy reported revenues of just over $11 billion in 2007, and in the year of the Crash of 2008, reported revenues of around $10.8 billion.

JP Morgan did purchase part of the Royal Bank of Scotland share of RBS Sempra Commodities but apparently did not take possession of any North American power and gas processing and distribution assets. The assets that JP Morgan did want were limited to "oil, metals, and European energy operations" reportedly for about $1.7 billion in cash. Royal Bank of Scotland is under orders to divest itself of all RBS Sempra Commodities assets after receiving government bailouts during the Crash of 2008.

RBS Sempa Metals is a leading trader on the Dubai Gold & Commodities Exchange, and Royal Bank of Scotland has been cited as the one financial with the greatest exposure to Dubai debt servicing as the largest underwriter of Dubai World debt. A recent 60 Minutes report documented the Congo conflict gold smuggling route that passes through the Ugandan capital of Kampala on its way to commodity traders in Dubai, where the smuggling route is estimated to produce some $300 million in nuggets annually.

It is purely speculative that Sempra Energy may or may not retain its share of the RBS Sempra Metals division. Sempra Energy itself was formerly an Enron commodities trading unit before morphing as a "new kind of energy company" into the ownership of several Southern California investor-owned utilities, including San Diego Gas and Electric Company.

Sempra Energy has always maintained a stance in favor of unregulated business units as profit centers, where the Simply Stated: 2000 Sempra Energy Annual Report declared in the same year as the 2000 California electricity crisis that "that we would realize one-third of earnings from our unregulated businesses by 2003." Sempra Energy revenues for the 2000 electricity crisis year were $7.1 billion, where just under $2.2 billion came in from electricity sales during the crisis. Poorly-negotiated state electricity contracts later forced Governor Gray Davis from office in a recall that put Arnold Schwarzenegger in charge of California's executive branch of government. As for Sempra Energy in 2003, operating revenues from its "Focus > Strategy > Results" paradigm were $7.9 billion.

Despite the drop in revenues to nearly 2003 levels, Morningstar Research maintains its fair value estimate of Sempra Energy.


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