Sempra Moves Forward with Capital Recycling Program to Enhance Growth in Utilities

Sempra Proceeds with Capital Recycling Strategy

On March 31, 2025, Sempra (NYSE: SRE) unveiled its plans to streamline its portfolio as part of a capital recycling strategy aimed at bolstering growth within its utilities in Texas and California. The company's CEO, Jeffrey W. Martin, articulated the ambition to divest specific energy infrastructure assets located in Mexico and to sell a minority stake in Sempra Infrastructure Partners—developments that align with its goal of optimizing resources and strengthening its financial position.

Strategic Divestitures

The focus is primarily on the sale of Ecogas México, S. de R.L. de C.V., which operates three utility franchises providing natural gas distribution across key regions like Mexicali, Chihuahua, and La Laguna-Durango. This network boasts over 5,000 kilometers of pipelines and serves more than 600,000 customers across residential, commercial, and industrial sectors. By divesting this asset, Sempra aims to tap into the proceeds to fuel its five-year capital campaign, particularly for reinforcing its U.S. utilities.

Leadership in Energy Infrastructure

In addition to the asset sale in Mexico, Sempra Infrastructure is also poised to sell a minority interest within its enterprise. This platform stands out as a key player in North America's energy infrastructure sector, particularly in liquefied natural gas (LNG) markets. This strategic move follows previous successful divestitures, including a notable 20% stake to Kohlberg Kravis Roberts & Co. L.P. in 2021 and a subsequent 10% share to the Abu Dhabi Investment Authority in 2022, both transactions reflecting robust market valuations.

Expanding LNG Ventures

Sempra's LNG franchise has experienced significant growth, benefiting from its strategic locations along the Pacific and Gulf Coasts. Major projects like the Energía Costa Azul LNG Phase 1, which is projected to commence operations in spring 2026, and the Port Arthur LNG Phase 1, on track for completion between 2027 and 2028, underscore the company's rigorous development trajectory. The ongoing developments, particularly the promising Port Arthur LNG Phase 2, which is attracting commercial interest and discussions with global corporations, exemplify Sempra's commitment to enhancing its LNG capacity.

Goals for Long-Term Value

The divestment initiatives are part of Sempra's broader value creation strategies for 2025, designed to enhance returns for shareholders while simultaneously ensuring operational efficiency within its utilities. The focus on recycling proceeds from non-core assets back into high-growth investments reaffirms Sempra's dedication to solidifying its balance sheet while improving service quality and affordability.

"At Sempra Infrastructure, we are focused on leveraging our LNG growth opportunities to elevate America's status in the global LNG export arena," said Justin Bird, CEO of Sempra Infrastructure. This strategic vision is expected to provide dividends for years to come, benefiting a wide array of consumers and stakeholders.

Conclusion

As Sempra advances through these transactions over the next 12 to 18 months, the anticipated outcomes are not only projected to enhance per-share earnings, but to contribute positively to the company's credit ratings, epitomizing a forward-thinking approach in energy infrastructure management. Through its ongoing commitment to sustainability and operational excellence, Sempra is poised to deliver innovative solutions for energy resilience to its customer base across California and Texas.

For more information about Sempra and its initiatives, visit sempra.com or follow them on social media @Sempra.