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Stephen L. Baum
Chairman, President and
Chief Executive Officer
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The past year marked the fifth anniversary of the merger that created Sempra Energy. I'm pleased that, for the fifth consecutive year, we produced outstanding results. Sempra Energy's earnings per share have grown, on average, by nearly 20 percent annually since 1998.
In 2003, we posted earnings of $649 million, up from $591 million in 2002. Earnings per diluted share were $3.03, a 6-percent increase over 2002. Sempra Energy's outstanding financial performance derives from our ability to capitalize on new opportunities, our focused strategy and our consistent execution. I am particularly proud of Sempra Energy's performance compared to many other energy companies in recent years.
Our growth strategy is focused and methodical. We develop a deep understanding of markets and customer needs, apply a rigorous risk-management analysis of potential investments and nurture positive relationships with our key constituents, including the communities in which we operate.
In 2003, we saw significant progress toward resolving many of the major issues facing our company. Sempra Energy Resources' long-term energy-supply contract with the California Department of Water Resources (CDWR) was upheld by both the Federal Energy Regulatory Commission (FERC) and a Superior Court of California. While these rulings are being appealed by the state, we expect the contract to continue to be upheld in all venues.
Sempra Energy Trading also has entered into a settlement agreement related to the FERC's investigation of marketers' activities in Western U.S. energy markets from 2000 to 2001.
In 2003, we received key permits to proceed with the development of two liquefied natural gas (LNG) receipt terminals—Energía Costa Azul in Baja California, Mexico, and Cameron LNG near Lake Charles, Louisiana. These are scheduled to be the first new LNG receipt facilities built in North America in the past two decades. We also entered into a preliminary agreement to bring a daily supply of 500 million cubic feet of natural gas to Energía Costa Azul from Indonesia. Additionally, Sempra Energy LNG announced its intention to form a 50/50 joint venture with Shell International Gas Limited to develop the Energía Costa Azul facility.
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