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Sempra Energy Unit Inks Marine Terminal Contract in Mexico

Zacks Equity Research
Sempra Energy's (SRE) unit signs contract with Chevron for 50% of the initial storage capacity at the Topolobampo refined fuels marine terminal.

Sempra Energy’s SRE Mexican subsidiary — Infrastructures Energética Nova, S.A.B. de C.V. (“IEnova”) — has entered into a long-term contract with Chevron Combustibles de México S. de R.L. de C.V., a subsidiary of Chevron Corp. CVX, for the initial 50% capacity of the Topolobampo refined fuels marine terminal project. The project will be located in Sinaloa, Mexico with a total capacity of 1 million barrels.

Details of the Project

In July 2018, Sempra Energy’s IEnova secured contract fromTopolobampo Port Administration Terminal to develop, construct and operate a marine terminal for the receipt and storage of hydrocarbons, petroleum, petrochemicals as well as other liquids to increase fuel supply sources and reliability in Sinaloa. The project is expected to begin commercial operations in the fourth quarter of 2020.

Sempra Mexico’s Capital Projects

IEnova invested more than $7.6 billion in operating assets and projects under construction in Mexico, which makes it one of the largest private energy companies in the country.

Apart from building marine terminals, IEnova is focused in the development of 125-Megawatt (MW) photovoltaic project in Sonora, Mexico. Earlier this week, the company was able to secure a long-term contract from the British Petroluem for 50% of storage capacity in its upcoming liquid fuels marine terminal in Baja California.

Per a report by the International Energy Agency, Mexico’s total energy demand is expected to increase approximately 20% by 2040 from 2016’s level, with higher preference for liquid fuels in power generation. The company is well poised to gain from improving energy demand in Mexico.

Price Performance

Year to date, Sempra Energy’s shares have gained 11.0% compared with the industry’s rise of 9.7% gain.

Zacks Rank & Stocks to Consider

Sempra Energy currently has a Zacks Rank #3 (Hold). A couple better-ranked stocks in the same space are National Fuel Gas Company NFG and Southwest Gas Corp. SWX , both carrying a Zacks Rank #2 (Buy). You can see the complete list of today’s Zacks #1 Rank (Strong Buy) stocks here

National Fuel Gas beat the Zacks Consensus Estimate in two of the last four quarters, with an average surprise of 7.28%. The Zacks Consensus Estimate for fiscal 2018 earnings inched up 3.3% in the past 60 days.

Southwest Gas surpassed the Zacks Consensus Estimate in three of the last four quarters, with an average surprise of 24.17%. The Zacks Consensus Estimate for fiscal 2018 earnings inched up 3.6% in the past 60 days.

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