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Sempra Energy (SRE) Unit Buys Ventika Facility in Mexico

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Sempra Energy’s (SRE - Free Report) Mexican unit, Infraestructura Energética Nova, S.A.B. de C.V. (“IEnova”) has closed the acquisition of the Ventika I and Ventika II wind generation facilities in the country.

Details of the Transaction

The purchase consideration for the transaction is approximately $900 million, including the assumption of outstanding debt.

In Sep 2016, IEnova entered into an agreement with Ventika to acquire 100% equity interest in the Ventika I and Ventika II facilities. On Dec 14, Mexico's antitrust commission, the Comisión Federal de Competencia Económica, approved the transaction.

A Brief Note on Ventika

Ventika is a 252-megawatt (“MW”) wind farm located in Nuevo Leon, which began commercial operations this April. Consisting of 84 operating wind turbines, it is the largest operating wind farm in the nation.

Ventika was jointly developed by CEMEX, Blackstone Energy Partners and Fisterra Energy, and is majority owned by funds managed by Blackstone. Power generation and capacity of the plant are under long-term, U.S. dollar-denominated agreements with high-credit rating commercial and industrial customers. CEMEX will remain the manager of the project.

About IEnova

IEnova specializes in developing, building and operating Mexico’s energy infrastructure. Its lines of business cover the entire energy infrastructure value chain, which is open to private investment. IEnova is one of the largest private energy companies in the country and the first private energy company to be listed in the Mexican Stock Exchange.

IEnova’s Pipeline

IEnova is expected to be one of the major growth drivers at Sempra Energy over the next few years. In Sep 2016, IEnova completed the acquisition of Petróleos Mexicanos’ (PEMEX) 50% equity interest in the IEnova–PEMEX joint venture, which was announced in Jul 2015. The purchase consideration of the transaction was approximately $1.14 billion. After the closure of the acquisition, IEnova will own 100% of Gasoductos de Chihuahua.

In the same month, IEnova won two solar energy projects in an auction conducted by Mexico's Centro Nacional de Control de Energía. The projects will total a capacity of 141 MWac and are expected to entail investment of approximately $150 million. They will be contracted by the Comisión Federal de Electricidad under a 15-year renewable energy and capacity agreement, and a 20-year clean energy certificate agreement. Constructions of both the projects are expected to begin in 2018, with operations scheduled for the first half of 2019.

Price Movement

Sempra Energy’s stock has improved about 8.5% in the last one year, underperforming the Zacks categorized Utility–Gas Distribution industry’s gain of 29.2%. This could be because of stringent government regulations and operational risks taking toll on the company’s performance.



Zacks Rank & Key Picks

Sempra Energy currently has a Zacks Rank #3 (Hold). A few better-ranked stocks in the same industry include MDU Resources Group, Inc. (MDU - Free Report) , ONE Gas, Inc. (OGS - Free Report) and Vectren Corporation , each carrying a Zacks Rank #2 (Buy). You can see the complete list of today’s Zacks #1 (Strong Buy) Rank stocks here.

On an average, MDU Resources has delivered a positive earnings surprise of 12% in the trailing four quarters. The company’s 2016 earnings estimates increased 1.8% over the last 30 days.

ONE Gas delivered a positive earnings surprise of 12.46% in the trailing four quarters. The company’s 2016 earnings estimates inched up 0.4% in the last 60 days.

Vectren Corporation’s 2016 earnings estimates inched up 0.8% over the last 60 days. On an average, the company has delivered a positive earnings surprise of 2.31% in the trailing four quarters.

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