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Sempra Energy (NYSE:SRE)
Q2 2020 Earnings Call
Aug 5, 2020, 3:00 p.m. ET

Contents:

  • Prepared Remarks
  • Questions and Answers
  • Call Participants

Prepared Remarks:

Operator

Good day and welcome to the Sempra Energy Second Quarter Earnings Call. Today's conference is being recorded. At this time, I would like to turn the conference over to Faisel Khan. Please go ahead.

Faisel H. Khan -- Senior Vice President, Finance

Good morning. And welcome to Sempra Energy's second quarter 2020 earnings call. A live webcast of this teleconference and slide presentation is available on our website under the Investor section. Several members of our management team are on the line with us today, including Jeff Martin, Chairman and Chief Executive Officer; Trevor Mihalik, Executive Vice President and Chief Financial Officer; Justin Bird, Chief Executive Officer of Sempra LNG; Allen Nye, Chief Executive Officer of Oncor; Kevin Sagara, Group President; and Peter Wall, Senior Vice President, Controller and Chief Accounting Officer.

Before starting, I would like to remind everyone that we will be discussing forward-looking statements within the meaning of the Private Securities Litigation Reform Act of 1995. Actual results may differ materially from those discussed today. The factors that could cause our actual results to differ materially are discussed in the company's most recent 10-K and 10-Q filed with the SEC.

All the earnings per share amounts in our presentation are shown on a diluted basis and we will be discussing certain non-GAAP financial measures. Please refer to the presentation slides that accompany this call for reconciliation to GAAP measures. I would also like to mention that the forward-looking statements contained in this presentation speak only as of today, August 5, 2020 and the company does not assume any obligation to update or revise any of these forward-looking statements in the future.

With that, please turn to Slide 4 and let me hand the call over to Jeff.

Jeffrey W. Martin -- Chairman and Chief Executive Officer

Thank you Faisel. And thank you all for joining us today. Two years ago, we laid out a strategic plan to divest non-core assets and reposition our business in the most attractive growth markets right here in North America. The plan also calls for concentrating our investments in a more narrow segment of the energy value chain, with the goal of improving our financial results. I'm proud to report that our strategy is working.

You will recall that our financial results in 2019 significantly exceeded our original guidance. And this year, we're pleased to have increased our 2020 EPS guidance range, completed our capital rotation program generating total gross proceeds of $8.3 billion, continued executing our utility centered capital program while deferring about $500 million of infrastructure capital, and at the end of last week, we reached substantial completion at Cameron Train 3 with commercial operations and full cash flows from all three trains expected in the coming days.

Given the quality and strength of our earnings and particularly the visibility we now have for our future growth, we believe recent share price performance doesn't reflect the value of our company nor its growth prospects. Because of this, we've made the decision to buy back $500 million of our stock and received approval from our Board for new authority of $2 billion for share repurchases. We are committed to being prudent stewards of your capital and we'll continue to look for ways to drive additional value back to our shareholders.

Turning to our financial results for the quarter. We are benefiting from more concentrated investments in our T&D portfolio. Our adjusted earnings results for the first half of 2020 are up over 50% when compared to last year, primarily driven by the results of our US utilities and Cameron, where our rate touched on our revised EPS guidance range for 2020. I'd like to also highlight that we are also affirming our 2021 EPS guidance range as well.

Now please turn to Slide 5, where I'll provide an overview of our recently completed capital rotation program. The sale of our Chilean businesses in June for approximately $2.2 billion, with the final transaction in our strategic capital rotation program and really sets us up well for the future. When we set out on this path, at the end of 2017, we had just finished the year with adjusted earnings per share of $5.42. Since then, we've recycled approximately $27 billion in firm value back into our business with a focus on T&D infrastructure, invested close to $16 billion of growth capital in our utility and infrastructure businesses and raised the midpoint of our 2020 adjusted EPS guidance range from $7.10 to $7.50, close to a 40% projected increase over our 2017 results.

Our companywide commitment to operational excellence has led to the strong execution of this strategy, and our employees deserve a ton of credit. We are today more strategically focused, more profitable, and more optimistic about our future growth prospects and it's all tied to making further progress on our mission to build North America's premier energy infrastructure company.

Please turn to the next slide. Our ongoing focus on safety and reliability remains paramount and is a critical component of our overall mission. Here at Sempra our number one priority continues to be the health and well-being of all of our employees, customers and the communities we serve. We've built a strong safety and performance culture throughout our organization. I could not be more proud of the ongoing commitment and dedication of all of our employees to providing essential, safe and reliable service to over 35 million consumers. We also continue to support our communities through charitable giving, donating over $13 million to local health and welfare areas since the start of the pandemic. As we look ahead, we're continuing to plan for the safe reentry back to the workplace. We continue to be thoughtful and strategic about returning to the office in a phased approach that considers specific work locations and personnel requirements, while adhering to the latest safety guidelines.

From an operational perspective, we've build a strong and sustainable business that can successfully operate in a variety of challenging environments by decoupled [Phonetic] revenues at our T&D utility in California, investments in the largest T&D provider in Texas, with no exposure to generation and regulatory protection from retail risk, tolling contracts with any rated customers that are also our equity partners at Cameron LNG and critical operating infrastructure in Mexico with dollar denominated long-term contracts with an average tenor in excess of 20 years. Our strong financial results year-to-date highlight the sustainable business model.

Please turn to the next slide. Across our businesses, we're investing in the portion of the energy value chain that we believe will provide the best risk adjusted returns. Nearly all of our five-year capital plan is expected to be invested in transmission and distribution projects. Through our narrowed geographic footprint, sustainable business model, and focus on T&D investments, we believe we've created an infrastructure portfolio, with strong cash flows to support a growing dividend and improved visibility to future earnings growth.

Now I'll turn the call over to Trevor to discuss our capital allocation approach as well as our operational and financial results.

Trevor I. Mihalik -- Executive Vice President and Chief Financial Officer

Thanks, Jeff. As already discussed, we believe we've built a business model that can weather the current health and economic crisis and emerge stronger and more profitable. We've been consistent with our capital allocation approach by prioritizing our utility centered capital plan, optimizing our balance sheet and returning value to our shareholders. Despite our demonstrated capabilities and superior dividend growth, our stock has underperformed this year and trades at a relative discount compared to our peers. In light of this, and in an effort to continue returning value to our shareholders, we are announcing that we have completed a $500 million share repurchase program. This $500 million has exhausted the previous $2 billion authorization that we had outstanding since 2007 as part of a previous capital recycling program. Therefore, our Board recently authorized an incremental $2 billion of share repurchases, providing the flexibility to buy back shares on an opportunistic basis.

Please turn to Slide 9. We have a strong track record of returning value to our shareholders. Since 2000, we've repurchased approximately 74 million common shares totaling $3 billion and we have consistently grown our common stock dividend, with $10 billion returned to shareholders.

Please turn to Slide 10, where I'll discuss operational updates. SDG&E's continues to be a leader in wildfire mitigation and has invested over $2 billion in this effort since 2007. The CPUC recently approved SDG&E's Wildfire Mitigation Plan and we have successfully procured wildfire insurance in excess of the $1 billion requirements in compliance with AB 1054. These insurance premiums are balanced as part of the 2019 GRC decision. We continue to innovate and advance our leadership position in this area through our Fire Safe 3.0 program, combining technology and over 10 years of data.

At SoCalGas, we received a proposed decision for approval to recover $806 million related to our Pipeline Safety Enhancement Plan. In addition to our continued focus on safely and reliably serving our customers, we are making significant headway on our sustainable clean energy goals. We remain on track to meet our goal to procure 5% renewable natural gas for our core customers by 2022. Separately, we continue to advance regulatory program that will allow SoCalGas and its customers to buy renewable natural gas for their homes and businesses along with working with legislators to advance our renewable gas portfolio standard. The company is also collaborating with several partners on a number of hydrogen demonstration and pilot projects. As the largest gas utility in the US, we believe our scale and commitment to innovation allows us to support renewable natural gas, hydrogen and other technologies required to meet the state's clean energy goals in a way that promotes resiliency of the system and affordability for our customers.

Shifting to Texas, Oncor continues to execute on its capital plan. Oncor connected over 20,000 new premises in the second quarter and over 38,500 new premises year-to-date. On the transmission side, Oncor is on pace to set a record for interconnection request in 2020, predominantly driven by an increase in solar generation activity. Through July, there were approximately 270 transmission interconnection requests, which compares to 300 requests for all of 2019. Despite the impacts of COVID-19, Oncor believes, it will continue to have steady increases in interconnection request for the remainder of 2020. Overall, Texas continues to be one of the most resilient markets in the country and ERCOT system expected to hit a new summer peak load later this year.

Please turn to Slide 11, where I'll discuss developments at the Sempra LNG and Sempra Mexico business units. Beginning with Cameron LNG Phase 1. As Jeff said, we're pleased that Train 3 has reached substantial completion with commercial operations expected in the coming days. The facility is expected to provide nearly $12 billion of after debt service cash flows to Sempra, during the 20 year tolling agreement, with no commodity or volumetric exposure and is supported by its A rated customers and partners.

Moving to Mexico, despite the current market challenges, we strongly believe in the long-term fundamentals of delivering cleaner and more affordable energy to the people of Mexico. Tanya and her team are prudently managing IEnova's business while helping to ensure the continuity of safe and reliable operations. IEnova continues to be disciplined with regards to capital allocation by strategically deferring capital and executing on its share repurchase program. In fact, across our North American infrastructure businesses, we have deferred about $0.5 billion of capital in 2020 as a result of the current market environment.

Moving to our development projects. ECA LNG Phase 1 has offtake in EPC contracts in place and is ready to move forward with a final investment decision subject to receiving the Mexican export permit. We continue to work closely with local authorities as well as the highest levels of the Mexican government on advancing the permit process. Separately, I'd like to address the recent commercial contract developments at the ECA regasification facility. Two customers are alleging that an update of the general terms and conditions for service at the facility, resulted in a force majeure and breach of the existing contracts. We believe these allegations are meritless and ECA has notified these customers that they are in breach of their obligations. We are examining all of our options in light of the timing and baselessness of the claims and plan to vigorously exercise our rights and remedies in all available forums. We don't believe that the initiation of arbitration by one of the customers will delay the ongoing steps to FID on the ECA Phase 1 liquefaction project.

At Cameron LNG Phase 2, we've signed MOUs with Total, Mitsui and Mitsubishi and are working on the preliminary front end design studies. We're excited about this opportunity and believe that the incremental capacity at the existing Cameron facility should provide very competitive pricing for our customers. Given the current market environment, we continue to target FID on Port Arthur in 2021. We're working with our current and potential customers and remain disciplined on how we allocate capital to the project. Ultimately demand from customers will drive the timing of Port Arthur.

We continue to believe in the long-term fundamentals of the LNG market and Sempra's competitive position. We see long-term value in our projects and believe that our financial strength and the strategic location of our development projects provide us with competitive advantages over others in the industry.

Please turn to Slide 12. Looking at our financial results, this was another strong quarter. Earlier this morning, we reported second quarter 2020 GAAP earnings of $2.23 billion or $7.61 per share. This compares to second quarter 2019 GAAP earnings of $354 million or $1.26 per share. On an adjusted basis, second quarter 2020 earnings were $485 million or $1.65 per share. This compares favorably to our second quarter 2019 adjusted earnings of $309 million or $1.10 per share.

Please turn to Slide 13. The variance in the second quarter 2020 adjusted earnings when compared to last year was affected by the following key items, $126 million of higher earnings at the California Utilities from the release of a regulatory liability in 2020 associated with an income tax expense memorandum account that track differences between the actual and forecasted estimates from 2016 to 2018, $75 million of higher earnings at the California Utilities from higher CPUC base operating margin net of operating expenses primarily driven by the timing of the 2019 GRC decision, $65 million of higher earnings from Cameron going into service and $31 million of higher earnings at Sempra Texas utilities, primarily driven by the increased consumption due to weather, updated rates reflecting increases in invested capital and the impact of Oncor's acquisition of InfraREIT in May of 2019. This was offset by $29 million of lower earnings from discontinued operations in South America, mainly as a result of the sale of our Peruvian businesses in April and $32 million of lower earnings at parent and other due to income tax items as well as losses on foreign currency derivatives related to the sale of our South American businesses.

Please turn to the next slide, where I'll turn the call back over to Jeff.

Jeffrey W. Martin -- Chairman and Chief Executive Officer

Thanks Trevor. Sempra continues to lead the sector in sustainability as highlighted by our strong ratings. In May, we published our 12th consecutive Corporate Sustainability Report. We're extremely proud of the progress we're making on the environmental, social, and governance front. And this year's report provides a great snapshot of our most recent initiatives and our latest results. Our sustainability report also highlights how we champion diversity. In fact across the Sempra family of companies that we control, 62% are persons of color and in our parent company, the majority of all of our employees are women. We are also quite proud of our Board of Directors where 62% are women or persons of color. I'm very proud of our employees who continue to live out our company values. At Sempra, we do the right thing: champion people and shape the future.

Please turn to the next slide. We're pleased to report a very successful quarter both operationally and financially. Benefiting from a more narrow strategic focus, we recently raised our full-year 2020 adjusted EPS guidance range and are also reaffirming our full-year 2021 EPS guidance range. We remain committed to creating long-term shareholder value, and I cannot be more pleased with our overall financial performance even in these challenging market conditions.

And with that, this concludes our prepared remarks and we'll stop to take your questions.

Questions and Answers:

Operator

[Operator Instructions] We will take our first question from Shar Pourreza with Guggenheim Partners.

Constantine Lednev -- Guggenheim Partners -- Analyst

Hi. Good morning. It's Constantine here stepping in for Shahriar. Congrats on a great quarter.

Jeffrey W. Martin -- Chairman and Chief Executive Officer

Thanks.

Constantine Lednev -- Guggenheim Partners -- Analyst

We have a couple of questions, one on kind of the capital allocation decisions that were announced here and the stock buybacks. A bit of a departure from kind of prior language on capital allocation. Just curious on kind of what sort of time frames are you looking at for that $2 billion? And can you give a bit more sense on the rationale of kind of buyback versus de-levering versus reinvestment, specifically more from a strategic perspective kind of the option that you're announcing today indicated some lack of efficient redeployment in the near-term? And just thinking about M&A allocation, has there been any consideration on the Oncor stake or any other opportunities in [Indecipherable] jurisdictions?

Jeffrey W. Martin -- Chairman and Chief Executive Officer

Thanks, Constantine. There's a few questions in there, so I'll try to take it in order. If I missed one, please circle back, I'll be glad to address that. I think I would just start with one of the comments we made in our prepared remarks, which is that we really felt like we're getting great traction with our strategy reset of course just over two years ago to kind of North America's premier energy infrastructure company. And to do that, we elected to exit South America and sell some non-core assets that generated about $8.3 billion of pre-tax proceeds, which we did over to effectively recycle back here into our core businesses, particularly in the United States. So what we've been number one focused on from a capital allocation standpoint is funding a $32 billion five-year capital program. The lion's share of that, as you know, is in our utilities. So, our first obligation is to always make sure that we meet the resource requirements at Oncor, SDG&E and SoCalGas, particularly in the areas of safety and reliability.

Second, we've made some definitive commitments around strengthening our balance sheet. We set forth our credit targets for the end of the year, namely around debt-to-capital and our FFO targets which are reflected in the slides. We feel good about where we're at. But I will say that we feel quite strongly that the utility sector has underperformed the broader market by about 6% this year, and our stock has likewise underperformed within the sector. And we think we have a very strong top-tier growth and income story. And that's why we've taken some steps in this market environment to defer some capital, which Trevor referenced in his prepared remarks, about $500 million out of this year into 2021. And that's created room for us to make sure that we're thoughtful to support our stock.

So, we were very pleased to be able to use up the remaining authorization from 2007. And the commitment and authorization from our Board really is to replenish that. And we're not going to talk about specifically how we might put that authority to work, but I think our past practices have been opportunistic to support our stock at these levels should guide your thoughts in that area.

Secondly, you raised this issue of M&A. And I think that our practice has been that we don't, as of convention, talk about forward-looking acquisition activity. So I do think there's always benefit to talk about the lens about which we look at M&A activity. And Constantine, it typically starts with looking at assets to fit our strategy. Second, we look at assets where we think we can bring deep expertise to try and operate them more effectively. And then thirdly, obviously price matters. We're always looking to pay a fair price. And if we can, obviously the dislocation price is helpful.

But if you think about our approach to energy future holdings, remember, this was an asset that was in bankruptcy, and we were able to extend our T&D strategy into Texas, which has been a core priority. And we did that at a very attractive price. And then we went from that one to InfraREIT, which was very similar position, great basket of assets. I think we picked that up for something around 16 times earning, which was a great price for the quality of those T&D assets. So when you think about where we're at today and we've talked about this larger management team with low interest rates and credit spreads that's surprising to see utilities trade at a discount in market. And if you look at -- we've reviewed a lot of sell side research in this area, I've looked at Wolf, BAML, Goldman, UBS and others, and it's clear that there's a lot of value in our sector today. And I think it's one of the reasons why we think about M&A, the one area that we feel like that really fits our strategy and also where we have deep expertise, and there's a really attractive price opportunity is with Sempra stock.

So, I mean, we're pretty much counting the table. We've got top tier growth and income story here, and that's one of the reasons that we were opportunistic this summer and pleased to go into the marketplace to purchase $500 million of our own stock. So, we have a $32 billion capital program under way. That is 100% of our focus, but at the same time we're going to be aggressive to continue to look for opportunities to be opportunistic going forward.

Constantine Lednev -- Guggenheim Partners -- Analyst

Perfect. Yeah, that's -- well, then it clarifies a bit. And just as a quick follow-up, hydrogen has been kind of a topic of interest recently in California and SoCalGas are kind of leading the way in conversation with R&D. What's your outlook on kind of implementing this technology? Any potential capex allocation in the near-term, I guess, five-year plan as an upside? And are you seeing the regulatory support in California for these type of projects or is it a little early?

Jeffrey W. Martin -- Chairman and Chief Executive Officer

Yeah. Well, I appreciate you asking this question. This is something that's a high area of interest to us all. So appreciate your recognition of the great R&D work that's been taking place at SDG&E and SoCalGas.

I'll provide a little bit of color, Constantine, and pass it to Kevin Sagara, who is the Group President of California. But I think it starts with the fact that over the last three to five years, this has been a priority on our company, right? So we own the largest natural gas franchise in the western hemisphere. We serve 22 million consumers right here in California, the basic natural gas needs. And we made the decision in the last several years that we will lead in this space.

When you take broad categories where we're spending time either on an R&D basis or projects, there's probably eight to 10 different projects that we're looking at. They fall into the categories of transportation refueling primarily focused on heavy-duty vehicles, blending opportunities into power generation, blending opportunity into compressor stations at SoCalGas, and really the opportunity to co-locate some of these facilities to take advantage of cost efficiencies with our LNG facility.

But we're also trying to take a leadership position, Constantine, in some of the major trade associations like the Hydrogen Council, and we're collaborating with countries we think that are leading in this field today, primarily Japan and Germany. So we're quite bullish on the role of hydrogen and renewable natural gas, particularly here in California. You think about the energy transition that's in front of our sector, and the women's in primary world particularly in the developing world, either is going to play an increasingly important role. It's still a little bit early, but I think you're raising a good point. The time now to create a leadership position is the work we're doing inside of our utilities currently.

And Kevin, perhaps you can provide some additional color.

Kevin Sagara -- Group President

Thanks, Jeff. As you mentioned, it is a little early but California has always led the way in this area of clean energy. And this time, I expect it will be no different. Having just come off from being the CEO of SDG&E, which is a leader in renewable energy, rooftop solar, electric vehicles, and having led Sempra Renewables, I'm all in on hydrogen. Now, at the gas company, we're speaking to all of the leading industry players that you would expect us to be speaking to. We've got several exciting projects in development. Today, we're participating on projects that make biomethane from solar power and recaptured CO2 and others that make green hydrogen from solar power and water.

As Jeff mentioned, we see opportunity in power generation, industrial processes, refueling medium and heavy-duty transportation, we see opportunities within our own system. We believe hydrogen will play a key role in the 21st century energy system, and you can expect that our infrastructure at the California utilities will be right smack dab in the middle of it. Both utilities are working on several exciting hydrogen projects that we'll be announcing in the upcoming quarters. And so, if you don't hear it in my voice, I am really excited about hydrogen, and I think there's a big opportunity here and our utilities are going to be a big part of it and that's great. Anyhow, our infrastructure is well positioned to play a big role.

Constantine Lednev -- Guggenheim Partners -- Analyst

Perfect. I think that's very, very helpful. Thanks so much. I'll jump back in queue.

Jeffrey W. Martin -- Chairman and Chief Executive Officer

Thanks, Constantine.

Operator

[Operator Instructions] We will take our next question from Steve Fleishman with Wolfe Research.

Steve Fleishman -- Wolfe Research -- Analyst

Hey. Thanks for the question. I guess, first of all, the $500 million of deferred capex, which part of the business did that come from?

Trevor I. Mihalik -- Executive Vice President and Chief Financial Officer

I would start by saying, Steve, that we're obviously committed to our $32 billion capital program. But with this current market backdrop, we've really pushed on the near-term spend in the capital program. This is really 100% coming in from our non-utility businesses, primarily LNG and IEnova. We've moved capital related to ECA in the next year, some capital. We've also deferred some capital related to our storage businesses in Mexico, but it shouldn't have any meaningful impact on 2020 or 2021.

Steve Fleishman -- Wolfe Research -- Analyst

Okay. And is there any -- the $2 billion incremental authorization, that's just -- is not like a time line or it's really -- would you -- is it fair to say?

Jeffrey W. Martin -- Chairman and Chief Executive Officer

No, there's [Indecipherable]. I think as I articulated to Constantine, I think our past practices would guide how we would look to use that.

Steve Fleishman -- Wolfe Research -- Analyst

Okay. And then, a couple just issues that have popped up, I guess, I get questions on -- recently has been this, first, the San Diego franchise issue, and then I guess this recent filing you guys made on quite a fine [Phonetic] lobbying and how that should be treated. Can you just maybe go through those two issues and your take on them?

Jeffrey W. Martin -- Chairman and Chief Executive Officer

Sure. I'll take your second question first and come back to the franchise agreement. But in California, for a long period of time, various investor on utilities would be looking to come out one view on regulation or another. And I think the goal always is to get the best long-term energy policies in the state. And the calls sometimes have lack of clarity about what type of activities require each from rate payer dollars versus shareholder dollars, we felt like that ambiguity is our enemy that we felt like for the benefit of the industry, it was worth having a lot of clarity, so we filed an OIR to make sure there's a process around this with a lot of transparency and allow all five commissioners and their staff to weigh in on it. So we feel good about taking that step. And I think it will add some clarity for all the participants in the industry.

On the San Diego franchise, I would probably offer you three different comments here, Steve. First, the city charter in San Diego always requires a competitive process to renew its [Indecipherable] city council, I think are doing all of the things that you expect them to be doing, right? They're running the competitive process. It's open and transparent. They've all made their staff with some outside consultants. And all of this is being done with a view toward bringing the best outcome for the residents of the city.

I think that leads to my second point, which is, we have close to 300 franchises across the State of California. So we're always evaluating 10 or 12 of these at a time. And our approach tends to be to focus on each of these. There's an opportunity for us to get better as a company. And you have to remind yourself, there's a strong alignment of interest that those same residents of the city are also our customers. So we're always trying to find new and better ways to serve them. And you have to remember these are customers that date back their relationship with our company back in the 1800s. We first started serving customers here in the region in 1881.

But let me tell you what I'm confident about, SDG&E is well positioned to be the best partner for the city. I think the three things that we've tried to talk about as a team at SDG&E is as a company that leads our nation in clean energy with rooftop solar here locally at a 15% penetration rate. That's a remarkable number and a credit to the support from the utility. And historically, we've always been targeting roughly 45% procurement for renewable generation, which is also an industry-leading position.

In the last 14 years, we've been consistently named the number one utility in the West for reliability. And that goes back to your safety and safety metrics where we have a really outsized lead compared to other utilities. And finally, just two or three weeks ago, we were named the number one investor on utility in the United States at SDG&E for their commitment and demonstrated expertise in innovation technology.

So, as you think about some of our accomplishments, Steven, you've followed the company for a long period of time. I think the one thing that's kind of common about our success historically has been the broad partnership with San Diego Gas & Electric has with the local IBEW and labor generally. This is the century-old partnership here in San Diego that's always proven safety and good and prudent utility practice and procedure. I think it's been central to our success and I think as we approach this opportunity with the city, I would not approach it from the standpoint that you're always good to have a little dose of humility and try to find the best way to put your foot forward. Our goal is to put the best value proposition from the city and we have a fair amount of confidence we can do that.

Steve Fleishman -- Wolfe Research -- Analyst

Okay, great. That's very helpful. I've been getting lot of the questions, so helpful to clarify those two things. Thank you, Jeff.

Jeffrey W. Martin -- Chairman and Chief Executive Officer

Thank you, Steve.

Operator

Our next question comes from the line of Julien Dumoulin-Smith with Bank of America.

Julien Dumoulin-Smith -- Bank of America -- Analyst

Hey. Good morning, Jeff. Thanks for the time, guys.

Jeffrey W. Martin -- Chairman and Chief Executive Officer

Thank you.

Julien Dumoulin-Smith -- Bank of America -- Analyst

If I can follow up -- hi. Good morning, Jeff. If I could follow up with the first round of questions here, Jeff, just to follow up here on the M&A question. Speaking of questions that we've been getting inbound, there's been a lot of consternation with the mark-up now on M&A specifically, and I'm hearing from you all on your call a very close focus on value in your own shares. Can you try to put -- square those two a little bit more narrowly? I mean, maybe said differently, when we hear about companies articulating frameworks around M&A from along the premium names if I can put it that way, can you perhaps screen the buyback in the context of M&A? Is the buyback really a placeholder on your line relative or is it true level of confidence pursuing this buyback continue through relative to alternative capital opportunities that pop up here.

Jeffrey W. Martin -- Chairman and Chief Executive Officer

Hey, Julien. I hate to do this to you that you came up, you came and broken up on the front end of your questions, would you mind repeating that for me, please.

Trevor I. Mihalik -- Executive Vice President and Chief Financial Officer

Sorry about that. Specifically on M&A, there's a lot of consternation in the market around how you all are -- to what extent you are engaged on M&A conversation. You're very focused on the value of your stock here on the call. Can you square your level of commitment to the buyback against a broader array of capital allocation opportunities, whether that's in the context of more rate base what at the utilities or as they started the question with around M&A more broadly.

Jeffrey W. Martin -- Chairman and Chief Executive Officer

I'll be pleased to answer that. I would say that in the past and currently we have had no formal discussions regarding M&A activities. It is not in our field as viewed currently. I think what you should hear from my prior comments is that we have what we think is a unique opportunity in our industry with really unparalleled visibility to our capital deployment through 2024. And in part, Julien, that goes back to the quality of the rate case we got at SoCalGas and SDG&E last year.

Our goal is to fund that capital program, meet our credit commitments that we've been pretty clear about relative the credit rating agencies and protecting our balance sheet. If we have opportunities where we can move capital or defer capital within our program, you should expect us to be opportunistic with our own stock. But in general, when you think your stock is trading at such a deep discounts, we think ours is, we should be trying to find every opportunity we can to repurchase stocks.

So, I'm not making commitments about how we would use the $2 billion of authority from our Board. But I am telling you that our focus is on, number one, the organic growth program that we have and right now it makes a lot more simple to buy something at a discount before you'd allocate capital to something, you'd be buying at a premium.

Julien Dumoulin-Smith -- Bank of America -- Analyst

Thanks for the emphasis. If I can turn back to Steve's question very quickly. What is this process around the franchise arrangement would look like? You talk about a partnership. How would you frame the process going forward for investors from here?

Jeffrey W. Martin -- Chairman and Chief Executive Officer

I think that the invitation to bid falls under the offices of the mayor's office. I think there's a meeting in San Diego tomorrow where the high level approach to the ITB or the investment to bid is being presented to the council. You had another opportunity for a lot of open transparent input from the council to that process. And probably over the next two to four weeks, the invitation to bid would come out and then we would expect to participate in that process with the view that we would be submitting bid sometime probably in the second half of October.

But, look, I can tell you that this has been a priority for our company for a long period of time. These are the types of discussions that been going on for years, not weeks or months and there's a lot of commitment to make sure that we don't take these types of things for granted and I think we're very, very proud of our company at SDG&E and its commitment to the community.

And as I've said my prior comment is the best way you're successful and obviously we manage 300 of these up and down the State of California, is you approach and enjoy with a little bit of humility and always from the mindset that we had a chance to get better and our jobs as a modern energy company to find new and better ways to serve customers and that's exactly the approach that the SDG&E team will be taking with the city.

Julien Dumoulin-Smith -- Bank of America -- Analyst

Appreciate it.

Jeffrey W. Martin -- Chairman and Chief Executive Officer

Thank you, Julien.

Operator

Our next question comes from Jeremy Tonet with JPMorgan.

Jeffrey W. Martin -- Chairman and Chief Executive Officer

Hi, Jeremy.

Jeremy Tonet -- JPMorgan -- Analyst

Hi, good morning. Hi.

Jeffrey W. Martin -- Chairman and Chief Executive Officer

Good morning.

Jeremy Tonet -- JPMorgan -- Analyst

Just want to touch on a bit of the question, maybe it was picked up earlier here, but given some of the recent moves in the industry here, how do you feel about the current regulated versus non-regulated business mix that you have? Do you see opportunities to kind of shift toward regulated more or are you kind of happy with where you're at?

Jeffrey W. Martin -- Chairman and Chief Executive Officer

That's a great strategic question, this is one that we review with our Board on a periodic basis. We'll be leading that discussions with our Board on the same topic later this year. Look, we certainly privilege -- we certainly privilege the utility side of our business. It represents roughly 80% of our earnings stack. I was intrigued and I mentioned this one in one of our earlier calls, as we think about our IEnova business, we certainly think there's going to be a lot of reshoring and on-shoring and a good portion of it, it's in the bylaw [Phonetic] discussions in dinner with President Trump and President Lopez Obrador just a couple of weeks ago. And there's a tremendous amount of collaboration taking place across all three nations under USMCA and a lot of opportunity for new business and factories and particularly in the pharmaceutical industry to relocate here.

So, I think it's intriguing for us to think about how we look at IEnova business which we also think is undervalued. We have been actively inside the IEnova business buying back those shares because there's a share repurchase program that has been under way there as well, quite active this year by the way, and as we think about our LNG business. So, there's more work to be done here. But I think one of the things that's intriguing is probably less about whether the percentage is 80% of the mix or 90% of it. And generally what maybe more interesting is how you make sure that those businesses that are not utilities are not consuming the balance sheet of the parent company, right? So, you see us seeing other companies in our sector do this. But the more we can think about having access to the unique growth profile that we have in our unregulated businesses and increasingly over time make sure it's not impacting our parent company and that is off-balance sheet, I think that's a real opportunity for our company.

Jeremy Tonet -- JPMorgan -- Analyst

Got it. That's helpful there. And then, maybe just kind of pivoting over to the LNG business debt, it looks like a nice kind of tick up in flows at Cameron, then steadily moving up there. Although the LNG market is a bit difficult right now, just wondering if you could provide any more color as far as commercial conversations might be having there, if the tone or the pace change at all granted you're talking more about a 2021 FID with Port Arthur, but just want to touch base on that and see how things were progressing.

Jeffrey W. Martin -- Chairman and Chief Executive Officer

I'll be glad to provide some comments. Justin, if you want to make some color, I'll pass it to you in a second. But what I would say, interesting, if you start, Jeremy, at the macro level, what's unique is that the northern hemisphere had a very mild winter. Storage levels as we came into the late spring were relatively full. And you've seen an impact of natural gas demand globally related to the pandemic. I think the most recent IEA forecasts were expecting natural gas demand to decline for the year by about 4%.

But what's interesting, inside the LNG category, it's actually gone up. So, global demand for LNG in the first half of the year is one of the few commodities that's actually up close to 3%. US LNG exports for this six-month period compared to the last year are up 70%, and that's a function of all the new capacities that's come online in the last 12 to 18 months, including Cameron. And interestingly, Europe's consumption of LNG is up 18% in the first six months. So, there's clearly an opportunity where LNG is actually price competitive to many countries' indigenous supply of natural gas. Thailand would be an example. They're landing LNG at a price that's cheaper in Thailand and they can actually produce it in their own economy. So I think that there is a continued green shoots and optimism about LNG.

But what we've been trying to focus on and I think our LNG team has been pretty redundant on this. We've always had a long held view that that second wave of LNG infrastructure, which is intended to allow for deliveries in the middle part of the decade, that is a very real opportunity. The LNG is going to play a very, very big role in reformulating the energy set globally. Roughly 80% percent of future energy demand will come from the developing world, and I think this market going to be led by Asia and specifically China and the subcontinent of India.

So, there is a big opportunity there, and I think this pandemic, if anything, is causing some LNG buyers to delay their decision, and it's also causing other infrastructure providers to get behind or fall by the wayside. So I think we've got a strong balance sheet. We have a very clear-eyed vision of what we want to accomplish in LNG. And it always comes back to what your competitive advantages are. I think our approach of having competitive low-cost brownfield sites that can dispatch directly into the Pacific and directly into Atlantic is an advantage that no other LNG infrastructure provider has in North America.

But let me stop there and, Justin, see if you'd like to provide a little bit of color about where we're at with both eco contracts, permit extension contract at Port Arthur.

Justin Bird -- Chief Executive Officer, Sempra LNG

Thank you, Jeff. And thank you, Jeremy, for the question. I think -- as Jeff said, I think on the supply side, we've seen a period where there has been a significant, I think it's around 8% per year growth rate in LNG supply and the consultants and we think as well that that will dramatically slow down as the market has changed. We think that may end up growing only around 1%. So, we think the supply growth will decrease as demand increases. And that's really an opportunity for world-class projects like ours to move forward.

In terms of our conversations at Port Arthur, as we've said, we're targeting 2021. This is a customer demand-driven project. We are engaged with PGNiG, Saudi Aramco and many other customers. As Jeff mentioned, there has been a slowdown in the market as a result of COVID-19 and economic slowdown. It's also the LNG businesses adjusting to teleconferences and virtual meetings, which is really historically been a face-to-face business that required a lot of international travel with this load and that definitely has slowed down the process.

But again, we think over time that we'll pick back up and we think given the competitive advantage our projects does move forward, in terms of Cameron expansion, we've announced that we have MOUs for the full volume there. We are working with the partners on conceptual work around the expansion and really trying to optimize that expansion from a cost basis and from a timing perspective. So, we do continue to see long-term growth in the LNG business. But again, we take a very disciplined capital allocation approach. We will build the projects when they have contracts and when the customer demand is there, and when our partners want us to move forward.

Jeremy Tonet -- JPMorgan -- Analyst

Great. That's really helpful. Thank you.

Jeffrey W. Martin -- Chairman and Chief Executive Officer

Thank you.

Operator

Our next question comes from Sophie Karp from KeyBanc.

Sophie Karp -- KeyBanc Capital Markets -- Analyst

Hi. Good afternoon. Congrats on the quarter and thank you for the time.

Jeffrey W. Martin -- Chairman and Chief Executive Officer

Thanks, Sophie. Thank you.

Sophie Karp -- KeyBanc Capital Markets -- Analyst

Yeah. A lot of my questions have been answered, but I just wanted to see if you could maybe give us a little more color on Mexico and what's happening there? Do you still go -- how you view that geography in your mix going forward as to your last outside of the US geography in the mix? And just curious to hear a little bit more color on what you're seeing on the ground there? Thank you.

Jeffrey W. Martin -- Chairman and Chief Executive Officer

Sophie, just to make I understand your question. Like a little bit more color on Mexico as a country with some of the macro economic developments.

Sophie Karp -- KeyBanc Capital Markets -- Analyst

Correct. That and the political landscape there as well, and how that effects energy development? So a little bit -- any update on your view there, if any, could be helpful?

Jeffrey W. Martin -- Chairman and Chief Executive Officer

Sure. Look, I think Sempra has been an investor in Mexico for 22 years. We have roughly a $10 billion investments in Mexico in all aspects of the energy infrastructure business. It continues to be a country that we think has a great macro story. This is the number 15 [Phonetic] economy in the world pre-COVID, our internal forecast felt Sophie, that this might be as a number 7 economy in the world by 2040. Remember it is a 130 million consumers and it's one of the fastest growing consumer markets in the Western hemisphere. You raised some good points. There certainly has been some disruption in terms of how the Marina party has been administering the government and its approach to energy, generally. Like I tell you, I had the good fortune of going to dinner with President Lopez Obrador and President Trump two weeks ago. There is true warmth and [Indecipherable] to that relationship. Obviously, the conversation two years ago or three years ago was more around the border and today there is broad recognition of the joint opportunity between both countries as they've set a priority of being able to bring back business and factories from Asia. So I think there's a real near-term opportunity for collaboration and we think there's an opportunity for energy companies like ours, they are not really a Canadian or US or Spanish or Italian company. This is a Mexican business that we own 67% of in Mexico, which is one of the Top 10 or 12 companies on the Bolsa. They have scale, they've got great relationships, they got the expertise and our goal is to make sure that we put forward a great value proposition every time we have the opportunity to work with the government. And you know, our business down there is increasing one of a bilateral business with C&I customers and increasingly less reliant on the state-owned agencies. So I think, near-term, there is a lack of clarity around some of the policies that can impact the marketplace, but we think the long-term macro story is intact.

Sophie Karp -- KeyBanc Capital Markets -- Analyst

Very good. Thank you.

Jeffrey W. Martin -- Chairman and Chief Executive Officer

Thank you.

Operator

Take our next question from Stephen Byrd with Morgan Stanley.

Stephen Byrd -- Morgan Stanley -- Analyst

Hey, good morning. Thanks for taking my questions.

Jeffrey W. Martin -- Chairman and Chief Executive Officer

Good morning Stephen.

Stephen Byrd -- Morgan Stanley -- Analyst

Wanted to go back to green hydrogen and Sempra certainly has been a thought leader there. While we're certainly excited about the growth in green hygiene, I'm wondering just at a high level of your thoughts on when green hydrogen will be economically viable for the utility sector? We can see applications in places like transportation, but the costs of getting hydrogen continue to look even as they are dropping, look relatively high compared to conventional gas for example. And I'm just curious, at a high level, sort of the rough timeframe over which you think green hydrogen may be viable for the utility business?

Jeffrey W. Martin -- Chairman and Chief Executive Officer

Well, it's a good question and I will start by telling you, I don't have a perfect view of what the right answer is. I think the analogy that we've talked about on our senior team is photovoltaic. So photovoltaics have been pursued by interest -- industry going back to the 1960s and then we've got Sempra that we launched the first large-scale central station project in 2008. Stephen, you may recall, that was the Copper Mountain Project and it was 10 megawatts. So that was 2008 and today it's not uncommon to see 500 megawatt project, that's really, really price competitive and very much more price competitive than traditional fossil fired generation. So if we think about the hydrogen, we see a similar opportunity. It clearly is early on the green hydrogen side. At best it's second half of this coming decade. So a lot will determine on the -- on the cost curve, and how much advances you have made on the R&D side. I think given that uncertainty, it's important that not just Sempra but a lot of other companies spend time and resources here because I think we have the chance to impact that cost curve and impact the commercial viability of green hydrogen and particularly when you think about California where we have periods of the year where we're long renewable resources and they cannot be used and you're actually trying to export them or pay contiguous states like Arizona take that power. We have a real inefficiencies certain times of the year and that production profile overlays very nicely with green hydrogen. So look I think if there's going to be a breakthrough and there's going to be any development that moves it forward in time, California is the place where it will happen.

Stephen Byrd -- Morgan Stanley -- Analyst

That makes a lot of sense. And then just thinking about natural gas usage in the state. Obviously, California is doing some thinking around moving away from conventional natural gas. Do you have a sense of sort of the regulatory or other timelines or sort of milestones or other sort of proceedings that we should be at least thinking about as we look at that? Or is there really nothing definitive, is just sort of a longer-term aspiration within the state?

Jeffrey W. Martin -- Chairman and Chief Executive Officer

Yeah, look there is a two part process being led by the PUC today. There is a Phase I review of the appropriate policies and impacts on natural gas that will lead to a Phase II program both SDG&E and SoCalGas are active in those proceedings. But I think when you speak with a lot of consultants in the space and a lot of the political leadership, there is a recognition that natural gas will play a long-term role in United States energy policy and a long-term role in California's energy policy. Remember as they decoupled state Stephen, it's probably more than reasonable that the natural gas could decline in some areas, maybe in our core customers, but with electrification, it's more likely than not that you are going to need the number one produced two or three or four times electricity that we currently produce and that's going to require more natural gas for power production. So I think what you should expect to see is because we're decoupled, our interests are aligned with policy makers to make sure we're pursuing low cost, low carbon strategies, but electrification is a big deal, both in the United States and in California and natural gas, particularly in power production will more than likely increase rather than decrease. I think it's important to your point to make sure we get the long-term policy right and that's why both of these procedures of the PUC are very important and we'll be involved. Kevin, would you like to add some comments to that?

Kevin Sagara -- Group President

The only thing I'd add is around RNG, renewable natural gas, you know the gas company set some pretty aggressive goals for itself, 5% by 2022 and 20% by 2030 and they are really making good progress on those goals. In terms of getting projects online and capture methane is really, really bad for the climate. And so capturing is an important part of the state goes to mitigate GHG emissions and do something about climate change. So we're excited about RNG and what -- you spoke about our regulatory construct that could be helpful and that would be around the RPS for RNG. So if we some kind of RPS standard in the state around RNG. I'll be very supportive to more projects capturing them. So I'll turn it back over to you, Jeff.

Jeffrey W. Martin -- Chairman and Chief Executive Officer

I think those are all good points. I'd probably just concludes the fact that you just seven months ago we got maybe one of the best general rate case since we ever got into SoCalGas, right. So they are very much privileged in system reliability and safety, they've got a 9 plus percent CAGAR of capital deployment inside their rate base. So it's a pretty aggressive program they had brought out. In fact across all three of our utilities, when you think about our capital program, we had average rate base growth forecasted for the next five years of 9%.

Stephen Byrd -- Morgan Stanley -- Analyst

That's all really helpful color. Thank you very much.

Jeffrey W. Martin -- Chairman and Chief Executive Officer

Appreciate it.

Operator

We'll take our next question from Michael Lapides with Goldman hi guys.

Michael Lapides -- Goldman Sachs -- Analyst

Hi guys. Thank you for taking my question. And congrats on a good first -- first half of the year. I really two questions, one Jeff, can you talk about the stock, and talk about the valuation and how you trade relative to peers? But just curious when you think structurally, California Utilities and you still have significant presence there. Obviously it's a bigger statements. Structurally a lower multiple business related to regulated companies in other states.

Jeffrey W. Martin -- Chairman and Chief Executive Officer

Let me just make sure I understand your question, Michael. And by the way. Thank you for joining our call. I think your question is, when we think about Sempra valuation, how much should it be impacted by structural issues in California, is that what you're asking?

Michael Lapides -- Goldman Sachs -- Analyst

Yeah. Do you believe that inherently the market views California utilities as a lower multiple business relative to utilities in other states?

Jeffrey W. Martin -- Chairman and Chief Executive Officer

My initial instinct is no, but let me give you a little bit of costs going back to the end of 2017, 80% of our earnings composition came from California. When we project out our earnings growth through 2022, roughly 50% of our earnings composition comes from California. And I think what makes me feel good about the California story, Michael is if you look at the remedial measures that were taken to make sure that we're not exposed wildfire risk financially, particularly if you're prudent, that's really important. But I think I would cover my view of it, my side of quality the rate case we got it right and you have heard us talk about this before, but you got a remarkable rate case for SDG&E and SoCalGas, you also have a really high quality cost of capital, SDG&E's average cost of capital when you blend in the FERC cost of capital is about 10.4% and then you've got this kind of runway now for really a five-year deployment of your revenue requirement, which we never had before. So as long as I've been around the business, I've never been able to how back clear the runway to what our authorized spending level and is. So I'll go back to the cost of capital, the rate case, the remedial measures to make sure that we have mitigated risks and the environment. And overall, one thing I think that people miss sometimes, Mike when we've been kind of jealous about it here in our company is you know the key for utilities, you have to make sure your end markets that have a lot of economic expansion, population growth and great regulation. And when you measure those three categories, California still looks like a premium market as does Texas. So we're pleased to have kind of Tier 1 position here and a Tier 1 position in Texas is that underlying economic growth, not just capital deployed for safety or reliability, it gives you this long-term opportunity to deploy capital.

Michael Lapides -- Goldman Sachs -- Analyst

Got it. Thank you for that Jeff. Just curious on the LNG front, I'm really thinking just about Cameron 1, 2, 3. Can you remind us in next five years or so or the next three years to five years, how much cash -- I know you talk about how much you're going to get out on the life of the project, but just next three years to five years, how much cash do you think you can get or how should we think about the annual run rate of cash from that of Cameron 1, 2, 3.

Jeffrey W. Martin -- Chairman and Chief Executive Officer

Right. What we've said publicly in the past, now I'll review it with you is we've talked about having just from Cameron itself $400 million to $450 million year run rate. I think in our latest estimates Michael, I might revised that to be a little bit higher. We have some more work to be done on that and we think we have much more clear vision to the run rate going forward. I think that over the next couple of years 2021, it goes up quite significantly, it's closer to $650 million and then it has a steady state around $450 million to $475 million. So over that over the life of the project, it is going to be greater than $12 billion of cash after debt service. On a run rate basis, it's going to be closer to the high end of that $400 million to $450 million. And the next year just because of how some of the amortization schedules work, we do have a little higher cash back to the company in 2021.

Michael Lapides -- Goldman Sachs -- Analyst

Got it. Thank you Jeff. Much appreciated. I'll follow up with your team offline.

Jeffrey W. Martin -- Chairman and Chief Executive Officer

I appreciate Michael.

Operator

Our next question comes from Ryan Levine with Citi.

Ryan Levine -- Citi -- Analyst

When you are starting the current business outlook in recent 2020 guidance revision. Is there any color you're able to share of the current outlook for 2021 guidance, any drivers within the range?

Jeffrey W. Martin -- Chairman and Chief Executive Officer

Well, I think one of the things I'll get back to you Ryan was you may recall, we were altogether virtually in our Investor Day we talked about the eight system we had to prioritize our activities really around trying to deliver our financial goals. And I think if you think about 2019, we set forward an EPS guidance range and during the year, we guided to the high end of the range and we are very pleased, Ryan that we are able to exceed that range on our February call when we announced our Q4 results. This year you will recall, we set a guidance range for 2020 and we've been able to guide higher in that range on the May call. And then on June 30, as you know we guided and actually adjusted our range -- actually raised in the low end of our range by $0.50. So as we think about 2021, I think we are pleased today Ryan to affirm our guidance for 2021. We have some more work to be done here, but we have an evergreen planning process, it goes on constantly. And I think that what I would characterize for 2021 is we want our front foot right you are going to have positive uplift from Cameron moving into full run rate, you're going to have the earnings from South America will get knocked out for 2021. We feel good about it. We just have more work to be done. And if we get through that work it seems like we should adjust the 2021 number we will. I think our pattern and practice, Ryan has been to under promise and work really, really hard to exceed expectations.

Ryan Levine -- Citi -- Analyst

Thank you. And then what was the average price of the $500 million buyback was purchased at? I mean was this treated with the rating agencies. And then going forward, what credit parameters or guide posts are you looking at when deciding on share buyback amounts and potential timing in future years?

Jeffrey W. Martin -- Chairman and Chief Executive Officer

Yeah, I'll start with the credit metrics and then I'll pass it to Trevor to talk about the weighted average share repurchase price, but we've been pretty consistent on our credit metrics even in on our slide presentation today. We remain on track to meet those by the end of the year and those have been commitments we've made of over multi-year. So we don't see any change to the credit metrics but perhaps, Trevor, you could speak to the, the purchase -- repurchase program.

Trevor I. Mihalik -- Executive Vice President and Chief Financial Officer

Sure, Jeff. So Ryan, what we did is we had an ASR, accelerated stock repurchase program for the last 30 days and the weighted average price of that was $122.

Ryan Levine -- Citi -- Analyst

Great, thank you. And just I guess one mix in terms of rating preview, rating agency preview, was that done in advance or not?

Jeffrey W. Martin -- Chairman and Chief Executive Officer

Ryan, repeat the question again please.

Ryan Levine -- Citi -- Analyst

Was this previewed with the rating agencies?

Trevor I. Mihalik -- Executive Vice President and Chief Financial Officer

Yeah. We have talked to the rating agencies about this recently as to what our overall plan is and where we're anticipating to get to by the end of the year.

Jeffrey W. Martin -- Chairman and Chief Executive Officer

And the best way I would comment on that Ryan, if you want, kind of a short-form approaches, we've laid out our capital program, in that capital program, we were able to move some capital from this year into future years. That was a $500 million shift in our capital deployment. And what we really did was redeploy that capital right into buying our shares what we think was a very attractive price.

Ryan Levine -- Citi -- Analyst

Appreciate it. Thank you.

Operator

Our next question comes from Anthony Crowdell with Mizuho.

Anthony Crowdell -- Mizuho -- Analyst

Good morning. Hope all is well with you and your family. Just a quick question, if I go back to the potential for the $2 billion share repurchase authorization. Can I think of that as a placeholder for LNG? I know you spoke about the strength of your LNG model, but the fact that it get pushed out further maybe because of the COVID impact or something, could we you think about the $2 billion share repurchase as a placeholder for that?

Jeffrey W. Martin -- Chairman and Chief Executive Officer

Anthony, it's actually a very interesting question. I'll probably frame it, by saying that the last authorization that we are working on with our Board was put in place in 2007. And it really gave management, the opportunity to look for points in time where we thought the stock was undervalued. I think we're certainly in one of those points of time today, I mean we're very, very bullish on how attractively our stock is priced today. I don't know that I would associate directly with LNG, but I think the way we described our capital allocation process this year where we fund our first order priorities particularly around our utility, we make a commitment to pay down parent debt and deliver on our credit metrics to the rating agencies. And if there's opportunities, either from a sale or divestiture of an asset or cash flow from other parts of our business or deferrals of capex, we will always be looking for opportunities periodically to be opportunistic to support our stock.

Anthony Crowdell -- Mizuho -- Analyst

Thanks so much. Thanks for taking my question.

Jeffrey W. Martin -- Chairman and Chief Executive Officer

Appreciate it. Thank you.

Operator

We'll take our next question from Eric Beaumont with Barclays.

Ian -- Barclays -- Analyst

Hey, guys. This is Ian [Phonetic] for Eric. Thanks for taking my question. [Speech Overlap] remark, but on Mexico, you guys highlighted some of the sort of near-term that might be impacting the public share price at this point. Just thought it will be good to get some commentary, I know a lot of people on this call sit on the Board for IEnova, but how Sempra sort of represents interests and what kind of strategic levers are available to derisk the stake, whether that be the interplay between payout ratio and credit metrics and things like that, just generally, sort of what the strategic direction for -- looks like?

Jeffrey W. Martin -- Chairman and Chief Executive Officer

Sure. I would say that we have 11 members on the Board on IEnova. Six come from Sempra plus Carlos, Reese and Tanya. We are very active in terms of how they build their capital program. How they manage their balance sheet. Certainly, when you think about that business, it's very rare in Mexico to see a business of this scale with US dollar denominated revenues and when you think about the tenor of that portfolio, they've really been able to assemble a very, very attractive basket of assets. And remember our long-term goal is, we don't want to invest outside of our utilities unless we think that we can risk-adjust those cash flows to match the expectations from a risk reward standpoint of our US based Utilities. So the one development that has taken place down there that kind of goes to the issue you are speaking of is over time, we now have the majority of our revenues coming from non-government entities. And I think we see that trend continuing over time and I think there will be periods in our investments in Mexico where we slow our capital spending, we preserve asset value and we leverage the value of our dividend for purposes of our shareholders, but the long-term story is intact. And maybe Faisel, I know you're on the Board of Directors there you can provide some thoughts in terms of how they manage the balance sheet and expectations in terms of creating value in Mexico.

Faisel H. Khan -- Senior Vice President, Finance

I think that in the current environment we want to be very disciplined in terms of how we allocate capital in Mexico and that's through either deferring capital, continuing to look at the dividend, continuing to buy back stock in Mexico. Those are three of the biggest levers that we have in order to create value in Mexico. And so the Board is very focused on discipline in the current environment. Clearly, you know ECA is a great opportunity for us to create a lot of shareholder value and that's where the focus is going to be going forward. So I think it's pretty straightforward from the way we look at it at the Board level. There is the opportunity in LNG and then there is the ability to be disciplined in how we allocate capital to the rest of the business and to shareholders.

Ian -- Barclays -- Analyst

Okay. Got it. That's helpful. Then just on the scenario of permitting process, can you just give an update on where that stands and sort of what the remaining bureaucratic angles might be?

Jeffrey W. Martin -- Chairman and Chief Executive Officer

This is Jeff. I would just make a couple of comments. Number one, is it's a novel request, right. So traditionally, state-owned enterprises have the domain and responsibility for the export of hydrocarbons. This will be the first permit that they've issued, it authorizes the export of hydrocarbons by private entity, number one. Number two, the government has largely been shut down because the pandemic I think Mexico today ranked Number 3 in the world in terms of impact from the virus and death. So they have been going through a really difficult situation economically that's impacted obviously the function of the government, but I would say this and I've mentioned it several times. I think that all the things that you would expect us to be doing as a company, both at Sempra and at IEnova in terms of relationships and value proposition and following up with folks we're doing that. I wish we could have delivered this near permit in Q4 of last year, just saying it is drawn on a little bit further than you probably think reasonable. But look, there's been a lot of extenuating circumstances. The conversations remain quite positive and I'm optimistic that we'll get the permit later in Q3.

Ian -- Barclays -- Analyst

All right, thanks guys.

Jeffrey W. Martin -- Chairman and Chief Executive Officer

Appreciate it.

Operator

We will take our next question from Paul Patterson with Glenrock Associates.

Paul Patterson -- Glenrock Associates -- Analyst

Very good morning, how are you doing?

Jeffrey W. Martin -- Chairman and Chief Executive Officer

Hi Paul.

Paul Patterson -- Glenrock Associates -- Analyst

All my questions have been answered. Just really -- just back to the franchise agreement with San Diego. What's a little unusual, I guess, is this idea of having a competition so to speak. And I'm just -- what's unclear to me because you guys own all these facilities there and everything, what would happen if, in fact, the franchise was actually awarded to another party? What would be the process from there, if you follow what I'm saying? As you mentioned, you're negotiating these around the state and I've obviously seen them around in other places, but never seen a situation where there's a natural competitive bid, so to speak, for the franchise. And what would it mean if I was actually awarded to somebody else?

Jeffrey W. Martin -- Chairman and Chief Executive Officer

I would probably say, Paul, the most probable answer is a -- it is the simplest simple answer, which is in this case the franchise and the City Charter requires a competition, right. It requires they go out and compete. So I don't know how this is done in other jurisdictions, but in San Diego this is a requirement in the City Charter. So it is not like an anomaly, that they're doing something outside of what they were required to do and our approach really is to make sure that we, as I indicated earlier, we approached it with the dose of humility, we put forward a really, really attractive partnership campaign. I think you can look at other jurisdictions, I think Boulder, Colorado is an example, many big things turn into very extended long-term contest. We don't think that's desirable for anyone. And I think what we want to do is use this, Paul as an opportunity for our company to get better and reassess our strength to make sure we put forward commitment that we can stand behind. We can take a century-old relationship and make it better.

Paul Patterson -- Glenrock Associates -- Analyst

Okay. Just to sort of understand that, though, there would be a completely different process if there was the franchise awarded to somebody else that would -- would it be surprising if that resulted in a lot of litigation and cost, etc. if I understand that correctly, is that a way to think about it?

Jeffrey W. Martin -- Chairman and Chief Executive Officer

I don't know if I would characterize it is litigation. I can tell you that our focus and attention is on controlling what we can control, which is we want to put forward the best most compelling value proposition to the city. These are our neighbors, right. This is a place we care about a lot. So we're going to play to win, Paul. And I think that's the 100% focus of our attention.

Paul Patterson -- Glenrock Associates -- Analyst

Okay. Thanks so much and have a [Speech Overlap]

Jeffrey W. Martin -- Chairman and Chief Executive Officer

Appreciate it. Thank you for joining the call.

Operator

It appears there are no further questions at this time. I would like to turn the conference back to Mr. Jeff Martin for closing remarks.

Jeffrey W. Martin -- Chairman and Chief Executive Officer

Thank you all for joining us today. This concludes our call. Most importantly, I hope each of you stay safe and healthy. Feel free per custom to reach out to our IR team with any additional questions. Thank you again.

Operator

[Operator Closing Remarks]

Duration: 45 minutes

Call participants:

Faisel H. Khan -- Senior Vice President, Finance

Jeffrey W. Martin -- Chairman and Chief Executive Officer

Trevor I. Mihalik -- Executive Vice President and Chief Financial Officer

Kevin Sagara -- Group President

Justin Bird -- Chief Executive Officer, Sempra LNG

Constantine Lednev -- Guggenheim Partners -- Analyst

Steve Fleishman -- Wolfe Research -- Analyst

Julien Dumoulin-Smith -- Bank of America -- Analyst

Jeremy Tonet -- JPMorgan -- Analyst

Sophie Karp -- KeyBanc Capital Markets -- Analyst

Stephen Byrd -- Morgan Stanley -- Analyst

Michael Lapides -- Goldman Sachs -- Analyst

Ryan Levine -- Citi -- Analyst

Anthony Crowdell -- Mizuho -- Analyst

Ian -- Barclays -- Analyst

Paul Patterson -- Glenrock Associates -- Analyst

More SRE analysis

All earnings call transcripts

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