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CONTINGENTLY REDEEMABLE NONCONTROLLING INTEREST | 9 Months Ended
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Sep. 30, 2025
Temporary Equity Disclosure [Abstract] |
CONTINGENTLY REDEEMABLE NONCONTROLLING INTEREST | CONTINGENTLY REDEEMABLE NONCONTROLLING INTEREST SEMPRA INFRASTRUCTURE Investor Equity Subscription In September 2025, PA2 JVCo issued 49.9% of its equity interests to Blackstone for $3.4 billion in cash at closing and a commitment to fund an additional $3.6 billion of capital contributions on a pre-determined funding schedule whereby Blackstone’s capital contributions are scheduled prior to SI Partners capital contributions. SI Partners holds the remaining 50.1% of equity interests in PA2 JVCo, and has committed to fund up to $7.8 billion to PA2 JVCo to support its share of the budgeted PA LNG Phase 2 project construction costs. SI Partners will continue to consolidate PA2 JVCo and direct the activities related to the construction and future operation and maintenance of the PA LNG Phase 2 project. Following the closing, Sempra, Blackstone, KKR Pinnacle and ADIA each hold a 35.1%, 49.9%, 10% and 5% ownership interest, respectively, in the PA LNG Phase 2 project. Upon closing the equity subscription, we received proceeds of $106 million and recorded an increase of $76 million in CRNCI, an increase of $9 million in NCI, and an increase of $16 million, net of $5 million in income tax expense, in Sempra’s shareholders’ equity. Additionally at closing, Blackstone paid its initial contribution and we received $3,166 million in cash, net of $168 million in transaction costs, and recorded an increase of $3,166 million in CRNCI. Distributions and Earnings Allocation Distributions from PA2 JVCo will be made quarterly from available cash to the members in accordance with their distribution percentages, which initially allocates 40.1% and 59.9% of distributions to SI Partners and Blackstone, respectively, until December 31, 2070, after which distributions convert to 50.1% and 49.9% to SI Partners and Blackstone, respectively. Blackstone is entitled to certain adjustments to its share of distributions upon the occurrence of certain events, including termination of LNG offtake contracts that have not been replaced within a specified timeframe, extended incidents of operational underperformance, or material breach of certain affiliate contracts. In the event of liquidation, distributions will continue to follow this allocation until Blackstone has achieved a contractually specified return on its contributed capital, after which such proceeds from liquidation are distributed to SI Partners and Blackstone proportionate to their ownership interest. Earnings are generally allocated 40.1% to SI Partners and 59.9% to Blackstone, subject to adjustments to Blackstone’s share of distributions discussed above. Call Rights and Redemption Features Under the PA2 JVCo LLCA, SI Partners has the right to appoint up to eight managers and Blackstone has the right to appoint up to two managers to PA2 JVCo’s board of managers, with voting power proportionate to their ownership interest. Blackstone has customary minority protections, including consent rights over significant actions such as amendments to the PA2 JVCo LLCA, incurrence of material indebtedness, and changes to the project budget. Call Options. The PA2 JVCo LLCA provides SI Partners with several call rights to purchase Blackstone’s equity interest under certain conditions or upon the occurrence of certain contingent events, including if Blackstone fails to fund required capital contributions or becomes subject to specific disqualifying events, and during certain defined time periods. Blackstone has a reciprocal call right if SI Partners becomes subject to similar disqualifying events, generally at fair market value in a bankruptcy scenario or 75% of fair market value for other disqualifying events. Contingent Redemption. Blackstone’s equity interest represents an NCI in PA2 JVCo and is classified as contingently redeemable because Blackstone has certain redemption and exit rights that are outside the control of SI Partners. These rights include, among others, the ability to require redemption upon (i) failure to complete construction by a specified date; (ii) sustained priority distributions to Blackstone above specified thresholds and for specified time periods as a result of extended periods of operational underperformance exceeding certain thresholds, termination of LNG offtake contracts that have not been replaced within a specified timeframe, or material breach of certain affiliate contracts; or (iii) the occurrence of certain monetization events, including a third-party sale of PA2 JVCo. Because these redemption features are contingent on events not solely within SI Partners’ control, we present Blackstone’s equity interest as a CRNCI, which appears between liabilities and equity in the mezzanine section of Sempra’s Condensed Consolidated Balance Sheet. We initially recorded the CRNCI at the amount for which Blackstone has a claim on the underlying net assets in liquidation at book value. At September 30, 2025, the CRNCI is not currently redeemable, nor is it probable that it will become redeemable because the forecasted completion of the PA LNG Phase 2 project is highly unlikely to occur beyond the contractually specified date in which Blackstone’s ownership interest becomes redeemable; therefore, we did not accrete the CRNCI to its redemption value. If it becomes probable that the CRNCI will become redeemable, we will make a policy election at that time regarding our accounting method of accreting the CRNCI to its redemption value. Either party may propose a third-party sale or other monetization event. Proceeds from such a sale or monetization event are generally allocated 40.1% to SI Partners and 59.9% to Blackstone until Blackstone achieves a contractually specified return on its contributed capital, and thereafter 90% to SI Partners and 10% to Blackstone. Allocation of Interests Upon reaching FID in September 2025, Port Arthur LNG II paid $1.9 billion to Port Arthur LNG I for a 50% ownership interest in shared common facilities located at the site of the natural gas liquefaction projects. As a result, claim on the underlying common facilities in liquidation is split equally between the PA LNG Phase 1 project and the PA LNG Phase 2 project. However, although the ultimate cost of the common facilities will be split equally between the PA LNG Phase 1 project and the PA LNG Phase 2 project upon completion of the PA LNG Phase 2 project, payments for construction costs associated with the common facilities may be made by one project on behalf of both, necessitating an allocation of the appropriate claim on the underlying common facilities between the PA LNG Phase 1 project and the PA LNG Phase 2 project. Because ownership interests in SI Partners, its subsidiaries and their projects differ by percentage and consolidation level, the allocation of claims on the underlying transactions must be further allocated among the respective owners. Such transactions also include the equity subscription, contributions provided by owners at different times based on a pre-determined funding schedule, and transaction costs, which include $122 million paid to Blackstone for fees and reimbursement of certain transaction expenses and $46 million paid to third parties. To effect the allocation of interests, in the three months and nine months ended September 30, 2025, we recorded a decrease in CRNCI of $1,309 million, an increase in NCI of $455 million and an increase in Sempra’s shareholders’ equity of $635 million, net of $219 million in income tax expense.

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