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Updated (10/22): Gas South Acquires Retail Natural Gas Marketing Operations In Florida From Peninsula Energy Services Company

Purchase Positions Gas South Among Top Four Natural Gas Providers In Florida

Chesapeake Utilities Corporation Sells Retail Natural Gas Marketing Business To Three Suppliers

October 9, 2019

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Copyright 2010-19
Reporting by Paul Ring •

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Update, 10/22:

Gas South today officially announced its acquisition of the Florida assets of Peninsula Energy Services Company (PESCO), a subsidiary of Chesapeake Utilities Corporation

The acquisition had been first reported on October 9, with PESCO's non-Florida retail operations and contracts sold to United Energy Trading, LLC (original story below)

Gas South said that the acquisition of PESCO's Florida retail business positions Gas South among the top four natural gas providers in Florida

Gas South entered Florida's commercial and industrial natural gas market in 2014, and will begin serving the acquired customers on November 1, 2019.

Original Story From October 9:

Chesapeake Utilities Corporation (the Company ) today announced that it is exiting the natural gas marketing business through the sale of the majority of the assets of Peninsula Energy Services Company, Inc. (PESCO), the Company's natural gas marketing subsidiary. To date, the Company has executed three separate transactions to sell PESCO's assets and contracts:

PESCO's Florida retail operations will be sold to Gas South LLC.

PESCO's other non-Florida retail operations and contracts were sold to United Energy Trading, LLC (UET).

PESCO's Mid-Atlantic wholesale contracts and Chesapeake Utilities' Delaware division, Maryland division and Sandpiper Energy Asset Management agreements were sold to NJR Energy Services Company (NJRES).

The Company expects to recognize a gain from the sale of the assets in 2019 upon the closing of the transactions. More information will be provided in the Company's third quarter earnings press release and Form 10-Q report as well as subsequent filings.

"After performing a strategic review of the PESCO business unit, we determined that our efforts should be focused on the strategies that support our core energy delivery businesses. The level of investment in infrastructure required to achieve the scale needed for future growth meant that PESCO would not achieve the target returns we expect," noted Jeff Householder, President and CEO of Chesapeake Utilities Corporation. "As a result, we made the decision to exit this business, and have done so in a way that reduces future volatility in our earnings, recovers our investment and improves our earnings outlook going forward."

"Commitment to quality service, access to supply, and service offerings were the driving factors for the selected counterparties. We are working closely with Gas South, UET, and NJRES to ensure each transaction is executed in an efficient manner with minimal impact to the respective customers," added Bill Hancock, Assistant Vice President of PESCO. "We have one remaining small book of business, our Producer Services portfolio, which we are targeting to sell by the end of the year."

Gas South serves more than 300,000 residential, business and governmental customers in Georgia, Florida, North Carolina and South Carolina. Gas South is a wholly-owned subsidiary of Cobb EMC.

United Energy Trading, LLC purchases, transports, and/or sells approximately 2 billion cubic feet/day of natural gas on over 80 pipelines, approximately 400,000 barrels/day of crude oil on over 20 pipelines and over 2.5 million gallons per day throughout North America.

Chesapeake Utilities Corporation is not affiliated with Chesapeake Energy, an oil and natural gas exploration company headquartered in Oklahoma City, Oklahoma.

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