Chesapeake Utilities Corporation, under new CEO Jeff Householder, is exiting the natural gas marketing business.
The Dover company has sold 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. Further information will be offered in future reports, a release stated.
“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,” Householder stated. “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,” stated 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.”
Chesapeake has been seeing an uptick of growth, due to an expanding market for natural gas in its territory that includes the Delmarva Peninsula and Florida. It has added a company that transportsnatural gas by truck and another that gathers natural gas in Ohio from wells.
The company is also expanding its pipeline system.