DOVER, Del., June 4, 2013 /PRNewswire/ -- Chesapeake Utilities Corporation (NYSE: CPK) ("Chesapeake") announced today that it has completed the acquisition of the operating assets of Eastern Shore Gas Company ("ESG") and its affiliate, Eastern Shore Propane Company ("ESP"), which are located in Worcester County, Maryland. Chesapeake's wholly-owned subsidiaries, Sandpiper Energy, Inc. and Sharpgas, Inc., acquired and will operate the ESG and ESP assets, respectively. The transaction was consummated on May 31, 2013. Management expects the transaction to be earnings accretive in the first full year of operations. The acquisition was financed through unsecured short-term debt. Chesapeake and ESG obtained the necessary approvals and consents to close the transaction, including approval of the Maryland Public Service Commission ("MPSC"), on May 29, 2013.
The MPSC approval included implementation of delivery service tariff rates for those customers being served via underground distribution mains. With the implementation of tariff rates, the pricing and other conditions of service are regulated by the MPSC. In the first full year of operations, Chesapeake estimates that Sandpiper Energy will save the community over one million dollars ($1,000,000). Residential and commercial/industrial customers will be charged rates based on the rate schedules approved by the MPSC, regardless of whether they use propane or natural gas. After thirty months from the date of the MPSC's order, Chesapeake is required to file a formal, in-depth review of its delivery service tariff rates with the MPSC.
"In late 2012, Chesapeake's interstate pipeline subsidiary, Eastern Shore Natural Gas Company ("Eastern Shore"), completed an expansion to bring natural gas to Worcester County, Maryland. The acquisition of the operating assets of ESG by Sandpiper Energy is a key next step in our growth strategy, enabling us to significantly expand our footprint in Worcester County. We are excited about our prospects for natural gas distribution growth in Worcester County and over the next few months, we will evaluate the potential conversion of the ESG facilities from propane to natural gas. We will proceed with conversions where economically feasible," said Michael P. McMasters, President and Chief Executive Officer of Chesapeake Utilities Corporation.
"In addition to providing savings, our objective is to provide superior service to the customers and communities we serve by: increasing their energy options; maintaining our systems and infrastructure in order to provide safe and reliable delivery of energy to customers; and providing the highest levels of customer service," noted Mr. McMasters.