Chesapeake Utilities Corporation Reports Third Quarter Results

DOVER, Del., Nov. 9, 2017 /PRNewswire/ -- Chesapeake Utilities Corporation (NYSE: CPK) ("Chesapeake Utilities" or the "Company") today reported third quarter financial results. The Company's net income for the quarter ended September 30, 2017 was $6.8 million, compared to $4.4 million for the same quarter of 2016. Earnings per share ("EPS") for the quarter ended September 30, 2017 were $0.42 per share, compared to $0.29 per share for the same quarter of 2016. The increase in net income reflected margin growth across business units for both the Regulated Energy and Unregulated Energy segments, as well as lower operating and maintenance expenses for the quarter.

For the nine months ended September 30, 2017, the Company reported net income of $32.0 million, or $1.96 per share. This represents a decrease of $789,000, or $0.18 per share, compared to the same period in 2016. Higher margins from the Eight Flags Energy, LLC ("Eight Flags") combined heat and power ("CHP") plant, Peninsula Energy Services Company, Inc. ("PESCO"), and Aspire Energy of Ohio, LLC ("Aspire Energy"), new services and customer growth in the natural gas transmission and distribution operations in Florida and on the Delmarva Peninsula, and new rates for Eastern Shore Natural Gas Company ("Eastern Shore") offset the increase in higher expenses to generate and support growth and the impact of warmer weather. An increase in outstanding shares as a result of the equity issuance in September 2016 lowered earnings per share by approximately $0.12 per share for the nine months ended September 30, 2017.

"Our solid results for the third quarter reflect the diverse sources of new gross margin throughout our Company," stated Michael P. McMasters, President and Chief Executive Officer. "Recently completed growth projects are adding value for our stockholders. In the near term, we will commence construction of Eastern Shore's largest ever expansion project, expected to be completed in early 2018, as well other projects that will cultivate future growth," he added. "Investments in system expansion, acquisitions, new service offerings and unique projects like Eight Flags, enhance the continued growth in customers and deliveries in our natural gas distribution and transmission businesses. Our employees continue to excel in identifying new opportunities for growth, and profitably managing current growth. We are also maintaining operating efficiency while providing safe, reliable service to our customers," he concluded.

A more detailed discussion and analysis of the Company's results for each segment is provided in the following pages.

Comparative Results for the Quarters Ended September 30, 2017 and 2016

Operating income for the third quarter increased by $4.1 million to $14.2 million, compared to the same period in 2016, driven by higher retail propane sales volumes and margins, implementation of new rates for Eastern Shore (subject to refund), additional margin from the Gas Reliability Infrastructure Program ("GRIP"), and continued growth from the Company's Delmarva and Florida natural gas distribution operations. Gross margin increased by $4.6 million, or 8.2 percent, which was offset by an increase in other operating expenses of $473,000, or 1.0 percent.

Regulated Energy Segment

Operating income for the Regulated Energy segment increased by $2.1 million, or 15.7 percent, compared to the same period in 2016. Higher operating income resulted from increased gross margin of $1.5 million during the quarter, or 3.4 percent, and a decrease in other operating expenses of $519,000.

The significant components of the $1.5 million gross margin increase included:

    --  $1.0 million of incremental revenue from the implementation of new rates
        for Eastern Shore, which were effective August 1, 2017.
    --  $406,000 generated from additional GRIP investments in the Florida
        natural gas distribution operations; and
    --  $566,000 increase from customer growth in the natural gas distribution
        businesses (excluding service expansions) which was partially offset by
        a $219,000 decrease in interruptible margin from Eastern Shore.

The significant factors contributing to the net decrease of $519,000 in other operating expenses included:

    --  $1.6 million in lower outside services and facilities and maintenance
        costs, due primarily to lower consulting and service contractor costs;
    --  $437,000 in lower benefits and employee-related costs in 2017 (since the
        Company is self-insured for healthcare, benefits costs fluctuate
        depending upon claims filed);
    --  $1.4 million in higher depreciation, asset removal and property tax
        costs associated with recent capital investments.

Unregulated Energy Segment

Operating income for the Unregulated Energy segment increased by $2.1 million, or 67.9 percent, compared to the same period in 2016. Gross margin increased by $3.1 million, or 30.1 percent, which was offset by an increase of $1.0 million, or 7.4 percent, in other operating expenses.

The significant components of the $3.1 million gross margin increase were as follows:

    --  $1.2 million of additional gross margin from increased sales volumes of
        propane to wholesale and retail customers on the Delmarva Peninsula and
        in Florida as well as higher sales of natural gas by Aspire Energy;
    --  $440,000 and $271,000 of additional gross margin from retail and
        wholesale propane margins, respectively, due primarily to favorable
        supply management activities;
    --  $297,000 of additional gross margin from Eight Flags operations, which
        was fully on-line in the third quarter of 2017;
    --  $291,000 of additional gross margin from Aspire Energy as a result of
        pricing amendments to long-term sales agreements; and
    --  $233,000 in increased gross margin due to the absence of the loss for
        Xeron recorded in the third quarter of 2016.

The principal components of the $1.0 million increase in other operating expenses were: $730,000 in higher staffing and associated costs for additional personnel to support growth, $293,000 in expenses associated with the incremental margin from Eight Flags, and $347,000 in higher depreciation, amortization and property tax costs due to increased capital investments and amortization of intangible assets acquired through acquisitions in 2017.

Comparative Results for the Nine Months Ended September 30, 2017 and 2016

Operating income for the nine months ended September 30, 2017 increased by $303,000 to $62.6 million, compared to $62.3 million for the same period in 2016. Gross margin increased by $14.0 million, or 7.3 percent, net of the negative impact of weather, which reduced margin by approximately $1.8 million for the first nine months. Other operating expenses increased by $13.7 million, or 10.7 percent, due primarily to a $4.3 million increase in depreciation, amortization and property taxes and a $9.4 million increase in other operating expenses to support growth.

Regulated Energy Segment

Operating income for the Regulated Energy segment decreased by $745,000, or 1.4 percent, compared to the same period in 2016, due principally to weather and the level and timing of costs associated with growth. Gross margin increased by $5.7 million, despite the impact of weather, which reduced margin by approximately $850,000 for the nine months ended September 30, 2017. The $3.5 million increase in depreciation, amortization and taxes and $3.0 million increase in other operating expenses largely reflect costs associated with recently completed and planned growth projects. Of the total $6.4 million increase in other operating expenses, $4.7 million is associated with Eastern Shore's recently completed projects as well as initiatives that are currently underway.

The significant components of the $5.7 million gross margin increase included:

    --  $1.6 million generated by additional GRIP investments in the Florida
        natural gas distribution operations;
    --  $1.6 million from growth in natural gas distribution and transmission
        services (excluding service expansions);
    --  $1.4 million generated from recently completed natural gas transmission
        expansions, which are more fully discussed in the "Major Projects and
        Initiatives" section later in this press release;
    --  $1.0 million from the implementation of Eastern Shore's new rates, as
        discussed previously;
    --  $534,000 from new natural gas transmission and distribution services
        provided to Eight Flags' CHP plant; and
    --  $249,000 generated as a result of the rate case settlement by the
        Company's Delaware natural gas distribution operations.

The foregoing increases were offset by a decrease in gross margin of $1.2 million from lower customer consumption of energy for the Company's distribution operations in Florida and on the Delmarva Peninsula, due primarily to weather, particularly warmer weather during the first quarter.

The significant components of the $6.4 million increase in other operating expenses included:

    --  $3.5 million in higher depreciation, asset removal and property tax
        costs associated with recent capital investments;
    --  $1.6 million in higher payroll costs for additional personnel to support
        growth;
    --  $855,000 in increased regulatory expenses, due primarily to Eastern
        Shore's rate case; and
    --  $722,000 in higher benefits and employee-related costs in 2017 (since
        the Company is self-insured for healthcare, benefits costs fluctuate
        depending upon filed claims).

Unregulated Energy Segment

Operating income for the Unregulated Energy segment for the nine months ended September 30, 2017 was $10.5 million, an increase of $1.2 million, or 13.3 percent, compared to the same period in 2016. Gross margin increased by $8.4 million, or 18.6 percent, which was offset by an increase of $7.2 million, or 20.0 percent, in operating expenses for the nine months ended September 30, 2017.

The significant components of the $8.4 million gross margin increase were as follows:

    --  $4.2 million of additional gross margin from Eight Flags' CHP plant,
        which commenced operations in June 2016;
    --  $1.8 million from PESCO, due to an increase in the number of contracts
        and customers served as well as additional revenue in the first quarter
        from providing natural gas to a customer in Ohio under a supplier
        agreement, which expired on March 31, 2017;
    --  $1.1 million of additional gross margin from Aspire Energy as a result
        of pricing amendments to long-term gas sales agreements;
    --  $728,000 of additional gross margin from wholesale propane sales, due
        primarily to favorable supply management activities; and
    --  $168,000 of additional gross margin, due primarily to higher sales of
        propane in Florida, a portion of which was associated with the timing of
        deliveries due partially to weather conditions in the third quarter of
        2017, offset by the impact of warmer weather during the first six months
        of 2017.

The significant components of the $7.2 million increase in other operating expenses included:

    --  $2.8 million in higher operating expenses by Eight Flags' CHP plant in
        support of the margin generated;
    --  $1.5 million in higher payroll costs for additional personnel to support
        growth;
    --  $950,000 in higher benefits and employee-related costs in 2017 (since
        the Company is self-insured for healthcare, benefits costs fluctuate
        depending upon claims filed);
    --  $800,000 in higher depreciation expense, of which $424,000 relates to a
        credit adjustment in 2016 recorded in conjunction with the final
        valuation for Aspire Energy; and
    --  $350,000 in higher outside services costs associated primarily with
        growth and ongoing compliance activities.

The Company also incurred $367,000 in non-operating expenses to complete the wind-down of Xeron's operations.

Matters discussed in this release may include forward-looking statements that involve risks and uncertainties. Actual results may differ materially from those in the forward-looking statements. Please refer to the Safe Harbor for Forward-Looking Statements in the Company's 2016 Annual Report on Form 10-K for further information on the risks and uncertainties related to the Company's forward-looking statements.

The discussions of the results use the term "gross margin," a non-Generally Accepted Accounting Principles ("GAAP") financial measure, which management uses to evaluate the performance of the Company's business segments. For an explanation of the calculation of "gross margin," see the footnote to the Financial Summary.

Unless otherwise noted, earnings per share are presented on a diluted basis.

Conference Call

Chesapeake Utilities will host a conference call on Friday, November 10, 2017, at 10:30 a.m. Eastern Time to discuss the Company's financial results for the quarter and nine months ended September 30, 2017. To participate in this call, dial 855.801.6270 and reference Chesapeake Utilities' 2017 Third Quarter Financial Results Conference Call. To access the replay recording of this call, please visit the Company's website at http://investor.chpk.com/results.cfm or download the replay on your mobile device by accessing the Audio cast section of the Company's IR App.

About Chesapeake Utilities Corporation

Chesapeake Utilities is a diversified energy company engaged in natural gas distribution, transmission, gathering and processing, and marketing; electricity generation and distribution; propane gas distribution; and other businesses. Information about Chesapeake Utilities and its family of businesses is available at http://www.chpk.com or through its IR App.

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

For more information, contact:

Beth W. Cooper
Senior Vice President & Chief Financial Officer
302.734.6799



                                                                                                                       Financial Summary

                                                                                                             (in thousands, except per share data)
                                                                                                              ------------------------------------



                                                                                                         Three Months Ended                                    Nine Months Ended

                                                                                                           September 30,                                         September 30,

                                                                                                       2017                    2016                      2017                    2016
                                                                                                       ----                    ----                      ----                    ----

    Gross Margin (1)

      Regulated Energy segment                                                                                 $46,909                                          $45,375                                          $151,147                                          $145,446

      Unregulated Energy segment                                                                     13,272                              10,202                               53,827                                45,380

      Other businesses and eliminations                                                               (105)                               (57)                               (325)                                (166)
                                                                                                       ----                                 ---                                 ----                                  ----

     Total Gross Margin                                                                                        $60,076                                          $55,520                                          $204,649                                          $190,660
                                                                                                               =======                                          =======                                          ========                                          ========


    Operating Income

       Regulated Energy segment                                                                                $15,168                                          $13,115                                           $51,915                                           $52,660

       Unregulated Energy segment                                                                     (989)                            (3,080)                              10,504                                 9,267

       Other businesses and eliminations                                                                 60                                 121                                  161                                   350
                                                                                                        ---                                                                     ---                                   ---

     Total Operating Income                                                                          14,239                              10,156                               62,580                                62,277
                                                                                                     ------                              ------                               ------                                ------


    Other Income (Expense), net                                                                         239                                (28)                               (643)                                 (68)

    Interest Charges                                                                                  3,321                               2,722                                9,133                                 7,996
                                                                                                      -----                               -----                                -----                                 -----

    Pre-tax Income                                                                                   11,157                               7,406                               52,804                                54,213

    Income Taxes                                                                                      4,324                               2,990                               20,781                                21,401
                                                                                                      -----

     Net Income                                                                                                 $6,833                                           $4,416                                           $32,023                                           $32,812
                                                                                                                ======                                           ======                                           =======                                           =======


    Earnings Per Share of Common Stock

    Basic                                                                                                        $0.42                                            $0.29                                             $1.96                                             $2.14

    Diluted                                                                                                      $0.42                                            $0.29                                             $1.96                                             $2.14


    (1) "Gross margin" is determined by deducting the cost of sales from operating revenue. Cost of sales includes the purchased fuel cost for natural gas, electricity and propane and the cost of labor spent on direct revenue-producing activities and excludes depreciation,
     amortization and accretion. Gross margin should not be considered an alternative to operating income or net income, which are determined in accordance with GAAP. The Company believes that gross margin, although a non-GAAP measure, is useful and meaningful to investors as
     a basis for making investment decisions. It provides investors with information that demonstrates the profitability achieved by the Company under its allowed rates for regulated operations and under its competitive pricing structure for non-regulated segments. The
     Company's management uses gross margin in measuring its business units' performance. Other companies may calculate gross margin in a different manner.


    Financial Summary Highlights


    Key variances, between the three months ended September 30, 2016 and 2017, included:


    (in thousands, except per share data)                                                Pre-tax           Net             Earnings
                                                                                         Income           Income          Per Share
                                                                                         ------           ------          ---------

    Third Quarter of 2016 Reported Results                                                         $7,406                           $4,416          $0.29
                                                                                                   ------                           ------          -----


    Adjusting for unusual items:

    Absence of Xeron's third quarter 2016 loss                                                545                     334                      0.02

    Weather impact                                                                          (333)                  (204)                   (0.01)
                                                                                             ----                    ----                     -----

                                                                                              212                     130                      0.01
                                                                                              ---                     ---                      ----

    Increased Gross Margins:

    Customer consumption (non-weather)                                                      1,166                     714                      0.05

    Implementation of new rates for Eastern Shore*                                          1,020                     625                      0.04

    Retail propane margins                                                                    440                     270                      0.02

    GRIP*                                                                                     406                     249                      0.02

    Natural gas growth (excluding service expansions)                                         347                     213                      0.01

    Eight Flags' CHP plant                                                                    304                     186                      0.01

    Pricing amendments to Aspire Energy's long-term agreements                                291                     178                      0.01

    Higher wholesale propane volumes and margins                                              271                     166                      0.01

                                                                                            4,245                   2,601                      0.17
                                                                                            -----                   -----                      ----

     Decreased (Increased) Other Operating Expenses:

    Higher depreciation, asset removal and property tax costs due to new capital          (1,710)                (1,047)                   (0.07)
    investments

    Lower outside services and facilities maintenance costs                                 1,678                   1,028                      0.07

    Higher payroll expense                                                                  (913)                  (559)                   (0.04)

    Lower benefit and other employee-related expenses                                         295                     181                      0.01

    Eight Flags' operating expenses                                                           293                     179                      0.01
                                                                                              ---                     ---                      ----

                                                                                            (357)                  (218)                   (0.02)
                                                                                             ----                    ----                     -----


    Net other changes                                                                       (349)                   (96)                   (0.01)
                                                                                             ----                     ---                     -----

                                                                                            (349)                   (96)                   (0.01)


    EPS impact of increase in outstanding shares due to September 2016 offering                 -                      -                   (0.02)
                                                                                              ---                    ---                    -----

    Third Quarter of 2017 Reported Results                                                        $11,157                           $6,833          $0.42
                                                                                                  =======                           ======          =====


         *See the Major Projects and Initiatives table later in this press release.

Key variances, between the nine months ended September 30, 2016 and 2017, included:



    (in thousands, except per share data)                                           Pre-tax           Net             Earnings
                                                                                    Income           Income          Per Share
                                                                                    ------           ------          ---------

    Nine Months Ended September 30, 2016 Reported Results                                    $54,213                           $32,812          $2.14
                                                                                             -------                           -------          -----


    Adjusting for unusual items:

    Weather impact                                                                   (1,782)                (1,081)                    (0.07)

    Wind-down and absence of loss from Xeron operations                                (341)                  (207)                    (0.01)
                                                                                        ----                    ----

                                                                                     (2,123)                (1,288)                    (0.08)
                                                                                      ------                  ------                      -----

    Increased Gross Margins:

    Eight Flags' CHP plant                                                             4,721                   2,863                       0.19

    Natural gas marketing                                                              1,760                   1,067                       0.07

    GRIP*                                                                              1,619                     982                       0.06

    Natural gas growth (excluding service expansions)                                  1,574                     955                       0.06

    Service expansions*                                                                1,371                     831                       0.05

    Pricing amendments to Aspire Energy's long-term agreements                         1,143                     693                       0.04

    Implementation of new rates for Eastern Shore*                                     1,020                     619                       0.04

    Wholesale propane margins                                                            728                     441                       0.03

    Customer consumption (non-weather)                                                   700                     425                       0.03

    Implementation of Delaware Division settled rates                                    249                     151                       0.01
                                                                                         ---                     ---                       ----

                                                                                      14,885                   9,027                       0.58
                                                                                      ------                   -----                       ----

    Increased Other Operating Expenses:

    Higher depreciation, asset removal and property tax costs due to new capital     (4,251)                (2,578)                    (0.17)
    investments

    Higher payroll expense                                                           (3,074)                (1,864)                    (0.12)

    Eight Flags' operating expenses                                                  (2,821)                (1,711)                    (0.11)

    Higher benefit and other employee-related expenses                               (1,669)                (1,012)                    (0.07)

    Higher regulatory expenses associated with rate filings                            (855)                  (519)                    (0.03)

    Higher outside services and facilities maintenance costs                           (318)                  (193)                    (0.01)
                                                                                        ----                    ----                      -----

                                                                                    (12,988)                (7,877)                    (0.51)
                                                                                     -------                  ------                      -----


    Interest charges                                                                 (1,136)                  (689)                    (0.04)

    Net other changes                                                                   (47)                     38                     (0.01)
                                                                                         ---                     ---                      -----

                                                                                     (1,183)                  (651)                    (0.05)


    EPS impact of increase in outstanding shares due to September 2016 offering            -                      -                    (0.12)
                                                                                         ---                    ---                     -----

    Nine Months Ended September 30, 2017 Reported Results                                    $52,804                           $32,023          $1.96
                                                                                             =======                           =======          =====


         *See the Major Projects and Initiatives table later in this press release.

Major Projects and Initiatives

The following table summarizes gross margin for the Company's major projects and initiatives recently completed and initiatives currently underway, but which will be completed in the future. Gross margin reflects operating revenue less cost of sales, excluding depreciation, amortization and accretion (dollars in thousands):


                                                                                                                                                                                   Gross Margin for the Period

                                                                                                                             Three Months Ended                                 Nine Months Ended                  Year Ended

                                                                                                                                September 30,                                     September 30,                   December 31,            Estimate for


                                                                                                                    2017                       2016                 Variance          2017                      2016           Variance         2016       2017                  2018          2019
                                                                                                                    ----                       ----                                   ----                      ----           --------         ----       ----                  ----          ----

    Major Projects and Initiatives
    Recently Completed

    Capital Investment Projects                                                                                                 $9,807                                $8,963                                   $844             $29,533                           $21,822                  $7,711     $29,819 $35,346 $31,814 $32,724

         Eastern Shore Rate Case (1)                                                                               1,020                          -                    1,020         1,020                         -              1,020            -       TBD                  TBD          TBD

    Settled Delaware Division Rate Case                                                                              431                        469                      (38)        1,596                     1,347                 249        1,487      2,250                 2,250         2,250
                                                                                                                     ---                        ---                       ---         -----                     -----                 ---        -----      -----                 -----         -----

    Total Major Projects and Initiatives Recently Completed                                                       11,258                      9,432                     1,826        32,149                    23,169               8,980       31,306     37,596                34,064        34,974
                                                                                                                  ------                      -----                     -----        ------                    ------               -----       ------     ------                ------        ------

    Future Major Projects and Initiatives

    Capital Investment Projects

    2017 Eastern Shore System Expansion                                                                                -                         -                        -            -                        -                  -           -       126                 9,313        15,799

    Northwest Florida Expansion                                                                                        -                         -                        -            -                        -                  -           -         -                3,484         5,127

    Other Florida Pipeline Expansions                                                                                  -                         -                        -            -                        -                  -           -         -                2,044         2,542
                                                                                                                     ---                       ---                      ---          ---                      ---                ---         ---       ---                -----         -----

    Total Future Major Projects and Initiatives                                                                        -                         -                        -            -                        -                  -           -       126                14,841        23,468
                                                                                                                     ---                       ---                      ---          ---                      ---                ---         ---       ---                ------        ------

    Total                                                                                                                      $11,258                                $9,432                                 $1,826             $32,149                           $23,169                  $8,980     $31,306 $37,722 $48,905 $58,442
                                                                                                                               =======                                ======                                 ======             =======                           =======                  ======     ======= ======= ======= =======



    (1) In January 2017, Eastern Shore filed a rate case with the FERC to recover the costs of the 2016 System Reliability Project and other investments and expenses
    associated with the expansion, reliability and safety initiatives completed by ESNG since its last rate settlement in 2012.  Settlement discussions among Eastern Shore,
    intervenors and the FERC Staff are ongoing and future margin contributions will be provided once a settlement is finalized.  For the third quarter of 2017, a portion of the
    increase in rates, implemented subject to refund in August 2017, has been recorded as revenue and the remainder has been reserved pending the settlement.

Major Projects and Initiatives Recently Completed

The following table summarizes gross margin generated from the Company's major projects and initiatives recently completed (dollars in thousands):


                                                                                                                                                                                Gross Margin for the Period

                                                                                                                  Three Months Ended                                         Nine Months Ended                         Year Ended

                                                                                                                    September 30,                                              September 30,                          December 31,                                     Estimate for

                                                                                                          2017                    2016                        Variance        2017                     2016                     Variance                      2016                            2017                                      2018                                        2019
                                                                                                          ----                    ----                        --------        ----                     ----                     --------                      ----                            ----                                      ----                                        ----

    Capital Investment Projects:
    ----------------------------

    Service Expansions:

    Short-term contracts (Delaware)                                                                                $1,283                                      $3,080                             $(1,797)                                      $5,140                                      $8,271                                             $(3,131)                                     $11,454                                      $5,642                                     $1,096                               $1,096

    Long-term contracts (Delaware)                                                                       2,793                     862                           1,931                     7,089                   2,587                                      4,502                1,815                   7,611                                    7,605                                        7,583
                                                                                                         -----                     ---                                                    -----                   -----                                      -----                -----                                                                                                       -----

    Total Service Expansions                                                                             4,076                   3,942                             134                    12,229                  10,858                                      1,371               13,269                  13,253                                    8,701                                        8,679
                                                                                                         -----                   -----                             ---                    ------                  ------                                      -----               ------                  ------                                    -----                                        -----

    Florida GRIP                                                                                         3,393                   2,987                             406                    10,002                   8,383                                      1,619               11,552                  13,727                                   14,407                                       15,085

    Eight Flags' CHP Plant                                                                               2,338                   2,034                             304                     7,302                   2,581                                      4,721                4,998                   8,366                                    8,706                                        8,960
                                                                                                         -----                   -----                             ---                     -----                   -----                                      -----                -----                   -----                                    -----                                        -----

    Total Capital Investment Projects                                                                    9,807                   8,963                             844                    29,533                  21,822                                      7,711               29,819                  35,346                                   31,814                                       32,724
                                                                                                         -----                   -----                             ---                    ------                  ------                                      -----               ------                  ------                                   ------                                       ------

    Eastern Shore Rate Case (1)                                                                          1,020                       -                          1,020                     1,020                       -                                     1,020                    -                    TBD                                     TBD                                         TBD
                                                                                                         -----                     ---                          -----                     -----                     ---                                     -----                  ---                    ---                                     ---                                         ---

    Settled Delaware Division Rate Case                                                                    431                     469                            (38)                    1,596                   1,347                                        249                1,487                   2,250                                    2,250                                        2,250
                                                                                                           ---                                                    ---                     -----                   -----                                        ---                -----                   -----                                                                                -----

    Total Major Projects and Initiatives Recently Completed                                                       $11,258                                      $9,432                               $1,826                                      $32,149                                     $23,169                                               $8,980                                      $31,306                                     $37,596                                    $34,064                              $34,974
                                                                                                                  =======                                      ======                               ======                                      =======                                     =======                                               ======                                      =======                                     =======                                    =======                              =======


    (1)  In January 2017, Eastern Shore filed a rate case with the FERC to recover the costs of the 2016 System Reliability Project and other investments and expenses associated with the expansion, reliability and safety initiatives completed by ESNG since its last rate settlement in 2012.  Settlement discussions among Eastern Shore, intervenors and the FERC Staff are ongoing and future margin contributions will be provided once a settlement is finalized. For the third quarter of 2017, a portion of the increase in rates, implemented subject
     to refund in August 2017, has been recorded as revenue and the remainder has been reserved pending the settlement.

Service Expansions

In August 2014, Eastern Shore entered into a precedent agreement with an electric power generator in Kent County, Delaware, to provide a 20-year OPT 90<= natural gas transmission service for 45,000 dekatherms per day ("Dts/d") deliverable to the lateral serving the customer's facility. In July 2016, the FERC authorized Eastern Shore to construct and operate the project, which consists of 5.4 miles of 16-inch pipeline looping and new compression capability in Delaware. Eastern Shore provided interim services to this customer pending construction of facilities. Construction of the project was completed, and long-term service commenced in March 2017. This service generated an additional gross margin of $106,000 during the nine months ended September 30, 2017 compared to the same period in 2016. There was no incremental margin change during the third quarter as the margin generated from the permanent services equated to the margin generated from providing interim services during the third quarter of 2016. This service is expected to generate gross margin of $7.0 million for 2017 and between $5.8 million and $7.8 million annually through the remaining term of the agreement.

In October 2015, Eastern Shore submitted an application to the FERC to make certain meter tube and control valve replacements and related improvements at its Texas Eastern Transmission, LP ("TETLP") interconnect facilities to increase natural gas receipts from TETLP by 53,000 Dts/d, for a total capacity of 160,000 Dts/d. In December 2015, the FERC authorized Eastern Shore to proceed with this project, which was completed and placed in service in March 2016. Approximately 35 percent of the increased capacity has been subscribed on a short-term firm service basis through October 2017. This service generated an additional gross margin of $80,000 and $1.3 million for the three and nine months ended September 30, 2017, respectively, compared to the same periods in 2016. The remaining capacity is available for firm or interruptible service.

System Reliability Project: In July 2016, the FERC authorized Eastern Shore to construct and operate the proposed System Reliability Project, which consisted of approximately 10.1 miles of 16-inch pipeline looping and auxiliary facilities in New Castle and Kent Counties, Delaware, and a new compressor at its existing Bridgeville compressor station in Sussex County, Delaware. A 2.5 mile looping segment was completed and placed into service in December 2016. The remaining looping and the new compressor were completed and placed into service in the second quarter of 2017. This project was included in Eastern Shore's January 2017 base rate case filing with the FERC. The Company has assumed recovery of this project's costs in August 2017, coinciding with the proposed effectiveness of new rates, subject to refund pending final resolution of the base rate case.

GRIP

GRIP is a natural gas pipe replacement program approved by the Florida Public Service Commission ("PSC"), designed to expedite the replacement of qualifying distribution mains and services (any material other than coated steel or plastic) to enhance the reliability and integrity of the Company's Florida natural gas distribution systems. This program allows recovery, through regulated rates, of capital and other program-related costs, inclusive of a return on investment, associated with the replacement of the mains and services. Since the program's inception in August 2012, the Company has invested $110.5 million to replace 240 miles of qualifying distribution mains, including $7.6 million during the first nine months of 2017. The increased investment in GRIP generated additional gross margin of $406,000 and $1.6 million for the three and nine months ended September 30, 2017, respectively, compared to the same periods in 2016.

Eight Flags' CHP plant

In June 2016, Eight Flags completed construction of a CHP plant on Amelia Island, Florida. This CHP plant, which consists of a natural-gas-fired turbine and associated electric generator, produces approximately 20 megawatts of base load power and includes a heat recovery steam generator capable of providing approximately 75,000 pounds per hour of residual steam. In June 2016, Eight Flags began selling power generated from the CHP plant to Florida Public Utilities Company ("FPU"), the Company's wholly-owned subsidiary, pursuant to a 20-year power purchase agreement for distribution to FPU's retail electric customers. In July 2016, it also started selling steam to the industrial customer that owns the property on which Eight Flags' CHP plant is located, pursuant to a separate 20-year contract.

The CHP plant is powered by natural gas transported by FPU through its distribution system and by Peninsula Pipeline Company, Inc. ("Peninsula Pipeline"), the Company's wholly-owned Florida intrastate pipeline subsidiary. For the three and nine months ended September 30, 2017, Eight Flags and other affiliates of the Company generated $304,000 and $4.7 million, respectively, in additional gross margin as a result of these services that began in June 2016. This amount includes gross margin of $7,000 and $534,000, for the three and nine months ended September 30, 2017, respectively, attributable to natural gas distribution and transportation services provided to the CHP plant by the Company's regulated affiliates.

Major Projects and Initiatives Currently Underway

Northwest Florida Expansion Project: Peninsula Pipeline and the Company's Florida natural gas division are constructing a pipeline in Escambia County, Florida that will interconnect with the Florida Gas Transmission Company ("FGT") interstate pipeline. The project consists of 33 miles of 12-inch transmission line from the FGT interconnect that will be operated by Peninsula Pipeline and 8 miles of 8-inch lateral distribution lines that will be operated by the Company's Florida natural gas division. The Company has signed agreements to serve two large customers and is marketing to other customers close to the facilities. The estimated annual gross margin associated with this project, once in service, is approximately $5.1 million.

New Smyrna Beach, Florida Project: Peninsula Pipeline is constructing a pipeline in Volusia County, Florida that will interconnect with FGT's pipeline. The project consists of 14 miles of transmission line from the FGT interconnect that will be operated by Peninsula Pipeline. The Company entered into an agreement to serve FPU customers. The estimated annual gross margin associated with this project, once in service, is approximately $1.4 million.

2017 Expansion Project: In May 2016, Eastern Shore submitted a request to the FERC to initiate the FERC's pre-filing process for its proposed 2017 Expansion Project. This project, which will expand Eastern Shore's firm service capacity by 26 percent, will provide 61,162 Dts/d of additional firm natural gas transportation service on Eastern Shore's pipeline system with an additional 52,500 Dts/d of firm transportation service at certain Eastern Shore receipt facilities pursuant to precedent agreements Eastern Shore entered into with existing customers. We expect to invest approximately $115.0 million in this expansion project and for the project to generate approximately $15.8 million of gross margin in the first full year after the new transportation services go into effect. On October 4, 2017, FERC issued a Certificate of Public Convenience and Necessity authorizing Eastern Shore to construct and operate the proposed 2017 Expansion Project.

Other major factors influencing gross margin

Weather and Consumption
Temperature variation in 2017 negatively impacted the Company's earnings. Compared to the prior year, cooler temperatures in Florida during the third quarter of 2017, reduced gross margin by $333,000, and warmer temperatures in all of the Company's service territories during the first nine months of 2017, reduced gross margin by $1.8 million, respectively. Warmer than normal temperatures for the quarter and nine months ended September 30, 2017, reduced gross margin by $193,000 and $4.3 million, respectively. The following table summarizes heating degree-day ("HDD") and cooling degree-day ("CDD") variances from the 10-year average HDD/CDD ("Normal") for the three and nine months ended September 30, 2017 and 2016.



    HDD and CDD Information


                                                    Three Months Ended                              Nine Months Ended

                                                      September 30,                                   September 30,

                                                2017                   2016        Variance      2017                     2016           Variance
                                                ----                   ----        --------      ----                     ----           --------

    Delmarva

    Actual HDD                                    16                            11                  5                           2,262                          2,590         (328)

    10-Year Average HDD ("Delmarva Normal")       62                            65                (3)                          2,845                          2,919          (74)
                                                                                                                                                           -----

    Variance from Delmarva Normal               (46)                         (54)                                     (583)                       (329)
                                                 ---                           ---                                       ----                         ----

    Florida

    Actual HDD                                     -                            -                 -                            298                            514         (216)

    10-Year Average HDD ("Florida Normal")         -                            -                 -                            602                            553            49
                                                                              ---                                              ---                            ---

    Variance from Florida Normal                             -                                -                                      (304)                          (39)
                                                           ---                              ---                                       ----                            ---

    Ohio

    Actual HDD                                    80                            39                 41                           3,072                          3,596         (524)

    10-Year Average HDD ("Ohio Normal")           92                           103               (11)                          3,866                          3,865             1
                                                                              ---                                                                           -----

    Variance from Ohio Normal                   (12)                         (64)                                     (794)                       (269)
                                                 ---                           ---                                       ----                         ----

    Florida

    Actual CDD                                 1,526                         1,679              (153)                          2,606                          2,792         (186)

    10-Year Average CDD ("Florida CDD Normal") 1,542                         1,523                 19                           2,579                          2,548            31
                                                                            -----                                                                           -----

    Variance from Florida CDD Normal            (16)                          156                                         27                          244
                                                 ---                           ---                                        ---                          ---

Propane Operations
The Company's Florida and Delmarva propane distribution operations added $2.0 million and $1.4 million, in incremental margin for the three and nine months ended September 30, 2017, respectively, compared to the same periods in 2016. Higher volumes sold to retail customers and improved margins due to effective supply management activities generated $905,000 and $440,000, in incremental margin, for the three months ended September 30, 2017, respectively, compared to the same period in 2016 and higher service revenue added $187,000 in additional margin, during the quarter.

For the nine months ended September 2017, higher volumes sold to retail customers and improved margins due to effective supply management activities generated $142,000 and $121,000, in incremental margin, respectively, compared to the same period in 2016 and higher service revenue added $244,000, in additional margin during the period.

Wholesale propane margins increased, generating additional gross margin of $271,000 and $728,000 for the three and nine months ended September 30, 2017, respectively, due primarily to higher volumes sold and improved margins resulting from supply management activities.

PESCO
PESCO provides natural gas supply and supply management services to residential, commercial, industrial and wholesale customers in Florida, on the Delmarva Peninsula, in Ohio, and, as a result of the recent acquisition of certain operating assets of ARM Energy Management, LLC, in western Pennsylvania. PESCO competes with regulated utilities and other unregulated third-party marketers to sell natural gas supplies directly to residential, commercial and industrial customers through competitively-priced contracts. PESCO does not currently own or operate any natural gas transmission or distribution assets but sells gas that is delivered to retail, commercial or wholesale customers through affiliated and non-affiliated local distribution company systems and transmission pipelines. The Company's Delmarva natural gas distribution operations entered into asset management agreements with PESCO to manage a portion of their natural gas pipeline and storage capacity for three years beginning on April 1, 2017.

For the three months ended September 30, 2017, PESCO's gross margin increased by $56,000. For the nine months ended September 30, 2017, PESCO generated additional gross margin of $1.8 million compared to the same period in 2016, largely as a result of revenues from a natural gas supplier agreement with a customer in Ohio which expired on March 31, 2017, as well as additional customers in Florida, partially offset by lower margin in the Mid-Atlantic region, primarily during the first quarter of 2017.

Xeron
As disclosed previously, Xeron's operations were wound down during the second quarter of 2017. As a result, Xeron did not generate an operating loss during the third quarter of 2017 and will not report operating results during the fourth quarter of 2017 or subsequent years. During the third quarter of 2016, Xeron generated a pre-tax loss of $486,000. On a year-to-date basis, Xeron's pre-tax operating loss increased by $375,000, compared to the same period in 2016, driven primarily by non-recurring employee severance costs and costs associated with the termination of leased office space in Houston, Texas. The Company does not anticipate incurring any additional costs that will have a material impact associated with winding down Xeron's operations.

Other Natural Gas Growth - Distribution Operations
In addition to service expansions, the Company's natural gas distribution operations on the Delmarva Peninsula generated $379,000 and $1.0 million in additional gross margin for the three and nine months ended September 30, 2017, respectively, compared to the same periods in 2016, due to an increase in residential, commercial and industrial customers served. The average number of residential customers on the Delmarva Peninsula increased by 3.7 percent and 3.8 percent during the three and nine months ended September 30, 2017, respectively, compared to the same periods in 2016. The Company's natural gas distribution operations in Florida generated $187,000 and $1.2 million in additional gross margin for the three and nine months ended September 30, 2017, respectively, compared to the same periods in 2016, due primarily to an increase in commercial and industrial customers in Florida.

Regulatory Proceedings

Delaware Division Rate Case
In December 2016, the Delaware PSC approved a settlement agreement, which, among other things, provided for an increase in the Company's Delaware division revenue requirement of $2.25 million and a rate of return on common equity of 9.75 percent. The new authorized rates went into effect on January 1, 2017. For the three months ended September 30, 2017, compared to the same period in 2016, revenue decreased by $38,000, reflecting the variance between settled and interim rates. For the nine months ended September 30, 2017, compared to the same period in 2016, the Company recorded incremental revenue of approximately $249,000 related to the rate case. Any amounts collected through 2016 interim rates in excess of the respective portion of the $2.25 million were refunded to the ratepayers in March 2017.

Eastern Shore Rate Case

In January 2017, Eastern Shore filed a base rate proceeding with the FERC, as required by the terms of its 2012 rate case settlement agreement. Eastern Shore's proposed rates were based on a cost of service of approximately $60 million, resulting in an overall requested revenue increase of approximately $18.9 million and a requested rate of return on common equity of 13.75 percent. The filing includes incremental rates for the White Oak Mainline Expansion project, which benefits a single customer. Eastern Shore also proposed a revision to its depreciation rates and negative salvage rate based on the results of independent, third-party depreciation and negative salvage value studies. In March 2017, the FERC issued an order suspending the effectiveness of the proposed tariff rates for the usual five-month period.

On August 1, 2017, Eastern Shore implemented new rates, subject to refund based upon the outcome of the rate proceeding. Eastern Shore recorded incremental revenue of approximately $1.0 million for the three and nine months ended September 30, 2017, and established a regulatory liability to reserve a portion of the total incremental revenues generated by the new rates until resolution of the rate case. Settlement discussions continue with the other parties to the case.

Investing for Future Growth
To support and continue its growth, the Company has expanded, and will continue to expand, its resources and capabilities. Eastern Shore has expanded, and has announced significant additional expansions to, its transmission system, and is, therefore, increasing its staffing. The Company requested recovery of most of Eastern Shore's increased staffing costs in its 2017 rate case filing. Growth in non-regulated energy businesses, including Aspire Energy, PESCO and Eight Flags, requires additional staff as well as corporate resources to support the increased level of business operations. Finally, to allow the Company to continue to identify and move growth initiatives forward and to assist in developing additional initiatives, resources have been added in the Company's corporate shared services departments. In the three and nine months ended September 30, 2017, the Company's staffing and associated costs increased by $617,000 and $4.7 million, or three percent and nine percent, respectively, compared to the same periods in 2016. The Company is prudently managing the pace and magnitude of the investments being made, while ensuring that it appropriately expands its human resources and systems capabilities to capitalize on future growth opportunities.


                                                   Chesapeake Utilities Corporation and Subsidiaries

                                                Condensed Consolidated Statements of Income (Unaudited)

                                                   (in thousands, except shares and per share data)


                                                                 Three Months Ended                            Nine Months Ended
                                                                 ------------------                            -----------------

                                                                 September 30,                             September 30,

                                                               2017                    2016              2017                     2016
                                                               ----                    ----              ----                     ----

    Operating Revenues

    Regulated Energy                                                   $69,703                                  $70,019                 $238,353  $226,630

    Unregulated Energy and other                             57,233                               38,329                      198,827     130,356

    Total Operating Revenues                                126,936                              108,348                      437,180     356,986
                                                            -------                              -------                      -------     -------

    Operating Expenses

    Regulated Energy cost of sales                           22,794                               24,644                       87,206      81,184

    Unregulated Energy and other cost of sales               44,066                               28,183                      145,325      85,142

    Operations                                               29,667                               30,126                       92,990      85,370

    Maintenance                                               2,737                                3,542                        9,370       8,925

    Gain from a settlement                                        -                                   -                       (130)      (130)

    Depreciation and amortization                             9,362                                8,209                       27,267      23,493

    Other taxes                                               4,071                                3,488                       12,572      10,725

    Total operating expenses                                112,697                               98,192                      374,600     294,709
                                                            -------                               ------                      -------     -------

    Operating Income                                         14,239                               10,156                       62,580      62,277

    Other income (expense), net                                 239                                 (28)                       (643)       (68)

    Interest charges                                          3,321                                2,722                        9,133       7,996


    Income Before Income Taxes                               11,157                                7,406                       52,804      54,213

    Income taxes                                              4,324                                2,990                       20,781      21,401
                                                              -----

    Net Income                                                          $6,833                                   $4,416                  $32,023   $32,812
                                                                        ======                                   ======                  =======   =======

    Weighted Average Common Shares Outstanding:

    Basic                                                16,344,442                           15,372,413                   16,334,210  15,324,932

    Diluted                                              16,389,635                           15,412,783                   16,378,633  15,365,955

    Earnings Per Share of Common Stock:

    Basic                                                                $0.42                                    $0.29                    $1.96     $2.14

    Diluted                                                              $0.42                                    $0.29                    $1.96     $2.14


                                   Chesapeake Utilities Corporation and Subsidiaries

                                   Condensed Consolidated Balance Sheets (Unaudited)



    Assets                                      September 30, 2017                   December 31, 2016
                                                ------------------                   -----------------

    (in thousands, except shares
     and per share data)

     Property, Plant and Equipment

    Regulated Energy                                                  $1,050,332                           $957,681

    Unregulated Energy                                     207,331                               196,800

    Other businesses and
     eliminations                                           26,061                                21,114

     Total property, plant and
      equipment                                          1,283,724                             1,175,595

     Less:  Accumulated
      depreciation and
      amortization                                       (267,138)                            (245,207)

     Plus:  Construction work in
      progress                                              69,053                                56,276

     Net property, plant and
      equipment                                          1,085,639                               986,664
                                                         ---------                               -------

     Current Assets

    Cash and cash equivalents                                3,386                                 4,178

    Accounts receivable (less
     allowance for uncollectible
     accounts of $912 and $909,
     respectively)                                          52,775                                62,803

    Accrued revenue                                         14,307                                16,986

    Propane inventory, at average
     cost                                                    5,226                                 6,457

    Other inventory, at average
     cost                                                   12,711                                 4,576

    Regulatory assets                                        9,761                                 7,694

    Storage gas prepayments                                  6,876                                 5,484

    Income taxes receivable                                 26,741                                22,888

    Prepaid expenses                                        10,899                                 6,792

    Mark-to-market energy assets                             1,526                                   823

    Other current assets                                     4,797                                 2,470
                                                             -----                                 -----

     Total current assets                                  149,005                               141,151
                                                           -------                               -------

     Deferred Charges and Other
      Assets

    Goodwill                                                21,944                                15,070

    Other intangible assets, net                             4,608                                 1,843

    Investments, at fair value                               6,380                                 4,902

    Regulatory assets                                       75,793                                76,803

    Receivables and other
     deferred charges                                        3,381                                 2,786
                                                             -----                                 -----

     Total deferred charges and
      other assets                                         112,106                               101,404
                                                           -------                               -------

    Total Assets                                                      $1,346,750                         $1,229,219
                                                                      ==========                         ==========


                                                                                 Chesapeake Utilities Corporation and Subsidiaries

                                                                                 Condensed Consolidated Balance Sheets (Unaudited)

    Capitalization and Liabilities                                                                                                 September 30, 2017            December 31, 2016
                                                                                                                                   ------------------            -----------------

    (in thousands, except shares and per share data)

     Capitalization

     Stockholders' equity

    Preferred stock, par value $0.01 per share (authorized 2,000,000 shares), no                                                                    $          -                      $         -
    shares issued and outstanding

    Common stock, par value $0.4867 per share (authorized 25,000,000 shares)                                                                    7,955                           7,935

     Additional paid-in capital                                                                                                               252,722                         250,967

     Retained earnings                                                                                                                        208,402                         192,062

     Accumulated other comprehensive loss                                                                                                     (5,259)                        (4,878)

     Deferred compensation obligation                                                                                                           3,366                           2,416

     Treasury stock                                                                                                                           (3,366)                        (2,416)
                                                                                                                                               ------                          ------

     Total stockholders' equity                                                                                                               463,820                         446,086

     Long-term debt, net of current maturities                                                                                                201,248                         136,954

     Total capitalization                                                                                                                     665,068                         583,040
                                                                                                                                              -------                         -------

     Current Liabilities

    Current portion of long-term debt                                                                                                          12,136                          12,099

    Short-term borrowing                                                                                                                      203,098                         209,871

    Accounts payable                                                                                                                           53,284                          56,935

    Customer deposits and refunds                                                                                                              32,493                          29,238

    Accrued interest                                                                                                                            3,361                           1,312

    Dividends payable                                                                                                                           5,312                           4,973

    Accrued compensation                                                                                                                        8,544                          10,496

    Regulatory liabilities                                                                                                                      5,338                           1,291

    Mark-to-market energy liabilities                                                                                                           1,732                             773

    Other accrued liabilities                                                                                                                  13,972                           7,063
                                                                                                                                               ------                           -----

     Total current liabilities                                                                                                                339,270                         334,051
                                                                                                                                              -------                         -------

     Deferred Credits and Other Liabilities

    Deferred income taxes                                                                                                                     252,273                         222,894

    Regulatory liabilities                                                                                                                     42,915                          43,064

    Environmental liabilities                                                                                                                   8,382                           8,592

    Other pension and benefit costs                                                                                                            32,059                          32,828

    Deferred investment tax credits and other liabilities                                                                                       6,783                           4,750
                                                                                                                                                -----                           -----

     Total deferred credits and other liabilities                                                                                             342,412                         312,128
                                                                                                                                              -------                         -------

    Total Capitalization and Liabilities                                                                                                              $1,346,750                        $1,229,219
                                                                                                                                                      ==========                        ==========


                                                                                                                             Chesapeake Utilities Corporation and Subsidiaries

                                                                                                                             Distribution Utility Statistical Data (Unaudited)


                                                For the Three Months Ended September 30, 2017                                              For the Three Months Ended September 30, 2016
                                                ---------------------------------------------

                             Delmarva NG            Chesapeake                     FPU NG            FPU Electric   Delmarva NG               Chesapeake                     FPU NG               FPU Electric
                             Distribution                                      Distribution          Distribution   Distribution                                         Distribution             Distribution
                                                     Utilities                                                                                 Utilities
                                                      Florida                                                                                   Florida
                                                    NG Division                                                                               NG Division
                                                    -----------                                                                               -----------

    Operating Revenues

    (in thousands)

      Residential                          $5,705                                             $1,247                                   $6,544                                             $14,112                         $5,327             $1,139    $5,016 $15,186

      Commercial                    5,888                              1,344                                  6,070                     11,701                                      5,136                          1,201             5,752     11,991

    Industrial                      1,700                              1,524                                  5,025                        748                                      1,695                          1,581             4,825        676

    Other (1)                          92                                954                                  (854)                   (2,481)                                      (76)                           908               797    (1,805)
    --------                          ---                                ---                                   ----                     ------                                        ---                            ---               ---     ------

    Total Operating Revenues              $13,385                                             $5,069                                  $16,785                                             $24,080                        $12,082             $4,829   $16,390 $26,048


    Volume (in Dts/MWHs)

      Residential                 184,993                             53,228                                247,118                     93,889                                    176,886                         47,274           196,831     99,896

      Commercial                  449,543                          1,172,625                                366,318                     88,917                                    469,921                      1,313,963           409,155     90,013

    Industrial                  1,169,465                          2,393,709                              1,082,701                      4,340                                  1,135,077                      2,313,776         1,029,165      5,890

    Other                          35,519                                  -                              (46,834)                     1,880                                     28,208                              -              601      1,979
    -----                          ------                                ---                               -------                      -----                                     ------                            ---              ---      -----

    Total                       1,839,520                          3,619,562                              1,649,303                    189,026                                  1,810,092                      3,675,013         1,635,752    197,778


    Average Customers

      Residential                  68,118                             15,782                                 54,543                     24,628                                     65,663                         15,337            53,314     24,367

      Commercial                    6,782                              1,425                                  4,007                      7,455                                      6,695                          1,408             4,216      7,401

    Industrial                        145                                 78                                  2,132                          2                                        125                             74             1,814          2

    Other                               3                                  -                                     -                         -                                         6                              -                -         -
    -----                             ---                                ---                                   ---                       ---                                       ---                            ---              ---       ---

    Total                          75,048                             17,285                                 60,682                     32,085                                     72,489                         16,819            59,344     31,770
    -----                          ------                             ------                                 ------                     ------                                     ------                         ------            ------     ------


                                                                                                                                                                          Chesapeake Utilities Corporation and Subsidiaries

                                                                                                                                                                          Distribution Utility Statistical Data (Unaudited)

                                                                                 For the Nine Months Ended September 30, 2017                                                                 For the Nine Months Ended September 30, 2016
                                                                                 --------------------------------------------

                                                          Delmarva NG               Chesapeake                      FPU NG                 FPU Electric                Delmarva NG               Chesapeake                     FPU NG               FPU Electric
                                                          Distribution                                          Distribution               Distribution                Distribution                                         Distribution             Distribution
                                                                                     Utilities                                                                                                    Utilities
                                                                                      Florida                                                                                                      Florida
                                                                                    NG Division                                                                                                  NG Division
                                                                                    -----------                                                                                                  -----------

    Operating Revenues

    (in thousands)

      Residential                                                         $42,511                                                 $4,165                                                 $24,945                                             $33,915                         $37,074                 $3,977   $20,597 $36,911

      Commercial                                                23,724                                  4,262                                      23,114                                  31,190                                     20,576                           3,847              20,912       31,814

      Industrial                                                 5,383                                  4,860                                      15,727                                   1,952                                      5,274                           4,808              15,399        2,154

      Other (1)                                                (1,586)                                 2,819                                     (4,909)                                (4,277)                                   (1,164)                          2,665             (2,615)     (5,410)
      --------                                                  ------                                  -----                                      ------                                  ------                                     ------                           -----              ------       ------

    Total Operating                                                       $70,032                                                $16,106                                                 $58,877                                             $62,780                         $61,760                $15,297   $54,293 $65,469
    Revenues


    Volume (in Dts/MWHs)

      Residential                                            2,576,001                                253,888                                   1,022,598                                 224,513                                  2,495,103                         260,404             993,917      241,691

      Commercial                                             2,445,262                              3,991,244                                   1,426,875                                 229,545                                  2,539,404                       4,118,131           1,633,920      233,199

      Industrial                                             3,749,961                              8,519,221                                   3,372,394                                  12,250                                  3,680,383                       8,405,424           3,188,556       17,470

      Other                                                     66,273                                      -                                   (62,710)                                  5,627                                     68,293                               -            (4,723)       6,577
      -----                                                     ------                                    ---                                    -------                                   -----                                     ------                             ---             ------        -----

    Total                                                    8,837,497                             12,764,353                                   5,759,157                                 471,935                                  8,783,183                      12,783,959           5,811,670      498,937


    Average Customers

      Residential                                               68,419                                 15,739                                      54,312                                  24,549                                     65,943                          15,303              53,215       24,268

      Commercial                                                 6,843                                  1,417                                       4,084                                   7,443                                      6,745                           1,391               4,247        7,399

      Industrial                                                   145                                     78                                       2,042                                       2                                        123                              72               1,760            2

      Other                                                          6                                      -                                          -                                      -                                         5                               -                  -           -
      -----                                                        ---                                    ---                                        ---                                    ---                                       ---                             ---                ---         ---

    Total                                                       75,413                                 17,234                                      60,438                                  31,994                                     72,816                          16,766              59,222       31,669
    -----                                                       ------                                 ------                                      ------                                  ------                                     ------                          ------              ------       ------


    (1)        Operating Revenues from "Other" sources include unbilled revenue, under (over) recoveries of fuel cost, conservation revenue, other miscellaneous charges,
    fees for billing services provided to third parties and adjustments for pass-through taxes.

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SOURCE Chesapeake Utilities Corporation