Chesapeake Utilities expands natural gas business with $923 million Florida City Gas acquisition

(UI) – Chesapeake Utilities Corporation has entered into a definitive agreement to acquire Florida City Gas ("FCG") from NextEra Energy, Inc. (NYSE: NEE) for $923 million in cash.

FCG serves approximately 120,000 residential and commercial natural gas customers across eight counties in Florida, including Miami-Dade, Broward, Brevard, Palm Beach, Hendry, Martin, St. Lucie and Indian River. Its natural gas system includes approximately 3,800 miles of distribution main and 80 miles of transmission pipe.

"This acquisition will more than double our natural gas business in Florida, one of the fastest growing states in the nation. For several years, gas distribution customer growth in Florida has significantly exceeded national averages. Demand for natural gas continues to increase as Florida consumers seek reliable, domestic and affordable energy for their homes and businesses," said Jeff Householder, chairman, president and chief executive officer of Chesapeake Utilities.

"We are well positioned to capture additional growth, including gas distribution expansion, to serve new residential development, as well as infrastructure investments across our other platforms, such as gas transmission. We expect these opportunities, which are a large driver of our increased capital investment plan, to enable us to continue to pursue long-term upper quartile earnings growth."

Post-acquisition, Chesapeake Utilities' footprint will expand significantly in Florida. The company's Florida portfolio is expected to comprise approximately 60% of its total utility net plant and operating income, versus 45% for the standalone business at the end of 2022.

This acquisition provides expansion opportunities into unserved and underserved communities throughout a widened service territory. Additionally, the transaction introduces growth opportunities across the company's portfolio, from organic growth of the regulated LDC assets to new opportunities for the company's natural gas pipeline and virtual pipeline businesses.

As a result of this transaction, the company's regulated utility customers and net plant will increase by 50% and 30%, respectively, which will bring enhanced scale and efficiency benefits. This acquisition is expected to benefit from Chesapeake Utilities' core experience and expertise in all facets of natural gas operations, regulatory, supply, business development and project execution. The company's expertise in navigating Florida's regulatory and political environment, as well as expected efficiencies related to the complementary nature of the combined operations, will allow the company to optimize this transaction, further supporting our earnings and dividend growth.

Chesapeake Utilities has had a natural gas distribution presence in Florida for 40 years, significantly building on that initial presence to include multiple business entities across the energy value chain. The acquisition more than doubles the company's Florida natural gas operations, expanding Chesapeake Utilities' service territory coverage to include five additional counties in Florida and increasing the company's presence in five of the top 10 most populous counties in the state.

With the addition of FCG, Chesapeake Utilities' overall natural gas distribution presence in Florida will include an approved regulated rate base of $941 million, serving more than 211,000 customers through nearly 7,000 miles of natural gas distribution company pipeline.

The transaction is projected to increase Chesapeake Utilities' regulated natural gas utility customers and net plant by 50% and 30%, respectively, with the regulated business mix reaching 87% (up from 81%).

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