Yahoo Finance Chesapeake Utilities' (CPK) Elkton Gas Acquisition in Process
Chesapeake Utilities Corporation CPK recently announced that it will acquire South Jersey Industries’ SJI subsidiary — Elkton Gas — which operates within a franchised area of Cecil County, Maryland.
If approved by the Maryland Public Service Commission, the acquisition will be completed in the first half of 2020. Post completion, Elkton Gas will become a wholly-owned subsidiary of Chesapeake Utilities. However, the unit will continue to operate in its existing office with the same personnel.
Footprint Expansion
The company provides natural gas service in another franchised area of Cecil County. The acquisition will enable Chesapeake Utilities to further expand its footprint in the region. The buyout is in sync with the company’s growth strategy that will generate earnings in the future.
The company is also undertaking initiatives to expand its natural gas projects. Few projects have been completed and some are likely to be completed in the next few years. Together, all these projects are expected to increase annual margin of $34.3 million in 2020.
Long-Term Growth Strategy
Apart from acquisitions for expansions, the company is also investing in organic projects. In 2019, the company expects to spend in the range of $170-$185 million. In its five year CapEx plan, Black Hills plans to invest between $750 million to $1 billion on utility & pipeline businesses.
Other companies from the same sector are also investing on a long-term basis. Sempra Energy SRE expects to make investments of approximately $18.2 billion during the 2019-2023 period. NextEra Energy NEE has plans to invest nearly $36.6 billion in different projects from 2019 through 2023.
Moreover, in the third quarter of 2019, the company exited from the natural gas marketing business as it was not aligned with its long-term growth strategy.
Price Movement
Chesapeake Utilities’ shares have gained 3.3% in the past 12 months compared with the industry’s rise of 9.6%.
Zacks Rank
Chesapeake Utilities currently has a Zacks Rank #3 (Hold). You can see the complete list of today’s Zacks #1 Rank (Strong Buy) stocks here.
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NextEra Energy, Inc. (NEE) : Free Stock Analysis Report
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