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Chesapeake Utilities Corporation Reports a 32-Percent Increase in Third Quarter Earnings Per Share

November 7, 2012

DOVER, Del., Nov. 7, 2012 /PRNewswire/ — Chesapeake Utilities Corporation (NYSE: CPK) today announced financial results for the third quarter of 2012. The Company’s net income for the quarter ended September 30, 2012 was $3.2 million, or $0.33 per share. This represents an increase of $822,000, or $0.08 per share, compared to the same quarter in 2011, and quarter-over-quarter increases of 34 percent and 32 percent for net income and earnings per share, respectively.

For the nine months ended September 30, 2012, the Company reported net income of $19.0 million, or $1.97 per share. This represents a decrease of $658,000 in net income, or $0.07 per share, compared to the same period in 2011. Warmer temperatures in 2012, primarily during the first three months of the year, resulted in lower net income of $2.4 million, or $0.25 per share, compared to 2011.

“We are pleased to announce strong third quarter results, representing a 32-percent increase in quarterly earnings per share,” stated Michael P. McMasters, President and Chief Executive Officer of Chesapeake Utilities Corporation. “These quarterly results demonstrate our employees’ continued success in identifying opportunities in all of our businesses and transforming them into growth for the Company and value to our customers and shareholders. Our latest effort to expand natural gas service on the Delmarva Peninsula includes the proposed increase in our natural gas service offerings in the southern part of Delaware and the pending purchase of the propane distribution assets of The Eastern Shore Gas Company and its affiliates (collectively, “ESG”). In our application for the approval of the ESG purchase filed in August with the Maryland Public Service Commission (“PSC”), we also requested approval of a new tariff governing service to all customers in Worcester County, Maryland. Our proposed service offerings in Maryland are aimed at providing energy savings to Worcester County customers, including approximately 11,000 underground propane gas distribution system customers currently served by ESG, regardless of when and if they are actually converted from propane to natural gas service. Also in August, the Florida PSC approved our natural gas infrastructure replacement program. This program provides real-time recovery and return on our investment to replace any aging natural gas infrastructure and to ensure continued safe delivery of natural gas in the future. Our unregulated businesses including BravePoint®, Inc. (“BravePoint”) continue to identify innovative solutions to provide high-quality service to existing and potential customers. Combined with the major expansion initiatives already underway on the Delmarva Peninsula and in Florida, these opportunities provide a positive outlook for our future performance.”

The Company’s operating income for the third quarter of 2012 was $7.6 million, an increase of $2.0 million, compared to the same quarter in 2011. Gross margin increased by $4.0 million, or 12 percent, in the third quarter of 2012, compared to the same quarter in 2011. All of the Company’s segments contributed to this increase. The regulated energy segment generated $2.3 million of this increase, due primarily to growth in the Company’s natural gas transmission and distribution operations. This included $1.0 million in additional gross margin generated by new natural gas transmission and distribution services associated with expansion initiatives in Sussex County, Delaware; Worcester County, Maryland; and Nassau County, Florida. Other customer growth in our natural gas transmission and distribution operations generated $718,000 in additional gross margin. The unregulated energy segment generated $1.1 million of the gross margin increase, due primarily to higher margins from the Florida propane distribution operation and Xeron, Inc. (“Xeron”), the Company’s propane wholesale marketing subsidiary. BravePoint, the Company’s advanced information services subsidiary, generated $594,000 in additional gross margin, $188,000 of which represents increased margin from ProfitZoom(TM) and Application Evolution(TM) sales and related services. The remaining increase from BravePoint was generated from higher consulting revenues and other product sales in its core business.

Other operating expenses for the third quarter of 2012 were $30.9 million, an increase of $2.0 million, compared to the same quarter in 2011. Additional costs of $208,000 associated with BravePoint’s growth and $397,000 related to acquisition-related efforts and increased capacity for future growth increased other operating expenses during the quarter. Amortization expense related to the recovery of the acquisition adjustment and merger-related costs associated with the acquisition of Florida Public Utilities Company (“FPU”) increased expenses by $589,000. Higher depreciation and asset removal costs associated with capital investments also added $339,000 in other operating expenses.

The Company’s operating income for the nine months ended September 30, 2012 was $38.1 million, a decrease of $117,000, or 0.3 percent, compared to the same period in 2011. Gross margin increased by $3.4 million, or three percent, for the nine months ended September 30, 2012, compared to the same period in 2011, due largely to $4.6 million in additional gross margin generated by our natural gas transmission and distribution operations from the recent expansion initiatives, new customer growth and additional transmission services provided to an existing industrial customer. Higher retail margins per gallon on propane sales increased gross margin by $922,000 and Eastern Shore Natural Gas Company, Inc. (“Eastern Shore”) generated additional gross margin of $729,000 as a result of new rates implemented in 2011, pursuant to its rate case settlement. BravePoint also generated $1.9 million in additional gross margin, $464,000 of which represents increased margin from ProfitZoom(TM) and Application Evolution(TM) sales and related services. The remaining increase from BravePoint was generated from higher consulting revenues and other product sales. These increases more than offset a reduction of: (a) $4.0 million in gross margin from lower customer energy consumption directly attributable to a decrease in heating degree-days of 17 percent and 35 percent on the Delmarva Peninsula and in Florida, respectively; and (b) $575,000 due to the absence of a one-time gain recorded in the first quarter of 2011 related to the proceeds received in an antitrust litigation settlement with a major propane supplier.

Other operating expenses for the nine months ended September 30, 2012 were $91.6 million, an increase of $3.5 million, compared to the same period in 2011. $1.8 million of the increase represented amortization expense related to the recovery of the FPU acquisition adjustment and merger-related costs. BravePoint’s other operating expenses increased by $937,000, due primarily to higher employee-related costs to support increased services. Higher depreciation and asset removal costs associated with capital investments also added $900,000 in other operating expenses.

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 most recent report on Form 10-K, as amended, and 10-Q 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 information is presented on a diluted basis.

Conference Call

Chesapeake Utilities Corporation will host a conference call on November 8, 2012, at 10:30 a.m. Eastern Time to discuss the Company’s financial results for the third quarter ended September 30, 2012. To participate in this call, dial 866.821.5457 and reference Chesapeake Utilities Corporation’s 2012 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.

About Chesapeake Utilities Corporation

Chesapeake Utilities Corporation is a diversified utility company engaged in natural gas distribution, transmission and marketing, electric distribution, propane gas distribution and wholesale marketing, advanced information services and other related services. Information about Chesapeake’s businesses is available at www.chpk.com.

For more information, contact:
Beth W. Cooper
Senior Vice President & Chief Financial Officer
302.734.6799

                                                                                                       Financial Summary
                                                                                     (in thousands, except per-share and degree-day data)
                                                                                      ---------------------------------------------------

                                                                                                           Third Quarter                                 Year to Date
                                                                                                           -------------                                 ------------

    Chesapeake and Subsidiaries                                                                                          2012                      2011                                      2012     2011
    ---------------------------                                                                                          ----                      ----                                      ----     ----
    Gross Margin (1)
      Regulated Energy                                                                                                $30,094                   $27,840                                   $98,838  $94,030
      Unregulated Energy                                                                                                6,226                     5,099                                    24,677   27,937
      Other                                                                                                             2,151                     1,554                                     6,209    4,373
     Total Gross Margin                                                                                               $38,471                   $34,493                                  $129,724 $126,340
     ==================                                                                                               =======                   =======                                  ======== ========

    Operating Income (Loss)
       Regulated Energy                                                                                                $7,848                    $6,943                                   $33,151  $30,964
       Unregulated Energy                                                                                                (709)                   (1,392)                                    4,044    7,276
       Other                                                                                                              425                        43                                       897      (31)
     Total Operating Income                                                                                             7,564                     5,594                                    38,092   38,209
     ----------------------                                                                                             -----                     -----                                    ------   ------

    Other (Loss) Income, net of other expenses                                                                           (136)                      649                                       212      699
    Interest Charges                                                                                                    2,126                     2,389                                     6,657    6,654
    Income Taxes                                                                                                        2,083                     1,457                                    12,641   12,590
     Net Income                                                                                                        $3,219                    $2,397                                   $19,006  $19,664
     ==========                                                                                                        ======                    ======                                   =======  =======

    Earnings Per Share of Common Stock
    Basic                                                                                                               $0.34                     $0.25                                     $1.98    $2.06
    Diluted                                                                                                             $0.33                     $0.25                                     $1.97    $2.04

    Heating Degree-Days - Delmarva Peninsula
       Actual                                                                                                              79                        49                                     2,375    2,876
       10-year average (normal)                                                                                            47                        53                                     2,899    2,905

    Heating Degree-Days - Florida
       Actual                                                                                                               -                         -                                       347      534
       10-year average (normal)                                                                                             -                         -                                       587      594

    Cooling Degree-Days - Florida
       Actual                                                                                                           1,475                     1,569                                     2,622    2,678
       10-year average (normal)                                                                                         1,505                     1,483                                     2,486    2,445

     (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. Gross margin should not be considered an alternative to operating income or net income, which is determined in accordance with GAAP.
      Chesapeake 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. Chesapeake's management uses gross margin in measuring its business units' performance and has historically analyzed and reported gross margin information publicly. Other
      companies may calculate gross margin in a different manner.

    Financial Summary Highlights

    Key variances for the quarter ended September 30, 2012 include:

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

    Q3 2011 Reported Results                                                                                                                      $3,854                              $2,397                              $0.25

    Normalizing Items:
                                                                      Amortization of acquisition premium and
                                                                      costs                                                                         (589)                               (366)                             (0.04)
                                                                     Pension settlement charge in 2011                                               219                                 136                               0.01
                                                                      Gain from the sale of Internet Protocol
                                                                      asset in 2011                                                                 (553)                               (344)                             (0.03)
                                                                                                                                                    (923)                               (574)                             (0.06)
    Increased Margins:
                                                                     Natural gas growth                                                            1,731                               1,077                               0.11
                                                                     BravePoint                                                                      594                                 369                               0.04
                                                                     Higher propane retail margins per gallon                                        497                                 309                               0.03
                                                                     Propane wholesale marketing                                                     481                                 299                               0.03
                                                                                                                                                   3,303                               2,054                               0.21
    Increased Other Expenses:
                                                                     Higher depreciation and asset removal costs                                    (339)                               (211)                             (0.02)
                                                                     Increased capacity for future growth                                           (292)                               (182)                             (0.02)
                                                                      BravePoint, primarily due to employee-
                                                                      related costs                                                                 (208)                               (129)                             (0.01)
                                                                     Acquisition-related costs                                                      (105)                                (65)                             (0.01)
                                                                                                                                                    (944)                               (587)                             (0.06)

    Net other changes                                                                                                                                 12                                 (71)                             (0.01)

    Q3 2012 Reported Results                                                                                                                      $5,302                              $3,219                              $0.33
                                                                                                                                                  ======                              ======                              =====

The strong third-quarter performance in 2012 was due primarily to increased gross margin generated our by natural gas transmission and distribution operations, higher revenues from BravePoint product sales and consulting activities and higher margins generated from propane retail sales in Florida and wholesale marketing activities. These gross margin increases more than offset amortization expense related to the recovery of the FPU acquisition adjustment and merger-related costs, higher costs associated with growth initiatives and capital investments and the absence of the one-time gain recorded in 2011 from the sale of a non-operating Internet Protocol asset.

Key variances for the nine months ended September 30, 2012 include:

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

    Year-to-date 2011 Reported Results                                                                                                                $32,254                              $19,664                                $2.04

    Normalizing Items:
                                                                     Weather impact                                                                  (4,016)                              (2,448)                               (0.25)
                                                                      Amortization of acquisition premium and
                                                                      costs                                                                          (1,767)                              (1,077)                               (0.11)
                                                                      Severance and pension settlement charge in
                                                                      2011                                                                            1,006                                  613                                 0.06
                                                                      Litigation settlement with a major propane
                                                                      supplier                                                                         (575)                                (351)                               (0.04)
                                                                      Gain from the sale of Internet Protocol
                                                                      asset in 2011                                                                    (553)                                (337)                               (0.03)
                                                                                                                                                     (5,905)                              (3,600)                               (0.37)
    Increased Margins:
                                                                     Natural gas growth                                                               4,623                                2,818                                 0.29
                                                                     BravePoint                                                                       1,850                                1,128                                 0.12
                                                                     Higher propane retail margins per gallon                                           922                                  562                                 0.06
                                                                     Eastern Shore rate case settlement                                                 729                                  444                                 0.05
                                                                                                                                                      8,124                                4,952                                 0.52
    (Increased) / Decreased Other Expenses:
                                                                      BravePoint, primarily due to employee-
                                                                      related costs                                                                    (937)                                (571)                               (0.06)
                                                                     Higher depreciation and asset removal costs                                       (900)                                (549)                               (0.06)
                                                                     Florida savings on payroll and benefit costs                                       594                                  362                                 0.04
                                                                     Acquisition-related costs                                                         (429)                                (262)                               (0.03)
                                                                      Higher legal costs due to Marianna
                                                                      litigation                                                                       (334)                                (204)                               (0.02)
                                                                     Increased capacity for future growth                                              (314)                                (191)                               (0.02)
                                                                      Increased cost from pipeline integrity
                                                                      requirements                                                                     (255)                                (155)                               (0.02)
                                                                                                                                                     (2,575)                              (1,570)                               (0.17)

    Net other changes                                                                                                                                  (251)                                (440)                               (0.05)

    Year-to-date 2012 Reported Results                                                                                                              $31,647                              $19,006                                $1.97
                                                                                                                                                    =======                              =======                                =====

The Company’s results for the nine months ended September 30, 2012 reflected a reduction of $4.0 million in gross margin due to the warm weather, primarily during the first three months of 2012, and amortization expense of $1.8 million related to the recovery of the FPU acquisition adjustment and merger-related costs. The negative weather impact was more than fully offset by additional gross margin generated by: (a) the natural gas transmission and distribution operations as a result of the major expansion initiatives in Sussex County, Delaware; Worcester County, Maryland; and Nassau County, Florida; (b) additional customer growth; and (c) additional transmission services provided to an existing industrial customer. Increased product sales and consulting activities by BravePoint and higher propane retail margins per gallon in Florida also generated additional gross margin. These increases offset higher costs associated with growth initiatives and capital investments.

The following information highlights certain key factors contributing to the Company’s results for the quarter and nine months ended September 30, 2012:

Growth

New natural gas transmission services and growth in natural gas distribution customers generated $1.1 million and $615,000, respectively, in additional gross margin for the third quarter of 2012, compared to the same period in 2011. New natural gas transmission services and growth in natural gas distribution customers generated $2.8 million and $1.8 million, respectively, in additional gross margin for the first nine months of 2012, compared to the same period in 2011. Most of these increases in gross margin were related to the continued execution of the Company’s strategic plan, including expansion of natural gas service to new areas and conversion of several large commercial and industrial customers to natural gas. New services are being initiated by the Company’s natural gas transmission subsidiaries in response to increased demand for natural gas service on the Delmarva Peninsula and in Florida, both from the Company’s natural gas distribution operations and other unaffiliated customers directly connected to the transmission systems.

Major Expansion Initiatives and Customer Growth Reflected in Results
In late 2011 and during the first nine months of 2012, the Company expanded natural gas transmission and distribution services to Sussex County, Delaware and Nassau County, Florida and also initiated natural gas transmission service in Worcester County, Maryland. These major expansion initiatives increased the Company’s natural gas footprint, delivering natural gas service to areas where it was not previously available. These initiatives generated $903,000 of additional gross margin for the natural gas transmission operations during the third quarter of 2012. Natural gas distribution service to two large industrial customers in Lewes, Delaware and two industrial facilities of an existing customer in southeastern Sussex County, Delaware generated $110,000 of additional gross margin for the third quarter. For the first nine months of 2012, these initiatives generated $2.0 million and $396,000 of additional gross margin for the natural gas transmission and distribution operations, respectively.

In addition to the recent expansion initiatives, the Delmarva natural gas distribution operation has added another 10 new large industrial and commercial customers since the beginning of 2011, which generated $122,000 in additional gross margin in the third quarter of 2012 and $468,000 in the first nine months of 2012, compared to the same periods in 2011, respectively. These 10 new customers are expected to generate $950,000 of gross margin in 2012, compared to $429,000 generated in 2011. Customer growth in Florida, primarily from commercial and industrial customers, also generated $351,000 and $686,000 in additional gross margin in the third quarter and first nine months of 2012, respectively.

Future Major Expansion Initiatives and Opportunities
Although not affecting results in the third quarter and first nine months of 2012, the Company is continuing its effort to extend natural gas service to Cecil County, Maryland, with the transmission service expected to commence in November 2012. Eastern Shore executed precedent agreements with NRG Energy Center Dover LLC (“NRG”) and PBF Energy Inc. (“Delaware City Refinery”) to further expand its transmission system to provide additional capacity to these customers. Firm transportation service agreements are expected to be executed by NRG and Delaware City Refinery with Eastern Shore upon satisfaction of certain conditions pursuant to the respective precedent agreements. These additional services are expected to be initiated in mid-to-late 2013.

As the Company expands its natural gas service to new areas, first through transmission service and distribution service to large industrial customers, its natural gas distribution operations continue to pursue additional opportunities to provide service to residential and other commercial and industrial customers in those areas. In an effort to increase the availability of natural gas within the Company’s Delaware service areas, the Company’s Delaware natural gas distribution division filed an application with the Delaware PSC in June 2012 to add several natural gas expansion service offerings. These offerings include a monthly fixed charge in lieu of upfront contributions from customers to extend the distribution system and optional service offerings to assist customers in the process of converting to natural gas. The goal of these new offerings is to meet the energy needs of residents, communities and businesses throughout the Company’s service territory, specifically in areas of southeastern Sussex County, where natural gas will now be available.

Additional information highlighting the major expansion initiatives is provided in the “Major Expansion Initiative Highlights (Unaudited)” table later in this release.

Acquisition
In June 2012, the Company entered into an agreement to purchase the operating assets of ESG for approximately $16.5 million. These assets are currently used to provide propane distribution service to approximately 11,000 residential and commercial customers in Worcester County, Maryland, primarily through underground propane gas distribution systems. The Company is evaluating the potential conversion of some of these underground propane distribution systems to natural gas where it is economical and feasible. The Company filed an application for approval of the transaction by the Maryland PSC in August 2012. The transaction, which is also subject to the receipt of consents of certain local jurisdictions to the assignment of certain franchise agreements and satisfaction of other closing conditions, is expected to be completed in 2013. The Company expects to finance the acquisition using unsecured short-term debt. The acquisition is expected to be accretive to earnings per share in 2013 and thereafter.

Investing in Growth
To continue its growth, the Company is expanding its resources and capabilities. The Company is in the early stages of several natural gas expansions on the Delmarva Peninsula. These include expansions into Sussex County, Delaware, and Worcester and Cecil Counties in Maryland. These expansions will require not only the construction or conversion of distribution facilities, but also the conversion of customers’ appliances or equipment inside their homes. The Company is currently in the process of reorganizing its Delmarva natural gas distribution operation and expects to increase its staffing to support these expansions. Secondly, as a result of BravePoint’s growth over the last several quarters, BravePoint is continuing to add staff. During the quarter and nine months ended September 30, 2012, BravePoint’s other operating expenses increased by $208,000 and $937,000, respectively, compared to the same periods in 2011, due primarily to the additional staff. Finally, to increase the Company’s capacity for future growth, resources will be added in several key functional areas, including, but not limited to, Human Resources, Communications and Strategic Business Development. For the quarter and nine months ended September 30, 2012, the Company incurred $105,000 and $429,000, respectively, of acquisition-related costs and $292,000 and $314,000, respectively, associated with increased capacity for future growth. The Company expects additional increases in costs associated with these key functional areas in the future.

Weather and Consumption

Although weather was not a significant factor in the second and third quarters, warmer temperatures during the first three months of the year, compared to temperatures in 2011, had a significant impact on the Company’s earnings. Lower customer energy consumption directly attributable to warmer temperatures in the nine months ended September 30, 2012, compared to temperatures in the same period in 2011, reduced gross margin by $4.0 million. Temperatures on the Delmarva Peninsula in the first nine months of 2012 were 17 percent (501 heating degree-days) warmer than the same period in 2011 and 18 percent (524 heating degree-days) warmer than normal temperatures, based on the 10-year historic average of heating degree-days. Temperatures in Florida in the first nine months of 2012 were 35 percent (187 heating degree-days) warmer than the same period in 2011 and 41 percent (240 heating degree-days) warmer than normal temperatures. The Company estimates that this variance reduced gross margin for the first nine months of 2012 by approximately $3.9 million, compared to gross margin under normal temperatures.

Recovery of Acquisition Premium and Merger-related Costs

In January 2012, the Florida PSC issued an order approving the recovery of $34.2 million in acquisition adjustment and $2.2 million in merger-related costs in connection with the Company’s acquisition of FPU in 2009. The inclusion of the acquisition adjustment and merger-related costs in the Company’s rate base and the recovery of these assets through amortization expense will increase the Company’s earnings and cash flows above what it would have achieved absent the regulatory approval. The acquisition adjustment and merger-related costs are amortized over 30 years and five years, respectively, beginning in November 2009. Based upon the effective date and outcome of the order, the Company recorded the amortization as an expense beginning in 2012, which resulted in an increase in amortization expense of $589,000 and $1.8 million in the third quarter and first nine months of 2012, respectively. The Company expects to record $2.4 million ($1.4 million, net of tax) in amortization expense in 2012 and 2013, $2.3 million ($1.4 million, net of tax) in 2014, and $1.8 million ($1.1 million, net of tax) annually thereafter until 2039.

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

Comparative Results for the Quarters Ended September 30, 2012 and 2011

Regulated Energy

Operating income for the regulated energy segment for the third quarter of 2012 was $7.8 million, an increase of $905,000, or 13 percent, compared to the same quarter in 2011. An increase in gross margin of $2.3 million was partially offset by an increase in operating expenses of $1.4 million. Items contributing to the quarter-over-quarter increase in gross margin are listed in the following table:

    (in thousands)
    Gross margin for the three months ended
     September 30, 2011                                                      $27,840
    ---------------------------------------                                  -------

    Factors contributing to the gross margin increase for the three months ended
     September 30, 2012:

    Major expansion initiatives                                                1,013
    Other customer growth -natural gas
     distribution                                                                506
    Increased customer consumption -weather and
     other                                                                       324
    Eastern Shore rate case settlement                                           241
    Other new services -natural gas
     transmission                                                                213
    Other                                                                        (43)

    Gross margin for the three months ended
     September 30, 2012                                                      $30,094
    ---------------------------------------                                  -------

Major Expansion Initiatives
Major expansion initiatives in Sussex County, Delaware, Worcester County, Maryland, and Nassau County, Florida generated $1.0 million in additional gross margin in the third quarter of 2012. In Sussex County, Delaware, the Company initiated both new transmission service by Eastern Shore and distribution service to two large industrial customers by the Delmarva natural gas distribution operation in Lewes, Delaware during the fourth quarter of 2011. These services generated $234,000 and $91,000, respectively, of additional gross margin in the quarter. The Company also began new transmission service by Eastern Shore and distribution service to two industrial facilities of an existing customer by the Delmarva natural gas distribution operation in the southeastern part of Sussex County, generating $111,000 and $19,000, respectively, of additional gross margin in the quarter. The Worcester County, Maryland expansion generated $29,000 in additional transmission gross margin for Eastern Shore. Eastern Shore expects to commence additional transmission service in Worcester County, Maryland by the end of the year. The Nassau County, Florida expansion generated $529,000 in additional transmission gross margin for Peninsula Pipeline Company, Inc. (“Peninsula Pipeline”). Additional information highlighting the major expansion initiatives is provided in a table later in this release, “Major Expansion Initiative Highlights (Unaudited).”

Other Customer Growth – Natural Gas Distribution

The Florida natural gas distribution operation generated $352,000 of additional gross margin in the third quarter of 2012, compared to the same quarter in 2011, primarily as a result of growth in commercial and industrial customers.

The Delmarva natural gas distribution operation generated $154,000 of additional gross margin in the third quarter of 2012, compared to the same quarter in 2011, due primarily to the addition of another 10 new large commercial and industrial customers since the beginning of 2011 and two-percent growth in residential customers.

Increased Customer Consumption – Weather and Other
An increase in customer consumption of natural gas due to weather and other factors generated $490,000 in additional gross margin primarily for the natural gas distribution operations. This increase was partially offset by a decrease of $166,000 in electric customer consumption in Florida.

Eastern Shore Rate Case Settlement
Eastern Shore generated $241,000 in additional gross margin as a result of new rates that became effective July 2011. Eastern Shore did not record the additional margin from the base rate increase until November 2011, when the rate case settlement was finalized by Eastern Shore, the FERC Staff and other interested parties and submitted for approval. The rate case settlement was approved without any modification by the FERC in January 2012.

Other New Services – Natural Gas Transmission
Eastern Shore also generated additional gross margin of $213,000 in the third quarter of 2012, due primarily to a new transmission service agreement with an existing industrial customer for a one-year period from November 2011 to October 2012 for an additional 9,514 dekatherms per day (“Dts/d”). This additional service, which is the result of a system expansion, is expected to generate additional gross margin of $84,000 during the fourth quarter of 2012.

Other operating expenses for the regulated energy segment increased by $1.4 million in the third quarter of 2012, compared to the same quarter in 2011, due largely to $589,000 in increased amortization expense associated with the recovery of the FPU acquisition adjustment and merger-related costs, $314,000 in increased costs associated with investing in growth and $249,000 in higher depreciation expense and asset removal costs associated with capital investments made during 2011 and early 2012.

Unregulated Energy

The unregulated energy segment reported an operating loss of $709,000 in the third quarter of 2012, an improvement of $683,000, compared to the third quarter of 2011. An increase in gross margin of $1.1 million, partially offset by an increase in operating expenses of $444,000, resulted in improved operating results. Items contributing to the quarter-over-quarter increase in gross margin are listed in the following table:

    (in thousands)
    Gross margin for the three months ended
     September 30, 2011                                              $5,099
    ---------------------------------------                          ------

    Factors contributing to the gross margin increase for the three
     months ended September 30, 2012:

    Increase in retail margins per gallon                               526
    Propane wholesale marketing                                         481
    Other                                                               148
    Natural gas marketing                                               (28)

    Gross margin for the three months ended
     September 30, 2012                                              $6,226
    ---------------------------------------                          ------

Increase in Retail Margins per Gallon
Sustained retail pricing in Florida in response to local market conditions and lower average propane inventory cost increased retail margins per gallon and generated additional gross margin of $524,000. Offsetting this increase was a slight decline in retail margins per gallon on the Delmarva Peninsula.

Propane Wholesale Marketing
Xeron generated an increase in gross margin of $481,000 in the third quarter of 2012, compared to the same quarter in 2011, as a result of higher margins in its trading activity. Xeron executed trades with higher margins during the third quarter of 2012 as the market presented opportunities resulting from the market fluctuation in wholesale propane prices.

Natural Gas Marketing
Gross margin from Peninsula Energy Services Company, Inc. (“PESCO”), the Company’s natural gas marketing subsidiary decreased by $28,000 during the third quarter of 2012, compared to the same quarter in 2011. Additional gross margin generated by new customers and contracts was fully offset by a quarter-over-quarter decrease in imbalance resolutions.

Other operating expenses for the unregulated energy segment increased by $444,000 in the third quarter of 2012, compared to the same quarter in 2011. This increase was due largely to increased payroll and benefits costs in the Florida propane operation, resulting from resources added to serve new territories, and increased costs associated with investing in growth.

Other
Operating income for the other segment for the quarter ended September 30, 2012 was $425,000, an increase of $382,000, compared to the same quarter in 2011. The increase in operating income was attributable to higher operating income from BravePoint.

BravePoint, which reported operating income of $312,000 in the third quarter of 2012, compared to an operating loss of $74,000 for the same quarter in 2011, generated increased gross margin of $594,000, $188,000 of which represents increased margin from ProfitZoom(TM) and Application Evolution(TM) sales and related services. The remaining increase was generated from higher consulting revenues and other product sales. This increase in gross margin was partially offset by $208,000 of increased operating expenses as a result of resources added to support these services.

BravePoint continues to market its new products, ProfitZoom(TM) and Application Evolution(TM). BravePoint generated $324,000 and $900,000 in revenue from the sale of these two products and related services during the third quarter and first nine months of 2012, respectively. To date, BravePoint has successfully implemented or is currently implementing ProfitZoom(TM) for eight customers in the fire suppression industry. Application Evolution(TM), which is a component of ProfitZoom(TM), is being marketed to customers both in the fire suppression industry and other unrelated businesses. Nine customers are currently utilizing this product. These ProfitZoom(TM) and Application Evolution(TM) contracts are expected to generate approximately $1.0 million in additional revenue over the next 12 months. Additional sales proposals are under consideration by both existing and potential new customers.

Interest Expense

Total interest expense for the quarter ended September 30, 2012 decreased by approximately $263,000, or 11 percent, compared to the same quarter in 2011. The decrease in interest expense is attributable primarily to decreases of $168,000 in other long-term interest expense due to scheduled repayments reducing the outstanding principal balance and $141,000 in interest on deposits from FPU’s customers due to a lower interest rate applied to those deposits. Partially offsetting this decrease was an increase of $46,000 in short-term interest expense due to slightly increased short-term borrowings and rates in 2012 compared to the same quarter in 2011.

Comparative Results for the Nine Months Ended September 30, 2012 and 2011

Regulated Energy

Operating income for the regulated energy segment for the nine months ended September 30, 2012 was $33.2 million, an increase of $2.2 million, or seven percent, compared to the same period in 2011. An increase in gross margin of $4.8 million was partially offset by an increase in operating expenses of $2.6 million. Items contributing to the period-over-period increase in gross margin are listed in the following table:

    (in thousands)
    Gross margin for the nine months ended
     September 30, 2011                                                      $94,030
    --------------------------------------                                   -------

    Factors contributing to the gross margin increase for the nine months ended
     September 30, 2012:

    Major expansion initiatives                                                2,415
    Other customer growth -natural gas
     distribution                                                              1,446
    Other new services -natural gas
     transmission                                                                762
    Eastern Shore rate case settlement                                           729
    Decreased customer consumption -weather and
     other                                                                      (566)
    Other                                                                         22

    Gross margin for the nine months ended
     September 30, 2012                                                      $98,838
    --------------------------------------                                   -------

Major Expansion Initiatives
Major expansion initiatives in Sussex County, Delaware, Worcester County, Maryland, and Nassau County, Florida generated $2.4 million in additional gross margin in the first nine months of 2012. In Sussex County, Delaware, the Company initiated both new transmission service by Eastern Shore and distribution service to two large industrial customers by the Delmarva natural gas distribution operation in Lewes, Delaware during the fourth quarter of 2011. These services generated $701,000 and $357,000, respectively, of additional gross margin in the period. The Company also began new transmission service by Eastern Shore and distribution service to two industrial facilities of an existing customer by the Delmarva natural gas distribution operation in the southeastern part of Sussex County, generated $223,000 and $39,000, respectively, of additional gross margin in the period. The Worcester County, Maryland expansion generated $39,000 in additional transmission gross margin for Eastern Shore. Eastern Shore expects to commence additional transmission service in Worcester County, Maryland by the end of the year. The Nassau County, Florida expansion generated $1.1 million in additional transmission gross margin for Peninsula Pipeline. Additional information highlighting the major expansion initiatives is provided in a table later in this release, “Major Expansion Initiative Highlights (Unaudited).”

Other Customer Growth – Natural Gas Distribution
The Delmarva natural gas distribution operation generated $760,000 of additional gross margin in the first nine months of 2012, compared to the same period in 2011. Gross margin from commercial and industrial customers for the Delmarva natural gas distribution operation increased by $468,000 in the first nine months of 2012, due primarily to the addition of another 10 new large commercial and industrial customers since the beginning of 2011. A two-percent growth in residential customers generated an additional $291,000 in gross margin for the Delmarva natural gas distribution operation.

The Florida natural gas distribution operation generated $686,000 of additional gross margin in the first nine months of 2012, compared to the same period in 2011, primarily as a result of growth in commercial and industrial customers.

Other New Services – Natural Gas Transmission
Eastern Shore generated additional gross margin of $762,000 in the first nine months of 2012, due primarily to two new transmission service agreements with an existing industrial customer; one for the period from May 2011 to April 2021 for an additional 3,405 Dts/d and the second for a one-year period from November 2011 to October 2012 for an additional 9,514 Dts/d. These new services generated $117,000 and $758,000, respectively, of additional gross margin in the first nine months of 2012. The service associated with the one-year transmission service agreement is expected to generate additional gross margin of $84,000 during the fourth quarter of 2012. The increases from new services were partially offset by a decrease of $173,000 from transmission service contracts, which expired in November 2011 and April 2012.

Eastern Shore Rate Case Settlement
Eastern Shore generated $729,000 in additional gross margin as a result of new rates that became effective July 2011. Eastern Shore did not record the additional margin from the base rate increase until November 2011, when the rate case settlement was finalized by Eastern Shore, the FERC Staff and other interested parties and submitted for approval. The rate case settlement was approved without any modification by the FERC in January 2012.

Decreased Customer Consumption – Weather and Other
Customer consumption of natural gas and electricity decreased, both on the Delmarva Peninsula and in Florida during the first nine months of 2012, compared to the same period in 2011. Consumption of energy is normally highest during the first and fourth quarters due to colder temperatures; however, the first quarter of 2012 was the warmest first quarter in the past 10 years. The Company estimates that significantly warmer weather in 2012, primarily during the first three months of 2012, resulted in a period-over-period decrease of approximately $1.2 million in gross margin, most of which occurred during the first three months of the year. Measured against normal heating degree-days (10-year historical average) in 2012, the Company estimates that weather reduced gross margin of the regulated energy segment by approximately $1.2 million in the first nine months of 2012. This decrease was partially offset by other volume increases, primarily in Florida.

Other operating expenses for the regulated energy segment increased by $2.6 million for the first nine months of 2012 due largely to: (a) $1.8 million in increased amortization expense associated with the recovery of the FPU acquisition adjustment and merger-related costs, (b) $725,000 in higher depreciation expense and asset removal costs associated with capital investments, (c) $587,000 in increased costs associated with investing in growth; (d) $334,000 in higher legal costs associated with an electric franchise dispute; and (e) $255,000 in increased costs related to pipeline integrity requirements. These increases in expense were partially offset by one-time charges totaling $836,000 in the first nine months of 2011 as a result of the voluntary workforce reduction in Florida and pension settlements, and $780,000 in reduced payroll and benefits, primarily in Florida because of the reduction in the workforce in 2011.

Unregulated Energy

Operating income for the unregulated energy segment for the nine months ended September 30, 2012 was $4.0 million, representing a decrease of $3.2 million, or 44 percent, compared to the same period in 2011. A decrease in gross margin of $3.3 million, slightly offset by a decrease in operating expenses of $28,000, resulted in decreased operating income. Items contributing to the period-over-period decrease in gross margin are listed in the following table:

    (in thousands)
    Gross margin for the nine months ended
     September 30, 2011                                                      $27,937
    --------------------------------------                                   -------

    Factors contributing to the gross margin decrease for the nine months ended
     September 30, 2012:

    Decreased customer consumption -weather and
     other                                                                    (3,750)
    Increase in retail margins per gallon                                      1,298
    Gain from litigation settlement -recorded
     in 2011                                                                    (575)
    Other                                                                       (279)
    Propane wholesale marketing                                                  231
    Natural gas marketing                                                       (185)

    Gross margin for the nine months ended
     September 30, 2012                                                      $24,677
    --------------------------------------                                   -------

Decreased Customer Consumption – Weather and Other
Significantly warmer weather resulted in decreased gross margin of $2.8 million during the first nine months of 2012, compared to the same period in 2011. Additionally, propane sales to bulk-delivery customers declined beyond the estimated weather impact due to the timing of deliveries, conservation and other factors, which further reduced gross margin by $951,000.

These decreases were partially offset by $244,000 in additional gross margin generated from 1,180 customers acquired in late 2011 and early 2012, following the purchase of the operating assets of several small propane distribution companies in Florida.

Increase in Retail Margins per Gallon
Higher retail margins per gallon in the Florida propane distribution operation generated $1.6 million in additional gross margin. Sustained retail pricing in response to local market conditions and lower average propane inventory costs contributed to the higher retail margins per gallon.

Gross margin for the Delmarva propane distribution operation decreased by $299,000 due to lower retail margins per gallon during the first nine months of 2012, compared to the same period in 2011. This decrease was attributable to a significant decline in wholesale propane prices during the first half of 2012, which resulted in a write-down of $465,000 in the inventory value for the Delmarva propane distribution operation.

Gain from Litigation Settlement – Recorded in 2011
A non-recurring gain of $575,000 was recorded in 2011 related to the Company’s share of proceeds received from an antitrust litigation settlement with a major propane supplier and is reflected as a period-over-period decrease in gross margin.

Other
Lower gross margin of $214,000 from merchandise sales in Florida, as the Company transitions from a merchandise goods business to a services business, contributed to this decrease.

Propane Wholesale Marketing
Xeron’s gross margin increased by $231,000 in the first nine months of 2012, compared to the same period in 2011, as a result of higher margins from its trading activity. Xeron executed trades with higher margins in 2012 as the market presented opportunities resulting from market fluctuations in wholesale propane prices.

Natural Gas Marketing
Gross margin from PESCO decreased by $185,000 during the first nine months of 2012, compared to the same period in 2011. PESCO’s gross margin in the first nine months of 2011 benefited from unusually large favorable imbalance resolutions with third-party intrastate pipelines, with which PESCO contracts for supply. Imbalance resolutions are not predictable and, therefore, are not included in our long-term financial plans or forecasts. Lower gross margin from imbalance resolutions was partially offset by additional gross margin generated by new customers and contracts.

Other operating expenses for the unregulated energy segment were $20.6 million for the first nine months of 2012, which is consistent with the same period in 2011.

Other
Operating income for the other segment for the nine months ended September 30, 2012 was $897,000, an increase of $928,000 from an operating loss of $31,000 for the same period in 2011. The increase in operating income was attributable to higher operating income from BravePoint.

BravePoint, which reported operating income of $557,000 in the first nine months of 2012, compared to an operating loss of $356,000 in the same period in 2011, generated increased gross margin of $1.9 million, $464,000 of which represents increased margin from ProfitZoom(TM) and Application Evolution(TM) sales and related services. The remaining increase was generated from higher consulting revenues and other product sales. This increase in gross margin was partially offset by $937,000 of increased operating expenses as a result of resources added to support these services.

Interest Expense

Total interest expense for the nine months ended September 30, 2012 remained unchanged from the same period in 2011. An increase in long-term interest expense of $294,000, which includes interest related to the $29 million long-term debt issuance in June 2011, was offset by decreases of $139,000 in short-term interest expense and $152,000 in interest on deposits from FPU’s customers. These decreases were a result of lower short-term borrowings and a lower interest rate applied to those deposits.

                                                     Chesapeake Utilities Corporation and Subsidiaries
                                                  Condensed Consolidated Statements of Income (Unaudited)
                                                     For the Periods Ended September 30, 2012 and 2011
                                                      (in thousands, except shares and per share data)

                                                                                 Third Quarter                      Year to Date
                                                                                 -------------                      ------------

                                                                                                 2012          2011                   2012      2011
                                                                                                 ----          ----                   ----      ----
    Operating Revenues
    Regulated Energy                                                                          $52,196       $53,651               $180,045  $192,713
    Unregulated Energy                                                                         23,259        23,721                 93,323   112,164
    Other                                                                                       2,720         3,238                  9,619     9,162
    Total Operating Revenues                                                                   78,175        80,610                282,987   314,039
    ------------------------                                                                   ------        ------                -------   -------

    Operating Expenses
       Regulated energy cost of sales                                                          22,102        25,811                 81,207    98,683
       Unregulated energy and other cost of sales                                              17,602        20,306                 72,056    89,017
       Operations                                                                              20,804        19,560                 60,831    59,796
       Maintenance                                                                              1,801         2,029                  5,635     5,624
       Depreciation and amortization                                                            5,767         4,978                 17,413    14,936
       Other taxes                                                                              2,535         2,332                  7,753     7,774
     Total operating expenses                                                                  70,611        75,016                244,895   275,830
     ------------------------                                                                  ------        ------                -------   -------
    Operating Income                                                                            7,564         5,594                 38,092    38,209
    Other (loss) income, net of other expenses                                                   (136)          649                    212       699
    Interest charges                                                                            2,126         2,389                  6,657     6,654
    Income Before Income Taxes                                                                  5,302         3,854                 31,647    32,254
    Income taxes                                                                                2,083         1,457                 12,641    12,590
    ------------                                                                                -----         -----                 ------    ------
    Net Income                                                                                 $3,219        $2,397                $19,006   $19,664
    ==========                                                                                 ======        ======                =======   =======

    Weighted Average Shares Outstanding:
       Basic                                                                                9,592,417     9,564,012              9,583,316 9,552,472
       Diluted                                                                              9,676,658     9,657,970              9,673,681 9,647,632

    Earnings Per Share of Common Stock:
       Basic                                                                                    $0.34         $0.25                  $1.98     $2.06
       Diluted                                                                                  $0.33         $0.25                  $1.97     $2.04
       -------                                                                                  -----         -----                  -----     -----
                                                                                                                                           Chesapeake Utilities Corporation and Subsidiaries
                                                                                                                                           Major Expansion Initiative Highlights (Unaudited)

    Major Expansion Initiatives with Services That Have Already Commenced (dollars in thousands):
    Project                                                                                                                                      Service Commen-                              Q3 2012                                  YTD                     Estimated               Estimated
                                                                                                                                                     cement                                   Margin                                September                   Total                 Annualized
                                                                                                                                                                                                                                   2012 Margin                             2012         Margin
                                                                                                                                                                                                                                                                Margin
    ---                                                                                                                                                                                                                                                         ------

    Sussex County, DE expansion
            Transmission (for Lewes, DE) - 3,250 Dts/d (1)                                                                     Nov-11                                                $234                                 $701                            $935                   $935
            Distribution - Two large industrial customers
               in Lewes, DE (2)                                                                                                Dec-11                                                  91                                  357                             456                    391
             Transmission (for southeastern part) 1,550
             Dts/d                                                                                                        Mar-12 to May-12                                            111                                  223                             334                    446
            Distribution - Two facilities of an existing customer
               in the southeastern part of the Sussex County                                                              Mar-12 to Aug-12                                             19                                   39                              78                    154
                                                                                                                                                                                                         $455                                     $1,320                 $1,803                  $1,926
    Worcester County, MD expansion
            Transmission - 1,450 Dts/d                                                                                    Jun-12 to Dec-12                                            $29                                  $39                            $102                   $391
    Nassau County, FL expansion
            Transmission - A new fixed annual rate service (5)                                                                                       Apr-12                                              $529                                     $1,056                 $1,575                  $2,100

                                                                                                                                                                                                       $1,013                                     $2,415                 $3,480                  $4,417
                                                                                                                                                                                                       ======                                     ======                 ======                  ======

    Total by Geographic Location of the Project:
            Delmarva Natural Gas Distribution                                                                                                                                        $110                                 $396                            $534                   $545
            Delmarva Natural Gas Transmission                                                                                                                                         374                                  963                           1,371                  1,772
            Florida Natural Gas Transmission                                                                                                                                          529                                1,056                           1,575                  2,100
                                                                                                                                                                                                       $1,013                                     $2,415                 $3,480                  $4,417
                                                                                                                                                                                                       ======                                     ======                 ======                  ======

    Upcoming Major Expansion Initiatives with Executed Contracts (dollars in thousands):

    Project                                                                                                                                      Service Commen-                             Estimated                         Estimated Annualized
                                                                                                                                                                                                                                      Margin
                                                                                                                                                     cement                                   Total
                                                                                                                                                                                                         2012
                                                                                                                                                                                              Margin
    ---                                                                                                                                                                                       ------

    Cecil County, MD expansion
            Transmission - 4,070 Dts/d                                                                                         Nov-12                                                $147                                 $882
    Service to NRG's Dover, DE electric generation plant
            Transmission - 13,440 Dts/d (3)                                                                                    May-13                                          $        -                     $2,400 to $2,800
    Delaware City refinery expansion
            Transmission - 15,000 Dts/d (3) (4)                                                                                Nov-13                                          $        -                               $1,600

                                                                                                                                                                                                         $147                           $4,882 to $5,282
                                                                                                                                                                                                         ====                           ================

            (1)These services generated $156,000 in gross margin in 2011 (all in the fourth quarter).
            (2)These services generated $1,000 in gross margin in 2011 (all in the fourth quarter).
             (3)A precedent agreement has been executed among the parties for these services.  The figures provided represent the
             estimated margin pursuant to the precedent agreement.  A firm transportation service agreement will be executed by the
             parties upon satisfying certain conditions.
             (4)This contract is expected to replace the 9,514 Dts/d contract with annualized gross margin of $1.0 million, which
             expires in November 2012.
             (5)Peninsula Pipeline commenced its service in April 2012, using compressed natural gas pending the completion of a new
             pipeline.  Once the new pipeline is completed, Peninsula Pipeline is expected to incur approximately $800,000 in annual
             transportation costs, which will reduce this gross margin.

                                                                                                                                                                                         Chesapeake Utilities Corporation and Subsidiaries
                                                                                                                                                                                         Distribution Utility Statistical Data (Unaudited)

                                                                       For the Three Months Ended September 30, 2012                                             For the Three Months Ended September 30, 2011
                                                                       ---------------------------------------------                                             ---------------------------------------------
                                                                                        Delmarva NG                                   Chesapeake                                     FPU NG                                FPU Electric              Delmarva NG            Chesapeake              FPU NG               FPU Electric
                                                                                        Distribution                                  Florida NG                                  Distribution                             Distribution             Distribution            Florida NG           Distribution            Distribution
                                                                                                                                       Division                                                                                                                              Division
                                                                                                                                                                                                                                                                           ---                                                                 ---
    Operating Revenues
    (in thousands)
    -------------
      Residential                                                                                             $4,206                                        $989                                        $3,436                             $12,999                  $4,128                  $984                 $3,335               $13,781
      Commercial                                                                                               2,413                                         956                                         4,882                              11,012                   2,520                   874                  5,514                11,580
      Industrial                                                                                               1,292                                       1,151                                         2,713                               1,525                   1,234                 1,142                  2,122                 1,679
      Other (1)                                                                                                  357                                         535                                         1,271                              (2,453)                    340                   557                  1,034                  (994)
      --------                                                                                                   ---                                         ---                                         -----                              ------                     ---                   ---                  -----                  ----
    Total Operating Revenues                                                                                  $8,268                                      $3,631                                       $12,302                             $23,083                  $8,222                $3,557                $12,005               $26,046

    Volume(in Dts/MWHs)
    -------------------
      Residential                                                                                            145,578                                      46,454                                       194,057                              63,591                 142,914                42,250                170,633                98,611
      Commercial                                                                                             338,727                                     307,800                                       559,436                              60,853                 362,758               258,707                574,217                93,994
      Industrial                                                                                             906,362                                   2,922,093                                       787,939                               9,580                 731,768             2,873,887                538,065                11,540
      Other                                                                                                   41,779                                           -                                       (10,306)                              5,585                  33,385                     -                (34,360)                1,061
      -----                                                                                                   ------                                         ---                                       -------                               -----
    Total                                                                                                  1,432,446                                   3,276,347                                     1,531,126                             139,609               1,270,825             3,174,844              1,248,555               205,206

    Average Customers
    -----------------
      Residential                                                                                             48,927                                      13,676                                        48,539                              23,703                  47,810                13,446                 47,815                23,583
      Commercial                                                                                               5,100                                       1,257                                         4,470                               7,410                   5,056                 1,183                  4,504                 7,401
      Industrial                                                                                                 101                                          53                                           894                                   2                      90                    57                    699                     2
      Other                                                                                                        6                                           -                                             -                                   -                       5                     -                      -                     -
      -----
    Total                                                                                                     54,134                                      14,986                                        53,903                              31,115                  52,961                14,686                 53,018                30,986
    -----                                                                                                     ------                                      ------                                        ------                              ------                  ------                ------                 ------                ------

    (1)Operating revenues from "Other" sources include accrued 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.

                                                                                                                                                                                 Chesapeake Utilities Corporation and Subsidiaries
                                                                                                                                                                                 Distribution Utility Statistical Data (Unaudited)

                                                                       For the Nine Months Ended September 30, 2012                                             For the Nine Months Ended September 30, 2011
                                                                       --------------------------------------------                                             --------------------------------------------
                                                                                        Delmarva NG                                  Chesapeake                                    FPU NG                                FPU Electric          Delmarva NG             Chesapeake               FPU NG               FPU Electric
                                                                                        Distribution                                 Florida NG                                 Distribution                             Distribution          Distribution            Florida NG            Distribution            Distribution
                                                                                                                                      Division                                                                                                                          Division
                                                                                                                                                                                                                                                                       ---                                                                 ---
    Operating Revenues
    (in thousands)
    -------------
      Residential                                                                                           $30,998                                      $3,315                                      $14,790                          $31,132                 $36,774                 $3,371                $15,306               $36,794
      Commercial                                                                                             14,070                                       2,905                                       20,346                           28,390                  19,499                  2,785                 23,214                31,924
      Industrial                                                                                              4,035                                       3,650                                        7,881                            6,604                   3,592                  3,585                  6,780                 5,618
      Other (1)                                                                                              (2,051)                                      1,845                                         (598)                          (2,169)                 (4,501)                 1,708                 (1,493)               (3,996)
      --------                                                                                               ------                                       -----                                         ----                           ------                  ------                  -----                 ------                ------
    Total Operating Revenues                                                                                $47,052                                     $11,715                                      $42,419                          $63,957                 $55,364                $11,449                $43,807               $70,340

    Volume(in Dts/MWHs)
    -------------------
      Residential                                                                                         1,804,358                                     229,900                                      894,597                          223,591               2,346,888                241,981                914,954               254,115
      Commercial                                                                                          1,905,218                                     971,631                                    2,067,314                          229,625               2,367,218                896,029              2,234,794               245,989
      Industrial                                                                                          2,766,117                                  10,689,157                                    2,463,939                           50,710               2,268,532             10,794,047              2,044,897                41,220
      Other                                                                                                  91,366                                           -                                       61,235                           20,228                  79,401                      -               (226,866)                7,949
      -----                                                                                                  ------                                         ---                                       ------                           ------
    Total                                                                                                 6,567,059                                  11,890,688                                    5,487,085                          524,154               7,062,039             11,932,057              4,967,779               549,273

    Average Customers
    -----------------
      Residential                                                                                            49,516                                      13,773                                       48,543                           23,663                  48,594                 13,589                 47,900                23,588
      Commercial                                                                                              5,206                                       1,249                                        4,534                            7,396                   5,179                  1,173                  4,524                 7,385
      Industrial                                                                                                103                                          55                                          811                                2                      90                     58                    680                     2
      Other                                                                                                       5                                           -                                            -                                -                       5                      -                      -                     -
      -----
    Total                                                                                                    54,830                                      15,077                                       53,888                           31,061                  53,868                 14,820                 53,104                30,975
    -----                                                                                                    ------                                      ------                                       ------                           ------                  ------                 ------                 ------                ------

    (1)Operating revenues from "Other" sources include accrued 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 .

                                       Chesapeake Utilities Corporation and Subsidiaries
                                      Condensed Consolidated Balance Sheets  (Unaudited)

     Assets                                           September 30,                      December 31,
                                                                            2012                          2011
    ---                                                                     ----                          ----
     (in thousands, except shares and per share data)

     Property, Plant and Equipment
        Regulated energy                                                $549,318                      $528,790
        Unregulated energy                                                68,956                        67,327
        Other                                                             19,031                        19,988
     Total property,
      plant and
      equipment                                                          637,305                       616,105
     Less:  Accumulated
      depreciation and
      amortization                                                      (150,859)                     (137,784)
     Plus:  Construction
      work in progress                                                    36,745                         9,383
     Net property, plant
      and equipment                                                      523,191                       487,704
     -------------------                                                 -------                       -------

     Current Assets
        Cash and cash
         equivalents                                                       2,046                         2,637
        Accounts receivable (less allowance for uncollectible
           accounts of $961
            and $1,090,
            respectively)                                                 42,107                        76,605
        Accrued revenue                                                    8,394                        10,403
        Propane inventory,
         at average cost                                                   6,256                         9,726
        Other inventory, at
         average cost                                                      3,284                         4,785
        Regulatory assets                                                  2,745                         1,846
        Storage gas
         prepayments                                                       4,593                         5,003
        Income taxes
         receivable                                                        7,967                         6,998
        Deferred income
         taxes                                                             2,158                         2,712
        Prepaid expenses                                                   6,097                         5,072
        Mark-to-market
         energy assets                                                       721                         1,754
        Other current
         assets                                                              121                           219
     Total current
      assets                                                              86,489                       127,760
     -------------                                                        ------                       -------

     Deferred Charges and Other Assets
        Goodwill                                                           4,090                         4,090
        Other intangible
         assets, net                                                       2,879                         3,127
        Investments, at
         fair value                                                        4,670                         3,918
        Regulatory assets                                                 75,634                        79,256
        Receivables and
         other deferred
         charges                                                           2,999                         3,211
     Total deferred
      charges and other
      assets                                                              90,272                        93,602
     ------------------                                                   ------                        ------

     Total Assets                                                       $699,952                      $709,066
     ============                                                       ========                      ========
                                   Chesapeake Utilities Corporation and Subsidiaries
                                  Condensed Consolidated Balance Sheets  (Unaudited)

      Capitalization
      and
      Liabilities                                        September 30,               December 31,
                                                                           2012                       2011
    ---                                                                    ----                       ----
     (in thousands, except shares and per share data)

     Capitalization
        Stockholders' equity
        Common stock, par value $0.4867 per
         share
        (authorized
        25,000,000
        shares)                                                          $4,669                     $4,656
         Additional
         paid-
         in
         capital                                                        150,230                    149,403
         Retained
         earnings                                                        99,912                     91,248
         Accumulated
         other
         comprehensive
         loss                                                            (4,327)                    (4,527)
         Deferred
         compensation
         obligation                                                         970                        817
         Treasury
         stock                                                             (970)                      (817)
     Total
      stockholders'
      equity                                                            250,484                    240,780

     Long-
      term
      debt,
      net of
      current
      maturities                                                        108,721                    110,285
     Total
      capitalization                                                    359,205                    351,065
     ---------------                                                    -------                    -------

     Current Liabilities
        Current
         portion
         of
         long-
         term
         debt                                                             8,196                      8,196
        Short-
         term
         borrowing                                                       30,756                     34,707
         Accounts
         payable                                                         35,478                     55,581
         Customer
         deposits
         and
         refunds                                                         29,832                     30,918
        Accrued
         interest                                                         3,146                      1,637
         Dividends
         payable                                                          3,501                      3,300
        Accrued
         compensation                                                     6,417                      6,932
         Regulatory
         liabilities                                                      2,641                      6,653
        Mark-
         to-
         market
         energy
         liabilities                                                        556                      1,496
        Other
         accrued
         liabilities                                                     10,078                      8,079
     Total
      current
      liabilities                                                       130,601                    157,499
     ------------                                                       -------                    -------

     Deferred Credits and Other Liabilities
         Deferred
         income
         taxes                                                          127,262                    115,624
         Deferred
         investment
         tax
         credits                                                            127                        171
         Regulatory
         liabilities                                                      3,479                      3,564
         Environmental
         liabilities                                                      9,170                      9,492
        Other
         pension
         and
         benefit
         costs                                                           22,947                     26,808
        Accrued
         asset
         removal
         cost -
         Regulatory
         liability                                                       37,899                     36,584
        Other
         liabilities                                                      9,262                      8,259
     Total
      deferred
      credits
      and
      other
      liabilities                                                       210,146                    200,502
     ------------                                                       -------                    -------

     Total
      Capitalization
      and
      Liabilities                                                      $699,952                   $709,066
     ===============                                                   ========                   ========

SOURCE Chesapeake Utilities Corporation


Source: PR Newswire