Beth Cooper - Senior Vice President and Chief Financial Officer Mike McMasters - President and Chief Executive Officer

Good morning. My name is (Liton) and I’ll be your conference operator today. At this time I would like to welcome everyone to the First Quarter Earnings Conference Call. All lines have been placed on mute to prevent any background noise. After the speakers’ remarks there will be a question-and-answer session. (Operator Instructions) Thank you. Senior Vice President and Chief Financial Officer, Beth Cooper, you may begin.

Good morning everyone and welcome to the Chesapeake Utilities first quarter 2014 earnings conference call. We have prepared a presentation to accompany our discussion today. This presentation can be accessed on our website under the Investors section and events and webcast sub-section. Before we begin, let me remind you that matters discussed in this conference call 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 2013 annual report on Form 10-K for further information on the risks and uncertainties related to the company’s forward-looking statements. Now I’ll turn the call over to Mike McMasters, President and Chief Executive Officer.

Thanks, Beth, and good morning everyone. Earlier this week we announced first quarter net income of $17.7 million or $1.82 per share for 2014. 2014’s earnings per share for the first quarter were $0.28 per share or 18% higher than 2013. Turning to Slide 3. One of the key things that we’ve been able to leverage over the last few years is the price advantage that natural gas has relative to other sources of energy. We’ve extended our systems to serve markets and are previously served by natural gas both in Delmarva and in Florida. We’ve increased the capacity of our transmission system to provide additional service to our current customers that are growing. The natural gas price advantage has increased our opportunities for growth and we’ve been able to execute on those opportunities. We continue to see opportunities for the expansion of natural gas infrastructure in our current service territories and we’re continuing to look for opportunities to expand beyond those territories. Natural gas is an abundant, clean and inexpensive fuel and the significant reserves we have here in the United States provide security of supply and price. This is reflected in the comparison of energy prices on Slide 3. The price advantage that natural gas has is expected to continue for the foreseeable future. Turning to Slide 4. No matter what page you look at, over the last 20 years, 10 years, five, three or one year ended March 2014, Chesapeake has produced top quartile total return to shareholders. On average over the past 20 years Chesapeake’s shareholders have earned more than 13% return on an annualized basis. Turning to Slide 5. 2013 marked the seventh straight year of record earnings per share delivered by the company. Slide 5 shows that for the five years ended December 2013…

Thanks Mike. As Mike noted first quarter earnings per share were higher by $0.28 per share or 18% over the first quarter of 2013. On Slide 9 you can see that this significant growth in first quarter 2014 earnings over first quarter of 2013 was a result of the impact of the extreme temperatures this past winter, positive contributions from the acquisitions we consummated in 2013, and continued strong growth in the natural gas distribution and transmission businesses. This consistent level of superior earnings growth has enabled us to provide shareholders the superior dividend growth. The latest example is the $0.08 or 5.2% increase in the annualized dividend approved by the Board on May 6 which Mike mentioned earlier. I would now like to highlight the key accomplishments and results for the business segments during the first quarter of 2014. Detailed discussions of the changes in gross margin and operating expenses by segment for the quarter are provided in our press release and Form 10-Q which were issued and filed on Tuesday. Slide 10 shows Chesapeake’s regulated energy businesses which include our natural gas transmission and distribution and electric distribution operations generated operating income of $21.1 million in the first quarter of 2014 compared to $17.3 million in the first quarter of 2013. Growth in the Regulated Energy segment generated $1.9 million in additional margin from major natural gas service expansions and customer additions, $4.3 million in additional margin from the operations of Sandpiper Energy and $724,000 and increased margins from the Florida Gas Reliability Infrastructure Program or GRIP as we commonly refer to it. As you may recall the operating assets of Sandpiper Energy were acquired from the previous centers at the end of May, 2013. So we have only $1.9 million during the first quarter of 2014 compared…

Thanks, Beth. Acquisitions and service expansions in our natural gas distribution and transmission business have been the major source of profitable growth in the past and we expect that they will continue to be in the future. Slide 16 details the key sources of expected growth for 2014. In the first quarter these initiatives accounted for $5.7 million of incremental margin. And they’re expected to contribute approximately $10.4 million in incremental margin for the full year compared to 2013. In addition to the major projects that have already been initiated on Slide 17 we have one major project we expect to provide significant contribution to margins that was not included in the table above. The expansion of transmission facilities to serve a new customer in Kent County, Delaware in January of 2015 should generate between $1.2 million and $1.8 million annually. This does not include revenue from any mainline transportation services provided to that company customer. I should note that these slides we’ve not included any rate cases or other projects underdeveloped on a negotiation. We expect that we’ll add to these strategic opportunities as we move forward. Slide 18 shows our focus for 2014 and beyond. We see attractive opportunities for growth across our energy businesses. As in the past we will continue to look for profitable large project investments in the natural gas distribution and transmission businesses. As a result of past expansions we have the opportunity to serve new commercial, industrial and residential customers and will be fine-tuning our conversion programs to meet that objective. We will also look to provide additional natural gas services to our existing customers. In Florida we expect to generate additional margins through our GRIP program. We’re also exploring opportunities to provide natural gas service to power generators, combined heat and power…

(Operator Instructions) There are no questions at this time. I’d like to turn the call over, Mike McMasters, President and Chief Executive Officer, the call back to you.

Thank you. I just want to thank everyone for joining us this morning and we’ll be talking to you probably later. Thank you. Bye.

This concludes today’s conference. You may now disconnect.