Ches. Utilities acquires propane portfolio in Carolinas
DOVER — Chesapeake Utilities Corp. has acquired the propane assets of Diversified Energy Company, growing the utility company’s operating footprint into North Carolina and South Carolina and fueling its growth.
Diversified Energy is based in Boone, N.C. and registered 10.3 million gallons in annual propane sales in 2021, according to trade publication LP Gas. It also served 19,000 residential, commercial and agricultural customers.
The deal, done through Chesapeake Utilities’ propane division, Sharp Energy, is expected to add about $11.3 million in the company’s gross margin for 2022.
Chesapeake Utilities President and CEO Jeff Householder emphasized that propane remains a core part of the business given high demand in more rural areas where natural gas pipelines cannot or have not reached at this point.
“The addition of Diversified Energy’s propane business expands Sharp’s footprint into the Carolinas, adding to our growing presence along the East Coast,” Householder said in a press statement. “We are pleased to welcome our new employees to the Chesapeake Utilities family and are committed to serving Sharp Energy’s new customers with a continued commitment to excellence, integrity and care.”
Diversified Energy was founded in 2000 by scores of North Carolina’s Electric Membership Cooperatives (EMCs) as a way to pursue alternative energy resources for its customer base. After a strategic review, the Diversified Energy board of directors made the decision to monetize their respective investments in the company. In turn, the board would also reissue that capital into their individual electricity businesses.
Headquartered in Georgetown, Sharp Energy distributes propane to residential, commercial and industrial customers in Maryland, Delaware, Virginia and Pennsylvania. In 2019, the company tripled its propane rail terminal capacity in the First State, preparing it to store more than 3.5 million gallons in the Mid-Atlantic Region.
Two years later, Sharp Energy bought out Boulden Brothers Propane, which served 5,200 residential and commercial customers and sold about 3 million gallons of propane through the tri-state region.
At the end of 2020, Sharp finalized the acquisition of Western Natural Gas Company in Florida, which served 4,000 customers and sold roughly 1 million gallons of propane in four countries in northeast Florida.
“We are excited to integrate the Diversified Energy business into Sharp Energy, and we believe the two organizations align culturally,” Sharp Energy Vice President Andy Hesson said in a statement.
Meanwhile, Chesapeake Utilities has been growing steadily on the Delmarva Peninsula. Two years ago, the company bought Elkton Gas for $15 million, adding another 7,000 customers from neighboring Cecil County, Md.
Earlier this year, Chesapeake Utilities received the approval to extend natural gas through Delaware and into Somerset County, Md. That $14 million project will deliver natural gas access to one of the last remaining spots in Maryland without it.