NextEra Energy Sells Florida City Gas To Chesapeake Utilities: Here's Details

NextEra Energy Inc's NEE Florida Power & Light Company subsidiary penned a deal to sell Florida City Gas (FCG) to Chesapeake Utilities Corp CPK for $923 million in cash.

FCG serves about 120,000 residential and commercial natural gas customers in Florida, and its natural gas system comprises about 3,800 miles of distribution main and 80 miles of transmission pipe.

Post closure, FCG will become a wholly owned subsidiary of CPK.

The transaction, which comprises intercompany debt of $145 million, is expected to close in Q4 FY23 subject to the expiration of the applicable waiting period under the Hart-Scott-Rodino Antitrust Improvements Act of 1976, as amended, and other customary closing conditions.

NEE Outlook: NEE expects the transaction to be accretive to its earnings immediately upon closure and reiterated its guidance for adjusted EPS at $2.98-$3.13 for 2023 and $3.23-$3.43 for 2024. 

The company will exclude the gain on the sale of assets at the time of deal closure from adjusted earnings.

For 2025 and 2026, the company continues to project adjusted EPS to grow 6%-8% (vs. 2024 figure) to $3.45-$3.70 and $3.63-$4.00, respectively. 

Also, the energy company reinstated its statement that it will be disappointed if it is not able to deliver financial results at or near the top end of its adjusted EPS ranges through 2026.

The company continues to expect dividends per share annual growth of roughly 10% through at least 2024, vs. 2022 base.

CPK Synergy & Outlook: Post-acquisition, CPK's Florida portfolio is expected to contribute about 60% of its total utility net plant and operating income vs. 45% for the standalone business at the end of 2022.

With the buyout, CPK's regulated utility customers and net plant will augment by 50% and 30%, respectively, with the regulated business mix coming to 87% (up from 81%). 

The deal is expected to drive the company's long-term EPS guidance and offers investment opportunities of about $500 million related to FCG over the coming five years.

CPK expects to exceed its current capital expenditure outlook of $900 million to $1.1 billion for the five years ended 2025, two years early. 

The company provided guidance for EPS of $7.75-$8.00 for 2028, implying growth of about 8% vs. the 2025 EPS guidance range or 8.5% since 2018. It expects capital expenditure of $1.5 billion to $1.8 billion for the five years ended 2028.

Price Action: NEE shares closed lower by 3.16% at $65.34, while CPK shares closed lower by 1.48% at $105.90 on Tuesday.