Good morning. My name is Tanya, and I'll be your conference operator today. At this time, I'd like to welcome everyone to the Chesapeake Utilities Second Quarter 2014 Financial Review Conference Call. [Operator Instructions] Beth Cooper, Senior Vice President and Chief Financial Officer, you may begin your conference.

Thank you. Good morning, everyone, and welcome to Chesapeake Utilities Second 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 subsection or via our IR app. The Chesapeake Utilities IR app is free and can be downloaded through the App Store on an iPhone or iPad or through Google Play on an Android mobile device. Turning to Slide 2. 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 and 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. Yesterday, we announced second quarter net income of $5.1 million or $0.53 per share for 2014. Summary financial results for the quarter are shown on Slide 3. 2014 earnings per share for the second quarter were $0.08 per share higher than the 2013 second quarter earnings per share. Excluding unusual items, earnings per share increased $0.03 or 6.7% over the second quarter of 2013. Our second quarter performance reflects continued growth in the Natural Gas Distribution and transmission businesses, a positive contribution from the Eastern Shore Gas acquisition and continued implementation of the Florida Gas Reliability Infrastructure Program, or GRIP as we commonly refer to it. We expect these initiatives to provide additional opportunities for future growth. I will highlight the key accomplishments and results for the business segments during the second quarter of 2014, and also briefly for the 6 months ended June 30, 2014. Detailed discussions of the changes in gross…

Thank you, Beth, and good morning, everyone. As Beth has highlighted, the second quarter of 2014 was another strong quarter for Chesapeake. We are fortunate to serve areas with significant opportunities and provide energy services that are friendly to the environment and low-cost to our customers. We possess some fundamental advantages, and our success this past year and over the past 20 years is ultimately a function of our people. Many service territories have growth opportunities, but our team has done a remarkable job of identifying and cultivating growth and then exercising financial discipline, effectively manage regulation to produce superior returns to shareholders, while providing clean, reliable and low-cost energy to our customers. Turning to Slide 13. The environmental and economic advantages of natural gas continue to present opportunities, with the expansion of its use in our service territory and across the United States. Natural gas is an abundant, clean and inexpensive fuel and a significant reserve we have here in the United States provides security of supply and price. This is reflected in the comparison of energy prices, which shows that natural gas enjoys a significant price advantage compared to oil, and it's expected to maintain this advantage for the foreseeable future. We see attractive opportunities for growth across our energy businesses as indicated on Slide 14. 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 customers and are continuing to enhance our conversion programs and processes. We will also look to provide additional services to our existing customers. And in Florida, we expect to continue to generate additional margins through our pipe replacement program. Providing natural gas service to power generators and…

[Operator Instructions] Your first question comes from the line of Spencer Joyce from Hilliard Lyons.

Beth, maybe first question for you here. I just wants to make sure I heard you currently in your prepared remarks. You mentioned that you all do expect to access the capital markets within the next year?

Yes.

And would this -- I mean, this is debt plus equity. I mean, both would fall under that umbrella. Can we see something similar to the forward debt deals that you all announced, I want say, about a year ago, you took it down December or May, or is this targeted really more towards the equity side?

Well, right now, Spencer, our balance sheet, we're still sitting at around 58% -- 57%, 58% in terms of equity to total capitalization. But with the forecasted CapEx spending that we talked about, again, we do forecast that some of that is going to fall into next year. That would necessitate, if we're going to maintain our target capital structure, that we would be -- we would be accessing the equity markets at some point. But keep in mind, which I know, and you know we talked about this during some of our meetings with you for larger projects or initiatives that we undertake. When we're looking at them from a financial perspective, what we're looking at is that those projects are going to meet or exceed our target returns. We're looking at those to be either earnings neutral or slightly accretive coming out of the box, and we're always looking at those projects with our target capital structure in mind.

Okay. Absolutely. I know -- I see the updated forecast here, 140-plus on the CapEx side for '14. Do you have anything either in the queue or did I maybe miss a comment on what we might be able to expect in 2015? And then I guess, also if there's not a number, maybe you can talk about any projects that would or would not repeat, that could cause delta count of either way?

At this time, we have not -- we've not put anything out there in regards to our 2015 projections. I think with some of Mike's comments, I think what we're trying to relay along the way is that we are aggressively looking at a lot of projects, both within and beyond our current service territories. And I think our hope is that some of these projects will come to fruition and we'll be able to come out with some disclosures around them.

Yes, I guess, Spencer, I can add. I think Beth had that right on the money. We have a pretty high standard to get the stuff in these documents and we wait until we get things buttoned up pretty tight. And so we're working hard to develop projects and to meet customers' expectations in terms of things that they're looking for from us, and when we get to the place where they -- everybody's happy, then we start looking at what's the proper release of information on those. And so -- sometimes, that's going to mean that we're a little bit delayed in getting some information out, but you can tell by the capital budget that we're pretty far along on several of the forecast and we're pretty far along on some of those opportunities.

Yes. That is a pretty robust spend here this year. I guess, while we're talking kind of about the big picture, here, Mike. You noted CHP and midstream opportunities just very briefly during the prepared remarks, some longer-term opportunities. And I was wondering if you could give us a little color around what the timeframe there may be? I mean, is it close enough that some of the spend, either late this year, could be a project of that type or are we talking a year plus kind of down the road there?

Some of that stuff is -- until there's a contract signed, really, it's hard to predict. It's really, to a large extent, up to a customer if we're ready to provide service and the price is acceptable to the customer, the question is acceptable, 1 and 2 is from their perspective, is -- do they have some interest in moving fast or slow, whatever. So it's hard to predict that, and to some degree beyond our control. I would say that, as Beth mentioned, there could be some delay in the spending. There's likely to some delay, question is how big in that spend? But we -- that is, I guess, over the next, I think you could easily say, 12 months, it's pretty likely that those dollars will be spent on a variety of projects and opportunities.

Okay. Sticking here with kind of the CHP midstream idea. Are you all comfortable with the current regulatory framework in the constructs in the Maryland/Delaware area to move forward with those, or is there anything in the works that may either increase or decrease your appetite for those specific types of projects?

Maybe I can take the -- I'm not sure it's about the [indiscernible] balance constructs, but we take CHP for example. That's a technology that makes a lot of sense, both environmentally and economically. And there are, sometimes, challenges, probably the biggest challenge with us, I think, maybe does get to the regulatory construct with what's the impact on the ultimate price of power once you figure you're connected to the grid and possibly, a distribution system -- probably, a distribution system and that can get some difficult price signals coming to the customer, the CHP customer. So that's always going to be a challenge regardless, and although there is a, I guess, a national desire to try to use more CHP. The midstream stuff, that's going to be -- you could consider Eastern Shore Natural Gas as a midstream and you can look at that things more than that too. But we are, I think, comfortable with the regulatory jurisdictions we're in, and we're pretty comfortable with several others. We've been operating at the FERC, in Florida, Delaware and Maryland for quite some time. I had some experience in Pennsylvania. So we've got some -- we've got a lot of regulatory experience in the building, and I think it's more about how you approach the regulators. You got to show them respect, listen to what they have to say and be willing to take your time to work through things with them, and again, respect their point of view. And I think you can be effective in most jurisdictions, I can't say all, but I think most jurisdictions, if you do that.

Okay, fair enough there, and I probably should targeted that question a little more towards the CHP side. I guess, a couple of other companies we follow that have some CHP exposure have had some differing views about the particular tax structure and some of the incentives around those projects. But I think you addressed it kind of well enough there.

[Operator Instructions] There are no further questions at this time. I turn the call back over to Mike McMasters.

Well, I just want to thank everyone, again, for your time and in your interest in Chesapeake. And We look forward to talking to you next quarter, and have a nice weekend. Thank you.

Thank you.

This concludes today's conference call. You may now disconnect.