Segment Information

We use the management approach to identify operating segments. We organize our business around differences in regulatory environment and/or products or services, and the operating results of each segment are regularly reviewed by the chief operating decision maker (our Chief Executive Officer) in order to make decisions about resources and to assess performance. The segments are evaluated based on their pre-tax operating income. Our operations are comprised of two reportable segments:


•	Regulated Energy. The Regulated Energy segment includes natural gas distribution, natural gas transmission and electric distribution operations. All operations in this segment are regulated, as to their rates and services, by the PSC having jurisdiction in each operating territory or by the FERC in the case of Eastern Shore.

•

Unregulated Energy. The Unregulated Energy segment includes propane distribution as well as natural gas marketing, gathering, processing, transportation and supply. These operations are unregulated as to their rates and services. Effective June 2016, this segment includes electricity and steam generation through Eight Flags' CHP plant. Through March 2017, this segment also included the operations of Xeron, our propane and crude oil trading subsidiary that began winding down operations at the end of the first quarter of 2017.

Other operations are presented as “Other businesses and eliminations,” which consist of unregulated subsidiaries that own real estate leased to Chesapeake Utilities, as well as certain corporate costs not allocated to other operations.

Our operations are entirely domestic.

The following table presents financial information about our reportable segments:



	Three Months Ended						Nine Months Ended
	September 30,						September 30,
	2017			2016			2017			2016
(in thousands)
Operating Revenues, Unaffiliated Customers
Regulated Energy segment	$	67,257		$	68,899		$	232,519		$	224,382
Unregulated Energy segment and other businesses	59,679			39,449			204,661			132,604
Total operating revenues, unaffiliated customers	$	126,936		$	108,348		$	437,180		$	356,986
Intersegment Revenues ⁽¹⁾
Regulated Energy segment	$	2,446		$	1,120		$	5,834		$	2,248
Unregulated Energy segment	5,009			2,593			15,801			3,759
Other businesses	194			240			581			705
Total intersegment revenues	$	7,649		$	3,953		$	22,216		$	6,712
Operating Income
Regulated Energy segment	$	15,168		$	13,115		$	51,915		$	52,660
Unregulated Energy segment	(989		)	(3,080		)	10,504			9,267
Other businesses and eliminations	60			121			161			350
Total operating income	14,239			10,156			62,580			62,277
Other income (expense), net	239			(28		)	(643		)	(68		)
Interest charges	3,321			2,722			9,133			7,996
Income before Income Taxes	11,157			7,406			52,804			54,213
Income taxes	4,324			2,990			20,781			21,401
Net Income	$	6,833		$	4,416		$	32,023		$	32,812


⁽¹⁾	All significant intersegment revenues are billed at market rates and have been eliminated from consolidated operating revenues.



(in thousands)	September 30, 2017		December 31, 2016
Identifiable Assets
Regulated Energy segment	$	1,084,961	$	986,752
Unregulated Energy segment	233,785		226,368
Other businesses and eliminations	28,004		16,099
Total identifiable assets	$	1,346,750	$	1,229,219