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<SEC-DOCUMENT>0000019745-04-000012.txt : 20040805
<SEC-HEADER>0000019745-04-000012.hdr.sgml : 20040805
<ACCEPTANCE-DATETIME>20040805121605
ACCESSION NUMBER:		0000019745-04-000012
CONFORMED SUBMISSION TYPE:	8-K
PUBLIC DOCUMENT COUNT:		2
CONFORMED PERIOD OF REPORT:	20040805
ITEM INFORMATION:		Results of Operations and Financial Condition
ITEM INFORMATION:		Financial statements and exhibits
FILED AS OF DATE:		20040805

FILER:

	COMPANY DATA:	
		COMPANY CONFORMED NAME:			CHESAPEAKE UTILITIES CORP
		CENTRAL INDEX KEY:			0000019745
		STANDARD INDUSTRIAL CLASSIFICATION:	NATURAL GAS TRANSMISSION & DISTRIBUTION [4923]
		IRS NUMBER:				510064146
		STATE OF INCORPORATION:			DE
		FISCAL YEAR END:			1231

	FILING VALUES:
		FORM TYPE:		8-K
		SEC ACT:		1934 Act
		SEC FILE NUMBER:	001-11590
		FILM NUMBER:		04953962

	BUSINESS ADDRESS:	
		STREET 1:		909 SILVER LAKE BLVD
		STREET 2:		PO BOX 615
		CITY:			DOVER
		STATE:			DE
		ZIP:			19903-0615
		BUSINESS PHONE:		3027346799

	MAIL ADDRESS:	
		STREET 1:		909 SILVER LAKE BLVD
		CITY:			DOVER
		STATE:			DE
		ZIP:			19904
</SEC-HEADER>
<DOCUMENT>
<TYPE>8-K
<SEQUENCE>1
<FILENAME>doc1.txt
<DESCRIPTION>FORM 8-K - 2ND QTR EARNINGS RELEASE
<TEXT>

                       SECURITIES AND EXCHANGE COMMISSION
                             WASHINGTON, D.C. 20549
                         _______________________________
                                    FORM 8-K
                                 CURRENT REPORT


     Pursuant to Section 13 or 15(d) of the Securities Exchange Act of 1934

        Date of Report (Date of earliest event reported): August 5, 2004


                        CHESAPEAKE UTILITIES CORPORATION
                        --------------------------------
             (Exact name of registrant as specified in its charter)


                  DELAWARE         001-11590         51-0064146
                  --------         ---------         ----------
              (State or other     (Commission     (I.R.S. Employer
              jurisdiction  of        File        Identification No.)
              incorporation or       Number)
               organization)


                909 SILVER LAKE BOULEVARD, DOVER, DELAWARE 19904
                ------------------------------------------------
          (Address of principal executive offices, including Zip Code)


                                 (302) 734-6799
                                 --------------
              (Registrant's Telephone Number, including Area Code)


         _______________________________________________________________
               (Former name, former address and former fiscal year,
                          if changed since last report.)


<PAGE>

ITEM  7.  FINANCIAL  STATEMENTS  AND  EXHIBITS.

(c)  Exhibit  99.1  -  Press  Release of Chesapeake Utilities Corporation, dated
     August  5,  2004.



ITEM  12.  RESULTS  OF  OPERATIONS  AND  FINANCIAL  CONDITION.

On  August  5, 2004, the Company issued a press release announcing its financial
results  for  the  quarter  ended  June 30, 2004. A copy of the press release is
attached  as  Exhibit  99.1  hereto  and  is  incorporated  by reference herein.




<PAGE>
                                    SIGNATURE


Pursuant  to  the  requirements  of  the  Securities  Exchange  Act of 1934, the
Registrant  has  duly  caused  this  Report  to  be  signed on its behalf by the
undersigned  hereunto  duly  authorized.


Chesapeake  Utilities  Corporation



/s/  Michael  P.  McMasters
- ---------------------------
     Michael  P.  McMasters
     Vice  President  and  Chief  Financial  Officer


Date:  August  5,  2004




</TEXT>
</DOCUMENT>
<DOCUMENT>
<TYPE>EX-99
<SEQUENCE>2
<FILENAME>doc2.txt
<DESCRIPTION>EARNINGS RELEASE 2ND QTR
<TEXT>
                                                                    EXHIBIT 99.1
[Chesapeake  Utilities
Corporation  Logo]



FOR  IMMEDIATE  RELEASE
AUGUST  5,  2004
NYSE  SYMBOL:  CPK

                CHESAPEAKE UTILITIES CORPORATION REPORTS EARNINGS
                       FOR THE PERIODS ENDED JUNE 30, 2004

Dover,  Delaware  - Chesapeake Utilities Corporation (NYSE: CPK) today announced
results  for the periods ended June 30, 2004. Net income for the second quarter,
including  discontinued water operations, was $631,000 or $0.11 per share (fully
diluted)  compared  to  net income for the second quarter of 2003 of $934,000 or
$0.17  per share (fully diluted). Income from continuing operations was $612,000
or  $0.11  (fully diluted) per share for the second quarter of 2004, compared to
$935,000  or  $0.17  (fully diluted) per share in 2003. The decrease in earnings
principally  reflects  a  decline  in  gross margin and operating income for the
Company's  Delmarva  natural  gas  and propane distribution operations caused by
warmer  temperatures  on  the Delmarva Peninsula. The Company estimates that the
warmer  weather  reduced gross margin by $677,000 for the second quarter of 2004
compared  to  2003.

"We  continue  to  be  pleased  with  the  strong  performance  of  our core gas
distribution  and propane operations," stated John R. Schimkaitis, President and
Chief  Executive Officer of Chesapeake Utilities Corporation. "While weather had
a  significant  impact  on  results  relative  to  last year, we continue to see
residential customer growth in our gas distribution service territories that far
exceeds  industry  averages.  The Delmarva propane business continues to lay the
foundation  for future growth through investment in community gas systems and we
continue  to  show  improved  profitability in our advanced information services
segment.  These  strong  fundamentals  support  our  attractive  dividend."

The  discussions of the results for each of the periods ended June 30, 2004, use
the  term  "gross  margin."  "Gross margin" is a non-GAAP financial measure that
management  uses  to  evaluate  the performance of its business segments. For an
explanation  of  the  calculation  of  "gross  margin"  see  Footnote (2) to the
Supplemental  Income  Statement  Data  below.

RESULTS  FOR  THE  QUARTER  ENDED  JUNE  30,  2004
Natural  gas  gross  margin  increased  $265,000  for the second quarter of 2004
compared  to  2003.  Increases  resulted  from  residential customer growth of 7
percent  in  Delaware,  Maryland  and Florida, as well as increases in Florida's
industrial  customer  gross  margin and the natural gas transmission operations'
firm transportation and interruptible services. These positive results more than
offset  the negative impact of warmer weather on the Delmarva Peninsula that the
Company  estimates  reduced  natural  gas  margins  by  $349,000 for the quarter
compared  to the second quarter of 2003. Other operating expenses were higher as
a  result  of  the  customer  growth.  Additionally, depreciation increased as a
result  of  continued  investment  in  plant  assets.

Propane  gross  margins  declined  primarily  due  to  the warmer weather on the
Delmarva  Peninsula  that  the  Company  estimates  to  have negatively impacted
margins by $328,000 compared to the second quarter of 2003. Advanced information
services  improved operating income by $96,000 or 59 percent. Revenues increased
$236,000,  while  the  cost of sales was held constant. Other operating expenses
were  higher  as  a  result  of  higher  software development costs to enhance a
software  product  and  increased  incentive  compensation.

RESULTS  FOR  THE  SIX  MONTHS  ENDED  JUNE  30,  2004
Net  income for the six months ended June 30, 2004 was $6.4 million or $1.09 per
share  (fully  diluted)  compared  to  $7.4  million  or  $1.30 per share (fully
diluted) for the same period in 2003. The decline in earnings for the six months
principally  reflects weather that was 10 percent warmer than the same period in
the  prior  year. The Company estimates that warmer temperatures on the Delmarva
Peninsula  resulted  in a reduction of $1.1 million in gross margin, compared to
the six months ended June 30, 2003, for the natural gas and propane distribution
operations  combined.

Natural  gas  gross  margin  increased  $933,000  or 4 percent. Gross margin for
Delaware  and  Maryland  was  unchanged  as  residential  customer growth of 6.7
percent  offset  the  negative  impact  of warmer weather. The warmer weather is
estimated  to  have  reduced margins by $553,000 compared to the prior year. The
Florida  operations  gross  margin  for the six-month period was $509,000 higher
than  the  prior  year  due  to  expansion  of unregulated gas supply management
operations  and  to  residential  customer growth of 6 percent. The transmission
operations increased gross margin by $424,000 as a result of increased levels of
firm  and  interruptible transportation services. Operating expenses were higher
due  to  the  increase  in  the  number  of  customers  served.

Propane  distribution  operations  on  the  Delmarva  Peninsula were affected by
temperatures,  measured  in heating degree-days that were 10 percent warmer than
the  first six months of 2003. The total decrease in Delmarva propane operations
gross  margin  was  $1.1  million.  The  Company  estimates  that  the  warmer
temperatures  represented  $519,000  of the decrease in propane gross margin. In
addition,  volumes sold to poultry industry customers declined, partially due to
the  2003  closing  of  a poultry processing plant in our service territory. The
plant  is  not  expected  to  reopen.  Additionally,  the  Delmarva  Peninsula
experienced  an  outbreak  of  avian  influenza  during  the  first quarter. The
outbreak  has  been  contained.  Gross  margins  per gallon sold per also lower.

Florida  propane  distribution  gross  margin  declined  by  $162,000.  This was
primarily  due  to  the impact of a one-time service project that increased 2003
gross  margin  by $192,000. Additionally, propane wholesale marketing operations
experienced  a  drop of $921,000 in gross margin, partially offset by a decrease
of  $284,000  in operating expenses. Although the results for the second quarter
were  comparable to the same period in 2003, the first quarter experienced lower
wholesale  price  volatility  and  therefore  fewer  trading  opportunities.

Gross  margin for the advanced information services segment grew by $194,000 for
the six months ended June 30, 2004. Although revenues were essentially even with
the prior year, the cost of sales was lower, reflecting continued success in the
segment's  efforts  to  enhance  profitability. The increase in gross margin was
partially  offset  by  increased  costs  related  to  software  enhancements and
incentive compensation, resulting in a $105,000 increase in operating income for
the  six-month  period.

Losses  from  discontinued operations decreased by $148,000 during the first six
months  of  2004,  reflecting  the  sale of the majority of the water businesses
during  the  second  half  of  2003.

RESULTS  FOR  THE  TWELVE  MONTHS  ENDED  JUNE  30,  2004
Income  from continuing operations for the twelve months ended June 30, 2004 was
$8.9  million,  or  $1.54  per share (fully diluted) compared to $9.9 million or
$1.75  per  share  (fully  diluted)  in  2003.  Net income, after the results of
discontinued  operations,  for  the  twelve  months ended June 30, 2004 was $8.3
million or $1.43 per share (fully diluted) compared to net income for the twelve
months  ended  June 30, 2003 of $8.1 million or $1.43 per share (fully diluted).

The  natural  gas  segment  benefited  from  residential  customer growth of 6.5
percent  on  the  Delmarva  Peninsula  and  5  percent in Florida. Additionally,
Florida  added two new industrial customers in the first quarter of 2003 and the
transmission  operation  experienced  increased  levels  of  firm transportation
services. This growth offset temperatures on the Delmarva Peninsula that were 10
percent  warmer,  measured  in  heating degree-days, than the prior twelve month
period. The Company estimates that the warmer temperatures had a negative impact
of  $893,000  on gross margin. The net effect was an increase in gross margin of
$2.0  million.  Higher operating expenses were the result of customer growth and
an increase in depreciation expense related to increased plant investment. Those
higher  operating  costs  offset  the  gross  margin  increase.

The  Delmarva  propane  distribution  operation's  operating income decreased by
$786,000  primarily  as  a  result  of  lower margins due to warmer weather. The
Company  estimates that warmer weather for the Delmarva Peninsula had a negative
impact of $839,000 on margins for the twelve months ended June 30, 2004 compared
to  the  prior  twelve-month period. The Florida propane distribution operations
experienced  a  decline  in operating income of $554,000. A decrease of $192,000
was  related  to a non-recurring service project that was completed in the first
quarter  of  2003. Additionally, service revenues in Florida declined during the
twelve  months ended June 30, 2004. Propane wholesale marketing operating income
decreased  by $668,000 due to fewer trading opportunities as the result of lower
wholesale  price  volatility.

Operating  income  for  the  advanced  information  services  segment  increased
$331,000 for the twelve months ended June 30, 2004 compared to the twelve months
ended  June  30,  2003.  Gross  margin was comparable for both periods; however,
cost-cutting  initiatives  put  into  place  led  to  lower  operating expenses.

Losses  from  discontinued operations decreased $1.2 million in 2004 compared to
2003.  This  improvement  relates  primarily to a charge for goodwill impairment
recorded  in the fourth quarter of 2002 for $1.5 million pre-tax ($973,000 after
tax).

On  December 31, 2003, the Company restated its financial statements in order to
reflect  a change in the revenue recognition method of its Delaware and Maryland
natural  gas  divisions from the "as billed" method to the "accrual" method. The
Company's  Florida  division  has  historically  used  the  "accrual"  method in
accordance with Florida Public Service Commission requirements. The Delaware and
Maryland  divisions  have  historically used the "as billed" method to recognize
revenues  consistent  with  the  rate-setting  processes  in  those states. This
change,  which  had  an  insignificant  effect  on the Company's annual results,
reflects  gas  consumed  by  the Company's customers through the last day of the
accounting  period  as revenue. Please see the Company's report on Form 10-K for
December  31,  2003  for  further  information.

<PAGE>

CONSOLIDATED  STATEMENTS  OF  INCOME
FOR  THE  PERIODS  ENDED  JUNE  30,  2004  AND  2003
DOLLARS  IN  THOUSANDS  EXCEPT  PER  SHARE  AMOUNTS
(UNAUDITED)

<TABLE>
<CAPTION>

- ------------------------------------------------------------------------------------------------------------------
                                       ----- 2ND QUARTER -----  ----- YEAR TO DATE -----  --- 12 MONTHS ENDED ---
                                       -- 2004 --   -- 2003 --   -- 2004 --  -- 2003 --    -- 2004 --   -- 2003 --
                                                   RESTATED (1)              RESTATED (1)             RESTATED (1)
- ------------------------------------------------------------------------------------------------------------------
<S>                                   <C>          <C>          <C>          <C>          <C>          <C>
OPERATING REVENUES . . . . . . . . .  $   34,293   $   30,785   $   98,055   $   93,744   $  166,609   $  155,983

OPERATING EXPENSES
   Cost of sales, excluding
      costs below. . . . . . . . . .      20,234       16,894       60,638       55,317      100,061       89,091
   Operations. . . . . . . . . . . .       8,634        7,772       17,795       16,633       33,926       32,405
   Maintenance . . . . . . . . . . .         416          431          796          850        1,684        1,874
   Depreciation and amortization . .       1,811        1,791        3,622        3,527        7,184        7,045
   Other taxes . . . . . . . . . . .       1,035        1,035        2,342        2,244        4,485        4,295
- ------------------------------------------------------------------------------------------------------------------
 Total operating expenses. . . . . .      32,130       27,923       85,193       78,571      147,340      134,710
- ------------------------------------------------------------------------------------------------------------------
OPERATING INCOME . . . . . . . . . .       2,163        2,862       12,862       15,173       19,269       21,273

OTHER INCOME . . . . . . . . . . . .          74           34          177           88          327          244

INTEREST CHARGES . . . . . . . . . .       1,328        1,429        2,655        2,895        5,466        5,507
- ------------------------------------------------------------------------------------------------------------------
INCOME BEFORE INCOME TAXES . . . . .         909        1,467       10,384       12,366       14,130       16,010

INCOME TAXES . . . . . . . . . . . .         297          532        3,999        4,794        5,237        6,138
- ------------------------------------------------------------------------------------------------------------------
INCOME FROM CONTINUING OPERATIONS. .         612          935        6,385        7,572        8,893        9,872

NET INCOME (LOSS) FROM DISCONTINUED
  OPERATIONS, NET OF TAX
    Discontinued operations. . . . .          19          (73)         (15)        (235)        (581)      (1,869)
    Gain (loss) on sale. . . . . . .           -           72            -           72          (59)          72
- ------------------------------------------------------------------------------------------------------------------
Total net gain (loss) from
   discontinued ops. . . . . . . . .          19           (1)         (15)        (163)        (640)      (1,797)
- ------------------------------------------------------------------------------------------------------------------
NET INCOME . . . . . . . . . . . . .  $      631   $      934   $    6,370   $    7,409   $    8,253   $    8,075
==================================================================================================================

Average Shares Outstanding . . . . .   5,728,158    5,599,525    5,708,294    5,580,620    5,673,999    5,548,522

Earnings Per Share - Basic
- --------------------------
From continuing operations . . . . .  $     0.11   $     0.17   $     1.12   $     1.36   $     1.57   $     1.78
From discontinued operations . . . .        0.00         0.00         0.00        (0.03)       (0.12)       (0.32)
- ------------------------------------------------------------------------------------------------------------------
Net Income . . . . . . . . . . . . .  $     0.11   $     0.17   $     1.12   $     1.33   $     1.45   $     1.46
==================================================================================================================

Earnings Per Share - Diluted
- ----------------------------
From continuing operations . . . . .  $     0.11   $     0.17   $     1.10   $     1.33   $     1.54   $     1.75
From discontinued operations . . . .        0.00         0.00        (0.01)       (0.03)       (0.11)       (0.32)
- ------------------------------------------------------------------------------------------------------------------
Net Income . . . . . . . . . . . . .  $     0.11   $     0.17   $     1.09   $     1.30   $     1.43   $     1.43
==================================================================================================================

<FN>
(1)  The impact of the restatement on the second quarter of 2003 was a decrease
     of $1,452 thousand to Operating Revenue, a decrease of $406 thousand to
     Operating Income, a decrease of $242 thousand in Net Income, and a decrease
     of $0.04 to basic and fully diluted Earnings Per Share. The impact of the
     restatement for the six months ended June 30, 2003 was a decrease of $2,417
     thousand to Operating Revenue, a decrease of $662 thousand to Operating
     Income, a decrease of $395 thousand in Net Income and a decrease of $0.07
     to basic and fully diluted Earnings Per Share. The impact for the twelve
     months ended June 30, 2003, was an increase of $205 thousand to Operating
     Revenue, an increase of $65 thousand to Operating Income, an increase of
     $39 thousand in Net Income and an increase of $0.01 to basic and fully
     diluted Earnings Per Share.

</FN>
</TABLE>



<PAGE>

SUPPLEMENTAL  INCOME  STATEMENT  DATA
FOR  THE  PERIODS  ENDED  JUNE  30,  2004  AND  2003
DOLLARS  IN  THOUSANDS
(UNAUDITED)

<TABLE>
<CAPTION>
- ------------------------------------------------------------------------------------------------------------------
                                       ----- 2ND QUARTER -----  ----- YEAR TO DATE -----  --- 12 MONTHS ENDED ---
                                       -- 2004 --   -- 2003 --   -- 2004 --  -- 2003 --    -- 2004 --   -- 2003 --
                                                   RESTATED (1)              RESTATED (1)             RESTATED (1)
- ------------------------------------------------------------------------------------------------------------------
<S>                                   <C>          <C>          <C>          <C>          <C>          <C>
GROSS MARGIN (2)
   Natural Gas . . . . . . . . . . .  $   10,025   $    9,760   $   24,968   $   24,035   $   45,686   $   43,705
   Propane . . . . . . . . . . . . .       2,496        2,866        9,650       11,828       15,326       17,788
   Advanced Information Services . .       1,586        1,344        2,918        2,724        5,753        5,749
   Other . . . . . . . . . . . . . .         (48)         (79)        (119)        (160)        (217)        (350)
- ------------------------------------------------------------------------------------------------------------------
 TOTAL GROSS MARGIN. . . . . . . . .  $   14,059   $   13,891   $   37,417   $   38,427   $   66,548   $   66,892
==================================================================================================================

OPERATING INCOME
   Natural Gas . . . . . . . . . . .  $    2,697   $    2,993   $    9,915   $   10,274   $   16,294   $   16,742
   Propane . . . . . . . . . . . . .        (882)        (390)       2,440        4,495        1,820        3,828
   Advanced Information Services . .         260          164          332          227          797          466
   Other . . . . . . . . . . . . . .          88           95          175          177          358          237
- ------------------------------------------------------------------------------------------------------------------
 TOTAL OPERATING INCOME. . . . . . .  $    2,163   $    2,862   $   12,862   $   15,173   $   19,269   $   21,273
==================================================================================================================

HEATING DEGREE-DAYS
   Actual. . . . . . . . . . . . . .         432          626        2,885        3,192        4,408        4,904
   10-Year Average . . . . . . . . .         500          489        2,771        2,752        4,409        4,393
- ------------------------------------------------------------------------------------------------------------------

<FN>
(1)  The impact of the restatement was a decrease to both Gross Margin and
     Operating Income of $406 thousand for the second quarter of 2003, a
     decrease to both Gross Margin and Operating Income of $662 thousand for the
     six months ended June 30, 2003 and an increase to both Gross Margin and
     Operating Income of $65 thousand for the twelve months ended June 30, 2003.
(2)  "Gross margin" is determined by deducting the cost of sales from operating
     revenue. Cost of sales includes the purchased gas cost for natural gas and
     propane and the cost of labor spent on direct revenue-producing activities
     for advanced information services. This should not be considered an
     alternative to operating income or net income, which are determined in
     accordance with Generally Accepted Accounting Principles ("GAAP").
     Chesapeake believes that gross margin, although a non-GAAP measure, is
     useful and meaningful to investors as a basis for making investment
     decisions. It provides investors with information that demonstrates the
     profitability achieved by the Company under its allowed rates for regulated
     operations and under its competitive pricing structure for non-regulated
     segments. Chesapeake's management uses gross margin in measuring certain
     performance goals and has historically analyzed and reported gross margin
     information publicly. Other companies may calculate gross margin in a
     different manner.

</FN>
</TABLE>



Matters  discussed  in  this release 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 Cautionary Statement in
the  Company's  report  on  Form  10-K  for the year ended December 31, 2003 for
further  information  on  the  risks  and uncertainties related to the Company's
forward-looking  statements.

Chesapeake  Utilities  Corporation  is  a diversified utility company engaged in
natural  gas  distribution  and  transmission,  propane  gas  distribution  and
wholesale  marketing,  advanced information services and other related services.
Information  about Chesapeake's businesses is available on the World Wide Web at
www.chpk.com.



For  more  information,  contact:
Michael  P.  McMasters
Vice  President  &  Chief  Financial  Officer
302.734.6799



</TEXT>
</DOCUMENT>
</SEC-DOCUMENT>
-----END PRIVACY-ENHANCED MESSAGE-----
