An Exelon Corporation (EXC) subsidiary, Constellation Energy Resources, LLC., inked an agreement to acquire seven compressed natural gas (CNG)-fueling stations in the Midwest from CNG Fuel, Inc. Fort Wayne, IN-headquartered CNG Fuel, Inc. is engaged in the construction, operation and strategic placement of fleet-compressed natural gas stations. The value and terms of the deal remain undisclosed.
The fuelling facilities are located at Dayton and Findlay, OH; and Greensburg, Indianapolis, Lafayette and Seymour, IN. The remaining one in Fort Wayne, IN is currently under construction.
Upon completion of the deal, Constellation will own and control the fueling stations and provide CNG to regional and interstate transportation fleets through the acquired assets.
The latest transaction will expand Constellation’s retail service portfolio under the natural gas division along with strengthening its operations in the CNG market.
According to a U.S. Energy Information Administration report published in Apr 2014, utilization of CNG and liquefied natural gas (LNG) by light- and heavy-duty vehicles, buses, locomotives and marine vessels will increase to 863 trillion British thermal units (Btu) in 2040 from 43 trillion Btu in 2012. Since both CNG and LNG are environmentally friendly fuels, the U.S. government encourages their use to a large extent. The largest consumers for CNG and LNG are expected to be tractor trailers, vocational vehicles, pickups and vans due to their cheaper rates than gasoline and diesel.
To tap the growing CNG demand in the U.S., Constellation invests systematically in CNG infrastructure development and natural gas supply management projects. Constellation is currently teaming up with its customers to develop, own and operate CNG-fueling stations in several locations through its widely expanded distributed energy business. These initiatives will enable it to provide CNG to both customer-owned and third-party contracted fleets.
Exelon is currently pursuing an inorganic growth strategy to expand its existing operations. In Nov 2014, the company acquired Integrys Energy Services Inc. from Integrys Energy Group, Inc. (TEG) and integrated it with Constellation. Integrys Energy Services Inc. is a competitive retail electricity and natural gas provider. The transaction enabled Exelon to add around 1.2 million customers and increase Constellation’s power and natural gas load capacity in several markets.
In addition, the company is on track with its merger plans with Pepco Holdings, Inc. (POM) and expects to conclude it by the second and third quarters of 2015. These initiatives will collectively allow Exelon to solidify its footprint in the U.S. and serve more customers.
Exelon currently holds a Zacks Rank #3 (Hold). A better-ranked stock in the same industry is Wisconsin Energy Corporation (WEC), carrying a Zacks Rank #1 (Strong Buy).
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