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File Number 70-
SECURITIES AND EXCHANGE COMMISSION
Washington, DC 20549
FORM U-1
DECLARATION UNDER THE
PUBLIC UTILITY HOLDING COMPANY ACT OF 1935
By
THE EAST OHIO GAS COMPANY
1717 East Ninth Street
Cleveland, Ohio 44101-0759
a subsidiary of
CONSOLIDATED NATURAL GAS COMPANY
CNG Tower
625 Liberty Avenue
Pittsburgh, Pennsylvania 15222-3199
(registered holding company and
the parent of the Declarant)
Names and addresses of agents for service:
Mike G. Bartels, Senior Vice President
The East Ohio Gas Company
1717 East Ninth Street
Cleveland, Ohio 44101-0759
J. M. Hostetler, Attorney
Consolidated Natural Gas Service Company, Inc.
CNG Tower
625 Liberty Avenue
Pittsburgh, Pennsylvania 15222-3199
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File Number 70-
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
DECLARATION UNDER THE PUBLIC UTILITY
HOLDING COMPANY ACT OF 1935
Item 1. Description of Proposed Transaction
___________________________________
(a) Furnish a reasonably detailed and precise
description of the proposed transaction, including a statement of
the reasons why it is desired to consummate the transaction and
the anticipated effect thereof. If the transaction is part of a
general program, describe the program and its relation to the
proposed transaction.
Consolidated Natural Gas Company ("Consolidated") is a
Delaware corporation and a public utility holding company
registered as such under the Public Utility Holding Company Act
of 1935 ("Act"). It is engaged solely in the business of owning
and holding all of the outstanding securities, with the
exception of certain minor long-term debt, of sixteen
subsidiaries. These subsidiary companies are primarily engaged
in natural gas exploration, production, purchasing, gathering,
transmission, storage, distribution, by-product operation, energy
services, and other activities related to the natural gas
business.
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The East Ohio Gas Company ("East Ohio"), an Ohio
corporation, is a subsidiary of Consolidated. It is the largest
utility company in the Consolidated system. (1) It is primarily
engaged in the retail distribution of natural gas to over one
million customers in Northeastern Ohio. Like many other gas
utilities, East Ohio has also been engaged in local oil and gas
production (in Ohio) as an ancillary part of its gas business.
East Ohio has signed a Purchase and Sale Agreement
("Agreement") -- contingent upon Securities and Exchange
Commission ("Commission") approval -- selling 378 production
wells, connecting lines, leases, access rights, contract rights
and records associated with the wells ("Wells") to Belden & Blake
Corporation ("Belden & Blake") for $6.5 million. Belden & Blake
is an oil and gas drilling and exploration company, headquartered
in Canton, Ohio, which owns and operates wells in Ohio,
Pennsylvania, Michigan, West Virginia and New York.
The sale of the Wells is part of East Ohio's
contribution towards the current effort of the Consolidated
system to cut costs and increase profits. With the expansion of
interstate pipelines, and changes in the industry in the past
___________
(1) The other utility companies in the Consolidated system are
West Ohio Gas Company, The Peoples Natural Gas Company, Hope
Gas, Inc., and Virginia Natural Gas, Inc.
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decade, the Wells are no longer needed for gas supply. As
utility assets, the Wells provide less than 1/2 of 1% of East
Ohio's total gas supply. By selling such, East Ohio will save
about $900,000 a year in maintenance costs.
The Agreement between East Ohio and Belden & Blake is
filed as Exhibit A-1. Article IV of the Agreement makes
consummation of the transaction contingent upon East Ohio
obtaining Commission approval. It also required the deposit of
the $ 6.5 million in escrow, which East Ohio becomes entitled to
withdraw at closing if the Commission approves this Declaration.
East Ohio requests authorization to consummate the sale
of the Wells to Belden & Blake. The Wells are "utility assets"
as defined at Section 2(a)(18) of the Act. Section 12(d) of the
Act prohibits a registered holding company from selling "any
security which it owns of any public-utility company, or any
utility assets, in contravention of such rules and regulations .
. . as the Commission deems necessary . . . for the protection of
investors or consumers. . . ."
Rule 44, promulgated under Section 12(d) of the Act,
prohibits a registered holding company from selling, directly or
indirectly, any public-utility security or any utility assets,
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unless the Commission has issued an order approving the sale. (2)
The Rule provides an exception for the "sale of securities or of
utility assets in an aggregate amount of up to $5,000,000 during
any calendar year if the acquisition of such securities or assets
does not require prior Commission approval." (3) However, the
proposed transaction exceeds the exception amount in the Rule.
Thus, East Ohio has filed this Declaration for case-specific
approval of this transaction.
Item 2. Fees, Commissions, and Expenses
_______________________________
(a) State (i) the fees, commissions and expenses paid
or incurred, or to be paid or incurred, directly or indirectly,
in connection with the proposed transaction by the applicant or
declarant or any associate company thereof, and (ii) if the
proposed transaction involves the sale of securities at
competitive bidding, the fees and expenses to be paid to counsel
selected by applicant or declarant to act for the successful
bidder.
It is estimated that the fees, commissions and expenses
ascertainable at this time to be incurred by Consolidated and
East Ohio in connection with the proposed transaction will not
exceed $7,000, including the $2,000 filing fee, $4,000 payable
to Consolidated Natural Gas Service Company, Inc. ("Service
___________
(2) See Volume 5 of CCH FEDERAL SECURITIES LAW REPORTER,
paragraph 37,533, Reg. Section 250.44(a).
(3) ID., Reg. Section 250.44(b). Subsection (b) was amended,
effective May 31, 1994. See SEC Release No. 35-26031
(paragraph 85,377) and 59 FEDERAL REGISTER 21922,
respectively.
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Company") for services on a cost basis (including regularly
employed counsel) for the preparation of this Declaration and
other documents, and $1,000 for miscellaneous other expenses.
(b) If any person to whom fees or commissions have
been or are to be paid in connection with the proposed
transaction is an associate company or an affiliate of the
applicant or declarant, or is an affiliate of an associate
company, set forth the facts with respect thereto.
The charges of Service Company, a subsidiary service
company, for services on a cost basis (including regularly
employed counsel) in connection with the preparation of this
Declaration and other related documents and papers required to
consummate the proposed transactions are as stated above.
Item 3. Applicable Statutory Provisions
_______________________________
(a) State the section of the Act and the rules
thereunder believed to be applicable to the proposed transaction.
If any section or rule would be applicable in the absence of a
specific exemption, state the basis of exemption.
As described above, Section 12(d) and Rule 44 are
deemed applicable to the sale of utility assets by East Ohio.
If the Commission considers the proposed transaction to
require any authorization, approval or exemption, under any
section of the Act or Rule or Regulation other than those cited
herein, such authorization, approval or exemption is hereby
requested.
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(b) If an applicant is not a registered holding
company or a subsidiary thereof, state the name of each public
utility company of which it is an affiliate or of which it will
become an affiliate as a result of the proposed transaction, and
the reasons why it is or will become such an affiliate.
Not applicable.
Item 4. Regulatory Approval
___________________
(a) State the nature and extent of the jurisdiction of
any State commission or any Federal commission (other than the
Securities and Exchange Commission) over the proposed
transactions.
The authorization sought herein is not subject to the
jurisdiction of any State or Federal commission (other than the
Commission).
(b) Describe the action taken or proposed to be taken
before any commission named in answer to paragraph (a) of this
item in connection with the proposed transaction.
Inapplicable.
Item 5. Procedure
_________
(a) State the date when Commission action is
requested. If the date is less than 40 days from the date of the
original filing, set forth the reasons for acceleration.
East Ohio requests that the Commission issue its order
with respect to the transaction proposed by May 15, 1995.
(b) State (i) whether there should be a recommended
decision by a hearing officer, (ii) whether there should be a
recommended decision by any other responsible officer of the
Commission, (iii) whether the Division of Investment Management -
Office of Public Utility Regulation may assist in the preparation
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of the Commission's decision, and (iv) whether there should be a
30-day waiting period between the issuance of the Commission's
order and the date on which it is to become effective.
It is submitted that a recommended decision by a
hearing or other responsible officer of the Commission is not
needed with respect to the proposed transactions. The office of
the Division of Investment Management - Office of Public Utility
Regulation may assist in the preparation of the Commission's
decision. There should be no waiting period between the issuance
of the Commission's order and the date on which it is to become
effective.
Item 6. Exhibits and Financial Statements
_________________________________
The following exhibits and financial statement are made
a part of this statement:
(a) Exhibits
________
A-1 Purchase and Sale Agreement
F Opinion of Counsel for East Ohio;
O Proposed Notice pursuant to Rule 22(f).
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(b) Financial Statements
____________________
Financial statements of the declarant are deemed
unnecessary with respect to the proposed authorization sought
herein due to the simple nature of the proposed transaction and
the dollar amount involved relative to the size of the declarant.
However, any financial information will be furnished upon
request.
Item 7. Information as to Environmental Effects
________________________________
(a) Describe briefly the environmental effects of the
proposed transaction in terms of the standards set forth in
Section 102 (2) (C) of the National Environmental Policy Act 42
(U.S.C. 4232(2) (C)). If the response to this item is a negative
statement as to the applicability of Section 102(2)(C) in
connection with the proposed transaction, also briefly state the
reasons or that response.
The proposed transaction does not involve major federal
action having a significant effect on the human environment. See
Item 1(a).
(b) State whether any other federal agency has
prepared or is preparing an environmental impact statement
("EIS") with respect to the proposed transaction. If any other
federal agency has prepared or is preparing an EIS, state which
agency or agencies and indicate the status of that EIS
preparation.
No federal agency has prepared or is preparing an
environmental impact statement with respect to the proposed
transaction.
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SIGNATURES
___________
Pursuant to the requirements of the Public Utility
Holding Company Act of 1935, the undersigned Company has duly
caused this statement to be signed on its behalf by the
undersigned thereunto duly authorized.
THE EAST OHIO GAS COMPANY
By W. F. Fritsche, Jr.
President
Dated: March 23, 1995
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EXHIBIT A-1
PURCHASE AND SALE AGREEMENT
____________________________
THIS AGREEMENT made and entered into this seventh day
of March, 1995 by and between THE EAST OHIO GAS COMPANY, an Ohio
corporation with its principal offices at 1717 East Ninth Street,
Cleveland, Ohio 44101-0759 ("Seller") and BELDEN & BLAKE
CORPORATION, an Ohio corporation with its principal offices at
5200 Stoneham Road, North Canton, Ohio 44720 ("Buyer").
In consideration of the agreements contained herein,
the benefits to be derived by each party hereto and other good
and valuable consideration. Buyer and Seller agree as follows:
ARTICLE I
Assets
_______
I.l Agreements to Sell and Purchase. Subject to the terms
and conditions herein set forth, at the Closing on the Closing
Date (as such terms are defined in Section 4.1) Seller shall sell
to Buyer, and Buyer shall purchase from Seller, the Assets (as
defined in Section 1.2), for the price of Six Million Five
Hundred Thousand Dollars ($6,500,000.00), which consists of
$6,450,000 for wells and $50,000 for sale lines, (the "Purchase
Price").
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I .2 Assets. The term "Assets" means:
a. Wells. All the right, title and interest of
Seller in and to the oil and gas wells listed and
identified in Exhibit A hereto and all the
tangible real and personal property relating
to, or used in connection with, such wells or the
operation thereof or the production, storage,
collection or gathering of oil, gas or other
hydrocarbons therefrom, including casing, tubing,
separators, tanks, fixtures, power lines and power
houses, engines and engine houses, pumping jacks,
plunger lifts, sale lines, flow lines, connections
and lateral lines (the "Wells").
b. Leases. All the right, title and interest of
Seller, in the oil and gas leases set forth in
Exhibit B hereto embracing lands on which the
Wells are located (the "Leases"), but only insofar
as they cover depths above the top of the
Queenston Shale formation. Seller reserves all
rights to the depths below the top of the
Queenston Shale formation.
c. Access Rights. All the right, title and interest
of Seller in and to the easements, licenses,
rights-of-way and easement agreements listed and
described in Exhibit C hereto used in connection
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with or relating to the development of the Leases,
the operation of Wells and the transportation and
sale of production from the Wells (the "Access
Rights").
However, Seller, for itself or for parties
participating with Seller, expressly retains the
right to access and use all easements, licenses,
rights-of-way and easement agreements listed and
described in Exhibit C in the event and to the
extent such rights relate to any retained
interests (deep rights) by Seller in the leases
described in Exhibit B or in the event and to the
extent Seller needs access and use due to its
ownership of leasehold and/or mineral rights in
lands adjacent to or in close proximity to those
which are being sold hereunder. Such access and
use shall be at Seller's sole risk and expense.
Seller shall give Buyer notice of its use of such
retained rights. The documents of transfer will
reserve such retained rights to Seller.
d. Contract Rights. All the right, title and
interest of Seller in, to and under the
communitization, unitization and pooling
agreements relating to the Wells and the gas
transportation agreements, division orders,
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operating agreements, permits, licenses and other
contracts relating to the Wells or the production
therefrom listed and described in Exhibit D hereto
(the "Contracts").
e. Records. All tiles, records or data owned by,
Seller and relating to the Leases or the Wells,
including all land, lease, division and transfer
order, title files and records, geological and
production records, engineering records and data,
logs, core data, pressure data and other related
data and records in Seller possession. Seller
shall have the right to retain copies of all
files, records and data.
ARTICLE II
Representations and Warranties
______________________________
2.1 Representations and Warranties of Seller. Seller
hereby represents and warrants to Buyer, as follows:
a. Corporate Organization and Existence. Seller is a
corporation duly organized, validly existing and
in good standing under the laws of the State of
Ohio, with the corporate power and authority to
own its properties and carry on its business as
now being conducted.
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b. Authority of Seller. Seller has the authority to
enter into this Agreement and to consummate the
transactions contemplated hereby. All corporate
action on the part of Seller necessary to
authorize the execution, delivery and consummation
of this Agreement has been duly and validly taken
by the Closing Date. This Agreement constitutes
the valid and binding obligation of Seller and is
enforceable against Seller in accordance with the
terms hereof, subject only to the application of
bankruptcy, insolvency and similar laws in effect
from time to time, and general principles of
equity.
c. No Violation or Default. Neither the execution
and delivery of this Agreement, nor the
consummation of the transactions contemplated
hereby by Seller will violate any provision or
constitute a default (whether with notice or lapse
of time or both) under its articles of
incorporation or bylaws, any law or regulation to
which it is subject, any lease, agreement,
instrument, order, arbitration award, judgment or
decree to which it is a party or by which it or
any of the Assets is bound or subject.
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d. Preferential Purchase Rights. To the best of
Seller's knowledge, neither the execution and
delivery of this Agreement nor the consummation of
the transactions contemplated hereby by Seller
will entitle any person to exercise any
preferential purchase right, option to purchase or
similar right with respect to any of the Assets.
e. Litigation. No claim, suit, action, arbitration
proceeding or other proceeding is pending or, to
the best knowledge of Seller, threatened before
any court, governmental agency or other tribunal
against Seller which might: (i) result in
impairment or loss of title to any of the Assets,
(ii) result in the impairment or loss of the value
of the interests of Seller in the Assets, (iii)
hinder or impede the development of any of the
Leases or the operation of any of the Wells, or
(iv) result in the removal of Seller as operator
under any of the operating agreements relating to
the Wells or in the termination or cancellation of
any of such operating agreements other than by the
terms of the agreements themselves.
f. Taxes Expenses and Royalties. All production,
severance, gross receipts and similar federal,
state or local taxes and assessments based on or
measured by the ownership of the Wells or the
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production of hydrocarbons or the receipt of
proceeds therefrom for all periods ending on or
before the Effective Date (as defined in Section
4.4) have been or will be paid by Seller. All
costs and expenses incurred on or before the
Effective Date in connection with the ownership of
the Wells and all amounts payable to the holders
of royalty, overriding royalty, working and other
interests with respect to the sale of hydrocarbons
produced from the Wells and sold on or before the
Effective Date have been or will be paid by
Seller, except for amounts being held in suspense
accounts as set forth in Schedule 2.1 (f) hereto.
All costs and expenses incurred on or before the
Closing Date in connection with the operation of
the Wells will be paid by Seller.
g. No Prepayments. Seller is not obligated, by
virtue of a "take or pay" or other prepayment
arrangement, a gas balancing agreement or any
similar provision in any contract for the sale of
production, to deliver at some future time any
production from any of the Wells without receiving
full payment therefor in accordance with the terms
of all agreements relating to such production.
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h. Compliance with Laws. To the best of Seller's
knowledge, Seller has complied with all laws,
regulations and orders of all governmental
agencies having jurisdiction over the Assets
(including, but not limited to, all federal, state
and local environmental laws, all applicable laws,
regulations, orders and permitting procedures for
the drilling, operation and plugging of oil and
gas wells and all applicable laws, regulations,
orders and permitting procedures regarding the
spacing, completion and bottoming of wells and the
disposal of water therefrom), except where the
failure to comply would not give rise to material
reclamation costs or other liability.
i. Contracts. Except as set forth in Exhibit D,
there are no gas purchase agreements, gas
transportation agreements, gas sales contracts,
operating agreements, well tending agreements,
maintenance agreements, or other agreements to
which Seller is a party involving or relating to
any of the Wells or Leases or to which any of the
interests of Seller therein is subject. All
Contracts listed in Exhibit D are valid, binding
and in full force and effect and no default exists
thereunder in the payment of any amounts due from
Seller thereunder or in the performance of any
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material obligation of Seller thereunder. Each of
the Contracts is freely assignable to Buyer
without the consent of any other party thereto,
except as set forth in Schedule 2.1 (i).
j. Wells. Exhibit A accurately sets forth
information regarding each of the Wells, including
the name and Seller's Station Number, the
percentage of the working interest and overriding
royalty interest, if any, owned by Seller and the
net revenue interest attributable to such working
interest and overriding royalty interest.
k. Leases. Exhibit B accurately sets forth
information regarding each of the Leases,
including the lease number, the name of the
lessor, the lease date, number of acres covered by
the lease, the name of the Well or Wells located
thereon, the recording information and the
location by county of the lands covered by each
lease. To the best of Seller's knowledge, the
Leases are valid, binding and in full force and
effect as of the Closing Date, no notice of
default, written or otherwise, has been received
by Seller and no default exists in the payment of
rentals, royalties or other amounts due thereunder
or in the performance of any other material
obligation of Seller thereunder. To the best of
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Seller's knowledge, each of the Leases is a valid
and subsisting encumbrance upon or an estate in
the lands covered thereby prior in right to any
other lien or encumbrance affecting the oil and
gas underlying such lands, and there is no other
lease, severance or mineral interest or any other
condition in the state of the underlying fee
interest in the lands covered by the Leases which
in any material manner would restrict, interfere
with or limit in any way the oil and gas
operations contemplated by the Leases. To the
best of Seller's knowledge, there are no
provisions or terms in any of the Leases which
would increase the royalty share of the lessor
thereunder or require the drilling of additional
wells or other development operations in order to
earn or continue to hold such Leases or permit the
continued operation of the Wells thereon.
l. Access Rights. Seller is the owner of the Access
Rights which consist of valid and subsisting
easements, rights-of-way and licenses, all of
which are set forth in Exhibit C and include all
easements, rights-of-way, and other rights
necessary for the operation and maintenance of the
Wells and for the transportation or production
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therefrom. The sales lines associated with the
Wells are located within the boundaries of such
easements, rights-of-way and licenses. To the
best of Seller's knowledge, none of such
easements, rights-of-way or licenses would
terminate or cease by reason of the termination or
expiration of any of the Leases. Seller has not
received any notices contesting the placement of
the sales lines or the validity of any of the
casements, rights-of-way or licenses.
m. Encumbrances. Seller has good and marketable
title to the Assets and at the Closing they will
be free and clear of any mortgages, liens,
security interests, or encumbrances granted or
created by Seller.
n. No Surface Damage Claims. As of the Effective
Date, all valid claims relating to damages to the
surface estate caused by operations on the lands
embraced by the Leases will have been resolved and
any required payments in full settlement thereof
will have been accepted by the appropriate owner
of the surface estate.
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o. Well Production. The historical gas production
information that Seller has provided to Buyer with
respect to well production for the period January,
1984 through October, 1994 accurately reflects the
quantities of gas production from the Wells.
p. Operating Agreements. Seller has furnished to
Buyer true and complete copies of all operating
agreements relating to the Wells and all
amendments and supplements thereto.
q. Natural Gas Pricing Matters. Seller has filed
with all appropriate federal and state
governmental agencies all necessary applications
for well determinations under the Natural Gas
Policy Act of 1978, as amended, and the rules and
regulations of the Federal Energy Regulatory
Commission relating to all Wells.
r. Disclaimer of Warranties. Other than as provided
above in Section 2.1, the Assets are to be sold to
Buyer as is, and Seller makes no warranty,
expressed or implied in fact or by law, whether of
title, operating condition, safety,
merchantability, fitness for any particular
purposes, or otherwise, concerning any of the
assets. All wells, personal property, machinery,
equipment and facilities therein, thereon and
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appurtenant thereto are to be conveyed by Seller
and accepted by Buyer precisely and only "as is,
where is".
2.2 Representations and Warranties of Buyer. Effective as
of the date of execution and continuing through the Closing,
Buyer hereby represents and warrants to the Seller, as follows:
a. Corporate Organization and Existence. Buyer is a
corporation duly organized, validly existing and
in good standing under the laws of the State of
Ohio, with the corporate power and authority to
own its properties and carry on its business as
now being conducted.
b. Authority of Buyer. The execution and delivery of
this Agreement and the performance of the
transactions contemplated hereby by Buyer has been
duly authorized by its Board of Directors. No
other corporate action, approval or proceeding on
the part of Buyer or its shareholders or third
parties is necessary to authorize the execution,
delivery and consummation of this Agreement. This
Agreement constitutes the valid and binding
obligation of Buyer, enforceable against it in
accordance with the terms hereof, subject only to
the application of bankruptcy, insolvency and
similar laws in effect from time to time, and
general principles of equity.
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c. No Violation or Default. Neither the execution
and delivery of this Agreement nor the
consummation of the transactions contemplated
hereby will violate any provision or constitute a
default (whether with notice or lapse of time or
both) under the articles of incorporation or code
of regulations of Buyer, any law or regulation to
which Buyer is subject or any agreement,
instrument, order, arbitration award, judgment or
decree to which Buyer is a party or by which it is
bound.
d. Litigation. No litigation, governmental
investigation or other proceeding is pending or,
to Buyer's knowledge, threatened against Buyer
which would prevent, delay or materially impair
the ability of Buyer to execute, deliver or
perform its obligations under this Agreement.
e. Inspection and Acceptance. Buyer has made or
arranged for others on its behalf to make an
inspection of the Assets. Buyer accepts all
Assets in "as is and where is" condition, with an
express acceptance and understanding of the
representations and disclaimers contained herein.
Buyer has been given the opportunity to inspect
and review all of the Assets and visit the sites
where the Assets are located.
<PAGE> 15
f Awareness of Buyer. Buyer is aware that the
Assets have been used for oil and gas drilling and
producing operations, related oilfield operations
and possibly the storage and disposal of waste
materials incidental to or occurring in connection
with such operations, and that Buyer has entered
into this Purchase and Sale Agreement on the basis
of Buyer's own investigation of the physical
condition of the Assets and the representations
and warranties herein.
2.3 Survival of Representations and Warranties. The
representations and warranties set forth above in this Article II
shall survive the closing of the transactions contemplated
hereby.
ARTICLE III
Conditions Precedent
____________________
3.1 Conditions Precedent to Obligations of the Seller. The
obligation of Seller to consummate the transactions contemplated
hereby, shall be subject to the satisfaction of the following
conditions, which Buyer may waive:
a. The representations and warranties of Buyer set
forth in Section 2.2 hereof shall have been true
and correct on the date hereof and shall be true
and correct on the Closing Date as if made on and
as of the Closing Date.
<PAGE> 16
b. Each of the agreements of Buyer to be performed on
or prior to the Closing Date shall have been duly
performed.
3.2 Conditions Precedent to Obligations of Buyer. The
obligation of Buyer to consummate the transactions contemplated
hereby, shall be subject to the satisfaction of the following
conditions, which Seller may waive:
a. The representations and warranties of Seller set
forth in Sections 2.1 shall have been true and
correct on the date hereof and shall be true and
correct on the Closing Date as if made on and as
of the Closing Date.
b. Each of the agreements of Seller to be performed
on or prior to the Closing Date shall have been
duly performed.
c. As of the Closing Date there shall have been no
loss or damage, whether or not covered by
insurance, to any of the Wells which materially
affects the condition, economic value, or
operation thereof.
d. Buyer shall be satisfied with its review of the
lease, well, land, title and contract files of
Seller and the evidence of title contained therein
and the public records as to Seller's ownership of
the Assets and the working interest and net
revenue interest of Seller in the Leases and Wells
<PAGE> 17
In the event Buyer discovers a title defect, Buyer
shall deliver to Seller a notice in writing of
such defect with full documentation by a
recognized professional in the field in support
thereof. Seller may elect (a) to cure the defect
at its own expense, or (b) to remove from the sale
(if the sale covers multiple properties) the
individual properties containing the title defect.
e. On or prior to the Closing Date, Buyer (or its
designee) shall have been substituted as operator
under each of the operating agreements relating to
the Wells. The effectiveness of such substitution
shall be contingent on the consummation of the
transaction contemplated hereby.
f. On or prior to the Closing Date, Seller shall have
furnished Buyer with satisfactory evidence that
all persons, to the best of Seller's knowledge,
entitled to exercise any preferential purchase
right, option or similar right with respect to any
of the Assets have waived all such rights, and all
persons whose consent is required to transfer any
of the Assets have consented to such transfer.
g. The findings of an environmental audit of the
Assets conducted for Buyer, at its expense, shall
be acceptable to Buyer as of the Closing Date. In
the event Buyer discovers an environmental defect,
<PAGE> 18
Buyer shall deliver to Seller a notice in writing
of such defect with full documentation by a
recognized professional in the field in support
thereof. Seller may elect (a) to cure the defect
at its own expense, or (b) to remove from the sale
(if the sale covers multiple properties) the
individual properties containing the environmental
defect.
ARTICLE IV
Closing
_______
4.1 Closing Contingent Upon SEC Approval. The consummation
of the transactions contemplated hereby (the "Closing") is
contingent upon Seller's obtaining approval from the Securities
and Exchange Commission ("SEC") of a Form U-l, Application or
Declaration under the Public Utility Holding Company Act of 1935
(the "Application"), which Seller shall file as soon as
practicable with the SEC. Seller shall give Buyer immediate
written notice of approval or denial of the Application. If the
Application is approved, the transaction shall be completed as
described below in this Article IV. The Closing shall occur five
(5) business days following notification by Seller to Buyer that
the Application has been approved (the "Closing Date") but in no
event after September 1, 1995 without the mutual consent of the
parties, which consent will not be unreasonably withheld. The
<PAGE> 19
Closing shall be held at the offices of The East Ohio Gas
Company, 1717 East Ninth Street, Cleveland, Ohio or such other
place as the parties may mutually agree. If the Application is
denied, Buyer shall return the Assets to Seller, along with all
revenues allocable to Seller's interests in the Wells
attributable to production from the Wells, less operating costs,
on and after the Effective Date (as defined in Section 4.4)
within thirty (30) days after receipt of notice from Seller.
Buyer shall provide an accounting of such revenues and operating
costs to Seller and Seller shall have the right to audit Buyer's
books relating to such matters.
4.2 Events Preliminary to Closing. Within three (3)
business days after the execution hereof, Buyer shall deposit the
amount of Six Million Five Hundred Thousand Dollars
($6,500,000.00) in escrow with a mutually acceptable bank or
title company which amount shall be held in a joint interest-
bearing account or invested in such interest-bearing governmental
securities or other obligations as Seller and Buyer may mutually
direct. If the SEC approves the Application described in Section
4.1, Seller shall be entitled to withdraw the funds from escrow
on the Closing Date. If the SEC denies the Application, Buyer
shall be entitled to withdraw the funds from escrow after the
Assets and revenues described in Section 4.1 are returned to
Seller.
<PAGE> 20
4.3 Closing Obligation of Seller. At the Closing, Seller
shall deliver to Buyer such assignments, bills of sale and other
instruments of transfer as are necessary to transfer the Assets
to Buyer. In addition, Seller shall deliver to Buyer an updated
Schedule 2.1 (f) with respect to amounts then being held by
Seller in suspense accounts, together with its check payable to
Buyer for the aggregate amount being held in such accounts.
4.4 Effective Date: Purchase Price Adjustments. In the
event the purchase and sale contemplated hereby is consummated by
the Closing Date, all revenues allocable to Seller's interests in
the Wells attributable to production from the Wells on and after
the Effective Date, which shall be the first day of the February,
1995 Production Period through the Closing Date shall be for
Buyer's account and shall be credited against the Purchase Price
payable by Buyer. The estimated amount of real estate taxes and
assessments, if any, to be imposed on the Assets for the last
half of 1994 (based on the most recent tax bills) and the amount
of all transfer taxes and conveyance fees payable in connection
with the sale of the Assets shall be credited against the
Purchase Price payable by Buyer.
4.5 Excluded Assets. In the event that, prior to the
Closing, Buyer determines that Seller's net revenue interest in
any Well is less than that shown on Exhibit A or its working
interest in any Well is greater than that shown in Exhibit A, or
Buyer determines that a title (less than marketable title) or
environmental defect exists with respect to the Assets that would
<PAGE> 21
materially and adversely affect the value of one or more of the
Wells, then in any of such events Buyer shall have the right to
negotiate all appropriate adjustment to the Purchase Price. The
Purchase Price shall be adjusted by the amount mutually agreed
upon by Seller and Buyer, and if the parties are unable to agree
on the amount of such adjustment, Buyer shall have the right to
exclude from the sale hereunder the interest of Seller in such
Well or Wells, in which case the Purchase Price shall be reduced
by the amount of the Purchase Price allocated to such Well or
Wells as set forth in Exhibit E hereto.
4.6 Settlement Statement. Within ninety (90) days
following the Closing, Seller and Buyer shall jointly prepare a
statement (the "Settlement Statement") setting forth the final
adjustments to the Purchase Price to be made pursuant to Sections
4.4 and 4.5. If Seller and Buyer are unable to agree on the
Settlement Statement within such ninety day period, an
independent accounting firm mutually acceptable to Seller and
Buyer shall be engaged to determine the amount of the Purchase
Price adjustment. The decision of the independent accounting
firm shall be binding upon the parties, and the fees and expenses
of such firm shall be borne one-half by Seller and one-half by
Buyer. The differences between the Purchase Price and the
Purchase Price adjustment amount as finally determined shall be
paid by the appropriate party to the party to whom it is owed
within five (5) business days after its final determination.
<PAGE> 22
4.7 Delivery of Records. On the Closing Date or as soon
thereafter as practicable, Seller will deliver or cause to be
delivered to Buyer at the location specified by Buyer all
original copies of the Leases and Contracts, together with all
files, records or data relating to the Assets including, without
limitation, all land, lease, division and transfer order, title
and well files and records, geological, engineering and
production records, and data, logs, core data, pressure data,
decline curves and related matters. Buyer shall record each
document and provide Seller with a copy of each recorded
document. If this transaction is not consummated, Buyer shall
return any of Seller's records in its possession to Seller.
ARTICLE V
Covenants
_________
5.1 Confidentiality. Except when required by a regulatory
agency or a court, Buyer and Seller shall not disclose to any
third party the existence of this Agreement or any of the terms
thereof or any information relating to the transactions
contemplated hereby prior to the Closing without first obtaining
the written consent of the other party. The obligation of
confidentiality shall survive the termination of this
transaction.
<PAGE> 23
5.2 Operations Prior to Closing. Until the Closing, Seller
agrees to conduct operations of tile Wells in a good and
workmanlike manner without substantial alteration from the manner
in which such operations have heretofore been conducted.
5.3 Access. From the date hereof through the date of
Closing, Seller shall allow Buyer and its representatives, free
access to Seller's files, records, books of account, reserve
reports, production records, as well as all other information
relating to the Assets, including lease, title and well files and
division order, operating agreement and gas transportation and
purchase agreement files. Unless and until the transactions
provided for herein have been consummated, Buyer and its
representatives will hold all such information in strict
confidence.
5.4 Indemnification. Seller shall indemnify and hold Buyer
harmless from and against any and all loss, liability, damage,
cost or expense whatsoever (including, without limitation,
attorney's fees and expenses) which arise out of or result from:
(a) the breach of any representation, warranty, covenant or
agreement of Seller set forth in this Agreement, and (b) the
ownership, operation or use on or prior to the Closing Date of
the Assets other than arising out of federal, state or local
environmental laws, rules or regulations, and (c) the exercising
or attempted exercising after the Closing Date of any
preferential right, purchase option or similar rights with
<PAGE> 24
respect to any of the Assets by any person whose waiver of such
rights was not obtained.
Buyer agrees as to the Assets being purchased to
defend, protect, indemnify and hold Seller, its employees,
agents, servants, officers, directors, independent contractors
and subcontractors harmless from all costs, expenses, claims,
demands, obligations and causes of action of every kind and
character, including court costs and attorneys fees, incident to
or in any way connected with the use, occupancy, or operation of
the Assets after the Closing Date and the maintenance, use or
handling of any equipment in connection therewith and any other
such liability which occurs on or after the Closing Date.
5.5 Brokers. Neither Buyer nor Seller is a party to, or in
any way obligated under, nor does Buyer or Seller have any
knowledge of any contract or outstanding claim for the payment of
any broker's or finder's fee in connection with the origin,
negotiation, execution or performance of this Agreement.
ARTICLE VI
Miscellaneous
_____________
6.1 Further Assurances. Seller agrees to execute and
deliver, from time to time at the request of Buyer, all such
further instruments of conveyance, assignment and transfer as may
reasonably be required in order to vest in and confirm to Buyer
all the right, title and interest of Seller to the Assets hereby
<PAGE> 25
agreed to be, and intended to be, conveyed, assigned and
transferred to Buyer.
6.2 Disbursements. Buyer agrees to assume all
responsibility for notifying the purchaser of oil production from
the subject properties and such other designated persons who may
be responsible for disbursing payments for the purchase of such
production of the change of ownership of the properties. Buyer
shall take all actions necessary to effectuate the transfer of
such payments to Buyer as of the Effective Date and Seller shall
cooperate with and assist Buyer in implementing said notices.
Seller shall have no responsibility or liability for the proper
distribution of proceeds from and after the Effective Date, and
Buyer shall hold Seller free and harmless from any and all
losses, claims or damages which may result from any improper
payments from and after the Effective Date.
6.3 Binding Effect. This Agreement shall be binding upon
and inure to the benefit of the parties hereto and their
respective successors and assigns.
6.4 Notice. All notices, requests, demands and other
communications hereunder shall be in writing and shall be deemed
to have been duly given if delivered personally, mailed by
registered or certified mail, postage prepaid, or sent by telefax
to the parties so addressed at the following addresses and
telefax numbers:
<PAGE> 26
If to Buyer:
Belden & Blake Corporation
5200 Stoneham Road
North Canton, Ohio 44720
Attention: Joseph M. Vitale
Telefax: (216)497-5463
If to Seller:
The East Ohio Gas Company
1717 East Ninth Street
Cleveland, Ohio 44101-0759
Attention: Barry Ferguson
Telefax: (216) 736-6525
6.5 Entire Agreement. This Agreement embodies the entire
agreement between the parties and supersedes all prior and
contemporaneous agreements and understandings, if any, relating
to the subject matter hereof, and may not be amended or modified
in any manner except by an instrument in writing executed by the
parties hereto.
6 6 Governing Law. This Agreement shall be governed by the
law of the State of Ohio, without regard to rules concerning
conflicts of law.
<PAGE> 27
IN WITNESS WHEREOF, the parties hereto have
executed this Agreement as of the day and year first above
written.
BELDEN & BLAKE CORPORATION
THE EAST OHIO GAS COMPANY
<PAGE> 1
EXHIBIT F-
March 23, 1995
Securities and Exchange Commission
450 Fifth Street, N.W.
Washington, D.C. 20549
RE: The East Ohio Gas Company
S.E.C. File Number 70-____
Dear Sirs:
The following opinion is rendered in accordance with the
requirements of Exhibit F to Form U-1 of the Securities and
Exchange Commission ("SEC") with respect to the transaction
proposed by The East Ohio Gas Company ("East Ohio"), in the
Declaration filed concurrently herewith. The Declaration seeks
authority for East Ohio to sell utility assets -- 378
production wells and connecting lines, including leases, etc.
("Wells") -- to Belden & Blake Corporation ("Belden & Blake")
in exchange for $6.5 million.
I have examined the Certificate of Incorporation and Bylaws
of East Ohio; the Purchase and Sale Agreement signed by East Ohio
and Belden & Blake relating to the transaction proposed within
the Declaration; and such other documents, records, laws and
other matters as I deemed relevant and necessary for the proposes
of this opinion.
Based on such examination and relying thereon, I am of the
opinion that when the SEC permits the Declaration to become
effective, all requisite action will have been obtained by East
Ohio to consummate the sale of the Wells.
In the event the proposed transaction is consummated in
accordance with the Declaration, I am of the opinion that all
state laws applicable to the proposed transaction will have been
complied with; that East Ohio will legally acquire the $6.5
million currently in escrow; and the consummation of the proposed
transaction will not violate the legal rights of East Ohio, its
parent, or any associate company thereof.
I hereby consent to the use of this opinion in connection
with the filing.
Sincerely,
J. M. Hostetler
Attorney
<?TEXT>
<PAGE> 1
EXHIBIT O
Proposed Notice Pursuant to Rule 22f)
(Release No. 35- )
FILINGS UNDER THE PUBLIC UTILITY HOLDING COMPANY ACT OF 1935
("ACT")
March __, 1995
Notice is hereby given that the following filing(s) has/have been
made with the Commission pursuant to provisions of the Act and
rules promulgated thereunder. All interested persons are
referred to the application(s) and/or declaration(s) for complete
statements of the proposed transaction(s) summarized below. The
application(s) and/or declaration(s) and any amendments thereto
is/are available for public inspection through the Commission's
Office of Public Reference. Interested persons wishing to
comment or request a hearing on the application(s) and/or
declaration(s) should submit their views in writing by
___________, 199_ to the Secretary, Securities and Exchange
Commission, Washington, DC 20549, and serve a copy on the
relevant applicant(s) and/or declarant(s) at the address(es)
specified below. Proof of service (by affidavit or, in case of
an attorney at law, by certificate) should be filed with the
request. Any request for hearing shall identify specifically the
issues of fact or law that are disputed. A person who so
<PAGE> 2
requests will be notified of any hearing, if ordered, and will
receive a copy of any notice or order issued in the matter.
After said date, the application(s) and/or declaration(s), as
filed or as amended, may be granted and/or permitted to become
effective.
____________________________________
The East Ohio Gas Company (70-____)
____________________________________
The East Ohio Gas Company ("East Ohio") (1717 East Ninth
Street Cleveland, Ohio 44101-0759), a wholly-owned utility
subsidiary of Consolidated Natural Gas Company ("Consolidated")
(CNG Tower, Pittsburgh, Pennsylvania 15222-3199), a registered
holding company, has filed an declaration under Section 12(d) of
the Act, and Rules 44 thereunder.
East Ohio has signed a Purchase and Sale Agreement
("Agreement") -- contingent upon Commission approval --
selling 378 production wells to Belden & Blake Corporation
("Belden & Blake") for $6.5 million. Belden & Blake is an oil
and gas drilling and exploration company, headquartered in
Canton, Ohio, which owns and operates wells in Ohio,
Pennsylvania, Michigan, West Virginia and New York.
<PAGE> 3
The sale of the Wells is part of East Ohio's
contribution towards the current effort of the Consolidated
system to cut costs and increase profits. With the expansion of
interstate pipelines, and changes in the industry in the past
decade, the Wells are no longer needed for gas supply. As
utility assets, the Wells provide less than 1/2 of 1% of East
Ohio's total gas supply. By selling such, East Ohio will save
about $900,000 a year in maintenance costs.
________________________________________
For the Commission, by the Division of Investment
Management, pursuant to delegated authority.
Jonathan G. Katz
Secretary
