<PAGE>
File Nos. 70-5543/70-6958
70-7055/70-6513
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
Report
Pursuant to Rule 24 under the
Public Utility Holding Company Act of 1935
NEW ENGLAND ELECTRIC SYSTEM (NEES)
NEW ENGLAND ENERGY INCORPORATED (NEEI)
In accordance with the Orders of the Securities and Exchange Commission
dated July 19, 1978, October 22, 1985, October 3, 1991 and December 8, 1987,
following is a report for the first quarter of 1995:
For the purpose of this report and following the Commission's Order dated
October 22, 1985 (Release No. 23873), references herein to "Old Program"
relate to that portion of the NEEI oil and gas exploration and development
program which consists of prospects entered into through December 31, 1983.
Likewise, references to "New Program" relate to prospects entered into since
December 31, 1983. In 1991, NEEI sold substantially all of the properties in
the New Program. No new prospects have been acquired since December 31, 1986.
a. Investment in partnerships by prospect: See Exhibit a.
b. Summary statement of proved and probable reserves:
Old Program
-----------
Natural Gas
Oil and ----------- Total
Condensate Equivalent Equivalent
Bbl. MCF Bbl. Bbl.
---------- ---------- ---------- ----------
Balance 1/1/95 1,047,750 72,493,244 12,082,208 13,129,958
Additions & Revisions
through 3/31/95 - - - -
-------------------- ---------- ----------
Balance 1,047,750 72,493,244 12,082,208 13,129,958
Production 1st Qtr. 1995(87,507)(4,186,400)(697,733) (785,240)
-------------------- ---------- ----------
Balance 3/31/95 960,243 68,306,844 11,384,475 12,344,718
-------------------- ---------- ----------
New Program
-----------
None.
<PAGE>
-2-
c. Production and revenue by prospect: See Exhibit c.
d. Description of Operations:
NEEI has participated through its partnership with Samedan Oil
Corporation (Samedan) in drilling operations with the results as
summarized below. Also shown are activities on properties acquired
from a former partner, Dorchester Exploration, Inc. (Dorchester),
prior to termination of that partnership. NEEI sold its remaining
interests in "Dorchester" properties as of June 1, 1988.
Old Program
-----------
Since
Quarter Inception
------- ---------
No. of dry holes
Samedan 0 732
Dorchester 0 51
-- -----
0 783
-- -----
No. of productive wells
Samedan 0 1,165*
Dorchester 0 69*
-- ------
0 1,234*
-- ------
No. of wells drilled 0 2,017
(both exploration and development)-- -----
* Includes depleted/sold wells as follows:
Samedan 0 468
Dorchester 0 69
-- -----
0 537
-- -----
New Program
-----------
None.
INVESTMENT
----------
Budget Authorized
Actual By SEC
---------------------- -----------------
Since
Quarter 1/1/95 1995 - 1998
---------- ---------- -----------------
Samedan $2,049,882 $2,049,882 $30,000,000 (A)
(A) Authorized through December 31, 1998, by Order dated
December 20, 1994 (Release No. 35-26197; 70-7055).
<PAGE>
-3-
e. Fuel Production, Sales and Other Income:
Old Program:
1. Sales to affiliates:
There have been no direct sales of NEEI oil and gas production
to affiliates.
Quarter Inception
Ended Thru
3/31/95 3/31/95
-------- --------
2.Sales to nonaffiliates
(Exhibit c.):
Equivalent barrels of fuel
produced 785,240 46,088,213
Average price per barrel $ 10.29$ 14.27
-----------------------
Sales revenues $8,077,745$657,498,951
3.Loss to NEP 11,635,475 296,735,731
4.Flow through of excess deferred1,104,800 78,407,811
taxes
5.Investment tax credit - 13,817,248
6.Depletion - 6,740,318
7.Deferred tax related to reserve - 9,080,000
addition
8.Transfer of reserve (net) from - 6,400,000
NEES
-------------------------
Total $20,818,020$1,068,680,059
-------------------------
New Program: None.
f. Credits applied to
New England Power Company (NEP):
1.Disposition of proceeds:
Amortization of cost of
fuel reserves $18,848,846$982,917,746
Production costs 961,974 73,819,623
State taxes 1,007,200 6,464,942
Savings to NEP - 8,701,242
Royalty to NEP - 1,099,807
Other - 65,472
-------------------------
Total $20,818,020$1,073,068,832
-------------------------
Net income/(loss)/retained $ -$ (4,388,773)
deficit -----------------------
<PAGE>
-4-
f. continued
Quarter Inception
Ended Thru
3/31/95 3/31/95
-------- ---------
2. Royalties prepaid to NEP:
Beginning balance in account$ 342,312$ -
------------------------
Royalties/savings earned - (9,801,049)
Royalties passed on to NEP - 10,143,361 *
------------------------
Ending balance in account$ 342,312$ 342,312
------------------------
3.Losses to be passed on to NEP:
Beginning balance in account$ 39,793,816$ -
------------------------
Losses accrued 11,635,475 296,735,731
Losses passed on to NEP** (15,412,584)(260,719,024)
------------------------
Ending balance in account$ 36,016,707$ 36,016,707
------------------------
* Includes $8,701,242 savings passed on to NEP for sales prior to 1/1/84
pursuant to Commission Order File No. 70-5543.
**Consistent with pricing policy approved in Release No. 23873, current
year losses cannot be recovered until the following year.
<PAGE>
-5-
g. Investment by NEES compared with Commission Authorization:
<TABLE>
<CAPTION>
Release No./Date
--------------------------------------
25129 24847 24847
----- ----- -----
8/8/90 3/29/89 3/29/89
------ ------- -------
<S> <C> <C> <C>
Maximum NEES Investment authorized: $45,000,000(1)$75,000,000$400,000,000
----------- ----------- ------------
1. Investments by NEES-inception through
December 31, 1994 (net)
Subordinated notes 2,700,880 15,597,6911 -
Common stock and premium 250,000 - -
----------- ----------- ------------
Total investment by NEES 2,950,880 15,597,691 -
Investment by NEES-during the
quarter (net)
Subordinated notes 572,601 - -
Total investment by NEES through
March 31, 1995 (net)
Subordinated notes 3,273,481 15,597,691 -
Common stock and premium 250,000 - -
----------- ----------- ------------
$ 3,523,481 $15,597,691 $ -
----------- ----------- ------------
2. Increase or Reduction in Investment
by NEES:
Date Amount Date Amount Date Amount
---- ------ ---- ------ ---- ------
Issues of subordinated notes
to NEES during quarter 1/3/95$ 12,205 $ - $ -
ended March 31, 1995 3/6/95 549,219
3/31/95 11,177
Payments of
subordinated notes to NEES
during quarter ended
March 31, 1995 $ - $ -
------------------- -------
Net change in investment $ 572,601 $ - $ -
------------------- -------
_______________
(1) Plus any after-tax net loss attributable to the expensing of interest
on up to $37,200,000 of borrowings in connection with the Old Program.
</TABLE>
<PAGE>
-6-
h.Financial Statements:
Exhibit h-1 Balance Sheet of NEEI at March 31, 1995, (unaudited, subject
to adjustment)
Exhibit h-2 Statement of Income and Retained Deficit of NEEI for the
quarter ended March 31, 1995 (unaudited, subject to adjustment)
Exhibit h-3 Statement of Cash Flows of NEEI for the quarter ended
March 31, 1995 (unaudited, subject to adjustment)
Exhibit h-4 Computation of Bank Interest for the quarter ended
March 31, 1995
i.Fuel purchased during quarter for NEP:
(Summary: See Exhibit i for detail.)
1. From proceeds from sale of NEEI Old Program production
Date purchased (delivered) 1st Quarter
Quantity of fuel (equiv. bbl) 1,298,577.11
Average net price (per equiv. bbl)$ 6.92
-------------
Cost to NEEI $ 8,988,799
Loss from NEEI fuel
exploration activities 15,412,584
-------------
Cost to NEP 24,401,383
Adjustments, inspection charges, etc. -
------------- -----------
Total $24,401,383
===========
k.Use of Proceeds from Sales of NEEI New Program Production:
None.
<PAGE>
-7-
Sale of NEEI Wells
------------------
Old Program
- -----------
During the period from January 1, 1995 through March 31, 1995, NEEI
disposed of its interest in Existing (Old) Program wells containing proved or
probable reserves as follows:
Est. Net Reserves
Effective (Eq. Bbls) as
Date of of Date of
Prospect Location Disposition Disposition
----------------------------------------------------------
Lost Bridge Dunn County, CO
Bear Creek Unit 10/01/94* 1,264
Buff Campbell County, WY
Federal Well 1-19 10/01/94* 1,547
Lindsey #1,2 10/01/94* 112
Salt Creek Hughes County, OK
Boone Well #1-21 12/01/94* 2,533
S. Carlsbad Eddy County, NM
Exxon-State #1 9/01/94* 197
-----
5,653
=====
* Reported by Samedan in the first quarter of 1995.
The order of the Securities and Exchange Commission dated October 22, 1985
(Release No. 23873) requires NEEI to include the reserves associated with the
above wells as production upon which royalties would be payable to NEP, but
authorizes NEEI to defer such inclusion to coincide with the estimated
production cycle for each well. However, in light of the particularly small
quantities of reserves represented in the table above, NEEI will include the
total 5,653 barrels of remaining reserves in the calculation of the royalty
for 1995. Due to operating losses, no royalty has been paid since 1985.
Losses Passed to NEP
--------------------
Through December 31, 1985, NEEI's Old Program generated customer savings.
Due to precipitous declines in oil and gas market prices, the Old Program
generated operating losses for the first time during 1986. As a result of the
losses during 1986, the crossover reserve, which was $24.1 MM at December 31,
1985, was exhausted. NEEI passed its 1986 losses in excess of the reserve,
$277,732, on to NEP in 1987. NEEI's Old Program incurred losses in 1987
through 1993 totalling $245,028,708 which were passed on to NEP in 1988
through 1994. NEEI's Old Program loss of $39,793,816, incurred in 1994, is
being passed on to NEP in 1995.
<PAGE>
-8-
SIGNATURES
Pursuant to the requirements of the Public Utility Holding Company Act of
1935, each undersigned company has duly caused this report (Commission's File
Nos. 70-5543, 70-6513, 70-6958, and 70-7055) to be signed on its behalf, as
indicated, by the undersigned officer thereunto duly authorized by each such
company.
NEW ENGLAND ELECTRIC SYSTEM
s/Michael E. Jesanis
Michael E. Jesanis, Treasurer
NEW ENGLAND ENERGY INCORPORATED
s/John G. Cochrane
John G. Cochrane, Treasurer
Date: May 15, 1995
The name "New England Electric System" means the trustee or trustees for the
time being (as trustee or trustees but not personally) under an agreement and
declaration of trust dated January 2, 1926, as amended, which is hereby
referred to, and a copy of which as amended has been filed with the Secretary
of the Commonwealth of Massachusetts. Any agreement, obligation or liability
made, entered into or incurred by or on behalf of New England Electric System
binds only its trust estate, and no shareholder, director, trustee, officer or
agent thereof assumes or shall be held to any liability therefor.
<PAGE>
EXHIBIT INDEX
Exhibit No. Description Page
- ----------- ----------- ----
a Investment in partnerships by prospectFiled under
(Old Program) cover of
Form SE
c Production and net revenue (Old Program)Filed under
cover of
Form SE
h-1 Balance Sheet at March 31, 1995 Filed herewith
(Unaudited, Subject to Adjustment)
h-2 Statement of Income and Retained Filed herewith
Deficit for the Quarter Ended
March 31, 1995 (Unaudited,
Subject to Adjustment)
h-3 Statement of Cash Flows for the QuarterFiled herewith
Ended March 31, 1995 (Unaudited,
Subject to Adjustment)
h-4 Computation of Bank Interest for the Filed herewith
Quarter Ended March 31, 1995
i Fuel Purchased for NEP for the QuarterFiled herewith
Ended March 31, 1995
<PAGE>
<TABLE>
Exhibit h-1
NEW ENGLAND ENERGY INCORPORATED
Balance Sheet
March 31, 1995
(Unaudited, Subject to Adjustment)
<CAPTION>
ASSETS
- ------
Old Program New Program Combined
----------- ----------- --------
<S> <C> <C> <C>
Current assets:
Cash, including temporary cash investments
of $6,500,000 with affiliated companies$ 6,486,995$ 51,426$ 6,538,421
Accounts receivable:
Affiliated companies:
- accrued loss to be passed
on to affiliate 36,016,707 - 36,016,707
- from sales of oil 4,859,954 - 4,859,954
- other 25,568 211 25,779
Prepaid expenses 342,312 - 342,312
----------------------------------------
Total current assets 47,731,536 51,637 47,783,173
----------------------------------------
Property at cost:
Cost of fuel reserves:
Exploration and development costs:
Samedan 742,396,753 - 742,396,753
Dorchester 67,401,440 - 67,401,440
Cost of capital 437,017,099 - 437,017,099
Other 32,649,250 - 32,649,250
----------------------------------------
1,279,464,542 - 1,279,464,542
Less-accumulated amortization (982,917,746) - (982,917,746)
----------------------------------------
Net cost of fuel reserves 296,546,796 - 296,546,796
Work in process - Samedan 1,318,931 - 1,318,931
----------------------------------------
Total property 297,865,727 - 297,865,727
----------------------------------------
$ 345,597,263$ 51,637$ 345,648,900
========================================
LIABILITIES AND PARENT COMPANY'S INVESTMENT
- -------------------------------------------
Current liabilities:
Accrued exploration and development costs$ 27,862,830$ -$ 27,862,830*
Accounts payable 3,820,201 446,204 4,266,405
Accrued interest 756,093 - 756,093
Accrued taxes payable 6,031,161 (82,700) 5,948,461
----------------------------------------
Total current liabilities 38,470,285 363,504 38,833,789
----------------------------------------
Deferred income taxes 98,770,923 (50,900) 98,720,023
----------------------------------------
Deferred credit 6,205,051 - 6,205,051
----------------------------------------
Notes payable to banks under credit agreement205,000,000 - 205,000,000
----------------------------------------
Parent company's investment:
Subordinated notes payable to parent 3,273,48115,597,691 18,871,172
Common stock, par value $1 per share 2,500 - 2,500
Paid-in capital 247,500 - 247,500
Retained deficit (6,372,477)(15,858,658)(22,231,135)
----------------------------------------
Total parent company's investment (2,848,996) (260,967) (3,109,963)
----------------------------------------
$ 345,597,263$ 51,637$ 345,648,900
========================================
*Accrued exploration and development costs:
Total
(All Samedan)
-------------
Exploration $10,387,479
Development 16,800,144
Work in process 373,139
Advance 302,068
-----------
$27,862,830
===========
</TABLE>
<PAGE>
<TABLE>
Exhibit h-2
NEW ENGLAND ENERGY INCORPORATED
Statements of Income and Retained Deficit
For the Quarter Ended March 31, 1995
(Unaudited, Subject to Adjustment)
<CAPTION>
Old Program New Program Combined
----------- ----------- --------
<S> <C> <C> <C>
Operating revenue:
Sales of fuel to an affiliate $ 24,401,383$ -$ 24,401,383
Loss passed on to an affiliate (15,412,584) - (15,412,584)
Accrued loss to be passed on to an affiliate11,635,475 - 11,635,475
Sales to nonaffiliates:
Oil 1,381,626 - 1,381,626
Gas 6,696,119 6,349 6,702,468
------------------------------------
Total operating revenue 28,702,019 6,349 28,708,368
------------------------------------
Operating expenses:
Purchases of fuel for an affiliate 8,988,799 - 8,988,799
Amortization of cost of fuel reserves 18,848,846 - 18,848,846
Production costs 961,974 779 962,753
------------------------------------
Total operating expenses 28,799,619 779 28,800,398
------------------------------------
Operating income/(loss) (97,600) 5,570 (92,030)
Other income/(expense):
Interest income - 703 703
Interest expense (587,647) - (587,647)
Other expense (228,883) - (228,883)
State taxes (984,000) - (984,000)
------------------------------------
Operating and other income/(loss) (1,898,130) 6,273 (1,891,857)
------------------------------------
Federal income taxes:
Current federal income taxes 4,933,900 2,200 4,936,100
Deferred federal income taxes (6,316,300) - (6,316,300)
------------------------------------
Net federal income taxes (1,382,400) 2,200 (1,380,200)
------------------------------------
Net income (515,730) 4,073 (511,657)
Retained deficit at beginning of period (5,856,747)(15,862,731)(21,719,478)
------------------------------------
Retained deficit at end of period $ (6,372,477)$(15,858,658)$(22,231,135)
============ ========================
</TABLE>
<PAGE>
<TABLE>
Exhibit h-3
NEW ENGLAND ENERGY INCORPORATED
Statements of Cash Flows
For the Quarter Ended March 31, 1995
(Unaudited, Subject to Adjustment)
<CAPTION>
Old Program New Program Combined
----------- ----------- --------
<S> <C> <C> <C>
Operating Activities:
Net income $ (515,730) $ 4,073$ (511,657)
Adjustments to reconcile net income to
net cash provided by operating activities:
Amortization of cost of fuel reserves 18,848,846 - 18,848,846
Loss passed on to an affiliate 15,412,584 - 15,412,584
Accrued loss to be passed on to an affiliate(11,635,475) - (11,635,475)
Deferred income taxes (5,909,100) _ (5,909,100)
(Increase)/decrease in accounts receivable
(excluding loss to be passed on to affiliate) (3,764,249)(20,851) (3,785,100)
Increase/(decrease) in accrued exploration
and development costs 1,581,487 - 1,581,487
Increase/(decrease) in accounts payable 1,708,206 96,390 1,804,596
Increase/(decrease) in accrued interest payable(34,678) - (34,678)
Increase/(decrease) in accrued taxes payable6,031,161(82,700) 5,948,461
------------ ---------------------
Net cash provided by operating activities$ 21,723,052$ (3,088)$ 21,719,964
------------ ---------------------
Investing Activities:
Investment in property - Samedan:
Exploration (also includes dry holes, depleted
wells and work in process)$ (1,053,992)$ -$ (1,053,992)
Development (also reflects transfer of
depleted wells) (1,238,208) - (1,238,208)
Capital costs (2,778,836) - (2,778,836)
Other (1,089,100) - (1,089,100)
------------ ---------------------
Net cash used in investing activities $ (6,160,136)$ -$ (6,160,136)
------------ ---------------------
Financing Activities:
Subordinated notes payable to parent-issues$ 572,601$ -$ 572,601
Subordinated notes payable to parent-retirements - - -
Changes in notes payable to bank under
credit agreement (11,000,000) - (11,000,000)
------------ ---------------------
Net cash used in financing activities$(10,427,399)$ -$(10,427,399)
------------ ---------------------
Net increase/(decrease) in cash and cash equivalents$ 5,135,517 $ (3,088)$ 5,132,429
Cash and cash equivalents at beginning of period1,351,478 54,514 1,405,992
------------ ---------------------
Cash and cash equivalents at end of period $ 6,486,995 $ 51,426$ 6,538,421
------------ ---------------------
</TABLE>
<PAGE>
Exhibit h-4
NEW ENGLAND ENERGY INCORPORATED
Computation of Bank Interest
Quarter Ended March 31, 1995
-------------------------------
Cost of Notes Payable to Banks Under Credit Agreement
- -----------------------------------------------------
Date Paid
Date or Maturity Annual
Amount Issued Date Rate % Total
------ ------ ----------- ------ -----
Old Program
-----------
$ 10,000,000 10/26/94 01/26/95 6.2500 $ 43,402.78
20,000,000 11/23/94 01/26/95 6.1700 85,694.44
5,000,000 11/23/94 01/26/95 6.4600 22,430.56
28,000,000 11/23/94 01/23/95 6.5625 112,291.67
37,000,000 12/06/94 03/06/95 5.9375 390,555.56
17,000,000 12/14/94 03/14/95 7.0000 145,775.00
84,000,000 12/28/94 02/28/95 6.7500 913,500.00
15,000,000 12/30/94 02/28/95 6.9375 167,656.26
28,000,000 01/23/95 03/23/95 6.8125 312,618.05
35,000,000 01/26/95 03/27/95 6.8125 397,395.83
97,000,000 02/28/95 05/23/95 6.7500 582,000.00
37,000,000 03/06/95 05/09/95 6.8125 182,045.14
14,000,000 03/14/95 04/18/95 6.7500 47,250.00
25,000,000 03/23/95 04/24/95 6.7500 42,187.50
32,000,000 03/27/95 04/27/95 6.7500 30,000.00
-------------
3,474,802.79
Interest Rate Swap (226,243.40)
Fees (Primarily facility) 117,924.98
-------------
Total Old Program $3,366,484.37
-------------
<PAGE>
<TABLE>
Exhibit i
NEW ENGLAND ENERGY INCORPORATED
Fuel Purchased for NEP
for the Quarter Ended March 31, 1995
-----------------------------------------
<CAPTION>
Exploration
- -----------
Date purchased (delivered)
Jan. 13, 1995Feb. 6, 1995Feb. 9, 1995
------------- --------------------------
<S> <C> <C> <C> <C>
Quantity of fuel (eq. bbl) 165,630.39 164,151.22 161,318.85
Average net price (per eq. bbl)$ 6.66$ 6.94$ 7.11
----------------------- ---- --------------
Cost to NEEI $1,103,532.57$1,139,097.97$1,147,124.60
Loss from NEEI fuel
exploration activities 1,960,629.58 1,943,120.19 1,950,426.91
----------------------- ---- --------------
Cost to NEP $3,064,162.15$3,082,218.16$3,097,551.51
----------------------------- --------------
Date purchased (delivered) Feb. 18, 1995Feb. 22, 1995
------------- -------------
Quantity of fuel (eq. bbl) 166,043.21 160,651.57
Average net price (per eq. bbl)$ 6.89$ 6.84
------------- -------------
Cost to NEEI $1,144,489.12$1,099,421.55
------------- -------------
Loss from NEEI fuel
exploration activities 1,965,516.34 1,901,693.48
------------- -------------
Cost to NEP $3,110,005.46$3,001,115.03
--------------------------
Date purchased (delivered) Mar. 1, 1995Mar. 1, 1995 Mar. 6, 1995 Mar. 6, 1995
------------- -------------------------- -------------
Quantity of fuel (eq. bbl) 182,834.68 45,868.91 209,388.41 42,689.87
Average net price (per eq. bbl)$ 6.87$ 6.87$ 7.08$ 7.08
------------------------------------ --------------------------
Cost to NEEI $1,255,435.23$ 314,959.14$1,482,490.28$ 302,248.46
Loss from NEEI fuel
exploration activities 2,164,283.36 542,967.632,478,609.91 505,336.21
----------------------------------------------------
Cost to NEP $3,419,718.59$ 857,926.77$3,961,100.19$ 807,584.67
----------------------------------------------------
</TABLE>
