NEW JERSEY RESOURCES CORP
10-Q, 1994-08-15
NATURAL GAS DISTRIBUTION
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                       SECURITIES AND EXCHANGE COMMISSION
                             Washington, D.C. 20549

                                   FORM 10-Q

              QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15 (d) OF
                      THE SECURITIES EXCHANGE ACT OF 1934




For the quarterly period ended June 30, 1994      Commission file number 1-8359



                        NEW JERSEY RESOURCES CORPORATION
             (Exact name of registrant as specified in its charter)



<TABLE>
<CAPTION>
           New Jersey                                                                22-2376465
<S>                                                                  <C>
(State or other jurisdiction of incorporation or organization)       I.R.S. Employer Identification Number)




1415 Wyckoff Road, Wall, New Jersey - 07719                             908-938-1480
(Address of principal executive offices)            (Registrant's  telephone  number, including area code)
</TABLE>




Indicate by check mark whether the Registrant (1) has filed all reports required
to be filed by Section 13 or 15 (d) of the Securities Exchange Act of 1934
during the preceding 12 months (or for such shorter period that the Registrant
was required to file such reports), and (2) has been subject to such filing
requirements for the past 90 days



                          YES: X                 No:




The number of shares outstanding of $2.50 par value Common Stock as of August 1,
1994 was 17,284,952.



<PAGE>

                                                -1-
<TABLE>
<CAPTION>

                                    NEW JERSEY RESOURCES CORPORATION
                                    CONSOLIDATED STATEMENTS OF INCOME
                                               (unaudited)
- - ----------------------------------------------------------------------------------------------
                                           Three Months Ended            Nine Months Ended
                                               June 30,                      June 30,
                                          1994         1993(A)        1994           1993(A)
- - ----------------------------------------------------------------------------------------------
                                             (Thousands, except per share data)
<S>                                     <C>            <C>           <C>            <C>
OPERATING REVENUES .................... $75,605        $75,734       $434,534       $397,846
                                        -------        -------       --------       --------
OPERATING EXPENSES
 Gas purchases ........................  37,233         40,806        244,706        219,961
 Operation and maintenance ............  16,443         14,658         50,817         46,247
 Depreciation and amortization ........   6,461          6,352         20,911         19,386
 Gross receipts tax, etc. .............   7,505          8,050         47,743         47,558
 Exploratory dry hole costs ...........    --              164             29          1,393
 Federal income taxes .................     744           (208)        18,056         14,185
                                        -------        -------       --------       -------- 
  Total operating expenses ............  68,386         69,822        382,262        348,730
                                        -------        -------       --------       --------
OPERATING INCOME ......................   7,219          5,912         52,272         49,116

OTHER INCOME, NET .....................   2,282            476          2,033            595

INTEREST CHARGES, NET .................   5,783          5,108         15,959         15,531
                                        -------        -------       --------       --------
INCOME BEFORE PREFERRED STOCK
 DIVIDENDS OF SUBSIDIARY ..............   3,718          1,280         38,346         34,180

Preferred stock dividends .............     416            419          1,249          1,606
                                        -------        -------       --------       --------
INCOME BEFORE CUMULATIVE EFFECT
 OF CHANGE IN ACCOUNTING FOR
 INCOME TAXES .........................   3,302            861         37,097         32,574

CUMULATIVE EFFECT OF CHANGE IN
 ACCOUNTING FOR INCOME TAXES ..........    --             --              721           --
                                        -------        -------       --------       --------
NET INCOME AVAILABLE FOR COMMON
 STOCK ................................ $ 3,302       $    861        $37,818        $32,574
                                        -------        -------       --------       --------
EARNINGS PER COMMON SHARE BEFORE
 CUMULATIVE EFFECT OF CHANGE IN
 ACCOUNTING FOR INCOME TAXES ..........    $.19           $.05          $2.18          $1.97

CUMULATIVE EFFECT OF CHANGE IN
 ACCOUNTING FOR INCOME TAXES ..........    --             --              .04           --
                                        -------        -------       --------       --------
EARNINGS PER COMMON SHARE .............    $.19           $.05          $2.22          $1.97
                                           ====           ====          =====          =====

DIVIDENDS PER COMMON SHARE ............    $.38           $.38          $1.14          $1.14
                                           ====           ====          =====          =====

AVERAGE SHARES OUTSTANDING ............  17,158         16,675         17,035         16,544
                                        =======        =======       ========       ========

     See Notes to Consolidated Financial Statements
- - --------------------------------------------------------------------------------------------------
<FN>
(A) Restated to reflect the change in accounting principle by NJR Energy for
    its oil and gas operations to the successful efforts method from the full
    cost method.
</FN>
</TABLE>


<PAGE>

                                                      -2-
<TABLE>
<CAPTION>

                                         NEW JERSEY RESOURCES CORPORATION
                                       CONSOLIDATED STATEMENTS OF CASH FLOWS
                                                    (unaudited)
- - ------------------------------------------------------------------------------------------------------------
                                                                                     Nine Months Ended
                                                                                          June 30,
                                                                                   1994          1993(A)
- - ------------------------------------------------------------------------------------------------------------
                                                                                        (Thousands)
<S>                                                                               <C>            <C>
CASH FLOWS FROM OPERATING ACTIVITIES
 Net income available for common  stock ...................................       $ 37,818       $ 32,574
 Adjustments to reconcile net income to cash flows
  Depreciation and amortization ...........................................         20,911         19,386
  Exploratory dry hole costs ..............................................             29          1,393
  Amortization of deferred charges ........................................          1,770          1,017
  Deferred income taxes ...................................................          9,488            (23)
  Cumulative effect of change in accounting for income taxes ..............           (721)          --
  Change in working capital ...............................................        (22,780)       (25,456)
  Other, net ..............................................................         (3,585)         1,320
                                                                                   --------      --------
Net cash flows from operating activities ..................................         42,930         30,211
                                                                                   --------      --------

CASH FLOWS USED IN FINANCING ACTIVITIES
 Proceeds from long-term debt .............................................         41,651         29,650
 Proceeds from common stock ...............................................          9,231          9,912
 Payments of long-term debt and preferred stock ...........................        (17,151)       (23,043)
 Payments of common stock dividends .......................................        (19,309)       (18,078)
 Net change in short-term debt ............................................        (18,100)         9,300
                                                                                   --------      --------
Net cash flows used in financing activities ...............................         (3,678)         7,741
                                                                                   --------      --------

CASH FLOWS USED IN INVESTING ACTIVITIES
 Expenditures for
  Utility plant ...........................................................        (34,398)       (35,176)
  Contribution from cogeneration developer ................................           --            4,850
  Real estate properties ..................................................         (2,205)        (2,275)
  Oil and gas properties ..................................................         (1,517)        (3,596)
  Cost of removal and other ...............................................         (2,030)        (1,121)
 Proceeds from sale of assets .............................................          2,000           --
                                                                                  --------       --------
Net cash flows used in investing activities ...............................        (38,150)       (37,318)
                                                                                  --------       --------

Net change in cash and temporary investments ..............................          1,102            634
Cash and temporary investments at September 30 ............................          1,555          1,811
                                                                                  --------       --------
Cash and temporary investments at June 30 .................................       $  2,657       $  2,445
                                                                                  ========       ========

CHANGES IN COMPONENTS OF WORKING CAPITAL
 Receivables ..............................................................       $(19,192)      $(17,629)
 Inventories ..............................................................         13,363         13,277
 Deferred gas costs .......................................................          7,978           (221)
 Purchased gas ............................................................         (5,701)         9,093
 Accrued and prepaid taxes, net ...........................................        (15,505)       (23,364)
 Customers' credit balances and deposits ..................................         (1,431)        (5,537)
 Other, net ...............................................................         (2,292)        (1,075)
                                                                                  --------       --------
Total .....................................................................       $(22,780)      $(25,456)
                                                                                  ========       ========

SUPPLEMENTAL DISCLOSURES OF CASH FLOWS INFORMATION
Cash paid for
 Interest (net of amounts capitalized) ....................................      $  15,247      $  14,199
 Income taxes .............................................................      $   5,948      $   9,350

See Notes to Consolidated Financial Statements

     
- - ------------------------------------------------------------------------------------------------------------
<FN>
(A) Restated to reflect the change in accounting principle by NJR Energy for
    its oil and gas operations to the successful efforts method from the full
    cost method.
</FN>
</TABLE>



<PAGE>

                                            -3-
<TABLE>
<CAPTION>

                                NEW JERSEY RESOURCES CORPORATION
                                  CONSOLIDATED BALANCE SHEETS

                                             ASSETS
- - -------------------------------------------------------------------------------------------
                                                 June 30,    September 30,     June 30,
                                                   1994        1993(A)         1993(A)
                                               (unaudited)                   (unaudited)
- - -------------------------------------------------------------------------------------------
                                                              (Thousands)
<S>                                              <C>            <C>            <C>
PROPERTY, PLANT AND EQUIPMENT
 Utility plant ...........................       $671,696       $637,580       $615,842
 Real estate properties ..................        104,575        102,369        101,776
 Oil and gas properties ..................         63,507         64,576         59,514
                                                 --------       --------       --------
                                                  839,778        804,525        777,132
 Accumulated depreciation and amortization       (215,304)      (198,875)      (195,371)
                                                 --------       --------       --------
  Property, plant and equipment, net .....        624,474        605,650        581,761
                                                 --------       --------       --------

CURRENT ASSETS
 Cash and temporary investments ..........          2,657          1,555          2,445
 Customer accounts receivable ............         41,590         16,719         33,983
 Unbilled revenues .......................          2,528         10,037          9,894
 Allowance for doubtful accounts .........         (1,368)          (684)        (1,769)
 Gas in storage, at average cost .........         23,081         37,282         15,628
 Materials and supplies, at average cost .          7,929          7,091          7,094
 Prepaid state taxes .....................         15,766           --             --
 Deferred gas costs ......................          6,308         22,891          3,546
 Other ...................................          6,462          6,250          6,464
                                                 --------       --------       --------
  Total current assets ...................        104,953        101,141         77,285
                                                 --------       --------       --------

DEFERRED CHARGES AND OTHER ...............         44,518         31,871         30,012
                                                 --------       --------       --------

   Total assets ..........................       $773,945       $738,662       $689,058
                                                 ========       ========       ========








See Notes to Consolidated Financial Statements

- - -------------------------------------------------------------------------------------------
<FN>
(A) Restated to reflect the change in accounting principle by NJR Energy for
    its oil and gas operations to the successful efforts method from the full
    cost method.
</FN>
</TABLE>


<PAGE>

                                        -4-
<TABLE>
<CAPTION>
                       NEW JERSEY RESOURCES CORPORATION
                         CONSOLIDATED BALANCE SHEETS

                        CAPITALIZATION AND LIABILITIES

- - -------------------------------------------------------------------------------------
                                               June 30,   September 30,   June 30,
                                                 1994        1993(A)      1993(A)
                                             (unaudited)                (unaudited)
- - -------------------------------------------------------------------------------------
                                                          (Thousands)
<S>                                           <C>           <C>           <C>
CAPITALIZATION
 Common stock equity ...................      $258,687      $230,313      $238,891
  Redeemable preferred stock ............       22,070        22,340        22,340
 Long-term debt ........................       301,690       310,996       272,957
                                              --------      --------      --------
  Total capitalization .................       582,447       563,649       534,188
                                              --------      --------      --------

CURRENT LIABILITIES
 Current maturities of long-term debt ..         4,403         4,650         4,764
 Short-term debt .......................        36,800        20,900         5,300
 Purchased gas .........................        19,114        24,815        28,950
 Accounts payable and other ............        31,626        33,571        30,148
 Accrued taxes .........................        11,507        11,246         8,761
 Customers' credit balances and deposits        10,208        11,639         7,684
                                              --------      --------      --------
  Total current liabilities ............       113,658       106,821        85,607
                                              --------      --------      --------

DEFERRED CREDITS
 Deferred income taxes .................        48,111        39,344        40,300
 Deferred investment tax credits .......        12,129        12,419        12,535
 Other .................................        17,600        16,429        16,428
                                              --------      --------      --------
  Total deferred credits ...............        77,840        68,192        69,263
                                              --------      --------      --------

   Total capitalization and liabilities       $773,945      $738,662      $689,058
                                              ========      ========      ========













See Notes to Consolidated Financial Statements

- - ------------------------------------------------------------------------------------
<FN>

(A) Restated to reflect the change in accounting principle by NJR Energy for
    its oil and gas operations to the successful efforts method from the full
    cost method.
</FN>
</TABLE>


<PAGE>

                                     -5-

                       NEW JERSEY RESOURCES CORPORATION

                  NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

1. General

     The preceding financial statements have been prepared without audit,
pursuant to the rules and regulations of the Securities and Exchange
Commission (the SEC). The September 30, 1993 balance sheet is derived from
audited financial statements. Although management believes that the
disclosures are adequate to make the information presented not misleading, it
is recommended that these financial statements be read in conjunction with the
financial statements and the notes thereto included in New Jersey Resources
Corporation's (the Company) 1993 Annual Report on Form 10-K/A.

     In the opinion of management, the information furnished reflects all
adjustments (consisting only of normal recurring adjustments) necessary for a
fair statement of the results of the interim periods. Because of the seasonal
nature of the Company's utility operations and other factors, the results of
operations for the interim periods presented are not indicative of the results
to be expected for the entire year.

2. Principles of Consolidation

     The consolidated financial statements include the accounts of the Company
and its subsidiaries - New Jersey Natural Gas Company (NJNG) and Paradigm
Resources Corporation (Paradigm). Commercial Realty & Resources Corp. (CR&R),
NJR Energy Corporation (NJR Energy) and Paradigm Power, Inc. (Paradigm Power)
are wholly owned subsidiaries of Paradigm. New Jersey Natural Resources
Company (NJNR), NJNR Pipeline Company (Pipeline), and NJRE Operating Company
are wholly owned subsidiaries of NJR Energy. Lighthouse One, Inc. and
Lighthouse II, Inc. are wholly owned subsidiaries of Paradigm Power.
Significant intercompany accounts and transactions have been eliminated.

3. Changes in Accounting

a. Oil and Natural Gas Properties
- - ---------------------------------

     As disclosed on Form 8-K, filed on April 27, 1994, NJR Energy changed its
method of accounting for its oil and gas operations to the successful efforts
method from the full cost method. On April 28, 1994, the Company filed Form
10-K/A for the fiscal year ended September 30, 1993 and Form 10-Q/A for the
quarterly period ended December 31, 1993, which filings restated the Company's
financial statements to reflect the change in accounting principle by NJR
Energy.

     Under the successful efforts method of accounting, proved leasehold costs
are capitalized and amortized over the proved developed and undeveloped
reserves on a units-of-production basis. Successful drilling costs and
developmental dry holes are capitalized and amortized over the proved
developed reserves on a units-of-production basis. Unproved leasehold costs
are capitalized and are not amortized, pending an evaluation of their
exploration potential. Unproved leasehold costs are assessed periodically to
determine if an impairment of the cost of significant individual properties
has occurred. The cost of an impairment is charged to expense in the period in
which it occurs. Costs incurred for exploratory dry holes, geological and
geophysical work and delay rentals are charged to expense as incurred.

     The Consolidated Balance Sheets as of September 30, 1993 and June 30,
1993 and related notes to the consolidated financial statements have been
restated to show the effects of NJR Energy's change in accounting principle to
the successful efforts method of accounting for oil and gas properties from
the full cost method. The change to the successful efforts method of
accounting resulted in a decrease of $17.2 million in retained earnings as of
September 30, 1993 by restating previously issued financial statements.

<PAGE>


                                     -6-

b. Income Taxes
- - ---------------

     Effective October 1, 1993, the Company adopted Statement of Financial
Accounting Standards (SFAS) No. 109, "Accounting for Income Taxes" (SFAS 109).
SFAS 109 requires the implementation of a liability method for the financial
reporting of income taxes, as compared with the deferred method. Under the
liability method, deferred tax balances must be recorded irrespective of
ratemaking treatment and are adjusted to reflect changes in tax rates.
Previously, deferred tax balances were not recorded for certain ratemaking
items and were not adjusted to reflect changes in tax rates. The cumulative
effect of adopting SFAS 109 on the Company's nonregulated operations was a
credit to net income of $721,000, or $.04 per share. The effect on NJNG was to
decrease its deferred tax liability by $375,000 with an offsetting regulatory
liability as the Company believes it is probable that the effects of SFAS 109
on NJNG will be payable to customers in the future.

     The tax effects of significant temporary differences comprising the
Company's net deferred income tax liability at October 1, 1993, upon adoption
of SFAS 109, were as follows:

          Property related items                  $  58,093
          Customer contributions                     (4,589)
          Capitalized overhead and interest          (4,720)
          Unamortized investment tax credits         (4,347)
          Alternative minimum taxes                  (7,882)
          Deferred charges and other                  1,693
                                                  ---------
          Total net deferred tax liability        $  38,248
                                                  =========


     The provision for federal income taxes for the nine months ended June 30,
1994 is composed of the following:

          Current expense                             $  17,601
          Deferred expense                                1,835
          Amortization of investment tax credits           (289)
                                                      ---------
          Total provision                             $  19,147
                                                      =========

          Charged to:
          Operating expenses                          $  18,056
          Other income, net                               1,091
                                                      ---------
          Total provision                             $  19,147
                                                      =========


c. Other Postretirement Benefits
- - --------------------------------

     Effective October 1, 1993, the Company adopted SFAS No. 106, "Employers'
Accounting for Postretirement Benefits Other Than Pensions" (SFAS 106). SFAS
106 requires an accrual method of accounting for postretirement benefits,
similar to that presently in effect for pension plans. Previously, certain
health care and life insurance benefits were charged to expense when paid.
Under the accrual method, the cost of providing postretirement benefits will
be recognized over the employee's service period. The Company's transition
obligation associated with SFAS 106 is $8.6 million, which will be amortized
over 20 years, and its annual expense will increase from approximately
$400,000 to $1.5 million, of which over 95% relates to NJNG. As part of its
January 1994 base rate order, NJNG is permitted to recover approximately 50%
of its SFAS 106 expense currently and defer the balance with ultimate recovery
of the deferred portion no later than that prescribed by generally accepted
accounting principles. At June 30, 1994, $620,000 of SFAS 106 expenses were
deferred and are included in Deferred charges and other on the Consolidated
Balance Sheet.



<PAGE>

                                     -7-

     The components of the accumulated postretirement benefit obligation as of
October 1, 1993 and the estimated cost in fiscal 1994 are as follows:

         Accumulated Postretirement Benefits Obligation (APBO)

         Retirees                                           $1,648
         Fully eligible participants                         2,648
         Other active participants                           4,304
                                                            ------
         Total APBO                                         $8,600
                                                            ======

     There were no plan assets as of October 1, 1993.

         Annual Net Postretirement Benefit Cost

         Service cost                                        $ 369
         Interest cost                                         678
         Amortization of transition obligation                 430
         Deferral of current expense                          (797)
                                                             ----- 
         Total annual net expense                            $ 680
                                                             =====

     The assumed health care cost trend rate used in measuring the APBO as of
October 1, 1993 was 12% in 1994 declining 1% each year to 7% in 1999 and then
remaining constant at 6.5% in 2000 and thereafter for participants under age 65.
For participants age 65 and older the trend rate was 9% in 1994 declining 1%
each year to 7% in 1996 and then remaining constant at 6.5% in 1997 and
thereafter. A 1% increase in the trend rates would increase the APBO as of
October 1, 1993 by $1.4 million and would increase the annual service and
interest costs by $200,000. The assumed discount rate used in determining the
APBO was 8%.


4. Capitalized Interest

     Capitalized interest and total interest charges for the three and nine
months ended June 30, 1994 and 1993, respectively, are as follows:

                             Three Months Ended         Nine Months Ended
                                   June 30,                  June 30,
                             1994        1993           1994        1993
                            -------------------        ------------------
                                              (Thousands)

Capitalized Interest         $453        $889          $2,128      $2,159
                             ====        ====          ======      ======

Total Interest Charges     $6,236      $5,997         $18,087     $17,690
                           ======      ======         =======     =======





<PAGE>

                                     -8-

5. Legal and Regulatory Proceedings

a. Weather Normalization Clause (WNC)
- - -------------------------------------

     In NJNG's June 1992 base rate order, the New Jersey Board of Public
Utilities (BPU) approved a WNC on a two-year experimental basis effective
October 1, 1992. This clause provides for a revenue adjustment if the weather
varies by more than one-half of one percent from normal, or 10-year average,
weather. The accumulated adjustment from one heating season (i.e.,
October-April) is billed or credited to customers in the subsequent heating
season. In July 1994, NJNG filed a petition with the BPU requesting $2.7
million be refunded to customers in fiscal 1995 as a result of colder than
normal winter weather in fiscal 1994. This amount is included in Customers'
credit balances and deposits on the Consolidated Balance Sheet at June 30,
1994. The petition also included a request that the WNC continue permanently.
A decision is expected in the first quarter of fiscal 1995.

b. Levelized Gas Adjustment Clause (LGA)
- - ----------------------------------------

     In July 1994, NJNG filed a petition with the BPU to increase its annual
LGA revenues by $8.8 million, or 2%, reflecting primarily NJNG's share of
transition costs associated with interstate natural gas pipelines complying
with FERC Order 636 and costs associated with demand side management programs.
A decision is expected in the first quarter of fiscal 1995. NJNG has incurred
a total of $18.8 million of such transition costs through June 30, 1994.
Pursuant to NJNG's November 1993 LGA order, transition costs paid through
September 1993 of $11.6 million are being recovered over a two-year period.
Accordingly, $8.6 million of deferred gas costs has been classified as
Deferred charges and other on the Consolidated Balance Sheet at June 30, 1994.

c. Manufactured Gas Plant (MGP) Sites
- - -------------------------------------

     NJNG has identified eleven former manufactured gas plant (MGP) sites,
dating back to the late 1800's and early 1900's, which it acquired from
predecessors, and which contain contaminated residues from former gas
manufacturing operations. All of the gas manufacturing operations ceased at
these sites at least since the mid-1950's and in some cases had been
discontinued many years earlier, and all of the old gas manufacturing
facilities were subsequently dismantled by NJNG or its predecessors. NJNG is
currently involved in administrative proceedings with the New Jersey
Department of Environmental Protection and Energy (the NJDEPE) and local
government authorities with respect to the plant sites in question, and is
participating in various studies and investigations by outside consultants to
determine the nature and extent of any such contaminated residues and to
develop appropriate programs of remedial action, where warranted. Since
October 1989, NJNG has entered into Administrative Consent Orders or Memoranda
of Agreement with the NJDEPE covering all eleven sites. These documents
establish the procedures to be followed by NJNG in developing a final remedial
clean-up plan for each site.

     Most of the cost of such studies and investigations is being shared under
an agreement with the former owner and operator of ten of the MGP sites.
NJNG's expenditures through June 1993 for environmental investigations and
preparation of proposals for remedial action at the former gas plant sites are
being recovered through a remediation rider, which was approved by the BPU in
its June 1992 base rate order. Costs incurred subsequent to June 30, 1993 will
be reviewed annually and, subject to BPU approval, recovered over seven-year
periods.

     NJNG estimates that it will incur additional expenditures of
approximately $10 million over the next five years for further investigation
and remedial action at these sites. Accordingly, this amount is reflected in
both Deferred charges and other and Other deferred credits in the Consolidated
Balance Sheets.

d.  Aberdeen
- - ------------

     In December 1993, a complaint was filed against NJNG, its contractor and
as yet unidentified parties by persons alleging injuries caused by a natural
gas explosion and fire on June 9, 1993 at a residential building in Aberdeen
Township, New Jersey. The plaintiffs (a decedent, his administratrix ad
prosequendum and his guardian) are seeking


<PAGE>

                                     -9-

to recover compensatory and punitive damages in unspecified amounts from the
defendants. The complaint alleges, among other things, that the defendants
were negligent or are strictly liable in tort for their alleged failure to
control, repair and maintain natural gas facilities at such building. In
February 1994, an additional complaint was filed in New Jersey Superior Court
against NJNG and its contractor by a person (individually and as general
administratrix and administratrix ad prosequendum of a decedent) alleging
injuries arising out of the natural gas explosion and fire at the Aberdeen
Township building. The plaintiff alleges, among other things, that the
defendants were negligent or are strictly liable in tort in connection with
their controlling, maintaining or inspecting natural gas lines to such
building. The plaintiff seeks unspecified compensatory and punitive damages
from NJNG, its contractor and as yet unidentified parties. Reference is made
to the Company's Annual Report on Form 10-K for the fiscal year ended
September 30, 1993 for information relating to four complaints previously
filed against NJNG arising out of the Aberdeen fire.

     NJNG has notified its liability insurance carriers of these matters. NJNG
is unable to predict the extent to which other claims will be asserted against,
or liability imposed on, NJNG. The Company does not believe that the ultimate
resolution of these matters will have a material adverse effect on its
consolidated financial condition or results of operations.


e.  Carnegie
- - ------------

     In March 1993, NJNG was named a defendant in a civil action commenced by
Carnegie Natural Gas Company (Carnegie) in the U.S. District Court for the
Western District of Pennsylvania. This action challenges NJNG's decision to
terminate the June 18, 1986 "Service Agreement for Sales Service under Rate
Schedule LVWS" (LVWS Service Agreement) between Carnegie and NJNG effective
March 31, 1994, pursuant to a "market-out" clause. The LVWS Service Agreement
would otherwise have expired on March 31, 2001. Carnegie seeks, among other
things, a declaratory judgment that the contract termination was void. Claims
of tortious interference with contractual relations and abuse of process are
also asserted and unspecified damages and punitive damages are also sought. In
April 1993, Carnegie filed a motion for summary judgment on the contract
termination claim. In May 1993, NJNG filed a response opposing Carnegie's
motion, as well as a cross motion for summary judgment on all claims. On
January 21, 1994 a federal magistrate issued a recommended decision denying
Carnegie's motion for summary judgment. In addition, the magistrate granted
NJNG's motion for summary judgment on Carnegie's tortious interference claim
and denied NJNG's motion for summary judgment on the contract termination and
abuse of process claims. Both parties filed objections to various aspects of
the magistrate's recommended decision, which were denied by order of a federal
district court judge on March 18, 1994. Thereafter, pretrial discovery began.
The parties have produced documents and responded to interrogatories, but no
depositions have yet been taken. On July 14, 1994, Carnegie served a motion
for a preliminary injunction requiring NJNG to continue making payments
pursuant to the contract during the pendency of the litigation, and NJNG is
opposing this motion. NJNG is unable to predict the outcome of this matter.
The Company does not believe that the ultimate resolution of this matter will
have a material adverse effect on its consolidated financial condition or
results of operations.

f. South Brunswick Asphalt, L.P.
- - --------------------------------

     NJNG has been named a defendant in a civil action commenced in New Jersey
Superior Court by South Brunswick Asphalt, L.P. (SBA) and its affiliated
companies seeking damages arising from alleged environmental contamination at
three sites owned or occupied by SBA and its affiliated companies.
Specifically, the suit charges that tar emulsion removed from 1979 through
1983 by an affiliate of SBA (Seal Tite, Inc.) from NJNG's former gas
manufacturing plant sites has been alleged by the NJDEPE to constitute a
hazardous waste and that the tar emulsion has contaminated the soil and ground
water at the three sites in question. In February 1991, the NJDEPE issued
letters classifying the tar emulsion/sand and gravel mixture at each site as
dry industrial waste, a non-hazardous classification. NJNG is presently
exploring various disposal methods for the tar emulsion/sand and gravel
mixture.

     NJNG's liability insurance carrier has assumed defense of this action but
has denied coverage for SBA's claims.


<PAGE>

                                     -10-

Although management is considering legal action against the carrier, NJNG
believes that the total cost to remove and dispose of the tar emulsion/sand
and gravel mixture from all three sites would be immaterial. Based upon the
gas remediation rider approved by the BPU in June 1992, NJNG believes that
such costs should be recoverable through the ratemaking process.

     One of the SBA sites is the subject of a NJDEPE Directive and Notice
alleging that the tar emulsion/sand and gravel mixture was a contributing
factor to the contamination of ground water at a residential community. The
NJDEPE is seeking reimbursement under the New Jersey Spill Compensation and
Control Act of cleanup, remediation and related costs, estimated by the NJDEPE
at approximately $20 million. NJNG is contesting the NJDEPE directive on the
grounds, among others, that any such alleged ground water contamination was
not caused by tar emulsions removed from NJNG's former gas plant manufacturing
sites. NJNG's liability insurance carriers, which have been defending the
civil action, have denied coverage for these claims and NJNG intends to
contest this position. NJNG would attempt to seek recovery through the
ratemaking process of any such cleanup or remediation payments it might
ultimately be required to make, but recognizes that such recovery is not
assured. There can be no assurance as to the outcome of these proceedings. The
Company does not believe that the ultimate resolution of these matters will
have a material adverse effect on its consolidated financial condition or
results of operations.

g.  Bridgeport Rental and Oil Service
- - -------------------------------------

     In January 1992, NJNG was advised of allegations that certain waste oil
from its former manufactured gas plant site in Wildwood, New Jersey may have
been sent by a demolition contractor to the Bridgeport Rental and Oil Service
site in Logan Township, New Jersey. That site has been designated a Superfund
site and is currently the subject of two lawsuits pending in the U.S. District
Court in New Jersey. NJNG has notified its insurance carriers and is
investigating this matter. NJNG is currently unable to predict the extent, if
any, to which it may have cleanup or other liability with respect to this
matter, but would seek recovery of any such costs through the ratemaking
process. However, no assurance can be given as to the timing or extent of the
ultimate recovery of such costs. The Company does not believe that the
ultimate resolution of these matters will have a material adverse effect on
its consolidated financial condition or results of operations.

h. Iroquois
- - -----------

     Pipeline owns a 2.8% equity interest in the Iroquois Gas Transmission
System, L.P. (Iroquois) which has constructed and is operating a 375-mile
pipeline from the Canadian border in Upstate New York to Long Island.

     Iroquois has been informed by the U.S. Attorney's Offices for the
Northern, Southern and Eastern Districts of New York that an investigation is
underway to determine whether or not Iroquois committed civil violations of
the Federal Clean Water Act and/or its Corps of Engineers permit during
construction of the pipeline.

     In addition, in conjunction with the Environmental Protection Agency
(EPA), a criminal investigation has been initiated by the U.S. Attorney's
Office for the Northern District of New York. To date, no criminal charges
have been filed.

     In December 1993, Iroquois received notification from the Enforcement
Staff of the Federal Energy Regulatory Commission Office of the General
Counsel (Enforcement) that Enforcement has commenced a preliminary, non-public
investigation concerning matters related to Iroquois' construction of certain
of its pipeline facilities. Enforcement has requested information regarding
certain aspects of the pipeline construction. In addition, in December 1993,
Iroquois received a similar communication from the Army Corps of Engineers
requesting information regarding permit compliance in connection with certain
aspects of the pipeline construction. Iroquois is evaluating and responding to
these requests for information and intends to work with these agencies to
allay their concerns. To date, no proceedings have been commenced against
Iroquois in connection with these agency inquiries.

     Iroquois has publicly stated that it believes the pipeline construction
and right-of-way activities were conducted


<PAGE>

                                     -11-

in a responsible manner and that its environmental program complied with or
exceeded applicable standards for the industry. The foregoing proceedings and
investigations have not affected the pipeline's operations.

     Pipeline is unable to predict the outcome of these proceedings and
investigations. Based upon information currently available to the Company
concerning the above matters involving Iroquois, the Company does not believe
that their ultimate resolution will have a material adverse effect on the
Company's consolidated financial condition or results of operations.
Pipeline's investment in Iroquois as of June 30, 1994 was $5.6 million.


i. Real Estate Properties
- - -------------------------

     CR&R is the owner of certain parcels of land located in Monmouth County,
New Jersey which it is in the process of developing. The development of the
land is subject to the Freshwater Wetlands Protection Act (the Act), which
restricts building in or near certain protected geographic areas designated as
"freshwater wetlands" and their transition areas. CR&R's land parcels were
exempt from the provisions of the Act until assumption of the Federal 404
freshwater wetlands program by the State of New Jersey on March 2, 1994. As of
that date, the New Jersey Department of Environmental Protection and Energy
(DEPE) has jurisdiction over any freshwater wetlands and may classify all or
part of the remaining developable area as freshwater wetlands. It is probable
that CR&R will be precluded from developing any land classified by the DEPE as
freshwater wetlands. CR&R is currently determining what portion of the land
parcels may be classified as freshwater wetlands by the DEPE and the effect,
if any, that such classification will have on its further development.

j. Bessie-8
- - -----------

     Reference is made to the Company's Form 10-Q for the quarterly period
ended March 31, 1994 for information relating to legal proceedings against
NJNR and others (the Joint Venture, et al.) in connection with the Bessie-8
joint venture activities.

     In January 1994, the owners of the plant previously served by the
Bessie-8 pipeline entered into a three-year natural gas contract with another
supplier. In March 1994, NJNR concluded that, based on meetings with its
partners to discuss various alternatives for the pipeline, the recovery of
NJNR's net investment of $1 million is doubtful. Accordingly, as disclosed on
Form 8-K filed by the Company on April 27, 1994, the results for the nine
months ended June 30, 1994 include a pre-tax charge to earnings of $1 million, 
or $.04 per share.

k. Various
- - ----------

     The Company is party to various claims, legal actions and complaints
arising in the ordinary course of business. In management's opinion, the
ultimate disposition of these matters will not have a material adverse effect
on its financial condition or results of operations.

6. Other
- - --------

     At June 30, 1994, there were 17,177,297 common shares outstanding and book
value per share was $15.06.

     Certain reclassifications have been made of previously reported amounts to
conform with current year classifications.



<PAGE>

                                     -12-

                       NEW JERSEY RESOURCES CORPORATION
                   MANAGEMENT'S DISCUSSION AND ANALYSIS OF
                FINANCIAL CONDITION AND RESULTS OF OPERATIONS
                  THREE AND NINE MONTHS ENDED JUNE 30, 1994


RESULTS OF OPERATIONS

     Consolidated net income for the three months ended June 30, 1994
increased by 284% to $3.3 million, or $.19 per share, compared with $861,000,
or $.05 per share, last year. This increase was due primarily to a gain
recognized on the termination of a development project involving a subsidiary
of Paradigm Power, Inc. (Paradigm). See Independent Power Operations on page
14 for a discussion of this transaction.

     Earnings for the nine months ended June 30, 1994 include the cumulative
effect of adopting Statement of Financial Accounting Standards No. 109
"Accounting for Income Taxes", which was a non-cash credit to consolidated net
income of $721,000, or $.04 per share. See Note 3. Changes in Accounting -b.)
Income Taxes on page 6 for a discussion of this change in accounting
principle.

     Consolidated net income for the nine months ended June 30, 1994, before
the effect of SFAS 109, increased by 14% to $37.1 million, or $2.18 per share,
compared with $32.6 million, or $1.97 per share, last year. The increase was
attributable primarily to the Paradigm transaction and higher financial
results of the Company's principal subsidiary, New Jersey Natural Gas Company
(NJNG).

UTILITY OPERATIONS

     NJNG's financial results are summarized as follows:
<TABLE>
<CAPTION>
                                         Three Months Ended           Nine Months Ended
                                              June 30,                     June 30,

                                         1994          1993         1994           1993
                                        --------------------        ----------------------
                                                          (Thousands)
<S>                                      <C>           <C>          <C>           <C>
Gross margin
  Residential and commercial             $26,858       $23,019      $127,911      $117,832
  JCP&L and other interruptible              378           314           776           709
  Off-system and capacity release            368           208         2,964         1,542
                                         -------       -------      --------      --------
Total gross margin                        27,604        23,541       131,651       120,083
Operating expenses                        20,897        19,355        64,684        60,273
Interest charges, net                      4,186         3,428        11,377        10,472
Federal income taxes                         981           (31)       18,912        15,642
Preferred dividends and other, net           281           350           944         1,336
                                         -------       -------      --------      --------
Net income                               $ 1,259       $   439      $ 35,734      $ 32,360
                                         =======       =======      ========      ========
</TABLE>

Gross Margin

     Gross margin, defined as gas revenues less gas costs and gross receipts
and franchise taxes (GRFT), provides a more meaningful basis for evaluating
utility operations since gas costs and GRFT are passed through to customers
and, therefore, have no effect on earnings. Gas costs are charged to operating
expenses on the basis of therm sales at the base and Levelized Gas Adjustment
(LGA) cost rates included in NJNG's tariff. The LGA clause allows NJNG to
recover gas costs that exceed the level reflected in its base rates. GRFT are
also calculated on a per-therm basis (excluding sales to other utilities).


<PAGE>

                                     -13-

Residential and Commercial Sales

     In NJNG's June 1992 base rate order, the BPU approved a
weather-normalization clause on a two-year experimental basis effective
October 1, 1992. Such a clause provides for a revenue adjustment if the
weather varies by more than one-half of one percent from normal, or 10-year
average, weather. The accumulated adjustment from one heating season
(October-April) is billed or credited to customers in the subsequent heating
season. This clause reduces the weather-sensitivity of gross margin from firm
(i.e. residential and commercial) customers. In July 1994, NJNG requested
approval from the BPU to continue the clause permanently.

     Gross margin from sales to firm customers increased by $3.8 million, or
17%, to $26.9 million during the third fiscal quarter and by $10 million, or
9%, to $127.9 million during the nine months, compared with the same periods
last year.

     The increase for the third fiscal quarter was due primarily to a $7.5
million base rate increase which became effective January 5, 1994. The
increase for the nine months was due to the base rate increase and a 6%
increase in firm therm sales which was attributable to 1% colder weather than
last year and the addition of approximately 10,000 customers during the twelve
months ended June 30, 1994.

     The weather for the nine months ended June 30, 1994, was 2% colder than
normal which, due to the aforementioned weather-normalization clause, did not
significantly impact gross margin. Instead, $2.7 million of gross margin was
deferred and included in Customers' credit balances and deposits for refunding
to customers in fiscal 1995. For the nine months ended June 30, 1993, colder
than normal weather resulted in $1.5 million of gross margin being deferred
due to the weather-normalization clause.

Off-System and Capacity Release Sales

     In order to reduce the overall cost of its gas supply commitments, NJNG
has entered into contracts to sell gas to customers who are outside of the
state and not connected to its system. These sales enable NJNG to spread its
fixed demand costs, which are charged by pipelines to access their supplies
year-round, over a larger and more diverse customer base. NJNG also
participates in the capacity release market where it sells capacity on the
interstate pipeline network which is not needed for its own system
requirements.

     NJNG's off-system sales totaled 37 million and 206 million therms and
generated $102,000 and $2 million of gross margin in the three and nine months
ended June 30, 1994, respectively, compared with 48 million and 159 million
therms and $208,000 and $1.5 million of gross margin in the same periods last
year. Off-system sales improved for the nine months due primarily to increased
marketing efforts, while the margin per therm declined due to a change in the
regulated margin-sharing formula and increased competition. Effective January
1994, NJNG retains 20% of the gross margin from off-system sales. Capacity
release sales generated $266,000 and $1 million of gross margin in the three
and nine months ended June 30, 1994, respectively.

Operating Expenses

     Operating expenses increased by $1.5 million, or 8%, and by $4.4 million,
or 7%, for the three and nine months ended June 30, 1994, respectively. These
increases were due primarily to higher depreciation associated with NJNG's
growing plant investment needed to support the customer growth and general
system expansion, higher payroll associated with the colder weather, rate case
related expenses and an inventory adjustment.

Interest Charges, Net

     Interest charges, net increased by $758,000, or 22%, and by $905,000, or
9%, for the three and nine months ended June 30, 1994, due primarily to higher
debt levels associated with its ongoing construction program.


<PAGE>

                                     -14-

INDEPENDENT POWER OPERATIONS

     In July 1993, the Company announced that a subsidiary of Paradigm entered
into an agreement with Harriman Energy Partners, Ltd., an affiliate of Destec
Energy, Inc., to jointly develop a 57 megawatt, natural gas fired cogeneration
project in Harriman, New York (the Northway Project). Harriman Energy had
agreed to sell electricity to Orange & Rockland Utilities, Inc. (Orange &
Rockland) pursuant to a 25-year power purchase agreement entered into in May
1991, as supplemented. In June 1994, Harriman Energy and Orange & Rockland,
agreed to terminate the power purchase agreement. Paradigm's share of the net
proceeds from this transaction is approximately $4.2 million, to be received
over three years, plus interest. As a result of this transaction, after
related expenses and taxes, consolidated net income for both the quarter and
nine months ended June 30, 1994 was positively impacted by $2.1 million, or
$.13 per share.

REAL ESTATE OPERATIONS

CR&R's financial results are summarized as follows:

                             Three Months Ended      Nine Months Ended
                                  June 30,               June 30,
                             1994        1993        1994        1993
                            -------------------      ------------------
                                             (Thousands)
Revenues                    $2,928      $3,112      $9,270      $9,302
Operating expenses
  Depreciation                 482         478       1,447       1,437
  Other                      1,289       1,202       3,665       3,427
                            ------      ------      ------      ------ 
Operating income             1,157       1,432       4,158       4,438
Other expenses                --          --           653         116
Interest charges,net         1,074       1,287       3,116       3,894
Federal income taxes            28          52         131         139
                            ------      ------      ------      ------
Income before SFAS 109          55          93         258         289
Effect of SFAS 109            --          --           660        --
                            ------      ------      ------      ------
Net income                  $   55      $   93      $  918      $  289
                            ======      ======      ======      ======

     Earnings for the nine months ended June 30, 1994 include the cumulative
effect of adopting SFAS 109 which was a non-cash credit to net income of
$660,000. See Note 3. Changes in Accounting -b.) Income Taxes on page 6 for a
discussion of this change in accounting principle.

     In evaluating the results of real estate operations, it is appropriate to
analyze net income adjusted for depreciation which better reflects the cash
flow being generated by its income-producing properties. This approach is
common in the real estate industry since cash flow is generally used to
evaluate asset performance.

     For the three months ended June 30, 1994, net income adjusted for
depreciation, decreased by $34,000, to $537,000, due to tenant roll-over
activity and expenses associated with evaluating CR&R's strategic alternatives,
which more than offset lower financing costs.

     Other expenses represent the costs associated with the October 1993
redemption of CR&R's remaining $13.8 million outstanding principal of its 
11 5/8% mortgage and the December 1992 redemption of its remaining $2.1 million
outstanding principal of its 12.75% mortgage.

     For the nine months ended June 30, 1994, net income before the effect of
SFAS 109, adjusted for depreciation and excluding redemption costs from both
periods, increased by 22%, to $2.4 million, as lower financing costs more than
offset a slight decline in revenues and higher operating expenses.


<PAGE>

                                     -15-

     Interest charges, net decreased by $213,000, or 17%, and by $778,000, or
20%, for the three and nine months ended June 30, 1994, respectively, due to
lower average interest rates resulting from the abovementioned mortgage
redemption activity.

     At June 30, 1994, CR&R's inventory of completed space and occupancy rate
was unchanged at 914,200 square feet and 96%, respectively, compared with June
30, 1993.

EXPLORATION AND PRODUCTION OPERATIONS

NJR Energy's financial results are summarized as follows:

<TABLE>
<CAPTION>
                                                  Three Months Ended        Nine Months Ended
                                                       June 30,                  June 30,
                                                  1994        1993(A)      1994        1993(A)
                                                  -------------------      -------------------
                                                                  (Thousands)
<S>                                              <C>          <C>          <C>          <C>
Revenues                                         $2,298       $2,268       $7,534       $7,010
Operating expenses
  Depreciation, depletion and amortization        1,136        1,056        4,515        3,433
  Exploratory dry hole costs                       --            164           29        1,393
  Other                                           1,388          943        3,911        3,352
                                                  ------       ------       ------       ------
Operating loss                                     (226)         105         (921)      (1,168)
Interest charges, net                               426          320        1,202          939
Federal income taxes                               (344)        (229)      (1,167)      (1,650)
                                                 ------       ------       ------       ------
Loss before SFAS 109                               (308)          14         (956)        (457)
Effect of SFAS 109                                 --           --             79         --
                                                 ------       ------       ------       ------
Net loss                                         $ (308)      $   14       $ (877)      $ (457)
                                                 ======       ======       ======       ====== 

<FN>
(A) Restated to reflect the change in accounting principle by NJR Energy for
    its oil and gas operations to the successful efforts method from the full
    cost method.
</FN>
</TABLE>

     Earnings for the nine months ended June 30, 1994 include the cumulative
effect of adopting SFAS 109 which was a non-cash credit to net income of
$79,000. See Note 3. Changes in Accounting -b.) Income Taxes on page 6 for a
discussion of this change in accounting principle.

     NJR Energy's operating results for the quarter ended June 30, 1994
declined by $331,000 as lower oil and gas prices and higher operating expenses
more than offset higher gas production and lower exploratory dry hole costs.

     NJR Energy's operating loss decreased by $247,000 for the nine months
ended June 30, 1994, as higher revenues from increased production and lower
exploratory dry hole costs more than offset the $1 million write-down of its
investment in the Bessie-8 pipeline and lower prices. See Note 5. Legal and
Regulatory Proceedings - j.) Bessie-8 page 11 for a discussion of the
write-down.

     Production and price information are as follows:

                          Three Months Ended       Nine Months Ended
                               June 30,                 June 30,
                            1994      1993          1994       1993
                          -------------------       -------------------
Gas Production (mmcf)         909         768       2,792       2,328
Avg. Gas Price (mcf)       $ 1.77      $ 1.90      $ 1.82      $ 1.84

Oil Production (mbbl)          23          23          85          70
Avg. Oil Price (bbl)       $14.42      $19.31      $14.90      $19.58


<PAGE>

                                     -16-

     The increases in production and operating expenses were due primarily to
the impact of the $5 million acquisition of 56 properties from Marathon Oil
Company in August 1993.

     In conjunction with the strategic shift in capital allocation as
discussed in Liquidity and Capital Resources - Exploration and Production on
page 17, and downward reserve revisions, NJNR has removed 15.6 bcf and 540,000
barrels of oil of proved reserves from its reserve base in fiscal 1994. NJR
Energy's proved reserves at June 30, 1994 totaled 23 bcf of natural gas and
1.8 million barrels of oil.

     NJR Energy's interest charges, net for the three and nine months ended
June 30, 1994, increased by $106,000, or 33%, and by $263,000, or 28%,
respectively, due to higher average debt levels associated with the Marathon
acquisition.

     Federal income taxes were favorably impacted by permanent tax benefits
associated with the development of properties eligible for the tight sands tax
credit.

     NJR Energy's ability to improve its earnings in the future is dependent
on several factors including changes in natural gas and oil prices, the
performance of reserve acquisitions and other investments, the amount and type
of which will be determined by market and other conditions.

LIQUIDITY AND CAPITAL RESOURCES

     In order to meet the working capital and external debt financing
requirements of its non-regulated subsidiaries, as well as its own working
capital needs, the Company maintains committed bank credit facilities totaling
$145 million and has a $10 million credit facility available on an offering
basis. At June 30, 1994, $120.1 million was outstanding under these
facilities.

UTILITY

     The seasonal nature of NJNG's operations creates large short-term cash
requirements, primarily to finance gas purchases and customer accounts
receivable. NJNG obtains working capital for these requirements, as well as
for the temporary financing of construction expenditures, sinking fund needs
and accelerated GRFT payments mandated by changes in New Jersey law, through
the issuance of commercial paper and short-term bank loans. To support the
issuance of commercial paper, NJNG maintains committed credit facilities
totaling $71 million with a number of commercial banks and has an additional
$15 million in lines of credit available on an offering basis. NJNG's lines of
credit are adjusted quarterly based upon its projected cash needs.

     Remaining fiscal 1994 construction expenditures are estimated at $17
million. These expenditures will be incurred for services, mains and meters to
support NJNG's continued customer growth, and general system renewals and
improvements. NJNG expects to finance these expenditures through internal
generation, the issuance of short-term debt and proceeds from the Company's
Dividend Reinvestment and Customer Stock Purchase Plan (DRP), the amount and
timing of which will be affected by market conditions and other factors.

     NJNG will also pursue the refinancing of existing long-term debt, the
amount and timing of which will be affected by market conditions and other
factors.

REAL ESTATE

     As a result of the Company's strategic re-evaluation, CR&R's capital
expenditures are expected to be limited to the fit-up of existing tenant space
and the development of previously committed projects, subject to additional
investments, approved by the Board of Directors, made for the purpose of
preserving the value of particular real


<PAGE>

                                     -17-

estate holdings, or made on a build-to-suit basis in accordance with
acceptable commitments from existing or prospective tenants or buyers. Such
remaining capital expenditures for fiscal 1994 are estimated at $700,000 and
are expected to be funded through internal generation and bank loans obtained
by the Company.

EXPLORATION & PRODUCTION

     In April 1994, the Company announced that it plans to reallocate much of
the capital previously dedicated to the development of natural gas and oil
reserves to investments with closer strategic ties to the rest of its energy
businesses. No further exploration activity is planned. Potential investment
opportunities may include gas gathering, storage and marketing, as well as
other investments designed to capitalize on the post - Order 636 investment
environment. In connection with this strategic shift, as discussed in Note 3
to the Consolidated Financial Statements, Changes in Accounting -a.) Oil and
Natural Gas Properties on page 5, NJR Energy has changed the method by which
it accounts for its oil and gas operations from the full cost method to the
successful efforts method.

     In April 1994, Natural Resources Compressor Company (Compressor) sold its
fleet of 41 natural gas compressors for $2 million. As part of the
transaction, Compressor agreed to lease certain compressors over a fixed
period of time. The proceeds from this earnings-neutral sale were used to pay
down a portion of the Company's bank loans.

     Remaining capital expenditures for fiscal 1994 are expected to total up
to $5 million, depending on market conditions and other factors. These
expenditures are expected to be funded through bank loans obtained by the
Company, proceeds from the Company's DRP and internal generation.



                         PART II - OTHER INFORMATION


Item 1.   Legal Proceedings

     Information required by this Item is incorporated by reference to Note 5
- - - Legal and Regulatory Proceedings beginning on Page 8.


Item 6.   Exhibits and Reports on Form 8-K

         (b) Reports on Form 8-K

     The Company filed a Current Report on Form 8-K, under Item 5 - Other
Events, dated April 27, 1994, with respect to (a) the change in accounting
principle for its oil and gas operations from the full cost method to the
successful efforts method and (b) the write-down of its investment in the
Bessie-8 pipeline.

 The Company filed a Current Report on Form 8-K, under Item 5 - Other Events,
dated June 24, 1994, with respect to the termination of a power purchase
agreement which resulted in a subsidiary of Paradigm Power, Inc. receiving
proceeds of approximately $4.2 million, to be received over 3 years, plus
interest.



<PAGE>

                                     -18-

                                  SIGNATURES



    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 thereunto duly authorized.



                                         NEW JERSEY RESOURCES CORPORATION
                                         --------------------------------


    Date:  August 12, 1994                    /s/Laurence M. Downes
           -------------                 ----------------------------------
                                                 Laurence M. Downes
                                                 Senior Vice President and
                                                 Chief Financial Officer



    Date:  August 12, 1994                    /s/Glenn C. Lockwood
           ---------------                ----------------------------------
                                                 Glenn C. Lockwood
                                                 Vice President, Controller
                                                 and Chief Accounting Officer



<PAGE>

                                     -19-


                                 SIGNATURES



    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 thereunto duly authorized.



                                         NEW JERSEY RESOURCES CORPORATION
                                         --------------------------------


    Date:  August 12, 1994
           ---------------               -----------------------------------
                                         Laurence M. Downes
                                         Senior Vice President and
                                         Chief Financial Officer



    Date:  August 12, 1994
           ---------------                ----------------------------------
                                          Glenn C. Lockwood
                                          Vice President, Controller
                                          and Chief Accounting Officer



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