- -------------------------------------------------------------------------------
- -------------------------------------------------------------------------------
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
FORM 10-Q
(Mark One)
[X] QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE
SECURITIES EXCHANGE ACT OF 1934
For the quarterly period ended September 30, 1999
OR
[ ] TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE
SECURITIES EXCHANGE ACT OF 1934
For the transition period from __________ to __________
Commission file number 1-7320
ANR PIPELINE COMPANY
(Exact name of registrant as specified in its charter)
Delaware 38-1281775
(State or other jurisdiction (I.R.S. Employer
of incorporation or organization) Identification No.)
500 Renaissance Center
Detroit, Michigan 48243-1902
(Address of principal executive offices) (Zip Code)
Registrant's telephone number, including area code: (313) 496-0200
---------------------------
Registrant meets the conditions set forth in General Instructions H(1)(a)
and (b) of Form 10-Q and is therefore filing this report with reduced disclosure
format.
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, and (2) has been subject to such filing
requirements for the past 90 days. Yes X No _____
As of October 29, 1999, there were outstanding 1,000 shares of common stock
of the Registrant, $100 par value per share, its only class of common stock.
None of the voting stock of the Registrant is held by nonaffiliates.
- -------------------------------------------------------------------------------
- -------------------------------------------------------------------------------
<PAGE>
PART I
FINANCIAL INFORMATION
Item 1. Financial Statements.
The financial statements of ANR Pipeline Company and its subsidiaries (the
"Company" or "ANR Pipeline") are presented herein and are unaudited, except for
balances as of December 31, 1998, and therefore are subject to year-end
adjustments; however, all adjustments which are, in the opinion of management,
necessary for a fair statement of the results of operations for the periods
covered have been made. The adjustments which have been made are of a normal
recurring nature. Such results are not necessarily indicative of results to be
expected for the year due to seasonal variations and market conditions affecting
natural gas deliveries.
<TABLE>
ANR PIPELINE COMPANY AND SUBSIDIARIES
CONSOLIDATED BALANCE SHEET
(Millions of Dollars)
<CAPTION>
September 30, December 31,
ASSETS 1999 1998
------------- --------------
(Unaudited)
<S> <C> <C>
Current Assets:
Cash and cash equivalents............................................... $ 3.5 $ 3.4
Notes receivable from related party..................................... 150.5 156.1
Accounts receivable:
Others............................................................... 12.9 19.9
Related parties...................................................... 18.5 26.0
Materials and supplies, at average cost................................. 27.7 27.8
Current deferred income taxes........................................... 27.7 25.0
---------- ----------
240.8 258.2
---------- ----------
Property, Plant and Equipment, at cost..................................... 3,466.4 3,446.6
Less - Accumulated depreciation......................................... 2,183.8 2,165.0
---------- ----------
1,282.6 1,281.6
---------- ----------
Other Assets:
Investment in related parties:
Pipeline partnerships................................................ 74.7 51.1
Other................................................................ 69.1 68.3
Deferred charges and other.............................................. 26.8 29.0
---------- ----------
170.6 148.4
---------- ----------
$ 1,694.0 $ 1,688.2
========== ==========
See Notes to Consolidated Financial Statements.
</TABLE>
- 1 -
<PAGE>
<TABLE>
ANR PIPELINE COMPANY AND SUBSIDIARIES
CONSOLIDATED BALANCE SHEET
(Millions of Dollars)
<CAPTION>
September 30, December 31,
LIABILITIES AND STOCKHOLDER'S EQUITY 1999 1998
--------------- --------------
(Unaudited)
<S> <C> <C>
Current Liabilities:
Accounts payable:
Others............................................................... $ 80.6 $ 77.6
Related parties...................................................... 7.7 11.5
Taxes on income......................................................... 29.6 37.8
Other taxes............................................................. 24.8 24.1
Other................................................................... 57.4 50.0
--------- ---------
200.1 201.0
--------- ---------
Long-Term Debt ............................................................ 498.0 497.9
--------- ---------
Deferred Credits and Other:
Accumulated deferred income taxes....................................... 196.5 174.4
Other deferred credits:
Others............................................................... 67.9 103.3
Related parties...................................................... 6.0 8.0
--------- ---------
270.4 285.7
--------- ---------
Common Stock and Other Stockholder's Equity:
Common stock, $100 par value, authorized, issued and outstanding
1,000 shares......................................................... .1 .1
Additional paid-in capital.............................................. 466.2 466.2
Retained earnings....................................................... 259.2 237.3
--------- ---------
725.5 703.6
--------- ---------
$ 1,694.0 $ 1,688.2
========= =========
See Notes to Consolidated Financial Statements.
</TABLE>
- 2 -
<PAGE>
<TABLE>
ANR PIPELINE COMPANY AND SUBSIDIARIES
STATEMENT OF CONSOLIDATED EARNINGS
(Millions of Dollars)
<CAPTION>
Three Months Ended Nine Months Ended
September 30, September 30,
---------------------- ---------------------
1999 1998 1999 1998
---------- ---------- --------- ---------
(Unaudited) (Unaudited)
<S> <C> <C> <C> <C>
Revenues:
Storage and transportation:
Others.................................................... $ 122.3 $ 125.7 $ 402.6 $ 464.4
Related parties........................................... 3.4 .6 12.0 4.5
Other revenues:
Others.................................................... 22.7 38.9 61.0 87.5
Related parties........................................... 4.9 7.5 16.9 23.6
---------- ---------- --------- ---------
153.3 172.7 492.5 580.0
---------- ---------- --------- ---------
Costs and Expenses:
Operation and maintenance:
Others.................................................... 72.3 68.5 194.3 219.4
Related parties........................................... 15.1 17.8 46.9 52.2
Depreciation and amortization................................ 9.7 9.2 27.9 27.0
Interest expense............................................. 11.7 11.6 35.2 35.1
Taxes on income.............................................. 16.8 24.5 69.4 77.5
---------- ---------- --------- ---------
125.6 131.6 373.7 411.2
---------- ---------- --------- ---------
Net Earnings.................................................... $ 27.7 $ 41.1 $ 118.8 $ 168.8
========== ========== ========= =========
See Notes to Consolidated Financial Statements.
</TABLE>
- 3 -
<PAGE>
<TABLE>
ANR PIPELINE COMPANY AND SUBSIDIARIES
STATEMENT OF CONSOLIDATED CASH FLOWS
(Millions of Dollars)
<CAPTION>
Nine Months Ended
September 30,
-------------------------
1999 1998
--------- --------
(Unaudited)
<S> <C> <C>
Cash Flows from Operating Activities:
Net earnings................................................................ $ 118.8 $ 168.8
Adjustments to reconcile net earnings to net cash provided by
operating activities:
Depreciation and amortization......................................... 28.1 27.2
Net decrease (increase) in working capital:
Others.............................................................. 5.8 ( 123.9)
Related parties..................................................... 4.2 ( .5)
Net change in other assets/liabilities................................ ( 6.7) 24.0
--------- --------
Total adjustments................................................... 31.4 ( 73.2)
--------- --------
Net cash provided by operating activities............................. 150.2 95.6
--------- --------
Cash Flows from Investing Activities:
Investment in pipeline partnerships......................................... ( 27.8) -
Decrease in note receivable from related party.............................. 5.6 65.9
Capital expenditures........................................................ ( 66.3) ( 53.1)
Proceeds from the sale of plant to related party............................ 37.2 -
--------- --------
Net cash (used in) provided by investing activities................... ( 51.3) 12.8
--------- --------
Cash Flows from Financing Activities:
Dividend paid............................................................... ( 97.0) ( 110.0)
Other....................................................................... ( 1.8) -
--------- --------
Net cash used in financing activities................................. ( 98.8) ( 110.0)
--------- --------
Net Increase (Decrease) in Cash and Cash Equivalents........................... .1 ( 1.6)
Cash and Cash Equivalents at Beginning of Period............................... 3.4 5.2
--------- --------
Cash and Cash Equivalents at End of Period..................................... $ 3.5 $ 3.6
========= ========
See Notes to Consolidated Financial Statements.
</TABLE>
- 4 -
<PAGE>
ANR PIPELINE COMPANY AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
1. Summary of Significant Accounting Policies
For additional information relative to operations and financial position,
reference is made to the Company's Annual Report on Form 10-K for the fiscal
year ended December 31, 1998. Certain reclassifications of prior period
statements have been made to conform with current reporting practices. The
effect of the reclassifications was not material to the Company's consolidated
financial position, results of operations or cash flows.
The Financial Accounting Standards Board has issued Statement of Financial
Accounting Standards No. 133, "Accounting for Derivative Instruments and Hedging
Activities" ("FAS 133"), as amended by Statement of Financial Accounting
Standards No. 137, to be effective for all fiscal quarters of fiscal years
beginning after June 15, 2000. FAS 133 requires that an entity recognize all
derivatives as either assets or liabilities in the statement of financial
position and measure those instruments at fair value. The accounting for changes
in the fair value of a derivative will depend on the intended use of the
derivative and the resulting designation. The Company is currently evaluating
the impact, if any, of FAS 133.
The Company adopted American Institute of Certified Public Accountants
Statement of Position 98-5, "Reporting on the Costs of Start-Up Activities"
("SOP 98-5"), in 1999. The application of SOP 98-5 did not have a material
effect on the Company's consolidated financial statements.
Supplemental information relative to the Statement of Consolidated Cash
Flows includes the following: The Company made cash payments for interest, net
of interest capitalized, of $28.8 million and $43.3 million for the nine-month
periods ended September 30, 1999 and 1998, respectively. Cash payments of income
taxes amounted to $58.3 million and $45.6 million for the nine-month periods
ended September 30, 1999 and 1998, respectively.
2. Income Taxes
Provisions for income taxes were as follows (millions of dollars):
<TABLE>
<CAPTION>
Three Months Ended Nine Months Ended
September 30, September 30,
---------------------- ---------------------
1999 1998 1999 1998
---------- ---------- --------- ---------
(Unaudited) (Unaudited)
<S> <C> <C> <C> <C>
Federal Income Taxes:
Currently payable...................................... $ 11.8 $ 7.5 $ 47.6 $ 28.1
Deferred............................................... 3.6 15.0 17.7 40.4
---------- ---------- --------- ---------
15.4 22.5 65.3 68.5
State and City Income Taxes............................... 1.4 2.0 4.1 9.0
---------- ---------- --------- ---------
$ 16.8 $ 24.5 $ 69.4 $ 77.5
========== ========== ========= =========
</TABLE>
3. Common Stock
All of the issued and outstanding common stock of the Company is owned by
American Natural Resources Company, a wholly owned subsidiary of Coastal Natural
Gas Company. Coastal Natural Gas Company is a wholly owned subsidiary of The
Coastal Corporation ("Coastal"). Therefore, earnings and cash dividends per
common share have no significance and are not presented.
- 5 -
<PAGE>
4. Litigation, Environmental and Regulatory Matters
Litigation Matters
In October 1996, Coastal, along with certain of its affiliates, including
ANR Pipeline, was named as a defendant in a suit filed by several former and
current African American employees in the United States District Court, Southern
District of Texas (the "Texas suit"). The Texas suit alleges racially
discriminatory employment policies and practices. Coastal and its affiliates
vigorously deny these allegations and have filed responsive pleadings.
Plaintiffs' counsel are seeking to have the Texas suit certified as a class
action of all former and current African American employees and initially
claimed compensatory and punitive damages of $400 million. In February 1999, in
response to Coastal's motion to deny class certification, plaintiffs' counsel
obtained permission from the Court to delete all claims for compensatory and
punitive damages and to seek equitable relief only.
In January 1998, the plaintiffs in the Texas suit amended their suit to
exclude ANR Pipeline employees from the potential class. A new suit was then
filed in state court in Wayne County, Michigan, seeking to have the Michigan
suit certified as a class action of African American employees of ANR Pipeline
and seeking unspecified damages as well as attorneys and expert fees. The
Company has filed responsive pleadings denying these allegations. In August
1999, the court denied plaintiffs' motion to have the Michigan suit certified as
a class action. Plaintiffs filed with the Michigan Court of Appeals an
application for leave to appeal the denial of the class certification. On
November 5, 1999, the Michigan Court of Appeals denied the application for leave
to appeal.
In 1996, Jack Grynberg filed a claim under the False Claims Act on behalf
of the U.S. government in the U.S. District Court, District of Columbia, against
70 defendants, including ANR Pipeline and another subsidiary of Coastal. The
suit sought damages for the alleged underpayment of royalties due to the
purported improper measurement of gas. The 1996 suit was dismissed without
prejudice in March 1997, and the dismissal was affirmed by the D.C. Court of
Appeals in October 1998. In September 1997, Mr. Grynberg filed 77 separate,
similar False Claims Act suits against natural gas transmission companies and
producers, gatherers, and processors of natural gas, seeking unspecified damages
which could include treble damages for the maximum period permitted by law
(potentially as much as 10 years) and penalties of up to $10,000 per false
claim. ANR Pipeline, Coastal and several other Coastal subsidiaries have been
included in two of the September 1997 suits. The suits were filed in both the
U.S. District Court, District of Colorado and the U.S. District Court, Eastern
District of Michigan (the "Grynberg suits"). In April 1999, the United States
Department of Justice notified the Company that the United States will not
intervene in these cases. In response to a motion filed by Mr. Grynberg, the
MultiDistrict Litigation Panel has consolidated the Grynberg suits with several
other Grynberg cases for pre-trial proceedings in Wyoming.
In May 1999, the Quinque Operating Company, on behalf of itself and
subclasses of gas producers, royalty owners and state taxing authorities,
instituted a legal proceeding in State Court, Stevens County, Kansas against
over 200 gas pipeline companies, including ANR Pipeline and other Coastal
subsidiaries (the "Quinque suit"). The Quinque suit seeks unspecified damages,
which could include treble damages through July 15, 1995, for the alleged
underpayment of royalties due to the purported mismeasurement of the heat value
and the volume of all natural gas purchased in the United States since 1974. The
plaintiffs in the Quinque suit are also seeking certification of a national
class of all similarly situated gas producers. The Quinque suit has been removed
to the U.S. District Court, Southern District of Kansas. The defendants in the
Quinque suit have filed a motion under the MultiDistrict Litigation rules to
have the suit transferred to Wyoming and consolidated with the Grynberg
proceedings.
Numerous other lawsuits and other proceedings which have arisen in the
ordinary course of business are pending or threatened against the Company or its
subsidiaries. Although no assurances can be given and no determination can be
made at this time as to the outcome of any particular lawsuit or proceeding, the
Company believes there are meritorious defenses to substantially all such claims
and that any liability which may finally be determined should not have a
material adverse effect on the Company's consolidated financial position or
results of operations.
Environmental Matters
The Company's operations are subject to extensive and evolving federal,
state and local environmental laws and regulations which may affect such
operations and costs as a result of their effect on the construction, operation
and
- 6 -
<PAGE>
maintenance of its pipeline facilities. Compliance with such laws and
regulations can be costly. Additionally, governmental authorities may enforce
the laws and regulations with a variety of civil and criminal enforcement
measures, including monetary penalties and remediation requirements.
The Comprehensive Environmental Response, Compensation and Liability Act,
also known as "Superfund," imposes liability for the release of a "hazardous
substance" into the environment. Superfund liability is imposed without regard
to fault and even if the waste disposal was in compliance with the then current
laws and regulations. With the joint and several liability imposed under
Superfund, a potentially responsible party ("PRP") may be required to pay more
than its proportional share of such costs. The Company has been named as a PRP
in four Superfund waste disposal sites. At these sites, there is sufficient
information to estimate total cleanup costs of approximately $67 million and the
Company estimates its pro-rata exposure, to be paid over a period of several
years, is approximately $1.3 million.
In Michigan, where the Company has extensive operations, the Environmental
Response Act requires individuals (including corporations) who have caused
contamination to remediate the contamination to regulatory standards. Owners or
operators of contaminated property who did not cause the contamination are not
required to remediate the contamination, but must exercise due care in their use
of the property so that the contamination is not exacerbated and the property
does not pose a threat to human health. ANR Pipeline estimates that its costs to
comply with the Michigan regulations will be approximately $10 million, which
will be expended over a period of several years and for which appropriate
provisions have been made.
In October 1998, the U. S. Environmental Protection Agency ("EPA")
announced a "Finding of Significant Contribution and Rulemaking for Certain
States in the Ozone Transport Assessment Group Region for Purposes of Reducing
Regional Transport of Ozone" ("NOx SIP Call"). The NOx SIP Call requires 22
states, including eight states in which ANR Pipeline operates, and the District
of Columbia to submit state implementation plans ("SIP Plans"), with each state
showing how it intends to reduce NOx emissions from sources located within its
borders to specified levels. Under the schedule proposed by the EPA in the NOx
SIP Call, states would have until September 1999 to submit SIP Plans to the EPA,
and reduction measures would have to be in place by May 1, 2003. The NOx SIP
Call provided that if a state failed to submit compliant SIP Plans by the
September 1999 deadline, the EPA would impose reductions upon specific sources
within the state. The NOx SIP Call is the subject of legal proceedings
instituted by nine of the affected states and numerous affected industries. In a
May 1999 order, the U. S. District Court, District of Columbia stayed, until
further order of the court, the date by which states must submit compliant SIP
Plans. ANR Pipeline operates compressor engines that emit nitrogen oxide and is,
therefore, potentially subject to any state or EPA rules issued under the NOx
SIP Call. Until the legal proceedings referenced above are resolved, final rules
are determined and the states have submitted compliant SIP Plans, the Company
will not be able to reasonably estimate the amount of any obligation resulting
from the NOx SIP Call.
Future information and developments, including legislative and enforcement
developments, will require the Company to continually reassess the expected
impact of these environmental matters. However, the Company has evaluated its
total environmental exposure based on currently available data, including its
potential joint and several liability, and believes that compliance with all
applicable laws and regulations will not have a material adverse impact on the
Company's consolidated financial position or results of operations.
Regulatory Matters
On July 29, 1998, the Federal Energy Regulatory Commission ("FERC") issued
a "Notice of Proposed Rulemaking," in which the FERC has proposed a number of
significant changes to the industry, including, among other things, removal of
price caps in the short-term market (less than one year), capacity auctions,
changed reporting obligations, the ability to negotiate terms and conditions of
all services, elimination of the requirement of a matching term cap on the
renewal of existing contracts and a review of its policies for approving
capacity construction. On the same day, the FERC also issued a "Notice of
Inquiry" soliciting industry input on various matters affecting the pricing of
long-term service and certificate pricing in light of changing market
conditions. The FERC has indicated that it may consider both proposals together
inasmuch as they raise several common issues. Comments on both of these matters
were due on April 22, 1999, and ANR Pipeline and its affiliates filed comments
with the FERC on that date, urging the FERC, among other things, to modify its
rate, service and certification policies for such pipelines.
- 7 -
<PAGE>
On September 15, 1999, the FERC issued a Policy Statement addressing the
certification and pricing of new pipeline construction projects. Under the
Policy Statement, applicants must first satisfy a threshold pricing requirement
of demonstrating that their projects can be constructed without subsidies from
existing customers. Second, the applicants must show that any adverse impacts of
the project on identified interests (existing customers of the applicant, other
existing pipelines and their captive customers, landowners and the surrounding
communities) are outweighed by its benefits. On October 19, 1999, ANR Pipeline
and its affiliates sought clarification and/or rehearing of the Policy Statement
insofar as it does not apply directly to those projects filed for approval under
the FERC's "optional certificate" regulations. Other parties also sought
rehearing of this and other aspects of the Policy Statement. The matter is still
pending.
Certain regulatory issues remain unresolved among the Company, its
customers, its suppliers and the FERC. The Company has made provisions which
represent management's assessment of the ultimate resolution of these issues. As
a result, the Company anticipates that these regulatory matters will not have a
material adverse effect on its consolidated financial position or results of
operations. While the Company estimates the provisions to be adequate to cover
potential adverse rulings on these and other issues, it cannot estimate when
each of these issues will be resolved.
Item 2. Management's Discussion and Analysis of Financial Condition and
Results of Operations.
This report includes certain forward-looking statements. The
forward-looking statements reflect the Company's expectations, objectives and
goals with respect to future events and financial performance and are based on
assumptions and estimates which the Company believes are reasonable. However,
actual results could differ materially from anticipated results. Important
factors which may affect the actual results include, but are not limited to,
commodity prices, political developments, market and economic conditions,
industry competition, the weather, changes in financial markets, changing
legislation and regulations, and the impact of the Year 2000 issue. The
forward-looking statements contained in this Report are intended to qualify for
the safe harbor provisions of Section 21E of the Securities Exchange Act of
1934, as amended.
The Notes to Consolidated Financial Statements contain information that is
pertinent to the following analysis.
The information required by this Item is presented in a reduced disclosure
format pursuant to General Instruction (H) of Form 10-Q.
Results of Operations
The change in the Company's earnings for the three-and nine-month periods
ended September 30, 1999 in comparison to the same periods in 1998 is a result
of the following:
Revenues. Storage and transportation revenues decreased for the nine-month
period ending September 30, 1999 as compared to the same period in 1998 by $54.3
million. The decrease in revenues for this period was primarily due to an
adjustment to the provision for rate related contingencies of $38.7 million
recorded in the first quarter of 1998, as a result of the Company's rate case
settlement. The remaining decrease was largely the result of a continuing
decline in surcharge revenues related to transition cost recoveries and lower
storage and transportation volumes and rates, partially offset by the net change
in the amortization of deferred revenues.
Other revenues decreased for the three- and nine-month periods ended
September 30, 1999 as compared to the same period in 1998 by $18.8 million and
$33.2 million, respectively. The decrease for the three-month period is
primarily due to proceeds received from the termination of gas transportation
contracts in 1998 of $26.7 million offset by the recognition of gain on the sale
of certain assets of $5.4 million. The decrease for the nine-month period was
primarily due to the contract terminations previously discussed and lower
interest income.
Operation and Maintenance. Operation and maintenance expenses decreased by
$30.4 million for the nine-month period ended September 30, 1999 as compared to
the same period in 1998. The primary factors contributing to the decrease were
a) a $10.7 million benefit recorded in the first quarter of 1999, related to
revisions of certain gas cost accruals, b) lower costs of $12.8 million
primarily due to a charge recorded in the first quarter of 1998 for
environmental
- 8 -
<PAGE>
regulatory compliance and c) lower property and use tax expenses of $4.9
million resulting primarily from favorable settlements of prior years tax issues
in certain states.
Taxes on Income. Taxes on income decreased for the three- and nine-month
periods ended September 30, 1999 as compared to the same periods in 1998
primarily due to lower pre-tax income. The decrease in the nine-month period was
partially offset by an adjustment to accumulated deferred income taxes recorded
in the first quarter of 1998.
- 9 -
<PAGE>
PART II
OTHER INFORMATION
Item 1. Legal Proceedings.
The information required hereunder is incorporated by reference into
Part II of this Report from Note 4 of Notes to Consolidated Financial Statements
set forth in Part I of this Report.
Item 2. Changes in Securities.
None.
Item 3. Defaults Upon Senior Securities.
None.
Item 4. Submission of Matters to a Vote of Security Holders.
None.
Item 5. Other Information.
None.
Item 6. Exhibits and Reports on Form 8-K.
(a) Exhibits.
(27) Financial Data Schedule.
(b) Reports on Form 8-K.
No reports on Form 8-K were filed during the quarter ended
September 30, 1999.
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.
ANR PIPELINE COMPANY
(Registrant)
By: WILLIAM L. JOHNSON
Date: November 12, 1999 ---------------------------------------
William L. Johnson
Senior Vice President and
Principal Accounting Officer
(As Authorized Officer and
Chief Accounting Officer)
- 10 -
<PAGE>
INDEX TO EXHIBITS
Exhibit
Number Description
- ------------------------------------------------------------------------------
27 Financial Data Schedule
- 11 -
<PAGE>
<TABLE> <S> <C>
<ARTICLE> 5
<LEGEND> THE SCHEDULE CONTAINS SUMMARY FINANCIAL INFORMATION
EXTRACTED FROM ANR PIPELINE COMPANY FORM 10-Q
QUARTERLY REPORT FOR THE PERIOD ENDED SEPTEMBER 30,
1999 AND IS QUALIFIED IN ITS ENTIRETY BY REFERENCE TO
SUCH FINANCIAL STATEMENTS.
</LEGEND>
<MULTIPLIER> 1,000,000
<S> <C>
<PERIOD-TYPE> 9-MOS
<FISCAL-YEAR-END> DEC-31-1999
<PERIOD-END> SEP-30-1999
<CASH> 3
<SECURITIES> 0
<RECEIVABLES> 182
<ALLOWANCES> 0
<INVENTORY> 28
<CURRENT-ASSETS> 241
<PP&E> 3,467
<DEPRECIATION> 2,184
<TOTAL-ASSETS> 1,694
<CURRENT-LIABILITIES> 200
<BONDS> 498
0
0
<COMMON> 0
<OTHER-SE> 726
<TOTAL-LIABILITY-AND-EQUITY> 1,694
<SALES> 0
<TOTAL-REVENUES> 492
<CGS> 0
<TOTAL-COSTS> 269
<OTHER-EXPENSES> 0
<LOSS-PROVISION> 0
<INTEREST-EXPENSE> 35
<INCOME-PRETAX> 188
<INCOME-TAX> 69
<INCOME-CONTINUING> 119
<DISCONTINUED> 0
<EXTRAORDINARY> 0
<CHANGES> 0
<NET-INCOME> 119
<EPS-BASIC> 0
<EPS-DILUTED> 0
</TABLE>
