UNITED STATES OF AMERICA
Before the
SECURITIES AND EXCHANGE COMMISSION
- --------------------------------------------
In the Matter of
NATIONAL FUEL GAS COMPANY SECOND
NATIONAL FUEL GAS DISTRIBUTION CORPORATION CERTIFICATE
NATIONAL FUEL GAS SUPPLY CORPORATION PURSUANT TO
SENECA RESOURCES CORPORATION RULE 24
UTILITY CONSTRUCTORS, INC.
HIGHLAND LAND & MINERALS, INC.
LEIDY HUB, INC.
DATA-TRACK ACCOUNT SERVICES, INC.
NATIONAL FUEL RESOURCES, INC.
HORIZON ENERGY DEVELOPMENT, INC.
SENECA INDEPENDENCE PIPELINE COMPANY
NIAGARA INDEPENDENCE MARKETING COMPANY
UPSTATE ENERGY INC., F/K/A NIAGARA ENERGY TRADING INC.
File No. 70-9153
(Public Utility Holding Company Act of 1935)
- --------------------------------------------
THIS IS TO CERTIFY, pursuant to Rule 24, that certain transactions
proposed by National Fuel Gas Company ("National"), and its subsidiaries:
National Fuel Gas Distribution Corporation ("Distribution Corporation"),
National Fuel Gas Supply Corporation ("Supply Corporation"), Seneca Resources
Corporation ("Seneca"), Utility Constructors, Inc. ("UCI"), Highland Land &
Minerals, Inc. ("Highland"), Leidy Hub, Inc. ("Leidy"), Data-Track Account
Services, Inc. ("Data-Track"), National Fuel Resources, Inc. ("NFR"), Horizon
Energy Development, Inc. ("Horizon Energy"), Seneca Independence Pipeline
Company ("SIP"), Niagara Independence Marketing Company ("NIM"), and Upstate
Energy Inc., formerly known as Niagara Energy Trading Inc. ("Upstate")
(collectively, the "Subsidiaries"), in their Application-Declaration on Form
U-1, as amended, ("Application-Declaration") in SEC File No. 70-9153, have been
carried out in accordance with the terms and conditions, and for the purposes as
represented by said Application-Declaration, and the Order of the Securities and
Exchange Commission ("Commission") (HCAR No. 35-26847 dated March 20, 1998) with
respect thereto.
<PAGE>
1. EXTERNAL FINANCING BY NFG
-------------------------
a. Short-term Debt
---------------
BORROWING BY NATIONAL
- ---------------------
National borrowed funds to be used for its own corporate
purposes by issuing commercial paper and/or short-term notes (in all cases
having maturities of no more than 270 days) to banks or other financial
institutions during the quarter ended June 30, 1998 ("Quarter"):
--------------------------------------------------------------
Maximum Level Minimum Level
At Beginning At End of Such Short- of Such Short-
of Quarter of Quarter term Debt term Debt
------------ ---------- -------------- --------------
$35,000,000 $35,000,000 $35,000,000 $35,000,000
b. Long-Term Securities
--------------------
(1) Long-Term Debt Securities; Preferred Stock
During the Quarter, National sold long-term debt securities (i.e. debt
with maturities in excess of 270 days) on one occasion. On May 20, 1998,
National sold $200,000,000 principal amount of medium term notes ("MTNs"),
through underwriters. These MTNs were issued on May 26, 1998, and mature on May
27, 2008. They have a coupon of 6.303%.
(2) Stock Issuance Plans
During the Quarter, National issued the following shares of common
stock through the following plans ("Stock Issuance Plans"):
<PAGE>
Number of
Shares
Exchanged
as
Consideration
For Share
Name of Plan Shares Issued Issuances
------------ ------------- -------------
Customer Stock 9,334 NA
Purchase Plan
Dividend Reinvestment
and Stock Purchase Plan 28,796 NA
Tax Deferred Savings
Plans [401(k)] 22,194 NA
Retainer Policy for
Outside Directors 700 NA
1997 Award & Option Plan 0 0
1993 Award and Option Plan 28,676 170
1984 Stock Plan 4,826 0
1983 Incentive Stock
Option Plan 3,000 0
Total Number of
Shares Issued/Exchanged 97,526 170
Net New Shares 97,356
Aggregate Consideration received upon issuance of 36,332 shares: $3,902,674.92.
The purpose of National's Customer Stock Purchase Plan and its
Dividend Reinvestment and Stock Purchase Plan is to promote the long-term
ownership of National's common stock by allowing for the purchase thereof
directly from National, through cash purchases and through reinvestment of cash
dividends.
<PAGE>
The purpose of National's two Tax-Deferred Savings Plans is to
encourage employees of National and of its Subsidiaries to provide for their
retirement needs by providing opportunities for long-term capital accumulation,
to promote ownership of National's common stock among employees, to provide an
attractive employee benefit, and to keep National's employee benefit program
competitive with programs offered by other corporations.
The purpose of National's Retainer Policy for Outside Directors is to
pay outside directors a portion of their annual retainer in common stock of
National. This promotes the long-term ownership of National's common stock by
outside directors.
National adopted its four award and option plans in order to attract,
retain and motivate key employees of outstanding ability. These plans were
intended to provide an incentive to key employees to maximize the long-range
profits, revenues, and financial integrity of National by increasing the
personal stake of those employees in the continued success and growth of
National, and by providing significant incentives to their continuation of
employment at National and its Subsidiaries.
(3) Compliance With Parameters Concerning Long-Term Securities
During the Quarter, all long-term debt of National had bond ratings of
"investment grade", and National's common equity (as reflected in its Form 10-Q)
did not fall below 30% of National's consolidated capitalization.
c. Hedging Transactions
--------------------
During the Quarter, National did not enter into any hedges or other
derivative transactions either pursuant to a Hedge Program or an Anticipatory
Hedge Program.
d. Other Securities
----------------
During the Quarter, National did not issue other types of securities
("Other Securities").
<PAGE>
2. MONEY POOL
----------
During the Quarter, National coordinated the borrowing
requirements of Subsidiaries through the system money pool ("Money Pool"). Money
Pool activities included:
a. National sold commercial paper during the Quarter, through Merrill
Lynch Money Markets, Inc. and/or Chase Securities, Inc. The proceeds were loaned
by National to certain Subsidiaries that borrowed through the Money Pool during
the Quarter.
Commercial Paper Outstanding
------------------------------------------------------------------
Maximum Amount Minimum Amount
At Beginning At End Outstanding Outstanding
of Quarter of Quarter During Quarter During Quarter
------------ ---------- -------------- --------------
$130,000,000 $93,000,000 $130,000,000 $70,000,000
b. National issued short-term notes to banks or other financial
institutions during the Quarter. The proceeds thereof were loaned by National to
certain Subsidiaries that borrowed through the Money Pool during the Quarter.
National's External Bank/Financial Institution Borrowings
Outstanding (Money Pool)
------------------------------------------------------------------
Maximum Amount Minimum Amount
At Beginning At End Outstanding Outstanding
of Quarter of Quarter During Quarter During Quarter
------------ ---------- -------------- --------------
$230,500,000 $108,900,000 $246,000,000 $57,900,000
c. The maximum aggregate amount of external short-term debt
borrowed by National (for its own use and for the Money Pool) at any time during
the Quarter was $396,900,000, and the maximum aggregate amount that National and
its Subsidiaries lent to other Subsidiaries participating in the Money Pool at
any time during the Quarter was $426,000,000.
d. The following table lists cash balances that National and
certain Subsidiaries (i.e., Subsidiaries with surplus funds) loaned to other
Subsidiaries that borrowed through the Money Pool during the Quarter:
<PAGE>
Cash Balances Loaned Through the Money Pool
----------------------------------------------------
At Beginning At End
of Quarter of Quarter Maximum Minimum
------------ ---------- ------- -------
National $14,300,000 $17,900,000 $34,700,000 $14,300,000
Distribution 0 0 41,200,000 0
Supply 0 0 0 0
Seneca 8,100,000 8,900,000 10,000,000 7,300,000
UCI 900,000 700,000 900,000 700,000
Highland 0 300,000 1,000,000 0
Leidy 700,000 700,000 700,000 0
Data-Track 500,000 600,000 600,000 500,000
NFR 2,800,000 800,000 5,100,000 0
Horizon Energy 0 300,000 5,400,000 0
SIP 0 0 0 0
NIM 0 0 0 0
Upstate 0 0 0 0
e. The following table lists cash balances that certain
Subsidiaries borrowed through the Money Pool during the Quarter. National does
not borrow from its Subsidiaries through the Money Pool or otherwise.
Borrowings from the Money Pool
-------------------------------------------------------
At Beginning At End Maximum Minimum
of Quarter of Quarter Borrowed Borrowed
------------ ---------- -------- --------
Distribution $ 27,900,000 $ 4,700,000 $ 27,900,000 $ 0
Supply 22,600,000 23,200,000 34,200,000 8,500,000
Seneca 224,200,000 177,400,000 281,300,000 153,700,000
UCI 0 0 0 0
Highland 500,000 0 500,000 0
Leidy 0 0 0 0
Data-Track 0 0 0 0
NFR 0 0 1,900,000 0
Horizon Energy 72,300,000 0 74,600,000 0
SIP 4,000,000 5,200,000 5,200,000 4,000,000
NIM 0 0 0 0
Upstate 500,000 200,000 500,000 200,000
3. USE OF PROCEEDS
---------------
National has used the proceeds of the aforementioned issuance's of
short-term debt and long-term securities, and the borrowing Subsidiaries have
used the proceeds of their Money Pool and long-term borrowings, for
acquisitions, capital expenditures, working capital needs, for the retirement or
redemption of securities, or for other general corporate purposes.
<PAGE>
4. EXTERNAL FINANCING BY DISTRIBUTION
----------------------------------
During the Quarter, Distribution did not engage in external financing.
5. FINANCING ENTITIES
------------------
During the Quarter, National and its nonutility Subsidiaries did not
organize new corporations, trusts, partnerships or other entities created for
the purpose of facilitating financing.
6. GUARANTEES BY NATIONAL
----------------------
During the Quarter, National made guarantees on behalf of its
Subsidiaries in the aggregate amount of $31,300,000. The maximum amount of
guarantees or credit support that National had outstanding to its Subsidiaries
at any time during the quarter was $106,293,233.
All guarantees relate to gas transportation, purchases or sales, or
other agreements relating to the Subsidiaries' existing businesses.
7. ACQUISITIONS OF EWG'S, FUCO'S AND RULE 58 COMPANIES
---------------------------------------------------
On May 29, 1998, National filed a Form U-57 with the Commission,
through which it designated the following four indirect subsidiaries (all of
which are incorporated and doing business in the Czech Republic) as "foreign
utility companies":
Severoceske Teplarny, a.s. ("SCT")
Prvni severozapadni teplarenska, a.s. ("PSZT")
Teplarna Liberec, a.s.
Teplarna Kromeriz, a.s.
During the Quarter, neither National nor any of its Subsidiaries made
any investments in entities that had been designated as electric wholesale
generators (EWG's) or foreign utility companies (FUCO's) at such time, and did
not make any investments in energy-related companies and gas-related companies
under Rule 58, except as follows: On June 11, 1998, Horizon withdrew $3,900,000
of its surplus funds that it had deposited in the Money Pool and advanced such
<PAGE>
amount to Horizon Energy Development B.V. ("B.V."). B.V. used a combination of
its own funds and most of the aforementioned advance to purchase 99,884 shares
of PSZT, between May 29 and June 15, 1998, for a total consideration equivalent
to $3,748,348.
On June 27, 1998, B.V. paid the equivalent of $17,298 to purchase 890
shares of SCT.
The aggregate investment of National and its subsidiaries in EWG'S and
FUCO's does not exceed the limits set forth in the Commission's Rule 53.
SIGNATURES
----------
Pursuant to the requirements of the Public Utility Holding Company Act
of 1935, the undersigned companies have duly caused this Second Certificate
Pursuant to Rule 24 to be signed on their behalf by the undersigned thereunto
duly authorized.
NATIONAL FUEL GAS COMPANY
By /s/ Philip C. Ackerman
----------------------------
Philip C. Ackerman
Senior Vice President
NATIONAL FUEL GAS DISTRIBUTION
CORPORATION
By /s/ Philip C. Ackerman
----------------------------
Philip C. Ackerman
President
SENECA RESOURCES CORPORATION
By /s/ G. T. Wehrlin
----------------------------
G. T. Wehrlin
Controller
NATIONAL FUEL GAS SUPPLY CORPORATION
By /s/ Richard Hare
----------------------------
Richard Hare
President
<PAGE>
NATIONAL FUEL RESOURCES, INC.
By /s/ Robert J. Kreppel
----------------------------
Robert J. Kreppel
President
UTILITY CONSTRUCTORS, INC.
By /s/ Philip C. Ackerman
----------------------------
Philip C. Ackerman
President
HORIZON ENERGY DEVELOPMENT INC.,
By /s/ Philip C. Ackerman
----------------------------
Philip C. Ackerman
President
HIGHLAND LAND & MINERALS, INC.
By /s/ Philip C. Ackerman
----------------------------
Philip C. Ackerman
President
DATA-TRACK ACCOUNT SERVICES, INC.
By /s/ Philip C. Ackerman
----------------------------
Philip C. Ackerman
President
LEIDY HUB, INC.
By /s/ G. T. Wehrlin
----------------------------
G. T. Wehrlin
Secretary/Treasurer
SENECA INDEPENDENCE PIPELINE COMPANY
By /s/ Richard Hare
----------------------------
Richard Hare
President
<PAGE>
NIAGARA INDEPENDENCE MARKETING COMPANY
By /s/ C. H. Friedrich
----------------------------
C. H. Friedrich
Treasurer
UPSTATE ENERGY INC.
By /s/ C. H. Friedrich
----------------------------
C. H Friedrich
Treasurer
Dated: August 28, 1998
