`2 UNITED STATES SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
Form 10-Q
/X/ QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE
SECURITIES EXCHANGE ACT OF 1934
For the quarterly period ended September 30, 1994
/ / 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 1-7584
TRANSCONTINENTAL GAS PIPE LINE CORPORATION
(Exact name of registrant as specified in its charter)
DELAWARE 74-1079400
(State or other jurisdiction (I.R.S. Employer
of incorporation or organization) Identification No.)
2800 Post Oak Boulevard
P. O. Box 1396
Houston, Texas 77251
(Address of principal executive offices) (Zip Code)
Registrant's telephone number, including area code: (713) 439-2000)
None
(Former name, former address and former fiscal year,
if changed since last report)
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 report), and (2) has been subject
to such filing requirements for the past 90 days. Yes /X/ No/ /
The number of shares of Common Stock, par value $1.00 per share,
outstanding as of September 30, 1994 was 100.
<PAGE>
PART I - FINANCIAL INFORMATION
Item 1. Financial Statements.
Company or Group of Companies for Which Report is Filed:
Transcontinental Gas Pipe Line Corporation (TGPL)
The condensed financial statements included herein have been prepared
by TGPL, without audit, pursuant to the rules and regulations of the
Securities and Exchange Commission. Certain information and footnote
disclosures normally included in financial statements prepared in
accordance with generally accepted accounting principles have been
condensed or omitted pursuant to such rules and regulations. In the
opinion of TGPL's management, however, all adjustments, consisting only of
normal and recurring adjustments, necessary for a fair presentation of the
financial position as of the date and results of operations for the
periods included herein have been made and the disclosures contained
herein are adequate to make the information presented not misleading.
These condensed financial statements should be read in conjunction with
the financial statements, notes thereto and management's discussion
contained in Items 7 and 8 of TGPL's 1993 Annual Report on Form 10-K and
included in TGPL's 1994 First and Second Quarter Reports on Form 10-Q.
<PAGE>
TRANSCONTINENTAL GAS PIPE LINE CORPORATION
CONDENSED BALANCE SHEET
(Thousands of Dollars)
<TABLE>
<CAPTION>
September 30, December 31,
1994 1993
_____________ _____________
ASSETS
<S> <C> <C>
Current Assets:
Cash . . . . . . . . . . . . . . . . . . . . . . . . $ 1,775 $ 1,094
Deposits . . . . . . . . . . . . . . . . . . . . . . 7,983 7,348
Receivables:
Trade. . . . . . . . . . . . . . . . . . . . . . 26,146 53,924
Other. . . . . . . . . . . . . . . . . . . . . . 27,740 39,257
Advances to Transco . . . . . . . . . . . . . . . . 114,241 133,304
Transportation and exchange gas receivable - others. 22,000 22,000
Inventories. . . . . . . . . . . . . . . . . . . . . 65,713 79,547
Deferred income tax benefits . . . . . . . . . . . . 12,422 -
Other. . . . . . . . . . . . . . . . . . . . . . . . 24,140 23,739
_____________ _____________
Total current assets . . . . . . . . . . . . . . 302,160 360,213
_____________ _____________
Property, Plant and Equipment, at cost:
Natural gas transmission plant . . . . . . . . . . . 4,285,531 4,223,501
Less - Accumulated depreciation and amortization . . 2,573,084 2,480,332
_____________ _____________
Property, plant and equipment, net . . . . . . . 1,712,447 1,743,169
_____________ _____________
Other Assets:
Transportation and exchange gas receivable:
Affiliates . . . . . . . . . . . . . . . . . . . 17,339 32,155
Others . . . . . . . . . . . . . . . . . . . . . 89,314 92,960
Other. . . . . . . . . . . . . . . . . . . . . . . . 83,220 75,728
_____________ _____________
Total other assets . . . . . . . . . . . . . . . 189,873 200,843
_____________ _____________
$ 2,204,480 $ 2,304,225
_____________ _____________
_____________ _____________
The accompanying condensed notes are an integral part of these condensed financial statements.
</TABLE>
<PAGE>
TRANSCONTINENTAL GAS PIPE LINE CORPORATION
CONDENSED BALANCE SHEET
(Thousands of Dollars)
<TABLE>
<CAPTION>
September 30, December 31,
1994 1993
_____________ _____________
LIABILITIES AND STOCKHOLDERS' EQUITY
<S> <C> <C>
Current Liabilities:
Payables . . . . . . . . . . . . . . . . . . . . . . $ 113,220 $ 199,635
Transportation and exchange gas payable - others . . 12,000 12,000
Accrued liabilities. . . . . . . . . . . . . . . . . 87,287 73,145
Reserve for legal and regulatory issues. . . . . . . 1,466 5,240
Reserve for rate refunds . . . . . . . . . . . . . . 72,362 141,270
Deferred income taxes. . . . . . . . . . . . . . . . - 1,452
Other. . . . . . . . . . . . . . . . . . . . . . . . 12,423 16,162
_____________ _____________
Total current liabilities. . . . . . . . . . . . 298,758 448,904
_____________ _____________
Long-Term Debt, less current maturities . . . . . . . . . 644,129 643,799
_____________ _____________
Other Liabilities and Deferred Credits:
Income taxes . . . . . . . . . . . . . . . . . . . . 283,913 279,303
Income taxes refundable to customers . . . . . . . . 11,373 19,148
Transportation and exchange gas payable:
Affiliates . . . . . . . . . . . . . . . . . . . 1,890 726
Others . . . . . . . . . . . . . . . . . . . . . 44,268 64,976
Other. . . . . . . . . . . . . . . . . . . . . . . . 63,957 64,888
_____________ _____________
Total other liabilities and deferred credits . . 405,401 429,041
_____________ _____________
Commitments and contingencies . . . . . . . . . . . . . . - -
Cumulative Redeemable Preferred Stock, without par value:
Authorized 10,000,000 shares:
Stated value $100 per share, issued and outstanding
722,444 shares and 757,427 shares in 1994 and 1993,
respectively . . . . . . . . . . . . . . . . . . 72,244 75,743
Less - Issue expense . . . . . . . . . . . . . . 503 552
_____________ _____________
Total preferred stock. . . . . . . . . . . . . . 71,741 75,191
_____________ _____________
Cumulative Redeemable Second Preferred Stock,
without par value:
Authorized 2,000,000 shares: none issued or
outstanding. . . . . . . . . . . . . . . . . . . - -
_____________ _____________
Common Stockholder's Equity:
Common Stock $1.00 par value:
100 shares authorized, issued and outstanding. . - -
Premium on capital stock and other paid-in capital . 285,279 283,037
Retained earnings. . . . . . . . . . . . . . . . . . 499,172 424,253
_____________ _____________
Total common stockholder's equity. . . . . . . . 784,451 707,290
_____________ _____________
$ 2,204,480 $ 2,304,225
_____________ _____________
_____________ _____________
The accompanying condensed notes are an integral part of these condensed financial statements.<PAGE>
</TABLE>
TRANSCONTINENTAL GAS PIPE LINE CORPORATION
CONDENSED STATEMENT OF INCOME
(Thousands of Dollars)
<TABLE>
<CAPTION>
Three Months Ended
September 30,
______________________________
1994 1993
_____________ _____________
<S> <C> <C>
Operating Revenues:
Natural gas sales . . . . . . . . . . . . . . . . . . . $ 164,881 $ 154,579
Natural gas transportation . . . . . . . . . . . . . . 164,170 154,973
Natural gas storage . . . . . . . . . . . . . . . . . . 37,980 37,565
Other . . . . . . . . . . . . . . . . . . . . . . . . . 1,454 1,442
_____________ _____________
Total operating revenues . . . . . . . . . . . . . . . 368,485 348,559
_____________ _____________
Operating Costs and Expenses:
Cost of natural gas sales . . . . . . . . . . . . . . . 164,873 155,123
Cost of natural gas transportation. . . . . . . . . . . 28,253 22,979
Operation and maintenance . . . . . . . . . . . . . . . 48,471 48,048
Administrative and general. . . . . . . . . . . . . . . 36,370 36,752
Depreciation and amortization . . . . . . . . . . . . . 30,203 29,897
Taxes - other than income taxes . . . . . . . . . . . . 8,818 8,033
Write-off of note receivable. . . . . . . . . . . . . . - 20,125
_____________ _____________
Total operating costs and expenses . . . . . . . . . . 316,988 320,957
_____________ _____________
Operating Income. . . . . . . . . . . . . . . . . . . . . . 51,497 27,602
_____________ _____________
Other (Income) and Other Deductions:
Interest expense. . . . . . . . . . . . . . . . . . . . 14,832 15,235
Interest income - affiliates . . . . . . . . . . . . . ( 1,626) ( 969)
- other. . . . . . . . . . . . . . . . ( 165) ( 1)
Allowance for equity and borrowed funds used during
construction (AFUDC) . . . . . . . . . . . . . . . . . ( 1,122) ( 3,086)
Miscellaneous other (income) and deductions, net. . . . 1,966 2,243
_____________ _____________
Total other (income) and other deductions . . . . . . 13,885 13,422
_____________ _____________
Income Before Income Taxes. . . . . . . . . . . . . . . . . 37,612 14,180
Provision for Income Taxes. . . . . . . . . . . . . . . . . 13,068 5,380
_____________ _____________
Net Income. . . . . . . . . . . . . . . . . . . . . . . . . 24,544 8,800
Dividends on Preferred Stock. . . . . . . . . . . . . . . . 1,551 2,091
_____________ _____________
Common Stock Equity in Net Income . . . . . . . . . . . . . $ 22,993 $ 6,709
_____________ _____________
_____________ _____________
The accompanying condensed notes are an integral part of these condensed financial statements.
</TABLE>
<PAGE>
TRANSCONTINENTAL GAS PIPE LINE CORPORATION
CONDENSED STATEMENT OF INCOME
(Thousands of Dollars)
<TABLE>
<CAPTION>
Nine Months Ended
September 30,
______________________________
1994 1993
_____________ _____________
<S> <C> <C>
Operating Revenues:
Natural gas sales . . . . . . . . . . . . . . . . . . . $ 586,667 $ 463,259
Natural gas transportation . . . . . . . . . . . . . . 496,692 512,987
Natural gas storage . . . . . . . . . . . . . . . . . . 110,986 111,300
Other . . . . . . . . . . . . . . . . . . . . . . . . . 4,716 4,259
_____________ _____________
Total operating revenues . . . . . . . . . . . . . . . 1,199,061 1,091,805
_____________ _____________
Operating Costs and Expenses:
Cost of natural gas sales . . . . . . . . . . . . . . . 586,809 462,353
Cost of natural gas transportation. . . . . . . . . . . 87,407 108,727
Operation and maintenance . . . . . . . . . . . . . . . 132,186 132,697
Administrative and general. . . . . . . . . . . . . . . 110,327 113,309
Depreciation and amortization . . . . . . . . . . . . . 90,490 89,461
Taxes - other than income taxes . . . . . . . . . . . . 26,121 24,954
Write-off of note receivable. . . . . . . . . . . . . . - 20,125
_____________ _____________
Total operating costs and expenses . . . . . . . . . . 1,033,340 951,626
_____________ _____________
Operating Income. . . . . . . . . . . . . . . . . . . . . . 165,721 140,179
_____________ _____________
Other (Income) and Other Deductions:
Interest expense - affiliates . . . . . . . . . . . . . - 221
- other. . . . . . . . . . . . . . . . 45,161 46,664
Interest income - affiliates . . . . . . . . . . . . . ( 4,297) ( 1,721)
- other. . . . . . . . . . . . . . . . ( 496) ( 1,889)
Allowance for equity and borrowed funds used during
construction (AFUDC) . . . . . . . . . . . . . . . . . ( 2,757) ( 3,856)
Miscellaneous other (income) and deductions, net. . . . 5,504 5,715
_____________ _____________
Total other (income) and other deductions . . . . . . 43,115 45,134
_____________ _____________
Income Before Income Taxes. . . . . . . . . . . . . . . . . 122,606 95,045
Provision for Income Taxes. . . . . . . . . . . . . . . . . 42,965 33,177
_____________ _____________
Net Income. . . . . . . . . . . . . . . . . . . . . . . . . 79,641 61,868
Dividends on Preferred Stock. . . . . . . . . . . . . . . . 4,722 6,343
_____________ _____________
Common Stock Equity in Net Income . . . . . . . . . . . . . $ 74,919 $ 55,525
_____________ _____________
_____________ _____________
The accompanying condensed notes are an integral part of these condensed financial statements.
</TABLE>
<PAGE>
TRANSCONTINENTAL GAS PIPE LINE CORPORATION
CONDENSED STATEMENT OF CASH FLOWS
(Thousands of Dollars)
<TABLE>
<CAPTION>
Nine Months Ended
September 30,
______________________________
1994 1993
_____________ _____________
<S> <C> <C>
Cash flows from operating activities:
Net income. . . . . . . . . . . . . . . . . . . . . . . $ 79,641 $ 61,868
Adjustments to reconcile net income to net cash
provided by (used in) operating activities:
Depreciation and amortization. . . . . . . . . . . . 100,669 99,995
Deferred income taxes. . . . . . . . . . . . . . . . ( 18,042) ( 42,317)
Tran$tock compensation expense . . . . . . . . . . . 2,291 2,177
Write-off of note receivable . . . . . . . . . . . . - 20,125
Allowance for equity funds used during
construction (AFUDC). . . . . . . . . . . . . . . ( 2,168) ( 2,028)
_____________ _____________
162,391 139,820
Nonrecoverable producer settlements. . . . . . . . . - ( 26,300)
Changes in operating assets and liabilities:
Deposits . . . . . . . . . . . . . . . . . . . . . . ( 635) ( 1,354)
Receivables. . . . . . . . . . . . . . . . . . . . . 39,295 24,701
Transportation and exchange gas receivable . . . . . 18,462 26,953
Inventories. . . . . . . . . . . . . . . . . . . . . 13,834 ( 419)
Payables . . . . . . . . . . . . . . . . . . . . . . ( 82,602) ( 22,314)
Transportation and exchange gas payable. . . . . . . ( 19,544) ( 37,886)
Accrued liabilities. . . . . . . . . . . . . . . . . 12,799 7,619
Reserve for rate refunds . . . . . . . . . . . . . . ( 68,908) 73,796
Other, net. . . . . . . . . . . . . . . . . . . . . . . ( 15,015) ( 4,282)
_____________ _____________
Net cash provided by operating activities . . . . 60,077 180,334
_____________ _____________
Cash flows from financing activities:
Retirement of long-term debt. . . . . . . . . . . . . . - ( 29,856)
Retirement of preferred stock . . . . . . . . . . . . . 3,499) ( 3,498)
Dividends on preferred stock. . . . . . . . . . . . . . ( 4,769) ( 6,392)
Other, net. . . . . . . . . . . . . . . . . . . . . . . - ( 2,161)
_____________ _____________
Net cash used in financing activities . . . . . . ( 8,268) ( 41,907)
_____________ _____________
Cash flows from investing activities:
Property, plant and equipment, net of equity AFUDC. . . ( 71,711) ( 67,078)
Recovery of producer settlements. . . . . . . . . . . . - 30,411
Advances to Transco . . . . . . . . . . . . . . . . . . ( 1,283,589) ( 903,398)
Retirement of advances to Transco . . . . . . . . . . . 1,302,652 794,305
Other, net. . . . . . . . . . . . . . . . . . . . . . . ( 1,520 8,261
_____________ _____________
Net cash used in investing activities . . . . . . ( 51,128) ( 137,499)
_____________ _____________
Net increase in cash and cash equivalents . . . . . . . . 681 928
Cash and cash equivalents at beginning of period. . . . . 1,094 1,259
_____________ ______________
Cash and cash equivalents at end of period. . . . . . . . $ 1,775 $ 2,187
_____________ ______________
_____________ ______________
Supplemental disclosures of cash flow information:
Cash paid (refunded) during the year for:
Interest (net of amount capitalized). . . . . . . . . $ 49,039 $ 45,154
Income taxes, net . . . . . . . . . . . . . . . . . . 14,290 73,059
The accompanying condensed notes are an integral part of these condensed financial statements.<PAGE>
</TABLE>
TRANSCONTINENTAL GAS PIPE LINE CORPORATION
NOTES TO CONDENSED FINANCIAL STATEMENTS
A. CORPORATE STRUCTURE AND CONTROL
Transcontinental Gas Pipe Line Corporation (TGPL) is a wholly-owned
subsidiary of Transco Gas Company (TGC). TGC is a wholly-owned subsidiary
of Transco Energy Company and, as used herein, the term Transco refers to
Transco Energy Company and its wholly-owned subsidiaries unless the
context otherwise requires.
The condensed financial statements have been prepared from the books and
records of TGPL without audit. Certain information and footnote
disclosures normally included in financial statements prepared in
accordance with generally accepted accounting principles have been
condensed or omitted. These condensed financial statements should be read
in conjunction with the financial statements and the notes thereto
included in TGPL's 1993 Annual Report on Form 10-K and included in the
Form 10-Q for the quarters ended March 31, 1994 and June 30, 1994 (First
and Second Quarter Form 10-Q).
Certain reclassifications have been made in the 1993 financial statements
to conform with the 1994 presentation.
Prior to 1993, TGPL was responsible for all jurisdictional gas sales to
its pipeline customers. After Federal Energy Regulatory Commission (FERC)
approval in January 1993, Transco implemented a plan to consolidate its
gas marketing businesses under the common management of Transco Gas
Marketing Company (TGMC) to more closely coordinate gas marketing
operations to improve efficiencies, reduce costs and improve
profitability. In January 1993, TGMC, through an agency agreement, began
to manage all jurisdictional merchant sales of TGPL. Under this agency
agreement, TGMC bills TGPL for the cost of managing TGPL's merchant gas
sales service and receives all margins associated with such business.
Consequently, TGPL's merchant gas sales service had no impact on its
results of operations.
Pursuant to a settlement that TGPL has with its customers, TGPL has in
place a gas inventory charge (GIC) designed to allow TGPL to recover its
above-spot-market gas cost through March 31, 2001. Pursuant to this
settlement, in 1993 and early 1994, TGPL's agreements with its customers
were renegotiated by TGMC, as agent for TGPL. TGMC and TGPL believe that
the GIC agreed to with TGPL's customers will be adequate to enable
recovery of its above-spot-market gas costs.
B. REGULATORY MATTERS
There have been no new developments from those described in TGPL's 1993
Annual Report on Form 10-K and in its First and Second Quarter Form 10-Q
other than described below.
Rate Matters
____________
In the first nine months of 1994, TGPL made partial refunds of
approximately $123 million, including interest, under Docket No. RP92-137.
TGPL had previously provided a reserve for these refunds. TGPL has also
provided a reserve which it believes is adequate for any additional
refunds that may be required under Docket No. RP92-137. At September 30,
1994, these additional refunds, which are currently expected to be made
during the fourth quarter of 1994, are estimated to be approximately $52
million, including interest. Interest will continue to accrue until all
refunds are made.
On October 20, 1994, an Administrative Law Judge (ALJ) issued an initial
decision granting a motion filed by certain parties for summary
disposition with respect to the issue of the allocation of certain costs
to TGPL's merchant sales service. That issue, among others, was referred
to the hearing in Docket No. RP92-137 by the FERC's orders approving
TGPL's implementation of Order 636. TGPL had opposed the motion. In his
initial decision, the ALJ determined that there is no genuine issue of
material fact warranting a trial-type hearing on the issue. The ALJ's
decision directs TGPL to remove from its gathering function approximately
$5.6 million of indirect costs and to reassign this amount to its merchant
sales service. The ALJ's decision is subject to final approval by the
FERC. Briefs on exceptions to the ALJ's decision are due on or before
November 21, 1994. Any changes in TGPL's rates or services resulting from
this issue would have a prospective effect only. Although no assurances
can be given, TGPL believes that the final resolution of this cost
allocation issue will not have a material adverse effect on its financial
position or results of operations.
On October 26, 1994, the FERC issued a notice of a request for initiation
of a complaint proceeding in TGPL's Order 636 restructuring docket. The
notice states that Fina Natural Gas Company has filed a complaint
requesting that the FERC initiate a proceeding under Natural Gas Act of
1938 (NGA) section 5 to investigate the functionalization of TGPL's
production-area facilities. Fina asserts that some of TGPL's production-
area facilities have been misfunctionalized as transmission, and that
under recent gathering orders, those facilities should properly be
functionalized as gathering facilities. Responses to the notice are due
on or before November 28, 1994. If the FERC elects to initiate a
proceeding, any change in classification of the function of plant
facilities between transmission and gathering would be prospective only.
Although no assurances can be given, TGPL does not believe the final
outcome of this issue will have a material adverse effect on TGPL's
financial position or results of operations.
C. LEGAL PROCEEDINGS
There have been no new developments from those described in TGPL's 1993
Annual Report on Form 10-K or in its First and Second Quarter Form 10-Q
other than as described below.
Producer Contract Litigation
____________________________
As discussed in TGPL's 1993 Annual Report on Form 10-K, in TGPL's only
remaining proceeding involving take-or-pay and other producer contract
claims, a producer filed in United States District Court for the Southern
District of Texas (Federal District Court) claiming that it should have
received more favorable terms for settlement of its contract claims and
asserting federal antitrust claims. The Federal District Court issued an
order granting TGPL's motion for summary judgment, which was appealed by
the producer to the United States Court of Appeals for the Fifth Circuit
(Fifth Circuit Court). On July 1, 1994, the Fifth Circuit Court affirmed
the judgment of the Federal District Court dismissing the producer's
claims in all respects and on July 27, 1994, denied the producer's
petition for rehearing.
Dakota Gasification Litigation
______________________________
As discussed in TGPL's 1993 Annual Report on Form 10-K and in the First
and Second Quarter Form 10-Q, in October 1990, Dakota Gasification Company
(Dakota), the owner of the Great Plains Coal Gasification Plant, filed
suit in the United States District Court in North Dakota against TGPL and
three other pipeline companies alleging that TGPL and the other pipeline
companies had not complied with their respective obligations under certain
gas purchase and gas transportation contracts. On March 30, 1994, the
parties executed definitive agreements which would settle the litigation
subject to final nonappealable regulatory approvals. The settlement is
also subject to a FERC ruling that TGPL's existing authority to recover in
rates certain costs related to the purchase and transportation of gas
produced by Dakota will pertain to gas purchase and transportation costs
TGPL will pay Dakota under the terms of the settlement. On June 23, 1994,
TGPL filed a petition with the FERC seeking approval of the settlement
provisions and the contract amendment including pass-through of all costs
to TGPL's customers. On October 18, 1994, the FERC issued an order
consolidating TGPL's petition with the petitions filed by the other three
pipeline companies and setting the matter for hearing before an ALJ. The
hearing will be limited to the issues of (i) whether the revised
agreements are prudent, and (ii) the level of Dakota costs to be recovered
in the proceeding. The FERC directed the ALJ to convene a prehearing
conference within 20 days of October 18, 1994 and directed that the ALJ
issue an initial decision by December 31, 1995, in order that final FERC
approval may take place by December 31, 1996. On November 7, 1994, the
ALJ convened a prehearing conference and adopted a procedural schedule to
govern the hearing. Under that procedural schedule, the hearing is
scheduled to commence on June 20, 1995. In the event that the necessary
regulatory approvals are not obtained, TGPL, Transco and Transco Coal Gas
Company intend to vigorously defend the suit. Although no assurances can
be given, TGPL does not believe that the ultimate resolution of this
litigation will have a material adverse effect on its financial position
or results of operations.
Royalty Claims
______________
As discussed in TGPL's 1993 Annual Report on Form 10-K and in the First
and Second Quarter Form 10-Q, in connection with TGPL's renegotiations
with producers to resolve take-or-pay and other contract claims and to
amend gas purchase contracts, TGPL has entered into certain settlements
which may require the indemnification by TGPL of certain claims for
additional royalties which producers may be required to pay as a result of
such settlements. TGPL has been made aware of demands on producers for
additional royalties and such producers may receive other demands which
could result in claims against TGPL pursuant to the indemnification
provision in its settlement. Indemnification for royalties will depend
on, among other things, the specific lease provisions between the producer
and the lessor and the terms of the settlement between the producer and
TGPL.
All parties in the Duplantis lawsuit, including Transco Exploration
Company (TXC) and TXP Operating Company (TXPO), have reached a settlement
in principle. Under the terms of the settlement, TXC and TXPO will pay,
in total, approximately $2.5 million, which represents TXC and TXPO's
portion of an $8.4 million settlement to be paid by all of the defendant-
producers. The settlement also releases TGPL from any liability to the
plaintiffs and the defendant-producers. The settlement is expected to
close on November 30, 1994.
In the Marathon lawsuit, trial has been set for July 31, 1995.
In the Vaquillas Ranch lawsuit, a motion by the plaintiffs to extend the
December 2, 1994 trial date has been granted. However, a new trial date
has not been set. In addition, the U. S. District Court judge recently
recommended that the case be remanded to state court. Texaco and TGPL
have moved for reconsideration of this ruling and a determination is
expected soon.
On July 5, 1994, the plaintiffs in the Vaquillas Ranch lawsuit filed a
separate lawsuit in the 111th Judicial District Court of Webb County,
Texas (Vaquillas Ranch Company, Ltd., et. al. vs. Transcontinental Gas
Pipe Line Corporation and Transco Gas Supply Company) in which the
plaintiffs contend that TGPL tortiously interfered with the plaintiffs'
lease by inducing the producer to enter into certain agreements that
reduced TGPL's take-or-pay obligations and the price TGPL was obligated to
pay for the gas it purchased. The plaintiffs are requesting an
unspecified amount of actual and punitive damages for the alleged tortious
interference. No trial date has been set.
In the Billings lawsuit, the U. S. District Court judge authorized the
plaintiffs to amend their complaint to exclude the parent of the producer-
defendant as a defendant and remanded the case to state court. The
producer-defendant has filed a motion to reconsider this order and TGPL
joined this motion. No trial date has been set.
Each of these lawsuits is in the discovery process. TGPL has denied
liability in the litigation and believes that it has meritorious defenses
to the claims which it intends to pursue vigorously. TGPL believes at
this time that its exposure, if any, under the provisions of its
settlements with the producers is substantially less than the amounts
claimed by the royalty owners.
Although no assurances can be given, TGPL believes that the ultimate
resolution of these royalty claims and litigation will not have a material
adverse effect on TGPL's financial position or results of operations.
D. ENVIRONMENTAL MATTERS
There have been no new developments from those described in TGPL's 1993
Annual Report on Form 10-K other than as described below.
TGPL is subject to the Federal Clean Air Act and the Federal Clean Air Act
Amendments of 1990 (1990 Amendments), which added significantly to the
existing requirements established by the Federal Clean Air Act. The 1990
Amendments required that the Environmental Protection Agency (EPA) issue
new regulations, mainly related to mobile sources, air toxics, ozone non-
attainment areas and acid rain. TGPL is installing new emission control
devices where required and conducting certain emission testing programs to
comply with the Federal Clean Air Act standards and the 1990 Amendments.
In addition, pursuant to the 1990 Amendments, the EPA has issued
regulations under which states must implement new air pollution controls
to achieve attainment of national ambient air quality standards in areas
where they are not currently achieved. TGPL has compressor stations in
ozone non-attainment areas that could require substantial air pollution
reduction expenditures, depending on the requirements imposed. While it
will not be possible to estimate the ultimate costs of compliance with
these new requirements until states approve TGPL's proposed plans for
modifications, TGPL expects that significant capital spending will be
required to modify TGPL's facilities, particularly the compressor engines
along TGPL's pipeline system. Additions to facilities for compliance with
currently known Federal Clean Air Act standards and the 1990 Amendments
are expected to cost in the range of $50 million to $60 million over the
next five years and will be recorded as additions to property, plant and
equipment as the facilities are added. Such costs, however, may increase,
depending on the requirements imposed.
<PAGE>
E. FINANCING
Restrictive Covenants
_____________________
As described in TGPL's 1993 Annual Report on Form 10-K and in its First
and Second Quarter Form 10-Q, certain of Transco's credit facilities and
indentures prohibit TGPL from, among other things, placing a lien on any
of the property or assets owned by TGPL, incurring or guaranteeing any
additional indebtedness, except for indebtedness incurred to refinance
existing indebtedness, issuing preferred stock or advancing cash to
affiliates other than Transco. Further, certain of Transco's credit
facilities and indentures contain restrictive covenants which could limit
Transco's ability to make additional borrowings and, therefore, under
certain circumstances, its ability to make or repay advances to TGPL or
make capital contributions to TGPL.
Additionally, certain of TGPL's debt instruments restrict the amount of
dividends distributable. As of September 30, 1994, approximately $351
million of TGPL's retained earnings of $499 million was available for
distribution.<PAGE>
Item 2. Management's Discussion and Analysis of Transcontinental Gas Pipe
Line Corporation's (TGPL) Financial Condition and Results of
Operations.
The following discussion should be read in conjunction with the financial
statements, notes and management's discussion contained in Items 7 and 8
of TGPL's 1993 Annual Report on Form 10-K and in its First and Second
Quarter Form 10-Q and with the condensed financial statements and notes
contained in this report.
INTRODUCTION
TGPL is an indirect wholly-owned subsidiary of Transco and as such may be
affected by the financial position and performance of Transco and its
subsidiaries other than TGPL.
Over the past two years, Transco has made significant progress in
improving its results of operations and financial flexibility. Transco
remains committed to deleveraging its balance sheet, further eliminating
or mitigating the potentially adverse impact from the resolution of
remaining litigation and contingencies and further improving financial
results.
CAPITAL RESOURCES AND LIQUIDITY
Financing
_________
Certain of Transco's credit facilities and indentures prohibit TGPL from,
among other things, placing a lien on any property or assets owned by
TGPL, incurring or guaranteeing any additional indebtedness (except for
indebtedness incurred to refinance existing indebtedness), issuing
preferred stock or advancing cash to affiliates other than Transco.
Further, certain of Transco's credit facilities and indentures contain
restrictive covenants which could limit Transco's ability to make
additional borrowings and, therefore, under certain circumstances,
Transco's ability to repay advances or make capital contributions to TGPL.
Additionally, certain of TGPL's debt instruments restrict the amount of
dividends distributable. As of September 30, 1994, approximately $351
million of TGPL's retained earnings of $499 million was available for
distribution.
In September 1993, TGPL entered into a new program to sell monthly trade
receivables to replace a similar program which expired. The new trade
receivables program, which expires in September 1995, provides for the
sale of up to $100 million of trade receivables without recourse. As of
December 31, 1993 and September 30, 1994, $100 million and $84 million,
respectively, in trade receivables were held by the investor.
Capitalization and Cash Flows
_____________________________
As shown in the following table, at September 30, 1994, the percentage of
total debt to total invested capital was 42.9%, compared to 45.1% at
December 31, 1993. Although total debt at September 30, 1994, remained
approximately the same as at December 31, 1993, net income during the
first nine months of 1994 had the effect of reducing the percentage of
total debt to total invested capital.<PAGE>
<TABLE>
<CAPTION>
September 30, December 31,
1994 1993
______________ _______________
(In millions)
<S> <C> <C>
Common Stockholder's Equity . . . . . . . . . . . . . . . . $ 784.5 $ 707.3
Preferred Stock . . . . . . . . . . . . . . . . . . . . . . 71.7 75.2
Long-term Debt, less Current Maturities . . . . . . . . . . 644.1 643.8
______________ _______________
Total Capitalization. . . . . . . . . . . . . . . . . . 1,500.3 1,426.3
Current Maturities of Long-term Debt. . . . . . . . . . . . - -
______________ _______________
Total Invested Capital. . . . . . . . . . . . . . . . . $ 1,500.3 $ 1,426.3
______________ _______________
______________ _______________
Long-term Debt, less Current Maturities as a Percentage of Total
Capitalization. . . . . . . . . . . . . . . . . . . . . 42.9% 45.1%
Common Stockholder's Equity as a Percentage of Total
Capitalization. . . . . . . . . . . . . . . . . . . . . 52.3% 49.6%
Total Debt as a Percentage of Total Invested Capital. . . . 42.9% 45.1%
</TABLE>
At September 30, 1994, TGPL had a working capital surplus of $3 million,
compared to a deficit of $89 million at December 31, 1993. The most
significant factor influencing the reduction in the working capital
deficit was payments made during the first nine months of 1994 for TGPL's
initial refunds under Docket No. RP92-137, as discussed in Note B of the
Notes to Condensed Financial Statements. The refunds were made from funds
generated by operating activities during the first nine months of 1994.
<TABLE>
<CAPTION>
Nine Months
Ended September 30,
__________________________
1994 1993
_________ __________
(In millions)
<S> <C> <C>
Cash Flows Provided by Operating Activities . . . . . . . . $ 60.1 $ 180.3
_________ __________
_________ __________
</TABLE>
For the nine months ended September 30, 1994, cash flows from operating
activities were $120 million lower than the nine months ended September
30, 1993. The lower cash flows for 1994 are primarily the result of cash
refunds made in the first nine months of 1994 in connection with the
settlement of TGPL's general rate case (Docket No. RP92-137), partly
offset by payments made in 1993 for nonrecoverable producer settlements.
<TABLE>
<CAPTION>
Nine Months
Ended September 30,
__________________________
1994 1993
__________ __________
(In millions)
<S> <C> <C>
Cash Flows Used in Financing Activities . . . . . . . . . . $ 8.3 $ 41.9
__________ __________
__________ __________
</TABLE>
The cash flows used in financing activities for the nine months ended
September 30, 1994, were attributable to dividend payments of $5 million
on preferred stock and $3 million for the retirement of preferred stock.
For the nine months ended September 30, 1993, cash flows used in financing
activities were primarily attributable to the retirement of $33 million of
long-term debt and preferred stock and dividend payments of $6 million on
preferred stock.
<TABLE>
<CAPTION>
Nine Months
Ended September 30,
__________________________
1994 1993
__________ __________
(In millions)
<S> <C> <C>
Cash Flows Used in Investing Activities . . . . . . . . . . $ 51.1 $ 137.5
__________ __________
__________ __________
</TABLE>
For the nine months ended September 30, 1994, cash flows used in investing
activities were primarily for capital expenditures for property, plant and
equipment, as shown on the following table, slightly offset by Transco's
net repayment of advances from TGPL.
For the nine months ended September 30, 1993, cash flows used in investing
activities were primarily for capital expenditures for property, plant and
equipment, as shown on the following table, and net advances to Transco,
partly offset by the recovery of producer settlement costs.
<TABLE>
<CAPTION>
Nine Months
Ended September 30,
__________________________
Capital Expenditures 1994 1993
____________________ __________ __________
(In millions)
<S> <C> <C>
Market-Area Projects . . . . . . . . . . . . . . . . . . . $ 10.0 $ 6.9
Supply-Area Projects. . . . . . . . . . . . . . . . . . . . 7.6 19.8
Maintenance of Existing Facilities and Other Projects . . . 54.1 40.4
__________ __________
Total Capital Expenditures. . . . . . . . . . . . . . . $ 71.7 $ 67.1
__________ __________
__________ __________
</TABLE>
Other Capital Requirements and Contingencies
____________________________________________
TGPL's capital requirements and contingencies are discussed in TGPL's 1993
Annual Report on Form 10-K and in its First and Second Quarter Form 10-Q.
Other than described in Notes B, C and D of the Notes to the Condensed
Financial Statements and below, there have been no new developments from
those described in TGPL's 1993 Annual Report on Form 10-K and in its First
and Second Quarter Form 10-Q with regard to other capital requirements and
contingencies.
Liberty Pipeline Company
In 1992, Liberty Pipeline Company (Liberty), a partnership of interstate
pipelines and local distribution companies, filed for FERC approval to
construct and operate a natural gas pipeline to provide 500 million cubic
feet per day in firm transportation service to the greater New York City
area. The partnership was comprised of subsidiaries of Transco and two
other interstate pipelines and subsidiaries of three TGPL customers in New
York.
On August 1, 1994, Liberty asked the FERC to postpone indefinitely its
review of the project. The decision follows the withdrawal of two key
shippers from the project. The partners reaffirmed their belief that an
additional delivery point to the New York facilities system, as proposed
by Liberty, would be necessary in the future and advised the FERC that the
Liberty partners would continue to pursue that goal. On August 12, 1994,
the FERC dismissed, without prejudice, the applications of Liberty and
other upstream pipeline companies for authority to build the pipeline and
other related facilities.
Rate Refunds
In the first nine months of 1994, TGPL made partial refunds of
approximately $123 million, including interest, under Docket No. RP92-137.
TGPL had previously provided a reserve for these refunds. TGPL has also
provided a reserve which it believes is adequate for any additional
refunds that may be required under Docket No. RP92-137. At September 30,
1994, these additional refunds, which are currently expected to be made
during the fourth quarter of 1994, are estimated to be approximately $52
million, including interest. Interest will continue to accrue until all
refunds are made.
Conclusion
__________
Although no assurances can be given, TGPL currently believes that the
aggregate of cash flows from operating activities, supplemented, when
necessary, by repayments of funds advanced to Transco or advances by
Transco, will provide TGPL with sufficient liquidity to meet its capital
requirements.
RESULTS OF OPERATIONS
As discussed in TGPL's 1993 Annual Report on Form 10-K and in its First
and Second Quarter Form 10-Q, effective January 1, 1993, TGMC, through an
agency management agreement with TGPL, manages all jurisdictional merchant
gas sales made by TGPL. The financial performance of TGPL's sales service
is discussed separately in the following discussion.
Net and Operating Income
________________________
TGPL's net income was higher by $16.3 million and $19.4 million for the
three months and nine months ended September 30, 1994 , respectively, than
net income for the three months and nine months ended September 30, 1993,
due primarily to the 1993 third quarter after-tax charge of $12.5 million
related to the write-off of a note receivable from TGPL's prior sale of an
interest in a gas field and related gas processing plant. Excluding the
net income impact of this write-off of a note receivable, TGPL's net
income was higher by $3.8 million for the three months ended September 30,
1994 compared to the three months ended September 30, 1993, due primarily
to higher net transportation revenues (net of the related cost of
transportation), and lower dividends on preferred stock, partly offset by
a lower allowance for funds used during construction (AFUDC). Operating
income for the three months ended September 30, 1994 was $51.5 million
compared to operating income of $27.6 million ($47.7 million excluding the
write-off of the note receivable) for the three months ended September 30,
1993. This $3.8 million increase, excluding the write-off of the note
receivable, was primarily due to higher net transportation revenues.
Excluding the net income impact of the write-off of a note receivable in
1993, TGPL's net income for the nine months ended September 30, 1994 was
$6.9 million higher than the comparable period in 1993, primarily due to
higher net transportation revenues, lower net interest expense and lower
dividends on preferred stock. Operating income for the nine months ended
September 30, 1994 was $165.7 million compared to operating income of
$140.2 million ($160.3 million excluding the write-off of the note
receivable) for the nine months ended September 30, 1993. This increase
of $5.4 million, excluding the write-off of the note receivable, reflects
the higher net transportation revenues.
Transportation Services and Other
_________________________________
TGPL's operating revenues, excluding sales and storage services, increased
$9 million to $166 million for the quarter ended September 30, 1994, when
compared to the same period in 1993, reflecting higher transportation
revenues. TGPL's operating revenues, excluding sales and storage services,
decreased by $16 million to $501 million for the nine months ended
September 30, 1994, when compared to the nine months ended September 30,
1993. The lower operating revenues reflect a decrease of $29 million due
to lower transportation rates resulting from the elimination of the
producer settlement surcharge which expired on May 31, 1993, partly offset
by higher transportation revenues of $13 million. However, the decrease
in transportation rates related to the surcharge did not affect TGPL's
operating or net income since the expiration of the producer settlement
surcharge also resulted in lower cost of transportation when compared with
the prior year.
Excluding the pre-tax effects of the note receivable write-off in 1993 and
the cost of sales and transportation of $193 million and $674 million for
the three months and nine months ended September 30, 1994, respectively,
and $178 million and $571 million for the three months and nine months
ended September 30, 1993, respectively, TGPL's operating expenses for the
quarter and for the first nine months of 1994 were comparable to the same
periods in 1993.
As shown in the table below, TGPL's total market-area deliveries for the
three months ended September 30, 1994 were 17.5 billion cubic feet (Bcf),
or 7%, higher than the same period in 1993. The increased deliveries,
primarily firm transportation volumes, are higher than the same period in
1993 primarily due to increased injections into storage during the quarter
resulting from the colder-than-normal weather in the market area during
January and February 1994 and to recapturing business from competing
pipelines due to TGPL's implementation of Order 636. TGPL's total market-
area deliveries for the nine months ended September 30, 1994 were 34.4
Bcf, or 4%, higher than the nine months ended September 30, 1993. The
increased deliveries, primarily firm transportation volumes, are higher
than the same period in 1993 mainly due to the colder-than-normal weather
in the market area during January and February 1994, coupled with the
strong deliveries of gas used for electric generation for summer cooling.
The production-area deliveries for the three months ended September 30,
1994, decreased 2.2 Bcf, or 4%, when compared to the same period in 1993,
due to competitive pressures. The production-area deliveries for the nine
months ended September 30, 1994 increased 9.5 Bcf, or 7%, when compared to
the same period in 1993 due to TGPL's decreased rates resulting from the
elimination of the producer settlement surcharge which expired on May 31,
1993. As a result of a straight fixed-variable (SFV) rate design and the
interruptible transportation revenue crediting requirement, these
increases in system deliveries have no significant impact on operating
income; however, these increases show the strength of the TGPL franchise.
<TABLE>
<CAPTION>
Three Months Nine Months
TGPL System Deliveries (Bcf) Ended September 30, Ended September 30,
____________________________ ______________________ _____________________
1994 1993 1994 1993
_________ ________ ________ ________
<S> <C> <C> <C> <C>
Market-area deliveries:
Long-haul transportation 167.4 178.6 584.4 608.0
Market-area transportation 95.2 66.5 319.7 261.7
________ ________ ________ ________
Total market-area deliveries 262.6 245.1 904.1 869.7
Production-area transportation 54.5 56.7 142.8 133.3
________ ________ ________ ________
Total system deliveries 317.1 301.8 1,046.9 1,003.0
________ ________ ________ ________
________ ________ ________ ________
</TABLE>
TGPL's facilities are divided into seven rate zones. Four are located in
the production area and three are located in the market area. Long-haul
transportation is gas that is received in one of the production-area zones
and delivered in a market-area zone. Market-area transportation is gas
that is both received and delivered within market-area zones. Production-
area transportation is gas that is both received and delivered within
production-area zones.
TGPL has expressed to the FERC concerns that inconsistent treatment under
Order 636 of TGPL and its competitor pipelines with regard to rate design
and cost allocation issues in the production area may result in rates
which could make TGPL less competitive, both in terms of production-area
and long-haul transportation. A hearing before a FERC ALJ, dealing with,
among other things, TGPL's production-area rate design, concluded in June
1994 and the parties submitted briefs to the ALJ in August and September
1994. The decision of the ALJ, when issued, will be subject to review by
the FERC. TGPL is unable at this time to fully assess the competitive
effect and resulting financial impact on TGPL of having to maintain its
current production-area rate design which is different than that of its
competitors.
On October 26, 1994, the FERC issued a notice of a request for initiation
of a complaint proceeding in TGPL's Order 636 restructuring docket. The
notice states that Fina Natural Gas Company has filed a complaint
requesting that the FERC initiate a proceeding under NGA section 5 to
investigate the functionalization of TGPL's production-area facilities.
Fina asserts that some of TGPL's production-area facilities have been
misfunctionalized as transmission, and that under recent gathering orders,
those facilities should properly be functionalized as gathering
facilities. Responses to the notice are due on or before November 28,
1994. If the FERC elects to initiate a proceeding, any change in
classification of the function of plant facilities between transmission
and gathering would be prospective only. Although no assurances can be
given, TGPL does not believe the final outcome of this issue will have a
material adverse effect on TGPL's financial position or results of
operations.
Sales Services
______________
TGPL makes jurisdictional merchant sales to customers through a Firm Sales
(FS) program, an Optional Firm Sales (OFS) program, an Interruptible Sales
(IS) program and a Negotiated Sales (NS) program coupled with a firm
transportation program as replacement for a contract sales quantity.
These programs give customers the option to purchase daily quantities of
gas from TGPL at market-responsive prices in exchange for a demand charge
payment to TGPL designed to recover the costs of gas in excess of current
month spot prices that TGPL is obligated to pay under its producer
contracts.
TGPL's sales revenues increased $10 million to $165 million for the
quarter ended September 30, 1994, when compared to the quarter ended
September 30, 1993. Of this increase, $5 million was related to increased
volumes sold through TGPL's jurisdictional merchant sales services and $5
million was due to higher non-merchant sales related to TGPL's cash
settlement of historical transportation imbalances. TGPL's sales revenues
increased $123 million to $587 million for the nine months ended September
30, 1994 when compared to the same period in 1993. Of this increase, $11
million was related to the cash settlement of historical transportation
imbalances and TGPL's cash-out program for the settlement of current month
transportation imbalances, with the remaining increase due to higher
volumes sold through TGPL's jurisdictional merchant sales services.
However, the increase in TGPL's non-merchant sales revenues for the
quarter and year-to-date had no impact on TGPL's operating income since
these revenue variances were offset by corresponding variances in the cost
of sales when compared to the prior year periods. TGPL's jurisdictional
sales service also had no impact on TGPL's operating income or results of
operations during the first nine months of 1994 or the same period in
1993. In January 1993, TGMC, through an agency agreement, began to manage
all jurisdictional merchant sales of TGPL. Under this agency agreement,
TGMC bills TGPL for the cost of managing TGPL's merchant gas sales service
and receives all margins associated with such business. Consequently,
TGPL believes its merchant gas sales service will have no impact on its
operating income or results of operations.
On October 20, 1994, an ALJ issued an initial decision granting a motion
filed by certain parties for summary disposition with respect to the issue
of the allocation of certain costs to TGPL's merchant sales service. That
issue, among others, was referred to the hearing in Docket No. RP92-137 by
the FERC's orders approving TGPL's implementation of Order 636. TGPL had
opposed the motion. In his initial decision, the ALJ determined that
there is no genuine issue of material fact warranting a trial-type hearing
on the issue. The ALJ's decision directs TGPL to remove from its
gathering function approximately $5.6 million of indirect costs and to
reassign this amount to its merchant sales service. The ALJ's decision is
subject to final approval by the FERC. Briefs on exceptions to the ALJ's
decision are due on or before November 21, 1994. Any changes in TGPL's
rates or services resulting from this issue would have a prospective
effect only. Although no assurances can be given, TGPL believes that the
final resolution of this cost allocation issue will not have a material
adverse effect on its financial position or results of operations.
<TABLE>
<CAPTION>
Three Months Nine Months
Gas Sales Volumes (Bcf)(1) Ended September 30, Ended September 30,
____________________________ _____________________ ____________________
1994 1993 1994 1993
_______ ________ _______ _______
<S> <C> <C> <C> <C>
Long-term sales . . . . . . . . . . . . . . 42.4 52.4 162.3 153.2
Short-term sales. . . . . . . . . . . . . . 33.6 4.6 82.7 23.2
_______ _______ _______ _______
Total gas sales . . . . . . . . . . . . 76.0 57.0 245.0 176.4
_______ _______ _______ _______
_______ _______ _______ _______
(1) Effective January 1993, TGMC, through an agency management agreement with TGPL, assumed operation
of TGPL's merchant sales service.
</TABLE>
Storage Services
________________
TGPL's operating revenues of $38 million and $111 million, respectively,
related to its storage services for the three months and nine months ended
September 30, 1994 were comparable to the storage revenues for the same
periods in 1993.
<PAGE>
PART II - OTHER INFORMATION
Item 1. Legal Proceedings.
See discussion of legal proceedings in Note C of the Notes to
Condensed Financial Statements included herein.
Item 6. Exhibits and Reports on Form 8-K.
(a) Exhibits.
None.
(b) Reports on Form 8-K.
None.<PAGE>
SIGNATURE
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.
Transcontinental Gas Pipe Line Corporation
Dated: November 14, 1994 By /S/ N. A. Bacile
______________________________________
(Signature)
N. A. Bacile
Vice President and Controller
<PAGE>
SIGNATURE
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.
Transcontinental Gas Pipe Line Corporation
Dated: November 14, 1994
______________________________________
(Signature)
N. A. Bacile
Vice President and Controller
<PAGE>
<TABLE> <S> <C>
<ARTICLE> 5
<LEGEND>
THIS SCHEDULE CONTAINS SUMMARY FINANCIAL INFORMATION EXTRACTED FROM THE
CONDENSED BALANCE SHEET AND THE CONDENSED STATEMENT OF INCOME FOR THE NINE
MONTHS ENDED SEPTEMBER 30, 1994, CONTAINED IN TRANSCONTINENTAL GAS PIPE
LINE CORPORATION'S 1994 THIRD QUARTER REPORT ON FORM 10-Q AND IS QUALIFIED
IN ITS ENTIRETY BY REFERENCE TO SUCH FINANCIAL STATEMENTS.
</LEGEND>
<MULTIPLIER> 1,000
<S> <C>
<PERIOD-TYPE> 9-MOS
<FISCAL-YEAR-END> DEC-31-1994
<PERIOD-END> SEP-30-1994
<CASH> 1,775
<SECURITIES> 0
<RECEIVABLES> 26,146
<ALLOWANCES> 0
<INVENTORY> 65,713
<CURRENT-ASSETS> 302,160
<PP&E> 4,285,531
<DEPRECIATION> 2,573,084
<TOTAL-ASSETS> 2,204,480
<CURRENT-LIABILITIES> 298,758
<BONDS> 644,129<F1>
<COMMON> 0
71,741<F2>
0
<OTHER-SE> 784,451
<TOTAL-LIABILITY-AND-EQUITY> 2,204,480
<SALES> 586,667
<TOTAL-REVENUES> 1,199,061
<CGS> 586,809
<TOTAL-COSTS> 923,013
<OTHER-EXPENSES> 0
<LOSS-PROVISION> 0
<INTEREST-EXPENSE> 45,161
<INCOME-PRETAX> 122,606
<INCOME-TAX> 42,965
<INCOME-CONTINUING> 79,641
<DISCONTINUED> 0
<EXTRAORDINARY> 0
<CHANGES> 0
<NET-INCOME> 79,641<F3>
<EPS-PRIMARY> 0
<EPS-DILUTED> 0
<FN>
<F1>NET OF UNAMORTIZED DEBT PREMIUM AND DISCOUNT
<F2>NET OF ISSUE EXPENSE
<F3>BEFORE PREFERRED DIVIDENDS OF 4,722
</FN>
</TABLE>
