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<SEC-DOCUMENT>/in/edgar/work/20000814/0000070145-00-000033/0000070145-00-000033.txt : 20000921
<SEC-HEADER>0000070145-00-000033.hdr.sgml : 20000921
ACCESSION NUMBER:		0000070145-00-000033
CONFORMED SUBMISSION TYPE:	10-Q
PUBLIC DOCUMENT COUNT:		8
CONFORMED PERIOD OF REPORT:	20000630
FILED AS OF DATE:		20000814

FILER:

	COMPANY DATA:	
		COMPANY CONFORMED NAME:			NATIONAL FUEL GAS CO
		CENTRAL INDEX KEY:			0000070145
		STANDARD INDUSTRIAL CLASSIFICATION:	 [4924
]		IRS NUMBER:				131086010
		STATE OF INCORPORATION:			NJ
		FISCAL YEAR END:			0930
</COMPANY-DATA>

		FILING VALUES:
			FORM TYPE:		10-Q
			SEC ACT:		
			SEC FILE NUMBER:	001-03880
			FILM NUMBER:		698847
</FILING-VALUES>

			BUSINESS ADDRESS:	
				STREET 1:		10 LAFAYETTE SQ
				CITY:			BUFFALO
				STATE:			NY
				ZIP:			14203
				BUSINESS PHONE:		7168576980
</BUSINESS-ADDRESS>

				MAIL ADDRESS:	
					STREET 1:		10 LAFAYETTE SQ
					STREET 2:		10 LAFAYETTE SQ
					CITY:			BUFFALO
					STATE:			NY
					ZIP:			14203
</MAIL-ADDRESS>
</FILER>
</SEC-HEADER>
<DOCUMENT>
<TYPE>10-Q
<SEQUENCE>1
<FILENAME>0001.txt
<DESCRIPTION>NATIONAL FUEL GAS COMPANY FORM 10Q
<TEXT>


- --------------------------------------------------------------------------------


                                  UNITED STATES

                       SECURITIES AND EXCHANGE COMMISSION

                             Washington, D.C. 20549
                             ----------------------

                                    FORM 10-Q

                QUARTERLY REPORT PURSUANT TO SECTION 13 or 15(d)

                     OF THE SECURITIES EXCHANGE ACT OF 1934

                  For the Quarterly Period Ended June 30, 2000
                                                 -------------

                          Commission File Number 1-3880
                          -----------------------------

                            NATIONAL FUEL GAS COMPANY

             (Exact name of registrant as specified in its charter)


                        New Jersey                        13-1086010
                        ----------                        ----------
               (State or other jurisdiction of            (I.R.S. Employer
               incorporation or organization)             Identification No.)

                  10 Lafayette Square
                   Buffalo, New York                       14203
                   ------------------                      -----
               (Address of principal executive offices)   (Zip Code)

                                 (716) 857-6980
                                 --------------

              (Registrant's telephone number, including area code)
              ----------------------------------------------------



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
                       --------       ---------

Indicate the number of shares  outstanding  of each of the  issuer's  classes of
common stock, as of the latest practicable date:

              Common stock, $1 par value, outstanding at July 31, 2000:
              39,279,886 shares.

- --------------------------------------------------------------------------------
<PAGE>

Company or Group of Companies for which Report is Filed:
- --------------------------------------------------------

NATIONAL FUEL GAS COMPANY (Company or Registrant)

DIRECT SUBSIDIARIES:  National Fuel Gas Distribution Corporation (Distribution
                          Corporation)
                      National Fuel Gas Supply Corporation (Supply Corporation)
                      Seneca Resources Corporation (Seneca)
                      Highland Forest Resources, Inc. (Highland)
                      Leidy Hub, Inc. (Leidy Hub)
                      Data-Track Account Services, Inc. (Data-Track)
                      National Fuel Resources, Inc. (NFR)
                      Horizon Energy Development, Inc. (Horizon)
                      Upstate Energy, Inc. (Upstate)
                      NFR Power, Inc. (NFR Power)
                      Niagara Independence Marketing Company (NIM)
                      Seneca Independence Pipeline Company (SIP)

                                      INDEX

          Part I. Financial Information                                  Page
          -----------------------------                                  ----

Item 1.  Financial Statements

         a.    Consolidated Statements of Income
               and Earnings Reinvested in the
               Business - Three and Nine Months
               Ended June 30, 2000 and 1999                             4 - 5

         b.    Consolidated Balance Sheets - June 30, 2000
               and September 30, 1999                                   6 - 7

         c.    Consolidated Statement of Cash Flows - Nine Months
               Ended June 30, 2000 and 1999                                8

         d.    Consolidated Statement of Comprehensive Income - Three
               and Nine Months Ended June 30, 2000 and 1999                9

         e.    Notes to Consolidated Financial Statements               10 - 17

Item 2.  Management's Discussion and Analysis of Financial
         Condition and Results of Operations                            18 - 39

Item 3.  Quantitative and Qualitative Disclosures About Market Risk        40

          Part II. Other Information
          --------------------------

Item 1.  Legal Proceedings                                                 40

Item 2.  Changes in Securities                                             40

Item 3.  Defaults Upon Senior Securities                                   o

Item 4.  Submission of Matters to a Vote of Security Holders               o

Item 5.  Other Information                                                 40

Item 6.  Exhibits and Reports on Form 8-K                               40 - 41

Signature                                                                  42

o The Company has nothing to report under this item.


<PAGE>


Reference to the "Company" in this report means the Registrant or the Registrant
and  its  subsidiaries  collectively,  as  appropriate  in  the  context  of the
disclosure. All references to a certain year in this report are to the Company's
fiscal year ended September 30 of that year, unless otherwise noted.

This Form 10-Q  contains  "forward-looking  statements"  within  the  meaning of
Section 21E of the Securities Exchange Act of 1934.  Forward-looking  statements
should be read with the cautionary  statements and important factors included in
this Form 10-Q at Item 2  "Management's  Discussion  and  Analysis of  Financial
Condition and Results of Operations" (MD&A),  under the heading "Safe Harbor for
Forward-Looking Statements." Forward-looking statements are all statements other
than  statements  of  historical  fact,  including,  without  limitation,  those
statements  that are designated  with a "*" following the statement,  as well as
those  statements  that are  identified  by the use of the words  "anticipates,"
"estimates,"  "expects," "intends," "plans," "predicts," "projects," and similar
expressions.


<PAGE>

Part I.  Financial Information
- -------  ---------------------

Item 1.  Financial Statements
         --------------------
<TABLE>
<CAPTION>

                            National Fuel Gas Company
                            -------------------------

                 Consolidated Statements of Income and Earnings
                 ----------------------------------------------

                           Reinvested in the Business
                           --------------------------

                                   (Unaudited)
                                   -----------

                                                                 Three Months Ended
                                                                      June 30,
(Dollars in Thousands, Except Per Common Share Amounts)         2000              1999
                                                         ----------------- -----------------

<S>                                                            <C>               <C>
INCOME
Operating Revenues                                             $289,757          $248,658
- --------------------------------------------------------------------------------------------

Operating Expenses
  Purchased Gas                                                  94,883            64,449
  Fuel Used in Heat and Electric Generation                       9,896             9,530
  Operation                                                      79,469            77,058
  Maintenance                                                     5,710             5,753
  Property, Franchise and Other Taxes                            14,794            20,817
  Depreciation, Depletion and Amortization                       35,083            31,985
  Income Taxes                                                   14,481             7,747
- --------------------------------------------------------------------------------------------
                                                                254,316           217,339
- --------------------------------------------------------------------------------------------
Operating Income                                                 35,441            31,319
Other Income                                                      2,271             1,584
- --------------------------------------------------------------------------------------------
Income Before Interest Charges and
  Minority Interest in Foreign Subsidiaries                      37,712            32,903
- --------------------------------------------------------------------------------------------

Interest Charges
  Interest on Long-Term Debt                                     17,550            16,180
  Other Interest                                                  6,115             5,231
- --------------------------------------------------------------------------------------------
                                                                 23,665            21,411
- --------------------------------------------------------------------------------------------
Minority Interest in Foreign Subsidiaries                           421               348
- --------------------------------------------------------------------------------------------

Net Income Available for Common Stock                            14,468            11,840

EARNINGS REINVESTED IN THE BUSINESS
Balance at April 1                                              552,198           492,233
- --------------------------------------------------------------------------------------------
                                                                566,666           504,073
Dividends on Common Stock
 (2000 - $0.48 per share; 1999 - $0.465 per share)               18,794            17,974
- --------------------------------------------------------------------------------------------
Balance at June 30                                             $547,872          $486,099
============================================================================================

Earnings Per Common Share:
  Basic                                                           $0.37             $0.31
============================================================================================
  Diluted                                                         $0.36             $0.30
============================================================================================
Weighted Average Common Shares Outstanding:
  Used in Basic Calculation                                  39,177,148        38,662,728
============================================================================================
  Used in Diluted Calculation                                39,677,909        39,000,553
============================================================================================
</TABLE>

                 See Notes to Consolidated Financial Statements


<PAGE>

Item 1.  Financial Statements (Cont.)
         ----------------------------
<TABLE>
<CAPTION>

                            National Fuel Gas Company
                            -------------------------

                 Consolidated Statements of Income and Earnings
                 ----------------------------------------------

                           Reinvested in the Business
                           --------------------------

                                   (Unaudited)
                                   -----------

                                                                    Nine Months Ended
                                                                         June 30,
(Dollars in Thousands, Except Per Common Share Amounts)            2000              1999
                                                            ----------------- -----------------
<S>                                                             <C>               <C>
INCOME
Operating Revenues                                              $1,184,555        $1,072,484
- -----------------------------------------------------------------------------------------------

Operating Expenses
  Purchased Gas                                                    441,912           377,273
  Fuel Used in Heat and Electric Generation                         46,563            47,311
  Operation                                                        241,350           232,221
  Maintenance                                                       17,101            17,400
  Property, Franchise and Other Taxes                               61,195            73,504
  Depreciation, Depletion and Amortization                         102,685            92,820
  Income Taxes                                                      76,997            60,327
- -----------------------------------------------------------------------------------------------
                                                                   987,803           900,856
- -----------------------------------------------------------------------------------------------
Operating Income                                                   196,752           171,628
Other Income                                                         7,636             7,901
- -----------------------------------------------------------------------------------------------
Income Before Interest Charges and
  Minority Interest in Foreign Subsidiaries                        204,388           179,529
- -----------------------------------------------------------------------------------------------

Interest Charges
  Interest on Long-Term Debt                                        50,446            49,630
  Other Interest                                                    21,300            16,755
- -----------------------------------------------------------------------------------------------
                                                                    71,746            66,385
- -----------------------------------------------------------------------------------------------
Minority Interest in Foreign Subsidiaries                           (2,255)           (2,540)
- -----------------------------------------------------------------------------------------------

Net Income Available for Common Stock                              130,387           110,604

EARNINGS REINVESTED IN THE BUSINESS
Balance at October 1                                               472,517           428,112
- -----------------------------------------------------------------------------------------------
                                                                   602,904           538,716
Dividends on Common Stock
 (2000 - $1.41 per share; 1999 - $1.365 per share)                  55,032            52,617
- -----------------------------------------------------------------------------------------------
Balance at June 30                                                $547,872          $486,099
===============================================================================================

Earnings Per Common Share:
  Basic                                                              $3.34             $2.86
===============================================================================================
  Diluted                                                            $3.30             $2.84
===============================================================================================
Weighted Average Common Shares Outstanding:
  Used in Basic Calculation                                     39,058,490        38,619,120
===============================================================================================
  Used in Diluted Calculation                                   39,470,417        38,969,822
===============================================================================================
</TABLE>


                 See Notes to Consolidated Financial Statements


<PAGE>

Item 1.  Financial Statements (Cont.)
         ----------------------------
<TABLE>
<CAPTION>


                            National Fuel Gas Company
                            -------------------------

                           Consolidated Balance Sheets
                           ---------------------------

                                   (Unaudited)
                                   -----------

                                                        June 30,          September 30,
                                                          2000                 1999
                                                   -------------------- -------------------

(Thousands of Dollars)

<S>                                                       <C>                 <C>
ASSETS
Property, Plant and Equipment                             $3,779,061          $3,390,875
   Less - Accumulated Depreciation, Depletion
     and Amortization                                      1,116,491           1,029,643
- -------------------------------------------------------------------------------------------
                                                           2,662,570           2,361,232
- -------------------------------------------------------------------------------------------
Current Assets
   Cash and Temporary Cash Investments                        55,354              29,222
   Receivables - Net                                         158,105              97,828
   Unbilled Utility Revenue                                   17,756              18,674
   Gas Stored Underground                                     23,406              41,099
   Materials and Supplies - at average cost                   29,740              23,631
   Unrecovered Purchased Gas Costs                             2,741               4,576
   Prepayments                                                26,990              35,072
- -------------------------------------------------------------------------------------------
                                                             314,092             250,102
- -------------------------------------------------------------------------------------------

Other Assets
   Recoverable Future Taxes                                   87,724              87,724
   Unamortized Debt Expense                                   20,508              21,717
   Other Regulatory Assets                                    20,247              25,214
   Deferred Charges                                           21,955              14,266
   Other                                                      92,686              82,331
- -------------------------------------------------------------------------------------------
                                                             243,120             231,252
- -------------------------------------------------------------------------------------------

                                                          $3,219,782          $2,842,586
===========================================================================================
</TABLE>



                 See Notes to Consolidated Financial Statements


<PAGE>

Item 1.  Financial Statements (Cont.)
         ----------------------------
<TABLE>
<CAPTION>


                            National Fuel Gas Company
                            -------------------------

                           Consolidated Balance Sheets
                           ---------------------------

                                   (Unaudited)
                                   -----------

                                                            June 30,          September 30,
                                                              2000                 1999
                                                       -------------------- -------------------
(Thousands of Dollars)
<S>                                                              <C>                 <C>
CAPITALIZATION AND LIABILITIES
Capitalization:
Common Stock Equity
   Common Stock, $1 Par Value
    Authorized  - 200,000,000 Shares; Issued
    and Outstanding - 39,223,061 Shares and
    38,837,499 Shares, Respectively                              $39,223             $38,837
   Paid in Capital                                               448,115             431,952
   Earnings Reinvested in the Business                           547,872             472,517
   Accumulated Other Comprehensive Loss                          (18,668)             (4,013)
- ----------------------------------------------------------------------------------------------
Total Common Stock Equity                                      1,016,542             939,293
Long-Term Debt, Net of Current Portion                           958,327             822,743
- -----------------------------------------------------------------------------------------------
Total Capitalization                                           1,974,869           1,762,036
- -----------------------------------------------------------------------------------------------

Minority Interest in Foreign Subsidiaries                         26,052              27,589
- -----------------------------------------------------------------------------------------------

Current and Accrued Liabilities
   Notes Payable to Banks and
    Commercial Paper                                             518,774             393,495
   Current Portion of Long-Term Debt                              12,646              69,608
   Accounts Payable                                               95,659              82,747
   Amounts Payable to Customers                                    3,070               5,934
   Other Accruals and Current Liabilities                        140,667              87,310
- -----------------------------------------------------------------------------------------------
                                                                 770,816             639,094
- -----------------------------------------------------------------------------------------------

Deferred Credits
   Accumulated Deferred Income Taxes                             308,935             275,008
   Taxes Refundable to Customers                                  14,814              14,814
   Unamortized Investment Tax Credit                              10,214              11,007
   Other Deferred Credits                                        114,082             113,038
- -----------------------------------------------------------------------------------------------
                                                                 448,045             413,867
- -----------------------------------------------------------------------------------------------
Commitments and Contingencies                                          -                   -
- -----------------------------------------------------------------------------------------------

                                                              $3,219,782          $2,842,586
===============================================================================================
</TABLE>

                 See Notes to Consolidated Financial Statements


<PAGE>

Item 1.  Financial Statements (Cont.)
         ----------------------------
<TABLE>
<CAPTION>

                            National Fuel Gas Company
                            -------------------------

                      Consolidated Statement of Cash Flows
                      ------------------------------------

                                   (Unaudited)
                                   -----------

                                                                      Nine Months Ended
                                                                           June 30,
                                                           -----------------------------------------
(Thousands of Dollars)                                              2000                  1999
                                                           ------------------- ---------------------
<S>                                                                <C>                   <C>
OPERATING ACTIVITIES
   Net Income Available for Common Stock                           $130,387              $110,604
   Adjustments to Reconcile Net Income to Net Cash
    Provided by Operating Activities:
         Depreciation, Depletion and Amortization                   102,685                92,820
         Deferred Income Taxes                                       14,557                12,912
         Minority Interest in Foreign Subsidiaries                    2,255                 2,540
         Other                                                        5,102                 5,597
         Change in:
           Receivables and Unbilled Utility Revenue                (53,959)              (56,195)
           Gas Stored Underground and Materials and
            Supplies                                                 14,579                11,235
           Unrecovered Purchased Gas Costs                            1,835                 6,316
           Prepayments                                                9,415               (6,284)
           Accounts Payable                                             561              (13,234)
           Amounts Payable to Customers                             (2,864)                15,703
           Other Accruals and Current Liabilities                    53,868                46,637
           Other Assets                                            (18,440)              (12,203)
           Other Liabilities                                          1,030                31,576
- ---------------------------------------------------------------------------------------------------
Net Cash Provided by
 Operating Activities                                               261,011               248,024
- ---------------------------------------------------------------------------------------------------

INVESTING ACTIVITIES
   Capital Expenditures                                           (184,862)             (205,859)
   Investment in Subsidiaries, Net of Cash Acquired               (123,809)                     -
   Investment in Partnerships                                       (4,375)               (3,633)
   Other                                                             11,390                 3,519
- ----------------------------------------------------------------------------------------------------
Net Cash Used in Investing Activities                             (301,656)             (205,973)
- ----------------------------------------------------------------------------------------------------

FINANCING ACTIVITIES
   Change in Notes Payable to Banks and Commercial Paper            125,450                24,700
   Net Proceeds from Issuance of Long-Term Debt                     149,334                98,736
   Reduction of Long-Term Debt                                    (161,499)             (115,365)
   Dividends Paid on Common Stock                                  (54,253)              (51,904)
   Proceeds from Issuance of Common Stock                            11,128                 7,921
- ----------------------------------------------------------------------------------------------------
Net Cash Provided By (Used in) Financing Activities                  70,160              (35,912)
- ----------------------------------------------------------------------------------------------------

Effect of Exchange Rates on Cash                                    (3,383)                 (728)
- ----------------------------------------------------------------------------------------------------
Net Increase in Cash and Temporary Cash Investments                  26,132                 5,411

Cash and Temporary Cash Investments at October 1                     29,222                30,437

- ----------------------------------------------------------------------------------------------------

Cash and Temporary Cash Investments at June 30                      $55,354               $35,848
====================================================================================================
</TABLE>


                 See Notes to Consolidated Financial Statements


<PAGE>

Item 1.  Financial Statements (Cont.)
         ----------------------------
<TABLE>
<CAPTION>

                            National Fuel Gas Company
                            -------------------------

                 Consolidated Statement of Comprehensive Income
                 ----------------------------------------------

                                   (Unaudited)
                                   -----------

                                                                                     Three Months Ended
                                                                                          June 30,
                                                                     ---------------------------------------------------
(Thousands of Dollars)                                                          2000                        1999
                                                                     ------------------------ --------------------------

<S>                                                                     <C>        <C>              <C>      <C>
Net Income Available for Common Stock                                              $14,468                   $11,840
- ------------------------------------------------------------------------------------------------------------------------
Other Comprehensive Income, Before Tax:
   Foreign Currency Translation Adjustment                                             762                     2,326
   Unrealized Gain on Securities Available for Sale
       Arising During the Period                                          447                       -
   Less:  Reclassification Adjustment for Gains
       Realized in Net Income                                            (103)                      -
                                                                     -----------              -----------
                                                                                       344                         -
- ------------------------------------------------------------------------------------------------------------------------
Other Comprehensive Gain, Before Tax                                                 1,106                     2,326
Income Tax Expense Related to Unrealized Gain
   on Securities Available for Sale Arising During the Period            (156)                      -
   Less:  Reclassification Adjustment for Income Tax
   Expense on Gains Realized in Net Income                                 36                       -
                                                                     -----------              -----------
                                                                                      (120)                        -
- ------------------------------------------------------------------------------------------------------------------------
Other Comprehensive Gain, Net of Tax                                                   986                     2,326
- ------------------------------------------------------------------------------------------------------------------------
Comprehensive Income                                                               $15,454                   $14,166
========================================================================================================================



                                                                                    Nine Months Ended
                                                                                         June 30,
                                                                  -------------------------------------------------------
(Thousands of Dollars)                                                        2000                          1999
                                                                  --------------------------- ---------------------------

Net Income Available for Common Stock                                             $130,387                   $110,604
- -------------------------------------------------------------------------------------------------------------------------
Other Comprehensive Income, Before Tax:
   Foreign Currency Translation Adjustment                                         (15,802)                    (16,719)
   Unrealized Gain on Securities Available for Sale
       Arising During the Period                                     1,867                          -
   Less:  Reclassification Adjustment for Gains
       Realized in Net Income                                         (103)                         -
                                                                  -----------                 -----------
                                                                                     1,764                          -
- -------------------------------------------------------------------------------------------------------------------------
Other Comprehensive Loss, Before Tax                                               (14,038)                    (16,719)
Income Tax Expense Related to Unrealized Gain on
   Securities Available for Sale Arising During the Period            (653)                         -
   Less:  Reclassification Adjustment for Income Tax
   Expense on Gains Realized in Net Income                              36                          -
                                                                  -----------                 -----------
                                                                                      (617)                         -
- -------------------------------------------------------------------------------------------------------------------------
Other Comprehensive Loss, Net of Tax                                               (14,655)                    (16,719)
- -------------------------------------------------------------------------------------------------------------------------
Comprehensive Income                                                              $115,732                    $93,885
=========================================================================================================================
</TABLE>


                 See Notes to Consolidated Financial Statements


<PAGE>

Item 1.  Financial Statements (Cont.)
         ----------------------------


                            National Fuel Gas Company
                            -------------------------

                   Notes to Consolidated Financial Statements
                   ------------------------------------------

Note 1 - Summary of Significant Accounting Policies

Principles of Consolidation.  The consolidated  financial statements include the
accounts of the Company and its majority owned  subsidiaries.  The equity method
is used to account for the Company's investment in minority owned entities.  All
significant  intercompany  balances and transactions  have been eliminated where
appropriate.

         The preparation of the consolidated  financial statements in conformity
with  generally  accepted  accounting  principles  requires  management  to make
estimates  and  assumptions  that  affect  the  reported  amounts  of assets and
liabilities  and disclosure of contingent  assets and liabilities at the date of
the  financial  statements  and the  reported  amounts of revenues  and expenses
during the reporting period. Actual results could differ from those estimates.

Quarterly Earnings.  The Company,  in its opinion,  has included all adjustments
that are  necessary for a fair  statement of the results of  operations  for the
reported  periods.  The  consolidated  financial  statements  and notes thereto,
included herein, should be read in conjunction with the financial statements and
notes for the years ended September 30, 1999, 1998 and 1997 that are included in
the Company's  combined  Annual Report to  Shareholders/Form  10-K for 1999. The
2000  consolidated  financial  statements  will  be  examined  by the  Company's
independent accountants after the end of the fiscal year.

         The  earnings  for the nine  months  ended June 30,  2000 should not be
taken as a prediction  of earnings for the entire  fiscal year ending  September
30, 2000. Most of the Company's business is seasonal in nature and is influenced
by weather  conditions.  Because of the seasonal nature of the Company's heating
business,  earnings  during the winter months  normally  represent a substantial
part of earnings for the entire fiscal year.  The impact of abnormal  weather on
earnings  during the heating  season is partially  reduced by the operation of a
weather  normalization  clause (WNC) included in Distribution  Corporation's New
York tariff. The WNC is effective for October through May billings. Distribution
Corporation's  tariff for its Pennsylvania  jurisdiction does not have a WNC. In
addition, Supply Corporation's straight fixed-variable rate design, which allows
for  recovery  of  substantially  all fixed  costs in the demand or  reservation
charge, reduces the earnings impact of weather fluctuations.

Consolidated Statement of Cash Flows. For purposes of the Consolidated Statement
of Cash  Flows,  the  Company  considers  all  highly  liquid  debt  instruments
purchased  with a  maturity  of  generally  three  months  or  less  to be  cash
equivalents.  Cash interest  payments during the nine months ended June 30, 2000
and 1999 amounted to $70.8 million and $64.1 million, respectively. Income taxes
paid  during the nine  months  ended June 30,  2000 and 1999  amounted  to $33.0
million and $30.4 million,  respectively.  In November 1999, the Company entered
into a non-cash  investing  activity  whereby it issued 54,674 shares of Company
common stock to Supply Corporation, which in turn exchanged those shares for the
assets of Cunningham Natural Gas Corporation.  The assets included approximately
$1.2 million of property, plant and equipment and $1.6 million of other assets.

         In June 2000,  Seneca acquired 100% of the stock of Tri Link Resources,
Ltd. (Tri Link). Details of the acquisition are as
follows (dollars in millions):

                  Assets acquired                        $260.7
                  Liabilities assumed                    (136.9)
                  Cash acquired at acquisition              -
                                                         --------
                  Cash paid, net of cash acquired        $123.8
                                                         ======

         Further  discussion of this  acquisition can be found at Note 3 - Stock
Acquisition.


<PAGE>


Item 1.  Financial Statements (Cont.)
         ----------------------------


         Reclassification.  Certain prior year amounts have been reclassified to
conform with current year presentation.

         Accumulated  Other  Comprehensive  Income  (Loss).  The  components  of
Accumulated Other Comprehensive Income (Loss) are as follows (in thousands):

                                       At June 30, 2000   At September 30, 1999
                                       ----------------   ---------------------

Cumulative Foreign Currency
  Translation Adjustment                      $(20,274)          $(4,472)
Net Unrealized Gain on Securities
    Available for Sale                           1,606               459
                                              --------           -------
Accumulated Other Comprehensive Loss          $(18,668)          $(4,013)
                                              ========           =======

Earnings  Per Common  Share.  Basic  earnings  per common  share is  computed by
dividing  income  available for common stock by the weighted  average  number of
common  shares  outstanding  for the period.  Diluted  earnings per common share
reflects  the  potential  dilution  that  could  occur  if  securities  or other
contracts to issue common stock were  exercised or converted  into common stock.
The only potentially  dilutive  securities the Company has outstanding are stock
options.   The  diluted  weighted  average  shares   outstanding  shown  on  the
Consolidated  Statement of Income  reflects the  potential  dilution  that could
result from the exercise of these stock options as determined using the Treasury
Stock Method.

Note 2 - Income Taxes

The  components of federal and state income taxes  included in the  Consolidated
Statement of Income are as follows (in thousands):

                                                    Nine Months Ended
                                                        June 30,
                                           ---------------------------------
                                                 2000            1999
                                           ---------------- ----------------

Operating Expenses:
  Current Income Taxes

     Federal                                    $49,979          $35,940
     State                                       13,538            6,050

  Deferred Income Taxes

     Federal                                      9,834           13,585
     State                                          660            1,706

  Foreign Income Taxes                            2,986            3,046
- ----------------------------------------------------------------------------
                                                 76,997           60,327

Other Income:
  Deferred Investment Tax Credit                   (788)            (499)

Minority Interest in Foreign Subsidiaries          (479)            (705)
- ----------------------------------------------------------------------------

Total Income Taxes                              $75,730          $59,123
============================================================================



<PAGE>


Item 1.  Financial Statements (Cont.)
         ----------------------------

The U.S. and foreign components of income before income taxes are as follows (in
thousands):

                                                     Nine Months Ended
                                                         June 30,

                                                2000                1999
- -------------------------------------------------------------------------------

U.S.                                          $193,042             $155,553
Foreign                                         13,075               14,174
- -------------------------------------------------------------------------------
                                              $206,117             $169,727
===============================================================================

           Total  income  taxes as reported  differ  from the amounts  that were
computed by applying the federal  income tax rate to income before income taxes.
The following is a reconciliation of this difference (in thousands):

                                                     Nine Months Ended
                                                         June 30,
                                               ---------------------------
                                                2000                 1999
                                               ---------------------------

Net income available for common stock         $130,387             $110,604
Total income taxes                              75,730               59,123
- -------------------------------------------------------------------------------

Income before income taxes                    $206,117             $169,727
===============================================================================

Income tax expense, computed at
 statutory rate of 35%                        $ 72,141             $ 59,404

Increase (reduction) in taxes resulting from:
  State income taxes                             9,229                5,045
  Depreciation                                   1,387                1,492
  Prior years tax adjustment                        37              (1,329)
  Foreign tax in excess of (less than)
   statutory rate                               (2,629)             (2,620)
  Miscellaneous                                 (4,435)             (2,869)
- -------------------------------------------------------------------------------

  Total Income Taxes                          $ 75,730             $ 59,123
===============================================================================

           Significant  components  of the  Company's  deferred tax  liabilities
(assets) were as follows (in thousands):
<TABLE>
<CAPTION>

                                                               At June 30, 2000             At September 30, 1999
                                                       --------------------------------- ----------------------------
<S>                                                                <C>                           <C>
Deferred Tax Liabilities:
  Excess of tax over book depreciation                              $219,521                     $227,881
  Exploration and intangible well drilling costs                     118,237                       95,034
  Other                                                               62,821                       39,040
- ---------------------------------------------------------------------------------------------------------------------
Total Deferred Tax Liabilities                                       400,579                      361,955
- ---------------------------------------------------------------------------------------------------------------------

Deferred Tax Assets:
  Capitalized overheads                                              (29,345)                     (26,861)
  Other                                                              (62,299)                     (60,086)
- ---------------------------------------------------------------------------------------------------------------------
Total Deferred Tax Assets                                            (91,644)                     (86,947)
- ---------------------------------------------------------------------------------------------------------------------

Total Net Deferred Income Taxes                                     $308,935                     $275,008
=====================================================================================================================
</TABLE>

<PAGE>

Item 1.  Financial Statements (Cont.)
         ----------------------------


           The Internal Revenue Service audits of the Company for the years 1977
- - 1994 were settled  during  December 1998. Net income for the nine months ended
June 30,  1999 was  increased  by  approximately  $3.9  million  as a result  of
interest, net of tax and other adjustments, related to this settlement.

Note 3 - Stock Acquisition

In June 2000,  National Fuel  Exploration  Corporation  (NFEC),  a  wholly-owned
subsidiary  of  Seneca,   acquired  the  outstanding   shares  of  Tri  Link,  a
Calgary-Alberta  based oil and gas exploration and production company.  The cost
of  acquiring  the  outstanding  shares  of Tri  Link was  approximately  $123.8
million.  The  acquisition  was  financed  with  short-term   borrowings.   Upon
completing this acquisition, Tri Link was amalgamated under the name of NFEC.

           The  acquisition of Tri Link was accounted for in accordance with the
purchase  method as specified by  Accounting  Principles  Board  Opinion No. 16.
NFEC's results of operations were incorporated  into the Company's  consolidated
financial  statements  for  the  period  subsequent  to  the  completion  of the
acquisition  of Tri  Link on June 15,  2000.  See  Note 4 -  Capitalization  for
discussion of the redemption of long-term debt, which was assumed as part of the
Tri Link stock acquisition.

Note 4 - Capitalization

Common  Stock.  During the nine months ended June 30, 2000,  the Company  issued
330,888 shares of common stock under the Company's  stock and benefit plans.  As
previously  discussed,  54,674 shares were issued for the purchase of the assets
of Cunningham Natural Gas Corporation.

           On February  17,  2000,  725,500  stock  options  were  granted at an
exercise price of $46.66 per share. On March 17, 2000, 25,000 stock options were
granted at an  exercise  price of $41.56 per share.  On June 15,  2000,  140,600
stock options were granted at an exercise price of $49.72 per share.

           In  February  2000,  the  Company  issued  $150.0  million  of  7.30%
medium-term notes due in February 2003. After deducting  underwriting  discounts
and commissions, the net proceeds to the Company amounted to $149.3 million. The
proceeds  of this  debt  issuance  were used to redeem  $50.0  million  of 6.60%
medium-term notes which matured in February 2000 and to reduce short-term debt.

           On June 27, 2000, NFEC paid approximately $96.2 million to redeem the
bank loans (CND 70.0  million,  USD 47.2 million) and  subordinated  convertible
debentures  (CND  72.7  million,  USD  49.0  million)  of  the  former Tri Link.
Short-term debt was used to redeem the bank loans and  subordinated  convertible
debentures.

Note 5 - Derivative Financial Instruments

Seneca has entered  into  certain  price swap  agreements,  no cost  collars and
options to manage a portion of the market risk associated  with  fluctuations in
the price of natural gas and crude oil in an effort to provide more stability to
its operating results.  These derivative financial  instruments are not held for
trading  purposes.  The price swap agreements call for Seneca to receive monthly
payments  from (or make  payments to) other  parties  based upon the  difference
between a fixed and a variable price as specified by the agreement.  The no cost
collars call for Seneca to receive  monthly  payments from (or make payments to)
other  parties  when a variable  price  falls below an  established  floor price
(Seneca  receives  payment  from the  counterparty)  or exceeds  an  established
ceiling price (Seneca pays the  counterparty).  The variable prices specified in
the price swap  agreements  and the no cost collars are either a crude oil price
quoted on the New York  Mercantile  Exchange  or a natural  gas price  quoted in
"Inside  FERC."  These  variable  prices are highly  correlated  with the market
prices received by Seneca for its natural gas and crude oil production. The fair
value of outstanding  natural gas and crude oil price swap  agreements,  no cost
collars and options  discussed below reflect the estimated  amounts Seneca would
pay or receive to terminate its  derivative  financial  instruments  at June 30,
2000.


<PAGE>

Item 1.  Financial Statements (Cont.)
         ----------------------------


           At June 30,  2000,  Seneca  had  natural  gas price  swap  agreements
covering a notional  amount of 36.4 billion cubic feet (Bcf)  extending  through
2003 at a weighted  average  fixed rate of $2.85 per thousand  cubic feet (Mcf).
Seneca also had crude oil price swap  agreements  covering a notional  amount of
8,703,895 barrels (bbls) extending through 2003 at a weighted average fixed rate
of $20.34 per bbl. The fair value of Seneca's  outstanding natural gas and crude
oil price swap agreements at June 30, 2000 was a net loss of approximately $74.6
million. This loss was offset by corresponding  unrecognized gains from Seneca's
anticipated  natural  gas and crude oil  production  over the terms of the price
swap agreements.

           Seneca  recognized  net  losses of $12.6  million  and $23.0  million
related to settlements of its price swap agreements  during the quarter and nine
months  ended June 30,  2000,  respectively.  During the quarter and nine months
ended  June 30,  1999,  Seneca  recognized  net gains of $0.3  million  and $6.2
million,  respectively,  related to its price swap  agreements.  Gains or losses
from Seneca's  price swap  agreements  are accrued in operating  revenues on the
Consolidated  Statement of Income at the contract  settlement dates. These gains
or losses were offset by corresponding gains or losses from Seneca's natural gas
and crude oil production.

           At June 30, 2000,  Seneca had no cost collars on natural gas covering
a notional  amount of 3.1 Bcf in 2001 with a  weighted  average  floor  price of
$3.69 per Mcf and a weighted average ceiling price of $6.00 per Mcf. Seneca also
had no cost  collars on crude oil covering a notional  amount of 1,500,000  bbls
extending through 2002 with a weighted average floor price of $22.00 per bbl and
a weighted  average  ceiling price of $29.03 per bbl. The fair value of Seneca's
outstanding  no cost collars on natural gas and crude oil at June 30, 2000 was a
net loss of  approximately  $0.1 million.  This loss was offset by corresponding
gains or losses from Seneca's natural gas and crude oil production.

           At June 30, 2000, Seneca had the following options outstanding:
<TABLE>
<CAPTION>

Type of Option                                 Notional Amount               Weighted Average Strike Price
- --------------                                 ---------------               -----------------------------
<S>                                    <C>                                         <C>
Written Call Options (1)               7.0 Bcf or 368,000 bbls                     $2.58/Mcf or $18.00/bbl
Written Put Option                                368,000 bbls                                  $12.50/bbl
Purchased Call Option                             368,000 bbls                                  $20.00/bbl
</TABLE>

(1) The  counterparty has a choice between a natural gas call option and a crude
    oil call  option,  depending on  whichever  option has greater  value to the
    counterparty.

         Seneca's call and put options are being  marked-to-market with gains or
losses recorded in Operating  Revenues on the Consolidated  Statement of Income.
The  mark-to-market  adjustment  for the quarter and nine months  ended June 30,
2000 was a loss of $7.4 million.  The mark-to-market  adjustment for the quarter
and nine months ended June 30, 1999 was a loss of $1.1  million.  The fair value
of the call and put  options at June 30,  2000 was a net loss of $11.1  million.
During  the  quarter  and nine  months  ended  June 30,  2000,  Seneca  paid the
counterparty  $4.1  million  and  $7.5  million,  respectively,  related  to the
exercise of a portion of the written call options and received  $3.1 million and
$8.0 million,  respectively,  from the counterparty related to Seneca's exercise
of a  portion  of the  $20.00  per  bbl  call  options  that  it had  purchased.
Settlements related to Seneca's call and put options during the quarter and nine
months ended June 30, 1999 were minor payments of less than $100,000.

         The Company is exposed to credit risk on the price swap  agreements and
no cost  collars  that Seneca has entered  into,  as well as on the call options
that  Seneca has  purchased.  Credit  risk  relates to the risk of loss that the
Company would incur as a result of nonperformance by counterparties  pursuant to
the terms of their  contractual  obligations.  To  mitigate  such  credit  risk,
management  performs  an  initial  credit  check  and then on an  ongoing  basis
monitors counterparty credit exposure.


<PAGE>

Item 1.  Financial Statements (Cont.)
         ----------------------------


         NFR utilizes  exchange-traded  futures and  exchange-traded  options to
manage a portion of the market risk associated with fluctuations in the price of
natural gas. Such futures and options are not held for trading purposes. At June
30, 2000, NFR had natural gas futures contracts covering 0.9 Bcf of gas on a net
basis (net short position) extending through 2002 at a weighted average contract
price of $3.87 per Mcf. NFR had purchased  natural gas options covering 70.2 Bcf
of gas extending  through 2001 at a weighted  average  strike price of $4.21 per
Mcf. NFR also had sold natural gas options  covering  60.4 Bcf of gas  extending
through  2001  at a  weighted  average  strike  price  of  $4.63  per  Mcf.  The
exchange-traded  futures  and  exchange-traded  options  are used to hedge NFR's
purchase and sale commitments and storage gas inventory. The fair value of NFR's
outstanding exchange-traded futures and exchange-traded options at June 30, 2000
was a net loss of  approximately  $5.9  million.  This fair value  reflects  the
estimated net amount that NFR would pay to terminate its exchange-traded futures
and exchange-traded options at June 30, 2000. This loss was substantially offset
by  corresponding  unrecognized  gains from the related  commodity  transaction.
Gains or losses from these  natural  gas  futures  and  options are  recorded in
either Other Deferred Credits or Deferred  Charges on the  Consolidated  Balance
Sheet until the hedged  commodity  transaction  occurs,  at which point they are
reflected in operating  revenues on the  Consolidated  Statement of Income.  NFR
recognized  net gains of $2.2 million and $4.0 million  related to these futures
contracts  and options  during the quarter and nine months  ended June 30, 2000,
respectively.  During the  quarter  and nine  months  ended June 30,  1999,  NFR
recognized net losses of $1.1 million and $6.5 million, respectively, related to
these futures  contracts and options.  These gains or losses were  substantially
offset by the related commodity transaction.

         NFR also utilizes  exchange-traded options as a financing mechanism for
its  hedging  program.  These  exchange-traded  options are not held for trading
purposes. At June 30, 2000, the notional amount of these exchange-traded options
was approximately  32.3 Bcf at a weighted average strike price of $4.28 per Mcf.
These  options  are being  marked-to-market  with  gains or losses  recorded  in
Operating  Revenues on the Consolidated  Statement of Income. The mark-to-market
adjustment  for the quarter  and nine  months  ended June 30, 2000 was a loss of
$5.3 million.  This represents the fair value of the exchange-traded  options at
June 30, 2000. There was not a corresponding  mark-to-market  adjustment  during
the quarter and nine months ended June 30, 1999.

         Privni severozapadni teplarenska, a.s. (PSZT) utilizes an interest rate
swap  to  mitigate   interest  rate  fluctuations  on  its  Czech  koruna  (CZK)
1,436,331,600  term loan  ($38.5  million  at June 30,  2000),  which  carries a
variable  interest rate of six month Prague Interbank Offered Rate (PRIBOR) plus
0.475%.  Under the terms of the interest  rate swap,  which  extends until 2002,
PSZT  pays a fixed  rate of 8.31%  and  receives  a  floating  rate of six month
PRIBOR.  PSZT recognized a loss of  approximately  $0.3 million and $0.7 million
related to this interest rate swap during the quarter and nine months ended June
30, 2000, respectively.  The fair value of PSZT's interest rate swap at June 30,
2000 was a loss of approximately $1.8 million.

Note 6 - Commitments and Contingencies

Environmental   Matters.   It  is  the  Company's  policy  to  accrue  estimated
environmental  clean-up costs  (investigation and remediation) when such amounts
can reasonably be estimated and it is probable that the Company will be required
to incur  such  costs.  Distribution  Corporation  and Supply  Corporation  have
estimated  their  clean-up  costs related to former  manufactured  gas plant and
former  gasoline plant sites and third party waste disposal sites will be in the
range of $8.1 million to $9.1 million. The minimum liability of $8.1 million has
been recorded on the Consolidated  Balance Sheet at June 30, 2000. Other than as
discussed in Note H of the 1999 Form 10-K  (referred  to below),  the Company is
currently  not  aware  of any  material  additional  exposure  to  environmental
liabilities.  However,  adverse  changes in  environmental  regulations or other
factors could impact the Company.

         The  Company is subject  to various  federal,  state and local laws and
regulations  relating  to the  protection  of the  environment.  The Company has
established  procedures for the ongoing evaluation of its operations to identify
potential  environmental  exposures  and comply  with  regulatory  policies  and
procedures.


<PAGE>

Item 1.  Financial Statements (Cont.)
         ----------------------------


         For further  discussion refer to Note H - Commitments and Contingencies
under the heading  "Environmental  Matters" in Item 8 of the Company's 1999 Form
10-K.

Other.  The Company is involved in  litigation  arising in the normal  course of
business.  The Company is involved in regulatory  matters  arising in the normal
course of business  that involve rate base,  cost of service and  purchased  gas
cost issues. While the resolution of such litigation or regulatory matters could
have a material  effect on  earnings  and cash flows in the year of  resolution,
none of this litigation,  and none of these regulatory matters,  are expected to
have a material adverse effect on the financial condition of the Company at this
time.

Note 7 - Business Segment Information.  The Company has six reportable segments:
Utility, Pipeline and Storage, Exploration and Production, International, Energy
Marketing,  and Timber.  The breakdown of the Company's  reportable  segments is
based upon a  combination  of factors  including  differences  in  products  and
services, regulatory environment and geographic factors.

         The data presented in the tables below reflect the reportable  segments
and reconciliations to consolidated  amounts.  There have been no changes in the
basis of segmentation nor in the basis of measuring  segment profit or loss from
those used in the 1999 Form 10-K.  There  have been no  material  changes in the
amount of assets for any  operating  segment  from the amounts  disclosed in the
1999 Form 10-K, except for the Exploration and Production  segment.  On June 15,
2000,  the  Exploration  and  Production  segment,  through  NFEC,  acquired the
outstanding  shares of Tri Link,  which included assets of $260.7  million.  See
further discussion of this acquisition in Note 3 - Stock Acquisition.


<PAGE>


Item 1.  Financial Statements (Concl.)
         -----------------------------
<TABLE>
<CAPTION>


Quarter Ended June 30, 2000 (Thousands)
- ------------------------------------------------------------------------------------------------------------------------------------
                           Pipeline  Exploration                                    Total               Corporate and
                           and           and                    Energy            Reportable             Intersegment     Total
                 Utility   Storage    Production  International Marketing Timber   Segments   All Other  Eliminations Consolidated
- ------------------------------------------------------------------------------------------------------------------------------------
<S>               <C>        <C>          <C>        <C>        <C>       <C>       <C>       <C>             <C>          <C>
Revenue from
External
Customers         $160,428   $19,736      $53,447    $15,303    $34,209   $10,662   $293,785  $(4,028)        $   -        $289,757

Intersegment
Revenues             4,022    22,104            -          -          -         -     26,126    4,322       (30,448)             -

Segment Profit:
Net Income (Loss)    5,565     7,324        6,026     (1,394)    (3,992)    1,155     14,684     (315)           99          14,468

Nine Months Ended June 30, 2000 (Thousands)
- ------------------------------------------------------------------------------------------------------------------------------------
                           Pipeline  Exploration                                    Total               Corporate and
                           and          and                     Energy            Reportable             Intersegment     Total
                 Utility   Storage    Production  International Marketing Timber   Segments   All Other  Eliminations  Consolidated
- ------------------------------------------------------------------------------------------------------------------------------------

Revenue from
External
Customers         $727,172   $61,775     $153,591    $92,985   $117,117   $30,933 $1,183,573     $982         $   -    $1,184,555

Intersegment
Revenues            16,868    66,425          224          -          -         -     83,517    4,323       (87,840)            -

Segment Profit:
Net Income (Loss)   68,843    26,762       21,910      7,606     (2,544)    6,175    128,752      212         1,423       130,387

Quarter Ended June 30, 1999 (Thousands)
- ------------------------------------------------------------------------------------------------------------------------------------
                                     Exploration                                     Total              Corporate and
                           Pipeline      and                    Energy             Reportable            Intersegment     Total
                 Utility   and        Production  International Marketing  Timber   Segments  All Other  Eliminations  Consolidated
                           Storage
- ------------------------------------------------------------------------------------------------------------------------------------

Revenue from
External
Customers         $141,960   $19,544      $38,655    $16,089    $25,979    $6,333   $248,560      $98         $   -      $248,658

Intersegment
Revenues             1,236    20,925        1,507          -          -         -     23,668        -       (23,668)            -

Segment Profit:
Net Income (Loss)    3,439     6,995        2,576     (2,495)       847       586     11,948      (43)          (65)       11,840

Nine Months Ended June 30, 1999 (Thousands)
- ------------------------------------------------------------------------------------------------------------------------------------
                           Pipeline  Exploration                                   Total                Corporate and
                           and           and                    Energy            Reportable             Intersegment     Total
                 Utility   Storage    Production  International Marketing Timber   Segments   All Other  Eliminations  Consolidated
- ------------------------------------------------------------------------------------------------------------------------------------

Revenue from
External
Customers         $705,581   $62,837      $99,001    $97,166    $82,253   $24,110 $1,070,948   $1,536         $   -    $1,072,484

Intersegment
Revenues             5,269    63,839        6,449          -          -         -     75,557        -       (75,557)            -

Segment Profit:
Net Income          62,438    30,094        2,982      7,996      1,730     4,445    109,685      162           757       110,604

</TABLE>



<PAGE>

Item 2.  Management's Discussion and Analysis of Financial Condition and Results
         -----------------------------------------------------------------------
         of Operations
         -------------

RESULTS OF OPERATIONS

Earnings.  The Company's earnings were $14.5 million,  or $0.37 per common share
($0.36 per common  share on a diluted  basis),  for the  quarter  ended June 30,
2000.  This compares with earnings of $11.8  million,  or $0.31 per common share
($0.30 per common  share on a diluted  basis),  for the  quarter  ended June 30,
1999.  The increase in earnings of  approximately  $2.7 million is the result of
higher earnings in the Exploration and Production, Utility, Timber, and Pipeline
and Storage segments. The increase in earnings also reflects a lower loss in the
current quarter for the International segment. These higher earnings were offset
in part by a loss in the Energy  Marketing  segment this year  compared with the
earnings reported in the prior year's quarter.

           The Company's earnings were $130.4 million, or $3.34 per common share
($3.30 per common share on a diluted basis),  for the nine months ended June 30,
2000. This compares with earnings of $110.6  million,  or $2.86 per common share
($2.84 per common share on a diluted basis),  for the nine months ended June 30,
1999. The increase in earnings of $19.8 million is the result of higher earnings
in the Exploration and Production,  Utility and Timber segments. These increases
were  offset  in  part  by  lower  earnings  in the  Pipeline  and  Storage  and
International segments and a loss in the Energy Marketing segment.

         Due to the  precipitous  rise in natural gas prices this  quarter,  the
Company  took a $12.7  million  pretax,  or $8.3  million  after  tax  charge to
earnings  for the  quarter  ended June 30,  2000.  This  charge  recognizes  the
estimated  net  value  related  to  written  put and call gas  option  contracts
scheduled  to be settled  over  various  periods of time from July 2000  through
February 2001.  Generally Accepted Accounting  Principles require the Company to
mark these contracts to market at the end of each quarter.  The contracts relate
to price risk management activities in the Exploration and Production and Energy
Marketing segments.  This mark-to-market  adjustment does not reflect the actual
gain or loss that will be realized upon settlement of the option contracts.

           Additional  discussion  of earnings in each of the business  segments
can be found in the business segment information that follows.

Earnings (Loss) by Segment
<TABLE>
<CAPTION>

- ----------------------------------------------------------------------------------------------------
                                    Three Months Ended                  Nine Months Ended
                                         June 30,                           June 30,
 ---------------------------------------------------------------------------------------------------
(Thousands)                           2000              1999             2000              1999
- ------------------------------ ---------------- ----------------- ---------------- -----------------
<S>                                  <C>               <C>             <C>               <C>
Utility                              $ 5,565           $ 3,439         $ 68,843          $ 62,438
Pipeline and Storage                   7,324             6,995           26,762            30,094
Exploration and Production             6,026             2,576           21,910             2,982
International                         (1,394)           (2,495)           7,606             7,996
Energy Marketing                      (3,992)              847           (2,544)            1,730
Timber                                 1,155               586            6,175             4,445
- ------------------------------ ---------------- ----------------- ---------------- -----------------
   Total Reportable Segments          14,684            11,948          128,752           109,685
All Other                               (315)              (43)             212               162
Corporate                                 99               (65)           1,423               757
- ------------------------------ ---------------- ----------------- ---------------- -----------------
   Total Consolidated                $14,468           $11,840         $130,387          $110,604
- ------------------------------ ---------------- ----------------- ---------------- -----------------
</TABLE>



<PAGE>


Item 2.  Management's Discussion and Analysis of Financial Condition and Results
         -----------------------------------------------------------------------
         of Operations (Cont.)
         ---------------------
<TABLE>
<CAPTION>

Utility

Utility Operating Revenues

- ----------------------------------------------------------------------------------------------------------------------
                                                          Three Months Ended                  Nine Months Ended
                                                               June 30,                           June 30,
- ----------------------------------------------------------------------------------------------------------------------
(Thousands)                                             2000              1999             2000              1999
- ------------------------------------------------ ---------------- ----------------- ---------------- -----------------
<S>                                                   <C>               <C>              <C>               <C>
  Retail Sales Revenues:
    Residential                                       $107,883          $100,924         $515,703          $521,457
    Commercial                                          15,856            15,214           84,418            93,444
    Industrial                                           3,742             2,618           13,217            11,988
- ------------------------------------------------ ---------------- ----------------- ---------------- -----------------
                                                       127,481           118,756          613,338           626,889
- ------------------------------------------------ ---------------- ----------------- ---------------- -----------------
  Off-System Sales                                       9,417             5,401           38,605            22,897
  Transportation                                        24,861            19,331           90,167            65,996
  Other                                                  2,691               (292)          1,930             (4,932)
- ------------------------------------------------ ---------------- ----------------- ---------------- -----------------
                                                      $164,450          $143,196         $744,040          $710,850
- ------------------------------------------------ ---------------- ----------------- ---------------- -----------------
</TABLE>
<TABLE>
<CAPTION>

Utility Throughput

- ------------------------------------------------ ---------------------------------- ----------------------------------
                                                          Three Months Ended                  Nine Months Ended
                                                               June 30,                           June 30,
- ------------------------------------------------ ---------------------------------- ----------------------------------
- ------------------------------------------------ ---------------- ----------------- ---------------- -----------------
(MMcf)                                                  2000              1999             2000              1999
- ------------------------------------------------ ---------------- ----------------- ---------------- -----------------
<S>                                                     <C>               <C>              <C>               <C>
  Retail Sales:
    Residential                                         11,305            11,222           62,766            66,199
    Commercial                                           1,907             1,926           11,425            13,055
    Industrial                                             851               747            2,929             2,978
- ------------------------------------------------ ---------------- ----------------- ---------------- -----------------
                                                        14,063            13,895           77,120            82,232
- ------------------------------------------------ ---------------- ----------------- ---------------- -----------------
  Off-System Sales                                       2,295             2,223           10,916            10,195
  Transportation                                        17,085            15,608           60,763            53,638
- ------------------------------------------------ ---------------- ----------------- ---------------- -----------------
                                                        33,443            31,726          148,799           146,065
- ------------------------------------------------ ---------------- ----------------- ---------------- -----------------
</TABLE>


2000 Compared with 1999

Operating  revenues for the Utility  segment  increased  $21.3 million and $33.2
million,  respectively,  for the quarter and nine months  ended June 30, 2000 as
compared  with the same  periods  a year ago.  For the  quarter,  this  increase
resulted from higher retail, transportation, off-system sales and other revenue.
For the nine months ended,  this increase  resulted from higher  transportation,
off-system  sales and other  revenue,  offset in part by lower  retail gas sales
revenues.

         The increase in retail gas sales  revenue for the quarter was primarily
the result of the recovery of higher gas costs and slightly higher volumes sold.
The recovery of higher gas costs  resulted  from a much higher cost of purchased
gas (the average  cost of purchased  gas was $5.21 per Mcf and $3.87 per Mcf for
the three  months  ended  June 30,  2000 and  1999,  respectively).  The  slight
increase in sales volumes was the result of colder weather, offset by the impact
of the  migration  of  residential  and small  commercial  retail  customers  to
transportation service in both the New York and Pennsylvania jurisdictions. This
migration to  transportation  service was also the primary cause of the increase
in volumes transported and transportation revenue.


<PAGE>


Item 2.  Management's Discussion and Analysis of Financial Condition and Results
         -----------------------------------------------------------------------
         of Operations (Cont.)
         ---------------------

         The  decrease  in retail gas sales  revenue for the nine months was the
result  of lower  volumes  of retail  gas  sales  because  of the  migration  of
residential and small  commercial  retail customers to  transportation  service.
This was offset in part by a higher  average cost of purchased  gas (the average
cost of  purchased  gas was $4.55 per Mcf and $3.64 per Mcf, for the nine months
ended June 30, 2000 and 1999,  respectively).  This migration to  transportation
service was also the primary  cause of the increase in volumes  transported  and
transportation revenue. Restructuring in the Utility segment's service territory
is further discussed in the "Rate Matters" section that follows.

         Off-system gas sales revenue  increased $4.0 million and $15.7 million,
respectively,  for the quarter and nine months ended June 30, 2000,  as compared
with the same  periods  a year  ago,  largely  due to  increased  gas  prices in
combination  with higher  volumes.  However,  due to profit  sharing with retail
customers, the margins resulting from off-system sales are minimal.

         Other  operating  revenues  increased  $3.0  million and $6.9  million,
respectively,  for the quarter and nine months ended June 30, 2000,  as compared
with the same periods a year ago.  Other  operating  revenues in the quarter and
nine months ended June 30, 1999 were  reduced by $1.6 million and $6.5  million,
respectively,  for the  recording of a special gas  restructuring  reserve to be
applied  against  incremental  costs that could  result from the New York Public
Service  Commission's  (NYPSC)  gas  restructuring  effort.  No such  reserve is
required  in 2000 by the terms of the New York rate  settlement  of 1998.  Other
operating  revenues for the quarter and nine months ended June 30, 2000, include
revenue of $2.0 million  accrued to offset  additional  state income taxes which
resulted  from the  enactment of tax changes in New York State.  The revenue and
related  regulatory  asset  were  recorded  as the  NYPSC has  provided  for the
opportunity  of rate  recovery by New York State  utilities  of such  additional
taxes.   Partly   offsetting  these  increases  to  other  operating   revenues,
Distribution Corporation accrued an estimated refund provision for a 50% sharing
with customers of earnings over a  predetermined  amount in accordance  with the
New York rate  settlement  of 1998.  The  estimated  refund  provision  was $1.1
million for the quarter ended June 30, 2000 and $3.3 million for the nine months
ended June 30, 2000.

         The Utility segment's third quarter 2000 earnings were $5.6 million, an
increase of $2.1 million when  compared with third  quarter 1999  earnings.  The
most significant reasons for the increase were that last year's quarter included
a portion (approximately $1.0 million reduction to earnings) of the 1999 special
gas restructuring reserve, as discussed above, and the current quarter had lower
operation and  maintenance  (O&M) expense of  approximately  $1.3 million (after
tax). This lower O&M expense is due in part to a charge for an early  retirement
offer in 1999.  Partially  offsetting  these  increases,  the third quarter 2000
earnings  included an estimated  refund  provision  (approximately  $0.7 million
reduction to earnings), which is also discussed above.

         The Utility segment's  earnings for the nine months ended June 30, 2000
were $68.8 million,  an increase of $6.4 million when compared with the earnings
for the nine  months  ended  June 30,  1999.  This  increase  can be  attributed
primarily to expenses related to early retirement offers in 1999  (approximately
$3.7  million  reduction  to earnings  in 1999) as well as the 1999  special gas
restructuring  reserve  (approximately  $4.2  million  reduction  to earnings in
1999),  which was discussed above.  Both the early retirement offers and the gas
restructuring  reserve did not recur in 2000. Partly offsetting these increases,
the nine  months  ended June 30, 2000  earnings  included  an  estimated  refund
provision  (approximately  $2.1 million  reduction to  earnings),  as previously
discussed.


<PAGE>
Item 2.  Management's Discussion and Analysis of Financial Condition and Results
         -----------------------------------------------------------------------
         of Operations (Cont.)
         ---------------------

<TABLE>
<CAPTION>
Degree Days
- ----------------------------------------------------------------------------------------------------------------------
                                                                                             Percent (Warmer)
Three Months Ended                                                                              Colder Than
                                                                                      --------------------------------
June 30                               Normal          2000              1999               Normal        Prior Year
- ---------------------------------- -------------- -------------- -------------------- ----------------- --------------
<S>                                   <C>            <C>               <C>                 <C>               <C>
Buffalo                                 976            936               817                (4.1%)           14.6%
Erie                                    874            835               755                (4.5%)           10.6%
- ---------------------------------- -------------- -------------- -------------------- ----------------- --------------
Nine Months Ended
June 30
- ---------------------------------- -------------- -------------- -------------------- ----------------- --------------
Buffalo                                6,733          6,090             6,066               (9.5%)           0.4%
Erie                                   6,130          5,478             5,513              (10.6%)          (0.6%)
- ---------------------------------- -------------- -------------- -------------------- ----------------- --------------
</TABLE>
<TABLE>
<CAPTION>

Pipeline and Storage

Pipeline and Storage Operating Revenues
- ----------------------------------------------------------------------------------------------------------------------
                                                          Three Months Ended                  Nine Months Ended
                                                               June 30,                           June 30,
- ------------------------------------------------ ---------------------------------- ----------------------------------
(Thousands)                                             2000              1999             2000              1999
- ------------------------------------------------ ---------------- ----------------- ---------------- -----------------
<S>                                                    <C>               <C>              <C>               <C>
Firm Transportation                                    $22,663           $21,810          $69,078           $68,951
Interruptible Transportation                               826               243            1,800               995
- ------------------------------------------------ ---------------- ----------------- ---------------- -----------------
                                                        23,489            22,053           70,878            69,946
- ------------------------------------------------ ---------------- ----------------- ---------------- -----------------
Firm Storage Service                                    15,594            15,654           47,706            47,117
Interruptible Storage Service                               38                 9              211               172
- ------------------------------------------------ ---------------- ----------------- ---------------- -----------------
                                                        15,632            15,663           47,917            47,289
- ------------------------------------------------ ---------------- ----------------- ---------------- -----------------
Other                                                    2,719             2,753            9,405             9,441
- ------------------------------------------------ ---------------- ----------------- ---------------- -----------------
                                                       $41,840           $40,469         $128,200          $126,676
- ------------------------------------------------ ---------------- ----------------- ---------------- -----------------
</TABLE>

<TABLE>
<CAPTION>

Pipeline and Storage Throughput
- ----------------------------------------------------------------------------------------------------------------------
                                                          Three Months Ended                  Nine Months Ended
                                                               June 30,                           June 30,
- ------------------------------------------------ ---------------------------------- ----------------------------------
(MMcf)                                                  2000              1999             2000              1999
- ------------------------------------------------ ---------------- ----------------- ---------------- -----------------
<S>                                                     <C>               <C>             <C>               <C>
Firm Transportation                                     52,834            53,970          237,575           240,395
Interruptible Transportation                             4,752               418            7,199             4,099
- ------------------------------------------------ ---------------- ----------------- ---------------- -----------------
                                                        57,586            54,388          244,774           244,494
- ------------------------------------------------ ---------------- ----------------- ---------------- -----------------
</TABLE>


2000 Compared with 1999

Operating  revenues for the Pipeline and Storage segment  increased $1.4 million
and  $1.5  million  for the  quarter  and  nine  months  ended  June  30,  2000,
respectively,  as compared with the same period a year ago. Approximately,  $1.3
million of these increases  relates to a "pass through" type item (which did not
recur in 2000)  that  reduced  revenues  in the prior  year and  correspondingly
reduced  O&M expense in the prior  year,  thus  having no bottom  line  earnings
impact.

         The Pipeline and Storage  segment's  third  quarter 2000  earnings were
$7.3  million,  an increase of $0.3 million when compared with the third quarter
of 1999's earnings. Lower O&M expense, due in part to a charge in the prior year
for an early retirement,  increased earnings for the quarter.  The impact of the
recently enacted New York State tax changes, as discussed in the Utility segment
above, mostly offset the O&M savings.  The Federal Energy Regulatory  Commission
(FERC),  which  regulates  this  segment,  has not  provided for the recovery of
additional taxes as has the NYPSC.
<PAGE>


Item 2.  Management's Discussion and Analysis of Financial Condition and Results
         -----------------------------------------------------------------------
         of Operations (Cont.)
         ---------------------

         The Pipeline and Storage  segment's  earnings for the nine months ended
June 30, 2000 were $26.8 million,  a decrease of $3.3 million when compared with
the  earnings  for the nine months  ended June 30,  1999.  The most  significant
reason for this  decrease is that the prior year's  earnings  included  interest
income  and a  reduction  in income  taxes  related to the final  settlement  of
Internal  Revenue  Service  audits of years  1977-1994.  This,  coupled with the
negative  impact of New York State tax  changes,  discussed  above,  resulted in
decreased earnings.
<TABLE>
<CAPTION>

Exploration and Production

Exploration and Production Operating Revenues

- ----------------------------------------------------------------------------------------------------------------------
                                                      Three Months Ended                 Nine Months Ended
                                                           June 30,                           June 30,
- ------------------------------------------------ ---------------------------------- ----------------------------------
(Thousands)                                            2000              1999             2000              1999
- ------------------------------------------------ ---------------- ----------------- ---------------- -----------------
<S>                                                    <C>               <C>              <C>               <C>
  Gas (after Hedging)                                  $28,321           $23,823          $83,532           $61,502
  Oil (after Hedging)                                   28,624            14,271           66,059            35,585
  Gas Processing Plant                                   4,170             2,734           12,541             8,326
  Other                                                 (7,668)            (666)           (8,317)               37
- ------------------------------------------------ ---------------- ----------------- ---------------- -----------------
                                                       $53,447           $40,162         $153,815          $105,450
- ------------------------------------------------ ---------------- ----------------- ---------------- -----------------
</TABLE>


2000 Compared with 1999

Operating  revenues for the Exploration and Production  segment  increased $13.3
million and $48.4 million,  respectively,  for the quarter and nine months ended
June 30,  2000,  as compared  with the same  periods a year ago. For the quarter
ended June 30, 2000,  gas  production  revenue  (after  hedging)  increased $4.5
million and oil production  revenue (after hedging)  increased $14.4 million due
to increased production and prices. For the nine months ended June 30, 2000, gas
production  revenue (after  hedging) and oil production  revenue (after hedging)
increased  $22.0  million  and $30.5  million,  respectively,  due to  increased
production  and prices.  Refer to the tables  below for  production  volumes and
average price  information.  Revenue from Seneca's gas  processing  plant was up
$1.4  million and $4.2  million,  respectively,  for the quarter and nine months
ended  June  30,  2000 as  compared  with  the  same  periods  a year ago due to
increased  prices for gas liquids and  residue.  Other  revenue  decreased  $7.0
million and $8.4  million,  respectively,  for the quarter and nine months ended
June 30, 2000,  as compared  with the same periods a year ago. The  decreases to
other  revenues  resulted  primarily  from   mark-to-market  and  other  revenue
adjustments  related to written options.  Refer to further discussion of written
options in the "Market Risk Sensitive  Instruments"  section that follows and in
Item 1, Note 5 - Derivative Financial Instruments.

         The  Exploration  and Production  segment's third quarter 2000 earnings
were $6.0 million,  an increase of $3.4 million when compared with third quarter
1999  earnings.  As  discussed  above,  significant  improvement  in oil and gas
pricing combined with an increase in production were the main reasons for higher
earnings.  A  20%  increase  in  oil  production  was  attributable  largely  to
production  from the  Canadian  wells  acquired  by  National  Fuel  Exploration
Corporation (NFEC) (a 100% wholly-owned subsidiary of Seneca) as part of the Tri
Link Resources, Ltd. (Tri Link) stock acquisition in mid-June. Partly offsetting
these  increases in revenues were increases in depletion  expense (due to higher
production  volumes and higher depletable  base),  lease operating costs (due to
increased production),  a negative  mark-to-market revenue adjustment related to
written options,  and increased  interest  expense due to higher  borrowings and
higher weighted average interest rates.


<PAGE>


Item 2.  Management's Discussion and Analysis of Financial Condition and Results
         -----------------------------------------------------------------------
         of Operations (Cont.)
         ---------------------

         The Exploration and Production  segment's  earnings for the nine months
ended June 30,  2000 were $21.9  million,  an  increase  of $18.9  million  when
compared with the earnings for the nine months ended June 30, 1999. As discussed
above,  significant improvement in oil and gas pricing combined with an increase
in production were the main reasons for higher earnings. Partly offsetting these
increases were higher depletion expense and lease operating costs. Earnings were
also reduced due to revenue  adjustments  related to written  options  discussed
above.  Also,  there  was  a  decrease  in  interest  income  as  1999  included
nonrecurring  interest  received from the final  settlement of the IRS audits in
December  1998.  In  addition,  there was an increase  in interest  expense as a
result of increased borrowings and higher weighted average interest rates.
<TABLE>
<CAPTION>

Production Volumes

- ----------------------------------------------------------------------------------------------------------------------
                                                       Three Months Ended                  Nine Months Ended
                                                            June 30,                           June 30,
- ------------------------------------------------ ---------------------------------- ----------------------------------
                                                        2000              1999             2000              1999
- ------------------------------------------------ ---------------- ----------------- ---------------- -----------------
<S>                                                      <C>               <C>             <C>               <C>
Gas Production (MMcf)
  Gulf Coast                                             8,860             8,532           24,948            21,473
  West Coast                                             1,058             1,050            3,301             2,839
  Appalachia                                             1,100             1,069            3,252             3,381
  Canada                                                    17                 -               17                 -
- ------------------------------------------------ ---------------- ----------------- ---------------- -----------------
                                                        11,035            10,651           31,518            27,693
- ------------------------------------------------ ---------------- ----------------- ---------------- -----------------
Oil Production (thousands of barrels)

  Gulf Coast                                               372               352            1,025             1,022
  West Coast                                               714               664            2,106             1,957
  Appalachia                                                 3                 2                7                 7
  Canada                                                   128                 -              128                 -
- ------------------------------------------------ ---------------- ----------------- ---------------- -----------------
                                                         1,217             1,018            3,266             2,986
- ------------------------------------------------ ---------------- ----------------- ---------------- -----------------
</TABLE>

<TABLE>
<CAPTION>

Average Prices

- ----------------------------------------------------------------------------------------------------------------------
                                                        Three Months Ended                 Nine Months Ended
                                                             June 30,                           June 30,
- ------------------------------------------------ ---------------------------------- ----------------------------------
                                                        2000              1999             2000              1999
- ------------------------------------------------ ---------------- ----------------- ---------------- -----------------
<S>                                                      <C>               <C>              <C>               <C>
Average Gas Price/Mcf
  Gulf Coast                                              $3.57             $2.19            $2.93             $1.99
  West Coast                                              $3.58             $2.30            $3.02             $2.17
  Appalachia                                              $3.03             $2.31            $2.94             $2.42
  Canada                                                  $2.68                 -            $2.68                 -
  Weighted Average                                        $3.52             $2.22            $2.94             $2.06
  Weighted Average After Hedging                          $2.57             $2.24            $2.65             $2.22

Average Oil Price/bbl
  Gulf Coast                                             $28.83            $16.54           $27.06            $13.41
  West Coast                                             $24.15            $12.60           $22.70            $10.19
  Appalachia                                             $27.16            $14.95           $24.23            $13.19
  Canada                                                 $28.58                 -           $28.58                 -
  Weighted Average                                       $26.06            $13.97           $24.30            $11.30
  Weighted Average After Hedging                         $23.52            $14.02           $20.22            $11.92
- ------------------------------------------------ ---------------- ----------------- ---------------- -----------------
</TABLE>



<PAGE>


Item 2.  Management's Discussion and Analysis of Financial Condition and Results
         -----------------------------------------------------------------------
         of Operations (Cont.)
         ---------------------
<TABLE>
<CAPTION>

International

International Operating Revenues

- ----------------------------------------------------------------------------------------------------------------------
                                                       Three Months Ended                  Nine Months Ended
                                                            June 30,                           June 30,
- ------------------------------------------------ ---------------------------------- ----------------------------------
(Thousands)                                             2000              1999             2000              1999
- ------------------------------------------------ ---------------- ----------------- ---------------- -----------------

<S>                                                      <C>             <C>                <C>             <C>
   Heating                                                $7,601          $8,221            $64,291         $68,020
   Electricity                                             7,141           7,853             25,466          27,224
   Other                                                     561              15              3,228           1,922
- ------------------------------------------------ ---------------- ----------------- ---------------- -----------------
                                                         $15,303         $16,089            $92,985         $97,166
- ------------------------------------------------ ---------------- ----------------- ---------------- -----------------
</TABLE>
<TABLE>
<CAPTION>

International Heating and Electric Volumes

- ----------------------------------------------------------------------------------------------------------------------
                                                      Three Months Ended                  Nine Months Ended
                                                           June 30,                           June 30,
- ------------------------------------------------ ---------------------------------- ----------------------------------
                                                        2000              1999             2000              1999
- ------------------------------------------------ ---------------- ----------------- ---------------- -----------------

<S>                                                    <C>               <C>              <C>               <C>
   Heating Sales (Gigajoules) (1)                      1,199,835         1,266,929        9,464,307         9,502,415
   Electricity Sales (megawatt hours)                    271,823           279,987          911,520           897,829

- ------------------------------------------------ ---------------- ----------------- ---------------- -----------------
</TABLE>

(1) Gigajoules = one billion joules.  A joule is a unit of energy.


2000 Compared with 1999

Operating revenues for the International segment decreased $0.8 million and $4.2
million,  respectively,  for the quarter and nine months  ended June 30, 2000 as
compared to the same periods a year ago. The decrease reflects a decrease in the
value of the Czech koruna as well as the impact of warm weather and conservation
efforts by customers.

         The  International  segment  experienced a loss of $1.4 million for the
third  quarter  2000,  $1.1 million  lower than the loss of $2.5 million for the
third  quarter of 1999.  This lower loss was primarily due to lower O&M expenses
and additional consideration received on the sale of a previous project.

         The International segment's earnings for the nine months ended June 30,
2000 were $7.6  million,  a decrease  of $0.4  million  when  compared  with the
earnings  for the  nine  months  ended  June  30,  1999.  This  decrease  can be
attributed   primarily  to  lower   margins   stemming  from  warm  weather  and
conservation  efforts by customers combined with the decline in the value of the
Czech koruna. These factors were offset, in part, by lower O&M expenses.


<PAGE>


Item 2.  Management's Discussion and Analysis of Financial Condition and Results
         -----------------------------------------------------------------------
         of Operations (Cont.)
         ---------------------

<TABLE>
<CAPTION>

Energy Marketing

Energy Marketing Operating Revenues

- ----------------------------------------------------------------------------------------------------------------------
                                                        Three Months Ended                 Nine Months Ended
                                                             June 30,                           June 30,
- ------------------------------------------------ ---------------------------------- ----------------------------------
(Thousands)                                             2000              1999             2000              1999
- ------------------------------------------------ ---------------- ----------------- ---------------- -----------------

<S>                                                     <C>               <C>             <C>                <C>
Natural Gas (after Hedging)                             $38,631           $25,407         $120,193           $81,693
Electricity                                                 536               471            1,290             1,179
Other                                                    (4,958)              101           (4,366)             (619)
- ------------------------------------------------ ---------------- ----------------- ---------------- -----------------
                                                        $34,209           $25,979         $117,117           $82,253
- ------------------------------------------------ ---------------- ----------------- ---------------- -----------------
</TABLE>

<TABLE>
<CAPTION>

Energy Marketing Volumes

- ----------------------------------------------------------------------------------------------------------------------
                                                        Three Months Ended                 Nine Months Ended
                                                             June 30,                           June 30,
- ------------------------------------------------ ---------------------------------- ----------------------------------
                                                           2000              1999             2000              1999
- ------------------------------------------------ ---------------- ----------------- ---------------- -----------------

<S>                                                       <C>               <C>             <C>               <C>
Natural Gas - (MMcf)                                      9,233             8,892           31,496            29,231
- ------------------------------------------------ ---------------- ----------------- ---------------- -----------------
</TABLE>

2000 Compared with 1999
Operating  revenues for the Energy Marketing  segment increased $8.2 million and
$34.9  million,  respectively,  for the quarter  and nine months  ended June 30,
2000,  as compared  with the same  periods a year ago.  This  increase  reflects
higher  marketing  volumes and  revenues as NFR's  customer  base  continues  to
increase.  These  increases  were  partly  offset  by a  negative  $5.3  million
mark-to-market  adjustment  related to written put and call gas option contracts
for the quarter and nine months ended June 30, 2000  (included in "Other" on the
table above). The mark-to-market  adjustment does not reflect the actual gain or
loss that will be realized upon settlement of the option contracts.  At July 31,
2000, NFR had settled 73% of these written put and call gas option  contracts at
a net gain of approximately $0.9 million.

         NFR utilizes  exchange-traded  futures and  exchange-traded  options to
manage a portion of the market risk associated with fluctuations in the price of
natural  gas.  Refer to  further  discussion  of these  hedging  activities  and
discussion of written options in the "Market Risk Sensitive Instruments" section
that follows and in Item 1, Note 5 - Derivative Financial Instruments.

         The Energy  Marketing  segment incurred losses for both the quarter and
nine months ended June 30, 2000.  When  compared to the same periods a year ago,
earnings  decreased  $4.8  million for the quarter and $4.3 million for the nine
month  period.  The  most  significant  reason  for  these  decreases  were  the
mark-to-market adjustments related to written put and call gas option contracts,
noted above.

<TABLE>
<CAPTION>
Timber

Timber Operating Revenues

- ----------------------------------------------------------------------------------------------------------------------
                                                        Three Months Ended                 Nine Months Ended
                                                             June 30,                           June 30,
- ------------------------------------------------ ---------------------------------- ----------------------------------
(Thousands)                                             2000              1999             2000              1999
- ------------------------------------------------ ---------------- ----------------- ---------------- -----------------

<S>                                                      <C>               <C>             <C>               <C>
Log Sales                                                $6,334            $2,757          $19,688           $14,610
Green Lumber Sales                                        1,272             1,045            3,401             3,142
Kiln Dry Lumber Sales                                     2,950             2,518            7,414             5,840
Other                                                       106                13              430               518
                                                 ---------------- ----------------- ---------------- -----------------
                                                        $10,662            $6,333          $30,933           $24,110
- ------------------------------------------------ ---------------- ----------------- ---------------- -----------------
</TABLE>


<PAGE>


Item 2.  Management's Discussion and Analysis of Financial Condition and Results
         -----------------------------------------------------------------------
         of Operations (Cont.)
         ---------------------


<TABLE>
<CAPTION>

- ----------------------------------------------------------------------------------------------------------------------
                                                        Three Months Ended                 Nine Months Ended
                                                             June 30,                           June 30,
- ------------------------------------------------ ---------------------------------- ----------------------------------
Board Feet (Thousands)                                  2000              1999             2000              1999
- ------------------------------------------------ ---------------- ----------------- ---------------- -----------------

<S>                                                       <C>               <C>             <C>               <C>
Log Sales                                                 2,331             1,111            7,439             5,000
Green Lumber Sales                                        2,251             2,135            6,405             6,767
Kiln Dry Lumber Sales                                     2,046             1,818            5,343             4,122
                                                 ---------------- ----------------- ---------------- -----------------
                                                          6,628             5,064           19,187            15,889
- ------------------------------------------------ ---------------- ----------------- ---------------- -----------------
</TABLE>

2000 Compared with 1999
Operating  revenues  for the Timber  segment  increased  $4.3  million  and $6.8
million,  respectively,  for the quarter and nine months ended June 30, 2000, as
compared with the same periods a year ago. The increase for the quarter and nine
month period resulted primarily from higher veneer log sales and kiln dry lumber
sales.  The  increase  in kiln  dry  lumber  sales  is due to the  operation  of
additional kilns purchased late in the quarter ended December 31, 1998.

         Earnings in the Timber segment increased $0.6 million and $1.7 million,
respectively,  for the quarter and nine months ended June 30, 2000,  as compared
with the same  periods a year ago.  The increase for the quarter and nine months
is the result of higher log and lumber sales,  partly offset by higher  interest
expense   resulting  from  higher  debt  related  to  the  PennzEnergy   Company
acquisition  in July  1999.  For the nine  month  period  a pretax  gain of $2.3
million  ($1.5  million  after  tax) on the  sale of land  and  standing  timber
increased earnings of this segment.

Other Income and Interest Charges
Although  variances in Other Income items and Interest  Charges are discussed in
the earnings discussion by segment above, following is a recap on a consolidated
basis:

Other Income
Other income increased $0.6 million for the quarter ended June 30, 2000 compared
with the quarter ended June 30, 1999. This increase resulted  primarily from the
$0.5  million of  additional  consideration  received  on the sale of a previous
project in the International segment.

         Other income  decreased $0.2 million for the nine months ended June 30,
2000 compared with the nine months ended June 30, 1999.  This decrease  resulted
mainly from  approximately  $3.2 million of interest income related to the final
settlement  of IRS audits for years 1977 - 1994 which was  recorded  during 1999
and did not recur this year.  Partially offsetting this decrease was the gain on
the sale of land and standing  timber in the second  quarter of 2000, as well as
the additional  consideration  received on the sale of a previous project,  both
noted above.

Interest Charges
Interest on  long-term  debt  increased  $1.4  million and $0.8  million for the
quarter and nine months ended June 30, 2000, respectively,  as compared with the
quarter and nine months ended June 30,  1999.  This  increase can be  attributed
primarily to a higher average amount of long-term debt outstanding combined with
higher weighted average interest rates.


<PAGE>


Item 2.  Management's Discussion and Analysis of Financial Condition and Results
         -----------------------------------------------------------------------
         of Operations (Cont.)
         ---------------------


         Other  interest  charges  increased  $0.8 million for the quarter ended
June 30,  2000.  This  increase  resulted  mainly from higher  weighted  average
interest  rates in the current  quarter,  offset  partially by a decrease in the
average amount of short-term  debt  outstanding.  For the nine months ended June
30, 2000, other interest charges increased $4.5 million. Higher weighted average
interest  rates for the  nine-month  period  together  with an  increase  in the
average  amount of short-term  debt  outstanding  contributed  to this increase.
Also, a reduction in interest  charges was recorded in 1999 related to the final
settlement of IRS audits of years 1977 - 1994.

CAPITAL RESOURCES AND LIQUIDITY

The Company's  primary  sources of cash during the nine-month  period ended June
30, 2000, consisted of cash provided by operating activities, long-term debt and
short-term bank loans and commercial  paper.  These sources were supplemented by
issuances of common stock under the Company's stock and benefit plans.

Operating Cash Flow.

Internally  generated  cash from  operating  activities  consists  of net income
available for common stock, adjusted for non-cash expenses,  non-cash income and
changes  in  operating   assets  and   liabilities.   Non-cash   items   include
depreciation,  depletion and  amortization,  deferred  income taxes and minority
interest in foreign subsidiaries.

         Cash  provided by operating  activities in the Utility and the Pipeline
and Storage  segments  may vary from  period to period  because of the impact of
rate cases. In the Utility segment,  supplier refunds,  over- or under-recovered
purchased gas costs and weather also significantly  impact cash flow. The impact
of weather  on cash flow is  tempered  in the  Utility  segment's  New York rate
jurisdiction  by its WNC and in the  Pipeline  and  Storage  segment  by  Supply
Corporation's straight fixed-variable rate design.

         Because  of the  seasonal  nature of the  Company's  heating  business,
revenues  are  relatively  high  during  the  nine  months  ended  June  30  and
receivables  historically  increase  from  September  to June  because of winter
weather.

         The storage gas inventory normally declines during the first and second
quarters of the year and is  replenished  during the third and fourth  quarters.
For storage gas  inventory  accounted  for under the last-in,  first-out  (LIFO)
method,  the current cost of replacing gas withdrawn from storage is recorded in
the  Consolidated  Statements  of Income and a reserve  for gas  replacement  is
recorded in the  Consolidated  Balance  Sheets and is included under the caption
"Other  Accruals  and  Current  Liabilities."  Such  reserve  is  reduced as the
inventory is replenished.

         Net cash provided by operating  activities  totaled  $261.1 million for
the nine months ended June 30, 2000, an increase of $13.0 million  compared with
$248.0 million  provided by operating  activities for the nine months ended June
30, 1999. The increase can be attributed  primarily to higher cash receipts from
the sale of oil and gas and  lower  interest  payments  in the  Exploration  and
Production  segment.  Higher cash receipts for oil and gas  production  resulted
from increased oil and gas production and significantly higher prices.  Interest
payments are down in this segment due to the  retirement  of the HarCor  Energy,
Inc. 14.875% Senior Secured Notes in March 1999 and July 1999.


<PAGE>


Item 2.  Management's Discussion and Analysis of Financial Condition and Results
         -----------------------------------------------------------------------
         of Operations (Cont.)
         ---------------------

Investing Cash Flow.

Expenditures for Long-Lived Assets
- ----------------------------------

Expenditures  for  long-lived  assets include  additions to property,  plant and
equipment  (capital   expenditures)  and  investments  in  corporations   (stock
acquisitions) or partnerships, net of any cash acquired.

         The Company's expenditures for long-lived assets totaled $314.2 million
during the nine  months  ended June 30,  2000.  The table below  presents  these
expenditures:
<TABLE>
<CAPTION>

- ---------------------------------------------------------------------------------------------------------------------
Nine Months Ended June 30, 2000
(in millions of dollars)
- ---------------------------------------------------------------------------------------------------------------------
                                                                          Investments in              Total
                                                     Capital               Corporations          Expenditures for
                                                   Expenditures          and Partnerships        Long-Lived Assets
- ---------------------------------------------------------------------------------------------------------------------

<S>                                                   <C>                      <C>                    <C>
   Utility                                            $ 43.1                    $  -                   $43.1
   Pipeline and Storage                                27.8(1)                   1.8                    29.6
   Exploration and Production                           96.4                   123.8                   220.2
   International                                         6.3                       -                     6.3
   Timber                                               11.4                       -                    11.4
   Energy Marketing                                        -                       -                       -
   All Other                                             1.0                     2.6                     3.6
- ---------------------------------------------------------------------------------------------------------------------
                                                     $186.0(1)                $128.2                  $314.2
- ---------------------------------------------------------------------------------------------------------------------
</TABLE>

(1)Includes non-cash acquisition of $1.2 million in a stock-for-asset swap.

Utility
- -------

The majority of the Utility  capital  expenditures  were made for replacement of
mains and main extensions, as well as for the replacement of service lines.

Pipeline and Storage
- --------------------

The  majority of the  Pipeline and Storage  capital  expenditures  were made for
additions,  improvements,  and  replacements to this segment's  transmission and
storage systems. Of the total capital expenditures,  $9.2 million was related to
Supply  Corporation's  acquisition of another company's  interest in the Niagara
Spur  Loop  Line  and  the  Ellisburg-Leidy   pipeline  in  January  2000.  This
acquisition was financed with short-term  borrowings.  The capital  expenditures
also  include  approximately  $1.2  million  of  natural  gas wells and  related
pipelines as well as some undeveloped  timber property  acquired from Cunningham
Natural  Gas  Corporation  (Cunningham)  in  November  1999.  These  assets were
acquired  through the  issuance of 54,674  shares of Company  common  stock.  In
addition  to the assets  identified  above,  the Company  received  Cunningham's
temporary cash investments in exchange for the shares of Company common stock.


<PAGE>


Item 2.  Management's Discussion and Analysis of Financial Condition and Results
         -----------------------------------------------------------------------
         of Operations (Cont.)
         ---------------------


         During the nine months  ended June 30,  2000,  SIP made a $1.8  million
investment in Independence  Pipeline  Company,  a Delaware  general  partnership
(Independence), and had an aggregate investment balance of $12.9 million at June
30, 2000.  This  investment  represents a one-third  partnership  interest.  The
investment has been financed with short-term borrowings. Independence intends to
build a 370 mile natural gas pipeline (the Independence Pipeline) from Defiance,
Ohio  to  Leidy,  Pennsylvania  at  an  estimated  cost  of  $680  million.*  If
construction never begins on the Independence  Pipeline project,  SIP's share of
the development  costs (including SIP's investment in Independence) is estimated
not to exceed $15.0 million.*

           On July 12, 2000, the FERC issued a certificate of public convenience
and  necessity  (the   Certificate)   authorizing,   among  other  things,   the
construction and operation of the Independence Pipeline, subject to satisfaction
of various  conditions  spelled  out in the  Certificate  and in  previous  FERC
orders.  Among those conditions is the requirement that, before construction may
commence,   Independence  must  file  at  FERC  executed,   firm  transportation
agreements   with  "no  out"  clauses  for  at  least  68.2%  of  its  capacity.
(Independence  already filed, on June 26 and July 6, 2000,  precedent agreements
for  firm  transportation  amounting  to  about  38%  of  the  capacity  of  the
Independence Pipeline,  thereby satisfying a FERC requirement previously imposed
as a  precondition  to FERC's  issuance of the  Certificate.)  The  Independence
Pipeline  sponsors are working on obtaining the required  customer  commitments.
The Certificate also requires that the Independence  Pipeline be constructed and
placed  in  service  by July  12,  2003.  Assuming  contracts  are in  place  in
quantities  satisfactory to the partners, the Independence Pipeline's planned in
service date is November 1, 2002.*

Exploration and Production
- --------------------------

The Exploration and Production segment capital  expenditures for the nine months
ended June 30, 2000 included  approximately  $76.4 million for Seneca's offshore
program  in the  Gulf  of  Mexico,  including  offshore  drilling  expenditures,
offshore  construction,  lease  acquisition costs and geological and geophysical
expenditures.  The  remaining  $20.0  million of capital  expenditures  included
onshore  drilling,  construction  and  recompletion  costs for wells  located in
Louisiana,  Texas and California as well as onshore  geological and  geophysical
costs,  including  the  purchase  of certain  3-D  seismic  data and fixed asset
purchases.

         In June 2000,  NFEC  acquired  the  outstanding  shares of Tri Link,  a
Calgary-Alberta  based oil and gas  exploration  and  production  company.  This
acquisition  builds  Seneca's total reserve base to  approximately  one trillion
cubic feet equivalent.* The cost of acquiring the outstanding shares of Tri Link
was approximately  $123.8 million.  The acquisition was financed with short-term
borrowings. Refer to "Financing Cash Flow" for a discussion of the redemption of
the debt that was assumed as part of the Tri Link acquisition.

International
- -------------

The majority of the International segment capital expenditures were concentrated
in the areas of improvements  and  replacements  within the district heating and
power generation plants in the Czech Republic.


<PAGE>


Item 2.  Management's Discussion and Analysis of Financial Condition and Results
         -----------------------------------------------------------------------
         of Operations (Cont.)
         ---------------------

Timber
- ------

The  majority  of the  Timber  segment  capital  expenditures  were made for the
purchase  of land  and  timber  in  Pennsylvania,  and the  construction  and/or
purchase of new  facilities  and equipment for this  segment's  sawmill and kiln
operations.  As discussed under the Timber segment's  results of operations,  in
January  2000,  this  segment  sold land and  timber  with a book  value of $3.0
million for $5.3  million.  The  resulting  gain on this sale of $2.3 million is
included in earnings for the nine months ending June 30, 2000.

All Other
- ---------

Expenditures  for  Long-Lived  Assets for all other  subsidiaries  consisted  of
Upstate's  purchase  of a 50%  interest  in a gas  processing  facility  and NFR
Power's purchase of a 50% partnership  interest in Seneca Energy II, LLC (Seneca
Energy).  Seneca Energy  generates and sells  electricity  to a public  utility.
Seneca  Energy  generates the  electricity  by using methane gas obtained from a
landfill in Seneca Falls, New York, which is owned by an outside party.

         The Company continuously evaluates capital expenditures and investments
in corporations  and  partnerships.  The amounts are subject to modification for
opportunities  such as the  acquisition  of attractive  oil and gas  properties,
timber or storage  facilities and the expansion of transmission line capacities.
While  the  majority  of  capital   expenditures  in  the  Utility  segment  are
necessitated  by the continued need for  replacement  and upgrading of mains and
service lines, the magnitude of future capital expenditures or other investments
in the Company's other business segments depends, to a large degree, upon market
conditions.*

Financing Cash Flow.

Consolidated  short-term  debt  increased  $125.3  million during the first nine
months of 2000. The Company  continues to consider  short-term debt an important
source of cash for temporarily financing capital expenditures and investments in
corporations  and/or   partnerships,   gas-in-storage   inventory,   unrecovered
purchased gas costs,  exploration and development expenditures and other working
capital needs.  Fluctuations in these items can have a significant impact on the
amount and timing of short-term debt.

         In June 2000, NFEC paid approximately  $96.2 million to redeem the bank
loans and convertible  debentures of the former Tri Link. These redemptions were
financed with short-term debt.

         In  February   2000,   the  Company  issued  $150.0  million  of  7.30%
medium-term notes due in February 2003. After deducting  underwriting  discounts
and commissions, the net proceeds to the Company amounted to $149.3 million. The
proceeds  of this  debt  issuance  were used to redeem  $50.0  million  of 6.60%
medium-term notes which matured in February 2000 and to reduce short-term debt.

         In March 1998, the Company obtained  authorization  from the Securities
and Exchange  Commission (SEC),  under the Public Utility Holding Company Act of
1935, to issue  long-term debt  securities and equity  securities in amounts not
exceeding  $2.0  billion  at  any  one  time  outstanding   during  the  order's
authorization  period,  which extends to December 31, 2002. In August 1999,  the
Company  registered  $625.0  million  of debt and  equity  securities  under the
Securities  Act of 1933.  After the  February  2000  medium-term  note  issuance
discussed  above,  the Company  currently has $475.0  million of debt and equity
securities registered under the Securities Act of 1933.


<PAGE>


Item 2.  Management's Discussion and Analysis of Financial Condition and Results
         -----------------------------------------------------------------------
         of Operations (Cont.)
         ---------------------


         The Company's present liquidity  position is believed to be adequate to
satisfy known demands.* Under the Company's  existing  indenture  covenants,  at
June 30, 2000, the Company would have been permitted to issue up to a maximum of
$510.0  million in  additional  long-term  unsecured  indebtedness  at projected
market interest rates. In addition, at June 30, 2000, the Company had regulatory
authorizations  and unused  short-term credit lines that would have permitted it
to borrow an additional $231.2 million of short-term debt.

         The amounts and timing of the issuance  and sale of debt and/or  equity
securities will depend on market conditions, regulatory authorizations,  and the
requirements of the Company.

         The Company is involved in  litigation  arising in the normal course of
business.  The Company is involved in regulatory  matters  arising in the normal
course of business  that involve rate base,  cost of service and  purchased  gas
cost issues,  among other things.  While the  resolution  of such  litigation or
regulatory  matters  could have a material  effect on earnings and cash flows in
the year of resolution,  none of this  litigation,  and none of these regulatory
matters are  expected  to change  materially  the  Company's  present  liquidity
position,  nor have a material adverse effect on the financial  condition of the
Company.*

Market Risk Sensitive Instruments

For a complete discussion of market risk sensitive instruments, refer to "Market
Risk  Sensitive  Instruments"  in Item 7 of the  Company's  1999 Form 10-K.  The
following discussion is an update to that disclosure.

Energy Commodity Price Risk
Certain of the Company's subsidiaries (primarily Seneca and NFR) utilize various
derivative financial instruments (derivatives), including price swap agreements,
options, no cost collars,  exchange-traded futures and exchange-traded  options,
as  part  of the  Company's  overall  energy  commodity  price  risk  management
strategy.  Under this strategy, the Company manages a portion of the market risk
associated with  fluctuations in the price of natural gas and crude oil, thereby
providing more stability to operating results.  The derivatives  entered into by
these subsidiaries are not held for trading purposes.

         The  following  tables  disclose  natural  gas and crude oil price swap
information by expected maturity dates for agreements in which Seneca receives a
fixed price in exchange for paying a variable  price as quoted in "Inside  FERC"
or on the New York Mercantile  Exchange.  Notional amounts (quantities) are used
to calculate the contractual  payments to be exchanged  under the contract.  The
tables do not reflect the earnings impact of the physical  transactions that are
expected to offset any  financial  gains and losses  arising from the use of the
price swap agreements. The weighted average variable prices represent the prices
as of June 30, 2000.  At June 30, 2000,  Seneca had not entered into any natural
gas or crude oil price swap  agreements  with maturity  dates  extending  beyond
2003.
<TABLE>
<CAPTION>

Natural Gas Price Swap Agreements
- ---------------------------------

- --------------------------------------------------------------------------------------------------------------------
                                                                        Expected Maturity Dates

                                                   -----------------------------------------------------------------
                                                         2000         2001          2002         2003        Total
- -------------------------------------------------- ------------ ------------ ------------- ------------ ------------

<S>                                                     <C>          <C>           <C>          <C>          <C>
Notional Quantities (Equivalent Bcf)                      6.6         17.9          10.8          1.1         36.4
Weighted Average Fixed Rate (per Mcf)                   $2.63        $2.79         $3.08        $2.78        $2.85
Weighted Average Variable Rate (per Mcf)                $4.58        $4.56         $4.56        $4.55        $4.56
- -------------------------------------------------- ------------ ------------ ------------- ------------ ------------
</TABLE>



<PAGE>


Item 2.  Management's Discussion and Analysis of Financial Condition and Results
         -----------------------------------------------------------------------
         of Operations (Cont.)
         ---------------------

<TABLE>
<CAPTION>

Crude Oil Price Swap Agreements
- -------------------------------

- -------------------------------------------------------------------------------------------------------------------------
                                                                           Expected Maturity Dates

                                                          2000           2001          2002          2003         Total
- -------------------------------------------------- ------------- -------------- ------------- ------------- -------------

<S>                                                    <C>          <C>           <C>           <C>           <C>
Notional Quantities (Equivalent bbls)                  574,000      3,717,915     2,608,980     1,803,000     8,703,895
Weighted Average Fixed Rate (per bbl)                   $18.88         $21.04        $19.93        $19.93        $20.34
Weighted Average Variable Rate (per bbl)                $31.53         $31.53        $31.53        $31.53        $31.53
- -------------------------------------------------- ------------- -------------- ------------- ------------- -------------
</TABLE>

         At  June  30,  2000,  Seneca  would  have  had  to pay  the  respective
counterparties  to its  natural  gas  price  swap  agreements  an  aggregate  of
approximately  $40.7 million to terminate the natural gas price swap  agreements
outstanding  at  that  date.  Seneca  would  have  had to pay  an  aggregate  of
approximately  $33.9 million to the  counterparties  to its crude oil price swap
agreements to terminate the crude oil price swap agreements  outstanding at June
30, 2000.

         The following  table  discloses the notional  quantities,  the weighted
average  ceiling  price and the  weighted  average  floor  price for the no cost
collars  utilized by Seneca to manage  natural gas and crude oil price risk. The
table does not reflect the earnings impact of the physical transactions that are
expected to offset any financial gains and losses arising from the use of the no
cost collars.  At June 30, 2000, Seneca had not entered into any no cost collars
with maturity dates extending beyond 2002.
<TABLE>
<CAPTION>

No Cost Collars

- --------------------------------------------------------------------------------------------------------------------
                                                                                  Expected Maturity Dates
                                                                               2001           2002           Total
- ---------------------------------------------------------------------- -------------- -------------- ---------------
<S>                                                                       <C>              <C>           <C>
Crude Oil
       Notional Quantities (Equivalent bbls)                              1,245,000        255,000       1,500,000
       Weighted Average Ceiling Price (per bbl)                              $29.13         $28.58          $29.03
       Weighted Average Floor Price (per bbl)                                $22.10         $21.53          $22.00
- ---------------------------------------------------------------------- -------------- -------------- ---------------
Natural Gas
       Notional Quantities (Equivalent Bcf)                                     3.1              -             3.1
       Weighted Average Ceiling Price (per Mcf)                               $6.00              -           $6.00
       Weighted Average Floor Price (per Mcf)                                 $3.69              -           $3.69
- ---------------------------------------------------------------------- -------------- -------------- ---------------
</TABLE>

         The  following  tables  disclose the notional  quantities  and weighted
average  strike prices for options  utilized by Seneca to manage natural gas and
crude oil price  risk.  The tables do not  reflect  the  earnings  impact of the
physical  transactions that are expected to offset any financial gains or losses
that might arise if an option were to be  exercised.  At June 30,  2000,  Seneca
held no options with maturity dates extending beyond December 2000.


<PAGE>


Item 2.  Management's Discussion and Analysis of Financial Condition and Results
         -----------------------------------------------------------------------
         of Operations (Cont.)
         ---------------------
<TABLE>
<CAPTION>

Written Call Options(1)
- --------------------

- --------------------------------------------------------------------------------------------------------------------
                                                                                  Expected Maturity Dates

                                                                       ---------------------------------------------
                                                                               2000           2001           Total
- ---------------------------------------------------------------------- -------------- -------------- ---------------
<S>                                                                         <C>            <C>             <C>
Crude Oil
   Notional Quantities (Equivalent bbls)                                    184,000        184,000         368,000
   Weighted Average Strike Price (per bbl)                                   $18.00         $18.00          $18.00
Natural Gas
   Notional Quantities (Equivalent Bcf)                                         3.5            3.5             7.0
   Weighted Average Strike Price (per Mcf)                                    $2.42          $2.74           $2.58
- ---------------------------------------------------------------------- -------------- -------------- ---------------
</TABLE>

(1)  The counterparty has a choice between a natural gas call option and a crude
     oil call option,  depending on  whichever  option has greater  value to the
     counterparty.
<TABLE>
<CAPTION>

Written Put Options
- -------------------

- --------------------------------------------------------------------------------------------------------------------
                                                                                  Expected Maturity Dates

                                                                       ---------------------------------------------
                                                                               2000           2001           Total
- ---------------------------------------------------------------------- -------------- -------------- ---------------
<S>                                                                         <C>            <C>             <C>
Crude Oil
   Notional Quantities (Equivalent bbls)                                    184,000        184,000         368,000
   Weighted Average Strike Price (per bbl)                                   $12.50         $12.50          $12.50
- ---------------------------------------------------------------------- -------------- -------------- ---------------
</TABLE>


Purchased Call Option
- ---------------------

- -----------------------------------------------------------------------------
                                              Expected Maturity Date - 2000
- -----------------------------------------------------------------------------

Crude Oil
   Notional Quantities (Equivalent bbls)                            368,000
   Weighted Average Strike Price (per bbl)                           $20.00
- -----------------------------------------------------------------------------

         At June 30, 2000,  Seneca would have had to pay the counterparty to its
call options $11.1 million on a net basis to terminate its call options.  Seneca
would have paid the  counterparty  $15.0 million  related to the exercise of the
written call and put options but would have  received  $3.9  million  related to
Seneca's exercise of its purchased call option.

         The Company is exposed to credit risk on the price swap  agreements and
no cost collars that Seneca has entered into as well as on the call options that
Seneca has  purchased.  Credit risk relates to the risk of loss that the Company
would  incur as a result of  nonperformance  by  counterparties  pursuant to the
terms of their contractual obligations. To mitigate such credit risk, management
performs  a credit  check and then on an  ongoing  basis  monitors  counterparty
credit  exposure.  The Company does not  anticipate  any material  impact to its
financial  position,  results  of  operations,  or cash  flows  as a  result  of
nonperformance by counterparties.*

         The following  table  discloses the net notional  quantities,  weighted
average  contract  prices and  weighted  average  settlement  prices by expected
maturity date for  exchange-traded  futures contracts  utilized by NFR to manage
natural gas price risk.  The table does not reflect the  earnings  impact of the
physical  transactions that are expected to offset any financial gains or losses
arising from the use of the futures  contracts.  At June 30,  2000,  NFR held no
futures contracts with maturity dates extending beyond 2002.


<PAGE>


Item 2.  Management's Discussion and Analysis of Financial Condition and Results
         -----------------------------------------------------------------------
         of Operations (Cont.)
         ---------------------
<TABLE>
<CAPTION>


Exchange-Traded Futures Contracts

- ----------------------------------------------------------------------------------------------------------------------
                                                                            Expected Maturity Dates
                                                             ----------------------------------------------------------
                                                                   2000             2001         2002         Total
- ------------------------------------------------------------ ------------- ---------------- ------------- -------------

<S>                                                               <C>              <C>          <C>           <C>
Contract Volumes Purchased (Sold) (Equivalent Bcf)                 (1.0)             0.2         (0.1)         (0.9)
Weighted Average Contract Price (per Mcf)                         $3.97            $3.60        $3.56         $3.87
Weighted Average Settlement Price (per Mcf)                       $4.67            $4.52        $3.65         $4.61
- ------------------------------------------------------------ ------------- ---------------- ------------- -------------
</TABLE>

         The  following  table  discloses the notional  quantities  and weighted
average  strike prices by expected  maturity dates for  exchange-traded  options
utilized by NFR to manage natural gas price risk. The table does not reflect the
earnings  impact of the physical  transactions  that would offset any  financial
gains or losses that might arise if an option were to be exercised.  At June 30,
2000, NFR held no options with maturity dates extending beyond 2001.

<TABLE>
<CAPTION>

Exchange-Traded Options Purchased
- ---------------------------------

- ---------------------------------------------------------------------------------------------------------------------
                                                                               Expected Maturity Date
                                                                -----------------------------------------------------
                                                                            2000              2001             Total
- --------------------------------------------------------------- ------------------ ---------------- -----------------

<S>                                                                       <C>              <C>               <C>
Notional Quantities (Equivalent Bcf)                                       51.7             18.5              70.2
Weighted Average Strike Price (per Mcf)                                   $4.32            $3.91             $4.21
- --------------------------------------------------------------- ------------------ ---------------- -----------------
</TABLE>

<TABLE>
<CAPTION>

Exchange-Traded Options Sold
- ----------------------------

- ---------------------------------------------------------------------------------------------------------------------
                                                                               Expected Maturity Date
                                                                -----------------------------------------------------
                                                                            2000              2001             Total
- --------------------------------------------------------------- ------------------ ---------------- -----------------

<S>                                                                        <C>             <C>               <C>
Notional Quantities (Equivalent Bcf)                                        38.9            21.5              60.4
Weighted Average Strike Price (per Mcf)                                    $4.74           $4.44             $4.63
- --------------------------------------------------------------- ------------------ ---------------- -----------------
</TABLE>

         At June 30,  2000,  NFR would have paid  approximately  $3.9 million to
settle the exchange-traded futures outstanding at that date. NFR would have paid
approximately $2.0 million to settle its exchange-traded  options outstanding at
June 30, 2000.

         The  following  table  discloses the notional  quantities  and weighted
average  strike prices by expected  maturity dates for  exchange-traded  options
utilized by NFR as a financing  mechanism for its hedging  program.  At June 30,
2002, NFR held no such options with maturity dates extending beyond 2001.
<TABLE>
<CAPTION>

Exchange-Traded Options Sold
- ----------------------------

- ---------------------------------------------------------------------------------------------------------------------
                                                                               Expected Maturity Date
                                                                -----------------------------------------------------
                                                                            2000              2001             Total
- --------------------------------------------------------------- ------------------ ---------------- -----------------

<S>                                                                        <C>              <C>              <C>
Notional Quantities (Equivalent Bcf)                                        28.3             4.0              32.3
Weighted Average Strike Price (per Mcf)                                    $4.31           $4.06             $4.28
- --------------------------------------------------------------- ------------------ ---------------- -----------------
</TABLE>

         At June 30, 2000, NFR would have had to pay $5.3 million on a net basis
to terminate these options.


<PAGE>


Item 2.  Management's Discussion and Analysis of Financial Condition and Results
         -----------------------------------------------------------------------
         of Operations (Cont.)
         ---------------------

Exchange Rate Risk

Seneca's  investment in NFEC is valued in Canadian  dollars,  and, as such, this
investment is subject to currency  exchange  risk when the Canadian  dollars are
translated into U.S. dollars. Subsequent to the completion of the acquisition of
Tri Link on June 15, 2000, the Canadian dollar decreased in value in relation to
the  U.S.  dollar  resulting  in a  $0.8  million  negative  adjustment  to  the
Cumulative Foreign Currency  Translation  Adjustment (a component of Accumulated
Other  Comprehensive  Loss).  Further  valuation  charges to the Canadian dollar
would result in corresponding positive or negative adjustments to the Cumulative
Foreign Currency Translation  Adjustment.  Management cannot predict whether the
Canadian dollar will increase or decrease in value against the U.S. dollar.*



RATE MATTERS

Utility Operation

New York Jurisdiction

On October 21, 1998, the NYPSC approved a rate plan for Distribution Corporation
for the period beginning October 1, 1998 and ending September 30, 2000. The plan
was  the  result  of  a  settlement   agreement  entered  into  by  Distribution
Corporation,  Staff for the NYPSC (Staff), Multiple Intervenors (an advocate for
large industrial  customers) and the State Consumer  Protection Board. Under the
plan,  Distribution  Corporation's  rates decreased by $7.2 million, or 1.1%. In
addition,  the plan provided  customers with up to $6.0 million in bill credits,
disbursed  volumetrically  over the two year term,  reflecting  a  predetermined
share of excess earnings under a 1996 settlement. An allowed return on equity of
12%,  above  which  additional  earnings  are  to be  shared  equally  with  the
customers,  was maintained from a 1996 settlement.  Finally,  as provided by the
rate plan,  $7.2 million of 1999 revenues were set aside in a special reserve to
be applied against Distribution  Corporation's  incremental costs resulting from
the NYPSC's gas restructuring effort further described below.

         On July 28, 2000, Distribution Corporation distributed a plan to extend
the  above-described  rate  plan  for a period  beyond  the  expiration  date of
September 30, 2000. The proposal was served on the rate plan parties  identified
above and interested marketers. In addition to extending the term of the current
rate  plan,  Distribution  Corporation's  proposal  includes  service  and  rate
modifications  designed to further the  NYPSC's  gas  restructuring  initiative.
Discussions  are currently  under way to determine if the parties might reach an
agreement on the Distribution Corporation's proposal.

         On November 3, 1998, the NYPSC issued its Policy  Statement  Concerning
                                                   -----------------------------
the Future of the Natural Gas  Industry in New York State and Order  Terminating
- --------------------------------------------------------------------------------
Capacity  Assignment  (Policy  Statement).  The Policy  Statement sets forth the
- --------------------
NYPSC's "vision" on "how best to ensure a competitive  market for natural gas in
New York." That vision includes the following goals:

         (1)  Effective   competition  in  the  gas  supply  market  for  retail
              customers;

         (2)  Downward pressure on customer gas prices;

         (3)  Increased customer choice of gas suppliers and service options;

         (4)  A provider of last resort (not necessarily the utility);

         (5)  Continuation  of reliable  service and  maintenance  of operations
              procedures that treat all participants fairly;

         (6)  Sufficient and accurate information for customers to use in making
              informed decisions;
<PAGE>


Item 2.  Management's Discussion and Analysis of Financial Condition and Results
         -----------------------------------------------------------------------

         of Operations (Cont.)
         ---------------------


        (7)  The availability of information that permits adequate oversight of
              the market to ensure fair competition; and

         (8)  Coordination  of Federal and State  policies  affecting gas supply
              and distribution in New York State.

         The Policy Statement  provides that the most effective way to establish
a competitive market in gas supply is "for local distribution companies to cease
selling gas." The NYPSC  indicated in its order that it hopes to accomplish that
objective over a three-to-seven  year transition period from the date the Policy
Statement  was issued,  taking into  account  "statutory  requirements"  and the
individual needs of each local distribution company (LDC).* The Policy Statement
directs Staff to schedule "discussions" with each LDC on an "individualized plan
that would effectuate our vision." In preparation for negotiations, LDCs will be
required to address issues such as a strategy to hold new capacity  contracts to
a minimum,  a long-term rate plan with a goal of reducing or freezing rates, and
a plan for  further  unbundling.  In  addition,  Staff  was  instructed  to hold
collaborative sessions with multiple parties to
discuss  generic  issues  including  reliability  and market  power  regulation.
Distribution  Corporation has participated in the collaborative sessions.  These
collaborative  sessions have not yet produced a consensus document on all issues
before the NYPSC.  Distribution  Corporation will continue to participate in all
future collaborative sessions.*

         On March 22, 2000, the NYPSC issued an order directing electric and gas
utilities to file tariff  amendments "to accommodate the wishes of retail access
customers who prefer to receive combined, single bills from either their utility
company or their  [marketer]"  (the Billing Order).  The tariff  amendments will
provide  for  marketer  single-bill  or utility  single-bill  services,  thereby
allowing a customer to choose a billing preference through the customer's choice
of  suppliers - utility or  marketer.  Distribution  Corporation  has  permitted
marketer  single billing since 1996. The Billing Order will permit  Distribution
Corporation to provide a single retail bill service for marketers.

         Included in the Billing Order is a requirement  that utilities design a
"back-out"  credit  equal to the long run costs  avoided  by each  utility  when
billing is provided by another party. On April 24, 2000 Distribution Corporation
submitted  draft  tariff  sheets  setting  forth  a  proposed   back-out  credit
methodology for review and comment by NYPSC Staff and other interested  parties.
Although  a  methodology  is  described,  no  back-out  credit  was  calculated.
Distribution  Corporation's  filing included provisions for a billing service to
be provided by  Distribution  Corporation,  together with  additional  rules and
regulations governing marketer-provided retail billing.

         Several  utilities  filed  requests for rehearing of the Billing Order.
The requests  include,  among other things,  arguments  challenging  the NYPSC's
authority  to  impose  a  back-out  credit  based  on long  run  avoided  costs.
Distribution  Corporation chose against joining the other utilities on rehearing
and  may,  if  necessary,  pursue  other  avenues  of  relief.*  At  this  time,
Distribution  Corporation is unable to ascertain the outcome of matters relating
to the Billing Order.

         In  conversations  with NYPSC Staff prior to the release of the Billing
Order,  Distribution  Corporation  requested  approval for a temporary,  interim
billing service to be provided in response to marketer inquiries. As a result of
Distribution Corporation's efforts, the Billing Order included a provision for a
billing   service  as  requested.   Accordingly,   beginning  on  May  1,  2000,
Distribution  Corporation  commenced a retail billing  service for two marketers
serving  approximately  2000  retail  customers.  The  billing  service is being
offered  to the  marketer  community  for a  per-bill  fee of $0.50,  subject to
modification  pursuant to the Billing Order. The temporary  billing service will
remain  available for interested  marketers  until it is replaced by a permanent
billing service under the Billing Order.

<PAGE>


Item 2.  Management's Discussion and Analysis of Financial Condition and Results
         -----------------------------------------------------------------------
         of Operations (Cont.)
         ---------------------


         On March 30, 2000, a collaborative  was convened to address the NYPSC's
Order Instituting  Proceeding in the so-called  "Provider of Last Resort" (POLR)
case.  The  collaborative  was  charged  with the task of  helping  the NYPSC to
"refine our concept of the mature competitive retail energy markets  (especially
the future role of the regulated utilities) and to identify and remove obstacles
to its  achievement."  This case is  expected to  address,  among other  things,
issues arising from utilities exiting the merchant  function.  The proceeding is
also  focusing on utilities'  responsibility  to provide  low-income  assistance
programs.  Currently the parties are meeting on a periodic  basis to establish a
procedure for identifying the issues and managing the proceeding.  At this time,
Distribution  Corporation  is  unable  to  ascertain  the  outcome  of the  POLR
proceeding.*

         On April 12, 2000,  the NYPSC issued an order setting forth  procedures
for implementation of electronic data interchange (EDI) for electronic  exchange
of retail access data in New York (EDI Order). As described by the NYPSC, EDI is
the computer-to-computer  exchange of routine business information in a standard
form. The NYPSC believes that EDI is necessary to develop  uniform data exchange
protocol  for the state's  customer  choice  initiatives.  The EDI Order  adopts
provisions of a report prepared after an EDI collaborative  involving utilities,
marketers  and  other  interests.  Distribution  Corporation  submitted  its EDI
implementation plans on May 31, 2000. At this time, Distribution  Corporation is
unable to ascertain the outcome of the EDI proceeding.

         The  NYPSC  continues  to  address,  through  various  proceedings  and
"collaboratives,"   upstream   pipeline   capacity   issues   arising  from  the
restructuring.  At this point,  Distribution  Corporation  remains authorized to
release  upstream  intermediate  capacity  to  marketers  serving  former  sales
customers.  Costs  relating  to  retained  upstream  transmission  capacity  are
recovered  through a  transition  cost  surcharge.  At this  time,  Distribution
Corporation  does  not  foresee  any  material  changes  to  upstream   capacity
requirements in the near term.*

Pennsylvania Jurisdiction

Distribution  Corporation  currently  does not have a rate case on file with the
Pennsylvania  Public Utility  Commission  (PaPUC).  Management  will continue to
monitor its financial position in the Pennsylvania jurisdiction to determine the
necessity of filing a rate case in the future.

         A natural gas restructuring  bill was signed into law on June 22, 1999.
Entitled the Natural Gas Choice and Competition Act (Act),  the new law requires
all Pennsylvania  LDCs to file tariffs designed to provide retail customers with
direct access to competitive gas markets. Distribution Corporation submitted its
compliance  filing on October 1, 1999 for an effective  date on or about July 1,
2000.  The filing  largely  mirrored  the  company's  System Wide Energy  Select
program  previously  in  effect,  which  substantially  complied  with the Act's
requirements.  After negotiations with PaPUC Staff and intervenors, a settlement
was reached  with all  parties  except for the  Pennsylvania  Office of Consumer
Advocate  (OCA).  The  settlement  parties  generally  agreed that  Distribution
Corporation's  proposal  needed only modest changes to meet the  requirements of
the Act.  Hearings  were  held and  briefs  filed on  OCA's  open  issues.  In a
Recommended  Decision  issued on March 31, 2000,  the  Administrative  Law Judge
rejected  the  OCA's  arguments  and  recommended  approval  of  the  settlement
agreement. On June 29, 2000, the PaPUC entered an Opinion and Order adopting the
settlement,  with immaterial changes.  Distribution  Corporation's  restructured
rates and services became effective on July 1, 2000.

         Base  rate   adjustments   in  both  the  New  York  and   Pennsylvania
jurisdictions do not reflect the recovery of purchased gas costs. Such costs are
recovered  through  operation of the  purchased  gas  adjustment  clauses of the
appropriate regulatory authorities.


<PAGE>


Item 2.  Management's Discussion and Analysis of Financial Condition and Results
         -----------------------------------------------------------------------
         of Operations (Cont.)
         ---------------------

Pipeline and Storage

Supply  Corporation  currently  does not have a rate case on file with the FERC.
Management will continue to monitor Supply  Corporation's  financial position to
determine the necessity of filing a rate case in the future.

Other Matters

Environmental Matters

It is the Company's  policy to accrue  estimated  environmental  clean-up  costs
(investigation  and  remediation)  when such amounts can reasonably be estimated
and it is  probable  that the  Company  will be  required  to incur such  costs.
Distribution  Corporation and Supply  Corporation  have estimated their clean-up
costs related to former  manufactured  gas plant and former gasoline plant sites
and third party  waste  disposal  sites will be in the range of $8.1  million to
$9.1  million.*  The minimum  liability of $8.1 million has been recorded on the
Consolidated  Balance Sheet at June 30, 2000.  Other than discussed in Note H of
the 1999 Form 10-K  (referred to below),  the Company is currently  not aware of
any material additional exposure to environmental liabilities.  However, adverse
changes in environmental regulations or other factors could impact the Company.*

         The  Company is subject  to various  federal,  state and local laws and
regulations  relating  to the  protection  of the  environment.  The Company has
established  procedures for the ongoing evaluation of its operations to identify
potential  environmental  exposures  and comply  with  regulatory  policies  and
procedures.

         For further  discussion refer to Note H - Commitments and Contingencies
under the heading  "Environmental  Matters" in Item 8 of the Company's 1999 Form
10-K.

Safe  Harbor  for  Forward-Looking  Statements.  The  Company is  including  the
following  cautionary  statement in this Form 10-Q to make  applicable  and take
advantage  of the  safe  harbor  provisions  of  Section  21E of the  Securities
Exchange Act of 1934 for any  forward-looking  statements  made by, or on behalf
of, the Company. Forward-looking statements include statements concerning plans,
objectives,  goals,  strategies,  future events or  performance,  and underlying
assumptions and other  statements  which are other than statements of historical
facts.  From time to time,  the Company may publish or otherwise  make available
forward-looking  statements of this nature. All such subsequent  forward-looking
statements,  whether  written  or oral and  whether  made by or on behalf of the
Company,  are also expressly qualified by these cautionary  statements.  Certain
statements  contained  herein,  including  without  limitation  those  which are
designated with a "*", are  forward-looking  statements and accordingly  involve
risks and  uncertainties  which could cause actual results or outcomes to differ
materially  from  those  expressed  in  the  forward-looking   statements.   The
forward-looking  statements  contained herein are based on various  assumptions,
many of which are  based,  in turn,  upon  further  assumptions.  The  Company's
expectations,  beliefs  and  projections  are  expressed  in good  faith and are
believed  by  the  Company  to  have  a  reasonable  basis,  including,  without
limitation,  management's  examination  of  historical  operating  trends,  data
contained in the Company's  records and other data available from third parties,
but  there  can be no  assurance  that  management's  expectations,  beliefs  or
projections  will result or be achieved  or  accomplished.  In addition to other
factors and matters  discussed  elsewhere  herein,  the  following are important
factors that, in the view of the Company,  could cause actual  results to differ
materially from those discussed in the forward-looking statements:

 1.      Changes  in  economic  conditions,  demographic  patterns  and  weather
         conditions

 2.      Changes in the availability and/or price of natural gas and oil

<PAGE>

Item 2.  Management's Discussion and Analysis of Financial Condition and Results
         -----------------------------------------------------------------------
         of Operations (Concl.)
         ----------------------

 3.      Inability to obtain new customers or retain existing ones

 4.      Significant changes in competitive factors affecting the Company

 5.      Governmental/regulatory   actions  and  initiatives,   including  those
         affecting acquisitions,  financings,  allowed rates of return, industry
         and  rate  structure,   franchise  renewal,  and   environmental/safety
         requirements

 6.      Unanticipated  impacts of restructuring  initiatives in the natural gas
         and electric industries

 7.      Significant  changes from  expectations in actual capital  expenditures
         and operating  expenses and unanticipated  project delays or changes in
         project costs

 8.      The  nature  and  projected  profitability  of  pending  and  potential
         projects and other investments

 9.      Occurrences  affecting  the  Company's  ability  to obtain  funds  from
         operations,  debt or equity to finance needed capital  expenditures and
         other investments

10.      Uncertainty of oil and gas reserve estimates

11.      Ability to  successfully  identify  and  finance  oil and gas  property
         acquisitions  and  ability to  operate  existing  and any  subsequently
         acquired businesses and/or properties

12.      Ability to successfully  identify,  drill for and produce  economically
         viable natural gas and oil reserves

13.      Changes  in the  availability  and/or  price  of  derivative  financial
         instruments

14.      Changes in the price of natural gas or oil and the related effect given
         the accounting treatment or valuation of these financial instruments.

15.      Inability of the various  counterparties to meet their obligations with
         respect to the Company's financial instruments

16.      Regarding  foreign  operations - changes in foreign  trade and monetary
         policies, laws and regulations related to foreign operations, political
         and  governmental  changes,  inflation  and exchange  rates,  taxes and
         operating conditions

17.      Significant  changes in tax rates or policies or in rates of  inflation
         or interest

18.      Significant  changes in the Company's  relationship  with its employees
         and the potential  adverse effects if labor disputes or grievances were
         to occur

19.      Changes  in  accounting  principles  and/or  the  application  of  such
         principles to the Company

         The Company  disclaims  any  obligation  to update any  forward-looking
statements to reflect events or circumstances after the date hereof.


<PAGE>


Item 3.  Quantitative and Qualitative Disclosures About Market Risk
         ----------------------------------------------------------

Refer  to  the  "Market  Risk  Sensitive   Instruments"  section  in  Item  2  -
Management's  Discussion  and  Analysis of  Financial  Condition  and Results of
Operations.

Part II.  Other Information
- ---------------------------

Item 1.  Legal Proceedings
         -----------------

For a discussion of various  environmental  matters,  refer to Part I, Item 1 at
Note 6 and to Part I,  Item 2 - MD&A of this  report  under the  heading  "Other
Matters."

Item 2.  Changes in Securities
         ---------------------

On April 3, 2000, the Company issued 600  unregistered  shares of Company common
stock to the  non-employee  directors of the Company.  The shares were issued as
partial  consideration for the directors'  service during the quarter ended June
30, 2000, pursuant to the Company's Retainer Policy for Non-Employee  Directors.
These  transactions  were  exempt  from  registration  by  Section  4(2)  of the
Securities  Act of 1933,  as amended,  as  transactions  not  involving a public
offering.

Item 5.  Other Information
         -----------------

In June,  John F. Riordan was elected to the Board of Directors  for a term that
will expire in February 2001. Mr. Riordan's election filled a vacancy created in
February when George H. Schofield retired from the Board.

Also in June, Highland Land & Minerals, Inc. changed its name to Highland Forest
Resources, Inc.


Item 6.  Exhibits and Reports on Form 8-K
         --------------------------------

         (a)      Exhibits

                  Exhibit
                  Number            Description of Exhibit
                  ------            ----------------------

                  3 (ii)            By-Laws:

                   3.1              National Fuel Gas Company By-Laws as amended
                                    on February 17, 2000.

                  (10)              Material Contracts

                  10.1              Amended and Restated Split Dollar  Insurance
                                    Agreement,  effective  June 15,  2000  among
                                    National   Fuel  Gas  Company,   Bernard  J.
                                    Kennedy,  and Joseph B. Kennedy,  as Trustee
                                    of  the  Trust  under  the  Agreement  dated
                                    January 9, 1998.

                  10.2              Contingent Benefit Agreement  effective June
                                    15, 2000 between National Fuel Gas Company
                                    and Bernard J. Kennedy.



<PAGE>


Item 6.  Exhibits and Reports on Form 8-K (Concl.)
         -----------------------------------------

         (a)      Exhibits

                  Exhibit
                  Number            Description of Exhibit
                  ------            ----------------------

                  (12)              Statements regarding Computation of Ratios:

                                    Ratio of Earnings  to Fixed  Charges for the
                                    Twelve  Months  Ended June 30,  2000 and the
                                    Fiscal  Years  Ended   September   30,  1995
                                    through 1999.

                  (27)              Financial Data Schedules

                  27.1              Financial Data Schedule for the Nine Months
                                    Ended June 30, 2000.

                  27.2              Restated Financial Data Schedule for the
                                    Nine Months Ended June 30, 1999.

                  (99)              National  Fuel Gas Company  Consolidated
                                    Statement of Income for the Twelve  Months
                                    Ended June 30, 2000 and 1999.

         (b)     Reports on Form 8-K

                                    On April 24, 2000,  the Company filed a Form
                                    8-K  regarding an agreement  whereby  Seneca
                                    Resources  Corporation  agreed  to  offer to
                                    acquire all of the outstanding common shares
                                    of Tri  Link  Resources,  Ltd.,  a  Calgary,
                                    Alberta  based  exploration  and  production
                                    company.  This  report did not  include  any
                                    financial statements.


<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.

                                        NATIONAL FUEL GAS COMPANY
                                        -------------------------

                                        (Registrant)

                                        /s/Joseph P. Pawlowski
                                        -----------------------------------

                                        Joseph P. Pawlowski
                                        Treasurer and
                                        Principal Accounting Officer

Date:  August 14, 2000
       ---------------


<PAGE>


                                  EXHIBIT INDEX

                                   (Form 10Q)

Exhibit 3(ii)              By-Laws, as amended on February 17, 2000.

Exhibit 10.1               Amended and  Restated  Split  Dollar  Insurance
                           Agreement,  effective  June 15,  2000 among  National
                           Fuel Gas Company,  Bernard J. Kennedy,  and Joseph B.
                           Kennedy,  as Trustee of the Trust under the Agreement
                           dated January 9, 1998.

Exhibit 10.2               Contingent Benefit Agreement  effective June 15,
                           2000 between National Fuel Gas Company and Bernard J.
                           Kennedy.

Exhibit 12                 Statements regarding Computation of Ratios:

                           Ratio of  Earnings  to Fixed  Charges  for the Twelve
                           Months  Ended  June  30,  2000  and the  Years  Ended
                           September 30, 1995 through 1999.

Exhibit 27.1               Financial  Data  Schedule  for the Nine  Months
                           Ended June 30, 2000.

Exhibit 27.2               Restated  Financial  Data Schedule for the Nine
                           Months Ended June 30, 1999.

Exhibit 99                 National Fuel Gas Company  Consolidated  Statement
                           of Income for the Twelve  Months  Ended June 30, 2000
                           and 1999.
</TEXT>
</DOCUMENT>
<DOCUMENT>
<TYPE>EX-3.(II)
<SEQUENCE>2
<FILENAME>0002.txt
<DESCRIPTION>NFGC AMENDED BY-LAWS
<TEXT>


                                                              Amended  2/21/85
                                                                       6/19/86
                                                                       7/07/88
                                                                       6/14/90
                                                                       6/18/92
                                                                       12/8/93
                                                                       6/09/94
                                                                       9/19/96
                                                                       1/01/97
                                                                       3/20/97
                                                                       6/19/97
                                                                       9/18/97
                                                                       9/17/98
                                                                       6/17/99
                                                                       9/16/99
                                                                       2/17/00
                                                                       6/15/00

                            NATIONAL FUEL GAS COMPANY
                            -------------------------

                                     BY-LAWS
                                     -------

                                    ARTICLE I
                                    ---------

                             Meeting of Stockholders
                             -----------------------

         1.  Meetings  of  stockholders  may be held at such  place,  within  or
without the State of New Jersey,  as may be fixed by the Board of Directors  and
stated in the notice of the meeting.

         2. In 1999 and thereafter,  the annual meeting of stockholders shall be
held on the third  Thursday in February in each year beginning at ten o'clock in
the forenoon,  local time, unless such day shall be on a holiday, in which event
such meeting shall be held at the same hour on the next succeeding business day.
In 1998, the Annual Meeting of Stockholders shall be held on Thursday,  February
26, 1998 at ten o'clock in the forenoon, local time.

         3. Except as otherwise  provided by New Jersey law,  written  notice of
the time,  place and purpose or purposes of every meeting of stockholders  shall
be given not less than 10 nor more than 60 days before the date of the  meeting,
either  personally or by mail, to each stockholder of record entitled to vote at
the meeting.

         4. Unless otherwise provided by statute,  all Special Meetings shall be
called upon the written  request of three or more  directors or of  stockholders
owning one-fourth of the capital stock issued and outstanding.

         5.  Unless   otherwise   provided  in  the  Company's   Certificate  of
Incorporation or in New Jersey law, (i) the holders of shares entitled to cast a
majority of the votes at any meeting of stockholders  shall  constitute a quorum
at such  meeting  except  that the votes that  holders of any class or series of
shares are  entitled  to cast shall not be  counted  in the  determination  of a
quorum for action to be taken at a meeting  with  respect to which such class or
series  has no vote,  and (ii) the  holders  of  shares  of any  class or series
entitled  to cast a majority  of the votes of such class or series  entitled  to
vote  separately on a specified  item of business  shall  constitute a quorum of
such class or series for the transaction of such specified item of business.

                  If a quorum  shall  not be so  represented,  the  stockholders
present at any meeting of  stockholders  shall have power to adjourn the meeting
to another time at the same or at another place.  If the time and place to which
the meeting is adjourned are  announced at the meeting at which the  adjournment
is taken and at the adjourned  meeting only such business is transacted as might
have been transacted at the original meeting,  it shall not be necessary to give
notice  of the  adjourned  meeting  unless  after the  adjournment  the Board of
Directors  fixes a new record date for the adjourned  meeting.  In the event the
Board of  Directors  fixes such a new  record  date,  a notice of the  adjourned
meeting  shall be given to each  stockholder  of record at the new  record  date
entitled to notice under Article I paragraph 3 of these By-Laws.

         6. At each  election of  Directors,  the  proxies and ballots  shall be
received  and all  questions  respecting  the  qualification  of voters shall be
decided by two  inspectors,  who shall be appointed by the presiding  officer of
the meeting;  provided however, that no candidate for election as Director shall
act as inspector.  Such  inspectors  shall be sworn  faithfully to perform their
duties and shall report in writing the results of the ballot.

         7. A. Business  transacted  at an annual  meeting of  stockholders  may
include all such business as may properly  come before the meeting.  Nominations
of persons for election to the Board of  Directors  and the proposal of business
to be  considered  by the  stockholders  may be made  at an  annual  meeting  of
stockholders:

                    (i)    pursuant to the Corporation's notice of meeting;

                   (ii)    by or at the direction of the Board of Directors; or

                  (iii)    by  any  stockholder  who  was a  stockholder  of
                           record  at the time of  giving  of  notice of the
                           meeting,  who is  entitled to vote at the meeting
                           and who complies with the notice  procedures  set
                           forth in this Section 7.

            B. For  nominations or other business to be properly  brought before
an annual  meeting by a  stockholder,  the  stockholder  must have given  timely
notice  thereof in writing to the  Secretary of the  Corporation  and such other
business  must  otherwise  be a  proper  matter  for  stockholder  action.  Such
stockholder's notice shall set forth:

                    (i)    as to each  person whom the  stockholder  proposes to
                           nominate for election or reelection as a director:

                           (a)  the name, age, business address of such person,

                           (b)  the  principal  occupation of employment of such
                                person,

                           (c)  the   class   and   number   of  shares  of  the
                                Corporation which are owned beneficially by such
                                person, and

                           (d)  all other  information  relating  to such person
                                that   is   required   to   be    disclosed   in
                                solicitations   of  proxies   for   election  of
                                directors   in  an  election   contest,   or  is
                                otherwise   required,   in   each   case   under
                                applicable SEC regulations (as of February 1999,
                                Regulation 14A under the Securities Exchange Act
                                of   1934,   as   amended,   and   Rule   14a-11
                                thereunder),  including  such  person's  written
                                consent to being named in the proxy statement as
                                a  nominee  and  to  serving  as a  director  if
                                elected;

                    (ii)   as  to  any  other  business  that  the   stockholder
                           proposes  to  bring  before  the  meeting,   a  brief
                           description  of the  business  desired  to be brought
                           before the meeting,  the reasons for conducting  such
                           business at the meeting and any material  interest in
                           such business of such  stockholder and the beneficial
                           owner,  if any, on whose behalf the proposal is made;
                           and

                    (iii)  as to the  stockholder  giving  the  notice  and  the
                           beneficial   owner,  if  any,  on  whose  behalf  the
                           nomination or proposal is made:

                           (a)  the name and  address  of such  stockholder,  as
                                they appear on the  Corporation's  books, and of
                                such beneficial owner, and

                           (b)  the   class   and   number   of  shares  of  the
                                Corporation which are owned  beneficially and of
                                record by such  stockholder  and such beneficial
                                owner.

                  C. To be timely,  a stockholder's  notice under this Section 7
must be delivered to the  Secretary at the  principal  executive  offices of the
Corporation not less than 110 days prior to the date  corresponding  to the date
on which the  Corporation  first mailed its proxy materials for the prior year's
annual meeting of stockholders; provided, however, that if both:
                                -----------------

                    (i)    the date of the annual  meeting is changed  more than
                           30 days  from the date  corresponding  to the date of
                           the prior year's annual meeting; and
                                                            ---

                   (ii)    notice (or, if earlier, public disclosure of the date
                           of the  annual  meeting)  is  given  or  made  to the
                           stockholders  of the  Corporation  less than 120 days
                           before  the date  corresponding  to the date on which
                           the Corporation  first mailed its proxy materials for
                           the prior year's meeting of stockholders; then

                  (iii)    a  stockholder's  notice  to  be  timely  must  be so
                           received  not later than the close of business on the
                           tenth day  following  the date on which  such  notice
                           (or, if earlier,  such public  disclosure of the date
                           of the  annual  meeting)  was  mailed  or made by the
                           Corporation.

                           In no  event  shall  the  public  announcement  of an
                           adjournment of an annual meeting  commence a new time
                           period for the giving of a stockholder's notice under
                           this Section 7.

            D.  Only  such   business   shall  be  conducted  at  a  meeting  of
stockholders  as shall have been brought  before the meeting in accordance  with
the procedures set forth in this Section 7. Other than persons  nominated by the
full  Board or any  nominating  committee  thereof,  only such  persons  who are
nominated in accordance with the procedures set forth in this Section 7 shall be
eligible to serve as directors. The chairman of the meeting shall have the power
and duty to  determine  whether a  nomination  or any  business  proposed  to be
brought  before  the  meeting  was made or  proposed,  as the  case  may be,  in
accordance  with the procedures set forth in this Section 7 and, if any proposed
nomination or business is not in compliance with this Section 7, to declare that
such defective  proposal or nomination  shall be disregarded,  unless  otherwise
provided by any applicable law.

            E.  Notwithstanding  the  foregoing  provisions of this Section 7, a
stockholder  shall also comply with all applicable  requirements of the Exchange
Act and the rules and  regulations  thereunder  with  respect to the matters set
forth in this Section 7. Nothing in this Section 7 shall be deemed to affect any
rights of:

                    (i)    the stockholders to request inclusion of proposals in
                           the  Corporation's  proxy statement  pursuant to Rule
                           14a-8 under the Exchange Act; or

                   (ii)    the holders of any series of Preferred Stock to elect
                           directors under specified circumstances.

            F.  Business  transacted  at a special  meeting of the  stockholders
shall be limited to the purposes set forth in the notice of the special meeting.

            G. For  purposes  of this  Section 7, the term  "public  disclosure"
shall mean disclosure in a news release  reported by the Dow Jones News Service,
the  Associated  Press or a comparable  national news service,  or in a document
publicly filed by the  Corporation  with the Securities and Exchange  Commission
pursuant to Section 13, 14 or 15(d) of the  Securities  Exchange Act of 1934, as
amended.

         8. At each meeting of  stockholders,  the chairman of the meeting shall
fix and  announce  the date and time of the opening and the closing of the polls
for each matter upon which the  stockholders  will vote at the meeting and shall
determine the order of business and all other matters of procedure. The Board of
Directors may adopt by resolution  such rules and regulations for the conduct of
meetings  of  stockholders  as it shall deem  appropriate.  Except to the extent
inconsistent  with any such  rules and  regulations  as  adopted by the Board of
Directors, the chairman of the meeting may establish rules, which need not be in
writing,  to  maintain  order and  safety and for the  conduct  of the  meeting.
Without limiting the foregoing, the chairman of the meeting may:

            A.  Determine  and declare to the meeting  that any  business is not
properly before the meeting and therefore shall not be considered;

            B.  Restrict  attendance  at any time to bona fide  shareholders  of
record and their proxies and other  persons in  attendance at the  invitation of
the chairman of the meeting;

            C. Restrict dissemination of solicitation materials and use of audio
or visual recording devices at the meeting;

            D. Adjourn the meeting without a vote of the  stockholders,  whether
or not there is a quorum present; and

            E. Make rules governing  speeches and debate,  including time limits
and access to microphones.

                                   ARTICLE II
                                   ----------

                               Board of Directors
                               ------------------

         1.  The  Board  of  Directors  shall  consist  of (i)  such  number  of
directors,  not less than seven nor more than eleven,  as may be determined from
time to time by resolution  adopted by the affirmative vote of a majority of the
entire Board of Directors,  and (ii) such directors as may be elected by vote of
the  holders  of  shares  of  preferred  stock,  when  and  as  provided  in the
Certificate of Incorporation of the Company. In order to qualify for election as
a director, a nominee must be a shareholder of the Company.

         2.  Subject  to the  provisions  of the  Statutes  of the  State of New
Jersey,  the Certificate of  Incorporation,  and the By-Laws of the Corporation,
the Board of Directors  shall have full and complete  management  and control of
the business and affairs of the Corporation.

         3. The Board of  Directors  may hold its  meetings  or any  adjournment
thereof either in the State of New Jersey or elsewhere and keep the books of the
Corporation  at such  places  within or  without  the State of New Jersey as the
Board of Directors may from time to time determine.

         4. Meetings of the Board of Directors may be called at the direction of
the Chairman of the Board, the President,  or any three of the Directors for the
time being in office.

         5. Notice of any meetings of the Board of  Directors  shall be given to
each Director by mailing the same to him at his last known address,  as the same
appears  upon the  records  of the  Corporation  at least  five days  before the
meeting or by telegraphing, telephoning or delivering the same to him personally
at least one day before the meeting.

         6. At any meeting of the Board of  Directors,  there may be  transacted
without  special  notice,  any  business  within the powers of the  Directors to
transact, except that of which the Statutes of the State of New Jersey expressly
require special notice shall be given.

         7. A. A majority of the  Directors in office shall  constitute a quorum
for the  transaction  of any business  which may properly come before them. If a
majority of said  Directors  shall not be present at any meeting,  the Directors
present  shall  have  power to  adjourn  to a day  certain,  and  notice  of the
adjourned  meeting shall be given by mailing the same addressed to each Director
at his address as the same appears upon the records of the Corporation, at least
two days prior to the adjourned  meeting,  or by  telegraphing,  telephoning  or
delivering  the same to him  personally  at least one day before said  adjourned
meeting.  But, if a majority of the Board of  Directors  are  present,  the said
meeting, or any adjourned meeting thereof, may be adjourned to a subsequent day;
such adjournment may be without notice of such adjournment if such notice is not
required by New Jersey Law (as of June 1997, N.J.S.A. 14A:6-10(2)).
                                             --------

            B. Unless a greater  vote is required  by  applicable  law or by the
Certificate of Incorporation of the Company or these By-laws (including, but not
limited  to,  subparagraph  C of this  paragraph  7), any action  approved  by a
majority  of the votes of  directors  present  at a meeting at which a quorum is
present shall be the act of the Board of Directors.

            C.  Anything in these By-laws to the contrary  notwithstanding,  any
action taken by the Board of Directors  pursuant to the terms of any Rights Plan
(as hereinafter  defined) of the Company shall, unless otherwise provided by the
terms of the Rights Plan, be approved by the affirmative  vote of  three-fourths
(3/4ths) of the entire Board of Directors.  For purposes of these  By-laws,  the
term "Rights  Plan" shall mean any plan  pursuant to which  shareholders  of the
Company are, upon the occurrence of certain specified events (including, but not
limited to, the  acquisition  by any person of a  specified  number of shares of
capital stock of the corporation),  entitled to purchase shares of capital stock
or  other  securities  of  either  the  Company  or the  acquiring  person  at a
discounted price.

         8. A. The Corporation  shall indemnify any person who was or is a party
or is  threatened  to be made a party to any  pending,  threatened  or completed
civil, criminal,  administrative or arbitrative action, suit or proceeding,  and
any appeal  therein  and any inquiry or  investigation  which could lead to such
action, suit or proceeding ("Proceeding") by reason of the fact that such person
is or was a director  or officer of the  Corporation,  or,  while a director  or
officer of the Corporation,  is or was serving at the request of the Corporation
as a  director,  officer,  trustee,  employee  or agent of  another  foreign  or
domestic corporation, or of any partnership, joint venture, sole proprietorship,
employee benefit plan, trust or other enterprise,  whether or not for profit, to
the fullest extent permitted and in the manner provided by the laws of the State
of New Jersey.

            B. Nothing in this  paragraph 8 shall restrict or limit the power of
the Corporation to indemnify its employees, agents and other persons, to advance
expenses  (including  attorneys'  fees)  on their  behalf  and to  purchase  and
maintain  insurance  on behalf of any person who is or was a director,  officer,
employee or agent of the Corporation in connection with any Proceeding.

            C.  The  indemnification  provided  by this  paragraph  8 shall  not
exclude  any  other  rights  to which a person  seeking  indemnification  may be
entitled under the Certificate of  Incorporation,  By-Laws,  agreement,  vote of
shareholders  or otherwise.  The  indemnification  provided by this  paragraph 8
shall  continue as to a person who has ceased to be a director  or officer,  and
shall extend to the estate or personal  representative  of any deceased director
or officer.

         9. A. Each  Director  who is not a regular  full-time  employee  of the
Corporation or one or more of its  subsidiaries,  shall be paid an annual fee of
$14,000 in cash and 480 shares of the common stock of the  Corporation,  payable
in equal quarterly increments, in advance (i.e., as of the first business day of
the quarter).  There will be proration of payments during quarters in which such
Director has only partial  service.  Each such share of stock of the Corporation
will be  non-transferable  until the later of two years from its issuance or six
months after such Director's cessation of service.

            B. Each Director of the Corporation  who is not a regular  full-time
employee  of the  Corporation  or one or more  of its  subsidiaries  shall  also
receive a fee of $1,200 for  attendance at any meeting of the Board of Directors
and a fee of $800 for attendance at any meeting of any committee of the Board of
Directors,  except that if a Director  participates  in a  committee  meeting by
telephone, the fee shall be $500. Also a Director who is not a regular full-time
employee of the Corporation or one or more of its  subsidiaries and who has been
appointed as Chairman of any  committee of the Board of Directors  shall be paid
an annual retainer fee of $3,000 for assuming these additional responsibilities.
This  retainer  shall  be paid  July 1 of each  year.  Each  Director  shall  be
reimbursed  for the travel  expenses  incurred  by him or her in  attending  any
meeting of the Board of Directors or any committee of the Board of Directors.

            C. Each Director of the Corporation  who is not a regular  full-time
employee of the  Corporation  or one or more of its  subsidiaries  shall be paid
$600 for each special  consultation as a Director that is with or at the request
of the Corporation's Chief Executive Officer.

         10. Any  contract or other  transaction  between the  Corporation  or a
subsidiary of the Corporation and any other entity shall not be void or voidable
because a Director of the  Corporation is interested  therein if the Corporation
has complied with the provisions of any  then-applicable  New Jersey  statute(s)
necessary or sufficient to make the transaction not void or voidable, including,
as of June 1997, N.J.S.A. 14A:6-8(1).
                 --------


                                   ARTICLE III
                                   -----------

                                    Officers
                                    --------

         1. At the  first  meeting  after  the  annual  election,  the  Board of
Directors  shall  choose a Chairman of the Board and a  President,  both of whom
shall be members of the Board of Directors,  and one or more Vice Presidents,  a
Secretary, a Treasurer and a Controller, who need not be members of the Board of
Directors,  and who shall hold their respective  offices until others are chosen
and qualify in their stead. The offices of Secretary and Treasurer may be filled
by the same person.

         2. In its  discretion,  the Board of Directors  may leave  unfilled for
such period as it may determine, any office except the offices of the President,
Treasurer and Secretary.

         3. The  Chairman of the Board shall be the Chief  Executive  Officer of
the Corporation.  He shall preside at all meetings of the Board of Directors and
shall,  during the recess of the Board of  Directors,  have general  control and
management of the affairs and business of the  Corporation.  The Chairman of the
Board shall preside at stockholders' meetings.

         4. In addition to the duties and responsibilities specified in the laws
of the State of New Jersey and these By-Laws,  the President  shall perform such
other  duties as from time to time may be assigned to him or her by the Board of
Directors,  and shall  preside at  stockholders'  meetings in the absence of the
Chairman of the Board.  In the absence of the  Chairman of the Board,  or in the
event that there is a vacancy in the office of the  Chairman  of the Board,  the
President  shall be the Chief  Executive  Officer of the  Corporation  and shall
perform  all the  duties  of the  Chairman  of the  Board  as well as  those  of
President.

         5. Each Vice President  shall perform such duties as shall from time to
time be assigned to him by the Board of Directors, the Chairman of the Board, or
the President.

         6. The  Secretary,  in addition  to his  statutory  duties,  shall give
proper notice of all meetings of the stockholders and of the Board of Directors.
He shall act as Secretary of all meetings of the  stockholders and shall perform
such other  duties as shall from time to time be assigned to him by the Board of
Directors or President.

         7. The Treasurer,  in addition to his statutory duties, shall keep full
and accurate  accounts of receipts and  disbursements  of the funds belonging to
the  Corporation,  and shall cause to be deposited all moneys and other valuable
effects in the name and to the credit of the Corporation in such depositories as
may from time to time be designated by the Board of Directors. He shall disburse
the funds of the  Corporation  as may be  ordered by the  Board,  taking  proper
vouchers for such disbursements, and shall render to the President and Directors
whenever they may require it, account of all his transactions as Treasurer,  and
of the  financial  condition  of the  Corporation.  He shall  perform such other
duties as shall be assigned to him by the Board or  President,  and shall give a
bond for the  faithful  discharge of his duties in such sum and with such surety
or sureties as the Board of Directors may from time to time require.

         8. The  Controller  shall  see that  adequate  records  of all  assets,
liabilities and  transactions  of the Corporation are maintained;  that adequate
audits thereof,  are currently and regularly made, and in conjunction with other
officers,  initiate and enforce measures and procedures  whereby the business of
the Corporation shall be conducted with maximum efficiency,  safety and economy.
He shall also perform all such other duties as usually  pertain to the office of
Controller. He shall be in all matters subject to the control of and responsible
to the Board of Directors alone.

         9. The Board of  Directors  may from time to time  appoint  such  other
officers and agents as they may deem necessary or advisable for the  transaction
of the  business of the  Corporation,  who shall hold their  offices  during the
pleasure of the Board of  Directors  and perform such duties as may from time to
time be designated or assigned to them by said Board of Directors.

         10. If the office of the  Chairman of the Board,  the  President,  Vice
President,  Secretary,  Treasurer,  or Controller or one or more of them becomes
vacant for any reason  whatsoever,  the Board of Directors at any duly  convened
meeting  may, by a majority  vote of those  present,  fill such  vacancy and the
person elected shall hold office for the unexpired term of such office and until
his successor shall be chosen.

         11.  All  officers  and  agents  chosen  or  appointed  by the Board of
Directors shall be subject to removal by the Board of Directors at any time with
or without cause,  and in the case of the absence of any officer or agent of the
Corporation,  or for any other reason that may seem  sufficient  to the Board of
Directors,  the said  Board  of  Directors  subject  to the  limitations  herein
contained and the statutes in such case made and provided, may, without removal,
delegate his powers and duties to any other officer or suitable  person for such
period as it shall deem proper.

         12. All duly authorized  bonds and debentures of the Corporation  shall
be  signed  on behalf of the  Corporation  by its  Chairman  of the Board or its
President, or one of its Vice Presidents or, if so provided by resolution of the
Board of  Directors,  by one or more of such  officers and such other officer or
officers designated by the Board of Directors; any or all such signatures may be
manual or facsimile  signatures,  the signature on interest  coupons attached to
any said bonds or debentures shall be a facsimile  signature;  and the corporate
seal or a  facsimile  of such  seal  may be  impressed,  affixed,  imprinted  or
otherwise  reproduced on said bonds and  debentures  and, if attested,  shall be
attested by the  Corporation's  Secretary  or  Assistant  Secretary by manual or
facsimile  signature.  In case any person whose signature  (manual or facsimile)
appears upon any said bond or debenture or coupons  attached thereto shall cease
to be an officer of the Corporation,  or shall cease to be the officer specified
thereon,  before the bonds or debentures so signed shall have been authenticated
by the trustee  under the  indenture or other  instrument  pursuant to which the
bonds or debentures  are delivered or sold,  such bonds or debentures or coupons
may  nevertheless be adopted by the  Corporation,  without further action by the
Board of  Directors,  and  authenticated  and  delivered  and sold as though the
person or persons who so signed or attested  such bonds or debentures or coupons
had not ceased to be an  officer of the  Corporation  or the  officer  specified
thereof; and any bonds or debentures may be signed as aforesaid; and the seal of
the Corporation  impressed,  affixed,  imprinted or otherwise reproduced thereon
may be attested on behalf of the Corporation as aforesaid,  and coupons attached
may be  signed  as  aforesaid  by  such  persons  as at the  actual  date of the
execution of the bonds or debentures or coupons shall be the proper  officers of
the  Corporations,  although at the time of the date of the bonds or debentures,
such persons may not have been officers of the Corporation.

                                   ARTICLE IV
                                   ----------

                               Executive Committee
                               -------------------

         1. The  Directors  may appoint an executive  committee  and one or more
other  committees  of not less than three  members  to be chosen  from among the
members of the Board of Directors.  Such  committees  may meet at such times and
places as the committee  shall,  by resolution,  determine and it shall make its
own rules of procedure.  A majority of the members of any such  committee  shall
constitute a quorum.

         2. Except as otherwise  provided by Board  resolution or statute (as of
June 1997, N.J.S.A. 14A:6-9(1)), each such committee shall have and may exercise
the  power of the Board of  Directors  in the  management  of the  business  and
affairs of the  Corporation  at any time when the Board of Directors  are not in
session.  Each  such  committee  shall,  however,  be  subject  to the  specific
directions of the Board of Directors.

         3. Each such committee shall keep regular minutes of their transactions
and shall cause them to be recorded in books to be kept for that  purpose in the
office of the  Corporation,  and shall report the same to the Board of Directors
at their regular meetings.

                                    ARTICLE V
                                    ---------

                               Transfer of Shares
                               ------------------

         1.  Except as  otherwise  provided  by  statute,  shares  evidenced  by
certificates  shall be transferred on the books of the  Corporation  only by the
holder thereof in person or by his attorney upon the surrender and  cancellation
of the  certificate or  certificates  of a like number of shares,  except in the
case of lost or destroyed certificates,  and in that case only after the receipt
of a satisfactory bond.

         2. The Board of Directors may appoint a transfer  agent and a registrar
of  transfers,  and may,  in the case of  shares  represented  by  certificates,
require all stock certificates to bear the signature of either or both.

                                   ARTICLE VI
                                   ----------

                                   Fiscal Year
                                   -----------

         1. The fiscal  year of the  Corporation  shall  begin on the 1st day of
October in each  calendar  year and end on the 30th day of September of the next
succeeding year.

                                   ARTICLE VII
                                   -----------

                          Dividends and Working Capital
                          -----------------------------

         1.  Before  declaring  any  dividends  or making  any  distribution  of
profits,  the  Directors  may set  apart  out of the net  profits  or out of the
surplus of the  Corporation  as a reserve fund to be used as working  capital or
for any other proper  purpose,  such sum or sums as the Directors shall in their
discretion deem just and proper and most for the benefit of the Corporation.

         2.  Dividends upon the capital stock of the  Corporation  when declared
shall be payable on dates to be determined by the Board of Directors.

                                  ARTICLE VIII
                                  ------------

                          Closing of Transfer Books and
                              Fixing A Record Book
                              --------------------

         The  Board of  Directors  may close  the  stock  transfer  books of the
Corporation  for a period not  exceeding  sixty days  preceding  the date of any
meeting of stockholders or the date for payment of any dividend, or the date for
the  allotment of rights,  or the date when any change or conversion or exchange
of capital stock shall go into effect.

         In lieu of so closing the stock transfer books,  the Board of Directors
may fix, in advance,  a date, not exceeding sixty days preceding the date of any
meeting of  stockholders,  or the date for the payment of any  dividend,  or the
date for the  allotment of rights,  or the date when any change or conversion or
exchange  of  capital  stock  shall go into  effect,  as a  record  date for the
determination  of the  stockholders  entitled  to notice of, and to vote at, any
such meeting,  or entitled to receive payment of any such dividend,  or any such
allotment  of rights,  or to exercise  the rights in respect to any such change,
conversion or exchange of capital stock,  and in such case only  stockholders of
record on the date so fixed shall be entitled to such notice of, and to vote at,
such meeting, or to receive payment of such dividend,  or allotment of rights or
exercise of such rights, as the case may be, and notwithstanding any transfer of
any stock on the books of the  Corporation  after any such  record date fixed as
aforesaid.

                                   ARTICLE IX
                                   ----------

                                Waiver of Notice
                                ----------------

         1. Any notice  required  to be given by these  By-Laws may be waived by
the person entitled thereto.

                                    ARTICLE X
                                    ---------

                                      Seal
                                      ----

         1. The  common  corporate  seal is and until  otherwise  ordered by the
Board of Directors  shall be an impression upon paper or wax bearing the words -
"NATIONAL FUEL GAS COMPANY, NEW JERSEY, INCORPORATED 1902".




                                   ARTICLE XI
                                   ----------

                              Amendment of By-Laws
                              --------------------

         1. Except as  otherwise  provided by  statute,  the Board of  Directors
shall have power to make,  alter or repeal the By-Laws of the  Corporation  by a
vote of a majority  of all the  Directors  at any duly  convened  meeting of the
Board,  but any  By-Laws  so made or  otherwise  promulgated  may be  altered or
repealed and new By-Laws made by the  stockholders at any duly convened  meeting
thereof.
</TEXT>
</DOCUMENT>
<DOCUMENT>
<TYPE>EX-10.1
<SEQUENCE>3
<FILENAME>0003.txt
<DESCRIPTION>AMENDED AND RESTATED SPLIT DOLLAR INSURANCE
<TEXT>

                              AMENDED AND RESTATED

                        SPLIT DOLLAR INSURANCE AGREEMENT

         WHEREAS,  National  Fuel  Gas  Company  (hereinafter,  with  any of its
subsidiaries,  collectively called the "Company"),  in recognition of the highly
valued services of Bernard J. Kennedy (hereinafter called the "Executive"),  the
Executive's  importance  to  the  success  of  the  Company,  and  the  need  of
Executive's family for financial security in the event of Executive's death, has
authorized  the adoption of a split dollar  insurance  agreement  benefiting the
Executive; and

         WHEREAS, pursuant to such authorization,  the Executive and the Company
entered into a certain Split Dollar Death  Benefits  Agreement  dated August 28,
1991, which Agreement has been amended by subsequent  agreements dated April 19,
1993 and March 15, 1994; and

         WHEREAS,  the  Executive  and the  Company  desire to amend in  certain
respects  and to restate in its  entirety  the terms of such Split  Dollar Death
Benefits Agreement, as amended; and

         WHEREAS,   the  Executive  has  agreed  not  to   participate   in  any
noncontributory group term life insurance program while employed by the Company;
and

         WHEREAS, the Company desires to be reimbursed, upon termination of this
Agreement,  for  premiums it advances  to  maintain a life  insurance  policy or
policies for these purposes; and

         WHEREAS,  by an Irrevocable  Trust Agreement dated January 9, 1998, the
Executive  has  established  a trust (the  "Trust") to which the  Executive  has
assigned all of his interests in the insurance  policies  described in Section I
of this Agreement.

NOW THEREFORE,  for mutual consideration,  the receipt and adequacy of which the
Company,  the  Executive  and the  Trust  each  acknowledge,  the  Company,  the
Executive and the Trust agree as follows:


<PAGE>


I.       LIFE INSURANCE

         A. The  Trust  and the  Company  are  currently  the  co-owners  of one
insurance  policy (policy number  3066713)  (hereinafter,  with any  replacement
policy, called the "Co-Owned Policy"), having a total face amount of $2,000,000,
issued by The Guardian Life Insurance Company of America,  of New York, New York
(hereinafter the "Insurer") on the life of the Executive.

         B. The Trust is  currently  the owner of five life  insurance  policies
(policy numbers 3171767,  3181516, 3495552, 3727153 and 3936117), having a total
face  amount  of  $6,283,473  (hereafter,  with any  additional  or  replacement
policies,  called the "Additional Policies"),  issued by the Insurer on the life
of the  Executive.  (The  Co-Owned  Policy and the  Additional  Policies  may be
collectively referred to hereinafter as the "Policies.")

         C. The Company's  ownership of the Co-Owned Policy while this Agreement
is in force shall be equal to the  "Company's  Interest" as defined in Section V
of this  Agreement.  The balance of the  Co-Owned  Policy  shall be owned by the
Trust.  Except as specifically  provided in this Agreement,  the Company and the
Trust may  exercise all rights and  incidents of ownership  only with respect to
their respective ownership interest in the Co-Owned Policy.

         D. The Trust shall be the sole owner of the Additional Policies and may
exercise all rights and  incidents of ownership  with respect to the  Additional
Policies,  except as  specifically  provided  in this  Agreement  and in certain
collateral  assignments of the Additional  Policies to the Company,  executed in
connection with this Agreement (the "Collateral Assignments").

II.      PREMIUMS

         The Company shall  advance each premium due on the Policies  during the
term of this  Agreement  to the  Insurer  on or  before  the  premium  due date,
extended by any grace period.  The Executive or the Trust may elect to reimburse
the Company for all or a portion of any premium due on the Policies. The Company
may elect to offset all or a portion of the premium advances with dividends from
the following  policies  during the year so indicated:  policy numbers  3066713,
3171767,  3181516  and 3495552  beginning  in the year 2002;  and policy  number
3727153 beginning in the year 2003.

III.     BENEFICIARY

         The Trust may from time to time while this  Agreement  is in force,  by
such  written  notice to the Insurer as the Insurer may require,  designate  the
beneficiary or beneficiaries (the "Beneficiary") to receive the policy proceeds,
to the extent provided in Section VI.

IV.      TERMINATION OF AGREEMENT

         A. This  Agreement  shall  terminate  upon the earliest to occur of the
following:

              a) February  15,  2010,  unless the Company and the Trust agree in
                 writing to a later date;

              b) mutual  agreement  of the  Company  and the Trust prior to such
                 date;

              c) the Executive's death.

         B. If the  Executive's  employment  with the Company is terminated  for
Cause, as hereinafter  defined,  or if the Executive engages in Competition,  as
hereinafter defined, with the Company, whether or not the Executive's employment
with the Company has been  terminated,  the Company may terminate this Agreement
by written  notice to the Executive and the Trust.  In the event of  termination
under this  Subsection  B, the  Executive and the Trust shall forfeit all rights
under this  Agreement,  and,  notwithstanding  anything in this  Agreement,  the
Company shall be entitled to any and all interests in the Policies.

V.       REPAYMENT TO THE COMPANY

         Upon  termination  of this  Agreement  during the  Executive's  life as
described in Section IV A(a) and (b), the Company shall be entitled to repayment
of an amount (the "Company's Interest") determined as follows:

         A. With respect to three of the  Additional  Policies  (policy  numbers
3936117,  3171767,  3181516),  the Company shall be entitled to repayment of the
total  premiums  advanced by the Company to maintain such  policies  since their
issuance,  less any amount  reimbursed  to the Company by the  Executive  or the
Trust.

         B. With  respect  to two of the  Additional  Policies  (policy  numbers
3495552 and 3727153), the Company shall be entitled to the entire cash surrender
value of such policies.

         C. With respect to the Co-Owned  Policy  (policy number  3066713),  the
Company shall be entitled to an amount  sufficient to bring the total  repayment
for all policies hereunder to $6,047,000.

If full repayment is not made within 60 days of  termination of this  Agreement,
the Company may,  with respect to the  Additional  Policies,  enforce its rights
under the Collateral Assignments.  Upon receipt of the Company's Interest in any
of the  Additional  Policies,  the Company will promptly  release the Collateral
Assignment thereof. With respect to the Co-Owned Policy (policy number 3066713),
the  Company  shall be  entitled  to an  amount  sufficient  to bring  the total
repayment for all policies hereunder to $6,047,000.

VI.      DEATH BENEFIT AND REPAYMENT TO THE COMPANY WHILE AGREEMENT IS IN FORCE

         A. If this Agreement terminates by reason of the Executive's death, the
proceeds of the Policies shall be paid as follows:

              a) The Company shall receive an amount equal to the total premiums
              paid by the Company to maintain the Policies since their issuance,
              less any amount  reimbursed to the Company by the Executive or the
              Trust.

              b) The Beneficiary shall be paid the sum of $8,000,000 (the "Death
              Benefit").

              c) Any remaining  policy proceeds after  satisfaction of a) and b)
              shall be paid to the Company.

         B. The  Company  shall  notify  the  Insurer of the amount of the Death
Benefit within 30 days of the death of the Executive  while this Agreement is in
force,  and  the  Death  Benefit  shall  be paid to the  Beneficiary  under  the
settlement option elected by the Trust.

VII.     OTHER COMPANY BENEFITS

         The   Executive   shall   have  no   right   to   participate   in  any
non-contributory  group-term life insurance plan  maintained by the Company.  In
other respects,  the benefits provided to the Executive under this Agreement and
the Policies  shall be separate from and in addition to other  benefits that may
be  offered by the  Company to the  Executive,  including  any  non-contributory
accidental death and dismemberment coverage that the Company maintains.

VIII.    POLICY LOANS

         While this  Agreement  is in force,  neither  the Company nor the Trust
shall borrow against or pledge the Policies as security for any debt.

IX.      ASSIGNMENT OF THE POLICIES AND THIS AGREEMENT

         The Policies shall not be assigned,  transferred,  pledged, surrendered
or otherwise encumbered or alienated without the written consent of the Company.
Any  assignee  pursuant to this  Section and any other  successor to the Trust's
interest in the Policies shall be bound by this restriction.

X.       REPLACEMENT OF THE POLICIES

         The  Company  shall have the right to replace the  Policies  with a new
policy or policies, with the consent of the Trust.

XI.      AMENDMENT

         This  Agreement  may be altered,  amended or modified only by a written
agreement signed by the Company and the Trust. This Agreement and any amendments
hereto  shall be binding upon the Company,  the  Executive,  the Trust and their
legal representatives,  successors, beneficiaries and assigns. In the event that
the Company becomes a party to any merger, consolidation or reorganization, this
Agreement  shall remain in full force and effect as an obligation of the Company
or its successors in interest.

XII.     DEFINITION OF TERMS

         A.  "Cause"  means  serious,  willful  misconduct  in  respect  of  the
Executive's  obligations  to the Company that has damaged or is likely to damage
the Company,  including  (without  limitation)  any  endeavor by the  Executive,
directly or indirectly,  to interfere in the business  relations of or otherwise
harm the Company, as the Company shall reasonably determine.

         B.  "Competition"  means any employment,  consulting  contract or other
arrangement,  before or after the termination of the Executive's employment with
the  Company,  with any person or entity  that is then or  becomes  engaged in a
business  enterprise of any sort that is, in any material  respect,  competitive
with the Company,  or any assistance by the Executive to any such  enterprise in
engaging in such competition.

XIII.    NONINTERFERENCE

         The Executive and the Trust covenant that the Executive, the Trust, any
Assignee and the Beneficiary shall not interfere with the Company's rights under
this Agreement or take any voluntary  action that causes the Policies to fail or
lapse,  in whole or in part.  The  Executive,  the Trust,  any  Assignee and the
Beneficiary  will  cooperate  with  Company and the  Insurer in all  respects in
obtaining and maintaining  the Policies and shall, if necessary,  use their best
efforts to provide,  from time to time,  such  evidence of  insurability  as the
Insurer may require.

XIV.     MISCELLANEOUS

         A. If any  part of this  Agreement  or the  application  of any part to
certain  persons  or  circumstances  shall  be  invalid  or  unenforceable,  the
remainder of the Agreement shall continue to be effective.

         B. This  Agreement  shall be construed and regulated  under the laws of
the State of New York.

         C. The  Executive  understands  that the benefits  provided  under this
Agreement will or may result in taxable  income to him and the Company  reserves
the right to implement tax  withholding  respecting  such amounts as and when it
may deem such withholding appropriate.

XV.      ERISA PROVISIONS

         This  Agreement  constitutes  part of a welfare  benefit plan ("Welfare
Plan") and, as such, the following provisions are part of this Agreement and are
intended to meet the requirements of Title I of the Employee  Retirement  Income
Security Act of 1974 ("ERISA"):

                1.       The named fiduciary of the Welfare Plan is the Company.

                2.       The funding  policies under the Welfare Plan are that
                         all  premiums  on the  Policies  be  remitted  to the
                         Insurer by the Company when due. The Executive or the
                         Trust may elect to reimburse the Company for all or a
                         portion of any premium due on the Policies.

                3.       Direct payment by the Insurer is the basis of payment
                         of benefits under this Agreement.

                4.       For claims procedure  purposes with respect to claims
                         asserted under the Welfare Plan, the "Claims Manager"
                         shall be Robert J. Dauer, or such other person as may
                         be designated from time to time by the Company.

                         a.       If for any  reason a claim for  benefits  is
                                  made by a participant under the Welfare Plan
                                  ("Claimant")  and is denied by the  Company,
                                  the  Claims  Manager  shall  deliver  to the
                                  Claimant  a written  explanation  specifying
                                  the reasons for the denial,  the  provisions
                                  on which  such  denial is based,  such other
                                  data as may be pertinent, and the procedures
                                  available to the  Claimant to obtain  review
                                  of  the  claim,  all  written  in  a  manner
                                  calculated to be understood by the Claimant.
                                  For this purpose,

                                  (i)     the claim shall be deemed filed when
                                          presented in writing to the Claims
                                          Manager; and

                                  (ii)    the  Claims  Manager's   explanation
                                          shall be in writing delivered to the
                                          Claimant  within 90 days of the date
                                          the claim is filed.

                         b.       The  Claimant  shall  have 60  days  following
                                  receipt  of the  denial  of the  claim to file
                                  with the Claims Manager a written  request for
                                  review of the  denial.  For such  review,  the
                                  Claimant  or  his or  her  representative  may
                                  submit pertinent  documents and written issues
                                  and comments.

                         c.       The Claims  Manager  shall have  discretion to
                                  decide the issue on review  and shall  furnish
                                  the  Claimant  with  a copy  of  the  decision
                                  within  60 days of  receiving  the  Claimant's
                                  request for review of the claim.  The decision
                                  on  review   shall  be  written  in  a  manner
                                  calculated  to be  understood  by the Claimant
                                  and  shall   specify   the   reasons  for  the
                                  decision,  as well as the  provisions on which
                                  the  decision  is  based.  If a  copy  of  the
                                  decision is not so  furnished  to the Claimant
                                  within such 60 days, the claim shall be deemed
                                  denied on review.


<PAGE>



         IN WITNESS  WHEREOF,  the parties have executed  this  Agreement on the
dates set opposite their respective signatures,  to be effective on the 15th day
of June, 2000.

                                       NATIONAL FUEL GAS COMPANY


July 26, 2000                       By:/s/Philip C. Ackerman
- -------------------------------        ------------------------
Date                                   Philip C. Ackerman
                                       President
/s/Paula M. Ciprich
- -------------------------------

Witness

                                    EXECUTIVE:

July 21, 2000                       /s/Bernard J. Kennedy
- -------------------------------     ------------------------------------------
Date                                Bernard J. Kennedy

/s/Paula M. Ciprich
- -------------------------------
Witness

                                    TRUSTEE:

July 31, 2000                       /s/Joseph B. Kennedy
- -------------------------------     ------------------------------------------
Date                                Joseph B. Kennedy, as Trustee of the Trust
                                    under the Agreement dated January 9, 1998
/s/Geraldine D. Kennedy
- -------------------------------
Witness


</TEXT>
</DOCUMENT>
<DOCUMENT>
<TYPE>EX-10.2
<SEQUENCE>4
<FILENAME>0004.txt
<DESCRIPTION>CONTINGENT BENEFIT AGREEMENT
<TEXT>

                                   CONTINGENT

                                BENEFIT AGREEMENT

         WHEREAS:

                  1.  Bernard  J.  Kennedy  (hereinafter  the  "Executive")  and
National  Fuel  Gas  Company   (hereinafter,   with  any  of  its  subsidiaries,
collectively  called  the  "Company"),  are  parties to a certain  Split  Dollar
Insurance  Agreement dated August 28, 1991, which has been amended by agreements
dated  April 19,  1993 and March  15,  1994,  and will be  further  amended  and
restated in its entirety by an Agreement  executed  contemporaneously  with this
Agreement (the "Restated Agreement").

                  2. By entering into the Restated  Agreement,  the Executive is
agreeing to a substantial  reduction in the benefit to which he (or in the event
of his  death,  his  beneficiaries)  would  have been  entitled  under the prior
agreement in effect between the Company and the Executive.

                  3.  The  parties   entered  into  these   Agreements   on  the
understanding  that federal law governing the taxation of split dollar insurance
plans  provides that neither the build-up of cash value within a life  insurance
policy  subject  to such a plan nor the  death  benefit  of any such  policy  is
included in the taxable income of the insured or any beneficiary of the policy.

                  4. The parties agree that certain  benefits should be provided
to the Executive or to the  Beneficiary of the policies  subject to the Restated
Agreement in the event of a substantial change in the law governing the taxation
of split dollar insurance plans during the term of the Restated Agreement.

                  NOW,  THEREFORE,  in consideration  of the promises  contained
herein  and  in  the  Restated   Agreement,   and  other  good  and   sufficient
consideration, the parties agree as follows:

                  A. If the federal law  governing  the taxation of split dollar
insurance  plans changes  substantially  before the  termination of the Restated
Agreement,  such that the Executive must take into taxable income any portion of
the annual  increment  in the cash value of any policy  subject to the  Restated
Agreement,  the  Company  hereby  agrees to pay to the  Executive  the  Gross-up
Amount, as hereinafter  defined. For each taxable year, the Gross-up Amount will
be the amount  that will result in the  Executive  receiving  the same  economic
benefit from the Company, after state and federal income taxes, as the Executive
would have  received in such year if his taxable  income did not include  either
the Gross-up Amount or any portion of such annual increment in value.

                  B.  If  the  Executive  dies  before  the  termination  of the
Restated Agreement,  and if by reason of a substantial change in federal tax law
any portion of the death benefit  payable upon the  Executive's  death under any
policy  subject to the Restated  Agreement is included in the taxable  income of
the beneficiary or  beneficiaries  of such policy,  the Company agrees to pay to
such beneficiary or beneficiaries a Beneficiary  Gross-up Amount, as hereinafter
defined. With respect to each such beneficiary,  the Beneficiary Gross-up Amount
is the  amount  that will  result in  receipt  by such  beneficiary  of the same
amount,  after state and federal  income taxes,  as the  beneficiary  would have
received  if the  beneficiary's  taxable  income  did  not  include  either  the
Beneficiary Gross-up Amount or any portion of such death benefit.

                  C.  This  Agreement  is  binding  upon  the  Company  and  the
Executive  and  their  legal  representatives,   successors,  beneficiaries  and
assigns.  In the  event  that  the  Company  becomes  a  party  to  any  merger,
consolidation  or  reorganization,  this Agreement will remain in full force and
effect as an obligation of the Company or its successors in interest.

                  IN WITNESS  WHEREOF,  the parties have executed this Agreement
on the dates set opposite their respective signatures.

Date signed June 15, 2000                    /s/Bernard J. Kennedy
                                             ----------------------------------
                                              Bernard J. Kennedy


                                                NATIONAL FUEL GAS COMPANY


Date signed June 15, 2000                       By: /s/Philip C. Ackerman
                                                    -------------------------
                                                    Philip C. Ackerman
                                                    President




</TEXT>
</DOCUMENT>
<DOCUMENT>
<TYPE>EX-12
<SEQUENCE>5
<FILENAME>0005.txt
<DESCRIPTION>TWELVE MONTHS ENDED JUNE 30, 2000
<TEXT>

                                                                      EXHIBIT 12
<TABLE>
<CAPTION>
                                                                                                 COMPUTATION OF RATIO OF
                                                                                                 EARNINGS TO FIXED CHARGES
                                                                                                                 UNAUDITED

                                                        For the Twelve                           Fiscal Year Ended September 30
                                                                         --------------------------------------------------------
                                                         Months Ended
                                                         June 30, 2000         1999       1998       1997       1996       1995
                                                    -----------------------------------------------------------------------------
<S>                                                       <C>               <C>        <C>          <C>       <C>        <C>
EARNINGS:

Income Before Interest Charges and Minority Interest
     in Foreign Subsidiaries (2)                          $227,283          $202,512   $118,085     $169,783  $159,599   $128,061
Allowance for Borrowed Funds Used in Construction              485               303        110          346       205        195
Federal Income Tax                                          51,970            44,583     43,626       57,807    55,148     30,522
State Income Tax                                            13,894             6,215      6,635        7,067     7,266      4,905
Deferred Inc. Taxes - Net (3)                               15,670            14,030    (26,237)       3,800     3,907      8,452
Investment Tax Credit - Net                                 (1,019)             (729)      (663)        (665)     (665)      (672)
Rentals (1)                                                  4,184             4,281      4,672        5,328     5,640      5,422
                                                    ------------------------------------------------------------------------------

                                                          $312,467          $271,195   $146,228     $243,466  $231,100   $176,885
                                                    ==============================================================================

FIXED CHARGES:

Interest & Amortization of Premium and
   Discount of Funded Debt                                 $66,218           $65,402    $53,154      $42,131   $40,872    $40,896
Interest on Commercial Paper and
   Short-Term Notes Payable                                 19,436            17,319     13,605        8,808     7,872      6,745
Other Interest (2)                                           5,963             2,835     16,919        4,502     6,389      4,721
Rentals (1)                                                  4,184             4,281      4,672        5,328     5,640      5,422
                                                    ------------------------------------------------------------------------------

                                                           $95,801           $89,837    $88,350      $60,769   $60,773    $57,784
                                                    ==============================================================================

RATIO OF EARNINGS TO FIXED CHARGES                            3.26              3.02       1.66         4.01      3.80       3.06
</TABLE>


   Notes:

   (1) Rentals  shown above  represent  the  portion of all rentals  (other than
       delay rentals) deemed representative of the interest factor.

   (2) The  twelve months ended June 30, 2000 and fiscal 1999,  1998, 1997, 1996
       and 1995 reflect the reclassification of $1,927,  $1,839, $1,716, $1,716,
       $1716 and  $1,716  representing  the loss on  reacquired  debt  amortized
       during each period, from Other Interest Charges to Operation Expense.

   (3) Deferred  Income  Taxes - Net for fiscal  1998  excludes  the  cumulative
       effect of change in accounting.
</TEXT>
</DOCUMENT>
<DOCUMENT>
<TYPE>EX-27
<SEQUENCE>6
<FILENAME>0006.txt
<DESCRIPTION>NINE MONTHS ENDED JUNE 30, 2000
<TEXT>

<TABLE> <S> <C>

<ARTICLE> UT
<LEGEND>
THE SCHEDULE CONTAINS SUMMARY FINANCIAL INFORMATION EXTRACTED FROM NATIONAL FUEL
GAS COMPANY'S CONSOLIDATED FINANCIAL STATEMENTS 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>                                             SEP-30-2000
<PERIOD-START>                                                OCT-01-1999
<PERIOD-END>                                                  JUN-30-2000
<BOOK-VALUE>                                                     PER-BOOK
<TOTAL-NET-UTILITY-PLANT>                                       2,662,570
<OTHER-PROPERTY-AND-INVEST>                                             0
<TOTAL-CURRENT-ASSETS>                                            314,092
<TOTAL-DEFERRED-CHARGES>                                           21,955
<OTHER-ASSETS>                                                    221,165
<TOTAL-ASSETS>                                                  3,219,782
<COMMON>                                                           39,223
<CAPITAL-SURPLUS-PAID-IN>                                         448,115
<RETAINED-EARNINGS>                                               547,872
<TOTAL-COMMON-STOCKHOLDERS-EQ>                                  1,016,542
<PREFERRED-MANDATORY>                                                   0
<PREFERRED>                                                             0
<LONG-TERM-DEBT-NET>                                              958,327
<SHORT-TERM-NOTES>                                                318,774
<LONG-TERM-NOTES-PAYABLE>                                               0
<COMMERCIAL-PAPER-OBLIGATIONS>                                    200,000
<LONG-TERM-DEBT-CURRENT-PORT>                                      12,646
<PREFERRED-STOCK-CURRENT>                                               0
<CAPITAL-LEASE-OBLIGATIONS>                                             0
<LEASES-CURRENT>                                                        0
<OTHER-ITEMS-CAPITAL-AND-LIAB>                                    713,493
<TOT-CAPITALIZATION-AND-LIAB>                                   3,219,782
<GROSS-OPERATING-REVENUE>                                       1,184,555
<INCOME-TAX-EXPENSE>                                               76,997
<OTHER-OPERATING-EXPENSES>                                        910,806
<TOTAL-OPERATING-EXPENSES>                                        987,803
<OPERATING-INCOME-LOSS>                                           196,752
<OTHER-INCOME-NET>                                                  7,636
<INCOME-BEFORE-INTEREST-EXPEN>                                    204,388
<TOTAL-INTEREST-EXPENSE>                                           71,746
<NET-INCOME>                                                      130,387
<PREFERRED-STOCK-DIVIDENDS>                                             0
<EARNINGS-AVAILABLE-FOR-COMM>                                     130,387
<COMMON-STOCK-DIVIDENDS>                                           55,032
<TOTAL-INTEREST-ON-BONDS>                                               0
<CASH-FLOW-OPERATIONS>                                            261,011
<EPS-BASIC>                                                          3.34
<EPS-DILUTED>                                                        3.30




</TABLE>
</TEXT>
</DOCUMENT>
<DOCUMENT>
<TYPE>EX-27
<SEQUENCE>7
<FILENAME>0007.txt
<DESCRIPTION>RESTATED FOR THE NINE MONTHS ENDED JUNE 30, 1999
<TEXT>

<TABLE> <S> <C>

<ARTICLE> UT
<LEGEND>
THE SCHEDULE CONTAINS SUMMARY FINANCIAL INFORMATION EXTRACTED FROM NATIONAL FUEL
GAS COMPANY'S CONSOLIDATED FINANCIAL STATEMENTS AND IS QUALIFIED IN ITS ENTIRETY
BY REFERENCE TO SUCH FINANCIAL STATEMENTS.
</LEGEND>
<RESTATED>
<MULTIPLIER> 1,000

<S>                                                           <C>
<PERIOD-TYPE>                                                 9-MOS
<FISCAL-YEAR-END>                                             SEP-30-1999
<PERIOD-START>                                                OCT-01-1998
<PERIOD-END>                                                  JUN-30-1999
<BOOK-VALUE>                                                     PER-BOOK
<TOTAL-NET-UTILITY-PLANT>                                       2,327,021
<OTHER-PROPERTY-AND-INVEST>                                             0
<TOTAL-CURRENT-ASSETS>                                            258,006
<TOTAL-DEFERRED-CHARGES>                                           13,736
<OTHER-ASSETS>                                                    228,401
<TOTAL-ASSETS>                                                  2,827,164
<COMMON>                                                           38,751
<CAPITAL-SURPLUS-PAID-IN>                                         428,273
<RETAINED-EARNINGS>                                               486,099
<TOTAL-COMMON-STOCKHOLDERS-EQ>                                    943,669
<PREFERRED-MANDATORY>                                                   0
<PREFERRED>                                                             0
<LONG-TERM-DEBT-NET>                                              726,272
<SHORT-TERM-NOTES>                                                218,500
<LONG-TERM-NOTES-PAYABLE>                                               0
<COMMERCIAL-PAPER-OBLIGATIONS>                                    132,500
<LONG-TERM-DEBT-CURRENT-PORT>                                     159,696
<PREFERRED-STOCK-CURRENT>                                               0
<CAPITAL-LEASE-OBLIGATIONS>                                             0
<LEASES-CURRENT>                                                        0
<OTHER-ITEMS-CAPITAL-AND-LIAB>                                    646,527
<TOT-CAPITALIZATION-AND-LIAB>                                   2,827,164
<GROSS-OPERATING-REVENUE>                                       1,072,484
<INCOME-TAX-EXPENSE>                                               60,327
<OTHER-OPERATING-EXPENSES>                                        840,529
<TOTAL-OPERATING-EXPENSES>                                        900,856
<OPERATING-INCOME-LOSS>                                           171,628
<OTHER-INCOME-NET>                                                  7,901
<INCOME-BEFORE-INTEREST-EXPEN>                                    179,529
<TOTAL-INTEREST-EXPENSE>                                           66,385
<NET-INCOME>                                                      110,604
<PREFERRED-STOCK-DIVIDENDS>                                             0
<EARNINGS-AVAILABLE-FOR-COMM>                                     110,604
<COMMON-STOCK-DIVIDENDS>                                           52,617
<TOTAL-INTEREST-ON-BONDS>                                               0
<CASH-FLOW-OPERATIONS>                                            248,024
<EPS-BASIC>                                                          2.86
<EPS-DILUTED>                                                        2.84



</TABLE>
</TEXT>
</DOCUMENT>
<DOCUMENT>
<TYPE>EX-99
<SEQUENCE>8
<FILENAME>0008.txt
<DESCRIPTION>CONSOLIDATED STATEMENT OF INCOME
<TEXT>

Exhibit 99
Form 10-Q
June 30, 2000


                                                       NATIONAL FUEL GAS
                                               CONSOLIDATED STATEMENT OF INCOME
                                                         (UNAUDITED)


                                                   Twelve Months Ended
                                                         June 30,
                                                   --------------------

                                                   2000            1999
(Thousands of Dollars)

INCOME
Operating Revenues                                $1,375,345      $1,249,892
                                                  ----------      ----------

Operating Expenses
  Purchased Gas                                      470,564         400,791
  Fuel Used in Heat and Electric Generation           55,040          54,988
  Operation                                          312,736         308,169
  Maintenance                                         23,582          23,846
  Property, Franchise and Other Taxes                 78,836          90,715
  Depreciation, Depletion and Amortization           135,920         126,399
  Income Taxes - Net                                  81,534          59,203
                                                  ----------      ----------
                                                   1,158,212       1,064,111
                                                  ----------      ----------

Operating Income                                     217,133         185,781
Other Income                                          12,077          11,358
                                                  ----------      ----------
Income Before Interest Charges and
  Minority Interest in Foreign Subsidiary            229,210         197,139
                                                  ----------      ----------

Interest Charges
  Interest on Long-Term Debt                          66,218          65,267
  Other Interest                                      26,841          22,626
                                                  ----------      ----------
                                                      93,059          87,893
                                                  ----------      ----------
Minority Interest in Foreign Subsidiary               (1,331)         (1,717)
                                                  ----------      ----------

Net Income Available for Common Stock             $  134,820      $  107,529
                                                  ==========      ==========

Basic Earnings Per Common Share:                  $     3.46      $     2.79
                                                  ==========      ==========

Diluted Earnings Per Common Share:                $     3.42      $     2.76
                                                  ==========      ==========

Weighted Average Common Shares Outstanding

    Used in Basic Calculation                     38,994,910      38,574,864
                                                  ==========      ==========
    Used in Diluted Calculation                   39,414,923      38,917,221
                                                  ==========      ==========

</TEXT>
</DOCUMENT>
</SEC-DOCUMENT>
-----END PRIVACY-ENHANCED MESSAGE-----
