DUFF & PHELPS RATES NATIONAL FUEL GAS COMPANY'S MEDIUM-TERM NOTE PROGRAM 'A'
CHICAGO, Aug. 11 /PRNewswire/ -- Duff & Phelps Credit Rating Co. has assigned a rating of `A' (Single-A) to National Fuel Gas Company's shelf registration for $350 million of medium-term notes, Series C. Proceeds will be used to reduce short-term debt, redeem higher cost debt, finance capital expenditures, and for general corporate purposes. National Fuel Gas' (NFG) credit protection measures have strengthened since 1991, aided by rate relief in its Utility and Supply, Transmission and Storage segments; refinancing of higher cost debt; and cost controls. Common equity sales have helped to reduce leverage, resulting in a more balanced capital structure. Future capital expenditures will require some additional external financing. Retail distribution operations provide a stable earnings base. Cost controls and integration of NFG's operations have enabled the distribution segment to maintain a favorable competitive position as a low-cost provider of natural gas to its residential base. With 97 percent of customers using gas for space heating, NFG is sensitive to weather variations. This is mitigated somewhat by a weather normalization clause in New York, NFG's largest retail jurisdiction. Supportive regulation will be necessary in view of this segment's pending rate matters as well as for issues related to the new deregulated gas environment under FERC Order 636. NFG's transmission system is strategically located near growing gas markets in the northeastern U.S. and interconnects with major pipelines. Canadian expansion projects have enabled it to increase its capacity to transport Canadian gas. NFG appears to be favorably positioned to operate in the post-FERC Order 636 environment. The company's supply segment has restructured many of its supply contracts to transportation, and will assign most of its gas purchase agreements to the distribution unit. NFG's ample storage capacity is expected to be of increasing strategic importance. Long-standing rate issues at the Penn-York storage subsidiary were recently resolved satisfactorily. Exploration and production operations, which traditionally have made a smaller earnings contribution, have benefited from the rise in natural gas prices and increased production. Exploration and production expenditures have risen as NFG has undertaken additional drilling to increase its natural gas reserves, particularly in the Gulf of Mexico. NFG's success in the Gulf has been good to date. Strategic expansion in the exploration/production area appears to be proceeding cautiously. -0- 8/11/93 /CONTACT: Lynda A. Housa of Duff & Phelps Credit Rating Co., 312-368-3156/ (NFG)
CO: National Fuel Gas Company ST: New York IN: UTI SU: RTG
LD -- NY090 -- 1842 08/11/93 16:37 EDT
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|Date:||Aug 11, 1993|
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