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                            United Cites Gas Company


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                      URGENT FEDERAL EXPRESS INSTRUCTIONS
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November 7, 1996

Dear Shareholder:

In order to assure that your latest dated proxy is  tabulated,  please take time
to sign and date  management's  enclosed WHITE PROXY CARD and Federal Express it
back to our proxy solicitor,  Corporate  Investor  Communications,  Inc., in the
prepaid return FedEX envelope.

You can  arrange  for your  proxy to be picked up by Federal  Express  simply by
calling (800)  463-3339,  and telling the operator your address and the time you
would like them to pick it up.

You must arrange for pick up no later than 5:00 PM on Monday, November 11, 1996.
It is  critical  to the  success of the merger  between  Atmos  Energy and Unted
Cities that we receive your latest dated proxy.

Thank you for your support and cooperation.


United Cities Gas Company




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                            United Cites Gas Company


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                                IMPORTANT NOTICE
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November 1, 1996

Dear Shareholder,

As you are aware by now,  Southern  Union has launched a  self-serving  campaign
attempting to derail the proposed  merger of United Cities Gas Company and Atmos
Energy  Corporation at the Special Meeting of Shareholders  scheduled to be held
on November 12, 1996.

The  Board  of  Directors  of  United  Cities  urges  you to  ignore  any  proxy
solicitation  materials you receive from Southern  Union. DO NOT RETURN SOUTHERN
UNION'S  PROXY CARD.  Instead,  please VOTE ALL WHITE PROXY CARDS sent to you by
United Cities.  If you have  previously  voted a white proxy card, we appreciate
your support and ask that you be patient  during this  critical  time and please
continue to vote all WHITE PROXY CARDS as you receive them.

                WHY IS SOUTHERN UNION TRYING TO CONVINCE YOU TO
         VOTE AGAINST A MERGER AGREEMENT THAT IS IN YOUR BEST INTERESTS?

The company  resulting from the  combination of Atmos and United Cities would be
well-positioned  to compete with Southern Union on the acquisition of properties
and other  business  opportunities.  In addition,  Southern  Union claims in its
preliminary  proxy  materials  that is has had an interest in  acquiring  United
Cities. Your management believes that Southern Union's sole purpose in launching
its  campaign  is to break up or weaken a  transaction  that it  perceives  is a
threat to its self-interest.

                         HOW WILL SOUTHERN UNION TRY TO
          CONVINCE YOU THAT THE MERGER IS NOT IN YOUR BEST INTERESTS?

Southern  Union will claim that your Board of Directors did not act in your best
interests.  They will  imply that this deal is  inferior  and less than what you
deserve.  And finally,  they will attempt to discredit  your Board of Directors.
Let's look at the facts:

     (i)  The merger consideration represents a 52.2% premium at the time of the
          announcement of the merger.

     (ii) While Southern Union claims it tried to discuss a possible transaction
          with United Cities - a claim denied by United Cities in the context of
          ongoing  litigation  between the parties - more than three months have
          passed since the  announcement of this Merger,  and no one,  including
          Southern Union, has come forward with any alternative proposal.

     (iii)Southern  Union   criticizes  the  employment   arrangements  of  your
          management  in  connection  with the  merger.  The  fact is,  it was a
          condition to the merger  agreement that your management  waive certain
          retirement  benefits with a value several times in excess of what will
          be received in exchange for these waivers.





             EXERCISING DISSENTERS' RIGHTS POSES SIGNIFICANT RISKS,
         AND COULD HELP SOUTHERN UNION'S EFFORTS TO DERAIL THIS MERGER.

Southern Union will attempt to influence  shareholders  to exercise  dissenters'
rights. There are no guarantees that more money will be received in an appraisal
proceeding.  And you may be  subject  to tax  liabilities  on the  excess of the
amount  of  cash  received  in  an  appraisal  proceeding,   unlike  the  Merger
consideration,  the receipt of which is intended to have no tax liability on the
shareholders.

              PLEASE REMEMBER, SUPPORTING SOUTHERN UNION'S EFFORTS
         TO DERAIL THE MERGER WITH ATMOS WILL BE IN ITS BEST INTERESTS,
                                   NOT YOURS!

If you have any further questions,  please call our proxy solicitor toll-free at
(888) 868-3347.

Sincerely,


Gene C. Koonce
Chairman of the Board, President and
Chief Executive Officer


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                              EXTREMELY IMPORTANT

     Please vote FOR the proposed  merger  between  United  Cities Gas
     Company  and Atmos  Energy  Corporation  by  SIGNING,  DATING and
     MAILING the  enclosed  WHITE PROXY CARD today in the postage paid
     envelope provided. Only the latest dated proxy counts.

     We urge you not to return any Proxy Cards sent to you by Southern
     Union Company.  If you accidentally  vote a later dated card sent
     to you by Southern Union,  please sign and date a new WHITE PROXY
     CARD or call us for  assistance.  If your  shares are held with a
     brokerage  firm,  your broker  cannot vote your shares  unless he
     receives your specific instructions.

     If you have any questions  about how to vote your shares,  please
     call our proxy solicitor toll-free at:

                    Corporate Investor Communications, Inc.
                               111 Commerce Road
                              Carlstadt, NJ 07072
                                 (888) 868-3347

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