Exhibit 99.2


                              November 2, 1996


The parties hereto agree as follows:


1.  Southern Union Company ("Southern Union") agrees that it will
not exercise, or take any action in the furtherance of the
exercise of, dissenters  rights with respect to shares of common
stock of United Cities Gas Company ("United Cities"), and will
not solicit or encourage any shareholder of United Cities to
exercise dissenters' rights or take any action in the furtherance
of such exercise, in connection with the proposed merger (the
"Merger") of United Cities with and into Atmos Energy Company
("Atmos") to be considered and voted upon at a Special Meeting of
shareholders of United Cities to be held on November 12, 1996
(the "Special Meeting").  Southern Union further agrees that it
will not solicit proxies in opposition to the Merger or take any
other action reasonably likely to result in opposition to the
Merger at the Special Meeting.

2.  After the vote is taken with respect to the Merger at the
Special Meeting, the parties hereto will use all reasonable
efforts to cause the dismissal with prejudice of all pending
judicial actions arising out of the proposed Merger and Southern
Union's acquisition of shares of common stock of United Cities,
as well as the complaint in Case No. GC-97-50 before the Missouri
Public Service Commission.  Southern Union will not move to
enjoin such vote or the Merger and will cause all pending
proceedings to enjoin such vote or the Merger to be withdrawn. 
Southern Union will also not appeal or take any other action to
set aside the order of dismissal in Cause No. 1:96 C 00144 in the
Eastern District of Missouri.

3.  Southern Union will not oppose or object to the consummation
of the Merger in any proceeding, including without limitation any
proceeding before any regulatory body for approval of the Merger,
and will withdraw any pending intervention before any such
regulatory body.

4.  Neither Atmos nor United Cities will oppose or object to any
application by Southern Union to allow it to own the shares of
United Cities common stock it currently purports to own or the
shares of Atmos common stock into which such shares will be
converted upon consummation of the Merger.  United Cities and
Atmos further agree that, if requested, they will so advise the
Missouri Public Service Commission.  Neither United Cities nor
Atmos will contend in any future regulatory or judicial
proceeding that Southern Union is not the beneficial owner of
shares of United Cities  stock purchased by Southern Union prior
to August 2, 1996 (including any Atmos shares into which such 
shares are converted) or that Southern Union should be penalized
because it did not obtain approval of the Missouri Public Service
Commission prior to purchasing such shares.

5.  Atmos, as the corporation surviving the Merger, will grant to
Southern Union a right of first offer in respect of any gas
utility property in the states of Texas, Missouri, Kansas or Iowa
to be disposed of by Atmos during the two year period following
the consummation of the Merger.  Under such right of first offer,
Atmos would provide Southern Union with notice of its intent to
dispose of any such property.  Southern Union would have thirty
days after receipt of such notice to indicate whether or not it
wished to purchase the designated property, and if so, at what
price.  If Southern Union indicated it  wished to purchase the
designated property, Atmos would have thirty days to accept such
offer, and Southern Union would have six months thereafter to
consummate such purchase.  If Southern Union did not consummate
such purchase for any reason, Atmos would be free to dispose of
such property without re-offering it to Southern Union.  If
Southern Union indicated it did not wish to purchase such
property, Atmos would be free to dispose of such property.  If
Southern Union indicated it did wish to purchase such property,
Atmos would be free to dispose of such property to a third party
for consideration with a value greater than the price offered by
Southern Union.

6.   This Agreement may be signed in counterpart and by telecopy.

SOUTHERN UNION COMPANY


By: /s/ Dennis K. Morgan                 
    ----------------------------
    Vice President and Secretary


UNITED CITIES GAS COMPANY


By: /s/ Gene C. Koonce
    -----------------------------
    President and Chief Executive
    Officer

ATMOS ENERGY CORPORATION


By: /s/ Robert F. Stephens
    -----------------------------
    President and Chief Operating
    Officer