Southern Union Company and Valley Resources, Inc.
                                Announce Merger
                                 Nov. 30, 1999

For Further Information:

     George Yankowski                                Sharon Partridge
     Southern Union Treasurer and                    Valley Resources
       Director of Investor Relations                Vice President and Chief
       (512) 370-8305                                  Financial Officer
                                                     (401) 334-1188, ext. 219



                SOUTHERN UNION COMPANY AND VALLEY RESOURCES, INC.
                            ANNOUNCE MERGER AGREEMENT



     AUSTIN,  Texas (Dec.  1, 1999) - Southern  Union  Company  (NYSE:  SUG) and
Valley Resources, Inc. (Amex: VR) today announced their boards of directors have
unanimously approved a definitive merger agreement.

     The  agreement  calls  for  Southern  Union to  acquire  Valley  Resources,
headquartered  in Cumberland,  R. I., in a transaction  valued at  approximately
$160 million,  including  assumption of debt.  Under the terms of the agreement,
Valley  Resources  shareholders  will receive $25.00 in cash per share of Valley
Resources  common stock.  This represents a 53% premium over the average closing
price of Valley Resources common stock during the previous 30 trading days.

     This agreement  follows the  consummation  of Southern  Union's merger with
Pennsylvania  Enterprises,  Inc.  on Nov.  4,  1999,  and the  announcements  of
Southern  Union's merger  agreements with Fall River Gas Company (Amex:  FAL) on
Oct. 5, 1999, and Providence  Energy  Corporation  (NYSE: PVY) on Nov. 15, 1999.
These mergers strengthen Southern Union's competitive position in the attractive
northeast energy market.

     Southern Union  President and COO Peter H. Kelley  stated,  "We continue to
seek the best  strategic  moves to position  Southern Union to take advantage of
the emerging  opportunities in the energy  industry.  Valley Resources will help
fortify  the  foundation  on which we base our  low-cost  and  customer-oriented
services."

     According to Valley Resources Chairman,  President and CEO Alfred P. Degen,
"This merger is an opportunity for customers,  employees and shareholders alike.
Southern  Union will bring its focus on  world-class  customer  service  and its
proven  record  of  being a  low-cost  energy  provider  to our  customers.  Our
employees  will be exposed to the  opportunities  of being a valued part of a $1
billion  company  and our  shareholders  are  realizing  full  value  for  their
investment in Valley Resources."

     Valley Resources will operate as a division of Southern Union and according
to Kelley, no lay-offs are anticipated as a result of the transaction.

     Valley  Resources is a public  utility  holding  company,  with natural gas
distribution  systems in northeastern and eastern Rhode Island,  serving a total
of 66,000 customers.

     Upon completion of the Valley  Resources,  Providence Energy and Fall River
Gas  mergers,  Southern  Union will serve  nearly 1.6 million  gas and  electric
customers in six states.

     This  transaction  requires  the approval of the holders of the majority of
the  outstanding  Valley  Resources  shares,   the  Rhode  Island   Legislature,
regulators in Rhode Island and Massachusetts, as well as regulators in Missouri,
Pennsylvania and Florida where Southern Union currently has operations.

     Southern Union is an international  energy  distribution  company,  serving
more than 1.2 million  customers  through its natural gas operating  divisions -
Southern Union Gas, Missouri Gas Energy, PG Energy, and Atlantic  Utilities.  In
Texas, Southern Union Gas serves approximately 513,000 customers,  including the
cities of Austin, El Paso, Brownsville, Galveston, and Port Arthur. Missouri Gas
Energy serves approximately 484,000 customers in western Missouri, including the
cities of Kansas City, St. Joseph, Joplin, and Monett. And, in Pennsylvania,  PG
Energy  serves  approximately   152,000  customers,   including  the  cities  of
Wilkes-Barre, Scranton and Williamsport.

     This release and other Company  reports and statements  issued or made from
time to time contain certain  "forward-looking  statements" concerning projected
future  financial  performance,  expected plans or future  operations.  Southern
Union  Company   cautions  that  actual  results  and  developments  may  differ
materially from such projections or expectations.

     Investors  should be aware of  important  factors  that could cause  actual
results  to  differ   materially   from  the   forward-looking   projections  or
expectations.  These factors include, but are not limited to: weather conditions
in the  Company's  service  territories;  cost  of  gas;  regulatory  and  court
decisions;  the receipt of timely and adequate rate relief;  the  achievement of
operating  efficiencies and the purchase and  implementation of new technologies
for  attaining  such  efficiencies;  impact of  relations  with labor  unions of
bargaining-unit employees; impact of any Year 2000 disruption; and the effect of
strategic  initiatives  on  earnings  and cash flow.  Most of these  factors are
difficult  to  accurately  predict and are  generally  beyond the control of the
Company.