SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549

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FORM 10-Q
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(Mark one)

X    QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE
SECURITIES EXCHANGE ACT OF 1934
For the quarterly period ended June 30, 2004

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 (or for such shorter period that the registrant was required to file such reports), and (2) has been subject to such filing requirements for the past 90 days.

Yes    X   No         

Indicate by check mark whether the registrant is an accelerated filer (as defined by Rule 12b-2 of the Exchange Act). Yes       No    X   

At June 30, 2004, the latest practicable date for determination, 100 shares of common stock, without par value, of the registrant were outstanding.

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The accompanying notes are an integral part of the Consolidated Financial Statements.

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The accompanying notes are an integral part of the Consolidated Financial Statements.

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Consolidated Natural Gas Company (the Company), a public utility holding company registered under the Public Utility Holding Company Act of 1935 (1935 Act), is a wholly-owned subsidiary of Dominion Resources, Inc. (Dominion). The Company, through its subsidiaries, operates in all phases of the natural gas business, explores for and produces gas and oil and provides a variety of energy marketing services. Its regulated gas distribution subsidiaries serve approximately 1.7 million residential, commercial and industrial gas sales and transportation customer accounts in Ohio, Pennsylvania and West Virginia and its nonregulated retail energy marketing businesses serve approximately 1.4 million residential and commercial customer accounts in the Northeast and Midwest. The Company operates an interstate gas transmission pipeline system in the Midwest, the Mid-Atlantic states and the Northeast and a liquefied natural gas import and storage facility in Maryland. The Company's producer services operations involve the aggregation of natural gas supply and related wholesale activities. The Company's exploration and production operations are located in several major gas and oil producing basins in the United States, both onshore and offshore.

The Company manages its daily operations through three primary operating segments: Energy, Delivery and Exploration & Production. In addition, the Company reports its corporate functions as a segment. Assets remain wholly-owned by the Company's legal subsidiaries.

The "Company" is used throughout this report and, depending on the context of its use, may represent any of the following: the legal entity, Consolidated Natural Gas Company, one of Consolidated Natural Gas Company's consolidated subsidiaries or the entirety of Consolidated Natural Gas Company and its consolidated subsidiaries.

In the opinion of the Company's management, the accompanying unaudited Consolidated Financial Statements contain all adjustments, including normal recurring accruals, necessary to present fairly the Company's financial position as of June 30, 2004, its results of operations for the three and six months ended June 30, 2004 and 2003, and its cash flows for the six months ended June 30, 2004 and 2003.

The Company makes certain estimates and assumptions in preparing its Consolidated Financial Statements in accordance with generally accepted accounting principles. These estimates and assumptions affect the reported amounts of assets and liabilities, the disclosure of contingent assets and liabilities at the date of the financial statements and the reported amounts of revenue and expenses for the periods presented. Actual results may differ from those estimates.

The Company reports certain contracts and instruments at fair value in accordance with generally accepted accounting principles. Market pricing and indicative price information from external sources are used to measure fair value when available. In the absence of this information, the Company estimates fair value based on near-term and historical price information and statistical methods. For individual contracts, the use of differing assumptions could have a material effect on the contract's estimated fair value. See Note 2 to the Consolidated Financial Statements in the Company's Annual Report on Form 10-K for the year ended December 31, 2003 for a more detailed discussion of the Company's estimation techniques.

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CONSOLIDATED NATURAL GAS COMPANY

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

The results of operations for the interim periods are not necessarily indicative of the results expected for the full year. Information for quarterly periods is affected by seasonal variations in sales, rate changes, timing of purchased gas expense recovery and other factors.

Certain amounts in the 2003 Consolidated Financial Statements have been reclassified to conform to the 2004 presentation.

Note 3.     Recently Adopted Accounting Standards

2004

FIN 46R

The Company adopted Financial Accounting Standards Board (FASB) Interpretation No. 46 (revised December 2003), Consolidation of Variable Interest Entities, (FIN 46R) for its interests in variable interest entities (VIEs) that are not considered special purpose entities on March 31, 2004. FIN 46R addresses the identification and consolidation of VIEs, which are entities that are not controllable through voting interests or in which the VIEs' equity investors do not bear the residual economic risks and rewards. There was no impact on the Company's results of operations or financial position related to this adoption.

As described more fully in Note 3 to the Consolidated Financial Statements in the Company's Annual Report on Form 10-K for the year ended December 31, 2003, the Company adopted FIN 46R for its interests in special purpose entities on December 31, 2003.

2003

Effective January 1, 2003, the Company adopted Statement of Financial Accounting Standards (SFAS) No. 143, Accounting for Asset Retirement Obligations, which provides accounting requirements for the recognition and measurement of liabilities associated with the retirement of tangible long-lived assets. Upon adoption, the Company recognized a $5 million after-tax loss as the cumulative effect of this change in accounting principle.

Note 4.     Classification of Oil and Gas Drilling Rights

Companies with oil and gas exploration and production operations have become aware that a question has arisen about whether oil and gas drilling rights should be classified as intangible assets rather than tangible assets on the balance sheet. In July 2004, the FASB issued a proposed staff position to clarify that an exception outlined in SFAS No. 142, Goodwill and Other Intangible Assets, includes the balance sheet classification of drilling and mineral rights of oil and gas producing entities. Under FASB's proposal, the Company would continue to present its oil and gas drilling rights ($3.7 billion at June 30, 2004) as tangible assets.

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The Company's operating revenue consists of the following:

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1.  Represents primarily the impact of foreign currency translation adjustments.

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The following table presents selected information related to cash flow hedges included in accumulated other comprehensive loss in the Consolidated Balance Sheet at June 30, 2004:

The Company follows the full cost method of accounting for gas and oil exploration and production activities prescribed by the SEC. Under the full cost method, capitalized costs are subject to a quarterly ceiling test. Under the ceiling test, amounts capitalized are limited to the present value of estimated future net revenues to be derived from the anticipated production of proved gas and oil reserves, assuming period-end hedge-adjusted prices. Approximately 14% of the Company's anticipated production is hedged by qualifying cash flow hedges, for which hedge-adjusted prices were used to calculate estimated future net revenue. Whether period-end market prices or hedge-adjusted prices were used for the portion of production that is hedged, there was no ceiling test impairment as of June 30, 2004.

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In August 2003, the Company entered into a $1.0 billion 364-day revolving credit facility that terminates in August 2004. This credit facility is being used to support the issuance of commercial paper and letters of credit to provide collateral required on derivative financial contracts used by the Company in its risk management strategies for gas and oil production. At June 30, 2004, outstanding letters of credit under this facility totaled $700 million. The Company expects to renew the $1.0 billion 364-day revolving credit facility prior to its maturity in August 2004.

At June 30, 2004, total outstanding commercial paper supported by the credit facilities was $610 million. At June 30, 2004, the Company did not have any commercial paper borrowings. At June 30, 2004, total outstanding letters of credit supported by the credit facilities were $478 million, of which $275 million was issued on behalf of the Company. At June 30, 2004, capacity available under the two credit facilities was $1.16 billion.

In June 2004, the Company repaid $88 million of its 9.25% senior notes.

At June 30, 2004, the Company had $1.3 billion of available capacity under a shelf registration with the SEC that would permit the Company to issue debt and trust preferred securities to meet future capital requirements.

The Company's current financing authorization under the 1935 Act expires at the end of 2004. The Company intends to file an application with the SEC in August 2004 to renew its 1935 Act financing authorization.

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Note 13.     Commitments and Contingencies

Other than the matters discussed below, there have been no significant developments regarding the commitments and contingencies disclosed in Note 20 to the Consolidated Financial Statements in the Company's Annual Report on Form 10-K for the year ended December 31, 2003, or Note 11 to the Consolidated Financial Statements in the Company's Quarterly Report on Form 10-Q for the quarter ended March 31, 2004, nor have any significant new matters arisen during the quarter ended June 30, 2004.

The Company sells natural gas and provides distribution services to residential, commercial and industrial customers and provides transmission services to utilities and other energy companies. In addition, the Company enters into contracts with various companies in the energy industry for purchases and sales of energy-related commodities, including natural gas and oil, in its hedging activities. Credit risk associated with trade accounts receivable from energy consumers is limited due to the large number of customers. The Company's exposure to credit risk is concentrated primarily within its sales of gas and oil production and energy marketing activities as the Company transacts with a smaller, less diverse group of counterparties and transactions may involve large notional volumes and potentially volatile commodity prices. At June 30, 2004, gross credit exposure related to these transactions totaled $439 million, reflecting the unrealized gains for contracts carried at fair value plus any outstanding receiv ables (net of payables, where netting agreements exist), prior to the application of collateral. After the application of collateral, the Company's credit exposure is reduced to $438 million. Of this amount, investment grade counterparties represent 51% and no single counterparty exceeded 5%. The credit exposure amounts exclude amounts receivable from affiliated companies. As of June 30, 2004 and December 31, 2003, the Company had margin deposit assets (reported in other current assets) of $46 million and $59 million, respectively. The Company had $1 million of margin deposit liabilities (reported in other current liabilities) as of June 30, 2004. The Company had no margin deposit liabilities as of December 31, 2003.

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The Company transacts with other Dominion subsidiaries for certain quantities of natural gas and other commodities at market prices in the ordinary course of business. The Company also enters into certain financial derivative commodity contracts with Dominion subsidiaries. These contracts, which are principally comprised of commodity swaps and options, are used by the Company to manage commodity price risks associated with the purchases and sales of natural gas. The Company designates the majority of these contracts as cash flow hedges for accounting purposes. The affiliated commodity transactions below include total net realized gains on affiliate commodity derivative transactions of $7 million and $20 million in the second quarter of 2004 and 2003, respectively, and $10 million and $25 million in the first six months of 2004 and 2003, respectively.

The Company's Consolidated Balance Sheets include derivative assets of $26 million and $50 million with Dominion subsidiaries at June 30, 2004 and December 31, 2003, respectively, and derivative liabilities of $49 million and $48 million with Dominion subsidiaries at June 30, 2004 and December 31, 2003, respectively. Unrealized gains or losses, representing the effective portion of the changes in fair value of those derivative contracts that had been designated as hedges, are included in the balance of accumulated other comprehensive loss in the Consolidated Balance Sheets.

Dominion Resources Services, Inc., a Dominion subsidiary, provides accounting, legal and certain administrative and technical services to the Company. The Company recognized expense of $39 million in both the second quarter of 2004 and 2003, and $83 million and $86 million in the first six months of 2004 and 2003, respectively, in operations and maintenance expense related to these services.

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The Company is organized primarily on the basis of products and services sold in the United States. The Company manages its operations based on three primary operating segments:

Energy includes the Company's gas transmission pipeline and storage system, certain gas production operations, a liquefied natural gas import and storage facility and producer services operations that include aggregation of gas supply and related wholesale activities.

Delivery includes the Company's regulated gas distribution systems and customer service operations and the Company's nonregulated retail energy marketing activities.

Exploration & Production includes the Company's onshore and offshore gas and oil exploration, development and production operations. These operations are located in several major producing basins in the lower 48 states, including the outer continental shelf and deepwater areas of the Gulf of Mexico.

Corporate and Other includes the Company's corporate and other functions, including the activities of CNGI and other minor subsidiaries. The contribution to net income by the Company's primary operating segments is determined based on a measure of profit that executive management believes represents the segments' core earnings. As a result, certain specific items attributable to those segments are not included in profit measures evaluated by executive management in assessing the segment's performance or allocating resources among the segments. These specific items are instead reported in the Corporate and Other segment.