Press Release

ENRON CORP. REPORTS EARNINGS OF $0.42 PER SHARE FOR THE SECOND QUARTER OF 1998 COMPARED TO $0.38 A YEAR AGO

FOR IMMEDIATE RELEASE: Tuesday, July 14, 1998

HOUSTON --Enron Corp. announced today 1998 second quarter earnings of $0.42 per diluted share, compared to $0.38 (before non-recurring charges) in the second quarter of 1997. The strong results were led by growth in Enron's largest business, Wholesale Energy Operations and Services, which provides integrated energy solutions to wholesale customers worldwide. In addition, Enron Energy Services, the company's new retail business, continued to progress, executing a number of significant contracts with end-use customers for delivery of energy commodities and a full range of energy management services.

"We are pleased to report another quarter of very solid earnings growth. These results confirm the operating strength of each Enron business unit and our ability to produce consistent, predictable earnings in spite of rapidly changing, highly volatile energy markets," said Kenneth L. Lay, Enron Corp. chairman and chief executive officer. "In addition to the strength of our traditional businesses, our newer activities are firmly established, particularly the U. S. wholesale power marketing business and Enron Energy Services. Combined with a very substantial backlog of projects and opportunities, our business outlook is the strongest in the company's history."

Enron's core businesses include Wholesale Energy Operations and Services, Transportation and Distribution, and Exploration and Production. The core businesses realized earnings per diluted share of $0.50 for the second quarter of 1998 compared to $0.44 for the second quarter of 1997.

Wholesale Energy Operations and Services: Enron's Wholesale business includes the development and construction of energy infrastructure (Asset Development and Construction), the origination of energy commodity sales and services (Cash and Physical), risk management products (Risk Management) and financial services and related investing activities (Finance and Investing).

The Wholesale business generated income before interest, minority interests and taxes (IBIT) of $241 million in the second quarter of 1998, an 85 percent increase over the $130 million of IBIT reported in the second quarter of 1997.

The Cash and Physical results reflect the continued operating strength of Enron's worldwide network of energy assets and the company's commitment to well-developed risk management disciplines throughout its businesses. In the second quarter of 1998, physical deliveries of all energy commodities increased 47 percent from a year ago to 24.2 trillion British thermal units per day. Compared to a year ago, these volumes included a 10 percent increase in natural gas deliveries and a more than doubling of electricity marketed to over 86 million megawatt hours.

In the second quarter of 1998, Enron's Finance and Investing activities benefited from the growing earnings and increased value of Enron's worldwide energy asset portfolio, which is comprised of volumetric production payments, loans and equity in energy-intensive businesses and projects. Enron's success in the Finance and Investing business is driven by the company's strong presence in the physical energy markets. This presence creates a unique platform for providing capital and risk management services to energy-producing and energy-intensive customers.

The Asset Development and Construction business also realized substantial increases in activity from a year ago. Currently, Enron has nine major international power plant and pipeline projects financed and in construction that represent over $6 billion in total capital costs. The projects all continue to progress on schedule, including Enron's 826 MW power project in Dabhol, India, which is over 90 percent complete and will be in full commercial operation in December 1998.

"All of our Wholesale businesses are experiencing historically high activity levels. Additionally, the company is seeing a substantially increased opportunity to invest in a wide range of assets related to each of these businesses," Lay said. "This is a positive development since earnings in the segment benefit from all returns on these assets including gains on sales and, for marketable assets, increases in market value."

Transportation and Distribution: This group includes both the Gas Pipeline Group, which owns and operates Enron's North American interstate natural gas pipelines, and Portland General, Enron's electric utility in Oregon. Even with warmer weather conditions in the U. S. upper Midwest service area, the Gas Pipeline Group generated $72 million of IBIT in the second quarter of 1998 compared with $73 million in the second quarter of 1997. In the second quarter of 1998, Portland General generated $62 million of IBIT. Because the merger with Enron was effective in July 1997, Portland General was not included in Enron's earnings during the second quarter of 1997.

Exploration and Production: Exploration and Production includes the operations of Enron Oil & Gas Company (EOG) and Enron's hedging of its exposure to commodity prices related to its majority ownership of EOG. In the second quarter of 1998, Exploration and Production generated $29 million of IBIT compared with $30 million in the second quarter of 1997. EOG continues successful development of its large reserves in India, increasing production to 82 million cubic feet equivalent per day in the recent quarter. Additionally, EOG announced yesterday the largest discovery in its history with the drilling of its first well in the U(a) Block located offshore Trinidad. EOG has a 100 percent working interest in the well, which is expected to contain 600 billion cubic feet equivalent to one trillion cubic feet equivalent of primarily natural gas reserves.

Enron Energy Services is Enron's new retail business that provides comprehensive energy solutions, including commodities, capital and services, to U.S.-based commercial and light industrial end-use customers.

In the second quarter of 1998, Enron Energy Services continued to significantly expand its contracting activities, signing contracts representing approximately $650 million of future revenues for delivery of energy. The contracts provide for additional service-related business including, in one case, a full outsourcing of a customer's nationwide energy requirements.

Enron Energy Services reported an operating loss before interest and taxes of $43 million in the second quarter of 1998 compared to a loss of $25 million in the second quarter of 1997, or $(0.08) and $(0.06) per diluted share, respectively. These losses reflect start-up activities associated with building this new business.

Enron is the world's leading integrated electricity and natural gas company. The company, which owns approximately $24 billion in energy related assets, produces electricity and natural gas, develops, constructs and operates energy facilities worldwide and delivers physical commodities and risk management and financial services to customers around the world. Enron's Internet address is www.enron.com, and the stock is traded under the ticker symbol, "ENE."

  This press release includes forward looking statements within the meaning of Section 27A of the Securities Act of 1933 and Section 21E of the Securities Exchange Act of 1934. Although Enron believes that its expectations are based on reasonable assumptions, it can give no assurance that its goals will be achieved. Important factors that could cause actual results to differ materially from those in the forward looking statements herein include political developments in foreign countries, the ability to penetrate new retail natural gas and electricity markets in the United States and Europe, the timing and extent of changes in commodity prices for crude oil, natural gas, electricity and interest rates, the extent of EOG's success in acquiring oil and gas properties and in discovering, developing, producing and marketing reserves, the timing and success of Enron's efforts to develop international power, pipeline and other infrastructure projects and conditions of the capital markets and equity markets during the periods covered by the forward looking statements.

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For additional information please contact:

Diane Bazelides

(713) 853-6285