Press Release

ENRON CORP. REPORTS THIRD QUARTER EARNINGS OF $0.47 PER SHARE AND AN ANNUAL COMMON STOCK DIVIDEND INCREASE TO $1.00 PER SHARE

FOR IMMEDIATE RELEASE: Tuesday, October 13, 1998

HOUSTON --Enron Corp. announced today 1998 third quarter earnings of $0.47 per diluted share compared to $0.46 (before non-recurring charges) in the third quarter of 1997. The results were led by continued growth in Wholesale Energy Operations and Services, which manages a large portfolio of energy-related assets and provides integrated energy solutions to customers worldwide.

"We are very pleased to report another quarter of strong results, generating $168 million of net income compared to $134 million a year ago. In a period of financial market uncertainty and commodity price volatility, Enron has demonstrated its ability to consistently generate solid and predictable earnings, as evidenced by the 60 percent increase in earnings in our Wholesale business," said Kenneth L. Lay, Enron Corp. chairman and chief executive officer.

"In addition to the momentum in Enron's core businesses, prospects for future earnings growth continue to strengthen with the excellent progress of our new retail energy business," Lay said. "This quarter, Enron Energy Services signed contracts representing over $850 million of value, 70 percent over our plan.

"Our Board of Directors shares this confidence, as reflected in today's announcement of a $0.05 increase in the annual dividend to $1.00 per share," Lay said.

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 $0.52 for the third quarter of 1998 compared to $0.51 for the third 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 marketing of energy commodities and services (Cash and Physical), and the origination of risk management products (Risk Management), financial services, investing and portfolio management activities (Finance and Investing).

The Wholesale business generated income before interest, minority interests and taxes (IBIT) of $277 million in the third quarter of 1998 versus $173 million in the third quarter of 1997.

In the third quarter of 1998, the Cash and Physical business reported IBIT of $137 million, reflecting strong performance by Enron's well-established natural gas and power marketing businesses in North America and in Europe. In the third quarter of 1998, physical deliveries of all energy commodities increased 68 percent from a year ago to over 34 trillion British thermal units per day. Compared to a year ago, these volumes included a 22 percent increase in natural gas deliveries and a 125 percent increase in electricity marketed to approximately 163 million megawatt hours. During the quarter, $44 million of IBIT was generated by Risk Management activities compared to $68 million for the prior year's period. The current quarter results reflect contract restructurings within Enron's large energy commodity portfolio.

Enron's Finance and Investing activities have consistently contributed substantial earnings from the origination of energy financings, the restructuring and sale of existing investments and changes in the market value of the investment portfolio. This quarter's contribution of $81 million compares to $126 million for a year ago. In the most recent quarter, earnings relate primarily to restructurings and sales of investments within the portfolio.

The Asset Development and Construction business more than tripled IBIT in the third quarter of 1998 to $51 million, primarily due to the sale of an interest in a project in the construction phase, partly offset by development costs. Enron currently has ownership interests in nine large international power plant and pipeline projects under construction, representing $6 billion of total capital, 3,498 megawatts of electric generation and 1,180 miles of natural gas pipelines.

Transportation and Distribution: This segment 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. The segment, which provides stable earnings and cash flow, generated $130 million of IBIT in the third quarter of 1998 compared with $122 million in the third quarter of 1997. Florida Gas Transmission recently announced a $237 million, 220 million cubic feet per day (MMcf/d) expansion into southern Florida, and Northern Border Pipeline Company's $839 million, 700 MMcf/d expansion project is scheduled to be in service in early December.

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 third quarter of 1998, Exploration and Production generated $25 million of IBIT compared with $49 million in the third quarter of 1997. These results reflect a 15 percent growth in worldwide oil and gas production offset by increased exploration costs and lower crude oil prices. EOG achieved record production levels in the third quarter, producing an average of over 1 billion cubic feet per day of natural gas.

Enron Energy Services provides comprehensive energy solutions to U.S. commercial and light industrial end-use customers.

In the third quarter of 1998, Enron Energy Services continued to significantly expand its contracting activities, signing contracts representing $850 million of customers' total energy expenditures for natural gas and electricity. More importantly, the contracts provide for opportunities to deliver high-value energy services, including comprehensive energy and facilities management. Enron Energy Services has increasingly expanded its customer base from California, the first state to implement electricity deregulation, to national accounts due to the company's ability to reduce customers' energy consumption and total energy costs independent of deregulation.

Enron Energy Services reported a loss before interest and taxes of $23 million in the third quarter of 1998 compared to a loss of $25 million in the third quarter of 1997, or $(0.05) per diluted share in each quarter. These losses reflect start-up activities associated with building this new business.

Enron Corp. announced a $0.05 per share increase in the indicated annual dividend rate of the company's common stock to $1.00 per share from the current indicated annual rate of $0.95 per share. The increase will be effective with the fourth quarter dividend of $0.25 per share payable on December 21, 1998 to stockholders of record as of December 1, 1998.

The Board also increased the indicated annual dividend on the Cumulative Second Preferred Convertible Stock to $13.652 per share from the current rate of $12.9696 per share. The increase will also be effective with the fourth quarter dividend of $3.413 per share payable on January 4, 1999 to preferred stockholders of record as of December 11, 1998.

  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 power, pipeline and other infrastructure projects and conditions of the capital markets and equity markets during the periods covered by the forward looking statements.

Click here to download this press release in Microsoft Word format.

Click here to download additional financial information in Microsoft Excel format.

For additional information please contact:

Diane Bazelides

(713) 853-6285