Press Release

ENRON REPORTS 29% INCREASE IN EARNINGS PER SHARE, DECLARES 2-FOR-1 STOCK SPLIT

HOUSTON – Enron Corp. announced today a 29 percent increase in earnings for the second quarter of 1999 to $0.54 per diluted share compared to second quarter 1998 results of $0.42 per diluted share. Net income in the current quarter increased 53 percent to $222 million compared to $145 million in the prior year’s quarter. Revenues were also up significantly in the second quarter of 1999 to $9.7 billion compared to $6.6 billion in the same period of 1998, a 47 percent increase.

Enron also announced a two-for-one common stock split that will be effective August 13, 1999, to shareholders of record as of July 23, 1999.

“Enron’s consistent earnings growth reflects the very strong market positions in all of our businesses. We have established unique networks in natural gas, electricity and, most recently, communications, that each have distinct advantages of scale and scope. Combining this strong market presence with our core skills and market knowledge, we are positioned to be the leading player in the largest and fastest growing markets in the world,” said Kenneth L. Lay, Enron chairman and chief executive officer. “The outlook for the company is excellent, and we are pleased to demonstrate that confidence by declaring the two-for-one stock split.”

Enron’s businesses are reported as Wholesale Energy Operations and Services (which includes Enron’s newly-formed communications business), Transportation and Distribution, Exploration and Production and Retail Energy Services.

Wholesale Energy Operations and Services: Enron’s wholesale group consists of two primary lines of business: Commodity Sales and Services (the marketing of energy commodities and services and the management of the associated contract portfolios) and Energy Assets and Investments (the development, construction and operation of energy assets and Enron’s finance and investing activities).

Income before interest, minority interest and taxes (IBIT) in the wholesale business increased 48 percent in the second quarter of 1999, reflecting Enron’s superior positions in large and growing markets. IBIT for the wholesale business increased to $356 million for the current period from $241 million in the second quarter of 1998.

The Commodity Sales and Services business increased earnings to $81 million from $23 million a year ago, as the wholesale group continued growth in its natural gas, oil and power marketing activities in every region. Physical deliveries of energy commodities increased to 33.7 trillion British thermal units per day, an increase of nearly 40 percent over the second quarter of 1998.

IBIT from the Energy Assets and Investments business increased to $325 million in the second quarter of 1999 from $258 million a year ago. This quarter’s strong performance primarily reflects increases from Enron’s growing communications investments and revenues from the sale of interests in several international power plants, partially offset by reductions in the value of certain energy investments and costs related to the new and rapidly expanding communications business.

During the second quarter, Enron began commercial operation of seven wholesale power plants with total capacity of more than 3,500 megawatts. The new facilities include three fast-track, peaking capacity plants in the U. S. and a large plant in the U. K., which fortify Enron’s power marketing networks and provide valuable, flexible supplies of electricity. In addition, power plants in Europe, India and South America began delivering power to local customers during the quarter. Financing is complete and construction is underway for the expansion of the Dabhol, India facility such that, when completed in late 2001, the power plant will be one of the world’s largest. Enron will also be positioned with a valuable new gas supply franchise in India by owning and operating the country’s first LNG receiving facility.

Transportation and Distribution: This group includes Enron’s Gas Pipeline Group and Portland General Electric. Both businesses continue to provide stable sources of earnings and cash flow, as reflected by the

$128 million of IBIT generated in the second quarter of 1999, compared to $134 million in the same quarter of 1998. The Gas Pipeline Group continues to expand its pipeline systems. The $350 million Phase IV expansion of Florida Gas Transmission is pending regulatory approval, and capacity agreements have been executed with two large electric generators on the $250 million Phase V expansion.

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. Including the benefits of Enron’s hedge results, the segment reported IBIT of $20 million in the quarter just ended, compared with $29 million in the same quarter of 1998. Total production during the quarter increased more than 6 percent over the comparable period in 1998, including a 42 percent increase in natural gas production in India.

Retail Energy Services: Enron Energy Services provides energy outsourcing products and services to commercial and industrial end-use customers throughout the U.S. Contracting activity continued at a strong pace during the second quarter, representing $1.7 billion of customers’ future expenditures for energy and services, or nearly three times the $650 million reported in the second quarter of 1998. The current quarter’s results include the largest contract signed since inception, a ten-year outsource agreement with a major food processor and distributor covering 50 manufacturing facilities in 24 states. This agreement demonstrates Enron Energy Services’ unique ability to structure complex, fully-integrated, nationwide energy solutions. Business activity is expected to accelerate further in the second half of the year, resulting in 1999 contracts for customers’ future energy and service expenditures of more than $8 billion.

Enron Energy Services reported a loss before interest and taxes of $26 million in the second quarter of 1999, compared to a loss before interest and taxes of $43 million in the second quarter of 1998. The new business continues to expect to make a positive earnings contribution during the fourth quarter of 1999.

The common stock split announced today will be effected as a non-taxable dividend of one share for each common share outstanding. On a post-split basis, the current annual dividend rate would be $0.50 per common share.

Please see attached tables for additional financial information.

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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Please see attached tables for additional financial information.

For additional information please contact:

Mark A. Palmer

713-853-4738