Press Release

ENRON AND ENRON OIL & GAS ANNOUNCE SHARE EXCHANGE AGREEMENT, CREATING INDEPENDENT EOG

HOUSTON – Enron Corp. and Enron Oil & Gas Company (EOG) announced today a transaction to establish EOG as a widely held public company that will be independent of Enron. Under the share exchange agreement that Enron and EOG have executed, Enron will exchange 62.27 million of its 82.27 million shares of EOG common stock for EOG’s China and India operations. In connection with the exchange, EOG will contribute $600 million in cash to one of EOG’s India subsidiaries that will be transferred to Enron. The $600 million will be used to finance international activities.

“Enron is successfully pursuing opportunities worldwide in the rapidly growing deregulated energy markets,” said Kenneth L. Lay, Enron chairman and CEO. “While EOG’s North American operations are among the best in the industry, they are no longer strategic to Enron’s North American energy businesses, as we have ready access to gas supplies in this well-developed market. The China and India operations provide valuable supplies to meet growing energy demand in these regions and are very strategic to our international activities.”

“We expect the transaction to be immediately accretive to cash flow per share,” said EOG Chairman Forrest E. Hoglund. “The transaction also will remove the uncertainty of our ownership status and will provide EOG with greater access to both debt and equity capital with which to grow its businesses. We are extremely excited about our platform for growth in North America and Trinidad and will continue to seek new international concessions.”

Upon closing of the transaction, Enron’s ownership of EOG will be reduced to 20 million shares, and the EOG board of directors will be reconstituted, with all Enron officers and directors currently serving as EOG directors resigning their positions on the EOG board.

EOG expects to issue additional equity to fund a large portion of the $600 million cash contribution to its EOG India subsidiary that will be transferred to Enron. EOG has received a commitment from Bank of America, N.A. for a new senior credit facility of up to $1.3 billion, which could also be used to fund the $600 million cash contribution, to refinance certain bank debt, to provide back-up liquidity of EOG’s commercial paper program, and to finance working capital and other general corporate purposes.

Enron has agreed to a lock-up period of six months after closing before selling its remaining 20 million shares in EOG. However, with respect to up to 10 million of Enron’s EOG shares, Enron has the right to sell Enron convertible securities that would be automatically exchangeable into EOG shares in conjunction with EOG’s planned primary offering of equity. This is neither an offer to sell nor a solicitation of an offer to buy any securities. Any securities offerings will be made only by means of prospectus.

The transaction has been approved by the boards of both companies and has been recommended by a special committee of independent directors of the EOG board. The special committee retained Goldman, Sachs & Co. and J.P. Morgan Securities, Inc. as its financial advisors and Wachtell, Lipton, Rosen & Katz as its legal counsel. The transaction, which is expected to be completed by Aug. 31, does not require any governmental approval.

Enron Oil & Gas Company is among the largest independent (non-integrated) oil and gas companies in the United States, with operations and substantial proved reserves in the U.S., Canada and offshore Trinidad. EOG is listed on the New York Stock Exchange and is traded under the ticker symbol, “EOG.”

Enron is one of the world’s leading electricity, natural gas and communications companies. The company, which owns approximately $33 billion in energy and communications assets, produces electricity and natural gas, develops, constructs and operates energy facilities worldwide, delivers physical commodities and financial and risk management services to customers around the world and is developing a nationwide Internet-based communications network. 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 and EOG believe that their expectations are based on reasonable assumptions, they can give no assurance that such expectations will be achieved. Important factors that could cause actual results to differ materially from those in the forward looking statements herein include, but are not limited to, 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 related products and interest rates, the extent of Enron's and EOG’s success in discovering, developing, producing and marketing reserves and in acquiring oil and gas properties, 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.

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

For additional information please contact:

Karen Denne

Enron

(713) 853-9757

A.H. Davis

Enron Oil & Gas

(713) 853-6941