News Release
July 22, 1998

DUKE ENERGY CORPORATION POSTS EARNINGS INCREASE; REPORTS 76 CENTS PER SHARE IN SECOND QUARTER

CHARLOTTE, NC. — Duke Energy Corporation today reported 1998 second quarter basic earnings of 76 cents per share, up 77 percent from 43 cents per share for the same quarter in 1997.

Duke Energy posted earnings for common stock of $274.4 million for the second quarter compared to $157.6 million reported for the same quarter in 1997. Overall earnings before interest and tax (EBIT) for the second quarter of 1998 was $582.4 million versus $407.0 for the second quarter of 1997.

"This has been an event-filled first year for Duke Energy. We’ve made rapid progress toward becoming a leading global energy company by closing on several acquisitions and announcing major projects worldwide," said Richard B. Priory, Duke Energy’s chairman and chief executive officer. "Our strong second-quarter performance reflects solid year-to-year growth for most of our major business units, plus the operating efficiency improvements resulting from last year’s merger. We are well positioned to continue taking advantage of the opportunities coming about from the changing energy industry."

Two major drivers of second-quarter earnings were increased overall electric sales of 14 percent and the absence of merger-related costs from last year’s quarter of $70.4 million, or around 15 cents per share.

Business Unit Results

In Electric Operations, which serves nearly 2 million customers in the Carolinas through Duke Power, EBIT for the quarter was $362.1 million versus $270.6 million for the same quarter last year.

Record hot weather and the upbeat economy of the Carolinas led to increased sales. Residential sales increased 18.5 percent from last year’s quarter. Commercial and general services sales rose 10.8 percent for the quarter while industrial sales increased 2.2 percent. Textile sales, a large component of the industrial sector, increased 4.6 percent.

"This was a turbulent quarter in the United States electric supply sector. Our electricity production team turned in an outstanding performance — keeping power flowing to our customers in the Carolinas," said Priory. "Although the hot weather drove residential sales, the healthy economy of our territory led the industrial and commercial sectors of our sales to solid gains."

In Natural Gas Transmission, which operates more than 22,000 miles of interstate natural gas pipeline, EBIT for the second quarter was $147.6 million, slightly above the $144.7 million reported in last year’s second quarter.

In the Northeast Pipelines, EDIT increased to $100.6 million this quarter compared to $96.6 for last year’s second quarter due to market expansion projects.

For the Midwest Pipelines, EDIT was $47.0 million this quarter compared to $48.1 million for last year’s quarter.

In Energy Services, EDIT for the quarter was $44.5 million compared to $46.5 million reported for last year’s quarter. Lower natural gas liquids prices resulted in significantly lower margins for Duke Energy’s Field Services unit.

However, many of the other Energy Services units posted improved results for the quarter. Expansions and acquisitions by Duke Energy’s Global Asset Development units and increased margins at Duke Energy Trading and Marketing helped generate these results.

Duke Energy Trading and Marketing posted increased revenues and EDIT for the quarter in a tumultuous wholesale power market.

"Our disciplined approach to trading continues to serve us well," added Priory. "Our trading operation performed well during periods of historic pricing volatility in the wholesale power market."

A Global Asset Development unit, Duke Energy Power Services, LLC (DEPS), completed the purchase recently of three electric generating stations in California. The $501 million purchase from a unit of PG&E Corp. marked the largest power plant acquisition ever by Duke Energy. DEPS also began producing power from its Bridgeport, Conn., power plant — Duke Energy’s first merchant power plant built in the Northeast U.S.

Another Global Asset Development unit, Duke Energy International, LLC (DEI) made two announcements during the quarter about its expansion into Australia. The unit announced the purchase of the assets of a PG&E Corp. business unit in Australia, most notably the 389-mile Queensland State Gas Pipeline. Also, the Australian State of Tasmania selected DEL to bring offshore natural gas onto the island. Presently, there is no natural gas available in Tasmania.

"Our Energy Services unit continues to build energy delivery and generation platforms in strategic areas of the world," said Priory. "We can build onto these platforms — expanding into generation, transmission, trading and marketing. The Duke Energy team possesses the full scope of skills necessary to execute this strategy successfully as we move into new territories."

In Diversified Operations, Crescent Resources, Duke Energy’s real estate development arm, posted EDIT of $42.3 million for the quarter, up from the $15.7 million posted for last year’s quarter. Increased project sales and the sale of land to the state of South Carolina led to the increase.

For the six months ending June 30, 1998, Duke Energy earned $1.63 a share, up from the $1.27 per share pro forma results earned for the same period in 1997. Increased electric revenues and the absence of merger-related costs led to much of the increase.

Duke Energy Corporation (NYSE:DUK) is a global energy company with more than $24 billion in assets. Duke Energy companies provide electric service to approximately 2 million customers; operate pipelines that deliver 12 percent of the natural gas consumed in the United States; and are leading marketers of electricity, natural gas and natural gas liquids. Globally the companies develop, own and operate energy facilities and provide engineering, management, operating and environmental services. Contact Duke Energy on the World Wide Web at http://www.duke-energy.com.

Contact: Randy Wheeless
Phone: (704) 382-8379
24 Hour Phone: (704) 382-8333
Email: crwheele@duke-energy.com