CHARLOTTE, N.C. – Duke Energy, riding strong performances by its natural gas field services and pipeline units and its energy trading and marketing group, today reported a gain in earnings for second quarter 1999. Basic earnings for the quarter that ended June 30 were 77 cents per share, up from 76 cents per share for the same quarter in 1998.

The company posted earnings for common stock of $283 million for the second quarter on operating revenue of $4.7 billion compared to $274 million on revenue of $4 billion reported for the same quarter in 1998.

"The strength of our diversified portfolio of businesses produced a solid quarter, demonstrating our ability to manage a changing array of energy assets, buffer the impact of weather variations and mitigate the effects of slowdowns in some sectors," said Richard B. Priory, Duke Energy’s chairman, president and chief executive officer. "We’re a growing global energy company developing and actively managing a multinational portfolio of strategic energy assets that complement our traditional operating segments and increase shareholder value."

The strong performance by Duke Energy’s natural gas operations more than offset the effects of operating without the Midwest pipeline assets that were sold in March. The company’s regulated electric operations had a more normal second quarter than in 1998, when very hot weather and resulting higher sales boosted performance.

The market expansion projects of Duke Energy’s Northeast Pipelines contributed positively to earnings, propelling the company’s natural gas pipelines unit to a solid quarter. In addition, Duke Energy Trading and Marketing’s earnings before interest and taxes (EBIT) increased 60 percent over the second quarter of last year, a strong increase resulting from higher trading margins and growing contributions from more complex, structured transactions. Highlighting Trading and Marketing's second quarter was the completion of multiyear gas supply contracts, firm transmission agreements and the purchase and subsequent sale of a significant portion of a 450-megawatt tolling option.

Duke Energy Field Services’ (DEFS) $1.35 billion acquisition of UPFuels was closed on March 31. "The acquisition and integration of these and other key midstream assets at an optimum time strategically positioned us to begin making numerous improvements in those assets and to take advantage of the improved second quarter natural gas liquids (NGL) pricing," Priory said. DEFS reported a second quarter EBIT increase of 177 percent over the same period in 1998.

The UPFuels’ natural gas gathering, processing, fractionation and NGL pipeline business assets combined with Duke Energy Field Services’ existing assets make the company the nation’s largest producer of natural gas liquids with output in excess of 200,000 barrels per day. "In addition, we’ve since added key gathering and processing facilities in Western Canada, South Texas and the offshore Gulf of Mexico to our growing base of assets. With that, we have access to all of North America’s major supply areas and are becoming a dominant midstream company," Priory said.

Duke Energy’s Global Asset Development businesses, Duke Energy International (DEI) and Duke Energy North America (DENA), made excellent strategic and earnings progress in the quarter, reporting EBIT of $25 million, a 67 percent increase over the $15 million in EBIT reported one year ago.

"As two of the company’s growth engines, DEI and DENA are quickly leveraging Duke Energy’s core development, construction, operation, trading and marketing, risk management and fuel procurement skills to build energy merchant platforms in key regions in North America and around the world," Priory said.

DENA owns, operates or has an interest in some 6,250 megawatts in operation or under construction and another 6,875 megawatts in advanced stages of development in the Midwest, Northeast, Southeast, Texas and California.

DEI continues to build its energy services’ platform in Latin America and the Asia Pacific region, and is evaluating opportunities in Europe. Highlighting DEI’s quarter, the company recently began construction of the 500-mile Eastern Gas Pipeline in Southeast Australia. The transmission pipeline will provide Sydney with a competitive source of natural gas before the city hosts the 2000 Summer Olympic Games. DEI's 400 megawatts of generating capacity acquired in Australia and New Zealand in late 1998 provided solid returns in the quarter. In Latin America, DEI established a trading and marketing business in Buenos Aires, Argentina.

"The project growth for DENA and DEI was quite impressive," said Priory, "and the developmental opportunities currently being pursued by these two units will drive additional earnings growth in the future."

DukeSolutions, Duke Energy’s integrated energy services solutions provider, continued its rapid growth with a 72 percent increase in revenue over the first six months of the year. In the second quarter, the company signed a number of multi-million dollar deals with industrial, commercial, institutional and governmental customers. DukeSolutions' growth has been especially strong in Canada where it is becoming that country’s leading retail energy services provider.

Overall, year-to-date basic earnings per share as of June 30, 1999 were $3.42, including the $1.82 extraordinary after-tax gain on the sale of the Midwest Pipelines last quarter. Year-to-date basic earnings per share for the same period last year were $1.63.

"All of our business segments are better positioned than they were last year at this time, and we’re building major positions in numerous key domestic and international regions," Priory said.

"We continue to review our portfolio of assets and seek to sell or trade at appropriate times those assets that no longer hold strategic value for us, such as the Midwest Pipelines, and to acquire assets that complement and further strengthen our base. Overall, our recently completed quarter was strong relative to the second quarter of 1998."

The solid performances turned in by the business units were supplemented by the successful resolution of several outstanding tax issues and the reversal of reserves previously held for those purposes.

"Two years into its formation, Duke Energy has strengthened its position as a leading integrated energy services company through calculated business decisions, critically timed moves and strategic acquisitions," Priory said. "Population growth in the Piedmont region of the Carolinas and the Northeastern United States, two key regions for Duke Energy’s traditional operating segments, bodes well for us. Also, we continue to make excellent progress toward implementing our integrated global energy merchant strategies. We’ve had an incredibly busy two years and have built a great foundation for future growth."

Duke Energy (NYSE:DUK) is a global energy company with more than $26 billion in assets. Headquartered in Charlotte, N.C., the company reaches into more than 50 countries, producing energy, transporting energy, marketing energy and providing energy services. In the United States, Duke Energy companies provide electric service to approximately two million customers in North Carolina and South Carolina; operate interstate pipelines that deliver natural gas to various regions of the country; and are leading marketers of electricity, natural gas and natural gas liquids. Additional information about the company is available on the Internet at: www.duke-energy.com

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