News Release
July 22, 1999

DUKE ENERGY: NATURAL GAS OPERATIONS DRIVE SOLID SECOND QUARTER RESULTS

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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June 1999
QUARTERLY HIGHLIGHTS
(unaudited)

Three Months Ended
June 30,

Year To Date
June 30,



(In millions, except where noted)

1999

1998

1999

1998


COMMON STOCK DATA

Earnings Per Share (before extraordinary item)

    Basic

$0.77

$0.76

$1.60

$1.65

  Dilutive

0.77

0.76

1.60

1.65

Earnings Per Share

  Basic

0.77

0.76

3.42

1.63

  Dilutive

0.77

0.76

3.41

1.63

Dividends Per Share

1.10

1.10

1.65

1.65

Book Value Per Share

24.87

21.00

Actual Shares Outstanding

365

361

365

361

Weighted Average Shares Outstanding

  Basic

364

361

364

360

  Dilutive

365

362

365

361


INCOME

Operating Revenues

$4,691

$4,013

$8,851

$8,128

Earnings Before Interest and Taxes (EBIT)

568

582

1,251

1,260

Interest Expense

120

122

252

246

Minority Interests (a)

33

17

68

32

Income Taxes

127

163

336

374

Extraordinary Gain (Loss)

-

-

660

(8)

Net Income

288

280

1,255

600

Preferred Stock Dividends and Redemption Premiums

5

6

10

12

Earnings Available for Common Stockholders

$283

$274

$1,245

$588

CAPITALIZATION

Common Equity

51.4%

49.6%

Preferred Stock

1.9%

2.2%

Trust Preferred Securities

6.6%

3.8%

Total Debt

40.1%

44.4%

SEC Fixed Charges Coverage

4.3

4.7

Total Debt

$7,083

$6,794


CAPITAL AND INVESTMENT EXPENDITURES

Electric Operations

$178

$139

$303

$240

Natural Gas Transmission

65

51

107

124

Field Services

92

61

1,537

131

Trading and Marketing

26

1

31

2

Global Asset Development

256

20

638

105

Other Energy Services

2

9

10

13

Real Estate Operations

93

48

153

90


EBIT BY BUSINESS SEGMENT

Electric Operations

$319

$362

$726

$740

Natural Gas Transmission

146

147

354

356

Field Services

36

13

48

61

Trading and Marketing

24

15

56

28

Global Asset Development

25

15

57

24

Other Energy Services

(6)

2

(11)

9

Real Estate Operations

28

42

46

64





Other Operations

(4)

(14)

(25)

(22)





Total EBIT

$568

$582

$1,251

$1,260



(a) Includes expense related to the Trust Preferred Securities of $18 million and $8 million for the three months ended and $36 million and $14 million for the six months ended June 30, 1999 and 1998, respectively.

June 1999
QUARTERLY HIGHLIGHTS
(unaudited)

Three Months Ended
June 30,

Year To Date
June 30,



(In millions, except where noted)

1999

1998

1999

1998


ELECTRIC OPERATIONS

Operating Revenues

$1,095

$1,134

$2,156

$2,170

Operating Expenses

796

796

1,471

1,477

Other Income (Expenses)

20

24

41

47





EBIT

$319

$362

$726

$740





Sales, GWh

19,787

20,837

39,323

40,094


NATURAL GAS TRANSMISSION

Operating Revenues

$260

$367

$662

$777

Operating Expenses

116

225

318

435

Other Income (Expenses)

2

5

10

14





EBIT

$146

$147

$354

$356





Throughput, TBtu

340

591

1,151

1,369


FIELD SERVICES

Operating Revenues

$782

$728

$1,126

$1,398

Operating Expenses

747

716

1,079

1,369

Other Income (Expenses)

1

1

1

32





EBIT

$36

$13

$48

$61





Natural Gas Gathered and Processed/Transported, TBtu/day

5.3

3.7

4.4

3.7

Natural Gas Liquids Production, MBbl/d

214.0

112.8

161.1

109.6

Natural Gas Marketed, TBtu/day

0.5

0.3

0.4

0.3

Average Natural Gas Price per MMBtu

$2.14

$2.19

$1.95

$2.20

Average Natural Gas Liquids Price per Gallon

0.30

0.27

0.27

0.28


TRADING AND MARKETING

Operating Revenues

$2,546

$1,727

$4,832

$3,739

Operating Expenses

2,524

1,712

4,781

3,712

Other Income (Expenses)

2

-

5

1





EBIT

$24

$15

$56

$28





Natural Gas Marketed, TBtu/day

10.0

7.2

10.5

7.5

Electricity Marketed, GWh

22,179

19,534

44,016

43,426


GLOBAL ASSET DEVELOPMENT

Operating Revenues

$114

$60

$222

$97

Operating Expenses

102

49

203

81

Other Income (Expenses)

13

4

38

8





EBIT

$25

$15

$57

$24





Proportional MW Capacity Owned (includes under construction or under contract)

NA

NA

7,131

3,893

Proportional Maximum Pipeline Capacity, Tbtu (includes under construction or under contract)

NA

NA

112

-

Estimated Proportional Investment in Project Net Assets   (includes under construction or under contract)

NA

NA

$2,559

(a)

$1,280

(a)





OTHER ENERGY SERVICES

Operating Revenues

$159

$136

$313

$251

Operating Expenses

165

134

324

242

Other Income (Expenses)

-

-

-

-





EBIT

$(6)

$2

$(11)

$9






REAL ESTATE OPERATIONS

Operating Revenues

$38

$49

$66

$79

Operating Expenses

11

7

21

15

Other Income (Expenses)

1

-

1

-





EBIT

$28

$42

$46

$64






(a) Includes total proportional estimated costs to complete projects under construction or under contract of $920 million and $679 million as of June 30, 1999 and 1998, respectively.

NA = Not applicable



Contact: Danny Gibbs
Phone: 704/373-6680
24 Hour Phone: 704/382-8333
Email: dpgibbs@duke-energy.com