News Release
April 03, 2000

DUKE ENERGY AND PHILLIPS CLOSE TRANSACTION, LAUNCH NEW GAS GATHERING AND PROCESSING COMPANY

DENVER – Duke Energy (NYSE: DUK) and Phillips Petroleum (NYSE: P) announced today they have closed the transaction that combines Duke Energy’s gas gathering and processing business with Phillips’ Gas Gathering, Processing and Marketing (GPM) unit into a new company, named Duke Energy Field Services (DEFS). The combination strengthens the company's national leadership position in natural gas liquids production (about 400,000 barrels per day) and natural gas gathering and processing. The transaction is expected to be accretive immediately to both Duke Energy and Phillips.

In connection with the combination, DEFS will borrow approximately $2.75 billion of short-term debt. The proceeds of the debt will be used to make one-time cash distributions of approximately $1.2 billion to both Duke Energy and Phillips and to pay $325 million and $20 million to Duke Energy and to Phillips respectively as reimbursement for the acquisition of additional assets since the Combination Agreement was signed in December 1999.

Jim W. Mogg, previously president and chief executive officer of Duke Energy’s gathering and processing business, assumed the position of chairman, president and chief executive officer of the new company. Michael Panatier, president and chief executive of GPM prior to the combination transaction, has been appointed vice chairman of the new company.

"As the natural gas industry continues to grow and consolidate, customer service and economies of scale will be critical factors in determining which companies are the ultimate winners," said Mogg. "The fact that DEFS and GPM have complementary strategic objectives and assets gives the combined company greater flexibility to meet and exceed customer needs and to successfully pursue future opportunities.

"The employees of the new DEFS have the demonstrated skill sets and expertise to optimize and rationalize assets, as well as the strategic ability to acquire and integrate new assets moving forward," Mogg added. "That makes all the difference in an industry where innovation and an entrepreneurial spirit set the standard."

"This combination clearly demonstrates Duke Energy’s ability to maximize value from its existing business units and assets," said Richard B. Priory, chairman, president and chief executive officer of Duke Energy. "We will continue to pursue opportunities that propel Duke Energy toward its goal of becoming the world’s premier global energy merchant."

Jim Mulva, chairman and chief executive officer of Phillips Petroleum Company, said, "this transaction is an integral step in Phillips’ strategy to position each of our business lines for growth and improve our return on capital employed, while maintaining Phillips’ diversification and strength through integration. In addition, this transaction makes GPM part of a much larger, more competitive asset base."

Duke Energy Field Services Acquires Conoco/Mitchell Energy Assets

Also today, DEFS announced it has completed the acquisition of companies holding certain gathering and processing assets in central Oklahoma from Conoco Inc. and Mitchell Energy & Development Corp. This transaction is significant in that the assets acquired lie adjacent to and between DEFS’ current assets, providing future integration opportunities.

In the transaction, DEFS obtained 100-percent ownership interest in Goldsby, Cashion/Mustang, Carney and Hennessey plants and associated gathering systems. DEFS also obtained a 42-percent ownership interest in the Dover Hennessey system operated by ExxonMobil. DEFS purchased Conoco’s interests in these assets for cash. In exchange for Mitchell’s interests in the Oklahoma gathering and processing assets, DEFS transferred to Mitchell its interests in the assets of the UP Bryan Plant, Ferguson-Burleson County Gas Gathering System and Austin Chalk Natural Gas Marketing Services joint ventures that operate in central Texas.

Duke Energy Contributes TEPPCO General Partner to DEFS

Duke Energy also announced it completed the transfer of Texas Eastern Products Pipeline Company, the General Partner of TEPPCO Partners, L.P., to DEFS today. TEPPCO Partners, L.P. is a publicly traded master limited partnership that, through its operating companies, is one of the largest common carrier pipelines of refined petroleum products and liquefied petroleum gases in the United States and is a crude oil gathering, transportation, storage and marketing company operating primarily in Texas and Oklahoma.

Phillips is an integrated petroleum company engaged in oil and gas exploration and production worldwide; gas gathering, processing and marketing in the United States; refining, marketing and transportation operations primarily in the United States; chemicals and plastics manufacturing and sales around the globe; and technology development. Founded in Bartlesville, Okla., in 1917, Phillips had 15,900 employees and $15 billion of assets at the end of 1999, and $14 billion of revenues for the year.

DEFS, headquartered in Denver, Colo., is the nation’s largest producer of natural gas liquids, one of the largest natural gas gatherers and marketers and one of the largest NGL marketers. The company operates in 11 states, including Wyoming, Colorado, Kansas, Oklahoma, New Mexico, Texas, Louisiana, Alabama and Mississippi, and along the Gulf Coast and in northwestern Alberta, Canada. DEFS now owns and operates 70 plants and 57,000 miles of pipeline.

Duke Energy, a diversified multi-national energy company, creates value for customers and shareholders through an integrated network of energy assets and expertise. Duke Energy manages a dynamic portfolio of natural gas and electric supply, delivery and trading businesses -- generating revenues of nearly $22 billion in 1999. Duke Energy, headquartered in Charlotte, N.C., is a Fortune 100 company traded on the New York Stock Exchange under the symbol DUK. More information about the company is available on the Internet at: www.duke-energy.com.

Contact: Phyllis Hammond
Phone: 303-605-1606
24 Hour Phone: 704-382-3333
Email: media_relations@duke-energy.com
Contact: Kristi Desjarlais
Phone: 918-661-6117
24 Hour Phone: 704-382-8333
Email: media_relations@duke-energy.com