AS FILED WITH THE SECURITIES AND EXCHANGE COMMISSION ON JANUARY 23, 1998

REGISTRATION NO. 333-

SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
FORM S-3
REGISTRATION STATEMENT
UNDER
THE SECURITIES ACT OF 1933

ENRON OIL & GAS COMPANY
(Exact name of registrant as specified in its charter)

            DELAWARE                                           47-0684736
  (State or other jurisdiction                              (I.R.S. Employer
of incorporation or organization)                          Identification No.)

1400 SMITH STREET, HOUSTON, TEXAS 77002
TELEPHONE NO. (713) 853-6161
(Address, including zip code, and telephone number, including area code, of
registrant's principal executive offices)

BARRY HUNSAKER, JR., ESQ.
SENIOR VICE PRESIDENT AND GENERAL COUNSEL
ENRON OIL & GAS COMPANY
1400 SMITH STREET
HOUSTON, TEXAS 77002
(713) 853-5788
(Name, address, including zip code, and telephone number, including area code,
of agent for service)

Copies to:

         GARY W. ORLOFF, ESQ.                                 REX R. ROGERS, ESQ.
     BRACEWELL & PATTERSON, L.L.P.               VICE PRESIDENT AND ASSOCIATE GENERAL COUNSEL
SOUTH TOWER PENNZOIL PLACE, SUITE 2900                            ENRON CORP.
         711 LOUISIANA STREET                            1400 SMITH STREET, ROOM 4842
         HOUSTON, TEXAS 77002                                HOUSTON, TEXAS 77002
            (713) 221-1306                                      (713) 853-3069

APPROXIMATE DATE OF COMMENCEMENT OF PROPOSED SALE OF THE SECURITIES TO THE PUBLIC: From time to time after the effective date of this Registration Statement as determined in light of market conditions and other factors.

If the only securities being registered on this Form are being offered pursuant to dividend or interest reinvestment plans, please check the following box. [ ]

If any of the securities being registered on this Form are to be offered on a delayed or continuous basis pursuant to Rule 415 under the Securities Act of 1933, check the following box. [X]

If this Form is filed to register additional securities for an offering pursuant to Rule 462(b) under the Securities Act, please check the following box and list the Securities Act registration statement number of the earlier effective registration statement for the same offering. [ ]

If this Form is a post-effective amendment filed pursuant to Rule 462(c) under the Securities Act, check the following box and list the Securities Act registration statement number of the earlier effective registration statement for the same offering. [ ]

If delivery of the prospectus is expected to be made pursuant to Rule 434, please check the following box. [ ]

CALCULATION OF REGISTRATION FEE

===========================================================================================================================
                                                                   PROPOSED             PROPOSED
                                               AMOUNT              MAXIMUM              MAXIMUM             AMOUNT OF
TITLE OF EACH CLASS OF                         TO BE            OFFERING PRICE         AGGREGATE           REGISTRATION
SECURITIES TO BE REGISTERED                  REGISTERED            PER UNIT        OFFERING PRICE(1)           FEE
---------------------------------------------------------------------------------------------------------------------------
  Debt Securities
  Common Stock, $.01 par value                  (2)                  (2)              $300,000,000           $88,500
===========================================================================================================================

(1) Estimated solely for the purposes of calculating the registration fee pursuant to Rule 457(o).

(2) Not applicable pursuant to Form S-3 General Instruction II. D under the Securities Act of 1933.
THE REGISTRANT HEREBY AMENDS THE REGISTRATION STATEMENT ON SUCH DATE OR DATES AS MAY BE NECESSARY TO DELAY ITS EFFECTIVE DATE UNTIL THE REGISTRANT SHALL FILE A FURTHER AMENDMENT WHICH SPECIFICALLY STATES THAT THIS REGISTRATION STATEMENT SHALL THEREAFTER BECOME EFFECTIVE IN ACCORDANCE WITH SECTION 8(A) OF THE SECURITIES ACT OF 1933 OR UNTIL THE REGISTRATION STATEMENT SHALL BECOME EFFECTIVE ON SUCH DATE AS THE COMMISSION, ACTING PURSUANT TO SAID SECTION 8(A), MAY DETERMINE.

PURSUANT TO RULE 429 UNDER THE SECURITIES ACT OF 1933, THIS REGISTRATION STATEMENT CONTAINS A COMBINED PROSPECTUS THAT ALSO RELATES TO $113,207,962 OF OTHER SECURITIES TO BE SOLD IN A PRIMARY OFFERING AND 4,940,000 SHARES OF COMMON STOCK TO BE SOLD IN A SECONDARY OFFERING REGISTERED ON FORM S-3, REGISTRATION STATEMENT NO. 333-18511, WHICH WAS DECLARED EFFECTIVE ON FEBRUARY 12, 1997 (THE "PREVIOUSLY REGISTERED SECURITIES"). THIS REGISTRATION STATEMENT CONSTITUTES POST-EFFECTIVE AMENDMENT NO. 1 TO REGISTRATION STATEMENT NO. 333-18511, PURSUANT TO WHICH THE TOTAL AMOUNT OF UNSOLD PREVIOUSLY REGISTERED SECURITIES REGISTERED ON REGISTRATION STATEMENT NO. 333-18511 MAY BE OFFERED AND SOLD TOGETHER WITH THE SECURITIES REGISTERED HEREUNDER THROUGH THE USE OF THE COMBINED PROSPECTUS INCLUDED HEREIN. IN THE EVENT SUCH PREVIOUSLY REGISTERED SECURITIES ARE OFFERED AND SOLD PRIOR TO THE EFFECTIVE DATE OF THIS REGISTRATION STATEMENT, THE AMOUNT OF SUCH PREVIOUSLY REGISTERED SECURITIES SO SOLD WILL NOT BE INCLUDED IN THE PROSPECTUS HEREUNDER. IN ACCORDANCE WITH RULE 429(B), THE AMOUNT OF THE PREVIOUSLY PAID FILING FEE ASSOCIATED WITH THE PREVIOUSLY REGISTERED SECURITIES WAS $60,607.


INFORMATION CONTAINED HEREIN IS SUBJECT TO CHANGE, COMPLETION OR AMENDMENT WITHOUT NOTICE. A REGISTRATION STATEMENT RELATING TO THESE SECURITIES HAS BEEN FILED WITH THE SECURITIES AND EXCHANGE COMMISSION. THESE SECURITIES MAY NOT BE SOLD NOR MAY OFFERS TO BUY BE ACCEPTED PRIOR TO THE TIME THE REGISTRATION STATEMENT BECOMES EFFECTIVE. THIS PROSPECTUS SHALL NOT CONSTITUTE AN OFFER TO SELL OR THE SOLICITATION OF AN OFFER TO BUY NOR SHALL THERE BE ANY SALE OF THESE SECURITIES IN ANY STATE IN WHICH SUCH OFFER, SOLICITATION OR SALE WOULD BE UNLAWFUL PRIOR TO REGISTRATION OR QUALIFICATION UNDER THE SECURITIES LAWS OF ANY SUCH STATE.

SUBJECT TO COMPLETION,
JANUARY 23, 1998

PROSPECTUS

ENRON OIL & GAS COMPANY

DEBT SECURITIES
COMMON STOCK


Enron Oil & Gas Company (the "Company") may offer from time to time its unsecured debt securities consisting of notes, debentures or other evidences of indebtedness (the "Debt Securities"). The Company and/or Enron Corp. (the "Selling Stockholder") may also offer and sell from time to time shares of Common Stock, par value $.01 per share, of the Company (the "Common Stock"). The Debt Securities and the Common Stock are collectively referred to as the "Securities". The aggregate initial offering price of the Debt Securities and the Common Stock to be offered by the Company hereby will not exceed $413,207,962, and the number of shares of Common Stock offered by the Selling Stockholder hereby will not exceed 4,940,000. The Securities may be offered in amounts, at prices and on terms to be determined in light of market conditions at the time of sale and, to the extent required, set forth in a Prospectus Supplement.

The Debt Securities may be offered as separate series. The terms of each series of Debt Securities, including, where applicable, the specific designation, aggregate principal amount, authorized denominations, maturity, rate or rates and time or times of payment of any interest, any terms for optional or mandatory redemption, which may include redemption at the option of holders upon the occurrence of certain events, or payment of additional amounts or any sinking fund provisions, and any other specific terms in connection with the offering and sale of such series (the "Offered Debt Securities") will be set forth in a Prospectus Supplement.

The Securities may be sold directly by the Company or the Selling Stockholder to investors, through agents designated from time to time or to or through underwriters or dealers. See "Plan of Distribution". If any underwriters are involved in the sale of any Securities in respect of which this Prospectus is being delivered, the names of such underwriters and any applicable commissions or discounts will be set forth in a Prospectus Supplement. The net proceeds to the Company from such sale also will be set forth in a Prospectus Supplement. The Company will not receive any of the proceeds from the sale of the Common Stock by the Selling Stockholder. Enron Corp. currently owns approximately 55% of the outstanding Common Stock.

The Common Stock is listed on the New York Stock Exchange under the symbol "EOG". On January 22, 1998 the last reported sale price of Common Stock on the New York Stock Exchange Composite Tape was $20 5/16 per share.


THESE SECURITIES HAVE NOT BEEN APPROVED OR DISAPPROVED BY THE SECURITIES AND
EXCHANGE COMMISSION OR ANY STATE SECURITIES COMMISSION NOR HAS THE SECURITIES
AND EXCHANGE COMMISSION OR ANY STATE SECURITIES COMMISSION PASSED UPON THE

ACCURACY OR ADEQUACY OF THIS PROSPECTUS. ANY REPRESENTATION TO THE CONTRARY IS A

CRIMINAL OFFENSE.


THE DATE OF THIS PROSPECTUS IS , 1998


AVAILABLE INFORMATION

The Company is subject to the informational requirements of the Securities Exchange Act of 1934, as amended (the "Exchange Act"), and in accordance therewith files reports, proxy statements and other information with the Securities and Exchange Commission (the "Commission"). Such reports, proxy statements and other information can be inspected and copied at the public reference facilities maintained by the Commission at Room 1024, 450 Fifth Street, N.W., Washington, D.C. 20549; and at the following Regional Offices of the Commission: Midwest Regional Office, 500 West Madison Street, Suite 1400, Chicago, Illinois 60661; and Northeast Regional Office, 7 World Trade Center, Suite 1300, New York, New York 10048. Copies of such material can also be obtained from the Public Reference Section of the Commission at 450 Fifth Street, N.W., Room 1024, Washington, D.C. 20549, at prescribed rates, or from the site maintained by the Commission on the Internet World Wide Web at http://www.sec.gov. The Company's Common Stock is listed on the New York Stock Exchange, Inc. ("NYSE"), and reports, proxy statements and other information concerning the Company can be inspected and copied at the offices of the NYSE at 20 Broad Street, New York, New York 10005.

This Prospectus constitutes a part of Registration Statements on Form S-3 (collectively, together with all amendments and exhibits thereto, the "Registration Statements") filed by the Company with the Commission under the Securities Act of 1933, as amended (the "Securities Act"), with respect to the Securities offered hereby. This Prospectus does not contain all of the information set forth in such Registration Statements, certain parts of which are omitted in accordance with the rules and regulations of the Commission. Reference is made to such Registration Statements and to the exhibits relating thereto for further information with respect to the Company and the Securities offered hereby. Any statements contained herein concerning the provisions of any document filed as an exhibit to the Registration Statements or otherwise filed with the Commission or incorporated by reference herein are not necessarily complete, and in each instance reference is made to the copy of such document so filed for a more complete description of the matter involved. Each such statement is qualified in its entirety by such reference.


INCORPORATION OF CERTAIN DOCUMENTS BY REFERENCE

The Company's Annual Report on Form 10-K for the year ended December 31, 1996, Quarterly Reports on Form 10-Q for the quarters ended March 31, 1997, June 30, 1997, and September 30, 1997, Current Reports on Form 8-K dated September 29, 1997 and December 1, 1997, and the description of the Common Stock contained in the Registration Statement on Form 8-A declared effective on October 3, 1989, are incorporated herein by reference.

Each document filed by the Company pursuant to Section 13(a), 13(c), 14 or 15(d) of the Exchange Act subsequent to the date of this Prospectus and prior to the termination of the offering of the Securities pursuant hereto shall be deemed to be incorporated herein by reference and to be a part hereof from the date of filing of such document. Any statement contained herein or in a document all or a portion of which is incorporated or deemed to be incorporated by reference herein shall be deemed to be modified or superseded for purposes of this Prospectus to the extent that a statement contained herein or in any subsequently filed document which also is or is deemed to be incorporated by reference herein modifies or supersedes such statement. Any statement so modified or superseded shall not be deemed, except as so modified or superseded, to constitute a part of this Prospectus.

The Company will provide without charge to each person to whom a copy of this Prospectus is delivered, on the request of any such person, a copy of any or all of the foregoing documents incorporated herein by reference, other than exhibits to such documents (unless such exhibits are specifically incorporated by reference into the documents that this Prospectus incorporates). Requests should be directed to Secretary, Enron Oil & Gas Company, at its principal executive offices, 1400 Smith Street, Houston, Texas 77002 (telephone:
713-853-6161).

CERTAIN PERSONS PARTICIPATING IN THIS OFFERING MAY ENGAGE IN TRANSACTIONS THAT STABILIZE, MAINTAIN OR OTHERWISE AFFECT THE MARKET PRICES OF THE SECURITIES OFFERED HEREBY, INCLUDING OVER-ALLOTMENT, STABILIZING, AND SHORT-COVERING TRANSACTIONS IN SUCH SECURITIES, AND THE IMPOSITION OF A PENALTY BID, IN CONNECTION WITH THE OFFERING. FOR A DESCRIPTION OF THESE ACTIVITIES, SEE "PLAN OF DISTRIBUTION."

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BUSINESS OF THE COMPANY

GENERAL

The Company, a Delaware corporation organized in 1985, is engaged, either directly or through a marketing subsidiary with regard to domestic operations or through various subsidiaries with regard to international operations, in the exploration for, and the development, production and marketing of, natural gas and crude oil primarily in major producing basins in the United States, as well as in Canada, Trinidad and India and, to a lesser extent, selected other international areas. At December 31, 1997, the Company's estimated net proved natural gas reserves were 4,001 billion cubic feet ("Bcf"), including 1,180 Bcf of proved undeveloped methane reserves in the Big Piney deep Paleozoic formations in Wyoming, and estimated net proved crude oil, condensate and natural gas liquids reserves were 78 million barrels. At such date, approximately 67% of the Company's reserves (on a natural gas equivalent basis) was located in the United States, 10% in Canada, 8% in Trinidad and 15% in India.

Unless the context requires otherwise, as used in this Prospectus the "Company" shall mean Enron Oil & Gas Company and its subsidiaries.

EXPLORATION AND PRODUCTION

NORTH AMERICA OPERATIONS

The Company's eight principal United States producing areas are the Big Piney area of Wyoming, South Texas area, East Texas area, Offshore Gulf of Mexico area, Canyon/Strawn Trend area of West Texas, Sand Tank and Pitchfork Ranch areas of New Mexico and Vernal area of Utah. Properties in these areas comprised approximately 82% of the Company's United States reserves (on a natural gas equivalent basis) and 76% of the Company's United States net natural gas deliverability as of December 31, 1997, and are substantially all operated by the Company.

The Company's other United States natural gas and crude oil producing properties are located primarily in other areas of Texas, Utah, New Mexico, Oklahoma, Mississippi, California and Kansas.

At December 31, 1997, 94% of the Company's proved United States reserves (on a natural gas equivalent basis), including the reserves in the Big Piney deep Paleozoic formations, was natural gas and 6% was crude oil, condensate and natural gas liquids. A substantial portion of the Company's United States natural gas reserves is in long-lived fields with well-established production histories. The Company believes that opportunities exist to increase production in many of these fields through continued infill and other development drilling.

The Company also has natural gas and crude oil producing properties located in Western Canada, primarily in the provinces of Alberta, Saskatchewan and Manitoba.

OUTSIDE NORTH AMERICA OPERATIONS

The Company has producing operations offshore Trinidad and India and is evaluating exploration and development opportunities in selected other international areas.

MARKETING

Wellhead Marketing. The Company's North America wellhead natural gas production is currently being sold on the spot market and under long-term natural gas contracts at market responsive prices. In many instances, the long-term contract prices closely approximate the prices received for natural gas being sold on the spot market. Wellhead natural gas volumes from Trinidad are sold at prices that are based on a fixed price schedule with annual escalations. Under terms of a production sharing contract, natural gas volumes in India are to be sold to the Government of India or its nominee at a price linked to a basket of world market fuel oil quotations with floor and ceiling limits. Approximately 15% of the Company's wellhead natural gas production is currently being sold to pipeline and marketing subsidiaries of Enron Corp. The Company believes that the

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terms of its transactions and agreements with Enron Corp. are and intends that future such transactions and agreements will be at least as favorable to the Company as could be obtained from third parties.

Substantially all of the Company's wellhead crude oil and condensate is sold under various terms and arrangements at market responsive prices. Approximately 10% of the Company's wellhead crude oil and condensate production is currently being sold to affiliated companies.

Other Marketing. Enron Oil & Gas Marketing, Inc. ("EOGM"), a wholly-owned subsidiary of the Company, is a marketing company engaging in various marketing activities. Both the Company and EOGM contract to provide, under short-term and long-term agreements, natural gas to various purchasers and then aggregate the necessary supplies for the sales with purchases from various sources including third-party producers, marketing companies, pipelines or from the Company's own production. In addition, EOGM has purchased and constructed several small gathering systems in order to facilitate its entry into the gathering business on a limited basis. Both the Company and EOGM utilize other short-term and long-term hedging and trading mechanisms including sales, purchases, price swaps and options utilizing NYMEX-related commodity market transactions. These marketing activities have provided an effective balance in managing a portion of the Company's exposure to commodity price risks for both natural gas and crude oil and condensate wellhead prices.

USE OF PROCEEDS

The Company intends to apply any net proceeds it receives from the sale of the Securities to its general funds to be used for general corporate purposes, including in certain circumstances to retire outstanding indebtedness. Any specific allocations of the proceeds to a particular purpose that have been made at the date of any Prospectus Supplement will be described therein. The Company will not receive any of the proceeds of the sale of Common Stock by the Selling Stockholder.

RATIO OF EARNINGS TO FIXED CHARGES

                                            NINE MONTHS                     YEAR ENDED DECEMBER 31,
                                               ENDED          ----------------------------------------------------
                                         SEPTEMBER 30, 1997     1996       1995       1994       1993       1992
                                         ------------------   --------   --------   --------   --------   --------
Ratio of Earnings to Fixed Charges.....         4.17            9.27      10.64     11.12       7.95       3.95

For purposes of computing the ratio of earnings to fixed charges, earnings consist of income before income taxes plus interest, net of amounts capitalized. Fixed charges consist of interest on debt including amounts capitalized, amortization of debt discount and issuance expense and that portion of rental expense determined to be representative of interest.

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DESCRIPTION OF DEBT SECURITIES

The following description of the terms of the Debt Securities sets forth certain general terms and provisions of the Debt Securities to which any Prospectus Supplement may relate (the "Offered Debt Securities"). The particular terms of the Offered Debt Securities and the extent, if any, to which such general provisions may apply to the Offered Debt Securities will be described in the Prospectus Supplement relating to such Offered Securities.

The Debt Securities will be unsecured obligations of the Company issued under an Indenture (the "Indenture") between the Company and Chase Bank of Texas, National Association (formerly named Texas Commerce Bank National Association), as Trustee (the "Trustee"), dated as of September 1, 1991. The following statements are summaries of certain provisions contained in the Indenture, the form of which is filed as an exhibit to the Registration Statement of which this Prospectus is a part. They do not purport to be complete statements of all the terms and provisions of the Indenture, and reference is hereby made to the Indenture for full and complete statements of such terms and provisions, including the definitions of certain terms used herein. Wherever reference is made in the following statements to a particular section of the Indenture, such section shall be deemed to be incorporated in such statements as a part thereof, and such statements are qualified in their entirety by such reference. The italicized references below are to the section numbers in the Indenture.

GENERAL

The Indenture does not limit the aggregate principal amount of unsecured debentures, notes or other evidences of indebtedness of the Company which may be issued thereunder from time to time in one or more series by the Company, and the Company may in the future issue additional securities (in addition to the Debt Securities) under the Indenture. At December 31, 1997, $350,000,000 principal amount of notes were outstanding under the Indenture. Reference is made to the Prospectus Supplement for the following terms of the Offered Debt Securities: (i) the title of the Offered Debt Securities; (ii) any limit upon the aggregate principal amount of the Offered Debt Securities; (iii) the date or dates on which the principal of the Offered Debt Securities is payable; (iv) the rate or rates (which may be fixed or variable), or the method by which such rate or rates shall be determined, at which the Offered Debt Securities shall bear interest, if any, the date or dates from which such interest shall accrue, or the method by which such date or dates shall be determined, the interest payment dates on which such interest shall be payable and the regular record date for the interest payable on any interest payment date; (v) the place or places where the principal of (and premium, if any) and interest on Offered Debt Securities shall be payable; (vi) the period or periods within which, the price or prices at which and the terms and conditions upon which Offered Debt Securities may be redeemed, in whole or in part, at the option of the Company, if the Company is to have that option; (vii) the obligation, if any, and the option, if any, of the Company to redeem, purchase or repay Offered Debt Securities pursuant to any sinking fund or analogous provisions or at the option of a holder thereof and the period or periods within which, the price or prices at which and the terms and conditions upon which Offered Debt Securities shall be redeemed, purchased or repaid in whole or in part, pursuant to such obligation or option; (viii) whether the Offered Debt Securities are to be issued in whole or in part in the form of one or more permanent global securities and, if so, the identity of the depositary for such permanent global securities; (ix) any trustees, paying agents, transfer agents or registrars with respect to Offered Debt Securities; and (x) any other term of the Offered Debt Securities (which term shall not be inconsistent with the provisions of the Indenture. (Section 301.)

The Company will maintain in each place specified by the Company for payment of any series of Offered Debt Securities an office or agency where Offered Debt Securities of that series may be presented or surrendered for payment, where Offered Debt Securities of that series may be surrendered for registration of transfer or exchange and where notices and demands to or upon the Company in respect of the Offered Debt Securities of that series and the Indenture may be served.

Unless otherwise indicated in the Prospectus Supplement relating thereto, the Offered Debt Securities will be issued only in fully registered form, without coupons, in denominations of $1,000 or integral multiples

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thereof. (Section 302.) No service charge will be made for any transfer or exchange of such Offered Debt Securities, but the Company may require payment of a sum sufficient to cover any tax or other governmental charge payable in relation thereto. (Section 305.)

Debt Securities may be issued under the Indenture as Original Issue Discount Securities to be offered and sold at a substantial discount below their principal amount. Special federal income tax, accounting and other considerations applicable to any such Original Issue Discount Securities will be described in any Prospectus Supplement relating thereto. "Original Issue Discount Securities" means any security which provides for an amount less than the principal amount thereof to be due and payable upon an Event of Default and the continuation thereof. (Section 101.)

Unless otherwise indicated in a Prospectus Supplement, the covenants contained in the Indenture and the Debt Securities would not necessarily afford holders of the Debt Securities protection in the event of a highly leveraged or other transaction involving the Company that may adversely affect holders.

PERMANENT GLOBAL DEBT SECURITIES

If any Offered Debt Securities are issuable in permanent global form, the applicable Prospectus Supplement will describe the circumstances, if any, under which beneficial owners of interests in any such permanent global Debt Security may exchange such interests for Debt Securities of such series and of like tenor and principal amount in any authorized form and denomination. (Section 305.) Principal of and any premium and interest on a permanent global Debt Security will be payable in the manner described in the applicable Prospectus Supplement.

LIMITATIONS ON LIENS

The Indenture provides that so long as any of the securities issued under the Indenture (including the Debt Securities) are outstanding, the Company will not, and will not permit any Subsidiary to, create or suffer to exist, except in favor of the Company or any Subsidiary, any Lien upon any Principal Property at any time owned by it, to secure any Funded Debt of the Company or any Subsidiary, unless effective provision is made whereby outstanding securities issued under the Indenture (including the Debt Securities) will be equally and ratably secured with any and all such Funded Debt and with any other indebtedness similarly entitled to be equally and ratably secured. This restriction does not apply to prevent the creation or existence of any: (a) Acquisition Lien or Permitted Encumbrance; or (b) Lien created or assumed by the Company or a Subsidiary in connection with the issuance of debt securities the interest on which is excludable from gross income of the holder of such security pursuant to the Internal Revenue Code of 1986, as amended, for the purpose of financing, in whole or in part, the acquisition or construction of property or assets to be used by the Company or a Subsidiary. In case the Company or any Subsidiary shall propose to create or permit to exist a Lien on any Principal Property at any time owned by it to secure any Funded Debt of the Company or any Subsidiary, other than Funded Debt permitted to be secured under clauses (a) or
(b) above, the Company will prior thereto give written notice thereof to the Trustee, and the Company will, or will cause such Subsidiary to, prior to or simultaneously with such creation or permission to exist, by supplemental indenture executed to the Trustee (or to the extent legally necessary to another trustee or additional or separate trustee), in form satisfactory to the Trustee, effectively secure all the securities issued under the Indenture equally and ratably with such Funded Debt and any other indebtedness entitled to be equally and ratably secured.

Notwithstanding the foregoing, the Company or a Subsidiary may issue, assume or guarantee Funded Debt secured by a Lien which would otherwise be subject to the foregoing restrictions in an aggregate amount which, together with all other Funded Debt of the Company or a Subsidiary secured by a Lien which (if originally issued, assumed or guaranteed at such time) would otherwise be subject to the foregoing restrictions (not including Funded Debt permitted to be secured under the foregoing exception), does not at the time exceed 10% of the Consolidated Net Tangible Assets of the Company, as shown on the audited consolidated financial statements of the Company as of the end of the fiscal year preceding the date of determination. (Section 1007.)

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The holder of more than 50% in principal amount of the outstanding securities issued under the Indenture (including the Debt Securities) may waive compliance by the Company with the covenant contained in Section 1007 of the Indenture (and certain other covenants of the Company). (Section 1009.)

The Indenture defines the term "Subsidiary" to mean a corporation more than 50% of the outstanding voting stock of which is owned, directly or indirectly, by the Company or by one or more other Subsidiaries, or by the Company and one or more other Subsidiaries. The term "Principal Property" is defined to mean any property interest in oil and gas reserves located in the United States or offshore the United States and owned by the Company or any Subsidiary and which is capable of producing crude oil, condensate, natural gas, natural gas liquids or other similar hydrocarbon substances in paying quantities, the net book value of which property interest exceeds two (2) percent of Consolidated Net Tangible Assets, except any such property interest or interests that in the opinion of the Board of Directors is not of material importance to the total business conducted by the Company and its Subsidiaries as a whole. Without limitation, the term "Principal Property" shall not include (i) accounts receivable and other obligations of any obligor under a contract for the sale, exploration, production, drilling, development, processing or transportation of crude oil, condensate, natural gas, natural gas liquids or other similar hydrocarbon substances by the Company or any of its Subsidiaries, and all related rights of the Company or any of its Subsidiaries, and all guarantees, insurance, letters of credit and other agreements or arrangements of whatever character supporting or securing payment of such receivables or obligations, or (ii) the production or any proceeds from production of crude oil, condensate, natural gas, natural gas liquids or other similar hydrocarbon substances. (Section 101.)

The term "indebtedness," as applied to the Company or any Subsidiaries, is defined to mean bonds, debentures, notes and other instruments representing obligations created or assumed by any such corporation for the repayment of money borrowed (other than unamortized debt discount or premium). All indebtedness secured by a Lien upon property owned by the Company or any Subsidiary and upon which indebtedness any such corporation customarily pays interest, although any such corporation has not assumed or become liable for the payment of such indebtedness, is also deemed to be indebtedness of any such corporation. All indebtedness for money borrowed, incurred by other persons, which is directly guaranteed as to payment of principal by the Company or any Subsidiary is for all purposes of the Indenture deemed to be indebtedness of any such corporation, but no other contingent obligation of any such corporation in respect of indebtedness incurred by other persons is for any purpose deemed indebtedness of such corporation. Indebtedness of the Company or any Subsidiary does not include (i) any amount representing capitalized lease obligations; (ii) indirect guarantees or other contingent obligations in connection with the indebtedness of others, including agreements, contingent or otherwise, with such persons or with third persons, with respect to, or to permit or ensure the payment of, obligations of such other persons, including, without limitation, agreements to purchase or repurchase obligations of such other persons, to advance or supply funds to or to invest in such other persons, or agreements to pay for property, products or services of such other persons (whether or not conferred, delivered or rendered), and any demand charge, throughput, take-or-pay, keep-well, make-whole, cash deficiency, maintenance of working capital or earnings or similar agreements; and (iii) any guarantees with respect to lease or other similar periodic payments to be made by other persons.
(Section 101.)

The term "Funded Debt" as applied to the Company or any Subsidiary is defined to mean all indebtedness incurred, created, assumed or guaranteed by the Company or any Subsidiary, or upon which such corporation customarily pays interest charges, which matures, or is renewable by such corporation to a date, more than one year after the date as of which Funded Debt is being determined.
(Section 101.)

"Lien" is defined to mean any mortgage, pledge, lien, security interest or similar charge or encumbrance. (Section 101.) "Acquisition Lien" is defined to mean any (i) Lien upon any property acquired before or after the date of the Indenture, created at the time of acquisition or within one year thereafter to secure all or a portion of the purchase price thereof, or existing thereon at the date of acquisition, whether or not assumed by the Company or any Subsidiary, provided that any such Lien applies only to the property so acquired and fixed improvements thereon, (ii) Lien upon any property acquired before or after the date of the Indenture by any corporation that is or becomes a Subsidiary after the date of the Indenture ("Acquired Entity"), provided that any such Lien (1) shall either (A) exist prior to the time the Acquired Entity becomes a Subsidiary or (B) be created at the time the Acquired Entity becomes a Subsidiary or within one year thereafter to secure all or a

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portion of the acquisition price thereof and (2) shall only apply to those properties owned by the Acquired Entity at the time it becomes a subsidiary or thereafter acquired by it from sources other than the Company or any other Subsidiary, and (iii) any extension, renewal or refunding, in whole or in part, of any Lien permitted by clause (i) or (ii) above, if limited to the same property or any portion thereof subject to, and securing not more than the amount secured by, the Lien extended, renewed or refunded. (Section 101.)

"Permitted Encumbrance" is defined to mean any (a) Lien reserved in any oil, gas or other mineral lease for rent, royalty or delay rental under such lease and for compliance with the terms of such lease; (b) Lien for any judgments or attachments in an aggregate amount not in excess of $10,000,000, or Lien for any judgment or attachment the execution or enforcement of which has been stayed or which has been appealed and secured, if necessary, by the filing of an appeal bond; (c) sale or other transfer of crude oil, condensate, natural gas, natural gas liquids or other similar hydrocarbon substances in place, or the future production thereof, for a period of time until, or in an amount such that, the transferee will realize therefrom a specified amount (however determined) of money or a specified amount of such crude oil, condensate, natural gas, natural gas liquids or other similar hydrocarbon substances or the sale or other transfer of any other interest in property of the character commonly referred to as a "production payment," "overriding royalty," "net profits interest," "royalty" or similar burden on any oil and gas property or mineral interest owned by the Company or any Subsidiary; (d) Lien consisting of or reserved in any (i) grant or conveyance in the nature of a farm-out or conditional assignment to the Company or any Subsidiary entered into in the ordinary course of business to secure any undertaking of the Company or any Subsidiary in such grant or conveyance, (ii) interest of an assignee in any proved undeveloped lease or proved undeveloped portion of any producing property transferred to such assignee for the purpose of the development of such lease or property, (iii) unitization or pooling agreement or declaration, (iv) contract for the sale, purchase, exchange or processing of production, or (v) operating agreement, area of mutual interest agreement and other agreements which are customary in the oil and gas business and which agreements do not materially detract from the value, or materially impair the use of, the properties affected thereby; (e) Lien arising out of any forward contract, futures contract, swap agreement or other commodities contract entered into by the Company or any Subsidiary; (f) Lien on any oil and gas property of the Company or any Subsidiary thereof, or on production therefrom, to secure any liability of the Company or such Subsidiary for all or part of the Development Cost for such property under any joint operating, drilling or similar agreement for exploration, drilling or development of such property, or any renewal or extension of such Lien; or (g) certain other Liens as described in the Indenture. (Section 101.)

MODIFICATION OF THE INDENTURE

With certain exceptions, the Indenture provides that, with the consent of the holders of more than 50% in principal amount of all outstanding securities issued under the Indenture (the "Indenture Securities") (including, where applicable, the Debt Securities) affected thereby, the Company and the Trustee may enter into a supplemental indenture for the purpose of adding to, changing or eliminating any of the provisions of the Indenture or modifying in any manner the rights of the holders of Indenture Securities. Notwithstanding the foregoing, the consent of the holder of each outstanding Indenture Security affected thereby will be required to: (a) change the Stated Maturity of the principal of, or any installment of principal of or interest on, any Indenture Security, or reduce the principal amount thereof or the rate of interest thereon or any premium payable upon the redemption thereof, or change any Place of Payment where, or change the coin or currency in which, any Indenture Security or any premium or the interest thereon is payable, or impair the right to institute suit for the enforcement of any such payment on or after the Stated Maturity thereof (or, in the case of redemption, on or after the Redemption Date); (b) reduce the percentage in principal amount of the outstanding Indenture Securities of any series, the consent of whose holders is required for any supplemental indenture or for any waiver provided for in the Indenture; or
(c) with certain exceptions, modify any of the provisions of the section of the Indenture which concern waiver of past defaults, waiver of certain covenants or consent to supplemental indentures, except to increase the percentage of principal amount of Indenture Securities of any series, the holders of which are required to effect such waiver or consent or to provide that certain other provisions of the Indenture cannot be modified or waived without the consent of the holder of each outstanding Indenture Security affected thereby. The Indenture provides that a supplemental indenture which changes or eliminates any covenant or other provision of the Indenture which has expressly been

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included solely for the benefit of one or more particular series of Indenture Securities, or which modifies the rights of the holders of Indenture Securities of such series with respect to such covenant or other provision shall be deemed not to affect the rights under the Indenture of the holder of Indenture Securities of any other series. (Section 902.)

EVENTS OF DEFAULT AND RIGHTS UPON DEFAULT

Under the Indenture, the term "Event of Default" with respect to any series of Indenture Securities, means any one of the following events which shall have occurred and is continuing: (a) default in the payment of any interest upon any Indenture Security of that series when it becomes due and payable or default in the payment of any mandatory sinking fund payment provided for by the terms of any series of Indenture Securities, and continuance of such default for a period of 30 days; (b) default in the payment of the principal of (or premium, if any, on) any Indenture Security of that series at its Maturity; (c) default in the performance, or breach, of any covenant or warranty of the Company in the Indenture (other than a covenant or warranty a default in whose performance or whose breach is otherwise specifically dealt with in the Indenture or which has been expressly included in the Indenture solely for the benefit of one or more series of Indenture Securities other than that series), and continuance of such default or breach for 60 days after there has been given to the Company by the Trustee, or to the Company and the Trustee by the holders of at least 25% in principal amount of all outstanding Indenture Securities, a written notice specifying such default or breach and requiring it to be remedied and stating that such notice is a "Notice of Default" under the Indenture; or (d) certain events involving the Company in bankruptcy, receivership or other insolvency proceedings or an assignment for the benefit of creditors (Section 501.)

If an Event of Default described in clause (a) or (b) in the foregoing paragraph has occurred and is continuing with respect to Indenture Securities of any series, the Indenture provides that the Trustee or the holders of not less than 25% in principal amount of the outstanding Indenture Securities of that series may declare the principal amount of all of the Indenture Securities of that series to be due and payable immediately, and upon any such declaration such principal amount shall become immediately due and payable. If an Event of Default described in clause (c) or (d) of the foregoing paragraph occurs and is continuing, the Trustee or the holders of not less that 25% in principal amount of all of the Indenture Securities then outstanding may declare the principal amount of all of the Indenture Securities to be due and payable immediately, and upon any such declaration such principal amount shall become immediately due and payable. (Section 502.)

A default under other indebtedness of the Company is not an Event of Default under the Indenture, and an Event of Default under one series of Indenture Securities will not necessarily be an Event of Default under another series.

At any time after such a declaration of acceleration with respect to Indenture Securities of any series (or of all series, as the case may be) has been made and before judgment or decree for payment of the money due has been obtained by the Trustee, the holders of a majority in principal amount of the outstanding Indenture Securities of that series (or of all series, as the case may be) may rescind and annul such declaration and its consequences, if subject to certain conditions, all Events of Default with respect to Indenture Securities of that series (or of all series, as the case may be), other than the non-payment of the principal of the Indenture Securities due solely by such declaration of acceleration, have been cured or waived and all payments due (other than by acceleration) have been paid or deposited with the Trustee. (Section 502.) With certain exceptions, the holders of not less than a majority in principal amount of the outstanding Indenture Securities of any series, on behalf of the holders of all the Indenture Securities of such series, may waive any past default described in clause (a) or (b) of the first paragraph of this heading "Events of Default and Rights Upon Default" (or, in the case of a default described in clause (c) or (d) of such paragraph, the holders of a majority in principal amount of all outstanding Indenture Securities may waive any such past default), and its consequences, except a default (a) in the payment of the principal of (or premium, if any) or interest on any Indenture Security, or (b) in respect to a covenant or provision of the Indenture which under the Indenture cannot be modified or amended without the consent of the holder of each outstanding Indenture Security of such series affected. (Section 513.)

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The holders of not less than a majority in principal amount of the Indenture Securities of any series at the time outstanding are empowered under the terms of the Indenture, subject to certain limitations, to direct the time, method and place of conducting any proceeding for any remedy available to the Trustee or exercising any trust or power conferred on the Trustee. (Section 512.)

The Indenture further provides that no holder of an Indenture Security of any series may enforce the Indenture except in the case of failure by the Trustee to act for 60 days after notice of a continuing Event of Default with respect to the Indenture Securities of that series and after request by the holders of not less than 25% in principal amount of the outstanding Indenture Securities of such series and the offer to the Trustee of reasonable indemnity, but this provision will not prevent a holder of any Indenture Security from enforcing the payment of the principal of, and interest on, such holder's Indenture Security. (Section 507 and 508.)

The Indenture requires that the Company deliver to the Trustee, within 120 days after the end of each fiscal year, an Officers' Certificate, stating whether to the best knowledge of the signers thereof the Company is in default in the performance and observance of certain of the terms of the Indenture, and if so, specifying each such default and the nature and status thereof of which the signers may have knowledge. (Section 1008.)

DISCHARGE OF INDENTURE

With certain exceptions, the Company may discharge its obligations under the Indenture with respect to any series of Indenture Securities by (i) paying or causing to be paid the principal of (and premium, if any) and interest on all the Indenture Securities of such series outstanding, as and when the same shall become due and payable; (ii) delivering to the Trustee all outstanding Indenture Securities of such series for cancellation; or (iii) entering into an agreement in form and substance satisfactory to the Company and the Trustee providing for the creation of an escrow fund and depositing in trust with the Trustee, as escrow agent of such fund, sufficient funds in cash and/or Eligible Obligations and/or U.S. Government Obligations, maturing as to principal and interest in such amounts and at such times, as will be sufficient to pay at the Stated Maturity or Redemption Date all such Indenture Securities of such series not previously delivered to the Trustee for cancellation, including principal (and premium, if any) and interest to the Stated Maturity or Redemption Date.
(Section 401.)

The Indenture defines "Eligible Obligations" to mean interest bearing obligations as a result of the deposit of which the Indenture Securities are rated in the highest generic long-term debt rating category assigned to legally defeased debt by one or more nationally recognized rating agencies. (Section 101).

For federal income tax purposes, there is a substantial risk that a legal defeasance of a series of Indenture Securities by the deposit of cash, Eligible Obligations, or U.S. Government Obligations in a trust would be characterized by the Internal Revenue Service or a court as a taxable exchange by the holders of the Indenture Securities of that series for either (i) an issue of obligations of the defeasance trust or (ii) a direct interest in the cash and/or Eligible Obligations and/or U.S. Government Obligations held in the defeasance trust. If the defeasance were so characterized, then a holder of an Indenture Security of the series defeased would be: (i) required to recognize gain or loss (which would be capital gain or loss if the Indenture Securities were held as a capital asset) at the time of the defeasance as if the Indenture Security had been sold at such time for an amount equal to the amount of cash and the fair market value of the Eligible Obligations and/or U.S. Government Obligations held in the defeasance trust; (ii) required to include in income in each taxable year the interest and any original issue discount or gain or loss attributable to either such defeasance trust obligations or such securities, as the case may be; and
(iii) subject to the market discount provisions of the Internal Revenue Code as they may pertain to such defeasance trust obligations or such securities. As a result, a holder of an Indenture Security may be required to pay taxes on any such gain or income even though such holder may not have received any cash therefrom. Prospective investors are urged to consult their own advisors as to the tax consequences of an actual or legal defeasance, including the applicability and effect of tax laws other than Federal income tax law.

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CONCERNING THE TRUSTEE

Chase Bank of Texas, National Association (formerly named Texas Commerce Bank National Association), 712 Main Street, Houston, Texas 77002, is the Trustee under the Indenture. Such bank may from time to time also act as a depository of funds for, make loans to, and perform other services for, the Company, or its affiliates in the normal course of business. Forrest E. Hoglund, Chairman of the Board and Chief Executive Officer, and a Director of the Company, is also an advisory director of Chase Bank of Texas, National Association.

The holders of a majority in principal amount of the outstanding securities issued under the Indenture will have the right to direct the time, method and place of conducting any proceeding for exercising any remedy available to the Trustee, subject to certain exceptions. The Indenture provides that if an Event of Default occurs (and is not cured), the Trustee will be required, in the exercise of its power, to use the degree of care of a prudent person in the conduct of such person's own affairs. Subject to such provisions, the Trustee will be under no obligation to exercise any of its rights or powers under the Indenture at the request of any holder of securities issued under the Indenture, unless such holder shall have offered to the Trustee security and indemnity satisfactory to it against any loss, liability or expense and then only to the extent required by the terms of the Indenture. The Trustee may resign at any time or may be removed by the Company. If the Trustee resigns, is removed or becomes incapable of acting as Trustee or if a vacancy occurs in the office of the Trustee for any cause, a successor Trustee shall be appointed in accordance with the provisions of the Indenture.

If the Trustee shall have or acquire any "conflicting interest" within the meaning of the Trust Indenture Act, the Trustee shall either eliminate such interest or resign, to the extent and in the manner provided by, and subject to the provisions of, the Trust Indenture Act and the Indenture. (Section 608.) The Trust Indenture Act also contains certain limitations on the right of the Trustee, as a creditor of the Company, to obtain payment of claims in certain cases, or to realize on certain property received by it in respect of such claims, as security or otherwise. (Section 613.)

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THE SELLING STOCKHOLDER

                                                                                       PERCENT OF
                             BENEFICIAL OWNERSHIP(1)                    SHARES          CLASS TO
                             -----------------------    SHARES TO     TO BE OWNED       BE OWNED
    SELLING STOCKHOLDER       SHARES      PERCENTAGE     BE SOLD     AFTER SALE(2)    AFTER SALE(1)
    -------------------      ---------    ----------    ---------    -------------    -------------
Enron Corp.................  85,080,000(2)   54.9%      4,940,000(3)  80,140,000(3)       51.7%(3)


(1) All percentages set forth in the table and the footnotes are based upon the 155,064,256 shares of Common Stock outstanding on December 31, 1997.

(2) Enron Corp. has previously issued certain Exchangeable Notes, which at maturity may be exchanged for no more than 10,500,000 shares of Common Stock owned by Enron Corp., subject to adjustment under certain circumstances and to Enron Corp.'s option to pay an amount in cash in lieu of such mandatory exchange. The shares that may be delivered upon exchange therefor are beneficially owned by Enron Corp. until such time, if any, as they are delivered at maturity of the Exchangeable Notes. If no additional shares of Common Stock are either sold or bought by Enron Corp. and the maximum number of shares of Common Stock are delivered at maturity of the Exchangeable Notes, Enron Corp. will beneficially own 74,580,000 shares of Common Stock or approximately 48.1% of the outstanding shares.

(3) Enron Corp. may sell hereunder from time to time a number of shares of Common Stock totaling up to an aggregate of no greater than 4,940,000 shares. If the maximum number of shares of Common Stock are sold hereunder, no additional shares of Common Stock are bought by Enron Corp. and the Exchangeable Notes have not matured, Enron Corp. would own approximately 51.7% of the outstanding shares after such sale.

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RELATIONSHIP BETWEEN THE COMPANY AND ENRON CORP.

Ownership of Common Stock. Enron Corp. owns approximately 55% of the outstanding shares of Common Stock of the Company. Through its ability to elect all of the directors of the Company, Enron Corp. generally has the ability to control matters relating to the management and policies of the Company, including determinations with respect to acquisition or disposition of Company assets, the Company's exploration, development, and operating expenditure plans, future issuances of Common Stock or other securities of the Company and dividends payable on the Common Stock.

Conflicts of Interest. The nature of the respective businesses of the Company and Enron Corp. and its other affiliates ("Enron") is such as to give rise to conflicts of interest between the companies from time to time. Conflicts may arise, for example, with respect to transactions involving purchases, sales and transportation of natural gas and other business dealings between the Company and Enron, potential acquisitions of businesses or crude oil and natural gas properties or the payment of dividends by the Company. In connection with its finance and trading business conducted by its subsidiaries, Enron Capital & Trade Resources Corp. ("ECT") and Enron International Capital & Trade Corp. ("EICT"), Enron provides or arranges financing for others, including exploration and production companies, some of which compete with the Company. Enron may make investments in the debt or equity of such companies, may make loans secured by crude oil and natural gas properties or securities of crude oil and natural gas companies, may acquire production payments or may receive interests in crude oil and natural gas properties as equity components of lending transactions. As a result of its finance and trading business, Enron may also acquire crude oil and natural gas properties or companies upon foreclosure of secured loans or as part of a borrower's rearrangement of its obligations. Enron also has interests in entities such as Joint Energy Development Investments Limited Partnership, which makes debt and equity investments in energy-related businesses, including exploration and production companies. The acquisition, exploration, development and production activities of entities in which Enron has interests may directly or indirectly compete with the Company's business.

Business Opportunity Agreement. Enron Corp. and the Company have entered into an Equity Participation and Business Opportunity Agreement (the "Business Opportunity Agreement") that defines certain obligations that Enron owes to the Company and relieves Enron from certain obligations to the Company that it might otherwise have, including the obligation to offer certain business opportunities to the Company. Enron has advised the Company that, although it believes that it has conducted its business in a manner that is consistent with its duties as a majority shareholder of the Company, it was motivated to enter into the Business Opportunity Agreement because of the difficulty of determining the applicability of the law relating to duties that Enron may owe to the Company in connection with Enron's finance and trading business and because of Enron's desire to have more flexibility in pursuing business opportunities identified by or developed solely by Enron personnel. The Business Opportunity Agreement was approved by the board of directors of the Company after it was approved unanimously by a special committee of the board of directors consisting of the Company's independent directors. The special committee retained its own legal and financial advisers in connection with its evaluation of Enron's proposal, and the Business Opportunity Agreement as executed reflects significant concessions on Enron's part resulting from its negotiations with members of the special committee.

The Business Opportunity Agreement provides generally that, so long as such activities are conducted in compliance with the Business Opportunity Agreement in all material respects, Enron may pursue business opportunities independently of the Company. The Business Opportunity Agreement contains an acknowledgment by the Company that Enron's finance and trading business may result in the acquisition by Enron of oil and gas properties or companies and that in certain cases Enron or entities in which Enron has an interest may acquire such assets pursuant to bidding or auction processes in which the Company is also a bidder. In the Business Opportunity Agreement, the Company acknowledges and agrees that such activities may have an impact on the Company or the price it pays for properties or securities it purchases from others, that Enron or entities in which it has an interest may acquire direct or indirect interests in oil and gas properties or

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companies as a result of such activities, may own, operate and control any such assets in connection therewith, and may acquire additional oil and gas properties or companies or pursue opportunities related thereto in connection therewith, in each case without any duty to offer all or any portion of such assets or opportunities to the Company. The Business Opportunity Agreement contains an acknowledgment and agreement by the Company that, to the extent that a court might hold that the conduct of such activity is a breach of a duty to the Company (and without admitting that the conduct of such activity is such a breach of duty), the Company waives any and all claims and causes of action that it may have to claim that the conduct of such activity is a breach of a duty to the Company.

The Business Opportunity Agreement contains certain restrictions on the conduct of Enron's business. It also provides that, except with respect to business opportunities pursued jointly by Enron and the Company and except as otherwise agreed to between Enron and the Company, Enron's business will be conducted through the use of its own personnel and assets and not with the use of any personnel or assets of the Company. Thus, without the consent of the Company, the finance and trading business conducted by ECT, EICT or other Enron entities may only involve business opportunities identified by or presented to ECT personnel, EICT personnel or other Enron personnel and developed and pursued solely through the use of the personnel and assets of ECT, EICT or other Enron entities. Enron has agreed that, so long as it controls the Company, it will not pursue any business opportunity a majority of the value of which involves oil and gas properties if the opportunity is first presented to an officer or director of Enron who is also an officer or director of the Company at the time such opportunity is presented, unless Enron first offers such opportunity to the Company. The Business Opportunity Agreement states that its provisions relate exclusively to the duties that Enron owes the Company and that nothing in the Business Opportunity Agreement affects the fiduciary or other duties owed to the Company by any individual director or officer of the Company in his or her capacity as such. In this connection, Enron has agreed that its representatives on the Board of Directors of the Company will not, for the purpose of enabling Enron to pursue an opportunity in the oil and gas business, vote in such a manner as to effectively prevent, prohibit or restrict the Company from pursuing such opportunity.

In consideration for the Company's agreements in the Business Opportunity Agreement, Enron provided valuable consideration to the Company, including options to purchase common stock of Enron that will give the Company the opportunity to participate in future appreciation in value of Enron, including any appreciation in value resulting from activities that the Company has agreed to permit Enron and its subsidiaries to pursue. Enron granted the Company ten year options to purchase 3,200,000 shares of Enron common stock at $39.1875 per share, the closing price per share on the date that the Company's Board of Directors approved the Business Opportunity Agreement. The options vest in accordance with a schedule that provides that 25% vested immediately, 15% vest on the anniversary of the Business Opportunity Agreement in 1998 and 10% vest each anniversary thereafter until all of the options are vested. Vesting will be accelerated in the event of a change of control of the Company. For such purposes a "change of control" means that (a) Enron no longer owns capital stock of the Company representing at least 35% of the voting power for the election of directors and (b) a majority of the members of the board of directors of the Company consists of persons who are not officers or directors of Enron or any affiliate of Enron other than the Company. The Business Opportunity Agreement also included (i) an agreement to replace the existing services agreement, under which Enron provides certain services to the Company, with a new services agreement under which the Company's payments to Enron will be reduced by $2.8 million per year for certain of the services provided, (ii) an agreement by Enron relieving the Company of the obligation to bear the costs of any registration of sales by Enron of shares of Common Stock of the Company, (iii) an agreement by Enron to pay the costs of registration of the Company's sales of Enron common stock acquired upon exercise of the options granted in the Business Opportunity Agreement, (iv) an agreement that if Enron takes any action that results in the loss by the Company of its status as an "independent producer" under the Internal Revenue Code, Enron will pay the Company each year through 2006 the lesser of (a) $1 million and (b) an amount which, after payment of applicable taxes, will compensate the Company for the additional income tax liability resulting from the loss of independent producer status, (v) an agreement that if Enron requests that the Company relocate its offices, and if the Company agrees to do so, Enron will pay the Company's moving expenses, including expenses of building out or refurbishing the space in its new offices and expenses of removing and reinstalling the Company's telecommunications and information systems facilities and (vi) an agreement by Enron to

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reimburse the Company for the costs and expenses of legal and financial consultants retained to assist the special committee in connection with the Business Opportunity Agreement. In addition, pursuant to the Business Opportunity Agreement Enron agreed to cause its subsidiary, Houston Pipe Line Company, to enter into various agreements with the Company rearranging certain existing contractual arrangements between them, and Enron and the Company entered into a licensing agreement covering the Enron name and mark and recognizing that the EOG and EOGI names and marks belong to the Company. In the Business Opportunity Agreement Enron and the Company also entered into agreements in principle regarding the manner in which they will share the burdens and benefits of the integrated projects under joint development by Enron and the Company in Qatar, Mozambique and Uzbekistan. The agreements in principle provide generally that the Company's interests in these projects will be 20%, 20% and 80%, respectively, of the combined ownership interest of the Company and Enron.

The Business Opportunity Agreement also contains provisions that give Enron the right to maintain its equity interest in the Company at certain levels. It provides that if the Company issues additional shares of its capital stock Enron will have the right to purchase additional shares of capital stock of the Company as follows: (i) if Enron owns a majority interest, Enron will have the right to purchase sufficient shares to permit it to retain its majority interest; (ii) if Enron does not own a majority interest but accounts for the assets and operations of the Company on a consolidated basis for financial reporting purposes Enron will have the right to purchase sufficient shares to permit it to continue to account for the Company on a consolidated basis; and
(iii) if Enron accounts for the assets and operations of the Company using the equity method for financial reporting purposes Enron will have the right to purchase sufficient shares to permit it to continue to account for the Company using the equity method. Any such purchase by Enron will be for cash at 97% of the average closing price per share over a specified 20 day period (reflecting a 3% private placement discount).

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DESCRIPTION OF COMMON STOCK

AUTHORIZED AND OUTSTANDING CAPITAL STOCK

The authorized capital stock of the Company consists of 10,000,000 shares of Preferred Stock, par value $.01 per share (the "Preferred Stock"), none of which are outstanding, and 320,000,000 shares of Common Stock, $.01 par value, of which 155,064,256 shares were outstanding on December 31, 1997. The following summary description of the capital stock of the Company is qualified in its entirety by reference to the Restated Certificate of Incorporation of the Company, as amended, a copy of which is filed as an exhibit to the Registration Statements of which this Prospectus is a part.

The Board of Directors of the Company is authorized, subject to any limitations prescribed by law, to provide for the issuance of the shares of Preferred Stock in series, by filing a certificate pursuant to the applicable laws of the State of Delaware to establish from time to time the number of shares to be included in each such series, and to fix the powers, designations, preferences, and relative, participating, optional or other rights, if any, of the shares of each such series and any qualifications, limitations, or restrictions thereof, all without stockholder approval. Any future issuance of Preferred Stock, while providing desired flexibility in connection with acquisitions and other corporate purposes, could adversely affect the voting power or other rights of holders of Common Stock and the likelihood that such holders will receive dividend payments and payments upon liquidation, and could have the effect of delaying, deferring or preventing a change of control of the Company.

The Common Stock possesses ordinary voting rights for the election of directors and in respect to other corporate matters, each share being entitled to one vote. There are no cumulative voting rights, meaning that the holders of a majority of the shares voting for the election of directors can elect all the directors if they choose to do so. The Common Stock carries no preemptive rights and is not convertible, redeemable or assessable, or entitled to the benefits of any sinking fund. The holders of Common Stock are entitled to dividends in such amounts and at such times as may be declared by the Board of Directors out of funds legally available therefor.

Upon liquidation or dissolution, holders of Common Stock are entitled to share ratably in all net assets available for distribution to stockholders after payment of any corporate debts and any liquidation preference established for the Preferred Stock. All outstanding shares of Common Stock are duly authorized, validly issued, fully paid and nonassessable.

The transfer agent and registrar of the Common Stock is First Chicago Trust Company of New York, Jersey City, New Jersey.

LIMITATION ON DIRECTORS' LIABILITY

Delaware corporation law authorizes corporations to limit or eliminate the personal liability of directors to corporations and their stockholders for monetary damages for breach of directors' fiduciary duty of care. The duty of care requires that, when acting on behalf of the corporation, directors must exercise an informed business judgment based on all material information reasonably available to them. Absent the limitations authorized by such laws, directors are accountable to corporations and their stockholders for monetary damages for conduct constituting gross negligence in the exercise of their duty of care. The Delaware laws enable corporations to limit available relief to equitable remedies such as injunction or rescission. The Restated Certificate of Incorporation, as amended, of the Company limits the liability of directors of the Company to the Company or its stockholders (in their capacity as directors but not in their capacity as officers) to the fullest extent permitted by the Delaware law. Specifically, directors of the Company will not be personally liable for monetary damages for breach of a director's fiduciary duty as a director, except for liability (i) for any breach of the director's duty of loyalty to the Company or its stockholders, (ii) for acts or omissions not in good faith or which involve intentional misconduct or a knowing violation of law, (iii) for unlawful payments of dividends or unlawful stock repurchases or redemptions as provided in Section 174 of the Delaware General Corporation Law, or (iv) for any transaction from which the director derived an improper personal benefit.

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This provision in the Restated Certificate of Incorporation may have the effect of reducing the likelihood of derivative litigation against directors, and may discourage or deter stockholders or management from bringing a lawsuit against directors for breach of their duty of care, even though such an action, if successful, might otherwise have benefited the Company and its stockholders.

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PLAN OF DISTRIBUTION

The Company and/or the Selling Stockholder may sell the Securities offered hereby (i) through underwriters, brokers, dealers or agents; or (ii) directly to purchasers. In addition, the Selling Stockholder may sell any shares of Common Stock offered hereby from time to time in transactions (including block transactions in which the Selling Stockholder is the seller) on the NYSE or any other exchange on which the Common Stock may be traded, or in the over-the-counter market. The Selling Stockholder may also sell shares of Common Stock in special offerings, exchange distributions or secondary distributions in accordance with the rules of the NYSE or such other exchange, in negotiated transactions, including through the writing of call options or the purchase of put options on shares of the Common Stock (whether such options are listed on an options exchange or otherwise), pursuant to Rule 144, or otherwise. The Selling Stockholder may effect such transactions by selling shares of the Common Stock to or through underwriters, dealers, brokers or agents. Such underwriters, dealers, brokers or agents may sell such shares to institutional purchasers in one or more transactions (including block transactions) on the NYSE or otherwise. Any sales of the Securities may be made at market prices prevailing at the time of sale, at prices related to such prevailing market prices or at negotiated prices. If required in connection with a particular offering of Securities, a Prospectus Supplement with respect to such offering of Securities will set forth the terms of the offering of the Securities, including the name or names of any underwriters, dealers, brokers or agents, the purchase price of the Securities and the proceeds to the Company and/or the Selling Stockholder from such sale, any delayed delivery arrangements, any underwriting discounts and commissions and other items constituting underwriters' compensation, any initial public offering price and any discounts or concessions allowed or reallowed or paid to dealers. Any initial public offering price and any discounts or concessions allowed or reallowed or paid to dealers may be changed from time to time.

If underwriters are used in the sale, the Securities will be acquired by the underwriters for their own account and may be resold from time to time in one or more transactions, including negotiated transactions, at a fixed public offering price or at varying prices determined at the time of sale. In connection with the sale of the Securities, underwriters, brokers, dealers or agents may be deemed to have received compensation from the Company or the Selling Stockholder in the form of underwriting discounts or commissions and may also receive commissions from purchasers of the Securities for whom they may act as agent or to whom they may sell as principal. Underwriters or agents may sell the Securities to or through dealers, and such dealers may receive compensation in the form of discounts, concessions or commissions from the underwriters or commissions from the purchasers for whom they may act as agent. The Securities may be offered to the public either through underwriting syndicates represented by one or more managing underwriters or directly by one or more firms acting as underwriters. The underwriter or underwriters with respect to a particular underwritten offering of Securities will be named in the Prospectus Supplement relating to such offering and, if an underwriting syndicate is used, the managing underwriter or underwriters will be set forth on the cover of such Prospectus Supplement. Unless otherwise set forth in the Prospectus Supplement relating thereto, the obligations of the underwriters to purchase the Securities will be subject to certain conditions precedent, and the underwriters will be obligated to purchase all the Securities offered if any are purchased.

In connection with an offering, the underwriters may purchase and sell the securities offered in the open market. These transactions may include over-allotment and stabilizing transactions and purchases to cover short positions created by the underwriters in connection with the offering. Stabilizing transactions consist of certain bids or purchases for the purpose of preventing or retarding a decline in the market price of the securities offered; and short positions created by the underwriters involve the sale by the underwriters of a greater number of securities than they are required to purchase from the Company in the offering. The underwriters may also impose a penalty bid, whereby selling concessions allowed to broker-dealers in respect of the securities sold in the offering may be reclaimed by the underwriters if such securities are repurchased by the underwriters in stabilizing or covering transactions. These activities may stabilize, maintain or otherwise affect the market price of the securities offered, which may be higher than the price that might otherwise prevail in the open market; and these activities, if commenced, may be discontinued at any time. These transactions may be effected in the over-the-counter market or otherwise.

18

If dealers are utilized in the sale of Securities, the Company and/or the Selling Stockholder will sell such Securities to the dealers as principals. The dealers may then resell such Securities to the public at varying prices to be determined by such dealers at the time of resale. To the extent required, the names of dealers or brokers acting as dealers and the terms of the transaction will be set forth in the Prospectus Supplement relating thereto.

The Securities may be sold directly by the Company and/or the Selling Stockholder or through agents designated by the Company and/or the Selling Stockholder from time to time. To the extent required, any agent involved in the offer or sale of the Securities in respect to which this Prospectus is delivered will be named, and any commissions payable by the Company and/or the Selling Stockholder to such agent will be set forth, in the Prospectus Supplement relating thereto. Unless otherwise indicated in the Prospectus Supplement, any such agent will be acting on a best efforts basis for the period of its appointment.

If so indicated in the Prospectus Supplement, the Company and/or the Selling Stockholder will authorize agents, underwriters, brokers or dealers to solicit offers from certain types of institutions to purchase Securities from the Company and/or the Selling Stockholder at the public offering price set forth in the Prospectus Supplement pursuant to delayed delivery contracts providing for payment and delivery on a specified date in the future. Such contracts will be subject only to those conditions set forth in the Prospectus Supplement, and the Prospectus Supplement will set forth the commission payable for solicitation of such contracts.

The Securities (other than the Common Stock), when first issued, will have no established trading market. Any underwriters or agents to or through whom Securities are sold by the Company or the Selling Stockholder for public offering and sale may make a market in such Securities, but such underwriters or agents will not be obligated to do so and may discontinue any market making at any time without notice. No assurance can be given as to the liquidity of the trading market for any such Securities.

Agents, brokers, dealers and underwriters may be entitled under agreements with the Company and/or the Selling Stockholder to indemnification by the Company against certain civil liabilities, including liabilities under the Securities Act, or to contribution with respect to payments which such agents, brokers, dealers or underwriters may be required to make in respect thereof. Agents, brokers, dealers and underwriters may be customers of, engage in transactions with or perform services for the Company or the Selling Stockholder in the ordinary course of business.

VALIDITY OF SECURITIES

The validity of the Securities offered hereby will be passed upon for the Company by Barry Hunsaker, Jr., Esq., Senior Vice President and General Counsel of the Company, and for the Underwriters by Bracewell & Patterson, L.L.P. Mr. Hunsaker owns substantially less than 1% of the outstanding shares of Common Stock. Bracewell & Patterson, L.L.P. provides services to the Company and to Enron Corp. and certain of its subsidiaries and affiliates on matters unrelated to the offering of the Securities.

EXPERTS

The consolidated financial statements and schedule included in the Company's Annual Report on Form 10-K for the year ended December 31, 1996, incorporated by reference in this Prospectus, have been audited by Arthur Andersen LLP, independent public accountants, as indicated in their report with respect thereto, and are incorporated by reference herein in reliance upon the authority of said firm as experts in accounting and auditing in giving said report.

The letter report of DeGolyer and MacNaughton, independent petroleum consultants, included as an exhibit to the Company's Annual Report on Form 10-K for the year ended December 31, 1996, and the estimates from the reports of that firm appearing in such Annual Report, are incorporated by reference herein on the authority of said firm as experts in petroleum engineering and in giving such reports.

19

PART II

INFORMATION NOT REQUIRED IN PROSPECTUS

ITEM 14. OTHER EXPENSES OF ISSUANCE AND DISTRIBUTION.

The following table sets forth those expenses to be incurred by the Company in connection with the issuance and distribution of the securities being registered. Except for the Securities and Exchange Commission registration fee, all amounts shown are estimates.

Filing Fee for Registration Statement.......................  $ 88,500
Legal Fees and Expenses.....................................    60,000
Accounting Fees and Expenses................................    10,000
Transfer Agent's and Trustee's Fees and Expenses............    15,000
Blue Sky Fees and Expenses..................................    10,000
Printing and Engraving Expenses.............................    50,000
Miscellaneous...............................................    21,500
                                                              --------
Total.......................................................  $255,000
                                                              ========

ITEM 15. INDEMNIFICATION OF OFFICERS AND DIRECTORS.

The Restated Certificate of Incorporation, as amended, of the Company (the "Corporation" therein) contains the following provisions relating to indemnification of directors and officers, namely:

"Eighth: A.1. A director of the Corporation shall not be personally liable to the Corporation or its stockholders for monetary damages for breach of fiduciary duty as a director, except for liability (i) for any breach of the director's duty of loyalty to the Corporation or its stockholders, (ii) for acts or omissions not in good faith or which involve intentional misconduct or a knowing violation of law, (iii) under Section 174 of the Delaware General Corporation Law, or (iv) for any transaction from which the director derived an improper personal benefit.

2. The foregoing provisions of this Article shall not eliminate or limit the liability of a director for any act or omission occurring prior to the effective date of this Restated Certificate of Incorporation. Any repeal or amendment of this Article by the stockholders of the Corporation shall be prospective only and shall not adversely affect any limitation on the personal liability of a director of the Corporation existing at the time of such repeal or amendment. In addition to the circumstances in which a director of the Corporation is not personally liable as set forth in the foregoing provisions of this Article, a director shall not be liable to the fullest extent permitted by any amendment to the Delaware General Corporation Law enacted that further limits the liability of a director.

B.1. Each person who was or is made a party or is threatened to be made a party to or is involved in any action, suit or proceeding, whether civil, criminal, administrative or investigative (hereinafter a "proceeding"), by reason of the fact that he or she, or a person of whom he or she is the legal representative, is or was a director or officer, of the Corporation or is or was serving at the request of the Corporation as a director, officer, employee or agent of another corporation or of a partnership, joint venture, trust or other enterprise, including service with respect to employee benefit plans, whether the basis of such proceeding is alleged action in an official capacity as a director, officer, employee or agent or in any other capacity while serving as a director, officer, employee or agent, shall be indemnified and held harmless by the Corporation to the fullest extent authorized by the Delaware General Corporation Law, as the same exists or may hereafter be amended (but, in the case of any such amendment, only to the extent that such amendment permits the Corporation to provide broader indemnification rights than said law permitted the Corporation to provide prior to such amendment), against all expense, liability and loss (including attorneys' fees, judgments, fines, ERISA excise taxes or penalties and amounts paid or to be paid in settlement) reasonably incurred or suffered by such person in connection therewith, and such indemnification shall continue as to a person who has ceased to be a director, officer, employee or agent

II-1


and shall inure to the benefit of his or her heirs, executors and administrators; provided, however, that, except as provided in paragraph 2. hereof, the Corporation shall indemnify any such person seeking indemnification in connection with a proceeding (or part thereof) initiated by such person only if such proceeding (or part thereof) was authorized by the Board of Directors of the Corporation. The right to indemnification conferred in this Section shall be a contract right and shall include the right to be paid by the Corporation the expenses incurred in defending any such proceeding in advance of its final disposition; provided, however, that, if the Delaware General Corporation Law requires, the payment of such expenses incurred by a director or officer in his or her capacity as a director or officer (and not in any other capacity in which service was or is rendered by such person while a director or officer, including, without limitation, service to an employee benefit plan) in advance of the final disposition of the proceeding, shall be made only upon delivery to the Corporation of an undertaking, by or on behalf of such director or officer, to repay all amounts so advanced if it shall ultimately be determined that such director or officer is not entitled to be indemnified under this Article or otherwise. The Corporation may, by action of its Board of Directors, provide indemnification to employees and agents of the Corporation with the same scope and effect as the foregoing indemnification of directors and officers.

2. If a claim under paragraph B.1. of this Article is not paid in full by the Corporation within thirty days after a written claim has been received by the Corporation, the claimant may at any time thereafter bring suit against the Corporation to recover the unpaid amount of the claim and, if successful in whole or in part, the claimant shall be entitled to be paid also the expense of prosecuting such claim. It shall be a defense to any such action (other than an action brought to enforce a claim for expenses incurred in defending any proceeding in advance of its final disposition where the required undertaking, if any is required, has been tendered to the Corporation) that the claimant has not met the standards of conduct which make it permissible under the Delaware General Corporation Law for the Corporation to indemnify the claimant for the amount claimed, but the burden of proving such defense shall be on the Corporation. Neither the failure of the Corporation (including its Board of Directors, independent legal counsel, or its stockholders) to have made a determination prior to the commencement of such action that indemnification of the claimant is proper in the circumstances because he or she has met the applicable standard of conduct set forth in the Delaware General Corporation Law, nor an actual determination by the Corporation (including its Board of Directors, independent legal counsel, or its stockholders) that the claimant has not met such applicable standard of conduct, shall be a defense to the action or create a presumption that the claimant has not met the applicable standard of conduct.

3. The right to indemnification and the payment of expenses incurred in defending a proceeding in advance of its final disposition conferred in this Article shall not be exclusive of any other right which any person may have or hereafter acquire under any statute, provision of the Certificate of Incorporation, by-law, agreement, vote of stockholders or disinterested directors or otherwise.

4. The Corporation may maintain insurance, at its expense, to protect itself and any director, officer, employee or agent of the Corporation or another corporation, partnership, joint venture, trust or other enterprise against any such expense, liability or loss, whether or not the Corporation would have the power to indemnify such person against such expense, liability or loss under the Delaware General Corporation Law.

5. If this Article or any portion hereof shall be invalidated on any ground by any court of competent jurisdiction, then the Corporation shall nevertheless indemnify and hold harmless each director, officer, employee and agent of the Corporation, and may nevertheless indemnify and hold harmless each employee and agent of the Corporation, as to costs, charges and expenses (including attorneys' fees), judgments, fines, and amounts paid in settlement with respect to any action, suit or proceeding, whether civil, criminal, administrative or investigative to the full extent permitted by any applicable portion of this Article that shall not have been invalidated and to the full extent permitted by applicable law.

6. For purposes of this Article, reference to the "Corporation" shall include, in addition to the Corporation, any constituent corporation (including any constituent of a constituent) absorbed in a consolidation or merger prior to (or, in the case of an entity specifically designated in a resolution of the

II-2


Board of Directors, after) the adoption hereof and which, if its separate existence had continued, would have had the power and authority to indemnify its directors, officers and employees or agents, so that any person who is or was a director, officer, employee or agent of such constituent corporation, or is or was serving at the request of such constituent corporation as a director, officer, employee or agent of another corporation, partnership, joint venture, trust or other enterprise, shall stand in the same position under the provisions of this Article with respect to the resulting or surviving corporation as he would have with respect to such constituent corporation if its separate existence had continued."

The Forms of Underwriting Agreement and Agency Agreement filed herewith as Exhibit 1(a) and Exhibit 1(b), respectively, under certain specified circumstances, provide for indemnification by the Underwriters or Agents, respectively, of the directors, officers who sign the Registration Statement and controlling persons of the Company.

The Company has purchased liability insurance policies covering the directors and officers of the Company to provide protection where the Company cannot legally indemnify a director or officer and where a claim arises under the Employee Retirement Income Security Act of 1974 against a director or officer based on an alleged breach of fiduciary duty or other wrongful act.

ITEM 16. EXHIBITS

EXHIBIT NO.                                DESCRIPTION
-----------                                -----------
  *1(a)            -- Form of Underwriting Agreement -- Debt Securities
                      (Exhibit 1(a) to Form S-3 Registration Statement No.
                      333-18511, filed December 20, 1996).
  *1(b)            -- Form of Agency Agreement for Sales of Common Stock of
                      Enron Oil & Gas Company (Exhibit 1(b) to Amendment No. 1
                      to Form S-3 Registration Statement No. 333-09919, filed
                      September 11, 1996).
  *3(a)            -- Restated Certificate of Incorporation of Enron Oil & Gas
                      Company (Exhibit 3.1 to Form S-1 Registration Statement
                      No. 33-30678, filed August 24, 1989).
  *3(b)            -- Certificate of Amendment of Restated Certificate of
                      Incorporation of Enron Oil & Gas Company (Exhibit 4.1(b)
                      to Form S-8 Registration Statement No. 33-52201, filed
                      February 8, 1994).
  *3(c)            -- Certificate of Amendment of Restated Certificate of
                      Incorporation of Enron Oil & Gas Company (Exhibit 4.1(c)
                      to Form S-8 Registration Statement No. 33-58103, filed
                      March 15, 1995).
  *3(d)            -- Certificate of Amendment of Restated Certificate of
                      Incorporation of Enron Oil & Gas Company, dated June 11,
                      1996 (Exhibit 3(d) to Form S-3 Registration Statement No.
                      333-09919, filed August 9, 1996).
  **3(e)           -- Certificate of Amendment of Restated Certificate of
                      Incorporation of Enron Oil & Gas Company, dated May 7,
                      1997.
  *3(f)            -- Bylaws of Enron Oil & Gas Company (Exhibit 3.2 to Enron
                      Oil & Gas Company Annual Report on Form 10-K for the year
                      ended December 31, 1995).
  *4(a)            -- Form of Indenture dated as of September 1, 1991, between
                      Enron Oil & Gas Company and Texas Commerce Bank National
                      Association (Exhibit 4(a) to Registration Statement No.
                      33-42640, filed September 6, 1991).
  *4(b)            -- Form of Debt Security, included in Exhibit 4(a).
  *4(c)            -- Specimen of Certificate evidencing the Common Stock
                      (Exhibit 3.3 to Form S-1 Registration Statement No.
                      33-30678, filed August 24, 1989).
 **5               -- Opinion of Barry Hunsaker, Jr., Esq., Senior Vice
                      President and General Counsel of Enron Oil & Gas Company.

II-3


EXHIBIT NO.                                DESCRIPTION
-----------                                -----------
**10               -- Equity Participation and Business Opportunity Agreement
                      dated December 9, 1997 between Enron Oil & Gas Company
                      and Enron Corp.
 *12               -- Computation of Ratios of Earnings to Fixed Charges
                      (Exhibit 12 to Form 10-Q for quarter ended September 30,
                      1996).
**23(a)            -- Consent of Arthur Andersen LLP.
**23(b)            -- Consent of DeGolyer and MacNaughton.
  23(c)            -- The consent of Barry Hunsaker, Jr., Esq. is contained in
                      his opinion filed as Exhibit 5 hereto.
**24               -- Powers of Attorney.
**25               -- Form T-1 Statement of Eligibility under the Trust
                      Indenture Act of 1939 of Chase Bank of Texas, National
                      Association, (formerly named Texas Commerce Bank National
                      Association).


* Incorporated by reference as indicated.

** Filed herewith.

ITEM 17. UNDERTAKINGS

The undersigned Registrant hereby undertakes:

(1) To file, during any period in which offers or sales are being made, a post-effective amendment to each Registration Statement:

(i) To include any prospectus required in Section 10(a)(3) of the Securities Act of 1933;

(ii) To reflect in the prospectus any facts or events arising after the effective date of each Registration Statement (or the most recent post-effective amendment thereof) which, individually or in the aggregate, represent a fundamental change in the information set forth in the Registration Statement. Notwithstanding the foregoing, any increase or decrease in volume of securities offered (if the total dollar value of securities offered would not exceed that which was registered) and any deviation from the low or high end of the estimated maximum offering range may be reflected in the form of prospectus filed with the Commission pursuant to Rule 424(b) if, in the aggregate, the changes in volume and price represent no more than a 20% change in the maximum aggregate offering price set forth in the "Calculation of Registration Fee" table in the effective registration statement;

(iii) To include any material information with respect to the plan of distribution not previously disclosed in the Registration Statement or any material change to such information in the Registration Statement;

provided, however, that paragraphs (1)(i) and (1)(ii) do not apply if the Registration Statement is on Form S-3, Form S-8 or Form F-3 and the information required to be included in a post-effective amendment by those paragraphs is contained in periodic reports filed by the Registrant pursuant to section 13 or section 15(d) of the Securities Exchange Act of 1934 that are incorporated by reference in the Registration Statement;

(2) That, for the purpose of determining any liability under the Securities Act of 1933, each such post-effective amendment shall be deemed to be a new registration statement relating to the securities offered therein, and the offering of such securities at that time shall be deemed to be the initial bona fide offering thereof.

II-4


(3) To remove from registration by means of a post-effective amendment any of the securities being registered which remain unsold at the termination of the offering.

(4) That, for purposes of determining any liability under the Securities Act of 1933, each filing of the Company's annual report pursuant to section 13(a) or section 15(d) of the Securities Exchange Act of 1934 (and, where applicable, each filing of an employee benefit plan's annual report pursuant to section 15(d) of the Securities Exchange Act of 1934) that is incorporated by reference in the Registration Statement shall be deemed to be a new registration statement relating to the securities offered therein, and the offering of such securities at that time shall be deemed to be the initial bona fide offering thereof.

(5) To deliver or cause to be delivered with the prospectus, to each person to whom the prospectus is sent or given, the latest annual report to security holders that is incorporated by reference in the prospectus and furnished pursuant to and meeting the requirements of Rule 14a-3 or Rule 14c-3 under the Securities Exchange Act of 1934; and, where interim financial information required to be presented by Article 3 of Regulation S-X is not set forth in the prospectus, to deliver or cause to be delivered to each person to whom the prospectus is sent or given, the latest quarterly report that is specifically incorporated by reference in the prospectus to provide such interim financial information.

Insofar as indemnification for liabilities arising under the Securities Act of 1933 may be permitted to directors, officers and controlling persons of the Registrant pursuant to the provisions described under Item 15 above, or otherwise, the Registrant has been advised that in the opinion of the Securities and Exchange Commission such indemnification is against public policy as expressed in the Act and is, therefore, unenforceable. In the event that a claim for indemnification against such liabilities (other than the payment by the Registrant of expenses incurred or paid by a director, officer or controlling person of the Registrant in the successful defense of any action, suit or proceeding) is asserted by such director, officer or controlling person in connection with the securities being registered, the Registrant will, unless in the opinion of its counsel the matter has been settled by controlling precedent, submit to a court of appropriate jurisdiction the question whether such indemnification by it is against public policy as expressed in the Act and will be governed by the final adjudication of such issue.

II-5


SIGNATURES

Pursuant to the requirements of the Securities Act of 1933, Enron Oil & Gas Company certifies that it has reasonable grounds to believe that it meets all of the requirements for filing on Form S-3 and has duly caused this Registration Statement or amendment to be signed on its behalf by the undersigned, thereunto duly authorized in the City of Houston, State of Texas, on the 23rd day of January, 1998.

ENRON OIL & GAS COMPANY
(Registrant)

By:    /s/ WALTER C. WILSON
  ----------------------------------
          (Walter C. Wilson)
   Senior Vice President and Chief
           Financial Officer

Pursuant to the requirements of the Securities Act of 1933, this Registration Statement or amendment has been signed by the following persons in the capacities with Enron Oil & Gas Company indicated and on the 23rd day of January, 1998.

                      SIGNATURE                                            TITLE
                      ---------                                            -----

               /s/ FORREST E. HOGLUND                  Chairman of the Board and Chief Executive
-----------------------------------------------------    Officer and Director (Principal Executive
                (Forrest E. Hoglund)                     Officer)

                /s/ WALTER C. WILSON                   Senior Vice President and Chief Financial
-----------------------------------------------------    Officer (Principal Financial Officer)
                 (Walter C. Wilson)

                   /s/ BEN B. BOYD                     Vice President and Controller
-----------------------------------------------------    (Principal Accounting Officer)
                    (Ben B. Boyd)

                   FRED C. ACKMAN*                     Director
-----------------------------------------------------
                  (Fred C. Ackman)

                JAMES V. DERRICK, JR.*                 Director
-----------------------------------------------------
               (James V. Derrick, Jr.)

                   KEN L. HARRISON*                    Director
-----------------------------------------------------
                  (Ken L. Harrison)

                   KENNETH L. LAY*                     Director
-----------------------------------------------------
                  (Kenneth L. Lay)

                 EDWARD RANDALL, III*                  Director
-----------------------------------------------------
                (Edward Randall, III)

                 JEFFREY K. SKILLING*                  Director
-----------------------------------------------------
                (Jeffrey K. Skilling)

                   FRANK G. WISNER*                    Director
-----------------------------------------------------
                  (Frank G. Wisner)

               *By /s/ ANGUS H. DAVIS
  -------------------------------------------------
                  (Angus H. Davis)
      (Attorney-in-fact for persons indicated)

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INDEX TO EXHIBITS

 EXHIBIT
  NUMBER                            DESCRIPTION
 -------                            -----------
 *1(a)      -- Form of Underwriting Agreement -- Debt Securities
               (Exhibit 1(a) to Form S-3 Registration Statement No.
               333-18511, filed December 20, 1996).
 *1(b)      -- Form of Agency Agreement for Sales of Common Stock of
               Enron Oil & Gas Company (Exhibit 1(b) to Amendment No. 1
               to Form S-3 Registration Statement No. 333-09919, filed
               September 11, 1996).
 *3(a)      -- Restated Certificate of Incorporation of Enron Oil & Gas
               Company (Exhibit 3.1 to Form S-1 Registration Statement
               No. 33-30678, filed August 24, 1989).
 *3(b)      -- Certificate of Amendment of Restated Certificate of
               Incorporation of Enron Oil & Gas Company (Exhibit 4.1(b)
               to Form S-8 Registration Statement No. 33-52201, filed
               February 8, 1994).
 *3(c)      -- Certificate of Amendment of Restated Certificate of
               Incorporation of Enron Oil & Gas Company (Exhibit 4.1(c)
               to Form S-8 Registration Statement No. 33-58103, filed
               March 15, 1995).
 *3(d)      -- Certificate of Amendment of Restated Certificate of
               Incorporation of Enron Oil & Gas Company, dated June 11,
               1996 (Exhibit 3(d) to Form S-3 Registration Statement No.
               333-09919, filed August 9, 1996).
  3(e)      -- Certificate of Amendment of Restated Certificate of
               Incorporation of Enron Oil & Gas Company, dated May 7,
               1997.
 *3(f)      -- Bylaws of Enron Oil & Gas Company (Exhibit 3.2 to Enron
               Oil & Gas Company Annual Report on Form 10-K for the year
               ended December 31, 1995).
 *4(a)      -- Form of Indenture dated as of September 1, 1991, between
               Enron Oil & Gas Company and Texas Commerce Bank National
               Association (Exhibit 4(a) to Registration Statement No.
               33-42640, filed September 6, 1991).
 *4(b)      -- Form of Debt Security, included in Exhibit 4(a).
 *4(c)      -- Specimen of Certificate evidencing the Common Stock
               (Exhibit 3.3 to Form S-1 Registration Statement No.
               33-30678, filed August 24, 1989).
  5         -- Opinion of Barry Hunsaker, Jr., Esq., Senior Vice
               President and General Counsel of Enron Oil & Gas Company.
 10         -- Equity Participation and Business Opportunity Agreement
               dated December 9, 1997 between Enron Oil & Gas Company
               and Enron Corp.
*12         -- Computation of Ratios of Earnings to Fixed Charges
               (Exhibit 12 to Form 10-Q for quarter ended September 30,
               1996).
 23(a)      -- Consent of Arthur Andersen LLP.
 23(b)      -- Consent of DeGolyer and MacNaughton.
 23(c)      -- The consent of Barry Hunsaker, Jr., Esq. is contained in
               his opinion filed as Exhibit 5 hereto.
 24         -- Powers of Attorney.
 25         -- Form T-1 Statement of Eligibility under the Trust
               Indenture Act of 1939 of Chase Bank of Texas, National
               Association (formerly named Texas Commerce Bank National
               Association).


* Incorporated by reference as indicated.


EXHIBIT 3(e)

State of Delaware

Office of the Secretary of State


I, EDWARD J. FREEL, SECRETARY OF STATE OF THE STATE OF DELAWARE, DO HEREBY CERTIFY THAT ATTACHED IS A TRUE AND CORRECT COPY OF THE CERTIFICATE OF AMENDMENT OF "ENRON OIL & GAS COMPANY", FILED IN THIS OFFICE ON THE SEVENTH DAY OF MAY, A.D. 1997, AT 2 O'CLOCK P.M.

                                        /s/ Edward J. Freel
                                        ------------------------------------
                                        Edward J. Freel, Secretary of State

2064000    8100                                     AUTHENTICATION:     8470052

971161469                                                    DATE:     05-16-97


CERTIFICATE OF AMENDMENT
OF
RESTATED CERTIFICATE OF INCORPORATION
OF
ENRON OIL & GAS COMPANY

Enron Oil & Gas Company, a corporation organized and existing under the General Corporation Law of the State of Delaware (the "Company"), does hereby certify that:

The amendment to the Company's Restated Certificate of Incorporation set forth in the following resolution approved by the Company's Board of Directors and stockholders was duly adopted in accordance with the provisions of Section 242 of the General Corporation Law of the State of Delaware:

"RESOLVED, that the Restated Certificate of Incorporation of the Company is hereby amended by deleting Article Fourth thereof in its entirety and substituting the following therefor:

"FOURTH: A. The total number of shares of all classes of stock that the Corporation shall have authority to issue is Three Hundred Thirty Million (330,000,000) shares, consisting of Three Hundred Twenty Million (320,000,000) shares of common stock, par value $.01 per share (hereinafter referred to as "Common Stock") and Ten Million (10,000,000) shares of preferred stock, par value $.01 per share (hereinafter referred to as "Preferred Stock").

B. The board of directors of the Corporation is authorized, subject to any limitations prescribed by law, to provide for the issuance of the shares of Preferred Stock in series, by filing a certificate pursuant to the applicable laws of the State of Delaware (hereinafter referred to as a "Preferred Stock Designation") to establish from time to time the number of shares to be included in each such series, and to fix the powers, designations, preferences, and relative, participating, optional or other rights, if any, of the shares of each such series and any qualifications, limitations, or restrictions thereof.


C. Each holder of shares of Common Stock shall be entitled to one vote for each share of Common Stock held of record on all matters on which the holders of shares of Common Stock are entitled to vote."

IN WITNESS WHEREOF, Enron Oil & Gas Company has caused this Certificate to be signed and attested by its duly authorized officers, this 7th day of May, 1997.

ATTEST:                                    ENRON OIL & GAS COMPANY

By:/s/ Barry Hunsaker, Jr.                 By:/s/ Forrest E. Hoglund
   ----------------------------               -----------------------------
       Barry Hunsaker, Jr.                        Forrest E. Hoglund
       Senior Vice President,                     Chairman and Chief
       General Counsel and                        Executive Officer
       Assistant Secretary

Page 3

EXHIBIT 5

Barry Hunsaker, Jr.
Senior Vice President
and General Counsel
Enron Oil & Gas Company
P.O. Box 1188
Houston, TX 77251-1188

January 22, 1998

Enron Oil & Gas Company
1400 Smith Street
Houston, Texas 77002

Gentlemen:

As Senior Vice President and General Counsel of Enron Oil & Gas Company, a Delaware corporation (the "Company"), I am familiar with Registration Statement No. 333-18511 on Form S-3 declared effective by the Securities and Exchange Commission (the "Commission") on February 12, 1997, and the Registration Statement on Form S-3 (Post-Effective Amendment No. 1 to Registration Statement No. 333-18511) currently being filed with the Commission (collectively, the "Registration Statement") relating to the proposed offering by the Company from time to time of up to an aggregate amount of $413,207,962 of Company Debt Securities and/or Common Stock, par value $.01 per share, and the proposed offering by Enron Corp. from time to time of up to 4,940,000 shares of Common Stock of the Company (the Debt Securities and Common Stock collectively referred to herein as the "Securities"). In connection therewith, I have examined, among other things, a copy of the Restated Certificate of Incorporation and Bylaws of the Company as amended to the date hereof, the corporate proceedings taken to date with respect to the authorization, issuance and sale of the Securities, a copy of the Indenture dated as of September 1, 1991 (the "Indenture") between the Company and Texas Commerce Bank National Association, as Trustee, and I have performed such other investigations as I have considered appropriate as the basis for the opinions expressed herein. Capitalized terms used but not defined herein are used as defined in the Registration Statement.

Based on the foregoing, I am of the opinion that:

1. The Company is a corporation duly incorporated, validly existing and in good standing under the laws of the State of Delaware.

2. The Debt Securities of the Company covered by the Registration Statement have been validly authorized for issuance, and (subject to the Registration Statement becoming effective and any applicable


state securities or Blue Sky laws being complied with), when the terms thereof and of their issue and sale have been duly established, upon issuance and delivery thereof as set forth in the Registration Statement, and upon receipt by the Company of the purchase price thereof, the Debt Securities will be validly issued and will be binding obligations of the Company.

3. The issuance of the shares of Common Stock to be issued by the Company pursuant to the Registration Statement has been duly authorized, and (subject to the Registration Statement becoming effective and applicable Blue Sky laws being complied with), when the terms of their issue and sale have been duly established, upon the issuance and delivery thereof as set forth in the Registration Statement, and upon the receipt by the Company of the purchase price thereof, such shares of Common Stock will be validly issued, fully paid and nonassessable.

4. The shares of Common Stock of the Company to be sold by the Selling Stockholder pursuant to the Registration Statement are, and upon sale will be, validly issued, fully paid and nonassessable.

I am a member of the bar of the State of Texas. The opinions set forth above are limited in all respects to the laws of the State of Texas, the General Corporation Law of the State of Delaware and federal law.

I hereby consent to the filing of this opinion as an exhibit to the Registration Statement and to the references to me under the caption "Validity of Securities" in the Prospectus constituting part of the Registration Statement and to the filing of this opinion as an exhibit thereto. By giving such consent, I do not admit that I am an expert with respect to any part of the Registration Statement, including this exhibit, within the meaning of the term "expert" as used in the Securities Act of 1933, as amended, or the rules and regulations of the Commission issued thereunder.

Very truly yours,

/s/ Barry Hunsaker, Jr.

Barry Hunsaker, Jr.


EXHIBIT 10

EXECUTION COPY

EQUITY PARTICIPATION AND BUSINESS OPPORTUNITY AGREEMENT

This Equity Participation and Business Opportunity Agreement ("Agreement") is made and entered into as of December 9, 1997, by and between Enron Oil & Gas Company, a Delaware corporation, and Enron Corp., an Oregon corporation.

WHEREAS, EOG is engaged in the exploration for and the development, production and marketing of natural gas and crude oil in the United States and internationally; and

WHEREAS, a majority of the outstanding capital stock of EOG is owned by Enron; the remaining shares are owned by the public; and Enron may have certain duties to EOG resulting from its ownership of EOG; and

WHEREAS, ECT (as defined below) and EII (as defined below) are wholly-owned subsidiaries of Enron; ECT and EII are engaged in the Finance and Trading Business (as defined below), and their activities in such business include without limitation activities involving the E&P Business (as defined below) and may have an impact on EOG; and

WHEREAS, Enron engages in other activities that may have an impact on EOG; and

WHEREAS, the application of the law relating to duties that Enron may owe to EOG in particular circumstances is often difficult to predict; and if a court were to hold that Enron breached any such duty Enron could be held liable for damages in a legal action brought on behalf of EOG; and

WHEREAS, EOG and Enron desire to enter into this Agreement in order
(i) to define duties that Enron will owe to EOG with respect to business opportunities and rights that Enron will have with respect to business opportunities and (ii) to specify circumstances in which no breach of duty will be deemed to have occurred; and

WHEREAS, Enron and EOG desire to enter into other agreements that relate to matters of concern to each of them; and

WHEREAS, Enron desires to provide valuable consideration to EOG, including options to purchase Common Stock of Enron that will give EOG the opportunity to participate in future appreciation in value of Enron and including other financial benefits;

NOW, THEREFORE, in consideration of the mutual covenants, rights, and obligations set forth in this Agreement, and the benefits to be derived herefrom, and other good and valuable consideration, the receipt and the sufficiency of which each of the parties hereto acknowledges and confesses, the parties hereto agree as follows:


1. Certain Defined Terms; Exhibits. In addition to the terms defined in this Agreement, the capitalized terms used in this Agreement will have the meanings ascribed to such terms in Exhibit A hereto. Exhibit A and each other exhibit to this Agreement are hereby made a part of this Agreement as if set forth in full in this Agreement

2. Representation by Enron. Enron represents and warrants to EOG that it has disclosed to the chief executive officer and the other directors of EOG all information in Enron's possession that is material to a decision by EOG to enter into this Agreement. Enron also represents that it has furnished to the chief executive officer of EOG, to the other directors of EOG and to the attorneys and financial advisers retained by the special committee of the Board of Directors of EOG access to all information in Enron's possession necessary to permit such persons to verify the accuracy of the information furnished.

3. Agreement by EOG Regarding Enron Business Activities. EOG acknowledges and agrees that, so long as such activities are conducted in compliance with this Agreement in all material respects (including the provisions of Section 4 hereof), Enron is free to conduct business activities that are within Enron's traditional lines of business and any other lines of business in which Enron chooses to engage in the future. Without limiting the foregoing, EOG acknowledges and agrees that, so long as such activities are conducted in compliance with this Agreement in all material respects (including the provisions of Section 4 hereof), Enron may engage in the Finance and Trading Business, including without limitation activities in such business involving the E&P Business, and that such Finance and Trading Business may include without limitation activities such as those conducted by ECT directly or through ECT Securities Corp. ("ECT Securities"), Joint Energy Development Investments Limited Partnership and Cactus Hydrocarbon III Limited Partnership, pursuant to which ECT provides funds to third parties in return for production payments or other property interests, including without limitation capital stock, partnership interests, debentures, notes or oil and gas royalty, overriding royalty, net profits or working interests or other securities or property, or pursuant to which ECT Securities arranges for transactions in securities for the account of others or underwrites securities. EOG also agrees that, so long as such activities are conducted in compliance with this Agreement in all material respects (including the provisions of Section 4 hereof), such Finance and Trading Business may include without limitation activities such as those proposed to be conducted by EII. In connection with the foregoing, EOG acknowledges that such activities may result in the acquisition by Enron of E&P Business Assets, and in certain cases Enron or entities in which Enron has an interest may acquire E&P Business Assets pursuant to bidding or auction processes in which EOG is also a bidder. EOG acknowledges and agrees that such activities may have an impact on EOG or the price it pays for properties or securities it purchases from others. EOG acknowledges and agrees that Enron or entities in which it has an interest may acquire direct or indirect interests in E&P Business Assets as a result of the activities described above, may own, operate and control any such assets in connection therewith, and may acquire additional E&P Business Assets or pursue opportunities related thereto in connection therewith, in each case without any duty to offer all or any portion of such assets or opportunities to EOG.

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4. Agreement by Enron Regarding Separate Conduct of Business. Enron agrees that, except with respect to business opportunities pursued jointly by Enron and EOG and except as otherwise agreed to between Enron and EOG, Enron's business will be conducted through the use of its own personnel and assets and not with the use of any personnel or assets of EOG. Without limiting the foregoing, Enron agrees that, without the consent of EOG, the Finance and Trading Business conducted by ECT, EII or other Enron entities will only involve business opportunities identified by or presented to ECT personnel, EII personnel or other Enron personnel and developed and pursued solely through the use of the personnel and assets of ECT, EII or other Enron entities. Enron agrees that it will not pursue any business opportunity that involves E&P Business Assets that is first presented to an officer or director of Enron who is also an officer or director of EOG at the time such opportunity is presented (i.e. the first officer or director of Enron to receive notice of such opportunity from a third party is also an officer or director of EOG), unless Enron first offers such opportunity to EOG and EOG notifies Enron in writing that EOG elects not to pursue such opportunity; provided that the foregoing agreement will not be applicable to opportunities first presented on or after the first date on which Enron no longer controls EOG and no longer owns directly or indirectly at least 40% of the capital stock of EOG having ordinary voting power for the election of directors. For purposes of the foregoing, (a) a business opportunity that involves E&P Business Assets shall not include any opportunity where E&P Business Assets represent less than a majority of the value of the opportunity, as determined by the officer or director of Enron to whom such opportunity is first presented, based on information available to such officer at the time such opportunity is first presented (which determination shall be conclusive if made in good faith), (b) senior officers of EOG who are members or ad hoc members of the Management Committee of Enron or any similar committee shall not, by virtue of such membership or ad hoc membership, be deemed to be Enron personnel, and (c) it will not be a breach of Enron's agreement to develop and pursue business opportunities solely through the use of the personnel and assets of ECT, EII or other Enron entities if one or more senior officers of Enron who serve on the Board of Directors of EOG participate, as officers of Enron, in evaluating, developing or approving business opportunities that were identified by other Enron personnel or first presented to other Enron personnel (i.e. the first Enron person to receive notice of such opportunity from a third party was not also an officer or director of EOG). The provisions of this Section 4 relate exclusively to the duties that Enron owes EOG, and nothing herein shall affect the fiduciary or other duties owed to EOG by any individual director or officer of EOG in his or her capacity as such. In this connection, Enron agrees that its representatives on the Board of Directors of EOG will not, for the purpose of enabling Enron to pursue an opportunity in the E&P Business, vote in such a manner as to effectively prevent, prohibit or restrict EOG from pursuing such opportunity.

5. Agreement and Waiver. In further consideration of the benefits received and to be received by EOG pursuant to this Agreement, EOG acknowledges and agrees that, if any business opportunity is presented to or identified by Enron, except as otherwise provided in Section 4 of this Agreement Enron may pursue such opportunity without any obligation to offer it to EOG, provided that Enron's activities in pursuing such business opportunity are conducted in compliance with this Agreement in all material respects (including the provisions of Section 4 hereof). EOG acknowledges and agrees that in such case, to the extent that a court might hold that the conduct of

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such activity is a breach of a duty to EOG (and without admitting that the conduct of such activity is such a breach of duty), EOG hereby waives any and all claims and causes of action that EOG may have to claim that the conduct of such activity is a breach of a duty to EOG. The waivers and agreements herein apply equally to activities to be conducted in the future and activities that have been conducted in the past.

6. Agreement to Supply Information. Enron agrees that, in connection with any opportunity presented to EOG pursuant to Section 4 of this Agreement, Enron will furnish to EOG all information in Enron's possession or reasonably available to Enron regarding the opportunity in question that is material to a decision by EOG whether or not to pursue such opportunity.

7. Options to Purchase Enron Common Stock. In consideration of EOG's agreements herein, Enron hereby grants to EOG options to purchase Common Stock of Enron as follows:

(a) The total number of shares issuable upon exercise of such options is 3,200,000 shares.

(b) The option exercise price shall be $39.1875 per share.

(c) Options shall become vested and exercisable as follows:
options have vested on the date hereof and are exercisable as to 25% of the total shares covered by the options on or following the date hereof. Subject to the provisions of Section 7(e) below, additional options will vest and will become exercisable on the anniversary of the date of this Agreement as follows:

                              Number of Shares Covered
  Year in Which                 By Options that Vest
Anniversary Occurs             and Become Exercisable
------------------            ------------------------
      1998                            15%
      1999                            10%
      2000                            10%
      2001                            10%
      2002                            10%
      2003                            10%
      2004                            10%

(d) Vested options may be exercised in whole or in part at any time and from time to time until the tenth anniversary of this Agreement.

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(e) If there is a change of control of EOG, then any remaining unvested options will vest. For such purposes a "change of control" means that (a) Enron no longer owns capital stock of EOG representing at least 35% of the voting power for the election of directors and (b) a majority of the members of the board of directors of EOG consists of persons who are not officers or directors of Enron or any affiliate of Enron other than EOG.

(f) Enron will afford EOG registration rights with respect to the shares of Common Stock acquired by EOG upon exercise of options granted herein. Such registration rights will be set forth in the Stock Restriction and Registration Agreement in the form attached as Exhibit B. Enron and EOG hereby agree to enter into such Stock Restriction and Registration Agreement promptly upon execution of this Agreement.

8. Agreements Regarding Certain Foreign Projects. In further consideration of EOG's agreements herein, Enron hereby agrees to enter into, or to cause its appropriate subsidiaries to enter into, agreements with EOG relating to existing projects in Qatar, Mozambique and Uzbekistan on the terms and conditions set forth in Exhibits C, D and E, respectively. Such agreements will be subject to the Standard Cost Sharing and Co-Ownership Matters set forth in Exhibit F. EOG agrees to enter into, or to cause its appropriate subsidiaries to enter into, such agreements with Enron. EOG acknowledges and agrees that Exhibits C, D, E and F set forth all terms and conditions of such agreements that are material to a decision by EOG to enter into this Agreement. The parties acknowledge and agree that the failure by either party to agree on any term or provision of any such agreement (as long as such failure to agree is not inconsistent with C, D, E or F) shall not serve as a basis for invalidating this Agreement (through lack of consideration or otherwise) or for any claim that a party breached this Agreement.

9. Agreement Regarding Enron Name and Marks. In further consideration of EOG's agreements herein, Enron hereby agrees to enter into a Non-Exclusive License Agreement with EOG in the form attached as Exhibit G. Enron and EOG hereby agree to enter into such NonExclusive License Agreement promptly upon execution of this Agreement.

10. Agreements Relating to Houston Pipe Line Company. In further consideration of EOG's agreements herein, Enron hereby agrees to cause its subsidiary, Houston Pipe Line Company ("HPL"), to enter into agreements with EOG upon the terms and conditions set forth in Exhibit H to this Agreement. Enron and EOG hereby agree that such agreements will be entered into promptly upon execution of this Agreement.

11. Further Consideration. In further consideration of the agreements herein, the parties agree as follows:

(a) Enron and EOG will enter into a Services Agreement, in the form attached as Exhibit I to this Agreement, which services agreement will replace the 1994 Services Agreement dated as of January 1, 1994.

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(b) Enron and EOG will enter into an amendment to the Stock Restriction and Registration Agreement dated as of August 23, 1989, between Enron Oil & Gas Company and Enron Corp., as amended, in the form attached as Exhibit J to this Agreement, to provide that all Registration Expenses (as defined therein) incident to any registration of stock or other action by EOG under the Stock Restriction and Registration Agreement dated as of August 23, 1989, that is primarily for the benefit of Enron will be borne by Enron.

(c) If at any time following the date of this Agreement Enron takes any action that results in the loss by EOG of its status as an "independent producer" under the provisions of Section 613A of the United States Internal Revenue Code, Enron shall pay to EOG within 120 days following the end of the calendar year in which the loss of such status occurs, and within 120 days following the end of each subsequent calendar year during which EOG would otherwise be eligible for independent producer status but for the actions of Enron, the lesser of (a) $1 million and (b) an amount which, after payment of applicable taxes, will compensate EOG for the additional income tax liability of EOG for such calendar year because of EOG's loss of independent producer status. The provisions of this Section 11(c) will not apply to any calendar year after the year ending December 31, 2006.

(d) If Enron requests that EOG relocate its offices, and if EOG agrees to do so, Enron will pay EOG's direct, out-of-pocket expenses associated with such relocation of EOG's offices, including, without limitation, moving expenses, expenses incurred in building out or refurbishing the space in its new offices so that it is comparable to EOG's existing space in the Enron Building, and expenses of removing and reinstalling EOG's telecommunications and information systems facilities. The agreement in this Section 11(d) will terminate on the tenth anniversary of the date of this Agreement.

12. Equity Participation Agreement. EOG agrees that, in the event that for any purpose EOG desires to issue additional shares of its authorized but unissued capital stock or to sell treasury shares to any party other than Enron, it will notify Enron at least thirty days in advance of such issuance or sale (except in the case of shares issued or sold pursuant to benefit plans or the exercise of any conversion option by holders of convertible securities, in which case EOG will notify Enron promptly after EOG is notified that the right to receive such stock will be or has been exercised), and Enron will have the right to purchase additional shares of capital stock of EOG as follows:

(a) If (i) at the time of such notice Enron owns capital stock representing a majority of the ordinary voting power for the election of directors of EOG and (ii) such issuance or sale to the party other than Enron would cause Enron's ownership interest in EOG to represent less than a majority of such voting power, Enron will have the right to purchase such number of additional shares of Common Stock of EOG as will cause it to own capital stock of EOG representing a majority of the ordinary voting power for the election of directors of EOG following the issuance or sale to the party other than Enron.

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(b) If (i) at the time of such notice Enron accounts for the assets and operations of EOG on a consolidated basis for financial reporting purposes but owns capital stock representing less than a majority of the ordinary voting power for the election of directors of EOG and (ii) such issuance or sale to the party other than Enron would cause Enron's ownership interest in EOG to represent less than an amount that Enron in its reasonable judgment deems appropriate to permit it to continue to account for the assets and operations of EOG on a consolidated basis for financial reporting purposes, then Enron will have the right to purchase such number of additional shares of Common Stock of EOG as will cause it to own capital stock of EOG representing an amount that Enron in its reasonable judgment deems appropriate to permit it to continue to account for the assets and operations of EOG on a consolidated basis for financial reporting purposes following the issuance or sale to the party other than Enron.

(c) If (i) at the time of such notice Enron accounts for the assets and operations of EOG using the equity method for financial reporting purposes and (ii) such issuance or sale to the party other than Enron would cause Enron's ownership interest in EOG to represent less than an amount that Enron in its reasonable judgment deems appropriate to permit it to continue to account for the assets and operations of EOG using the equity method for financial reporting purposes, then Enron will have the right to purchase such number of additional shares of Common Stock of EOG as will cause it to own capital stock of EOG representing an amount that Enron in its reasonable judgment deems appropriate to permit it to continue to account for the assets and operations of EOG using the equity method for financial reporting purposes following the issuance or sale to the party other than Enron.

(d) Any purchase by Enron of additional shares of Common Stock of EOG pursuant to this Section 12 shall be for cash, and the consideration shall be payable and the shares issuable contemporaneously with the issuance or sale to the party other than Enron (except in the case of stock issued pursuant to benefit plans or the exercise of any conversion option by holders of convertible securities, in which case such closing shall occur on the fifth business day after EOG has received timely notice from Enron that it elects to exercise its right under this Section 12). The purchase price thereof payable by Enron shall be 97% of the average closing price per share of Common Shares in EOG reported at the close of trading on the New York Stock Exchange for the 20 trading days immediately preceding the second trading day prior to the issuance or sale to the party other than Enron (reflecting a 3% private placement discount). Enron will have registration rights with respect to such shares that are identical to those it now has with respect to its shares of capital stock of EOG, taking into consideration Section 11(b).

(e) Enron shall notify EOG in writing within five business days after receipt of notice of the proposed issuance or sale of capital stock by EOG whether Enron will exercise any right granted in this Section 12 to purchase such additional shares of capital stock of EOG. The failure of Enron to notify EOG of its election within such five day period shall conclusively be deemed an election not to exercise its right to purchase such stock.

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13. Existing Agreements. Except as expressly provided herein, nothing in this Agreement shall impair or otherwise affect the duties or obligations of Enron or EOG under existing agreements.

14. Confidentiality Agreements, etc. Each of the parties agrees that if it or any of its subsidiaries or any other affiliate directly or indirectly controlled by it executes any confidentiality agreement, area of mutual interest agreement, standstill agreement or other agreement to which neither the other party nor any of its affiliates is a party, but which nevertheless purports to bind the other party or any of its affiliates, (i) such agreement shall not be binding on the other party or any of its affiliates (each party acknowledging that neither it nor any of its subsidiaries or controlled affiliates has any authority to bind the other party or the other party's affiliates), (ii) the other party and its affiliates shall have no liability for any breach of such agreement, and (iii) it will indemnify, defend and hold harmless the other party and its affiliates against any claims arising from or relating to such agreement or any alleged breach thereof. In the event that any third party requires that EOG execute any confidentiality or standstill agreement as a condition to Enron's right to furnish to EOG the information required by this Agreement in order to permit EOG to exercise any right of first refusal granted by this Agreement, Enron's obligation in this Agreement to furnish such information and its obligation to afford EOG such right of first refusal will be conditioned upon the execution of such agreement by EOG.

15. Outside Advisers. Each of the parties agrees that the other may engage any investment banker or engineering, accounting, legal or other professional adviser to perform services for it, notwithstanding the fact that the other party may also employ such person, and each party waives the right to claim that the other party breached any duty to it in connection with such engagement. Nothing herein shall be deemed to grant any rights to any person performing investment banking or other professional services for Enron or EOG or to preclude any claim by either Enron or EOG against any person that violates any duty owed by such person to Enron or EOG.

16. Right of EOG to Engage in Other Activities. The parties acknowledge that nothing in this Agreement is intended to limit or restrict the present or future lines of business of EOG and that this Agreement imposes upon EOG no duty to refrain from competing with Enron in any line of business.

17. Notices. Without limiting any other manner in which such an election may be made, any election by EOG under Section 4 not to pursue a business opportunity involving E&P Business Assets may be made by the Chief Executive Officer of EOG or such officer's designee.

18. Certain Expenses. Enron agrees to reimburse EOG for any costs and expenses incurred by EOG in respect of consultants (including, without limitation, legal and financial consultants) retained to assist any of the independent directors of Enron Oil & Gas Company in their due diligence and analysis in connection with this Agreement.

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19. Governing Law and Venue. This Agreement shall be governed by and construed and enforced in accordance with the laws of the State of Delaware without regard to principles of conflicts of law. The Parties agree that the courts of the State of Delaware shall be the exclusive venue for any judicial proceeding relating to the validity, interpretation or enforcement of this Agreement.

EXECUTED as of the date first set forth above.

ENRON OIL & GAS COMPANY

By: /s/ FORREST E. HOGLUND
   --------------------------------------
  Name:  Forrest E. Hoglund
  Title: Chairman of the Board and
              Chief Executive Officer

ENRON CORP.

By:  /s/ J. CLIFFORD BAXTER
   --------------------------------------
  Name:  J. Clifford Baxter
  Title: Senior Vice President,
               Corporate Development

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EXHIBIT A

CERTAIN DEFINED TERMS

In addition to such other defined terms as may be set forth in the Agreement of which this Exhibit A is a part, as used in such Agreement or in this Exhibit A, the following terms have the following respective meanings:

"E&P Business" means the oil and gas exploration, exploitation, development and production business and includes without limitation (a) the ownership of oil and gas property interests (including concessions and production sharing agreements, and including agreements referred to in the international oil and gas industry as "service contracts" whereby a company involved in the E&P Business agrees to explore, develop and operate oil and gas properties in return for a fee for each unit of production), (b) the ownership and operation of real and personal property used or useful in connection with exploration for Hydrocarbons, development of Hydrocarbon reserves upon discovery thereof and production of Hydrocarbons from wells located on oil and gas properties and (c) debt of or equity interests in corporations, partnerships or other entities engaged in the exploration for Hydrocarbons, the development of Hydrocarbon reserves and the production and sale of Hydrocarbons from wells located on oil and gas properties in which the entity conducting the E&P Business owns an interest; but such term does not include the oilfield service business.

"E&P Business Assets" means interests in oil and gas properties (including concessions, production sharing agreements and service contracts, as such terms are used in clause (a) of the definition of E&P Business), real and personal property used or useful in connection with the production and sale of Hydrocarbons from wells located on oil and gas properties and notes and securities issued by corporations, partnerships or other entities engaged in the E&P Business.

"ECT" means Enron Capital & Trade Resources Corp., together with its subsidiaries and other affiliated entities directly or indirectly controlled by it.

"EII" means Enron International Inc., together with its subsidiaries and other affiliated entities directly or indirectly controlled by it.

"Enron" means Enron Corp. together with its subsidiaries and other affiliated entities directly or indirectly controlled by it, other than EOG and entities directly or indirectly controlled by it.

"EOG" means Enron Oil & Gas Company together with its subsidiaries and other affiliated entities directly or indirectly controlled by it.

"Finance and Trading Business" means the business of trading in securities, arranging transactions in securities for the accounts of others, providing funds or other assets to third parties

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in return for securities or other assets, underwriting securities or making investments in securities or other assets.

"Hydrocarbons" means oil, gas or other liquid or gaseous hydrocarbons.

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EXHIBIT B

STOCK RESTRICTION AND REGISTRATION RIGHTS AGREEMENT

THIS STOCK RESTRICTION AND REGISTRATION RIGHTS AGREEMENT (the "Agreement") dated as of December 9, 1997, is between ENRON CORP., an Oregon corporation (the "Company"), and ENRON OIL & GAS COMPANY, a Delaware corporation (the "Holder").

W I T N E S S E T H:

WHEREAS, the Holder owns a substantial number of options to purchase shares of common stock, without par value (the "Common Stock"), of the Company (the "Options");

WHEREAS, the Options are, and the Common Stock to be issued upon exercise of such Options will be, "restricted securities" under the Securities Act of 1933 (the "Securities Act"); and

WHEREAS, under the provisions of the Securities Act and the General Rules and Regulations promulgated by the Securities and Exchange Commission (the "SEC") thereunder, the Holder may be limited in the manner of selling the shares of Common Stock owned by the Holder, absent registration under the Securities Act of the sale of such Common Stock or the availability of another exemption from the registration requirements of the Securities Act; and

WHEREAS, the Company and the Holder desire to set forth certain registration rights as to such shares;

NOW, THEREFORE, in consideration of the premises and the mutual covenants and agreements contained herein, the parties hereby agree as follows:

1. Agreement Not to Sell or Transfer Restricted Stock For a Period of Time. The Holder agrees that it will not offer, sell, contract to sell or otherwise dispose of any Options or shares of Common Stock except pursuant to a registration statement under the Securities Act or an applicable exemption therefrom.

2. Demand Registration.

a. Request for Registration. As used in this Agreement, "Restricted Stock" shall mean all shares of Common Stock issued upon exercise of the Options, together with any securities issued or issuable with respect to any such Common Stock by way of stock dividend or stock split or in connection with a combination of shares, recapitalization, merger, consolidation or other reorganization or otherwise. As to any particular Restricted Stock, once issued such securities shall cease to be Restricted Stock when (a) a registration statement with respect to the sale of such securities shall have become effective under the Securities Act and such securities shall have been

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disposed of in accordance with such registration statement, (b) such securities shall have been sold pursuant to Rule 144 (or any successor provision) under the Securities Act, or (c) such securities shall have been otherwise transferred, new certificates representing such securities not bearing a legend restricting further transfer shall have been delivered by the Company and subsequent disposition of such securities shall not require registration or qualification of such securities under the Securities Act or any similar state law then in force. The Holder and any permitted assignee of the Holder's rights and duties hereunder are referred to herein as the "Holders." Unless the context otherwise requires, any reference herein to a Holder or Holders of Restricted Stock shall be deemed to include reference to a holder of Options, and any reference herein to a number of shares of Restricted Stock, to a majority in number of shares of Restricted Stock or to all or a portion of shares of Restricted Stock of any Holder or Holders shall be deemed to include reference to a number of shares of Restricted Stock issuable upon exercise thereof or to a combination of shares of Restricted Stock issuable and issued upon exercise of Options (provided that the Company shall not be required to file any registration statement covering resales of Options). Subject to the conditions and limitations set forth in Section 5 of this Agreement, the Holder or Holders of Restricted Stock holding in the aggregate at least 500,000 shares of Restricted Stock may make a written request for registration under the Securities Act of all or part of its or their Restricted Stock pursuant to this
Section 2 ("Demand Registration"), provided that the number of shares of Restricted Stock proposed to be sold shall be at least 500,000 shares (subject to appropriate adjustment for any stock dividend, stock split, combination, recapitalization, merger, consolidation, reorganization or other occurrence affecting the number of shares of Restricted Stock). Such request will specify the aggregate number of shares of Restricted Stock proposed to be sold and will also specify the intended method of disposition thereof. Within ten days after receipt of such request, the Company will give written notice of such registration request to all other Holders of Restricted Stock and include in such registration all Restricted Stock with respect to which the Company has received written requests for inclusion therein within fifteen business days after the receipt by the applicable Holder of the Company's notice. Each such request will also specify the aggregate number of shares of Restricted Stock to be registered and the intended method of disposition thereof. No other party, including the Company (but excluding another Holder of Restricted Stock), shall be permitted to offer securities under any such Demand Registration unless the Holder or Holders requesting the Demand Registration shall consent in writing.

b. Priority on Demand Registrations. If the Holders of a majority in number of shares of the Restricted Stock to be registered in a Demand Registration so elect, the offering of such Restricted Stock pursuant to such Demand Registration shall be in the form of an underwritten offering. In such event, if the managing underwriter or underwriters of such offering advise the Company and the Holders in writing that in their opinion the aggregate amount of Restricted Stock requested to be included in such offering is so large that it will materially and adversely affect the success of such offering, the Company will include in such registration the aggregate number of shares of Restricted Stock which in the opinion of such managing underwriter or underwriters can be sold without any such material adverse effect, and such number of shares shall be allocated pro rata among the Holders of Restricted Stock on the basis of the number of shares of Restricted Stock requested to be included in such registration by their Holders. To the extent Restricted Stock so

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requested to be registered are excluded from the offering, then the Holders of such Restricted Stock shall have the right to one additional Demand Registration under this Section with respect to such Restricted Stock, provided that the failure of such Restricted Stock to be registered is through no fault of such Holder.

c. Selection of Underwriters and Counsel. If any Demand Registration is in the form of an underwritten offering, the Holders of a majority in number of shares of Restricted Stock to be registered will select and obtain the services of the investment banker or investment bankers and manager or managers that will administer the offering and the counsel to such investment bankers and managers; provided that such investment bankers, managers and counsel must be approved by the Company, which approval shall not be unreasonably withheld.

3. Piggyback Registration. If the Company proposes to file a registration statement under the Securities Act with respect to an offering for its own account of any class of its equity securities (other than a registration statement on Form S-8 (or any successor form) or any other registration statement relating solely to employee benefit plans or filed in connection with an exchange offer, a transaction to which Rule 145 under the Securities Act applies or an offering of securities solely to the Company's existing stockholders), then the Company shall in each case give written notice of such proposed filing to the Holders of Restricted Stock as soon as practicable (but no later than five business days) before the anticipated filing date, and such notice shall offer such Holders the opportunity to register such number of shares of Restricted Stock as each such Holder may request. Each Holder of Restricted Stock desiring to have such Holder's Restricted Stock included in such registration statement shall so advise the Company in writing within five business days after the date of Company's notice, setting forth the amount of such Holder's Restricted Stock for which registration is requested. If the Company's offering is to be an underwritten offering, the Company shall, subject to the further provisions of this Agreement, use its reasonable efforts to cause the managing underwriter or underwriters of a proposed underwritten offering to permit the Holders of the Restricted Stock, requested to be included in the registration for such offering, to include such securities in such offering on the same terms and conditions as any similar securities of the Company included therein. Moreover, if the registration of which the Company gives notice does involve an underwriting, the right of each Holder to registration pursuant to this Section 3 shall, unless the Company otherwise assents, be conditioned upon such Holder's participation as a seller in such underwriting and its execution of an underwriting agreement with the managing underwriter or underwriters selected by the Company. Notwithstanding the foregoing, if the managing underwriter or underwriters of such offering deliver a written opinion to the Holders of Restricted Stock that either because of (A) the kind of securities which the Holders, the Company and any other person or entities intend to include in such offering or (B) the size of the offering which the Holders, the Company and other persons intend to make, the success of the offering would be materially and adversely affected by inclusion of the Restricted Stock requested to be included, then (i) in the event that the size of the offering is the basis of such managing underwriter's opinion, the number of shares to be offered for the accounts of Holders of Restricted Stock shall be reduced pro rata or to the extent necessary to reduce the total amount of securities to be included in such offering to the amount recommended by such managing underwriter or underwriters; provided that if securities are being

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offered for the account of other persons or entities as well as the Company, such reduction shall not represent a greater fraction of the number or kind of securities intended to be offered by Holders of Restricted Stock than the fraction of similar reductions imposed on such other persons or entities over the amount of securities of such kind they intended to offer; and (ii) in the event that the combination of securities to be offered is the basis of such managing underwriter's opinion, (x) the Restricted Stock to be included in such offering shall be reduced as described in clause (i) above (subject to the proviso in clause (i)) or, (y) if the actions described in clause (x) would, in the judgment of the managing underwriter, be insufficient to substantially eliminate the adverse effect that inclusion of the Restricted Stock requested to be included would have on such offering, such Restricted Stock will be excluded from such offering. Any Restricted Stock excluded from an underwriting shall be withdrawn from registration and shall not, without the consent of the Company and the manager of the underwriting, be transferred in a public distribution prior to the earlier of 90 days (or such other shorter period of time as the manager of the underwriting may require) after the effective date of the registration statement or 150 days after the date the Holders of such Restricted Stock are notified of such exclusion.

4. Registration Procedures. Whenever, pursuant to Section 2 or 3, the Holders of Restricted Stock have requested that any Restricted Stock be registered, the Company will, subject to the provisions of Section 5, use all reasonable efforts to effect the registration and the sale of such Restricted Stock in accordance with the intended method of disposition thereof as promptly as practicable, and in connection with any such request, the Company will:

a. in connection with a request pursuant to Section 2, prepare and file with the SEC, not later than 60 days after receipt of a request to file a registration statement with respect to Restricted Stock, a registration statement on any form for which the Company then qualifies and which counsel for the Company shall deem appropriate and which form shall be available for the sale of such Restricted Stock in accordance with the intended method of distribution thereof, and use its reasonable efforts to cause such registration statement to become effective; provided that if the Company shall furnish to the Holders making such a request a certificate signed by either the chief financial officer or the chief accounting officer of the Company stating that in his good faith judgment it would be significantly disadvantageous to the Company for such a registration statement to be filed on or before the date filing would be required, the Company shall have an additional period of not more than 90 days within which to file such registration statement; and provided further, (i) that before filing a registration statement or prospectus or any amendments or supplements thereto, the Company will furnish to one counsel selected by the Holders of a majority in number of shares of the Restricted Stock covered by such registration statement copies of all such documents proposed to be filed, which documents will be subject to the review of such counsel, and (ii) that after the filing of the registration statement, the Company will promptly notify each selling Holder of Restricted Stock of any stop order issued or, to the knowledge of the Company, threatened by the SEC and take all reasonable actions to prevent the entry of such stop order or to remove it if entered;

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b. in connection with a registration pursuant to Section 2, prepare and file with the SEC such amendments and supplements to such registration statement and the prospectus used in connection therewith as may be necessary to keep such registration statement effective for a period of not less than 270 days or such shorter period as shall terminate when all Restricted Stock covered by such registration statement have been sold (but not before the expiration of the 90-day period referred to in Section 4(3) of the Securities Act and Rule 174 thereunder, if applicable), and comply with the provisions of the Securities Act with respect to the disposition of all securities covered by such registration statement during such period in accordance with the intended methods of disposition by the Selling Holders thereof set forth in such registration statement;

c. as soon as reasonably practicable, furnish to each selling Holder, prior to filing a registration statement, copies of such registration statement as proposed to be filed, and thereafter furnish to such selling Holder such number of copies of such registration statement, each amendment and supplement thereto (in each case, if specified by such Holder, including all exhibits thereto), the prospectus included in such registration statement (including each preliminary prospectus) and such other documents as such selling Holder may reasonably request in order to facilitate the disposition of the Restricted Stock owned by such selling Holder;

d. with reasonable promptness, use its reasonable efforts to register or qualify such Restricted Stock under such other securities or blue sky laws of such jurisdictions within the United States as any selling Holder reasonably (in light of such selling Holder's intended plan of distribution) requests and do any and all other acts and things which may be reasonably necessary or advisable to enable such selling Holder to consummate the disposition in such jurisdictions of the Restricted Stock owned by such selling Holder; provided that the Company will not be required to (i) qualify generally to do business in any jurisdiction where it would not otherwise be required to qualify but for this subsection d., (ii) subject itself to taxation in any such jurisdiction or (iii) consent to general service of process in any such jurisdiction;

e. with reasonable promptness, use reasonable efforts to cause the Restricted Stock covered by such registration statement to be registered with or approved by such other governmental agencies or authorities as may be necessary by virtue of the business and operations of the Company to enable the selling Holder or Holders thereof to consummate the disposition of such Restricted Stock;

f. promptly notify each selling Holder of such Restricted Stock, at any time when a prospectus relating thereto is required to be delivered under the Securities Act, of the occurrence of any event known to the Company requiring the preparation of a supplement or amendment to such prospectus so that, as thereafter delivered to the purchasers of such Restricted Stock, such prospectus will not contain an untrue statement of a material fact or omit to state any material fact required to be stated therein or necessary to make the statements therein not misleading and promptly make available to each selling Holder any such supplement or amendment;

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g. in connection with a request pursuant to Section 2, enter into an underwriting agreement in customary form, the form and substance of such underwriting agreement being subject to the reasonable satisfaction of the Company;

h. with reasonable promptness make available for inspection by any selling Holder, any underwriter participating in any disposition pursuant to such registration statement, and any attorney, accountant or other agent retained by any such selling Holder or underwriter (collectively, the "Inspectors"), all financial and other records, pertinent corporate documents and properties of the Company (collectively, the "Records"') as shall be reasonably necessary to enable them to exercise their due diligence responsibility, and cause the Company's officers and employees to supply all information reasonably requested for such purpose by any such Inspector in connection with such registration statement; provided, however, that the selection of any Inspector other than a selling Holder shall be subject to the consent of the Company, which shall not be unreasonably withheld. Each Inspector that actually reviews Records supplied by the Company that include information that the Company determines, in good faith, to be confidential ("Confidential Information") shall be required, prior to any such review, to execute an agreement with the Company providing that such Inspector shall not disclose any Confidential Information unless such disclosure is required by applicable law or legal process. Each selling Holder of Restricted Stock agrees that Confidential Information obtained by it as a result of such inspections shall not be used by it as the basis for any transactions in securities of the Company unless and until such information is made generally available to the public. Each selling Holder of Restricted Stock further agrees that it will, upon learning that disclosure of Confidential Information is sought in a court of competent jurisdiction, give notice to the Company and allow the Company, at its expense, to undertake appropriate action to prevent disclosure of the Confidential Information. Each selling Holder also agrees that the due diligence investigation made by the Inspectors shall be conducted in a manner which shall not unreasonably disrupt the operations of the Company or the work performed by the Company's officers and employees;

i. in the event such sale is pursuant to an underwritten offering, use its reasonable efforts to obtain a comfort letter or letters from the Company's independent public accountants in customary form and covering such matters of the type customarily covered by comfort letters as the managing underwriter reasonably requests;

j. otherwise use its reasonable efforts to comply with all applicable rules and regulations of the SEC, and make available to its security holders, as soon as reasonably practicable, an earnings statement covering a period of twelve months, beginning within three months after the effective date of the registration statement, which earnings statement shall satisfy the provisions of Section 11(a) of the Securities Act; and

k. with reasonable promptness, use its reasonable efforts to cause all such Restricted stock to be listed on each securities exchange on which the Common Stock of the Company is then listed, provided that the applicable listing requirements are satisfied.

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Each selling Holder of Restricted Stock agrees that, upon receipt of any notice from the Company of the happening of any event of the kind described in subsection f. hereof, such selling Holder will forthwith discontinue disposition of Restricted Stock pursuant to the registration statement covering such Restricted Stock until such selling Holder's receipt of the copies of the supplemented or amended prospectus contemplated by subsection f. hereof, and, if so directed by the Company, such selling Holder will deliver to the Company (at the Company's expense) all copies, other than permanent file copies then in such selling Holder's possession, of the prospectus covering such Restricted Stock current at the time of receipt of such notice. In the event the Company shall give any such notice, the Company shall extend the period during which such registration statement shall be maintained effective pursuant to this Agreement (including the period referred to in subsection b.) by the number of days during the period from and including the date of the giving of such notice pursuant to subsection f. hereof to and including the date when each selling Holder of Restricted Stock covered by such registration statement shall have received the copies of the supplemented or amended prospectus contemplated by subsection f. hereof. Each selling Holder also agrees to notify the Company if any event relating to such selling Holder occurs which would require the preparation of a supplement or amendment to the prospectus so that such prospectus will not contain an untrue statement of a material fact or omit to state a material fact required to be stated therein or necessary to make the statements therein not misleading.

5. Conditions and Limitations.

a. The Company's obligations under Section 2 shall be subject to the following limitations:

i. the Company need not file a registration statement either (x) during the period starting with the date 60 days prior to the Company's estimated date of filing of, and ending 90 days after the effective date of, any registration statement pertaining to securities of the Company (other than a registration of securities in a Rule 145 transaction or exchange offer or with respect to an employee benefit plan or dividend reinvestment plan), provided that if such Company registration statement is not filed within 90 days after the first date on which the Company notifies a Holder of Restricted Stock that it will delay a Demand Registration pursuant to this clause (x), the Company may not further postpone such Demand Registration pursuant to this clause; or (y) during the period specified in the first proviso of subparagraph a. of Section 4;

ii. the Company shall not be required to furnish any audited financial statements other than those audited statements customarily prepared at the end of its fiscal year, or to furnish any unaudited financial information with respect to any period other than its regularly reported interim quarterly periods unless in the absence of such other unaudited financial information the registration statement would contain an untrue statement of material fact or omit to state a material fact required to be stated therein or necessary to make the statements therein not misleading;

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iii. except as provided in Section 2.b., the Company shall not be required to file more than two Demand Registrations. A registration statement will not count as a Demand Registration until it has become effective; and

iv. the Company shall have received the information and documents specified in Section 6 and each selling Holder shall have observed or performed its other covenants and conditions contained in such section and Section 8.

b. The Company's obligation under Section 3 shall be subject to the limitations and conditions specified in such section and in clauses (i), (ii) and (iv) of subsection a. of this Section 5, and to the condition that the Company may at any time terminate its proposal to register its shares and discontinue its efforts to cause a registration statement to become or remain effective.

6. Information from and Certain Covenants of Holders of Restricted Stock. Notices and requests delivered to the Company by Holders for whom Restricted Stock are to be registered pursuant to this Agreement shall contain such information regarding the Restricted Stock to be so registered, the Holder and the intended method of disposition of such Restricted Stock as shall reasonably be required in connection with the action to be taken. Any Holder whose Restricted Stock is included in a registration statement pursuant to this Agreement shall execute all consents, powers of attorney, registration statements and other documents reasonably required to be signed by it in order to cause such registration statement to become effective. Each selling Holder covenants that, in disposing of such Holder's shares, such Holder will comply with Regulation M of the SEC adopted pursuant to the Securities Exchange Act of 1934 (the "Exchange Act").

7. Registration Expenses. All Registration Expenses (as defined herein) will be borne by the Company. Underwriting discounts and commissions applicable to the sale of Restricted Stock shall be borne by the Holder of the Restricted Stock to which such discount or commission relates, and each selling Holder shall be responsible for the fees and expenses of any legal counsel, accountants or other agents retained by such selling Holder and all other out-of-pocket expenses incurred by such selling Holder in connection with any registration under this Agreement.

As used herein, the term Registration Expenses means all expenses incident to the Company's performance of or compliance with this Agreement (whether or not the registration in connection with which such expenses are incurred ultimately becomes effective), including without limitation all registration and filing fees, fees and expenses of compliance with securities or blue sky laws (including reasonable fees and disbursements of counsel in connection with blue sky qualifications of the Restricted Stock), rating agency fees, printing expenses, messenger and delivery expenses incurred by the Company, internal expenses incurred by the Company (including, without limitation, all salaries and expenses of its officers and employees performing legal or accounting duties), the fees and expenses incurred in connection with the listing of the securities to be registered on each securities exchange on which similar securities issued by the Company are then listed, and fees and disbursements of counsel for the Company and its independent certified public accountants (including the expenses of any special audit or comfort letters required by or incident to such

B-8

performance), securities acts liability insurance (if the Company elects to obtain such insurance), the reasonable fees and expenses of any special experts retained by the Company in connection with such registration and the fees and expenses of other persons retained by the Company.

8. Indemnification; Contribution.

a. Indemnification by the Company. The Company agrees to indemnify and hold harmless each selling Holder of Restricted Stock, its officers, directors and agents and each person, if any, who controls such selling Holder within the meaning of either Section 15 of the Securities Act or
Section 20 of the Exchange Act, from and against any and all losses, claims, damages, liabilities and expenses (including reasonable costs of investigation) arising out of or based upon any untrue statement or alleged untrue statement of a material fact contained in any registration statement or prospectus relating to the Restricted Stock or in any amendment or supplement thereto or in any preliminary prospectus relating to the Restricted Stock, or arising out of or based upon any omission or alleged omission to state therein a material fact required to be stated therein or necessary to make the statements therein not misleading, except insofar as such losses, claims, damages, liabilities or expenses arise out of, or are based upon, any such untrue statement or omission or allegation thereof based upon information furnished in writing to the Company by such selling Holder or on such selling Holder's behalf expressly for use therein and provided further, that with respect to any untrue statement or omission or alleged untrue statement or omission made in any preliminary prospectus, the indemnity agreement contained in this subsection shall not apply to the extent that any such loss, claim, damage, liability or expense results from the fact that a copy of the final prospectus was not sent or given to the person asserting any such losses, claims, damages, liabilities or expenses at or prior to the written confirmation of the sale of the Restricted Stock concerned to such person. The Company also agrees to include in any underwriting agreement with any underwriters of the Restricted Stock provisions indemnifying and providing for contribution to such underwriters, their officers and directors and each person who controls such underwriters on substantially the same basis as the provisions of this Section 8 indemnifying and providing for contribution to the selling Holders.

b. Indemnification by Holders of Restricted Stock. Each selling Holder agrees to indemnify and hold harmless the Company, its officers, directors and agents and each person, if any, who controls the Company within the meaning of either Section 15 of the Securities Act or Section 20 of the Exchange Act, from and against any and all losses, claims, damages, liabilities and expenses (including reasonable costs of investigation) arising out of or based upon any untrue statement or alleged untrue statement of a material fact contained in any registration statement or prospectus relating to the Restricted Stock or in any amendment or supplement thereto or in any preliminary prospectus relating to the Restricted Stock, or arising out of or based upon any omission or alleged omission to state therein a material fact required to be stated therein or necessary to make the statements therein not misleading, provided (i) that such losses, claims, damages, liabilities or expenses arise out of, or are based upon, any such untrue statement or omission or allegation thereof based upon information furnished in writing to the Company by such selling Holder or on such selling Holder's behalf expressly for use therein, (ii) that with respect to any untrue statement or

B-9

omission or alleged untrue statement or omission made in any preliminary prospectus, the indemnity agreement contained in this subsection shall not apply to the extent that any such loss, claim, damage, liability or expense results from the fact that a copy of the final prospectus was not sent or given to the person asserting any such losses, claims, damages, liabilities or expenses at or prior to the written confirmation of the sale of the Restricted Stock concerned to such person, and (iii) that no selling Holder shall be liable for any indemnification under this Section 8 in an aggregate amount which exceeds the total net proceeds (before deducting expenses) received by such selling Holder from the offering. Each selling Holder also agrees to include in any underwriting agreement with underwriters of the Restricted Stock provisions indemnifying and providing for contribution to such underwriters, their officers and directors and each person who controls such underwriters on substantially the same basis as the provisions of this Section 8 indemnifying and providing for contribution to the Company.

c. Conduct of Indemnification Proceedings. If any action or proceeding (including any governmental investigation) shall be brought or asserted against any indemnified party in respect of which indemnity may be sought from an indemnifying party, the indemnifying party shall assume the defense thereof, including the employment of counsel reasonably satisfactory to such indemnified party, and shall assume the payment of all expenses. Such indemnified party shall have the right to employ separate counsel in any such action and to participate in the defense thereof, but the fees and expenses of such counsel shall be at the expense of such indemnified party unless (i) the indemnifying party has agreed to pay such fees and expenses, or (ii) the indemnifying party shall have failed to assume the defense of such action or proceeding and employ counsel reasonably satisfactory to such indemnified party or (iii) the named parties to any such action or proceeding (including any impleaded parties) include both such indemnified party and such indemnifying party, and such indemnified party shall have been advised by counsel that there may be one or more legal defenses available to such indemnified party which are different from or additional to those available to the indemnifying party (in which case, if such indemnified party notifies the indemnifying party in writing that it elects to employ separate counsel at the expense of the indemnifying party, the indemnifying party shall not have the right to assume the defense of such action or proceeding on behalf of such indemnified party, it being understood, however, that the indemnifying party shall not, in connection with any one such action or proceeding or separate but substantially similar or related actions or proceedings in the same jurisdiction arising out of the same general allegations or circumstances, be liable for the fees and expenses of more than one separate firm of attorneys (together with appropriate local counsel) at any time for such indemnified party, which firm shall be designated in writing by such indemnified party). The indemnifying party shall not be liable for any settlement of any such action or proceeding effected without its written consent, but if settled with its written consent, or if there is a final judgment for the plaintiff in any such action or proceeding, the indemnifying party agrees to indemnify and hold harmless such indemnified party from and against any loss or liability (to the extent stated above) by reason of such settlement or judgment.

d. Contribution. If the indemnification provided for in this Section 8 is unavailable to the Company or the selling Holders in respect of any losses, claims, damages,

B-10

liabilities or judgments referred to therein, then each such indemnifying party, in lieu of indemnifying such indemnified party, shall contribute to the amount paid or payable by such indemnified party as a result of such losses, claims, damages, liabilities and judgments, in such proportion as is appropriate to reflect the relative fault of each such party in connection with such statements or omissions, as well as any other relevant equitable considerations. The relative fault of each such party shall be determined by reference to, among other things, whether the untrue or alleged untrue statement of a material fact or the omission or alleged omission to state a material fact relates to information supplied by such party, and the parties' relative intent, knowledge, access to information and opportunity to correct or prevent such statement or omission.

The Company and the selling Holders agree that it would not be just and equitable if contribution pursuant to this Section 8.d. were determined by pro rata allocation or by any other method of allocation which does not take account of the equitable considerations referred to in the immediately preceding paragraph. The amount paid or payable by an indemnified party as a result of the losses, claims, damages, liabilities or judgments referred to in the immediately preceding paragraph shall be deemed to include, subject to the limitations set forth above, any legal or other expenses reasonably incurred by such indemnified party in connection with investigation or defending any such action or claim. Notwithstanding the provisions of this Section 8.d., no selling Holder shall be required to contribute any amount in excess of the amount by which the total price at which the Restricted Stock of such selling Holder were offered to the public exceeds the amount of any damages which such selling Holder has otherwise been required to pay by reason of such untrue or alleged untrue statement or omission or alleged omission. No person guilty of fraudulent misrepresentation (within the meaning of Section 11(f) of the Securities Act) shall be entitled to contribution from any person who was not guilty of such fraudulent misrepresentation.

9. Cashless Exercises. The Company agrees to cooperate with the Holder in order to permit the Holder to effect "cashless exercises" of Options.

10. Amendments. This Agreement may be amended or modified upon the written consent thereto of the Company and the Holders of not less than 66-2/3% of Restricted Stock.

11. Assignments. This Agreement shall be binding on and inure to the benefit of the respective successors and assigns of the parties hereto.

12. Entire Agreement; Governing Law. This Agreement constitutes the entire agreement of the parties relating to the subject matter hereof; all prior or contemporaneous written or oral agreements are merged herein; this Agreement shall be governed by the laws of the State of Texas.

13. Notices. Any notice, request, instruction, correspondence or other document to be given hereunder by either party to the other (herein collectively called "Notice") shall be in writing and delivered personally or mailed, postage prepaid, or by telegram or telecopier, as follows:

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If to the Company:

Enron Corp.
1400 Smith Street
P. O. Box 1188
Houston, Texas 77251-1188

Attention: Vice President and Secretary
Telecopier No.: 713-853-3920

If to the Holder:

Enron Oil & Gas Company
1400 Smith Street
Houston, Texas 77002

Attention: General Counsel
Telecopier No.: 713-646-2750

Notice given by personal delivery or mail shall be effective upon actual receipt. Notice given by telegram or telecopier shall be effective upon actual receipt if received during the recipient's normal business hours, or at the beginning of the recipient's next business day after receipt if not received during the recipient's normal business hours. Any party may change any address to which Notice is to be given to it by giving Notice as provided above of such change of address.

IN WITNESS WHEREOF, the Company and the Holder have caused this Agreement to be signed by their respective officers thereunto duly authorized.

ENRON CORP.

By: /s/ J. CLIFFORD BAXTER
   ---------------------------------------
 Name:  J. Clifford Baxter
 Title: Senior Vice President, Corporate
          Development

ENRON OIL & GAS COMPANY

By: /s/ FORREST E. HOGLUND
   ---------------------------------------
 Name:  Forrest E. Hoglund
 Title: Chairman of the Board and
          Chief Executive Officer

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EXHIBIT C

AGREEMENTS RELATING TO QATAR PROJECT

Project Ownership
o 80% Enron-20% EOG

Project Scope
o Enron's 35% interest in Project Company to be formed with QGPC which will own and operate all facilities in Qatar relating to five million tons per year LNG facility including gas production and transmission facilities, gas liquefication facilities and export facilities at Ras Laffan
o any future expansions using the Project Company facilities will also be split on an 80/20 basis -- all other activities will be outside the scope of the Project and will be subject to general principles of the Agreement
o services to be provided by Enron to Project Company pursuant to Project Services Agreement will be allocated among Enron and EOG based on available expertise with a goal of an 80/20 allocation

Lead
o Enron will be overall Lead Party for Project
o Enron to select operator of onshore facilities including LNG plant, condensate stabilization and LNG shipping (if necessary)
o EOG will represent Enron's interest in the selection of the operator of the License Area, gathering system and transmission system to the shore

Costs
o all historic and future costs to be shared 80% Enron and 20% EOG in accordance with Exhibit F provided that:
o costs allocated to Project shall include Marketing Costs including Israel, Jordan and India, however EOG's share of India Marketing Costs shall be limited to $8 million of India Marketing Costs incurred prior to the time that Enron Fuel Services India Limited is a party to contracts for it to sell at least 5 million tons per year of LNG or regassified LNG from the Project. The term "Marketing Costs" means the following costs and expenditures incurred in connection with the identification and solicitation of prospective purchasers of LNG produced by the Project or natural gas obtained from the regasification of such LNG, and the negotiation and execution of definitive agreements for such purchases:

1. Salaries, wages and benefit costs (including, without limitation, costs of holidays, vacation, sickness and disability benefits, living and housing allowances, travel time, bonuses and other customary allowances applicable to such employees, as well as

C-1

costs of group life insurance, group medical insurance, hospitalization, retirement and other benefit plans) of employees directly engaged in such activities, and expenditures or contributions made pursuant to assessments imposed by governmental authorities for payments with respect to such salaries, wages and benefits or on account of such employees;

2. Reasonable expenses (including, without limitation, travel costs) of those employees referred to in clause 1 above incurred in connection with such activities;

3. Costs of relocating employees to or from the countries in which such prospective purchasers are located (allocated to the Project on an equitable basis if such employees will be engaged in other activities in addition to those referred to above);

4. Costs of maintaining any offices in the countries in which such prospective purchasers are located (allocated to the Project on an equitable basis if such offices are also used for other activities in addition to those referred to above);

5. Charges for exclusively owned equipment of Enron located in the countries in which such prospective purchasers are located, at rates not to exceed the average commercial rates of non-affiliated third parties then prevailing for like equipment for use in such area (allocated to the Project on an equitable basis if such equipment is also used for other activities in addition to those referred to above);

6. The cost of services provided by third parties, including, without limitation, fees and expenses of legal, accounting, tax, public relations, marketing and other consultants that are reasonably necessary for the activities described above; and

7. Any other costs and expenditures incurred by Enron that are reasonably necessary for the activities described above.

If employees are engaged in other activities in addition to the solicitation of purchasers, the cost of such employees shall be allocated to the Project on an equitable basis.

o historic costs allocated to Project shall include costs incurred with respect to Oman (excluding power generation) but shall exclude costs incurred with respect to Yemen
o each party's interest shall bear its pro rata share of and be reduced proportionately by all existing commitments, if any, including pursuant to agreements with Mohamed Ajami and his related entities.

Risks
o all risks incident to the FOB LNG Sales Contract take or pay commitments which are not funded as due by payments from other sources shall be borne 80% Enron and 20% EOG

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o EOG shall participate in 20% of the costs and benefits of any risk mitigation strategies employed by Enron with respect to the risk of the take or pay commitment
o all risks, obligations and credit support relating to Project Company (including financing of QGPC equity share) and all obligations under the Project documents to be borne 80% Enron and 20% EOG
o EOG to provide credit support for required Enron guarantees of EOG share of obligations

Co-Ownership Issues
o as set forth on Exhibit F with respect to joint 35% interest except:
o Enron designates all Enron directors on Project Company board
o Enron votes all shares of Project Company stock owned by Enron or EOG

Refund of Amounts Paid
o if within six months following the execution of the Agreement Enron determines not to supply energy from the Project to Enron's Dabhol power project in India, Enron will refund to EOG the lesser of (a) $3,000,000 and (b) amounts attributable to the Project and included in amounts payable by EOG to Enron for purposes of completing the Settlement Payment (as defined in Exhibit F) and any other amounts paid by EOG to Enron in respect of the Qatar Project through the date of such determination.

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EXHIBIT D

AGREEMENTS RELATING TO MOZAMBIQUE PROJECT

Project Ownership
o 80% Enron-20% EOG
o each party's interest shall bear its pro rata share of and be reduced proportionately by all existing commitments including commitments, if any, to William J. Friedman and related companies

Project Scope
o all operations and activities from the Pande gas reservoir to FOB sales of steel at Maputo, including exploration, drilling, production, gathering, gas transmission, gas sales, steel plant construction and operation and sales of steel production
o any participation interest in iron ore reduction plant in South Africa using gas from Mozambique gas reservoir
o any future expansions involving the Project Company facilities will be split 80% Enron-20% EOG
o all other projects in Mozambique (including new License Areas) or South Africa will not be considered part of the Project and may be pursued independently by Enron and EOG in accordance with the Agreement

Lead
o Enron will be the Lead Party in accordance with Exhibit F except:
o Enron will designate the operator of gas pipeline and Maputo steel plant provided that the terms of such operatorship will be on an arms-length basis
o EOG will represent Enron's interest in connection with the designation of the operator of License Area and gathering system provided that the terms of such operatorship will be on an arms-length basis

Costs and Risks
o all historic and future costs and risks relating to the Project to be shared 80% Enron and 20% EOG in accordance with Exhibit F

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EXHIBIT E

AGREEMENTS RELATING TO UZBEKISTAN PROJECT

Co-Ownership
o 80% EOG-20% Enron
o Each party's interest will bear its pro rata share of and be reduced proportionately by the following commitments:
o Uzbekneftegaz has a carried interest of 44.9%
o MD International Petroleum, Inc., has the option to acquire 10% of the working interest available to Enron and EOG, but MDI's interest will never be greater than 5% or less than 4.5% of 100% of all interests. MDI pays its share of Uzbekneftegaz' carried interest.
o Botas International Ltd. has been offered the right to acquire up to 40% of the working interest available to Enron and EOG in the project for the following consideration: (i) cash payment of $250,000; (ii) the obligation to pay 100% of the incremental project development costs from the date a joint development agreement is signed with Botas until cumulative expenditures paid by Botas equals $3.76 million; and (iii) the obligation to pay 100% of the cost to re-enter and production test two drilled, cased and suspended gas development wells in Kandym Field. Botas pays its share of Uzbekneftegaz' carried interest.

Project Scope
o Co-owned activities in Uzbekistan limited to upstream activities:
o Gas reservoir to export pipeline including exploration, drilling, production, gathering, gas processing, delivery of gas to export pipeline, marketing of liquids and other valuable products
o Downstream activities including contract services, transmission, marketing, provision of services to national natural gas infrastructure projects, procurements of pipeline capacity and transmission and marketing of natural gas to Gazprom or final market shall be outside the Project Scope and will be subject to the general principles of the Agreement
o EOG and Enron agree on transfer pricing of gas at suitable location
(Uzbek-Kazak border or plant tailgate)

Lead
o EOG will be Lead Party for Project

Costs
o all historic and future costs attributable to Project will be shared 80% EOG and 20% Enron in accordance with Exhibit F

Risks
o all historic and future costs and risks associated with the Project shall be borne 80% EOG- 20% Enron in accordance with Exhibit F

E-1

EXHIBIT F

STANDARD COST SHARING AND CO-OWNERSHIP MATTERS

Historic Costs
o all historic third party costs previously incurred by Enron and EOG in connection with each Project through a date to be agreed upon (the "Settlement Date") will be pooled and reallocated between EOG and Enron based on their agreed ownership of the Project, and the party that has borne less than its share of such costs will make a payment (the "Settlement Payment") to the other party on the date of execution of the Agreement so that each party bears its share of the costs previously incurred
o for purposes of determining the Settlement Payment, internal costs will be allocated to the Project in accordance with standard Company procedures and will be reviewed by the parties prior to the date of execution of the Agreement and, unless otherwise agreed, will be pooled and redistributed between EOG and Enron based on their agreed ownership of the Project
o for purposes of determining the Settlement Payment, unless otherwise agreed, such third party and internal costs incurred prior to the date of the Agreement will be settled on a project-by-project basis by a payment from Enron to EOG or from EOG to Enron as the case may be on the Date of execution of the Agreement
o The settlement on the date of execution of the Agreement of all historic third party and internal costs incurred prior to and including the Settlement Date shall be final and binding and shall not be subject to adjustment or change by either party for any reason (including, without limitation, accounting errors, the failure to include costs properly allocable to the Project and the inclusion of costs not properly allocable to the Project).

Future Costs
o all future costs, risks and liabilities incurred with respect to the Project from and after the Settlement Date (third party and internal) will be borne and paid in accordance with ownership interest in the Project
o future costs will be incurred in accordance with approved development budgets
o internal costs will be allocated to the Project in accordance with prior practice
o individual performance bonuses attributable to the Project will be included as Project Costs
o with respect to each Project, the costs incurred by each party will be pooled and balanced by appropriate cash transfers on a quarterly basis

Co-Ownership Matters
o all decisions as to Project structure, terms and conditions of project documents and project financing, selection of third party vendors and contractors will be made by Lead Party on behalf of both parties
o in the event Lead Party elects to bring a strategic partner into the Project, both parties' interests will be reduced pro rata
o in the event either party elects to sell down their interest in Project, it will offer the Other Party the opportunity to participate in such sale on a pro rata basis if possible
o if Lead Party elects to sell all or a majority of its interest to a Buyer who requires acquisition of all or a majority of the interest, Other Party shall participate in such sale on a pro rata basis

F-1

o directors attributable to EOG's and Enron's interest in any joint entity with third parties formed with respect to Project will be designated by Lead Party

F-2

EXHIBIT G

NON-EXCLUSIVE LICENSE AGREEMENT

This Non-Exclusive License Agreement ("Agreement") is entered into as of December 9, 1997, by and between Enron Corp., a corporation organized and existing under the laws of the State of Oregon with its headquarters at 1400 Smith Street, Houston, Texas 77002 ("Licensor"), and Enron Oil & Gas Company, a corporation organized and existing under the laws of the State of Delaware with its headquarters at 1400 Smith, Houston, Texas 77002, on behalf of itself and its subsidiaries, whether existing now or in the future (collectively referred to as "Licensee").

WHEREAS, Licensor is the owner of the names and/or marks listed on Attachment A, attached hereto and incorporated for all purposes herein ("Names and/or Marks"), any domestic or foreign Registrations or Applications for registrations of the Names and/or Marks, as well as the goodwill and business interest associated with the Names and/or Marks; and

WHEREAS, Licensee is desirous of using the Names and/or Marks in association with the business, goods and services of Licensee in accordance with the terms and conditions of this Agreement. Licensee is also desirous of obtaining a right and license in certain names and/or marks that may be adopted or acquired in the future by Licensor which become a member of the Enron Corp. family of names and marks.

NOW, THEREFORE, in consideration of the mutual promises and covenants contained herein, the receipt and sufficiency of which are hereby acknowledged, Licensor and Licensee agree as follows:

1. Except as otherwise provided herein, Licensor hereby grants to Licensee, and Licensee accepts, a non-exclusive, non-transferable, royalty-free and worldwide right and license to adopt and use the Names and/or Marks in connection with Licensee's business, goods and services. Licensee represents and warrants that it is not now using, and shall not in the future use, any of Licensor's trade names, trademarks or service marks that are not listed on Exhibit A. Provided, however, in the case of the names and marks ENRON OIL & GAS COMPANY, ENRON OIL & GAS, ENRON GAS & OIL, ENRON OIL or ENRON EXPLORATION Licensee may, without the prior written permission of Licensor, adopt and commence using any such name and mark with various suffixes thereon that denote countries, geographical areas, or limited liability (e.g., ENRON OIL & GAS COMPANY--INDIA or ENRON OIL & GAS COMPANY--FAR EAST.) Each such derivation of any such root name and mark shall be a Name and Mark owned by Licensor and the rights and obligations of the parties with respect to such Name and Mark shall be governed by this Agreement. Upon request, Licensee shall provide Licensor with a listing of all such Names and Marks. If [i] Licensor hereafter adopts (or acquires) and uses any other terms or logos as trade names, trademarks or service marks, and [ii] Licensor allows its entire family of companies to use such trade names, trade marks, or service marks, and [iii] Licensor gives Licensee prior written authorization to use such terms or logos, Licensee's use of such terms or logos shall be pursuant to the terms and conditions of this Agreement; however, until such time as Licensor grants Licensee written authorization to use such additional trade names, trademarks and/or service marks, Licensee shall have no right or license to use such additional trade names, trademarks, and service marks and Licensee agrees that it shall not

G-1

use such additional trade names, trademarks and service marks without such prior written authorization.

2. Notwithstanding anything to the contrary provided herein, Licensee agrees that it shall not use the Names and/or Marks, or any terms confusingly similar thereto, in connection with the marketing or distribution of oil, gas or any other goods or services in India; provided that the foregoing will not prohibit Licensee from (a) using the Names and/or Marks in performing services (other than marketing of oil, gas or any other goods or services for third parties) under any joint operating agreements relating to oil or gas properties in or offshore of India or (b) entering into contracts providing for sales for Licensee's own account to the Government of India or entities controlled by it if and to the extent such sales are required or permitted to be made pursuant to the terms of any production sharing agreement or similar agreement.

3. Licensee shall use the Names and/or Marks only as authorized herein by Licensor and in accordance with such standards of quality as Licensor may establish. Licensor shall at all times remain the owner of the Names and/or Marks and related Applications and Registrations; all use of the Names and/or Marks by Licensee shall inure to the benefit of Licensor; and Licensee shall obtain no right, title or interest in and to the Names and/or Marks or any other word, words, term, design, name or mark that is confusingly similar thereto other than the non-exclusive license granted herein.

4. The term of this Agreement shall be one year from the date of this Agreement. The non-exclusive license granted herein shall be renewed and extended automatically and repetitively for similar terms unless otherwise terminated in accordance with the provisions set forth herein.

5. This Agreement and the non-exclusive license granted herein shall terminate as follows:

(a) This Agreement and the non-exclusive license granted herein may be terminated by either party at any time for Cause, which is defined as a material breach of the obligations of this Agreement, by the giving of a written notice of breach to the defaulting party, and, if such breach is not cured within thirty (30) days, by the giving of a written notice of termination. This Agreement and the non-exclusive license granted herein shall then terminate effective upon the receipt of such written notice of termination.

(b) This Agreement and the non-exclusive license granted herein may be terminated by Licensor at any time and for any reason if Licensor's stock ownership in Licensee is less than 35% of the issued and outstanding common stock of Licensee having the right to vote for directors of Licensee.

6. Upon termination of this Agreement and the non-exclusive license granted herein, Licensee shall immediately cease all use of the Names and/or Marks and shall thereafter make no use of any word, words, term, design, name or mark confusingly similar with any of the Names and/or Marks; provided, however, that Licensee shall have the right in any contract or other legal instrument to be identified by its then current name, followed by the words "formerly known as Enron Oil & Gas Company" or any similar phrase.

G-2

7. Licensor agrees that during the term of this Agreement and for a period of eighteen (18) months after the date of termination, Licensor shall not use the term ENRON OIL & GAS COMPANY in connection with any business, goods or services, or license others to do so; thereafter, Licensor may freely use the term ENRON OIL & GAS COMPANY as a name or mark in connection with any and all businesses, goods or services.

8. Licensor and Licensee acknowledge and agree that the name and mark EOG, when used separate and apart from Licensor's name and mark ENRON OIL & GAS, presents a commercial impression that is different and separate from Licensor's name and mark ENRON OIL & GAS and that the name and mark EOGI, when used separate and apart from Licensor's name and mark ENRON OIL & GAS INTERNATIONAL, presents a commercial impression that is different and separate from Licensor's name and mark ENRON OIL & GAS INTERNATIONAL. Subject to the condition subsequent that the license granted under this Agreement is terminated, Licensor quitclaims unto Licensee (a) all of Licensor's right, title and interest, if any, in and to the name and mark EOG, and the goodwill associated therewith, as used in connection with Licensee's business, goods or services in a fashion that presents a different and separate commercial impression from Licensor's name and mark ENRON OIL & GAS and (b) all of Licensor's right, title and interest, if any, in and to the name and mark EOGI, and the goodwill associated therewith, as used in connection with Licensee's business, goods or services in a fashion that presents a different and separate commercial impression from Licensor's name and mark ENRON OIL & GAS INTERNATIONAL. However, Licensee agrees that after termination of this Agreement, Licensee shall not use the names and marks EOG and EOGI in any fashion that is likely to lead the public to believe that such name and mark refers to ENRON OIL & GAS or ENRON OIL & GAS INTERNATIONAL or that Licensee's business, goods or services are associated or affiliated with or sponsored by Licensor (e.g., Licensee shall adopt and commence using some new name, such as EMPIRE OIL & GAS, or EOG, INC., that is not likely to cause confusion in the marketplace with Licensor's business, goods and services).

9. The relationship of Licensor and Licensee pursuant to this Agreement shall be that of independent contractors. Licensor shall not by virtue of this Agreement control or have the right to control the methods and means by which Licensee offers its goods or services in association with the Names and/or Marks.

10. The non-exclusive license granted by Licensor to Licensee is personal to Licensee and may not be assigned, sub-licensed or transferred by Licensee in any manner. To the extent that Licensee has subsidiary corporations that utilize Licensor's Names and/or Marks, each such subsidiary corporation shall also sign this Agreement.

11. This Agreement constitutes the entire agreement and understanding between the parties with respect to the subject matter hereof and merges all prior discussions, representations and negotiations with respect to the subject matter hereof.

12. This Agreement shall be interpreted, construed and enforced pursuant to the laws of the State of Texas.

IN WITNESS WHEREOF, Licensor and Licensee, appearing through their duly authorized representatives, have executed this instrument to be effective as of the date first set forth above.

G-3

ENRON CORP.

By:  /s/ J. CLIFFORD BAXTER
    ------------------------
Name: J. Clifford Baxter
Title: Senior Vice President, Corporate Development

ENRON OIL & GAS COMPANY

By:  /s/ FORREST E. HOGLUND
    ------------------------
Name:  Forrest E. Hoglund
Title:  Chairman of the Board and
          Chief Executive Officer

G-4

EXHIBIT A
TO
NON-EXCLUSIVE LICENSE AGREEMENT
BETWEEN
ENRON CORP. AND ENRON OIL & GAS COMPANY

Enron Corp.'s Names and Marks

that Enron Oil & Gas Company is authorized to use:

1. Enron, ENRON AND FANCIFUL O DESIGN logo, and ENRON AND FANCIFUL E DESIGN logo
2. Enron Corp. and ENRON CORP, ENRON AND FANCIFUL O DESIGN logo, and ENRON AND FANCIFUL E DESIGN logo
3. Enron Oil & Gas Company, along with various suffixes that designate countries, geographical areas or limited liability
4. SOCKET AND FLAME logo
5. NATURAL GAS. ELECTRICITY. ENDLESS POSSIBILITIES. slogan
6. ENDLESS POSSIBILITIES slogan
7. Enron Oil & Gas, along with various suffixes that designate countries, geographical areas or limited liability
8. Enron Gas & Oil, along with various suffixes that designate countries, geographical areas or limited liability
9. Enron Oil, along with various suffixes that designate countries, geographical areas or limited liability
10. Enron Exploration, along with various suffixes that designate countries, geographical areas or limited liability
11. Enron Oil & Gas Capital Management I, Ltd.
12. Enron Oil & Gas Property Management, Inc.
13. Enron Oil & Gas Investments, Inc.
14. Enron Oil & Gas Acquisitions L.P.
15. Enron Oil & Gas Marketing, Inc.

G-5

EXHIBIT H

TERMS AND PROVISIONS OF AGREEMENTS BETWEEN HPL AND EOG

H-1

HOUSTON PIPE LINE COMPANY/ENRON OIL & GAS COMPANY
TERM SHEET DATED AS OF AUGUST 1, 1997, SUBJECT TO CONSUMMATION OF
EQUITY PARTICIPATION AND BUSINESS OPPORTUNITY AGREEMENT

This term sheet sets out the agreements among Enron Oil & Gas Company ("EOG") and Houston Pipe Line Company ("HPL"), a wholly owned subsidiary of Enron Corp., HPL Resources Company ("HPLR"), a wholly owned subsidiary of HPL, and Intratex Gas Company ("IGC"), a wholly owned subsidiary of HPL, which are being entered into upon the condition of the consummation of that certain Equity Participation and Business Opportunity Agreement among EOG and Enron Corp. and various of its subsidiary companies. HPL, HPLR, IGC and EOG agree to diligently work toward completion of documentation on or before October 17, 1997 acceptable to all parties reflecting the agreements herein set forth.

VARIOUS IGC/EOG DEDICATED GAS CONTRACTS

1. EOG and IGC agree to terminate the following dedicated gas contracts between EOG and IGC, identified below by reference to IGC internal contract number:

IGC # 18-40228-171       Omnibus
IGC # 18-40228-102       Ward County
IGC # 18-40228-104       Loving County
IGC # 18-40228-107       Ward County
IGC # 18-40228-133       Reeves County
IGC # 18-40228-134       Reeves County
IGC # 18-40228-135       Ward County
IGC # 18-40228-152       Loving County
IGC # 18-40228-160       Schleicher County
IGC # 18-40228-162       Sutton County
IGC # 18-16006-101       Ward County
IGC # 18-28850-101       Sutton County
IGC # 18-28850-102       Sutton County
IGC # 18-32500-110       Ward County

OMNIBUS DEDICATED CONTRACT

2. HPL, HPLR and EOG agree to terminate that certain Gas Purchase Contract dated effective October 1, 1987, between EOG and HPL (HPL contract # 12-40228-167), and its related evergreen excess gas purchase contract dated January 8, 1988, between EOG and HPLR (HPLR contract # 078-40228-119) (collectively, the "Omnibus Contract"); provided, the termination of the Omnibus Contract relieving the parties of their rights and obligations thereunder is subject to the fulfillment of the following conditions:

a. The termination of the Omnibus Contract shall be partial in that the Omnibus

1

Contract shall survive to cover the interests of Black Hawk Oil Company purchased from EOG as of March 1, 1994 and to which the Omnibus Contract continues to have effect among Black Hawk Oil Company, HPL and HPLR.

b. EOG will dedicate for purchase by HPL or its designee all current and future interests it may own or control in all fields now committed under the Omnibus Contract for purchase by HPL (and expressly including the "Zapata Released Gas Properties" described in that certain Gas Purchase Contract Amendment dated December 1, 1995), currently connected to HPL's pipeline system or wherein production attributable to such fields is currently sold to HPL or HPLR under the Omnibus Contract (the "Omnibus Fields"). The Omnibus Fields are listed below and more particularly described in Appendix "1" incorporated herein for all purposes; provided, it is expressly agreed that there shall be excepted from the Omnibus Fields the well bores, and production therefrom, identified in Appendix "1-A" (the "Omnibus Well Bore Exceptions"). It is expressly agreed that the Omnibus Fields shall include certain fields and wells subject to that certain Gas Purchase Contract Amendment dated December 1, 1995 identified therein as the "Zapata Excess Released Gas Properties;" provided, the "Zapata Excess Released Gas Properties" shall continue to be released subject to the provision of transportation by HPL of said gas under the terms of the Gas Transportation Agreement dated April 1,1997, between HPL and Enron Oil & Gas Marketing, Inc. for the term thereof, or any similar subsequent agreement. EOG and HPL or its designee will enter into gas purchase agreements committing the Omnibus Fields, excepting the Omnibus Well Bore Exceptions, for a primary term through December 31, 2003 at the contract prices set forth below referring to the common field name set forth in Appendix "1."

Hundido, Zapata County

Per MMBtu, 100 percent of the Houston Ship Channel/Beaumont, Texas Index for large packages of gas as published in the first publication of the month in Inside F.E.R.C.' s Gas Market Report LESS $0.12

J.C. Martin, Zapata County

Per MMBtu, 95 percent of the Houston Ship Channel/Beaumont, Texas Index for large packages of gas as published in the first publication of the month in Inside F.E.R.C.'s Gas Market Report

La Perla, Zapata and Webb Counties

Per MMBtu, 95 percent of the Houston Ship Channel/Beaumont, Texas Index for large packages of gas as published in the first publication of the month in Inside F.E.R.C.'s Gas Market Report

2

Las Ovejas, Zapata County

Per MMBtu, 100 percent of the Houston Ship Channel/Beaumont, Texas Index for large packages of gas as published in the first publication of the month in Inside F.E.R.C.'s Gas Market Report LESS $0.12

San Ygnacio, Zapata County

Per MMBtu, 100 percent of the Houston Ship Channel/Beaumont, Texas Index for large packages of gas as published in the first publication of the month in Inside F.E.R.C.'s Gas Market Report LESS $0.09 and LESS the sum of any fees and charges incurred by buyer to have the gas transported from the applicable points of delivery to the pipeline system of HPL

Volpe, Zapata County

Per MMBtu, 100 percent of the Houston Ship Channel/Beaumont, Texas Index for large packages of gas as published in the first publication of the month in Inside F.E.R.C.'s Gas Market Report LESS $0.09 at the Thompsonville point of delivery

Sprint South, Kleberg County

Per MMBtu, 100 percent of the Houston Ship Channel/Beaumont, Texas Index for large packages of gas as published in the first publication of the month in Inside F.E.R.C.'s Gas Market Report LESS $0.15

BIG COWBOY DEDICATED CONTRACT

3. HPL, HPLR and EOG agree to continue throughout its term that certain Gas Purchase Contract dated effective October 10, 1978, as previously amended, between EOG and HPL (HPL contract # 12-40228-162), and its related evergreen excess gas purchase contract dated March 1, 1988, as previously amended, between EOG and HPLR (HPLR contract # 078-40228-120) (collectively, the "Big Cowboy Contract") in accordance with the following:

a. All current and future interests owned or controlled by EOG within the "Area of Mutual Interest" set forth in that certain Big Cowboy System Construction, Ownership, Operating and Maintenance Agreement dated August 20, 1992 between HPL and Gulf Energy Pipeline Co. (HPL contract # 012-35422-40-003) (the "AMI Fields") will remain dedicated pursuant to the terms of the Big Cowboy Contract, except as set forth in item d below.

b. All current and future interests owned or controlled by EOG now dedicated under the Big Cowboy Contract for purchase by HPL (and expressly including the "Webb Released Gas Properties" described in that certain Gas Purchase Contract Amendment dated December 1, 1995), currently connected to HPL's pipeline system or wherein production attributable to such fields is currently sold to HPL or HPLR under the Big Cowboy Contract, other than the AMI Fields, and excepting therefrom the wells and associated leases identified as the "Juanita

3

Field Wells" listed in Appendix "2-B" (the "Other Big Cowboy Fields"), will remain dedicated pursuant to the terms of the Big Cowboy Contract. The AMI Fields and the Other Big Cowboy Fields are more particularly described in Appendix "2" incorporated herein for all purposes; provided, it is expressly agreed that there shall be excepted from the AMI Fields and the Other Big Cowboy Fields the well bores, and production therefrom, identified in Appendix "2-A" (the "Big Cowboy Well Bore Exceptions"). It is expressly agreed that the AMI Fields and the Other Big Cowboy Fields include certain fields and wells subject to that certain Gas Purchase Contract Amendment dated December 1, 1995 identified therein as the "Webb Excess Released Gas Properties;" provided, the "Webb Excess Released Gas Properties" shall continue to be released subject to the provision of transportation by HPL of said gas under the terms of the Gas Transportation Agreement dated April 1,1997, between HPL and Enron Oil & Gas Marketing, Inc. for the term thereof, or a similar subsequent agreement, if any.

c. The contract price for the AMI Fields and the Other Big Cowboy Fields, excepting the Big Cowboy Well Bore Exceptions, shall remain as currently stated in the Big Cowboy Contract for the remaining term thereof.

d. HPL and HPLR will permanently release from the Big Cowboy Contract those certain properties recently acquired by EOG and as more particularly described on Appendix "2-C" (the "Amoco Fields") coincident with EOG's execution of those certain agreements between EOG and Webb-Duval Gatherers and Exxon Gas Company USA regarding all production from the South Callaghan, Casa Verde, Umbrella and Cinco Compadres fields which comprise a portion of the Amoco Fields through a term to December 31, 2003.

e. HPL and HPLR will permanently release all acreage from the Big Cowboy Contract except (i) the AMI Fields, (ii) the Other Big Cowboy Fields, (iii) the Amoco Fields (to be released in accordance with item d above), (iv) the interests of Black Hawk Oil Company purchased from EOG as of March 1, 1994 and to which the Big Cowboy Contract continues to have effect among Black Hawk Oil Company, HPL and HPLR, and (v) the interests of Sonat Exploration Company purchased from EOG as of August 1, 1994 and to which the Big Cowboy Contract continues to have effect among Sonat Exploration Company, HPL and HPLR.

BAMMEL DEDICATED CONTRACT

4. HPL, HPLR and EOG agree to terminate that certain Gas Purchase Contract dated effective August 1, 1966, between EOG and HPL (HPL contract # 12-40228-168), and its related evergreen excess gas purchase contract dated March 1, 1988, between EOG and HPLR (HPLR contract # 078-40228-124) (collectively, the "Bammel Contract"); provided, the termination of the Bammel Contract relieving the parties of their rights and obligations thereunder is subject to the fulfillment of

4

the following conditions:

a. EOG will dedicate for purchase by HPL or its designee all current and future interests it may own or control in the Bammel/North Milton fields committed under the Bammel Contract for purchase by HPL or HPLR (the "Bammel Fields"). The Bammel Fields are more particularly described in Appendix "3" incorporated herein for all purposes. EOG and HPL or its designee will enter into a gas purchase agreement committing the Bammel Fields for a term coincident with the term of all real property interests attributable to gas production within the fields owned or controlled by EOG, and any and all renewals, extensions or replacements of same.

b. The contract price for the Bammel Fields, per MMBtu, is 94 percent of the Houston Ship Channel/Beaumont, Texas Index for large packages of gas as published in the first publication of the month in Inside F.E.R.C.'s Gas Market Report.

EOG and HPL or its designee will enter into supporting agreements to reflect the following matters:

c. At no charge to EOG, HPL will maintain the current conditions at the Bammel Fields' central delivery point into HPL's compression facilities (the 8 inch flange) wherein (i) the pipeline operating pressures shall be maintained at or below 450 psig, except in the event of emergency circumstances or other short term conditions wherein the operating pressures may exceed 450 psig up to 490 psig, and (ii) EOG is able to continue delivering gas that has not been dehydrated to meet pipeline specifications.

d. At no charge to EOG, HPL will provide gathering lines and metering for future wells completed in the Bammel Fields based upon a well-connect criteria of two BCF of recoverable reserves for each mile of pipeline. This criteria will be reviewed and reestablished by the parties every two years.

e. At no charge to HPL, EOG will continue to operate and pump in accordance with prudent operating standards the Erhardt and the Hamill Nos. 1, 2 and 3 Wells and associated leases for the term of the contract covering the Bammel Fields provided for above. EOG will discharge any and all existing claims of EOG against HPL and HPLR for past performance of these activities.

f. At no charge to HPL, EOG will perform all the necessary accounting, including, without limitation, royalty check payments, division order updates and similar activities, associated with HPL's production on behalf of HPL. EOG will discharge any and all existing claims of EOG against HPL and HPLR for past performance of these activities.

5

g. EOG commits to remediate, at its sole cost and in a timely manner, the drilling mud and cuttings disposal sites according to processes and procedures generally accepted within the industry and by applicable regulatory bodies and will continue its operations in a manner acceptable to HPL and in accordance with applicable law and regulations.

h. HPL will discharge any and all existing claims of HPL against EOG relating to work performed by HPL or its designee in the Bammel Fields through July 31, 1997. For the period commencing after July 31, 1997, HPL will invoice EOG for (i) work performed at the written request of EOG or (ii) work performed that is directly related to, and reasonably necessary for, the handling of EOG's production from the Bammel Fields, taking into consideration the location of the Bammel Fields in relation to the Bammel storage facility owned by HPL (either category (i) or (ii), a "Condition"). EOG agrees to make payment to HPL for the performance of work if such work meets a Condition, to the extent the costs charged therefor are reasonably comparable to industry standard charges for such work, except with regard to prospective charges as provided in paragraph 4.d above. HPL agrees to provide EOG, or cause its designee to provide EOG, reasonable advance notice of the commencement of the performance of any work directly related to, and reasonably necessary for, the handling of EOG's production, except where emergency circumstances exist.

WOODBINE PROSPECT, POLK AND TYLER COUNTIES (TEXAS)

5. EOG agrees to dedicate interests owned or controlled by EOG in the Woodbine Prospect acreage to HPLR for purchase under the same contractual arrangements as exist between HPLR and Black Stone Energy Company by ratification of that certain Gas Purchase Agreement dated July 1, 1997 between HPLR and Black Stone Energy Company.

FURTHER ASSURANCES

6. With regard to all other areas within the States of Texas or Louisiana where EOG currently or in the future conducts exploration and production operations, EOG ensures HPL that HPL will be accorded the same rights and opportunities to compete for EOG's business as other third party gatherers, transporters and supply purchasers.

6

The parties do hereby execute this term sheet in multiple counterparts effective as of August 1, 1997.

ENRON OIL & GAS COMPANY

By:  /s/ MARK G. PAPA
   ----------------------------
Name:  Mark G. Papa
     --------------------------
Title: President
      -------------------------
Date:  August 18, 1997
     --------------------------

HOUSTON PIPE LINE COMPANY

By:  /s/ MICHAEL S. MCCONNELL
   ----------------------------
Name:  Michael S. McConnell
     --------------------------
Title: President
      -------------------------
Date:  August 18,1997
     --------------------------

INTRATEX GAS COMPANY

By:  /s/ MICHAEL S. MCCONNELL
   ----------------------------
Name:  Michael S. McConnell
     --------------------------
Title: President
      -------------------------
Date:  August 18, 1997
     --------------------------

HPL RESOURCES COMPANY

By:  /s/ MICHAEL S. MCCONNELL
   ----------------------------
Name:  Michael S. McConnell
     --------------------------
Title: President
      -------------------------
Date:  August 18, 1997
     --------------------------

7

APPENDIX "1"

Omnibus Fields

The Omnibus Fields include the acreage and all depths covered by leases, fee interests and all other real property interests of whatever nature attributable to gas production from the wells identified herein. The identification of the particular wells herein is for reference only and does not limit the forgoing.


APPENDIX "1"

OMNIBUS FIELDS

EOG PROPERTIES CONNECTED TO HPL
EOG CONTRACT NUMBERS: HPL99001, NGM99001
HPL CONTRACT NUMBER: 12-40228-167
HPLR CONTRACT NUMBER: 078-40228-119

COMMON FIELD NAME      METER       FIELD        COUNTY           WELL NAME              WELL NUMBER         RCI          API
-----------------    ---------   ---------    ---------- ---------------------------  ---------------     -------     ----------
SAN YGNACIO FIELD       297     SAN YGNACIO     ZAPATA        GARZA, AMERICA ET AL           1            125326      4250532351

 LA PERLA FIELD        5155      LA PERLA        WEBB          HEIN, LUZ A. ESTATE          10            144313      4247935653
                       5155      LA PERLA       ZAPATA       BRUNI MINERAL TRUST A-A         1            069973      4250530529
                       5155      LA PERLA       ZAPATA       BRUNI MINERAL TRUST A-A        12            142469      4250532913
                       5155      LA PERLA       ZAPATA       BRUNI MINERAL TRUST A-A        13            144382      4250532950
                       5155      LA PERLA       ZAPATA       BRUNI MINERAL TRUST A-B         3            077960      4250530975
                       5155      LA PERLA       ZAPATA       BRUNI MINERAL TRUST A-B         7            134065      4250532638
                       5155      LA PERLA       ZAPATA       BRUNI MINERAL TRUST A-B        14            144341      4250532975
                       5155      LA PERLA       ZAPATA       BRUNI MINERAL TRUST AA         17            147687      4250533121
                       5155      LA PERLA       ZAPATA       BRUNI MINERAL TRUST AB          9            139464      4250532772
                       5155      LA PERLA       ZAPATA       BRUNI MINERAL TRUST AB         10            141749      4250532860
                       5155      LA PERLA       ZAPATA       BRUNI MINERAL TRUST AB         16            146526      4250533067
                       5155      LA PERLA       ZAPATA              HEIN, A.O.               1            131965      4250530090
                       5155      LA PERLA       ZAPATA              HEIN, A.O.               4            153183      4250533275
                       5155      LA PERLA       ZAPATA             HEIN, LUZ A.              4            139223      4250532779
                       5155      LA PERLA        WEBB          HEIN, LUZ A. ESTATE           5            141296      4247935386
                       5155      LA PERLA        WEBB          HEIN, LUZ A. ESTATE           6            141842      4247935445
                       5155      LA PERLA        WEBB          HEIN, LUZ A. ESTATE           7            142849      4247935544
                       5155      LA PERLA        WEBB          HEIN, LUZ A. ESTATE           8            142846      4247935563
                       5155      LA PERLA       ZAPATA            HEIN-BRUNI GU              1            143775      4250532937
                       5155      LA PERLA       ZAPATA            SULLIVAN HEIN              4            083852      4250531084

  J.C. MARTIN          5263      BENAVIDES      ZAPATA      ADRIAN EUDOXIO MARTINEZ GU       1            161735          NYA
                       5263      BENAVIDES      ZAPATA      LAURO-ACELA MARTINEZ B GU        2            156455      4250533321
                       5263      BENAVIDES      ZAPATA         MARSHALL, STANLEY G.          3            126242      4250532391
                       5263      J C MARTIN     ZAPATA        MARTINEZ, A. GAS UNIT          2            075822      4250530940
                       5263      J C MARTIN     ZAPATA           MARTINEZ, ACELA             1            077343      4250530981
                       5263      J C MARTIN     ZAPATA           MARTINEZ, ACELA             2            096183      4250531299
                       5263      BENAVIDES      ZAPATA           MARTINEZ, ACELA             3            123140      4250532239
                       5263      BENAVIDES      ZAPATA           MARTINEZ, ACELA             5            156060      4250533315
                       5263      BENAVIDES      ZAPATA           MARTINEZ, ADRIAN            7            154447      4250533296
                       5263      J C MARTIN     ZAPATA       MARTINEZ, ADRIAN GAS UNIT       1            074921      4250530906
                       5263      J C MARTIN     ZAPATA       MARTINEZ, ADRIAN GAS UNIT       4            153625      4250533280
                       5263      J C MARTIN     ZAPATA       MARTINEZ, ADRIAN GAS UNIT       6            154233      4250533284
                       5263      J C MARTIN     ZAPATA           MARTINEZ, EUDOXIO           1            075657      4250530869
                       5263      BENAVIDES      ZAPATA           MARTINEZ, EUDOXIO           3            122571      4250532230
                       5263      BENAVIDES      ZAPATA           MARTINEZ, EUDOXIO           8            126685      4250523240
                       5263      BENAVIDES      ZAPATA           MARTINEZ, EUDOXIO          10            157149      4250533353
                       5263      BENAVIDES      ZAPATA       MARTINEZ, EUDOXIO GAS UNIT      2            073452      4250530873
                       5263      BENAVIDES      ZAPATA       MARTINEZ, EUDOXIO GAS UNIT      6            124581      4250532308
                       5263      BENAVIDES      ZAPATA       MARTINEZ, EUDOXIO GAS UNIT      7            125756      4250532376
                       5263      BENAVIDES      ZAPATA            MARTINEZ, LAURO            1            072247      4250530598
                       5263      BENAVIDES      ZAPATA            MARTINEZ, LAURO            3            121431      4250532187
                       5263      BENAVIDES      ZAPATA    MARTINEZ, LAURO-ACELA GAS UNIT     1            131195      4250532541
                       5263      BENAVIDES      ZAPATA       MARTINEZ, LAURO-EUDOXIO GU      1            157155      4250533357
                       5263      BENAVIDES      ZAPATA         SAN FERNANDO MINERALS         1              NYA           NYA
                       5263      BENAVIDES      ZAPATA         SAN FERNANDO MINERALS         2            125447      4250532362
                       5263      BENAVIDES      ZAPATA         SAN FERNANDO MINERALS         3            128986      4250532454
                       5263      BENAVIDES      ZAPATA       SANCHEZ, CARMEN D. MEIRS        1            125197      4250532337
                       5263      BENAVIDES      ZAPATA       SANCHEZ, CARMEN D. MEIRS        2            128406      4250532470
                       5263      BIG MAC        ZAPATA     SANCHEZ-SAN FERNANDO MIN. GU      1            144473      4250532973
                       6103      J C MARTIN     ZAPATA         MARSHALL, STANLEY G.          2            113321      4250531833

Page 1

COMMON FIELD NAME      METER         FIELD          COUNTY            WELL NAME             WELL NUMBER         RCI         API
-----------------    ---------   -------------    ---------- ---------------------------  ---------------     -------    ----------
                       6103        BENAVIDES       ZAPATA        MARSHALL, STANLEY G.           3            126242      4250532391

   LAS OVEJAS          5353        LAS OVEJAS      ZAPATA          LAUREL, OSCAR M.             1            079647      4250530967
                       5353        LAS OVEJAS      ZAPATA          LAUREL, OSCAR M.             4            125956      4250532379
                       5353      JENNINGS WEST     ZAPATA           LAUREL, SERGIO              3            147314      4250531820
                       5353         J J & J        ZAPATA           LAUREL, SERGIO              6            144480      4250532893
                       5353        LAS OVEJAS      ZAPATA            LAUREL-STATE               1            079646      4250531003
                       5353        LAS OVEJAS      ZAPATA       URIBE, AURELIANO HEIRS          3            158767      4250533409
                       5357         HUNDIDO        ZAPATA            MARSHALL, S.G.             3            107214      4250531657
                       5357         MCASKILL       ZAPATA         MARSHALL, S.G. ET AL          4            117290      4250532033
                       6067      LAS OVEJAS WEST   ZAPATA            MARSHALL, S.G.             7            117239      4250531934
                       6067        POK-A-DOT       ZAPATA            MARSHALL, S.G.             8            122768      4250532245
                       6067        POK-A-DOT       ZAPATA            MARSHALL, S.G.             9            123171      4250532270
                       6067        POK-A-DOT       ZAPATA            MARSHALL, S.G.            10            124135      4250532303
                       6067        POK-A-DOT       ZAPATA            MARSHALL, S.G.            11            124659      4250532325
                       6067        POK-A-DOT       ZAPATA            MARSHALL, S.G.            12            124742      4250532326
                       6067        POK-A-DOT       ZAPATA            MARSHALL, S.G.            13            125128      4250532341
                       6067        POK-A-DOT       ZAPATA            MARSHALL, S.G.            15            125358      4250532468
                       6067        POK-A-DOT       ZAPATA            MARSHALL, S.G.            18            133350      4250532598
                       6067        POK-A-DOT       ZAPATA            MARSHALL, S.G.            19            135145      4250532659
                       6067      LAS OVEJAS WEST   ZAPATA            MARSHALL, S.G.            20            144509      4250532899
                       6067        POK-A-DOT       ZAPATA            MARSHALL, S.G.            23            143874      4250532956
                       6067        POK-A-DOT       ZAPATA        MARSHALL, STANLEY G.           6            111434      4250531781
                       6067         J J & J        ZAPATA             MARTINEZ, L.              2            114070      4250531899
                       6067         J J & J        ZAPATA             MARTINEZ, L.              3            116773      4250531953
                       6067        LAS OVEJAS      ZAPATA             MARTINEZ, M.              1            119603      4250531662
                       6067        POK-A-DOT       ZAPATA             MARTINEZ, M.              2            136399      4250531920
                       6067        POK-A-DOT       ZAPATA             MARTINEZ, M.              4            122996      4250532259
                       6067        POK-A-DOT       ZAPATA             MARTINEZ, M.              5            124660      4250532302
                       6067        POK-A-DOT       ZAPATA             MARTINEZ, M.              6            129202      4250532491
                       6067        POK-A-DOT       ZAPATA             MARTINEZ, M.              7            132276      4250532592
                       6067        POK-A-DOT       ZAPATA             MARTINEZ, M.              8            133492      4250532611
                       6067        POK-A-DOT       ZAPATA             MARTINEZ, M.              9            135304      4250532660
                       6067        POK-A-DOT       ZAPATA             MARTINEZ, M.             10            136476      4250532719
                       6067        POK-A-DOT       ZAPATA             MARTINEZ, M.             11            137793      4250532754
                       6067         J J & J        ZAPATA            MARTINEZ, M.B.             1            142684      4250532891
                       6067         J J & J        ZAPATA            MARTINEZ, OMAR             1            113497      4250531831
                       6067         J J & J        ZAPATA           RAMIREZ, R.A. GU            1            142491      4250532904
                       6067         J J & J        ZAPATA              URIBE, I.C.              1            143000      4250532885
                       6067         J J & J        ZAPATA              URIBE, I.C.              2            142541      4250532914
                       6067         J J & J        ZAPATA            URIBE, I.C. GU             4            159594      4250533447
                       6067        POK-A-DOT       ZAPATA            URIBE, SERAFIN             1            135497      4250532689
                       6067        POK-A-DOT       ZAPATA            URIBE, SERAFIN             2            136860      4250532733
                       6067        POK-A-DOT       ZAPATA            URIBE, SERAFIN             3            138235      4250532771

   HUNDIDO             6487       HUNDIDO NE       ZAPATA             RANGEL, B.M.              2            131102      4250532501
                       6487       MCMURREY SW      ZAPATA               TOMASA                  1              NYA           NYA
                       6748        HUNDIDO         ZAPATA          BENAVIDES, BELIA B           8            144453      4250532954
                       6748        HUNDIDO         ZAPATA        BENAVIDES, BELIA R. B          1            143730      4250531333
                       6748        HUNDIDO         ZAPATA        BENAVIDES, BELIA R. B          4            148985      4250531552
                       6748        HUNDIDO         ZAPATA        BENAVIDES, BELIA R. B          5            143731      4250531607
                       6748        HUNDIDO         ZAPATA        BENAVIDES, BELIA R. B          6            106618      4250531668
                       6748        HUNDIDO         ZAPATA        BENAVIDES, BELIA R. B          9            158107      4250533134
                       6748        HUNDIDO         ZAPATA        BENAVIDES, BELIA R. B         10            148274      4250533146
                       6748        HUNDIDO         ZAPATA        BENAVIDES, BELIA R. B         12            150705      4250533207
                       6748        HUNDIDO         ZAPATA        BENAVIDES, BELIA R. B         16            159486      4250533385
                       6748        HUNDIDO         ZAPATA        BENAVIDES, BELIA R. B        11L            150718      4250533181
                       6748        HUNDIDO         ZAPATA        BENAVIDES, BELIA R. B        13L            156907      4250533230
                       6748        HUNDIDO         ZAPATA        BENAVIDES, BELIA R. B        14L            154548      4250533299
                       6748        HUNDIDO         ZAPATA        BENAVIDES, BELIA R. B        15L            155904      4250533351
                       6748        HUNDIDO         ZAPATA        BENAVIDES, BELIA R. B        15U              NYA            NYA
                       6748        HUNDIDO         ZAPATA        BENAVIDES, BELIA R. C          1            149544      4250533172
                       6748        HUNDIDO         ZAPATA        BENAVIDES, BELIA R. C          3            157441      4250533372
                       6748     LOS MOGOTES N      ZAPATA        BENAVIDES, BELIA R. C         1A            074836      4250530601
                       6748        HUNDIDO         ZAPATA        BENAVIDES, BELIA R. C         4A            082509      4250531067
                       6760        HUNDIDO         ZAPATA           MARTINEZ TRUST              1              NYA       4250532992

Page 2

COMMON FIELD NAME      METER         FIELD          COUNTY            WELL NAME             WELL NUMBER        RCI          API
-----------------    ---------   -------------    ---------- ---------------------------  ---------------    --------    ----------
                       6776         HUNDIDO         ZAPATA          MARTINEZ, S.               1             075828      4250530888
                       6776         HUNDIDO         ZAPATA          MARTINEZ, S.               2             110746      4250530960
                       6776         HUNDIDO         ZAPATA          MARTINEZ, S.               3             142847      4250530998

  SPRINT SOUTH         6882      SOUTH SPRINT      KLEBERG    SOUTH SPRINT STATE GU #1         1             046021      4227300064
                       6882      SOUTH SPRINT      KLEBERG    SOUTH SPRINT STATE GU #2         1             053640      4227330001
                       6882      SOUTH SPRINT      KLEBERG    SOUTH SPRINT STATE GU #3         1             120342      4260230158

     VOLPE             268           VOLPE          ZAPATA       GARCIA, SALVADOR F            17              NYA           NYA
                       268           VOLPE          ZAPATA       GARCIA, SALVADOR F            20              NYA           NYA
                       268           VOLPE          ZAPATA       GARCIA, SALVADOR F            23              NYA           NYA
                       268           VOLPE          ZAPATA       GARCIA, SALVADOR G            16              NYA           NYA
                       268           VOLPE          ZAPATA       GARCIA, SALVADOR G            24              NYA           NYA

Page 3

APPENDIX "1-A"

Omnibus Well Bore Exceptions


APPENDIX "1-A"
Omnibus Well Bore Exceptions

COMMON FIELD NAME      METER        FIELD       COUNTY                WELL NAME          WELL NUMBER       RCI         API
------------------------------------------------------------------------------------------------------------------------------
LA PERLA FIELD         5155     LA PERLA         WEBB            HEIN, LUZ A. ESTATE          10          144313    4247935653
                       5155     LA PERLA        ZAPATA         BRUNI MINERAL TRUST A-A        12          142469    4250532913
                       5155     LA PERLA        ZAPATA         BRUNI MINERAL TRUST A-A        13          144382    4250532950
                       5155     LA PERLA        ZAPATA         BRUNI MINERAL TRUST A-B        14          144341    4250532975
                       5155     LA PERLA        ZAPATA         BRUNI MINERAL TRUST AB          9          139464    4250532772
                       5155     LA PERLA        ZAPATA         BRUNI MINERAL TRUST AB         10          141749    4250532860
                       5155     LA PERLA        ZAPATA               HEIN, LUZ A.              4          138223    4250532779
                       5155     LA PERLA         WEBB            HEIN, LUZ A. ESTATE           5          141296    4247935386
                       5155     LA PERLA         WEBB            HEIN, LUZ A. ESTATE           6          141842    4247935445
                       5155     LA PERLA         WEBB            HEIN, LUZ A. ESTATE           7          142849    4247935544
                       5155     LA PERLA         WEBB            HEIN, LUZ A. ESTATE           8          142845    4247935563
                       5155     LA PERLA        ZAPATA             HEIN-BRUNI GU               1          143775    4250532937

J.C. MARTIN            5263     BENAVIDES       ZAPATA               MARTINEZ, LAURO           3          121431    4250532187
                       5263      BIG MAC        ZAPATA         SANCHEZ-SAN FERNANDO MIN. GU    1          144473    4250532973

LAS OVEJAS             5353      JJ & J         ZAPATA               LAUREL, SERGIO            6          144480    4250532893
                       6067  LAS OVEJAS WEST    ZAPATA               MARSHALL, S.G.           20          144509    4250532899
                       6067     POK-A-DOT       ZAPATA               MARSHALL, S.G.           23          143574    4250532956
                       6067      JJ & J         ZAPATA                 MARTINEZ, L.            2          114070    4250531899
                       6067      JJ & J         ZAPATA                MARTINEZ, M.B.           1          142584    4250532891
                       6067      JJ & J         ZAPATA               RAMIREZ, R.A. GU          1          142491    4250532904
                       6067      JJ & J         ZAPATA                 URIBE, I.C.             1          143000    4250532885
                       6067      JJ & J         ZAPATA                 URIBE, I.C.             2          142541    4250532914

HUNDIDO                6748     HUNDIDO         ZAPATA              BENAVIDES, BELIA B         8          144453    4250532954
                       6748     HUNDIDO         ZAPATA             BENAVIDES, BELIA R. B       1          143730    4250531333
                       6748     HUNDIDO         ZAPATA             BENAVIDES, BELIA R. B       5          143731    4250531607
                       6760     HUNDIDO         ZAPATA               MARTINEZ TRUST            1            NYA     4250532992


APPENDIX "2"

AMI Fields and Other Big Cowboy Fields

The AMI Fields include all acreage and all depths covered by leases, fee interests and all other real property interests of whatever nature in the "Area of Mutual Interest" set forth in that certain Big Cowboy System Construction, Ownership, Operating and Maintenance Agreement dated August 20, 1992 between HPL and Gulf Energy Pipeline Co. (HPL contract # 012-35422-40-003). The "Area of Mutual Interest" is shown on the plat included in this Appendix "2" and the identification of the particular wells herein is for reference only and does not limit the foregoing.

The Other Big Cowboy Fields include the acreage and all depths covered by leases, fee interests and all other real property interests of whatever nature attributable to gas production from the wells identified herein and not located within the boundaries of the "Area of Mutual Interest." The identification of the particular wells herein is for reference only and does not limit the forgoing.


APPENDIX "2"

AMI AND OTHER BIG COWBOY FIELDS

EOG PROPERTIES CONNECTED TO HPL
EOG CONTRACT NUMBERS: HPL42028, NGM42001
HPL CONTRACT NUMBER: 12-40228-162
HPLR CONTRACT NUMBER: 078-40228-120

COMMON FIELD NAME   METER      FIELD       COUNTY       WELL NAME        WELL NUMBER     RCI      API
-----------------   -----   ------------   ------  --------------------- -----------   ------  ----------
RANCHO VIEJO        6546    RANCHO VIEJO    WEBB       APPLEGATE 2367          1        135559  4247934965
                    6546    RANCHO VIEJO    WEBB       APPLEGATE 2367          2        161116  4247936511
                    6548    RANCHO VIEJO    WEBB   APPLEGATE-ALLEY GAS UNIT    1        132263  4247934902

BRISCOE             6679    BRISCOE         WEBB       HUGHES RANCH            1        140166  4247935298
                    6679    BRISCOE         WEBB       HUGHES RANCH            2        141297  4247935412
                    6679    BRISCOE         WEBB       HUGHES RANCH            3        142477  4247935550

DESPARADO           6707    DESPARADO       WEBB        LUNDELL 40             2        141301  4247934998
                    6707    DESPARADO       WEBB        LUNDELL 40             3        141882  4247935480
                    6707    DESPARADO       WEBB        LUNDELL 40             4        142616  4247935512
                    6707    DESPARADO       WEBB        LUNDELL 44             1        144314  4247935581

BLACK CREEK         6728    BLACK CREEK     WEBB          DESPAIN              1        144464  4247935486
                    6728    BLACK CREEK     WEBB          DESPAIN              3        144477  4247935701
                    6728    BLACK CREEK     WEBB          DESPAIN              5        144494  4247935751
                    6728    BLACK CREEK     WEBB          DESPAIN              6        144490  4247935737
                    6728    BLACK CREEK     WEBB          DESPAIN              7        150681  4247935777
                    6728    BLACK CREEK     WEBB          DESPAIN              8        152432  4247935750
                    6742    BLACK CREEK     WEBB          DESPAIN             10        155275  4247936303
                    6742    BLACK CREEK     WEBB         BRISCOE D             1        144466  4247935618
                    6742    BLACK CREEK     WEBB         BRISCOE D             2        144469  4247935665
                    6742    BLACK CREEK     WEBB         BRISCOE D             3        144471  4247935678
                    6742    BLACK CREEK     WEBB         BRISCOE D             4        144482  4247935680
                    6742    BLACK CREEK     WEBB         BRISCOE D             5        144493  4247935679
                    6742    BLACK CREEK     WEBB         BRISCOE D             6        144491  4247935738
                    6742    BLACK CREEK     WEBB         BRISCOE D             8        150164  4247936094
                    6742    BLACK CREEK     WEBB         BRISCOE D             9        151280  4247936157
                    6742    BLACK CREEK     WEBB         BRISCOE D            10        152403  4247936203
                    6742    BLACK CREEK     WEBB         BRISCOE D            11        153167  4247936221
                    6742    BLACK CREEK     WEBB         BRISCOE D            12        157621  4247936410
                    6742    BLACK CREEK     WEBB         BRISCOE D            13        157585  4247936400
                    6742    BLACK CREEK     WEBB         BRISCOE D            14        157768  4247936422
                    6742    BLACK CREEK     WEBB         BRISCOE D            15        158102  4247936439
                    6742    BLACK CREEK     WEBB         BRISCOE D            16        158138  4247936459
                    6742    BLACK CREEK     WEBB         BRISCOE D            17        158231  4247936476
                    6742    BLACK CREEK     WEBB         BRISCOE D            19        161159  4247936525
                    6742    BLACK CREEK     WEBB         BRISCOE E            2A          NYA       NYA

LA MANGANA          6763    LA MANGANA      WEBB         1 PENA, HL            1        145813  4247935752
                    6763    LA MANGANA      WEBB         2 PENA, HL            2        146395  4250533059
                    6763    LA MANGANA      WEBB         3 PENA, HL            3        158861  4247935980
                    6763    LA MANGANA      WEBB         4 PENA, HL            4        159403  4247936193
                    6763    LA MANGANA      WEBB         5 PENA, HL            5        159602  4247936226
                    6763    LA MANGANA      WEBB         6 PENA, HL            6        160639  4247936573
                    6763    LA MANGANA      WEBB         7 PENA, HL            7        182236      NYA

BRISCOE M&B         8751    CALICHE CREEK   WEBB         BRISCOE B             1        142683  4247935528
                    8751    CALICHE CREEK   WEBB         BRISCOE B             2        143772  4247935582
                    8751    CALICHE CREEK   WEBB         BRISCOE B             3        145693  4247935699

Page 1

COMMON FIELD NAME   METER      FIELD       COUNTY       WELL NAME        WELL NUMBER     RCI      API
-----------------   -----   ------------   ------  --------------------- -----------   ------  ----------
                    8751     BLACK CREEK    WEBB        BRISCOE M              1        162137    NYA
                    8751    CALICHE CREEK   WEBB      BRISCOE N 2046           2          NYA     NYA
                    8751    CALICHE CREEK   WEBB     BRISCOE-OLMITOS           2A         NYA     NYA
                    8751    CALICHE CREEK   WEBB   BRISCOE-OLMITOS RANCH       1        162162    NYA
                    8751    CALICHE CREEK   WEBB   BRISCOE-OLMITOS RANCH       1A         NYA     NYA

Page 2

Area of Mutual Interest Plat

[The original contains a detailed map of the Big Cowboy Area of Mutual Interest]


APPENDIX "2-A"

Big Cowboy Well Bore Exceptions


APPENDIX "2-A"
BIG COWBOW WELL BORE EXCEPTIONS

COMMON FIELD NAME   METER     FIELD             COUNTY         WELL NAME           WELL NUMBER        RCI          API
-----------------  -------   -------           --------       -----------         --------------     ------       ------
BRISCOE             6679      BRISCOE           WEBB           HUGHES RANCH             1            140166      4247935292
                    6679      BRISCOE           WEBB           HUGHES RANCH             2            141297      4247935412
                    6679      BRISCOE           WEBB           HUGHES RANCH             3            142477      4247935550


DESPARADO           6707      DESPARADO         WEBB           LUNDELL 40               2            141301      4247934998
                    6707      DESPARADO         WEBB           LUNDELL 40               3            141882      4247935480
                    6707      DESPARADO         WEBB           LUNDELL 40               4            142616      4247935512
                    6707      DESPARADO         WEBB           LUNDELL 44               1            144314      4247935581


BLACK CREEK         6728      BLACK CREEK       WEBB           DESPAIN                  1            144464      4247935486
                    6728      BLACK CREEK       WEBB           DESPAIN                  3            144477      4247935701
                    6728      BLACK CREEK       WEBB           DESPAIN                  6            144490      4247935737
                    6742      BLACK CREEK       WEBB           BRISCOE D                1            144466      4247935618
                    6742      BLACK CREEK       WEBB           BRISCOE D                2            144469      4247935665
                    6742      BLACK CREEK       WEBB           BRISCOE D                3            144471      4247935678
                    6742      BLACK CREEK       WEBB           BRISCOE D                4            144482      4247935680
                    6742      BLACK CREEK       WEBB           BRISCOE D                5            144493      4247935679
                    6742      BLACK CREEK       WEBB           BRISCOE D                6            144491      4247935738

BRISCOE M&B         8751      CALICHE CREEK     WEBB           BRISCOE B                1            142683      4247935528
                    8751      CALICHE CREEK     WEBB           BRISCOE B                2            143772      4247935582
                    8751      CALICHE CREEK     WEBB           BRISCOE B                3            145693      4247935699

Page 1

APPENDIX "2-B"

Juanita Field Wells

The Juanita Field Wells include the acreage and all depths covered by leases, fee interests and all other real property interests of whatever nature attributable to gas production from the wells identified herein. The identification of the particular wells herein is for reference only and does not limit the forgoing.


APPENDIX "2-B"
JUANITA FIELD WELLS

                                                                                                 EOG
                                                                                               PROPERTY
COMMON FIELD NAME   METER      FIELD       COUNTY           WELL NAME          WELL NUMBER     NUMBER        API
-----------------   -----      -----       ------           ---------          -----------     --------      ---

    JUANITA         5434      JUANITA     WEBB, TX    BRUNI HIRSCH GAS UNIT          1          2810      4247934820
                    5434      JUANITA     WEBB, TX       BRUNI MINERAL A             1          2811      4247932255
                    5434      JUANITA     WEBB, TX       BRUNI MINERAL A             2          2812      4247932323
                    5434      JUANITA     WEBB, TX       BRUNI MINERAL A             3          2813      4247932410
                    5434      JUANITA     WEBB, TX       BRUNI MINERAL A             8          2818      4247934645
                    5434      JUANITA     WEBB, TX       BRUNI MINERAL A             9          2819      4247934838
                    5434      JUANITA     WEBB, TX     BRUNI MINERAL A NCT          10          1080      4247934929
                    5434      JUANITA     WEBB, TX       BRUNI MINERAL A            11          1171      4247934959
                    5434      JUANITA     WEBB, TX       BRUNI MINERAL A            12          1181      4247934967
                    5434      JUANITA     WEBB, TX       BRUNI MINERAL A            14         19810      4247935242
                    5434      JUANITA     WEBB, TX     BRUNI MINERAL A NCT          15         21441      4247935463
                    5434      JUANITA     WEBB, TX     BRUNI MINERAL A NCT          16         21922      4247935541
                    5434      JUANITA     WEBB, TX       BRUNI MINERAL B             1          2820      4247932514
                    5434      JUANITA     WEBB, TX       BRUNI MINERAL B             2          2823      4247932637
                    5434      JUANITA     WEBB, TX       BRUNI MINERAL B             3          2824      4247932515
                    5434      JUANITA     WEBB, TX       BRUNI MINERAL B             7          2827      4247933368
                    5434      JUANITA     WEBB, TX       BRUNI MINERAL B             9          2829      4247934484
                    5434      JUANITA     WEBB, TX       BRUNI MINERAL B            10          2821      4204790347
                    5434      JUANITA     WEBB, TX       BRUNI MINERAL B            11          2822      4247934919
                    5434      JUANITA     WEBB, TX       BRUNI MINERAL B            12         19315      4247935149
                    5434      JUANITA     WEBB, TX       BRUNI MINERAL B            13         19608      4247935196
                    5434      JUANITA     WEBB, TX       BRUNI MINERAL B            14         19683      4247935210
                    5434      JUANITA     WEBB, TX       BRUNI MINERAL C             1          2831      4247932045
                    5434      JUANITA     WEBB, TX       BRUNI MINERAL C             2          2832      4247932556
                    5434      JUANITA     WEBB, TX       BRUNI MINERAL C             3          2833      4247933433
                    5434      JUANITA     WEBB, TX       BRUNI MINERAL C             4          2834      4247934813
                    5434      JUANITA     WEBB, TX       BRUNI MINERAL C             5          1010      4247934927
                    5434      JUANITA     WEBB, TX       BRUNI MINERAL C             6          2835      4247934859
                    5434      JUANITA     WEBB, TX       BRUNI MINERAL C             7          1281      4247934979
                    5434      JUANITA     WEBB, TX       BRUNI MINERAL C             8         19145      4247934990
                    5434      JUANITA     WEBB, TX       BRUNI MINERAL C             9         19615      4247935197
                    5434      JUANITA     WEBB, TX       BRUNI MINERAL C            10         19633      4247935194
                    5434      JUANITA     WEBB, TX       BRUNI MINERAL C            11         19737      4247935228
                    5434      JUANITA     WEBB, TX       BRUNI MINERAL C            12         22235      4247935526
                    5434      JUANITA     WEBB, TX       BRUNI MINERAL C            13         24313      4247935919
                    5434      JUANITA     WEBB, TX      BRUNI MINERAL C GU           1           831      4247934861
                    5434      JUANITA     WEBB, TX       BRUNI MINERAL D             2          2837      4247932759
                    5434      JUANITA     WEBB, TX    BRUNI MINERAL TRUST IN B       1          2849      4247931013

Page 1

APPENDIX "2-C"

The Amoco Fields

[THE ORIGINAL CONTAINS TWO DETAILED MAPS OF
THE AMOCO FIELDS IN WEBB COUNTY, TEXAS]


APPENDIX "3"

Bammel Fields

The Bammel Fields include the acreage and all depths covered by leases, fee interests and all other real property interests of whatever nature attributable to gas production from the wells identified herein. The identification of the particular wells herein is for reference only and does not limit the forgoing.


APPENDIX "3"

BAMMEL FIELDS

EOG PROPERTIES CONNECTED TO HPL
EOG CONTRACT NUMBERS: HPL42037, NGM42002
HPL CONTRACT NUMBER: 12-40228-168
HPLR CONTRACT NUMBER: 078-40228-124

COMMON FIELD NAME      METER        FIELD       COUNTY                WELL NAME          WELL NUMBER       RCI         API
------------------------------------------------------------------------------------------------------------------------------
NORTH MILTON FIELD     3081     MILTON NORTH    HARRIS           EHRHARDT (WILCOX)GU #1       5           150320    4220132363
                       3081     MILTON NORTH    HARRIS            EHRHARDT GAS UNIT #1        2           148092    4220132328
                       3082     MILTON NORTH    HARRIS                  DWYER                 1           162912    4220132456
                       3082     MILTON NORTH    HARRIS                  DWYER                 2             NYA     4220132460
                       3082     MILTON NORTH    HARRIS           EHRHARDT (WILCOX)GU #1       3           150650    4220132348
                       3082     MILTON NORTH    HARRIS           EHRHARDT (WILCOX)GU #1       4           150317    4220132336
                       3082     MILTON NORTH    HARRIS         EHRHARDT JOHN (WILCOX) GU #1   1           041633    4220107901
                       3082     MILTON NORTH    HARRIS               GRAVES B UNIT            1           149888    4220132333
                       3082     MILTON NORTH    HARRIS               GRAVES B UNIT            2           151237    4220132366
                       3082     MILTON NORTH    HARRIS               GRAVES B UNIT            3           153191    4220132397
                       3082     MILTON NORTH    HARRIS         GRAVES ESTATE (WILCOX)GU #1    1           154137    4220132367
                       3082     MILTON NORTH    HARRIS         GRAVES ESTATE (WILCOX)GU #1    2           151617    4220132382
                       3082     MILTON NORTH    HARRIS         GRAVES ESTATE (WILCOX)GU #1    3           152691    4220132392
                       3082     MILTON NORTH    HARRIS         GRAVES ESTATE (WILCOX)GU #1    4           153354    4220132398
                       3082     MILTON NORTH    HARRIS            HAMILL (WILCOX) GU #1       3           154069    4220132324
                       3082     MILTON NORTH    HARRIS             HAMILL GAS UNIT #1         1           039890    4220107859
                       3082     MILTON NORTH    HARRIS             HAMILL GAS UNIT #1         2           149628    4220132326
                       3082     MILTON NORTH    HARRIS             HAMILL GAS UNIT #2         1           040188    4220120260
                       3082     MILTON NORTH    HARRIS             HAMILL GAS UNIT #3         1           040559    4220107868
                       9631     MILTON NORTH    HARRIS             HAMILL GAS UNIT #3         2           151235    4220132369
                                                                      MCLAUGHLIN              1           160962    4220132442


EXHIBIT I

SERVICES AGREEMENT

I-1

SERVICES AGREEMENT

This Agreement is made and entered into as of the 1st day of January, 1997, between Enron Corp., an OREGON corporation ("Enron"), and Enron Oil & Gas Company, a Delaware corporation ("EOG").

For and in consideration of the mutual promises and conditions contained herein, the parties hereto agree as follows:

1. In order to assist the continued and orderly conduct of certain corporate functions currently performed by Enron for the benefit of EOG, Enron agrees to provide and EOG agrees to purchase, subject to the terms and conditions set forth herein, certain corporate staff and support services (collectively, the "Services").

2. This Agreement shall become effective and Enron shall make the Services available to EOG pursuant to the terms of this Agreement commencing on January 1, 1997, and shall continue thereafter for a period of 10 years (unless otherwise specified herein) and from year to year thereafter unless terminated upon written notice by either party 60 days prior to the anniversary date of this Agreement. IF ENRON'S STOCK OWNERSHIP IN EOG FALLS BELOW 35% OF THE ISSUED AND OUTSTANDING COMMON STOCK OF EOG HAVING THE RIGHT TO VOTE FOR DIRECTORS OF EOG, THEN EITHER PARTY SHALL HAVE THE RIGHT TO TERMINATE THIS AGREEMENT BY GIVING WRITTEN NOTICE TO THE OTHER PARTY, SUCH TERMINATION TO BE EFFECTIVE AS OF THE DATE SET FORTH IN SUCH NOTICE; PROVIDED,


HOWEVER, THAT EOG SHALL HAVE THE RIGHT TO DELAY THE EFFECTIVE DATE OF ANY SUCH TERMINATION BY ENRON FOR A PERIOD OF UP TO ONE YEAR IN ORDER FOR EOG TO MAKE NECESSARY ARRANGEMENTS FOR THE SERVICES TO BE PROVIDED BY THIRD PARTIES BY SO NOTIFYING ENRON WITHIN 15 DAYS AFTER RECEIPT OF ENRON'S NOTICE OF TERMINATION.

3. The parties understand and agree that the Services shall be substantially identical in nature and quality to the Services provided to EOG by Enron during the 12-month period prior to the effective date of this Agreement.

4. EOG, as compensation for the performance of the Services, agrees to reimburse Enron for: (i) all expenses actually incurred by Enron and readily identifiable to EOG relating to corporate staff and support services provided by Enron hereunder ("Direct Charges"), as identified in Exhibit A attached hereto, which calculation shall be based on the cost incurred by Enron in providing such Services and charged to EOG, IN EACH INSTANCE, USING THE METHODOLOGY THAT MOST REASONABLY REFLECTS THE USE OF THE SPECIFIC SERVICE BY EOG AND ITS SUBSIDIARIES, ON THE ONE HAND, AND BY ENRON AND ITS OTHER SUBSIDIARIES OR AFFILIATED COMPANIES, ON THE OTHER HAND (excepting the calculation of charges for "Rent and LHI" as indicated in Exhibit A for any square footage occupied during the term hereof) , (ii) the actual cost of any goods or services purchased for EOG by Enron from third parties unaffiliated with Enron ("Operating Charges"), (iii) the actual cost or charge for


outsourced services provided by any third party unaffiliated with Enron for EOG under an Enron or Enron affiliate agreement with such third party ("Outsourced Charges") and (iv) AN ALLOCATED PORTION OF ADMINISTRATIVE AND GENERAL EXPENSES INCURRED BY ENRON FOR CORPORATE STAFF AND SUPPORT SERVICES, COMPOSED OF THOSE SERVICES AS IDENTIFIED IN EXHIBIT B ATTACHED HERETO (EXCLUDING THOSE SERVICES ON EXHIBIT B FOR WHICH THE AMOUNT SHOWN UNDER THE HEADING "EOG" IS $0), AND FOR WHICH EOG DOES NOT RECEIVE DIRECT CHARGES ("ALLOCATED CHARGE"). THE ALLOCATED CHARGE PAYABLE BY EOG UNDER CLAUSE (IV) OF THE IMMEDIATELY PRECEDING SENTENCE WILL BE (I) THE PORTION OF THE EXPENSES REFERRED TO IN CLAUSE (IV) ALLOCATED TO EOG USING THE MODIFIED MASSACHUSETTS FORMULA, MINUS (II) $2,800,000 PER YEAR BEGINNING JANUARY 1, 1997; PROVIDED, HOWEVER, THAT THE ALLOCATED CHARGE DURING ANY YEAR SHALL NOT EXCEED THE ALLOCATED CHARGE CEILING (AS DEFINED BELOW). The $2,800,000 will be adjusted annually, in the same manner that the Allocated Charge Ceiling is adjusted below, based upon any change in the SEASONALLY ADJUSTED Consumer Price Index for all Urban Consumers as determined by the U.S. Department of Labor, Bureau of Labor Statistics (the "CPI-U").

THE ALLOCATED CHARGE CEILING FOR THE YEAR 1997 SHALL BE $5,300,000. THE ALLOCATED CHARGE CEILING FOR EACH YEAR THEREAFTER SHALL BE ADJUSTED ANNUALLY, AS HEREINAFTER PROVIDED, FOR CHANGES IN THE CPI-U, AND ROUNDED TO THE NEAREST $100,000.


FOR THE PURPOSE OF COMPUTING THE EFFECTS OF THE CPI-U CHANGE ON THE ALLOCATED CHARGE CEILING, THE PARTIES HERETO AGREE THAT THE BASE PERIOD FOR THE CPI-U IS "1982/84 EQUALS 100", AND THE CPI-U INDEX NUMBER FOR DECEMBER 31, 1996 IS 159.2. CPI-U ADJUSTMENTS TO THE ALLOCATED CHARGE CEILING SHALL BE MADE ANNUALLY, BASED UPON THE CPI-U INDEX NUMBER FOR THE MONTH OF DECEMBER FOR THE IMMEDIATELY PRECEDING YEAR (SUCH ADJUSTMENTS ARE TO BE EFFECTED UPON PUBLICATION OF THE CPI-U INDEX NUMBER FOR SUCH MONTH). IN THE EVENT THE BUREAU OF LABOR STATISTICS SHIFTS THE CPI-U REFERRED TO HEREIN FROM THE "1982/84 EQUALS 100" BASE PERIOD TO A DIFFERENT BASE PERIOD, EOG AND ENRON AGREE TO USE THE REBASING FACTORS PUBLISHED BY THE BUREAU OF LABOR STATISTICS FOR CONVERTING THE "1982/84 EQUALS 100" BASE PERIOD TO THE NEW APPLICABLE BASE. IN THE EVENT
(I) WITH RESPECT TO THE CPI-U, REBASING FACTORS ARE NOT PUBLISHED OR (II) THE CPI-U IS DISCONTINUED, A PROPER INDEX OR CLASSIFICATION WITH APPROPRIATE ADJUSTMENT FACTORS SHALL BE SUBSTITUTED BY WRITTEN AGREEMENT BETWEEN ENRON AND EOG.

IF THE COMPENSATION FOR ANY SERVICE DOES NOT INCLUDE SALES, USE, EXCISE VALUE ADDED OR SIMILAR TAXES, AND IF ANY SUCH TAXES ARE IMPOSED ON THE SERVICES AFTER THE EFFECTIVE DATE OF THIS AGREEMENT, THEN SUCH TAXES SHALL BE PAID BY EOG.

THE METHODOLOGIES USED FOR DETERMINING DIRECT CHARGES,


OPERATING CHARGES, OUTSOURCED CHARGES AND ALLOCATED CHARGES TO EOG WILL BE EVALUATED PERIODICALLY TO DETERMINE WHETHER MORE ACCURATE METHODOLOGIES MAY BE AVAILABLE FOR DETERMINING SUCH CHARGES THAN THOSE BEING USED ON THE EFFECTIVE DATE OF THIS AGREEMENT. CHANGES IN METHODOLOGIES WILL BE IMPLEMENTED ONLY AFTER BEING AGREED TO BY BOTH ENRON AND EOG.

5. Enron shall invoice EOG by the 15th working day of each month for all Direct Charges, Operating Charges, Outsourced Charges and Allocated Charges, all with respect to the preceding month. All invoices shall reflect in reasonable detail a description of the Services performed during the preceding month, and shall be due and payable on the last day of the month of the invoice. In the event of default in payment by EOG, and if such payment is not made within thirty days after written notice is sent to EOG by certified mail to the address specified below, Enron may terminate this Agreement as to those Services which relate to the unpaid portion of the invoice by giving written notice of such election to EOG. In the event of a dispute as to the propriety of invoiced amounts, EOG shall pay all undisputed amounts on each invoice, but shall be entitled to withhold payment of any amount in dispute and shall promptly notify Enron of its dispute. Enron shall provide EOG with records relating to the disputed amount so as to enable the parties to resolve the dispute. So long as the parties are attempting in good faith to resolve the dispute, Enron shall not be entitled to terminate the Services related to and by reason of the disputed charge.


6. Any input necessary for Enron or any third party to perform any Services shall be submitted by EOG in a manner consistent with the practices utilized during the period prior to the effective date of this Agreement, which manner shall not be altered except by mutual written agreement of the parties. Should EOG's failure to supply such input render Enron's or any third party's performance of any Services unreasonably difficult, Enron or any third party, upon reasonable notice, may refuse to perform such Services until such input is supplied.

7. EOG acknowledges that the Services shall be provided only with respect to the business of EOG. EOG will not request performance of any Services for the benefit of any entity other than EOG and its subsidiaries or affiliates. EOG represents and agrees that it will use the Services only in accordance with all applicable federal, state and local laws and regulations and communications and common carrier tariffs, and in accordance with the reasonable conditions, rules, regulations and specifications which may be set forth in any manuals, materials, documents or instructions in existence on the effective date of this Agreement and furnished by Enron to EOG. Enron or any third party reserves the right to take all actions, including termination of any particular Services, that Enron or any third party reasonably believes to be necessary to assure compliance with applicable laws, regulations and tariffs.

8. Enron will assign to EOG all user codes, passwords or numbers, or other control or identifying cards or numbers, necessary for Enron to perform the Services. EOG assumes full


responsibility for selection and use of any such codes, passwords, cards or numbers that may be permitted or required in connection with the Services involved.

9. The Services will be of the same nature and quality as those provided to EOG during the 12-month period prior to the effective date of this Agreement.

ALL PRODUCTS OBTAINED FOR EOG ARE AS IS, WHERE IS, WITH ALL FAULTS. NEITHER ENRON, ANY ENRON AFFILIATE NOR ANY THIRD PARTY PERFORMING ANY SERVICES HEREUNDER MAKE ANY WARRANTIES OR REPRESENTATIONS WHATSOEVER, EXPRESS OR IMPLIED, INCLUDING THE WARRANTY OF MERCHANTABILITY OR FITNESS FOR A PARTICULAR PURPOSE WITH RESPECT TO THE SERVICES RENDERED OR PRODUCTS OBTAINED FOR EOG.

IN NO EVENT SHALL ENRON BE LIABLE TO EOG OR ANY OTHER PERSON FOR ANY INDIRECT, SPECIAL OR CONSEQUENTIAL DAMAGES RESULTING FROM ANY ERROR IN THE PERFORMANCE OF SERVICES OR FROM THE BREACH OF THIS AGREEMENT, REGARDLESS OF ENRON OR ANY THIRD PARTY FAULT. TO THE EXTENT ANY THIRD PARTY HAS LIMITED ITS LIABILITY TO ENRON FOR SERVICES UNDER AN OUTSOURCING OR OTHER AGREEMENT, EOG AGREES TO BE BOUND BY SUCH LIMITATION OF LIABILITY FOR ANY PRODUCT OR SERVICE PROVIDED TO EOG BY SUCH THIRD PARTY UNDER ENRON'S AGREEMENT.

Enron shall have no obligation to perform the Services if its failure to do so is caused by or results from any act of God, governmental action, natural disaster, strike, failure of essential equipment or any other cause or circumstance beyond the control of Enron. Enron agrees that upon restoring service


following any failure of any equipment necessary for Enron to provide any Services, Enron will allow EOG to have equal priority, in accordance with prior practice, with respect to access to the restored service. At its election, Enron may cause one or more of its subsidiaries (other than EOG) , affiliates or third party contractors to provide the services called for by this Agreement; however, such action shall not release Enron from its obligations under this Agreement.

10. In the event any portion of this Agreement shall be found by a court of competent jurisdiction to be unenforceable, that portion of the Agreement will be null and void and the remainder of the Agreement will be binding on the parties as if the unenforceable provisions had never been contained herein.

11. This Agreement shall not be assignable by either of the parties hereto except by operation of law.

12. This Agreement constitutes the entire agreement of the parties relating to the performance of the Services and all prior or contemporaneous written or oral agreements are merged herein. This Agreement may not be changed except by a writing signed by both parties. This Agreement shall be governed by the laws of the State of Texas.

13. Any notice, request, instruction, correspondence or other document to be given hereunder by either party to the other (herein collectively called "Notice") shall be in writing and delivered personally or mailed, postage prepaid, or by facsimile or telegram, as follows:


IF TO ENRON:

Enron Corp.
1400 Smith Street
P. 0. Box 1188
Houston, Texas 77251-1188
Attention: Senior Vice President,
Chief Accounting and Information
Officer
Facsimile No.: 713-853-3920

IF TO EOG:
Enron Oil & Gas Company
1400 Smith Street
P. 0. Box 4362
Houston, Texas 77210-4362
Attention: Senior Vice President and
Chief Financial Officer
Facsimile No.: 713-646-2113

Notice given by personal delivery or mail shall be effective upon actual receipt by the party to whom addressed. Notice given by facsimile or telegram shall be effective upon actual receipt if received during the recipient's normal business hours, or at the beginning of the recipient's next business day after receipt if not received during the recipient's normal business hours. Any party may change any address to which Notice is to be given to it by giving Notice as provided above of such change of address.


IN WITNESS WHEREOF, the parties hereto have caused this Agreement to be signed on the date(s) noted below on their behalf by their duly authorized officers effective as of January 1, 1997.

ENRON CORP.

By: /s/ J. CLIFFORD BAXTER
   ------------------------------------
        J. Clifford Baxter,
        Senior Vice President,
        Corporate Development
Date:   December 9, 1997

ENRON OIL & GAS COMPANY

By: /s/ FORREST E HOGLUND
   ------------------------------------
        Forrest E. Hoglund
        Chairman of the Board
        and Chief Executive Officer
Date:   December 9, 1997


EXHIBIT A

Major    Sub
Cat.     Cat.     RC#               Title                               Charge Basis
----------------------------------------------------------------------------------------------
PENSION, THRIFT & MEDICAL
                  2320              Savings Plan                        Head Count
            *     2321              Retirement Plan               Demographics (see note below)
                  2323              EE Life, AD&D Dep                   Head Count
                  2324              Long Term Disability                Head Count
            *     2325              Supp. Exec. Retirement Plan   Demographics (see note below)
                  2326              ESOP Admin. Fees                    Head Count
                  2338(2333)        Business Travel Insurance           Head Count
            *     2335              FAS 106                       Demographics (see note below)
                  2356              Adm. Fees For Met Life              Head Count
                  2330              HMO Premiums                        Head Count
                  2331              Drug Plan - Admin. Chgs.            Head Count
                  2337              Active Medical/Dental               Head Count

*NOTE: The effective date for change in methodology for these items will be the later of January 1, 1996 or the beginning of the 22nd month prior to the date of the Equity Participation and Business Opportunity Agreement between EOG and Enron Corp.

COMPENSATION PLANS
                  2314              Restricted Stock                  Actual Participation
                  0028              Long-term Incentive Plan          Actual Participation
                  1148              Perf. Based Rest. Stock           Actual Participation

AVIATION
                  0781              Aviation Reservation Fee            Usage
                  0782              Aviation Usage                      Usage

BUILDING FACILITIES & SERVICES
         Building Rent & Related
                  0566              Construction Services               Usage
                  0580              Facility Planning                   Usage
                  0581              Facility Maintenance               EB Space
                  0629              Corporate Security                 EB Space
                  0666              Recycling                           Usage
                  0692              EPCO-Churn Relocation               Usage
                  0898              Office Relocation/Furniture        EB Space
                  1829              International Security              Usage
                  2234              Facilities Operatons               EB Space
                  2441              Building Utilities                 EB Space
                  2455              Building Rent and LHI        EB Space @ 13.50/sq. ft. up to
                                                                 170K sq. ft. Amounts over 170K
                                                                 will be negotiated separately.
         Parking Garage Svcs. and Transp. Subs.
                  0060              Service Garage                  Employee Election
                  2478              Parking                         Employee Election
                  2334              Transportation Subsidy          Employee Election
         Copy, Graphics & Audio Visual Services
                  0224              Forms Management                    Usage
                  0228              Copier Center                       Usage
                  0339              Artistic Services                   Usage
                  0703              Audio Visual Services               Usage
                  2255              Convenience Copiers                 Usage


EXHIBIT A

Major    Sub
Cat.     Cat.     RC#               Title                               Charge Basis
--------------------------------------------------------------------------------------------

BUILDING FACILITIES & SERVICES(continued)
         Mail, Shipping & Receiving
                  0103              Shipping & Receiving                    Usage
                  0492              Mail Center                             Usage
         Records Related Costs
                  0215              Record Center Houston                   Usage
                  0489              Record & Info Management                Usage
         Real Estate Management
                  0075              EPCO Administration                     Usage
                  0508              Real Estate Management                  Usage
                  0752              EPCO Legal Services                     Usage
         Health & Employee Services
                  0647              Health & Employee Services            Headcount
                  0776              Manager - Wellness                    Headcount
                  2453              Cafeteria                             Headcount
                  2454              Body Shop                             Headcount
                  2460              Employee Recreation                   Headcount
                  2475              Coffee                                Headcount
                  2477              Corporate Special Events       Mgt. Comm. Member Head Count
         Telecommunications
                  0117              Enron Information Services         % of Total EIS Services
                  2357              Telecomm. Houston Operations            Usage
                  2358              Computer Services                       Usage
                  2359              Ardmore Center                          Usage

OUTSIDE PROFESSIONAL SERVICES
                  2349              Outside Auditing Fees               Per AA&Co.
                  0408              Contract Audit Services             Per AA&Co.

INSURANCE
                  2411              Insurance Premiums/Cost           Methodology representing
                                                                        basis for premiums

DATA PROCESSING COSTS
                                    EIS Charges                             Usage
                                    EDS Charges                             Usage
                                    Amortization of EDS Pre-paids       Historical Usage

HR & BENEFITS RELATED
                  0071              Alcohol/Drug Testing                    Usage
                  0208              Compensation & Benefits             Replaced by 2012
                  0319              Corporate Human Resources             Head Count
                  0246              Payroll                               Head Count
                  0649              Benefits Accounting                 Replaced by 2012
                  2012              EMI Management Fee                    Head Count
                  2242              Fair Employment                       Head Count


EXHIBIT A

Major    Sub
Cat.     Cat.     RC#               Title                               Charge Basis
--------------------------------------------------------------------------------------------
RECRUITING, TRAINING & FAIR EMPLOYMENT PRACTICES
                  0658              Corp. Org. Development & Trng.        Head Count
                  1150              Corp HR Services                  Usage-moved from HR
                  1121              VP - Recruit, Trng. & FEP             Head Count

TREASURY, FINANCE & RISK MANAGEMENT
                                    Bank Fees                               Usage
                  0410              Risk Management                 Primarily % of Premiums
                  0451              Treasury                                Usage
                  0041              Corporate Finance                       Usage

TAX
                  0441              State Tax Group                         Usage
                  0564              Ad Valorem Tax Dept.                    Usage

LEGAL
                  0610              Corporate Secretary                     Usage
                  0611              Misc. MLP Expenses                      Usage
                  0854              Legal Litigation                        Usage
                  0860              Corporate Legal                         Usage
                  0861              Environmental Legal                     Usage
                  2416              Legal Library                      Attny. Head Count

INVESTOR RELATIONS
                  0405              Investor Relations                     Usage

EMPLOYEE MATCHING
                  2381              Corp. Contributions - Houston      Employee Elections

CORPORATE EVENTS
                  1274              Management Conference                 Attendees
                  1137              Enron Earth Day                       Headcount
                  1140              Volunteer Events                      Headcount
                  1284              Employee Picnic                       Headcount
                  2397              Employee Communications               Headcount


EXHIBIT B

                                                                           Total           Enron
                                                       RC                   Net            Oil &
         Description*                                 Number              Expenses          Gas
--------------------------------                     -------            -----------       ----------
MMF %                                                                                          22.10%

Direct Cost In - Shared Services                                        $14,166,000       $3,130,686
Direct Cost In - Other                                                    2,783,457          615,144
Executive Consultants                                   89                2,000,000          442,000
Corporate Financial Planning                           137                1,008,000          222,768
Corporate Accounting & Reporting                       138                1,811,000          400,231
Competitive Analysis                                   150                  440,000                0
Sr. Vice President - Corporate Mkt. & Resources        302                1,117,000          246,857
Sr. Vice President - CIAAO                             303                  602,000          133,042
President and COO                                      304                1,800,000          397,800
Chief of Staff                                         305                  693,000          153,153
Corporate Affairs                                      307                  619,000          136,799
Executive Reception                                    308                  544,000          120,224
Political Action Committee                             309                   34,000            7,514
Workforce Diversity                                    315                  383,000           84,643
Investor Relations                                     405                1,663,000                0
Vice President - Tax                                   445                2,816,000                0
Corporate Development                                  460                  706,000          156,026
Vice President & Treasurer                             588                  473,000          104,533
Corporate Secretary                                    610                1,616,000                0
MLP Services                                           611                   60,000                0
Organizational Development & Testing                   658                        0                0
Government Affairs & Public Policy                     808                        0                0
Public Policy Analysis                                 848                  192,000                0
Corporate Legal                                        860                1,259,000                0
Federal Government Affairs                             866                1,283,000          283,543
State Government Affairs                               870                  913,000          201,773
Chairman and CEO                                       890                2,100,000          464,100
Corporate Advertising                                 1109                        0                0
Corporate Aircraft Usage                              2001                4,365,300          964,731
NQ Stock Plan                                         2315                        0                0
Exec Perqs                                            2317                        0                0
Employee Performance Awards                           2318                  150,000           33,150
Corporate Contributions - Houston                     2381                        0                0
Corporate Memberships                                 2396                  490,000          108,290
Employee Communications                               2397                  359,800           79,516
Corporate Communications                              2398                  684,600          151,297
Media Relations                                       2399                1,942,000          429,182
Executive Board Meeting Expenses                      2418                1,034,400          228,602
1997 EOG Service Agreement Reduction                                                      (2,800,000)
1997 EOG Service Agreement Cap Adjustment                                         0       (1,186,000)
                                                                        -----------       ----------
                  TOTAL                                                 $50,107,557       $5,309,604 **
                                                                        ===========       ==========

* May vary as new costs centers are created. ** The calculated 1997 amount based on the 1/94 Enron/EOG Service agreement is $8.1mm.


EXHIBIT J

AMENDMENT TO STOCK RESTRICTION AND REGISTRATION AGREEMENT

This amendment (this "Amendment") to the Stock Restriction and Registration Agreement dated as of August 23, 1989 (the "Agreement") is dated as of December 9, 1997, and is entered into by Enron Oil & Gas Company, a Delaware corporation (the "Company"), and Enron Corp., an Oregon corporation (the "Holder").

WHEREAS, Section 7 of the Agreement provides that the Company will be obligated to pay Registration Expenses, defined in the Agreement to include generally all expenses incident to the performance by the Company of its obligations under the Agreement; and

WHEREAS, the Company and the Holder desire to provide that the Holder will be obligated to pay the expenses incident to the performance by the Company of its obligations under the Agreement, with certain specified exceptions;

NOW, THEREFORE, in consideration of the agreements herein and other valuable consideration, the receipt and sufficiency of which are hereby acknowledged, the undersigned agree that the Agreement is hereby amended as follows:

1. AMENDMENT TO SECTION 7. Section 7 of the Agreement is hereby amended to read as follows:

7. Registration Expenses. All Registration Expenses (as defined herein) will be borne by the selling Holders in proportion to the number of shares registered.

As used herein, the term Registration Expenses means (a) underwriting discounts and commissions applicable to the sale of Restricted Stock, fees and expenses of any legal counsel, accountants or other agents retained by any selling Holder and all other out-of-pocket expenses incurred by any selling Holder in connection with any registration under this Agreement and (b) all out-of-pocket expenses incident to the Company's performance of or compliance with this Agreement (whether or not the registration in connection with which such expenses are incurred ultimately becomes effective), including without limitation all registration and filing fees, fees and expenses of compliance with securities or blue sky laws (including reasonable fees and disbursements of counsel in connection with blue sky qualifications of the Restricted Stock), rating agency fees, printing expenses, messenger and delivery expenses incurred by the Company, the fees and expenses incurred in connection with the listing of the securities to be registered on each securities exchange on which similar securities issued by the Company are then listed, and fees and disbursements of counsel for the Company and its independent certified public accountants (including the expenses of any special audit or comfort letters required by or incident to such performance), securities acts liability insurance (if the Company elects to obtain such insurance), the reasonable fees and expenses of any special experts retained by the Company in connection with such registration and the fees and expenses of other persons retained by the Company. The term Registration Expenses shall not include any portion of expenses that would have been incurred by the Company in the absence of registration, such as depreciation or rent or other charges for use of Company property, and such term shall not include any portion of the Company's internal expenses, such as salaries

J-1

and expenses of its officers and employees performing drafting, due diligence, legal or accounting duties.

2. CERTAIN DEFINED TERMS. Capitalized terms used but not defined herein are used as defined in the Agreement.

3. GOVERNING LAW. This Amendment will be governed by and construed in accordance with the laws of the State of Delaware.

IN WITNESS WHEREOF, this Amendment has been executed as of the date first written above.

ENRON OIL & GAS COMPANY

By:  /s/ FORREST E. HOGLUND
    ------------------------
Name:  Forrest E. Hoglund
Title: Chairman of the Board and
        Chief Executive Officer

ENRON CORP.

By:  /s/ J. CLIFFORD BAXTER
    ------------------------
Name:  J. Clifford Baxter
Title: Senior Vice President,
         Corporate Development

J-2

EXHIBIT 23(a)

CONSENT OF INDEPENDENT PUBLIC ACCOUNTANTS

As independent public accountants, we hereby consent to the incorporation by reference in this registration statement of our report on the consolidated financial statements of Enron Oil & Gas Company and subsidiaries dated February 17, 1997, included in Enron Oil & Gas Company's Form 10-K for the year ended December 31, 1996, and to all references to our Firm included in this registration statement.

ARTHUR ANDERSEN LLP

Houston, Texas
January 22, 1997


EXHIBIT 23(b)

[DEGOLYER AND MACNAUGHTON LETTERHEAD]

January 20, 1998

Enron Oil & Gas Company
1400 Smith Street
Houston, Texas 77002

Gentlemen:

In connection with the Registration Statement on Form S-3 (the Registration Statement), to be filed with the Securities and Exchange Commission on or about January 22, 1998, by Enron Oil & Gas Company (the Company), DeGolyer and MacNaughton (the firm) hereby consents to the incorporation in said Registration Statement of the references to the firm and to the opinions delivered to the Company regarding the comparison of estimates prepared by the firm with those furnished to it by the Company of the proved oil, condensate, natural gas liquids, and natural gas reserves of certain selected properties owned by the Company. The opinions are contained in the firm's letter reports dated January 13, 1995, January 22, 1996, and January 17, 1997, for estimates as of January 1, 1995, December 31, 1995, and December 31, 1996, respectively. The opinions are referred to in the section "Supplemental Information to Consolidated Financial Statements-Oil and Gas Producing Activities" in the Company's Annual Report on Form 10-K for the year ended December 31, 1996. DeGolyer and MacNaughton also consents to the references to it in section "Experts" in the Prospectus that is a part of the Registration Statement.

Very truly yours,

/s/ DEGOLYER & MACNAUGHTON

DeGOLYER and MacNAUGHTON


EXHIBIT 24

POWER OF ATTORNEY

KNOW ALL MEN BY THESE PRESENTS, that in connection with the proposed registration by Enron Oil & Gas Company, a Delaware corporation (the "Company"), of Debt Securities and Common Stock, $.01 par value, in connection with the proposed sale of such Debt Securities by the Company and Common Stock by the Company and/or Enron Corp. as a "Selling Stockholder" of the Company, the undersigned officer or director of the Company hereby constitutes and appoints Walter C. Wilson, Barry Hunsaker, Jr., and Angus H. Davis, and each of them (with full power to each of them to act alone), his true and lawful attorney-in-fact and agent, for him and on his behalf and in his name, place and stead, in any and all capacities, to sign, execute and file a registration statement on Form S-3 relating to such securities to be filed with the Securities and Exchange Commission, together with all amendments thereto, with all exhibits and any and all documents required to be filed with respect thereto with any regulatory authority, granting unto said attorneys, and each of them, full power and authority to do and perform each and every act and thing requisite and necessary to be done in and about the premises in order to effectuate the same as fully to all intents and purposes as the undersigned might or could do if personally present, hereby ratifying and confirming all the said attorneys-in-fact and agents, or any of them, may lawfully do or cause to be done by virtue hereof.

IN WITNESS WHEREOF, the undersigned has hereto set his hand this 22nd day of January, 1998.

/s/ Fred C. Ackman
------------------------
Fred C. Ackman


POWER OF ATTORNEY

KNOW ALL MEN BY THESE PRESENTS, that in connection with the proposed registration by Enron Oil & Gas Company, a Delaware corporation (the "Company"), of Debt Securities and Common Stock, $.01 par value, in connection with the proposed sale of such Debt Securities by the Company and Common Stock by the Company and/or Enron Corp. as a "Selling Stockholder" of the Company, the undersigned officer or director of the Company hereby constitutes and appoints Walter C. Wilson, Barry Hunsaker, Jr., and Angus H. Davis, and each of them (with full power to each of them to act alone), his true and lawful attorney-in-fact and agent, for him and on his behalf and in his name, place and stead, in any and all capacities, to sign, execute and file a registration statement on Form S-3 relating to such securities to be filed with the Securities and Exchange Commission, together with all amendments thereto, with all exhibits and any and all documents required to be filed with respect thereto with any regulatory authority, granting unto said attorneys, and each of them, full power and authority to do and perform each and every act and thing requisite and necessary to be done in and about the premises in order to effectuate the same as fully to all intents and purposes as the undersigned might or could do if personally present, hereby ratifying and confirming all the said attorneys-in-fact and agents, or any of them, may lawfully do or cause to be done by virtue hereof.

IN WITNESS WHEREOF, the undersigned has hereto set his hand this 22nd day of January, 1998.

/s/ James V. Derrick, Jr.
------------------------------
James V. Derrick, Jr.


POWER OF ATTORNEY

KNOW ALL MEN BY THESE PRESENTS, that in connection with the proposed registration by Enron Oil & Gas Company, a Delaware corporation (the "Company"), of Debt Securities and Common Stock, $.01 par value, in connection with the proposed sale of such Debt Securities by the Company and Common Stock by the Company and/or Enron Corp. as a "Selling Stockholder" of the Company, the undersigned officer or director of the Company hereby constitutes and appoints Walter C. Wilson, Barry Hunsaker, Jr., and Angus H. Davis, and each of them (with full power to each of them to act alone), his true and lawful attorney-in-fact and agent, for him and on his behalf and in his name, place and stead, in any and all capacities, to sign, execute and file a registration statement on Form S-3 relating to such securities to be filed with the Securities and Exchange Commission, together with all amendments thereto, with all exhibits and any and all documents required to be filed with respect thereto with any regulatory authority, granting unto said attorneys, and each of them, full power and authority to do and perform each and every act and thing requisite and necessary to be done in and about the premises in order to effectuate the same as fully to all intents and purposes as the undersigned might or could do if personally present, hereby ratifying and confirming all the said attorneys-in-fact and agents, or any of them, may lawfully do or cause to be done by virtue hereof.

IN WITNESS WHEREOF, the undersigned has hereto set his hand this 22nd day of January, 1998.

/s/ Ken L. Harrison
--------------------------
Ken L. Harrison


POWER OF ATTORNEY

KNOW ALL MEN BY THESE PRESENTS, that in connection with the proposed registration by Enron Oil & Gas Company, a Delaware corporation (the "Company"), of Debt Securities and Common Stock, $.01 par value, in connection with the proposed sale of such Debt Securities by the Company and Common Stock by the Company and/or Enron Corp. as a "Selling Stockholder" of the Company, the undersigned officer or director of the Company hereby constitutes and appoints Walter C. Wilson, Barry Hunsaker, Jr., and Angus H. Davis, and each of them (with full power to each of them to act alone), his true and lawful attorney-in-fact and agent, for him and on his behalf and in his name, place and stead, in any and all capacities, to sign, execute and file a registration statement on Form S-3 relating to such securities to be filed with the Securities and Exchange Commission, together with all amendments thereto, with all exhibits and any and all documents required to be filed with respect thereto with any regulatory authority, granting unto said attorneys, and each of them, full power and authority to do and perform each and every act and thing requisite and necessary to be done in and about the premises in order to effectuate the same as fully to all intents and purposes as the undersigned might or could do if personally present, hereby ratifying and confirming all the said attorneys-in-fact and agents, or any of them, may lawfully do or cause to be done by virtue hereof.

IN WITNESS WHEREOF, the undersigned has hereto set his hand this 22nd day of January, 1998.

/s/ Kenneth L. Lay
--------------------------
Kenneth L. Lay


POWER OF ATTORNEY

KNOW ALL MEN BY THESE PRESENTS, that in connection with the proposed registration by Enron Oil & Gas Company, a Delaware corporation (the "Company"), of Debt Securities and Common Stock, $.01 par value, in connection with the proposed sale of such Debt Securities by the Company and Common Stock by the Company and/or Enron Corp. as a "Selling Stockholder" of the Company, the undersigned officer or director of the Company hereby constitutes and appoints Walter C. Wilson, Barry Hunsaker, Jr., and Angus H. Davis, and each of them (with full power to each of them to act alone), his true and lawful attorney-in-fact and agent, for him and on his behalf and in his name, place and stead, in any and all capacities, to sign, execute and file a registration statement on Form S-3 relating to such securities to be filed with the Securities and Exchange Commission, together with all amendments thereto, with all exhibits and any and all documents required to be filed with respect thereto with any regulatory authority, granting unto said attorneys, and each of them, full power and authority to do and perform each and every act and thing requisite and necessary to be done in and about the premises in order to effectuate the same as fully to all intents and purposes as the undersigned might or could do if personally present, hereby ratifying and confirming all the said attorneys-in-fact and agents, or any of them, may lawfully do or cause to be done by virtue hereof.

IN WITNESS WHEREOF, the undersigned has hereto set his hand this 22nd day of January, 1998.

/s/ Edward Randall, III
-----------------------------
Edward Randall, III


POWER OF ATTORNEY

KNOW ALL MEN BY THESE PRESENTS, that in connection with the proposed registration by Enron Oil & Gas Company, a Delaware corporation (the "Company"), of Debt Securities and Common Stock, $.01 par value, in connection with the proposed sale of such Debt Securities by the Company and Common Stock by the Company and/or Enron Corp. as a "Selling Stockholder" of the Company, the undersigned officer or director of the Company hereby constitutes and appoints Walter C. Wilson, Barry Hunsaker, Jr., and Angus H. Davis, and each of them (with full power to each of them to act alone), his true and lawful attorney-in-fact and agent, for him and on his behalf and in his name, place and stead, in any and all capacities, to sign, execute and file a registration statement on Form S-3 relating to such securities to be filed with the Securities and Exchange Commission, together with all amendments thereto, with all exhibits and any and all documents required to be filed with respect thereto with any regulatory authority, granting unto said attorneys, and each of them, full power and authority to do and perform each and every act and thing requisite and necessary to be done in and about the premises in order to effectuate the same as fully to all intents and purposes as the undersigned might or could do if personally present, hereby ratifying and confirming all the said attorneys-in-fact and agents, or any of them, may lawfully do or cause to be done by virtue hereof.

IN WITNESS WHEREOF, the undersigned has hereto set his hand this 22nd day of January, 1998.

/s/ Jeffrey K. Skilling
-----------------------------
Jeffrey K. Skilling


POWER OF ATTORNEY

KNOW ALL MEN BY THESE PRESENTS, that in connection with the proposed registration by Enron Oil & Gas Company, a Delaware corporation (the "Company"), of Debt Securities and Common Stock, $.01 par value, in connection with the proposed sale of such Debt Securities by the Company and Common Stock by the Company and/or Enron Corp. as a "Selling Stockholder" of the Company, the undersigned officer or director of the Company hereby constitutes and appoints Walter C. Wilson, Barry Hunsaker, Jr., and Angus H. Davis, and each of them (with full power to each of them to act alone), his true and lawful attorney-in-fact and agent, for him and on his behalf and in his name, place and stead, in any and all capacities, to sign, execute and file a registration statement on Form S-3 relating to such securities to be filed with the Securities and Exchange Commission, together with all amendments thereto, with all exhibits and any and all documents required to be filed with respect thereto with any regulatory authority, granting unto said attorneys, and each of them, full power and authority to do and perform each and every act and thing requisite and necessary to be done in and about the premises in order to effectuate the same as fully to all intents and purposes as the undersigned might or could do if personally present, hereby ratifying and confirming all the said attorneys-in-fact and agents, or any of them, may lawfully do or cause to be done by virtue hereof.

IN WITNESS WHEREOF, the undersigned has hereto set his hand this 22nd day of January, 1998.

/s/ Frank G. Wisner
--------------------------


Frank G. Wisner



SECURITIES AND EXCHANGE COMMISSION

WASHINGTON, D.C. 20549


FORM T-1

STATEMENT OF ELIGIBILITY UNDER THE
TRUST INDENTURE ACT OF 1939 OF A
CORPORATION DESIGNATED TO ACT AS TRUSTEE

CHECK IF AN APPLICATION TO DETERMINE ELIGIBILITY
OF A TRUSTEE PURSUANT TO SECTION 305(b)(2)____


CHASE BANK OF TEXAS, NATIONAL ASSOCIATION
(FORMERLY TEXAS COMMERCE BANK NATIONAL ASSOCIATION)

(Exact name of trustee as specified in its charter)

   A NATIONAL BANKING ASSOCIATION                                                                   74-0800980
(State of Incorporation if not a U.S.                                                            (I.R.S. Employer
         national bank)                                                                        Identification No.)

         712 MAIN STREET
         HOUSTON, TEXAS                                                                               77002
  (Address of principal executive offices)                                                          (Zip Code)


ENRON OIL & GAS COMPANY
(Exact name of obligor as specified in its charter)

                DELAWARE                                                                       47-0684736
     (State or other jurisdiction of                                                        (I.R.S. Employer
     incorporation or organization)                                                        Identification No.)

            1400 SMITH STREET
             HOUSTON, TEXAS                                                                       77002
(Address of principal executive offices)                                                       (Zip Code)


ENRON OIL & GAS COMPANY DEBT
SECURITIES
(Title of the indenture securities)



ITEM 1. GENERAL INFORMATION.

FURNISH THE FOLLOWING INFORMATION AS TO THE TRUSTEE:

(a) NAME AND ADDRESS OF EACH EXAMINING OR SUPERVISING AUTHORITY TO WHICH IT IS SUBJECT.

Comptroller of the Currency, Washington, D.C.

Federal Deposit Insurance Corporation,
Washington, D.C.
Board of Governors of The Federal Reserve System,
Washington, D.C.

(b) WHETHER IT IS AUTHORIZED TO EXERCISE CORPORATE TRUST POWERS.

Yes.

ITEM 2. AFFILIATIONS WITH THE OBLIGOR.

IF THE OBLIGOR IS AN AFFILIATE OF THE TRUSTEE, DESCRIBE EACH
SUCH AFFILIATION.

The obligor is not an affiliate of the trustee.

ITEM 3. VOTING SECURITIES OF THE TRUSTEE.

FURNISH THE FOLLOWING INFORMATION AS TO EACH CLASS OF VOTING
SECURITIES OF THE TRUSTEE:

    COL. A                                         COL. B
TITLE OF CLASS                               AMOUNT OUTSTANDING
--------------                               ------------------

Not applicable by virtue of Form T-1 General Instruction B and response to Item 13.

ITEM 4. TRUSTEESHIPS UNDER OTHER INDENTURES.

IF THE TRUSTEE IS A TRUSTEE UNDER ANOTHER INDENTURE UNDER WHICH ANY OTHER SECURITIES, OR CERTIFICATES OF INTEREST OR PARTICIPATION IN ANY OTHER SECURITIES, OF THE OBLIGOR ARE OUTSTANDING, FURNISH THE FOLLOWING INFORMATION:

(a) TITLE OF THE SECURITIES OUTSTANDING UNDER EACH SUCH OTHER INDENTURE.

Not applicable by virtue of Form T-1 General Instruction B and response to Item 13.

(b) A BRIEF STATEMENT OF THE FACTS RELIED UPON AS A BASIS FOR THE CLAIM THAT NO CONFLICTING INTEREST WITHIN THE MEANING OF
SECTION 310(b)(1) OF THE ACT ARISES AS A RESULT OF THE TRUSTEESHIP UNDER ANY SUCH OTHER INDENTURE, INCLUDING A STATEMENT AS TO HOW THE INDENTURE SECURITIES WILL RANK AS COMPARED WITH THE SECURITIES ISSUED UNDER SUCH OTHER INDENTURE.

Not applicable by virtue of Form T-1 General Instruction B and response to Item 13.

2

ITEM 5. INTERLOCKING DIRECTORATES AND SIMILAR RELATIONSHIPS WITH THE OBLIGOR OR UNDERWRITERS.

IF THE TRUSTEE OR ANY OF THE DIRECTORS OR EXECUTIVE OFFICERS OF THE TRUSTEE IS A DIRECTOR, OFFICER, PARTNER, EMPLOYEE, APPOINTEE OR REPRESENTATIVE OF THE OBLIGOR OR OF ANY UNDERWRITER FOR THE OBLIGOR, IDENTIFY EACH SUCH PERSON HAVING ANY SUCH CONNECTION AND STATE THE NATURE OF EACH SUCH CONNECTION.

Not applicable by virtue of Form T-1 General Instruction B and response to Item 13.

ITEM 6. VOTING SECURITIES OF THE TRUSTEE OWNED BY THE OBLIGOR OR ITS OFFICIALS.

FURNISH THE FOLLOWING INFORMATION AS TO THE VOTING SECURITIES OF THE TRUSTEE OWNED BENEFICIALLY BY THE OBLIGOR AND EACH DIRECTOR, PARTNER AND EXECUTIVE OFFICER OF THE OBLIGOR.

    COL. A                     COL. B                      COL. C                      COL. D

                                                                                   PERCENTAGE OF
                                                                                 VOTING SECURITIES
                                                                                   REPRESENTED BY
                                                        AMOUNT OWNED                AMOUNT GIVEN
NAME OF OWNER              TITLE OF CLASS               BENEFICIALLY                 IN COL. C
-------------              --------------               ------------             -----------------

Not applicable by virtue of Form T-1 General Instruction B and response to Item 13.

ITEM 7. VOTING SECURITIES OF THE TRUSTEE OWNED BY UNDERWRITERS OR THEIR OFFICIALS.

FURNISH THE FOLLOWING INFORMATION AS TO THE VOTING SECURITIES OF THE TRUSTEE OWNED BENEFICIALLY BY EACH UNDERWRITER FOR THE OBLIGOR AND EACH DIRECTOR, PARTNER AND EXECUTIVE OFFICER OF EACH SUCH UNDERWRITER.

    Col. A                     Col. B                      Col. C                      Col. D
                                                                                     Percent of
                                                                                 voting securities
                                                                                   represented by
                                                        Amount owned                amount given
Name of owner              Title of class               beneficially                 in Col. C
-------------              --------------               ------------             -----------------

Not applicable by virtue of Form T-1 General Instruction B and response to Item 13.

3

ITEM 8. SECURITIES OF THE OBLIGOR OWNED OR HELD BY THE TRUSTEE.

FURNISH THE FOLLOWING INFORMATION AS TO SECURITIES OF THE OBLIGOR OWNED BENEFICIALLY OR HELD AS COLLATERAL SECURITY FOR OBLIGATIONS IN DEFAULT BY THE TRUSTEE.

    COL. A                     COL. B                      COL. C                      COL. D

                            WHETHER THE                 AMOUNT OWNED
                             SECURITIES             BENEFICIALLY OR HELD          PERCENT OF CLASS
                             ARE VOTING            AS COLLATERAL SECURITY          REPRESENTED BY
                            OR NONVOTING              FOR OBLIGATIONS               AMOUNT GIVEN
TITLE OF CLASS               SECURITIES                  IN DEFAULT                  IN COL. C
-------------              --------------               ------------             -----------------

Not applicable by virtue of Form T-1 General Instruction B and response to Item 13.

ITEM 9. SECURITIES OF UNDERWRITERS OWNED OR HELD BY THE TRUSTEE.

IF THE TRUSTEE OWNS BENEFICIALLY OR HOLDS AS COLLATERAL SECURITY FOR OBLIGATIONS IN DEFAULT ANY SECURITIES OF AN UNDERWRITER FOR THE OBLIGOR, FURNISH THE FOLLOWING INFORMATION AS TO EACH CLASS OF SECURITIES OF SUCH UNDERWRITER ANY OF WHICH ARE SO OWNED OR HELD BY THE TRUSTEE.

      COL. A                     COL. B                      COL. C                      COL. D
                                                          AMOUNT OWNED
                                                      BENEFICIALLY OR HELD          PERCENT OF CLASS
                                                     AS COLLATERAL SECURITY          REPRESENTED BY
NAME OF ISSUER AND               AMOUNT                FOR OBLIGATIONS IN             AMOUNT GIVEN
  TITLE OF CLASS              OUTSTANDING              DEFAULT BY TRUSTEE              IN COL. C
  -------------              --------------               ------------             -----------------

Not applicable by virtue of Form T-1 General Instruction B and response to Item 13.

ITEM 10. OWNERSHIP OR HOLDINGS BY THE TRUSTEE OF VOTING SECURITIES OF CERTAIN AFFILIATES OR SECURITY HOLDERS OF THE OBLIGOR.

IF THE TRUSTEE OWNS BENEFICIALLY OR HOLDS AS COLLATERAL SECURITY FOR OBLIGATIONS IN DEFAULT VOTING SECURITIES OF A PERSON WHO, TO THE KNOWLEDGE OF THE TRUSTEE (1) OWNS 10 PERCENT OR MORE OF THE VOTING SECURITIES OF THE OBLIGOR OR (2) IS AN AFFILIATE, OTHER THAN A SUBSIDIARY, OF THE OBLIGOR, FURNISH THE FOLLOWING INFORMATION AS TO THE VOTING SECURITIES OF SUCH PERSON:

      COL. A                     COL. B                      COL. C                      COL. D

                                                          AMOUNT OWNED
                                                      BENEFICIALLY OR HELD          PERCENT OF CLASS
                                                     AS COLLATERAL SECURITY          REPRESENTED BY
NAME OF ISSUER AND               AMOUNT                FOR OBLIGATIONS IN             AMOUNT GIVEN
  TITLE OF CLASS              OUTSTANDING              DEFAULT BY TRUSTEE              IN COL. C
  -------------              --------------               ------------             -----------------

Not applicable by virtue of Form T-1 General Instruction B and response to Item 13.

4

ITEM 11. OWNERSHIP OR HOLDINGS BY THE TRUSTEE OF ANY SECURITIES OF A PERSON OWNING 50 PERCENT OR MORE OF THE VOTING SECURITIES OF THE OBLIGOR.

IF THE TRUSTEE OWNS BENEFICIALLY OR HOLDS AS COLLATERAL SECURITY FOR OBLIGATIONS IN DEFAULT ANY SECURITIES OF A PERSON WHO, TO THE KNOWLEDGE OF THE TRUSTEE, OWNS 50 PERCENT OR MORE OF THE VOTING SECURITIES OF THE OBLIGOR, FURNISH THE FOLLOWING INFORMATION AS TO EACH CLASS OF SECURITIES OF SUCH PERSON ANY OF WHICH ARE SO OWNED OR HELD BY THE TRUSTEE.

      COL. A                     COL. B                      COL. C                      COL. D

                                                          AMOUNT OWNED
                                                      BENEFICIALLY OR HELD          PERCENT OF CLASS
                                                     AS COLLATERAL SECURITY          REPRESENTED BY
NAME OF ISSUER AND               AMOUNT                FOR OBLIGATIONS IN             AMOUNT GIVEN
  TITLE OF CLASS              OUTSTANDING              DEFAULT BY TRUSTEE              IN COL. C
  -------------              --------------               ------------             -----------------

Not applicable by virtue of Form T-1 General Instruction B and response to Item 13.

ITEM 12. INDEBTEDNESS OF THE OBLIGOR TO THE TRUSTEE.

EXCEPT AS NOTED IN THE INSTRUCTIONS, IF THE OBLIGOR IS

INDEBTED TO THE TRUSTEE, FURNISH THE FOLLOWING INFORMATION:

   COL. A                               COL. B                               COL. C

  NATURE OF                             AMOUNT
INDEBTEDNESS                          OUTSTANDING                           DATE DUE
------------                          -----------                           --------

Not applicable by virtue of Form T-1 General Instruction B and response to Item 13.

ITEM 13. DEFAULTS BY THE OBLIGOR.

(a) STATE WHETHER THERE IS OR HAS BEEN A DEFAULT WITH RESPECT TO THE SECURITIES UNDER THIS INDENTURE. EXPLAIN THE NATURE OF ANY SUCH DEFAULT.

There is not, nor has there been, a default with respect to the securities under this indenture. (See Note on Page 6.)

(b) IF THE TRUSTEE IS A TRUSTEE UNDER ANOTHER INDENTURE UNDER WHICH ANY OTHER SECURITIES, OR CERTIFICATES OF INTEREST OR PARTICIPATION IN ANY OTHER SECURITIES, OF THE OBLIGOR ARE OUTSTANDING, OR IS TRUSTEE FOR MORE THAN ONE OUTSTANDING SERIES OF SECURITIES UNDER THE INDENTURE, STATE WHETHER THERE HAS BEEN A DEFAULT UNDER ANY SUCH INDENTURE OR SERIES, IDENTIFY THE INDENTURE OR SERIES AFFECTED, AND EXPLAIN THE NATURE OF ANY SUCH DEFAULT.

There has not been a default under any such indenture or series. (See Note on Page 6.)

5

ITEM 14. AFFILIATIONS WITH THE UNDERWRITERS.

IF ANY UNDERWRITER IS AN AFFILIATE OF THE TRUSTEE, DESCRIBE
EACH SUCH AFFILIATION.

Not applicable by virtue of Form T-1 General Instruction B and response to Item 13.

ITEM 15. FOREIGN TRUSTEE.

IDENTIFY THE ORDER OR RULE PURSUANT TO WHICH THE FOREIGN TRUSTEE IS AUTHORIZED TO ACT AS SOLE TRUSTEE UNDER INDENTURES QUALIFIED OR TO BE QUALIFIED UNDER THE ACT.

Not applicable.

ITEM 16. LIST OF EXHIBITS.

LIST BELOW ALL EXHIBITS FILED AS A PART OF THIS STATEMENT OF
ELIGIBILITY.

o  1    --       A copy of the articles of association of the trustee
                 as now in effect.
#  2    --       A copy of the certificate of authority of the trustee
                 to commence business.
*  3    --       A copy of the authorization of the trustee to
                 exercise corporate trust powers.
[ ]4    --       A copy of the existing by-laws of the trustee.
   5    --       Not applicable.
   6    --       The consent of the trustee required by Section 321(b)
                 of the Act.
 + 7    --       A copy of the latest report of condition of the
                 trustee published pursuant to law or the requirements
                 of its supervising or examining authority.
   8    --       Not applicable.
   9    --       Not applicable.

o                Incorporated by reference to exhibit bearing the same
                 designation and previously filed with the Securities
                 and Exchange Commission as an exhibit to the Form S-3
                 File No. 33-56195.

#                Incorporated by reference to exhibit bearing the same
                 designation and previously filed with the Securities
                 and Exchange Commission as an exhibit to the Form S-3
                 File No. 33-42814.

*                Incorporated by reference to exhibit bearing the same
                 designation and previously filed with the Securities
                 and Exchange Commission as an exhibit to the Form
                 S-11 File No. 33-25132.

[ ]              Incorporated by reference to exhibit bearing the same
                 designation and previously filed with the Securities
                 and Exchange Commission as an exhibit to the Form S-3
                 File No. 33-65055.

+                Incorporated by reference to exhibit bearing the same
                 designation and previously filed with the Securities
                 and Exchange Commission as an exhibit to the Form S-3
                 File No. 333-34045.

NOTE

Inasmuch as this Form T-1 is filed prior to the ascertainment of all facts on which to base a responsive answer to Item 13, the answer to said Item is based on incomplete information. Such item may, however, be considered as correct unless amended by an amendment to this Form T-1.

6

SIGNATURE

PURSUANT TO THE REQUIREMENTS OF THE TRUST INDENTURE ACT OF 1939, THE TRUSTEE, TEXAS COMMERCE BANK NATIONAL ASSOCIATION, A NATIONAL BANKING ASSOCIATION ORGANIZED AND EXISTING UNDER THE LAWS OF THE UNITED STATES OF AMERICA, HAS DULY CAUSED THIS STATEMENT OF ELIGIBILITY TO BE SIGNED ON ITS BEHALF BY THE UNDERSIGNED, THEREUNTO DULY AUTHORIZED, ALL IN THE CITY OF HOUSTON AND STATE OF TEXAS, ON THE 22ND DAY OF JANUARY, 1998.

CHASE BANK OF TEXAS,
NATIONAL ASSOCIATION

By: /s/ Ronda L. Parman
    -----------------------------------
    Ronda L. Parman
    Corporate Trust Officer

7

Exhibit 6


Exhibit 6

CONSENT OF TRUSTEE

Pursuant to the requirements of Section 321(b) of the Trust Indenture Act of 1939 in connection with the proposed issue of Enron Oil & Gas Company Debt Securities, we hereby consent that reports of examinations by Federal, State, Territorial or District authorities may be furnished by such authorities to the Securities and Exchange Commission upon request therefor.

CHASE BANK OF TEXAS,
NATIONAL ASSOCIATION

                                       By: /s/ Ronda L. Parman
                                           ------------------------------------
                                           Ronda L. Parman
                                           Corporate Trust Officer


Dated: January 22, 1998