<PAGE>   1
 
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                                 UNITED STATES
                       SECURITIES AND EXCHANGE COMMISSION
                             Washington, D.C. 20549
                             ---------------------
                                   FORM 10-Q
 
(Mark One)
[X]             QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d)
                     OF THE SECURITIES EXCHANGE ACT OF 1934
 
                 FOR THE QUARTERLY PERIOD ENDED MARCH 31, 1999
 
                                       OR
 
[  ]           TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d)
                     OF THE SECURITIES EXCHANGE ACT OF 1934
 
             FOR THE TRANSITION PERIOD FROM           TO
 
                         COMMISSION FILE NUMBER 1-2700
                             ---------------------
                          EL PASO NATURAL GAS COMPANY
             (Exact Name of Registrant as Specified in its Charter)
 
<TABLE>
<S>                                            <C>
                   DELAWARE                                      74-0608280
         (State or Other Jurisdiction                         (I.R.S. Employer
      of Incorporation or Organization)                     Identification No.)
           EL PASO ENERGY BUILDING
            1001 LOUISIANA STREET
                HOUSTON, TEXAS                                     77002
   (Address of Principal Executive Offices)                      (Zip Code)
</TABLE>
 
       Registrant's Telephone Number, Including Area Code: (713) 420-2131
 
     Indicate by check mark whether the registrant (1) has filed all reports
required to be filed by Section 13 or 15(d) of the Securities Exchange Act of
1934 during the preceding 12 months (or for such shorter period that the
registrant was required to file such reports), and (2) has been subject to such
filing requirements for the past 90 days.  Yes [X] No [ ]
 
     Indicate the number of shares outstanding of each of the issuer's classes
of common stock, as of the latest practicable date.
 
     Common Stock, par value $1.00 per share. Shares outstanding on May 12,
1999: 1,000
 
     EL PASO NATURAL GAS COMPANY MEETS THE CONDITIONS OF GENERAL INSTRUCTION
H(1)(a) AND (b) OF FORM 10-Q AND IS THEREFORE FILING THIS REPORT WITH A REDUCED
DISCLOSURE FORMAT AS PERMITTED BY SUCH INSTRUCTION.
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<PAGE>   2
 
                                    GLOSSARY
 
     The following abbreviations, acronyms, or defined terms used in this Form
10-Q are defined below:
 
<TABLE>
<CAPTION>
                                           DEFINITIONS
                                           -----------
<S>                     <C>
ALJ...................  Administrative Law Judge
Company...............  El Paso Natural Gas Company and its subsidiaries
Court of Appeals......  United States Court of Appeals for the District of Columbia Circuit
EBIT..................  Earnings before interest expense and income taxes, excluding affiliated
                        interest income
Edison................  Southern California Edison Company
EPEC..................  El Paso Energy Corporation, the parent company of El Paso Natural Gas
                        Company
EPFS..................  El Paso Field Services Company, a wholly owned subsidiary of El Paso
                        Tennessee Pipeline Co.
EPNG..................  El Paso Natural Gas Company, a wholly owned subsidiary of El Paso Energy
                        Corporation
FERC..................  Federal Energy Regulatory Commission
PRP(s)................  Potentially responsible party(ies)
TransAmerican.........  TransAmerican Natural Gas Corporation
</TABLE>
 
                                        i
<PAGE>   3
 
                        PART I -- FINANCIAL INFORMATION
 
ITEM 1. FINANCIAL STATEMENTS
 
                          EL PASO NATURAL GAS COMPANY
 
                  CONDENSED CONSOLIDATED STATEMENTS OF INCOME
                                 (IN MILLIONS)
                                  (UNAUDITED)
 
<TABLE>
<CAPTION>
                                                               FIRST QUARTER
                                                              ENDED MARCH 31,
                                                              ---------------
                                                              1999      1998
                                                              -----     -----
<S>                                                           <C>       <C>
Operating revenues..........................................  $118      $115
                                                              ----      ----
Operating expenses
  Operation and maintenance.................................    38        40
  Depreciation, depletion, and amortization.................    16        16
  Taxes, other than income taxes............................     8         9
                                                              ----      ----
                                                                62        65
                                                              ----      ----
Operating income............................................    56        50
                                                              ----      ----
Other (income) and expense
  Non-affiliated interest and debt expense..................    26        31
  Affiliated interest income, net...........................   (12)      (10)
  Other -- net..............................................    --        (2)
                                                              ----      ----
                                                                14        19
                                                              ----      ----
Income before income taxes and discontinued operations......    42        31
Income tax expense..........................................    16        12
                                                              ----      ----
Income before discontinued operations.......................    26        19
Discontinued operations, net of income tax..................    --        39
                                                              ----      ----
Net income..................................................  $ 26      $ 58
                                                              ====      ====
</TABLE>
 
              The accompanying Notes are an integral part of these
                  Condensed Consolidated Financial Statements.
 
                                        1
<PAGE>   4
 
                          EL PASO NATURAL GAS COMPANY
 
                     CONDENSED CONSOLIDATED BALANCE SHEETS
                      (IN MILLIONS, EXCEPT SHARE AMOUNTS)
 
                                     ASSETS
 
<TABLE>
<CAPTION>
                                                               MARCH 31,     DECEMBER 31,
                                                                 1999            1998
                                                              -----------    ------------
                                                              (UNAUDITED)
<S>                                                           <C>            <C>
Current assets
  Cash and temporary investments............................    $   11          $    9
  Accounts and notes receivable, net........................     1,236           1,107
  Materials and supplies....................................        28              28
  Other.....................................................         6               7
                                                                ------          ------
          Total current assets..............................     1,281           1,151
Property, plant, and equipment, net.........................     1,531           1,537
Other.......................................................        95              98
                                                                ------          ------
          Total assets......................................    $2,907          $2,786
                                                                ======          ======
 
                          LIABILITIES AND STOCKHOLDER'S EQUITY
Current liabilities
  Accounts payable..........................................    $   42          $   34
  Short-term borrowings (including current maturities of
     long-term debt)........................................       358             268
  Other.....................................................       140             117
                                                                ------          ------
          Total current liabilities.........................       540             419
                                                                ------          ------
Long-term debt, less current maturities.....................       975             980
                                                                ------          ------
Other.......................................................       329             343
                                                                ------          ------
Commitments and contingencies (See Note 3)
Stockholder's equity
  Preferred stock, 1,000,000 shares authorized; 8% par value
     $0.01 per share: 500,000 shares issued; stated at
     liquidation value......................................       350             350
  Common stock, par value $1 per share; authorized 1,000
     shares; issued 1,000...................................        --              --
  Additional paid-in capital................................       694             694
  Retained earnings.........................................        19              --
                                                                ------          ------
          Total stockholder's equity........................     1,063           1,044
                                                                ------          ------
          Total liabilities and stockholder's equity........    $2,907          $2,786
                                                                ======          ======
</TABLE>
 
              The accompanying Notes are an integral part of these
                  Condensed Consolidated Financial Statements.
 
                                        2
<PAGE>   5
 
                          EL PASO NATURAL GAS COMPANY
 
                CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS
                                 (IN MILLIONS)
                                  (UNAUDITED)
 
<TABLE>
<CAPTION>
                                                              FIRST QUARTER
                                                                  ENDED
                                                                MARCH 31,
                                                              --------------
                                                              1999     1998
                                                              -----    -----
<S>                                                           <C>      <C>
Cash flows from operating activities
  Net income................................................  $  26    $  58
  Less income from discontinued operations, net of income
     tax....................................................     --       39
                                                              -----    -----
Income from continuing operations...........................     26       19
  Adjustments to reconcile net income to net cash from
     operating activities...................................
     Depreciation, depletion, and amortization..............     16       16
     Deferred income taxes..................................     (1)       4
     Other..................................................     (8)      (3)
  Working capital changes...................................    115      (72)
  Other.....................................................     (7)     (20)
                                                              -----    -----
     Cash provided by (used in) continuing operations.......    141      (56)
     Cash provided by discontinued operations...............     --      166
                                                              -----    -----
          Net cash provided by operating activities.........    141      110
                                                              -----    -----
Cash flows from investing activities
  Capital expenditures......................................     (5)      (4)
  Net change in advances to EPEC............................   (219)    (152)
  Cash used in investing activities by discontinued
     operations.............................................     --     (162)
                                                              -----    -----
          Net cash used in investing activities.............   (224)    (318)
                                                              -----    -----
Cash flows from financing activities
  Net commercial paper borrowings (repayments)..............     20      (72)
  Other credit facilities borrowings........................    165       --
  Other credit facilities repayments........................    (95)     (45)
  Long-term debt retirements................................     (5)     (21)
  Net proceeds from an affiliated note issuance.............     --      335
  Dividends paid on common stock............................     --      (22)
  Other.....................................................     --        8
  Cash used in financing activities by discontinued
     operations.............................................     --      (18)
                                                              -----    -----
          Net cash provided by financing activities.........     85      165
                                                              -----    -----
Increase (decrease) in cash and temporary investments.......      2      (43)
  Less decrease in cash and temporary investments related to
     discontinued operations................................     --      (14)
                                                              -----    -----
Increase (decrease) in cash and temporary investments from
  continuing operations.....................................      2      (29)
Cash and temporary investments
  Beginning of period.......................................      9       62
                                                              -----    -----
  End of period.............................................  $  11    $  33
                                                              =====    =====
</TABLE>
 
              The accompanying Notes are an integral part of these
                  Condensed Consolidated Financial Statements.
 
                                        3
<PAGE>   6
 
                          EL PASO NATURAL GAS COMPANY
 
              NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
                                  (UNAUDITED)
 
1. BASIS OF PRESENTATION
 
     The 1998 Annual Report on Form 10-K for the Company includes a summary of
significant accounting policies and other disclosures and should be read in
conjunction with this Quarterly Report on Form 10-Q. The condensed consolidated
financial statements at March 31, 1999, and for the quarters ended March 31,
1999, and 1998, are unaudited. The condensed balance sheet at December 31, 1998,
is derived from audited financial statements. These financial statements do not
include all disclosures required by generally accepted accounting principles. In
the opinion of management, all material adjustments necessary to present fairly
the results of operations for such periods have been included. All such
adjustments, except for those relating to discounted operations as described
below, are of a normal recurring nature. Results of operations for any interim
period are not necessarily indicative of the results of operations for the
entire year due to the seasonal nature of the Company's businesses. Financial
statements for the previous periods include certain reclassifications which were
made to conform to current presentation. Such reclassifications have no effect
on reported net income or stockholder's equity.
 
  Tax-free Internal Reorganization (Discontinued Operations)
 
     On December 31, 1998, EPEC completed a series of steps to effect a tax-free
internal reorganization. The Company has treated the assets and operations
distributed to EPEC or other subsidiaries of EPEC in the tax-free internal
reorganization as though they were discontinued operations as of December 31,
1998. Accordingly, the information for the quarter ended March 31, 1998, in
these financial statements has been restated as though the transactions occurred
on January 1, 1998. Revenues related to those items treated as discontinued
operations were $1,504 million for the quarter ended March 31, 1998.
 
2. FINANCING TRANSACTIONS
 
     The average interest rate of short-term borrowings was 5.0% and 5.8% at
March 31, 1999, and December 31, 1998, respectively. The Company had short-term
borrowings, including current maturities of long term debt, at March 31, 1999,
and December 31, 1998, as follows:
 
<TABLE>
<CAPTION>
                                                              1999     1998
                                                              -----    -----
                                                              (IN MILLIONS)
<S>                                                           <C>      <C>
Commercial paper............................................  $170     $150
Other credit facilities.....................................   130       60
Current maturities of long-term debt........................    58       58
                                                              ----     ----
                                                              $358     $268
                                                              ====     ====
</TABLE>
 
     During the first quarter of 1999, the Company accrued $7 million in
dividends payable on its 8% preferred stock.
 
     In May 1999, EPEC issued $500 million aggregate principal amount of 6.75%
Senior Notes due 2009. Approximately $70 million of the proceeds were used to
repay a portion of EPNG's outstanding commercial paper.
 
3. COMMITMENTS AND CONTINGENCIES
 
  Rates and Regulatory Matters
 
     In July 1998, FERC issued a Notice of Proposed Rulemaking ("NOPR") in which
it sought comments on a wide range of initiatives to change the manner in which
short-term (less than one year) transportation markets are regulated. Among
other things, the NOPR proposes the following: (i) removing the price cap for
the short-term capacity market; (ii) establishing procedures to make pipeline
and shipper-owned capacity
 
                                        4
<PAGE>   7
 
comparable; (iii) auctioning all available short-term pipeline capacity on a
daily basis with the pipeline unable to set a reserve price above variable
costs; (iv) changing policies or pipeline penalties, nomination procedures and
services; (v) increasing pipeline reporting requirements; (vi) permitting the
negotiation of terms and conditions of service; and (vii) potentially modifying
the procedures for certificating new pipeline construction. Also in July 1998,
FERC issued a Notice of Inquiry ("NOI") seeking comments on FERC's policy for
pricing long-term capacity. The Company provided comments on the NOPR and NOI in
April 1999. It is not known when FERC will act on the NOPR and NOI.
 
     In June 1995, EPNG filed with FERC for approval of new system rates for
mainline transportation to be effective January 1, 1996. In March 1996, EPNG
filed a comprehensive offer of settlement to resolve that proceeding as well as
issues surrounding certain contract reductions and expirations that were to
occur from January 1, 1996, through December 31, 1997. In April 1997, FERC
approved EPNG's settlement as filed and determined that only the contesting
party, Edison, should be severed for separate determination of the rates it
ultimately pays EPNG. In July 1997, FERC issued an order denying the requests
for rehearing of the April 1997 order and the settlement was implemented
effective July 1, 1997. Hearings to determine Edison's rates were completed in
May 1998, and an initial decision was issued by the presiding ALJ in July 1998.
EPNG and Edison have filed exceptions to the decision with FERC. If the ALJ's
decision is affirmed by FERC, EPNG believes that the resulting rates to Edison
would be such that no significant, if any, refunds in excess of the amounts
reserved would be required. Pending the final outcome, Edison continues to pay
the originally filed rates, subject to refund, and EPNG continues to provide a
reserve for such potential refunds.
 
     Edison filed with the Court of Appeals a petition for review of FERC's
April 1997 and July 1997 orders, in which it challenged the propriety of FERC's
approving the settlement over Edison's objections to the settlement as a
customer of Southern California Gas Company. In December 1998, the Court of
Appeals issued its decision vacating and remanding FERC's order. In April 1999,
FERC issued an order requiring the parties to submit briefs setting forth their
positions as to whether FERC can approve the settlement over Edison's continuing
objections. EPNG cannot predict the outcome with certainty, but it believes that
FERC will ultimately approve the settlement.
 
     The rate settlement establishes, among other things, base rates through
December 31, 2005. Such rates escalate annually beginning in 1998. In addition,
the settlement provides for settling customers to (i) pay $295 million
(including interest) as a risk sharing obligation, which approximates 35 percent
of anticipated revenue shortfalls over an 8 year period, resulting from certain
contract reductions and expirations identified in the settlement, (ii) receive
35 percent of additional revenues received by EPNG, above a threshold, for the
same eight-year period, and (iii) have the base rates increase or decrease if
certain changes in laws or regulations result in increased or decreased costs in
excess of $10 million a year. Through March 31, 1999, approximately $231 million
of the risk sharing obligation had been paid, and the remaining balance of $64
million will be collected by the end of 2003. At March 31, 1999, the balance of
the unearned risk sharing revenue was $215 million. This amount will be
recognized ratably through the year 2003.
 
     In addition to other arrangements to offset the effects of the reduction in
firm capacity commitments referred to above, EPNG entered into three contracts
with Dynegy Inc. ("Dynegy") for the sale of substantially all of its turned back
firm capacity available to California as of January 1, 1998, (approximately 1.3
billion cubic feet) for a two-year period beginning January 1, 1998, at rates
negotiated pursuant to EPNG's tariff provisions and FERC policies. EPNG realized
$11 million in revenue in the first quarter of 1999 and anticipates realizing at
least $32 million in revenues during the remainder of 1999. Such revenue is
subject to the revenue sharing provisions of the rate settlement. The contracts
have a transport-or-pay provision requiring Dynegy to pay a minimum charge equal
to the reservation component of the contractual charge on at least 72 percent of
the contracted volumes each month in 1999. In the third quarter of 1999, EPNG
intends to remarket this capacity pursuant to EPNG's tariff provisions and FERC
regulations, subject to Dynegy's right of first refusal.
 
     In December 1997, EPNG filed to implement several negotiated rate
contracts, including those with Dynegy. In a protest to this filing, three
shippers (producers/marketers) requested that FERC require EPNG to eliminate
certain provisions from the Dynegy contracts, to publicly disclose and repost
the contracts for
 
                                        5
<PAGE>   8
 
competitive bidding, and to suspend their effectiveness. In an order issued in
January 1998, FERC rejected several of the arguments made in the protest and
allowed the contracts to become effective as of January 1, 1998, subject to
refund, and subject to the outcome of a technical conference, which was held in
March 1998. In June 1998, FERC issued an order rejecting the protests to the
Dynegy contracts, but required EPNG to file modifications with FERC to the
contracts clarifying the credits under the reservation reduction mechanism and
the recall rights of certain capacity. In addition, EPNG agreed to separately
post capacity covered by the Dynegy contracts which becomes available in the
future. Several parties have protested EPNG's compliance filing and/or requested
rehearing of FERC's June 1998 order. In June 1998, EPNG filed a letter agreement
in compliance with the June 1998 FERC order. In September 1998, FERC issued an
order accepting the letter agreement subject to EPNG making additional
modifications. The additional modifications to the letter agreement required
further clarification of credits available to Dynegy under the reservation
reduction mechanism and the recall rights of certain capacity. In October 1998,
EPNG filed a revised letter agreement with FERC and requested rehearing of the
September 1998 order. The issue is pending before FERC.
 
     Under the revenue sharing provisions of its rate case settlement, EPNG was
obligated to return approximately $12 million of non-traditional fixed cost
revenues earned in 1998 to certain customers. This amount was credited to those
customers' transportation invoices between October 1998 and March 1999. EPNG
continues to reserve for the revenue sharing provisions. At March 31, 1999, EPNG
had a reserve of $4 million for additional amounts, which are expected to be
credited to customer accounts during the period September 1999 through March
2000.
 
     In a November 1997 order, FERC reversed its previous decision and found
that EPNG's Chaco Station should be functionalized as a gathering, not
transmission, facility and should be transferred to EPFS. In accordance with the
FERC orders, the Chaco Station was transferred to EPFS in April 1998. EPNG and
two other parties filed petitions for review with the Court of Appeals. EPNG and
others contested FERC's functionalization ruling and other parties contested
FERC's determination of the impact of the functionalization ruling on the
treatment of the Chaco Station costs in the rate settlement. The matter has been
briefed and will be argued in September 1999.
 
     As an interstate pipeline, EPNG is subject to FERC audits of its books and
records. EPNG currently has an open audit covering the years 1990 through 1995.
FERC is expected to issue its final audit report in 1999. As part of an
industry-wide initiative, EPNG's property retirements are currently under review
by the FERC audit staff.
 
     As the aforementioned rate and regulatory matters are fully and
unconditionally resolved, the Company may either recognize an additional refund
obligation or a non-cash benefit to finalize previously estimated liabilities.
Management believes the ultimate resolution of these matters, which are in
various stages of finalization, will not have a material adverse effect on the
Company's financial position, results of operations, or cash flows.
 
  Legal Proceedings
 
     In November 1993, TransAmerican filed a complaint in a Texas state court,
TransAmerican Natural Gas Corporation v. El Paso Natural Gas Company, et al.,
alleging fraud, tortious interference with contractual relationships, negligent
misrepresentation, economic duress, civil conspiracy, and violation of state
antitrust laws arising from a settlement agreement entered into by EPNG,
TransAmerican Natural Gas Corporation ("TransAmerican"), and others in 1990 to
settle litigation then pending and other potential claims. The complaint, as
amended, seeks actual damages of $1.5 billion and exemplary damages of $6
billion. EPNG is defending the matter in the State District Court of Dallas
County, Texas. In April 1996, a former employee of TransAmerican filed a related
case in Harris County, Texas, Vickroy E. Stone v. Godwin & Carlton, P.C., et al.
(including EPNG), seeking indemnification and other damages in unspecified
amounts relating to litigation consulting work allegedly performed for various
entities, including EPNG, in cases involving TransAmerican. EPNG filed a motion
for summary judgment in the TransAmerican case arguing that plaintiff's claims
are barred by a prior release executed by TransAmerican, by statues of
limitations, and by the
 
                                        6
<PAGE>   9
 
final court judgment ending the original litigation in 1990. Following a hearing
in January 1998, the court granted summary judgment in EPNG's favor on
TransAmerican's claims based on economic duress and negligent misrepresentation,
but denied the motion as to the remaining claims. In March 1999, the court ruled
in EPNG's favor, denying TransAmerican's summary judgment motion which sought to
dismiss EPNG's counterclaims. In April 1999, EPNG filed a motion for partial
summary judgment as to TransAmerican's claims of fraud, tortious interference
and civil conspiracy. The motion is currently set for hearing in June 1999. The
TransAmerican trial is set to commence in September 1999. In February 1998, EPNG
filed a motion for summary judgment in the Stone litigation arguing that all
claims are baseless, barred by statutes of limitations, subject to executed
releases, or have been assigned to TransAmerican. In June 1998, the court
granted EPNG's motion in its entirety and dismissed all the remaining claims in
the Stone litigation. In August 1998, the court denied Stone's motion for a new
trial seeking reconsideration of that ruling. Stone has appealed the court's
ruling to the Texas Court of Appeals in Houston, Texas. Based on information
available at this time, management believes that the claims asserted against it
in both cases have no factual or legal basis and that the ultimate resolution of
these matters will not have a material adverse effect on the Company's financial
position, results of operations, or cash flows.
 
     EPNG has been named a defendant in actions brought by Jack Grynberg on
behalf of the U.S. Government under the false claims act. Generally, the
complaints allege an industry-wide conspiracy to underreport the heating value
as well as the volumes of the natural gas produced from federal and Indian
lands, thereby depriving the U.S. Government of royalties. In April 1999, the
U.S. Government filed a notice that it does not intend to intervene in these
actions. The Company believes the complaint to be without merit.
 
     The Company is a named defendant in numerous lawsuits and a named party in
numerous governmental proceedings arising in the ordinary course of business.
While the outcome of such lawsuits or other proceedings against the Company
cannot be predicted with certainty, management currently does not expect these
matters to have a material adverse effect on the Company's financial position,
results of operations, or cash flows.
 
  Environmental
 
     The Company is subject to extensive federal, state, and local laws and
regulations governing environmental quality and pollution control. These laws
and regulations require the Company to remove or remedy the effect on the
environment of the disposal or release of specified substances at current and
former operating sites. As of March 31, 1999, the Company had reserves of
approximately $22 million for expected environmental costs.
 
     Capital expenditures are expected to be approximately $9 million in total
for the years 2000 through 2007. These expenditures primarily relate to
compliance with air regulations and, to a lesser extent, control of water
discharges.
 
     The Company and certain of its subsidiaries have been designated, have
received notice that they could be designated, or have been asked for
information to determine whether they could be designated as a PRP with respect
to 5 sites under the Comprehensive Environmental Response, Compensation and
Liability Act (CERCLA or Superfund) or state equivalents. The Company has sought
to resolve its liability as a PRP with respect to these Superfund sites through
indemnification by third parties and/or settlements which provide for payment of
the Company's allocable share of remediation costs. Since the clean-up costs are
estimates and are subject to revision as more information becomes available
about the extent of remediation required, and because in some cases the Company
has asserted a defense to any liability, the Company's estimate of its share of
remediation costs could change. Moreover, liability under the federal Superfund
statute is joint and several, meaning that the Company could be required to pay
in excess of its pro rata share of remediation costs. The Company's
understanding of the financial strength of other PRPs has been considered, where
appropriate, in its determination of its estimated liability as described
herein. The Company presently believes that the costs associated with the
current status of such other entities as PRPs at the Superfund sites referenced
above will not have a material adverse effect on the Company's financial
position, results of operations, or cash flows.
 
                                        7
<PAGE>   10
 
     The Company has initiated proceedings against its historic liability
insurers seeking payment or reimbursement of costs and liabilities associated
with environmental matters. In these proceedings, the Company contends that
certain environmental costs and liabilities associated with various entities or
sites, including costs associated with former operating sites, must be paid or
reimbursed by certain of its historic insurers. The proceedings are in the
discovery stage, and it is not yet possible to predict the outcome.
 
     It is possible that new information or future developments could require
the Company to reassess its potential exposure related to environmental matters.
The Company may incur significant costs and liabilities in order to comply with
existing environmental laws and regulations. It is also possible that other
developments, such as increasingly strict environmental laws, regulations and
enforcement policies thereunder, and claims for damages to property, employees,
other persons and the environment resulting from current or discontinued
operations, could result in substantial costs and liabilities in the future. As
such information becomes available, or other relevant developments occur,
related accrual amounts will be adjusted accordingly. While there are still
uncertainties relating to the ultimate costs which may be incurred, based upon
the Company's evaluation and experience to date, the Company believes the
recorded reserve is adequate.
 
     For a further discussion of other environmental matters, see Legal
Proceedings above.
 
     Other than the items discussed above, management is not aware of any other
commitments or contingent liabilities which would have a material adverse effect
on the Company's financial condition, results of operations, or cash flows.
 
4. PROPERTY, PLANT, AND EQUIPMENT
 
     Property, plant, and equipment at March 31, 1999, and December 31, 1998,
consisted of the following:
 
<TABLE>
<CAPTION>
                                                               1999      1998
                                                              ------    ------
                                                               (IN MILLIONS)
<S>                                                           <C>       <C>
Property, plant, and equipment, at cost.....................  $2,412    $2,417
Less accumulated depreciation and depletion.................     961       961
                                                              ------    ------
                                                               1,451     1,456
Additional acquisition cost assigned to utility plant, net
  of accumulated amortization...............................      80        81
                                                              ------    ------
          Total property, plant, and equipment, net.........  $1,531    $1,537
                                                              ======    ======
</TABLE>
 
     Current FERC policy does not permit the Company to recover amounts in
excess of original cost allocated in purchase accounting to its regulated
operations through rates.
 
5. NEW ACCOUNTING PRONOUNCEMENTS NOT YET ADOPTED
 
  Accounting for Derivative Instruments and Hedging Activities
 
     In June 1998, Statement of Financial Accounting Standards No. 133,
Accounting for Derivative Instruments and Hedging Activities, was issued by the
Financial Accounting Standards Board to establish accounting and reporting
standards for derivative instruments, including certain derivative instruments
embedded in other contracts, and for hedging activities. This pronouncement
requires that an entity classify all derivatives as either assets or liabilities
in the statement of financial position and measure those instruments at fair
value. If certain conditions are met, a derivative may be specifically
designated as (i) a hedge of the exposure to changes in the fair value of a
recognized asset or liability or an unrecognized firm commitment, (ii) a hedge
of the exposure to variable cash flows of a forecasted transaction, or (iii) a
hedge of the foreign currency exposure of a net investment in a foreign
operation, an unrecognized firm commitment, an available-for-sale security or a
foreign-currency-denominated forecasted transaction. The accounting for the
changes in the fair value of a derivative depends on the intended use of the
derivative and the resulting designation. The standard is effective for all
quarters in fiscal years beginning after June 15, 1999. The Company is currently
evaluating the effects of this pronouncement.
 
                                        8
<PAGE>   11
 
ITEM 2. MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS
OF OPERATIONS
 
     The information contained in Item 2 updates, and should be read in
conjunction with, information set forth in Part II, Items 7, 7A, and 8, in the
Company's Annual Report on Form 10-K for the year ended December 31, 1998, in
addition to the interim condensed consolidated financial statements and
accompanying notes presented in Item 1 of this Quarterly Report on Form 10-Q.
 
                                    GENERAL
 
     On December 31, 1998, EPEC completed a tax-free internal reorganization of
its assets and operations and those of its subsidiaries. After giving effect to
the reorganization, the Company's primary assets are its interstate pipeline
systems known as the EPNG System and the Mojave Pipeline Company System. See
Note 1 for a further discussion of the tax-free internal reorganization.
 
                        RESULTS OF CONTINUING OPERATIONS
 
<TABLE>
<CAPTION>
                                                              FIRST QUARTER
                                                                  ENDED
                                                                MARCH 31,
                                                              -------------
                                                              1999     1998
                                                              ----     ----
                                                              (IN MILLIONS)
<S>                                                           <C>      <C>
Operating revenues..........................................  $118     $115
Operating expenses..........................................   (62)     (65)
Other -- net................................................    --        2
                                                              ----     ----
  EBIT......................................................  $ 56     $ 52
                                                              ====     ====
</TABLE>
 
     Operating revenues for the quarter ended March 31, 1999, were $3 million
higher than for the same period of 1998 primarily due to an increase in
non-traditional revenues, including revenues from the sale of capacity to
Dynegy.
 
     Operating expenses for the quarter ended March 31, 1999, were $3 million
lower than for the same period of 1998 primarily due to lower fuel costs,
partially offset by an increase in operation and maintenance expenses.
 
  NON-AFFILIATED INTEREST AND DEBT EXPENSE
 
     Non-affiliated interest and debt expense for the quarter ended March 31,
1999, was $5 million lower than for the same period of 1998 primarily due to
lower average principal balances on commercial paper and other credit facilities
in 1999.
 
  AFFILIATED INTEREST INCOME, NET
 
     Affiliated interest income, net for the quarter ended March 31, 1999, was
$2 million higher than for the same period of 1998 primarily due to increased
advances to EPEC.
 
                                        9
<PAGE>   12
 
      CAUTIONARY STATEMENT FOR PURPOSES OF THE "SAFE HARBOR" PROVISIONS OF
             THE PRIVATE SECURITIES LITIGATION REFORM ACT OF 1995.
 
     This report contains forward-looking statements within the meaning of the
Private Securities Litigation Reform Act of 1995. Where any such forward-looking
statement includes a statement of the assumptions or bases underlying such
forward-looking statement, the Company cautions that, while such assumptions or
bases are believed to be reasonable and are made in good faith, assumed facts or
bases almost always vary from the actual results, and the differences between
assumed facts or bases and actual results can be material, depending upon the
circumstances. Where, in any forward-looking statement, the Company or its
management expresses an expectation or belief as to future results, such
expectation or belief is expressed in good faith and is believed to have a
reasonable basis, but there can be no assurance that the statement of
expectation or belief will result or be achieved or accomplished. The words
"believe," "expect," "estimate," "anticipate" and similar expressions may
identify forward-looking statements.
 
     Important factors that could cause actual results to differ materially from
those in the forward-looking statements herein include increasing competition
within the Company's industry, the timing and extent of changes in commodity
prices for natural gas and power, uncertainties associated with acquisitions and
joint ventures, potential environmental liabilities, potential contingent
liabilities and tax liabilities related to the Company's acquisitions, political
and economic risks associated with current and future operations in foreign
countries, conditions of the equity and other capital markets during the periods
covered by the forward-looking statements, and other risks, uncertainties and
factors, including the effect of the Year 2000 date change, discussed more
completely in the Company's other filings with the U.S. Securities and Exchange
Commission, including its Annual Report on Form 10-K for the year ended December
31, 1998.
 
     The Company is participating in EPEC's Year 2000 project. Accordingly, the
Company is taking steps to mitigate any adverse effects of the Year 2000 date
change on our customers and business operations including the assessment,
remediation, testing of our applications, hardware and software, and the
implementation of necessary changes. Nevertheless, our failure, or the failure
of third-parties with whom we deal, to achieve Year 2000 compliance may
adversely affect our business. For more information regarding the Year 2000
compliance project, see EPEC's Quarterly Report on Form 10-Q for the period
ended March 31, 1999.
 
ITEM 3. QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET RISK
 
     The information contained in Item 3 updates, and should be read in
conjunction with, information set forth in Part II, Item 7A in the Company's
Annual Report on Form 10-K for the year ended December 31, 1998, in addition to
the interim consolidated financial statements, accompanying notes, and
Management's Discussion and Analysis of Financial Condition and Results of
Operations presented in Items 1 and 2 of this Quarterly Report on Form 10-Q.
 
     There are no material changes in market risks faced by the Company from
those reported in the Company's Annual Report on Form 10-K for the year ended
December 31, 1998.
 
                                       10
<PAGE>   13
 
                          PART II -- OTHER INFORMATION
 
ITEM 1. LEGAL PROCEEDINGS
 
     See Part I, Financial Information, Note 3, which is incorporated herein by
reference.
 
ITEM 2. CHANGES IN SECURITIES AND USE OF PROCEEDS
 
     None.
 
ITEM 3. DEFAULTS UPON SENIOR SECURITIES
 
     None.
 
ITEM 4. SUBMISSION OF MATTERS TO A VOTE OF SECURITY-HOLDERS
 
     None.
 
ITEM 5. OTHER INFORMATION
 
     None.
 
ITEM. 6. EXHIBITS AND REPORTS ON FORM 8-K
 
     a. Exhibits
 
     Each exhibit identified below is filed as a part of this report.
 
<TABLE>
<CAPTION>
        EXHIBIT
         NUMBER                                  DESCRIPTION
        -------                                  -----------
<C>                      <S>
           3.A           -- Restated Certificate of Incorporation of EPNG, dated May
                            11, 1999.
          27             -- Financial Data Schedule.
</TABLE>
 
     Undertaking
 
          The undersigned hereby undertakes, pursuant to Regulation S-K, Item
     601(b), paragraph (4)(iii), to furnish to the U.S. Securities and Exchange
     Commission, upon request, all constituent instruments defining the rights
     of holders of long-term debt of EPNG and its consolidated subsidiaries not
     filed herewith for the reason that the total amount of securities
     authorized under any of such instruments does not exceed 10 percent of the
     total consolidated assets of EPNG and its consolidated subsidiaries.
 
     b. Reports on Form 8-K
 
          EPNG filed a report under Item 2 on Form 8-K, dated January 14, 1999,
     with respect to the tax-free internal reorganization.
 
                                       11
<PAGE>   14
 
                                   SIGNATURES
 
     Pursuant to the requirements of the Securities Exchange Act of 1934, the
Registrant has duly caused this report to be signed on its behalf by the
undersigned thereunto duly authorized.
 
                                           EL PASO NATURAL GAS COMPANY
 
Date: May 13, 1999                                 /s/ H. BRENT AUSTIN
                                            ------------------------------------
                                                      H. Brent Austin
                                                Executive Vice President and
                                                  Chief Financial Officer
 
Date: May 13, 1999                                /s/ JEFFREY I. BEASON
                                            ------------------------------------
                                                     Jeffrey I. Beason
                                               Vice President and Controller
                                                 (Chief Accounting Officer)
 
                                       12
<PAGE>   15
 
                               INDEX TO EXHIBITS
 
<TABLE>
<CAPTION>
        EXHIBIT
         NUMBER                                  DESCRIPTION
        -------                                  -----------
<C>                      <S>
           3.A           -- Restated Certificate of Incorporation of EPNG, dated May
                            11, 1999.
          27             -- Financial Data Schedule.
</TABLE>