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                       SECURITIES AND EXCHANGE COMMISSION
                             WASHINGTON, D.C. 20549
                                 ---------------


                                    FORM 10-Q


                QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(D)
                     OF THE SECURITIES EXCHANGE ACT OF 1934


For Quarter Ended March 31, 1998                   Commission File Number 1-4456



                     TEXAS EASTERN TRANSMISSION CORPORATION
             (Exact name of Registrant as Specified in its Charter)


                   Delaware                                72-0378240
(State or Other Jurisdiction of Incorporation) (IRS Employer Identification No.)

                              5400 Westheimer Court
                                  P.O. Box 1642
                             Houston, TX 77251-1642
                    (Address of Principal Executive Offices)
                                   (Zip code)

                                  713-627-5400
              (Registrant's telephone number, including area code)

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 __

The Registrant meets the conditions set forth in General Instructions  (H)(1)(a)
and (b) of Form 10-Q and is  therefore  filing  this Form 10-Q with the  reduced
disclosure format.  Part I, Item 2 has been reduced and Part II, Item 4 has been
omitted in accordance with such Instruction H.

All of the  Registrant's  common  shares  are  indirectly  owned by Duke  Energy
Corporation (File No. 1-4928),  which files reports and proxy materials pursuant
to the Securities Exchange Act of 1934.

Indicate the number of shares outstanding of each of the Registrant's classes of
common stock, as of the latest practicable date:

Number of  shares  of  Common  Stock,  $1 par  value,  outstanding  at 
April 30, 1998............................................................1,000

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<PAGE>



                     TEXAS EASTERN TRANSMISSION CORPORATION
                 FORM 10-Q FOR THE QUARTER ENDED MARCH 31, 1998
                                      INDEX


<TABLE>
<CAPTION>
Item                                                                                                        Page
----                                                                                                        ----
<S>                                                                                                         <C>
                                           PART I. FINANCIAL INFORMATION

1.   Financial Statements....................................................................................1
         Consolidated Statements of Income for the Three Months Ended March 31, 1998 and 1997................1
         Consolidated Statements of Cash Flows for the Three Months Ended March 31, 1998 and 1997............2
         Consolidated Balance Sheets as of March 31, 1998 and December 31, 1997..............................3
         Notes to Consolidated Financial Statements..........................................................5
2.   Management's Discussion and Analysis of Results of Operations and Financial Condition...................7

                                            PART II. OTHER INFORMATION

1.   Legal Proceedings.......................................................................................8
5.   Other Information.......................................................................................8
6.   Exhibits and Reports on Form 8-K........................................................................8

     Signatures..............................................................................................9
</TABLE>



                                       i

<PAGE>




                          PART I. FINANCIAL INFORMATION

Item 1. Financial Statements.

                     TEXAS EASTERN TRANSMISSION CORPORATION
                        CONSOLIDATED STATEMENTS OF INCOME
                                   (Unaudited)
                                  (In millions)


                                                             Three Months Ended
                                                                   March 31
                                                             -------------------
                                                               1998       1997
                                                             --------   --------

Operating Revenues
      Transportation and storage of natural gas              $  226.0   $  228.4
      Other                                                      13.2       14.2
                                                             --------   --------
          Total operating revenues                              239.2      242.6
                                                             --------   --------

Operating Expenses
      Operation and maintenance                                  95.8      104.8
      Depreciation and amortization                              37.5       36.7
      Property and other taxes                                   (2.0)      11.3
                                                             --------   --------
          Total operating expenses                              131.3      152.8
                                                             --------   --------

Operating Income                                                107.9       89.8
                                                             --------   --------

Other Income and Expenses                                         2.6        2.4
                                                             --------   --------

Earnings Before Interest and Taxes                              110.5       92.2

Interest Expense                                                 28.6       29.5
                                                             --------   --------

Earnings Before Income Taxes                                     81.9       62.7

Income Taxes                                                     29.8       23.7
                                                             --------   --------

Net Income                                                   $   52.1   $   39.0
                                                             ========   ========






                 See Notes to Consolidated Financial Statements.



                                       1
<PAGE>



                     TEXAS EASTERN TRANSMISSION CORPORATION
                      CONSOLIDATED STATEMENTS OF CASH FLOWS
                                   (Unaudited)
                                  (In millions)



                                                            Three Months Ended
                                                                  March 31
                                                            -------------------
CASH FLOWS FROM OPERATING ACTIVITIES                          1998       1997
                                                            --------   --------

      Net income                                            $   52.1   $   39.0
      Adjustments to reconcile net income to net
          cash provided by operating activities:
      Depreciation and amortization                             38.7       36.7
      Deferred income taxes                                     (3.9)       4.7
      Natural gas transition cost recoveries                    (0.3)      (9.6)
          Net change in current assets and liabilities         (71.2)     (67.9)
      Other, net                                                 0.4         --
                                                            --------   --------
          Net cash provided by operating activities             15.8        2.9
                                                            --------   --------

CASH FLOWS FROM INVESTING ACTIVITIES
      Capital and investment expenditures                      (20.2)      (6.0)
      Net increase in advances receivable - parent               4.9        1.5
      Retirements and other                                     (0.5)       1.6
                                                            --------   --------
          Net cash used in investing activities                (15.8)      (2.9)
                                                            --------   --------

      Net decrease in cash and cash equivalents                   --         --

      Cash and cash equivalents at beginning of period            --         --
                                                            --------   --------
      Cash and cash equivalents at end of period            $     --   $     --
                                                            ========   ========


Supplemental Disclosures
      Cash paid for interest (net of amount capitalized)    $   25.7   $   25.7
      Cash paid for income taxes                            $   72.0   $   45.2




                 See Notes to Consolidated Financial Statements.


                                       2
<PAGE>


                     TEXAS EASTERN TRANSMISSION CORPORATION
                           CONSOLIDATED BALANCE SHEETS
                                  (In millions)



                                                          March 31, December 31,
                                                            1998       1997
                                                        (Unaudited)
                                                        ----------- -----------
ASSETS

Current Assets
      Receivables                                         $   83.5   $   80.6
      Inventory                                               12.3       14.3
      Current portion of natural gas transition costs         66.0       66.4
      Current portion of environmental clean-up costs         12.8       12.3
      Other                                                   18.6       19.8
                                                          --------   --------
          Total current assets                               193.2      193.4
                                                          --------   --------

Investments and Other Assets
      Advances receivable - parent                           968.8      973.7
      Goodwill, net                                          155.0      156.2
      Other                                                   14.6       16.8
                                                          --------   --------
          Total investments and other assets               1,138.4    1,146.7
                                                          --------   --------

Property, Plant and Equipment
      Cost                                                 3,424.5    3,411.0
      Less accumulated depreciation and amortization         936.3      908.0
                                                          --------   --------
          Net property, plant and equipment                2,488.2    2,503.0
                                                          --------   --------

Regulatory Assets and Deferred Debits
      Debt expense                                            44.1       45.5
      Natural gas transition costs                           179.7      192.9
      Environmental clean-up costs                            75.1       78.6
      Other                                                   88.4       89.7
                                                          --------   --------
          Total regulatory assets and deferred debits        387.3      406.7
                                                          --------   --------


      Total Assets                                        $4,207.1   $4,249.8
                                                          ========   ========





                 See Notes to Consolidated Financial Statements.




                                       3
<PAGE>


                     TEXAS EASTERN TRANSMISSION CORPORATION
                           CONSOLIDATED BALANCE SHEETS
                       (In millions, except share amounts)



                                                          March 31, December 31,
                                                            1998       1997
                                                        (Unaudited)
                                                        ----------- -----------
LIABILITIES AND STOCKHOLDER'S EQUITY

Current Liabilities
      Accounts payable                                     $   27.0   $   39.0
      Taxes accrued                                            64.2      106.8
      Interest accrued                                         14.8       14.1
      Current portion of natural gas transition liabilities    35.0       35.0
      Current portion of environmental clean-up liabilities     7.9        9.0
      Other                                                    81.6       98.8
                                                           --------   --------
          Total current liabilities                           230.5      302.7
                                                           --------   --------

Long-term Debt
      Notes payable - parent                                  605.0      605.0
      Other                                                   599.5      599.4
                                                           --------   --------
          Total long-term debt                              1,204.5    1,204.4
                                                           --------   --------

Deferred Credits and Other Liabilities
      Deferred income taxes                                   588.4      592.0
      Natural gas transition liabilities                       63.4       77.3
      Environmental clean-up liabilities                      118.6      120.1
      Other                                                   142.2      145.9
                                                           --------   --------
          Total deferred credits and other liabilities        912.6      935.3
                                                           --------   --------

Common Stockholder's Equity
      Common stock, $1 par value, 1,000 shares authorized,
          issued and outstanding                                 --         --
      Paid-in capital                                       1,463.5    1,463.5
      Retained earnings                                       396.0      343.9
                                                           --------   --------
          Total common stockholder's equity                 1,859.5    1,807.4
                                                           --------   --------

      Total Liabilities and Stockholder's Equity           $4,207.1   $4,249.8
                                                           ========   ========









                 See Notes to Consolidated Financial Statements.



                                       4
<PAGE>



                     TEXAS EASTERN TRANSMISSION CORPORATION
                   NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
                                   (Unaudited)


1.   General

Texas Eastern  Transmission  Corporation (TETCO) is a wholly owned subsidiary of
PanEnergy  Corp,  which is an indirect  wholly owned  subsidiary  of Duke Energy
Corporation.  TETCO and its subsidiaries  (the Company) are primarily engaged in
the interstate transportation and storage of natural gas. The interstate natural
gas transmission and storage  operations of the Company are subject to the rules
and regulations of the Federal Energy Regulatory Commission (FERC).

The consolidated  financial  statements  include the accounts of the Company and
all majority-owned subsidiaries. These consolidated financial statements reflect
all  normal  recurring  adjustments  that are,  in the  opinion  of  management,
necessary to present fairly the financial position and results of operations for
the respective periods.

Certain amounts for the prior periods have been reclassified in the consolidated
financial statements to conform to the current presentation.

2.   Related Party Transactions

A summary of certain balances due to or due from related parties included in the
Consolidated Balance Sheets is as follows:

      ------------------------- ------------------ -----------------
                                    March 31,        December 31,
      In Millions                     1998               1997
      ------------------------- ------------------ -----------------
      Receivables                  $      4.9         $      6.2
      Accounts payable                   15.9               20.5
      Taxes accrued                      29.7               68.8
      ------------------------- ------------------ -----------------


Interest  expense  included $12.9 million and $12.5 million for the three months
ended March 31, 1998 and 1997,  respectively,  of interest associated with notes
payable to parent.

3.   Gas Imbalances

The  Consolidated  Balance  Sheets  included  in-kind  balances  as a result  of
differences  in gas  volumes  received  and  delivered.  At March  31,  1998 and
December  31,  1997,  other  current  assets  included  $10.8  million and $12.6
million,  respectively, and other current liabilities included $13.0 million and
$9.8 million, respectively, related to gas imbalances.

4.   Commitments and Contingencies

LITIGATION.  On February  18,  1997,  Amerada Hess  Corporation  (Amerada  Hess)
notified TETCO that it intended to commence  substitution of other gas reserves,
deliverability  and leases  for those  dedicated  to its  natural  gas  purchase
contract (the Amerada Hess Contract) with TETCO. On the same date,  Amerada Hess
also filed a petition  in the  District  Court of Harris  County,  Texas,  157th
Judicial District, seeking a declaratory judgment that its interpretation of the
Amerada Hess Contract is correct. TETCO filed a declaratory judgment action with
respect to Amerada Hess'  contentions in the U.S. District Court for the Eastern
District of Louisiana on February 21, 1997.

On September 26, 1997, the judge presiding over the Amerada Hess contract matter
issued a summary judgment in favor of TETCO.  Amerada Hess subsequently  filed a
notice of appeal of the summary judgment. The potential



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liability of the Company  associated with the Amerada Hess Contract should TETCO
be contractually obligated to purchase natural gas based upon the substitute gas
reserves,   deliverability  and  leases,  and  the  effect  of  transition  cost
recoveries  pursuant to TETCO's Order 636 settlement  involves  numerous complex
legal  and  factual  matters  which  will take a  substantial  period of time to
resolve. However, the Company does not believe that Amerada Hess will prevail on
its appeal of the lower court's summary  judgment.  Management is of the opinion
that the final  disposition  of this  matter  will not have a  material  adverse
effect on the  consolidated  results of operations or financial  position of the
Company.

The Company and its  subsidiaries  are also  involved  in other  legal,  tax and
regulatory  proceedings  before  various  courts,   regulatory  commissions  and
governmental  agencies  regarding  matters  arising  in the  ordinary  course of
business,  some of which involve  substantial  amounts.  Where appropriate,  the
Company has made accruals in accordance  with Statement of Financial  Accounting
Standards No. 5,  "Accounting for  Contingencies,"  in order to provide for such
matters.  Management  is of the  opinion  that the  final  disposition  of these
proceedings will not have a material adverse effect on the consolidated  results
of operations or financial position of the Company.

OTHER  COMMITMENTS  AND  CONTINGENCIES.  In  1993,  the U.S.  Department  of the
Interior announced its intention to seek additional royalties from gas producers
as a result of  payments  received by such  producers  in  connection  with past
take-or-pay  settlements,  and buyouts and buydowns of gas sales  contracts with
natural gas pipelines.  The Company,  with respect to certain producer  contract
settlements,  may be contractually  required to reimburse or, in some instances,
to indemnify  producers against such royalty claims. The potential  liability of
the producers to the government  and of the pipelines to the producers  involves
complex  issues of law and fact  which are  likely to take  substantial  time to
resolve.  If required to reimburse or indemnify the producers,  the Company will
file with FERC to recover a portion of these costs from pipeline customers.

Periodically,  the Company  may become  involved in  contractual  disputes  with
natural gas transmission  customers involving potential or threatened abrogation
of contracts by the customers. If the customers are successful,  the Company may
not receive the full value of anticipated benefits under the contracts.

Management is of the opinion that these commitments and  contingencies  will not
have a material adverse effect on the consolidated  results of operations or the
financial position of the Company.


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<PAGE>


Item 2.  Management's  Discussion  and  Analysis  of Results of  Operations  and
         Financial Condition.

INTRODUCTION

Texas Eastern  Transmission  Corporation (TETCO) is a wholly owned subsidiary of
PanEnergy  Corp,  which is an indirect  wholly owned  subsidiary  of Duke Energy
Corporation.  TETCO and its subsidiaries  (the Company) are primarily engaged in
the interstate transportation and storage of natural gas. The interstate natural
gas transmission and storage  operations of the Company are subject to the rules
and regulations of the Federal Energy Regulatory Commission(FERC).

RESULTS OF OPERATIONS

For the three  months  ended March 31, 1998,  net income was $52.1  million,  up
$13.1  million from the  comparable  period in 1997,  primarily as a result of a
favorable state property tax ruling in 1998 and non-recurring severance expenses
in 1997, which are included in operating expenses.

LIQUIDITY AND CAPITAL RESOURCES

Capital and  investment  expenditures  totaled  $20.2 million in the first three
months of 1998,  compared  with $6  million  for the same  period  in 1997.  The
increase  is  primarily  due  to  business  expansion  projects,  including  the
Philadelphia  Lateral Expansion project completed in March 1998.  Projected 1998
capital and investment  expenditures,  including allowance for funds used during
construction, are approximately $155.3 million. These projections are subject to
periodic review and revision. Expenditures for 1998 are expected to be funded by
cash from operations and/or collection of intercompany  advances receivable.



On April 28,  1998,  the Company  filed with the FERC a proposed  settlement  to
accelerate  recovery of natural gas transition costs and to reduce  depreciation
expense  to  more  appropriately  reflect  the  estimated  useful  lives  of its
facilities,  principally interstate natural gas pipelines.  The Company reviewed
the  condition of its natural gas pipeline  facilities  and current  maintenance
practices, and concluded that extension of the useful lives was appropriate. The
proposed   settlement  reduces  customer  rates  as  a  result  of  the  reduced
depreciation   expense  offset  by  the  accelerated  recovery  of  natural  gas
transition  costs.  The  Company  anticipates  implementation  of  the  proposed
settlement as early as August 1998.  The proposed  settlement is not expected to
have a material effect on the net results of operations or financial position of
the Company. As a result of the proposed settlement,  cash flows from operations
are not expected to change for the first two years after  implementation  due to
the offsetting effect on customer rates of the reduced  depreciation expense and
increased  recovery  of natural  gas  transition  costs.  Once the  natural  gas
transition costs are fully recovered, cash flows from operations are expected to
decrease during 2001 through 2003 by an estimated total of $270 million.



                                       7
<PAGE>



                           PART II. OTHER INFORMATION

Item 1. Legal Proceedings.

For information concerning litigation and other contingencies, see Note 4 to the
Consolidated Financial Statements.

Item 5. Other Information.

Forward-Looking Statements

From time to time, the Company may make  statements  regarding its  assumptions,
projections,  expectations,  intentions  or beliefs about future  events.  These
statements  are  intended  as  "forward-looking  statements"  under the  Private
Securities Litigation Reform Act of 1995. The Company cautions that assumptions,
projections,  expectations,  intentions  or beliefs  about future events may and
often do vary from  actual  results  and the  differences  between  assumptions,
projections,  expectations,  intentions  or beliefs  and actual  results  can be
material.  Accordingly,  there can be no assurance  that actual results will not
differ  materially  from  those  expressed  or  implied  by the  forward-looking
statements.  The  following  are some of the  factors  that could  cause  actual
achievements and events to differ  materially from those expressed or implied in
such  forward-looking  statements:  state and federal legislative and regulatory
initiatives  that affect cost and  investment  recovery,  have an impact on rate
structures,  and  affect the speed and  degree to which  competition  enters the
natural gas industry;  the weather and other natural  phenomena;  the timing and
extent  of  changes  in  commodity   prices  and  interest  rates;   changes  in
environmental  and  other  laws and  regulations  to which the  Company  and its
subsidiaries are subject or other external factors over which the Company has no
control;  the results of  financing  efforts;  growth in  opportunities  for the
Company's subsidiaries;  and the effect of the Company's accounting policies, in
each case during the periods covered by the forward-looking statements.

Item 6. Exhibits and Reports on Form 8-K.

(a)  Exhibits

     (27) Financial Data Schedule (included in electronic filing only)

(b)  Reports on Form 8-K

     The Company filed no reports on Form 8-K during the first quarter of 1998.



                                       8
<PAGE>



                                   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.



                                       TEXAS EASTERN TRANSMISSION CORPORATION


May 14, 1998                           /s/ Richard J. Osborne
                                       ----------------------
                                       Richard J. Osborne
                                       Senior Vice President and
                                       Chief Financial Officer






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