SECURITIES AND EXCHANGE COMMISSION  
                        WASHINGTON, D.C. 20549  
                              FORM 10-K 

(Mark One) 
[X] Annual report pursuant to Section 13 or 15(d) of the Securities 
Exchange Act of 1934 For the fiscal year ended    December 31, 1998
                                               --------------------
   OR 
[ ] Transition report pursuant to Section 13 or 15(d) of the 
Securities Exchange Act of 1934 For the transition period from
       to
------   -------
                        PACIFIC ENTERPRISES
-------------------------------------------------------------------
      (Exact name of registrant as specified in its charter)

CALIFORNIA                      1-40                94-0743670
-------------------------------------------------------------------
(State of incorporation        (Commission         (I.R.S. Employer
or organization)               File Number)      Identification No.

555 WEST FIFTH STREET, LOS ANGELES, CALIFORNIA               90013
-------------------------------------------------------------------
(Address of principal executive offices)                 (Zip Code) 
 
Registrant's telephone number, including area code    (213)244-1200 
                                                     -------------- 

SECURITIES REGISTERED PURSUANT TO SECTION 12(b) OF THE ACT: 

                                              Name of each exchange 
Title of each class                             on which registered 
-------------------                           --------------------- 
Preferred Stock:                            American and Pacific
      $4.75 dividend
      $4.50 dividend
      $4.40 dividend
      $4.36 dividend

SECURITIES REGISTERED PURSUANT TO SECTION 12(g) OF THE ACT:    None 

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 and 
(2) has been subject to such filing requirements for the past 90 
days.                                         Yes [ X ]   No  [   ]    
  
Indicate by check mark if disclosure of delinquent filers pursuant 
to Item 405 of Regulation S-K is not contained herein, and will not 
be contained, to the best of registrant's knowledge, in definitive 
proxy or information statements incorporated by reference in Part 
III of this Form 10-K or any amendment to this Form 10-K.  [  ]   
 
Exhibit Index on page 67.  Glossary on page 70.  
 
Aggregate market value of the voting preferred stock held by non-
affiliates of the registrant as of March 26, 1999 was 
$67.6 million.

Registrant's common stock outstanding as of March 26, 1999 was 
wholly owned by Sempra Energy.

DOCUMENTS INCORPORATED BY REFERENCE: 
Portions of the Information Statement prepared for the May 1999 
annual meeting of shareholders are incorporated by reference into 
Part III. 


                        TABLE OF CONTENTS

PART I
Item 1.  Business . . . . . . . . . . . . . . . . . . . . . . .  3
Item 2.  Properties . . . . . . . . . . . . . . . . . . . . . . 11
Item 3.  Legal Proceedings. . . . . . . . . . . . . . . . . . . 11
Item 4.  Submission of Matters to a Vote of Security Holders. . 12
         Executive Officers of the Registrant . . . . . . . . . 12

PART II
Item 5.  Market for Registrant's Common Equity and Related
            Stockholder Matters . . . . . . . . . . . . . . . . 12
Item 6.  Selected Financial Data. . . . . . . . . . . . . . . . 13
Item 7.  Management's Discussion and Analysis of Financial 
            Condition and Results of Operations . . . . . . . . 13
Item 7A. Quantitative and Qualitative Disclosures
            About Market Risk . . . . . . . . . . . . . . . . . 29
Item 8.  Financial Statements and Supplementary Data. . . . . . 30
Item 9.  Changes In and Disagreements with Accountants on
            Accounting and Financial Disclosure . . . . . . . . 61

PART III
Item 10. Directors and Executive Officers of the Registrant . . 61
Item 11. Executive Compensation . . . . . . . . . . . . . . . . 61
Item 12. Security Ownership of Certain Beneficial Owners
            and Management. . . . . . . . . . . . . . . . . . . 62
Item 13. Certain Relationships and Related Transactions . . . . 62

PART IV
Item 14. Exhibits, Financial Statement Schedules and Reports
            on Form 8-K . . . . . . . . . . . . . . . . . . . . 62

Independent Auditors' Consent and Report on Schedule. . . . . . 63

Signatures. . . . . . . . . . . . . . . . . . . . . . . . . . . 66

Exhibit Index . . . . . . . . . . . . . . . . . . . . . . . . . 67

Glossary. . . . . . . . . . . . . . . . . . . . . . . . . . . . 70



This report includes forward-looking statements within the definition 
of Section 27A of the Securities Act of 1933 and Section 21E of the 
Securities Exchange Act of 1934. The words "estimates," "believes," 
"expects," "anticipates," "plans" and "intends," variations of such 
words, and similar expressions, are intended to identify forward-
looking statements that involve risks and uncertainties which could 
cause actual results to differ materially from those anticipated. 

These statements are necessarily based upon various assumptions 
involving judgments with respect to the future including, among 
others, local, regional, national and international economic, 
competitive, political and regulatory conditions and developments, 
technological developments, capital market conditions, inflation 
rates, interest rates, energy markets, weather conditions, business 
and regulatory or legal decisions, the pace of deregulation of retail 
natural gas and electricity industries, the timing and success of 
business development efforts, and other uncertainties, all of which 
are difficult to predict and many of which are beyond the control of 
the Company. Accordingly, while the Company believes that the 
assumptions are reasonable, there can be no assurance that they will 
approximate actual experience, or that the expectations will be 
realized. Readers are urged to carefully review and consider the 
risks, uncertainties and other factors which affect the Company's 
business described in this annual report and other reports filed by 
the Company from time to time with the Securities and Exchange 
Commission.

                             PART I

ITEM 1. BUSINESS

Description of Business
Pacific Enterprises (PE or the Company) is an energy services company 
whose principal subsidiary is Southern California Gas Company 
(SoCalGas), the nation's largest natural gas distribution utility. 
Effective June 26, 1998, PE and Enova Corporation (Enova) combined to 
form Sempra Energy, a California-based Fortune 500 energy-services 
company (PE/Enova Business Combination). San Diego Gas & Electric 
Company (SDG&E), an operating public utility which provides electric 
and natural gas service to San Diego County and southern Orange 
County, is the principal subsidiary of Enova. Further discussion of 
PE and the PE/Enova Business Combination are included in 
"Management's Discussion and Analysis of Financial Condition and 
Results of Operations" and in Note 1 of the "Notes to Consolidated 
Financial Statements," herein. 

GOVERNMENT REGULATION

PE's principal subsidiary, SoCalGas, is regulated by local, state and 
federal agencies, as described below. Regulation of PE's other 
subsidiaries is insignificant.

Local Regulation
SoCalGas has gas franchises with the 236 legal jurisdictions in its 
service territory. These franchises allow SoCalGas to locate 
facilities for the transmission and distribution of natural gas in 
the streets and other public places. Most of the franchises do not 
have fixed terms and continue indefinitely. The range of expiration 
dates for the franchises with definite terms is 2003 to 2041.

State Regulation
The California Public Utilities Commission (CPUC) regulates SoCalGas' 
rates and conditions of service, sales of securities, rate of return, 
rates of depreciation, uniform systems of accounts, examination of 
records, and long-term resource procurement. The CPUC also conducts 
various reviews of utility performance and conducts investigations 
into various matters, such as deregulation, competition and the 
environment, to determine its future policies.

Federal Regulation
The Federal Energy Regulatory Commission (FERC) regulates the 
interstate sale and transportation of natural gas, the uniform 
systems of accounts and rates of depreciation. 

Licenses and Permits
SoCalGas obtains a number of permits, authorizations and licenses in 
connection with the transmission and distribution of natural gas. 
They require periodic renewal, which results in continuing regulation 
by the granting agency.

Other regulatory matters are described throughout this report.

SOURCES OF REVENUE

(In Millions of Dollars)                1998       1997       1996
-------------------------------------------------------------------
Operating Revenue by type of customer:

  Gas Sales, Transportation & Exchange-
       Residential                    $ 1,987    $ 1,736    $ 1,613
       Commercial/Industrial              727        757        709
       Utility Electric Generation         66         76         70
       Wholesale                           66         67         70
                                    ---------  ---------  ----------
                                        2,846      2,636      2,462
       Balancing and Other               (419)         5        (40)
                                    ---------  ---------  ----------
         Total Gas Revenues             2,427      2,641      2,422
  
  Other Operating Revenues                 45         97        141
                                    ---------  ---------  ----------
                                      $ 2,472    $ 2,738    $ 2,563
                                    =========  =========  ==========

Industry segment information is contained in "Management's Discussion 
and Analysis of Financial Condition and Results of Operations" and in 
Note 14 of the "Notes to Consolidated Financial Statements" herein.

NATURAL GAS OPERATIONS

UTILITY SERVICES
SoCalGas distributes natural gas throughout a 23,000 square-mile
service territory with a population of approximately 17.6 million 
people. Its service territory includes most of southern California 
and part of central California.

SoCalGas offers two basic services, sale of natural gas and 
transportation of natural gas, through two business units. One 
business unit focuses on core distribution customers and the other on 
large volume gas transportation customers. Natural gas service is 
also provided on a wholesale basis to the distribution systems of the 
City of Long Beach, affiliated company SDG&E and Southwest Gas 
Corporation.

Supplies of Natural Gas 
SoCalGas buys natural gas under several short-term and long-term 
contracts. Short-term purchases are based on monthly-spot-market 
prices. SoCalGas has pipeline capacity contracts with pipeline 
companies that expire at various dates through 2006.

Most of the natural gas purchased and delivered by SoCalGas is 
produced outside of California. These supplies are delivered to 
SoCalGas' intrastate transmission system by interstate pipeline 
companies, primarily El Paso Natural Gas Company and Transwestern 
Natural Gas Company. These interstate companies provide 
transportation services for supplies purchased from other sources by 
SoCalGas or its transportation customers. The rates that interstate 
pipeline companies may charge for natural gas and transportation 
services are regulated by the FERC. Existing pipeline capacity into 
California exceeds current demand by over 1 billion cubic feet (bcf) 
per day. The implications of this excess are described in 
"Management's Discussion and Analysis of Financial Condition and 
Results of Operations" herein. The following table shows the sources 
of natural gas deliveries from 1994 through 1998.


<TABLE>
<CAPTION>
                                                                Year Ended December 31
                                          -------------------------------------------------------------------
                                            1998           1997          1996           1995           1994
-------------------------------------------------------------------------------------------------------------
<S>                                        <C>            <C>           <C>            <C>            <C>
Gas Purchases (billions of cubic feet)
 Market                                      270            229           226            206            247
 Affiliates                                  101             95            96             99            101
California Producers &
  Federal Offshore                             3              5            12             29             36 
                                           -------        -------       -------        -------        -------
    Total Gas Purchases                      374            329           334            334            384

Customer-Owned and Exchange Receipts
 Affiliate                                   116            100            96             89             93
 Other                                       521            514           422            531            565

Storage Withdrawal
   (Injection) - Net                         (28)            (3)           42            (13)            (9)

Company Use and
  Unaccounted For                            (21)           (10)          (10)            (4)           (13)
                                          -------        -------       -------        -------        -------
    Net Deliveries                           962            930           884            937          1,020 
                                          =======        =======       =======        =======        =======
Cost of Gas Purchased(millions of dollars)
 Commodity Costs                           $ 774         $  849         $ 627          $ 478         $  644

 Fixed Charges*                              174            250           276            264            368
                                          -------        -------       -------        -------        -------
    Total Gas Purchases                    $ 948         $1,099         $ 903          $ 742         $1,012
                                          =======        =======       =======        =======        =======
Average Cost of Gas Purchased
  (dollars per thousand cubic feet)**      $2.07         $ 2.58         $1.88          $1.42         $ 1.68
                                          =======        =======       =======        =======        =======
</TABLE>
 *  Fixed charges primarily include pipeline demand charges, take or pay
    settlement costs and other direct billed amounts allocated over the
    quantities delivered by the interstate pipelines serving SoCalGas.

**  The average commodity cost of natural gas purchased excludes fixed charges.

Market sensitive natural gas supplies (supplies purchased on the 
spot market as well as under longer-term contracts ranging from one 
month to ten years based on spot prices) accounted for 72 percent 
of total natural gas volumes purchased by SoCalGas during 1998, as 
compared with 70 percent and 68 percent during 1997 and 1996, 
respectively. These supplies were generally purchased at prices 
significantly below those of long-term sources of supply.

During 1998, SoCalGas delivered 962 bcf of natural gas through its 
system. Approximately 66 percent of these deliveries were customer-
owned natural gas for which SoCalGas provided transportation 
services. The balance of natural gas deliveries was gas purchased 
by SoCalGas and resold to customers. SoCalGas estimates that 
sufficient natural gas supplies will be available to meet the 
requirements of its customers for the next several years. 

Customers
For regulatory purposes, customers are separated into core and 
noncore customers. Core customers are primarily residential and 
small commercial and industrial customers, without alternative 
fuel capability. There are approximately 4.8 million core 
customers (4.6 million residential and 200,000 small commercial 
and industrial). Noncore customers consist primarily of utility 
electric generation (UEG), wholesale, and large commercial and 
industrial customers, and total approximately 1,600.

Most core customers purchase natural gas directly from SoCalGas. 
Core aggregate transportation customers are permitted to aggregate 
their natural gas requirement and, up to a CPUC-imposed limit of 10 
percent of SoCalGas' core market, to purchase natural gas directly 
from brokers or producers. SoCalGas continues to be obligated to 
purchase reliable supplies of natural gas to serve the requirements 
of its core customers. However, the only natural gas supplies that 
SoCalGas may offer for sale to noncore customers are the same 
supplies that it purchases for its core customers.

Noncore customers have the option of purchasing natural gas either 
from SoCalGas or from other sources, such as brokers or producers, 
for delivery through SoCalGas' transmission and distribution 
system. Most noncore customers procure their own natural gas 
supply.

For 1998, approximately 87 percent of the CPUC-authorized 
natural gas margin was allocated to the core customers, with 13 
percent allocated to the noncore customers.

Although revenue from transportation throughput is less than for 
natural gas sales, SoCalGas generally earns the same margin whether 
SoCalGas buys the gas and sells it to the customer or transports 
natural gas already owned by the customer.

SoCalGas also provides natural gas storage services for noncore and 
off-system customers on a bid and negotiated contract basis. The 
storage service program provides opportunities for customers to 
store natural gas on an "as available" basis, usually during the 
summer to reduce winter purchases when natural gas costs are 
generally higher. As of December 31, 1998, SoCalGas stored 
approximately 26 bcf of customer-owned gas.


Demand for Natural Gas
Natural gas is a principal energy source for residential, 
commercial, industrial and UEG customers. Natural gas competes with 
electricity for residential and commercial cooking, water heating, 
space heating and clothes drying, and with other fuels for large 
industrial, commercial and UEG uses. Growth in the natural gas 
markets is largely dependent upon the health and expansion of the 
southern California economy. SoCalGas added approximately 46,000 
new meters in 1998. This represents a growth rate of approximately 
0.9 percent. SoCalGas expects its growth for 1999 will continue at 
about the 1998 level.

During 1998, 97 percent of residential energy customers in 
SoCalGas' service area used natural gas for water heating, 94 
percent for space heating, 78 percent for cooking and 72 percent 
for clothes drying.

Demand for natural gas by noncore customers is very sensitive to 
the price of alternative competitive fuels. Although the number of 
noncore customers in 1998 was only 1,600, it accounted for 13 
percent of the authorized natural gas revenues and 62 percent of 
total natural gas volumes. External factors such as weather, 
electric deregulation, the increased use of hydro-electric power, 
competing pipeline bypass and general economic conditions can 
result in significant shifts in this market. Natural gas demand for 
big UEG customers is also greatly affected by the price and 
availability of electric power generated in other areas and 
purchased by SoCalGas' UEG customers. Natural gas demand in 1998 
for UEG customer use decreased as a result of decreased demand for 
electricity. UEG customer demand increased in 1997 as a result of 
higher demand for electricity and less availability of hydro-
electricity.

As a result of electric industry restructuring, natural gas 
demand for electric generation within southern California 
competes with electric power generated throughout the western 
United States. Effective March 31, 1998, California consumers 
were given the option of selecting their electric energy 
provider from a variety of local and out-of-state producers. 
Although the electric industry restructuring has no direct 
impact on SoCalGas' natural gas operations, future volumes of 
natural gas transported for UEG customers may be adversely 
affected to the extent that regulatory changes divert 
electricity from its service area.

Other
Additional information concerning customer demand and other aspects 
of natural gas operations is provided under "Management's 
Discussion and Analysis of Financial Condition and Results of 
Operations" and in Notes 12 and 13 of the "Notes to Consolidated 
Financial Statements" herein.

RATES AND REGULATION

SoCalGas is regulated by the CPUC, which consists of five 
commissioners appointed by the Governor of California for staggered 
six-year terms. Two of the five commissioner positions are 
currently vacant. It is the responsibility of the CPUC to determine 
that utilities operate within the best interests of their 
customers. The regulatory structure is complex and has a 
substantial impact on SoCalGas' profitability. The natural gas 
industry is currently undergoing transitions to competition (see 
below).

Natural Gas Industry Restructuring
The natural gas industry experienced an initial phase of 
restructuring during the 1980s by deregulating natural gas sales to 
noncore customers. In January 1998, the CPUC released a staff 
report initiating a project to assess the current market and 
regulatory framework for California's natural gas industry. The 
general goals of the plan are to consider reforms to the current 
regulatory framework emphasizing market-oriented policies 
benefiting California natural gas customers. Additional information 
on natural gas industry restructuring is discussed in "Management's 
Discussion and Analysis of Financial Condition and Results of 
Operations" and in Note 13 of the "Notes to Consolidated Financial 
Statements" herein.

Balancing Accounts
In general, earnings fluctuations from changes in the costs of 
natural gas and consumption levels for the majority of natural gas 
are eliminated by balancing accounts authorized by the CPUC. 
Additional information on balancing accounts is discussed in 
"Management's Discussion and Analysis of Financial Condition and 
Results of Operations" and in Note 2 of the "Notes to Consolidated 
Financial Statements" herein.

Performance-Based Regulation (PBR)
To promote efficient operations and improved productivity and to 
move away from reasonableness reviews and disallowances, the CPUC 
has been directing utilities to use PBR. PBR has replaced the 
general rate case and certain other regulatory proceedings for 
SoCalGas. Under PBR, regulators require future income potential to 
be tied to achieving or exceeding specific performance and 
productivity measures, as well as cost reductions, rather than 
relying solely on expanding utility rate base in a market where a 
utility already has a highly developed infrastructure. Additional 
information on PBR is discussed in "Management's Discussion and 
Analysis of Financial Condition and Results of Operations" and in 
Note 13 of the "Notes to Consolidated Financial Statements" herein.

Biennial Cost Allocation Proceeding (BCAP)
Rates to recover the changes in natural gas fuel costs and changes 
in the cost of natural gas transportation services are determined 
in the BCAP. The BCAP adjusts rates to reflect variances in core 
customer demand from estimates previously used in establishing core 
customer rates. The mechanism substantially eliminates the effect 
on core income of variances in core market demand and natural gas 
costs subject to the limitations of the Gas Cost Incentive 
Mechanism (GCIM) discussed below. The BCAP will continue under PBR. 
Additional information on the BCAP is discussed in "Management's 
Discussion and Analysis of Financial Condition and Results of 
Operations" and in Note 13 of the "Notes to Consolidated Financial 
Statements" herein.

Gas Cost Incentive Mechanism (GCIM)
The GCIM is a process SoCalGas uses to evaluate its natural gas 
purchases, substantially replacing the previous process of 
reasonableness reviews. Additional information on the GCIM is 
discussed in "Management's Discussion and Analysis of Financial 
Condition and Results of Operations" and in Note 13 of the "Notes 
to Consolidated Financial Statements" herein.

Affiliate Transactions
In December 1997, the CPUC adopted rules establishing uniform 
standards of conduct governing the manner in which California 
investor-owned utilities conduct business with their affiliates. 
The objective of these rules is to ensure that the utilities' 
energy affiliates do not gain an unfair advantage over other 
competitors in the marketplace and that utility customers do not 
subsidize affiliate activities. Additional information on affiliate 
transactions is discussed in "Management's Discussion and Analysis 
of Financial Condition and Results of Operations" and in Note 13 of 
the "Notes to Consolidated Financial Statements" herein.

Cost of Capital
Under PBR, annual Cost of Capital proceedings have been replaced by 
an automatic adjustment mechanism if changes in certain indices 
exceed established tolerances. For 1999, SoCalGas is authorized to 
earn a rate of return on rate base of 9.49 percent and a rate of 
return on common equity of 11.6 percent, the same as in 1998, 
unless interest-rate changes are large enough to trigger an 
automatic adjustment. Additional information on the utilities' cost 
of capital is discussed in "Management's Discussion and Analysis of 
Financial Condition and Results of Operations" and in Note 13 of 
the "Notes to Consolidated Financial Statements" herein.

ENVIRONMENTAL MATTERS

Discussions about environmental issues, including hazardous 
substances, are included in "Management's Discussion and Analysis 
of Financial Condition and Results of Operations" herein.  The 
following should be read in conjunction with those discussions.

Hazardous Substances
The utility lawfully disposed of wastes at facilities owned and 
operated by other entities. Operations at these facilities may 
result in actual or threatened risks to the environment or public 
health. Under California law, redevelopment agencies are authorized 
to require landowners to cleanup property within their jurisdiction 
or, where the landowner or operator of such a facility fails to 
complete any corrective action required, applicable environmental 
laws may impose an obligation to undertake corrective actions on 
the utilities and others who disposed of hazardous wastes at the 
facility.

SoCalGas has been named as a potential responsible party (PRP) for 
two landfill sites and two industrial waste disposal sites, as 
described below.

The Casmalia former waste disposal site operated as a Class I waste 
disposal site which was composed of 6 landfills, 58 surface 
impoundments, 11 disposal wells, 7 disposal trenches, 2 treatment 
systems and one former pre-Resource Conservation and Recovery Act 
drum burial area. The utility has estimated the costs of 
remediation at Casmalia to be $1.1 million. In 1998, SoCalGas 
completed work efforts of $225,000. Remedial actions and 
negotiations with other PRPs and the United States Environmental 
Protection Agency (EPA) have been continuing since March 1993. 
SoCalGas is currently negotiating a final remedy with the EPA for 
Operating Industries, Inc. (OII), a former landfill for both 
household and industrial wastes. The total costs for remediation of 
OII are estimated at $3 million, of which $.06 million was 
completed during 1998. Remedial actions and negotiations have been 
in progress since June 1986.

In the early 1990s, SoCalGas was notified of hazards at two former 
industrial waste treatment facilities, Industrial Waste Processing 
(Industrial) and Cal Compact (Compact), where SoCalGas had disposed 
of wastes. A feasibility study and remedial investigation have been 
submitted and accepted by the EPA for Industrial. The total cost 
estimate for remediation of Industrial is $300,000, of which $4,000 
of remedial action was completed in 1998. The nature and extent for 
remediation of the Compact site indicates an estimated cost of 
$120,000. During 1998, the utility completed remedial efforts of 
this site at a cost of $50,000 and is involved in ongoing 
negotiations with the California Department of Toxic Substances 
Control.

At December 31, 1998, the utility's estimated remaining 
investigation and remediation liability related to hazardous waste 
sites not detailed above was $68 million, of which 90 percent is 
authorized to be recovered through the Hazardous Waste 
Collaborative mechanism. SoCalGas believes that any costs not 
ultimately recovered through rates, insurance or other means, upon 
giving effect to previously established liabilities, will not have 
a material adverse effect on the Company's consolidated results of 
operations or financial position.

Estimated liabilities for environmental remediation are recorded 
when amounts are probable and estimable. Amounts authorized to be 
recovered in rates under the Hazardous Waste Collaborative 
mechanism are recorded as a regulatory asset. Possible recoveries 
of environmental remediation liabilities from third parties are not 
deducted from the liability.	

OTHER

Year 2000
A discussion of the Company's plans to prepare its computer systems 
and applications for the year 2000 and beyond is included in 
"Management's Discussion and Analysis of Financial Condition and 
Results of Operations" herein.

Research, Development and Demonstration (RD&D)
The SoCalGas RD&D portfolio is focused in five major areas: 
Operations, Utilization Systems, Power Generation, Public Interest 
and Transportation. Each of these activities provides benefits to 
customers and society by providing more cost-effective, efficient  
natural gas equipment with lower emissions, increased safety and 
reduced environmental mitigation and other utility operating costs. 
The CPUC has authorized SoCalGas to recover its operating cost 
associated with RD&D. An annual average of $7.7 million has been 
spent for the last three years.

Employees of Registrant
As of December 31, 1998, SoCalGas had 6,148 employees, compared to 
6,615 at December 31, 1997. This decrease is related to synergies 
resulting from the PE/Enova Business Combination and the shifting 
of certain functions to Sempra Energy. Subsequent to the business 
combination, PE employees were shifted to Sempra Energy and 
operating units, and PE now has no direct employees.

Field, technical and most clerical employees of SoCalGas are 
represented by the Utility Workers' Union of America or the 
International Chemical Workers' Council. The collective bargaining 
agreement on wages, hours and working conditions remains in effect 
through March 31, 2000.

Foreign Operations
A discussion of PE's foreign operations is included in 
"Management's Discussion and Analysis of Financial Condition and 
Results of Operations" and in Note 3 of the "Notes to Consolidated 
Financial Statements" herein.

ITEM 2. PROPERTIES

Natural Gas Properties
At December 31, 1998, SoCalGas owned 2,857 miles of transmission 
and storage pipeline, 44,097 miles of distribution pipeline and 
43,825 miles of service piping. It also owned 10 transmission 
compressor stations and 6 underground storage reservoirs (with a 
combined working storage capacity of approximately 116 Bcf).

Other Properties
Southern California Gas Tower, a wholly owned subsidiary of 
SoCalGas, has a 15-percent limited partnership interest in a 52-
story office building in downtown Los Angeles. SoCalGas leases 
approximately half of the building through the year 2011. The lease 
has six separate five-year renewal options.

PE and its subsidiaries own or lease other offices, operating and 
maintenance centers, shops, service facilities, and certain 
equipment necessary in the conduct of business.

ITEM 3. LEGAL PROCEEDINGS

Except for the matters referred to in the financial statements in 
Item 8 or referred to elsewhere in this Annual Report, neither the 
Company nor any of its affiliates is a party to, nor is its 
property the subject of, any material pending legal proceedings 
other than routine litigation incidental to its businesses.


ITEM 4. SUBMISSION OF MATTERS TO A VOTE OF SECURITY HOLDERS
        None

ITEM 4. EXECUTIVE OFFICERS OF THE REGISTRANT

Name                        Age*    Positions
-------------------------------------------------------------------
Richard D. Farman            63     Chairman and Chief Executive 
                                    Officer

Stephen L. Baum              57     President and Chief Operating 
                                    Officer

John R. Light                57     Executive Vice President and 
                                    General Counsel

Neal E. Schmale              51     Executive Vice President and 
                                    Chief Financial Officer

Frank H. Ault                54     Vice President and Controller

Charles A. McMonagle         48     Vice President and Treasurer

Thomas C. Sanger             55     Corporate Secretary

*  As of December 31, 1998.

Each Executive Officer has been an officer of Sempra Energy or one 
of its subsidiaries for more than five years, with the exception of 
Mssrs. Light and Schmale. Prior to joining the Company in 1998, Mr. 
Light was a partner in the law firm of Latham & Watkins. Prior to 
joining the Company in 1997, Mr. Schmale was Chief Financial 
Officer of Unocal Corporation.

                             PART II

ITEM 5. MARKET FOR REGISTRANT'S COMMON EQUITY AND RELATED 
STOCKHOLDER MATTERS

As a result of the formation of Sempra Energy (see Note 1 of "Notes 
to Consolidated Financial Statements" herein), all of the issued 
and outstanding common stock of PE is owned by Sempra Energy. The 
information required by Item 5 concerning dividends declared is 
included in the "Statements of Consolidated Changes in 
Shareholders' Equity" set forth in Item 8 of this Annual Report 
herein.

Dividend Restrictions
At December 31, 1998, $103 million of PE's retained earnings was 
available for future dividends, due to the CPUC's regulation of 
SoCalGas' capital structure. 


ITEM 6. SELECTED FINANCIAL DATA


<TABLE>
(Dollars in millions)
<CAPTION>
                                      At December 31, or for the years then ended
                                    ------------------------------------------------
                                       1998      1997      1996      1995      1994 
                                    --------   -------   -------   -------   -------
<S>                                 <C>        <C>       <C>       <C>       <C>    
Income Statement Data:
   Revenues and Other Income          $2,472    $2,777    $2,588    $2,377    $2,702
   Operating Income                   $  341    $  438    $  451    $  422    $  439
   Earnings Applicable to
     Common Shares                    $  143    $  180    $  196    $  175    $  160

Balance Sheet Data:
   Total Assets                       $4,598    $4,977    $5,186    $5,259    $5,445
   Long-Term Debt                     $  985    $1,118    $1,225    $1,371    $1,550
   Short-Term Debt (a)                $  249    $  502    $  411    $  334    $  406
   Shareholders' Equity               $1,547    $1,469    $1,440    $1,483    $1,428


(a) Includes bank and other notes payable, commercial paper borrowings 
and long-term debt due within one year.

Since Pacific Enterprises is a wholly owned subsidiary of Sempra Energy, per share 
data has been omitted.

This data should be read in conjunction with the Consolidated Financial Statements 
and notes to Consolidated Financial Statements contained herein.

</TABLE>


ITEM 7. MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND 
RESULTS OF OPERATIONS

Introduction
This section includes management's analysis of operating results from 
1996 through 1998, and is intended to provide additional information 
about the capital resources, liquidity and financial performance of 
Pacific Enterprises (PE or the Company). This section also focuses on 
the major factors expected to influence future operating results and 
discusses investment and financing plans. It should be read in 
conjunction with the Consolidated Financial Statements.
     PE is a California-based utility holding company whose principal 
subsidiary is Southern California Gas Company (SoCalGas), the 
nation's largest natural gas distribution utility, serving 4.8 
million meters throughout most of southern California and part of 
central California. SoCalGas delivers natural gas and related 
services to residential and small commercial and industrial customers 
and stores and transports natural gas for utility electric generation 
and wholesale customers. The company, jointly with Enova Corporation 
(Enova), the parent corporation of San Diego Gas & Electric, owns and 
operates Sempra Energy Solutions (Solutions) and Sempra Energy 
Trading. Sempra Energy Solutions is engaged in the buying and selling 
of natural gas for large users, integrated energy management services 
targeted at large governmental and commercial facilities, and 
consumer-market products and services. Sempra Energy Trading is 
engaged in the wholesale trading and marketing of natural gas, power 
and petroleum. Through other subsidiaries the Company owns and 
operates interstate and offshore natural gas pipelines and 
centralized heating and cooling for large building complexes, and is 
involved in domestic and international energy-utility operations, and 
other energy-related products and services.
    In January 1998, the Company and Enova jointly acquired CES/Way 
International, Inc., through the jointly owned Solutions. CES/Way 
provides energy-efficiency services including energy audits, 
engineering design, project management, construction, financing and 
contract maintenance.

Business Combination
Sempra Energy was formed to serve as a holding company for the 
Company and Enova in connection with a business combination that 
became effective on June 26, 1998 (the PE/Enova Business 
Combination).  Expenses incurred by the Company in connection with 
the business combination are $35 million, aftertax, and $9 million, 
aftertax, for the years ended December 31, 1998 and 1997, 
respectively. These costs consist primarily of employee-related 
costs, and investment banking, legal, regulatory and consulting fees. 
    In connection with the PE/Enova Business Combination, the holders 
of common stock of the Company and Enova each became holders of 
Sempra Energy common stock. PE's common shareholders received 1.5038 
shares of Sempra Energy's common stock for each share of PE common 
stock, and Enova's common shareholders received one share of Sempra 
Energy's common stock for each share of Enova common stock. The 
preferred stock of the Company and of SoCalGas remained outstanding. 
The combination was approved by the shareholders of both companies on 
March 11, 1997 and was a tax-free transaction.
    In conjunction with the PE/Enova Business Combination, on 
September 30, 1998 PE's ownership interests in certain non-utility 
subsidiaries were dividended to Sempra Energy at book value.
 
Capital Resources and Liquidity
The Company's working capital requirements are met through cash from 
operations and the issuance of short-term and long-term debt.  Cash 
requirements primarily include capital investments in the utility 
operations.  Nonutility cash requirements include investments in 
Sempra Energy Solutions, Sempra Energy Trading, CES/Way 
International, and other domestic and international ventures.
    Additional information on sources and uses of cash during the 
last three years is summarized in the following condensed statement 
of cash flows:


Sources and (Uses) of Cash
                                         Year Ended December 31, 
(Dollars in millions)                   1998        1997      1996
-------------------------------------------------------------------
Operating activities                 $   598     $   350    $  608 
                                 ----------------------------------
Investing activities: 
  Capital expenditures                  (150)       (187)     (204)
  Acquisitions of companies              (45)       (138)      (62) 
  Other                                    6          62       (20)
                                  ---------------------------------
      Total investing activities        (189)       (263)     (286)
                                 ----------------------------------
Financing activities:
  Long-term debt - net                   (75)       (125)      (97)
  Short-term debt - net                 (311)         92        29
  Issuance of common stock                27          17         8 
  Repurchase of common stock              --         (48)      (24) 
  Redemption of preferred stock          (75)         --      (210)
  Dividends on common and
     preferred stock                    (101)       (126)     (123)
                                 ----------------------------------
      Total financing activities        (535)       (190)     (417)
                                 ----------------------------------
Decrease in cash 
  and cash equivalents                $ (126)    $  (103)   $  (95) 
-------------------------------------------------------------------

Cash Flows from Operating Activities
The increase in cash flows from operating activities in 1998 was 
primarily due to lower working capital requirements for natural gas 
operations in 1998. This was caused by higher throughput compared to 
1997 combined with natural gas costs that were lower than amounts 
being collected in rates, resulting in overcollected regulatory 
balancing accounts at year-end 1998. This increase was partially 
offset by expenses incurred in connection with the PE/Enova Business 
Combination.
     The decrease in cash flows from operating activities in 1997 was 
primarily due to greater working capital requirements for natural gas 
operations in 1997. This was caused by natural gas costs' being 
higher than amounts collected in rates, resulting in undercollected 
regulatory balancing accounts at year-end 1997.

Cash Flows from Investing Activities
Cash flows from investing activities primarily represent capital 
expenditures at SoCalGas and investments in new businesses.
    Capital expenditures were $37 million lower in 1998 primarily due 
to the shifting of certain functions to Sempra Energy following the 
PE/Enova Business Combination.
    Capital expenditures were $17 million lower in 1997 than in 1996 
due to lower spending at SoCalGas primarily related to the customer 
information system's being completed in 1996, and other nonrecurring 
computer system expenditures in 1996.  The decrease was partially 
offset by higher capital expenditures related to the purchase of a 
data processing facility and a plant expansion at a non-utility 
subsidiary.
    Capital expenditures are estimated to be $180 million in 1999. 
They will be financed primarily by internally generated funds and 
will largely represent investment in utility operations.

Investments
In December 1997, the Company and Enova jointly acquired Sempra 
Energy Trading for $225 million. In July 1998, Sempra Energy Trading 
purchased Consolidated Natural Gas, a wholesale trading and 
commercial marketing operation, for $36 million to expand its eastern 
United States operations. 
    In May 1997, Sempra Energy Solutions together with Conectiv 
Thermal Systems, Inc., formed two joint ventures to provide 
integrated energy management services to commercial and industrial 
customers.  Specific projects of these joint ventures are described 
in Note 3 of the notes to Consolidated Financial Statements.
    As noted above, Sempra Energy Solutions acquired CES/Way 
International, Inc. (CES/Way) in January 1998.
    In March 1998, the Company increased its combined investment in 
two Argentine natural gas utility holding companies from 12.5 percent 
to 21.5 percent by purchasing an additional interest for $40 million. 
    Fluctuations in the Company's level of investments in the next 
few years will depend primarily on the activities of its subsidiaries 
other than SoCalGas.

Cash Flows from Financing Activities

Long-Term Debt
In 1998, cash was used for the repayment of $100 million of first 
mortgage bonds and $47 million of Swiss Franc bonds partially offset 
by the issuance of $75 million of Medium-Term Notes. Short-term debt 
repayments included repayment of $94 million of debt issued to 
finance the Comprehensive Settlement (see Note 13 of the notes to 
Consolidated Financial Statements). 
     In 1997 cash was used for the repayment of $96 million of debt 
issued to finance the Comprehensive Settlement and repayment of $125 
million of first-mortgage bonds. This was partially offset by the 
issuance of $120 million in Medium-Term Notes and short-term 
borrowings used to finance working capital requirements at SoCalGas.
     
Stock Purchases and Redemption
The Company repurchased common stock of $48 million and $24 million 
in 1997 and 1996, respectively. The Company did not repurchase common 
stock in 1998.  The repurchase program of the Company was suspended 
as a result of the PE/Enova Business Combination. 
    On February 2, 1998, SoCalGas redeemed all outstanding shares of 
its 7 3/4% Series Preferred Stock at a cost of $25.09 per share, or 
$75.3 million including accrued dividends. 

Dividends
Dividends paid on common and preferred stock amounted to $124 
million, $126 million and $123 million in 1998, 1997 and 1996, 
respectively. During 1998, prior to the PE/Enova Business 
Combination, the Company declared and paid the first through third 
quarter dividends. The increase in 1997 was primarily due to an 
increase in the quarterly dividend rate in the second quarter of 
1997, partially offset by a reduction in the number of shares 
outstanding.
    The payment of future dividends and the amount thereof is within 
the discretion of the board of directors.

Capitalization
The debt-to-capitalization ratio was 44 percent at year-end 1998, 
below the 51 percent ratio in 1997. The decrease was primarily due to 
the repayment of debt. The debt-to-capitalization ratio was 51 
percent at year-end 1997, slightly below the 52 percent ratio in 
1996.

Cash and Cash Equivalents
Cash and cash equivalents were $27 million at December 31, 1998. This 
cash is available for investment in energy-related domestic and 
international projects, the retirement of debt and other corporate 
purposes.
     The Company anticipates that cash required in 1999 for capital 
expenditures, dividends and debt payments will be provided by cash 
generated from operating activities and existing cash balances.
     In addition to cash from ongoing operations, the Company has 
multi-year credit agreements that permit term borrowing of up to $700 
million, of which $43 million is outstanding at December 31, 1998. 
For further discussion, see Note 4 of the notes to Consolidated 
Financial Statements.

Results of Operations 

1998 Compared to 1997
Net income for 1998 decreased to $147 million in 1998, compared to 
net income of $184 million in 1997.
     The decrease in net income is primarily due to costs associated 
with the PE/Enova Business Combination and a lower base margin 
established at SoCalGas in its Performance Based Regulation (PBR) 
decision which became effective on August 1, 1997 (see Note 13 of the 
notes to Consolidated Financial Statements). Expenses related to the 
business combination were $35 million and $9 million, aftertax, for 
1998 and 1997, respectively. 
     Also contributing to lower net income for 1998 were significant 
start-up costs at Sempra Energy Solutions (see discussion under 
"Other Operations" below.)

1997 Compared to 1996
Net income for 1997 decreased to $184 million compared to net income 
of $203 million in 1996. 
     The decrease in net income is due primarily to costs associated 
with the PE/Enova Business Combination, favorable litigation 
settlements in 1996 and the absence of such in 1997, and start-up 
costs and increased operating expenses related to energy products and 
services offered by Sempra Energy Solutions.  Partially offsetting 
the lower consolidated net income in 1997 was an increase in 
SoCalGas' net income in 1996 (see "SoCalGas Operations" for further 
discussion).

Utility Operations
To understand the operations and financial results of PE, it is 
important to understand the ratemaking procedures that SoCalGas 
follows.
    SoCalGas is regulated by the CPUC. It is the responsibility of 
the CPUC to determine that utilities operate in the best interests of 
their customers and have the opportunity to earn a reasonable return 
on investment. In response to utility-industry restructuring, in 1997 
SoCalGas received approval from the CPUC for performance-based 
regulation (PBR).
    PBR replaced the general rate case (GRC) procedure and certain 
other regulatory proceedings through December 31, 2002. Under 
ratemaking procedures in effect prior to PBR, SoCalGas typically 
filed a GRC with the CPUC every three years. In a GRC, the CPUC 
establishes a base margin, which is the amount of revenue to be 
collected from customers to recover authorized operating expenses 
(other than the cost natural gas), depreciation, taxes and return on 
rate base. 
    Under PBR, regulators allow income potential to be tied to 
achieving or exceeding specific performance and productivity 
measures, rather than relying solely on expanding utility rate base 
in a market where a utility already has a highly developed 
infrastructure.  See additional discussion of PBR in Note 13 of the 
notes to Consolidated Financial Statements.
    The natural gas industry experienced an initial phase of 
restructuring during the 1980s by deregulating natural gas sales to 
noncore customers. In January 1998, the CPUC initiated a project to 
assess the current market and regulatory framework for California's 
natural gas industry. The general goals of the plan are to consider 
reforms to the current regulatory framework emphasizing market-
oriented policies. 
    See additional discussion of natural gas industry restructuring 
in Note 13 of the notes to Consolidated Financial Statements.

1998 Compared to 1997 
SoCalGas' net income for 1998 decreased to $159 million, compared to 
net income of $238 million in 1997. This decrease is primarily due to 
costs associated with the PE/Enova Business Combination and a lower 
base margin established at SoCalGas in its PBR decision, which became 
effective on August 1, 1997 (see Note 13 of the notes to Consolidated 
Financial Statements). The expense related to the PE/Enova Business 
Combination was $35 million, aftertax, for 1998.
     Utility natural gas revenues decreased 8 percent in 1998 
primarily due to the lower gas margin established in SoCalGas' PBR 
proceeding, a decrease in the average cost of natural gas, and a 
decrease in sales to utility electric generation customers due to 
decreased demand for electricity. This decrease was partially offset 
by increased sales to residential customers due to colder weather in 
1998.
     The Company's cost of natural gas distributed decreased 16 
percent in 1998 largely due to a decrease in the average cost of 
natural gas purchased, partially offset by an increase in sales 
volume.
     Operating expenses increased 12 percent in 1998 primarily due to 
costs associated with the PE/Enova Business Combination.

1997 Compared to 1996 
SoCalGas' net income for 1997 increased to $238 million, compared to 
net income of $201 million in 1996. This increase in net income is 
primarily due to increased throughput to utility electric generation 
customers and lower operation and maintenance expenses than amounts 
authorized in rates.
     Utility natural gas revenues increased 9 percent in 1997 
primarily due to an increase in the average unit cost of natural gas 
which is recoverable in rates. To a lesser extent, the increase was 
due to increased throughput to utility electric generation customers 
due to increased demand for electricity.
     Utility cost of natural gas distributed increased 18 percent in 
1997, largely due to an increase in the average cost of natural gas 
purchased and increases in sales volume.
     Operating expenses were relatively unchanged in 1997, because of 
the Company's continued emphasis on reducing costs and reduced costs 
in 1996 from favorable litigation settlements.

The table below summarizes the components of SoCalGas' volume and 
revenues by customer class for the years ended December 31, 1998, 
1997 and 1996. 


<TABLE>
Gas Sales, Transportation & Exchange
(Dollars in millions, volumes in billion cubic feet)
<CAPTION>

                                Gas Sales     Transportation & Exchange      Total
                           ---------------------------------------------------------------
                           Throughput  Revenue   	Throughput  Revenue   Throughput  Revenue
                           ---------------------------------------------------------------
<S>                          <C>       <C>         <C>      <C>          <C>      <C>
1998:
 Residential                     269   $1,976           3     $ 11          272   $1,987
 Commercial and Industrial        81      466         315      261          396      727
 Utility Electric Generation                          139       66          139       66
 Wholesale                                            155       66          155       66
                           ---------------------------------------------------------------
                                 350   $2,442         612     $404          962    2,846
 Balancing accounts and other                                                       (419)
                                                                                 --------
   Total Operating Revenues                                                       $2,427
------------------------------------------------------------------------------------------

1997:
 Residential                     237   $1,726           3     $ 10          240   $1,736
 Commercial and Industrial        80      502         314      255          394      757
 Utility Electric Generation                          158       76          158       76
 Wholesale                                            138       67          138       67
                           ---------------------------------------------------------------
                                 317   $2,228         613     $408          930    2,636
 Balancing accounts and other                                                          5
                                                                                 ---------
   Total Operating Revenues                                                       $2,641
------------------------------------------------------------------------------------------

1996:
 Residential                     233   $1,603           3     $ 10          236   $1,613
 Commercial and Industrial        82      473         297      236          379      709
 Utility Electric Generation                          139       70          139       70
 Wholesale                                            130       70          130       70
                           ---------------------------------------------------------------
                                 315   $2,076         569     $386          884    2,462
 Balancing accounts and other                                                        (40)
                                                                                 ---------
   Total Operating Revenues                                                       $2,422
------------------------------------------------------------------------------------------


Although the revenues from transportation throughput are less than 
for natural gas sales, the Company generally earns the same margin 
whether it buys the natural gas and sells it to the customer or 
transports natural gas already owned by the customer.  Throughput, 
the total natural gas sales and transportation volumes moved through 
the Company's system, increased in 1998 compared to 1997, primarily 
because of higher residential sales due to colder weather in 1998.  
The increase in throughput in 1997 compared to 1996, is primarily 
due to higher demand for electricity from gas-fired electric 
generation and less availability of hydro-electricity.


Factors Influencing Future Performance
Performance of the Company in the near future will depend primarily 
on the results of SoCalGas. Because of the ratemaking and regulatory 
process, electric and natural gas industry restructurings, and the 
changing energy marketplace, there are several factors that will 
influence future financial performance. These factors are summarized 
below.

KN Energy Acquisition.  On February 22, 1999, Sempra Energy 
announced a definitive agreement to acquire KN Energy, Inc., subject 
to approval by the shareholders of both companies and by various 
regulatory agencies.  See Note 15 of the notes to Consolidated 
Financial Statements for additional information.

Performance Based Regulation. Under PBR, regulators allow future 
income potential to be tied to achieving or exceeding specific 
performance and productivity measures, as well as cost reductions, 
rather than relying solely on expanding utility rate base. See 
additional discussion in Note 13 of the notes to Consolidated 
Financial Statements.

Regulatory Accounting Standards. SoCalGas has been accounting for 
the economic effects of regulation on all of its utility operations 
in accordance with Statement of Financial Accounting Standards 
(SFAS) No. 71, "Accounting for the Effects of Certain Types of 
Regulation." Under SFAS No. 71, a regulated entity records a 
regulatory asset if it is probable that, through the ratemaking 
process, the utility will recover the asset from customers. 
Regulatory liabilities represent future reductions in revenues for 
amounts due to customers.  See Notes 2 and 13 of the notes to 
Consolidated Financial Statements for additional information.
     
Affiliate Transactions. On December 16, 1997, the CPUC adopted rules 
establishing uniform standards of conduct governing the manner in 
which California investor owned utilities (IOUs) conduct business 
with their affiliates. The objective of these rules, effective 
January 1, 1998, is to ensure that the utilities' energy affiliates 
do not gain an unfair advantage over other competitors in the 
marketplace and that utility customers do not subsidize affiliate 
activities. 
     The CPUC excluded utility-to-utility transactions between 
SoCalGas and SDG&E from the affiliate-transaction rules in its 
decision approving the PE/Enova Business Combination. As a result, 
the affiliate-transaction rules will not substantially impact the 
Company's ability to achieve anticipated synergy savings. See Notes 
1 and 13 of the notes to Consolidated Financial Statements for 
additional information.

Allowed Rate of Return. For 1998, SoCalGas was authorized to earn a 
rate of return on rate base of 9.49 percent and a rate of return on 
common equity of 11.6 percent, which is unchanged from 1997.  See 
additional discussion in Note 13 of the notes to Consolidated 
Financial Statements.

Management Control of Expenses and Investment. In the past, 
management has been able to control operating expenses and 
investments within the amounts authorized to be collected in rates.
     It is the intent of management to control operating expenses 
and investments within the amounts authorized to be collected in 
rates in the PBR decision. SoCalGas intends to make the efficiency 
improvements, changes in operations and cost reductions necessary to 
achieve this objective and earn its authorized rate of return. 
However, in view of the earnings-sharing mechanism and other 
elements of the PBR, it is more difficult to achieve returns at 
least at or in excess of authorized returns at levels experienced in 
past years. See additional discussion of PBR in Note 13 of the notes 
to Consolidated Financial Statements.

Electric Industry Restructuring.  As a result of electric industry 
restructuring, natural gas generated electricity within SoCalGas' 
service area competes with electric power generated throughout the 
western United States.
    The State of California in September 1996 enacted a law 
restructuring California's electric-utility industry (AB 1890). 
Consumers have the opportunity to choose to continue to purchase 
their electricity from the local utility under regulated tariffs, to 
enter into contracts with other energy-service providers (direct 
access) or to buy their power from the independent Power Exchange 
(PX) that serves as a wholesale power pool allowing all energy 
producers to participate competitively. The implementation of 
electric industry restructuring has no direct impact on the 
SoCalGas' operations.  However, future volumes of natural gas 
transported for current utility electric generation customers may be 
adversely affected to the extent these regulatory changes divert 
electricity generated from the SoCalGas' service territory.

Gas Industry Restructuring. The natural gas industry experienced an 
initial phase of restructuring during the 1980s by deregulating 
natural gas sales to noncore customers. On January 21, 1998, the 
CPUC released a staff report initiating a project to assess the 
current market and regulatory framework for California's natural gas 
industry. The general goals of the plan are to consider reforms to 
the current regulatory framework emphasizing market-oriented 
policies benefiting California natural gas consumers. On August 25, 
1998 California enacted a law prohibiting the CPUC from enacting any 
natural gas industry-restructuring decision for core customers prior 
to January 1, 2000.  The CPUC continues to study the issue.

Noncore Bypass. SoCalGas' throughput to enhanced oil recovery (EOR) 
customers in the Kern County area has decreased significantly since 
1992 because of the bypass of SoCalGas' system by competing 
interstate pipelines. The decrease in revenues from EOR customers 
did not have a material impact on SoCalGas' earnings. 
    Bypass of other markets also may occur, and SoCalGas is fully at 
risk for a reduction in non-EOR, noncore volumes due to bypass. 
However, significant additional bypass would require construction of 
additional facilities by competing pipelines. SoCalGas is continuing 
to reduce its costs to maintain cost competitiveness in order to 
retain transportation customers.

Noncore Pricing. To respond to bypass, SoCalGas has received 
authorization from the CPUC for expedited review of long-term 
natural gas transportation service contracts with some noncore 
customers at lower than tariff rates. In addition, the CPUC approved 
changes in the methodology that eliminates subsidization of core 
customer rates by noncore customers. This allocation flexibility, 
together with negotiating authority, has enabled SoCalGas to better 
compete with new interstate pipelines for noncore customers.

Noncore Throughput. SoCalGas' earnings may be adversely impacted if 
natural gas throughput to its noncore customers varies from 
estimates adopted by the CPUC in establishing rates. There is a 
continuing risk that an unfavorable variance in noncore volumes may 
result from external factors such as weather, electric deregulation, 
the increased use of hydro-electric power, competing pipeline bypass 
of SoCalGas' system and a downturn in general economic conditions. 
In addition, many noncore customers are especially sensitive to the 
price relationship between natural gas and alternate fuels, as they 
are capable of readily switching from one fuel to another, subject 
to air-quality regulations. SoCalGas is at risk for the lost revenue.
    Through July 31, 1999, any favorable earnings effect of higher 
revenues resulting from higher throughput to noncore customers has 
been limited as a result of the Comprehensive Settlement discussed 
in Note 13 of the notes to Consolidated Financial Statements.

Excess Interstate Pipeline Capacity. Existing interstate pipeline 
capacity into California exceeds current demand by over one billion 
cubic feet (Bcf) per day. This situation has reduced the market 
value of the capacity well below the Federal Energy Regulatory 
Commission's (FERC) tariffs. SoCalGas has exercised its step-down 
option on both the El Paso and Transwestern systems, thereby 
reducing its firm interstate capacity obligation from 2.25 Bcf per 
day to 1.45 Bcf per day. 
    FERC-approved settlements have resulted in a reduction in the 
costs that SoCalGas may have been required to pay for the capacity 
released back to El Paso and Transwestern that cannot be remarketed. 
Of the 1.45 Bcf per day of capacity, SoCalGas' core customers use 
1.05 Bcf per day at the full FERC tariff rate. The remaining 0.4 Bcf 
per day of capacity is marketed at significant discounts. Under 
existing California regulation, unsubscribed capacity costs 
associated with the remaining 0.4 Bcf per day are recoverable in 
customer rates. While including the unsubscribed pipeline cost in 
rates may impact the Company's ability to compete in highly 
contested markets, the Company does not believe its inclusion will 
have a significant impact on volumes transported or sold.

Environmental Matters  
The Company's operations are conducted in accordance with applicable 
federal, state and local environmental laws and regulations 
governing such things as hazardous wastes, air and water quality, 
and the protection of wildlife.
    These costs of compliance are normally recovered in customer 
rates. It is anticipated that the environmental costs associated 
with the natural gas operations will continue to be recoverable in 
rates.
    Capital expenditures to comply with environmental laws and 
regulations were $1 million in 1998 and 1997 and $3 million in 1996. 
    In 1994, the CPUC approved the Hazardous Waste Collaborative 
Mechanism, which allows utilities to recover cleanup costs of 
hazardous waste contamination at sites where the utility may have 
responsibility or liability under the law to conduct or participate 
in any required cleanup. In general, utilities are allowed to 
recover 90 percent of their cleanup costs and any related costs of 
litigation with responsible parties.      
    Estimated liabilities for environmental remediation are recorded 
when amounts are probable and estimable. Amounts authorized to be 
recovered in rates under the Hazardous Waste Collaborative Mechanism 
are recorded as a regulatory asset. Possible recoveries of 
environmental remediation liabilities from third parties are not 
deducted from the liability.
    For further discussion of environmental matters, see Note 12 of 
the notes to Consolidated Financial Statements.

International Operations
Pacific Enterprises International (PEI) was established to 
participate in the international natural gas infrastructure market 
and began operations in March 1995.
    Together with Enova International, PEI currently is involved in 
natural gas transmission and distribution projects in Mexico, 
Argentina and Uruguay. The Company will be pursuing projects in 
other parts of Latin America.
    In March 1998, PEI increased its existing investment in two 
Argentine natural gas utility holding companies (Sodigas Pampeana 
S.A. and Sodigas Sur S.A.) by purchasing an additional 9-percent 
interest for $40 million. With this purchase, PEI's interest in the 
holding companies was increased to 21.5 percent. The distribution 
companies serve 1.2 million customers in central and southern 
Argentina, respectively, and have a combined sendout of 650 million 
cubic feet per day.
    The net losses for international operations were $2 million, $8 
million and $5 million for 1998, 1997 and 1996, respectively.

Other Operations
Sempra Energy Trading Corp. (SET), a leading natural gas and power 
marketing firm headquartered in Stamford, Connecticut, was jointly 
acquired by PE and Enova on December 31, 1997.  The Company's 
portion of the net losses was $6 million for the year ended December 
31, 1998. The losses were primarily due to the amortization of costs 
associated with the acquisition.  Additional information concerning 
SET is provided in Note 3 of the notes to Consolidated Financial 
Statements.
     Sempra Energy Solutions (Solutions), formed in 1997 and owned 
equally by the Company and Enova, incorporates several existing 
unregulated businesses from each of PE and Enova. It is pursuing a 
variety of opportunities, including buying and selling natural gas 
for large users, integrated energy-management services targeted at 
large governmental and commercial facilities, and consumer-market 
products and services such as earthquake shutoff valves. CES/Way 
International, Inc. (CES/Way) acquired by Solutions in January 1998, 
provides energy-efficiency services including energy audits, 
engineering design, project management, construction, financing and 
contract maintenance.
     The Company's portion of Solutions' net losses was $21 million 
and $7 million, aftertax, for 1998 and 1997, respectively. The 
losses are primarily due to start-up costs.

Other Income, Interest Expense and Income Taxes 
Other Income
Other income primarily consists of interest income from short-term 
investments and regulatory balancing accounts. Other income was $20 
million in 1998 compared to $46 million in 1997. The decrease was 
primarily the result of lower interest income from short-term 
investments. Other income increased in 1997 to $46 million from $25 
million in 1996 primarily due to higher interest from short-term 
investments during much of 1997.
     Equity in losses of unconsolidated joint ventures and 
partnerships represents the Company's portion of net income or 
losses from Solutions, SET and PEI.

Interest Expense 
Interest expense for 1998 decreased to $67 million from $103 million 
in 1997. The decrease was primarily due to the repayment of short-
term debt in 1998.  Interest expense for 1997 increased to $103 
million from $97 million in 1996, as a result of a higher long-term 
debt balance.

Income Taxes 
Income tax expense was $127 million, $151 million and $151 million 
in 1998, 1997 and 1996, respectively.  This represents an effective 
tax rate of 46 percent, 45 percent and 43 percent for the same 
periods.  The increase in the effective tax rate for 1997 was 
primarily due to fewer deductions from capitalized information-
systems costs at SoCalGas.

Derivative Financial Instruments 
The Company's policy is to use derivative financial instruments to 
manage exposure to fluctuations in interest rates, foreign currency 
exchange rates and energy prices. The Company also uses and trades 
derivative financial instruments in its energy trading and marketing 
activities. Transactions involving these financial instruments are 
with reputable firms and major exchanges. The use of these 
instruments may expose the Company to market and credit risks. At 
times, credit risk may be concentrated with certain counterparties, 
although counterparty nonperformance is not anticipated. 
    Sempra Energy Trading derives a substantial portion of its 
revenue from risk management and trading activities in natural gas, 
petroleum and electricity. Profits are earned as SET acts as a 
dealer in structuring and executing transactions that assist its 
customers in managing their energy-price risk. In addition, SET may, 
on a limited basis, take positions in energy markets based on the 
expectation of future market conditions. These positions include 
options, forwards, futures and swaps. See Note 9 of the notes to 
Consolidated Financial Statements and the following "Market Risk 
Management Activities" section for additional information regarding 
SET's use of derivative financial instruments.
    The Company's regulated operations use energy derivatives to 
manage natural gas price risk associated with servicing their load 
requirements. These instruments include forward contracts, futures, 
swaps, options and other contracts, with maturities ranging from 30 
days to 12 months. In the case of price-risk management activities, 
the use of derivative financial instruments by the Company's 
regulated operations is subject to certain limitations imposed by 
established Company policy and regulatory requirements. See Note 9 
of the notes to Consolidated Financial Statements and the "Market 
Risk Management Activities" section below for further information 
regarding the use of energy derivatives by the Company's regulated 
operations.

Market Risk Management Activities 
Market risk is the risk of erosion of the Company's cash flows, net 
income and asset values due to adverse changes in interest and 
foreign-currency rates, and in prices for energy. Sempra Energy has 
adopted corporate-wide policies governing its market-risk management 
and trading activities.  An Energy Risk Management Oversight 
Committee, consisting of senior corporate officers, oversees energy-
price risk-management and trading activities to ensure compliance 
with Sempra Energy's stated energy risk-management and trading 
policies. In addition, all affiliates have groups that monitor and 
control energy-price risk-management and trading activities 
independently from the groups responsible for creating or actively 
managing these risks.
    Along with other tools, the Company uses Value at Risk (VaR) to 
measure its exposure to market risk. VaR is an estimate of the 
potential loss on a position or portfolio of positions over a 
specified holding period, based on normal market conditions and 
within a given statistical confidence level. The Company has adopted 
the variance/covariance methodology in its calculation of VaR, and 
uses a 95 percent confidence level. Holding periods are specific to 
the types of positions being measured, and are determined based on 
the size of the position or portfolios, market liquidity, tenor and 
other factors. Historical volatilities and correlations between 
instruments and positions are used in the calculation.
    The following is a discussion of the Company's primary market-
risk exposures as of December 31, 1998, including a discussion of 
how these exposures are managed.

Interest-Rate Risk
The Company is exposed to fluctuations in interest rates primarily 
as a result of its fixed-rate long-term debt. The Company has 
historically funded utility operations through long-term bond issues 
with fixed interest rates. With the restructuring of the regulatory 
process, greater flexibility has been permitted within the debt-
management process. As a result, recent debt offerings have been 
selected with short-term maturities to take advantage of yield 
curves or used a combination of fixed- and floating-rate debt. 
Interest rate swaps, subject to regulatory constraints, may be used 
to adjust interest-rate exposures when appropriate, based upon 
market conditions. However, no such swaps are in place at December 
31, 1998.
    A portion of the Company's borrowings is denominated in foreign 
currencies, which expose the Company to market risk associated with 
exchange-rate movements. The Company's policy generally is to hedge 
major foreign-currency cash exposures through swap transactions. 
These contracts are entered into with major international banks, 
thereby minimizing the risk of credit loss.
    The VaR on the Company's fixed-rate long-term debt is estimated 
at approximately $168 million as of December 31, 1998, assuming a 
one-year holding period. The VaR attributable to currency exchange 
rates nets to zero as a result of a currency swap that is directly 
matched to the Company's Swiss Franc debt obligation, its only non-
dollar-denominated debt.

Energy-Price Risk  
Market risk related to physical commodities is based upon potential 
fluctuations in natural gas exchange prices and basis. The Company's 
market risk is impacted by changes in volatility and liquidity in 
the markets in which these instruments are traded. The Company's 
regulated and unregulated affiliates are exposed, in varying 
degrees, to price risk in the natural gas markets. The Company's 
policy is to manage this risk within a framework that considers the 
unique markets,and operating and regulatory environment of each 
affiliate. 
    SoCalGas is exposed to market risk on its natural gas purchase, 
sale and storage activities whenever natural gas prices fall outside 
the GCIM tolerance band. SoCalGas manages this risk within the 
parameters of the Company's market risk management and trading 
framework. As of December 31, 1998, the total VaR of SoCalGas' 
natural gas positions was not material. 

Sempra Energy Trading
Sempra Energy Trading derives a substantial portion of its revenue 
from risk management and trading activities in natural gas, 
petroleum and electricity.  As such, SET is exposed to price 
volatility in the domestic and international natural gas markets, 
petroleum and electricity markets.  SET conducts these activities 
within a structured and disciplined risk management and control 
framework that is based on clearly communicated policies and 
procedures, position limits, active and ongoing management 
monitoring and oversight, clearly defined roles and 
responsibilities, and daily risk measurement and reporting.
    Market risk of SET's portfolio is measured using a variety of 
methods, including VaR.  SET computes the VaR of its portfolio based 
on a three-day holding period.  As of December 31, 1998, the 
diversified VaR of SET's portfolio was $5.3 million. 

Credit Risk
Credit risk relates to the risk of loss that would be incurred as a 
result of nonperformance by counterparties pursuant to the terms of 
their contractual obligations. The Company avoids concentration of 
counterparties and maintains credit policies with regard to 
counterparties that management believes significantly minimize 
overall credit risk. These policies include an evaluation of 
potential counterparties' financial condition (including credit 
rating), collateral requirements under certain circumstances, and 
the use of standardized agreements that allow for the netting of 
positive and negative exposures associated with a single 
counterparty.
The Company monitors credit risk through a credit-approval 
process and the assignment and monitoring of credit limits. These 
credit limits are established based on risk and return 
considerations under terms customarily available in the industry.

Year 2000 Issues
Most companies are affected by the inability of many automated 
systems and applications to process the year 2000 and beyond. The 
Year 2000 issues are the result of computer programs and other 
automated processes using two digits to identify a year, rather than 
four digits. Any of the Company's computer programs that include 
date-sensitive software may recognize a date using "00" as 
representing the year 1900, instead of the year 2000, or "01" as 
1901, etc., which could lead to system malfunctions. The Year 2000 
issues impact both Information Technology (IT) systems and also non-
IT systems, including systems incorporating "embedded processors." 
To address this problem, in 1996, both Pacific Enterprises and Enova 
Corporation established company-wide Year 2000 programs. These 
programs have now been consolidated into Sempra Energy's overall 
Year 2000 readiness effort. Sempra Energy has established a central 
Year 2000 Program Office which reports to the its Chief Information 
Technology Officer and reports periodically to the audit committee 
of the Board of Directors.

The Company's State of Readiness  
Sempra Energy is identifying all IT and non-IT that might not be 
Year 2000 ready and categorizing them in the following areas: IT 
applications, computer hardware and software infrastructure, 
telecommunications, embedded systems and third parties. Sempra 
Energy is currently evaluating its exposure in all of these areas. 
These systems and applications are being tracked and measured 
through four key phases: inventory, assessment, remediation/testing, 
and Year 2000 readiness. Those applications and systems which, if 
not appropriately remediated, may have a significant impact on 
energy delivery, revenue collection or the safety of personnel, 
customers or facilities are being assessed and modified/replaced 
first. The testing effort includes functional testing of Year 2000 
dates and validating that changes have not altered existing 
functionality. Sempra Energy uses an independent, internal-review 
process to verify that the appropriate testing has occurred.
    Inventory and assessment for all Company systems were completed 
by January 1999 and ongoing inventory and assessment will be 
performed, as necessary, on any new applications. The project is on 
schedule and the Company estimates that by June 30, 1999, all 
critical systems will be suitable for continued use into the year 
2000 with no significant operational problems.
    Sempra Energy's current schedule for Year 2000 testing, 
readiness and development of contingency plans is subject to change 
depending upon the remediation and testing phases of its compliance 
effort and upon developments that may arise as the Company continues 
to assess its computer-based systems and operations. In addition, 
this schedule is dependent upon the efforts of third parties, such 
as suppliers (including energy producers) and customers. 
Accordingly, delays by third parties may cause Sempra Energy's 
schedule to change.

Costs to Address Sempra Energy's Year 2000 Issues
Sempra Energy's budget for the Year 2000 program is $48 million, of 
which $38 million has been spent. As Sempra Energy continues to 
assess its systems and as the remediation and testing efforts 
progress, cost estimates may change. Sempra Energy's Year 2000 
readiness effort is being funded entirely by operating cash flows.

The Risks of Sempra Energy's Year 2000 Issues
Based upon its current assessment and testing of the Year 2000 
issue, Sempra Energy believes the reasonably likely worst case Year 
2000 scenarios would have the following impacts upon its operations.  
With respect to Sempra Energy's ability to provide energy to its 
domestic utility customers, it believes that the reasonably likely 
worst case scenario is for small, localized interruptions of natural 
gas or electrical service which are restored in a timeframe that is 
within normal service levels. With respect to services that are 
essential to Sempra Energy's operations, such as customer service, 
business operations, supplies and emergency response capabilities, 
the scenario is for minor disruptions of essential services with 
rapid recovery and all essential information and processes 
ultimately recovered.
    To assist in preparing for and mitigating these possible 
scenarios, Sempra Energy is a member of several industry-wide 
efforts established to deal with Year 2000 problems affecting 
embedded systems and equipment used by the nation's natural gas and 
electric power companies. Under these efforts, participating 
utilities are working together to assess specific vendors' system 
problems and to test plans. These assessments will be shared by the 
industry as a whole to facilitate Year 2000 problem solving.
    A portion of this risk is due to the various Year 2000 schedules 
of critical third-party suppliers and customers. Sempra Energy is in 
the process of contacting its critical suppliers and customers to 
survey their Year 2000 remediation programs. While risks related to 
the lack of Year 2000 readiness by third parties could materially 
and adversely affect the Company's business, results of operations 
and financial condition, the Company expects its Year 2000 readiness 
efforts to reduce significantly the Company's level of uncertainty 
about the impact of third party Year 2000 issues on both its IT 
systems and non-IT systems.

Company's Contingency Plans
Sempra Energy's contingency plans for interruptions related to year 
2000 are being incorporated in its existing overall emergency 
preparedness plans. To the extent appropriate, such plans will 
include emergency backup and recovery procedures, remediation of 
existing systems parallel with installation of new systems, 
replacing electronic applications with manual processes, 
identification of alternate suppliers and increasing inventory 
levels. Sempra Energy expects these contingency plans to be 
completed by June 30, 1999. Due to the speculative and uncertain 
nature of contingency planning, there can be no assurances that such 
plans actually will be sufficient to reduce the risk of material 
impacts on Sempra Energy's operations due to Year 2000 issues.

New Accounting Standards
In April 1998, the American Institute of Certified Public 
Accountants issued Statement of Position 98-5 "Reporting on the 
Costs of Start-up Activities". This statement is effective for 1999, 
but is not expected to have a significant effect on the Company's 
Consolidated Financial Statements. 
     In June 1998, the Financial Accounting Standards Board issued 
Statement of Financial Accounting Standards (SFAS) No. 133 
"Accounting for Derivative Instruments and Hedging Activities." This 
statement, which is effective January 1, 2000, requires that an 
entity recognize all derivatives as either assets or liabilities in 
the statement of financial position, measure those instruments at 
fair value and recognize changes in the fair value of derivatives in 
earnings in the period of change unless the derivative qualifies as 
an effective hedge that offsets certain exposures. The effect of 
this standard on the Company's Consolidated Financial Statements has 
not yet been determined.

Information Regarding Forward-Looking Statements
This report includes forward-looking statements within the 
definition of Section 27A of the Securities Act of 1933 and 
Section 21E of the Securities Exchange Act of 1934. The words 
"estimates," "believes," "expects," "anticipates," "plans" and 
"intends," variations of such words, and similar expressions, 
are intended to identify forward-looking statements that 
involve risks and uncertainties which could cause actual 
results to differ materially from those anticipated. 

These statements are necessarily based upon various 
assumptions involving judgments with respect to the future 
including, among others, local, regional, national and 
international economic, competitive, political and regulatory 
conditions and developments, technological developments, 
capital market conditions, inflation rates, interest rates, 
energy markets, weather conditions, business and regulatory or 
legal decisions, the pace of deregulation of retail natural 
gas and electricity industries, the timing and success of 
business development efforts, and other uncertainties, all of 
which are difficult to predict and many of which are beyond 
the control of the Company. Accordingly, while the Company 
believes that the assumptions are reasonable, there can be no 
assurance that they will approximate actual experience, or 
that the expectations will be realized. Readers are urged to 
carefully review and consider the risks, uncertainties and 
other factors which affect the Company's business described in 
this annual report and other reports filed by the Company from 
time to time with the Securities and Exchange Commission.

ITEM 7A. QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET RISK

The information required by Item 7A is set forth under "Item 7. 
Management's Discussion and Analysis of Financial Condition and 
Results of Operations - Market Risk Management Activities."


ITEM 8. FINANCIAL STATEMENTS AND SUPPLEMENTARY DATA

INDEPENDENT AUDITORS' REPORT

To the Board of Directors and Shareholders of Pacific 
Enterprises:

     We have audited the accompanying consolidated balance sheets 
of Pacific Enterprises and subsidiaries as of December 31, 1998 and 
1997, and the related statements of consolidated income, changes in 
shareholders' equity, and cash flows for each of the three years in 
the period ended December 31, 1998.  These financial statements are 
the responsibility of the Company's management.  Our responsibility 
is to express an opinion on these financial statements based on our 
audits.

     We conducted our audits in accordance with generally accepted 
auditing standards.  Those standards require that we plan and 
perform the audit to obtain reasonable assurance about whether the 
financial statements are free of material misstatement.  An audit 
includes examining, on a test basis, evidence supporting the 
amounts and disclosures in the financial statements.  An audit also 
includes assessing the accounting principles used and significant 
estimates made by management, as well as evaluating the overall 
financial statement presentation.  We believe that our audits 
provide a reasonable basis for our opinion.

     In our opinion, such consolidated financial statements present 
fairly, in all material respects, the financial position of Pacific 
Enterprises and subsidiaries as of December 31, 1998 and 1997, and 
the results of their operations and their cash flows for each of 
the three years in the period ended December 31, 1998 in conformity 
with generally accepted accounting principles.

/s/ DELOITTE & TOUCHE LLP

San Diego, California
January 27, 1999, except for Note 15 as to which the 
date is February 22, 1999





</TABLE>
<TABLE>
PACIFIC ENTERPRISES AND SUBSIDIARIES               
STATEMENTS OF CONSOLIDATED INCOME                 
In millions of dollars

<CAPTION>

For the years ended December 31            1998     1997     1996 
                                          ------   ------   ------
<S>                                    <C>       <C>       <C>    
Revenues
 Operating revenues                       $2,472   $2,738   $2,563
 Loss of unconsolidated
   joint ventures and partnerships           (20)      (7)      --
 Other Income                                 20       46       25
                                           -----    -----    -----
Total                                      2,472    2,777    2,588
                                           -----    -----    -----
Expenses
 Cost of natural gas distributed             840    1,059      866
 Operating expenses                          930      918      910
 Depreciation and amortization               259      256      255
 Franchise fees and other taxes              100       99       98
 Preferred dividends of subsidiaries           2        7        8
                                           -----    -----    -----
Total                                      2,131    2,339    2,137
                                           -----    -----    -----
Income Before Interest
 and Income Taxes                            341      438      451
Interest                                      67      103       97
                                           -----    -----    -----
Income Before Income Taxes                   274      335      354
Income Taxes                                 127      151      151
                                           -----    -----    -----
Net Income                                   147      184      203
Preferred Dividend Requirements                4        4        5
Preferred Stock Original Issue Discount       --       --        2
                                           -----    -----    -----
Earnings Applicable to Common Shares      $  143   $  180   $  196
                                           =====    =====    =====

See notes to Consolidated Financial Statements.
</TABLE>

<TABLE>
PACIFIC ENTERPRISES AND SUBSIDIARIES
CONSOLIDATED BALANCE SHEETS
In millions of dollars
                                   
<CAPTION>
Balance at December 31                                    1998         1997   
                                                      -----------  -----------
<S>                                                     <C>          <C>      
ASSETS
Current assets
  Cash and cash equivalents                             $  27        $  153
  Accounts and notes receivable - trade                                    
   (less allowance for doubtful receivables                                
    of $18 in 1998 and $19 in 1997)                       444           480
  Accounts and notes receivable - other                   137            50
  Income taxes receivable                                  22             3
  Regulatory balancing accounts undercollected - net       --           355
  Deferred income taxes                                   130            --
  Natural Gas in storage                                   49            25
  Materials and supplies                                   16            16
  Prepaid expenses                                         19            21
                                                        -----         -----
      Total current assets                                844         1,103
                                                        -----         -----

Property, plant and equipment                           6,152         6,097
  Less accumulated depreciation and
    amortization                                        3,149         2,943
                                                       ------        ------
      Total property, plant and 
        equipment - net                                 3,003         3,154
                                                       ------        ------
Investments and other assets:
  Regulatory assets                                       351           394
  Other receivables                                       130            62
  Investments                                             209           191
  Other assets                                             61            73
                                                       ------        ------
      Total investments and
         other assets                                     751           720
                                                       ------        ------
      Total                                            $4,598        $4,977
                                                       ======        ======

See notes to Consolidated Financial Statements.

</TABLE>

<TABLE>
PACIFIC ENTERPRISES AND SUBSIDIARIES
CONSOLIDATED BALANCE SHEETS
In millions of dollars

<CAPTION>
                                                 
Balance at December 31                                    1998        1997    
                                                      -----------  -----------
<S>                                                    <C>         <C>        
LIABILITIES AND SHAREHOLDERS' EQUITY
Current liabilities
  Short-term debt                                       $  43         $ 354
  Current portion of long-term debt                       206           148
  Accounts payable - trade                                163           133
  Accounts payable - other                                245           304
  Regulatory balancing accounts overcollected - net       129            --
  Interest accrued                                         47            52
  Deferred income taxes                                    --             7
  Other taxes payable                                      32            30
  Other                                                   149            87
                                                        -----         -----
      Total current liabilities                         1,014         1,115
                                                        -----         -----

Long-term debt                                            985           988
Debt of Employee Stock Ownership Plan                      --           130
                                                        -----         -----
      Total long-term debt                                985         1,118
                                                        -----         -----
Deferred credits and other liabilities:
  Customer advances for construction                       31            34
  Post-retirement benefits other than pensions            210           217
  Deferred income taxes - net                             220           272
  Deferred investment tax credits                          58            61
  Other deferred credits                                  346           413
  Other long-term liabilities                             167           183
                                                        -----         -----
      Total deferred credits and
        other liabilities                               1,032         1,180
                                                        -----         -----
Preferred stock of subsidiary                              20            95
                                                        -----         -----
Commitments and contingent liabilities (Note 12)

Shareholders' equity:
  Capital stock:
    Preferred                                              80            80
    Common                                              1,117         1,064
                                                        -----         -----
      Total capital stock                               1,197         1,144
  Retained earnings                                       395           372
  Deferred compensation relating to
    Employee Stock Ownership Plan                         (45)          (47)
                                                        -----         -----
      Total shareholders' equity                        1,547         1,469
                                                       ------        ------
          Total                                        $4,598        $4,977
                                                       ======        ======
See notes to Consolidated Financial Statements.
</TABLE>


<TABLE>
PACIFIC ENTERPRISES AND SUBSIDIARIES
STATEMENTS OF CONSOLIDATED CASH FLOWS
In millions of dollars
<CAPTION>                                                                        

For the years ended December 31                       1998       1997       1996 
                                                     ------     ------     ------

<S>                                                  <C>         <C>       <C>   
Cash Flows from Operating Activities:
  Net Income                                         $  147     $  184     $  203
  Adjustments to reconcile net income                                            
    to net cash provided by operating                                            
    activities:                                                                  
      Depreciation and amortization                     259        256        255
      Deferred income taxes                             (55)       (35)        33
      Loss of unconsolidated
        joint ventures and partnerships                  20          7         --
      Other - net                                       (79)       (22)        13
      Changes in working capital components             306        (40)       104
                                                     ------     ------     ------
        Net cash provided by operating activities       598        350        608
                                                     ------     ------     ------
Cash Flows from Investing Activities:
  Expenditures for property, plant and
    equipment                                          (150)      (187)      (204)
  Acquisition of Sempra Energy Trading                   --       (112)        --
  Increase in investments                               (45)       (26)       (62)
  Proceeds from disposition of properties                --         20         --
  (Increase) decrease in other receivables,
     regulatory assets and other assets                   6         42        (20)
                                                     ------     ------     ------
         Net cash used in investing activities         (189)      (263)      (286)
                                                     ------     ------     ------
Cash Flows from Financing Activities:
  Common dividends paid                                 (97)      (122)      (119)
  Preferred dividends paid                               (4)        (4)        (4)
  Payment on long-term debt                            (150)      (245)      (172)
  Increase (decrease)in short-term debt                (311)        92         29
  Issuance of long-term debt                             75        120         75
  Sale of common stock                                   27         17          8
  Repurchase of common stock                             --        (48)       (24)
  Redemption of preferred stock of a subsidiary         (75)        --       (100)
  Redemption of preferred stock                          --         --       (110)
                                                     ------     ------     ------
        Net cash used in financing activities          (535)      (190)      (417)
                                                     ------     ------     ------
Net decrease                                           (126)      (103)       (95)
Cash and Cash Equivalents, January 1                    153        256        351
                                                     ------     ------     ------
Cash and Cash Equivalents, December 31               $   27     $  153     $  256
                                                     ======     ======     ======
See notes to Consolidated Financial Statements.
</TABLE>

<TABLE>
PACIFIC ENTERPRISES AND SUBSIDIARIES
STATEMENT OF CONSOLIDATED CASH FLOWS
In millions of dollars
                                                                                 
<CAPTION>
For the years ended December 31                       1998       1997       1996 
                                                     ------     ------     ------
<S>                                                 <C>        <C>        <C>
Changes in Working Capital Components
  (Excluding cash and cash equivalents, 
     short-term debt and long-term debt
     due within one year)
  Current Assets:
   Receivables                                       $  (51)    $  (34)    $  (58)
   Income taxes receivable                              (19)        55         12
   Deferred income taxes                               (130)        --         11
   Inventories                                          (24)         5         27
   Regulatory balancing accounts                         --         25         46
   Other                                                  2          2         16
                                                     ------     ------     ------
    Total                                              (222)        53         54
                                                     ------     ------     ------
  Current Liabilities:
   Accounts payable                                     (29)      (139)        53
   Deferred income taxes                                 (7)        26         --
   Other taxes payable                                    2          2        (18)
   Regulatory balancing accounts                        484         --         --
   Other                                                 78         18         15
                                                     ------     ------     ------
    Total                                               528        (93)        50
                                                     ------     ------     ------
       Net change in other working
        capital components                           $  306     $  (40)    $  104
                                                     ======     ======     ======

Supplemental Disclosure of Cash Flow Information:
   Income tax payments, net of refunds               $  263     $  112     $   92
                                                     ======     ======     ======
   Interest payments, net of amount capitalized      $   72     $   92     $  100
                                                     ======     ======     ======
Supplemental Schedule of Noncash Activities:
   Dividend of property to Sempra Energy             $   23     $   --     $   --
                                                     ======     ======     ======
   Capital contribution from Sempra Energy           $   26     $   --     $   --
                                                     ======     ======     ======

Sale of assets of small generation plants:
   Fair value of the assets sold                                $   77
   Cash received                                                   (20)
   Loss on sale                                                     (6)
                                                                ------
   Note receivable                                              $   51
                                                                ======


See notes to Consolidated Financial Statements.

</TABLE>

<TABLE> 
PACIFIC ENTERPRISES
STATEMENTS OF CONSOLIDATED CHANGES IN SHAREHOLDERS' EQUITY 
For the years ended December 31, 1998, 1997, 1996 
(Dollars in millions)
 
<CAPTION> 

                                                                 Deferred
                                                                 Compensation  Total  
                                  Common    Preferred  Retained  Relating      Shareholders'
                                  Stock     Stock      Earnings  to ESOP       Equity
--------------------------------------------------------------------------------------------
<S>                               <C>       <C>        <C>       <C>           <C> 
Balance at December 31, 1995      $ 1,111    $  188     $  236    $  (52)      $ 1,483 
Net income                                                 203                     203
Preferred stock dividends declared                          (5)                     (5)
Common stock dividends declared                           (118)                   (118)
Sale of common stock                    8                                            8 
Repurchase of common stock            (24)                                         (24)
Redemption of preferred stock                  (108)        (2)                   (110)
Common stock released
   from ESOP                                                           3             3 
-------------------------------------------------------------------------------------------- 
Balance at December 31, 1996        1,095        80        314       (49)        1,440
Net income                                                 184                     184
Preferred stock dividends declared                          (4)                     (4)
Common stock dividends declared                           (122)                   (122)
Sale of common stock                   17                                           17
Repurchase of common stock            (48)                                         (48)
Common stock released
   from ESOP                                                           2             2  
--------------------------------------------------------------------------------------------
Balance at December 31, 1997        1,064        80        372       (47)        1,469
Net income                                                 147                     147
Preferred stock dividends declared                          (4)                     (4)
Common stock dividends declared                           (120)                   (120)
Capital contribution                   26                                           26 
Sale of common stock                   27                                           27
Common stock released
   from ESOP                                                           2             2
--------------------------------------------------------------------------------------------
Balance at December 31, 1998      $ 1,117    $   80     $  395    $  (45)      $ 1,547
============================================================================================
 
See notes to Consolidated Financial Statements. 

</TABLE>


NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

NOTE 1:  BUSINESS COMBINATION

On June 26, 1998, Enova Corporation (Enova) and Pacific Enterprises 
(PE or the Company) combined into a new company named Sempra 
Energy. As a result of the combination, (i) each outstanding share 
of common stock of Enova was converted into one share of common 
stock of Sempra Energy, (ii) each outstanding share of common stock 
of PE was converted into 1.5038 shares of common stock of Sempra 
Energy and (iii) the preferred stock and preference stock of 
Enova's principal subsidiary, San Diego Gas & Electric Company 
(SDG&E); PE; and PE's principal subsidiary, Southern California Gas 
Company (SoCalGas) remained outstanding. The combination was 
approved by the shareholders of both companies on March 11, 1997 
and was a tax-free transaction. The Consolidated Financial 
Statements of Sempra Energy and its subsidiaries give effect to the 
business combination using the pooling-of-interests method. 
     As required by the March 1998 decision of the California 
Public Utilities Commission (CPUC) approving the business 
combination, SDG&E has entered into agreements to sell its fossil-
fueled generation units. The sales are subject to regulatory 
approvals and are expected to close during its first half of 1999. 
In addition SoCalGas has sold its options to purchase the 
California portions of the Kern River and Mojave Pipeline natural 
gas transmission facilities. The Federal Energy Regulatory 
Commission's (FERC) approval of the combination includes conditions 
that the combined company will not unfairly use any potential 
market power regarding natural gas transportation to fossil-fueled 
generation plants. The FERC also specifically noted that the 
divestiture of SDG&E's fossil-fueled generation plants would 
eliminate any concerns about vertical market power arising from 
transactions between SDG&E and SoCalGas.

NOTE 2:  SIGNIFICANT ACCOUNTING POLICIES

Property, Plant and Equipment
  
This primarily represents the buildings, equipment and other 
facilities used by SoCalGas to provide natural gas service. The 
cost of utility plant includes labor, materials, contract services 
and related items, and an allowance for funds used during 
construction. The cost of retired depreciable utility plant, plus 
removal costs minus salvage value, is charged to accumulated 
depreciation. Depreciation expense is based on the straight-line 
method over the useful lives of the assets or a shorter period 
prescribed by the CPUC. The provisions for depreciation as a 
percentage of average depreciable utility plant in 1998, 1997 and 
1996, respectively are: 4.36, 4.35 and 4.39.

Inventories
  
Materials and supplies are generally valued at the lower of average 
cost or market; natural gas in storage is valued by the last-in 
first-out method.


Trading Instruments

Sempra Energy Trading (SET), a leading natural gas and power 
marketing firm headquartered in Stamford, Connecticut, was jointly 
acquired by PE and Enova on December 31, 1997. SET's trading assets 
and trading liabilities are recorded on a trade-date basis at fair 
value and include option premiums paid and received, and unrealized 
gains and losses from exchange-traded futures and options, over the 
counter (OTC) swaps, forwards, and options. Unrealized gains and 
losses on OTC transactions reflect amounts which would be received 
from or paid to a third party upon settlement of the contracts. 
Unrealized gains and losses on OTC transactions are reported 
separately as assets and liabilities unless a legal right of setoff 
exists under a master netting arrangement enforceable by law. 
Revenues are recognized on a trade-date basis and include realized 
gains and losses, and the net change in unrealized gains and 
losses.
     Futures and exchange-traded option transactions are recorded 
as contractual commitments on a trade-date basis and are carried at 
fair value based on closing exchange quotations. Commodity swaps 
and forward transactions are accounted for as contractual 
commitments on a trade-date basis and are carried at fair value 
derived from dealer quotations and underlying commodity-exchange 
quotations. OTC options are carried at fair value based on the use 
of valuation models that utilize, among other things, current 
interest, commodity and volatility rates, as applicable. For long-
dated forward transactions, where there are no dealer or exchange 
quotations, fair values are derived using internally developed 
valuation methodologies based on available market information. 
Where market rates are not quoted, current interest, commodity and 
volatility rates are estimated by reference to current market 
levels. Given the nature, size and timing of transactions, 
estimated values may differ from realized values. Changes in the 
fair value are recorded currently in income.

Effects of Regulation
  
SoCalGas accounting policies conform with generally accepted 
accounting principles for regulated enterprises and reflect the 
policies of the CPUC and the FERC. The Company's interstate natural 
gas transmission subsidiary follows accounting policies authorized 
by the FERC.
     SoCalGas prepares its financial statements in accordance with 
the provisions of Statement of Financial Accounting Standards 
(SFAS) No. 71, "Accounting for the Effects of Certain Types of 
Regulation," under which a regulated utility may record a 
regulatory asset if it is probable that, through the ratemaking 
process, the utility will recover that asset from customers. 
Regulatory liabilities represent future reductions in rates for 
amounts due to customers. In addition, SFAS No. 121, "Accounting 
for the Impairment of Long-Lived Assets and for Long-Lived Assets 
to Be Disposed Of," affects utility plant and regulatory assets 
such that a loss must be recognized whenever a regulator excludes 
all or part of an asset's cost from rate base. Additional 
information concerning regulatory assets and liabilities is 
described below in "Revenues and Regulatory Balancing Accounts" and 
in Note 13.




Revenues and Regulatory Balancing Accounts
  
Revenues from utility customers consist of deliveries to customers 
and the changes in regulatory balancing accounts. Earnings 
fluctuations from changes in the costs of natural gas and 
consumption levels for the majority of natural gas are eliminated 
by balancing accounts authorized by the CPUC.

Regulatory Assets
  
Regulatory assets include unrecovered premium on early retirement 
of debt, post-retirement benefit costs, deferred income taxes 
recoverable in rates and other regulatory-related expenditures that 
the utility expects to recover in future rates. See Note 13 for 
additional information.

Comprehensive Income

In 1998, the Company adopted SFAS No. 130, "Reporting Comprehensive 
Income."  This statement requires reporting of comprehensive income 
and its components (revenues, expenses, gains and losses) in any 
complete presentation of general-purpose financial statements. 
Comprehensive income describes all changes, except those resulting 
from investments by owners and distributions to owners, in the 
equity of a business enterprise from transactions and other events 
including, as applicable, foreign-currency items, minimum pension 
liability adjustments and unrealized gains and losses on certain 
investments in debt and equity securities. Comprehensive income was 
equal to net income for the years ended December 31, 1998, 1997 and 
1996.

Quasi-Reorganization

In 1993, PE completed a strategic plan to refocus on its natural 
gas utility and related businesses. The strategy included the 
divestiture of its merchandising operations and all of its oil and 
natural gas exploration and production business. In connection with 
the divestitures, PE effected a quasi-reorganization for financial 
reporting purposes, effective December 31, 1992. Certain of the 
liabilities established in connection with discontinued operations 
and the quasi-reorganization will be resolved in future years. 
Management believes the provisions previously established for these 
matters are adequate at December 31, 1998.

Use of Estimates in the Preparation of the Financial Statements
  
The preparation of the consolidated financial statements in 
conformity with generally accepted accounting principles requires 
management to make estimates and assumptions that affect the 
reported amounts of assets and liabilities and disclosure of 
contingent assets and liabilities at the date of the financial 
statements and the reported amounts of revenues and expenses during 
the reporting period. Actual results could differ from those 
estimates.

Statements of Consolidated Cash Flows
  
Cash equivalents are highly liquid investments with original 
maturities of three months or less, or investments that are readily 
convertible to cash.

New Accounting Standard

In April 1998, the American Institute of Certified Public 
Accountants issued Statement of Position 98-5 "Reporting on the 
Costs of Start-up Activities". This statement is effective for 
1999, but is not expected to have a significant effect on the 
Company's Consolidated Financial Statements.
     In June 1998, the Financial Accounting Standards Board issued 
Statement of Financial Accounting Standards (SFAS) No. 133 
"Accounting for Derivative Instruments and Hedging Activities."  
This statement, which is effective January 1, 2000, requires that 
an entity recognize all derivatives as either assets or liabilities 
in the statement of financial position, measure those instruments 
at fair value and recognize changes in the fair value of 
derivatives in earnings in the period of change unless the 
derivative qualifies as an effective hedge that offsets certain 
exposures. The effect of this standard on the Company's 
consolidated financial statements has not yet been determined.

NOTE 3:  ACQUISITIONS AND JOINT VENTURES

Sempra Energy Trading, Sempra Energy Resources, Sempra Energy 
Utility Ventures and Sempra Energy Solutions are nonregulated 
subsidiaries of Sempra Energy, each equally owned by PE and Enova.

Sempra Energy Trading  
In December 1997, PE and Enova jointly acquired Sempra Energy 
Trading (SET) for $225 million. SET is a wholesale-energy trading 
company based in Stamford, Connecticut. It participates in 
marketing and trading physical and financial energy products, 
including natural gas, power, crude oil and associated commodities. 
    In July 1998, SET purchased CNG Energy Services Corporation, a 
subsidiary of Pittsburgh-based Consolidated Natural Gas Company, 
for $36 million. The acquisition expands SET's business volume by 
adding large commodity-trading contracts with local distribution 
companies, municipalities and major industrial corporations in the 
eastern United States. See Note 9 for additional information on 
Sempra Energy Trading. 

Sempra Energy Resources
In December 1997, Sempra Energy Resources (SER), in partnership 
with Reliant Energy Power Generation, formed El Dorado Energy. In 
April 1998, El Dorado Energy began construction on a 480-megawatt 
power plant near Boulder City, Nevada. SER invested $2.3 million in 
1997 and $19.7 million in 1998 on this $263-million project. In 
October 1998, El Dorado Energy obtained a $158-million senior 
secured credit facility, which entails both construction and 15-
year term financing for the project. This financing represents 60 
percent of the estimated total project costs.

Sempra Energy Utility Ventures  
In September 1997, Sempra Energy Utility Ventures (SEUV) formed a 
joint venture with Bangor Hydro to build, own and operate a $40-
million natural gas distribution system in Bangor, Maine. 
Construction began in June 1998. The new Bangor Gas Company expects 
to begin deliveries in the fourth quarter of 1999.
    In December 1997, SEUV formed Frontier Energy with Frontier 
Utilities of North Carolina to build and operate a $55-million 
natural gas distribution system in North Carolina.  Gas delivery 
began in December 1998. Subsequent to December 31, 1998, SEUV 
purchased Frontier Utilities' interest and acquired 100 percent 
ownership of the system.

Sempra Energy Solutions
In January 1998, Sempra Energy Solutions completed the acquisition 
of CES/Way International, a national leader in energy-service 
performance contracting headquartered in Houston, Texas. CES/Way 
provides energy-efficiency services including energy audits, 
engineering design, project management, construction, financing and 
contract maintenance.
    In May 1997, Sempra Energy Solutions entered into an operating 
joint venture agreement with Conectiv Thermal Systems, Inc. 
(formerly Atlantic Thermal System, Inc.) to form Atlantic-Pacific 
Las Vegas, with each receiving a 50 percent interest. Atlantic-
Pacific Las Vegas will provide integrated energy-management 
services to commercial and industrial customers including the 
construction of facilities. In May 1997, Atlantic-Pacific Las Vegas 
entered into an energy-services agreement with three other parties 
to finance, own, operate and maintain an integrated thermal-energy 
production facility at the site of the future Venetian Casino 
Resort in Las Vegas. The construction cost incurred to date is $48 
million.
    A second joint venture agreement was entered into with Conectiv 
Thermal Systems to form Atlantic-Pacific Glendale in August 1997, 
with each receiving a 50-percent interest. Atlantic-Pacific 
Glendale entered into an integrated energy-management services 
agreement with Dreamworks Animation, LLC, to develop, manage and 
finance the construction and operation of a central chiller plant, 
emergency power generators and chilled-water distribution and 
circulation system at Dreamworks' Glendale facilities. The cost of 
the project, completed in May 1998, was $7 million.

International Gas Distribution Projects
Pacific Enterprises International (PEI), Sempra Energy 
International (SEI), and Proxima Gas S.A. de C.V., partners in the 
Mexican companies Distribuidora de Gas Natural (DGN) de Mexicali 
and Distribuidora de Gas Natural (DGN) de Chihuahua, are the 
licensees to build and operate natural gas distribution systems in 
Mexicali and Chihuahua. DGN - Mexicali will invest up to $25 
million during the first five years of the 30-year license period. 
DGN - Chihuahua will invest up to $50 million over the first five 
years of operation. DGN - Mexicali and DGN - Chihauhua assumed 
ownership of natural gas distribution during the third quarter of 
1997. PEI owns interests of 30 and 47.5 percent in the Mexicali and 
Chihuahua projects, respectively. In March 1998, PEI increased its 
existing investment in two Argentine natural gas utility holding 
companies (Sodigas Pampeana S.A. and Sodigas Sur S.A.) from 12.5 
percent to 21.5 percent by purchasing an additional 9 percent 
interest for $40 million.

Dividending of Subsidiaries to Sempra Energy
As a result of the PE/Enova Business Combination which was 
completed in June 1998, certain subsidiaries of PE were dividended 
to Sempra Energy in September 1998 in order to effectuate the 
change in the corporate structure. 


NOTE 4:  SHORT-TERM BORROWINGS 

PE has a $300 million multi-year credit agreement. SoCalGas has an 
additional $400 million multi-year credit agreement. These 
agreements expire in 2001 and bear interest at various rates based 
on market rates and the companies' credit ratings. SoCalGas' lines 
of credit are available to support commercial paper. At December 
31, 1998, PE had $43 million of bank loans under the credit 
agreement outstanding, due and paid in January 1999. SoCalGas' bank 
line of credit was unused. At December 31, 1997, both bank lines of 
credit were unused.
     At December 31, 1998, there were no commercial-paper 
obligations outstanding. At December 31, 1997, SoCalGas had $354 
million of commercial-paper obligations outstanding, of which 
approximately $94 million related to the restructuring costs 
associated with certain long-term natural gas supply contracts 
under the Comprehensive Settlement. See Note 13 for additional 
information.

NOTE 5:  LONG-TERM DEBT
--------------------------------------------------------------
                                             December 31,
(Dollars in millions)                     1998          1997
--------------------------------------------------------------
First-Mortgage Bonds
  5.250% March 1, 1998                  $   --       $  100
  6.875% August 15, 2002                   100          100
  5.750% November 15, 2003                 100          100
  8.750% October 1, 2021                   150          150
  7.375% March 1, 2023                     100          100
  7.500% June 15, 2023                     125          125
  6.875% November 1, 2025                  175          175
                                         ------       ------
                                           750          850
Other Long-Term Debt
  6.210% Notes, November  7, 1999           75           75
  6.375% Notes, October 29, 2001           120          120 
  8.750% Notes, July 6, 2000                30           30
  5.670% Notes, January 15, 2003            75           -- 
  SFr. 100,000,000 5.125% Bonds, 
     February 6, 1998 (foreign currency
     exposure hedged through currency
     swap at an interest rate of 9.725%)    --           47 
  SFr. 15,695,000 6.375% Foreign 
     Interest Payment Securities,
     May 14, 2006                            8            8
  Employee Stock Ownership Plan, 
     November 30, 1999                     130          130
  Other, 8% - 9.5%, 1999-2002               19           21
                                       -----------------------
       Total                             1,207        1,281
                                       -----------------------
Less:
   Long term debt due within one year      206          148
   Unamortized discount on 
     long-term debt                         16           15
                                       -----------------------
                                           222          163
                                       -----------------------
Total                                   $  985       $1,118
--------------------------------------------------------------


Maturities of long-term debt, including PE's Employees Stock 
Ownership Plan, are $206 million in 1999, $30 million in 2000, $120 
million in 2001, $100 million in 2002 and $175 million in 2003. 

First-Mortgage Bonds  

First-mortgage bonds are secured by a lien on substantially all 
utility plant. SoCalGas may issue additional first-mortgage bonds 
upon compliance with the provisions of its bond indenture, which 
provides for, among other things, the issuance of an additional 
$750 million of first-mortgage bonds at December 31, 1998.

Other Long-Term Debt

During 1998, SoCalGas issued $75 million of unsecured debt in 
medium-term notes used to finance working capital requirements. 

Currency Rate Swaps  

In May 1996, SoCalGas issued SFr. 15,695,000 of 6.375% Foreign 
Interest Payment Securities maturing on May 14, 2006. SoCalGas 
hedged the currency exposure by entering into a swap transaction 
with a major international bank. As a result, the bond issue, 
interest payments and other ongoing costs were swapped for fixed 
annual payments. The Foreign Interest Payment Securities are 
renewable at ten-year intervals at reset interest rates. The next 
put date for the $8 million Foreign Interest Payment Securities is 
in the year 2006.

Debt of Employee Stock Ownership Plan (ESOP) and Trust

The Trust covers substantially all of the Company's former PE 
employees and is used to partially fund their retirement savings 
program. It has an ESOP feature and holds approximately 3.1 million 
shares of Sempra Energy's common stock. The variable-rate ESOP debt 
held by the Trust bears interest at a rate necessary to place or 
remarket the notes at par. The balance of this debt was $130 
million at December 31, 1998, and is included in the table above. 
Principal is due on November 30, 1999 and interest is payable 
monthly. PE is obligated to make contributions to the Trust 
sufficient to satisfy debt service requirements. As PE makes 
contributions to the Trust, these contributions, plus any dividends 
paid on the unallocated shares of PE's common stock held by the 
Trust, will be used to repay the debt. As dividends are increased 
or decreased, required contributions are reduced or increased, 
respectively. Interest on ESOP debt amounted to $6 million in each 
of the years 1998, 1997 and 1996. Dividends used for debt service 
amounted to $3 million in each of the years 1998, 1997 and 1996, 
and are deductible only for federal income tax purposes.


NOTE 6:  INCOME TAXES

The reconciliation of the statutory federal income tax rate to the
effective income tax rate is as follows:
-----------------------------------------------------------------------
                                            1998       1997       1996
-----------------------------------------------------------------------
Statutory federal income tax rate           35.0%      35.0%      35.0%
Depreciation                                 9.9        6.9        6.5
State income taxes - net of 
  federal income tax benefit                 4.7        6.9        5.7
Tax credits                                 (1.0)      (0.9)      (0.8)
Capitalized expenses not deferred            0.4       (0.9)      (3.1)
Other - net                                 (2.6)      (1.9)      (0.6)
                                          -----------------------------
Effective income tax rate                   46.4%      45.1%      42.7%
-----------------------------------------------------------------------

The components of income tax expense are as follows:
-----------------------------------------------------------------------
(Dollars in millions)                       1998      1997        1996
-----------------------------------------------------------------------
Current:
  Federal                                   $242       $143       $ 68
  State                                       65         25         25
                                          -----------------------------
    Total current taxes                      307        168         93
                                          -----------------------------
Deferred:
  Federal                                   (139)       (19)        54
  State                                      (38)         5          7
                                          -----------------------------
    Total deferred taxes                    (177)       (14)        61
                                          -----------------------------
Deferred investment tax credits-net           (3)        (3)        (3)
                                          -----------------------------
Total income tax expense                    $127       $151       $151
-----------------------------------------------------------------------


Deferred income taxes at December 31 result from the following:
--------------------------------------------------------------
(Dollars in millions)                       1998       1997
--------------------------------------------------------------
Deferred Tax Liabilities:
  Differences in financial and
    tax bases of utility plant              $449     $  495
  Regulatory balancing accounts               -         161
  Regulatory assets                           76         90
  Other                                       51         61
                                          --------------------
    Total deferred tax liabilities           576        807
                                          --------------------
Deferred Tax Assets:
  Unamortized investment tax credits          25         27
  Regulatory balancing accounts               51          -
  Comprehensive settlement (see Note 13)      95        117
  Postretirement benefits                     76         81
  Other deferred liabilities                 153        157
  Restructuring costs                         51         54
  Other                                       35         92
                                          --------------------
    Total deferred tax assets                486        528
                                          --------------------
Net deferred income tax liability             90        279
Current portion - net asset (liability)      130         (7) 
                                          --------------------
Non-current portion - net liability         $220       $272
--------------------------------------------------------------

NOTE 7:  EMPLOYEE BENEFIT PLANS

The information presented below describes the plans of the Company 
and its principal subsidiaries. In connection with the PE/Enova 
Business Combination described in Note 1, certain of these plans 
have been or will be replaced or modified, and numerous 
participants have been or will be transferred from the Company's 
plans to those of Sempra Energy.

Pension And Other Postretirement Benefits

The Company sponsors qualified and nonqualified pension plans and 
other postretirement benefit plans for its employees. The following 
tables provide a reconciliation of the changes in the plans' 
benefit obligations and fair value of assets over the two years, 
and a statement of the funded status as of each year end:


<TABLE>
<CAPTION>
---------------------------------------------------------------------------------
                                                                   Other          
                                    Pension Benefits      Postretirement Benefits
                                  -----------------------------------------------
(Dollars in millions)                1998      1997           1998         1997  
---------------------------------------------------------------------------------
<S>                                 <C>       <C>            <C>        <C>
Weighted-Average Assumptions 
  as of December 31:
Discount rate                        6.75%     7.00%          6.75%      7.00%
Expected return on plan assets       8.50%     8.00%          8.50%      8.00%
Rate of compensation increase        5.00%     5.00%          5.00%      5.00%
Cost trend of covered 
  health-care charges                   -         -           8.00%(1)   7.00%(2)

Change in Benefit Obligation:
Net benefit obligation at 
  January 1                        $1,512    $1,435          $ 488        $ 401
Service cost                           36        35             12           14
Interest cost                         104       104             33           32
Plan participants' contributions        -         -              1            1
Plan amendments                        21         -              -            -
Actuarial (gain) loss                 (32)       35             (5)          56
Transfer of liability (3)            (293)        -            (43)           - 
Special termination benefits           54        13              3            2
Gross benefits paid                  (221)     (110)           (17)         (18)
                                  -----------------------------------------------
Net benefit obligation at 
  December 31                       1,181     1,512            472          488
                                  -----------------------------------------------

Change in Plan Assets:
Fair value of plan assets 
  at January 1                      1,954     1,774            349          274
Actual return on plan assets          300       288             62           59
Employer contributions                 13         2             31           33
Plan participants' contributions        -         -              1            1
Transfer of assets (3)               (447)        -            (40)           -
Gross benefits paid                  (221)     (110)           (17)         (18)
                                  -----------------------------------------------
Fair value of plan assets 
  at December 31                    1,599     1,954            386          349
                                  -----------------------------------------------
Funded status at December 31          418       442            (86)        (139)
Unrecognized net actuarial gain      (525)     (533)          (110)         (63)
Unrecognized prior service cost        50        32            (14)         (15)
Unrecognized net transition 
  obligation                            3         4              -            -
                                  -----------------------------------------------
Net liability at December 31 (4)    $ (54)    $ (55)         $(210)       $(217)
---------------------------------------------------------------------------------
(1) Decreasing to ultimate trend of 6.50% in 2004.
(2) Decreasing to ultimate trend of 6.50% in 1998.
(3) To reflect transfer of plan assets and liability to Sempra Energy plan 
    for Company employees transferred to Sempra Energy.
(4) Approximates amounts recognized in the Consolidated Balance Sheets at 
    December 31.
</TABLE>

The following table provides the components of net periodic 
benefit cost for the plans:

<TABLE>
<CAPTION>
---------------------------------------------------------------------------------
                                                                  Other
                                     Pension Benefits     Postretirement Benefits
                                  -----------------------------------------------
(Dollars in millions)               1998   1997   1996     1998     1997     1996
---------------------------------------------------------------------------------
<S>                                <C>    <C>    <C>       <C>      <C>    <C>
Service cost                        $ 36   $ 35   $ 39     $ 12     $ 14    $ 17
Interest cost                        104    104    103       33       32      33
Expected return on assets           (135)  (128)  (117)     (24)     (21)    (19)
Amortization of:
   Transition obligation               1      1      1        -        -       -
   Prior service cost                  3      3      3       (1)      (1)     (1)
   Actuarial (gain) loss             (12)   (10)     -        1        1       1
Special termination benefit           54     13      -        3        2       -
Settlement credit                    (30)     -      -        -        -       -
Regulatory adjustment                 -       -      3        9       13      13
                                  -----------------------------------------------
Total net periodic benefit cost     $ 21   $ 18   $ 32     $ 33     $ 40    $ 44
---------------------------------------------------------------------------------
</TABLE>

Assumed health care cost trend rates have a significant effect on 
the amounts reported for the health care plans. A 1-percent change 
in assumed health care cost trend rates would have the following 
effects:
------------------------------------------------------------------------
(Dollars in millions)                     1% Increase       1% Decrease
------------------------------------------------------------------------
Effect on total of service and interest cost 
  components of net periodic postretirement 
  health care benefit cost                       $11             $ (9)
Effect on the health care component of the 
  accumulated postretirement benefit obligation  $70             $(63)
------------------------------------------------------------------------

The projected benefit obligation and accumulated benefit 
obligation for the pension plan were $40 million and $32 million, 
respectively, as of December 31, 1998, and $37 million and $34 
million, respectively, as of December 31, 1997. 
     Other postretirement benefits include medical benefits for 
retirees and their spouses, and retiree life insurance.

Savings Plans  

Pacific Enterprises and SoCalGas offer savings plans, administered 
by plan trustees, to all eligible employees. Eligibility to 
participate in the various employer plans ranges from one month to 
one year of completed service. Employees may contribute, subject 
to plan provisions, from 1 percent to 15 percent of their regular 
earnings. The employee's contributions, at the direction of the 
employees, are primarily invested in Sempra Energy stock, mutual 
funds or guaranteed investment contracts. Employer contributions, 
after one year of completed service, are made in shares of Sempra 
Energy common stock. Employer contribution methods vary by plan, 
but generally the contribution is equal to 50 percent of the first 
6 percent of eligible base salary contributed by employees. 
Employer contributions for the PE and SoCalGas plans are partially 
funded by the Pacific Enterprises Employee Stock Ownership Plan 
and Trust. Annual expense for the savings plans was $8 million in 
1998, 1997 and 1996.

Employee Stock Ownership Plan  

The Pacific Enterprises Employee Stock Ownership Plan and Trust 
(Trust) covers substantially all employees of PE and SoCalGas and 
is used to partially fund their retirement savings plan programs. 
All contributions to the Trust are made by the Company, and there 
are no contributions made by the participants. As the Company 
makes contributions to the Trust, the Trust debt service is paid 
and shares are released in proportion to the total expected debt 
service. 

Compensation expense is charged and equity is credited for the 
market value of the shares released. Income-tax deductions are 
allowed based on the cost of the shares. Dividends on unallocated 
shares are used to pay debt service and are charged against 
liabilities. The Trust held 3.1 and 3.3 million shares of Sempra 
Energy common stock, with fair values of $77.9 million and $80.3 
million at December 31, 1998, and 1997, respectively.

NOTE 8:  STOCK-BASED COMPENSATION

Sempra Energy has stock-based compensation plans that align 
employee and shareholder objectives related to Sempra Energy's 
long-term growth. The long-term incentive stock compensation plan 
provides for aggregate awards of Sempra Energy non-qualified stock 
options, incentive stock options, restricted stock, stock 
appreciation rights, performance awards, stock payments or dividend 
equivalents to eligible employees of Sempra Energy and its 
subsidiaries.
     In 1995, Statement of Financial Accounting Standards (SFAS) 
No. 123, "Accounting for Stock-Based compensation," was issued. It 
encourages a fair-value-based method of accounting for stock-based 
compensation. As permitted by SFAS No. 123, Sempra Energy and its 
subsidiaries adopted its disclosure-only requirements and continue 
to account for stock-based compensation in accordance with the 
provisions of accounting Principles Board Opinion No. 25, 
"Accounting for Stock Issued to Employees."
     To the extent that subsidiary employees participate in the 
plans or that subsidiaries are allocated a portion of Sempra 
Energy's costs of the plans, the subsidiaries record an expense for 
the plans. PE recorded expenses of $8 million in 1998, $17 million 
in 1997 and $6 million in 1996.  

NOTE 9:  FINANCIAL INSTRUMENTS

Fair Value
   
The fair values of the Company's financial instruments are not 
materially different from the carrying amounts, except for long-
term debt and preferred stock. The carrying amounts and fair values 
of long-term debt are $1.2 billion each at December 31, 1998, and 
$1.3 billion each at December 31, 1997. The carrying amounts and 
fair values of the combined preferred stock and preferred stock of 
subsidiaries are $100 million and $77 million, respectively, at 
December 31, 1998, and $175 million and $157 million, respectively, 
at December 31, 1997. The fair values of the first-mortgage bonds 
and preferred stock are estimated based on quoted market prices for 
them or for similar issues.  The fair values of long-term notes 
payable are based on the present value of the future cash flows, 
discounted at rates available for similar notes with comparable 
maturities.

Off-Balance-Sheet Financial Instruments
   
The Company's policy is to use derivative financial instruments to 
manage its exposure to fluctuations in interest rates, foreign-
currency exchange rates and energy prices. Transactions involving 
these financial instruments expose the Company to market and credit 
risks which may at times be concentrated with certain 
counterparties, although counterparty nonperformance is not 
anticipated. 

Energy Derivatives
 
Information on derivative financial instruments of SET is provided 
below. The Company's regulated operations use energy derivatives 
for price risk management purposes within certain limitations 
imposed by Company policies and regulatory requirements. 
     As a result of the GCIM (see Note 13), SoCalGas enters into a 
certain amount of natural gas futures contracts in the open market 
with the intent of reducing natural gas costs within the GCIM 
tolerance band. The Company's policy is to use natural gas futures 
contracts to mitigate risk and better manage natural gas costs. The 
CPUC has approved the use of natural gas futures for managing risk 
associated with the GCIM. For the years ended December 31, 1998, 
1997 and 1996, gains and losses from natural gas futures contracts 
are not material to SoCalGas' financial statements. 

Sempra Energy Trading

SET derives a substantial portion of its revenue from market making 
and trading activities, as a principal, in natural gas, petroleum 
and electricity. It quotes bid and offer prices to end users and 
other market makers. It also earns trading profits as a dealer by 
structuring and executing transactions that permit its 
counterparties to manage their risk profiles. In addition, it takes 
positions in energy markets based on the expectation of future 
market conditions. These positions may be offset with similar 
positions or may be offset in the exchange-traded markets. These 
positions include options, forwards, futures and swaps. These 
financial instruments represent contracts with counterparties 
whereby payments are linked to or derived from energy-market 
indices or on terms predetermined by the contract, which may or may 
not be physically or financially settled by SET. For the year ended 
December 31, 1998, substantially all of SET's derivative 
transactions were held for trading and marketing purposes.
     Market risk arises from the potential for changes in the value 
of financial instruments resulting from fluctuations in natural 
gas, petroleum and electricity commodity-exchange prices and basis. 
Market risk is also affected by changes in volatility and liquidity 
in markets in which these instruments are traded.
     SET adjusts the book value of these derivatives to market each 
month with gains and losses recognized in earnings. Certain 
instruments such as swaps are entered into and closed out within 
the same month and, therefore, do not have any balance-sheet 
impact. 
     SET also carries an inventory of financial instruments. As 
trading strategies depend on both market making and proprietary 
positions, given the relationships between instruments and markets, 
those activities are managed in concert in order to maximize 
trading profits.
     SET's credit risk from financial instruments as of December 
31, 1998, is represented by the positive fair value of financial 
instruments after consideration of master netting agreements and 
collateral. Credit risk disclosures, however, relate to the net 
accounting losses that would be recognized if all counterparties 
completely failed to perform their obligations. Options written do 
not expose SET to credit risk.  Exchange-traded futures and options 
are not deemed to have significant credit exposure as the exchanges 
guarantee that every contract will be properly settled on a daily 
basis.
     The following table approximates the counterparty credit 
quality and exposure of SET expressed in terms of net replacement 
value (in millions of dollars):


-------------------------------------------------------------------
                                  Futures,
                              forward and 
                                     swap      Purchased  
Counterparty credit quality:    contracts        options      Total
-------------------------------------------------------------------
AAA                                  $ 32           $  1       $ 33
AA                                     41             14         55
A                                     129             19        148
BBB                                   290             26        316
Below investment grade                 69              2         71
Exchanges                              30              8         38
-------------------------------------------------------------------
                                     $591           $ 70       $661
------------------------------------------------------------------- 

     Financial instruments with maturities or repricing 
characteristics of 180 days or less, including cash and cash 
equivalents, are considered to be short-term and, therefore, the 
carrying values of these financial instruments approximate their 
fair values. SET's commodities owned, trading assets and trading 
liabilities are carried at fair value. The average fair values 
during the year, based on quarterly observation, for trading assets 
and trading liabilities which are considered financial instruments 
with off-balance-sheet risk approximate $952 million and $890 
million, respectively. The fair values are net of the amounts 
offset pursuant to rights of setoff based on qualifying master 
netting arrangements with counterparties, and do not include the 
effects of collateral held or pledged.
     As of December 31, 1998, and 1997, SET's trading assets and 
trading liabilities approximate the following:


-------------------------------------------------------------------
                                                      December 31,
(Dollars in millions)                               1998       1997
-------------------------------------------------------------------
Trading Assets
  Unrealized gains on swaps and forwards           $ 756      $ 497
  Due from commodity clearing organization
    and clearing brokers                              75         41
  OTC commodity options purchased                     45         33
  Due from trading counterparties                     30         16
                                                 ------------------
  Total                                            $ 906      $ 587
------------------------------------------------------------------- 
                                                

Trading Liabilities
   Unrealized losses on swaps and forwards         $ 740      $ 487
   Due to trading counterparties                      35         41
   OTC commodity options written                      30         29
                                                 ------------------
   Total                                           $ 805      $ 557
-------------------------------------------------------------------

     Notional amounts do not necessarily represent the amounts 
exchanged by parties to the financial instruments and do not 
measure SET's exposure to credit or market risks. The notional or 
contractual amounts are used to summarize the volume of financial 
instruments, but do not reflect the extent to which positions may 
offset one another. Accordingly, SET is exposed to much smaller 
amounts potentially subject to risk. The notional amounts of SET's 
financial instruments are:

-------------------------------------------------------------------
(Dollars in millions)                                      Total
-------------------------------------------------------------------
Forwards and commodity swaps                             $ 5,916
Futures and exchange options                               2,915
Options purchased                                          1,320
Options written                                            1,298
                                                      -------------
      Total                                              $11,449
-------------------------------------------------------------------

NOTE 10:  PREFERRED STOCK OF SUBSIDIARIES

-----------------------------------------------------------------
SoCalGas                                           December 31,
(Dollars in millions)                             1998     1997
-----------------------------------------------------------------
Not subject to mandatory redemption:
  $25 par value, authorized 1,000,000 shares
    6% Series, 28,664 shares outstanding             $ 1     $ 1
    6% Series A, 783,032 shares outstanding           19      19
  Without par value, authorized 10,000,000 shares
    7.75% Series                                       -      75
                                                   --------------
                                                     $20     $95
-----------------------------------------------------------------

     None of SoCalGas' series of preferred stock is callable. All 
series have one vote per share and cumulative preferences as to 
dividends. On February 2, 1998, SoCalGas redeemed all outstanding 
shares of 7.75% Series Preferred Stock at a price per share of $25 
plus $0.09 of dividends accruing to the date of redemption. The 
total cost to SoCalGas was approximately $75.3 million.

NOTE 11:  SHAREHOLDERS' EQUITY

---------------------------------------------------------------------- 
                                                  December 31,     
(Dollars in millions)                        1998              1997
---------------------------------------------------------------------- 
COMMON EQUITY:
Common                                      $ 1,117           $ 1,064
Retained earnings                               395               372 
Deferred compensation relating to 
  Employee Stock Ownership Plan                 (45)              (47)
                                         -----------------------------
     Total common equity                    $ 1,467           $ 1,389
----------------------------------------------------------------------

The Company is authorized to issue 600,000,000 shares of common 
stock, 10,000,000 shares of Preferred Stock and 5,000,000 shares of 
Class A Preferred Stock. All shares of PE common stock are owned by 
Sempra Energy. No shares of Unclassified or Class A preferred stock 
are outstanding.

----------------------------------------------------------------------
                                           Call      December 31,
(Dollars in millions except call price)   Price    1998        1997
----------------------------------------------------------------------
PREFERRED STOCK:
Cumulative preferred  
  without par value:
    $4.75 Dividend, 200,000 shares
      authorized and outstanding        $100.00   $  20       $  20
    $4.50 Dividend, 300,000 shares
      authorized and outstanding        $100.00      30          30
    $4.40 Dividend, 100,000 shares
      authorized and outstanding        $101.50      10          10
    $4.36 Dividend, 200,000 shares
      authorized and outstanding        $101.00      20          20
    $4.75 Dividend, 253 shares
      authorized and outstanding        $101.00      --          --

                                                ----------------------
      Total                                       $  80       $  80
----------------------------------------------------------------------

All or any part of every series of presently outstanding PE 
preferred stock is subject to redemption at PE's option at any time 
upon not less than 30 days notice, at the applicable redemption 
prices for each series, together with the accrued and accumulated 
dividends to the date of redemption. All series have one vote per 
share and cumulative preferences as to dividends. 

Dividend Restrictions
At December 31, 1998, $103 million of PE's retained earnings was 
available for future dividends, due to the CPUC's regulation of 
SoCalGas' capital structure.

NOTE 12: CONTINGENCIES AND COMMITMENTS

Natural Gas Contracts  

SoCalGas buys natural gas under several short-term and long-term 
contracts.  Short-term purchases are based on monthly spot market 
prices.  SoCalGas has commitments for firm pipeline capacity under 
contracts with pipeline companies that expire at various dates 
through the year 2006.  These agreements provide for payments of an 
annual reservation charge.  SoCalGas recovers such fixed charges in 
rates.
     At December 31, 1998, the future minimum payments under 
natural gas contracts were:

-----------------------------------------------------------------------
                                            Storage and 
(Dollars in millions)                    Transportation   Natural Gas
-----------------------------------------------------------------------
1999                                          $  184          $  270
2000                                             186             150
2001                                             188             153
2002                                             188             157
2003                                             184             158
Thereafter                                       460              -
                                       --------------------------------
Total minimum payments                        $1,390          $  888
-----------------------------------------------------------------------

     Total payments under the short-term and long-term contracts 
were $0.9 billion in 1998, $1.1 billion in 1997, and $0.9 billion 
in 1996.

Leases

PE and its subsidiaries have operating leases on real and personal 
property expiring at various dates from 1999 to 2030. The rentals 
payable under these leases are determined on both fixed and 
percentage bases and most leases contain options to extend, which 
are exercisable by PE or its subsidiaries. 
     The minimum rental commitments payable in future years under 
all noncancellable leases are(in millions of dollars):
-------------------------------------------------------------------
1999                                                      $   49 
2000                                                          49 
2001                                                          47 
2002                                                          48 
2003                                                          45 
Thereafter                                                   350  
                                                   ----------------
Total future rental commitment                            $  588 
-------------------------------------------------------------------

     Rent expense totaled $55 million in 1998, $56 million in 1997, 
and $58 million in 1996.
     In connection with its quasi-reorganization described in Note 
2 and loss on disposal of discontinued operations, PE established 
reserves of $102 million to fair value operating leases related to 
its headquarters and other leases at December 31, 1992.  The 
remaining amount of these reserves was $76 million at December 31, 
1998. These leases are reflected in the above table.

Other Commitments and Contingencies

At December 31, 1998, commitments for capital expenditures were 
approximately $8 million.

Environmental Issues

PE believes that its operations are conducted in accordance with 
federal, state and local environmental laws and regulations 
governing hazardous wastes, air and water quality, land use, and 
solid waste disposal. SoCalGas incurs significant costs to operate 
its facilities in compliance with these laws and regulations. The 
costs of compliance with environmental laws and regulations 
generally have been recovered in customer rates.
     In 1994, the CPUC approved the Hazardous Waste Collaborative 
Memorandum account allowing utilities to recover their hazardous-
waste costs, including those related to Superfund sites or similar 
sites requiring cleanup. Recovery of 90 percent of cleanup costs 
and related third-party litigation costs and 70 percent of the 
related insurance-litigation expenses is permitted. In addition, 
the Company has the opportunity to retain a percentage of any 
insurance recoveries to offset the 10 percent of costs not 
recovered in rates. Environmental liabilities that may arise are 
recorded when remedial efforts are probable and the costs can be 
estimated.
     PE capital expenditures to comply with environmental laws and 
regulations were $1 million in 1998, $1 million in 1997, and $3 
million in 1996, and are not expected to be significant over the 
next five years. 
     SoCalGas has identified and reported to California 
environmental authorities 42 former manufactured-gas plant sites 
for which it (together with other utilities as to 21 of these 
sites) may have remedial obligations under environmental laws. As 
of December 31, 1998, 12 of these sites have been remediated, of 
which 10 have received certification from the California 
Environmental Protection Agency. Preliminary investigations, at a 
minimum, have been completed on 39 of the gas plant sites.  At 
December 31, 1998, the Company's estimated remaining investigation 
and remediation liability for the above sites was $68 million, of 
which 90 percent is authorized to be recovered through the 
Hazardous Waste Collaborative Mechanism. In addition, PE and its 
subsidiaries have been named as potentially responsible parties for 
two landfill sites and two industrial waste disposal sites. The 
total cost estimate for remediation of these four sites is $5 
million. The Company believes that any costs not ultimately 
recovered through rates, insurance or other means, upon giving 
effect to previously established liabilities, will not have a 
material adverse effect on the Company's consolidated results of 
operations or financial position.
     PE and its subsidiaries have been associated with various 
other sites, which may require remediation under federal, state or 
local environmental laws.  PE is unable to determine fully the 
extent of its responsibility for remediation of these sites until 
assessments are completed.  Furthermore, the number of others that 
also may be responsible, and their ability to share in the cost of 
the cleanup is not known.  The Company does not anticipate that 
such costs net of the portion recoverable in rates, will be 
significant.

     
Litigation

PE is involved in various legal matters arising out of the ordinary 
course of business.  Management believes that these matters will 
not have a material adverse effect on Pacific Enterprise's results 
of operations, financial condition or liquidity.

Concentration of Credit Risk

PE maintains credit policies and systems to minimize overall credit 
risk.  These policies include, when applicable, the use of an 
evaluation of potential counterparties' financial condition and an 
assignment of credit limits.  These credit limits are established 
based on risk and return considerations under terms customarily 
available in the industry.
     SoCalGas grants credit to its utility customers, substantially 
all of whom are located in its service territories, which covers 
most of Southern California and a portion of Central California. 

NOTE 13:  REGULATORY MATTERS

Natural Gas Industry Restructuring  

The natural gas industry experienced an initial phase of 
restructuring during the 1980s by deregulating natural gas sales to 
noncore customers. On January 21, 1998, the CPUC released a staff 
report initiating a project to assess the current market and 
regulatory framework for California's natural gas industry. The 
general goals of the plan are to consider reforms to the current 
regulatory framework emphasizing market-oriented policies 
benefiting California natural gas consumers.
     On August 25, 1998, California adopted a law prohibiting the 
CPUC from enacting any natural gas industry restructuring decision 
for customers prior to January 1, 2000. During the moratorium, the 
CPUC will hold hearings throughout the state and intends to give 
the California Legislature a report for its review detailing 
specific recommendations for changing the natural gas market within 
California. SoCalGas will actively participate in this effort.

Performance-Based Regulation (PBR)  

To promote efficient operations and improved productivity and to 
move away from reasonableness reviews and disallowances, the CPUC 
has been directing utilities to use PBR. PBR has replaced the 
general rate case and certain other regulatory proceedings for 
SoCalGas. Under PBR, regulators require future income potential to 
be tied to achieving or exceeding specific performance and 
productivity measures, as well as cost reductions, rather than 
relying solely on expanding utility rate base in a market where a 
utility already has a highly developed infrastructure.
     SoCalGas' PBR is in effect through December 31, 2002; however, 
the CPUC decision allows for the possibility that changes to the 
PBR mechanism could be adopted in a decision to be issued in 
SoCalGas' 1999 Biennial Cost Allocation Proceeding, which is 
anticipated to become effective before year end 1999. Key elements 
of the SoCalGas PBR include an initial reduction in base rates, an 
indexing mechanism that limits future rate increases to the 
inflation rate less a productivity factor, a sharing mechanism with 
customers if earnings exceed the authorized rate of return on rate 
base, and rate refunds to customers if service quality 
deteriorates. Specifically, the key elements of SoCalGas' PBR 
include the following:

--Earnings up to 25 basis points in excess of the authorized rate 
of return on rate base are retained 100 percent by shareholders. 
Earnings that exceed the authorized rate of return on rate base by 
greater than 25 basis points are shared between customers and 
shareholders on a sliding scale that begins with 75 percent of the 
additional earnings being given back to customers and declining to 
0 percent as earned returns approach 300 basis points above 
authorized amounts. There is no sharing if actual earnings fall 
below the authorized rate of return. In 1999, SoCalGas is 
authorized to earn a 9.49 percent return on rate base, the same as 
in 1998.

--Revenue or base margin per customer is indexed based on inflation 
less an estimated productivity factor of 2.1 percent in the first 
year (1998), increasing 0.1 percent per year up to 2.5 percent in 
the fifth year (2002). This factor includes 1 percent to 
approximate the projected impact of a declining rate base. 

--The CPUC decision allows for pricing flexibility for residential 
and small commercial customers, with any shortfalls in revenue 
being borne by shareholders and with any increase in revenue shared 
between shareholders and customers.

     Under SoCalGas' PBR, annual cost of capital proceedings are 
replaced by an automatic adjustment mechanism if changes in certain 
indices exceed established tolerances. The mechanism is triggered 
if the 12-month trailing average of actual market interest rates 
increases or decreases by more than 150 basis points and is 
forecasted to continue to vary by at least 150 basis points for the 
next year. If this occurs, there would be an automatic adjustment 
of rates for the change in the cost of capital according to a 
preestablished formula which applies a percentage of the change to 
various capital components.

Comprehensive Settlement Of Natural Gas Regulatory Issues

In July 1994, the CPUC approved a comprehensive settlement for 
SoCalGas (Comprehensive Settlement) of a number of regulatory 
issues, including rate recovery of a significant portion of the 
restructuring costs associated with certain long-term contracts 
with suppliers of California-offshore and Canadian natural gas. In 
the past, the cost of these supplies had been substantially in 
excess of SoCalGas' average delivered cost for all natural gas 
supplies. The restructured contracts substantially reduced the 
ongoing delivered costs of these supplies. The Comprehensive 
Settlement permits SoCalGas to recover in utility rates 
approximately 80 percent of the contract-restructuring costs of 
$391 million and accelerated amortization of related pipeline 
assets of approximately $140 million, together with interest, 
incurred prior to January 1, 1999. In addition to the supply 
issues, the Comprehensive Settlement addressed the following other 
regulatory issues:

--Noncore Customer Rates.  The Comprehensive Settlement changed the 
procedures for determining noncore rates to be charged by SoCalGas 
for the five-year period commencing August 1, 1994. These rates are 
based upon SoCalGas' recorded throughput to these customers for 
1991. SoCalGas will bear the full risk of any declines in noncore 
deliveries from 1991 levels. Any revenue enhancement from 
deliveries in excess of 1991 levels will be limited by a crediting 
account mechanism that will require a credit to customers of 87.5 
percent of revenues in excess of certain limits. These annual 
limits above which the credit is applicable increase from $11 
million to $19 million over the five-year period from August 1, 
1994, through July 31, 1999. SoCalGas' ability to report as 
earnings the results from revenues in excess of SoCalGas' 
authorized return from noncore customers due to volume increases 
has been limited for the five years beginning August 1, 1994, as a 
result of the Comprehensive Settlement. The 1999 Biennial Cost 
Allocation Proceeding is intended to adopt measures to replace this 
aspect of the Comprehensive Settlement when it expires during 1999.

--Gas Cost Incentive Mechanism (GCIM).  On April 1, 1994, SoCalGas 
implemented a new process for evaluating its natural gas purchases, 
substantially replacing the previous process of reasonableness 
reviews. Initially a three-year pilot program, in December 1998 the 
CPUC extended the GCIM program indefinitely. Automatic annual 
extensions to the program will continue unless the CPUC issues an 
order stating otherwise.
     GCIM compares SoCalGas' cost of natural gas with a benchmark 
level, which is the average price of 30-day firm spot supplies in 
the basins in which SoCalGas purchases the natural gas. The 
mechanism permits full recovery of all costs within a tolerance 
band above the benchmark price and refunds all savings within a 
tolerance band  below the benchmark price. The costs or savings 
outside the  tolerance band  are shared equally between customers 
and shareholders. 
     The CPUC approved the use of natural gas futures for managing 
risk associated with the GCIM. SoCalGas enters into natural gas 
futures contracts in the open market on a limited basis to mitigate 
risk and better manage natural gas costs. 
     In June 1997, SoCalGas requested a shareholder award of $11 
million, which was approved by the CPUC in June 1998 and is 
included in pretax income in 1998. In June 1998, SoCalGas filed its 
annual GCIM application with the CPUC, requesting an award of $2 
million for the annual period ended March 31, 1998. This request 
was approved by the CPUC in December 1998 and is included in pretax 
income in 1998.

--Attrition Allowances.  The Comprehensive Settlement authorized 
SoCalGas an annual allowance for increases in operating and 
maintenance expenses. However, no attrition allowance was 
authorized for 1997 and beyond, based on an agreement reached as 
part of the PBR application. 
     PE and SoCalGas recorded the impact of the Comprehensive 
Settlement in 1993. Upon giving effect to liabilities previously 
recognized by the companies, the costs of the Comprehensive 
Settlement, including the restructuring of natural gas supply 
contracts, did not result in any future charge to PE's earnings.

Biennial Cost Allocation Proceeding (BCAP)  

In the second quarter of 1997, the CPUC issued a decision on 
SoCalGas' 1996 BCAP filing.
     In this decision, the CPUC considered SoCalGas' 
relinquishments of interstate pipeline capacity on both the El Paso 
and Transwestern pipelines. This resulted in a reduction in the 
pipeline demand charges allocated to SoCalGas' customers and 
surcharges allocated to firm capacity holders through pipeline 
rate-case settlements adopted at the FERC. However, the CPUC and 
FERC are reviewing the decision.
     In October 1998, SoCalGas filed 1999 BCAP applications 
requesting that new rates become effective August 1, 1999 and 
remain in effect through December 31, 2002. The proposed beginning 
date follows the conclusion of the Comprehensive Settlement 
(discussed above), and the proposed end date aligns with the 
expiration of SoCalGas' PBR. The application seeks overall 
decreases in natural gas revenues of $204 million.

Cost of Capital  

Under PBR, annual Cost of Capital proceedings were replaced by an 
automatic adjustment mechanism if changes in certain indices exceed 
established tolerances. For 1999, SoCalGas is authorized to earn a 
rate of return on common equity of 11.6 percent and a 9.49 percent 
return on rate base, the same as in 1998, unless interest-rate 
changes are large enough to trigger an automatic adjustment as 
discussed above under "Performance-Based Regulation."

Transactions with Affiliates  

On December 16, 1997, the CPUC adopted rules, effective January 1, 
1998, establishing uniform standards of conduct governing the 
manner in which IOUs conduct business with their energy-related 
affiliates. The objective of the affiliate-transaction rules is to 
ensure that these affiliates do not gain an unfair advantage over 
other competitors in the marketplace and that utility customers do 
not subsidize affiliate activities. The rules establish standards 
relating to non-discrimination, disclosure and information 
exchange, and separation of activities. 
      The CPUC excluded utility-to-utility transactions between 
SDG&E and SoCalGas from the affiliate-transaction rules in its 
March 1998 decision approving the business combination of Enova and 
PE (see Note 1). 
     During 1998, 1997 and 1996, the Company sold natural gas  
transportation and storage services to SDG&E in the amount of $55 
million to $60 million per year. These sales were at rates 
established by the CPUC.

NOTE 14:  SEGMENT INFORMATION

The Company has two separately managed reportable segments: 
SoCalGas and Sempra Energy Trading (SET). SoCalGas is a natural 
gas distribution utility, serving customers throughout most of 
Southern California and part of Central California.  SET is based 
in Stamford, Connecticut, and is engaged in the nationwide 
wholesale trading and marketing of natural gas, power and 
petroleum. The Company has a 50 percent ownership interest in SET, 
and accounts for this investment on the equity method of 
accounting. However, for segment reporting, items of income and 
assets for SET are reported at 100 percent. A corresponding 
adjustment is made to reconcile the amounts to those that were 
reported by the Company under the equity method. The accounting 
policies of the segments are the same as those described in Note 
2, and segment performance is evaluated by management based on 
reported net income. Intersegment transactions are generally 
recorded the same as sales or transactions with third parties. 
Utility transactions are primarily based on rates set by the CPUC.

---------------------------------------------------------------------
                                     For the years ended December 31,
(Dollars in millions)                     1998       1997        1996
---------------------------------------------------------------------
Revenues and Other Income:
  Southern California Gas           $   2,427   $   2,641   $   2,422
  Sempra Energy Trading                   110          --          --
  Sempra Energy Trading adjustment       (110)         --          --
  All other                                45         136         166
                                    ---------------------------------
    Total                           $   2,472   $   2,777   $   2,588
                                    ---------------------------------

Interest Revenue:
  Southern California Gas           $       4   $      16   $       5
  Sempra Energy Trading                     3          --          --
  Sempra Energy Trading adjustment         (3)         --          --
  All other                                15          15          14
                                    ---------------------------------
    Total  Interest                        19          31          19
  Sundry income                             1          15           6
                                    ---------------------------------
    Total Other Income              $      20   $      46   $      25
                                    ---------------------------------

Depreciation and amortization:
  Southern California Gas           $     254   $     251   $     248
  Sempra Energy Trading                    13          --          --
  Sempra Energy Trading adjustment        (13)         --          --
  All other                                 5           5           7
                                    ---------------------------------
    Total                           $     259   $     256   $     255
                                    ---------------------------------
Interest Expense:
  Southern California Gas           $      80   $      87   $      86
  Sempra Energy Trading                     5          --          --
  Sempra Energy Trading adjustment         (5)         --          --
  All other                               (13)         16          11
                                    ---------------------------------
    Total                           $      67   $     103   $      97
                                    ---------------------------------
Income Tax Expense (Benefit):
  Southern California Gas           $     128   $     178   $     148
  Sempra Energy Trading                    (9)         --          --
  Sempra Energy Trading adjustment          9          --          --
  All other                                (1)        (27)          3
                                    ---------------------------------
    Total                           $     127   $     151   $     151
                                    ---------------------------------
Net Income:
  Southern California Gas           $     158   $     231   $     193
  Sempra Energy Trading                   (13)         --          --
  Sempra Energy Trading adjustment          7          --          --
  All other                                (5)        (47)         10
                                    ---------------------------------
    Total                           $     147   $     184   $     203
                                    ---------------------------------

---------------------------------------------------------------------
                                         At December 31, or for
                                          the year then ended
(Dollars in millions)                   1998         1997        1996
---------------------------------------------------------------------
Assets:
  Southern California Gas           $   3,834   $   4,205   $   4,354
  Sempra Energy Trading                 1,225         846          --
  Sempra Energy Trading adjustment     (1,225)       (846)         --
  All other                               764         772         832
                                    ---------------------------------
    Total                           $   4,598   $   4,977   $   5,186
                                    ---------------------------------
Capital Expenditures:
  Southern California Gas           $     128   $     159   $     197
  Sempra Energy Trading                    --          --          --
  All other                                22          28           7
                                    ---------------------------------
    Total                           $     150   $     187   $     204
                                    ---------------------------------
Geographic Information:
  Long-lived assets
    United States                   $   3,096    $  3,287   $   3,301
    Latin America                         106          58          51
                                    ---------------------------------
    Total                           $   3,202    $  3,345   $   3,352
                                    ---------------------------------
  Revenues and Other Income:
    United States                   $   2,471    $  2,776   $   2,587
    Latin America                           1           1           1
                                    ---------------------------------
    Total                           $   2,472    $  2,777   $   2,588
---------------------------------------------------------------------

NOTE 15:  SUBSEQUENT EVENT

On February 22, 1999, Sempra Energy and KN Energy, Inc. (KN Energy) 
announced that their respective boards of directors approved Sempra 
Energy's acquisition of KN Energy, subject to approval by the 
shareholders of both companies and by various federal and state 
regulatory agencies. If the transaction is approved, holders of KN 
Energy common stock will receive 1.115 shares of Sempra Energy 
common stock or $25 in cash, or some combination thereof, for each 
share of KN Energy common stock. In the aggregate, the cash portion 
of the transaction will constitute not more than 30 percent of the 
total consideration of $1.7 billion. The companies anticipate that 
the closing will occur in six to eight months. The transaction will 
be treated as a purchase for accounting purposes.


NOTE 16:  QUARTERLY FINANCIAL DATA (UNAUDITED)

<TABLE>
<CAPTION>
                                                Quarter ended
                            -------------------------------------------------------
Dollars in millions          March 31     June 30     September 30     December 31
-----------------------------------------------------------------------------------
<S>                         <C>         <C>           <C>             <C>
1998
Operating Revenues           $    678    $    585       $    521        $    688
Operating expenses                581         541            421             588
                              -----------------------------------------------------
Operating income             $     97    $     44       $    100        $    100
                              -----------------------------------------------------
Net income                   $     40    $     12       $     45        $     50
Dividends on preferred stock        1           1              1               1
                              -----------------------------------------------------
Net income applicable 
  to common shares           $     39    $     11       $     44        $     49
                              =====================================================

1997
Operating Revenues           $    803    $     598      $    624        $    752
Operating expenses                687          470           525             657
                              -----------------------------------------------------
Operating income             $    116    $     128      $     99        $     95
                              -----------------------------------------------------
Net income                   $     50    $      57      $     37        $     40
Dividends on preferred stock        1            1             1               1
                              -----------------------------------------------------
Net income applicable
  to common shares           $     49    $      56      $     36        $     39
                              =====================================================

</TABLE>


Item 9. CHANGES IN AND DISAGREEMENTS WITH ACCOUNTANTS ON ACCOUNTING 
AND FINANCIAL DISCLOSURE

None.

                             PART III

ITEM 10. DIRECTORS AND EXECUTIVE OFFICERS OF THE REGISTRANT

The information required on Identification of Directors is 
incorporated by reference from "Election of Directors" in the 
Information Statement prepared for the May 1999 annual meeting of 
shareholders. The information required on the Company's executive 
officers is set forth in Item 4 herein.

ITEM 11. EXECUTIVE COMPENSATION

The information required by Item 11 is incorporated by reference 
from "Election of Directors" and "Executive Compensation" in the 
Information Statement prepared for the May 1999 annual meeting of 
shareholders.

ITEM 12. SECURITY OWNERSHIP OF CERTAIN BENEFICIAL OWNERS AND 
MANAGEMENT

The information required by Item 12 is incorporated by reference 
from "Election of Directors" in the Information Statement prepared 
for the May 1999 annual meeting of shareholders.

ITEM 13. CERTAIN RELATIONSHIPS AND RELATED TRANSACTIONS.

None.

                           PART IV

ITEM 14. EXHIBITS, FINANCIAL STATEMENT SCHEDULES AND REPORTS ON FORM 8-K

(a) The following documents are filed as part of this report:

1. Financial statements
                                                     Page in
                                                   This Report

Independent Auditors' Report . . . . . . . . . . . . . . 30

Statements of Consolidated Income for the years
  ended December 31, 1998, 1997 and 1996 . . . . . . . . 31

Consolidated Balance Sheets at December 31, 
  1998 and 1997. . . . . . . . . . . . . . . . . . . . . 32

Statements of Consolidated Cash Flows for the
  years ended December 31, 1998, 1997 and 1996 . . . . . 34

Statements of Consolidated Changes in
  Shareholders' Equity for the years ended
  December 31, 1998, 1997 and 1996 . . . . . . . . . . . 36

Notes to Consolidated Financial Statements . . . . . . . 37

Quarterly Financial Data (Unaudited) . . . . . . . . . . 61

2. Financial statement schedules

The following documents may be found in this report 
at the indicated page numbers:

Independent Auditors' Consent and
   Report on Schedule. . . . . . . . . . . . . . . . . . 63
Schedule I--Condensed Financial Information of Parent. . 64

Any other schedules for which provision is made in Regulation S-X 
are not required under the instructions contained therein, are 
inapplicable, or the information is included in the notes to the 
Consolidated Financial Statements herein.

3. Exhibits
See Exhibit Index on page 67 of this report.

(b) Reports on Form 8-K
There were no reports on Form 8-K filed after September 30, 1998.


INDEPENDENT AUDITORS' CONSENT AND REPORT ON SCHEDULE

To the Board of Directors and Shareholders of Pacific Enterprises:

We consent to the incorporation by reference in Registration 
Statement Nos. 2-96782, 33-26357, 2-66833, 2-96781, 33-21908 and 
33-54055 of Pacific Enterprises on Forms S-8 and Registration 
Statement Nos. 33-24830 and 33-44338 of Pacific Enterprises on 
Forms S-3 of our report dated January 27, 1999, except for Note 15 
as to which the date is February 22, 1999, appearing in this Annual 
Report on Form 10-K of Pacific Enterprises for the year ended 
December 31, 1998.

Our audits of the financial statements referred to in our 
aforementioned report also included the financial statement 
schedule of Pacific Enterprises, listed in Item 14.  This financial 
statement schedule is the responsibility of the Company's 
management.  Our responsibility is to express an opinion based on 
our audits.  In our opinion, such financial statement schedule, 
when considered in relation to the basic financial statements taken 
as a whole, presents fairly in all material respects the 
information set forth therein.

/s/ DELOITTE & TOUCHE LLP

San Diego, California
March 31, 1999



Schedule I -- CONDENSED FINANCIAL INFORMATION OF PARENT
<TABLE>
PACIFIC ENTERPRISES
Schedule 1
Condensed Financial Information of Parent
<CAPTION>

                        Condensed Statements of Income
                            (Dollars in millions)    


For the years ended December 31           1998        1997      1996  
                                        --------   --------   --------
<S>                                     <C>        <C>         <C>    
Revenues and other income               $     11   $     20   $     65
Expenses, interest and income taxes           20         59         64
                                        --------   --------   --------
Loss before subsidiary earnings               (9)       (39)         1
Subsidiary earnings                          152        219        195
                                        --------   --------   --------
Earnings applicable to common shares    $    143   $    180   $    196
                                        ========   ========   ========

</TABLE>

<TABLE>
PACIFIC ENTERPRISES
Schedule 1 (continued)
Condensed Financial Information of Parent
<CAPTION>

                           Condensed Balance Sheets
                            (Dollars in millions)


Balance at December 31                               1998          1997     
                                                  ----------    ----------  
<S>                                               <C>           <C>  
Assets:
   Cash and temporary investments                 $        3    $      151
   Other current assets                                  130            13
                                                  ----------    ----------
     Total current assets                                133           164
Investments in subsidiaries                            1,763         1,659
Deferred charges and other assets                        162           232
                                                  ----------    ----------
     Total Assets                                 $    2,058    $    2,055
                                                  ==========    ==========
Liabilities and Shareholders' Equity:
   Dividends payable                              $        1    $        2
   Due to affiliates                                     171           180
   Other current liabilities                             203            51
                                                  ----------    ----------
     Total current liabilities                           375           233
Other long-term liabilities                              136           353
Preferred stock                                           80            80
Common equity                                          1,467         1,389
                                                  ----------    ----------
     Total Liabilities and Shareholders' Equity   $    2,058    $    2,055
                                                  ==========    ==========
</TABLE>


<TABLE>
PACIFIC ENTERPRISES
Schedule 1 (continued)
Condensed Financial Information of Parent
<CAPTION>

                      Condensed Statements of Cash Flows
                          (Dollars in millions)


For the years ended December 31                     1998       1997      1996
                                                  --------   -------   -------
<S>                                               <C>        <C>       <C>
Cash flows from operating activities             $   (220)  $   (19)  $  (110)
                                                 --------   -------   -------
Expenditures for property, plant and equipment        (12)      (10)       --
Dividends received from subsidiaries                  164       251       255
Increase in investments and other                     (53)     (152)       (1)
                                                 --------   -------   -------
Cash flows from investing activities                   99        89       254
                                                 --------   -------   -------
Sale of common stock                                   27        17         8
Repurchase of common stock                             --       (48)      (24)
Increase in short-term debt                            43        --          
Redemption of preferred stock                          --        --      (110)
Common dividends                                      (97)     (122)     (119)
                                                 --------   -------   -------
Cash flows from financing activities                  (27)     (153)     (245)
                                                 --------   -------   -------
Net cash flow                                        (148)      (83)     (101)
Cash and temporary investments, 
   beginning of year                                  151       234       335
                                                 --------   -------   -------
Cash and temporary investments, end of year      $      3  $    151   $   234
                                                 ========   =======   =======


</TABLE>




SIGNATURES
Pursuant to the requirements of Section 13 or 15(d) of the Securities Exchange
 Act of 1934, the Registrant has duly caused this report to be signed on its
 behalf by the undersigned, hereunto duly authorized. 

                                 PACIFIC ENTERPRISES

                             By: 
                                   /s/ Richard D. Farman             .
                                 Richard D. Farman
                                 Chairman and Chief Executive Officer

Pursuant to the requirements of the Securities Exchange Act of 1934, this
 report is signed below by the following persons on behalf of the Registrant
 in the capacities and on the dates indicated. 


Name/Title                              Signature          Date

Principal Executive Officers:
Richard D. Farman
Chairman, Chief Executive Officer  /s/ Richard D. Farman        March 2, 1999

Stephen L. Baum
President, 
Chief Operating Officer            /s/ Stephen L. Baum          March 2, 1999

Principal Financial Officer:
Neal E. Schmale
Executive Vice President,
Chief Financial Officer            /s/ Neal E. Schmale          March 2, 1999

Principal Accounting Officer:
Frank H. Ault
Vice President, Controller         /s/ Frank H. Ault           March 2, 1999

Directors:
Richard D. Farman
Chairman                           /s/ Richard D. Farman        March 2, 1999

Hyla H. Bertea
Director                           /s/ Hyla H. Bertea           March 2, 1999

Ann Burr
Director                           /s/ Ann Burr                 March 2, 1999

Herbert L. Carter
Director                           /s/ Herbert L. Carter        March 2, 1999

Richard A. Collato    
Director                           /s/ Richard A. Collato       March 2, 1999

Daniel W. Derbes
Director                           /s/ Daniel W. Derbes         March 2, 1999

Wilford D. Godbold, Jr.
Director                           /s/ Wilford D. Godbold, Jr.  March 2, 1999

Robert H. Goldsmith
Director                           /s/ Robert H. Goldsmith      March 2, 1999

William D. Jones
Director                           /s/ William D. Jones         March 2, 1999

Ignacio E. Lozano, Jr.
Director                           /s/ Ignacio E. Lozano, Jr.   March 2, 1999

Ralph R. Ocampo
Director                           /s/ Ralph R. Ocampo          March 2, 1999

William G. Ouchi
Director                           /s/ William G. Ouchi         March 2, 1999

Richard J. Stegemeier
Director                           /s/ Richard J. Stegemeier    March 2, 1999

Thomas C. Stickel
Director                           /s/ Thomas C. Stickel        March 2, 1999

Diana L. Walker
Director                           /s/ Diana L. Walker          March 2, 1999


                           EXHIBIT INDEX

The Forms 8-K, 10-K and 10-Q referred to herein were filed under 
Commission File Number 1-14201 (Sempra Energy), Commission File 
Number 1-40 (Pacific Enterprises) and/or Commission File Number 1-
1402 (Southern California Gas Company).

Exhibit 3 -- By-Laws and Articles Of Incorporation 

3.01  Articles of Incorporation of Pacific Enterprises (Pacific Enterprises
      1996 Form 10-K; Exhibit 3.01).

3.02  Restated bylaws of Pacific Enterprises dated March 2, 1999.

Exhibit 4 -- Instruments Defining The Rights Of Security Holders

The Company agrees to furnish a copy of each such instrument to the Commission  
upon request.

4.01  Specimen Common Stock Certificate of Pacific Enterprises (Pacific
      Enterprises 1988 Form 10-K; Exhibit 4.01).

4.02  Specimen Preferred Stock Certificates of Pacific Enterprises (Pacific
      Lighting Corporation 1980 Form 10-K; Exhibit 4.02).

4.03  First Mortgage Indenture of Southern California Gas Company to American
      Trust Company dated October 1, 1940 (Registration Statement No. 2-4504
      filed by Southern California Gas Company on September 16, 1940; Exhibit
      B-4).

4.04  Supplemental Indenture of Southern California Gas Company to American
      Trust Company dated as of July 1, 1947 (Registration Statement No. 2-
      7072 filed by Southern California Gas Company on March 15, 1947; Exhibit
      B-5).

4.05  Supplemental Indenture of Southern California Gas Company to American
      Trust Company dated as of August 1, 1955 (Registration Statement No. 2-
      11997 filed by Pacific Lighting Corporation on October 26, 1955; Exhibit
      4.07).

4.06  Supplemental Indenture of Southern California Gas Company to American
      Trust Company dated as of June 1, 1956 (Registration Statement No. 2-
      12456 filed by Southern California Gas Company on April 23, 1956;
      Exhibit 2.08).

4.07  Supplemental Indenture of Southern California Gas Company to Wells Fargo
      Bank, National Association dated as of August 1, 1972 (Registration
      Statement No. 2-59832 filed by Southern California Gas Company on
      September 6, 1977; Exhibit 2.19).

4.08  Supplemental Indenture of Southern California Gas Company to Wells
      Fargo Bank, National Association dated as of May 1, 1976 (Registration
      Statement No. 2-56034 filed by Southern California Gas Company on April
      14, 1976; Exhibit 2.20).

4.09  Supplemental Indenture of Southern California Gas Company to Wells
      Fargo Bank, National Association dated as of September 15, 1981
      (Pacific Lighting Corporation 1981 Form 10-K; Exhibit 4.25).

4.10  Supplemental Indenture of Southern California Gas Company to
      Manufacturers Hanover Trust Company of California, successor to Wells
      Fargo Bank, National Association, and Crocker National Bank as Successor
      Trustee dated as of May 18, 1984 (Pacific Lighting Corporation 1984 Form
      10-K; Exhibit 4.29).

4.11  Supplemental Indenture of Southern California Gas Company to Bankers
      Trust Company of California, N.A., successor to Wells Fargo Bank,
      National Association dated as of January 15, 1988 (Pacific Enterprises
      1987 Form 10-K; Exhibit 4.11).

4.12  Supplemental Indenture of Southern California Gas Company to First Trust
      of California, National Association, successor to Bankers Trust Company
      of California, N.A. (Registration Statement No. 33-50826 filed by
      Southern California Gas Company on August 13, 1992; Exhibit 4.37).

4.13  Rights Agreement dated as of March 7, 1990 between Pacific Enterprises
      and Security Pacific National Bank, as Rights Agent (Pacific Enterprises
      September 25, 1992 Form 8-K; Exhibit 4).

Exhibit 10 -- Material Contracts

10.01  Form of Indemnification Agreement between Pacific Enterprises and each
       of its directors and officers (Pacific Enterprises 1992 Form 10-K;
       Exhibit 10.07).

10.03  Operating Agreement of Mineral JV, LLC, dated as of January 13, 1997
       (Registration Statement No. 333-21229 filed by Mineral Energy Company
       on February 5, 1997; Exhibit 10.5).

Executive Compensation Plans and Arrangements

10.09  Sempra Energy Supplemental Executive Retirement Plan as amended and
       restated effective July 1, 1998 (1998 Sempra Energy Form 10-K Exhibit
       10.09).

10.11  Sempra Energy Executive Incentive Plan effective June 1, 1998 (1998
       Sempra Energy Form 10-K Exhibit 10.11).

10.12  Sempra Energy Executive Deferred Compensation Agreement effective June
       1, 1998 (1998 Sempra Energy Form 10-K Exhibit 10.12).

10.12  Pacific Enterprises Deferred Compensation Plan for Key Management
       Employees (Pacific Lighting Corporation 1985 Form 10-K; Exhibit 10.41).

10.14  Sempra Energy 1998 Long Term Incentive Plan (Incorporated by reference
       from the Registration Statement on Form S-8 Sempra Energy Registration
       No. 333-56161 dated June 5, 1998;  Exhibit 4.1).

10.16  Enova Corporation 1986 Long-Term Incentive Plan amended and restated as
       the Sempra Energy 1986 Long-Term Incentive Plan (Incorporated by
       reference from the Registration Statement on Form S-8 Sempra Energy 
       Registration No. 333-56161;  Exhibit 4.3).

10.17  Pacific Lighting Corporation Stock Incentive Plan amended and restated
       as the Sempra Energy Stock Incentive Plan (Incorporated by reference 
       from the Registration Statement on Form S-8 Sempra Energy Registration 
       No. 333-56161;  Exhibit 4.4).

10.18  Pacific Enterprises Employee Stock Option Plan amended and restated as 
       the Sempra Energy Employee Stock Option Plan (Incorporated by reference 
       from the Registration Statement on Form S-8 Sempra Energy Registration 
       No. 333-56161;  Exhibit 4.5).

10.04  Restatement and Amendment of Pacific Enterprises 1979 Stock Option Plan
       (Registration Statement No. 2-66833 filed by Pacific Lighting
       Corporation on March 5, 1980; Exhibit 1.1).

10.05  Pacific Enterprises Supplemental Medical Reimbursement Plan for Senior
       Officers (Pacific Lighting Corporation 1980 Form 10-K; Exhibit 10.24).

10.06  Pacific Enterprises Financial Services Program for Senior Officers
       (Pacific Lighting Corporation 1980 Form 10-K; Exhibit 10.25).

10.07  Pacific Enterprises Supplemental Retirement and Survivor Plan (Pacific
       Lighting Corporation 1984 Form 10-K; Exhibit 10.36).

10.08  Pacific Lighting Corporation Stock Payment Plan (Pacific Lighting
       Corporation 1984 Form 10-K; Exhibit 10.37). 

10.09  Pacific Lighting Corporation Pension Restoration Plan (Pacific Lighting
       Corporation 1980 Form 10-K; Exhibit 10.28).

10.10  Southern California Gas Company Pension Restoration Plan For Certain
       Management Employees (Pacific Lighting Corporation 1980 Form 10-K;
       Exhibit 10.29).

10.11  Pacific Enterprises Executive Incentive Plan (Pacific Enterprises
       1987 Form 10-K; Exhibit 10.13).

10.13  Pacific Enterprises Employee Stock Ownership Plan and Trust Agreement
       as amended effective October 1, 1992. (Pacific Enterprises 1992 Form
       10-K; Exhibit 10.18).

10.14  Pacific Enterprises Stock Incentive Plan (Registration Statement No.
       33-21908 filed by Pacific Enterprises on May 17, 1988; Exhibit 4.01).

10.15  Pacific Enterprises Retirement Plan for Directors (Pacific Enterprises
       1992 Form 10-K; Exhibit 10.20).

10.16  Pacific Enterprises Director's Deferred Compensation Plan (Pacific
       Enterprises 1992 Form 10-K; Exhibit 10.21).

10.17  Amended and Restated Pacific Enterprises Employee Stock Option Plan (as
       of March 4, 1997) (Pacific Enterprises 1996 Form 10-K; Exhibit 10.17).

10.18  Form of Severance Agreement (Pacific Enterprises 1996 Form 10-K;
       Exhibit 10.18).

10.19  Form of Incentive Bonus Agreement (Pacific Enterprises 1996 Form 10-K;
       Exhibit 10.19).

Exhibit 21 -- Subsidiaries 

See Notes 1 and 3 of notes to Consolidated Financial Statements and 
Management's Discussion and Analysis of Financial Condition and Results of 
Operations contained in Part II, Items 7 and 8 herein.

Exhibit 23 - Independent Auditors' Consent, page 63.

Exhibit 27 -- Financial Data Schedule

27.01  Financial Data Schedule for the year ended December 31, 1998.


GLOSSARY


BCAP                    Biennial Cost Allocation Proceeding

Bcf                     Billion Cubic Feet (of natural gas) 

CPUC                    California Public Utilities Commission

DGN                     Distribuidora de Gas Natural

Enova                   Enova Corporation 

EOR                     Enhanced Oil Recovery

ESOP                    Employee Stock Ownership Plan

FASB                    Financial Accounting Standards Board

FERC                    Federal Energy Regulatory Commission

GCIM                    Gas Cost Incentive Mechanism

GRC                     General Rate Case

IDBs                    Industrial Development Bonds

IOUs                    Investor-Owned Utilities

IT                      Information Technology

Mcf                     Thousand Cubic Feet (of natural gas)

Mmcfd                   Million Cubic Feet (of natural gas) per day

ORA                     Office of Ratepayer Advocates

PBR                     Performance-Based Ratemaking

PE                      Pacific Enterprises

PEI                     Pacific Enterprises International

PRP                     Potential Responsible Party

ROE                     Return on Equity

ROR                     Rate of Return

SDG&E                   San Diego Gas & Electric Company

SEC                     Securities and Exchange Commission

SEI                     Sempra Energy International

SER                     Sempra Energy Resources

Solutions               Sempra Energy Solutions

SET                     Sempra Energy Trading

SEUV                    Sempra Energy Utility Ventures

SFAS                    Statement of Financial Accounting Standards

SoCalGas                Southern California Gas Company

UEG                     Utility electric generation

VaR                     Value at Risk





                                  

70

3