===========================================================================

                    SECURITIES AND EXCHANGE COMMISSION
                    ----------------------------------

                         WASHINGTON, D.C.  20549
                         -----------------------

                            ------------------

                                FORM 10-Q

                            ------------------

                             QUARTERLY REPORT

                  Pursuant to Section 13 or 15(d) of the
                     Securities Exchange Act of 1934

               For the Quarter Ended September 30, 1995
                        Commission File No. 1-8157

                            ------------------

                      PANHANDLE EASTERN CORPORATION
          (Exact name of registrant as specified in its charter)

                          A Delaware Corporation
                 (State of Incorporation or Organization)

                                74-2150460
                    (IRS Employer Identification No.)

     5400 Westheimer Court, P.O. Box 1642, Houston, Texas 77251-1642
       (Address of principal executive offices, including zip code)

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



Indicate by check mark whether the registrant (1) has filed all reports
required to be filed by Section 13 or 15(d) of the Securities Exchange Act of
1934 during the preceding twelve months (or for such shorter period that the
registrant was required to file such reports), and (2) has been subject to
such filing requirements for the past 90 days.

                           Yes:  X      No:    

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

                Class                      Outstanding at October 31, 1995
      --------------------------           -------------------------------
      Common Stock, $1 par value                      150,126,927


===========================================================================
<PAGE>
                        PART I.  FINANCIAL INFORMATION
Item 1.  Financial Statements - Unaudited
                Panhandle Eastern Corporation and Subsidiaries
                       CONSOLIDATED STATEMENT OF INCOME
<TABLE>
<CAPTION>
                                                        Periods Ended September 30        
                                        Three Months                Nine Months     
                                      ------------------         ------------------ 
Millions, except per share amounts     1995      1994    1995                1994   
----------------------------------   --------  --------                    --------  -------- 
<S>                                            <C>                         <C>       <C>       <C>      
Operating Revenues 
 Sales of natural gas and 
   petroleum products        $  746.4          $  751.8                    $2,476.4  $2,273.8 
 Transportation and storage of
   natural gas                  370.4   351.1   1,128.3 1,062.5 
 Other                           16.9    21.3      44.4    80.4 
                             --------          --------                    --------  -------- 
   Total (Note 3)             1,133.7 1,124.2   3,649.1 3,416.7 
                             --------          --------                    --------  -------- 
Costs and Expenses
 Natural gas and petroleum 
   products purchased           682.9   701.8   2,293.8 2,120.0 
 Operating and maintenance      149.4   145.5     432.4   420.7 
 General and administrative      51.5    58.4     152.7   175.8 
 Depreciation and amortization   70.0    59.8     208.3   190.1 
 Miscellaneous taxes             21.3    22.0      65.6    63.6 
                             --------          --------                    --------  -------- 
   Total                        975.1   987.5   3,152.8 2,970.2 
                             --------          --------                    --------  -------- 
Operating Income                158.6   136.7     496.3   446.5 
                             --------          --------                    --------  -------- 
Other Income and Deductions
 Equity in earnings of 
   unconsolidated affiliates     11.0    11.7      44.3    24.2 
 Gains (losses) on the sale 
   of assets                      7.5    (1.4)      6.9    (2.7)
 Other, net                       3.8    (0.9)      7.9     2.7 
                             --------          --------                    --------  -------- 
   Total                         22.3     9.4      59.1    24.2 
                             --------          --------                    --------  -------- 
Gross Income                    180.9   146.1     555.4   470.7 

Interest Expense                 57.9    60.3     181.3   178.9 
                             --------          --------                    --------  -------- 
Income before Income Tax        123.0    85.8     374.1   291.8 

Income Tax                       49.4    34.7     148.9   119.8 
                             --------          --------                    --------  -------- 
NET INCOME                   $   73.6          $   51.1                    $  225.2  $  172.0 
                             ========          ========                    ========  ======== 
Average Common Shares Outstanding       149.9     149.0   149.5               148.6 
                             ========          ========                    ========  ======== 
Earnings per Common Share    $   0.49          $   0.34                    $   1.51  $   1.16 
                             ========          ========                    ========  ======== 
Dividends per Common Share   $  0.225          $   0.21                    $   0.66  $   0.63 
                             ========          ========                    ========  ======== 
</TABLE>
         See accompanying notes to consolidated financial statements,
         including Note 2 for the restatement resulting from a merger.

                                       2<PAGE>
<PAGE>
Item 1.  Financial Statements - Unaudited (Continued)

                Panhandle Eastern Corporation and Subsidiaries
                          CONSOLIDATED BALANCE SHEET
                                    ASSETS
<TABLE>
<CAPTION>
                                              September 30,        December 31,
Millions                                   1995                        1994    
--------                                   -------------        ------------
<S>                                                <C>                             <C>        
Current Assets
 Cash and cash equivalents            $    80.3      $    33.3 
 Accounts and notes receivable, net       353.1          368.6 
 Inventory and supplies                   137.3          124.1 
 Current deferred income tax               51.9           78.4 
 Other (Notes 3 and 7)                    182.5          206.8 
                                      ---------      --------- 

   Total                                  805.1          811.2 
                                      ---------      --------- 

Investments
 Affiliates                               166.5          160.1 
 Other                                     63.7           72.7 
                                      ---------      --------- 

   Total                                  230.2          232.8 
                                      ---------      --------- 

Plant, Property and Equipment
 Original cost                          8,294.0        8,039.9 
 Accumulated depreciation and amortization            (3,201.9) (3,032.1)
                                      ---------      --------- 

   Net plant, property and equipment                   5,092.1   5,007.8 
                                      ---------      --------- 

Deferred Charges
 Goodwill, net                            333.7          342.4 
 Prepaid pension                          254.6          239.8 
 Other (Notes 3 and 7)                    778.5          873.5 
                                      ---------      --------- 

   Total                                1,366.8        1,455.7 
                                      ---------      --------- 


TOTAL ASSETS                          $ 7,494.2      $ 7,507.5 
                                      =========      ========= 
</TABLE>

         See accompanying notes to consolidated financial statements,
         including Note 2 for the restatement resulting from a merger.






                                       3<PAGE>
<PAGE>
Item 1.  Financial Statements - Unaudited (Continued)

                Panhandle Eastern Corporation and Subsidiaries
                         CONSOLIDATED BALANCE SHEET 
                     LIABILITIES AND STOCKHOLDERS' EQUITY
<TABLE>
<CAPTION>
                                              September 30,        December 31,
Millions, except per share amounts         1995                        1994    
----------------------------------         -------------           ------------
<S>                                                <C>                         <C>       
Current Liabilities
 Long-term debt due within one year    $  147.4       $    4.1 
 Accounts payable                         288.8          349.4 
 Rate refund provisions (Note 3)           20.5           60.2 
 Accrued interest                          71.0           65.0 
 Taxes payable                             72.2           53.8 
 Other (Notes 3 and 7)                    355.6          413.6 
                                       --------       -------- 

   Total                                  955.5          946.1 
                                       --------       -------- 

Deferred Liabilities and Credits
 Deferred income tax (Note 4)           1,239.7        1,184.5 
 Deferred revenue - liquefied 
   natural gas project                     63.0           69.7 
 Other (Notes 3 and 7)                    809.9          908.3 
                                       --------       -------- 

   Total                                2,112.6        2,162.5 
                                       --------       -------- 

Long-term Debt                          2,250.6        2,363.7 
                                       --------       -------- 

Commitments and Contingent Liabilities
 (Notes 3, 5, 7 and 8)

Common Stockholders' Equity
 Common stock, 150 million (1995) and 
   149.1 million (1994) shares issued and
   outstanding, $1 par value per share    150.0          149.1 
 Paid-in capital                        2,212.2        2,199.8 
 Retained earnings (deficit)             (186.7)        (313.7)
                                       --------       -------- 

   Total (Note 6)                       2,175.5        2,035.2 
                                       --------       -------- 


TOTAL LIABILITIES AND STOCKHOLDERS' EQUITY            $7,494.2  $7,507.5 
                                       ========       ======== 
</TABLE>
         See accompanying notes to consolidated financial statements,
         including Note 2 for the restatement resulting from a merger.




                                       4<PAGE>
<PAGE>
Item 1.  Financial Statements - Unaudited (Continued)
                Panhandle Eastern Corporation and Subsidiaries
                     CONSOLIDATED STATEMENT OF CASH FLOWS
<TABLE>
<CAPTION>
                                                          Nine Months Ended    
                                                       September 30      
                                                       --------------------  
Millions                                      1995      1994    
--------                                      -------            -------  
<S>                                                     <C>                <C>      
Operating Activities
 Net income                                  $ 225.2   $ 172.0 
 Adjustments to reconcile net income to operating
   cash flows:
      Depreciation and amortization            208.3     190.1 
      Deferred income tax expense               78.4      63.6 
      Earnings of unconsolidated affiliates,
        net of distributions                   (13.6)    (15.8)
      Net pension benefit                      (14.8)    (15.0)
      Gain on the sale of investments           (8.1)      -   
      Other non-cash items in net income       (24.4)    (23.9)
      Net change in operating assets 
        and liabilities                        (14.3)     78.8 
                                             -------   ------- 
 Net Cash Flows Provided by Operating Activities         436.7     449.8 
                                             -------   ------- 
Investing Activities
 Additions to plant, property and equipment   (291.8)   (429.7)
 Net investment decreases (increases)           19.4     (42.8)
 Property retirements and other                 10.1       8.9 
                                             -------   ------- 
 Net Cash Flows Used in Investing Activities  (262.3)   (463.6)
                                             -------   ------- 
Financing Activities
 Retirement of debt                           (185.1)    (54.0)
 Issuance of debt                              200.0     179.9 
 Net decrease in notes payable                   -       (18.4)
 Common stock issuance                          12.3      17.5 
 Dividends paid                                (98.2)    (77.1)
 Other                                         (56.4)     (0.8)
                                             -------   ------- 
 Net Cash Flows Provided by (Used in) 
    Financing Activities                      (127.4)     47.1 
                                             -------   ------- 
Net Change in Cash
 Increase in cash and cash equivalents          47.0      33.3 
 Cash and cash equivalents, beginning of period 33.3      77.6 
                                             -------   ------- 

 Cash and Cash Equivalents, End of Period    $  80.3   $ 110.9 
                                             =======   ======= 
Supplemental Disclosures
 Cash paid for interest (net of amount capitalized)    $ 167.6   $ 158.8 
 Cash paid for income tax                       47.8      59.9 
</TABLE>
         See accompanying notes to consolidated financial statements,
         including Note 2 for the restatement resulting from a merger.

                                        5<PAGE>
<PAGE>
              PANHANDLE EASTERN CORPORATION AND SUBSIDIARIES
                NOTES TO CONSOLIDATED FINANCIAL STATEMENTS


 1. References

    Panhandle Eastern Corporation (PEC) and its subsidiaries (the Company)
    are involved in the interstate transportation and storage of natural
    gas, as well as the gathering, processing, marketing and intrastate
    transportation of natural gas, natural gas liquids (NGLs) and crude oil. 
    The interstate gas transmission operations of Texas Eastern Transmission
    Corporation (TETCO), Algonquin Gas Transmission Company (Algonquin),
    Panhandle Eastern Pipe Line Company (PEPL) and Trunkline Gas Company
    (Trunkline), and the liquefied natural gas (LNG) facilities of Trunkline
    LNG Company (Trunkline LNG), are subject to the rules, regulations and
    accounting procedures of the Federal Energy Regulatory Commission
    (FERC).  Certain amounts for the prior periods have been reclassified
    in the consolidated financial statements to conform to the current
    presentation.  

 2. Business Combination

    On December 15, 1994, a wholly-owned subsidiary of PEC merged with
    Associated Natural Gas Corporation (Associated), and as a result,
    Associated became a wholly-owned PEC subsidiary.  The merger was
    accounted for under the pooling of interests method of accounting for
    a business combination and, accordingly, PEC's 1994 consolidated
    financial statements, where applicable, were restated to include the
    accounts of Associated.  

 3. Natural Gas Revenues and Regulatory Matters 

    When rate cases are pending final FERC approval, a portion of revenues
    collected by each natural gas pipeline is subject to possible refunds. 
    The Company has established adequate reserves where required for such
    cases.  The following is a summary of pending rate cases before FERC and
    certain regulatory matters.  

    FERC Order 636 and the Termination of Merchant Services

    During 1993, the Company's interstate natural gas pipelines began
    providing restructured services pursuant to FERC Order 636.  This order,
    which is on appeal to the courts, requires pipeline service
    restructuring that "unbundles" sales, transportation and storage
    services.  Order 636 provides for the use of the straight fixed-variable
    (SFV) rate design, which assigns return on equity, related taxes and
    other fixed costs to the reservation component of rates.  In addition,
    Order 636 allows pipelines to recover eligible costs resulting from
    implementation of the order (transition costs).  








6<PAGE>
                                  <PAGE>
    TETCO's final and nonappealable Order 636 settlement, implemented on
    August 1, 1994, provides for the recovery of certain transition costs
    through volumetric and reservation charges through 2002 and beyond, if
    necessary.  Pursuant to the settlement, TETCO will absorb a certain
    portion of the transition costs, the amount of which is dependent upon
    natural gas prices and deliverability levels.  In 1993, the Company
    established a provision to reflect the impact of the settlement.  PEPL's
    transition cost recoveries, which are subject to certain challenges
    pending before FERC, will occur through 1998.  

    At September 30, 1995 and December 31, 1994, the Company's interstate
    pipelines had recorded approximately $55 million and $250 million
    (1995), and $35 million and $300 million (1994) of current and long-term
    regulatory assets, respectively, representing transition costs incurred
    or estimated to be incurred that will be recovered.  The Company had
    estimated current and long-term liabilities recorded of approximately
    $110 million and $55 million at September 30, 1995, and $125 million and
    $105 million, respectively, at December 31, 1994 related to Order 636
    transition costs.  

    In the past, during the normal course of business, the Company's
    interstate pipelines entered into certain gas purchase contracts
    containing take-or-pay provisions, which may expose the Company to
    financial risk.  PEPL and Trunkline are currently collecting certain
    take-or-pay settlement costs through volumetric surcharges with interest
    through 1997.  

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

    The Company believes the exposure associated with gas purchase contract
    commitments and the termination of the Company's pipeline merchant
    services is substantially mitigated by transition cost recoveries
    pursuant to TETCO's settlement, Order 636 and other mechanisms.  As a
    result, the Company believes that Order 636 transition cost issues and
    take-or-pay settlement matters will not have a material adverse effect
    on future consolidated results of operations or financial position.  









7<PAGE>
                                  <PAGE>
    Jurisdictional Transportation and Sales Rates

    PEPL - On April 1, 1992 and November 1, 1992, PEPL placed into effect,
    subject to refund, general rate increases incorporating the SFV rate
    design.  Hearings in these rate proceedings were completed in the first
    half of 1994.  The FERC issued an order on May 25, 1995 on the earlier
    rate proceeding and PEPL has requested rehearing of certain matters in
    that order.  The latter rate proceeding is pending FERC review of the
    initial Administrative Law Judge decision.  

    Effective April 1, 1989, PEPL placed into effect, subject to refund,
    sales and transportation rates reflecting a restructuring of rates,
    including seasonal rate structures.  PEPL and others are appealing
    various FERC orders related to these rates.  On December 7, 1994, FERC
    approved a settlement agreement with a majority of the customers which
    resolves refund matters and terminates other actions for the period
    these rates were effective for the settling parties.  

    Trunkline - On September 1, 1994, Trunkline placed into effect, subject
    to refund, a general rate increase as a result of a filing made in
    accordance with terms of a rate case settlement in 1993.  An offer of
    settlement, supported by Trunkline's customers, was approved by FERC on
    July 6, 1995 and is currently pending rehearing.  

    Other - The Company's pipelines, pursuant to FERC requirements,
    requested FERC approval to record the impact of adopting Statement of
    Financial Accounting Standards (Accounting Standard) No. 109,
    "Accounting for Income Taxes," including the recognition of a portion
    of the impact as an increase to stockholders' equity.  The FERC
    accounting branch has denied approval of certain of these requests,
    pending future rate proceedings, and the Company's pipelines, where
    approval has been denied, have filed for rehearing.  The Company
    believes the ultimate resolution of this matter will not have a material
    adverse effect on consolidated financial position.  

 4. Income Tax

    The Company's investment tax credit (ITC) carryforward of $71.7 million
    at December 31, 1994, which is expected to be fully utilized, will begin
    to expire in 1996 and will be extinguished in 2002 if not utilized
    sooner.  The alternative minimum tax credit carryforward of
    $78.1 million at December 31, 1994 can be carried forward indefinitely. 

 5. Other Contingencies

    TEPPCO Partners, L.P. - TEPPCO Partners, L.P. is a master limited
    partnership (MLP) that owns and operates a petroleum products pipeline. 
    The Company has a 10.45% ownership interest in the MLP.  A subsidiary
    partnership of the MLP has $349.5 million in First Mortgage Notes
    outstanding with recourse to the general partner, a subsidiary of PEC. 
    These notes have annual principal payments due through 2010.  In the
    opinion of management, the probability that the subsidiary of PEC will
    be required to perform under this recourse provision is remote.  




                                   8<PAGE>
<PAGE>
    Petrolane Incorporated (Petrolane) - In connection with the sale of
    Petrolane in 1989, Texas Eastern Corporation (TEC) agreed to indemnify
    Petrolane against certain obligations for guaranteed leases and
    environmental matters.  Certain of the lease obligations relate to
    Petrolane's divestiture of supermarket operations prior to its
    acquisition by TEC and as of December 31, 1994 totaled approximately
    $84.3 million over the remaining terms of the leases, which expire in
    2006.  In the opinion of management, the probability that TEC will be
    required to perform under this indemnity provision is remote.  

    Petrolane was named in a suit filed by the city of Fresno, California
    (the City) in the U.S. District Court for the Eastern District of
    California on February 18, 1993 seeking contribution from 22 parties for
    assessment and cleanup costs related to the Fresno Sanitary Landfill. 
    A tentative settlement has been reached between Petrolane and the City
    resolving all claims.  The amount of the settlement will not have a
    material adverse effect on the Company's consolidated results of
    operations or financial position.  

    Northern Border Pipeline Company (Northern Border) - Under the terms of
    a settlement related to a transportation agreement between PEPL and
    Northern Border, PEPL guarantees payment to Northern Border under a
    transportation agreement by an affiliate of Pan-Alberta Gas Limited. 
    The transportation agreement requires estimated total payments of
    $184 million for the years 1995 through 2001.  In the opinion of
    management, the probability that PEPL will be required to perform under
    this guarantee is remote.  

 6. Stockholders' Equity

    Under the most restrictive covenants contained in the Company's debt
    agreements, $856.8 million of PEC's consolidated common stockholders'
    equity was available for the payment of dividends at September 30, 1995. 

 7. Environmental Matters 

    TETCO - TETCO is currently conducting PCB (polychlorinated biphenyl)
    assessment and cleanup programs at certain of its compressor station
    sites under conditions stipulated by a U.S. Consent Decree.  The
    programs include on- and off-site characterization, installation of
    on-site source control equipment and groundwater monitoring wells, and
    on- and off-site cleanup work.  TETCO expects to complete the programs
    at up to 89 sites in as many as 14 states by the year 2000.  

    In addition, TETCO has been conducting PCB cleanup work at certain on-
    and off-site areas pursuant to separate agreements with the states of
    Pennsylvania and New Jersey.  These agreements generally impose cleanup
    levels that are more stringent than those required by the U.S. Consent
    Decree.  








9<PAGE>
                                  <PAGE>
    In 1987, the Commonwealth of Kentucky instituted suit in state court
    against TETCO, alleging improper disposal of PCBs at TETCO's three
    compressor station sites in Kentucky.  This suit, which is still
    pending, seeks penalties for violations of Kentucky environmental
    statutes.  The Company previously established a reserve for potential
    fines and penalties.  In 1991, TETCO and the Commonwealth executed a
    consent order in which TETCO agreed to perform site assessments at its
    sites in Kentucky, and this work has been substantially completed. 
    TETCO completed cleanup of one of its Kentucky sites in 1994 and another
    in 1995.  

    At September 30, 1995 and December 31, 1994, TETCO had current and
    long-term liabilities recorded of $46.4 million and $270.6 million
    (1995), and $56.4 million and $289.1 million (1994), respectively, for
    remaining estimated cleanup costs.  These cost estimates represent gross
    cleanup costs expected to be incurred by TETCO, have not been discounted
    or reduced by customer recoveries and do not include fines, penalties
    or third-party claims.  TETCO is recovering 57.5% of cleanup costs in
    rates pursuant to a stipulation and agreement approved by FERC in 1992. 
    At September 30, 1995 and December 31, 1994, TETCO had current and
    long-term regulatory assets recorded of $20.7 million and $160.5 million
    (1995), and $18.6 million and $177.1 million (1994), respectively,
    representing costs to be recovered.

    On August 30, 1995, two plaintiffs filed a lawsuit with class action
    allegations in the 58th Judicial District Court, Jefferson County,
    Texas, against PEC, TEC and TETCO, among other defendants.  Plaintiffs
    seek recovery of compensatory and punitive damages, in unspecified
    amounts, for personal injuries and property damage resulting from
    alleged exposure to PCBs.  Additionally, TETCO, as well as certain other
    PEC subsidiaries in some of the cases, are defendants in several other
    private plaintiff suits in various courts.  These suits seek relief for
    actual and punitive damages that allegedly resulted from the release of
    PCBs and other hazardous substances in violation of federal and state
    laws.  The Company is defending itself vigorously in all the above
    suits.  

    PEPL and Trunkline - The Company has identified environmental
    contamination at up to 53 sites on the PEPL and Trunkline systems and
    is undertaking cleanup programs at these sites.  The contamination
    resulted from the past use of lubricants containing PCBs and the prior
    use of wastewater collection facilities and other on-site disposal
    areas.  Soil and sediment testing, to date, has detected no significant
    off-site contamination.  The Company has communicated with the U.S.
    Environmental Protection Agency and appropriate state regulatory
    agencies on these matters.  The environmental cleanup programs are
    expected to continue until 2002.  

    At September 30, 1995 and December 31, 1994, the Company had
    undiscounted liabilities recorded of $70.4 million and $70 million,
    respectively, relating to PEPL and Trunkline PCB, wastewater and
    disposal area cleanup programs and had regulatory assets recorded of
    $80.3 million and $82.4 million, respectively, representing costs to be
    recovered from customers.  



10<PAGE>
                                 <PAGE>
    The federal and state cleanup programs are not expected to interrupt or
    diminish the Company's ability to deliver natural gas to customers.  The
    Company believes the ultimate resolution of matters relating to the
    environmental issues discussed above will not have a material adverse
    effect on consolidated results of operations or financial position.  

 8. Litigation

    In connection with a rupture and fire that occurred on TETCO's 36-inch
    natural gas pipeline on March 23, 1994 in Edison, New Jersey, numerous
    lawsuits have been filed against TETCO and other defendants in the
    Superior Court of New Jersey, Middlesex County, on behalf of hundreds
    of individuals seeking compensatory damages for personal injuries and
    property losses, as well as punitive damages.  The property insurers of
    an apartment complex adjacent to the asphalt plant where the rupture
    occurred also have filed suit against TETCO and other defendants in
    Superior Court seeking to recover approximately $10 million for amounts
    paid under the pertinent policies of insurance.  TETCO also has been
    contacted by hundreds of additional individuals or their attorneys with
    claims against TETCO.  In addition, Quality Materials, Inc., the owner
    of the asphalt plant, has filed suit in the U.S. District Court for the
    District of New Jersey against TETCO seeking to recover unspecified
    property damages, lost income and punitive damages.  TETCO has filed a
    counterclaim against Quality Materials, Inc.  

    The findings of an investigation of the incident by the Company and the
    National Transportation Safety Board (NTSB) indicate third-party damage
    to be the cause of the rupture.  Additionally, an NTSB report found that
    TETCO's pipeline operations met or exceeded federal safety regulations. 
    The Company expects the resolution of these matters will not have a
    material adverse effect on consolidated results of operations or
    financial position.  

    The Company is also involved in various other legal actions and claims
    arising in the normal course of business.  Based upon its current
    assessment of the facts and the law, management does not believe that
    the outcome of any such action or claim will have a material adverse
    effect upon the consolidated financial position of the Company. 
    However, these actions and claims in the aggregate seek substantial
    damages against the Company and are subject to the uncertainties
    inherent in any litigation.  

 9. Fair Presentation

    The information as furnished reflects all normal recurring adjustments
    that are, in the opinion of management, necessary for a fair
    presentation of the Company's financial position as of September 30,
    1995, results of operations for the three and nine months ended
    September 30, 1995 and 1994, and cash flows for the nine months ended
    September 30, 1995 and 1994.  







11<PAGE>
                                 <PAGE>
Item 2.  Management's Discussion and Analysis of Financial Condition and
         Results of Operations

The following information is provided to facilitate increased understanding
of the 1995 and 1994 interim consolidated financial statements and
accompanying notes presented in Item 1.  The discussion of the Company's
"Operating Environment and Outlook" addresses key trends and future plans.
Material period-to-period variances in the consolidated statement of income
are discussed under "Results of Operations." The "Capital Resources, Liquidity
and Financial Position" section analyzes cash flows and financial position. 
Throughout these discussions, management addresses items that are reasonably
likely to materially affect future liquidity or earnings.  

OPERATING ENVIRONMENT AND OUTLOOK

The changing environment resulting from the restructuring of the natural gas
industry has spurred some industry consolidations and additional growth
opportunities for the Company, particularly in the Market and Supply Services
group.  The Company has expanded Field Services' operations, including
processing and storage, while also continuing to advance interstate natural
gas pipeline market-expansion projects and new services requested by
customers.  The Company plans to continue to pursue strategic opportunities
that emerge, in the U.S. and internationally, via additional joint ventures,
expansion projects and acquisitions in both the Natural Gas Transmission group
and the Market and Supply Services group.  In addition, opportunities in the
electric power marketing business area are being pursued. 

In the Natural Gas Transmission group, all traditional pipeline sales services
ceased during the fourth quarter of 1994 when Trunkline's unbundled sales
contracts expired.  Pipeline earnings have generally become more evenly
distributed throughout the year as a result of the SFV rate design required
by Order 636.  The Company's pipelines continue to offer selective discounting
to maximize revenues from existing capacity.  

RESULTS OF OPERATIONS

Consolidated net income for the nine months ended September 30, 1995 was
$225.2 million, or $1.51 per share on 149.5 million average common shares
outstanding, compared with $172 million, or $1.16 per share on 148.6 million
average common shares outstanding, for the same period in 1994.  

Operating Income Analysis

Consolidated operating income increased to $496.3 million in the first nine
months of 1995 compared with $446.5 million for the same period in 1994,
reflecting improvements in both the Natural Gas Transmission group and the
Market and Supply Services group.  










12<PAGE>
                                 <PAGE>
Con          solidated Operating Income by Business Group
    <TABLE>
    <CAPTION>
                                                 Nine Months Ended September 30
                                               -------------------------------
    Millions                      1995     1994    % Change
    --------                     ------   ------   --------
    <S>                          <C>           <C>        <C> 
    Natural Gas Transmission
       TETCO                     $222.1   $195.8      13 
       Algonquin                   57.0     50.5      13 
       PEPL                       109.5    109.1       - 
       Trunkline                   27.6     33.3     (17)
       Other                        3.8      4.0      (5)
                                 ------   ------     --- 
       Total                      420.0    392.7       7 
                                 ------   ------     --- 

    Market and Supply Services
       Field Services              55.0     29.8      85 
       Market Services             11.6     17.6     (34)
       ATTCO                        6.4      6.3       2 
                                 ------   ------     --- 
       Total                       73.0     53.7      36 
                                 ------   ------     --- 
    Parent and Other                3.3      0.1     n/m (A)
                                 ------   ------     --- 
    Consolidated Operating Income$496.3   $446.5      11 
                                 ======   ======     === 

    (A) not meaningful

    </TABLE>
      























                                   13<PAGE>
<PAGE>
                            Operating Data
    <TABLE>
    <CAPTION>
                                                 Nine Months Ended September 30
                                                ------------------------------
                                  1995     1994    % Change
                                 ------   ------   --------
    <S>                          <C>      <C>        <C>   
    Natural Gas Pipeline Volumes, 
      Billion Cubic Feet (Bcf)
       Market Area 
        TETCO                      775      761         2  
        Algonquin                  235      198        19  
        PEPL                       444      430         3  
        Trunkline                  279      335       (17) 
        Eliminations               (34)     (69)      (51) 
                                 -----    -----       ---  
          Total                  1,699              1,655    3  
                                 -----    -----       ---  

       Supply Area 
        TETCO                       88      107       (18) 
        PEPL                        30       29         3  
        Trunkline                   80       77         4  
                                 -----    -----       ---  
          Total                    198      213        (7) 
                                 -----    -----       ---  
       Total Volumes             1,897              1,868    2  
                                 =====    =====       ===  

    Market and Supply Services
       Field Services
        Natural gas gathered/processed, 
          Bcf/d(1)                 1.8      1.6        13  
        Natural gas marketed, Bcf/d0.5      0.3        67  
        NGL production, MBbl/d(2) 53.2     46.9        13  
        Helium production, MMcf/d(3)        1.8       1.8    -  

       Market Services
        Natural gas marketed, Bcf/d3.8      2.8        36  

       ATTCO
        Crude oil pipeline
          volumes, MBbl/d         79.0     45.2        75  
        NGL pipeline volumes, MBbl/d       16.6      14.6   14  

       ----------
    (1) Billion cubic feet per day.
    (2) Thousand barrels per day.
    (3) Million cubic feet per day.  
    </TABLE>






                                      14<PAGE>
<PAGE>
Natural Gas Transmission

Operating income from the Natural Gas Transmission group increased
$27.3 million, or 7%, to $420 million in the first nine months of 1995
compared with the same period in 1994.  

TETCO - Operating income for TETCO increased $26.3 million comparing the first
nine months of 1995 with the same period in 1994.  Transportation revenue
increased $50.7 million, or 10%, as a result of expansion projects and the
recovery of transition costs totaling approximately $38 million, which were
offset by a corresponding increase in operating expenses.  The increase in
transportation revenue was partially offset by the effect of a $6 million
reduction in the interruptible revenue retention cap in 1995, as required by
TETCO's 1994 Order 636 settlement.  Operating expenses, excluding transition
costs, declined due to a $5 million charge to income in 1994 related to the
Edison, New Jersey pipeline rupture and cost-management initiatives in 1995. 

Algonquin - Algonquin's operating income increased $6.5 million in the first
nine months of 1995 compared with the same period in 1994.  Expansion
projects, including the Company's Integrated Transportation Program (ITP), and
new services to local distribution companies and an electric power generator
contributed $8.6 million of additional revenues in 1995.  This increase was
partially offset by resolutions of regulatory issues amounting to $8 million
in the second quarter of 1994 and $4 million in the first quarter of 1995. 

PEPL - PEPL's operating income increased $0.4 million comparing the first nine
months of 1995 with the same period in 1994.  PEPL achieved operating
efficiencies during the third quarter of 1995, which helped lower operating
expenses.  The comparison for the nine-month period also includes the effects
of $21.6 million of income recorded in 1994 for the resolution of certain
regulatory matters, partially offset by $15.5 million recorded in the third
quarter of 1995 for similar regulatory resolutions.  

Trunkline - Operating income for Trunkline decreased $5.7 million comparing
the first nine months of 1995 with the same period in 1994, primarily
resulting from $4 million of revenues recorded in 1994 related to a contract
settlement.  Decreased transportation revenue due to lower volumes
attributable to warmer weather during the first half of 1995 was partially
offset by lower operating costs.  Sales revenue and associated gas purchased
costs declined $163.5 million as a result of the elimination of Trunkline's
merchant function in late 1994. 

Market and Supply Services

The September 30, 1994 consolidated financial statements have been restated
to include Associated's results for the periods ended June 30, 1994 due to
Associated's fiscal year end of September 30 prior to the merger.  Therefore,
consolidated operating results for the nine months ended September 30, 1995
reflect only three months of the heating season with respect to Associated's
operations, while the comparative 1994 period includes the entire heating
season.  This creates some unfavorable operating income comparisons since the
heating season has historically provided more favorable pricing and margins. 





                                   15<PAGE>
<PAGE>
Operating income for the Market and Supply Services group increased
$19.3 million, or 36%, comparing the first nine months of 1995 with the same
period in 1994.  

Field Services - Field Services' operating income increased $25.2 million, or
85%, for the first nine months of 1995 as compared to the prior year period. 
Net revenues increased $17.9 million, or 14%, resulting from higher natural
gas processing margins, liquids production and gathering volumes.  Operating
and general and administrative expenses were more than $10 million lower in
1995, primarily benefitting from cost-saving efficiencies from merging
Associated's and PEC's field operations in early 1995.  

Market Services - Market Services' operating income was $6 million, or 34%,
lower for the first nine months of 1995 compared to the same period in 1994. 
In addition to the effects of the non-comparable periods discussed above, mild
weather in the first part of 1995 reduced gas prices and margins on marketed
volumes, more than offsetting the increase in marketed volumes, which were up
36% over 1994, and a one-time gain related to basis trading recorded in the
third quarter 1995.  

ATTCO - ATTCO's operating income increased 2% to $6.4 million for the first
nine months of 1995 compared with the same period for 1994.  Higher crude oil
trading and pipeline volumes contributed to a $337.1 million increase in gross
revenues and a $3.8 million, or 26%, increase in net revenues, which was
offset by higher expenses.  

Risk Management - PEC uses financial instruments to reduce the Company's
exposure to market fluctuations in the price and transportation costs of
natural gas and petroleum products.  The Company's general strategy is to
hedge fixed-price commitments with commodity futures, swaps and options;
however, net open positions can occur in the ordinary course of business.  In
conjunction with the hedging activities, the Company also engages in limited
trading of such instruments.  The Company adheres to policies which limit its
exposure to market risk from open positions and monitors daily its exposure
from open positions.

Other Operating Income

Operating income for the LNG Project increased $5.7 million comparing the
first nine months of 1995 with the same period in 1994.  A $10.4 million
provision reversal recorded in the second quarter of 1995 was partially offset
by lower LNG tanker charter revenues.  Both of the LNG tankers are under
charters that began in the third quarter 1995.  

Other Income and Deductions 

The increase of $34.9 million in net other income and deductions in the first
nine months of 1995 compared with the same period in 1994 was primarily the
result of higher earnings from investments in affiliates.  








                                   16<PAGE>
<PAGE>
            Equity in Earnings of Unconsolidated Affiliates
<TABLE>
<CAPTION>
                                               Nine Months Ended    
                                               September 30      
                                               ------------------   
Millions                                              1995    1994    
--------                                             ------  ------   
<S>                                       <C>      <C>      
National Methanol Company                 $21.8     $13.7   
Midland Cogeneration Venture                8.8       1.6   
Northern Border Partners, L.P.              6.1       3.4   
TEPPCO Partners, L.P.                       4.7       2.0   
Other affiliates                            2.9       3.5   
                                          -----     -----   
    Total                                             $44.3   $24.2   
                                          =====     =====   
</TABLE>

Equity in earnings from National Methanol Company increased $8.1 million,
reflecting higher methanol margins and MTBE (methyl tertiary butyl ether)
sales in 1995.  Methanol margins, which increased throughout 1994 and the
first quarter of 1995, continued to decline in the third quarter 1995,
averaging approximately 30% of first quarter 1995 levels.  Also contributing
to the increase in earnings from investments in affiliates was a $7.2 million
increase in earnings from Midland Cogeneration Venture due to higher revenue
from increased capacity availability.  

The improvement in net other income also includes an $8.1 million gain
resulting from the sale of the Company's investment in Seagull Shoreline
System in the third quarter of 1995, as well as the 1994 write-off of
$3.8 million of costs related to the Liberty Pipeline Project.  

Interest Expense 

Interest expense in the first nine months of 1995 increased $2.4 million, or
1%, compared with the same period in 1994, as a result of higher average debt
balances outstanding in 1995 partially offset by lower average rates.  

CAPITAL RESOURCES, LIQUIDITY AND FINANCIAL POSITION

Operating Cash Flow
<TABLE>
<CAPTION>
                                               Nine Months Ended    
                                               September 30      
                                               ------------------   
Millions                                              1995    1994    
--------                                             ------  ------   
<S>                                      <C>       <C>      
Net Cash Flows Provided by 
  Operating Activities                   $436.7    $449.8   
                                         ------    ------   
</TABLE>



                                   17<PAGE>
<PAGE>
Historical Analysis - Operating cash flows decreased $13.1 million comparing
the nine-month period in 1995 to the same period in 1994.  This decrease
reflects increased net cash outflows primarily related to transition cost
payments and recoveries, partially offset by higher 1995 earnings.  

Order 636 Transition Costs - With implementation of Order 636 and the
elimination of pipeline merchant services, the Company's natural gas pipelines
are incurring certain costs related to the transition, primarily TETCO's gas
purchase contract commitments.  At September 30, 1995, TETCO's gross
commitments under gas purchase contracts that do not contain market-sensitive
pricing provisions were approximately $150 million, $135 million, $75 million,
$45 million and $20 million for the years 1995 through 1999, respectively,
with no significant amounts thereafter.  These estimates reflect significant
assumptions regarding deliverability and escalation clauses.  

TETCO's final and nonappealable Order 636 settlement, implemented on August 1,
1994, provides for the recovery of certain transition costs through volumetric
and reservation charges through 2002 and beyond, if necessary.  Pursuant to
the settlement, TETCO will absorb a certain portion of the transition costs,
the amount of which is dependent upon natural gas prices and deliverability
levels.  In 1993, the Company established a provision to reflect the impact
of the settlement.  PEPL's transition cost recoveries, which are subject to
certain challenges pending before FERC, will occur through 1998.  See Note 3
of the Notes to Consolidated Financial Statements.  

During the next two years, above-market gas purchase contract payments by
TETCO are expected to exceed transition cost collections from customers.  Net
cash receipts related to transition costs are expected to occur in periods
thereafter.  Cash requirements related to transition costs will be funded by
cash from operations and/or available credit facilities.  

The Company believes the exposure associated with gas purchase contract
commitments and the termination of the Company's pipeline merchant services
is substantially mitigated by transition cost recoveries pursuant to TETCO's
settlement, Order 636 and other mechanisms.  

Environmental Matters - The Company believes it will be able to fund the
TETCO, PEPL and Trunkline PCB and other cleanup program costs from recoveries
from customers and other cash flows.  For information concerning cleanup
programs and environmental litigation, see Note 7 of the Notes to Consolidated
Financial Statements.  

Litigation - In connection with a rupture and fire that occurred on TETCO's
36-inch natural gas pipeline on March 23, 1994 in Edison, New Jersey, numerous
lawsuits have been filed against TETCO and other defendants in the Superior
Court of New Jersey, Middlesex County, on behalf of hundreds of individuals
seeking compensatory damages for personal injuries and property losses, as
well as punitive damages.  The property insurers of an apartment complex
adjacent to the asphalt plant where the rupture occurred also have filed suit
against TETCO and other defendants in Superior Court seeking to recover
approximately $10 million for amounts paid under the pertinent policies of
insurance.  TETCO has also been contacted by hundreds of additional
individuals or their attorneys with claims against TETCO.  In addition,
Quality Materials, Inc., the owner of the asphalt plant, has filed suit in the
U.S. District Court for the District of New Jersey against TETCO seeking to
recover unspecified property damages, lost income and punitive damages.  TETCO
has filed a counterclaim against Quality Materials, Inc.  
                                  18
<PAGE>
The findings of an investigation of the incident by the Company and the NTSB
indicate third-party damage to be the cause of the rupture.  Additionally, an
NTSB report found that TETCO's pipeline operations met or exceeded federal
safety regulations.  

Other - The Company expects to generate sufficient future taxable income from
operations to fully utilize deferred tax assets, net of valuation allowance,
including the ITC carryforward.  However, if needed, the Company could
implement tax-planning strategies to accelerate approximately $140 million of
taxable income prior to expiration of the ITC.  

See Notes 3 and 5 of the Notes to Consolidated Financial Statements for a
discussion of certain other regulatory proceedings and other contingencies.

The Company believes the regulatory, environmental and legal issues discussed
above will not have a material adverse effect on consolidated results of
operations, financial position or liquidity.  During the next 12 months, cash
requirements for operations are expected to be funded by cash from operations,
debt issuances, periodic sales of trade receivables with limited recourse
and/or available credit facilities.  

Investing Cash Flow

<TABLE>
<CAPTION>
                                                       Nine Months Ended     
                                                       September 30       
                                              --       ---------------------   
Millions                                              1995      1994  
--------                                             ------    ------ 
<S>                                      <C>         <C>    
Net Cash Flows Used in Investing Activities            $262.3       $463.6 
                                                ------         ------ 
</TABLE>

Capital Expenditures - Capital expenditures totaled $291.8 million in the
first nine months of 1995, compared with $429.7 million for the same period
in 1994.  Expenditures in 1995 included the acquisition of a natural gas
gathering and processing system in central Colorado for approximately
$60 million.  Expenditures in 1994 included the purchase of certain intrastate
natural gas pipeline, storage and processing facilities in south Texas for
more than $100 million.  

Capital and investment expenditures for 1995 are expected to approximate
$490 million, with approximately 50% for the Natural Gas Transmission group
and 45% for the Market and Supply Services group.  Expenditures for
market-expansion projects will total approximately $330 million in 1995,
including costs to place in service additional firm transportation for the
Natural Gas Transmission group.   Also included are costs of additional
facilities which will enable the Market and Supply Services group to provide
expanded services for natural gas producers and other customers in the Gulf
Coast and Mid-Continent regions.  Expenditures are being funded by cash from
operations, debt issuances and/or available credit facilities.  




                                   19<PAGE>
<PAGE>
The Company currently expects to invest a minimum of $400 million in 1996
capital and investment expenditures.  The Company's 1996 expenditure plans
include market-expansion projects by the Natural Gas Transmission and Market
and Supply Services groups.  Projects are also planned which would expand the
Company's international business, including a proposed joint pipeline project
along with several partners to access natural gas reserves located near
offshore Nova Scotia.  This project, the Maritimes and Northeast Pipeline
Project, is planned to be in full operation in 1999.  The Company, along with
five other international energy companies, is also participating in the
development of an integrated gas and power project to be located near
Aguaytia, Peru.  

The Company has submitted plans to the appropriate state and/or federal
agencies in order to fully comply with the Clean Air Act Amendments of 1990
(the Amendments).  While regulatory review of these plans is currently
underway, the Company estimates that capital expenditures necessary to comply
with the requirements of the Amendments and associated regulations are
approximately $50 million, with an estimated $20 million to be spent in 1995. 
Management believes any expenditures necessary will be eligible for recovery
in rates.  

Financing Cash Flow

<TABLE>
<CAPTION>
                                                       Nine Months Ended    
                                                       September 30      
                                               -        -------------------   
Millions                                             1995        1994  
--------                                            -------          ----- 
<S>                                        <C>         <C>   
Net Cash Flows Provided by (Used in)
  Financing Activities                     $(127.4)    $47.1 
                                           -------         ----- 
</TABLE>
Debt and Credit Facilities - PEC has a variable-rate, bank credit agreement
that permits PEC to borrow up to $600 million.  PEPL and TETCO also have
variable-rate, bank credit agreements that permit these subsidiaries to borrow
up to $200 million on a combined basis.  At September 30, 1995, there were no
amounts outstanding under any of these agreements.  

In September 1995, PEPL called for redemption the $125 million of 9 7/8%
debentures due October 1996.  Accordingly, the Company has classified these
debentures as current liabilities in the consolidated balance sheet as of
September 30, 1995.  

Financing Requirements - Dividends and debt repayments for the next 12 months,
along with operating and investing requirements, are expected to be funded by
cash from operations, debt issuances and/or available credit facilities.  As
of the date of this report, PEC, TETCO and PEPL each have effective shelf
registration statements with the Securities and Exchange Commission for the
issuance of $100 million each of unsecured debt securities.  





                                   20<PAGE>
<PAGE>
Accounting Standards

Accounting Standard No. 121, "Accounting for the Impairment of Long-Lived
Assets and for Long-Lived Assets to be Disposed Of", was issued in March 1995.
This standard addresses the accounting for the recognition and measurement of
impairment losses for long-lived assets, certain identifiable intangibles and
goodwill related to those assets to be held and used.  This standard also
addresses the accounting for long-lived assets and certain identifiable
intangibles to be disposed of.  

The Company does not expect Accounting Standard No. 121 to have a significant
effect on consolidated results of operations or financial position upon
adoption.  


                       PART II.  OTHER INFORMATION

Item 1.  Legal Proceedings

See Notes 3, 5, 7 and 8 of the Notes to Consolidated Financial Statements in
Part I of this Report, which are incorporated herein by reference.  See also
Item 3 of PEC's Annual Report on Form 10-K for the year ended
December 31, 1994.  

Item 6.  Exhibits and Reports on Form 8-K 

(a)  Exhibits - 

   Exhibit Number         Description
        27          Financial Data Schedule

(b)  Reports on Form 8-K - None

























                                      21<PAGE>
<PAGE>
                                SIGNATURES


   Pursuant to the requirements of the Securities Exchange Act of 1934, as
amended, the registrant has duly caused this report to be signed on its behalf
by the undersigned duly authorized officer and chief accounting officer.  




                                PANHANDLE EASTERN CORPORATION
                                        (Registrant)


                                  /s/ Sandra P. Meyer                      

                               -------------------------------
                               Sandra P. Meyer, Vice President
                                 and Controller



Date:  November 14, 1995


































                                   22