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                               UNITED STATES
                  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 March 31, 1997
                        Commission File No. 1-8157

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

                            PANENERGY CORP
          (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 April 30, 1997
      --------------------------         -----------------------------
      Common Stock, $1 par value                   151,527,819


===========================================================================<PAGE>
<PAGE>
                        PART I.  FINANCIAL INFORMATION
Item 1.  Financial Statements - Unaudited
                     PanEnergy Corp and Subsidiaries
                       CONSOLIDATED STATEMENT OF INCOME
<TABLE>
<CAPTION>
                                                        Three Months Ended 
                                                        March 31      
                                                        ------------------ 
Millions, except per share amounts                       1997      1996   
----------------------------------                     --------  -------- 
<S>                                                    <C>       <C>      
Operating Revenues 
 Sales of natural gas, petroleum products and power    $2,209.8  $1,271.2 
   Transportation and storage of natural gas              410.0     400.9 
 Other                                            23.2     19.8 
                                                       --------  -------- 
   Total (Note 3)                              2,643.0  1,691.9 
                                                       --------  -------- 
Costs and Expenses
 Natural gas, petroleum products and power purchased    2,051.3   1,156.6 
 Operating and maintenance                       159.7    152.6 
 General and administrative                       54.6     74.8 
 Depreciation and amortization                    78.2     72.1 
 Miscellaneous taxes                              29.7     22.6 
                                                       --------  -------- 
   Total                                       2,373.5  1,478.7 
                                                       --------  -------- 
Operating Income                                 269.5    213.2 
                                                       --------  -------- 
Other Income and Deductions
 Equity in earnings of unconsolidated affiliates            9.5       5.1 
 Other income, net of deductions                   5.0      3.7 
                                                       --------  -------- 
   Total                                          14.5      8.8 
                                                       --------  -------- 
Earnings Before Interest and Tax                 284.0    222.0 
Interest Expense                                  50.5     58.3 
                                                       --------  -------- 
Earnings Before Minority Interest and Income Tax          233.5     163.7 
Minority Interest                                 10.5      -   
Income Tax                                        86.7     61.9 
                                                       --------  -------- 
NET INCOME                                             $  136.3  $  101.8 
                                                       ========  ======== 
Average Common Shares Outstanding                151.3    150.5 
                                                       ========  ======== 
Earnings per Common Share                              $   0.90  $   0.68 
                                                       ========  ======== 
Dividends per Common Share                             $   0.24  $  0.225 
                                                       ========  ======== 
</TABLE>
         See accompanying notes to consolidated financial statements
<PAGE>
Item 1.  Financial Statements - Unaudited (Continued)

                     PanEnergy Corp and Subsidiaries
                       CONSOLIDATED BALANCE SHEET
                                 ASSETS
<TABLE>
<CAPTION>
                                              March 31,            December 31,
Millions                                    1997                       1996    
--------                                   ---------            ------------
<S>                                                 <C>                            <C>        
Current Assets
 Cash and cash equivalents             $    25.8     $    57.2 
 Accounts and notes receivable, net        928.4       1,178.0 
 Inventory and supplies                    103.3         132.1 
 Current deferred income tax                61.6          50.4 
 Other (Notes 3, 5 and 7)                  382.5         217.8 
                                       ---------     --------- 
   Total                                 1,501.6       1,635.5 
                                       ---------     --------- 

Investments
 Affiliates                                340.7         313.9 
 Other                                      56.9          58.4 
                                       ---------     --------- 
   Total                                   397.6         372.3 
                                       ---------     --------- 

Plant, Property and Equipment
 Original cost                           8,867.7       8,822.5 
 Accumulated depreciation and amortization            (3,436.3) (3,365.8)
                                       ---------     --------- 
   Net plant, property and equipment     5,431.4       5,456.7 
                                       ---------     --------- 

Deferred Charges
 Prepaid pension                           286.4         280.6 
 Goodwill, net                             189.1         191.4 
 Other (Notes 3 and 5)                     557.1         631.3 
                                       ---------     --------- 
   Total                                 1,032.6       1,103.3 
                                       ---------     --------- 

TOTAL ASSETS                           $ 8,363.2     $ 8,567.8 
                                       =========     ========= 
</TABLE>

         See accompanying notes to consolidated financial statements
<PAGE>
<PAGE>
Item 1.  Financial Statements - Unaudited (Continued)

                     PanEnergy Corp and Subsidiaries
                       CONSOLIDATED BALANCE SHEET
                  LIABILITIES AND STOCKHOLDERS' EQUITY
<TABLE>
<CAPTION>
                                               March 31,           December 31,
Millions                                    1997                       1996    
--------                                   ---------               ------------
<S>                                                 <C>                        <C>       
Current Liabilities
 Long-term debt due within one year    $   23.8       $  138.3 
 Notes payable and commercial paper       275.3          354.1 
 Accounts payable                         700.1          959.2 
 Rate refund provisions (Note 3)           37.8           37.0 
 Accrued interest                          52.4           59.7 
 Taxes payable                            114.6           73.8 
 Other (Notes 3, 5 and 7)                 667.4          435.9 
                                       --------       -------- 
   Total                                1,871.4        2,058.0 
                                       --------       -------- 
Deferred Liabilities and Credits
 Deferred income tax                    1,296.7        1,242.9 
 Other (Notes 3 and 5)                    633.4          785.1 
                                       --------       -------- 
   Total                                1,930.1        2,028.0 
                                       --------       -------- 

Long-term Debt                          1,947.4        1,947.0 
                                       --------       -------- 
Commitments and Contingent Liabilities
 (Notes 3, 5, 6 and 7)

Minority Interest                          57.4           82.3 
                                       --------       -------- 
Common Stockholders' Equity
 Common stock, 151.5 million (1997) and 
   151.1 million (1996) shares issued and
   outstanding, $1 par value per share    151.5          151.1 
 Paid-in capital                        2,246.4        2,242.1 
 Retained earnings                        159.0           59.3 
                                       --------       -------- 
   Total (Note 4)                       2,556.9        2,452.5 
                                       --------       -------- 

TOTAL LIABILITIES AND STOCKHOLDERS' EQUITY            $8,363.2  $8,567.8 
                                       ========       ======== 
</TABLE>

         See accompanying notes to consolidated financial statements
<PAGE>
<PAGE>
Item 1.  Financial Statements - Unaudited (Continued)
                     PanEnergy Corp and Subsidiaries
                  CONSOLIDATED STATEMENT OF CASH FLOWS
<TABLE>
<CAPTION>
                                                          Three Months Ended   
                                                       March 31        
                                                       --------------------  
Millions                                       1997      1996   
--------                                     -------   -------  
<S>                                                     <C>           <C>      
Operating Activities
 Net income                                  $ 136.3   $ 101.8 
 Adjustments to reconcile net income to operating
   cash flows
      Depreciation and amortization             78.2      72.1 
      Deferred income tax expense               39.4      21.4 
      Minority interest in earnings             10.5       -   
      Earnings of unconsolidated affiliates,
        net of distributions                    (1.9)     (2.3)
      Net pension benefit                       (5.8)     (5.0)
      Other non-cash items in net income       (20.2)      5.5 
      Net change in operating assets 
        and liabilities                        100.6     (42.9)
                                             -------   ------- 
 Net Cash Flows Provided by Operating Activities         337.1     150.6 
                                             -------   ------- 
Investing Activities
 Capital expenditures                          (50.2)    (41.8)
 Investment expenditures                       (26.3)     (3.0)
 Net investment decreases (increases)            1.7      (1.1)
 Property retirements and other                  1.8      24.4 
                                             -------   ------- 
 Net Cash Flows Used in Investing Activities   (73.0)    (21.5)
                                             -------   ------- 
Financing Activities
 Retirement of debt                           (114.5)    (40.1)
 Net decrease in notes payable and commercial paper      (78.8)   (101.1)
 Net increase (decrease) in accounts payable - banks     (32.3)     30.2 
 Dividends paid                                (36.3)    (33.8)
 Minority interest distributions, net          (35.5)      -   
 Other                                           1.9       4.4 
                                             -------   ------- 
 Net Cash Flows Used in Financing Activities  (295.5)   (140.4)
                                             -------   ------- 
Net Change in Cash
 Decrease in cash and cash equivalents         (31.4)    (11.3)
 Cash and cash equivalents, beginning of period 57.2      50.8 
                                             -------   ------- 
 Cash and Cash Equivalents, End of Period    $  25.8   $  39.5 
                                             =======   ======= 
Supplemental Disclosures
 Cash paid for interest (net of amount capitalized)    $  38.9   $  54.0 
 Cash paid (received) for income tax            (0.5)      1.3 
</TABLE> 
 
       See accompanying notes to consolidated financial statements
<PAGE>
                    PanEnergy Corp and Subsidiaries
                NOTES TO CONSOLIDATED FINANCIAL STATEMENTS


1.  General

    PanEnergy Corp (PanEnergy) and its subsidiaries (the Company) are
    involved in the transportation, storage, gathering and processing of
    natural gas and the production of natural gas liquids (NGLs).  The
    Company is also a leading marketer of natural gas, electricity,
    liquefied petroleum gases and related energy services.  

    The interstate natural gas transmission and storage 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)
    operations of Trunkline LNG Company and Algonquin LNG, Inc. (Algonquin
    LNG), are subject to the rules and regulations of the Federal Energy
    Regulatory Commission (FERC).  TETCO, Algonquin, PEPL, Trunkline and
    Algonquin LNG meet the criteria and, accordingly, follow the reporting
    and accounting requirements of Statement of Financial Accounting
    Standards (SFAS) No. 71, "Accounting for the Effects of Certain Types
    of Regulation."  Accordingly, certain net costs totaling $438.8 million
    at December 31, 1996 have been deferred as regulatory assets for amounts
    recoverable from customers, including costs related to environmental
    matters, FERC Order 636 transition, certain employee benefits and the
    early retirement of debt.  

    The preparation of financial statements in conformity with generally
    accepted accounting principles requires management to make estimates and
    assumptions that affect certain reported amounts in the financial
    statements.  Actual results could differ from those estimates.  The
    consolidated financial statements reflect all normal recurring
    adjustments that are, in the opinion of management, necessary for fair
    presentation.  Certain amounts for the prior periods have been
    reclassified in the consolidated financial statements to conform to the
    current presentation.  

2.  Pending Duke Power Company Merger

    On November 25, 1996, PanEnergy and Duke Power Company (Duke Power)
    announced a definitive merger agreement for a tax-free, stock-for-stock
    transaction.  The merger is conditioned upon, among other things, the
    approval of PanEnergy and Duke Power shareholders, and approvals of
    appropriate state and federal regulatory agencies.  The proposed merger
    has already received PanEnergy and Duke Power shareholders' approvals
    and regulatory approval from the utilities commissions of North Carolina
    and South Carolina.  Additionally, the Federal Trade Commission granted
    early termination of the waiting period prescribed under the
    Hart-Scott-Rodino Antitrust Improvements Act.  As of the date of this
    report, the merger is awaiting regulatory approval from FERC.  The
    Company anticipates that FERC approval will be granted by the originally
    targeted timeframe of November 1997.  At closing, Duke Power will change
    its name to Duke Energy Corporation (Duke Energy) and PanEnergy will
        become a wholly-owned subsidiary of Duke Energy.  <PAGE>
<PAGE>
3.  Natural Gas Revenues and Regulatory Matters 

    When rate cases are pending final FERC approval, a portion of the
    revenues collected by interstate natural gas pipelines is subject to
    possible refund.  The Company has established adequate reserves where
    required for such cases.  The following is a summary of significant
    pending rate cases before FERC and related regulatory matters.  

    FERC Order 636 and Transition Costs

    The Company's interstate natural gas pipelines primarily provide
    transportation and storage services pursuant to FERC Order 636.  This
    order allows pipelines to recover eligible costs resulting from
    implementation of the order (transition costs).  On July 16, 1996, the
    U.S. Court of Appeals for the District of Columbia upheld, in general,
    all aspects of Order 636 and remanded certain issues, including recovery
    of gas supply realignment (GSR) costs, for further explanation.  This
    decision is on appeal to the U.S. Supreme Court.  On February 27, 1997,
    FERC issued an order reaffirming the right of interstate pipelines to
    recover 100% of GSR costs.  

    TETCO's final and nonappealable Order 636 settlement, implemented in
    1994, provides for the recovery of a significant portion of 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 continues
    to be subject to change dependent upon natural gas prices and contract
    reserve levels.  

    At March 31, 1997 and December 31, 1996, the Company's interstate
    pipelines had recorded $67 million and $235.2 million (1997), and
    $67.9 million and $250 million (1996), of current and long-term
    regulatory assets, respectively, representing transition costs incurred
    or estimated to be incurred that will be recovered.  At March 31, 1997
    and December 31, 1996, the Company had recorded estimated current and
    long-term liabilities related to Order 636 transition costs of
    $115.4 million and $66.6 million (1997), and $84.4 million and
    $121.9 million (1996), respectively.  

    The Company believes the exposure associated with gas purchase contract
    commitments is substantially mitigated by transition cost recoveries
    pursuant to customer settlements, Order 636 and other mechanisms, and
    that this issue will not have a material adverse effect on the Company's
    consolidated results of operations, financial position or liquidity.

<PAGE>
<PAGE>
    In 1993, the U.S. Department of the Interior announced its intention to
    seek additional royalties from gas producers as a result of payments
    received by such producers in connection with past take-or-pay
    settlements, and buyouts and buydowns of gas sales contracts with
    natural gas pipelines.  The Company'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 substantial time to resolve.
    If required 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 resolution of this matter
    will not have a material adverse effect on the Company's consolidated
    financial position or liquidity.  

    Jurisdictional Transportation and Sales Rates

    PEPL - On April 1, 1992 and November 1, 1992, PEPL placed into effect,
    subject to refund, general rate increases. On February 26, 1997, FERC
    approved PEPL's settlement agreement which provides final resolution of
    refund matters and establishes prospective rates.  The agreement
    terminates other actions relating to these proceedings as well as PEPL's
    restructuring of rates and transition cost recoveries related to
    Order 636.  As a result of the resolution of this matter, PEPL recorded
    pre-tax earnings of $27.7 million in the first quarter of 1997 and in
    April 1997 refunded $37.8 million to customers.  The settlement will not
    have a material impact on future operating revenues.

    Trunkline - Effective August 1, 1996, Trunkline placed into effect a
    general rate increase, subject to refund, reflecting an annual cost of
    service increase of $5 million.  The rate proceeding is in the discovery
    phase, with hearings scheduled to commence in the third quarter of 1997. 
    
4.  Common Stockholders' Equity

    Under the most restrictive covenants contained in the Company's debt
    agreements, $1.3 billion of PanEnergy's consolidated common stock-
    holders' equity was available for the payment of dividends at March 31,
    1997.  

5.  Environmental Matters 

    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 assessment, installation of on-site source control
    equipment and groundwater monitoring wells, and on- and off-site cleanup
    work.  TETCO expects to complete these cleanup programs during 1997. 
    Groundwater monitoring activities will continue beyond 1997.  
<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 1996, TETCO completed cleanup of these sites. 

    The Company has also identified environmental contamination at certain
    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 Environmental Protection Agency and
    appropriate state regulatory agencies on these matters.  Environmental
    cleanup programs are expected to continue until 2002.  

    PEPL is also in discussions with environmental regulatory agencies in
    the states of Missouri and Illinois, and Trunkline is in similar
    discussions with the state of Louisiana, regarding potential monetary
    sanctions for alleged air compliance violations by facilities in those
    states.  

    At March 31, 1997 and December 31, 1996, the Company had total current
    and long-term liabilities recorded of $27.8 million and $185.6 million
    (1997), and $32.4 million and $188.9 million (1996), respectively, for
    remaining estimated cleanup costs on the TETCO, PEPL and Trunkline
    systems.  These estimates represent probable gross cleanup costs
    expected to be incurred, have not been discounted or reduced by customer
    recoveries and do not include fines, penalties or third-party claims. 
    At March 31, 1997 and December 31, 1996, the Company had total current
    and long-term regulatory assets recorded of $17 million and
    $98.2 million (1997), and $16.7 million and $136.5 million (1996),
    respectively, representing estimated costs to be recovered from
    customers.

    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 resolution of matters relating to the environmental
    issues discussed above will not have a material adverse effect on the
    Company's consolidated results of operations, financial position or
    liquidity based upon customer settlements and past experience with
        environmental cleanup costs.  <PAGE>
<PAGE>
6.  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, claims
    have been made and numerous lawsuits have been filed in the Superior
    Court of New Jersey, Middlesex County against TETCO and other private
    and governmental entities by or on behalf of hundreds of individuals and
    businesses.  These claimants seek compensatory damages for personal
    injuries, property losses and/or lost business income, as well as
    punitive damages.  The property insurers of an apartment complex
    adjacent to the asphalt plant where the rupture occurred also filed
    suits against TETCO and other defendants in Superior Court seeking to
    recover amounts paid under pertinent policies of insurance.  Quality
    Materials, Inc.  (Quality), the owner of the asphalt plant, has filed 
    a claim against TETCO seeking to recover unspecified property damages,
    lost income and punitive damages.  TETCO filed a counterclaim against
    Quality and has settled the claims of the property insurers and some
    individuals and businesses, while retaining the right to seek recovery
    of those settlement amounts from other defendants.  

    The findings of an investigation of the incident by the National
    Transportation Safety Board indicate third-party damage to be the cause
    of the rupture.  The Company recorded a provision in 1994 for costs
    related to this incident that are not recoverable under the Company's
    insurance policies.  

    On August 30, 1995, two plaintiffs filed a lawsuit with class action
    allegations in Jefferson County, Texas, against PanEnergy, Texas Eastern
    Corporation (TEC) and TETCO, among others.  While that suit ultimately
    was dismissed, one of the two original plaintiffs refiled the suit on
    June 3, 1996 in the Circuit Court of the City of St. Louis, Missouri. 
    The defendants removed the suit to the U.S. District Court for the
    Eastern District of Missouri, Eastern Division in July 1996.  In March
    1997, the case was remanded to the same state court in St. Louis.  The
    plaintiff seeks, in addition to class certification, recovery of
    compensatory and punitive damages, in unspecified amounts, for personal
    injuries and property damage resulting from alleged exposure to PCBs. 

    On August 31, 1995, Midwest Gas Storage, Inc. (Midwest) filed suit
    against PanEnergy and PEPL in the 58th Judicial District Court,
    Jefferson County, Texas, alleging that PEPL breached an interconnection
    agreement with Midwest and used its superior bargaining position to
    force Midwest to accept terms and conditions which were not in the
    original agreement.  Amended petitions filed in 1996 further allege that
    PanEnergy and PEPL, through economic coercion, have attempted to drive
    Midwest out of business.  Asserting fraud and violations of Texas
    anti-trust laws, among other counts, Midwest seeks compensatory and
        punitive damages in unspecified amounts.  <PAGE>
<PAGE>
    A lawsuit filed in the United States District Court for the District of
    Columbia by a natural gas producer was served in July 1996 naming TETCO,
    PEPL, Trunkline and PanEnergy Services, Inc. (a subsidiary) as
    defendants, among others.  The action was brought under the federal
    False Claims Act against 70 defendants, including every major pipeline,
    asserting that the defendants intentionally underreported volumes and
    heating content of gas purchased from producers on federal and Indian
    lands, with the result that the United States was underpaid royalties. 
    The plaintiff seeks recovery of the royalty amounts due the United
    States, treble damages and civil penalties.  The Company's named
    affiliates and many of the other defendants were dismissed from the
    lawsuit on March 27, 1997.  The plaintiff retains the right to refile
    the claims against the various defendants under certain conditions.  

    The Company believes the resolution of the legal matters discussed above
    will not have a material adverse effect on the Company's consolidated
    results of operations, financial position or liquidity.  

    On December 16, 1996, TETCO received notification that Marathon Oil
    Company (Marathon) intended to commence substitution of other gas
    reserves, deliverability and leases for those dedicated to a certain
    natural gas purchase contract (the Marathon Contract) with TETCO.  In
    TETCO's view, the tendered substitute gas reserves, deliverability and
    leases are not subject to the Marathon Contract and TETCO filed a
    declaratory judgment action on December 17, 1996 in the U.S. District
    Court for the Eastern District of Louisiana seeking a ruling that
    Marathon's interpretation of the Marathon Contract is incorrect.  On
    January 7, 1997, Marathon filed an answer and a counterclaim to TETCO's
    complaint seeking a declaratory judgment enforcing its interpretation
    of the Marathon Contract.  

    On February 18, 1997, Amerada Hess Corporation (Amerada Hess) notified
    TETCO that it intended to commence substitution of other gas reserves,
    deliverability, and leases for those dedicated to its natural gas
    purchase contract (the Amerada Hess Contract) with TETCO.  On the same
    date, Amerada Hess also filed a petition in the District Court of Harris
    County, Texas, 157th Judicial District, seeking a declaratory judgment
    that its interpretation of the Amerada Hess Contract, which covers the
    same leases and reserves as the Marathon Contract, is correct.  TETCO
    removed that suit to the U.S. District Court for the Southern District
    of Texas, Houston Division.  TETCO also filed a declaratory judgment
    action with respect to Amerada Hess contentions in the U.S. District
    Court for the Eastern District of Louisiana on February 21, 1997.  The
    Texas action has been transferred to the Eastern District of Louisiana. 
    That suit and the Louisiana action filed by TETCO have been transferred
        to the judge presiding over the Marathon Contract matter.  <PAGE>
<PAGE>
    The potential liability of the Company should TETCO be contractually
    obligated to purchase natural gas based upon the substitute gas
    reserves, deliverability and leases, and the effect of transition cost
    recoveries pursuant to TETCO's Order 636 settlement involve numerous
    complex legal and factual matters which will take a substantial period
    of time to resolve.  Because these matters are in the early stages of
    litigation, the Company cannot estimate the effects of this issue, based
    on information currently available.  

    On April 25, 1997, a group of affiliated plaintiffs that own and/or
    operate various pipeline and marketing partnerships in Kansas and
    Missouri filed suit against PEPL in the United States District Court for
    the Western District of Missouri.  The plaintiffs allege that PEPL has
    engaged in unlawful and anti-competitive conduct with regard to requests
    for interconnects with the PEPL system for service to the Kansas City
    area.  Asserting that PEPL has violated the antitrust laws and
    tortiously interfered with plaintiffs' contracts with third parties,
    plaintiffs seek compensatory and punitive damages in unspecified
    amounts.  As of the date of this report, PEPL has not been served with
    the complaint.  Accordingly, the Company cannot estimate the effects of
    this issue, based on information currently available.  

    On May 1, 1997, Citrus Trading Corporation (Citrus) and Enron Capital
    and Trade Resources Corporation, as successor to Enron Gas Marketing
    Corporation, filed suit in the District Court of Harris County, Texas,
    against PanEnergy LNG Sales, Inc. (formerly Pan National Gas Sales,
    Inc.), a subsidiary of PanEnergy, alleging breach of a gas purchase
    contract (the Contract) for regasified LNG entered into between Citrus
    and Pan National Gas Sales, Inc.  Plaintiffs allege that PanEnergy LNG
    Sales, Inc. failed to deliver LNG pursuant to the terms of the Contract. 
    Plaintiffs seek compensatory damages in unspecified amounts for losses
    allegedly incurred as a result of the contract breach as well as a
    declaratory judgment that PanEnergy LNG Sales Inc.'s assertions of force
    majeure due to the interruption in the supply of LNG to PanEnergy LNG
    Sales, Inc. do not constitute force majeure under the Contract.  Because
    this matter is in the early stages of litigation, the Company cannot
    estimate the effects of this issue, based on information currently
    available.  

    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 Company's consolidated results of operations, financial
    position or liquidity.  However, these actions and claims in the
    aggregate seek substantial damages against the Company and are subject
    to the uncertainties inherent in any litigation.  The Company is
    defending itself vigorously in all the above suits.  
<PAGE>
<PAGE>
7.  Other Matters

    TEPPCO Partners, L.P. - The Company has a 10% ownership interest in
    TEPPCO Partners, L.P., a master limited partnership (MLP) that owns and
    operates a petroleum products pipeline.  A subsidiary partnership of the
    MLP has $326.5 million in First Mortgage Notes outstanding at March 31,
    1997 with recourse to the general partner, a subsidiary of PanEnergy. 
    These notes have annual principal payments due through 2010.  In the
    opinion of management, the probability that the PanEnergy subsidiary
    will be required to perform under this recourse provision is remote.  

    Petrolane Incorporated (Petrolane) - In connection with the sale of
    Petrolane in 1989, TEC, a subsidiary of PanEnergy, 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, 1996 totaled approximately
    $62.2 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.  

    Northern Border Pipeline Company (Northern Border) - PEPL owns an
    effective 6% ownership interest in Northern Border through an MLP. 
    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 $94.4 million for 1997 through 2001.  In the opinion of
    management, the probability that PEPL will be required to perform under
    this guarantee is remote. 

    Commodity Risk Management - The Company holds and issues instruments
    that reduce the Company's exposure to market fluctuations in the price
    and transportation costs of natural gas, petroleum products and electric
    power.  The Company uses futures, swaps and options to manage and hedge
    price and location risk related to market exposures.  In addition to
    hedging activities, the Company also engages in the trading of such
    instruments, and therefore experiences net open positions in terms of
    price, volume and specified delivery point.  At March 31, 1997, the
    Company had unrealized gains of $215 million and unrealized losses of
    $194.5 million recorded as other current assets and other current
    liabilities, respectively, related to derivatives utilized for trading
    purposes.  The Company manages open positions with strict policies which
    limits its exposure to market risk and require daily reporting to
    management of potential financial exposure.  These policies include
    statistical risk tolerance limits using historical price movements to
    calculate a daily earning at risk as well as a total value at risk
    measurement.  
<PAGE>
<PAGE>
    ACCOUNTING STANDARDS

    The Company adopted SFAS No. 125, "Accounting for Transfers and
    Servicing of Financial Assets and Extinguishments of Liabilities," on
    a prospective basis effective January 1, 1997, with no significant
    impact on the Company's results of operations or financial position.  

    PanEnergy will implement SFAS No. 128, "Earnings per Share," for
    year-end 1997 financial reporting.  This standard requires presentation
    of both "basic" and, where capital structures are complex, "diluted"
    earnings per share disclosure in the statement of income.  The Company
    expects that implementation of this standard will not have a material
    effect on earnings per share as currently calculated.  

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 1997 and 1996 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 earnings or liquidity.  

OPERATING ENVIRONMENT AND OUTLOOK

The restructuring of the natural gas industry under FERC Order 636 and the
electric power industry under FERC Order 888 has created additional growth
opportunities for the Company.  Increasingly, companies in these industries
are planning combinations to form full-service energy enterprises.  On
November 25, 1996, PanEnergy and Duke Power, one of the nation's largest and
lowest-cost investor-owned electric utilities, announced a definitive merger
agreement for a tax-free, stock-for-stock transaction.  The pending merger
will create an integrated energy and energy services provider, with the
ability to offer physical delivery and management of both natural gas and
electricity throughout the country.  
<PAGE>
<PAGE>
The Company continues its growth strategy of expanding non-jurisdictional
businesses, while also continuing to develop interstate gas pipeline
market-expansion projects and new services for customers.  In the Energy
Services segment, the Company in the second half of 1996 formed the marketing
company PanEnergy Trading and Market Services (PTMS), whose operations are
expected to be combined with those of Duke/Louis Dreyfus upon completion of
the merger with Duke Power.  Also in 1996, the Company purchased various
natural gas gathering, processing and related assets and gathering systems,
and also purchased a general partnership interest in Dauphin Island Gathering
Partners (Dauphin Island).  In January 1997, Dauphin Island combined its
offshore gathering system with Main Pass Gathering Company, in which the
Company also has ownership interests, and subsequently filed to construct
additional gathering facilities in the Gulf of Mexico.  In the Natural Gas
Transmission segment, the Company in March 1997 announced the Excelsior(sm)
and Spectrum(sm) projects, with proposed in-service dates of the year 2000,
that would increase delivery capability to New York and the East Coast,
respectively, by approximately 500 billion British thermal units per day for
each project.  

The Company plans to continue to pursue strategic opportunities that emerge,
in the U.S. and internationally, via joint ventures, expansion projects and
acquisitions in both the Natural Gas Transmission and the Energy Services
segments.  These opportunities are expected to increase as the Company
combines its natural gas expertise with the electric power capability of Duke
Power.

RESULTS OF OPERATIONS

Consolidated net income for the three months ended March 31, 1997 was
$136.3 million, or $0.90 per share on 151.3 million average common shares
outstanding, compared with $101.8 million, or $0.68 per share on 150.5 million
average common shares outstanding, for the same period in 1996. 

Operating Income and Earnings Before Interest and Tax Analysis

Consolidated operating income increased to $269.5 million in the first three
months of 1997 compared with $213.2 million for the same period in 1996, while
consolidated earnings before interest and tax increased to $284 million in the
first three months of 1997 as compared with $222 million in 1996.  These
increases reflect improvements in both the Natural Gas Transmission and Energy
Services groups.  Business expansions, increased margins and the impact of
rate case resolutions contributed to these improvements.  These increases are
net of $8 million and $17 million of work-force reduction charges in 1997 and
1996, respectively.  
<PAGE>
<PAGE>
     Operating Income and Earnings Before Interest and Tax (EBIT) 
                           by Business Group
     ------------------------------------------------------------ 
    <TABLE>
    <CAPTION>
                                                  Three Months Ended March 31    
                                                  -----------------------------------
                                  Operating Income        EBIT      
                                  ----------------        ----------------
    Millions                1997     1996    1997    1996 
    --------               ------   ------  ------  ------
    <S>                    <C>      <C>     <C>     <C>   
    Natural Gas Transmission
       TETCO               $ 89.8   $ 85.1  $ 92.2  $ 86.8
       Algonquin             16.0     17.9    16.2    18.1
       PEPL                  67.9     32.1    76.9    33.2
       Trunkline             20.6     20.6    20.5    20.2
                           ------   ------  ------  ------
       Total                194.3    155.7   205.8   158.3
                           ------   ------  ------  ------
    Energy Services
       Field Services        46.0     31.6    48.1    34.0
       Gas and Power Services         28.7    21.6    24.0      21.8
                           ------   ------  ------  ------
       Total                 74.7     53.2    72.1    55.8
                           ------   ------  ------  ------
    Other Operations          0.5      4.3     6.1     7.9
                           ------   ------  ------  ------
    Consolidated Total     $269.5   $213.2  $284.0  $222.0
                           ======   ======  ======  ======
    </TABLE>

<PAGE>
<PAGE>
       Equity in Earnings (Losses) of Unconsolidated Affiliates
            (included in Earnings Before Interest and Tax)
    --------------------------------------------------------
    <TABLE>
    <CAPTION>
                                                  Three Months Ended  
                                                  March 31       
                                                  ------------------- 
    
    Millions                              1997       1996 
    --------                             -----      ----- 
    <S>                                  <C>        <C>   
    Natural Gas Transmission
       Northern Border Partners, L.P.    $ 1.3      $ 1.1 
                                         -----      ----- 
    Energy Services
       Various affiliates                  2.0        0.5 
                                         -----      ----- 
    Other Operations
       National Methanol Company           1.8        2.7 
       TEPPCO Partners, L.P.               2.9        2.7 
       Midland Cogeneration Venture        1.0       (0.3)
       Other affiliates                    0.5       (1.6)
                                         -----      ----- 
       Total                               6.2        3.5 
                                         -----      ----- 
    Total                                      Equity in Earnings  $ 9.5     $ 5.1 
                                         =====      ===== 
    </TABLE>
<PAGE>
<PAGE>

                            Operating Data
                            --------------
    <TABLE>
    <CAPTION>
                                                 Three Months Ended 
                                                 March 31      
                                                 ------------------ 
                                         1997        1996 
                                         ----        ---- 
    <S>                                  <C>         <C>  
    Natural Gas Transmission Volumes, 
      Trillion British Thermal Units

       Market Area 
         TETCO                            350         401 
         Algonquin                        109         105 
         PEPL                             196         210 
         Trunkline                        135         153 
         Eliminations                     (20)        (12)
                                         ----        ---- 
            Total                         770         857 
                                         ----        ---- 

       Supply Area 
         TETCO                             31          32 
         PEPL                               8           8 
         Trunkline                         33          28 
                                         ----        ---- 
            Total                          72          68 
                                         ----        ---- 
       Total Volumes                      842         925 
                                         ====        ==== 

    Energy Services Volumes

       Field Services
         Natural gas gathered/
           processed, TBtu/d(1)           3.4         2.5 
         NGL production, MBbl/d(2)      101.6        58.2 
         Crude oil pipeline volumes, MBbl/d         64.0  68.4 
         NGL pipeline volumes, MBbl/d    18.3        20.2 

       Gas and Power Services
         Natural gas marketed, TBtu/d     6.9         4.4 
         Electricity marketed, GWh(3)   3,793         171 

    ----------
    (1)  Trillion British thermal units per day.
    (2)  Thousand barrels per day.
    (3)  Gigawatt-hours.  
       </TABLE>
<PAGE>
<PAGE>
Natural Gas Transmission

Operating income for Natural Gas Transmission increased to $194.3 million in
the first three months of 1997 compared with $155.7 million for the same
period in 1996, while earnings before interest and tax increased
$47.5 million, or 30%, to $205.8 million in the first three months of 1997.

TETCO - Higher operating income drove TETCO's $5.4 million increase in
earnings before interest and tax, comparing the first three months of 1997
with the prior-year period.  The operating income increase was attributable
to higher revenues related to new pipeline expansion projects, partially
offset by severance costs and lower volumes due to warmer weather.  

Algonquin - Algonquin's earnings before interest and tax decreased
$1.9 million in the first three months of 1997 compared with the same period
in 1996 as a result of decreased operating income resulting from severance
expense of $3.8 million in the first quarter 1997 related to the previously
announced office consolidation.  Excluding this item, earnings before interest
and tax increased $1.9 million primarily due to higher throughput to fuel
electricity generation.  

PEPL - PEPL's earnings before interest and tax increased $43.7 million to
$76.9 million in the first quarter of 1997 compared with the prior-year
period, primarily due to increased operating income.  A $27.7 million
provision reversal in 1997 related to the final settlement of three rate
proceedings, $9.5 million of severance expense in 1996 and lower operating
costs contributed to the increase in earnings before interest and tax.  

Trunkline - Earnings before interest and tax for Trunkline increased
$0.3 million to $20.5 million in the first three months of 1997 as compared
with the same period in 1996, while operating income of $20.6 million remained
steady.  Decreased expenses in 1997, including the impact of higher severance
costs recorded in 1996, were offset by the effects of lower volumes due to
warmer weather.  

Energy Services

Earnings before interest and tax for Energy Services increased $16.3 million,
or 29%, comparing the first three months of 1997 with the same period in 1996,
primarily as a result of higher operating income driven by higher natural gas
gathering and trading volumes as well as higher NGL volumes and prices.  

Field Services - Field Services, which includes the Crude Oil group, increased
earnings before interest and tax $14.1 million for the first three months of
1997 as compared with the prior-year period due to higher operating income. 
Net revenues increased $26.9 million, or 35%, resulting from higher NGL prices
and increased gathering and processing volumes related to expansion projects
and the 1996 Mobil assets acquisition.  NGL production increased 75% to
101,600 million barrels per day, and gathering and processing volumes
increased 36% to 3.4 TBtu/d.  <PAGE>
<PAGE>
Gas and Power Services - Operating income and earnings before interest and tax
for Gas and Power Services increased $7.1 million and $2.2 million,
respectively, for the first three months of 1997 compared with the same period
in 1996.  Significantly higher gas volumes more than offset lower margins and
a one-time charge related to the disposition of the United Kingdom marketing
operations.  Total marketed gas volumes increased 57% to 6.9 TBtu/d and
electricity marketed increased to 3,793 GWh, primarily as a result of the
formation of PTMS in the third quarter 1996.  Earnings for the first quarter
of 1997 reflect a $10.5 million minority interest for Mobil's investment in
PTMS.  

Commodity Risk Management - See Note 7 of the Notes to Consolidated Financial
Statements for information concerning commodity risk management.  

Other Operations

A decrease in charter income from the liquefied natural gas project caused
lower operating income when comparing the first three months of 1997 with the
same period in 1996.  In addition, lower equity earnings from National
Methanol Company contributed to the $1.8 million decrease in earnings before
interest and tax.  

Accounting Standards

See Note 7 of the Notes to Consolidated Financial Statements for a discussion
of standards adopted and to be adopted.  

CAPITAL RESOURCES, LIQUIDITY AND FINANCIAL POSITION

Operating Cash Flow
<TABLE>
<CAPTION>
                                               Three Months Ended    
                                               March 31         
                                               --------------------   
Millions                                                1997    1996    
--------                                               ------  ------   
<S>                                      <C>         <C>      
Net Cash Flows Provided by Operating Activities        $337.1  $150.6   
                                         ------      ------   
</TABLE>

Historical Analysis - Operating cash flows increased $186.5 million comparing
the first three months in 1997 with the same period in 1996.  This increase
primarily reflects higher 1997 earnings.  In addition, net decreases in
accounts receivable partially offset by net decreases in accounts payable
reflect the seasonal declines from high levels of winter period trading
activity.  
<PAGE>
<PAGE>
Order 636 Transition Costs - With implementation of FERC Order 636 and the
unbundling of services, the Company's interstate natural gas pipelines are
incurring certain costs related to the transition, primarily TETCO's gas
purchase contract commitments.  TETCO's gross commitments under gas purchase
contracts that do not contain market-sensitive pricing provisions were
approximately $120 million, $55 million, $50 million and $15 million for the
years 1997 through 2000, respectively, with no significant amounts thereafter. 
These estimates reflect significant assumptions regarding natural gas contract
reserves and prices.  

As a result of the sale in 1996 of the right to collect certain Order 636
transition costs, above-market gas purchase contract payments by TETCO are
expected to exceed transition cost collections from customers through 2000. 

Environmental Matters - For information concerning cleanup programs and
environmental litigation, see Notes 5 and 6 of the Notes to Consolidated
Financial Statements.  

Litigation - For information concerning other litigation matters, see Note 6
of the Notes to Consolidated Financial Statements.  

Other - See Notes 3 and 7 of the Notes to Consolidated Financial Statements
for a discussion of certain other regulatory proceedings and other
contingencies.

The carrying value of LNG project assets is expected to be recovered through
estimated future cash flows.  Current estimates of future cash flows are based
on significant business relationships and assumptions of future natural gas
prices, supply availability and demand for LNG, which are subject to change. 
The Company has fully chartered its two LNG tankers for 22 years starting as
early as 1999.  

Investing Cash Flow

<TABLE>
<CAPTION>
                                                       Three Months Ended    
                                                        March 31         
                                               -       -------------------   
Millions                                           1997          1996   
--------                                          -----         -----   
<S>                                        <C>                  <C>     
Net Cash Flows Used in Investing Activities       $73.0         $21.5   
                                           -----                -----   
</TABLE>
<PAGE>
<PAGE>
Capital and Investment Expenditures - Capital and investment expenditures
totaled $76.5 million in the first three months of 1997, compared with
$44.8 million for the same period in 1996.  The Company currently expects to
invest up to $600 million in 1997 capital and investment expenditures, with
approximately 50% for Natural Gas Transmission and 40% for Energy Services,
with the remainder budgeted for international and other development projects. 
The Company's 1997 expenditure plans include approximately $425 million for
market-expansion projects.  

Asset Sale - In connection with the pending merger with Duke Power, in April
1997, the Company signed a definitive agreement for the sale of its investment
in Midland Cogeneration Venture Limited Partnership.  The sale is pending
regulatory approval.

Financing Cash Flow

<TABLE>
<CAPTION>
                                                       Three Months Ended    
                                                        March 31         
                                               -       --------------------   
Millions                                          1997          1996    
--------                                        ------ ------
<S>                                        <C>                 <C>      
Net Cash Flows Used in Financing Activities      $295.5        $140.4   
                                                 ------        ------   
</TABLE>

On April 1, 1997, PanEnergy called for redemption of its outstanding
$10 million, 9% convertible notes.  The note holders subsequently exercised
their right to convert the notes to PanEnergy common stock.  The notes were
converted and on May 13, 1997, 451,875 shares of PanEnergy common stock were
issued.  In connection with the note conversions, PanEnergy purchased
451,875 shares of its common stock on the open market during the period
April 29, 1997 through May 7, 1997 for $20.6 million.  

Debt and Credit Facilities - PanEnergy increased the size of its commercial
paper program in the first quarter 1997 for amounts up to $800 million,
supported by its two variable-rate bank credit agreements that permit
PanEnergy to borrow up to $400 million under a five-year facility and
$400 million under a 364-day facility.  Amounts outstanding under the credit
agreements and commercial paper program are limited to $800 million in
aggregate.  At March 31, 1997, there was $249.9 million of commercial paper
outstanding and no amounts outstanding under the credit agreements. 

Common Stockholders' Equity - At its April meeting, the board of directors
declared a quarterly dividend on common stock of $0.24 per common share
payable June 15, 1997, to shareholders of record on May 15, 1997.  
<PAGE>
<PAGE>
Financing Requirements - Dividends and debt repayments for the next year,
along with operating and investing requirements as previously discussed in the
Operating and Investing Cash Flow sections, are expected to be funded by cash
from operations, debt and commercial paper issuances and/or available credit
facilities.  As of the date of this report, PanEnergy, TETCO and PEPL have
effective shelf registration statements with the Securities and Exchange
Commission for the issuance of $50 million, $100 million and $100 million,
respectively, of unsecured debt securities.   

FORWARD-LOOKING INFORMATION

This report may contain certain forward-looking information regarding the
Company, including projections, estimates, forecasts, plans, contingencies and
objectives.  Although management believes that all such statements are based
upon reasonable assumptions, no assurance can be given that the actual results
will not differ materially from those contained in such forward-looking
statements.  

Important factors that could cause actual results to differ include, but are
not limited to, general economic conditions, natural gas and liquids prices,
competition from other pipelines and alternative fuels, weather conditions,
state and federal regulation, legal and regulatory proceedings, the
development of new markets, services and products, and the condition of the
capital markets utilized by the Company.  <PAGE>
<PAGE>
                       PART II.  OTHER INFORMATION

Item 1.  Legal Proceedings

See Notes 3, 5 and 6 of the Notes to Consolidated Financial Statements in
Part I of this Report, which are incorporated herein by reference.  See also
Item 3 of PanEnergy's Annual Report on Form 10-K for the year ended
December 31, 1996.  

Item 6.  Exhibits and Reports on Form 8-K 

(a)  Exhibits  

   Exhibit Number       Description      
        27        Financial Data Schedule

(b)  Reports on Form 8-K 

   A Current Report dated February 10, 1997 was filed under Item 7,
   "Financial Statements and Exhibits", to provide certain financial data of
   PanEnergy and subsidiaries as of December 31, 1996 and 1995 and for each
   of the years in the three year period ended December 31, 1996.  

   A Current Report dated March 10, 1997 was filed under Item 5, "Other
   Events", to disclose Duke Power Company receiving approval by the Public
   Service Commission of South Carolina for the pending merger with PanEnergy
   and to file the Agreement and Plan of Merger dated as of November 24,
   1996, as amended and restated as of March 10, 1997.  



<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.  




                                       PanEnergy Corp
                                        (Registrant)


                                 /s/ Sandra P. Meyer

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



Date:  May 14, 1997