<PAGE>
                          UNITED STATES
                SECURITIES AND EXCHANGE COMMISSION
                      Washington, D.C. 20549
                                 

                            FORM 10-Q

(Mark One)

[X]  QUARTERLY REPORT UNDER SECTION 13 OR 15 (d) OF THE SECURITIES
     EXCHANGE ACT OF 1934 

     For the Quarterly Period Ended March 31, 1997

     OR

[ ]  TRANSITION REPORT PURSUANT TO SECTION 13 OR 15 (d) OF THE SECURITIES
     EXCHANGE ACT OF 1934 

     For the Transition Period from __________ to __________

                   Commission File No. 1-11413


                    ENSERCH EXPLORATION, INC.
      (Exact name of Registrant as specified in its charter)

                              Texas
  (State or other jurisdiction of incorporation or organization)

                            75-2556975
               (I.R.S. Employer Identification No.)

6688 North Central Expressway, Suite 1000, Dallas, Texas 75206-3922
        (Address of principal executive office) (Zip Code)

                          (214)692-4300
       (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 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
                            -----    -----

     Number of shares of Common Stock of Registrant outstanding as of
May 13, 1997:  126,227,796


<PAGE>
<PAGE>
                             
                               
                PART I.  FINANCIAL INFORMATION


Item 1.  Financial Statements

<TABLE>
<CAPTION>

                   ENSERCH EXPLORATION, INC.
  CONDENSED STATEMENTS OF CONSOLIDATED OPERATIONS (UNAUDITED)


                                               Three Months
                                              Ended March 31
                                           -------------------
                                             1997       1996
                                           --------   --------
                                            (In thousands except
                                             per share amounts)
<S>                                       <C>         <C>
Revenues
 Natural gas                              $  58,181   $ 54,101
 Oil and condensate                          25,157     19,366
 Natural gas liquids                          1,714      1,544
 Other                                           95        400
                                          ---------  ---------
    Total                                    85,147     75,411
                                          ---------  ---------

Costs and Expenses
 Production and operating                    13,568     19,592
 Exploration                                  2,774      2,860
 Depreciation and amortization               26,951     32,825
 Write down of gas and oil properties       385,200
 General, administrative and other            7,388      8,251
 Taxes, other than income                     4,612      6,168
                                          ---------   --------
    Total                                   440,493     69,696
                                          ---------   --------

Operating Income (Loss)                    (355,346)     5,715
Other Income (Expense) - Net                    (22)        (1)
Interest Income                                  52
Interest and Other Financing Costs           (5,927)    (5,651)
                                          ---------   --------

Income (Loss) Before Income Taxes          (361,243)        63
Income Taxes (Benefit)                     (126,513)       (21)
                                          ---------   --------

Net Income (Loss)                         $(234,730)  $     84
                                          =========   ========

Net Income (Loss) Per Share               $   (1.86)  $    .00
                                          =========   ========
Weighted Average Shares Outstanding         125,974    125,841
                                          =========   ========
<FN>
See accompanying Notes.
</FN>
</TABLE>

                               1
<PAGE>
<PAGE>
<TABLE>
<CAPTION>

                   ENSERCH EXPLORATION, Inc.
  CONDENSED STATEMENTS OF CONSOLIDATED CASH FLOWS (UNAUDITED)


                                           Three Months Ended
                                                 March 31
                                           -------------------
                                             1997       1996
                                           --------   --------
                                              (In Thousands)
<S>                                      <C>         <C>
OPERATING ACTIVITIES
 Net income (loss)                       $(234,730)  $      84
 Write down of gas and oil properties      385,200
 Depreciation and amortization              26,951      32,825
 Deferred income tax expense (benefit)    (131,427)      1,751
 Other                                       2,859         871
 Changes in current operating assets
      and liabilities
  Accounts receivable                       29,021      (3,904)
  Other current assets                       9,593      (3,084)
  Accounts payable                         (17,617)     (2,349)
  Other current liabilities                  5,003         435
                                          ---------  ---------
Net cash flows from operating activities    74,853      26,629
                                          ---------  ---------

INVESTING ACTIVITIES
 Additions to property, plant
      and equipment                        (38,629)    (30,085)
 Proceeds from disposition of
      property, plant and equipment          2,187      13,604
 Other                                      (9,479)     (7,320)
                                          ---------   ---------
Net cash flows used in investing
     activities                            (45,921)    (23,801)
                                          ---------   ---------

FINANCING ACTIVITIES
Borrowings under bank revolving
     credit agreement                       20,000      55,000
Repayment of borrowings under bank
     revolving credit agreement            (55,000)    (20,000)
Borrowings under short term
     financing agreement                     7,000
 Change in temporary advances with
    affiliated companies                     6,051     (31,258)
Payments of capital lease obligations       (1,173)     (1,100)
 Decrease in advances under
    leasing arrangements                      (557)
 Issuance of common stock                        2          30
                                          ---------  ---------
  Net cash flows from (used in)
    financing activities                   (23,677)      2,672
                                          ---------  ---------
Net Increase in Cash                         5,255       5,500
Cash at Beginning of Period                  1,340       1,546
                                          ---------  ---------
Cash at End of Period                    $   6,595  $    7,046
                                          =========  =========
<FN>
See accompanying Notes.
</FN>
</TABLE>
                               2

<PAGE>
<PAGE>
<TABLE>
<CAPTION>

                   ENSERCH EXPLORATION, INC.
             CONDENSED CONSOLIDATED BALANCE SHEETS
                  (March 31, 1997 Unaudited)

                                          March 31 December 31
                                             1997      1996
                                          --------- ---------
                                              (In thousands)
<S>                                      <C>        <C> 
ASSETS
Current Assets
 Cash                                    $    6,595 $    1,340
 Accounts receivable - trade                 41,683     61,654
 Accounts receivable - affiliated
    companies                                 7,499     16,549
 Temporary advances - affiliated
    companies                                 7,082     13,133
 Other                                        8,588     18,181
                                         ---------- ----------
    Total current assets                     71,447    110,857
                                         ---------- ----------

Property, Plant and Equipment (at cost)
 Gas and oil properties
    (full cost method)                    2,451,910  2,806,536
 Other                                       21,941     21,957
                                         ---------- ----------
    Total                                 2,473,851  2,828,493
 Less accumulated depreciation
    and amortization                      1,102,912  1,081,845
                                         ----------  ----------
    Net property, plant and equipment     1,370,939  1,746,648
                                         ----------  ----------
Other Assets                                 10,906     14,634
                                         ---------- ----------
    Total                                $1,453,292 $1,872,139
                                         ==========  ==========
LIABILITIES AND SHAREHOLDERS' EQUITY
Current Liabilities
 Accounts payable - trade                    58,633    $90,922
 Accounts payable - affiliated
    companies                                14,117      8,924
 Short term borrowings                        7,000
 Advances under leasing arrangements          4,900      5,457
 Current portion of capital
    lease obligations                         9,608      3,250
 Other                                       15,587     10,584
                                         ----------  ----------
    Total current liabilities               109,845    119,137
                                         ----------  ----------
Bank Revolving Credit Agreement              80,000    115,000
                                         ----------  ----------
Capital Lease Obligations                   234,204    241,735
                                         ----------  ----------
Deferred Income Taxes                       142,373    273,801
                                         ----------  ----------
Other Liabilities                            27,257     28,249
                                         ----------  ----------
Company-Obligated Mandatorily Redeemable
 Preferred Securities of Subsidiary         150,000    150,000
                                         ----------  ----------
Common Shareholders' Equity
 Common stock (200,000 shares authorized;
  126,178 and 126,044 shares
    outstanding)                            126,178    126,044
 Paid in capital                            821,681    820,808
 Accumulated deficit                       (236,458)    (1,728)
 Unamortized restricted stock
    compensation                             (1,788)      (677)
 Treasury stock                                           (230)
                                         ----------  ----------
    Common shareholders' equity             709,613    944,217
                                         ----------  ----------
    Total                                $1,453,292 $1,872,139
                                         ==========  ==========
<FN>
See accompanying Notes.
</FN>
</TABLE>
                               3

<PAGE>
<PAGE>


                   ENSERCH EXPLORATION, INC.
            Notes to Condensed Financial Statements


1.   Earnings per share applicable to common stock are based on
     the weighted average number of common shares outstanding during
     the period, including common equivalent shares when dilutive.

2.   At March 31, 1997, the unamortized capitalized costs of U.S. gas and
     oil properties exceeded the SEC-prescribed  cost center ceiling by
     approximately $250 million.  Accordingly, a write down of gas and oil
     properties of $250 million after-tax ($385 million pre-tax) was recorded
     in March 1997.

3.   In the opinion of management, all adjustments (consisting
     only  of  normal recurring accruals) necessary  for  a  fair
     presentation  of the results of operations for  the  interim
     periods included herein have been made.































                               4

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<PAGE>


INDEPENDENT ACCOUNTANTS' REPORT


Enserch Exploration, Inc.:

      We  have reviewed the accompanying condensed consolidated
balance  sheet  of  Enserch Exploration, Inc. and  subsidiaries
(the "Company") as of March 31, 1997, and the related condensed
statements  of consolidated operations and cash flows  for  the
three  months  ended March 31, 1997 and 1996.  These  financial
statements are the responsibility of the Company's management.

      We  conducted  our  review in accordance  with  standards
established  by  the  American Institute  of  Certified  Public
Accountants.    A  review  of  interim  financial   information
consists  principally of applying analytical review  procedures
to  financial data and making inquiries of persons  responsible
for financial and accounting matters.  It is substantially less
in  scope  than an audit in accordance with generally  accepted
auditing standards, the objective of which is the expression of
an opinion regarding the financial statements taken as a whole.
Accordingly, we do not express such an opinion.

      Based  on  our review, we are not aware of  any  material
modifications   that   should  be  made   to   such   condensed
consolidated financial statements for them to be in  conformity
with generally accepted accounting principles.

      We  have previously audited, in accordance with generally
accepted auditing standards, the consolidated balance sheet  of
the Company as of December 31, 1996, and the related statements
of  consolidated operations, cash flows and owners'  equity for
the  year then ended (not presented herein); and in our  report
dated  February  10,  1997  (March 7,  1997  as  to  the  third
paragraph  of Note 4), we expressed an unqualified  opinion  on
those  consolidated financial statements.  In our opinion,  the
information   set   forth   in   the   accompanying   condensed
consolidated balance sheet as of December 31, 1996,  is  fairly
stated   in   all  material  respects,  in  relation   to   the
consolidated balance sheet from which it has been derived.




DELOITTE & TOUCHE LLP

Dallas, Texas
May 2, 1997






                               5

<PAGE>
<PAGE>

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


RESULTS OF OPERATIONS - Enserch Exploration, Inc. (EEX) had  a
first  quarter  1997  net loss of $234.7  million  ($1.86  per
share),  after  a  Securities and  Exchange  Commission  (SEC)
prescribed   non-cash  write down of gas  and  oil  properties
under the full cost method of accounting of $250 million after-
tax  ($385 million pre-tax), compared with net income  of  $.1
million($.00  per share) for the first quarter  of  1996.  EEX
sustained  an operating loss of $355 million in 1997  compared
with operating income of $5.7 million in 1996.  Excluding  the
non-cash write down, first quarter net income was $16  million
and  operating income was $30 million, significantly  improved
from the prior year.

Results  for  1996 include the impact of two significant  non-
recurring  items.  First, the Rocky Mountain  area  properties
were sold in late 1996. Revenues, costs and expenses and sales
volumes  attributable to these properties in the first quarter
of 1996 were:

   Revenues                       Millions     Sales Volumes
    Natural gas                    $5.4        3,340 MMcf
    Oil and condensate             $1.3        80 MBbls
    Natural gas liquids            $0.4        47 MBbls

  Costs and Expenses                                  
    Production & operating         $1.4        
    Depreciation &          
       amortization                $4.3        
    Taxes other than income        $0.6        

Second,  the  Cooper  Project equipment  and  facilities  were
refinanced   and   the  associated  operating   sublease   was
capitalized  in December 1996.  The pro forma impact  of  this
transaction on first quarter 1996 results of operations  is  a
reduction  of production and operating costs of $4.2  million,
an increase in depreciation and amortization of $2 million and
an  increase  in interest and other financing  costs  of  $2.4
million.

The  following comparisons of first quarter revenues and costs
and  expenses exclude the 1997 non-cash write down of gas  and
oil  properties  and the  income and expenses related  to  the
Rocky  Mountain  area  properties sold  in  1996.   Costs  and
expenses  for  1996  have also been adjusted  to  reflect  the
impact  of the refinancing of the Cooper Project as if it  had
occurred on January 1, 1996.

Revenues  for  1997  were $85 million,  a  $17  million  (25%)
increase  from 1996, reflecting a $9.5 million (20%)  increase
in  natural gas revenues, and a $7.4 million (38%) improvement
in  oil and other revenues.  Improved revenues were the result
of  higher average natural gas and crude oil prices and higher
crude oil production.  The average natural gas sales price per


                               6
<PAGE>
<PAGE>

thousand  cubic  feet (Mcf) was $2.85 in  1997  compared  with
$2.25  in  1996.   Natural gas production for  1997  was  20.4
billion  cubic  feet  (Bcf),  down  from  21.6  Bcf  in  1996,
primarily  due to reduced output from a non-operated  offshore
property  due to water encroachment.  Higher oil  revenues  in
1997 reflect a 22% improvement in the average sales price  and
a 14% increase in sales volumes due primarily to the continued
development  of  the  Cooper Project.  Overall,  oil  and  gas
production  in  the  1997 first quarter was  reduced  somewhat
because the Cooper facility was shut-in for approximately  two
weeks to allow for maintenance and repair activities.

Operating  expenses  were down 10% in the first  quarter  1997
compared   to  1996  with  all  categories  showing  declines.
Production  and operating costs were down slightly, reflecting
lower production. General and administrative expenses for 1997
were  $7.4  million, 10% less than 1996 due to cost  reduction
initiatives begun in late 1996.  Taxes, other than income were
$4.6  million, down 17% from 1996 primarily due  to  lower  ad
valorem  tax accruals.  Depreciation and amortization was  $27
million  in  1997,  a 12% decline from 1996  due  to  a  lower
amortization rate.  Assuming the 1997 write down  of  gas  and
oil   properties  occurred  on  January  1,  1996,  pro  forma
depreciation and amortization for the first quarter 1996 would
have been $27 million, the same as 1997.

Interest and other financing costs for 1997 were $5.9 million,
a  $2.2  million (27%) reduction from 1996, including the  pro
forma  Cooper Project adjustment described above. Interest  in
1996 included the impact from the debt incurred to finance the
DALEN  acquisition which was reduced by proceeds from property
sales in late 1996.

HEDGING ACTIVITIES

A  portion  of  the risk associated with fluctuations  in  the
price  of  natural gas and oil is managed through the  use  of
hedging  techniques  such as gas and oil  swaps,  collars  and
futures agreements.  EEX fixed the price on first quarter 1997
production  volumes  of  16  Bcf  of  natural  gas   (78%   of
production) at an average price of $2.93 per Mcf and 385 MBbls
of  oil (34% of production) at an average price of $22.78  per
Bbl.  In total, gas and oil price hedging activities decreased
first  quarter 1997 and 1996 revenues by $.5 million and  $5.7
million,  respectively. At March 31, 1997, EEX had outstanding
swaps,  collars and futures agreements that were entered  into
as  hedges  extending through December 31, 1997,  to  exchange
payments on 19 Bcf of natural gas and 1,650 MBbls of oil.   At
March 31, 1997, there were $3.8 million of net unrealized  and
unrecognized hedging gains based on the difference between the
strike  price  and  the New York Mercantile  Exchange  futures
price  for  the applicable trading month.  In addition,  there
were  $1.4  million  of realized gains on  hedging  activities
which  were  deferred and will be applied as  an  increase  in
revenues  in  April  1997,  the  month  of  physical  sale  of
production.




                               7
<PAGE>
<PAGE>

CAPITALIZED COSTS

The   SEC-prescribed  full  cost  accounting   rules   require
registrants to calculate the cost center ceiling limitation at
the  end  of  each  quarter using current  prices  and  costs.
Natural  gas  and oil prices used in the March 31,  1997  cost
center ceiling calculation declined sharply from prices at the
end of 1996.  Natural gas decreased to $1.83 per Mcf (46%) and
oil  decreased  to $18.11 per Bbl (22%).  As a result  of  the
significant decrease in prices required to be used in the cost
center   ceiling   calculation  at  March  31,   1997,   EEX's
unamortized capitalized costs of U. S. oil and gas  properties
exceeded  the  cost center ceiling limitation by approximately
$250  million.  Accordingly, a non-cash write down of gas  and
oil  properties of $250 million after-tax ($385  million  pre-
tax) was recorded in March 1997.

Management believes the low prices required to be used in  the
calculation  are  not representative of the  prices  EEX  will
receive for its production in the future.  The non-cash  write
down of oil and gas properties will reduce future depreciation
and  amortization  expense but will  not  impact  future  cash
flows.

LIQUIDITY AND CAPITAL RESOURCES

Cash Flows

EEX  generated sufficient cash flows from operations  to  fund
its capital requirements and reduce financings by $29 million.
Net cash flows from operating  activities were $75 million, an
increase  of  $48  million  over 1996.   Investing  activities
required  net  cash flows of $46 million, an increase  of  $22
million  compared  with  1996 due to an  increase  in  capital
expenditures  and a decrease in proceeds from  disposition  of
properties.

EEX  intends  to  utilize substantially all of its  internally
generated cash flows for growth of the business and expects to
have  ample  cash  flow  from operations  and  the  continuous
monetization  of  non-core assets to fund its business  plans.
Borrowings  under  EEX's  credit facilities  may  be  used  to
supplement temporary cash flow needs.  EEX does not anticipate
paying cash dividends in the foreseeable future.

Capital Structure

Debt and preferred securities of a subsidiary represented  40%
of  total  capitalization of $1.2 billion at March  31,  1997,
compared  to  35% of total capitalization of $1.5  billion  at
December 31, 1996.  The reduction in total capitalization  and
the  corresponding increase in debt as a percentage  of  total
capitalization   was  due  primarily  to  the   reduction   in
shareholders'  equity  from the first  quarter  1997  non-cash
write  down  of  gas and oil properties, partially  offset  by
earnings and reduced bank borrowings.



                               8
<PAGE>
<PAGE>


MERGER WITH LONE STAR ENERGY PLANT OPERATIONS, INC.

In  April 1996, ENSERCH announced that it had entered  into  a
merger  agreement  with Dallas-based Texas  Utilities  Company
("ENSERCH/TUC Merger").  Under the terms of the  agreement,  a
new  holding  company will acquire the businesses of  ENSERCH,
excluding  the  businesses of EEX and Lone Star  Energy  Plant
Operations,   Inc.  ("LSEPO").   Immediately  prior   to   the
consummation  of the ENSERCH/TUC Merger, and  as  a  condition
thereof,  EEX will be merged into LSEPO ("EEX/LSEPO  Merger"),
LSEPO  will  change  its name to "Enserch  Exploration,  Inc."
("New  EEX"),  shares of EEX will automatically  be  converted
into  shares of New EEX on a one-for-one basis in  a  tax-free
transaction,  and ENSERCH will distribute to its shareholders,
on a pro rata basis, all of the shares of New EEX common stock
it   owns   ("Distribution").   The  mergers,  including   the
transactions contemplated by the mergers, were approved by the
shareholders of EEX, ENSERCH and TUC, in separate meetings, on
November 15, 1996.  The ENSERCH/TUC merger is subject to certain
conditions which include the  approval by  the  Securities and 
Exchange Commission (SEC) and receipt by ENSERCH of a favorable
tax ruling from the Internal Revenue Service (IRS) to the effect
that its distribution of EEX stock is a tax-free transaction.  
ENSERCH received this IRS ruling in February 1997.  ENSERCH has
stated that it recently became aware of an inadvertent misstatement
of fact it believes is immaterial in its filings with the IRS and
has received opinion from outside counsel that it  will  still be
able to rely on the ruling.  ENSERCH and TUC have stated that while
they  do  not  believe  the additional facts would change the IRS's
ruling, the situation is being reviewed by the parties and further
communication with the IRS may ensue.  All other approvals have 
been received,  except for approval by the SEC under the Public
Utility Holding Company Act of 1935 where the approval process is
proceeding.   





























                               9
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<TABLE>
<CAPTION>

                   ENSERCH EXPLORATION, INC.
             SUMMARY OF OPERATING DATA (UNAUDITED)


                                              Three Months
                                             Ended March 31
                                          --------------------
                                            1997         1996
                                          --------    --------
<S>                                       <C>           <C> 
Operating Income (Loss)
    (in millions) (a)                     $ (355.3)     $   5.7
                                           ========     =======
Revenues (in millions)
 Natural gas                              $   58.2      $  54.1
 Oil and condensate                           25.1         19.4
 Natural gas liquids                           1.7          1.5
 Other                                          .1           .4
                                           --------     -------
   Total                                  $   85.1      $  75.4
                                           ========     =======
Sales Volumes
 Natural gas (MMcf)                         20,426       24,971
 Oil and condensate (MBbls)                  1,147        1,082
 Natural gas liquids (MBbls)                    96          166
   Total volumes (Mmcfe) (b)                27,884       32,459

Average Sales Price
 Natural gas (per Mcf)                       $2.85        $2.17
 Oil and condensate (per Bbl)                21.93        17.90
 Natural gas liquids (per Bbl)               17.85         9.30
   Total (per Mcfe) (b)                       3.05         2.31

Cost and Expenses (per Mcfe) (b)
 Production and operating (c)                 $.49         $.60
 Exploration                                   .10          .09
 Depreciation and amortization                 .97         1.01
 General, administrative and other             .26          .25
 Taxes, other than income                      .17          .19

Net Wells
 Drilled                                        16           18
 Productive                                     11           17

<FN>
(a)  1997 includes a write down of gas and oil properties of
     $250 million after-tax ($385 million pre-tax).
(b)  Oil and natural gas liquids are converted to Mcf
     equivalents (Mcfe) on the basis of one barrel equals 6.0 Mcfe.
(c)  Excludes related production, severance and ad valorem taxes.
</FN>
</TABLE>
                              10

<PAGE>
<PAGE>




                  PART II - OTHER INFORMATION



Item 6.  Exhibits and Reports on Form 8-K

       (a) Exhibits

           EXHIBIT  (15) - Letter of Deloitte  &  Touche  LLP dated
                           May 14, 1997, regarding unaudited
                           interim financial statements

           EXHIBIT (27) -  Financial Data Schedule

       (b)  Report on Form 8-K

            Current Report on Form 8-K dated January 8, 1997/January 13,
            1997. (News Releases dated January 8, 1997  and January 13, 1997: 
            (1) Developments at the Cooper Project and (2) Appointment  of
            Chairman, President and CEO.)

            Current  Report on Form 8-K dated March 10, 1997. (News Release
            dated March 10, 1997: Developments in merger of ENSERCH and TUC.)




























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                          SIGNATURES


      Pursuant  to the requirements of the Securities  Exchange
Act  of 1934, the Registrant has duly caused this report to  be
signed  on  its  behalf  by  the  undersigned  thereunto   duly
authorized.

                                 ENSERCH EXPLORATION, INC.
                                        (Registrant)






Dated May 14, 1997       By           /s/R. S. LANGDON
                           -----------------------------------------
                                      R. S. Langdon
                                      Executive Vice President,
                                      Finance and Administration,
                                      and Chief Financial Officer




Dated May 14, 1997       By          /s/R. E. SCHMITZ
                           -----------------------------------------
                                      R. E. Schmitz
                                      Vice President
                                      and Controller












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