<PAGE> 1

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

                            FORM 10-Q
(Mark One)

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

For the quarterly period ended          June 30, 1999
                              -----------------------------------
                                        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 Number                  1-6446
                      -------------------------------------------

                        K N ENERGY, INC.
-----------------------------------------------------------------
     (Exact name of registrant as specified in its charter)

                Kansas                        48-0290000
-----------------------------------------------------------------
     (State or other Jurisdiction of      (I.R.S. Employer
     incorporation or organization)       Identification No.)

    370 Van Gordon Street
    P.O. Box 281304, Lakewood, Colorado          80228-8304
-----------------------------------------------------------------
(Address of principal executive offices)        (Zip Code)

                              (303) 989-1740
-----------------------------------------------------------------
        (Registrant's telephone number, including area code)


-----------------------------------------------------------------
(Former name, former address and former fiscal year, if changed
since last report)

Indicate by check mark whether the registrant (1) has filed all
reports required to be filed by Section 13 or 15(d) of the
Securities Exchange Act of 1934 during the preceding 12 months
(or for such shorter period that the registrant was required to
file such reports), and (2) has been subject to such filing
requirements for the past 90 days.

                         Yes  X         No
                            ------        -------

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

Common stock, $5 par value; authorized 150,000,000 shares;
-----------------------------------------------------------------
outstanding 70,825,393 shares as of July 31, 1999.
--------------------------------------------------

<PAGE> 2                                                   Form 10-Q

                K N ENERGY, INC. AND SUBSIDIARIES
                            FORM 10-Q
                   QUARTER ENDED JUNE 30, 1999
                            Contents

PART I.FINANCIAL INFORMATION

 Item 1. Financial Statements (Unaudited)                     Page Number

           Consolidated Balance Sheets                              3 & 4
           Consolidated Statements of Income                            5
           Consolidated Statements of Cash Flows                        6
           Notes to Consolidated Financial Statements              7 - 15

 Item 2. Management's Discussion and Analysis of Financial
           Condition and Results of Operations                    16 - 26

 Item 3. Quantitative and Qualitative Disclosures About Market
         Risk                                                          27

PART II    OTHER INFORMATION

 Item 1. Legal Proceedings                                             28
 Item 4. Submission of Matters to a Vote of Security Holders           28
 Item 5. Other Information                                        28 - 29
 Item 6. Exhibits and Reports on Form 8-K                              29

SIGNATURE                                                              30

<PAGE> 3                                                   Form 10-Q

PART I - FINANCIAL INFORMATION

Item 1.  Financial Statements

CONSOLIDATED BALANCE SHEETS (Unaudited)
K N Energy, Inc. and Subsidiaries
(Dollars in Thousands)

<TABLE>
<CAPTION>
                                                                         June 30           December 31
                                                                          1999                 1998
                                                                      -------------       -------------
<S>                                                                   <C>                 <C>


ASSETS:
Current Assets:
Cash and Cash Equivalents                                             $   39,489          $   21,955
Restricted Deposits                                                        5,503               9,096
U.S. Government Securities                                                     -           1,092,415
Accounts Receivable                                                      686,336             693,044
Inventories                                                              121,986             144,831
Gas Imbalances                                                            80,683              85,349
Other                                                                     46,981              46,812
                                                                      ----------          ----------
                                                                         980,978           2,093,502
                                                                      ----------          ----------

Investments                                                              260,980             252,543
                                                                      ----------          ----------

Property, Plant and Equipment                                          7,676,064           7,767,332
Less Accumulated Depreciation and Amortization                           758,482             744,156
                                                                      ----------          ----------
                                                                       6,917,582           7,023,176
                                                                      ----------          ----------

Deferred Charges and Other Assets                                        253,017             242,991
                                                                      ----------          ----------
Total Assets                                                          $8,412,557          $9,612,212
                                                                      ==========          ==========
</TABLE>

The accompanying notes are an integral part of these statements.

<PAGE> 4                                                   Form 10-Q

CONSOLIDATED BALANCE SHEETS (Unaudited)
K N Energy, Inc. and Subsidiaries
(Dollars in Thousands)


<TABLE>
<CAPTION>
                                                                         June 30           December 31
                                                                          1999                 1998
                                                                      -------------       -------------
<S>                                                                   <C>                 <C>


LIABILITIES AND STOCKHOLDERS' EQUITY:
Current Liabilities:
Current Maturities of Long-Term Debt                                  $    7,167          $   10,167
Notes Payable                                                            623,450             297,000
Substitute Note                                                                -           1,394,846
Accounts Payable                                                         495,521             489,414
Accrued Taxes                                                             30,939              18,914
Gas Imbalances                                                            59,867              74,857
Payable for Purchase of Thermo Companies                                  43,213              86,799
Other                                                                    219,220             247,465
                                                                      ----------          ----------
                                                                       1,479,377           2,619,462
                                                                      ----------          ----------
Other Liabilities and Deferred Credits:
Deferred Income Taxes                                                  1,702,183           1,699,072
Other                                                                    346,795             431,565
                                                                      ----------          ----------
                                                                       2,048,978           2,130,637
                                                                      ----------          ----------

Long-Term Debt                                                         3,299,541           3,300,025
                                                                      ----------          ----------

K N-Obligated Mandatorily Redeemable Preferred Capital Trust
 Securities of Subsidiary Trusts Holding Solely Debentures of K N        275,000             275,000
                                                                      ----------          ----------

Minority Interests in Equity of Subsidiaries                              64,531              63,267
                                                                      ----------          ----------

Stockholders' Equity:
Preferred Stock, Class A, 0 and 70,000 Shares Outstanding                      -               7,000
                                                                      ----------          ----------
Common Stock-
  Authorized - 150,000,000 Shares, Par Value $5 Per Share
  Outstanding - 70,819,129 and 68,597,308 Shares, Respectively,
    After Deducting 76,786 and 48,598 Shares Held in Treasury            354,480             343,230
Additional Paid-in Capital                                               729,841             694,223
Retained Earnings                                                        170,352             193,925
Other                                                                     (9,543)            (14,557)
                                                                      ----------          ----------
Total Common Stockholders' Equity                                      1,245,130           1,216,821
                                                                      ----------          ----------
Total Stockholders' Equity                                             1,245,130           1,223,821
                                                                      ----------          ----------
Total Liabilities and Stockholders' Equity                            $8,412,557          $9,612,212
                                                                      ==========          ==========

</TABLE>

The accompanying notes are an integral part of these statements.

<PAGE> 5                                                   Form 10-Q

CONSOLIDATED STATEMENTS OF INCOME (Unaudited)
K N Energy, Inc. and Subsidiaries
(In Thousands Except Per Share Amounts)

<TABLE>
<CAPTION>
                                                                     Three Months Ended                 Six Months Ended
                                                                          June 30                           June 30
                                                               ------------------------------   ---------------------------
                                                                   1999             1998             1999             1998
                                                                   ----             ----             ----             ----
<S>                                                            <C>              <C>             <C>              <C>

Operating Revenues:
Upstream Gathering and Processing                              $  166,101       $  151,311      $  297,696       $  290,410
Midstream Sales, Transportation and Storage                       374,952          379,293         732,378          665,191
Downstream Retail and Marketing                                   902,156          624,638       1,597,994        1,453,177
Intersegment Eliminations                                        (257,518)        (115,523)       (388,408)        (202,537)
                                                               ----------       ----------      ----------       ----------
Total Operating Revenues                                        1,185,691        1,039,719       2,239,660        2,206,241
                                                               ----------       ----------      ----------       ----------

Operating Costs and Expenses:
Gas Purchases and Other Costs of Sales                            964,927          786,094       1,762,760        1,725,629
Operations and Maintenance                                        103,307           99,607         203,988          190,487
Depreciation and Amortization                                      53,483           47,379         107,003           89,199
Taxes, Other Than Income Taxes                                     13,480           13,139          27,663           25,287
Merger-Related Costs, Net of Reimbursement                         (2,916)           1,410               -            5,763
                                                               ----------       ----------      ----------       ----------
Total Operating Costs and Expenses                              1,132,281          947,629       2,101,414        2,036,365
                                                               ----------       ----------      ----------       ----------

Operating Income                                                   53,410           92,090         138,246          169,876
                                                               ----------       ----------      ----------       ----------

Other Income and (Deductions):
Interest Expense, Net                                             (70,321)         (63,491)       (140,771)        (113,833)
Minority Interests                                                 (5,886)          (4,615)        (11,153)          (6,996)
Other, Net                                                         18,849            2,478          21,405           13,172
                                                               ----------       ----------      ----------       ----------
Total Other Income and (Deductions)                               (57,358)         (65,628)       (130,519)        (107,657)
                                                               ----------       ----------      ----------       ----------

Income (Loss) Before Income Taxes                                  (3,948)          26,462           7,727           62,219
Income Taxes (Benefit)                                             (1,540)           9,772           3,013           23,021
                                                               ----------       ----------      ----------       ----------

Net Income (Loss)                                                  (2,408)          16,690           4,714           39,198
Less - Preferred Stock Dividends                                       41               87             129              175
Less - Premium Paid on Preferred Stock Redemption                     350                -             350                -
                                                               ----------       ----------      ----------       ----------

Earnings (Loss) Available For Common Stock                     $   (2,799)      $   16,603      $    4,235       $   39,023
                                                               ==========       ==========      ==========       ==========

Number of Shares Used in Computing
  Basic Earnings Per Common Share                                  70,689           67,170          70,087           60,015
                                                               ==========       ==========      ==========       ==========

Basic Earnings (Loss) Per Common Share                         $    (0.04)      $     0.25      $     0.06       $     0.65
                                                               ==========       ==========      ==========       ==========

Number of Shares Used in Computing
  Diluted Earnings Per Common Share                                70,689           67,986          70,169           60,818
                                                               ==========       ==========      ==========       ==========

Diluted Earnings (Loss) Per Common Share                       $    (0.04)      $     0.24      $     0.06       $     0.64
                                                               ==========       ==========      ==========       ==========

Dividends Per Common Share                                     $     0.20       $     0.19      $     0.40       $     0.37
                                                               ==========       ==========      ==========       ==========

</TABLE>

The accompanying notes are an integral part of these statements.


<PAGE> 6                                                   Form 10-Q

CONSOLIDATED STATEMENTS OF CASH FLOWS (Unaudited)
K N Energy, Inc. and Subsidiaries
Increase (Decrease) in Cash and Cash Equivalents
(In Thousands)

<TABLE>
<CAPTION>
                                                                               Six Months Ended
                                                                                   June 30
                                                                      ----------------------------------

                                                                          1999                 1998
                                                                          ----                 ----
<S>                                                                   <C>                 <C>

CASH FLOWS FROM OPERATING ACTIVITIES:
Net Income                                                            $    4,714          $   39,198
Adjustments to Reconcile Net Income to Net Cash Flows from
  Operating Activities:
Depreciation and Amortization, Excluding Amortization
   of Gas Plant Acquisition Adjustment                                    52,556              44,839
Deferred Income Taxes                                                      1,007               8,714
Deferred Purchased Gas Costs                                               7,278              14,777
Net Gains on Sales of Facilities                                         (18,077)             (8,440)
Proceeds from Buyout of Contractual Gas Purchase Obligations                   -              27,500
Change in Gas in Underground Storage                                      28,419             (46,938)
Changes in Other Working Capital Items (Note 5)                           (1,606)             35,268
Changes in Deferred Revenues                                              (6,383)             (3,497)
Other, Net                                                                (1,033)             14,284
                                                                      ----------          ----------
NET CASH FLOWS FROM OPERATING ACTIVITIES                                  66,875             125,705
                                                                      ----------          ----------

CASH FLOWS FROM INVESTING ACTIVITIES:
Capital Expenditures                                                     (60,718)           (189,256)
Cash Paid for Acquisition of MidCon, Net of Cash Acquired                      -          (2,177,591)
Other Acquisitions                                                       (38,440)            (13,218)
Investments                                                                1,674               1,293
Sale of U.S. Government Securities                                     1,092,415                   -
Purchase of U.S. Government Securities                                         -          (1,061,203)
Proceeds from Sales of Assets                                             57,086              28,985
                                                                      ----------          ----------
NET CASH FLOWS PROVIDED BY (USED IN) INVESTING ACTIVITIES              1,052,017          (3,410,990)
                                                                      ----------          ----------

CASH FLOWS FROM FINANCING ACTIVITIES:
Short-Term Debt, Net                                                  (1,068,396)            196,000
Long-Term Debt - Issued                                                        -           2,350,000
Long-Term Debt - Retired                                                  (3,950)            (21,876)
Common Stock Issued in Public Offering                                         -             650,000
Other Common Stock Issued                                                  6,329              11,956
Mandatorily Redeemable Trust Securities Issued                                 -             175,000
Preferred Stock Redeemed                                                  (7,350)                  -
Treasury Stock, Issued                                                        39                 632
Treasury Stock , Acquired                                                    (56)               (499)
Cash Dividends, Common                                                   (28,158)            (25,044)
Cash Dividends, Preferred                                                   (129)               (175)
Minority Interests, Net                                                    1,410              16,844
PEPS Contract Fees                                                        (1,097)                  -
Securities Issuance Costs                                                      -             (52,142)
                                                                      ----------          ----------
NET CASH FLOWS (USED IN) PROVIDED BY FINANCING ACTIVITIES             (1,101,358)          3,300,696
                                                                      ==========          ==========

Net Increase in Cash and Cash Equivalents                                 17,534              15,411
Cash and Cash Equivalents at Beginning of Period                          21,955              22,471
                                                                      ----------          ----------
Cash and Cash Equivalents at End of Period                            $   39,489          $   37,882
                                                                      ==========          ==========

</TABLE>

For supplemental cash flow information, see Note 5.
The accompanying notes are an integral part of these statements.

<PAGE> 7                                                   Form 10-Q

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

1.   General
     -------

As used herein, "K N" or "the Company" refers to K N Energy, Inc.
and its consolidated subsidiaries unless the context otherwise
requires.  In the opinion of Management, all adjustments
necessary for a fair presentation of the results for the
unaudited interim periods have been made.  Except as explicitly
noted, these adjustments consist solely of normal recurring
accruals.  Certain prior period amounts have been reclassified to
conform with the current presentation.

2.   Business Combinations
     ---------------------

On February 22, 1999, Sempra Energy ("Sempra") and the Company
announced that their respective boards of directors had
unanimously approved a definitive agreement under which Sempra
and K N would combine in a stock-and-cash transaction valued in
the aggregate at $6.0 billion.  On June 21, 1999, Sempra and K N
announced that they had mutually agreed to terminate their merger
agreement.  Sempra reimbursed K N $5.95 million for expenses
incurred in connection with the proposed merger.

On July 8, 1999, K N announced an Agreement and Plan of Merger to
combine with Kinder Morgan, Inc.   Kinder Morgan, Inc. is the
sole stockholder of the general partner of Kinder Morgan Energy
Partners, L. P. ("KMEP").  KMEP is the nation's largest pipeline
master limited partnership.  It owns and operates one of the
largest product pipeline systems in the United States, serving
customers in sixteen states with more than 5,000 miles of
pipeline and over twenty associated terminals.  KMEP also
operates 24 bulk terminal facilities which transload over 40
million tons of coal, petroleum coke and other products annually.
In addition, KMEP owns 51 percent of Plantation Pipe Line Company
and 20 percent of Shell CO2 Company, Ltd.

In the combination, K N Energy would issue approximately 41.5
million shares of K N common stock in return for all of the
outstanding shares of Kinder Morgan, Inc.  Upon closing of the
transaction, Richard D. Kinder, Chairman and Chief Executive
Officer of Kinder Morgan, Inc., will be named Chairman and Chief
Executive Officer of the combined entity, which will be known as
Kinder Morgan, Inc.  The transaction is expected to close early
in the fourth quarter of 1999.

On January 30, 1998, pursuant to a definitive stock purchase
agreement (the "MidCon Agreement"), the Company acquired all of
the outstanding shares of capital stock of MidCon Corp.
("MidCon") from Occidental Petroleum Corporation ("Occidental")
for $2.1 billion in cash and the assumption of a $1.4 billion
note (the "Substitute Note"), at which time MidCon became a
wholly owned subsidiary of K N Energy, Inc. (the "Acquisition").
The Substitute Note bore interest at 5.798% and was required to
be collateralized by U.S. government securities, letters of
credit or a combination thereof.  The Substitute Note was paid in
full on January 4, 1999.  In conjunction with the Acquisition,
K N also assumed MidCon's obligation to lease the MidCon Texas
intrastate pipeline system under a 30-year operating lease,
requiring average annual lease payments of approximately $30
million.  The Acquisition was initially financed through a
combination of credit agreements (see Note 7).

The Acquisition was accounted for as a purchase for accounting
purposes and, accordingly, the MidCon assets acquired and
liabilities assumed were recorded at their respective estimated
fair market values as of the acquisition date.  The allocation of
purchase price resulted in the recognition of a gas plant
acquisition adjustment of approximately $3.9 billion, principally
representing the excess of the assigned fair market value of

<PAGE> 8                                                   Form 10-Q

the assets of Natural Gas Pipeline Company of America ("NGPL"), a
wholly owned subsidiary of MidCon, over the historical cost for
ratemaking purposes.  This gas plant acquisition adjustment, none
of which is currently being recognized for rate-making purposes,
is being amortized over 36 years, approximately the estimated
remaining useful life of NGPL's interstate pipeline system.  For
the quarters ended June 30, 1999 and 1998, $27.2 million and
$24.6 million of such amortization, respectively, was charged to
expense.  For the six months ended June 30, 1999 and 1998, $54.4
million and $44.4 million, respectively, was charged to expense.
The assets, liabilities and results of operations of MidCon are
included with those of the Company beginning with the January 30,
1998 acquisition date.  For the six months ended June 30, 1998,
operating revenues, net income, diluted earnings per common share
and number of shares used in computing diluted earnings per
share, on a pro forma basis to reflect the acquisition of MidCon,
were $2,475.5 million, $43.2 million, $0.71 and 60.818 million,
respectively.

During the third quarter of 1998, K N completed its acquisition
of interests in four independent power plants in Colorado from
the Denver-based Thermo Companies ("Thermo"), representing
approximately 380 megawatts of electric generation capacity and
access to approximately 130 Bcf of natural gas reserves.  These
generating facilities are located in Ft. Lupton, Colorado (272
megawatts) and Greeley, Colorado (108 megawatts) and sell their
power output to Public Service Company of Colorado under long-
term agreements.  Payments for these interests are being made
over a two-year period, with the initial payment of 689,810
shares (1,034,715 shares adjusted for the December 1998 three-for-
two stock split) of K N common stock having been made on October
21, 1998.  Additional payments were made on January 4, 1999,
consisting of 833,623 shares of K N common stock and $15 million
in cash, and on April 20, 1999, consisting of 1,232,286 shares of
K N common stock and $20 million in cash.  The remaining payment
in 2000 is expected to be made in a combination of cash and
common stock as agreed to by K N and Thermo, with the default mix
being 50 percent stock and 50 percent cash.  This transaction was
accounted for as a purchase.

3.   Investments and Sales
     ---------------------

In March 1998, K N sold its Kansas retail natural gas
distribution properties, located in 58 Kansas communities and
serving approximately 30,000 residential, commercial and
industrial customers, to Midwest Energy, Inc., a customer-owned
cooperative based in Hays, Kansas.  K N received approximately
$24 million in cash in conjunction with the sale and recorded a
pre-tax gain of approximately $8.5 million (approximately $5.2
million after tax or $0.08 per diluted share).  Concurrently with
the sale, K N received $27.5 million in cash in exchange for the
release of the purchaser from certain contractual gas purchase
obligations, which amount will be amortized as an offset to gas
purchases over a period of years as the associated volumes are
sold.

On March 31, 1999, the TransColorado Gas Transmission Company
("TransColorado"), an enterprise jointly owned by K N and Questar
Corp., placed in service a 280-mile-long natural gas pipeline,
which includes two compressor stations and extends from near
Rangely, Colorado, to its southern terminus at the Blanco Hub
near Aztec, New Mexico.  The pipeline has a design transmission
capacity of approximately 300 million cubic feet of natural gas
per day.  On October 14, 1998, TransColorado entered into a $200
million revolving credit agreement with a group of commercial
banks.  K N provides a corporate guarantee for one-half of all
amounts borrowed under the agreement.

In August 1999, Thunder Creek Gas Services, LLC, a joint venture
of K N and Devon Energy Corporation, substantially completed
construction of a 126-mile-long-trunkline natural gas gathering
system extending from Glenrock, Wyoming to approximately 12 miles
north of Gillette, Wyoming.  The trunkline will have an initial
capacity of 450 million cubic feet of natural gas per day.  The
gathering system is located in the Powder River


<PAGE> 9                                                   Form 10-Q

Basin of northeast Wyoming and is expected to be operational by
fall 1999, after installation of a carbon dioxide removal plant.
The expected total cost of the system is approximately $100
million.

In May 1999, the Company announced plans to build the Horizon
Pipeline, a 129-mile-long natural gas pipeline from Joliet,
Illinois, to Hales Corners, Wisconsin.  Construction is expected
to be completed by the fall of 2001. The estimated cost of the
project is $150 million to $250 million, depending on shipper
response and design capacity, expected to be from 630 million
cubic feet up to 1.2 billion cubic feet per day.  The Company
plans to jointly own the pipeline with one or more other
partners.  An open season closed in June 1999 with service
requests from shippers of more than 800 MMcf of natural gas per
day, including 300 MMcf per day from Nicor Gas.  The project is
expected to be funded through a combination of non-recourse debt
securities and equity contributions.

On June 30, 1999, the Company sold its interests in the HIOS and
UTOS offshore pipeline systems and related laterals to Leviathan
Gas Pipeline Partners, L. P.  The Company received approximately
$51 million in cash in conjunction with the sale and recorded a
pre-tax gain of $17.5 million (approximately $10.7 million after
tax or $0.15 per diluted share).

4.   Non-Strategic Asset Divestiture Plans
     -------------------------------------

On  August 3, 1999, the Company announced its intention to divest
itself of certain non-strategic assets.  Initial assets
identified for divestiture are: certain international assets,
MidCon Texas Pipeline, Wattenberg Gathering and Processing,
en*able and Orcom, K N Field Services and Compressor Pump &
Engine, and certain West Texas transmission assets.  The Company
is developing a plan for disposal of these, and potentially
other, non-strategic assets.  Statement of Financial Accounting
Standards No. 121, "Accounting for the Impairment of Long-Lived
Assets and for Long-Lived Assets to be Disposed of" ("SFAS 121"),
requires that all long-lived assets and certain identifiable
intangibles to be disposed of, for which management has committed
to a disposal plan meeting certain criteria, be reported at the
lower of carrying amount or fair value less cost to sell.
Therefore, the Company may be required to write-down the carrying
value of certain of these assets if and when these criteria have
been met.  In addition, SFAS 121 requires that assets to be
disposed of not be depreciated during the period prior to
disposition.


<PAGE> 10                                                  Form 10-Q

5.   Supplemental Cash Flow Information
     ----------------------------------

Changes in Other Working Capital Items Summary and Supplemental
Disclosures of Cash Flow Information are as follows:

<TABLE>
<CAPTION>
                                                                               Six Months Ended
                                                                                   June 30
                                                                      ----------------------------------

                                                                          1999                 1998
                                                                          ----                 ----
<S>                                                                   <C>                 <C>

CHANGES IN OTHER WORKING CAPITAL ITEMS                                           In Thousands
  (Net of Effects of Acquisitions and Sales)
INCREASE (DECREASE) IN CASH AND CASH EQUIVALENTS
Accounts Receivable                                                   $    4,777          $  253,676
Materials and Supplies Inventory                                           5,655             (18,776)
Other Current Assets                                                       8,089             (19,213)
Accounts Payable                                                           6,107            (255,480)
Other Current Liabilities                                                (26,234)             75,061
                                                                      ----------          ----------
                                                                      $   (1,606)         $   35,268
                                                                      ==========          ==========
SUPPLEMENTAL CASH FLOW INFORMATION

Cash Paid During the Period for:
 Interest, Net of Amount Capitalized                                  $  151,641          $   64,238
                                                                      ==========          ==========
 Distributions on Preferred Capital Trust Securities                  $   10,956          $    4,280
                                                                      ==========          ==========
 Income Taxes                                                         $    2,052          $   22,496
                                                                      ==========          ==========

</TABLE>

The Company considers all highly liquid investments purchased
with an original maturity of three months or less to be cash
equivalents.  "Other, Net", presented as a component of "Net Cash
Flows from Operating Activities" in the accompanying interim
Consolidated Statements of Cash Flows includes, among other
things, the amortization of the gas plant acquisition adjustment
recorded in conjunction with the acquisition of MidCon,
undistributed equity in earnings of unconsolidated subsidiaries
and joint ventures and other non-cash charges and credits to
income.

In the third quarter of 1998, K N purchased interests in four
independent power plants in Colorado from the Thermo Companies.
Payments for this purchase were made in October 1998 with K N
common stock and in January and April 1999 with a combination of
cash and K N common stock.  The remaining payment is expected to
be made with a combination of cash and K N common stock.  A
portion of K N's January 1998 acquisition of MidCon was made
through the assumption of a note.  For additional information on
these transactions, see Note 2.

6.   Business Segments
     -----------------

K N Energy, Inc. has adopted a strategy of extracting profit from
the energy value stream, which extends from the purchase or
production of the fuel through the sale of the energy to the end-
user.  Consistent with this strategy, K N manages its business
and has segregated its activities into three business segments,
"Upstream", "Midstream" and "Downstream", based on where in the
value stream such activities are conducted.  In general, these
segments are also differentiated by the nature of their
processes, their principal suppliers, and their target markets
and customers.  The Company's Upstream operations consist of (i)
natural gas gathering, (ii) natural gas processing and (iii)
natural gas liquids ("NGLs") extraction and marketing;  Midstream
operations consist of transportation, storage and bundled sales
transactions for K N's interstate and intrastate pipelines;
Downstream operations principally consist of energy marketing,
regulated natural gas distribution and electric power generation
and sales.


<PAGE> 11                                                  Form 10-Q

The accounting policies applied in the generation of segment
information are generally the same as those described in the
summary of significant accounting policies in the Company's 1998
Report on Form 10-K.  In general, items below the "Operating
Income" line are either not allocated to business segments or are
not considered by Management in its evaluation of business unit
performance.  In addition, certain items included in operating
income (such as the merger-related costs incurred) are not
allocated to individual business segments.  With adjustment for
these items, the Company currently evaluates business segment
performance primarily based on operating income in relation to
the level of capital employed.  In general, intersegment sales
are accounted for at market prices, while asset transfers are
made at either market value or, in some instances, book value.

<TABLE>
<CAPTION>
                                                                 Three Months Ended June 30, 1999
                                             -------------------------------------------------------------------------
                                               Upstream       Midstream     Downstream        Other      Consolidated
                                               --------       ---------     ----------        -----      ------------
<S>                                          <C>            <C>            <C>            <C>            <C>
                                                                       (In Millions)
Revenues from External Customers             $  144.2       $  324.4       $  717.1                      $1,185.7
Intersegment Revenues                        $   21.9       $   50.6       $  185.0                         257.5

Operating Income (Loss)                      $    1.6       $   65.6       $  (16.7)      $    2.9 (1)   $   53.4
Other Income and (Deductions)                                                                               (57.3)
                                                                                                         --------
Loss Before Income Taxes                                                                                 $   (3.9)
                                                                                                         ========

Total Assets at June 30, 1999                $  729.7       $6,497.1       $1,140.8       $   45.0 (3)   $8,412.6

                                                                 Three Months Ended June 30, 1998
                                             -------------------------------------------------------------------------
                                               Upstream       Midstream     Downstream        Other      Consolidated
                                               --------       ---------     ----------        -----      ------------
                                                                       (In Millions)
Revenues from External Customers             $  124.4       $  311.3       $  604.0                      $1,039.7
Intersegment Revenues                        $   26.9       $   68.0       $   20.6                         115.5

Operating Income (Loss)                      $   (4.0)      $   91.9       $    5.6        $  (1.4) (2)  $   92.1
Other Income and (Deductions)                                                                               (65.6)
                                                                                                         --------
Income Before Income Taxes                                                                               $   26.5
                                                                                                         ========

                                                                  Six Months Ended June 30, 1999
                                             -------------------------------------------------------------------------
                                               Upstream       Midstream     Downstream        Other      Consolidated
                                               --------       ---------     ----------        -----      ------------
                                                                       (In Millions)
Revenues from External Customers             $  245.8       $  623.1       $1,370.8                      $2,239.7
Intersegment Revenues                        $   51.9       $  109.3       $  227.2                         388.4

Operating Income (Loss)                      $   (1.8)      $  153.3       $  (13.3)                     $  138.2
Other Income and (Deductions)                                                                              (130.5)
                                                                                                         --------
Income Before Income Taxes                                                                               $    7.7
                                                                                                         ========

                                                                  Six Months Ended June 30, 1998
                                             -------------------------------------------------------------------------
                                               Upstream       Midstream     Downstream        Other      Consolidated
                                               --------       ---------     ----------        -----      ------------
                                                                       (In Millions)
Revenues from External Customers             $  245.0       $  523.9       $1,437.3                      $2,206.2
Intersegment Revenues                        $   45.4       $  141.3       $   15.9                         202.6

Operating Income (Loss)                      $   (8.1)      $  169.7       $   14.1       $   (5.8) (2)  $  169.9
Other Income and (Deductions)                                                                              (107.7)
                                                                                                         --------
Income Before Income Taxes                                                                               $   62.2
                                                                                                         ========

(1) Represents reimbursement of costs related to the terminated merger with Sempra (see Note 2).
(2) Represents costs related to the MidCon Acquisition (see Note 2).
(3) Corporate assets represent cash and restricted deposits.

</TABLE>

<PAGE> 12                                                  Form 10-Q

7.   Financing
     ---------

The total amount of funds required by the Company to complete the
acquisition of MidCon, pay related fees and expenses and to repay
borrowings under the Company's existing credit facility was
approximately $2.5 billion, financed through borrowings under
credit agreements dated January 30, 1998 (the "Bank Facility")
among K N, Morgan Guaranty Trust Company of New York and a
syndicate of other lenders.  A working capital facility replaced
the revolving credit agreement previously in place (the "Pre-
Acquisition Facility").  An acquisition facility was also part of
the overall Bank Facility structure.  See Note 7(A) of Notes to
Consolidated Financial Statements on pages 42-43 of the Company's
1998 Annual Report on Form 10-K for additional information
regarding the Bank Facility and the Pre-Acquisition Facility.  In
addition to the working capital and acquisition components of the
Bank Facility described preceding, the Company assumed a short-
term note for $1.4 billion due January 1999 (the "Substitute
Note") which, pursuant to the MidCon Agreement, was initially
collateralized by letters of credit issued under a commitment for
that purpose within the Bank Facility.  The acquisition facility
was repaid in its entirety and canceled on March 10, 1998. The
Substitute Note was repaid on January 4, 1999.  On January 5,
1999, K N canceled the remaining letters of credit used to
collateralize the Substitute Note.

In March 1998, the Company received net proceeds of approximately
$624.6 million from a public offering of 12.5 million shares
(18.75 million shares after adjustment for the December 1998
three-for-two stock split) of K N common stock and approximately
$2.34 billion from the concurrent public offerings of senior debt
securities of varying maturities with principal totaling $2.35
billion.  The net proceeds from these offerings were used to
refinance borrowings under the Bank Facility and to purchase U.S.
government securities to replace a portion of the letters of
credit that collateralized the Substitute Note.

In April 1998, the Company sold $175 million of 7.63% Capital
Trust Securities (the "Capital Securities") maturing on April 15,
2028, in an underwritten public offering.  The sale was effected
through a wholly owned business trust, K N Capital Trust III.
The Company used the net proceeds from the offering to purchase
U.S. government securities to replace a portion of the letters of
credit that collateralized the Substitute Note.

In November 1998, the Company completed an underwritten public
offering of $400 million of three-year senior notes (the "Senior
Notes") bearing an interest rate of 6.45 percent.  The net
proceeds of approximately $397.4 million were used to retire a
portion of K N's then-outstanding short-term borrowings.
Concurrently with the Senior Notes offering, the Company sold
$460 million principal amount of premium equity participating
security units ("PEPS") in an underwritten public offering.  The
PEPS essentially are contracts (i) requiring the holders to
purchase K N common stock at the end of a three-year period
coinciding with the maturity of the Senior Notes and (ii)
providing for payment of a contract fee of 2.375 percent to the
PEPS holders by the Company during the three-year period.  The
net cash proceeds from the sale of the PEPS, together with
additional funds provided by the Company, were used to purchase
U.S. treasury securities on behalf of the PEPS owners.  For a
description of the accounting for these securities, see Note 7(B)
to the consolidated financial statements of K N's 1998 Annual
Report on Form 10-K.

8.   Preferred Stock
     ---------------

On April 13, 1999, the Company sent notice to holders of its
Class A $5.00 Cumulative Preferred Stock, of its  intent to
redeem these shares on May 14, 1999.  Holders of 70,000 preferred
shares were advised that on April 13, 1999, funds were deposited
with the First National Bank of Chicago to pay the redemption
price of $105 per share plus accrued but unpaid dividends.  Under
the terms of the Company's Articles of Incorporation,

<PAGE> 13                                                  Form 10-Q

upon deposit of funds to pay the redemption price, all rights of
the preferred stockholders cease and terminate except the right
to receive the redemption price upon surrender of their stock
certificates.

9.   Common Stock Split and Dividend Action
     --------------------------------------

On November 9, 1998, the Board of Directors of K N Energy, Inc.
approved a 7.1 percent increase in the quarterly dividend and a
three-for-two split of the Company's common stock.  The quarterly
dividend was declared at $0.30 per common share, an increase from
$0.28 per common share.  Giving effect to the stock split, the
quarterly dividend is $0.20 per common share.  The stock split
was distributed and the increase in dividend was paid
concurrently on December 31, 1998, to shareholders of record at
the close of business on December 15, 1998.  The par value of the
stock did not change. Weighted-average shares outstanding and all
per share amounts (except as otherwise noted) in the accompanying
interim consolidated financial statements and these notes have
been restated to reflect the stock split.

10.  Regulatory Matters
     -------------------

On January 23, 1998, K N Interstate Gas Transmission Co. ("KNI"),
a wholly owned subsidiary of K N Energy, Inc., filed a general
rate case with the Federal Energy Regulatory Commission ("FERC")
requesting a $30.2 million increase in annual revenues.  As a
result of the FERC action, KNI was allowed to place its rates
into effect on August 1, 1998, subject to refund, and provisions
for refund have been recorded based on its expectation of
ultimate resolution.  By a subsequent order, the FERC required
KNI to remove costs associated with the Pony Express project and
to refund the associated dollars.  The interim refund, associated
with the ordered removal of the Pony Express facilities' costs
from KNI's rates, amounts to approximately $13 million, and will
be made during September 1999.  KNI has filed for rehearing of
the FERC's orders that addressed Pony Express.  KNI's rate case
is currently scheduled to go to hearing in March 2000.

On December 29, 1998, Rocky Mountain Natural Gas Company
("RMNG"), a wholly owned subsidiary of K N Energy, Inc., received
a "show cause" order from the Colorado Public Utilities
Commission (the "Commission").  RMNG has reached settlement on
the issue, and a Stipulation and Agreement memorializing the
settlement with the Staff of the Commission and the Office of
Consumer Counsel has been filed and approved.  As part of this
settlement, RMNG agreed to reduce its sales and transportation
rates effective June 1, 1999.  The settled rate reduction is
anticipated to reduce RMNG's annual revenues by approximately
$0.9 million per year.

11.  Comprehensive Income
     --------------------

Statement of Financial Accounting Standards No. 130, "Reporting of
Comprehensive Income", effective for fiscal years beginning after
December 15, 1997, requires that enterprises report a total for
comprehensive income.  Currently, the only difference between
"net income" and "comprehensive income" for K N is the unrealized
gain or loss on its investment in available-for-sale securities
which is recorded directly to stockholders' equity.  For the
quarters ended June 30, 1999 and 1998, the respective unrealized
after-tax investment gain (loss) was $1.9 million and $(2.1)
million, resulting in comprehensive income of $(0.5) million and
$14.6 million, respectively.  For the six month periods ended
June 30, 1999 and 1998, the unrealized after-tax investment gain
(loss) was $3.0 million and $(0.3) million, resulting in comprehensive
income of $7.7 million and $38.9 million, respectively.


<PAGE> 14                                                 Form 10-Q

12.  Accounting for Derivative Instruments and Hedging Activities
     ------------------------------------------------------------

In June 1998, the Financial Accounting Standards Board issued
Statement of Financial Accounting Standards No. 133, "Accounting
for Derivative Instruments and Hedging Activities" (the
"Statement").  The Statement establishes accounting and reporting
standards requiring that every derivative instrument (including
certain derivative instruments embedded in other contracts) be
recorded in the balance sheet as either an asset or liability
measured at its fair value.  The Statement requires that changes
in the derivatives' fair value be recognized currently in
earnings unless specific hedge accounting criteria are met.  If
the derivatives meet these criteria, the Statement allows a
derivative's gains and losses to offset related results on the
hedged item in the income statement, and requires that a company
formally designate a derivative as a hedge and document and
assess the effectiveness of derivatives associated with
transactions that receive hedge accounting.

The Statement, as amended by Statement of Financial Accounting
Standards No. 137, "Accounting for Derivative Instruments and
Hedging Activities - Deferral of the Effective Date of FASB
Statement No. 133," is effective for fiscal years beginning after
June 15, 2000.  A company may also implement the Statement as of
the beginning of any fiscal quarter after issuance (that is,
fiscal quarters beginning June 16, 1999 and thereafter). The
Statement cannot be applied retroactively.  The Statement must be
applied to (i) derivative instruments and (ii) all applicable
derivative instruments embedded in hybrid contracts or at the
company's election, only those derivatives embedded in hybrid
contracts that were issued, acquired, or substantively modified
after either January 1, 1998 or January 1, 1999.  K N has not
yet quantified the impacts of adopting the Statement on its
financial position or results of operations and has not
determined the timing of or method of adoption of the Statement.

13.  Interest Expense, Net
     ---------------------

"Interest Expense, Net" as presented in the accompanying interim
Consolidated Statements of Income is net of (i) the debt
component of the allowance for funds used during construction
("AFUDC - Interest") and (ii) interest income related to
government securities associated with the acquisition of MidCon
("Interest Income"), as shown in the following table.

                         Three Months Ended    Six Months Ended
                              June 30               June 30
                         ------------------    ------------------
                                      (In Millions)

                           1999      1998       1999       1998
                           ----      ----       ----       ----
   AFUDC - Interest        $ 0.1     $ 1.3      $ 0.4      $ 1.7
   Interest Income         $   -     $13.3      $ 0.5      $15.8

As discussed in Note 2, in conjunction with the January 30, 1998,
acquisition of MidCon Corp., the Company was required by the
MidCon Agreement to assume the Substitute Note for $1.4 billion
and to collateralize the Substitute Note with bank letters of
credit, a portfolio of U.S. government securities or a
combination of the two.  As a result, the Company had interest
income associated with the issuance of the Substitute Note, which
has been reported together with the related interest expense as
described preceding.

14.  Equity in Earnings of Equity Method Investments
     -----------------------------------------------

Equity in earnings (losses) of investments accounted for under
the equity method totaling $(0.3) million and $4.8 million for
the three months ended June 30, 1999 and 1998, and $5.0 million
and $8.1 million for the six months ended June 30, 1999 and 1998,
respectively, are included in operating revenues (within the
appropriate business segment) in the accompanying interim
Consolidated Statements of Income.

<PAGE> 15                                                  Form 10-Q

15.  Accounts Receivable
     -------------------

The caption "Accounts Receivable" in the accompanying interim
Consolidated Balance Sheets is presented net of allowances for
doubtful accounts of $11.8 million at June 30, 1999, and $10.8
million at December 31, 1998.


<PAGE> 16                                                  Form 10-Q

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

General
-------

The following discussion should be read in conjunction with (i) the
accompanying interim Consolidated Financial Statements and related Notes
and (ii) the Consolidated Financial Statements, related Notes and
Management's Discussion and Analysis of Financial Condition and Results
of Operations included in K N's 1998 Report on Form 10-K.  Due to
the seasonal variation in energy demand, among other factors, the
interim results which follow may not be indicative of the results to
be expected for an entire year.  As discussed in Notes 2 and 3 to the
accompanying interim Consolidated Financial Statements, the Company
has engaged in acquisition and divestiture transactions which may
affect the comparison of results of operations between periods.
All per share amounts following reflect the impact of the December 31,
1998, three-for-two common stock split.

Certain information contained herin may include forward-looking
statements within the meaning of Section 27A of the Securities Act
of 1933 and Section 21E of the Securities Exchange Act of 1934.
Although the Company believes that these statements are based upon
reasonable assumptions, it can give no assurance that its goals will
be achieved.  Important factors that could cause actual results to
differ materially from those in the forward-looking statements
contained herein include, among other factors, the pace of deregulation
of retail natural gas and electricity markets in the United States,
federal, state and international regulatory developments, the
timing and extent of changes in commodity prices for oil, natural gas,
NGLs, electricity, certain agricultural products and interest rates,
the extent of success in acquiring natural gas facilities, the timing
and success of efforts to develop power, pipeline and other projects,
political developments in foreign countries, weather-related factors,
the Company's success in implenting the Year 2000 Plan, the effectiveness
of the Year 2000 Plan and the Year 2000 readiness of external entities
and conditions of capital markets and equity markets during the periods
covered by the forward-looking statements.  All of these factors are
difficult to predict and many are beyond the Company's control.

On February 22, 1999, Sempra Energy ("Sempra") and the Company
announced that their respective boards of directors had approved
a definitive agreement under which Sempra and the Company would
combine in a stock-and-cash transaction valued in the aggregate
at $6.0 billion.  On June 21, 1999, Sempra and K N announced that
they had mutually agreed to terminate their merger agreement (see
Note 2 to the accompanying interim Consolidated Financial Statements).

On July 8, 1999, the Company announced that they had signed an
Agreement and Plan of Merger to combine with Kinder Morgan, Inc.
In the combination, the Company would issue approximately 41.5
million shares of K N common stock in return for all of the
outstanding shares of Kinder Morgan, Inc. Upon closing of the
transaction, Richard D. Kinder, Chairman and Chief Executive Officer
of Kinder Morgan, Inc., will be named Chairman and Chief Executive
Officer of the combined entity, which will be known as Kinder Morgan,
Inc. The transaction is expected to close early in the fourth quarter
of 1999 (see Note 2 to the accompanying interim Consolidated Financial
Statements).

<PAGE> 17                                                  Form 10-Q

Consolidated Financial Results
------------------------------
<TABLE>
<CAPTION>
                                  Three Months Ended June 30            Six Months Ended June 30
                              ----------------------------------   ----------------------------------
                                               (In Millions Except Per Share Amounts)
                                                       Increase                             Increase
                                 1999        1998     (Decrease)      1999        1998     (Decrease)
                                 ----        ----     ----------      ----        ----     ----------
<S>                           <C>         <C>         <C>          <C>         <C>         <C>

Operating Revenues            $1,185.7    $1,039.7    $ 146.0      $2,239.7    $2,206.2    $  33.5
Gross Margin                     220.8       253.6      (32.8)        476.9       480.6       (3.7)
Operating Income                  53.4        92.1      (38.7)        138.2       169.9      (31.7)
Net Income (Loss)                 (2.4)       16.7      (19.1)          4.7        39.2      (34.5)
Diluted Earnings Per Share    $  (0.04)   $   0.24    $ (0.28)     $   0.06    $   0.64    $ (0.58)
</TABLE>

In comparison to the corresponding period of 1998, the Company's
consolidated results for the three months ended June 30, 1999,
reflect an increase of 14.0 percent in operating revenues and
decreases of 12.9 percent in gross margin, 42.0 percent in
operating income and 114.4 percent in net income.  Operating
income was positively impacted in 1999, relative to 1998, by (i)
the inclusion in 1998 results of $1.4 million of expenses related
to the acquisition of MidCon and (ii) the inclusion in 1999
results of a $2.9 million credit resulting from the reimbursement
of previously expensed merger-related costs by Sempra after the
proposed merger with the Company was terminated.  Diluted
earnings per common share for 1999 declined by 116.7 percent from
1998 reflecting, in addition to the decline in 1999 net income,
an increase of 4.0 percent in the number of diluted shares used
to calculate earnings per share. This increase in shares was
largely due to the issuance of 3.1 million shares as partial
consideration for the purchase of interests in power plants from
the Thermo Companies (see Note 2 to the accompanying interim
Consolidated Financial Statements).

In comparison to the corresponding period of 1998, the Company's
consolidated results for the six months ended June 30, 1999,
reflect an increase of 1.5 percent in operating revenues and
decreases of 0.8 percent in gross margin, 18.7 percent in
operating income and 88.0 percent in net income.  Operating
income was positively impacted in 1999, relative to 1998, by the
fact that 1998 results included $5.8 million of expenses related
to the acquisition of MidCon.  Diluted earnings per common share
for 1999 declined by 90.6 percent from 1998 reflecting, in
addition to the decline in 1999 net income, an increase of 15.4
percent in the number of diluted shares used to calculate
earnings per share. This increase in shares was largely due to
(i) the March 1998 common stock issuance associated with the
acquisition of MidCon (see Note 7 to the accompanying interim
Consolidated Financial Statements) and (ii) the issuance of 3.1
million shares as partial consideration for the purchase of
interests in power plants from the Thermo Companies as described
preceding.

Operating income (loss) for each of the Company's business
segments, as well as interest expense, other income and
deductions and income taxes were impacted by various factors,
which are described within the corresponding individual
discussions which follow- see "Upstream Gathering and
Processing," "Midstream Sales, Transportation and Storage,"
"Downstream Retail and Marketing," "Other Income and
(Deductions)" and "Income Taxes" elsewhere herein.

Results of Operations

Reflecting the Company's strategy of extracting margins from the
various segments of the energy value stream, the Company has
segregated its results of operations into "Upstream," "Midstream"
and "Downstream" components.  The Company's Upstream operations
consist of (i) natural gas gathering, (ii) natural gas processing
and (iii) NGLs extraction and marketing activities.  Midstream
operations consist of transportation, storage and bundled sales
transactions for K N's interstate and intrastate pipelines.
Downstream activities principally consist of energy marketing,
regulated natural gas distribution and electric power generation and

<PAGE> 18                                                  Form 10-Q

sales.  The following segment data are before intersegment
eliminations, and exclude expenses of the terminated Sempra
merger, the pending Kinder Morgan merger and the MidCon
acquisition.

<TABLE>
<CAPTION>
                                                     Three Months Ended June 30            Six Months Ended June 30
                                                  ---------------------------------    ---------------------------------
                                                             (Dollars in Millions Except Per Gallon Amounts)
                                                                           Increase                            Increase
Upstream Gathering and Processing                    1999        1998     (Decrease)     1999        1998     (Decrease)
---------------------------------                    ----        ----     ----------     ----        ----     ----------
<S>                                               <C>         <C>         <C>         <C>         <C>         <C>
Operating Revenues
  Gas Sales                                       $  59.6     $  48.9     $  10.7     $ 112.1     $  99.1     $  13.0
  Natural Gas Liquids Sales                          72.4        69.9         2.5       117.3       125.7        (8.4)
  Gathering and Other                                34.1        32.5         1.6        68.3        65.6         2.7
                                                  -------     -------     -------     -------     -------     -------
                                                    166.1       151.3        14.8       297.7       290.4         7.3
  Less - Gas Purchases and Other Costs of Sales     126.6       116.1        10.5       225.5       219.4         6.1
                                                  -------     -------     -------     -------     -------     -------
Gross Margin                                         39.5        35.2         4.3        72.2        71.0         1.2
                                                  -------     -------     -------     -------     -------     -------

Operating Expenses
  Operations and Maintenance                         28.1        29.9        (1.8)       54.8        60.1        (5.3)
  Depreciation and Amortization                       6.9         6.6         0.3        13.7        12.9         0.8
  Taxes, Other Than Income Taxes                      2.9         2.7         0.2         5.5         6.1        (0.6)
                                                  -------     -------     -------     -------     -------     -------
                                                     37.9        39.2        (1.3)       74.0        79.1        (5.1)
                                                  -------     -------     -------     -------     -------     -------
Operating Income (Loss)                           $   1.6     $  (4.0)    $   5.6     $  (1.8)    $  (8.1)    $   6.3
                                                  =======     =======     =======     =======     =======     =======

Systems Throughput (Trillion Btus)
  Gas Sales                                          31.1        24.7         6.4        63.7        49.5        14.2
  Gathering                                          81.4        86.8        (5.4)      165.8       172.7        (6.9)
                                                  -------     -------     -------     -------     -------     -------
                                                    112.5       111.5         1.0       229.5       222.2         7.3
                                                  =======     =======     =======     =======     =======     =======
Natural Gas Liquids Sales
    Sales (Million Gallons)                         248.1       238.0        10.1       442.1       418.1        24.0
                                                  =======     =======     =======     =======     =======     =======
    Average Sales Price/Gallon                    $  0.29     $  0.29     $     -     $  0.27     $  0.30     $ (0.03)
                                                  =======     =======     =======     =======     =======     =======
</TABLE>

Upstream's operating results improved by $5.6 million from an
operating loss of $4.0 million for the three months ended June
30, 1998, to $1.6 million of operating income for the
corresponding period of 1999.  The Upstream segment was
positively impacted in 1999, relative to 1998, by (i)
approximately $8 million of improved processing margins resulting
largely from increased ethane recoveries and lower gas costs and
(ii) the fact that 1998 results included operating losses
associated with gas processing facilities that were sold in the
fourth quarter of 1998. These positive impacts were partially
offset by the negative impacts of (i) reduced 1999 pipeline basis
differentials which negatively affected joint venture marketing
activities, (ii) reduced gathering revenues due to volume
declines and (iii) increased depreciation resulting from
completed 1998 capital projects.

Upstream's operating loss declined by $6.3 million from $8.1
million for the six months ended June 30, 1998, to $1.8 million
for the corresponding period of 1999.  The Upstream segment was
positively impacted in 1999, relative to 1998, by (i)
approximately $1.2 million of improved processing margins, (ii)
the fact that 1998 results included operating losses associated
with gas processing facilities that were sold in the fourth
quarter of 1998, (iii) increased gathering revenues resulting
primarily from higher rates and (iv) reduced 1999 operating
expenses.  These positive impacts were partially offset by the
negative impacts of (i) reduced 1999 pipeline basis differentials
which negatively affected joint venture marketing activities and
(ii) increased depreciation resulting from completed capital
projects.


<PAGE> 19                                                  Form 10-Q

<TABLE>
<CAPTION>
                                                     Three Months Ended June 30            Six Months Ended June 30
                                                  ---------------------------------    ---------------------------------
                                                                          (Dollars in Millions)
                                                                           Increase                            Increase
Midstream Sales, Transportation and Storage          1999        1998     (Decrease)     1999        1998     (Decrease)
-------------------------------------------          ----        ----     ----------     ----        ----     ----------
<S>                                               <C>         <C>         <C>         <C>         <C>         <C>
Operating Revenues
  Transportation and Storage                      $ 152.7     $ 162.1     $  (9.4)    $ 325.2     $ 298.6     $  26.6
  Gas Sales                                         217.6       211.0         6.6       396.1       356.2        39.9
  Other                                               4.7         6.2        (1.5)       11.1        10.4         0.7
                                                  -------     -------     -------     -------     -------     -------
                                                    375.0       379.3        (4.3)      732.4       665.2        67.2
  Less - Gas Purchases and Other Costs of Sales     200.9       187.5        13.4       360.5       313.9        46.6
                                                  -------     -------     -------     -------     -------     -------
Gross Margin                                        174.1       191.8       (17.7)      371.9       351.3        20.6
                                                  -------     -------     -------     -------     -------     -------

Operating Expenses
  Operations and Maintenance                         56.3        52.8         3.5       113.3        96.0        17.3
  Depreciation and Amortization                      43.0        37.6         5.4        86.2        69.5        16.7
  Taxes, Other Than Income Taxes                      9.2         9.5        (0.3)       19.1        16.1         3.0
                                                  -------     -------     -------     -------     -------     -------
                                                    108.5        99.9         8.6       218.6       181.6        37.0
                                                  -------     -------     -------     -------     -------     -------

Operating Income                                  $  65.6     $  91.9     $ (26.3)    $ 153.3     $ 169.7     $ (16.4)
                                                  =======     =======     =======     =======     =======     =======
Systems Throughput (Trillion Btus)                  606.9       619.2       (12.3)    1,276.5     1,087.5       189.0
                                                  =======     =======     =======     =======     =======     =======
</TABLE>

Midstream operating income decreased by $26.3 million from $91.9
million for the three months ended June 30, 1998, to $65.6
million for the corresponding period of 1999.  The Midstream
segment was negatively impacted in 1999, relative to 1998, by (i)
approximately $18 million of decreased margins from the segment's
interstate pipeline systems due to reduced throughput as well as
reduced per unit margins and (ii) increases in operating
expenses, depreciation and amortization.  The decreased
throughput and reduced margins were largely due to decreased
basis differentials resulting from the two recent mild winters,
including the resultant high storage levels.  In addition,
competitive pressures have increased in Midwest markets due to
increased supply.

Midstream operating income decreased by $16.4 million from $169.7
million for the six months ended June 30, 1998, to $153.3 million
for the corresponding period of 1999.  The Midstream segment was
negatively impacted in 1999, relative to 1998, primarily by
reduced per unit margins from the segment's interstate pipeline
systems largely due to the factors described preceding.  This
impact was partially offset by the fact that 1999 results include
six months of the operations of MidCon, while 1998 results
include only five months.

<TABLE>
<CAPTION>
                                                     Three Months Ended June 30            Six Months Ended June 30
                                                  ---------------------------------    ---------------------------------
                                                                          (Dollars in Millions)
                                                                           Increase                            Increase
Downstream Retail and Marketing                      1999        1998     (Decrease)     1999        1998     (Decrease)
-------------------------------                      ----        ----     ----------     ----        ----     ----------
<S>                                               <C>         <C>         <C>         <C>         <C>         <C>
Operating Revenues
  Gas Sales                                       $ 884.2     $ 607.3     $ 276.9     $1,556.5    $1,427.2    $ 129.3
  Transportation and Other                           18.0        17.3         0.7         41.5        26.0       15.5
                                                  -------     -------     -------     --------    --------    -------
                                                    902.2       624.6       277.6      1,598.0     1,453.2      144.8
  Less - Gas Purchases and Other Costs of Sales     892.4       596.8       295.6      1,560.1     1,392.9      167.2
                                                  -------     -------     -------     --------    --------    -------
Gross Margin                                          9.8        27.8       (18.0)        37.9        60.3      (22.4)
                                                  -------     -------     -------     --------    --------    -------

Operating Expenses
  Operations and Maintenance                         21.5        18.1         3.4         41.0        36.3        4.7
  Depreciation and Amortization                       3.6         3.2         0.4          7.1         6.8        0.3
  Taxes, Other Than Income Taxes                      1.4         0.9         0.5          3.1         3.1          -
                                                  -------     -------     -------     --------    --------    -------
                                                     26.5        22.2         4.3         51.2        46.2        5.0
                                                  -------     -------     -------     --------    --------    -------

Operating Income (Loss)                           $ (16.7)    $   5.6     $ (22.3)    $  (13.3)   $   14.1    $ (27.4)
                                                  =======     =======     =======     ========    ========    =======

Gas Sales (Trillion Btus)                           410.7       273.9       136.8        772.1       611.4      160.7
                                                  =======     =======     =======     ========    ========    =======

</TABLE>

<PAGE> 20                                                  Form 10-Q

Downstream's operating results decreased by $22.3 million from
$5.6 million of operating income for the three months ended June
30, 1998, to an operating loss of $16.7 million for the
corresponding period of 1999. Downstream results were negatively
impacted in 1999, relative to 1998, by (i) approximately $8
million of reduced margins from commodity marketing, due
primarily to reduced margins on capacity held on the Pony
Express Pipeline, (ii) approximately $7 million of reduced
margins from retail gas sales and transportation, due primarily
to weather-related factors, lower unit margins related to the
Nebraska Choice Gas program and adjustments to deferred purchased
gas costs, (iii) $2.5 million of increased losses from en*able
and (iv) reduced sales of storage gas. These negative impacts
were partially offset by $2.2 million of operating income from
the Thermo assets, which were acquired in the third quarter of
1998 (see Note 2 to the accompanying interim Consolidated Financial
Statements).

Downstream's operating results decreased by $27.4 million from
$14.1 million of operating income for the six months ended June
30, 1998 to an operating loss of $13.3 million for the
corresponding period of 1999. Downstream results were negatively
impacted in 1999, relative to 1998, by (i) approximately $6
million of reduced margins from commodity marketing, due
primarily to reduced margins on capacity held on the Pony
Express Pipeline, (ii) approximately $9 million of reduced
margins from retail gas sales and transportation, due primarily
to weather-related factors, lower unit margins related to the
Nebraska Choice Gas program and adjustments to deferred purchased
gas costs, (iii) the inclusion in 1998 earnings of (a) $5.4
million in margins from sales of storage gas, (b) income related
to the favorable resolution of certain "above market" gas
purchase contracts and (c) first quarter operating income from
the Company's Kansas gas distribution properties, which were sold
on March 31, 1998 and  (iv) increased losses from en*able. These
negative impacts were partially offset by 1999 income from the
Thermo assets.

<TABLE>
<CAPTION>
                                            Three Months Ended June 30            Six Months Ended June 30
                                        ----------------------------------   ----------------------------------
                                                                     (In Millions)
                                                                 Earnings                              Earnings
                                                                 Increase                              Increase
Other Income and (Deductions)              1999        1998     (Decrease)       1999        1998     (Decrease)
                                           ----        ----     ----------       ----        ----     ----------
<S>                                     <C>          <C>          <C>         <C>         <C>           <C>

Interest Expense, Net                   $(70.3)      $(63.5)      $ (6.8)     $(140.8)    $(113.9)      $(26.9)
Minority Interests                        (5.9)        (4.6)        (1.3)       (11.1)       (7.0)        (4.1)
Other, Net                                18.8          2.5         16.3         21.4        13.2          8.2
                                        ------      -------     --------      -------     -------     --------
                                        $(57.4)      $(65.6)      $  8.2      $(130.5)    $(107.7)      $(22.8)
                                        ======      =======     ========      =======     =======     ========
</TABLE>

The increase of $6.8 million in "Interest Expense, Net" for the
three months ended June 30, 1999, over the corresponding period
of 1998, was largely due to the cumulative impact of reduced 1998
and 1999 cash flows from operations and associated increases in debt
levels, resulting from the depressed pricing environment and unfavorable
weather experienced during the twelve months ended June 30, 1999,
as described preceding.  The increase in net expense associated
with "Minority Interests" in 1999, relative to 1998, was
principally due to dividend requirements associated with the $175
million of Capital Trust Securities issued in April 1998 (see
Note 7 to the accompanying interim Consolidated Financial Statements).
The increase in "Other, Net" from 1998 to 1999 was principally
due to a $17.5 million pre-tax gain from the sale of the Company's
interests in the HIOS and UTOS offshore pipeline systems in June
1999 (see Note 3 to the accompanying interim Consolidated Financial
Statements).

The increase of $26.9 million in "Interest Expense, Net" for the
six months ended June 30, 1999, over the corresponding period of
1998, was largely due to the cumulative impact  of reduced 1998
and 1999 cash flows from operations as described preceding.  The
increase in net expense associated with "Minority Interests" in
1999, relative to 1998, was principally due to dividend requirements
associated with the $175 million of Capital Trust Securities, also as
described preceding.  The increase in "Other, Net" from 1998 to
1999 was principally due to the net impact of  (i) the June, 1999
pre-tax gain of  $17.5 million from the sale of the Company's

<PAGE> 21                                                  Form 10-Q

interests in the HIOS and UTOS offshore pipeline systems and (ii)
the March 1998 pre-tax gain of $8.5 million from the Company's
sale of its Kansas natural gas distribution properties.

<TABLE>
<CAPTION>
                                            Three Months Ended June 30            Six Months Ended June 30
                                        ----------------------------------   ----------------------------------
                                                                 (Dollars In Millions)
                                                                 Increase                             Increase
Income Taxes                               1999        1998     (Decrease)      1999        1998     (Decrease)
                                           ----        ----     ----------      ----        ----     ----------
<S>                                      <C>         <C>         <C>          <C>         <C>          <C>

   Provision (Benefit)                   $ (1.5)     $  9.8      $ (11.3)     $  3.0      $ 23.0       $(20.0)
                                         ======      ======      =======      ======      ======       ======
   Effective Tax Rate                      39.0%       36.9%         2.1%       39.0%       37.0%         2.0%
                                         ======      ======      =======      ======      ======       ======
</TABLE>

The $11.3 million net decrease in income tax expense for the
three months ended June 30, 1999 from the corresponding period of
1998 reflected a decrease of approximately $11.2 million
attributable to a decrease in 1999 pre-tax income and an decrease
of approximately $0.1 million attributable to a change in the
effective tax rate.

The $20.0 million net decrease in income tax expense for the six
months ended June 30, 1999 from the corresponding period of 1998
reflected a decrease of approximately $20.2 million attributable
to a decrease in 1999 pre-tax income and an increase of
approximately $0.2 million attributable to a change in the
effective tax rate.

Liquidity and Capital Resources
-------------------------------

The following table illustrates the sources of the Company's
invested capital.  These balances reflect the incremental capital
associated with the acquisition of MidCon, including the post-
acquisition refinancings completed in 1998 (see Notes 2 and 7 to
the accompanying interim Consolidated Financial Statements).

<TABLE>
<CAPTION>
                                                  June 30                               December 31
                                        ----------------------------    -------------------------------------------
                                                                  (Dollars in Thousands)
                                            1999           1998             1998           1997           1996
                                            ----           ----             ----           ----           ----
<S>                                     <C>            <C>              <C>            <C>            <C>

Long-Term Debt                          $3,299,541     $ 2,891,998      $ 3,300,025    $   553,816    $   423,676
Common Equity                            1,245,130       1,258,029        1,216,821        606,132        519,794
Preferred Stock                                  -           7,000            7,000          7,000          7,000
Capital Trust Securities                   275,000         275,000          275,000        100,000              -
                                        ----------     -----------      -----------    -----------    -----------
  Capitalization                         4,819,671       4,432,027        4,798,846      1,266,948        950,470
Short-Term Debt                            630,617       1,935,733 (1)    1,702,013 (1)    359,951        156,271
                                        ----------     -----------      -----------    -----------    -----------
  Invested Capital                      $5,450,288     $ 6,367,760      $ 6,500,859    $ 1,626,899    $ 1,106,741
                                        ==========     ===========      ===========    ===========    ===========

Capitalization:
  Long-Term Debt                             68.5%           65.2%            68.8%          43.7%          44.6%
  Common Equity                              25.8%           28.4%            25.4%          47.8%          54.7%
  Preferred Stock                               -             0.2%             0.1%           0.6%           0.7%
  Capital Trust Securities                    5.7%            6.2%             5.7%           7.9%             -

Invested Capital:
  Total Debt                                 72.1%           75.8%            76.9%          56.2%          52.4%
  Equity, Including Capital
   Trust Securities                          27.9%           24.2%            23.1%          43.8%          47.6%

</TABLE>

(1)Includes the $1,394,846 Substitute Note assumed in
  conjunction with the acquisition of MidCon, which was repaid in
  January 1999.

The following discussion of cash flows should be read in
conjunction with the accompanying Consolidated Statements of Cash
Flows and related supplemental disclosures.

<PAGE> 22                                                  Form 10-Q

Net Cash Flows From Operating Activities
----------------------------------------

The net cash inflow from operating activities decreased from
$125.7 million for the six months ended June 30, 1998, to $66.9
million for the corresponding period of 1999, a decrease of $58.8
million or 46.8 percent.  This decrease was principally
attributable to the net impact of (i) a decrease in 1999 earnings
before non-cash charges and credits, (ii) the inclusion in 1998
results of $27.5 million of proceeds from the buyout of certain
contractual gas purchase obligations, (iii) higher 1999 interest
payments, and (iv) changes in gas in underground storage.

Net Cash Flows From Investing Activities
----------------------------------------

The net cash inflow from investing activities for the six months
ended June 30, 1999, consisted principally of (i) $1.1 billion of
proceeds from the sale of  U.S. government securities, which were
used, together with additional short-term borrowings, to repay
the Substitute Note (see "Net Cash Flows From Financing
Activities" following) and (ii) $99.2 million of capital
expenditures and acquisitions.  The net cash outflow from
investing activities for the six months ended June 30, 1998
consisted principally of (i) $2.1 billion in cash paid to
Occidental for the purchase of MidCon, (ii) the purchase of $1.1
billion of U.S. government securities as collateral for the
Substitute Note, also in conjunction with the acquisition of
MidCon and (iii) capital expenditures and other acquisitions of
$202.5 million.

On  August 3, 1999, the Company announced plans to divest itself
of certain non-strategic assets.  Initial assets identified for
divestiture are: certain international assets, MidCon Texas
Pipeline, Wattenberg Gathering and Processing, en*able and Orcom,
K N Field Services and Compressor Pump & Engine, and certain West
Texas transmission assets (see Note 4 to the accompanying
interim Consolidated Financial Statements).

Net Cash Flows From Financing Activities
----------------------------------------

The net cash outflow for financing activities for the six months
ended June 30, 1999, was principally attributable to the January
4, 1999, repayment of the Substitute Note (see Notes 2 and 7 to
the accompanying interim Consolidated Financial Statements).
The note was repaid using the proceeds of approximately $1.1
billion from the sale of U.S. government securities which had
been held as collateral, with the balance of the funds provided
by an increase in short-term borrowings.  In addition, 1999 cash
flows include (i) the payment of $28.3 million of common and
preferred dividends, (ii) the payment of $7.4 million to redeem
preferred stock and (iii) receipts of $6.3 million for common
stock issued.

The net cash inflow from financing activities of $3.3 billion for
the six months ended June 30, 1998, was principally the result of
financing activities in conjunction with the purchase of MidCon
(see Notes 2 and 7 to the accompanying interim Consolidated
Financial Statements).  In March 1998, K N issued 12.5 million
shares (18.75 million shares after adjustment for the December
1998 three-for-two stock split) of common stock in an underwritten
public offering, receiving net proceeds of approximately $624.6
million.  Also in March 1998, K N issued $2.35 billion principal
amount of debt securities of varying maturities and interest
rates in an underwritten public offering, receiving net proceeds
of approximately $2.34 billion.  The net proceeds from these two
offerings were used to refinance borrowings under the MidCon
acquisition financing arrangements and to purchase U.S.
government securities to collateralize a portion of the
Substitute Note.  In April 1998, K N sold $175 million of 7.63%
Capital Securities due April 15, 2028, in an underwritten
offering, with the net proceeds of $173.1 million used to
purchase U.S. government securities to further collateralize the
Substitute Note.  In addition, 1998 results include (i) the
payment of $25.2 million of common and preferred dividends,

<PAGE> 23                                                  Form 10-Q

(ii) the payment of $21.9 million to retire long-term debt, (iii)
receipts of $12.0 million for other common stock issued, and (iv)
$16.8 million of minority interest contributions.

The Company's principal sources of short-term liquidity are its
$1 billion revolving bank facilities.  The Company is in the
process of establishing a receivables sales facility, which is
expected to close in the third quarter and provide in excess of
$200 million of additional liquidity.  At June 30, 1999, the
Company had $623.5 million of bank borrowings and commercial
paper issued and outstanding (which is backed by the bank
facilities); the related amount outstanding was $636.6 million at
August 2, 1999.  After inclusion of applicable letters of credit,
the remaining available borrowing capacity under the bank
facilities was $355.4 million and $342.3 million at June 30, 1999
and August 2, 1999, respectively.  As described in the Company's
1998 Report on Form 10-K, the Company's bank facilities and
certain of its operating lease arrangements contain covenants
related to the Company's ratio of debt to total capitalization,
consolidated net worth and debt ratings.

Regulation
----------

On January 23, 1998, K N Interstate Gas Transmission Co. ("KNI"),
a wholly owned subsidiary of K N Energy, Inc., filed a general
rate case with the Federal Energy Regulatory Commission ("FERC")
requesting a $30.2 million increase in annual revenues.  As a
result of the FERC action, KNI was allowed to place its rates
into effect on August 1, 1998, subject to refund, and provisions
for refund have been recorded based on its expectation of
ultimate resolution.  By a subsequent order, the FERC required
KNI to remove costs associated with the Pony Express
project and to refund the associated dollars.  The interim
refund, associated with the ordered removal of the Pony Express
facilities' costs from KNI's rates, amounts to approximately $13
million, and will be made in September 1999.  KNI has filed for
rehearing of the FERC's orders that addressed Pony Express.
KNI's rate case is currently scheduled to go to hearing in March
2000.

On December 29, 1998, Rocky Mountain Natural Gas Company
("RMNG"), a wholly owned subsidiary of K N Energy, Inc., received
a "show cause" order from the Colorado Public Utilities
Commission (the "Commission"). RMNG has reached settlement on the
issue, and a Stipulation and Agreement memorializing the
settlement with the Staff of the Commission and the Office of
Consumer Counsel has been filed and approved.  As part of this
settlement, RMNG agreed to reduce its sales and transportation
rates effective June 1, 1999.  The settled rate reduction is
anticipated to reduce RMNG's annual revenues by approximately
$0.9 million per year.

Readiness for Year 2000
-----------------------

The following is a discussion of the Year 2000 problem and its
potential impact on the Company.  The Securities and Exchange
Commission ("SEC") has issued specific guidelines for public
companies regarding their disclosure of the Year 2000 problem.
The guidelines require more detailed disclosure of each company's
analysis of and approach to the Year 2000 problem.  As a result,
the Company is providing the following disclosure; however, the
length and detail contained in this disclosure, relative to the
other disclosures contained herein, is not an indication of the
Company's view of the relative risk of the Year 2000 problem to
the Company.

Some computers and programs, and some devices containing computer
chips ("embedded chips") store or process dates containing the
Year 2000 as "00".  This can result in inaccurate date-related
calculations.  It is expected that once the Year 2000 arrives,
computers, computer programs and devices with embedded chips that
have not been modified to correct this problem will not function
normally.  The Company relies on a number of automated systems to
conduct its operations and to transact its business, as is common
among large diversified energy companies.  In addition, certain
of the Company's pipelines and processing equipment and

<PAGE> 24                                                  Form 10-Q

related systems contain electric controls or other devices containing
embedded chips.  These controls may also be adversely affected by
this problem.

In 1997, the Audit Committee of the Company's Board of Directors
(the "Audit Committee") established a Year 2000 project to
address the Year 2000 problem.  In that year, the Company
established a Year 2000 Executive Steering Committee (the "Year
2000 Committee") and a Year 2000 Project Management Office (the
"Year 2000 Project Management Office").  The Year 2000 project is
an ongoing effort monitored by the Audit Committee.

The Audit Committee has adopted a Year 2000 Plan (the "Plan") and
will oversee its implementation by receiving periodic reports
from the Year 2000 Committee and directly from management.  The
Audit Committee is prepared to require management to make
additional efforts, including amending the Plan as necessary, to
fulfill the Audit Committee's goal of taking reasonable steps to
minimize injury to people, damage to property, disruption to the
Company's delivery of products and services, supporting systems
and business operations, and other risks associated with the Year
2000 problem.

The Year 2000 Committee is charged with directing the
implementation of the Plan in accordance with resolutions of the
Audit Committee and under the direction of the Company's
designated senior executives.  The Year 2000 Committee oversees
the Year 2000 Project Management Office, headed by the Year 2000
Project Coordinator.  The Year 2000 Committee keeps the Audit
Committee informed of the Company's

progress in implementing the Plan and of significant updates that
are made to the Plan.  The Year 2000 Committee communicates the
Audit Committee's directives concerning the Plan to management
and executives, and oversees the implementation of those
directives.

The Year 2000 Project Management Office works closely with the
Company's Readiness Teams comprised of members of the Company's
operating units.  The teams have been organized to further
implement the Plan throughout the Company.  The Project
Management Office, among other things, promotes exchange of
information about Year 2000 problems and solutions, assists in
disseminating information about the Company's policies governing
communications concerning Year 2000 issues and serves as a
conduit between the various Readiness Teams and the Year 2000
Committee.

The aim of the Plan is to take reasonable steps to prevent the
Company's mission critical functions from being impaired due to
the Year 2000 problem.  "Mission critical" describes those
systems, devices, functions and external entities that are of
material importance to maintaining the Company's capacity to
deliver and account for products and services without
interruption, and to maintain the Company's supporting business
operations with no material disruption or diminution in quality.

Each of the Company's operating units is in various stages of
implementing the Plan to address the Year 2000 problem.  These
efforts include:

     an inventory of systems and areas which may need to be
       corrected;
     an assessment of potential problems;
     remediation and implementation, with priority given to mission
       critical items;
     the testing of such systems and devices; and
     developing contingency plans in case the Company cannot correct
       the problem in time, or in the event certain facets of the Year
       2000 problem go undetected or do not manifest themselves until
       after January 1, 2000.

<PAGE> 25                                                  Form 10-Q

Specifically, the Company is in the process of correcting
programmable code, replacing non-Year 2000-ready embedded chips,
installing Year 2000-ready releases of certain vendor-supplied
computer systems and, in some cases, replacing existing systems
with new internally or externally developed software in advance
of December 31, 1999.

The process of inventorying, assessing, remediating, and testing
in anticipation of the Year 2000 is necessarily an ongoing and
continuing process.  As the Company learns more about the Year
2000 problem and its effects on the Company, the process of
evaluation, remediation and testing is repeated continuously.
The Company anticipates that it will be necessary to continue
this process into the Year 2000 as new problems are identified,
as well as to repeat the process for problems that can only
reasonably be identified after December 31, 1999.

As of August 10, 1999, the Company and all of its business units
were at various points in implementation of the Plan.  The
Company tracks its progress towards implementing the Plan in the
following categories: (i) internal software applications and
systems, which includes the Company's information technology
applications and programs ("IT Systems"), (ii) field systems, which
includes the various automated systems that are used to gather,
process and transport the Company's natural gas ("Automation") and
measurement accounting, which includes the Company's systems to measure
the gas flow ("Measurement"), (iii) desktop systems, which includes
the internal computers utilized by the Company's employees,  and
(iv) external entities, which includes an assessment of the  Company's
critical suppliers and their Year 2000 readiness ("External Entities").
The chart below shows the dates that the Company has completed or expects
to complete, as applicable, the stages in the listed categories:

<TABLE>
<CAPTION>
                                                               Stages
                                ----------------------------------------------------------------------
Categories                                                                                 Contingency
                                Inventory     Assessment     Remediation      Testing       Planning
                                ---------     ----------     -----------      -------       --------
<S>                               <C>             <C>           <C>            <C>             <C>

IT Systems                        12/97           4/98          10/99          10/99           9/99
Field Systems:
   Automation                     12/98           6/99          11/99           8/99           7/99
   Measurement                    12/98           3/99           9/99           8/99           7/99
Desktop                            7/99           8/99          10/99          10/99           6/99
External Entities                 10/98           8/99          N/A*           N/A*            9/99

*Not Applicable

</TABLE>

The Company will continue to closely monitor its progress in
these categories and revise the estimated completion dates as
applicable.

For the Company's Plan to be successful, the Company must rely
for some purposes on outside contractors.  There is a risk that
those contractors will not complete their work prior to the Year
2000.  The Company is developing alternative ways to conduct its
business if such deadlines are not met.  However, any alternative
may involve additional expense and may not be implemented in time
to avoid the Year 2000 problem.  Ultimately, these alternatives
may not be successful.

The Company also relies on suppliers, business partners and other
External Entities which may or may not be addressing their own
problems associated with the Year 2000 problem.  The Company has
sent out questionnaires to External Entities to determine what
steps they have taken to correct any Year 2000 problems

<PAGE> 26                                                  Form 10-Q

they may have.  The Company has no control over such External Entities'
efforts, so the Company has developed contingency plans in case
such External Entities do not complete their efforts before the
Year 2000.

The contingency plans developed by the Company will address the
fact that despite the Company's good faith reasonable efforts,
the Company may not be able to remediate all of its mission
critical systems.  In addition, External Entities that do business
with the Company may not be Year 2000 ready.  The Company's
contingency plans call for teams of employees to be available in
the evening of December 31, 1999 to respond rapidly to any Year
2000-related problem that occurs or affects the Company's mission
critical systems.   The contingency plans call for an on-going
assessment of the Year 2000 problem following January 1, 2000 and
procedures for remediating any problems that arise.

The Company estimates that the direct costs the Company has
incurred or will incur in 1998, 1999 and 2000 associated with
assessing, inventorying, remediating and testing internally
developed computer applications, hardware and equipment,
including embedded chip systems and third-party developed
software, to be between $5 million and $7 million.  In addition,
as part of the integration of the Company's systems with the
systems of MidCon, the Company has begun modifying certain of its
computer systems for the combined company or purchasing computer
systems from third parties.  These computer systems will address
the Year 2000 problem.  The costs for these computer systems are
expected to be between $23 million and $25 million, the majority of
which will be capitalized.

The SEC's guidelines also require the Company to address the most
reasonably likely worst case scenarios resulting from the Year
2000 problem.  As a result of the Year 2000 problem, the Company
may be faced with: failure of electrical, gas and similar
services and supplies from utilities, disruption of
telecommunications facilities, interruptions in the nation's
transportation systems, failure of a substantial number of the
Company's mission critical computer hardware and software
systems, including mission critical internal systems as well as
systems that control operational facilities such as pipeline,
electric generation, transmission and distribution systems, re-coding
errors due to the failure to fix all of the Company's computer code,
failure to discover or fix all embedded chips and sabotage.  In
addition, the Company's key suppliers or customers may experience
their own Year 2000 problems in a way that materially adversely
affects the Company's ability to do business without interruption
or disruption.  The Company could also face substantial claims
from customers for loss of revenues due to service interruptions,
for the Company's inability to account for revenues, for
inaccurate customer billing, or for unfulfilled contractual
obligations.  The Company could face substantial expenses from
Year 2000-related litigation, for fixing problems following the
failure of mission critical systems and for executing the
contingency plans.  As a result of the cumulative impact of these
events, the Company's business may be materially adversely
affected.  The adverse impact of these events occurring can not
be quantified at this time.

The Company is in the process of developing contingency plans to
address issues associated with the reasonably likely worst case
scenarios.  The Company has completed such contingency plans for
field operations, and is in the process of developing contingency
plans for mission critical systems Company-wide and expects to
have such plans completed in advance of January 1, 2000.

The Company does not believe that the direct costs associated
with the Year 2000 problem will be material to its business,
financial position or results of operations.

<PAGE> 27                                                  Form 10-Q

Item 3.  Quantitative and Qualitative Disclosures About Market
Risk

There have been no material changes in market risk exposures that
would affect the quantitative and qualitative disclosures
presented as of December 31, 1998, in the "Risk Management"
section of Management's Discussion and Analysis of Financial
Condition and Results of Operations on page 25 of the Company's
1998 Annual Report on Form 10-K.


<PAGE> 28                                                  Form 10-Q

PART II - OTHER INFORMATION

Item 1.  Legal Proceedings

On July 26, 1996, the Company and RMNG, along with over 70 other
natural gas companies, were served by Jack J. Grynberg, acting on
behalf of the Government of the United States, with a Civil False
Claims Act lawsuit alleging mismeasurement of the heating content
and volume of natural gas resulting in underpayment of royalties
to the federal government.  The Company and the other named
companies filed a motion to dismiss the lawsuit on grounds of
improper joinder and lack of jurisdiction.  The motion was
granted in 1997, but the court gave Mr. Grynberg leave to refile
this action in a court with proper jurisdiction.  Mr. Grynberg
appealed the dismissal of the action based on improper joinder,
and the D.C. Court of Appeals affirmed the joinder decision in
October 1998.  Mr. Grynberg has filed a new case, modified
somewhat from his original action, in Federal District Court,
District of Colorado. The Department of Justice decided to not
intervene in these cases in support of Grynberg's complaint. The
Company was served in this action on May 25, 1999.  The Company
believes it has a meritorious position in this matter, and does
not expect this lawsuit to have a material adverse effect on the
Company's business, financial position or results of operations.

The Company believes it has meritorious defenses to all lawsuits
and legal proceedings in which it is a defendant and will
vigorously defend against them.  Based on its evaluation of the
above matters, and after consideration of reserves established,
the Company believes that the resolution of such matters will not
have a material adverse effect on the Company's business,
financial position or results of operations.

Item 4.  Submission of Matters to a Vote of Security Holders

     a.)The Company held its Annual Meeting of Shareholders on April
        15, 1999 (the "Annual Meeting").

     b.)Proxies for the Annual Meeting were solicited pursuant to
        Regulation 14A of the Securities Exchange Act of 1934.  There was
        no solicitation in opposition to management's nominees for
        directors as listed in the Proxy Statement and all such nominees
        were elected, which included Messrs. Battey, Bliss, Chitwood,
        Coghlan, Randall and Taylor.  In addition, those directors
        continuing in office after the meeting included Messrs. Austin,
        Burkholder, Carmichael, Hall, Haines, Hybl, Kinder, Riordan and
        True.  The number of votes for and withheld for the nominees
        elected at the meeting were as follows:

                                        For            Withheld
                                        ---            --------

        Charles W. Battey            56,995,373        1,091,847
        Stewart A. Bliss             56,989,478        1,097,742
        Robert H. Chitwood           57,098,443          988,777
        Howard P. Coghlan            57,101,519          985,701
        Edward Randall, III          57,057,058        1,030,162
        James C. Taylor              57,134,762          952,458

Item 5.  Other Information

Effective July 8, 1999, Larry D. Hall resigned his post as
Chairman and Chief Executive Officer of the Company. At that
time, Stewart Bliss, an independent member of the Company's Board
of Directors,  assumed the Chairman and CEO positions on an
interim basis.  Upon closing of the merger with Kinder Morgan,
Inc.,

<PAGE> 29                                                  Form 10-Q

expected in the fourth quarter of 1999, Richard D. Kinder,
Chairman and CEO of Kinder Morgan, Inc., will be named Chairman
and CEO of the combined company. For more information concerning
the merger with Kinder Morgan, Inc., see Note 2 to the interim
Consolidated Financial Statements, included elsewhere herein.

On June 20, 1999, David M. Carmichael resigned from the Company's
Board of Directors to pursue another business venture.  In
addition, on June 24, 1999, Richard D. Kinder resigned from the
Board of Directors to pursue the merger between the Company and
Kinder Morgan, Inc.  On August 5, 1999, John F. Riordan resigned
from the Board of Directors.

Effective July 31, 1999, Clyde McKenzie, Chief Financial Officer,
Mort Aaronson, Chief Marketing Officer, and John DiNardo,
Executive Vice President of K N Gas Gathering, left the company as
part of a corporate reorganization.  The Company does not plan to
fill these positions until completion of the merger with Kinder
Morgan, Inc.

Item 6.  Exhibits

(A)Exhibits

          27- Financial Data Schedule

(B)Reports on Form 8-K

Current Report on Form 8-K dated April 2, 1999, to announce the
early termination of the Hart-Scott-Rodino Act waiting period for
the merger of KN into Cardinal Acquisition Corp., a wholly owned
subsidiary of Sempra Energy.

Current Report on Form 8-K dated April 16, 1999, to present
unaudited pro forma condensed statement of income for the year
ended December 31, 1998 and related notes included therein.

Current Report on Form 8-K dated June 21, 1999, to report the
termination of the Agreement and Plan of Merger with Sempra
Energy.


<PAGE> 30                                                  Form 10-Q

                            SIGNATURE


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.


                     K N ENERGY, INC.
                     (Registrant)


August 13, 1999      /s/ Jack W. Ellis II
                     ------------------------------------------
                     Jack W. Ellis II
                     Vice President and Controller
                     (On Behalf of the Registrant and as
                     Principal Financial and Accounting Officer)