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                       SECURITIES AND EXCHANGE COMMISSION
                             WASHINGTON, D.C. 20549
                                 ---------------

                                    FORM 10-Q


                QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(D)
                     OF THE SECURITIES EXCHANGE ACT OF 1934


For Quarter Ended March 31, 1998                   Commission File Number 1-2921


                       PANHANDLE EASTERN PIPE LINE COMPANY
             (Exact name of Registrant as Specified in its Charter)


          Delaware                                       44-0382470
(State or Other Jurisdiction                   (IRS Employer Identification No.)
       of Incorporation) 

                              5400 Westheimer Court
                                  P.O. Box 1642
                             Houston, TX 77251-1642
                    (Address of Principal Executive Offices)
                                   (Zip code)

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


Indicate by check mark whether the registrant (1) has filed all reports required
to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during
the  preceding 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 __

The Registrant meets the conditions set forth in General Instructions  (H)(1)(a)
and (b) of Form 10-Q and is  therefore  filing  this Form 10-Q with the  reduced
disclosure format.  Part I, Item 2 has been reduced and Part II, Item 4 has been
omitted in accordance with such Instruction H.

All of the  Registrant's  common  shares  are  indirectly  owned by Duke  Energy
Corporation (File No. 1-4928),  which files reports and proxy materials pursuant
to the Securities Exchange Act of 1934.

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

Number of shares of Common Stock, 
no par value, outstanding at April 30, 1998................................1,000

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i




                       PANHANDLE EASTERN PIPE LINE COMPANY
                 FORM 10-Q FOR THE QUARTER ENDED MARCH 31, 1998
                                      INDEX

<TABLE>
<CAPTION>
Item                                                                                                       Page
----                                                                                                       ----

                          PART I. FINANCIAL INFORMATION
<S>                                                                                                          <C>
1.   Financial Statements....................................................................................1
         Consolidated Statements of Income for the Three Months Ended March 31, 1998 and 1997................1
         Consolidated Statements of Cash Flows for the Three Months Ended March 31, 1998 and 1997............2
         Consolidated Balance Sheets as of March 31, 1998 and December 31, 1997..............................3
         Notes to Consolidated Financial Statements..........................................................5
2.   Management's Discussion and Analysis of Results of Operations and Financial Condition...................7

                           PART II. OTHER INFORMATION

1.   Legal Proceedings.......................................................................................8
5.   Other Information.......................................................................................8
6.   Exhibits and Reports on Form 8-K........................................................................8

     Signatures..............................................................................................9
</TABLE>



<PAGE>

                          PART I. FINANCIAL INFORMATION

Item 1. Financial Statements.

                       PANHANDLE EASTERN PIPE LINE COMPANY
                        CONSOLIDATED STATEMENTS OF INCOME
                                   (Unaudited)
                                  (In millions)


                                                              Three Months Ended
                                                                  March 31
                                                             -------------------
                                                               1998        1997
                                                             -------     -------

Operating Revenues
      Transportation and storage of natural gas              $ 131.7     $ 154.1
      Other                                                      6.9        12.3
                                                             -------     -------
          Total operating revenues                             138.6       166.4
                                                             -------     -------

Operating Expenses
      Operation and maintenance                                 47.5        56.2
      Depreciation and amortization                             14.5        14.7
      Property and other taxes                                   6.9         7.3
                                                             -------     -------
          Total operating expenses                              68.9        78.2
                                                             -------     -------

Operating Income                                                69.7        88.2
                                                             -------     -------

Other Income and Expenses                                        6.5         7.7
                                                             -------     -------

Earnings Before Interest and Taxes                              76.2        95.9

Interest Expense                                                19.2        18.6
                                                             -------     -------

Earnings Before Income Taxes                                    57.0        77.3

Income Taxes                                                    21.6        29.6
                                                             -------     -------

Net Income                                                   $  35.4     $  47.7
                                                             =======     =======



                 See Notes to Consolidated Financial Statements.


                                       1
<PAGE>


                       PANHANDLE EASTERN PIPE LINE COMPANY
                      CONSOLIDATED STATEMENTS OF CASH FLOWS
                                   (Unaudited)
                                  (In millions)

<TABLE>
<CAPTION>
                                                                     Three Months Ended
                                                                         March 31
                                                                    ------------------
                                                                      1998       1997
                                                                    -------    -------
<S>                                                                 <C>        <C>
CASH FLOWS FROM OPERATING ACTIVITIES
      Net income                                                    $  35.4    $  47.7
      Adjustments to reconcile net income to net cash provided by
          operating activities:
      Depreciation and amortization                                    15.0       14.7
      Deferred income taxes                                            (1.3)       5.1
      Rate settlement                                                  --        (27.7)
      Net change in current assets and liabilites                     (31.1)     (24.7)
      Other, net                                                        0.6        4.2
                                                                    -------    -------
          Net cash provided by operating activities                    18.6       19.3
                                                                    -------    -------

CASH FLOWS FROM INVESTING ACTIVITIES
      Capital and investment expenditures                             (17.4)     (10.8)
      Net decrease (increase) in advances receivable - parent           0.8       (8.6)
      Retirements and other                                            (2.0)      --
                                                                    -------    -------
          Net cash used in investing activities                       (18.6)     (19.4)
                                                                    -------    -------

      Net decrease in cash and cash equivalents                        --         (0.1)

      Cash and cash equivalents at beginning of period                 --          0.1
                                                                    -------    -------
      Cash and cash equivalents at end of period                    $  --      $  --
                                                                    =======    =======


Supplemental Disclosures
      Cash paid for interest (net of amount capitalized)            $  24.9    $  23.9
      Cash paid for income taxes                                    $  55.0    $  63.4
</TABLE>



                 See Notes to Consolidated Financial Statements.

                                       2
<PAGE>



                       PANHANDLE EASTERN PIPE LINE COMPANY
                           CONSOLIDATED BALANCE SHEETS
                                  (In millions)



                                                        March 31,   December 31,
                                                           1998        1997
                                                       (Unaudited)
                                                         --------    --------
ASSETS

Current Assets
      Receivables                                        $   93.7    $  106.0
      Inventory and supplies                                 36.9        38.2
      Current deferred income tax                             5.2         4.3
      Current portion of regulatory assets                    6.1         6.5
      Other                                                  33.0        37.3
                                                         --------    --------
          Total current assets                              174.9       192.3
                                                         --------    --------

Investments and Other Assets
      Advances and note receivable - parent                 661.3       662.1
      Investment in affiliates                               46.9        47.0
      Other                                                   7.1         7.1
                                                         --------    --------
          Total investments and other assets                715.3       716.2
                                                         --------    --------

Property, Plant and Equipment
      Cost                                                2,745.1     2,733.9
      Less accumulated depreciation and amortization      1,784.8     1,776.0
                                                         --------    --------
          Net property, plant and equipment                 960.3       957.9
                                                         --------    --------

Regulatory Assets
      Debt expense                                           12.2        12.7
      Other                                                  27.0        27.0
                                                         --------    --------
          Total regulatory assets                            39.2        39.7
                                                         --------    --------

      Total Assets                                       $1,889.7    $1,906.1
                                                         ========    ========







                 See Notes to Consolidated Financial Statements.


                                       3
<PAGE>





                       PANHANDLE EASTERN PIPE LINE COMPANY
                           CONSOLIDATED BALANCE SHEETS
                                  (In millions)

<TABLE>
<CAPTION>
                                                                              March 31,   December 31,
                                                                                1998         1997
                                                                            (Unaudited)
                                                                              --------      --------
<S>                                                                           <C>           <C>     
LIABILITIES AND STOCKHOLDER'S EQUITY                                                       
                                                                                           
Current Liabilities
      Accounts payable                                                        $   37.8      $   45.5
      Notes payable - parent                                                     675.0         675.0
      Taxes accrued                                                               44.4          76.7
      Interest accrued                                                             2.2           8.0
      Other                                                                      110.9         114.1
                                                                              --------      --------
          Total current liabilities                                              870.3         919.3
                                                                              --------      --------
                                                                                           
Long-term Debt                                                                   299.2         299.2
                                                                              --------      --------
                                                                                           
Deferred Credits and Other Liabilities                                                     
      Deferred income taxes                                                       81.9          82.1
      Other                                                                      103.9         104.5
                                                                              --------      --------
          Total deferred credits and other liabilities                           185.8         186.6
                                                                              --------      --------
                                                                                           
Common Stockholder's Equity                                                                
      Common stock, no par, 1,000 shares authorized, issued and outstanding        1.0           1.0
      Paid-in capital                                                            465.9         465.9
      Retained earnings                                                           67.5          34.1
                                                                              --------      --------
          Total common stockholder's equity                                      534.4         501.0
                                                                              --------      --------
                                                                                           
                                                                                           
                                                                                           
                                                                                           
      Total Liabilities and Stockholder's Equity                              $1,889.7      $1,906.1
                                                                              ========      ========
</TABLE>

                 See Notes to Consolidated Financial Statements.

                                       4
<PAGE>

                       PANHANDLE EASTERN PIPE LINE COMPANY
                   NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
                                   (Unaudited)

1.  General

Panhandle  Eastern Pipe Line  Company  (PEPL) is a wholly  owned  subsidiary  of
PanEnergy  Corp,  which is an indirect  wholly owned  subsidiary  of Duke Energy
Corporation.  PEPL and its subsidiaries  (the Company) are primarily  engaged in
the interstate transportation and storage of natural gas. The interstate natural
gas  transmission  operations  of the  Company  are  subject  to the  rules  and
regulations of the Federal Energy Regulatory Commission (FERC).

The consolidated  financial  statements  include the accounts of the Company and
all majority-owned subsidiaries. These consolidated financial statements reflect
all  normal  recurring  adjustments  that are,  in the  opinion  of  management,
necessary to present fairly the financial position and results of operations for
the respective periods.

Certain amounts for the prior periods have been reclassified in the consolidated
financial statements to conform to the current presentation.

2.    Regulatory Matters

Effective  August 1, 1996,  Trunkline Gas Company,  a subsidiary of the Company,
placed into effect a general rate  increase,  subject to refund.  Hearings  were
completed  in the third  quarter of 1997.  The case is pending  decisions by the
administrative law judge and the FERC.

In conjunction  with a FERC order issued in September 1997,  certain natural gas
producers were required to refund  previously  collected Kansas ad-valorem taxes
to interstate natural gas pipelines. These pipelines were also ordered to refund
these amounts to their customers. All payments are to be made in compliance with
prescribed FERC requirements.  At March 31, 1998 and December 31, 1997, Accounts
Receivable  included  $46.6 million and $53.6  million,  respectively,  due from
natural gas producers and Other Current  Liabilities  included $53.4 million and
$53.6 million, respectively, for related obligations. The Company refunded $6.8
Million to customers in April 1998.

3.   Related Party Transactions

A summary of certain balances due to or due from related parties included in the
Consolidated Balance Sheets is as follows :

      ------------------------- ------------------ -----------------
                                    March 31,        December 31,
      In Millions                     1998               1997
      ------------------------- ------------------ -----------------
      Receivables                  $      7.2         $      8.1
      Accounts payable                   30.2               36.6
      Taxes accrued                      20.1               54.8
      ------------------------- ------------------ -----------------

Advances and Note  Receivable - Parent  included a $30 million note at March 31,
1998 and December 31, 1997.

Interest  expense  included $13.9 million and $11.9 million for the three months
ended March 31, 1998 and 1997,  respectively,  of interest associated with notes
payable to parent.

                                       5

<PAGE>


4. Gas Imbalances

The  Consolidated  Balance  Sheets  included  in-kind  balances  as a result  of
differences  in gas  volumes  received  and  delivered.  At March  31,  1998 and
December  31,  1997,  other  current  assets  included  $22.2  million and $24.2
million,  respectively, and other current liabilities included $19.3 million and
$22.0 million, respectively, related to gas imbalances.

5.  Commitments and Contingencies

LITIGATION.  On April 25, 1997, a group of affiliated plaintiffs that own and/or
operate various pipeline and marketing  companies and partnerships  primarily in
Kansas  filed suit  against  PEPL in the United  States  District  Court for the
Western  District of Missouri.  The  plaintiffs  allege that PEPL has engaged in
unlawful and anti-competitive  conduct with regard to requests for interconnects
with the PEPL system for service to the Kansas  City area.  Asserting  that PEPL
has violated the antitrust laws and tortiously  interfered  with the plaintiffs'
contracts with third  parties,  the plaintiffs  seek  compensatory  and punitive
damages in unspecified amounts.  Based on information currently available to the
Company,  the Company believes  the  resolution  of this  matter will not have a
material adverse effect on the  consolidated  results of operations or financial
position of the Company.

On May 13, 1997, Anadarko Petroleum  Corporation  (Anadarko) filed suits against
PEPL and other  affiliates,  as defendants,  both in the United States  District
Court for the  Southern  District  of Texas and State  District  Court of Harris
County,  Texas.  Anadarko  claims  that it was  effectively  indemnified  by the
defendants  against any  responsibility  for refunds of Kansas  ad-valorem taxes
which are due purchasers of gas from Anadarko, retroactive to 1983. The suit has
been stayed  pending  resolution by the FERC of ad-valorem tax issues.  Based on
information  currently  available  to the  Company,  the  Company  believes  the
resolution  of this  matter  will  not have a  material  adverse  effect  on the
consolidated results of operations or financial position of the Company.

The Company is also  involved in other  legal,  tax and  regulatory  proceedings
before  various  courts,   regulatory   commissions  and  governmental  agencies
regarding  matters  arising in the ordinary  course of  business,  some of which
involve  substantial  amounts.  Where appropriate for all of these matters,  the
Company has made accruals in accordance  with Statement of Financial  Accounting
Standards No. 5,  "Accounting for  Contingencies,"  in order to provide for such
matters.  Management  is of the  opinion  that the  final  disposition  of these
matters will not have a material adverse effect on the  consolidated  results of
operations or financial position of the Company.

OTHER  COMMITMENTS  AND  CONTINGENCIES.  In  1993,  the U.S.  Department  of the
Interior announced its intention to seek additional royalties from gas producers
as a result of  payments  received by such  producers  in  connection  with past
take-or-pay  settlements,  and buyouts and buydowns of gas sales  contracts with
natural gas pipelines. The Company's pipelines, with respect to certain producer
contract  settlements,  may be  contractually  required to reimburse or, in some
instances,  to indemnify  producers  against such royalty claims.  The potential
liability  of the  producers  to the  government  and  of the  pipelines  to the
producers  involves  complex  issues of law and fact  which  are  likely to take
substantial  time  to  resolve.  If  required  to  reimburse  or  indemnify  the
producers,  the Company's  pipelines will file with FERC to recover a portion of
these costs from  pipeline  customers.  Management  is of the  opinion  that the
resolution  of this  matter  will  not have a  material  adverse  effect  on the
consolidated results of operations or financial position of the Company.

PEPL owns an  effective  5.3%  ownership  interest in Northern  Border  Pipeline
Company (Northern Border) through a master limited partnership.  Under the terms
of a settlement related to a transportation  agreement between PEPL and Northern
Border Pipeline Company (Northern  Border),  PEPL guarantees payment to Northern
Border under a transportation  agreement held by an affiliate of Pan-Alberta Gas
Limited. The transportation agreement requires estimated total payments of $73.2
million for 1998 through 2001.  In the opinion of  management,  the  probability
that PEPL will be required to perform under this guarantee is remote.


                                       6

<PAGE>


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

INTRODUCTION

Panhandle  Eastern Pipe Line  Company  (PEPL) is a wholly  owned  subsidiary  of
PanEnergy  Corp,  which is an indirect  wholly owned  subsidiary  of Duke Energy
Corporation.  PEPL and its subsidiaries (the Company),  are primarily engaged in
the interstate transportation and storage of natural gas. The interstate natural
gas transmission and storage  operations of the Company are subject to the rules
and regulations of the Federal Energy Regulatory Commission (FERC).

RESULTS OF OPERATIONS

For the three months ended March 31, 1998,  net income was $35.4  million,  down
$12.3  million  from  the   comparable   period  in  1997.   Total  natural  gas
transportation  volumes for the three months  ended March 31, 1998  decreased 7%
from the same period in 1997, primarily due to warmer weather.

Revenues for the three months ended March 31, 1998 decreased  $27.8 million from
the  comparable  period  in 1997,  due  primarily  to  favorable  resolution  of
regulatory matters in 1997 and decreased transportation volumes in 1998.

Operating  expenses  for the three months  ended March 31, 1998  decreased  $9.3
million from the prior year  comparable  period,  primarily as a result of lower
regulatory asset amortization expense and 1997 severance expenses.

LIQUIDITY AND CAPITAL RESOURCES

Capital and  investment  expenditures  totaled  $17.4 million in the first three
months  of 1998,  compared  with  $10.8  million  for the same  period  in 1997.
This increase is primarily due to the Terrebonne business expansion project.
Projected  1998 capital and  investment  expenditures,  including  allowance for
funds  used  during  construction,   are  approximately  $74.0  million.   These
projections are subject to periodic review and revision.  Expenditures  for 1998
are  expected  to be funded by cash from  operations  and/or the  collection  of
intercompany advances and receivables.


                                       7

<PAGE>


                           PART II. OTHER INFORMATION

Item 1. Legal Proceedings.

For information concerning litigation and other contingencies, see Note 5 to the
Consolidated Financial Statements.

Item 5. Other Information.

Forward-Looking Statements

From time to time, the Company may make  statements  regarding its  assumptions,
projections,  expectations,  intentions  or beliefs about future  events.  These
statements  are  intended  as  "forward-looking  statements"  under the  Private
Securities Litigation Reform Act of 1995. The Company cautions that assumptions,
projections,  expectations,  intentions  or beliefs  about future events may and
often do vary from  actual  results  and the  differences  between  assumptions,
projections,  expectations,  intentions  or beliefs  and actual  results  can be
material.  Accordingly,  there can be no assurance  that actual results will not
differ  materially  from  those  expressed  or  implied  by the  forward-looking
statements.  The  following  are some of the  factors  that could  cause  actual
achievements and events to differ  materially from those expressed or implied in
such  forward-looking  statements:  state and federal legislative and regulatory
initiatives  that affect cost and  investment  recovery,  have an impact on rate
structures,  and  affect the speed and  degree to which  competition  enters the
natural gas industry;  the weather and other natural  phenomena;  the timing and
extent  of  changes  in  commodity   prices  and  interest  rates;   changes  in
environmental  and  other  laws and  regulations  to which the  Company  and its
subsidiaries are subject or other external factors over which the Company has no
control;  the results of  financing  efforts;  growth in  opportunities  for the
Company's subsidiaries;  and the effect of the Company's accounting policies, in
each case during the periods covered by the forward-looking statements.


Item 6. Exhibits and Reports on Form 8-K.

(a)  Exhibits

         (27)  Financial Data Schedule (included in electronic filing only)


 (b) Reports on Form 8-K

     The  Corporation  filed no reports on Form 8-K during the first  quarter of
1998.





                                       8

<PAGE>


                                   SIGNATURES

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



                                        PANHANDLE EASTERN PIPE LINE COMPANY



May 13, 1998                           /s/ Richard J. Osborne
                                       ------------------------------------
                                       Richard J. Osborne
                                       Senior Vice President and
                                       Chief Financial Officer




                                       9