<PAGE>

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

                            FORM 10-Q

(Mark One)

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

     For the Quarterly Period Ended September 30, 1997

     OR

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

     For the Transition Period from             to
                                  -----------    -----------

                   Commission File No. 1-12905


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

                              Texas
 (State or other jurisdiction of incorporation or organization)

                           75-2421863
              (I.R.S. Employer Identification No.)

      2500 CityWest Blvd., Suite 1400, Houston, Texas 77042
       (Address of principal executive office) (Zip Code)

                         (713) 243-3100
      (Registrant's telephone number, including Area Code)

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

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

      Number  of shares of Common Stock of Registrant outstanding
as of November 10, 1997: 126,911,927

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

                 PART I.  FINANCIAL INFORMATION


Item 1.  Financial Statements




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

                                     Three Months Ended    Nine Months Ended
                                        September 30         September 30
                                     --------------------------------------
                                        1997    1996        1997    1996
                                        ---------------    ------- --------
                                             (Restated)           (Restated)
                                             ----------           ---------
                                      (In thousands except per share amounts)
<S>                                 <C>       <C>       <C>       <C>      
Revenues
 Natural gas                        $  51,175 $ 51,373  $154,826  $161,772
 Oil and condensate                    21,866   26,852    71,230    70,583
 Natural gas liquids                    2,177    2,800     4,968     6,444
 Cogeneration operations                2,912    2,771     8,387     8,055
 Other                                    100      743       883     1,626
                                    ---------- -------    ------- --------
   Total                               78,230   84,539   240,294   248,480
                                    ---------- -------    ------- --------
Costs and Expenses
 Production and operating              12,267   18,412    37,317    55,340
 Exploration                           25,192   28,481    65,213    68,335
 Depreciation and amortization         38,604   43,299   112,353   121,028
 Impairment of producing oil
     and gas  properties              210,202            210,202
 Loss (gain) on sales of property,
    plant & equipment                   1,635  (21,777)    1,635   (24,383)
 Unusual charges                       24,229             26,412
 Cogeneration operations                2,584    2,589     7,742     7,553
 General, administrative and other      7,710    7,487    22,181    23,999
 Taxes, other than income               4,670    5,245    13,624    16,218
                                    ---------- --------  -------- --------
   Total                              327,093   83,736   496,679   268,090
                                    ---------- --------  -------- --------
Operating Income (Loss)              (248,863)     803  (256,385)  (19,610)
Other Income (Expense) - Net              (79)     (42)     (150)       42
Interest Income                           383                469
Interest and Other Financing Costs     (8,804)  (6,918)  (25,502)  (21,015)
                                    ---------- --------  -------- ---------
Loss Before Income Taxes             (257,363)  (6,157) (281,568)  (40,583)
Income Taxes (Benefit)                (75,828)  (2,214)  (84,303)  (14,309)
Minority Interest                         (73)               (73)
                                    ---------- --------  -------- ---------

Net  Loss                           $(181,608) $(3,943)$(197,338) $(26,274)
                                    ========== ======== ========= =========
Net  Loss  Per  Share               $   (1.44) $ (0.03) $  (1.56) $  (0.21)
                                    ========== ======== ========= =========

Weighted Average Shares Outstanding   126,666  126,571    126,666  126,565
                                    =========  ======== ========= =========


See accompanying Notes.

</TABLE>


                                2
<PAGE>
<PAGE>
<TABLE>
<CAPTION>


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


                                                     Nine Months Ended
                                                       September 30
                                               ---------------------------
                                                     1997         1996
                                                   --------    ----------
                                                               (Restated)
                                                               ----------
                                                     (In Thousands)
<S>                                             <C>           <C>  
OPERATING ACTIVITIES
 Net income (loss)                              $(197,338)    $ (26,274)
 Impairment of producing oil and gas properties   210,202
 Impairment of undeveloped leasehold               40,866        25,500
 Dry hole cost                                      7,409        18,834
 Depreciation and amortization                    112,353       121,028
 Deferred income tax expense (benefit)            (79,172)      (12,861)
 Other                                             23,709       (10,464)
 Changes in current operating
     assets and liabilities
  Accounts receivable                              17,068        16,509
  Other current assets                             (2,477)           64
  Accounts payable                                 17,915       (17,951)
  Other current liabilities                           355         3,672
                                                ---------     ---------
  Net cash flows from operating activities        150,890       118,057
                                                ---------     ---------

INVESTING ACTIVITIES
 Additions to property, plant and equipment      (128,522)     (150,512)
 Retirements of property, plant and equipment      53,237        82,136
 Changes in property, plant
     and equipment accruals                        (3,386)         (554)
                                                ---------     ---------
    Net cash flows used in
     investing activities                         (78,671)      (68,930)
                                                ---------     ---------

FINANCING ACTIVITIES
 Borrowings under bank revolving
     credit agreement                              60,000       125,000
 Repayment of borrowings under bank
     revolving credit agreement                  (140,000)     (155,000)
 Borrowings under short term
     financing agreement                          130,900
 Repayments under short term
     financing agreement                         (127,900)
 Repayment of Company-Obligated
     Mandatorily Redeemable Preferred
       Securities of Subsidiary                  (150,000)
 Issuance of Minority Interests in
     Preferred Securities of Subsidiaries         150,000
  Change in temporary advances with
     affiliated companies                          13,328       (19,957)
 Change in deferred payable to
     affiliated company                                          (1,887)
 Change in advances under leasing arrangements     (5,457)        5,930
 Payments of capital lease obligations             (2,899)       (3,413)
 Issuance of common stock                               2           120
                                                ---------     ---------
  Net cash flows used in financing activities     (72,026)      (49,207)
                                                ---------     ---------
Net Increase in Cash                                  193           (80)
Cash at Beginning of Period                         1,358         1,565
                                                ---------     ---------
Cash at End of Period                           $   1,551     $   1,485
                                                =========     =========


See accompanying Notes.

</TABLE>


                                3 
<PAGE>
<PAGE>
<TABLE>
<CAPTION>

                    ENSERCH EXPLORATION, INC.
              CONDENSED CONSOLIDATED BALANCE SHEETS
                           (Unaudited)
                                
                                                 September 30   December 31
                                                     1997           1996
                                                 ------------   -----------
                                                                 (Restated)
                                                                -----------
                                                      (In thousands)
<S>                                            <C>              <C>
ASSETS
Current Assets
 Cash                                          $      1,551     $    1,358
 Accounts receivable - trade                         65,407         65,926
 Accounts receivable - affiliated companies                         16,549
 Temporary advances - affiliated companies                          13,328
 Other                                               20,743         18,266
                                               ------------     ----------
    Total current assets                             87,701        115,427
                                               ------------     ----------
Property, Plant and Equipment (at cost)
   Oil and gas properties
     (successful  efforts  method)                1,969,135      1,984,341
 Other                                               18,617         22,084
                                              -------------      ---------
    Total                                         1,987,752      2,006,425
 Less accumulated depreciation
     and amortization                             1,221,234        941,052
                                             --------------      ---------
    Net property, plant and equipment               766,518      1,065,373
                                             --------------      ---------
Deferred Income Tax Benefit                          30,961
                                             --------------      ---------
Other Assets                                         10,098         14,654
                                             --------------       --------
    Total                                      $    895,278     $1,195,454
                                             ==============     ===========
LIABILITIES AND SHAREHOLDERS' EQUITY
Current Liabilities
 Accounts payable - trade                      $    112,611     $   91,026
 Accounts payable - affiliated companies                             8,924
 Short term borrowings                                3,000
 Advances under leasing arrangements                                 5,457
 Current portion of capital lease obligations         8,392          3,250
 Other                                               12,198         11,843
                                              -------------      ---------
    Total current liabilities                       136,201        120,500
                                              -------------      ---------
Bank Revolving Credit Agreement                      35,000        115,000
                                              -------------      ---------
Capital Lease Obligations                           233,694        241,735
                                              -------------      ---------
Deferred Income Taxes                                               35,330
                                              -------------      ---------
Other Liabilities                                    47,031         42,483
                                              -------------      ---------
Company-Obligated Mandatorily Redeemable
 Preferred Securities of Subsidiary                                150,000
                                              -------------      ---------
Minority Interests in Preferred
     Securities of Subsidiaries                    150,000
                                              ------------      ----------
Common Shareholders' Equity
 Common stock (400,000 shares authorized;
  126,920 and 126,736 shares outstanding)            1,269         126,736
 Paid in capital                                   569,173         442,246
 Accumulated deficit                              (275,007)        (77,669)
 Unamortized restricted stock compensation          (1,550)           (677)
 Treasury stock (57 and 25 shares)                    (533)           (230)
                                             -------------       ---------
    Common shareholders' equity                    293,352         490,406
                                             -------------       ---------
    Total                                     $    895,278      $1,195,454
                                             =============       =========


See accompanying Notes.

</TABLE>
                                        4
<PAGE>                                
<PAGE>                                
                                
                                
                                
                    ENSERCH EXPLORATION, INC.
      Notes to Condensed Consolidated Financial Statements

1.    BASIS  OF  PRESENTATION - On August 5, 1997, the merger  of
  ENSERCH Corporation ("ENSERCH") and Texas Utilities Company and
  the related merger of Enserch Exploration, Inc. ("Old EEX") and
  Lone Star Energy Plant Operations, Inc. ("LSEPO") were completed.
  In  the  EEX/LSEPO merger, LSEPO changed its name  to  "Enserch
  Exploration, Inc." ("EEX"), shares of Old EEX were automatically
  converted into shares of New EEX on a one-for-one basis in a tax-
  free transaction, New EEX issued 691,631 shares of common stock
  to  ENSERCH in exchange for outstanding LSEPO common stock  and
  ENSERCH distributed to its shareholders, on a pro rata basis, all
  of the shares of New EEX common stock it owned.  In addition, the
  merger  fixed  LSEPO's working capital at $3.5  million.    For
  financial reporting purposes, the EEX/LSEPO merger was treated as
  a combination of entities under common control. Accordingly, the
  operations and assets and liabilities of EEX and LSEPO have been
  recorded  at  their  historical  amounts  in  the  accompanying
  Condensed Statements of Consolidated Operations and Cash  Flows
  for the three months and nine months ended September 30, 1997 and
  1996  and  the  Condensed Consolidated  Balance  Sheets  as  of
  September 30, 1997 and December 31, 1996. The number of  common
  shares outstanding for all periods has been increased to reflect
  the 691,631 additional shares issued in the merger.  The Restated
  Articles of Incorporation of EEX authorized 400 million shares of
  common  stock with a par value of $.01.  This change  has  been
  reflected  in the accompanying condensed consolidated financial
  statements.

2.In  the  third quarter 1997, EEX adopted the successful efforts
  method  of accounting for its oil and gas operations and  prior
  period  financial  statements have  been  restated.  Under  the
  successful  efforts  method  of accounting,  lease  acquisition
  costs  are  capitalized  when incurred.   Significant  unproved
  properties  are reviewed periodically on a property-by-property
  basis  to  determine if there has been an impairment in  value,
  with  such  impairment charged to expense. All  other  unproved
  properties are aggregated and a portion of the costs  estimated
  to  be  non-productive,  based  on  historical  experience,  is
  amortized over the average life of the leases.  Geological  and
  geophysical  costs  and  the costs of  carrying  and  retaining
  undeveloped  properties are expensed as incurred.   Exploratory
  drilling  costs  are  initially  capitalized  but  charged   to
  current expense if the well is commercially unsuccessful.

  Leasehold costs of producing properties are depleted using  the
  unit  of  production method based on estimated proved  oil  and
  gas  reserves  quantified  on the  basis  of  their  equivalent
  energy  content.  Amortization of drilling and equipment  costs
  is  based  on  the  unit of production method  using  estimated
  proved  developed oil and gas reserves quantified on the  basis
  of  their  equivalent  energy content.  Depreciation  of  other
  property,  plant and equipment is provided principally  by  the
  straight  line method over the estimated service lives  of  the
  related  assets.   The current undiscounted cost  of  estimated
  future site restoration, dismantlement and abandonment, net  of
  salvage,  is  included in the cost of productive  oil  and  gas
  properties   and  a  corresponding  liability  recorded.    The
  recorded  cost  is amortized on the unit of production  method.
  Actual  costs incurred for these activities are charged to  the
  recorded liability.

<PAGE>
<PAGE>
                                5


  The  effect  of the  adoption of the successful efforts  method
  of  accounting  on  net income (loss) for  the  quarters  ended
  September  30,  1997  and  1996 is as  follows  (in  thousands,
  except per share amounts):

<TABLE>
<CAPTION>  
                                              1997      1996
                                          ---------------------
                                           Increase (Decrease)
     <S>                                 <C>         <C>
     Net (loss)                          $ (173,331) $  (6,135)
                                         =========== =========
     Net (loss) per share                $    (1.37) $   (0.05)
                                         =========== =========
</TABLE>

 The  effect  on previously reported net  income (loss)  for  the
 first  two  quarters  of  1997  and  1996  is  as  follows   (in
 thousands, except per share amounts):

<TABLE>
<CAPTION>
                                                  Three Months Ended
                                                ===========================
                                                  June 30        March 31
                                                ==========      ===========
  <S>                                         <C>              <C>
  1997
  Net  income (loss) as previously reported   $     6,044      $  (234,595)
  Adjustment  for  effect  of  change  to
      successful  efforts                         (19,573)         232,392
                                               ----------      -----------
     Net (loss) as adjusted                   $   (13,529)     $    (2,201)
                                              ===========       ==========
  Per share amounts:
  Net  income (loss) as previously reported   $       .05      $     (1.85)
  Adjustment  for  effect  of  change  to
      successful  efforts                            (.16)            1.83
                                               ----------       -----------
     Net (loss) as adjusted                   $      (.11)    $       (.02)
                                              ===========        ==========
  1996
  Net income as previously reported           $     5,334     $        205
  Adjustment  for  effect  of  change  to
      successful  efforts                         (18,473)          (9,398)
                                              -----------        ----------
     Net (loss) as adjusted                   $   (13,139)    $     (9,192)
                                              ===========        ==========
  Per share amounts:  
  Net income as previously reported           $      .04      $        .00
  Adjustment  for  effect  of  change  to
      successful  efforts                           (.14)             (.07)
                                              ----------       ------------
    
     Net (loss) as adjusted                   $     (.10)       $     (.07)
                                              ===========         ==========
</TABLE>


The effect on retained earnings (deficit) and paid in capital  is
as follows (in thousands):

<TABLE>
<CAPTION>
                                                      Retained
                                                      Earnings    Paid In
                                                     (Deficit)    Capital
                                                     ---------   -----------
  <S>                                              <C>         <C>
  Balance at December 31, 1996, 
    as previously reported                         $    2,292  $  819,393
  Adjustment for cumulative effect for
     restatement to successful efforts
       accounting for the following periods:
       Through December 31, 1994                                 (377,147)
       Two years ended December 31, 1996              (79,961)
                                                   ----------  ----------
  Balance  at December 31, 1996, as restated          (77,669) $  442,246
                                                               ==========
  Restated net (loss) for quarters ended
     March 31 and June 30, 1997                       (15,730)
                                                     ----------
  Balance at beginning of quarter
    ended September 30, 1997, as restated             (93,399)
  Net (loss) for quarter ended September 30, 1997    (181,608)
                                                     ----------
  Balance September 30, 1997                       $ (275,007)
                                                    ==========
</TABLE>

<PAGE>
<PAGE>

                                6

3.     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) provides  for  the
  recognition  of losses when events or changes in  circumstances
  indicate that the carrying value of long-lived assets may not be
  realized. When there is evidence that the cost of such assets may
  not be realized based upon periodic evaluation, SFAS 121 requires
  the carrying values of long-lived assets be written down to fair
  values. The Company estimates fair values using the present value
  of  expected future cash flows for each significant oil and gas
  field.
  
  Early  in  1997,  EEX  began  a  review  and  evaluation  of  the
  commercial  feasibility  of  its  non-producing   oil  and  gas
  reserves.   The Company has announced, based upon a preliminary
  evaluation,  that  it expects a material downward  revision  of
  its  oil and natural gas reserves, primarily in its behind pipe
  and  proved  undeveloped reserves in East Texas and its  proved
  undeveloped  reserves in the deep-water Gulf of Mexico.   While
  additional  analysis is required and is currently in  progress,
  EEX  management believes that the study progressed sufficiently
  during  the third quarter of 1997 that the amount of the  year-
  end  1997  downward revision could be reasonably  estimated  to
  approximate 670 billion cubic feet of gas equivalent.

  As  a  result  of the estimated downward revision of  reserves,
  the Company reexamined the carrying value of its properties  as
  a  part  of the overall process.  In order to determine whether
  its  assets  had  been  impaired,  EEX  grouped  its  producing
  properties  by  fields, which it believes is the  lowest  level
  for   which   cash   flows   are  reasonably   and   separately
  identifiable,  and  determined  that  anticipated  future  cash
  flows  based on the revised reserve estimations and development
  plans  were  insufficient  to recover  the  carrying  value  of
  certain fields. Accordingly, the carrying value of such  fields
  were  reduced  to fair value, and EEX recorded a  $137  million
  after-tax, ($210 million pre-tax) charge for impairment at  the
  end of the third quarter 1997.

4.    The  deferred  tax  effect of the difference  in  financial
  accounting  basis and the income tax basis of EEX's assets  and
  liabilities at September 30, 1997, and December 31, 1996, were as
  follows:
<TABLE>
<CAPTION>
                                             September  30,  December 31,
                                                 1997            1996
                                              ------------- ------------
                                                   (In thousands)
<S>                                         <C>            <C>
 Deferred tax assets (liabilities):
  Property, plant and equipment             $   50,896     $   (44,399)
  Losses of controlled foreign corporations      8,044           8,079
  All other                                      3,018           2,088
                                            ----------      ----------
   Total                                        61,958         (34,232)
   Valuation allowance                         (30,000)
                                              ----------    ----------
     
 Net deferred tax asset (liability)         $   31,958      $  (34,232)
                                              ==========    ==========
     
 Current amount                             $      997      $    1,098
 Non-current amount                             30,961         (35,330)
                                              ----------    ----------
     
   Total                                   $    31,958      $  (34,232)
                                              ==========    ==========
</TABLE>     
     
                                7
  
<PAGE>
<PAGE>

 The  Company   established a $30 million valuation allowance  to
  reduce  the  calculated deferred tax asset  to  net  realizable
  value  in  accordance  with Statement of  Financial  Accounting
  Standards  No.  109  (SFAS  109).   Although  the  Company  has
  incurred net taxable losses for book purposes in recent  years,
  management  believes  it  is more  likely  than  not  that  the
  Company  will generate taxable income sufficient to  realize  a
  portion of the tax benefits associated with  assets which  have
  a   tax  basis  in  excess  of  net  cost  recorded  under  the
  successful  efforts  method of accounting  used  for  financial
  reporting  purposes. Such assets are primarily  represented  by
  seismic  costs capitalized for tax purposes but expensed  under
  successful  efforts  accounting and assets impaired  under  the
  provisions  of  SFAS  121  for  which  no  tax  deduction   was
  immediately  available.   This belief  is  based  primarily  on
  available  tax  planning strategies which  include  anticipated
  sales of assets with  fair market values in excess of book  and
  tax  cost  bases  within  the next year.  While  management  is
  optimistic that future earnings will be significantly  enhanced
  as   a  result  of  its  ongoing  restructuring  program,   the
  anticipated  earnings  benefit which  could  be  realized  from
  further  realization of the additional tax  basis  in  selected
  assets  has  not  been  recognized  in  the  valuation  of  the
  Company's deferred tax asset.

5.    On September 29, 1997, EEX concluded a transaction in which
  all   of   the  outstanding  mandatorily  redeemable  preferred
  securities of a subsidiary were redeemed at the stated value of
  $150 million.  The redemption was funded by a private sale of new
  issues  of preferred stock of EEX Capital, Inc. (EEXC),  wholly
  owned  by  EEX, and Preferred Interests of MIStS Issuer  L.L.C.
  (Issuer), whose common equity interests are wholly owned by EEXC.
  On  October  27, 1997, EEXC sold an additional $75  million  of
  preferred stock and used the proceeds to satisfy a $75  million
  demand  note  with Issuer.  Issuer used the proceeds  from  the
  demand note to redeem all the preferred interests sold by Issuer
  on  September  29,  1997.  The dividend  rate  for  EEXC's  new
  securities  is based on LIBOR (reset quarterly) plus  a  spread
  beginning at 3.0% for the period ending December 31, 1997,  and
  increasing by 1.0% quarterly through December 31, 1998.  The new
  securities are redeemable, in whole or in part, at the option of
  EEXC on the quarterly dividend payment dates.  Interest payable
  on  a  $150 million demand note from EEX to EEXC will fund  the
  dividends.

6.    In early 1997, EEX management committed  to restructure the
  Company  and  undertook a program to refocus the scope  of  its
  future operations and reduce the number  of personnel.  Costs and
  expenses  associated with this program include unusual  charges
  incurred   in  connection  with  restructuring  and  relocating
  administrative functions as well as  terminating  a  number  of
  employees.  In the third quarter 1997, as an integral part of its
  restructure  plan, EEX relocated its Corporate headquarters  to
  Houston, Texas, committed to the  severance of approximately 375
  Dallas-based employees and authorized the closure of its Dallas,
  Texas administrative offices by year-end 1998. Accordingly, EEX
  accrued $19 million for severance of  employees not relocating to
  Houston under the benefits outlined in its severance program and
  $1.6  million  for  cancellation of office  leases  during  the
  quarter.  Amounts paid and charged against these accruals during
  the  quarter  were  employee  severance  of  $5.8  million  (72
  employees)  and lease cancellation costs of $.4 million.  Other
  amounts  associated with these changes which  are  expected  to
  benefit future operations are expensed as incurred; during  the
  third  quarter they  included  professional services  of   $1.3
  million and office  and  employee



                                  8

<PAGE>
<PAGE>

  relocation of $1 million.  Also during the third quarter  1997,
  non  oil and gas assets were written down $2.3 million  to  net
  realizable   value.   Second  quarter  1997  charges   included
  employee    severance   of   $1.6   million   (45   employees),
  professional  services of $.3 million and office  and  employee
  relocation of $.3 million.

7.    EEX  has  filed suit in the 11th District Court  of  Harris
  County, Texas alleging, among other claims, anticipatory breach
  of  a  drilling rig contract which provides EEX with daily  rig
  rates  substantially less than current market  rates.   EEX  is
  seeking a declaratory judgment that the contract includes a three
  year  Option Term.  Unfavorable settlement of this matter could
  materially impact future offshore deep water drilling costs.

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

9.    In  the  opinion of management, all adjustments (consisting
  only  of  normal  recurring  accruals)  necessary  for  a  fair
  presentation of the financial position, results of operations and
  cash  flows for the interim periods included herein  have  been
  made.  Certain items in prior periods have been reclassified to
  be consistent with the current presentation.



































                                 9
<PAGE>                                
<PAGE>                                

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

OVERVIEW

On  August  5,  1997, the merger of ENSERCH and Texas  Utilities
Company  and  the  related merger of Enserch  Exploration,  Inc.
("EEX")  and  Lone Star Energy Plant Operations, Inc.  ("LSEPO")
were  completed. Under the terms of the EEX/LSEPO merger,  LSEPO
changed  its  name to "Enserch Exploration, Inc."  ("New  EEX"),
shares  of EEX were automatically converted into shares  of  New
EEX  on  a one-for-one basis in a tax-free transaction, New  EEX
issued 691,631 shares of common stock to ENSERCH in exchange for
outstanding  LSEPO common stock and ENSERCH distributed  to  its
shareholders, on a pro rata basis, all shares of New EEX  common
stock  it owned.  In addition, the merger fixed LSEPO's  working
capital at $3.5 million.  For financial reporting purposes,  the
EEX/LSEPO merger was treated as a combination of entities  under
common  control.  Accordingly, the  operations  and  assets  and
liabilities  of  EEX  and  LSEPO have  been  recorded  at  their
historical  amounts  in  the accompanying financial  statements.
The  number  of common shares outstanding has been increased  to
reflect  the 691,631 additional shares issued in the merger  and
the  adjustment  of LSEPO's working capital to $3.5  million  is
reflected  in  the  accompanying Condensed Consolidated  Balance
Sheets.


RESULTS OF OPERATIONS

EEX  changed from the full cost method to the successful efforts
method  to  account for its oil and gas operations in the  third
quarter  of 1997 and all prior period financial statements  have
been  restated.  See  Note 2 of Notes to Condensed  Consolidated
Financial  Statements for additional information. The  following
discussions  of  operating results are based on  those  restated
amounts.

EEX  reported  a  third quarter 1997 net loss  of  $182  million
($1.44  per share), versus a net loss of $3.9 million ($.03  per
share) in 1996.  The third quarter 1997 operating loss was  $249
million,  compared to operating income of $1 million  for  1996.
For  the  first nine months of 1997, EEX had a net loss of  $197
million  ($1.56 per share) compared to a net loss of $26 million
($.21 per share) for 1996.

Results  of  operations for the third quarter  and  year-to-date
1997 were impacted by the following unusual items:

     A  third quarter $137 million after-tax ($210 million pre-
  tax) charge for impairment of producing oil and gas properties
  required by Statement of Financial Accounting Standards No. 121,
  "Accounting for the Impairment of Long-Lived Assets and for Long-
  Lived  Assets to Be Disposed Of." This impairment will  reduce
  future depreciation and amortization expense.


                                       10

<PAGE>
<PAGE>


    An unusual charge, primarily severance, of $16 million after-
  tax ($24 million pre-tax) for the third quarter and $17 million
  after-tax  ($26 million pre-tax) year-to-date related  to  the
  reorganization and restructuring of operations and the relocation
  of corporate headquarters to Houston, Texas.

In  the  following  comparisons of results of  operations,  1997
results  have  been  adjusted  to  exclude  the  unusual   items
described above.


QUARTERS  ENDED SEPTEMBER 30, 1997 AND 1996 - Revenues for  1997
were  $78 million, $6 million (7%) lower than 1996. Natural  gas
revenues,  unchanged from 1996, were impacted by a 16%  increase
in average prices, offset by a 14% decrease in production due to
sales of the Rocky Mountain properties in late 1996. The average
natural gas sales price per thousand cubic feet (Mcf) was  $2.32
in 1997 compared with $2.01 in 1996.  Natural gas production for
1997 was 22 billion cubic feet (Bcf), compared with 25.6 Bcf  in
1996.  Oil revenues decreased $5 million (19%) due to  sales  of
the Rocky Mountain properties in late 1996 and a decrease in the
average  crude oil sales price per barrel to $17.88 in 1997 from
$19.86 in 1996.  Crude oil production was 1,223 thousand barrels
(MBbls),compared with 1,352  MBbls in 1996.

Costs  and expenses, excluding loss (gain) on sales of property,
plant and equipment, were down 14% in the third quarter of  1997
compared  to  1996. Production and operating expenses  decreased
33%  from  1996 as a result of properties sold in late 1996  and
capitalization of the Cooper Project operating lease in December
1996.  Exploration  expenses decreased 12% due  primarily  to  a
change   in  focus  to  offshore  and  international   and   the
curtailment of the onshore exploration program during the  first
nine months of 1997. Exploration expenses are expected to be  at
lower levels in the future due to reduction of exploration staff
levels,  major curtailment of onshore exploration and  reduction
of exposure to deep water Gulf of Mexico dry hole cost resulting
from  the  offshore  exploration  joint  venture  (See  Offshore
Exploration Joint Venture).  Taxes, other than income  decreased
11%  from  1996  primarily  due  to  the  1996  property  sales.
Properties sold in the third quarter of 1997 resulted in a  loss
of  $1.6  million  compared to a gain of $22 million  for  third
quarter   1996.   EEX  is  divesting  non-core  properties   and
anticipates closing several major sales in the fourth quarter of
1997.

Interest and other financing costs for 1997 were $8.8 million, a
$.5 million (6%) reduction from 1996 after an adjustment of $2.4
million  for the impact of capitalization of the Cooper  Project
operating  lease. The decrease in 1997 is due primarily  to  the
reduction in debt from proceeds from property sales.


NINE  MONTHS  ENDED SEPTEMBER 30, 1997 AND 1996 -  Revenues  for
1997  were  $240 million, $8 million (3%) decreased  from  1996.
Natural gas revenues decreased $7 million (4%), resulting from a
16%  decrease in production volumes partially offset  by  a  14%
increase  in  the average sales price. The average  natural  gas
sales  price  per Mcf was $2.41 in 1997 compared with  $2.11  in
1996.   Natural gas production for 1997 was 64.2 Bcf, down  from
76.5 Bcf in

                               11

<PAGE>
<PAGE>

1996 due primarily to the aforementioned property sales.  Higher
oil revenues in  1997 reflect a 3% improvement in the average sales
price  to $19.50  per barrel in 1997 from $18.94 in 1996, offset by
a  2% decline  in production volumes. Crude oil production  was  3,652
MBbls in 1997 compared to 3,726 MBbls in 1996. Overall, oil  and
gas  production  in the first nine months of  1997  was  reduced
somewhat  because  the Cooper facility was shut-in  for  several
weeks   to   allow   for  maintenance,  repair  and   completion
activities.

Costs  and expenses, excluding loss (gain) on sales of property,
plant  and  equipment, were down 12% in 1997 compared  to  1996.
Production and operating  expenses decreased 33% from  1996  for
the  reasons described above. Exploration expenses were down  5%
due  to  the  refocusing of the exploration  programs  described
above  and  are  expected to be at lower levels in  the  future.
General  and administrative expenses were $22 million,  8%  less
than  1996  due  to  restructuring and  ongoing  cost  reduction
initiatives.   Taxes, other than income were $14  million,  down
16% from 1996 primarily due to lower ad valorem tax accruals and
1996 property sales.  Property sales in the first nine months of
1997  resulted in a loss of $1.6 million compared to a  gain  of
$24 million for 1996.

Interest and other financing costs for 1997 were $26 million,  a
$3 million (10%) reduction from 1996 after an adjustment of $7.2
million  for the impact of capitalization of the Cooper  Project
operating lease. The decrease in 1997 is due to the reduction in
debt from proceeds from property sales.


HEDGING ACTIVITIES

A  portion of the risk associated with fluctuations in the price
of  oil  and  natural gas is managed through the use of  hedging
techniques  such  as  oil  and gas swaps,  collars  and  futures
agreements.    EEX  fixed  the  price  on  third  quarter   1997
production  volumes of 19 Bcf of natural gas (82% of production)
at  an average price of $2.33 per Mcf and 828 MBbls of oil  (68%
of  production) at an average price of $20.38 per Bbl.  For  the
first  nine  months of 1997, EEX fixed the price on  48  Bcf  of
natural gas (71% of production) at an average price of $2.60 per
Mcf  and  1,759 MBbls of oil (48% of production) at  an  average
price  of  $21.24 per Bbl.  In total oil and gas  price  hedging
activities decreased third quarter 1997 revenues by $.8 million,
compared to a decrease of $3.3 million for the third quarter  of
1996.  For  the first nine months of 1997, oil and  gas  hedging
activities increased revenues by $.8
million,  but  decreased revenues for the first nine  months  of
1996 by $11
million.  At  September  30, 1997, EEX  had  outstanding  swaps,
collars and futures agreements that were entered into as  hedges
extending through December 31, 1998, to exchange payments on  39
Bcf  of  natural gas and 1,548 MBbls of oil.  At  September  30,
1997, there were $7.5 million of net unrealized and unrecognized
hedging losses based on the difference between the strike  price
and  the  New  York Mercantile Exchange futures  price  for  the
applicable trading months of 1997 and 1998.  In addition,  there
were $6.4 million of realized losses on hedging activities which
were  deferred and will be applied as a decrease in revenues  in
October   1997,  the  applicable  month  of  physical  sale   of
production.

                               12
<PAGE>
<PAGE>

RESERVE  REVISION  AND  IMPAIRMENT  OF  PRODUCING  OIL  AND  GAS
PROPERTIES

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) provides for the recognition  of
losses when events or changes in circumstances indicate that  the
carrying  value  of long-lived assets may not be  realized.  When
there  is  evidence  that  the cost of such  assets  may  not  be
realized  based upon periodic evaluation, SFAS 121  requires  the
carrying  values  of long-lived assets be written  down  to  fair
values. The Company estimates fair values using the present value
of  expected future cash flows for each significant oil  and  gas
field.

Early  in  1997,  EEX  began  a  review  and  evaluation  of  the
commercial  feasibility  of  its  non-producing   oil   and   gas
reserves.   The  Company has announced, based upon a  preliminary
evaluation, that it expects a material downward revision  of  its
oil  and  natural gas reserves, primarily in its behind pipe  and
proved   undeveloped  reserves  in  East  Texas  and  its  proved
undeveloped  reserves in the deep-water Gulf  of  Mexico.   While
additional analysis is required and is currently in progress, EEX
management believes that the study progressed sufficiently during
the  third  quarter of 1997 that the amount of the year-end  1997
downward  revision could be reasonably estimated  to  approximate
670 billion cubic feet of gas equivalent.

As  a result of the estimated downward revision of reserves,  the
Company reexamined the carrying value of its properties as a part
of the overall process.  In order to determine whether its assets
had  been  impaired,  EEX  grouped its  producing  properties  by
fields,  which  it believes is the lowest level  for  which  cash
flows  are reasonably and separately identifiable, and determined
that  anticipated future cash flows based on the revised  reserve
estimations  and development plans were insufficient  to  recover
the  carrying value of certain fields. Accordingly, the  carrying
value of such fields were reduced to fair value, and EEX recorded
a  $137  million  after-tax, ($210 million  pre-tax)  charge  for
impairment at the end of the third quarter 1997.


LIQUIDITY AND CAPITAL RESOURCES

Cash Flows

EEX generated sufficient cash flows from operations and property
sales to fund its capital requirements and reduce financings  by
$80  million.   Net cash flows from operating   activities  were
$151  million, an increase of $33 million over 1996 largely  due
to  higher commodity prices during the first quarter of 1997 and
changes  in current operating assets and liabilities.  Net  cash
flows used for investing activities in 1997 were $79 million,  a
$10 million increase from 1996.

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


                               13

<PAGE>
<PAGE>

Capital Structure

In  the third quarter 1997, EEX redeemed, at the stated value of
$150   million,  all  the  outstanding  mandatorily   redeemable
preferred securities of a subsidiary. The redemption was  funded
by  private sales of new issues of preferred securities  by  EEX
subsidiaries. The new preferred securities are redeemable at the
option  of  the subsidiaries and are reflected on the  condensed
consolidated  balance sheet as "Minority Interests in  Preferred
Securities  of  Subsidiaries". After  the  redemption,  debt  at
September  30,  1997 represented 49% of total capitalization  of
$573   million,  compared  to  51%,  including  the  mandatorily
redeemable  preferred  securities  of  a  subsidiary,  of  total
capitalization  of  $1  billion  at  December  31,  1996.    The
reduction in total capitalization at September 30, 1997 was  due
to  the reduction in shareholders' equity from the third quarter
1997 non-cash impairment of producing oil and gas properties and
the   reduction  in  debt  resulting  from  redemption  of   the
mandatorily redeemable preferred securities.


OFFSHORE EXPLORATION JOINT VENTURE

On July 1, 1997 EEX announced agreement with  Enterprise Oil Plc
("Enterprise")  to  participate in  an  exploration  venture  to
evaluate EEX's portfolio of offshore blocks in the deep water of
the Gulf of Mexico.

The agreement, covering approximately 78 blocks primarily in the
areas of Garden Banks, Green Canyon and Mississippi Canyon,  was
closed  on  September  15,  1997 and all  required  governmental
approvals  have been obtained.  Excluded from the agreement  are
reserves  at  Green Canyon 254 (Allegheny Project) and  reserves
and production facilities at Mississippi Canyon and Garden Banks
388 (Cooper Project).

Under  the  agreement, approved by the Boards of  each  company,
Enterprise  will  pay $65 million, which will be  used  to  fund
EEX's  exploration  drilling costs  and  in  return  receive  an
immediate  assignment  of  50%  of  EEX's  deep water portfolio.
A  further  $35 million to be funded by Enterprise is contingent
on  drilling  successes and the announcement  of  at  least  two
commercial  developments. Enterprise will immediately  become  a
full partner in the relevant Joint Operating Agreements.

The  companies intend to conduct a 10 to 12 well drilling program
over  the next two and one-half years utilizing two rigs  capable
of drilling in 3,300 feet of water.  The rigs are under long-term
contract to EEX at below market day rates. EEX has filed suit  in
the  11th District Court of Harris County, Texas alleging,  among
other  claims,  anticipatory breach of one of the  rig  contracts
which  provides EEX with daily rig rates substantially less  than
current market rates.  EEX is seeking a declaratory judgment that
the  contract  includes  a three year Option  Term.   Unfavorable
settlement of this matter could materially impact future offshore
deep  water  drilling costs.  The first well has been spudded  on
the  Llano prospect in Garden Banks 386 and is currently drilling
below  18,000  feet  towards a proposed  depth  of  25,000  feet.
Results  are  expected  to be known by  the  end  of  the  fourth
quarter.  The  second  well in this program  is  expected  to  be
spudded in the fourth quarter.


                               14

<PAGE>
<PAGE>
FORWARD LOOKING STATEMENTS - UNCERTAINTIES AND RISKS

Written  statements throughout this report on Form 10-Q  relating
to  EEX management's intentions, hopes, beliefs, expectations  or
predictions of the future are forward-looking statements.  It  is
important  to  note  that  EEX's   actual  results  could  differ
materially   from   those  projected  in   such   forward-looking
statements. Information concerning some of the factors that could
cause  actual  results to differ materially  from  those  in  the
forward-looking statements are described below.

Estimating Reserves and Future Net Cash Flows.  Uncertainties are
inherent in estimating quantities and values of reserves  and  in
projecting  rates of production, net revenues and the  timing  of
development  expenditures.  The reserve data represent  estimates
only   of   the   recovery  of  hydrocarbons   from   underground
accumulations  and  are  often  different  from  the   quantities
ultimately   recovered.  Any  downward  adjustment   in   reserve
estimates could adversely affect EEX.

Operational Risks and Hazards.  EEX's operations are  subject  to
the  risks  and uncertainties associated with finding,  acquiring
and   developing   gas   and  oil  properties,   and   producing,
transporting  and  selling  gas  and  oil.   Operations  may   be
materially curtailed, delayed or canceled as a result of numerous
factors,  such as accidents, weather conditions, compliance  with
governmental requirements and shortages or delays in the delivery
of  equipment.   Drilling may involve unprofitable  efforts,  not
only  with respect to dry wells, but also with respect  to  wells
that are productive but do not produce sufficient net revenues to
return  a  profit  after  drilling, operating  and  other  costs.
Various  field  operating  hazards  such  as  fires,  explosions,
blow-outs,  equipment  failures, abnormally pressured  formations
and  environmental accidents may adversely affect production from
successful  wells.  EEX's  ability  to  sell  its  gas  and   oil
production  is  dependent  on the availability  and  capacity  of
gathering systems, pipelines and other forms of transportation.

Offshore  Risks.   EEX's  offshore Gulf of  Mexico  gas  and  oil
reserves  include properties located in water  depths  of  20  to
3,400  feet  where operations are by their nature more  difficult
than  drilling operations conducted on land.  Deep water drilling
and   operations  require  the  application  of   more   advanced
technologies, involving a higher risk of mechanical  failure  and
inevitably   resulting  in  significantly  higher  drilling   and
operating  costs.   Furthermore, offshore  operations  require  a
significant amount of time between the time of discovery and  the
time  the gas or oil is actually marketed, increasing the  market
risk involved with such operations.

Volatility  of Gas and Oil Markets.  EEX's operations are  highly
dependent upon the prices of, and demand for, gas and oil.  These
prices  have  been, and are likely to continue to  be,  volatile.
Prices  are  subject to fluctuations in response to a variety  of
factors  that  are beyond the control of EEX, such  as  worldwide
economic and political conditions as they affect actions of  OPEC
and  Middle East and other producing countries, and the price and
availability  of  alternative fuels.  EEX's  hedging   activities
with  respect  to  some  of its

                               15
<PAGE>
<PAGE>

projected  oil and gas production, which are designed to  protect
against  price  declines,  may prevent  EEX  from  realizing  the
benefits  of price increases above the levels of the  hedges  and
protect it from incurring the detriments of price decreases below
the  level of hedges. Because EEX's reserve base is approximately
80%  natural  gas  on  an energy equivalent  basis,  it  is  more
sensitive to fluctuations in the price of natural gas.

Government  Regulation.  EEX's business  is  subject  to  certain
federal,  state  and local laws and regulations relating  to  the
drilling  for  the  production  of  gas  and  oil,  as  well   as
environmental and safety matters.





























                               16
                                
<PAGE>
<PAGE>
<TABLE>
<CAPTION>

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

                                     Three Months Ended   Nine Months Ended
                                        September 30        September 30
                                    -------------------  -----------------

                                        1997    1996      1997   1996
                                       ------  ------    ------ ------

<S>                                     <C>    <C>       <C>     <C> 
Sales Volumes
 Natural gas (MMcf)                     22,022 25,561    64,173  76,501
 Oil and condensate (MBbls)              1,223  1,352     3,652   3,726
 Natural gas liquids (MBbls)               179    209       365     572
   Total volumes (MMcfe) (a)            30,434 34,957    88,275 102,289

Average Sales Price
 Natural gas (per Mcf)                  $ 2.32 $ 2.01   $  2.41 $ 2.11
 Oil and condensate (per Bbl)            17.88  19.86     19.50  18.94
 Natural gas liquids (per Bbl)           12.16  13.39     13.61  11.26
    Total product revenue
       (per Mcfe) (a)                     2.47   2.32      2.62   2.33

Cost and Expenses (per Mcfe) (a) (b)
 Production and operating (c)           $  .40 $  .53   $   .42  $ .54
 Exploration                               .83    .81       .74    .67
 Depreciation and amortization            1.27   1.24      1.27   1.18
 General, administration and other         .25    .21       .25    .23
 Taxes, other than income                  .15    .15       .15    .16

Net Wells
 Drilled                                    16     30        45     84
 Productive                                  9     22        33     64


(a) Oil   and  natural  gas  liquids  have  been  converted  to  Mcf
    equivalents (Mcfe) on the basis of one barrel equals 6.0 Mcfe.
(b) Excludes unusual and non-recurring expenses.
(c) Excludes related production, severance and ad valorem taxes.

</TABLE>
















                               17

<PAGE>
<PAGE>



                   PART II - OTHER INFORMATION



Item 6.  Exhibits and Reports on Form 8-K

       (a)
       EXHIBIT
       NNUMBER
       
          3.1    Restated   Articles   of
                 Incorporation  of the Registrant  (included  as
                 Annex C to the Joint Proxy Statement/Prospectus
                 filed   as   Exhibit  3.1  to   the   Company's
                 Registration  Statement on Form S-4  (No.  333-
                 13241).(1)
          
          3.2    Bylaws of the Registrant.(2)
       
          4.1    Form  of  Common Stock Certificate included  as
                 Exhibit  4.1  to the Registration Statement  of
                 Old EEX on Form S-4 (No. 33-56792).(1)
       
          4.2    Rights  Agreement  dated as  of  September  10,
                 1996,  between the Company (formerly Lone  Star
                 Gas  Company) and Harris Trust Company  of  New
                 York as Rights Agent, filed as Exhibit 10.21 to
                 the Company's Registration Statement on Form S-
                 4 (No. 333-13241).(1)
       
          4.3    Subscription  Agreement among EEX Capital  Inc.
                 and  UBS Securities LLC, as Placement Agent for
                 the  Holders from time to time of the Preferred
                 Stock  and  Enserch Exploration, Inc.  (not  an
                 issuer), effective as of September 29, 1997.(2)
           
          4.4    Amended    and    Restated    Certificate    of
                 Designations,    Preferences   and    Relative,
                 Participating,  Optional  and   Other   Special
                 Rights   --   Class   A  Cumulative   Perpetual
                 Increasing  Dividend  Preferred  Stock  of  EEX
                 Capital Inc.(2)
           
          4.5    $150,000,000 Subordinated Note made by  Enserch
                 Exploration,  Inc.  in favor  of  EEX  Capital,
                 Inc.(2)
           
         10.1    Lease  Agreement for Garden Banks 388-1 between
                 Old  EEX and Enserch Exploration Holdings, Inc.
                 (formerly Enserch Exploration, Inc.")  included
                 as  Exhibit 10.3 to the Registration  Statement
                 of Old EEX on Form S-4 (No. 33-56792).(1)
           
         10.2    Lease  Agreement for Garden Banks 388-2 between
                 Old  EEX and Enserch Exploration Holdings, Inc.
                 (formerly "Enserch Exploration, Inc.") included
                 as  Exhibit 10.4 to the Registration  Statement
                 of Old EEX on Form S-4 (No. 33-56792).(1)
           
           
           
           
                               18
<PAGE>
<PAGE>
           
          10.3  Lease  Agreement  for  Mississippi  Canyon   441
                 between   Old   EEX  and  Enserch   Exploration
                 Holdings,  Inc. (formerly "Enserch Exploration,
                 Inc.")   included  as  Exhibit  10.5   to   the
                 Registration Statement of Old EEX on  Form  S-4
                 (No. 33-56792).(1)
           
          10.4  Participation  Agreement  between  EP  Operating
                 Limited  Partnership and Mobil Producing  Texas
                 and  New  Mexico Inc. included as Exhibit  10.6
                 to  the  Registration Statement of Old  EEX  on
                 Form S-4 (No. 33-56792).(1)
           
          10.5  Stock  Purchase Agreement dated as of April  12,
                 1995,  By  and  Between  PG&E  Enterprises,  as
                 Seller  and Old EEX, as Buyer, filed as Exhibit
                 10.7  to the Registration Statement of Old  EEX
                 on Form S-2 (No. 33-60461) .(1)
           
          10.6  Credit   Agreement  among  Enserch  Exploration,
                 Inc.  as Borrower, Texas Commerce Bank National
                 Association, as Administrative Agent, The Chase
                 Manhattan  Bank,  N.A., as  Syndication  Agent,
                 Chemical Bank, as Auction Agent and The Lenders
                 now or hereafter Parties hereto dated as of May
                 1,  1995,  and First Amendment dated  September
                 16,  1996, Second Amendment dated June 27, 1997
                 and   Third  Amendment,  dated  September   25,
                 1997.(2)
           
          10.7  Tax    Sharing    Agreement   between    ENSERCH
                 Corporation and Old EEX, filed as Exhibit 10.21
                 to  the  Registration Statement of Old  EEX  on
                 Form S-2 (No. 33-60461) .(1)
          
          10.8  Form  of Tax Allocation Agreement among ENSERCH,
                 the  Company  and Texas Utilities  Company  and
                 attached  Tax  Sharing Agreement  dated  as  of
                 January   1,  1995  between  ENSERCH  and   EEX
                 (included  as  Annex A-3 to the  Agreement  and
                 Plan  of  Merger  filed as  Exhibit  2  to  the
                 Company's  Registration Statement on  Form  S-4
                 (No. 333-13241).(1)
           
          10.9  Form  of Tax Assurance Agreement between ENSERCH
                 and  the Company (included as Annex A-4 to  the
                 Agreement and Plan of Merger filed as Exhibit 2
                 to the Company's Registration Statement on Form
                 S-4 (No. 333-13241).(1)
          
           
           Executive Compensation Plan and Arrangements
           (Exhibits 10.10 through 10.15):
           
          10.10 Enserch  Exploration, Inc. Revised  and  Amended
                 1996 Stock Incentive Plan, included as Annex A-
                 2  to the Agreement and Plan of Merger filed as
                 Exhibit   2   to   the  Company's  Registration
                 Statement on Form S-4 (No. 333-13241).(1)
          
          10.11 Performance Incentive Plan - Calendar Year  1997
                 filed as Exhibit 10.15 to the Form 10-K for the
                 year ended December 31, 1996, of Old EEX.(1)
          
          10.12 The   Company's   Deferred   Compensation   Plan
                 effective as of July 1, 1997.(2)
           
          10.13 Deferred  Compensation  Trust  effective  as  of
                 July 1, 1997.(2)
           
           
                               19
<PAGE>
<PAGE>
           
          10.14 Form of Change of Control Agreement executed  by
                 certain  executive  officers  of  the  Company,
                 filed as Exhibit 10.20 to the Annual Report  on
                 Form  10-K for the year ended December 31, 1996
                 of Old EEX.(1)
           
          10.15 Form   of   Employment  Agreement  executed   by
                 certain  executive  officers  of  the  Company,
                 filed as Exhibit 10.20 to the Annual Report  on
                 Form  10-K for the year ended December 31, 1996
                 of Old EEX.(1)
           
          27    Financial Data Schedule(2)
           
           
                   
          (1)  Incorporated by reference.
          (2)  Filed herewith.
                   
           
       (b)   Reports on Form 8-K

           Current  Report  on Form 8-K  dated  August  4,  1997.
           (News   Release   dated  August  4,   1997:    Enserch
           Exploration  announced it expects a material  downward
           revision of its oil and gas reserves.)
           
           Current Report on Form 8-K dated August 5, 1997.
           1.   Item 2 -- Merger  with Enserch Exploration, Inc.
           2.   Item 5 -- Pro Forma Financial Information.

           Current Report on Form 8-K dated August 6, 1997.
            (Consummation of merger of Enserch Exploration,  Inc.
            and Lone Star Energy Plant Operations.)

            Current Report on Form 8-K dated September 25, 1997.
            (Change in EEX's certifying accountant.)













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                           SIGNATURES



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


                                      ENSERCH EXPLORATION, INC.
                                             (Registrant)






Dated November 12, 1997             By       /s/R. S. Langdon
                                      -------------------------------
                                      R. S. Langdon
                                      Executive Vice President,
                                      Finance and Administration,
                                      and Chief Financial Officer




Dated November 12, 1997             By     /s/R.  E. Schmitz
                                      -------------------------------
                                      R. E. Schmitz
                                      Vice President
                                      and Controller

















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