<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 June 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. 1-12108


                    ENSERCH EXPLORATION, INC.
        (formerly Lone Star Energy Plant Operations, 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.)

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

                          (214)692-4300
       (Registrant's telephone number, including Area Code)

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

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

     Number of shares of Common Stock of Registrant outstanding as of
August 8, 1997: 126,919,427

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

                 PART I.  FINANCIAL INFORMATION


Item 1.  Financial Statements




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

                                     Three Months Ended  Six Months Ended
                                          June 30            June 30
                                     ------------------  ----------------

                                        1997   1996       1997     1996
                                      ------- -------    ------- --------
                                   (In thousands except per share amounts)
<S>                                  <C>      <C>      <C>       <C>
Revenues
 Natural gas                         $46,313  $57,015  $ 103,651 $110,399
 Oil and condensate                   24,292   24,445     49,364   43,731
 Natural gas liquids                   1,092    2,101      2,791    3,644
 Cogeneration operations               2,872    2,925      5,475    5,284
 Other                                   688      483        783      883
                                      ------ --------    ------- --------
   Total                              75,257   86,969    162,064  163,941
                                      ------ --------    ------- --------
Costs and Expenses
 Production and operating             12,425   18,134     25,050   36,928
 Exploration                             984    3,308      3,758    6,168
 Depreciation and amortization        28,887   35,207     55,838   68,032
 Write down of oil and
     gas properties                                      385,200
 Unusual charges                       2,183               2,183
 Cogeneration operations               2,767    2,820      5,158    4,964
 General, administrative and other     7,083    8,261     14,471   16,512
 Taxes, other than income              4,342    4,805      8,954   10,973
                                      ------ --------    ------- --------
   Total                              58,671   72,535    500,612  143,577
                                      ------ --------    ------- --------
Operating Income (Loss)               16,586   14,434   (338,548)  20,364
Other Income (Expense) - Net             (50)      27        (76)     116
Interest Income                           34                  86
Interest and Other Financing Costs    (7,158)  (6,288)   (13,085) (12,029)
                                      ------ --------    ------- --------
Income (Loss) Before Income Taxes      9,412    8,173   (351,623)   8,451
Income Taxes (Benefit)                 3,368    2,839   (123,072)   2,912
                                      ------ --------    ------- --------
Net Income (Loss)                    $ 6,044  $ 5,334  $(228,551)$  5,539
                                      ====== ========    ======= ========
Net Income (Loss) Per Share          $   .05  $   .04  $   (1.80)$    .04
                                      ====== ========    ======= ========

Weighted  Average Shares
     Outstanding                     126,723  126,559    126,666  126,540
                                     ======= ========    ======= ========


See accompanying Notes.

</TABLE>







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

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


                                                     Six Months Ended
                                                          June 30
                                                  -----------------------
                                                    1997           1996
                                                  --------       --------
                                                      (In Thousands)
<S>                                             <C>             <C>
OPERATING ACTIVITIES
 Net income (loss)                              $(228,551)      $  5,539
 Write down of oil and gas properties             385,200
 Depreciation and amortization                     55,846         68,039
 Deferred income tax expense (benefit)           (124,949)         4,576
 Other                                             (1,277)        (7,637)
 Changes in current operating
     assets and liabilities
  Accounts receivable                              30,588         (7,319)
  Other current assets                             11,218            404
  Accounts payable                                (24,440)       (12,198)
  Other current liabilities                           457          1,064
                                                ---------      ---------
  Net cash flows from operating activities        104,092         52,468
                                                ---------      ---------

INVESTING ACTIVITIES
 Additions to property, plant and equipment       (85,721)      (107,227)
 Proceeds from disposition of property,
     plant and equipment                            2,212         13,738
 Changes in property, plant and
     equipment accruals                           (10,868)           397
                                                ---------      ---------
    Net cash flows used in
     investing  activities                        (94,377)       (93,092)
                                                ---------      ---------

FINANCING ACTIVITIES
 Borrowings under bank revolving
     credit agreement                              40,000        115,000
   Repayment of  borrowings  under
      bank revolving credit agreement             (65,000)       (53,000)
 Borrowings under short term
     financing agreement                           81,400
 Repayments under short term
     financing agreement                          (76,400)
  Change in temporary advances with
     affiliated companies                          15,764        (24,162)
 Change in deferred payable to
     affiliated company                                           (1,434)
 Change in advances under
     leasing arrangements                            (697)         6,703
 Payments of capital lease obligations             (2,551)        (2,249)
 Issuance of common stock                               2             74
                                                ---------      ---------
  Net cash flows from (used in)
     financing activities                          (7,482)        40,932
                                                ---------      ---------
Net Increase in Cash                                2,233            308
Cash at Beginning of Period                         1,358          1,565
                                                ---------      ---------
Cash at End of Period                           $   3,591      $   1,873
                                                =========      =========


See accompanying Notes.

</TABLE>









                                2
<PAGE>

<PAGE>
<TABLE>
<CAPTION>

                    ENSERCH EXPLORATION, INC.
              CONDENSED CONSOLIDATED BALANCE SHEETS
                    (June 30, 1997 Unaudited)

                                                   June 30     December 31
                                                    1997          1996
                                                  --------     -----------
                                                      (In thousands)
<S>                                            <C>             <C>
ASSETS
Current Assets
 Cash                                          $    3,591      $    1,358
 Accounts receivable - trade                       46,624          65,926
 Accounts receivable - affiliated companies         5,263          16,549
 Temporary advances - affiliated companies            453          13,410
 Other                                              7,048          18,266
                                                 --------       ---------
    Total current assets                           62,979         115,509
                                                 --------       ---------

Property, Plant and Equipment (at cost)
 Oil and gas properties (full cost method)      2,497,768       2,806,536
 Other                                             23,231          22,084
                                               ----------      ----------
    Total                                       2,520,999       2,828,620
   Less accumulated depreciation
     and amortization                           1,131,818       1,081,902
                                               ----------      ----------
    Net property, plant and equipment           1,389,181       1,746,718
                                               ----------      ----------
Other Assets                                       15,459          14,654
                                               ----------      ----------
    Total                                      $1,467,619      $1,876,881
                                               ==========      ==========
LIABILITIES AND SHAREHOLDERS' EQUITY
Current Liabilities
 Accounts payable - trade                      $   64,642      $   91,026
 Accounts payable - affiliated companies                            8,924
 Temporary advances - affiliated companies          2,807
 Short term borrowings                              5,000
 Advances under leasing arrangements                4,760           5,457
 Current portion of capital lease obligations       9,608           3,250
 Other                                             12,300          11,843
                                               ----------      ----------
    Total current liabilities                      99,117         120,500
                                               ----------      ----------
Bank Revolving Credit Agreement                    90,000         115,000
                                               ----------      ----------
Capital Lease Obligations                         232,826         241,735
                                               ----------      ----------
Deferred Income Taxes                             148,852         273,801
                                               ----------      ----------
Other Liabilities                                  27,531          28,249
                                               ----------      ----------
Company-Obligated Mandatorily Redeemable
 Preferred Securities of Subsidiary               150,000         150,000
                                               ----------      ----------
Common Shareholders' Equity
 Common stock (200,000 shares authorized;
  126,920 and 126,736 shares outstanding)         126,920         126,736
 Paid in capital                                  821,229         819,475
 Accumulated earnings (deficit)                  (226,259)          2,292
 Unamortized restricted stock compensation         (2,385)           (677)
 Treasury stock                                      (212)           (230)
                                               ----------      ----------
    Common shareholders' equity                   719,293         947,596
                                               ----------      ----------
    Total                                      $1,467,619      $1,876,881
                                               ==========      ==========

See accompanying Notes.

</TABLE>
                                        3
<PAGE>
  
<PAGE>

                                
                    ENSERCH EXPLORATION, INC.
      Notes to Condensed Consolidated Financial Statements

1. BASIS  OF  PRESENTATION - On August 5, 1997, the previously
   announced  merger of ENSERCH Corporation ("ENSERCH") and  Texas
   Utilities  Company and the related merger of 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
   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  will  be
   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 six months ended June  30,
   1997 and 1996 and the Condensed Consolidated Balance Sheets as of
   June 30, 1997 and December 31, 1996. The number of common shares
   outstanding has been increased to reflect the 691,631 additional
   shares  issued  in the merger and the June 30, 1997  pro  forma
   adjustment  of  LSEPO's  working capital  to  $3.5  million  is
   reflected  in  the accompanying Condensed Consolidated  Balance
   Sheets.

2. EEX is conducting a review and evaluation of the commercial
   feasibility  of  its non-producing oil and gas  properties.  On
   August 4, 1997, the Company 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, it
   is  anticipated  at this time that the amount of  the  downward
   revision of its proved non-producing reserves will fall within a
   range  of  500  to  700  billion cubic  feet  equivalent.   EEX
   anticipates  that  this  evaluation and the  determination   of
   both the extent of the revision and the  financial  impact   on
   the  Company  will be completed by the end of the third quarter.

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

4. Unusual charges related to the relocation and restructuring
   of  the  Company  recorded in the second quarter  1997  include
   employee severance of $1.6 million, professional services of $.3
   million and office and employee relocation of $.3 million.

5. 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.

6. 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.

                                4
<PAGE>

<PAGE>

INDEPENDENT ACCOUNTANTS' REPORT


Enserch Exploration, Inc.:

We  have reviewed the accompanying condensed consolidated balance
sheet   of  Enserch  Exploration,  Inc.  and  subsidiaries   (the
"Company")  as  of  June  30,  1997, and  the  related  condensed
statements  of consolidated operations for the three  months  and
six  months  ended  June  30, 1997 and 1996,  and  the  condensed
statements  of consolidated cash flows for the six  months  ended
June  30,  1997  and  1996.  These financial statements  are  the
responsibility of the Company's management.

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

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

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

As  discussed in Note 2, the Company announced on August 4, 1997,
that  it  expects a material downward revision  of  its  oil  and
natural gas reserves.



DELOITTE & TOUCHE LLP

Dallas, Texas
August 8, 1997




                                5

<PAGE>

<PAGE>

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


OVERVIEW

On August 5, 1997, the previously announced merger of ENSERCH
and Texas Utilities Company and the related merger of 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 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 will be 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 June 30, 1997 pro forma adjustment of LSEPO's
working capital to $3.5 million is reflected in the accompanying
Condensed Consolidated Balance Sheets.

RESULTS OF OPERATIONS

Enserch Exploration, Inc. (EEX) reported second quarter 1997 net
income of $6 million ($.05 per share), 13% higher than the  same
period  in  1996. Second quarter 1997 operating income  was  $17
million,  compared to $14 million in 1996.  For  the  first  six
months  of  1997, EEX had a net loss of $229 million ($1.80  per
share),  including  the impact of a first quarter  $250  million
(after-tax)  ($385 million pre-tax) write down of  oil  and  gas
properties  under the full cost method of accounting.  Excluding
the  write-down, net income for the first six months of 1997 was
$22  million ($.17 per share), compared with $5.5 million  ($.04
per  share) for 1996; operating income was $47 million in  1997,
compared to $20 million in 1996.

Results  of  operations for 1997 and 1996 were impacted  by  the
following unusual items:

  A $2.2 million (before tax) ($1.4 million after-tax) unusual
  charge in the second quarter 1997 related to the reorganization
  and restructuring of operations and the relocation of corporate
  headquarters to Houston, Texas. EEX anticipates completing the
  reorganization and restructuring plan and recording a significant
  charge against earnings in the third quarter 1997.

  A first quarter 1997 write down of oil and gas properties of
  $250 million (after-tax) ($385 million pre-tax).  The write down
  resulted in a 19% reduction in the 1997 amortization rate.


                                6
<PAGE>
                                
<PAGE>

  The Rocky Mountain area properties were sold in late 1996.
  Revenues, costs and expenses and production volumes attributable
  to these properties  for the periods ended June 30, 1996 were:

                                  Second Quarter  Six Months
                                    (Dollars in millions)
    Revenues
      Natural gas                      $4.1          $9.5
      Oil and condensate               $1.6          $2.9
      Natural gas liquids              $0.6          $1.0

    Costs and Expenses
      Production & operating           $1.7          $3.1
      Depreciation & amortization      $4.5          $8.8
      Taxes other than income          $0.3          $0.9

    Production Volumes
      Natural gas (MMcf)              3,211         6,551
      Oil and condensate (MBbls)         79           159
      Natural gas liquids (MBbls)        74           121

  The Cooper Project equipment and facilities were refinanced
  and the associated operating sublease was capitalized in December
  1996.  The pro forma impact of this transaction on results  of
  operations  for the three months and six months ended June 30,
  1996 was to decrease production and operating costs $4.1 million
  and $8.3 million, increase depreciation and amortization expense
  $1.4  million and $4.1 million and increase interest and other
  financing costs $2.4 million and $4.8 million, respectively.

In the following comparisons of results of operations, both 1997
and  1996  historical amounts have been adjusted to exclude  the
unusual  and  non-recurring transactions  described  above.   In
addition, amortization for 1996 has been recalculated on  a  pro
forma  basis  assuming that the 1997 write down of oil  and  gas
properties and the refinancing of the Cooper facilities in  late
1996 occurred on January 1, 1996.

QUARTERS  ENDED JUNE 30, 1997 AND 1996 - Revenues for 1997  were
$75  million, a $5.5 million (7%) decrease from 1996, reflecting
a  $6.6 million (12%) decrease in natural gas revenues resulting
from  lower  second  quarter  1997  prices  ($4.3  million)  and
production  ($2.3 million). The average natural gas sales  price
per  thousand  cubic feet (Mcf) was $2.13 in 1997 compared  with
$2.33 in 1996.  Natural gas production for 1997 was 21.7 billion
cubic  feet (Bcf), down from 22.7 Bcf in 1996, primarily due  to
reduced  output from a non-operated offshore property  resulting
from  water encroachment and from an operated offshore  property
which was shut-in pending repairs. The reduction in natural  gas
revenues was partially offset by a $1.1 million (4%) increase in
oil and other revenues, primarily the result of higher crude oil
production.  The average  crude oil sales price per  barrel  was
$18.95 in 1997


                                7
<PAGE>

<PAGE>

compared with $18.87 in 1996.  Crude oil production increased 6%
in  1997  to 1,282 thousand barrels (MBbls), due principally  to
the continued development of the Cooper Project and new wells in
other areas.  Overall, oil and gas production in the 1997 second
quarter  was  reduced somewhat because the Cooper  facility  was
shut-in  for approximately three weeks to allow for maintenance,
repair and completion activities.

Operating  expenses were down 6% in the second quarter  of  1997
compared  to  1996, the result of lower exploration and  general
and  administrative expenses.  Lower exploration  expenses  were
due  to  the  refocusing of the exploration programs during  the
first  six  months  of  1997.  Exploration expenses  during  the
remainder  of  the year are expected to increase  somewhat  over
current  levels.  General and administrative expenses  for  1997
were   $7.1   million,  14%  less  than  1996  due  to   ongoing
restructuring and cost reduction initiatives.  Taxes, other than
income  were  $4.3 million, down 3% from 1996 primarily  due  to
lower  revenues.  Depreciation and amortization was $29  million
in  1997,  unchanged from the prior year calculated on  the  pro
forma basis described above.

Interest and other financing costs for 1997 were $7.2 million, a
$1.5  million (18%) reduction from 1996, including the pro forma
Cooper Project adjustment described above.  The decrease in 1997
is  due to the reduction in debt from proceeds of Rocky Mountain
properties sold in late 1996 and slightly lower interest rates.


SIX MONTHS ENDED JUNE 30, 1997 AND 1996 - Revenues for 1997 were
$162  million, a $12 million (8%) increase from 1996, reflecting
a  $2.8  million (3%) increase in natural gas revenues,  and  an
$8.7  million  (18%)  improvement in  oil  and  other  revenues.
Improved revenues were the result of higher average natural  gas
and crude oil prices and higher crude oil production, offset  by
lower  natural  gas production.  The average natural  gas  sales
price  per  Mcf was $2.46 in 1997 compared with $2.27  in  1996.
Natural gas production for 1997 was 42.2 Bcf, down from 44.4 Bcf
in  1996  for  the reasons cited above.  Higher oil revenues  in
1997  reflect a 10% improvement in both the average sales  price
and  sales volumes.  Crude oil production was 2.4 MMBbls in 1997
compared  to  2.2 MMBbls in 1996 due primarily to the  continued
development  of  the  Cooper  Project.   Overall,  oil  and  gas
production in the first six months of 1997 was reduced  somewhat
because  the Cooper facility was shut-in for approximately  five
weeks   to   allow   for  maintenance,  repair  and   completion
activities.

Operating  expenses  were  down 5% in  1997  compared  to  1996.
Exploration  expenses  were  down  $2.4  million  due   to   the
refocusing of the exploration programs described above.  General
and administrative expenses were $14 million, 12% less than 1996
due  to  ongoing  restructuring and cost reduction  initiatives.
Taxes,  other  than income were $9 million, down 11%  from  1996
primarily  due  to lower ad valorem tax accruals.   Depreciation
and  amortization  was $56 million in 1997,  the  same  as  1996
calculated on the pro forma basis described above.
                                

Interest and other financing costs for 1997 were $13 million,  a
$4  million (22%) reduction from 1996, including the  pro  forma
Cooper Project adjustment 
                                 8
<PAGE>

<PAGE>

described above. The decrease in  1997
is  due to the reduction in debt from proceeds of Rocky Mountain
properties sold in late 1996 and slightly lower interest rates.


HEDGING ACTIVITIES

A  portion of the risk associated with fluctuations in the price
of  natural  oil and gas is managed through the use  of  hedging
techniques  such  as  oil  and gas swaps,  collars  and  futures
agreements.   EEX  fixed  the  price  on  second  quarter   1997
production  volumes of 12 Bcf of natural gas (54% of production)
at  an average price of $2.37 per Mcf and 546 MBbls of oil  (43%
of  production) at an average price of $21.45 per Bbl.  For  the
first  six  months of 1997, EEX fixed the price  on  28  Bcf  of
natural gas (66% of production) at an average price of $2.78 per
Mcf and 93l MBbls of oil (38% of production) at an average price
of  $22  per Bbl.  In total oil and gas price hedging activities
increased  second  quarter 1997 revenues by  $2.1  million,  but
decreased  second quarter 1996 revenues by $2 million.  For  the
first  six  months  of  1997,  oil and  gas  hedging  activities
increased  revenues by $1.6 million, but decreased revenues  for
the  first six months of 1996 by $7.7 million. At June 30, 1997,
EEX  had outstanding swaps, collars and futures agreements  that
were entered into as hedges extending through March 31, 1998, to
exchange  payments on 15 Bcf of natural gas and 1,378  MBbls  of
oil.  At June 30, 1997, there were $.4 million of net unrealized
and  unrecognized hedging gains based on the difference  between
the  strike  price and the New York Mercantile Exchange  futures
price for the applicable trading month.  In addition, there were
$.2  million of realized gains on hedging activities which  were
deferred and will be applied as an increase in revenues  in  the
third  quarter of 1997 in the applicable month of physical  sale
of production.


CAPITALIZED COSTS

At  June 30, 1997, the  Securities and Exchange Commission (SEC)
prescribed  cost  center  ceiling  limitation   exceeded   EEX's
unamortized  capitalized costs of U. S. oil and gas  properties.
However,  oil and gas prices are subject to seasonal  and  other
fluctuations. A substantial decline in prices from June 30, 1997
levels or other factors, without mitigating circumstances, could
cause  a  future write down of capitalized costs and a  non-cash
charge  against  income.  On August 4,  1997  EEX  announced  it
expects a material downward revision of its oil and gas reserves
and a  non-cash charge against income in the third quarter 1997.
See  RECENT  EVENTS  below  and Note 2  of  Notes  to  Condensed
Consolidated Financial Statements for additional information.

At  March 31, 1997, EEX's unamortized capitalized costs of U. S.
oil  and  gas  properties  exceeded  the   cost  center  ceiling
limitation by approximately $250 million.  Accordingly,  a  non-
cash write down of oil and gas properties of $250 million after-
tax  ($385  million pre-tax) was recorded in the  first  quarter
1997.  The write down had no impact on cash flows.

                                9

<PAGE>

<PAGE>

LIQUIDITY AND CAPITAL RESOURCES

Cash Flows

EEX  generated sufficient cash flows from operations to fund its
capital requirements and reduce financings by $23 million.   Net
cash  flows  from  operating  activities were $104  million,  an
increase  of  $52  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 $94  million,  unchanged
from 1996.

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


Capital Structure

Debt,   including   preferred  securities   of   a   subsidiary,
represented 40% of total capitalization of $1.2 billion at  June
30,  1997,  compared  to  35% of total  capitalization  of  $1.5
billion   at  December  31,  1996.   The  reduction   in   total
capitalization  and  the corresponding increase  in  debt  as  a
percentage  of  total capitalization was due  primarily  to  the
reduction  in  shareholders' equity from the first quarter  1997
non-cash write down of oil and gas properties, partially  offset
by earnings and reduced bank borrowings.


RECENT EVENTS

RESERVE REVISION

The ENSERCH/TUC Merger and EEX/LSEPO Merger and related EEX spin-
off  were completed on August 5, 1997.  In anticipation  of  the
spin-off  and  to position the Company as a competitive,  fully-
independent  oil  and gas company, new EEX management  initiated
restructuring  programs  in  1997  to  improve  cash  flow  from
existing core area properties through operating efficiencies and
cost  reductions  and geared the investment  program  towards  a
stable  reserve  and  production growth at  significantly  lower
finding  and  development  costs.   As  part  of  these  ongoing
restructuring  programs, EEX, working with its  outside  reserve
engineers,  DeGolyer & MacNaughton, is conducting a  review  and
evaluation  of  the commercial feasibility of its  non-producing
oil   and  gas  properties.  On  August  4,  1997,  the  Company
announced, based upon a preliminary evaluation, that it  expects
a  material downward revision of its proved 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, it is anticipated at this
time that the amount of the downward revision of its proved non-
producing  reserves  will fall within a  range  of  500  to  700
billion cubic feet equivalent.

                               10
<PAGE>

<PAGE>

This  downward  reserve reduction will not affect  the  Company's
current cash flow. Also, because the revision is expected to only
impact  behind  pipe and undeveloped reserves, the  value  impact
will  be  offset to an extent by the elimination of  the  capital
costs associated with these reserves and thus is not expected  to
be  proportionate  to the reserve revision. EEX anticipates  that
this  evaluation and the determination of both the extent of  the
revision  and  the  financial  impact  on  the  Company  will  be
completed by the end of the third quarter.


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,  is
subject  to government approvals and certain pre-emption  rights
on some of the blocks. 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  deepwater
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.  The first well
has been spudded on the Llano prospect in Garden Banks 386.















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<PAGE>

<PAGE>
<TABLE>
<CAPTION>


                       ENSERCH EXPLORATION, INC.
    SUMMARY OF OPERATING DATA FOR OIL & GAS PRODUCING ACTIVITIES (UNAUDITED)

                                     Three Months Ended    Six Months Ended
                                          June 30              June 30
                                    -------------------    -----------------

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

<S>                                    <C>    <C>          <C>      <C> 
Operating Income (Loss)
     (in millions) (a)                 $ 16.5 $  14.3      $(338.9) $ 20.0
                                      ======= =======      =======  ======
Revenues (in millions)
 Natural gas                           $ 46.3 $  57.0      $ 103.7  $110.4
 Oil and condensate                      24.3    24.4         49.4    43.7
 Natural gas liquids                      1.1     2.1          2.8     3.7
 Other                                     .7      .5           .7      .9
                                      -------  ------      -------  ------
   Total                               $ 72.4 $  84.0      $ 156.6  $158.7
                                      =======  ======      =======  ======
Sales Volumes
 Natural gas (MMcf)                    21,725  25,939       42,151  50,910
 Oil and condensate (MBbls)             1,282   1,292        2,429   2,374
 Natural gas liquids (MBbls)               90     197          186     363
   Total volumes (MMcfe) (b)           29,957  34,873       57,841  67,332

Average Sales Price
 Natural gas (per Mcf)                 $ 2.13 $  2.20      $  2.46  $ 2.17
 Oil and condensate (per Bbl)           18.95   18.92        20.32   18.42
 Natural gas liquids (per Bbl)          12.13   10.66        15.01   10.04
  Total product revenue(per Mcfe)(b)     2.39    2.40         2.69    2.34

Cost and Expenses (per Mcfe) (b)
 Production and operating (c)          $  .41 $   .52      $   .43   $ .55
 Exploration                              .03     .09          .06     .09
 Depreciation and amortization            .96    1.01          .97    1.01
 General, administration and other        .24     .24          .25     .25
 Taxes, other than income                 .14     .14          .15     .16

Net Wells
 Drilled                                   13      36           29      54
 Productive                                13      25           24      42


(a) Six  months ended June 30, 1997 includes a write down of oil and
    gas  properties of $250 million after-tax ($385 million pre-tax)
    recorded in March 1997.
(b) Oil   and  natural  gas  liquids  have  been  converted  to  Mcf
    equivalents (Mcfe) on the basis of one barrel equals 6.0 Mcfe.
(c) Excludes related production, severance and ad valorem taxes.

</TABLE>















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<PAGE>

<PAGE>




                   PART II - OTHER INFORMATION



Item 6.  Exhibits and Reports on Form 8-K

       (a)       Exhibits

           EXHIBIT (15) - Letter of Deloitte & Touche LLP dated
                          August 8, 1997, regarding unaudited
                          interim financial statements


       (b)       Reports on Form 8-K

           Current  Report  on  Form 8-K   dated  May  30,  1997.
           (News  Release  dated March 30, 1997:   ENSERCH  filed
           supplemental  request with IRS to confirm  reliability
           of  prior   IRS  ruling regarding tax free  status  of
           distribution of EEX stock.)




































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<PAGE>

<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.


                                  ENSERCH EXPLORATION, INC.
                                         (Registrant)


Dated August 8, 1997           By       /s/R. S. Langdon
                                  -------------------------------
                                  R. S. Langdon
                                  Executive Vice President,
                                  Finance and Administration,
                                  and Chief Financial Officer


Dated August 8, 1997           By      /s/R.  E.Schmitz
                                  -------------------------------
                                  R. E. Schmitz
                                  Vice President
                                  and Controller
















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