PENNZOIL CO /DE/
10-Q, 1996-05-14
PETROLEUM REFINING
Previous: PG ENERGY INC, 10-Q, 1996-05-14
Next: PENTAIR INC, 10-Q, 1996-05-14




<PAGE>
<PAGE>  1

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



                             FORM 10-Q
        Quarterly Report Pursuant to Section 13 or 15(d) of
                the Securities Exchange Act of 1934


For the Quarter Ended March 31, 1996 Commission File No. 1-5591


                         PENNZOIL COMPANY
      (Exact name of registrant as specified in its charter)


                Delaware                            74-1597290
      (State or other jurisdiction of           (I.R.S. Employer
      incorporation or organization)            Identification No.)


                   Pennzoil Place, P.O. Box 2967
                    Houston, Texas  77252-2967
              (Address of principal executive offices)



Registrant's telephone number, including area code:  (713) 546-4000


      Indicate  by check mark whether the registrant (1) has  filed
all  reports  required to be filed by Section 13 or  15(d)  of  the
Securities Exchange Act of 1934 during the preceding 12 months  (or
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 outstanding of each class of common stock, as
of latest practicable date, April 30, 1996:

     Common stock, par value $0.83-1/3 per share, 46,443,204
shares.

<PAGE>
<PAGE>  2

                                 PART I. FINANCIAL INFORMATION

Item 1. Financial Statements
- ----------------------------

<TABLE>
                                        PENNZOIL COMPANY
                           CONDENSED CONSOLIDATED STATEMENT OF INCOME
                                          (UNAUDITED)
<CAPTION>

                                                                           Three Months Ended
                                                                                March 31
                                                                      ----------------------------
                                                                         1996             1995
                                                                      -----------      -----------
                                                                         (Expressed in thousands
                                                                         except per share amounts)
<S>                                                                   <C>              <C>
REVENUES                                                              $  587,341       $  635,340

COSTS AND EXPENSES
   Cost of sales                                                         340,095          368,832
   Selling, general and administrative expenses                           86,637           99,457
   Depreciation, depletion and amortization                               65,990           92,611
   Exploration expenses                                                    9,845            9,072
   Taxes, other than income                                               13,742           14,731
   Interest charges, net                                                  47,563           48,479
                                                                      -----------      -----------
INCOME BEFORE INCOME TAX                                                  23,469            2,158

Income tax provision (benefit)                                             7,700             (585)
                                                                      -----------      -----------

NET INCOME                                                            $   15,769       $    2,743
                                                                      ===========      ===========

EARNINGS PER SHARE                                                    $     0.34       $     0.06
                                                                      ===========      ===========

DIVIDENDS PER COMMON SHARE                                            $     0.25       $     0.75
                                                                      ===========      ===========

AVERAGE SHARES OUTSTANDING                                                46,394           46,158
                                                                      ===========      ===========
NUMBER OF SHARES OUTSTANDING                                              46,426           46,193
                                                                      ===========      ===========

<FN>
<F1>
See Notes to Condensed Consolidated Financial Statements.
</FN>
</TABLE>

<PAGE>
<PAGE>  3


                                  PART I. FINANCIAL INFORMATION - continued

<TABLE>
                                               PENNZOIL COMPANY
                                    CONDENSED CONSOLIDATED BALANCE SHEET
                                                 (UNAUDITED)
<CAPTION>
                                                                              March 31,           December 31,
                                                                                1996                  1995
                                                                            -------------        -------------
                                                                                 (Expressed in thousands)
<S>                                                                         <C>                   <C>
ASSETS

Current assets
   Cash and cash equivalents                                                 $     33,971         $     23,615
   Receivables                                                                    331,826              335,876
   Inventories
     Crude oil, natural gas and sulphur                                            29,902               41,363
     Motor oil and refined products                                               126,985              119,830
   Deferred income tax                                                             24,418               26,452
   Other current assets                                                            57,058               57,689
                                                                            -------------        -------------
Total current assets                                                              604,160              604,825

Property, plant and equipment, net                                              2,396,621            2,418,025
Marketable securities and other investments                                       929,414              910,334
Other assets                                                                      320,340              374,592
                                                                            -------------        -------------

TOTAL ASSETS                                                                 $  4,250,535         $  4,307,776
                                                                            =============        =============

LIABILITIES AND SHAREHOLDERS' EQUITY

Current liabilities
   Current maturities of long-term debt                                      $      1,808         $      2,263
   Notes payable                                                                  389,888              468,934
   Accounts payable and accrued liabilities                                       244,299              330,263
   Interest accrued                                                                39,974               35,358
   Other current liabilities                                                       63,366               81,450
                                                                            -------------        -------------
Total current liabilities                                                         739,335              918,268

Long-term debt                                                                  2,101,132            2,038,921
Deferred income tax                                                               243,419              227,941
Other liabilities                                                                 304,417              286,414
                                                                            -------------        -------------
TOTAL LIABILITIES                                                               3,388,303            3,471,544
                                                                            -------------        -------------
COMMITMENTS AND CONTINGENCIES

SHAREHOLDERS' EQUITY                                                              862,232              836,232
                                                                            -------------        -------------

TOTAL LIABILITIES AND SHAREHOLDERS' EQUITY                                   $  4,250,535         $  4,307,776
                                                                            =============        =============
<FN>
<F1>
See Notes to Condensed Consolidated Financial Statements.
</FN>
</TABLE>

<PAGE>
<PAGE>  4


                                     PART I. FINANCIAL INFORMATION - continued

<TABLE>
                                                 PENNZOIL COMPANY
                                  CONDENSED CONSOLIDATED STATEMENT OF CASH FLOWS
                                                    (UNAUDITED)
<CAPTION>

                                                                                          Three Months Ended
                                                                                                March 31
                                                                                   ---------------------------------
                                                                                      1996                  1995
                                                                                   -----------           -----------
                                                                                         (Expressed in thousands)
<S>                                                                                <C>                   <C>
CASH FLOWS FROM OPERATING ACTIVITIES
  Net income                                                                       $   15,769            $    2,743
  Adjustments to reconcile net income to net cash
    provided by operating activities:
      Depreciation, depletion and amortization                                         65,990                92,611
      Dry holes and impairments                                                         1,574                 2,484
      Deferred income tax                                                               6,370                  (910)
      Non-cash and other nonoperating items                                            13,486                  (377)
      Change in operating assets and liabilities                                      (69,761)               10,961
                                                                                     -----------           ---------
  Net cash provided by operating activities                                            33,428               107,512
                                                                                   -----------           -----------

CASH FLOWS FROM INVESTING ACTIVITIES
  Capital expenditures                                                               (127,663)              (93,700)
  Purchases of marketable securities and other investments                           (146,904)             (147,844)
  Proceeds from sales of marketable securities and other
    investments                                                                       159,516               145,312
  Proceeds from sales of assets                                                       121,556                37,448
  Other investing activities                                                           (5,815)              (22,413)
                                                                                   -----------           -----------
  Net cash provided by (used in) investing activities                                     690               (81,197)
                                                                                   -----------           -----------

CASH FLOWS FROM FINANCING ACTIVITIES
  Proceeds (repayments) of notes payable, net                                         (79,046)              209,091
  Debt and capital lease obligation repayments                                       (303,116)             (207,151)
  Proceeds from issuance of debt                                                      370,000                 5,000
  Dividends paid                                                                      (11,600)              (34,626)
                                                                                   -----------           -----------
  Net cash used in financing activities                                               (23,762)              (27,686)
                                                                                   -----------           -----------

NET INCREASE (DECREASE) IN CASH AND CASH EQUIVALENTS                                   10,356                (1,371)


CASH AND CASH EQUIVALENTS, beginning of period                                         23,615                24,884
                                                                                   -----------           -----------

CASH AND CASH EQUIVALENTS, end of period                                           $   33,971            $   23,513
                                                                                   ===========           ===========

<FN>
<F1>
See Notes to Condensed Consolidated Financial Statements.
</FN>
</TABLE>

<PAGE>
<PAGE>  5


             PART I. FINANCIAL INFORMATION - continued

                         PENNZOIL COMPANY
       NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
                            (UNAUDITED)


(1)  General -

      The  condensed  consolidated  financial  statements  included
herein  have been prepared by Pennzoil Company ("Pennzoil") without
audit  and  should  be  read  in  conjunction  with  the  financial
statements  and  the  notes thereto included in  Pennzoil's  latest
annual  report.   The foregoing financial statements  include  only
normal  recurring  accruals  and  all  adjustments  which  Pennzoil
considers necessary for a fair presentation.

(2) Adoption of New Accounting Standard -

     In  October  1995,  the Financial Accounting  Standards  Board
issued  Statement  of Financial Accounting Standards  ("SFAS")  No.
123,  "Accounting for Stock-Based Compensation," which  established
an   elective   new   standard   on  accounting   for   stock-based
compensation.   SFAS No. 123 establishes a fair value-based  method
of  accounting  for  stock-based compensation plans  awarded  after
December  31, 1995 and encourages companies to adopt the accounting
method  set  forth in SFAS 123 in place of the existing  accounting
method, which requires expense recognition only in situations where
stock compensation plans award intrinsic value to employees at  the
date of grant.  Companies that elect not to follow SFAS No. 123 for
accounting  purposes must make annual pro forma disclosure  of  its
effects.
     As of January 1, 1996, Pennzoil adopted SFAS No. 123 using the
pro   forma  disclosure  method  described  in  the  pronouncement.
Accordingly,  adoption of the statement did not  impact  Pennzoil's
results  of operations or financial position.  Information relating
to  stock-based  compensation  will be  included  in  footnotes  to
Pennzoil's audited financial statements in future periods.

(3)       Transactions Involving Oil and Gas Assets

     In  April 1996,  Pennzoil signed a letter of intent with  Gulf
Canada  Resources  Limited ("Gulf Canada") providing  for  (i)  the
establishment of a joint venture for the development of natural gas
reserves in the Zama area of northern Alberta and (ii) the sale  by
Pennzoil  of  its  remaining, non-strategic Canadian  oil  and  gas
assets  to  Gulf  Canada  for approximately C$250  million  (US$184
million).   These transactions are subject to the  execution  of  a
definitive   agreement  and  the  receipt  of  certain   regulatory
approvals  and  are expected to close  by mid-1996.  The sale  is
expected to result in a  gain for Pennzoil.  The  sale  includes
840,000    net   acres  of  land,  75  percent  of  which  is
undeveloped.   The  properties to be sold,  which  are  located  in
Alberta  and  northwestern  British Columbia,  include  net  proved
reserves  of  approximately 35 million barrels  ("MMbbls")  of  oil
equivalent  and  are currently producing approximately  5  thousand
barrels  ("Mbbls")  per day of liquids and 33  million  cubic  feet
("MMcf") per day of natural gas, net of royalties.
     In April 1996, Pennzoil entered into a definitive agreement to
sell  approximately  half  of  its interest  in  the  Azeri-Chirag-
Gunashli ("ACG") joint development unit offshore Azerbaijan in  the

<PAGE>
<PAGE>  6


             PART I. FINANCIAL INFORMATION - continued

Caspian  Sea  to  ITOCHU Oil Exploration Co.,  Ltd.  ("ITOCHU"),  a
subsidiary of the Japanese general trading company ITOCHU Corp.  As
part  of the transaction, ITOCHU will fund all of Pennzoil's future
obligations  in  the  ACG project until all such  expenditures  and
accrued  interest are recovered from Pennzoil's share of production
from  the  ACG  unit.  ITOCHU will pay Pennzoil approximately  $132
million  for a 5 percent working interest in the ACG unit  and  the
right  to  receive  51  percent of the payments  due  Pennzoil  for
reimbursement  of  costs incurred in developing a  gas  utilization
project  for  the  Gunashli Field.  Pennzoil will retain  a  4.8175
percent working interest in the ACG unit after ITOCHU has recovered
its  expenditures  and  accrued  interest  for  payments  made   on
Pennzoil's behalf.  Cash payments to Pennzoil will be made in three
installments.   The first payment of about $90 million  is  due  at
closing,  which  is expected to occur around mid-1996.   Subsequent
installments  of  $22  million and $20 million  are  due  at  first
production  (projected in late 1997) and when the  project  reaches
production  of  200 Mbbls of oil equivalents per day (projected  in
approximately  four  years), respectively.   No  gain  or  loss  is
expected  from this transaction as proceeds from the sale  will  be
applied to reduce Pennzoil's net investment in the ACG project.
    In addition to its interest in the ACG unit, Pennzoil retains a
30  percent  interest in a definitive exploration, development  and
production  sharing contract covering the Karabakh  prospect,  also
located in the Caspian Sea.  The Karabakh agreement was ratified by
the Azerbaijan Parliament in February 1996.
     In the first quarter of 1996, Pennzoil substantially completed
its  asset  highgrading  program  and the  related  disposition  of
noncore  oil and gas assets commenced in 1992.  Proceeds  from  the
first quarter 1996 sales of assets totaled $88.1 million.  Gains or
losses  on  such  sales  during the  first  quarter  of  1996  were
insignificant.


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

Results of Operations

      Net  income  for the quarter ended March 31, 1996  was  $15.8
million,  or $.34 per share, compared to $2.7 million, or $.06  per
share,  for the same period in 1995.  The increase in earnings  for
the  first  quarter  of  1996, compared  to  the  prior  year,  was
primarily  attributable to higher results  from  the  oil  and  gas
segment  and  lower  overall general and  administrative  expenses.
These  increases were partially offset by lower other income  as  a
result of a prior year Texas franchise tax refund.

Oil and Gas

      Operating income from this segment was $49.3 million for  the
quarter  ended March 31, 1996, compared with $12.9 million for  the
same  period  in  1995.   The  increase  in  operating  income  was
primarily  due  to higher natural gas prices, lower  operating  and
general   and  administrative  expenses,  and  lower  depreciation,
depletion  and  amortization  ("DD&A")  expense.   The  lower  DD&A
expense  experienced  in the first quarter of  1996  was  primarily
attributable  to lower DD&A rates as a result of the July  1,  1995
write-down of assets associated with the adoption of SFAS No.  121,
"Accounting for the Impairment of Long-Lived Assets and  for  Long-
Lived  Assets  to  be  Disposed of" (described  below),  and  to  a
decrease  in natural gas and liquids volume.  Operating  costs  per
barrel  of  oil equivalent produced, excluding DD&A and exploration
expense, decreased $.60 compared to the same period in 1995.

<PAGE>
<PAGE>  7

             PART I. FINANCIAL INFORMATION - continued

      Natural  gas  price realizations averaged $1.79 per  thousand
cubic  feet  ("Mcf")  for the three months  ended  March  31,  1996
compared to $1.40 per Mcf for the same period in 1995.  Natural gas
volumes produced for sale for the three months ended March 31, 1996
were 559.8 MMcf per day compared to 682.3 MMcf per day for the same
period in 1995.  Liquids production volumes were 60.4 Mbbls per day
for  the  three months ended March 31, 1996 compared to 73.3  Mbbls
per day for the same period in 1995.
     Effective   July  1,  1995,  Pennzoil   adopted   the
requirements of SFAS No. 121 which, in certain instances, specifies
that  the carrying values of assets be written down to fair values.
For  Pennzoil, this resulted in write-downs of proved oil  and  gas
properties  that  were  not  required under  its  prior  impairment
policy.  The  pretax charge for the asset impairment of  Pennzoil's
proved oil and gas properties was $378.9 million.
     In  April 1996,  Pennzoil signed a letter of intent with  Gulf
Canada  providing for (i) the establishment of a joint venture  for
the  development  of  natural gas reserves  in  the  Zama  area  of
northern  Alberta and (ii) the sale by Pennzoil of  its  remaining,
non-strategic  Canadian  oil and gas  assets  to  Gulf  Canada  for
approximately  C$250 million (US$184 million).  These  transactions
are  subject  to  the execution of a definitive agreement  and  the
receipt  of certain regulatory approvals  and are  expected to
close  by   mid-1996.  The sale is  expected  to result  in  a
gain for Pennzoil.  The sale includes 840,000 net acres  of land,
75  percent of which is undeveloped.  The properties  to  be
sold,  which  are  located  in  Alberta  and  northwestern  British
Columbia, include net proved reserves of approximately 35 MMbbls of
oil  equivalent and are currently producing approximately  5  Mbbls
barrels per day of liquids and 33 MMcf per day of natural gas,  net
of  royalties.
     In April 1996, Pennzoil entered into a definitive agreement to
sell   approximately  half  of  its  interest  in  the  ACG   joint
development unit offshore Azerbaijan in the Caspian Sea to  ITOCHU.
As  part  of  the transaction, ITOCHU will fund all  of  Pennzoil's
future  obligations in the ACG project until all such  expenditures
and  accrued  interest  are  recovered  from  Pennzoil's  share  of
production   from   the  ACG  unit.   ITOCHU  will   pay   Pennzoil
approximately $132 million for a 5 percent working interest in  the
ACG  unit  and the right to receive 51 percent of the payments  due
Pennzoil  for reimbursement of costs incurred in developing  a  gas
utilization project for the Gunashli Field.  Pennzoil will retain a
4.8175  percent working interest in the ACG unit after  ITOCHU  has
recovered  its expenditures and accrued interest for payments  made
on  Pennzoil's behalf.  Cash payments to Pennzoil will be  made  in
three installments.  The first payment of about $90 million is  due
at  closing, which is expected to occur around mid-1996. Subsequent
installments  of  $22  million and $20 million  are  due  at  first
production  (projected in late 1997) and when the  project  reaches
production  of  200 Mbbls of oil equivalents per day (projected  in
approximately  four  years), respectively.   No  gain  or  loss  is
expected  from this transaction as proceeds from the sale  will  be
applied to reduce Pennzoil's net investment in the ACG project.
    In addition to its interest in the ACG unit, Pennzoil retains a
30  percent  interest in a definitive exploration, development  and
production  sharing contract covering the Karabakh  prospect,  also
located in the Caspian Sea.  The Karabakh agreement was ratified by
the Azerbaijan Parliament in February 1996.
    In the first quarter of 1996, Pennzoil substantially completed
its  asset  highgrading  program  and the  related  disposition  of
noncore  oil and gas assets commenced in 1992.  Proceeds  from  the
first quarter 1996 sales of assets totaled $88.1 million.  Gains or
losses  on  such  sales  during the  first  quarter  of  1996  were
insignificant.

<PAGE>
<PAGE>  8

             PART I. FINANCIAL INFORMATION - continued



Motor Oil & Refined Products

      Operating income from this segment was $14.4 million for  the
quarter  ended March 31, 1996, compared with $14.3 million for  the
same  period in 1995. This slight increase in operating income from
the  comparable period in 1995 was primarily attributable to higher
motor  oil  and other lubricating product margins.  These increases
were  partially offset by higher manufacturing expenses,  and  pre-
operating expenses related to Excel Paralubes.  Excel Paralubes  is
the  joint  venture partnership with Conoco, Inc. for  construction
and  operation  of  a  new lube base oil plant near  Lake  Charles,
Louisiana.  Completion of the plant and initial startup is expected
before year-end.


Franchise Operations

      The franchise operations segment recorded operating income of
$4.5 million for the quarter ended March 31, 1996, compared with  a
loss  of  $.1 million for the same period in 1995. Results for  the
first quarter of 1995 included a $6.0 million litigation settlement
charge.  After adjusting for nonrecurring charges, operating income
was  slightly  down primarily due to the impact  of  severe  winter
weather  in the northeastern part of the United States where  Jiffy
Lube  has  a  high concentration of company centers,  and  start-up
costs  associated  with  the  opening of  new  centers  during  the
quarter.
      Domestic systemwide sales reported on Jiffy Lube centers  for
the  first  quarter  of  1996 increased  $12.3  million  to  $164.8
million,  compared with the first quarter of 1995.  Average  ticket
prices  increased to $34.76 for the quarter ended March  31,  1996,
compared  with  $34.30 for the first quarter of 1995.   There  were
1,229  domestic  lube  centers (including 484  Jiffy  Lube  company
operated centers) open as of  March 31, 1996.
      The  Sears Auto Center program continues to expand,  with  42
fast-oil change units open in Sears centers throughout the  system,
including  37  company  operated and 5 franchised  operated  units.
Jiffy  Lube expects to open approximately 160 fast-oil change units
in  Sears centers by year-end and has committed to open a total  of
254 units in the program.

Other

      Other  operating income for the quarter ended March 31,  1996
was  $15.5 million, compared with $41.1 million for the same period
in  1995.   The  decrease was primarily due  to  a  1995  favorable
resolution  of  a  Texas  franchise tax issue,  which  resulted  in
Pennzoil  receiving  a  $24.7 million refund  which  included  $1.5
million in interest.
      Net  interest  expense for the quarter ended March  31,  1996
decreased  $0.9 million from the same period in 1995 primarily  due
to lower interest rates.

Capital Resources and Liquidity

      Cash Flow.  As of March 31, 1996, Pennzoil had cash and  cash
equivalents of $34.0 million.  During the three months ended  March
31,  1996,  Pennzoil's  cash and cash equivalents  increased  $10.4
million.   Cash  flows  from  operating  activities  totaled  $33.4
million during the first quarter of 1996.

<PAGE>
<PAGE>  9


             PART I. FINANCIAL INFORMATION - continued

      Pennzoil's  other  income includes dividend  income  of  $9.0
million  during  the three months ended March  31,  1996  from  its
investment in common stock of Chevron Corporation.

      Price  Risk Management.  Pennzoil has a price risk management
program  that  permits  utilization  of  agreements  and  financial
instruments  (such  as  futures, forward and option  contracts  and
swaps  and  collars)  to  reduce the price  risks  associated  with
fluctuations  in  crude oil and natural gas  prices.   The  primary
purpose of the program, as it relates to 1996 crude oil and natural
gas  production,  is to help provide Pennzoil with sufficient  cash
from  operations  in  1996  to fund its  capital  spending  program
without  increasing  debt.   As of March  31,  1996,  Pennzoil  had
entered   into   transactions  that   committed   an   average   of
approximately 273 MMcf per day of natural gas for the remainder  of
1996  to  be  sold  at  fixed prices (New York Mercantile  Exchange
("NYMEX")-based)  ranging  from $1.73 to  $2.93  per  Mcf,  with  a
weighted  average price of $1.80 per Mcf, and Pennzoil had  entered
into  transactions  that committed an average of  approximately  37
Mbbls per day of crude oil for the remainder of 1996 to be sold  at
fixed prices (NYMEX-based) ranging from $16.75 per barrel to $17.72
per  barrel,  with a weighted average price of $17.02  per  barrel.
Pennzoil  will constantly review and may alter its hedged positions
as conditions change.

<PAGE>
<PAGE> 10


                          PART I. FINANCIAL INFORMATION - continued
<TABLE>
                                         (UNAUDITED)

The following tables show revenues and operating income by segment,
other components of income and operating data.


<CAPTION>
                                                                      Three Months Ended
                                                                           March 31
                                                                 ----------------------------
                                                                    1996             1995
                                                                 -----------      -----------
                                                                   (Dollar amounts expressed
                                                                         in thousands)
<S>                                                              <C>              <C>
REVENUES
   Oil and Gas                                                   $  175,082       $  189,176
   Motor Oil & Refined Products                                     393,149          378,283
   Franchise Operations                                              71,415           67,120
   Other                                                             21,958           42,032
   Intersegment sales                                               (74,263)         (41,271)
                                                                 -----------      -----------
        Total revenues                                           $  587,341       $  635,340
                                                                 -----------      -----------


OPERATING INCOME (LOSS)
   Oil and Gas                                                   $   49,323       $   12,908
   Motor Oil & Refined Products                                      14,428           14,265
   Franchise Operations                                               4,525             (148)
   Other                                                             15,487           41,058
                                                                 -----------      -----------
        Total operating income                                       83,763           68,083

Corporate administrative expenses                                    12,731           17,446
Interest charges, net                                                47,563           48,479
                                                                 -----------      -----------
Income before income tax                                             23,469            2,158

Income tax provision (benefit)                                        7,700             (585)
                                                                 -----------      -----------

NET INCOME                                                       $   15,769       $    2,743
                                                                 ===========      ===========

RATIO OF EARNINGS TO FIXED CHARGES                                     1.40             1.02
                                                                 ===========      ===========

</TABLE>

<PAGE>
<PAGE> 11


                          PART I. FINANCIAL INFORMATION - continued
<TABLE>
                                         (UNAUDITED)

<CAPTION>
                                                                      Three Months Ended
                                                                           March 31
                                                                ------------------------------
                                                                   1996              1995
                                                                ------------      ------------
<S>                                                             <C>               <C>
OPERATING DATA
- --------------

OIL AND GAS
  Net production
    Crude oil, condensate and natural
      gas liquids (barrels per day)                                  60,402            73,326
    Natural gas produced for sale (Mcf per day)                     559,776           682,273

  Weighted average prices
    Crude oil, condensate and natural
      gas liquids (per barrel)                                   $    14.15        $    14.34
    Natural gas (per Mcf)                                        $     1.79        $     1.40


MOTOR OIL & REFINED PRODUCTS
  Sales (barrels per day)
    Gasoline and naphtha                                             20,618            21,492
    Distillates and gas oils                                         27,630            28,487
    Lubricating oil and other specialty products                     21,969            23,756
    Residual fuel oils                                                4,042             4,098
                                                                 -----------       -----------
          Total sales (barrels per day)                              74,259            77,833
                                                                 ===========       ===========

  Raw materials processed (barrels per day)                          51,416            55,548

  Refining capacity (barrels per day)                                62,700            62,700

FRANCHISE OPERATIONS
  Domestic systemwide sales (in thousands)                       $  164,819        $  152,534
  Same center sales (in thousands)                               $  154,794        $  150,917
  Centers open (U.S.)                                                 1,229             1,137

</TABLE>

<PAGE>
<PAGE> 12


                    PART II. OTHER INFORMATION

Item 1. Legal Proceedings

(a)      In  March  1996, the United States Department  of  Justice
filed  a lawsuit against Pennzoil Products Company ("PPC") and  The
Eureka  Pipe Line Company ("Eureka"), a subsidiary of PPC,  in  the
Unites  States  District Court for the Southern  District  of  West
Virginia.   The  lawsuit alleges that PPC and  Eureka  are  legally
responsible  for  numerous oil spills in navigable  waters  of  the
United  States  in  violation of the Clean  Water  Act,  and  seeks
payment  of  civil  penalties in excess of $100,000  and  injuctive
relief.   The  Company  is currently engaged in  active  settlement
negotiations with respect to these matters.



Item 6.  Exhibits and Reports on Form 8-K

(a)  Exhibits -

     12  Computation of Ratio of Earnings to Fixed Charges for the
         three months ended March 31, 1996 and 1995.

     27  Financial Data Schedule

(b)  Reports -

     No reports on Form 8-K were filed during the quarter for which
     this report was filed.

<PAGE>
<PAGE> 13


                             SIGNATURE



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




                                   PENNZOIL COMPANY
                                      Registrant




                                   S/N Michael J. Maratea
                                   Michael J. Maratea
                                   Vice President and Controller




May  10, 1996



<TABLE>
                                                                                              EXHIBIT 12
                                        PENNZOIL COMPANY AND SUBSIDIARIES
                                COMPUTATION OF RATIO OF EARNINGS TO FIXED CHARGES
<CAPTION>
                                                                                  For the three months ended
                                                                                           March 31,
                                                                             ----------------------------------
                                                                                 1996                  1995
                                                                             -------------        -------------
                                                                           (Dollar amounts expressed in thousands)
<S>                                                                          <C>                  <C>
Income from continuing operations before extraordinary items
      and cumulative effect of change in accounting principle                $     15,769         $      2,743
Income tax provision (benefit)
    Federal and foreign                                                             6,898               (1,325)
    State                                                                             802                  740
                                                                             -------------        -------------
        Total income tax provision (benefit)                                        7,700                 (585)

Interest charges                                                                   53,789               54,494
                                                                             -------------        -------------
Income before income tax provision (benefit) and interest charges            $     77,258         $     56,652
                                                                             =============        =============

Fixed charges                                                                $     55,241         $     55,557
                                                                             =============        =============

Ratio of earnings to fixed charges                                                   1.40                 1.02
                                                                             =============        =============


<CAPTION>
                                       DETAIL OF INTEREST AND FIXED CHARGES

                                                                                  For the three months ended
                                                                                          March 31,
                                                                             ----------------------------------
                                                                                 1996                 1995
                                                                             -------------        -------------
                                                                                  (Expressed in thousands)
<S>                                                                          <C>                  <C>
Interest charges per Consolidated Statement of Income
  which includes amortization of debt discount, expense and premium          $     49,015         $     49,542
Add: portion of rental expense representative of interest factor <F1>               6,226                6,015
                                                                             -------------        -------------
  Total fixed charges                                                        $     55,241         $     55,557

Less: interest capitalized per Consolidated Statement of Income                     1,452                1,063
                                                                             -------------        -------------
  Total interest charges                                                     $     53,789         $     54,494
                                                                             =============        =============

<FN>
<F1> Interest factor based on management's estimates and approximates one-third of rental expense.
</FN>
</TABLE>





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



FORM 10-Q


Quarterly Report Pursuant to Section 13 or 15(d) of
the Securities Exchange Act of 1934


For the Quarter Ended March 31, 1996  Commission File No. 1-5591


                  PENNZOIL COMPANY
(Exact name of registrant as specified in its charter)


             Delaware                          74-1597290
(State or other jurisdiction of          (I.R.S. Employer
incorporation or organization)           Identification No.)


Pennzoil Place, P.O. Box 2967
Houston, Texas 77252-2967
(Address of principal executive offices)




EXHIBIT


<PAGE>





                        PENNZOIL COMPANY AND SUBSIDIARIES
                                 INDEX TO EXHIBITS


Exhibit No.
- -----------



         12    Computation of Ratio of Earnings to Fixed Charges for the three
               months ended March 31, 1996 and 1995.

         27    Financial Data Schedule





<TABLE> <S> <C>

<ARTICLE> 5
<MULTIPLIER> 1,000
       
<S>                             <C>
<PERIOD-TYPE>                   3-MOS
<FISCAL-YEAR-END>                          DEC-31-1996
<PERIOD-END>                               MAR-31-1996
<CASH>                                          33,971
<SECURITIES>                                         0
<RECEIVABLES>                                  340,568
<ALLOWANCES>                                     8,742
<INVENTORY>                                    156,887
<CURRENT-ASSETS>                               604,160
<PP&E>                                       5,970,091
<DEPRECIATION>                               3,573,470
<TOTAL-ASSETS>                               4,250,535
<CURRENT-LIABILITIES>                          739,335
<BONDS>                                      2,101,132
<COMMON>                                        43,507
                                0
                                          0
<OTHER-SE>                                     818,725
<TOTAL-LIABILITY-AND-EQUITY>                 4,250,535
<SALES>                                        563,813
<TOTAL-REVENUES>                               587,341
<CGS>                                          340,095
<TOTAL-COSTS>                                  349,940
<OTHER-EXPENSES>                                79,732
<LOSS-PROVISION>                                     0
<INTEREST-EXPENSE>                              47,563
<INCOME-PRETAX>                                 23,469
<INCOME-TAX>                                     7,700
<INCOME-CONTINUING>                             15,769
<DISCONTINUED>                                       0
<EXTRAORDINARY>                                      0
<CHANGES>                                            0
<NET-INCOME>                                    15,769
<EPS-PRIMARY>                                      .34
<EPS-DILUTED>                                      .34
        


</TABLE>


© 2022 IncJournal is not affiliated with or endorsed by the U.S. Securities and Exchange Commission