<PAGE>
<PAGE> 1
UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
Washington D. C. 20549
FORM 8-K
CURRENT REPORT
Pursuant to Section 13 or 15(d) of
the Securities Exchange Act of 1934
Date of Report (Date of earliest event reported): July 17, 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
<PAGE>
<PAGE> 2
Item 2. Acquisition or Disposition of Assets
Introduction
On July 17, 1996, Pennzoil Petroleums Ltd. an indirect
wholly owned subsidiary of Pennzoil Company ("Pennzoil"), completed
the sale of all the issued and outstanding capital stock of
Pennzoil Canada Inc. ("Pennzoil Canada") to Gulf Canada Resources
Limited ("Gulf Canada"). After closing and working capital
adjustments, Pennzoil received proceeds of US $192.8 million.
Pennzoil Canada owned properties with net proven oil and gas
reserves of approximately 35 million barrels of oil equivalent
located in Alberta and northwest British Columbia. Pennzoil
Canada owned approximately 840,000 net acres of land, 75 percent
of which was undeveloped.
In addition, Pennzoil and Gulf Canada have created a 50-50
joint venture to develop natural gas reserves in the Zama-Virgo
area of Alberta, with each company contributing reserves and
capital to the joint venture equally.
SEC Requirements
Included on pages F-1 through F-5 hereof are the unaudited
Pro Forma Condensed Consolidated Financial Statements of Pennzoil
and subsidiaries, which include certain adjustments to the
historical consolidated financial statements of Pennzoil and
subsidiaries to reflect the disposition of all the issued and
outstanding capital stock of Pennzoil Canada.
Effects of the Disposition
Results of operations from Pennzoil Canada are being removed
from Pennzoil's consolidated financial statements beginning
July 17, 1996.
Item 7. Financial Statements and Exhibits
(a) Pro Forma Financial Information
Pennzoil Company and Subsidiaries Pro Forma
Condensed Consolidated Statements (Unaudited) F-1
Pro Forma Condensed Consolidated Balance Sheet
as of December 31, 1995 F-2
Pro Forma Condensed Consolidated Statement
of Income for the year ended
December 31, 1995 F-3
Pro Forma Condensed Consolidated Statement
of Income for the six months ended
June 30, 1996 F-4
Notes to Pro Forma Condensed Consolidated
Financial Statements F-5
(b) Exhibits-
Press Release of Pennzoil dated July 17, 1996
<PAGE>
<PAGE> 3
PENNZOIL COMPANY AND SUBSIDIARIES
PRO FORMA CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
(Unaudited)
SEC Requirements
The Pro Forma Condensed Consolidated Financial Statements have
been prepared in accordance with the requirements of Item 11 of
Regulation S-X promulgated by the Securities and Exchange
Commission ("SEC"). These required statements are presented for
informational purposes only and are not indicative of the results
of future operations or financial position, nor the results of
historical operations and financial position had the disposition
occurred as of the assumed dates.
Explanatory Notes
The Pro Forma Condensed Consolidated Balance Sheet as of
December 31, 1995 has been prepared assuming that the disposition
of Pennzoil Canada occurred on that date. The Pro Forma Condensed
Consolidated Statements of Income for the twelve months ended
December 31, 1995 and for the six months ended June 30, 1996 have
been prepared assuming that the disposition of Pennzoil Canada
had occurred at the beginning of those periods. Pursuant to
SEC regulations, pro forma adjustments include only the effects
of events directly attributable to a transaction that are
factually supportable and, for income accounts, are expected
to have a continuing impact.
The Pro Forma Condensed Consolidated Financial Statements
should be read in conjunction with Pennzoil's historical
consolidated financial statements included in Pennzoil's Annual
Report on Form 10-K for the year ended December 31, 1995.
F-1
<PAGE>
<PAGE> 4
<TABLE>
PENNZOIL COMPANY AND SUBSIDIARIES
PRO FORMA CONDENSED CONSOLIDATED BALANCE SHEET
December 31, 1995
(UNAUDITED)
<CAPTION>
Historical Pro Forma
Pennzoil Adjustments As Adjusted
--------- ------------- ------------
(Expressed in thousands)
<S> <C> <C> <C>
ASSETS
Current assets
Cash and cash equivalents $ 23,615 $ - $ 23,615
Receivables 335,876 (7,630) (a) 351,484
23,238 (b)
Inventories 161,193 (2,232) (a) 158,961
Other current assets 84,141 - 84,141
------------ ------------ ------------
Total current assets 604,825 13,376 618,201
Property, plant and equipment, net 2,418,025 (194,109) (a) 2,223,916
Marketable securities and other investments 910,334 - 910,334
Other assets 374,592 (11) (a) 374,581
------------ ------------ ------------
TOTAL ASSETS $ 4,307,776 $ (180,744) $ 4,127,032
============ ============= ============
LIABILITIES AND SHAREHOLDERS' EQUITY
Current liabilities
Current maturities of long-term debt $ 2,263 $ - $ 2,263
Notes payable 468,934 - 468,934
Accounts payable and accrued liabilities 330,263 (12,262) (a) 318,001
Other current liabilities 116,808 (374) (a) 116,434
------------ ------------- ------------
Total current liabilities 918,268 (12,636) 905,632
Long-term debt 2,038,921 (175,178) (c) 1,863,743
Deferred income tax 227,941 (10,574) (a) 217,367
Other liabilities 286,414 - 286,414
------------ ------------- ------------
TOTAL LIABILITIES 3,471,544 (198,388) 3,273,156
------------ ------------- ------------
COMMITMENTS AND CONTINGENCIES
SHAREHOLDERS' EQUITY 836,232 17,644 (d) 853,876
------------ ------------- ------------
TOTAL LIABILITIES AND SHAREHOLDERS' EQUITY $ 4,307,776 $ (180,744) $ 4,127,032
============ ============= ============
<FN>
<F1>
The accompanying notes are an integral part of these pro
forma condensed consolidated financial statements.
</FN>
F-2
</TABLE>
<PAGE>
<PAGE> 5
<TABLE>
PENNZOIL COMPANY AND SUBSIDIARIES
PRO FORMA CONDENSED CONSOLIDATED STATEMENT OF INCOME
Year Ended December 31, 1995
(UNAUDITED)
<CAPTION>
Historical Pro Forma
Pennzoil Adjustments As Adjusted
------------ ----------- ------------
(Expressed in thousands except per share amounts)
<S> <C> <C> <C>
REVENUES $ 2,489,986 $ (53,191) (a) $ 2,436,795
COSTS AND EXPENSES
Cost of sales 1,537,737 (17,673) (a) 1,520,064
Selling, general and administrative expenses 419,530 (5,079) (a) 414,451
Depreciation, depletion and amortization 325,119 (29,466) (a) 295,653
Exploration expenses 39,782 (11,060) (a) 28,722
Impairment of long-lived assets 399,830 (54,891) (b) 344,939
Taxes, other than income 51,315 (355) (a) 50,960
Interest charges, net 194,348 (11,411) (c) 182,937
----------- ----------- -----------
INCOME (LOSS) BEFORE INCOME TAX (477,675) 76,744 (400,931)
Income tax provision (benefit) (172,533) 22,910 (d) (149,623)
----------- ----------- -----------
NET INCOME (LOSS) $ (305,142) $ 53,834 $ (251,308)
=========== =========== ===========
LOSS PER SHARE $ (6.60) $ (5.43)
=========== ===========
DIVIDENDS PER COMMON SHARE $ 2.50 $ 2.50
============ ============
AVERAGE SHARES OUTSTANDING 46,245 46,245
============ ============
<FN>
<F1>
The accompanying notes are an integral part of these pro
forma condensed consolidated financial statements.
</FN>
F-3
</TABLE>
<PAGE>
<PAGE> 6
<TABLE>
PENNZOIL COMPANY AND SUBSIDIARIES
PRO FORMA CONDENSED CONSOLIDATED STATEMENT OF INCOME
Six Months Ended June 30, 1996
(UNAUDITED)
<CAPTION>
Historical Pro Forma
Pennzoil Adjustments As Adjusted
------------ ------------ ------------
(Expressed in thousands except per share amounts)
<S> <C> <C> <C>
REVENUES $ 1,223,921 $ (26,913) (a) $ 1,197,008
COSTS AND EXPENSES
Cost of sales 711,749 (7,626) (a) 704,123
Selling, general and administrative expenses 169,547 (1,986) (a) 167,561
Depreciation, depletion and amortization 138,999 (12,152) (a) 126,847
Exploration expenses 21,708 (4,704) (a) 17,004
Taxes, other than income 27,347 (234) (a) 27,113
Interest charges, net 94,367 (5,675) (c) 88,692
----------- ----------- -----------
INCOME BEFORE INCOME TAX 60,204 5,464 65,668
Income tax provision 19,892 2,119 (d) 22,011
----------- ----------- -----------
NET INCOME $ 40,312 $ 3,345 $ 43,657
=========== =========== ===========
EARNINGS PER SHARE $ 0.87 $ 0.94
=========== ===========
DIVIDENDS PER COMMON SHARE $ 0.50 $ 0.50
============ ============
AVERAGE SHARES OUTSTANDING 46,420 46,420
============ ===========
<FN>
<F1>
The accompanying notes are an integral part of these pro
forma condensed consolidated financial statements.
</FN>
F-4
</TABLE>
<PAGE>
<PAGE> 7
PENNZOIL COMPANY AND SUBSIDIARIES
NOTES TO PRO FORMA CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
(UNAUDITED)
On July 17, 1996, Pennzoil Petroleums Ltd. an indirect
wholly owned subsidiary of Pennzoil Company ("Pennzoil"),
completed the sale of all the issued and outstanding capital
stock of Pennzoil Canada Inc. ("Pennzoil Canada") to Gulf
Canada Resources Limited ("Gulf Canada"). After closing
and working capital adjustments, Pennzoil received proceeds
of US $192.8 million.
The Pro Forma Condensed Consolidated Balance Sheet as of
December 31, 1995 has been prepared assuming that the
disposition of Pennzoil Canada occurred on that date. The
Pro Forma Condensed Consolidated Statements of Income for
the twelve months ended December 31, 1995 and for the six
months ended June 30, 1996 have been prepared assuming
that the disposition of Pennzoil Canada had occurred
at the beginning of those periods.
The adjustments to the Pro Forma Condensed Consolidated
Balance Sheet as of December 31, 1995 are as follows:
(a) Reflects the removal of the historical net book
value of Pennzoil Canada's assets and liabilities.
(b) Reflects a receivable for federal income tax
benefits generated from the sale of the issued
and outstanding capital stock of Pennzoil Canada.
(c) Reflects Pennzoil's debt reduction using proceeds
derived from the sale of the issued and outstanding
capital stock of Pennzoil Canada.
(d) Represents the after-tax gain realized from the
sale of all the issued and outstanding capital stock
of Pennzoil Canada.
The adjustments to the Pro Forma Condensed Consolidated
Statement of Income for the twelve months ended
December 31, 1995 and six months ended June 30, 1996 are
as follows:
(a) Reflects the removal of revenues and certain
costs and expenses associated with the assets
sold by Pennzoil.
(b) Reflects the elimination of the charge for the
impairment of long-lived assets related to the
assets sold by Pennzoil. Such impairment is
related to the adoption of Statement of Financial
Accounting Standards No. 121, "Accounting for the
Impairment of Long-Lived Assets and for Long-
Lived Assets to be Disposed of," and would not
be required once the aforementioned assets are
removed.
(c) Reflects the elimination of interest expense
related to the debt reduction using the net
proceeds received from the sale of the issued
and outstanding capital stock of Pennzoil Canada.
(d) Reflects the pro forma effect of the adjustments
to income using Pennzoil Canada's historical
effective tax rate.
F-5
<PAGE>
<PAGE> 8
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
July 31, 1996
PENNZOIL COMPANY NEWS
PUBLIC RELATIONS DEPARTMENT - PENNZOIL PLACE - P. O. Box 2967 -
HOUSTON, TEXAS 77252-8200
FOR IMMEDIATE RELEASE
CONTACT: Tom Powell
713/546-8686
John Sparks
Gulf Canada Resources
403/233-4049
Pennzoil Completes Canadian Properties Sale
HOUSTON (July 17, 1996) -- Pennzoil Co. (NYSE:PZL) has
completed the previously announced sale of its non-strategic
Canadian oil and gas assets to Gulf Canada Resources Limited
for approximately US$184 million (C$250 million). Pennzoil
will use the cash proceeds primarily to reduce debt.
The properties, located in Alberta and British Columbia,
include net proven reserves of approximately 35 million barrels
of oil equivalent (6,000 cubic feet of gas = 1 barrel of oil).
Current gross production, including royalty share, is 7,000
barrels of liquids (5,500 bbls. net to Pennzoil) and about
40 million cubic feet of natural gas (34 MMcf net) daily.
In addition to the sale, Pennzoil and Gulf Canada have
created a 50-50 joint venture to develop natural gas reserves
in the Zama-Virgo area of Alberta, with each company contributing
reserves and capital to the joint venture equally.
##
