<PAGE>
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
____________________
FORM 11-K
ANNUAL REPORT
____________________
Pursuant to Section 15(d) of the
Securities Exchange Act of 1934
____________________
For the Fiscal Year Ended December 31, 1997
_____________________
PENNZOIL COMPANY SAVINGS AND INVESTMENT PLAN
FOR HOURLY EMPLOYEES
Commission File No. 1-5591
______________________
PENNZOIL COMPANY
Pennzoil Place, P. O. Box 2967
Houston, Texas 77252-2967
(Name of issuer of securities held pursuant to the plan and
address of its principal executive office)
<PAGE>
<PAGE>
REPORT OF INDEPENDENT PUBLIC ACCOUNTANTS
To the Administrative Committee,
Pennzoil Company Savings and
Investment Plan for Hourly Employees:
We have audited the accompanying statements of net assets
available for benefits of the Pennzoil Company Savings and
Investment Plan for Hourly Employees (the Plan) as of
December 31, 1997 and 1996, and the related statement of
changes in net assets available for benefits for the year
ended December 31, 1997. These financial statements and the
schedules referred to below are the responsibility of the
Plan's administrative committee. Our responsibility is to
express an opinion on these financial statements and
schedules based on our audits.
We conducted our audits in accordance with generally
accepted auditing standards. Those standards require that
we plan and perform the audit to obtain reasonable assurance
about whether the financial statements are free of material
misstatement. An audit includes examining, on a test basis,
evidence supporting the amounts and disclosures in the
financial statements. An audit also includes assessing the
accounting principles used and significant estimates made by
the Plan's administrative committee, as well as evaluating
the overall financial statement presentation. We believe
that our audits provide a reasonable basis for our opinion.
In our opinion, the financial statements referred to above
present fairly, in all material respects, the net assets
available for benefits of the Plan as of December 31, 1997
and 1996, and the changes in its net assets available for
benefits for the year ended December 31, 1997, in conformity
with generally accepted accounting principles.
Our audits were made for the purpose of forming an opinion
on the basic financial statements taken as a whole. The
supplemental schedules of assets held for investment
purposes as of December 31, 1997, included as Schedule I,
and reportable transactions (series of investment
transactions) for the year ended December 31, 1997, included
as Schedule II, are presented for purposes of additional
analysis and are not a required part of the basic financial
statements but are supplementary information required by the
Department of Labor's Rules and Regulations for Reporting
and Disclosure under the Employee Retirement Income Security
Act of 1974. The Fund Information in the statements of net
assets available for benefits and statement of changes in
net assets available for benefits is presented for purposes
of additional analysis rather than to present the net assets
available for benefits and changes in net assets available
for benefits of each fund. The supplemental schedules and
Fund Information have been subjected to the auditing
procedures applied in the audits of the basic financial
statements and, in our opinion, are fairly stated in all
material respects in relation to the basic financial
statements taken as a whole.
ARTHUR ANDERSEN LLP
Houston, Texas
June 25, 1998
<PAGE>
<PAGE>
<TABLE>
PENNZOIL COMPANY SAVINGS AND INVESTMENT PLAN
FOR HOURLY EMPLOYEES
STATEMENT OF NET ASSETS AVAILABLE FOR BENEFITS
(WITH FUND INFORMATION)
DECEMBER 31, 1997
<CAPTION>
Participant Directed Funds
------------------------------------------------------------------------------------
Merrill J. P. Fidelity Dreyfus/ Davis
Lynch Morgan Advisor Laurel New
Retirement Institutional Income & Equity York
Preservation Bond Growth Index Venture
Trust Fund Fund Trust Fund
------------ ------------ ------------ ------------ ------------
<S> <C> <C> <C> <C> <C>
ASSETS:
Investments, at current value-
Pennzoil Company common stock $ - $ - $ - $ - $ -
Battle Mountain Gold Company
common stock - - - - -
Merrill Lynch Retirement
Preservation Trust 3,867,164 - - - -
Mutual funds - 209,355 405,708 4,678,558 1,542,380
Participant loans - - - - -
Cash and temporary investments 51,760 - - 339 -
Receivables-
Employee contributions 20,960 1,627 4,679 24,702 9,845
Employer contributions - - - - -
Investment income 5,243 2,542 27,663 - -
------------ ------------ ------------ ------------ ------------
Total assets 3,945,127 213,524 438,050 4,703,599 1,552,225
LIABILITIES:
Payable to brokers 4,985 - - - -
------------ ------------ ------------ ------------ ------------
NET ASSETS AVAILABLE
FOR BENEFITS $3,940,142 $ 213,524 $ 438,050 $4,703,599 $1,552,225
============ ============ ============ ============ ============
<FN>
See notes to financial statements.
</FN>
<CAPTION>
Non-
Participant
Participant Directed Funds Directed
------------------------------ ------------
Company Company
Loan Stock Stock
Fund Fund Fund Total
------------ ------------ ------------ ------------
<S> <C> <C> <C> <C>
ASSETS:
Investments, at current value-
Pennzoil Company common stock $ - $2,196,879 $5,945,421 $8,142,300
Battle Mountain Gold Company
common stock - 6,485 5,751 12,236
Merrill Lynch Retirement
Preservation Trust - - - 3,867,164
Mutual funds - - - 6,836,001
Participant loans 1,032,917 - - 1,032,917
Cash and temporary investments - - 50,040 102,139
Receivables-
Employee contributions - 13,210 - 75,023
Employer contributions - - 24,473 24,473
Investment income - - 3,563 39,011
------------ ------------ ------------ ------------
Total assets 1,032,917 2,216,574 6,029,248 20,131,264
LIABILITIES:
Payable to brokers - - 18,072 23,057
------------ ------------ ------------ ------------
NET ASSETS AVAILABLE
FOR BENEFITS $1,032,917 $2,216,574 $6,011,176 $20,108,207
============ ============ ============ ============
<FN>
See notes to financial statements.
</FN>
</TABLE>
<PAGE>
<PAGE>
<TABLE>
PENNZOIL COMPANY SAVINGS AND INVESTMENT PLAN
FOR HOURLY EMPLOYEES
STATEMENT OF NET ASSETS AVAILABLE FOR BENEFITS
(WITH FUND INFORMATION)
DECEMBER 31, 1996
<CAPTION>
Participant Directed Funds
------------------------------------------------------------------------------------
Merrill J. P. Fidelity Dreyfus/ Davis
Lynch Morgan Advisor Laurel New
Retirement Institutional Income & Equity York
Preservation Bond Growth Index Venture
Trust Fund Fund Trust Fund
------------ ------------ ------------ ------------ ------------
<S> <C> <C> <C> <C> <C>
ASSETS:
Investments, at current value-
Pennzoil Company common stock $ - $ - $ - $ - $ -
Battle Mountain Gold Company
common stock - - - - -
Merrill Lynch Retirement
Preservation Trust 3,073,475 - - - -
Mutual funds - 176,778 244,802 2,949,961 606,905
Participant loans - - - - -
Cash and temporary investments 60,407 - - - -
Receivables-
Employee contributions 46,309 3,353 5,249 37,379 11,433
Employer contributions - - - - -
Investment income 91 - - - -
------------ ------------ ------------ ------------ ------------
Total assets 3,180,282 180,131 250,051 2,987,340 618,338
LIABILITIES:
Payable to brokers - 18,934 3,386 20,535 7,267
------------ ------------ ------------ ------------ ------------
NET ASSETS AVAILABLE
FOR BENEFITS $3,180,282 $ 161,197 $ 246,665 $2,966,805 $ 611,071
============ ============ ============ ============ ============
<FN>
See notes to financial statements.
</FN>
<CAPTION>
Non-
Participant
Participant Directed Funds Directed
------------------------------ ------------
Company Company
Loan Stock Stock
Fund Fund Fund Total
------------ ------------ ------------ ------------
<S> <C> <C> <C> <C>
ASSETS:
Investments, at current value-
Pennzoil Company common stock $ - $2,242,279 $5,224,705 $7,466,984
Battle Mountain Gold Company
common stock - 7,892 6,999 14,891
Merrill Lynch Retirement
Preservation Trust - - - 3,073,475
Mutual funds - - - 3,978,446
Participant loans 692,157 - - 692,157
Cash and temporary investments - - 35,489 95,896
Receivables-
Employee contributions - 27,083 - 130,806
Employer contributions - - 57,403 57,403
Investment income - - 36 127
------------ ------------ ------------ ------------
Total assets 692,157 2,277,254 5,324,632 15,510,185
LIABILITIES:
Payable to brokers - - - 50,122
------------ ------------ ------------ ------------
NET ASSETS AVAILABLE
FOR BENEFITS $ 692,157 $2,277,254 $5,324,632 $15,460,063
============ ============ ============ ============
<FN>
See notes to financial statements.
</FN>
</TABLE>
<PAGE>
<PAGE>
<TABLE>
PENNZOIL COMPANY SAVINGS AND INVESTMENT PLAN
FOR HOURLY EMPLOYEES
STATEMENT OF CHANGES IN NET ASSETS AVAILABLE FOR BENEFITS
(WITH FUND INFORMATION)
FOR THE YEAR ENDED DECEMBER 31, 1997
<CAPTION>
Participant Directed Funds
---------------------------------------------------------------------------------------
Merrill J.P. Fidelity Dreyfus/ Davis
Lynch Morgan Advisor Laurel New
Retirement Institutional Income & Equity York
Preservation Bond Growth Index Venture
Trust Fund Fund Trust Fund
----------- ----------- ----------- ----------- -----------
<S> <C> <C> <C> <C> <C>
NET ASSETS AVAILABLE FOR BENEFITS,
beginning of year $3,180,282 $ 161,197 $ 246,665 $2,966,805 $ 611,071
CONTRIBUTIONS:
Employee 539,951 40,628 121,210 660,983 254,637
Employer - - - - -
INVESTMENT INCOME:
Dividends - 14,896 34,151 121,645 66,503
Interest 217,789 - - - -
Loan Repayment Interest 24,225 1,368 1,350 19,005 7,324
NET APPRECIATION IN FAIR VALUE
OF INVESTMENTS - 3,173 24,947 928,117 209,835
NET TRANSFERS (Note 1)
Among Funds 393,719 6,224 37,343 320,547 462,257
To Salaried Plan (39,557) (3,764) (16,111) (113,657) (25,491)
PARTICIPANT LOANS (Note 1)
New Loans Issued (142,410) (14,327) (12,438) (116,309) (66,761)
Principal Received 90,518 5,351 7,617 76,485 39,623
EXPENSES (1,247) (81) (86) (786) (357)
DISTRIBUTIONS AND WITHDRAWALS (323,128) (1,141) (6,598) (159,236) (6,416)
(Note 1)
----------- ----------- ----------- ----------- -----------
NET ASSETS AVAILABLE FOR BENEFITS,
end of year $3,940,142 $ 213,524 $ 438,050 $4,703,599 $1,552,225
=========== =========== =========== =========== ===========
<FN>
See notes to financial statements
</FN>
<CAPTION> Non-
Participant
Participant Directed Funds Directed
------------------------------ -----------
Company Company
Loan Stock Stock
Fund Fund Fund Total
----------- ----------- ----------- -----------
<S> <C> <C> <C> <C>
NET ASSETS AVAILABLE FOR BENEFITS,
beginning of year $ 692,157 $2,277,254 $5,324,632 $15,460,063
CONTRIBUTIONS:
Employee - 334,233 - 1,951,642
Employer - - 805,278 805,278
INVESTMENT INCOME:
Dividends - 35,969 90,474 363,638
Interest - 348 874 219,011
Loan Repayment Interest - 15,907 - 69,179
NET APPRECIATION IN FAIR VALUE
INVESTMENTS - 440,324 1,107,559 2,713,955
NET TRANSFERS (Note 1)
Among Funds (30,248) (430,551) (759,291) -
To Salaried Plan (22,820) (18,834) (111,985) (352,219)
PARTICIPANT LOANS (Note 1)
New Loans Issued 682,598 (330,353) - -
Principal Received (288,770) 69,176 - -
EXPENSES - - (684) (3,241)
DISTRIBUTIONS AND WITHDRAWALS - (176,899) (445,681) (1,119,099)
(Note 1)
----------- ----------- ----------- -----------
NET ASSETS AVAILABLE FOR BENEFITS,
end of year $1,032,917 $2,216,574 $6,011,176 $20,108,207
=========== =========== =========== ===========
<FN>
See notes to financial statements
</FN>
</TABLE>
<PAGE>
<PAGE>
PENNZOIL COMPANY SAVINGS AND INVESTMENT PLAN
FOR HOURLY EMPLOYEES
NOTES TO FINANCIAL STATEMENTS
1. DESCRIPTION OF THE PLAN:
General
The Pennzoil Company Savings and Investment Plan for Hourly Employees
(the Plan) was established effective January 1, 1989 (effective date),
by Pennzoil Company. The purpose of the Plan is to encourage hourly
employees of Pennzoil Company and participating subsidiaries and
affiliated companies (Pennzoil) to save, and invest systematically, a
portion of their current compensation in order that they may have an
additional source of income upon their retirement or disability, or
for their family in the event of their death. Upon changing wage
status to salary, a participant's account balance is transferred
between the Plan and the Pennzoil Company Savings and Investment Plan.
Each person employed by Pennzoil who is a member of a collective
bargaining unit which has agreed to participate in the Plan and who is
receiving remuneration on an hourly basis on or after January 1, 1989,
is eligible to participate in the Plan on the later of the effective
date or the entry date coinciding with or next following their
completion of one year of service.
In addition, an eligible employee could, independently of his pretax
contribution, elect to make after-tax contributions to the Plan in
whole percentages of not less than 1 percent and not more than
6 percent of annual compensation. Effective April 1, 1994, the Plan
was amended to increase the maximum pretax and after-tax contributions
for eligible employees from 6 percent of annual compensation to
12 percent of annual compensation. In addition, the maximum combined
contribution rates of pretax and after-tax contributions based on
years of participation in the Plan were increased to 9 percent,
10 percent and 12 percent, respectively, for those employees. The sum
of the rates of pretax and after-tax contributions are subject to the
following limitations:
Years of Participation(a) Maximum Combined Contribution Rate
- ------------------------ ----------------------------------
Less than 5 years 9%
5 - 10 years 10%
More than 10 years 12%
For each Plan year, Pennzoil contributes an amount on behalf of
participating employees equal to the following percentages of the
aggregate pretax and after-tax contribution rates shown above.
Pennzoil's contributions on behalf of participating employees were not
changed by the amendment.
Applicable
Percentage -
Years of Employer Matching
Participation (a) Contribution
----------------- -----------------
Less than 5 years 50%
5 - 10 years 75%
More than 10 years 100%
(a) Includes years of participation in the Plan, the Prior Plan or
the Pennzoil Company and Participating Companies Employees Stock
Purchase Plan.
<PAGE>
<PAGE>
Investment Choices
Employer contributions are invested primarily in Pennzoil common
stock. At Pennzoil's discretion, employer contributions may be made
either in cash or in Pennzoil common stock. Employer contributions
are invested in either Pennzoil common stock or in the other
investment funds as designated by the participant. The statements of
net assets available for benefits and statement of changes in net
assets available for benefits present participant directed and non-
participant directed activity separately. During 1997, Pennzoil
contributed 13,226 shares of its common stock valued at the average of
the high and low market prices on the date of the contribution. All
employee and employer contributions (other than stock) are initially
invested in interest-bearing short-term, highly liquid investments and
are classified in the accompanying statement of net assets available
for benefits under the caption "Cash and temporary investments."
Employee contributions are invested as designated by participating
employees in the following investment funds:
Fund Name Type of Investment(s)
I. Merrill Lynch Invests primarily in guaranteed
Retirement investment contracts (generally with
Preservation Trust insurance companies or banks which
agree to return principal and a stated
rate of return over a specified period
of time) and U.S. Government and U.S.
Government Agency securities.
II. J. P. Morgan Normally, at least 65% of the fund's
Institutional Bond assets will be represented by
Fund investment in securities rated "A" or
better by a major ratings agency. The
fund's duration (a measure of average
maturity) ranges between 3-1/2 and 5-
1/2 years.
III. Fidelity Advisor Invests in a diversified portfolio of
Income & Growth Fund equity and fixed-income securities
with income, growth of income and
capital appreciation potential.
IV. Dreyfus/Laurel Consists of common stocks that, to the
Equity Index Trust extent possible, duplicate the
composition of Standard & Poor's Index
of 500 stocks.
V. Davis New York Invests primarily in common stock and
Venture Fund securities convertible into common
(formerly New York stock. The fund ordinarily invests in
Venture Fund) securities which management believes
have above-average appreciation
potential.
VI. Company Stock Common stock of Pennzoil.
Fund
Loans
A participant may apply to the administrative committee of the Plan to
borrow from his accounts, subject to certain limitations. Such loans
will be for a term not to exceed five years (up to 20 years in the
case of loans to purchase a primary residence). The minimum loan
amount is $1,000 and the maximum loan amount is the lesser of $50,000
or 50 percent of the participant's account balances. Interest rates on
loans are fixed at the Prime Rate plus one percent.
Repayment of loans are made each pay period by payroll deductions, or
a loan may be prepaid in full by a lump sum payment. Upon retirement,
death or termination of employment, participants have 60 days after
the next-payment due date to pay the loan in full.
Participant loans are reported as an asset of the Loan Fund and
principal and interest payments received are transferred to the
investment funds based on the participant's current contribution
elections.
<PAGE>
<PAGE>
Vesting and Disposition of Forfeitures
Participants are always fully vested in employee contributions.
Participants vest in employer contributions at a rate of 25 percent
per year beginning at the end of two years of service, becoming fully
vested after five years of service. Any nonvested portion of employer
contributions shall be forfeited upon termination. Forfeitures shall
be allocated as follows: first, to reinstate any employer
contribution amounts of participants who return to service and,
second, to restore any amounts previously forfeited as unclaimed
benefits. Any remaining amounts are applied to reduce succeeding
employer contributions. Forfeitures available, plus earnings, for
utilization as of December 31, 1997 and 1996 had market values of
$3,683 and $3,071, respectively. No forfeitures were utilized during
1997.
Withdrawals
Withdrawals may be made from either an employee's previous pretax or
after-tax contributions, net of previous withdrawals, upon written
notice to the administrative committee of the Plan. After-tax
withdrawals result in the participant's forfeiture of the right to
participate in the Plan for 180 days. Pretax withdrawals are allowed
only when the participant's age is 59-1/2 or older, unless a financial
hardship exists. Hardship withdrawals will cause the participants to
be suspended from making further contributions for 365 days.
Withdrawals may be made from employer contributions only if the
participant has been a member of the Plan for five full Plan years and
will cause an employee to be suspended from participation in the Plan
for 180 days.
Distribution of Benefits
Benefits that are vested are payable to participants or their
beneficiaries at retirement, permanent disability, death or
termination of service.
Plan Administration
The Plan is administered by an administrative committee consisting of
at least three members appointed by the Board of Directors of
Pennzoil. The sole trustee of the Plan is Mellon Bank, N.A. All
administrative expenses are borne by Pennzoil with the exception of
fees for investment management and loan processing fees for
participant loans.
The Plan is subject to reporting and regulations pursuant to the
Employee Retirement Income Security Act of 1974.
Termination or Amendment of the Plan
The Plan may be terminated, amended or modified by the Board of
Directors of Pennzoil at any time. Upon complete or partial
termination of the Plan, all amounts credited to the accounts with
respect to which the Plan has been terminated shall become fully
vested and nonforfeitable.
<PAGE>
<PAGE>
2. SUMMARY OF ACCOUNTING POLICIES:
Basis of Accounting
The financial statements of the Plan are presented on the accrual
basis of accounting, except that amounts allocated to accounts of
persons who have withdrawn from participation in the earnings and
operations of the Plan are not recorded as a liability of the Plan but
are classified as a component of net assets available for benefits.
There were no such amounts outstanding at December 31, 1997 and 1996.
A separate account is maintained for each participant which reflects
the participant's contributions, net of withdrawals, and the
participant's allocable share of Pennzoil contributions and the Plan's
investment earnings.
Management's Use of Estimates
The preparation of financial statements in conformity with generally
accepted accounting principles requires the Plan's management to use
estimates and assumptions that affect the accompanying financial
statements and disclosures. Actual results could differ from those
estimates.
Asset Valuation
The Plan's investments are reflected in the accompanying financial
statements at year-end current values, which represent fair values.
For the Company Stock Fund, fair value was determined by using the
applicable closing price of the funds listed on the New York Stock
Exchange on the last trading day of the Plan year. For all mutual
funds at December 31, 1997 and 1996, fair value was determined based
on the closing price of the securities held by the collective fund as
listed on the applicable stock exchange on the last trading day of the
Plan year and the number of participating units held by the Plan in
each fund. The Merrill Lynch Retirement Preservation Trust Fund is a
common/collective trust fund investing primarily in guaranteed
investment contracts and U.S. Government securities. The guaranteed
investment contracts are fully benefit responsive and are recorded at
contract value, which approximates fair value. Effective yields were
approximately 6.6% and 6.4% and crediting interest rates approximated
6.1% and 5.9% for the years ended December 31, 1997 and 1996,
respectively. Contract value for the Merrill Lynch Retirement
Preservation Trust was determined based on contributions made under
the investment contract plus interest earned at the contract's rate
less funds used to pay investment fees charged by the insurance
companies.
Investments in the Stock Fund are assigned units of participation.
The unit value is determined daily based upon the fair market value of
the underlying net assets, which consist of Pennzoil Common Stock,
cash and temporary investments. The total units of Pennzoil Common
Stock assigned to participants at December 31, 1997 were 280,554. The
unit value for Pennzoil Common Stock at December 31, 1997 was $29.14.
The total units of Pennzoil Common Stock assigned to participants at
December 31, 1996 were 308,776. The unit value for Pennzoil Common
Stock at December 31, 1996 was $24.29.
Net appreciation in fair value of investments consists of realized
gains on sale of investments and unrealized appreciation of
investments. Realized gains are calculated based on proceeds from the
sale of assets and the value of the assets at the beginning of the
Plan year or at time of purchase if acquired during the current Plan
year. Unrealized appreciation of investments is calculated based on
the market value of the assets at the end of the Plan year and the
market value of the assets at the beginning of the Plan year or at
time of purchase if acquired during the current Plan year.
<PAGE>
<PAGE>
3. FEDERAL INCOME TAXES:
The Plan obtained its latest determination letter on October 26, 1994,
in which the Internal Revenue Service stated that the Plan, as then
designed, was in compliance with the applicable requirements of the
Internal Revenue Code. The Plan administrator believes that the Plan
is currently designed and being operated in compliance with the
applicable requirements of the Internal Revenue Code. Therefore, the
Plan administrator believes that the Plan was qualified and the
related trust was tax-exempt as of December 31, 1997 and 1996.
4. SUBSEQUENT EVENTS:
On April 15, 1998, Pennzoil announced a comprehensive restructuring
that will result in the separation of Pennzoil's motor oil, refined
products and franchise operations (which generally include Pennzoil
Products Company ("PPC"), Jiffy Lube International, Inc. ("Jiffy
Lube") and their respective subsidiaries (collectively, "Pennzoil
Products Group")) from Pennzoil's exploration and production
operations. The restructuring includes the pro rata distribution of
Pennzoil Products Group (i.e., the common stock of PPC (which will at
such time hold the motor oil and refined products operations of PPC
and the common stock of Jiffy Lube)) to holders of Pennzoil common
stock. As a result of the restructuring, the Plan will be split
between the Pennzoil Products Group and Pennzoil. Each plan after the
split will have similar provisions as the existing Plan. At this time,
Pennzoil is unable to determine the amounts to be transferred to the
new plans.
<PAGE>
<PAGE>
<TABLE>
SCHEDULE I
PENNZOIL COMPANY SAVINGS AND INVESTMENT PLAN
FOR HOURLY EMPLOYEES
SCHEDULE OF ASSETS HELD FOR INVESTMENT PURPOSES
DECEMBER 31, 1997
<CAPTION>
Current
Identity of Issue Description of Investment Cost Value
- --------------------- ------------------------- ----------- -----------
<S> <C> <C>
EQUITY SECURITIES:
Common stock-
Pennzoil Company <F1> 121,867 shares--$.83-1/3 par value $ 6,606,341 $ 8,142,300
Battle Mountain Gold Company 2,128 shares--$.10 par value 9,754 12,236
----------- -----------
Total equity securities 6,616,095 8,154,536
----------- -----------
INVESTMENT COMMON TRUSTS:
Merrill Lynch Retirement
Preservation Trust 3,867,164 units of collective trust 3,867,164 3,867,164
----------- -----------
MUTUAL FUNDS:
Dreyfus/Laurel Equity
Index Trust 227,446 units of an equity fund 3,155,850 4,678,558
Davis New York Venture Fund 69,072 units 1,288,935 1,542,380
Fidelity Advisor Income & Growth Fund 22,313 units 375,991 405,708
J.P. Morgan Institutional Bond Fund 20,998 units 205,809 209,355
----------- -----------
Total mutual funds 5,026,585 6,836,001
----------- -----------
OTHER ASSETS:
Cash <F1> 339 339
Mellon Bank - EB temporary
investment fund <F1> 101,800 units 101,800 101,800
----------- -----------
Total cash and temporary investments 102,139 102,139
Participant Loans with interest
rates ranging from 8.75% to 10% <F1> 1,032,917 1,032,917
----------- -----------
Total other assets 1,135,056 1,135,056
----------- -----------
Total assets held for
investment purposes $16,644,900 $19,992,757
=========== ===========
<FN>
<F1> Represents party in interest.
</FN>
</TABLE>
<PAGE>
<PAGE>
<TABLE>
SCHEDULE II
PENNZOIL COMPANY SAVINGS AND INVESTMENT PLAN
FOR HOURLY EMPLOYEES
SCHEDULE OF REPORTABLE TRANSACTIONS
(SERIES OF INVESTMENT TRANSACTIONS)
FOR THE YEAR ENDED DECEMBER 31, 1997
<CAPTION>
Number of
Units or
Face Value Identity of Party Involved Purchase Selling Cost of Net
Amount and Description of Assets Price<F1> Price<F1> Asset Gain
- ---------- ------------------------------- ---------- ---------- ---------- --------
<C> <S> <C> <C> <C> <C>
Pennzoil Company common stock,
$.83-1/3 par value -
24,552 Purchases (68 transactions) $1,541,474 $ - $1,541,474 $ -
34,844 Sales (116 transactions) - 2,414,041 1,838,812 575,229
Mellon Bank - EB Temporary
Investment Fund -
1,361,333 Purchases (152 transactions) 1,361,333 - 1,361,333 -
1,355,354 Sales (125 transactions) - 1,355,354 1,355,354 -
Merrill Lynch Retirement
Preservation Trust -
1,771,772 Purchases (74 transactions) 1,771,772 - 1,771,772 -
978,083 Sales (74 transactions) - 978,083 978,083 -
Dreyfus/Laurel Equity Index
Trust -
73,664 Purchases (94 transactions) 1,401,729 - 1,401,729 -
31,634 Sales (72 transactions) - 601,249 401,523 199,726
Davis New York Venture
Fund -
46,428 Purchases (97 transactions) 978,875 - 978,875 -
12,036 Sales (42 transactions) - 253,235 199,374 53,861
<FN>
<F1> Current value of asset on transaction date is equal to the purchase or selling price.
Prices are shown net of related expenses.
NOTE: This schedule is a listing of a series of investment
transactions in the same security which exceed 5% of the
current value of the Plan's assets as of the beginning
of the Plan year.
</FN>
</TABLE>
<PAGE>
<PAGE>
SIGNATURE
Pursuant to the requirements of the Securities Exchange Act of
1934, the Administrative Committee has duly caused this report to be
signed by the undersigned thereunto duly authorized.
PENNZOIL COMPANY SAVINGS AND
INVESTMENT PLAN FOR HOURLY EMPLOYEES
By S/N JAMES W. SHADDIX
James W. Shaddix
Chairman of the Administrative Committee
June 29, 1998
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CONSENT OF INDEPENDENT PUBLIC ACCOUNTANTS
As independent public accountants, we hereby consent to the
incorporation of our report dated June 25, 1998, included herein, into
Pennzoil Company's previously filed Registration Statements on Form S-
8 Nos. 33-24261 and 33-53783.
ARTHUR ANDERSEN LLP
Houston, Texas
June 29, 1998
