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, 1998
_____________________
PENNZENERGY COMPANY SAVINGS AND INVESTMENT PLAN
Commission File No. 1-5591
______________________
PENNZENERGY COMPANY
Pennzoil Place, P. O. Box 4616
Houston, Texas 77210-4616
(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,
PennzEnergy Company Savings and
Investment Plan:
We have audited the accompanying statements of net assets available
for benefits of the PennzEnergy Company Savings and Investment Plan
(the Plan) as of December 31, 1998 and 1997, and the related statement
of changes in net assets available for benefits for the year ended
December 31, 1998. These financial statements and the supplemental
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 supplemental 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, 1998 and 1997, and the changes
in net assets available for benefits for the year ended December 31,
1998, in conformity with generally accepted accounting principles.
Our audits were performed 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,
1998, included as Schedule I, and reportable transactions (series of
investment transactions) for the year ended December 31, 1998,
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 28, 1999
<PAGE>
<PAGE>
<TABLE>
PENNZENERGY COMPANY SAVINGS AND INVESTMENT PLAN
STATEMENT OF NET ASSETS AVAILABLE FOR BENEFITS
(WITH FUND INFORMATION)
DECEMBER 31, 1998
<CAPTION>
Participant Directed Funds
------------------------------------------------------------------------------------
Merrill J. P. Merrill Davis
Lynch Morgan Fidelity Lynch New
Retirement Institutional Advisor Equity York
Preservation Bond Balanced Index Venture
Trust Fund Fund Trust Fund
------------ ------------ ------------ ------------ ------------
<S> <C> <C> <C> <C> <C>
ASSETS:
Investments, at current value-
PennzEnergy Company common stock $ - $ - $ - $ - $ -
Pennzoil-Quaker State Company - - - - -
common stock
Battle Mountain Gold Company
common stock - - - - -
Merrill Lynch Retirement
Preservation Trust 24,754,684 - - - -
Merrill Lynch Equity Index Trust - - - 49,058,800 -
Mutual funds - 2,252,634 7,247,859 - 26,811,130
Participant loans - - - - -
Cash and temporary investments - - - - -
Receivables-
Employee contributions 151,120 20,059 78,059 239,122 256,482
Employer contributions - - - - -
Investment income - - - - -
------------ ------------ ------------ ------------ ------------
NET ASSETS AVAILABLE
FOR BENEFITS $24,905,804 $ 2,272,693 $ 7,325,918 $49,297,922 $27,067,612
============ ============ ============ ============ ============
<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-
PennzEnergy Company common stock $ - $ 8,551,293 $20,522,682 $29,073,975
Pennzoil-Quaker State Company - 7,732,437 18,557,477 26,289,914
common stock
Battle Mountain Gold Company
common stock - 25,315 31,292 56,607
Merrill Lynch Retirement
Preservation Trust - - - 24,754,684
Merrill Lynch Equity Index Trust - - - 49,058,800
Mutual funds - - - 36,311,623
Participant loans 8,129,131 - - 8,129,131
Cash and temporary investments - - 788,345 788,345
Receivables-
Employee contributions - 144,124 - 888,966
Employer contributions - - 688,427 688,427
Investment income - - 46,803 46,803
------------ ------------ ------------ -------------
NET ASSETS AVAILABLE
FOR BENEFITS $ 8,129,131 $16,453,169 $40,635,026 $176,087,275
============ ============ ============ =============
<FN>
See notes to financial statements.
</FN>
</TABLE>
<PAGE>
<PAGE>
<TABLE>
PENNZENERGY COMPANY SAVINGS AND INVESTMENT PLAN
STATEMENT OF NET ASSETS AVAILABLE FOR BENEFITS
(WITH FUND INFORMATION)
DECEMBER 31, 1997
<CAPTION>
Participant Directed Funds
------------------------------------------------------------------------------------
Merrill J. P. Merrill Davis
Lynch Morgan Fidelity Lynch New
Retirement Institutional Advisor Equity York
Preservation Bond Balanced 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 24,482,865 - - - -
Mutual funds - 1,867,176 6,274,008 38,980,040 24,685,633
Participant loans - - - - -
Cash and temporary investments - - - - -
Receivables-
Employee contributions 195,651 24,383 85,124 258,516 267,615
Employer contributions - - - - -
Investment income - - - - -
------------ ------------ ------------ ------------ ------------
NET ASSETS AVAILABLE
FOR BENEFITS $24,678,516 $ 1,891,559 $ 6,359,132 $39,238,556 $24,953,248
============ ============ ============ ============ ============
<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 $ - $18,916,706 $74,694,182 $ 93,610,888
Battle Mountain Gold Company
common stock - 39,295 48,574 87,869
Merrill Lynch Retirement
Preservation Trust - - - 24,482,865
Mutual funds - - - 71,806,857
Participant loans 8,426,467 - - 8,426,467
Cash and temporary investments - - 4,017 4,017
Receivables-
Employee contributions - 156,529 - 987,818
Employer contributions - - 778,806 778,806
Investment income - - 34,566 34,566
------------ ------------ ------------ -------------
NET ASSETS AVAILABLE
FOR BENEFITS $ 8,426,467 $19,112,530 $75,560,145 $200,220,153
============ ============ ============ =============
<FN>
See notes to financial statements.
</FN>
</TABLE>
<PAGE>
<PAGE>
<TABLE>
PENNZENERGY COMPANY SAVINGS AND INVESTMENT PLAN
STATEMENT OF CHANGES IN NET ASSETS AVAILABLE FOR BENEFITS
(WITH FUND INFORMATION)
FOR THE YEAR ENDED DECEMBER 31,1998
<CAPTION>
Participant Directed Funds
-----------------------------------------------------------------------------------------
Merrill J.P. Merrill Davis
Lynch Morgan Fidelity Lynch New
Retirement Institutional Advisor Equity York
Preservation Bond Balanced Index Venture
Trust Fund Fund Trust Fund
-------------- ------------- ------------- ------------- --------------
<S> <C> <C> <C> <C> <C>
NET ASSETS AVAILABLE FOR BENEFITS,
beginning of year $ 24,678,516 $ 1,891,559 $ 6,359,132 $ 39,238,556 $ 24,953,248
CONTRIBUTIONS:
Employee 2,021,827 269,950 1,060,286 3,250,275 3,495,908
Employer 120,694 8,157 38,637 159,388 136,616
Rollovers from qualified plans 49,383 13,357 94,596 603,461 305,828
(Note 2)
INVESTMENT INCOME:
Dividends - 149,527 799,488 - 627,433
Interest 1,519,388 - - - -
Loan Repayment Interest 138,760 8,549 37,234 208,515 142,308
Other - - - - 1,357
NET APPRECIATION (DEPRECIATION)
IN FAIR VALUE OF INVESTMENTS - (11,200) 162,970 10,933,542 2,798,634
NET TRANSFERS (Note 2)
Among Funds (1,533,656) (29,653) (709,740) (2,378,109) (4,120,426)
From Hourly Plan 421,665 3,738 45,052 106,810 67,809
ADMINISTRATIVE EXPENSES (Note 2) (2,812) (136) (960) (3,680) (2,111)
DISTRIBUTIONS AND WITHDRAWALS (1,800,118) (39,085) (534,175) (2,382,124) (1,405,579)
(Note 2)
PARTICIPANT LOANS (Note 2)
New Loans Issued (748,915) (38,446) (206,208) (1,267,302) (548,704)
Principal Received 676,571 49,922 201,018 984,918 643,733
OTHER (635,499) (3,546) (21,412) (156,328) (28,442)
-------------- ------------- ------------- ------------- -------------
NET ASSETS AVAILABLE FOR BENEFITS,
end of year $ 24,905,804 $ 2,272,693 $ 7,325,918 $ 49,297,922 $ 27,067,612
============== ============= ============= ============= =============
<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 $ 8,426,467 $ 19,112,530 $ 75,560,145 $200,220,153
CONTRIBUTIONS:
Employee - 1,958,295 - 12,056,541
Employer - - 8,917,623 9,381,115
Rollovers from qualified plans - 68,740 - 1,135,365
(Note 2)
INVESTMENT INCOME:
Dividends - 370,502 1,173,332 3,120,282
Interest - - - 1,519,388
Loan Repayment Interest - 174,466 - 709,832
Other - 12,237 - 13,594
NET APPRECIATION (DEPRECIATION)
IN FAIR VALUE OF INVESTMENTS - (12,845,560) (41,999,576) (40,961,190)
NET TRANSFERS (Note 2)
Among Funds - 8,838,394 (66,810) -
From Hourly Plan (7,426) 75,298 170,004 882,950
ADMINISTRATIVE EXPENSES (Note 2) - (2,711) (1,870) (14,280)
DISTRIBUTIONS AND WITHDRAWALS (477,537) (1,134,026) (3,693,717) (11,466,361)
(Note 2)
PARTICIPANT LOANS (Note 2)
New Loans Issued 3,623,335 (813,760) - -
Principal Received (3,443,631) 887,469 - -
OTHER 7,923 (248,705) 575,895 (510,114)
-------------- ------------- ------------- -------------
NET ASSETS AVAILABLE FOR BENEFITS,
end of year $ 8,129,131 $ 16,453,169 $ 40,635,026 $176,087,275
============== ============= ============= =============
<FN>
See notes to financial statements
</FN>
</TABLE>
<PAGE>
<PAGE>
PENNZENERGY COMPANY SAVINGS AND INVESTMENT PLAN
NOTES TO FINANCIAL STATEMENTS
1. SPIN-OFF OF PENNZOIL-QUAKER STATE COMPANY FROM PENNZOIL
COMPANY:
On December 30, 1998, Pennzoil Company (Pennzoil) distributed to
its shareholders 47.8 million shares of common stock of its wholly
owned subsidiary Pennzoil-Quaker State Company (Pennzoil-Quaker
State) representing all of the shares of Pennzoil-Quaker State
owned by Pennzoil. As a result of the distribution, Pennzoil,
renamed PennzEnergy Company (PennzEnergy or the Company), and
Pennzoil-Quaker State are no longer affiliated entities.
As part of the spin-off transaction, the Pennzoil Company Savings
and Investment Plan (the Plan) was renamed the PennzEnergy Company
Savings and Investment Plan, effective December 31, 1998, and
covers the employees of PennzEnergy Company and participating
subsidiaries and affiliated companies, effective January 1, 1999.
On January 25, 1999, net assets available for benefits of $119.2
million related to Pennzoil-Quaker State employees were
transferred to the Pennzoil-Quaker State Company Savings and
Investment Plan.
In connection with the spin-off, Pennzoil distributed one share of
Pennzoil-Quaker State common stock for every share of Pennzoil
common stock. As a result, the Company Stock Fund holds both
PennzEnergy and Pennzoil-Quaker State common stock. Effective with
the distribution, the Plan only purchases PennzEnergy common
stock.
During 1998, the Plan provided benefits for Pennzoil-Quaker State
and PennzEnergy employees (collectively Pennzoil).
2. DESCRIPTION OF THE PLAN:
General
The following description of the Plan provides only general
information. Participants should refer to the Plan agreement for a
more complete description of the Plan's provisions.
The Plan was established effective December 20, 1986 (effective
date) by Pennzoil Company. The purpose of the Plan is to
encourage employees 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.
<PAGE>
<PAGE>
Salaried employees become eligible to participate in the Plan on
the effective date or entry date coinciding with or immediately
following their completion of one year of service. When changing
wage status, a participant's account balance was transferred
between the Plan and the Pennzoil Company Savings and Investment
Plan for Hourly Employees (renamed Pennzoil-Quaker State Company
Savings and Investment Plan for Hourly Employees, effective
December 31, 1998). Such transfers were reflected at current value
as of the date of transfer in the accompanying financial
statements.
Contributions
In order to participate in the Plan, an eligible employee may
authorize, by payroll deduction, a contribution of not less than
1 percent and not more than 12 percent of annual compensation.
Employee contributions may be made "after-tax" or, under a
Section 401(k) option, on a "before-tax" basis. The Company
matches an employee's contribution dollar- for- dollar up to 6
percent of their base pay.
Upon written request filed with the administrative committee, a
participant in the Plan or an employee of Pennzoil or PennzEnergy
(subsequent to December 30, 1998) who is otherwise eligible to
participate in the Plan but who has not yet completed the
participation requirements, may transfer an amount from another
qualified investment plan (Rollover Amount) into the Plan, provided
that such Rollover Amount is transferred in the form of cash. The
Rollover Amount must be deposited in an investment fund and shall
at all times be fully vested and nonforfeitable and share in the
income of the investment fund. However, such Rollover Amount may
not share in employer matching contributions.
Investment Choices
Prior to December 30, 1998, employer contributions were invested
primarily in Pennzoil Company common stock and are invested
primarily in PennzEnergy common stock subsequent to December 30,
1998. At the Company's option, employer contributions may be made
either in cash or in common stock. Employee contributions are
invested in either 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 1998, Pennzoil
contributed 178,250 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
statements of net assets available for benefits under the caption
"Cash and temporary investments."
<PAGE>
<PAGE>
Participants who have attained age 55 have the option to transfer
all or a part of their existing employer contributions to be
invested among the various investment options. Subject to the
above, Pennzoil-Quaker State common stock held in the employer's
contribution account may not be transferred to be invested in other
investment options. 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
Retirement guaranteed investment
Preservation Trust contracts (generally with
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
Institutional Bond the fund's assets will be
Fund represented by 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 Invests in a diversified
Advisor Balanced portfolio of equity and
Fund fixed-income securities
with income, growth of
income and capital
appreciation potential.
IV. Merrill Lynch Consists of common stocks
Equity Index Trust that, to the extent
possible, duplicate the
composition of Standard &
Poor's Index of 500 stocks.
V. Davis New York Invests primarily in common
Venture Fund stock and securities
convertible into common
stock. The fund ordinarily
invests in securities which
the Fund management
believes have above-average
appreciation potential.
VI. Company Stock Common Stock of Pennzoil
Fund prior to December 30, 1998
and PennzEnergy subsequent
to December 30, 1998.
<PAGE>
<PAGE>
Loans
A participant may apply to the administrative committee of the Plan
to borrow from his or her accounts, subject to certain limitations.
Such loans will be for a term from six months to 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 vested
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.
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 or attainment of age 55.
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.
Withdrawals
Withdrawals may be made from either of an employee's previous
pretax or after-tax contributions, net of previous withdrawals,
upon written notice to the administrative committee. After-tax
withdrawals cause the participants to forfeit the right to
participate in the Plan for 180 days, while pretax withdrawals are
allowed only when the participant is age 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 is fully vested and only after withdrawing all
amounts from any prior plan accounts and any Rollover Amounts, and
not being in a suspended status.
Distribution of Benefits
Benefits are payable to participants or their beneficiaries at
retirement, permanent disability, death or termination of service.
<PAGE>
<PAGE>
Pending Distributions at Year-End
Benefits pending payment to participants that have provided notice
of withdrawal totaled $86,255 as of December 31, 1997. No benefits
were pending payment as of December 31, 1998. The following is a
reconciliation of net assets available for benefits per the
financial statements to the Form 5500:
December 31, 1997
Net assets available for benefits per
the financial statements $200,220,153
Less- Amounts allocated to
withdrawing participants (86,255)
Net assets available for benefits per
the Form 5500 at December 31, 1997 $200,133,898
The following is a reconciliation of benefits paid to participants
per the financial statements to the Form 5500:
Year Ended
December 31,
1997
Benefits paid to participants per the
financial statements $15,056,452
Add- Amounts allocated to
withdrawing participants
at December 31, 1997 86,255
Benefits paid to participants per the
Form 5500 $15,142,707
Amounts allocated to withdrawing participants are recorded on the
Form 5500 for benefit claims that have been processed and approved
for participants prior to December 31, 1997, but have not yet been
paid as of that date.
Plan Administration
The Plan is administered by an administrative committee consisting
of at least three members appointed by the Board of Directors of
the Company. Merrill Lynch Trust Company (Trustee) is sole trustee
of the Plan. All administrative expenses are borne by the Company
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 (ERISA).
Termination or Amendment of the Plan
The Plan may be terminated, amended, or modified by the Board of
Directors of the Company 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>
3. SUMMARY OF ACCOUNTING POLICIES:
Basis of Accounting
The financial statements of the Plan are presented on the accrual
basis of accounting. 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. A
separate account is maintained for each participant which reflects
the participant's contributions, net of withdrawals, and the
participant's allocable share of the employer's 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 values, which represent fair values. For
the Company Stock Fund, fair value was determined by using the
closing price of the securities held as listed on the New York
Stock Exchange on the last trading day of the Plan year. Fair
value of the mutual funds 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. 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 approximated 6.6% for both December 31, 1998 and
1997. 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.
Net appreciation in fair value of investments consists of realized
gains on sale of investments and unrealized appreciation of
investments.
<PAGE>
<PAGE>
4. FEDERAL INCOME TAXES:
The Plan received 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 has since been
amended; however, the Plan administrator believes that the Plan is
currently designed and being operated in compliance with 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, 1998 and 1997.
5. RISKS AND UNCERTAINTIES:
The Plan provides for various investments in equity securities,
common/collective trust funds, mutual funds, and cash and temporary
investments. Investment securities, in general, are exposed to
various risks, such as interest rate, credit and overall market
volatility risk. Due to the level of risk associated with certain
investment securities, it is reasonably possible that changes in
the values of investment securities will occur in the near term and
that such changes could materially affect the amounts reported in
the statements of net assets available for benefits and participant
accounts.
6. SUBSEQUENT EVENTS:
On May 19, 1999, Devon Energy Corporation (Devon) and PennzEnergy
signed an agreement and plan of merger. PennzEnergy shareholders
will receive 0.4475 shares of common stock in a new Devon Energy
Corporation for each share of PennzEnergy common stock that they
own. The merger is subject to approval by an affirmative vote of
the holders of a majority of the outstanding shares of both
companies, as well as expiration of applicable regulatory waiting
periods and other customary closing conditions. At this time, it
is undetermined how the merger will affect the Plan.
<PAGE>
<PAGE>
<TABLE>
SCHEDULE I
PENNZENERGY COMPANY SAVINGS AND INVESTMENT PLAN
SCHEDULE OF ASSETS HELD FOR INVESTMENT PURPOSES
DECEMBER 31, 1998
<CAPTION>
Current
Identity of Issue Description of Investment Cost Value
- --------------------- ------------------------- ----------- -----------
<S> <C> <C>
EQUITY SECURITIES:
Common stock-
PennzEnergy Company <F1> 1,782,367 shares--$.83-1/3 par value $ 48,293,002 $ 29,073,975
Pennzoil-Quaker State Company 1,782,367 shares--$.10 par value 46,399,221 26,289,914
Battle Mountain Gold Company 13,854 shares--$.10 par value 65,992 56,607
------------ ------------
Total equity securities 94,758,215 55,420,496
------------ ------------
COMMON/COLLECTIVE TRUST FUNDS:
Merrill Lynch Retirement
Preservation Trust <F1> 24,754,684 units 24,754,684 24,754,684
Merrill Lynch Equity Index Trust <F1> 584,576 units 23,982,348 49,058,800
------------ ------------
Total common/collective trust funds 48,737,032 73,813,484
------------ ------------
MUTUAL FUNDS:
Fidelity Advisor Balanced Fund 387,794 units 6,712,376 7,247,859
Davis New York Venture Fund 1,072,016 units 19,692,615 26,811,130
J.P. Morgan Institutional Bond Fund 226,168 units 2,241,547 2,252,634
------------ ------------
Total mutual funds 28,646,538 36,311,623
------------ ------------
OTHER ASSETS:
Cash and Temporary investments 835,138 835,138
PennzEnergy Company Savings and Participant loans at interest rates
Investment Plan <F1> ranging from 7.0% to 10.0% 8,129,131 8,129,131
------------ ------------
Total other assets 8,964,269 8,964,269
------------ ------------
Total assets held for $181,106,054 $174,509,872
investment purposes ============ ============
<FN>
<F1> Represents party in interest.
</FN>
</TABLE>
<PAGE>
<PAGE>
<TABLE>
SCHEDULE II
PENNZENERGY COMPANY SAVINGS AND INVESTMENT PLAN
SCHEDULE OF REPORTABLE TRANSACTIONS
(SERIES OF INVESTMENT TRANSACTIONS)
FOR THE YEAR ENDED DECEMBER 31, 1998
<CAPTION>
Identity of Party Involved Purchase Selling Cost of Net
and Description of Assets Price <F1> Price <F1> Asset Gain/(Loss)
- --------------------------- ---------- ---------- -------- ---------
<S> <C> <C> <C> <C>
Pennzoil Company common stock,
$.83-1/3 par value-
Purchases (705 transactions) $24,173,338 $ - $24,173,338 $ -
Sales (639 transactions) - 7,575,201 7,625,532 (50,331)
Merrill Lynch Equity Index Trust-
Purchases (471 transactions) 6,866,496 - 6,866,496 -
Sales (513 transactions) - 7,721,277 4,684,035 3,037,242
Merrill Lynch Retirement
Preservation Trust-
Purchases (750 transactions) 8,316,082 - 8,316,082 -
Sales (486 transactions) - 8,044,264 8,044,264 -
Davis New York Venture Fund
Purchases (435 transactions) 7,777,969 - 7,777,969 -
Sales (456 transactions) - 8,451,105 7,007,796 1,443,309
<FN>
<F1> Current value of asset on transaction date is equal to the selling price/purchase
price. Prices are shown net of related expenses.
NOTE: This schedule is a listing of 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.
PENNZENERGY COMPANY SAVINGS AND
INVESTMENT PLAN
By S/N STEPHEN D. CHESEBRO'
Stephen D. Chesebro'
Chairman of the Administrative
Committee
June 29, 1999
<PAGE>
<PAGE>
CONSENT OF INDEPENDENT PUBLIC ACCOUNTANTS
As independent public accountants, we hereby consent to the
incorporation of our report dated June 28, 1999, included herein, into
PennzEnergy Company's previously filed Registration Statement on Form
S-8 No. 33-51473.
ARTHUR ANDERSEN LLP
Houston, Texas
June 28, 1999
