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, 1998 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, 1998:
Common stock, par value $0.83-1/3 per share, 47,685,588
shares.
2
PART I. FINANCIAL INFORMATION
Item 1. Financial Statements
- ----------------------------
PENNZOIL COMPANY
CONDENSED CONSOLIDATED STATEMENT OF INCOME AND COMPREHENSIVE INCOME
(UNAUDITED)
Three Months Ended
March 31
----------------------------
1998 1997
----------- -----------
(Expressed in thousands
except per share amounts)
REVENUES $ 545,810 $ 649,000
COSTS AND EXPENSES
Cost of sales 307,782 355,872
Selling, general and administrative expenses 86,689 80,102
Depreciation, depletion and amortization 73,362 62,568
Exploration expenses 12,675 10,040
Taxes, other than income 11,464 13,112
Interest charges, net 41,880 37,118
----------- -----------
INCOME BEFORE INCOME TAX 11,958 90,188
Income tax provision 2,300 32,637
----------- -----------
NET INCOME $ 9,658 $ 57,551
=========== ===========
Foreign currency translation adjustment $ (875) $ 1
Unrealized gains on securities, net of tax:
Unrealized holding gains arising during the period 431 -
Less: reclassification adjustment for gains
realized in net income (30) (1,019)
----------- -----------
Net unrealized gains 401 (1,019)
----------- -----------
OTHER COMPREHENSIVE INCOME, NET OF TAX (474) (1,018)
---------- -----------
COMPREHENSIVE INCOME $ 9,184 $ 56,533
=========== ===========
EARNINGS PER SHARE:
Basic $ 0.20 $ 1.23
=========== ===========
Diluted $ 0.20 $ 1.21
=========== ===========
DIVIDENDS PER COMMON SHARE $ 0.25 $ 0.25
=========== ===========
AVERAGE SHARES OUTSTANDING:
Basic 47,593 46,818
=========== ===========
Diluted 48,402 47,455
=========== ===========
END OF PERIOD SHARES OUTSTANDING - BASIC 47,654 46,937
=========== ===========
<FN>
<F1>
See Notes to Condensed Consolidated Financial Statements.
</FN>
3
PART I. FINANCIAL INFORMATION - continued
PENNZOIL COMPANY
CONDENSED CONSOLIDATED BALANCE SHEET
(UNAUDITED)
March 31, December 31,
1998 1997
------------- -------------
(Expressed in thousands)
ASSETS
Current assets
Cash and cash equivalents $ 24,894 $ 18,594
Receivables 232,491 234,282
Inventories
Crude oil and natural gas 15,620 20,883
Motor oil and refined products 189,942 184,027
Deferred income tax 19,587 19,479
Other current assets 75,366 117,449
------------- -------------
Total current assets 557,900 594,714
Property, plant and equipment, net 2,534,183 2,498,597
Marketable securities and other investments 931,694 945,995
Other assets 361,843 366,581
------------- -------------
TOTAL ASSETS $ 4,385,620 $ 4,405,887
============= =============
LIABILITIES AND SHAREHOLDERS' EQUITY
Current liabilities
Current maturities of long-term debt $ 1,381 $ 2,363
Accounts payable and accrued liabilities 223,678 363,249
Interest accrued 49,444 30,016
Other current liabilities 61,018 90,367
------------- -------------
Total current liabilities 335,521 485,995
Long-term debt, less current maturities
Exchangeable debentures 888,858 889,027
Other long-term debt 1,428,768 1,308,520
------------- -------------
Total long-term debt, less current maturities 2,317,626 2,197,547
Deferred income tax 291,072 288,677
Other liabilities 299,665 295,129
------------- -------------
TOTAL LIABILITIES 3,243,884 3,267,348
------------- -------------
COMMITMENTS AND CONTINGENCIES
SHAREHOLDERS' EQUITY 1,141,736 1,138,539
------------- -------------
TOTAL LIABILITIES AND SHAREHOLDERS' EQUITY $ 4,385,620 $ 4,405,887
============= =============
<FN>
<F1>
See Notes to Condensed Consolidated Financial Statements.
</FN>
4
PART I. FINANCIAL INFORMATION - continued
PENNZOIL COMPANY
CONDENSED CONSOLIDATED STATEMENT OF CASH FLOWS
(UNAUDITED)
Three Months Ended
March 31
---------------------------------
1998 1997
----------- -----------
(Expressed in thousands)
CASH FLOWS FROM OPERATING ACTIVITIES
Net income $ 9,658 $ 57,551
Adjustments to reconcile net income to net cash
provided by (used in) operating activities:
Depreciation, depletion and amortization 73,362 62,568
Dry holes and impairments 5,033 2,416
Deferred income tax 2,149 19,569
Partnership distributions in excess of earnings 1,054 -
Non-cash and other nonoperating items 8,667 4,497
Change in operating assets and liabilities:
Accrued taxes (35,182) 10,673
Accounts payable and other accrued liabilities (81,608) 13,819
Other assets and liabilities (12,753) 3,161
----------- -----------
Net cash provided by (used in) operating activities (29,620) 174,254
----------- -----------
CASH FLOWS FROM INVESTING ACTIVITIES
Capital expenditures (133,637) (114,378)
Purchases of marketable securities and other investments (141,638) (131,210)
Proceeds from sales of marketable securities and other
investments 155,770 135,940
Proceeds from sales of assets 41,900 5,620
Other investing activities 3,813 (49,823)
----------- -----------
Net cash (used in) investing activities (73,792) (153,851)
----------- -----------
CASH FLOWS FROM FINANCING ACTIVITIES
Proceeds (repayments) of notes payable, net 102,197 (19,596)
Debt and capital lease obligation repayments (343,589) (304,296)
Proceeds from issuance of debt 360,000 300,000
Dividends paid (11,899) (11,724)
Other financing activities 3,003 14,802
----------- -----------
Net cash provided by (used in) financing activities 109,712 (20,814)
----------- -----------
NET INCREASE (DECREASE) IN CASH AND CASH EQUIVALENTS 6,300 (411)
CASH AND CASH EQUIVALENTS, beginning of period 18,594 34,383
----------- -----------
CASH AND CASH EQUIVALENTS, end of period $ 24,894 $ 33,972
=========== ===========
<FN>
<F1>
See Notes to Condensed Consolidated Financial Statements.
</FN>
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. Certain prior period
items have been reclassified in the condensed consolidated
financial statements in order to conform with the current year
presentation.
(2) New Accounting Standards -
In June 1997, the Financial Accounting Standards Board ("FASB")
issued Statement of Financial Accounting Standards ("SFAS") No.
131, "Disclosure about Segments of an Enterprise and Related
Information," which establishes standards for reporting information
about operating segments in annual financial statements and
requires that selected information be reported about the operating
segments in interim financial reports issued to the shareholders.
It also establishes standards for related disclosure about products
and services, geographic areas, and major customers. Pennzoil
plans to adopt SFAS No. 131 in its annual financial statements for
the fiscal year ended December 31, 1998.
In March 1998, the American Institute of Certified Public
Accountants ("AICPA") issued Statement of Position ("SOP") No. 98-
1, "Accounting for the Costs of Computer Software Developed or
Obtained for Internal Use." The SOP is effective for fiscal years
beginning after December 15, 1998 and earlier adoption is
permitted. The adoption of the SOP is not expected to have a
material impact on Pennzoil's results of operations.
In April 1998, the AICPA issued SOP No. 98-5, "Reporting on
the Costs of Start-Up Activities." The SOP is effective for
financial statements for fiscal years beginning after December 15,
1998 and earlier adoption is permitted. Pennzoil is currently
evaluating the implementation of SOP No. 98-5.
(3) Proposed Spin-off of Downstream Operations and Merger of
Downstream Operations with Quaker State Corporation -
On April 14, 1998, Pennzoil, Pennzoil's subsidiary Pennzoil
Products Company ("PPC") and Downstream Merger Company, a wholly
owned subsidiary of PPC ("Merger Sub"), entered into an Agreement
and Plan of Merger (the "Merger Agreement") with Quaker State
Corporation ("Quaker State"). The Merger Agreement and related
agreements provide for the separation of Pennzoil's motor oil,
refined products and franchise operations (which generally includes
PPC and Jiffy Lube International, Inc. ("Jiffy Lube") and their
respective subsidiaries) from its exploration and production
operations and for the combination of the motor oil, refined
products and franchise operations with Quaker State.
6
PART I. FINANCIAL INFORMATION - continued
The transactions contemplated by the Merger Agreement are (1)
a pro rata distribution, on a share for share basis, of all of the
issued and outstanding Common Stock of PPC (which, among other
things, will at such time hold the motor oil and refined products
operations of PPC and the franchise operations of Jiffy Lube) to the
holders of Common Stock of Pennzoil (2) a merger of Merger Sub with
and into Quaker State, in which holders of Capital Stock of Quaker
State will receive, in exchange for each share held, 0.8204 shares
of Common Stock of PPC. Immediately following the transactions
contemplated by the Merger Agreement, approximately 38.5% of PPC
will be owned by former Quaker State stockholders and approximately
61.5% of PPC will be owned by stockholders of Pennzoil.
Closing under the Merger Agreement is conditioned upon, among
other things, approval by Quaker State's stockholders, expiration
or termination of waiting periods under the Hart-Scott-Rodino
Antitrust Improvements Act of 1976 and receipt of a favorable tax
ruling from the Internal Revenue Service.
(4) Debt -
During the three months ended March 31, 1998, certain owners
of Pennzoil's exchangeable debentures requested to exchange their
debentures for Chevron Corporation ("Chevron") common stock, in
accordance with the respective supplemental indentures, which
resulted in a decrease of $.2 million of outstanding exchangeable
debentures.
In December 1997, Pennzoil filed a registration statement on
Form S-4 with the Securities and Exchange Commission ("SEC")
proposing to issue up to $889.1 million principal amount of new
exchangeable senior debentures ("New Debentures") in exchange for a
portion of its 6 1/2% Exchangeable Senior Debentures (the "6 1/2%
Debentures") and the 4 3/4% Exchangeable Senior Debentures (the
"4 3/4% Debentures"). The New Debentures would have terms
substantially similar to the existing debentures except for the
maturity date, call date, coupon and the number of shares into
which the New Debentures are exchangeable. Pennzoil expects to be
able to commence the exchange offer in May 1998, and the offer
would be required to remain open for at least 20 business days.
The 6 1/2% Debentures and 4 3/4% Debentures are exchangeable
at the option of the holders at any time prior to maturity, unless
previously redeemed, for shares of Chevron common stock. In lieu
of delivering Chevron common stock, Pennzoil may, at its option,
pay to any holder an amount in cash equal to the market value of
the Chevron common stock to satisfy the exchange request. If
Pennzoil delivers Chevron common stock to satisfy an exchange,
Pennzoil records an ordinary gain on the sale of Chevron common
stock, limited to the face value of the related exchangeable
debentures and the associated debt issue cost. The face value of
exchangeable debentures and debt issue cost would be retired by
recording an extraordinary charge for the early extinguishment of
debt. Alternatively, should Pennzoil choose to pay cash to the
holders and retain the Chevron common stock, Pennzoil would record
an extraordinary charge for the extinguishment of debt. In
addition, Pennzoil would record an increase in the net unrealized
holding gain on the Chevron common stock to reflect current market
value which was previously capped under the exchange rights. This
would be reported as an increase in comprehensive income in
accordance with SFAS No. 130 (Reference is made to Note 6 of Notes
to Condensed Consolidated Financial Statements) and as a separate
component of shareholders' equity as required under SFAS No. 115,
"Accounting for Certain Investments in Debt and Equity Securities."
7
PART I. FINANCIAL INFORMATION - continued
(5) Use of Derivatives -
Pennzoil has a price risk management program that utilizes
derivative financial instruments, principally crude oil and natural
gas swaps, to reduce the price risks associated with fluctuations
in crude oil and natural gas prices. These financial instruments
are designated as hedges and accounted for on the accrual basis
with gains and losses being recognized based on the type of
contract and exposure being hedged. Realized gains or losses on
crude oil and natural gas swaps designated as hedges of anticipated
transactions related to anticipated production are treated as
deferred credits or charges and are included in other current
liabilities or other current assets on the balance sheet. Net
gains and losses on crude oil and natural gas swaps designated as
hedges of anticipated transactions, including accrued gains or
losses upon maturity or termination of the contract, are deferred
and recognized in income when the associated hedged commodities are
produced.
In order for crude oil and natural gas swaps to qualify as a
hedge of an anticipated transaction, the derivative contract must
identify the expected date of the transaction, the commodity
involved, and the expected quantity to be purchased or sold. In
the event that a hedged transaction does not occur, future gains
and losses, including termination gains or losses, are included in
the income statement when incurred.
In the statement of cash flows, cash receipts or payments
related to financial instruments are classified consistent with the
cash flows from the transaction being hedged.
Pennzoil has not materially hedged crude oil or natural gas
prices in 1998. Pennzoil will continually review and may alter its
hedged positions as conditions change.
(6) Comprehensive Income -
In June 1997, the FASB issued SFAS No. 130, "Reporting
Comprehensive Income," which requires that an enterprise classify
items of other comprehensive income by their nature in a financial
statement and display the accumulated balance of other
comprehensive income separately from retained earnings and
additional paid-in capital in the equity section of the balance
sheet. Pennzoil adopted SFAS No. 130 in the first quarter of 1998.
Components of comprehensive income consist of foreign currency
translation adjustments, unrealized gains and losses on available-
for-sale securities and minimum pension liability.
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, 1998 was $9.7
million, or $0.20 per share, compared to $57.6 million, or $1.23
per share for the same period in 1997. The decrease in operating
income was primarily due to lower realized natural gas and liquids
prices partially offset by higher results in the Motor Oil and
Refined Products segment.
Oil and Gas
Operating income from this segment was $30.8 million for the
quarter ended March 31, 1998, compared with $107.1 million for the
same period in 1997. The decrease in operating income was
primarily due to lower realized natural gas and liquids prices.
8
PART I. FINANCIAL INFORMATION - continued
Natural gas price realizations averaged $2.07 per thousand
cubic feet ("Mcf") for the three months ended March 31, 1998
compared to $2.77 per Mcf for the same period in 1997. Natural gas
volumes produced for sale for the three months ended March 31, 1998
were 499.5 million cubic feet ("MMcf") per day compared to 523.3
MMcf per day for the same period in 1997. Liquids prices averaged
$12.43 per barrel during the first quarter of 1998, compared to
$19.47 per barrel from the comparable period in 1997. Liquids
production volumes were 53.7 thousand barrels ("Mbbls") per day
for the three months ended March 31, 1998 compared to 53.6 Mbbls
per day for the same period in 1997.
Production volumes for the first quarter of 1998 were down
compared to the same period in 1997 primarily due to damage caused
by a third party vessel dragging its anchor across the Sea Robin
gathering pipeline connected to Pennzoil's West Cameron 580 block
in late January 1998. The damage caused Pennzoil to shut in
production on the block until the pipeline repairs were completed
during February 1998. Production comparisons were also negatively
impacted by Pennzoil's December 1997 sale of its 50% interest in
the Zama/Virgo joint venture in Canada.
Internationally, Pennzoil plans to drill eight exploration
wells in 1998 in Australia, Azerbaijan, Egypt and Venezuela.
In April, the Caspian International Petroleum Company began
drilling the KPS-2 well on the Karabakh prospect offshore
Azerbaijan in the Caspian Sea. Pennzoil holds a 30 percent
interest in Karabakh. A third well, KPS-3, will spud during the
second half of 1998 after the KPS-2 well has been completed.
Azerbaijan International Operating Company, in which Pennzoil
has a 4.8 percent carried interest, delivered its first oil
shipment to the Black Sea in March 1998 from the Azeri-Chirag-
Gunashli ("ACG") joint development area. The ACG joint development
area is estimated to contain nearly 5 billion barrels of crude oil.
At the end of the first quarter of 1998, daily crude oil production
was 36,000 barrels. Total daily production is expected to increase
to 75,000 barrels by year-end 1998. In January 1998, Pennzoil
received a $22.0 million installment payment as part of Pennzoil's
July 1996 sale of approximately half of its original interest in
the ACG joint development unit.
In Egypt, Pennzoil has five concessions covering 9.2 million
acres. Four blocks are located in the Gulf of Suez: North July
(100 percent Pennzoil), West Feiran (50 percent Pennzoil), Southwest
Gebel el-Zeit (87.5 percent Pennzoil) and Southeast Gulf of Suez
(50 percent Pennzoil). The fifth block, West Beni Suef (100 percent
Pennzoil), is located in Egypt's Western Desert. Pennzoil spud
its first well on North July in March 1998. Three additional
exploratory wells are planned for Egypt in 1998, including two at
Southwest Gebel el-Zeit and one at West Feiran. Pennzoil also began
a seismic program on West Beni Suef in early April 1998.
Pennzoil and its partners received approval from Petroleos de
Venezuela, S.A., the state oil company of Venezuela, to develop two
blocks in Lake Maracaibo during the first quarter of 1998.
Pennzoil holds a 60 percent working interest on block B2X-68/79 and
50 percent working interest on block B2X-70/80. Pennzoil's initial
share of daily production from these two blocks is estimated to be
approximately 4,000 barrels beginning in the second half of 1998.
These two blocks have remaining gross reserves of between 100 and
200 million barrels.
9
PART I. FINANCIAL INFORMATION - continued
Motor Oil & Refined Products
Operating income from this segment was $24.8 million for the
quarter ended March 31, 1998, compared with $13.0 million for the
same period in 1997. The increase in operating income was due to
higher motor oil volumes, fuels volumes and lube margins. In
addition, operating income at Excel Paralubes, a lube base oil
plant in which Pennzoil and Conoco Inc. are equal partners,
increased $6.6 million for the quarter ended March 31, 1998,
compared to the same period in 1997. The increase in income from
Excel Paralubes was primarily due to higher production volumes. As
a result of mechanical difficulties during startup, full production
was not reached at Excel Paralubes until near the end of the first
quarter of 1997. In addition, the upgrade of Pennzoil's
Shreveport, Louisiana refinery was not completed until April 1997.
The refinery upgrade substantially increased fuels production at
the facility and is responsible for the higher fuels volumes
experienced during the quarter ended March 31, 1998.
Franchise Operations
The franchise operations segment recorded operating income of
$4.7 million for the quarter ended March 31, 1998, compared with
$4.5 million for the same period in 1997. Systemwide sales for
the three months ended March 31, 1998 increased $13.1 million to
$191.8 million, compared with the first quarter of 1997.
Systemwide average ticket prices increased to $36.52 for the
quarter ended March 31, 1998, compared with $35.49 for the first
quarter of 1997. There were 1,537 lube centers (including 586
Jiffy Lube company operated centers) open as of March 31, 1998.
In 1998, Jiffy Lube plans to open approximately 120 centers.
As of March 31, 1998, there were 166 fast-oil change units open in
Sears Centers of which 134 are company operated.
Other
Other operating income for the quarter ended March 31, 1998
was $10.5 million, compared with $15.7 million for the same period
in 1997. Pennzoil's other income includes dividend income of
$10.9 million during the three months ended March 31, 1998 from its
investment in common stock of Chevron.
Net interest expense for the quarter ended March 31, 1998
increased $4.8 million from the same period in 1997 primarily due
to lower capitalized interest.
Capital Resources and Liquidity
Cash Flow. As of March 31, 1998, Pennzoil had cash and cash
equivalents of $24.9 million. During the three months ended March
31, 1998, Pennzoil's cash and cash equivalents increased $6.3
million. Cash flows used in operating activities totaled $29.6
million during the first quarter of 1998.
Debt Instruments and Repayments. Through the three months
ended March 31, 1998, certain owners of Pennzoil's exchangeable
debentures requested to exchange their debentures for Chevron
common stock, in accordance with the respective supplemental
indentures, which resulted in a decrease of $.2 million of
outstanding exchangeable debentures.
Borrowings under Pennzoil's commercial paper and variable-
rate credit arrangements totaled $449.7 million as of March 31,
1998, all of which has been classified as long-term debt.
10
PART I. FINANCIAL INFORMATION - continued
Year 2000
Pennzoil has begun the process of identifying, evaluating
and implementing new operating computer systems necessary to
address potential year 2000 compliance issues. Many of Pennzoil's
operating and financial systems are already compliant. Pennzoil's
remaining operating and financial systems are scheduled for
compliance in phases and will be compliant by the year 2000.
Pennzoil is communicating with software vendors, business partners
and others with which it conducts business to provide written
assurances that their systems will be year 2000 compliant. The
total future cost associated with potential year 2000 compliance
issues has not been determined, but is not expected to have a
material adverse effect on the consolidated financial position or
results of operations of Pennzoil.
11
PART I. FINANCIAL INFORMATION - continued
(UNAUDITED)
The following tables show revenues and operating income by segment,
other components of income and operating data.
Three Months Ended
March 31
----------------------------
1998 1997
----------- -----------
(Dollar amounts expressed
in thousands)
REVENUES
Oil and Gas $ 161,029 $ 226,741
Motor Oil & Refined Products 372,896 432,952
Franchise Operations 80,710 75,150
Other 9,867 11,470
Intersegment sales (78,692) (97,313)
----------- -----------
Total revenues $ 545,810 $ 649,000
----------- -----------
OPERATING INCOME
Oil and Gas $ 30,815 $ 107,179
Motor Oil & Refined Products 24,840 13,048
Franchise Operations 4,650 4,496
Other 10,434 15,665
----------- -----------
Total operating income 70,739 140,388
Corporate administrative expenses 16,901 13,082
Interest charges, net 41,880 37,118
----------- -----------
Income before income tax 11,958 90,188
Income tax provision 2,300 32,637
----------- -----------
NET INCOME $ 9,658 $ 57,551
=========== ===========
RATIO OF EARNINGS TO FIXED CHARGES 1.20 2.69
=========== ===========
12
PART I. FINANCIAL INFORMATION - continued
(UNAUDITED)
Three Months Ended
March 31
------------------------------
1998 1997
------------ ------------
OPERATING DATA
- --------------
OIL AND GAS
Net production
Crude oil, condensate and natural
gas liquids (barrels per day) 53,676 53,632
Natural gas produced for sale (Mcf per day) 499,505 523,348
Weighted average prices
Crude oil, condensate and natural
gas liquids (per barrel) $ 12.43 $ 19.47
Natural gas (per Mcf) $ 2.07 $ 2.77
MOTOR OIL & REFINED PRODUCTS
Sales (barrels per day)
Gasoline and naphtha 23,171 20,020
Distillates and gas oils 25,542 26,377
Lubricating oil and other specialty products <F1> 24,583 25,916
Residual fuel oils 1,643 3,513
----------- -----------
Total sales (barrels per day) 74,939 75,826
=========== ===========
Raw materials processed (barrels per day) <F2> 71,094 63,909
Refining capacity (barrels per day) <F2> 80,300 76,000
FRANCHISE OPERATIONS
Domestic systemwide sales (in thousands) $ 191,847 $ 178,705
Same center sales (in thousands) $ 181,144 $ 177,679
Centers open (U.S.) 1,537 1,419
<FN>
<F1> Excludes sales from Pennzoil's Penreco ownership in 1998. Pennzoil
recorded Penreco's sales through September 30,1997.
<F2> Includes Pennzoil's 50% ownership in Excel Paralubes.
<FN>
13
PART II. OTHER INFORMATION
Item 6. Exhibits and Reports on Form 8-K
(a) Exhibits -
3 By-laws of Pennzoil Company, as amended through May 7, 1998.
12 Computation of Ratio of Earnings to Fixed Charges for the three
months ended March 31, 1998 and 1997.
27 Financial Data Schedule
(b) Reports -
Pennzoil filed the following Current Reports on Form 8-K with
the Securities and Exchange Commission:
Date of Report Items Reported
March 12, 1998 Pennzoil's amendment of its By-laws as
of March 12, 1998.
April 20, 1998 Information relating to the Agreement
and Plan of Merger dated as of April
14, 1998 among Pennzoil Company, Pennzoil Products
Company, Downstream Merger Company and Quaker
State Corporation. The Form 8-K included as
exhibits a press release dated April 15, 1998
issued by Pennzoil Company and Quaker State
Corporation and a copy of the Agreement and Plan
of Merger. See Note 3 of Notes to Condensed
Consolidated Financial Statements.
April 17, 1998 Pennzoil's amendment dated April 17,
1998 to its Rights Agreements.
14
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 13, 1998