SECURITIES AND EXCHANGE COMMISSION
                      Washington, DC 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)   August 28, 1998

          __________________________________________
                          
                          
                          XCL LTD.
    (Exact Name of Registrant as Specified in Its Charter)
                          
                          
                      Delaware
   (State or other Jurisdiction of Incorporation)
                          
                          
     1-10669                                   51-0305643
(Commission File Number)                   (I.R.S. Employer
                                         Identification Number)


          110 Rue Jean Lafitte, 2nd Floor
             Lafayette, Louisiana 70508
      (Address of Principal Executive Offices)
                          
                          
                    318-237-0325
(Registrant's Telephone Number, Including Area Code)
                          
                          
                          
Item 5.     Other Events.

     On August 28, 1998, the Company issued a press
release announcing that on August 26, 1998, it and
its partners, China National Oil and Gas Exploration
and Development Corporation (CNODC) and Apache
Corporation, began drilling the C-4-2 appraisal well
located on the Zhao Dong Block, Bohai Bay, the
People's Republic of China.  The C-4-2 is located
approximately one mile south of the highly successful
C-4 well, which tested 15,359 barrels of oil per day
and 10,707 Mcf of gas per day in October 1997.  The
company does not expect to make additional
announcements with respect to the C-4-2 until results
have been determined.

XCL Ltd. and Apache Corporation (NYSE:APA) each own a
50 percent interest in the Foreign Contractor's share
of the Zhao Dong Block.



                     SIGNATURES
                          
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 hereunto duly
authorized.
                                        XCL LTD.

     September 9, 1998               /s/ Lisha C.Falk 
_________________________      By:_______________________________
             Date                       Lisha C. Falk
                                        Secretary