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UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
---------------------
FORM 10-Q

[X] QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE
ACT OF 1934

For the quarterly period ended March 31, 1996

[ ] TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE
ACT OF 1934

For the transition period from _____ to _____

Commission File Number 1-11154

---------------------

ULTRAMAR CORPORATION
(Exact name of registrant as specified in its charter)

Delaware 13-3663331
(State or other jurisdiction of (I.R.S. Employer
incorporation or organization) Identification No.)

Two Pickwick Plaza, Greenwich, Connecticut 06830
(Address of principal executive offices) (Zip Code)

Registrant's telephone number, including area code: (203) 622-7000

---------------------

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 for 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
--- ---

Common Stock, $.01 Par Value -- 44,498,109 shares as of April 30, 1996

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ULTRAMAR CORPORATION
FORM 10-Q
MARCH 31, 1996

TABLE OF CONTENTS

PART I - FINANCIAL INFORMATION PAGE

Item 1. Financial Statements (Unaudited)

Consolidated Balance Sheets as of March 31, 1996 and
December 31, 1995. . . . . . . . . . . . . . . . . . . . . 3

Consolidated Statements of Income for the Three Month
Periods Ended March 31, 1996 and 1995. . . . . . . . . . . 4

Consolidated Statements of Cash Flows for the Three Month
Periods Ended March 31, 1996 and 1995. . . . . . . . . . . 5

Notes to Financial Statements. . . . . . . . . . . . . . . . 6

Item 2. Management's Discussion and Analysis
of Financial Condition and Results of Operations . . . 8

PART II - OTHER INFORMATION

Item 6. Exhibits and Reports on Form 8-K . . . . . . . . . . . . 14

SIGNATURE. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 15

PART I. FINANCIAL INFORMATION

Item 1. Financial Statements

ULTRAMAR CORPORATION
CONSOLIDATED BALANCE SHEETS

MARCH 31, DECEMBER 31,
1996 1995
---- ----
(Unaudited) (Note)
(in thousands)

ASSETS

CURRENT ASSETS:
Cash and cash equivalents. . . . . . . . . . . . $ 128,693 $ 126,852
Accounts and notes receivable, net . . . . . . . 206,496 181,222
Inventories. . . . . . . . . . . . . . . . . . . 321,055 288,251
Prepaid expenses and other current assets. . . . 33,435 41,912
Deferred income taxes. . . . . . . . . . . . . . 11,017 13,421
---------- ----------
TOTAL CURRENT ASSETS . . . . . . . . . . . . . 700,696 651,658

Notes receivable and other assets, net . . . . . 72,720 74,336

Property, plant and equipment, at cost . . . . . . 1,425,277 1,383,665
Less accumulated depreciation and amortization . . (151,030) (138,324)
---------- ----------
1,274,247 1,245,341
---------- ----------

TOTAL ASSETS . . . . . . . . . . . . . . . . . $2,047,663 $1,971,335
---------- ----------
---------- ----------

LIABILITIES AND STOCKHOLDERS' EQUITY

CURRENT LIABILITIES:
Notes payable and current portion of
long-term debt. . . . . . . . . . . . . . . . . $ 165 $ 172
Accounts payable . . . . . . . . . . . . . . . . 198,467 181,809
Accrued liabilities. . . . . . . . . . . . . . . 90,668 123,002
Taxes other than income taxes. . . . . . . . . . 125,277 124,999
Income taxes payable . . . . . . . . . . . . . . 6,278 1,365
---------- ----------
TOTAL CURRENT LIABILITIES. . . . . . . . . . . 420,855 431,347

Long-term debt, less current portion . . . . . . . 674,784 600,253
Other long-term liabilities. . . . . . . . . . . . 178,980 174,832
Deferred income taxes. . . . . . . . . . . . . . . 63,535 61,548

STOCKHOLDERS' EQUITY:
Common Stock, par value $.01 per share:
Authorized - 100,000,000 shares, issued and
outstanding - 44,473,309 and 44,414,469
shares, respectively . . . . . . . . . . . . 445 444
Additional paid-in capital . . . . . . . . . . . 671,108 669,942
Unamortized restricted stock awards. . . . . (83) (102)
Retained earnings. . . . . . . . . . . . . . . . 91,307 88,722
Foreign currency translation adjustment. . . . . (53,268) (55,651)
---------- ----------
TOTAL STOCKHOLDERS' EQUITY . . . . . . . . . . 709,509 703,355
---------- ----------

TOTAL LIABILITIES AND STOCKHOLDERS' EQUITY . . $2,047,663 $1,971,335
---------- ----------
---------- ----------

Note: The balance sheet at December 31, 1995 has been derived from the
audited consolidated financial statements at that date.

See accompanying notes.

ULTRAMAR CORPORATION
CONSOLIDATED STATEMENTS OF INCOME
(Unaudited)

THREE MONTHS ENDED
MARCH 31,
---------
1996 1995
---- ----
(restated)
(in thousands, except
per share data)

REVENUES
Sales and services . . . . . . . . . . . . . . . $736,614 $628,867

OPERATING COSTS AND EXPENSES
Cost of products sold. . . . . . . . . . . . . . 566,833 476,879
Operating expenses . . . . . . . . . . . . . . . 69,994 75,506
Selling, general and
administrative expenses. . . . . . . . . . . . 51,345 48,263
Depreciation and amortization. . . . . . . . . . 15,802 13,368
-------- --------
TOTAL OPERATING COSTS AND EXPENSES . . . . . . 703,974 614,016
-------- --------

OPERATING INCOME . . . . . . . . . . . . . . . . . 32,640 14,851
Interest income. . . . . . . . . . . . . . . . . . 1,771 676
Interest expense . . . . . . . . . . . . . . . . . (10,008) (11,364)
-------- --------

INCOME BEFORE INCOME TAXES AND CUMULATIVE
EFFECT OF ACCOUNTING CHANGE. . . . . . . . . . . 24,403 4,163
Provision for income taxes . . . . . . . . . . . . 9,589 1,331
-------- --------

INCOME BEFORE CUMULATIVE EFFECT OF
ACCOUNTING CHANGE. . . . . . . . . . . . . . . . 14,814 2,832
Cumulative effect to December 31,
1994, of accounting change,
net of income taxes - Note 2. . . . . . . . . . 22,024
-------- --------

NET INCOME . . . . . . . . . . . . . . . . . . . . $ 14,814 $ 24,856
-------- --------
-------- --------
EARNINGS PER SHARE:
Income before cumulative
effect of accounting change. . . . . . . . . . . $.33 $.07
Cumulative effect of accounting change . . . . . . .57
---- ----
NET INCOME . . . . . . . . . . . . . . . . . . . . $.33 $.64
---- ----
---- ----
WEIGHTED AVERAGE NUMBER OF COMMON
AND COMMON EQUIVALENT SHARES
USED IN COMPUTATION. . . . . . . . . . . . . . . . 45,006 38,954
------ ------
------ ------
DIVIDENDS PER COMMON SHARE . . . . . . . . . . . . $.275 $ .275
----- ------
----- ------

See accompanying notes.

ULTRAMAR CORPORATION
CONSOLIDATED STATEMENTS OF CASH FLOWS
(Unaudited)

THREE MONTHS ENDED
MARCH 31,
---------
1996 1995
---- ----
(restated)
(in thousands)

CASH FLOWS FROM OPERATING ACTIVITIES
Net income . . . . . . . . . . . . . . . . . . . . $ 14,814 $ 24,856
Adjustments to reconcile net income to
net cash used in operating activities:
Depreciation and amortization . . . . . . . . . 15,802 13,368
Amortization of debt discount and issuance costs 365 402
Restricted stock award amortization . . . . . . 19 43
Provision for losses on receivables . . . . . . 681 2,221
Undistributed (earnings) losses of investees. . (10) 66
Loss on sale of fixed assets. . . . . . . . . . 44 193
Provision for deferred income taxes . . . . . . 4,233 785
Cumulative effect of accounting change. . . . . (22,024)
Changes in operating assets and liabilities:
(Increase) decrease in accounts and notes
receivable . . . . . . . . . . . . . . . . . (24,962) 35,812
Increase in inventories . . . . . . . . . . . (32,028) (12,558)
Decrease in prepaid expenses and other
current assets. . . . . . . . . . . . . . . 10,590 1,365
(Increase) decrease in notes receivable and
other assets . . . . . . . . . . . . . . . . (3,265) 1,842
Decrease in accounts payable, accrued liabilities
and taxes other than income taxes . . . . . (16,689) (81,842)
Increase in income taxes payable. . . . . . . 4,880 106
Increase in other long-term liabilities . . . 1,052 4,278
-------- --------
NET CASH USED IN OPERATING ACTIVITIES. . . . . . . (24,474) (31,087)

CASH FLOWS FROM INVESTING ACTIVITIES
Capital expenditures . . . . . . . . . . . . . . . (29,447) (29,611)
Increase in deferred turnaround costs. . . . . . . (8,312) (4,602)
Proceeds from sale of property, plant and
equipment . . . . . . . . . . . . . . . . . . . . 526 271
-------- --------
NET CASH USED IN INVESTING ACTIVITIES. . . . . . . (37,233) (33,942)

CASH FLOWS FROM FINANCING ACTIVITIES
Increase (decrease) in other long-term debt. . . . 74,480 (48,693)
Proceeds from the issuance of medium term notes. . 149,229
Proceeds from the issuance of Common Stock . . . 881 337
Payment of dividends . . . . . . . . . . . . . . . (12,229) (10,597)
-------- --------
NET CASH PROVIDED BY FINANCING ACTIVITIES. . . . . 63,132 90,276

Effect of exchange rate changes on cash. . . . . . 416 9
-------- --------

NET INCREASE IN CASH AND CASH EQUIVALENTS. . . . . 1,841 25,256
CASH AND CASH EQUIVALENTS AT BEGINNING OF PERIOD . 126,852 55,053
-------- --------

CASH AND CASH EQUIVALENTS AT END OF PERIOD . . . . $128,693 $ 80,309
-------- --------
-------- --------
CASH FLOW INFORMATION:

Interest paid. . . . . . . . . . . . . . . . . . $25,899 $20,571
-------- --------
-------- --------

Income taxes paid. . . . . . . . . . . . . . . . $473 $438
---- ----
---- ----
See accompanying notes.

ULTRAMAR CORPORATION
NOTES TO FINANCIAL STATEMENTS
(Unaudited)

NOTE 1: BASIS OF PRESENTATION

The accompanying unaudited financial statements have been prepared in accordance
with generally accepted accounting principles for interim financial information
and with the instructions to Form 10-Q and Article 10 of Regulation S-X.
Accordingly, they do not include all of the information and footnotes required
by generally accepted accounting principles for complete financial statements.
In the opinion of management, all adjustments (consisting of normal recurring
accruals) considered necessary for a fair presentation have been included.
Operating results for the three month period ended March 31, 1996 are not
necessarily indicative of the results that may be expected for the year ending
December 31, 1996. The results of operations may be affected by seasonal
factors, such as the demand for petroleum products and working capital
requirements in eastern Canada, which vary significantly during the year, or
industry factors that may be specific to a particular period, such as movements
in and the general level of crude oil prices, the demand for and prices of
refined products, industry supply capacity and maintenance turnarounds. For
further information, see the financial statements and footnotes thereto included
in the Ultramar Corporation annual report on Form 10-K for the year ended
December 31, 1995.

NOTE 2: CHANGE IN ACCOUNTING FOR REFINERY MAINTENANCE TURNAROUND COSTS

During the second quarter of 1995, the Company changed its method of accounting
for refinery maintenance turnaround costs from an accrual method to a deferral
and amortization method to better match revenues and expenses. The results of
operations for the first quarter of 1995 have been restated to reflect the
change in accounting method as if the change had occurred effective January 1,
1995. The change resulted in a cumulative adjustment through December 31, 1994
of $22,024,000 (after income taxes of $13,400,000) or $.57 per share, which is
included in net income for the three month period ended March 31, 1995. The
effect of the change on the three month period ended March 31, 1995 was to
increase income before cumulative effect of accounting change by approximately
$1,700,000 ($.04 per share).

NOTE 3: INVENTORIES

MARCH 31, DECEMBER 31,
1996 1995
---- ----
(in thousands)
Inventories consisted of the following:

Crude oil and other feedstocks $158,042 $138,317
Refined and other finished products 141,195 128,422
Materials and supplies 21,818 21,512
-------- --------
$321,055 $288,251
-------- --------
-------- --------

Crude oil and refined product inventories are valued at the lower of cost or
market (net realizable value). Cost is determined on the last-in, first-out
("LIFO") basis. Materials and supplies are valued at average cost, not in
excess of market value. At March 31, 1996 and December 31, 1995, the carrying
amount of inventories approximated current replacement cost.

ULTRAMAR CORPORATION
NOTES TO FINANCIAL STATEMENTS-CONTINUED
(Unaudited)

NOTE 4: NET INCOME PER COMMON AND COMMON EQUIVALENT SHARE

Net income per common and common equivalent share is based on the weighted
average number of shares of Common Stock outstanding during each period,
including the common stock equivalents of dilutive stock options.

NOTE 5: INCOME TAXES

The consolidated income tax provisions for the three month periods ended March
31, 1996 and 1995 were determined based upon estimates of the Company's U.S. and
Canadian effective income tax rates for the years ending December 31, 1996 and
1995, respectively. The differences between the consolidated effective income
tax rates and the U.S. Federal statutory rate are primarily attributable to
state income taxes and the effects of foreign operations.

NOTE 6: COMMITMENTS AND CONTINGENCIES

The Company's operations are subject to environmental laws and regulations
adopted by various governmental authorities. Site restoration and environmental
remediation and clean-up obligations are accrued either when known or when
considered probable and reasonably estimable. Total future environmental costs
cannot be reasonably estimated due to unknown factors such as the magnitude of
possible contamination, the timing and extent of remediation, the determination
of the Company's liability in proportion to other parties and the extent to
which environmental laws and regulations may change in the future. Although
environmental costs may have a significant impact on results of operations for
any single year, the Company believes that such costs will not have a material
adverse effect on the Company's financial position.

There are various legal proceedings and claims pending against the Company that
arise in the ordinary course of business. It is management's opinion, based
upon advice of legal counsel, that these matters, individually or in the
aggregate, will not have a material adverse effect on the Company's financial
position.

NOTE 7: NONRECURRING ITEMS

During March 1995, the Company experienced a storage tank fire at its Wilmington
refinery. The Company accrued the estimated cost to repair the damage caused by
the fire and recognized anticipated insurance recoveries, resulting in a net
charge of $3,000,000 during the first quarter of 1995. The actual cost of
repairs to the storage tank and other related costs incurred during 1995
exceeded related insurance proceeds by $2,600,000.

NOTE 8: SUBSEQUENT EVENTS

On April 25, 1996, the Company declared a dividend of $.275 per common share
payable on June 15, 1996 to holders of record on May 15, 1996.

ITEM 2. MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS
OF OPERATIONS

The following discussion and analysis should be read in conjunction with the
Company's annual report on Form 10-K for the year ended December 31, 1995.

RESULTS OF OPERATIONS

The Company's operating results are affected by Company-specific factors,
primarily its refinery utilization rates and refinery maintenance turnarounds;
seasonal factors, such as the demand for petroleum products and working capital
requirements for eastern Canada, both of which vary significantly during the
year; and industry factors, such as movements in and the general level of crude
oil prices, the demand for and prices of refined products and industry supply
capacity. The effect of crude oil price changes on the Company's operating
results is determined, in part, by the rate at which refined product prices
adjust to reflect such changes. As a result, the Company's earnings have been
volatile in the past and may be volatile in the future.

THREE MONTHS ENDED MARCH 31, 1996 COMPARED TO THREE MONTHS ENDED MARCH 31, 1995

Financial and operating data by geographic area for the three month periods
ended March 31, 1996 and 1995 are as follows:

FINANCIAL DATA:

THREE MONTHS ENDED MARCH 31,
-------------------------------------------------------------------------------------
1996 1995
----------------------------------------- ---------------------------------------
UNITED STATES CANADA TOTAL UNITED STATES CANADA TOTAL
(restated)(1)
(in thousands)

Revenues . . . . . . . . . . . . . . . $327,918 $408,696 $736,614 $278,939 $349,928 $628,867
Cost of products sold. . . . . . . . . 276,891 289,942 566,833 233,248 243,631 476,879
Operating expenses . . . . . . . . . . 36,343 33,651 69,994 42,899 32,607 75,506
Selling, general and
administrative expenses. . . . . . . 9,958 41,387 51,345 6,170 42,093 48,263
Depreciation and amortization. . . . . 9,483 6,319 15,802 7,502 5,866 13,368
-------- -------- -------- -------- -------- --------
Operating (loss) income. . . . . . (4,757) 37,397 32,640 (10,880) 25,731 14,851
Interest expense, net. . . . . . . . . 3,175 5,062 8,237 3,452 7,236 10,688
-------- -------- -------- -------- -------- --------
(Loss) income before income
taxes and cumulative effects
of accounting change . . . . . . $ (7,932) $ 32,335 24,403 $(14,332) $ 18,495 4,163
-------- -------- -------- --------
-------- -------- -------- --------
Provision for income taxes . . . . . . 9,589 1,331
------- -------
Income before cumulative
effect of accounting
change . . . . . . . . . . . . . 14,814 2,832
Cumulative effect to December
31, 1994 of accounting change,
net of income taxes. . . . . . . . . 22,024
------- -------
Net income . . . . . . . . . . . $14,814 $24,856
------- -------
------- -------

(1) The results of operations for the first quarter of 1995 have been restated
to reflect a change in the accounting for refinery maintenance turnaround
costs from an accrual method to a deferral and amortization method that was
adopted in the second quarter of 1995. The effect of the change on the
results for the first quarter was to increase income before cumulative
effect of accounting change by approximately $1.7 million. The change also
resulted in a cumulative adjustment through December 31, 1994 of $22.0
million (after income taxes) which is included in net income for the first
quarter of 1995.

OPERATING DATA:

THREE MONTHS ENDED
MARCH 31,
---------
1996 1995
---- ----

UNITED STATES

Wilmington Refinery
Throughput (BPD) . . . . . . . . . . . . . . 81,500 73,200
Margin (dollars per barrel). . . . . . . . . 3.63 3.25

Retail Marketing
Sales volume (BPD) . . . . . . . . . . . . . 34,700 32,300
Overall margin (cents per gallon) (1) . . . 8.4 13.0

Retail Marketing - Company-operated Only
Sales volume (BPD) . . . . . . . . . . . . . 17,800 17,100
Fuel margin (cents per gallon) (2). . . . . 9.9 14.2
Overall margin (cents per gallon). . . . . . 15.5 19.6
Average number of retail outlets . . . . . . 149 145

EASTERN CANADA

Quebec Refinery
Throughput (BPD) . . . . . . . . . . . . . . 144,400 145,300
Margin (dollars per barrel) (3) . . . . . . 3.87 2.03

Retail Marketing
Sales volume (BPD) . . . . . . . . . . . . . 63,500 61,600
Overall margin (cents per gallon) (3) . . . 24.1 27.1

(1) Overall retail marketing margin includes sales of petroleum products
through company and dealer-operated outlets, dealer-owned outlets and
truckstops and convenience store items at company-operated outlets.

(3) Fuel margin at company-operated retail outlets includes sales of petroleum
products only (excluding convenience store items).

(3) Effective January 1, 1996, the Company modified its policy for pricing
refined products transferred from its Canadian refining operations to its
Canadian marketing operations to more closely reflect the spot market
prices for such refined products. To facilitate the comparison to the
operating data for the first quarter of 1996, the amounts reported for the
first quarter of 1995 have been adjusted to reflect the pricing policy
change as if it had occurred as of January 1, 1995. The refining margin
and marketing margin originally reported for the three month period ended
March 31, 1995 were $3.42 per barrel and 22.3 cents per gallon,
respectively.

GENERAL

Net income for the quarter ended March 31, 1996 totaled $14.8 million as
compared to income before cumulative effect of accounting change for the
quarter ended March 31, 1995 of $2.8 million. In the United States, the Company
incurred a pre-tax loss of $7.9 million for the first quarter of 1996 as
compared to a pre-tax loss of $14.3 million for the first quarter of 1995.
Operating results in the United States improved over the corresponding quarter
of 1995 as both refinery throughput and margin increased. In eastern Canada,
pre-tax income of $32.3 million was $13.8 million higher than that of the first
quarter of 1995, as operating results benefited from strong refining margin.

UNITED STATES OPERATIONS

U.S. revenues of $327.9 million for the first quarter of 1996 were $49.0 million
or 17.6% higher than for the first quarter of 1995, as average product prices
and overall product sales volume (135,800 BPD) during the first quarter of 1996
increased by 6.5% and 9.1%, respectively, as compared to the first quarter of
1995.

The cost of products sold during the first quarter of 1996 increased, as a
percentage of revenues, to 84.4% from 83.6% during the first quarter of 1995,
reflecting a sharp, industry-wide increase in crude oil costs during the first
quarter of 1996. Refinery operating expenses, before depreciation, of
$23.3 million (or $3.14 per barrel of throughput) were $1.1 million or 4.3%
lower than in the first quarter of 1995. First quarter 1995 refinery operating
expenses were negatively impacted by the accrual of $3.0 million (net of
estimated insurance recovery) for damage caused by a March 1995 storage tank
fire. Selling, general and administrative expenses during the first quarter of
1996 were $3.8 million above those of the corresponding quarter of 1995 as
expenses during the first quarter of 1995 were reduced by the favorable
settlement of a previously accrued pre-acquisition contingency. Interest
expense, net of interest income, totaled $3.2 million for the first quarter
of 1996 and was comparable to interest for the first quarter of 1995.

During the first quarter of 1996, refining margin was $3.63 per barrel of
throughput or 11.7% higher than in 1995 and refinery throughput was 81,500 BPD
or 11.3% higher than in 1995. Refining margin during the first quarter of 1995
was adversely affected by a more severe deterioration in the price differential
between heavy and light crude oils and, to a lesser extent, the introduction of
reformulated gasoline. Refinery throughput during the first quarter of 1995 was
also adversely affected by the unplanned downtime of several processing units
and the impact on production of exceptionally heavy rains during the quarter.

Retail marketing margin of 8.4 cents per gallon during the first quarter of
1996 was 4.6 cents or 35.4% lower than the first quarter of 1995. Retail
marketing margin decreased as the previously mentioned increase in crude oil
costs flowed through to the wholesale market but was not passed on at the
retail level due to competitive pressures. Overall retail sales volume
averaged 34,700 BPD during the first quarter of 1996 and was 7.4% higher than
in the first quarter of 1995, principally as a result of the marketing growth
program initiated in the fourth quarter of 1995. Company-operated retail sites
averaged 17,800 BPD or 4.1% more than in the corresponding period in 1995.
Fuel margin and overall margin for the company-operated retail network
averaged 9.9 cents and 15.5 cents per gallon, respectively, and were 30.3% and
20.9% below such margins for the corresponding quarter of 1995 due to the
previously mentioned increase in crude oil costs.

During the first quarter of 1996, company-operated convenience store sales
totaled $13.2 million with gross margin at 28.7%. Company-operated convenience
store sales during the first quarter of 1995 totaled $12.4 million with gross
margin at 27.8%. The profit contribution from convenience store sales offset
50.6% of the direct operating expenses of company-operated retail outlets during
the first quarter of 1996. Net operating costs at company-operated retail
outlets averaged 6.4CENTS per gallon during the first quarter of 1996 compared
to 6.1CENTS per gallon in the corresponding period of 1995.

EASTERN CANADA OPERATIONS

Revenues in eastern Canada of $408.7 million for the first quarter of 1996
increased 16.8% over the corresponding quarter of 1995 as average product prices
and overall product sales volume (156,600 BPD) during the first quarter of 1996
increased 6.2% and 8.3%, respectively, as compared to the corresponding period
of 1995.

The cost of products sold during the first quarter of 1996, as a percentage of
revenues, increased to 70.9% from 69.6% in the first quarter of 1995 as a result
of the sharp increase in crude oil costs noted in the discussion of the
Company's U.S. operations. Refinery operating expenses, before depreciation, of
$12.4 million for the first quarter of 1996 were $1.4 million or 12.8% higher
than in 1995 principally due to two minor storage tank maintenance projects
completed during the quarter. Selling, general and administrative expenses of
$41.4 million during the first quarter of 1996 were slightly lower than during
the first quarter of 1995. Net interest expense for the first quarter of 1996
of $5.1 million was $2.1 million lower than in the first quarter of 1995 as
strong positive cash flow in Canada eliminated the need for short-term
borrowings during the quarter.

During the first quarter of 1996, refining margin was $3.87 per barrel of
throughput, as compared to $2.03 per barrel of throughput during the first
quarter of 1995. The improvement in refining margin is attributable to several
factors including the processing of lower cost, acidic Heidrun crude oil and
increased demand as a result of the much colder winter weather experienced in
the first quarter of 1996. Refinery throughput during the first quarter of 1996
of 144,400 BPD decreased only marginally as compared to 1995, despite an
interruption in the supply of crude oil to the refinery caused by the mechanical
problems of a spot-chartered crude oil tanker during the first quarter of 1996.
Refinery operating cost per barrel of throughput increased by 10CENTS to 94CENTS
during the first quarter of 1996 as a result of the increased maintenance costs
and lower throughput previously mentioned.

Retail marketing margin during the first quarter of 1996 averaged 24.1CENTS per
gallon, a decrease of 3CENTS per gallon or 11.1% from the corresponding quarter
in 1995 as strong heating oil sales and margin were more than offset by lower
motorist margin. The decrease in motorist margin was due, in part, to the sharp
rise in crude oil prices. Retail marketing volume during the first quarter of
1996 was 63,500 BPD or 3.1% higher than in the first quarter of 1995 principally
as a result of an increase in heating oil sales.

OUTLOOK

The Company's earnings depend largely on refining margin and retail marketing
margin. The petroleum refining and marketing industry has been, and continues
to be, volatile and highly competitive. The cost of crude oil purchased by the
Company and the price of refined products sold by the Company have fluctuated
widely. As a result of the historic volatility of refining and marketing
margins and the fact that they are affected by numerous diverse factors, it is
impossible to predict future margin levels.

During the first quarter of 1996, crude oil prices increased sharply while
product prices lagged behind, resulting in compressed profit margin. During
April and early May, however, profit margin on the West Coast and in eastern
Canada benefited as product prices rose while crude oil prices began to abate.
Early second quarter margins in California have also benefitted from the
Wilmington refinery's new high-pressure gasoil hydrotreater that became
operational in late March and the refinery's ability to produce commercial
quantities of California Air Resource Board specification gasoline. Refining
margin in eastern Canada also continued to benefit from the processing of
lower cost Heidrun crude oil.

CAPITAL EXPENDITURES

The refining and marketing of petroleum products is a capital intensive
business. The capital requirements of the Company's operations consist
primarily of (i) non-discretionary expenditures, such as those required to
maintain reliability and safety and to address environmental regulations; and
(ii) discretionary opportunity expenditures, such as those being currently
made to enhance its retail marketing facilities consistent with its strategy
to improve productivity.

During the first quarter of 1996, capital expenditures totaled $37.8 million, of
which $14.1 million related to the construction of the high-pressure gasoil
hydrotreater at the Wilmington refinery. The gasoil hydrotreater is designed
to increase the Wilmington refinery's ability to upgrade unfinished product
into finished product and increase runs of heavy, sour crude oil and allow
the processing of less-expensive feedstocks. The Company intends to spend an
additional $3.2 million through 1996 to complete the gasoil hydrotreater
project, for a total of $196.1 million. Capital expenditures during the first
quarter of 1996 also included $3.0 million for modifications to the Quebec
refinery to enhance its ability to run Heidrun and other highly acidic
crude oils.

The Company is continually investigating strategic acquisitions and other
business opportunities that will complement its current business activities.

The Company expects to fund its capital expenditures over the next several years
from cash provided by operations and, to the extent necessary, from the proceeds
of borrowings under its bank credit facilities and its commercial paper and
medium-term note program discussed below. In addition, depending upon its
future needs and the cost and availability of various financing alternatives,
the Company may from time to time seek additional debt or equity financing in
the public or private markets.

LIQUIDITY AND CAPITAL RESOURCES

At March 31, 1996, the Company had a cash position of $128.7 million. The
Company has $50 million of availability under a debt shelf registration
previously filed with the Securities and Exchange Commission. In addition, the
Company has committed, unsecured bank facilities which provide a maximum of $200
million and Cdn. $200 million of available credit to its subsidiaries, Ultramar
Inc. and Canadian Ultramar Limited, respectively, and a $100 million commercial
paper program supported by the unsecured bank facility of Ultramar Inc. The
Company's bank facilities require the maintenance of certain financial ratios
and contain covenants that must be complied with before its subsidiaries can pay
cash dividends and make loans to the Company. The Company believes these
covenants will not have a significant impact on the Company's liquidity or its
ability to pay dividends. At March 31, 1996, the Company had approximately
$272.3 million of remaining borrowing capacity under the bank facilities and
commercial paper program. In addition to its committed bank facilities, the
Company presently has approximately $268.0 million of borrowing capacity under
uncommitted, unsecured short-term lines of credit with fourteen financial
institutions.

The Company intends to file a shelf registration statement with the Securities
and Exchange Commission in 1996 covering the issuance, from time to time, of up
to an additional $250 million of debt and/or equity securities. The net
proceeds from any offering under the existing shelf registration or the 1996
shelf registration would add to the Company's working capital and would also
be available for general corporate purposes.

The Company believes its current sources of funds will be sufficient to satisfy
its capital expenditure, working capital, debt service and dividend requirements
for at least the next twelve months.

On April 25, 1996, the Company declared a dividend of $.275 per common share
payable on June 15, 1996 to holders of record on May 15, 1996

CASH FLOWS FOR THE THREE MONTHS ENDED MARCH 31, 1996

During the three months ended March 31, 1996, the Company's cash position
increased $1.8 million to $128.7 million. Net cash provided by operating
activities, before changes in non-cash operating assets and liabilities, was
$35.9 million. Net cash used in operating activities (after changes in non-cash
operating assets and liabilities) totaled $24.5 million.

Net cash used in investing activities during the three month period ended
March 31, 1996 totaled $37.2 million, representing capital expenditures and
capitalized refinery maintenance turnaround costs, net of the proceeds
from asset disposals.

Net cash provided by financing activities during the three month period ended
March 31, 1996, totaled $63.1 million, consisting of borrowings under the
Company's commercial paper program ($74.5 million) and the issuance of
Common Stock upon the exercise of employee stock options ($0.9 million),
partially offset by the payment of dividends ($12.2 million).

SEASONALITY

In eastern Canada, demand for petroleum products varies significantly during the
year. Distillate demand during the first and fourth quarters can range from 30%
to 40% above the average demand during the second and third quarters. The
substantial increase in demand for heating oils during the winter months results
in the Company's Canadian operations having significantly higher accounts
receivable and inventory levels during the first and last quarters of each year.
The Company's operations in California are less affected by seasonal
fluctuations in demand than its operations in eastern Canada. The working
capital requirements of the California operations are limited due to lower
inventory requirements and show little fluctuation throughout the year.

EXCHANGE RATES

The value of the Canadian dollar relative to the U.S. dollar has weakened
substantially since the inception of the Company in 1992. As the Company's
Canadian operations are in a net asset position, the weaker Canadian dollar has
reduced, in U.S. dollars, the Company's net equity at March 31, 1996 by $53.3
million. However, during the quarter ended March 31, 1996, the exchange rate
improved marginally over the rate at December 31, 1995, resulting in an increase
in the Company's equity of $2.4 million during the quarter.

With the exception of its crude oil costs, which are U.S. dollar denominated,
fluctuations in the Canadian dollar exchange rate will affect the U.S. dollar
amount of revenues and related costs and expenses reported by the Canadian
operation. The potential impact on refining margin of fluctuating exchange
rates together with U.S. dollar denominated crude oil costs is mitigated by the
Company's pricing policies in Canada, which generally pass on any change in the
cost of crude oil. Marketing margin, on the other hand, has been adversely
affected by exchange rate fluctuations as competitive pressures have, from time
to time, limited the Company's ability to promptly pass through the increased
costs to the ultimate consumer.

During April 1996, the Canadian dollar strengthened slightly against the U.S.
dollar. The Company expects the exchange rate to continue to fluctuate during
1996 and thus cannot reasonably predict its future movement or the resulting
impact on the Company's equity or results of operations.

The Company has considered various strategies to manage currency risk and it
hedges the Canadian currency risk when such hedging is considered economically
appropriate.

PART II. OTHER INFORMATION

ITEM 6. EXHIBITS AND REPORTS ON FORM 8-K

(a) EXHIBITS

11 - Statement re: Computation of Earnings Per Share

(b) REPORTS ON FORM 8-K

None

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.

ULTRAMAR CORPORATION
(REGISTRANT)

BY: /S/ H. PETE SMITH
----------------------------
H. PETE SMITH
SENIOR VICE PRESIDENT
AND CHIEF FINANCIAL OFFICER,
MAY 14, 1996

EXHIBIT 11 - STATEMENT RE: COMPUTATION OF EARNINGS PER SHARE

THREE MONTHS ENDED
MARCH 31,
---------
1996 1995
---- ----
(in thousands, except
per share data)

Primary:

Average shares outstanding . . . . . . . . . . . . 44,449 38,525

Net effect of dilutive stock options - based on the
treasury stock method using average market price 557 429
------- -------

Total. . . . . . . . . . . . . . . . . . . . . . 45,006 38,954
------- -------
------- -------

Income before cumulative effect of accounting change $14,814 $ 2,832
Cumulative effect of accounting change . . . . . . 22,024
------- -------
Net income . . . . . . . . . . . . . . . . . . . . $14,814 $24,856
------- -------
------- -------
Earnings per share:
Income before cumulative effect of accounting change $.33 $.07
Cumulative effect of accounting change . . . . . .57
---- ----
Net income . . . . . . . . . . . . . . . . . . . $.33 $.64
---- ----
---- ----

Fully Diluted:

Average shares outstanding . . . . . . . . . . . . 44,449 38,525

Net effect of dilutive stock options - based on the
treasury stock method using the period-end market
price, if higher than average market price . . . 617 501
------- -------

Total. . . . . . . . . . . . . . . . . . . . . . 45,066 39,026
------- -------
------- -------