================================================================================


                                  UNITED STATES

                       SECURITIES AND EXCHANGE COMMISSION

                             WASHINGTON, D.C. 20549

                                   FORM 10-Q/A


                                   ----------


                 AMENDMENT NO. 1 TO QUARTERLY REPORT PURSUANT TO
           SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934


For the quarterly period ended September 30, 1998    Commission file number 1-27


                                   TEXACO INC.
           (Exact name of the registrant as specified in its charter)


           Delaware                                              74-1383447
(State or other jurisdiction of                               (I.R.S. Employer
 incorporation or organization)                              Identification No.)


      2000 Westchester Avenue
       White Plains, New York                                      10650
(Address of principal executive offices)                         (Zip Code)



        Registrant's telephone number, including area code (914) 253-4000


                                   ----------

     Texaco Inc. (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, and
(2) HAS BEEN subject to such filing requirements for the past 90 days.

     As of October 30, 1998, there were outstanding 534,530,334 shares of Texaco
Inc. Common Stock - par value $3.125.

================================================================================

<PAGE>

The Registrant is filing this  Amendment No. 1 to Quarterly  Report on Form 10-Q
for the period ended  September 30, 1998,  in order to revise the  discussion of
its Year 2000  Readiness  that is contained in the  Management's  Discussion and
Analysis  of  Financial  Condition  and  Results of  Operations  section of said
Report.  Pursuant to Rule 12b-15 under the Securities  Exchange Act of 1934, the
Registrant  is including the complete text of the  Management's  Discussion  and
Analysis  of  Financial  Condition  and  Results of  Operations  section,  as so
revised.



                     MANAGEMENT'S DISCUSSION AND ANALYSIS OF
                  FINANCIAL CONDITION AND RESULTS OF OPERATIONS
                  ---------------------------------------------

RESULTS OF OPERATIONS
---------------------

Our net income  for the third  quarter  of 1998 was $215  million,  or $0.38 per
share, as compared with $490 million,  or $0.90 per share, for the third quarter
of 1997. Net income for the first nine months of 1998 was $816 million, or $1.46
per share,  as compared with $2,041 million,  or $3.75 per share,  for the first
nine months of 1997.

Net income before  special items for the third quarter of 1998 was $208 million,
or $0.37 per share.  There were no special  items in the third  quarter of 1997.
For the first nine  months of 1998,  net income  before  special  items was $802
million,  or $1.43 per share,  as  compared  with $1,422  million,  or $2.60 per
share, for the first nine months of 1997.

Weak worldwide crude oil and natural gas prices and depressed downstream margins
in the Far East eroded third quarter  earnings.  Worldwide  production growth of
nine  percent  and tight  control  over  cash  expenses  helped to lessen  these
negative impacts.

During the third quarter of 1998:
       o Average  quarterly  crude oil prices  slumped to their lowest levels
         since 1986;
       o Continued economic instability in the Far East depressed downstream
         margins;
       o Worldwide daily production rose nine percent for the quarter and 12
         percent for nine months;  and
       o  Year-to-date cash operating expenses per barrel decreased six percent.

Average  crude oil  prices  for the  quarter  reached a low point not seen since
mid-1986.  OPEC efforts to reduce  production and lower inventory  levels caused
crude prices to rebound  somewhat from their summer lows;  however,  prices have
recently retreated and remain significantly below last year's levels.  Storms in
the Gulf of Mexico caused temporary  production  shut-ins which further dampened
earnings.

Our worldwide downstream results decreased from sluggish margins,  especially in
the Far East, due to the impact of the Asian financial and economic crisis. As a
result,  Singapore  refinery  margins  were  negative in the third  quarter from
extremely weak demand.  In the U.S.,  results were down from an extremely strong
quarter  last year;  however,  in Latin  America and  Europe,  margins and sales
volumes remained strong.

To remain competitive in this environment,  our affiliate,  Caltex,  announced a
reorganization  program.  This program will focus the organization  functionally
and  better  position  Caltex  to  identify  growth  opportunities.  When  fully
implemented,  it is expected to yield  expense  savings in excess of $50 million
annually.  Also, our U.S.  alliances with Shell Oil Company and Saudi  Refining,
Inc.  continue  to  implement  programs  that will take  advantage  of  existing
synergies.

Results for 1998 and 1997 are  summarized  in the  following  table.  Details on
special items are included in the functional analysis which follows this table.








                                      - 1 -


<PAGE>

<TABLE>
<CAPTION>

                                                                                            (Unaudited)
                                                                         -------------------------------------------------
                                                                         For the nine months          For the three months
                                                                         ended September 30,           ended September 30,
                                                                         -------------------           -------------------
                                                                         1998           1997          1998           1997
                                                                         ----           ----          ----           ----
                                                                                       (Millions of Dollars)
<S>                                                                     <C>            <C>           <C>             <C>  
Net income before special items                                         $  802         $1,422        $  208          $ 490
                                                                        ------         ------        ------          -----
Caltex reorganization                                                      (43)             -           (43)             -
U.S. alliance formation issues                                              (7)             -            25              -
U.S. tax issues                                                             25            488            25              -
Gains on major asset sales                                                  20            174             -              -
Tax benefits on asset sales                                                 19              -             -              -
Financial reserves for various issues                                        -            (43)            -              -
                                                                        ------         ------        ------          -----
                                                                            14            619             7              -
                                                                        ------         ------        ------          -----
Total net income                                                        $  816         $2,041        $  215          $ 490
                                                                        ======         ======        ======          =====
</TABLE>



                               OPERATING EARNINGS


PETROLEUM AND NATURAL GAS
     EXPLORATION AND PRODUCTION
        United States

Exploration  and  production  earnings in the U.S. for the third quarter of 1998
were $92 million,  as compared  with $232 million for the third quarter of 1997.
For the first nine months of 1998 and 1997,  earnings were $319 million and $732
million,  respectively.  Results for 1998 included a second quarter special gain
of $20 million from the sale of an interest in a natural gas pipeline. Excluding
the  special  gain,  results  for the first  nine  months of 1998  totaled  $299
million.  Results  for 1997  included  a second  quarter  special  charge of $43
million to establish  financial  reserves for royalty and  severance tax issues.
Excluding the special charge,  results for the first nine months of 1997 totaled
$775 million.

U.S.  exploration and production  earnings for the third quarter and nine months
of 1998 were below last  year's  levels due to lower  crude oil and  natural gas
prices.  Average realized crude oil prices for the third quarter and nine months
of 1998 were  $10.06  and  $10.87 per  barrel;  39  percent  lower than the 1997
periods.  The dramatic  price  declines  reflect a slowing in  worldwide  demand
growth and continued high inventory levels.  Crude oil prices recovered somewhat
in late  September as a result of the OPEC nations'  efforts to cut  production.
For the third quarter and nine months of 1998,  average  natural gas prices were
$1.89 and $2.03 per MCF; 11 percent lower than the 1997  periods.  Lower natural
gas prices were the result of excess supply in the marketplace.

Production increased four percent for this year's third quarter and nine percent
for the year.  The increased  production in the quarter  included new production
from the Arnold,  Oyster and Barite South fields  located in the Gulf of Mexico.
Both  production and earnings were  negatively  impacted by the recent storms in
the Gulf of Mexico.  This year included  production from the Monterey properties
acquired in November 1997.

We continued to pursue new reserve opportunities in the Gulf of Mexico,  leading
to higher  exploration  expenses  this year.  Exploration  expenses for the nine
months of 1998 were $195 million  before tax,  $73 million  higher than the same
period of 1997.  For the third  quarter of 1998,  exploration  expenses were $48
million, $2 million higher than the third quarter of 1997.






                                      - 2 -


<PAGE>

         International

Exploration  and production  earnings  outside the U.S. for the third quarter of
1998 were $40 million,  as compared  with $103 million for the third  quarter of
1997. For the first nine months of 1998 and 1997, earnings were $131 million and
$499 million,  respectively.  Results for 1997 included  second quarter  special
gains of $161  million  from the sales of a 15 percent  interest  in the Captain
Field in the U.K.  North Sea,  an interest in  Canadian  gas  properties  and an
interest in an Australian pipeline system.  Excluding the special gains, results
for the first nine months of 1997 totaled $338 million.

International exploration and production earnings for the third quarter and nine
months of 1998 declined significantly from the same periods of 1997 due to lower
crude oil  prices.  Average  realized  crude oil prices in 1998 were  $11.05 per
barrel for the quarter and $11.55 for nine months.  These average prices were 35
percent  below  1997  levels.  OPEC's  efforts  to reduce  production  and lower
inventory  levels  caused  prices to recover  slightly  from their  summer lows;
however,  prices have  recently  retreated and remain  substantially  below last
year's levels.

Daily  production  growth of 15 percent  for this  year's  third  quarter and 16
percent  for the year  benefited  earnings.  The  combined  production  from the
Captain,  Erskine  and Galley  fields in the U.K.  North Sea grew to 95 thousand
barrels of oil equivalent per day in the third quarter.  Production also grew in
the Partitioned Neutral Zone, Indonesia and Colombia.

Exploration  and  production  operating  results  outside the U.S. for the third
quarter and nine months of 1998 included non-cash currency charges of $3 million
and $6 million,  respectively,  related to deferred income taxes  denominated in
British Pound  Sterling.  This compares to benefits of $13 million for the third
quarter and $26 million for nine months of 1997.


     MANUFACTURING, MARKETING AND DISTRIBUTION

         United States

Manufacturing,  marketing  and  distribution  earnings in the U.S. for the third
quarter of 1998 were $124  million,  as compared with $132 million for the third
quarter of 1997. For the first nine months of 1998 and 1997,  earnings were $235
million  and $238  million,  respectively.  Results  for 1998  included  a third
quarter net special  gain of $25 million  associated  with the  formation of the
U.S.  alliances.  This net gain included gains on asset sales,  asset writedowns
and other  formation  charges.  The second  quarter  of 1998  included a special
charge of $32  million  for  alliance  formation  expenses,  primarily  employee
severance programs. Excluding these special items, results for the third quarter
and  first  nine  months  of  1998   totaled  $99  million  and  $242   million,
respectively.  Results for 1997  included a second  quarter  special gain of $13
million from the sale of credit card  operations.  Excluding  the special  gain,
results for the first nine months of 1997 totaled $225 million.

U.S. manufacturing, marketing and distribution earnings for the third quarter of
1998 included  results from Motiva  Enterprises  LLC, our Eastern  alliance with
Shell Oil Company and Saudi Refining,  Inc.,  that began  operations in July. In
addition,   the  quarter  and  year  included  operating  results  from  Equilon
Enterprises  LLC,  our  Western  alliance  with  Shell Oil  Company,  that began
operations in the first quarter.

Results for the third quarter of 1998  reflected the industry trend of shrinking
refining margins. Operating difficulties at certain refineries and the temporary
shutdown  of  Gulf  Coast  refineries  in  September  due to  hurricane  Georges
negatively impacted earnings. Lower crude costs as well as strong transportation
and lubricants earnings benefited the quarter and year.


                                      - 3 -


<PAGE>

Results for the third quarter of 1997  included  minimum  refinery  downtime and
solid West Coast margins.  Both the quarter and year included  strong Gulf Coast
refining margins. However, refinery fires in late 1996 and early 1997 negatively
affected  product yields and caused  casualty loss expense in the first quarter.
Additionally, West Coast margins were weak during the first half of the year due
to intense competitive pressures.

         International

Manufacturing,  marketing  and  distribution  earnings  outside the U.S. for the
third  quarter of 1998 were $38 million,  as compared  with $134 million for the
third quarter of 1997. For the first nine months of 1998 and 1997, earnings were
$414 million and $370 million,  respectively.  Results for 1998 included a third
quarter net special  charge of $43 million for a  reorganization  program in our
affiliate,  Caltex.  Excluding the special charge, results for the third quarter
and  first  nine  months  of  1998   totaled  $81  million  and  $457   million,
respectively.

International manufacturing and marketing earnings for the third quarter of 1998
declined  significantly  from  1997.  The  sharp  decline  was due to the  Asian
financial  and  economic  crisis  which  weakened  demand and  created  currency
volatility.  Caltex  experienced  a  loss  as  a  result  of  declining  margins
throughout  the region from weak inland demand that caused higher  volumes to be
sold into the lower  margin  export  markets.  Singapore  refinery  margins were
negative from extremely weak demand. However, in Latin America and Europe, third
quarter earnings were up slightly.

Nine months 1998 results  increased due to improved  manufacturing and marketing
results  from higher  margins and  volumes,  mainly in the U.K.,  Caribbean  and
Central America.

Manufacturing, marketing and distribution operating results outside the U.S. for
the third quarter and nine months of 1998 included  non-cash currency charges of
$3 million  and $5  million,  respectively,  related to  deferred  income  taxes
denominated in British Pound  Sterling.  This compares to benefits of $4 million
for the third quarter and $8 million for nine months of 1997.


NONPETROLEUM

Nonpetroleum earnings for the third quarter of 1998 were $4 million, as compared
with $3 million for the third quarter of 1997. For the first nine months of 1998
and 1997, earnings were $4 million and $16 million, respectively.


                         CORPORATE/NONOPERATING RESULTS

Corporate  and  nonoperating  charges  for the  third  quarter  of 1998 were $83
million, as compared with charges of $114 million for the third quarter of 1997.
Corporate and  nonoperating  charges for the first nine months of 1998 were $287
million,  as compared with earnings of $186 million for the first nine months of
1997.  Results for 1998 included a third quarter  special benefit of $25 million
to adjust prior year's tax liability and a second quarter special tax benefit of
$19 million  attributable to the sale of an interest in a subsidiary.  Excluding
the special  benefits,  charges  for the third  quarter and first nine months of
1998 totaled $108 million and $331 million, respectively.  Results for the first
nine months of 1997  included a first  quarter  special  benefit of $488 million
associated  with  an IRS  settlement.  Excluding  this  benefit,  corporate  and
nonoperating charges totaled $302 million for the first nine months of 1997.

Corporate and nonoperating results for the third quarter and nine months of 1998
included  increased  net  interest  expense  from higher debt  levels;  however,
successful  efforts  to  control  expenses  in  overhead  departments  more than
mitigated this impact.  Results for nine months of 1998 included higher expenses
for Texaco's  corporate  advertising  campaign  introduced in the second half of
1997.


                                      -4 -
<PAGE>

LIQUIDITY AND CAPITAL RESOURCES
-------------------------------

Our cash,  cash  equivalents  and  short-term  investments  were $285 million at
September 30, 1998, as compared with $395 million at year-end 1997.

During  1998,  our  operations  provided  cash of $2,078  million.  We raised an
additional  $701 million from net  borrowings and $130 million from asset sales.
We spent  $2,226  million on our capital and  exploratory  program and paid $792
million in dividends to common, preferred and minority shareholders.

At September 30, 1998, our ratio of debt to total borrowed and invested  capital
was 34.9%,  as compared with 32.3% at year-end  1997. At September 30, 1998, our
long-term  debt  included  $1.7 billion of debt  scheduled to mature  within one
year,  which we have both the intent and  ability to  refinance  on a  long-term
basis.  At September 30, 1998, we  maintained  $1.7 billion in revolving  credit
facilities,  which were unused at quarter end. On November 9, 1998, we increased
the amount of the commitments to $2.05 billion, which also remained unused.

Our major debt activity during the first nine months of 1998 was as follows. We:
o  borrowed $300 million at 6% for seven years and issued $153 million of 
   Medium-Term Notes.
o  borrowed $150 million at 5.92% for seven years to cover expenditures at our 
   Erskine field in the U.K. North Sea.
o  borrowed $131 million for four years and entered into an associated 
   LIBOR-based floating rate swap associated with existing assets of our Tartan
   Field in the U.K. North Sea.
o borrowed $94 million from the issuance of Zero Coupon Notes due 2005.
o increased the amount of our  commercial  paper by $300 million,  to a total of
  $1.2 billion at September 30, 1998. 
o repurchased  approximately $200 million of 10.61% Notes that we assumed in 
  last year's acquisition of Monterey Resources.

During the first  quarter of 1998,  we  purchased  about $125  million of common
stock in the open  market.  This  completed  a two-year  program  under which we
purchased $650 million of our common stock. On March 30, 1998, we announced that
we will purchase up to an additional $1 billion of our common stock,  subject to
market  conditions,  through  open  market  purchases  or  privately  negotiated
transactions.  Under the current program, we purchased about $450 million during
the first nine months of 1998.

 In  April  1998,   we  received   $463  million  from   Equilon,   representing
reimbursement of certain capital expenditures incurred prior to the formation of
Equilon.  In  addition,  we received  $149 million from Equilon in July 1998 for
certain specifically identified assets transferred for value to Equilon.

We  consider  our  financial  position  to be  sufficiently  strong  to meet our
anticipated future financial requirements.

                                      - 5 -

<PAGE>

NEW ACCOUNTING STANDARDS
------------------------

In June 1997, the Financial  Accounting  Standards Board (FASB) issued Statement
of Financial Accounting Standards (SFAS) 131,  "Disclosures about Segments of an
Enterprise  and  Related   Information."   SFAS  131  requires  that  we  report
information  about our business  segments on the same basis used internally when
assessing performance and allocating  resources.  We will adopt SFAS 131 for our
1998  audited  financial  statements.  Presently,  we  disclose  in our  audited
financial statements  information about geographic segments only. We expect that
our  business  segments  will be  substantially  similar  to those we  presently
identify in the  Management's  Discussion and Analysis section of our Forms 10-K
and 10-Q.

In February 1998, the FASB issued SFAS 132, "Employers' Disclosure about Pension
and Other  Postretirement  Benefits."  We are required to adopt SFAS 132 for our
1998 audited financial  statements and will modify our disclosures  accordingly.
SFAS  132  does  not  affect  how  we  measure  expense  for  pension  or  other
postretirement benefits.

In June 1998, the FASB issued SFAS 133,  "Accounting for Derivative  Instruments
and  Hedging  Activities,"  effective  in  the  first  quarter  2000.  SFAS  133
establishes  new  accounting  rules and disclosure  requirements  for derivative
instruments.  We are  assessing the impacts of SFAS 133 on the balance sheet and
on net income.


CAPITAL AND EXPLORATORY EXPENDITURES
------------------------------------

Our capital and exploratory  expenditures  for the first nine months of 1998 and
1997 were $2,769 million and $3,023 million, respectively.

In the U.S., our  exploration  and  development  expenditures  slowed during the
third quarter,  but were flat for the year.  Activities continued to reflect our
focus in both the  traditional  shelf and deepwater areas of the Gulf of Mexico.
Using  advanced  technologies,  we continue to grow oil and gas  production  and
reserves.

Internationally,  our expenditures decreased following the completion of several
large projects in both the U.K. and Danish sectors of the North Sea. Development
activity in Indonesia,  the North Sea and other  promising areas continued while
exploratory  spending  decreased in China and other Far Eastern areas.  Upstream
expenditures  in discovered  reserve  opportunities  also continued in promising
areas, including the Karachaganak venture in Kazakhstan.

Lower international  downstream  expenditures reflected a decrease in the Caltex
marketing  areas from higher 1997 service  station  investments in Hong Kong and
slower  re-imaging  spending in Caltex areas and Europe.  These  decreases  were
partly offset by higher  marketing and  manufacturing  expenditures in our newly
formed U.S. alliances.

We  continue  to  carefully  assess  investment  projects  given the current and
projected  industry  environment.  Adjustments  in  spending  have  been made by
deferring  non-critical  projects into future  periods.  It is expected that our
capital and exploratory  expenditures for the year 1998 will be about 20 percent
less than the $4.6 billion that we had budgeted for the year.


                                      - 6 -

<PAGE>

YEAR 2000 READINESS
-------------------

The Year  2000  ("Y2K")  problem  concerns  the  inability  of  information  and
technology-based   operating   systems  to   properly   recognize   and  process
date-sensitive  information  beyond  December  31,  1999.  This could  result in
systems failures and  miscalculations,  which could cause business  disruptions.
Equipment that uses a date, such as computers and operating control systems, may
be affected.  This includes  equipment used by our customers and  suppliers,  as
well as by utilities and governmental entities that provide critical services to
us.

State of Readiness

We started  working on the Y2K problem in early 1995. By early 1996, we formed a
Business Unit Steering  Team and a Corporate  Year 2000 Office.  Our progress is
reported monthly to our Chief Executive  Officer,  and quarterly to our Board of
Directors.  Additionally,  we are actively  performing  both internal audits and
external reviews to ensure that we reach our objectives.

We recognize that the Y2K issue affects every aspect of our business,  including
computer software, computer hardware, telecommunications,  industrial automation
and relationships with our suppliers and customers.  Our Y2K effort has included
an  extensive  program to educate our  employees,  and  development  of detailed
guidelines for project management,  testing, and remediation. Each business unit
is  periodically   graded  on  their  progress  toward  reaching  their  project
milestones. Our major affiliates are undertaking similar programs.

In our  computers  and  computer  software,  most of the  problems we have found
involve our corporate  financial  software  applications.  Approximately  95% of
these need some type of  modification or upgrade.  In our industrial  automation
systems,  which we use in our refinery,  lubricant plant, gas plant and oil well
operations to monitor,  control and log data about the processes,  approximately
5% need  modification or upgrade.  The majority of these are auxiliary  systems,
such as laboratory  analyzers and alarm  logging  functions,  but several of the
higher level supervisory data acquisition systems and flow metering systems also
require  upgrades.  We project  that we will be  approximately  80%  through the
effort of  inventorying,  assessing  and fixing our  systems by the end of 1998.
Almost all systems  should be ready by the end of the first quarter of 1999, but
a few will be delayed until later in 1999 as we wait for vendor upgrades. We are
also  progressing  in our reviews with  critical  suppliers  and customers as to
their Y2K state of readiness.

Costs

Because we began early, we have been able to do most of the work ourselves. This
has kept our  costs  low,  and we  project  that we will  spend no more than $75
million on making our systems  Y2K ready.  As of  September  30,  1998,  we have
incurred costs of approximately $35 million.


Risks

Certain  Y2K risk  factors  which  could have a material  adverse  effect on our
results of operations,  liquidity,  and financial condition include, but are not
limited to: failure to identify critical systems which will experience failures,
errors in efforts to  correct  problems,  unexpected  failures  by key  business
suppliers  and  customers,  extended  failures  by public  and  private  utility
companies or common  carriers  supplying  services to us, and failures in global
banking systems and capital markets.

We routinely analyze all of our production and automation systems for potential
failures and  appropriate  responses are identified and  documented.  If we have
missed  a  potential  Y2K  problem,  it will  most  likely  be in our  financial
software,  or in  auxiliary  systems  in  our  operations,  such  as  laboratory
analyzers and alarm logging  functions,  where we have found the majority of the
problems.  We do not  anticipate  that a  problem  in these  areas  will  have a
significant impact on our ability to pursue our primary business objectives. Any
problems in our primary  industrial  automation  systems can be dealt with using
our existing engineering procedures.



                                      - 7 -

<PAGE>

The worst case  scenario  would be that our failure or failures by our important
suppliers and customers to correct material Y2K problems could result in serious
disruptions in normal business activities and operations. Such disruptions could
prevent us from  producing  crude oil and natural  gas,  and  manufacturing  and
delivering  refined  products to  customers.  For example,  failure by a utility
company to deliver  electricity  to our producing  operations  could cause us to
shut-in  production  leading to lost sales and income.  While we do not expect a
worst case scenario,  if it occurs,  Y2K failures,  if not corrected on a timely
basis or otherwise  mitigated by our  contingency  plans,  could have a material
adverse  effect on our results of  operations,  liquidity and overall  financial
condition.

Contingency Plans

We are well into our program to identify  and assess our Y2K  readiness  and the
Y2K readiness of our critical and important  suppliers  and  customers.  We will
either seek alternative suppliers and customers for those we assess as risky, or
we will  develop  and test  contingency  plans.  We have begun to develop  these
contingency  plans.  In  addition,   we  are  reviewing  our  existing  business
resumption  plans.  We expect to arrange  alternative  suppliers  or develop and
complete the testing of contingency plans no later than July 1, 1999.


EURO
----

On January 1, 1999, eleven of the fifteen member countries of the European Union
are  scheduled  to establish  fixed  conversion  rates  between  their  existing
currencies  ("legacy  currencies")  and one common currency - the euro. The euro
will begin to be traded on world currency  exchanges and may be used in business
transactions.  On January 1, 2002, new euro-denominated  bills and coins will be
issued,  and legacy currencies will be completely  withdrawn from circulation by
June 30 of that year.

Our operating  subsidiaries  affected by the euro  conversion have been actively
addressing  our IT systems  and overall  fiscal and  operational  activities  to
ensure our euro readiness. We are adapting our computer, financial and operating
systems and equipment to accommodate euro-denominated  transactions. We are also
reviewing our marketing and  operational  policies and  procedures to ensure our
ability to continue to successfully  conduct all aspects of our business in this
new, price transparent market. We believe that the euro conversion will not have
a material adverse impact on our financial condition or results of operations.


                                      - 8 -
<PAGE>

WORLDWIDE UPSTREAM REORGANIZATION
---------------------------------

On November 12, 1998, we announced a worldwide upstream  reorganization designed
to place greater emphasis on our long-term production and reserve growth, and to
address the need for  streamlining  costs and improving  competitiveness  in the
current low oil price  environment.  The reorganization is expected to result in
the reduction of approximately 1,000 employees and contractors  worldwide and to
be completed by the end of the first quarter of next year.



                                  * * * * * * *



FORWARD-LOOKING STATEMENTS
--------------------------

Portions  of the  foregoing  discussion  of YEAR  2000  READINESS,  the EURO and
WORLDWIDE UPSTREAM  REORGANIZATION contain  "forward-looking  statements" within
the meaning of Section 27A of the  Securities Act of 1933 and Section 21E of the
Securities  Exchange  Act of 1934.  These  statements  are based on our  current
expectations,  estimates and projections. Therefore, they could ultimately prove
to be inaccurate.  Factors which could affect our ability to be Y2K compliant by
the end of 1999  include:  the  failure of  customers,  suppliers,  governmental
entities and others to achieve  compliance and the inaccuracy of  certifications
received  from them;  our  inability to identify and  remediate  every  possible
problem;  a shortage of  necessary  programmers,  hardware  and  software;  and,
similar  circumstances.  Factors which could alter the  financial  impact of our
euro  conversion  include  changes  in  current  governmental  regulations  (and
interpretations of such regulations),  unanticipated  implementation  costs, and
the effect of the euro conversion on product prices and margins.  The extent and
timing of the upstream  reorganization  will depend upon  worldwide and industry
economic conditions.




                                      - 9 -
<PAGE>

                                   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, thereunto duly authorized.




                                                            Texaco Inc.
                                                --------------------------------
                                                           (Registrant)




                                           By:              R.C. Oelkers
                                                --------------------------------
                                                (Vice President and Comptroller)




                                           By:                R.E. Koch
                                                --------------------------------
                                                        (Assistant Secretary)




Date:    February 25, 1999
         -----------------



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