<PAGE>   1
                                  FORM 10-KSB

                    U.S. SECURITIES AND EXCHANGE COMMISSION
(Mark One)                    Washington, D.C.  20549

[XX] ANNUAL REPORT PURSUANT TO SECTION 13 OR 15(d) of the SECURITIES EXCHANGE
     ACT OF 1934 [FEE REQUIRED]

                  For the fiscal year ended December 31, 1997

                                      OR

[  ] TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES
     EXCHANGE ACT OF 1934 [NO FEE REQUIRED]

For the transition period from ______________to ____________________________

Commission file number:     0-3912

                            PETROL INDUSTRIES, INC.
             (Exact Name of Registrant as Specified in its Charter)

           NEVADA                                     75-1282449
(State or Other Jurisdiction of             (IRS Employer Identification No.)
 Incorporation of Organization)

202 N. THOMAS, SUITE 4, SHREVEPORT, LOUISIANA             71107-6539
  (Address of Principal Executive Offices)                (Zip Code)

Registrant's telephone number, including area code:  (318) 424-6396

          Securities registered pursuant to Section 12(b) of the Act:

   TITLE OF EACH CLASS            NAME OF EACH EXCHANGE ON WHICH REGISTERED
                          None

          Securities registered pursuant to Section 12(g) of the Act:

                    Common Stock, par value $.10 per share

     Check mark whether the issuer: (1) has filed all reports required to be
filed by Section 13 or 15(d) of the Exchange Act during the past 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: [   ]

     Check if there is no disclosure of delinquent filers in response to Item
405 of Regulation S-B is not contained herein, and will not be contained, to
the best of registrant's knowledge, in definitive proxy or information
statements incorporated by  reference in Part III of this Form 10-KSB or any
amendment to this Form 10-KSB. [ X ]

     State the issuer's revenues for its most recent fiscal year:  $810,365

     The aggregate market value of the voting stock held by non-affiliates of
the registrant, computed by reference to the average of the closing bid and
asked price of the stock as of March 12, 1998 was $499,124.

     ISSUERS INVOLVED IN BANKRUPTCY PROCEEDINGS DURING THE PAST FIVE YEARS

     Check whether the issuer has filed all documents and reports required to
be filed by Section 12, 13 or 15(d) of the Exchange Act after distribution of
securities under a plan confirmed by a court.  Yes [  ] No [  ]

                   APPLICABLE ONLY TO CORPORATE REGISTRANTS

     The number of shares of common stock, $.10 par value, outstanding as of
March 19, 1998 was 1,597,196.

     Transitional Small Business Disclosure Format: Yes [    ]  No [ X ]

                     DOCUMENTS INCORPORATED BY REFERENCE:
                                     None
                              Page 1 of 34 Pages
                           Index appears at Page 10











































<PAGE>   2

ITEM 1.   BUSINESS.

GENERAL DESCRIPTION.

     Petrol Industries, Inc. ("Petrol" or the "Company") was organized under
the laws of the State of Nevada in 1968 as a wholly-owned subsidiary of
Sovereign Industries, Inc.  In 1970, Sovereign Industries, Inc. distributed a
substantial portion of Petrol's common stock to its stockholders.  Since the
dates of their respective organizations, Petrol and its wholly-owned
subsidiaries have been engaged in a single industry segment - drilling for and
producing oil and gas on leased property located in the Caddo Pine Island
Field, the Greenwood-Waskom Field, and the Shreveport Field, all in Caddo
Parish, Louisiana.  Petrol and its wholly-owned subsidiaries currently employ
16 persons in the aggregate.

     As of December 31, 1997, Petrol's leases contained 8 completed gas wells,
18 completed wells producing oil and gas, and 326 completed oil wells,
principally in the Annona Chalk zone.  Petrol estimates that, on the average,
its wells have been producing for a period in excess of 25 years.  An aggregate
of 275 wells producing oil or oil and gas are currently being operated.  The
Company expects that if received oil prices justify the expenditure,
approximately 30 of its wells will be placed back in operation during the
course of 1998, as a result of its on-going rework program discussed below,
although even so, it is expected that approximately 20-25 wells will
temporarily not be operating at any given time as maintenance is required.
Management is carefully examining whether to suspend production on certain
wells to conserve available capital and assets.  During the course of 1997, the
Company disposed of two of its leases which had become unprofitable to operate.

     Virtually all of the Company's oil production comes from property
characterized as stripper well property, meaning that the wells located thereon
produced an average of 10 barrels or less per day.  In 1997, Petrol's interests
in oil wells and gas wells taken together with oil wells owned by the limited
partnerships organized in connection with its 1979, 1983 and 1984 drilling
programs had a gross production of 42,672 barrels of oil and 3,038 MCF of gas,
and production, net to Petrol, of 32,516 barrels of oil and 3,038 MCF of gas.

     The prices obtained by Petrol for its oil are in direct proportion to its
gravity (a.p.i.); the higher the gravity, the higher the price.  Approximately
51% of Petrol's oil production constitutes high gravity, light crude, having a
gravity of 40 a.p.i. or above; the balance of Petrol's production ranges from
18 to 39 a.p.i.  During the calendar year 1997, the average price received by
Petrol for its oil (including wells owned by the various partnerships) was
$18.44 per barrel of oil and $2.04 per MCF of gas.

REWORK AND MAINTENANCE PROGRAMS.

     Petrol maintains for itself and the limited partnerships it formed (see
below) an ongoing rework and maintenance program with respect to all its
wells.  During 1997 and 1996, approximately $157,199 and $151,054 were
expended on such maintenance.

     In 1979, 1983 and 1984 Petrol formed Louisiana partnerships in commendam
(limited partnerships) for the development of oil and gas wells on its
properties.  In connection with such programs, Petrol contributed drilling
sites and hardware, was responsible for drilling and completing the wells on a
"turnkey" basis, and presently operates the completed wells.  Actual drilling
was done by one of several locally available subcontractors.  The Company also
<PAGE>   3

handles the administrative and bookkeeping arrangements for the partnerships.
Petrol was paid fees for drilling the partnerships' wells, receives additional
fees for operating the wells and is entitled to a share of the partnerships'
net income.

     The Company receives 75% of net revenues from the 26 wells drilled for the
1983 limited partnership and from the 17 wells drilled for the 1984 limited
partnership.

     There was no drilling activity in 1996 or 1997.

MARKET FOR PETROL'S OIL AND GAS PRODUCTION.

     The Company's oil and gas production is sold to major oil companies and
other purchasers which gather oil production by tankwagon in areas where
pipelines are not available.  Two companies, EOTT Energy Operating Limited
Partnership, formerly EOTT Energy ("EOTT") and Citgo Petroleum Corporation
together accounted for 93.3% of the Company's 1997 oil sales.  More than half a
dozen other customers account for the balance of the Company's sales.  Petrol
is not a party to any long-term supply contracts for oil and gas.

     In recent years, Petrol's production has been sold at the local open
market price, which is reflective of world-wide supply of and demand for crude
oil and local demand for natural gas.  Management believes that the continuing
desire of domestic refiners and marketers of oil and gas to secure access to
domestic production will continue to create a strong market for Petrol's
products.  Petrol anticipates, however, that the price which its products will
command will continue to closely match world oil prices, which in turn reflect
world economic and political conditions.

GOVERNMENTAL REGULATION.

     Petrol, in the operation of its existing oil and gas wells and in the
drilling of new wells, is subject to a number of federal, state and other laws
and regulations concerning requirements relating to permits to drill wells, the
spacing of wells, the prevention of waste of oil and gas, and the manner of
drilling and completing wells.  Management believes that Petrol is in
compliance with all federal, state and local statutes and regulations
regulating the discharge of materials into the environment or otherwise
relating to the protection of the environment.  Although compliance with such
statutes and regulations has a material effect on the Company's capital
expenditures and earnings, such compliance does not adversely affect its
competitive position in its industry, as all other producers in its market are
subject to the same statutes and regulations.  Should such regulations be
strengthened, however, the Company would likely not have the capital or liquid
asset reserves to ensure compliance, given the cash flow generated from oil
sales at current oil prices.

ITEM 2.   PROPERTIES.

     a.  LOCATION AND CHARACTER OF THE COMPANY'S PROPERTIES.  Petrol, in
connection with its oil and gas production, currently leases approximately 110
parcels of property, located in the Caddo Pine Island Field and the Shreveport
Field, both located in Caddo Parish, Louisiana.  Most of its wells are shallow
oil wells, completed in the Annona Chalk Zone, at depths ranging from 1,400
feet to 1,600 feet.  In general, the leases held by Petrol provide that they
shall remain in force so long as producing wells are being operated thereon or
so long as Petrol is actively engaged in rework thereon.  If Petrol does not
<PAGE>   4

produce any oil from a particular lease and is not engaged in any rework on
such lease for a period of three consecutive months, such lease may at the
option of the lessor, be deemed abandoned.  Because of the Company's shortage
of capital and liquid assets, Management is examining the possibility of
suspending production on many of its leases.  If such a strategy is
implemented, Management will seek to minimize the adverse effect which
suspension of production could have on the Company's lease holdings.

     b.  RESERVES.  See Supplemental Information regarding Oil and Gas
Producing Activities at Pages 21 to 24 and Schedules 3 and 4 at Pages 25 to 26,
for estimates of net quantities of proved oil and gas reserves, and for
standardized measure of discounted future net cash flow relating thereto.

     c.  RESERVES REPORTED TO OTHER AGENCIES.  The Company did not file any
estimates of oil and gas reserves with any federal authority or agency during
1997.

     d.  PRODUCTION.  For the years ended December 31, 1996 and 1997, the
average sales price (including transfers) per unit of oil produced was $20.34
and $18.44, respectively, and the average production cost (lifting cost) per
unit of production for oil was $15.36 and $15.73, respectively.

     e.  PRODUCTIVE WELLS AND ACREAGE.  As of December 31, 1997, the Company
held the following productive wells and developed acres:

                                         OIL          GAS        OIL & GAS

     (i)    Gross Productive Wells       326            8           18
     (ii)   Net Productive Wells         316            1.2         10.5
     (iii)  Gross Developed Acres      4,288        1,310          958
     (iv)   Net Developed Acres        2,436.3         66          179.5

     f.  UNDEVELOPED ACREAGE.  As of December 31, 1997, the Company held the
following undeveloped acreage:

          (i)    Gross Acres                   121
          (ii)   Net Acres                      54

     g.  DRILLING ACTIVITY.  No drilling activity occurred in 1997 or 1996.

     h.  PRESENT ACTIVITIES.  See Item 1.

     i.  DELIVERY COMMITMENTS.  The Company is not, and for more than three
years, had not been required to provide any fixed or determinable quantity of
oil or gas under any contracts or agreements.













<PAGE>   5


ITEM 3.   LEGAL PROCEEDINGS.

          None.

ITEM 4.   SUBMISSION OF MATTERS TO A VOTE OF SECURITY HOLDERS.

          Not applicable.


















































<PAGE>   6

                                    PART II

ITEM 5.   MARKET FOR THE REGISTRANT'S COMMON STOCK AND RELATED STOCKHOLDER
          MATTERS.

     Until June 8, 1992, trading in the Company's common stock was reported in
the National Association of Securities Dealers' Automated Quotation system.
Since June 9, 1992, the Company's common stock has been traded
over-the-counter.  Following are the high and low bids of its common stock as
of January 1, 1996, on a quarterly basis.  Prices are reported by the National
Quotation Bureau, Inc. which may reflect inter-dealer prices, without retail
mark-up, mark-down or commission and may not necessarily represent actual
transactions.

                                             HIGH BID              LOW BID
                                             --------              -------
            1996

     1st Quarter                               3/16                 5/32
     2nd Quarter                               7/16                 3/16
     3rd Quarter                               3/8                  1/8
     4th Quarter                               9/16                 1/8

            1997

     1st Quarter                               5/16                 5/32
     2nd Quarter                               1/2                  5/32
     3rd Quarter                               9/32                 3/16
     4th Quarter                               7/16                 5/32

            1998

     1st Quarter thru March 13                 3/8                  7/32


     On March 20, 1998, there were 3,747 holders of record of its common stock.

     No dividends were declared or paid during 1996 or 1997 and the Company has
no present intention to pay cash dividends in the foreseeable future.

     During the course of 1997, Joseph M. Rodano, President and Treasurer of
Petrol, as well as a member of its Board of Directors, purchased a total of
92,000 shares Common Stock, $.10 par value per share, of Petrol Industries,
Inc.  During the course of 1996, Mr. Rodano purchased a total of 27,500
shares.  Each purchase was, in each case, in an open market transaction.  All
of the shares purchased by Mr. Rodano were purchased with his personal funds.












<PAGE>   7

ITEM 6.   MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION
          AND RESULTS OF OPERATIONS.


1997 COMPARED TO 1996

     (a)  RESULTS OF OPERATIONS.  The Company continues to endeavor a decrease
in production for 1997, as overall production declined 5.1% from 1996.  This
decline in gross production is also accompanied by a decrease in received oil
prices.  The average price of an equivalent barrel of oil received in 1997 was
$18.44, down from $20.34 received on average for 1996.  The decline in
production when associated with the decline in received oil prices resulted in
a net loss to the Company of $236,196, or $.14 per share, on revenues of
$810,365.

     The net loss from operations (before other income/expense items) was
$224,618 for 1997 as compared to $138,457 for 1996, or an increase in the loss
from operations of 62.2% over the prior year's operations.  To restore
operating profitability, the Company will depend on significant increases in
overall production and this production must be aided by an increase in received
oil prices over the following twelve month period, understanding that received
oil prices are dependent on the results of world events outside the Company's
control.

     (b)  FINANCIAL CONDITION AND LIQUIDITY.  The recurring losses from
operations continue to erode the cash and cash equivalents of the Company, as
the liquid assets are being used to fund current operations.  Current
liabilities exceed current assets by $568,759 and stockholders' deficit was
$451,125 for the year ended December 31, 1997.  Management has continued to
endeavor a further reduction in the average price of an equivalent barrel of
oil during the first quarter of 1998.

     Management is examining available financing alternatives to enable it to
remain in operation.  These alternatives range from seeking outside equity
capital to permit continued or expanded operations, with the hope of lowering
average direct lifting costs, to shutting down all but minimal operations
utilizing only a skeleton staff, putting the Company in a suspended state for
as long as assets permit.  Management is also examining the possibility of
realizing value for the Company's remaining assets, including, if necessary,
dissolution.

     (c)  ENVIRONMENTAL.  The Company's operations are subject to numerous laws
and regulations designed to protect the environment and/or impose remedial
obligations.  The Company operates certain oil fields for which known or
potential obligations for environmental remediation exist.

     Although the Company is not aware of any environmental matters that might
have a material effect on the Company's financial condition at December 31,
1997, there is the possibility that expenditures could be required, or revised
regulatory requirements could necessitate expenditures at certain sites.  Such
expenditures could have a material impact on the results of operations in a
future period.

1996 COMPARED TO 1995

     (a)  RESULTS OF OPERATIONS.  Production declined 10.5% from 1995.  The
decline in production offset the increase in received oil prices, resulting in
a net loss of $133,243, or $.08 per share, on revenues of $956,541.  The
<PAGE>   8


Company's operating loss of $138,457 declined from last year's operating loss
of $171,218.

     The average price of an equivalent barrel of oil received in 1996 was
$20.34, up from $16.59 received on average in 1995.

     (b)  FINANCIAL CONDITION AND LIQUIDITY.  Due to the Company's recurring
losses from operations, significant operating and administrative expenses,
current liabilities in excess of current assets, and a stockholders' deficit of
$214,929, the Company will lack sufficient capital reserves and liquid or
liquidatable assets to permit a full year of operations.


DISCLOSURE REGARDING FORWARD-LOOKING STATEMENTS.

     This Annual Report on Form 10-KSB includes "forward-looking statements"
within the meaning of Section 27A of the Securities Act of 1933, as amended
(the "Securities Act") and Section 21E of the Securities Exchange Act of 1934,
as amended (the "Exchange Act").  All statements other than statements of
historical facts included in this Annual Report on Form 10-KSB regarding
reserve estimates, planned capital expenditures, future oil and gas production
and prices, future drilling activity, the Company's financial position,
business strategy and other plans and objectives for future operations, are
forward-looking statements.  Although the Company believes that the
expectations reflected in such forward- looking statements are reasonable, it
can give no assurance that such expectations will prove to be correct.  There
are numerous uncertainties inherent in estimating quantities of proved oil and
natural gas reserves and in projecting future rates of production and timing
of development expenditures, including many factors beyond the control of the
Company.  Reserve engineering is a subjective process of estimating
underground accumulations of oil and natural gas that cannot be measured in an
exact way, and the accuracy of any reserve estimate is a function of the
quality of available data and of engineering and geological interpretation and
judgment.  As a result, estimates made by different engineers often vary from
one another.  In addition, results of drilling, testing and production
subsequent to the date of an estimate may justify revisions of such estimate
and such revisions, if significant, would change the schedule of any further
production and development drilling.  Accordingly, reserve estimates are
generally different from the quantities of oil and natural gas that are
ultimately recovered.  Additional important factors that could cause actual
results to differ materially from the Company's expectations include changes
in oil and gas prices, changes in regulatory or environmental policies,
production difficulties, transportation difficulties and future drilling
results.  All subsequent written and oral forward-looking statements
attributable to the Company or persons acting on its behalf are expressly
qualified in their entirety by such factors.

RECENT ACCOUNTING PRONOUNCEMENTS

     In February of 1997, the Financial Accounting Standards Board (FASB)
issued SFAS 128, EARNINGS PER SHARE, effective for financial statements for
both interim and annual periods ending after December 15, 1997.  SFAS 128
provides for revised calculation of earnings per share to compare with
current international reporting and provides for computation of earnings per
share from continuing operations and earnings per share of net income along
with disclosures of the respective computations.  Since the Company is of
simple capital structure with only one class of common stock outstanding,
<PAGE>   9


management does not anticipate any material impact by SFAS 128 in the
calculation of the respective earnings per share computation and disclosures.

     In February of 1997, the Financial Accounting Standards Board (FASB)
issued SFAS 129, DISCLOSURE OF INFORMATION ABOUT CAPITAL STRUCTURE, effective
for financial statements for periods ending after December 15, 1997.  SFAS
129 provides for the presentation in summary from within an entity financial
statements, the pertinent rights and privileges of the various securities
outstanding and the disclosure within its financial statements of the number
of shares issued upon conversion, exercise or satisfaction of required
conditions during at least the most recent annual fiscal period and any
subsequent interim period presented.  Since this SFAS pertains only to the
disclosure of required information, it should not have any financial impact
on the Company's operations.

     In June of 1997, the Financial Accounting Standards Board (FASB) issued
SFAS 130, REPORTING COMPREHENSIVE INCOME, effective for fiscal years
beginning after December 15, 1997.  SFAS 130 discusses how to report and
display comprehensive income and its components.  Comprehensive income is
defined as "the change in equity (net asset) of a business enterprise during
a period from transactions and other events and circumstances from non owner
sources.  It includes all changes in equity during a period except those
resulting from investments by owners and distributions to owners."  This
statement divides comprehensive income into net income and other
comprehensive income, and there should be no material impact by this SFAS on
operations or financial statements.

     In June of 1997, the Financial Accounting Standards Board (FASB) issued
SFAS 131, DISCLOSURES ABOUT SEGMENTS OF AN ENTERPRISE AND RELATED
INFORMATION, effective for fiscal years beginning after December 15, 1997.
SFAS 131 requires that public business enterprises report certain information
about operating segments in complete sets of financial statements of the
enterprise and in condensed financial statements of interim periods issued to
shareholders.  It also requires that public business enterprises report
certain information about their products and services, the geographic areas
in which they operate, and their major customers.  At the current time, the
Company does not meet the additional reporting requirements of this SFAS.




















<PAGE>   10

ITEM 7.  INDEX TO FINANCIAL STATEMENTS.


                                                                      PAGE
                                                                      ----

         Independent Auditors' Report                                  11

         Consolidated Balance Sheet                                    12

         Consolidated Statements of Operations                         13

         Consolidated Statements of Changes in Stockholders'           14
           Deficit

         Consolidated Statements of Cash Flows                         15

         Notes to Consolidated Financial Statements                    16








































<PAGE>   11

                         Independent Auditors' Report



The Board of Directors and Stockholders
Petrol Industries, Inc. and Subsidiaries
Shreveport, Louisiana


We have audited the consolidated balance sheet of Petrol Industries, Inc. and
Subsidiaries as of December 31, 1997, and the related consolidated statements
of operations, stockholders' deficit, and cash flows for the year then ended.
These consolidated financial statements are the responsibility of the Company's
management.  Our responsibility is to express an opinion on these consolidated
financial statements based on our audit.  The financial statements of Petrol
Industries, Inc. and Subsidiaries as of December 31, 1996, were audited by
other auditors whose report dated February 14, 1997, expressed an unqualified
opinion.

We conducted our audit in accordance with generally accepted auditing
standards.  Those standards require that we plan and perform the audit to
obtain reasonable assurance about whether the financial statements are free of
material misstatements.  An audit includes examining, on a test basis, evidence
supporting the amounts and disclosures in the financial statements.  An audit
also includes assessing the accounting principles used and significant
estimates made by management, as well as evaluating the overall financial
statement presentation.  We believe that our audit provide a reasonable basis
for our opinion.

In our opinion, the consolidated financial statements referred to above present
fairly, in all material respects, the financial position of Petrol Industries,
Inc. and Subsidiaries at December 31, 1997, and the results of their
consolidated operations and their cash flows for the year then ended, in
conformity with generally accepted accounting principles.

The accompanying financial statements have been prepared assuming that Petrol
Industries, Inc. and Subsidiaries will continue as a going concern.  As
discussed in Note 2 to the financial statements, the Company has suffered
recurring losses from operations and has a net capital deficiency that raises
substantial doubt about the entity's ability to continue as a going concern.
Management's plans in regard to these matters are also described in Note 2.
The financial statements do not include any adjustments that might result from
the outcome of this uncertainty.



HEARD McELROY & VESTAL LLP

Shreveport, Louisiana
March 1, 1998








<PAGE>   12
<TABLE>
                         PETROL INDUSTRIES, INC. AND SUBSIDIARIES
                                Consolidated Balance Sheet
                                    December 31, 1997
                ASSETS
<S>                                                            <C>
Current assets:
  Cash and cash equivalents                                   $   174,809
  Accounts receivable:
    Trade                                                          56,499
    Other                                                           9,817
                                                                ---------
                                                                   66,316

  Inventory                                                        43,643
  Prepaid expenses                                                  2,468
                                                                ---------
          Total current assets                                    287,236
                                                                ---------
Property and equipment, at cost:
  Land                                                              7,000
  Developed and undeveloped oil and gas
    properties-successful efforts method                        4,180,055
  Trucks and other operating equipment                            349,911
  Furniture and fixtures                                           44,015
                                                                ---------
                                                                4,580,981
  Less accumulated depreciation, depletion and amortization     4,521,200
                                                                ---------
                                                                   59,781
                                                                ---------
Cash surrender value of life insurance, net                        56,746
Other assets                                                        1,107
                                                                ---------
                                                              $   404,870
                                                                =========
     LIABILITIES AND STOCKHOLDERS' DEFICIT

Current liabilities:
  Accounts payable                                            $    47,611
  Payable to interest owners                                      303,692
  Payable to officer, net                                         391,701
  Accrued expenses                                                112,991
                                                                ---------
          Total current liabilities                               855,995
                                                                ---------
Stockholders' deficit:
  Preferred stock-no par value. Authorized 1,000,000
    shares; no shares issued or outstanding                           ---
  Common stock-$.10 par value. Authorized 10,000,000
    shares; issued and outstanding 1,597,196 and
    1,597,233 shares in 1997 and 1996                             159,720
  Accumulated deficit                                            (610,845)
                                                                ---------
          Total stockholders' deficit                            (451,125)
                                                                ---------
                                                              $   404,870
                                                                =========
See accompanying notes to consolidated financial statements.
</TABLE>



























































<PAGE>   13
<TABLE>

                         PETROL INDUSTRIES, INC. AND SUBSIDIARIES

                           Consolidated Statements of Operations

                          Years ended December 31, 1997 and 1996



                                                  1997             1996
                                                  ----             ----
<S>                                           <C>               <C>
Revenues:
  Oil and gas sales                          $   792,965          938,911
  Other operating income                          17,400           17,630
                                               ---------        ---------
                                                 810,365          956,541
                                               ---------        ---------
Expenses:
  Lease operating expense                        671,106          691,132
  Severance taxes                                 21,118           35,422
  General and administrative                     333,508          359,375
  Depreciation, depletion and
    amortization                                   9,251            9,069
                                               ---------        ---------
                                               1,034,983        1,094,998
                                               ---------        ---------
          Operating loss                        (224,618)        (138,457)

Other income and (expense):
  Gain on sale of assets                           7,500           19,473
  Interest and dividend income                    11,947           10,709
  Interest expense                               (31,025)         (24,968)
                                               ---------        ---------
                                                 (11,578)           5,214

          Loss before provision
           for income taxes                     (236,196)        (133,243)

Income Tax                                           ---              ---
                                               ---------        ---------
          Net loss                           $  (236,196)        (133,243)
                                               =========        =========

Net loss per share                           $      (.14)            (.08)
                                               =========        =========




See accompanying notes to consolidated financial statements.

</TABLE>





<PAGE>   14
<TABLE>

                         PETROL INDUSTRIES, INC. AND SUBSIDIARIES

                Consolidated Statements of Changes in Stockholders' Deficit

                          Years ended December 31, 1997 and 1996



                                                  1997              1996
                                                  ----              ----
<S>                                           <C>                <C>
Preferred stock                              $       ---               ---

Common stock:
  Balance at beginning of year                   159,720           159,724
  Retirement of stock                                ---                (4)
                                               ---------         ---------
  Balance at end of year                         159,720           159,720
                                               ---------         ---------

Accumulated deficit:
  Balance at beginning of year                  (374,649)         (241,406)
  Net loss                                      (236,196)         (133,243)
                                               ---------         ---------
  Balance at end of year                        (610,845)         (374,649)
                                               ---------         ---------

     Total stockholders' deficit             $  (451,125)         (214,929)
                                               =========         =========




See accompanying notes to consolidated financial statements.

</TABLE>





















<PAGE>   15
<TABLE>
                         PETROL INDUSTRIES, INC. AND SUBSIDIARIES
                           Consolidated Statements of Cash Flows
                          Years ended December 31, 1997 and 1996


                                                 1997            1996
                                                 ----            ----
<S>                                           <C>             <C>
Operating activities:
  Net loss                                   $ (236,196)       (133,243)
  Adjustments to reconcile net loss to cash
   provided (used) by operating activities:
     Depreciation, depletion and                  9,251           9,069
      amortization
     Gain on sale of assets                      (7,500)        (19,473)
     Losses on retirements of property
      and equipment included in lease
      operating expenses                            ---          20,767
     Increase in cash surrender value
      of life insurance                          (6,270)        (11,100)
     Decrease (increase) in accounts
      receivable                                 26,468          (1,796)
     Decrease (increase) in inventory             4,004         (17,657)
     Decrease in prepaid expenses                 2,857           9,883
     Increase (decrease) in accounts payable
      and accrued expenses                       (6,182)         42,210
     Increase in payable to officer, net        150,446         130,547
     Increase in payable to interest owners      25,136          34,478
                                              ---------       ---------
       Net cash provided (used) by
         operating activities                   (37,986)         63,685
                                              ---------       ---------
Investing activities:
  Capital expenditures                          (13,060)        (35,338)
  Proceeds from sale of property and
   equipment                                      7,500          20,000
                                              ---------       ---------
       Net cash used by investing
         activities                              (5,560)        (15,338)
                                              ---------       ---------
Financing Activities:
  Purchase and retirement of common stock           ---              (4)
                                              ---------       ---------
       Net cash used by financing activities        ---              (4)
                                              ---------       ---------

Increase (decrease) in cash and cash
  equivalents                                   (43,546)         48,343
Cash and cash equivalents at beginning
  of year                                       218,355         170,012
                                              ---------       ---------
Cash and cash equivalents at end of year     $  174,809         218,355
                                              =========       =========
See accompanying notes to consolidated financial statements.
</TABLE>



<PAGE>   16

                         PETROL INDUSTRIES, INC. AND SUBSIDIARIES

                        Notes to Consolidated Financial Statements

                                December 31, 1997 and 1996


(1)  SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES

     Principles of Consolidation -- The consolidated financial statements
include the accounts of Petrol Industries, Inc. and its Subsidiaries (the
"Company"), all of which are wholly owned.  All significant intercompany
transactions have been eliminated.

     Cash and Cash Equivalents -- For purposes of reporting cash flows, cash
and cash equivalents include cash on hand, demand deposits with banks or other
financial institutions, and short-term, highly liquid investments with original
maturities of three months or less.

     Inventory -- Inventory consists of crude oil accumulated in the Company's
own storage tanks and is valued at the posted market price at the end of the
year.

     Property and Equipment -- The Company's oil and gas producing activities
are accounted for using the successful efforts method of accounting in
accordance with Statement of Financial Accounting Standards No. 19.  The costs
incurred to acquire property (proved and unproved) and all development costs
and exploratory costs which find proved oil and gas reserves are capitalized.
The costs of exploratory wells drilled are capitalized until determination is
made as to whether such wells have found proved oil and gas reserves.  Upon
final determination, such costs are charged to operations if no reserves are
found or are capitalized as producing oil and gas properties.  Total cost
capitalized for oil and gas producing activities that exceed the estimated
discounted future net cash flows related to oil and gas reserve quantities are
charged to expense on a quarterly basis.

     During 1996, the Company adopted Statement of Financial Accounting
Standards (SFAS) No. 121, ACCOUNTING FOR THE IMPAIRMENT OF LONG-LIVED ASSETS
AND FOR LONG-LIVED ASSETS TO BE DISPOSED OF.  Management, after a review of
relevant facts and circumstances, makes a determination whether an indication
of impairment exists with respect to any asset or group of assets of the
Company.  If impairment indicators are present, management assesses whether
fair value or, if fair value is not determinable, the present value of the
expected future cash flows from the operation of assets, including any proceeds
from their eventual disposition, are at least equal to their carrying value.
Should future cash flows be less than the assets' carrying value, an impairment
loss is recognized through a charge to operations and a reduction of the
carrying value of the assets.  The impairment loss is based upon a
determination of fair value or, if fair value is not determinable, the present
value of the expected future cash flows from the operation of assets.

     Depreciation, Depletion and Amortization -- Depreciation, depletion and
amortization of producing oil and gas properties are provided under the
unit-of-production method, comparing production to estimated proved developed
oil and gas reserves.

                                                                 (Continued)

<PAGE>   17

                         PETROL INDUSTRIES, INC. AND SUBSIDIARIES

                        Notes to Consolidated Financial Statements


Other property and equipment are depreciated on a straight-line basis over
their estimated useful lives.

     Income Taxes -- The Company follows the provisions of Statement of
Financial Accounting Standards No. 109 (SFAS 109), ACCOUNTING FOR INCOME
TAXES, which requires the asset and liability method of accounting for income
taxes.  Under this method, deferred tax assets and liabilities are determined
based on differences between the financial statement carrying amounts and the
tax bases of existing assets and liabilities and are measured using the
enacted tax rates that are assumed will still be in effect when the
differences are expected to reverse.  The effect on deferred taxes of a
change in a tax rate is recognized in the statement of income for the period
covering the enactment date.

     Use of Estimates -- Management of the Company has made a number of
estimates and assumptions relating to the reporting of assets and liabilities
to prepare these financial statements in conformity with generally accepted
accounting principles.  Actual results could differ from those estimates.

     Financial Instruments -- Statement of Financial Accounting Standards No.
107, DISCLOSURES ABOUT FAIR VALUE OF FINANCIAL INSTRUMENTS, requires that the
Company disclose estimated fair values for its financial instruments.  Fair
value estimates set forth below for the Company's financial instruments:

     Accounts receivable, accounts payable, payable to interest owners and
     accrued expense -- The carrying amounts approximate fair value because of
     the short maturity of these instruments.

     The fair value estimates are made at a specific point in time, based on
relevant market information and information about the financial instruments.
These estimates are subjective in nature and involve uncertainties and matters
of significant judgment and therefore cannot be determined with precision.
Changes in assumptions could significantly affect the estimates.

(2)  LIQUIDITY AND FINANCIAL CONDITION

     Due to the Company's recurring losses from operations, significant
operating and administrative expenses, current liabilities in excess of current
assets, and a stockholders' deficit of $451,125, the Company will lack
sufficient capital reserves and liquid or liquidatable assets to permit a full
year of operations.

     Management is examining available financing alternatives to enable it to
remain in operation.  These alternatives range from seeking outside equity
capital to permit continued or expanded operations, with the hope of lowering
average direct lifting costs, to shutting down all but minimal operations
utilizing only a skeleton staff, putting the Company in a suspended state for
as long as assets permit.  Management is also examining the possibility of
realizing value for the Company's remaining assets, including, if necessary,
dissolution.  The financial statements do not include any adjustments that
might result from the outcome of this uncertainty.

                                                                (Continued)
<PAGE>   18
                         PETROL INDUSTRIES, INC. AND SUBSIDIARIES

                        Notes to Consolidated Financial Statements


(3)  CASH SURRENDER VALUE LIFE INSURANCE

     In 1993, the Company borrowed $78,666 against a life insurance policy.
No payments have been paid on the principal as of December 31, 1997, however,
interest payments of $6,293 were made in 1997 and 1996.  The stated rate of
interest is 8%.  There are no terms for repayment of the principal.  The
outstanding loan amount has been netted against the cash surrender value of
the policy which totaled $135,412 at December 31, 1997.

(4)  INCOME TAXES

     There was no income tax expense (benefit) reported for the years ended
December 31, 1997 and 1996.

     The following table presents reconciliations of the expected tax expense
(benefit) using the statutory federal tax rates of 34% in 1997 and 1996, and
the Company's actual tax benefit:

                                                     1997            1996
                                                     ----            ----
     Tax (benefit) at the statutory
       federal rate                              $ (80,307)        (45,303)
     Current year losses which provided
       no tax benefit                               74,251          38,825
     Other, net                                      6,056           6,478
                                                  --------        --------
                                                 $     ___             ___
                                                  ========        ========

     The tax effects of temporary differences that give rise to significant
portions of the deferred tax assets and deferred tax liabilities at December
31, 1997 and 1996, are presented below.

                                                      1997          1996
                                                      ----          ----
     Deferred tax assets:
       Net property and equipment, principally
         due to differences in depreciation      $    60,000        60,142
       Accounts payable and accrued expenses          51,906        48,851
       Tax net operating loss carryforward           387,283       401,340
       Capital loss carryforward                         ---           ---
       Statutory depletion carryforward              313,943       282,131
                                                   ---------     ---------
           Total gross deferred tax assets           818,132       792,464
           Less valuation allowance                 (818,132)     (792,464)
                                                   ---------     ---------
           Net deferred tax assets               $       ___           ___
                                                   =========     =========

                                                                (Continued)




<PAGE>   19

                   PETROL INDUSTRIES, INC. AND SUBSIDIARIES

                  Notes to Consolidated Financial Statements


     Due to the Company's history of net operating losses and the uncertainties
that affect the ultimate realization of the above deferred tax amounts, the
Company has recorded a 100% valuation allowance applicable to these deferred
tax assets.  The Company will periodically review the realizability of these
assets and adjust the related valuation allowance as needed.

     The valuation allowance for deferred tax assets of approximately $818,132
at December 31, 1997, has increased approximately $26,000 (the same as the
decrease in certain deferred tax assets) from the amount determined at January
1, 1997.  Any subsequently recognized tax benefits relating to the valuation
allowance would be reported as a reduction of income tax expense in the
consolidated statement of operations.

     The Company has federal tax net operating loss carryforwards of
approximately $1,138,000 which expire between 2003 and 2011, which could be
used to offset future federal taxable income.  The Company has a statutory oil
and gas depletion carryforward of approximately $923,000, which has no
expiration date.

     There were no taxes paid in 1997 and 1996.

(5)  PAYABLE TO INTEREST OWNERS

     The Company has recorded as a payable totaling $303,692 to approximately
100 individual owners of royalty, working interests, and/or overriding royalty
interest as a result of proceeds it received in settling a dispute in a
property, plus the undistributed net revenues since the settlement date in
1992.  The Company intends to distribute the funds when more accurate
information is available regarding the amounts due to individual interest
owners.

(6)  BUSINESS AND CREDIT CONCENTRATIONS

     The Company has been engaged in a single industry segment - drilling for
and producing oil and gas on leased property located in the Caddo Pine Island
Field, Greenwood Waskom Field, and the Shreveport Field, all in Caddo Parish,
Louisiana.

     The Company is primarily involved in the production of oil which is sold
to approximately ten oil companies.  The Company had sales to two major
customers in 1997 and 1996 as follows:

                                      1997             1996
                                      ----             ----

     Customer 1                   $  188,000          242,000
     Customer 2                      552,000          619,000
                                     -------          -------
                                  $  740,000          861,000
                                     =======          =======

                                                                (Continued)

<PAGE>   20
                   PETROL INDUSTRIES, INC. AND SUBSIDIARIES

                  Notes to Consolidated Financial Statements

(7)  NET LOSS PER SHARE

     Net loss per share of common stock was computed on the weighted average
number of shares outstanding of 1,597,196 and 1,597,223 for 1997 and 1996,
respectively.

(8)  AFFILIATED PARTNERSHIPS

     The Company serves as general partner in several limited partnerships
engaged in exploration and production activities.  The Company is compensated
for providing management and accounting services to the partnerships (see Note
9).  The Company also serves as operator on partnership wells and in connection
therewith receives and disburses partnership funds.

     Indebtedness to partnerships for their portion of undistributed net
revenue was approximately $17,332 at December 31, 1997, and is included in
accounts payable.

(9)  OTHER OPERATING INCOME

     Other operating income for the years ended December 31, 1997 and 1996,
consists of the following:

                                                    1997         1996
                                                    ----         ----
     Affiliated partnerships - operations
       and administration fee                   $  12,180       12,406
     Other                                          5,220        5,224
                                                   ------       ------
                                                $  17,400       17,630
                                                   ======       ======

(10) RELATED PARTY TRANSACTIONS

     Payable to officer, net, consists of the following:

                                                1997        1996
                                                     ----        ----
     Accrued salary plus interest               $  506,064     356,327
     Note payable to Company plus interest         (43,817)    (40,570)
     Advances                                      (70,547)    (74,502)
                                                  --------    --------
                                                $  391,701     241,255
                                                  ========    ========

     Interest at a bank's prime rate is accruing on all accrued salary and
unpaid interest thereon.  Interest cost included in expense during 1997 and
1996 were $24,732 and $16,644, respectively.  The note payable represents a
$35,000 note payable issued to the Company during 1995, repayable on demand;
the loan bears interest at an annual rate of one-quarter of a percent in excess
of prime rate of Citibank, N.A.  Interest included in income was $3,238 and
$3,246 during 1997 and 1996, respectively.  Advances are non-interest bearing.

                                                                (Continued)

<PAGE>   21

                         PETROL INDUSTRIES, INC. AND SUBSIDIARIES

                        Notes to Consolidated Financial Statements


(11) CONTINGENCIES

     The Company is involved in various claims and legal actions arising in the
ordinary course of business.  In the opinion of management, the ultimate
disposition of these matters will not have a material adverse effect on the
Company's consolidated financial position, results of operations or liquidity.















































<PAGE>   22

                   PETROL INDUSTRIES, INC. AND SUBSIDIARIES

                     Supplemental Oil and Gas Information
                                  (unaudited)

                       OIL AND GAS PRODUCING ACTIVITIES

Information shown in Schedules 1 through 4 are presented in accordance with
Statement of Financial Accounting Standards No. 69, Disclosures about Oil and
Gas Producing Activities.

CAPITALIZED COSTS RELATING TO OIL AND GAS PRODUCING ACTIVITIES-Schedule 1

This schedule presents the capitalized costs of proved oil and gas properties
along with the applicable accumulated depreciation, depletion, and
amortization.

COSTS INCURRED IN OIL AND GAS PROPERTY ACQUISITION, EXPLORATION, AND
DEVELOPMENT ACTIVITIES-Schedule 2

This schedule presents costs incurred in oil and gas producing activities by
type of expenditure.

ESTIMATED NET QUANTITIES OF PROVED OIL AND GAS RESERVES-Schedule 3

All of the Company's oil and gas reserves are located in one geographic area
within the continental United States.  Reserves cannot be measured exactly
since reserve estimates involve many subjective judgments and must be reviewed
periodically and adjusted to reflect additional information gained from
reservoir performance, new geological and geophysical data, and economic
changes.

Proved reserves are those quantities of oil and gas that appear with reasonable
certainty to be recoverable in the future from known reservoirs under existing
economic and operating conditions at that time.  As additional information
becomes available or conditions change, estimates must be revised.  Significant
declines in the price of crude oil or significant technological changes may
render these reserves to be uneconomical to develop.  The last analysis of
geological and engineering data performed by the Company to estimated proved
reserves was performed in 1974.  As a result of the financial condition of the
Company and the significant length of time that has expired since the last
engineering analysis, proved undeveloped reserves have been omitted from
Schedule 3.

Proved developed reserves are those quantities of proved oil and gas reserves
that are recoverable through existing wells within existing equipment and
operating methods.  The last analysis of geological and engineering data
performed by the Company to estimated proved developed reserves was performed
as of January 1, 1989.  Since 1989, changes in proved developed reserves have
been made for the results of annual production volumes.

STANDARDIZED MEASURE OF DISCOUNTED FUTURE NET CASH FLOWS RELATING TO PROVED OIL
AND GAS RESERVE QUANTITIES-Schedule 4

Estimated future net cash flows were determined by summing yearly future cash
inflows computed by applying year-end prices (approximately $15.33 per barrel
for oil at December 31, 1997) to estimated quantities of proved developed

<PAGE>   23

                   PETROL INDUSTRIES, INC. AND SUBSIDIARIES

                     Supplemental Oil and Gas Information
                                  (unaudited)


reserves as of each year end.  Oil prices have declined in early 1998 from year
end levels.  The estimated future production costs were deducted based on the
assumed continuation of the cost levels and economic conditions existing at the
respective year end.  Income taxes are not included due to the Company not
being in a tax paying position.  The future net cash flows were then discounted
at 10%.

The Company cautions readers that the standardized measure information, which
places a value on proved reserves, is not indicative of either fair market
value or present value of future cash flows.  Other logical assumptions could
have been used for this computation which would likely have resulted in
significantly different amounts.  This information is disclosed in accordance
with Statement No. 69 solely to provide readers with a common base for use in
preparing their own estimates of future cash flows and for comparing reserves
among companies.  Management of the Company does not rely on the computations
in Schedule 4 when making investment and operating decisions.

Schedule 4 also presents a summary of the principal sources of change in the
standardized measure of discounted future net cash flows for the years 1997 and
1996.
































<PAGE>   24
                                                                 Schedule 1

                   PETROL INDUSTRIES, INC. AND SUBSIDIARIES

                     Capital Costs Relating to Oil and Gas
                             Producing Activities

                          December 31, 1997 and 1996
                                  (unaudited)


                                                1997           1996
                                                ----           ----

Proved properties                           $ 4,180,055      4,262,884
Other                                           349,911        336,098
                                              ---------      ---------
                                              4,529,966      4,598,982
Accumulated depreciation, depletion
  and amortization                            4,482,391      4,552,235
                                              ---------      ---------
Net capitalized costs                       $    47,575         46,747
                                              =========      =========




NOTE:  Included in capitalized costs at December 31, 1997 and 1996, is
$746,941, representing contributions of capital costs made by the Company to
affiliated limited partnerships pursuant to various partnership agreements.





























<PAGE>   25

                                                                  Schedule 2
                   PETROL INDUSTRIES, INC. AND SUBSIDIARIES

              Costs Incurred in Oil and Gas Property Acquisition,
                    Exploration, and Development Activities

                    Years ended December 31, 1997 and 1996
                                  (unaudited)


                                                  1997             1996
                                                  ----             ----

Developmental costs                          $    6,560           24,686
                                                =======          =======











































<PAGE>   26

                                                                  Schedule 3
                   PETROL INDUSTRIES, INC. AND SUBSIDIARIES

                          Estimated Net Quantities of
                     Proved Developed Oil and Gas Reserves

                    Years ended December 31, 1997 and 1996
                                  (unaudited)


                                                 1997            1996
                                                 ----            ----
                                                Barrels         Barrels
                                                of Oil          of Oil
                                                -------         -------
Proved developed reserves:
  Beginning of year                              293,293         356,454
  Production                                     (42,672)        (44,969)
  Sales of minerals in place                      (7,056)        (18,192)
  Revisions, extensions and discoveries              ---             ---
                                                --------        --------

End of year                                      243,565         293,293
                                                ========        ========






NOTE:  The proved developed reserves are all located within the United
States.  Proved developed reserves have been included since they are
economically the most appropriate estimate of reserves to include in the
schedule.
























<PAGE>   27
                                                                   Schedule 4
                   PETROL INDUSTRIES, INC. AND SUBSIDIARIES

              Standardized Measure of Discounted Future Net Cash
                Flows Relating to Proved Oil and Gas Quantities

                    Years ended December 31, 1997 and 1996
                                  (unaudited)

                                            1997              1996
                                            ----              ----
                                                (in thousands)

Future cash inflows                      $  3,734             6,975
Future production and development
  cost                                     (3,831)           (4,496)
Future income tax (expense)
  benefit                                     ---               ---
                                           ------            ------
Future net cash flows (deficit)               (97)            2,479
10% annual discount for estimated
  timing of cash flows (deficit)               29              (826)
                                           ------            ------
Standardized measure of discounted
  future net cash flows (deficit)        $    (68)            1,653
                                           ======            ======

Principal sources of change in the standardized measure of discounted future
net cash flows for the years shown:

                                            1997              1996
                                            ----              ----
                                                (in thousands)
Net changes in prices and production
  cost, including excise taxes            $(1,901)              738
Sales and transfers of oil and gas
  produced, net of production costs          (122)             (212)
Net change due to revisions,
  extensions, and discoveries                 ---               ---
Net change due to purchase (sales) of
  minerals-in-place                          (130)             (370)
Development cost incurred during the
  period                                        7                25
Accretion of discount                         165               118
Change in production rates (timing)
  and other                                   260               173
                                            -----             -----
                                          $(1,721)              472
                                            =====             =====

NOTE:  The proved and proved developed reserves are located within the United
States.







<PAGE>   28



ITEM 8.   CHANGES IN AND DISAGREEMENTS WITH ACCOUNTANTS ON ACCOUNTING
          AND FINANCIAL DISCLOSURE

          Effective November 12, 1997, Petrol dismissed its prior certifying
accountants KPMG Peat Marwick and retained as its new certifying accountants,
Heard, McElroy & Vestal, L.L.P.  There were no disagreements between Petrol
and KPMG Peat Marwick on matters of accounting principles or practices,
financial statement disclosure, or auditing scope or procedure.
















































<PAGE>   29

                                   PART III


ITEM 9.   DIRECTORS AND EXECUTIVE OFFICERS OF THE REGISTRANT.

     (a)  The Directors of Petrol are as follows:

                                Position with the Company
                                and Business Experience            Director
Name                  Age       During Past Five Years              Since
----                  ---       -------------------------          --------

Joseph M. Rodano       61       Chairman of the Board of             1972
                                Directors, President
                                and Chief Executive Officer
                                of Petrol since 1972;
                                Treasurer of Petrol since
                                1980; Assistant Secretary
                                since March, 1996.

Robert M. Bontempi     66       Director, Retired; Bond              1972
                                Salesman, Thomson McKinnon
                                Securities, 1983-1988.

Arlys C. Milan         43       Vice President of Petrol             1994
                                since 1990; Office Manager
                                for more than 4 years prior
                                thereto; elected to Board of
                                Directors in August, 1994;
                                Secretary since March, 1996.

     All Directors serve until the next annual meeting of stockholders and
until their successors are duly elected and qualify.

     (b)  The chief executive officers and four most highly compensated
executive officers of the Company are as follows:

                                    Position with the Company and Business
Name                     Age        Experience During Past Five Years
----                     ---        --------------------------------------

Joseph M. Rodano         61         See "Directors" above.

Arlys C. Milan           43         See "Directors" above.

Jimmy S. Foster          54         Vice President of Petrol since April,
                                    1990; Field Supervisor for more than five
                                    years prior thereto.

     All Officers serve at the pleasure of the Board of Directors.








<PAGE>   30


     (c)  Significant Employees.

              None.

     (d)  Family Relationships.

              None.

     (e)  Business Experiences.

              See (a) and (b) above.

     (f)  Involvement in Legal Proceedings.

              Not applicable to any person listed in (a) or (b) above.

     The Company has no standing audit, nominating or compensation committees,
or committees performing similar functions.  The Board of Directors met twice
in 1997.


ITEM 10.  EXECUTIVE COMPENSATION AND OTHER INFORMATION

Summary of Cash and Certain Other Compensation

     The following table shows, for the two most recently ended fiscal years
ended December 31, the cash compensation paid or accrued for those years to
the Chief Executive Officer of the Company who is the only one among the four
most highly compensated executive officers of the Company whose aggregate
annual salary and bonus paid in compensation for services rendered in all the
capacities in which he served exceeded $100,000 for the Company's last fiscal
year:
<TABLE>
                                      SUMMARY COMPENSATION TABLE
                                                                         Long-Term Compensation
                                       Annual Compensation               Awards         Payouts
                               ------------------------------------ --------------------------------
Name and                                                            Restricted                         All Other
Principal                                           Other Annual      Stock     Options/    LTIP      Compensation
Position                 Year  Salary($)  Bonus($)  Compensation($)  Awards($)   SARs(#)  Payouts($)      ($)
--------                 ----  ---------  --------  --------------- ----------  --------  ----------  ------------
<S>                      <C>    <C>         <C>         <C>            <C>         <C>      <C>            <C>
Joseph M. Rodano,        1996   125,000      -           -              -           -        -              -
 President, Chief        1997   125,000      -           -              -           -        -              -
 Executive Officer,
 and Chairman of the
 Board
</TABLE>

Stock Option Grants

     There were no grants of stock options/SARs made during the fiscal year
ended December 31, 1997 and 1996 to Mr. Rodano.




<PAGE>   31
<TABLE>
                                OPTIONS/SAR GRANTS IN LAST FISCAL YEAR
-----------------------------------------------------------------------------------------------------------------
                    Individual Grants
------------------------------------------------------------
                      Percent of                                Potential Realizable Value
                        Total                                   at Assumed Annual Rates of   (Alternative to
                       Options/                                  Stock Price Appreciation    Potential Realizable
                        SARs                                        For Option Term          Realizable Value)
           Options/   Granted to                                __________________________   ____________________
            SARs      Employees    Exercise or
           Granted    in Fiscal    Base Price     Expiration                                      Grant Date
Name         (#)        Year         ($/Sh)          Date          5%($)          10%($)        Present Value $
----       -------    ----------   -----------    ----------       -----          ------        ---------------
<S>        <C>        <C>          <C>            <C>              <C>            <C>              <C>
Not Applicable

</TABLE>

Stock Option Exercises

     Mr. Rodano did not exercise any stock options during the fiscal year ended
December 31, 1997 or 1996 and did not have any unexercised options at the
fiscal year-end.

<TABLE>
                   AGGREGATED OPTIONS/SAR EXERCISES IN LAST FISCAL YEAR
                               AND FY-END OPTION/SAR VALUES
                                                                                 Value of Unexercised
                                                 Number of Unexercised               In-the-Money
               Shares                               Option/SARs at                  Option/SARs at
              Acquired                                 FY-End(#)                      FY-End ($)
                on             Value          ---------------------------     ---------------------------
Name         Exercise(#)     Realized($)      Exercisable   Unexercisable     Exercisable   Unexercisable
----         -----------     -----------      -----------   -------------     -----------   -------------
<S>           <C>            <C>              <C>           <C>               <C>           <C>
Not Applicable

</TABLE>

Long-Term Incentive Plan Awards in Last Fiscal Year

     There were no awards made in the fiscal year ended December 31, 1997 and
1996 to Mr. Rodano under any form of Company LTIP (w/incentives spanning more
than one fiscal year).

<TABLE>
                            LONG-TERM INCENTIVE PLANS - AWARDS
                                   IN LAST FISCAL YEAR
----------------------------------------------------------------------------------------------------
                                                            Estimated Future Payouts Under Non-Stock
          Number of Shares,                                            Price-Based Plans
           Units or Other        Performance or Other       ----------------------------------------
               Rights           Period Until Maturation     Threshold         Target         Maximum
Name            (#)                   or Payout             ($ or #)         ($ or #)        ($ or #)
----      -----------------     -----------------------     ---------        --------        --------
<S>       <C>                   <C>                         <C>              <C>             <C>
Not Applicable
</TABLE>
<PAGE>   32


     Except as described above, no annuity, pension or retirement benefits,
plans for cash or non-cash compensation or other existing plans or arrangements
for remunerating officers and directors, other than salary, are presently in
effect.  The Company does not have any stock option, stock appreciation or
other form of incentive plan or arrangement for its management or employees.

     Non-management directors were paid an annual fee of $800 in 1995, with the
remainder of the fees being accrued.  Fees were accrued in 1996, but none were
accrued in 1997.

     There are no retirement, resignation or termination arrangements with
executive officers due to change in control of the Company, or for any other
reason.


ITEM 11.  SECURITY OWNERSHIP OF CERTAIN BENEFICIAL OWNERS AND MANAGEMENT

     (a)  The following table sets forth, as of March 19, 1998, information
concerning the beneficial ownership of Petrol's Common Stock by each person who
is known by management to own beneficially more than 5% of such securities:

              Name of              Amount and Nature        Percent
          Beneficial Owner      of Beneficial Ownership     of Class
          ----------------      -----------------------     --------

          Joseph M. Rodano          529,325 (direct)          33.1%

     (b)  The following table sets forth, as of March 19, 1998, information
concerning the beneficial ownership of voting securities of the Company by all
current directors individually, by the Chief Executive Officer and the two next
most highly compensated officers, and by all directors and officers as a group:

              Name of              Amount and Nature        Percent
          Beneficial Owner      of Beneficial Ownership     of Class
          ----------------      -----------------------     --------
          Joseph M. Rodano          529,325 (direct)          33.1%

          Robert M. Bontempi              0                    0.0%

          Arlys C. Milan                  0                    0.0%

          Jimmy S. Foster                 0                    0.0%

     (c)  Changes in Control.  There are no arrangements known to the Company,
including any pledge by any person of securities of the Company, the operation
of which may at a subsequent date result in a change in control thereof.











<PAGE>   33

ITEM 12.  CERTAIN RELATIONSHIPS AND RELATED TRANSACTIONS

     (a)  Transactions with Management and Others.  In April, 1995, the
Company loaned its president the principal sum of $35,000, repayable on
demand; the loan bears interest at an annual rate of one-quarter of a percent
in excess of the prime rate.

     (b)  Certain Business Relationships of Directors.

          Not applicable.

     (c)  Indebtedness of Management in excess of $60,000.

          Not applicable.

     (d)  Transactions with Promoters.

          Not applicable.


ITEM 13.  EXHIBITS AND REPORTS ON FORM 8-K

          1.  Exhibits:

              3(a)   Certificate of Incorporation of the Company, and
                     amendments thereto (Filed as Exhibit 3(a) to the
                     Company's 1981 Annual Report on Form 10-K and
                     incorporated herein by reference).

              3(b)   By-laws of the Company (Filed as Exhibit 3(b) to the
                     Company's 1981 Annual Report on Form 10-K and
                     incorporated herein by reference).

              10(a)  Compromise Agreement between Petrol Industries, Inc. and
                     Enron Oil Trading & Transportation Company dated as of
                     November 30, 1992 (contained in the Company's 1992
                     Annual Report on Form 10-K).

              10(b)  Compromise Agreement between and among Petrol
                     Industries, Inc., Oryx Energy Company and Enron Oil
                     Trading & Transportation Company dated as of November
                     30, 1992 (contained in the Company's 1992 Annual Report
                     on Form 10-K).

              22     Subsidiaries of the Company (Filed as Exhibit 22 to
                     Registrant's 1981 Annual Report on Form 10-K and
                     incorporated herein by reference).

              (b)  Reports on Form 8-K.

                   A Form 8-K regarding a change in certifying accountants
                   was filed with the Commission on November 19, 1997.  Form
                   8-K/A was filed with the Commission on December 5, 1997,
                   to add the response letter of KPMG Peat Marwick.





<PAGE>   34

                                  SIGNATURES


     Pursuant to the requirements of Section 13 of 15(d) 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.

                                       PETROL INDUSTRIES, INC.

March 30, 1998                         By:     Joseph M. Rodano
                                          ----------------------------------
                                          Joseph M. Rodano
                                          President and Treasurer


     Pursuant to the requirements of the Securities Exchange Act of 1934, this
report has been signed below by the following persons on behalf of the
Registrant and in the capacities and on the dates indicated.

March 30, 1998                                   Joseph M. Rodano
                                       -------------------------------------
                                       Joseph M. Rodano - Director

March 30, 1998                                   Robert Bontempi
                                       -------------------------------------
                                       Robert Bontempi - Director

March 30, 1998                                   Arlys C. Milan
                                       -------------------------------------
                                       Arlys C. Milan - Director