<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

                                    PART I

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 
11 persons in the aggregate.

     As of December 31, 1998, 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 225 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 1999, 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.

     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 1998, 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 36,740 barrels of oil and 3,005 MCF of gas, 
and production, net to Petrol, of 27,460 barrels of oil and 3,005 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 1998, the average price received by 
Petrol for its oil (including wells owned by the various partnerships) was 
$12.03 per barrel of oil and $1.68 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 1998 and 1997, approximately $102,608 and $157,199 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
<PAGE>   3


"turnkey" basis, and presently operates the completed wells.  Actual drilling 
was done by one of several locally available subcontractors.  The Company also 
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 1997 or 1998.

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 91.4% of the Company's 1998 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 
<PAGE>   4

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 
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 22 to 25 and Schedules 3 and 4 at Pages 26 to 27, 
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 
1998.

     D.  PRODUCTION:  For the years ended December 31, 1997 and 1998, the 
average sales price (including transfers) per unit of oil produced was $18.44 
and $12.03, respectively, and the average production cost (lifting cost) per 
unit of production for oil was $15.73 and $13.27, respectively.

     E.  PRODUCTIVE WELLS AND ACREAGE:  As of December 31, 1998, 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, 1998, the Company held the 
following undeveloped acreage:

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

     G.  DRILLING ACTIVITY:  No drilling activity occurred in 1998 or 1997.

     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, 1997, 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
                                             --------              -------
            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                               3/8                  7/32
     2nd Quarter                               3/8                  1/4
     3rd Quarter                               1/4                  5/32
     4th Quarter                               9/32                 1/8

            1999

     1st Quarter thru March 12                 1/8                  1/8


     On March 22, 1999, there were 3,701 holders of record of its common stock.

     No dividends were declared or paid during 1997 or 1998 and the Company has 
no present intention to pay cash dividends in the foreseeable future.

     During the course of 1998, Joseph M. Rodano, President and Treasurer of 
Petrol, as well as a member of its Board of Directors, purchased a total of 
5,000 shares Common Stock, $.10 par value per share, of Petrol Industries, 
Inc.  During the course of 1997, Mr. Rodano purchased a total of 92,000 
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.

1998 COMPARED TO 1997

     (A)  RESULTS OF OPERATIONS:  The Company continues to endeavor a decrease 
in production for 1998, as overall production declined 13.9% from 1997.  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 1998 was 
$12.03, down from $18.44 received on average for 1997.  The decline in 
production when associated with the decline in received oil prices resulted in 
a net loss to the Company of $383,990, or $.24 per share, on revenues of 
$472,591.

     The net loss from operations (before other income/expense items) was 
$353,475 for 1998 as compared to $224,618 for 1997, or an increase in the loss 
from operations of 57.3% 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 $904,459 and stockholders' deficit was 
$835,115 for the year ended December 31, 1998.  Management has continued to 
endeavor a low average price of an equivalent barrel of oil during the first 
quarter of 1999.

     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, 
1998, 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.





<PAGE>   8


1997 COMPARED TO 1996

     (A)  RESULTS OF OPERATIONS:  Production declined 5.1% from 1996.  The 
decline in production accompanied by a decrease in oil prices, resulted in a 
net loss of $236,196, or $.14 per share, on revenues of $810,365.  The 
Company's operating loss of $224,618 increased from last year's operating loss 
of $138,457.

     The average price of an equivalent barrel of oil received in 1997 was 
$18.44, down from $20.34 received on average in 1996.

     (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 
$451,125, the Company may lack sufficient capital reserves and liquid or 
liquidatable assets to permit continued 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 1998, the Financial Accounting Standards Board (FASB) 
issued SFAS 132, EMPLOYERS' DISCLOSURES ABOUT PENSIONS AND OTHER POSTRETIREMENT
<PAGE>   9


BENEFITS, effective for financial statements for both interim and annual
periods ending after December 15, 1997.  SFAS 132 revises employers' 
disclosures about pension and other postretirement benefit plans.  It does not 
change the measurement or recognition of those plans.  It standardizes the 
disclosure requirements for pensions and other postretirement benefits to the 
extent practicable, requires additional information on changes in the benefit 
obligations and fair values of plan assets that will facilitate financial 
analysis, and eliminates certain disclosures that are no longer as useful as 
they were when FASB Statements No. 87, EMPLOYERS' ACCOUNTING FOR PENSIONS, No. 
88, EMPLOYERS' ACCOUNTING FOR SETTLEMENTS AND CURTAILMENTS OF DEFINED BENEFIT 
PENSION PLAN AND FOR TERMINATION BENEFITS, and No. 106, EMPLOYERS' ACCOUNTING 
FOR POSTRETIREMENT BENEFITS OTHER THAN PENSIONS, were issued.  This Statement 
suggests combined formats for presentation of pension and other postretirement 
benefit disclosures.  The Statement also permits reduced disclosures for 
nonpublic entities.

     In June of 1998, the Financial Accounting Standards Board (FASB) issued 
SFAS 133, ACCOUNTING FOR DERIVATIVE INSTRUMENT AND HEDGING ACTIVITIES, 
effective for all fiscal quarters of all fiscal years beginning after June 15, 
1999.  SFAS 133 establishes accounting and reporting standards for derivative 
instruments, including certain derivative instruments embedded in other 
contracts, (collectively referred to as derivatives) and for hedging 
activities.  It requires that an entity recognize all derivatives as either 
assets or liabilities in the statement of financial position and measure those 
instruments at fair value.  If certain conditions are met, a derivative may be 
specifically designated as (a) a hedge of the exposure to changes in the fair 
value of a recognized asset or liability or an unrecognized firm commitment, 
(b) a hedge of the exposure to variable cash flows of a forecasted transaction, 
or (c) a hedge of the foreign currency exposure of a net investment in a 
foreign operation, an unrecognized firm commitment, an available-for-sale 
security, or a foreign-currency-denominated forecasted transaction.

























<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 Stockholders' Deficit            14

          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, 1998, 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.

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 provides 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, 1998, 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 22, 1998









<PAGE>   12
<TABLE>
                         PETROL INDUSTRIES, INC. AND SUBSIDIARIES
                                Consolidated Balance Sheet
                                    December 31, 1998
                ASSETS
                ------
<S>
Current assets:                                          <C>
  Cash and cash equivalents                             $    56,729
  Accounts receivable:
    Trade                                                    28,688
    Other                                                     9,497
                                                         ----------
                                                             38,185

  Inventory                                                  16,685
  Prepaid expenses                                            3,804
                                                         ----------
          Total current assets                              115,403
                                                         ----------
Property and equipment, at cost:
  Land                                                        7,000
  Developed and undeveloped oil and gas
    properties-successful efforts method                  4,179,433
  Trucks and other operating equipment                      367,984
  Furniture and fixtures                                     44,015
                                                          ---------
                                                          4,598,432
  Less accumulated depreciation, depletion and
        amortization                                      4,530,195
                                                          ---------
                                                             68,237
                                                          ---------
Cash surrender value of life insurance, net                     ---
Other assets                                                  1,107
                                                          ---------
                                                        $   184,747
                                                          =========
     LIABILITIES AND STOCKHOLDERS' DEFICIT
     -------------------------------------
Current liabilities:
  Accounts payable                                      $    37,242
  Payable to interest owners                                313,168
  Payable to officer, net                                   562,682
  Accrued expenses                                          106,770
                                                          ---------
          Total current liabilities                       1,019,862
                                                          ---------
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
    shares in 1998 and 1997                                 159,720
  Accumulated deficit                                      (994,835)
                                                         ----------
          Total stockholders' deficit                      (835,115)
                                                         ----------
                                                        $   184,747
                                                          =========
See accompanying notes to consolidated financial statements.
</TABLE>

<PAGE>   13
<TABLE>
                         PETROL INDUSTRIES, INC. AND SUBSIDIARIES

                           Consolidated Statements of Operations

                          Years ended December 31, 1998 and 1997



                                                  1998             1997
                                                  ----             ----
<S>                                            <C>              <C>
Revenues:
  Oil and gas sales                           $  447,491          792,965
  Other operating income                          25,100           17,400
                                               ---------        ---------
                                                 472,591          810,365
                                               ---------        ---------
Expenses:
  Lease operating expense                        487,806          671,106
  Severance taxes                                  8,112           21,118
  General and administrative                     317,163          333,508
  Depreciation, depletion and
    amortization                                  12,985            9,251
                                               ---------        ---------
                                                 826,066        1,034,983
                                               ---------        ---------

          Operating loss                        (353,475)        (224,618)

Other income and (expense):
  Gain (loss) on sale of assets                     (408)           7,500
  Interest and dividend income                     6,315           11,947
  Interest expense                               (36,422)         (31,025)
                                               ---------        ---------
                                                 (30,515)         (11,578)

          Loss before provision
           for income taxes                     (383,990)        (236,196)

Income Tax                                           ---              ---
                                               ---------        ---------

          Net loss                            $ (383,990)        (236,196)
                                               =========        =========

Net loss per share                            $     (.24)            (.14)
                                               =========        =========


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, 1998 and 1997



                                                  1998              1997
                                                  ----              ----
<S>                                            <C>              <C>
Preferred stock                               $      ---               ---

Common stock:
  Balance at beginning of year                   159,720           159,720
  Retirement of stock                                ---               ---
                                               ---------         ---------
  Balance at end of year                         159,720           159,720
                                               ---------         ---------

Accumulated deficit:
  Balance at beginning of year                  (610,845)         (374,649)
  Net loss                                      (383,990)         (236,196)
                                               ---------         ---------
  Balance at end of year                        (994,835)         (610,845)
                                               ---------         ---------

     Total stockholders' deficit              $ (835,115)         (451,125)
                                               =========         =========




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, 1998 and 1997

                                                 1998            1997
                                                 ----            ----
<S>                                           <C>             <C>
OPERATING ACTIVITIES:
--------------------
  Net loss                                   $ (383,990)       (236,196)
  Adjustments to reconcile net loss to cash
   provided (used) by operating activities:
     Depreciation, depletion and                 12,985           9,251
      amortization
     (Gain) loss on sale of assets                  408          (7,500)
     (Increase) decrease in cash surrender
      value of life insurance                    56,746          (6,270)
     Decrease in accounts receivable             28,131          26,468
     Decrease (increase) in inventory            26,958           4,004
     (Increase) decrease in prepaid expenses     (1,336)          2,857
     Decrease in accounts payable and
      accrued expenses                          (16,590)         (6,182)
     Increase in payable to officer, net        170,981         150,446
     Increase in payable to interest owners       9,476          25,136
                                               --------       ---------
       Net cash used by operating
         activities                             (96,231)        (37,986)

INVESTING ACTIVITIES:
--------------------
  Capital expenditures                          (21,884)        (13,060)
  Proceeds from sale of property and
   equipment                                         35           7,500
                                               --------       ---------
       Net cash used by investing
         activities                             (21,849)         (5,560)
                                               --------       ---------
FINANCING ACTIVITIES:
--------------------
  Purchase and retirement of common stock           ---             ---
                                              ---------       ---------
       Net cash used by financing activities        ---             ---
                                              ---------       ---------
Increase (decrease) in cash and cash
  equivalents                                  (118,080)        (43,546)
Cash and cash equivalents at beginning
  of year                                       174,809         218,355
                                              ---------       ---------
Cash and cash equivalents at end of year     $   56,729         174,809
                                              =========       =========

See accompanying notes to consolidated financial statements.
</TABLE>




<PAGE>   16

                   PETROL INDUSTRIES, INC. AND SUBSIDIARIES

                  Notes to Consolidated Financial Statements

                          December 31, 1998 and 1997


(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 $835,115, 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.


<PAGE>   18


(3)  CASH SURRENDER VALUE LIFE INSURANCE

     In 1993, the Company borrowed $78,666 against a life insurance policy.  No 
payments were 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 were no terms for repayment of the principal.  The outstanding loan 
amount was netted against the cash surrender value of the policy which totaled 
$135,412 at December 31, 1997.
     
     As of October 15, 1998, the Company canceled the life insurance policy 
described above, and obtained a net cash surrender value of $53,055.  The 
transaction was accounted for on the Company's books as receiving a gross cash 
surrender value of $137,490 which was offset by the amount borrowed against the 
policy of $84,435, represented by principal of $78,666 and the related accrued 
interest of $5,769.

(4)  INCOME TAXES

     There was no income tax expense (benefit) reported for the years ended 
December 31, 1998 and 1997.

     The following table presents reconciliations of the expected tax expense 
(benefit) using the statutory federal tax rates of 34% in 1998 and 1997, and 
the Company's actual tax benefit:

                                                     1998            1997
                                                     ----            ----
     Tax (benefit) at the statutory
       federal rate                             $ (130,557)        (80,307)
     Current year losses which provided
       no tax benefit                               52,326          74,251
     Other, net                                     78,231           6,056
                                                  --------        --------
                                                $      ---             ---
                                                  ========        ========
     
     The tax effects of temporary differences that give rise to significant 
portions of the deferred tax assets and deferred tax liabilities at December 
31, 1998 and 1997, are presented below.
                                                      1998          1997
                                                      ----          ----
     Deferred tax assets:
       Net property and equipment, principally
         due to differences in depreciation      $    29,000        60,000
       Accounts payable and accrued expenses          50,953        51,906
       Tax net operating loss carryforward           617,331       387,283
       Capital loss carryforward                         ---           ---
       Statutory depletion carryforward              320,000       313,943
                                                  ----------     ---------
           Total gross deferred tax assets         1,017,284       818,132
           Less valuation allowance               (1,017,284)     (818,132)
                                                  ----------     ---------
           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 
$1,017,284 at December 31, 1998, has increased approximately $199,152 (the same 
as the decrease in certain deferred tax assets) from the amount determined at 
January 1, 1998.  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 $1,220,000 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 $997,000, which has no 
expiration date.
     
     There were no taxes paid in 1998 and 1997.
     
(5)  PAYABLE TO INTEREST OWNERS

     The Company has recorded as a payable totaling $313,168 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 1998 and 1997 as follows:

                                           1998             1997
                                           ----             ----

          Customer 1                   $   23,000          188,000
          Customer 2                      386,000          552,000
                                          -------          -------
                                       $  409,000          740,000
                                          =======          =======
                                                                   (Continued)

<PAGE>   20

                            PETROL INDUSTRIES, INC.

                  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 for 1998 and 1997, 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 $15,773 at December 31, 1998, and is included in 
accounts payable.

(9)  OTHER OPERATING INCOME

     Other operating income for the years ended December 31, 1998 and 1997, 
consists of the following:

                                                    1998         1997
                                                    ----         ----
     Affiliated partnerships - operations
       and administration fee                   $   9,484       12,180
     Other                                         15,616        5,220
                                                  -------      -------
                                                $  25,100       17,400
                                                  =======      =======

(10) RELATED PARTY TRANSACTIONS

     Payable to officer, net, consists of the following:

                                                     1998        1997
                                                     ----        ----

     Accrued salary plus interest               $  562,682     506,064
     Note payable to Company plus interest             ---     (43,817)
     Advances                                          ---     (70,547)
                                                  --------    --------
                                                $  562,682     391,701
                                                  ========    ========

                                                                    (Continued)






<PAGE>   21


                            PETROL INDUSTRIES, INC.

                  Notes to Consolidated Financial Statements
     

     Interest at a bank's prime rate is accruing on all accrued salary and 
unpaid interest thereon.  Interest cost included in expense during 1998 and 
1997 were $31,225 and $24,732, 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 $2,536 and 
$3,238 during 1998 and 1997, respectively.  Advances are non-interest bearing.  
As of December 31, 1998, the Company netted the note payable to the Company 
from the officer and the advances from the officer against the amount which the 
Company owed the officer in accrued salary and interest.

(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.






<PAGE>   23

                   PETROL INDUSTRIES, INC. AND SUBSIDIARIES

                     Supplemental Oil and Gas Information
                                  (unaudited)


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 $9.38 per barrel 
for oil at December 31, 1998) to estimated quantities of proved developed 
reserves as of each year end.  Oil prices have remained constant  in early 1999 
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 1998 and 
1997.

























<PAGE>   24
                                                                 SCHEDULE 1

                   PETROL INDUSTRIES, INC. AND SUBSIDIARIES

                     Capital Costs Relating to Oil and Gas
                             Producing Activities

                          December 31, 1998 and 1997
                                  (unaudited)


                                                1998           1997
                                                ----           ----

Proved properties                           $ 4,179,433      4,180,055
Other                                           367,984        349,911
                                              ---------      ---------
                                              4,547,417      4,529,966
Accumulated depreciation, depletion
  and amortization                            4,489,071      4,482,391
                                              ---------      ---------
Net capitalized costs                       $    58,346         47,575
                                              =========      =========




NOTE:  Included in capitalized costs at December 31, 1998 and 1997, 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, 1998 and 1997
                                  (unaudited)


                                                  1998             1997
                                                  ----             ----

Developmental costs                          $    3,990            6,560
                                                =======          =======









































<PAGE>   26

                                                                  SCHEDULE 3

                   PETROL INDUSTRIES, INC. AND SUBSIDIARIES

                          Estimated Net Quantities of
                     Proved Developed Oil and Gas Reserves

                    Years ended December 31, 1998 and 1997
                                  (unaudited)


                                                 1998            1997
                                                 ----            ----
                                                Barrels         Barrels
                                                of Oil          of Oil
                                                -------         -------
Proved developed reserves:
  Beginning of year                              243,565         293,293
  Production                                     (36,740)        (42,672)
  Sales of minerals in place                         ---          (7,056)
  Revisions, extensions and discoveries              ---             ---
                                               ---------       ---------
End of year                                      206,825         243,565
                                               =========       =========






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, 1998 and 1997
                                  (unaudited)

                                            1998              1997
                                            ----              ----
                                                (in thousands)

Future cash inflows                      $  1,940             3,734
Future production and development
  cost                                     (2,745)           (3,831)
Future income tax (expense)
  benefit                                     ---               ---
                                           ------            ------
Future net cash flows (deficit)              (805)              (97)
10% annual discount for estimated
  timing of cash flows (deficit)              221                29
                                           ------            ------
Standardized measure of discounted
  future net cash flows (deficit)        $   (584)              (68)
                                           ======            ======

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

                                            1998              1997
                                            ----              ----
                                                (in thousands)
Net changes in prices and production
  cost, including excise taxes            $    (5)           (1,901)
Sales and transfers of oil and gas
  produced, net of production costs            40              (122)
Net change due to revisions,
  extensions, and discoveries                 ---               ---
Net change due to purchase (sales) of
  minerals-in-place                           ---              (130)
Development cost incurred during the
  period                                        4                 7
Accretion of discount                          (7)              165
Change in production rates (timing)
  and other                                  (548)              260
                                            -----             -----
                                          $  (516)           (1,721)
                                            =====             =====

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       62       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     67       Director, Retired; Bond              1972
                                Salesman, Thomson McKinnon
                                Securities, 1983-1988.

Arlys C. Milan         44       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         62         See "Directors" above.

Arlys C. Milan           44         See "Directors" above.

Jimmy S. Foster          55         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.

     (c)  Significant Employees.

              None.



<PAGE>   30


     (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 once in 
1998.


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,        1997   125,000      -           -              -           -        -              -
 President, Chief        1998   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, 1998 and 1997 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, 1998 or 1997 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, 1998 and 
1997 to Mr. Rodano under any form of Company LTIP (w/incentives spanning more 
than one fiscal year).








<PAGE>   32
<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 #)
----      -----------------     -----------------------     ---------        --------        --------
<C>       <C>                   <C>                         <C>              <C>             <C>
                                     Not Applicable
</TABLE>

     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 or 1998.

     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, 1999, 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          534,325 (direct)          34.0%

     (b)  The following table sets forth, as of March 19, 1999, 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          534,325 (direct)          34.0%

          Robert M. Bontempi              0                    0.0%

          Arlys C. Milan                  0                    0.0%

          Jimmy S. Foster                 0                    0.0%



<PAGE>   33

     (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.

     (a)  Transactions with Management and Others.

          Not applicable.

     (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.

                                       By:     Joseph M. Rodano
March  30 , 1999                          ----------------------------------
                                          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.

                                               Joseph M. Rodano
March  30 , 1999                       -------------------------------------
                                       Joseph M. Rodano - Director

                                               Robert Bontempi
March  30 , 1999                       -------------------------------------
                                       Robert Bontempi - Director

                                               Arlys C. Milan
March  30 , 1999                       -------------------------------------
                                       Arlys C. Milan - Director