EXHIBIT 99.2

                             GUARANTY AGREEMENT


      THIS  GUARANTY  AGREEMENT  by  HOWELL  CORPORATION  (hereinafter  called
"Guarantor"),  is in favor of BANK OF MONTREAL, as agent (the "Agent") for the
lenders (the  "Lenders")  that are or become  parties to the Credit  Agreement
defined below.

                             W I T N E S S E T H:

      WHEREAS,  on  even  date  herewith,  HOWELL  PETROLEUM  CORPORATION,   a
Delaware  corporation  (hereinafter  called  "Borrower"),  the  Agent  and the
Lenders have entered into that certain  Credit  Agreement  (as the same may be
amended from time to time, the "Credit Agreement"); and

      WHEREAS,  one of the terms and conditions stated in the Credit Agreement
for the making of the loans  described  therein is the  execution and delivery
to the Agent for the benefit of the Lenders of this Guaranty Agreement;

      NOW, THEREFORE,  (i) in order to comply with the terms and conditions of
the Credit Agreement,  (ii) to induce the Lenders, at any time or from time to
time,  to loan  monies,  with or  without  security  to or for the  account of
Borrower in accordance  with the terms of the Credit  Agreement,  (iii) at the
special  insistence  and request of the Lenders,  and (iv) for  other good and
valuable  consideration,  the  receipt  and  sufficiency  of which  is  hereby
acknowledged, Guarantor hereby agrees as follows:

                                   ARTICLE 1

                                 General Terms

      ARTICLE 1   General Terms

      Section 1.1 Terms Defined  Above.  As used in this  Guaranty  Agreement,
the terms "Agent", "Borrower",  "Credit Agreement",  "Guarantor" and "Lenders"
shall have the meanings indicated above.

      Section 1.2 Certain  Definitions.  As used in this  Guaranty  Agreement,
the  following  terms shall have the  following  meanings,  unless the context
otherwise requires:

      "Guarantor  Claims"  shall have the meaning  indicated  in Section
      4.1 hereof.

      "Guaranty  Agreement" shall mean this Guaranty  Agreement,  as the
      same may from time to time be amended or supplemented.

      "Liabilities"   shall   mean   (a)  any   and  all   indebtedness,
      obligations  and  liabilities  of  the  Borrower  pursuant  to the
      Credit  Agreement,   including  without  limitation,   the  unpaid
      principal  of  and  interest  on  the  Notes,   including  without
      limitation,  interest  accruing  subsequent  to  the  filing  of a
      petition or other action  concerning  bankruptcy  or other similar
      proceeding;  (b) payment of and performance of any and all Hedging
      Agreements,  if any,  entered into by the Borrower  with a Lender;
      (c) all  reimbursements  and other  obligations  with  respect  to
      Letters  of  Credit;   and  (d)  all   renewals,   rearrangements,
      increases,  extensions for any period, amendments or supplement in
      whole or in part of the  Notes  or any  documents  evidencing  the
      above.

      "Loan Documents" shall mean the Credit  Agreement,  the Notes, the
      Letters of Credit and the other Loan Documents.

      Section 1.3 Credit  Agreement  Definitions.   Unless  otherwise  defined
herein,  all terms  beginning  with a capital  letter which are defined in the
Credit Agreement shall have the same meanings herein as therein.

                                   ARTICLE 2

                                 The Guaranty

      ARTICLE 2   The Guaranty

      Section 2.1 Liabilities  Guaranteed.  Guarantor  hereby  irrevocably and
unconditionally guarantees the prompt payment at maturity of the Liabilities.

      Section 2.2 Nature  of   Guaranty.   This   Guaranty   Agreement  is  an
absolute, irrevocable,  completed and continuing guaranty of payment and not a
guaranty of collection,  and no notice of the  Liabilities or any extension of
credit  already or  hereafter  contracted  by or extended to Borrower  need be
given to Guarantor.  This  Guaranty  Agreement may not be revoked by Guarantor
and shall continue to be effective with respect to debt under the  Liabilities
arising or created  after any  attempted  revocation  by  Guarantor  and shall
remain in full force and  effect  until the  Liabilities  are paid in full and
the Commitments are terminated,  notwithstanding  that from time to time prior
thereto no  Liabilities  may be  outstanding.  Borrower  and the  Lenders  may
modify,  alter,  rearrange,  extend for any period  and/or  renew from time to
time,  the  Liabilities,  and the  Lenders  may waive any Default or Events of
Default  without  notice to the  Guarantor  and in such event  Guarantor  will
remain  fully bound  hereunder on the  Liabilities.  This  Guaranty  Agreement
shall  continue to be  effective or be  reinstated,  as the case may be, if at
any time any payment of the  Liabilities  is  rescinded  or must  otherwise be
returned  by  any  of  the  Lenders  upon  the   insolvency,   bankruptcy   or
reorganization  of Borrower or  otherwise,  all as though such payment had not
been  made.  This  Guaranty  Agreement  may be  enforced  by the Agent and any
subsequent  holder of any of the  Liabilities  and shall not be  discharged by
the  assignment or negotiation  of all or part of the  Liabilities.  Guarantor
hereby expressly waives presentment,  demand,  notice of non-payment,  protest
and notice of protest  and  dishonor,  notice of Default or Event of  Default,
notice of intent to accelerate the maturity and notice of  acceleration of the
maturity and any other notice in  connection  with the  Liabilities,  and also
notice of  acceptance of this  Guaranty  Agreement,  acceptance on the part of
the  Lenders  being  conclusively  presumed by the  Lenders'  request for this
Guaranty Agreement and delivery of the same to the Agent.

      Section 2.3 Agent's  Rights.  Guarantor  authorizes  the Agent,  without
notice or demand and without affecting  Guarantor's  liability  hereunder,  to
take and hold security for the payment of this Guaranty  Agreement  and/or the
Liabilities,  and exchange,  enforce, waive and release any such security; and
to apply such  security  and direct the order or manner of sale thereof as the
Agent  in its  discretion  may  determine;  and to  obtain a  guaranty  of the
Liabilities  from any one or more Persons and at any time or times to enforce,
waive,  rearrange,  modify,  limit or release any of such other  Persons  from
their obligations under such guaranties.

      Section 2.4 Guarantor's Waivers.

            (a)   General.    Guarantor  waives  any right to  require  any of
      the Lenders to (i) proceed  against  Borrower or any other person liable
      on the  Liabilities,  (ii) enforce any of their rights against any other
      guarantor  of the  Liabilities  (iii) proceed  or  enforce  any of their
      rights against or exhaust any security  given to secure the  Liabilities
      (iv) have  Borrower  joined with  Guarantor  in any suit  arising out of
      this Guaranty Agreement and/or the Liabilities,  or (v) pursue any other
      remedy in the  Lenders'  powers  whatsoever.  The  Lenders  shall not be
      required  to mitigate  damages or take any action to reduce,  collect or
      enforce  the  Liabilities.  Guarantor  waives  any  defense  arising  by
      reason of any  disability,  lack of  corporate  authority  or power,  or
      other  defense of Borrower or any other  guarantor  of the  Liabilities,
      and shall remain  liable hereon  regardless  of whether  Borrower or any
      other  guarantor  be found not liable  thereon for any  reason.  Whether
      and when to exercise  any of the  remedies  of the Lenders  under any of
      the Loan Documents  shall be in the sole and absolute  discretion of the
      Agent,  and no delay by the Agent in  enforcing  any  remedy,  including
      delay in  conducting  a  foreclosure  sale,  shall be a  defense  to the
      Guarantor's liability under this Guaranty Agreement.

            (b)   Subrogation.      Until  the  Liabilities  have been paid in
      full, the Guarantor  waives all rights of  subrogation or  reimbursement
      against the  Borrower,  whether  arising by contract or operation of law
      (including,  without  limitation,  any  such  right  arising  under  any
      federal or state  bankruptcy or insolvency laws) and waives any right to
      enforce  any remedy  which the Lenders  now have or may  hereafter  have
      against  the   Borrower,   and  waives  any  benefit  or  any  right  to
      participate  in any security  now or hereafter  held by the Agent or any
      Lender.

      Section 2.5 Maturity of Liabilities;  Payment.  Guarantor agrees that if
the  maturity  of any of the  Liabilities  is  accelerated  by  bankruptcy  or
otherwise,  such maturity shall also be deemed  accelerated for the purpose of
this  Guaranty  Agreement  without  demand or notice to  Guarantor.  Guarantor
will,  forthwith  upon notice from the Agent,  pay to the Agent the amount due
and unpaid by  Borrower  and  guaranteed  hereby.  The failure of the Agent to
give this notice shall not in any way release Guarantor hereunder.

      Section 2.6 Agent's   Expenses.   If   Guarantor   fails   to  pay   the
Liabilities  after  notice  from the Agent of  Borrower's  failure  to pay any
Liabilities at maturity,  and if the Agent obtains the services of an attorney
for collection of amounts owing by Guarantor  hereunder,  or obtains advice of
counsel in respect of any of their rights under this  Guaranty  Agreement,  or
if suit is filed to enforce this Guaranty  Agreement,  or if  proceedings  are
had in any bankruptcy,  probate,  receivership  or other judicial  proceedings
for  the  establishment  or  collection  of  any  amount  owing  by  Guarantor
hereunder,  or if any amount owing by Guarantor hereunder is collected through
such proceedings,  Guarantor agrees to pay to the Agent the Agent's reasonable
attorneys' fees.

      Section 2.7 Liability.  It is  expressly  agreed that the  liability  of
the Guarantor for the payment of the  Liabilities  guaranteed  hereby shall be
primary and not secondary.

      Section 2.8 Events  and  Circumstances  Not  Reducing  or  Discharging  
Guarantor's  Obligations.  Guarantor hereby consents and agrees to each of the
following to the fullest extent  permitted by law, and agrees that Guarantor's
obligations under this Guaranty  Agreement shall not be released,  diminished,
impaired,  reduced or adversely  affected by any of the following,  and waives
any rights  (including  without  limitation  rights to notice) which Guarantor
might  otherwise  have  as a  result  of or in  connection  with  any  of  the
following:

            (a)   Modifications,    etc.   Any    renewal,    extension,
      modification,  increase, decrease,  alteration or rearrangement of
      all or  any  part  of the  Liabilities,  or of the  Notes,  or the
      Credit   Agreement  or  any  instrument   executed  in  connection
      therewith,  or any contract or understanding  between Borrower and
      any of  the  Lenders,  or  any  other  Person,  pertaining  to the
      Liabilities;

            (b)   Adjustment,    etc.   Any   adjustment,    indulgence,
      forbearance  or  compromise  that might be granted or given by any
      of the Lenders to Borrower or  Guarantor  or any Person  liable on
      the Liabilities;

            (c)   Condition of Borrower or  Guarantor.  The  insolvency,
      bankruptcy  arrangement,  adjustment,  composition,   liquidation,
      disability,  dissolution,  death or lack of power of  Borrower  or
      Guarantor  or any other  Person at any time liable for the payment
      of all or part of the Liabilities;  or any dissolution of Borrower
      or Guarantor,  or any sale, lease or transfer of any or all of the
      assets  of   Borrower  or   Guarantor,   or  any  changes  in  the
      shareholders,  partners,  or members of Borrower or Guarantor;  or
      any reorganization of Borrower or Guarantor;

            (d)   Invalidity    of    Liabilities.    The    invalidity,
      illegality  or   unenforceability  of  all  or  any  part  of  the
      Liabilities,  or any document or agreement  executed in connection
      with  the  Liabilities,  for  any  reason  whatsoever,   including
      without  limitation  the fact  that the  Liabilities,  or any part
      thereof,  exceed the amount  permitted by law, the act of creating
      the  Liabilities or any part thereof is ultra vires,  the officers
      or  representatives  executing the documents or otherwise creating
      the  Liabilities   acted  in  excess  of  their   authority,   the
      Liabilities  violate applicable usury laws, the Borrower has valid
      defenses,  claims  or  offsets  (whether  at law,  in equity or by
      agreement)  which  render  the  Liabilities  wholly  or  partially
      uncollectible   from  Borrower,   the  creation,   performance  or
      repayment  of the  Liabilities  (or the  execution,  delivery  and
      performance  of any document or  instrument  representing  part of
      the  Liabilities or executed in connection  with the  Liabilities,
      or given to secure the repayment of the  Liabilities)  is illegal,
      uncollectible,  legally impossible or unenforceable, or the Credit
      Agreement or other  documents  or  instruments  pertaining  to the
      Liabilities  have been forged or  otherwise  are  irregular or not
      genuine or authentic;

            (e)   Release of  Obligors.  Any full or partial  release of
      the liability of Borrower on the  Liabilities or any part thereof,
      of  any  co-guarantors,  or any  other  Person  now  or  hereafter
      liable,  whether directly or indirectly,  jointly,  severally,  or
      jointly and severally,  to pay,  perform,  guarantee or assure the
      payment  of  the  Liabilities  or  any  part  thereof,   it  being
      recognized,  acknowledged  and agreed by Guarantor  that Guarantor
      may be required to pay the Liabilities in full without  assistance
      or  support  of any  other  Person,  and  Guarantor  has not  been
      induced to enter into this  Guaranty  Agreement  on the basis of a
      contemplation,  belief,  understanding  or  agreement  that  other
      parties  other than the  Borrower  will be liable to  perform  the
      Liabilities,  or the Lenders will look to other parties to perform
      the Liabilities.

            (f)   Other  Security.  The taking or accepting of any other
      security,  collateral or guaranty,  or other assurance of payment,
      for all or any part of the Liabilities;

            (g)   Release of  Collateral,  etc. Any release,  surrender,
      exchange, subordination,  deterioration, waste, loss or impairment
      (including without limitation negligent,  willful, unreasonable or
      unjustifiable   impairment)   of  any   collateral,   property  or
      security,  at any time existing in connection with, or assuring or
      securing payment of, all or any part of the Liabilities;

            (h)   Care and  Diligence.  The  failure  of the  Lenders or
      any other Person to exercise  diligence or reasonable  care in the
      preservation,  protection,  enforcement, sale or other handling or
      treatment  of all or any  part of  such  collateral,  property  or
      security;

            (i)   Status  of  Liens.   The  fact  that  any  collateral,
      security,  security  interest or lien  contemplated or intended to
      be given,  created or granted as security for the repayment of the
      Liabilities shall not be properly  perfected or created,  or shall
      prove to be  unenforceable  or  subordinate  to any other security
      interest  or lien,  it being  recognized  and agreed by  Guarantor
      that  Guarantor is not entering  into this  Guaranty  Agreement in
      reliance  on,  or  in   contemplation  of  the  benefits  of,  the
      validity,  enforceability,  collectibility  or value of any of the
      collateral for the Liabilities;

            (j)   Payments  Rescinded.  Any  payment by  Borrower to the
      Lenders is held to  constitute a preference  under the  bankruptcy
      laws,  or for any reason the Lenders  are  required to refund such
      payment or pay such amount to Borrower or someone else; or

            (k)   Other  Actions  Taken or  Omitted.  Any  other  action
      taken  or  omitted  to  be  taken  with   respect  to  the  Credit
      Agreement,  the  Liabilities,   or  the  security  and  collateral
      therefor,  whether  or not  such  action  or  omission  prejudices
      Guarantor or  increases  the  likelihood  that  Guarantor  will be
      required to pay the Liabilities  pursuant to the terms hereof;  it
      being the unambiguous and unequivocal  intention of Guarantor that
      Guarantor  shall be  obligated  to pay the  Liabilities  when due,
      notwithstanding any occurrence,  circumstance,  event,  action, or
      omission whatsoever,  whether contemplated or uncontemplated,  and
      whether or not otherwise or particularly  described herein, except
      for  the  full  and  final   payment  and   satisfaction   of  the
      Liabilities.


                                   ARTICLE 3

                        Representations and Warranties

      Section 3.1 By  Guarantor.  In order to  induce  the  Lenders  to accept
this  Guaranty  Agreement,  Guarantor  represents  and warrants to the Lenders
(which  representations  and  warranties  will  survive  the  creation  of the
Liabilities and any extension of credit thereunder) that:

            (a)   Benefit to Guarantor.  Guarantor's  guaranty  pursuant
      to this Guaranty Agreement  reasonably may be expected to benefit,
      directly or indirectly, Guarantor.

            (b)   Corporate  Existence.  Guarantor is a corporation duly
      organized,  legally  existing and in good standing  under the laws
      of the State of Delaware and is duly  qualified all  jurisdictions
      wherein  the  failure  to be so  organized,  existing  and in good
      standing would have a Material Adverse Effect.

            (c)   Corporate Power and  Authorization.  Guarantor is duly
      authorized  and  empowered  to execute,  deliver and perform  this
      Guaranty  Agreement and all corporate  action on Guarantor's  part
      requisite for the due execution,  delivery and performance of this
      Guaranty Agreement has been duly and effectively taken.

            (d)   Binding    Obligations.    This   Guaranty   Agreement
      constitutes   valid  and   binding   obligations   of   Guarantor,
      enforceable in accordance with its terms (except that  enforcement
      may  be  subject  to  any  applicable  bankruptcy,  insolvency  or
      similar laws  generally  affecting the  enforcement  of creditors'
      rights).

            (e)   No  Legal  Bar  or  Resultant   Lien.   This  Guaranty
      Agreement will not violate any provisions of Guarantor's  articles
      or  certificate  of   incorporation,   bylaws,  or  any  contract,
      agreement,  law, regulation,  order, injunction,  judgment, decree
      or writ to which  Guarantor is subject,  or result in the creation
      or imposition of any Lien upon any Properties of Guarantor.

            (f)   No  Consent.   Guarantor's  execution,   delivery  and
      performance  of this  Guaranty  Agreement  does  not  require  the
      consent  or  approval  of  any  other  Person,  including  without
      limitation any regulatory  authority or  governmental  body of the
      United States or any state  thereof or any  political  subdivision
      of the United States or any state thereof.

            (g)   Solvency.  The Guarantor  hereby  represents  that (i)
      it is  not  insolvent  as of  the  date  hereof  and  will  not be
      rendered  insolvent as a result of this Guaranty  Agreement,  (ii)
      it is not  engaged  in  business  or a  transaction,  or  about to
      engage in a business or a  transaction,  for which any property or
      assets  remaining  with  such  Guarantor  is  unreasonably   small
      capital,  and (iii) it does not  intend to incur,  or  believe  it
      will  incur,  debts that will be beyond its ability to pay as such
      debts mature.

            (h)  Financial Condition.  The audited consolidated  balance
      sheet  of  the  Guarantor and its Consolidated  Subsidiaries as at 
      December 31,1996 and the related consolidated statement of income,
      stockholders'  equity  and  cash flow of the  Guarantor   and  its
      Consolidated  Subsidiaries  for the fiscal year ended on said date,
      with  the  opinion  thereon  of  Deloitte  & Touche LLP  heretofore
      furnished  to each of the Lenders  and  the unaudited  consolidated 
      balance sheet of the Guarantor  and its  Consolidated  Subsidiaries
      as at September 30, 1997 and their  related consolidated statements
      of  income, stockholders' equity and cash flow of the Guarantor and
      its Consolidated  Subsidiaries for the ninth month  period ended on
      such  date  heretofore  furnished  to  the Agent,  are complete and 
      correct and fairly present the consolidated financial condition  of
      the  Guarantor  and  its Consolidated Subsidiaries as at said dates
      and the results of its operations for the fiscal year and the ninth
      month period on said dates, all in accordance with GAAP, as applied
      on a consistent basis(subject, in the case of the interim financial
      statements,  to normal year-end adjustments). Neither the Guarantor
      nor  any of its Subsidiaries  has on the  Closing Date any material
      Debt, material contingent  liabilities,  material  liabilities  for
      taxes,   material  unusual  forward  or  long-term  commitments  or
      material  unrealized  or  anticipated losses  from  any unfavorable
      commitments,  except as referred to or reflected or provided for in
      the Financial Statements or in Schedule 7.02 of the Credit Agreement.
      Since December 31, 1996, there has been no change or event  having a
      Material Adverse Effect. Since the date of the Financial Statements,
      neither  the  business nor the Properties of the Guarantor or any of
      its  material  Subsidiaries  have  been  materially  and   adversely 
      affected  as  a  result of any fire, explosion,  earthquake,  flood, 
      drought,   windstorm, accident,  strike or other labor  disturbance,
      embargo,  requisition  or  taking  of  Property  or  cancellation of 
      contracts,  permits  or  concessions  by any Governmental Authority,
      riot,  activities  of  armed  forces or acts of God or of any public 
      enemy.

            (i) Litigation. Except as disclosed to the Lenders in Schedule
      7.03  of  the  Credit  Agreement,  at  the  Closing Date there is no 
      material litigation,  legal,  administrative or arbitral proceeding,
      investigation  or other  action  of any  nature  pending  or, to the
      knowledge  of the   Guarantor  threatened  against or affecting  the 
      Guarantor or any of its Subsidiaries  which involves  the reasonable
      possibility  of  any  judgment or liability against the Guarantor or 
      any  of  its Subsidiaries not fully covered by insurance (except for 
      normal deductibles).

            (j) No Breach. Neither  the  execution  and  delivery  of this
      Guaranty Agreement or any other Loan Documents,  nor compliance with
      the  terms  and  provisions  hereof or thereof will conflict with or
      result in a breach of, or require  any consent  which has  not  been
      obtained as of the Closing Date under,  the  respective  charter  or
      by-laws  of  the  Guarantor  or  any  of  its  Subsidiaries,  or any
      Governmental  Requirement or any  agreement or  instrument  to which
      the  Guarantor or any of its Subsidiaries is a party or by  which it
      is  bound  or  to  which  it  or  its  Properties  are  subject,  or  
      constitute  a  default  under  any  such agreement or instrument, or
      result  in  the  creation  or imposition of any Lien upon any of the  
      revenues  or  assets  of  the  Guarantor  or any of its Subsidiaries  
      pursuant to the terms of any such agreement or instrument other than
      the Liens created by the Loan Documents.

            (k)   ERISA.

                  (1)   No act,  omission or  transaction  has  occurred  with
            respect to any Plan which would have a Material Adverse Effect.

                  (2)   No Plan  (other than a defined  contribution  plan) or
            any trust  created under any such Plan has been  terminated  since
            September 2,  1974.  No  liability to the PBGC (other than for the
            payment  of  current  premiums  which  are  not  past  due) by the
            Guarantor,  any of its  Subsidiaries  or any ERISA  Affiliate  has
            been or is expected by the Guarantor,  any of its  Subsidiaries or
            any ERISA  Affiliate to be incurred  with respect to any Plan.  No
            ERISA Event with respect to any Plan has occurred  that would have
            a Material Adverse Effect.

                  (3)   Full  payment  when due has been  made of all  amounts
            which  the  Guarantor,  any  of  its  Subsidiaries  or  any  ERISA
            Affiliate is required  under the terms of each Plan or  applicable
            law  to  have  paid  as   contributions   to  such  Plan,  and  no
            accumulated  funding  deficiency  (as  defined in  section  302 of
            ERISA and section 412 of the Code), whether or not waived,  exists
            with respect to any Plan.

                  (4)   The   actuarial   present   value   of   the   benefit
            liabilities  under each Plan which is subject to Title IV of ERISA
            does not, as of the end of the  Guarantor's  most  recently  ended
            fiscal year,  exceed the current value of the assets  (computed on
            a plan termination  basis in accordance with Title IV of ERISA) of
            such  Plan  allocable  to  such  benefit  liabilities.   The  term
            "actuarial  present value of the benefit  liabilities"  shall have
            the meaning specified in section 4041 of ERISA.

                  (5)   None of the Guarantor,  any of its Subsidiaries or any
            ERISA  Affiliate  sponsors,   maintains,   or  contributes  to  an
            employee  welfare  benefit  plan,  as defined  in section  3(1) of
            ERISA, including,  without limitation, any such plan maintained to
            provide  benefits to former  employees of such entities,  that may
            not be  terminated  by the  Guarantor,  a Subsidiary  or any ERISA
            Affiliate in its sole  discretion at any time without any material
            liability.

                  (6)   None of the Guarantor,  any of its Subsidiaries or any
            ERISA Affiliate  sponsors,  maintains or contributes to, or has at
            any  time  in  the  preceding  six  calendar   years,   sponsored,
            maintained or contributed to, any Multiemployer Plan.

                  (7)   None of the Guarantor,  any of its Subsidiaries or any
            ERISA  Affiliate  is required to provide  security  under  section
            401(a)(29) of the Code due to a Plan  amendment that results in an
            increase in current liability for the Plan.

            (l)   Taxes.  Except  as set out in  Schedule 7.09  of the  Credit
      Agreement,  each of the  Guarantor  and its  Subsidiaries  has filed all
      United  States  Federal  income tax returns and all other  material  tax
      returns  which  are  required  to be filed  by them  and  have  paid all
      material  taxes  due  pursuant  to  such  returns  or  pursuant  to  any
      assessment  received by the  Guarantor or any of its  Subsidiaries.  The
      charges,  accruals  and reserves on the books of the  Guarantor  and its
      Subsidiaries in respect of taxes and other governmental  charges are, in
      the opinion of the  Guarantor,  adequate.  No  material  tax lien (other
      than any  Excepted  Lien) has been filed and,  to the  knowledge  of the
      Guarantor,  no material claim is being asserted with respect to any such
      tax, fee or other charge.

            (m)   Title to Capital  Stock of Borrower.  The Guarantor has good
      and unencumbered title to all of the capital stock of the Borrower.

            (n)   Investment  Company Act.  Neither the  Guarantor  nor any of
      its  Subsidiaries is an "investment  company" or a company  "controlled"
      by an  "investment  company,"  within  the  meaning  of  the  Investment
      Company Act of 1940, as amended.

            (o)   Public Utility  Holding  Company Act.  Neither the Guarantor
      nor any of its  Subsidiaries  is a "holding  company," or a  "subsidiary
      company"  of a  "holding  company,"  or  an  "affiliate"  of a  "holding
      company"  or of a  "subsidiary  company"  of a "holding  company,"  or a
      "public  utility"  within  the  meaning of the  Public  Utility  Holding
      Company Act of 1935, as amended.

            (p)   Subsidiaries.  Except  as set  forth on  Schedule 1  hereto,
      the Guarantor has no Subsidiaries other than the Borrower.

            (q)   Compliance  with the Law.  Neither the  Guarantor nor any of
      its Subsidiaries has violated any Governmental  Requirement or failed to
      obtain   any   license,   permit,   franchise   or  other   governmental
      authorization  necessary for the  ownership of any of its  Properties or
      the conduct of its business,  which  violation or failure would have (in
      the event such  violation or failure were asserted by any Person through
      appropriate action) a Material Adverse Effect.

      Section 3.2 No  Representation  by  LendersSection.  Neither the Lenders
nor any other  Person has made any  representation,  warranty or  statement to
the  Guarantor  in order to induce  the  Guarantor  to execute  this  Guaranty
Agreement.


                                   ARTICLE 4

                         Subordination of Indebtedness

      ARTICLE 4   Subordination of Indebtedness

      Section 4.1 Subordination of All Guarantor Claims.  As used herein,  the
term  "Guarantor  Claims" shall mean all debts and  liabilities of Borrower to
Guarantor,  whether  such  debts and  liabilities  now exist or are  hereafter
incurred or arise,  or whether the  obligation of Borrower  thereon be direct,
contingent,  primary, secondary, several, joint and several, or otherwise, and
irrespective  of  whether  such debts or  liabilities  be  evidenced  by note,
contract,  open  account,  or  otherwise,  and  irrespective  of the person or
persons in whose  favor such debts or  liabilities  may,  at their  inception,
have been, or may hereafter be created,  or the manner in which they have been
or may  hereafter  be  acquired  by  Guarantor.  The  Guarantor  Claims  shall
include  without  limitation  all  rights  and  claims  of  Guarantor  against
Borrower  arising  as a result  of  subrogation  or  otherwise  as a result of
Guarantor's  payment of all or a portion of the Liabilities.  It is understood
that the Guarantor  Claims are expressly made  subordinate and junior in right
of  payment  to the prior  payment  and  performance  of the  Liabilities  and
accordingly  no payment or  prepayment  of any  principal,  interest  or other
amount on account of the  Guarantor  Claims  shall be made,  if at the time of
such payment or prepayment  or  immediately  after giving  affect  thereto (a)
there shall exist a default in the payment or  prepayment  with respect to any
of the  Liabilities  or (b) there shall have  occurred an Event of Default and
such Event of Default shall not have been cured or waived; and further,  until
the Liabilities shall be paid and satisfied in full and no Commitments  remain
outstanding  under the  Credit  Agreement,  no payment  or  prepayment  of any
principal,  interest or other amount on account of that  certain  indebtedness
the  principal  amount of  $64,296,029.00  owing by the  Borrower to Guarantor
shall be received or collected,  directly or indirectly except as permitted by
Section 9.20 of the Credit Agreement.

      Section 4.2 Claims  in  Bankruptcy.   In  the  event  of   receivership,
bankruptcy, reorganization,  arrangement, debtor's relief, or other insolvency
proceedings  involving  Borrower,  as debtor, the Lenders shall have the right
to  prove  their  claim  in any  proceeding,  so as to  establish  its  rights
hereunder  and  receive  directly  from the  receiver,  trustee or other court
custodian,  dividends  and  payments  which would  otherwise  be payable  upon
Guarantor  Claims.  Guarantor  hereby  assigns such  dividends and payments to
the Lenders.  Should the Agent or any Lender  receive,  for  application  upon
the  Liabilities,  any such dividend or payment which is otherwise  payable to
Guarantor,  and which, as between  Borrower and Guarantor,  shall constitute a
credit  upon  the  Guarantor  Claims,   then  upon  payment  in  full  of  the
Liabilities,  Guarantor  shall become  subrogated to the rights of the Lenders
to the extent that such payments to the Lenders on the  Guarantor  Claims have
contributed  toward the liquidation of the  Liabilities,  and such subrogation
shall be with respect to that proportion of the  Liabilities  which would have
been unpaid if the Agent or a Lender had not  received  dividends  or payments
upon the Guarantor Claims.

      Section 4.3 Payments  Held in Trust.  In the event that  notwithstanding
Sections  4.1 and 4.2 above,  Guarantor  should  receive any funds,  payments,
claims  or  distributions  which is  prohibited  by such  Sections,  Guarantor
agrees to hold in trust for the  Lenders an amount  equal to the amount of all
funds,  payments,  claims or  distributions  so  received,  and agrees that it
shall have  absolutely  no dominion  over the amount of such funds,  payments,
claims  or  distributions  except  to pay  them  promptly  to the  Agent,  and
Guarantor covenants promptly to pay the same to the Agent.

      Section 4.4 Liens   Subordinate.   Guarantor   agrees  that  any  liens,
security  interests,  judgment  liens,  charges  or  other  encumbrances  upon
Borrower's  assets  securing  payment  of the  Guarantor  Claims  shall be and
remain inferior and  subordinate to any liens,  security  interests,  judgment
liens,  charges or other  encumbrances upon Borrower's assets securing payment
of the  Liabilities,  regardless  of  whether  such  encumbrances  in favor of
Guarantor,  the Agent or the Lenders  presently exist or are hereafter created
or attach.  Without the prior written consent of the Lenders,  Guarantor shall
not  (a) exercise  or enforce  any  creditor's  right it may have  against the
Borrower,  or (b) foreclose,  repossess,  sequester or otherwise take steps or
institute any action or proceeding  (judicial or otherwise,  including without
limitation  the  commencement  of or joinder in any  liquidation,  bankruptcy,
rearrangement,  debtor's relief or insolvency proceeding) to enforce any lien,
mortgages, deeds of trust, security interest,  collateral rights, judgments or
other encumbrances on assets of Borrower held by Guarantor.

      Section 4.5 Notation  of  Records.   All  promissory   notes,   accounts
receivable  ledgers or other evidence of the Guarantor  Claims  accepted by or
held by Guarantor  shall contain a specific  written  notice  thereon that the
indebtedness  evidenced  thereby  is  subordinated  under  the  terms  of this
Guaranty Agreement.

                                   ARTICLE 5

                         Certain Additional Covenants 

      Section 5.1 Capital  Stock of Borrower.  The  Guarantor  will not permit
any of the  capital  stock of the  Borrower to be owned or  controlled  (other
than through  stock  ownership of the  Guarantor) by any Person other than the
Guarantor.

      Section 5.2 LiensSection.  The Guarantor will not create,  incur, assume
or permit to exist any Lien on any of the capital stock of the Borrower  other
than Excepted Liens.


                                   ARTICLE 6

                                Miscellaneous

      Section 6.1 Successors  and  Assigns.  This  Guaranty  Agreement  is and
shall be in every  particular  available to the  successors and assigns of the
Lenders   and  is  and  shall   always  be  fully   binding   upon  the  legal
representatives,  successors  and assigns of Guarantor,  notwithstanding  that
some or all of the monies,  the  repayment  of which this  Guaranty  Agreement
applies,  may  be  actually  advanced  after  any  bankruptcy,   receivership,
reorganization or other event affecting Guarantor.

      Section 6.2 Notices.  Any  notice  or demand  to  Guarantor  under or in
connection  with this Guaranty  Agreement may be given and shall  conclusively
be deemed and  considered to have been given and received in  accordance  with
Section 12.02 of the Credit  Agreement,  addressed to Guarantor at the address
on the signature  page hereof or at such other  address  provided to the Agent
in writing.

      Section 6.3 Business  and  Financial  Information.  The  Guarantor  will
promptly  furnish to the Agent and the Lenders  from time to time upon request
such  information  regarding the business and affairs and financial  condition
of the  Guarantor  and its  subsidiaries  as the  Agent  and the  Lenders  may
reasonably request.

      Section 6.4 Construction.  This  Guaranty  Agreement is a contract  made
under and shall be  construed in  accordance  with and governed by the laws of
the State of Texas.

      Section 6.5 Invalidity.  In  the  event  that  any  one or  more  of the
provisions  contained in this Guaranty  Agreement  shall,  for any reason,  be
held  invalid,  illegal or  unenforceable  in any  respect,  such  invalidity,
illegality or  unenforceability  shall not affect any other  provision of this
Guaranty Agreement.

      Section 6.6 ENTIRE AGREEMENT.  THIS WRITTEN GUARANTY AGREEMENT EMBODIES 
THE ENTIRE AGREEMENT AND UNDERSTANDING  BETWEEN THE LENDERS AND THE GUARANTOR 
AND SUPERSEDES ALL OTHER AGREEMENTS AND  UNDERSTANDINGS  BETWEEN SUCH PARTIES 
RELATING TO THE SUBJECT  MATTER  HEREOF AND THEREOF.  THIS  WRITTEN  GUARANTY 
AGREEMENT  REPRESENTS THE FINAL AGREEMENT  BETWEEN THE PARTIES AND MAY NOT BE 
CONTRADICTED  BY  EVIDENCE  OF PRIOR,  CONTEMPORANEOUS,  OR  SUBSEQUENT  ORAL 
AGREEMENTS OF THE PARTIES.  THERE ARE NO UNWRITTEN  ORAL  AGREEMENTS  BETWEEN 
THE PARTIES.



      WITNESS THE EXECUTION HEREOF, as of this the 17th day of December, 1997.

                                    HOWELL CORPORATION



                                    By:____________________________
                                    Name:
                                    Title:

                                    1500 Howell Building
                                    1111 Fannin
                                    Houston, Texas  77002-6923
                                    Telecopier No.: (713) 658-4007
                                    Telephone No.:  (713) 658-4008
                                    Attention:__________________