UNITED STATES SECURITIES AND EXCHANGE COMMISSION
                           Washington, D. C. 20549

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


                                  FORM 10-Q


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

                 For the quarterly period ended June 30, 1998

                                      OR

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


                        Commission File Number 1-8704

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


           Delaware                                   74-1223027
(State or other jurisdiction of          (I.R.S. Employer Identification No.)
incorporation or organization)


1111 Fannin, Suite 1500, Houston, Texas                  77002
(Address of principal executive offices)              (Zip Code)


                                (713) 658-4000
             (Registrant's telephone number, including area code)


Indicate by check mark whether the registrant (1) has filed all reports required
to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during
the  preceding 12 months (or for such  shorter  period that the  registrant  was
required  to file  such  reports),  and  (2) has  been  subject  to such  filing
requirements for the past 90 days.

                            Yes    X    No
                                  ---       ---
 
Indicate the number of shares  outstanding  on each of the  issuer's  classes of
common stock, as of the latest practicable date.

             Class                           Outstanding at July 31, 1998
---------------------------------         ------------------------------------
 Common Stock, $1.00 par value                         5,471,782

================================================================================
                        This report contains 15 pages


<PAGE>





                     HOWELL CORPORATION AND SUBSIDIARIES

                                  Form 10-Q

                                    INDEX



                                                                        Page No.
                                                                        --------
Part  I. Financial Information

Item 1.  Consolidated Statements of Operations --
           Three and six months ended June 30, 1998 and 1997 (unaudited)... 3

         Consolidated Balance Sheets --
           June 30, 1998 (unaudited) and December 31, 1997................. 4

         Consolidated Statements of Cash Flows --
           Six  months ended June 30, 1998 and 1997 (unaudited)............ 5

         Notes to Consolidated Financial Statements (unaudited)............ 6

Item 2.  Management's Discussion and Analysis of Financial Condition
           and Results of Operations...................................... 11


Part II. Other Information

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


<PAGE>


<TABLE>
<CAPTION>
                        PART I. FINANCIAL INFORMATION
                                   (ITEM 1)


====================================================================================================
CONSOLIDATED STATEMENTS OF OPERATIONS (UNAUDITED)
Howell Corporation and Subsidiaries
----------------------------------------------------------------------------------------------------
                                                          Three Months Ended      Six Months Ended
                                                               June 30,               June 30,
                                                           1998        1997       1998        1997
                                                           ----        ----       ----        ----
                                                                    (In thousands, except
                                                                      per share amounts)
<S>                                                    <C>          <C>         <C>         <C>
Revenues ............................................   $ 12,267    $  7,904    $ 26,534    $ 16,971
                                                        --------    --------    --------    --------

Cost and expenses:
   Lease operating expenses .........................      5,774       3,210      14,051       7,019
   Depreciation, depletion, and amortization ........      2,434       2,290       6,066       4,524
   Ceiling test write-down ..........................       --          --        66,118        --
   General and administrative expenses ..............      1,053         973       3,121       2,464
                                                         --------    --------   --------    --------
                                                           9,261       6,473      89,356      14,007
                                                         --------    --------    -------     -------
Other income (expense):
   Interest expense .................................     (2,762)       (441)     (5,434)       (854)
   Interest income ..................................         35          26          47          51
   Net earnings of investees ........................        104          79         224         507
   Other-net ........................................       (146)        (39)       (157)       (173)
                                                        --------    --------    --------    --------
                                                          (2,769)       (375)     (5,320)       (469)
                                                        --------    --------    --------    --------

Earnings (loss) before income taxes .................        237       1,056     (68,142)      2,495
Income tax provision (benefit) ......................        103         417     (23,120)        912
                                                        --------    --------    --------    --------
Net earnings (loss) from continuing operations ......        134         639     (45,022)      1,583
                                                        --------    --------    --------    --------

Discontinued operations:
  Net earnings from Howell Hydrocarbons
   (less applicable income taxes of $(15), $53, $(15)
   and $309, respectively)...........................        (59)       --           (59)        458
                                                        --------    --------    --------    --------

Net earnings (loss) .................................         75         639     (45,081)      2,041
   Less: Preferred stock dividends ..................       (604)       (604)     (1,208)     (1,208)
                                                        --------    --------    --------    --------

Net (loss) earnings applicable to common shares .....   $   (529)   $     35    $(46,289) $      833
                                                        ========    ========    ========    ========

Basic (loss) earnings per common share:
   Continuing operations ............................   $  (0.09)   $   0.01    $  (8.45)   $   0.08
   Discontinued operations ..........................      (0.01)       --         (0.01)       0.09
                                                        --------    --------    --------    --------

   Net (loss) earnings per common share (basic) .....   $  (0.10)   $   0.01    $  (8.46)   $   0.17
                                                        ========    ========    ========    ========

Weighted average shares outstanding(basic) ..........      5,472       5,020       5,468       5,003
                                                        ========    ========    ========    ========

Diluted (loss) earnings per common share:
   Continuing operations ............................   $  (0.09)   $   0.01    $  (8.45)   $   0.07
   Discontinued operations ..........................      (0.01)       --         (0.01)       0.09
                                                        --------    --------    --------    --------

   Net (loss) earnings per common share(diluted) ....   $  (0.10)   $   0.01    $  (8.46)   $   0.16
                                                        ========    ========    ========    ========
Weighted average shares outstanding (diluted) .......      5,472       5,193       5,468       5,134
                                                        ========    ========    ========    ========
Cash dividends per common share .....................   $   0.04    $   0.04    $   0.08    $   0.08
                                                        ========    ========    ========    ========
</TABLE>

See accompanying Notes to Consolidated Financial Statements.


<PAGE>


<TABLE>
<CAPTION>

========================================================================================================
CONSOLIDATED BALANCE SHEETS
Howell Corporation and Subsidiaries
--------------------------------------------------------------------------------------------------------

                                                                            June 30,     December 31,
                                                                              1998          1997
                                                                          (Unaudited)

                                                                       (In thousands, except share data)

                       Assets
<S>                                                                       <C>          <C>
Current assets:
   Cash and cash equivalents ..........................................   $   1,123    $      56
   Trade accounts receivable, less allowance for doubtful accounts of
       $150 in 1998 and $144 in 1997 ..................................       7,188        5,520
   Accounts receivable from investees .................................       2,300        2,300
   Other current assets ...............................................         729        1,489
                                                                          ---------    ---------
    Total current assets ..............................................      11,340        9,365
                                                                          ---------    ---------

Property, plant and equipment:
   Oil and gas properties, utilizing the full-cost method of accounting     385,966      371,975
   Unproven properties ................................................      44,517       41,017
   Fee mineral properties, unproven ...................................      18,123       18,123
   Other ..............................................................       2,409        2,670
   Less accumulated depreciation, depletion and amortization ..........    (279,481)    (207,557)
                                                                          ---------    ---------
    Net property and equipment ........................................     171,534      226,228
                                                                          ---------    ---------
Investment in investees ...............................................      16,577       16,432
Other assets ..........................................................       3,031       14,686
                                                                          ---------    ---------
    Total assets ......................................................   $ 202,482    $ 266,711
                                                                          =========    =========

        Liabilities and Shareholders' Equity

Current liabilities:
   Current portion of long-term debt ..................................   $  30,000    $  20,000
   Accounts payable ...................................................       4,995        2,165
   Accrued liabilities ................................................       5,765        4,819
   Income tax payable .................................................        (201)      (1,411)
                                                                          ---------    ---------
    Total current liabilities .........................................      40,559       25,573
                                                                          ---------    ---------
Deferred income taxes .................................................       2,592       25,071
                                                                          ---------    ---------
Other liabilities .....................................................       1,355        1,428
                                                                          ---------    ---------
Long-term debt ........................................................     107,000      117,000
                                                                          ---------    ---------
Shareholders' equity:
   Preferred stock, $1 par value; 690,000 shares issued and
     outstanding, liquidation value of $34,500,000 ....................         690          690
   Common stock, $1 par value; 5,471,782 shares issued and outstanding        5,472        5,465
   Additional paid-in capital .........................................      40,818       40,760
   Retained earnings ..................................................       3,996       50,724
                                                                          ---------    ---------
    Total shareholders' equity ........................................      50,976       97,639
                                                                          ---------    ---------
    Total liabilities and shareholders' equity ........................   $ 202,482    $ 266,711
                                                                          =========    =========
</TABLE>

See accompanying Notes to Consolidated Financial Statements.


<PAGE>
<TABLE>
==============================================================================================
CONSOLIDATED STATEMENTS OF CASH FLOWS (UNAUDITED)
Howell Corporation and Subsidiaries
----------------------------------------------------------------------------------------------
<CAPTION>
                                                                     Six Months Ended June 30,
                                                                          1998       1997
                                                                          ----       ----
                                                                          (In thousands)
<S>                                                                    <C>         <C>
OPERATING ACTIVITIES:
Net (loss) earnings from continuing operations .....................   $(45,022)   $  1,583
Adjustments for non-cash items:
   Depreciation, depletion and amortization ........................     72,184       4,524
   Deferred income taxes ...........................................    (22,479)       --
   Equity in earnings of investees - net of amortization ...........       (224)       (507)
                                                                       --------    --------
Earnings from continuing operations plus non-cash operating items ..      4,459       5,600
Changes in components of working capital from operations:
   (Increase) decrease in trade accounts receivable ................     (1,668)      1,949
   Decrease in other current assets ................................        760         870
   Increase (decrease) in accounts payable .........................      2,873      (1,443)
   Increase (decrease) in accrued and other liabilities ............      1,233      (2,003)
   Increase (decrease) in income tax payable .......................      1,283      (1,878)
                                                                       --------    --------
Cash provided by continuing operations .............................      8,940       3,095
Cash (utilized in) provided by discontinued operations .............       (535)      2,693
                                                                       --------    --------
Cash provided by operating activities ..............................      8,405       5,788
                                                                       --------    --------

INVESTING ACTIVITIES:
Dividends received from investees ..................................         79         204
Additions to property, plant and equipment .........................    (17,527)     (5,188)
Refund of deposit for Amoco Acquisition ............................     12,369        --
Other, net .........................................................       (677)       (173)
                                                                       --------    --------
Cash (utilized in) investing activities ............................     (5,756)     (5,157)
                                                                       --------    --------

FINANCING ACTIVITIES:
Long-term debt:

   Repayments under revolving credit agreement, net - Bank One .....       --        (3,001)
   Repayments to Department of Energy ..............................       --          (682)
Cash dividends:
     Common shareholders ...........................................       (439)       (399)
     Preferred shareholders ........................................     (1,208)     (1,208)
Exercise of stock options ..........................................         65       1,425
                                                                       --------    --------
Cash (utilized in) financing activities ............................     (1,582)     (3,865)
                                                                       --------    --------

NET INCREASE (DECREASE) IN CASH AND CASH EQUIVALENTS ...............      1,067      (3,234)
CASH AND CASH EQUIVALENTS, BEGINNING OF PERIOD .....................         56       3,253
                                                                       ========    ========
CASH AND CASH EQUIVALENTS, END OF PERIOD ...........................   $  1,123    $     19
                                                                       ========    ========

SUPPLEMENTAL DISCLOSURES OF CASH FLOW INFORMATION Net cash paid for:
Interest ...........................................................   $  3,656    $    615
                                                                       ========    ========
Income taxes .......................................................   $     65    $  1,449
                                                                       ========    ========
</TABLE>

See accompanying Notes to Consolidated Financial Statements


<PAGE>
================================================================================
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (UNAUDITED)
Howell Corporation and Subsidiaries
June 30, 1998 and 1997
--------------------------------------------------------------------------------

Note 1 - Basis of Financial Statement Preparation

The  unaudited  consolidated  financial  statements  included  herein  have been
prepared  by  Howell  Corporation  (the  "Company"),  pursuant  to the rules and
regulations  of the Securities  and Exchange  Commission and in accordance  with
generally  accepted  accounting  principles.  In the opinion of management,  all
adjustments  (all of which are  normal and  recurring)  have been made which are
necessary for a fair  statement of the results of  operations  for the three and
six months ended June 30, 1998 and 1997. The results of operations for the three
and six months ended June 30, 1998, are not necessarily indicative of results to
be expected for the full year. The accounting  policies  followed by the Company
are set forth in Note 1 to the consolidated  financial  statements in its Annual
Report on form 10-K for the year ended  December  31, 1997.  These  consolidated
financial statements should be read in conjunction with the financial statements
and notes thereto included in the Company's latest Form 10-K.

Reclassifications

Certain  reclassifications  have been made to the 1997 financial presentation to
conform with the 1998 presentation.

Note 2 - Adoption of New Accounting Standards

Comprehensive Income

In June 1997,  the  Financial  Accounting  Standards  Board issued  Statement of
Financial Accounting Standards No. 130, "Reporting Comprehensive Income," ("SFAS
130").  SFAS No. 130 is effective for periods beginning after December 15, 1997.
SFAS 130 establishes standards for reporting and displaying comprehensive income
and its components. The purpose of reporting comprehensive income is to report a
measure of all changes in equity of an  enterprise  that result from  recognized
transactions  and other  economic  events of the period other than  transactions
with owners in their  capacity as owners.  The Company has adopted this standard
and as of  March  31,  1998,  there  are no  adjustments  ("other  comprehensive
income") to net income in deriving comprehensive income.

In June 1997, the Financial Accounting Standards Board issued Statement No. 131,
"Disclosures about Segments of an Enterprise and Related Information," (SFAS No.
131).  SFAS No.  131  establishes  standards  for the way that  public  business
enterprises  report  information  about  operating  segments.  SFAS  No.  131 is
effective for periods beginning after December 15, 1997, but need not be applied
to interim financial  statements in the initial year of application.  Management
of the  Company  is  evaluating  what,  if any,  additional  disclosures  may be
required when this statement is first applied.

Note 3 - Financial Instruments and Hedging Activities

In order to mitigate the effects of future price fluctuations,  the Company uses
a limited  program of hedging  its crude oil  production.  Crude oil futures and
options contracts are used as the hedging tools.  Changes in the market value of
the futures  transactions  are deferred  until the gain or loss is recognized on
the hedged  transactions.  The  Company  is  currently  engaged in a  nine-month
hedging  program  ending  December 31,  1998,  and was also engaged in a hedging
program during the first two months of 1997.

In 1998,  the Company  purchased  a put option and sold a call  option  covering
4,800  barrels of oil per day for a nine-month  period ended  December 31, 1998.
The strike prices are $16.00 per barrel for the put option and $19.25 per barrel
for the call option.  There is no premium associated with these options.  During
the three  months ended June 30, 1998,  the Company  received  $0.6 million as a
result of the options.  Without the options the average  price per barrel of oil
for the three and six months ended June 30,  1998,  would have been reduced from
$11.35 to $10.67 and $11.85 to $11.51, respectively.
<PAGE>

In 1996,  the Company  purchased  a put option and sold a call  option  covering
100,000 barrels of oil per month for a six-month period ended February 28, 1997.
The  strike  prices  were  $16.50  per  barrel for the put option and $21.10 per
barrel for the call option. There was no premium associated with these options.

In 1997,  the  monthly  average  price of crude  oil on the  organized  exchange
exceeded the strike price for the call option during  January and February,  the
final two months of the options.  The  payments  required in 1997 under the call
option totaled $0.5 million and were recorded as a reduction of revenue.

Note 4 - Accumulated Depreciation, Depletion and Amortization

During the first  quarter of 1998 a pre-tax  write-down of the Company's oil and
gas properties of $66.1 million was required as a result of lower energy prices.
On an after-tax basis, the write-down  amounted to $43.6 million.  When compared
to 1997,  the  Company's  pre  write-down  depletion  rate for the three and six
months ended June 30, 1998,  dropped from $5.33 to $2.33 per  equivalent  barrel
and from $5.35 to $2.79 per equivalent barrel, respectively.


Note 5 - Income Taxes

The effective  tax rate from  Continuing  Operations  was 43%, 34%, 39% and 37%,
respectively,  for the three and six months  ended June 30,  1998,  and June 30,
1997. The rate variance is due to changes in state income tax estimates.

Note 6 - Acquisitions & Dispositions

On December  18,  1997,  the  Company  purchased  certain oil and gas  producing
properties  (the   "Acquisition")  in  Wyoming  from  Amoco  Production  Company
("Amoco"), a subsidiary of Amoco Corporation,  for approximately $115.4 million,
subject to purchase price adjustments. The effective date of the Acquisition was
December 1, 1997. The Acquisition was accounted for using the purchase method of
accounting, and accordingly, the purchase price has been preliminarily allocated
to  the  assets  acquired  based  on  estimated  fair  values  at  the  date  of
acquisition.  The operating  results of the assets acquired from Amoco have been
included in the Company's  Statement of Operations  since December 18, 1997. The
pro forma  information  shown below  assumes  that the  Acquisition  occurred at
January 1, 1997.  Adjustments have been made to reflect changes in the Company's
results from revenues and direct operating expenses of the producing  properties
acquired from Amoco,  additional  interest  expense to reflect the  acquisition,
depreciation,  depletion and  amortization  based on fair values assigned to the
assets  acquired and general and  administrative  expenses  incurred from hiring
additional employees.  The pro forma financial data are based on assumptions and
the actual  recording of the Acquisition  could differ.  The unaudited pro forma
financial data are not  necessarily  indicative of financial  results that would
have occurred had the Acquisition occurred on January 1, 1997, and should not be
viewed as indicative of operations in future periods.

<TABLE> 
<CAPTION>
                                                                          Pro Forma          Pro Forma
                                                                          Unaudited          Unaudited
                                                                     Three Months Ended   Six Months Ended
                                                                       June 30, 1997       June 30, 1997
                                                                     ------------------   ---------------- 
                                                                    (In thousands, except per share data)
<S>                                                                         <C>               <C>
Revenues ...........................................................        20,650             43,150
Net earnings from continuing operations ............................         3,496              7,334
Net earnings from continuing operations per common share - basic ...          0.58               1.22
Net income from continuing operations per common share - diluted ...          0.48               1.02
</TABLE>
<PAGE>

On July 31,  1997,  the Company  completed  the  previously  announced  sale and
disposition  of  Howell   Hydrocarbons  &  Chemicals,   Inc.  which  represented
substantially  all of the assets of its research and reference  fuels and custom
chemical manufacturing business. The results of the technical fuels and chemical
processing  business  have been  classified  as  discontinued  operations in the
accompanying  consolidated financial statements.  Discontinued  Operations had a
loss of $0.1 million for the six months ended June 30,  1998,  primarily  due to
1997 franchise and state income taxes paid in 1998.

Note 7 - Litigation

On July 11, 1995,  the Company  received a demand  letter from  several  working
interest  owners in the North  Frisco  City  Field and in the North  Rome  Field
indicating  the  Company  had not  paid  according  to the  terms  of a "call on
production."  The Company was granted a call on a portion of this production but
has never exercised the call.  Accordingly,  the Company has filed petitions for
declaratory   judgment  to  that  effect  in  cases  styled   Howell   Petroleum
Corporation,  et al, vs.  Shore Oil  Company,  et al,  District  Court of Harris
County,  Texas;  No.  95-037480  and Howell  Petroleum  Corporation,  et al, vs.
Tenexco, Inc., et al, District Court of Harris County, Texas; No. 95-037970. The
defendants in this action have counterclaimed  against the Company. These claims
are similar in nature to the Alabama and Mississippi royalty litigation.  One of
the defendants, John Faulkinberry,  has filed a counterclaim against the Company
seeking  actual  damages  of  $75,000  and  punitive  damages  of  $100,000,000.
Effective July 14, 1997, the Company  settled with John  Faulkinberry as well as
several  other  working  interest  owners.  The  terms  of  the  settlement  are
confidential,  but the  amounts  paid in  settlement  were not  material  to the
Company's financial condition, results of operations or cash flows. The case (as
to the  remaining  interest  owners) is  currently  set for trial on December 7,
1998.

Related to this matter,  several royalty owners have filed lawsuits  against the
Company in Alabama and Mississippi  concerning  pricing in the North Frisco City
Field.  The  lawsuits  allege  the  Company  violated  its  contracts  with  the
plaintiffs by not paying the plaintiffs ". . . the highest  available  price for
oil." Damages claimed by the plaintiffs  include  approximately $3.8 million and
are based on numerous damage theories including, but not limited to, allegations
of breach of contract and fraud. The complaints also seek  unspecified  punitive
damages  in the  Alabama  lawsuits  and $7 million  in  punitive  damages in the
Mississippi  lawsuit. The Company filed answers denying all charges. The Company
does not believe  that the  ultimate  resolution  of these  matters  will have a
materially  adverse effect on the financial  position,  results of operations or
cash flows of the Company. On July 28, 1997, the Company settled the Mississippi
lawsuit. On March 30, 1998, a tentative  settlement was reached with the Alabama
class representative; however, the settlement must be approved by the court. The
amounts to be paid in  settlement  are not material to the  Company's  financial
condition, results of operations or cash flows.

On December 3, 1997,  Snyder Oil Corporation sued Amoco  Production  Company and
Howell  Petroleum  Corporation  to enjoin the sale of the  Beaver  Creek Unit to
Howell  Petroleum  until such time as Amoco complies with Snyder's  preferential
right to purchase the unit.  Snyder Oil Corporation v. Amoco Production  Company
and Howell  Petroleum  Corporation;  District  Court,  Ninth Judicial  District,
Fremont County,  Wyoming;  Civil Action No. 29861. The lawsuit is based upon two
theories:  (i) the Beaver Creek Unit should not have been sold in a package with
other properties,  and (ii) Amoco and Howell Petroleum inflated the value of the
unit in order to make it too costly for Snyder to buy the unit. On May 26, 1998,
the Company settled this case. In connection  with the  settlement,  the Company
agreed to relinquish  its  contractual  rights to purchase the Beaver Creek unit
and acquired,  effective May 1, 1998,  additional gas properties  from Amoco for
$11.0 million.

There are various other lawsuits and claims against the Company,  none of which,
in the  opinion of  management,  will have a  materially  adverse  effect on the
Company.

Note 8 - (Loss) Earnings per Share

Basic earnings per common share amounts are calculated  using the average number
of common  shares  outstanding  during each period.  Diluted  earnings per share
assumes conversion of dilutive convertible  preferred stocks and exercise of all
stock options having  exercise  prices less than the average market price of the
common stock using the treasury  stock  method.  The earnings per share data for
the three and six months  ended June 30, 1997 has been  restated  following  the
standards in Statement of Financial  Accounting Standards No. 128, "Earnings Per
Share".
<PAGE>

The tables below present the  reconciliation  of the numerators and denominators
in calculating diluted earnings per share ("EPS") from continuing  operations in
accordance with Statement of Financial Accounting Standards No. 128.


Three Months Ended June 30, 1998
                                                                      Earnings
                                                        Increase in      per
                                           Increase in   Number of   Incremental
                                              Income      Shares       Share
                                           -----------  -----------  -----------
Options....................................     -            24,371       -
Dividends on convertible preferred stock... $ 603,750     2,090,909     $0.29

<TABLE>
<CAPTION>
                                      Computation of Diluted Earnings per Share
                                              Net Loss
                                             Available
                                                from
                                             Continuing    Common
                                             Operations    Shares     Per Share
                                            -----------  -----------  ----------
<S>                                         <C>           <C>          <C>        <C>
                                            $(469,750)    5,471,782    $(0.09)
Common stock options.......................      -           24,371
                                            -----------  -----------  ----------
                                            $(469,750)    5,496,153    $(0.09)    Antidilutive
Dividends on convertible preferred stock...   603,750     2,090,909
                                            ----------  -----------   ----------
                                            $ 134,000    7,587,062     $ 0.02     Antidilutive
                                            ==========  ===========   ==========
</TABLE>

Note: Because diluted EPS from continuing  operations  increases from $(0.09) to
$0.02 when common stock options and convertible preferred shares are included in
the computation,  the common stock options and convertible  preferred shares are
antidilutive  and are ignored in the  computation of diluted EPS from continuing
operations.  Therefore,  diluted EPS from  continuing  operations is reported as
$(0.09).

Three Months Ended June 30, 1997
                                                                      Earnings
                                                        Increase in      per
                                           Increase in   Number of   Incremental
                                              Income      Shares       Share
                                           -----------  -----------  -----------
Options....................................     -           172,435       -
Dividends on convertible preferred stock... $ 603,750     2,090,909     $0.29

<TABLE>
<CAPTION>
                                      Computation of Diluted Earnings per Share
                                              Income
                                             Available
                                               from
                                             Continuing    Common
                                             Operations    Shares     Per Share
                                            -----------  -----------  ----------
<S>                                         <C>           <C>          <C>       <C>
                                            $   35,250    5,020,372     $0.01
Common stock options.......................     -           172,435
                                            -----------  -----------  ----------
                                            $   35,250    5,192,807     $0.01     Dilutive
Dividends on convertible preferred stock...    603,750    2,090,909
                                            -----------  -----------  ----------
                                            $  639,000    7,283,716     $0.09     Antidilutive
                                            ===========  ===========  ==========
</TABLE>

Note:  Because  diluted EPS from continuing  operations  increases from $0.01 to
$0.09 when convertible  preferred  shares are included in the  computation,  the
convertible preferred shares are antidilutive and are ignored in the computation
of  diluted  EPS  from  continuing  operations.   Therefore,  diluted  EPS  from
continuing operations is reported as $0.01.
<PAGE>
<TABLE>
<CAPTION>
Six Months Ended June 30, 1998
                                                                        Earnings
                                                          Increase in      per
                                             Increase in   Number of   Incremental
                                                Income       Shares       Share
                                             -----------  -----------  -----------
<S>                                           <C>           <C>           <C>
Options....................................       -           84,641       -
Dividends on convertible preferred stock...  $1,207,500    2,090,909     $0.58
</TABLE>

<TABLE>
<CAPTION>
                                        Computation of Diluted Earnings per Share
                                                Net Loss
                                               Available
                                                  from
                                               Continuing    Common
                                               Operations    Shares     Per Share
                                              -----------  -----------  ---------
<S>                                         <C>           <C>          <C>        <C>
                                             $(46,229,500)  5,468,232    $(8.45)
Common stock options.......................        -           84,641
                                             ------------   ---------   --------
                                             $(46,229,500)  5,552,873    $(8.33)  Antidilutive
Dividends on convertible preferred stock...     1,207,500   2,090,909
                                             ============   =========   ========
                                             $(45,022,000)  7,643,782    $(5.89)  Antidilutive
                                             ============   =========   ========
</TABLE>


Note: Because diluted EPS from continuing  operations  increases from $(8.45) to
$(8.33) when common stock  options are included in the  computation  and because
diluted EPS increases from $(8.33) to $(5.89) when convertible  preferred shares
are  included in the  computation,  both common  stock  options and  convertible
preferred  shares are antidilutive and are ignored in the computation of diluted
EPS  from  continuing  operations.   Therefore,   diluted  EPS  from  continuing
operations is reported as $(8.45).

<TABLE>
<CAPTION>

Six Months Ended June 30, 1997
                                                                        Earnings
                                                          Increase in     per
                                             Increase in   Number of   Incremental
                                               Income       Shares       Share
                                             -----------  -----------  -----------
<S>                                           <C>           <C>           <C>
Options....................................        -         131,319       -
Dividends on convertible preferred stock...  $1,207,500    2,090,909     $0.58

</TABLE>
<TABLE>
<CAPTION>
                                      Computation of Diluted Earnings per Share
                                               Income
                                             Available
                                                from
                                             Continuing    Common
                                             Operations    Shares      Per Share
                                            -----------  -----------   ---------
<S>                                         <C>           <C>          <C>        <C>
                                            $  375,500     5,002,605     $0.08
Common stock options.......................       -          131,319
                                            -----------  -----------   ---------
                                            $  375,500    $5,133,924     $0.07    Dilutive
Dividends on convertible preferred stock...  1,207,500     2,090,909
                                            -----------  -----------   ---------
                                            $1,583,000     7,224,833     $0.22    Antidilutive
                                            ===========  ===========   =========
</TABLE>


Note:  Because  diluted EPS from continuing  operations  increases from $0.07 to
$0.22 when convertible  preferred  shares are included in the  computation,  the
convertible preferred shares are antidilutive and are ignored in the computation
of  diluted  EPS  from  continuing  operations.   Therefore,  diluted  EPS  from
continuing operations is reported as $0.07.
<PAGE>

                        PART I. FINANCIAL INFORMATION
                                   (ITEM 2)

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

The following is a discussion of the Company's financial  condition,  results of
operations, capital resources and liquidity. This discussion and analysis should
be read in conjunction with the Consolidated Financial Statements of the Company
and the notes thereto.  Management's review may include certain  forward-looking
statements  reflecting the Company's  expectations in the near future;  however,
many factors which may affect the actual results,  especially  commodity  prices
and changing  regulations,  are difficult to predict.  Accordingly,  there is no
assurance that the Company's expectations will be realized.

RESULTS OF CONTINUING OPERATIONS

The Company's  principal business segment is oil and gas production.  Results of
continuing operations for the three and six months ended June 30, 1998 and 1997,
are discussed below.

Oil and Gas Production

                                       Three Months Ended      Six Months Ended
                                             June 30,              June 30,
                                          1998     1997          1998      1997
                                          ----     ----          ----      ----
Revenues (in thousands):
Sales of oil and natural gas...........  $11,621  $6,366       $ 25,062  $13,885
Sales of LaBarge other products........      291     415            782      846
Gas marketing..........................      265     720            485    1,731
Minerals leasing and other.............       90     403            205      509
                                         -------  ------       --------  -------
     Total revenues....................  $12,267  $7,904       $ 26,534  $16,971
                                         =======  ======       ========  =======

Operating profit(loss)(in thousands)...  $ 3,006  $1,431       $(62,822)  $2,964
                                         =======  ======       ========  =======

Operating information:
Average net daily production:
    Oil and NGL (Bbls).................    9,368   3,175          9,792    3,143
    Natural gas (Mcf)..................   11,850   8,755         12,542    8,636

Average sales prices:
    Oil and NGL (per Bbl)..............  $ 11.18  $17.15       $  11.70   $17.88
    Natural gas (per Mcf)..............  $  1.94  $ 1.76       $   1.91   $ 2.37

Revenues

Revenues for three and six months ended June 30,  1998,  increased  $4.4 million
and $9.6  million,  respectively,  when  compared to 1997  primarily  due to the
additional  properties  purchased from Amoco.  As a result of the new properties
the Company's net daily production of oil and natural gas liquids increased 195%
and 212%, respectively, when compared to the three and six months ended June 30,
1997.  Also  contributing to the increase in revenues for the three months ended
June 30, 1998, was a 10% increase in the average realized natural gas price.

Increased  revenues were partially offset by lower energy prices.  The Company's
average  realized oil price declined 35% for the three and six months ended June
30, 1998, and the Company's  average realized natural gas price declined 19% for
the six months ended June 30,  1998.  Revenues for the six months ended June 30,
1998,  were also  impacted by a decrease in production  from the Company's  Main
Pass 64/65 property due to storm-related downtime.

In order to  mitigate  the  effects of future  price  fluctuations,  the Company
periodically  enters into a limited program of hedging its crude oil production.
Crude oil futures and options  contracts are used as the hedging tools.  Changes
in the market value of the futures  transactions  are deferred until the gain or
loss is recognized on the hedged transactions.
<PAGE>

The Company  has entered  into a hedging  program for the period  April  through
December  1998.  The  Company  purchased  a put  option  and sold a call  option
covering 4,800 barrels of oil per day for a nine-month period ended December 31,
1998.  The strike prices are $16.00 per barrel for the put option and $19.25 per
barrel for the call option.  There is no premium  associated with these options.
During the three months ended June 30, 1998, the Company  received $0.6 million,
which was recorded as revenue,  as a result of the options.  Without the options
the average realized oil price for the three and six months ended June 30, 1998,
would  have  been  reduced  from  $11.35 to $10.67  and from  $11.85 to  $11.51,
respectively.

The Company's  average  realized sales price of its crude oil production  during
the six months  ended June 30,  1997 was  reduced by the  effects of the put and
call options the Company had in place.  The strike price of the call options was
exceeded for the first two months of 1997,  resulting in a reduction of revenues
of $0.5 million.  Without the effects of the options, the average sales price of
the Company's crude oil production would have been $19.09 instead of $18.12.

Operating Profit

During the first six months of 1998,  operating  profit  decreased $65.8 million
when compared to the first six months of 1997. The decrease was primarily due to
a pre-tax  non-cash  write-down  of $66.1  million of the  Company's oil and gas
properties.  On an after-tax basis, the write-down amounted to $43.6 million, or
a loss of $7.98 per common share. The operating profit before the write-down for
the six months was $3.3  million,  an increase of $0.3 million when  compared to
the six months ended June 30, 1997.  Offsetting revenue was an increase in lease
operating  expenses and pre write-down  depletion  expenses primarily due to the
additional production activity from the Wyoming properties.

Operating  profit for the three  months  ended  June 30,  1998,  increased  $1.6
million  from the same period in 1997.  The increase  was  primarily  due to the
additional properties acquired from Amoco in December 1997. Also, as a result of
the write-down in the first quarter 1998,  the Company's  depletion rate dropped
from $5.33 to $2.33 per  equivalent  barrel for the three  months ended June 30,
1998, when compared to the same period in 1997.

Also contributing to the decrease in operating profit was an increase in general
and administrative  expenses as a result of the additional  transition  expenses
associated with assuming operations of the new Wyoming  properties.  General and
administrative  expenses  increased  $0.7 million when  comparing  the first six
months of 1998 to 1997.

Crude Oil Marketing

The Company  retains a direct and indirect  interest in Genesis Crude Oil, L.P.,
Genesis  Energy,  L.P., and Genesis  Energy,  L.L.C.  (collectively  referred to
hereinafter as "Genesis").  As a result of the Company's  interest,  the Company
recognized  net earnings in Genesis of $0.2 million  during the first six months
of 1998. This represents a decrease of $0.3 million from the first six months of
1997.

Net Interest Expense

Net interest expense for the three and six months ended June 30, 1998, increased
$2.3 million and $4.6 million, respectively, above the 1997 level as a result of
increased debt of $114.2 million.  The reason for this increase was the purchase
of the Wyoming properties from Amoco on December 17, 1997.

Provision for Income Taxes

The  Company's  effective  tax rate for the three months ended June 30, 1998 and
1997 was 43% and 39%,  respectively.  For the six months ended June 30, 1998 and
1997,  the effective tax rate was 34% and 37%,  respectively.  The rates reflect
the  statutory  federal rate and state income taxes less the effect of statutory
depletion deductions in excess of cost basis.
<PAGE>

RESULTS FROM DISCONTINUED OPERATIONS

Technical Fuels and Chemical Processing

On July 31,  1997,  the Company  completed  the  previously  announced  sale and
disposition  of  Howell   Hydrocarbons  &  Chemicals,   Inc.  which  represented
substantially  all of the assets of its research and reference  fuels and custom
chemical manufacturing business.

The results of the technical  fuels and chemical  processing  business have been
classified as discontinued operations in the accompanying consolidated financial
statements.  Discontinued operations incurred a net loss of $0.1 million for the
three  and six  months  ended  June 30,  1998,  primarily  as a  result  of 1997
franchise   and  state  income  taxes  paid  during  1998.   Net  earnings  from
discontinued  operations  were $0.5  million  for the six months  ended June 30,
1997.  Discontinued  operations also includes the allocation of interest expense
(based on a ratio of net assets of discontinued operations to total consolidated
net assets).  Interest expense allocated for the three and six months ended June
30, 1997 was $60,000 and $112,000, respectively.


LIQUIDITY AND CAPITAL RESOURCES

Cash provided by continuing  operations  for the six months ended June 30, 1998,
was $8.9  million.  Of this amount,  $4.5 million was provided by a reduction in
working  capital.  This  compares to $3.1 million of cash provided by continuing
operations  in the  comparable  1997  period.  During the 1997  period,  working
capital changes resulted in cash utilization of $2.5 million. The Company's debt
did not increase  during the first six months of 1998 compared to a reduction in
debt of $3.0 million during the first six months of 1997.  Capital  expenditures
for the six months  ended June 30,  1998,  were $17.5  million  compared to $5.2
million for the 1997 period. Of the $17.5 million,  $11.0 million was associated
with the purchase of certain Amoco  properties in place of the Beaver Creek Unit
involved  in the  Snyder  and  Amoco  litigation.  See  Note 7 of  Notes  to the
Consolidated Financial Statements.

The  Company's  total debt at June 30, 1998,  was $137.0  million,  comprised of
$107.0 million in long-term and $30.0 million in current  maturities due May 30,
1999.  Various  recapitalization  alternatives  are under review.  The Company's
working capital  deficit of $29.2 million at June 30, 1998,  included this $30.0
million of current  maturities.  At June 30, 1998, the Company had $13.0 million
in unused borrowing capacity under the terms of its Credit Facility.

As a result of the  impairment of the  Company's  oil and gas  properties in the
first  quarter  of 1998 due to  decreases  in the  price of oil,  the  Company's
Tangible  Net Worth was less than the  minimum  required  under the terms of the
Credit Facility.  That impairment  would have been an Event of Default,  but for
the fact that Bank of Montreal waived the requirement.  The Company successfully
negotiated  revisions to its Credit  Facility  with Bank of Montreal as noted in
the 8-K filed June 12, 1998.

Budgeted capital  expenditures have been reduced to compensate for the decreased
cash flow caused by reduced oil and gas prices. The Company anticipates spending
$3.0 million to $6.0 million for the remainder of 1998.

During the first six months of 1998,  the Company paid common  dividends of $0.4
million and preferred dividends of $1.2 million.

Year 2000 Date Conversion

The Company  has a plan in place that  addresses  the 2000 year date  conversion
matters. Based on preliminary  estimates,  the cost of implementing this plan is
not  expected  to have a  material  adverse  impact on the  Company's  financial
position, results of operations or cash flows in future periods. However, if the
Company,  its  customers  or vendors are unable to resolve  these 2000 year date
conversion  issues in a timely manner,  it could result in a material  financial
risk.  Accordingly,  the  Company  plans to devote the  necessary  resources  to
resolve all significant year 2000 issues in a timely manner.


<PAGE>



                          PART II. OTHER INFORMATION

Item 4. Results of Votes of Security Holders.

The Annual  Meeting of the  Shareholders  of the  Company  was held on April 29,
1998, for the following purposes:

To elect three  members of the Board of Directors to serve a three-year  term as
Class I Directors.

        (a) The results of the voting for each of the nominees for director were
            as follows:

                                     Shares      Shares     Broker
                                      For       Withheld  Non-Voters
                                     ------     --------  ----------
            Paul N. Howell          4,937,459     6,220       -
            Richard K. Hebert       4,939,979     3,700       -
            Donald W. Clayton       4,939,979     3,700       -

         A simple  majority  of the shares of common  stock  represented  at the
         meeting was  required for each  nominee to be elected.  Therefore,  all
         nominees for director were elected.

        (b) To ratify  the appointment of Deloitte & Touche  LLP as  independent
            auditors for  the  Company  for the fiscal year  ending December 31,
            1998.

        The results of the voting on this matter were as follows:

                        Shares For           4,937,274
                        Shares Against           5,200
                        Shares Abstaining        1,205
                        Broker Non-Votes             -

        A simple  majority of  the common  shares  represented  was required for
        ratification; therefore, the appointment was ratified.

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

        (a) Exhibits - none.

        (b) Reports on Form 8-K

            A report on Form 8-K was filed on January 2, 1998, announcing:
            1)  the  acquisition  of a  group of  producing  oil and natural gas
                properties located  in  Wyoming,  Montana,  Colorado  and  North
                Dakota from Amoco Production Company for $115.4 million in cash,
            2)  the new credit agreement dated December 17, 1997 between  Howell
                Petroleum Corporation and Bank of Montreal, and

            A report on Form 8-K/A was filed on March 3,  1998,  disclosing  the
            financial  statements  and  exhibits  associated with the January 2,
            1998, Form 8-K filing.

            A report on Form 8-K/A  was filed on June 5,  1998,  announcing  the
            settlement of  certain litigation  brought by Snyder Oil Corporation
            against the Company and Amoco Production Company.

            A report on Form 8-K was  filed on June  12,  1998,  announcing  the
            amendment  of   the   credit  agreement   between  Howell  Petroleum
            Corporation and Bank of Montreal.
<PAGE>



                                   SIGNATURE

Pursuant  to the  requirements  of the  Securities  Exchange  Act of  1934,  the
Registrant  has duly  caused  this  report  to be  signed  on its  behalf by the
undersigned thereunto duly authorized.

                                   Howell Corporation
                                   ------------------
                                   (Registrant)



Date:  August 14, 1998              /s/  J. Richard Lisenby
                                    --------------------------------------------
                                    J. Richard Lisenby
                                    Vice President & Chief Financial Officer
                                    (Principal Financial and Accounting Officer)