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 September 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 October 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 nine months ended September 30,1998 and 1997(unaudited) 3

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

        Consolidated Statements of Cash Flows --
         Nine  months ended September 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..............................    15


<PAGE>



<TABLE>
<CAPTION>

                                     PART I. FINANCIAL INFORMATION
                                                 (ITEM 1)

CONSOLIDATED STATEMENTS OF OPERATIONS (UNAUDITED)
Howell Corporation and Subsidiaries

    
                                                                Three Months Ended      Nine Months Ended
                                                                   September 30,           September 30,
                                                                   1998       1997       1998       1997
                                                                   ----       ----       ----       ----
                                                                           (In thousands, except
                                                                            per share amounts)

<S>                                                            <C>         <C>         <C>         <C>
Revenues ...................................................   $ 12,525    $  7,522    $ 39,059    $ 24,493
                                                               --------    --------    --------    --------
Cost and expenses:
   Lease operating expenses ................................      6,386       3,566      20,437      10,585
   Depreciation, depletion, and amortization ...............      2,842       2,250       8,908       6,774
   Ceiling test write-down .................................       --          --        66,118        --
   General and administrative expenses .....................         91       1,192       3,212       3,656
                                                               --------    --------    --------    --------
                                                                  9,319       7,008      98,675      21,015
                                                               --------    --------    --------    --------
Other income (expense):
   Interest expense ........................................     (2,772)       (210)     (8,206)     (1,064)
   Interest income .........................................         22          24          69          75
   Net earnings of investees ...............................        227         229         451         736
   Other-net ...............................................        (78)        301        (235)        128
                                                               --------    --------    --------    --------
                                                                 (2,601)        344      (7,921)       (125)
                                                               --------    --------    --------    --------

Earnings (loss) before income taxes ........................        605         858     (67,537)      3,353
Income tax provision (benefit) .............................        (60)        150     (23,180)      1,062
                                                               --------    --------    --------    --------
Net earnings (loss) from continuing operations .............        665         708     (44,357)      2,291

Discontinued operations:
  Net earnings from Howell Hydrocarbons
    (less applicable income taxes of $235,$196,$220
    and $505, respectively) ................................        455         299         396         757
                                                               --------    --------    --------    --------
Net earnings (loss) ........................................      1,120       1,007     (43,961)      3,048
  Less: Preferred stock dividends ..........................       (604)       (604)     (1,811)     (1,811)
                                                               --------    --------    --------    --------
Net (loss) earnings applicable to common shares ............   $    516    $    403    $(45,772)   $  1,237
                                                               ========    ========    ========    ========
Basic (loss) earnings per common share:
   Continuing operations                                       $   0.01    $   0.02    $  (8.44)   $   0.10
   Discontinued operations                                         0.08        0.06        0.07        0.15
                                                               --------    --------    --------    --------
   Net (loss) earnings per common share(basic) .............   $   0.09    $   0.08    $  (8.37)   $   0.25
                                                               ========    ========    ========    ========
Weighted average shares outstanding(basic) .................      5,472       5,096       5,469       5,034
                                                               ========    ========    ========    ========
Diluted (loss) earnings per common share:
   Continuing operations....................................   $   0.01    $   0.02    $  (8.44)   $   0.09
   Discontinued operations .................................       0.08        0.06        0.07        0.15
                                                               --------    --------    --------    --------

   Net (loss) earnings per common share(diluted) ...........   $   0.09    $   0.08    $  (8.37)   $   0.24  
                                                               ========    ========    ========    ========
Weighted average shares outstanding (diluted) ..............      5,472       5,393       5,469       5,220
                                                               ========    ========    ========    ========  
Cash dividends per common share ............................   $   0.04    $   0.04    $   0.12    $   0.12
                                                               ========    ========    ========    ========


See accompanying Notes to Consolidated Financial Statements


</TABLE>





<PAGE>



<TABLE>
<CAPTION>


CONSOLIDATED BALANCE SHEETS
Howell Corporation and Subsidiaries


                                                                           September 30,  December 31,
                                                                               1998          1997
                                                                               ----          ----
                                                                                 (Unaudited)
     
                                                                      (In thousands, except share data)

                       Assets
<S>                                                                        <C>          <C>

Current assets:
   Cash and cash equivalents ...........................................   $     232    $      56
   Trade accounts receivable, less allowance for doubtful accounts of
       $153 in 1998 and $141 in 1997 ...................................      12,035        5,520
   Accounts receivable from investees ..................................       2,300        2,300
   Other current assets ................................................         829        1,489
                                                                           ---------    ---------
    Total current assets ...............................................      15,396        9,365
                                                                           ---------    ---------

Property, plant and equipment:
   Oil and gas properties, utilizing the full-cost method of accounting      386,959      371,975
   Unproven properties..................................................      44,517       41,017
   Fee mineral properties, unproven ....................................      18,123       18,123
   Other ...............................................................       2,553        2,670
   Less accumulated depreciation, depletion and amortization ...........    (282,320)    (207,557)
                                                                           ---------    ---------
      Net property and equipment .......................................     169,832      226,228
                                                                           ---------    ---------
Investment in investees.................................................      16,764       16,432
Other assets ...........................................................       2,996       14,686
                                                                           ---------    ---------
    Total assets .......................................................   $ 204,988    $ 266,711
                                                                           =========    =========

        Liabilities and Shareholders' Equity

Current liabilities:
   Current portion of long-term debt ...................................   $  30,000    $  20,000
   Accounts payable ....................................................       6,998        2,165
   Accrued liabilities .................................................       5,349        4,819
   Income tax payable ..................................................      (1,104)      (1,411)
                                                                           ---------    ---------
    Total current liabilities ..........................................      41,243       25,573
                                                                           ---------    ---------
Deferred income taxes ..................................................       3,668       25,071
                                                                           ---------    ---------
Other liabilities ......................................................       1,304        1,428
                                                                           ---------    ---------
Long-term debt .........................................................     107,500      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
     in 1998; 5,464,642 issued and outstanding in 1997..................       5,472        5,465
   Additional paid-in capital ..........................................      40,818       40,760
   Retained earnings ...................................................       4,293       50,724
                                                                           ---------    ---------
    Total shareholders' equity .........................................      51,273       97,639
                                                                           =========    =========
    Total liabilities and shareholders' equity .........................   $ 204,988    $ 266,711
                                                                           =========    =========

See accompanying Notes to Consolidated Financial Statements.

</TABLE>


<PAGE>



<TABLE>
<CAPTION>

CONSOLIDATED STATEMENTS OF CASH FLOWS (UNAUDITED)
Howell Corporation and Subsidiaries

                                                    Nine Months Ended September 30,
                                                            1998       1997
                                                            ----       ----
                                                            (In thousands)

OPERATING ACTIVITIES:
<S>                                                       <C>          <C>
Net (loss) earnings from continuing operations..........  $(44,357)    $ 2,291
Adjustments for non-cash items:
   Depreciation, depletion and amortization.............    75,026       6,773
   Deferred income taxes................................   (21,403)     (1,900)
   Equity in earnings of investees - net of amortization      (451)       (736)
   Gain on sale of assets...............................        (2)       (139)
                                                          ---------   ---------
Earnings from continuing operations plus non-cash            8,813       6,289
operating items.........................................
Changes in components of working capital from operations:
   (Increase) decrease in trade accounts receivable.....    (6,515)      1,454
   Decrease in other current assets.....................       660         619
   Increase (decrease) in accounts payable..............     4,874      (1,188)
   Increase (decrease) in accrued and other liabilities.       918      (3,398)
   Increase (decrease) in income tax payable............       145        (957)
                                                          ---------   ---------
Cash provided by continuing operations..................     8,895       2,819
Cash provided by discontinued operations................         5       1,250
                                                          ---------   ---------
Cash provided by operating activities...................     8,900       4,069
                                                          ---------   ---------

INVESTING ACTIVITIES:
Dividends received from investees.......................       119         298
Proceeds from the disposition of property...............        39      20,049
Additions to property, plant and equipment..............   (18,667)     (7,515)
Refund of deposit for Amoco Acquisition.................    12,369           -
Other, net..............................................      (679)         33
                                                          ---------   ---------
Cash (utilized in) investing activities.................    (6,819)     12,865
                                                          ---------   ---------

FINANCING ACTIVITIES:
Long-term debt:
 Borrowings under revolving credit agreement,net-Bank of .     500          -
 Repayments under revolving credit agreement,net- Bank One..     -     (17,081)
 Repayments to Department of Energy.....................         -      (2,418)
Cash dividends:
     Common shareholders................................      (659)       (603)
     Preferred shareholders.............................    (1,811)     (1,811)
Exercise of stock options...............................        65       1,774
                                                          ---------   ---------
Cash utilized in financing activities...................    (1,905)    (20,139)
                                                          ---------   ---------

NET INCREASE (DECREASE) IN CASH AND CASH EQUIVALENTS....       176      (3,205)
CASH AND CASH EQUIVALENTS, BEGINNING OF PERIOD..........        56       3,257
                                                          ---------   ---------
CASH AND CASH EQUIVALENTS, END OF PERIOD................  $    232     $    52
                                                          =========   =========

SUPPLEMENTAL DISCLOSURES OF CASH FLOW INFORMATION Net cash paid for:
Interest................................................  $  6,976     $   815
                                                          =========   =========
Income taxes............................................  $     66     $ 4,683
                                                          =========   =========

See accompanying Notes to Consolidated Financial Statements.


</TABLE>


<PAGE>






NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (UNAUDITED)
Howell Corporation and Subsidiaries
September 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
nine months ended September 30, 1998 and 1997. The results of operations for the
three and nine months ended September 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 - New Accounting Standards

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 September 30, 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.

In June 1998,  the  Financial  Accounting  Standards  Board issued  Statement of
Financial Accounting  Standards No. 133, "Accounting for Derivative  Instruments
and Hedging  Activities"  ("SFAS  133").  SFAS 133  establishes  accounting  and
reporting  standards for  derivative  instruments  and hedging  activities  that
require an entity to recognize all derivatives as an asset or liability measured
at its fair value.  Depending on the intended use of the derivative,  changes in
its fair value will be reported in the period of change as either a component of
earnings or a component of other comprehensive income. SFAS 133 is effective for
all fiscal  quarters of fiscal  years  beginning  after June 15,  1999.  Earlier
application  of SFAS 133 is  encouraged,  but not prior to the  beginning of any
fiscal  quarter  that  begins  after  issuance  of  the  Statement.  Retroactive
application  to periods  prior to adoption is not  allowed.  The Company has not
qualified  the impact of adoption  on its  financial  statements  or the date it
intends to adopt.

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  January  8,  1999,  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 January 8, 1999. 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 and nine months  ended  September  30,  1998,  the Company  received  $0.8
million  and $1.4  million,  respectively,  as a result  of the  options.  These
amounts were  recorded as additional  revenues.  Without the options the average
price per barrel of oil for the three and nine months ended  September 30, 1998,
would have been reduced from $10.92 to $9.95 and $11.53 to $10.98, respectively.

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 nine
months  ended  September  30, 1998,  dropped from $5.33 to $2.64 per  equivalent
barrel and from $5.35 to $2.74 per equivalent barrel, respectively.


Note 5 - Income Taxes

The effective tax rate from  Continuing  Operations was 34% and 32% for the nine
months ended September 30, 1998 and 1997, respectively.

Note 6 - Acquisitions & Dispositions

On December  17,  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 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 on the following page 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 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   Nine Months Ended
                                                                 September 30, 1997   September 30, 1997
                                                                 -------------------  ------------------
                                                                  (In thousands, except per share data)

<S>                                                                <C>                 <C>
Revenues .......................................................   $   21,641          $   64,791
Net earnings from continuing operations ........................        3,534              10,868
Net earnings from continuing operations per common share - basic         0.58                1.80
Net income from continuing operations per common share - diluted         0.47                1.49
</TABLE>

On July 31,  1997,  the Company  completed  the  previously  announced  sale and
disposition of Howell Hydrocarbons & Chemicals,  Inc. ("HHCI") 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
gain of $0.4 million for the nine months ended September 30, 1998, primarily due
to payments  received from the purchaser of the assets of Howell  Hydrocarbons &
Chemicals,  Inc. (HHCI), the amount of which was determined in accordance with a
formula  contained in the sales agreement based on the post-closing  earnings of
the HHCI facility before interest, income taxes, depreciation and amortization.


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. 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.

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 - Earnings (Loss) 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 nine months ended September 30, 1997 have been restated  following
the standards in Statement of Financial  Accounting Standards No. 128, "Earnings
Per Share".

The  following  tables  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.


<TABLE>
<CAPTION>


Three Months Ended September 30, 1998
<S>                                               <C>          <C>          <C>      
                                                                             Earnings
                                                                Increase        per
                                                   Increase     in Number   Incremental
                                                   in Income    of Shares      Share
                                                  -----------  -----------  ----------
Options....................................               -          543          -
Dividends on convertible preferred stock...       $  603,750   2,090,909    $    0.29
</TABLE>

<TABLE>
<CAPTION>

                                        Computation of Diluted Earnings per Share
<S>                                               <C>          <C>           <C>           <C>
                                                     Income
                                                    Available
                                                      from
                                                   Continuing    Common
                                                   Operations    Shares     Per Share
                                                  -----------  -----------  ----------                                          
                                                  $   61,250   5,471,782    $    0.01
Common stock options.......................              -           543
                                                  -----------  ----------   ----------
                                                  $   61,250    5,472,325   $    0.01      Dilutive
Dividends on convertible preferred stock...          603,750    2,090,909
                                                  -----------  -----------  ----------
                                                  $  665,000    7,563,234   $    0.09      Antidilutive
                                                  ===========  ===========  ==========

</TABLE>

Note:  Because  diluted  EPS  increases  from  $0.01 to $0.09  when  convertible
preferred shares are included in the computation,  those  convertible  preferred
shares are antidilutive and are ignored in the computation of diluted EPS.
Therefore, diluted EPS is reported as $0.01.

<TABLE>
<CAPTION>

Three Months Ended September 30, 1997
<S>                                              <C>           <C>         <C>
                                                                             Earnings
                                                                Increase        per
                                                   Increase     in Number   Incremental
                                                   in Income    of Shares      Share   
                                                  -----------  -----------  ----------

Options.....................................            -         297,439         -
Dividends on convertible preferred stock....      $  603,750    2,090,909   $    0.29
</TABLE> 

<TABLE>
<CAPTION>

                                         Computation of Diluted Earnings per Share
<S>                                               <C>           <C>         <C>          <C>
                                                   Income
                                                  Available
                                                    from
                                                  Continuing     Common
                                                  Operations     Shares     Per Share
                                                  -----------  -----------  ----------
                                                  $  104,250    5,095,818   $    0.02
Common stock options........................           -          297,439
                                                  -----------  -----------  ----------
                                                  $  104,250    5,393,257   $    0.02    Dilutive
Dividends on convertible preferred stock....         603,750    2,090,909
                                                  -----------  -----------  ----------
                                                  $  708,000    7,484,166   $    0.09    Antidilutive
                                                  ===========  ===========  ==========
</TABLE>

Note:  Because  diluted  EPS  increases  from  $0.02 to $0.09  when  convertible
preferred shares are included in the computation,  those  convertible  preferred
shares are antidilutive and are ignored in the computation of diluted EPS.
Therefore, diluted EPS is reported as $0.02.









<PAGE>



<TABLE>
<CAPTION>

Nine Months Ended September 30, 1998
<S>                                                    <C>          <C>          <C>

                                                                                   Earnings
                                                                      Increase        per
                                                         Increase     in Number   Incremental
                                                         in Income    of Shares      Share
                                                        -----------  -----------  ----------
Options...............................................         -         56,608       -
Dividends on convertible preferred stock..............  $1,811,250    2,090,909   $    0.87

</TABLE>

<TABLE>
<CAPTION>

                                          Computation of Diluted Earnings per Share
<S>                                                   <C>          <C>          <C>            <C>
 
                                                         Net Loss
                                                         Available
                                                           from
                                                        Continuing     Common
                                                        Operations     Shares     Per Share
                                                        -----------  -----------  ----------
                                                      $(46,168,250)   5,469,428   $   (8.44)
Common stock options.................................          -         56,608
                                                        -----------  -----------  ----------
                                                      $(46,168,250)   5,526,036   $   (8.35)   Antidilutive
Dividends on convertible preferred stock.............    1,811,250    2,090,909
                                                       ------------  -----------  ----------
                                                      $(44,357,000)   7,616,945   $   (5.82)   Antidilutive
                                                       ============  ===========  ==========
</TABLE>


Note:  Because  diluted EPS increases  from ($8.44) to ($8.35) when common stock
options are included in the  computation  and because diluted EPS increases from
($8.25)  to ($5.82)  when  convertible  preferred  shares  are  included  in the
computation,  both common stock  options and  convertible  preferred  shares are
ignored  in  the  computation  of  diluted  EPS.  Therefore,  diluted  EPS  from
continuing operations is reported as ($8.44).


<TABLE>
<CAPTION>

Nine Months Ended September 30, 1997
<S>                                                       <C>          <C>          <C>
                                                                                     Earnings
                                                                      Increase      per
                                                         Increase     in Number  Incremental
                                                         in Income    of Shares    Share
                                                        -----------  -----------  ----------
Options................................................      -          186,692         -
Dividends on convertible preferred stock............... $1,811,250    2,090,909   $    0.87

</TABLE>
<TABLE>
<CAPTION>

                  Computation of Diluted Earnings per Share
<S>                                                      <C>           <C>         <C>        <C>
                                                           Income
                                                          Available
                                                            from
                                                         Continuing     Common
                                                         Operations     Shares     Per Share
                                                        -----------  -----------  ----------
                                                         $ 479,750    5,033,610   $    0.10
Common stock options....................................       -        186,692
                                                        -----------  -----------   ---------
                                                        $  479,750    5,220,302   $    0.09   Dilutive
Dividends on convertible preferred stock                 1,811,250    2,090,909
                                                        -----------  -----------   ---------
                                                        $2,291,000    7,311,211   $    0.31   Antidilutive
                                                        ===========  ===========  ==========
</TABLE>


Note:  Because  diluted  EPS  increases  from  $0.09 to $0.31  when  convertible
preferred shares are included in the computation,  those  convertible  preferred
shares are antidilutive and are ignored in the computation of diluted EPS.
Therefore, diluted EPS is reported as $0.09.





                        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.

RESULTS OF CONTINUING OPERATIONS

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

Oil and Gas Production

<TABLE>
<CAPTION>

                                       Three Months Ended      Nine Months Ended
                                          September 30,           September 30,
                                          1998     1997           1998      1997
                                          ----     ----           ----      ----
<S>                                     <C>       <C>            <C>      <C>
Revenues (in thousands):
Sales of oil and natural gas...........  $11,689  $6,268         $36,751    $20,142
Sales of LaBarge other products........      468     413           1,250      1,258
Gas marketing..........................      198     560             683      2,291
Minerals leasing and other.............      170     281             375        802
                                         -------- -------       ---------   -------- 

     Total revenues....................  $12,525  $7,522        $ 39,059    $24,493
                                         ======== =======       =========   ========

Operating profit (loss) (in thousands).  $ 3,206  $  514        $(59,616)   $ 3,478
                                         ======== =======       =========   ========

Operating information:
Average net daily production: 
    Oil and NGL (Bbls).................    9,467   3,039           9,684      3,108
    Natural gas (Mcf)..................   12,626   8,894          12,571      8,723

Average sales prices:
    Oil and NGL (per Bbl)..............  $ 10.98  $16.71        $  11.46    $ 17.50
    Natural gas (per Mcf)..............  $  1.83  $ 1.95        $   1.88    $  2.22

</TABLE>

Revenues

Revenues for three and nine months ended  September  30,  1998,  increased  $5.0
million and $14.6 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  212% when  compared to the three and nine months ended  September 30,
1997.  Also  contributing  to the  increase in  revenues  for the three and nine
months ended  September  30, 1998,  was an increase in the daily  production  of
natural gas of 42% and 44%, respectively.

Increased  revenues due to these volume increases were partially offset by lower
energy prices. The Company's average realized oil price declined 36% and 35% for
the three and nine months ended  September 30, 1998,  and the Company's  average
realized  natural  gas price  declined  6% and 15% for the three and nine months
ended  September  30,  1998,  respectively.  Revenues  for the nine months ended
September  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.

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 January 9,
1999.  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 and nine months ended September 30, 1998, the Company  received
$0.8 million, and $1.4 million respectively, which was recorded as revenue, as a
result of the  options.  Without the options the average  realized oil price for
the three and nine months ended September 30, 1998, would have been reduced from
$10.92 to $9.95 and from $11.53 to $10.98, respectively.

The Company's  average  realized sales price of its crude oil production  during
the nine months ended  September  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 $18.44 instead of
$17.79.

Operating Profit

During the first nine months of 1998,  operating  profit decreased $63.1 million
when  compared to the first nine 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 $7.97 per common share. The operating profit before the write-down for
the nine months was $6.5  million,  an increase of $3.0 million when compared to
the nine months ended September 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 September 30, 1998,  increased $2.7
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 $2.64 per equivalent  barrel for the three months ended  September
30, 1998, when compared to the same period in 1997.

Also contributing to the increase in operating profit for the three months ended
September 30, 1998, was a decrease in general and  administrative  expenses as a
result of the additional transition expense adjustments associated with assuming
operations of the new Wyoming  properties.  General and administrative  expenses
decreased $1.1 million when comparing the third quarter 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 $0.5 million during the first nine months
of 1998.  This  represents a decrease of $0.3 million from the first nine months
of 1997.

Net Interest Expense

Net  interest  expense for the three and nine months ended  September  30, 1998,
increased $2.5 million and $7.1 million, respectively, above the 1997 level as a
result of increased  debt of $134 million.  The primary 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  September 30, 1998
and 1997 was (10%) and 17%, respectively.  An adjustment to the state income tax
provision resulted in a tax benefit for 1998. The percentage depletion deduction
resulted in a lower 1997 effective rate. For the nine months ended September 30,
1998 and 1997, the effective tax rate was 34% and 32%, respectively.





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. ("HHCI") 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 resulted in net earnings of $0.5 million and
$0.4 million,  respectively,  for the three and nine months ended  September 30,
1998,  due to payments  received from the  purchaser of the assets of HHCI,  the
amount of which was  determined  in accordance  with a formula  contained in the
sales agreement based on the  post-closing  earnings of the HHCI facility before
interest,  income  taxes,  depreciation  and  amortization.  Net  earnings  from
discontinued  operations  were $0.8 million for the nine months ended  September
30, 1997.  Discontinued  operations  for 1997 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 nine months
ended September 30, 1997 was $112,000.


LIQUIDITY AND CAPITAL RESOURCES

Cash provided by continuing  operations for the nine months ended  September 30,
1998,  was $8.9  million.  This  compares  to $2.8  million of cash  provided by
continuing  operations in the  comparable  1997 period.  During the 1997 period,
working  capital  changes  resulted in cash  utilization  of $3.5  million.  The
Company's  debt  increased  $0.5  million  during the first nine  months of 1998
compared to a reduction in debt of $19.5 million during the first nine months of
1997.  Capital  expenditures  for the nine months ended September 30, 1998, were
$18.7  million  compared  to $7.6  million  for the 1997  period.  Of the  $18.7
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.

The Company's total debt at September 30, 1998, was $137.5 million, comprised of
$107.5 million in long-term and $30.0 million in current  maturities due May 30,
1999. The Company's  working capital deficit of $25.8 million at September,  30,
1998, included this $30.0 million of current maturities.  At September 30, 1998,
the Company had $12.5 million in unused  borrowing  capacity  under the terms of
its Credit  Facility.  The Company is  currently  undergoing  a  borrowing  base
redetermination.  Various  refinancing  alternatives,  including  selected asset
sales, to reduce the current maturities are under review;  however, there can be
no assurance that  sufficient  capital will be available to the Company on terms
it considers reasonable.

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  would have been 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 which  addressed this issue as noted in the 8-K filed June 12, 1998. If
oil prices remain at their current  depressed  levels,  the Company may again be
required to impair the value of its oil and gas  properties.  If this impairment
occurs,  the Company may not be able to satisfy certain  covenants  contained in
the Credit Facility.

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 $5.0 million for the remainder of 1998.

During the first nine months of 1998, the Company paid common  dividends of $0.7
million and preferred dividends of $1.8 million.

Year 2000 Date Conversion

The Company has a plan in place that addresses the year 2000 ("Y2K")  conversion
issue.  The first step in the plan is to evaluate all  computer  systems used in
its  operations.  This  includes  accounting  and financial  systems,  field and
production  systems,  and  other  field or  office  devices  that may not be Y2K
compliant.  This is  followed  by a  determination  of what  remedial  action is
necessary and initiation of that remedy. The Company has begun corrective action
on major systems both in the office and in the field and anticipates  completion
in early to mid 1999.

The next step is to determine the Y2K status of relevant  outside  suppliers and
vendors.  While the Company cannot  control the Y2K  corrective  action of third
parties,  it is in the  process  of  identifying  and  contacting  its  critical
suppliers  and  vendors.  Based  on  their  status,  the  Company  will  develop
contingency plans. These should be completed by mid 1999.

The Company's plan to correct its in-house systems involves  installation of new
software and hardware.  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. Most
of  the  replacement   systems,  in  addition  to  being  Y2K  compliant,   have
significantly  enhanced  capabilities  which will benefit  operations  in future
periods.

Management  believes it has an effective  program in place to respond to the Y2K
situation.  However,  it is not possible to anticipate  all possible  variables,
especially  concerning  third  parties.  Achieving Y2K  compliance is subject to
risks and  uncertainties,  such as those referred to above. If the Company,  its
customers or vendors are unable to resolve these Y2K date conversion issues in a
timely manner, it could result in a material financial risk.

Forward-looking Statements

Statements  contained in this Report and other materials filed or to be filed by
the Company with the Securities and Exchange  Commission (as well as information
included in oral or other written  statements  made or to be made by the Company
or its  representatives)  that are  forward-looking in nature are intended to be
"forward-looking statements" within the meaning of Section 27A of the Securities
Act of 1933, as amended, and Section 21E of the Securities Exchange Act of 1934,
as amended,  relating to matters such as  anticipated  operating  and  financial
performance, business prospects, developments and results of the Company. Actual
performance,  prospects, developments and results may differ materially from any
or  all  anticipated  results  due  to  economic  conditions  and  other  risks,
uncertainties  and  circumstances  partly or totally  outside the control of the
Company,  including rates of inflation, oil and natural gas prices,  uncertainty
of  reserve  estimates,  rates and timing of future  production  of oil and gas,
exploratory and development  activities,  acquisition  risks, and changes in the
level and timing of future costs and expenses  related to drilling and operating
activities.

Words  such as  "anticipated",  "expect",  "estimate",  "project",  and  similar
expressions are intended to identify forward-looking statements.

<PAGE>



                          PART II. OTHER INFORMATION

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.



                                   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:  November 13, 1998            /s/  J. Richard Lisenby
                                    J. Richard Lisenby
                                    Vice President & Chief Financial Officer
                                    (Principal Financial and Accounting Officer)