TEXACO

                                  2/10/94

                      Stock     Price      52 week     YTD Pr    Div  Gross
                      Rating     2/09   --- Range ---    Chg     Rate Yield
Texaco Inc.             TB      67.00       70-60         3      3.20  4.8

                                 Est.        - Interim EPS -    -EBITDA 94-
          FY/IP       EPS93     EPS94 PE94   --Next- -YrAgo-    per/sh  p/e
TX        12/01Q      4.05R      4.80 14.0       n/a     n/a     11.85  5.7

Texaco (TX) $67, 1994E $4.60, 1995E $5.20, Trading Buy

1.  Yesterday, Texaco announced it had reached settlement with the State of
Louisiana as to royalty payments attributable to gas production over a
period of many years.  This has been the subject of litigation over the
past five years.  The 1992 annual report cited claims by the state of some
$1.1 billion for back royalties plus interest.  In addition, the state was
seeking cancellation of leases.  The actual settlement was for a total of
$250 million in cash payments by Texaco to the State (payable $150 million
very shortly and $50 million in 1995 and 1996) and commitments by Texaco to
expend $152 million over the next five years on exploration and development
activity.  It appears the market was expecting settlement along these
lines.  Still, analysts view this as a positive event for Texaco and for
the shares in that it removes the possibility of a truly adverse
settlement. No charge against earnings will be required as Texaco is fully
reserved.

2.  On the positive side, Texaco now has clear title to its leasehold
position in Louisiana, and this was of some concern to investors.  The
commitment to expend $152 million is a purely economic one, as Texaco would
do this under any circumstance with the lease question clarified.  Texaco
indicated yesterday it is hopeful it can achieve meaningful reserve and
production increments with these investments.  The commitment is a mix of
exploration and development expenditures (with the latter to be
capitalized).

3.  This settlement will effectively resolve most of Texaco's lingering
lawsuits.  Analysts expected the issues to be solved fairly much along
these lines but still will view this with a sigh of relief.  The cash
outflow is not material relative to Texaco's size or cash flow.  At some
point, but probably not this year, analysts expect Texaco to receive a
refund from the IRS of substantially greater magnitude related to the
Aramco lawsuit which is unfolding in Texaco's favor.