Press release

Net income before special items FF4.6 billion compared to FF4.9 billion for the same period 1997

Net income per share before special items FF18 compared to FF19 for the first half 1997

The Board of Directors of Elf Aquitaine (NYSE: ELF) examined the unaudited consolidated results of the company for the first half of 1998 at a meeting held yesterday, September 2.

PRINCIPAL RESULTS FOR THE FIRST HALF 1998

	First Half			Year
Per Share/ADR (In French francs or dollars)	1998 US $*	1998 FF	1997 FF	1997 FF
Net Income before special items	1.49	18.0	19.0	39.7

Average number of ADRs/shares in circulation (in millions)

510.6

255.3

258.3

256.5

	First Half			Year
(In millions)	1998 US $*	1998 FF	1997 FF	1997 FF
Sales	18,662	112,847	128,387	254,306
Operating Income before special items	1,769	10,695	13,007	25,448
Exploration and Production	898	5,431	9,157	17,058
Refining Marketing and Trading	300	1,813	848	2,248
Chemicals	366	2,214	2,004	4,083
Health	206	1,244	1,008	2,059
Consolidation Adjustments Operating Income	(1) 1,769	(7) 10,695	(10) 13,007	- 20,048
Net income before special items	758	4,586	4,920	10,183
Consolidated Net Income	758	4,586	5,262	5,602
Funds Generated from Operations	2,518	15,228	16,288	33,165
Investments (including Exploration)	2,174	13,146	11,268	25,745
Proceeds from the Sale of Assets	292	1,765	2,903	5,666
Net Debt to Equity Ratio (in %)	29%	29%	34%	32%

* US $ equivalents are provided for reader convenience at the noon buying rate in New York City on June 30, 1998 exchange rate of US $1 = FF6.0470

PRINCIPAL COMMENTS

Operating income decreased 18% to FF10.7 billion for the first six months of 1998, compared to the same period last year. This is due to a 30% drop in the price of oil expressed in dollars which was amply compensated for by the downstream, chemicals and health operations, continued optimization of our core businesses and productivity gains.

Net income for the first half was FF4.6 billion down 7% in comparison to the same period 1997 (FF4.9 billion). The decrease in net income per share before special items was limited to 5% (FF18 against 19F for the first half of 1997) due to the effect of the share buy-back policy. Net income for the first half of 1997 had special items of FF342 million from capital gains on disposals of financial interests.

Funds generated from operations were FF15.2 billion or a decrease of 7% compared to the same period 1997. Investments, including exploration, were FF13.1 billion, an increase of 17%. The net debt to equity ratio was 29% at the end of June 1998, compared to 32% at the end of December 1997.

ELF AQUITAINE CHAIRMAN COMMENTS - Philippe Jaffré, Chairman and Chief Executive Officer of Elf Aquitaine made the following comments on the results:

"Elf's new capacity to resist the fall in the oil price was put to the test during the first half of 1998. In a strong overall economic environment for the downstream and chemicals operations in Europe, the continuing optimization of our asset base and internal growth have allowed us to compensate almost fully at the net income level for the effects of the 30% drop in the oil price.

The start of the second half of the year was characterized by the continued low oil price, a satisfying level of activity in downstream and health and a suitable one in chemicals. The prospects for the evolution of oil prices remain uncertain. Their progressive rise is related to a reduction in supply, this being tied to a better control of the level of production worldwide and an increase in the global demand. In such a scenario, a deterioration, at least temporary, in refining margins would not be excluded.

The impact of the economic slowdown in Asia, combined with the new petrochemical capacities on the market, could lead to a deterioration of conditions in this sector toward the end of the year or the beginning of next year. This would be more noticeable if economic growth slowed in Europe and in North America.

In this context, Elf firmly maintains its two objectives: to continue to improve its capacity to resist fluctuations in the economic environment and to build durable and profitable growth supported by the high quality developments in progress in all our activities and strict cost control."

RESULTS BY SECTOR

EXPLORATION AND PRODUCTION

	First Half			Year
(in millions)	1998 US $*	1998 FF	1997 FF	1997 FF
Operating income	898	5,431	9,157	17,058
Special Items	-	-	-	-
Operating Income (before Special Items)	898	5,431	9,157	17,058

Oil and Gas Production:
Oil (in thousands of barrels per day)		763	778	795
Gas (in millions of cubic feet per day)		1,273	1,352	1,312
Total Production (in thousands of barrels of oil equivalent per day)		983	1,012	1,021

* US $ equivalents are provided for reader convenience at the noon buying rate in New York City on June 30, 1998 exchange rate of US $1 = FF6.0470

Operating income for the Exploration and Production division decreased 41%, from FF9.2 billion to FF5.4 billion. The 30% drop in the average Brent oil price (from $19.60 to $13.70 per barrel) was only partially compensated for by the appreciation in the average parity between the French franc and the US dollar (from FF5.69 to FF6.06) and the continuing optimization of the asset base and productivity gains.

Operating income for the first half of 1998 incorporates a positive effect (and without impact on net income) of the reclassification of FF0.5 billion into tax of amounts previously classified as royalties in Nigeria.

Exploration expenses amounted to FF1,014 million for the first half of 1998, comparable to FF967 million for the first half of 1997.

Oil and gas production was 983,000 barrels of oil equivalent per day for the first six months of the year, a reduction of 3% compared to the same period last year.

Crude oil production decreased 2% to 763,000 barrels per day. The increases in production from Nigeria (resulting from the reclassification under taxes of amounts previously classified as royalties), from Angola and Qatar were not able to fully compensate for the decreases in production from the UK and Congo, and the sale of the Tunisian operations in 1997.

The 6% reduction in natural gas production to 1,273 million cubic per day resulted principally from the decline in the Lacq field in southwestern France.

The decision to develop the Girassol field, located in Block 17 offshore Angola (Elf is the operator with 35%), was taken in July. The principal contracts for the different drilling and production installations have been awarded. Girassol's reserves are estimated to be approximately one billion barrels, of which 700 million are to be developed in the intitial phase of the development. First production is planned for the end of the year 2000.

A fourth structure, named Rosa, was discovered on this same block at the beginning of 1998. And, the results of drilling on a new structure, called Lirio, are now being studied.

In Equatorial Guinea, Elf was awarded an exploration license covering 6,800 square kilometers situated southwest of Bioko Island in water depths varying from 1,000 to 2,700 meters.

In the Netherlands, Elf discovered two gas reservoirs on Blocks K4-E and K5-G (Elf is the operator with 17.4%)

In Romania, Elf and the national oil company Petrom signed an agreement concerning Elf taking an interest in the exploration block Neptun in the Black Sea covering an area of about 10,000 square kilometers. The western portion of the block, with water depths under 100 meters, will be operated by Petrom which holds a 70% interest and Elf 30%. In the eastern portion of the block, with water depths of between 100 and 1,600 meters, Elf will be the operator with a 70% interest, Petrom 30%.

In Italy, Elf sold its subsidiary, Elf Idrocarburi Italiana, to Edison Gas.

In the Gulf of Mexico in the US, the decision was taken to develop the Virgo field (Elf is the operator with 64%). The field is situated in a water depth of 345 meters. Production start-up is planned for 1999.

In Azerbaijan, Elf concluded an agreement with the national oil company Socar, Mobil and Agip for the construction of a drilling platform to be used for exploration in the Caspian Sea.

REFINING & MARKETING AND TRADING

(in millions)	First Half			Year
	1998 US $*	1998 FF	1997 FF	1997 FF
Operating income	300	1,813	848	(3,152)
Special Items	-	-	-	(5,400)
Operating Income (before Special Items)	300	1,813	848	2,248
Quantities refined (thousands of barrels per day)		646	381	434
Quantities sold (thousands of barrels per day)		1,022	818	864

* US $ equivalents are provided for reader convenience at the noon buying rate in New York City on June 30, 1998 exchange rate of US $1 = FF6.0470

The increase in the downstream operating income for the first half of 1998, from FF0.8 billion to FF1.8 billion, is due to a combination of a good European refining and marketing economic environment, strong internal growth and productivity gains. Similar to the first half of 1997, the international trading sector enjoyed a good level of activity during the first six months of the year.

The European refining margins on Brent ($2.74 a barrel in 1998 vs. $2.66 a barrel in 1998) only slightly increased when compared to the same period in 1997. This tendency has been augmented by the increase in the parity between the US dollar and the currencies of the countries included in the future Euro zone. Refining margins expressed in French francs improved by nearly 10% when compared to the same period last year.

The marketing outlets in Great Britain and France experienced good activity. The market remains highly competitive in eastern Germany.

Refined volumes increased 70% from 381,000 to 646,000 barrels a day compared to the same period in 1997. The start-up of the Leuna refinery in eastern Germany at the beginning of the year represented an increase of 147,000 barrels a day. Also, three refineries (Donges, Feyzin and Milford Haven) were shut down for maintenance in the first half of 1997.

Finally, the improvement in productivity continued according to established objectives, notably in France and the UK.

In line with its policy of safeguarding air quality, Elf continued the operational development of Aquazole, a water-diesel emulsion for buses and trucks, during the first half of the year. The fuel is already being used, notably by portions of bus fleets in Chambery and Lyon in France. Testing by urban bus fleets in Paris and the surrounding area will soon begin. In addition, Elf continued the development of its sales outlets for LPG-fuel, bringing the number of station outlets to 202 at the end of June this year.

CHEMICALS

(in millions)	First Half			Year
	1998 US $*	1998 FF	1997 FF	1997 FF
Sales	4,887	29,551	29,657	58,047
- Basic chemicals	2,155	13,031	13,818	27,036
- Fine and industrial chemicals	1,106	6,686	6,263	12,093
- Performance products	1,626	9,834	9,576	16,038
Operating Income	366	2,214	2,004	4,083

* US $ equivalents are provided for reader convenience at the noon buying rate in New York City on June 30, 1998 exchange rate of US $1 = FF6.0470

Operating income for the chemicals division increased 10% to FF2.2 billion. Improvement in each of the three areas of activity was achieved essentially from internal growth and an improvement in competitiveness. The economic environment remained generally neutral: good in Europe and average in both the US and Asia.

In a context of lower prices for raw materials, basic chemicals activities continued to advance. The demand for olefins and plastics and for PVC remained healthy throughout the first half of the year. The recovery in the demand for and the price of soda equally made a positive contribution to the results in this sector, whereas in a context of low prices the demand for fertilizers remained flat.

Continuing its growth, the subsidiary Appryl announced two major polypropylene investments amounting to a total of FF1 billion. The two projects, which are planned from now to the end of 1999, relate to an increase in capacity to 700,000 tons per year on three sites -- at Lavera (France) where the production capacity remains unchanged, at Gonfreville (France), where the capacity will be increased to 250,000 tons a year and with the construction of a new factory in Grangemouth, Scotland, with a capacity of 250,000 tons per year destined for the UK market.

Fine and industrial chemicals strengthened their results, thanks to the gradual recovery of hydrogen peroxide prices in Europe.

During the first half of the year, Elf Atochem took over Air Liquide's share of their joint subisidiary Oxysynthese. With a production capacity 240,000 tons a year from four units (France, Germany, Canada and Japan), Elf Atochem now ranks as the fourth leading producer of hydrogen peroxide worldwide.

Performance products continued to grow. Electroplating and adhesives again experienced increased sales while agrochemicals benefited from climatic conditions and favorable markets.

Performance polymers equally benefited from a good business climate in Europe and new developments in the US and in Asia. Continuing its policy of internationalization, Elf Atochem confirmed the creation of a joint company with its local partner, Gaoyuan Organic Powder Plant, for the production of polymide powders in China and the purchase of Rohm & Haas' share in their joint subsidiary AtoHaas. Formed in 1992, this activity had sales of more than FF3 billion in 1997 and ranks number one in the production of acrylic plastics.

HEALTH

(in millions)	First Half			Year
	1998 US $*	1998 FF	1997 FF	1997 FF
Sales	2,132	12,890	12,108	25,690
- Health	1,846	11,162	10,530	21,723
- Beauty	286	1,728	1,578	3,967
Operating Income	206	1,244	1,008	2,059

* US $ equivalents are provided for reader convenience at the noon buying rate in New York City on June 30, 1998 exchange rate of US $1 = FF6.0470

The operating contribution from the Health Division progressed 23%, from FF1 billion to FF1.2 billion when compared to the first half 1997. Sales increased 6.5% (9.6% on a comparable basis).

In the pharmaceuticals sector, consolidated sales progressed 10.5% during the first half of the year, 13% for consolidated sales of the first ten products.

During this period, the two new drugs from Sanofi research, the anti-hypertensive irbesartan (Aprovel,â Avaproâ , Karveaâ ) and the anti-atherothrombotic drug clopidogrel (Plavixâ ) had worldwide sales of more than FF500 million: FF352 million for irbesartan (FF170 million were consolidated in Sanofi's sales) and FF173 million for clopidogrel in the US (consolidated by Bristol-Myers Squibb). This drug obtained authorization to be put on the European market on July 15.

FINANCIAL ELEMENTS

Funds generated from operations decreased 7% to FF15.2 billion. This amply covers investments, which increased 17% to FF13.1 billion. These include exploration expenditures of FF1.5 billion, which remain stable in comparison to the first half of 1997.

Investments, excluding exploration, amounted to FF11.6 billion for the first half of the year. This figure increased 20% when compared to the same period for 1997. This rise is due principally to the upstream division (notably the development of the Elgin-Franklin field) and the chemicals division (the acquisitions from Air Liquide and Rohm & Haas). Investments in the downstream division, however, have clearly decreased following the completion of work at the Leuna refinery.

Net interest expenses were FF0.7 billion, a slight increase to that of the first half of 1997, due to the absence of the capitalized interest relating to the refinery at Leuna which began production at the beginning of 1998.

Non-operational costs before special items remained stable at around FF0.7 billion.

Optimization of the industrial asset portfolio in the different Group sectors continued. Gross disposals amounted to FF1.8 billion during the first half of 1998.

Income taxes were FF4.5 billion. The effective tax rate on net income before special items was 46%, a distinct decrease from the 54% for the first half of 1997. It is due to the effect of the strong decrease in the operating contribution of the upstream division which is subject to a higher tax rate than the downstream and chemicals activities, both of whose operational contributions were higher for the first half of 1998.

After having taken into account dividend payments and the working capital variation, the free cash flow at the end of June 1998, amounted to FF3 billion.

The average net debt continued to decrease. For the first half of 1998, it was FF32.2 billion compared to FF35.4 billion for the entire year of 1997. At the end of June 1998, the net debt to equity ratio was 29% compared to 32% at the end of December 1997.

At the end of June 1998, there were an average of 255.3 million shares in circulation. At the end of June 1998, the number of shares in circulation was 255.2 million. The company's share buy-back policy continued within the legal framework of French law which is still restrictive.

Press Contacts

Thomas Saunders (33.1) 47.44.42.30
Catherine Durand (33.1) 47.44.37.76

Investor Relations Contacts

In Paris : (33) 1.47.44.24.63
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