
==============================================================================
                       SECURITIES AND EXCHANGE COMMISSION
                               Washington, D.C. 20549

                                      FORM 10-K

               Annual Report Pursuant to Section 13 or 15(d) of the
                           Securities Exchange Act of 1934

                   FOR THE FISCAL YEAR ENDED SEPTEMBER 30, 1995

                           Commission file number 1-2918

                                    ASHLAND INC.
                             (a Kentucky corporation)

                                I.R.S. No. 61-0122250
                                  1000 Ashland Drive
                               Russell, Kentucky 41169

                          Telephone Number: (606) 329-3333

                    Securities Registered Pursuant to Section 12(b):

                                                      Name of each exchange
     Title of each class                               on which registered
     -------------------                              ------------------------
Common Stock, par value $1.00 per share              New York Stock Exchange
                                                      and Chicago Stock Exchange
Rights to Purchase Cumulative Preferred Stock,       New York Stock Exchange
  Series of 1987                                      and Chicago Stock Exchange
$3.125 Cumulative Convertible Preferred Stock        New York Stock Exchange
6 3/4% Convertible Subordinated Debentures,          New York Stock Exchange
  due 2014

                 Securities Registered Pursuant to Section 12(g): None

     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 by check mark if disclosure of delinquent  filers pursuant to
Item  405 of  Regulation  S-K is not  contained  herein,  and  will  not be
contained,  to the best of Registrant's  knowledge,  in definitive proxy or
information  statements  incorporated by reference in Part III of this Form
10-K or any amendment to this Form 10-K. [ x ]

     At October  31,  1995,  based on the New York Stock  Exchange  closing
price, the aggregate market value of voting stock held by non-affiliates of
the  Registrant  was  approximately  $1,618,029,653.  In  determining  this
amount,  Ashland Inc. has assumed that directors,  certain of its executive
officers,  and persons known to it to be the beneficial owners of more than
five percent of its common stock are affiliates.  Such assumption shall not
be deemed conclusive for any other purpose.

     At October 31,  1995,  there were  63,741,478  shares of  Registrant's
common stock outstanding.

                         Documents Incorporated by Reference

     Portions of Registrant's  Annual Report to Shareholders for the fiscal
year ended  September 30, 1995 are  incorporated  by reference into Parts I
and II.

     Portions of  Registrant's  definitive  Proxy Statement for its January
25, 1996 Annual Meeting of Shareholders  are incorporated by reference into
Part III.

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<PAGE>

                             TABLE OF CONTENTS
                                                                           Page

PART I
   Item 1.    Business ....................................................  1
                       Corporate Developments..............................  1
                       Petroleum...........................................  2
                       SuperAmerica........................................  4
                       Valvoline...........................................  5
                       Chemical............................................  6
                       APAC................................................  7
                       Coal................................................  8
                       Exploration......................................... 10
                       Other Business...................................... 13
                       Miscellaneous....................................... 13
    Item 2.   Properties................................................... 16
    Item 3.   Legal Proceedings............................................ 16
    Item 4.   Submission of Matters to a
                Vote of Security Holders................................... 16
    Item X.   Executive Officers of Ashland................................ 17

PART II
    Item 5.   Market for Registrant's Common Stock and Related
                Security Holder Matters.................................... 18
    Item 6.   Selected Financial Data...................................... 18
    Item 7.   Management's Discussion and Analysis of Financial
                Condition and Results of Operations........................ 18
    Item 8.   Financial Statements and Supplementary Data.................. 18
    Item 9.   Changes in and Disagreements with Accountants
                on Accounting and Financial Disclosure..................... 18

PART III
    Item 10.  Directors and Executive Officers of the Registrant........... 18
    Item 11.  Executive Compensation....................................... 18
    Item 12.  Security Ownership of Certain Beneficial
                Owners and Management...................................... 19
    Item 13.  Certain Relationships and Related Transactions............... 19

PART IV
    Item 14.  Exhibits, Financial Statement Schedules and Reports
                on Form 8-K................................................ 19



<PAGE>


                                PART I

ITEM 1. BUSINESS
     Ashland Inc. is a Kentucky corporation, organized on October 22, 1936,
with  its  principal  executive  offices  located  at 1000  Ashland  Drive,
Russell,  Kentucky 41169 (Mailing Address: P.O. Box 391, Ashland,  Kentucky
41114) (Telephone:  (606) 329-3333).  The terms "Ashland" and the "Company"
as used herein  include  Ashland  Inc. and its  consolidated  subsidiaries,
except where the context indicates otherwise.
     Ashland's   businesses  are  grouped  into  seven  industry  segments:
Petroleum,  SuperAmerica,  Valvoline, Chemical, APAC, Coal and Exploration.
Financial  information about these segments for the five fiscal years ended
September  30,  1995 is set  forth on Pages 58 and 59 of  Ashland's  Annual
Report to  Shareholders  for the  fiscal  year  ended  September  30,  1995
("Annual Report").
     Ashland Petroleum is one of the nation's largest independent petroleum
refiners and a leading supplier of petroleum products to the transportation
and commercial fleet industries, other industrial customers and independent
marketers,  and to  SuperAmerica  for  retail  distribution.  In  addition,
Ashland Petroleum  gathers and transports crude oil and petroleum  products
and  distributes  petroleum  products  under  the  Ashland(R)  brand  name.
SuperAmerica operates combination gasoline and merchandise stores under the
SuperAmerica(R)  and  Rich(R)  brand  names.  Valvoline  is a  marketer  of
branded, packaged motor oil and automotive chemicals,  antifreeze, filters,
rust  preventives  and coolants.  In addition,  Valvoline is engaged in the
"fast oil change"  business  through outlets  operating under the Valvoline
Instant Oil Change(R) and Valvoline Rapid Oil Change(R) names.
     Ashland   Chemical   distributes   industrial   chemicals,   solvents,
thermoplastics  and resins,  and fiberglass  materials,  and manufactures a
wide  variety of  specialty  chemicals  and  certain  petrochemicals.  APAC
performs  contract  construction  work including highway paving and repair,
excavation  and grading,  and bridge and sewer  construction,  and produces
asphaltic  and  ready-mix  concrete,  crushed  stone and  other  aggregate,
concrete  block  and  certain  specialized  construction  materials  in the
southern United States.
     Ashland's coal operations are conducted by 54% owned,  publicly traded
Ashland Coal, Inc.  ("Ashland Coal"), a producer of low-sulfur,  bituminous
coal in  central  Appalachia  for sale to  domestic  and  foreign  electric
utility and industrial customers. Ashland also holds a 50% interest in Arch
Mineral Corporation  ("Arch"),  a producer of low sulfur coal and steam and
metallurgical  coal in  Illinois,  Kentucky,  West  Virginia  and  Wyoming.
Ashland  Exploration  explores for, develops,  produces and sells crude oil
and  natural  gas  principally  in the  eastern and Gulf Coast areas of the
United  States,  explores for and produces  crude oil in Nigeria for export
and explores for oil and gas in other international areas.
     At September 30, 1995,  Ashland and its consolidated  subsidiaries had
approximately 32,800 employees (excluding contract employees).

                           CORPORATE DEVELOPMENTS
     During  fiscal  1995,  Ashland  filed a universal  shelf  registration
statement  with  the  Securities  and  Exchange  Commission  to  allow  for
offerings  from time to time of up to $600  million in debt  and/or  equity
securities.  Ashland  has  filed  amendments  to  this  shelf  registration
statement to allow for offerings from time to time of up to $200 million in
medium-term notes and $100 million in shares of Ashland Common Stock. As of
September 30,  1995, $46 million of the medium-term notes and $51.3 million
of Ashland Common Stock (1,428,600 shares) had been issued.
     Columbia  Gas  Transmission  and  Columbia  Gas Systems  (collectively
"Columbia"),  as part of their  reorganization  plans  filed  with the U.S.
Bankruptcy Court in Delaware, included a proposed settlement agreement with
certain gas producers,  including  Ashland,  which resolved  claims between
Ashland and Columbia. The settlement agreement provided that Columbia would
pay Ashland  $78.5  million,  of which 5% would be withheld to  potentially
satisfy claims of other  non-settling  gas producers.  Ashland received its
payment of $74,575,000 in November, 1995.
     Effective  September 30, 1995,  Ashland adopted  Financial  Accounting
Standards  Board  Statement  No. 121,  "Accounting  for the  Impairment  of
Long-Lived  Assets  and for  Long-Lived  Assets  to Be  Disposed  Of." As a
result,  Ashland  recorded an after tax charge of $54 million to write down
certain assets to their fair value.  In addition,  after tax charges of $25
million  related  to  early  retirement  and  restructuring  programs  were
incurred,  reflecting  efforts by Ashland  Petroleum and other divisions to
reduce their costs and improve their competitive positions.


                                       1
<PAGE>

                                    PETROLEUM

     Ashland  Petroleum,  a division of  Ashland,  has  responsibility  for
obtaining Ashland's crude oil requirements,  operating Ashland's refineries
and marketing the refined petroleum products,  and transporting and storing
crude oil and refined products.
CRUDE OIL SUPPLY
     The crude oil processed in Ashland Petroleum's  refineries is obtained
from  negotiated  lease,  contract and spot purchases or exchanges.  During
fiscal  1995,  Ashland  Petroleum's  negotiated  lease,  contract  and spot
purchases of United States crude oil for refinery  input  averaged  110,185
barrels per day (1 barrel = 42 United  States  gallons),  including  94,476
barrels per day which were  acquired  through  Ashland's  Scurlock  Permian
subsidiary.  Purchases from Canada  averaged  87,327 barrels per day during
fiscal 1995,  including  68,303 barrels per day acquired  through  Scurlock
Permian's Canadian subsidiary. The balance of Ashland Petroleum's crude oil
requirements  during fiscal 1995 were met largely  through  purchases  from
various foreign national oil companies and producing  companies.  Purchases
of  foreign  crude  oil  (including  Canada)  represented  68%  of  Ashland
Petroleum's  crude oil  requirements  during  fiscal  1995  compared to 65%
during fiscal 1994.
     Ashland Petroleum's crude oil requirements in fiscal 1996 are expected
to  be  met  through   contract  and  spot  purchases  from  United  States
independent  producers and from various foreign  national oil companies and
traders as worldwide  availability  and prices dictate.  Ashland's share of
Nigerian  production  will either be sold,  traded or used to help  satisfy
part of Ashland  Petroleum's fiscal 1996 crude oil requirements,  depending
upon  world  crude oil  prices  and other  economic  factors.  For  further
information concerning Nigerian production, see  "Exploration-International
Operations."
     In addition to providing crude oil for Ashland Petroleum's refineries,
Scurlock  Permian is actively  engaged in  purchasing,  selling and trading
crude oil, principally at Midland, Texas; Cushing, Oklahoma; and St. James,
Louisiana,  three of the major distribution  points for United States crude
oil.
REFINING AND MARKETING
     Ashland  Petroleum owns and operates three  refineries  located in its
key markets with an aggregate refining capacity of 354,200 barrels of crude
oil per day. The Catlettsburg, Kentucky refinery has a refining capacity of
219,300 barrels per day and the St. Paul Park,  Minnesota and Canton,  Ohio
refineries  have refining  capacities of 69,000  barrels and 65,900 barrels
per day,  respectively.  Ashland  Petroleum's  refineries  are  complex and
include crude oil  atmospheric  and vacuum  distillation,  fluid  catalytic
cracking,  catalytic reforming,  desulfurization and sulfur recovery units.
Each has the  capability  to  process a wide  variety  of crude oils and to
produce normal  refinery  products,  including  reformulated  gasoline.  In
addition, the Catlettsburg refinery is equipped to manufacture  lubricating
oils and a wide range of petrochemicals.
     Ashland  Petroleum's  principal  marketing  area for gasoline and fuel
oils includes the Ohio River  Valley,  the upper  Midwest,  the upper Great
Plains and the southeastern United States. In addition to gasoline and fuel
oils,  Ashland  also  manufactures  and markets  liquified  petroleum  gas,
asphalt  and  asphaltic  products,   pitch,  base  lube  stocks,  kerosene,
petrochemicals, jet fuels, and residual fuels.
     Ashland Petroleum's  production of gasoline,  kerosene, and light fuel
oils  is sold in 21  states  through  wholesale  channels  of  distribution
(including  company owned and exchange  terminals and Ashland  Branded bulk
plants) and at retail through Ashland's retail outlets and Ashland(R) brand
locations.   Gasoline  is  sold  at  wholesale   primarily  to  independent
marketers, jobbers, and chain retailers who resell through several thousand
retail  outlets  primarily  under  their  own  names,  and also  under  the
Ashland(R)  brand  name.  Gasoline,  kerosene,  distillates,  and  aviation
products are also sold to  utilities,  railroads,  river towing  companies,
commercial fleet operators,  aviation and airline  companies,  governmental
agencies and other end users.
     Ashland Petroleum also markets petroleum products under the Ashland(R)
brand name  through a network of 83 (72 owned and 11  leased)  bulk  plants
located  in 5  states.  These  plants  maintain  inventories  of  gasoline,
distillate,  kerosene,  motor  oils,  greases and other  related  products.
Ashland   supplies   71  (60  owned  and  11   leased)   Ashland(R)   brand
lessee-dealers  and  336  reseller  outlets.  In  1994,  Ashland  Petroleum
announced a new program to modernize  and upgrade  Ashland  Branded  retail
marketing.  This program focuses on expanding the Ashland(R)  brand through
an independent  jobber  network.  Several jobbers have committed to the new
program,  and Ashland  Petroleum has sold or  transferred  company owned or
leased bulk plants and stations to some of these  jobbers.  Retail  outlets
will be reimaged,  including  the use of the new  Ashland(R)  brand logo to
improve customer recognition and use of Ashland(R) brand locations. Ashland
Petroleum  currently  plans to  continue  expanding  the  Ashland(R)  brand
through  jobbers,  and company  owned or leased bulk plants will be sold to
jobbers  in the  process.  It also  plans to have  approximately  225 units
reimaged by calendar year-end 1995.

                                       2
<PAGE>


     Sales of gasoline  (excluding excise taxes) represented  approximately
17%, 18% and 20% of Ashland's  consolidated  sales and  operating  revenues
(excluding excise taxes) in fiscal years 1995, 1994 and 1993, respectively.
Sales of crude oil  represented  approximately  7%, 8% and 10% of Ashland's
consolidated  sales and  operating  revenues  (excluding  excise  taxes) in
fiscal years 1995, 1994 and 1993, respectively.
     Ashland   Petroleum  also  produces  and  markets   asphalt   cements,
polymerized  asphalt,  asphalt  emulsions,  and industrial  asphalts in the
United States.  Ashland  Petroleum  markets asphalt  products in 21 states.
Additionally,  Ashland Petroleum  manufactures  petroleum pitch,  primarily
used in the graphite electrode, clay target and refractory industries.
     Ashland Petroleum  produces residual fuels at its three refineries and
markets and sells these  products in nine states,  primarily to  industrial
customers as boiler fuel.
     The table below shows Ashland's refining operations for the last three
fiscal years:
<TABLE>
<CAPTION>
                                                                             Years Ended September 30
                                                                       ------------------------------------
                                                                        1995           1994           1993
                                                                       -----          -----          -----
<S>                                                                    <C>            <C>            <C>
     Refinery Input (In thousands of barrels per day)                  353.8          341.8          339.7
     ------------------------------------------------
     Refinery Production (In thousands of barrels per day)
     -----------------------------------------------------
     Gasoline                                                          176.8          168.0          166.8
     Distillates and Kerosene                                           92.5           90.6           88.6
     Asphalt                                                            31.5           29.3           27.4
     Jet and Turbine Fuel                                               11.1           10.9           12.2
     Heavy Fuel Oils                                                     6.7            7.7            9.0
     Lubricants                                                          7.7            7.6            7.6
     Other                                                              16.8           16.8           17.0
</TABLE>

     The  table  below  shows  the  average  daily  consolidated  sales  of
petroleum  products  and  crude  oil by  Ashland  Petroleum,  SuperAmerica,
Valvoline and Exploration (excluding intercompany sales) for the last three
fiscal years:
<TABLE>
<CAPTION>
                                                                             Years Ended September 30
                                                                       ------------------------------------
                                                                        1995           1994           1993
                                                                       -----          -----          -----
<S>                                                                    <C>            <C>            <C>
     Consolidated Product Sales (In thousands of barrels per day)
     ------------------------------------------------------------
     Gasoline                                                          193.7          181.9          182.1
     Crude Oil                                                         131.8          142.1          150.3
     Distillates and Kerosene                                          102.8           97.0           93.0
     Asphalt                                                            36.8           34.3           31.4
     Jet and Turbine Fuel                                                9.6           10.9           11.2
     Heavy Fuel Oils                                                     7.1            8.4            9.7
     Lubricants                                                         15.0           14.7           15.6
     Other                                                              28.3           23.3           21.3
</TABLE>

TRANSPORTATION AND STORAGE
     Ashland owns,  leases, or has an ownership  interest in 5,790 miles of
pipeline  in 13  states.  This  network  transports  crude oil and  refined
products  to and from  terminals,  refineries  and  other  pipelines.  This
includes 2,287 miles of crude oil gathering lines, 2,987 miles of crude oil
trunk lines, 475 miles of refined product lines and 41 miles of natural gas
liquid lines.
     Ashland has an 18.6%  ownership  interest in LOOP INC.  ("LOOP"),  the
only U.S. deep water port facility capable of receiving crude oil from very
large crude  carriers  and which has a capacity to  off-load  1,000,000  to
1,200,000  barrels per day. Ashland also has a 21.4% ownership  interest in
LOCAP INC.  ("LOCAP") which has a capacity of 1,200,000 barrels per day and
a 21.6% undivided  ownership  interest in the Capline Pipeline System which
has a nominal capacity of 1,175,000  barrels per day. LOCAP owns a pipeline
connecting  LOOP and the  Capline  System  that  originates  at St.  James,
Louisiana.  These port and pipeline systems provide Ashland  Petroleum with
access to common  carrier  transportation  from the Louisiana Gulf Coast to
Patoka,  Illinois. At Patoka, the Capline System connects with other common
carrier  pipelines owned or leased by Ashland which

                                       3

<PAGE>

provide  transportation to Ashland  Petroleum's  refineries in Kentucky and
Ohio. For summarized  financial  statements and information with respect to
advances and transportation payments made by Ashland to LOOP and LOCAP, see
Notes D and G of Notes to  Consolidated  Financial  Statements in Ashland's
Annual Report.
     In addition,  Ashland owns a 33% stock  interest in the Minnesota Pipe
Line Company, which owns a crude oil pipeline in Minnesota.  Minnesota Pipe
Line Company provides Ashland  Petroleum with access to 270,000 barrels per
day of crude oil common carrier  transportation from Clearbrook,  Minnesota
to  Cottage  Grove,  Minnesota,   which  is  in  the  vicinity  of  Ashland
Petroleum's St. Paul Park,  Minnesota  refinery.
     Ashland Petroleum's river transportation operations include 8 towboats
(6 owned,  2 leased)  and 165 barges that  transport  crude oil and refined
products on the Ohio,  Mississippi and Illinois rivers,  their tributaries,
and the Intracoastal  Waterway.  In 1995, Ashland entered into an agreement
with Jeffboat, a division of American Commercial Marine Service Company, to
construct 42 new  double-skin  inland river tank barges.  These barges will
replace current  single-skin  barges owned and operated by Ashland in order
to comply with  requirements  of the Oil  Pollution  Act of 1990.  See also
"Miscellaneous-Governmental     Regulation     and     Action-Environmental
Protection."
     Ashland   Petroleum  leases  on  a  long-term  basis  two  80,000  ton
deadweight  tankers  which are  normally  used for third party  delivery of
foreign crude oil to the United States.  Additional requirements are met by
chartering tankers for individual voyages.
     Ashland Petroleum leases rail cars in various sizes and capacities for
movement of petroleum products and chemicals. Ashland Petroleum also owns a
large number of tractor-trailers, additional trailers, and a large fleet of
tank trucks and general service trucks.
     Ashland  Petroleum  owns or has an interest in 35 terminal  facilities
from which it sells a wide range of petroleum  products.  These  facilities
are supplied by a  combination  of river barge,  pipeline,  truck and rail.
Ashland  Petroleum  also owns or operates a number of other  terminals that
are used in connection  with the  transportation  of petroleum  products or
crude oil.
OTHER MATTERS
     For  information on federal,  state and local statutes and regulations
relating to releases into the environment or protection of the environment,
see   "Miscellaneous-Governmental   Regulation   and   Action-Environmental
Protection." For information relating to certain environmental  litigation,
see "Legal Proceedings-Environmental Proceedings."
     There are traditional seasonal variations in Ashland Petroleum's sales
and operating results.  The seasonality that Ashland Petroleum  experiences
is due primarily to increased demand for gasoline during the summer driving
season,  higher demand for distillate during the winter heating season, and
increased  demand for asphalt from the road paving industry during the last
six months of Ashland's  fiscal year. The refining  industry  experiences a
similar  seasonality.  For  Ashland's  fiscal years 1993 to 1995,  refining
margins  for  Ashland  Petroleum  have  averaged  $3.79 per  barrel for the
six-month  periods  ended  March 31 and $4.53 per barrel for the  six-month
periods ended September 30.


                                SUPERAMERICA

     SuperAmerica  Group, a division of Ashland,  conducts retail petroleum
marketing  operations under the SuperAmerica(R) and Rich(R) names. See also
"Petroleum-Refining and Marketing."
     SuperAmerica(R)  Stores - SuperAmerica operates 609 (507 owned and 102
leased)  combination  gasoline and  merchandise  stores in 11 states in the
Ohio Valley and Upper Midwest under the SuperAmerica(R)  name. These stores
are designed for high volume  sales.  SuperAmerica  stores offer  consumers
gasoline,  diesel fuel at selected locations and a broad mix of other goods
and services such as fresh-baked  goods,  automated teller machines,  video
rentals,   automotive  accessories  and  a  line  of  private-label  items.
SuperAmerica is also adding to its one-stop  shopping concept by partnering
with fast food  chains  including  Taco  Bell,  Subway,  TCBY,  Arby's  and
Blimpies.  During  fiscal  1995,  40% of the  revenues of the  SuperAmerica
stores were derived from the sale of  merchandise  and 60% of such revenues
were derived from the sale of gasoline and diesel fuel.
     SuperAmerica  operates warehouse  distribution centers in Bloomington,
Minnesota,  and Ashland,  Kentucky,  that distribute certain merchandise to
stores.  SuperAmerica also operates a commissary in Russell, Kentucky, that
produces fresh sandwiches,  salads and other food products for distribution
to stores in the Ohio Valley.  A



                                       4

<PAGE>

wholly-owned  subsidiary  of  Ashland  also  operates  a large  bakery  and
commissary in St. Paul Park, Minnesota, under the name SuperMom's(R) Inc.

     In  addition  to the  609  SuperAmerica  stores,  SuperAmerica  has 28
jobber/franchisees who operate 40 stores in 3 states in the upper Midwest.
     Rich(R) Oil -  SuperAmerica  also operates 95 (76 owned and 19 leased)
retail  gasoline  outlets in  Kentucky,  Ohio and West  Virginia  under the
Rich(R) Oil name.  These outlets  generate lower gasoline  volumes than the
average  SuperAmerica  store,  primarily  because the outlets are generally
smaller and located in less-densely-populated areas.




                                      VALVOLINE

     The  Valvoline  Company,  a division  of  Ashland,  is a  marketer  of
automotive and industrial oils,  automotive  chemicals,  and automotive and
environmental  services,  with  sales  in  more  than  140  countries.  The
Valvoline(R)  trademark was federally  registered in 1873 and is the oldest
trademark  for  a  lubricating   oil  in  the  United   States.   See  also
"Petroleum-Refining   and   Marketing."   Valvoline  has   diversified  its
operations  in recent  years and is  comprised  of the  following  business
units:
     Valvoline U.S.A. - In 1995,  Valvoline  combined its Branded Sales and
Car Care  Products  Groups to form  Valvoline  U.S.A.  Prior to the change,
Branded Sales was Valvoline's largest business unit, marketing Valvoline(R)
brand lubricants to the U.S. consumer and commercial fleet markets. The Car
Care Products  Group was  responsible  for marketing the company's  growing
portfolio of automotive  chemical products including  Zerex(R)  antifreeze,
Pyroil(R)  automotive   refrigerants,   and  Pyroil(R)  and  private  label
automotive  chemicals.  The two groups  were  combined  to  improve  sales,
marketing,  and  production  efficiencies  as well as to  better  serve the
company's  network  of U.S.  distributors,  retailers,  and  direct  market
customers.
     During  fiscal  1995,  marketshare  for  Valvoline(R)  brand motor oil
increased;  a new  engine  treatment  product,  TM8,  was  introduced;  and
advertising  and  marketing  for  Zerex(R)  brand  antifreeze,   which  was
purchased from the BASF Corp. in 1994, was revamped.  Although refrigerants
containing  chlorofluorocarbons  are now phased out of  production,  Pyroil
will continue to be a leading supplier of R-12 for air conditioning systems
for older cars until its  inventory of R-12 is depleted.  At the same time,
Pyroil is actively  supporting  an  industry-wide  transition to ozone-safe
refrigerants.
     Valvoline International - Valvoline through wholly-owned subsidiaries,
markets  Valvoline(R)  branded  products  and  TECTYL(R)  rust  preventives
worldwide  and operates  company-owned  affiliates  in  Australia,  Canada,
Denmark,  Great Britain,  the Netherlands,  Sweden,  Germany,  Switzerland,
Austria,  France,  Italy and Belgium.  Licensees  and  distributors  market
products in other parts of Europe, Central and South America, the Far East,
the Middle East and  certain  African  countries.  Packaging  and  blending
plants and  distribution  centers in Australia,  Canada,  Denmark,  Sweden,
Great Britain,  the Netherlands and the United States supply  international
customers.  Through a joint  venture with  Western  India  Petroleum  Ltd.,
Valvoline has announced  plans to construct a blending and packaging  plant
in India before the end of the decade.
     Valvoline Instant Oil Change(R)  ("VIOC") - VIOC is one of the largest
competitors  in the  expanding  U.S.  "fast oil change"  service  business,
providing  Valvoline with a significant  share of the installed  segment of
the  passenger car and light truck motor oil market.  Incorporation  of the
Valvoline name and trademark in VIOC's name,  store signage and advertising
provides an ongoing  Valvoline  presence in the  communities  in which VIOC
stores are located.  As of September  30, 1995,  365  company-owned  and 90
franchise service centers were operating in 14 and 18 states, respectively.
     In 1995,  VIOC  introduced  the "MVP"  (maximum  vehicle  performance)
program to maintain industry leadership in customer-service innovation. MVP
is a computer-based  program that maintains service records on all customer
vehicles,  system-wide.  MVP also  contains a database on all car makes and
models  which  allows  service  recommendations  based  strictly on vehicle
owner's manual recommendations.
     Ecogard,  Inc. - As of September 30, 1995, Ecogard,  Inc., through its
First Recovery division, was collecting used motor oil at an annual rate of
43 million gallons from a network of automotive  aftermarket  retailers and
service  businesses  in 42  states.  Completing  Valvoline's  "total  fluid
management"  approach  to  customer  service,  First  Recovery  provides an
environmental  service  to  Valvoline  U.S.A.  customers,  collecting  used
antifreeze and oil filters as well.




                                       5

<PAGE>

    Lube Refinery  Sales - Valvoline's  Lube Refinery Sales division sells
excess base stock production from the Catlettsburg,  Kentucky lube refinery
to other U.S. motor oil and industrial oil marketers as well as to fuel and
lube additive  companies in the United States. It also markets slack wax, a
lube  byproduct,  through a network of resellers and to other  refiners for
further processing.  The division is also engaged in private label blending
and   packaging   for   other   North   American    refiners.    See   also
"Petroleum-Refining and Marketing."


                                    CHEMICAL

     Ashland  Chemical  Company,  a division of Ashland,  is engaged in the
manufacture,  distribution  and  sale of a wide  variety  of  chemical  and
plastic  products.   Ashland  Chemical  owns  or  leases  45  manufacturing
facilities  in 11 states  and 16  foreign  countries  and owns or leases 94
distribution  facilities  in 33 states  and 11 foreign  countries.  Ashland
Chemical is comprised of the following operations:
DISTRIBUTION
     Industrial  Chemicals  & Solvents  Division  ("IC&S")  - IC&S  markets
chemical  products  and  solvents  to  industrial  chemical  users in major
markets  through  distribution  centers  in the United  States,  Canada and
Puerto Rico. It distributes  approximately  3,500 chemical products made by
many of the nation's  leading chemical  manufacturers,  a growing number of
off-shore  producers,  plus  petrochemicals from Ashland's  refineries.  It
specializes  in  supplying   mixed   truckloads   and   less-than-truckload
quantities  to many  industries  including  the paint and  coatings,  inks,
adhesives, industrial and institutional compounding,  automotive, appliance
and  paper  industries.   In  addition,   IC&S  distributes   cosmetic  and
pharmaceutical   specialty   chemicals   and   food-grade   additives   and
ingredients.  It also offers customers environmental  services,  working in
cooperation  with major  chemical  waste  disposal,  recycling and recovery
companies.
     FRP  Supply  Division - This  division  markets  to  customers  in the
reinforced  plastics and cultured  marble  industries  mixed  truckload and
less-than-truckload  quantities of polyester  resins,  fiberglass and other
specialty  reinforcements,  catalysts and allied products from more than 50
distribution locations throughout North America.
     General  Polymers  Division - This  division  markets a broad range of
thermoplastic  injection  molding and extrusion  materials to processors in
the plastics industry through distribution  locations in the United States,
Canada,  Mexico and Puerto Rico. It also provides plastic material transfer
and  packaging  services  and  less-than-truckload  quantities  of packaged
thermoplastics.  The basic resins business unit markets bulk  thermoplastic
resins to a variety of proprietary processors in North America.
     Ashland  Plastics  Division - This  division  markets a broad range of
thermoplastics  to processors  outside North America.  Ashland Plastics has
distribution  centers located in Australia,  Belgium,  France,  Italy,  the
Netherlands,  Ireland,  New Zealand,  and the United Kingdom and exports to
Latin America from the United States.
SPECIALTY CHEMICALS
     Composite  Polymers Division - This division  manufactures and sells a
broad  range  of  chemical-resistant,  fire-retardant  and  general-purpose
grades of  unsaturated  polyester and vinyl ester resins for the reinforced
plastics  industry.  Key markets include the automotive,  construction  and
marine industries.  It has manufacturing  plants in Colton and Los Angeles,
California;  Bartow,  Florida;  Ashtabula,  Ohio;  Philadelphia and Neville
Island, Pennsylvania and Jacksonville, Arkansas.
     Specialty Polymers & Adhesives  Division - This division  manufactures
and sells  specialty  phenolic resins for paper  impregnation  and friction
material  bonding;  acrylic  polymers  for  pressure  sensitive  adhesives;
emulsion  polymer   isocyanate   adhesives  for  structural  wood  bonding;
polyurethane  and  epoxy  structural   adhesives  for  bonding   fiberglass
reinforced plastics,  composites,  thermoplastics and metals in automotive,
recreational,  and industrial  applications;  induction bonding systems for
thermoplastic  materials;  elastomeric  polymer  adhesives and butyl rubber
roofing  tapes for  commercial  roofing  applications;  and  vapor  curing,
high-performance  urethane coatings systems. It has manufacturing plants in
Calumet City, Illinois; Norwood, New Jersey; and Ashland, Ohio.
     Drew  Ameroid  Marine  Division  - This  division  supplies  specialty
chemicals for water and fuel  treatment and general  maintenance as well as
refrigeration services,  sealing products, welding and refrigerant products
and fire fighting and safety services to the world's merchant marine fleet.
Drew Ameroid Marine currently provides shipboard technical service for more
than 15,000  vessels from 140 locations  serving 800 ports  throughout  the
world.




                                       6

<PAGE>

     Electronic Chemicals Division - This division manufactures and sells a
variety of ultra  high-purity  chemicals  for the  worldwide  semiconductor
manufacturing  industry  through various  manufacturing  locations and also
custom  blends  and  packages  high-purity  liquid  chemicals  to  customer
specifications.  It has manufacturing plants in Newark, California;  Milan,
Italy; Easton, Pennsylvania; and Dallas, Texas. In addition, it also enters
into long-term agreements to provide complete chemical management services,
including  purchasing,  warehousing  and delivering  chemicals for in-plant
use, for major facilities of large consumers of high-purity chemicals.
     Foundry  Products  Division  - This  division  manufactures  and sells
foundry chemicals worldwide,  including a complete line of foundry binders,
core and mold coatings,  sand additives,  mold releases,  core pastes,  die
lubes and  other  specialties.  It has two  domestic  manufacturing  plants
located in  Cleveland,  Ohio and 18  foreign  subsidiaries  and  affiliates
manufacturing  and/or marketing foundry and other chemicals.  It also has a
metals  applications  laboratory as part of the company's technical center,
which is used for test castings and mold and core material testing.
     Drew  Industrial   Division  -  This  division  supplies   specialized
chemicals  and  consulting  services  for the  treatment  of boiler  water,
cooling  water,  steam,  fuel and waste streams.  It also supplies  process
chemicals  and  technical  services  to  the  pulp  and  paper  and  mining
industries  and also supplies  additives  used in  manufacturing  latex and
paints. It conducts operations throughout North America, Europe and the Far
East through  subsidiaries,  joint venture companies and distributors.  The
division has  manufacturing  plants in Kansas  City,  Kansas;  Kearny,  New
Jersey; Houston, Texas; Ajax, Ontario, Canada; and Singapore.
PETROCHEMICALS
     This  division  markets  aromatic  hydrocarbons,  principally  cumene,
toluene,   xylene,  and  aromatic  and  aliphatic  solvents  and  propylene
manufactured at facilities located at the Catlettsburg,  Kentucky refinery.
It manufactures maleic anhydride at Neal, West Virginia and Neville Island,
Pennsylvania and methanol near Plaquemine, Louisiana.
OTHER MATTERS
     Melamine Chemicals, Inc. ("MCI") - Ashland owns 23% of the outstanding
common stock of MCI, a public company (NASDAQ:MTWO).  MCI produces melamine
at its Donaldsonville, Louisiana plant and sells it to customers throughout
the world.  Melamine is a specialty chemical having numerous industrial and
commercial applications.
     For information relating to the Comprehensive  Environmental  Response
Compensation  and Liability Act ("CERCLA") and the Superfund  Amendment and
Reauthorization Act of 1986 ("SARA") (CERCLA and SARA hereinafter sometimes
referred to collectively as "Superfund"), and the Resource Conservation and
Recovery  Act  ("RCRA"),  see  "Miscellaneous-Governmental  Regulation  and
Action-Environmental Protection."




                                     APAC

     The APAC group of companies,  which are located in 13 southern states,
perform construction work such as paving,  repair and resurfacing highways,
streets, airports, residential and commercial developments,  sidewalks, and
driveways;  grading and base work; and excavation and related activities in
the  construction  of bridges and  structures,  sanitary  sewers,  drainage
facilities  and  underground  utilities.   APAC  also  produces  and  sells
construction  materials such as asphaltic and ready-mix  concrete,  crushed
stone and other  aggregate,  and in  certain  markets,  concrete  block and
specialized construction materials, such as architectural block.
     To  deliver  its  services  and  products,   APAC  utilizes  extensive
aggregate-producing properties and construction equipment. It currently has
14 permanent  operating  quarry  locations,  29 other aggregate  production
facilities, 30 ready-mix concrete plants, 143 hot-mix asphalt plants, and a
fleet of over 8,500 mobile  equipment units,  including heavy  construction
equipment and transportation-related equipment.
     Raw aggregate generally consists of sand, gravel,  granite,  limestone
and sandstone.  About 28% of the raw aggregate  produced by APAC is used in
the performance of APAC's own contract construction work and the production
of various processed construction materials. The remainder is sold to third
parties. APAC also purchases  substantial  quantities of raw aggregate from
other  producers  whose  proximity  to the job site render it  economically
feasible. Most other raw materials, such as liquid asphalt, portland cement
and  reinforcing  steel,  are purchased from others.  APAC is not dependent
upon any one supplier or customer.
     Approximately  60% of APAC's  revenues  are derived  from  highway and
other public sector  sources.  The other 40% is derived from industrial and
commercial customers and other private developers and contractors.


                                       7

<PAGE>

     Climate and weather  significantly affect revenues in the construction
business.  Due to its  location,  APAC  tends  to enjoy a  relatively  long
construction  season.  Most of APAC's  operating income is generated during
the construction period of May to October.
     Total backlog at September 30, 1995 was $672 million, compared to $554
million at September 30, 1994. The backlog orders at September 30, 1995 are
considered firm, and a major portion is expected to be filled during fiscal
1996.

                                       COAL

     Ashland Coal, Inc.  ("Ashland Coal") - Ashland owns  approximately 54%
of  Ashland  Coal,  a public  company  (NYSE:ACI)  which is  engaged in the
production,  transportation,  processing  and marketing of bituminous  coal
produced  in  eastern   Kentucky  and  southern  West   Virginia.   Carboex
International  Ltd., a subsidiary of Sociedad  Espanola De Carbon Exterior,
S.A., a coal supply firm controlled by entities of the Government of Spain,
owns  approximately  a 10% interest in Ashland  Coal.  The remaining 36% of
Ashland Coal is owned by the public.  The primary emphasis and direction of
Ashland Coal is on the acquisition and development of low-sulfur steam coal
reserves.
     For its fiscal year ended  December  31,  1994,  Ashland  Coal and its
independent  operating  subsidiaries  sold 20.2  million  tons of coal,  as
compared to 16.0 and 19.1 million tons sold in 1993 and 1992, respectively.
Of the total number of tons sold during fiscal 1994,  approximately 62% was
under  long-term  contracts,  as compared to 57% for 1993 and 66% for 1992,
with the balance  being sold on the spot market.  In fiscal  1994,  Ashland
Coal and its independent  operating  subsidiaries  sold 1.7 million tons of
coal in the export  market,  compared to 2.1  million  tons in 1993 and 3.9
million tons in 1992. Approximately 54%, 61%, and 71% of total revenues for
1994, 1993, and 1992, respectively,  were derived from long-term contracts.
For the year ended December 31, 1994, Ashland Coal's independent  operating
subsidiaries produced  approximately 19.2 million tons of coal, as compared
to 14.2 and 16.7 million tons for 1993 and 1992, respectively. In addition,
Ashland Coal  purchased for resale  approximately  1.3 million tons of coal
during 1994 and  approximately 1.6 and 2.0 million tons of coal during 1993
and 1992.
     Ashland  Coal's  consolidated  results  for  1993  were  significantly
affected  by a  selective  strike by the  United  Mine  Workers  of America
("UMWA")  from  May  to  December  1993  against  the   operations  of  two
subsidiaries  of  Ashland  Coal's  Dal-Tex  Coal   Corporation   subsidiary
("Dal-Tex")  and the  operations  of  Ashland  Coal's  Hobet  Mining,  Inc.
subsidiary  ("Hobet").  On December  14, 1993,  UMWA  members  ratified the
National  Bituminous  Coal Wage  Agreement of 1993, and thereafter the UMWA
miners returned to work at the Dal-Tex and Hobet operations.
     For the nine months ended  September  30,  1995,  Ashland Coal and its
independent  operating  subsidiaries sold 16.5 million tons of coal. Of the
total number of tons sold during the nine months ended  September 30, 1995,
61.2%  was  under   long-term   contracts.   These  sales   accounted   for
approximately  63.2% of Ashland  Coal's total  revenues for the  nine-month
period.  Of the 16.5 million tons sold during the  nine-month  period,  2.1
million tons were sold in the export market.  For the nine months,  Ashland
Coal's  independent  operating  subsidiaries  produced  approximately  15.7
million  tons of coal and  purchased  approximately  1.0  million  tons for
resale.
     Ashland Coal has announced that it  anticipates  1996 earnings will be
significantly  adversely  affected by the  expiration at the end of 1995 of
favorable  sales  contracts with  Cincinnati Gas & Electric  Company and by
price reopeners under other supply contracts. In addition, Ashland Coal has
announced that its Board of Directors has authorized the  repurchase,  from
time to time, of up to one million shares of Ashland Coal's Common Stock.
     The labor forces at Ashland Coal's Mingo Logan Coal Company subsidiary
("Mingo  Logan") and Mingo Logan's  Mountaineer  Mining  Company and Bearco
divisions  are  not  currently  unionized.  However,  in a  National  Labor
Relations  Board  ("NLRB")  proceeding,   Mingo  Logan  and  certain  other
employers  with whom Mingo  Logan  contracts  for  construction  and mining
services  were  determined  to be joint  employers  by the Acting  Regional
Director for NLRB Region 9. As a consequence of this ruling, the bargaining
unit  at  Mingo  Logan's   Mountaineer  Mine  for  purposes  of  collective
bargaining has been  determined to be comprised of employees of Mingo Logan
and its  contractors,  and these  employees  voted  together on January 19,
1995,  on the  question of whether or not to be  represented  by the United
Mine Workers of America. The result of this vote, which was required by the
NLRB  decision,  is not yet known as the ballots  have been sealed  pending
appeal of the initial determination  concerning the appropriate  bargaining
unit. Mingo Logan has appealed the Acting Regional  Director's  decision to
the NLRB and expects to prevail in its appeal.  If Mingo Logan does prevail
on appeal,  the January 19, 1995  representation  election  results will be
invalidated.




                                       8

<PAGE>

     Substantially  all of Ashland  Coal's coal  properties  are in eastern
Kentucky and southern  West Virginia and are  controlled by lease.  Most of
these leases run until the exhaustion of minable and merchantable coal. The
remaining leases have primary terms ranging from one to 40 years, with many
containing  options to renew.  Royalties  paid to  lessors  are either on a
fixed  price per ton basis or on a  percentage  of the  gross  sales  price
basis.
     As of December 31, 1994,  Ashland Coal estimates that its subsidiaries
controlled  approximately  688 million tons of recoverable  reserves in the
proven and probable  categories.  Based upon limited  information  obtained
from preliminary prospecting, drilling and coal seam analysis, Ashland Coal
estimates  that a substantial  percentage of this coal has a sulfur content
of 1% or less.  Ashland has not made an  independent  verification  of this
information.  The extent to which reserves will eventually be mined depends
upon a variety of  variables,  including  future  economic  conditions  and
governmental  actions  affecting  both  the  mining  and  marketability  of
low-sulfur steam coal.
     Arch Mineral Corporation ("Arch") - Ashland currently owns 50% of Arch
and has the right to acquire an additional  1.25% of Arch pursuant to a Put
and Call  Agreement  with an Arch  shareholder.  Through  its wholly  owned
subsidiaries,  Arch mines,  processes,  markets, and transports  bituminous
coal in the domestic and export steam and  metallurgical  markets and owns,
controls  and  manages  mineral-bearing  properties  throughout  the United
States. Arch has mines located in the Appalachian,  Midwestern, and Western
coal fields with access to rail,  inland waterway and truck  transportation
networks,  including several of its own transloading facilities.  Arch also
controls  undeveloped  reserves  in the San Juan Basin of New  Mexico,  the
Green  River  area  in  southwest  Wyoming,  southern  Illinois,   Indiana,
southeast Kentucky, western Virginia and southern West Virginia.
     For its fiscal year ended  December 31,  1994,  Arch sold 27.9 million
tons of coal  compared to sales of 17.6  million tons and 20.9 million tons
in 1993 and 1992, respectively.  In 1994, 73% of Arch's sales were from the
production of its wholly owned independent operating subsidiaries, compared
to 79% and 82% in 1993 and 1992,  respectively.  The  remainder of the coal
sold in each of  these  periods  came  from  brokerage  activities  or from
independent  contractors  operating on property controlled by Arch. Surface
mines  accounted for 52% of the  production in 1994, as compared to 69% and
62% in 1993 and 1992, respectively. In each of these periods, the remainder
of Arch's production came from its underground and auger mines. Sales under
contracts with a duration of more than one year accounted for 69% of Arch's
sales in 1994, compared with 78% and 86% in 1993 and 1992, respectively.
     As of  September  30, 1995,  Arch had 28 coal supply  contracts of one
year or longer duration.  In the nine-months ended September 30, 1995, Arch
sold 19.8 million tons of coal, 74% of which was sold under  contracts with
a duration of more than one year.  During this period,  77% of Arch's total
sales came from the  production  of its  subsidiaries,  while the remaining
coal  sold  came  from  brokerage  activities  or  independent  contractors
operating on properties  controlled by Arch. During this nine-month period,
58% of Arch's  production  was from its surface mines and the remainder was
from its underground and auger mines.
     As  of  December  31,  1994,   Arch  owned  or  controlled   estimated
recoverable  coal  reserves  in  the  proven  and  probable  categories  of
approximately  1.6 billion tons,  based on an estimate  prepared by Arch. A
majority of these reserves have a sulfur content of less than 1.6 pounds of
sulfur  dioxide  per million Btu and a  substantial  portion  have a sulfur
content of less than 1.2 pounds of sulfur dioxide per million Btu.  Ashland
has not made an independent verification of this information.
     Apogee Coal Company ("Apogee"), an independent operating subsidiary of
Arch, is a member of the Bituminous Coal Operators Association ("BCOA") and
a signatory to a five year  collective  bargaining  agreement with the UMWA
that expires on August 1, 1998.  This contract was ratified on December 14,
1993,  after a 219-day  strike  against  certain  BCOA  members,  including
Apogee. This strike significantly affected Apogee's performance in 1993. In
the nine months ended September 30, 1995, Apogee's  production  represented
approximately 50% of Arch's total sales. Two other independent subsidiaries
of  Arch  are   signatories  to  collective   bargaining   agreements  with
independent  employees  associations.  Employees of the remainder of Arch's
operating subsidiaries are not represented by labor unions.
     During 1995, Arch sold substantially all of the assets associated with
its  mining  supply  business  and its  timber  rights  on  certain  of its
Appalachian  properties,  and  acquired  32.7  million  tons of  additional
reserves.
     Other  Matters - Ashland  Coal and Arch are  subject to  environmental
regulations,  including the Surface Mining Control and  Reclamation  Act of
1977,  the Clean Water Act,  RCRA and the Clean Air Act, as well as related
federal  environmental   regulations  and  similar  state  enactments.   In
addition,  the Federal Mine Safety and Health Act of 1977 ("MSHA")  imposes
health and safety  standards on all mining  operations.  Regulations  under
MSHA are  comprehensive  and affect numerous aspects of mining  operations,
including the training of mine 




                                       9


<PAGE>
personnel,  mining  procedures,  blasting and the equipment  used in mining
operations.  These laws,  regulations and  requirements are not expected to
have a  material  adverse  impact on Ashland  Coal's or Arch's  competitive
position.
     Ashland  Coal and  Arch  are  subject  to the  provisions  of the Coal
Industry Retiree Health Benefit Act of 1992. This legislation  provides for
the funding of medical and death  benefits for certain  retired  members of
the UMWA through premiums to be paid by assigned operators,  transfers from
an  overfunded  pension trust  established  for the benefit of retired UMWA
members,  and transfers from the Abandoned Mine Lands Fund, which is funded
by a federal tax on coal production.
     For   information    relating   to   acid   rain   legislation,    see
"Miscellaneous-Governmental     Regulation     and     Action-Environmental
Protection."


                                EXPLORATION

     Ashland's  oil and  gas  exploration  and  production  activities  are
conducted  through  wholly  owned  subsidiaries  of  Ashland  (collectively
referred to as "Ashland  Exploration").  Ashland  Exploration  is currently
engaged in the  exploration for and production of crude oil and natural gas
in the United States and in the exploration for and production of crude oil
in Nigeria. Exploration activity is also ongoing in Australia.
     For information regarding Ashland Exploration's  estimated oil and gas
reserves and other financial data, see Supplemental Oil and Gas Information
on Pages 60 and 61 in Ashland's  Annual  Report.  Since October 1, 1994, no
estimates  of Ashland  Exploration's  total  proved net oil or gas reserves
have been filed or included in reports to any federal  authority  or agency
other than the SEC.
DOMESTIC OPERATIONS
     Ashland   Exploration  has  concentrated  its  domestic  drilling  and
production  efforts in two core areas:  the Appalachian  Basin and the Gulf
Coast. In addition,  minor royalty  interests are located  primarily in the
Southwest and Midcontinent regions of the United States.
     In the Appalachian  Basin,  Ashland  Exploration's  activities consist
primarily  of shallow  gas  development  drilling  on  leaseholds  totaling
approximately  917,000  acres  in  eastern  Kentucky,   Virginia  and  West
Virginia.  In fiscal 1995,  it completed 86 net gas wells,  excluding 5 net
wells which were being drilled at year-end.
     Ashland  Exploration's  exploratory efforts are concentrated along the
Gulf Coast. In fiscal 1995, Ashland Exploration participated in drilling 16
gross exploratory  prospects.  Ashland Exploration's  exploratory leasehold
position  in the Gulf of Mexico  has risen to  164,000  net  acres.  
     During fiscal 1995, Ashland Exploration's domestic production averaged
609 net  barrels of oil per day and 103  million  net cubic feet of natural
gas per day. The average price  received  during fiscal 1995 was $15.96 per
barrel of oil and $1.89 per thousand cubic feet (MCF) of gas.
     Ashland  Exploration  owned a working  interest in 4,269 gross  (3,870
net) domestic producing wells at September 30, 1995.
INTERNATIONAL OPERATIONS
     Ashland Exploration's oil production in Nigeria during fiscal 1995 was
18,800  barrels per day from 103,000  acres  onshore ("OPL 118") and 74,000
acres offshore ("OPL 98") held under a production-sharing  contract ("PSC")
with the Nigerian National  Petroleum  Corporation  ("NNPC"),  the Nigerian
state-owned  petroleum  company.  Ashland  Exploration  has  satisfied  the
financial  commitment  required in the revised PSC by the drilling of three
exploratory  wells during fiscal 1995. The first  exploratory  well came on
production  in June  1995 at a rate of 2,000  barrels  of oil per day.  The
second  well tested  2,500  barrels of oil per day and is  currently  being
evaluated.   The  third  well  was   economically   unsuccessful.   Ashland
Exploration plans to drill two additional  appraisal wells on OPL 98 during
fiscal 1996.
     Other  exploratory  efforts  in  Nigeria  will be  carried  out on two
additional  offshore blocks ("OPL's 90/225")  comprising a contract area of
approximately 580,000 gross acres under another production-sharing contract
with NNPC.  Ashland  Exploration holds a 50% interest in these blocks.  The
first exploratory well drilled in 1994 was successful. A second exploratory
well drilled in fiscal 1995 was economically unsuccessful. Data from a 1995
seismic program is being evaluated currently.  Ashland Exploration plans to
drill an appraisal well to the 1994 discovery and another  exploratory well
on OPL's 90/225 in fiscal 1996.


                                       10

<PAGE>

     In  Australia,   Ashland  Exploration  owns  a  50%  interest  in  one
exploration  permit consisting of 335,000 gross acres and a 25% interest in
another exploration permit consisting of 590,000 gross acres, both of which
are located offshore western Australia.  One unsuccessful  exploratory well
was drilled in Australia in fiscal 1995.
     Ashland Exploration's international operations are necessarily subject
to factors beyond its control.  Foreign  operations may also be affected by
laws  and  policies  of  the  United  States  relating  to  foreign  trade,
investment, and taxation.
OPERATING STATISTICS
ACREAGE AND WELLS
     The following table sets forth the gross and net productive  wells and
acreage at September 30, 1995:
<TABLE>
<CAPTION>
Productive wells - Gas                                                                      Gross          Net
                                                                                            -----        -----
<S>                                                                                         <C>          <C>  
      United States .......................................                                 4,269        3,870


Productive wells - Oil
      United States........................................                                    49           29
      Nigeria .............................................                                    36           36
                                                                                            -----        -----
           Total*..........................................                                 4,354        3,935
                                                                                            =====        ===== 
</TABLE>
<TABLE>
<CAPTION>
                                                                      Developed                  Undeveloped
                                                                       Acreage                     Acreage
                                                                       -------                     -------

<S>                                                              <C>         <C>            <C>          <C>  
   Acreage (in thousands)                                        Gross         Net          Gross          Net
                                                                 -----         ---          -----          ---
      United States........................................      1,287         954            751          422
      Nigeria .............................................        177         177            580          290
      Australia............................................                                   925          315
                                                                 -----       -----          -----        -----
           Total...........................................      1,464       1,131          2,256        1,027
                                                                 =====       =====          =====        =====
   -----------------
<FN>
   *  These wells  include 342 gross wells (330  domestic and 12  international)  and 293 net wells (281  domestic
   and 12 international) which have multiple completions.
</TABLE>




                                       11

<PAGE>


   The following table summarizes the exploration and production activities
for the last three fiscal years:
<TABLE>
<CAPTION>

                                                                            Years Ended September 30
                                                               --------------------------------------------------
                                                                    1995              1994                1993
                                                                    ----              ----                ----

<S>                                                               <C>               <C>                 <C>
   Net Natural Gas Production (MMCF per day)
      United States........................................        102.9              94.3                99.3
   Net Crude Oil Production (average barrels per day)
      United States........................................          609               822               1,001
      Nigeria (1) .........................................       18,791            18,707              21,660
                                                                  ------            ------              ------
           Total...........................................       19,400            19,529              22,661
                                                                  ======            ======              ======
   Average Sales Prices - Natural Gas (per MCF)
      United States........................................       $ 1.89             $2.42               $2.45
   Average Sales Prices - Crude Oil (per barrel)
      United States........................................       $15.96            $14.29              $17.54
      Nigeria .............................................        16.17             15.01               17.77

   Average Production Product Cost (per equivalent barrel) (2)
      United States........................................        $4.09             $3.87               $3.84
      Nigeria .............................................         9.17              7.69                7.27

   Net Exploratory Wells Drilled - United States
      Net Productive Wells.................................            2                 2                   1
      Net Dry Wells .......................................            5                 4                   2
                                                                      --                --                  --
            Total..........................................            7                 6                   3
                                                                      ==                ==                  ==
   Net Exploratory Wells Drilled - International
      Net Productive Wells.................................            1                 1                   0
      Net Dry Wells .......................................            2                 1                   0
                                                                      --                --                  --
            Total..........................................            3                 2                   0
                                                                      ==                ==                  ==
   Net Development Wells Drilled
      Net Productive Wells
      United States........................................           88                59                  84
      International .......................................            0                 0                   0
                                                                      --                --                  --
           Total...........................................           88                59                  84
                                                                      ==                ==                  ==
      Net Dry Wells
      United States........................................            0                 1                   1
      International .......................................            0                 0                   0
                                                                      --                --                  --
           Total...........................................            0                 1                   1
                                                                      ==                ==                  ==
</TABLE>
[FN]
   -----------------
   (1)Net production for Nigeria is before royalty.
   (2)Equivalent barrels computed on a six MCF to one barrel ratio.


                                       12

<PAGE>



                                   OTHER BUSINESS

     AECOM Technology Corporation ("AECOM"), which is 19% owned by Ashland,
provides  a wide  array of design,  engineering,  architectural,  planning,
operations  and  maintenance,  construction  and  construction  management,
development, environmental and other technical and professional services to
industrial,  commercial and government  clients.  AECOM is headquartered in
Los Angeles,  California,  and performs  services  through  offices located
throughout the world.  Under an agreement between AECOM and Ashland,  AECOM
will be  repurchasing  all of Ashland's  equity  interest in AECOM with the
repurchase scheduled to be completed in stages through 1998.
     Ashland,  through a special purpose subsidiary,  Ashland Ethanol, Inc.
("AEI"),  has a 50% interest in a  partnership  that owns an ethanol  plant
located in South  Point,  Ohio.  The  partnership  is  comprised of AEI and
subsidiaries of Ohio Farm Bureau  Federation,  Inc.,  Publicker  Industries
Inc. and UGI  Corporation.  The plant began operation in September 1982 but
discontinued  operations  due to low  margins  in August  1995.  Because of
concerns  about the venture's  long-term  viability,  Ashland wrote off its
investment  in AEI in fiscal 1986.  The  partnership  is in default under a
loan  with  the  Farmers  Home   Administration   with  a  balance  due  of
approximately  $14.7  million plus  interest  and has an unpaid  balance of
$24.5 million under a Department of Energy cooperative agreement.

                                   MISCELLANEOUS
GOVERNMENTAL REGULATION AND ACTION
     Ashland's  operations are affected by political  developments and laws
and  regulations,  such as  restrictions  on  production,  restrictions  on
imports and exports, the maintenance of specified reserves, price controls,
tax  increases  and  retroactive  tax claims,  expropriation  of  property,
cancellation of contract rights, environmental protection controls and laws
pertaining  to workers'  health and safety.  As discussed in part below,  a
number of bills have been enacted or proposed by the United States Congress
and various state governments which have or could have a significant impact
on Ashland.
     General - As a refiner,  Ashland is substantially  affected by changes
in world  crude  oil  prices.  Many  world  and  regional  events  can have
substantial  effects on world crude oil prices and can increase  volatility
in world markets.  Ashland expects to be able to acquire adequate  supplies
of crude oil at competitive prices. However, Ashland cannot predict whether
foreign and United  States  petroleum  product price levels will permit its
refineries  to operate on a  profitable  basis.  Neither can it predict the
effect on its operations and financial  condition from possible  changes in
the Organization of Petroleum  Exporting  Countries ("OPEC") policies or in
actions by the  President  of the  United  States  and the  Congress,  from
changes in taxes and federal  regulation of the oil and gas business in the
United States, or from other developments that cannot be foreseen.
     The  stability of Ashland's  crude oil supply from foreign  sources is
subject to factors beyond its control,  such as military  conflict  between
oil-producing  countries,  the  possibility of  nationalization  of assets,
embargoes of the type imposed by OPEC in 1973, internal  instability in one
or more oil-producing  countries,  and rapid increases in crude oil prices.
Although Ashland will continue,  for economic reasons, to rely upon foreign
crude oil sources for a  substantial  portion of its crude oil supply,  the
extent of operation in the domestic  crude oil market  afforded by Scurlock
Permian  Corporation  assists in offsetting the adverse effects  frequently
associated with market  volatility.  See  "Petroleum-Crude  Oil Supply" for
Ashland's crude oil processing requirements.
     Imported crude oil is subject at present to payment of duty,  which is
10.5(cent) per barrel for crudes over 25(degree) API gravity (2.1(cent) per
barrel for  Canadian  imports) and  5.25(cent)  per barrel for crudes below
25(degree)  API  gravity  (1.05(cent)  per  barrel for  Canadian  imports).
Imported  crude oil is also  subject to a customs  users fee of .17% of the
value of the crude oil. For information  with respect to tax assessments on
crude oil, see also "Environmental Protection."
     Retail  marketing  "divorcement"  legislation and wholesale and retail
pricing  regulations  have been adopted in some  states.  They are proposed
from  time  to time in  other  states  and at the  federal  level.  If such
legislation  were  adopted  at the  federal  level or in the  states  where
SuperAmerica sells petroleum products,  it could have a substantial adverse
impact.


                                       13

<PAGE>

     Environmental  Protection  -  Federal,  state and local  statutes  and
regulations   relating  to  the  protection  of  the  environment   have  a
significant  impact  on the  conduct  of  Ashland's  businesses.  Ashland's
capital and operating  expenditures  for air, water and solid waste control
facilities are summarized below.

                                              Years Ended September 30
                                 -----------------------------------------------
   (In millions)                  1995                   1994              1993
- ----------------------           ------                 ------           ------

Capital expenditures              $  44                  $  63            $137
Operating expenditures              151                    140             148


     At  September   30,  1995,   Ashland's   reserves  for   environmental
assessments and remediation efforts were $174 million, reflecting Ashland's
most likely  estimates of the costs which will be incurred over an extended
period to remediate identified environmental conditions for which costs are
reasonably estimable.
     Based on current environmental regulations,  Ashland estimates capital
expenditures  for air,  water and solid waste control  facilities to be $50
million in 1996.  Expenditures  for  investigatory  and remedial efforts in
future years are subject to the uncertainties associated with environmental
exposures,  including identification of new environmental sites and changes
in laws and regulations and their application. Such expenditures,  however,
are  not  expected  to  have  a  material   adverse   effect  on  Ashland's
consolidated financial position,  cash flow or liquidity,  but could have a
material adverse effect on results of operations in a particular quarter or
fiscal year.  Ashland does not believe the nature and  significance  of its
costs  will  vary  significantly  from  those  of  its  competitors  in the
petroleum, chemical and mining industries.
     The United States  Environmental  Protection  Agency ("USEPA") and the
states have adopted  regulations  and laws concerning  underground  storage
tanks  covering,  among  other  things,   registration  of  tanks,  release
detection,  corrosion  protection,  response to  releases,  closure of, and
financial responsibility for, underground storage tank systems.
     Superfund  provides for the  establishment  of a fund to be used for a
waste clean-up program administered by the USEPA. The law provides for five
separate  taxes:  (i) a petroleum tax on domestic crude oil and on imported
crude oil  equalized at 9.7(cent)  per barrel plus a 5(cent) per barrel oil
spill tax, as more fully described  below,  (ii) a chemical  feedstock tax,
(iii) a tax on imported  chemical  derivatives,  and (iv) an "environmental
tax" based on corporate  alternative  minimum taxable income.  Ashland paid
approximately $19 million in Superfund taxes during fiscal 1995. Superfund,
which provides for cleanup of certain  hazardous waste sites, is undergoing
consideration for significant  amendments,  including a reevaluation of the
liability allocation provisions and improved cleanup remedy selection, both
of  which  should  make  Superfund  more  cost  effective.  However,  it is
uncertain at this time exactly what the revisions  will be, or if they will
in fact be adopted.
     Effective  October 1, 1993, the USEPA reduced by 90 percent,  from 0.5
to 0.05 percent by weight,  the allowable  sulfur level in diesel fuel used
on highways.  The USEPA's action was designed to provide  cleaner fuel that
will permit reduced  particulate  emissions from truck engines.  Ashland is
currently producing ultra-low-sulfur diesel fuel for on-highway use.
     The Oil  Pollution  Act of 1990  ("OPA 90")  established  a $1 billion
trust  fund  to  cover  cleanup-related  costs  of  oil  spills  after  the
responsible  party's  liability  limits  have  been  reached,  or where the
responsible  party is otherwise  unidentifiable or unable to pay. The trust
fund is financed,  when depleted below specified levels,  through an excise
tax of 5(cent) per barrel on domestic crude oil and imported  petroleum oil
products  (pursuant  to  Superfund).  OPA 90  subjects  spillers  to strict
liability  for  removal  costs  and  damages  (including  natural  resource
damages)  resulting  from oil spills,  and  requires  the  preparation  and
implementation   of   spill-response   plans  at  designated   vessels  and
facilities. Additionally, OPA 90 requires that new tank vessels entering or
operating  in domestic  waters be  equipped  with  double  hulls,  and that
existing tank vessels  without  double hulls be retrofitted or removed from
domestic service according to a phase-out schedule.
     On July 1, 1994,  the United  States Coast Guard issued  interim final
regulations dealing with financial responsibility for water pollution under
OPA 90 and  CERCLA.  The  regulations  require  self-propelled  tank vessel
owners and  operators  to maintain  evidence of  financial  responsibility,
effective December 28, 1994,  sufficient to meet their potential  liability
defined under OPA 90 and CERCLA for spills of oil or hazardous  substances.
The  Director,  Coast Guard  National  Pollution  Funds  Center has granted
permission to Ashland to self-insure  the financial  responsibility  amount
for liability purposes for Ashland's ocean tankers as provided in OPA 90.




                                       14

<PAGE>
     The Federal  Clean Air Act required  the  refining  industry to market
cleaner-burning,  reformulated  gasoline ("RFG") beginning January 1, 1995,
in nine specified  metropolitan areas across the country.  Ashland does not
directly supply gasoline in any of the nine  metropolitan  areas.  However,
several urban locations within Ashland's marketing area have opted into the
RFG program and  Ashland has been able to meet  expected  demand for RFG in
its marketing  area. The Clean Air Act also required the refining  industry
to  supply 39 carbon  monoxide  (CO)  non-attainment  areas  with  gasoline
containing 2.7 weight percent oxygen for four winter months each year. Upon
being  re-designated  CO attainment,  several of these areas are seeking to
opt-out of the oxygenated gasoline  requirements.  Ashland believes it will
have a continuing  need to directly supply this fuel only at St. Paul Park,
Minnesota, whose primary market is a CO non-attainment area.
     The Clean Air Act also  contains  acid rain  provisions  which require
substantial  reductions in sulfur dioxide  emissions by power plants in the
United States. Both Ashland Coal and Arch have significant  low-sulfur coal
reserves.
     RCRA, which requires "cradle to grave"  management of hazardous waste,
is  slated  to  be  reauthorized  by  Congress,  although  timing  of  such
reauthorization  is  uncertain.   Reauthorization  issues  may  include  an
expansion of hazardous  waste program  coverage,  recycling,  used oil, and
solid waste  management.  These same issues may be addressed in  additional
USEPA rulemakings  unrelated to reauthorization  efforts. It is anticipated
that both the  reauthorization  and other future rulemakings will result in
increased  environmental  compliance costs, but the amount of such increase
is uncertain at this time.
RESEARCH
     Ashland conducts a program of research and development directed toward
the invention and improvement of products and processes and also toward the
improvement  of  environmental  controls  for its existing  facilities.  It
maintains its primary research  facilities in Catlettsburg,  Kentucky,  and
Dublin,  Ohio. Research and development costs are expensed as incurred ($24
million in 1995, $23 million in 1994 and $21 million in 1993).
COMPETITION
     In all of its  operations,  Ashland is subject to intense  competition
both from companies in the  respective  industries in which it operates and
from products of companies in other  industries.  In all of these segments,
competition is based  primarily on price,  with factors such as reliability
of supply, service and quality being considered. Ashland Petroleum competes
primarily  with other  domestic  refiners  and,  to a lesser  extent,  with
imported products. However, Ashland Petroleum typically enjoys a geographic
advantage  for  products  in  its  primary  marketing  areas.   While  some
integrated  competitors  have sources of controlled crude  production,  few
competitors in Ashland  Petroleum's  market areas are  significantly  crude
self-sufficient.   SuperAmerica   competes   with   major  oil   companies,
independent  oil  companies  and  independent  marketers.  Virtually all of
SuperAmerica's   refined  products  are  supplied  by  Ashland   Petroleum.
SuperAmerica  strives to  maintain  one of the lowest  net  operating  cost
structures in the industry and enjoys  gasoline and  merchandise  sales per
store  exceeding the convenience  store industry  average based on the 1995
National Association of Convenience Store State of the Industry Survey.
     Valvoline  competes  primarily  with domestic oil companies  and, to a
lesser  extent,  with  international  oil  companies on a worldwide  basis.
Valvoline's  brand recognition and increasing market share in the "fast oil
change" market are important competitive factors. Ashland Chemical competes
in a number of chemical distribution,  specialty chemical and petrochemical
markets.  Its chemicals and solvents  distribution  businesses compete with
national,  regional  and local  companies  throughout  North  America.  Its
plastics  distribution  businesses  compete  worldwide.  Ashland Chemical's
specialty  chemicals  businesses compete globally in selected niche markets
and compete  largely on the basis of  technology  and service while holding
proprietary   technology  in  virtually  all  their   specialty   chemicals
businesses.  Petrochemicals  are  largely  commodities,  with  pricing  and
quality being the most important factors.  The majority of the business for
which APAC  competes is  obtained  by  competitive  bidding.  An  important
competitive factor in Ashland Exploration's domestic production activity is
the  ability of its  exploration  staff to identify  potential  natural gas
prospects,  obtain  exploration rights and formulate and complete plans for
the  development of  properties.  Similarly,  competitive  factors that are
important for Ashland  Exploration's  international  production include its
experience  in   identifying   prospects  and   developing   and  operating
properties.  The coal industry is highly competitive,  and Ashland Coal and
Arch compete  (principally  in price,  location and quality of coal) with a
large number of other coal producers, some of


 


                                       15

<PAGE>
which are  substantially  larger and have greater  financial  resources and
larger reserve bases than Ashland Coal and Arch.
ITEM 2. PROPERTIES
     Ashland's corporate  headquarters,  which is leased, and the principal
offices of Ashland  Petroleum,  which are owned,  are  located in  Russell,
Kentucky.  Principal  offices of other  segments are located in  Lexington,
Kentucky  (SuperAmerica and Valvoline);  Dublin, Ohio (Chemical);  Atlanta,
Georgia (APAC);  Huntington,  West Virginia  (Ashland  Coal)   and Houston,
Texas  (Exploration),   all  of  which  are  leased.   Ashland's  principal
manufacturing, marketing and other materially important physical properties
are  described  under the  appropriate  segment  under Item 1. See also the
statistical  data  included  under  "Exploration"  and "Coal" in Item 1 and
Supplemental Oil and Gas Information on Pages 60 and 61 in Ashland's Annual
Report.  Additional  information  concerning certain leases may be found in
Note G of Notes to Consolidated  Financial  Statements in Ashland's  Annual
Report. Such information is incorporated in this Item by reference.
ITEM 3.  LEGAL PROCEEDINGS
     Environmental Proceedings  -(1) As of September 30, 1995,  Ashland was
subject  to 85 notices  received  from the USEPA  identifying  Ashland as a
"potentially responsible party" ("PRP") under Superfund for potential joint
and several liability for cleanup costs in connection with alleged releases
of hazardous  substances  from various waste  treatment or disposal  sites.
These sites are  currently  subject to ongoing  investigation  and remedial
activities, overseen by the USEPA in accordance with procedures established
under Superfund  regulations,  in which Ashland may be  participating  as a
member of various PRP groups.  Generally,  the type of relief sought by the
USEPA  includes   remediation  of  contaminated  soil  and/or  groundwater,
reimbursement  for the costs of site cleanup or  oversight  expended by the
USEPA,  and/or  long-term  monitoring  of  environmental  conditions at the
sites.  Ashland also  receives  notices from state  environmental  agencies
pursuant to similar  state  legislation.  Ashland  carefully  monitors  the
investigatory  and remedial  activity at many of these sites.  Based on its
experience   with  site   remediation,   its   familiarity   with   current
environmental laws and regulations,  its analysis of the specific hazardous
substances at issue, the existence of other financially viable PRPs and its
current estimates of  investigatory,  clean-up and monitoring costs at each
site,   Ashland  believes  that  its  liability  at  these  sites,   either
individually  or in the  aggregate,  after taking into account  established
reserves, will not have a material adverse effect on Ashland's consolidated
financial  position,  cash  flow or  liquidity  but could  have a  material
adverse  effect on results of operations in a particular  quarter or fiscal
year.  Estimated  costs for these matters are recognized in accordance with
generally  accepted  accounting  principles  governing  probability and the
ability to reasonably  estimate  future costs.  For additional  information
regarding  Superfund,   see   "Miscellaneous-Governmental   Regulation  and
Action-Environmental Protection."
     (2) In connection with a demand for penalties,  Ashland has received a
draft  Stipulation  Agreement from the Minnesota  Pollution  Control Agency
relating to various alleged  environmental  regulatory violations regarding
hazardous  waste and water  quality and spill matters at Ashland's St. Paul
Park refinery.  Ashland is having discussions with the Minnesota  Pollution
Control Agency toward finalization of the Stipulation Agreement.
     (3) On or about April 21,  1995,  Ashland  received an  Administrative
Complaint  and a Notice of  Proposed  Assessment  of  Administrative  Civil
Penalty  from the USEPA - Region IV. The  Complaint  alleges  that  Ashland
missed  its April 1, 1994  interim  construction  deadline  and  maintained
insufficient records regarding  construction of a waste sewer system at its
Catlettsburg,  Kentucky  refinery.  The USEPA is seeking an  administrative
civil  penalty of $162,500 for these alleged  violations.  Ashland filed an
Answer and has  requested  an  administrative  hearing on the merits of the
complaint.
     (4)  Ashland  has  brought an  administrative  proceeding  against the
Kentucky Division of Air Quality ("KDAQ") challenging the denial by KDAQ of
certain regulatory relief from emission standards for seven malfunctions at
its Catlettsburg, Kentucky refinery. In the proceeding, KDAQ has asserted a
counterclaim for penalties for the malfunctions.
ITEM 4.  SUBMISSION OF MATTERS TO A VOTE OF SECURITY HOLDERS
     No matters were  submitted to a vote of security  holders  through the
solicitation  of proxies or otherwise,  during the quarter ended  September
30, 1995.


                                       16

<PAGE>

ITEM X.  EXECUTIVE OFFICERS OF ASHLAND
     The following is a list of Ashland's  executive  officers,  their ages
and  their  positions  and  offices  during  the last  five  years  (listed
alphabetically  as to Senior Vice  Presidents  who are members of Ashland's
core management group,  other Senior Vice Presidents,  Administrative  Vice
Presidents and other executive officers.)
     John R. Hall (age 63) is  Chairman  of the Board of  Directors,  Chief
Executive Officer and Director of Ashland and has served in such capacities
since 1981, 1981 and 1968, respectively.
     Paul W.  Chellgren (age 52) is President and Chief  Operating  Officer
and  Director  of Ashland  and has served in such  capacities  since  1992.
During the past five years, he has also served as Senior Vice President and
Chief Financial Officer of Ashland.
     James R. Boyd (age 49) is Senior Vice  President  of Ashland and Group
Operating Officer - Ashland  Exploration,  Inc., Arch Mineral  Corporation,
Ashland  Services Company and APAC, Inc. Mr. Boyd has served as Senior Vice
President since 1989 and as Group Operating Officer for the above companies
since 1990, with the exception of APAC for which he assumed  responsibility
as of October 1, 1993.
     John A.  Brothers  (age 55) is Senior  Vice  President  of Ashland and
Group Operating Officer - Ashland Chemical Company,  SuperAmerica Group and
The  Valvoline  Company  and has served in such  capacities  since 1984 and
1988, respectively.
     Thomas L. Feazell (age 58) is Senior Vice  President,  General Counsel
and Secretary of Ashland and has served in such capacities since 1992, 1981
and 1992,  respectively.  During the past five years he has also  served as
Administrative Vice President of Ashland.
     J. Marvin Quin (age 48) is Senior Vice  President and Chief  Financial
Officer of Ashland and has served in such capacities since 1992. During the
past five years,  he has also served as  Administrative  Vice President and
Treasurer of Ashland.
     Robert E.  Yancey,  Jr. (age 50) is Senior Vice  President of Ashland,
President  of  Ashland  Petroleum  Company  and Group  Operating  Officer -
Ashland  Petroleum  Company and has served in such  capacities  since 1986,
1986, and 1988, respectively. During the past five years, he also served as
Group Operating Officer of APAC, Inc.
     Harry M. Zachem (age 51) is Senior Vice President - Public Affairs and
has served in such capacity since 1988.
     David J.  D'Antoni  (age 50) is Senior Vice  President  of Ashland and
President  of Ashland  Chemical  Company and has served in such  capacities
since 1988.
     John F.  Pettus  (age 52) is Senior  Vice  President  of  Ashland  and
President of  SuperAmerica  Group and has served in such  capacities  since
1989 and 1988, respectively.
     Charles F.  Potts (age 51) is Senior  Vice  President  of Ashland  and
President  of APAC,  Inc.  and has served in such  capacities  since  1992.
During the past five years he has also served as Senior Vice  President and
Chief Operating Officer and Regional Vice President of APAC.
     G. Thomas  Wilkinson  (age 57) is Senior Vice President of Ashland and
President of Ashland  Exploration,  Inc. and has served in such  capacities
since 1992 and 1990,  respectively.  During the past five years he has also
served as Vice President of Ashland.
     Kenneth  L.  Aulen  (age  46) is  Administrative  Vice  President  and
Controller  of Ashland and has served in such capacity  since 1992.  During
the past five years he has also served as Auditor and Assistant  Controller
of Ashland.
     Philip W.  Block (age 48) is  Administrative  Vice  President  - Human
Resources of Ashland and has served in such capacity since 1992. During the
past five years he has also  served as Vice  President  -  Corporate  Human
Resources.
     John W. Dansby (age 50) is Administrative Vice President and Treasurer
of Ashland and has served in such  capacities  since 1992.  During the past
five years he has also served as Ashland's Vice President of Planning.


                                       17
<PAGE>


     William R. Sawran  (age 50) is Vice  President  and Chief  Information
Officer of  Ashland,  and  President  of Ashland  Services  Company and has
served  in  such  capacities  since  1984,  with  the  exception  of  Chief
Information Officer which he assumed in 1994.
     James J. O'Brien (age 41) is Vice  President of Ashland and  President
of The Valvoline  Company and has served in such  capacities  since October
1995.  During the past five years he has also served as Vice  President  of
Ashland  Petroleum  Company,  Executive  Assistant  to the Chief  Executive
Officer  and  Regional  Manager  of  Ashland  Chemical's  General  Polymers
division.
     Fred E. Lutzeier (age 43) is Auditor of Ashland and has served in such
capacity since December 1992. During the past five years he has also served
as Vice President and Controller of Arch Mineral Corporation.
     Each executive  officer (other than Vice  Presidents who are appointed
by Ashland's  management) is elected by the Board of Directors to a term of
one year, or until the successor is duly elected,  at the annual meeting of
the Board of  Directors,  except in those  instances  where the  officer is
elected at other than an annual meeting of the Board of Directors, in which
case the  tenure  will  expire at the next  annual  meeting of the Board of
Directors unless the officer is re-elected.

                                  PART II

ITEM 5. MARKET FOR  REGISTRANT'S COMMON  STOCK AND  RELATED SECURITY HOLDER
        MATTERS
     There is hereby  incorporated by reference the  information  appearing
under the caption "Management's Discussion and Analysis-Quarterly Financial
Information" on Page 40 in Ashland's Annual Report.
     At September  30, 1995,  there were  approximately  24,600  holders of
record of Ashland's Common Stock. Ashland Common Stock is listed on the New
York and  Chicago  stock  exchanges  (ticker  symbol  ASH) and has  trading
privileges on the Boston, Cincinnati,  Pacific,  Philadelphia and Amsterdam
stock exchanges. 
ITEM 6. SELECTED FINANCIAL DATA
     There is hereby  incorporated by reference the  information  appearing
under the caption "Five Year Selected Financial  Information" on Page 57 in
Ashland's Annual Report.
ITEM 7. MANAGEMENT'S  DISCUSSION AND ANALYSIS OF FINANCIAL  CONDITION AND
        RESULTS OF OPERATIONS 
     There is hereby  incorporated by reference the  information  appearing
under the caption "Management's  Discussion and Analysis" on Pages 34 to 40
in Ashland's Annual Report.
ITEM 8.  FINANCIAL STATEMENTS AND SUPPLEMENTARY DATA
     There is hereby  incorporated by reference the consolidated  financial
statements  appearing on Pages 41 through 55, the supplemental  information
appearing on Pages 58 through 61, and the  information  appearing under the
caption   "Management's   Discussion   and   Analysis-Quarterly   Financial
Information" on Page 40 in Ashland's Annual Report. 
ITEM 9. CHANGES IN AND DISAGREEMENTS WITH ACCOUNTANTS ON ACCOUNTING 
        AND FINANCIAL DISCLOSURE
     None

                                 PART III

ITEM 10.  DIRECTORS AND EXECUTIVE OFFICERS OF THE REGISTRANT
     There is hereby  incorporated  by reference the  information to appear
under the caption  "Election of  Directors" in Ashland's  definitive  Proxy
Statement for its January 25, 1996 Annual  Meeting of  Shareholders,  which
will be filed with the SEC within 120 days after September 30, 1995 ("Proxy
Statement").  See also the list of Ashland's executive officers and related
information under "Executive Officers of Ashland" in Item X herein.
ITEM 11. EXECUTIVE COMPENSATION
     There is hereby  incorporated  by reference the  information to appear
under the captions "Executive Compensation" and "Compensation of Directors"
in Ashland's Proxy Statement.


                                       18

<PAGE>


ITEM 12. SECURITY OWNERSHIP OF CERTAIN BENEFICIAL OWNERS AND MANAGEMENT
     There is hereby  incorporated  by reference the  information to appear
under the caption "Election of Directors" and the information regarding the
ownership of securities of Ashland in Ashland's Proxy  Statement.  
ITEM 13. CERTAIN RELATIONSHIPS AND RELATED TRANSACTIONS
     There is hereby  incorporated  by reference the  information to appear
under  the  caption   "Compensation   Committee   Interlocks   and  Insider
Participation" in Ashland's Proxy Statement.

                                    PART IV

ITEM 14. EXHIBITS,  FINANCIAL STATEMENT SCHEDULES AND REPORTS ON FORM 8-K
     (A)  DOCUMENTS  FILED  AS PART OF THIS  REPORT  
     (1) and (2)  Financial Statements and Financial Schedule
     The  consolidated  financial  statements  and  financial  schedule  of
Ashland presented or incorporated by reference in this report are listed in
the index on Page 23.
     (3) Exhibits
          3.1   -   Second Restated Articles of Incorporation of Ashland,
                    as amended to January 27, 1995 (filed as Exhibit 3.1 to
                    Ashland's  Form 10-Q for the quarter ended December 31,
                    1994, and incorporated herein by reference).
          3.2   -   Bylaws of  Ashland,  as amended to January  27,  1995
                    (filed as Exhibit  3.2 to  Ashland's  Form 10-Q for the
                    quarter  ended  December  31,  1994,  and  incorporated
                    herein by reference).
          4.1   -   Ashland  agrees to  provide  the SEC,  upon  request,
                    copies of instruments defining the rights of holders of
                    long-term debt of Ashland,  and all of its subsidiaries
                    for  which  consolidated  or  unconsolidated  financial
                    statements are required to be filed with the SEC.
          4.2   -   Indenture,  dated as of August 15,  1989,  as amended
                    and restated as of August 15, 1990, between Ashland and
                    Citibank,  N.A.,  as Trustee  (filed as Exhibit 4(a) to
                    Ashland's Form 10-K for the fiscal year ended September
                    30, 1991, and incorporated herein by reference).

          The following  Exhibits 10.1 through 10.20 are compensatory plans
          or arrangements or management  contracts  required to be filed as
          exhibits pursuant to Item 601(b)(10)(iii)(A) of Regulation S-K.

          10.1  -   Amended  Stock  Incentive  Plan for Key  Employees of
                    Ashland  Inc.  and its  Subsidiaries  (filed as Exhibit
                    10(c).1  to  Ashland's  Form 10-K for the  fiscal  year
                    ended  December 30, 1994,  and  incorporated  herein by
                    reference).
          10.2  -   Ashland  Inc.   Deferred   Compensation   and  Stock
                    Incentive  Plan for  Non-Employee  Directors  (filed as
                    Exhibit 10(c).18 to Ashland's Form 10-Q for the quarter
                    ended  December 31, 1993,  and  incorporated  herein by
                    reference).
          10.3  -   Ashland  Inc.  Director  Retirement  Plan  (filed as
                    Exhibit  10(c).3 to Ashland's  Form 10-K for the fiscal
                    year ended September 30, 1988, and incorporated  herein
                    by reference).
          10.4  -   Eighth Amended and Restated Ashland Inc. Supplemental
                    Early   Retirement   Plan  for  Certain  Key  Executive
                    Employees  (filed as Exhibit  10(c).4 to Ashland's Form
                    10-K for the fiscal year ended  September 30, 1992, and
                    incorporated herein by reference).
          10.5  -   Ashland Inc. Amended  Performance Unit Plan (filed as
                    Exhibit  10(c).5 to Ashland's  Form 10-K for the fiscal
                    year ended September 30, 1994, and incorporated  herein
                    by reference).
          10.6  -   Ashland Inc.  Incentive  Compensation  Plan (filed as
                    Exhibit  10(c).6 to  Ashland's Form 10-K for the fiscal
                    year ended September 30, 1993, and incorporated  herein
                    by reference).
          10.7  -   Ashland Inc. Director Death Benefit Program (filed as
                    Exhibit  10(c).10 to Ashland's Form 10-K for the fiscal
                    year ended September 30, 1990, and incorporated  herein
                    by reference).
          10.8  -   Ashland  Inc.  Salary   Continuation  Plan  (filed  as
                    Exhibit  10(c).11 to Ashland's Form 10-K for the fiscal
                    year ended September 30, 1988, and incorporated  herein
                    by reference).
          10.9  -   Forms of Ashland Inc. Executive  Employment  Contract
                    between Ashland Inc. and certain executive  officers of
                    Ashland  (filed as Exhibit  10(c).12 to Ashland's  Form
                    10-K for the fiscal year ended  September 30, 1989, and
                    incorporated  herein  by  reference).  


                                       19
<PAGE>

          10.10 -   Form of  Indemnification  Agreement  between  Ashland
                    Inc. and each member of its Board of  Directors  (filed
                    as  Exhibit  10(c).13  to  Ashland's  Form 10-K for the
                    fiscal year ended September 30, 1990, and  incorporated
                    herein by reference).
          10.11 -   Ashland Inc. Nonqualified Excess Benefit Pension Plan
                    (filed as Exhibit  10(c).14 to Ashland's  Form 10-K for
                    the  fiscal  year  ended   September   30,  1988,   and
                    incorporated herein by reference).
          10.12 -   Ashland  Inc.  Long-Term  Incentive  Plan  (filed as
                    Exhibit  10(c).15 to Ashland's Form 10-K for the fiscal
                    year ended September 30, 1994, and incorporated  herein
                    by reference).
          10.13 -   Ashland  Inc.  Directors'  Charitable  Award  Program
                    (filed as Exhibit  10(c).16 to Ashland's  Form 10-K for
                    the  fiscal  year  ended   September   30,  1991,   and
                    incorporated herein by reference).
          10.14 -   Ashland  Inc.  1993 Stock  Incentive  Plan  (filed as
                    Exhibit  10(c).17 to Ashland's Form 10-K for the fiscal
                    year ended September 30, 1994, and incorporated  herein
                    by reference).
          10.15 -   Ashland  Inc.  1995  Performance  Unit Plan (filed as
                    Exhibit 10(c).18 to Ashland's Form 10-Q for the quarter
                    ended  December 31, 1994,  and  incorporated  herein by
                    reference).
          10.16 -   Ashland  Inc.  Incentive  Compensation  Plan for Key
                    Executives (filed as Exhibit 10(c).19 to Ashland's Form
                    10-Q for the  quarter  ended  December  31,  1994,  and
                    incorporated herein by reference).
          10.17 -   Ashland  Inc.  Deferred  Compensation  Plan (filed as
                    Exhibit 10(c).20 to Ashland's Form 10-Q for the quarter
                    ended  December 31, 1994,  and  incorporated  herein by
                    reference).

          11    -   Computation of Earnings Per Share  (appearing on Page
                    26 of  Ashland's  Form 10-K for the  fiscal  year ended
                    September 30, 1995).
          13    -   Portions of Ashland's  Annual Report to Shareholders,
                    incorporated by reference  herein,  for the fiscal year
                    ended September 30, 1995.
          21    -   List of Subsidiaries.
          23    -   Consent of Ernst & Young LLP, independent auditors.
          24    -   Power of Attorney, including resolutions of the Board
                    of Directors.
          27    -   Financial Data Schedule.
     Upon written or oral  request,  a copy of the above  exhibits  will be
furnished at cost. 

(B) REPORTS ON FORM 8-K

     A report on Form 8-K dated  September 15, 1995 was filed by Ashland to
disclose that it adopted a new accounting  standard,  Financial  Accounting
Standards  Board  Statement  No. 121,  "Accounting  for the  Impairment  of
Long-Lived Assets and for Long-Lived Assets to Be Disposed Of," which would
result in an unusual pre-tax charge against earnings of  approximately  $90
million in the September  quarter.  Ashland also  announced it would take a
pre-tax  charge  against  earnings  of  approximately  $40  million  in the
September quarter for Ashland Petroleum  Company's early retirement program
and unrelated reorganization costs for Valvoline and Arch Mineral.



                                       20

<PAGE>



                               SIGNATURES

     PURSUANT TO THE  REQUIREMENTS OF SECTION 13 OR 15(D) 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.

                                        ASHLAND INC.
                                           (Registrant)
       
                                        By:   /s/ Kenneth L. Aulen
                                            -----------------------------------
                                              (Kenneth L. Aulen, Administrative
                                              Vice President and Controller)

                                        Date:   November 29, 1995

     PURSUANT TO THE  REQUIREMENTS OF THE SECURITIES  EXCHANGE ACT OF 1934,
THIS REPORT HAS BEEN SIGNED BELOW BY THE FOLLOWING PERSONS ON BEHALF OF THE
REGISTRANT, IN THE CAPACITIES INDICATED, ON NOVEMBER 29, 1995.

           Signatures                      Capacity
           ----------                      --------

/s/ John R. Hall                 Chairman of the Board of  Directors,  Chief
- ----------------------           Executive Officer and Director
     JOHN R. HALL

 /s/ J. Marvin Quin              Senior  Vice   President   and  Chief   
- ----------------------           Financial Officer
    J. MARVIN QUIN

/s/ Kenneth L. Aulen             Administrative   Vice   President,   
- ----------------------           Controller  and Principal Accounting Officer
    KENNETH L. AULEN

      *                          Director
- ----------------------
Jack S. Blanton

      *                          Director
- ----------------------
Thomas E. Bolger

      *                          Director
- ----------------------
Samuel C. Butler

      *                          Director
- ----------------------
Frank C. Carlucci

      *                          Director
- ----------------------
Paul W. Chellgren

      *                          Director
- ----------------------
James B. Farley

      *                          Director
- ----------------------
Ralph E. Gomory

      *                          Director
- ----------------------
Mannie L. Jackson

                                       21
<PAGE>

      *                          Director
- ----------------------
Patrick F. Noonan

      *                          Director
- ----------------------
Jane C. Pfeiffer

      *                          Director
- ----------------------
James R. Rinehart

      *                          Director
- ----------------------
Michael D. Rose

      *                          Director
- ----------------------
William L. Rouse , Jr.

      *                          Director
- ----------------------
Robert B. Stobaugh



  *  By: /s/ Thomas L. Feazell
        --------------------------
             Thomas L. Feazell
             Attorney-in-Fact


     Date: November 29, 1995



                                       22

<PAGE>



               INDEX TO FINANCIAL STATEMENTS AND FINANCIAL SCHEDULES

                                                                        Page
Consolidated financial statements and supplemental information:
  Statements of consolidated income                                       *
  Consolidated balance sheets                                             *
  Statements of consolidated common stockholders' equity                  *
  Statements of consolidated cash flows                                   *
  Notes to consolidated financial statements                              *
  Five year information by industry segment                               *
  Supplemental oil and gas information                                    *
  Management's discussion and analysis-Quarterly financial information    *

Consolidated financial schedule:
  II - Valuation and qualifying accounts                                  25
- -----------


     *The consolidated  financial  statements appearing on Pages 41 through
55, the supplemental  information  appearing on Pages 58 through 61 and the
information  appearing  under  the  caption  "Management's  Discussion  and
Analysis-Quarterly  Financial  Information" on Page 40 in Ashland's  Annual
Report are incorporated by reference in this Annual Report on Form 10-K.

     Schedules  other than that listed above have been  omitted  because of
the absence of the conditions  under which they are required or because the
information  required is shown in the consolidated  financial statements or
the  notes  thereto.   Separate  financial   statements  of  unconsolidated
affiliates  are  omitted   because  each  company  does  not  constitute  a
significant  subsidiary  using the 20% tests when considered  individually.
Summarized financial information for such affiliates is disclosed in Note D
of Notes to Consolidated Financial Statements in Ashland's Annual Report.


                                       23

<PAGE>
                       REPORT OF INDEPENDENT AUDITORS

     We have audited the consolidated  financial statements and schedule of
Ashland Inc. and subsidiaries listed in the accompanying index to financial
statements and financial schedules (Item 14(a)). These financial statements
and  schedule  are  the   responsibility  of  Ashland's   management.   Our
responsibility  is to express an opinion on these financial  statements and
schedule based on our audits.
     We conducted our audits in accordance with generally accepted auditing
standards.  Those  standards  require that we plan and perform the audit to
obtain reasonable assurance about whether the financial statements are free
of material  misstatement.  An audit includes  examining,  on a test basis,
evidence   supporting   the  amounts  and   disclosures  in  the  financial
statements. An audit also includes assessing the accounting principles used
and  significant  estimates made by  management,  as well as evaluating the
overall  financial  statement  presentation.  We  believe  that our  audits
provide a reasonable basis for our opinion.
     In our opinion,  the financial  statements  listed in the accompanying
index to financial  statements (Item 14(a)) present fairly, in all material
respects,   the  consolidated   financial  position  of  Ashland  Inc.  and
subsidiaries at September 30, 1995 and 1994, and the  consolidated  results
of their operations and their cash flows for each of the three years in the
period ended  September  30, 1995, in conformity  with  generally  accepted
accounting  principles.   Also,  in  our  opinion,  the  related  financial
statement  schedule,  when  considered  in relation to the basic  financial
statements taken as a whole,  presents fairly in all material  respects the
information set forth therein.
     As discussed in Note A to the consolidated  financial  statements,  in
fiscal  1995  Ashland   changed  its  method  of  accounting   relative  to
impairments of long-lived assets.

                                                          Ernst & Young LLP
Louisville, Kentucky 
November 1, 1995


                                       24

<PAGE>  
<TABLE>
<CAPTION>
- --------------------------------------------------------------------------------------------------------------------------------
Ashland Inc. and Subsidiaries
Schedule II - Valuation and Qualifying Accounts

=================================================================================================================================
(In millions)                                           Balance at      Provisions                                       Balance
                                                         beginning      charged to       Reserves            Other        at end
Description                                                of year        earnings       utilized          changes       of year
=================================================================================================================================
<S>                                                           <C>            <C>             <C>            <C>             <C>
YEAR ENDED SEPTEMBER 30, 1995
Reserves deducted from asset accounts
   Accounts receivable                                        $23            $  9            $(7) (1)       $  -            $25
   Inventories                                                  6               3             (3)              -              6
- ---------------------------------------------------------------------------------------------------------------------------------
YEAR ENDED SEPTEMBER 30, 1994
Reserves deducted from asset accounts
   Accounts receivable                                        $20             $11            $(8) (1)       $  -            $23
   Inventories                                                  5               3             (2)              -              6
- ---------------------------------------------------------------------------------------------------------------------------------
YEAR ENDED SEPTEMBER 30, 1993
Reserves deducted from asset accounts
   Accounts receivable                                        $18             $13            $(9) (1)        $(2)           $20
   Inventories                                                  9               2             (6)              -              5
=================================================================================================================================
<FN>

(1)  Uncollected amounts written off, net of recoveries of $1 million in 1995, $2 million in 1994 and $3 million in 1993.
</TABLE>



                                       25

<PAGE>
<TABLE>
<CAPTION>
- -----------------------------------------------------------------------------------------------------------------------------------
Ashland Inc. and Subsidiaries
Exhibit 11 - Computation of Earnings Per Share
Years Ended September 30

====================================================================================================================================
(In millions except per share data)                                                        1995             1994              1993
====================================================================================================================================
<S>                                                                                        <C>             <C>               <C>  
PRIMARY EARNINGS PER SHARE
Income available to common shares
   Net income                                                                              $ 24            $ 197             $ 142
   Ashland Coal, Inc. (ACI) equity income and Ashland's share of
      ACI's cumulative effect of accounting changes (net of income
      taxes)                                                                                  -                -               (25)
   Ashland's share of ACI primary earnings
      per share (net of income taxes)                                                         -                -                23
   Dividends on convertible preferred stock                                                 (19)             (19)               (6)
- ------------------------------------------------------------------------------------------------------------------------------------
                                                                                           $  5            $ 178             $ 134
- ------------------------------------------------------------------------------------------------------------------------------------
Average common shares and equivalents outstanding
   Average common shares outstanding                                                         62               60                60
   Common shares issuable upon exercise of stock options                                      -                1                 -
   Share adjustment for prepaid contribution to leveraged
      employee stock ownership plan (LESOP)                                                   -                -                (1)
- ------------------------------------------------------------------------------------------------------------------------------------
                                                                                             62               61                59
- ------------------------------------------------------------------------------------------------------------------------------------
Earnings per share                                                                         $.08            $2.94             $2.26
====================================================================================================================================
EARNINGS PER SHARE ASSUMING FULL DILUTION
Income available to common shares
   Net income                                                                              $ 24            $ 197             $ 142
   ACI equity income and Ashland's share of ACI's cumulative
      effect of accounting changes (net of income taxes)                                      -                -               (25)
   Ashland's share of ACI earnings per share assuming
      full dilution (net of income taxes)                                                     -                -                21
   Interest on convertible debentures (net of income taxes)                                   -                5                 6
   Dividends on convertible preferred stock                                                 (19)               -                 -
- ------------------------------------------------------------------------------------------------------------------------------------
                                                                                           $  5            $ 202             $ 144
- ------------------------------------------------------------------------------------------------------------------------------------
Average common shares and equivalents outstanding
   Average common shares outstanding                                                         62               60                60
   Common shares issuable upon
      Exercise of stock options                                                               1                1                 1
      Conversion of debentures                                                                -                2                 3
      Conversion of preferred stock                                                           -                9                 3
   Share adjustment for prepaid contribution to LESOP                                         -                -                (1)
- ------------------------------------------------------------------------------------------------------------------------------------
                                                                                             63               72                66
- ------------------------------------------------------------------------------------------------------------------------------------
Earnings per share                                                                         $.08            $2.79             $2.20
====================================================================================================================================


                                       26

</TABLE>
