Providence and Worcester Railroad Company to Work With ChevronTexaco Corp. on Waterfront Property.

Business Editors

WORCESTER, Mass.--(BUSINESS WIRE)--April 3, 2002

Providence and Worcester Railroad Company (AMEX: "PWX") (P&W) confirmed today that it has entered into a memorandum of understanding with an affiliate of ChevronTexaco Corp. (Chevron) with respect to joint development by the two companies of property located on the waterfront in East Providence, Rhode Island.

P&W owns a 45-acre site known as the South Quay, which consists of a 33-acre parcel created over a period of years between 1979 and 1998 by P&W's filling of tide flowed land on the Providence River, and an adjacent 12-acre parcel. P&W's fee simple absolute title to the 33-acre parcel was confirmed by the Rhode Island Supreme Court in 1999, and its fee simple absolute title to the 12-acre parcel was confirmed by the Rhode Island Superior Court in 2000. Chevron owns the 30-acre parcel immediately to the south of the South Quay.

"75 acres situated on the waterfront just across the harbor from Providence, and a short drive from other major New England cities, offers a unique opportunity for development," said Orville R. Harrold, P&W's president. "We are pleased to be exploring the possibilities with both Chevron and the City of East Providence. In addition, P&W and the City of East Providence have been working to improve access to the South Quay, which should enhance the development potential of this site."

P&W is a regional freight railroad operating in the states of Massachusetts, Rhode Island, Connecticut and New York. P&W transports a wide variety of commodities, including construction aggregate, iron and steel products, chemicals, lumber, scrap metals, plastic resins, cement, processed foods and edible food stuffs, such as frozen foods, corn syrup and animal and vegetable oils. By agreement with a private operator, P&W also operates two approved customs bonded intermodal yards in Worcester, MA, primarily for the movement of container traffic from the Far East destined for points in New England.

This release contains "forward-looking statements" within the meaning of section 21E of the Securities and Exchange Act of 1934, as amended. These forward-looking statements represent the Company's present expectations or beliefs concerning future events. The Company cautions that such statements are necessarily based on certain assumptions which are subject to risks and uncertainties, including, but not limited to, changes in general economic condition, and changing competition which could cause actual results to differ materially from those indicated herein. Further information on these risk factors is included in the Company's filings with the Securities and Exchange Commission.