Very high-boiling hydrocarbon, such as petroleum residue, is converted to low-boiling liquid products by passing it through a continuous phase of a catalyst system selected from antimony trichloride, tribromide or triiodide; bismuth trichloride or tribromide; or arsenic triiodide; maintained at a temperature between 200* and 550* C. and under hydrogen partial pressure of at least 250 p.s.i. whereby the catalyst system performs the functions of acting as a hydrogenation catalyst, acting as a cracking catalyst, and providing a medium for maintaining the reactants in suitable relation to one another to promote reactions and obtain beneficial product distribution.