press release

Arco-led consortium to drill exploration well on Sulu Sea Wildebeest prospect offshore the Philippines

The following news release was issued by Arco Philippines (Sulu), Inc.

Manila, Philippines, April 10, 2000 -- An oil and gas exploration consortium led by Arco Philippines (Sulu), Inc., has received approval from the Philippines Department of Energy for exploration drilling on the Wildebeest prospect in Service Contract 41 Block B (SC41B) in the Sulu Sea.

In addition to Arco Philippines (Sulu), a subsidiary of Atlantic Richfield Company that currently holds a 45% working interest, the other consortium members include Preussag Energie Gmbh (25%), MMC Exploration and Production (Philippines) Pte. Ltd. (15%) and a group of Filipino companies (15%). A farm-in for a 15-percent interest in the acreage by Unocal Sulu Ltd., a subsidiary of Unocal Corporation, is pending government approval.

SC41 is divided into two sub-blocks. Block B constitutes the deepwater portion of the contract area. Block A is located near the boundary with Sabah, Malaysia, where the Nymphe discovery is located. In February 1998, the consortium drilled the Hippo-1 well in Block A. Oil and gas shows were encountered near the well's TD. However, these were not tested since the oil shows were found in the open-hole section beyond the casing depth.

The Wildebeest prospect is located in the deepwater portion of the Sandakan delta system in an area with water depths in excess of 3,000 feet (914 meters). The exploration program will include up to two vertical wells. The first will be drilled in 3,625 feet (1,105 meters) of water to a total depth of 12,600 feet (3,850 meters). The initial well will test a large-scale submarine fan system, penetrating three of the largest fans. If successful, the consortium plans a second well in 3,280 feet (1,000 meters) of water to a total depth of 13,900 feet (4,250 meters) to test five medium-sized fans.

The Wildebeest prospect is associated with direct hydrocarbon indications (DHI), and Unocal has successfully tested similar submarine fan systems in the West Seno and Merah Besar oilfields outboard of the Mahakam delta in East Kalimantan.

Arco conducted a 3-D seismic program in 1999 on the Hippo and adjoining prospects. At the same time, interpretation of existing 2D seismic data was conducted over Wildebeest. Arco mapped two prospects: Wildebeest in Block B and Rhino in Block A. Should the Wildebeest wells be successful, Arco plans to drill the Rhino Prospect in 2001.

Unocal's farm-in to the acreage will allow the consortium to use the Sedco 601 semi-submersible rig and utilize Unocal's innovative Saturation Exploration (SX) drilling technology. The SX technology has been employed successfully in drilling more than 100 exploration and delineation wells in deepwater areas offshore Indonesia. Unocal will conduct the drilling operations on the Wildebeest prospect for the consortium.

In view of recent worldwide increases in oil prices, development of oil resources on SC41B would benefit the Philippines economically and make the country less dependent on imported crude oil.

Members of the Filipino group of companies in Block A include The Philodrill Corporation, Petroenergy Resources Inc., Trans-Asia Oil & Mineral Dev. Corp., Basic Petroleum & Minerals, Inc., Philex Mining Corporation, Phoenix Energy Corporation, Anglo-Phil. Oil & Mining Corporation, San Jose Oil Company Inc, Vulcan Industrial & Mining Corporation, Oriental Petroleum & Minerals Corporation, and Universal Robina Corporation.

Members of the Filipino group of companies in Block B include Basic Petroleum & Minerals, Inc., Oriental Petroleum & Minerals Corporation, and South China Petroleum & Exploration, Inc.

Updated: April 2000