press release

Spirit Energy 76 secures deepwater rig contract

Sugar Land, Texas, Sept. 19, 1997 -- Spirit Energy 76, Unocal Corporation's Lower 48 exploration and production business unit, announced today that it has signed a memorandum of understanding (MOU) with Smedvig Offshore Limited for a deepwater drill ship that can operate in 10,000 feet of water. The drill ship is designed for dual activity and has capabilities for production testing.

The ship is currently under construction and is scheduled to start drilling operations late 1998 or early 1999. Subject to settlement on terms and conditions and approval by the boards of both companies, the MOU will form the basis for a five year drilling contract. All commercial details have not been disclosed.

"This rig commitment, our aggressive lease acquisitions program, and a significant increase in capital investment are positioning our deepwater exploration program for future success," said Jack Schanck, president of Spirit Energy 76. "Spirit's deepwater campaign is targeted to find 400 million barrels of oil equivalent in reserves by 2002."

In 1997, Spirit Energy 76 acquired 90 deepwater tracts through U.S. Minerals Management Service (MMS) lease sales, bringing the total inventory of deepwater blocks to 123 (36 are pending final MMS approval).

The sale of Unocal's downstream assets earlier this year allowed Unocal to rechannel spending into higher return growth opportunities. Intensified focus on the U.S. Gulf is boosting projected capital investment in the Lower 48. Between 1998 and 2001, Spirit Energy 76's annual capital spending is projected to average over $500 million, a growth of nearly 70% over 1997 projections.

Spirit Energy 76 is the third largest producer in the U.S. Gulf of Mexico, with 300 platforms and 2,700 active wells in 355 fields. In 1996, it produced an average of 912 mmcf of gas and about 52,000 barrels of oil per day.

Forward-looking statements and estimates of future financial and operating results in this News Release are based on assumptions concerning market, competitive, regulatory, environmental, operational and other considerations. Actual results could differ materially.

Updated: September 1997