press release

Spirit Energy 76 triples exploratory discoveries

Sugar Land, Texas, June 1, 1998 -- Spirit Energy 76, Unocal Corporation's Lower 48 U.S. exploration and production unit, today announced it has made 26 new oil and gas discoveries both onshore and in the continental shelf area since October 1997. This is more than triple the number of discoveries for the first nine months of 1997.

Spirit Energy's new onshore and shelf exploration strategy began paying off in the fourth quarter 1997. The program emphasizes quick cycle time projects that are frequently tied back to Spirit's extensive Gulf of Mexico asset base. The strategy is designed to have a rapid impact on Spirit production levels and to provide the "transition" production growth necessary to bridge to Spirit's long-term growth program in the deepwater Gulf of Mexico.

Twenty-four of the 26 discoveries are expected to be producing by the third quarter 1998. Spirit has achieved an exploration success rate of 54 percent since October 1997.

Spirit's exploration strategy is also designed to focus on reserve replacement. In the first quarter 1998, Spirit Energy estimates it replaced about 104 percent of production, up from an average of 44 percent over the last three years.

Spirit Energy 76 has net production of about 180,000 BOE per day and operates 300 offshore platforms with 2,700 active wells in 355 fields in the Gulf of Mexico region. The unit employs approximately 1,300 people.

Highlights of Recent Discoveries

Teton (West Cameron 304/305)

  • 4Q 1997 discovery
  • Spirit Energy 76 is operator; 100% working interest
  • Directionally drilled well encountered 63 feet of gas pay (true vertical) in two zones between 7,500 and 9,300 feet
  • Brought on production in May 1998 and is currently ramping up to an expected rate of approximately 20-25 mmcfd and 300 barrels of condensate per day (BCPD)
  • Spirit acquired the prospect at the OCS central Gulf of Mexico lease sale held in March 1997

East Breaks 158 A14ST

  • 4Q 1997 discovery
  • Spirit Energy 76 is operator; 67% working interest
  • Extended reach well encountered 142 feet (true vertical) of oil and gas pay in three zones between 5,000 and 6,700 feet
  • Current gross production rate 9.5 mmcfd

West Cameron 279 B5ST

  • 1Q 1998 discovery
  • Spirit Energy 76 is operator; 100% working interest
  • Well encountered 78 feet of gas pay (true vertical) at a vertical depth of 13,911 feet
  • Well was quickly brought on production in April 1998; currently producing 26 mmcfd
  • Slim-hole technology was utilized

Calgary (High Island 169)

  • 1Q 1998 discovery
  • Vastar Resources, Inc. is operator; Spirit Energy 76 has 25% working interest
  • Well encountered more than 100 feet of gas pay in lower Miocene sands
  • Anticipated production in third quarter 1998 at an expected gross rate of 20-30 mmcfd

Canvasback (East Cameron 62)

  • 2Q 1998 discovery
  • Spirit Energy 76 is operator; 100% working interest
  • Well encountered a total of 24 feet of gas pay (true vertical) in a single zone at a vertical depth of 6,470 feet
  • Anticipated production in mid-July at an expected rate of 7 mmcfd
  • Pre-investment in development infrastructure allowed fast-track to first production. Infrastructure will also allow rapid development of an additional prospect that is currently being drilled

Vermilion 67 No.1ST

  • 2Q 1998 discovery
  • Spirit Energy 76 is operator; 100% working interest
  • Well encountered a total of 83 feet of gas pay (true vertical) in six zones between 8,500 and 10,500 feet
  • Expected production in June at a rate of 15-20 mmcfd
  • Quick turnaround to first production

Ship Shoal 208 J6ST

  • 2Q 1998 discovery
  • Spirit Energy 76 is operator; 86.7% working interest
  • Well encountered a total of 50-180 feet of hydrocarbon pay (true vertical) in a single zone at 13,353 feet. Analysis of the pay zone is still in progress
  • Expected production in June at a gross rate of 5-10 mmcfd

East Breaks 158 A3ST (LD Prospect)

  • 2Q 1998 discovery
  • Spirit Energy 76 is operator; 67% working interest
  • Well encountered a total of 68 feet (true vertical) of oil and gas pay in two zones at 6,300 feet
  • Anticipate production in July at an expected rate of 10 mmcfd
  • Complicated extended reach well - nearly 12,000 feet

Updated: June 1998