press release

Unocal announces K2 deepwater oil discovery; suspends drilling on Sumatra prospect

Sugar Land, Texas, Sept. 29, 1999 - Unocal Corporation's Spirit Energy 76 unit today announced that the deepwater K2 prospect exploration well in the Green Canyon area of the Gulf of Mexico discovered oil in a high quality reservoir.

The K2 well was drilled in 3,900 feet of water on Green Canyon 562, about 180 miles south of New Orleans.

The company said that the joint venture participants decided to temporarily suspend the well and develop plans for appraisal of the hydrocarbon zone and exploration of the deeper objectives. Drilling on the prospect is expected to resume in the Spring 2000.

Conoco, Inc., is operator and has a 50-percent working interest. Unocal holds the remaining 50-percent working interest.

The successful K2 well is Unocal's fourth deepwater Gulf of Mexico discovery.

Sumatra prospect

Spirit Energy said its deepwater subsalt exploration well on the Sumatra prospect (Garden Bank 941) has been temporarily abandoned after reaching a depth of 21,207 feet. Water depth was 3,700 feet.

"We had encouraging technical results with oil shows both above and below the salt, proving that the prospect has an active petroleum system," said Mike Bell, Spirit Energy vice president for deepwater. "Unfortunately, the well encountered mechanical difficulties before reaching its primary objective. We believe these difficulties can be overcome by utilizing the larger, state-of-the art Discoverer Spirit drillship when it arrives next year." The Sumatra well was drilled using the George Richardson drillship.

Unocal has a 100-percent working interest in Sumatra.

Spirit Energy has spudded the next well on its deepwater schedule -- a delineation well to the earlier McKinley discovery by Texaco, Inc., in Green Canyon 416. The McKinley well should occupy the balance of contract for the George Richardson drillship. The company is earning a 50-percent interest in the six-block McKinley prospect by drilling this delineation well.

Dry hole costs

Unocal said it expects Spirit Energy 76 to record total dry hole charges of about $15 million (pretax) in the third quarter, including write-offs of abandoned footage in various wells. This compares with dry hole costs of $33 million (pretax) in the second quarter 1999.

Spirit Energy 76, Unocal's U.S. Lower 48 exploration and production unit, has major operations onshore in Texas and Louisiana and on the Gulf of Mexico shelf and a significant presence in the Gulf of Mexico deepwater.

Unocal is one of the world's largest independent oil and gas exploration and production companies, with resource development, power plant and pipeline projects in Asia, the U.S. Gulf of Mexico region and Latin America.

Forward-looking statements regarding exploration and development activities, expected charges, and reservoir characterization in this news release are based on assumptions concerning market, competitive, regulatory, environmental, operational and other considerations. Actual results could differ materially as a result of factors discussed in Unocal Corporation's 1998 Form 10-K report filed with the Securities and Exchange Commission.

Updated: September 1999