press release

Unocal announces new Rapak production-sharing contract in East Kalimantan, Indonesia

El Segundo, Calif., Dec. 4, l997 - Unocal Corporation today announced the signing of a new production-sharing contract (PSC) by one of its Indonesian subsidiaries with Pertamina, the Indonesian national oil company. The new PSC area, named Rapak, lies in the Mahakam Delta area, offshore East Kalimantan, Indonesia, and covers 734,000 acres (2,937 square kilometers).

Map of PSC area named Rapak

The company's Unocal Rapak, Ltd., subisidiary is operator of the new PSC area and holds a 90 percent working interest, but another multinational oil company has been offered a 30 percent working interest in the PSC, subject to Pertamina's approval. P.T. Nusamba Kaltim Pratama holds the remaining 10 percent.

Several promising leads have been identified in the Rapak contract area, and Unocal has already started a 3-D seismic survey. This will be followed by a minimum of two exploration wells.

Rapak is the third new production sharing area that Unocal has added to its Indonesia portfolio in 1997. In September, Unocal signed a PSC for the Sesulu area (Unocal, 100 percent working interest) and acquired a 50 percent working interest in the Makassar Strait PSC. Mobil Makassar, Inc., holds the remaining 50 percent interest.

"The opportunities for significant growth in our Indonesia operations are the most exciting prospect we've seen in the company in many years," Roger C. Beach, Unocal chairman and chief executive officer, recently told analysts. "There is tremendous hydrocarbon potential in the new deepwater areas, and we have the technology and team in place to capitalize on those resources."

Rapak is adjacent to both Unocal's existing productive East Kalimantan contract area and the jointly held Unocal/Mobil Makassar Strait contract area (Unocal, 50% working interest), on which a deepwater discovery was announced in September. Water depths in the Rapak contact area range from 900 feet to 6,000 feet.

"The Rapak area is a natural extension of the deepwater exploration program that Unocal initiated in the Mahakam Delta this year," said Timothy C. Lauer, president & managing director of Unocal Indonesia Company. "This area is in a geologic setting similar to the recent Merah Besar #6 discovery."

The Rapak contract area has been designated a "frontier area," qualifying Unocal and its co-venturers for a 35 percent aftertax share of oil production plus reimbursement for expenses. This compares with the current 15 percent aftertax share of oil production from the East Kalimantan contract area.

Lauer noted that Unocal plans to drill nearly 38 deepwater exploration wells during 1998 in the East Kalimantan and Makassar Strait contract areas as part of the company's aggressive exploration program. Earlier this year, the company announced a series of successful discovery wells in the deepwater Merah Besar structure that extends into the East Kalimantan and Makassar Strait contract areas.

With the addition of the Rapak contract area, Unocal's net acreage in Indonesia now totals more than 3.6 million acres. This compares with the company's net holdings of 860,000 acres in the Gulf of Mexico.

Unocal Indonesia Company, under a production-sharing contract with Pertamina, operates nine fields offshore East Kalimantan. Unocal holds a 100 percent working interest in eight of these fields - Santan, Serang, Sepinggan, Melahin, Kerindingan, Seguni, Pantai and Yakin - and a 50 percent working interest in the supergiant Attaka Field. Current gross daily production is more than 90,000 barrels of oil and 250 million cubic feet of gas. All of the production is in water depths of less than 300 feet (100 meters).

Unocal is a leading global energy resource and project development company, with year-end 1996 petroleum reserves of more than 9.8 trillion cubic feet of natural gas equivalent (1.6 billion barrels of oil equivalent) and major oil and gas production activities in Asia and the U.S. Gulf of Mexico. The company is also active in energy resource development in Asia and Latin America and is developing gas-marketing solutions for Turkmenistan. The company maintains twin headquarters in California and Malaysia, with major offices in Singapore, Jakarta, Bangkok and Sugar Land, Texas.

Forward-looking statements, including estimates of future exploration and development activities, in this news release are based on assumptions concerning geology, drilling success, costs, discount rates, market conditions, competition, and other considerations. Actual results could differ materially.

Updated: December 1997