press release

Unocal builds on low-cost exploration, current infrastructure with new contract areas offshore Indonesia

El Segundo, Calif., Nov. 20, 1998 -- Unocal Corporation today announced the addition of two new production-sharing contract (PSC) areas in the Makassar Strait offshore Indonesia.

Unocal East Kalimantan PSCs

The new PSCs with Pertamina, the Indonesian state oil and gas company, are for the Sangkarang and Lompa contract areas, which lie approximately 300 miles (480 kilometers) south of Unocal's existing offshore production operations. The Sangkarang PSC covers nearly 2 million acres (8,100 square kilometers), while the Lompa PSC covers nearly 2.5 million acres (10,100 square kilometers). The primary areas of interest lie in water depths ranging from 1,000 feet to 3,100 feet (300 to 940 meters).

"Sangkarang and Lompa provide Unocal with highly promising new prospects that are outside of the Mahakam Delta, but close enough to be supported by our existing infrastructure on East Kalimantan," said Timothy C. Lauer, president and managing director of Unocal Indonesia Company. "Our low-cost exploration approaches and a favorable work commitment will allow us to explore this area as efficiently as anyone in the industry."

Unocal's Saturation Exploration (SX) drilling approach has proved successful offshore East Kalimantan, where exploration wells are being drilled for as little as one-third the cost of industry-average conventional wells.

Unocal presently holds 100-percent working interests in the new PSC areas through its subsidiaries, Unocal Sangkarang, Ltd. and Unocal Lompa, Ltd. The PSC areas have been designated as "frontier areas," qualifying Unocal for a net profit share of 35 percent for oil and 40 percent for gas after capital cost recovery, if the company makes a commercial discovery.

Under the terms of the PSCs, Unocal will conduct seismic and geological and geophysical work over the next two years. The first exploration well on the Sangkarang PSC would be drilled in the second or third year.

Sangkarang and Lompa are the fifth and sixth production sharing contract areas that Unocal has added to its Indonesia portfolio in the past two years. Unocal is presently delineating two significant deepwater discoveries offshore East Kalimantan, Seno and Merah Besar. Unocal now holds varying interests in more than 9.5 million acres (38,000 square kilometers) offshore Indonesia.

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 super giant Attaka field. Current gross daily production is approximately 68,000 barrels of oil and 275 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 major oil and gas exploration and production activities in Asia, the U.S Gulf of Mexico and Latin America.

Forward-looking statements, including estimates of potential resource and future exploration and development activities in this news release are based on assumptions concerning geology, and other considerations. Actual results could differ materially.

Updated: November 1998