press release

Unocal deepwater Indonesia discovery tests 10,069 barrels of oil per day

El Segundo, Calif., Aug. 24, 1998 - Unocal Corporation today said the test of a second interval in the West Seno #2 deepwater discovery well offshore Indonesia flowed at a daily rate of 10,069 barrels of 39-degree API gravity oil and 9.5 million cubic feet of natural gas.

This drillstem test (DST) was from a true vertical depth subsea (TVDS) interval between 8,007 feet and 8,064 feet on a 1-1/4-inch choke. Flowing tubing pressure was 830 pounds per square inch.

Last week, Unocal announced a successful DST on a deeper interval in the West Seno #2 well. Mechanical equipment problems prevented conducting a high rate test on that interval, but yielded important reservoir information. In total, the West Seno #2 well encountered 172 feet of vertical hydrocarbon pay in two zones between 7,300 feet and 8,600 feet TVDS. The well is located in 2,800 feet of water.

"The success of our exploration program on the Seno and Merah Besar prospects confirm that the deepwater area of the Kutei Basin offshore Indonesia will be a key component of Unocal's long-term growth strategy," said Roger C. Beach, Unocal chairman and chief executive officer. "The successes also increase our optimism for significantly expanding Unocal's resource base as we move forward in exploring the many other prime deepwater prospects and leads in the area."

The West Seno #2 well is located on the Makassar Strait production-sharing contract (PSC) area. Unocal Indonesia Company is operator of the Makassar Strait PSC and has a 50-percent working interest. Mobil Makassar, Inc., holds the remaining 50 percent.

The West Seno #2 well is Unocal Indonesia's second deepwater discovery offshore East Kalimantan in the Kutei Basin. Last year, the company discovered the Merah Besar field, which is located about 13 miles southwest of the West Seno well. The Merah Besar field is located on the East Kalimantan PSC (Unocal, 100% working interest) and Makassar Strait PSC.

"The Merah Besar success showed the presence of high-quality oil-bearing sands in the deepwater areas offshore East Kalimantan," said Timothy C. Lauer, president and managing director of Unocal Indonesia. Flow tests and wireline logging indicate porosity of 30 percent and excellent permeability in the formations.

Unocal plans to drill the West Seno #1 well from the current location to further appraise the prospect. Following that well, additional drilling is planned for the East Seno area. Before the initial Seno well, Unocal had estimated the gross resource potential for the Seno prospect at 210 to 720 million barrels-of-oil equivalent (BOE). The extent and commerciality of the West Seno discovery will be determined following additional appraisal drilling.

"We will now focus on confirming the commerciality of the Seno discovery and planning for rapid development," Lauer said. Unocal is currently preparing development plans for the Merah Besar field utilizing a tension-leg platform concept, which would also be appropriate for development of the Seno prospect. Production could begin from Merah Besar by 2001.

Forward-looking statements about future exploration and development activities and projected results in this news release are based on assumptions concerning geology, regulatory actions, economic, market conditions, operational concerns and other considerations. Actual results could differ materially.

Note: Under the terms of the PSCs, Unocal, as contractor to Pertamina, the Indonesian national oil company, is entitled to varying shares of the oil and gas produced from commercial discoveries.

Updated: August 1998