press release

Unocal deepwater well in Indonesia tests 9,430 barrels of oil per day

El Segundo, Calif., Jan. 28, 1998 -- Unocal Corporation said today that its Unocal Indonesia Company subsidiary had successfully completed an significant oil test in Miocene sands in the deepwater Merah Besar area of the Mahakam Delta, offshore East Kalimantan, Indonesia.

The Merah Besar #5 well tested at a rate of 9,430 barrels of oil and 7.4 million cubic feet (mmcf) of gas per day on a 1-1/8-inch choke from a single zone with a flowing tubing pressure of 900 psi. Additional oil and gas zones were confirmed but not tested. The well's measured depth was 11,120 feet (3,390 meters).

MB-5 is in 1,664 feet (507 meters) of water, about 1.8 miles (3 kilometers) west of the earlier Merah Besar #6 discovery. The MB-6 discovery, announced last September, tested 24.8 mmcf of gas and 860 barrels of condensate at a measured depth of 8,553 feet (2,600 meters). Two other zones tested at a combined rate of 980 barrels of oil per day.

The company said another well, Merah Besar #7, confirmed the presence of hydrocarbons. The oil sands, though, were sub-commercial, and the well was abandoned without testing. So far, eight of the 12 wells drilled by Unocal on deepwater prospects in the exploration program in Indonesia have been successful.

The MB-5 and MB-7 wells lie in the East Kalimantan production-sharing contract (PSC) area. Unocal is operator of the PSC and holds a 100-percent working interest.

"We are clearly pleased with the test results from MB-5, which demonstrate good reservoir quality in the Miocene oil sands," said Timothy C. Lauer, president and managing director of Unocal Indonesia. "The drilling and 3-D seismic data show that the Miocene sandstones are stratigraphically complex, but can be prolific reservoirs in this promising deepwater area."

Lauer pointed out that the Merah Besar structure is only a small fraction of Unocal's total deepwater exploration acreage in the East Kalimantan, Makassar Strait, and the recently awarded Rapak contract areas. Due to the large number of prospects yet to be explored, Lauer said it is too early to assess the resource potential of Unocal's deepwater position.

Two more delineation wells are scheduled in the Merah Besar area. The first of these is now drilling approximately 1.8 miles (3 kilometers) north of the MB-5 location. These two wells will give the company a better view of the resource potential of the Merah Besar area.

Exploration drilling on the southern portion of the Makassar Strait contract area is expected to begin by March 1. The three planned wells, which will test large structures identified by 2-D seismic, are considered higher-risk exploration opportunities. Unocal and Mobil Makassar, Inc., each have a 50-percent working interest in the Makassar Strait PSC.

In June, after interpretation of a newly acquired 850 square mile (2,200 square kilometer) 3-D seismic survey. Unocal plans to drill up to three delineation wells in the eastern part of the Merah Besar structure.

In total, Unocal expects to drill 38 exploration wells on deepwater prospects offshore East Kalimantan during 1998.

"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, told security analysts earlier. "There is tremendous hydrocarbon potential in the new deepwater areas, and we have the technology and team in place to capitalize on those resources."

Unocal Corporation is one of the world's leading energy resource and project development companies with major oil and gas production activities in Asia and the U.S. Gulf of Mexico. The company is also active in energy resource development activities in Azerbaijan and Bangladesh and is developing gas-marketing solutions for Turkmenistan. Unocal is headquartered in El Segundo, California with a corporate office in Kuala Lumpur and major offices in Singapore, Jakarta, Bangkok and Sugar Land, Texas.

Forward-looking statements about resource potential and future exploration activities in this news release are based on assumptions concerning geological, market, competitive, regulatory, environmental, operational and other considerations. Actual results could differ materially.

Updated: January 1998