press release

Unocal posts 4Q 1997 earnings; company expects further oil and gas production increases

El Segundo, Calif., Jan. 28, 1998 -- Unocal Corporation today reported preliminary fourth-quarter 1997 earnings from continuing operations, excluding special items, of $134 million, or 55 cents per share. These results are on the same basis as the latest First Call consensus for basic earnings. In the fourth quarter 1996, Unocal's earnings from continuing operations, excluding special items, were $160 million, or 64 cents per share.

"Our international oil and gas operations reported a 4 percent increase in net production on an oil-equivalent basis to more than 265,000 barrels per day," said Roger C. Beach, Unocal chairman and chief executive officer. "Net gas production in Thailand was up 2 percent over a year ago, and net oil production in Indonesia (including host country share) was up 9 percent."

Beach added that the company expects to see further nternational production increases in 1998 with new output from Azerbaijan, Myanmar, and Bangladesh, as well as full-year production in Yemen.

Beach noted that the company's Lower 48 U.S. production declined considerably in the last half of 1997. "We expect to reverse this decline in 1998 so that the full-year average will be on par with 1997," Beach said.

Beach added that the company's fourth quarter operating results also reflected lower prices for crude oil and export urea and higher domestic and international exploration expenses. These negative factors were offset partially by significantly reduced foreign taxes due principally to the effects of currency devaluation in Asia. The higher exploration expenses reflect Unocal's increased emphasis on increasing production and reserves through an aggressive exploration program.

Beach commented on the impact on Unocal of the current financial turmoil in Asia. "Unocal's earnings and cash flow are mostly protected from a foreign exchange perspective," Beach said, "and we remain optimistic about our long-term prospects in Asia."

Beach went on to say that the carbon and minerals segment recorded higher-than-anticipated earnings because of an increased contribution from Unocal's equity interest in a Brazilian niobium operation. Earlier, Unocal had indicated that the segment's earnings in the quarter would be lower because of a two-month production shutdown at the Molycorp, Inc., molybdenum mine in New Mexico.

Unocal's interest expense dropped $18 million in the quarter, reflecting a reduction in the company's total debt to $2,170 million. This compares with total debt of $3,058 million at the end of 1996.

Unocal completed its $400 million share repurchase program earlier this month, with a total of 10.3 million shares purchased over the past year. Beach said the board of directors has authorized extending the program and the company may repurchase up to $200 million in Unocal common stock.

Net cash provided from operating activities, excluding working capital changes, was $347 million, compared with $381 million in the fourth quarter 1996.

Unocal's preliminary reported net earnings for the fourth quarter, including special items and discontinued operations, were $142 million, compared with a loss of $497 million in the fourth quarter 1996. Reported basic net earnings were 58 cents per share, compared with a loss of $1.99 per share a year ago. Reported diluted net earnings per share were 57 cents, compared with a loss of $1.97 per share in 1996. The 1996 results reflected a loss on the disposal of the company's West Coast refining, marketing and transportation assets.

Full-year 1997 results

Preliminary full-year 1997 earnings from continuing operations, excluding special items, were $515 million, or $2.08 per share, compared with $562 million, or $1.97 per share, the year before.

Reported full-year 1997 net earnings (including special items, discontinued operations, and an extraordinary charge for the early retirement of debt) were $581 million, compared with earnings of $36 million in 1996. Reported basic net earnings per share were $2.34, compared with a loss of 15 cents a year ago. Reported diluted net earnings per share were $2.31, compared with a loss of 7 cents per share in 1996.

Unocal is a leading global energy resource and project development company, with major oil and gas exploration and production activities in Asia and the U.S. Gulf of Mexico. 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 production activities and other business plans and outlook in this news release are based on assumptions concerning market, competitive, regulatory, environmental, operational and other considerations. Actual results could differ materially.

    CONDENSED CONSOLIDATED EARNINGS STATEMENT
    (UNAUDITED)
                                   For the Three Months For the Twelve Months
                                    Ended December 31      Ended December 31
    Dollars in millions except
    per share amounts
                                     1997        1996       1997       1996

    Total revenues                  $1,557     $1,385      $6,064     $5,328
    Costs and other deductions       1,375      1,364       5,293      4,570
    Earnings from continuing
     operations before income taxes    182         21         771        758
    Income taxes                        34         18         102        302
    Earnings from continuing
     operations                        148          3         669        456
    Earnings from discontinued
     operations (net of tax)            --         (9)         --         71
    Loss on disposal (net of tax)       (6)      (491)        (50)      (491)
    Extraordinary charge -
     extinguishment of debt
     (net of tax)                       --         --         (38)        --
    Net earnings                      $142      $(497)       $581        $36
    Dividends on preferred stock        --         --          --         18
    Non-cash charge related to
     exchange of preferred stock        --         --          --         54
    Net earnings applicable
     to common stock                  $142      $(497)       $581       $(36)

    Basic earnings/(loss)
     per common share (a)
      Continuing operations          $0.60      $0.01       $2.69      $1.54
      Discontinued operations        (0.02)     (2.00)     (0.20)     (1.69)
      Extraordinary item -
       extinguishment of debt
       (net of tax)                     --         --      (0.15)         --
    Basic net earnings/
     (loss) per share                $0.58     $(1.99)      $2.34    $(0.15)

    Diluted earnings
     per common share (b) (c)
      Continuing operations          $0.59      $0.01       $2.65      $1.53
      Discontinued operations        (0.02)     (1.98)     (0.19)     (1.60)
      Extraordinary item -
       extinguishment of
       debt (net of tax)                --          --     (0.15)         --
    Diluted net earnings/
     (loss) per share                $0.57     $(1.97)      $2.31    $(0.07)

    (a)  Weighted average shares -
     basic (millions)                  245        250         248        249
    (b)  Weighted average shares -
     diluted (millions)                259        252         262        263
    (c)  Distributions on preferred
     securities excluded in numerator   $6        $--         $24        $--


    CONDENSED CONSOLIDATED BALANCE SHEET
    (UNAUDITED)
                                                          Dec. 31     Dec. 31
    Millions of dollars                                      1997       1996

    Assets
    Cash and cash equivalents                                $338       $217
    Net assets of discontinued operations (d)                  --      1,774
    Other current assets                                    1,163      1,237
    Investments and long-term receivables                   1,113      1,206
    Properties - net                                        4,816      4,590
    Other assets                                              100         99
      Total assets                                         $7,530     $9,123

    Liabilities and Equity
    Current portion of long-term debt and capital leases       $1       $118
    Other current liabilities                               1,159      1,504
    Long-term debt and capital lease obligations            2,169      2,940
    Deferred income taxes                                     137        348
    Other deferred credits and liabilities                  1,228      1,416

    Convertible preferred securities                          522        522

    Stockholders' equity                                    2,314      2,275
      Total liabilities and equity                         $7,530     $9,123

    (d)  Excludes retained working capital


    CONDENSED CONSOLIDATED CASH FLOWS
    (INCLUDES DISCONTINUED OPERATIONS)
    (UNAUDITED)                     For the Three MonthsFor the Twelve Months
                                       Ended December 31    Ended December 31
    Millions of dollars                     1997  1996 (a)     1997  1996 (a)

    Cash flows from operating activities
     Net earnings                           $142    $(497)     $581      $36
     Adjustments to reconcile net earnings to
      net cash provided by operating activities
       Loss on disposal of discontinued
        operations (before-tax)               10      743        81      743
       Depreciation, depletion
        and amortization                     207      335       962    1,059
       Dry hole costs                         59       67       110      139
       Deferred income taxes                 (23)    (380)     (249)    (332)
       Gain on sales of assets (before-tax)  (21)      96       (80)     (77)
       Other                                 (27)      17      (110)     113
     Working capital and other changes
      related to operations                   50      104      (162)       3
       Net cash provided by
        operating activities                 397      485     1,133    1,684

    Cash flows from investing activities
     Capital expenditures
      (includes dry hole costs)             (474)    (458)   (1,427)  (1,398)
     Proceeds from sale of
      discontinued operations                 --       --     1,789       --
     Proceeds from asset sales                45       24       100      609
       Net cash provided by/
        (used in) investing activities      (429)    (434)      462     (789)

    Cash flows from financing activities
     Net increase/(decrease) in long-term debt93       (8)     (866)    (568)
     Dividends paid                          (49)     (50)     (199)    (226)
     Repurchase of common stock             (189)      --      (362)      --
     Other                                    (1)      (1)      (47)      22
       Net cash used in financing activities(146)     (59)   (1,474)    (772)

    Increase/(decrease) in cash
     and cash equivalents                   (178)      (8)      121      123
    Cash and cash equivalents
     at beginning of period                  516      225       217       94
    Cash and cash equivalents
     at end of period                       $338     $217      $338     $217

    (a)  Cash flows related to discontinued operations have not been
segregated for the 1997 and 1996 periods.

    CONDENSED CAPITAL EXPENDITURES
    (UNAUDITED)
    Millions of dollars

    United States Exploration & Production  $167      $89      $367     $416
    International Exploration & Production   227      195       801      507
    Geothermal Operations                     26       23       102      114
    Diversified Business Group                19       56        59       82
    New Ventures (Non E & P)                  --       --         5        5
    Corporate & Unallocated                   35       28        44       50
    Discontinued Operations                   --       67        49      224
      Total (b)                             $474     $458    $1,427   $1,398

    (b)  Includes capitalized interest of:    $9       $4       $35      $13

    DISCRETIONARY CASH FLOW
    (INCLUDES DISCONTINUED OPERATIONS)
    (UNAUDITED)                     For the Three MonthsFor the Twelve Months
                                       Ended December 31   Ended December 31
    Millions of dollars                  1997       1996      1997      1996

    Net earnings                         $142      $(497)     $581       $36

    Adjustments to net earnings
     Depletion, depreciation
      & amortization                      200        260       893       984
     Impairment                             7         75        69        75
     Dry hole costs                        59         67       110       139
     Deferred income taxes                (23)      (380)     (249)     (332)
     (Gain) Loss on sales of assets       (21)        96       (80)      (77)
     Exploration expenses                  79         34       193       117
     Proceeds from asset sales             45         24     1,889       609
     Environmental and litigation
       provision                           14        106       134       219
     Environmental and litigation
       payments                           (29)       (32)     (162)      (85)
     Loss on disposal of
      discontinued operations              10        743        81       743
     Other                                (12)       (57)      (82)      (21)
       Total discretionary cash flow     $471       $439    $3,377    $2,407

The preceding table of discretionary cash flow is provided for analysts and others in the investment community as a supplement to conventional financial data prepared in accordance with generally accepted accounting principles. Discretionary cash flow does not give effect to significant uses of cash, including those for capital projects, debt reduction and regular dividends, some of which result from previous commitments, and should only be considered in conjunction with the full presentation of condensed consolidated cash flows on the preceding page.

    RESULTS OF OPERATIONS FOR
    EXPLORATION AND PRODUCTION ACTIVITIES
    (UNAUDITED)
                                              For the Three Months
                                        Ended December 31, 1997
                              Spirit     Other                Other
    Millions of dollars     Energy 76     U.S.  Far East International  Total

    Sales (includes intercompany sales)
     Crude oil and condensate   $63        $44      $111       $42      $260
     Natural gas                197         18       157        11       383
     Natural gas liquids         15          1         7         1        24
     Other                        1         --        --        --         1
      Total                     276         63       275        54       668
    Other revenue                23          2         7         7        39
    Gain(loss) on asset sales     9         --        --         1        10
      Total revenues            308         65       282        62       717

    Production costs             54         20        37        21       132
    Exploration expenses         22          1        33        20        76
    Dry hole costs               19         --        30        --        49
    Depreciation, depletion
     & amortization              94         11        68        16       189
    Other operating expenses     21          4        13        12        50
      Results of operations
       before income tax        $98        $29      $101      $(7)      $221


                                       For the Three Months Ended
                                        Ended December 31, 1996
                              Spirit     Other                Other
                            Energy 76     U.S.  Far East International  Total

    Sales (includes intercompany sales)
     Crude oil and condensate  $113        $63      $117       $45      $338
     Natural gas                212         23       167        13       415
     Natural gas liquids         23          2         7         1        33
     Other                        1         --        --        --         1
      Total                     349         88       291        59       787
    Other revenue                15          1         1        10        27
    Gain(loss) on asset sales   (7)        (4)       (1)         1      (11)
      Total revenues            357         85       291        70       803

    Production costs             44         26        33        24       127
    Exploration expenses          7         --        10        16        33
    Dry hole costs               13          5        37         9        64
    Depreciation, depletion
     & amortization             130         54        45        25       254
    Other operating expenses     36          6        16       (1)        57
      Results of operations
       before income tax       $127       $(6)      $150      $(3)      $268


    RESULTS OF OPERATIONS FOR
    EXPLORATION AND PRODUCTION ACTIVITIES
    (UNAUDITED)
                                       For the Twelve Months Ended
                                        Ended December 31, 1997
                              Spirit     Other                Other
    Millions of dollars     Energy 76     U.S.  Far East International  Total

    Sales (includes intercompany sales)
     Crude oil and condensate   $308      $180      $453      $161    $1,102
     Natural gas                 743        65       642        46     1,496
     Natural gas liquids          56         4        25         4        89
     Other                         3        --        --        --         3
      Total                    1,110       249     1,120       211     2,690
    Other revenue                 33         6         9        23        71
    Gain/(loss) on asset sales    11        --        --       (15)       (4)
      Total revenues           1,154       255     1,129       219     2,757

    Production costs             193        93       130        74       490
    Exploration expenses          59         1        73        51       184
    Dry hole costs                29        --        69         1        99
    Depreciation, depletion
     & amortization              468        53       303        69       893
    Other operating expenses      77        12        47        57       193
      Results of operations
       before income tax        $328       $96      $507      $(33)     $898


                                       For the Twelve Months Ended
                                        Ended December 31, 1996
                              Spirit     Other                Other
                            Energy 76     U.S.  Far East International  Total

    Sales (includes intercompany sales)
     Crude oil and condensate   $400      $272      $395      $182    $1,249
     Natural gas                 774        84       529        48     1,435
     Natural gas liquids          70         6        19         4        99
     Other                         4        --        --        --         4
      Total                    1,248       362       943       234     2,787
    Other revenue                 23         3         1        27        54
    Gain/(loss) on asset sales     1       106        --        24       131
      Total revenues           1,272       471       944       285     2,972

    Production costs             178       122       127        81       508
    Exploration expenses          26        --        41        44       111
    Dry hole costs                62         5        50        14       131
    Depreciation, depletion
     & amortization              398       128       208        69       803
    Other operating expenses     136        19        46         3       204
      Results of operations
       before income tax        $472      $197      $472       $74    $1,215


    OPERATING HIGHLIGHTS
    (UNAUDITED)                    For the Three Months For the Twelve Months
                                      Ended December 31    Ended December 31
                                       1997        1996      1997       1996
    Net daily production
     Crude oil and condensate (thousand barrels daily):
      United States
       Spirit Energy 76                42.9        51.0       44.5      51.7
       Other (a)                       34.1        35.7       32.2      44.1
        Total United States            77.0        86.7       76.7      95.8
      International
       Far East (b)                    96.1        87.6       95.2      83.7
       Other                           25.2        25.3       25.7      27.1
        Total International           121.3       112.9      120.9     110.8

        Total Worldwide               198.3       199.6      197.6     206.6

     Natural gas (million cubic feet daily):
      United States
       Spirit Energy 76               813.4       895.6      860.0     911.6
       Other (a)                      137.8       157.8      132.6     162.9
        Total United States           951.2     1,053.4      992.6   1,074.5
      International
       Far East (b)                   809.3       797.2      794.5     668.8
       Other                           56.9        58.4       60.5      67.9
        Total International           866.2       855.6      855.0     736.7

        Total Worldwide             1,817.4     1,909.0    1,847.6   1,811.2

     Natural gas liquids
      (thousand barrels daily) (a)     16.8        20.2       18.3      19.5

     Geothermal (million
      kilowatt-hours daily)            20.3        19.9       18.0      17.9

    Average sales prices
     Crude oil and condensate (per barrel):
      United States
       Spirit Energy 76              $20.13      $24.09     $19.96    $21.27
       Other                          14.83       19.29      15.25     16.83
        Total United States           17.88       22.10      18.00     19.21
      International
       Far East                      $17.95      $21.62     $18.52    $19.17
       Other                          16.90       21.48      17.39     19.20
        Total International           17.65       21.58      18.21     19.18

        Total Worldwide              $17.75      $21.85     $18.11    $19.20

     Natural gas (per mcf):
      United States
       Spirit Energy 76               $2.88       $2.83      $2.53     $2.46
       Other                           1.47        1.51       1.41      1.40
        Total United States            2.67        2.59       2.38      2.30
      International
       Far East                       $2.16       $2.39      $2.30     $2.28
       Other                           2.34        1.95       2.25      1.85
        Total International            2.17        2.36       2.30      2.23

        Total Worldwide               $2.43       $2.49      $2.34     $2.27

    (a)  Includes production from
     California upstream properties of:
      Crude oil and condensate           --         0.9         --       7.4
      Natural gas                        --          --         --      12.9
      Natural gas liquids                --          --         --       0.1

    (b)  Includes host country share
     in Indonesia of:
      Crude oil and condensate         26.2        29.9       28.4      27.5
      Natural gas                      33.5        27.9       28.3      26.6

    OPERATING HIGHLIGHTS (continued)
    (UNAUDITED)
                                    For the Three MonthsFor the Twelve Months
                                       Ended December 31   Ended December 31
                                       1997         1996     1997       1996
    Agricultural products production
     volumes (thousand tons)
      Ammonia                           383         379      1,455     1,468
      Urea                              223         286        919     1,131
      Other products                    207         164        701       658

    Agricultural products sales
     volumes (thousand tons)
      Ammonia                           179         134        769       708
      Urea                              285         343        975     1,122
      Other products                    175         269      1,082     1,240


    EARNINGS BY BUSINESS SEGMENT
    (Unaudited)
                                 4th Quarter of 1997     4th Quarter of 1996
    Millions of dollars          Before-tax   After-tax Before-tax  After-tax

    Exploration and Production
     United States
      Spirit Energy 76               $98         $61         $127        $74
      Other                           29          18           (6)        (3)
     International                    94         116          147         71

    Geothermal Operations              3           1         (109)       (70)

    Diversified Business Group
      Agricultural Products            8           4           39         25
      Carbon and Minerals             (1)         --            7          7
      Pipelines                       16          13           22         18
      Other                            2           1            7          5
    Corporate and Unallocated
      Administrative and
       general expense               (20)        (16)         (39)       (24)
      Net interest expense           (24)        (22)         (59)       (40)
      Environmental and
       litigation expense             (8)         (5)         (94)       (59)
      New Ventures                   (15)        (10)         (16)       (10)
      Other                           --         (13)          (5)         9
    Earnings from continuing
     operations before
     discontinued operations
     and extraordinary item          182         148           21          3
    Loss from discontinued
     operations                      (10)         (6)        (805)      (500)
       Total                        $172        $142        $(784)     $(497)

    Exploration and Production - this segment explores for, produces,
     purchases and markets crude oil, condensate, natural gas and natural gas
     liquids.
    Geothermal Operations - this segment explores for,produces and sells
     geothermal resources and constructs and operates electrical generating
     plants served by the resources.
    Diversified Business Group:
     Agricultural Products - this business unit manufactures and markets
      nitrogen-based products for wholesale agricultural and industrial
      markets supplying the western United States and the Pacific Rim.
     Carbon and Minerals - this business unit produces and markets petroleum
      coke, graphites and specialty minerals.
     Pipelines - this business unit principally includes the company's equity
      interests in affiliated pipeline companies.
     Other - principally includes the company's equity interest in The UNO-VEN
      Company prior to the May 1, 1997 restructuring.


    SPECIAL ITEMS
    (Unaudited)
                                 4th Quarter of 1997     4th Quarter of 1996
    Millions of dollars        Before-tax    After-tax  Before-tax  After-tax

    Reported earnings               $172        $142        $(784)     $(497)
    Less: Special items

    Exploration and Production
     United States
      Spirit Energy
       Asset sales                     9           5           (7)        (5)
       Impairment                     (4)         (2)         (19)       (11)
       Settlement of
        federal leases                --          --           12          7
       Restructuring provision        --          --           (7)        (4)
      Other
       Asset sales                    --          --           (4)        (2)
       Impairment                     --          --          (33)       (21)
     International
       Asset sales                     2           1           --         --
       Impairment                     (3)         (2)          --         --
       Uninsured loss
         - Bangladesh                 (2)         (1)          --         --
       Deferred tax adjustment        --          26           --         --
    Geothermal Operations
       Asset sales                    --          --          (92)       (57)
       Impairment                     --          --          (23)       (14)
       Other                          --          --            3          2
    Diversified Business Group
     Carbon and Minerals
       Environmental and
        litigation provision         (10)         (6)          (2)        (1)
       Restructuring costs            (2)         (1)          --         --
     Pipeline
       Asset sales                    --          --            3          2
     Other
       UNO-VEN restructuring           2           1           --         --
    Corporate and Unallocated
       Asset sales                    11           7            3          2
       Environmental and
        litigation provision          (5)         (3)         (83)       (52)
       Deferred tax adjustment        --         (11)          --         --
       Other                          --          --           (4)        (3)
    Discontinued Operations
       Other                          --          --            1          1
       Net loss on disposal          (10)         (6)        (792)      (491)
    Extraordinary item                --          --           --         --
     Total special items             (12)          8       (1,044)      (647)
    Adjusted earnings               $184        $134         $260       $150


    EXCLUDING SPECIAL ITEMS
    (Unaudited)

    Millions of dollars except per share amounts
                                 4th Quarter of 1997     4th Quarter of 1996
                                Before-tax   After-tax  Before-tax  After-tax
    Exploration and Production
     United States
      Spirit Energy 76               $93         $58         $148        $87
      Other                           29          18           31         20
     International                    97          92          147         71

    Geothermal Operations              3           1            3         (1)

    Diversified Business Group
      Agricultural Products            8           4           39         25
      Carbon and Minerals             11           7            9          8
      Pipelines                       16          13           19         16
      Other                           --          --            7          5

    Corporate and Unallocated
      Administrative and
       general expense               (20)        (16)         (39)       (24)
      Net interest expense           (24)        (22)         (59)       (40)
      Environmental and
       litigation expense             (3)         (2)         (11)        (7)
      New Ventures                   (15)        (10)         (16)       (10)
      Other                          (11)         (9)          (4)        10

    Earnings from continuing
     operations                      184         134          274        160
    Loss from discontinued
     operations                       --          --          (14)       (10)
       Total                        $184        $134         $260       $150
    Adjusted earnings
     applicable to
     common stock                               $134                    $150
    Adjusted earnings per
     common share                              $0.55                   $0.60
    Adjusted earnings
     from continuing
     operations per
     common share                              $0.55                   $0.64


    EARNINGS BY BUSINESS SEGMENT
    (Unaudited)
                                 Twelve Months Ended     Twelve Months Ended
                                   December 31, 1997      December 31, 1996
    Millions of dollars         Before-tax   After-tax   Before-tax After-tax

    Exploration and Production
     United States
      Spirit Energy 76              $328        $205         $472       $293
      Other                           96          60          197        119
     International                   474         375          546        316

    Geothermal Operations             31          26          (76)       (55)

    Diversified Business Group
      Agricultural Products           83          54          152         98
      Carbon and Minerals            109          76           59         47
      Pipelines                       70          59           86         69
      Other                           45          38           22         14
    Corporate and Unallocated
      Administrative and
       general expense               (82)        (56)        (126)       (79)
      Net interest expense          (133)       (106)        (256)      (175)
      Environmental and
       litigation expense           (146)        (91)        (230)      (143)
      New Ventures                   (49)        (33)         (36)       (23)
      Other                          (55)         62          (52)       (25)
    Earnings from continuing
     operations before
     discontinued operations
     and extraordinary item          771         669          758        456
    Loss from discontinued
     operations                      (81)        (50)        (677)      (420)
    Extraordinary item               (52)        (38)          --         --
       Total                        $638        $581          $81        $36


    SPECIAL ITEMS
    (Unaudited)

    Dollars in millions except per share amounts
                                 Twelve Months Ended     Twelve Months Ended
                                   December 31, 1997       December 31, 1996
                                Before-tax   After-tax   Before-tax After-tax

    Reported earnings               $638        $581          $81        $36
    Less: Special items

    Exploration and Production
     United States
      Spirit Energy
       Asset sales                    11           7            1         --
       Impairment                    (66)        (41)         (19)       (11)
       Settlement of
        federal leases                --          --           12          7
       Restructuring provision        --          --           (7)        (4)
      Other
       Asset sales                    --          --          106         66
       Impairment                     --          --          (33)       (21)
     International
       Asset sales                   (15)        (16)          24         41
       Impairment                     (3)         (2)          --         --
       Uninsured loss - Bangladesh   (12)         (8)          --         --
       Deferred tax adjustment        --          94           --         --
    Geothermal Operations
       Asset sales                    --          --          (92)       (57)
       Deferred tax adjustment        --          10           --         --
       Impairment                                             (23)       (14)
       Other                          --          --            3          2
    Diversified Business Group
     Carbon and Minerals
       Asset sales                    67          41           --         --
       Environmental and
        litigation provision         (10)         (6)          (2)        (1)
       Restructuring costs            (2)         (1)          --         --
     Pipeline
       Asset Sales                    --          --           15          9
     Other
       UNO-VEN restructuring          48          40           --         --
    Corporate and Unallocated
       Asset Sales                    18          11           18         11
       Environmental and
        litigation provision        (125)        (78)        (196)      (122)
       Deferred tax adjustment        --         103           --         --
       Other                          --          --          (15)       (12)
    Discontinued Operations
       Asset Sales                    --          --            5          3
       Other                          --          --            3          2
       Net loss on disposal          (81)        (50)        (792)      (491)
    Extraordinary item               (52)        (38)          --         --
    Total special items             (222)         66         (992)      (592)

    Adjusted earnings               $860        $515       $1,073       $628


    EARNINGS BY BUSINESS SEGMENT
    EXCLUDING SPECIAL ITEMS
    (Unaudited)

    Millions of dollars except per share amounts
                                 Twelve Months Ended     Twelve Months Ended
                                  December 31, 1997       December 31, 1996
                               Before-tax     After-tax  Before-tax After-tax

    Exploration and Production
     United States
      Spirit Energy 76              $383        $239         $485       $301
      Other                           96          60          124         74
     International                   504         307          522        275

    Geothermal Operations             31          16           36         14

    Diversified Business Group
      Agricultural Products           83          54          152         98
      Carbon and Minerals             54          42           61         48
      Pipelines                       70          59           71         60
      Other                           (3)         (2)          22         14

    Corporate and Unallocated
      Administrative and
       general expense               (82)        (56)        (126)       (79)
      Net interest expense          (133)       (106)        (256)      (175)
      Environmental and
       litigation expense            (21)        (13)         (34)       (21)
      New Ventures                   (49)        (33)         (36)       (23)
      Other                          (73)        (52)         (55)       (24)

    Earnings from continuing
     operations                      860         515          966        562
    Earnings from discontinued
     operations                       --          --          107         66
     Total                          $860         515       $1,073       $628
    Dividends on preferred stock                  --                      18
    Non-cash charge related to
     exchange of preferred stock                  --                      54
    Adjusted earnings applicable
     to common stock                            $515                    $556
    Adjusted earnings
     per common share                          $2.08                   $2.23
    Adjusted earnings from
     continuing operations
     per common share                          $2.08                   $1.97

Updated: January 1998