press release

Unocal posts record quarterly earnings; Lower 48 natural gas production up 22%

El Segundo, Calif., April 25, 2001 -- Unocal Corporation (NYSE: UCL) today said that increased Lower 48 natural gas prices and production pushed the company's first quarter 2001 earnings to $295 million, the highest quarterly earnings in Unocal's history. On a per-share basis, Unocal reported earnings of $1.18 per share (diluted).

The 1Q 2001 performance is more than double the $133 million, or 55 cents per share (diluted), reported in the first quarter a year ago.

Adjusted aftertax earnings from continuing operations in the quarter (excluding special items) were $340 million, or $1.35 per share (diluted). This compares with adjusted earnings of $139 million, or 57 cents per share (diluted), in 1Q 2000.

CONSOLIDATED RESULTS (unaudited) Unocal Corporation
Millions of dollars except per share amounts 1Q 2001 4Q 2000 1Q 2000

Adjusted after-tax earnings from continuing operations $ 340 $ 261 $ 139
Special items (48) (88) (15)

Earnings from continuing operations $ 292 $ 173 $ 124
Earnings from discontinued operations 4 - 9
Cumulative effect of accounting change (1) - -

Net earnings $ 295 $ 173 $ 133

DILUTED EARNINGS PER SHARE DATA (unaudited)
Adjusted after-tax earnings per share from continuing operations $ 1.35 $ 1.04 $ 0.57

Net earnings per share:
Continuing operations $ 1.16 $ 0.70 $ 0.51
Discontinued operations 0.02 - 0.04

Total net earnings per share $ 1.18 $ 0.70 $ 0.55

CASH FLOW DATA (unaudited)
Adjusted discretionary cash flow $ 714 $ 677 $ 412
Adjusted discretionary cash flow per share (diluted) $ 2.79 $ 2.64 $ 1.70

REVENUES FROM CONTINUING OPERATIONS (unaudited) $ 2,214 $ 2,783 $ 1,856

"Unocal's Lower 48 natural gas production continued to increase for the fifth straight quarter, allowing us to take advantage of the strong natural gas market in the U.S.," said Charles R. Williamson, Unocal chief executive officer. "The earnings were further helped by sales at 'bid week' prices, which put our realizations higher than average daily spot prices for the quarter."

Unocal's first quarter Lower 48 natural gas prices averaged $6.93 per mcf, compared with $2.50 per mcf a year ago. The year-to-year increase in natural gas prices boosted Unocal's aftertax earnings by about $215 million.

Worldwide, Unocal's average realized natural gas price nearly doubled to $4.41 per mcf, compared with $2.26 per mcf in the first quarter 2000. The average worldwide liquids (crude oil, condensate and natural gas liquids) price was $24.63 per barrel, up 4 percent.

Production increases

In the Lower 48 U.S., Unocal's net natural gas production in the first quarter was 874 million cubic feet per day (mmcfd), up 22 percent from 714 mmcfd in the first quarter 2000. The higher production was due principally to the GOM Muni field, which reached peak production of 130 mmcfd; production from newly acquired properties in the Norphlet Trend in Mobile Bay and other Gulf of Mexico shelf areas; and the Titan Exploration merger and subsequent production increases by Unocal's Pure Resources, Inc. (NYSE: PRS) subsidiary (65%-owned).

Canada natural gas production increased above 4Q 2000 levels due to the timing of natural gas produced from the Aitken Creek Facility.

Worldwide consolidated net daily production in the first quarter 2001 averaged 495,000 barrels-of-oil equivalent (BOE), up nearly 7 percent from 464,000 BOE in the same period a year ago.

Unocal's worldwide production and price data is now reported using the net economic interest method, which excludes all host countries' shares under foreign production-sharing contracts and concessions from reported amounts. The company has also changed its natural gas reporting to a dry basis and now includes the produced natural gas liquids with the crude oil and condensate volumes. Prior period data have been restated to conform to the new reporting method.

These changes in production reporting have no impact on past or expected revenues and cash flow.

Production, price and certain other statistical information in the Quarterly Fact Book and Production Forecast have been conformed to the new reporting method. The fact book and forecast are available in the Investor Information - Data Warehouse section.

Financial measures

Unocal's adjusted discretionary cash flow for the first quarter was $714 million, or $2.79 per share (diluted). This compares with $412 million, or $1.70 per share (diluted), in the same period of 2000.

Capital spending for the first quarter was $360 million, up from $295 million in the first quarter 2000. The current year expenditures exclude the Pure Resources, Inc. acquisition of oil and gas properties from International Paper Company for $261 million. Pure Resources is a consolidated subsidiary of Unocal.

The company's long-term debt (including current maturities) was $2.74 billion (45% debt-to-total- capitalization ratio) at the end of the quarter, compared with $2.51 billion (44% debt-to-total- capitalization ratio) at the end of 2000. The debt increase during the first quarter was due to the Pure Resources acquisition of various International Paper properties. Barring any other substantial acquisitions, Unocal expects the debt-to-total-capitalization ratio will decline during the remainder of the year on the strength of Unocal's forecasted earnings.

First quarter revenues from continuing operations were $2.21 billion, up 19 percent from $1.86 billion in the first quarter 2000.

Special items

Significant aftertax special charges in the first quarter 2001 included $31 million for environmental accruals related to downstream businesses sold in prior years and $17 million in non-cash, mark-to-market accruals by Unocal's Northrock Resources, Ltd. subsidiary that are related to commodity derivative positions not accounted for as hedges.

Earnings/production forecast

"We are projecting 2Q 2001 adjusted earnings from continuing operations of 80 to 90 cents per share, depending on the outcome of our deepwater drilling results and other factors," Williamson said.

The company's second quarter forecast assumes average NYMEX benchmark commodity prices of $27.75 per barrel of crude oil and $5.15 per mmBtu for natural gas.

For the full-year 2001, Unocal currently estimates earnings of between $3.85 and $4.15 per share. The full-year forecast assumes average NYMEX benchmark commodity prices of $28 per barrel for crude oil and $5.70 per mmBtu for natural gas.

Unocal's second-quarter forecasted earnings are expected to change 3 cents per share for every $1 change in its average worldwide realized price for crude oil and 2 cents per share for every 10-cent change in the company's average realized Lower 48 natural gas price. Full-year adjusted earnings are expected to change 13 cents per share for every $1 change in its average worldwide realized price for crude oil and 7 cents per share for every 10-cent change in the company's average realized Lower 48 natural gas price.

The company expects that net daily worldwide production for the second quarter 2001 will average between 495,000 and 500,000 BOE. For full-year 2001, Unocal is forecasting net worldwide daily production of about 500,000 to 510,000 BOE. In the Lower 48, dry natural gas production is expected to average 880 mmcfd for the year, up from 764 mmcfd in 2000.

Deepwater exploration activities

"Unocal expects to have exploration wells under way in each of its four high potential deepwater areas during the second quarter," Williamson said.

In the Gulf of Mexico, the Ponza well (Unocal, 50% W.I.) is expected to reach the objective zone soon. Unocal has concluded with its partners that for competitive reasons the Ponza results will remain confidential at this time.

The results of the current multi-well Ranggas delineation drilling program (Unocal, 80% W.I.) offshore Indonesia in the Rapak PSC area will be announced after the upcoming lease sale on deepwater Kutei Basin concessions.

In Gabon, Unocal is participating in a multi-well program (Unocal, 25% W.I.). The company expects to be able to announce the results of the Renee #1 on the Astrid East prospect and the Judy #1 on the Astrid West prospect in May.

Offshore Brazil, two deepwater wells are expected to begin drilling soon. The wells are on the Kitty Hawk prospect in block BC-9 (Unocal, 35% W.I.) and the Lagosta prospect in block BES-2 (Unocal, 30% W.I.).

Conference call/financial database

Unocal will broadcast its quarterly earnings conference call today at 1 p.m. PDT (4 p.m. EDT) over the Internet. To listen to the live webcast, go to the Investor Presentations section of the Unocal web site. Replays of the conference call, including questions and answers, will be available until May 31, 2001.

In addition, complete detailed financial tables for the 1Q 2001 and the comparable prior periods are available in the "Quarterly Fact Book," which has been posted in the Unocal Investor Data Warehouse.

This news release contains certain forward-looking statements about production, drilling activities, debt ratio, commodity prices, and other operating and financial measures. These statements are not guarantees of future performance. The statements are based upon Unocal's current expectations and beliefs and are subject to a number of known and unknown risks and uncertainties that could cause actual results to differ materially from those described in the forward-looking statements. Actual results could differ materially as a result of factors discussed in Unocal's 2000 Form 10-K and other reports filed with the U.S. Securities and Exchange Commission. Unocal undertakes no obligation to update the information in this news release.

Production amounts include estimated minority interest and equity investee shares in the U.S. Investors are urged to consider closely the disclosure in Unocal's 2000 Form 10-K and other reports. Copies of the company's SEC filings are available from the company by calling 800-252-2233. The reports are also available on the Unocal web site.

     ADJUSTED AFTER-TAX EARNINGS                  1st       4th        1st
     BY BUSINESS SEGMENT (UNAUDITED)            Quarter   Quarter    Quarter
     Millions of dollars                         2001      2000       2000
     Exploration & Production
       North America
          Lower 48 (a) (b)                        241       149        63
          Alaska                                   19        23        24
          Canada (a)                               14         6         3
     International
          Far East                                106       127        82
          Other                                    22        14        (2)
     Global Trade                                   3         2        (2)
     Midstream                                      9        15        16
     Geothermal and Power Operations                1         6         9
     Corporate and Other
          Administrative & General                (23)      (26)      (22)
          Interest Expense - Net (a)              (33)      (36)      (36)
          Environmental & Litigation               (3)       (2)       (3)
          Other                                   (16)      (17)        7
     Adjusted after-tax earnings                 $340      $261      $139
     (a) Includes minority interests of:
          Lower 48                                (17)      (14)       (5)
          Canada                                   --         1         8
          Corporate and Other                       1        --         1
     (b) Includes earnings (loss) from:
          Onshore / Shelf                         264       188        75
          Deep Water                              (23)      (39)      (12)


     ADJUSTED DISCRETIONARY CASH FLOW             1st       4th        1st
      (UNAUDITED)                               Quarter   Quarter    Quarter
     Millions except per share amounts           2001      2000       2000

     Adjusted after-tax earnings                 $340      $261      $139
     Adjustments to earnings, excluding
      special items:
       Depreciation, depletion
        and amortization                          245       250       206
       Dry hole costs                              40        58        14
       Deferred income taxes                       60        72         6
       Exploration expenses                        34        41        49
       Capitalized interest                        (5)       (5)       (2)
         Total adjusted discretionary
          cash flow                              $714      $677      $412

     Diluted weighted average shares              256       256       243
     Adjusted discretionary cash flow
      per share (diluted)                        2.79      2.64      1.70


The preceding table of discretionary cash flow, excluding special items and all asset sales, 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 assumes certain income taxes related to special items are deferred and 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 in the company's quarterly fact book.

    OPERATING HIGHLIGHTS (UNAUDITED)               1st       4th       1st
                                                 Quarter   Quarter   Quarter
                                                  2001      2000      2000
     North America Net Daily Production
       Crude oil, condensate and
        natural gas liquids (thousand barrels)
         Lower 48 (a)                              53        52        54
         Alaska                                    24        25        28
         Canada (a)                                15        16        17
            Total crude oil, condensate and
             natural gas liquids                   92        93        99
       Natural gas - dry basis
        (million cubic feet)
         Lower 48 (a)                             874       840       714
         Alaska                                   138        87       151
         Canada (a)                               140       105        98
            Total natural gas                   1,152     1,032       963
     North America Average Prices (b)
       Crude oil, condensate and
        natural gas liquids (per barrel)
         Lower 48                              $26.71    $29.69    $25.15
         Alaska                                $22.76    $28.02    $23.15
         Canada                                $20.46    $22.55    $18.82
            Average                            $24.60    $27.97    $23.47
       Natural gas (per mcf)
         Lower 48                               $6.93     $5.27     $2.50
         Alaska                                 $1.20     $1.20     $1.20
         Canada                                 $4.22     $3.20     $1.60
           Average                              $5.87     $4.69     $2.19

     International Net Daily Production
       Crude oil, condensate and natural
        gas liquids (thousand barrels)
         Far East                                  50        50        46
         Other                                     19        17        18
           Total crude oil, condensate and
            natural gas liquids                    69        67        64
       Natural gas - dry basis
        (million cubic feet)
         Far East                                 793       799       781
         Other                                     57        56        61
           Total natural gas                      850       855       842
     International Average Prices (b)
       Crude oil, condensate and
        natural gas liquids (per barrel)
         Far East                              $24.25    $28.16    $23.60
         Other                                 $25.55    $29.08    $25.53
           Average                             $24.67    $28.34    $24.00
       Natural gas (per mcf)
         Far East                               $2.48     $2.68     $2.29
         Other                                  $2.89     $2.86     $2.73
           Average                              $2.50     $2.69     $2.33
     Worldwide Net Daily Production (a)
       Crude oil, condensate and natural
        gas liquids (thousand barrels)            161       160       163
       Natural gas - dry basis
        (million cubic feet)                    2,002     1,887     1,805
       Barrels oil equivalent (thousands)         495       475       464
     Worldwide Average Prices (b)
       Crude oil, condensate and
        natural gas liquids (per barrel)       $24.63    $28.12    $23.66
       Natural gas (per mcf)                    $4.41     $3.76     $2.26

    (a) Production includes 100 percent of production of consolidated
        subsidiaries and proportional shares of production of equity
        investees.

    (b) Average prices include hedging gains and losses but exclude gains or
        losses on derivative positions not accounted for as hedges and other
        Global Trade margins.

                    

Updated: April 2001