press release

Unocal posts record quarterly earnings of $264 million

El Segundo, Calif., July 27, 2000 -- Unocal Corporation (NYSE: UCL) today said that its net earnings of $264 million, or $1.05 per share (diluted), for the second quarter 2000 were the highest quarterly earnings recorded in the company's history.

Earnings from continuing operations were $250 million, or $1.00 per share (diluted). Adjusted aftertax earnings from continuing operations for the quarter (excluding special items) were $170 million, or 69 cents per share (diluted).

The second quarter results compare with net earnings of $9 million, or 4 cents per share (diluted), in the same period a year ago. Adjusted aftertax earnings from continuing operations for the second quarter 1999 were $16 million, or 6 cents per share (diluted).

CONSOLIDATED RESULTS (unaudited) Unocal Corporation
Millions of dollars except per share amounts 2Q 2000 1Q 2000 2Q 1999

Adjusted after-tax earnings from continuing operations $ 170 $ 139 $ 16
Special items 80 (15) (10)

Earnings from continuing operations $ 250 $ 124 $ 6
Earnings from discontinued operations 14 9 3

Net earnings $ 264 $ 133 $ 9

DILUTED EARNINGS PER SHARE DATA (unaudited)
Adjusted after-tax earnings per share from continuing operations $ 0.69 $ 0.57 $ 0.06

Net earnings per share:
Continuing operations $ 1.00 $ 0.51 $ 0.03
Discontinued operations 0.05 0.04 0.01

Total net earnings per share $ 1.05 $ 0.55 $ 0.04

CASH FLOW DATA (unaudited)
Adjusted discretionary cash flow $ 495 $ 412 $ 308
Adjusted discretionary cash flow per share $ 1.93 $ 1.70 $ 1.26

REVENUES FROM CONTINUING OPERATIONS (unaudited) $ 2,248 $ 1,881 $ 1,441

"Our strong sustaining production portfolio allowed us to participate in the stronger oil and gas commodity prices, particularly in our Lower 48 U.S. operations. This helped us record the highest earnings in the company's history," said Roger C. Beach, Unocal chairman and chief executive officer. "The results this quarter show that we are on track with the earnings expectations that Unocal set earlier this year." Unocal's adjusted aftertax earnings per share were 6 cents above the latest First Call consensus.

Commodity prices and production

Unocal's worldwide average realized natural gas price rose 33 percent to $2.62 per thousand cubic feet (mcf), compared with second quarter 1999. The average worldwide price for crude oil was $24.78 per barrel, up 77 percent.

Higher worldwide natural gas prices contributed about $70 million to earnings, while increased worldwide crude oil prices contributed about $90 million.

Worldwide consolidated net daily production averaged 507,000 barrels-of-oil equivalent (BOE), compared with 481,000 BOE for the same period last year. Second quarter Lower 48 natural gas production was up 2 percent, compared with the first three months of the year, continuing an upward trend that began with the fourth quarter 1999. In the Far East, natural gas production was up 4 percent from the first quarter 2000, due primarily to higher deliveries in Thailand.

Financial measures

Unocal's adjusted discretionary cash flow for the second quarter was $495 million, or $1.93 per share. This compares with $308 million, or $1.26 per share, in the same period of 1999.

Capital spending for the second quarter was $263 million, up from $243 million a year ago. The capital spending in both periods excludes acquisition costs for the stock of Canada-based Northrock Resources Ltd.

The company's total debt was $2.78 billion (48% debt-to-total capitalization ratio) at the end of the second quarter, compared with $2.85 billion (51% debt-to-total capitalization ratio) at the end of 1999. The debt-to-total capitalization ratio should continue to decline over the remainder of 2000 on the strength of Unocal's expected earnings.

Second quarter revenues were $2.25 billion, up 56 percent from $1.44 billion in the same period a year ago.

Special items/discontinued operations

The special items for the second quarter 2000 included $55 million aftertax ($91 million pretax) received for infringement of one of the company's five reformulated gasoline patents during a five-month period in 1996. A U.S. District Court jury in 1998 awarded Unocal a royalty fee of 5.75-cents per infringing gallon of gasoline manufactured by six (now five) defendant oil companies. The company will now seek additional damages from the defendants for infringement subsequent to Aug. 1, 1996.

The company also recorded a $21 million aftertax insurance recovery and booked a $42 million aftertax gain from the Pure Resources transaction.

These positive special items were offset partially by $30 million (aftertax) in litigation/environmental provisions.

The company's agricultural products business (a discontinued operation) contributed $14 million, or 5 cents per share (diluted), to Unocal's net earnings. The company expects to complete the sale of this business unit in August, assuming final approval by the U.S. Federal Trade Commission.

Earnings/production forecast

"We are projecting that 3Q 2000 adjusted earnings from continuing operations will exceed 70 cents per share, with full-year adjusted earnings coming in at about $2.70 to $2.90 per share," Beach said. For the third quarter, the company assumes an average West Texas Intermediate (WTI) price of $29.75 per barrel of oil and a Henry Hub price of $4.00 per mmBtu of gas. The full-year 2000 forecast is based on an average WTI price of $28.60 per barrel oil and a Henry Hub price of $3.55 per mmBtu for gas.

The company expects that net daily worldwide production for the second half of 2000 will average about 528,000 BOE, up 4 percent from the first six months of the year.

Six-months results

For the first six months of 2000, Unocal recorded net earnings of $397 million, or $1.60 per share (diluted), on revenues of $4.13 billion. This compares with net earnings of $16 million, or 7 cents per share (diluted), on revenues of $2.61 billion last year.

Earnings from continuing operations for the six months were $374 million, or 1.51 cents per share (diluted), up from $10 million, or 5 cents per share (diluted), last year. Adjusted aftertax earnings from continuing operations for the six months (excluding special items) were $309 million, or $1.26 per share, compared with $33 million, or 13 cents per share, reported in the same period of 1999.

CONSOLIDATED RESULTS (unaudited) FOR THE 6 MONTHS ENDED JUNE 30
Millions of dollars except per share amounts 2000 1999

Adjusted after-tax earnings from continuing operations $ 309 $ 33
Special items 65 (23)
Earnings from continuing operations $ 374 $ 10
Earnings from discontinued operations 23 6

Net earnings $ 397 $ 16

DILUTED EARNINGS PER SHARE DATA (unaudited)
Adjusted after-tax earnings per share from continuing operations $ 1.26 $ 0.13

Net earnings per share:
Continuing operations $ 1.51 $ 0.05
Discontinued operations 0.09 0.02

Total net earnings per share $ 1.60 $ 0.07

CASH FLOW DATA (unaudited)
Adjusted discretionary cash flow $ 907 $ 564
Adjusted discretionary cash flow per share $ 3.54 $ 2.32

REVENUES FROM CONTINUING OPERATIONS (unaudited) $ 4,129 $ 2, 609

About Unocal Corporation

Unocal is one of the world's leading independent natural gas and crude oil exploration and production companies. The company also focuses on pipeline and power plant projects in Asia and the Americas. At year-end 1999, Unocal had worldwide natural gas reserves of 6.6 trillion cubic feet, representing two-thirds of the company's overall hydrocarbon reserves. Unocal's net worldwide natural gas production currently averages 2 billion cubic feet per day. This includes about 1 billion cubic feet per day in North America, where Unocal is one of the largest independent natural gas producers.

Conference call/financial database

Forward-looking statements regarding earnings, commodity prices, capital expenditures, debt levels, cash flow, forecasted production levels and reserves in this news release are based on assumptions concerning operational, market, competitive, regulatory, environmental and other considerations. Actual results could differ materially as a result of factors discussed in Unocal Corporation's 1999 Form 10-K report filed with the Securities and Exchange Commission.

ADJUSTED DISCRETIONARY CASH FLOW (UNAUDITED)   2Q         1Q       2Q
    Millions except per share amounts            2000       2000     1999

    Adjusted after-tax earnings                  $170       $139      $19

    Adjustments to earnings, excluding
     special items:
      Depreciation, depletion and amortization    224        206      183
      Dry hole costs                               37         14       47
      Deferred income taxes                        30          6       28
      Exploration expenses                         37         49       35
      Capitalized interest                         (3)        (2)      (4)
       Total adjusted discretionary cash flow    $495       $412     $308

    Diluted weighted average shares               256        243      244
    Adjusted discretionary cash flow per share   1.93       1.70     1.26

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.

                                                       UNOCAL CORPORATION
    ADJUSTED AFTER-TAX EARNINGS BY BUSINESS SEGMENT
    (UNAUDITED)
                                                    2nd       1st     2nd
                                                Quarter   Quarter Quarter
    Millions of dollars                            2000      2000    1999
      Exploration & Production
       North America
         Lower 48 (a) (b)                            92        63       6
         Alaska                                      23        24       6
         Canada (a)                                 (11)        4       5
       International
         Far East                                    88        82      39
         Other                                       19        (2)     (4)
      Global Trade                                    6        (2)     --
      Pipelines                                      15        15      16
      Geothermal and Power Operations                 5         9      10
      Carbon & Minerals (a)                           6         8       7
      Corporate and Unallocated
         Administrative & General                   (21)      (22)    (21)
         Interest Expense - Net (a)                 (37)      (36)    (34)
         Environmental & Litigation                  (3)       (3)     (4)
         Other                                      (12)       (1)    (10)
    Adjusted after-tax earnings from
     continuing operations                         $170      $139     $16

    Adjusted after-tax earnings from
     discontinued operations                         --        --       3

    Adjusted after-tax earnings                    $170      $139     $19

    (a)Includes minority interests of:
        Lower 48                                     (6)       (5)     (4)
        Canada                                       12         8      (1)
        Carbon & Minerals                            (1)       --      --
        Corporate and Unallocated                     1         1       1

    (b)Includes earnings (loss) from:
        Onshore / Shelf                             105        75      41
        Deepwater                                   (13)      (12)    (35)

                                                      UNOCAL CORPORATION
    OPERATING HIGHLIGHTS (UNAUDITED)
                                                   2nd       1st      2nd
                                                Quarter   Quarter   Quarter
                                                  2000      2000     1999

    North America Net Daily Production
     Crude oil (thousand barrels daily)
       Lower 48 (a)                                44        45       40
       Alaska                                      26        27       28
       Canada (a)                                  15        16       12
         Total North America crude oil             85        88       80

     Natural gas - wet basis (million cubic
      feet daily)
        Lower 48 (a)                              756       737      764
        Alaska                                    138       154      131
        Canada (a)                                 94       101       59
         Total North America natural gas          988       992      954

    North America Average Prices (c)
     Crude oil (per barrel)
        Lower 48                               $27.12    $27.52   $14.98
        Alaska                                 $23.81    $23.15   $12.02
        Canada                                 $18.50    $19.24   $11.91
         Average North America
          crude oil prices                     $24.51    $24.60   $13.47

     Natural gas (per mcf)
        Lower 48                                $3.41     $2.50    $2.05
        Alaska                                  $1.20     $1.20    $1.20
        Canada                                  $1.50     $1.50    $1.90
         Average North America
          natural gas prices                    $2.89     $2.18    $1.93

    International Net Daily Production (b)
     Crude oil (thousand barrels daily)
       Far East                                    71        71       72
       Other                                       19        19       23
         Total International crude oil             90        90       95

     Natural gas - wet basis (million cubic
      feet daily)
       Far East                                   945       911      851
       Other                                       58        62       29
         Total International natural gas        1,003       973      880

    International Average Prices (c)
     Crude oil (per barrel)
       Far East                                $24.40    $23.63   $14.76
       Other                                   $26.38    $25.53   $14.26
         Average International
          crude oil prices                     $25.10    $24.05   $14.61

     Natural gas (per mcf)
       Far East                                 $2.31     $2.29    $2.03
       Other                                    $2.80     $2.73    $1.89
         Average International
          natural gas prices                    $2.35     $2.33    $2.02

    Worldwide Net Daily Production (a) (b)
     Crude oil (thousand barrels daily)           175       178      175
     Natural gas (per mcf)                      1,991     1,965    1,834
     Barrels Oil Equivalent                       507       506      481

    Worldwide Average Prices (c)
     Crude oil (per barrel)                    $24.78    $24.39   $13.99
     Natural gas (per mcf)                      $2.62     $2.25    $1.97

        (a) production includes 100 percent of consolidated subsidiaries and
            proportionate share of equity affiliates.

        (b) production includes certain host
            countries' shares of:
                                 Crude oil         27        29       26
                                 Natural gas      117       110       77

        (c) 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: July 2000