press release

Unocal projects 2001 capital spending at $1.5 - $1.6 billion; focus on domestic natgas projects, Asia production

El Segundo, Calif., Dec. 12, 2000 -- Unocal Corporation today said it expects capital spending for 2001 of $1.5 to $1.6 billion, up slightly from the estimated $1.4 billion this year. The capital spending estimates do not include significant acquisition expenditures.

"We will maintain discipline in our capital spending even in the face of extremely high commodity prices," said Roger C. Beach, Unocal chairman and chief executive officer. "The spending will add production in Southeast Asia and in the Gulf of Mexico shelf and the U.S. Permian Basin (through our investment in Pure Resources, Inc.), which will allow us to take advantage of higher expected natural gas realizations."

Charles R. Williamson, Unocal's executive vice president for International Energy Operations, said that the spending forecast includes higher exploration drilling on Unocal's Gulf of Mexico and East Kalimantan, Indonesia, deepwater prospects, as well the company's first deepwater wells offshore Brazil and Gabon. Williamson has been elected Unocal's new chief executive officer effective Jan. 1, 2001.

"We expect to generate excess operating cash flow over our proposed capital spending and expected common stock dividends for 2001, based on current NYMEX commodity prices," Williamson said. "Our spending plan, particularly in North America, is flexible enough that we can adjust it if commodity prices significantly change. If prices hold up at today's levels, we will allocate most of the excess cash flow to debt reduction."

International exploration and development

The company expects to spend about $425 million next year on projects in Thailand and Indonesia. This includes development of the Pailin gas field and Yala oil field in the Gulf of Thailand and the West Seno oil field in the Makassar Strait offshore East Kalimantan. Yala is the company's first oil field development in Thailand. About $70 million is earmarked for exploration drilling in the two countries.

The company expects to spend about $50 million for exploration drilling on deepwater prospects offshore Brazil and Gabon (West Africa).

North America exploration and development

Unocal expects that capital expenditures for North America will total about $930 million. This includes about $130 million for the Gulf of Mexico deepwater exploration drilling, more than double the 2000 spending level.

The company plans spending of $530 million for exploration and development projects on the Gulf of Mexico shelf and the Permian Basin (through Unocal's 65-percent owned Pure Resources, Inc., subsidiary). These projects are expected to generate additional natural gas production volumes to take advantage of high commodity prices. The current NYMEX average price for 2001 is well over $5 per thousand cubic feet (mcf), compared with about $4 per mcf in 2000.

Acquisitions

The planned 2001 capital spending and the 2000 estimated spending level do not include significant acquisition expenditures. In 2000, the company spent $155 million to acquire the interests of Exxon Mobil affiliates in the Makassar Strait and Rapak production-sharing contract areas in Indonesia and $161 million to purchase the publicly held stock of Northrock Resources, Inc., in Canada.

This news release contains certain forward-looking statements about capital expenditures, development activities, and commodity prices. 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 1999 Form 10-K report filed with the U.S. Securities and Exchange Commission. Unocal undertakes no obligation to update the information in this news release.

U.S. investors are urged to consider closely the disclosure in Unocal's 1999 Form 10-K.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.

Updated: December 2000