press release

Unocal reports preliminary year-end 2004 reserves of 1.75 billion BOE

View/download Preliminary 2004 E&P Segment Reserves and Cost Information(pdf format)

El Segundo, Calif., Feb. 1, 2005 - Unocal Corporation (NYSE: UCL) today reported its preliminary natural gas and crude oil reserves estimate of 1.754 billion barrels-of-oil equivalent (BOE) at year-end 2004.

The 2004 results compare with 1.759 billion BOE a year earlier.

For the year 2004, Unocal added 150 million BOE to its reserves through discoveries and extensions, net purchases and sales, and performance, price and other revisions. The company produced 155 million BOE in 2004.

The company replaced 96 percent of its 2004 production through discoveries and extensions, net purchases and sales, and revisions. Excluding net purchases and sales, Unocal replaced 105 percent of its 2004 production. The calculation of both ratios is explained below.

The company added 199 million BOE from discoveries and extensions. Unocal also made 39 million BOE in negative price revisions attributable to changes in crude oil prices for reserves held under production-sharing contracts (PSCs). Other price revisions accounted for a 14 million BOE increase in the company's North American reserves. Purchases and sales amounted to a net reduction of 12 million BOE. All other revisions totaled a negative 12 million BOE.

"Our primary focus in 2004 was development and moving contracts forward on previous discoveries," said Charles R. Williamson, Unocal chairman and chief executive officer. "We recorded major bookings in Bangladesh and the Caspian Sea as contracts were signed and development projects were approved. In addition, we added reserves from discoveries in Thailand, the Permian Basin and Canada."

The discoveries and extensions were primarily from the sanctioning of the Bibiyana development in Bangladesh and the Phase III development by the Azerbaijan International Operating Company (AIOC) in the Caspian Sea, and additional reserves of the company's Unocal Thailand, Pure Resources and Northrock operations.

Worldwide, Unocal's finding, development and acquisition (FD&A) cost ratio, as explained below, was $11.09 per BOE. In 2004, the company promoted approximately 135 million BOE from proved undeveloped to the proved developed category. Under foreign PSC arrangements in Indonesia, Myanmar, Azerbaijan (AIOC), Bangladesh, and the Democratic Republic of the Congo, net entitlement reserves to the contractor (Unocal) increase as oil and/or gas prices decline and decrease when they rise. Benchmark crude oil prices rose from $32.55 per barrel at year-end 2003 to $43.46 per barrel at the end of 2004. The price increase resulted in approximately 39 million BOE negative revisions in Unocal's reserves under PSCs because fewer equivalent barrels are required to reimburse the company for its costs. The higher prices resulted in 14 million BOE of positive revisions in non-PSC countries because the company's estimates of commercially recoverable resources increased under those economic conditions.

Reserve details

Details of Unocal's preliminary year-end 2004 exploration and production segment reserves and cost information are posted on the Unocal web site,, in the table entitled "Year-End 2004 Estimated Reserves and Cost Information." (View/download Preliminary 2004 E&P Segment Reserves and Cost Information)

About Unocal Corporation

Unocal is one of the world's leading independent natural gas and crude oil exploration and production companies. The company's principal oil and gas activities are in North America and Asia.

Unocal preliminary estimated proved reserves
of crude oil and natural gas (MMBOE)
As of December 31, 2003 1,759
Discoveries and extensions 199
Revisions -- PSC price-related (39)
-- Other price-related 14
All other revisions (12)
Purchases & sales (net) (12)
Total 2004 changes 150
Production (155)
As of December 31, 2004 1,754

Explanation of Ratios

Certain ratios described in this news release were calculated based on information included in the table immediately above and in the table referred to under "Reserve details." The reserve replacement ratio of 96% was calculated by dividing the sum of changes (revisions of estimates, improved recovery, discoveries & extensions and net purchases and sales) to estimated proved oil and gas reserves during 2004 by Unocal's 2004 production of 155 million BOE. The reserve replacement ratio of 105% was calculated by dividing the sum of changes to reserves as noted above, other than from purchases and sales of reserves volumes, by the 2004 production. The FD&A cost ratio was calculated by dividing the sum of the components of property acquisition, exploration (finding) and development costs by the total BOE of proved reserves added (discoveries and extensions plus improved recovery, revisions and purchases).

Forward-Looking Statements: This news release, including the table referred to under "Reserve details," contains forward-looking statements about matters such as estimates of proved oil and gas reserves recoverable in future years. Although these statements are based upon Unocal's current expectations and beliefs, they are subject to known and unknown risks and uncertainties that could cause actual results to differ materially from those described in, or implied by, the forward-looking statements, including volatility in commodity prices; Unocal's ability to develop and produce deepwater and other projects in a timely and cost-effective manner; the accuracy of Unocal's estimates and judgments regarding hydrocarbon resources and formations and reservoir performance; operational risks inherent in the exploration, development and production of oil and gas; the impact of environmental laws, permitting and licensing requirements and other regulations; international and domestic political and economic factors; and other factors discussed in Unocal's 2003 Annual Report on Form 10-K, as amended, and subsequent reports filed by Unocal with the U.S. Securities and Exchange Commission (SEC). Copies of Unocal's SEC filings are available from Unocal by calling 800-252-2233 or from the SEC by calling 800-SEC-0330. The reports are also available on the Unocal web site, Unocal undertakes no obligation to update the forward-looking statements in this news release to reflect future events or circumstances. All such statements are expressly qualified by this cautionary statement, which is provided pursuant to the safe harbor provisions of Section 27A of the Securities Act of 1933 and Section 21E of the Securities Exchange Act of 1934.

Estimates of Proved Reserves

Proved reserves, as defined by the SEC, are the estimated quantities of crude oil, natural gas and natural gas liquids that geological and engineering data demonstrate with reasonable certainty to be recoverable in future years from known reservoirs under existing economic and operating conditions. Estimates of proved reserves require substantial judgment. Different reserve engineers may make different estimates of reserve quantities based on the same data. Please see the risk factor entitled "Our oil and gas reserve estimates are subject to change" in Unocal's 2003 Annual Report on Form 10-K, as amended. In addition, the estimates in this news release, including the table referred to under "Reserve details," are preliminary and are subject to change in connection with Unocal's preparation and filing of its 2004 Annual Report on Form 10-K, which will contain disclosures regarding Unocal's estimates of its proved reserves as of December 31, 2004. Proved reserve quantities exclude royalty and other interests owned by others.

Updated: February 2005