press release

Unocal sees 2002 adjusted earnings of $1.10 to $1.20 per share

El Segundo, Calif., Jan. 29, 2002 - Unocal Corporation (NYSE: UCL) today said it expects adjusted aftertax earnings (excluding special items) per share of $1.10 to $1.20 for 2002.

In addition, the company revised its expectation for 2002 production and announced it is reducing its 2002 capital-spending plan.

Unocal expects net worldwide daily production for 2002 of 510,000 to 520,000 barrels-of-oil-equivalent (BOE) per day. This compares with the prior forecast of 535,000 BOE per day.

"We reduced our forecast for 2002 because of a number of factors, including faster than expected declines from the Muni field on Ship Shoal 295 and reduced capital spending in 2002 for short-term production projects," said Charles R. Williamson, Unocal chairman and chief executive officer. "While we have made slight revisions to our longer term production forecast, we still project a 6-percent annual growth rate through 2004."

Capital spending plan

"Given continued weakness in commodity prices, especially in NYMEX natural gas, and our imperative to maintain a strong balance sheet, we are reducing our expected capital spending by $100 to $150 million from the previously announced $1.7 billion plan," Williamson said. "We are prepared to make additional cuts if the commodity price environment weakens further."

The company said it would focus on longer-term exploration and development activities. "We will push forward with our high-value, long-term development projects and shift our exploration focus in the Gulf of Mexico shelf to deeper, more subtle plays," Williamson said. "These are plays with significantly higher resource potential where we feel we have significant competitive advantages, mainly because of our drilling expertise, geologic/geophysical capabilities and our extensive seismic and land inventories."

The company plans to drill 8 to 10 net deep shelf exploration wildcats in 2002, with activity increasing in the second half of the year.

Unocal said the capital cuts are mainly focused on development and exploitation activities in North America that would yield near-term production increases. "Given the current weakness in commodity prices, we will not aggressively invest in short-term production projects in areas such as the Gulf of Mexico," Williamson said.

Williamson noted that the company has the flexibility to invest additional capital if prices recover or new opportunities arise in areas such as Thailand, which are not subject to NYMEX pricing.

The forecast for full-year 2002 earnings assumes average NYMEX benchmark prices of $20.00 per barrel of crude oil and $3.00 per million British thermal units (mmBtus) for North America natural gas.

Unocal's adjusted earnings are expected to change 15 cents per share for every $1 change in its average worldwide realized price for crude oil and 9 cents per share for every 10-cent change in the company's average realized North America natural gas price.

The forecast also assumes pretax dry hole costs of $130 to $140 million (62% to 59% success rate). Unocal's earnings are expected to change 8-cents-per-share for each 10-percent change in the overall success rate of the company's exploration drilling program.

1Q 2002 earnings forecast

The company said it expects adjusted aftertax earnings (excluding special items) per share of 10 cents to 15 cents for first quarter 2002. The forecast assumes average NYMEX benchmark prices of $19.35 per barrel of crude oil and $2.25 per million British thermal units (mmBtus) for North America gas.

In the first quarter 2002, the company expects net worldwide production to average between 490,000 and 500,000 BOE per day.

Details of the elements that support the 2002 estimates are available in the Investor Data Warehouse on the Unocal web site, www.unocal.com/investor.

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 operations are located in North America (Gulf of Mexico region, Permian Basin, Alaska and Canada) and in Asia (Thailand, Myanmar, Indonesia, Bangladesh and Azerbaijan). The company is also pursuing exploration programs in Brazil and West Africa. Unocal is one of the world's largest producers of geothermal energy with operations in the Philippines and Indonesia.

This news release contains certain forward-looking statements about expected earnings, production, commodity prices, capital expenditures, dry hole and other costs. 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 Annual Report on Form 10-K and subsequent reports filed with the U.S. Securities and Exchange Commission. Unocal undertakes no obligation to update the information in this news release.

Investors are urged to consider closely the disclosure in Unocal's 2000 Annual Report Form 10-K and other reports filed with the SEC (SEC File No. 1-8483). Copies of the company's SEC filings are available from the company by calling 800-252-2233 or from the SEC by calling 800-SEC-0330. The reports are also available on the Unocal web site.

Updated: January 2002