press release

Unocal sees 2002 capital spending at $1.7 billion; focus shifts to deepwater and development projects

El Segundo, Calif., Jan. 7, 2002 - Unocal Corporation (NYSE: UCL) today said it expects capital expenditures for 2002 of approximately $1.7 billion, essentially unchanged from the estimated expenditures in 2001. The capital-spending estimate does not include major acquisition expenditures for either year.

"We are shifting more of our capital spending emphasis in 2002 to development programs," said Charles R. Williamson, Unocal chairman and chief executive officer. "We expect to spend about $250 million, or 15 percent of our plan, on development of new deepwater oil and gas production in Indonesia and the Gulf of Mexico. We also will move forward in Azerbaijan with the phase-one oil development and construction of the main export pipeline."

Williamson noted that development expenditures are expected to total about $1.1 billion, up from $900 million in 2001. Exploration capital is expected to total about $400 million, down from about $500 million in 2001. The 2002 exploration capital estimate includes spending for delineation of the Trident deepwater Gulf of Mexico discovery and the Ranggas deepwater Indonesian discovery.

"We have built flexibility into our capital spending plan so we can make adjustments through the year to reflect the cash flow available because of commodity price changes," Williamson said.

International development and exploration

The company expects to spend about $800 million in 2002 on international projects. These include continued development of oil and gas resources in the Gulf of Thailand, the deepwater oil project at West Seno in Indonesia's Makassar Strait, and the phase one development and main export pipeline from oil fields in the Azerbaijan sector of the Caspian Sea. About $100 million is earmarked for exploration work, including drilling on deepwater prospects offshore Indonesia and Brazil.

North American development and exploration

Unocal expects that North America capital spending will total about $800 million. This includes initial development of the deepwater Mad Dog field in the Gulf of Mexico and continued development of GOM Shelf resources.

Planned North America exploration spending is approximately $300 million, including drilling in the Gulf of Mexico (deepwater and shelf), and in the Permian Basin through Unocal's 65-percent-owned Pure Resources, Inc., subsidiary.

Major acquisitions

The planned 2002 capital-spending plan does not include major acquisition expenditures. In 2001, the company spent about $650 million for major acquisitions.

Hedging activities

Unocal said it has no material hedges in place for 2002, except for a February and March costless collar on 24 billion Btus of natural gas. The collar has a floor of $2.50 per million Btus (MMBtus) and an average ceiling of $3.35 per MMBtus.

Williamson said the February and March hedge positions represent approximately 20 percent of Unocal's estimated worldwide natural gas production and 45 percent of the company's Lower 48 gas production for the two-month period.

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 operations are located in North America (Gulf of Mexico region, Alaska and Canada) and in Asia (Thailand, Myanmar, Indonesia, Bangladesh and Azerbaijan). The company is also pursuing exploration programs in West Africa and Brazil.

This news release contains certain forward-looking statements about capital expenditures and production. 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 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 Form 10-K and other reports (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