press release

Unocal sees production rising to nearly 800,000 BOE/day in 2007, analysts told

New York, Sept. 5, 2001 - Unocal Corporation (NYSE: UCL) senior management today told analysts that the company's worldwide net oil and gas production could average nearly 800,000 barrels-of-oil-equivalent (BOE) per day in 2007, 63 percent above the company's average production last year.

"Our legacy assets in North America and Asia continue to perform and grow, while our exploration programs are beginning to deliver new resources for us," said Charles R. Williamson, Unocal's chief executive officer.

The company's production forecast came at Lehman Brothers' 15th Annual CEO Energy Conference today in New York City.

"We expect to achieve this production growth through development of frontier discoveries that we have already made and aggressive development of additional oil and gas resources in our established operating areas," Williamson said. "Our goal is to maintain a stable capital spending program of $1.8 - $2.0 billion per year, with a 45- to 50-percent debt-to-total-capitalization ratio, while reducing finding and development costs to about $5.50 per BOE."

Williamson pointed out that Unocal is a leading international E&P company. Natural gas accounts for about two-thirds of the company's current production and proved reserves. "We're a major gas producer in North America and we have huge discovered, but unbooked, gas resources in Asia," Williamson said. "By coupling this asset base with our industry-leading drilling capability, we fully expect to meet the production and cost targets that we've outlined."

Williamson told analysts where Unocal would achieve the additional oil and gas production. "In the U.S., we are looking a new deep gas production on the Gulf of Mexico shelf, GOM deepwater projects and additional oil and gas production in South Alaska," Williamson said. "We also see steady growth in oil production in Thailand and Azerbaijan, as well our deepwater resources in Indonesia."

Earnings and reserves

Unocal said it expects adjusted earnings from continuing operations for 2001 of between $3.20 and $3.40 per share, with adjusted discretionary cash flow of $9.10 to $9.25 per share. The full-year earnings forecast assumes average NYMEX benchmark prices of $27.00 per barrel for crude oil and $4.50 per MMBtus for Lower 48 natural gas.

Unocal's worldwide net production for the year should average between 505,000 to 515,000 BOE. In the Lower 48, dry natural gas production is expected to average 920 million cubic feet per day (MMcfd) for the year, up from 764 MMcfd in 2000.

"We expect to record reserve replacement this year of between 170- and 220-percent of production at an F&D cost about between $7.30 per BOE and $5.60 per BOE," Williamson said.

GOM deep water exploration

The company also outlined for analysts its deepwater Gulf of Mexico plans for 2002.

"We will continue with the appraisal of our Trident and Mad Dog discoveries, while drilling two or three more wildcats on Unocal prospects," Williamson said. "At the same time, we are taking steps to optimize the use of the Discoverer Spirit drillship by capturing the best opportunities and increasing flexibility so we can reduce our total exploration costs."

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

Webcast of presentation

Unocal will broadcast the presentation at the Lehman Brothers conference today at 7 a.m. PDT (10 a.m. EDT) over the Internet. To listen to the live webcast, go to the "Investor Information" section of the Unocal web site. Replays of the presentation, including questions and answers, will be available until Sept. 28, 2001. Visitors will also be able to view and download the handout from the presentation.

This news release contains certain forward-looking statements about future production, capital spending, debt, finding and development costs, earnings, discretionary cash flow, commodity prices, reserves and future drilling. 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 other reports filed with the U.S. Securities and Exchange Commission. Unocal undertakes no obligation to update the information in this news release.

Production amounts include minority interest and equity investee shares in the U.S. Investors are urged to consider closely the disclosure in Unocal's 2000 Form 10-K and other reports. 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: September 2001