press release

Unocal sees reserve replacement ratio at 135-145% for 1999; FD&A costs pegged at $5.50-$6.00 per BOE

Unocal sees reserve replacement ratio at 135-145% for 1999; FD&A costs pegged at $5.50-$6.00 per BOE

El Segundo, Calif., Dec. 13, 1999 -- Unocal Corporation today said it expects that it will replace approximately 135-145 percent of its oil and gas production with new reserves in 1999, and total finding, development and acquisition (FD&A) costs could be about $5.50-$6.00 per barrel-of-oil-equivalent (BOE) for the year.

Roger C. Beach, Unocal chairman and chief executive officer, said the new estimates of reserve replacement is significantly higher than earlier projections, due mainly to successes in Unocal's exploration program in sustaining businesses in the second half of the year and an aggressive, year-long development and production program. The company had previously projected a 100-percent replacement ratio based on the reduced capital spending for the year.

"The reserve replacement performance in 1999 is the best since 1990 and reflects the success of our transition to a growth and return-oriented E&P player," Beach said.

Beach also noted that Unocal's total FD&A costs are expected to be about $5.50-$6.00 per BOE. "The cost performance is particularly encouraging given the high level of spending during the year to promote undeveloped reserves into the developed and producing category in our mature Spirit Energy 76 business in the Gulf of Mexico region," Beach said. "These development programs are highly profitable, but do not contribute new reserves bookings."

In addition, the company has not yet booked reserves associated with the deepwater Mirage and Mad Dog discoveries in the Gulf of Mexico, despite significant capital spending on those prospects.

The reserve replacement ratio reflects discoveries and extensions, improved recovery, price-related and other revisions, purchases of reserves, and sales of reserves.

The estimated reserve replacement ratio includes Northrock Resources Ltd. Excluding the minority share of Northrock, the estimated reserve replacement ratio is 120-130 percent. The estimated FD&A costs include Northrock Resources Ltd. Excluding the minority share of Northrock, the estimated FD&A cost is $6.50-$7.00 per BOE.

Detailed reserve replacement and FD&A data for 1999 are expected to be published in February 2000.

Forward looking statements and estimates regarding the reserve replacement ratio, possible future reserve bookings, FD&A costs, and capital spending in this news release are based on assumptions about operational, market, competitive, regulatory, environmental, and other considerations. Actual results could differ materially as a result of factors discussed in Unocal's 1998 Form 10-K report filed with the U.S. Securities and Exchange Commission.

Updated: December 1999