press release

Unocal wells expand deepwater Merah Besar oil and gas resource offshore Indonesia

El Segundo, Calif., March 16, 1998 -- Unocal Corporation said today that its Unocal Indonesia Company subsidiary drilled two more successful wells in the deepwater Merah Besar area, further delineating a recent discovery offshore Indonesia.

The two wells, Merah Besar #9 and Hitam Besar #1, both encountered shallow gas on the E. Kalimantan production-sharing contract (PSC) area. The Merah Besar #9 well also found deeper oil pay in the Miocene formation, but well problems prevented evaluation of the Miocene sands in the Hitam Besar #1.

"These new wells add significantly to our understanding of the area's geology," said Timothy C. Lauer, president and managing director of Unocal Indonesia. "Based on the latest drilling results, coupled with our analysis of extensive seismic surveys, we now estimate the gross resource potential for the Merah Besar area at 75 to 300 million barrels of oil equivalent."

The company intends to submit a plan of development for the Merah Besar area in the fourth quarter of 1998. Production could begin by early 2001. The new development would include deepwater portions of the East Kalimantan and Makassar Strait PSCs. Unocal has a 100-percent working interest in the East Kalimantan PSC. The company is operator and has a 50-percent working interest in the Makassar Strait PSC. Mobil Makassar, Inc., holds the remaining 50-percent working interest.

Lauer noted that 10 of 14 deepwater wells drilled to date offshore East Kalimantan have been successful, including 8 out of 10 drilled in the Merah Besar area. Merah Besar #5 recently tested at 9,430 barrels of oil per day and 7.4 million cubic feet of gas per day from a single zone. Additional oil and gas zones were confirmed but not tested.

Lauer added that 2-D and 3-D seismic surveys on Unocal's deepwater acreage have indicated numerous additional leads, several of which could be larger than the expected size of Merah Besar.

The Sedco 602 semi-submersible drilling rig, which is capable of drilling in water depths of up to 3,000 feet, has been moved to new prospects on the southern portion of the Makassar Strait PSC. Three planned wells there are considered higher-risk exploration opportunities.

An additional deepwater rig (with 5,000 feet water depth capability) is expected in June to drill three additional delineation wells in the eastern part of the Merah Besar structure.

In total, Unocal expects to drill 35 exploration wells on deepwater prospects offshore East Kalimantan during 1998.

Forward-looking statements about resource potential and future exploration activities in this news release are based on assumptions concerning geological, market, competitive, regulatory, environmental, operational and other considerations. Actual results could differ materially.

Updated: March 1998