press release

Unocal wells extend significant Seno resource offshore Indonesia; development approaches proposed

El Segundo, Calif., Oct. 26, 1998 - Unocal Corporation today said that two successful deepwater wells have further confirmed the significant resource potential of the Seno prospect and the deepwater Kutei Basin play that has been a focus of the company's Indonesia exploration program.

The West Seno-1 was the second well drilled on the Seno prospect, which is located on the Makassar Strait production-sharing contract (PSC) area. The well was drilled down-dip of the earlier West Seno-2 discovery well to a true vertical depth subsea (TVDS) of 10,444 feet in 2,758 feet of water. The West Seno-1 well encountered 287 feet of vertical oil and gas pay in several zones between 7,200 feet and 9,800 feet (TVDS) and was not tested. The reservoir sands encountered in the well were equivalent to the sands that tested at a rate of 10,069 barrels-of-oil-per-day in the West Seno-2 well with porosity in the 30-percent range and with excellent permeability.

Unocal is currently drilling the West Seno-5 well, a delineation well located approximately 2.5 miles (4 km) south of the West Seno-2 well. The well is currently drilling at a depth of 10,490 feet TVDS with a target depth of 12,900 feet TVDS. The well has encountered 188 feet of vertical gas and oil pay in the section drilled to date.

After completion of the West Seno-5 well, the semi-submersible drilling rig will move to the East Seno-3 location, approximately 2 miles (3 kilometers) southeast of the East Seno-1 well location. The East Seno-1 well was drilled to 9,415 feet TVDS and encountered oil and gas shows. Located near the crest of the Seno structure, the East Seno-1 well had limited reservoir development. The East Seno-3 well is located down-dip of the East Seno-1 well and will test a thick series of high-amplitude seismic reflectors in a position where good reservoir development is expected.

The total resource potential of the Seno prospect was previously estimated at between 210 and 720 million barrels-of-oil equivalent. The company said it will require at least 3 or 4 more wells before it can update the resource potential range. Current indications are strong that the lower end of the range will rise sharply.

"Our focus is now on confirming the size of the West Seno field in order to move forward with rapid development. We expect to have first production during 2001," said Timothy C. Lauer, president and managing director of Unocal Indonesia. "We are working with the state oil and gas company, Pertamina, to develop low-cost deepwater technology that takes advantage of East Kalimantan's benign climatic conditions."

The Seno development also will benefit from more favorable PSC profit splits of 35 percent for the contractors, compared with 15 percent for shelf development.

Located in slightly deeper water than the Merah Besar field, the West Seno field would be developed using a fast-track modular approach that utilizes mini-TLP wellhead platforms and a central spread-moored production barge and is expected to cost about one-third less than a similar Gulf of Mexico deepwater development.

The Seno prospect is approximately 13 miles (22 kilometers) northeast of the Merah Besar field where Unocal recorded the first deepwater Indonesia oil and gas discovery last year. A plan of development is presently being prepared for that field, which is located in both the East Kalimantan PSC and the Makassar Strait PSC.

In addition, the company expects to begin exploration drilling on the promising Janaka prospect before year-end. If successful, the close grouping of the Merah Besar, Seno and Janaka deepwater prospects would provide significant economies of scale for development.

Unocal Indonesia Company is operator of the Makassar Strait PSC and has a 50-percent working interest. Mobil Makassar, Inc. holds the remaining 50-percent. Unocal is operator and holds a 100-percent working interest in the East Kalimantan PSC.

Forward-looking statements about future exploration and development activities and projected results in this news release are based on assumptions concerning geology, regulatory actions, economic, market conditions, operational concerns and other considerations. Actual results could differ materially.

Under the terms of the PSCs, Unocal, as contractor to Pertamina, the Indonesian national oil company, is entitled to varying shares of the oil and gas produced from commercial discoveries.

Seno Drilling Results to Date (in chronological order)

Well Drilling Depth Pay Test Results
West Seno-2 8,770 feet TVDS 120 vertical feet between 8,275 and 8,395 feet TVDS DST #1: 2,900 bopd; 37° API; 31 mmcfd gas; 28/64-inch choke, 2,170# FTP
57 vertical feet between 8,007 and 8,064 feet TVDS DST #2: 10,069 bopd; 39° API; 9.5 mmcfd gas;1-1/4-inch choke; 830# FTP
West Seno-1 10,444 feet TVDS 287 vertical feet in several zones between 7,200 and 9,800 feet TVDS No test
East Seno-1 9,415 feet TVDS Oil and gas shows No test
West Seno-5 Currently drilling at 10,490 feet TVDS; target 12,900 feet TVDS Encountered 188 vertical feet of pay to date

Updated: October 1998