press release

Unocal-led venture to move forward with West Seno oil and gas development offshore Indonesia

El Segundo, Calif., Jan. 13, 1999 - Unocal Corporation said today it is pursuing a fast-track development program for the deepwater West Seno oil and gas field offshore East Kalimantan and expects to submit its plan of development early in the second quarter.

The West Seno field is the first deepwater oil and gas field offshore East Kalimantan that Unocal Indonesia Company and its co-venturer, Mobil Makassar, Inc., plan to develop and one of several prospective areas on the greater Seno structure in the Kutei Basin. Earlier, the company had estimated the gross resource potential for the greater Seno structure at 210 to 720 million barrels-of-oil equivalent (MMBOE).

Based on the successful exploration and delineation drilling to date, the company estimates gross recoverable oil and gas resources for the West Seno field alone at about 150 MMBOE. Planned follow-on drilling in the West Seno field could increase the total resource.

"Our early success with this exploration program has given us the enviable challenge of balancing additional exploration with development of our discoveries," said Timothy C. Lauer, president and managing director of Unocal Indonesia Company. "Our goal in this low-price environment is to move forward with innovative, low-cost developments. Based on resource size, both proven and potential, the greater Seno structure has moved to the front of the queue in our development portfolio and will be Unocal's first deepwater development in Indonesia."

Unocal Indonesia's latest delineation well in the West Seno field, West Seno 4, has encountered 319 feet of oil and gas pay so far and is still drilling. In addition, the first well on the Janaka prospect, located 10 miles (16 kilometers) south of the Seno structure in the Makassar Strait production-sharing contract (PSC) area, encountered 39 feet of confirmed oil and gas pay and 54 feet of probable pay. If subsequent drilling on Janaka proves commerciality, the field could be developed in concert with other Makassar Strait projects.

Unocal anticipates submitting a plan of development for the deepwater Merah Besar field. The Merah Besar field is located on the East Kalimantan and Makassar Strait PSC areas. Merah Besar could be developed as a cost-efficient satellite development to West Seno. Production from these deepwater fields is expected to begin in 2001.

"We plan to continue our aggressive drilling program in the Kutei Basin throughout 1999, with 20 to 25 deepwater exploration and delineation wells planned for the year," Lauer said. The company has identified five attractive prospects within 9 miles (15 km) of the Seno discovery that are ready to drill on the Rapak PSC area and northern portion of the Makassar Strait PSC area in early 1999. These five prospects have an unrisked gross resource potential of about 725 MMBOE.

The company has identified dozens of additional leads in the Makassar Strait and Rapak PSC areas to be evaluated.

"Our continued success and expanded knowledge of the geology have increased our confidence and enthusiasm for this deepwater area in Indonesia," said Roger C. Beach, Unocal chairman and chief executive officer. "We continue to see outstanding reservoir quality and high-grade oil resources throughout the basin."

West Seno is located on the Makassar Strait PSC area. Unocal Makassar, Ltd., is operator of the Makassar Strait PSC and has a 50-percent working interest. Mobil Makassar, Inc. holds the remaining 50-percent. Unocal Indonesia is operator and has a 100-percent working interest in the East Kalimantan PSC. Unocal Rapak, Ltd., is operator and currently holds a 70-percent working interest in the Rapak PSC. Mobil holds a contract with Unocal for the remaining 30-percent interest.

Unocal is a leading global oil and gas exploration and production company with significant pipeline and power plant project developments worldwide.

Recent exploration and delineation drilling in deepwater Makassar Strait PSC.

Well Well depth (TVDS) Water depth Oil/gas pay
West Seno 2 8,705' 2,734' 172' oil
West Seno 1 10,444' 2,758' 287'
East Seno 1 9,393' 3,370' Oil shows
West Seno 5 12,650' 3,120' 182'
East Seno 3 12,289' 3,559' Oil shows
South Seno 2 12,884' 3,130' 55'
West Seno 3 9,998' 3,076' 51'
West Seno 6 9,460' 2,930' 96'
Janaka 1 9,500' 4,074' 39'
54' probable
West Seno 4 9,998' (planned) 3,101' 319'; drilling
South Seno 1 11,165' (planned) 4,052 Drilling

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

Under the terms of the PSCs, Unocal's subsidiaries, as contractors to Pertamina, the Indonesian national oil company, are entitled to varying shares of the oil and gas produced from commercial discoveries.

Updated: January 1999