press release

Unocal's Spirit Energy 76 announces success of exploration and development programs

Unocal's Spirit Energy 76 announces success of exploration and development programs

Sugar Land, Texas, Dec. 3, 1999 - Unocal Corporation's Spirit Energy 76 unit today said that increased exploration and development activity in the second half of 1999 in its Gulf of Mexico shelf and onshore regions has generated additional crude oil and natural gas resources that will provide the platform for higher production levels at the end of 1999 and into 2000.

These successes should allow Spirit Energy to achieve a production rate of between 175,000 and 180,000 barrels of oil equivalent (BOE/D) by early 2000 and will provide a strong base for increasing production rates through the year. Spirit's third quarter production averaged 167,000 BOE/D.

"The high level of recent success associated with our stepped-up activity demonstrates the continuing attractiveness of Unocal's North American sustaining operations, as well as our ability to continue to generate significant cash flow and earnings through increased production," said Timothy H. Ling, Unocal chief financial officer and executive vice president for Unocal's North America energy operations.

"We have built an aggressive exploration and development program in North America, capitalizing on our advantages from low drilling and operating costs and an intense focus on bringing projects to production quickly," Ling said.

The company said the positive outlook for production comes despite intentionally lower levels of activity earlier in the year due to depressed commodity prices. As prices improved, Unocal moved to increase exploration and development drilling activities in the second half of the year by contracting for a highly flexible drilling rig fleet.

Spirit spudded 6 exploratory wells and 13 development wells on the GOM shelf and onshore area during the third quarter. Fourteen of the wells drilled in the third quarter have been completed, with 11 of those wells currently producing. This third quarter exploration effort generated a success rate of 100 percent.

Spirit's ramped up activity level and high success rate on the shelf and onshore areas has continued in the fourth quarter with an exploratory success rate of 100 percent to date. Representative exploration and development wells include:

Ship Shoal 208 - The Cook well, an exploratory test of a new fault block, is expected to reach total depth later this month but has already logged more than 500 feet of net pay. The well is located within one of Spirit's fields and demonstrates the value of conducting detailed subsurface studies of older fields and then applying drilling techniques that reach complex pay targets with a high degree of precision. Spirit is proceeding immediately with a follow up well. Estimated first production of 17 million cubic feet per day of natural gas (mmcf/d) is expected to begin later this month. Spirit is the operator with an 86-percent working interest; BP Amoco holds the remaining interest.

Ship Shoal 266 - The successful Inverness and Shinnecock wells, located in Ship Shoal block 266, illustrate Spirit's ability to add attractive production from the acquisition of mature properties where other operators have been unable to perform profitably. The Inverness exploration well logged 20 net feet of pay in a new fault block and is expected to produce 19 mmcf/d beginning in late December. The Shinnecock development well logged 350 net feet of pay and is expected to produce 1,500 barrels of oil per day (bop/d) by the end of this month. Spirit has a 100-percent working interest in both wells.

High Island 179 -- Drilled by Spirit Energy 76 after two other operators' attempts failed due to high mechanical difficulty, the Nesejac wildcat well discovered a new reservoir. The well is expected to begin producing by May 2000 at a rate of 10 to 15 mmcf/d. The success at Nesejac is being followed up with a similar well drilling the nearby Boudin prospect in High Island 178. Spirit, which holds a 100-percent working interest in both wells, gained access to these opportunities because of its proven drilling expertise.

Spirit Energy 76, Unocal's U.S. Lower 48 exploration and production unit, has major operations onshore in Texas and Louisiana and on the Gulf of Mexico shelf and a significant presence in the Gulf of Mexico deepwater.

Forward-looking statements regarding exploration and development activities and forecasted production levels in this news release are based on assumptions concerning operational, market, competitive, regulatory, environmental and other considerations. Actual results could differ materially as a result of factors discussed in Unocal Corporation's 1998 Form 10-K report filed with the Securities and Exchange Commission.

Updated: December 1999