press release

Unocal's Spirit Energy 76 unit close to contract on deepwater drillship for Gulf of Mexico exploration program

Sugar Land, Texas, Jan. 16, 1998 - Unocal Corporation's Spirit Energy 76 unit said today it is in negotiations on a five-year contract for a deepwater drillship that can operate in depths of up to 10,000 feet.

Spirit Energy 76 initiated negotiations for an alternative drillship after Smedvig Offshore Limited concluded it could not convert its drillship within the time and cost framework originally outlined in a memorandum of understanding signed in September 1997. Smedvig issued a statement earlier today that the agreement with Unocal was terminated.

The company said it expects to sign a definitive letter of commitment for a deepwater drillship shortly on better terms than Smedvig ultimately proposed to Unocal.

Spirit Energy 76, Unocal's Lower 48 U.S. exploration and production unit, is one of the largest oil and gas producers in the Gulf of Mexico. The unit operates 300 platforms and approximately 2,700 active wells in 355 fields.

Updated: January 1998