press release

YPF, Unocal sign agreement for San Jorge Basin E&P joint venture

Buenos Aires, Dec. 22, 1997 - YPF S.A. and Unocal Patagonia, Ltd. said today that they have signed the joint operating agreement for the exploration and development of two large permit areas offshore Argentina. Unocal Patagonia, Ltd. is a subsidiary of Unocal Corporation.

The offshore CGSJM blocks 1 and 2 cover 19,300 square kilometers (approximately 7,500 square miles) and include the offshore extension of the San Jorge Basin.

"This agreement demonstrates Unocal's commitment to expanding the company's activities in Latin America," said Roger C. Beach, Unocal chairman and chief executive officer, at signing ceremonies in Buenos Aires.

"Both Unocal and YPF have special expertise that increases our confidence in the ultimate success of this challenging project," Beach said. "Unocal has extensive experience with low-cost offshore production in Thailand, Indonesia and the Netherlands, while YPF brings local operating experience, and knowledge and understanding of the local geology to the joint venture."

"YPF's determination of expanding our exploration operations in the offshore blocks of the San Jorge Basin indicates our commitment to continue growing and investing in Argentina, attracting those companies that provide resources, experience and know-how to the industry" said Roberto Monti, YPF CEO.

YPF and Unocal will each hold a 50 percent working interest in the joint venture.

The onshore portion of the San Jorge Basin has already produced more than 2.5 billion barrels of oil. The offshore blocks encompass about one-third of the total basin. Based on the known geology of the San Jorge Basin, these blocks contain the potential of more than one billion barrels of recoverable oil. Exploration to date in the offshore area has included 17 wells that encountered hydrocarbons, with five of those classified as discoveries. These wells were all drilled in the 1970's.

YPF and Unocal will initially conduct additional appraisal work on the blocks, including acquisition of three-dimensional seismic data. Drilling of appraisal wells is expected within a year following acquisition of the data.

This agreement is the second project between YPF and Unocal in Latin America. In 1996, Unocal became a co-investor with YPF and Empresa Nacional del Petroleo (ENAP), the state oil company of Chile, in the 265-mile TransAndean Pipeline that transports oil from Argentina to a terminal on the coast of Chile.

YPF, Argentina's largest company, is an integrated oil and gas company involved in petroleum exploration and production, refining, marketing, transportation and distribution, and power generation.

Unocal is a leading global energy resource and project development company, with year-end 1996 petroleum reserves of more than 9.8 trillion cubic feet of natural gas equivalent (1.6 billion barrels of oil equivalent) and major oil and gas production activities in Asia and the U.S. Gulf of Mexico. The company is also active in energy resource development in Asia and Latin America. Unocal maintains twin headquarters in California and Malaysia, with major offices in Singapore, Jakarta, Bangkok and Sugar Land, Texas.

Updated: December 1997