PRESS RELEASE - Unocal posts 3Q 2000 earnings of $190 million

Unocal Corporation today reported net earnings of $190 million, or 77 cents per share (diluted), for the third quarter 2000.

Earnings from continuing operations were $176 million, or 71 cents per share (diluted). Adjusted aftertax earnings from continuing operations for the quarter (excluding special items) were $228 million, or 92 cents per share (diluted).

CONSOLIDATED RESULTS (UNAUDITED) 3rd 2nd 3rd

Quarter Quarter Quarter

Millions of dollars except per share amounts 2000 2000 1999

Adjusted after-tax earnings from

continuing operations $ 228 $ 170 $ 44

Special items (52) 80 (12)

Earnings from continuing operations $ 176 $ 250 $ 32

Earnings from discontinued operations 14 14 (8)

Net earnings $ 190 $ 264 $ 24

DILUTED EARNINGS PER SHARE DATA (UNAUDITED)

Adjusted after-tax earnings per share from

continuing operations $ 0.92 $ 0.69 $ 0.19

Net earnings per share:

Continuing operations $ 0.71 $ 1.00 $ 0.13

Discontinued operations 0.06 0.05 (0.03)

Total net earnings per share $ 0.77 $ 1.05 $ 0.10

CASH FLOW DATA (UNAUDITED)

Adjusted discretionary cash flow $ 596 $ 495 $ 285

Adjusted discretionary cash flow per

share (diluted) $ 2.33 $ 1.93 $ 1.17

REVENUES FROM CONTINUING OPERATIONS

(UNAUDITED) $2,391 $2,248 $1,520

The third quarter 2000 results compare with net earnings of $24 million, or 10 cents per share (diluted), in the same period a year ago. Adjusted aftertax earnings from continuing operations for the third quarter 1999 were $44 million, or 19 cents per share (diluted).

``Oil and gas commodity prices remained strong throughout the quarter,'' said Roger C. Beach, Unocal chairman and chief executive officer. ``We continued to improve production, particularly in the Lower 48, to take advantage of these higher prices.''

The company noted that it took a $15 million (aftertax) charge in the quarter for the Sumatra prospect deepwater well that was drilled in 1999. ``We have a particularly robust deepwater Gulf of Mexico drilling program planned for our new drillship,'' Beach said. ``Because it will be some time before we can conduct any further evaluation of this prospect, accounting rules required the company to take the charge at this time.''

Commodity prices and production

Unocal's worldwide average realized natural gas price rose 50 percent to $3.11 per thousand cubic feet (mcf), compared with the third quarter 1999. The average worldwide price for crude oil was $28.44 per barrel, up 71 percent.

Worldwide consolidated net daily production (including host country share in Indonesia) averaged 511,000 barrels-of-oil equivalent (BOE), compared with 491,000 BOE for the same period last year. The higher third quarter Lower 48 natural gas production continued an upward trend that began with the fourth quarter 1999.

Financial measures

Unocal's adjusted discretionary cash flow for the third quarter was $596 million, or $2.33 per share (diluted). This compares with $285 million, or $1.17 per share (diluted), in the same period of 1999.

Capital spending for the third quarter was $314 million, up from $293 million for the same period a year ago.

The company's long-term debt (including current maturities) was $2.74 billion (47% debt-to-total capitalization ratio) at the end of the third quarter, compared with $2.85 billion (51% debt-to-total capitalization ratio) at the end of 1999. The debt-to-total capitalization ratio should continue to decline over the remainder of 2000 on the strength of Unocal's forecasted earnings.

Third quarter revenues from continuing operations were $2.39 billion, up 57 percent from $1.52 billion in the same period a year ago.

Discontinued operations/special items

The company completed the sale of its agricultural products business (a discontinued operation) in September. An aftertax gain of $14 million, or 6 cents per share (diluted), was recorded in the third quarter from the sale.

Special items included net aftertax provisions of $38 million for environmental and litigation matters and an aftertax loss of $40 million related to mark-to-market commodity derivative positions held by the company's Northrock subsidiary that were not accounted for as hedges. These negative factors were partially offset by $26 million in net benefits related to adjustments to provisions covering prior-year foreign and U.S. income tax matters.

Earnings/production forecast

``We are projecting 4Q 2000 adjusted earnings from continuing operations of 90 to 95 cents per share, depending on the outcome of our deepwater GOM results, and other factors,'' Beach said.

The company's fourth quarter forecast assumes average NYMEX benchmark commodity prices of $31 per barrel for West Texas Intermediate (WTI) crude oil and $5 per mmBtu for Henry Hub natural gas.

For the full-year 2000, Unocal currently estimates earnings of between $3.08 and $3.13 per share. The full-year forecast assumes average benchmark commodity prices of $30 per barrel for West Texas Intermediate (WTI) crude oil and $3.90 per mmbtu for Henry Hub natural gas.

The company expects that net daily worldwide production for the fourth quarter 2000 will average about 520,000 BOE, up 2 percent from the third quarter level. The 4Q increase is driven principally by new natural gas production from the Muni field on the Gulf of Mexico shelf.

Nine-months results

For the first nine months of 2000, Unocal recorded net earnings of $587 million, or $2.37 per share (diluted), on revenues of $6.52 billion. This compares with net earnings of $40 million, or 17 cents per share (diluted), on revenues from continuing operations of $4.13 billion last year.

Earnings from continuing operations for the nine months were $550 million, or $2.23 per share (diluted), up from $42 million, or 18 cents per share (diluted), last year.

Adjusted aftertax earnings from continuing operations for the nine months (excluding special items) were $537 million, or $2.18 per share, compared with $77 million, or 32 cents per share, reported in the same period of 1999.

CONSOLIDATED RESULTS (UNAUDITED) For the Nine Months

Ended September 30,

Millions of dollars except per share amounts 2000 1999

Adjusted after-tax earnings from continuing

operations $ 537 $ 77

Special items 13 (35)

Earnings from continuing operations $ 550 $ 42

Earnings from discontinued operations 37 (2)

Net earnings $ 587 $ 40

DILUTED EARNINGS PER SHARE DATA (UNAUDITED)

Adjusted after-tax earnings per share from

continuing operations $ 2.18 $ 0.32

Net earnings per share:

Continuing operations $ 2.23 $ 0.18

Discontinued operations 0.14 (0.01)

Total net earnings per share $ 2.37 $ 0.17

CASH FLOW DATA (UNAUDITED)

Adjusted discretionary cash flow $1,503 $ 849

Adjusted discretionary cash flow per share (diluted) $ 5.87 $ 3.49

REVENUES FROM CONTINUING OPERATIONS (UNAUDITED) $6,520 $4,129

About Unocal Corporation

Unocal is one of the world's leading independent natural gas and crude oil exploration and production companies. At year-end 1999, Unocal had worldwide natural gas reserves of 6.6 trillion cubic feet, representing two-thirds of the company's overall hydrocarbon reserves. Unocal's net worldwide natural gas production currently averages 2 billion cubic feet per day. This includes about 1 billion cubic feet per day in North America, where Unocal is one of the largest independent natural gas producers. (*)