El Paso Production to Purchase Unocal's Interest in UnoPaso

El Paso Production Company has entered into an agreement to purchase a Unocal Corporation affiliate that indirectly holds a 50-percent interest in UnoPaso, a joint venture that owns oil and natural gas assets in Brazil, for $61 million and up to $19 million in additional payments that are contingent on attainment of certain natural gas price or volume thresholds. El Paso currently reports its UnoPaso investment as an equity interest. Following the completion of this transaction, El Paso will own 100 percent of UnoPaso. The sale, which is subject to approval by Unocal's board of directors, is expected to close on or before July 31, 2004.

The acquisition will add 71 billion cubic feet equivalent of proved reserves to El Paso's reserve base and will increase production by 27-30 million cubic feet equivalent per day. UnoPaso owns six exploration and development concessions, all of which are located offshore northeast Brazil. Additionally, EP is acquiring Unocal's 30-percent interest in an adjacent exploration block. UnoPaso owns a 35-percent interest in certain producing concessions associated with the Pescada-Arabaiana field, which is operated by Petrobras.

"Strategic acquisitions such as this one are a key step in our plan to turn around El Paso's production business," said Lisa Stewart, president of El Paso Production and Non-regulated Operations. "In addition to expanding our reserve base and increasing our production, the UnoPaso acquisition solidifies our position in Brazil and provides us with substantial future drilling opportunities."