Unocal Completes Successful Appraisal of St. Malo Discovery

Unocal has completed successful appraisal operations at the St. Malo hydrocarbon discovery in Walker Ridge block 678 in the Gulf of Mexico deepwater.

The appraisal well encountered more than 400 net feet of oil pay at depths greater than were encountered in the earlier discovery well in 2003.

The appraisal well results also indicate the field's potential hydrocarbon resources are greater than previously suggested by the discovery well.

Unocal is currently evaluating the results of the extensive testing program that was conducted on the well. The evaluation will focus on productivity, potential further appraisal operations and the viability of development options, with the current objective of establishing commerciality in 2005.

"Based on the quality of the test data and the increased rock volume, we intend to proceed with work to assess the potential productivity of the field and evaluate development options," said Mike Bell, Unocal's vice president for Gulf of Mexico exploration and appraisal.

The original St. Malo discovery, announced in October 2003, encountered more than 450 net feet of oil pay.

To appraise the St. Malo discovery, the company returned to the original Dana Point wildcat well, which was completed as a dry hole in early 2001. The St. Malo appraisal well drilled to 28,903 feet, approximately 2,000 feet deeper than the original Dana Point well.

The St. Malo appraisal drilling began on May 4, 2004, and was completed in 57 days at a gross cost of $31 million. Redrilling on the Dana Point location saved Unocal and the other co-venturers an aggregate of approximately $25 million over the cost that would have been incurred by drilling a new well.

The appraisal well is located in 7,036 feet of water, approximately 6,000 feet east of the discovery well.

Unocal is the operator and holds a 28.75-percent working interest. Unocal's co-venturers in the St. Malo prospect are Petrobras, 25 percent; Devon Energy, 22.5 percent; ChevronTexaco, 12.5 percent; EnCana Gulf of Mexico LLC, 6.25 percent; ExxonMobil, 3.75 percent; and Eni SpA, 1.25 percent.

Upon completion of the St. Malo appraisal well, the Discoverer Spirit will move on to the Sardinia prospect in Keathley Canyon 681.