Unocal and Ocean Energy Enter Exploration Agreement

Unocal Corporation said it has entered into an exploration agreement for multiple deepwater Gulf of Mexico prospects with Ocean Energy, Inc.

The first exploration well under this deepwater exploration venture will be on the Ponza prospect on Keathley Canyon Block 774. The Discoverer Spirit drillship is being moved to the Ponza location.

Under the agreement, Unocal will hold a 50-percent working interest in Ponza and several related prospects. Ocean Energy will have a 25-percent working interest in the Ponza prospect. Under a separate multi-prospect agreement, the remaining 25 percent working interest will be held by another company, which was not named.

"Ocean Energy brings special skills and expertise to our deepwater exploration program," said Charles R. Williamson, Unocal chief executive officer. "Their participation makes good financial sense given the wildcat nature of the plays. This allows Unocal to moderate its cost exposure while retaining a significant interest."

Williamson added that it was encouraging when top companies such as Ocean share Unocal's confidence in the quality of Unocal's deepwater Gulf of Mexico portfolio. "We expect to pursue similar deals in the future on other prospects," he said.

Unocal currently holds leases on 226 blocks in the Gulf of Mexico deep water, with 137 blocks located in the ultra-deepwater, or greater than 5,000 feet of water. The Discoverer Spirit drillship is capable of operating in water depths up to 10,000 feet.