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Unocal Touts 'Very Significant' Gulf Discovery

Unocal Touts 'Very Significant' Gulf Discovery

Unocal Corp.'s Spirit Energy 76 unit announced a "very significant" oil and gas discovery on the Mad Dog prospect in the Gulf of Mexico deep-water Green Canyon block 826. The well encountered 300 net feet of hydrocarbons, mainly crude oil. A spokeswoman said more specific information about how much of Mad Dog reserves might be gas is not yet available.

Spirit Energy holds a 25% interest in the 2-1/2-block drilling unit that encompasses most of the Mad Dog structure. Based on available data, the company believes its net resource potential for the Mad Dog drilling unit is likely in excess of 100 MMBoe and possibly as high as 200 MMBoe.

Although further appraisal drilling is required to determine the extent of the discovery, Spirit Energy believes the gross resource potential within the drilling unit to be in excess of 400 MMBoe and as much as 800 MMBoe. If the upper range of this initial resource estimate is confirmed, Mad Dog could be one of the largest discoveries yet announced in the Gulf of Mexico.

"Mad Dog is the second deepwater discovery we've announced this year, and it signifies a major step toward our goal of adding substantial value to the corporation through a successful deepwater program in the Gulf of Mexico," said Unocal CEO Roger C. Beach. "We began our Gulf of Mexico deep-water program from a standing start in 1997 and have quickly delivered results as we built an extremely attractive prospect inventory for continued future success."

David A. Johnson, Spirit Energy's vice president for exploration, said the well likely represents the "trend opening" discovery for the Eastern Fold Belt and Salt Canopy play that the company was betting on when it acquired a considerable deepwater acreage position in last year's Lease Sale 171. Unocal's deep-water holdings contain several other major prospects and leads in this trend that have geological characteristics similar to Mad Dog.

BP Amoco is the operator of the Mad Dog well with a 64% working interest. BHP holds the remaining 11% interest. Spirit Energy 76 also said it reached an agreement with Conoco to acquire a 50% working interest in the oil and gas lease covering Green Canyon Block 562 (K2 prospect). The K2 prospect is just north of Mad Dog on the same geologic trend.

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