Unocal Corp. said lower oil and gas prices, coupled withincreased exploration costs because of several dry holes, led tolower third quarter earnings of $36 million, or 15 cents per share,compared with $177 million, or 70 cents/share in the third quarterof 1997. Earnings from continuing operations, excluding specialitems, were $4 million, or 2 cents per share, compared with $94million, or 38 cents per share in 3Q97. Total revenues for thethird quarter were $1.4 billion, about the same as a year ago.Capital expenditures were $502 million, up from $308 million in thesame period of 1997.

In late October, three Spirit Energy 76 exploration wells turnedout to be dry holes. They included the Calypso deep-water well. Asa result, the company took an $18 million charge during thequarter, which lowered Unocal earnings by 5 cents per share.Unocal’s total oil and gas exploration expenses in the thirdquarter, including dry hole costs, were $118 million, more thandouble the level for the comparable period in 1997. So far thisyear, Unocal’s oil and gas exploration success rate has been 52%with 49 commercial successes. Dry hole costs were $156 million,which is 42% of the $375 million spent on exploration drilling sofar this year.

Lower prices for oil and gas reduced after-tax operatingearnings by about $70 million, or nearly 29 cents per share,compared with the same period a year ago. And the companyexperienced Gulf storm-related curtailments which contributed to a5% decline in 3Q oil and gas production. Nevertheless, Unocal saidits exploration program is on track to replace production with newreserves in 1998.

©Copyright 1998 Intelligence Press, Inc. All rightsreserved. The preceding news report may not be republished orredistributed in whole or in part without prior written consent ofIntelligence Press, Inc.