Fourth Quarter Operating Results Conference Call Slides

1
Fourth Quarter Operating Results Conference Call
Slides Slides contain certain non-GAAP
measures.For reconciliation to GAAP measures
refer to the Unocal 4Q 2003 Earnings News Release
and Quarterly Fact Book
2
2003 Performance Wrap-up

• Clean earnings 2.95 per share
• ROCE 12.6
• Operating cash flow 2.047 billion
• Free cash flow 883 million
• Reduction in net debt and
• other financings 691 million
• Year-end debt / total cap ratio 39
• Reserve replacement 149
• Worldwide FD costs 6.92 / BOE

Excluding purchases sales
3
Unocal 2003 Operations Highlights

• Significant deepwater discoveries St. Malo,
  Puma (Gulf of Mexico) and Gehem (Indonesia)
• Agreements in Thailand to extend gas sales
  contracts and increase contract volumes plans to
  double oil production
• A restructured North American business
• East China Sea exploration production PSCs
• Gas sales agreement for new field in Bangladesh
• Major Progress on AIOC Phase 1 project pipeline
• Debt reduction for 2003 (39 debt-to-cap)

4
Unocal What To Watch For In 2004

• Major new developments near completion, resulting
  in 8-10 production growth in 2005
• AIOC, Mad Dog, Bangladesh, Thai oil
• Continued deepwater exploration success and
  appraisal of 2003 deepwater discoveries
• St. Malo, Puma, Gehem
• Commercial progress in Perdido (Trident)
• Launching Indonesia deepwater gas developments
  for Bontang LNG
• Meet 8.00 per BOE Finding Development Cost
  Target for all of North America, including the
  reduced Gulf of Mexico shelf program

5
Net Debt Reduced in 2003(MM)
Total Debt / Total
Total Net Capitalization Debt Cash
Debt Ratio
Dec. 31, 2002 3,338 168 3,170 47 Dec. 31,
2003 2,883 404 2,479 39 Decrease in
net debt (691)
Total debt minus cash Proforma for FIN 46
6
2004 Estimated Capital Expenditures
Total 1,926 MM
Other EP 600 MM
Deepwater GOM 85 MM Deep Shelf GOM 30
MM Deepwater Indonesia 60 MM All Other 120 MM
Explor. Drilling 295 MM
Major Projects (incl. BTC) 930 MM
All Other 110 MM
Note Excludes Capitalized Interest
7
Unocal Reserves Production
Reserves (MMBOE) 12/31/2003
Production (MBOE/D) 2003 Average
Other Intl. 17
Other Intl. 8
Far East 50
Lower 48 32
Far East 46
Lower 48 21
35
293
145
373
889
205
31
101
109
32
Alaska 7
Alaska 6
Canada 6
Canada 7
Total 448,200 barrels of oil equivalent per day
64 gas 36 oil
Total 1,765 million barrels of oil equivalent
62 gas 38 oil
8
2003 Year-End Preliminary Proved Undeveloped
Hydrocarbon Reserves
West Seno Phase 1 2 AIOC Merah Besar Mad
Dog K2 Ranggas
Major Developments 40
All Other 20
Thailand 40
P.U.D. 880 Million BOE Total 1,765 Million BOE
9
Thailand Proved Undeveloped Reserves350 Million
BOE

• Current Production is Pipeline Limited
• Net Sales Commitments expected to rise from 590
  MMCFPD to 920 MMCFPD, contract extension to 2022
• Third Pipeline is under Construction Est.
  Completion 2006
• Thailand has a long history of just-in-time
  Development and routine promotion of PUD units to
  PDP and Production.
• In order to justify Thailands investment in
  Pipelines and Power Plants the government
  requires assurance of Proved Reserves for future
  needs.
• Thai National pipeline company reviews Unocals
  reserve estimates as part of their due diligence

10
Quality AssuranceReserve Process

• Reserves are calculated by professionals degreed
  in engineering and geology
• Calculations are reviewed by business units
  qualified experts
• Business Unit Vice President and experts make
  representation that annual reserve estimates are
  in accordance with SEC standards
• In aggregate, a rotating 50 of the asset base
  and 90 of changes reviewed by the corporate
  review team
• Leader reports directly to the CFO
• No team member has direct or indirect management
  ties to the business unit under review
• All team members are considered an expert in
  their discipline
• No team member has a reserve volume goal
• One member from independent 3rd party (Ryder
  Scott)
• Material changes reviewed by Management Committee
• Letter of Confidence issued by Outside Audit Firm

11
2003 Proved Hydrocarbon ReservesAudit Coverage
Total 1,765 Million BOE
Audit Team Review
33
Not Reviewed In 2003
Audit Team Partner Review
11
23
33
100 of Major Changes Reviewed Every Year 95
of All Changes Reviewed in 2003
Third Party Review
12
Unocal 1Q 2004 Outlook Summary

• Worldwide Production 410,000 420,000 boed
• EPS
• Adjusted after tax (diluted) 0.70 - 0.80
• Feb 2nd Analyst Mean Estimate 0.73
• Commodity Price Assumptions
• (NYMEX Benchmark at 1-29-2004)
• Oil 34.25/bbl (WTI)
• Gas 6.00/mmBtu (Henry Hub)
• Earnings Sensitivities to Commodity Prices
• Oil 8 MM change for every 1/bbl change
• Gas 3 MM change for every 0.10/mmBtu change
  in North America realization
• Pretax Dry Hole Forecast 40 - 50 MM

13
Unocal 2004Non EP Earnings Outlook Ranges
Million 1Q Full Year

• Trade 0 - 1 0 - 4
• Midstream 2025 6575
• Geothermal 1218 5065
• Corporate Other
• Admin General (20)(24) (90)-(95)
• Net Interest (23)(28) (80)-(90)
• Environ. Litigation (3)-(6) (18)-(24)
• Other (30)-(35) (100-110)

14
Unocal 1Q 2004 Material Hedge Positions
Daily Volume Fixed Price

• Fixed Price
• Gas, MMMBTU 448 6.25
• Oil, MBO 30 30.14
• Collars Ceiling Floor
• Oil, MBO 2 28.40 24.00

NYMEX trading closed for January February
15
Unocal 2Q 2004 Material Hedge Positions
Daily Volume Fixed Price

• Fixed Price
• Gas, MMMBTU 102 5.31
• Oil, MBO 26 30.67
• Collars Ceiling Floor
• Gas, MMMBTU 13 5.76 4.65
• Oil, MBO 2 28.40 24.00

16
Unocal 3Q 2004 Material Hedge Positions
Daily Volume Fixed Price

• Fixed Price
• Gas, MMMBTU 140 5.29
• Collars Ceiling Floor
• Oil, MBO 2 28.40 24.00

17
Unocal 4Q 2004 Material Hedge Positions
Daily Volume Fixed Price

• Fixed Price
• Gas, MMMBTU 140 5.29
• Collars Ceiling Floor
• Oil, MBO 2 28.40 24.00

18
Unocal Full Year 2004 Material Hedge Positions
Daily Volume Fixed Price

• Fixed Price
• Gas, MMMBTU 211 5.80
• Oil, MBO 14 30.39
• Collars Ceiling Floor
• Gas, MMMBTU 3 5.76 4.65
• Oil, MBO 2 28.40 27.41

NYMEX trading closed for January February
19
Unocal 4Q Reported and Adjusted Earnings
Million Per Share

• Reported Fourth Quarter 2003 180 .68
• Special Items
• Gain on Sale of L 48 Assets (3) (.01)
• Canadian Statutory Tax Rate (29) (.11)
• Insurance Recoveries (17) (.06)
• Premium on Debt Buy Back 28 .11
• Environmental Litigation 15 .05
• Restructuring Charge 1 -
• Discontinued Ops (RM) (8) (.03)

Adjusted Fourth Quarter 2003 167 .63
20
Unocal Adjusted Earnings
Million Per Share

• Fourth Quarter 2003 167 .63
• Third Quarter 2003 190 .72
• Decrease (23) (.09)
• Factors
• Higher worldwide oil/liquids prices 8 .03
• (28.33 vs. 27.28)
• Higher worldwide gas prices 9 .03
• (3.65 vs. 3.60)
• Higher EP expenses (Timing) (37) (.13)
• Lower Earnings from non EP oper. (10) (.04)
• Lower production volumes (19) (.07)
• (420 MBOE/D vs. 441 MBOE/D)
• Timing of Crude Oil Liftings 10 .03
• Lower Corporate Other Expense 16 .06

21
Unocal EPLower 48 Results4Q 2003 vs. 3Q 2003
Million

• Lower 48 - lower earnings (27)
• Higher oil and liquids prices 3
• (28.50 vs. 27.71)
• Higher Natural Gas Prices 4
• ( 4.91 vs, 4.82)
• Higher cash expenses (10)
• Lower Dry Holes (9)
• Lower production volumes (15)

22
Unocal EPAlaska Results4Q 2003 vs. 3Q 2003
Million

• Alaska higher results 4
• Higher liquids price 1
• (30.73 vs. 29.39)
• Timing of crude oil liftings 3

23
Unocal EPCanada Results4Q 2003 vs. 3Q 2003
Million

• Canada - Lower results (8)
• Timing of 3Q Gain on sale of Tar Sands (7)
• Lower Prices (3)
• Liq. ( 22.94 vs. 24.02)
• Gas ( 4.34 vs, 4.64)
• Income Tax Other 2

24
Unocal EPInternational Results4Q 2003 vs. 3Q
2003
Million

• International - Higher earnings 2
• Lower production (3)
• ( 236 MBOEPD vs. 238 MBOEPD)
• Timing of crude oil liftings 7
• Tax rate Other 3
• Higher liquids prices 5
• (28.73 vs. 27.20)
• Higher natural gas prices 7
• (2.96 vs. 2.87)
• Timing of Cash Expenses (17)

25
Unocal Non EP Operating Segment Results4Q 2003
vs. 3Q 2003
Million

• Non EP - Lower earnings (10)
• Geothermal
• Timing of Power Results (6)
• All Other (1)
• Oil and gas marketing - (Trade) (3)

26
Unocal Corporate Other Results4Q 2003 vs. 3Q
2003
Million

• Corp. Other - Lower expenses 16
• Lower net interest expense 6
• Higher Minerals results 2
• Timing of litigation expense 7
• All Other 1