UNOCAL DISCUSSES SALE OF ALL CALIFORNIA PRODUCTION

Unocal Corp. may pull out of upstream operations in California, the state it has called home for more than 100 years.

From its Los Angeles headquarters, the company last week disclosed its board of directors has authorized talks with three firms that have expressed interest in buying all of Unocal's crude oil and natural gas assets in California.

Roger C. Beach, Unocal chief executive officer, said the company received unsolicited, preliminary, nonbinding expressions of value for its California upstream assets from Torch Energy Advisors Inc., Houston, on behalf of its institutional investors, Contour Production Co., also of Houston, and Vintage Petroleum Inc., Tulsa, in a venture with Venoco Inc., Santa Barbara, Calif -Unocal's net production from California leases is about 33,000 b/d of oil, or about 22% of the company's total 1993 U.S. oil production, and 80 MMcfd of gas, about 8% of its total U.S. gas production in 1993.

The discussions cover all of Unocal's interests in 69 oil and gas fields, including 10 producing platforms off California in state and federal waters.

The sale will not include Unocal's interest in the Point Pedernales unit off California and several onshore fields near Vandenberg Air Force Base in Santa Barbara County. Unocal is negotiating the sale of those assets separately to Torch Energy Advisors.

STRATEGIC FIT

Beach said California still offers opportunities and should be a good strategic fit for the companies that have expressed interest in the assets.

"For a company of Unocal's size to continue growing, it must pursue large, long life projects," he said.

Beach cited projects like Unocal's accelerated development program in North America, the Salak and Sarulla geothermal projects in Indonesia, expansion of existing gas fields and development of new fields in Thailand and Indonesia, and development of Yadana gas field off Myanmar.

The company also is evaluating exploration and development opportunities in China and Viet Nam.

Beach noted Unocal was founded as Union Oil Co. of California in Santa Paula, Calif., in 1890.

He said, "We have been an integral part of the history of oil in this state for more than a century. But given our worldwide portfolio of opportunities, our capital is flowing to those areas that offer the highest growth potential for Unocal."

Meantime, Unocal's board of directors approved a major reorganization of the company's management and created a new 76 Products Co. The organizational changes were effective July 1.

Beach said the new organization focuses on operations, growth, and finance rather than business lines.