Marathon Updates Investors on Growth Plans

Marathon Oil Corporation provided investors with a comprehensive report on the company's global operations, including a review of the business plan that is enabling the company to achieve sustainable value growth. By executing on its strategies as a fully integrated energy company, Marathon has been able to deliver top quartile results in a number of key performance measures including a three-year (October 2003 - October 2006) total shareholder return of approximately 190 percent.

Leveraging Marathon's Fully Integrated Structure to Create Value

In his comments during the meeting, Marathon president and CEO, Clarence P. Cazalot, Jr., noted that the company's vision, business model and strategy established nearly five years ago have remained largely unchanged and are serving as a foundation for Marathon's continued success. "In 2002, we set out to differentiate Marathon from our competitors with a vision to create sustainable value growth through innovative energy solutions and unique partnerships. This vision and our business strategy continue to be appropriate in the face of a dynamic and challenging global business environment. I am pleased to report that our efforts have been rewarded based upon the strength of the expanding resource and production base in our upstream portfolio, the full ownership we now have in our top-tier downstream operations and our growing integrated gas business."

Cazalot noted Marathon's blueprint for success is based upon several key business factors and strategic intents, as well as a commitment to corporate values that serve as a foundation for all of the company's activities. "Underpinning all that we do is our unwavering commitment to what we call Living Our Values. By Living Our Values, we simply mean that we view health and safety, environmental stewardship, honesty and integrity, corporate citizenship and functioning as a high performance team as keys to our current and future success in delivering shareholder value."

Cazalot added that the industry is facing a challenging business environment with access to conventional resources becoming more difficult, higher operating costs and greater capacity constraints, an expanded role of governments through increased regulations and more onerous fiscal terms, a shortage of trained personnel and increased volatility and uncertainty in commodity prices and margins.

Notwithstanding these challenges, Marathon has demonstrated its flexibility and ability to adapt to changing business conditions by applying its commercial skills, technology and international reputation to seize current and future profitable growth opportunities in each of its business segments.

Key Upstream Highlights

In the upstream segment, Marathon continues to progress its major projects that, in conjunction with the company's strong base production business, are expected to yield production growth at a compound average rate of six to nine percent through 2010.

Key among Marathon's major upstream production drivers are the company's Alvheim/Vilje development on the Norwegian Continental Shelf, gas production from the Alba field offshore Equatorial Guinea for the Equatorial Guinea LNG Train 1 project, and the Neptune development in the Gulf of Mexico.

The Alvheim/Vilje development will utilize a floating production, storage and offloading (FPSO) vessel. Construction of the development is approximately 93 percent complete with initial production anticipated by the end of the first quarter of 2007. Peak production is expected by early 2008 at a net rate of approximately 75,000 bpd. Marathon holds a 65 percent interest in Alvheim and serves as operator. The company holds a 47 percent working interest in Vilje.

Neptune, in which Marathon holds a 30 percent interest, is approximately 57 percent complete and on target for first production by early 2008, with a net peak daily rate expected to be approximately 15,000 boe.

Marathon continues to expand its resource base through successful exploration as well as selective acquisitions. These efforts are providing a well defined portfolio of development opportunities that are expected to yield production beyond 2010.

Examples of this include an estimated total of nine to 10 discoveries Marathon expects to record during 2006 in Angola and Norway. Key acquisitions during 2006 include an extensive leasehold position in the Bakken Shale play of North Dakota and Montana, the Piceance Basin of Western Colorado and the Barnett Shale play in North Central Texas. These new resource plays expose Marathon to potential net resources of approximately 270 million barrels of oil equivalent (boe), with peak net daily production of more than 50,000 boe by 2012.

Internationally, in June 2006, Marathon was awarded a 70 percent interest and operatorship in the Pasangkayu Block offshore Indonesia as part of that country's 2005 Regular Tender Round. The Pasangkayu Block encompasses approximately 1.2 million acres and is located predominantly offshore the Island of Sulawesi in the Makassar Strait, directly east of the prolific Kutei Basin oil and gas production region. Current exploration plans call for the collection of geophysical data during 2007, followed by drilling during 2008 and 2009.

In addition, the company's re-entry into Libya has exposed Marathon to a wide range of potential exploration and development opportunities that could also contribute to production growth beyond 2010.

Key Integrated Gas/Integrated Oil Highlights

Marathon's integrated gas strategy, first outlined in 2002 and highly complementary to the company's exploration and production business, has been confirmed through project execution.

A key example of the company's integrated gas activities is the Equatorial Guinea liquefied natural gas (LNG) Train 1 project. Construction of this project is on-budget and ahead of schedule with first shipments of LNG expected in the second quarter of 2007. The Train 1 project will consist of a 3.7 million metric tonnes per annum (mmtpa) liquefaction plant that is aligned with, and integrated into, Marathon's other Equatorial Guinea gas processing operations on Bioko Island. Marathon has an agreement with BG Gas Marketing under which BG has contracted for 3.4 mmtpa of LNG for 17 years. The price of the LNG is FOB Bioko Island and indexed to Henry Hub. Based upon a $6 Henry Hub price, Marathon expects to realize after-tax cash flow of approximately $200 million per year and after-tax income of approximately $180 million per year from the Train 1 project.

Marathon and its Equatorial Guinea LNG partners are in discussions with potential gas suppliers in Nigeria, Cameroon and Equatorial Guinea which could provide the basis for additional LNG trains on Bioko Island. Currently, Marathon and its partners in the LNG Train 1 project are conducting a FEED study on a potential second LNG train. The FEED work on the potential 4.4 mmtpa plant and associated facilities is expected to be completed by the end of the first quarter 2007.

The company also recognizes the opportunities it has to leverage Marathon's strong asset portfolio into integrated oil projects, such as a Canadian Oil Sands venture. As part of its integrated oil development efforts, Marathon recently announced plans to issue a request for proposals (RFP) to engage interested parties in a process that could lead to a Canadian oil sands venture. Marathon believes this RFP approach is the best way to achieve a full recognition of the value of the company's downstream operations by Canada's bitumen producers. Marathon continues to believe an integrated project involving the company's top-tier downstream operations with an upstream Canadian oil sands producer, is the highest value outcome for Marathon and its potential partners.

Cazalot concluded his remarks by saying, "Our continued success is fueled by an employee team with a shared vision and core values that drive our performance. Accountability is in place at every level within our organization to ensure everyone fully understands their role in contributing to Marathon's goal of simply being the best, not the biggest."

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