Marathon to Sell Pennaco Energy Subsidiary

Marathon Oil intends to solicit offers for the company's wholly owned subsidiary, Pennaco Energy, Inc., which operates coalbed natural gas assets in the Powder River Basin of Wyoming and Montana.

Marathon's decision to market Pennaco and its assets is part of the company's ongoing efforts to actively manage its global asset portfolio to ensure alignment with its business strategy and to generate sustainable value growth. This business approach demands that the company continually evaluate the value of existing operations against the value of new or emerging opportunities. Strong natural gas prices and recent sales transactions in the Rocky Mountains indicate that now is the appropriate time to solicit potential offers for these interests.

Marathon is the largest coalbed natural gas acreage holder in the Powder River Basin with more than 650,000 net acres in northeast Wyoming and southeast Montana. Production from these operations averaged approximately 72 net million cubic feet of natural gas per day during the first quarter of 2004. At year-end 2003, Marathon's total resource base in the Powder River Basin exceeded two trillion cubic feet of natural gas, of which 388 billion cubic feet were booked as proved reserves. Although Marathon has a major presence in the Powder River Basin, the company's production from these operations represents only approximately 10 percent of its U.S. natural gas production.

The marketing and potential sale of Pennaco does not include any of Marathon's conventional oil and natural gas exploration and production operations in Wyoming or Montana. Marathon plans to conclude the bidding process in the third quarter of this year. If an acceptable offer for Pennaco is received, Marathon would anticipate closing the transaction during the fourth quarter.