Marathon Adds Net Proved Reserves of 221 Mln BOE During 2004

Marathon Oil reports that during 2004, the company added net proved reserves of 221 million barrels of oil equivalent (mmboe), excluding 2 mmboe of dispositions, while producing 122 mmboe during the year. Over the past three years, Marathon has added net proved reserves of 782 mmboe, excluding dispositions of approximately 280 mmboe, while producing approximately 411 mmboe. At year-end, Marathon had estimated proved reserves of 1,139 mmboe.

Marathon also announced it has approved a $3 billion capital, investment and exploration budget for 2005, which represents a 19 percent increase over estimated 2004 spending.

"Marathon's strong reserve replacement performance during the past three years illustrates our commitment to deliver sustainable value growth by enhancing our base business, executing our balanced exploration strategy, and capturing key business development opportunities," said Clarence P. Cazalot, Jr., Marathon president and CEO. "Our 2005 capital and exploration budget provides the necessary funding to continue the development of our reserve base, while strengthening our upstream portfolio and providing the necessary capital to successfully grow our integrated gas and downstream businesses."

2004 Reserve Replacement

Of particular importance is that during 2004 Marathon added approximately 136 mmboe through extensions, discoveries and other additions, which alone more than offset 2004 production of 122 mmboe. Internationally, 95 mmboe of proved reserves were added to the company's operations while 41 mmboe were added in the U.S. through extensions, discoveries and other additions. 2004 production from the international and U.S. areas amounted to 54 mmboe and 68 mmboe, respectively. The largest reserve additions, in this category, were attributable to Marathon's European business unit where plans were approved for the company's Alvheim and Vilje developments in Norway, and the Corrib development in Ireland. Combined, these projects added almost 80 mmboe of proved reserves.

Net proved reserve revisions during the year totaled approximately 81 mmboe. The major components of this net change consist of positive revisions in Equatorial Guinea, where the company added 162 mmboe of net proved reserves, offset by reserve reductions in Russia and the Powder River Basin.

The net change in proved reserves for Russia was a reduction of 46 mmboe, including a disposition of 2 mmboe, while the net reduction in the Powder River Basin proved reserves amounted to 35 mmboe. Despite these downward revisions, the company continues to believe these two areas hold significant resources and projects production growth from both over the next few years.

Over the past two years, third party audits and estimates have been conducted on almost 50 percent of Marathon's year-end 2004 proved reserves and these results have been consistent with Marathon's own internal estimates. Additionally, approximately 62 percent of Marathon's proved reserves were developed at year-end 2004. Of the approximately 430 mmboe of proved undeveloped reserves at year-end 2004, only 22 percent have been included as proved reserves for more than two years, while 56 percent were added during 2004 for previously mentioned projects in Equatorial Guinea, Norway and Ireland.

             Estimated Proved Reserves of Crude Oil & Natural Gas
                   (millions of barrels of oil equivalent)

                                      Total             U.S.         Int'l

    As of December 31, 2003           1,042             482           560
    Discoveries & extensions            136              41            95
    Improved recovery                     1               1           ---
    Revisions                            81             (39)          120
    Purchases                             3               1             2
    Sales                                (2)            ---            (2)
    Production                         (122)            (68)          (54)
    As of December 31, 2004           1,139             418           721

2005 Capex Budget

Marathon's 2005 capital, investment and exploration budget of almost $3 billion represents a 19 percent increase over estimated 2004 spending of $2.5 billion. This increase is due primarily to anticipated spending in Norway where the company is leading the previously mentioned Alvheim development on the Norwegian Continental Shelf, and in Equatorial Guinea where Marathon is constructing a liquefied natural gas (LNG) plant and related facilities.

Both the 2005 budget and the estimated 2004 spending include 100 percent of the amounts related to Marathon Ashland Petroleum LLC (MAP) and Equatorial Guinea LNG Holdings Limited. Marathon holds 62 and 75 percent interests, respectively, in these consolidated subsidiaries.

Exploration and Production

Marathon's 2005 worldwide exploration and exploitation budget of $364 million includes plans to drill 15 significant exploration wells. Exploitation activities will focus on projects primarily in the United States. Exploitation includes data gathering and drilling of wells in and around current producing areas that, while not without risk, have lower risk than most exploration activities.

Worldwide production capital spending is projected to be $1,219 million during 2005. As previously noted, key production investments will continue in Norway where the Alvheim and Vilje developments are expected to begin producing in early 2007 with production ramping up to more than a combined 50,000 net barrels of oil equivalent per day (boepd) during 2007. In addition, Marathon will be targeting key investments in support of the company's production growth and development projects in the U.S. onshore, Russia, Ireland, the Gulf of Mexico and Equatorial Guinea.

Refining, Marketing and Transportation

Refining, marketing and transportation capital spending, which includes 100 percent of MAP, is expected to total $804 million during 2005. This spending will be allocated primarily to refinery expansion and upgrading projects, as well as investments necessary to meet required low sulfur (Tier 2) gasoline and ultra-low sulfur diesel fuel specifications. By year- end 2005, MAP anticipates having invested approximately $850 million of the estimated total $900 million the company expects to spend between 2002 and 2006 on investments necessary to meet these new fuel specifications. In addition, MAP will be allocating spending for various capital projects in support of its marketing and transportation networks.

Integrated Gas

Marathon has budgeted $481 million for integrated gas investments during 2005. Substantially all of this spending will be made in Equatorial Guinea in support of the company's LNG project currently under construction and on schedule to begin first shipments of LNG in late 2007. While Marathon holds and funds a 75 percent interest in this LNG project, 100 percent of the related costs are reflected in Marathon's 2005 budget and 2004 estimated spending. GEPetrol, the National Oil Company of Equatorial Guinea, owns and funds the remaining 25 percent interest.

Corporate and Capitalized Interest

During 2005, corporate spending and capitalized interest is expected to total approximately $111 million. The corporate capital budget will include investments in information technology, as well as other corporate support areas.