Marathon Sets 2006 Budget at $3.4 Billion

Marathon Oil Corporation (NYSE: MRO) has approved a $3.4 billion capital, investment and exploration budget for 2006, which represents a 13 percent increase over actual 2005 spending of $3 billion. The 2006 budget excludes payments totaling $732 million associated with Marathon's reentry into Libya.

"Marathon's 2006 capital, investment and exploration budget provides the necessary funding to continue the profitable growth of our upstream business, while also providing the necessary capital to grow our integrated gas and downstream businesses," said Clarence P. Cazalot, Jr., Marathon president and CEO.

The increase over actual 2005 spending is due primarily to higher exploration/exploitation activity levels along with the ramp-up of development projects in the Gulf of Mexico (Neptune), Ireland (Corrib) and Norway (Alvheim and Vilje). Additionally, increases in the cost of materials, equipment and oilfield/refinery contract services are estimated to have increased the 2006 budget by approximately $50 million.

Exploration and Production

Marathon's 2006 worldwide exploration and exploitation budget is $588 million, which represents an increase of $199 million over 2005 spending. Approximately 60 percent of this budget is for exploration activity which includes funds to drill 19 significant exploration wells. The 2006 exploration budget is approximately $80 million higher than 2005 spending and largely reflects increased 2006 activity in Angola. Exploitation activity comprises the remaining 40 percent of this budget and is focused primarily on projects within or adjacent to the Company's onshore producing properties in the United States.

Worldwide production capital spending is projected to be $1.357 billion during 2006. Key investments will continue in Norway where Marathon and its partners are advancing the Alvheim and Vilje developments which are expected to begin producing in the first quarter 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 is expected to total $886 million during 2006. Refining investments, which comprise the majority of the 2006 downstream budget, are targeting value added projects primarily aimed at de-bottlenecking various refining components to increase throughput capacity. In addition, the Company will be investing approximately $200 million to meet revised EPA National Ambient Air Quality Standards, best achievable control technology and Tier II Clean Fuels regulations. Also included in the budget is planned spending for the front end engineering and design (FEED) work being undertaken for the potential 180,000 barrel per day Garyville, La., refinery expansion project.

The 2006 budget also includes increased investments in transportation logistics to allow the Company to leverage and strengthen its market position in this strategically important segment of its business. Marathon also is planning increased ethanol related investments during 2006 which will allow the Company to maintain its industry leading position in ethanol blending.

Finally, the Company will be investing in its Speedway SuperAmerica (SSA) marketing network to enable it to continue increasing same store merchandise sales through additional merchandise categories and technology investments.

Integrated Gas

Marathon has budgeted $341 million for integrated gas investments during 2006. These investments will include spending associated with the Company's Equatorial Guinea liquefied natural gas (LNG) Train 1 project currently under construction and ahead of schedule, with first shipments of LNG now projected to begin in the third quarter of 2007. While Marathon holds and funds a 60 percent interest in this LNG project, 100 percent of the related costs are reflected in Marathon's 2006 budget and 2005 actual spending. The remainder is owned and funded by partners GEPetrol, the National Oil Company of Equatorial Guinea, (25 percent), Mitsui (8.5 percent) and Marubeni (6.5 percent).

Corporate and Capitalized Interest

During 2006, corporate spending and capitalized interest is expected to total approximately $210 million. The increase over 2005 reflects the increased capitalized interest due to the large capital projects underway, as well as general corporate operations such as increased information technology spending.