Marathon Oil Issues 2nd Quarter 2007 Interim Update

07-16-2007

Marathon Oil Corporation provides information on market factors and operating conditions which occurred during the second quarter 2007 that could impact the Company's quarterly financial results. The market indicators and Company estimates noted below and in the attached table may differ significantly from actual results. The Company will report second quarter results July 31, 2007, and conduct a conference call and webcast that same day. Details of the earnings conference call and webcast are noted at the end of this release.

Exploration and Production

Production sold during the second quarter is estimated to be approximately 336,000 barrels of oil equivalent per day (boepd). Revenues are reported based on production sold during the period which can vary from production available for sale primarily as a result of the timing of international crude oil liftings and natural gas sales. Oil and natural gas production available for sale during the second quarter is expected to be approximately 343,000 boepd, within the previously provided second quarter guidance of 335,000 to 365,000 boepd.

Marathon's average liquid hydrocarbon realization for the first two months of the second quarter, as compared to the first quarter 2007, increased $4.95 per barrel domestically and $9.79 per barrel internationally, generally tracking market price movements during the first two months of the quarter. For the entire second quarter 2007, the average West Texas Intermediate (WTI) crude oil market price indicator was $6.79 per barrel higher than the first quarter 2007 average. The average Dated Brent indicator increased approximately $11.00 in the second quarter 2007 as compared to the first quarter 2007.

Marathon's domestic average natural gas price realization for April and May increased $0.17 per thousand cubic feet over the Company's average realized price in the first quarter 2007. The average Henry Hub (HH) prompt natural gas price for the first two months of the second quarter increased $0.48 per million British Thermal Units (BTUs), while the average HH bid week natural gas price increased $0.77 per million BTUs during this same period. Marathon's lower increase in its domestic average realized price as compared to the market indicators for the first two months of the second quarter reflects regional pricing differentials to HH as well as the influence of Alaskan natural gas pricing. The Company expects similar domestic differentials for the entire second quarter 2007 compared with the market indicators. Marathon's average international natural gas realization decreased during the first two months of the quarter, compared to its average first quarter 2007 natural gas realization, reflecting higher Equatorial Guinea natural gas sales associated with the May start-up of the Equatorial Guinea liquefied natural gas (LNG) Train 1 production facility, as well as lower natural gas realizations in Europe during the second quarter.

Marathon's actual crude oil and natural gas price realizations vary from market indicators primarily due to product quality and location differentials. Second quarter exploration expense is estimated to be between $150 and $180 million, unchanged from the Company's earlier guidance. U.S. exploration expense is estimated to be between $90 and $110 million, while international exploration expense is estimated to be $60 to $70 million.

Refining, Marketing and Transportation

The Company currently projects refined products sales volume will average approximately 1,400,000 barrels per day (bpd) in the second quarter 2007. As indicated on the attached table, Light Louisiana Sweet (LLS) averaged $5.63 per barrel more than WTI in the second quarter 2007 compared to $1.48 per barrel more than WTI in the second quarter 2006. Therefore, in order to better reflect the actual cost of light sweet crudes available to most U.S. Gulf Coast and Midwestern refiners, the Company has revised the market indicators on the attached table to be based on LLS rather than WTI. Market indicators for refining margins (crack spreads) in the Midwest (Chicago) and Gulf Coast were stronger during the second quarter 2007, when compared with the second quarter 2006. The Company projects its second quarter 2007 refining and wholesale marketing gross margin per gallon will be approximately 30 percent higher than the second quarter 2006. Crude oil refined averaged 1,070,000 bpd during April and May 2007 and is expected to approximate that same average for the entire second quarter 2007. Total refinery throughputs for the second quarter 2007 are also expected to be about the same as the 1,276,000 bpd the Company averaged for April and May 2007. Speedway SuperAmerica LLC's gasoline and distillate gross margin averaged $0.0869 per gallon during the first two months of the second quarter 2007 and is expected to average approximately $0.10 per gallon for the second quarter of 2007.

Integrated Gas

As mentioned above, the Equatorial Guinea LNG Train 1 production facility, in which Marathon holds a 60 percent interest, delivered its first cargo of LNG in late May 2007. There were three cargoes of LNG sold during the second quarter 2007. This new revenue stream will be largely offset during the second quarter 2007 by lower methanol prices and higher research and development costs. Segment income for second quarter 2007 is anticipated to be approximately $10 million.

Unallocated Administrative Expense and Other Information

Total pre-tax unallocated administrative expense for the quarter is estimated to be $70 to $80 million.

The overall corporate effective income tax rate, excluding special items, is expected to be approximately 44 to 46 percent. The effective income tax rate for the Refining, Marketing and Transportation segment is expected to be approximately 36 to 37 percent, while the Exploration and Production segment is expected to incur a second quarter effective income tax rate of approximately 52 to 54 percent.

The Company continued its share repurchase program during the second quarter 2007. Since January 2006, the Company's Board of Directors has authorized the repurchase of up to $3.0 billion of Marathon's common stock. To date, the Company has repurchased approximately $2.5 billion in Marathon shares.