Marathon Announces Additional Details of 2008 Reserve Additions and Costs Incurred

UPDATE: Feb. 20, 2009 -- Marathon Oil Corporation issued a clarification regarding the Company's 2008 reserve additions and costs incurred for property acquisition, exploration and development activities related to oil and gas properties. The total costs incurred were $3.4 billion for 2008 and $9.0 billion for the three-year period ended Dec. 31, 2008. In the original release, dollar amounts were rounded to the nearest billion and were reported as $3 billion and $9 billion, respectively.

HOUSTON, Feb. 19 /PRNewswire-FirstCall/ -- Marathon Oil Corporation (NYSE: MRO) announced that during 2008, the Company added net proved liquid hydrocarbon and natural gas reserves of 110 million barrels of oil equivalent (mmboe), excluding dispositions of 3 mmboe, while producing 137 mmboe, for a reserve replacement of 80 percent. Included in the table below are the reserve additions, revisions, sales and production for 2008 by region.

Estimated Net Proved Reserves of Liquid Hydrocarbons & Natural Gas*

    (Millions of barrels of           U.S.  Europe  Africa   Total
     oil equivalent)
    As of December 31, 2007            334    179    712    1,225
     Extensions, discoveries & other
      additions                         59     16     11       86
     Improved recovery                   1      -      -        1
     Revisions of previous estimates    16    (10)    17       23
     Purchases of reserves in place      -      -      -        -
     Sales of reserves in place         (1)    (2)     -       (3)
     Production                        (50)   (30)   (57)    (137)
    As of December 31, 2008            359    153    683    1,195

    *Note: Bitumen reserves are not included.

"Marathon delivered solid oil and gas reserve additions for 2008 despite extreme market volatility. Importantly, 79 percent of our overall reserve additions were generated through drilling activity and improved recovery techniques. We also increased the Company's U.S. proved reserves for the first time since 2002, mainly as a result of increased drilling activity. Marathon's reserve additions are the result of our ongoing focus to convert the Company's substantial risked resource base of 6.5 billion barrels of oil equivalent into proved reserves. This in turn has provided defined, profitable production growth well into the future for Marathon," said Clarence P. Cazalot, Jr., Marathon president and CEO.

The use of average 2008 prices rather than end-of-year prices would have resulted in additional reserve bookings from approved projects in Angola and the Gulf of Mexico as well as planned development wells in North Dakota, and would have increased total reserve additions to approximately equal 2008 production.

For the three-year period ended Dec. 31, 2008, Marathon added net proved liquid hydrocarbon and natural gas reserves of 344 mmboe, excluding dispositions of 48 mmboe, while producing 396 mmboe, resulting in an average reserve replacement of 87 percent. Both the one-year and three-year additions exclude the Company's 388 million barrels of proved bitumen reserves in its Canadian oil sands business acquired in 2007, which are reported separately.

Year-end 2008 net proved reserves totaled 1,195 mmboe, of which 53 percent were liquid hydrocarbons and 47 percent were natural gas. Marathon's 2008 proved reserve additions were primarily in the United States, Libya, Equatorial Guinea and Norway. Proved developed reserves represented 76 percent of total proved reserves at year end 2008, as compared to 72 percent the previous year.

Property acquisition, exploration and development costs incurred for oil and gas producing activities during 2008 were $3 billion. For the three-year period ended Dec. 31, 2008, costs incurred for oil and gas producing activities were $9 billion.

Marathon is an integrated international energy company engaged in exploration and production; oil sands mining; integrated gas; and refining, marketing and transportation operations. Marathon, which is based in Houston, has principal operations in the United States, Angola, Canada, Equatorial Guinea, Gabon, Indonesia, Ireland, Libya, Norway and the United Kingdom. Marathon is the fourth largest United States-based integrated oil company and the nation's fifth largest refiner.

This release contains forward-looking statements related to proved reserves of liquid hydrocarbons and natural gas, which are based upon certain assumptions, including, among others, presently known physical data concerning size and character of reservoirs, economic recoverability, technology development, future drilling success, production experience, industry economic conditions, levels of cash flow from operations and operating conditions. This release also contains forward-looking statements regarding proved bitumen reserves, which are based on presently known physical data, economic recoverability and operating conditions. The foregoing factors (among others) could cause actual results to differ materially from those set forth in the forward-looking statements. In accordance with the "safe harbor" provisions of the Private Securities Litigation Reform Act of 1995, Marathon Oil Corporation has included in its Annual Report on Form 10-K for the year ended December 31, 2007, and subsequent Forms 10-Q and 8-K, cautionary language identifying other important factors, though not necessarily all such factors, that could cause future outcomes to differ materially from those set forth in the forward-looking statements.