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Marathon Oil Corporation Provides Third Quarter 2008 Interim Update

October 8, 2008

HOUSTON, Oct. 8 /PRNewswire-FirstCall/ — Marathon Oil Corporation today is providing information on market factors and operating conditions that occurred during the third quarter of 2008 that could impact the Company’s quarterly financial results. The market indicators and Company estimates noted below and in the attached schedule may differ significantly from actual results. The Company will report third quarter results on Oct. 30, 2008, and will 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.

   (Logo:  http://www.newscom.com/cgi-bin/prnh/20051027/DATH029LOGO )    Exploration and Production  

Liquid hydrocarbon and natural gas production sold during the third quarter is estimated to be approximately 384,000 barrels of oil equivalent per day (boepd), compared to 350,000 boepd during the second quarter 2008. Revenues reported are 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 held in storage. Liquid hydrocarbon and natural gas production available for sale during the third quarter is expected to be approximately 388,000 boepd, above both the initial quarterly guidance of 360,000 to 385,000 boepd, and the 374,000 boepd available for sale in the second quarter of 2008.

As shown in the attached table, Marathon’s average liquid hydrocarbon realization for the first two months of the third quarter, as compared to the second quarter of 2008, increased $3.01 per barrel domestically and $8.49 per barrel internationally. For the same two-month period, the average West Texas Intermediate (WTI) crude oil market price indicator was $1.48 per barrel higher than the second quarter of 2008, and the average Dated Brent indicator increased $2.38 per barrel. The larger increase in Marathon’s international liquid hydrocarbon realizations compared to Dated Brent was largely a result of higher sales volumes for July when prices averaged about $20 per barrel higher than in August. Market prices continued to weaken in the third month of the quarter, as indicated in the attached table.

Marathon’s domestic average natural gas realization for July and August and the average Henry Hub (HH) bid week natural gas price for the same two- month period increased slightly compared to the averages in the second quarter 2008.

Internationally, average natural gas realizations increased 54 cents per mcf in the first two months of the third quarter compared to the second quarter 2008. September sales results are expected to bring full quarter realizations for international natural gas closer to that experienced in the second quarter.

Marathon’s actual crude oil and natural gas price realizations generally vary from market indicators primarily due to product quality and location differentials.

Third quarter 2008 exploration expense overall is forecast to be within previous guidance of $100 to $160 million for the quarter.

Oil Sands Mining

For the third quarter 2008, the Company estimates that its net share of bitumen production before royalties from the Athabasca Oil Sands Project (AOSP) mining operation will be approximately 27,000 barrels per day (bpd), which is higher than second quarter production and within the previous guidance of 25,000 to 28,000 bpd. During the third quarter, the royalty calculation rate applicable to bitumen production from the Muskeg River Mine increased from 1 percent of gross revenue to 25 percent of net revenue, as per applicable regulations, following the achievement of the project’s payout. Marathon’s synthetic crude oil sales from AOSP for third quarter 2008 are estimated to be approximately 32,000 bpd. Marathon’s average synthetic crude oil realization (excluding derivative impacts) for the first two months of the third quarter, as compared to second quarter 2008, increased $5.26 per barrel, reflecting the general market price movements during the first two months of the third quarter.

For the third quarter 2008, the Company expects a net after-tax gain of $189 million on crude oil derivative instruments intended to mitigate price risk related to sales of synthetic crude oil. The Company estimates it will realize an after-tax loss of approximately $24 million and an unrealized after-tax mark-to-market gain of approximately $213 million. The last of these derivative instruments expire at year end 2009.

Refining, Marketing and Transportation

The Company estimates its refined products sales volume will average approximately 1,365,000 bpd in the third quarter of 2008 compared to 1,440,000 bpd in the third quarter of 2007.

The Company estimates its third quarter 2008 refining and wholesale marketing gross margin will be approximately 40 percent higher than the $0.1717 per gallon earned in the third quarter 2007. The primary reason for the projected quarter-to-quarter increase in the refining and wholesale marketing gross margin was the impact from crude oil prices falling approximately $40 per barrel during the third quarter of 2008 compared to increasing approximately $10 per barrel during the third quarter of 2007. Third quarter 2008 results also benefited from an increase in the average sweet/sour differentials quarter-over-quarter. Additionally, the gross margin includes an estimated gain on derivative instruments of approximately $150 million in the third quarter of 2008 compared to a loss of $360 million in the third quarter of 2007. This change was primarily due to the substantial change in crude oil prices during the third quarter 2008 compared to the third quarter 2007 noted above, as well as the fact that the Company is no longer using derivatives to mitigate its domestic crude oil acquisition price risk. Most of these derivatives have an underlying physical commodity transaction; however, the income effect related to the derivatives and the income effect related to the underlying physical transactions may not necessarily be recognized in net income in the same period. These favorable variances were partially offset by higher manufacturing costs.

Crude oil refined is expected to average approximately 950,000 bpd for the third quarter 2008, compared to 1,042,000 bpd in the third quarter of 2007. Total refinery throughputs for the third quarter 2008 are expected to be about 1,150,000 bpd compared to 1,241,000 bpd in the third quarter of 2007. Hurricane related impacts caused about half of the quarter-over-quarter variance in total throughputs.

Speedway SuperAmerica LLC’s (SSA) gasoline and distillate gross margin averaged $0.1645 per gallon during July and August 2008 and is expected to average approximately $0.1600 per gallon for the third quarter 2008.

Integrated Gas

Marathon’s share of LNG sales from operations in Equatorial Guinea and Alaska is estimated to be approximately 6,100 metric tonnes per day (mtpd) in the third quarter of 2008, above previous guidance of 5,300 to 5,800 mtpd.

Other Information

The overall corporate effective income tax rate for full year 2008, excluding special items and foreign currency remeasurement effects, is anticipated to remain between 46 to 49 percent. The actual annual effective tax rate is influenced by several factors including the geographical mix and timing of product sales.

The Company continued its share repurchase program during the third quarter of 2008 by repurchasing approximately 2.3 million shares at a cost of approximately $107 million. Since January 2006, the Company’s Board of Directors has authorized the repurchase of up to $5 billion of Marathon’s common stock. To date, the Company has repurchased $2.9 billion in Marathon shares.

Earnings Release Date and Conference Call Information

Marathon will report its third quarter 2008 results on Oct. 30, 2008. The Company will also conduct a conference call and webcast that same day at 2:00 p.m. EDT. The call will cover third quarter 2008 financial results and may include forward-looking information. Interested parties can listen to this call and view associated slides by accessing the Marathon Oil Corporation website at http://www.marathon.com/ and clicking on the Third Quarter 2008 Financial Results Conference Call link. Replays of the conference call will be available on the website through Nov. 13, 2008. Financial information, including earnings releases and other investor-related material, is also available online.

This release contains forward-looking statements with respect to estimates of the Company’s worldwide liquid hydrocarbon and natural gas production, exploration expenses, mined bitumen production, royalties, synthetic crude oil sales, oil sands mining derivative gains and losses, refined products sales volume, refining and wholesale marketing gross margin per gallon, crude oil and total refinery throughputs, Speedway SuperAmerica LLC gasoline and distillate gross margins, LNG sales volumes, and the corporate effective income tax rate for 2008. These are preliminary estimates and are therefore subject to change. Actual results may differ materially from the estimates given in this update. 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 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.

   Media Relations Contacts:      Lee Warren               713-296-4103                                  Paul Weeditz             713-296-3910   Investor Relations Contacts:   Howard Thill             713-296-4140                                  Chris Phillips           713-296-3213                                  Michol Ecklund           713-296-3919      Select Operating and Financial Data (unaudited)                                        3Q        2Q    July - Aug    3Q                                      2007      2008      2008      2008                                     Actual    Actual    Actual    Actual   Exploration and Production    Net Sales (1)     Domestic - Liquid Hydrocarbons      (MBPD)                            63        63        71        --     Domestic - Natural Gas (MMCFD)    464       431       429        --     International - Liquid      Hydrocarbons (MBPD)              136       119       178        --     International - Natural Gas      (MMCFD)(2)                       567       573       458        --         MBOEPD(1)                     371       350       397        --    Market Prices     NYMEX prompt WTI oil price      ($/BBL)                        75.15    123.80    125.28    118.22     Dated Brent oil price ($/BBL)   74.74    121.18    123.56    115.09     HH prompt natural gas price      ($/MMBTU)                       6.17     11.32      9.81      9.13     HH bid week natural gas price      ($/MMBTU)                       6.16     10.94     11.17     10.25   Average Realizations(3)     Liquid Hydrocarbons:        Domestic ($/BBL)             63.53    109.85    112.86        --        International ($/BBL)        70.37    112.99    121.48        --     Natural Gas:        Domestic ($/MCF)              5.14      8.66      8.75        --        International ($/MCF)         2.38      2.58      3.12        --    Oil Sands Mining    Net bitumen production (MBPD)(4)    --        24        27        --   Net synthetic crude sales (MBPD)(4)  --        31        32        --   Synthetic crude average realization   ($/BBL) (3)                          --    116.40    121.66        --    Refining, Marketing and    Transportation    Chicago LLS 6-3-2-1 crack     spread ($/BBL)                  10.51      2.71      3.82      7.81    Gulf Coast LLS 6-3-2-1 crack     spread ($/BBL)                   6.01      1.99      2.00      6.32    Chicago LLS 3-2-1 crack spread     ($/BBL)                         16.77     10.32      8.83     13.75    Gulf Coast LLS 3-2-1 crack     spread ($/BBL)                  11.22      9.33      6.32     11.88    Sweet/sour differential    ($/BBL) (5)                       9.06     13.74     11.48     11.38   Refinery Runs:     Crude oil refined (MBPD)        1,042     1,023       971        --     Other charge & blend stocks      (MBPD)                           199       180       184        --        Total (MBPD)                 1,241     1,203     1,155        --    Crude oil capacity utilization     (%)(6)                            107       101        96        --    Refined product sales volumes     (MBPD)(7)                       1,440     1,369     1,393        --    Refining & wholesale marketing     gross margin ($/gal) (8)       0.1717    0.0835    0.1632        --    SSA gasoline and distillate     sales (MMGal)                     892       788       542        --    SSA gasoline and distillate     gross margin ($/gal)           0.1103    0.0862    0.1645        --    SSA merchandise gross margin     ($million)                        191       181       135        --    Integrated Gas    Sales Volumes (MTPD)(9)     LNG                             6,137     6,402     5,637        --      BBL - barrel      MBPD - thousand barrels    MMCFD - million cubic                     per day                    feet per day    MMBTU - million   MMBPD - million barrels    MTPD - metric tonnes   British Thermal   per day                    per day   Units    MCF - thousand    gal - gallons              MMGal - million gallons   cubic feet    MBOEPD - thousand barrels of oil equivalent per day     (1) Amounts reflected are after royalties, except for Ireland and Canada       where amounts are before royalties.   (2) Includes natural gas acquired for injection and subsequent resale.   (3) Excludes gains and losses on traditional derivative instruments and       the unrealized effects of long-term U.K. natural gas contracts that       are accounted for as derivatives.   (4) The oil sands mining operations were acquired October 18, 2007.   (5) 15% Arab Light, 20% Kuwait, 10% Maya, 15% Western Canadian Select, 40%       Mars.   (6) Prior to January 1, 2008, crude oil capacity utilization was based on       historical crude oil refining capacity of 974 MBPD.  As of December       31, 2007, crude oil refining capacity was revised to 1.016 MMBPD.   (7) Total average daily volumes of all refined product sales to wholesale,       branded and retail (SSA) customers.   (8) Sales revenue less cost of refinery inputs, purchased products and       manufacturing expenses, including depreciation.   (9) LNG sales volumes include both consolidated sales and our share of the       sales of an equity method investee.  

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Marathon Oil Corporation

CONTACT: Media Relations: Lee Warren, +1-713-296-4103, Paul Weeditz,+1-713-296-3910, Investor Relations Contacts: Howard Thill, +1-713-296-4140,Chris Phillips, +1-713-296-3213, Michol Ecklund, +1-713-296-3919, all ofMarathon Oil Corporation

Web site: http://www.marathon.com/




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