Marathon Oil Corporation Reports Fourth Quarter and Full-Year 2012 Results

Marathon Oil Corporation Reports Fourth Quarter and Full-Year 2012 Results

Total reserve replacement ratio was 226 percent, 185 percent excluding
acquisitions

HOUSTON, Feb. 6, 2013 (GLOBE NEWSWIRE) -- Marathon Oil Corporation (NYSE:MRO)
today reported fourth quarter 2012 net income of $322 million, or $0.45 per
diluted share, compared to net income in the third quarter of 2012 of $450
million, or $0.63 per diluted share. For the fourth quarter of 2012, adjusted
net income was $388 million, or $0.55 per diluted share, compared to adjusted
net income of $454 million, or $0.64 per diluted share, for the third quarter
of 2012.

Marathon Oil reported full-year 2012 net income of $1.582 billion, or $2.23
per diluted share. Net income in 2011 was $2.946 billion, or $4.13 per diluted
share. Net income for 2011 included income of $1.239 billion from the
Company's former Refining, Marketing and Transportation business, which was
spun off on June 30, 2011 and reported as discontinued operations in 2011, so
income from continuing operations is better suited for year-over-year
comparison. For full-year 2012, adjusted income from continuing operations was
$1.736 billion, or $2.45 per diluted share, compared to adjusted income from
continuing operations of $2.293 billion, or $3.21 per diluted share, for
full-year 2011.

              Three Months Ended               Year Ended
              Dec. 31         Sept. 30         Dec. 31         Dec. 31
(In millions,
except per     2012            2012             2012            2011
diluted share
data)
Adjusted
income from    $388            $454             $1,736          $2,293
continuing
operations (a)
Adjustments
for special                                                  
items (net of
taxes):
Impairments     (64)     (231)    (195)
                               -
Gain (loss) on   (11)    72   45
dispositions   -
Unrealized
gain on crude   5  29    34  
oil derivative                                                   -
instruments
Pension         (7)  (22)    (29)   (19)
settlement
Loss on early        
extinguishment -               -                -                (176)
of debt
Tax effect of        
subsidiary     -               -                -                (122)
restructure
Deferred             
income tax     -               -                -                (61)
items
Water                
abatement -    -               -                -                (48)
Oil Sands
Eagle Ford           
transaction    -               -                -                (10)
costs
Income from
continuing     $322            $450             $1,582          $1,707
operations
Discontinued    -  -   -  1,239
operations (b)
Net income     $322            $450             $1,582          $2,946
Adjusted
income from
continuing     $0.55           $0.64            $2.45           $3.21
operations -
per diluted
share (a)
Income from
continuing
operations -   $0.45           $0.63            $2.23           $2.39
per diluted
share
Discontinued
operations -          $1.74
per diluted    -               -                 -
share (b)
Net income -
per diluted    $0.45           $0.63            $2.23           $4.13
share
Revenues and
other income   $4,236          $4,161           $16,221         $15,282
(b)
Weighted
average shares  711    709     710    714
- diluted
Cash Flow                                                    
Cash flow from
continuing
operations     $1,146          $992             $4,454          $4,908
before changes
in working
capital (c)
Changes in
working
capital from    59   78   (437)            526
continuing
operations
Cash flow from
continuing     $1,205          $1,070           $4,017          $5,434
operations

(a) Adjusted income from continuing operations is a non-GAAP financial
measure and should not be considered a substitute for income from continuing
operations as determined in accordance with accounting principles generally
accepted in the United States. See below for further discussion of adjusted
income from continuing operations.

(b) The spin-off of Marathon's downstream business was completed on June 30,
2011, and all comparative periods have been recast to reflect the downstream
business as discontinued operations.

(c) Cash flow from continuing operations before changes in working capital
is a non-GAAP financial measure and should not be considered a substitute for
cash flow from operations as determined in accordance with accounting
principles generally accepted in the United States. See below for further
discussion of cash flow from continuing operations before changes in working
capital.

"Last year, the first full year for Marathon Oil as an independent Exploration
and Production (E&P) company, was marked by outstanding execution in our
domestic resource plays, continued safe and reliable operations in our base
assets and entry into new, high-potential exploration opportunities," said
Clarence P. Cazalot Jr., Marathon Oil's chairman, president and CEO.

"Our strong position in the top U.S. resource plays, a stable portfolio of
base assets and solid operational performance allowed us to increase full-year
Upstream (E&P and Oil Sands Mining [OSM]) net production available for sale,
excluding Libya which had production disruptions in 2011, 8 percent over the
prior year, exceeding our 2012 production targets.

"We project 2013 production available for sale from our Upstream businesses
will be 6 to 8 percent higher than 2012, excluding Libya because of the
uncertainty in production levels and Alaska as we sold that asset at the end
of January 2013. Importantly, this growth will continue to be focused on
higher-value liquids.

"Our future growth is underpinned by our growing resource base and net proved
reserves of 2 billion barrels of oil equivalent (boe) at year end 2012, a 12
percent increase over the prior year end and our highest level of proved
reserves in 40 years. During 2012 we replaced 226 percent of our production,
185 percent excluding acquisitions, both at a preliminary cost estimate of
approximately $17 per boe. This outstanding performance was largely driven by
what we consider to be the highest-value resource plays in the world - the
Eagle Ford shale in south Texas, the Bakken shale in North Dakota and the
Oklahoma Resource Basins. We've established a 10-year plus drilling inventory
across these plays at current rig levels and expect to spend approximately
one-third of our $5.2 billion capital, investment and exploration budget for
2013 in the Eagle Ford, the cornerstone of our growth strategy.

"Importantly, our investments in recent years have afforded us the ability to
scale our growth to optimize value. We're committed to our goal of growing
production at a 5 to 7 percent compound annual rate from 2010 through 2017,
and we'll do so with our long-standing commitment to spending largely within
our cash flows. While volume growth is critical to our success, value growth
is the ultimate goal. A key focus in 2013 will be improving our earnings and
cash margins as we grow," Cazalot added.

2012 Key Highlights

· Demonstrated ability to execute strategy in first full year as an
independent E&P company

o Achieved 8 percent year-over-year growth in Upstream net production
available for sale, excluding Libya

· Doubled Lower 48 onshore net production available for sale over
the past five quarters

o Increased average net production more than four-fold in the Eagle Ford
shale from approximately 15,000 barrels of oil equivalent per day (boed) in
December 2011 to more than 65,000 boed in December 2012. For the same period,
average net production in the Bakken shale increased from 24,000 to 35,000
boed, while average net production in the Oklahoma Resource Basins increased
from 2,500 to 9,600 boed

o Expanded midstream infrastructure in the Eagle Ford to support production
growth

o In total, spud 392 gross operated wells in U.S. resource plays in 2012,
compared to 123 in 2011

· Completed targeted acquisitions in the Eagle Ford of
approximately $1 billion, increased the Company's acreage position and working
interest in the core of the play and added production and drilling locations

· Replaced 226 percent of 2012 Upstream production, including
acquisitions and Libya

o Increased total net proved reserves 12 percent to 2.0 billion boe

o Replaced 268 percent of net proved liquid hydrocarbon and synthetic crude
oil (SCO) reserves, consistent with liquids-focused strategy

· Recorded more than 95 percent average operational availability
for Company-operated E&P assets

· Enhanced global exploration program, announcing plans to pursue
activities in Kenya, Ethiopia and Gabon, to create a balanced portfolio
targeting significant value creation

· Continued commitment to financial discipline and progress toward
the previously stated goal of divesting between $1.5 billion and $3 billion of
non-core assets over the period of 2011 through 2013, of which approximately
$1.3 billion was completed or contracted through the end of 2012

· Issued $1 billion of 3-year senior notes at 0.9 percent interest
and $1 billion of 10-year senior notes at 2.8 percent interest

· Increased quarterly dividend 13 percent to $0.17 per share

2013 Key Benchmarks

· Project 6 to 8 percent growth in Upstream net production
available for sale compared to 2012, progressing toward the Company's goal of
5 to 7 percent compound annual net production growth from 2010 through 2017.
(Both exclude Libya and Alaska. Libya is excluded because of the uncertainty
around sustained production levels, while Marathon Oil sold its Alaska
business on Jan. 31, 2013.)

o Implement $5.2 billion capital, investment and exploration expenditures
budget

o Spud 350-400 gross operated wells in key U.S. resource plays

o Continue downspacing pilot in Eagle Ford to identify optimal spacing of
wells

o Continue to build infrastructure to support production growth across
Eagle Ford operating area

· Anticipate 2013 Upstream reserve replacement ratio of more than
100 percent, excluding acquisitions, divestitures and Libya

· Expect to participate in 10 to 13 exploration wells across the
deepwater Gulf of Mexico, Ethiopia, Kenya, Gabon, the Kurdistan Region of Iraq
and Norway

· Continue portfolio optimization through divestitures and capital
discipline

Reserves

Driven by strong reserves growth in the Company's U.S. resource plays,
Marathon Oil's total net proved reserves were 2.0 billion boe at the end of
2012, an increase of 12 percent from the prior year. Of that total, 77 percent
were liquid hydrocarbons and SCO and 72 percent were developed. The Company's
overall reserve replacement ratio was 226 percent, with 389 million boe of net
proved reserves added, while producing 172 million boe. Excluding acquisitions
of 70 million boe, the overall reserve replacement ratio was 185 percent.

Net additions, including acquisitions, were driven primarily by U.S. resource
play activity in the Eagle Ford shale, the Oklahoma Resource Basins and the
Bakken shale as well as additions in Canada, Norway and Libya.

Consistent with the Company's liquids-focused strategy, Marathon Oil added a
total of 316 million barrels of net proved liquid hydrocarbon and SCO
reserves, including acquisitions of 52 million barrels, while producing 118
million barrels, resulting in a total liquids reserve replacement ratio of 268
percent.

For the three-year period ended Dec. 31, 2012, Marathon Oil added net proved
reserves of 808 million boe, excluding the dispositions of 3 million boe,
while producing 467 million boe, resulting in a three-year average reserve
replacement ratio of 173 percent.

Estimated Net Proved Reserves
                                                                     Percent
                     E&P                          OSM       Total   Proved
                                                                     Developed
                                                                     of Total
                     Liquid       Natural Total   Synthetic        
                      Hydrocarbons Gas             Crude Oil
                     (mmbbl)      (bcf)   (mmboe) (mmbbl)   (mmboe) 
As of Dec. 31, 2011   733          2,666   1,177   623       1,800   78%
 Additions          219          330     274     45        319     
 Acquisitions       52           105     70      --        70      
 Production         (103)        (322)   (157)   (15)      (172)   
As of Dec. 31, 2012   901          2,779   1,364   653       2,017   72%
Reserve Replacement
Ratio (including      263%         135%    219%    300%      226%    
acquisitions)
Reserve Replacement
Ratio (excluding      213%         102%    175%    300%      185%    
acquisitions)

Segment Results

Total segment income was $555 million in the fourth quarter of 2012 and $2.148
billion for the full-year 2012, compared to $590 million in the third quarter
of 2012 and $2.591 billion for full-year 2011.

                          Three Months Ended  Year Ended
                          Dec. 31  Sept. 30   Dec. 31 Dec. 31
(In millions)              2012     2012       2012    2011
Segment Income                                      
Exploration and Production                          
 United States            $104     $110       $393    $366
International            397      376        1,488   1,791
 Total E&P            501      486        1,881   2,157
Oil Sands Mining           19       65         176     256
Integrated Gas             35       39         91      178
 Segment Income (a)       $555    $590       $2,148 $2,591

(a) See Supplemental Statistics below for a reconciliation of segment
income to net income as reported under generally accepted accounting
principles.

                     Three Months Ended          Year Ended
                     Dec. 31      Sept. 30       Dec. 31       Dec. 31
(mboed)               2012         2012           2012          2011
Net Sales Volumes                                            
Exploration and                                              
Production
 United States       200          172            167           130
 International       287          280            266           233
 Total E&P          487  452   432  363
 Oil Sands Mining    48           53             47            43
 Total Upstream    535          505            479           406
Libya                 64           53             44            5
 Total Upstream      471          452            435           401
Excluding Libya

                        Three Months Ended         Year Ended
                        Dec. 31      Sept. 30      Dec. 31      Dec. 31
(mboed)                  2012         2012          2012         2011
Production Available for                                      
Sale
Exploration and                                               
Production
 United States           198  171   166  129
 International          264          295           270          236
 Total E&P             462  466   435  365
 Oil Sands Mining       43           46            41           38
 Total Upstream       505          512           476          403
Libya                    42           74            49           8
 Total Upstream         463          438           427          395
Excluding Libya

Exploration and Production

E&P segment income totaled $501 million in the fourth quarter of 2012,
compared to $486 million in the third quarter of 2012. On a pre-tax basis, the
increase was primarily the result of higher liquid hydrocarbon sales volumes,
along with higher natural gas prices mostly offset by higher depreciation,
depletion and amortization (DD&A) and operating costs associated with the
additional volumes and higher exploration expenses. For full-year 2012, E&P
segment income was $1.881 billion, compared to $2.157 billion for 2011. The
decrease included lower earnings in the U.K. and Equatorial Guinea, partially
offset by higher earnings in Libya. Also, in 2011 the Company was not in an
excess foreign tax credit position for the entire year as it was in 2012.

E&P sales volumes per day (excluding Libya) during the fourth quarter of 2012
averaged 423,000 net boed, up 6 percent compared to 399,000 net boed for the
third quarter. For full-year 2012, sales volumes (excluding Libya) averaged
388,000 net boed, an 8 percent increase from the 2011 average of 358,000 boed.
The increases in the quarter and for the full year were largely the result of
ramped up production in the Company's U.S. resource plays, particularly the
Eagle Ford and Bakken shale plays.

E&P production available for sale for the fourth quarter of 2012 averaged
420,000 net boed (excluding Libya), which was 7 percent higher than the third
quarter 2012 average of 392,000 net boed. For full-year 2012, E&P production
available for sale (excluding Libya) increased 8 percent over 2011 volumes,
with 2012 available for sale volumes averaging 386,000 net boed compared to
357,000 net boed for full-year 2011.

The difference between production volumes available for sale and recorded
sales volumes was primarily due to the timing of international liftings.

Production operations in Libya were suspended in the first quarter of 2011 and
resumed with limited production in the fourth quarter of 2011. During the
fourth quarter of 2012, net production available for sale averaged 42,000
boed, compared to 74,000 boed in the third quarter, and net sales averaged
64,000 boed compared to 53,000 boed in the third quarter. Production available
for sale was higher in the third quarter compared to the fourth quarter
because of a natural gas sales agreement executed in the third quarter. Fourth
quarter sales were higher than third quarter sales because of the lifting of
the majority of the previous liquid hydrocarbon underlift.

Marathon Oil estimates first quarter 2013 E&P production available for sale
will be between 415,000 and 430,000 net boed, which includes one month of
Alaska production but excludes Libya. Full-year 2013 E&P production available
for sale is projected to be between 395,000 and 420,000 net boed, reflecting
the sale of the Alaska business on Jan. 31, 2013 as well as planned
turnarounds in Norway, Equatorial Guinea and the U.K. during the year. This
guidance excludes the effect of acquisitions or dispositions not previously
announced.

United States E&P income was $104 million for the fourth quarter of 2012,
compared to $110 million in the third quarter of 2012, with the decrease
largely the result of higher exploration expenses. Higher sales volumes of
liquids, reflecting the Company's ongoing development programs primarily in
the Eagle Ford and Bakken shale plays, were partially offset by higher DD&A
and other costs associated with these increased activities.

For full-year 2012, U.S. E&P income was $393 million, compared to $366 million
for the prior year. The increase was a result of higher sales volumes,
partially offset by lower realized product prices, higher DD&A and operating
expenses primarily associated with increased activities in the shale resource
plays and higher exploration expenses. On a per boe basis, operating costs and
DD&A each showed improvement by approximately $0.30 per boe.

International E&P income was $397 million in the fourth quarter of 2012,
compared to $376 million in the third quarter of 2012. On a pre-tax basis, the
increase reflects the impact of higher liquid hydrocarbon sales volumes and
realizations and lower DD&A.

International E&P income for full-year 2012 was $1.488 billion, compared to
$1.791 billion in 2011. The decrease included lower earnings in the U.K. and
Equatorial Guinea, partially offset by higher earnings in Libya. Also, in 2011
the Company was not in an excess foreign tax credit position for the entire
year as it was in 2012.

Total E&P exploration expenses were $238 million for the fourth quarter of
2012 and $729 million for the entire year, compared to $176 million in the
third quarter of 2012 and $644 million for full-year 2011. Fourth quarter 2012
exploration expenses included $85 million of dry well costs associated with
the Innsbruck prospect in the Gulf of Mexico.

EAGLE FORD: Marathon Oil's average net production in the Texas Eagle Ford
shale rose 50 percent in the fourth quarter to approximately 60,000 boed
compared to 40,000 net boed in the prior quarter. Approximately 64 percent of
the production was crude oil/condensate, 16 percent was natural gas liquids
(NGLs) and 20 percent was natural gas. For the month of January, the Company
projects average production was approximately 70,000 net boed. During the
fourth quarter, Marathon Oil reached total depth on 70 gross Company operated
wells and brought 70 gross operated wells to sales. For all of 2012, the
Company reached total depth on 248 Eagle Ford gross operated wells, an
increase of approximately 15 percent from original 2012 estimates, and brought
215 gross operated wells to sales. Marathon Oil has continued to deliver a
top-quartile drilling performance in the areas in which it operates in the
Eagle Ford. The Company improved its spud-to-spud performance 40 percent from
the fourth quarter of 2011 (35 days) to the fourth quarter of 2012 (21 days).
During January, the Company improved another 10 percent averaging 19 days
spud-to-spud on wells drilled in the Eagle Ford. The Company fully expects the
spud-to-spud time to continue dropping during 2013 as it moves to more pad
drilling.

Additionally, Marathon Oil continues to build infrastructure to support liquid
hydrocarbon and natural gas production growth across the Eagle Ford operating
area. Approximately 370 miles of gathering lines were installed in 2012, while
12 new central gathering and treating facilities were commissioned, with seven
additional facilities in various stages of planning or construction. Marathon
Oil also owns and operates the Sugarloaf gathering system, a 42-mile natural
gas pipeline through the heart of the Company's acreage in Karnes, Atascosa
and Bee counties. The Company currently transports approximately 60 percent of
its product by pipeline, with additional contract negotiations and facility
designs under way. In 2013, Marathon Oil plans to drill 215-250 net wells
(275-320 gross, all Company operated) in the Eagle Ford.

BAKKEN: Marathon Oil averaged production of approximately 35,000 net boed
during the fourth quarter compared to 30,000 net boed in the previous quarter.
For the month of January, the Company projects average production was
approximately 33,000 net boed, down slightly from the previous month because
of weather and completion schedules. The Company reached total depth on 18
gross wells during the fourth quarter and brought 18 gross wells to sales. In
the fourth quarter Marathon Oil's average time to drill a well was 27 days
spud-to-spud, a top-quartile performance in the areas in which Marathon Oil
operates. Marathon Oil's Bakken production averages approximately 90 percent
crude oil, 5 percent NGLs and 5 percent natural gas. Marathon Oil plans to
drill 65-70 net wells (190-220 gross, 60-70 Company operated) in 2013.

OKLAHOMA RESOURCE BASINS: The Company's unconventional production averaged
9,800 net boed during the fourth quarter compared to 9,600 net boed in the
previous quarter. During the fourth quarter, five gross wells were brought to
sales. For the month of January, the Company projects average production was
approximately 12,000 net boed. Marathon Oil's plans call for drilling 15-19
net wells (42-50 gross, 12-14 Company operated) in the Oklahoma Resource
Basins in 2013.

NORWAY: In January, Marathon Oil was awarded a 20 percent non-operated working
interest in Production License (PL) 694 by the Norwegian Ministry of Petroleum
and Energy as part of the country's 2012 Awards in Predefined Areas (APA
2012). PL 694 consists of three blocks south of the Sverdrup prospect area in
the northern part of the Norwegian Sea. Also as part of APA 2012, Marathon Oil
and its partners were awarded additional acreage in the North Sea north of the
Alvheim area in PL 203 B. The Company's 65 percent working interest and role
as operator are the same as PL 203.

The Darwin (formerly Velsemoy) exploration well in the Barents Sea is expected
to begin drilling in the first quarter of 2013 on PL 531, in which the Company
holds a 10 percent non-operated working interest. Drilling is expected to
commence in the third quarter of 2013 on the Sverdrup exploration well on
license PL 330 where the Company holds a 30 percent non-operated working
interest.

KURDISTAN: In December, Marathon Oil reached total depth of approximately
12,500 feet on its first operated exploration well on the Harir block in the
Kurdistan Region of Iraq. The well was tested and is now being plugged and
abandoned. The Company plans to spud two exploration wells on its operated
blocks in the first half of 2013. One well will be drilled on the Harir block
and the other on the Safen block. Marathon Oil holds a 45 percent working
interest in each block.

Additionally, following the successful appraisal program on the
outside-operated Atrush block, a Declaration of Commerciality has been filed
with the Ministry of Natural Resources and a Plan of Development is
anticipated in the second quarter of 2013. On the outside-operated Sarsang
block, the Mangesh exploration well was spud in September and the Gara
exploration well was spud in November. Both wells are currently drilling and
are expected to reach total depth in the first half of 2013. Marathon Oil
holds a 20 percent working interest in the Atrush block and a 25 percent
working interest in the Sarsang block.

ETHIOPIA: In January, Marathon Oil received Ethiopian government approvals of
the Company's agreement, announced in October, to acquire a 20 percent
non-operated working interest in the onshore South Omo concession. The Sabisa
exploration well was spud in the South Omo concession in January and is
expected to take approximately 60 days to reach the planned total depth of
approximately 8,500 feet.

GABON: Exploration drilling is expected to begin in the first quarter of 2013
on the Diaman No. 1 well in the Diaba License G4-223, offshore Gabon, to test
the deepwater presalt play. Marathon Oil acquired a 21.25 percent non-operated
working interest in the Diaba Block in October 2012.

GULF OF MEXICO: The outside-operated Shenandoah appraisal well reached total
depth in January and is currently being logged. The ENSCO 8501 rig arrived on
the outside-operated Gunflint prospect and spud a second appraisal well in
early February.

ANGOLA: During the fourth quarter, production commenced from the Block 31
deepwater PSVM development, in which Marathon Oil holds a 10 percent
non-operated working interest, but no sales were recorded during the quarter.

Oil Sands Mining

The OSM segment reported income of $19 million for the fourth quarter of 2012,
compared to $65 million in the third quarter of 2012. Results were negatively
impacted by unplanned downtime at the Scotford upgrader in the fourth quarter
of 2012. With less throughput at the upgrader, a higher percentage of
lower-value products were sold, leading to lower price realizations. For
full-year 2012, OSM reported income of $176 million compared to income of $256
million for full-year 2011. This decrease was primarily the result of lower
price realizations, partially offset by an increase in sales volumes.

                                         Three Months Ended  Year Ended
                                         Dec. 31  Sept. 30   Dec. 31 Dec. 31
                                         2012     2012       2012    2011
Key Oil Sands Mining Statistics                                    
Net Synthetic Crude Oil Sales (mbbld)     48       53         47      43
Synthetic Crude Oil Average Realizations  $76.36   $81.13     $81.72  $91.65
(per bbl)

Marathon Oil's fourth quarter 2012 net synthetic crude oil production
(upgraded bitumen excluding blendstocks) from its non-operated position in the
Athabasca Oil Sands Project (AOSP) mining operation was 43,000 barrels per day
(bbld). Full-year 2012 net production was 41,000 bbld, compared to 38,000 bbld
for 2011. Marathon Oil anticipates producing an average of 37,000 to 42,000
net bbld of synthetic crude oil (upgraded bitumen excluding blendstocks) in
the first quarter of 2013 and an average of 40,000 to 45,000 net bbld of
synthetic crude oil for full year 2013. Marathon Oil holds a 20 percent
working interest in the AOSP.

Integrated Gas

Integrated Gas segment income was $35 million in the fourth quarter of 2012
compared to $39 million in the third quarter of 2012. This decrease was
primarily due to lower liquefied natural gas (LNG) sales volumes. For the full
year, income was $91 million in 2012, compared to $178 million in 2011. The
full-year decrease was primarily due to lower LNG sales volumes, the result of
a turnaround in the second quarter of 2012 in Equatorial Guinea and the sale
of the Company's interest in a liquefied natural gas production facility in
Alaska during the third quarter of 2011, as well as lower price realizations.

                                 Three Months Ended  Year Ended
                                 Dec. 31  Sept. 30   Dec. 31 Dec. 31
                                 2012     2012       2012    2011
Key Integrated Gas Statistics                              
Net Sales (metric tonnes per day)                          
 LNG                          6,327    7,065      6,290   7,086
 Methanol                     1,465    1,146      1,298   1,282

Corporate and Special Items

As previously announced, Marathon Oil anticipates divestitures of $1.5 billion
to $3 billion over the period of 2011 through 2013 in an ongoing effort to
optimize the Company's portfolio for profitable growth. As of Feb. 5, 2013,
the Company has closed on approximately $1.3 billion in divestitures. On Jan.
31, 2013, the Company closed on the previously announced sale of its remaining
Alaska business, which had an effective date of Jan. 1, 2012 and a transaction
value of $375 million. Including purchase price adjustments, largely for the
2012 cash flows, the Company will realize up to $195 million in cash proceeds,
subject to a six-month escrow of $50 million for various indemnities. On Feb.
5, 2013 the Company closed on the sale of its interest in the Neptune gas
plant in South Louisiana for approximately $170 million in cash.

Full year cash flow from continuing operations before changes in working
capital totaled $4.5 billion in 2012 compared to $4.9 billion in 2011. Cash
flow from continuing operations totaled $4.0 billion in 2012 compared to $5.4
billion in 2011. The decline in cash flow from continuing operations was
primarily the result of working capital changes related to the 2012 ramp up of
operations in the Eagle Ford shale and Libya and the timing of tax payments.

Marathon Oil previously announced a 2013 budget of $5.2 billion for capital,
investment and exploration expenditures, a slight reduction from the Company's
actual $5.4 billion of expenditures in 2012. Both years exclude acquisitions.

In August 2012, Marathon Oil entered into crude oil derivative instruments
related to a portion of its forecast U.S. E&P crude oil sales. For the fourth
quarter of 2012, an after-tax unrealized gain of $5 million ($8 million
pre-tax) was recorded related to these crude oil derivative instruments.

As a result of lower natural gas prices, projected production from the
Company's Powder River Basin operations in Wyoming was reduced. Consequently,
7 million boe of proved reserves were written off and an impairment charge of
$47 million after-tax ($73 million pre-tax) was recorded in the fourth quarter
of 2012.

The Ozona development in the Gulf of Mexico is being produced to abandonment
pressure, which is expected to occur in the first half of 2013. Because
projected production was reduced, approximately 420,000 boe of proved reserves
were written off and an impairment charge of $17 million after-tax ($27
million pre-tax) was recorded in the fourth quarter of 2012.

Marathon Oil recorded an after-tax settlement charge of $7 million ($11
million pre-tax) in the fourth quarter of 2012 in connection with the
Company's U.S. pension plans.

The Company will conduct a conference call and webcast today, Feb. 6, at 2:00
p.m. EST, during which it will discuss fourth quarter and full-year 2012
results and will include forward-looking information. To listen to the webcast
of the conference call and view the slides, visit the Marathon Oil website at
http://www.marathonoil.com. Replays of the webcast will be available through
Feb. 20. Quarterly and annual financial and operational information will also
be provided via the Quarterly Investor Packet available on Marathon Oil's
website at http://ir.marathonoil.com and on the Company's app available for
mobile devices. The webcast slides and Quarterly Investor Packet will be
posted to the Company's website and to its mobile app later this morning.

                                    # # #

In addition to income from continuing operations determined in accordance with
generally accepted accounting principles, Marathon Oil has provided
supplementally "adjusted income from continuing operations," a non-GAAP
financial measure which facilitates comparisons to earnings forecasts prepared
by stock analysts and other third parties. Such forecasts generally exclude
the effects of items that are considered non-recurring, are difficult to
predict or to measure in advance or that are not directly related to Marathon
Oil's ongoing operations. A reconciliation between GAAP income from continuing
operations and "adjusted income from continuing operations" is provided in a
table on page 1 of this release. "Adjusted income from continuing operations"
should not be considered a substitute for income from continuing operations as
reported in accordance with GAAP. Management, as well as certain investors,
uses "adjusted income from continuing operations" to evaluate Marathon Oil's
financial performance between periods. Management also uses "adjusted income
from continuing operations" to compare Marathon Oil's performance to certain
competitors

In addition to cash flow from operations determined in accordance with GAAP,
Marathon Oil has provided supplementally "cash flow from continuing operations
before changes in working capital," a non-GAAP financial measure, which
management believes demonstrates the Company's ability to internally fund
capital expenditures, pay dividends and service debt. A reconciliation between
GAAP cash flow from continuing operations and "cash flow from continuing
operations before changes in working capital" is provided in a table on page 1
of this release. "Cash flow from continuing operations before changes in
working capital" should not be considered a substitute for cash flow from
continuing operations as reported in accordance with GAAP. Management, as well
as certain investors, uses "cash flow from continuing operations before
changes in working capital" to evaluate Marathon Oil's financial performance
between periods. Management also uses "cash flow from continuing operations
before changes in working capital" to compare Marathon Oil's performance to
certain competitors.

This release contains forward-looking statements with respect to the timing
and levels of the Company's worldwide liquid hydrocarbon and natural gas
production, synthetic crude oil production, the expected number of wells to be
drilled in key resource plays, exploration drilling activity in the Gulf of
Mexico, Ethiopia, Kenya, Gabon, the Kurdistan Region of Iraq and Norway,
expectations as to improving earnings and cash margins in 2013, the capital,
investment and exploration expenditures budget, anticipated 2013 reserve
replacement ratio, plans to exit the Marcellus shale play and projected asset
dispositions through 2013. The average times to drill a well referenced in the
release may not be indicative of future drilling times. The current production
rates referenced in this release may not be indicative of future production
rates. Factors that could potentially affect the timing and levels of the
Company's worldwide liquid hydrocarbon and natural gas production, synthetic
crude oil production, the expected number of wells to be drilled in key
resource plays, and exploration drilling activity in the Gulf of Mexico,
Ethiopia, Kenya, Gabon, the Kurdistan Region of Iraq and Norway include
pricing, supply and demand for liquid hydrocarbons and natural gas, the amount
of capital available for exploration and development, regulatory constraints,
timing of commencing production from new wells, drilling rig availability,
unforeseen hazards such as weather conditions, acts of war or terrorist acts
and the governmental or military response thereto, and other geological,
operating and economic considerations. Expectations as to improving earnings
and cash margins in 2013, the capital, investment and exploration budget,
anticipated 2013 reserve replacement ratio, plans to exit the Marcellus shale
play and projected asset dispositions are based on current expectations, good
faith estimates and projections and are not guarantees of future performance.
Actual results may differ materially from these expectations, estimates and
projections and are subject to certain risks, uncertainties and other factors,
some of which are beyond the Company's control and difficult to predict. 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, 2011, 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.

Condensed Consolidated Statements of Income                              
(Unaudited)
              Three Months Ended                            Year Ended
              Dec. 31         Sept. 30      Dec. 31         Dec. 31       Dec. 31
(In millions,
except per     2012            2012          2011            2012          2011
share data)
Revenues and                                                           
other income:
 Sales and
other          $4,117          $4,018        $3,634          $15,630       $14,603
operating
revenues
 Sales to
related        15              16            15              58            60
parties
 Income from
equity method  110             122           102             370           462
investments
 Net gain
(loss) on      1               (12)          40              127           103
disposal of
assets
 Other       (7)             17            18              36            54
income (loss)

Total revenues 4,236           4,161         3,809           16,221        15,282
and other
income
Costs and                                                              
expenses:
 Cost of
revenues       1,214           1,296         1,554           5,219         6,225
(excludes
items below)
 Purchases
from related   57              72            66              248           250
parties

Depreciation,  699             625           550             2,478         2,266
depletion and
amortization
 Impairments 100             8             3               371           310
 General and
administrative 166             139           173             555           544
expenses
 Other taxes 81              63            60              289           230
 Exploration 238             176           140             729           644
expenses

Total costs    2,555           2,379         2,546           9,889         10,469
and expenses
Income from    1,681           1,782         1,263           6,332         4,813
operations
 Net
interest and   (59)            (53)          (45)            (219)         (107)
other
 Loss on
early                (279)
extinguishment -               -             -                -
of debt
Income from
continuing
operations     1,622           1,729         1,218           6,113         4,427
before income
taxes
 Provision
for income     1,300           1,279         669             4,531         2,720
taxes
Income from
continuing      322   450   549   1,582   1,707
operations
                    
Discontinued   -               -             -               -              1,239
operations (a)
Net income     $322            $450          $549            $1,582        $2,946
Adjusted
income from    $388            $454          $552            $1,736        $2,293
continuing
operations (b)
Adjustments
for special                                                            
items (net of
taxes):
Impairments     (64)      (231)  (195)
                               -            -
Gain (loss) on        22      
dispositions   -              (11)                           72            45
Unrealized
gain on crude  5               29               34            
oil derivative                               -                              -
instruments
Pension                  (19)   (29) 
settlement     (7)             (22)                                         (19)
Loss on early       
extinguishment -              -            -              -              (176)
of debt
Tax effect of       
subsidiary     -              -            -              -              (122)
restructure
Deferred              
income tax     -              -            4               -             (61)
items
Water                
abatement -    -              -            -              -             (48)
Oil Sands
Eagle Ford                           
transaction    -              -             (10)  -           (10)
costs
Income from
continuing     322             450           549             1,582         1,707
operations
Discontinued          1,239
operations (a) -               -             -                -
Net income     $322            $450          $549            $1,582        $2,946
Per Share Data                                                         
Basic:                                                                 
Income from
continuing     $0.46           $0.64         $0.78           $2.24         $2.40
operations
Discontinued        $1.75
operations (a) -              -            -               -
Net income     $0.46           $0.64         $0.78           $2.24         $4.15
Diluted:                                                               
Adjusted
income from    $0.55           $0.64         $0.78           $2.45         $3.21
continuing
operations (b)
Income from
continuing     $0.45           $0.63         $0.78           $2.23         $2.39
operations
Discontinued        $1.74
operations (a) -              -            -               -
Net income     $0.45           $0.63         $0.78           $2.23         $4.13
Weighted
Average                                                                
Shares:
 Basic        707             706           704             706           710
 Diluted      711             709           707             710           714

(a) The spin-off of Marathon's downstream business was completed on June
30, 2011, and all comparative periods have been recast to reflect the
downstream business as discontinued operations.

(b) Adjusted income from continuing operations is a non-GAAP financial
measure and should not be considered a substitute for income from continuing
operations as determined in accordance with accounting principles generally
accepted in the United States. See above for further discussion of adjusted
income from continuing operations.

Supplemental
Statistics                                                    
(Unaudited)
               Three Months Ended                    Year Ended
               Dec. 31      Sept. 30    Dec. 31      Dec. 31     Dec. 31
(in millions)   2012         2012        2011         2012        2011
Segment Income                                                

Exploration and                                               
Production
       $104         $110        $129         $393        $366
United States
       397          376         429          1,488       1,791
International
  501          486         558          1,881       2,157
E&P segment
 Oil Sands  19           65          63           176         256
Mining
 Integrated 35           39          20           91          178
Gas
Segment income  555          590         641          2,148       2,591
Items not
allocated to
segments, net                                                 
of income
taxes:
 Corporate
and other       (167)        (136)       (89)         (412)       (298)
unallocated
items
Impairments      (64)     (231)   (195)
                             -          -
Gain (loss) on    (11)  22   72 
dispositions    -                                                 45
Unrealized gain
on crude oil    5            29            34          
derivative                               -                         -
instruments
Pension                  (19)   (29) 
settlement      (7)          (22)                                  (19)
Loss on early        
extinguishment  -           -          -           -           (176)
of debt
Tax effect of         
subsidiary      -           -          -           -          (122)
restructure
Deferred income    4   
tax items       -           -                        -          (61)
Water abatement      
- Oil Sands     -           -          -            -          (48)
Eagle Ford                       
transaction     -           -           (10)   -          (10)
costs

Income from      322         1,582  1,707
continuing                   450         549
operations
             
Discontinued    -           -          -           -           1,239
operations (a)
 Net income $322         $450        $549         $1,582      $2,946
Capital
Expenditures                                                  
(c)

Exploration and                                               
Production
       $1,104       $1,046      $738         $3,995      $2,145
United States
       302          228         199          870         893
International
  1,406        1,274       937          4,865       3,038
E&P segment
 Oil Sands  52           41          72           188         308
Mining
 Integrated  1              2           2
Gas             -                        -
 Corporate  24           23          14           106         51
  $1,482       $1,339      $1,023       $5,161      $3,399
Total
Exploration                                                   
Expenses
 United     $195         $132        $99          $564        $379
States
            43           44          41           165         265
International
  $238         $176        $140         $729        $644
Total

^(c) Capital expenditures include changes in accruals.

Supplemental
Statistics    Three Months Ended                      Year Ended
(Unaudited)
             Dec. 31      Sept. 30     Dec. 31       Dec. 31    Dec. 31
             2012         2012         2011          2012       2011
E&P Operating
Statistics -                                                 
Net Sales
Volumes
                                                            
 United
States -       133   111    83    107  75
Liquids
(mbbld)
 Bakken   33            29  21  28          16
 Eagle     47  33   8  28          2
Ford
 Anadarko  3  3  1  3           1
Woodford
 Other     50   46  53     56
U.S.                                                   48
 United
States -                                               
Crude Oil and  117   98   77   96          70
Condensate
(mbbld)
 Bakken   32            28  21  27          16
 Eagle     38   26   7  23          2
Ford
 Anadarko           1          
Woodford      1       1            -                       -
 Other              45         
U.S.          46           43           49                        52
 United
States -                
Natural Gas   16           13           6             11         5
Liquids
(mbbld)
 Bakken   1                1          
                           1            -                       -
 Eagle        5          
Ford          9            7            1                         -
 Anadarko     2          
Woodford      2            2            1                         1
 Other        3          
U.S.          4            3            4                         4
 United
States -       404   366   325        326
Natural Gas                                            358
(mmcfd)
 Bakken         8          
              10           7            5                         6
 Eagle            37         
Ford          72           46           8                         2
 Anadarko         29         
Woodford      39           38           9                         7
 Alaska    100        92         
                           88           92                        94
 Other     183  187  211      217
U.S.                                                   192

International  191   182   136        144
- Liquids                                              175
(mbbld)
                                         
Equatorial    33           39           39   36         38
Guinea
 Norway             81         
              79           80           78                        80
 U.K.               16         
              20           14           19                        21
 Libya             42         
              59           49           -                       5

International  569   585   567        540
- Natural Gas                                          544
(mmcfd)

Equatorial     445  459  455  428         443
Guinea
 Norway             53         
              54           54           51                        42
 U.K. (d)           48         
              44           46           61                        55
 Libya             15         
              26           26           -                       -
 Worldwide
Net Sales     487   452   368   432         363
(mboed)

^(d) Includes natural gas acquired for injection and subsequent resale of 12
mmcfd,18 mmcfd and 15 mmcfd in the fourth and third quarters of 2012 and the
fourth quarter of 2011, and of 18 mmcfd and 16 mmcfd for the years 2012 and
2011.

Supplemental Statistics                                           
(Unaudited)
                             Three Months Ended              Year Ended
                             Dec. 31 Sept. 30 Dec. 31        Dec. 31 Dec. 31
                             2012    2012     2011           2012    2011
E&P Operating Statistics -                                        
Average Realizations (e)
 Crude Oil and                                            
Condensate (per bbl)
 United States    $89.92  $90.16   $98.13         $91.29  $94.80
 Europe           113.82  113.00   114.73         115.59  115.88
 Africa           116.53  113.30   92.80          114.52  98.80
 Total         115.04  113.14   109.78         115.15  111.78
International
       105.15  104.73   105.32         106.35  105.84
Worldwide
 Natural Gas Liquids                                      
(per bbl)
 United States    $35.29  $37.88   $56.74         $39.57  $58.53
 Europe           87.78   68.17    74.05          78.81   78.76
 Africa           1.00    1.00     1.00           1.00    1.00
 Total         9.21    8.23     5.28           8.32    6.77
International
       23.86   23.41    21.94          23.44   21.21
Worldwide
 Total Liquid                                             
Hydrocarbons (per bbl)
 United States    $83.20  $83.80   $95.21         $85.80  $92.55
(f)
 Europe           113.50  112.34   114.43         115.16  115.55
 Africa           102.10  98.65    66.08          98.52   73.21
 Total         108.01  105.71   100.43         107.78  102.96
International
       97.86   97.40    98.46          99.46   99.37
Worldwide
                                                                 
 Natural Gas (per                                         
mcf)
 United States    $4.39   $3.61    $4.68          $3.91   $4.95
 Europe           11.78   10.10    9.29           10.47   9.84
 Africa (g)       0.52    0.63     0.24           0.43    0.24
 Total         2.46    2.25     2.03           2.29    1.97
International
       3.26    2.77     3.00           2.94    3.09
Worldwide
OSM Operating Statistics                                          
 Net Synthetic Crude Oil   48      53        44  47      43
Sales (mbbld) (h)
Synthetic Crude Oil Average  $76.36  $81.13   $93.81         $81.72  $91.65
Realizations (per bbl) (e)
IG Operating Statistics                                           
 Net Sales (mtd) (i)                                         
 LNG                  6,327   7,065    6,984          6,290   7,086
 Methanol             1,465   1,146     1,199     1,298   1,282

(e) Excludes gains or losses on derivative instruments.
(f) Inclusion of realized gains on crude oil derivative instruments would
have increased averaged realizations by $1.27 per bbl for the fourth quarter
of 2012 and $0.39 per bbl for the year 2012.
(g) Primarily represents fixed prices under long-term contracts with Alba
Plant LLC, Atlantic Methanol Production Company LLC (AMPCO) and Equatorial
Guinea LNG Holdings Limited (EGHoldings), which are equity method investees.
Marathon includes its share of Alba Plant LLC's income in the Exploration and
Production segment and its share of AMPCO's and EGHoldings' income in the
Integrated Gas segment.
(h) Includes blendstocks.
(i) Includes both consolidated sales volumes and our share of the sales
volumes of equity method investees in the full year of 2011.LNG sales from
Alaska, conducted through a consolidated subsidiary, ceased when these
operations were sold in the third quarter of 2011. LNG and methanol sales
from Equatorial Guinea are conducted through equity method investees.

CONTACT: Media Relations Contacts:
         Lee Warren: 713-296-4103
         John Porretto: 713-296-4102
        
         Investor Relations Contacts:
         Howard Thill: 713-296-4140
         Chris Phillips: 713-296-3213
 
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