Marathon Oil Corporation Reports First Quarter 2013 Results

Marathon Oil Corporation Reports First Quarter 2013 Results

HOUSTON, May 7, 2013 (GLOBE NEWSWIRE) -- Marathon Oil Corporation (NYSE:MRO)
today reported first quarter 2013 net income of $383 million, or $0.54 per
diluted share, compared to net income in the fourth quarter of 2012 of $322
million, or $0.45 per diluted share. For the first quarter of 2013, adjusted
net income was $361 million, or $0.51 per diluted share, compared to adjusted
net income of $388 million, or $0.55 per diluted share, for the fourth quarter
of 2012.

                   Three Months Ended                                       
                   Mar. 31                      Dec. 31                     
(In millions,
except per diluted  2013                         2012                        
share data)
Adjusted net income $361                         $388                        
(a)
Adjustments for
special items (net                                                         
of taxes):
Unrealized gain
(loss) on crude oil  (32)     5  
derivative
instruments
Impairments          (10)     (64)   
Net gain on          64      - 
dispositions
Pension settlement   -   (7)  
Net income          $383                         $322                        
Adjusted net income
- per diluted share $0.51                        $0.55                       
(a)
Net income - per    $0.54                        $0.45                       
diluted share
Revenues and other  $4,106                       $4,237                      
income
Weighted average     712       711     
shares - diluted
Exploration                                                                
expenses
Unproved property   $383                         $78                         
impairments
Dry well costs       21      92    
Geological and       27      32    
geophysical
Other                34      33    
Total exploration   $465                         $235                        
expenses
Cash flow                                                                  
Cash flow from
operations before   $1,601                       $1,146                      
changes in working
capital (b)
Changes in working   (73)     59    
capital
Cash flow from      $1,528                       $1,205                      
operations
(a) Adjusted net income is a non-GAAP financial measure and should not be
considered a substitute for net income as determined in accordance with      
accounting principles generally accepted in the United States. See below for
further discussion of adjusted net income.
(b) Cash flow from 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 operations before changes in working capital.   

"Marathon Oil's first quarter performance was highlighted by continued growth
in production available for sale, up 4 percent over the prior quarter and 19
percent over the first quarter of 2012, excluding Libya and Alaska, largely
driven by our U.S. resource plays," said Clarence P. Cazalot, Jr., Marathon
Oil's chairman, president and CEO. "Net sales volumes, excluding Libya, grew 3
percent over the previous quarter to 485,000 barrels of oil equivalent per day
(boed). These higher sales volumes, along with improved cash production costs
per barrel of oil equivalent and higher crude oil and condensate realizations
in North America, led to a 40 percent increase in cash flow from operations
before changes in working capital for the quarter.

"Our strong operational performance was a result of high levels of reliability
in our base business along with continued growth in our Eagle Ford and Bakken
shale plays. Average net daily production rose approximately 22 percent in the
Eagle Ford and nearly 6 percent in the Bakken when compared to the fourth
quarter. As a result of continued strong performance, we have increased our
Bakken guidance for 2013 to approximately 40,000 net boed, 14 percent higher
than our original guidance, and we continue to see higher crude oil
realizations in the Bakken driven by our increased utilization of available
rail capacity. Production from our lower 48 onshore operations was 72 percent
liquids for the first quarter.

"During the quarter we recognized the non-cash impairment of certain unproved
leases in the Eagle Ford that either expired or that we do not expect to drill
or extend, reducing earnings $340 million pre-tax or $218 million after-tax.
These properties are primarily located in Bee, Dewitt, Lavaca and Wilson
counties, and we expect the relinquishment of this acreage to have minimal to
no impact on the number of wells we expect to drill or our level of resource.

"Our refocused exploration and appraisal program is well under way, marked by
the successful Shenandoah appraisal well drilled in the Gulf of Mexico during
the quarter. We're currently drilling or participating in eight exploration or
appraisal wells and expect to evaluate the potential of this program over the
next 12 months.

"Backed by our continued strong operational results, we are raising our
production growth target for 2013 (excluding Libya and Alaska) to 7 to 10
percent compared to 2012 from our previous guidance of 6 to 8 percent. We also
remain confident in our ability to grow production (excluding Alaska and any
future acquisitions and divestitures) at a 5 to 7 percent compound annual rate
from 2012 to 2017, delivering significant value to shareholders," Cazalot
added.

Segment Changes

Beginning in 2013, Marathon Oil changed its reportable segments to reflect the
growing importance of United States unconventional resource plays to its
business. All periods presented have been recast in this new segment view.

The Company has three reportable operating segments, each of which is
organized and managed based primarily upon geographic location and the nature
of the products and services it offers. The three segments are as follows:

· North AmericaExploration and Production (E&P) - explores for,
produces and markets liquid hydrocarbons and natural gas in North America.

· International E&P - explores for, produces and markets liquid
hydrocarbons and natural gas outside of North America and produces and markets
products manufactured from natural gas, such as liquefied natural gas (LNG)
and methanol in Equatorial Guinea.

· Oil Sands Mining - mines, extracts and transports bitumen from oil
sands deposits in Alberta, Canada, and upgrades the bitumen to produce and
market synthetic crude oil and vacuum gas oil.

Sales and Production Volumes

Total Company sales volumes (excluding Libya) during the first quarter of 2013
averaged 485,000 net boed, a 3 percent increase compared to 471,000 net boed
for the fourth quarter of 2012. This increase was driven by the timing of
International E&P liftings, first sales from Angola Block 31 and increased
production from the Company's U.S. resource plays, partially offset by the
disposition of the Company's Alaska assets during the first quarter of 2013.

                                                           Three Months Ended
                                                           Mar. 31   Dec. 31
(mboed)                                                     2013      2012
Net Sales Volumes                                                    
North America E&P excluding Alaska                          193       183
Alaska                                                      5         17
International E&P excluding Libya (a)                       236       223
Oil Sands Mining (b)                                        51        48
Total excluding Libya                                       485       471
Libya                                                       38        64
Total                                                       523       535
(a) Libya is excluded because of uncertainty around                  
sustained production and sales levels.
(b)Includes blendstocks.                                            

                                  Three Months Ended         Guidance (a)
                                  Mar. 31       Dec. 31      Q2
(mboed)                            2013          2012         2013
Net Production Available for Sale                           
North America E&P excluding Alaska 193           183          198-204
Alaska                             5             15           
International E&P excluding Libya  229           222          205-216
(b)
Oil Sands Mining (c)               44            43           40-44
Total excluding Libya              471           463          
Libya                              46            42           
Total                              517           505          
(a) This guidance excludes the effect of acquisitions or dispositions not
previously announced.
(b) Libya is excluded because of uncertainty around sustained production and
sales levels.
(c) Upgraded bitumen excluding blendstocks.

Production available for sale from all segments for the first quarter of 2013
averaged 471,000 net boed (excluding Libya), compared to the fourth quarter
2012 average of 463,000 net boed. Production available for sale of 427,000 net
boed for the North America E&P and International E&P segments combined
(excluding Libya) was at the upper end of the Company's guidance for the
quarter (415,000 to 430,000 net boed). The OSM segment had net production in
the quarter of 44,000 barrels per day (bbld) (excluding blendstocks) and
exceeded the Company's previous guidance of 37,000 to 42,000 bbld.

North America E&P production available for sale in the first quarter of 2013
and the fourth quarter of 2012 both averaged 198,000 net boed. Excluding
Alaska production (5,000 boed in the first quarter of 2013 and 15,000 boed in
the fourth quarter of 2012), North America E&P production available for sale
grew 5 percent.

International E&P production available for sale for the first quarter of 2013
averaged 229,000 net boed (excluding Libya), which was 3 percent higher than
the fourth quarter 2012 average of 222,000 net boed. The first quarter of 2013
included a full quarter of production from Angola Block 31.

As per the table above, production available for sale in the second quarter of
2013 is expected to be lower than the first quarter. This anticipated decrease
is a result of a planned turnaround in Equatorial Guinea, the disposition of
the Company's Alaska assets and anticipated field declines in Norway. Full
year 2013 guidance for production available for sale from the North America
E&P and International E&P segments combined has been revised upward to a range
of 405,000 to 425,000 net boed (excluding Libya), a 2 percent increase from
previous guidance at the midpoint.

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

Segment Results

Total segment income was $432 million in the first quarter of 2013, compared
to $564 million in the fourth quarter of 2012.

                     Three Months Ended
                     Mar. 31                         Dec. 31
(In millions)         2013                            2012
Segment Income (Loss)                                
North America E&P     ($59)                           $101
International E&P      453          446
Oil Sands Mining       38         17
 Segment Income (a)  $432                            $564
(a) See Supplemental Statistics below for a reconciliation of segment
income to net income as reported under generally accepted accounting
principles.

North America E&P

The North America E&P segment reported a loss of $59 million in the first
quarter of 2013, compared to income of $101 million in the fourth quarter of
2012. The decrease was primarily the result of unproved property impairments
and lower natural gas prices and volumes largely driven by the disposition of
the Company's assets in Alaska. This was partially offset by higher liquid
hydrocarbon sales volumes and realized prices.

First quarter 2013 exploration expenses included approximately $340 million
related to the unproved property impairments associated with the Eagle Ford
shale previously discussed. These properties are primarily located in Bee,
Dewitt, Lavaca and Wilson counties, and the Company expects the relinquishment
of this acreage to have minimal to no impact on the number of wells it expects
to drill or its level of resource.

EAGLE FORD: Marathon Oil's average net production in the Eagle Ford shale grew
approximately 22 percent from the fourth quarter of 2012 to approximately
72,000 boed in the first quarter. Approximately 64 percent of first quarter
production was crude oil/condensate, 17 percent was natural gas liquids (NGLs)
and 19 percent was natural gas. For the month of April, the Company estimates
average production was approximately 76,000 net boed. During the first
quarter, Marathon Oil reached total depth on 76 gross Company operated wells
and brought 68 gross operated wells to sales. Marathon Oil has continued to
advance its drilling performance in the Eagle Ford, improving its spud-to-spud
performance 36 percent from the first quarter of 2012 (28 days) to the first
quarter of 2013 (18 days). The Company expects the spud-to-spud time to
continue dropping during 2013 as additional efficiencies are gained from pad
drilling.

Marathon Oil continues to build infrastructure to support production growth
across the Eagle Ford operating area. Approximately 148 miles of gathering
lines were installed in the first quarter of 2013, while five new central
gathering and treating facilities were commissioned, with two additional
facilities in various stages of planning or construction. The Company
currently transports approximately 65 percent of its crude/condensate by
pipeline, with additional contract negotiations and facility designs under way
that are expected to push that figure to 75 percent by the end of May. The
ability to transport more barrels by pipeline enables the Company to reduce
costs, improve reliability and lessen its environmental footprint.

The Company is confident the core acreage position will be developed on a
maximum of 80-acre spacings and continues to evaluate the potential of
downspacing to 40- and 60-acre units. Marathon Oil has begun drilling wells in
the Austin Chalk and Pearsall formations to further test the resource
potential of these other horizons. The results to-date of the downspacing
pilots have been in line with its expectations, and the Company anticipates
releasing more definitive results of the downspacing pilots and additional
formation testing in the second half of this year.

BAKKEN: Marathon Oil averaged production of approximately 37,000 net boed
during the first quarter compared to 35,000 net boed in the previous quarter.
For the month of April, the Company estimates average production was
approximately 38,000 net boed. The Company reached total depth on 18 gross
wells during the first quarter and brought 22 gross wells to sales. In the
first quarter Marathon Oil's average time to drill a well was 25 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. The Company has increased
its guidance for the Bakken for full-year 2013 to approximately 40,000 net
boed, a 14 percent increase over the original guidance.

OKLAHOMA RESOURCE BASINS: The Company's unconventional production averaged
13,000 net boed during the first quarter compared to 10,000 net boed in the
previous quarter. During the first quarter, four gross wells were brought to
sales. Marathon Oil anticipates drilling two wells each in the Mississippi
Lime and Granite Wash formations during 2013.

GULF OF MEXICO: In March, Marathon Oil announced that the outside-operated
Shenandoah appraisal well in the deepwater Gulf of Mexico encountered more
than 1,000 net feet of oil pay in multiple high-quality Lower Tertiary-aged
reservoirs. The well is located on Walker Ridge Block 51, in which Marathon
Oil holds a 10 percent working interest.

The Company is currently participating in an appraisal well on the Gunflint
prospect on Mississippi Canyon Block 992, in which it holds an 18 percent
outside-operated working interest. After penetrating the initial appraisal
targets, the well is being deepened to a previously untested Lower Miocene
interval with a projected total depth of 32,835 feet.

In March, the Company submitted the apparent high bids totaling approximately
$33 million for a 100 percent working interest in two blocks in the Central
Gulf of Mexico Lease Sale 227: Keathley Canyon Block 340 on the Colonial
prospect and Keathley Canyon Block 153, an extension to the Meteor prospect on
the Company's existing Keathley Canyon Block 196 lease. Keathley Canyon blocks
340 and 153 are both inboard-Paleogene prospects.

International E&P

International E&P segment income totaled $453 million in the first quarter of
2013, relatively unchanged from $446 million in the fourth quarter of 2012.

ANGOLA: During the first quarter, production available for sale averaged 6,000
net boed while sales averaged 9,000 net boed from the Block 31 deepwater PSVM
development, in which Marathon Oil holds a 10 percent non-operated working
interest.

EQUATORIAL GUINEA: Continued strong operational performance, with availability
of nearly 98 percent, bolstered production during the first quarter of 2013.
Net production available for sale averaged approximately 110,000 boed in the
first quarter, roughly flat compared to the fourth quarter of 2012. A 30-day
planned turnaround commenced April 1 and was safely completed eight days ahead
of schedule and below budget. The Alba Field, associated gas plant and LNG
facility each resumed full production on April 22, 2013.

NORWAY:The production decline that Marathon Oil has projected and disclosed
for several years in the Alvheim area continues to be less severe than
expected. Net production available for sale averaged 86,500 boed for the first
quarter, slightly lower than the 88,500 boed produced in the fourth quarter of
2012. The better-than-expected results were achieved through continued strong
operational performance that delivered availability of 97 percent; reservoir
and well performance at the upper end of expectations, resulting primarily
from a delay in anticipated water breakthrough at the Volund field; and
sustained contributions from the recently completed development drilling
program.

Also, the Darwin (formerly Veslemoy) exploration well in the Barents Sea was
drilled in the first quarter of 2013 on PL 531, in which the Company holds a
10 percent non-operated fully carried working interest, to a total depth of
8,300 feet. Gas shows were recorded in the Paleocene objective section,
although no hydrocarbons were found in the Cretaceous section and the well has
been plugged and abandoned. Drilling is expected to commence in the third
quarter of 2013 on the Sverdrup exploration well on PL 330 in the Norwegian
Sea, in which the Company holds a 30 percent non-operated working interest.

KURDISTAN REGION OF IRAQ: The Company spud the Mirawa exploration well on its
operated Harir Block in March and the Safen exploration well on its operated
Safen Block in April. The Mirawa well is expected to reach total depth in July
and the Safen well is expected to reach total depth in August, with testing
programs to follow on each well. Projected total depths for the Mirawa and
Safen exploration wells are 12,800 feet and 10,350 feet, respectively.
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 was filed with
the Ministry of Natural Resources, and a Plan of Development is anticipated to
be filed in May 2013. The Atrush-3 appraisal well was spud in March. On the
outside-operated Sarsang Block, two exploration wells, Mangesh and Gara, were
spud in the second half of 2012 and are expected to reach total depth during
May, with testing programs to follow on each well. Also on the Sarsang Block,
the East Swara Tika exploration well is expected to be spud late in the second
quarter or early in the third quarter of 2013 and will test additional
resource potential to the northeast of the previously announced Swara Tika
discovery. Marathon Oil holds a 15 percent working interest in the Atrush
Block and a 25 percent working interest in the Sarsang Block.

ETHIOPIA: The Sabisa-1 exploration well on the onshore South Omo Block has
been drilled to a total depth of approximately 6,000 feet and recorded
hydrocarbon indications in sands beneath a thick claystone top seal. Hole
instability issues have required the drilling of a sidetrack to
comprehensively log and sample zones of interest. Results from the sidetrack
are expected in early June. Marathon Oil holds a 20 percent non-operated
working interest in the South Omo Block.

GABON: Exploration drilling began in April on the Diaman No. 1 well in the
Diaba License G4-223, offshore Gabon, to test the deepwater presalt play.
Drilling is expected to reach the projected total depth of 18,300 feet in the
third quarter. Marathon Oil holds a 21.25 percent non-operated working
interest in the Diaba License.

POLAND: After an extensive evaluation of the Company's exploration activities
in Poland and unsuccessful attempts to find commercial levels of hydrocarbons,
Marathon Oil has elected to conclude operations in the country. The Company is
evaluating disposition options for its concessions, which had a net book value
at March 31, 2013, of $12 million.

Oil Sands Mining (OSM)

The OSM segment reported income of $38 million for the first quarter of 2013,
compared to $17 million in the fourth quarter of 2012. The mines and upgrader
experienced significantly improved reliability.Primarily because of the
reliability improvements, combined production from the Jack Pine and Muskeg
River mines set a record bitumen production rate in the first quarter.In
addition, the upgrader availability was 100 percent for the first quarter,
allowing the facility to maximize production of lighter synthetic crudes,
which improved realizations and profit margins.

First quarter 2013 operating costs were higher than the fourth quarter of 2012
because of seasonal activity such as overburden removal and infield drilling;
however, because of higher production resulting from improved reliability,
operating costs per barrel decreased in the first quarter of 2013.Marathon
Oil expects second quarter operating costs to be essentially flat compared to
the first quarter because of turnaround activities at the upgrader in the
second quarter. The Company expects cost improvements on both an absolute and
per barrel basis in the third and fourth quarters of 2013 as a result of
seasonal impacts and cost savings initiatives.

Corporate and Other

Marathon Oil changed the presentation of its consolidated statements of
income, primarily to present additional details of revenues and expenses and
to classify certain expenses more consistently with the peer group of
independent exploration and production companies.As a result of these
classification changes, more costs will be presented as general and
administrative expenses in prior and future periods, primarily certain costs
associated with operations support and operations management. Offsetting
reductions will be reflected in production, other operating and exploration
expenses and taxes other than income taxes. For the first and fourth quarters
of 2012, $39 million and $38 million of such costs were reclassified,
respectively.

The Company continues to progress the potential sale of assets in an ongoing
effort to optimize its portfolio for profitable growth. In April 2013,
Marathon Oil reached an agreement to sell its interests in the DJ Basin. The
transaction is expected to close in mid-2013 and a second quarter loss of
approximately $115 million is anticipated on this disposition.

As previously announced, Marathon Oil anticipates divestitures of $1.5 billion
to $3 billion over the period of 2011 through 2013. As of May 6, 2013, the
Company has agreed upon or closed on approximately $1.3 billion in
divestitures.

Special Items

In the first quarter of 2013, Marathon Oil recorded a net gain of $64 million
after-tax ($101 million pre-tax) on three asset dispositions: a gain of $29
million after-tax ($46 million pre-tax) on the sale of its assets in Alaska; a
loss of $28 million after-tax ($43 million pre-tax) on the conveyance of its
interest in the Marcellus natural gas shale play; and a gain of $63 million
after-tax ($98 million pre-tax) on the sale of its interest in the Neptune gas
plant.

In August 2012, Marathon Oil entered into crude oil derivative instruments
related to a portion of its forecast North America E&P crude oil sales. For
the first quarter of 2013, an after-tax unrealized loss of $32 million ($50
million pre-tax) was recorded related to these crude oil derivative
instruments.

In the first quarter of 2013, as a result of the Company's decision to wind
down operations in the Powder River Basin due to poor economics, an after-tax
impairment of $10 million ($15 million pre-tax) was recorded.

The Company will conduct a conference call and webcast on Wednesday, May 8 at
9:00 a.m. EDT, during which it will discuss first quarter 2013 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
June 8. 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 as soon as practical after the
earnings release is issued.

                                    # # #

In addition to net income determined in accordance with generally accepted
accounting principles, Marathon Oil has provided supplementally "adjusted net
income," 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 net income and "adjusted net income" is provided in a table on
page 1 of this release. "Adjusted net income" should not be considered a
substitute for net income as reported in accordance with GAAP. Management, as
well as certain investors, uses "adjusted net income" to evaluate Marathon
Oil's financial performance between periods. Management also uses "adjusted
net income" 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 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 operations and "cash flow from operations before changes in
working capital" is provided in a table on page 1 of this release. "Cash flow
from operations before changes in working capital" should not be considered a
substitute for cash flow from operations as reported in accordance with GAAP.
Management, as well as certain investors, uses "cash flow from operations
before changes in working capital" to evaluate Marathon Oil's financial
performance between periods. Management also uses "cash flow from 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, natural gas and
synthetic crude oil production, production forecasts for the Bakken resource
play, exploration drilling activity in the Gulf of Mexico, Oklahoma Resource
Basins, Ethiopia, Gabon, the Kurdistan Region of Iraq and Norway, planned
infrastructure improvements in the Eagle Ford operating area, plans to exit
Poland, the filing of a Plan of Development for the Atrush Block, the timing
of closing the sale of the Company's interests in the DJ Basin, 2013 operating
costs 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,
natural gas and synthetic crude oil production, production forecasts for the
Bakken resource play, exploration drilling activity in the Gulf of Mexico,
Oklahoma Resource Basins, Ethiopia, 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. The planned
infrastructure improvements in the Eagle Ford could be affected by the
inability to obtain or delay in obtaining necessary government and third-party
approvals and permits. Plans to exit Poland, the timing of filing the Plan of
Development for the Atrush Block, 2013 operating costs and the projected asset
dispositions are based on current expectations, good faith estimates and
projections and are not guarantees of future performance. The timing of
closing the sale of the Company's interests in the DJ Basin is subject to the
satisfaction of customary closing conditions. 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, 2012, and subsequent Forms 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.

Consolidated
Statements of  Three Months Ended
Income
(Unaudited)
              Mar. 31                   Dec. 31                  Mar. 31
(In millions,
except per     2013                      2012                     2012
share data)
Revenues and                                                    
other income:
 Sales and
other
operating      $3,440                    $3,644                   $2,954
revenues,
including
related party
 Marketing   430                       487                      839
revenues
 Income from
equity method  118                       110                      78
investments
 Net gain on
disposal of    109                       1                        166
assets
 Other       9                         (5)                      3
income (loss)
Total revenues
and other      4,106                     4,237                    4,040
income
Costs and                                                       
expenses:
 Production  578                       626                      514
 Marketing,
including
purchases from 429                       500                      842
related
parties
 Other       111                       122                      92
operating
 Exploration 465                       235                      135

Depreciation,  747                       699                      574
depletion and
amortization
 Impairments 38                        100                      262
 Taxes other 84                        70                       68
than income
 General and 174                       204                      159
administrative
Total costs    2,626                     2,556                    2,646
and expenses
Income from    1,480                     1,681                    1,394
operations
 Net
interest and   (72)                      (59)                     (50)
other
Income from
operations     1,408                     1,622                    1,344
before income
taxes
 Provision
for income     1,025                     1,300                    927
taxes
Net income     $383                      $322                     $417
Adjusted net   $361                      $388                     $478
income (a)
Adjustments
for special                                                     
items (net of
taxes):
Unrealized
gain (loss) on                            
crude oil       (32) 5                        -
derivative
instruments
Impairments     (10)       (167)
                                         (64)
Net gain on     64     106
dispositions                             -
Pension            
settlement     -                         (7)                      -
Net income     $383                      $322                     $417
Per Share Data                                                  
Basic:                                                          
Net income     $0.54                     $0.46                    $0.59
Diluted:                                                        
Adjusted net   $0.51                     $0.55                    $0.67
income (a)
Net income     $0.54                     $0.45                    $0.59
Weighted
Average                                                         
Shares:
Basic          708                       707                      706
Diluted        712                       711                      710
(a) Adjusted net income is a non-GAAP financial measure and should not be considered a
substitute for net income as determined in accordance with accounting principles
generally accepted in the United States. See above for further discussion of adjusted net
income.

Supplemental
Statistics    Three Months Ended
(Unaudited)
             Mar. 31                 Dec. 31                  Mar. 31
(in millions) 2013                    2012                     2012
Segment                                                      
Income (Loss)
North America ($59)                   $101                     $104
E&P
International  453  446   407
E&P
Oil Sands     38                      17                       38
Mining
Segment       432                     564                      549
income
Items not
allocated to
segments, net                                                
of income
taxes:
Corporate and (71)                    (176)                    (71)
unallocated
Unrealized
gain (loss)       
on crude oil  (32)                    5                        -
derivative
instruments
Impairments             (167)
              (10)                    (64)
Net gain on         106
dispositions  64                      -
Pension           
settlement    -                     (7)                      -
Net income   $383                    $322                     $417
Capital
Expenditures                                                 
(b)
North America $970                    $1,101                   $829
E&P
International  225  271   138
E&P
Oil Sands         52 
Mining        45                                               52
Corporate         28 
              30                                               44
Total         $1,270                  $1,452                   $1,063
Exploration                                                  
Expenses
North America $435                    $195                     $106
E&P
International     40 
E&P           30                                               29
Total         $465                    $235                     $135
Provision for                                                
Income Taxes
Current       981                     1,483                    949
income taxes
Deferred      44                      (183)                    (22)
income taxes
Total         $1,025                  $1,300                   $927
(b) Capital expenditures include changes in accruals.

Supplemental
Statistics    Three Months Ended
(Unaudited)
             Mar. 31                  Dec. 31                  Mar. 31
             2013                     2012                     2012
North America
E&P - Net                                                     
Sales Volumes
Liquid
Hydrocarbons   141   133   90
(mbbld)
 Bakken   35                       33                       24
 Eagle     58  47  12
Ford
 Anadarko   
Woodford      4                        3                        2
 Other     44  50  52
North America
 Crude Oil
and            121   117   83
Condensate
(mbbld)
 Bakken   33                       32                       23
 Eagle     46  38  11
Ford
 Anadarko   
Woodford      1                        1                        1
 Other     41  46  48
North America
 Natural Gas                                                   
Liquids        20  16 7
(mbbld)
 Bakken   2                        1                        1
 Eagle     12  
Ford                                   9                        1
 Anadarko   
Woodford      3                        2                        1
 Other      
North America 3                        4                        4
 Natural Gas  340   404   344
(mmcfd)
 Bakken    13  10 
                                                                9
 Eagle     83  72  13
Ford
 Anadarko  51  39  17
Woodford
 Alaska    31  100   98
 Other     162   183   207
North America
International
E&P - Net                                                     
Sales Volumes
Liquid
Hydrocarbons   180   191   149
(mbbld)

Equatorial     37  33  35
Guinea
 Norway    79  79  90
 United       21  20 
Kingdom                                                         7
 Libya     34  59  17
 Other       
International 9                        -                      -
 Natural Gas  568   569   522
(mmcfd)

Equatorial     447   445   417
Guinea
 Norway    54  54  52
 United    41  44  52
Kingdom (c)
 Libya     26  26 
                                                                1
Oil Sands
Mining - Net                                                  
Sales Volumes
Synthetic
Crude Oil      51  48  44
(mbbld) (d)
                                                             
Total Company
- Net Sales    523   535   427
Volumes
(mboed)
Net Sales
Volumes of
Equity Method                                                 
Investees
(mtd)
 LNG      6,787                    6,327                    6,291
 Methanol 1,410                    1,465                    1,312
(c) Includes natural gas acquired for injection and subsequent resale of 11 mmcfd, 12
mmcfd and 14 mmcfd in first quarter of 2013, the fourth quarter of 2012 and the first
quarter of 2012, respectively.

(d) Includes blendstocks.

Supplemental
Statistics    Three Months Ended
(Unaudited)
             Mar. 31            Dec. 31                 Mar. 31
             2013               2012                    2012
North America
E&P - Average                                          
Realizations
(e)
Liquid
Hydrocarbons  $86.14             $83.20                  $93.63
($ per bbl)
(f)
 Bakken       79.97   87.04
              88.60
 Eagle        85.69   99.88
Ford          88.06
 Anadarko     49.43   53.37
Woodford      51.05
 Crude Oil
and           $94.68             $89.92                  $97.28
Condensate ($
per bbl)
 Bakken       81.78   88.15
              91.22
 Eagle           99.21   106.02
Ford          103.78
 Anadarko     88.14   97.91
Woodford      90.52
 Natural Gas
Liquids ($    $35.48             $35.29                  $51.55
per bbl)
 Bakken       41.15   51.42
              41.05
 Eagle        30.23   48.66
Ford          28.16
 Anadarko     32.81   33.46
Woodford      37.94
 Natural Gas $3.86              $4.39                   $4.13
($ per mcf)
 Bakken     3.50  3.73
              3.61
 Eagle      3.38  2.81
Ford          3.35
 Anadarko   3.39  3.41
Woodford      3.67
 Alaska     7.13  7.32
              7.90
International
E&P- Average                                           
Realizations
(e)
Liquid
Hydrocarbons  $107.68            $108.01                 $113.55
($ per bbl)
          
Equatorial    65.89               58.12   68.97
Guinea
 Norway          114.64     124.68
              117.13
 United          109.04     111.96
Kingdom       112.25
 Libya           126.70     147.64
              129.56
 Other           
International 105.95             -                     -
 Natural Gas $2.57              $2.46                   $2.19
($ per mcf)
          
Equatorial    0.24                0.24  0.24
Guinea (g)
 Norway       12.74   10.53
              14.00
 United       10.62   9.46
Kingdom       11.27
 Libya      5.19  0.70
              5.04
Oil Sands
Mining -
Average                                                
Realizations
(e)
Synthetic
Crude Oil ($  $79.98             $76.36                  $90.88
per bbl)
(e) Excludes gains or losses on derivative instruments.
(f) Inclusion of realized gains (losses) on crude oil derivative instruments
would have increased (decreased) North America E&P average liquid hydrocarbon
realizations by ($0.37) per bbl for the first quarter of 2013 and $1.27 per bbl
for the fourth quarter of 2012. There were no realized gains (losses) on crude
oil derivative instruments in the first quarter of 2012.
(g) Primarily represents fixed prices under long-term contracts with Alba
Plant LLC, Atlantic Methanol Production Company LLC and Equatorial Guinea LNG
Holdings Limited, which are equity method investees. Marathon Oil includes its
share of income from each of these equity method investees in the International
E&P segment.

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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