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Marathon Reinforces Business Strategy and Outlines Progress Made in Implementing Company's Growth Plans

Posted: 02 March 2005

Marathon Oil Corporation continues to make substantial progress in implementing the business strategy it communicated to investors three years ago, recording numerous achievements which are serving as the basis for delivering defined, sustainable value growth. This central message and other key elements of the company's operations were presented today during a meeting with security analysts in New York .

In his comments during the meeting, Marathon president and CEO, Clarence P. Cazalot, Jr., noted that the company's vision, business model and strategy established in 2002 and reiterated in 2003 are unchanged and that the company's forward view of the industry's business environment at that time has been validated by actual events. "Three years ago, Marathon established a strategic plan with a business model that differentiates us from our competition. We also defined Marathon 's vision which remains unchanged -- to be the pacesetter in creating sustainable value growth through innovative energy solutions and unique partnerships. Our business model focuses on adding shareholder value by enabling us to use our size as an advantage, linking our technical strengths, commercial skills and international stature with the ability to form unique partnerships, and to do so with the speed and agility of a smaller enterprise. Underpinning our vision, business model and strategy is the recognition that access to resource is the most critical challenge facing international oil companies."

Cazalot noted Marathon 's overall strategy is based upon several key business factors and strategic intents that have guided the company's business focus over the last three years and positioned the company for continued profitable growth. These factors and strategic intents include:

* A commitment to remain integrated across the value chain

* Commercializing stranded gas through the company's integrated gas strategy

* Retaining a substantial Organization for Economic Cooperation and Development (OECD) asset position

* Capturing the value created by ongoing improvement in U.S. refining and marketing fundamentals

* Recognizing that access to markets is critical to resource holders

* Recognizing that access to profitable resource is the most critical challenge facing international oil companies

* Achieving earnings per share growth on a flat price and downstream margin basis

During this time period, Marathon has differentiated itself by maintaining a top quartile refining and marketing business through its interest in Marathon Ashland Petroleum LLC (MAP), a U.S. joint venture refining, marketing and transportation company in which Marathon holds a 62 percent interest. The company established new exploration and production core areas where it has gained access to significant oil and gas resources with near and long term potential. Marathon also established a significant Atlantic basin liquefied natural gas (LNG) business, positioning the company to commercialize stranded gas resources to meet growing demand for clean, accessible natural gas in the U.S. and other major consuming nations. In addition to LNG, Marathon also has advanced its gas-to-liquids (GTL) technology which could lead to large scale projects to convert currently stranded natural gas to ultra-clean fuels and other high value liquid products. Each of these areas of the company's business benefited from Marathon 's continued efforts to enhance its major project execution skills.

"Among the most important of our accomplishments is the continued success we have achieved in our exploration and production business," added Cazalot. "With a 70 percent exploration success rate during the past two years and the addition of approximately 700 million barrels of resource through the drill bit since 2001, we are well positioned to realize profitable growth from future developments. With this exploration success, the establishment of new core areas in three countries and continued development of our base businesses, we were able to achieve a three year average reserve replacement ratio of 190(a) percent at very competitive finding and development costs of $5.71(b) per barrel of oil equivalent. This success, and the ongoing contributions from our base business, provides defined production growth that is expected to increase our average daily production by an estimated compounded average growth rate of five to nine percent between 2005 and 2008."

(a) See page 6 for a reconciliation to the GAAP financial measure for the reserve replacement ratio.

(b) See page 6 for a reconciliation to the GAAP financial measure for finding and development costs per barrel of oil equivalent.

Exploration and Production
In the exploration and production segment of the company's business, Marathon established new core areas in Equatorial Guinea , Norway and Russia . Each of these areas provides the company with critical access to substantial resources that will serve as the primary basis for Marathon 's production growth during the next four years and beyond. The company's successful exploration programs in Angola, Equatorial Guinea, Norway and the Gulf of Mexico have provided an inventory of large-scale resources that further enhance Marathon's production growth outlook beyond 2008.

Integrated Gas
Marathon's integrated gas strategy, first outlined in 2002 and highly complementary to the company's exploration and production business, has been confirmed by market events demonstrating the need to link the large volumes of stranded gas around the world to meet growing demand for this premium energy source. Marathon 's progress in implementing its integrated gas strategy has been marked by solid progress during the past three years with the prospect of further growth in the coming years. A key example of the company's integrated gas activities is the Equatorial Guinea LNG Train 1 project which is moving forward on schedule with first deliveries of LNG expected in late 2007. Efforts are underway to acquire additional gas supply and expand the utilization of this LNG facility above and beyond the contract to supply 3.4 million metric tonnes per year to BG Gas Marketing Ltd. for 17 years. In addition, Marathon also is seeking additional natural gas supplies in the area that could lead to the development of a second LNG train.

Marathon also has enhanced its strategic position to access key markets by securing long term capacity rights at the Elba Island, Georgia, LNG regasification terminal. These rights, acquired in late 2002, enable the company to deliver and sell up to 58 billion cubic feet of natural gas per year through this terminal, with pricing linked to the Henry Hub Index, for a period of up to 22 years. Last year Marathon reached an agreement with BP Energy Company under which BP will supply Marathon with 58 billion cubic feet of natural gas per year, as LNG, using its Elba Island capacity for a minimum period of five years beginning in the second half of 2005.

The company also continues to make progress in exploring the potential of GTL technology. An example of this progress is the successful GTL demonstration plant at the Port of Catoosa , Oklahoma . This plant mirrored a commercial scale plant and successfully demonstrated GTL technology that could be incorporated into the design of a commercial GTL facility such as Marathon 's proposed gas processing project in Qatar .

Refining, Marketing and Transportation
In the refining and marketing segment, Marathon recognized the improving industry fundamentals, and in response, continued to make critical investments in MAP to capture the value of this business environment. In particular, the company has completed investments of approximately $550 million during the past three years on key refinery upgrading projects, including investments in its Garyville, Louisiana; Catletsburg, Kentucky; and Texas City, Texas, refineries to improve processing capacity and efficiency. In addition, MAP's $300 million Detroit refinery expansion and Tier II clean fuels project is 60 percent complete with scheduled startup in the fourth quarter of this year. MAP's other investments in its marketing network and transportation systems are further strengthening its competitive position. Recognizing the value MAP provides to Marathon 's business, and consistent with Marathon 's commitment to remain fully integrated across the value chain, the company is continuing to work with Ashland Inc. to pursue the completion of the previously announced transaction to acquire Ashland 's 38 percent interest in MAP.

Cazalot added that Marathon's financial strength, flexibility and capital discipline provide the resources necessary to fund these growth opportunities and enhance Marathon's ability to deliver superior shareholder value growth. "Returns from these high value projects are expected to increase Marathon 's return on capital employed and earnings per share on a flat commodity price and refined product margin basis.

" Marathon 's strategic intents remain unchanged," noted Cazalot. "We intend to remain integrated across the entire value chain, target mid-cycle return on capital employed at greater than 10 percent, retain a substantial OECD asset position, maintain a cash adjusted debt to total capital ratio below 40 percent, and achieve earnings per share growth on a flat price and margin basis.

"Central to all of our business activities is our unwavering commitment to the highest standards of business ethics and integrity, environmental stewardship, safety, corporate social responsibility, and maintaining Marathon's reputation for excellence in corporate governance," concluded Cazalot. "Our continued success is fueled by an employee team with a shared vision and core values that underpin our performance. Accountability is in place at every level within our organization to ensure everyone fully understands their role in contributing to Marathon 's success."

Replays of Marathon 's analyst meeting will be available on the company's Web site at http://www.Marathon.com through March 10, 2005 . Also available online are the slides used in the presentations in a downloadable format along with other financial information, including earnings releases and other investor-related material.

This news release contains forward-looking statements with respect to the timing and levels of the company's worldwide liquid hydrocarbon and natural gas and condensate production, expansion plans for core areas, the Detroit expansion project, the proposed acquisition of Ashland's 38 percent interest in MAP and other related businesses, an LNG project, the possible reentry into Libya, future exploration and drilling plans, and other expansion projects. Some factors that could potentially affect worldwide liquid hydrocarbon and natural gas and condensate production, expansion plans for core areas, the exploration and drilling program, reserve replacements, and other expansion projects include pricing, supply and demand for petroleum products, amount of capital available for exploration and development, occurrence of acquisitions or dispositions of oil and gas properties, 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. Factors that could affect the Company's planned reentry into Libya includes successful negotiations and unforeseen economic or political developments. Factors that could affect the proposed LNG project include unforeseen problems arising from construction, inability or delay in obtaining necessary government and third-party approvals, unanticipated changes in market demand or supply, environmental issues, availability or construction of sufficient LNG vessels, and unforeseen hazards such as weather conditions. Factors that could impact the timing of completion of the Detroit expansion project include unforeseen problems arising from construction, regulatory approval constraints, and unforeseen hazards such as weather conditions. Some factors that could affect the completion of the acquisition of Ashland's 38 percent interest in MAP and other related businesses include a favorable tax ruling from the U.S. Internal Revenue Service, opinions of outside tax counsel, Ashland shareholder approval, Ashland public debt holder consents, and updated Ashland solvency opinions. 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, 2003, 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.

Other Information
In connection with the proposed transfer to Marathon Oil Corporation by Ashland Inc. of its interest in Marathon Ashland Petroleum LLC and other related businesses, each of Marathon, New EXM Inc. and ATB Holdings Inc. has filed with the U.S. Securities and Exchange Commission a registration statement on Form S-4 that included a preliminary proxy statement of Ashland and a prospectus of Marathon, New EXM and ATB Holdings. Investors and security holders are urged to read the preliminary proxy statement/prospectus, which is available now, and the definitive proxy statement/prospectus, when it becomes available, because it contains and will contain important information. Investors and security holders may obtain a free copy of the preliminary proxy statement/prospectus and the definitive proxy statement/prospectus (when it is available) and other documents filed by Marathon, Ashland, New EXM and ATB Holdings with the SEC at the SEC's web site at http://www.sec.gov. The definitive proxy statement/prospectus and other documents filed by Marathon may also be obtained for free from Marathon by calling Investor Relations at 713-296-4171.

The following tables show the calculation of the three year average reserve replacement ratio and three year average finding and development costs per barrel of oil equivalent as reported, as well as a reconciliation to the ratios calculated using measures in accordance with generally accepted accounting principles.

Reserve Replacement Ratio: 2002-2004

Finding % development costs per boe: 2002-2004

** Reserve additions include purchases, revisions, improved recovery, and extensions, discoveries and other additions, and exclude dispositions.

Posted by Editor Pipeline Magazine

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