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Howard Weil Energy ConferenceHoward Weil Energy Conference
March 28, 2011
Clarence P. Cazalot, Jr.President and CEO
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ForwardForward--Looking StatementLooking Statement
Except for historical information, this presentation contains forward-looking information including, but not limited to, the timing and levels
of the Company's worldwide liquid hydrocarbon and natural gas production, synthetic crude production, Droshky, Ozona, Gunflint, Angola
and other existing and potential development projects, anticipated future exploratory and development drilling activity in Poland and other
countries, potential developments in Indonesia, the possibility of a new significant resource base in Kurdistan, expansion plans for oil sands
’
m n ng, e e ro eavy pgra e pro ec , p ans o move orwar w sp nn ng o ara on orpora on s owns ream us ness
into a separate publically traded company and the capital spending forecast. These statements are subject to risks and uncertainties thatcould cause actual results to differ materially from those expressed or implied from such information. 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, 2010, and subsequent 8-K, cautionary language identifying important factors, though not necessarily all
such factors, that could cause future outcomes to differ materially from those set forth in the forward-looking statements.
See definitions of terms used throughout this presentation in the Appendix.
Cautionary Note to U.S. Investors – The United States Securities and Exchange Commission (SEC) permits oil and gas companies, in their filings with the SEC, to
disclose only proved, probable, or possible reserves that a company has demonstrated by actual production or conclusive formation tests to be economically and legally producible under existing economic and operating conditions. Marathon Oil Corporation uses certain terms in this presentation to refer to reserves other
than proved, probable, or possible reserves, which the SEC’s guidelines strictly prohibit us from including in filings with SEC. These terms include resource base, net resource potential, net unrisked resource potential, gross unrisked potential and other similar terms, which are not yet classified as proved, probable, or possible
reserves. U.S. investors are urged to consider closely the disclosures in Marathon's periodic filings with the SEC, available from us at 5555 San Felipe, Houston, Texas'
an e ompany s we s e a www.mara on.com . ou can a so o a n s n orma on rom e y ca ng - - - .
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Writing the Next Chapter for The Ohio Oil CompanyWriting the Next Chapter for The Ohio Oil Company
Well positioned versus peers
Strong balance sheets
Experienced and focused management teams
Enhanced flexibility to pursue tailored strategies
Expanded growth opportunities
Superior transparency – improved investor focus
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Proved ReservesProved ReservesEOY 2010
4,000
3,000
,
1 500
2,000
,
MMBOE
500
1,000
0
OXY APA DVN APC CHK MRO HES EOG ECA TLM NBL MURMRO
13:1 6:1Source: Company annual reportsBOE volume based on 6:1 and 13:1 gas/oil ratioMRO & MUR include Oil Sands Mining Operations
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Proved ReservesProved Reserves - - % Liquids% LiquidsEOY 2010
100%
80%
40%% Liquids
20%
0%
OXY MRO HES MUR APC APA DVN TLM NBL EOG CHK ECA
Source: Company annual reportsBOE volume based on 6:1 gas/oil ratioMRO & MUR include Oil Sands Mining Operations
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Upstream Adjusted Income, $/BOEUpstream Adjusted Income, $/BOEYr. 2010
18
20
1416
E
8
10
com
e,$/B
4
6I
0
OXY MRO HES APA CHK MUR DVN NBL APC ECA TLM EOG
Source: Company annual reportsBOE volume based on 6:1 oil/gas ratioMRO upstream includes after tax income of E&P, OSM & Integrated Gas. MUR includes OSM. MRO, MUR & HES exclude R&M
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Upstream PortfolioUpstream Portfolio
CanadaOil Sands MiningIn-situ
UKBraeFoinaven Norway
AlvheimViljeVolund
United StatesBakken Poland
Kurdistan4 Blocks
Indonesia
Anadarko WoodfordDJ BasinEagle FordRocky Mountain Oil
AlaskaPermian Basin
2.3 MM Acres
Gulf of MexicoDroshkyPetronius
yaFareghDahra JofraNC-98North Gialo
West Africa
Piceance
Base Assets
Ewing BankNeptuneOzonaGunflintShenandoahStones
EGAngola
Impact Exploration
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Base AssetsBase Assets
Characterized by safe and reliable operations
Stable base roduction 2010 - 2015 avera es ~380 MBOED
Averages 66% liquidsCAPEX ~$1.5B per year
Constantly seek to reduce costs and optimize portfolio
Generate substantial free cash flow
Equatorial Guinea Oil Sands MiningUS Conventional Gulf of MexicoNorth Sea Libya
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MROMRO –– Marathon Oil CorporationMarathon Oil Corporation
Key Strategies
Maximize value from existing base assets
Establish profitable-sustainable growth in reserves and production
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Growth Assets and OpportunitiesGrowth Assets and Opportunities
Shift from few large projects to lower risk and scalable resource plays
Select dee water ro ects on oin
Technical excellence and project execution are key success factors
Focused on li uids
Retain upside for mid to long term natural gas
-
Disciplined CAPEX spend $1.5B-$2.5B per year
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Growth AssetsGrowth Assets
Net ProductionProduction grows greater than 25% CAGR
Production mix avera es 72% li uids
CAPEX spend ~$1.5-$2.5B per year
Y10 Y11 Y12 Y13 Y14 Y15
Liquids Gas
Growth assets include Angola, select Gulf of Mexico, Bakken, Anadarko Woodford, DJ Basin (Niobrara), Eagle Ford, Piceance, and Haynesville/Bossier
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Focus on North American Liquids GrowthFocus on North American Liquids Growth
2007$1,400MM*
2011$1,900MM*CAPEX Focus
Natural GasLHC
40%
60%
8%
92%
24% Increase in liquids production
200763,000 BPD
201178,000 BPD
*Excludes impact exploration CAPEX
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U.S. LiquidsU.S. Liquids--Rich Shale PlaysRich Shale Plays
Based on Net Acreage, 000s Acres
3,000
2,000
2,500
1,500
000s acre
500
1,000
0
A B C D E F MRO G H I J K
Comparator group includes; APA, APC, CHK, DVN, ECA, EOG, HES, MUR, NBL, OXY, and TLM
Plays included: Bakken, DJ Basin (Niobrara), Anadarko Woodford, Eagle Ford, Granite Wash, Wolfberry, and Barnett
Source: The most recent available public sources including investor presentations, analyst reports, SEC filings, and earnings call transcripts as of year end 2010
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Growth AssetsGrowth Assets
Liquids Rich Resource Plays
Resource Play Total• ~791,000 net acresIn-situ
~ • , ne we s• Significant down-spacing upside
• Acreage acquisition ongoing
,• Birchwood (13,000 net acres)
• Appraisal program early 2011
Bakken Shale• ~391,000 net acres• ~450 net wells
• Acreage acquisition ongoing
• Well Cost**: ~$6.0-$7.0MM• 30-Day IP: ~250-600 BOED• ~280 -500 MBOE/well
Woodford Well Metrics *
Anadarko Woodford Shale• ~94,000 net acres
~
DJ Basin (Niobrara)• ~177,000 net acres• ~600 net wells• Acreage acquisition ongoing
• Well Cost**: ~$7.5MM• 30-Day IP: ~600-900 BOED• ~750-1,000 MBOE/well
• Acreage acquisition ongoingDJ Basin Well Metrics *• Well Cost**: ~$4.0MM• 30-Day IP: ~200-300 BOED• ~250-300 MBOE/well
Eagle Ford Shale• ~79,000 net acres
~
Eagle Ford Well Metrics *• Well Cost**: ~$5.5MM• 30-Day IP: ~350-400 BOED• ~250-400 MBOE/well
*Industry basin average resource per well **Well cost includes facilities costs
• Acreage acquisition ongoing
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Bakken ShaleBakken Shale
Diomedes
Cazador
Elk Creek HelenAeneas
Myrmidon
Menelaus
Fort
Paris Hector BertholdReservation
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BakkenBakken ShaleShale
Bakken Shale Summary
Net acres 391,000
Projected Well Stats
EUR 280-500 MBOE
Average MRO-op WI 81%
Average OBO WI 17%
Potential locations 450
30-Day IP 250-600 BOED
Well & facility costs $6-$7 MM
Operating cost (FLC) $5-$6/BOE
Resource potential190MMBOE
Average well spacing 420 – 640 acres
Total discount to WTI $6-$8 / BBL
Net development costs $15-$20/BOE
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MRO Bakken Average Annual Net Production(MBOED)
6 10
2008 2009 2010 2013E
Exited 2010 with ~15,000 BOED Net Production
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Anadarko Woodford Shale WindowAnadarko Woodford Shale Window
Expanding Legacy Position in Liquids
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Anadarko Woodford ShaleAnadarko Woodford Shale
Expanding Legacy Position in Liquids
Anadarko Woodford Shale Summary
Net acres 94,000
Projected Well Stats
EUR 750-1,000 MBOE
Average MRO-op WI 60%
Average OBO WI 15%
30-Day IP 600-900 BOED
Well & facility costs $7.5 MM
Potential locations 350
Resource potential 300 MMBOE
Spud-to-spud 45 Days
Operating costs (FLC) $2-$3/BOE
Net development costs 10- 15/BOE
Increased program activity-
50-60 net wells per year by 2013Industry returns among highest of domestic resource playsExited 2010 at ~1,500 BOEDEstimate peak rate > 30,000 BOED by 2015
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Eagle Ford ShaleEagle Ford ShaleNew Liquids Play Entry
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Eagle Ford ShaleEagle Ford ShaleNew Liquids Play Entry
Eagle Ford Shale Summary
Net acres 79,000
Projected Well Stats
EUR 250-400 MBOE
Average MRO-op WI 94%
Average OBO WI N/A
30-Day IP 350-400 BOED
Well & facility costs $5.5 MM
Potential locations 350
Resource potential 110 MMBOE
Average well spacing 160 acres
Spud-to-spud 35 Days
Operating costs (FLC) $5-$6/BOE
Net development costs $18-$25/BOE
Option to acquire ~75,000 net acresHigh interest – 94% WI
Consolidated positionDrill and complete 4 wells in 2011 to evaluate acreage potential– Risk reduced with option to purchase remaining acreage
Estimated peak rate > 15,000 BOED
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DJ Basin (Niobrara)DJ Basin (Niobrara)New Frontier Growth Play
DJ BASINDenver, CO
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Retained Natural Gas UpsideRetained Natural Gas Upside
Natural Gas Resources• Acreage primarily held by production
Powder River Basin• ~40 MMBOE net resource potential
Piceance Basin• ~160 MMBOE net resource potential
Oklahoma Conventional• ~260 MMBOE net resource otential
Haynesville/Bossier Shale• ~250 MMBOE net resource potential
East Texas Conventional• ~135 MMBOE net resource potential
Net resource potential represents P90 (high side) case
Additional Significant Long-term Upside from EG LNG 25
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MROMRO –– Marathon Oil CorporationMarathon Oil CorporationKey Strategies
Maximize value from existing base assets
Establish profitable-sustainable growth in reserves and productionCreate si nificant value throu h im act ex loration
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Gulf of MexicoGulf of Mexico
~21 Prospects with net unrisked resource44% Miocene56% Paleogene
Plan to operate 65%
Shelf
InnsbruckMC 993, 85% WI GunflintMC 948 12.5% WI
Deepwater
Exploration Leases
P A L E O G E N E
Producing Leases2011 Possible Exploration
Well2011 Possible Appraisal
Neptune30% WI
r ng
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Kurdistan Region of IraqKurdistan Region of Iraq
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Kurdistan Region of IraqKurdistan Region of Iraq
New Impact Entry
Announced October 20, 2010
Position in four exploration blocks
High potential, world class, under-explored onshore oil play
ne o t e ast ons ore reg ons w t a s gn cant resource potent a per prospect
Potential to establish oil production in short to mid-term
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Kurdistan Region of IraqKurdistan Region of Iraq
3 BBOE Gross Unrisked PotentialStacked pay
4-way surface anticlines
Production sharing contracts2 wells in testing phase
– 1 in Sarsang– 1 in Atrush
Harir and Safen– 2011 seismic acquisition– 2012 initiate drilling
Block MRO WI Gross Acres
Harir 100 174,200Safen 100 104,800
Sarsan 25 303 000
Atrush 20 66,500 Atrush #1
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PolandPoland
Shale gas potentialLower Paleozoic shales
100 – 600’ thick
8,000 – 13,000’ drill depth
Total 2.3 million net acres
2D Seismic & 1 well
exploration phase
5+ year concessions
: cqu re se sm c anDrill 1-2 wells in Q4
2012: Drill 7-8 wells
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MROMRO –– Marathon Oil CorporationMarathon Oil CorporationKey Strategies
Maximize value from existing base assets
Establish profitable-sustainable growth in reserves and productionCreate si nificant value throu h im act ex loration
Maintain strong balance sheet and capital discipline
Pa com etitive dividend
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What Distinguishes MRO?What Distinguishes MRO?
Large and stable base assets provide significant earnings and free cash flow
Leveraged to liquids with retained natural gas upsideDisci lined and sustainable reserve/ roduction rowth 3-5% CAGR
Very strong financial position
S endin linked to cash flow eneration
Top quartile financial and shareholder returns
Focused Focused on Total Shareholder Returnson Total Shareholder Returns
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ForwardForward--Looking StatementLooking Statement
The following portion of the presentation contains forward-looking statements with respect to theplans to move forward with spinning off Marathon Oil Corporation's downstream business into aseparate publicly traded company thus creating two independent companies. Some factors that couldpotentially affect these forward-looking statements include board approval, receipt of a favorable
private letter ruling from the IRS and a registration statement declared effective by the SEC. Otherforward-looking statements include the Detroit Refinery Heavy Upgrade Project, which could beaffected by transportation logistics, availability of materials and labor, unforeseen hazards such asweather conditions, delays in obtaining or imposed by necessary government and third-partyapprovals, and other risks customarily associated with construction projects. 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, 2010,and subsequent Forms 8-K, cautionary language identifying other important factors, though notnecessarily all such factors, that could cause future outcomes to differ materially from those set forthin the forward-looking statements.
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MPCMPC -- Marathon Petroleum CorporationMarathon Petroleum CorporationPositioned to be the premier US Independent Refiner
Strong across the full downstream value chain
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Marathon Petroleum Corporation (MPC)Marathon Petroleum Corporation (MPC)Focused and Integrated Asset Base – Flexibility to Achieve Peer-Leading Results
Refineries
PipelinesTerminals
Coastal water terminals Inland water terminals
Speedway Brand MarketingPipelines TerminalsRefineries
Coastal waterterminals
Inland waterterminals Marketing Area
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MPC Relative Refining PositionMPC Relative Refining PositionU.S. Crude Refining Capacity (1) # of U.S. Refineries (1)(MB/D) (#)
2,0001,962 1,951
1,4011,142 1,114
2,000
, 13
11
7 76 6 6 6
5
10
823 755 675 665
0
1,000
oco
lero
xon
BP
PC
PC
vron
hell
itgo
oco
soro
3 3
0
5
oco
lero
xon
oro P
CPC B
Phell
ron
itgo
oco
279252 233
300
Co V E
Che
Su Te
13.5 12.915.0
Co V
a Ex TeS
Che C
Su
Average Crude Capacity ofU.S. Refineries (1)
Nelson Complexity Index (1)(NCI)(MB/D)
190 188 186 178154
137
95100
200
.11.7 11.7 11.2 10.8 10.5 10.5
9.5
8.010.0
0
Exxon
Citgo
BP
Sunoco
MPC
Chevron
MPC
Valero
Conoco
Shell
Tesoro
5.0
Chevron
Exxon
Shell
BP
Citgo
Valero
Conoco
MPC
MPC
Tesoro
Sunoco
(1) O&GJ U.S. Refining Survey, data as of 1/1/2011. Owned interest of joint ventures are included in companystatistics: Conoco includes 50% WRB, Exxon includes 50% Chalmette, BP includes 50% BP-Husky Toledo, Shellincludes 50% Deer Park and Motiva. Sunoco data does not include the Eagle Point refinery which was shut down in2009. Valero data does not include the Paulsboro refinery which was sold to PBF in December 2010.
Majors and IntegratedsMPC
Independent Refiners
MPC w/Garyville @ 464 MBPD
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MPC's Extensive Retail NetworkMPC's Extensive Retail NetworkIndustry-Leading Retail Operation
Speedway4th lar est U.S. owned o erated87 c-store chain
Over 1,350 stores~2.0 million customers/dayLocated in 7 states470
30663
77589
27
130
60887650
601
457136109
Brand
Independent entrepreneurs~5,100 branded locationsLocated in 18 states289137
100
1
Store counts as of 12/31/10
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Marathon Petroleum CorporationMarathon Petroleum CorporationPositioned to be the premier US Independent Refiner
Strong across the full downstream value chain
Well positioned geographically/operational flexibility and logistics
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Midwest/PADD II Net Short Supply PositionMidwest/PADD II Net Short Supply PositionEnhances Margin Opportunities
The incremental barrel in PADD II isshipped from PADD III, so product
rices in PADD II should retain a
2015
premium to the USGC/PADD III
Refinery utilization rates in PADD IIhave traditionall been hi her than in other PADDs
Product stocks have stayed0.9 MMB/D or 18% of demand
to the other PADDs
TEPPCO Pipeline has raised tariffs49%
53%47%
40%
60%
ercentage o apac ty y
PADD II refiners are alsoadvantaged by having better access
8%
21%
4%
18%
0%
20%
PADD I PADD II PADD III PADD IV PADD V
In ustry D str ut on MPC w DHOUP & w o SPP
MPC has the highest Midwest exposure of all the major refining competitors
Source: DOE, data as of 1/1/2011Source: Marathon Economics
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MPC W ll P i i d C Oil S d E iMPC W ll P i i d C Oil S d E i
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MPC Well Positioned to Capture Oil Sands EconomicsMPC Well Positioned to Capture Oil Sands EconomicsAdvantaged Location Should Lead to Higher Relative Profitability
Hardisty
~ $7.35/BBLHardisty to USGC
~ $5.50/BBLHardisty to
Detroit
ChicagoDetroit Value vs. USGC Refineries for
WoodRiver
Patoka
~ $1.70/BBL
Canadian Heavy Processing
Laid-in Crude Cost
$/BBL
1.85
Port ArthurHouston
Houston to C icago
Higher Product Value 1.90*Total Advantage 3.75
* Includes $0.20 time value of money to ship a lightproduct barrel from Houston to Chicago
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M h P l C iM h P l C i
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Marathon Petroleum CorporationMarathon Petroleum CorporationPositioned to be the premier US Independent Refiner
Strong across the full downstream value chain
Well positioned geographically/operational flexibility and logistics
Major refining investments nearly complete
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G ill O ti Effi i iG ill O ti Effi i i
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Garyville Operating EfficienciesGaryville Operating Efficiencies
Base Garyvi e re inery, 2008 So omon surveyBest U.S. cash cost operating expenseSecond-best U.S. Energy Intensity Index
Garyville Major Expansion Project (GME) expected to improve overallfixed cash cost by 20% per barrel at the Garyville refinery
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Detroit Hea Oil Upgrade ProjectDetroit Hea Oil Upgrade Project
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Detroit Heavy Oil Upgrade ProjectDetroit Heavy Oil Upgrade Project
Positioned to capitalize on Canadian oilsands production
Increases heavy oil capacity an additional80,000 B D, including “difficult to process”Canadian crudes
Crude capacity increases ~15,000 B/D
28,000 B/D delayed coker and 36,000 B/Ddistillate hydrotreater (DHT)
DHT will provide feedan cetane ex ty
Commenced constructionJune 2008, completion
$2.2 B* project; $1.27 B*capitalized as of
,
*Excludes capitalized interest
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Marathon Petroleum CorporationMarathon Petroleum Corporation
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Marathon Petroleum CorporationMarathon Petroleum CorporationPositioned to be the premier US Independent Refiner
Strong across the full downstream value chain
Well positioned geographically/operational flexibility and logistics
Major refining investments nearly complete
Consistently a top performer on an operating income per barrel basis
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IndustryIndustry Leading ProfitabilityLeading Profitability
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IndustryIndustry--Leading ProfitabilityLeading Profitability(Pre-tax Adjusted Domestic Operating Income per Barrel of Crude Oil Throughput)
15
10
L
MPC
Group Range
0
5$/B
-51998 1999 2000 2001 2002 2003 2004 2005 2006 2007 2008 2009 2010
Preliminary
Companies Ranked* 12 11 11 9 10 9 8 9 98 10 8
MPC’s Rank 3 3 2 1 2 7 2 5 313 1
8
3
*Current companies ranked: BP, COP, CVX, MPC, SUN, TSO, VLO, XOM
Source: Company Reports
50
Diversified Income StreamDiversified Income Stream
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Diversified Income StreamDiversified Income StreamPipeline and Retail Contributed 46% and 42% of Segment Income in 2009 and 9/30/2010 YTD
2009 Segment Income from Operations 9/30/2010 YTD Segment Income from Operations
PipelineTransportation
$172MM21%
PipelineTransportation
$131MM15%
Refining &Marketing
$452MM
Refining &Marketing
$497MMSpeedway54%
Speedway$212MM
25%
58%$228MM27%
Source: MPC Form 10 filed with SEC on January 25, 2011
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Marathon Petroleum CorporationMarathon Petroleum Corporation
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Marathon Petroleum CorporationMarathon Petroleum CorporationPositioned to be the premier US Independent Refiner
Strong across the full downstream value chain
Well positioned geographically/operational flexibility and logistics
Major refining investments nearly complete
Consistently a top performer on an operating income per barrel basis
Characterized by safe and reliable operations
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Writing the Next Chapter for The Ohio Oil CompanyWriting the Next Chapter for The Ohio Oil Company
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Writing the Next Chapter for The Ohio Oil CompanyWriting the Next Chapter for The Ohio Oil Company
Well positioned versus peers
Strong balance sheets
Experienced and focused management teams
Enhanced flexibility to pursue tailored strategies
Expanded growth opportunities
Superior transparency – improved investor focus
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AppendixAppendix
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DefinitionsDefinitions
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Term DefinitionCAGR Compound average growth rate, which is the annual growth rate calculated based
on each year's previous number anchored to a base starting point
, ,costs that are expensed as incurred rather than capitalized such as geological and
geophysical costs and certain staff costs, and other miscellaneous investmentexpenditures
Cash Adjusted Debt Calculated as follows: (Total Debt) – (Cash and cash equivalents) – (Trusteed cash)
CO2 Carbon dioxide
Conv Conventional
COP ConocoPhillips
CSG Coal seam gas
CVX Chevron Corporation
DD&A Depreciation, depletion and amortization
DHOUP Detroit Heavy Oil Upgrade Project
Dividend Yield Calculated as follows: (4 x Most Recent Quarterly Dividend Rate) ÷ (Current StockPrice
57
DefinitionsDefinitions
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Term DefinitionE Estimated
E-10 A fuel mixture of 10% ethanol and 90% gasoline
E&P Exp oration & Pro uction, one o MRO s our usiness segments
EG Equatorial Guinea
EG LNG Equatorial Guinea Liquified Natural Gas production facility
EHCI E ectrica , Hy rau ic, C emica Injection
EIA Energy Information Administration
EOR Enhanced oil recovery
s ma e ma e ecovera e
FCC Fluid Catalytic Cracker
FLC Field Level Controllable Cost
oa ng pro uc on, s orage an o oa ng vesse
G&A General and administrative expense
GME Garyville Major Expansion project
HES Hess Corporation
58
DefinitionsDefinitions
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Term DefinitionHH Henry Hub natural gas spot price
IEA International Energy Agency
IG Integrated Gas, one of MRO’s four business segments
In-situ Oil sands too deep for mining that require in-place treatment to achieve production
IP Initial production rate
LLS Light Louisiana Sweet crude oil
LNG Liquefied natural gas
LTPD Long tons per day
M Thousand
MBD Thousand barrels per day
MBOD Thousand barrels of oil per day
MBOED Thousand barrels of oil equivalent per day
59
DefinitionsDefinitions
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Term DefinitionMCF Thousand cubic feet per day
MM Million
MMBOE Mi ion arre s o oi equiva ent
MMBTU Million British thermal units
MMCFED Million cubic feet equivalent per day
MRI Magnetic Resonance Imaging
MRO Marathon Oil Corporation
MSAT Mobile Source Air Toxics
e e o o aCapital Ratio
a cu a e as o ows: as us e e ÷ o a oc o ers qu y + asAdjusted Debt)
NOL Net operating loss
OBO Operated By Others
Oil Sands Mining orOSM
The business segment through which MRO’s oil sands mining results are reported;MRO holds a 20% outside-operated interest in the Athabasca Oil Sands Project, anoil sands mining joint venture located in Alberta, Canada
OPIS Oil Price Information Service
60
DefinitionsDefinitions
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Term DefinitionOXY Occidental Petroleum Corporation
PADD Petroleum Administration for Defense Districts
Production Production available for sale
Proved Reserves Proved oil, natural gas and bitumen reserves determined under SEC requirements
PP&E Property, Plant & Equipment
PSVM Plutao, Saturno, Venus, Marte development area
PTD Projected Target Depth
R/P Reserve/Production
RDS Royal Dutch Shell plc
Recordable Incident The number of cases of in ur or illness er 200 000 work hours e uivalent to the Rate
hours worked by 100 full-time workers in a year)
REP Repsol YPF, S.A.
Reserves Proved, Probable and Possible oil and gas volumes as defined by the SEC
Resources Total Resource represents a high side, or P90 estimate of remaining expectedrecovery
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DefinitionsDefinitions
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Term DefinitionRFS Renewable fuels standard, which was amended by the Energy Independence and
Security Act of 2007 to require 36B gallons of renewable fuels by 2022
RIN Renewable identification number
RM&T Refining, Marketing & Transportation, one of MRO’s four business segments
ROCE Return on Capital EmployedROZ Residual oil zone
RVP Reid vapor pressure
SEC Securities and Exchange Commission
SCT Special Corporation Tax
SG&A Selling, General & Administrative
SPT Special Petroleum Tax
SSA Speedway SuperAmerica LLC
unoco, nc.
TAN Total acid number
TD Total depth
Total Debt Calculated as follows: (Long-term Debt + Short-term Debt)
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Net Sales VolumesNet Sales Volumes
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Yr. 2010
300
200
250
150MMBOE
50
100
0OXY APA APC DVN HES MRO TLM ECA CHK EOG MUR NBLMRO
13:1 6:1Source: Company annual reportsBOE volume based on 6:1 and 13:1 gas/oil ratioMRO & MUR include Oil Sands Mining Operations
64
Base AssetsBase Assetsl lb ld d d
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Equatorial Guinea Alba Field & LPG – Long-Lived Production & Resource Base
Alba Field, 63% WI & Operator
590 MMBOE net resource– 395 MMBOE net proved reserves
Adding offshore compression. Start-up in 2015
Exploration potential
a an , pera or
2010 Production
37 MBD net liquids, 405 MMCFD net natural gasReliability > 92%; without planned TAR >96%
120 Projected EG Production
40
60
80
duction (MBOED)
Natural Gas
-
20
2008 2009 2010 2011 2012 2013 2014 2015 2016 2017 2018
Net Pro
Liquids
65
Base AssetsBase AssetsE i l G i LNG & M h l W ld Cl S l L Li d I S
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Equatorial Guinea LNG & Methanol – World Class Scale, Long-Lived Income Stream
Monetize previously stranded gas
.
60% ownership
First sales Q2 2007, 17-year contract, FOB Bioko Island
Reliability > 97% in 2010, without planned TAR ~99%
At $6 HH net back $3.45/MMBTU
- Net cash flow to Marathon ~$265MM/year- Net profit to Marathon ~$200MM/year
>1 MMTPA Methanol Plant
45% Ownership
One of the worlds lowest cost producers
Competitively positioned to supply key markets
66
Base AssetsBase AssetsN O t f i g E t ti ith Additi l S t llit P t ti l
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Norway – Outperforming Expectations with Additional Satellite Potential
Alvheim & Volund 65% WI & Operator / Vilje 47% WIFull field developed at cost of $13.25/boe~ ,through year-end 2010
Further Phase II infill drilling taking place through 2012Additional prospectivity
Mari øne A iscovery, 65% WI, ~20 MMBOE gross resourcepotential
– Evaluation underway, first production expected 2014
Recent Viper & Caterpillar discoveries
e ou e ng eva ua e
100,000
Alvheim FPSOViper
Marihone
Vilje South
20,000
40,00060,000
,
Axis Title Volund
Vilje
Alvheim Ph2a,b&c
0Alvheim Ph1
Sanctioned (w/normalized start date)
67
Base AssetsBase AssetsUK Area
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UK Area
Brae Complex – Extending Asset Life3 Marathon-operated platforms
120
140
Brae Controllable Costs
Reliability > 92% in 2010, withoutplanned TAR >93%Reduced controllable costs, top quartile
80
100
illion
performance in 2009 McKinsey &Company benchmarkingFurther development drilling planned in
2011 & 2012
40
60$ m
Pursuing additional 3rd party volumes
Foinaven – Steady Source of Production & Income
0
2008 2009 2010
~30% Average WI2010 production 11 MBOED net, > 10MBOEPD projected through 2015Upgrading FPSO extends life to 2021
68
Base AssetsBase AssetsLegacy North American Oil
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Legacy North American Oil
Long-lived, low decline onshore assetsRockies Oil
– ~ • Wyoming’s top oil producer
– Operated activity in 13 fields– High WI: ~98%
–
Permian Basin OBO position– 2010 Exit rate: ~7 MBOED net– 12 fields
• ree most s gn cant– Seminole: WI ~14%– Vacuum: WI ~26%– Wasson: WI ~12%
–
50
75 Net Production
ED
Gulf of Mexico2010 Exit rate: ~47 MBOED net
0
25
MB
2010 2011E 2012E 2013E 2014E
LHC Natural Gas
69
Base AssetsBase AssetsLegacy North American Gas
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Legacy North American Gas
Alaska2010 Exit rate: ~119 MMCFD
– Disconnected from Lower 48 market
• 2010 realized price $5.37/mcf – Gas storage capabilities optimize
Rockies Gas (CO/WY)2010 Exit rate: ~79 MMCFD
Mid-Continent (OK/TX/LA)
50
75 Legacy North American GasNet Production
2010 Exit rate: ~92 MMCFD
25MBOED
2010 2011E 2012E 2013E 2014E
LHC Natural Gas
70
Base AssetsBase AssetsAthabasca Oil Sands Project
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Athabasca Oil Sands Project
20% WI, 2 billion barrels of Bitumenresource (pre-royalty)Muskeg River mine production
Pierre
River
capac y neExpansion 1 ~20 MBD net
Mine began ramping up production Q3 2010Upgrader complete and commissioning in 2011
Muskeg RiverJackpine
Jackpine 2
85 MBD gross de-bottleneckingopportunities
700
800
D)
Fort McKay
400
500
600
duction (MB
Potential Micro-Expansions
PotentialMajor Expansions
Fort McMurray
Mining Assets
0
100
200
Gross Pr
Expansion 1
Muskeg River Mine
& Debottlenecking
2050
Production before royalty; growth beyond Expansion 1 is illustrative of timing and volumes
71
Growth AssetsGrowth AssetsDriving Production Growth in 2011 & Beyond
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Driving Production Growth in 2011 & Beyond
Project MROW.I. MRO Operated First Production Peak Net Rate
(MBOED)
US Resource Pla s
Bakken ~80% 2006 22
Anadarko Woodford ~60% 2008 >30Ea le Ford ~94% 2011 >15
DJ Basin 75% 2011 TBD
Gulf of Mexico
Gunflint 12.5% 2015 6
Canadian In-situ
Birchwood – Phase I 100% 2016 15
AngolaBlock 31 PSVM 10% 2012 14
Block 32 CSE 10% 2016 18
72
Growth AssetsGrowth AssetsBakken hale
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Production GrowthCurrently running 7 rigs
20
– – 1 dedicated to completions
Targeting 18 re-fracs in 2011Peak production 22 MBOED D
5
10
in 2013– Downspacing upside
Exited 2010 ~ 15 MBOEDMBOE
0
2007 2008 2009 2010 2011E 2012E 2013E
– ~ perate we s– ~100 Outside operated
73
Growth AssetsGrowth AssetsBakken hale
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Focused on ultimate recovery, not initial ratesConservative initial production practice focused on delivering higher recovery
80
100
120
E
MRO
Industry
40
60MB
Dunn County per well average
0
20
0 12 24 36
cumu at ve pro uct on
Time, Months
74
Da s from S ud
Growth AssetsGrowth AssetsBakken hale
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Da s from S ud
0
2,000
4,000
0 10 20 30 40 50 60
2006
Drilling performanceimprovement
6,000
8,000
10,00012,000D
epth, ft
2007
2008
20092010
evolution
Geology drives completionstechnique,
16,000
18,000
20,000
MRO Best– Initial open-hole fracs in shortlaterals
– Now drilling longer laterals• Surface access constraints• Technology advancements
Not all Bakken completions are created equal– MRO currently determining optimum completion type and number of stages to achieve
im roved well economics• Applying this knowledge to obtain most cost-effective completions by area
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Growth AssetsGrowth AssetsAnadarko Woodford Shale
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2011 ProgramCurrently running 3 company operated rigs, going to 8 by year-end 2011
500
20 - 25 Company-operated drill wells
25 - 50 Outside-operated drill wells
350
400
450
200
250
300
Capex, $MM
50
100
150
0
2009 2010 2011E 2012E 2013E 2014E 2015E
76
Growth AssetsGrowth AssetsMarcellus Shale Gas
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Joint Venture$45 million in drilling carry
– Earns 50% of ~60,000 acres
$10 million option– Earns 50% of remaining ~22,000 acres
Option to acquire 100% o MRO sremaining net acreage
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Growth AssetsGrowth AssetsHaynesville/Bossier Shale Gas
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20,000 Net acres, 70% operated
Mostly held by production
10 Miles
150-250 MMBOE net resourcepotential Shelby Co.
LOUISIANATEXAS
Shelby Co.
2010: Drilled 2 wells, 1 waiting oncompletion, WI 100%
2010 Exit rate 8 MMCFD
2011: Drill 3 wells1 company operated
MRO WellsRecent IPs > 15 MMCFD
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Growth AssetsGrowth AssetsAngola
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Block 31, 10% WIPSVM Development
MRO acreage
Oil discovery
– Conversion FPSO, 150 MBOED– Project sanctioned 2008– Development drilling underway– -
BLOCK 3110% WI
PSVM
DevelopmentAreaVenus
Marte
Saturno
Leda
,expected May 2011
– First production Q2 2012
Evaluating further potential
Potential Mid
DevelopmentArea
Ceres
Hebe
Titania
Plutao
Miranda
Cordelia
Portia
developments
Block 32, 10% WI
Potential SE
DevelopmentAreaBLOCK 32
10% WI
Juno
UranoAstraea
Palas
Man ericao
CominhosColorau
AlhoDione
Oberon
Cola
Tebe
Development scenarios being evaluatedPotential
EasternDevelopmentArea
Gengibre
Mostarda
Canela
Gindungo
SalsaLouro
40 KM
79
Growth AssetsGrowth AssetsCanadian In-situ
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In-situ OwnershipOperated
– Birchwood 100%– Namur ~60%
Outside-operated– Ells River 20%
Net resource
Namur60% WI
PierreRiver
– >1 BBBL net bitumen
2011 Birchwood Appraisal~ Well program
Ells River20% WI Muskeg River
– 2011 Capex: ~$86MMDrill, Evaluate, Plug
– Contracted four rigs– Cores planned for all wells
Birchwood
Fort McKay
– pen o e ogs pressure tests– Cap rock integrity tests
Project sanction: 2014First production: 2016
100% WI
or c urray
In-situ Assets
80
Poland Compared to US Shale Gas PlaysPoland Compared to US Shale Gas Plays
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Shale Gas Plays Haynesville AnadarkoWoodford
Poland(Pre-Drill)
Total Organic Carbon(%)
0.5 – 8.0 1- 14 0.5 – 7.0
Depth(000 feet)
10 – 14 9 - 15 8 - 13
Net Thickness (feet) 150- 300 100 – 300 100 – 600
OGIP(BCF/ sq mile)
160 - 320 100 - 150 65 - 400
81
Impact ExplorationImpact ExplorationIndonesia
I N D O N E S I A
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Pasangkayu Block70% WI & operatorAc uired 3D seismic 2008
Kutei Basin~15 BBOE
PasangkayuBlock
4 Commitment wells– 1 Well in 2010– 1 Well in 2011
~potential
Bone Bay Block
55% WI & operator
S U L A W E S I
2009 / 2010 Acquired 2D seismicDrill 2012
Kumawa BlockBone Bay
Block
umawaBlock
55% WI & operator2010 Acquired 2D seismicDrill 2012
MRO Acreage
~3.3 million gross acres across 3 blocks
82
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Project Completed in Late 2009 Enhances FlexibilityProject Completed in Late 2009 Enhances FlexibilityGaryville Major Expansion (GME) Enhances Opportunities for Cash Flow and Profit*
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4,000GME Contribution
Downstream Segment Income31%
2,000
3,000
$MM
Pre-Tax DownstreamSegment Income + DD&A
28%
51%
0
1,000
32%
Mars 2-1-1 Crack Spread $16.20 $19.65 $8.83 $10.96
2003-2007**Average
2008** 2009** 2010**
Incremental average annual after-tax project contribution
Cash flow (2010+) $575 MM $825 MM $300 MM $375 MM
Profit (2010+) $425 MM $675 MM $150 MM $200 MM
*Includes minority interest.**For illustrative purposes only. A simple, annual average of forecast results is added to actuals for all periods. Forecast based upon2003-2007, 2008 and 2009 average pricing for inputs and outputs as well as expected production rates and associated manufacturing costs.
84
Impressive Safety and Environmental RecordImpressive Safety and Environmental Record
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OSHA Recordable Incident Rate(Employee and Contractor History)
1.370.97 0.90 0.73 0.80 0.611.00
2.00Days Away Rate
(Employee and Contractor History)
0.50
1.00
. .
0.00
2003 2004 2005 2006 2007 2008 2009 2010Est.
0.12 0.09 0.09 0.13 0.10 0.08 0.12
0.00
2004 2005 2006 2007 2008 2009 2010Est.
6,8198,000
Designated Environmental Incidents
167200
Pipeline Barrels Released
Environmental
(BBLS)
610 60 64 24 4 14 1210
2,0004,000
,
2003 2004 2005 2006 2007 2008 2009 8/20/2010
610
500
1,00086 83 74 76 7334
0
100
24 4 140
2003 2004 2005 2006 2007 2008 2009 2010
Est.
Since 2003, MPC has transported over 2 MMB/D
Goal – Top quartile performer in all Safety and Environmental Metrics
85
Speedway vs. Public CSpeedway vs. Public C- -StoresStores
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167.3180
Light Product Sales
163.3180
Merchandise Sales
100.0 105.5 115.7120
140
160
nth 114.6
132.8
120
140
160
nth
71.2
60
80
G
al/Store/M 80.4 84.8
60
80
M/Store/Mo
0
20M
0
20 24.9% 42.0% 32.9% 34.7% 36.6%
(Margin % inside bars)
Top-Tier Industry Performer Source: Based on 2009 Company Public Reports
86
Crude Oil Differentials are Projected to ImproveCrude Oil Differentials are Projected to ImproveImproving Economy Should Result in Improved Differentials
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$0.00
-$10.00
-$5.00
-$15.00$/BBL
-$20.00
- 25.002006 2007 2008 2009 2010 2011E 2012E 2013E 2014E 2015E 2016E 2017E 2018E 2019E 2020E
Maya-LLS Mars-LLS MPC Sweet/Sour Differential
$1 BBL/ Δ in MPC Sweet/Sour Di erential ≈ $150 MM A ter Tax Pro it Forecast Sources: Maya – LLS and Mars – LLS, Purvin & Gertz; MPC Sweet/Sour Differential estimated based on above Purvin & Gertz forecast
MPC Sweet/Sour Differential = [(15% Arab Light) + (20% Kuwait) + (10% Maya) + (10% Western Canadian Select) + (45% Mars)]- Louisiana Light Sweet
87
AtAt--Risk RefineriesRisk Refineries –– CapacityCapacityUS Refineries at Risk (PADDs I-III)
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2013 Capacity(MBD)
PADD I PADD IIIPADD II
1,884 3,928 9,180
Total I-III
14,992
Total I-V
18,812
PotentialClosures Count
Potential Closures
2 6 7
335 572 664
15
1 571 1 571
15
Capacity AfterClosures (MBD) 1,549 3,356 8,516 13,421 17,241
Sources: Media reports, Credit Suisse, OPIS, Purvin & Gertz, MRO estimates
88
RFS II & U.S. Gasoline DemandRFS II & U.S. Gasoline Demand
RFS II C ll l i Eth l
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10
Actual & MROForecast of U.S.
RFS II Cellulosic Ethanol:Technically, economically &Blend Wall challenged
8
9
MB/D
Gasoline Demand
E-10 Blend Wall
7
M
62006 2007 2008 2009 2010 2011 2012 2013 2014 2015 2016 2017 2018 2019 2020
Hydrocarbon Gasoline Component RFS Ethanol Within E-10 LimitActual Ethanol in Surplus of RFS RFS Ethanol Over E-10 Blend WallQuestionable RFS Volume
Ca italizin on Historical Ethanol Position
Sources: DOE/EIA; Marathon EconomicsEarly Blending Investment Paying Dividends
89
Anticipated Benefits of SpinAnticipated Benefits of Spin- -offoff
h d fl b l l d h ll h
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Enhanced flexibility to pursue tailored strategies - each company will have agreater ability to make business and operational decisions in the best interests of its business and to allocate ca ital and cor orate resources with a focus onachieving its own strategic priorities
Expanded growth opportunities – a more focused business strategy will result in anex anded ortfolio of attractive rowth o ortunities for each com an
Superior transparency – improved investor focus – as independent energycompanies, analysis and investment decisions will be more transparent, allow formore specific comparisons against peers, competitors, benchmarks andperformance metrics and thus facilitate evaluation assessments which will likelymake the two companies appeal to different sets of shareholders seeking to investin specific segments of the oil and gas industry
Strengthened ability to attract and retain talent - more focused business models
will enhance each company’s ability to attract and retain individuals with theappropriate skill sets as well as to better align compensation and incentives with
90
Corporate Governance and Dividend PolicyCorporate Governance and Dividend Policy
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Each company will be led by the experienced directors and management thathave led Marathon
MPC
Thomas J. Usher – Non-Executive Chairman–.
MROClarence P. Cazalot – Chairman, President and CEO
Dividend PolicyMaintain annual $1.00 per share dividend
– ~.– $0.80 annual per share MPC (~355 million shares)
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Financial ObjectivesFinancial Objectives
T i d i
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Two strong, investment grade companies
Each will have sufficient li uidit and financial flexibilit to ursue theirstrategic objectives
Spin-off intended to be tax-free to the corporation and domestic shareholdersIRS Ruling pending for confirmation of tax-free status
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Financing Structure at Separation DateFinancing Structure at Separation Date
MPC (D t )
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MPC (Downstream)$2 billion new 4 year revolving credit facility
– JP Morgan and Morgan Stanley led
Issued $3 billion in new long term debt (Guaranteed by MRO until spin)– $750 MM 5-year notes, 3.5%– - , .– $1.25B 30-year notes, 6.5%
$750 million minimum balance sheet cash
MRO (Upstream)Retain existing $3B revolving credit facility
Retain existing public debt– Long-term debt reduced by ~$2.5 billion
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MROMRO -- Debt Maturity ProfileDebt Maturity ProfileDecember 31, 2010
1 800 C d $2 5B h d ff h d b
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1,600
1,800 Commenced ~$2.5B cash tender offer to purchase debt
1 000
1,200
1,400
M)
Up to $500MM of 2017, 2018 or 2019
600
800($000
-
200
400
'10 '11 '12 '13 '14 '15 '16 '17 '18 '19 '20 '21 '22 '23 '24 '25 '26 '27 '28 '29 '30 '31 '32 '33 '34 '35 '36 '37
Public Debt IRBs & Other USS Serviced Debt
2011 maturities reflect retirement of industrial revenue bonds by US Steel in accordance with the Financial Matters Agreement
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Tax ConsiderationsTax Considerations
Deferred Tax Liabilities
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Deferred Tax LiabilitiesCanadian election to pay tax in US dollars eliminates currencyremeasurement uctuat ons re ate to t ose tax a ances
Norway NOL balances expired
Country Statutory Tax Rate
Norway 28% Income Tax ; 50% SPT
Canada 26.5% Income Tax
Libya 93% Income Tax
EG 25% Income Tax
Angola 50% Income Tax
UK 30% Income Tax; 20% SCT
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