Gulf of Mexico

The Gulf of Mexico continues to be a core area for Marathon, with promising development and exploration potential. The Company currently has interests in six producing fields and three platforms, of which Marathon operates one.

The Company has rebuilt its inventory of prospects for future exploration activity in the deepwater Gulf of Mexico, and over the last 18 months was high bidder on 42 blocks in the Outer Continental Shelf lease sales. The following is a summary of Marathon's significant production and development projects in the Gulf:

Droshky:

The Droshky discovery (formerly named Troika Deep), is two miles south of the Troika Field Production System in approximately 2,900 feet of water. Marathon holds a 100 percent
working interest in Droshky, excluding royalty adjustments. The initial well was drilled to a total depth of 21,190 feet and encountered approximately 250 feet of net oil pay. The downdip appraisal sidetrack encountered more than 600 feet of net oil pay, while the lateral sidetrack encountered approximately 300 feet of net oil pay. All pay intervals are Upper Miocene in age. Preliminary analysis suggests that Droshky holds 30- to 32-degree API fluids, similar to the Troika Field.

In October 2008, Marathon sanctioned a project that will consist of four development wells.
Marathon has secured the Noble Paul Romano rig to begin drilling in 2009, and first production is targeted for 2010. Expected net peak production is about 45 mbpd of liquid hydrocarbons and 37 mmcfd of natural gas, after royalties.

Ewing Bank (Arnold, Lobster and Oyster):

Located 130 miles south of New Orleans, Louisiana, this 1994 development serves as a production hub platform. A significant contributor to the Company's Gulf of Mexico portfolio,
the Lobster platform stands in 775 feet of water. In March 2008, the Arnold #4 subsea well came onstream.

Gunflint (Mississippi Canyon Block 948):

In October 2008, Marathon participated in a successful discovery well on the Gunflint prospect, located on Mississippi Canyon Block 948, in the deepwater Gulf of Mexico. The well is located approximately 160 miles southeast of New Orleans, and was drilled in about 6,100 feet of water, to a total depth of approximately 29,280 feet. The well encountered more than 550 feet of net hydrocarbon-bearing sands in the Middle and Lower Miocene reservoirs. Marathon owns a 12.5 percent working interest in Mississippi Canyon Block 948. Noble Energy Inc. holds a 37.5 percent working interest in the well and will serve as operator for the block. BP Exploration & Production Inc. operated the exploration well with a 25 percent working interest. Samson Offshore Company owns the remaining 25 percent working interest.

Neptune (Atwater Valley Blocks 573, 574, 575, 617 & 618):

Discovered in 1995, Neptune was the first discovery in the Atwater Foldbelt trend, approximately 120 miles off the coast of Louisiana. Marathon holds a 30 percent working interest in Neptune, which consists of five Outer Continental Shelf blocks. Marathon's partners in Neptune are BHP Billiton, which holds a 35 percent working interest and serves as operator; Woodside Petroleum Limited, with a 20 percent working interest; and Maxus (US) Exploration, a subsidiary of Repsol YPF, with a 15 percent working interest. Neptune was sanctioned for development in June 2005. Production commenced in July 2008. Field development consists of six subsea wells tied back to a mini-tension leg platform (TLP). The mini-TLP is situated above the Sigsbee Escarpment on Green Canyon Block 613 in approximately 4,300 feet of water. The subsea wells are located below the escarpment in approximately 5,200 feet of water. The oil and gas are exported via the existing Caesar and Cleopatra trunk lines.

Ozona (Garden Banks Block 515):

Marathon holds a 68 percent working interest in the Ozona Field, and serves as operator. Marubeni holds the remaining 32 percent working interest. Ozona was sanctioned for development in October 2008. Marathon has contracted with the Noble Jim Day rig to complete one previously drilled appraisal well, which will be tied back to Shell's Auger platform. First production is expected in 2011, with an anticipated net peak rate of about 6 mbpd of oil and 13 mmcfd of natural gas, after royalties.

Petronius/Perseus (Viosca Knoll Blocks 786/830):

Marathon holds a 50 percent working interest in these blocks, approximately 130 miles southeast of New Orleans. Chevron USA holds the remaining 50 percent working interest and serves as operator. The Petronius development consists of a compliant tower structure with
production and drilling facilities. The platform was set over six predrilled wells, drilled to several sandstone reservoirs approximately 10,000 feet below sea level. The tower is 2,001 feet tall and is installed in 1,754 feet of water. Petronius is capable of providing processing and transportation services to adjacent third-party fields.

Shenandoah (Walker Ridge Block 52):

Marathon holds a 10 percent working interest in the Shenandoah discovery located in Walker Ridge Block 52. This discovery encountered almost 300 feet of net pay. The well targeted the Lower Tertiary trend and is located in 5,815 feet of water and was drilled to a total measured depth of about 30,500 feet. Anadarko is the operator and holds a 30 percent working interest, along with ConocoPhillips (40 percent) and Cobalt (20 percent).

Stones (Walker Ridge Block 508):

In 2005, Marathon participated in the Stones #1 discovery well. This well targeted the Lower Tertiary trend. In 2008, Marathon and its partners drilled a successful appraisal well. The well was drilled at a water depth of 7,500 feet to a total depth of 29,400 feet, with oil located in multiple reservoirs. Shell holds a 35 percent working interest and serves as operator; Marathon and Petrobras each hold a 25 percent working interest; and ENI S.p.A holds the remaining 15 percent.