Dear Fellow Shareholders: By focusing and successfully executing on the strategies and plans that increase our company's value, we are continuing to build a new Marathon. We have set a solid foundation for sustainable and improving future performance by creating an enhanced asset base with greater growth potential. And the market is beginning to recognize and reward our actions, placing Marathon in the top third of our peer group in terms of total shareholder return since our transformation began. On March 1, 2000, Marathon established a new leadership team and began the development of a bold strategic direction. We set our sights on becoming the pacesetter for sustainable value growth through innovative energy solutions and unique partnerships. And we identified the key achievements that would take us there: exploration success, financial discipline, profitable new core areas, a new integrated gas strategy and continued strong performance in our downstream joint venture. Our many successes in 2003 make it clear that Marathon is on the right path. Tracking our shareholder return from March 1, 2000, through the end of 2003, we rank fourth in the Amex Oil Index of 13 peer companies* with a total shareholder return of 56.9 percent.** Make no mistake — we are not satisfied with that position, but we are pleased that the market is recognizing and rewarding the steps we have taken to reposition our company. 2003 Key Highlights:      • Made nine offshore exploration discoveries in Norway, Angola, Equatorial Guinea and the Gulf of Mexico      • Advanced new core areas in Equatorial Guinea and Norway      • Created a new core area in Russia through a $285 million acquisition      • Increased condensate production with the Phase 2A expansion project in Equatorial Guinea      • Signed two agreements to advance our integrated gas strategy in Equatorial Guinea      • Invested in refinery upgrades and efficiency enhancements      • Improved downstream logistics network through Centennial and Cardinal Products pipelines      • Completed an asset rationalization program and launched a business transformation process A Differentiated Marathon Not only is the Marathon of today different from the past, we are differentiated from our competitors by a business model unique for our size, encompassing exploration and production; refining, marketing and transportation; and integrated gas. Our upstream assets have been enhanced as we have reshaped our portfolio, divesting of almost $1 billion in non-core assets in 2003 and focusing our resources on new opportunities in Russia, Equatorial Guinea and Norway. We are commercializing our exploration successes, with interests in Alvheim and Klegg offshore Norway, the Gulf of Mexico’s Neptune and Perseus discoveries, and a string of deepwater discoveries offshore Angola. Approximately 60 percent of our proved reserves at year-end 2003 have been added since January 1, 2000. These assets have much greater resource potential and already have added approximately 2 billion barrels of oil equivalent of net risked resource for us to draw upon in the future. Despite some initial market skepticism about Marathon’s ability to execute on our integrated gas strategy, the global marketplace has confirmed what we knew all along — it is the right strategy at the right time. Our success to date also affirms that we are the right company to deliver it. To that end, we have focused on identifying critical skill sets and adding the expertise needed to execute our strategies going forward. The growing market for liquefied natural gas (LNG), particularly in meeting growing natural gas demand in the United States, is a key focus for Marathon’s integrated gas strategy. In the Atlantic Basin, where regasification terminals already exist and many more are planned, our efforts are concentrated on LNG supply. Having reached tentative agreement on long-term offtake in Equatorial Guinea and acquired the right to deliver other LNG supplies at Georgia’s Elba Island, Marathon’s integrated gas strategy would reach critical mass with the approval and construction of the proposed LNG plant in Equatorial Guinea, with projected annual production of 3.4 million metric tonnes. Pending approvals, start-up currently is projected for late 2007. The emergence of viable gas-to-liquids (GTL) technology also presents exciting integrated gas opportunities to commercialize stranded gas resources. A demonstration plant in Oklahoma is helping Marathon evaluate the commerciality of an experimental GTL technology, which is a feature of a proposed integrated gas project in Qatar. Our downstream joint venture is continuing to leverage investments in core markets, expand and enhance its asset base, reduce costs, and manage efficiently and strategically. In 2003, MAP invested in technology upgrades and expansions at its refineries to increase yield, improve reliability and help meet clean fuels requirements. MAP improved its logistical network into the relatively high-margin Midwest through increased ownership of the Centennial Pipeline and the completion of the new Cardinal Products Pipeline. On the retail side, merchandise margins continue to exceed fuel margins and investment is focused on MAP’s largest markets. As our industry benefited from higher-than-mid-cycle prices in both oil and natural gas in 2003, Marathon took advantage of favorable market conditions to fund profitable growth and strengthen our balance sheet. Marathon lowered its cash-adjusted debt-to-capital ratio to less than 33 percent at year-end and announced an increase in the quarterly dividend of approximately 9 percent during the third quarter. Our strengthened balance sheet has greatly increased the strategic opportunities within our reach. Strategic Intents Going forward, we have outlined the path to our future success with a number of strategic intents. First, we intend to remain integrated across the value chain. Our integration opens more opportunities for growth and helps to protect us against pricing volatility between our upstream and downstream interests. Although much of our investment in the future is international, we will retain a substantial asset position in member countries of the Organisation for Economic Co-operation and Development (OECD), expecting to maintain an asset base of approximately 70 percent OECD through 2008. By continuing our emphasis on financial discipline, we intend to maintain a cash-adjusted debt-to-capital ratio of approximately 40 percent or lower. And we intend to achieve earnings-per-share growth on a mid-cycle, flat-price basis.* We see this growth coming from more than just production. Our unique business model provides for many sources of profitable growth beyond our current production portfolio: LNG volumes in Equatorial Guinea, re-gas volumes into Elba Island, a growing resource and reserve base, and substantially increased branded gasoline and merchandise sales through MAP. Through these efforts, Marathon can add value based on the actions we take, not simply as a result of the market or pricing. To continue Marathon on the path to profitable growth, we have identified a number of operational goals for 2004. We expect to continue our exploration success in Angola, Equatorial Guinea, Nova Scotia and the Gulf of Mexico. The successful completion of our Phase 2B expansion in Equatorial Guinea, the sanctioning of our recent discoveries offshore Norway and in the Gulf of Mexico, and the development of growth opportunities will be critical to our performance. Certainly, obtaining project sanctioning to construct the LNG plant in Equatorial Guinea is a key objective in 2004. In addition, we are investing approximately $800 million in our downstream joint venture operations to enhance efficiency, optimize sourcing and comply with low-sulfur (Tier 2) fuel specifications. Finally, we must continue to exercise financial discipline to enable Marathon to capitalize on several high-potential investment opportunities we have identified for the future. Living Our Values At Marathon, we remain committed to operating with the highest regard for our shareholders, our partners, our employees and the communities in which we operate. Our accountability to shareholders begins with personal performance commitments linked to our corporate goals. These commitments are then linked to compensation. In April our shareholders approved the 2003 Incentive Compensation Plan. Our annual incentives for officers are based on competitive metrics that drive our business, and our long-term incentives are linked to shareholder return rankings within our industry. In addition, we implemented stock ownership guidelines for all officers and directors. Our focus on the highest standards of corporate governance is reflected in Marathon’s outstanding reputation. We are leading our industry in several important measures, including being the first oil company to announce the expensing of options. In early 2004, Institutional Shareholder Services scored Marathon as outperforming more than 81 percent of the companies in the S&P 500 and 96 percent of the companies in the Energy Indices in terms of corporate governance excellence. In 2003, the Energy Intelligence Group ranked Marathon first in corporate governance quality among the world’s top 20 publicly traded oil and gas companies. Lastly, we will maintain our standing as a good corporate citizen, known for running safe and environmentally sensitive operations, fostering a business environment that celebrates diversity, and providing philanthropic support. One good example of community support is our partnership to reduce the transmission of malaria on Bioko Island, a leading cause of mortality among children under five in Equatorial Guinea. Through education, improved preventive measures at the household and community levels, medical case management and indoor residual spraying, we aim to reduce the infection rate by 80 to 90 percent over a five-year period. This is but one example of the positive impact Marathon makes on the communities around the world where we live and work. Although we have made much progress in reshaping our company over the last few years, we are by no means satisfied that the job is complete. Walk the halls at Marathon and you will find a workforce that is energized, motivated and passionate about the direction in which we are heading. We have accomplished a great deal in the last four years, but we know the best lies ahead and we are committed to delivering sustainable value growth in 2004 and beyond. We thank you for your investment and continued confidence in Marathon. Sincerely, Thomas J. Usher Chairman Clarence P. Cazalot Jr. President and Chief Executive Officer March 10, 2004 *   The Amex Oil Index includes Amerada Hess Corporation; BP PLC; ChevronTexaco Corporation; ConocoPhillips; ExxonMobil Corporation; Kerr-McGee Corporation; Marathon Oil Corporation; Occidental Petroleum Corporation; Repsol YPF; Royal Dutch Petroleum Company; Sunoco, Inc.; Total S.A.; and Unocal Corporation. ** Total shareholder return is calculated using a single-point baseline (the stock price on March 1, 2000) compared to the average of the closing common stock prices during December 2003, plus dividends paid over the time period.