The Alvheim FPSO offshore Norway achieved first oil in early June 2008. Strong production from Alvheim helped drive production performance for 2008. Additional satellite prospects are planned over the next few years.

Delivering high value impact projects. Production from Marathon's E&P segment increased by more than 8 percent from 2007 to 2008.

Production growth was largely driven by the start-up of the Alvheim/Vilje development in the Norwegian sector of the North Sea. The fields have been developed utilizing a purpose-designed floating production storage and offloading vessel (FPSO) that takes advantage of the latest technology for low emission gas turbines — a first for the Norwegian Continental Shelf. The Alvheim FPSO, with an original design capacity of 120 gross mboepd, demonstrated a proven actual facility capacity of 135 gross mboepd during 2008. Marathon has a 65 percent operated interest in the Alvheim area and a 47 percent outside-operated working interest in the Vilje Field.

The Neptune development in the Gulf of Mexico, in which the Company holds a 30 percent interest, began production mid-year. In 2008, Marathon sanctioned two additional Gulf of Mexico developments, the Droshky and Ozona projects, which are expected to contribute significantly to the Company's production growth upon start-up in the 2010/2011 time frame.

In Angola, Marathon is shifting focus from exploration to a queue of development projects. In 2008, the Company and its partners received approval to proceed with the PSVM deepwater oil development project on Block 31, comprising the Plutao, Saturno, Venus and Marté discoveries. Slated for first production in the 2011/2012 time frame, PSVM is the first in an anticipated series of deepwater development projects across Blocks 31 and 32, and advances Angola as a new core area.

Marathon's return to Libya in 2005 has provided a strong base for the Company to increase reserves and production. Marathon holds a 16.33 percent working interest in the Waha Concessions that encompass almost 13 million acres in the Sirte Basin and currently produce approximately 344 gross mboepd. This basin is one of the most prolific oil and gas producing areas of Libya, containing sizable undeveloped oil and gas resources. Marathon has four additional development projects within the Concessions in addition to further exploration potential.

In the Bakken Shale in North Dakota, the Company continues to achieve best-in-class drilling and completion performance, and improved drilling and well costs.

The Company has had encouraging results from the evaluation of in-situ oil leases in Canada, where Marathon holds ownership interests in both operated and non-operated leases that have the potential to be developed using in-situ methods of extraction. These leases cover approximately 143,000 gross acres (55,000 net acres) and are located near Fort McMurray, Alberta. Recent drilling results bolstered Marathon's view of the bitumen resource potential in this portfolio, moving from an estimated in-situ resource potential of 600 million barrels net bitumen to what the Company now believes is approximately 1.5 billion barrels. Evaluation on all in-situ properties is continuing, with first production possible in approximately 2015.

Emerging resource plays. Marathon's Bakken Shale leasehold in North Dakota and eastern Montana represents one of the Company's unconventional resource developments. Advances in horizontal drilling technology have made it possible to extract oil and gas from a thin layer of dense rock buried two miles underground. To capitalize on the Bakken opportunities, Marathon drilled 69 wells in 2008. Year-end net production for Bakken was 8.2 mboepd. The Company anticipates drilling up to 225 wells over the next five years, with the potential to bring net production to approximately 15 mboepd by 2015.

The Company is well positioned with significant acreage in the core of the emerging Woodford Shale play in the Anadarko Basin of Oklahoma and the Haynesville Shale resource play in Texas and Louisiana. In 2008, the Company successfully completed its first horizontal well in the Woodford Shale. This well, the Cana No. 1-15H, is one of the world's first totally interventionless well completions using the patented EXcape® Completion Process technology, developed jointly by Marathon and several partners. Plans call for additional drilling in both plays in 2009. Marathon expanded its exploration activity into the Eastern U.S., focusing on the Marcellus Shale resource play in the Appalachian Basin in Pennsylvania and West Virginia, where the Company holds 65,000 net acres. Marathon plans to begin drilling in this play in 2009.

Marathon has utilized its experience with coal seam gas (CSG) plays to capture an average 50 percent interest in 520,000 gross acres in the United Kingdom — the largest CSG acreage position in the country, including 11 new blocks awarded in 2008. Testing and exploration on two of the licenses was conducted in 2008.

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