Marathon Oil (MRO)

Depreciation, Depletion and Amortization of Property, Plant and Equipment

        Depreciation and depletion of producing oil and gas properties is determined by the units-of-production method and could change with revisions to estimated proved developed recoverable reserves. The change in the depreciation and depletion rate over the past three years due to revisions of previous reserve estimates has been immaterial. A five percent increase in the amount of oil and gas reserves would change the depreciation and depletion rate from $5.55 per barrel to $5.29 per barrel, which would increase pre-tax income by $32 million annually. A five percent decrease in the amount of oil and gas reserves would change the depreciation and depletion rate from $5.55 per barrel to $5.84 per barrel and would result in a decrease in pre-tax income of $35 million annually.

        Property, plant and equipment in our RM&T segment are depreciated using the straight-line method over their estimated useful lives, which range from 3 to 42 years. Useful lives are based on historical experience and the assumption that we will provide an appropriate level of annual expenditures to maintain the assets in good operating condition. Factors which could affect the estimated useful lives of our RM&T property, plant and equipment include changes in planned use, environmental regulations, competition and technological advances. There have been no significant changes in the useful lives of our RM&T property, plant and equipment during the 2002-2004 period.