Marathon Oil (MRO)

Financial Condition

Net property, plant and equipment as of the end of the last two years is summarized in the following table.

Net property, plant and equipment increased $8.022 billion in 2007 primarily due to the addition of the Oil Sands Mining assets recorded as a result of the Western acquisition. The decrease in integrated gas segment assets is due to the deconsolidation of EG Holdings discussed above.

Financial Condition

Financial Condition

        Net property, plant and equipment increased $1.642 billion in 2006 primarily as a result of the capital expenditures and the additional capitalized asset retirement costs discussed below. Net property, plant and equipment as of the end of the last two years is summarized in the following table.

        Asset retirement obligations increased $333 million in 2006 from 2005 primarily due to upward revisions of previous estimates related to increasing cost estimates, primarily in the United Kingdom, and to the accrual of obligations for new properties, primarily the Alvheim/Vilje development in Norway and the LNG production facility in Equatorial Guinea.

Financial Condition

        Net property, plant and equipment increased $1.642 billion in 2006 primarily as a result of the capital expenditures and the additional capitalized asset retirement costs discussed below. Net property, plant and equipment as of the end of the last two years is summarized in the following table.

        Asset retirement obligations increased $333 million in 2006 from 2005 primarily due to upward revisions of previous estimates related to increasing cost estimates, primarily in the United Kingdom, and to the accrual of obligations for new properties, primarily the Alvheim/Vilje development in Norway and the LNG production facility in Equatorial Guinea.

Financial Condition

        Current assets increased $2.823 billion from year-end 2003, primarily due to an increase in cash and cash equivalents and receivables. The increase in cash and cash equivalents was mainly due to the issuance on March 31, 2004, of 34,500,000 shares of common stock resulting in net proceeds of $1.004 billion and the suspension of cash distributions to Ashland. The increase in receivables was mainly due to higher year-end commodity prices.

        Current liabilities increased $1.046 billion from year-end 2003, primarily due to an increase in accounts payable as a result of higher priced year-end crude oil purchases at MAP.

        Investments and long-term receivables increased $223 million from year-end 2003, primarily due to contributions to an equity investee to fund the LPG expansion project in Equatorial Guinea and restricted cash of $66 million at EGHoldings.

        Net property, plant and equipment increased $980 million from year-end 2003. Net property, plant and equipment for each of the last two years is summarized in the following table:

        The increase in international E&P is due to the construction of the Alba field condensate expansion project in Equatorial Guinea. The increase in RM&T is primarily due to refinery upgrade projects to enable the production of low sulfur gasoline and diesel fuel and the Detroit, Michigan refinery expansion project, partially offset by sales of SSA stores. The increase in IG is primarily due to costs associated with the LNG project in Equatorial Guinea.

        Long-term debt at December 31, 2004 was $4.057 billion, a decrease of $28 million from year-end 2003. See "Liquidity and Capital Resources" on page 40, for further discussion.

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        Asset retirement obligations increased $87 million from year-end 2003 primarily due to revisions of previous estimates caused by the impact of a weakening U.S. dollar on foreign asset retirement obligations, as well as drilling activity during 2004.