Marathon Oil (MRO)

13.  Long-term Debt

On September 27, 2007, Marathon issued $750 million aggregate principal amount of senior notes bearing interest at 6.000 percent with a maturity date of October 1, 2017, and $750 million aggregate principal amount of senior notes bearing interest at 6.600 percent with a maturity date of October 1, 2037. Interest on the senior notes is payable semi-annually beginning April 1, 2008.

On June 26, 2007, the Parish of St. John the Baptist, where Marathon’s Garyville, Louisiana, refinery is located, issued $1.0 billion of 5.125 percent Fixed Rate Revenue Bonds (Marathon Oil Corporation Project) Series 2007A associated with the Garyville refinery expansion with a maturity date of June 1, 2037.  Marathon is solely obligated to service the principal and interest payments associated with the bonds.  The proceeds from the bonds were trusteed to be disbursed to Marathon upon its request for reimbursement of expenditures related to the Garyville refinery expansion.  Through September 30, 2007, such reimbursements have totaled $163 million.  The $1.0 billion obligation is reflected as long-term debt and the $848 million of trusteed funds, including interest income earned to date, is reflected as other noncurrent assets in the consolidated balance sheet as of September 30, 2007.

On June 15, 2007, Marathon borrowed $578 million under a loan agreement from Eksportfinans ASA, the Norwegian export credit agency, based upon the amount of qualifying purchases of goods and services by Marathon from Norwegian contractors.  The original loan agreement that was executed in 2006 was amended in June 2007 to provide for an increase in borrowing capacity from $525 million to $578 million.  The term of the loan is 8.5 years with semi-annual principal and interest payments beginning December 15, 2007, and the loan bears a fixed interest rate of 4.550 percent.   The loan also requires additional credit security support in the form of letters of credit or guarantees.

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