Marathon Oil (MRO)

Open Derivative Positions as of December 31, 2007 and Sensitivity Analysis

At year end our E&P segment held open derivative contracts to mitigate the price risk on natural gas held in storage or purchased to be marketed with our own natural gas production in amounts that were in line with

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Table of Contents

Index to Financial Statements

normal levels of activity. At December 31, 2007, we had no open derivative contracts related to our future sales of liquid hydrocarbons and natural gas and therefore remained substantially exposed to market prices of these commodities.

At October 18, 2007, Western held crude oil put options purchased in October 2005 for the three-year period beginning January 1, 2007. The premiums for the purchased put options had been partially offset through the sale of call options for the same three-year period, resulting in a net premium liability. Payment of the net premium liability is deferred until the settlement of the option contracts. As of December 31, 2007, the following put and call options were outstanding:

At year end our RM&T segment held open derivative contracts in amounts that were in line with normal levels of activity.

Sensitivity analysis of the incremental effects on income from operations (“IFO”) of hypothetical 10 percent and 25 percent changes in commodity prices for open commodity derivative instruments as of December 31, 2007, is provided in the following table. The direction of the price change used in calculating the sensitivity amount for each commodity reflects that which would result in the largest incremental decrease in IFO when applied to the commodity derivative instruments used to hedge that commodity.

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Table of Contents

Index to Financial Statements

Open
Derivative Positions as of December 31, 2007 and Sensitivity Analysis

At year end our E&P segment held open derivative
contracts to mitigate the price risk on natural gas held in storage or purchased to be marketed with our own natural gas production in amounts that were in line with

62

Table of Contents

Index to Financial Statements

normal levels of activity. At December 31, 2007, we had no open derivative contracts related to our future sales of liquid hydrocarbons and natural gas
and therefore remained substantially exposed to market prices of these commodities.

At October 18, 2007, Western held crude oil put
options purchased in October 2005 for the three-year period beginning January 1, 2007. The premiums for the purchased put options had been partially offset through the sale of call options for the same three-year period, resulting in a net
premium liability. Payment of the net premium liability is deferred until the settlement of the option contracts. As of December 31, 2007, the following put and call options were outstanding: