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MRO » Topics » Outlook

This excerpt taken from the MRO 10-K filed Feb 27, 2009.

Outlook

STYLE="margin-top:12px;margin-bottom:0px">Capital, Investment and Exploration Budget

SIZE="2">Our Board of Directors approved a capital, investment and exploration budget of $5,738 million for 2009, which includes budgeted capital expenditures of $5,547 million. This represents a 24 percent decrease from 2008 spending. The focus of
our 2009 budget is to maintain solid production performance, enhance our downstream business and provide necessary investments in mid- and long-term growth projects.

FACE="Times New Roman" SIZE="2">The budget includes worldwide exploration and production spending of $2,468 million. A significant amount of this budget, 45 percent, is targeted on projects that will sustain and grow production in the short-term,
including domestic assets such as those in the Bakken Shale and Piceance Basin and international development projects like Volund in Norway. Mid-term production growth projects such as Droshky and Ozona in the Gulf of Mexico and emerging resource
plays in the Marcellus and Woodford Shales account for 34 percent of the 2009 budget. Long-term projects will require about 20 percent of budgeted funds in 2009. The PSVM development on Angola Block 31, the Gudrun development in Norway, as well as
exploration in the Gulf of Mexico, Angola, Norway and Indonesia are our significant long-term projects.

The budget includes $887 million
for the Oil Sands Mining segment in 2009, primarily for the continuation of Expansion 1. This is slightly lower than 2008 spending due in part to the stronger U.S. dollar and to the expected deferral of some nonessential projects.

STYLE="margin-top:12px;margin-bottom:0px; text-indent:3%">The budget includes $1,944 million for RM&T projects, with about 52 percent budgeted for the Garyville refinery expansion and 17 percent for the
Detroit refinery heavy oil upgrading and expansion project. The remainder of the budget is allocated to maintaining facilities and meeting regulatory requirements, notably the Mobile Source Air Toxics (“MSAT”) regulations that will be
effective at the beginning of 2011.

The remaining $439 million relates to capitalized interest and corporate activities.

STYLE="margin-top:12px;margin-bottom:0px; text-indent:3%">The forward-looking statements about our capital, investment and exploration budget are based on current expectations, estimates and projections and are
not guarantees of future performance. Actual results may differ materially from these expectations, estimates and projections and are subject to certain risks, uncertainties and other factors, some of which are beyond our control and are difficult
to predict. Some factors that could cause actual results to differ materially include prices of and demand for crude oil, natural gas and refined products, actions of competitors, disruptions or interruptions of our production or refining operations
due to the shortage of skilled labor and unforeseen hazards such as weather conditions, acts of war or terrorist acts and the governmental or military response, and other operating and economic considerations.

STYLE="margin-top:12px;margin-bottom:0px">Exploration

Major exploration activities are
currently underway or under evaluation worldwide.

Angola – We hold a 10 percent outside-operated interest in offshore Block 31
and a 30 percent outside-operated interest in offshore Block 32. We plan to participate in four to six exploration or appraisal wells in these deepwater blocks in 2009. Four potential development hubs have been identified on these two blocks and we
continue to evaluate our discoveries for future development.

Norway – We hold interests in over 510,000 acres offshore Norway
and plan to continue our exploration efforts there. In 2009, exploration drilling is expected to commence on additional prospects with the potential to be tied back to the Alvheim complex.

STYLE="margin-top:12px;margin-bottom:0px; text-indent:3%">Gulf of Mexico – We plan to participate in one to three exploration wells during 2009. The exploration success on the Shenandoah prospect was
announced in February 2009 by the operator. We own a 10 percent outside-operated interest in this prospect. Additional prospects have been identified in the Gulf of Mexico deepwater leases acquired in 2007 and 2008. These projects make up the core
of our 2009 through 2010 Gulf of Mexico exploration drilling plans.

 


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Table of Contents


Index to Financial Statements


Indonesia – We continue to evaluate seismic data on the Pasangkayu Block offshore Indonesia
and plan to start exploratory drilling there in early 2010. We are the operator of this block and hold a 70 percent interest. Evaluation of the Bone Bay Block offshore Indonesia, which we were awarded in 2008, continues with plans to collect seismic
data in 2010. Exploratory drilling on this block could begin in 2011. We have a 49 percent interest in the Bone Bay Block and are the operator.

SIZE="2">U.S. onshore – We announced a discovery in the Woodford Shale in January 2009. We hold 30,000 net acres in the Woodford Shale resource play in the Anadarko Basin of Oklahoma and plan to participate in more horizontal wells in
2009. We also hold prospective acreage in two emerging shale resource plays in the U.S. In the Appalachian Basin we hold 65,000 net acres in the Marcellus Shale resource play in Pennsylvania and West Virginia. We also hold 25,000 net acres,
primarily in Texas, in the Haynesville Shale resource play in North Louisiana and East Texas . Our plans call for initial drilling on some of these leases in 2009.

FACE="Times New Roman" SIZE="2">Equatorial Guinea – We are evaluating development scenarios for the Deep Luba and Gardenia discoveries on the Alba Block, one of which includes production through the Alba field infrastructure. We own a 63
percent interest in the Alba Block and serve as operator.

"Outlook" elsewhere:

Valero Energy (VLO)
ConocoPhillips (COP)
The AES Corporation (AES)
Anadarko Petroleum (APC)
Canadian Natural Resources (CNQ)
Dominion Resources (D)
Murphy Oil (MUR)
ONEOK (OKE)
SuperValu (SVU)
Weatherford International (WFT)
KOHLS CORPORATION (KSS)
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