Marathon Oil (MRO)

Refining, Marketing and Transportation

RM&T segment income depends largely on our refining and wholesale marketing gross margin, refinery throughputs, retail marketing gross margins for gasoline, distillates and merchandise, and the profitability of our pipeline transportation operations.

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Table of Contents

Index to Financial Statements

Our refining and wholesale marketing gross margin is the difference between the prices of refined products sold and the costs of crude oil and other charge and blendstocks refined, including the costs to transport these inputs to our refineries, the costs of purchased products and manufacturing expenses, including depreciation. The crack spread is a measure of the difference between market prices for refined products and crude oil, commonly used by the industry as an indicator of the impact of price on the refining margin. Crack spreads can fluctuate significantly, particularly when prices of refined products do not move in the same relationship as the cost of crude oil. As a performance benchmark and a comparison with other industry participants, we calculate Midwest (Chicago) and U.S. Gulf Coast crack spreads that we feel most closely track our operations and slate of products. Posted Light Louisiana Sweet (“LLS”) prices and a 6-3-2-1 ratio of products (6 barrels of crude oil producing 3 barrels of gasoline, 2 barrels of distillate and 1 barrel of residual fuel) are used for the crack spread calculation. The following table lists calculated average crack spreads by quarter for the Midwest (Chicago) and Gulf Coast markets in 2008.

In addition to the market changes indicated by the crack spreads, our refining and wholesale marketing gross margin is impacted by factors such as the types of crude oil and other charge and blendstocks processed, the selling prices realized for refined products, the impact of commodity derivative instruments used to mitigate price risk and the cost of purchased products for resale. We process significant amounts of sour crude oil which can enhance our profitability compared to certain of our competitors, as sour crude oil typically can be purchased at a discount to sweet crude oil. Finally, our refining and wholesale marketing gross margin is impacted by changes in manufacturing costs, which are primarily driven by the level of maintenance activities at the refineries and the price of purchased natural gas used for plant fuel.

Our 2008 refining and wholesale marketing gross margin was the key driver of the 43 percent decrease in RM&T segment income when compared to 2007. Our average refining and wholesale marketing gross margin per gallon decreased 37 percent, to 11.66 cents in 2008 from 18.48 cents in 2007, primarily due to the significant and rapid increases in crude oil prices early in 2008 and lagging wholesale price realizations.

Our retail marketing gross margin for gasoline and distillates, which is the difference between the ultimate price paid by consumers and the cost of refined products, including secondary transportation and consumer excise taxes, also impacts RM&T segment profitability. While on average demand has been increasing for several years, there are numerous factors including local competition, seasonal demand fluctuations, the available wholesale supply, the level of economic activity in our marketing areas and weather conditions that impact gasoline and distillate demand throughout the year. In 2008, demand began to drop due to the combination of significant increases in retail petroleum prices and a broad slowdown in general activity. The gross margin on merchandise sold at retail outlets has historically been more constant.

The profitability of our pipeline transportation operations is primarily dependent on the volumes shipped through our crude oil and refined products pipelines. The volume of crude oil that we transport is directly affected by the supply of, and refiner demand for, crude oil in the markets served directly by our crude oil pipelines. Key factors in this supply and demand balance are the production levels of crude oil by producers, the availability and cost of alternative modes of transportation, and refinery and transportation system maintenance levels. The volume of refined products that we transport is directly affected by the production levels of, and user demand for, refined products in the markets served by our refined product pipelines. In most of our markets, demand for gasoline peaks during the summer and declines during the fall and winter months, whereas distillate demand is more ratable throughout the year. As with crude oil, other transportation alternatives and system maintenance levels influence refined product movements.

Refining, Marketing and Transportation

RM&T segment income depends largely on our refining and wholesale marketing gross margin, refinery throughputs, retail marketing gross margins for gasoline, distillates and merchandise, and the profitability of our pipeline transportation operations.

40

Table of Contents

Index to Financial Statements

Our refining and wholesale marketing gross margin is the difference between the prices of refined products sold and the costs of crude oil and other charge and blendstocks refined, including the costs to transport these inputs to our refineries, the costs of purchased products and manufacturing expenses, including depreciation. The crack spread is a measure of the difference between market prices for refined products and crude oil, commonly used by the industry as an indicator of the impact of price on the refining margin. Crack spreads can fluctuate significantly, particularly when prices of refined products do not move in the same relationship as the cost of crude oil. As a performance benchmark and a comparison with other industry participants, we calculate Midwest (Chicago) and U.S. Gulf Coast crack spreads that we feel most closely track our operations and slate of products. Posted Light Louisiana Sweet (“LLS”) prices and a 6-3-2-1 ratio of products (6 barrels of crude oil producing 3 barrels of gasoline, 2 barrels of distillate and 1 barrel of residual fuel) are used for the crack spread calculation. The following table lists calculated average crack spreads by quarter for the Midwest (Chicago) and Gulf Coast markets in 2008.

In addition to the market changes indicated by the crack spreads, our refining and wholesale marketing gross margin is impacted by factors such as the types of crude oil and other charge and blendstocks processed, the selling prices realized for refined products, the impact of commodity derivative instruments used to mitigate price risk and the cost of purchased products for resale. We process significant amounts of sour crude oil which can enhance our profitability compared to certain of our competitors, as sour crude oil typically can be purchased at a discount to sweet crude oil. Finally, our refining and wholesale marketing gross margin is impacted by changes in manufacturing costs, which are primarily driven by the level of maintenance activities at the refineries and the price of purchased natural gas used for plant fuel.

Our 2008 refining and wholesale marketing gross margin was the key driver of the 43 percent decrease in RM&T segment income when compared to 2007. Our average refining and wholesale marketing gross margin per gallon decreased 37 percent, to 11.66 cents in 2008 from 18.48 cents in 2007, primarily due to the significant and rapid increases in crude oil prices early in 2008 and lagging wholesale price realizations.

Our retail marketing gross margin for gasoline and distillates, which is the difference between the ultimate price paid by consumers and the cost of refined products, including secondary transportation and consumer excise taxes, also impacts RM&T segment profitability. While on average demand has been increasing for several years, there are numerous factors including local competition, seasonal demand fluctuations, the available wholesale supply, the level of economic activity in our marketing areas and weather conditions that impact gasoline and distillate demand throughout the year. In 2008, demand began to drop due to the combination of significant increases in retail petroleum prices and a broad slowdown in general activity. The gross margin on merchandise sold at retail outlets has historically been more constant.

The profitability of our pipeline transportation operations is primarily dependent on the volumes shipped through our crude oil and refined products pipelines. The volume of crude oil that we transport is directly affected by the supply of, and refiner demand for, crude oil in the markets served directly by our crude oil pipelines. Key factors in this supply and demand balance are the production levels of crude oil by producers, the availability and cost of alternative modes of transportation, and refinery and transportation system maintenance levels. The volume of refined products that we transport is directly affected by the production levels of, and user demand for, refined products in the markets served by our refined product pipelines. In most of our markets, demand for gasoline peaks during the summer and declines during the fall and winter months, whereas distillate demand is more ratable throughout the year. As with crude oil, other transportation alternatives and system maintenance levels influence refined product movements.

Refining, Marketing and Transportation

Refining, Marketing and Transportation

The Garyville refinery expansion is expected to be completed and ready for start up in the fourth quarter of 2009. Total projected costs are now estimated to be $3.35 billion (excluding capitalized interest). This expansion will increase the refinery’s crude oil throughput capacity by 180 mbpd and will enable the refinery to provide an additional 7.5 million gallons of clean transportation fuels to the market each day.

Permits were obtained and construction commenced for the heavy oil upgrading and expansion project at our Detroit, Michigan, refinery in 2008. Due to delays in the projected production from Canadian oil sands and current market conditions, we have reevaluated the project construction schedule and now plan to complete this project in mid-2012. We now forecast the project will cost $2.2 billion (excluding capitalized interest), or about 15 percent more than the original budget, due primarily to additional costs associated with the project deferral as well as a scope change that will allow the refinery to process heavier and more acidic crude oils.

Through these investment projects, we expect to more than double our coking capacity by 2012, which should lead to lower feedstock costs and increased margins. In addition, as the new units comprising the Garyville refinery expansion reach full capacity utilization, we anticipate the percentage of distillate produced to increase.

We estimate that we will spend approximately $200 million in 2009 to comply with MSAT II regulations.

The above discussion includes forward-looking statements concerning the planned expansion of the Garyville refinery, the Detroit refinery heavy oil upgrading and expansion project and MSAT II regulations compliance costs. Some factors that could affect the Garyville, Detroit and MSAT II projects include transportation logistics, availability of materials and labor, unforeseen hazards such as weather conditions, other risks customarily associated with construction projects. These factors (among others) could cause actual results to differ materially from those set forth in the forward-looking statements.

Refining, Marketing and Transportation

The Garyville refinery expansion is expected to be completed and ready for start up in the fourth quarter of 2009. Total projected costs are now estimated to be $3.35 billion (excluding capitalized interest). This expansion will increase the refinery’s crude oil throughput capacity by 180 mbpd and will enable the refinery to provide an additional 7.5 million gallons of clean transportation fuels to the market each day.

Permits were obtained and construction commenced for the heavy oil upgrading and expansion project at our Detroit, Michigan, refinery in 2008. Due to delays in the projected production from Canadian oil sands and current market conditions, we have reevaluated the project construction schedule and now plan to complete this project in mid-2012. We now forecast the project will cost $2.2 billion (excluding capitalized interest), or about 15 percent more than the original budget, due primarily to additional costs associated with the project deferral as well as a scope change that will allow the refinery to process heavier and more acidic crude oils.

Through these investment projects, we expect to more than double our coking capacity by 2012, which should lead to lower feedstock costs and increased margins. In addition, as the new units comprising the Garyville refinery expansion reach full capacity utilization, we anticipate the percentage of distillate produced to increase.

We estimate that we will spend approximately $200 million in 2009 to comply with MSAT II regulations.

The above discussion includes forward-looking statements concerning the planned expansion of the Garyville refinery, the Detroit refinery heavy oil upgrading and expansion project and MSAT II regulations compliance costs. Some factors that could affect the Garyville, Detroit and MSAT II projects include transportation logistics, availability of materials and labor, unforeseen hazards such as weather conditions, other risks customarily associated with construction projects. These factors (among others) could cause actual results to differ materially from those set forth in the forward-looking statements.

Refining, Marketing and Transportation

Refining, Marketing and Transportation

Throughout 2007, we remained focused on our strategy of leveraging refining and marketing investments in core markets, as well as expanding and enhancing our asset base while controlling costs. Our 2007 average daily crude oil throughput and total refinery throughput were at record levels.

Construction continues on an expansion of our Garyville, Louisiana refinery with a total projected cost of $3.2 billion (excluding capitalized interest). This expansion will increase the refinery’s crude oil throughput capacity by 180 mbpd and, when completed in late 2009, will enable the refinery to provide an additional 7.5 million gallons of clean transportation fuels to the market each day.

In 2007, a heavy oil upgrading and expansion project at our Detroit, Michigan refinery was approved at a total projected cost of $1.9 billion (excluding capitalized interest). Construction is expected to begin in the first half of 2008, subject to obtaining the necessary permits from applicable regulatory agencies.

We also continue our investment in transportation and storage assets to increase our ability to blend and distribute ethanol. By mid-2008, we expect to have the capacity to blend to an “E-10” level (90 percent gasoline and 10 percent ethanol) across our entire gasoline distribution network.

We previously estimated that we would spend approximately $400 million over a four-year period beginning in 2008 to comply with Mobile Source Air Toxics II regulations relating to benzene. We have not finalized our strategy or cost estimates to comply with these recently promulgated requirements, but the cost estimates will increase and may be approximately $1 billion over a three-year period beginning in 2008. The cost estimates have increased due to better definition of the projects needed to meet the requirements of the finalized regulations and updated construction cost estimates.

The above discussion includes forward-looking statements concerning the planned expansion of the Garyville refinery, the Detroit refinery heavy oil upgrading and expansion project, our ethanol program and Mobile Source Air Toxics II regulations compliance costs. Some factors that could affect the Garyville and Detroit projects include necessary government and third-party approvals, transportation logistics, availability of materials and labor, unforeseen hazards such as weather conditions, other risks customarily associated with construction projects and crude oil supply. Factors that could affect our ethanol program include necessary government and third-party approvals, availability of materials and labor, unforeseen hazards such as weather conditions and other risks customarily associated with construction projects. The compliance cost estimates are subject to change as FEED work is completed in 2008. These factors (among others) could cause actual results to differ materially from those set forth in the forward-looking statements.

Refining, Marketing and Transportation

Refining, Marketing and Transportation

Downstream segment income was $4 million in the fourth quarter of 2007 and $2.077 billion for the year, compared to $533 million and $2.795 billion in the same periods of 2006, with the decrease in both periods primarily a result of lower refining and wholesale marketing gross margins. The refining and wholesale marketing gross margin per gallon was 4.80 cents in the fourth quarter of 2007, compared to 17.07 cents in the fourth quarter of 2006, and 18.48 cents for 2007, compared to 22.88 cents for 2006.

While the relevant market indicators [Light Louisiana Sweet (LLS) 6-3-2-1 crack spreads] in the Midwest (Chicago) and Gulf Coast markets were weaker in the fourth quarter of 2007 compared to the fourth quarter of 2006, the decline in Marathon’s refining and wholesale marketing gross margin was greater than that of the market indicators as the Company’s wholesale price realizations in the fourth quarter of 2007 did not increase over the comparable prior-year period as much as the average spot market prices used in the market indicators. In addition, the Company’s crude oil costs increased substantially more than the quarter-to-quarter change in average LLS prices would indicate, primarily due to the shift in market structure from a contango market in the fourth quarter of 2006 to a backwardated market in the fourth quarter of 2007. Though the relevant market indicators for the full year 2007 were stronger than in 2006, Marathon’s refining and wholesale marketing gross margin declined for that period primarily due to the significant and rapid increase in crude oil prices during the year and lagging wholesale price realizations as discussed. The refining and wholesale marketing gross margins for both the fourth quarter and full year 2007 were further reduced by higher manufacturing costs related to planned maintenance at several refineries. In addition to the lower refining and wholesale marketing gross margins, segment income was impacted by higher operating and administrative expenses in both periods.

Marathon’s refining and wholesale marketing gross margins included pre-tax derivatives losses of $427 million for the fourth quarter and $899 million for the full year 2007, compared to pre-tax derivative gains of $194 million and $400 million in the same periods of 2006. The derivative changes reflect both the realized effects of closed derivative positions as well as unrealized effects as a result of marking open derivative positions to market. Most derivatives have an underlying physical commodity transaction; however, the income effect related to the derivatives and the income effect related to the underlying physical transactions may not necessarily be recognized in net income in the same period.

Marathon Oil Corporation Reports Fourth Quarter and Full-Year 2007 Financial Results  page  6

Crude oil refined during the fourth quarter of 2007 averaged 956,000 barrels per day (bpd), which is consistent with the throughput achieved in the fourth quarter of 2006. Total refinery inputs were lower in the fourth quarter of 2007 compared to the fourth quarter of 2006, primarily due to the higher level of planned maintenance completed on the fluid catalytic cracking units at three of the Company’s refineries during the fourth quarter of 2007. Crude oil refined for the full year 2007 averaged a record 1,010,000 bpd, 30,000 bpd higher than 2006. Total refinery throughputs also averaged a record 1,224,000 bpd for the full year 2007. .

Speedway SuperAmerica LLC (SSA) gasoline and distillate gross margin per gallon averaged 11.31 cents during the fourth quarter of 2007, up nearly 1 percent from the 11.21 cents realized in the fourth quarter of 2006, and averaged 11.19 cents for the full year 2007, down 3 percent from the 11.56 cents realized in 2006. SSA’s same store merchandise sales increased 1.1 percent during the fourth quarter and 3.2 percent for the full year 2007.

In the fourth quarter of 2007, Marathon’s Board of Directors approved a projected $1.9 billion heavy oil upgrading and expansion project at the Company’s Detroit refinery. Construction is expected to begin in early 2008, subject to obtaining the necessary permits from applicable regulatory agencies.

Construction continues to progress on the projected $3.2 billion Garyville refinery expansion project which will increase the refinery’s capacity by 180,000 bpd. When completed in late 2009, this expansion will enable the refinery to provide an additional 7.5 million gallons of clean transportation fuels to the market each day.

Refining, Marketing and Transportation

        Throughout 2006, we remained focused on our strategy of leveraging refining and marketing investments in core markets, as well as expanding and enhancing our asset base while controlling costs. Our 2006 average daily crude oil throughput exceeded the record throughput achieved in 2005.

        In 2006, our Board of Directors approved a projected $3.2 billion expansion of our Garyville refinery by 180 mbpd to 425 mbpd, which will increase our total refining capacity to 1.154 mmbpd. We recently received air permit approval from the Louisiana Department of Environmental Quality for this project and construction is expected to begin in mid-2007, with startup planned for the fourth quarter of 2009. When completed, this expansion will enable the refinery to provide an additional 7.5 million gallons of clean transportation fuels to the market each day.

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        We have also commenced front-end engineering and design for a potential heavy oil upgrading project at our Detroit refinery which would allow us to process increased volumes of Canadian oil sand production and are undertaking a feasibility study for a similar upgrading project at our Catlettsburg refinery.

        In 2006, we signed a definitive agreement forming a joint venture that will construct and operate one or more ethanol production plants. Our partner in the joint venture will provide the day-to-day management of the plants, as well as grain procurement, and distillers dried grain marketing and ethanol management services. This venture will enable us to maintain the reliability of a portion of our future ethanol supplies. Together with our partner, we selected the venture's initial plan site, Greenville, Ohio, and construction has commenced on a 110 million gallon per year ethanol facility. The facility is expected to be operational as soon as the first quarter of 2008.

        The above discussion includes forward-looking statements concerning the planned expansion of the Garyville refinery, potential heavy oil refining upgrading projects and a joint venture that would construct and operate ethanol plants. Some factors that could affect the Garyville expansion project and the ethanol plant construction, management and development include necessary government and third party approvals, transportation logistics, availability of materials and labor, unforeseen hazards such as weather conditions and other risks customarily associated with construction projects. The Garyville project may be further affected by crude oil supply. These factors (among others) could cause actual results to differ materially from those set forth in the forward-looking statements. Factors that could affect the heavy oil refining upgrading projects include unforeseen difficulty in negotiation of definitive agreements, results of front-end engineering and design work, approval of our Board of Directors, inability or delay in obtaining necessary government and third-party approvals, continued favorable investment climate, and other geological, operating and economic considerations.

Refining, Marketing and Transportation

        Throughout 2006, we remained focused on our strategy of leveraging refining and marketing investments in core markets, as well as expanding and enhancing our asset base while controlling costs. Our 2006 average daily crude oil throughput exceeded the record throughput achieved in 2005.

        In 2006, our Board of Directors approved a projected $3.2 billion expansion of our Garyville refinery by 180 mbpd to 425 mbpd, which will increase our total refining capacity to 1.154 mmbpd. We recently received air permit approval from the Louisiana Department of Environmental Quality for this project and construction is expected to begin in mid-2007, with startup planned for the fourth quarter of 2009. When completed, this expansion will enable the refinery to provide an additional 7.5 million gallons of clean transportation fuels to the market each day.

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        We have also commenced front-end engineering and design for a potential heavy oil upgrading project at our Detroit refinery which would allow us to process increased volumes of Canadian oil sand production and are undertaking a feasibility study for a similar upgrading project at our Catlettsburg refinery.

        In 2006, we signed a definitive agreement forming a joint venture that will construct and operate one or more ethanol production plants. Our partner in the joint venture will provide the day-to-day management of the plants, as well as grain procurement, and distillers dried grain marketing and ethanol management services. This venture will enable us to maintain the reliability of a portion of our future ethanol supplies. Together with our partner, we selected the venture's initial plan site, Greenville, Ohio, and construction has commenced on a 110 million gallon per year ethanol facility. The facility is expected to be operational as soon as the first quarter of 2008.

        The above discussion includes forward-looking statements concerning the planned expansion of the Garyville refinery, potential heavy oil refining upgrading projects and a joint venture that would construct and operate ethanol plants. Some factors that could affect the Garyville expansion project and the ethanol plant construction, management and development include necessary government and third party approvals, transportation logistics, availability of materials and labor, unforeseen hazards such as weather conditions and other risks customarily associated with construction projects. The Garyville project may be further affected by crude oil supply. These factors (among others) could cause actual results to differ materially from those set forth in the forward-looking statements. Factors that could affect the heavy oil refining upgrading projects include unforeseen difficulty in negotiation of definitive agreements, results of front-end engineering and design work, approval of our Board of Directors, inability or delay in obtaining necessary government and third-party approvals, continued favorable investment climate, and other geological, operating and economic considerations.

Refining, Marketing and Transportation

Market indicators for refining margins (crack spreads) in the Midwest and Gulf Coast were very strong during the fourth quarter of 2005.  As a result of these very strong refining margins, favorable wholesale margins, widened sweet/sour differentials and continued solid operating performance during the fourth quarter, as described below, the company estimates its refining and wholesale marketing margin per gallon will be more than double that reported for the fourth quarter 2004.

Crude run rates remained strong during October and November averaging 961,000 barrels per day (bpd).  The company estimates that crude runs for the quarter will average approximately 975,000 bpd.

The Speedway SuperAmerica LLC gasoline and distillate gross margin averaged approximately 15 cents per gallon in the first two months of the fourth quarter 2005, up substantially from both the fourth quarter 2004 and third quarter 2005.  However, the fourth quarter 2005 retail gasoline and distillate margin is expected to be somewhat lower than 15 cents per gallon due to substantially lower retail margins in December.

Refining, Marketing and Transportation

Our RM&T segment benefited from a higher refining and wholesale marketing margin in the third quarter due to the impact that Hurricanes Katrina and Rita had on refined product margins.  Our Garyville, Louisiana and Texas City, Texas refineries returned to operation safely with a minimum amount of downtime.  These refineries sustained minimal damage during these storms and were able to be brought back on-line within days after the hurricanes, allowing us to meet the demand for transportation fuels during this period of reduced supply.  The repair cost associated with these hurricanes was not significant.

While spot market gasoline and distillate prices peaked at all time highs during the third quarter our RM&T prices and realizations were constrained by competitive pricing at the wholesale and retail levels.

Refinery crude runs during the third quarter of 2005 averaged 979,600 bpd, with total throughput averaging 1,194,800 bpd.  This record throughput was achieved despite the loss of approximately 40,000 bpd of refinery capacity due to the hurricanes.  In addition to the temporary complete shut-down of the Garyville and Texas City refineries, we experienced minor reductions in throughputs at some of our Midwest refineries due to the temporary closure of crude oil pipelines originating in the U.S. Gulf Coast after Hurricane Katrina.

We expect our average crude oil throughput for the total year 2005 to exceed the crude oil throughput record set in 2004.

Speedway SuperAmerica LLC (“SSA”) realized increased same-store merchandise sales of approximately 11 percent when compared to the third quarter of 2004.  In addition, SSA also increased its same store gasoline sales volume during the third quarter by approximately 5 percent compared to the same quarter last year.

Our $300 million, 26,000 bpd Detroit, Michigan refinery crude oil throughput expansion and Tier II low sulfur fuels project is in the final stages of completion.  The refinery was shut down on September 29, 2005 to accommodate the installation and integration of key project components and other related work.  The refinery is expected to restart in

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Refining, Marketing and Transportation

•      Maintained outstanding refinery mechanical reliability and set new refinery throughput record

•      Resumed operations of Gulf Coast refineries within days of hurricanes

•      Expansion of Detroit refinery from 74,000 barrels per day (bpd) to 100,000 bpd enters final stages

Refining, Marketing and Transportation

Market indicators for refining margins (crack spreads) in the Midwest and Gulf Coast strengthened during the quarter as compared to the second quarter 2005 and were significantly higher than third quarter 2004 as reflected in the attached table. A significant portion of the increase occurred in September as a result of Hurricanes Katrina and Rita which also reduced throughputs at the company’s refineries.  However, sales realizations on the company’s entire refined product slate did not increase as rapidly as the changes in the spot

Refining, Marketing and Transportation

In the RM&T segment, MAP benefited from wider sweet/sour crude differentials and was able to run more sour crudes during the period, taking advantage of discounts on these feedstocks.  MAP continued to realize increased crude runs during the second quarter of 2005 that averaged 1,012,000 bpd, with total throughput averaging 1,187,000 bpd.  This operating performance positioned us to help meet rising demand for transportation fuels, while capturing the benefits of the improved refining margins.  When compared to the second quarter of 2004, the second quarter 2005 crack spread for the Midwest was slightly lower while the Gulf Coast crack spread was at a record high.

MAP expects its average crude oil throughput for the total year 2005 to exceed the crude oil throughput record set in 2004.

Speedway SuperAmerica LLC (“SSA”) realized increased same-store merchandise sales of over 10 percent when compared to the second quarter of 2004.

MAP continued to make progress on its Detroit refinery expansion project during the quarter.  This approximately $300 million project, which remains on schedule for completion during the fourth quarter of 2005, is expected to increase the refinery’s crude processing capacity from 74,000 bpd to 100,000 bpd and enable it to meet the Federal Tier II low-sulfur fuels regulations which become fully effective in 2006.

MAP also completed its purchase of a 388,000 barrel light products terminal located in Ft. Lauderdale, Florida.  This purchase will increase MAP’s storage capacity at Ft. Lauderdale by more than 70 percent, enabling MAP to better serve the growing Florida market, improve logistics and to add flexibility to its product sourcing.

The above discussion includes forward-looking statements with respect to refinery throughputs and the Detroit capital project.  Some factors that could potentially cause the actual results from the Detroit construction project to be different than expected include availability of materials and labor, unforeseen hazards such as weather conditions, and other risks customarily associated with construction projects.  Some factors that could affect refinery throughputs include unexpected downtime due to operating problems, weather conditions, and labor issues.  These factors (among others) could cause actual results to differ materially from those set forth in the forward-looking statements.

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