Marathon Oil (MRO)

Segment Results

Total segment income was $455 million in the fourth quarter of 2007 and $3.875 billion for the full year 2007 compared with $833 million and $4.814 billion in the same periods of 2006.

Segment Results

        Segment income for the first quarters of 2007 and 2006 is summarized in the following table.

        United States E&P income in the first quarter of 2007 decreased $95 million, or 39 percent, compared to the first quarter of 2006. Pretax income decreased $150 million and the effective income tax rate increased slightly from 37 percent to 38 percent. The decrease in pretax income was primarily the result of revenue decreases from lower liquid hydrocarbon and natural gas sales volumes and realized natural gas prices as discussed above.

        International E&P income in the first quarter of 2007 increased $15 million, or 7 percent, from the first quarter of 2006, primarily due to the effective income tax rate decline from 60 percent to 58 percent. International pretax income was flat as a decrease in exploration expenses and an increase in revenues from higher liquid hydrocarbon sales volumes, primarily in Libya and Equatorial Guinea, were mostly offset by declines in natural gas sales volumes and in realized prices for liquid hydrocarbons and natural gas.

        RM&T segment income in the first quarter of 2007 increased $26 million, or 8 percent, from the first quarter of 2006. Pretax income increased $20 million and the effective income tax rate declined from 39 percent to 36 percent. The increase in RM&T pretax income is primarily a result of increases in SSA's gasoline and distillates gross margin and merchandise gross margin. The SSA gasoline and distillates gross margin averaged 12.17 cents per gallon in the first quarter of 2007 compared to 10.55 cents per gallon in the first quarter of 2006, while the merchandise gross margin grew to $160 million in the first quarter of 2007 from $148 million in the first quarter of 2006.

        IG segment income in the first quarter of 2007 increased $11 million, or 137 percent, from the first quarter of 2006 primarily as a result of increased income from Atlantic Methanol Production Company LLC ("AMPCO"). Average methanol prices realized by AMPCO were 48 percent higher in the first quarter of 2007 than they were in the comparable quarter of 2006.

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Total segment income was $1.435 billion in third quarter 2005, compared with $760 million in third quarter 2004.

Total segment income was $1.610 billion in second quarter 2005, compared with $1.007 billion in second quarter 2004.

Total segment income was $772 million in first quarter 2005, compared with $528 million in first quarter 2004.

** See Preliminary Supplemental Statistics on page 8 for a reconcilement of segment income to income from operations as reported under generally accepted accounting principles.

Total segment income was $855 million in fourth quarter 2004 and $3.150 billion for full year 2004, compared with $459 million and $2.396 billion in the same periods in 2003.