Marathon to Return to Libya

Marathon Oil Corporation, in conjunction with its partners in the former Oasis Group, has reached agreement with the Libyan National Oil Corporation on the terms under which the companies will return to their former oil and gas exploration and production operations in the Waha concessions in Libya.

Marathon and ConocoPhillips each hold a 16.33 percent interest in the Waha concessions, with Amerada Hess holding an 8.16 percent interest, and the Libyan National Oil Corporation holding the remaining 59.16 percent interest. The concessions, which currently produce approximately 350,000 barrels of oil per day, encompass almost 13 million acres located in the Sirte Basin, which is one of the most prolific oil and gas producing areas of Libya, and which contains sizable undeveloped oil and gas resources. Marathon anticipates adding in excess of 160 million barrels of oil equivalent to the company's proved reserves as a result of the re-entry into Libya. In addition, the company expects to add approximately 40-45,000 net barrels per day of production during 2006.

"This is a historic day for Marathon and our partners," said Clarence P. Cazalot, Jr., Marathon president and CEO. "We are pleased to be rejoining our longtime friends at the Libyan National Oil Corporation and the Waha operating company. We look forward to assisting in the further exploration and development of Waha's significant oil and gas resources, improving productivity from the existing fields and to providing gas supplies for the Libyan economy and for export."

The fiscal terms will be essentially the same as the terms in effect at the time of the suspension of the partners' activities in 1986. The reentry terms include a 25-year extension of the concessions through 2031-34, and a payment of $1.3 billion to the Libyan National Oil Corporation ($520 million net to Marathon) for reentry and the extension of the concessions. In addition, the companies will make a contribution to unamortized investments made since 1986 of $530 million ($212 million net to Marathon), that was agreed to be paid as part of the 1986 standstill agreement to hold the assets in escrow for the U.S. partners.

Since 1986, the Waha concessions have been operated by Waha Oil Company, a wholly owned subsidiary of the Libyan National Oil Corporation. During these years, Waha Oil Company has applied its skills to maintain operations and add to the hydrocarbon resource.

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Posted 17/01/06

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