Howard Weil 2010 Energy Conference

Transcription

1 Howard Weil 2010 Energy Conference March 22, 2010 Clarence P. Cazalot, Jr. President and CEO

2 Forward-Looking Statement Except for historical information, this presentation contains forward-looking information including, but not limited to, the timing and levels of the Company's worldwide liquid hydrocarbon and natural gas production, synthetic crude production, AOSP Expansion 1, Droshky, Ozona, Angola and other potential development projects, potential new leaseholds in Poland, anticipated future exploratory and development drilling activity, potential developments in Indonesia, expansion plans for Libya, proved reserves of liquid hydrocarbons and natural gas, expansion plans for oil sands mining, the Detroit Heavy Oil Upgrade project, and the capital, investment and exploration spending forecast. These statements are subject to risks and uncertainties that could cause actual results to differ materially from those expressed or implied from such information. In accordance with the safe harbor provisions of the Private Securities Litigation Reform Act of 1995, Marathon Oil Corporation has included in its Annual Report on Form 10-K for the year ended December 31, 2009, cautionary language identifying important factors, though not necessarily all such factors, that could cause future outcomes to differ materially from those set forth in the forward-looking statements. See definitions of terms used throughout this presentation in the Appendix. 1 Cautionary Note to U.S. Investors The United States Securities and Exchange Commission (SEC) permits oil and gas companies, in their filings with the SEC, to disclose only proved, probable, or possible reserves that a company has demonstrated by actual production or conclusive formation tests to be economically and legally producible under existing economic and operating conditions. Marathon Oil Corporation uses certain terms in this presentation to refer to reserves other than proved, probable, or possible reserves, which the SEC s guidelines strictly prohibit us from including in filings with SEC. These terms include resource base, net resource, net resource potential, net unrisked resource potential, in-situ net resource, gross resource potential, gross unrisked potential and other similar terms, which are not yet classified as proved, probable, or possible reserves. U.S. investors are urged to consider closely the disclosures in Marathon's periodic filings with the SEC, available from us at 5555 San Felipe, Houston, Texas and the Company's website at You can also obtain this information from the SEC by calling SEC-0330.

3 Corporate Strategy Upstream will be driver of company growth Top quartile Downstream will provide solid returns and free cash flow Deliver top quartile financial and shareholder returns 2 Success Defined by Top Quartile TSR

4 Upstream Business Goals Increase production by 3-5% per year Maintain R/P ratio 10 Competitive F&D costs and margins Strategies Commercialize and develop existing unproved resource base Capture new resource / value through exploration and selective acquisitions Safe, low-cost, reliable operations Execute major developments on time and at competitive costs Deploy technologies to increase value 3

5 Upstream Production Solid record of growth 500 duction (MB BOED) Net Pro E&P and Oil Sands Mining, available for sale

6 E&P Cost Structure Best-in-Class Among Peer Group 40 Upstream Cost ($/BOE) Peer Group Marathon MRO Rank Companies* *Current companies ranked: APC, BP, CVX, COP, XOM, HES, MRO, OXY, RDS Sources: Credit Suisse, Company Reports includes production cost, production taxes, DD&A & exploration expense MRO does not include Oil Sands Mining or Equity Affiliates; 2009 data excludes Gabon & Ireland discontinued operations

7 Increased Resource Base E&P and Oil Sands Mining 14 Unproved 12 Proved 10.1 BOE) Resource (B Net Mean YE Production Dispositions Oil Sands Additions Other Net Additions YE 2009 YE This chart represents the mean or expected value. Total Resource under modernized Securities and Exchange Commission definitions is 10.1 BBOE and represents a high side, or P90 estimate.

8 Upstream Portfolio Canada Oil Sands Mining In-situ UK Brae Foinaven CSG Norway Alvheim Vilje Volund Gudrun United States Alaska Mid-Continent Permian Basin Rocky Mountains Powder River Bakken Shale Piceance Basin Woodford Shale Haynesville Shale Marcellus Shale 7 Gulf of Mexico Petronius Ewing Bank Troika Neptune Droshky Ozona Stones West Africa EG Angola Poland Kwidzyn Brodnica Orzechow Libya Faregh Dahra Jofra NC-98 North Gialo Deepwater Conventional Resource Unconventional Resource Integrated Gas Oil Sands Mining Indonesia Pasangkayu Bone Bay Kumawa

9 Upstream CapEx Outlook 4, CapEx ~$18 Billion 3,000 Conventional 37% Ca apex ($MM) 2,000 Unconventional 17% Oil Sands 13% 1,000 Deepwater 33% E 2011E 2012E 2013E 8 E&P, Integrated Gas and Oil Sands Mining CapEx defined as capital and exploration expenditures Excludes capitalized interest

10 Upstream Growth Projects Resource Plays Major Projects Net Productio on (MBOE/D D) E 2011E 9 E&P and Oil Sands, available for sale North America Resource Plays include Bakken, Piceance, Haynesville Shale, Marcellus Shale and Woodford Shale Major Projects include Alvheim, Vilje, Volund, Neptune, Droshky, Ozona, Faregh Phase 2 and Oil Sands Mining Expansion 1

11 Gulf of Mexico Droshky Development On Time & Under Budget 100% WI, Green Canyon Block 244 Sanctioned October 2008 at $1.3B First production mid-2010 Peak rate ~51 MBOED net Mid-30 API gravity crude ~60 MMBOE net resource ~26 MMBOE net proved reserves Subsea tie-back 4 development wells / 10 completions Bullwinkle GC200 GC244 C201 Troika Droshky 10 MRO Acreage Oil Development

12 North Dakota Bakken Exceeding Expectations 350,000 Net acres, WI ~83% 2009 Exit rate: >11 MBOED net Peak rate: ~22 MBOED net (2013) Typical well economics 1,280-acre Spacing Well & facility cost: ~$5.5MM Operating cost: <$5/BBL Total discount to WTI: <$6/BBL Net development cost: $16-20/BOE Bakken Net Production (MBOED) E Gross Production (BOED) Bakken Type Curve 0 11 Y1 Y2 Y3 Y4 Y5 Y6 Y7 Y8 Y9 Y10

13 North Dakota Bakken Acreage Optimization through Acquisitions & Dispositions Saskatchewan, Canada MONTANA A NORTH DAKOTA A Odysseus Cassandra MRO Acreage Areas of Evaluation Transaction Acres Time Original entry 187, Dispositionsiti -37, Acquisitions 110, Yellowstone Cazador Williston Myrmidon Paris Hector Marfa Ajax May 2006 (Entry) Grassroots leasing 90,000 Project Life Total 350,000 Saskatchewan, Canada MONTANA NORTH DAKOTA MRO Acreage Focus Areas M O N T A N A NORTH DAKOTA Williston Basin Bakken Williston Cazador SOUTH Myrmidon WYOMING DAKOTA Oil Paris Hector Ajax Marfa mi Development March 2010

14 North Dakota Bakken Technology Advantage Bakken composed of five distinct units Total MRO net Bakken system y 4.5 BBOE original oil in place ~100 MMBOE net resource (Middle Bakken) ~2% of the total Bakken system OOIP 2010 Integrated technology program Suite of evaluation wells in progress Flow capacity Geochemical correlations Stimulation & production testing Fluid content & mobility Cores & special core analysis Formation evaluation testing Rock dynamics Multi-microseismic (surface & downhole) Tiltmeter MRI, sonic scanner & imaging logs 13

15 Athabasca Oil Sands Project World-Class Asset 20% WI, 2 billion net synthetic crude total resource Muskeg River Mine net production capacity ~30 MBD Expansion 1 ~20 MBD net, start-up 2010 / 2011 Assessing additional de-bottlenecking / optimization ALBERTA C A N A D A Gros ss Production (MBD) Potential Debottlenecking Expansion 1 Muskeg River Mine Potential Major Expansions Potential Micro-Expansions 2050 Production before royalty; growth beyond Expansion 1 is illustrative of timing and volumes 14 Significant upside potential

16 Upstream Production Outlook Net Product tion (MBOED) % Oil 42% Gas 67% Oil 33% Gas Disposed producing assets E 2011E 15 E&P and Oil Sands Mining, available for sale Does not assume contribution from future potential exploration successes Disposed producing assets include Ireland (Kinsale Head & Seven Heads), Permian Basin, Giddings and Gabon

17 2012 and Beyond Growth Projects Unconventional Marcellus Haynesville Woodford d Poland Deepwater Angola Block 31 Angola Block 32 Stones Exploration Success (Shenandoah & Gunflint) Oil Sands Mining Future AOSP Expansions Conventional Libya Developments Gudrun Canadian In-situ Developments 16

18 Angola Deepwater New Core Area Large Resource Base Block 31, 10% WI Announced 19 total discoveries PSVM Development Conversion FPSO 150 MBD gross capacity Project sanctioned Development drilling starts 2011 / First production Evaluating potential second hub Block 32, 10% WI Announced 12 total discoveries Closed sale of 20% WI in Q Potential Eastern Development Area NW Block 32 evaluation ongoing BLOCK 31 10% WI MRO acreage Oil discovery Terra Leda Miranda Cordelia BLOCK 32 10% WI Portia Marte Venus Plutao Saturno Titania PSVM Development Area Ceres Potential Mid Development Area Hebe Tebe Juno Oberon Urano Astraea Dione Palas Alho Colorau Manjericao Cominhos Caril Gengibre Louro Mostarda Potential SE Development Area Cola Salsa Gindungo Canela Potential Eastern Development Area 40 KM 17

19 Canadian Oil Sands AOSP 20% Ownership Muskeg River (MRM) Jackpine (JM) Pierre River Net resource 2 BBBL net synthetic crude total resource Namur Pierre River Jackpine 2 18 In-situ Ownership Operated Namur 60% Birchwood 100% Outside-operated Ells River 20% Net resource >1 BBBL net bitumen Undergoing appraisal Ells River Birchwood In-situ Assets Fort McKay Muskeg River Jackpine Fort McMurray Mining Assets Mining + In-situ Net Resource >3 BBBL Bitumen & Net Synthetic Crude

20 2010 Exploration Drilling Program Marcellus 6-10 wells Woodford wells + Conv Haynesville / Bossier 3-4 wells Adding New & Building on Core Areas Norway 3-4 wells Satellite Tie-Backs Poland Shale Gas Transferring Skills to New Markets Gulf of Mexico 3-4 wells In Key Trends & Plays Libya 3-5 wells Support Ongoing Program Indonesia 2 wells High-Risk High-Reward Angola 1-2 wells Exploration Success Transferring to Development 19

21 Marcellus Shale Gas Building a New Core Area 75,000 Net acres, 70% operated MMBOE net resource potential 2009: Drilled 4 wells 2010: Drill 6-10 wells WI % Reducing well & facility costs Vertical: $2.6MM $2.3MM Horizontal: $4.3MM $3.7MM Managing water by filtering & re-use Obtaining pipeline capacity PENNSYLVANIA WEST VIRGINIA 50 Miles MRO Wells 20

22 Haynesville Shale Gas Adding to Legacy Business 25,000 Net acres, 70% operated Mostly held by production MMBOE net resource potential 2009: Drilled 1 well, WI 100% 2010: Drill 3-4 wells WI 80-85% Reducing well & facility costs 10 Miles TEXAS Shelby Co. Horizontal: $9.3MM $7.7MM Recent IPs > 15 MMCFD MRO Wells LOUISIANA 21

23 Poland Unconventional Early Entry into Potential Shale Gas Play Shale gas potential Lower Paleozoic shales thick 8,000-13,000 drill depth Total 814,000 net acres Brodnica license awarded Kwidzyń and Orzechów licenses previously awarded 100% WI 2D Seismic & 1 well commitment in exploration phase Pursuing additional licenses Large European gas market locally undersupplied Kwidzyń Marathon Licenses Brodnica Orzechów Existing Licenses 22

24 GOM Exploration Program Positioned in Key Trends & Plays >24 Prospects 60% Miocene 4+ Years of drilling opportunities Rigs under contract 40% Paleogene Plan to operate ~50% Net Unrisked Resource Potential ~1.2 BBOE M I O C E N E Shelf Deepwater P A L E O G E N E Shenandoah Flying Dutchman Stones Bronco Innsbruck Gunflint Mauna Kea Exploration Leases Discoveries Producing Leases 2010 Exploration Wells Appraisal Drilling

25 GOM Flying Dutchman/Bronco Prospects Green Canyon Miocene W Flying Dutchman (Proposed) GC512 #1 Knotty Head E Flying Dutchman objective Salt Knotty Head / Pony pay interval M. Mio L. Mio Black Pearl Flying Dutchman Knotty Head K2/Timon Bronco prospect p 24 Tonga Tahiti Catalina Big Foot Mad Dog 6000' Shenzi 0 9 Miles MRO Leases Oil GC511 63% WI & operator WD 3,700, PTD 30,000, well cost $135MM Three-way closure against salt feeder / weld Syncline separated from Knotty Head / Pony pay Gross unrisked potential: MMBOE Bronco: separate prospect, east half block

26 GOM Innsbruck Prospect Mississippi Canyon Miocene NW MC948 #2 Gunflint / Freedom Innsbruck (Proposed) SE Salt Oligocene M. Mio Tubular Bells 0 Miles 9 Oligocene 25 Appraisals Gunflint Innsbruck Thunderhorse Mauna Kea 7000' MRO Leases Oil Up to 55% WI & operator MC993 WD 6,270, PTD 30,000, well cost $135MM Three-way closure with stratigraphic pinchout Syncline separated from Gunflint / Freedom pay Gross unrisked potential: MMBOE

27 GOM Mauna Kea Prospect Atwater Valley Miocene SW Mauna Kea Thunderhorse NE Tubular Bells 0 Miles 9 Appraisals Thunderhorse Gunflint 7000' AT72 Salt M. Mio Oligocene Middle Miocene Pay Innsbruck Mauna Kea MRO Leases Oil 35% WI (outside-operated) WD 7,200, PTD 19,000, well cost $75MM Three-way closure with stratigraphic pinchout Southern margin of Thunderhorse sub-basin Gross unrisked potential: MMBOE 26

28 Indonesia Exploration High-Risk, High-Reward Opportunities 27 Pasangkayu Block 70% WI & operator Acquired 3D seismic Commitment wells 2 wells in 2010 Pasangkayu Kutei Basin >1 BBOE gross unrisked potential ~15 BBOE Block Bone Bay Block 49% WI & operator 2010 Acquired 2D seismic Drill 2011 Kumawa Block 49% WI & operator 2010 Acquired 2D seismic Drill 2012 S U L A W E S I Bone Bay Block ~3.3 million acres across 3 blocks I N D O N E S I A Kumawa Block MRO Acreage

29 Indonesia Pasangkayu Block Multiple Independent Prospects Regional structural high Rangkong 1 Favorable for carbonate reservoirs Focus for hydrocarbon migration Multiple, independent prospects 2 wells in Transocean GSF Explorer, 2Q 2010 Well cost: ~$50MM each Bravo gross unrisked potential: 250-1,000 MMBOE P k Romeo gross unrisked potential: MMBOE Romeo Pasangkayu 20km Bravo West Bravo W Romeo Eocene-Oligocene-Miocene Carbonate Reservoirs Bravo West Bravo 0 m E Sulawesi 28 Post-Miocene Basin Fill Oligo-Miocene Post-rift Source kitchen Eocene syn-rift Source & Secondary Reservoir 5000 m

30 Downstream Business Goal Deliver top quartile returns and free cash flow Strategies Safe, low-cost, reliable operations Refineries well positioned to address changes in marketplace Capture commercial advantage with strong logistical system Increase both retail and brand sales volumes 29 Enhancing Top-Tier Tier Downstream Assets

31 Focused & Integrated Asset Base Flexibility to Achieve Peer-Leading Results Refineries Terminals Pipelines Coastal water terminals Inland water terminals SSA Stations Brand Stations 30 Refineries Pipelines Inland water terminals Coastal water terminals Terminals

32 Marathon vs. Competitors (Pre-Tax Adjusted Domestic Operating Income per Barrel of Crude Oil Throughput) 15 MRO $/BB BL 10 5 Group Range MRO s Rank Companies Ranked* * Current companies ranked: BP, COP, CVX, MRO, SUN, TSO, VLO, XOM 31 Source: Company Reports

33 Garyville Refinery Pre-expansion 256 MBD Crude Rate 190 MBD Gasoline 95 MBD Diesel Post-expansion 436 MBD Crude Rate 290 MBD Gasoline 175 MBD Diesel 570 Employees 770 Employees 350 Full-time contractors 430 Full-time contractors 18 th Largest US refinery 4 th Largest US refinery 32 Enhancing Last Grassroots Refinery Built in US

34 Garyville Major Expansion Incremental Avg Annual After-Tax Cash Contribution $M MM 1, GME only, does not include base Garyville refinery Mars Crack Spread $ $ $ For illustrative purposes only; A simple, annual average of forecast results; Forecast based upon average pricing for inputs and outputs for each period as well as expected production rates and associated manufacturing costs Substantial Cash Flow Across Refining Cycle

35 U.S. Gulf Coast Crude Differentials $0.00 -$5.00 -$ $ $ $ E 2011E 2012E 2013E 2014E 2015E 2016E 2017E 2018E 2019E 2020E Maya-LLS Mars-LLS MRO Sweet/Sour Differential Forecast Sources: Maya LLS and Mars LLS, Purvin & Gertz; MRO Sweet / Sour Differential, MRO estimates based on above Purvin & Gertz forecast 34 $1 BBL Δ in MRO Sweet / Sour Differentials $150 MM After Tax Income

36 Downstream CapEx Outlook $MM 3,500 GME 3,000 2,500 2,000 1,500 DHOUP MSAT II Transportation & Logistics Speedway SuperAmerica Other 1,000 $700 - $ E 2011E 2012E 2013E 35 Excludes capitalized interest & foreign currency hedge impacts

37 Best Gasoline Brand in the US For a second consecutive year! EquiTrend Brand Survey, Harris InterActive 36

38 Financial Goal & Strategies Goal Deliver top quartile financial and shareholder returns Strategies Ensure capital program is value accretive Pay competitive dividend Optimize portfolio Control costs Strong capital structure and liquidity 37

39 CapEx Actuals & Outlook $9,000 $8,000 $7,000 Acquisitions Corporate RM&T Upstream $6,000 $MM $5,000 $4,000 $3,000 $2,000 $1,000 $ (A) 2008 (A) 2009 (A) 2010E 2011E 2012E 2013E Acquisitions include both capital and non-capital items Includes exploration program & capitalized interest 38

40 MRO ROCE vs XOI Recent returns have underperformed peers Group Median Marathon MRO s Rank Peer Group XOI includes APC, BP, COP, CVX, HES, MRO, OXY, RDS/A, REP, SUN, TOT, VLO, XOM

41 MRO Net PP&E Investments in major projects about to come on-stream 35 WIP 24% WIP 29% WIP 34% 30 $b Net PP&E In Service Assets Under Construction 40 Note : At year end 2009 GME Capital is included in Assets Under Construction

42 Competitor Dividend Yields 12% 10% 8% 6% 4% 2% 0% BP RDS/A TOT REP COP VLO CVX MRO XOM SUN OXY HES APC 41 *Source: Bloomberg, as of close 12/31/ Week Range

43 Cost Savings $8.1 $6.3 Total operating and SG&A expense down 22% vs $ Billions Upstream production up 8% during same period Notes: Operating costs exclude purchased crude oil, feedstocks, purchased energy expenses, DD&A, exploration expense and select other expenses Upstream production includes E&P recorded sales volumes (excl discontinued operations) plus synthetic crude oil sales

44 Net Debt-to-Total Capital Ratio Year-end % 40% 35% 30% 25% % 20% 15% 10% 5% 0% Flexibility to Fully Fund Capital Program Includes Industrial Revenue Bonds serviced by US Steel in accordance with the Financial Matters Agreement.

45 Why Marathon? Upstream business Solid near term growth leveraged to oil Future growth underpinned by significant resource base High quality impact exploration program underway Downstream business Diversified best-in-class business Potential for substantial upside with economic recovery and wider differentials Significant earnings / cash provider Financial Strong financial position Focused on improving financial / shareholder returns 44

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47 Appendix

48 Definitions Term Definition $ US dollars unless otherwise indicated AOSP APC API Gravity Available for Sale B BBBL BBL BBOE BD BOE BOED BP BTU Athabasca Oil Sands Project, a Canadian oil sands operation owned by RDS (60%), CVX (20%) and MRO (20%) Anadarko Petroleum Corporation American Petroleum Institute gravity, a measure of how heavy or light a petroleum liquid is compared to water Produced hydrocarbons Billion Billlion barrels Barrel Billion barrels of oil equivalent Barrels per day Barrel of oil equivalent Barrel of oil equivalent per day BP p.l.c. British thermal units 47

49 Definitions Term CAGR CapEx CO2 Conv COP CSG CVX DD&A DHOUP Definition Compound average growth rate, which is the annual growth rate calculated based on each year's previous number anchored to a base starting point Capital expenditures, cash investments in equity method investees, exploration costs that are expensed as incurred rather than capitalized such as geological and geophysical costs and certain staff costs, and other miscellaneous investment t expenditures Carbon dioxide Conventional ConocoPhillips Coal seam gas Chevron Corporation Depreciation, depletion and amortization Detroit Heavy Oil Upgrade Project Dividend Yield Calculated as follows: (4 x Most Recent Quarterly Dividend Rate) (Current Stock Price) 48

50 Definitions Term E Definition Estimated E-10 A fuel mixture of 10% ethanol and 90% gasoline E&P EG EG LNG EIA EOR FPSO GME GOM HES IG In-situ IP Exploration & Production, one of MRO s four business segments Equatorial Guinea Equatorial Guinea Liquified Natural Gas production facility Energy Information Administration Enhanced oil recovery Floating production, storage and offloading vessel Garyville Major Expansion project Gulf of Mexico Hess Corporation Integrated Gas, one of MRO s four business segments Oil sands too deep for mining that require steam-assisted gravity drainage to produce the bitumen Initial production rate 49

51 Definitions Term LLS LNG LTPD M MBD MBOD MBOED MCF MM MMBOE MMCFED MRI MRO MSAT Net Debt to Total Capital Ratio Definition Light Louisiana Sweet crude oil Liquefied natural gas Long tons per day Thousand Thousand barrels per day Thousand barrels of oil per day Thousand barrels of oil equivalent per day Thousand cubic feet per day Million Million barrels of oil equivalent Million cubic feet equivalent per day Magnetic Resonance Imaging Marathon Oil Corporation Mobile Source Air Toxics Calculated as follows: (Cash Adjusted Debt) (Total Stockholders' Equity + Cash Adjusted Debt) 50

52 Definitions Term Net Risked Resource NOL Oil Sands Mining or OSM OOIP OPIS OXY PADD Production Proved Reserves PP&E PSVM Definition As used in this presentation, the term resource represents the risked mean of the accumulation or our best estimate, where undrilled areas have been risked to reflect geologic uncertainty Net operating loss The business segment through which MRO s oil sands mining results are reported; MRO holds a 20% outside-operated interest in the Athabasca Oil Sands Project, an oil sands mining joint venture located in Alberta, Canada Original oil in place Oil Price Information Service Occidental Petroleum Corporation Petroleum Administration for Defense Districts Production available for sale Proved oil, natural gas and bitumen reserves determined under SEC requirements Property, Plant & Equipment Plutao, Saturno, Venus, Marte development area 51

53 Definitions Term PTD R/P RDS Recordable Incident Rate REP Reserves Resource RFS RM&T Definition Projected Target Depth Reserve/Production Royal Dutch Shell plc The number of cases of injury or illness per 200,000 work hours (equivalent to the hours worked by 100 full-time workers in a year) Repsol YPF, S.A. SEC proved oil and gas reserves and SEC proved bitumen mining reserves. As used in this presentation, the term resource represents the risked mean of the accumulation or our best estimate, where undrilled areas have been risked to reflect geologic uncertainty Renewable fuels standard, which was amended by the Energy Independence and Security Act of 2007 to require 36B gallons of renewable fuels by 2022 Refining, Marketing & Transportation, one of MRO s four business segments 52

54 Definitions Term ROCE ROZ SEC SCT SG&A SPT SSA SUN TAN TD TOC TtlDbt Total Debt Total Shareholder Return or TSR Definition Return on Capital Employed Residual oil zone Securities and Exchange Commission Special Corporation Tax Selling, General & Administrative Special Petroleum Tax Speedway SuperAmerica LLC Sunoco, Inc. Total acid number Total depth Total organic content Calculated as follows: (Long-term Debt + Short-term Debt) Calculated as follows: (Change in share price between the beginning and ending months in the calculation, based upon the monthly average determined by the number of business days in the relevant month) + (Dividends paid during the calculation period) (Beginning month share price) 53

55 Definitions Term TOT TSO WCS WD WTI WI XOI XOM Y YE YTD Definition Total S.A. Tesoro Corporation Western Canadian Select Water depth West Texas Intermediate crude, a type of crude oil used as a benchmark in oil pricing Working interest The Amex Oil Index, which includes the following companies: APC, BP, COP, CVX, HES, MRO, OXY, RDS, REP, SUN, TOT, VLO, XOM Exxon Mobil Corporation Year Year end Year to date 54

56 Sanctioned Developments Driving Production Growth to 2012 & Beyond Project MRO WI MRO- Operated First Production Peak Net Rate (MBOED) NORWAY Volund 65% GULF OF MEXICO Droshky 100% Ozona 68% CANADA AOSP Expansion 1 20% * LIBYA Faregh Phase II 16.3% ANGOLA Block 31NE PSVM 10% 2011 / *Production before royalty

57 Upstream CapEx Outlook E&P, Integrated Gas and Oil Sands Mining 4, E CapEx $3.5B Ca apex ($M MM) 3,000 2,000 1, E 2010E 2011E 2012E 2013E Exploration 19% Exploitation 3% Sanctioned Developments 36% Resource Plays 15% OSM 6% Base 16% Maint. 5% 56 CapEx defined as capital and exploration expenditures Excludes capitalized interest & foreign currency hedge impacts

58 Norway Additional Satellite Potential Low-Risk Exploration 10 KM Boa Volund U K Kameleon N O R W A Y Alvheim Kneler Viper Vilje East Kameleon South Kneler South Gekko Recent Marihøne A discovery 65% WI MMBOE gross resource potential Evaluations underway Several additional prospects Rigs secured for First production Marihøne B Satellite discovery Low-risk prospect Pipelines Projected Gross Oil Production Marihøne A MBOD

59 Permian Basin Pioneered Horizontal Drilling MBOED 2009: Completed ~$300MM disposition Retained outside-operated operated interests 12 fields; CO2 EOR projects continue Three most significant fields: Seminole - WI ~14% Completed ROZ Stage 1 July 2009 Vacuum - WI ~26% Wasson - WI ~12% 2009E Exit rate: 7 MBOED Net resource ~55 MMBOE Projected Permian Production Empire Fren Monument Drinkard Sand Dunes Vacuum Hobbs Gomez Levelland Wasson Seminole Roberston Fullerton Oil Development Gas Development 200 mi

60 Rocky Mountain Oil Long Life & Low Decline Wyoming s No. 1 oil producer Proven development track record Operated activity in 13 fields High WI: ~98% Quality margins Strong cash flow & earnings Price driven activity levels Marketing advantage 2009E Rate: 19 MBOED Net resource >100 MMBOE 30 Projected Rocky Mountain Oil Production M O N T A N A N O R T H D A K O T A MBOED Bighorn Basin Bighorn Basin Wind River Wind Basin River Basin WYOMING M I N G S O U T H D A K O T A Oil Development 100 mi

61 GOM Catalina Prospect Green Canyon Miocene NW Catalina (Proposed) WR29 #3 Big Foot WR29 #2 Big Foot SE Salt Main Big Foot pay interval Flying Dutchman 60 Tonga Tahiti Catalina Big Foot Knotty Head Mad Dog 6000' K2/Timon Shenzi 0 9 Miles MRO Leases Oil GC996 M. Mio L. Mio Paleogene Cretaceous 50% WI & operator WD 5,000, PTD 30,000, well cost $130MM Three-way closure against salt keel Syncline separated from Big Foot pay Gross unrisked potential: MMBOE Additional upside in Paleogene Additional pay in Paleogene

62 Oil Sands Mining CapEx Outlook Base and Expansion 1 Tailings Management Ne et ($MM) 1,200 1, Expansion 1 (Maintenance) Expansion 1 (Growth) Base (Maintenance) E 2011E 2012E 2013E 61 CapEx excludes future expansions Excludes capitalized interest & foreign currency hedge impacts

63 At-Risk Refineries Capacity US Refineries at Risk (PADDs I-III) 2013 Capacity (MBD) Potential Closures Count Potential Closures (MBD) Capacity After Closures (MBD) Change PADD I PADD II PADD III Total I-III Total I-V 1,884 3,928 9,180 14,992 18, ,571 1,571 1,549 3,356 8,516 13,421 17,241 18% 15% 7% 10% 8% 62 Sources: Media reports, Credit Suisse, OPIS, Purvin & Gertz, MRO estimates

64 RFS II & US Gasoline Demand 10 RFS II Cellulosic Ethanol: Technically, economically & blend wall challenged MM MBD 9 8 Actual & MRO Forecast of US Gasoline Demand E-10 Blend Wall Hydrocarbon Gasoline Component Actual Ethanol in Surplus of RFS Questionable RFS Volume RFS Ethanol Within E-10 Limit RFS Ethanol Over E-10 Blend Wall Sources: EIA, MRO Economics 63 Capitalizing on Historical Ethanol Position Early Blending Investment Paying Dividends

65 Detroit Heavy Oil Upgrade Project $2.2B Upgrade & Expansion BD Coker 28,000 Distillate Hydrotreater 33,000 Additional Heavy Crude Runs 80,000 Sulfur Plants (LTPD) 280 Hydrogen Plant (3 rd Party) 64 A Unique Opportunity

66 WCS vs. LLS 800 Annual Pre-Tax Feedstock Savings* MM 400 $ E WCS vs. LLS Price Differential ($26.07) ($22.38) ($25.68) ($22.94) ($12.17) WCS vs. LLS Tariff Differential $3.30 $3.30 $3.30 $3.30 $3.30 *Savings based on 80 MBD WCS Western Canadian Select LLS Louisiana Light Sweet 65 Project Driven by Lower Feedstock Cost

67 DHOUP vs. USGC Refineries Advantaged Location Leads to Higher Profitability Hardisty ~ $6.00/BBL Hardisty to USGC ~ $5.00/BBL Hardisty to Detroit Detroit Value vs. USGC Refineries for Canadian Heavy Processing $/BBL Laid-in Crude Cost 1.00 Higher Product Value 2.15* Total Advantage 3.15 Wood River Chicago Patoka ~ $1.70/BBL Houston to Chicago 66 *Includes $0.45 time value of money to ship a light product barrel from Houston to Chicago Houston Port Arthur

68 Benefits of Owned & Operated Retail Ratable sales Optimized operations Refining Pipeline Terminal Ethanol blending base load Supply dislocation flexibility Reduced credit risk Refineries Coastal water terminals Pipelines Terminals Inland water terminals 67 Fully Integrated Downstream Business

69 Liquidity $2.0B Cash balance at 12/31/09 Closed $1.3B sale of 20% interest in Block 32 Angola in Q $3B Revolver available 2012/2013 maturity No significant debt retirements prior to 2012 US Steel serviced debt retires

70 Future Debt Maturities 1,750 $ MM 1,500 1,250 1, Total Debt Cash Balance Net Debt 12/31/09 $8.5 B $2.0 B $6.5 B MRO debt US Steel serviced debt maturities reflect retirement t of industrial i revenue bonds by US Steel in accordance with the Financial i Matters Agreement Cash balance includes $108MM of escrowed funds Strong BBB+/Baa1 Debt Rating

71 Tax Considerations Country Norway Canada Libya EG Angola UK Statutory Tax Rate 28% Income Tax ; 50% SPT 29% Income Tax 93% Income Tax 25% Income Tax 50% Income Tax 30% Income Tax; 20% SCT Deferred Tax Liabilities Canadian election to pay tax in US dollars eliminates currency remeasurement fluctuations related to those tax balances Norway NOL balance as of 9/30/09 Regular Corporate NOL $0 remaining SPT NOL $300MM remaining 70 GME - Upon project completion qualified expenditures 50% deductible 98% complete as of 10/31/09 Estimated cash tax savings in 2009 of ~$700MM