form8k2010nov3.htm

The Company has acquired more than 120,000 net acres within the Niobrara play, a potentially new unconventional oil play in the DJ Basin of southeast Wyoming and northern Colorado and expects to commence drilling there in 2011. Marathon has also increased its acreage holdings in the liquids rich portion of the Woodford Shale in the Anadarko Basin of Oklahoma to approximately 75,000 net acres. Existing production operations in this region will facilitate expanded drilling with initial wells currently in progress.

In the North Dakota Bakken Shale play, the Company added a sixth operated rig during the third quarter, having begun the year with four rigs. Current net production amounts to approximately 14,000 boepd. For the first nine months of 2010, Bakken production averaged 12,000 boepd compared to 9,000 boepd for the same period last year. Marathon has also achieved a net increase in its acreage in North Dakota over the past 12 months, from 336,000 to 385,000 acres, including actions to high-grade the overall acreage position.

Early in the third quarter, Marathon’s deepwater Gulf of Mexico Droshky development [Green Canyon Block 244, 100 percent working interest (WI) and operator] began production and reached a peak of 45,000 net boepd. Three of the four wells are currently producing, with production from the fourth well delayed due to an equipment issue. Marathon plans to re-enter the fourth well in the first quarter of 2011 to make the necessary

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repairs. Production declines have been steeper than anticipated due to reservoir compartmentalization and lack of aquifer support.

The Alvheim floating, production, storage and offloading (FPSO) vessel in Norway achieved strong operational performance and reliability, with production available for sale averaging 81,000 net boepd for the first nine months of 2010, compared to 72,000 net boepd for the same period last year. Marathon has 65 percent operated interests in Alvheim and Volund and a 47 percent outside-operated interest in Vilje.

In October, Marathon announced it had acquired a position in four exploration blocks in the Iraqi Kurdistan Region for a total entry cost of $156 million plus a pro rata share of historic costs estimated to be $20 million. The transaction provides Marathon with access to a total of approximately 295,000 net acres. The Company holds an 80 percent ownership in two open blocks northeast of Erbil, Harir and Safen, and the Kurdistan Regional Government holds a fully carried 20 percent interest. Additionally, Marathon has been assigned working interests in two blocks north-northwest of Erbil, Atrush (20 percent WI) and Sarsang (25 percent WI). Marathon has committed to a seismic program and to drilling one well on each of the two open blocks during the initial three-year explor ation period. The Atrush and Sarsang blocks each have a well currently drilling.

Marathon added an eleventh onshore exploration license with shale gas potential in Poland in September, increasing its total acreage position to approximately 2.3 million net acres. The Company is currently conducting geologic studies to be followed by the acquisition of seismic in 2011, with plans to initiate drilling by the fourth quarter of 2011. Marathon has a 100 percent interest and is operator of all 11 blocks.

In Libya, Phase II of the Faregh project began commissioning during the third quarter and first production is anticipated later in November. Marathon has continued its successful exploration program in Libya with six discoveries during 2010.

In Indonesia, Marathon began its deepwater exploration drilling program in the Pasangkayu block (70 percent WI and operator) in August, and is currently targeting the Bravo and Romeo prospects. The Bravo exploration well is expected to reach total depth in the fourth quarter while the Romeo prospect is expcted to be reached during the first half of 2011.

Oil Sands Mining

The Oils Sands Mining (OSM) segment reported income of $18 million for the third quarter of 2010, compared to $25 million in the third quarter of 2009. The decrease was primarily the result of unrealized losses associated with crude oil derivative instruments, which amounted to a net pre-tax loss of $8 million in the third quarter of 2010 resulting from a $15 million realized gain and a $23 million unrealized loss. The impact of derivatives on the 2009 period was not significant.

Marathon’s third quarter 2010 net synthetic crude production (upgraded bitumen excluding blendstocks) from the Athabasca Oil Sands Project (AOSP) mining operation was flat year over year at 27,000 barrels per day (bpd), but above previous guidance for the quarter.

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For the first nine months of 2010, net synthetic crude production averaged 21,000 bpd, compared to 27,000 bpd for the same period last year. The decrease was largely due to AOSP turnaround activities that began March 22, 2010 and halted production until a staged resumption of operations in May.

Marathon expects fourth quarter net synthetic crude production will be between 28,000 and 34,000 bpd, with anticipated full-year net synthetic crude production estimater to be 23,000 bpd.


	Three Months Ended
	September 30,
	2010		2009
Key Oil Sands Mining Statistics
Net Synthetic Crude Oil Sales (mbpd)(a)		31		33
Synthetic Crude Oil Average Realization (per bbl)(b)	$	67.83	$	62.08

(a) Includes blendstocks.

(b) Excludes gains and losses on derivative instruments.

In the third quarter of 2010, the AOSP Expansion 1 project began a phased start-up of the Jackpine Mine operations, which will add capacity of 100,000 gross boepd to the existing Muskeg River Mine capacity of 155,000 boepd. The expanded upgrader operations are on schedule for a phased start-up beginning in late 2010 and extending into early 2011. Marathon holds a 20 percent working interest in the AOSP.

The AOSP operator announced that it has identified up to 85,000 gross boepd of debottlenecking potential at the existing and soon-to-be expanded AOSP assets that could be implemented in the future.

Integrated Gas

Integrated Gas segment income was $41 million in the third quarter of 2010, compared to $13 million in the third quarter of 2009. The increase was primarily the result of higher price realizations and higher liquefied natural gas (LNG) sales volumes.


	Three Months Ended
	September 30,
	2010		2009

Key Integrated Gas Statistics
Net Sales (metric tonnes per day)
LNG		7,142		6,372
Methanol		1,069		1,145

Refining, Marketing and Transportation

The Refining, Marketing and Transportation (RM&T) segment reported income of $285 million in the third quarter of 2010, compared to income of $158 million in the third quarter of 2009. The refining and wholesale marketing gross margin per gallon was 9.21 cents in the third quarter of 2010 compared to 7.62 cents in the third quarter of 2009.

Primary factors contributing to the increased segment income include a wider sweet/sour crude differential and increased sales volumes resulting primarily from the Garyville refinery expansion.

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As shown in the chart below, total refinery throughputs increased over the third quarter of 2009, primarily as a result of the Garyville refinery expansion.


	Three Months Ended
	September 30,
	2010		2009

Key Refining, Marketing & Transportation Statistics
Crude Oil Refined (mbpd)		1,263		1,019
Other Charge and Blend Stocks (mbpd)		182		171
Total Refinery Inputs (mbpd)		1,445		1,190
Refined Products Sales Volumes (mbpd)		1,681		1,400
Refining and Wholesale Marketing Gross Margin ($/gallon)	$	0.0921	$	0.0762

Speedway SuperAmerica LLC (SSA) gasoline and distillate gross margin per gallon averaged 15.49 cents in the third quarter of 2010, compared to 13.99 cents in the third quarter of 2009. SSA third quarter 2010 same store gasoline sales volumes increased 6 percent, while same store merchandise sales increased by 3 percent for the same period.

As of September 30, the Detroit Heavy Oil Upgrading Project was approximately 47 percent complete and is on budget and on schedule for an expected completion in the second half of 2012.

In October, Marathon entered into definitive agreements to sell most of the Company’s Minnesota downstream assets. The total sales value is approximately $900 million, including an estimated $300 million for inventories associated with the assets and preferred stock with a stated value of $80 million. The sale is anticipated to close by year-end 2010.

In July, Marathon also entered into an agreement to supply fuel to more than 600 Pantry locations in the southeastern United States, with a joint branding relationship at approximately 285 of the sites.

Corporate and Special Items

In the third quarter of 2010, the Integrated Gas segment’s equity method investment in an entity engaged in gas-to-fuels related technology was fully impaired. This impairment is reported as a special item.

The Company will conduct a conference call and webcast today, Nov. 2, at 2:00 p.m. EDT, during which it will discuss third quarter results and include forward-looking information. The webcast will include synchronized slides. To listen to the webcast of the conference call and view the slides, visit the Marathon website at http://www.marathon.com. Replays of the webcast will be available through Nov. 16, 2010. Quarterly financial and operational information is also provided on Marathon’s website at http://ir.marathon.com in the Quarterly Investor Packet.

# # #

In addition to net income determined in accordance with generally accepted accounting principles, Marathon has provided supplementally “net income adjusted for special items,” a non-GAAP financial measure which facilitates comparisons to earnings forecasts prepared by stock analysts and other third parties. Such forecasts generally exclude the effects of items that are considered non-recurring, are difficult to predict or to

Page6

measure in advance or that are not directly related to Marathon's ongoing operations. A reconciliation between GAAP net income and “net income adjusted for special items” is provided in a table on page 1 of this release. “Net income adjusted for special items” should not be considered a substitute for net income as reported in accordance with GAAP. Management, as well as certain investors, uses “net income adjusted for special items” to evaluate Marathon's financial performance between periods. Management also uses “net income adjusted for special items” to compare Marathon's performance to certain competitors.< /div>

This release contains forward-looking statements with respect to the timing and levels of the Company’s worldwide liquid hydrocarbon and natural gas production, synthetic crude production, the Droshky development (Green Canyon Block 244), drilling plans in the Niobrara play in the DJ Basin, anticipated future exploratory and development drilling ac tivity, Phase II of the Faregh project in Libya, the possibility of a significant new resource base in the Iraqi Kurdistan region, licensing and geologic studies in Poland, the Pasangkayu block in Indonesia, the AOSP expansion, the Detroit Heavy Oil Upgrading Project and the potential sale of the Minnesota downstream assets. Factors that could potentially affect the timing and levels of the Company’s worldwide liquid hydrocarbon and natural gas production, synthetic crude production, the Droshky development(Green Canyon Block 244), drilling plans in the Niobrara play in the DJ Basin, anticipated future exploratory and development drilling activity, Phase II of the Faregh project in Libya, the possibility of a significant new resource base in the Iraqi Kurdistan region , licensing and geologic studies in Poland, and the Pasangkayu block in Indonesia include pricing, supply and demand for crude oil, natural gas and petroleum products, the amount of capital available for exploration and development, regulatory constraints, timing of commencing production from new wells, drilling rig availability, unforeseen hazards such as weather conditions, acts of war or terrorist acts and the governmental or military response thereto, and other geological, operating and economic considerations. Factors that could affect the AOSP expansion and the Detroit Heavy Oil Upgrading Project include transportation logistics, availability of materials and labor, unforeseen hazards such as weather conditions, delays in obtaining or conditions imposed by necessary government and third-party approvals, and other risks customarily associated with construction projects. Some factors that could potentially affect the sale of the Minnesota downstream assets are buyer financing and customary closing condit ions, including government and regulatory approvals. The foregoing factors (among others) could cause actual results to differ materially from those set forth in the forward-looking statements. 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, and subsequent Forms 10-Q and 8-K, cautionary language identifying other 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.

Media Relations Contacts:

Lee Warren: 713-296-4103

John Porretto: 713-296-4102

Investor Relations Contacts:

Howard Thill: 713-296-4140

Chris Phillips: 713-296-3213

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Condensed Consolidated Statements of Income (Unaudited)

		Three Months Ended						Nine Months Ended
	September 30,							September 30,
(In millions, except per share data)		2010			2009			2010			2009
Revenues and other income:
Sales and other operating revenues
(including consumer excise taxes)		$	18,407		$	14,335		$	52,673		$	37,509
Sales to related parties			36			27			88			68
Income from equity method investments			95			75			301			184
Net gain on disposal of assets			5			5			830			200
Other income			32			35			77			112
Total revenues and other income			18,575			14,477			53,969			38,073
Costs and expenses:
Cost of revenues (excludes items below)			14,291			10,963			41,464			28,080
Purchases from related parties			180			133			454			338
Consumer excise taxes			1,351			1,258			3,871			3,658
Depreciation, depletion and amortization			765			627			2,072			1,970
Long-live asset impairments			-			3			467			18
Selling, general and administrative expenses			324			323			958			935
Other taxes			99			98			324			296
Exploration expenses			59			55			282			181
Total costs and expenses			17,069			13,460			49,892			35,476
Income from operations			1,506			1,017			4,077			2,597
Net interest and other financing costs			(27	)		(35	)		(75	)		(63	)
Loss on early extinguishment of debt			-			-			(92	)		-
Income from continuing operations before income taxes			1,479			982			3,910			2,534
Provision for income taxes			783			590			2,048			1,549
Income from continuing operations			696			392			1,862			985
Discontinued operations			-			21			-			123
Net income		$	696		$	413		$	1,862		$	1,108
Per Share Data
Basic:
Income from continuing operations		$	0.98		$	0.55		$	2.63		$	1.39
Discontinued operations			-		$	0.03			-		$	0.17
Net income		$	0.98		$	0.58			2.63		$	1.56
Diluted:
Income from continuing operations		$	0.98		$	0.55		$	2.62		$	1.39
Discontinued operations			-		$	0.03			-		$	0.17
Net income		$	0.98		$	0.58		$	2.62		$	1.56
Dividends paid		$	0.25		$	0.24		$	0.74		$	0.72
Weighted Average Shares:
Basic			710			709			709			709
Diluted			712			711			711			711

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Preliminary Supplemental Statistics (Unaudited)

	Three Months Ended						Nine Months Ended
	September 30,						September 30,
(Dollars in millions, except as noted)	2010			2009			2010			2009
SEGMENT INCOME (LOSS)
Exploration and Production
United States	$	99		$	32		$	233		$	(61	)
International		411			459			1,211			843
E&P segment		510			491			1,444			782
Oil Sands Mining		18			25			(59	)		3
Integrated Gas		41			13			109			53
Refining, Marketing and Transportation		285			158			469			482
Segment income		854			687			1,963			1,320
Items not allocated to segments, net of
income taxes
Corporate and other unallocated items		(106	)		(159	)		(178	)		(299	)
Foreign currency remeasurement of taxes		(37	)		(114	)		33			(180	)
Gain (loss) on disposition		-			(15	)		449			107
Impairments		(15	)		-			(303	)		-
Loss on early extinguishment of debt		-			-			(57	)		-
Deferred income taxes - tax
legislation changes		-			-			(45	)		-
Gain (loss) on U.K. natural gas contracts		-			(7	)		-			37
Discontinued operations (a)		-			21			-			123
Net income	$	696		$	413		$	1,862		$	1,108
CAPITAL EXPENDITURES(b)
Exploration and Production
United States	$	352		$	403		$	1,222		$	1,018
International		234			113			552			472
E&P segment		586			516			1,774			1,490
Oil Sands Mining		191			267			699			834
Integrated Gas		1			-			2			1
Refining, Marketing and Transportation		273			634			839			2,007
Discontinued Operations		-			3			-			66
Corporate		13			10			27			18
Total	$	1,064		$	1,430		$	3,341		$	4,416
EXPLORATION EXPENSES
United States	$	34		$	23		$	192		$	88
International		25			32			90			93
Total	$	59		$	55		$	282		$	181

(a) Marathon’s businesses in Ireland and Gabon were sold in 2009. All periods of 2009 have been recast to reflect these businesses as discontinued operations.

(b) Capital expenditures include changes in accruals.

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Preliminary Supplemental Statistics (Unaudited) (continued)

	Three Months Ended				Nine Months Ended
	September 30,				September 30,
	2010		2009		2010		2009
E&P OPERATING STATISTICS
Net Liquid Hydrocarbon Sales (mbpd)
United States		80		63		65		64
Europe		80		76		92		87
Africa		89		83		84		87
Total International		169		159		176		174
Worldwide Continuing Operations		249		222		241		238
Discontinued Operations		-		10		-		6
Worldwide		249		232		241		244
Net Natural Gas Sales (mmcfpd)
United States		363		339		350		376
Europe (c)		99		119		104		143
Africa		442		409		399		427
Total International		541		528		503		570
Worldwide Continuing Operations		904		867		853		946
Discontinued Operations		-		-		-		22
Worldwide		904		867		853		968
Total Worldwide Sales (mboepd)
Continuing Operations		399		366		382		396
Discontinued Operations		-		10		-		9
Worldwide		399		376		382		405

Average Realizations (d)
Liquid Hydrocarbons (per bbl)
United States	$	69.52	$	61.07	$	69.95	$	50.19
Europe		80.49		70.58		79.69		60.10
Africa		69.24		60.50		69.85		49.67
Total International		74.57		65.32		75.00		54.88
Worldwide Continuing Operations		72.95		64.12		73.64		53.62
Discontinued Operations		-		67.77		-		56.27
Worldwide	$	72.95	$	64.27	$	73.64	$	53.68
Natural Gas (per mcf)
United States	$	4.43	$	3.63	$	4.78	$	3.94
Europe		7.20		4.87		6.42		4.89
Africa (e)		0.25		0.25		0.25		0.25
Total International		1.52		1.29		1.52		1.41
Worldwide Continuing Operations		2.69		2.20		2.86		2.42
Discontinued Operations		-		-		-		8.54
Worldwide	$	2.69	$	2.20	$	2.86	$	2.56

(c) Includes natural gas acquired for injection and subsequent resale of 15 mmcfd and 18 mmcfd in the second quarters of 2010 and 2009, 19 mmcfd and 20 mmcfd for the first nine months of 2010 and 2009.

(d) Excludes gains and losses on derivative instruments, including the unrealized effects of U.K. natural gas sales contracts that were accounted for as derivatives and expired in September 2009.

(e) Primarily represents fixed prices under long-term contracts with Alba Plant LLC, Atlantic Methanol Production Company LLC (AMPCO) and Equatorial Guinea LNG Holdings Limited (EGHoldings), which are equity method investees. Marathon includes its share of Alba Plant LLC’s income in the Exploration and Production segment and its share of AMPCO’s and EGHoldings’ income in the Integrated Gas segment.

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Preliminary Supplemental Statistics (Unaudited) (continued)

	Three Months Ended				Nine Months Ended
	September 30,				September 30,
(Dollars in millions, except as noted)	2010		2009		2010		2009
OSM OPERATING STATISTICS
Net Synthetic Crude Oil Sales (mbpd)(f)		31		33		25		31
Synthetic Crude Oil Average	$	67.83	$	62.08	$	69.07	$	52.02
Realization (per bbl) (g)
IG OPERATING STATISTICS(h)
LNG (mtpd)		7,142		6,372		6,502		6,583
Methanol (mtpd)		1,069		1,145		1,120		1,220
RM&T OPERATING STATISTICS
Refinery Runs (mbpd)
Crude oil refined		1,263		1,019		1,166		943
Other charge and blendstocks		182		171		148		197
Total		1,445		1,190		1,314		1,140
Refined Product Yields (mbpd)
Gasoline		785		687		706		655
Distillates		439		330		392		319
Propane		27		23		24		23
Feedstocks and special products		113		75		108		66
Heavy fuel oil		28		22		24		23
Asphalt		80		70		79		70
Total		1,472		1,207		1,333		1,156
Refined Products Sales Volumes (mbpd)(i)		1,681		1,400		1,550		1,353
Refining and Wholesale Marketing
Gross Margin (per gallon) (j)	$	0.0921	$	0.0762		0.0636	$	0.0808
Speedway SuperAmerica
Retail outlets		1,594		1,610		-		-
Gasoline and distillate
sales (millions of gallons)		869		818		2,500		2,408
Gasoline and distillate gross
margin (per gallon)	$	0.1549	$	0.1399		0.1363	$	0.1175
Merchandise sales	$	867	$	842		2,430	$	2,341
Merchandise gross margin	$	215	$	207		600	$	577

(f) Includes blendstocks.

(g) Excludes gains and losses on derivative instruments.

(h) Includes both consolidated sales volume and Marathon’s share of sales volumes of equity method investees. LNG sales from Alaska are conducted through a consolidated subsidiary. LNG and methanol sales from Equatorial Guinea are conducted through equity method investees.

(i) Total average daily volumes of all refined product sales to wholesale, branded and retail (SSA) customers.

(j) Sales revenue less cost of refinery inputs, purchased products and manufacturing expenses, including depreciation.

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-----END PRIVACY-ENHANCED MESSAGE-----


Delaware	1-5153		25-0996816
_____________________ (State or other jurisdiction	_____________ (Commission		______________ (I.R.S. Employer
of incorporation)	File Number)		Identification No.)

5555 San Felipe Road, Houston, Texas			77056
_________________________________ (Address of principal executive offices)			___________ (Zip Code)

Registrant’s telephone number, including area code:		(713) 629-6600


	Marathon Oil Corporation

November 2, 2010	By:	/s/ Michael K. Stewart

		Name: Michael K. Stewart
		Title: Vice President, Accounting and Controller

Exhibit Number	Description
99.1	Press Release dated November 2, 2010, issued by Marathon Oil Corporation


Date of Report (Date of Earliest Event Reported):		November 2, 2010


	Three Months Ended
	September 30,
(In millions, except per diluted share data)	2010			2009
Net income adjusted for special items	$	711		$	436
Adjustments for special items (net of taxes):
Loss on disposition		-			(16	)
Impairments		(15	)		-
Loss on early extinguishment of debt		-			-
Loss on U.K. natural gas contracts		-			(7	)
Net income	$	696		$	413
Net income adjusted for special items (a) – per diluted share	$	1.00		$	0.61
Net income – per diluted share	$	0.98		$	0.58
Revenues and other income	$	18,575		$	14,477
Weighted average shares – diluted		712			711


	Three Months Ended
	September 30,
(In millions)	2010		2009
Segment Income
Exploration and Production
United States	$	99	$	32
International		411		459
Total E&P		510		491
Oil Sands Mining		18		25
Integrated Gas		41		13
Refining, Marketing and Transportation		285		158
Segment Income(a)	$	854	$	687