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Marathon Oil Corporation (NYSE:MRO)

Q2 FY08 Earnings Call

July 31, 2008, 2:00 PM ET

Executives

Howard J. Thill - VP, IR and Public Affairs

Clarence P. Cazalot Jr. - President and CEO

David E. Roberts Jr. - EVP, Upstream

Gary R. Heminger - EVP, Downstream

Garry L. Peiffer - Sr. VP, Finance and Commercial Services

Janet F. Clark - EVP and CFO

Analysts

Arjun Murti - Goldman Sachs

Paul Sankey - Deutsche Bank

Neil McMahon - Sanford Bernstein

Paul Cheng - Lehman Brothers

Michael LaMotte - JP Morgan

Erik Mielke - Merrill Lynch

Faisel Khan - Citigroup

Robert Kessler - Simmons & Company

Mark Gilman - The Benchmark Company

Jessica Resnick - Dow Jones

Robin Levine - JP Morgan

Operator

Good day everyone. Welcome to Marathon Oil's Second Quarter Earnings Conference Call. As a reminder, this call is being recorded.

For opening remarks and introductions, I would like to turn the call over to Mr. Howard Thill, Vice President of Investor Relations and Public Affairs. Please go ahead sir.

Howard J. Thill - Vice President, Investor Relations and Public Affairs

Thank you, Jennifer, and I too would like to welcome everyone to Marathon Oil Corporation's second quarter 2008 earnings webcast and teleconference. The synchronized slides that accompany this call can be found on our website, marathon.com.

On the call today are Clarence Cazalot, President and CEO; Janet Clark, Executive Vice President and CFO; Gary Heminger, Marathon Executive Vice President and President of our Refining, Marketing and Transportation Organization; Dave Roberts, Executive Vice President, Upstream and Garry Peiffer, Senior Vice President of Finance and Commercial Services, Downstream.

Slide 2 contains the forward-looking statement and other information related to this presentation. Our remarks and answers to questions today will contain forward-looking statements subject to risks and uncertainties that could cause actual results to differ materially from those expressed or implied by such statements.

In accordance with 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, 2007 and subsequent forms 10-Q and 8-K cautionary language identifying important factors but not necessarily all factors that could cause future outcomes to differ materially from those set forth in the forward-looking statement.

As most of the numbers we will discuss today are adjusted net income, slide 3 provides a reconciliation of net income to adjusted net income by quarter for 2006, 2007 and 2008.

Slides 4 and 5 provide adjusted net income and adjusted net income per diluted share by quarter for 2006 through the second quarter 2008.

Moving to slide 6. The year-over-year decrease in adjusted net income mainly resulted from the steep decline in downstream earnings and the derivatives impact in Oil Sands Mining, partially offset by strong upstream income, largely a result of higher upstream liquid hydrocarbon and natural gas price realizations and lower taxes. Production available for sale increased 29,000 barrels of oil equivalent per day or boepd year-over-year, largely as a result of a full quarter of gas sales to the Equatorial Guinea LNG plant, the start of production at Alvheim and ramp up in the Bakken oil shale resource play.

As shown on slide 7, the second quarter 2008 adjusted net income increased almost 12% from the first quarter of 2008, a result of higher upstream realizations and the quarter-over-quarter improvement in the refining and wholesale marketing gross margin, partially offset by the significant decline in the Oil Sands Mining segment. The Oil Sands Mining segment was negatively impacted by the steep rise in crude oil prices, which resulted in a $250 million after tax loss on derivative instruments, of which $220 million was unrealized.

Turning to slide 8, Upstream segment income for the second quarter was $144 million over the first quarter 2008, reflecting higher realizations while production available for sale was relatively unchanged quarter-to-quarter. The timing of liftings in Gabon, Equatorial Guinea and Libya and the seasonal injection of gas into storage in Ireland and Alaska lowered sales volumes in the second quarter, partially offsetting the impact of higher realizations.

Slide 9 shows the production available for sale and sales volumes just discussed. Average realizations increased 25% or $14.53 per barrel of oil equivalent or boe between the first and second quarters to $73.26 per boe.

Moving to slide 10, domestic upstream income increased $115 million from the first quarter on higher realizations as well as higher oil volumes in the Bakken oil shale resource play and Ewing Bank Block 963. This increase was partially offset by lower gas sales volumes in Alaska, Oklahoma and East Texas.

As noted on slide 11, both our domestic liquid hydrocarbon realizations and WTI increased by almost $26. Our natural gas realizations in the lower 48 lagged Henry Hub midweek pricing, primarily due to weaker basis differentials for gas sold in the mid-continent and Rocky Mountain regions. Domestic sales volumes were down in the second quarter, largely due to seasonally lower natural gas sales in Alaska.

Turning to slide 12, second quarter domestic upstream expense excluding exploration expense increased by $4.54 per boe from the fourth quarter, primarily as a result of increased production taxes and increased development activity. Domestic upstream income per boe increased $10.48 quarter-over-quarter, reflecting the impact of higher realized prices.

Moving to slide 13. The $29 million increase in international upstream income was the result of higher realizations, partially offset by lower sales volume, which were impacted by the timing of liftings and seasonal gas injection as previously discussed.

As shown on slide 14, our total international liquids realizations for the second quarter increased less than dated Brent. Our international cruel oil prices actually increased slightly more than dated Brent, NGL realizations did not keep up with the price of crude. Our international natural gas realization decreased $0.61 per MCF due to the higher proportion of natural gas sales in Equatorial Guinea and lower European volumes. International sales volumes decreased quarter-over-quarter to 215,000 boepd and were impacted by the timing of liftings as well as a seasonal decline in natural gas sales in Ireland.

Third quarter international sales volumes are anticipated to increase, reflecting a full quarter of production from the Alvheim/Vilje development. Additionally, the third quarter is expected to include a makeup of a portion [ph] of our underlift positions in Equatorial Guinea, Gabon, Libya and at Foinaven.

Turning to slide 15. International upstream income increased $3.52 per boe, primarily due to higher liquid realizations, partially offset by lower sales volumes and higher income taxes.

Turning to slide 16 and the Oil Sands Mining segment. The $157 million second quarter loss was primarily the result of the previously discussed derivative activity. The last of these derivative instruments is set to expire in the fourth quarter of 2009. As you can see in the slide, the derivative losses had a significant impact during the quarter. Net bitumen production before royalties was 24,000 barrels per day for the second quarter, which was less than previously guided due to a revised plan to manage the disposal of tailings that resulted in mining a lower grade ore as well as planned and unplanned maintenance at the mine.

As shown on slide 17, when you combine our upstream production available for sale and Oil Sands Mining' bitumen production, our total production for the second quarter was 398,000 boe per day, an increase of about 15% from the second quarter 2007 and on par with the first quarter of 2008.

Moving to our downstream businesses. As noted on slide 18, second quarter 2008 segment income totaled $158 million compared to $1.25 billion for the same quarter last year. Because of the seasonality of the downstream business, I will compare our second quarter 2008 results against the same quarter in 2007. The primary factor contributing to downstream's lower earnings was a significant reduction in the Light Louisiana Sweet or LLS 6-3-2-1 crack spread on a two-thirds Chicago, one-third U.S. Gulf Coast basis. The average LLS 6-3-2-1 crack spread decreased by $13 per barrel.

In addition, during the second quarter, the company's per gallon wholesale sales price realization did not increase over the comparable prior year period as much as the average spot market price for the product in the LLS 6-3-2-1 calculation. For example, the average price of the products we sell other than gasoline and distillate increased by less than $0.70 per gallon whereas the price of 3% residual fuel oil used in the 6-3-2-1 calculation increased by an average of $0.82 per gallon quarter-to-quarter. Total refinery crude oil throughput was down almost 50,000 barrels per day for the same quarter last year and total throughput decreased 77,000 barrels per day.

We also incurred higher expensed compared to the year ago period primarily due to the higher natural gas prices and maintenance activities. Finally, due to the fact that the cost of our foreign term crude oil purchases rose more the second quarter of 2008 than in the prior year period, we incurred a pre-tax loss of $156 million on our foreign crude in transit inventories compared to a loss of only $25 million in the same quarter last year.

Partially offsetting these negatives factors were several positive quarter-to-quarter variances. First, our crude oil and other blend stock costs did not increase as much as the change in the average price of LLS during the quarter of 2008 compared to the prior year period. In addition, primarily because of the widening differential between gasoline and ethanol prices in the second quarter 2008, we had a positive variance in our ethanol earnings during the quarter as compared to the second quarter of 2007.

And finally, we improved the volume of refinery gains in our plant in the second quarter of 2008, which, along with the higher refined product prices, improved the value of these volumetric gains quarter-to-quarter.

The refining and wholesale marketing gross margin for second quarter 2008 includes a pre-tax derivates-related loss of $187 million compared to a loss of $139 million in the second quarter of 2007. Approximately half of the second quarter 2008 derivative losses were incurred in April as Marathon transitioned away from the practice of using derivates to mitigate crude oil price risk on our domestic spot crude oil purchases. The downstream business segment will selectively continue its practice of using derivatives to protect the carrying value of seasonal inventories in long haul foreign crude oil spot purchases.

As shown on slide 19, SSA's gasoline and distillate sales were down approximately 40 million gallons or a decrease of 4.8% compared with the second quarter of 2007 while merchandize sales were up 1%. SSA's gross margin for gasoline and distillates was 8.62 cents per gallon compared to 10.29 cents per gallon in the same quarter of 2007.

Slide 20 provides a summary of segment data along with a reconciliation to net income. The increase in allocated administrative expenses is primarily due to mark-to-market adjustments on legacy stock appreciation rights awarded and increased pension expense due to the revision of certain actuarial assumptions.

The effective tax rate for the second quarter was 51% compared to a rate at 44% in the first quarter. The increase was primarily driven by income mix in the upstream segment where Libya took a more prominent percentage in the second quarter compared to the first. The second quarter rate also included a first quarter catch up for the change in rate and an increase in the deferred tax balances related to a change in the Canadian exchange rate. This exchange rate fluctuation was a benefit in the first quarter.

Slide 21 provides selected preliminary balance sheet and cash flow data. Cash adjusted debt to total capital at the end of the second quarter remained unchanged from the first quarter at approximately 24%. As a reminder, this cash adjusted debt balance includes $488 million of debt serviced by U.S. Steel. Year-to-date, preliminary cash flow from operations was approximately $3 billion and preliminary cash flow from operations before working capital changes was approximately $2.9 billion.

Slide 22 provides a summary of sources and uses of cash for the first six months of the year and the impact on our outstanding cash adjusted debt balance. As I stated, cash... operating cash flow for the first half of 2008 was just under $3 billion while capital spending during the period was approximately $3.4 billion. We also spent $295 million on share repurchases and $342 million on dividends. Our net debt increased by $1 billion during the first half of the year. Clarence will provide some comments on the second half of the year later.

Slide 23 provides actual results for the first two quarters as well as guidance for the third quarter and full year 2008. Production available for sale during the third quarter excluding Oil Sands Mining is forecasted to be between 360 and 385,000 boepd versus 374,000 boepd available for sale in the second quarter 2008. While third quarter production will be positively impacted by the ramp up of operations at our Alvheim/Vilje and Neptune projects, those increases will be offset by scheduled downtime at our Equatorial Guinea and LPG facilities, a planned shut-in at Foinaven and a scheduled slowdown at the SAGE facility will adversely affect third quarter production volumes. Additionally, facility maintenance in Waha's Libyan operations will curtail volumes during the third quarter.

Our upstream production forecast for the full year has been narrowed to 380,000 to 400,000 boepd excluding the effect of any dispositions. The full year production forecast for our Oil Sands Mining segment has been lowered to between 25,000 and 28,000 boepd, largely as a result of the previously mentioned revised plan to manage the disposal of tailings.

I will now turn the call over to Clarence Cazalot, Marathon President and CEO.

Clarence P. Cazalot Jr. - President and Chief Executive Officer

Thank you, Howard, and good afternoon everyone. Howard has just discussed our second quarter results in some detail. But I now want to comment on Marathon's ongoing plans and activities, and I will begin with the upstream business and then ask Dave Roberts to provide some additional context. And then I will ask Gary Heminger to comment on our downstream activities. And then I'll conclude, as Howard has said, with our capital and cash flow outlook.

It seems clear to me that the market doesn't yet fully appreciate it, but Marathon's upstream business today is the strongest it's ever been in terms of secured resource and reserve potential and a clear, well defined production growth profile. We also have a high quality portfolio of exploration and other growth opportunities.

We are delivering on our defined production growth of 7% compound average growth rate between 2007 and 2012. And I believe both the magnitude and certainty of this growth meets or exceeds that of our peers. Since the beginning of June, we have brought on stream two major high margin projects: Alvheim/Vilje in Norway and Neptune in the Gulf of Mexico.

Alvheim production commenced on June 8, considerably later than planned and we recognize and except that poor execution on this project despite our best-in-class execution on EG LNG has hurt our credibility. We have learnt some costly lessons and have incorporated these learnings into our project planning and execution. But I think it's very important that people understand just how well this new asset is performing. The Alvheim/Vilje FPSO and related infrastructure have current gross production of almost 100,000 barrels of oil per day and 30 million cubic feet of gas per day from only five wells. And we expect to reach full capacity on the facility in the next few weeks. These are very profitable barrels with an after-tax income margin of almost $60 per boe at $125 WTI. On a total cash basis, this asset will generate after-tax cash flow net to Marathon for 2008 alone of almost $1.25 billion.

In the Gulf of Mexico, the Neptune project, in which we have a 30% non-operated interest, has come on stream in early July and has already reached peak capacity of the facility. Marathon's net after-tax income margin is about $41 per boe on this project at $125 WTI.

Suffice it to say, these two projects will make a significant contribution to Marathon's profitability in the second half of 2008 and beyond. Importantly, though, we project a substantial increase in our net production available for sale over the second half of 2008, going from a second quarter average of 374,000 boe per day to an exit rate in December of 425 to 450,000 barrels of oil equivalent per day, very significant and profitable growth.

And now I'd ask Dave Roberts to provide a little more detail and context around our E&P business.

David E. Roberts Jr. - Executive Vice President, Upstream

Thanks, Clarence. As Clarence has mentioned, we are on track to reach our target production growth of 7% through 2012. While Alvheim/Vilje and Neptune are the 2000 foundation assets for this growth, our line of sight in future potential portfolios continue to suggest a great future for upstream business.

In terms of assets in development, Ireland [ph] or next to Alvheim area building block is on schedule and will begin production later next year. You'll already have noted our announcing the sanction of the Angola Block 31 PSVM project and that production will begin in 2012. And closer still, two projects in the Gulf of Mexico, Droshky and Ozona that we expect to sanction this year will begin adding profitable volumes in 2010 or 2011.

I realize there is tremendous interest in our resource play position. Our 320,000 net acre position in the Bakken Shale of North Dakota continues to deliver. As noted, our net production has already exceeded 6,000 barrels of oil equivalent per day. And I expect it to reach 8,000 barrels of oil equivalent per day by year end. We will drill and complete 60 wells this year, bringing our total since entering the play to roughly 100.

In terms of our exposure to other unconventional gas resources, we have fourth quarter rigs up in the Piceance Colorado play and we will have 28 total completion s by year end with growing production effects in 2009 and forward.

Marathon is also building a position in the Marcellus Appalachia play with 30,000 acres in hand of a targeted 100,000 total by year end. Drilling on our acreage is expected within six to nine months. We already have existing positions in the Haynesville play in East Texas, North Louisiana, 25,000 acres most held by production, the drilling will start on in 2009. And the Anadarko, Woodford in West Central Oklahoma, where we have 30,000 acres in hand, and we'll have three wells drilled by the end of this year.

Outside of North America, we have utilized our experience with coal seam gas plays to capture with our partners Greenpark Energy, the largest coal seam gas acreage position in the United Kingdom at 520,000 acres, 260,000 net to Marathon. We drilled three test wells today and on the cut, we are drilling up to 7 pilot production wells in 2008-2009.

Finally in the area of unconventional oil, we have had encouraging results in the evaluation of two of in situ oil holdings in Canada. Drilling results from this past winter have bolstered our view of the bitumen source potential in this portfolio. As you'll recall, when we have acquired Marathon Canada, we estimated in situ resource potential of 600 million barrels net bitumen. We now believe these assets may approach 1.5 billion barrels net resources potential.

In the 100% Marathon-operated Birchwood assets, we would likely undertake additional drilling and environmental assessments into 2009 and we expect the project feasibility study to begin in 2009 in Marathon's 20% around Ells River project. In conjunction with our development projects, Marathon is also positioned itself for the long-term success in our exploration program. While we are now beginning to finally see the results of our long and successful term campaign in Angola, we have been active in securing new opportunities in both the Gulf of Mexico, where we along with our partners have been ordered 42 blocks in the last two lease sales and in Indonesia where we operate the coveted Pasangkayu Block and are actively looking for further options there.

In the Gulf, we have numerous prospects from the recent sale identified and moving toward drillable status in 2009. Similarly in Indonesia, we have completed a seismic program over Pasangkayu and we will drill our first well there in 2009 as well. But we aren't waiting for the future.

We continue to drill successfully in Angola and in the Gulf we have currently participated in the BP operated Freedom well located in Mississippi Canyon Block 948, which we will finish drilling later this quarter, Marathon having 12.5% interest in this prospect. And in the Anadarko-operated Chantedorra [ph] well located in Walker Ridge Block A. Marathon has a 10% interest in this prospect. This well spud late in the second quarter and is expected to be finished drilling in the third quarter. Freedom is targeted as the Miocene and Chantedorra [ph] as the Paleocene, and of course that Shell-operated Stone sidetrack appraisal will be drilled in the fourth quarter of this year. Marathon has a 25% interest in this lower tertiary well.

In addition, we continue to have an active U.S. onshore exploration program in East Texas and Oklahoma. I would remind you that no to success from these wells or programs were built into our production forecast. However, if successful, they will contribute to our production growth in the future.

In terms of our integrated gas portfolio, while we have made little progress in moving and trying to go forward, as we continue to work on the commercial framework of the project with our partners, our efforts continue in the light of the continued success of trying one. With outstanding reliability, the facility continues to meet nameplate expectations and so the net 5,800 metric tons of LNG per day in the quarter delivering 14 LNG cargoes.

The facility turnaround originally scheduled for June, was started on July 19th. It was scheduled for 16 days, but the facility has already returned to 50% capacity and should be at 100% on the weekend. Quite, simply EG LNG is an industry-leading operations. Our other integrated gas businesses had solid quarter too, but our methanol business experienced a 30-day shutdown to begin quarter three, due to a process issue. The facility has been returned to production. Clarence I am sorry perhaps carried on a bit longer than I should have, but we have a great story for the quarter and for the future in our upstream portfolio.

Clarence P. Cazalot Jr. - President and Chief Executive Officer

Thank you Dave and I'd like Gary to update you on the downstream.

Gary R. Heminger - Executive Vice President, Downstream

Okay and I believe Howard [ph] covered in sufficient detail the results of the second quarter. So I'll just bring up-to-date on couple of our major projects and then talk a bit about today's market. But on our first project, the Garyville major expansion, we are approximately 60% complete as we speak today, and we have a full complement of skilled trades across the entire mechanical, civil side of that construction project.

We are beginning to take delivery or some of the major fabricated vessels. In fact, our cokers [ph] as we speak is coming through the Panama Canal and we continue to expect fourth quarter 2009 startup, as I said we are on time and on budget.

Turning to the Detroit Heavy Oil operated project, we did receive our permit on June 20th and started construction immediately. We have just started the construction site of that business and we are only about 5% complete but we will significantly wrap up over the coming months.

Turning down to the operations, while markets have been challenging in the second quarter with a roughly of about $40 in crude price, I am pleased to say that we have operated above out plan from a mechanical availability standpoint and from the safety standpoint. When you look at today's markets and look at speed way supermarket same-store sales, we believe that we have outperformed the overall market, when we look at same store versus Pad 2 total demand.

So from an operating standpoint we are operating well, we're getting the production to our marketplace and we are continuing to add new marathon branded job or businesses going to help down the road with our Garyville major expansion program. And with that, Clarence I'll turn back it to you.

Clarence P. Cazalot Jr. - President and Chief Executive Officer

Thank you, Gary. Our overall 2008 capital spending will be up slightly, as we have reduced standing in the downstream and increased spending primarily in the upstream. From a cash flow standpoint, we expect cash flow from operations in the second half of 2008, to essentially cover our capital spending, dividend payments and share buyback program. In addition our portfolio review process will result in the sale of a certain assets.

As announced earlier this month, we've reached an agreement with Centrica to sell our non-operated interest in the offshore Heimdal infrastructure and related fields for $416 million. We expect to announce additional sales in the third quarter.

Lastly, you know the onshore [ph] announcement this morning that our Board is evaluating a potential separation of Marathon into two strong independent and publicly-traded companies and I know you'll be having some questions and we'll try to be as responsive as we can, but I hope you understand that we probably can't be much more specific than what is in the release.

And with that I'll turn it to Howard for questions.

Howard J. Thill - Vice President, Investor Relations and Public Affairs

Thank you, Clarence. Dave and Gary I appreciate that update. Before we open it up to questions, I'd like to remind everyone that to accommodate all those who want to ask questions with the limited amount of time that we have remaining, we'd ask that you to limit yourself to one question plus a follow up, and that for the benefit of all the listeners, would ask that you identify yourself and your affiliation.

And with that, we will open it up to questions, Jennifer.

Question And Answer

Operator

Thank you, sir. The question and answer session will be conducted electronically. [Operator Instructions]. And we will go ahead and take our first question from Arjun Murti with Goldman Sachs.

Arjun Murti - Goldman Sachs

Thank you very much. Clarence, I definitely appreciate there are probably legal restrictions beyond the press release, but just want to try one related to the press release. You mentioned that you didn't think the Street was fully appreciating the value of the E&P business. Is the primarily driver of the separation here a belief that the stock is very undervalued or were there things strategically that either business couldn't do together that they could potentially do separated? And I guess my thought there was, it hasn't seemed like there was anything strategically that either refiner E&P couldn't do as part of a combined company, and therefore I presume the driver here is valuation. But perhaps you can shed some color on that.

Clarence P. Cazalot Jr. - President and Chief Executive Officer

Again, Arjun, I think you summed it up upfront. There is only so much at this point prior to actually completing the evaluation and disclosing the decision that we really want to say. But suffice it to say, ours is a management and a Board as I've said many times before that is always looking to see what we can do to enhance our business strategically, operationally and financially. And I think, as you would expect, we continually look at all of the options and alternatives available to us. And this is one that, as we said in the press release, we have been looking at for some time now and have now advanced to the point that we have brought in outside advisors. And I think you should put great importance around the fact that we've done that and we have also said that this will be completed and the Board will make its decision in the fourth quarter. And I think at this point, Arjun, we'd prefer to wait until a decision is made and then talk about it much more fulsomely in terms of what actions we are actually taking.

Arjun Murti - Goldman Sachs

Thank you, Clarence. If I could just ask one related follow up? And it's really just to clarify something I think you just said, and I believe you've said it in the past. And that is you're looking to do what's right for shareholders and get the most value possible, which will mean all options are available. The press release specifically refers to a potential separation. But I think Marathon has always considered all alternatives, which could be obviously a sale of the entire company, sale of individual pieces, keeping the company together. I think you are willing to consider all alternatives, is that correct?

Clarence P. Cazalot Jr. - President and Chief Executive Officer

That is the process, Arjun, that is always on the table and constantly reviewing our options, yes.

Arjun Murti - Goldman Sachs

Thank you very much.

Operator

We'll go ahead and move to a question from Paul Sankey with Deutsche Bank.

Paul Sankey - Deutsche Bank

Yes, hi Clarence. Thanks for taking the question. If I could follow up on the all options are open angle. It nevertheless seems that the way you've written the press release indicates that the strategic option is going to be quite clearly outlined in terms of the split between upstream and downstream, and that's going to be the nature of the vote [ph] by Q4. Or am I reading too much into the way you've written the statement? Thanks.

Clarence P. Cazalot Jr. - President and Chief Executive Officer

Well I think the statement is pretty clear, Paul. It says that we have undertaken an evaluation of a potential separation of the company into two separate publicly traded entities. And suffice it to say that as we have looked at our options and our alternatives, that is one that we have elected to go forward and study in greater detail. And because we want to ensure that we are able to do that, fulsomely engage the people that need to be in that evaluation, we felt it was important to announce it and let people know that indeed, the Board had elected to go forward with this detailed evaluation.

Paul Sankey - Deutsche Bank

So basically, you are still finalizing the split of assets. The reason I am asking this is because you can debate whether or not the Canadian heavy oil sands should actually stay within the downstream whether or not you should slip refinery into an upstream valued company and other issues such as that.

Clarence P. Cazalot Jr. - President and Chief Executive Officer

Yes, I think there is a lot of things, frankly, Paul, that need to be decided. And obviously, that's why we are limited in terms of what we are going to say today. We did say, however, that the businesses... the current business segments that would be combined with the exploration, production, integrated gas and the oil sands mining business with the refining, marketing and transportation business being a separate one. And that's simply because as we look at where the businesses best fit, we think Oil Sands Mining fits better with the upstream, in part because of what Dave indicated earlier that we now see greater potential in the in situ resource than we did at time of the acquisition. And obviously, that lends itself to upstream type skill sets and technologies. But also, I think as everyone is aware, the SEC is there looking to finalize their thoughts on reserve estimation and estimates is certainly now looking much more seriously at classifying mining reserves as convention... not conventional, but as oil and gas reserves. So, think it makes more sense there. I know other companies do it differently. But that's the fit we think is most logical, again, if indeed a separation were to occur.

Paul Sankey - Deutsche Bank

And just very finally the... I guess on timing, we can relatively confident of a vote in Q4. There is no reason to believe that there would be any drift in the way that we have seen other corporate action sliding in other oil companies.

Clarence P. Cazalot Jr. - President and Chief Executive Officer

We wouldn't have said it in our press release, Paul, if we didn't mean it. So that's what we've said.

Paul Sankey - Deutsche Bank

Thanks Clarence.

Clarence P. Cazalot Jr. - President and Chief Executive Officer

Yup.

Operator

All right, we'll move forward and take a question from Neil McMahon with Sanford Bernstein.

Neil McMahon - Sanford Bernstein

Hi. Just another question on the potential separation. How do you view your position in Canadian oil stands with respect to the availability of refining capacity for any additional volumes you would bring on into the future outside your capacity that you have already been allocated within this year a lot greater? Maybe walk through, if any deal were to happen, would there be certain requirements or contracts set up so that you would still have effective capacity in the ex-Marathon I suppose refining portfolio?

Clarence P. Cazalot Jr. - President and Chief Executive Officer

Neil, that's one of many details that would be part of this ongoing evaluation. But certainly, we would have before us the option if we believe it to be in the best interest of the company itself to have some kind of supply agreement between the two entities. But at this point, we're not prepared to say that that is something we would or would not do. It is an option and it's one of the things that will be studied.

Neil McMahon - Sanford Bernstein

Maybe in a related question, Clarence, given the fact that the share price of the company has been suffering for some time, have you seen any interest from other parties in Marathon as the combined entity? Has that sort of fished [ph] you to actually... and the Board to actually look at maybe splitting up or taking on a different tack, or is this something that was... that you see has been going on over the last few months? So I was just wondering if there was anything else that may have started you down this process.

Clarence P. Cazalot Jr. - President and Chief Executive Officer

Neil, if I am not being... I am consistent. And I have consistently said to these kinds of questions, we don't comment on those kinds of things. And again, as we said before, the valuation that we undertook internally started several months ago. And again, that is something that we undertook on our own. But we don't comment on contacts or discussions with other companies.

Neil McMahon - Sanford Bernstein

Okay, thanks.

Clarence P. Cazalot Jr. - President and Chief Executive Officer

Yes.

Operator

We'll take a question from Paul Cheng with Lehman Brothers.

Paul Cheng - Lehman Brothers

Hey guys.

Clarence P. Cazalot Jr. - President and Chief Executive Officer

How are you doing Paul?

Paul Cheng - Lehman Brothers

Very good. I guess I should not ask any more question about the separation.

Clarence P. Cazalot Jr. - President and Chief Executive Officer

You could, but you may not get an answer.

Paul Cheng - Lehman Brothers

So I'd probably save then answering the other question then. Gary, can you give us some market intelligence that how the diesel sales volume look like on a same-store sale, I mean in terms of the... on low [ph] diesel?

Gary R. Heminger - Executive Vice President, Downstream

Sure. In the second quarter, Paul, we found a slow down in same-store diesel around a, I would say, a 4 to 4.5% across the board, most of that caused by two reasons: First of all, a drop in tonnage in the market and secondly, the way the rig operators are now running their trucks. And if you are out on the interstate at all, you will see that they are running at a much lower speed than they had prior, which has really taken about... an improvement of about 4% in their miles per gallon, which has dropped demand. So to answer your question, in the 4 to 4.5% range.

Paul Cheng - Lehman Brothers

Okay. Well maybe that is indirectly related separation. With today's credit and also the, I guess that the high oil prices, I mean if the R&M [ph] is a independent company, what kind of working capital requirement or financing need it will be? I mean how big is your credit line need to be and how costly?

Clarence P. Cazalot Jr. - President and Chief Executive Officer

Again, Paul, you entered into an area that, again, part of the evaluation would be to ensure that if indeed a separation is implemented that both companies are investment grade and fully capable of handling all of their capital and funding and working capital requirements. So again, I don't want to speculate about those kinds of things. Suffice it to say, that's part of the analysis that will be done.

Paul Cheng - Lehman Brothers

Okay, very good. Thank you.

Operator

Our next question comes from Doug Leggate with Quadrant Capital.

Unidentified Analyst

Hi folks, how are you doing?

Clarence P. Cazalot Jr. - President and Chief Executive Officer

Good Doug.

Unidentified Analyst

I am going to try a couple here, Clarence. I am not going to talk about the separation too much. But you mentioned on the... or Howard mentioned on his introductory remarks about the fall in production in the third quarter partly being related to Equatorial Guinea. What I am kind of curious about here is can you give us some idea as just what the impact is there because, if I am not mistaken, these are very, very low margin upstream barrels, and at the same time, you are going to be ramping up barrels that you are basically telling us are going to earn $60 in that range per barrel. So can you give us an idea of how much the volume impact is likely to be in Q3 of the downtown EG [ph] and I've got a follow up

David E. Roberts Jr. - Executive Vice President, Upstream

Doug, this is Dave Roberts. As we talked about, we had basically a 16 day turnaround in the LNG facility. And I think as we talked in the last quarter, you can imagine that equates to about 30,000 barrel a day drop, 25,000 of that being natural gas, 5,000 of it being liquids. We think for the quarter that that's going to be slightly over 10,000 barrels a day. And I would remind you that even though the natural gas is low volume, it's turned into LNG, which are low value... it's turned into LNG that we do take value out of in the Integrated Gas segment.

Unidentified Analyst

Great, thanks for the volume number. My follow up is I guess there has been no update on the disposal program that you folks are targeting in the second half. So if you could bring us up to date there, that would be great. Thanks.

Clarence P. Cazalot Jr. - President and Chief Executive Officer

No, there is not much to say, Doug, other than what I said in the comments that we concluded the sale of the Norway assets and you should anticipate additional asset sale announcements in the third quarter. We are moving forward on our asset review program and the sale of those assets that we deem to be non-core to our company.

Unidentified Analyst

Do you think the 2 to 4 is still a good number to be realized this year?

Clarence P. Cazalot Jr. - President and Chief Executive Officer

It's the number we set [ph] in terms of what would be concluded by the middle of 2009. So I think the number is still valid and the timing is still valid.

Unidentified Analyst

Great stuff. Thanks.

Operator

We'll take a question from Michael LaMotte with JP Morgan.

Michael LaMotte - JP Morgan

Thanks. Good afternoon everybody. Clarence, if I can sort of beat this horse hopefully not dead on the separation. I think we've largely assumed a complete separation. And if I look at the value of integration, terms of supply agreements and the CapEx requirements on the downstream into '09 and 2010, the upstream was providing a good bit of cash into those investments. Is one of the options on the table here just to... perhaps an IPO of 20% of the upstream business to try to get a revaluation, but not a... or is the ultimate end game here total separation?

Clarence P. Cazalot Jr. - President and Chief Executive Officer

No, I think I will again, let the press release speak for itself. We are looking at the potential separation in the two business. Beyond that, we are not speculating on IPOs, we are not speculating on the funding ability or debt levels of the various companies. Those are all details to be dealt with as we go through this process. But again, as I said earlier suffice it to say if this were something that the evaluation said we should do, you can rest assured that we would do it on a basis that both companies would not just be operationally strong, but financially strong and able to take care of, again, all of their funding requirements. So you can take that as a given.

Michael LaMotte - JP Morgan

Okay. So the takeaway is really all options, as Arjun was getting at, all options are on the table at this point.

Clarence P. Cazalot Jr. - President and Chief Executive Officer

Well, I'm not sure all options. We've said we are evaluating a potential separation of the company.

Michael LaMotte - JP Morgan

Right.

Clarence P. Cazalot Jr. - President and Chief Executive Officer

Within the context of that separation, there are a number of options that we could pursue. And so yes, within the context of that, we are looking at many, many options, yes.

Michael LaMotte - JP Morgan

Okay. And then to follow up on Doug's question on specific assets. If I look at your positions in the Haynesville and Woodford, they are relatively small, particularly versus of the E&P companies. Do you see yourself as a net buyer or a seller of acreage in those two play?

David E. Roberts Jr. - Executive Vice President, Upstream

Michael, it's Dave Roberts. I think there is a couple of things. Number one is we have no aspirations to be like some of our independent competitors in terms of having massive land positions. What you see particularly in the Anadarko Woodford is we have a very focused and we think very core position. But I keep going to the overall philosophy of Marathon is we're going to do what's best for our shareholders, and that may include coring up in some of these basins and leaving others.

Michael LaMotte - JP Morgan

Okay, helpful. Thank you.

Operator

All right, we'll go ahead and take our next question from Erik Mielke with Merrill Lynch.

Erik Mielke - Merrill Lynch

Yes, hi there. Following up on the very comprehensive update you gave on the upstream business and where the different projects are on the ramp up throughout the second half of the year. The one part of the business that hasn't performed as one would have hoped is the Oil Sands business. Can you talk a little bit about profitability when you are operating at these sort of 25,000 barrels per day level and what that does to operating costs? Because it seems that you are not really getting a huge contribution from that segment.

Gary R. Heminger - Executive Vice President, Downstream

Well, let me put that... this is Gary... let me put that in perspective and go over our cash operating cost. I was anticipating that question based on the performance in the second quarter. And just let me state that Marathon Oil Canada's cash operating costs we are in the 40 to $45 range for the second quarter versus 35 to 40 per barrel in the first quarter. And this higher OpEx is primarily due to higher cost of natural gas, diesel, electricity and then the planned and unplanned maintenance that we talked about before, specifically also the execution of our tailings management plan.

So when you look at those costs and we compare those against some of our major competitors, we blend... we have a different operation than some of our major competitors in the oil sands in that we blend a rather large amount of feedstocks in order to be able to make the oil sand available for market sale. So we have a little bit of a different manner in which we calculate that. But we have subtracted those purchase feedstocks out.

So if you look at... versus the first quarter, we were of course higher than our operating cost in the first quarter. But there are two things that went on. First of all, the ore grade quality here in the second quarter. We are just finishing up one of the base cells of production. And as we are finishing that base cell up, we of course ran into much lower ore grade quality, still moving the same tonnage per day, but lower ore grade quality. Now that we have completed that right at the 1st of July, we are moving into a new area in the South and expect to be able to improve on that as we go into the third quarter. And then lastly, as we have really ramped up the execution of a temporary tailings management issue, we believe that will help us going into the second half of the year as well.

Clarence P. Cazalot Jr. - President and Chief Executive Officer

And I would just say, Erik, on our slide 16, what we have tried to illustrate is what the overall profitability is of that business if you exclude the unrealized derivates and... it would have been $63 million in the quarter. And that's a quarter, as Gary said, because of this tailing management program and dealing with the poor ore grade, our volumes were down. And again, I think the team is working well together, Chevron... Chevron, Marathon both in terms of improving that as well as the overall reliability of the system. So I wouldn't be too disheartened by near-term performance, great asset that's going be a significant contributor for us.

Erik Mielke - Merrill Lynch

That's great. So looking forward say maybe two quarters and you have everything up in running again and assuming a similar price environments what we had in the second quarter, would you now pegs [ph] 35 be realistic?

Unidentified Company Representative

Well we have not completed nor has the operator completed next year's plans. As we came into this year, we were expecting somewhere in the 30 to 33 range and have been disappointed in the performance of clients [ph] I just outlined. So won't feel as the operator puts forth the 2009 business plan. Let me put it this way, we will be very disappointed if it wasn't north of where we are this year.

Erik Mielke - Merrill Lynch

That's great. Thanks.

Operator

We move to the question from Faisel Khan with Citigroup.

Faisel Khan - Citigroup

Good afternoon,

Clarence P. Cazalot Jr. - President and Chief Executive Officer

Good afternoon.

Faisel Khan - Citigroup

Wanted to get just comment on the startup of the construction of Detroit in terms of, what kind of contingencies you guys have planned in terms of cost inflation and labor inflation, for the cost of that project?

Gary R. Heminger - Executive Vice President, Downstream

Okay, this is Gary. Just starting up here and please understand we're just in the early stages of the similar work and we're in negotiations with some of the fabricators and some of the main contractors. So I really don't want to get in and discuss any contingencies. But number that we've put out this $1.9 billion project we believe we've adequately covered what the critical skills, the fabricating costs and materials will be in that project.

Faisel Khan - Citigroup

Okay fair enough. An then on steam [ph] refining business, I know you guys have talked about kind of your ability to have discretionary blending of ethanol and talk about in the quarter, what kind of advantage or disadvantage that may have had for you in the quarter in terms of blending ethanol?

Unidentified Company Representative

Garry Peiffer is online. Garry do you have any of those... I don't have those details with me.

Garry L. Peiffer - Senior Vice President, Finance and Commercial Services

Yes, this is Garry Peiffer. I guess the only thing we've... we don't really talk about our ethanol profitability. But what I can tell you is in the quarter our... please let me just grab it here. Our actual blending of ethanol is up versus our prior years. Such that we blended about 55,000 barrels a day of ethanol in the second quarter of '08. That compares to about 40,000 barrels in the second quarter of '07. So, a substantial increase in the amount of ethanol we are blending. We believe that because of the infrastructure which we've invested in, we are now capable of ethane blend 10% ethanol and 90% gasoline throughout our entire marketing network that we are able to take advantage of the fairly substantial difference that is in the market today, between ethanol prices and gasoline prices. So just the shear volume of increase that we had over the last year plus the positive variance we have had because of the pricing, has given us we think a pretty strong advantage in our ethanol blending program this quarter.

Faisel Khan - Citigroup

Okay great. Thanks for the time.

Operator

Alright. We will go ahead and move to a question from Robert Kessler with Simmons & Company.

Robert Kessler - Simmons & Company

Good afternoon. Sorry I have got another separation question. This is one area where you seemed to have honed in fairly specifically on, which is the separation in two big buckets that being as opposed to multiple smaller buckets. And I am curious if you could comment into why you're going ahead and made that decision at this point in evaluation process.

A couple of things that come to mind would be a I free vintage countless [ph] times in the downstream and spinning off your midstream transportations assets into an MLP. I know you've not been particularly keen on that idea in the past, but it doesn't play a multiple gap that it could be realized and as a consequence, you could accelerate some value there.

And then in the upstream, it seems you've got a number of big assets that would be attractive to some of your major or pears or perhaps independent of the other assets. Certainly you have already commented about breaking apart the downstream from the oil sands, the majors outside results have been quite keen to pick up oil sand companies in isolation and then in integrated gas you have already highlighted your interest in farming out perhaps EG LNG to tie in some reserves held by others there, which would indicate perhaps of being possible separate divestment candidate.

And then finally in Angola to non-operated interest largely, I know those partners are quite keen on their own or interested in expanding their own interest there, so perhaps selling to partners in Angola would make sense. Just it seems you'd excluded those options at a fairly early stages; so just curious as to why?

Clarence P. Cazalot Jr. - President and Chief Executive Officer

I guess rather thoughtful [ph] I will say that, as we have said now for some time, we had an asset review program underway and you saw the first result of that in the sale, in Norway. And I as indicated earlier, we anticipate additional sales to come. So I think clearly there will be other assets that we don't see as part of our ongoing portfolio, either as a combined entity or in separate companies. I think we are in the business about creating value and I would say that the combination of the assets that we have indicated thus far in our press release, give us the best opportunity that we believe to do just that. And are there other potential combinations? Perhaps, you've indicated some.

But we think that when we look at the aggregation of our assets in our downstream business, to your point we have a great set of assets, from our refining assets to our midstream assets to our marketing assets, and our teams... our management teams will continue to look at what they can do to capture the most value from those. And in the end, if we decide to separate companies that will be an issue for the new management and Board to consider whether or not MLPs are part of strategy,

So, again I don't want to pre-suppose anything along those lines, but I'll simply tell you that we management team that indeed continually assesses how we best build our business to create value. And some of the things you've discussed would not be foreign to us, but we have indicated a press release what we believe to be the best aggregation of assets going forward.

Robert Kessler - Simmons & Company

Thanks Clarence, if I could ask one quick follow up just a quick numerical one; on the midstream business do you have an estimate EBITDA just for you midstream assets?

Clarence P. Cazalot Jr. - President and Chief Executive Officer

No we did not that public Robert.

Robert Kessler - Simmons & Company

Okay, thanks.

Operator

Alright. We will take your question from Mark Gilman with The Benchmark Company.

Mark Gilman - The Benchmark Company

Hi good afternoon folks. I wanted to talk a little bit actual [ph] production and the ability sustain ahead both Neptune as well as Alpine. It would appear perhaps there might be a longer ability to sustain at Neptune that I otherwise thought, given that you are at 50 a day and one well still remains to be drilled. Gary [ph] any thoughts on how long you can stay at that well?

David E. Roberts Jr. - Executive Vice President, Upstream

Well Mark I would say you could predict those kind of things. I will tell you that just talk... let's talk about Alpine first. We basically are on the cusp of reaching a facility capacity of with 7 wells and as we have more wells existing in the Alpine complex. We have bolt-on [ph] schedule coming next year. So, without predicting what the reservoirs are going to do because it is very early days, I think we are on track to basically keep the SCSO at a practical level for the foreseeable future. Net change in again, we have got five wells on and the sixth well will be on, in the early part of August. Those wells have performed to expectation perhaps exceeded, but again very early days and we'll have to let the reservoir shake down before we make any predictions about how long we can stay at 15 KBDs.

Mark Gilman - The Benchmark Company

Hey Dave, if I could just follow-up. I was trying to do some rough math on the Bakken numbers that you were talking about and some of them are there in the release. How many producing wells do you have currently? I was guessing about 60, is that right?

David E. Roberts Jr. - Executive Vice President, Upstream

Hold on just a second, let me... I've got about 50 wells right now.

Mark Gilman - The Benchmark Company

Yes, that suggests a lower average per well deliverability than I think we've talked about in the past. Is that something that you're seeing.

David E. Roberts Jr. - Executive Vice President, Upstream

No I think, we are still in the province of 250 to 300 barrel a day IPs, 30 days average IPs that's how Marathon measures them and we still believe that we are talking about 340 barrels a day recovery. So a lot of what is going on in the Bakken has to with how the wells are staggered when they come on and you have got be very careful about how you add up production. But we are not seeing in any declination where our expectations are.

Mark Gilman - The Benchmark Company

What's the royalty [ph] on that Dave?

David E. Roberts Jr. - Executive Vice President, Upstream

It varies, but we have a very high NRI out there.

Mark Gilman - The Benchmark Company

Okay, thanks.

Operator

All right, we'll move to a question from George Williams with JP Morgan.

Unidentified Analyst

Hi, good afternoon, assuming you proceed with the separation of the businesses, do you intend to maintain your credit rating at the current level or will be willing to accept a slightly lower rating?

Janet F. Clark - Executive Vice President and Chief Financial Officer

I think as Clarence already said, we would anticipate setting up both of these companies to be very strong financially and we would expect both of them to maintain an investment grade rating.

Unidentified Analyst

Okay. Low investment grade, a BBB- level or a mid BBB [ph].

Janet F. Clark - Executive Vice President and Chief Financial Officer

I think I answered your question the best I can at this time.

Unidentified Analyst

Okay, thank you.

Operator

All right, we'll move forward to a question from Matt Daly with Reuters.

Unidentified Analyst

Hi, gentlemen. Thank you for allowing us to join the call today. My question is of course on the potential split. First of all, I want to look just strategically on how you're going to access potentially taking these units apart when refineries are at, a lot of people believe, near the bottom of the cycle at this point. Can you explain how that might affect to your judgments?

Clarence P. Cazalot Jr. - President and Chief Executive Officer

I am sorry, how it would affect our judgment, again, we have not had made any judgment here. I think what we have said is we are undertaking an evaluation and all of the factors in terms of what the current market is and our projected performance for all of our assets will be taken into account. But again, I don't want to get into a discussion of what the various decision gates are for this evaluation.

Unidentified Analyst

Okay. And one follow up to that. You did say that we could expect some announcements on the asset dispositions in the third quarter. Can you say how that program will be affected by your plan to assess the spilt off?

Clarence P. Cazalot Jr. - President and Chief Executive Officer

Well, again, the potential separation is an evaluation. So I think the business plans and the actions that we have underway today, including all of our operating,activities investment activities as well as the asset sale process that's underway are going to go forward concurrent with the evaluation. So essentially, there is no effect.

Unidentified Analyst

Okay, thank you.

Operator

Okay, we'll take a question from Jessica Resnick with Dow Juan... I'm sorry, Dow Jones.

Jessica Resnick - Dow Jones

Hi, this is Jessica Resnick all, with Dow Jones. I do have to go back to the potential separation issue. And I guess one of the things that's interesting to me is that Marathon acquired these assets in a fairly beneficial time for the company in terms of acquiring them right before the boom scene in 2006 and '07. Is the option to do a split being put on the table now because a sale of these assets is simply not an option given current asset values?

Clarence P. Cazalot Jr. - President and Chief Executive Officer

Again, Jessica, I don't want to... I'm not going to comment on how we got to this point or what we think the outcome is going to be. I think you have to except our announcement at face value. We are undertaking this evaluation and we intend to conclude it by the fourth quarter this year. So that's about all I'll say.

Jessica Resnick - Dow Jones

So the evaluation is not considering a sale; it is only considering a separation of the two companies.

Clarence P. Cazalot Jr. - President and Chief Executive Officer

That's what our press release says, yes.

Jessica Resnick - Dow Jones

Thank you.

Clarence P. Cazalot Jr. - President and Chief Executive Officer

Okay.

Operator

Our next question comes from Robin Levine with JP Morgan.

Robin Levine - JP Morgan

My question has already been answered already. Thank you.

Clarence P. Cazalot Jr. - President and Chief Executive Officer

Thank you.

Operator

And we'll move forward to a question from Paul Sankey with Deutsche Bank.

Paul Sankey - Deutsche Bank

Very quickly, guys. Is the separation technically a change of control?

Clarence P. Cazalot Jr. - President and Chief Executive Officer

It is not.

Paul Sankey - Deutsche Bank

Thanks. That's it.

Operator

All right, and we will take a question from Mark Gilman with The Benchmark Company.

Mark Gilman - The Benchmark Company

Guys, at the risk of getting buried conceptually into something I don't understand, maybe Garry Peiffer or Gary Heminger can help me understand something.

Unidentified Company Representative

Sure.

Mark Gilman - The Benchmark Company

You indicated that you have and will continue to hedge long haul crews. Yet, particularly in periods like this, and frankly in most quarters, we continue to talk about the crude on the water adjustment, which of course, in this period was a particularly significant negative item. If you have been hedging the delivery delay and so far as the crude on the water, why is this crude on the water adjustment even relevant?

Garry L. Peiffer - Senior Vice President, Finance and Commercial Services

Mark, this is Garry Peiffer. The way the crude oil adjustment that we are referring to in Howard's remarks, that's for some of our term purchase crudes, which essentially we take title to in the Middle East, but we don't actually price till they arrive in the United States by contract. So, essentially, contractually, those long haul crudes on a term basis are, at least from a contractual standpoint, hedged. We take title, but we don't price it until they come to the United States. So that's why we have to provisionally price them when we take title, but we have to re-price them, essentially mark-to-market those crudes until we take delivery.

So when Howard referred to the long haul crudes, maybe we didn't make it clear, we are talking about long haul spot purchases. Those crudes that we buy on a spot basis that take a long time from the time we contract to buy them till we actually are able to use them. So two different types of transactions, term transactions versus spot transactions.

Mark Gilman - The Benchmark Company

Garry, thanks a lot. If I could just ask Dave Roberts to clarify the numbers that you put, Dave, on the planned turnaround at the LNG facility. I must have gotten something wrong because I think you said a 30,000 a day equivalent hit, and then you went on to say it was 10 for the quarter and it's a 16 day turn. What have I got wrong?

David E. Roberts Jr. - Executive Vice President, Upstream

Well, I think the issue is it's not a complete 16 day shutdown, Mark. What you basically would have seen is we had it planned for a certain number of days to be off 100% and a certain number of days of warm up. And what I mentioned to you is that we were well ahead of the 16 day schedule in terms of starting on the 19th and basically be back at full capacity by this weekend and basically brought the plan up to 50% by the beginning of this week. And so it's probably just the number of days in your calculation.

Mark Gilman - The Benchmark Company

David, if it's less than 60 days, then the number should be a lot smaller.

David E. Roberts Jr. - Executive Vice President, Upstream

16, one six, Mark, I'm sorry, 16.

Mark Gilman - The Benchmark Company

We'll take it offline. Thanks.

Operator

And we have no further questions remaining at this time. I would like to turn the conference back over to Mr. Thill for any additional or closing remarks.

Howard J. Thill - Vice President, Investor Relations and Public Affairs

Well, Jennifer, we appreciate all the interest from those listeners and we hope you have a good afternoon. Good bye.

Operator

Thank you so much. sir. This does conclude today's teleconference. We thank you for your participation and have a great day.

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Source: Marathon Oil Corp. Q2 2008 Earnings Call
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