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Marathon Completes Acquisition of Ashland's Interest in MAP

HOUSTON, Texas -- Marathon Oil Corp. announced today that it has completed its acquisition of Ashland Inc.'s 38 percent interest in Marathon Ashland Petroleum LLC (MAP), as well as two complementary businesses, in a transaction valued at approximately $3.73 billion, excluding any potential tax liabilities.

MAP is now a wholly owned subsidiary of Marathon, and its name will be changed to Marathon Petroleum Company LLC effective Sept. 1, 2005, following orderly notifications to customers, suppliers, regulatory agencies and other parties.

In addition to acquiring Ashland's interest in MAP, Marathon has acquired Ashland's maleic anhydride business, including the company's plant located in Neal, W.Va., adjacent to MAP's Catlettsburg (Kentucky) refinery, as well as a portion of its Valvoline Instant Oil Change business, consisting of 60 retail outlets located in Michigan and Ohio.

"Today marks an important milestone that reinforces Marathon's strategic intent to remain a fully integrated company," said Clarence P. Cazalot, Jr., president and CEO of Marathon Oil Corporation. "MAP, soon to be Marathon Petroleum Company LLC, has distinguished itself as a leading refining, marketing and transportation organization and we look forward to the many opportunities and contributions this segment of our company will provide in our drive for continued value growth."

"Today, we have completed one of our key strategic objectives," said James J. O'Brien, Ashland's chairman and chief executive officer. "This transaction demonstrates Ashland's commitment to deliver long-term value to our shareholders and brings to a close a long and notable chapter of our history in petroleum refining and marketing."

On April 28, 2005, Marathon and Ashland announced that the companies had reached agreement on a modified transaction that amended the agreement between Marathon and Ashland to acquire Ashland's interest in MAP.

Under the terms of the modified agreement, Marathon has acquired Ashland's interest in MAP and other complementary businesses for consideration payable as follows:

-- $879 million in cash and accounts receivable distributed to Ashland by
-- $915 million in Marathon common stock (17.5 million shares valued at
$52.17 per share), which will be distributed to Ashland's shareholders. The total consideration value of these 17.5 million shares will be based upon the closing price of Marathon stock today.
-- $1.92 billion in assumed debt
-- Assumed environmental liabilities with a present value of $15 million

In addition to this consideration, and as agreed to under the terms of the modified transaction, Marathon will indemnify Ashland for tax obligations associated with the transaction. Based upon the closing price of Ashland stock on June 29, Marathon's tax obligation would be approximately $48 million. Marathon's exact tax obligation will depend upon, among other things, the trading price of New Ashland stock on July 1 and the final, adjusted tax basis of New Ashland stock which will be calculated after July 1.

At closing, Ashland also received a cash and accounts receivable distribution of approximately $518 million representing 38 percent of MAP's distributable cash as of June 30, 2005.

The $1.92 billion in assumed debt will be retired by Marathon on July 1, 2005. With the closing of this transaction, including the newly issued shareholder equity of $915 million, Marathon estimates its cash-adjusted debt-to-capital ratio will be less than 35 percent, well within the company's stated target of less than 40 percent, providing Marathon the financial flexibility to support the company's global growth plans, as well as preserve the company's overall credit quality. Marathon expects the acquisition to be immediately accretive on an operating cash flow and earnings per share basis.
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