As discussed in our annual and quarterly reports filed with the Securities and Exchange Commission, Marathon Oil Corporation has received Notices of Violation
(“NOVs”) from the Environmental Protection Agency (“EPA”) related to alleged violations of the Clean Air Act with respect to our operations on the Fort Berthold Indian Reservation between 2015 and 2019. On July 10, 2024, we
entered into a consent decree with the EPA and Department of Justice to fully resolve this matter. The consent decree is subject to a 30-day public comment period before it may be considered for entry by the
court.
The consent decree will require the completion of mitigation projects, implementation of specific injunctive relief, and payment of a
$64.5 million civil penalty with substantially all of that civil penalty accrued in our previously filed quarterly report for the period ending March 31, 2024. In 2022, we began early implementation of the injunctive requirements
associated with likely settlement terms and are scheduled to complete this work in 2025. The total cost associated with the injunctive relief is estimated to be approximately $177 million, but over 70% of that cost has been incurred or included
in the previously announced 2024 capital budget with the remaining amount to be spent by the end of 2025.
The consent decree sets forth a detailed
compliance schedule with deadlines for achievement of milestones through at least 2026. The consent decree further contains requirements for ongoing permitting, inspection and monitoring, maintenance, auditing, and reporting. Findings from such
inspection, monitoring and auditing activities may result in decisions to temporarily shut in or reduce production from certain wells and facilities.
We
have cooperated fully with the EPA, including collecting and sharing extensive data to resolve this matter. The vast majority of emission reductions are being achieved by Marathon’s voluntary commitment to incorporate industry-leading
technologies, like our new lowest emitting automated facilities (LEAF). This work in the Bakken, which has been ongoing for some time, complements and builds on our longstanding emission reduction and overall compliance enhancement efforts. Marathon
does not admit liability regarding any of the allegations in the complaint associated with the consent decree and elected to resolve the allegations in a negotiated settlement rather than litigation.
We do not believe that the mitigation expenditures, penalties, and injunctive relief that resulted from this settlement will have a material adverse effect on
either our business or operations or the previously announced Agreement and Plan of Merger with ConocoPhillips.
Forward-Looking Statements
This report includes “forward-looking statements” as defined under the federal securities laws. All statements other than statements of historical
fact included or incorporated by reference in this communication, including, among other things, statements regarding the expected resolution of the NOVs, the anticipated effect of the consent decree on our business and operations, our estimates
regarding the costs of mitigation projects and the timing thereof, the scheduled completion of injunctive requirements and the total cost associated with the injunctive relief as well as statements regarding the proposed business combination
transaction between ConocoPhillips (“ConocoPhillips”) and Marathon Oil Corporation (“Marathon”), future events, plans and anticipated results of operations, business strategies, the anticipated benefits of the proposed
transaction, the anticipated closing date for the proposed transaction and other aspects of Marathon’s or ConocoPhillips’ operations or operating results are forward-looking statements. Words and phrases such as “ambition,”
“anticipate,” “estimate,” “believe,” “budget,” “continue,” “could,” “intend,” “may,” “plan,” “potential,” “predict,” “seek,”
“should,” “will,” “would,” “expect,” “objective,” “projection,” “forecast,” “goal,” “guidance,” “outlook,” “effort,” “target” and
other similar words can be used to identify forward-looking statements. However, the absence of these words does not mean that the statements are not forward-looking. Where, in any forward-looking statement, Marathon or ConocoPhillips expresses an
expectation or belief as to future results, such expectation or belief is expressed in good faith and believed to be reasonable at the time such forward-looking statement is made. However, these statements are not guarantees of future performance
and involve certain risks, uncertainties and other factors beyond Marathon’s or ConocoPhillips’ control. Therefore, actual outcomes and results may differ materially from what is expressed or forecast in the forward-looking statements.
The following important factors and uncertainties, among others, could cause actual results or events to differ materially from those described in
forward-looking statements: ConocoPhillips’ ability to successfully integrate Marathon’s businesses and technologies, which may result in the combined company not operating as effectively and efficiently as expected; the risk that the
expected benefits and synergies of the proposed transaction may not be fully achieved in a timely manner, or at all; the risk that Marathon or ConocoPhillips will be unable to retain and hire key personnel and maintain relationships with their
suppliers and customers; the risk associated with Marathon’s ability to obtain the approval of its stockholders required to consummate the proposed transaction and the timing of the closing of the proposed transaction, including the risk that
the conditions to the transaction are not satisfied on a timely basis or at all or the failure of the transaction to close for any other reason or to close on the anticipated terms, including the anticipated tax treatment; the risk that any
regulatory approval, consent or authorization that may be required for the proposed transaction is not obtained or is obtained subject to conditions that are not anticipated; the occurrence of any event, change or other circumstance that could give
rise to the termination of the proposed transaction; unanticipated difficulties, liabilities or expenditures relating to the transaction; the effect of the announcement, pendency or completion of the proposed transaction on the parties’
business relationships and business operations generally; the effect of the announcement or pendency of the proposed transaction on the parties’ common stock prices and uncertainty as to the long-term