UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C.  20549

FORM 10-Q

(Mark One)
 
[X]
QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d)
OF THE SECURITIES EXCHANGE ACT OF 1934
 
For the Quarterly Period Ended June 30, 2013

OR

[   ]
TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d)
OF THE SECURITIES EXCHANGE ACT OF 1934
 
For the transition period from _____ to _____

Commission file number 1-5153

Marathon Oil Corporation
(Exact name of registrant as specified in its charter)

Delaware
 
25-0996816
(State or other jurisdiction of incorporation or organization)
 
(I.R.S. Employer Identification No.)
5555 San Felipe Street, Houston, TX  77056-2723
(Address of principal executive offices)

(713) 629-6600
(Registrant’s telephone number, including area code)
 
Indicate by check mark whether the registrant (1) has filed all reports required to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during the preceding 12 months (or for such shorter period that the registrant was required to file such reports), and (2) has been subject to such filing requirements for the past 90 days.       Yes R No £

Indicate by check mark whether the registrant has submitted electronically and posted on its corporate Web site, if any, every Interactive Data File required to be submitted and posted pursuant to Rule 405 of Regulation S-T (§232.405 of this chapter) during the preceding 12 months (or for such shorter period that the registrant was required to submit and post such files).    Yes R No £
 
Indicate by check mark whether the registrant is a large accelerated filer, an accelerated filer, a non-accelerated filer or a smaller reporting company.  See the definitions of “large accelerated filer,” “accelerated filer” and “smaller reporting company” in Rule 12b-2 of the Exchange Act.
Large accelerated filer     þ   
Accelerated filer              o
Non-accelerated filer        o         (Do not check if a smaller reporting company) 
Smaller reporting company         o    
 
Indicate by check mark whether the registrant is a shell company (as defined in Rule 12b-2 of the Exchange Act).         
Yes o No þ
 
There were 709,671,894 shares of Marathon Oil Corporation common stock outstanding as of July 31, 2013 .



MARATHON OIL CORPORATION
 
Form 10-Q
 
Quarter Ended June 30, 2013


 
INDEX
 
 
 
Page
 
 
 
 
 
 
 
 
 
 

 
Unless the context otherwise indicates, references in this Form 10-Q to “Marathon Oil,” “we,” “our,” or “us” are references to Marathon Oil Corporation, including its wholly-owned and majority-owned subsidiaries, and its ownership interests in equity method investees (corporate entities, partnerships, limited liability companies and other ventures over which Marathon Oil exerts significant influence by virtue of its ownership interest).


1


Part I - Financial Information
Item 1. Financial Statements

MARATHON OIL CORPORATION
Consolidated Statements of Income (Unaudited)
 
Three Months Ended
 
Six Months Ended
 
June 30,
 
June 30,
(In millions, except per share data)
2013
 
2012
 
2013
 
2012
Revenues and other income:
 
 
 
 
 
 
 
Sales and other operating revenues, including related party
$
3,419

 
$
2,975

 
$
6,859

 
$
5,919

Marketing revenues
499

 
757

 
929

 
1,606

Income from equity method investments
77

 
60

 
195

 
138

Net gain (loss) on disposal of assets
(107
)
 
(28
)
 
2

 
138

Other income
10

 
20

 
19

 
23

Total revenues and other income
3,898

 
3,784

 
8,004

 
7,824

Costs and expenses:
 

 
 

 
 
 
 

Production
614

 
485

 
1,192

 
987

Marketing, including purchases from related parties
495

 
755

 
924

 
1,609

Other operating
86

 
107

 
197

 
199

Exploration
133

 
172

 
598

 
307

Depreciation, depletion and amortization
738

 
580

 
1,485

 
1,154

Impairments
—

 
1

 
38

 
263

Taxes other than income
93

 
55

 
177

 
123

General and administrative
164

 
154

 
338

 
313

Total costs and expenses
2,323

 
2,309

 
4,949

 
4,955

Income from operations
1,575

 
1,475

 
3,055

 
2,869

Net interest and other
(71
)
 
(57
)
 
(143
)
 
(107
)
Income before income taxes
1,504

 
1,418

 
2,912

 
2,762

Provision for income taxes
1,078

 
1,025

 
2,103

 
1,952

Net income
$
426

 
$
393

 
$
809

 
$
810

Per Share Data
 

 
 

 
 

 
 

Net Income:
 

 
 

 
 

 
 

Basic
$
0.60

 
$
0.56

 
$
1.14

 
$
1.15

Diluted
$
0.60

 
$
0.56

 
$
1.14

 
$
1.14

Dividends paid
$
0.17

 
$
0.17

 
$
0.34

 
$
0.34

Weighted average shares:
 

 
 

 
 

 
 

Basic
710

 
706

 
709

 
705

Diluted
714

 
709

 
713

 
709

  The accompanying notes are an integral part of these consolidated financial statements .

2


MARATHON OIL CORPORATION
Consolidated Statements of Comprehensive Income (Unaudited)
 
Three Months Ended
 
Six Months Ended
 
June 30,
 
June 30,
(In millions)
2013
 
2012
 
2013
 
2012
Net income
$
426

 
$
393

 
$
809

 
$
810

Other comprehensive income (loss)
 

 
 

 
 

 
 

Postretirement and postemployment plans
 

 
 

 
 

 
 

Change in actuarial loss and other
133

 
(3
)
 
146

 
10

Income tax (provision) benefit on postretirement and
 

 
 

 
 

 
 

postemployment plans
(49
)
 
1

 
(54
)
 
(4
)
Postretirement and postemployment plans, net of tax
84

 
(2
)
 
92

 
6

Foreign currency translation and other
 

 
 

 
 

 
 

Unrealized loss
(3
)
 
(1
)
 
(4
)
 
—

Income tax benefit on foreign currency translation and other
1

 
—

 
1

 
—

Foreign currency translation and other, net of tax
(2
)
 
(1
)
 
(3
)
 
—

Other comprehensive income (loss)
82

 
(3
)
 
89

 
6

Comprehensive income
$
508

 
$
390

 
$
898

 
$
816

  The accompanying notes are an integral part of these consolidated financial statements .


3


MARATHON OIL CORPORATION
Consolidated Balance Sheets (Unaudited)
 
June 30,
 
December 31,
(In millions, except per share data)
2013
 
2012
Assets
 
 
 
Current assets:
 
 
 
Cash and cash equivalents
$
246

 
$
684

Receivables
2,443

 
2,418

Inventories
368

 
361

Other current assets
224

 
299

Total current assets
3,281

 
3,762

Equity method investments
1,244

 
1,279

Property, plant and equipment, less accumulated depreciation,
 

 
 

depletion and amortization of $20,639 and $19,266
27,457

 
28,272

Goodwill
499

 
525

Other noncurrent assets
2,567

 
1,468

Total assets
$
35,048

 
$
35,306

Liabilities
 

 
 

Current liabilities:
 

 
 

Commercial paper
$
—

 
$
200

Accounts payable
2,152

 
2,324

Payroll and benefits payable
137

 
217

Accrued taxes
1,397

 
1,983

Other current liabilities
254

 
173

Long-term debt due within one year
68

 
184

Total current liabilities
4,008

 
5,081

Long-term debt
6,428

 
6,512

Deferred tax liabilities
2,406

 
2,432

Defined benefit postretirement plan obligations
739

 
856

Asset retirement obligations
2,039

 
1,749

Deferred credits and other liabilities
407

 
393

Total liabilities
16,027

 
17,023

Commitments and contingencies


 


Stockholders’ Equity
 

 
 

Preferred stock – no shares issued or outstanding (no par value,
 

 
 

26 million shares authorized)
—

 
—

Common stock:
 

 
 

Issued – 770 million and 770 million shares (par value $1 per share,
 
 
 
1.1 billion shares authorized)
770

 
770

Securities exchangeable into common stock – no shares issued or
 

 
 

outstanding (no par value, 29 million shares authorized)
—

 
—

Held in treasury, at cost – 61 million and 63 million shares
(2,477
)
 
(2,560
)
Additional paid-in capital
6,614

 
6,616

Retained earnings
14,458

 
13,890

Accumulated other comprehensive loss
(344
)
 
(433
)
Total equity
19,021

 
18,283

Total liabilities and stockholders' equity
$
35,048

 
$
35,306

  The accompanying notes are an integral part of these consolidated financial statements .

4


MARATHON OIL CORPORATION
Consolidated Statements of Cash Flows (Unaudited)
 
Six Months Ended
 
June 30,
(In millions)
2013
 
2012
Increase (decrease) in cash and cash equivalents
 
 
 
Operating activities:
 

 
 

Net income
$
809

 
$
810

Adjustments to reconcile net income to net cash provided by operating activities:
 

 
 

Deferred income taxes
113

 
75

Depreciation, depletion and amortization
1,485

 
1,154

Impairments
38

 
263

Pension and other postretirement benefits, net
34

 
(22
)
Exploratory dry well costs and unproved property impairments
494

 
174

Net gain on disposal of assets
(2
)
 
(138
)
Equity method investments, net
—

 
7

Changes in:
 
 
 

Current receivables
17

 
(107
)
Inventories
(16
)
 
(18
)
Current accounts payable and accrued liabilities
(651
)
 
(450
)
All other operating, net
75

 
(6
)
Net cash provided by operating activities
2,396

 
1,742

Investing activities:
 

 
 

Additions to property, plant and equipment
(2,676
)
 
(2,181
)
Disposal of assets
333

 
218

Investments - return of capital
29

 
21

All other investing, net
15

 
(59
)
Net cash used in investing activities
(2,299
)
 
(2,001
)
Financing activities:
 

 
 

Commercial paper, net
(200
)
 
550

Debt issuance costs
—

 
(9
)
Debt repayments
(148
)
 
(111
)
Dividends paid
(241
)
 
(240
)
All other financing, net
46

 
20

Net cash (used in) provided by financing activities
(543
)
 
210

Effect of exchange rate changes on cash
8

 
8

Net decrease in cash and cash equivalents
(438
)
 
(41
)
Cash and cash equivalents at beginning of period
684

 
493

Cash and cash equivalents at end of period
$
246

 
$
452

  The accompanying notes are an integral part of these consolidated financial statements .

5

MARATHON OIL CORPORATION
Notes to Consolidated Financial Statements (Unaudited)



1.    Basis of Presentation
These consolidated financial statements are unaudited; however, in the opinion of management, these statements reflect all adjustments necessary for a fair statement of the results for the periods reported.  All such adjustments are of a normal recurring nature unless disclosed otherwise.  These consolidated financial statements, including notes, have been prepared in accordance with the applicable rules of the Securities and Exchange Commission ("SEC") and do not include all of the information and disclosures required by accounting principles generally accepted in the United States of America for complete financial statements.
Beginning in the first quarter of 2013, we changed the presentation of our consolidated statements of income, primarily to present additional details of revenues and expenses and to classify certain expenses more consistently with our peer group of independent exploration and production companies. To effect these changes, reclassifications of previously reported amounts were made and are reflected in these consolidated financial statements. As a result of the reclassifications, general and administrative expenses for the second quarter and first six months of 2012 increased by $24 million and $63 million which primarily includes certain costs associated with operations support and operations management. Offsetting reductions are reflected in production, other operating and exploration expenses and taxes other than income.
These interim financial statements should be read in conjunction with the consolidated financial statements and notes thereto included in the Marathon Oil Corporation 2012 Annual Report on Form 10-K.  The results of operations for the second quarter and first six months of 2013 are not necessarily indicative of the results to be expected for the full year.
2.   Accounting Standards
Not Yet Adopted
In June 2013, the Financial Accounting Standards Board ("FASB") ratified the Emerging Issues Task Force consensus on Issue 13-C, which requires that an unrecognized tax benefit or a portion of an unrecognized tax benefit be presented as a reduction to a deferred tax asset for an available net operating loss carryforward, a similar tax loss or tax credit carryforward. This accounting standards update is effective for us beginning in the first quarter of 2014 and should be applied prospectively to unrecognized tax benefits that exist as of the effective date. Early adoption and retrospective application are permitted. We do not expect this accounting standards update to have a significant impact on our consolidated results of operations, financial position or cash flows.
In February 2013, an accounting standards update was issued to provide guidance for the recognition, measurement, and disclosure of obligations resulting from joint and several liability arrangements for which the total amount of the obligation is fixed at the reporting date, except for obligations such as asset retirement and environmental obligations, contingencies, guarantees, income taxes and retirement benefits, which are separately addressed within United States generally accepted accounting principles ("U.S. GAAP"). An entity is required to measure obligations resulting from joint and several liability arrangements for which the total amount of the obligation is fixed at the reporting date as the sum of 1) the amount the entity agreed to pay on the basis of its arrangement among its co-obligors and 2) any amount the entity expects to pay on behalf of its co-obligors. Disclosure of the nature of the obligation, including how the liability arose, the relationship with other co-obligors and the terms and conditions of the arrangement is required. In addition, the total outstanding amount under the arrangement, not reduced by the effect of any amounts that may be recoverable from other entities, plus the carrying amount of any liability or receivable recognized must be disclosed. This accounting standards update is effective for us beginning in the first quarter of 2014 and should be applied retrospectively for those in-scope obligations resulting from joint and several liability arrangements that exist at the beginning of 2014. Early adoption is permitted. We do not expect this accounting standards update to have a significant impact on our consolidated results of operations, financial position or cash flows.
Recently Adopted
In February 2013, an accounting standards update was issued to improve the reporting of reclassifications out of accumulated other comprehensive income. This standard requires an entity to provide information about the amounts reclassified out of accumulated other comprehensive income by component. In addition, an entity is required to present, either on the face of the statement where net income is presented or in the notes, significant amounts reclassified out of accumulated other comprehensive income by the respective line items of net income but only if the amount reclassified is required under U.S. GAAP to be reclassified to net income in its entirety in the same reporting period. For other amounts that are not required under U.S. GAAP to be reclassified in their entirety to net income, an entity is required to cross-reference to other disclosures required under U.S. GAAP that provide additional detail about those amounts. This accounting standards update was effective for us beginning the first quarter of 2013 and we present the required disclosures in Note 15 . Adoption of this standard did not have a significant impact on our consolidated results of operations, financial position or cash flows.

6

MARATHON OIL CORPORATION
Notes to Consolidated Financial Statements (Unaudited)


In December 2011, an accounting standards update designed to enhance disclosures about offsetting assets and liabilities was issued. Further clarification limiting the scope of these disclosures to derivatives, repurchase agreements and reverse repurchase agreements, and securities borrowing and securities lending transactions was issued in January 2013. The disclosures are intended to enable financial statement users to evaluate the effect or potential effect of netting arrangements on an entity’s financial position. Entities are required to disclose both gross information and net information about in-scope financial instruments that are either offset in the statement of financial position or subject to an enforceable master netting arrangement or similar agreement, irrespective of whether they are offset. The accounting standards update was effective for us beginning the first quarter of 2013 and we include the required disclosures in Note 13 . Adoption of this standard did not have a significant impact on our consolidated results of operations, financial position or cash flows.
3.   Variable Interest Entity
The owners of the Athabasca Oil Sands Project (“AOSP”), in which we hold a 20 percent undivided interest, contracted with a wholly-owned subsidiary of a publicly traded Canadian limited partnership (“Corridor Pipeline”) to provide materials transportation capabilities among the Muskeg River and Jackpine mines, the Scotford upgrader and markets in Edmonton.  The contract, originally signed in 1999 by a company we acquired, allows each holder of an undivided interest in the AOSP to ship materials in accordance with its undivided interest.  Costs under this contract are accrued and recorded on a monthly basis, with current liabilities of $3 million recorded at June 30, 2013 , consistent with December 31, 2012 .  Under this agreement, the AOSP absorbs all of the operating and capital costs of the pipeline.  Currently, no third-party shippers use the pipeline.  Should shipments be suspended, by choice or due to force majeure, we remain responsible for the portion of the payments related to our undivided interest for all remaining periods.  The contract expires in 2029; however, the shippers can extend its term perpetually.  This contract qualifies as a variable interest contractual arrangement and the Corridor Pipeline qualifies as a variable interest entity (“VIE”).  We hold a variable interest but are not the primary beneficiary because our shipments are only 20 percent of the total; therefore the Corridor Pipeline is not consolidated by us.  Our maximum exposure to loss as a result of our involvement with this VIE is the amount we expect to pay over the contract term, which was $728 million as of June 30, 2013 .  The liability on our books related to this contract at any given time will reflect amounts due for the immediately previous month’s activity, which is substantially less than the maximum exposure over the contract term.  We have not provided financial assistance to Corridor Pipeline and we do not have any guarantees of such assistance in the future.
4.    Income per Common Share
Basic income per share is based on the weighted average number of common shares outstanding.  Diluted income per share assumes exercise of stock options and stock appreciation rights, provided the effect is not antidilutive.
 
Three Months Ended June 30,
 
2013
 
2012
(In millions, except per share data)
Basic
 
Diluted
 
Basic
 
Diluted
Net income
$
426

 
$
426

 
$
393

 
$
393

 
 
 
 
 
 
 
 
Weighted average common shares outstanding
710

 
710

 
706

 
706

Effect of dilutive securities
—

 
4

 
—

 
3

Weighted average common shares, including
 
 
 
 
 
 
 
dilutive effect
710

 
714

 
706

 
709

Per share:
 

 
 

 
 

 
 

Net income

$0.60

 

$0.60

 

$0.56

 

$0.56

 

7

MARATHON OIL CORPORATION
Notes to Consolidated Financial Statements (Unaudited)


 
Six Months Ended June 30,
 
2013
 
2012
(In millions, except per share data)
Basic
 
Diluted
 
Basic
 
Diluted
Net income
$
809

 
$
809

 
$
810

 
$
810

 
 
 
 
 
 
 
 
Weighted average common shares outstanding
709

 
709

 
705

 
705

Effect of dilutive securities
—

 
4

 
—

 
4

Weighted average common shares, including
 
 
 
 
 
 
 
dilutive effect
709

 
713

 
705

 
709

Per share:
 

 
 

 
 

 
 

Net income
$1.14
 
$1.14
 
$1.15
 
$1.14
The per share calculations above exclude 6 million stock options and stock appreciation rights for the second quarter and first six months of 2013 . Excluded for the second quarter and first six months of 2012 were 10 million and 9 million stock options and stock appreciation rights.
5.   Dispositions
2013 - North America Exploration and Production ("E&P") Segment
In June 2013, we closed the sale of our interests in the DJ Basin for proceeds of $19 million . A loss of $114 million was recorded in the second quarter of 2013.
In February 2013, we conveyed our interests in the Marcellus natural gas shale play to the operator. A $43 million loss on this transaction was recorded in the first quarter of 2013.
In February 2013, we closed the sale of our interest in the Neptune gas plant, located onshore Louisiana, for proceeds of $166 million . A $98 million gain was recorded in the first quarter of 2013.
In January 2013, we closed the sale of our remaining assets in Alaska, for proceeds of $195 million , subject to a six-month escrow of $50 million which was collected in July 2013. After closing adjustments made in the second quarter of 2013, the gain on this sale was $55 million .
2013 - International E&P Segment
In June 2013, we entered into an agreement to sell our non-operated 10 percent working interest in the Production Sharing Contract and Joint Operating Agreement in Block 31 offshore Angola. This transaction, valued at $1.5 billion before closing adjustments, is expected to close in the fourth quarter of 2013, subject to government, regulatory and third-party approvals. Angola Block 31 is reflected as held for sale in the June 30, 2013 consolidated balance sheet as follows:
(In millions)
 
Other noncurrent assets
$
1,550

Total assets
1,550

Other current liabilities
58

Deferred credits and other liabilities
39

Total liabilities
$
97

2012 - North America E&P Segment
In January 2012, we closed on the sale of our interests in several Gulf of Mexico crude oil pipeline systems for proceeds of $206 million .  This included our equity method interests in Poseidon Oil Pipeline Company, L.L.C. and Odyssey Pipeline L.L.C., as well as certain other oil pipeline interests, including the Eugene Island pipeline system.  A gain of $166 million was recorded in the first quarter of 2012.

8

MARATHON OIL CORPORATION
Notes to Consolidated Financial Statements (Unaudited)


2012 - International E&P Segment
In May 2012, we reached an agreement to relinquish our operatorship of and interests in the Bone Bay and Kumawa exploration licenses in Indonesia. A $36 million payment to settle all of our obligations related to these licenses, including well commitments, was accrued and reported as a loss on disposal of assets in the second quarter of 2012.
6.    Segment Information
  Beginning in 2013, we changed our reportable segments and revised our management reporting to better reflect the growing importance of United States unconventional resource plays to our business. All periods presented have been recast to reflect these new segments.
We have three reportable operating segments.  Each of these segments is organized and managed based upon both geographic location and the nature of the products and services it offers.
•
North America E&P ("N.A. E&P") – explores for, produces and markets liquid hydrocarbons and natural gas in North America;
•
International E&P ("Int'l E&P") – explores for, produces and markets liquid hydrocarbons and natural gas outside of North America and produces and markets products manufactured from natural gas, such as liquefied natural gas ("LNG")and methanol, in Equatorial Guinea; and
•
Oil Sands Mining (“OSM”) – mines, extracts and transports bitumen from oil sands deposits in Alberta, Canada, and upgrades the bitumen to produce and market synthetic crude oil and vacuum gas oil.
Information regarding assets by segment is not presented because it is not reviewed by the chief operating decision maker (“CODM”).  Segment income represents income from continuing operations excluding certain items not allocated to segments as discussed below, net of income taxes, attributable to the operating segments. Our corporate and operations support general and administrative costs are not allocated to the operating segments. These costs primarily consist of employment costs (including pension effects), professional services, facilities and other costs associated with corporate and operations support activities, net of associated income tax effects.  Unrealized gains or losses on crude oil derivative instruments, impairments, gains or losses on disposal of assets or other items that affect comparability (as determined by the CODM) also are not allocated to operating segments.
Differences between segment totals and our consolidated totals for income taxes and depreciation, depletion and amortization represent amounts related to corporate administrative activities and other unallocated items which are included in “Items not allocated to segments, net of income taxes” in the reconciliation below. Total capital expenditures include accruals but not corporate activities.
 
Three Months Ended June 30, 2013
(In millions)
N.A. E&P
 
Int'l E&P
 
OSM
 
Total
Revenues:
 
 
 
 
 
 
 
Sales and other operating revenues
$
1,284

 
$
1,732

 
$
353

 
$
3,369

Marketing revenues
439

 
51

 
9

 
499

Segment revenues
$
1,723

 
$
1,783

 
$
362

 
3,868

Unrealized gain on crude oil derivative instruments
 
 
 
 
 
 
50

Total revenues
 
 
 
 
 
 
$
3,918

Segment income
$
221

 
$
382

 
$
20

 
$
623

Income from equity method investments
—

 
77

 
—

 
77

Depreciation, depletion and amortization
490

 
189

 
48

 
727

Income tax provision
129

 
1,004

 
7

 
1,140

Capital expenditures
904

 
241

 
97

 
1,242


9

MARATHON OIL CORPORATION
Notes to Consolidated Financial Statements (Unaudited)


 
Three Months Ended June 30, 2012
(In millions)
N.A. E&P
 
Int'l E&P
 
OSM
 
Total
Revenues:
 
 
 
 
 
 
 
Sales and other operating revenues
$
833

 
$
1,813

 
$
329

 
$
2,975

Marketing revenues
696

 
56

 
5

 
757

Total revenues
$
1,529

 
$
1,869

 
$
334

 
$
3,732

Segment income
$
70

 
$
373

 
$
50

 
$
493

Income from equity method investments
—

 
60

 
—

 
60

Depreciation, depletion and amortization
290

 
228

 
50

 
568

Income tax provision
39

 
1,070

 
17

 
1,126

Capital expenditures
1,013

 
202

 
43

 
1,258

 
Six Months Ended June 30, 2013
(In millions)
N.A. E&P
 
Int'l E&P
 
OSM
 
Total
Revenues:
 
 
 
 
 
 
 
Sales and other operating revenues
$
2,499

 
$
3,619

 
$
741

 
$
6,859

Marketing revenues
784

 
136

 
9

 
929

Segment revenues
$
3,283

 
$
3,755

 
$
750

 
7,788

Unrealized loss on crude oil derivative instruments
 
 
 
 
 
 
—

Total revenues
 
 
 
 
 
 
$
7,788

Segment income
$
162

 
$
835

 
$
58

 
$
1,055

Income from equity method investments
—

 
195

 
—

 
195

Depreciation, depletion and amortization
968

 
396

 
100

 
1,464

Income tax provision
99

 
2,146

 
20

 
2,265

Capital expenditures
1,874

 
466

 
142

 
2,482

 
Six Months Ended June 30, 2012
(In millions)
N.A. E&P
 
Int'l E&P
 
OSM
 
Total
Revenues:
 
 
 
 
 
 
 
Sales and other operating revenues
$
1,745

 
$
3,476

 
$
698

 
$
5,919

Marketing revenues
1,471

 
120

 
15

 
1,606

Total revenues
$
3,216

 
$
3,596

 
$
713

 
$
7,525

Segment income
$
174

 
$
780

 
$
88

 
$
1,042

Income from equity method investments
1

 
137

 
—

 
138

Depreciation, depletion and amortization
604

 
428

 
99

 
1,131

Income tax provision
100

 
2,041

 
30

 
2,171

Capital expenditures
1,842

 
340

 
95

 
2,277

The following reconciles total revenues to sales and other operating revenues as reported in the consolidated statements of income:
 
Three Months Ended June 30,
Six Months Ended June 30,
(In millions)
2013
2012
2013
2012
Total revenues
$
3,918

$
3,732

$
7,788

$
7,525

Less:  Marketing revenues
499

757

929

1,606

Sales and other operating revenues, including related party
$
3,419

$
2,975

$
6,859

$
5,919


10

MARATHON OIL CORPORATION
Notes to Consolidated Financial Statements (Unaudited)


The following reconciles segment income to net income as reported in the consolidated statements of income:
 
Three Months Ended June 30,
Six Months Ended June 30,
(In millions)
2013
2012
2013
2012
Segment income
$
623

$
493

$
1,055

$
1,042

Items not allocated to segments, net of income taxes:
 

 

 

 

Corporate and other unallocated items
(156
)
(77
)
(227
)
(148
)
Unrealized gain (loss) on crude oil derivative instruments
32

—

—

—

     Net gain (loss) on dispositions
(73
)
(23
)
(9
)
83

     Impairments
—

—

(10
)
(167
)
Net income
$
426

$
393

$
809

$
810


7.    Defined Benefit Postretirement Plans
The following summarizes the components of net periodic benefit cost:
 
Three Months Ended June 30,
   
Pension Benefits
 
Other Benefits
(In millions)
2013
 
2012
 
2013
 
2012
Service cost
$
14

 
$
13

 
$
1

 
$
1

Interest cost
16

 
16

 
3

 
3

Expected return on plan assets
(16
)
 
(16
)
 
—

 
—

Amortization:
 

 
 

 
 

 
 

– prior service cost (credit)
1

 
2

 
(1
)
 
(1
)
– actuarial loss
16

 
13

 
—

 
—

Net settlement loss (a)
17

 
—

 
—

 
—

Net periodic benefit cost
$
48

 
$
28

 
$
3

 
$
3

 
Six Months Ended June 30,
   
Pension Benefits
 
Other Benefits
(In millions)
2013
 
2012
 
2013
 
2012
Service cost
$
28

 
$
25

 
$
2

 
$
2

Interest cost
31

 
32

 
6

 
7

Expected return on plan assets
(33
)
 
(32
)
 
—

 
—

Amortization:
 

 
 

 
 

 
 

– prior service cost (credit)
3

 
4

 
(3
)
 
(3
)
– actuarial loss
29

 
25

 
—

 
—

Net settlement loss (a)
17

 
—

 
—

 
—

Net periodic benefit cost
$
75

 
$
54

 
$
5

 
$
6

(a) Settlements are recognized as they occur, once it is probable that lump sum payments from a plan for a given year will exceed the plan's total service and interest cost for that year. Such settlements were recorded for our U.S. plans in the second quarter of 2013.
During the second quarter of 2013, we recorded the effects of partial settlements of our U.S. pension plans and we remeasured the plans' assets and liabilities as of June 30, 2013, using a discount rat e of 4.14 percent as of that date. As a result, we recognized a decrease of $139 million in actuarial losses, in other comprehensive income.
During the first six months of 2013 , we made contributions of $28 million to our funded pension plans.  We expect to make additional contributions up to an estimated $39 million to our funded pension plans over the remainder of 2013 .  Current benefit payments related to unfunded pension and other postretirement benefit plans were $10 million and $7 million during the first six months of 2013 .

11

MARATHON OIL CORPORATION
Notes to Consolidated Financial Statements (Unaudited)



8.   Income Taxes
The effective income tax rate is influenced by a variety of factors including the geographic sources of income and the relative magnitude of these sources of income. The provision for income taxes is allocated on a discrete, stand-alone basis to pretax segment income and to individual items not allocated to segments. The difference between the total provision and the sum of the amounts allocated to segments and to individual items not allocated to segments is reported in “Corporate and other unallocated items” in Note 6 .
Our effective income tax rates in the first six months of 2013 and 2012 were 72 percent and 71 percent .   These rates are higher than the U.S. statutory rate of 35 percent due to earnings from foreign jurisdictions, primarily Norway and Libya, where the tax rates are in excess of the U.S. statutory rate.  In Libya, where the statutory tax rate is in excess of 90 percent , there remains uncertainty around sustained production and sales levels.  Reliable estimates of 2013 and 2012 annual ordinary income from our Libyan operations could not be made and the range of possible scenarios when including ordinary income from our Libyan operations in the worldwide annual effective tax rate calculation demonstrates significant variability.  As such, for the first six months of 2013 and 2012, estimated annual effective tax rates were calculated excluding Libya and applied to consolidated ordinary income excluding Libya and the tax provision applicable to Libyan ordinary income was recorded as a discrete item in the periods.  Excluding Libya, the effective tax rates would be 63 percent and 64 percent for the first six months of 2013 and 2012.
 
 
 
 
9.   Inventories
 Inventories are carried at the lower of cost or market value.
 
June 30,
 
December 31,
(In millions)
2013
 
2012
Liquid hydrocarbons, natural gas and bitumen
$
48

 
$
73

Supplies and other items
320

 
288

Inventories, at cost
$
368

 
$
361

10.  Property, Plant and Equipment
 
June 30,
 
December 31,
(In millions)
2013
 
2012
North America E&P
$
25,129

 
$
23,748

International E&P
12,213

 
13,214

Oil Sands Mining
10,270

 
10,127

Corporate
484

 
449

Total property, plant and equipment
48,096

 
47,538

Less accumulated depreciation, depletion and amortization
(20,639
)
 
(19,266
)
Net property, plant and equipment
$
27,457

 
$
28,272

In the first quarter of 2011, production operations in Libya were suspended. In the fourth quarter of 2011, limited production resumed.  Since that time, average sales volumes have increased to near pre-conflict levels.  We and our partners in the Waha concessions continue to assess the condition of our assets in Libya and uncertainty around sustained production and sales levels remains. As of June 30, 2013 , our net property, plant and equipment investment in Libya was approximately $740 million .
Exploratory well costs capitalized greater than one year after completion of drilling were $220 million as of June 30, 2013 .  The net decrease from December 31, 2012 primarily related to the conveyance of our interests in the Marcellus natural gas shale play to the operator in February 2013.

12

MARATHON OIL CORPORATION
Notes to Consolidated Financial Statements (Unaudited)


11. Asset Retirement Obligations
The following summarizes the changes in asset retirement obligations during the first six months of 2013:
(In millions)
 
Beginning balance
$
1,783

Incurred, including acquisitions
8

Settled, including dispositions
(27
)
Accretion expense (included in depreciation, depletion and amortization)
48

Revisions to previous estimates
306

Held for sale
(39
)
Ending balance (a)
$
2,079

(a) Includes asset retirement obligations of $40 million classified as a short-term at June 30, 2013 .
12.  Fair Value Measurements
  Fair Values - Recurring
The following tables present assets and liabilities accounted for at fair value on a recurring basis as of June 30, 2013 and December 31, 2012 by fair value hierarchy level.
 
June 30, 2013
(In millions)
Level 1
 
Level 2
 
Level 3
 
Collateral
 
Total
Derivative instruments, assets
 
 
 
 
 
 
 
 
 
     Commodity
$
—

 
$
52

 
$
—

 
$
—

 
$
52

     Interest rate
—

 
6

 
—

 
—

 
6

          Derivative instruments, assets
$
—

 
$
58

 
$
—

 
$
—

 
$
58

Derivative instruments, liabilities
 
 
 
 
 
 
 
 
 
     Foreign currency
$
—

 
$
30

 
$
—

 
$
—

 
$
30

          Derivative instruments, liabilities
$
—

 
$
30

 
$
—

 
$
—

 
$
30

 
December 31, 2012
(In millions)
Level 1
 
Level 2
 
Level 3
 
Collateral
 
Total
Derivative instruments, assets
 
 
 
 
 
 
 
 
 
Commodity
$
—

 
$
52

 
$
—

 
$
1

 
$
53

Interest rate
—

 
21

 
—

 
—

 
21

Foreign currency
—

 
18

 
—

 
—

 
18

Derivative instruments, assets
$
—

 
$
91

 
$
—

 
$
1

 
$
92

Commodity swaps in Level 2 are measured at fair value with a market approach using prices obtained from exchanges or pricing services, which have been corroborated with data from active markets for similar assets or liabilities.  Commodity options in Level 2 are valued using the Black-Scholes Model.  Inputs to this model include prices as noted above, discount factors, and implied market volatility.  The inputs to this fair value measurement are categorized as Level 2 because predominantly all assumptions and inputs are observable in active markets throughout the term of the instruments.  Collateral deposits related to commodity derivatives are in broker accounts covered by master netting agreements.
Interest rate swaps are measured at fair value with a market approach using actionable broker quotes which are Level 2 inputs.  Foreign currency forwards are measured at fair value with a market approach using third-party pricing services, such as Bloomberg L.P., which have been corroborated with data from active markets for similar assets or liabilities, and are Level 2 inputs.

13

MARATHON OIL CORPORATION
Notes to Consolidated Financial Statements (Unaudited)


Fair Values - Nonrecurring
The following table shows the values of assets, by major category, measured at fair value on a nonrecurring basis in periods subsequent to their initial recognition.
 
Three Months Ended June 30,
 
2013
 
2012
(In millions)
Fair Value
 
Impairment
 
Fair Value
 
Impairment
Long-lived assets held for use
$
—

 
$
—

 
$
—

 
$
1

 
Six Months Ended June 30,
 
2013
 
2012
(In millions)
Fair Value
 
Impairment
 
Fair Value
 
Impairment
Long-lived assets held for use
$
—

 
$
38

 
$
75

 
$
263


All long-lived assets held for use that were impaired in the first six months of 2013 and 2012 were held by our North America E&P segment. The fair values of each discussed below were measured using an income approach based upon internal estimates of future production levels, prices and discount rate, all of which are Level 3 inputs.  Inputs to the fair value measurement included reserve and production estimates made by our reservoir engineers, estimated commodity prices adjusted for quality and location differentials, and forecasted operating expenses for the remaining estimated life of the reservoir.
In the first quarter of 2013, as a result of our decision to wind down operations in the Powder River Basin due to poor economics, an impairment of $15 million was recorded.
In early 2012, production rates from the Ozona development in the Gulf of Mexico declined significantly. Accordingly, our reserve engineers prepared evaluations of our future production as well as our reserves and an impairment of $261 million was recorded in the first quarter of 2012.  As the development produced towards abandonment pressures, further downward revisions of reserves were taken, resulting in an additional impairment recorded in the fourth quarter of 2012. Ozona production ceased in the first quarter of 2013 and an additional $21 million impairment was recorded.
Other impairments of long-lived assets held for use by our North America E&P segment in the first six months of 2013 and 2012 were a result of reduced drilling expectations, reductions of estimated reserves or declining natural gas prices.
Fair Values – Financial Instruments
Our current assets and liabilities include financial instruments, the most significant of which are receivables, commercial paper and payables. We believe the carrying values of our receivables, commercial paper and payables approximate fair value. Our fair value assessment incorporates a variety of considerations, including (1) the short-term duration of the instruments, (2) our investment-grade credit rating, and (3) our historical incurrence of and expected future insignificance of bad debt expense, which includes an evaluation of counterparty credit risk.
The following table summarizes financial instruments, excluding receivables, commercial paper, payables and derivative financial instruments, and their reported fair value by individual balance sheet line item at June 30, 2013 and December 31, 2012 .

June 30, 2013
 
December 31, 2012
 
Fair
 
Carrying
 
Fair
 
Carrying
(In millions)
Value
 
Amount
 
Value
 
Amount
Financial assets
 
 
 
 
 
 
 
Other noncurrent assets
$
165

 
$
164

 
$
189

 
$
186

Total financial assets  
165

 
164

 
189

 
186

Financial liabilities
 

 
 

 
 

 
 

     Other current liabilities
13

 
13

 
13

 
13

     Long-term debt, including current portion (a)
6,991

 
6,460

 
7,610

 
6,642

Deferred credits and other liabilities
141

 
140

 
94

 
94

Total financial liabilities  
$
7,145

 
$
6,613

 
$
7,717

 
$
6,749

(a)       Excludes capital leases.

14

MARATHON OIL CORPORATION
Notes to Consolidated Financial Statements (Unaudited)


Fair values of our financial assets included in other noncurrent assets, and of our financial liabilities included in other current liabilities and deferred credits and other liabilities are measured using an income approach and most inputs are internally generated, which results in a Level 3 classification. Estimated future cash flows are discounted using a rate deemed appropriate to obtain the fair value.
Most of our long-term debt instruments are publicly-traded. A market approach, based upon quotes from major financial institutions, is used to measure the fair value of such debt. Because these quotes cannot be independently verified to an active market they are considered Level 3 inputs. The fair value of our debt that is not publicly-traded is measured using an income approach. The future debt service payments are discounted using the rate at which we currently expect to borrow. All inputs to this calculation are Level 3.
13. Derivatives
For information regarding the fair value measurement of derivative instruments, see Note 12 . All of our interest rate and commodity derivatives are subject to enforceable master netting arrangements or similar agreements under which we may report net amounts. Netting is assessed by counterparty, and as of June 30, 2013 and December 31, 2012 , there were no offsetting amounts. Positions by contract were all either assets or liabilities. The following tables present the gross fair values of derivative instruments, excluding cash collateral, and the reported net amounts along with where they appear on the consolidated balance sheets as of June 30, 2013 and December 31, 2012 .
 
June 30, 2013
 
 
(In millions)
Asset
 
Liability
 
Net Asset
 
Balance Sheet Location
Fair Value Hedges
 
 
 
 
 
 
 
     Interest rate
$
6

 
$
—

 
$
6

 
Other noncurrent assets
Total Designated Hedges
6

 
—

 
6

 
 
 
 
 
 
 
 
 
 
Not Designated as Hedges
 
 
 
 
 
 
 
     Commodity
52

 
—

 
52

 
Other current assets
Total Not Designated as Hedges
52

 
—

 
52

 
 
     Total
$
58

 
$
—

 
$
58

 
 
 
 
June 30, 2013
 
 
(In millions)
Asset
 
Liability
 
Net Liability
 
Balance Sheet Location
Fair Value Hedges
 
 
 
 
 
 
 
     Foreign currency
$
—

 
$
30

 
$
30

 
Other current liabilities
Total Designated Hedges
—

 
30

 
30

 
 
     Total
$
—

 
$
30

 
$
30

 
 
 
December 31, 2012
 
 
(In millions)
Asset
 
Liability
 
Net Asset
 
Balance Sheet Location
Fair Value Hedges
 
 
 
 
 
 
 
     Foreign currency
$
18

 
$
—

 
$
18

 
Other current assets
     Interest rate
21

 
—

 
21

 
Other noncurrent assets
Total Designated Hedges
39

 
—

 
39

 
 
 
 
 
 
 
 
 
 
Not Designated as Hedges
 
 
 
 
 
 
 
     Commodity
52

 
—

 
52

 
Other current assets
Total Not Designated as Hedges
52

 
—

 
52

 
 
     Total
$
91

 
$
—

 
$
91

 
 

15

MARATHON OIL CORPORATION
Notes to Consolidated Financial Statements (Unaudited)


Derivatives Designated as Fair Value Hedges
As of June 30, 2013 and December 31, 2012 , we had multiple interest rate swap agreements with a total notional amount of $600 million with a maturity date of October 1, 2017 at a weighted average, London Interbank Offer Rate (“LIBOR”)-based, floating rate of  4.68 percent and 4.70 percent .
As of June 30, 2013 and December 31, 2012 , our foreign currency forwards had an aggregate notional amount of 2,965 million and 3,043 million Norwegian Kroner at a weighted average forward rate of 5.738 and 5.780 . These forwards hedge our current Norwegian tax liability and have settlement dates through December 2013 .
The pretax effect of derivative instruments designated as hedges of fair value in our consolidated statements of income are summarized in the table below.
 
 
Gain (Loss)
 
 
Three Months Ended June 30,
 
Six Months Ended June 30,
(In millions)
Income Statement Location
2013
 
2012
 
2013
 
2012
Derivative
 
 
 
 
 
 
 
 
Interest rate
Net interest and other
$
(12
)
 
$
12

 
$
(15
)
 
$
12

Foreign currency
Provision for income taxes
$
(21
)
 
$
(32
)
 
$
(46
)
 
$
(40
)
Hedged Item
 
 

 
 

 
 

 
 

Long-term debt
Net interest and other
$
12

 
$
(12
)
 
$
15

 
$
(12
)
Accrued taxes
Provision for income taxes
$
21

 
$
32

 
$
46

 
$
40

  Derivatives not Designated as Hedges
In August 2012, we entered into crude oil derivatives related to a portion of our forecast North America E&P crude oil sales through December 31, 2013. These commodity derivatives were not designated as hedges and are shown in the table below.
Remaining Term
Bbls per Day
Weighted Average Price per Bbl
Benchmark
Swaps
 
 
 
July 2013 - December 2013
20,000
$96.29
West Texas Intermediate
July 2013 - December 2013
25,000
$109.19
Brent
Option Collars
 
 
 
July 2013 - December 2013
15,000
$90.00 floor / $101.17 ceiling
West Texas Intermediate
July 2013 - December 2013
15,000
$100.00 floor / $116.30 ceiling
Brent
The following table summarizes the effect of all derivative instruments not designated as hedges in our consolidated statements of income.
 
 
Gain (Loss)
 
 
Three Months Ended
 
Six Months Ended
 
 
June 30,
 
June 30,
(In millions)
Income Statement Location
2013
 
2012
 
2013
 
2012
Commodity
Sales and other operating revenues, including related party
$
67

 
$
(1
)
 
$
13

 
$
2


16

MARATHON OIL CORPORATION
Notes to Consolidated Financial Statements (Unaudited)


14.    Incentive Based Compensation
  Stock option and restricted stock awards
  The following table presents a summary of stock option and restricted stock award activity for the first six months of 2013 : 
 
Stock Options
 
Restricted Stock
 
Number of
Shares
 
Weighted
Average
Exercise Price
 
Awards
 
Weighted
Average Grant
Date Fair Value
Outstanding at December 31, 2012
19,536,965

 

$26.19

 
4,177,884

 

$29.02

Granted
1,381,321

(a)  

$32.85

 
1,087,731

 

$32.38

Options Exercised/Stock Vested
(1,422,488
)


$21.53

 
(605,209
)
 

$29.73

Cancelled
(386,186
)


$34.54

 
(182,958
)
 

$29.35

Outstanding at June 30, 2013
19,109,612

 

$26.85

 
4,477,448

 

$29.79

(a)     The weighted average grant date fair value of stock option awards granted was $10.25 per share.
Performance unit awards
 In the first quarter of 2013, we granted 353,600 performance units to certain officers that provide a cash payout upon the achievement of certain performance goals at the end of a 36-month performance period.  The performance goals are tied to our total shareholder return (“TSR”) as compared to TSR for a group of peer companies determined by the Compensation Committee of the Board of Directors.   At the grant date, each unit represents the value of one share of our common stock, while payout after completion of the performance period will be based on the value of anywhere from zero to two times the number of units granted.  Dividend equivalents accrue during the performance period and are paid in cash at the end of the performance period based on the number of shares that would represent the value of the units.  The fair value of these performance units is re-measured on a quarterly basis using the Monte Carlo simulation method.  These performance units are accounted for as liability awards because they are to be settled in cash at the end of the performance period and their fair value is expensed over the performance period.
15.  Reclassifications Out of Accumulated Other Comprehensive Loss
The following table presents a summary of amounts reclassified from accumulated other comprehensive loss to net income in their entirety:
 
Three Months Ended June 30, 2013
Six Months Ended June 30, 2013
 
 
(In millions)
 
Income Statement Line
Accumulated Other Comprehensive Loss Components
 
 
 
Income (Expense)
 
 
Amortization of postretirement and postemployment plans
 
 
 
Actuarial loss
$
(16
)
$
(29
)
 
General and administrative
Net settlement loss
(17
)
(17
)
 
General and administrative
 
12

17

 
Provision for income taxes
Total reclassifications for the period
$
(21
)
$
(29
)
 
Net income

17

MARATHON OIL CORPORATION
Notes to Consolidated Financial Statements (Unaudited)


16.  Supplemental Cash Flow Information
 
Six Months Ended June 30,
(In millions)
2013
 
2012
Net cash provided from operating activities:
 
 
 
Interest paid (net of amounts capitalized)
$
160

 
$
113

Income taxes paid to taxing authorities
2,474

 
2,317

Commercial paper, net:
 

 
 

Commercial paper - issuances
$
2,075

 
$
4,252

- repayments
(2,275
)
 
(3,702
)
Noncash investing activities:
 

 
 

Asset retirement costs capitalized
$
314

 
$
34

Debt payments made by United States Steel
—

 
14

Change in capital expenditure accrual
(149
)
 
159

Asset retirement obligations assumed by buyer
92

 
7

Receivable for disposal of assets
50

 
—

17.   Commitments and Contingencies
 We are a defendant in a number of lawsuits arising in the ordinary course of business, including, but not limited to, royalty claims, contract claims and environmental claims.  While the ultimate outcome and impact to us cannot be predicted with certainty, we believe the resolution of these proceedings will not have a material adverse effect on our consolidated financial position, results of operations or cash flows.  Certain of these matters are discussed below.
  Litigation – In March 2011, Noble Drilling (U.S.) LLC (“Noble”) filed a lawsuit against us in the District Court of Harris County, Texas, alleging, among other things, breach of contract, breach of the duty of good faith and fair dealing, and negligent misrepresentation, relating to a multi-year drilling contract for a newly constructed drilling rig to be deployed in the U.S. Gulf of Mexico.  We filed an answer in April 2011, contending, among other things, failure to perform, failure to comply with material obligations, failure to mitigate alleged damages and that Noble failed to provide the rig according to the operating, performance and safety requirements specified in the drilling contract. In April 2013, we filed a counterclaim against Noble alleging, among other things, breach of contract and breach of the duty of good faith relating to the multi-year drilling contract. The counterclaim also included a breach of contract claim for reimbursement for the value of fuel used by Noble under an offshore daywork drilling contract. We are vigorously defending this litigation.  The ultimate outcome of this lawsuit, including any financial effect on us, remains uncertain.  We do not believe an estimate of a reasonably probable loss (or range of loss) can be made for this lawsuit at this time.
Contractual commitments – At June 30, 2013 , Marathon’s contract commitments to acquire property, plant and equipment were $1,122 million .

18



Item 2. Management’s Discussion and Analysis of Financial Condition and Results of Operations  
  Beginning in 2013, we changed our reportable segments and revised our management reporting to better reflect the growing importance of United States unconventional resource plays to our business. All periods presented have been recast to reflect these new segments.
We are an international energy company with operations in the United States, Canada, Africa, the Middle East and Europe.  We have three reportable operating segments. Each of these segments is organized and managed based upon both geographic location and the nature of the products and services it offers.
•
North America Exploration and Production ("E&P") – explores for, produces and markets liquid hydrocarbons and natural gas in North America;
•
International E&P – explores for, produces and markets liquid hydrocarbons and natural gas outside of North America and produces and markets products manufactured from natural gas, such as LNG and methanol, in Equatorial Guinea; and
•
Oil Sands Mining – mines, extracts and transports bitumen from oil sands deposits in Alberta, Canada, and upgrades the bitumen to produce and market synthetic crude oil and vacuum gas oil.
 Certain sections of this Quarterly Report on Form 10-Q, including Management’s Discussion and Analysis of Financial Condition and Results of Operations contain forward-looking statements concerning trends or events potentially affecting our business.  These statements typically contain words such as “anticipates,” “believes,” “estimates,” “expects,” “targets,” “plans,” “projects,” “could,” “may,” “should,” “would” or similar words indicating that future outcomes are uncertain.  In accordance with “safe harbor” provisions of the Private Securities Litigation Reform Act of 1995, these statements are accompanied by cautionary language identifying important factors, though not necessarily all such factors, which could cause future outcomes to differ materially from those set forth in the forward-looking statements.  For additional risk factors affecting our business, see Item 1A. Risk Factors in our 2012 Annual Report on Form 10-K. We assume no duty to update these statements as to any future date.
Key Operating and Financial Activities
In the second quarter of 2013 , notable items were:
•
Total net sales volumes averaged 506 thousand barrels of oil equivalent per day (“mboed”), a 12 percent increase over the same quarter of last year
•
North America E&P net sales volumes increased 38 percent over the same quarter of last year
•
Eagle Ford shale averaged net sales volumes of 80 mboed, a 286 percent increase
•
Bakken shale averaged net sales volumes of 39 mboed, a 49 percent increase
•
Turnaround in Equatorial Guinea started and safely completed in April, eight days ahead of schedule and below budget
•
Successful appraisal well on non-operated Gunflint prospect in the Gulf of Mexico announced by operator
•
Two Gulf of Mexico leases from Lease Sale 227 awarded to us
•
Entered into agreement to sell our working interest in Angola Block 31 in a transaction valued at $1.5 billion before closing adjustments
•
Concluded exploration activities in Poland
•
Closed sale of interests in DJ Basin and recorded a $114 million loss on sale
Some significant third quarter activities to August 8, 2013 include:
•
Increased dividend 12 percent to 19 cents per share

19

Overview and Outlook
North America E&P
Production
 Net liquid hydrocarbon and natural gas sales volumes averaged 201 mboed and 200 mboed during the second quarter and first six months of 2013 compared to 146 mboed in both periods of 2012 , for increases of approximately 37 percent in both periods.  Net liquid hydrocarbon sales volumes increased for both the quarter and the first six months of 2013, primarily reflecting the impact of our ongoing development programs in the Eagle Ford and Bakken shale resource plays, while net natural gas sales volumes decreased slightly during the same periods due to the sale of our Alaska assets in January 2013. Excluding the sales volume related to Alaska in both six-month periods, our average net liquid hydrocarbon and natural gas sales volumes increased 50 percent.
Eagle Ford – In 2013, production growth continued in the Eagle Ford shale play. Average net sales volumes were 80 mboed and 76 mboed in the second quarter and first six months of 2013 compared to 21 mboed and 18 mboed in the same periods of 2012. Approximately 63 percent of the first six months of 2013 production was crude oil and condensate, 17 percent was natural gas liquids ("NGLs") and 20 percent was natural gas. In the second quarter of 2013, we increased the amount of crude oil and condensate transported by pipeline to 70 percent from 65 percent in the previous quarter. The ability to transport more barrels by pipeline enables us to reduce costs, improve reliability and lessen our environmental footprint.
During the second quarter of 2013 , we reached total depth on 82 gross operated wells and brought 70 gross operated wells to sales, with 158 gross operated wells reaching total depth and 138 gross operated wells brought on line in the first six months of 2013 . With approximately 85 percent pad drilling, which continues to improve efficiencies and reduce costs, our second quarter average spud-to-total depth time was 12 days and spud-to-spud was 18 days.
To support production growth across the Eagle Ford operating area, approximately 170 miles of gathering lines were installed in the first six months of 2013 , bringing the total to more than 650 miles. We also commissioned six new central gathering and treating facilities and have three additional facilities in various stages of planning or construction, bringing the total to 27.
We continue to evaluate the potential of downspacing to 40-acre and 60-acre units, with the results of the downspacing pilots expected to be released in December 2013. We also continue to evaluate the Austin Chalk and Pearsall formations across our acreage position. To date, we have completed four Austin Chalk wells with average 24-hour initial production ("IP") rates of 980 gross barrels of oil equivalent per day (“boed”) (485 barrels per day ("bbld") of crude oil and condensate, 220 bbld of NGLs and 1.65 million cubic feet per day ("mmcfd") of natural gas). Early Austin Chalk production results suggest that the mix of crude oil and condensate, NGLs and natural gas is similar to Eagle Ford condensate wells. Also in the second quarter of 2013, one Pearsall well was completed with a 24-hour IP rate of 580 gross boed.
Bakken – Average net sales volumes from the Bakken shale were 39 mboed and 38 mboed in the second quarter and first six months of 2013 compared to 26 mboed in the same periods of 2012. Our Bakken production averages approximately 90 percent crude oil, 5 percent NGLs and 5 percent natural gas. During the second quarter of 2013 , we reached total depth on 22 gross operated wells and brought 16 gross operated wells to sales. During the first six months of 2013 we reached total depth on 40 gross operated wells and brought 38 gross operated wells to sales. Our second quarter average time to drill a well continued to improve, averaging 15 days spud-to-total depth and 22 days spud-to-spud.
Oklahoma Resource Basins – Net sales volumes from the Anadarko Woodford shale averaged 13 mboed in the second quarter and first six months of 2013 compared to 6 mboed and 5 mboed in the same periods of 2012.  During the second quarter of 2013 , we reached total depth on two gross operated wells and three gross operated wells were brought to sales, while during the first six months of 2013 we reached total depth on two gross operated wells and brought seven gross operated wells to sales. We anticipate drilling will begin on two wells each in the Mississippi Lime formation in central Oklahoma and the Granite Wash formation in northwestern Oklahoma during the second half of 2013.
Exploration
Gulf of Mexico – Late in the third quarter of 2013, we expect to begin drilling the first exploration well on the Madagascar prospect located on De Soto Canyon Block 757. We reduced our working interest in the Madagascar prospect from 100 percent to 70 percent as a result of a farm-down in the second quarter of 2013 with no up-front cash proceeds. We anticipate further reducing our interest to a target of 40 to 50 percent working interest by the time of drilling.
We participated in an appraisal well on the Gunflint prospect located on Mississippi Canyon Block 992 in which we hold an 18 percent non-operated working interest. T he appraisal well successfully encountered 109 feet of net pay within the primary reservoir targets. After penetrating the initial appraisal targets, the well was deepened to a previously untested Lower Miocene interval. Commercial hydrocarbons were not encountered in the deeper exploration objective. Additional exploration potential

20

remains in an adjacent structure to the north, which is a candidate for future exploration following development of the confirmed resources.
The first appraisal well on the Shenandoah prospect located on Walker Ridge Block 51, in which we have a 10 percent non-operated working interest, reached total depth in the first quarter of 2013. This appraisal well successfully encountered more than 1,000 net feet of oil pay in multiple high-quality Lower Tertiary-aged reservoirs.
In March 2013, we submitted bids totaling $33 million for 100 percent working interest in two blocks in the Central Gulf of Mexico Lease Sale 227: Keathley Canyon Block 340 on the Colonial prospect and Keathley Canyon Block 153, an extension to the Meteor prospect on our existing Keathley Canyon 196 lease. Keathley Canyon Blocks 340 and 153 are both inboard-Paleogene prospects. These leases were awarded to us in the second quarter of 2013.
Canada – During the first quarter of 2012, we submitted a regulatory application relating to our Canada in-situ assets at Birchwood, for a proposed 12 thousand barrels per day ("mbbld") steam assisted gravity drainage ("SAGD") demonstration project. We are expecting to receive regulatory approval for this project in early 2014.  Upon receiving this approval, we will further evaluate our development plans.
International E&P
Production
Net liquid hydrocarbon and natural gas sales volumes averaged 262 mboed and 268 mboed during the second quarter and first six months of 2013 compared to 261 mboed and 249 mboed in the same periods of 2012 , which is flat for the quarter and an increase of 8 percent for the six-month period.  During the first six months of 2013 , Libya net liquid hydrocarbon and natural gas sales volumes increased 5 mboed and 13 mboed, compared to the same periods of 2012, primarily due to limited resumption of sales in early 2012 after the 2011 civil unrest.  In addition, both the second quarter and first six months of 2013 include net liquid hydrocarbon sales volumes of 9 mboed from the PSVM development located on the northeastern portion of Angola Block 31 which had first sales in February 2013.
 Equatorial Guinea – Average net sales volumes were 97 mboed and 105 mboed in the second quarter and first six months compared to 101 mboed and 103 mboed in the same periods of 2012. The planned turnaround that occurred in April 2013 was safely completed in 22 days, eight days ahead of schedule and below budget. Sales in the second quarter of 2013 were impacted by the turnaround, but operational availability of 98 percent in the first quarter of 2013 bolstered sales for the six-month period.
Norway – The production decline in the Alvheim area continues to be less than expected.  Average net sales volumes from Norway were 88 mboed in both the second quarter and first six months of 2013 compared to 86 mboed and 92 mboed in the same periods of 2012. These better-than-expected results have been achieved through continued strong operational performance that delivered availability of approximately 96 percent in the second quarter and 97 percent in the first quarter of 2013 ; production optimization from well management; and reservoir and well performance at the upper end of expectations primarily due to a delay in anticipated water breakthrough at the Volund field. A planned 10-day turnaround in Norway is scheduled during the third quarter of 2013.
United Kingdom – Production at non-operated Foinaven was shut-in in mid-July 2013 due to compression and subsea equipment issues and is expected to resume at partial rates in mid-August. Planned pipeline curtailments and a turnaround at Brae in the North Sea in the second half of 2013 will also reduce third quarter 2013 production.
Exploration
Kurdistan Region of Iraq – We hold 45 percent operated working interests in both the Harir and Safen blocks. Current exploratory drilling includes the Mirawa well which began in March 2013 on the Harir Block and the Safen well which commenced drilling in April 2013 on the Safen Block. The Mirawa well reached total depth in July 2013 and is currently testing. The Safen well is expected to reach projected total depth in August 2013, with testing programs to follow.
Additionally, following the successful appraisal program on the non-operated Atrush Block a declaration of commerciality was filed with the government in 2012, and a plan of development was filed in May 2013. The development plan is currently under review with final approval expected in the third quarter of 2013.  We anticipate first production in 2015. The Atrush-3 appraisal well has reached total depth and is currently testing. We hold a 15 percent non-operated working interest in the Atrush Block.
On the non-operated Sarsang block, two exploration wells, the Mangesh and the Gara, began drilling in the second half of 2012 and have reached total depth, with testing programs ongoing. Also on the Sarsang block, the East Swara Tika exploration well began drilling in July 2013 to test additional resource potential to the northeast of the previously announced Swara Tika discovery. We hold a 25 percent working interest in the Sarsang Block.

21

Ethiopia – The Sabisa-1 exploration well, on the onshore South Omo block in a frontier rift basin, encountered reservoir quality sands, oil and heavy gas shows and a thick shale section. The presence of oil prone source rocks, reservoir sands and good seals is encouraging for the numerous fault bounded traps identified in the basin. Because of mechanical issues, the well was abandoned before a full evaluation could be completed. The rig will mobilize to the nearby Tultule prospect, approximately two miles from the Sabisa-1 during the second half of 2013. We hold a 20 percent non-operated working interest in the South Omo block.
Gabon – Exploration drilling began in April 2013 on the Diaman well in the Diaba License G4-223, offshore Gabon, to test the deepwater presalt play. The well reached total depth in the third quarter of 2013. Logging and evaluation are underway. We hold a 21 percent non-operated working interest in the Diaba License.
Norway – We commenced drilling of the Sverdrup exploration well on PL 330 offshore Norway in June 2013 and total depth is expected to be reached in early September 2013. We hold a 30 percent non-operated working interest in this license. The Darwin (formerly Veslemoy) exploration well was drilled in the first quarter of 2013 on PL 531 in which we hold a 10 percent non-operated fully-carried working interest. Gas shows were recorded in the Paleocene objective section, although no hydrocarbons were found in the Cretaceous section and the well has been plugged and abandoned.
Poland – After an extensive evaluation of our exploration activities in Poland and unsuccessful attempts to find commercial levels of hydrocarbons, we have elected to conclude operations in the country. We are evaluating disposition options for our concessions.
Kenya – The first exploratory well on Block 9 is expected to commence before the end of 2013 onshore Kenya where we hold a 50 percent non-operated working interest.
Angola – The Kaombo development, located in the southeastern portion of Block 32, is expected be sanctioned late in 2013 so that production from the Kaombo development is possible in 2017.
  Oil Sands Mining
 Our Oil Sands Mining operations consist of a 20 percent non-operated working interest in the Athabasca Oil Sands Project (“AOSP”).  Our net synthetic crude oil sales were 43 mbbld and 47 mbbld in the second quarter and first six months of 2013 compared to 44 mbbld in each of the same periods of 2012 .  Sales were relatively flat in all periods with the exception of the first six months of 2013. The impact of strong reliability experienced at both mines and the upgrader during the first quarter of 2013 was partially offset by unplanned mine downtime and a planned turnaround during the second quarter of 2013.
Acquisitions and Dispositions
In June 2013, we entered into an agreement to sell our non-operated 10 percent working interest in the Production Sharing Contract and Joint Operating Agreement in Block 31 offshore Angola. This transaction, valued at $1.5 billion before closing adjustments, is expected to close in the fourth quarter of 2013, subject to government, regulatory and third-party approvals.
In June 2013, we closed the sale of our interests in the DJ Basin for proceeds of $19 million. A pretax loss of $114 million was recorded in the second quarter of 2013.
In February 2013, we conveyed our interests in the Marcellus natural gas shale play to the operator. A $43 million pretax loss on this transaction was recorded in the first quarter of 2013.
In February 2013, we closed the sale of our interest in the Neptune gas plant, located onshore Louisiana, for proceeds of $166 million. A $98 million pretax gain was recorded in the first quarter of 2013.
In January 2013, we closed the sale of our remaining assets in Alaska, for proceeds of $195 million, subject to a six-month escrow of $50 million which was collected in July 2013. After closing adjustments made in the second quarter of 2013, the pretax gain on this sale was $55 million.
In January 2013, government approval was received for our acquisition of a 20 percent non-operated interest in the onshore South Omo concession in Ethiopia.
As previously disclosed, we had engaged in discussions with respect to a potential sale of a portion of our 20 percent outside-operated interest in the AOSP. An agreement was not reached with the prospective purchaser and negotiations have been terminated. We are not engaged in further discussions with respect to a potential sale of these assets.
We continue to progress the potential sale of assets in an ongoing effort to optimize our portfolio for profitable growth, with a previously stated goal of divesting between $1.5 billion and $3 billion over the period of 2011 through 2013. To date, we have agreed upon or completed divestitures of approximately $2.9 billion.
The above discussions include forward-looking statements with respect to anticipated drilling activity, possible increased recoverable resources from optimized well spacing in the Eagle Ford resource play, planned infrastructure improvements in the

22

Eagle Ford operating area, additional farm-down of our working interest in the Madagascar prospect in the Gulf of Mexico, anticipated exploration activity in the Gulf of Mexico, the Kurdistan Region of Iraq, Ethiopia, Gabon, Norway, and Kenya, the development of our in-situ assets, a planned turnaround in Norway, planned pipeline curtailments and turnaround at Brae in the North Sea, expected timing and rate of production returning at Foinaven, the timing of approval of a plan of development and first production for the Atrush Block, plans to exit Poland, the timing of closing the sale of our 10 percent working interest in Block 31 offshore Angola, and the projected asset dispositions through 2013. The average times to drill a well and expectations as to future drilling times may not be indicative of future drilling times. The current production rates may not be indicative of future production rates. Factors that could potentially affect anticipated drilling activity, possible increased recoverable resources from optimized well spacing in the Eagle Ford resource play, planned infrastructure improvements in the Eagle Ford operating area, anticipated exploratory activity in the Gulf of Mexico, the Kurdistan Region of Iraq, Ethiopia, Gabon, Norway, and Kenya, a planned turnaround in Norway and planned pipeline curtailments and turnaround at Brae in the North Sea include pricing, supply and demand for liquid hydrocarbons and natural gas, the amount of capital available for exploration and development, regulatory constraints, timing of commencing production from new wells, drilling rig availability, availability of materials and labor, other associated risks with construction projects, the inability to obtain or delay in obtaining necessary government and third-party approvals and permits, 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. The timing of closing the sale of our 10 percent working interest in Block 31 offshore Angola is subject to the satisfaction of customary closing conditions and obtaining necessary government, regulatory and third-party approvals. The expected timing and rate of production returning at Foinaven, additional farm-down of the our working interest in the Madagascar prospect in the Gulf of Mexico, plans to exit Poland, the timing of approval of a plan of development and first production for the Atrush Block and the projected asset dispositions through 2013 are based on current expectations, estimates, and projections and are not guarantees of future performance. The development of our in-situ assets is dependent on obtaining regulatory approval and future development plans. Actual results may differ materially from these expectations, estimates and projections and are subject to certain risks, uncertainties and other factors, some of which are beyond our control and difficult to predict. The foregoing factors (among others) could cause actual results to differ materially from those set forth in the forward-looking statements.
Market Conditions
 Prevailing prices for the various qualities of crude oil and natural gas that we produce significantly impact our revenues and cash flows.  Worldwide prices have been volatile in recent years.  The following table lists benchmark crude oil and natural gas price averages relative to our North America E&P and International E&P segments in the second quarter and first six months of 2013 and 2012 .
 
Three Months Ended June 30,
 
Six Months Ended June 30,
Benchmark
2013
 
2012
 
2013
 
2012
West Texas Intermediate ("WTI") crude oil (Dollars per barrel)

$94.17

 

$93.35

 
$94.26
 
$98.15
Brent (Europe) crude oil (Dollars per barrel)

$102.58

 

$108.42

 
$107.54
 
$113.45
Henry Hub natural gas ( Dollars per million British thermal units  ("mmbtu" )) (a)   

$4.09

 

$2.22

 
$3.71
 
$2.48
(a)  
Settlement date average.
North America E&P
Liquid hydrocarbons – The quality, location and composition of our liquid hydrocarbon production mix can cause our U.S. liquid hydrocarbon realizations to differ from the WTI benchmark.
Quality – Light sweet crude contains less sulfur and tends to be lighter than sour crude oil so that refining it is less costly and produces higher value products; therefore, light sweet crude is considered of higher quality and typically sells at a price that approximates WTI or at a premium to WTI. The percentage of our North America E&P crude and condensate production that is light sweet crude has been increasing as onshore production from the Eagle Ford and Bakken shale plays increases and production from the Gulf of Mexico declines. In the second quarter and first six months of 2013 , the percentage of our U.S. crude oil and condensate production that was sweet averaged 75 percent and 74 percent compared to 42 percent and 45 percent in the same periods of 2012 . 
Location – In recent years, crude oil sold along the United States Gulf Coast, such as that from the Eagle Ford shale, has been priced based on the Louisiana Light Sweet benchmark which prices at a premium to WTI and tracks closest to Brent, while production from inland areas farther from large refineries has been at a discount to WTI.

23


Composition – The proportion of our liquid hydrocarbon sales that are NGLs continues to increase due to our development of United States unconventional liquids-rich plays. NGLs were 14 percent of our North America E&P liquid hydrocarbon sales volumes in the second quarter and first six months of 2013 compared to 9 percent in the same periods of 2012 .
Natural gas – A significant portion of our natural gas production in the U.S. is sold at bid-week prices, or first-of-month indices relative to our specific producing areas.  Average Henry Hub settlement prices for natural gas were 84 percent and 50 percent higher for the second quarter and first six months of 2013 compared to the same periods of the prior year. 
International E&P
Liquid hydrocarbons – Our international crude oil production is relatively sweet and is generally sold in relation to the Brent crude benchmark, which was 5 percent lower in both the second quarter and first six months of 2013 than the same periods of 2012 .
Natural gas – Our major international natural gas-producing regions are Europe and Equatorial Guinea.  Natural gas prices in Europe have been considerably higher than in the U.S. in recent years.  In the case of Equatorial Guinea, our natural gas sales are subject to term contracts, making realized prices in these areas less volatile.  The natural gas sales from Equatorial Guinea are at fixed prices; therefore, our reported average natural gas realized prices may not fully track market price movements.
Oil Sands Mining
 The Oil Sands Mining segment produces and sells various qualities of synthetic crude oil. Output mix can be impacted by operational problems or planned unit outages at the mines or upgrader. Sales prices for roughly two-thirds of the normal output mix will track movements in WTI and one-third will track movements in the Canadian heavy sour crude oil marker, primarily Western Canadian Select ("WCS"). A decrease in the WTI benchmark prices, coupled with a higher WCS discount from WTI in the first six months of 2013 compared to same period of 2012 , created downward pressure on our average realizations. However, in the second quarter of 2013 compared to the second quarter of 2012, the WCS discount from WTI has narrowed, with the discount remaining at these lower levels into July 2013.
The operating cost structure of the Oil Sands Mining operations is predominantly fixed and therefore many of the costs incurred in times of full operation continue during production downtime. Per-unit costs are sensitive to production rates. Key variable costs are natural gas and diesel fuel, which track commodity markets such as the Canadian Alberta Energy Company ("AECO") natural gas sales index and crude oil prices, respectively.
The table below shows benchmark prices that impacted both our revenues and variable costs for the second quarter and first six months of 2013 and 2012 :
 
Three Months Ended June 30,
 
Six Months Ended June 30,
Benchmark
2013
 
2012
 
2013
 
2012
WTI crude oil   (Dollars per barrel)

$94.17

 

$93.35

 
$94.26
 
$98.15
WCS crude oil   (Dollars per barrel) (a)

$75.06

 

$70.63

 
$68.74
 

$76.07

AECO natural gas sales index  (Dollars per mmbtu) (b)    

$3.45

 

$1.84

 
$3.31
 

$2.04

(a)  
Monthly pricing based upon average WTI adjusted for differentials unique to western Canada.
(b)  
Monthly average AECO day ahead index.

24


Results of Operations
Consolidated Results of Operation
Consolidated income before income taxes in the second quarter and first six months of 2013 was approximately 6 percent higher than in the same periods of 2012 primarily related to increases in sales volumes. The effective tax rate was 72 percent in the first six months of 2013 compared to 71 percent in the first six months of 2012 , with the increase related to higher income from operations in higher tax jurisdictions, primarily Libya.
Sales and other operating revenues, including related party are summarized by segment in the following table:
 
Three Months Ended June 30,
Six Months Ended June 30,
(In millions)
2013
2012
2013
2012
Sales and other operating revenues, including related party:
 
 
 
 
North America E&P
$
1,284

$
833

$
2,499

$
1,745

International E&P
1,732

1,813

3,619

3,476

Oil Sands Mining
353

329

741

698

Segment sales and other operating revenues, including related party
$
3,369

$
2,975

$
6,859

$
5,919

Unrealized gain (loss) on crude oil derivative instruments
50

—

—

—

Total sales and other operating revenues, including related party
$
3,419

$
2,975

$
6,859

$
5,919

 
Total sales and other operating revenues increased $444 million and $940 million in the second quarter and first six months of 2013 from the comparable prior-year periods. The $451 million and $754 million increases in the North America E&P segment in the second quarter and first six months of 2013 were primarily due to liquid hydrocarbon net sales volumes which increased 59 percent over the same periods of 2012 , primarily due to ongoing development programs in the Eagle Ford and Bakken shale resources plays.
The following table gives details of net sales volumes and average realizations of our North America E&P segment.
 
Three Months Ended June 30,
Six Months Ended June 30,
 
2013
2012
2013
2012
North America E&P Operating Statistics
 
 
 
 
Net liquid hydrocarbon sales volumes (mbbld) (a)
148

93

145

91

Liquid hydrocarbon average realizations  (per bbl)   (b) (c)
$84.51
$84.72
$85.30
$89.23
Net crude oil and condensate sales volumes (mbbld)
126

85

124

83

     Crude oil and condensate average realizations  (per bbl)   (b)
$93.75
$89.04
$94.20
$93.25
     Net natural gas liquids sales volumes (mbbld)
22

8

21

8

     Natural gas liquids average realizations  (per bbl)   (b)
$31.72
$40.54
$33.51
$45.65
 
 
 
 
 
Net natural gas sales volumes (mmcfd)
316

319

328

331

Natural gas average realizations  (per mcf) (b)
$4.19
$3.42
$4.02
$3.79
(a)  
Includes crude oil, condensate and natural gas liquids.
(b)  
Excludes gains and losses on derivative instruments
(c)  
Inclusion of realized gains (losses) on crude oil derivative instruments would have increased average liquid hydrocarbon realizations by $1.22 per bbl and $0.45 per bbl for the second quarter and first six months of 2013 . There were no realized gains (losses) on crude oil derivative instruments in the second quarter and first six months of 2012 .
As compared to prior year periods, International E&P sales and other operating revenues decreased $81 million in the second quarter of 2013 due to lower liquid hydrocarbon realizations and increased $143 million in the first six months of 2013 as a result of increased liquid hydrocarbon and natural gas sales volumes, partially offset by lower liquid hydrocarbon realizations.

25


The following table gives details of net sales volumes and average realizations of our International E&P segment.
 
Three Months Ended June 30,
Six Months Ended June 30,
 
2013
2012
2013
2012
International E&P Operating Statistics
 
 
 
 
     Net liquid hydrocarbon sales   volumes  (mbbld) (a)
 
 
 
 
Europe
93

99

96

98

Africa
84

78

82

65

Total International E&P
177

177

178

163

     Liquid hydrocarbon average realizations (per bbl) (b)
 
 
 
 
Europe
$106.41
$111.12
$111.43
$117.37
Africa
$92.92
$96.84
$94.96
$95.87
Total International E&P
$100.00
$104.82
$103.86
$108.80
 
 
 
 
 
Net natural gas sales volumes (mmcfd)
 
 
 
 
Europe (c)
89

102

92

103

Africa
425

399

449

409

Total International E&P
514

501

541

512

     Natural gas average realizations (per mcf) (b)
 
 
 
 
Europe
$11.37
$10.05
$12.12
$10.02
Africa
$0.49
$0.25
$0.50
$0.25
Total International E&P
$2.37
$2.25
$2.47
$2.22
(a)  
Includes crude oil, condensate and natural gas liquids. The amounts correspond with the basis for fiscal settlements with governments, representing equity tanker liftings and direct deliveries of liquid hydrocarbons.
(b)  
Excludes gains and losses on derivative instruments.
(c)  
Includes natural gas acquired for injection and subsequent resale of 8 mmcfd and 17 mmcfd for the second quarter s of 2013 and 2012 , and 10 mmcfd and 15 mmcfd for the first six months of 2013 and 2012 .
Oil Sands Mining sales and other operating revenues increased $24 million and $43 million in the second quarter and first six months of 2013 from the comparable prior-year periods. Synthetic crude oil sales volumes were slightly lower in the second quarter of 2013 than in the second quarter of 2012 ; however, a decrease in the discount of WCS to WTI in second quarter of 2013 resulted in increases in average realizations compared to the prior-year period. Synthetic crude oil sales volumes for the first six months of 2013 were 7 percent higher than in the first six months of 2012 , reflecting increased reliability of the mines and upgrader in the first quarter of 2013.  The following table gives details of net sales volumes and average realizations of our Oil Sands Mining segment.
 
Three Months Ended June 30,
 
Six Months Ended June 30,
 
2013
 
2012
 
2013
 
2012
Oil Sands Mining Operating Statistics
 
 
 
 
 
 
 
    Net synthetic crude oil sales volumes (mbbld)   (a)
43

 
44

 
47

 
44

Synthetic crude oil average realizations (per bbl)
$89.39
 
$79.31
 
$84.31
 
$85.07
(a)  
Includes blendstocks.
Unrealized gains and losses on crude oil derivative instruments are included in total sales and other operating revenues but are not allocated to the segments. In the second quarter of 2013 , the net unrealized gain on crude oil derivative instruments was $50 million while unrealized gains and losses did not have a significant impact on the first six months of 2013. There was no comparable crude oil derivative activity in the same periods of 2012. See Note 13 to the consolidated financial statements and Item 3. Quantitative and Qualitative Disclosures About Market Risk for additional information about our derivative positions.

26


Marketing revenues decreased $258 million and $677 million in the second quarter and first six months of 2013 from the comparable prior-year periods. North America E&P segment marketing activities, formerly referred to as supply optimization activities, which include the purchase of commodities from third parties for resale, have been decreasing in 2013 due to market dynamics. These activities serve to aggregate volumes in order to satisfy transportation commitments and to achieve flexibility within product types and delivery points.  
  Income from equity method investments increased $17 million and $57 million in the second quarter and first six months of 2013 from the comparable prior-year periods, primarily due to higher LNG net sales volumes.  
Net gain (loss) on disposal of assets in the second quarter of 2013 includes a $114 million loss on the sale of our interests in the DJ Basin. In addition, the first six months of 2013 include a $98 million gain on the sale of our interest in the Neptune gas plant, a $55 million gain on the sale of our remaining assets in Alaska and a $43 million loss on the conveyance of our interests in the Marcellus natural gas shale play to the operator. The net loss on disposal of assets in the second quarter of 2012 reflects $36 million to settle all obligations as a result of the assignment of exploration licenses in Indonesia. The net gain on disposal of assets in the first six months of 2012 consists primarily of the $166 million gain on the sale of our interests in several Gulf of Mexico crude oil pipeline systems, and the second quarter Indonesia loss. See Note 5 to the consolidated financial statements for information about these dispositions.
Production expenses increased $129 million and $205 million in the second quarter and first six months of 2013 from the comparable periods of 2012 . The increases are primarily related to increased sales volumes in the North America E&P and International E&P segments and a planned turnaround in the OSM segment during the second quarter of 2013.
Marketing expenses decreased $260 million and $685 million in the second quarter and first six months of 2013 from the same periods of 2012 , consistent with the marketing revenue decline discussed above.
  Exploration expenses were lower in the second quarter of 2013 than in the same quarter in 2012 due to lower dry well costs and geological and geophysical costs. Exploration costs were higher in the first six months of 2013 than in the same period of 2012 , primarily due to larger unproved property impairments. The first quarter of 2013 included $340 million in unproved property impairments on Eagle Ford shale leases that either have expired or that we do not expect to drill or extend. The following table summarizes the components of exploration expenses.
 
Three Months Ended June 30,
Six Months Ended June 30,
(In millions)
2013
2012
2013
2012
Unproved property impairments
$
40

$
35

$
423

$
70

Dry well costs
50

81

71

104

Geological and geophysical
12

29

39

74

Other
31

27

65

59

Total exploration expenses
$
133

$
172

$
598

$
307

Depreciation, depletion and amortization (“DD&A”) increased $158 million and $331 million in the second quarter and first six months of 2013 from the comparable prior-year periods.  Our segments apply the units-of-production method to the majority of their assets; therefore, the previously discussed increases in sales volumes generally result in similar changes in DD&A. The DD&A rate (expense per barrel of oil equivalent), which is impacted by changes in reserves and capitalized costs, can also cause changes in our DD&A. An increase in the North America E&P DD&A rate in the  second quarter and first six months of 2013 compared to the same prior-year periods was primarily due to the ongoing development programs in the Eagle Ford and Bakken shale resources plays. A lower International E&P DD&A rate in the second quarter and first six months of 2013 , primarily due to reserve increases at the end of 2012 and in the second quarter of 2013 for Norway, compared to the same periods in 2012 partially offset the impact of the higher North America E&P rate and higher sales volumes.  The following table provides DD&A rates for each segment.
 
Three Months Ended June 30,
Six Months Ended June 30,
($ per boe)
2013
2012
2013
2012
DD&A rate
 
 
 

 

North America E&P

$27


$22


$27


$23

International E&P

$8


$10


$8


$9

Oil Sands Mining

$12


$13


$12


$13


27


  Impairments in the first six months of 2013 related to the Powder River Basin and to the Ozona development in the Gulf of Mexico. Impairments in the first six months of 2012 were also related to the Ozona development in the Gulf of Mexico.  See Note 12 to the consolidated financial statements for information about these impairments.
  Taxes other than income include production, severance and ad valorem taxes in the United States which tend to increase or decrease in relation to sales volumes and revenues.
General and administrative expenses increased $10 million and $25 million in the second quarter and first six months of 2013 from the comparable prior year periods primarily due to pension settlement charges of $17 million in the second quarter of 2013.
Net interest and other increased $14 million and $36 million in the second quarter and first six months of 2013 from the comparable periods of 2012 primarily due to lower capitalized interest in 2013.
Provision for income taxes increased $53 million and $151 million in the second quarter and first six months of 2013 from the comparable periods of 2012 primarily due to the increase in pretax income.
The effective income tax rate is influenced by a variety of factors including the geographic sources of income and the relative magnitude of these sources of income. The provision for income taxes is allocated on a discrete, stand-alone basis to pretax segment income and to individual items not allocated to segments. The difference between the total provision and the sum of the amounts allocated to segments and to items not allocated to segments is shown in corporate and other unallocated items in the segment income table below.
Our effective tax rates in the first six months of 2013 and 2012 were 72 percent and 71 percent .   These rates are higher than the U.S. statutory rate of 35 percent due to earnings from foreign jurisdictions, primarily Norway and Libya, where the tax rates are in excess of the U.S. statutory rate.  In Libya, where the statutory tax rate is in excess of 90 percent, there remains uncertainty around sustained production and sales levels.  Reliable estimates of 2013 and 2012 annual ordinary income from our Libyan operations could not be made and the range of possible scenarios when including ordinary income from our Libyan operations in the worldwide annual effective tax rate calculation demonstrates significant variability.  As such, for the first six months of 2013 and 2012 , estimated annual effective tax rates were calculated excluding Libya and applied to consolidated ordinary income excluding Libya and the tax provision applicable to Libyan ordinary income was recorded as a discrete item in the periods.  Excluding Libya, the effective tax rates would be 63 percent and 64 percent for the first six months of 2013 and 2012 .
  Segment Income
 
Three Months Ended June 30,
 
Six Months Ended June 30,
(In millions)
2013
 
2012
 
2013
 
2012
North America E&P
$
221

 
$
70

 
$
162

 
$
174

International E&P
382

 
373

 
835

 
780

Oil Sands Mining
20

 
50

 
58

 
88

Segment income
623

 
493

 
1,055

 
1,042

Items not allocated to segments, net of income taxes:
 

 
 

 
 
 
 
Corporate and other unallocated items
(156
)
 
(77
)
 
(227
)
 
(148
)
Unrealized gain (loss) on crude oil derivative instruments
32

 
—

 
—

 
—

Net gain (loss) on dispositions
(73
)
 
(23
)
 
(9
)
 
83

Impairments
—

 
—

 
(10
)
 
(167
)
Net income
$
426

 
$
393

 
$
809

 
$
810

 North America E&P segment income increased $151 million in the second quarter of 2013 and decreased $12 million in the first six months of 2013 compared to the same periods of 2012 . The increase in the second quarter of 2013 is largely due to increased liquid hydrocarbon net sales volumes primarily in the Eagle Ford and Bakken shale resource plays. The decrease in the first six months of 2013 was primarily the result of unproved property impairments, higher DD&A and lower liquid hydrocarbon realizations, partially offset by higher liquid hydrocarbon net sales volumes, as discussed above.
  International E&P segment income increased $9 million and $55 million in the second quarter and first six months of 2013 compared to the same periods of 2012 . These increases were primarily related to higher liquid hydrocarbon net sales volumes and increased income from equity method investments, partially offset by higher income taxes.  
 Oil Sands Mining segment income decreased $30 million in the second quarter and first six months of 2013 compared to the same periods of 2012 . These decreases are primarily due to higher production expenses, including the costs of the scheduled upgrader turnaround in the second quarter of 2013.

28



Critical Accounting Estimates
There have been no changes to our critical accounting estimates subsequent to December 31, 2012 .
Accounting Standards Not Yet Adopted
In June 2013, the Financial Accounting Standards Board ("FASB") ratified the Emerging Issues Task Force consensus on Issue 13-C, which requires that an unrecognized tax benefit or a portion of an unrecognized tax benefit be presented as a reduction to a deferred tax asset for an available net operating loss carryforward, a similar tax loss or tax credit carryforward. This accounting standards update is effective for us beginning in the first quarter of 2014 and should be applied prospectively to unrecognized tax benefits that exist as of the effective date. Early adoption and retrospective application are permitted. We do not expect this accounting standards update to have a significant impact on our consolidated results of operations, financial position or cash flows.
In February 2013, an accounting standards update was issued to provide guidance for the recognition, measurement, and disclosure of obligations resulting from joint and several liability arrangements for which the total amount of the obligation is fixed at the reporting date, except for obligations such as asset retirement and environmental obligations, contingencies, guarantees, income taxes and retirement benefits, which are separately addressed within United States generally accepted accounting principles ("U.S. GAAP"). An entity is required to measure obligations resulting from joint and several liability arrangements for which the total amount of the obligation is fixed at the reporting date as the sum of 1) the amount the entity agreed to pay on the basis of its arrangement among its co-obligors and 2) any amount the entity expects to pay on behalf of its co-obligors. Disclosure of the nature of the obligation, including how the liability arose, the relationship with other co-obligors and the terms and conditions of the arrangement is required. In addition, the total outstanding amount under the arrangement, not reduced by the effect of any amounts that may be recoverable from other entities, plus the carrying amount of any liability or receivable recognized must be disclosed. This accounting standards update is effective for us beginning in the first quarter of 2014 and should be applied retrospectively for those in-scope obligations resulting from joint and several liability arrangements that exist at the beginning of 2014. Early adoption is permitted. We do not expect this accounting standards update to have a significant impact on our consolidated results of operations, financial position or cash flows.
Cash Flows and Liquidity
  Cash Flows
  Net cash provided by operating activities was $2,396 million in the first six months of 2013 , compared to $1,742 million in the first six months of 2012 , primarily reflecting the impact of increased liquid hydrocarbon, natural gas and synthetic crude oil sales volumes on operating income.
  Net cash used in investing activities   totaled $2,299 million in the first six months of 2013 , compared to $2,001 million in the first six months of 2012 .  Significant investing activities are additions to property, plant and equipment and disposal of assets.  Additions in both periods primarily related to spending on U.S. unconventional resource plays, particularly the Eagle Ford shale. Disposals of assets totaled $333 million and $218 million in first six months of 2013 and 2012 , with 2013 net proceeds primarily related to the sales of our interests in our Alaska assets, the Neptune gas plant, and the DJ Basin. In 2012, net proceeds resulted primarily from the sale of our interests in several Gulf of Mexico crude oil pipeline systems.
 For further information regarding capital expenditures by segment, see Supplemental Statistics.
  Net cash used in financing activities was $543 million in the first six months of 2013 , compared to $210 million provided by financing activities in the first six months of 2012 .  Repayments of debt at maturity were $148 million in the first six months of 2013 and $111 million in the first six months of 2012 . We also repaid a net $200 million of our outstanding commercial paper during the first six months of 2013 compared to the same period in 2012, when we drew a net $550 million of commercial paper.   Dividends paid of approximately $241 million were a significant use of cash in both periods.
  Liquidity and Capital Resources
 Our main sources of liquidity are cash and cash equivalents, internally generated cash flow from operations, the issuance of notes, our committed revolving credit facility and sales of non-strategic assets. Our working capital requirements are supported by these sources and we may issue commercial paper backed by our $2.5 billion revolving credit facility to meet short-term cash requirements.  Because of the alternatives available to us as discussed above, we believe that our short-term and long-term liquidity is adequate to fund not only our current operations, but also our near-term and long-term funding requirements including our capital spending programs, dividend payments, defined benefit plan contributions, repayment of debt maturities, share repurchase program and other amounts that may ultimately be paid in connection with contingencies.

29


  Capital Resources
Credit Arrangements and Borrowings
 At June 30, 2013 , we had no borrowings against our revolving credit facility or under our U.S. commercial paper program that is backed by the revolving credit facility. During the first six months of 2013 , $2,075 million of commercial paper was issued and $2,275 million of commercial paper was repaid.
At June 30, 2013 , we had $6,496 million in long-term debt outstanding, $68 million of which is due within one year. We do not have any triggers on any of our corporate debt that would cause an event of default in the case of a downgrade of our credit ratings.
The sale of our non-operated 10 percent working interest in Block 31 offshore Angola, a transaction valued at $1.5 billion before closing adjustments, is expected to close in the fourth quarter of 2013, subject to government, regulatory and third-party approvals. We expect to use the proceeds from this sale principally to repurchase shares, but also to strengthen our balance sheet and for general corporate purposes.
Shelf Registration
We are a "well-known seasoned issuer" for purposes of SEC rules, thereby allowing us to use a universal shelf registration statement should we choose to issue and sell various types of equity and debt securities. Beginning in the first quarter of 2013, we changed our reportable segments and expect to recast all periods presented to reflect these new segments in our consolidated financial statements no later than upon filing our 2013 Annual Report on Form 10-K with the SEC. When appropriate, we will update and file our universal shelf registration statement.
Cash-Adjusted Debt-To-Capital Ratio
 Our cash-adjusted debt-to-capital ratio (total debt-minus-cash to total debt-plus-equity-minus-cash) was 25 percent at June 30, 2013 and December 31, 2012 .
 
June 30,
 
December 31,
(In millions)
2013
 
2012
Commercial paper
$
—

 
$
200

Long-term debt due within one year
68

 
184

Long-term debt
6,428

 
6,512

Total debt
$
6,496

 
$
6,896

Cash
$
246

 
$
684

Equity
$
19,021

 
$
18,283

Calculation:
 

 
 

Total debt
$
6,496

 
$
6,896

Minus cash
246

 
684

Total debt minus cash
6,250

 
6,212

Total debt
6,496

 
6,896

Plus equity
19,021

 
18,283

Minus cash
246

 
684

Total debt plus equity minus cash
$
25,271

 
$
24,495

Cash-adjusted debt-to-capital ratio
25
%
 
25
%
  Capital Requirements
 On July 31, 2013, our Board of Directors approved a dividend of 19 cents per share for the second quarter of 2013 , a 12 percent increase over the previous quarter, payable September 10, 2013 to stockholders of record at the close of business on August 21, 2013.
As of June 30, 2013 , we plan to make contributions of up to $39 million to our funded pension plans during the remainder of 2013.
Since January 2006, our Board of Directors has authorized a common share repurchase program totaling $5 billion. As of June 30, 2013, we had repurchased 78 million common shares at a cost of $3,222 million, with 66 million shares purchased for $2,922 million prior to the spin-off of our downstream business and 12 million shares acquired at a cost of $300 million in the third quarter of 2011. Purchases under the program may be in either open market transactions, including block purchases, or in

30


privately negotiated transactions. This program may be changed based upon our financial condition or changes in market conditions and is subject to termination prior to completion. The program’s authorization does not include specific price targets or timetables. The timing of purchases under the program will be influenced by cash generated from operations, proceeds from potential asset sales, cash from available borrowings and market conditions.
Our opinions concerning liquidity and our ability to avail ourselves in the future of the financing options mentioned in the above forward-looking statements are based on currently available information. If this information proves to be inaccurate, future availability of financing may be adversely affected. Factors that affect the availability of financing include our performance (as measured by various factors including cash provided from operating activities), the state of worldwide debt and equity markets, investor perceptions and expectations of past and future performance, the global financial climate, and, in particular, with respect to borrowings, the levels of our outstanding debt and credit ratings by rating agencies.  The discussion of liquidity above also contains forward-looking statements regarding the timing of closing the sale of our 10 percent working interest in Block 31 offshore Angola, including the use of proceeds. The timing of closing the sale of our 10 percent working interest in Block 31 offshore Angola is subject to the satisfaction of customary closing conditions and obtaining necessary government, regulatory and third-party approvals.  The expectations with respect to the use of proceeds from the sale of our 10 percent working interest in Block 31 offshore Angola could be affected by changes in the prices and demand for liquid hydrocarbons and natural gas, actions of competitors, disruptions or interruptions of the our exploration or production operations, unforeseen hazards such as weather conditions or acts of war or terrorist acts and other operating and economic considerations. The discussion of liquidity above also contains forward-looking statements regarding planned funding of pension plans, which are based on current expectations, estimates and projections and are not guarantees of actual performance. Actual results may differ materially from these expectations, estimates and projections and are subject to certain risks, uncertainties and other factors, some of which are beyond our control and are difficult to predict.  Some factors that could cause actual results to differ materially include prices of and demand for liquid hydrocarbons, natural gas and synthetic crude oil, actions of competitors, disruptions or interruptions of our production or oil sands mining and bitumen upgrading operations due to unforeseen hazards such as weather conditions, acts of war or terrorist acts and the governmental or military response thereto, and other operating and economic considerations.
Contractual Cash Obligations
As of June 30, 2013 , our total contractual cash obligations were consistent with December 31, 2012 .
 
 
 
 
 
 
 
 
 
 
Environmental Matters  
We have incurred and will continue to incur substantial capital, operating and maintenance, and remediation expenditures as a result of environmental laws and regulations.  If these expenditures, as with all costs, are not ultimately reflected in the prices of our products and services, our operating results will be adversely affected.  We believe that substantially all of our competitors must comply with similar environmental laws and regulations.  However, the specific impact on each competitor may vary depending on a number of factors, including the age and location of its operating facilities, marketing areas and production processes.
There have been no significant changes to our environmental matters subsequent to December 31, 2012 .
Other Contingencies
We are a defendant in a number of lawsuits arising in the ordinary course of business, including, but not limited to, royalty claims, contract claims and environmental claims.  While the ultimate outcome and impact to us cannot be predicted with certainty, we believe the resolution of these proceedings will not have a material adverse effect on our consolidated financial position, results of operations or cash flows.  
 See Part II Item 1. Legal Proceedings for updated information about ongoing litigation.

31


Item 3. Quantitative and Qualitative Disclosures About Market Risk
For a detailed discussion of our risk management strategies and our derivative instruments, see Item 7A. Quantitative and Qualitative Disclosures About Market Risk in our 2012 Annual Report on Form 10-K. Additional disclosures regarding our open derivative positions, including underlying notional quantities, how they are reported in our consolidated financial statements and how their fair values are measured, may be found in Notes 12 and 13 to the consolidated financial statements.
Sensitivity analysis of the incremental effects on income from operations (“IFO”) of hypothetical 10 percent and 25 percent increases and decreases in commodity prices on our open commodity derivative instruments, by contract type as of June 30, 2013 is provided in the following table.
 
Incremental Change in IFO from a Hypothetical Price Increase of
 
Incremental Change in IFO from a Hypothetical Price Decrease of
 
10%
 
25%
 
10%
 
25%
Crude oil
 
 
 
 
 
 
 
Swaps
$
(81
)
 
$
(203
)
 
$
81

 
$
203

Option Collars
(30
)
 
(92
)
 
34

 
109

Total crude oil
$
(111
)
 
$
(295
)
 
$
115

 
$
312

Sensitivity analysis of the projected incremental effect of a hypothetical 10 percent change in interest rates on financial assets and liabilities as of  June 30, 2013 is provided in the following table.
 
 
 
Incremental
 
 
 
Change in
(In millions)                         
Fair Value
 
Fair Value
Financial assets (liabilities): (a)
 
 
 
Interest rate swap agreements
$
6

(b)  
$
3

Long-term debt, including amounts due within one year
$
(6,991
)
(b)  
$
(241
)
(a)  
Fair values of cash and cash equivalents, receivables, accounts payable and accrued interest approximate carrying value and are relatively insensitive to changes in interest rates due to the short-term maturity of the instruments.  Accordingly, these instruments are excluded from the table.
(b)  
Fair value was based on market prices where available, or current borrowing rates for financings with similar terms and maturities.
The aggregate cash flow effect on foreign currency derivative contracts of a hypothetical 10 percent change in exchange rates at  June 30, 2013 would be $49 million .
Item 4. Controls and Procedures
An evaluation of the effectiveness of the design and operation of our disclosure controls and procedures (as defined in Rules 13a-15(e) and 15d-15(e) under the Securities Exchange Act of 1934) was carried out under the supervision and with the participation of our management, including our Chief Executive Officer and Chief Financial Officer.  Based upon that evaluation, the Chief Executive Officer and Chief Financial Officer concluded that our company's design and operation of disclosure controls and procedures were effective as of June 30, 2013 .  
In the first quarter of 2013, we completed the update of our existing Enterprise Resource Planning ("ERP") system. This update included a new general ledger, consolidations system and reporting tools. There were no changes in our internal control over financial reporting that have materially affected, or were reasonably likely to materially affect, our internal control over financial reporting.

32

MARATHON OIL CORPORATION
Supplemental Statistics (Unaudited)


 
Three Months Ended
 
Six Months Ended
 
June 30,
 
June 30,
(In millions)
2013
 
2012
 
2013
 
2012
Segment Income
 
 
 
 
 
 
 
North America E&P
$
221

 
$
70

 
$
162

 
$
174

International E&P
382

 
373

 
835

 
780

Oil Sands Mining
20

 
50

 
58

 
88

Segment income
623

 
493

 
1,055

 
1,042

Items not allocated to segments, net of income taxes
(197
)
 
(100
)
 
(246
)
 
(232
)
Net income
$
426

 
$
393

 
$
809

 
$
810

Capital Expenditures (a)
 
 
 
 
 

 
 

North America E&P
$
904

 
$
1,013

 
$
1,874

 
$
1,842

International E&P
241

 
202

 
466

 
340

Oil Sands Mining
97

 
43

 
142

 
95

Corporate
15

 
19

 
45

 
63

Total
$
1,257

 
$
1,277

 
$
2,527

 
$
2,340

Exploration Expenses
 
 
 
 
 

 
 

North America E&P
$
76

 
$
147

 
$
511

 
$
253

International E&P
57

 
25

 
87

 
54

Total
$
133

 
$
172

 
$
598

 
$
307

(a)  
Capital expenditures include changes in accruals.



33

MARATHON OIL CORPORATION
Supplemental Statistics (Unaudited)


 
Three Months Ended
 
Six Months Ended
 
June 30,
 
June 30,
Net Sales Volumes
2013
 
2012
 
2013
 
2012
North America E&P
 

 
 

 
 

 
 

Crude Oil and Condensate (mbbld)
126

 
85

 
124

 
83

Natural Gas Liquids (mbbld)
22

 
8

 
21

 
8

Total Liquid Hydrocarbons
148

 
93

 
145

 
91

Natural Gas (mmcfd)
316

 
319

 
328

 
331

Total North America E&P (mboed)
201

 
146

 
200

 
146

 
 
 
 
 
 
 
 
International E&P
 

 
 

 
 
 
 
Liquid Hydrocarbons (mbbld)
 
 
 
 
 
 
 
Europe
93

 
99

 
96

 
98

Africa
84

 
78

 
82

 
65

Total Liquid Hydrocarbons
177

 
177

 
178

 
163

Natural Gas (mmcfd)
 

 
 
 
 
 
 
Europe (b)
89

 
102

 
92

 
103

Africa
425

 
399

 
449

 
409

Total Natural Gas
514

 
501

 
541

 
512

Total International E&P (mboed)
262

 
261

 
268

 
249

 
 
 
 
 
 
 
 
Oil Sands Mining
 
 
 
 
 
 
 
Synthetic Crude Oil (mbbld) (c)
43

 
44

 
47

 
44

 
 
 
 
 
 
 
 
Total Company (mboed)
506

 
451

 
515

 
439

Net Sales Volumes of Equity Method Investees
 

 
 

 
 
 
 
LNG (mtd)
5,820

 
5,467

 
6,301

 
5,879

Methanol (mtd)
973

 
1,268

 
1,191

 
1,290

(b)  
Includes natural gas acquired for injection and subsequent resale of 8 mmcfd and 17 mmcfd for the second quarter s of 2013 and 2012 , and 10 mmcfd and 15 mmcfd for the first six months of 2013 and 2012 .
(c)  
Includes blendstocks.




34

MARATHON OIL CORPORATION
Supplemental Statistics (Unaudited)


 
Three Months Ended
 
Six Months Ended
 
June 30,
 
June 30,
Average Realizations (d)
2013
 
2012
 
2013
 
2012
North America E&P
 
 
 
 
 
 
 
Crude Oil and Condensate (per bbl)

$93.75

 

$89.04

 
$94.20
 
$93.25
Natural Gas Liquids (per bbl)

$31.72

 

$40.54

 
$33.51
 
$45.65
Total Liquid Hydrocarbons (e)

$84.51

 

$84.72

 
$85.30
 
$89.23
Natural Gas (per mcf)

$4.19

 

$3.42

 
$4.02
 
$3.79
 
 
 
 
 
 
 
 
International E&P
 
 
 
 
 
 
 
Liquid Hydrocarbons (per bbl)
 
 
 
 
 
 
 
Europe

$106.41

 

$111.12

 
$111.43
 
$117.37
Africa

$92.92

 

$96.84

 
$94.96
 
$95.87
Total Liquid Hydrocarbons

$100.00

 

$104.82

 
$103.86
 
$108.80
Natural Gas (per mcf)
 
 
 
 
 
 
 
Europe

$11.37

 

$10.05

 
$12.12
 
$10.02
Africa (f)

$0.49

 

$0.25

 
$0.50
 
$0.25
Total Natural Gas

$2.37

 

$2.25

 
$2.47
 
$2.22
 
 
 
 
 
 
 
 
Oil Sands Mining
 
 
 
 
 
 
 
    Synthetic Crude Oil (per bbl)

$89.39

 

$79.31

 
$84.31
 
$85.07
(d)  
Excludes gains and losses on derivative instruments.
(e)  
Inclusion of realized gains (losses) on crude oil derivative instruments would have increased average liquid hydrocarbon realizations by $1.22 per bbl and $0.45 per bbl for the second quarter and first six months of 2013 . There were no realized gains (losses) on crude oil derivative instruments in the same periods of 2012 .
(f)  
Primarily represents fixed prices under long-term contracts with Alba Plant LLC, Atlantic Methanol Production Company LLC and Equatorial Guinea LNG Holdings Limited, which are equity method investees.  We include our share of income from each of these equity method investees in our International E&P segment.

35


Part II – OTHER INFORMATION
Item 1. Legal Proceedings
We are a defendant in a number of lawsuits arising in the ordinary course of business, including, but not limited to, royalty claims, contract claims and environmental claims.  While the ultimate outcome and impact to us cannot be predicted with certainty, we believe the resolution of these proceedings will not have a material adverse effect on our consolidated financial position, results of operations or cash flows.  Certain of those matters are discussed below.
Litigation
In March 2011, Noble Drilling (U.S.) LLC (“Noble”) filed a lawsuit against us in the District Court of Harris County, Texas, alleging, among other things, breach of contract, breach of the duty of good faith and fair dealing, and negligent misrepresentation, relating to a multi-year drilling contract for a newly constructed drilling rig to be deployed in the U.S. Gulf of Mexico.  We filed an answer in April 2011, contending, among other things, failure to perform, failure to comply with material obligations, failure to mitigate alleged damages and that Noble failed to provide the rig according to the operating, performance and safety requirements specified in the drilling contract. In April 2013, we filed a counterclaim against Noble alleging, among other things, breach of contract and breach of the duty of good faith relating to the multi-year drilling contract. The counterclaim also included a breach of contract claim for reimbursement for the value of fuel used by Noble under an offshore daywork drilling contract. We are vigorously defending this litigation.  The ultimate outcome of this lawsuit, including any financial effect on us, remains uncertain.  We do not believe an estimate of a reasonably probable loss (or range of loss) can be made for this lawsuit at this time.
Environmental
 We executed a settlement agreement with the North Dakota Department of Health regarding voluntary disclosures of potential Clean Air Act violations made in 2009 relating to our operations on state lands in the Bakken shale and paid a fine of $169,800 in June 2013.
SEC Investigation Relating to Libya
On May 25, 2011, we received a subpoena issued by the SEC requiring production of documents related to payments made to the government of Libya, or to officials and persons affiliated with officials of the government of Libya. By letter dated April 26, 2013, the SEC further notified us that they completed their investigation and did not intend to recommend any enforcement action in this matter.
Item 1A. Risk Factors
We are subject to various risks and uncertainties in the course of our business.  The discussion of such risks and uncertainties may be found under Item 1A. Risk Factors in our 2012 Annual Report on Form 10-K.
Item 2. Unregistered Sales of Equity Securities and Use of Proceeds
The following table provides information about purchases by Marathon Oil during the quarter ended June 30, 2013 , of equity securities that are registered by Marathon Oil pursuant to Section 12 of the Securities Exchange Act of 1934.
 
Column (a)
 
Column (b)
 
Column (c)
 
Column (d)
 
Total Number of
 
Average Price
 
Total Number of
Shares Purchased
as Part of
Publicly Announced
 
Approximate Dollar
Value of Shares that
May Yet Be
Purchased Under the
Period
Shares Purchased (a)(b)
 
Paid per Share
 
 Plans or Programs (c)
 
Plans or Programs (c)
04/01/13 - 04/30/13

12,135

 
$33.64
 
—

 
$1,780,609,536
05/01/13 - 05/31/13
3,795

 
$32.05
 
—

 
$1,780,609,536
06/01/13 - 06/30/13
36,664

 
$34.84
 
—

 
$1,780,609,536
Total
52,594

 
$34.36
 
—

 
 
(a)  
27,051 shares of restricted stock were delivered by employees to Marathon Oil, upon vesting, to satisfy tax withholding requirements.
(b)  
In June 2013, 25,543 shares were repurchased in open-market transactions to satisfy the requirements for dividend reinvestment under the Marathon Oil Corporation Dividend Reinvestment and Direct Stock Purchase Plan (the “Dividend Reinvestment Plan”) by the administrator of the Dividend Reinvestment Plan. Shares needed to meet the requirements of the Dividend Reinvestment Plan are either purchased in the open market or issued directly by Marathon Oil.
(c)  
We announced a share repurchase program in January 2006, and amended it several times in 2007 for a total authorized program of $5 billion. As of June 30, 2013 , 78 million split-adjusted common shares had been acquired at a cost of $3,222 million, which includes transaction fees and commissions that are not reported in the table above.  Of this total, 66 million shares had been acquired at a cost of $2,922 million prior to the spin-off of the downstream business.

36


Item 4. Mine Safety Disclosures
 Not applicable.
Item 6.  Exhibits
The following exhibits are filed as a part of this report:
 
 
 
 
Incorporated by Reference
 
 
 
 
Exhibit Number
 
Exhibit Description
 
Form
 
Exhibit
 
Filing Date
 
SEC File No.
 
Filed Herewith
 
Furnished Herewith
3.1
 
Restated Certificate of Incorporation of Marathon Oil Corporation.
 
 
 
 
 
 
 
 
 
X
 
 
3.2
 
Amended By-laws of Marathon Oil Corporation effective May 29, 2013.
 
 
 
 
 
 
 
 
 
X
 
 
3.3
 
Amended By-Laws of Marathon Oil Corporation effective August 1, 2013.
 
 
 
 
 
 
 
 
 
X
 
 
10.1
 
Marathon Oil Corporation 2011 Officer Change in Control Severance Benefits Plan (For Officers Hired or Promoted after October 26, 2011).
 
10-Q
 
10.4
 
5/4/2012
 
001-05153
 
 
 
 
12.1
 
Computation of Ratio of Earnings to Fixed Charges.
 
 
 
 
 
 
 
 
 
X
 
 
31.1
 
Certification of President and Chief Executive Officer pursuant to Rule 13(a)-14 and 15(d)-14 under the Securities Exchange Act of 1934.
 
 
 
 
 
 
 
 
 
X
 
 
31.2
 
Certification of Executive Vice President and Chief Financial Officer pursuant to Rule 13(a)-14 and 15(d)-14 under the Securities Exchange Act of 1934.
 
 
 
 
 
 
 
 
 
X
 
 
32.1
 
Certification of President and Chief Executive Officer pursuant to 18 U.S.C. Section 1350.
 
 
 
 
 
 
 
 
 
X
 
 
32.2
 
Certification of Executive Vice President and Chief Financial Officer pursuant to 18 U.S.C. Section 1350.
 
 
 
 
 
 
 
 
 
X
 
 
101.INS
 
XBRL Instance Document.
 
 
 
 
 
 
 
 
 
X
 
 
101.SCH
 
XBRL Taxonomy Extension Schema.
 
 
 
 
 
 
 
 
 
X
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
101.CAL
 
XBRL Taxonomy Extension Calculation Linkbase.
 
 
 
 
 
 
 
 
 
X
 
 
101.DEF
 
XBRL Taxonomy Extension Definition Linkbase.
 
 
 
 
 
 
 
 
 
X
 
 
101.LAB
 
XBRL Taxonomy Extension Label Linkbase.
 
 
 
 
 
 
 
 
 
X
 
 
101.PRE
 
XBRL Taxonomy Extension Presentation Linkbase.
 
 
 
 
 
 
 
 
 
X
 
 


37



SIGNATURES

 
Pursuant to the requirements of the Securities Exchange Act of 1934, the registrant has duly caused this report to be signed on its behalf by the undersigned thereunto duly authorized.
August 8, 2013
 
MARATHON OIL CORPORATION
 
 
 
 
By:
/s/ Michael K. Stewart
 
 
 Michael K. Stewart
 
 
Vice President, Finance and Accounting,
Controller and Treasurer

38



Exhibit Index

 
 
 
 
Incorporated by Reference
 
 
 
 
Exhibit Number
 
Exhibit Description
 
Form
 
Exhibit
 
Filing Date
 
SEC File No.
 
Filed Herewith
 
Furnished Herewith
3.1
 
Restated Certificate of Incorporation of Marathon Oil Corporation.
 
 
 
 
 
 
 
 
 
X
 
 
3.2
 
Amended By-laws of Marathon Oil Corporation effective May 29, 2013.
 
 
 
 
 
 
 
 
 
X
 
 
3.3
 
Amended By-Laws of Marathon Oil Corporation effective August 1, 2013.
 
 
 
 
 
 
 
 
 
X
 
 
10.1
 
Marathon Oil Corporation 2011 Officer Change in Control Severance Benefits Plan (For Officers Hired or Promoted after October 26, 2011).
 
10-Q
 
10.4
 
5/4/2012
 
001-05153
 
 
 
 
12.1
 
Computation of Ratio of Earnings to Fixed Charges.
 
 
 
 
 
 
 
 
 
X
 
 
31.1
 
Certification of President and Chief Executive Officer pursuant to Rule 13(a)-14 and 15(d)-14 under the Securities Exchange Act of 1934.
 
 
 
 
 
 
 
 
 
X
 
 
31.2
 
Certification of Executive Vice President and Chief Financial Officer pursuant to Rule 13(a)-14 and 15(d)-14 under the Securities Exchange Act of 1934.
 
 
 
 
 
 
 
 
 
X
 
 
32.1
 
Certification of President and Chief Executive Officer pursuant to 18 U.S.C. Section 1350.
 
 
 
 
 
 
 
 
 
X
 
 
32.2
 
Certification of Executive Vice President and Chief Financial Officer pursuant to 18 U.S.C. Section 1350.
 
 
 
 
 
 
 
 
 
X
 
 
101.INS
 
XBRL Instance Document.
 
 
 
 
 
 
 
 
 
X
 
 
101.SCH
 
XBRL Taxonomy Extension Schema.
 
 
 
 
 
 
 
 
 
X
 
 
101.CAL
 
XBRL Taxonomy Extension Calculation Linkbase.
 
 
 
 
 
 
 
 
 
X
 
 
101.DEF
 
XBRL Taxonomy Extension Definition Linkbase.
 
 
 
 
 
 
 
 
 
X
 
 
101.LAB
 
XBRL Taxonomy Extension Label Linkbase.
 
 
 
 
 
 
 
 
 
X
 
 
101.PRE
 
XBRL Taxonomy Extension Presentation Linkbase.
 
 
 
 
 
 
 
 
 
X
 
 


Exhibit 3.1

RESTATED CERTIFICATE OF INCORPORATION
OF
MARATHON OIL CORPORATION
* * * * * *
Marathon Oil Corporation, a corporation organized and existing under the laws of the State of Delaware, hereby certifies as follows:
1. The name of the corporation is Marathon Oil Corporation and the name under which the corporation was originally incorporated is USX HoldCo, Inc. The date of filing of its original Certificate of Incorporation with the Secretary of State was May 30, 2001.
2. This Restated Certificate of Incorporation restates and integrates and further amends the provisions of the Certificate of Incorporation of this corporation by (i) amending Article Fourth to increase the number of authorized shares of capital stock from 576 million to 1,126 million and to increase the number of authorized shares of common stock from 550 million to 1,100 million and (ii) amending Article Eighth to provide that stockholders may adopt, amend and repeal the by-laws of this corporation at any regular or special meeting of the stockholders by an affirmative vote of the majority of shares present in person or represented by proxy at the meeting and entitled to vote thereon.
3. The text of the Certificate of Incorporation as amended or supplemented heretofore is further amended hereby to read as herein set forth in full:
First: The name of the Corporation (which is hereinafter referred to as the "Corporation") is
MARATHON OIL CORPORATION
Second: Its registered office and place of business in the State of Delaware is located at 1209 Orange Street, in the City of Wilmington, County of New Castle. The registered agent in charge thereof upon whom process against the Corporation may be served is The Corporation Trust Company.
Third: The purposes of the Corporation are to engage in any lawful act or activity for which corporations may be organized under the General Corporation Law of Delaware.
Fourth: The total number of shares of capital stock which the Corporation shall have authority to issue is One Billion One Hundred Twenty Six Million (1,126,000,000), of which One Billion One Hundred Million (1,100,000,000) shares shall be Common Stock having a par value of one dollar ($1.00) per share and Twenty Six Million (26,000,000) shares shall be shares of Preferred Stock, without par value (hereinafter called “Preferred Stock”).
A statement of the designations of the Preferred Stock or of any series thereof, and the powers, preferences and relative, participating, optional or other special rights, and qualifications, limitations or restrictions thereof, or of the authority of the Board of Directors to fix by resolution



or resolutions such designations and other terms not fixed by the Certificate of Incorporation, is as follows:
1. The Preferred Stock may be issued in one or more series, from time to time, with each such series to have such designation, powers, preferences and relative, participating, optional or other special rights, and qualifications, limitations or restrictions thereof, as shall be stated and expressed in the resolution or resolutions providing for the issue of such series adopted by the Board of Directors of the Corporation, subject to the limitations prescribed by law and in accordance with the provisions hereof, the Board of Directors being hereby expressly vested with authority to adopt any such resolution or resolutions. The authority of the Board of Directors with respect to each such series shall include, but not be limited to, the determination or fixing of the following:
(i) The distinctive designation and number of shares comprising such series, which number may (except where otherwise provided by the Board of Directors in creating such series) be increased or decreased (but not below the number of shares then outstanding) from time to time by like action of the Board of Directors;
(ii) The dividend rate of such series, the conditions and times upon which such dividends shall be payable, the relation which such dividends shall bear to the dividends payable on any other class or classes of stock or series thereof, or any other series of the same class, and whether dividends shall be cumulative or non-cumulative;
(iii) The conditions upon which the shares of such series shall be subject to redemption by the Corporation and the times, prices and other terms and provisions upon which the shares of the series may be redeemed;
(iv) Whether or not the shares of the series shall be subject to the operation of a retirement or sinking fund to be applied to the purchase or redemption of such shares and, if such retirement or sinking fund be established, the annual amount thereof and the terms and provisions relative to the operation thereof;
(v) Whether or not the shares of the series shall be convertible into or exchangeable for shares of any other class or classes, with or without par value, or of any other series of the same class, and, if provision is made for conversion or exchange, the times, prices, rates, adjustments, and other terms and conditions of such conversion or exchange;
(vi) Whether or not the shares of the series shall have voting rights, in addition to the voting rights provided by law, and, if so, subject to the limitation hereinafter set forth, the terms of such voting rights;

2 of 5


(vii) The rights of the shares of the series in the event of voluntary or involuntary liquidation, dissolution, or upon the distribution of assets of the Corporation;
(viii) Any other powers, preferences and relative, participating, optional or other special rights, and qualifications, limitations or restrictions thereof, of the shares of such series, as the Board of Directors may deem advisable and as shall not be inconsistent with the provisions of this Certificate of Incorporation.
2. The holders of shares of the Preferred Stock of each series shall be entitled to receive, when and as declared by the Board of Directors, out of funds legally available for the payment of dividends, dividends at the rates fixed by the Board of Directors for such series, and no more, before any dividends, other than dividends payable in Common Stock, shall be declared and paid, or set apart for payment, on the Common Stock with respect to the same dividend period.
3. Whenever, at any time, dividends on the then outstanding Preferred Stock as may be required with respect to any series outstanding shall have been paid or declared and set apart for payment on the then outstanding Preferred Stock, and after complying with respect to any retirement or sinking fund or funds for any series of Preferred Stock, the Board of Directors may, subject to the provisions of the resolution or resolutions creating any series of Preferred Stock, declare and pay dividends on the Common Stock, and the holders of shares of the Preferred Stock shall not be entitled to share therein.
4. The holders of shares of the Preferred Stock of each series shall be entitled upon liquidation or dissolution or upon the distribution of the assets of the Corporation to such preferences as provided in the resolution or resolutions creating such series of Preferred Stock, and no more, before any distribution of the assets of the Corporation shall be made to the holders of shares of the Common Stock.
5. Except as otherwise provided by a resolution or resolutions of the Board of Directors creating any series of Preferred Stock or by the General Corporation Law of Delaware, the holders of shares of the Common Stock issued and outstanding shall have and possess the exclusive right to notice of stockholders' meetings and the exclusive power to vote. The holders of shares of the Preferred Stock issued and outstanding shall, in no event, be entitled to more than one vote for each share of Preferred Stock held by them unless otherwise required by law.
As used in this Article Fourth, the term “Board of Directors” shall include the Board of Directors of the Corporation and, to the extent permitted by the General Corporation Law of the State of Delaware, any duly authorized committee of such Board of Directors.
Fifth: The existence of the Corporation is to be perpetual.

3 of 5


Sixth: The private property of the stockholders shall not be subject to the payment of corporate debts to any extent whatever.
Seventh: The number of directors of the Corporation shall be fixed from time to time by, or in the manner provided in, its by-laws and may be increased or decreased as therein provided; but the number thereof shall not be less than three.
At the 2007 annual meeting of the stockholders of the Corporation, the successors of the directors whose terms expire at that meeting shall be elected for a term expiring at the 2008 annual meeting of the stockholders of the Corporation; at the 2008 annual meeting of the stockholders of the Corporation, the successors of the directors whose terms expire at that meeting shall be elected for a term expiring at the 2009 annual meeting of the stockholders of the Corporation; and at each annual meeting of the stockholders of the Corporation thereafter, the directors shall be elected for terms expiring at the next succeeding annual meeting of the stockholders of the Corporation.
In the case of any increase in the number of directors of the Corporation, the additional director or directors shall be elected by the Board of Directors.
In the case of any vacancy in the Board of Directors from death, resignation, disqualification or other cause, a successor to hold office for the unexpired portion of the term of the director whose place shall be vacant, and until the election of his successor, shall be elected by a majority of the Board of Directors then in office, though less than a quorum.
Eighth: The Board of Directors shall have power to adopt, amend and repeal the by-laws at any regular or special meeting of the Board of Directors, provided that notice of intention to adopt, amend or repeal the by-laws in whole or in part shall have been included in the notice of meeting; or, without any such notice, by a vote of two-thirds of the directors then in office.
Stockholders may adopt, amend and repeal the by-laws at any regular or special meeting of the stockholders by an affirmative vote of the majority of shares present in person or represented by proxy at the meeting and entitled to vote thereon, provided that notice of intention to adopt, amend or repeal the by-laws in whole or in part shall have been included in the notice of the meeting.
Any action required to be taken at any annual or special meeting of the stockholders of the Corporation, or any action which may be taken at any annual or special meeting of the stockholders or otherwise, may not be taken without a meeting, prior notice and a vote, and stockholders may not act by written consent.
Ninth: The Board of Directors from time to time shall determine whether and to what extent, and at what times and places, and under what conditions and regulations, the accounts and books of the Corporation, or any of them, shall be open to the inspection of the stockholders, and no stockholder shall have any right to inspect any account or book or document of the Corporation, except as conferred by law or authorized by the Board of Directors, or by the stockholders.

4 of 5


Tenth: The directors may from time to time declare such dividends as they shall deem advisable and proper, subject to the provisions of Article Fourth and to such restrictions as may be imposed by law, and cause the Corporation to pay the same to the stockholders at such times as they shall fix.
The Board of Directors shall have power to issue bonds, debentures, or other obligations, either non-convertible or convertible into the Corporation's stock, subject to the provisions of Article Fourth and upon such terms, in such manner and under such conditions in conformity with law, as may be fixed by the Board of Directors prior to the issue of such bonds, debentures or other obligations.
Eleventh: No director shall be personally liable to the Corporation or its stockholders for monetary damages for any breach of fiduciary duty by such director as a director, except (i) for breach of the director's duty of loyalty to the Corporation or its stockholders, (ii) for acts or omissions not in good faith or which involve intentional misconduct or a knowing violation of law, (iii) pursuant to Section 174 of the Delaware General Corporation Law, or (iv) for any transaction from which the director derived an improper personal benefit. No amendment to or repeal of this Article Eleventh shall apply to or have any effect on the liability or alleged liability of any director of the Corporation for or with respect to any acts or omissions of such director occurring prior to such amendment or repeal.
Twelfth: The powers and authorities hereinbefore conferred upon the Board of Directors are in furtherance and not in limitation of those conferred by the laws of the State of Delaware.
Thirteenth: The Corporation reserves the right at any time and from time to time to amend, alter, change or repeal any provision contained in this Certificate of Incorporation in the manner now or hereafter prescribed by law, and all rights preferences and privileges of whatsoever nature conferred upon stockholders, directors or any other persons whomsoever by and pursuant to this Certificate of Incorporation in its present form or as hereafter amended are granted subject to the rights reserved in this Article.
5.    This Restated Certificate of Incorporation was duly adopted and approved by the Board of Directors and the stockholders in accordance with Sections 242 and 245 of the General Corporation Law of the State of Delaware.
IN WITNESS WHEREOF, said Marathon Oil Corporation has caused this Certificate to be signed by William F. Schwind, Jr., its Vice President, General Counsel and Secretary, this 25th day of April, 2007.
By: /s/ William F. Schwind, Jr.     
William F. Schwind, Jr.


5 of 5
Exhibit 3.2

MARATHON OIL CORPORATION
BY-LAWS
May 29, 2013

ARTICLE I.
Stockholders.
Section 1.1 Time and Place of Meetings of Stockholders. Unless the time and place of the annual meeting of stockholders for the purpose of electing directors and transacting such other business as may be brought before the meeting are changed by the Board of Directors, as may be done from time to time, provided that all legal requirements for such change and notice to stockholders are observed, such annual meeting of stockholders of the Corporation shall be held at the office of the Corporation's registered agent in the State of Delaware at 2 o'clock p.m., on the last Wednesday in April in each year, if not a legal holiday, and if a legal holiday, then on the next succeeding Wednesday which is not a legal holiday.
     Special meetings of the stockholders (i) may be called at any time by the Board of Directors and (ii) shall be called by the chairman of the Board of Directors or the chief executive officer of the Corporation following receipt by the secretary of the Corporation of a written request of a holder or holders, who, individually or collectively, have continuously held 20 percent or more of the outstanding shares of the Corporation's common stock for at least one year prior to the date the Corporation receives the written request to call a special meeting. For this purpose, share ownership is to be calculated on a “net long” basis, determined by subtracting the stockholders' short position from their long position, based on Rule 14e-4 under the Securities Exchange Act of 1934, as amended. Any such request by a stockholder or stockholders to call a special meeting must: (i) be accompanied by proof of ownership of record of 20 percent or more of the outstanding shares of the Corporation's common stock and state the purchase date of each such share; (ii) specify the matter or matters to be acted upon at such meeting, each of which must be a proper subject for stockholder action under applicable law, which specification must include the complete text of any resolution or any amendment to any document applicable to the Corporation intended to be presented at the meeting; (iii) state the reasons for conducting such business at a special meeting of stockholders; and (iv) provide any other information which may be required pursuant to these By-laws or any other information with respect to the matter or matters requested to be acted upon which may be required to be disclosed under the Delaware General Corporation Law or included in a proxy statement filed pursuant to the rules of the Securities and Exchange Commission, and, as to each stockholder requesting the meeting and each other person, if any, who is a beneficial owner of the shares held by such stockholder, (a) their name and address, (b) the class

1


and number of shares of the Corporation which are owned beneficially or of record, and (c) any material interest in the business to be brought before the meeting. Without limiting the generality of the foregoing: (a) in the case of any such request to call a special meeting for the purpose of (or for multiple purposes that include) considering any nominee or nominees to serve on the Board of Directors, such request shall set forth all the information required to be included in a notice to which the provisions of the fourth sentence of Section 1.3 of these By-laws apply, and the provisions of the fifth sentence of Section 1.4 of these By-laws shall be applicable; and (b) in the case of any such request to call a special meeting for other purpose or purposes, such request shall set forth all the information required to be included in a notice to which the provisions of the sixth sentence of Section 1.4 of these By-laws apply. Notwithstanding the forgoing, neither the chairman of the Board of Directors nor the chief executive officer of the Corporation shall be required to call a special stockholder meeting if (i) the special meeting request relates to an item of business that is not a proper subject for stockholder action under applicable law, (ii) a similar item was presented at any meeting of stockholders held within 120 calendar days prior to the receipt by the Corporation of the special meeting request, (iii) a similar item is included in the Corporation's notice as an item of business to be brought before a stockholder meeting that has been called but not yet held, or (iv) the special meeting request is received by the Corporation during the period commencing 90 calendar days prior to the first anniversary of the preceding year's annual meeting of stockholders.
Neither the annual meeting nor any special meeting of stockholders need be held within the State of Delaware.
Any action required to be taken at any annual or special meeting of the stockholders of the Corporation, or any action which may be taken at any annual or special meeting of the stockholders or otherwise, may not be taken without a meeting, prior notice and a vote, and stockholders may not act by written consent.
Section 1.2 Notice of Meetings of Stockholders. It shall be the duty of the Secretary to cause notice of each annual or special meeting to be mailed to all stockholders of record as of the record date as fixed by the Board of Directors for the determination of stockholders entitled to vote at such meeting. Such notice shall indicate briefly the action to be taken at such meeting and shall be mailed to the stockholders at the addresses of such stockholders as shown on the books of the Corporation at least 10 days but not more than 60 days preceding the meeting. Only matters stated in the notice of a special meeting of the stockholders shall be brought before and acted upon at the meeting. Any such notice may be satisfied by electronic transmission, subject to the requirements of Section 232 of the DGCL.
Section 1.3. Nomination of Directors. Only persons who are nominated in accordance with the following procedures shall be eligible for election as directors. Nomination for election to the Board of Directors of the Corporation at a meeting of stockholders may be made by the Board of Directors or by any stockholder of record of the Corporation entitled to vote generally for the election

2


of directors at such meeting who complies with the notice procedures set forth in this Section 1.3. Such nominations, other than those made by or on behalf of the Board of Directors, shall be made by notice in writing delivered or mailed by first-class United States mail, postage prepaid, to the Secretary, and received not less than 90 days nor more than 120 days prior to the first anniversary of the date on which the Corporation first mailed its proxy materials for the preceding year's annual meeting of stockholders; provided, however, that if the date of the annual meeting is advanced more than 30 days prior to or delayed by more than 30 days after the anniversary of the preceding year's annual meeting, notice by the stockholder to be timely must be so delivered not later than the close of business on the later of (i) the 90 th day prior to such annual meeting or (ii) the 10 th day following the day on which public announcement of the date of such meeting is first made. Such notice shall set forth (a) as to each proposed nominee (i) the name, age, business address and, if known, residence address of each such nominee, (ii) the principal occupation or employment of each such nominee, (iii) the number of shares of each class of the capital stock of the Corporation which are beneficially owned by each such nominee, and (iv) any other information concerning the nominee that must be disclosed as to nominees in proxy solicitations pursuant to Regulation 14A under the Securities Exchange Act of 1934, as amended (including such person's written consent to be named as a nominee and to serve as a director if elected); and (b) as to the stockholder giving the notice (i) the name and address, as they appear on the Corporation's books, of such stockholder, (ii) the number of shares of each class of the capital stock of the Corporation which are beneficially owned by such stockholder, (iii) a description of any agreement, arrangement or understanding relating to any hedging or other transaction or series of transactions (including any derivative or short position profit interest, option, hedging transaction or borrowing or lending of shares) that has been entered into or made by such stockholder, the effect or intent of which is to mitigate loss, manage risk or benefit from share price changes or to increase or decrease the voting power of such stockholder or any of its Stockholder Associated Persons (as defined in Section 1.4), in any case with respect to any share of stock of the Corporation, and (iv) a description of any agreement, arrangement or understanding with respect to such nomination between or among the stockholder and any of its Stockholder Associated Persons, and any others (including their names) acting in concert with any of the foregoing. In addition, the notice shall include a representation that the stockholder will notify the Corporation in writing of any change in any of the information referenced above in this Section 1.3 as of the record date for the meeting promptly following the later of the record date or the date notice of the record date is first publicly disclosed. The Corporation may require any proposed nominee to furnish such other information as may reasonably be required by the Corporation to determine the eligibility of such proposed nominee to serve as a director of the Corporation. The provisions of this Section 1.3 regarding the timeliness of nominations by a stockholder shall apply to each such nomination, regardless of whether a stockholder making such nomination (i) desires to have such nomination reflected in the Corporation's proxy statement for the meeting at which such nomination is to be made or (ii) intends to prepare separate proxy materials.

3


The chairman of the meeting shall, if the facts warrant, determine and declare to the meeting that a nomination was not made in accordance with the foregoing procedure, and if he should so determine, he shall so declare to the meeting and the defective nomination shall be disregarded.
Section 1.4. Notice of Business at Annual Meetings. At an annual meeting of the stockholders, only such business shall be conducted as shall have been properly brought before the meeting. To be properly brought before an annual meeting, business must be (a) specified in the notice of meeting (or any supplement thereto) given by or at the direction of the Board of Directors, (b) otherwise properly brought before the meeting by or at the direction of the Board of Directors, or (c) otherwise properly brought before the meeting by a stockholder of record. For business to be properly brought before an annual meeting by a stockholder, if such business relates to the election of directors of the Corporation, the procedures in Article I, Section 1.3 must be complied with. If such business relates to any other matter, the stockholder must have given timely notice thereof in writing to the Secretary. To be timely, a stockholder's notice must be delivered to or mailed and received at the principal executive offices of the Corporation not less than 90 days nor more than 120 days prior to the first anniversary of the date on which the Corporation first mailed its proxy materials for the preceding year's annual meeting of stockholders; provided, however, that if the date of the annual meeting is advanced more than 30 days prior to or delayed by more than 30 days after the anniversary of the preceding year's annual meeting, notice by the stockholder to be timely must be so delivered not later than the close of business on the later of (i) the 90 th day prior to such annual meeting or (ii) the 10 th day following the day on which public announcement of the date of such meeting is first made. A stockholder's notice to the Secretary shall set forth as to each matter the stockholder proposes to bring before the annual meeting (a) a brief description of the business desired to be brought before the annual meeting and the reasons for conducting such business at the annual meeting, (b) the name and address, as they appear on the Corporation's books, of the stockholder proposing such business, (c) the number of shares of each class of the capital stock of the Corporation which are beneficially owned by the stockholder, (d) any material interest of the stockholder in such business and any Stockholder Associated Person (as defined below), individually or in the aggregate, including any anticipated benefit to the stockholder or the Stockholder Associated Person therefrom, and (e) a description of any agreement, arrangement or understanding relating to any hedging or other transaction or series of transactions (including any derivative or short position profit interest, option, hedging transaction or borrowing or lending of shares) that has been entered into or made, the effect or intent of which is to mitigate loss, manage risk or benefit from share price changes or to increase or decrease the voting power of such stockholder or any such Stockholder Associated Person, in any case with respect to any share of stock of the Corporation. In addition, the notice shall include a, representation that the stockholder will notify the Corporation in writing of any change in any of the information referenced above in this Section 1.4 as of the record date for the meeting promptly following the later of the record date or the date notice of the

4


record date is first publicly disclosed. With respect to the stockholder giving notice of proposal which includes any Stockholder Associated Person covered by clauses (d) or (e) of this paragraph of this Section 1.4, the stockholder must give notice of (i) the name and address of such Stockholder Associated Person, if any, (ii) the number of shares of each class of capital stock of the Corporation owned by such Stockholder Associated Person, if any, and (iii) to the extent known by the stockholder giving the notice, the name and address of any other stockholder supporting the proposal of other business on the date of such stockholder's notice. Notwithstanding anything in the By-laws to the contrary, no business shall be conducted at any annual meeting except in accordance with the procedures set forth in this Section 1.4 and in Section 1.3 of this Article I and except that any stockholder proposal which complies with Rule 14a-8 of the proxy rules (or any successor provision) promulgated under the Securities Exchange Act of 1934, as amended, and is to be included in the Corporation's proxy statement for an annual meeting of stockholders shall be deemed to comply with the requirements of this Section 1.4. Without limiting the generality of the foregoing, the provisions of this Section 1.4 regarding the timeliness of a stockholder's notice for a matter to be brought before an annual meeting shall apply to each such matter to be brought before the meeting, regardless of whether the stockholder proposing to bring the matter before the meeting (i) desires to have such matter reflected in the Corporation's proxy statement for such meeting or (ii) intends to prepare separate proxy materials. Nothing in Section 1.3 or in this Section 1.4 shall be deemed to give any stockholder the right to have any nomination or proposal included in any proxy statement prepared by the Corporation, and, to the extent any such right exists under applicable law or governmental regulation, such right shall be limited to the right provided under such applicable law or governmental regulation.
The chairman of the meeting shall, if the facts warrant, determine and declare to the meeting that business was not properly brought before the meeting in accordance with the provisions of this Section 1.4, and if he should so determine, the chairman shall so declare to the meeting that any such business not properly brought before the meeting shall not be transacted.
For purposes of Section 1.3 and Section 1.4, “Stockholder Associated Person” of any stockholder shall mean (i) any person acting in concert with such stockholder, (ii) any person who beneficially owns shares of stock of the Corporation owned of record or beneficially by such stockholder and (iii) any person controlling, controlled by or under common control, directly or indirectly, such stockholder or any Stockholder Associated Person described in clause (i) or (ii) of this definition.
Section 1.5. Quorum. At each meeting of the stockholders the holders of one-third of the voting power of the outstanding shares of stock entitled to vote generally at the meeting, present in person or represented by proxy, shall constitute a quorum, unless the representation of a larger number shall be required by law, and, in that case, the representation of the number so required shall constitute a quorum.


5


Except as otherwise required by law, a majority of the voting power of the shares of stock entitled to vote generally at a meeting and present in person or by proxy, whether or not constituting a quorum, may adjourn, from time to time, without notice other than by announcement at the meeting. At any such adjourned meeting at which a quorum shall be present, any business may be transacted which might have been transacted at the meeting as originally notified.
Section 1.6. Organization. The chairman of the Board, or in his absence the Lead Director, or the chief executive officer in the order named, shall call meetings of the stockholders to order, and shall act as chairman of such meeting; provided, however, that the Board of Directors may appoint any person to act as chairman of any meeting in the absence of the chairman of the Board or the Lead Director.
The Secretary of the Corporation shall act as secretary at all meetings of the stockholders; but in the absence of the Secretary at any meeting of the stockholders the presiding officer may appoint any person to act as secretary of the meeting.
Section 1.7. Voting. At each meeting of the stockholders, every stockholder shall be entitled to vote in person, or by proxy appointed by instrument in writing, subscribed by such stockholder or by his duly authorized attorney, or, to the extent permitted by law, appointed by an electronic transmission, and delivered to the inspectors at the meeting; and such stockholder shall have the number of votes for each share of capital stock standing registered in such stockholder's name at the date fixed by the Board of Directors pursuant to Section 4.4 of Article IV of these By-laws as may be determined in accordance with the Corporation's Certificate of Incorporation, or as may be provided by law. Voting at meetings of stockholders must be by written ballot in all elections of directors, but otherwise need not be by written ballot unless the Board of Directors, in its discretion, by resolution so requires or, in the case of any such meeting, the chairman of that meeting, in his or her discretion, so requires. The Board of Directors, in its discretion, may authorize the requirement of a written ballot in any case to be satisfied by electronic transmission, subject to the requirements of Section 211(e) of the DGCL.
At least ten days before each meeting of the stockholders, a full, true and complete list, in alphabetical order, of all of the stockholders entitled to vote at such meeting, showing the address of each stockholder, and indicating the class and number of shares held by each, shall be furnished and held open for inspection in such manner, as is required by law. Only the persons in whose names shares of stock stand on the books of the Corporation at the date fixed by the Board of Directors pursuant to Section 4.4 of Article IV of these By-laws, as evidenced in the manner provided by law, shall be entitled to vote in person or by proxy on the shares so standing in their names.
Prior to any meeting, but subsequent to the date fixed by the Board of Directors pursuant to Section 4.4 of Article IV of these By-laws, any proxy may submit his powers of attorney to the secretary, or to the treasurer, for

6


examination. The certificate of the secretary, or of the treasurer, as to the regularity of such powers of attorney, and as to the class and number of shares held by the persons who severally and respectively executed such powers of attorney, shall be received as prima facie evidence of the class and number of shares represented by the holder of such powers of attorney for the purpose of establishing the presence of a quorum at such meeting and of organizing the same, and for all other purposes.
Except as otherwise provided in the Certificate of Incorporation, each director shall be elected by the vote of a majority of the votes cast with respect to the director at any meeting for the election of directors at which a quorum is present; provided, however, that the directors shall be elected by the vote of a plurality of the shares represented in person or by proxy at any such meeting and entitled to vote on the election of directors if, in connection with such meeting (i) the Secretary of the Corporation shall have received a notice that a stockholder has nominated a person for election to the Board in compliance with the advance-notice requirements for stockholder nominees for director set forth in Section 1.3 and (ii) such nomination shall not have been withdrawn by such stockholder on or prior to the day next preceding the date the Corporation first mails its notice of meeting for such meeting to the stockholders of the Corporation. If directors are to be elected by a plurality of the votes cast pursuant to the provisions of the immediately preceding sentence, stockholders shall not be provided the option to vote against any one or more of the nominees, but shall only be provided the option to vote for one or more of the nominees or withhold their votes with respect to one or more of the nominees. For purposes hereof, a majority of the votes cast means that the number of shares voted “for” a director must exceed the number of votes cast “against” that director. (Accordingly, abstentions will not be taken into account for this purpose.)
In the case of any question to which the stockholder approval policy of any national securities exchange or quotation system on which capital stock of the Corporation is traded or quoted on the Corporation's application, the requirements under the Securities Exchange Act of 1934, as amended, or any provision of the Internal Revenue Code of 1986, as amended, or the rules and regulations thereunder (the “Code”) applies, in each case for which question the Certificate of Incorporation, these By-laws or the DGCL does not specify a higher voting requirement, that question will be decided by the requisite vote that stockholder approval policy, Exchange Act requirement or Code provision, as the case may be, specifies, or the highest requisite vote if more than one applies.
A majority of the votes of the shares present in person at the meeting and those represented by proxy and entitled to vote on the question whether to ratify the appointment of independent public accountants, if that question is submitted for a vote of stockholders, will be sufficient to ratify the appointment.
All other elections, proposals and questions which have properly come before any meeting will, unless the Certificate of Incorporation, these By-laws or applicable law otherwise provides, be decided by a majority of the votes of the

7


shares present in person at the meeting and those represented by proxy and entitled to vote at that meeting.
Section 1.8. Inspectors. At each meeting of the stockholders, the polls shall be opened and closed, the proxies and ballots shall be received and be taken in charge, and all questions touching the qualification of voters and the validity of proxies and the acceptance or rejection of votes, shall be decided by one or more inspectors. Such inspector or inspectors shall be appointed by the Board of Directors before the meeting. If for any reason any of the inspectors previously appointed shall fail to attend or refuse or be unable to serve, inspectors in place of any so failing to attend or refusing or unable to serve, shall be appointed in like manner.
Section 1.9. Approval or Ratification of Acts or Contracts by Stockholders. The Board, in its discretion, may submit any act or contract for approval or ratification at any annual meeting of stockholders, or at any special meeting of stockholders called for the purpose of considering any such act or contract, and, except as applicable law or the Certificate of Incorporation otherwise provides, any act or contract that the holders of shares of stock of the Corporation present in person or by proxy at that meeting and having a majority of the votes entitled to vote on that approval or ratification approve or ratify will, provided that a quorum is present, be as valid and as binding on the Corporation and on all stockholders as if every stockholder had approved or ratified it.
Section 1.10. Conduct of Meetings. The Board may adopt by resolution such rules and regulations for the conduct of meetings of stockholders as it deems appropriate. Except to the extent inconsistent with those rules and regulations, if any, the chairman of any meeting of stockholders will have the right and authority to prescribe such rules, regulations and procedures and to do all such acts as, in the judgment of that chairman, are appropriate for the proper conduct of that meeting. Those rules, regulations or procedures, by whomever so adopted, may include the following:
(a)      the establishment of an agenda or order of business for the meeting;
(b)      rules and procedures for maintaining order at the meeting and the safety of those present;
(c)      limitations on attendance at or participation in the meeting to stockholders of record, their duly authorized and constituted proxies or such other persons as the chairman of the meeting may determine;
(d)      restrictions on entry to the meeting after the time fixed for the commencement thereof; and
(e)      limitations on the time allotted to questions or comments by participants.
Except to the extent the Board or the chairman of any meeting otherwise prescribes, no rules of parliamentary procedure will govern any meeting of stockholders.


8


ARTICLE II.
Board of Directors.
Section 2.1. Number, Classes and Terms of Office. The business and affairs of the Corporation shall be managed by or under the direction of the Board of Directors.
The number of directors shall be fixed from time to time by resolution of the Board, but the number thereof shall not be less than three.
At the 2007 annual meeting of stockholders of the Corporation, the successors of the directors whose terms expire at that meeting shall be elected for a term expiring at the 2008 annual meeting of the stockholders of the Corporation; at the 2008 annual meeting of the stockholders of the Corporation, the successors of the directors whose terms expire at that meeting shall be elected for a term expiring at the 2009 annual meeting of the stockholders of the Corporation; and at each annual meeting of the stockholders of the Corporation thereafter, the directors shall be elected for terms expiring at the next succeeding annual meeting of the stockholders of the Corporation.
In the case of any increase in the number of directors of the Corporation, the additional director or directors shall be elected only by the Board.
Section 2.2. Vacancies. Except as otherwise provided by law, in the case of any vacancy in the Board through death, resignation, disqualification or other cause, a successor to hold office for the unexpired portion of the term of the director whose place shall be vacant, and until the election of his successor, shall be elected only by a majority of the Board then in office, though less than a quorum.
Section 2.3. Removal. Directors of the Corporation may be removed with or without cause.
Section 2.4. Retirements. No director shall continue to serve on the Board beyond the last day of the annual stockholder election term during which such director attains the age of 72, except that a former chief executive officer of the Corporation shall not continue to serve on the Board beyond the last day of the annual stockholder election term during which the age of 70 is attained. Notwithstanding the foregoing, officer-directors, other than a chief executive officer, shall retire from the Board at the time such officer-director ceases to be a principal officer of the Corporation.
Section 2.5 Place of Meetings, etc. The Board may hold its meetings, and may have an office and keep the books of the Corporation (except as otherwise may be provided for by law) in such place or places in the State of Delaware or outside of the State of Delaware, as the Board from time to time may determine.
Section 2.6. Regular Meetings. Regular meetings of the Board shall be held at such times as may be fixed by resolution of the Board. The Secretary shall give notice, as provided for special meetings, for each regular meeting.

9


Section 2.7. Special Meetings. Special meetings of the Board shall be held whenever called by direction of the chairman of the Board, the Lead Director, chief executive officer, or a majority of the directors then in office.
The Secretary shall give notice of each special meeting by mailing the same at least two days before the meeting, or by telegraph, telecopier, electronic transmission or other communications device at least one day before the meeting, to each director; but such notice may be waived by any director. Unless otherwise indicated in the notice thereof, any and all business may be transacted at a special meeting. At any meeting at which every director shall be present, even though without any notice, any business may be transacted.
Section 2.8. Telephonic and Other Meetings. Members of the Board may hold and participate in any Board meeting by means of conference telephone or other communications equipment that permits all persons participating in the meeting to hear each other, and participation of any director in a meeting under this Section 2.8 will constitute the presence in person of that director at that meeting for purposes of these By-laws, except in the case of a director who so participates only for the express purpose of objecting, at the beginning of the meeting, to the transaction of any business on the ground that the meeting has not been called or convened in accordance with applicable law or these By-laws.
Section 2.9. Quorum. A majority of the total number of directors then in office shall constitute a quorum for the transaction of business; but if at any meeting of the Board there be less than a quorum present, a majority of those present may adjourn the meeting from time to time.
At any meeting of the Board all matters shall be decided by the affirmative vote of a majority of directors then present, provided, that the affirmative vote of at least one-third of all the directors then in office shall be necessary for the passage of any resolution.
Section 2.10. Order of Business. At meetings of the Board business shall be transacted in such order as, from time to time, the Board may determine by resolution.
At all meetings of the Board, the chairman of the Board, or in his absence the Lead Director, or the chief executive officer, in the order named, shall preside.
Section 2.11. Compensation of Directors. Each director of the Corporation who is not a salaried officer or employee of the Corporation, or of a subsidiary of the Corporation, shall receive an annual cash retainer and an annual common stock unit award for serving as a director of the Board as the Board may from time to time determine. The Lead Director and Chairs of the Board Committees shall receive retainers as the Board may from time to time determine.


10


Section 2.12. Disqualification of Directors. No person shall qualify for service as a director of the Corporation if he or she is a party to any compensatory, payment or other financial agreement, arrangement or understanding with any person or entity other than the Corporation, or has received any such compensation or other payment from any person or entity other than the Corporation, in each case in connection with candidacy or service as a director of the Corporation; provided that agreements providing only for indemnification and/or reimbursement of out-of-pocket expenses in connection with candidacy as a director (but not, for the avoidance of doubt, in connection with service as a director) and any pre-existing employment agreement a candidate has with his or her employer (not entered into in contemplation of the employer's investment in the Corporation or such employee's candidacy as a director), shall not be disqualifying under this By-law.
Section 2.13. Board Committees.
(a)      The Board may, by resolution or by election of a majority vote, designate one or more Board Committees consisting of one or more of the directors. The Board may designate one or more directors as alternate members of any Board Committee, who may replace any absent or disqualified member at any meeting of that committee. The member or members present at any meeting of any Board Committee and not disqualified from voting at that meeting may, whether or not constituting a quorum, unanimously appoint another director to act at that meeting in any place of any member of that committee who is absent from or disqualified to vote at that meeting.
(b)      The Board by resolution may change the membership of any Board Committee at any time and fill vacancies on any of those committees. A majority of the members of any Board Committee will constitute a quorum for the transaction of business by that committee unless the Board by resolution requires a greater number for that purpose. The Board by resolution may elect a chairman of any Board Committee. Except as expressly provided in these By-laws, the election or appointment of any director to a Board Committee will not create any contract rights of that director, and the Board's removal of any member of any Board Committee will not prejudice any contract rights that member otherwise may have.
(c)      Under Section 2.13(a) hereof, the Board may designate an executive committee to exercise, subject to applicable provisions of law, any or all of the powers of the Board in the management of the business and affairs of the Corporation when the Board is not in session.
(d)      Each other Board Committee the Board of Directors may designate under Section 2.13(a) hereof will, subject to applicable provisions of law, have and may exercise all the powers and authorities of the Board to the extent the Board of Directors' resolution designating that committee so provides.
(e)      Board Committee Rules; Minutes . Unless the Board otherwise provides, each Board Committee may make, alter and repeal rules for the conduct of its business. In the absence of those rules, each Board Committee

11


will conduct its business in the same manner as the Board of Directors conducts its business under Article II. Each committee will keep regular minutes of its meetings and will report the same to the Board of Directors as a whole.

ARTICLE III.
Officers.
Section 3.1. Officers. The principal officers of the Corporation will be elected by the Board and shall include a chief executive officer, president, chief accounting officer, chief financial officer, vice presidents, general counsel, secretary and treasurer. All other offices, titles, powers and duties with respect to principal officers shall be determined by the Board from time to time. Each principal officer who shall be a member of the Board of Directors shall be considered an officer-director.
The Board of Directors or any Board Committee or officer designated by it may appoint such other officers as necessary, who shall have such authority and shall perform such duties as from time to time may be assigned to them by or with the authority of the Board of Directors.
One person may hold two or more offices.
In its discretion, the Board of Directors may leave unfilled any office.
All officers, agents and employees shall be subject to removal at any time by the Board of Directors. All officers, agents and employees, other than officers elected by the Board of Directors, shall hold office at the discretion of the committee or of the officer appointing them.
Each of the salaried officers of the Corporation shall devote his entire time, skill and energy to the business of the Corporation, unless the contrary is expressly consented to by the Board of Directors.
     Section 3.2. Powers and Duties of the Chief Executive Officer. Subject to the Board of Directors, the chief executive officer of the Corporation shall be in general charge of the affairs of the Corporation.
Section 3.3. Powers and Duties of the President. Subject to the chief executive officer and the Board of Directors, the president shall have such duties as may be assigned by the Board.
Section 3.4. Powers and Duties of the Chief Accounting Officer and Chief Financial Officer. The chief accounting officer and chief financial officer shall each have such authority and shall perform such duties, as may be assigned by the Board.
Section 3.5. Powers and Duties of the General Counsel. The general counsel shall be the chief consulting officer of the Corporation in all legal matters, and, subject to the Board of Directors, shall have general control of all matters of legal import concerning the Corporation.

12


Section 3.6. Powers and Duties of the Treasurer. Subject to the officer designated by the Board of Directors, the treasurer shall have custody of all the funds and securities of the Corporation which may have come into the hand of the Corporation; when necessary or proper he or she shall endorse, or cause to be endorsed, on behalf of the Corporation, for collection, checks, notes and other obligations, and shall cause the deposit of same to the credit of the Corporation in such bank or banks or depositary as the Board of Directors may designate or as the Board of Directors by resolution may authorize; he or she shall sign all receipts and vouchers for payments made to the Corporation other than routine receipts and vouchers, the signing of which he or she may delegate; he or she shall sign all checks made by the Corporation; provided, however, that the Board of Directors may authorize and prescribe by resolution the manner in which checks drawn on banks or depositaries shall be signed, including the use of facsimile signatures, and the manner in which officers, agents or employees shall be authorized to sign; he or she may sign with the president or a vice president all certificates of shares in the capital stock; whenever required by the Board of Directors, he or she shall render a statement of his or her cash account; he or she shall enter regularly, in books of the Corporation to be kept for the purpose, full and accurate account of all moneys received and paid by him or her on account of the Corporation; he or she shall, at all reasonable times, exhibit his or her books and accounts to any director of the Corporation upon application at his or her office during business hours; and he or she shall perform all acts incident to the position of treasurer.
The treasurer shall give a bond for the faithful discharge of the assigned duties in such sum as the Board of Directors may require.
Section 3.7. Powers and Duties of Secretary. The secretary shall keep the minutes of all meetings of the Board of Directors, and the minutes of all meetings of the stockholders, and also (unless otherwise directed by the Board of Directors) the minutes of all committees, in books provided for that purpose; he or she shall attend to the giving and serving of all notices of the Corporation; he or she may sign with any other duly authorized person, in the name of the Corporation, all contracts authorized by the Board of Directors, and affix the seal of the Corporation thereto; he or she shall have charge of the certificate books, transfer books and stock ledgers, and such other books and papers as the Board of Directors may direct, all of which shall, at all reasonable times, be open to the examination of any director, upon application at the secretary's office during business hours; and he or she shall in general perform all the duties incident to the office of secretary, subject to the control of the Board of Directors.
Section 3.8. Voting upon Interests in Other Business Entities. Unless otherwise ordered by the Board of Directors, any person or persons appointed in writing by any of them shall have full power and authority on behalf of the Corporation to attend and to act and to vote at any meetings of stockholders of any corporation in which the Corporation may hold stock, or at any other meetings of holders of ownership interests in business entities in which the Corporation may hold an interest, including limited liability companies, and at any such meeting shall possess and may exercise any and all rights and powers

13


incident to the ownership of such stock or other interest, and which, as the owner thereof, the Corporation might have possessed and exercised if present. The Board of Directors, by resolution, from time to time, may confer like powers upon any other person or persons.
Section 3.9. Term of Office, etc. Each officer will hold office until the first regular meeting of the Board in each year (at which a quorum shall be present) held next after the annual meeting of stockholders, and until a successor is elected and qualified or until such officer's earlier resignation or removal. No officer of the Corporation will have any contractual right against the Corporation for compensation by reason of the election or appointment as an officer of the Corporation beyond the date of service as such, except as a written employment or other contract otherwise may provide. The Board may remove any officer with or without cause at any time, but any such removal will not prejudice the contractual rights of that officer, if any, against the Corporation. The Board by resolution may fill any vacancy occurring in any office of the Corporation by death, resignation, removal or otherwise for the unexpired portion of the term of that office at any time.

ARTICLE IV.
Capital Stock - Seal.
Section 4.1. Certificates of Shares. Shares of each class of the capital stock of the Corporation shall be uncertificated and shall not be represented by certificates, except to the extent as may be required by applicable law or as may otherwise be authorized by the Secretary or an assistant secretary of the Corporation. Ownership of any such uncertificated shares shall be evidenced by book-entry notation on the stock transfer records of the Corporation. Notwithstanding the foregoing, shares of capital stock of the Corporation represented by a certificate and issued and outstanding on February 23, 2011 shall remain represented by a certificate until such certificate is surrendered to the Corporation. All certificates surrendered to the Corporation shall be cancelled, and no new certificate shall be issued, except as may be required by applicable law or as may be authorized by the Secretary or an assistant secretary of the Corporation.
No certificate representing shares of capital stock of the Corporation shall be valid unless it is signed by two principal officers of the Corporation, or one principal officer and an assistant secretary or an assistant treasurer of the Corporation, but, where such certificate is signed by a registrar other than the Corporation or its employee the signatures of any such officer and, where authorized by resolution of the Board of Directors, any transfer agent may be facsimiles. In case any officer or transfer agent of the Corporation who has signed, or whose facsimile signature has been placed upon, any such certificate shall have ceased to such be such officer or transfer agent of the Corporation before such certificate is issued, such certificate may be issued by the Corporation with the same effect as though the person or persons were such officer or transfer agent of the Corporation at the date of issue.

14


With respect to each class of capital stock of the Corporation, any certificates issued shall be consecutively numbered. The name of the person owning the shares represented thereby, with the class and number of such shares and the date of issue, shall be entered on the Corporation's books.
Section 4.2. Transfer of Shares. Transfers of shares shall be made on the stock transfer records of the Corporation only by the registered holder thereof, or by such holder's attorney thereunto authorized by power of attorney duly executed and filed with the Corporation's Secretary, or with a transfer agent duly appointed, and upon surrender of the certificate or certificates for such shares properly endorsed, if such shares are represented by a certificate, and payment of all taxes thereon. Upon receipt of proper transfer instructions from the registered holder of uncertificated shares, from an approved source duly authorized by such holder or from such holder's attorney thereunto authorized by power of attorney duly executed and filed with the Corporation's Secretary, or with a transfer agent duly appointed, such uncertificated shares shall be cancelled and issuance of new equivalent uncertificated shares shall be made to the person entitled thereto and the transaction shall be recorded on the stock transfer records of the Corporation. The person in whose name shares stand on the Corporation's stock transfer records shall be deemed the absolute owner thereof for all purposes as regards the Corporation and, accordingly, the Corporation shall not be bound to recognize any equitable or other claim to or interest in such shares on the part of any other person, whether or not it shall have express or other notice thereof.
Section 4.3. Regulations. The Board of Directors shall have power and authority to make all such additional rules and regulations as it may deem expedient concerning the issue, transfer and registration or replacement of shares of the capital stock of the Corporation.
The Board of Directors may appoint one or more transfer agents or assistant transfer agents, including the Corporation, and one or more registrars of transfers, including the Corporation, and may require any stock certificates to bear the signature of a transfer agent or assistant transfer agent and a registrar of transfers. The Board of Directors may at any time terminate the appointment of any transfer agent or any assistant transfer agent or any registrar of transfers.
Section 4.4. Fixing Date for Determination of Stockholders' Rights. The Board of Directors is authorized from time to time to fix in advance a date, not exceeding 60 days preceding the date of any meeting of stockholders, or the date for the payment of any dividend, or the date for the allotment of rights, or the date when any change or conversion or exchange of capital stock shall go into effect, as a record date for the determination of the stockholders entitled to notice of, and to vote at, any such meeting and any adjournment thereof, or entitled to receive payment of any such dividend, or to any such allotment of rights, or to exercise the rights in respect of any such change, conversion or exchange of capital stock, and in such case such stockholders and only such stockholders as shall be stockholders of record on the date so fixed shall be entitled to such notice of, and to vote at, such meeting and any adjournment thereof, or to receive payment of such dividend, or to receive such allotment of rights, or to

15


exercise such rights, as the case may be, notwithstanding any transfer of any stock on the books of the Corporation after any such record date fixed as aforesaid.
Section 4.5. Dividends. The Board of Directors may from time to time declare such dividends as they shall deem advisable and proper, subject to such restrictions as may be imposed by law and the Corporation's Certificate of Incorporation.
Section 4.6. Facsimile Signatures. In addition to the provisions for the use of facsimile signatures elsewhere specifically authorized in these By-laws, facsimile signatures of any officer or officers of this Corporation may be used whenever and as authorized by the Board of Directors.
Section 4.7. Corporate Seal. The Board of Directors shall provide a suitable seal, containing the name of the Corporation, which seal shall be in charge of the Secretary. Unless otherwise directed by the Board of Directors, duplicates of the seal may be kept and used by the treasurer or by any assistant secretary or assistant treasurer.

ARTICLE V.
Indemnification.
Section 5.1. Right to Indemnification. The Corporation shall indemnify and hold harmless to the fullest extent permitted by law any person who was or is made or is threatened to be made a party or is involved in any Proceeding whether civil, criminal, administrative or investigative by reason of the fact that he, or a person for whom he is the legal representative, is or was a director, officer, employee or agent of the Corporation or is or was serving at the request of the Corporation as a director, officer, employee or agent of another corporation or of a partnership, joint venture, trust, enterprise or non-profit entity, including service with respect to employee benefit plans, against all expenses, liability, and loss reasonably incurred or suffered by such person. The Corporation shall indemnify any person seeking indemnity in connection with a Proceeding initiated by such person only if the Proceeding was authorized by the Board of Directors of the Corporation.
Section 5.2. Advancement of Expenses.
(a)      If and whenever any Indemnitee is, or is threatened to be made, a party to any Proceeding that may give rise to a right of that Indemnitee to indemnification under Section 5.1, the Corporation will advance (unless such advance is in violation of law) all Expenses reasonably incurred by or on behalf of that Indemnitee in connection with that Proceeding within 10 days after the Corporation receives a statement or statements from that Indemnitee requesting the advance or advances from time to time, whether prior to or after final disposition of that Proceeding; provided, however, that the Corporation will have no obligation to advance Expenses if such advance will be in violation of applicable law. Each such statement must reasonably evidence the Expenses

16


incurred by or on behalf of that Indemnitee and include or be preceded or accompanied by an undertaking by or on behalf of that Indemnitee to repay any Expenses advanced if it ultimately is determined that the Indemnitee is not entitled to be indemnified by the Corporation under Section 5.1 against those Expenses. The Corporation will accept any such undertaking without reference to the financial ability of Indemnitee to make repayment. If the Corporation advances Expenses in connection with any Claim as to which an Indemnitee has requested or may request indemnification under Section 5.1 and a determination is made under Section 5.4 that the Indemnitee is not entitled to that indemnification, the Indemnitee will not be required to reimburse the Corporation for those advances until the 180th day following the date of that determination; provided, however, that if the Indemnitee timely commences and thereafter prosecutes in good faith a judicial proceeding or arbitration under Section 5.6 or otherwise to obtain that indemnification, the Indemnitee will not be required to reimburse the Corporation for those Expenses until a determination in that proceeding or arbitration that the Indemnitee is not entitled to that indemnification has become final and nonappealable.
(b)      The Corporation may advance Expenses under Section 5.2(a) to an Indemnitee or, at the Corporation's option, directly to the Person to which those Expenses are owed, and any Indemnitee's request for an advance under Section 5.2(a) will constitute that Indemnitee's consent to any such direct payment, to Indemnitee's legal counsel or any other Person.
Section 5.3. Notification and Defense of Claims.
(a)      If any Indemnitee receives notice, otherwise than from the Corporation, that the Indemnitee is or will be made, or is threatened to be made, a party to any Proceeding in respect of which the Indemnitee intends to seek indemnification under this Article V, the Indemnitee must promptly notify the Corporation in writing of the nature and, to the Indemnitee's knowledge, status of that Proceeding. If this Section 5.3(a) requires any Indemnitee to give such a notice, but that Indemnitee fails to do so, that failure will not relieve the Corporation from, or otherwise affect the obligations the Corporation may have to indemnify that Indemnitee under this Article V, unless the Corporation can establish that the failure has resulted in actual prejudice to the Corporation.
(b)      Except as this Section 5.3(b) otherwise provides, in the case of any Proceeding in respect of which any Indemnitee seeks indemnification under this Article V:
(1)      the Corporation and any Related Enterprise that also may be obligated to indemnify that Indemnitee in respect of that Proceeding will be entitled to participate at its own expense in that Proceeding;
(2)      the Corporation or that Related Enterprise, or either of them, will be entitled to assume the defense of all Claims, other than (A) Corporation Claims, if any, and (B) other Claims, if any, as to which that Indemnitee shall reasonably reach the conclusion clause (3) of the next sentence describes, in

17


that Proceeding against that Indemnitee by prompt written notice of that election to that Indemnitee; and
(3)      if clause (2) above entitles the Corporation or that Related Enterprise to assume the defense of any of those Claims and it delivers to that Indemnitee notice of that assumption under clause (2), the Corporation will not be liable to that Indemnitee under this Article V for any fees or expenses of legal counsel for that Indemnitee which that Indemnitee incurs after that Indemnitee receives that notice.
That Indemnitee will have the right to employ that Indemnitee's own legal counsel in that Proceeding, but, as clause (3) of the preceding sentence provides, will bear the fees and expenses of that counsel unless:
(1)      the Corporation has authorized that Indemnitee in writing to retain that counsel;
(2)      the Corporation shall not within a reasonable period of time actually have employed counsel to assume the defense of those Claims; or
(3)      that Indemnitee shall have (A) reasonably concluded that a conflict of interest may exist between that Indemnitee and the Corporation as to the defense of one or more of those Claims and (B) communicated that conclusion to the Corporation in writing.
(c)      The Corporation will not be obligated hereunder to, or to cause another Corporation Entity to, indemnify any Indemnitee against or hold that Indemnitee harmless from and in respect of any amounts paid, or agreed to be paid, by that Indemnitee in settlement of any Claim against that Indemnitee which that Indemnitee effects without the Corporation's prior written consent. The Corporation will not settle any Claim against any Indemnitee in any manner that would impose any penalty or limitation on that Indemnitee without that Indemnitee's prior written consent. Neither the Corporation nor any Indemnitee will unreasonably delay or withhold consent to any such settlement the other party proposes to effect.
Section 5.4. Procedure for Determination of Entitlement to Indemnification.
(a)      To obtain indemnification under this Article V, any Indemnitee must submit to the Corporation a written request therefor which specifies the Section or Sections under which that Indemnitee is seeking indemnification and which includes, or is accompanied by, such documentation and information as is reasonably available to that Indemnitee and is reasonably necessary to determine whether and to what extent that Indemnitee is entitled to that indemnification. Any Indemnitee may request indemnification under this Article V at any time and from time to time as that Indemnitee deems appropriate in that Indemnitee's sole discretion. In the case of any request by any Indemnitee for indemnification under Section 5.1 as to any Claim which is pending or threatened at the time that Indemnitee delivers that request to the Corporation and would not be resolved with finality, whether by judgment, order, settlement or otherwise, on payment of the indemnification requested, the Corporation may defer the

18


determination under Section 5.4(c) of that Indemnitee's entitlement to that indemnification to a date that is no later than 45 days after the effective date of that final resolution if the Board concludes in good faith that an earlier determination would be materially prejudicial to the Corporation or a Related Enterprise.
(b)      On written request by any Indemnitee under Section 5.4(a) for indemnification under Section 5.1, the determination of that Indemnitee's entitlement to that indemnification will be made:
(1)      if that Indemnitee will be a director or officer of the Corporation at the time that determination is made, under Section 5.4(c) in each case; or
(2)      if that Indemnitee will not be a director or officer of the Corporation at the time that determination is made, under Section 5.4(c) in any case, if so requested in writing by that Indemnitee or so directed by the Board, or, in the absence of that request and direction, as the Board shall duly authorize or direct.
(c)      Each determination of any Indemnitee's entitlement to indemnification under Section 5.1 to which this Section 5.4(c) applies will be made as follows:
(1)      by a majority vote of the Disinterested Directors, even though less than a quorum; or
(2)      by a committee of Disinterested Directors a majority vote of the Disinterested Directors may designate, even though less than a quorum; or
(3)      if (A) there are no Disinterested Directors or (B) a majority vote of the Disinterested Directors so directs, by an Independent Counsel in a written opinion to the Board, a copy of which the Corporation will deliver to that Indemnitee;
provided, however, that if that Indemnitee has so requested in that Indemnitee's request for indemnification, an Independent Counsel will make that determination in a written opinion to the Board, a copy of which the Corporation will deliver to Indemnitee.
(d)      If it is determined that any Indemnitee is entitled to indemnification under Section 5.1, the Corporation will, or will cause another Corporation Entity to, subject to the provisions of Section 5.4(f):
(1)      within 10 days after that determination pay to that Indemnitee all amounts (A) theretofore incurred by or on behalf of that Indemnitee in respect of which that Indemnitee is entitled to that indemnification by reason of that determination and (B) requested from the Corporation in writing by that Indemnitee; and
(2)      thereafter on written request by that Indemnitee, pay to that Indemnitee within 10 days after that request such additional amounts

19


theretofore incurred by or on behalf of that Indemnitee in respect of which that Indemnitee is entitled to that indemnification by reason of that determination.
Each Indemnitee must cooperate with the person, persons or entity making the determination under Section 5.4(c) with respect to that Indemnitee's entitlement to indemnification under Section 5.1, including providing to such person, persons or entity, on reasonable advance request, any documentation or information that is:
(1)      not privileged or otherwise protected from disclosure;
(2)      reasonably available to that Indemnitee; and
(3)      reasonably necessary to that determination.
(e)      If an Independent Counsel is to make a determination under Section 5.4(c) of entitlement of any Indemnitee to indemnification under Section 5.1, the Board will select the Independent Counsel and give written notice to that Indemnitee which names the person or firm it has selected, whereupon that Indemnitee may, within 10 days after that Indemnitee's receipt of that notice, deliver to the Secretary a written objection to the selection; provided, however, that any such objection may be asserted only on the ground that the person or firm selected is not an “Independent Counsel” as Section 5.11 defines that term, and the objection must set forth with particularity the factual basis for that assertion. Absent a proper and timely objection, the person or firm so selected will act as Independent Counsel under Section 5.4(c). If any such written objection is so made and substantiated, the person or firm so selected may not serve as Independent Counsel unless and until the objection is withdrawn or a court of competent jurisdiction has determined that the objection is without merit.
If the person or firm that will act as Independent Counsel has not been determined within 30 days after any Indemnitee's submission of the related request for indemnification, either the Corporation or that Indemnitee may petition the Court of Chancery for resolution of any objection that has been made by that Indemnitee to the Board's selection of Independent Counsel or for the appointment as Independent Counsel of a person or firm selected by the Court of Chancery or by such other person or firm as the Court of Chancery designates, and the person or firm with respect to whom all objections are so resolved or the person or firm so appointed will act as Independent Counsel under Section 5.4(c).
The Corporation will pay any and all reasonable fees and expenses the Independent Counsel incurs in connection with acting under Section 5.4(c), and the Corporation will pay all reasonable fees and expenses incident to the procedures this Section 5.4(e) sets forth, regardless of the manner in which the Independent Counsel is selected or appointed.
If any Indemnitee becomes entitled to, and does, initiate any judicial proceeding or arbitration under Section 5.6, the Corporation will terminate its engagement of the person or firm acting as Independent Counsel, whereupon that person or firm will be, subject to the applicable standards of professional

20


conduct then prevailing, relieved of any further responsibility in the capacity of Independent Counsel.
(f)      The amount of any indemnification against Expenses to which any Indemnitee becomes entitled under any provision of this Article V, including Section 5.1, will be determined subject to the provisions of this Section 5.4(f). Each Indemnitee will have the burden of showing that that Indemnitee actually has incurred the Expenses for which that Indemnitee requests indemnification. If the Corporation or a Corporation Entity has made any advance in respect of any Expense incurred by any Indemnitee without objecting in writing to that Indemnitee at the time of the advance to the reasonableness thereof, the incurrence of that Expense by that Indemnitee will be deemed for all purposes hereof to have been reasonable. In the case of any Expense as to which such an objection has been made, or any Expense for which no advance has been made, the incurrence of that Expense will be presumed to have been reasonable, and the Corporation will have the burden of proof to overcome that presumption.
Section 5.5 Presumptions and Effect of Certain Proceedings.
(a)      In making a determination under Section 5.4(c) with respect to entitlement of any Indemnitee to indemnification under Section 5.1, the person, persons or entity making that determination must presume that that Indemnitee is entitled to that indemnification if that Indemnitee has submitted a request for indemnification in accordance with Section 5.4(a), and the Corporation will have the burden of proof to overcome that presumption in connection with the making by any person, persons or entity of any determination contrary to that presumption.
(b)      The termination of any Proceeding or of any Claim therein, by judgment, order, settlement or conviction, or on a plea of nolo contendere or its equivalent, will not, except as this Article V otherwise expressly provides, of itself adversely affect the right of any Indemnitee to indemnification under this Article V or, in the case of any determination under Section 5.4(c) of any Indemnitee's entitlement to indemnification under Section 5.1, create a presumption that that Indemnitee did not act in good faith and in a manner that Indemnitee reasonably believed to be in or not opposed to the best interests of the Corporation or, with respect to any criminal action or proceeding, that Indemnitee had reasonable cause to believe that that Indemnitee's conduct was unlawful.
(c)      Any service of any Indemnitee as a Functionary of the Corporation or any Related Enterprise which imposes duties on, or involves services by, that Indemnitee with respect to any Related Enterprise that is an employee benefit or welfare plan or related trust, if any, or that plan's participants or that trust's beneficiaries, will be deemed for all purposes hereof as service at the request of the Corporation, and any action that Indemnitee takes or omits to take in connection with any such plan or trust will, if taken or omitted in good faith by that Indemnitee and in a manner that Indemnitee reasonably believed to be in the interest of the participants in or beneficiaries of that plan or trust, be deemed to

21


have been taken or omitted in a manner “not opposed to the best interests of the Corporation” for all purposes of this Article V.
(d)      For purposes of any determination under this Article V as to whether any Indemnitee has performed services or engaged in conduct on behalf of any Enterprise in good faith, that Indemnitee will be deemed to have acted in good faith if that Indemnitee acted in reliance on the records of the Enterprise or on information, opinions, reports or statements, including financial statements and other financial information, concerning the Enterprise or any other Person which were prepared or supplied to that Indemnitee by:
(1)      one or more of the officers or employees of the Enterprise;
(2)      appraisers, engineers, investment bankers, legal counsel or other Persons as to matters that Indemnitee reasonably believed were within the professional or expert competence of those Persons; and
(3)      any committee of the board of directors or equivalent managing body of the Enterprise of which that Indemnitee is or was, at the relevant time, not a member;
provided, however, that if that Indemnitee has actual knowledge as to any matter that makes any such reliance unwarranted as to that matter, this Section 5.5(d) will not entitle that Indemnitee to any presumption that that Indemnitee acted in good faith respecting that matter.
(e)      For purposes of any determination under this Article V as to whether any Indemnitee is entitled to indemnification under Section 5.1, neither the knowledge nor the conduct of any other Functionary of the Corporation or any Related Enterprise shall be imputed to that Indemnitee.
(f)      Any Indemnitee will be deemed a party to a Proceeding for all purposes of this Article V if that Indemnitee is named as a defendant or respondent in a complaint or petition for relief in that Proceeding, regardless of whether that Indemnitee ever is served with process or makes an appearance in that Proceeding.
(g)      If any Indemnitee serves or served as a Functionary of a Related Enterprise, that service will be deemed to be “at the request of the Corporation” for all purposes of this Article V notwithstanding that the request is not evidenced by a writing or shown to have been made orally. In the event the Corporation were to extend the rights of indemnification and advancement of Expenses under this Article V to any Indemnitee's serving at the request of the Corporation as a Functionary of any Enterprise other than the Corporation or a Related Enterprise, that Indemnitee must show that the request was made by the Board or at its authorization.

22


Section 5.6 Remedies of Indemnitee in Certain Cases. (a) If any Indemnitee makes a written request in compliance with Section 5.4(a) for indemnification under Section 5.1 and either:
(1)      no determination as to the entitlement of that Indemnitee to that indemnification is made before the last to occur of (A) the close of business on the date, if any, the Corporation has specified under Section 5.4(a) as the outside date for that determination or (B) the elapse of the 45-day period beginning the day after the date the Corporation receives that request; or
(2)      a determination is made under Section 5.4(c) that that Indemnitee is not entitled to that indemnification in whole or in any part in respect of any Claim to which that request related,
that Indemnitee will be entitled to an adjudication from the Court of Chancery of that Indemnitee's entitlement to that indemnification. Alternatively, that Indemnitee, at that Indemnitee's option, may seek an award in arbitration to be conducted by a single arbitrator in accordance with the Commercial Arbitration Rules of the American Arbitration Association. In the case of any determination under Section 5.5(d) that is adverse to an Indemnitee, that Indemnitee must commence any such judicial proceeding or arbitration within 180 days following the date on which that Indemnitee first has the right to commence that proceeding under this Section 5.6(a) or that Indemnitee will be bound by that determination for all purposes of this Article V.
(b)      If a determination has been made under Section 5.4 that an Indemnitee is not entitled to indemnification under Section 5.1, any judicial proceeding or arbitration commenced by that Indemnitee under this Section 5.6 will be conducted in all respects as a de novo trial or arbitration on the merits, and that Indemnitee will not be prejudiced by reason of that adverse determination. In any judicial proceeding or arbitration commenced under this Section 5.6, the Corporation will have the burden of proving that the Indemnitee is not entitled to indemnification hereunder, and the Corporation may not, for any purpose, refer to or introduce into evidence any determination under Section 5.4(c) which is adverse to the Indemnitee.
(c)      If a determination has been made under Section 5.4 that any Indemnitee is entitled to indemnification under Section 5.1, the Corporation will be bound by that determination in any judicial proceeding or arbitration that Indemnitee thereafter commences under this Section 5.6 or otherwise, absent:
(1)      a misstatement by that Indemnitee of a material fact, or an omission by that Indemnitee of a material fact necessary to make that Indemnitee's statements not materially misleading, in connection with that Indemnitee's request for indemnification; or
(2)      a prohibition of that indemnification under applicable law.
(d)      If any Indemnitee, under this Section 5.6 or otherwise, seeks a judicial adjudication of or an award in arbitration to enforce that Indemnitee's rights under this Article V, that Indemnitee will be entitled to recover from the

23


Corporation, and will be indemnified by the Corporation against, any and all expenses, of the types the definition of Expenses in Section 5.11 describes, reasonably incurred by or on behalf of that Indemnitee in that judicial adjudication or arbitration, but only if that Indemnitee prevails therein. If it is determined in that judicial adjudication or arbitration that that Indemnitee is entitled to receive part of, but not all, the indemnification or advancement of expenses sought, the expenses incurred by that Indemnitee in connection with that judicial adjudication or arbitration will be appropriately prorated between those in respect of which this Article V entitles that Indemnitee to indemnification and those that Indemnitee must bear.
(e)      In any judicial proceeding or arbitration under this Section 5.6, the Corporation:
(1)      will not, and will not permit any other Person acting on its behalf to, assert that the procedures or presumptions this Article V establishes are not valid, binding and enforceable; and
(2)      will stipulate that it is bound by all the provisions of this Article V.
Section 5.7 Non-exclusivity; Equivalence to Contract Rights; Survival of Rights; Insurance; Subrogation.
(a) The rights to indemnification and advancement of Expenses and the remedies this Article V provides are not and will not be deemed exclusive of any other rights or remedies to which any Indemnitee may at any time be entitled under applicable law, the Certificate of Incorporation, any agreement, a vote of stockholders or Disinterested Directors, or otherwise, but each such right or remedy under this Article V will be cumulative with all such other rights and remedies. The rights to indemnification and advancement of Expenses this Article V provides shall be considered the equivalent of a contract right that vests upon the occurrence or alleged occurrence of any act or omission that forms the basis for or is related to the claim for which indemnification is sought by an Indemnitee, to the same extent as if the provisions of this Article V were set forth in a separate, written contract between such Indemnitee and the Corporation, and no amendment, modification or repeal of this Article V or any provision hereof will limit or restrict any right of any Indemnitee under this Article V in respect of any action that Indemnitee has taken or omitted in that Indemnitee's capacity as a Functionary of the Corporation or any Related Enterprise prior to that amendment, modification or repeal. This Article V will not limit or restrict the power or right of the Corporation, to the extent and in the manner applicable law permits, to indemnify and advance expenses to Persons other than Indemnitees when and as authorized by the Board or by other appropriate corporate action.
(b)      If the Corporation maintains an insurance policy or policies providing liability insurance for directors or officers of the Corporation, each Indemnitee will be covered by the policy or policies in accordance with its or their terms to the maximum extent of the coverage available for any such director or officer under the policy or policies. If the Corporation receives written notice from any source of a pending Proceeding to which any Indemnitee is a party and in

24


respect of which that Indemnitee might be entitled to indemnification under Section 5.1 and the Corporation then maintains any such policy of which that Indemnitee is a beneficiary, the Corporation will:
(1)      promptly give notice of that Proceeding to the relevant insurers in accordance with the applicable policy procedures; and
(2)      thereafter take all action necessary to cause those insurers to pay, on behalf of that Indemnitee, all amounts payable in accordance with the applicable policy terms as a result of that Proceeding;
provided, however, that the Corporation need not comply with the provisions of this sentence if its failure to do so would not actually be prejudicial to that Indemnitee in any material respect.
(c)      The Corporation will not be liable under this Article V to make or cause to be made any payment of amounts otherwise indemnifiable under this Article V, or to make or cause to be made any advance this Article V otherwise requires it to make or cause to be made, to or for the account of any Indemnitee, if and to the extent that the Indemnitee has otherwise actually received or had applied for the Indemnitee's benefit that payment or advance or otherwise obtained the entire benefit therefrom under any insurance policy, any other contract or agreement or otherwise.
(d)      If the Corporation makes or causes to be made any payment under this Article V to or for the account of any Indemnitee, it will be subrogated to the extent of that payment to all the rights of recovery of that Indemnitee, who must execute all papers required and take all action necessary to secure those rights, including execution of such documents as are necessary to enable the Corporation to bring suit to enforce those rights.
(e)      The Corporation's obligation to make or cause to be made any payment or advance under this Article V to or for the account of any Indemnitee with respect to that Indemnitee's service at the request of the Corporation as a Functionary of any Related Enterprise will be reduced by any amount that Indemnitee has actually received as indemnification or advancement of expenses from that Related Enterprise.
Section 5.8 Benefit of this Article V. The provisions of this Article V will inure to the benefit of each Indemnitee and that Indemnitee's spouse, heirs, executors and administrators.
Section 5.9 Severability. If any provision or provisions of this Article V is or are invalid, illegal or unenforceable for any reason whatsoever:
(1)      the validity, legality and enforceability of the remaining provisions of this Article V, including each portion of any Section containing any such invalid, illegal or unenforceable provision which is not itself invalid, illegal or unenforceable, will not in any way be affected or impaired thereby;

25


(2)      such provision or provisions will be deemed reformed to the extent necessary to conform to applicable law and to give the maximum effect to the intent of the Corporation as expressed in this Article V; and
(3)      to the fullest extent possible, the provisions of this Article V, including each portion of any Section containing any such invalid, illegal or unenforceable provision which is not itself invalid, illegal or unenforceable, will be construed so as to give effect to the intent manifested thereby.
Section 5.10 Exceptions to Right of Indemnification or Advancement of Expenses. No provision in this Article V will obligate the Corporation to pay or cause to be paid any indemnity to or for the account of any Indemnitee in connection with or as a result of:
(1)      any Claim made against that Indemnitee for an accounting of profits, under Section 16(b) of the Exchange Act or similar provision of state statutory or common law, from the purchase and sale, or sale and purchase, by that Indemnitee of securities of the Corporation or any Related Enterprise; or
(2)      except for any Claim initiated by that Indemnitee, whether as a cause of action or as a defense to a cause of action under Section 5.6 or otherwise, to enforce or establish, by declaratory judgment or otherwise, that Indemnitee's rights or remedies under this Article V, any Claim initiated by that Indemnitee without the prior authorization of the Board against the Corporation or any Related Enterprise or any of their respective present or former Functionaries.
Section 5.11 Definitions. (a) For purposes of this Article V:
“ Affiliate ” has the meaning Exchange Act Rule 12b-2 specifies.
“ Claim ” means any claim for damages or a declaratory, equitable or other substantive remedy, or any other issue or matter, in any Proceeding.
“ Corporation Claim ” means, in the case of any Indemnitee, any Claim brought by or in the right of the Corporation or a Related Enterprise against that Indemnitee.
“ Corporation Entity ” means any Related Enterprise, other than an employee benefit or welfare plan or its related trust, if any.
“ Court of Chancery ” means the Court of Chancery of the State of Delaware.
“ Disinterested Director ” means a director of the Corporation who is not and was not a party to the Proceeding, or any Claim therein, in respect of which indemnification is sought by any Indemnitee under this Article V.
“ Enterprise ” means any business trust, corporation, joint venture, limited liability company, partnership or other entity or enterprise, including any operational division of any entity, or any employee benefit or welfare plan or related trust.
“ Expenses ” include all attorneys' fees, retainers, court costs, transcript costs, fees of experts, witness fees, travel expenses, duplicating costs, printing and

26


binding costs, telephone charges, postage, delivery service fees, all other disbursements or expenses of the types customarily incurred in connection with prosecuting, defending, preparing to prosecute or defend, investigating, being or preparing to be a witness in, or otherwise participating in, a Proceeding. Should any payments by the Corporation to or for the account of any Indemnitee under this Article V be determined to be subject to any federal, state or local income or excise tax, “Expenses” also will include such amounts as are necessary to place that Indemnitee in the same after-tax position, after giving effect to all applicable taxes, that Indemnitee would have been in had no such tax been determined to apply to those payments.
“ Functionary ” of any Enterprise means any director, officer, manager, administrator, employee, agent, representative or other functionary of that Enterprise, including, in the case of any employee benefit or welfare plan, any member of any committee administering that plan or any individual to whom the duties of that committee are delegated.
“ Indemnitee ” means at any time any director, officer, employee or agent of the Corporation or any person that is or was serving at the request of the Corporation as a director, officer, employee or agent of another corporation or of a partnership, joint venture, trust, limited liability company, enterprise, non-profit entity or other entity including, without limitation, service with respect to employee benefit plans.
“ Independent Counsel ” means, in the case of any determination under Section 5.4(c) of the entitlement of any Indemnitee to indemnification under Section 5.1, a law firm, or a member of a law firm, that or who is experienced in matters of corporation law and neither presently is, nor in the past five years has been, retained to represent:
(1)      the Corporation or any of its Affiliates or that Indemnitee in any matter material to any such Person; or
(2)      any other party to the Proceeding giving rise to a claim of that Indemnitee for that indemnification;
notwithstanding the foregoing, the term “Independent Counsel” does not include at any time any Person who, under the applicable standards of professional conduct then prevailing, would have a conflict of interest in representing either the Corporation or a Related Enterprise or that Indemnitee in an action to determine that Indemnitee's rights under these By-laws.
“ Person ” means any natural person, sole proprietorship, corporation, partnership, limited liability company, business trust, unincorporated organization or association, mutual company, joint stock company, joint venture or any other entity of any kind having a separate legal status or any estate, trust, union or employee organization or governmental authority.

27


“ Proceeding ” includes:
(1)      any threatened, pending or completed action, suit, arbitration, alternate dispute resolution procedure, investigation, inquiry or other threatened, actual or completed proceeding, whether of a civil, criminal, administrative, investigative or private nature and irrespective of the initiator thereof; and
(2)      any appeal in any such proceeding.
“ Related Enterprise ” means at any time any Enterprise:
(1)      50% or more of the outstanding capital stock or other ownership interests of which, or the assets of which, the Corporation owns or controls, or previously owned or controlled, directly or indirectly, at that time;
(2)      50% or more of the outstanding voting power of the outstanding capital stock or other ownership interests of which the Corporation owns or controls, or previously owned or controlled, directly or indirectly, at that time;
(3)      that is, or previously was, an Affiliate of the Corporation which the Corporation controls, or previously controlled, by ownership, contract or otherwise and whether alone or together with another Person, directly or indirectly, at that time; or
(4)      if that Enterprise is an employee benefit or welfare plan or related trust, whose participants or beneficiaries are present or former employees of the Corporation or any other Related Enterprise.
Section 5.12 Contribution. If it is established, under Section 5.4(c) or otherwise, that any Indemnitee has the right to be indemnified under Section 5.1 in respect of any Claim, but that right is unenforceable by reason of any applicable law or public policy, then, to the fullest extent applicable law permits, the Corporation, in lieu of indemnifying or causing the indemnification of that Indemnitee under Section 5.1, will contribute or cause to be contributed to the amount that Indemnitee has incurred, whether for judgments, fines, penalties, excise taxes, amounts paid or to be paid in settlement or for Expenses reasonably incurred, in connection with that Claim, in such proportion as is deemed fair and reasonable in light of all the circumstances of that Claim in order to reflect:
(1)      the relative benefits that Indemnitee and the Corporation have received as a result of the event(s) or transaction(s) giving rise to that Claim; or
(2)      the relative fault of that Indemnitee and of the Corporation and its other Functionaries in connection with those event(s) or transaction(s).

28


Section 5.13 Submission to Jurisdiction. Each Indemnitee, by seeking any indemnification or advance of Expenses under this Article V, will be deemed, except with respect to any arbitration that Indemnitee commences under Section 5.6:
(1)      to have agreed that any action or proceeding arising out of or in connection with this Article V must be brought only in the Court of Chancery and not in any other state or federal court in the United States of America or any court in any other country;
(2)      to have consented to submit to the exclusive jurisdiction of the Court of Chancery for purposes of any action or proceeding arising out of or in connection with this Article V;
(3)      to have waived any objection to the laying of venue of any such action or proceeding in the Court of Chancery; and
(4)      to have waived, and to have agreed not to plead or to make, any claim that any such action or proceeding brought in the Court of Chancery has been brought in an improper or otherwise inconvenient forum. The Corporation shall indemnify and hold harmless to the fullest extent permitted by law any person who was or is made or is threatened to be made a party or is involved in any action, suit, or proceeding whether civil, criminal, administrative or investigative (“proceeding”) by reason of the fact that he, or a person for whom he is the legal representative, is or was a director, officer, employee or agent of the Corporation or is or was serving at the request of the Corporation as a director, officer, employee or agent of another corporation or of a partnership, joint venture, trust, enterprise or non-profit entity, including service with respect to employee benefit plans, against all expenses, liability, and loss reasonably incurred or suffered by such person. The Corporation shall indemnify any person seeking indemnity in connection with a proceeding initiated by such person only if the proceeding was authorized by the Board of Directors of the Corporation.

ARTICLE VI.
Miscellaneous.

Section 6.1 Amendments. The Board of Directors shall have the power to adopt, amend and repeal the By-laws at any regular or special meeting of the Board, provided that notice of intention to adopt, amend or repeal the By-laws in whole or in part shall have been included in the notice of meeting; or, without any such notice, by a vote of two-thirds of the directors then in office.
Stockholders may adopt, amend and repeal the By-laws at any regular or special meeting of the stockholders by an affirmative vote of the majority of shares present in person or represented by proxy at the meeting and entitled to vote thereon, provided that notice of intention to adopt, amend or repeal the By-laws in whole or in part shall have been included in the notice of the meeting.

29


Section 6.2 Offices. The Corporation's registered office shall be in the City of Wilmington, County of New Castle, State of Delaware. The Corporation may have such other offices within and without the State of Delaware as have heretofore been established or may hereafter be established by or with the authority of the Board. The Corporation's administrative office shall be located at 5555 San Felipe Road, Houston, Texas.
Section 6.3 Fiscal Year . The fiscal year of the Corporation will end on December 31.
Section 6.4 Interested Directors; Quorum . No contract or transaction between the Corporation and one or more of its directors or officers, or between the Corporation and any other Entity in which one or more of its directors or officers are directors or officers (or hold equivalent offices or positions), or have a financial interest, will be void or voidable solely for this reason, or solely because the director or officer is present at or participates in the meeting of the Board or Board Committee which authorizes the contract or transaction, or solely because his or her votes are counted for that purpose, if:
(1)      the material facts as to the relationship or interest of the director or officer and as to the contract or transaction are disclosed or are known to the Board or the Board Committee, and the Board or Board Committee in good faith authorizes the contract or transaction by the affirmative votes of a majority of the disinterested directors, even though the disinterested directors be less than a quorum; or
(2)      the material facts as to the relationship of the director or officer or interest and as to the contract or transaction are disclosed or are known to the stockholders entitled to vote thereon, and the contract or transaction is specifically approved in good faith by vote of those stockholders; or
(3)      the contract or transaction is fair as to the Corporation as of the time it is authorized, approved or ratified by the Board, a Board Committee or the stockholders.
Common or interested directors may be counted in determining the presence of a quorum at a meeting of the Board or of a Board Committee which authorizes the contract or transaction.
Section 6.5 Form of Records . Any records the Corporation maintains in the regular course of its business, including its stock ledger, books of account, and minute books, may be kept on, or be in the form of, punch cards, magnetic tape, photographs, microphotographs or any other information storage device, provided that the records so kept can be converted into clearly legible form within a reasonable time.
Section 6.6 Notices; Waiver of Notice. Whenever any notice is required to be given to any stockholder, director or member of any Board Committee under the provisions of the DGCL, the Certificate of Incorporation or these By-laws, that notice will be deemed to be sufficient if given (a) by telegraphic,

30


facsimile, cable or wireless or electronic transmission or (b) by deposit of the same in the United States mail, with postage paid thereon, addressed to the person entitled thereto at his address as it appears in the records of the Corporation, and that notice will be deemed to have been given on the day of such transmission or mailing, as the case may be.
Whenever any notice is required to be given to any stockholder or director under the provisions of the DGCL, the Certificate of Incorporation or these By-laws, a waiver thereof in writing signed by or by electronic transmission from the person or persons entitled to that notice, whether before or after the time stated therein, will be equivalent to the giving of that notice. Attendance of a person at a meeting will constitute a waiver of notice of that meeting, except when the person attends a meeting for the express purpose of objecting, at the beginning of the meeting, to the transaction of any business because the meeting is not lawfully called or convened. Neither the business to be transacted at, nor the purpose of, any regular or special meeting of the stockholders, the Board or any Board Committee need be specified in any waiver of notice in writing or by electronic transmission unless the Certificate of Incorporation or these By-laws so require.
Section 6.7 Resignations. Any director or officer of the Corporation may resign at any time. Any such resignation must be made in writing or by electronic transmission to the Corporation and will take effect at the time specified in that writing or electronic transmission, or, if that resignation does not specify any time, at the time of its receipt by the chairman or the secretary. The acceptance of a resignation will not be necessary to make it effective, unless that resignation expressly so provides.
If an incumbent director who is nominated for re-election to the Board does not receive sufficient votes “for” to be elected in accordance with Section 1.7, that incumbent director shall promptly tender his or her resignation to the Board. The Corporate Governance and Nominating Committee of the Board (the “Corporate Governance and Nominating Committee”) shall make a recommendation to the Board as to whether to accept or reject the tendered resignation, or whether other action should be taken. The Board shall act on the tendered resignation, taking into account the Corporate Governance and Nominating Committee's recommendation, and publicly disclose (by a press release, a filing with the Securities and Exchange Commission or other broadly disseminated means of communication) its decision regarding the tendered resignation within 90 days from the date of the certification of the election results. The Corporate Governance and Nominating Committee in making its recommendation, and the Board in making its decision, may each consider any factors or other information that it considers appropriate and relevant. The director who tenders his or her resignation should not participate in the recommendation of the Corporate Governance and Nominating Committee or the decision of the Board with respect to his or her resignation. If such incumbent director's resignation is not accepted by the Board, such director shall continue to serve until the next annual meeting of the stockholders of the Corporation and until his or her successor is duly elected, or his or her earlier resignation or removal. If a director's resignation is accepted by the Board pursuant to this

31


Section 6.7, or if a nominee for director is not elected and the nominee is not an incumbent director, then the Board, in its sole discretion, may fill any resulting vacancy pursuant to the provisions of Article Seventh of the Certificate of Incorporation or may decrease the size of the Board pursuant to the provisions of Section 2.1.
Section 6.8 Facsimile Signatures. In addition to the provisions for the use of facsimile signatures these By-laws elsewhere specifically authorize, facsimile signatures of any officer or officers of the Corporation may be used as and whenever the Board by resolution so authorizes.
Section 6.9 Reliance on Books, Reports and Records. Each director and each member of any Board Committee designated by the Board will, in the performance of his duties, be fully protected in relying in good faith on the books of account or reports made to the Corporation by any of its officers, or by an independent certified public accountant, or by an appraiser selected with reasonable care by the Board or by any such committee, or in relying in good faith upon other records of the Corporation.
Section 6.10 Certain Definitional Provisions. (a) In these By-laws:
“Board” or “Board of Directors” means the board of directors of the Corporation.
“Board Committee” means any committee of the Board.
“Certificate of Incorporation” means at any time the original certificate of incorporation of the Corporation as amended and restated from time to time to that time, including each certificate of designation, if any, respecting any class or series of preferred stock of the Corporation.
“Chairman” or “chairman” means the chairman of the Board.
“DGCL” means the General Corporation Law of the State of Delaware.
“Exchange Act” means the Securities Exchange Act of 1934, as amended.
“Lead Director” means the Director elected by the Board, not less than annually, by the affirmative vote of a majority of the non-employee Directors in the event the Chairman and Chief Executive Officer positions are not separate.
“Secretary” or “secretary” means the secretary of the Corporation.
(b)      When used in these By-laws, the words “herein,” “hereof” and “hereunder” and words of similar import refer to these By-laws as a whole and not to any provision of these By-laws, and the words “Article” and “Section” refer to Articles and Sections of these By-laws unless otherwise specified.
(c)      Whenever the context so requires, the singular number includes the plural and vice versa, and a reference to one gender includes the other gender and the neuter.

32


(d)      The word “including” (and, with correlative meaning, the word “include”) means including, without limiting the generality of any description preceding that word, and the words “shall” and “will” are used interchangeably and have the same meaning.
Section 6.11 Captions
. Captions to Articles and Sections of these By-laws are included for convenience of reference only, and these captions do not constitute a part hereof for any other purpose or in any way affect the meaning or construction of any provision hereof.


33




Exhibit 3.3

MARATHON OIL CORPORATION
BY-LAWS
 
August 1, 2013

ARTICLE I.
Stockholders.
Section 1.1 Time and Place of Meetings of Stockholders. Unless the time and place of the annual meeting of stockholders for the purpose of electing directors and transacting such other business as may be brought before the meeting are changed by the Board of Directors, as may be done from time to time, provided that all legal requirements for such change and notice to stockholders are observed, such annual meeting of stockholders of the Corporation shall be held at the office of the Corporation's registered agent in the State of Delaware at 2 o'clock p.m., on the last Wednesday in April in each year, if not a legal holiday, and if a legal holiday, then on the next succeeding Wednesday which is not a legal holiday.
     Special meetings of the stockholders (i) may be called at any time by the Board of Directors and (ii) shall be called by the chairman of the Board of Directors or the chief executive officer of the Corporation following receipt by the secretary of the Corporation of a written request of a holder or holders, who, individually or collectively, have continuously held 20 percent or more of the outstanding shares of the Corporation's common stock for at least one year prior to the date the Corporation receives the written request to call a special meeting. For this purpose, share ownership is to be calculated on a “net long” basis, determined by subtracting the stockholders' short position from their long position, based on Rule 14e-4 under the Securities Exchange Act of 1934, as amended. Any such request by a stockholder or stockholders to call a special meeting must: (i) be accompanied by proof of ownership of record of 20 percent or more of the outstanding shares of the Corporation's common stock and state the purchase date of each such share; (ii) specify the matter or matters to be acted upon at such meeting, each of which must be a proper subject for stockholder action under applicable law, which specification must include the complete text of any resolution or any amendment to any document applicable to the Corporation intended to be presented at the meeting; (iii) state the reasons for conducting such business at a special meeting of stockholders; and (iv) provide any other information which may be required pursuant to these By-laws or any other information with respect to the matter or matters requested to be acted upon which may be required to be disclosed under the Delaware General Corporation Law or included in a proxy statement filed pursuant to the rules of the Securities and Exchange Commission, and, as to each stockholder requesting the




meeting and each other person, if any, who is a beneficial owner of the shares held by such stockholder, (a) their name and address, (b) the class and number of shares of the Corporation which are owned beneficially or of record, and (c) any material interest in the business to be brought before the meeting. Without limiting the generality of the foregoing: (a) in the case of any such request to call a special meeting for the purpose of (or for multiple purposes that include) considering any nominee or nominees to serve on the Board of Directors, such request shall set forth all the information required to be included in a notice to which the provisions of the fourth sentence of Section 1.3 of these By-laws apply, and the provisions of the fifth sentence of Section 1.4 of these By-laws shall be applicable; and (b) in the case of any such request to call a special meeting for other purpose or purposes, such request shall set forth all the information required to be included in a notice to which the provisions of the sixth sentence of Section 1.4 of these By-laws apply. Notwithstanding the forgoing, neither the chairman of the Board of Directors nor the chief executive officer of the Corporation shall be required to call a special stockholder meeting if (i) the special meeting request relates to an item of business that is not a proper subject for stockholder action under applicable law, (ii) a similar item was presented at any meeting of stockholders held within 120 calendar days prior to the receipt by the Corporation of the special meeting request, (iii) a similar item is included in the Corporation's notice as an item of business to be brought before a stockholder meeting that has been called but not yet held, or (iv) the special meeting request is received by the Corporation during the period commencing 90 calendar days prior to the first anniversary of the preceding year's annual meeting of stockholders.
Neither the annual meeting nor any special meeting of stockholders need be held within the State of Delaware.
Any action required to be taken at any annual or special meeting of the stockholders of the Corporation, or any action which may be taken at any annual or special meeting of the stockholders or otherwise, may not be taken without a meeting, prior notice and a vote, and stockholders may not act by written consent.
Section 1.2 Notice of Meetings of Stockholders. It shall be the duty of the Secretary to cause notice of each annual or special meeting to be mailed to all stockholders of record as of the record date as fixed by the Board of Directors for the determination of stockholders entitled to vote at such meeting. Such notice shall indicate briefly the action to be taken at such meeting and shall be mailed to the stockholders at the addresses of such stockholders as shown on the books of the Corporation at least 10 days but not more than 60 days preceding the meeting. Only matters stated in the notice of a special meeting of the stockholders shall be brought before and acted upon at the meeting. Any such notice may be satisfied by electronic transmission, subject to the requirements of Section 232 of the DGCL.
Section 1.3. Nomination of Directors. Only persons who are nominated in accordance with the following procedures shall be eligible for election as directors. Nomination for election to the Board of Directors of the Corporation at a meeting of stockholders may be made by the Board of Directors or by any stockholder of record




of the Corporation entitled to vote generally for the election of directors at such meeting who complies with the notice procedures set forth in this Section 1.3. Such nominations, other than those made by or on behalf of the Board of Directors, shall be made by notice in writing delivered or mailed by first-class United States mail, postage prepaid, to the Secretary, and received not less than 90 days nor more than 120 days prior to the first anniversary of the date on which the Corporation first mailed its proxy materials for the preceding year's annual meeting of stockholders; provided, however, that if the date of the annual meeting is advanced more than 30 days prior to or delayed by more than 30 days after the anniversary of the preceding year's annual meeting, notice by the stockholder to be timely must be so delivered not later than the close of business on the later of (i) the 90 th day prior to such annual meeting or (ii) the 10 th day following the day on which public announcement of the date of such meeting is first made. Such notice shall set forth (a) as to each proposed nominee (i) the name, age, business address and, if known, residence address of each such nominee, (ii) the principal occupation or employment of each such nominee, (iii) the number of shares of each class of the capital stock of the Corporation which are beneficially owned by each such nominee, and (iv) any other information concerning the nominee that must be disclosed as to nominees in proxy solicitations pursuant to Regulation 14A under the Securities Exchange Act of 1934, as amended (including such person's written consent to be named as a nominee and to serve as a director if elected); and (b) as to the stockholder giving the notice (i) the name and address, as they appear on the Corporation's books, of such stockholder, (ii) the number of shares of each class of the capital stock of the Corporation which are beneficially owned by such stockholder, (iii) a description of any agreement, arrangement or understanding relating to any hedging or other transaction or series of transactions (including any derivative or short position profit interest, option, hedging transaction or borrowing or lending of shares) that has been entered into or made by such stockholder, the effect or intent of which is to mitigate loss, manage risk or benefit from share price changes or to increase or decrease the voting power of such stockholder or any of its Stockholder Associated Persons (as defined in Section 1.4), in any case with respect to any share of stock of the Corporation, and (iv) a description of any agreement, arrangement or understanding with respect to such nomination between or among the stockholder and any of its Stockholder Associated Persons, and any others (including their names) acting in concert with any of the foregoing. In addition, the notice shall include a representation that the stockholder will notify the Corporation in writing of any change in any of the information referenced above in this Section 1.3 as of the record date for the meeting promptly following the later of the record date or the date notice of the record date is first publicly disclosed. The Corporation may require any proposed nominee to furnish such other information as may reasonably be required by the Corporation to determine the eligibility of such proposed nominee to serve as a director of the Corporation. The provisions of this Section 1.3 regarding the timeliness of nominations by a stockholder shall apply to each such nomination, regardless of whether a stockholder making such nomination (i) desires to have such nomination reflected in the Corporation's proxy statement for the meeting at




which such nomination is to be made or (ii) intends to prepare separate proxy materials.
The chairman of the meeting shall, if the facts warrant, determine and declare to the meeting that a nomination was not made in accordance with the foregoing procedure, and if he should so determine, he shall so declare to the meeting and the defective nomination shall be disregarded.
Section 1.4. Notice of Business at Annual Meetings. At an annual meeting of the stockholders, only such business shall be conducted as shall have been properly brought before the meeting. To be properly brought before an annual meeting, business must be (a) specified in the notice of meeting (or any supplement thereto) given by or at the direction of the Board of Directors, (b) otherwise properly brought before the meeting by or at the direction of the Board of Directors, or (c) otherwise properly brought before the meeting by a stockholder of record. For business to be properly brought before an annual meeting by a stockholder, if such business relates to the election of directors of the Corporation, the procedures in Article I, Section 1.3 must be complied with. If such business relates to any other matter, the stockholder must have given timely notice thereof in writing to the Secretary. To be timely, a stockholder's notice must be delivered to or mailed and received at the principal executive offices of the Corporation not less than 90 days nor more than 120 days prior to the first anniversary of the date on which the Corporation first mailed its proxy materials for the preceding year's annual meeting of stockholders; provided, however, that if the date of the annual meeting is advanced more than 30 days prior to or delayed by more than 30 days after the anniversary of the preceding year's annual meeting, notice by the stockholder to be timely must be so delivered not later than the close of business on the later of (i) the 90 th day prior to such annual meeting or (ii) the 10 th day following the day on which public announcement of the date of such meeting is first made. A stockholder's notice to the Secretary shall set forth as to each matter the stockholder proposes to bring before the annual meeting (a) a brief description of the business desired to be brought before the annual meeting and the reasons for conducting such business at the annual meeting, (b) the name and address, as they appear on the Corporation's books, of the stockholder proposing such business, (c) the number of shares of each class of the capital stock of the Corporation which are beneficially owned by the stockholder, (d) any material interest of the stockholder in such business and any Stockholder Associated Person (as defined below), individually or in the aggregate, including any anticipated benefit to the stockholder or the Stockholder Associated Person therefrom, and (e) a description of any agreement, arrangement or understanding relating to any hedging or other transaction or series of transactions (including any derivative or short position profit interest, option, hedging transaction or borrowing or lending of shares) that has been entered into or made, the effect or intent of which is to mitigate loss, manage risk or benefit from share price changes or to increase or decrease the voting power of such stockholder or any such Stockholder Associated Person, in any case with respect to any share of stock of the Corporation. In addition, the notice shall include a, representation that the stockholder will notify the Corporation in writing of any change in any of the




information referenced above in this Section 1.4 as of the record date for the meeting promptly following the later of the record date or the date notice of the record date is first publicly disclosed. With respect to the stockholder giving notice of proposal which includes any Stockholder Associated Person covered by clauses (d) or (e) of this paragraph of this Section 1.4, the stockholder must give notice of (i) the name and address of such Stockholder Associated Person, if any, (ii) the number of shares of each class of capital stock of the Corporation owned by such Stockholder Associated Person, if any, and (iii) to the extent known by the stockholder giving the notice, the name and address of any other stockholder supporting the proposal of other business on the date of such stockholder's notice. Notwithstanding anything in the By-laws to the contrary, no business shall be conducted at any annual meeting except in accordance with the procedures set forth in this Section 1.4 and in Section 1.3 of this Article I and except that any stockholder proposal which complies with Rule 14a-8 of the proxy rules (or any successor provision) promulgated under the Securities Exchange Act of 1934, as amended, and is to be included in the Corporation's proxy statement for an annual meeting of stockholders shall be deemed to comply with the requirements of this Section 1.4. Without limiting the generality of the foregoing, the provisions of this Section 1.4 regarding the timeliness of a stockholder's notice for a matter to be brought before an annual meeting shall apply to each such matter to be brought before the meeting, regardless of whether the stockholder proposing to bring the matter before the meeting (i) desires to have such matter reflected in the Corporation's proxy statement for such meeting or (ii) intends to prepare separate proxy materials. Nothing in Section 1.3 or in this Section 1.4 shall be deemed to give any stockholder the right to have any nomination or proposal included in any proxy statement prepared by the Corporation, and, to the extent any such right exists under applicable law or governmental regulation, such right shall be limited to the right provided under such applicable law or governmental regulation.
The chairman of the meeting shall, if the facts warrant, determine and declare to the meeting that business was not properly brought before the meeting in accordance with the provisions of this Section 1.4, and if he should so determine, the chairman shall so declare to the meeting that any such business not properly brought before the meeting shall not be transacted.
For purposes of Section 1.3 and Section 1.4, “Stockholder Associated Person” of any stockholder shall mean (i) any person acting in concert with such stockholder, (ii) any person who beneficially owns shares of stock of the Corporation owned of record or beneficially by such stockholder and (iii) any person controlling, controlled by or under common control, directly or indirectly, such stockholder or any Stockholder Associated Person described in clause (i) or (ii) of this definition.
Section 1.5. Quorum. At each meeting of the stockholders the holders of one-third of the voting power of the outstanding shares of stock entitled to vote generally at the meeting, present in person or represented by proxy, shall constitute a quorum, unless the representation of a larger number shall be required by law, and, in that case, the representation of the number so required shall constitute a quorum.




Except as otherwise required by law, a majority of the voting power of the shares of stock entitled to vote generally at a meeting and present in person or by proxy, whether or not constituting a quorum, may adjourn, from time to time, without notice other than by announcement at the meeting. At any such adjourned meeting at which a quorum shall be present, any business may be transacted which might have been transacted at the meeting as originally notified.
Section 1.6. Organization. The chairman of the Board, or in his absence the Lead Director, or the chief executive officer in the order named, shall call meetings of the stockholders to order, and shall act as chairman of such meeting; provided, however, that the Board of Directors may appoint any person to act as chairman of any meeting in the absence of the chairman of the Board or the Lead Director.
The Secretary of the Corporation shall act as secretary at all meetings of the stockholders; but in the absence of the Secretary at any meeting of the stockholders the presiding officer may appoint any person to act as secretary of the meeting.
Section 1.7. Voting. At each meeting of the stockholders, every stockholder shall be entitled to vote in person, or by proxy appointed by instrument in writing, subscribed by such stockholder or by his duly authorized attorney, or, to the extent permitted by law, appointed by an electronic transmission, and delivered to the inspectors at the meeting; and such stockholder shall have the number of votes for each share of capital stock standing registered in such stockholder's name at the date fixed by the Board of Directors pursuant to Section 4.4 of Article IV of these By-laws as may be determined in accordance with the Corporation's Certificate of Incorporation, or as may be provided by law. Voting at meetings of stockholders must be by written ballot in all elections of directors, but otherwise need not be by written ballot unless the Board of Directors, in its discretion, by resolution so requires or, in the case of any such meeting, the chairman of that meeting, in his or her discretion, so requires. The Board of Directors, in its discretion, may authorize the requirement of a written ballot in any case to be satisfied by electronic transmission, subject to the requirements of Section 211(e) of the DGCL.
At least ten days before each meeting of the stockholders, a full, true and complete list, in alphabetical order, of all of the stockholders entitled to vote at such meeting, showing the address of each stockholder, and indicating the class and number of shares held by each, shall be furnished and held open for inspection in such manner, as is required by law. Only the persons in whose names shares of stock stand on the books of the Corporation at the date fixed by the Board of Directors pursuant to Section 4.4 of Article IV of these By-laws, as evidenced in the manner provided by law, shall be entitled to vote in person or by proxy on the shares so standing in their names.
Prior to any meeting, but subsequent to the date fixed by the Board of Directors pursuant to Section 4.4 of Article IV of these By-laws, any proxy may submit his powers of attorney to the secretary, or to the treasurer, for examination. The certificate of the secretary, or of the treasurer, as to the regularity of such powers of attorney, and as to the class and number of shares held by the persons who severally and respectively executed such powers of attorney, shall be received as




prima facie evidence of the class and number of shares represented by the holder of such powers of attorney for the purpose of establishing the presence of a quorum at such meeting and of organizing the same, and for all other purposes.
Except as otherwise provided in the Certificate of Incorporation, each director shall be elected by the vote of a majority of the votes cast with respect to the director at any meeting for the election of directors at which a quorum is present; provided, however, that the directors shall be elected by the vote of a plurality of the shares represented in person or by proxy at any such meeting and entitled to vote on the election of directors if, in connection with such meeting (i) the Secretary of the Corporation shall have received a notice that a stockholder has nominated a person for election to the Board in compliance with the advance-notice requirements for stockholder nominees for director set forth in Section 1.3 and (ii) such nomination shall not have been withdrawn by such stockholder on or prior to the day next preceding the date the Corporation first mails its notice of meeting for such meeting to the stockholders of the Corporation. If directors are to be elected by a plurality of the votes cast pursuant to the provisions of the immediately preceding sentence, stockholders shall not be provided the option to vote against any one or more of the nominees, but shall only be provided the option to vote for one or more of the nominees or withhold their votes with respect to one or more of the nominees. For purposes hereof, a majority of the votes cast means that the number of shares voted “for” a director must exceed the number of votes cast “against” that director. (Accordingly, abstentions will not be taken into account for this purpose.)
In the case of any question to which the stockholder approval policy of any national securities exchange or quotation system on which capital stock of the Corporation is traded or quoted on the Corporation's application, the requirements under the Securities Exchange Act of 1934, as amended, or any provision of the Internal Revenue Code of 1986, as amended, or the rules and regulations thereunder (the “Code”) applies, in each case for which question the Certificate of Incorporation, these By-laws or the DGCL does not specify a higher voting requirement, that question will be decided by the requisite vote that stockholder approval policy, Exchange Act requirement or Code provision, as the case may be, specifies, or the highest requisite vote if more than one applies.
A majority of the votes of the shares present in person at the meeting and those represented by proxy and entitled to vote on the question whether to ratify the appointment of independent public accountants, if that question is submitted for a vote of stockholders, will be sufficient to ratify the appointment.
All other elections, proposals and questions which have properly come before any meeting will, unless the Certificate of Incorporation, these By-laws or applicable law otherwise provides, be decided by a majority of the votes of the shares present in person at the meeting and those represented by proxy and entitled to vote at that meeting.




Section 1.8. Inspectors. At each meeting of the stockholders, the polls shall be opened and closed, the proxies and ballots shall be received and be taken in charge, and all questions touching the qualification of voters and the validity of proxies and the acceptance or rejection of votes, shall be decided by one or more inspectors. Such inspector or inspectors shall be appointed by the Board of Directors before the meeting. If for any reason any of the inspectors previously appointed shall fail to attend or refuse or be unable to serve, inspectors in place of any so failing to attend or refusing or unable to serve, shall be appointed in like manner.
Section 1.9. Approval or Ratification of Acts or Contracts by Stockholders. The Board, in its discretion, may submit any act or contract for approval or ratification at any annual meeting of stockholders, or at any special meeting of stockholders called for the purpose of considering any such act or contract, and, except as applicable law or the Certificate of Incorporation otherwise provides, any act or contract that the holders of shares of stock of the Corporation present in person or by proxy at that meeting and having a majority of the votes entitled to vote on that approval or ratification approve or ratify will, provided that a quorum is present, be as valid and as binding on the Corporation and on all stockholders as if every stockholder had approved or ratified it.
Section 1.10. Conduct of Meetings. The Board may adopt by resolution such rules and regulations for the conduct of meetings of stockholders as it deems appropriate. Except to the extent inconsistent with those rules and regulations, if any, the chairman of any meeting of stockholders will have the right and authority to prescribe such rules, regulations and procedures and to do all such acts as, in the judgment of that chairman, are appropriate for the proper conduct of that meeting. Those rules, regulations or procedures, by whomever so adopted, may include the following:
(a)      the establishment of an agenda or order of business for the meeting;
(b)      rules and procedures for maintaining order at the meeting and the safety of those present;
(c)      limitations on attendance at or participation in the meeting to stockholders of record, their duly authorized and constituted proxies or such other persons as the chairman of the meeting may determine;
(d)      restrictions on entry to the meeting after the time fixed for the commencement thereof; and
(e)      limitations on the time allotted to questions or comments by participants.
Except to the extent the Board or the chairman of any meeting otherwise prescribes, no rules of parliamentary procedure will govern any meeting of stockholders.





ARTICLE II.
Board of Directors.
Section 2.1. Number, Classes and Terms of Office. The business and affairs of the Corporation shall be managed by or under the direction of the Board of Directors.
The number of directors shall be fixed from time to time by resolution of the Board, but the number thereof shall not be less than three.
At the 2007 annual meeting of stockholders of the Corporation, the successors of the directors whose terms expire at that meeting shall be elected for a term expiring at the 2008 annual meeting of the stockholders of the Corporation; at the 2008 annual meeting of the stockholders of the Corporation, the successors of the directors whose terms expire at that meeting shall be elected for a term expiring at the 2009 annual meeting of the stockholders of the Corporation; and at each annual meeting of the stockholders of the Corporation thereafter, the directors shall be elected for terms expiring at the next succeeding annual meeting of the stockholders of the Corporation.
In the case of any increase in the number of directors of the Corporation, the additional director or directors shall be elected only by the Board.
Section 2.2. Vacancies. Except as otherwise provided by law, in the case of any vacancy in the Board through death, resignation, disqualification or other cause, a successor to hold office for the unexpired portion of the term of the director whose place shall be vacant, and until the election of his successor, shall be elected only by a majority of the Board then in office, though less than a quorum.
Section 2.3. Removal. Directors of the Corporation may be removed with or without cause.
Section 2.4. Retirements. No director shall continue to serve on the Board beyond the last day of the annual stockholder election term during which such director attains the age of 72, except that a former chief executive officer of the Corporation shall not continue to serve on the Board beyond the last day of the annual stockholder election term during which the age of 70 is attained. Notwithstanding the foregoing, officer-directors, other than a chief executive officer, shall retire from the Board at the time such officer-director ceases to be a principal officer of the Corporation.
Section 2.5 Place of Meetings, etc. The Board may hold its meetings, and may have an office and keep the books of the Corporation (except as otherwise may be provided for by law) in such place or places in the State of Delaware or outside of the State of Delaware, as the Board from time to time may determine.
Section 2.6. Regular Meetings. Regular meetings of the Board shall be held at such times as may be fixed by resolution of the Board. The Secretary shall give notice, as provided for special meetings, for each regular meeting.




Section 2.7. Special Meetings. Special meetings of the Board shall be held whenever called by direction of the chairman of the Board, the Lead Director, chief executive officer, or a majority of the directors then in office.
The Secretary shall give notice of each special meeting by mailing the same at least two days before the meeting, or by telegraph, telecopier, electronic transmission or other communications device at least one day before the meeting, to each director; but such notice may be waived by any director. Unless otherwise indicated in the notice thereof, any and all business may be transacted at a special meeting. At any meeting at which every director shall be present, even though without any notice, any business may be transacted.
Section 2.8. Telephonic and Other Meetings. Members of the Board may hold and participate in any Board meeting by means of conference telephone or other communications equipment that permits all persons participating in the meeting to hear each other, and participation of any director in a meeting under this Section 2.8 will constitute the presence in person of that director at that meeting for purposes of these By-laws, except in the case of a director who so participates only for the express purpose of objecting, at the beginning of the meeting, to the transaction of any business on the ground that the meeting has not been called or convened in accordance with applicable law or these By-laws.
Section 2.9. Quorum. A majority of the total number of directors then in office shall constitute a quorum for the transaction of business; but if at any meeting of the Board there be less than a quorum present, a majority of those present may adjourn the meeting from time to time.
At any meeting of the Board all matters shall be decided by the affirmative vote of a majority of directors then present, provided, that the affirmative vote of at least one-third of all the directors then in office shall be necessary for the passage of any resolution.
Section 2.10. Order of Business. At meetings of the Board business shall be transacted in such order as, from time to time, the Board may determine by resolution.
At all meetings of the Board, the chairman of the Board, or in his absence the Lead Director, or the chief executive officer, in the order named, shall preside.
Section 2.11. Compensation of Directors. Each director of the Corporation who is not a salaried officer or employee of the Corporation, or of a subsidiary of the Corporation, shall receive an annual cash retainer and an annual common stock unit award for serving as a director of the Board as the Board may from time to time determine. The Lead Director and Chairs of the Board Committees shall receive retainers as the Board may from time to time determine.





Section 2.12. Disqualification of Directors. No person shall qualify for service as a director of the Corporation if he or she is a party to any compensatory, payment or other financial agreement, arrangement or understanding with any person or entity other than the Corporation, or has received any such compensation or other payment from any person or entity other than the Corporation, in each case in connection with candidacy or service as a director of the Corporation; provided that agreements providing only for indemnification and/or reimbursement of out-of-pocket expenses in connection with candidacy as a director (but not, for the avoidance of doubt, in connection with service as a director) and any pre-existing employment agreement a candidate has with his or her employer (not entered into in contemplation of the employer's investment in the Corporation or such employee's candidacy as a director), shall not be disqualifying under this By-law.
Section 2.13. Board Committees.
(a)      The Board may, by resolution or by election of a majority vote, designate one or more Board Committees consisting of one or more of the directors. The Board may designate one or more directors as alternate members of any Board Committee, who may replace any absent or disqualified member at any meeting of that committee. The member or members present at any meeting of any Board Committee and not disqualified from voting at that meeting may, whether or not constituting a quorum, unanimously appoint another director to act at that meeting in any place of any member of that committee who is absent from or disqualified to vote at that meeting.
(b)      The Board by resolution may change the membership of any Board Committee at any time and fill vacancies on any of those committees. A majority of the members of any Board Committee will constitute a quorum for the transaction of business by that committee unless the Board by resolution requires a greater number for that purpose. The Board by resolution may elect a chairman of any Board Committee. Except as expressly provided in these By-laws, the election or appointment of any director to a Board Committee will not create any contract rights of that director, and the Board's removal of any member of any Board Committee will not prejudice any contract rights that member otherwise may have.
(c)      Under Section 2.13(a) hereof, the Board may designate an executive committee to exercise, subject to applicable provisions of law, any or all of the powers of the Board in the management of the business and affairs of the Corporation when the Board is not in session.
(d)      Each other Board Committee the Board of Directors may designate under Section 2.13(a) hereof will, subject to applicable provisions of law, have and may exercise all the powers and authorities of the Board to the extent the Board of Directors' resolution designating that committee so provides.
(e)      Board Committee Rules; Minutes . Unless the Board otherwise provides, each Board Committee may make, alter and repeal rules for the conduct of its business. In the absence of those rules, each Board Committee will conduct




its business in the same manner as the Board of Directors conducts its business under Article II. Each committee will keep regular minutes of its meetings and will report the same to the Board of Directors as a whole.
ARTICLE III.
Officers.
Section 3.1. Officers. The principal officers of the Corporation will be elected by the Board and shall include a chief executive officer, president, chief accounting officer, chief financial officer, vice presidents, general counsel, secretary and treasurer. All other offices, titles, powers and duties with respect to principal officers shall be determined by the Board from time to time, which can include the Chairman as an officer of the Corporation. Each principal officer who shall be a member of the Board of Directors shall be considered an officer-director.
The Board of Directors or any Board Committee or officer designated by it may appoint such other officers as necessary, who shall have such authority and shall perform such duties as from time to time may be assigned to them by or with the authority of the Board of Directors.
One person may hold two or more offices.
In its discretion, the Board of Directors may leave unfilled any office.
All officers, agents and employees shall be subject to removal at any time by the Board of Directors. All officers, agents and employees, other than officers elected by the Board of Directors, shall hold office at the discretion of the committee or of the officer appointing them.
Each of the salaried officers of the Corporation shall devote his entire time, skill and energy to the business of the Corporation, unless the contrary is expressly consented to by the Board of Directors.
     Section 3.2. Chairman of the Board. The Chairman of the Board may be an employee or officer of the Corporation and will, if present, preside at meetings of the Board of Directors and stockholders. The Chairman of the Board will exercise and perform such other duties as may be assigned by the Board of Directors. The Chairman of the Board will report to the Board of Directors.
Section 3.3. Powers and Duties of the Chief Executive Officer. Subject to the Board of Directors, the chief executive officer of the Corporation shall be in general charge of the affairs of the Corporation.
Section 3.4. Powers and Duties of the President. Subject to the chief executive officer and the Board of Directors, the president shall have such duties as may be assigned by the Board.
Section 3.5. Powers and Duties of the Chief Accounting Officer and Chief Financial Officer. The chief accounting officer and chief financial officer shall each have such authority and shall perform such duties, as may be assigned by the Board.




Section 3.6. Powers and Duties of the General Counsel. The general counsel shall be the chief consulting officer of the Corporation in all legal matters, and, subject to the Board of Directors, shall have general control of all matters of legal import concerning the Corporation.
Section 3.7. Powers and Duties of the Treasurer. Subject to the officer designated by the Board of Directors, the treasurer shall have custody of all the funds and securities of the Corporation which may have come into the hand of the Corporation; when necessary or proper he or she shall endorse, or cause to be endorsed, on behalf of the Corporation, for collection, checks, notes and other obligations, and shall cause the deposit of same to the credit of the Corporation in such bank or banks or depositary as the Board of Directors may designate or as the Board of Directors by resolution may authorize; he or she shall sign all receipts and vouchers for payments made to the Corporation other than routine receipts and vouchers, the signing of which he or she may delegate; he or she shall sign all checks made by the Corporation; provided, however, that the Board of Directors may authorize and prescribe by resolution the manner in which checks drawn on banks or depositaries shall be signed, including the use of facsimile signatures, and the manner in which officers, agents or employees shall be authorized to sign; he or she may sign with the president or a vice president all certificates of shares in the capital stock; whenever required by the Board of Directors, he or she shall render a statement of his or her cash account; he or she shall enter regularly, in books of the Corporation to be kept for the purpose, full and accurate account of all moneys received and paid by him or her on account of the Corporation; he or she shall, at all reasonable times, exhibit his or her books and accounts to any director of the Corporation upon application at his or her office during business hours; and he or she shall perform all acts incident to the position of treasurer.
The treasurer shall give a bond for the faithful discharge of the assigned duties in such sum as the Board of Directors may require.
Section 3.8. Powers and Duties of Secretary. The secretary shall keep the minutes of all meetings of the Board of Directors, and the minutes of all meetings of the stockholders, and also (unless otherwise directed by the Board of Directors) the minutes of all committees, in books provided for that purpose; he or she shall attend to the giving and serving of all notices of the Corporation; he or she may sign with any other duly authorized person, in the name of the Corporation, all contracts authorized by the Board of Directors, and affix the seal of the Corporation thereto; he or she shall have charge of the certificate books, transfer books and stock ledgers, and such other books and papers as the Board of Directors may direct, all of which shall, at all reasonable times, be open to the examination of any director, upon application at the secretary's office during business hours; and he or she shall in general perform all the duties incident to the office of secretary, subject to the control of the Board of Directors.
Section 3.9. Voting upon Interests in Other Business Entities. Unless otherwise ordered by the Board of Directors, any person or persons appointed in writing by any of them shall have full power and authority on behalf of the Corporation




to attend and to act and to vote at any meetings of stockholders of any corporation in which the Corporation may hold stock, or at any other meetings of holders of ownership interests in business entities in which the Corporation may hold an interest, including limited liability companies, and at any such meeting shall possess and may exercise any and all rights and powers incident to the ownership of such stock or other interest, and which, as the owner thereof, the Corporation might have possessed and exercised if present. The Board of Directors, by resolution, from time to time, may confer like powers upon any other person or persons.
Section 3.10. Term of Office, etc. Each officer will hold office until the first regular meeting of the Board in each year (at which a quorum shall be present) held next after the annual meeting of stockholders, and until a successor is elected and qualified or until such officer's earlier resignation or removal. No officer of the Corporation will have any contractual right against the Corporation for compensation by reason of the election or appointment as an officer of the Corporation beyond the date of service as such, except as a written employment or other contract otherwise may provide. The Board may remove any officer with or without cause at any time, but any such removal will not prejudice the contractual rights of that officer, if any, against the Corporation. The Board by resolution may fill any vacancy occurring in any office of the Corporation by death, resignation, removal or otherwise for the unexpired portion of the term of that office at any time.

ARTICLE IV.
Capital Stock - Seal.
Section 4.1. Certificates of Shares. Shares of each class of the capital stock of the Corporation shall be uncertificated and shall not be represented by certificates, except to the extent as may be required by applicable law or as may otherwise be authorized by the Secretary or an assistant secretary of the Corporation. Ownership of any such uncertificated shares shall be evidenced by book-entry notation on the stock transfer records of the Corporation. Notwithstanding the foregoing, shares of capital stock of the Corporation represented by a certificate and issued and outstanding on February 23, 2011 shall remain represented by a certificate until such certificate is surrendered to the Corporation. All certificates surrendered to the Corporation shall be cancelled, and no new certificate shall be issued, except as may be required by applicable law or as may be authorized by the Secretary or an assistant secretary of the Corporation.
No certificate representing shares of capital stock of the Corporation shall be valid unless it is signed by two principal officers of the Corporation, or one principal officer and an assistant secretary or an assistant treasurer of the Corporation, but, where such certificate is signed by a registrar other than the Corporation or its employee the signatures of any such officer and, where authorized by resolution of the Board of Directors, any transfer agent may be facsimiles. In case any officer or transfer agent of the Corporation who has signed, or whose facsimile signature has been placed upon, any such certificate shall have ceased to such be such officer




or transfer agent of the Corporation before such certificate is issued, such certificate may be issued by the Corporation with the same effect as though the person or persons were such officer or transfer agent of the Corporation at the date of issue.
With respect to each class of capital stock of the Corporation, any certificates issued shall be consecutively numbered. The name of the person owning the shares represented thereby, with the class and number of such shares and the date of issue, shall be entered on the Corporation's books.
Section 4.2. Transfer of Shares. Transfers of shares shall be made on the stock transfer records of the Corporation only by the registered holder thereof, or by such holder's attorney thereunto authorized by power of attorney duly executed and filed with the Corporation's Secretary, or with a transfer agent duly appointed, and upon surrender of the certificate or certificates for such shares properly endorsed, if such shares are represented by a certificate, and payment of all taxes thereon. Upon receipt of proper transfer instructions from the registered holder of uncertificated shares, from an approved source duly authorized by such holder or from such holder's attorney thereunto authorized by power of attorney duly executed and filed with the Corporation's Secretary, or with a transfer agent duly appointed, such uncertificated shares shall be cancelled and issuance of new equivalent uncertificated shares shall be made to the person entitled thereto and the transaction shall be recorded on the stock transfer records of the Corporation. The person in whose name shares stand on the Corporation's stock transfer records shall be deemed the absolute owner thereof for all purposes as regards the Corporation and, accordingly, the Corporation shall not be bound to recognize any equitable or other claim to or interest in such shares on the part of any other person, whether or not it shall have express or other notice thereof.
Section 4.3. Regulations. The Board of Directors shall have power and authority to make all such additional rules and regulations as it may deem expedient concerning the issue, transfer and registration or replacement of shares of the capital stock of the Corporation.
The Board of Directors may appoint one or more transfer agents or assistant transfer agents, including the Corporation, and one or more registrars of transfers, including the Corporation, and may require any stock certificates to bear the signature of a transfer agent or assistant transfer agent and a registrar of transfers. The Board of Directors may at any time terminate the appointment of any transfer agent or any assistant transfer agent or any registrar of transfers.
Section 4.4. Fixing Date for Determination of Stockholders' Rights. The Board of Directors is authorized from time to time to fix in advance a date, not exceeding 60 days preceding the date of any meeting of stockholders, or the date for the payment of any dividend, or the date for the allotment of rights, or the date when any change or conversion or exchange of capital stock shall go into effect, as a record date for the determination of the stockholders entitled to notice of, and to vote at, any such meeting and any adjournment thereof, or entitled to receive payment of any such dividend, or to any such allotment of rights, or to exercise the rights in respect of any such change, conversion or exchange of capital stock, and




in such case such stockholders and only such stockholders as shall be stockholders of record on the date so fixed shall be entitled to such notice of, and to vote at, such meeting and any adjournment thereof, or to receive payment of such dividend, or to receive such allotment of rights, or to exercise such rights, as the case may be, notwithstanding any transfer of any stock on the books of the Corporation after any such record date fixed as aforesaid.
Section 4.5. Dividends. The Board of Directors may from time to time declare such dividends as they shall deem advisable and proper, subject to such restrictions as may be imposed by law and the Corporation's Certificate of Incorporation.
Section 4.6. Facsimile Signatures. In addition to the provisions for the use of facsimile signatures elsewhere specifically authorized in these By-laws, facsimile signatures of any officer or officers of this Corporation may be used whenever and as authorized by the Board of Directors.
Section 4.7. Corporate Seal. The Board of Directors shall provide a suitable seal, containing the name of the Corporation, which seal shall be in charge of the Secretary. Unless otherwise directed by the Board of Directors, duplicates of the seal may be kept and used by the treasurer or by any assistant secretary or assistant treasurer.
ARTICLE V.
Indemnification.
Section 5.1. Right to Indemnification. The Corporation shall indemnify and hold harmless to the fullest extent permitted by law any person who was or is made or is threatened to be made a party or is involved in any Proceeding whether civil, criminal, administrative or investigative by reason of the fact that he, or a person for whom he is the legal representative, is or was a director, officer, employee or agent of the Corporation or is or was serving at the request of the Corporation as a director, officer, employee or agent of another corporation or of a partnership, joint venture, trust, enterprise or non-profit entity, including service with respect to employee benefit plans, against all expenses, liability, and loss reasonably incurred or suffered by such person. The Corporation shall indemnify any person seeking indemnity in connection with a Proceeding initiated by such person only if the Proceeding was authorized by the Board of Directors of the Corporation.
Section 5.2. Advancement of Expenses.
(a)      If and whenever any Indemnitee is, or is threatened to be made, a party to any Proceeding that may give rise to a right of that Indemnitee to indemnification under Section 5.1, the Corporation will advance (unless such advance is in violation of law) all Expenses reasonably incurred by or on behalf of that Indemnitee in connection with that Proceeding within 10 days after the Corporation receives a statement or statements from that Indemnitee requesting the advance or advances from time to time, whether prior to or after final disposition of that Proceeding; provided, however, that the Corporation will have no obligation




to advance Expenses if such advance will be in violation of applicable law. Each such statement must reasonably evidence the Expenses incurred by or on behalf of that Indemnitee and include or be preceded or accompanied by an undertaking by or on behalf of that Indemnitee to repay any Expenses advanced if it ultimately is determined that the Indemnitee is not entitled to be indemnified by the Corporation under Section 5.1 against those Expenses. The Corporation will accept any such undertaking without reference to the financial ability of Indemnitee to make repayment. If the Corporation advances Expenses in connection with any Claim as to which an Indemnitee has requested or may request indemnification under Section 5.1 and a determination is made under Section 5.4 that the Indemnitee is not entitled to that indemnification, the Indemnitee will not be required to reimburse the Corporation for those advances until the 180th day following the date of that determination; provided, however, that if the Indemnitee timely commences and thereafter prosecutes in good faith a judicial proceeding or arbitration under Section 5.6 or otherwise to obtain that indemnification, the Indemnitee will not be required to reimburse the Corporation for those Expenses until a determination in that proceeding or arbitration that the Indemnitee is not entitled to that indemnification has become final and nonappealable.
(b)      The Corporation may advance Expenses under Section 5.2(a) to an Indemnitee or, at the Corporation's option, directly to the Person to which those Expenses are owed, and any Indemnitee's request for an advance under Section 5.2(a) will constitute that Indemnitee's consent to any such direct payment, to Indemnitee's legal counsel or any other Person.
Section 5.3. Notification and Defense of Claims.
(a)      If any Indemnitee receives notice, otherwise than from the Corporation, that the Indemnitee is or will be made, or is threatened to be made, a party to any Proceeding in respect of which the Indemnitee intends to seek indemnification under this Article V, the Indemnitee must promptly notify the Corporation in writing of the nature and, to the Indemnitee's knowledge, status of that Proceeding. If this Section 5.3(a) requires any Indemnitee to give such a notice, but that Indemnitee fails to do so, that failure will not relieve the Corporation from, or otherwise affect the obligations the Corporation may have to indemnify that Indemnitee under this Article V, unless the Corporation can establish that the failure has resulted in actual prejudice to the Corporation.
(b)      Except as this Section 5.3(b) otherwise provides, in the case of any Proceeding in respect of which any Indemnitee seeks indemnification under this Article V:
(1)      the Corporation and any Related Enterprise that also may be obligated to indemnify that Indemnitee in respect of that Proceeding will be entitled to participate at its own expense in that Proceeding;
(2)      the Corporation or that Related Enterprise, or either of them, will be entitled to assume the defense of all Claims, other than (A) Corporation Claims, if any, and (B) other Claims, if any, as to which that Indemnitee shall reasonably




reach the conclusion clause (3) of the next sentence describes, in that Proceeding against that Indemnitee by prompt written notice of that election to that Indemnitee; and
(3)      if clause (2) above entitles the Corporation or that Related Enterprise to assume the defense of any of those Claims and it delivers to that Indemnitee notice of that assumption under clause (2), the Corporation will not be liable to that Indemnitee under this Article V for any fees or expenses of legal counsel for that Indemnitee which that Indemnitee incurs after that Indemnitee receives that notice.
That Indemnitee will have the right to employ that Indemnitee's own legal counsel in that Proceeding, but, as clause (3) of the preceding sentence provides, will bear the fees and expenses of that counsel unless:
(1)      the Corporation has authorized that Indemnitee in writing to retain that counsel;
(2)      the Corporation shall not within a reasonable period of time actually have employed counsel to assume the defense of those Claims; or
(3)      that Indemnitee shall have (A) reasonably concluded that a conflict of interest may exist between that Indemnitee and the Corporation as to the defense of one or more of those Claims and (B) communicated that conclusion to the Corporation in writing.
(c)      The Corporation will not be obligated hereunder to, or to cause another Corporation Entity to, indemnify any Indemnitee against or hold that Indemnitee harmless from and in respect of any amounts paid, or agreed to be paid, by that Indemnitee in settlement of any Claim against that Indemnitee which that Indemnitee effects without the Corporation's prior written consent. The Corporation will not settle any Claim against any Indemnitee in any manner that would impose any penalty or limitation on that Indemnitee without that Indemnitee's prior written consent. Neither the Corporation nor any Indemnitee will unreasonably delay or withhold consent to any such settlement the other party proposes to effect.
Section 5.4. Procedure for Determination of Entitlement to Indemnification.
(a)      To obtain indemnification under this Article V, any Indemnitee must submit to the Corporation a written request therefor which specifies the Section or Sections under which that Indemnitee is seeking indemnification and which includes, or is accompanied by, such documentation and information as is reasonably available to that Indemnitee and is reasonably necessary to determine whether and to what extent that Indemnitee is entitled to that indemnification. Any Indemnitee may request indemnification under this Article V at any time and from time to time as that Indemnitee deems appropriate in that Indemnitee's sole discretion. In the case of any request by any Indemnitee for indemnification under Section 5.1 as to any Claim which is pending or threatened at the time that Indemnitee delivers that request to the Corporation and would not be resolved with finality, whether by




judgment, order, settlement or otherwise, on payment of the indemnification requested, the Corporation may defer the determination under Section 5.4(c) of that Indemnitee's entitlement to that indemnification to a date that is no later than 45 days after the effective date of that final resolution if the Board concludes in good faith that an earlier determination would be materially prejudicial to the Corporation or a Related Enterprise.
(b)      On written request by any Indemnitee under Section 5.4(a) for indemnification under Section 5.1, the determination of that Indemnitee's entitlement to that indemnification will be made:
(1)      if that Indemnitee will be a director or officer of the Corporation at the time that determination is made, under Section 5.4(c) in each case; or
(2)      if that Indemnitee will not be a director or officer of the Corporation at the time that determination is made, under Section 5.4(c) in any case, if so requested in writing by that Indemnitee or so directed by the Board, or, in the absence of that request and direction, as the Board shall duly authorize or direct.
(c)      Each determination of any Indemnitee's entitlement to indemnification under Section 5.1 to which this Section 5.4(c) applies will be made as follows:
(1)      by a majority vote of the Disinterested Directors, even though less than a quorum; or
(2)      by a committee of Disinterested Directors a majority vote of the Disinterested Directors may designate, even though less than a quorum; or
(3)      if (A) there are no Disinterested Directors or (B) a majority vote of the Disinterested Directors so directs, by an Independent Counsel in a written opinion to the Board, a copy of which the Corporation will deliver to that Indemnitee;
provided, however, that if that Indemnitee has so requested in that Indemnitee's request for indemnification, an Independent Counsel will make that determination in a written opinion to the Board, a copy of which the Corporation will deliver to Indemnitee.
(d)      If it is determined that any Indemnitee is entitled to indemnification under Section 5.1, the Corporation will, or will cause another Corporation Entity to, subject to the provisions of Section 5.4(f):
(1)      within 10 days after that determination pay to that Indemnitee all amounts (A) theretofore incurred by or on behalf of that Indemnitee in respect of which that Indemnitee is entitled to that indemnification by reason of that determination and (B) requested from the Corporation in writing by that Indemnitee; and




(2)      thereafter on written request by that Indemnitee, pay to that Indemnitee within 10 days after that request such additional amounts theretofore incurred by or on behalf of that Indemnitee in respect of which that Indemnitee is entitled to that indemnification by reason of that determination.
Each Indemnitee must cooperate with the person, persons or entity making the determination under Section 5.4(c) with respect to that Indemnitee's entitlement to indemnification under Section 5.1, including providing to such person, persons or entity, on reasonable advance request, any documentation or information that is:
(1)      not privileged or otherwise protected from disclosure;
(2)      reasonably available to that Indemnitee; and
(3)      reasonably necessary to that determination.
(e)      If an Independent Counsel is to make a determination under Section 5.4(c) of entitlement of any Indemnitee to indemnification under Section 5.1, the Board will select the Independent Counsel and give written notice to that Indemnitee which names the person or firm it has selected, whereupon that Indemnitee may, within 10 days after that Indemnitee's receipt of that notice, deliver to the Secretary a written objection to the selection; provided, however, that any such objection may be asserted only on the ground that the person or firm selected is not an “Independent Counsel” as Section 5.11 defines that term, and the objection must set forth with particularity the factual basis for that assertion. Absent a proper and timely objection, the person or firm so selected will act as Independent Counsel under Section 5.4(c). If any such written objection is so made and substantiated, the person or firm so selected may not serve as Independent Counsel unless and until the objection is withdrawn or a court of competent jurisdiction has determined that the objection is without merit.
If the person or firm that will act as Independent Counsel has not been determined within 30 days after any Indemnitee's submission of the related request for indemnification, either the Corporation or that Indemnitee may petition the Court of Chancery for resolution of any objection that has been made by that Indemnitee to the Board's selection of Independent Counsel or for the appointment as Independent Counsel of a person or firm selected by the Court of Chancery or by such other person or firm as the Court of Chancery designates, and the person or firm with respect to whom all objections are so resolved or the person or firm so appointed will act as Independent Counsel under Section 5.4(c).
The Corporation will pay any and all reasonable fees and expenses the Independent Counsel incurs in connection with acting under Section 5.4(c), and the Corporation will pay all reasonable fees and expenses incident to the procedures this Section 5.4(e) sets forth, regardless of the manner in which the Independent Counsel is selected or appointed.
If any Indemnitee becomes entitled to, and does, initiate any judicial proceeding or arbitration under Section 5.6, the Corporation will terminate its




engagement of the person or firm acting as Independent Counsel, whereupon that person or firm will be, subject to the applicable standards of professional conduct then prevailing, relieved of any further responsibility in the capacity of Independent Counsel.
(f)      The amount of any indemnification against Expenses to which any Indemnitee becomes entitled under any provision of this Article V, including Section 5.1, will be determined subject to the provisions of this Section 5.4(f). Each Indemnitee will have the burden of showing that that Indemnitee actually has incurred the Expenses for which that Indemnitee requests indemnification. If the Corporation or a Corporation Entity has made any advance in respect of any Expense incurred by any Indemnitee without objecting in writing to that Indemnitee at the time of the advance to the reasonableness thereof, the incurrence of that Expense by that Indemnitee will be deemed for all purposes hereof to have been reasonable. In the case of any Expense as to which such an objection has been made, or any Expense for which no advance has been made, the incurrence of that Expense will be presumed to have been reasonable, and the Corporation will have the burden of proof to overcome that presumption.
Section 5.5 Presumptions and Effect of Certain Proceedings.
(a)      In making a determination under Section 5.4(c) with respect to entitlement of any Indemnitee to indemnification under Section 5.1, the person, persons or entity making that determination must presume that that Indemnitee is entitled to that indemnification if that Indemnitee has submitted a request for indemnification in accordance with Section 5.4(a), and the Corporation will have the burden of proof to overcome that presumption in connection with the making by any person, persons or entity of any determination contrary to that presumption.
(b)      The termination of any Proceeding or of any Claim therein, by judgment, order, settlement or conviction, or on a plea of nolo contendere or its equivalent, will not, except as this Article V otherwise expressly provides, of itself adversely affect the right of any Indemnitee to indemnification under this Article V or, in the case of any determination under Section 5.4(c) of any Indemnitee's entitlement to indemnification under Section 5.1, create a presumption that that Indemnitee did not act in good faith and in a manner that Indemnitee reasonably believed to be in or not opposed to the best interests of the Corporation or, with respect to any criminal action or proceeding, that Indemnitee had reasonable cause to believe that that Indemnitee's conduct was unlawful.
(c)      Any service of any Indemnitee as a Functionary of the Corporation or any Related Enterprise which imposes duties on, or involves services by, that Indemnitee with respect to any Related Enterprise that is an employee benefit or welfare plan or related trust, if any, or that plan's participants or that trust's beneficiaries, will be deemed for all purposes hereof as service at the request of the Corporation, and any action that Indemnitee takes or omits to take in connection with any such plan or trust will, if taken or omitted in good faith by that Indemnitee and in a manner that Indemnitee reasonably believed to be in the interest of the




participants in or beneficiaries of that plan or trust, be deemed to have been taken or omitted in a manner “not opposed to the best interests of the Corporation” for all purposes of this Article V.
(d)      For purposes of any determination under this Article V as to whether any Indemnitee has performed services or engaged in conduct on behalf of any Enterprise in good faith, that Indemnitee will be deemed to have acted in good faith if that Indemnitee acted in reliance on the records of the Enterprise or on information, opinions, reports or statements, including financial statements and other financial information, concerning the Enterprise or any other Person which were prepared or supplied to that Indemnitee by:
(1)      one or more of the officers or employees of the Enterprise;
(2)      appraisers, engineers, investment bankers, legal counsel or other Persons as to matters that Indemnitee reasonably believed were within the professional or expert competence of those Persons; and
(3)      any committee of the board of directors or equivalent managing body of the Enterprise of which that Indemnitee is or was, at the relevant time, not a member;
provided, however, that if that Indemnitee has actual knowledge as to any matter that makes any such reliance unwarranted as to that matter, this Section 5.5(d) will not entitle that Indemnitee to any presumption that that Indemnitee acted in good faith respecting that matter.
(e)      For purposes of any determination under this Article V as to whether any Indemnitee is entitled to indemnification under Section 5.1, neither the knowledge nor the conduct of any other Functionary of the Corporation or any Related Enterprise shall be imputed to that Indemnitee.
(f)      Any Indemnitee will be deemed a party to a Proceeding for all purposes of this Article V if that Indemnitee is named as a defendant or respondent in a complaint or petition for relief in that Proceeding, regardless of whether that Indemnitee ever is served with process or makes an appearance in that Proceeding.
(g)      If any Indemnitee serves or served as a Functionary of a Related Enterprise, that service will be deemed to be “at the request of the Corporation” for all purposes of this Article V notwithstanding that the request is not evidenced by a writing or shown to have been made orally. In the event the Corporation were to extend the rights of indemnification and advancement of Expenses under this Article V to any Indemnitee's serving at the request of the Corporation as a Functionary of any Enterprise other than the Corporation or a Related Enterprise, that Indemnitee must show that the request was made by the Board or at its authorization.




Section 5.6 Remedies of Indemnitee in Certain Cases. (a) If any Indemnitee makes a written request in compliance with Section 5.4(a) for indemnification under Section 5.1 and either:
(1)      no determination as to the entitlement of that Indemnitee to that indemnification is made before the last to occur of (A) the close of business on the date, if any, the Corporation has specified under Section 5.4(a) as the outside date for that determination or (B) the elapse of the 45-day period beginning the day after the date the Corporation receives that request; or
(2)      a determination is made under Section 5.4(c) that that Indemnitee is not entitled to that indemnification in whole or in any part in respect of any Claim to which that request related,
that Indemnitee will be entitled to an adjudication from the Court of Chancery of that Indemnitee's entitlement to that indemnification. Alternatively, that Indemnitee, at that Indemnitee's option, may seek an award in arbitration to be conducted by a single arbitrator in accordance with the Commercial Arbitration Rules of the American Arbitration Association. In the case of any determination under Section 5.5(d) that is adverse to an Indemnitee, that Indemnitee must commence any such judicial proceeding or arbitration within 180 days following the date on which that Indemnitee first has the right to commence that proceeding under this Section 5.6(a) or that Indemnitee will be bound by that determination for all purposes of this Article V.
(b)      If a determination has been made under Section 5.4 that an Indemnitee is not entitled to indemnification under Section 5.1, any judicial proceeding or arbitration commenced by that Indemnitee under this Section 5.6 will be conducted in all respects as a de novo trial or arbitration on the merits, and that Indemnitee will not be prejudiced by reason of that adverse determination. In any judicial proceeding or arbitration commenced under this Section 5.6, the Corporation will have the burden of proving that the Indemnitee is not entitled to indemnification hereunder, and the Corporation may not, for any purpose, refer to or introduce into evidence any determination under Section 5.4(c) which is adverse to the Indemnitee.
(c)      If a determination has been made under Section 5.4 that any Indemnitee is entitled to indemnification under Section 5.1, the Corporation will be bound by that determination in any judicial proceeding or arbitration that Indemnitee thereafter commences under this Section 5.6 or otherwise, absent:
(1)      a misstatement by that Indemnitee of a material fact, or an omission by that Indemnitee of a material fact necessary to make that Indemnitee's statements not materially misleading, in connection with that Indemnitee's request for indemnification; or
(2)      a prohibition of that indemnification under applicable law.
(d)      If any Indemnitee, under this Section 5.6 or otherwise, seeks a judicial adjudication of or an award in arbitration to enforce that Indemnitee's rights under this Article V, that Indemnitee will be entitled to recover from the Corporation, and




will be indemnified by the Corporation against, any and all expenses, of the types the definition of Expenses in Section 5.11 describes, reasonably incurred by or on behalf of that Indemnitee in that judicial adjudication or arbitration, but only if that Indemnitee prevails therein. If it is determined in that judicial adjudication or arbitration that that Indemnitee is entitled to receive part of, but not all, the indemnification or advancement of expenses sought, the expenses incurred by that Indemnitee in connection with that judicial adjudication or arbitration will be appropriately prorated between those in respect of which this Article V entitles that Indemnitee to indemnification and those that Indemnitee must bear.
(e)      In any judicial proceeding or arbitration under this Section 5.6, the Corporation:
(1)      will not, and will not permit any other Person acting on its behalf to, assert that the procedures or presumptions this Article V establishes are not valid, binding and enforceable; and
(2)      will stipulate that it is bound by all the provisions of this Article V.
Section 5.7 Non-exclusivity; Equivalence to Contract Rights; Survival of Rights; Insurance; Subrogation.
(a) The rights to indemnification and advancement of Expenses and the remedies this Article V provides are not and will not be deemed exclusive of any other rights or remedies to which any Indemnitee may at any time be entitled under applicable law, the Certificate of Incorporation, any agreement, a vote of stockholders or Disinterested Directors, or otherwise, but each such right or remedy under this Article V will be cumulative with all such other rights and remedies. The rights to indemnification and advancement of Expenses this Article V provides shall be considered the equivalent of a contract right that vests upon the occurrence or alleged occurrence of any act or omission that forms the basis for or is related to the claim for which indemnification is sought by an Indemnitee, to the same extent as if the provisions of this Article V were set forth in a separate, written contract between such Indemnitee and the Corporation, and no amendment, modification or repeal of this Article V or any provision hereof will limit or restrict any right of any Indemnitee under this Article V in respect of any action that Indemnitee has taken or omitted in that Indemnitee's capacity as a Functionary of the Corporation or any Related Enterprise prior to that amendment, modification or repeal. This Article V will not limit or restrict the power or right of the Corporation, to the extent and in the manner applicable law permits, to indemnify and advance expenses to Persons other than Indemnitees when and as authorized by the Board or by other appropriate corporate action.
(b)      If the Corporation maintains an insurance policy or policies providing liability insurance for directors or officers of the Corporation, each Indemnitee will be covered by the policy or policies in accordance with its or their terms to the maximum extent of the coverage available for any such director or officer under the policy or policies. If the Corporation receives written notice from any source of a




pending Proceeding to which any Indemnitee is a party and in respect of which that Indemnitee might be entitled to indemnification under Section 5.1 and the Corporation then maintains any such policy of which that Indemnitee is a beneficiary, the Corporation will:
(1)      promptly give notice of that Proceeding to the relevant insurers in accordance with the applicable policy procedures; and
(2)      thereafter take all action necessary to cause those insurers to pay, on behalf of that Indemnitee, all amounts payable in accordance with the applicable policy terms as a result of that Proceeding;
provided, however, that the Corporation need not comply with the provisions of this sentence if its failure to do so would not actually be prejudicial to that Indemnitee in any material respect.
(c)      The Corporation will not be liable under this Article V to make or cause to be made any payment of amounts otherwise indemnifiable under this Article V, or to make or cause to be made any advance this Article V otherwise requires it to make or cause to be made, to or for the account of any Indemnitee, if and to the extent that the Indemnitee has otherwise actually received or had applied for the Indemnitee's benefit that payment or advance or otherwise obtained the entire benefit therefrom under any insurance policy, any other contract or agreement or otherwise.
(d)      If the Corporation makes or causes to be made any payment under this Article V to or for the account of any Indemnitee, it will be subrogated to the extent of that payment to all the rights of recovery of that Indemnitee, who must execute all papers required and take all action necessary to secure those rights, including execution of such documents as are necessary to enable the Corporation to bring suit to enforce those rights.
(e)      The Corporation's obligation to make or cause to be made any payment or advance under this Article V to or for the account of any Indemnitee with respect to that Indemnitee's service at the request of the Corporation as a Functionary of any Related Enterprise will be reduced by any amount that Indemnitee has actually received as indemnification or advancement of expenses from that Related Enterprise.
Section 5.8 Benefit of this Article V. The provisions of this Article V will inure to the benefit of each Indemnitee and that Indemnitee's spouse, heirs, executors and administrators.
Section 5.9 Severability. If any provision or provisions of this Article V is or are invalid, illegal or unenforceable for any reason whatsoever:
(1)      the validity, legality and enforceability of the remaining provisions of this Article V, including each portion of any Section containing any such invalid,




illegal or unenforceable provision which is not itself invalid, illegal or unenforceable, will not in any way be affected or impaired thereby;
(2)      such provision or provisions will be deemed reformed to the extent necessary to conform to applicable law and to give the maximum effect to the intent of the Corporation as expressed in this Article V; and
(3)      to the fullest extent possible, the provisions of this Article V, including each portion of any Section containing any such invalid, illegal or unenforceable provision which is not itself invalid, illegal or unenforceable, will be construed so as to give effect to the intent manifested thereby.
Section 5.10 Exceptions to Right of Indemnification or Advancement of Expenses. No provision in this Article V will obligate the Corporation to pay or cause to be paid any indemnity to or for the account of any Indemnitee in connection with or as a result of:
(1)      any Claim made against that Indemnitee for an accounting of profits, under Section 16(b) of the Exchange Act or similar provision of state statutory or common law, from the purchase and sale, or sale and purchase, by that Indemnitee of securities of the Corporation or any Related Enterprise; or
(2)      except for any Claim initiated by that Indemnitee, whether as a cause of action or as a defense to a cause of action under Section 5.6 or otherwise, to enforce or establish, by declaratory judgment or otherwise, that Indemnitee's rights or remedies under this Article V, any Claim initiated by that Indemnitee without the prior authorization of the Board against the Corporation or any Related Enterprise or any of their respective present or former Functionaries.
Section 5.11 Definitions. (a) For purposes of this Article V:
“ Affiliate ” has the meaning Exchange Act Rule 12b-2 specifies.
“ Claim ” means any claim for damages or a declaratory, equitable or other substantive remedy, or any other issue or matter, in any Proceeding.
“ Corporation Claim ” means, in the case of any Indemnitee, any Claim brought by or in the right of the Corporation or a Related Enterprise against that Indemnitee.
“ Corporation Entity ” means any Related Enterprise, other than an employee benefit or welfare plan or its related trust, if any.
“ Court of Chancery ” means the Court of Chancery of the State of Delaware.
“ Disinterested Director ” means a director of the Corporation who is not and was not a party to the Proceeding, or any Claim therein, in respect of which indemnification is sought by any Indemnitee under this Article V.
“ Enterprise ” means any business trust, corporation, joint venture, limited liability company, partnership or other entity or enterprise, including any operational division of any entity, or any employee benefit or welfare plan or related trust.




“ Expenses ” include all attorneys' fees, retainers, court costs, transcript costs, fees of experts, witness fees, travel expenses, duplicating costs, printing and binding costs, telephone charges, postage, delivery service fees, all other disbursements or expenses of the types customarily incurred in connection with prosecuting, defending, preparing to prosecute or defend, investigating, being or preparing to be a witness in, or otherwise participating in, a Proceeding. Should any payments by the Corporation to or for the account of any Indemnitee under this Article V be determined to be subject to any federal, state or local income or excise tax, “Expenses” also will include such amounts as are necessary to place that Indemnitee in the same after-tax position, after giving effect to all applicable taxes, that Indemnitee would have been in had no such tax been determined to apply to those payments.
“ Functionary ” of any Enterprise means any director, officer, manager, administrator, employee, agent, representative or other functionary of that Enterprise, including, in the case of any employee benefit or welfare plan, any member of any committee administering that plan or any individual to whom the duties of that committee are delegated.
“ Indemnitee ” means at any time any director, officer, employee or agent of the Corporation or any person that is or was serving at the request of the Corporation as a director, officer, employee or agent of another corporation or of a partnership, joint venture, trust, limited liability company, enterprise, non-profit entity or other entity including, without limitation, service with respect to employee benefit plans.
“ Independent Counsel ” means, in the case of any determination under Section 5.4(c) of the entitlement of any Indemnitee to indemnification under Section 5.1, a law firm, or a member of a law firm, that or who is experienced in matters of corporation law and neither presently is, nor in the past five years has been, retained to represent:
(1)      the Corporation or any of its Affiliates or that Indemnitee in any matter material to any such Person; or
(2)      any other party to the Proceeding giving rise to a claim of that Indemnitee for that indemnification;
notwithstanding the foregoing, the term “Independent Counsel” does not include at any time any Person who, under the applicable standards of professional conduct then prevailing, would have a conflict of interest in representing either the Corporation or a Related Enterprise or that Indemnitee in an action to determine that Indemnitee's rights under these By-laws.
“ Person ” means any natural person, sole proprietorship, corporation, partnership, limited liability company, business trust, unincorporated organization or association, mutual company, joint stock company, joint venture or any other entity of any kind having a separate legal status or any estate, trust, union or employee organization or governmental authority.




“ Proceeding ” includes:
(1)      any threatened, pending or completed action, suit, arbitration, alternate dispute resolution procedure, investigation, inquiry or other threatened, actual or completed proceeding, whether of a civil, criminal, administrative, investigative or private nature and irrespective of the initiator thereof; and
(2)      any appeal in any such proceeding.
“ Related Enterprise ” means at any time any Enterprise:
(1)      50% or more of the outstanding capital stock or other ownership interests of which, or the assets of which, the Corporation owns or controls, or previously owned or controlled, directly or indirectly, at that time;
(2)      50% or more of the outstanding voting power of the outstanding capital stock or other ownership interests of which the Corporation owns or controls, or previously owned or controlled, directly or indirectly, at that time;
(3)      that is, or previously was, an Affiliate of the Corporation which the Corporation controls, or previously controlled, by ownership, contract or otherwise and whether alone or together with another Person, directly or indirectly, at that time; or
(4)      if that Enterprise is an employee benefit or welfare plan or related trust, whose participants or beneficiaries are present or former employees of the Corporation or any other Related Enterprise.
Section 5.12 Contribution. If it is established, under Section 5.4(c) or otherwise, that any Indemnitee has the right to be indemnified under Section 5.1 in respect of any Claim, but that right is unenforceable by reason of any applicable law or public policy, then, to the fullest extent applicable law permits, the Corporation, in lieu of indemnifying or causing the indemnification of that Indemnitee under Section 5.1, will contribute or cause to be contributed to the amount that Indemnitee has incurred, whether for judgments, fines, penalties, excise taxes, amounts paid or to be paid in settlement or for Expenses reasonably incurred, in connection with that Claim, in such proportion as is deemed fair and reasonable in light of all the circumstances of that Claim in order to reflect:
(1)      the relative benefits that Indemnitee and the Corporation have received as a result of the event(s) or transaction(s) giving rise to that Claim; or
(2)      the relative fault of that Indemnitee and of the Corporation and its other Functionaries in connection with those event(s) or transaction(s).




Section 5.13 Submission to Jurisdiction. Each Indemnitee, by seeking any indemnification or advance of Expenses under this Article V, will be deemed, except with respect to any arbitration that Indemnitee commences under Section 5.6:
(1)      to have agreed that any action or proceeding arising out of or in connection with this Article V must be brought only in the Court of Chancery and not in any other state or federal court in the United States of America or any court in any other country;
(2)      to have consented to submit to the exclusive jurisdiction of the Court of Chancery for purposes of any action or proceeding arising out of or in connection with this Article V;
(3)      to have waived any objection to the laying of venue of any such action or proceeding in the Court of Chancery; and
(4)      to have waived, and to have agreed not to plead or to make, any claim that any such action or proceeding brought in the Court of Chancery has been brought in an improper or otherwise inconvenient forum. The Corporation shall indemnify and hold harmless to the fullest extent permitted by law any person who was or is made or is threatened to be made a party or is involved in any action, suit, or proceeding whether civil, criminal, administrative or investigative (“proceeding”) by reason of the fact that he, or a person for whom he is the legal representative, is or was a director, officer, employee or agent of the Corporation or is or was serving at the request of the Corporation as a director, officer, employee or agent of another corporation or of a partnership, joint venture, trust, enterprise or non-profit entity, including service with respect to employee benefit plans, against all expenses, liability, and loss reasonably incurred or suffered by such person. The Corporation shall indemnify any person seeking indemnity in connection with a proceeding initiated by such person only if the proceeding was authorized by the Board of Directors of the Corporation.

ARTICLE VI.
Miscellaneous.

Section 6.1 Amendments. The Board of Directors shall have the power to adopt, amend and repeal the By-laws at any regular or special meeting of the Board, provided that notice of intention to adopt, amend or repeal the By-laws in whole or in part shall have been included in the notice of meeting; or, without any such notice, by a vote of two-thirds of the directors then in office.
Stockholders may adopt, amend and repeal the By-laws at any regular or special meeting of the stockholders by an affirmative vote of the majority of shares present in person or represented by proxy at the meeting and entitled to vote thereon, provided that notice of intention to adopt, amend or repeal the By-laws in whole or in part shall have been included in the notice of the meeting.




Section 6.2 Offices. The Corporation's registered office shall be in the City of Wilmington, County of New Castle, State of Delaware. The Corporation may have such other offices within and without the State of Delaware as have heretofore been established or may hereafter be established by or with the authority of the Board. The Corporation's administrative office shall be located at 5555 San Felipe Road, Houston, Texas.
Section 6.3 Fiscal Year . The fiscal year of the Corporation will end on December 31.
Section 6.4 Interested Directors; Quorum . No contract or transaction between the Corporation and one or more of its directors or officers, or between the Corporation and any other Entity in which one or more of its directors or officers are directors or officers (or hold equivalent offices or positions), or have a financial interest, will be void or voidable solely for this reason, or solely because the director or officer is present at or participates in the meeting of the Board or Board Committee which authorizes the contract or transaction, or solely because his or her votes are counted for that purpose, if:
(1)      the material facts as to the relationship or interest of the director or officer and as to the contract or transaction are disclosed or are known to the Board or the Board Committee, and the Board or Board Committee in good faith authorizes the contract or transaction by the affirmative votes of a majority of the disinterested directors, even though the disinterested directors be less than a quorum; or
(2)      the material facts as to the relationship of the director or officer or interest and as to the contract or transaction are disclosed or are known to the stockholders entitled to vote thereon, and the contract or transaction is specifically approved in good faith by vote of those stockholders; or
(3)      the contract or transaction is fair as to the Corporation as of the time it is authorized, approved or ratified by the Board, a Board Committee or the stockholders.
Common or interested directors may be counted in determining the presence of a quorum at a meeting of the Board or of a Board Committee which authorizes the contract or transaction.
Section 6.5 Form of Records . Any records the Corporation maintains in the regular course of its business, including its stock ledger, books of account, and minute books, may be kept on, or be in the form of, punch cards, magnetic tape, photographs, microphotographs or any other information storage device, provided that the records so kept can be converted into clearly legible form within a reasonable time.
Section 6.6 Notices; Waiver of Notice. Whenever any notice is required to be given to any stockholder, director or member of any Board Committee under the provisions of the DGCL, the Certificate of Incorporation or these By-laws, that notice




will be deemed to be sufficient if given (a) by telegraphic, facsimile, cable or wireless or electronic transmission or (b) by deposit of the same in the United States mail, with postage paid thereon, addressed to the person entitled thereto at his address as it appears in the records of the Corporation, and that notice will be deemed to have been given on the day of such transmission or mailing, as the case may be.
Whenever any notice is required to be given to any stockholder or director under the provisions of the DGCL, the Certificate of Incorporation or these By-laws, a waiver thereof in writing signed by or by electronic transmission from the person or persons entitled to that notice, whether before or after the time stated therein, will be equivalent to the giving of that notice. Attendance of a person at a meeting will constitute a waiver of notice of that meeting, except when the person attends a meeting for the express purpose of objecting, at the beginning of the meeting, to the transaction of any business because the meeting is not lawfully called or convened. Neither the business to be transacted at, nor the purpose of, any regular or special meeting of the stockholders, the Board or any Board Committee need be specified in any waiver of notice in writing or by electronic transmission unless the Certificate of Incorporation or these By-laws so require.
Section 6.7 Resignations. Any director or officer of the Corporation may resign at any time. Any such resignation must be made in writing or by electronic transmission to the Corporation and will take effect at the time specified in that writing or electronic transmission, or, if that resignation does not specify any time, at the time of its receipt by the chairman or the secretary. The acceptance of a resignation will not be necessary to make it effective, unless that resignation expressly so provides.
If an incumbent director who is nominated for re-election to the Board does not receive sufficient votes “for” to be elected in accordance with Section 1.7, that incumbent director shall promptly tender his or her resignation to the Board. The Corporate Governance and Nominating Committee of the Board (the “Corporate Governance and Nominating Committee”) shall make a recommendation to the Board as to whether to accept or reject the tendered resignation, or whether other action should be taken. The Board shall act on the tendered resignation, taking into account the Corporate Governance and Nominating Committee's recommendation, and publicly disclose (by a press release, a filing with the Securities and Exchange Commission or other broadly disseminated means of communication) its decision regarding the tendered resignation within 90 days from the date of the certification of the election results. The Corporate Governance and Nominating Committee in making its recommendation, and the Board in making its decision, may each consider any factors or other information that it considers appropriate and relevant. The director who tenders his or her resignation should not participate in the recommendation of the Corporate Governance and Nominating Committee or the decision of the Board with respect to his or her resignation. If such incumbent director's resignation is not accepted by the Board, such director shall continue to serve until the next annual meeting of the stockholders of the Corporation and until his or her successor is duly elected, or his or her earlier




resignation or removal. If a director's resignation is accepted by the Board pursuant to this Section 6.7, or if a nominee for director is not elected and the nominee is not an incumbent director, then the Board, in its sole discretion, may fill any resulting vacancy pursuant to the provisions of Article Seventh of the Certificate of Incorporation or may decrease the size of the Board pursuant to the provisions of Section 2.1.
Section 6.8 Facsimile Signatures. In addition to the provisions for the use of facsimile signatures these By-laws elsewhere specifically authorize, facsimile signatures of any officer or officers of the Corporation may be used as and whenever the Board by resolution so authorizes.
Section 6.9 Reliance on Books, Reports and Records. Each director and each member of any Board Committee designated by the Board will, in the performance of his duties, be fully protected in relying in good faith on the books of account or reports made to the Corporation by any of its officers, or by an independent certified public accountant, or by an appraiser selected with reasonable care by the Board or by any such committee, or in relying in good faith upon other records of the Corporation.
Section 6.10 Certain Definitional Provisions. (a) In these By-laws:
“Board” or “Board of Directors” means the board of directors of the Corporation.
“Board Committee” means any committee of the Board.
“Certificate of Incorporation” means at any time the original certificate of incorporation of the Corporation as amended and restated from time to time to that time, including each certificate of designation, if any, respecting any class or series of preferred stock of the Corporation.
“Chairman” or “chairman” means the chairman of the Board.
“DGCL” means the General Corporation Law of the State of Delaware.
“Exchange Act” means the Securities Exchange Act of 1934, as amended.
“Lead Director” means the Director elected by the Board, not less than annually, by the affirmative vote of a majority of the non-employee Directors in the event (i) the Chairman and Chief Executive Officer positions are not separate, or (ii) the Chairman is not independent according to the categorical standards for director independence set forth in the Corporation's Corporate Governance Principles.
“Secretary” or “secretary” means the secretary of the Corporation.
(b)      When used in these By-laws, the words “herein,” “hereof” and “hereunder” and words of similar import refer to these By-laws as a whole and not




to any provision of these By-laws, and the words “Article” and “Section” refer to Articles and Sections of these By-laws unless otherwise specified.
(c)      Whenever the context so requires, the singular number includes the plural and vice versa, and a reference to one gender includes the other gender and the neuter.
(d)      The word “including” (and, with correlative meaning, the word “include”) means including, without limiting the generality of any description preceding that word, and the words “shall” and “will” are used interchangeably and have the same meaning.
Section 6.11 Captions. Captions to Articles and Sections of these By-laws are included for convenience of reference only, and these captions do not constitute a part hereof for any other purpose or in any way affect the meaning or construction of any provision hereof.






Exhibit 12.1


Marathon Oil Corporation
Computation of Ratio of Earnings to Fixed Charges
TOTAL ENTERPRISE BASIS - Unaudited



 
 
Six Months Ended
 
(In millions)
 
June 30,
 
 
 
 
 
 
 
 
 
 
2013
 
 
2012
 
 
 
 
 
 
 
 
Portion of rentals representing interest,
 
 
 
 
 
 
     including discontinued operations
 
$
13

 
 
$
11

 
 
 
 

 
 
 

 
Capitalized interest,
 
 

 
 
 

 
     including discontinued operations
 
12

 
 
37

 
 
 
 

 
 
 

 
Other interest and fixed charges,
 
 

 
 
 

 
     including discontinued operations
 
150

 
 
111

 
 
 
 

 
 
 

 
Total fixed charges (A)
 
$
175

 
 
$
159

 
 
 
 

 
 
 

 
Earnings-pretax income with
 
 

 
 
 

 
     applicable adjustments (B)
 
$
3,085

 
 
$
2,920

 
 
 
 

 
 
 

 
Ratio of (B) to (A)
 
17.63

 
 
18.36

 






Exhibit 31.1 
MARATHON OIL CORPORATION  

CERTIFICATION PURSUANT TO SECTION 302 OF
THE SARBANES-OXLEY ACT OF 2002
I, Lee M. Tillman, certify that: 

1.
 I have reviewed this report on Form 10-Q of Marathon Oil Corporation;
2.
Based on my knowledge, this report does not contain any untrue statement of a material fact or omit to state a material fact necessary to make the statements made, in light of the circumstances under which such statements were made, not misleading with respect to the period covered by this report;
3.
Based on my knowledge, the financial statements, and other financial information included in this report, fairly present in all material respects the financial condition, results of operations and cash flows of the registrant as of, and for, the periods presented in this report;
4.
The registrant’s other certifying officer and I are responsible for establishing and maintaining disclosure controls and procedures (as defined in Exchange Act Rules 13a-15(e) and 15d-15(e)) and internal control over financial reporting (as defined in Exchange Act Rules 13a-15(f) and 15d-15(f)) for the registrant and have:
(a)
Designed such disclosure controls and procedures, or caused such disclosure controls and procedures to be designed under our supervision, to ensure that material information relating to the registrant, including its consolidated subsidiaries, is made known to us by others within those entities, particularly during the period in which this report is being prepared;
(b)
Designed such internal control over financial reporting, or caused such internal control over financial reporting to be designed under our supervision, to provide reasonable assurance regarding the reliability of financial reporting and the preparation of financial statements for external purposes in accordance with generally accepted accounting principles;
(c)
Evaluated the effectiveness of the registrant’s disclosure controls and procedures and presented in this report our conclusions about the effectiveness of the disclosure controls and procedures, as of the end of the period covered by this report based on such evaluation; and
(d)
Disclosed in this report any change in the registrant’s internal control over financial reporting that occurred during the registrant’s most recent fiscal quarter (the registrant’s fourth fiscal quarter in the case of an annual report) that has materially affected, or is reasonably likely to materially affect, the registrant’s internal control over financial reporting; and
5.
The registrant’s other certifying officer and I have disclosed, based on our most recent evaluation of internal control over financial reporting, to the registrant’s auditors and the audit committee of the registrant’s board of directors (or persons performing the equivalent functions):
(a)
All significant deficiencies and material weaknesses in the design or operation of internal control over financial reporting which are reasonably likely to adversely affect the registrant’s ability to record, process, summarize and report financial information; and
(b)
Any fraud, whether or not material, that involves management or other employees who have a significant role in the registrant’s internal control over financial reporting.
Date:
August 8, 2013
 
/s/ Lee M. Tillman
 
 
 
Lee M. Tillman
 
 
 
President and Chief Executive Officer
    





Exhibit 31.2 
MARATHON OIL CORPORATION 

CERTIFICATION PURSUANT TO SECTION 302 OF
THE SARBANES-OXLEY ACT OF 2002 
 I, Janet F. Clark, certify that:

1.
I have reviewed this report on Form 10-Q of Marathon Oil Corporation;
2.
Based on my knowledge, this report does not contain any untrue statement of a material fact or omit to state a material fact necessary to make the statements made, in light of the circumstances under which such statements were made, not misleading with respect to the period covered by this report;
3.
Based on my knowledge, the financial statements, and other financial information included in this report, fairly present in all material respects the financial condition, results of operations and cash flows of the registrant as of, and for, the periods presented in this report;
4.
The registrant’s other certifying officer and I are responsible for establishing and maintaining disclosure controls and procedures (as defined in Exchange Act Rules 13a-15(e) and 15d-15(e)) and internal control over financial reporting (as defined in Exchange Act Rules 13a-15(f) and 15d-15(f)) for the registrant and have:
(a)
Designed such disclosure controls and procedures, or caused such disclosure controls and procedures to be designed under our supervision, to ensure that material information relating to the registrant, including its consolidated subsidiaries, is made known to us by others within those entities, particularly during the period in which this report is being prepared;
(b)
Designed such internal control over financial reporting, or caused such internal control over financial reporting to be designed under our supervision, to provide reasonable assurance regarding the reliability of financial reporting and the preparation of financial statements for external purposes in accordance with generally accepted accounting principles;
(c)
Evaluated the effectiveness of the registrant’s disclosure controls and procedures and presented in this report our conclusions about the effectiveness of the disclosure controls and procedures, as of the end of the period covered by this report based on such evaluation; and
(d)
Disclosed in this report any change in the registrant’s internal control over financial reporting that occurred during the registrant’s most recent fiscal quarter (the registrant’s fourth fiscal quarter in the case of an annual report) that has materially affected, or is reasonably likely to materially affect, the registrant’s internal control over financial reporting; and
5.
The registrant’s other certifying officer and I have disclosed, based on our most recent evaluation of internal control over financial reporting, to the registrant’s auditors and the audit committee of the registrant’s board of directors (or persons performing the equivalent functions):
(a)
All significant deficiencies and material weaknesses in the design or operation of internal control over financial reporting which are reasonably likely to adversely affect the registrant’s ability to record, process, summarize and report financial information; and
(b)
Any fraud, whether or not material, that involves management or other employees who have a significant role in the registrant’s internal control over financial reporting.
Date:
August 8, 2013
 
/s/ Janet F. Clark
 
 
 
Janet F. Clark
 
 
 
Executive Vice President and Chief Financial Officer

    





Exhibit 32.1

CERTIFICATION PURSUANT TO
18 U.S.C. SECTION 1350,
AS ADOPTED PURSUANT TO
SECTION 906 OF THE SARBANES-OXLEY ACT OF 2002

In connection with the Quarterly Report of Marathon Oil Corporation (the “Company”) on Form 10-Q for the period ending June 30, 2013 as filed with the Securities and Exchange Commission on the date hereof (the “Report”), I, Lee M. Tillman, President and Chief Executive Officer of the Company, certify, pursuant to 18 U.S.C. §1350, as adopted pursuant to §906 of the Sarbanes-Oxley Act of 2002, that to the best of my knowledge:

(1)
The Report fully complies with the requirements of Section 13(a) or 15(d) of the Securities Exchange Act of 1934; and
(2)
The information contained in the Report fairly presents, in all material respects, the financial condition and results of operations of the Company.
August 8, 2013
 
 
 
/s/ Lee M. Tillman
 
Lee M. Tillman
 
President and Chief Executive Officer
 






Exhibit 32.2

CERTIFICATION PURSUANT TO
18 U.S.C. SECTION 1350,
AS ADOPTED PURSUANT TO
SECTION 906 OF THE SARBANES-OXLEY ACT OF 2002
In connection with the Quarterly Report of Marathon Oil Corporation (the “Company”) on Form 10-Q for the period ending June 30, 2013 as filed with the Securities and Exchange Commission on the date hereof (the “Report”), I, Janet F. Clark, Executive Vice President and Chief Financial Officer of the Company, certify, pursuant to 18 U.S.C. §1350, as adopted pursuant to §906 of the Sarbanes-Oxley Act of 2002, that to the best of my knowledge:

(1)
The Report fully complies with the requirements of Section 13(a) or 15(d) of the Securities Exchange Act of 1934; and
(2)
The information contained in the Report fairly presents, in all material respects, the financial condition and results of operations of the Company.
August 8, 2013
 
 
 
/s/ Janet F. Clark
 
Janet F. Clark
 
Executive Vice President and Chief Financial Officer