 | 5555 San Felipe Road (77056-2725) P. O. Box 3128 (77253-3128) Houston, TX Telephone 713/629-6600 |
| November 17, 2010 |
Christopher J. White
Branch Chief
United States Securities and Exchange Commission
Division of Corporation Finance
100 F Street, N.E., Mail Stop 7010
Washington, DC 20549
| Re: | Marathon Oil Corporation |
| Form 10-K for Fiscal Year Ended December 31, 2009 | |
| Filed February 26, 2010, as amended September 17, 2010 | |
| File No. 1-05153 |
Dear Mr. White:
Set forth below is the response from Marathon Oil Corporation to comments of the Staff of the United States Securities and Exchange Commission, dated November 3, 2010, concerning Marathon’s Annual Report on Form 10-K for the fiscal year ended December 31, 2009, as amended.
For your convenience, we have repeated the comment prior to the response. The comment is highlighted in bold.
Exhibit 99.2
Comment
| 1. | We note the following language in Netherland Sewell’s report: |
In evaluating the information at our disposal concerning this report, we have excluded from our consideration all matters as to which the controlling interpretation may be political, socioeconomic, legal, or accounting, rather than engineering and geologic.
It does not appear that NSAI has “excluded from [its] consideration all matters as to which the controlling interpretation may be political, socioeconomic, legal, or accounting, rather than engineering and geologic.”
2
In this regard, we note that the definition of “reserves” in Rule 4-10(a)(26) of Regulation S-X indicates that “there must exist, or there must be a reasonable expectation that there will exist, the legal right to produce or revenue interest in the production.” We also note that the definition of proved reserves is contained in Regulation S-X which is an accounting regulation. Therefore, we believe NSAI should address this limiting language in one of the following ways, as deemed appropriate:
• | remove the sentence referenced above; or |
• | replace the referenced sentence with a new statement that is precisely tailored to the expertise of NSAI and the circumstances under which the report was prepared. |
Response
In a letter to us dated November 8, 2010, Netherland, Sewell & Associates, Inc. (“NSAI”) provided the following explanation:
… the statement “In evaluating the information at our disposal concerning this, we have excluded from our consideration all matters as to which the controlling interpretation may be political, socioeconomic, legal or accounting, rather than engineering and geologic” was included in our report to explain that expertise at Netherland, Sewell & Associates, Inc. (NSAI) is centered around the technical engineering and geologic disciplines; NSAI does not purport to be certified accountants, landmen, or attorneys who are qualified at validating an entity’s legal right to extract oil and gas from the earth. NSAI, as a firm, recognizes that the definition of reserves requires reasonable expectation of a legal right to produce, or receive revenue from, a hydrocarbon flow stream. The language in our report is intended to serve as a disclaimer to the end user that NSAI has accepted as true the Company’s representation that it has “the legal right to produce”, and NSAI does not have or engage the expertise to perform legal or land due diligence to validate it. In the same manner, NSAI utilizes the Company’s lease operating statements as provided to NSAI and does not perform additional forensic accounting unless something appears inconsistent with other data or its understanding of costs or prices in the applicable field area. As in all aspects of oil and gas evaluation, there are uncertainties inherent in the interpretation of engineering and geosciences data; therefore, our conclusions necessarily represent only informed professional judgment.
This statement clarifies NSAI’s intent behind using the language in question. Based on this explanation and its public availability after the conclusion of the Staff’s review process, we believe this complies with the spirit of the regulations. However if a NSAI report is included with our Form 10-K for fiscal year ended December 31, 2010 or subsequent years, we will ensure that the language in question is modified in accordance with the explanation provided above.
_____________________________
3
We acknowledge that:
| • | We are responsible for the adequacy and accuracy of the disclosure in the filing; |
| • | Staff comments or changes to disclosures in response to Staff comments do not foreclose the Commission from taking any action with respect to the filing; and |
| • | We may not assert Staff comments as a defense in any proceeding initiated by the Commission or any person under the federal securities laws of the United States. |
Please acknowledge receipt of this response letter by electronic confirmation.
Please call the undersigned at 713-296-4131, Michael K. Stewart, Vice President, Accounting and Controller at 713-296-4333, or Richard J. Kolencik, Sr. Group Counsel at 713-296-2535, if you have any questions regarding this submission.
| Very truly yours, | |
| /s/ Janet F. Clark | |
Janet F. Clark Executive Vice President and Chief Financial Officer | |