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Effective June 30, 2011, Marathon Oil Corporation completed the spin-off of its wholly owned subsidiary, Marathon Petroleum Corporation into a separate independent publicly traded corporation to holders of record of Marathon Oil Corporation common stock on June 27, 2011.
Additional general information about the spin-off and related transactions may be found in the Information Statement distributed to Marathon Oil shareholders in advance of the spin-off. See pages 1 through 5 of the Information Statement for Questions and Answers about the spin-off. Cost basis information related to the spin-off.
Marathon Oil Corporation spin-off of Marathon Petroleum Corporation - June 30, 2011
On June 30, 2011, Marathon Oil Corporation spun off its wholly-owned subsidiary, Marathon Petroleum Corporation. The holders of Marathon Oil Corporation common stock received one share of Marathon Petroleum Corporation common stock for every two shares of Marathon Oil Corporation common stock held on June 27, 2011.
On October 18, 2007, Marathon Oil completed its acquisition of Western Oil Sands, Inc. Below is a series of frequently asked questions and answers about the mechanics of the transaction for the benefit of former shareholders of Western. Additional general information about the transaction may be found in the information circular (PDF 5.9MB) distributed by Western in advance of the shareholder meeting at which the transaction was approved.
1. What did Western shareholders receive in the transaction?
Under the Plan, shareholders of Western were entitled to receive, subject to proration, either:
(a) Cdn$35.50 in cash (see note below on proration);
(b) 0.5932 of a share of Marathon common stock (each, a "Marathon Share");
(c) 0.5932 of an exchangeable share of 1339971 Alberta Ltd. (each, an "Exchangeable Share"); or
(d) a combination thereof.
Under the Plan, the maximum amount of cash to be paid to Western shareholders was Cdn$3.8 billion. However, Western shareholders elected to receive a cash amount greater than the Cdn$3.8 billion available. As a result, the cash paid was prorated, and shareholders received approximately 86 percent of the cash amount that they elected.
Shareholders who did not make an affirmative election received approximately 55 percent cash and 45 percent Marathon shares (after proration).
As part of the Plan, Western shareholders also received for each Class A share held, one common share and one-tenth of a common share purchase warrant of WesternZagros Resources Ltd. ("WesternZagros"), a new international exploration company that is carrying on Western's former business in the Kurdistan Region of Iraq. Each whole warrant of WesternZagros may be exercised to purchase one common share of WesternZagros until January 18, 2008 at an exercise price of Cdn$2.50. For questions about these securities, please contact WesternZagros.
2. How can I get individual information about the specific consideration I received for my Western shares in the transaction?
For individual shareholder information, you may contact Valiant Trust Company at the following numbers:
3. What are the tax consequences of the transaction for former Western shareholders?
General information about the tax consequences of the transaction for individual shareholders may be found in the information circular (PDF 5.9MB). Information about certain Canadian federal income tax considerations begins on page 74. Information about certain U.S. federal income tax considerations begins on page 87.
All former Western shareholders are encouraged to consult their personal tax advisors regarding individual tax consequences.
4. I recently received a tax notice regarding Section 338. What does it mean?
This notice is required to be sent to all former Western shareholders under U.S. tax regulations. The notice informs former Western shareholders that it is possible that the IRS may challenge certain tax positions taken by Western under the passive foreign investment corporation ("PFIC") rules, which could impact the personal tax consequences for Western shareholders. All former Western shareholders are urged to consult their own tax advisors regarding these complex rules.
5. I received exchangeable shares in the transaction. How can I exchange them for common shares of Marathon Oil Corporation?
As described above, as part of the transaction Western shareholders could elect to receive exchangeable shares and certain ancillary rights of 1339971 Alberta Ltd., which are exchangeable for common shares of Marathon Oil Corporation. More information about the exchangeable shares may be found beginning on page 41 of the information circular (PDF 5.9MB).
For information about exchanging these shares for common shares, you may contact Valiant Trust Company at the following numbers:
6. Will I receive dividends on my exchangeable shares?
Holders of exchangeable shares will not receive cash dividends. In lieu of cash dividends, the exchange ratio will be adjusted when dividends are paid to Marathon Oil common shareholders.