Exhibit 10.5

MARATHON OIL CORPORATION

2007 INCENTIVE COMPENSATION PLAN

NONQUALIFIED STOCK OPTION AWARD AGREEMENT

[GRANT DATE]

Section 16 Officer

Pursuant to this Award Agreement, MARATHON OIL CORPORATION (the “Corporation”)
hereby grants to [NAME] (the “Optionee”), an employee of the Corporation or a
Subsidiary, on February 24, 2010 (the “Grant Date”), a right (the “Option”) to
purchase from the Corporation [NUMBER] shares of Common Stock of the Corporation
at a grant price of $[PRICE] per share (the “Grant Price”), pursuant to the
Marathon Oil Corporation 2007 Incentive Compensation Plan (the “Plan”), with
such number of shares and such price per share being subject to adjustment as
provided in Section 16 of the Plan, and further subject to the following terms
and conditions:

1. Relationship to the Plan. This Option is subject to all of the terms,
conditions and provisions of the Plan and administrative interpretations
thereunder, if any, that have been adopted by the Committee. Except as defined
herein (including in Paragraph 11 of this Award Agreement), capitalized terms
shall have the same meanings ascribed to them under the Plan. To the extent that
any provision of this Award Agreement conflicts with the express terms of the
Plan, the terms of the Plan shall control and, if necessary, the applicable
provisions of this Award Agreement shall be hereby deemed amended so as to carry
out the purpose and intent of the Plan. References to the Optionee also include
the heirs or other legal representatives of the Optionee.

2. Exercise and Vesting Schedule.

(a) This Option shall become exercisable in three cumulative annual
installments, as follows:

(i) one-third of the Option Shares shall become exercisable on the first
anniversary of the Grant Date;

(ii) an additional one-third of the Option Shares shall become exercisable on
the second anniversary of the Grant Date; and

(iii) the remaining one-third of the Option Shares shall become exercisable on
the third anniversary of the Grant Date;

provided, however, that the Optionee must be in continuous Employment from the
Grant Date through the date of exercisability of each installment in order for
the Option to become exercisable with respect to additional shares of Common
Stock on such date. If the Employment of the Optionee is terminated for any
reason other than death or Retirement, any Option Shares that are not
exercisable as of the date of such termination of Employment shall be forfeited
to the Corporation.

 

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(b) This Option shall become fully exercisable, irrespective of the limitations
set forth in subparagraph (a) above, upon:

(i) termination of the Optionee’s Employment due to death;

(ii) termination of the Optionee’s Employment due to Retirement; or

(ii) a Change in Control of the Corporation, provided that as of such Change in
Control the Optionee had been in continuous Employment since the Grant Date.

3. Expiration of Option.

(a) Expiration of Option Period. The Option Period shall expire on the tenth
anniversary of the Grant Date.

(b) Termination of Employment Due to Death or Retirement. If Employment of the
Optionee is terminated due to death or Retirement, the Option shall expire upon
the earlier of (i) five years following the date of termination of Employment or
(ii) expiration of the Option Period. The death of the Optionee following
Retirement but prior to the expiration of the Option shall have no effect on the
expiration of the Option.

(c) Termination of Employment by the Corporation for Cause or Due to
Resignation. If Employment of the Optionee is terminated by the Corporation or
any of its Subsidiaries for Cause or due to voluntary resignation by the
Optionee, the Option shall expire upon the termination of Employment.

(d) Termination of Employment by the Corporation Other Than For Cause. If
Employment of the Optionee is terminated by the Corporation or any of its
Affiliates for any reason other than Cause, the Option shall expire upon the
earlier of (i) 90 days following the date of termination of Employment or
(ii) expiration of the Option Period.

(e) Termination of Employment Following Change in Control. If Employment of the
Optionee is terminated following a Change in Control and, as a result, the
Optionee is eligible for severance benefits under a Change in Control Agreement,
the Option shall remain exercisable throughout the Option Period.

4. Employment with a Competitor. Notwithstanding anything herein to the
contrary, in the event the Committee, the Chief Executive Officer, or an
authorized officer determines that the Optionee has accepted or intends to
accept employment with a competitor of any business unit of the Corporation, the
Committee, the Chief Executive Officer, or the authorized officer may cancel the
Option by written notice to the Optionee.

 

 

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5. Forfeiture or Repayment Resulting from Forfeiture Event.

(a) Forfeiture of Unexercised Option. If a Forfeiture Event occurs during the
Optionee’s Employment or within three years following Optionee’s termination of
Employment, the Committee may, but is not obligated to, cause all or any portion
of the Option granted under this Award Agreement to be forfeited.

(b) Repayment of Spread on Exercised Option. If a Forfeiture Event occurs during
the Optionee’s Employment or within three years following Optionee’s termination
of Employment, the Committee may, but is not obligated to, require the Optionee
to pay to the Corporation an amount in cash up to (but not in excess of) the
difference between the Grant Price and market price of the Option on the date of
exercise with respect to any shares for which the Option has been exercised (the
“Forfeited Spread Amount”). Any Forfeited Spread Amount shall be paid by the
Participant within sixty (60) days of receipt from the Corporation of written
notice requiring payment of such Forfeited Spread Amount.

(c) Application of Forfeiture Provisions. This Paragraph 5 shall apply
notwithstanding any provision of this Award Agreement to the contrary and is
meant to provide the Corporation with rights in addition to any other remedy
which may exist in law or in equity. This Paragraph 5 shall not apply to the
Optionee following the effective time of a Change in Control.

6. Exercise of Option. Subject to the limitations set forth herein and in the
Plan, this Option may be exercised in whole or in part by providing notice to
the Committee or its designated representative of the number of Option Shares to
be exercised. Such notice shall be accompanied by payment of the Grant Price of
such Option Shares in cash or, at the election of the Optionee, in shares of
Common Stock or any combination thereof. For purposes of determining the amount,
if any, of the purchase price satisfied by payment in Common Stock, such Common
Stock shall be valued at its Fair Market Value on the date of exercise. Upon
receipt of the purchase price, the Corporation or its designated representative
shall issue or cause to be issued to the Optionee a number of shares of Common
Stock equal to the number of Option Shares then exercised.

7. Taxes. The Corporation or its designated representative shall have the right
to withhold applicable taxes from the shares of Common Stock otherwise payable
to the Optionee upon exercise of the Option or from compensation otherwise
payable to the Optionee at the time of exercise pursuant to Section 13 of the
Plan.

8. Shareholder Rights. The Optionee shall have no rights of a shareholder with
respect to the Option Shares unless and until such time as the Option has been
exercised and shares of Common Stock have been issued to the Optionee in
conjunction with the exercise of the Option.

9. Nonassignability. During the Optionee’s lifetime, the Option may be exercised
only by the Optionee or by the Optionee’s guardian or legal representative. Upon
the Optionee’s death, the Option shall be transferred to the Optionee’s estate.
Otherwise, the Optionee may not sell, transfer, assign, pledge or otherwise
encumber any portion of the Option, and any attempt to sell, transfer, assign,
pledge, or encumber any portion of the Option shall have no effect.

 

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10. No Employment Guaranteed. Nothing in this Award Agreement shall give the
Optionee any rights to (or impose any obligations for) continued Employment by
the Corporation or any Affiliate thereof or successor thereto, nor shall it give
such entities any rights (or impose any obligations) with respect to continued
performance of duties by the Optionee.

11. Modification of Agreement. Any modification of this Award Agreement shall be
binding only if evidenced in writing and signed by an authorized representative
of the Corporation, provided that no modification may, without the consent of
the Optionee, adversely affect the rights of the Optionee hereunder.

12. Definitions. For purposes of this Award Agreement:

“Cause” means termination from Employment by the Corporation or its Subsidiaries
due to unacceptable performance, gross misconduct, gross negligence, material
dishonesty, material acts detrimental or destructive to the Corporation or its
Subsidiaries, employees or property, or any material violation of the policies
of the Corporation or its Subsidiaries.

“Change in Control,” unless otherwise defined by the Committee, means a change
in control of a nature that would be required to be reported in response to
Item 6(e) of Schedule 14A of Regulation 14A promulgated under the Securities
Exchange Act of 1934, as amended, whether or not the Corporation is then subject
to such reporting requirement; provided, that, without limitation, such a change
in control shall be deemed to have occurred if:

(i) any person (as defined in Sections 13(d) and 14(d) of the Exchange Act) (a
“Person”) is or becomes the “beneficial owner” (as defined in Rule 13d-3 under
the Exchange Act), directly or indirectly, of securities of the Corporation (not
including in the amount of the securities beneficially owned by such person any
such securities acquired directly from the Corporation or its affiliates)
representing twenty percent (20%) or more of the combined voting power of the
Corporation’s then outstanding voting securities; provided, however, that for
purposes of this Plan the term “Person” shall not include (A) the Corporation or
any of its subsidiaries, (B) a trustee or other fiduciary holding securities
under an employee benefit plan of the Corporation or any of its subsidiaries,
(C) an underwriter temporarily holding securities pursuant to an offering of
such securities, or (D) a corporation owned, directly or indirectly, by the
stockholders of the Corporation in substantially the same proportions as their
ownership of stock of the Corporation; and provided, further, however, that for
purposes of this paragraph (i), there shall be excluded any Person who becomes
such a beneficial owner in connection with an Excluded Transaction (as defined
in paragraph (iii) below);

(ii) the following individuals cease for any reason to constitute a majority of
the number of Directors then serving: individuals who, on the date hereof,
constitute the Board and any new Director (other than a Director whose initial
assumption of office is in connection with an actual or threatened election
contest including but not limited to a consent solicitation, relating to the
election of Directors of the Corporation) whose appointment or election by the
Board or nomination for election by the Corporation’s stockholders was approved
or recommended by a vote of at least two-thirds (2/3) of the directors then
still in office who either were Directors on the date hereof or whose
appointment, election or nomination for election was previously so approved; or

 

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(iii) there is consummated a merger or consolidation of the Corporation or any
direct or indirect subsidiary thereof with any other corporation, other than a
merger or consolidation (an “Excluded Transaction”) which would result in the
holders of the voting securities of the Corporation outstanding immediately
prior thereto continuing to represent (either by remaining outstanding or by
being converted into voting securities of the surviving corporation or any
parent thereof) at least 50% of the combined voting power of the voting
securities of the entity surviving the merger or consolidation (or the parent of
such surviving entity) immediately after such merger or consolidation, or the
stockholders of the Corporation approve a plan of complete liquidation of the
Corporation, or there is consummated the sale or other disposition of all or
substantially all of the Corporation’s assets.

Notwithstanding any other provision to the contrary, in no event shall the
transfer of ownership interests in the Corporation in and of itself constitute a
Change in Control under this Award Agreement.

“Change in Control Agreement” means any plan, program, agreement, or arrangement
under which the Corporation or a Subsidiary agrees to provide benefits to the
Optionee in the event he or she is terminated following a Change in Control, as
applicable to the Optionee at the relevant time.

“Employment” means employment with the Corporation or any of its Affiliates. For
purposes of this Option, Employment shall also include any period of time during
which the Optionee is on Disability status.

“Forfeiture Event” means the occurrence of at least one of the following (a) the
Corporation is required, pursuant to a determination made by the Securities and
Exchange Commission or by the Audit Committee of the Board, to prepare a
material accounting restatement due to the noncompliance of the Corporation with
any financial reporting requirement under applicable securities laws as a result
of misconduct, and the Committee determines that (1) the Optionee knowingly
engaged in the misconduct, (2) the Optionee was grossly negligent with respect
to such misconduct or (3) the Optionee knowingly or grossly negligently failed
to prevent the misconduct or (b) the Committee concludes that the Optionee
engaged in fraud, embezzlement or other similar misconduct materially
detrimental to the Corporation.

“Option Period” means the period commencing upon the Optionee’s receipt of this
Award Agreement and ending on the date on which the Option expires pursuant to
Paragraph 3(a).

 

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“Option Shares” means the shares of Common Stock covered by this Option.

“Retirement” means (i) for an Employee participating in the Retirement Plans,
termination on or after the time at which the Employee is eligible for
retirement under the Retirement Plans, or (ii) for an Employee not participating
in the Retirement Plans, (a) for an Employee with ten or more years of
Employment, termination on or after the Employee’s 50th birthday or
(b) termination on or after the Employee’s 65th birthday .

“Retirement Plans” means the Retirement Plan of Marathon Oil Company, the
Marathon Petroleum Company LLC Retirement Plan, or a successor plan to either of
such plans, as applicable.

 

Marathon Oil Corporation

By

 

LOGO [g137551g24g46.jpg]

Authorized Officer

 

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