Marathon Oil announced the change as crude oil prices have been on the rise, surpassing the $90 a barrel mark on smaller inventory and expectations of more demand in 2011. Oil for February delivery was trading at about $91 a barrel Thursday.
"The substantial improvement in the global business and financial environments over the last two years has created the conditions under which we believe it is now appropriate to move forward with the formation of two strong independent energy companies," Marathon CEO Clarence P. Cazalot Jr. said in a statement.
Marathon Oil plans to cut its long-term debt by about $2.5 billion before the spinoff, while Marathon Petroleum will start life with a cash balance of $750 million and as much as $3 billion in debt to Marathon Oil. JP Morgan and Morgan Stanley will provide a bridge loan for Marathon Petroleum.
Marathon Oil shares rose $2.45, or 6%, to close at $42.98 on Thursday.