HOUSTON – In the deepwater Gulf of Mexico, the Droshky development has started production for Marathon Oil Corp. (NYSE: MRO) . Production, which is expected to reach 50,000 net barrels of oil equivalent per day at its peak (45,000 b/d of liquid hydrocarbons and 30 million cubic feet per day of natural gas), has started on time and–with final a development cost of less than $900 million–under its projected $1.3 billion budget.

Marathon owns 100% working interest in the development, which is located in roughly 3,000 feet of water in Green Canyon Block 244, about 160 miles southwest of New Orleans. The project consists of four development wells tied back to the third-party Bullwinkle platform with dual, 18-mile flowlines.

The initial stage of development is expected to produce 35 million of the estimated 60 million barrels of oil equivalent (boe) net resource. At year-end 2009, Droshky had booked proved reserves of approximately 26 million boe.

In morning trading after the announcement, shares of Marathon were up 13 cents to $31.84 on the New York Stock Exchange.