hxn2007q2confcallfinal

Second Quarter 2007 Earnings Conference Call

August 14, 2007

2

Certain information in this presentation may be considered forward-looking information within the meaning of the Private Securities Litigation Reform Act of 1995. This information is based on the Company's current expectations and actual results could vary materially depending on risks and uncertainties that may affect the Company's operations, markets, services, prices and other factors as discussed in filings with the Securities and Exchange Commission. These risks and uncertainties include, but are not limited to, industry and economic conditions, competitive, legal, governmental and technological factors. There is no assurance that the Company's expectations will be realized. The Company assumes no obligation to update any forward-looking information contained in this presentation should circumstances change, except as otherwise required by securities and other applicable laws.

This presentation contains non-GAAP financial measu res. A reconciliation to the nearest U.S. GAAP financial measures is included at the end of the presentation.

Forward-Looking Statements

Overview of Second Quarter Results

Craig O. MorrisonChairman, President & Chief Executive Officer

4

Second Quarter 2007 Highlights

Hexion delivered strong results in Q207� Revenues increased 10% over prior year, which offset the impact of a 14% increase in

Hexion’s raw material index on a year-over-year basis� Segment EBITDA (1) reached $154 million, a 15% increase, compared to $134 million posted in

prior year quarter

Hexion’s global market and product diversification continues to offset the downturn in North American housing and automotive markets

Pricing actions, flattening raw materials, synergies and productivity initiatives continue to be reflected in an improving bottom line when compared to the prior year period

Synergies are on track to achieve the targeted $175 million

Hexion continues to focus on expanding its international footprint � Announced acquisition of the resins and formaldehyde business of Arkema GmbH � Formation of a joint venture with OAO Shchekinoazot

2007 LTM results delivered a pro forma adjusted EBITDA of $695 million

Hexion entered into a definitive merger agreement with Huntsman Corporation on July 12, 2007� Transaction remains subject to regulatory review, approval by Huntsman’s shareholders and other

customary closing conditions

Hexion Continues to Execute its Strategic and Operational Plan(1) Segment EBITDA and Adjusted EBITDA are non-GAAP financial measures. The closest GAAP financial measure is Net Income (Loss). A table that reconciles these two measures is at the end of this

presentation. Management believes that Adjusted EBITDA is meaningful to investors because maintaining a minimum ratio of Adjusted EBITDA to Fixed Charges is a covenant that is contained in Hexion’s loan agreements. Last Twelve Month (LTM) Adjusted EBITDA includes $80 million of in-process Hexion synergies and $33 million of acquisition adjustments.

5

Diversified Portfolio and Increasing International Presence Drive Quarterly Results

nm(75)(4)Net loss

134

59

$ 1,326

2006

↑↑↑↑ 51%89Operating Income

↑↑↑↑ 15%

↑↑↑↑ 10%

∆∆∆∆

154

$ 1,464

2007

Segment EBITDA (1)

Revenue

($ in millions)

Hexion Results Quarter Ended June 30

(1) Segment EBITDA excludes in-process synergies and the pro forma effect of acquisitions.

6

First Half ’07 Results Compare Favorably to Prior Y ear

nm(40)—Net income (loss)

266

170

$ 2,560

2006

↑↑↑↑ 14%193Operating Income

↑↑↑↑ 22%

↑↑↑↑ 13%

∆∆∆∆

324

$ 2,903

2007

Segment EBITDA (1)

Revenue

($ in millions)

Hexion Results Six Months Ended June 30

(1) Segment EBITDA excludes in-process synergies and the pro forma effect of acquisitions.

7

Strong Revenue Growth Continued in Second Quarter and First Half 2007

12%

9%

13%

5%

Net Sales

Performance Products

Coatings& Inks

Forest & Formaldehyde

Products

Epoxy & Phenolic

Resins

14%

9%

12%

17%

2Q ’07 vs. 2Q ‘06 1H ‘07 vs. 1H ‘06

AcrossAcross--thethe--Board Segment Revenue GrowthBoard Segment Revenue Growth

8

13%

27%

9%

21%16%

22%

13%

Overall Growth in Segment EBITDA During Second Quarter and First Half 2007

Segment EBITDA

(4)%

FFP

C & I

PP

EPRD

2Q ’07 vs. 2Q ‘06 1H ‘07 vs. 1H ‘06

Improving Segment EBITDA Margins in Q207 and 1H07Improving Segment EBITDA Margins in Q207 and 1H07

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On Track to Achieve $175 Million in Synergies

Sourcing M anufacturing SG&A

$155

$20

As of FY05

$105

$70

As ofFY06

As ofQ207

$80Unrealized Synergies

$95Achieved Synergies

Achieved($ millions)

$70

Hexion Continues to Achieve Targeted Synergies

Summary:

� Achieved $14 million in targeted synergies in Q2 ‘07

� Anticipate achieving $125 million in synergies by year-end 2007

� Synergy achievement remains an ongoing focus of senior management team

FY ’06A FY ’07Est.

$125

SourcingManufacturingSG&A

Targeted Synergy Focus Areas

$75 mm

$67 mm

$33 mm

($ in millions)

Financial Review

William CarterExecutive Vice President & Chief Financial Officer

11

Epoxy and Phenolic Resins Segment Highlights

$69

$542

2006

↑↑↑↑ 22%$84 Segment EBITDA

↑↑↑↑ 13%

∆∆∆∆

$612

2007

Revenue

($ in millions)

Quarter Ended June 30

Q2 ‘07 Sales Comparison YOY

13%--5%13%(5)%

TotalAcquisitions/Divestitures

CurrencyTranslation

Price/MixVolume

EPRD results driven by robust epoxy demandin higher margin product lines

Overall segment volumes impacted by planned turnarounds and VersaticAcids and Derivatives force majeure

Product mix helped improve segment margins despite volatility in phenol

EBITDA margin improvement of 100 basis points driven by synergies and productivity initiatives

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Formaldehyde and Forest Product Resins Segment Highlights

$38

$370

2006

↑↑↑↑ 16%$44 Segment EBITDA

↑↑↑↑ 12%

∆∆∆∆

$415

2007

Revenue

($ in millions)

Segment results supported by our contractual ability to pass through higher phenol, methanol and urea costs

Sluggish N. American market conditions and planned turnarounds at major formaldehyde customersnegatively impacted volumes

Strong international demand for resins and overall cost control initiatives contributed to an improved bottom line

Net impact of acquisitions and divestitures contributed $4 million in increased Segment EBITDA in Q207 compared to Q206



12%9%3%8%(8)%


CurrencyTranslation

Price/MixVolume

13

Coatings and Inks Segment Highlights

$25

$326

2006

↓↓↓↓ (4)% $24 Segment EBITDA

↑↑↑↑ 5%

∆∆∆∆

$341

2007

Revenue

($ in millions)

N. American housing market adversely impacting Coating volumes

Additional progress in site rationalization efforts in Q207 with closure of coatings site in Clayton U.K. announced in July



5%9%4%2%(10)%


CurrencyTranslation

Price/MixVolume

14

Performance Products Segment Highlights

$ 15

$ 88

2006

↑↑↑↑ 13%$ 17 Segment EBITDA

↑↑↑↑ 9%

∆∆∆∆

$ 96

2007

Revenue

($ in millions)

Oilfield products continued to benefit from strong volumes and product mix

Volume improvement from N. American gas drilling activities and a new Canadian facility brought online in 2006

Decreased foundry volumes and EBITDA reflect slower N. American auto demand



9%--1%7%1


CurrencyTranslation

Price/MixVolume

15

Balance Sheet Update

Hexion generated $50 million in cash from operations during second quarter 2007 before one-time items

Net debt outstanding at Q207 decreased $29 million as of June 30, 2007

Positive movements in working capital in second quarter 2007

In June 2007, Hexion amended and restated its senior secured credit facility to fund incremental term loans in the amount of $200 million and replenish the amount of incremental borrowings available under its debt agreements to $300 million

�Reduced the interest rates applicable to the borrowings of term loans by 0.25%

Maintaining capital expenditure target of $120 million in 2007

Net debt as of Q207 Totals $3.4 Billion

Transaction Update & Second Quarter 2007 Summary

Craig O. Morrison

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Hexion & Huntsman: Creating a Global Leader

EMEA

37%

North

America

43%

RoW

20%

2006 Revenues = $14.0 billion

Revenue by Region

• Strong global positions with significant scale and market leadership • Expanded portfolio of leading products and technolo gies• Hexion has fully committed financing in place to co mplete the transaction

(1) Reflects Huntsman 2006 PF Revenue of $8.8 billion as presented in February 2007 Analyst Day presentation. Huntsman revenue pro forma for Textile Effects acquisition, butadiene/MTBE, U.S. and European Base Chemicals and Polymers divestitures. Hexion revenue reflects 2006 reported sales of $5.2 billion. While Hexion and Huntsman each have divisions referred to as “Performance Products,” both the products and end-markets served in these segments are different and unique from each other.

Epoxy &

Phenolic Resins

15%

Form. & Forest

Products

10%

Coatings & Inks

9%

Hexion Perf.

Products

3%

Pigments

8%

Huntsman

Perf. Produts

14% Materials &

Effects

16%

Polyurethanes

25%

Combined Company Revenues by Reportable Segments (1)

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Summary: Hexion Second Quarter 2007 Results

Hexion’s global market and product diversification drove strong quarterly revenue and Segment EBITDA performance compared to the prior year period

Continued focus on pricing actions to offset ongoing raw material volatility

Actions for $175 million synergy program continue on track

Arkema acquisition and OAO Shchekinoazot further expands Hexion’s international footprint

Hexion’s results delivered a LTM pro forma adjusted EBITDA of $695 million

The announced merger with Huntsman, subject to regulatory review, approval by Huntsman’s shareholders and other customary closing conditions, will create one of the world’s largest chemical companies

Hexion Continues to Execute its Strategic and Operational Plan

Appendices

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Reconciliation of Non-GAAP Financial Measures

(51)--(51)--Loss on extinguishment of debt

(2)(10)(1)(4)Business realignments

--

4

--

(40) --(75) (4) Net income (loss)

(78)(96)(41)(49)Depreciation and amortization

(30)(33)(11)(12)Income tax benefit (expense)

(110)(153)(56)(77)Interest expense, net

(37) (42)(50) (20)Total adjustments

20 (6)(13) 1Total unusual items

(4)--(2)1Other

(13)--(13)--Discontinued operations

(2)--(1)Purchase accounting effects/inventory step-up

41 44 Gain on sale of business

Unusual items:

(13)(15)(6)(10)Non-cash charges

(23)(20)(13)(11)Integration costs

(21)(1)(18)Transaction costs

Items not included in Segment EBITDA

Reconciliation:266 324 134 154 Total

(24)(27)(13)(15)Corporate and Other

3135 15 17 Performance Products

45 49 25 24 Coatings and Inks

72 87 38 44 Formaldehyde and Forest Product Resins

142 180 69 84 Epoxy and Phenolic Resins

Segment EBITDA:2006200720062007

Six months ended June 30Three months ended June 30($ millions)

21

Reconciliation of Net Loss to Adj. EBIT DA

Net loss (69)

Income taxes 17

Interest expense, net 285

Loss from extinguishment of debt 70

Depreciation and amortization expense 189

EBITDA 492

Adjustments to EBIT DA

Acquisitions EBITDA (1) 33

Transaction costs (2) 0

Integration costs (3) 54

Non-cash charges (4) 24

Unusual items:

Gain on divestiture of business (2)

Purchase accounting effects/inventory step-up 1

Discontinued operations 1

Business realignments 6

Other (5) 6

Total unusual items 12

In process Synergies (6) 80

Adjusted EBITDA (7) 695

Fixed Charges (8) 303

Ratio of Adj. EBITDA to Fixed Charges 2.29

$

Fixed Charge Covenant Calculations

June 30, 2007LTM Period

$

22

Fixed Charge Covenant Calculations cont.

Footnotes

1) Represents the incremental EBITDA impact for the Orica Acquisition, and the announced, but not completed Arkema acquisition, as if they had taken place at the beginning of the period.

2) Represents the write-off of deferred accounting, legal and printing costs associated with the Company’s proposed IPO, as well as costs associated with terminated acquisition activities.

3) Represents redundancy and plant rationalization costs, and incremental administrative costs from integration programs. Also includes costs related to implement a single, company-wide management information and accounting system.

4) Includes non-cash charges for impairments of fixed assets, stock based compensation, and unrealized foreign exchange and derivative losses.

5) Includes the impact of the announced divestiture of the European solvent coating resins business, one-time benefit plan costs and management fees.

6) Represents estimated net unrealized synergy savings from the Hexion Formation.

7) The Company is required to have an Adjusted EBITDA to Fixed Charges ratio of greater than 2.0 to 1.0 to incur additional indebtedness under its indenture for the Second Priority Senior Secured Notes. As of June 30, 2007, the Company was able to satisfy this covenant and incur additional indebtedness under its indentures.

8) LTM Period fixed charges reflect pro forma interest expense as if the Orica acquisition, the announced, but not completed, Arkemaacquisition, and the amendment of our senior secured credit facilities, which occurred on February 1, 2007, had taken place at the beginning of the period.

23

Debt at June 30, 2007

6256259.75% Second-priority senior secured notes due 2014

200200Floating rate second-priority senior secured notes due 2014

3,609

112

11

34

78

247

115

2,187

0

6/30/2007

3,392Total debt

64Other

11Capital Leases

34Industrial Revenue Bonds due 2009

Other Borrowings:

78Sinking fund debentures: 8.375% due 2016

2477.875% debentures 2023

1159.2% debentures due 2021

Debentures:

1,995Floating rate term loans due 2013

Credit Agreements:

Senior Secured Notes:

23Revolving Credit Facilities

12/31/2006

($ in millions)

$ $

$ $

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