Q4 and FY 2007 Earnings Conference Call Summary

Fourth Quarter and Fiscal Year 2007
Earnings Conference Call
March 11, 2008

Forward-Looking Statements

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 measures. A reconciliation to the nearest
U.S. GAAP financial measures is included at the end of the presentation.

2

Overview of Fourth Quarter and
Fiscal Year 2007 Results
Craig O. Morrison
Chairman, President & Chief Executive Officer

Summary Performance
Hexion Specialty Chemicals Fourth Quarter 2007 highlights:
Revenues increased 13% over prior year
Operating income of $21 million compared to $59 million. Q407 operating income
negatively impacted by $40 million of asset impairments, manufacturing interruptions and planned
turnarounds
A 30% increase in our raw material index created a negative $16 million lead/lag impact on EBITDA
Hexion posted Segment EBITDA (1) of $125 million, a 2% increase over prior year

Hexion Specialty Chemicals Fiscal Year 2007 highlights:
Revenues reached $5.8 billion, a 12% increase over prior year
Operating income increased to $302 million, a 22% increase over prior year results when
excluding gains from the sale of businesses
Segment EBITDA (1) of $611 million, a 17% increase over prior year
Year-end 2007 pro forma adjusted EBITDA of $707 million (1)

Hexion remains on track to achieve $175 million in targeted synergies

Arkema GmbH transaction closed in Nov. 2007, an Eastern German forest products business

Ongoing progress with the regulatory review process for Hexion’s pending merger with Huntsman
Corporation (2)
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 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 December 31, 2007, the Company was able to satisfy this covenant and incur additional indebtedness under its indentures. Year-ended December 31, 2007 Adjusted EBITDA includes $55 million of in-process Hexion
synergies and $38 million of acquisition adjustments.
(2) Transaction remains subject to various conditions, including expiration or termination of applicable waiting periods under the Hart-Scott-Rodino Act, review by foreign jurisdictions and other customary closing conditions.
4

Summary Financial Performance

Quarter Ended December 31 Year Ended

∆ ∆
($ in millions) 2007 2006 2007 2006

↑ 13% ↑ 12%
Revenue $ 1,480 $ 1,309 $ 5,810 $ 5,205
Q407 operating FY06 operating
income included income
Operating $40 million of
↓ 64%
increased 22%
↑ 6%
21 59 302 286
asset impairments,
excluding gain
Income planned on the sale of
turnarounds & assets
manufacturing
interruptions
Net loss (63) (55) nm (65) (109) nm

Segment
↑ 2% ↑ 17%
125 123 611 524
EBITDA (1)

Hexion Posted Strong Year-over-Year Revenue and Segment EBITDA Gains
(1) Segment EBITDA excludes in-process synergies and the pro forma effect of acquisitions.

5

Fourth Quarter 2007 Results Impacted by
Raw Material Headwinds
Negative lead/lag impact of $16 million in Q407
Hexion Composite Raw Material Index at December 2007 increased 30% compared
to Q307
Ongoing focus on pricing actions to compensate for the rapid rise in raw materials
Current prices remain volatile; closely monitoring market conditions for 2008

Hexion Composite Raw Material Index
1.6

1.5
1.4

1.3
1.2

1.1

1.0

Q1 Q2 Q3 Q4 Q1 Q2 Q3 Q4
2006 2007
Source: CMAI data.

Key Raw Materials at or near Historical Highs as of Year-end 2007
6

Strong Revenue Growth in
Fourth Quarter & Fiscal Year 2007
Net Sales
Q407 vs. Q406 FY07 vs. FY06

Epoxy &
Phenolic
14% 13%
Resins

Forest &
25% 15%
Formaldehyde
Products

Coatings
(3%) 6%
& Inks

Performance
15% 9%
Products

Broad Product Portfolio Supports Ongoing Revenue Growth;
58% of Hexion’s Total Sales were from International Markets in FY07

7

Fourth Quarter and Fiscal Year 2007 EBITDA

Segment EBITDA
Q407 vs. Q406 FY07 vs. FY06

Epoxy &
(6%)
Phenolic 24%
Resins

Forest &
(9%) 6%
Formaldehyde
Products

Coatings 55% 6%
& Inks

Performance
26%
43%
Products

Diversified Portfolio is Key to 2007 Performance
8

Hexion Remains on Pace to Achieve
$175 Million in Synergies
Achieved
Summary
($ millions)
$120
Achieved $15 million in targeted synergies in
Q407
All Phase II actions expected to be taken in
$70
2008
Synergies continue to contribute toward
Hexion’s improvement in gross and operating
margins in FY07 compared to FY06
SG&A as a percentage of sales improved to
7.1% in FY07 vs. 7.4% in FY06

FY07
FY06
Targeted Synergy Focus Areas
Sourcing Manufacturing SG&A

SG&A

$37 mm
Sourcing
As of As of As of $72 mm
FY05 FY06 FY07
($ in millions)

Achieved Synergies $20 $70 $120
$66 mm
Unrealized Synergies $155 $105 $55

Manufacturing
9

Site Actions Designed to Strategically
Optimize Manufacturing Footprint

Site actions related to Hexion’s synergy
programs include:

Hernani, Spain (Phenolic Resins)
Santo Varao, Portugal (Inks)
(1)
Pleasant Prairie, Wisconsin (Inks)
(1)
Lynwood, California (Coatings)
Clayton, U.K. (Coatings)
Hamburg, Germany (Coatings)
Molndal, Sweden (Coatings)
LaVal, Quebec (Forest Products)
Virginia, Minnesota (Forest Products)
Vancouver, British Columbia (Forest Products)
High Point, North Carolina (Forest Products)

Productivity and Synergy Programs Continue
(1) Sites operational; actions included stopping production of heatset ink vehicles at Pleasant Prairie location and solvent-based coatings at our Lynwood California facility.
10

Financial Review
William Carter
Executive Vice President & Chief Financial Officer

Epoxy and Phenolic Resins
Fourth Quarter 2007 Segment Highlights

Quarter Ended December 31

∆
2007 2006
($ in millions)
Ongoing revenue growth enhanced
by pricing and favorable product
↑ 14%
Revenue $616 $539 mix.

Segment Q407 planned turnarounds and
↓ (6)%
$62 $66
EBITDA manufacturing outages negatively
impacted Segment EBITDA

Q407 Sales Comparison YOY

Currency Acquisitions /
Volume Price/Mix Translation Divestitures Total
-- 7% 7% -- 14%

12

Epoxy and Phenolic Resins
Fiscal Year 2007 Segment Highlights

Year Ended December 31

∆
2007 2006
($ in millions)
Strong revenue growth reflects
pricing initiatives and favorable
↑ 13%
Revenue $2,424 $2,152 product mix

Ongoing EBITDA improvement
Segment
↑ 24%
$337 $271 despite inflationary raw material
EBITDA
environment

Segment EBITDA growth
supported by positive demand
from wind energy, aerospace and
international construction
FY07 Sales Comparison YOY

Currency Acquisitions/
(3)% 10% 6% -- 13%

13

Formaldehyde and Forest Products Resins


∆
2007 2006
($ in millions)
Revenue growth reflects strong
pass-through capabilities as well as
↑ 25%
Revenue $448 $357 broad-based international growth

Methanol spiked dramatically in
Segment
↓ (9)%
$39 $43 Q407:
EBITDA
Sept. ’07: $0.95/gal.
Dec. ’07: $2.62/gal

North American downturn partially
offset by favorable international
growth
(3)% 6% 6% 16% 25%

14

Formaldehyde and Forest Products Resins


∆
2007 2006
($ in millions)
Strong international demand
drove year-over-year gains in
↑ 15%
Revenue $1,663 $1,440 revenue and Segment EBITDA

Contractual pass-through
Segment
↑ 6%
$165 $156 capabilities offset rapid rise in
EBITDA
raw materials in FY07


(7)% 9% 3% 10% 15%

15

Coatings and Inks


∆
2007 2006
($ in millions)
Ongoing North American housing
pressures continued to negatively
↓ (3)%
Revenue $316 $326 impact coatings demand

Segment Focused cost control programs,
↑ 55%
$17 $11 coupled with site rationalizations
EBITDA
significantly improved cost structure


Currency
(12)% 5% 7% (3)% (3)%

16

Coatings and Inks


∆
2007 2006
($ in millions)
Ongoing pricing actions helped
offset North American housing
↑ 6%
Revenue $1,330 $1,254 decline

Segment Site rationalizations will continue
↑ 6%
$86 $81
EBITDA to optimize cost structure


(9)% 4% 5% 6% 6%

17

Performance Products


∆
2007 2006
($ in millions)
Strong regional demand for Oilfield
products continued in the U.S. and
↑ 15%
Revenue $ 100 $ 87 Mexico in Q407

New oilfield technology products
Segment
↑ 43%
$ 20 $ 14 have dramatically impacted revenue
EBITDA
and EBITDA results: Proptrac™,
XRT Ceramax™ and Prime Plus™


3% 11% 1% -- 15%

18

Performance Products


∆
2007 2006
($ in millions)
Oilfield and Asia Pacific growth
contributed to strong year-over-
↑
Revenue $ 393 $ 359 9% year revenue and Segment
EBITDA gains
Segment
↑ 26%
$ 77 $ 61
EBITDA


-- 8% 1% -- 9%

19

Balance Sheet Update

Hexion generated $174 million in cash from operations in 2007

In FY07, Hexion funded $130 million for the acquisitions of Orica and
Arkema GmbH

2007 capital expenditures totaled $123 million

Strong liquidity position: cash plus borrowing availability of $485
million at December 31, 2007

Ongoing focus on working capital improvements in 2008 and
maintaining a disciplined approach to capital spending

20

Summary:
Hexion Fourth Quarter and Fiscal Year 2007 Results

Hexion delivered strong financial results in FY07 with a 12% increase in
revenues and a 17% increase in Segment EBITDA

The company remains on track to achieve $175 million in targeted
synergies

Recently announced site closings will continue to improve overall cost
structure

December 31, 2007 pro forma adjusted EBITDA of $707 million

On March 5, 2008, Hexion announced post-merger senior leaders for the
company, contingent on the close of the acquisition of Huntsman (1)

Hexion Continues to Execute its Strategic and Operational Plan
(1) Transaction remains subject to various conditions, including expiration or termination of applicable waiting periods under the Hart-Scott-Rodino Act, review by foreign jurisdictions and
other customary closing conditions.

22

Reconciliation of Non-GAAP Financial Measures
($ millions) Fiscal Year ended Dec. 31
Three months ended Dec. 31,
2006 2006
2007 2007
Segment EBITDA:
Epoxy and Phenolic Resins 62 66 337 271
Formaldehyde and Forest Product Resins 39 43 165 156
Coatings and Inks 17 11 86 81
Performance Products 20 14 77 61
Corporate and Other (13) (11) (54) (45)
Total 125 123 611 524
Reconciliation:
Items not included in Segment EBITDA
(1)
Transaction costs -- 1 (20)
Integration costs (10) (12) (38) (57)
Non-cash charges (37) (9) (54) (22)
Unusual items:
8
Gain on sale of business -- (1) 39
(1)
Purchase accounting effects/inventory step-up (1) -- (3)
-- (14)
Discontinued operations -- --
Business realignments (5) 6 (21) 2
Other (8) (2) (17) (10)
Total unusual items (14) 3 (31) 14
Total adjustments (61) (17) (124) (85)
Interest expense, net (73) (71) (310) (242)
Loss on extinguishment of debt -- (69) -- (121)
Income tax benefit (expense) (1) 27 (44) (14)
Depreciation and amortization (53) (48) (198) (171)
Net income (loss) (63) (55) (65) (109)
24

Fixed Charge Covenant Calculations

Year Ended
Dec. 31, 2007
Reconciliation of Net Loss to Adj. EBIT DA
Net loss (65)
$
Income taxes 44
Interest expense, net 310
Depreciation and amortization expense 198
EBITDA 487
Adjustments to EBIT DA
Acquisitions EBITDA (1) 38
Transaction costs 1
Integration costs (2) 38
Non-cash charges (3) 54
Unusual items:
Gain on divestiture of business (8)
Purchase accounting/inventory step-up 1
Business realignments 21
(4)

Other (5) 20
Total unusual items 34

In process Synergies 55
(6)

Adjusted EBITDA 707
$
(7)

Fixed Charges (8) 274
Ratio of Adj. EBITDA to Fixed Charges 2.58

25

Fixed Charge Covenant Calculations cont.

Footnotes

1) Represents the incremental EBITDA impact for the Orica Acquisition and the Arkema acquisition as if they had taken place at the
beginning of the period. Also includes the impact of in-process synergies related to the Coatings and Inks acquisitions.

2) Represents redundancy and incremental administrative costs from integration programs. Also includes costs related to implementation
of a single, company-wide management information and accounting system.

3) Includes non-cash charges for fixed asset impairments, stock based compensation, and unrealized foreign exchange and derivative
activity.

4) Represents plant rationalization, headcount reduction and other costs associated with business realignments.

5) Includes the impact of the announced divestiture of the European solvent coating resins business as if it had taken place at the
beginning of the period, management fees, costs to settle a lawsuit, realized foreign currency activity, and costs for unplanned plant
outages.

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

7) The charges reflect pro forma interest expense at March 3, 2008 as if the Orica A&R acquisition, the Arkema acquisition, and the
amendment of our senior secured credit facilities had taken place at the beginning of the period.

8) Company is required to maintain 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 December 31, 2007, the Company was able to satisfy this
covenant and incur additional indebtedness under this indenture.

26

Debt at December 31, 2007

($ in millions)
12/31/2007 12/31/2006
Senior Secured Credit Facilities:
Floating rate term loans due 2013 2,282 1,995
$
$

Revolving credit facilities due 2011 -- 23

Senior Secured Notes:

9.75% Second-priority senior secured notes due 2014 625 625

Floating rate second-priority senior secured notes due 2014 200 200

Debentures:

9.2% debentures due 2021 115 115

7.875% debentures 2023 247 247

Sinking fund debentures: 8.375% due 2016 78 78

Other Borrowings:

Australian Multi-Currency Term/Working Capital Facility due 2012 69 --

Industrial Revenue Bonds due 2009 34 34

Capital Leases 12 11

Other 58 64

Total debt 3,720 3,392
$
$

27

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Q4 and FY 2007 Earnings Conference Call Summary

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