1. 1 Phillips Chemical Company and Chevron Chemical Company Joint Venture Transaction Summary

2. 2 Joint Venture of Phillips & Chevron Chemicals  Joint Venture to consist of: –Chevron and Phillips chemicals segments –Excludes Chevron Oronite Division  Joint ownership: 50/50  Investment grade credit rating  $1.6 billion initial debt; each receives $800 MM at closing  Regulatory review required  Target closing: mid-year 2000  $6.1 billion in assets  6,000 employees  Headquartered in Houston  Limited Liability Company  Accounting and Tax –Equity accounting by each party –Flow-through taxation  JV to be Self-Managed and Governed by a JV Board –50/50 Board representation Transaction Summary Joint Venture Overview

3. 3 Strategic Rationale  Creates world-class chemical business with strong, compatible partners  Excellent business fit along product and technology lines  Improves earnings and ROCE for Phillips and Chevron through lower operating and capital costs  Positions JV company for profitable growth

4. 4 Joint Venture Structure and Management Management Board of Directors Equal Members CEO (P) SVP (C) CFO SVP (P) Plan & Str Trans SVP (P) Olefins/ Polyolefins SVP (C) Aromatics SVP (C) Styrenics/ Specialty Phillips Joint Venture (LLC) $800MM 50/50$800MM Structure Chevron PhillipsChevron

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