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On Tuesday, November 12, 2013, Institutional Investor and SumZero, the world’s largest online membership community of buy-side investment professionals, hosted an idea competition at Columbia University Business School’s Uris Hall Auditorium.

Nineteen emerging managers were selected from within the SumZero community on the basis of strong performance and high-quality peer reviews. Each manager gave a three minute pitch on their best idea to an audience of analysts and investors who rated their pitch for validity of the thesis, strength of the argument, feasibility of the trade and originality.

We invite you to view these ideas and register to download each presenter’s bio and full pitch paper. If you’re a professional investment officer or analyst, we invite you to register to vote for the winning idea.

Favorite Investment Book:Margin of Safety

Favorite Quote/Author: “Investment management is risk management. Inves-tors must take deliberate, understood risk in an effort to achieve successful long-term investment performance without exposing portfolios to excess risk.”

Most Attractive Area of the Market Right Now:Streaming Finance Companies

Least Attractive Area of the Market Right Now:Enterprise Software

Best Past Investment Made:GrizzlyRock successfully exited a long position in Liberator Medical (LBMH), recognizing a 114% gain in less than a

year. Liberator’s actualized catalyst was a clear transfor-mation from a user of cash to a producer of cash.

Worst Past Investment Made:GrizzlyRock closed a short of Green Mountain Coffee Roasters (GMCR) during Q3 2013. The GMCR short was initiated based on a maturing market, increasing com-petition, and allegations of aggressive sales tactics and accounting methods.

Personal Investing Style:Deep Value as defined by Cash Flow

Areas of Personal Expertise:GrizzlyRock invests in high yield corporate bonds and equities in developed markets with an emphasis on North America. Industry generalist.

Kyle Mowery GrizzlyRock Capital

Age: 31 Title: Managing Partner Location: Chicago

Education (Undergrad/Grad/Certifications):MBA, University of Booth School of Business; BA in Economics, UCLA

Previous Employers/Positions: BMO Capital Markets, Middle Market Leveraged Finance; THL Credit (then known as McDonnell Asset Management), High Yield Asset Management; Pacific Alter-native Asset Management Company, Fund of Hedge Funds.

Bio: Kyle Mowery, Founder and Managing Partner of GrizzlyRock Capital, holds an MBA from the University of Chicago Booth School of Business and a BA in Economics from the University of California, Los Angeles. Mr. Mowery’s back-ground includes investing in levered loans and high yield bonds at McDonnell Investment Management and underwriting syndicated credit facilities for middle market, private-equity backed companies at BMO Capital Markets. Mr. Mowery began his career at hedge fund of funds Pacific Alternative Asset Management Company (PAAMCO). In 2011, Mr. Mow-ery founded GrizzlyRock Capital to provide clients a strong risk-adjusted investment return and preservation of capital regardless of market environment. The firm utilizes a long/short approach in both corporate credit and equity securities.

Past Ideas Submitted on SumZero: Crawford A/B (share class arbitrage), Ituran location & Control, Alliant Techsystems

Firm Focus: Corporate securities markets are inefficient for a host of informational, analytical, & behavioral factors. Griz-zlyRock’s goal is to identify and capitalize upon those inefficiencies on behalf of our investors

Firm Strategy: GrizzlyRock’s primary investment edge is understanding business value and investing at a price which represents a significant margin of safety. Action is not rewarded; rather prescient investment decisions create long-term gains for investors.

AUM: Less than $50 million Fund Disclaimer: Please see section 1 of appendix.

Fund Description:GrizzlyRock Capital utilizes a long/short approach in both corporate credit and equity securities in an effort to provide cli-ents a strong risk-adjusted investment return and preservation of capital regardless of market environment. GrizzlyRock views investors as partners in the investment management process and treats them accordingly. GrizzlyRock Capital operates with a fundamental value-base style marked by rigorous valuation work on each portfolio company. Guided by each investment’s intrinsic business value, GrizzlyRock invests opportunistically in companies which are misunderstood and mispriced by the market. GrizzlyRock rigorously applies our rigorous edge in misunderstood companies in select investments. As such, the firm typically maintains roughly twenty “best idea” investment positions at one time. Many investors focus on finding the “next new thing” and being active with portfolio turnover attempting to outperform market indices.

“Decadent Vanilla”Murphy USA (NYSE:MUSA)

Legal Disclaimer

The following is a product of GrizzlyRock Capital designed for to be informational and entertaining. The herein is in no way investmentadvice. You should assume that as of the publication date of our reports and research, GrizzlyRock Capital, LLC (possibly along with orthrough our members, partners, affiliates, employees, and/or consultants) along with our clients and/or investors and/or their clients and/orinvestors has a long position in all stocks (and/or options, swaps, and other derivatives related to the stock) covered herein, and thereforestands to realize significant gains in the event that the price increases. We intend to continue transacting in the securities of issuers covered onthis site for an indefinite period after our first report, and we may be long, short, or neutral at any time hereafter regardless of our initialrecommendation.

This is not an offering or the solicitation of an offer to purchase an interest in GrizzlyRock Value Partners, LP. Any such offer or solicitationwill only be made to qualified investors by means of a confidential private placement memorandum and only in those jurisdictions wherepermitted by law. An investment in the fund is speculative and involves a high degree of risk. Opportunities for withdrawal, redemption andtransferability of interests are restricted, so investors may not have access to capital when it is needed. There is no secondary market for theinterests and none is expected to develop.

Founder & Managing PartnerGrizzlyRock Capital, LLC

[email protected](949) 874 – 3116

Kyle Mowery

Share price as of 11/7/13 Company financials as of 9/30/13

Executive Summary

Murphy USA, Inc. ("Murphy", “MUSA” or the “Company") is a leading convenience store & gasoline retailer in the US Southeast with 5% market share by volume in their geographic area. Murphy is directly intertwined with Walmart as the vast majority of Murphy gas stations are located in or around a Walmart parking lot. Similar to Walmart with respect to pricing, Murphy is a price leader compared to most gas stations and compensates by driving significantly more volume (2x to 4x) than many other stations which focus on convenience store products. In 2012, the Company derived 78.3% of revenue from fuel sales, 11.3% merchandise sales, and the remaining 10.4% are fuel excise taxes (direct pass-through to the government with no margin). A recent spin-out from exploration & production giant Murphy Oil (NYSE:MUR), Murphy USA began trading in late August 2013 and priced at 6.2x TTM EBITDA and 12.6x TTM EPS on November 7th. Currently, shares are priced below both a conservatively estimated base case DCF value of ~$66 per share (see page 10 herein) as well as estimated replacement value of $2.6 billion for tangible asset value as described on page 14 (i.e. no attributed value to the lengthy & significant Walmart relationship). The following attributes make Murphy USA an attractive long-term investment at the current price:

• Low Operating Cost Model: Murphy is a low-cost operator focused on volume versus in-store sales (divergent from peers). Murphy has the lowest cash break even cost (+6.6 cent margin per gallon of gasoline) and a smaller average store which requires less labor cost and maintenance expense.

Murphy sources low-cost fuel by (1) ownership of midstream assets such as terminals (2) shipper status on the colonial pipeline and (3) flexibility to purchase non-branded fuel from the lowest cost supplier at any time and any location.

• Solid Financial Profile: MUSA is underlevered with 1.0x Debt to LTM EBITDA at 9/30/13 and consistently generates significant EBITDA and FCF. Additionally, the Company generates solid returns on invested capital (in excess of 15% pre-tax).

Share Price (11/7/13) $42.1 Net Leverage Ratio 1.0x Fully-Diluted Shares 46.8 EV to EBITDA 6.2x Market Capitalization $1,968 Price to Earnings Ratio 12.6x + Debt $642 3 Year Average Pre Growth FCF $245 - Cash $262 FCF Yield (Pre-Growth CapEx) 12.4% Enterprise Value $2,348 Replacement Value per Share $41.0

Intrinsic Value Share Price $66.0 Stress Case Equity Value $42.0 Fully-Diluted Shares 46.8 Stress Case Return 0% Implied Market Capitalization $3,086 Base Case Equity Value $66.0 + Debt $642 Base Case Return 57% - Cash $262 Upside Case Equity Value $82.0 Intrinsic Enterprise Value $3,466 Upside Case Return 95%

Source: CapitalIQ & GrizzlyRock Capital. Please read along with the legal disclaimer on the front page.

Murphy USA Current Metrics ($MMs except per share values)

($MMs except per share values) GrizzlyRock Base Case Metrics

© GrizzlyRock Capital, LLC [email protected] (949) 874-3116 1

mailto:[email protected]

• Attractive Valuation: At the current price of ~$42 per share, MUSA trades below its conservatively estimated convenience store replacement value of $2.2 million per unit ($44 per share) and at 6.2x EBITDA

Murphy’s 6.2x EBITDA multiple is ~2x below competitors such as Susser (as shown on page 13), which equates to a base case target price of ~$60 which is nearly 50% upside from current prices.

• Growth Opportunities: The Company has significant growth opportunities, as it recently entered into an agreement with Walmart to build an additional 200 stores near/or on Walmart locations.

• Leading Market Position: Murphy maintains a ~5% market share by volume in their geographic markets. Market share helps with scale as the Company can purchase merchandise in bigger quantities versus mom and pop convenience operator (62.9% of total convenience stores per NACS) and source fuel efficiently.

• Spin-Off from Larger Parent: The spinoff of Murphy has created vast mispricing. Forced selling has created an opportunity with the business trading below its conservatively estimated replacement value.

Murphy USA is dramatically undervalued given its modest valuation, spin-off dynamics, solid market share in a fragmented market, and economic moat as a low-cost provider of commodity products. At current prices, Murphy USA offers conservative upside potential of 50%+. Catalysts to Value Realization

Catalyst Description Sell Side Coverage Initiation

• As sell-side analysts initiate coverage, the Company will be presented to a wide range of investors, specifically mid-cap focused funds.

Investor Awareness

• Murphy is a new story to the public markets and investors are becoming cognizant of the unique story & valuation of independent gas & convenience store products

(For example, Third Avenue included an expose on direct Murphy comps Susser and CST in their Q3 commentary)

Attractive Valuation

• MUSA currently trades at 7.0x LTM 2013 Owner's Earnings and 11x earnings.

• Murphy also trades below its conservatively estimated replacement value, estimated at $41 per share and below its publicly traded peers at 6.5x EBITDA (9.3x peer average as shown on page 13).

Growth Strategy Execution

• MUSA expects to grow by ~70 new locations per year (~6% per year) for the foreseeable future.

• At an average cost of $2.2 million per location, this will cost of ~$150 million will easily be finance via generated operating cash flow. If the Company needs additional funds they have ample revolver capacity.

Share Buybacks and or Dividends beginning in Fall of 2015

• Murphy trades at a vast discount to its conservatively estimated base case valuation of $66 per share. At current prices, buybacks will be accretive to intrinsic value.

• For the next two years, Murphy will not be allowed to return capital given its tax-free spinoff status. However, after the two year lock up, it is highly probable the Company will return cash to shareholders, especially given the Murphy family's preference for dividends (hold collectively over 6% of the common stock).



Company Overview

Murphy is a low-price, high-volume fuel retailer who also sells convenience merchandise through small footprint stores. The business was recently spun off from Murphy Oil and primarily generates revenues selling motor fuel products and convenience merchandise through a large chain of 1,196 (at Nov. 13th, 2013) retail stations - all of which are in close proximity to Walmart stores. Much as retailers such as Kroger, Safeway, or Costco leverage low-cost fuel to augment retail traffic, Walmart found operating their own stations to be cumbersome and struggled to maintain a low-cost sourcing model. So, Walmart partnered with Murphy to essentially create a joint venture and build out the “Walmart of Gas” at Murphy. While MUSA is a completely separate entity from Walmart, Walmart does have a say in a handful of certain products Murphy cannot sell as well as a first right of refusal on any land sales MUSA may contemplate. The Company's retail stations are located in 23 Southern and Midwestern states. 1,018 stations are branded Murphy USA and 175 are standalone Murphy Express locations and the Company is transitioning the Murphy Express locations to unified branding of Murphy USA. The Company owns roughly 90% of its real estate – this allows the company to be a low-cost provider of commodity gasoline to retail consumers (MUSA doesn’t compete with trucking fuel programs). The Company owns core midstream assets including six core product distribution terminals and key pipeline shipper status. Lastly, Murphy owns two ethanol plants which are being sold. One is under contract and is expected to be sold for ~$100 million net of tax by YE 2013 and the second could generate Murphy ~$50 million net of tax during 2014. (Ethanol distribution figures estimated by GrizzlyRock Capital) Unit Economics Table

(Amounts in $000s) 208 ft2 1,200 ft2

Initial Build-out Cost 1,850 2,100Yearly Maintenance 26 30

Fuel Gallons Sold 3,325 3,325Fuel Margin Per Gallon (cents) 12.5 12.5Gross Profit ($000s) 416 416

Merchandise Revenue 1,800 2,050Merchandise Gross Margin 14% 16%Merchandise Gross Profit 252 328

Total Gross Profit 668 744

SG&A & Corp. Overhead (Per Store) 360 370

EBITDA 308 374

Pre-Tax Earnings (EBITDA - Maint. CapEx) 282 344Pre-Tax Return on Invested Capital 15.2% 16.4%

Post Tax Earnings Per Store 175 213Post Tax Earnings Margin 9.4% 10.1%

Murphy USA Yearly Unit Economic Analysis

Source: Company filings, discussions, and GrizzlyRock Capital estimates.



Fuel Sales ($14.9 billion 2012 revenue) Note: Murphy has both a wholesale business selling to Murphy USA retail gas stations, non-Murphy branded gas stations such as Pilot & Travel Centers of America, local farm depots etc. as well as Murphy’s own extensive retail network retail locations. Citing competitive rational, the Company declines to break out its wholesale and retail business to investors. As such, this write-up will address the wholesale and retail business together. MUSA is a low-cost retailer defined by price paid by consumer. Gross fuel margins are lower than its peers; however this is offset by increased volume and lower operating expenses versus its peers. According to the NACS, Murphy operates at 56% of the average industry operating costs. Although Murphy is a low-cost provider, as shown in the above chart, the Company focuses on providing the lowest cost fuel in local geographies (store managers check local pricing 2-3x per day). On certain occasions (such as Super Bowl weekend), MUSA will occasionally raise price with other local station increasing to match in order to capture additional margin.

Murphy USA Quarterly Retail Fuel Margin

MUSA is able to source fuel at lower prices than competitors due to:

• Proprietary terminal access: 8.8% of 2012 fuel volume was sourced via proprietary terminals • Shipper status on the Colonial pipeline system • The Company is not restricted to selling branded fuel versus its competition. • 45% of 2012 fuel was contracted from outside of Murphy’s wholesale business.

Additionally, MUSA can utilize its wholesale arm to distribute fuel and capture greater margins when retail pricing is not optimal. For example, if retail pricing is generating a 1 cent profit per gallon, the Company can sometimes locate a wholesale customer (truck stops, small farms, distributors, etc.) and capture a 3 cent profit per gallon. Merchandise Sales ($14.9 billion 2012 revenue) Given their physical proximity to Walmart, Murphy pursues a strategy of offering SKUs that complement Walmart’s as opposed to directly competing on beverages etc. While primarily tobacco products (see below chart), Murphy is beginning to expand into larger convenience stores with higher margin & broader SKUs. Murphy's retail convenience stores are in two formats, a 280 ft2 kiosk (77% of locations) and a 1,200 ft2 store footprint (23% of current locations) Going forward, Murphy will be building 1,200 ft2 units given the more attractive margins & return profile. (New CEO was architect of this strategy when hired by MUSA as a consultant) Note: third quarter 2013 earnings re-emphasized the superior economics of the 1,200 ft2 stores and GrizzlyRock believes this trend will continue to generate strong returns for MUSA.



Ethanol ($644 million 2012 revenue / $84 million operating loss during FY 2012)

Note: One of the two ethanol plants is under contract and is expected to close by year end 2013. The second plant is on the block yet management is willing to be a patient seller.

Murphy operates two ethanol production facilities, located in Hankinson, North Dakota and Hereford, Texas. The Hankinson plant, which was acquired in 2009 for ~$92 million, currently is rated at 132 million gallons of ethanol per year. The Hereford plant (acquired in 2010 for ~$40 million with operations beginning in 2011) and is rated at 105 million gallons of ethanol per year. The Company sells ethanol for blending with gasoline and distilled grains. Importantly, the Company has essentially viewed these assets as non-core. Murphy is actively looking into a potential sale of the two refineries when market conditions are optimal. The ethanol assets should sell for ~$150 million net of tax, which is in line with the historical purchase price. Differentiation: Murphy differentiates itself from its competitors primarily through:

• Small format offerings leading to higher sales per ft2 (average footprint for comps is 3,000 ft2): MUSA sells roughly 9x the merchandise per years per ft2 compared to comps ($4,744 vs. $547).

• Volume focused sales model: MUSA’s monthly fuel gallons sold per store per month is 277K which is more than 2x the industry average of 124 fuel gallons per store per month. Driven by MUSA’s locations adjacent to a Walmart (including many Walmart Supercenters).

• Low operating costs: MUSA operates at 3/4th industry average cost (typically $30K per month operating cost per store compared to ~$40K for comps). Murphy achieves this by running stores with only 1 or 2 employees at any one time, using one distributor (McLane) for 80% of their non-gas SKUs, and maintaining smaller stores which require less maintenance.

• Highly scalable business model which is relatively inexpensive to build out and highly profitable.

Growth Drivers: Murphy plans to continue its long term growth strategy by:

• Building 200+ new stores in the next three years adjacent to Walmart Super Centers. Funding will be from FCF and potentially an increase in revolving credit or ethanol asset sales. GrizzlyRock expects 500+ stores openings over 5 to 7 years as Murphy continues saturating Walmart’s footprint.

• Rolling out 1,200 ft2 stores going forward which should increase both sales per store and gross profit per store due to increased volumes of high margin beverage & other non-tobacco products.

• Increased midstream participation, which lowers fuel sourcing costs for the retail business as the Company has shipper status on the Colony pipeline and currently owns seven terminals.

• Dispose of non-core ethanol facilities & the non-core Tampa terminal.

Spin Off Rationale

• Strategic management focus: Management is aligned with the results of their unit, which was previously a smaller portion of Murphy. Entrepreneurial juices should be released with the transaction.

• Pursue growth opportunities: With its own board of directors and capital structure, Murphy USA will be able to pursue a growth and capital strategy that makes sense for its own business, not Murphy Oil.

• Unlock value: Gasoline retailers / convenience store comparable firms trade at 8x to 10x EBITDA as compared to current Murphy Oil multiple of ~4x EBITDA

Real Estate

• Murphy owns 90% of its retail locations, which enables the Company to have lower cash operating costs versus its peers (elimination of rental expense).



Gross Margin Analysis

At first glance, Murphy's gross margins drastically lag those of its peers. However going past "first level thinking", Murphy's strategy is solely focused on value pricing, supported by high volumes and ultra-low operating expenses. The Company makes up the lack of margin through excess volume which translates into higher gross profit dollars and EBITDA. Moreover, Murphy's margins are in line with another high gasoline volume focused retailer, TravelCenters of America. Murphy's peers tend to focus less on fuel volumes and more on convenience store traffic, which translate into higher gross profit margins – offset by higher operating expenses. Additionally, the mix of merchandise (esp. non-tobacco SKUs) towards gasoline tends to dramatically impact MUSA’s margin profile compared to comps. Importantly, MUSA has managed to maintain steady gross margins over a volatile gasoline pricing environment, with a max drawdown of 40 bps, compared to its convenience focused peers who have had margin swings in excess of 100 bps.

Fuel gross profit margins tend to be low throughout the industry, with 50 bps margin swings a norm for operators. Although a low-cost operator, MUSA's fuel margins are generally in line with its competition, who tend to focus less on volume and more on c-store traffic. Murphy's ability to keep margins in line, while being a low-cost provider is primarily due to the Company's wholesale arm and midstream assets. MUSA focuses on (1) volume, (2) value pricing and (3) low operating expenses, which allows Murphy to better handle external gasoline pricing fluctuations. Murphy's wholesale segment offers the Company flexibility in maintaining margins. It acts as (1) a proprietary sourcing mechanism and (2) a wholesale profit division, for which the Company can utilize to gain a greater per gallon margin spread when retail pricing is unfavorable.

Merchandise margins tend to be the highest gross profit contributor for many operators in the space. Murphy's merchandise margins lag those of its peers as over 80% of Murphy's merchandise sales come from tobacco products, which carry lower margins that dispensed fountain drinks and other snacks. Going forward, Murphy's merchandise margins will start to come in line with its peers as the Company builds out the 1,200 ft2 format stores (23% of the current footprint), which carry a wider selection of higher margined products.

FY2009 FY2010 FY2011 FY2012 LTM 2013MUSA 4.18% 4.37% 3.64% 4.24%CASY 4.81% 5.61% 5.30% 4.45% 4.45%CST 5.50% 5.11% 4.09% 4.50% 3.17%ATD 5.26% 4.67% 5.26% 3.85%PNTRY 4.88% 4.84% 4.04% 3.26% 3.20%TA 6.32% 5.40% 4.73% 5.11% 5.22%SUSS 6.55% 6.81% 6.71% 6.21% 5.99%

Fuel Gross Profit Margins

MUSA 4.18%

4.37%

3.64%

MUSA 4.24%

3.0%

4.0%

5.0%

6.0%

7.0%

FY2009 FY2010 FY2011 FY2012 LTM 2013

Fuel Gross Profit Margins By Year

MUSA CASY ATD CST PNTRY SUSS TA

FY2009 FY2010 FY2011 FY2012 LTM 2013MUSA 13.1% 12.8% 13.5% 13.3%CASY 40.6% 41.3% 39.9% 40.0% 40.9%CST 28.1% 28.3% 28.7% 29.7% 29.7%ATD 33.1% 33.0% 33.1% 32.0%PNTRY 35.4% 33.8% 33.9% 33.7% 33.2%TA 57.7% 57.8% 56.9% 55.5% 55.0%SUSS 33.3% 33.6% 33.7% 33.9% 33.8%

Merchandise Gross Profit Margins

MUSA 13.1% MUSA 12.8% MUSA 13.5% MUSA 13.3%0.0%

10.0%

20.0%

30.0%

40.0%

50.0%

60.0%

70.0%

FY2009 FY2010 FY2011 FY2012 LTM 2013

Merchandise Gross Profit Margins By Year

MUSA CASY ATD CST PNTRY SUSS TA

FY2009 FY2010 FY2011 FY2012 LTM 2013MUSA 6.0% 5.8% 5.6% 5.8%CASY 17.0% 18.9% 17.1% 15.5% 16.3%CST 13.7% 12.5% 10.3% 10.2% 9.8%ATD 15.5% 14.8% 12.9% 13.0% 12.8%PNTRY 16.4% 13.7% 11.8% 11.1% 11.0%TA 6.0% 5.3% 4.6% 4.8% 4.9%SUSS 12.9% 12.0% 10.2% 10.0% 10.0%

Gross Profit Margins



Capitalization

Murphy is extremely well-capitalized with 1.0x Net Debt/EBITDA at 9/30/13. The Company's unlevered balance sheet along with its portfolio of owned real estate (90%) gives Murphy multiple levers to return capital to shareholders in the form of share repurchases or dividends as soon as September 2015 (tax free spin rational). GrizzlyRock expects cash to build and for MUSA to continue to pay down its term loan (10% of the term loan oustanding at 9/30/30 paid down in October). We are happy to accumulate free cass flow in the interim. Capital Expenditures

CapEx within the marketing segment (convenience stores) primarily entails the acquisition of land and build out of stores. Maintenance CapEx is fairly low within the segment, primarily deployed to upgrade existing sites (i.e. update pumps, etc.). The Company's other CapEx is dedicated to its ethanol and terminal segments, which are primarily growth related initiatives. Overall, the Company's maintenance CapEx requirements are low (averaging ~$27K per store per year) allowing for a high EBITDA/OCF conversion. The Company expects to spend $204 million on capital expenditures in FY2013 with $30 million slated for maintenance CapEx and $170 million for new retail locations/growth CapEx. The remaining $3 million is slated for the Company's ethanol facilities. Porter’s Five Forces Analysis

Risk Severity Mitigant Threat of New Entrants

High • The industry is highly fragmented. Murphy has ~5% market share, which gives it scale and purchasing power versus and industry which is dominated by smaller operators.

Threat of Substitute Products

Low • There is no current a mass substitute for gasoline in the US.

• The Company offers a wide arrange of merchandise products in their kiosks/stores (i.e. tobacco products, soft drinks, etc.)

• Electrical car networks present a potential future opportunity for the Company but this is unlikely to impact MUSA in the next 5 years.

Bargaining Power of Suppliers

Low • Gasoline prices are typically set by the market, additionally the Company has shipper status and mid-stream terminal positions allowing for attractive purchasing.

Bargaining Power of Customers

High • Gasoline is a widely used commodity and can be purchased at multiple locations in nearly all geographical DMAs.

Rivalry High • Rivalry is high, however Murphy has an advantage over its competitors through the co-locations with Walmart, purchasing scale and lower break-even costs compared with other C-Stores.

• The Walmart relationship enables Murphy to reach a captive audience (Walmart shoppers). Additionally, customers tend to be destination customers who get their groceries and fill up on the same trip.

MUSA Stores 2010 2011 2012 2013E Existing Stores 1,048 1,099 1,128 1,165

New Stores Added 51 29 37 43 Stores at Year End 1,099 1,128 1,165 1,208

CapEx per New Store ($ millions) $2.9 $1.7 $2.0 $2.1

Source: Company and GrizzlyRock Capital



Risks & Mitigants

Risk Impact Mitigant Reliance on Walmart for Additional Locations and Discount Program

Material for Future Growth Opportunities

• Murphy has a long-term relationship of over ten years with Walmart, further bolstered by an agreement between both companies and a discount program for Walmart shoppers.

• The Company owns roughly 90% of its real estate.

• MUSA has purchased 908 of its location real estate from Walmart and currently has a signed agreement with Walmart to purchase & build out 200+ more locations over three years

New Build Program

Potential Squeeze on Future Cash Flow Risk

• Per unit economics are ~10% returns post tax & maintenance CapEx (implies ~15% to 16% pre-tax margin)

• The Company's cost per new store is fairly low at $2.1 million, and can easily be funded through the Company's ongoing free cash flow and revolver.

Volatility in Gasoline Prices

Revenue and Margin Decline

• Murphy is a low-cost operator & requires only 6.6 cents per gallon of gasoline margin for cash breakeven (materially lower than both comps and MUSA’s historical 12 cent per gallon average)

• MUSA has successfully operated in a wide variety of pricing environments – keeping EBITDA well positive in tough markets.

• Murphy’s owned real estate, midstream assets and the fact they are unencumbered by purchasing branded fuel position them to be the low-cost provider.

Tobacco Merchandise

Revenue and Gross Margin Decline

• Although tobacco volume and is expected to reduce 5% per year in perpetuity, Murphy is dramatically increasing other high margin convenience store products (such as snacks & beverages) by focusing new store growth on 1,200 ft2 footprint units.

Industry

The gas station / convenience store industry has enjoyed a strong performance over the past five years. According to IBIS World, industry revenue has increased at a 0.8% CAGR to $466.9 billion over the period, with 2.2% growth expected in 2013. The world price of crude oil is the main driver of the industry’s revenue growth. Gasoline makes up the lion’s share of revenue, and pump prices are driven by the ebbs and flows of world oil demand. To maximize profitability, though, industry operators are increasingly relying on convenience store sales. Over the next five years, revenue is forecast to increase at a CAGR 2.0% to $514.4 billion. Oil refiners and E&P companies have divested their retail brands given the multiple discount between pure-play E&P firms and shareholder pressure. Thus an increasingly fragmented market place is net positive for Murphy given the Company has scale over competitors along with an exceptionally strong platform for new stores (Walmart). Competition

Industry concentration decreased over the past five years as prominent E&P firms divested gas stations. The recession prompted oil companies to focus on more profitable operations. Scale is important in the industry as it allows for greater bargaining power for merchandise and ability to acquire large amounts of fuel at better terms.



Miles Driven

According to the Department of Transportation, miles driven have declined 2.8% from the last peak due to the Great Recession and higher fuel costs. In August 2012, the U.S. Dept. of Transportation and the EPA finalized the corporate average fuel economy (CAFE) for cars and light-duty trucks. The new rule requires an average fuel economy of 54.5 mpg for 2025 model year vehicles. This is a stringent increase from President Obama’s 2012–2016 standard, which increases the CAFE average to 35.5 mpg by 2016, up from the current CAFE average of 29 mpg. While total miles will may decline, MUSA should retain or grow market share on a per store basis and can reasonably expected to growth both revenue and profit but increasing embedded store base at attractive rates on capital deployed. Comparable Firms

Source: CapitalIQ & GrizzlyRock Capital. Merchandise margins tend to be lower for MUSA as the Company's store size restricts the amount of convenience items the Company can carry. Additionally, MUSA's small format stores focus on tobacco products (~89% of sales), which tend to be lower margin, high volume products. Going forward, MUSA's gross margins should normalize in line with its peers as the Company continues to build out 1,200 ft2 stores, which carry a wider variety of merchandise and have high margin, dispensed-drink fountains.

Murphy's peers tend to have higher merchandise margins as they operate larger format stores away from a leading price retailer such as Walmart, which allows for the sale of high margin prepared food products among other items. However, these large format stores have their drawbacks as they require greater CapEx build out and higher operating costs.

LTM For Period Ended 6/30/2013 9/30/2013 7/31/2013 9/29/2013 6/27/2013

Murphy USA Inc.

CST Brands, Inc.

Casey's General Stores, Inc.

Susser Holdings Corp.

The Pantry, Inc.

Ticker MUSA CST CASY SUSS PTRYRevenue 17,399 10,973 6,901 6,036 7,075Gross Margins 5.8% 10.2% 16.5% 10.2% 11.4%EBITDA 360 399 358 173 207EBITDA Margins 2.1% 3.6% 5.2% 2.9% 2.9%Cash Flows From Ops 327.3 0.0 318.0 0.0 109.6Capex as a % Sales 0.9% 0.0% 4.4% 0.0% 1.0%FCF 164.7 0.0 12.0 0.0 39.4Dividend Yield 0.0% 0.8% 0.9% 0.0% 0.0%Market Cap (11/7/13) 1,948 2,517 2,959 1,188 315



Scenario Valuation Analysis

Base Case

The base case portrays a realistic expectation of Murphy's performance going forward. Below are the assumptions used in the base case scenario:

• 2013 revenue is projected to be up 2.5% based on 40 new stores. After 2013, sales are expected to grow at 3% to 4% going forward per annum primarily through the addition of 70 new stores per year.

• Gross margin is expected to be 5.5% in perpetuity.

• EBITDA margin is expected to be maintained at 1.9%, which is in line with the Company's three year average which experienced some volatility in fuel margins.

• Cash taxes are expected to be 38%.

• No dividends or share repurchases considered

Projected Operating Metrics 12/31/10 12/31/11 12/31/12 2013E 2014E 2015E 2016E 2017E

Number of New Stores 51 29 37 40 70 70 70 70Total Stores (Year End) 1,099 1,128 1,165 1,205 1,265 1,325 1,385 1,445

Sales Growth N/A 23.7% 2.0% 0.0% 3.3% 3.1% 3.3% 3.1%

Gross Margin 6.0% 5.8% 5.2% 5.5% 5.5% 5.5% 5.5% 5.5%EBITDA Margin 2.1% 2.3% 1.6% 1.9% 1.9% 1.9% 1.9% 1.9%

Capital Expenditures 222 101 112 130 176 178 180 183

Free Cash Flow to the Firm 40,543 40,908 41,274 41,275 41,276 41,277 41,278 41,279EBIT(1-t) 145 206 119 183 191 196 174 152+ NCC 61 70 78 85 85 90 136 183- ΔWC (59) 28 (85) (4) (4) (4) (4)- CapEx (222) (101) (112) (130) (176) (178) (180) (183)Free Cash Flow to the Firm 283 230 162 300 265 272 321 369

Earnings Per Share 3.1 4.4 1.8 3.9 4.1 4.2 3.7 3.2

WACC 10.0% EBITDA in Terminal Year 416 EPS in 2014 $4.09Terminal FCFF Growth Rate 2.0% Exit Multiple 7.5x Earnings Multiple 15.0x

Terminal Value 4,706 Terminal Value 3,122

NPV of Terminal Value 2,922 NPV of Terminal Value 1,939NPV of 2013-2017 FCFF 1,144 NPV of 2013-2017 FCFF 1,144Enterprise Value (as calculated) 4,066 Enterprise Value (as calculated) 3,083Less: Net Debt at 9/30/13 (380) Less: Net Debt at 9/30/13 (380)Equity Value 3,686 Equity Value 2,703

Diluted Shares 47 Diluted Shares 47Equity Value Per Share $78.8 Equity Value Per Share $57.8 Equity Value Per Share $61.3Average of Each Method $66.0 per share

Base Case Valuation

Perpetuity Growth Method EBITDA Multiple Method EPS Method



Stress Case

The stress case portrays a scenario in which Murphy does not deliver on its current objectives. Below are the assumptions used in the stress case scenario:

• 2033 revenue is projected to be up 2.2% based on 40 new stores. After 2013, sales are expected to grow at ~2% per annum primarily through the addition of 50 new stores per year and no volume changes per store.

• Gross margin forecasted at 5.25% for 2013 then decline to 4.75% in 2014 (based on increased supply costs), 5.0% in 2015, and normalize at 5.50% thereafter.


• No dividends or share repurchases considered



Sales Growth N/A 23.7% 2.0% 2.2% 2.2% 2.1% 2.0% 2.0%



Free Cash Flow to the Firm 40,543 40,908 41,274 41,275 41,276 41,277 41,278 41,279EBIT(1-t) 145 206 119 138 79 109 162 154+ NCC 61 70 78 80 85 90 109 129- ΔWC (59) 28 (1) (2) (0) 1 (1)- CapEx (222) (101) (112) (130) (125) (127) (128) (129)Free Cash Flow to the Firm (161) (89) (7) 211 212 217 237 259


WACC 10.0% EBITDA in Terminal Year 366 Avg. EPS 2014 and 2015 $2.00Terminal FCFF Growth Rate 2.0% Exit Multiple 7.0x Earnings Multiple 14.0x


NPV of Terminal Value 2,047 NPV of Terminal Value 1,591NPV of 2012 -2016 FCFF 852 NPV of 2012 -2016 FCFF 852Enterprise Value (as calculated) 2,899 Enterprise Value (as calculated) 2,443Less: Net Debt at 9/30/13 (380) Less: Net Debt at 9/30/13 (380)Equity Value 2,519 Equity Value 2,063


Stress Case Valuation




Upside Case The upside case portrays a strong five-year forecast for the Company, when compared with the base case forecasts. Below are the assumptions used in the upside case scenario:

• 2103 revenue is projected to be up nearly 5% based on 70 new stores. After 2013, sales are expected to grow at ~2.9% to 2.5% per annum primarily through the addition of 50 new stores per year and no volume changes per store.

• Gross margin forecasted to remain at 5.70% which is in-line with many prior years.

• EBITDA margin expected to total 2.1%, which is slightly above the three year average yet highly achievable.


• No dividends or share repurchases considered (very conservative)



Sales Growth N/A 23.7% 2.0% 2.5% 4.7% 4.4% 4.2% 3.9%



Free Cash Flow to the Firm 40,543 40,908 41,274EBIT(1-t) 145 206 119 213 223 232 205 178+ NCC 61 70 78 80 85 90 150 210- ΔWC (59) 28 (87) (6) (5) (5) (5)- CapEx (222) (101) (112) (200) (203) (206) (208) (210)Free Cash Flow to the Firm 283 230 162 367 294 301 363 426


WACC 10.0% EBITDA in Terminal Year 483 EPS in 2014 $4.8Terminal FCFF Growth Rate 3.0% Exit Multiple 8.0x Earnings Multiple 15.0x


NPV of Terminal Value 3,889 NPV of Terminal Value 2,401NPV of 2012 -2016 FCFF 1,316 NPV of 2012 -2016 FCFF 1,316Enterprise Value (as calculated) 5,204 Enterprise Value (as calculated) 3,717Less: Net Debt at 9/30/13 (380) Less: Net Debt at 9/30/13 (380)Equity Value 4,824 Equity Value 3,337


Upside Case Valuation




Relative Valuation

A relative valuation analysis was completed using peers within the convenience retail industry. There are three comparable, publicly-traded companies in the U.S. and Canada, whose primary or sole business involves operating independent gas stations & convenience stores: Susser Holdings Corporation, Casey's General Stores, and CST Brands, Inc. Importantly, the average EV/EBITDA for the sector trades at roughly 9.3x reiterating our assertion that Murphy equity should rise 50%+ over the intermediate term. Conclusion Murphy USA has a sustainable moat as the low-cost provider of a necessary commodity (gasoline). Yet MUSA’s equity price implies a 50%+ increase to conservatively calculated intrinsic value. Management’s plan to grow intrinsic value is to grow 200 stores over three year financed solely from free cash is readily attainable both operationally and financially. The Company monetizing separable, non-core assets including their wholly owned ethanol facilities underutilized terminals which simply increase the upside. Further, management is well aligned with shareholders (the board in aggregate holds ~6% of the Company and the will hold shares worth 5x salary). Given the expected future store growth & Murphy underutilized balance sheet, Murphy’s shares could be worth $66+ as the Company continues to grow its competitive advantages through scale. While not a “great business” due to gross margin fluctuations, Murphy is a good business at a very fair price. Buy Murphy USA at current prices to realize a 50%+ gain in 12 to 24 months.

Stock PriceCompany Name Ticker 11/7/2013 EBITDA Trailing P/E P/BVCST Brands, Inc. CST $33.2 2,517 3,141 7.9x 14.9x 4.3xCasey's General Stores, Inc. CASY $76.8 2,959 3,587 10.0x 23.5x 4.5xSusser Holdings Corporation SUSS $59.1 1,188 1,734 10.1x 64.6x 2.9x

Murphy USA Inc. $42.1 1,968 2,348 6.2x 12.6x 1.8x

High 10.1x 64.6x 4.5xMean 9.3x 34.3x 3.9xMedian 10.0x 23.5x 4.3xLow 7.9x 14.9x 2.9x

Trading Multiples for Murphy USA Comparable Firms

Equity Value ($MMs)

Enterprise Value ($MMs)

EV as a Multiple of:



Appendix Replacement Cost

Management

Mr. Andrew Clyde will serve as President and CEO of Murphy USA. Mr. Clyde previously was employed at Booz & Company in its global energy practice as the North American Energy Practice Leader and Dallas office Managing Partner and serving on the firm’s board nominating committee.

Mindy K. West serves as CFO and Treasurer of Murphy. Ms. West joined Murphy Oil in 1996 and has held positions in Accounting, Employee Benefits, Planning and Investor Relations.

MUSA's board is aligned with shareholders as they collectively hold ~6% of the outstanding stock. Additionally, since the spin-off, management and other board members purchased ~$150K - $200K worth of shares each. Renewable Identification Numbers (“RINs”) As part of their wholesale business, Murphy creates RINs when they blend ethanol and gasoline in their terminals and “splash-blend” in trucks. Much of recent EBTIDA upside comes from volatility in RIN market pricing yet GrizzlyRock believes this will normalize over time. Murphy will retain their RIN generation capability when their ethanol assets are sold. RINs are not a large portion of GrizzlyRock’s MUSA thesis and thus we are describing them briefly here in the appendix.

Kyle Mowery is the Founder and Managing Partner of GrizzlyRock Capital, LLC. Before founding GrizzlyRock Capital, Mr. Mowery worked at Pacific Alternative Management Company (PAAMCO), the Alternative Credit Strategies team at McDonnell Investment Management (now THL Credit Senior Loan Strategies) and BMO Capital Markets. Mr. Mowery received an MBA from the University of Chicago Booth School of Business as well as a degree in Economics from UCLA.

GrizzlyRock Capital, LLC is a Chicago based investment firm that manages the investment partnership, GrizzlyRock Value Partners, LP, and separately managed accounts. GrizzlyRock Capital invests in long / short corporate securities including equity and debt utilizing fundamental investment analysis. The firm’s objective is to provide clients exceptional investment services focused on strong risk-adjusted return regardless of market environment. GrizzlyRock invests in 20 to 25 best idea investments at any one time.

Store Type Stores at 6/30/13

Cost per Store ($MMs)

Replacement Cost

208 ft2 Stores 930 2.0 1,860

1,200 ft2 Stores & All Other Formats

278 2.3 639

Total Replacement Cost ($MMs) 2,499

Per Share Replacement Value Current PriceLess: Net Debt 380 $42.1Equity Value 2,119# Shares Outstanding (MMs) 47.0Per Share Value $45.1 7%

MUSA Existing Store Replacement Cost

Discount To Replacement Cost



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