Methanex Reports Q2 2014 Earnings

Methanex Reports Q2 2014 Earnings 
VANCOUVER, BRITISH COLUMBIA -- (Marketwired) -- 07/30/14 --   For the
second quarter of 2014, Methanex (TSX: MX)(NASDAQ: MEOH) reported
Adjusted EBITDA(1) of $160 million, compared to Adjusted EBITDA(1) of
$255 million reported in the first quarter of 2014 and $157 million
reported in the quarter ended June 30, 2013. Adjusted net income(1)
was $91 million ($0.94 per share on a diluted basis) in the second
quarter of 2014, compared to Adjusted net income(1) of $160 million
($1.65 per share on a diluted basis) for the first quarter of 2014
and $99 million ($1.02 per share on a diluted basis) for the second
quarter of 2013.   
John Floren, President and CEO of Methanex commented, "Methanol
prices are lower in Q2 2014 compared to Q1 2014, resulting in lower
Q2 earnings as compared to the first quarter. We believe pricing is
now stabilizing at current levels." Mr. Floren added, "At these
methanol prices, Methanex continues to generate strong EBITDA and
cash flows. The methanol industry environment remains favourable,
with steady demand and limited new supply additions expected in the
near to medium term."  
Mr. Floren added, "We are making excellent progress on the relocation
of two of our Chile plants to Geismar, Louisiana, and are targeting
methanol production from our Geismar 1 facility in late 2014 and
Geismar 2 in early 2016. Each of these plants will add an incremental
one million tonnes to our operating capacity."  
"In the second quarter we also reached a settlement agreement with
Total Austral S.A. of Argentina and received a lump sum payment of
US$42 million, or $27 million net of tax, to terminate their
obligations under their former long-term natural gas supply agreement
with Methanex in Chile. This payment is not included in our Q2 2014
Adjusted EBITDA or Adjusted net income but has been recorded in Q2
2014 Net income attributable to Methanex shareholders."   
"During the quarter, we returned over $100 million in cash to
shareholders in the form of dividends and share repurchases. With
over $600 million of cash on hand, an undrawn credit facility, robust
balance sheet, and strong cash flow generation, we are well
positioned to meet our financial commitments, invest to grow the
Company and return excess cash to shareholders through dividen
ds and
our share buyback program."   
A conference call is scheduled for July 31, 2014 at 12:00 noon ET
(9:00 am PT) to review these second quarter results. To access the
call, dial the conferencing operator ten minutes prior to the start
of the call at (416) 340-2218, or toll free at (866) 226-1793. A
playback version of the conference call will be available until
August 21, 2014 at (905) 694-9451, or toll free at (800) 408-3053.
The passcode for the playback version is 2070181. Presentation slides
summarizing Q2-14 results and a simultaneous audio-only webcast of
the conference call can be accessed from our website at
www.methanex.com. The webcast will be available on the website for
three weeks following the call.  
Methanex is a Vancouver-based, publicly traded company and is the
world's largest producer and supplier of methanol to major
international markets. Methanex shares are listed for trading on the
Toronto Stock Exchange in Canada under the trading symbol "MX" and on
the NASDAQ Global Market in the United States under the trading
symbol "MEOH". 
FORWARD-LOOKING INFORMATION WARNING  
This Second Quarter 2014 press release contains forward-looking
statements with respect to us and the chemical industry. Refer to
Forward-Looking Information Warning in the attached Second Quarter
2014 Management's Discussion and Analysis for more information. 


 
 
(1) Adjusted EBITDA, Adjusted net income and Adjusted net income per common 
    share are non-GAAP measures which do not have any standardized meaning  
    prescribed by GAAP. These measures represent the amounts that are       
    attributable to Methanex Corporation shareholders and are calculated by 
    excluding the mark-to-market impact of share-based compensation as a    
    result of changes in our share price and items considered by management 
    to be non-operational. Refer to the Additional Information -            
    Supplemental Non-GAAP Measures section of the attached Interim Report   
    for the three months ended June 30, 2014 for reconciliations to the most
    comparable GAAP measures.                                               

Interim Report for the Three Months Ended June 30, 2014    
At July 30, 2014 the Company had 94,323,459 common shares issued and
outstanding and stock options exercisable for 1,585,616 additional
common shares. 
Share Information  
Methanex Corporation's common shares are listed for trading on the
Toronto Stock Exchange under the symbol MX and on the Nasdaq Global
Market under the symbol MEOH.  
Transfer Agents & Registrars  


 
 
CIBC Mellon Trust Company                                                   
320 Bay Street                                                              
Toronto, Ontario Canada M5H 4A6                                             
Toll free in North America: 1-800-387-0825                                  

Investor Information  
All financial reports, news releases and corporate information can be
accessed on our website at www.methanex.com.  
Contact Information  


 
 
Methanex Investor Relations                                                 
1800 - 200 Burrard Street                                                   
Vancouver, BC Canada V6C 3M1                                                
E-mail: invest@methanex.com                                                 
Methanex Toll-Free: 1-800-661-8851                                          

SECOND QUARTER MANAGEMENT'S DISCUSSION AND ANALYSIS 
Except where otherwise noted, all currency amounts are stated in
United States dollars. 
FINANCIAL AND OPERATIONAL HIGHLIGHTS 


 
 
--  A reconciliation from net income attributable to Methanex shareholders
    to Adjusted net income(1) and the calculation of Adjusted net income per
    common share(1) is as follows: 
 
                               Three Months Ended         Six Months Ended  
                         ------------------------------ --------------------
($ millions except number                                                   
 of shares and per share    Jun 30     Mar 31    Jun 30   June 30    June 30
 amounts)                     2014       2014      2013      2014       2013
------------------------------------------------------- --------------------
 
Net income attributable                                                     
 to Methanex shareholders $    125   $    145  $     54  $    270   $    114
  Mark-to-market impact                                                     
   of share-based                                                           
   compensation, net of                                                     
   tax                          (7)        15         9         8         36
  Argentina gas                                                             
   settlement, net of tax      (27)         -         -       (27)         -
  Write-off of oil and                                                      
   gas rights, net of tax        -          -        14         -         14
  Geismar project                                                           
   relocation expenses,                                                     
   net of tax                    -         
 -        22         -         22
------------------------------------------------------- --------------------
Adjusted net income (1)   $     91   $    160  $     99  $    251   $    186
------------------------------------------------------- --------------------
Diluted weighted average                                                    
 shares outstanding                                                         
 (millions)                     97         97        96        97         96
Adjusted net income per                                                     
 common share (1)         $   0.94   $   1.65  $   1.02  $   2.59   $   1.94
------------------------------------------------------- --------------------
 
--  We recorded Adjusted EBITDA(1) of $160 million for the second quarter of
    2014 compared with $255 million for the first quarter of 2014. The
    decrease in Adjusted EBITDA(1) was primarily due to a decrease in our
    average realized price to $450 per tonne for the second quarter of 2014
    from $524 per tonne for the first quarter of 2014 and a decrease in
    sales of Methanex-produced methanol. 
--  Production for the second quarter of 2014 was 1,216,000 tonnes compared
    with 1,226,000 tonnes for the first quarter of 2014. Refer to the
    Production Summary section. 
--  Sales of Methanex-produced methanol were 1,143,000 tonnes in the second
    quarter of 2014 compared with 1,228,000 in the first quarter of 2014. 
--  We continue to progress our Geismar relocation projects. We are
    targeting to be producing methanol from Geismar 1 in late 2014 and from
    Geismar 2 in early 2016.  
--  During the quarter, we reached a settlement with Total Austral S.A.
    ("Total") for $42 million ($27 million net of tax) in relation to
    Total's natural gas delivery obligations pursuant to a long-term natural
    gas supply agreement in Chile.  
--  During the second quarter of 2014, we paid a $0.25 per share dividend to
    shareholders for a total of $24 million. 
--  During the second quarter of 2014, we repurchased 1,371,447 common
    shares for $82 million for an average buyback price of $59.99 per share
    under the Normal Course Issuer Bid approved by the Board in late April.
    The shares repurchased in the quarter represent 28% of the total shares
    approved to be repurchased. 
 
(1) These items are non-GAAP measures that do not have any standardized     
    meaning prescribed by GAAP and therefore are unlikely to be comparable  
    to similar measures presented by other companies. Refer to the          
    Additional Information - Supplemental Non-GAAP Measures section for a   
    description of each non-GAAP measure and reconciliations to the most    
    comparable GAAP measures.                                               

This Second Quarter 2014 Management's Discussion and Analysis ("MD&A")
dated July 30, 2014 for Methanex Corporation ("the Company") should
be read in conjunction with the Company's condensed consolidated
interim financial statements for the period ended June 30, 2014 as
well as the 2013 Annual Consolidated Financial Statements and MD&A
included in the Methanex 2013 Annual Report. Unless otherwise
indicated, the financial information presented in this interim report
is prepared in accordance with International Financial Reporting
Standards (IFRS) as issued by the International Accounting Standards
Board (IASB). The Methanex 2013 Annual Report and additional
information relating to Methanex is available on SEDAR at
www.sedar.com and on EDGAR at www.sec.gov. 
FINANCIAL AND OPERATIONAL DATA 


 
 
                                   Three Months Ended      Six Months Ended 
                              --------------------------- ------------------
($ millions, except per share    Jun 30   Mar 31   Jun 30    Jun 30   Jun 30
 amounts and where noted)          2014     2014     2013      2014     2013
--------------------------------------------------------- ------------------
 
Production (thousands of                                                    
 tonnes) (attributable to                                                   
 Methanex shareholders)           1,216    1,226    1,052     2,442    2,115
 
Sales volumes (thousands of                                                 
 tonnes):                                                                   
Methanex-produced methanol                                                  
 (attributable to Methanex                                                  
 shareholders)                    1,143    1,228    1,039     2,371    2,069
  Purchased methanol                643      654      749     1,297    1,337
  Commission sales                  206      296      242       502      461
--------------------------------------------------------- ------------------
  Total sales volumes (1)         1,992    2,178    2,030     4,170    3,867
 
Methanex average non-                                                       
 discounted posted price ($                                                 
 per tonne) (2)                     523      613      494       569      484
Average realized price ($ per                                               
 tonne) (3)                         450      524      425       488      418
 
Adjusted EBITDA (attributable                                               
 to Methanex shareholders) (4)      160      255      157       415      307
Cash flows from operating                                                   
 activities                         240      179      125       419      243
Adjusted net income                                                         
 (attributable to Methanex                                                  
 shareholders) (4)                   91      160       99       251      186
Net income attributable to                                                  
 Methanex shareholders              125      145       54       270      114
 
Adjusted net income per common                                              
 share (attributable to                                                     
 Methanex shareholders) (4)        0.94     1.65     1.02      2.59     1.94
Basic net income per common                                                 
 share (attributable to                                                     
 Methanex shareholders)            1.30     1.51     0.57      2.81     1.21
Diluted net income per common                                               
 share (attributable to                                                     
 Methanex shareholders)            1.24     1.50     0.56      2.79     1.19
 
Common share information                                                    
 (millions of shares):                                                      
  Weighted average number of                                                
   common shares                     96       96       95        96       95
  Diluted weighted average                                                  
   number of common shares           97       97       96        97       96
  Number of common shares                                                   
   outstanding, end of period        95       97       95        95       95
--------------------------------------------------------- ------------------
 
 
(1) Methanex-produced methanol includes volumes produced by Chile using     
    natural gas supplied from Argentina under a tolling arrangement.        
    Commission sales represent volumes marketed on a commission basis       
    related to 36.9% of the Atlas methanol facility and the portion of the  
    Egypt methanol facility that we do not own.                             
 
(2) Methanex average non-discounted posted price represents the average of  
    our non-discounted posted prices in North America, Europe and Asia      
    Pacific weighted by sales volume. Current and historical pricing        
    information is available at www.methanex.com.                           
 
(3) Average realized price is calculated as revenue, excluding commissions  
    earned and the Egypt non-controlling interest share of revenue but      
    including an amount representing our share of Atlas revenue, divided by 
    the total sales volumes of Methanex-produced (attributable to Methanex  
    shareholders) and purchased methanol.                                   
 
(4) These items are non-GAAP measures that do not have any standardized     
    meaning prescribed by GAAP and therefore are unlikely to be comparable  
    to similar measures presented by other companies. Refer to the          
    Additional Information - Supplemental Non-GAAP Measures section for a   
    description of each non-GAAP measure and reconciliations to the most    
    comparable GAAP measures.                                               
 
----------------------------------------------------------------------------

PRODUCTION SUMMARY 


 
 
                                   Q2 2014              Q1 2014      Q2 2013
(thousands of tonnes)     Capacity(1)   Production   Production   Production
----------------------------------------------------------------------------
 
New Zealand (2)                   608          559          500          361
Atlas (Trinidad) (63.1%                                                     
 interest)                        281          191          249          201
Titan (Trinidad)                  218          203          149          169
Egypt (50% interest)(3)           158           99          139          163
Medicine Hat (Canada)             140          138          122          129
Chile I and IV                    430           26           67           29
Geismar 1 and 2                                                             
 (Louisiana, USA)(4)                -            -            -            -
----------------------------------------------------------------------------
                                1,835        1,216        1,226        1,052
----------------------------------------------------------------------------
 
                               YTD Q2 2014     YTD Q2 2013
(thousands of tonnes)           Production      Production
----------------------------------------------------------
 
New Zealand (2)                      1,059             670
Atlas (Trinidad) (63.1%                                   
 interest)                             440             449
Titan (Trinidad)                       352             350
Egypt (50% interest)(3)                238             296
Medicine Hat (Canada)                  260             260
Chile I and IV                          93              90
Geismar 1 and 2                                           
 (Louisiana, USA)(4)                     -               -
----------------------------------------------------------
                                     2,442           2,115
----------------------------------------------------------
 
(1) The production capacity of our facilities may be higher than original   
    nameplate capacity as, over time, these figures have been adjusted to   
    reflect ongoing operating efficiencies. Actual production for a facility
    in any given year may be higher or lower than annual production capacity
    due to a number of factors, including natural gas composition or the age
    of the facility's catalyst.                                             
(2) The annual production capacity of New Zealand represents the two Motunui
    facilities and the Waitara Valley facility (refer to New Zealand section
    below).                                                                 
(3) On December 9, 2013, we completed a sale of 10% equity interest in the  
    Egypt facility. Production figures prior to December 9, 2013 reflect a  
    60% interest.                                                           
(4) We are relocating two 1.0 million tonne idle Chile facilities to        
    Geismar, Louisiana and are targeting to be producing methanol from      
    Geismar 1 in late 2014 and Geismar 2 by early 2016.                     

New Zealand  
Our New Zealand methanol facilities produced 559,000 tonnes of
methanol in the second quarter of 2014 compared with 500,000 tonnes
in the first quarter of 2014. With all three facilities now
operating, we are able to produce up to 2.4 million tonnes annually,
depending on natural gas composition.  
Trinidad  
In Trinidad, we own 100% of the Titan facility with an annual
production capacity of 875,000 tonnes and have a 63.1% interest in
the Atlas facility with an annual production capacity of 1,125,000
tonnes (63.1% interest). The Titan facility produced 203,000 tonnes
in the second quarter of 2014 compared with 149,000 tonnes in the
first quarter of 2014. The Atlas facility produced 191,000 tonnes in
the second quarter of 2014 compared with 249,000 tonnes in the first
quarter of 2014. The Atlas facility had ongoing production
interruptions due to mechanical problems with the air separation
unit.  
We continue to experience some natural gas curtailments to our
Trinidad facilities due to a mismatch between upstream commitments to
supply the Natural Gas Company of Trinidad and Tobago (NGC) and
downstream demand from NGC's customers including Atlas and Titan,
which becomes apparent when an upstream supplier has a technical
issue or planned maintenance that reduces gas delivery. We are
engaged with key stakeholders to find a solution to this issue, but
in the meantime expect to continue to experience gas curtailments to
the Trinidad site. Gas curtailments in Q2 2014 were slightly higher
than in Q1 2014. 
Egypt  
On a 100% basis, the Egypt methanol facility produced 198,000 tonnes
in the second quarter of 2014 (Methanex share of 99,000 tonnes)
compared with 278,000 tonnes (Methanex share of 139,000 tonnes) in
the first quarter of 2014. Production during the second quarter of
2014 continued to be impacted by natural gas supply restrictions and
we idled the plant in mid-June due to a lack of natural gas
availability. We believe that we will be able to restart the plant
after the peak summer electricity consumption period ends.   
The Egypt facility has experienced periodic natural gas supply
restrictions since mid-2012 which have resulted in production below
full capacity. This situation may persist in the future and becomes
more acute during the summer months when electricity demand is at its
peak. Refer to page 23 of the Risk Factors and Risk Management
section of our 2013 Annual Report for further details. 
Medicine Hat, Canada  
During the second quarter of 2014, we produced 138,000 tonnes at our
Medicine Hat facility compared with 122,000 tonnes during the first
quarter of 2014.  
Chile  
During the second quarter of 2014, we produced 26,000 tonnes in Chile
compared with 67,000 tonnes in the first quarter of 2014, supported
by natural gas supplies from Chile and from Argentina through a
tolling arrangement.  
As a result of insufficient natural gas feedstock from Chile and
Argentina during the southern hemisphere winter, we idled our Chile
operations in May 2014. We are optimistic that we will secure
sufficient natural gas from Chilean sources supplemented by Argentine
gas to restart our operations later in 2014.  
T
he future of our Chile operations is primarily dependent on the
level of natural gas exploration and development in southern Chile
and our ability to secure a sustainable natural gas supply to our
facilities on economic terms from Chile and Argentina. 
Geismar, Louisiana  
We continue to progress our two Geismar relocation projects. We are
targeting to be producing methanol from the 1.0 million tonne Geismar
1 facility in late 2014 and from the 1.0 million tonne Geismar 2
facility in early 2016. During the second quarter of 2014, we
incurred $100 million of capital expenditures related to these
projects, excluding capitalized interest. 
FINANCIAL RESULTS  
For the second quarter of 2014 we recorded Adjusted EBITDA of $160
million and Adjusted net income of $91 million ($0.94 per share on a
diluted basis). This compares with Adjusted EBITDA of $255 million
and Adjusted net income of $160 million ($1.65 per share on a diluted
basis) for the first quarter of 2014.  
For the second quarter of 2014, we reported net income attributable
to Methanex shareholders of $125 million ($1.24 per share on a
diluted basis) compared with net income attributable to Methanex
shareholders for the first quarter of 2014 of $145 million ($1.50
income per share on a diluted basis).  
We calculate Adjusted EBITDA and Adjusted net income by including
amounts related to our equity share of the Atlas (63.1% interest) and
Egypt (50% interest) facilities and by excluding the mark-to-market
impact of share-based compensation as a result of changes in our
share price and items which are considered by management to be
non-operational. Refer to the Additional Information - Supplemental
Non-GAAP Measures section for a further discussion on how we
calculate these measures. Our analysis of depreciation and
amortization, finance costs, finance income and other expenses and
income taxes is consistent with the presentation of our consolidated
statements of income and excludes amounts related to Atlas.   
A reconciliation from net income attributable to Methanex
shareholders to Adjusted net income and the calculation of Adjusted
net income per common share is as follows:  


 
 
                               Three Months Ended         Six Months Ended  
                         ------------------------------ --------------------
($ millions except number                                                   
 of shares and per share    Jun 30     Mar 31    Jun 30   June 30    June 30
 amounts)                     2014       2014      2013      2014       2013
------------------------------------------------------- --------------------
 
Net income attributable                                                     
 to Methanex shareholders $    125   $    145  $     54  $    270   $    114
  Mark-to-market impact                                                     
   of share-based                                                           
   compensation, net of                                                     
   tax                          (7)        15         9         8         36
  Argentina gas                                                             
   settlement, net of tax      (27)         -         -       (27)         -
  Write-off of oil and                                                      
   gas rights, net of tax        -          -        14         -         14
  Geismar project                                                           
   relocation expenses,                                                     
   net of tax                    -          -        22         -         22
------------------------------------------------------- --------------------
Adjusted net income (1)   $     91   $    160  $     99  $    251   $    186
------------------------------------------------------- --------------------
Diluted weighted average                                                    
 shares outstanding                                                         
 (millions)                     97         97        96        97         96
Adjusted net income per                                                     
 common share (1)         $   0.94   $   1.65  $   1.02  $   2.59   $   1.94
------------------------------------------------------- --------------------
 
(1) These items are non-GAAP measures that do not have any standardized     
    meaning prescribed by GAAP and therefore are unlikely to be comparable  
    to similar measures presented by other companies. Refer to the          
    Additional Information - Supplemental Non-GAAP Measures section for a   
    description of each non-GAAP measure and reconciliations to the most    
    comparable GAAP measures.                                               

We review our financial results by analyzing changes in Adjusted
EBITDA, mark-to-market impact of share-based compensation,
depreciation and amortization, Argentina gas settlements, write-off
of oil and gas rights, Geismar project relocation expenses, finance
costs, finance income and other expenses and income taxes. A summary
of our consolidated statements of income is as follows: 


 
 
                                Three Months Ended        Six Months Ended  
                           ----------------------------- -------------------
                             Jun 30    Mar 31    Jun 30    Jun 30    Jun 30 
($ millions)                   2014      2014      2013      2014      2013 
-------------------------------------------------------- -------------------
 
Consolidated statements of                                                  
 income:                                                                    
  Revenue                   $   792   $   968   $   733   $ 1,760   $ 1,385 
  Cost of sales and                                                         
   operating expenses,                                                      
   excluding mark-to-market                                                 
   impact of share-based                                                    
   compensation                (618)     (692)     (571)   (1,310)   (1,068)
  Adjusted EBITDA of                                                        
   associate (Atlas) (1)         11        17        18        28        27 
----------------------------------------------------------------------------
                                185       293       180       478       344 
Comprised of:                                                               
  Adjusted EBITDA                                                           
   (attributable to                                                         
   Methanex shareholders)                                                   
   (2)                          160       255       157       415       307 
  Attributable to non-                                                      
   controlling interests         25        38        23        63        37 
-------------------------------------------------------- -------------------
                                185       293       180       478       344 
Mark-to-market impact of                                                    
 share-based compensation         8       (18)       (9)      (10)      (40)
Depreciation and                                                            
 amortization                   (33)      (35)      (29)      (68)      (59)
Argentina gas settlement         42         -         -        42         - 
Write-off of oil and gas                                                    
 rights                           -         -       (17)        -       (17)
Geismar project relocation                                                  
 expenses and charges             -         -       (34)        -       (34)
Earnings of associate,                                                      
 excluding amount included                                                  
 in Adjusted EBITDA (1)          (9)       (9)      (12)      (18)      (20)
Finance costs                    (9)      (11)      (15)      (20)      (30)
Finance income and other                                                    
 expenses                         1         -         3         1         1 
Income tax expense              (46)      (52)       (1)      (98)      (13)
----------------------------------------------------------------------------
Net income                  $   139   $   168   $    66   $   307   $   132 
----------------------------------------------------------------------------
Net income attributable to                                                  
 Methanex shareholders      $   125   $   145   $    54   $   270   $   114 
----------------------------------------------------------------------------
 

 
 
(1) Earnings of associate has been divided into an amount included in       
    Adjusted EBITDA and an amount excluded from Adjusted EBITDA. The amount 
    excluded from A
djusted EBITDA represents depreciation and amortization, 
    finance costs, finance income and other expenses and income tax expense 
    relating to earnings of associate.                                      
(2) This item is a non-GAAP measure that does not have any standardized     
    meaning prescribed by GAAP and therefore is unlikely to be comparable to
    similar measures presented by other companies. Refer to the Additional  
    Information - Supplemental Non-GAAP Measures section for a description  
    of the non-GAAP measure and reconciliation to the most comparable GAAP  
    measure.                                                                

Adjusted EBITDA (Attributable to Methanex Shareholders)  
Our operations consist of a single operating segment - the production
and sale of methanol. We review the results of operations by
analyzing changes in the components of Adjusted EBITDA. For a
discussion of the definitions used in our Adjusted EBITDA analysis,
refer to the How We Analyze Our Business section.  
The changes in Adjusted EBITDA resulted from changes in the
following:  


 
 
                              Q2 2014           Q2 2014         YTD Q2 2014 
                        compared with     compared with       compared with 
($ millions)                  Q1 2014           Q2 2013         YTD Q2 2013 
----------------------------------------------------------------------------
 
Average realized                                                            
 price                  $        (134)    $          44       $         252 
Sales volume                      (12)               (1)                 26 
Total cash costs                   51               (40)               (170)
----------------------------------------------------------------------------
Increase (decrease)                                                         
 in Adjusted EBITDA     $         (95)    $           3       $         108 
----------------------------------------------------------------------------

Average realized price 


 
 
                                   Three Months Ended      Six Months Ended 
                               -------------------------- ------------------
                                 Jun 30   Mar 31   Jun 30    Jun 30   Jun 30
($ per tonne)                      2014     2014     2013      2014     2013
--------------------------------------------------------- ------------------
 
Methanex average non-discounted                                             
 posted price                       523      613      494       569      484
Methanex average realized price     450      524      425       488      418
--------------------------------------------------------- ------------------

Methanol pricing for the second quarter was lower compared to the first
quarter as the industry recovered from very tight market conditions
experienced in late 2013 and early 2014 with multiple suppliers
resuming operations after extended periods of closure or reduced
operating rates. As a result of these and other factors, prices
moderated from the high levels in Q1 and began to stabilize late in
the quarter and into the third quarter of 2014. We believe that
pricing is now stabilizing at current levels (refer to the
Supply/Demand Fundamentals section). Our average non-discounted
posted price for the second quarter of 2014 was $523 per tonne
compared with $613 per tonne for the first quarter of 2014 and $494
per tonne for the second quarter of 2013. Our average realized price
for the second quarter of 2014 was $450 per tonne compared with $524
per tonne for the first quarter of 2014 and $425 per tonne for the
second quarter of 2013. The change in average realized price for the
second quarter of 2014 decreased Adjusted EBITDA by $134 million
compared with the first quarter of 2014 and increased Adjusted EBITDA
by $44 million compared with the second quarter of 2013.  
Sales volume  
Methanol sales volumes excluding commission sales volumes were lower
in the second quarter of 2014 compared with the first quarter of 2014
by 96,000 tonnes and with the second quarter of 2013 by 2,000 tonnes.
Lower methanol sales volumes excluding commission sales volumes for
these periods decreased Adjusted EBITDA by $12 million and $1
million, respectively. For the six month period ended June 30, 2014
compared with the same period in 2013, methanol sales volumes
excluding commission sales volumes were higher by 262,000 tonnes and
this resulted in higher Adjusted EBITDA by $26 million. 
Total cash costs  
The primary drivers of changes in our total cash costs are changes in
the cost of methanol we produce at our facilities (Methanex-produced
methanol) and changes in the cost of methanol we purchase from others
(purchased methanol). All of our production facilities except
Medicine Hat are underpinned by natural gas purchase agreements with
pricing terms that include base and variable price components linked
to the price of methanol. We supplement our production with methanol
produced by others through methanol offtake contracts and purchases
on the spot market to meet customer needs and support our marketing
efforts within the major global markets.  
We have adopted the first-in, first-out method of accounting for
inventories and it generally takes between 30 and 60 days to sell the
methanol we produce or purchase. Accordingly, the changes in Adjusted
EBITDA as a result of changes in Methanex-produced and purchased
methanol costs primarily depend on changes in methanol pricing and
the timing of inventory flows.  
In a rising price environment, our margins at a given price are
higher than in a stable price environment as a result of timing of
methanol purchases and production versus sales. Conversely, the
opposite applies when methanol prices are decreasing. 
The impact on Adjusted EBITDA from changes in our cash costs are
explained below:  


 
 
                               Q2 2014           Q2 2014        YTD Q2 2014 
                         compared with     compared with      compared with 
($ millions)                   Q1 2014           Q2 2013        YTD Q2 2013 
----------------------------------------------------------------------------
 
Methanex-produced                                                           
 methanol costs           $         18     $         (25)     $         (75)
Proportion of Methanex-                                                     
 produced methanol                                                          
 sales                              (4)               20                 24 
Purchased methanol                                                          
 costs                              33               (37)              (114)
Other, net                           4                 2                 (5)
----------------------------------------------------------------------------
                          $         51     $         (40)     $        (170)
----------------------------------------------------------------------------

Methanex-produced methanol costs  
We purchase natural gas for the New Zealand, Trinidad, Egypt, and
Chile methanol facilities under natural gas purchase agreements where
the unique terms of each contract include a base price and a variable
price component linked to the price of methanol to reduce our
commodity price risk exposure. The variable price component of each
gas contract is adjusted by a formula related to methanol prices
above a certain level. For the second quarter of 2014 compared with
the first quarter of 2014, Methanex-produced methanol costs were
lower by $18 million, primarily due to the impact of lower realized
methanol prices on the variable portion of our natural gas costs. For
the three and six month periods ended June 30, 2014 compared with the
same periods in 2013, Methanex-produced methanol costs were higher by
$25 million and $75 million, respectively, primarily due to the
impact of 
higher realized methanol prices on our natural gas costs
and changes in the mix of production sold from inventory. 
Proportion of Methanex-produced methanol sales  
The cost of purchased methanol is directly linked to the selling
price for methanol at the time of purchase and the cost of purchased
methanol is generally higher than the cost of Methanex-produced
methanol. Accordingly, an increase in the proportion of
Methanex-produced methanol sales results in a decrease in our overall
cost structure for a given period. For the second quarter of 2014
compared with the first quarter of 2014, a lower proportion of
Methanex-produced methanol sales decreased Adjusted EBITDA by $4
million. For the second quarter of 2014 compared with the same period
in 2013, sales of Methanex-produced methanol made up a higher
proportion of our total sales and this increased Adjusted EBITDA by
$20 million. 
Purchased methanol costs  
Changes in purchased methanol costs for all periods presented are
primarily as a result of changes in methanol pricing. 
Other, net  
We have commenced the process of building a manufacturing
organization in Geismar, Louisiana. Under IFRS, costs incurred
related to organizational build-up are not eligible for
capitalization and are charged directly to earnings as incurred.
During the second quarter of 2014, we incurred approximately $2
million of Geismar organizational build-up costs compared to $3
million in the first quarter of 2014 and nil in the second quarter of
2013. The remaining organizational build-up costs are estimated to be
approximately $20 million.  
Mark-to-Market Impact of Share-based Compensation  
We grant share-based awards as an element of compensation.
Share-based awards granted include stock options, share appreciation
rights, tandem share appreciation rights, deferred share units,
restricted share units and performance share units. For all the
share-based awards, share-based compensation is recognized over the
related vesting period for the proportion of the service that has
been rendered at each reporting date. Share-based compensation
includes an amount related to the grant-date value and a
mark-to-market impact as a result of subsequent changes in the
Company's share price. The grant-date value amount is included in
Adjusted EBITDA and Adjusted net income. The mark-to-market impact of
share-based compensation as a result of changes in our share price is
excluded from Adjusted EBITDA and Adjusted net income and analyzed
separately.  


 
 
                                Three Months Ended         Six Months Ended 
                          ------------------------------ -------------------
($ millions except share     Jun 30     Mar 31    Jun 30    Jun 30    Jun 30
 price)                        2014       2014      2013      2014      2013
-------------------------------------------------------- -------------------
 
Methanex Corporation share                                                  
 price (1)                 $  61.78   $  63.94  $  42.84  $  61.78  $  42.84
 
Grant-date fair value                                                       
 expense included in                                                        
 Adjusted EBITDA and                                                        
 Adjusted net income              7          7         6        14        12
Mark-to-market impact due                                                   
 to change in share price        (8)        18         9        10        40
-------------------------------------------------------- -------------------
Total share-based                                                           
 compensation expense                                                       
 (recovery)                $     (1)  $     25  $     15  $     24  $     52
-------------------------------------------------------- -------------------
 
(1) US dollar share price of Methanex Corporation as quoted on NASDAQ Global
    Market on the last trading day of the respective period.                

The Methanex Corporation share price decreased from US $63.94 per share
at March 31, 2014 to US $61.78 per share at June 30, 2014. As a
result of the decrease in the share price and the resulting impact on
the fair value of the outstanding units, we recorded an $8 million
mark-to-market recovery on share-based compensation in the second
quarter of 2014 compared with an $18 million mark-to-market expense
in the first quarter of 2014 and a $9 million expense in the second
quarter of 2013.  
Depreciation and Amortization   
Depreciation and amortization was $33 million for the second quarter
of 2014 compared with $35 million for the first quarter of 2014 and
$29 million for the second quarter of 2013. Depreciation and
amortization was lower in the second quarter of 2014 compared with
the first quarter of 2014 primarily due to lower sales volumes of
Methanex-produced methanol.  
Finance Costs 


 
 
                                Three Months Ended        Six Months Ended  
                           ----------------------------- -------------------
                             Jun 30    Mar 31    Jun 30    Jun 30    Jun 30 
($ millions)                   2014      2014      2013      2014      2013 
-------------------------------------------------------- -------------------
 
Finance costs before                                                        
 capitalized interest       $    15   $    16   $    17   $    31   $    33 
Less capitalized interest        (6)       (5)       (2)      (11)       (3)
-------------------------------------------------------- -------------------
 
Finance costs               $     9   $    11   $    15   $    20   $    30 
-------------------------------------------------------- -------------------

Finance costs before capitalized interest primarily relate to interest
expense on the unsecured notes and limited recourse debt facilities.
Capitalized interest relates to interest costs capitalized for the
Geismar projects. 
Finance Income and Other Expenses 


 
 
                                 Three Months Ended        Six Months Ended 
                           ----------------------------- -------------------
                              Jun 30    Mar 31    Jun 30    Jun 30    Jun 30
($ millions)                    2014      2014      2013      2014      2013
-------------------------------------------------------- -------------------
 
Finance income and other                                                    
 expenses                     $    1    $    -    $    3    $    1    $    1
----------------------------------------------------------------------------

The change in finance income and other expenses for all periods
presented was primarily due to the impact of changes in foreign
exchange rates. 
Income Taxes  
A summary of our income taxes for the second quarter of 2014 compared
with the first quarter of 2014 is as follows:  


 
 
                        Three Months Ended           Three Months Ended     
                           June 30, 2014               March 31, 2014       
                    ---------------------------- ---------------------------
                                       Adjusted                    Adjusted 
($ millions, except          Net            Net          Net            Net 
 where noted)             Income     Income (1)       Income     Income (1) 
------------------------------------------------ ---------------------------
 
Amount before income                                                        
 tax                  $      185    $       120   $      220    $       210 
Income tax expense           (46)           (29)         (52)           (50)
------------------------------------------------ ---------------------------
Amount after income                                                         
 tax                  $      139    $        91   $      168    $       160 
------------------------------------------------ ---------------------------
 
Effective tax rate            25%            24%          24%            24%
----------------------------------------------------------------------------
 
(1) This item is a non-GAAP measure that does not have any standardized     
    meaning prescribed by GAAP and therefore is unlikely to be comparable to
    similar measures presented by other companies. Refer to the Additional  
    Information - Supplemental Non-GAAP Measures section for a description  
    of the non-GAAP measure and reconciliation to the most comparable GAAP  
    measure.                                                                

For the second quarter of 2014, the effective tax rate was 25% compared
with 24% for the first quarter of 2014. Adjusted net income
represents the amount that is attributable to Methanex shareholders
and excludes the mark-to-market impact of share-based compensation
and items that are considered by management to be non-operational.
The effective 
tax rate related to Adjusted net income was 24% for the
second quarter of 2014 compared with 24% for the first quarter of
2014.  
We earn the majority of our earnings in Trinidad, Egypt, Chile,
Canada and New Zealand. In Trinidad and Chile, the statutory tax rate
is 35%. The statutory rates in Canada and New Zealand are 25% and
28%, respectively. During the quarter, there was a temporary change
to the Egypt statutory tax rate to 30% from 25% for the years 2014 to
2016. As the Atlas entity is accounted for using the equity method,
any income taxes related to Atlas are included in earnings of
associate and therefore excluded from total income taxes.  
SUPPLY/DEMAND FUNDAMENTALS  


 
 
             Methanex Non-Discounted Regional Posted Prices (1)             
                                     Jul         Jun         May         Apr
(US$ per tonne)                     2014        2014        2014        2014
----------------------------------------------------------------------------
 
United States                        482         532         565         599
Europe (2)                           440         565         565         565
Asia Pacific                         410         430         460         480
----------------------------------------------------------------------------
(1) Discounts from our posted prices are offered to customers based on      
    various factors.                                                        
(2) EUR322 for Q3 2014 (Q2 2014 - EUR412) converted to United States        
    dollars.                                                                
----------------------------------------------------------------------------

We estimate that methanol demand, excluding methanol demand from
integrated methanol to olefins facilities, is currently approximately
57 million tonnes on an annualized basis.  
In the fourth quarter of 2013 and into the first quarter of 2014, we
experienced very tight methanol market conditions and high methanol
pricing primarily as a result of major industry supply issues in Asia
and the Middle East. As several of these plants returned to operation
late in the first quarter, pricing moderated through the quarter,
stabilizing in June and into Q3. As a result, our average
non-discounted price in the second quarter of 2014 was $523 per tonne
compared with $613 per tonne in the first quarter of 2014 and we
recently announced our North American non-discounted price for August
at $482/tonne, and our Asia Pacific price at $410/tonne, both
unchanged from July. In June, we announced the Q3 European contract
price at EUR322 or approximately $440/tonne.  
The medium term outlook for methanol demand growth continues to be
strong, led by the growing use of methanol in energy-related
applications which today represent approximately 40% of global
methanol demand. The wide disparity between the price of crude oil
and that of natural gas and coal has resulted in an increased
substitution of methanol into energy-related applications, such as
direct methanol blending into gasoline, DME and biodiesel production.
Growth of direct methanol blending into gasoline in China has been
particularly strong and we believe that future growth in this
application is supported by numerous provincial fuel-blending
standards, such as M15 or M85 (15% methanol and 85% methanol,
respectively). Fuel blending is also starting to gain interest
outside of China with several countries currently conducting
demonstration programs to test the use of methanol-blended fuels.  
China is also leading the commercialization of methanol's use as a
feedstock to manufacture olefins. Methanol-to-olefins (MTO)
technology, at current energy prices, is proving to be cost
competitive relative to the traditional production of olefins from
naphtha. There are now three MTO plants operating in China which are
dependent on merchant methanol supply and which have the capacity to
consume over 3 million tonnes of methanol annually, and there are a
number of other plants at various stages of construction which we
expect will commence operations in the 2014-15 timeframe. There are
other coal-to-olefins (CTO) plants which make methanol using coal as
a feedstock and are integrated with olefins production facilities.
These plants occasionally purchase methanol to supplement their
production when required. We believe demand potential into
energy-related applications and olefins production will continue to
grow.  
Traditional chemical derivatives consume about 60% of global methanol
demand and growth is correlated to industrial production growth
rates.  
The methanol price will ultimately depend on the strength of the
global economy, industry operating rates, global energy prices, new
supply additions and the strength of global demand. Over the next few
years, there is a modest level of new capacity expected to come
on-stream relative to demand growth expectations. We are relocating
two idle Chile facilities to Geismar, Louisiana and are targeting to
be producing methanol from the first 1.0 million tonne facility by
late 2014 and the second 1.0 million tonne facility in early 2016. In
addition, a 1.3 million tonne Celanese plant is currently under
construction in Bishop, Texas. We expect that production from new
capacity in China will be consumed in that country and that higher
cost production capacity in China will need to operate in order to
satisfy demand growth. 
LIQUIDITY AND CAPITAL RESOURCES  
Cash flows from operating activities in the second quarter of 2014
increased by $61 million to $240 million compared with $179 million
for the first quarter of 2014 and increased by $115 million compared
to $125 million for the second quarter of 2013. The changes in cash
flows from operating activities resulted from changes in the
following:  


 
 
                                    Q2 2014         Q2 2014     YTD Q2 2014 
                              compared with   compared with   compared with 
($ millions)                        Q1 2014         Q2 2013     YTD Q2 2013 
----------------------------------------------------------------------------
 
Change in Adjusted EBITDA                                                   
 (attributable to Methanex                                                  
 shareholders)                 $        (95)   $          3    $        108 
Exclude change in Adjusted                                                  
 EBITDA of associate (Atlas)              6               7              (1)
Dividends received from                                                     
 associate                               25              25              25 
Cash flows attributable to                                                  
 non-controlling interests              (13)              2              26 
Non-cash working capital                 67              13             (30)
Income taxes paid                        (1)             (5)             (8)
Argentina gas settlement                 42              42              42 
Geismar project relocation                                                  
 expenses                                 -              34              34 
Share-based payments                     33              (4)            (23)
Other                                    (3)             (2)              3 
----------------------------------------------------------------------------
Increase in cash flows from                                                 
 operating activities          $         61    $        115    $        176 
----------------------------------------------------------------------------

During the second quarter of 2014, we paid a quarterly dividend of
$0.25 per share, or $24 million. On April 29, 2014, the Board of
Directors approved a 5% normal course issuer bid, which allows us to
repurchase for cancellation up to 4.8 million shares. In the second
quarter of 2014 we repurchased 1.4 million shares for cancellation
under the norma
l course issuer bid at an average price of $59.99 per
share.  
We operate in a highly competitive commodity industry and believe it
is appropriate to maintain a conservative balance sheet and retain
financial flexibility. At June 30, 2014, our cash balance was $647
million, including $65 million related to the 50% non-controlling
interest in Egypt. We invest our cash only in highly rated
instruments that have maturities of three months or less to ensure
preservation of capital and appropriate liquidity. We have a strong
balance sheet and an undrawn $400 million credit facility that
expires in late 2016.  
Our planned capital maintenance expenditure program directed towards
maintenance, turnarounds and catalyst changes for existing operations
is currently estimated to be $130 million for the 18 month period to
the end of 2015. Capital expenditures during the second quarter,
excluding the Geismar projects, were $16 million. We are relocating
two methanol plants from our Chile site to Geismar, Louisiana. During
the second quarter of 2014, capital expenditures related to the
Geismar projects were $100 million, excluding capitalized interest.
The remaining budgeted capital expenditures related to the Geismar
projects are $405 million, excluding capitalized interest.  
We believe we are well positioned to meet our financial commitments,
invest to grow the Company and continue to deliver on our commitment
to return excess cash to shareholders. 
SHORT-TERM OUTLOOK  
Methanol prices moderated through the second quarter. Entering the
third quarter, methanol prices have been relatively stable. We
recently announced our August contract prices for Asia at US$410/MT
and for North America at US$482/MT, unchanged at the previous month's
levels. Methanol prices will ultimately depend on the strength of the
global economy, industry operating rates, global energy prices, new
supply additions and the strength of global demand. We believe that
our financial position and financial flexibility, outstanding global
supply network and competitive-cost position will provide a sound
basis for Methanex to continue to be the leader in the methanol
industry and to invest to grow the Company. 
CONTROLS AND PROCEDURES  
For the three months ended June 30, 2014, no changes were made in our
internal control over financial reporting that have materially
affected, or are reasonably likely to materially affect, our internal
control over financial reporting. 
ADDITIONAL INFORMATION - SUPPLEMENTAL NON-GAAP MEASURES  
In addition to providing measures prepared in accordance with
International Financial Reporting Standards (IFRS), we present
certain supplemental non-GAAP measures. These are Adjusted EBITDA,
Adjusted net income, Adjusted net income per common share and
operating income. These measures do not have any standardized meaning
prescribed by generally accepted accounting principles (GAAP) and
therefore are unlikely to be comparable to similar measures presented
by other companies. These supplemental non-GAAP measures are provided
to assist readers in determining our ability to generate cash from
operations and improve the comparability of our results from one
period to another. We believe these measures are useful in assessing
operating performance and liquidity of the Company's ongoing business
on an overall basis. We also believe Adjusted EBITDA is frequently
used by securities analysts and investors when comparing our results
with those of other companies. 
Adjusted EBITDA (attributable to Methanex shareholders)  
Adjusted EBITDA differs from the most comparable GAAP measure, net
income attributable to Methanex shareholders, because it excludes
depreciation and amortization, finance costs, finance income and
other expenses, income tax expense, mark-to-market impact of
share-based compensation, Geismar project relocation expenses and
charges, write-off of oil and gas rights, and the Argentina gas
settlement. Adjusted EBITDA includes an amount representing our 63.1%
interest in the Atlas facility and our 50% interest in the methanol
facility in Egypt.  
Adjusted EBITDA and Adjusted net income exclude the mark-to-market
impact of share-based compensation related to the impact of changes
in our share price on share appreciation rights, tandem share
appreciation rights, deferred share units, restricted share units and
performance share units. The mark-to-market impact related to
performance share units that is excluded from Adjusted EBITDA and
Adjusted net income is calculated as the difference between the grant
date value determined using a Methanex total shareholder return
factor of 100% and the fair value recorded at each period end. As
share-based awards will be settled in future periods, the ultimate
value of the units is unknown at the date of grant and therefore the
grant date value recognized in Adjusted EBITDA and Adjusted net
income may differ from the total settlement cost.  
The following table shows a reconciliation from net income
attributable to Methanex shareholders to Adjusted EBITDA: 


 
 
                               Three Months Ended         Six Months Ended  
                          -----------------------------  -------------------
                            Jun 30    Mar 31    Jun 30     Jun 30    Jun 30 
($ millions)                  2014      2014      2013       2014      2013 
-------------------------------------------------------  -------------------
 
Net income attributable to                                                  
 Methanex shareholders     $   125   $   145   $    54    $   270   $   114 
  Mark-to-market impact of                                                  
   share-based                                                              
   compensation                 (8)       18         9         10        40 
  Depreciation and                                                          
   amortization                 33        35        29         68        59 
  Argentina gas settlement     (42)        -         -        (42)        - 
  Write-off of oil and gas                                                  
   rights                        -         -        17          -        17 
  Geismar project                                                           
   relocation expenses and                                                  
   charges                       -         -        34          -        34 
  Finance costs                  9        11        15         20        30 
  Finance income and other                                                  
   expenses                     (1)        -        (3)        (1)       (1)
  Income tax expense            46        52         1         98        13 
  Earnings of associate,                                                    
   excluding amount                                                         
   included in Adjusted                                                     
   EBITDA (1)                    9         9        12         18        20 
  Non-controlling                                                           
   interests adjustment                                                     
   (1)                         (11)      (15)      (11)       (26)      (19)
-------------------------------------------------------  -------------------
Adjusted EBITDA                                                             
 (attributable to Methanex                                                  
 shareholders)             $   160   $   255   $   157    $   415   $   307 
-------------------------------------------------------  -------------------
 
(1) These adjustments represent depreciation and amortization, finance      
    costs, finance income and other expenses and income tax expense         
    associated with the non-controlling interest in the methanol facility in
    Egypt and our 63.1% interest in the Atlas methanol facility.            

Adjusted Net Income and Adjusted Net Income per Common Share  
Adjusted net income and Adjusted net income per common share are
non-GAAP measures because they exclude the mark-to-market impact of
share-based compensation and items that are considered by management
to be non-operational, including Geismar project relocation expenses
and charges, write-off of oil and gas rights, and the Argentina gas
settlement. The following table shows a reconciliation of net income
attributable to Methanex shareholders to Adjusted net income and the
calculation of Adjusted net income per common share:  


 
 
                               Three Months Ended         Six Months Ended  
                          -----------------------------  -------------------
($ millions except number                                                   
 of shares and per share    Jun 30    Mar 31    Jun 30     Jun 30    Jun 30 
 amounts)                     2014      2014      2013       2014      2013 
-------------------------------------------------------  ------------------
-
 
Net income attributable to                                                  
 Methanex shareholders     $   125   $   145   $    54    $   270   $   114 
  Mark-to-market impact of                                                  
   share-based                                                              
   compensation                 (8)       18         9         10        40 
  Argentina gas settlement     (42)        -         -        (42)        - 
  Write-off of oil and gas                                                  
   rights                        -         -        17          -        17 
  Geismar project                                                           
   relocation expenses and                                                  
   charges                       -         -        34          -        34 
  Income tax expense                                                        
   (recovery) related to                                                    
   above items                  16        (3)      (15)        13       (19)
-------------------------------------------------------  -------------------
Adjusted net income        $    91   $   160   $    99    $   251   $   186 
-------------------------------------------------------  -------------------
Diluted weighted average                                                    
 shares outstanding                                                         
 (millions)                     97        97        96         97        96 
Adjusted net income per                                                     
 common share              $  0.94   $  1.65   $  1.02    $  2.59   $  1.94 
-------------------------------------------------------  -------------------

Operating Income  
Operating income is reconciled directly to a GAAP measure in our
consolidated statements of income. 
QUARTERLY FINANCIAL DATA (UNAUDITED)  
A summary of selected financial information for the prior eight
quarters is as follows: 


 
 
                                             Three Months Ended             
                                --------------------------------------------
($ millions, except per share        Jun 30     Mar 31     Dec 31     Sep 30
 amounts)                              2014       2014       2013       2013
----------------------------------------------------------------------------
 
Revenue                            $    792   $    968   $    881   $    758
Adjusted EBITDA (1 2)                   160        255        245        184
Net income (1)                          125        145        128         87
Adjusted net income (1 2)                91        160        167        117
Basic net income per common                                                 
 share (1)                             1.30       1.51       1.33       0.91
Diluted net income per common                                               
 share (1)                             1.24       1.50       1.32       0.90
Adjusted net income per share (1                                            
 2)                                    0.94       1.65       1.72       1.22
----------------------------------------------------------------------------
 
                                             Three Months Ended             
                                --------------------------------------------
($ millions, except per share        Jun 30     Mar 31    Dec 31     Sep 30 
 amounts)                              2013       2013      2012       2012 
----------------------------------------------------------------------------
 
Revenue                            $    733   $    652   $   668    $   608 
Adjusted EBITDA (1 2)                   157        149       119        104 
Net income (loss) (1)                    54         60      (140)        (3)
Adjusted net income (1 2)                99         88        61         36 
Basic net income (loss) per                                                 
 common share (1)                      0.57       0.64     (1.49)     (0.03)
Diluted net income (loss) per                                               
 common share (1)                      0.56       0.63     (1.49)     (0.03)
Adjusted net income per share (1                                            
 2)                                    1.02       0.92      0.64       0.38 
----------------------------------------------------------------------------
 
(1) Attributable to Methanex Corporation shareholders.                      
(2) These items are non-GAAP measures that do not have any standardized     
    meaning prescribed by GAAP and therefore are unlikely to be comparable  
    to similar measures presented by other companies. Refer to the          
    Additional Information - Supplemental Non-GAAP Measures section for a   
    description of each non-GAAP measure and reconciliations to the most    
    comparable GAAP measures.                                               

FORWARD-LOOKING INFORMATION WARNING  
This Second Quarter 2014 Management's Discussion and Analysis
("MD&A") as well as comments made during the Second Quarter 2014
investor conference call contain forward-looking statements with
respect to us and our industry. These statements relate to future
events or our future performance. All statements other than
statements of historical fact are forward-looking statements.
Statements that include the words "believes", "expects", "may",
"will", "should", "potential", "estimates", "anticipates", "aim",
"goal" or other comparable terminology and similar statements of a
future or forward-looking nature identify forward-looking statements. 
More particularly and without limitation, any statements regarding
the following are forward-looking statements: 


 
 
--  expected demand for methanol and its derivatives, 
--  expected new methanol supply or restart of idled capacity and timing for
    start-up of the same, 
--  expected shutdowns (either temporary or permanent) or restarts of
    existing methanol supply (including our own facilities), including,
    without limitation, the timing and length of planned maintenance
    outages, 
--  expected methanol and energy prices, 
--  expected levels of methanol purchases from traders or other third
    parties, 
--  expected levels, timing and availability of economically priced natural
    gas supply to each of our plants, 
--  capital committed by third parties towards future natural gas
    exploration and development in the vicinity of our plants, 
--  our expected capital expenditures, 
--  anticipated operating rates of our plants, 
--  expected operating costs, including natural gas feedstock costs and
    logistics costs, 
--  expected tax rates or resolutions to tax disputes, 
--  expected cash flows, earnings capability and share price, 
--  availability of committed credit facilities and other financing, 
--  ability to meet covenants or obtain or continue to obtain waivers
    associated with our long-term debt obligations, including, without
    limitation, the Egypt limited recourse debt facilities that have
    conditions associated with the payment of cash or other distributions
    and the finalization of certain land title registration and related
    mortgages that require action by Egyptian governmental entities, 
--  our shareholder distribution strategy and anticipated distributions to
    shareholders, 
--  commercial viability and timing of, or our ability to execute, future
    projects, plant restarts, capacity expansions, plant relocations, or
    other business initiatives or opportunities, including the planned
    relocation of idle Chile methanol plants to Geismar, Louisiana
    ("Geismar"), 
--  our financial strength and ability to meet future financial commitments,
--  expected global or regional economic activity (including industrial
    production levels), 
--  expected outcomes of litigation or other disputes, claims and
    assessments, 
--  expected actions of governments, government agencies, gas suppliers,
    courts, tribunals or other third parties, and 
--  expected impact on our operations in Egypt or our financial condition as
    a consequence of civil unrest or actions taken or inaction by the
    Government of Egypt and its agencies. 

We believe that we have a reasonable basis for making such
forward-looking statements. The forward-looking statements in this
document are based on our experience, our perception of trends,
current conditions and expected future developments as well as other
factors. Certain material factors or assumptions were applied in
drawing the conclusions or making the forecasts or projections that
are included in these forward-looking statements, including, without
limitation, future expectations and assumptions concerning the
following:  


 
 
--  the supply of, demand for and price of methanol, methanol derivatives,
    natural gas, coal, oil and oil derivatives, 
--  our ability t
o procure natural gas feedstock on commercially acceptable
    terms, 
--  operating rates of our facilities, 
--  receipt or issuance of third-party consents or approvals, including,
    without limitation, governmental registrations of land title and related
    mortgages in Egypt, governmental approvals related to rights to purchase
    natural gas, 
--  the establishment of new fuel standards, 
--  operating costs including natural gas feedstock and logistics costs,
    capital costs, tax rates, cash flows, foreign exchange rates and
    interest rates, 
--  the availability of committed credit facilities and other financing, 
--  timing of completion and cost of our Geismar project, 
--  global and regional economic activity (including industrial production
    levels), 
--  absence of a material negative impact from major natural disasters, 
--  absence of a material negative impact from changes in laws or
    regulations, 
--  absence of a material negative impact from political instability in the
    countries in which we operate, and 
--  enforcement of contractual arrangements and ability to perform
    contractual obligations by customers, natural gas and other suppliers
    and other third parties. 

However, forward-looking statements, by their nature, involve risks and
uncertainties that could cause actual results to differ materially
from those contemplated by the forward-looking statements. The risks
and uncertainties primarily include those attendant with producing
and marketing methanol and successfully carrying out major capital
expenditure projects in various jurisdictions, including, without
limitation: 


 
 
--  conditions in the methanol and other industries including fluctuations
    in the supply, demand for and price of methanol and its derivatives,
    including demand for methanol for energy uses, 
--  the price of natural gas, coal, oil and oil derivatives, 
--  the success of natural gas exploration and development activities in
    southern Chile, 
--  our ability to obtain natural gas feedstock on commercially acceptable
    terms to underpin current operations and future production growth
    opportunities, 
--  the ability to successfully carry out corporate initiatives and
    strategies, 
--  actions of competitors, suppliers and financial institutions, 
--  conditions within the natural gas delivery systems that may prevent
    delivery of our natural gas supply requirements, 
--  our ability to meet timeline and budget targets for our Geismar project,
    including cost pressures arising from labour costs, 
--  competing demand for natural gas, especially with respect to domestic
    needs for gas and electricity in Chile and Egypt, 
--  actions of governments and governmental authorities, including, without
    limitation, the implementation of policies or other measures that could
    impact the supply of or demand for methanol or its derivatives, 
--  changes in laws or regulations, 
--  import or export restrictions, anti-dumping measures, increases in
    duties, taxes and government royalties, and other actions by governments
    that may adversely affect our operations or existing contractual
    arrangements, 
--  world-wide economic conditions, 
--  satisfaction of conditions precedent contained in the Geismar 1 natural
    gas supply agreement, and 
--  other risks described in our 2013 Management's Discussion and Analysis
    and this Second Quarter 2014 Management's Discussion and Analysis.  

Having in mind these and other factors, investors and other readers are
cautioned not to place undue reliance on forward-looking statements.
They are not a substitute for the exercise of one's own due diligence
and judgment. The outcomes anticipated in forward-looking statements
may not occur and we do not undertake to update forward-looking
statements except as required by applicable securities laws. 
HOW WE ANALYZE OUR BUSINESS  
Our operations consist of a single operating segment - the production
and sale of methanol. We review our results of operations by
analyzing changes in the components of Adjusted EBITDA (refer to the
Additional Information - Supplemental Non-GAAP Measures section for a
description of each non-GAAP measure and reconciliations to the most
comparable GAAP measures).  
In addition to the methanol that we produce at our facilities
("Methanex-produced methanol"), we also purchase and re-sell methanol
produced by others ("purchased methanol") and we sell methanol on a
commission basis. We analyze the results of all methanol sales
together, excluding commission sales volumes. The key drivers of
changes in Adjusted EBITDA are average realized price, cash costs and
sales volume which are defined and calculated as follows:  


 
 
PRICE     The change in Adjusted EBITDA as a result of changes in average   
          realized price is calculated as the difference from period to     
          period in the selling price of methanol multiplied by the current 
          period total methanol sales volume excluding commission sales     
          volume plus the difference from period to period in commission    
          revenue.                                                          
 
CASH COST The change in Adjusted EBITDA as a result of changes in cash costs
          is calculated as the difference from period to period in cash     
          costs per tonne multiplied by the current period total methanol   
          sales volume excluding commission sales volume in the current     
          period. The cash costs per tonne is the weighted average of the   
          cash cost per tonne of Methanex-produced methanol and the cash    
          cost per tonne of purchased methanol. The cash cost per tonne of  
          Methanex-produced methanol includes absorbed fixed cash costs per 
          tonne and variable cash costs per tonne. The cash cost per tonne  
          of purchased methanol consists principally of the cost of methanol
          itself. In addition, the change in Adjusted EBITDA as a result of 
          changes in cash costs includes the changes from period to period  
          in unabsorbed fixed production costs, consolidated selling,       
          general and administrative expenses and fixed storage and handling
          costs.                                                            
 
VOLUME    The change in Adjusted EBITDA as a result of changes in sales     
          volume is calculated as the difference from period to period in   
          total methanol sales volume excluding commission sales volumes    
          multiplied by the margin per tonne for the prior period. The      
          margin per tonne for the prior period is the weighted average     
          margin per tonne of Methanex-produced methanol and margin per     
          tonne of purchased methanol. The margin per tonne for Methanex-   
          produced methanol is calculated as the selling price per tonne of 
          methanol less absorbed fixed cash costs per tonne and variable    
          cash costs per tonne. The margin per tonne for purchased methanol 
          is calculated as the selling price per tonne of methanol less the 
          cost of purchased methanol per tonne.                             

We own 63.1% of the Atlas methanol facility and market the remaining
36.9% of its production through a commission offtake agreement. A
contractual agreement between us and our partners establishes joint
control over Atlas. As a result, we account for this investment using
the equity method of accounting, which results in 63.1% of the net
assets and net earnings of Atlas being presented separately in the
consolidated statements of financial position and consolidated
statements of income, respectively. For purposes of analyzing our
business, Adjusted EBITDA, Adjusted net income and Adjusted net
income per common share include an amount representing our 63.1%
equity share in Atlas.  
On December 9, 2013, we completed the sale of a 10% equity interest
in the Egypt methanol facility. At June 30, 2014, we own 50% of the
1.26 million tonne per year Egypt methanol facility and market the
remaining 50% of its production through a commission offtake
agreement. We account for this investment using consolidation
accounting, which results in 100% of the revenues and expenses being
included in our financial statements with the other investors'
interests in the methanol facility being presented as
"non-controlling interests". For purposes of analyzing our business,
Adjusted EBITDA, Adjusted net income and Adjusted net income per
common share exclude the amount associated with the other investors'
non-controlling interests. 


 
 
Methanex Corporation                                                        
Consolidated Statements of Income (unaudited)                               
(thousands of U.S. dollars, except number of common shares and per share    
amounts)                                                      
              
 
                           Three Months Ended          Six Months Ended     
                       -------------------------- --------------------------
                             Jun 30       Jun 30        Jun 30       Jun 30 
                               2014         2013          2014         2013 
----------------------------------------------------------------------------
----------------------------------------------------------------------------
 
Revenue                 $   791,310  $   733,099   $ 1,759,788  $ 1,384,998 
Cost of sales and                                                           
 operating expenses        (610,294)    (580,116)   (1,320,166)  (1,108,111)
Depreciation and                                                            
 amortization               (33,113)     (28,953)      (67,924)     (58,770)
Argentina gas                                                               
 settlement (note 11)        42,000            -        42,000            - 
Write-off of oil and                                                        
 gas rights                       -      (16,859)            -      (16,859)
Geismar project                                                             
 relocation expenses                                                        
 and charges                      -      (33,867)            -      (33,867)
----------------------------------------------------------------------------
Operating income            189,903       73,304       413,698      167,391 
Earnings of associate                                                       
 (note 4)                     3,293        6,017        10,704        7,303 
Finance costs (note 6)       (9,570)     (14,618)      (20,408)     (30,069)
Finance income and                                                          
 other expenses               1,277        2,698           914        1,071 
----------------------------------------------------------------------------
Income before income                                                        
 taxes                      184,903       67,401       404,908      145,696 
Income tax recovery                                                         
 (expense):                                                                 
  Current                   (27,275)     (23,276)      (53,653)     (27,667)
  Deferred                  (19,154)      21,726       (44,442)      14,055 
----------------------------------------------------------------------------
                            (46,429)      (1,550)      (98,095)     (13,612)
----------------------------------------------------------------------------
Net income              $   138,474  $    65,851   $   306,813  $   132,084 
----------------------------------------------------------------------------
Attributable to:                                                            
  Methanex Corporation                                                      
   shareholders             124,784       53,999       269,886      114,266 
  Non-controlling                                                           
   interests                 13,690       11,852        36,927       17,818 
----------------------------------------------------------------------------
                        $   138,474  $    65,851   $   306,813  $   132,084 
----------------------------------------------------------------------------
 
Income per share for                                                        
 the period                                                                 
 attributable to                                                            
 Methanex Corporation                                                       
 shareholders                                                               
  Basic net income per                                                      
   common share (note                                                       
   7)                   $      1.30  $      0.57   $      2.81  $      1.21 
  Diluted net income                                                        
   per common share                                                         
   (note 7)             $      1.24  $      0.56   $      2.79  $      1.19 
 
Weighted average number                                                     
 of common shares                                                           
 outstanding (note 7)    96,124,565   95,116,950    96,212,652   94,817,234 
Diluted weighted                                                            
 average number of                                                          
 common shares                                                              
 outstanding (note 7)    97,322,144   96,260,035    96,818,731   95,998,786 
 
See accompanying notes to condensed consolidated interim financial          
 statements.                                                                
 
Methanex Corporation                                                        
Consolidated Statements of Comprehensive Income (unaudited)                 
(thousands of U.S. dollars)                                                 
 
                                 Three Months Ended      Six Months Ended   
                               ---------------------- ----------------------
                                   Jun 30     Jun 30      Jun 30     Jun 30 
                                     2014       2013        2014       2013 
----------------------------------------------------------------------------
----------------------------------------------------------------------------
 
Net income                      $ 138,474  $  65,851   $ 306,813  $ 132,084 
  Other comprehensive income                                                
   (loss), net of taxes:                                                    
    Items that may be                                                       
     reclassified to income:                                                
      Change in fair value of                                               
       forward exchange                                                     
       contracts                      128     (4,262)        276     (4,446)
      Change in fair value of                                               
       interest rate swap                                                   
       contracts                      744         (4)        478       (300)
      Realized loss on interest                                             
       rate swap contracts                                                  
       reclassified to finance                                              
       costs                        2,213      2,792       4,426      5,383 
----------------------------------------------------------------------------
                                    3,085     (1,474)      5,180        637 
----------------------------------------------------------------------------
Comprehensive income            $ 141,559  $  64,377   $ 311,993  $ 132,721 
----------------------------------------------------------------------------
Attributable to:                                                            
  Methanex Corporation                                                      
   shareholders                   126,393     51,410     272,121    112,870 
  Non-controlling interests        15,166     12,967      39,872     19,851 
----------------------------------------------------------------------------
                                $ 141,559  $  64,377   $ 311,993  $ 132,721 
----------------------------------------------------------------------------
 
See accompanying notes to condensed consolidated interim financial          
 statements.                                                                
 
Methanex Corporation                                                        
Consolidated Statements of Financial Positio
n (unaudited)                   
(thousands of U.S. dollars)                                                 
 
                                                      Jun 30         Dec 31 
AS AT                                                   2014           2013 
----------------------------------------------------------------------------
----------------------------------------------------------------------------
 
ASSETS                                                                      
Current assets:                                                             
  Cash and cash equivalents                     $    647,482   $    732,736 
  Trade and other receivables                        487,791        534,130 
  Inventories (note 2)                               279,048        313,809 
  Prepaid expenses                                    28,743         20,533 
----------------------------------------------------------------------------
                                                   1,443,064      1,601,208 
Non-current assets:                                                         
  Property, plant and equipment (note 3)           2,431,390      2,230,938 
  Investment in associate (note 4)                   201,872        216,095 
  Other assets                                        70,484         65,253 
----------------------------------------------------------------------------
                                                   2,703,746      2,512,286 
----------------------------------------------------------------------------
                                                $  4,146,810   $  4,113,494 
----------------------------------------------------------------------------
 
LIABILITIES AND EQUITY                                                      
Current liabilities:                                                        
  Trade, other payables and accrued                                         
   liabilities                                  $    512,186   $    618,181 
  Current maturities on long-term debt (note                                
   5)                                                 42,723         41,504 
  Current maturities on other long-term                                     
   liabilities                                       101,486         85,648 
----------------------------------------------------------------------------
                                                     656,395        745,333 
Non-current liabilities:                                                    
  Long-term debt (note 5)                          1,106,861      1,126,802 
  Other long-term liabilities                        127,300        188,520 
  Deferred income tax liabilities                    193,073        147,506 
----------------------------------------------------------------------------
                                                   1,427,234      1,462,828 
Equity:                                                                     
  Capital stock                                      533,794        531,573 
  Contributed surplus                                  3,283          4,994 
  Retained earnings                                1,278,741      1,126,700 
  Accumulated other comprehensive loss                (3,309)        (5,544)
----------------------------------------------------------------------------
  Shareholders' equity                             1,812,509      1,657,723 
  Non-controlling interests                          250,672        247,610 
----------------------------------------------------------------------------
  Total equity                                     2,063,181      1,905,333 
----------------------------------------------------------------------------
                                                $  4,146,810   $  4,113,494 
----------------------------------------------------------------------------
 
See accompanying notes to condensed consolidated interim financial          
 statements.                                                                
 
Methanex Corporation                                                        
Consolidated Statements of Changes in Equity (unaudited)                    
(thousands of U.S. dollars, except number of common shares)                 
 
                                                                Accumulated 
                  Number of                                           Other 
                     Common  Capital  Contributed   Retained  Comprehensive 
                     Shares    Stock      Surplus   Earnings           Loss 
----------------------------------------------------------------------------
Balance,                                                                    
 December 31,                                                               
 2012            94,309,970 $481,779 $     15,481 $  805,661 $      (13,045)
Net income                -        -            -    114,266              - 
Other                                                                       
 comprehensive                                                              
 income (loss)            -        -            -          -         (1,396)
Compensation                                                                
 expense                                                                    
 recorded for                                                               
 stock options            -        -          441          -              - 
Issue of shares                                                             
 on exercise of                                                             
 stock options    1,018,520   24,151            -          -              - 
Reclassification                                                            
 of grant date                                                              
 fair value on                                                              
 exercise of                                                                
 stock options            -    7,135       (7,135)         -              - 
Dividend                                                                    
 payments to                                                                
 Methanex                                                                   
 Corporation                                                                
 shareholders             -        -            -    (36,591)             - 
Distributions to                                                            
 non-controlling                                                            
 interests                -        -            -          -              - 
Equity                                                                      
 contributions                                                              
 by non                                                                     
 controlling                                                                
 interests                -        -            -          -              - 
----------------------------------------------------------------------------
Balance, June                                                               
 30, 2013        95,328,490  513,065        8,787    883,336        (14,441)
Net income                -        -            -    214,901              - 
Other                                                                       
 comprehensive                                                              
 income                   -        -            -      5,362          7,444 
Compensation                                                                
 expense                                                                    
 recorded for                                                               
 stock options            -        -          281          -              - 
Sale of partial                                                             
 interest in                                                                
 subsidiary               -        -            -     61,447          1,453 
Issue of shares                                                             
 on exercise of                                                             
 stock options      772,479   14,434            -          -              - 
Reclassification                                                            
 of grant date                                                              
 fair value on                                                              
 exercise of                                                                
 stock options            -    4,074       (4,074)         -              - 
Dividend                                                                    
 payments to                                                                
 Methanex                                   
                                
 Corporation                                                                
 shareholders             -        -            -    (38,346)             - 
Distributions to                                                            
 non-controlling                                                            
 interests                -        -            -          -              - 
----------------------------------------------------------------------------
Balance,                                                                    
 December 31,                                                               
 2013            96,100,969  531,573        4,994  1,126,700         (5,544)
Net income                -        -            -    269,886              - 
Other                                                                       
 comprehensive                                                              
 income                   -        -            -          -          2,235 
Compensation                                                                
 expense                                                                    
 recorded for                                                               
 stock options            -        -          464          -              - 
Issue of shares                                                             
 on exercise of                                                             
 stock options      430,287    7,701            -          -              - 
Reclassification                                                            
 of grant date                                                              
 fair value on                                                              
 exercise of                                                                
 stock options            -    2,175       (2,175)         -              - 
Payment for                                                                 
 shares                                                                     
 repurchased     (1,371,447)  (7,655)           -    (74,617)             - 
Dividend                                                                    
 payments to                                                                
 Methanex                                                                   
 Corporation                                                                
 shareholders             -        -            -    (43,228)             - 
Distributions to                                                            
 non-controlling                                                            
 interests                -        -            -          -              - 
----------------------------------------------------------------------------
Balance, June                                                               
 30, 2014        95,159,809 $533,794 $      3,283 $1,278,741 $       (3,309)
----------------------------------------------------------------------------
 
                                                    Non-                    
                       Shareholders'         Controlling              Total 
                              Equity           Interests             Equity 
----------------------------------------------------------------------------
Balance,                                                                    
 December 31,                                                               
 2012             $        1,289,876   $         187,861   $      1,477,737 
Net income                   114,266              17,818            132,084 
Other                                                                       
 comprehensive                                                              
 income (loss)                (1,396)              2,033                637 
Compensation                                                                
 expense                                                                    
 recorded for                                                               
 stock options                   441                   -                441 
Issue of shares                                                             
 on exercise of                                                             
 stock options                24,151                   -             24,151 
Reclassification                                                            
 of grant date                                                              
 fair value on                                                              
 exercise of                                                                
 stock options                     -                   -                  - 
Dividend                                                                    
 payments to                                                                
 Methanex                                                                   
 Corporation                                                                
 shareholders                (36,591)                  -            (36,591)
Distributions to                                                            
 non-controlling                                                            
 interests                         -             (13,024)           (13,024)
Equity                                                                      
 contributions                                                              
 by non                                                                     
 controlling                                                                
 interests                         -               1,000              1,000 
----------------------------------------------------------------------------
Balance, June                                                               
 30, 2013                  1,390,747             195,688          1,586,435 
Net income                   214,901              30,015            244,916 
Other                                                                       
 comprehensive                                                              
 income                       12,806               1,734             14,540 
Compensation                                                                
 expense                                                                    
 recorded for                                                               
 stock options                   281                   -                281 
Sale of partial                                                             
 interest in                                                                
 subsidiary                   62,900              47,100            110,000 
Issue of shares                                                             
 on exercise of                                                             
 stock options                14,434                   -             14,434 
Reclassification                                                            
 of grant date                                                              
 fair value on                                                              
 exercise of                                                                
 stock options                     -                   -                  - 
Dividend                                                                    
 payments to                                                                
 Methanex                                                                   
 Corporation                                                                
 shareholders                (38,346)                  -            (38,346)
Distributions to                                                            
 non-controlling                            
                                
 interests                         -             (26,927)           (26,927)
----------------------------------------------------------------------------
Balance,                                                                    
 December 31,                                                               
 2013                      1,657,723             247,610          1,905,333 
Net income                   269,886              36,927            306,813 
Other                                                                       
 comprehensive                                                              
 income                        2,235               2,945              5,180 
Compensation                                                                
 expense                                                                    
 recorded for                                                               
 stock options                   464                   -                464 
Issue of shares                                                             
 on exercise of                                                             
 stock options                 7,701                   -              7,701 
Reclassification                                                            
 of grant date                                                              
 fair value on                                                              
 exercise of                                                                
 stock options                     -                   -                  - 
Payment for                                                                 
 shares                                                                     
 repurchased                 (82,272)                  -            (82,272)
Dividend                                                                    
 payments to                                                                
 Methanex                                                                   
 Corporation                                                                
 shareholders                (43,228)                  -            (43,228)
Distributions to                                                            
 non-controlling                                                            
 interests                         -             (36,810)           (36,810)
----------------------------------------------------------------------------
Balance, June                                                               
 30, 2014         $        1,812,509   $         250,672   $      2,063,181 
----------------------------------------------------------------------------
 
See accompanying notes to condensed consolidated interim financial          
 statements.                                                                
 
Methanex Corporation                                                        
Consolidated Statements of Cash Flows (unaudited)                           
(thousands of U.S. dollars)                                                 
 
                               Three Months Ended       Six Months Ended    
                             ----------------------- -----------------------
                                 Jun 30      Jun 30      Jun 30      Jun 30 
                                   2014        2013        2014        2013 
----------------------------------------------------------------------------
----------------------------------------------------------------------------
 
CASH FLOWS FROM OPERATING                                                   
 ACTIVITIES                                                                 
Net income                    $ 138,474   $  65,851   $ 306,813   $ 132,084 
Deduct earnings of associate     (3,293)     (6,017)    (10,704)     (7,303)
Dividends received from                                                     
 associate                       25,240           -      25,240           - 
Add (deduct) non-cash items:                                                
  Depreciation and                                                          
   amortization                  33,113      28,953      67,924      58,770 
  Write-off of oil and gas                                                  
   rights                             -      16,859           -      16,859 
  Income tax expense             46,429       1,550      98,095      13,612 
  Share based compensation                                                  
   expense (recovery)            (1,121)     15,694      24,125      52,007 
  Finance costs                   9,570      14,618      20,408      30,069 
  Other                             701        (765)        424        (301)
Income taxes paid               (12,068)     (6,568)    (23,426)    (15,351)
Other cash payments,                                                        
 including share-based                                                      
 compensation                    (5,627)       (440)    (40,336)    (17,995)
----------------------------------------------------------------------------
Cash flows from operating                                                   
 activities before undernoted   231,418     129,735     468,563     262,451 
Changes in non-cash working                                                 
 capital (note 9)                 8,754      (3,986)    (49,320)    (19,023)
----------------------------------------------------------------------------
                                240,172     125,749     419,243     243,428 
----------------------------------------------------------------------------
 
CASH FLOWS FROM FINANCING                                                   
 ACTIVITIES                                                                 
  Payments for repurchase of                                                
   shares                       (77,324)          -     (77,324)          - 
  Dividend payments to                                                      
   Methanex Corporation                                                     
   shareholders                 (23,933)    (19,057)    (43,228)    (36,591)
  Interest paid, including                                                  
   interest rate swap                                                       
   settlements                   (5,810)     (6,546)    (26,811)    (27,757)
  Repayment of long-term debt                                               
   and limited recourse debt       (913)     (1,213)    (20,433)    (19,480)
  Cash distributions to non-                                                
   controlling interests        (18,713)     (7,759)    (36,810)    (13,024)
  Proceeds on issue of shares                                               
   on exercise of stock                                                     
   options                          133      11,063       7,701      24,151 
  Proceeds from limited                                                     
   recourse debt                      -           -           -      10,000 
  Other                          (1,034)       (936)     (2,049)       (855)
                             -----------------------------------------------
                               (127,594)    (24,448)   (198,954)    (63,556)
----------------------------------------------------------------------------
 
CASH FLOWS FROM INVESTING                                                   
 ACTIVITIES                                                                 
  Property, plant and                                                       
   equipment                    (15,936)    (62,613)    (31,764)    (96,232)
  Geismar plants under                                                      
   construction                 (98,453)    (53,679)   (226,367)    (97,077)
  Other assets                   (4,056)     (4,958)     (8,919)     (5,750)
  Changes in non-cash working                                               
   capital related to                                                       
   investing activities (note                                               
   9)                           (55,864)      1,612     (38,493)        316 
----------------------------------------------------------------------------
                               (174,309)   (119,638)   (305,543)   (198,743)
----------------------------------------------------------------------------
Decrease in cash and cash                                                   
 equivalents                    (61,731)    (18,337)    (85,254)    (18,871)
Cash and cash equivalents,                                                  
 beginning of period            709,213     726,851     732,736     727,385 
----------------------------------------------------------------------------
Cash and cash equivalents,                  
                                
 end of period                $ 647,482   $ 708,514   $ 647,482   $ 708,514 
----------------------------------------------------------------------------
 
See accompanying notes to condensed consolidated interim financial          
 statements.                                                                
 
Methanex Corporation                                                        
Notes to Condensed Consolidated Interim Financial Statements (unaudited)    
Except where otherwise noted, tabular dollar amounts are stated in thousands
of U.S. dollars.                                                            

1. Basis of presentation:  
Methanex Corporation (the Company) is an incorporated entity with
corporate offices in Vancouver, Canada. The Company's operations
consist of the production and sale of methanol, a commodity chemical.
The Company is the world's largest producer and supplier of methanol
to the major international markets of Asia Pacific, North America,
Europe and South America.  
These condensed consolidated interim financial statements are
prepared in accordance with International Accounting Standards (IAS)
34, Interim Financial Reporting, as issued by the International
Accounting Standards Board (IASB) on a basis consistent with those
followed in the most recent annual consolidated financial statements. 
These condensed consolidated interim financial statements do not
include all of the information required for full annual financial
statements and were approved and authorized for issue by the Audit,
Finance & Risk Committee of the Board of Directors on July 30, 2014. 
2. Inventories:  
Inventories are valued at the lower of cost, determined on a first-in
first-out basis, and estimated net realizable value. The amount of
inventories included in cost of sales and operating expenses and
depreciation and amortization for the three and six month periods
ended June 30, 2014 is $545 million (2013 - $544 million) and $1,236
million (2013 - $1,013 million), respectively. 
3. Property, plant and equipment:  


 
 
                   Buildings,                                               
                        Plant                                               
                Installations  Plants Under   Oil & Gas                     
                  & Machinery  Construction  Properties    Other       Total
----------------------------------------------------------------------------
 
Cost at June 30,                                                            
 2014            $  3,129,409  $    630,051  $   87,974  $85,360  $3,932,794
Accumulated                                                                 
 depreciation at                                                            
 June 30, 2014      1,381,954             -      79,963   39,487   1,501,404
----------------------------------------------------------------------------
Net book value                                                              
 at June 30,                                                                
 2014            $  1,747,455  $    630,051  $    8,011  $45,873  $2,431,390
----------------------------------------------------------------------------
 
Cost at December                                                            
 31, 2013        $  3,100,597  $    393,044  $   86,312  $82,556  $3,662,509
Accumulated                                                                 
 depreciation at                                                            
 December 31,                                                               
 2013               1,317,329             -      78,228   36,014   1,431,571
----------------------------------------------------------------------------
Net book value                                                              
 at December 31,                                                            
 2013            $  1,783,268  $    393,044  $    8,084  $46,542  $2,230,938
----------------------------------------------------------------------------

The Company is relocating two idle Chile facilities to Geismar,
Louisiana with Geismar 1 targeted to be producing methanol by late
2014 and Geismar 2 in early 2016. During the three months ended June
30, 2014, the Company incurred capital expenditures related to the
Geismar projects of $100 million, excluding capitalized interest. The
remaining budgeted capital expenditures for these projects are $405
million, excluding capitalized interest. 
4. Interest in Atlas joint venture:  
a) The Company has a 63.1% equity interest in Atlas Methanol Company
Unlimited (Atlas). Atlas owns a 1.8 million tonne per year methanol
production facility in Trinidad. The Company accounts for its
interest in Atlas using the equity method. Summarized financial
information of Atlas (100% basis) is as follows:  


 
 
Consolidated statements of financial                Jun 30           Dec 31 
 position as at                                       2014             2013 
----------------------------------------------------------------------------
 
Cash and cash equivalents                   $       15,722   $       20,776 
Other current assets                               126,352          161,765 
Non-current assets                                 365,722          378,890 
Current liabilities                                (34,199)         (47,359)
Long-term debt, including current                                           
 maturities                                        (44,831)         (56,752)
Other long-term liabilities, including                                      
 current maturities                               (131,213)        (136,730)
----------------------------------------------------------------------------
Net assets at 100%                          $      297,553   $      320,590 
----------------------------------------------------------------------------
 
Net assets at 63.1%                         $      187,756   $      202,292 
Long-term receivable from Atlas                     14,116           13,803 
----------------------------------------------------------------------------
 
Investment in associate                     $      201,872   $      216,095 
----------------------------------------------------------------------------
 
                            Three Months Ended         Six Months Ended     
                         ------------------------- -------------------------
Consolidated statements      Jun 30       Jun 30       Jun 30       Jun 30  
 of income                      2014         2013         2014         2013 
-------------------------------------------------- -------------------------
 
Revenue                   $   80,738   $   78,415   $  196,765   $  163,781 
Cost of sales and                                                           
 depreciation and                                                           
 amortization                (71,820)     (62,146)    (170,218)    (141,444)
----------------------------------------------------------------------------
Operating income               8,918       16,269       26,547       22,337 
Finance costs, finance                                                      
 income and other                                                           
 expenses                     (2,756)      (3,451)      (5,506)      (6,872)
Income tax expense              (943)      (3,283)      (4,077)      (3,892)
----------------------------------------------------------------------------
Net earnings at 100%      $    5,219   $    9,535   $   16,964   $   11,573 
----------------------------------------------------------------------------
Earnings of associate at                                                    
 63.1%                    $    3,293   $    6,017   $   10,704   $    7,303 
----------------------------------------------------------------------------
 
------------------------------------------------------------
----------------
Dividends received from                                                     
 associate                $   25,240            -   $   25,240            - 
----------------------------------------------------------------------------

b) Contingent liability:  
The Board of Inland Revenue of Trinidad and Tobago has issued
assessments against Atlas in respect of the 2005, 2006 and 2007
financial years. All subsequent tax years remain open to assessment.
The assessments relate to the pricing arrangements of certain
long-term fixed price sales contracts that extend to 2014 and 2019
related to methanol produced by Atlas. Atlas had partial relief from
corporation income tax until late July 2014.  
The Company has lodged objections to the assessments. Based on the
merits of the cases and legal interpretation, management believes its
position should be sustained. 
5. Long-term debt:  


 
 
                                                      Jun 30         Dec 31 
As at                                                   2014           2013 
----------------------------------------------------------------------------
Unsecured notes                                                             
 
  $350 million at 3.25% due December 15, 2019   $    344,946   $    344,530 
  $250 million at 5.25% due March 1, 2022            246,813        246,650 
  $150 million at 6.00% due August 15, 2015          149,707        149,581 
----------------------------------------------------------------------------
                                                     741,466        740,761 
Egypt limited recourse debt facilities               387,036        404,722 
Other limited recourse debt facilities                21,082         22,823 
----------------------------------------------------------------------------
Total long-term debt (1)                           1,149,584      1,168,306 
Less current maturities                              (42,723)       (41,504)
----------------------------------------------------------------------------
                                                $  1,106,861   $  1,126,802 
----------------------------------------------------------------------------
 
(1) Long-term debt is presented net of deferred financing fees.             

During the three months ended June 30, 2014, the Company has made
repayments on its other limited recourse debt facilities of $0.9
million.  
At June 30, 2014, management believes the Company was in compliance
with all significant terms and default provisions related to
long-term debt obligations. 
6. Finance costs:  


 
 
                               Three Months Ended       Six Months Ended    
                             ----------------------- -----------------------
                                 Jun 30      Jun 30      Jun 30      Jun 30 
                                   2014        2013        2014        2013 
---------------------------------------------------- -----------------------
 
Finance costs                 $  15,527   $  16,278   $  31,048   $  32,796 
Less capitalized interest                                                   
 related to Geismar plants                                                  
 under construction              (5,957)     (1,660)    (10,640)     (2,727)
----------------------------------------------------------------------------
                              $   9,570   $  14,618   $  20,408   $  30,069 
----------------------------------------------------------------------------

Finance costs are primarily comprised of interest on borrowings and
finance lease obligations, the effective portion of interest rate
swaps designated as cash flow hedges, amortization of deferred
financing fees, and accretion expense associated with site
restoration costs. Interest during construction of the Geismar plants
is capitalized until the plants are substantially completed and ready
for productive use.  
The Company has interest rate swap contracts on its Egypt limited
recourse debt facilities to swap the LIBOR-based interest payments
for an average aggregated fixed rate of 4.8% plus a spread on
approximately 75% of the Egypt limited recourse debt facilities for
the period to March 31, 2015. 
7. Net income per common share:  
Diluted net income per common share is calculated by considering the
potential dilution that would occur if outstanding stock options and,
under certain circumstances, tandem share appreciation rights (TSARs)
were exercised or converted to common shares.  
Outstanding TSARs may be settled in cash or common shares at the
holder's option and for purposes of calculating diluted net income
per common share, the more dilutive of the cash-settled and
equity-settled method is used, regardless of how the plan is
accounted for. Accordingly, TSARs that are accounted for using the
cash-settled method will require adjustments to the numerator and
denominator if the equity-settled method is determined to have a
dilutive effect on diluted net income per common share. For the
periods presented, the equity settled method was more dilutive for
the three months ended June 30, 2014.  
A reconciliation of the numerator used for the purpose of calculating
diluted net income per common share is as follows:  


 
 
                               Three Months Ended        Six Months Ended   
                            ------------------------ -----------------------
                                 Jun 30       Jun 30      Jun 30      Jun 30
                                   2014         2013        2014        2013
---------------------------------------------------- -----------------------
 
Numerator for basic net                                                     
 income per common share     $  124,784   $   53,999  $  269,886  $  114,266
  Adjustment for the effect                                                 
   of TSARs:                                                                
    Cash settled recovery                                                   
     included in net income      (1,990)           -           -           -
    Equity settled expense       (1,874)           -           -           -
----------------------------------------------------------------------------
Numerator for diluted net                                                   
 income per common share     $  120,920   $   53,999  $  269,886  $  114,266
----------------------------------------------------------------------------

Stock options and, if calculated using the equity-settled method, TSARs
are considered dilutive when the average market price of the
Company's common shares during the period disclosed exceeds the
exercise price of the stock option or TSAR. A reconciliation of the
denominator used for the purposes of calculating basic and diluted
net income per common share is as follows: 


 
 
                              Three Months Ended        Six Months Ended    
                           ------------------------ ------------------------
                                 Jun 30      Jun 30       Jun 30      Jun 30
                                   2014        2013         2014        2013
--------------------------------------------------- ------------------------
 
Denominator for basic net                                                   
 income per common share     96,124,565  95,116,950   96,212,652  94,817,234
  Effect of dilutive stock                                                  
   options                      516,169   1,143,085      606,079   1,181,552
  Effect of dilutive TSARs      681,410           -            -           -
----------------------------------------------------------------------------
Denominator for diluted net                                                 
 income per common share     97,322,144  96,260,035   96,818,731  95,998,786
----------------------------------------------------------------------------

For the three month and six month periods ended June 30, 2014 and 2013,
basic and diluted net income per common share attributable to
Methanex shareholders were as follows: 


 
 
                                    Three Months Ended    Six Months Ended  
                                   -------------------- --------------------
                                       Jun 30    Jun 30     Jun 30    Jun 30
                                         2014      2013       2014      2013
------------------------------------------------------- --------------------
 
Basic net income per common share      $ 1.30    $ 0.57     $ 2.81    $ 1.21
Diluted net income per common share    $ 1.24    $ 0.56     $ 2.79    $ 1.19
----------------------------------------------------------------------------

8. Share-based compensation:  
a) Share appreciation rights (SARs), tandem share appreciation rights
(TSARs) and stock options:  
(i) Outstanding units: 
Information regarding units outstanding at June 30, 2014 is as
follows:
*
T 
SARs                     TSARs          
------------------------ ------------------------ 
Weighted                 Weighted 
Average                  Average 
Number     Exercise      Number     Exercise
(per share amounts in USD)    of Units        Price    of Units        Price
--------------------------------------------------- ------------------------ 
Outstanding at December 31,                                                 
 2013                        1,093,117   $    32.02   1,858,585   $    31.83
Granted                        203,190        73.13     303,850        72.66
Exercised                     (190,229)       28.90    (283,750)       30.21
Cancelled                      (10,750)       33.95      (6,900)       35.69
--------------------------------------------------- ------------------------
Outstanding at March 31,                                                    
 2014                        1,095,328   $    40.17   1,871,785   $    38.69
--------------------------------------------------- ------------------------
Exercised                      (11,700)       34.59     (71,400)       27.39
Cancelled                       (5,500)       51.56      (8,600)       35.97
----------------------------------------------------------------------------
Outstanding at June 30,                                                     
 2014                        1,078,128   $    40.17   1,791,785   $    39.15
---------------------------------------------------------------------------- 
Stock Options             
------------------------------------- 
Weighted Average
(per share amounts in USD)             Number of Units        Exercise Price
---------------------------------------------------------------------------- 
Outstanding at December 31, 2013             1,219,420      $          19.15
  Granted                                       45,600                 73.13
  Exercised                                   (422,987)                17.72
  Cancelled                                     (2,500)                35.90
  Expired                                      (22,835)                22.82
----------------------------------------------------------------------------
Outstanding at March 31, 2014                  816,698      $          22.75
----------------------------------------------------------------------------
  Exercised                                     (7,300)                18.24
----------------------------------------------------------------------------
Outstanding at June 30, 2014                   809,398      $          22.79
---------------------------------------------------------------------------- 
Units Outstanding at           Units Exercisable at   
June 30, 2014                  June 30, 2014      
------------------------------------ ------------------------
Range of                                                                    
 Exercise           Weighted                                                
 Prices              Average               Weighted                 Weighted
(per share         Remaining      Number    Average        Number    Average
 amounts in      Contractual    of Units   Exercise      of Units   Exercise
 USD)           Life (Years) Outstanding      Price   Exercisable      Price
--------------------------------------------------- ------------------------
SARs:                                                                       
  $23.36 to                                                                  
31.74                 3.9     540,638 $    29.11       421,957 $    28.47
  $31.88 to                                                                  
73.13                 6.1     537,490      51.29       102,800      38.24
---------------------------------------------------------------------------- 
5.0   1,078,128 $    40.17       524,757 $    30.38
----------------------------------------------------------------------------
TSARs:                                                                      
  $23.36 to                                                                  
31.74                 3.8     954,045 $    29.03       742,978 $    28.28
  $31.88 to                                                                  
73.13                 6.0     837,740      50.68       180,890      38.03
---------------------------------------------------------------------------- 
4.9   1,791,785 $    39.15       923,868 $    30.19
----------------------------------------------------------------------------
Stock options:                                                              
  $6.33 to                                                                   
25.22                 1.8     384,035 $     8.79       384,035 $     8.79
  $28.43 to                                                                  
73.13                 3.1     425,363      35.43       303,863      29.65
---------------------------------------------------------------------------- 
2.5     809,398 $    22.79       687,898 $    18.01
---------------------------------------------------------------------------- 


(ii) Compensation expense related to SARs and TSARs: 
 
Compensation expense for SARs and TSARs is measured based on their
fair value and is recognized over the vesting period. Changes in fair
value each period are recognized in net income for the proportion of
the service that has been rendered at each reporting date. The fair
value at June 30, 2014 was $72.9 million compared with the recorded
liability of $66.1 million. The difference between the fair value and
the recorded liability of $6.8 million will be recognized over the
weighted average remaining vesting period of approximately 1.7 years.
The weighted average fair value was estimated at June 30, 2014 using
the Black-Scholes option pricing model.
 
For the three and six month periods ended June 30, 2014, compensation
expense related to SARs and TSARs included a recovery in cost of
sales and operating expenses of $2.7 million (2013 - expense of $6.9
million) and an expense of $15.5 million (2013 - expense of $23.9
million), respectively. This included a recovery of $5.8 million
(2013 - expense of $4.1 million) and an expense of $8.6 million (2013
- expense of $19.1 million), respectively, related to the effect of
the change in the Company's share price for the three and six month
periods ended June 30, 2014. 
 
(iii) Compensation expense related to stock options: 
 
For the three and six month periods ended June 30, 2014, compensation
expense related to stock options included in cost of sales and
operating expenses was $0.2 million (2013 - $0.2 million) and $0.4
million (2013 - $0.4 million), respectively. The fair value of each
stock option grant was estimated on the grant date using the
Black-Scholes option pricing model.
 
b) Deferred, restricted and performance share units: 
 
Deferred, restricted and performance share units outstanding at June
30, 2014 are as follows:

  
Number of      Number of     Number of  
Deferred     Restricted   Performance  
Share Units    Share Units   Share Units 
---------------------------------------------------------------------------- 
Outstanding at December 31, 2013       346,814         44,131       946,446 
  Granted                                4,200          7,000       139,160 
  Granted performance factor (1)             -              -        55,677 
  Granted in-lieu of dividends           1,012            152         2,381 
  Redeemed                             (27,052)             -      (334,062)
  Cancelled                                  -              -        (6,663)
----------------------------------------------------------------------------
Outstanding at March 31, 2014          324,974         51,283       802,939 
----------------------------------------------------------------------------
  Granted in-lieu of dividends           1,315            207         3,200 
  Cancelled                                  -              -       (10,885)
----------------------------------------------------------------------------
Outstanding at June 30, 2014           326,289         51,490       795,254 
---------------------------------------------------------------------------- 
(1) Performance share units have a feature where the ultimate number of      
units that vest are adjusted by a performance factor of the original     
grant as determined by the Company'
s total shareholder return in         
relation to a predetermined target over the period to vesting. These     
units relate to performance share units redeemed in the quarter ended    
March 31, 2014.                                                          


Compensation expense for deferred, restricted and performance share
units is measured at fair value based on the market value of the
Company's common shares and is recognized over the vesting period.
Changes in fair value are recognized in net income for the proportion
of the service that has been rendered at each reporting date. The
fair value of deferred, restricted and performance share units at
June 30, 2014 was $75.5 million compared with the recorded liability
of $65.4 million. The difference between the fair value and the
recorded liability of $10.1 million will be recognized over the
weighted average remaining vesting period of approximately 1.4 years.
 
 
For the three and six month periods ended June 30, 2014, compensation
expense related to deferred, restricted and performance share units
included in cost of sales and operating expenses was an expense of
$1.5 million (2013 - expense of $8.6 million) and an expense of $8.3
million (2013 - expense of $27.7 million), respectively. This
included a recovery of $2.1 million (2013 - expense of $5.2 million)
and an expense of $1.0 million (2013 - expense of $20.9 million)
related to the effect of the change in the Company's share price for
the three and six month periods ended June 30, 2014. 
 
9. Changes in non-cash working capital: 
 
Changes in non-cash working capital for the three and six month
periods ended June 30, 2014 and 2013 were as follows:

  
Three Months Ended       Six Months Ended     
----------------------- ----------------------- 
Jun 30      Jun 30      Jun 30      Jun 30  
2014        2013        2014        2013 
---------------------------------------------------- -----------------------
Decrease (increase) in non-                                                 
 cash working capital:                                                      
  Trade and other receivables $  88,196   $ (35,677)  $  46,339   $ (60,105)
  Inventories                    25,718      18,531      34,761     (14,596)
  Prepaid expenses               (6,371)     (9,531)     (8,210)     (5,640)
  Trade, other payables and                                                  
accrued liabilities,                                                      
including long-term                                                       
payables included in other                                                
long-term liabilities       (131,221)     49,264    (124,954)     86,972 
---------------------------------------------------- ----------------------- 
(23,678)     22,587     (52,064)      6,631 
Adjustments for items not                                                   
 having a cash effect and                                                   
 working capital changes                                                    
 relating to taxes and                                                      
 interest paid                  (23,432)    (24,961)    (35,749)    (25,338)
---------------------------------------------------- -----------------------
Changes in non-cash working                                                 
 capital having a cash effect $ (47,110)  $  (2,374)  $ (87,813)  $ (18,707)
---------------------------------------------------- ----------------------- 
These changes relate to the                                                 
 following activities:                                                      
  Operating                   $   8,754   $  (3,986)  $ (49,320)  $ (19,023)
  Investing                     (55,864)      1,612     (38,493)        316 
---------------------------------------------------- -----------------------
Changes in non-cash working                                                 
 capital                      $ (47,110)  $  (2,374)  $ (87,813)  $ (18,707)
---------------------------------------------------- ----------------------- 


10. Financial instruments: 
 
Financial instruments are either measured at amortized cost or fair
value. Held-to-maturity investments, loans and receivables and other
financial liabilities are measured at amortized cost.
Held-for-trading financial assets and liabilities and
available-for-sale financial assets are measured on the Consolidated
Statements of Financial Position at fair value. Derivative financial
instruments are classified as held-for-trading and are recorded on
the Consolidated Statements of Financial Position at fair value
unless exempted. Changes in fair value of held-for-trading derivative
financial instruments are recorded in earnings unless the instruments
are designated as cash flow hedges. 
 
The euro hedges and Egypt interest rate swaps designated as cash flow
hedges are measured at fair value based on industry-accepted
valuation models and inputs obtained from active markets. 
 
The Egypt limited recourse debt facilities bear interest at LIBOR
plus a spread. The Company has interest rate swap contracts to swap
the LIBOR-based interest payments for an average aggregated fixed
rate of 4.8% plus a spread on approximately 75% of the Egypt limited
recourse debt facilities for the period to March 31, 2015. These
interest rate swaps had an outstanding notional amount of $302
million as at June 30, 2014. The notional amount decreases over the
expected repayment period. At June 30, 2014, these interest rate swap
contracts had a negative fair value of $13.3 million (December 31,
2013 - negative $19.8 million) recorded in current liabilities. The
fair value of these interest rate swap contracts will fluctuate until
maturity. 
 
The Company also designates as cash flow hedges forward exchange
contracts to sell euro at a fixed USD exchange rate. At June 30,
2014, the Company had outstanding forward exchange contracts
designated as cash flow hedges to sell a notional amount of EUR37.0
million in exchange for US dollars. The euro contracts had a positive
fair value of $0.2 million recorded in current assets. Changes in
fair value of derivative financial instruments designated as cash
flow hedges have been recorded in other comprehensive income. 
 
The carrying values of the Company's financial instruments
approximate their fair values, except as follows:

  
June 30, 2014         
------------------------------
As at                                          Carrying Value     Fair Value
---------------------------------------------------------------------------- 
Long-term debt excluding deferred financing                                 
 fees                                             $ 1,163,348    $ 1,221,601
---------------------------------------------------------------------------- 


There is no publicly traded market for the limited recourse debt
facilities. The fair value disclosed on a recurring basis and
categorized as Level 2 within the fair value hierarchy is estimated
by reference to current market prices for debt securities with
similar terms and characteristics. The fair value of the unsecured
notes disclosed on a recurring basis and also categorized as Level 2
within the fair value hierarchy was estimated by reference to a
limited number of small transactions in June 2014. The fair value of
the Company's unsecured notes will fluctuate until maturity.
 
11. Argentina gas settlement: 
 
During the quarter, we reached a settlement with Total Austral S.A.
("Total") for $42 million in relation to Total's natural gas delivery
obligations pursuant to a long-term natural gas supply agreement in
Chile. 

  
Methanex Corporation              
Quarterly History                                                           
(unaudited)                                                                  
YTD     Q2     Q1                                
2014   2014   2014   2013    Q4    Q3    Q2    Q1
---------------------------------------------------------------------------- 
METHANOL SALES VOLUMES                                                      
(thousands of tonnes)                                                        
Methanex-produced(1)      2,371  1,143  1,228  4,304 1,190 1,045 1,039 1,030
Purchased methanol        1,297    643    654  2,715   663   715   749   588
Commission sales (1)        502    206    296    972   274   237   242   219
---------------------------------------------------------------------------- 
4,170  1,992  2,178  7,991 2,127 1,997 2,030 1,837
---------------------------------------------------------------------------- 
METHANOL PRODUCTION                                                         
(thousands of tonnes)                                                        
New Zealand               1,059    559    500  1,419   400   349   361   309
Atlas, Trinidad (63.1%)     440    191    249    971   268   254   201   248
Titan, Trinidad             352    203    149    651   173   128   169   181
Egypt (50%) (2)             238     99    139    623   159   168   163   133
Medicine Hat                260    138    122    476    86   130   129   131
Chile                        93     26     67    204   108     6    29    61
---------------------------------------------------------------------------- 
2,442  1,216  1,226  4,344 1,194 1,035 1,052 1,063
---------------------------------------------------------------------------- 
AVERAGE REALIZED                                                            
 METHANOL PRICE (3)                                                         
($/tonne)                   488    450    524    441   493   438   425   412
($/gallon)                 1.47   1.35   1.58   1.33  1.48  1.32  1.28  1.24 
PER SHARE INFORMATION ($                                                    
 per share) (4)                                                             
Basic net income (loss)    2.81   1.30   1.51   3.46  1.33  0.91  0.57  0.64
Diluted net income                                                          
 (loss)                    2.79   1.24   1.50   3.41  1.32  0.90  0.56  0.63
Adjusted net income (5)    2.59   0.94   1.65   4.88  1.72  1.22  1.02  0.92 
---------------------------------------------------------------------------- 
2012         Q4        Q3        Q2        Q1
---------------------------------------------------------------------------- 
METHANOL SALES VOLUMES                                                      
(thousands of tonnes)                                                        
Methanex-produced(1)          4,039      1,059     1,053     1,001       926
Purchased methanol            2,565        664       641       569       691
Commission sales (1)            855        176       205       276       198
---------------------------------------------------------------------------- 
7,459      1,899     1,899     1,846     1,815
---------------------------------------------------------------------------- 
METHANOL PRODUCTION                                                         
(thousands of tonnes)                                                        
New Zealand                   1,108        378       346       210       174
Atlas, Trinidad (63.1%)         826        180       255       264       127
Titan, Trinidad                 786        189       186       196       215
Egypt (50%) (2)                 557        129        62       164       202
Medicine Hat                    481        132       117       118       114
Chile                           313         59        59        82       113
---------------------------------------------------------------------------- 
4,071      1,067     1,025     1,034       945
---------------------------------------------------------------------------- 
AVERAGE REALIZED                                                            
 METHANOL PRICE (3)                                                         
($/tonne)                       382        389       373       384       382
($/gallon)                     1.15       1.17      1.12      1.15      1.15 
PER SHARE INFORMATION ($                                                    
 per share) (4)                                                             
Basic net income (loss)      (0.73)     (1.49)    (0.03)      0.56      0.24
Diluted net income                                                          
 (loss)                      (0.73)     (1.49)    (0.03)      0.50      0.23
Adjusted net income (5)        1.90       0.64      0.38      0.47      0.41 
----------------------------------------------------------------------------
(1) Methanex-produced methanol includes volumes produced by Chile using      
natural gas supplied from Argentina under a tolling arrangement.         
Commission sales represent volumes marketed on a commission basis        
related to the 36.9% of the Atlas methanol facility and the portion of   
the Egypt methanol facility that we do not own.                          
(2) On December 9, 2013, we completed a sale of 10% equity interest in the   
Egypt facility. Production figures prior to December 9, 2013 reflect a   
60% interest.                                                            
(3) Average realized price is calculated as revenue, excluding commissions   
earned and the Egypt non-controlling interest share of revenue but       
including an amount representing our share of Atlas revenue, divided by  
the total sales volumes of Methanex-produced (attributable to Methanex   
shareholders) and purchased methanol.                                    
(4) Per share information calculated using amounts attributable to Methanex  
shareholders.                                                            
(5) This item is a non-GAAP measure that does not have any standardized      
meaning prescribed by GAAP and therefore is unlikely to be comparable to 
similar measures presented by other companies. Refer to the Additional   
Information - Supplemental Non-GAAP Measures section for a description   
of the non-GAAP measure and reconciliation to the most comparable GAAP   
measure.                                                                 


 
 
Contacts:
Sandra Daycock
Director, Investor Relations
Methanex Corporation
604-661-2600


 
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