Methanex Reports Fourth Quarter Results

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VANCOUVER, BRITISH COLUMBIA--(Marketwired - Jan. 27, 2016) - For the fourth quarter of 2015, Methanex MXMEOH reported Adjusted EBITDA(1) of $80 million and Adjusted net income(1) of $15 million ($0.16 per share on a diluted basis(1)). This compares with Adjusted EBITDA of $95 million and Adjusted net income of $23 million ($0.26 per share on a diluted basis) for the third quarter of 2015. Net income attributable to Methanex shareholders was $10 million in the fourth quarter compared to $78 million in the third quarter of 2015. For the year ended December 31, 2015, Methanex reported Adjusted EBITDA of $401 million and Adjusted net income of $110 million ($1.20 per share on a diluted basis). This compares with Adjusted EBITDA of $702 million and Adjusted net income of $397 million ($4.12 per share on a diluted basis) for the year ended December 31, 2014.

John Floren, President and CEO of Methanex commented, "Our fourth quarter Adjusted EBITDA reflects lower average realized methanol pricing compared to the third quarter. The continued decline in oil pricing further reduced the affordability for methanol into energy applications. This, combined with new methanol supply introduced in the fourth quarter, negatively impacted methanol pricing."

Mr. Floren continued, "I am pleased to confirm that our one million tonne Geismar 2 plant started production on December 27, 2015 and has been operating at high rates since start up. The delivery of Geismar 2 ahead of schedule in a safe and efficient manner is a major accomplishment. The two Geismar plants are core components of our asset portfolio with strong, reliable production expected for years to come."

"We returned over $30 million to shareholders in the fourth quarter of 2015 in the form of dividends and share repurchases. While the future of oil and methanol pricing is uncertain, Methanex is well positioned to navigate through this period of challenging industry conditions. Our flexible cost structure decreases when methanol prices are lower, preserving positive cash margins at a broad range of methanol prices. With over $250 million cash on hand, a $400 million undrawn credit facility, and a robust balance sheet, we are well positioned to meet our financial and capital commitments. Further, with the higher operating capacity provided by the Geismar facilities, we believe we are well positioned to leverage a recovery in methanol pricing, allowing us to generate strong future cash flows."

A conference call is scheduled for January 28, 2016 at 12:00 noon ET (9:00 am PT) to review these fourth quarter results. To access the call, dial the conferencing operator ten minutes prior to the start of the call at (416) 340-8530, or toll free at (800) 769-8320. A playback version of the conference call will be available until February 18, 2016 at (905) 694-9451, or toll free at (800) 408-3053. The passcode for the playback version is 7161356. Presentation slides summarizing the Q4 2015 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 fourth quarter 2015 press release contains forward-looking statements with respect to us and the chemical industry. Refer to Forward-Looking Information Warning in the attached fourth quarter 2015 Management's Discussion and Analysis for more information.



(1) The Company has used the terms Adjusted EBITDA, Adjusted net income,
Adjusted net income per common share, Adjusted Revenue and operating
income throughout this document. These terms 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 the impact of certain items associated with specific
identified events. Refer to the Additional Information - Supplemental
Non-GAAP Measures section of the attached Interim Report for the three
and twelve months ended December 31, 2015 for reconciliations to the
most comparable GAAP measures.



Interim Report for the Three Months Ended December 31, 2015

At January 27, 2016 the Company had 89,681,748 common shares issued and outstanding and stock options exercisable for 1,659,074 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



CST 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



FOURTH 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 and the calculation of Adjusted net income per
common share is as follows:


Three Months Ended Years Ended
-------------------------------------------------
($ millions except number
of shares and per share Dec 31 Sep 30 Dec 31 Dec 31 Dec 31
amounts) 2015 2015 2014 2015 2014
----------------------------------------------------------------------------
----------------------------------------------------------------------------
Net income attributable to
Methanex shareholders $ 10 $ 78 $ 133 $ 201 $ 455
Mark-to-market impact of
share-based
compensation, net of tax 5 (55) (53) (34) (31)
Gain related to the
termination of a
terminal services
agreement, net of tax - - - (57) -
Argentina gas settlement,
net of tax - - - - (27)
----------------------------------------------------------------------------
Adjusted net income $ 15 $ 23 $ 80 $ 110 $ 397
----------------------------------------------------------------------------
Diluted weighted average
shares outstanding
(millions) 90 91 94 91 96
Adjusted net income per
common share $ 0.16 $ 0.26 $ 0.85 $ 1.20 $ 4.12
----------------------------------------------------------------------------


-- We recorded Adjusted EBITDA of $80 million for the fourth quarter of
2015 compared with $95 million for the third quarter of 2015. The
decrease in Adjusted EBITDA was primarily due to a decrease in our
average realized price to $277 per tonne for the fourth quarter of 2015
from $323 per tonne for the third quarter of 2015.
-- Production for the fourth quarter of 2015 was 1,389,000 tonnes compared
with 1,259,000 tonnes for the third quarter of 2015. Refer to the
Production Summary section.
-- Sales of Methanex-produced methanol were 1,372,000 tonnes in the fourth
quarter of 2015 compared with 1,238,000 in the third quarter of 2015.
-- We successfully started the Geismar 2 facility late in the fourth
quarter of 2015, which is approximately three months ahead of our
original schedule, while the estimated total combined cost for the
completion of the two Geismar plants is unchanged at $1.4 billion.
-- During the fourth quarter of 2015 we paid a $0.275 per share dividend to
shareholders for a total of $25 million.
-- During the fourth quarter of 2015 we repurchased 210,000 common shares
for $8 million. Under the current normal course issuer bid, we are
authorized to purchase up to a further 3 million shares by May 5, 2016.



This Fourth Quarter 2015 Management's Discussion and Analysis ("MD&A") dated January 27, 2016 for Methanex Corporation ("the Company") should be read in conjunction with the Company's condensed consolidated interim financial statements for the period ended December 31, 2015 as well as the 2014 Annual Consolidated Financial Statements and MD&A included in the Methanex 2014 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 2014 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 Years Ended
----------------------------------------
($ millions except per share amounts Dec 31 Sep 30 Dec 31 Dec 31 Dec 31
and where noted) 2015 2015 2014 2015 2014
----------------------------------------------------------------------------
----------------------------------------------------------------------------
Production (thousands of tonnes)
(attributable to Methanex
shareholders) 1,389 1,259 1,207 5,193 4,853
Sales volume (thousands of tonnes)
Methanex-produced methanol
(attributable to Methanex
shareholders) 1,372 1,238 1,249 5,050 4,878
Purchased methanol 636 679 694 2,780 2,685
Commission sales 178 169 248 641 941
----------------------------------------------------------------------------
Total sales volume (1) 2,186 2,086 2,191 8,471 8,504

Methanex average non-discounted
posted price ($ per tonne) (2) 327 384 453 374 507
Average realized price ($ per tonne)
(3) 277 323 390 322 437

Adjusted revenue (attributable to
Methanex shareholders) 555 619 744 2,495 3,261
Adjusted EBITDA (attributable to
Methanex shareholders) 80 95 150 401 702
Cash flows from operating activities 44 134 211 297 801
Adjusted net income (attributable to
Methanex shareholders) 15 23 80 110 397
Net income attributable to Methanex
shareholders 10 78 133 201 455

Adjusted net income per common share
(attributable to Methanex
shareholders) 0.16 0.26 0.85 1.20 4.12
Basic net income per common share
(attributable to Methanex
shareholders) 0.10 0.87 1.43 2.21 4.79
Diluted net income per common share
(attributable to Methanex
shareholders) 0.10 0.54 1.11 2.01 4.55

Common share information (millions
of shares)
Weighted average number of common
shares 90 90 93 91 95
Diluted weighted average number of
common shares 90 91 94 91 96
Number of common shares
outstanding, end of period 90 90 92 90 92
----------------------------------------------------------------------------

(1) Methanex-produced methanol includes volume produced by Chile using
natural gas supplied from Argentina under a tolling arrangement
("Tolling Volume"). For the fourth quarter of 2015, Tolling Volume was
5,000 tonnes. Commission sales represent volume marketed on a
commission basis related to the 36.9% of the Atlas methanol facility
and 50% 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 volume of Methanex-produced (attributable to Methanex
shareholders) and purchased methanol but excluding Tolling Volume.



PRODUCTION SUMMARY



Annual
Operating 2015 2014
(thousands of tonnes) Capacity(1) Production Production
----------------------------------------------------------------
----------------------------------------------------------------
New Zealand (2) 2,430 1,856 2,196
Geismar 1 and 2
(Louisiana, USA) (3) 2,000 959 -
Atlas (Trinidad) (63.1%
interest) 1,125 912 907
Titan (Trinidad) 875 732 664
Egypt (50% interest) 630 74 416
Medicine Hat (Canada) 600 456 505
Chile I and IV (4) 400 204 165
----------------------------------------------------------------
8,060 5,193 4,853
----------------------------------------------------------------

Q4 2015 Q3 2015 Q4 2014
(thousands of tonnes) Production Production Production
----------------------------------------------------------------
----------------------------------------------------------------
New Zealand (2) 412 476 542
Geismar 1 and 2
(Louisiana, USA) (3) 244 259 -
Atlas (Trinidad) (63.1%
interest) 241 226 233
Titan (Trinidad) 191 172 127
Egypt (50% interest) 58 - 128
Medicine Hat (Canada) 155 123 115
Chile I and IV (4) 88 3 62
----------------------------------------------------------------
1,389 1,259 1,207
----------------------------------------------------------------

(1) Operating capacity includes only those facilities which are currently
capable of operating, assuming access to natural gas feedstock, but
excludes any portion of an asset that is underutilized due to a lack of
natural gas feedstock over a prolonged period of time. Our current
annual operating capacity is 8.0 million tonnes, including 0.4 million
tonnes related to our Chile operations. The operating capacity of our
production facilities may be higher than original nameplate capacity
as, over time, these figures have been adjusted to reflect ongoing
operating efficiencies at these facilities. Actual production for a
facility in any given year may be higher or lower than operating
capacity due to a number of factors, including natural gas composition
or the age of the facility's catalyst.
(2) The operating capacity of New Zealand represents the two Motunui
facilities and the Waitara Valley facility (refer to New Zealand
section below).
(3) We commenced methanol production from Geismar 1 during the first
quarter of 2015 and from Geismar 2 late in the fourth quarter of 2015.
Each facility has an annual operating capacity of 1.0 million tonnes.
(4) The production capacity of our Chile I and IV facilities is 1.7 million
tonnes annually assuming access to natural gas feedstock.



New Zealand

Our New Zealand methanol facilities produced 412,000 tonnes of methanol in the fourth quarter of 2015 compared with 476,000 tonnes in the third quarter of 2015. Mechanical issues at our New Zealand facilities resulted in lost production of approximately 175,000 tonnes during the fourth quarter of 2015. Both the Motunui plants and the Waitara Valley plant were shut down for repairs during the fourth quarter to address mechanical issues which are now complete. The New Zealand facilities are capable of producing up to 2.4 million tonnes annually, depending on natural gas composition.

Geismar, United States

The Geismar 1 plant commenced production in late January 2015 and Geismar 2 commenced production in late December 2015. Geismar 1 produced 236,000 tonnes during the fourth quarter of 2015 compared to 259,000 tonnes during the third quarter of 2015. A mechanical issue at Geismar 1 during the fourth quarter resulted in lost production of approximately 15,000 tonnes.

Trinidad

Production in Trinidad during the quarter was impacted by gas curtailments at both plants at levels similar to those experienced over the past year. The Titan facility produced 191,000 tonnes in the fourth quarter of 2015 compared with 172,000 tonnes in the third quarter of 2015. The Atlas facility produced 241,000 tonnes (63.1% interest) in the fourth quarter of 2015 compared with 226,000 tonnes (63.1% interest) in the third quarter of 2015.

We continue to experience natural gas curtailments to our Trinidad facilities due to a mismatch between upstream supply to the Natural Gas Company of Trinidad and Tobago ("NGC") and downstream demand from NGC's customers including Atlas and Titan. 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.

Egypt

The Egypt methanol facility restarted midway through the fourth quarter of 2015, producing 116,000 tonnes (Methanex share of 58,000 tonnes) after being idled for most of 2015 due to natural gas restrictions during the peak Egyptian summer electricity consumption period. Prior to restart, the Egypt facility only operated twelve days during 2015, primarily due to gas restrictions.

The Egypt facility has experienced periodic natural gas supply restrictions since mid-2012 and gas restrictions have become more significant since 2014. We cannot predict when the gas supply situation will improve, but are optimistic that recent developments impacting upstream gas supply in Egypt could result in improved gas deliveries in the future.

Medicine Hat, Canada

During the fourth quarter of 2015, we produced 155,000 tonnes at our Medicine Hat facility compared with 123,000 tonnes during the third quarter of 2015. The Medicine Hat facility underwent a planned major refurbishment during the second quarter of 2015, returned to normal operation in mid-July, and has been operating at full rates since restart.

Chile

After idling our Chile operations during the southern hemisphere winter as a result of insufficient natural gas feedstock from Chile and Argentina, we restarted one of our two plants in late September 2015. During the fourth quarter of 2015 we produced 88,000 tonnes in Chile, supported by natural gas supplies both from Chile and from Argentina through a tolling arrangement. We have reached an agreement with Empresa Nacional del Petroleo ("ENAP") for gas supply until April 2016.

The 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.

FINANCIAL RESULTS

For the fourth quarter of 2015, we reported net income attributable to Methanex shareholders of $10 million ($0.10 per share on a diluted basis) compared with net income attributable to Methanex shareholders for the third quarter of 2015 of $78 million($0.54 income per share on a diluted basis).

For the fourth quarter of 2015, we recorded Adjusted EBITDA of $80 million and Adjusted net income of $15 million ($0.16 per share on a diluted basis). This compares with Adjusted EBITDA of $95 million and Adjusted net income of $23 million ($0.26 per share on a diluted basis) for the third quarter of 2015.

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 the impact of certain items associated with specific identified events. 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 Years Ended
-------------------------------------------------
($ millions except number
of shares and per share Dec 31 Sep 30 Dec 31 Dec 31 Dec 31
amounts) 2015 2015 2014 2015 2014
----------------------------------------------------------------------------
----------------------------------------------------------------------------
Net income attributable to
Methanex shareholders $ 10 $ 78 $ 133 $ 201 $ 455
Mark-to-market impact of
share-based
compensation, net of tax 5 (55) (53) (34) (31)
Gain related to the
termination of a
terminal services
agreement, net of tax - - - (57) -
Argentina gas settlement,
net of tax - - - - (27)
----------------------------------------------------------------------------
Adjusted net income $ 15 $ 23 $ 80 $ 110 $ 397
----------------------------------------------------------------------------
Diluted weighted average
shares outstanding
(millions) 90 91 94 91 96
Adjusted net income per
common share $ 0.16 $ 0.26 $ 0.85 $ 1.20 $ 4.12
----------------------------------------------------------------------------



We review our financial results by analyzing changes in Adjusted EBITDA, mark-to-market impact of share-based compensation, depreciation and amortization, finance costs, finance income and other expenses and income taxes. A summary of our consolidated statements of income is as follows:



Three Months Ended Years Ended
--------------------------------------------------
Dec 31 Sep 30 Dec 31 Dec 31 Dec 31
($ millions) 2015 2015 2014 2015 2014
----------------------------------------------------------------------------
----------------------------------------------------------------------------
Consolidated statements of
income:
Revenue $ 484 $ 527 $ 733 $ 2,226 $ 3,223
Cost of sales and
operating expenses (436) (394) (510) (1,858) (2,426)
Mark-to-market impact of
share-based
compensation 6 (67) (64) (43) (38)
Adjusted EBITDA
(attributable to
associate) 30 38 9 108 41
Amounts excluded from
Adjusted EBITDA
attributable to non-
controlling interests (4) (9) (18) (32) (98)
----------------------------------------------------------------------------
Adjusted EBITDA
(attributable to
Methanex shareholders) 80 95 150 401 702

Mark-to-market impact of
share-based
compensation (6) 67 64 43 38
Depreciation and
amortization (50) (51) (36) (195) (143)
Gain related to the
termination of a
terminal services
agreement - - - 65 -
Argentina gas settlement - - - - 42
Finance costs (15) (16) (9) (70) (37)
Finance income and other
expenses - 1 (3) (6) (7)
Income tax recovery
(expense) 14 (10) (38) (11) (155)
Earnings of associate
adjustment (1) (15) (18) (6) (56) (32)
Non-controlling
interests adjustment
(1) 2 10 11 30 47
----------------------------------------------------------------------------
Net income attributable to
Methanex shareholders $ 10 $ 78 $ 133 $ 201 $ 455
----------------------------------------------------------------------------
Net income $ 11 $ 77 $ 140 $ 202 $ 506
----------------------------------------------------------------------------

(1) These adjustments represent depreciation and amortization, finance
costs, finance income and other expenses and income taxes associated
with our 63.1% interest in the Atlas methanol facility and the non-
controlling interests.



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:



Q4 2015 Q4 2015 2015
compared compared compared
($ millions) with Q3 2015 with Q4 2014 with 2014
----------------------------------------------------------------------------
----------------------------------------------------------------------------
Average realized price $ (91) $ (227) $ (898)
Sales volume 6 10 33
Total cash costs 70 147 564
----------------------------------------------------------------------------
Decrease in Adjusted EBITDA $ (15) $ (70) $ (301)
----------------------------------------------------------------------------



Average realized price



Three Months Ended Years Ended
---------------------------------------------
Dec 31 Sep 30 Dec 31 Dec 31 Dec 31
($ per tonne) 2015 2015 2014 2015 2014
----------------------------------------------------------------------------
----------------------------------------------------------------------------
Methanex average non-discounted
posted price 327 384 453 374 507
Methanex average realized price 277 323 390 322 437
----------------------------------------------------------------------------



Methanex's average realized price for the fourth quarter of 2015 was lower compared to the third quarter of 2015. Non-discounted posted prices moved lower through the quarter in Asia Pacific, the United States, and Europe compared to the third quarter of 2015 (refer to the Supply/Demand Fundamentals section for more information). Our average non-discounted posted price for the fourth quarter of 2015 was $327 per tonne compared with $384 per tonne for the third quarter of 2015 and $453 per tonne for the fourth quarter of 2014. Our average realized price for the fourth quarter of 2015 was $277 per tonne compared with $323 per tonne for the third quarter of 2015 and $390 per tonne for the fourth quarter of 2014. The change in average realized price for the fourth quarter of 2015 decreased Adjusted EBITDA by $91 million compared with the third quarter of 2015 and decreased Adjusted EBITDA by $227 million compared with the fourth quarter of 2014.

Methanex's average realized non-discounted posted price decreased from $507 per tonne for the year ended December 31, 2014 to $374 per tonne for the year ended December 31, 2015. Our average realized price was $322 per tonne for the year ended December 31, 2015 compared to $437 per tonne for the year ended December 31, 2014. The year over year change in average realized price negatively impacted adjusted EBITDA by $898 million.

Sales volume

Methanol sales volume excluding commission sales volume was higher in the fourth quarter of 2015 compared with the third quarter of 2015 by 91,000 tonnes and with the fourth quarter of 2014 by 65,000 tonnes. Higher methanol sales volume excluding commission sales volume for the fourth quarter of 2015 compared with these periods increased Adjusted EBITDA by $6 million and $10 million, respectively. For the year ended December 31, 2015, compared with the same period in 2014, methanol sales volume excluding commission sales volume was higher by 267,000 tonnes resulting in higher Adjusted EBITDA of $33 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 current production facilities except Medicine Hat and Geismar 2 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 to 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:



Q4 2015 Q4 2015 2015
compared compared compared
($ millions) with Q3 2015 with Q4 2014 with 2014
----------------------------------------------------------------------------
----------------------------------------------------------------------------
Methanex-produced methanol
costs $ 24 $ 48 $ 198
Proportion of Methanex-
produced methanol sales 10 16 1
Purchased methanol costs 40 78 326
Other, net (4) 5 39
----------------------------------------------------------------------------
Increase in Adjusted EBITDA $ 70 $ 147 $ 564
----------------------------------------------------------------------------



Methanex-produced methanol costs

We purchase natural gas for the New Zealand, Trinidad, Geismar 1, 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. This reduces 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 fourth quarter of 2015 compared with the third quarter of 2015 and with the fourth quarter of 2014, Methanex-produced methanol costs were lower by $24 million and $48 million, respectively. For the year ended December 31, 2015 compared with the same period in 2014, Methanex-produced methanol costs were lower by $198 million. Changes in Methanex-produced methanol costs for all periods presented are primarily due to the impact of changes in realized methanol prices on the variable portion of 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 fourth quarter of 2015 compared with the third quarter of 2015 and the fourth quarter of 2014, a higher proportion of Methanex-produced methanol sales increased Adjusted EBITDA by $10 million and $16 million, respectively. For the year ended December 31, 2015 compared with the same period in 2014, a higher proportion of Methanex-produced methanol sales increased Adjusted EBITDA by $1 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

For the three month period ended December 31, 2015 compared to the three month period ended September 30, 2015 other costs were higher by $4 million, primarily due to increased logistics costs from higher production volume in the quarter. Our logistics costs per metric tonne were lower in the fourth quarter of 2015 when compared to the third quarter of 2015. For the three month period ended December 31, 2015 compared to the three month period ended December 31, 2014 and the year ended December 31, 2015 compared to the year ended December 31, 2014, other costs were lower by $5 million and $39 million, respectively. The decrease in the current quarter compared to prior year fourth quarter primarily relates to selling, general and administrative expenses related to Geismar organizational build-up costs that are not eligible for capitalization. The year over year decrease primarily relates to lower logistics costs.

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 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 fair value of the share-based awards primarily driven by 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 Years Ended
-------------------------------------------------
($ millions except share Dec 31 Sep 30 Dec 31 Dec 31 Dec 31
share price) 2015 2015 2014 2015 2014
----------------------------------------------------------------------------
----------------------------------------------------------------------------
Methanex Corporation share
price (1) $ 33.01 $ 33.16 $ 45.83 $ 33.01 $ 45.83
Grant-date fair value
expense included in
Adjusted EBITDA and
Adjusted net income 4 3 3 21 22
Mark-to-market impact due
to change in share price 6 (67) (64) (43) (38)
----------------------------------------------------------------------------
Total share-based
compensation expense
(recovery), before tax $ 10 $ (64) $ (61) $ (22) $ (16)
----------------------------------------------------------------------------

(1) US dollar share price of Methanex Corporation as quoted on the NASDAQ
Global Market on the last trading day of the respective period. The
weighted-average closing share price for the 90 calendar days on the
NASDAQ Global Market immediately preceding December 31, 2015 was
$38.51.



For the three month period ended December 31, 2015, we recorded a $6 million mark-to-market expense on share-based compensation. This expense predominantly relates to the final vesting of performance share units granted in 2013. Performance share units have a feature where the ultimate number of units that vest will depend on the Company's total shareholder return in relation to a predetermined target over the period to vesting. For units granted prior to 2014, the number of units that ultimately vest will be in the range of 50% to 120% of the original grant. The value of the units is initially measured at the grant date and subsequently re-measured based on the market value of the Company's common shares on the last day of each quarter with an adjustment in the final quarter of vesting based on the weighted-average closing share price for the 90 calendar days on the NASDAQ Global Market immediately preceding the year end date that the performance share units vest. The $67 million mark-to-market recovery in the third quarter of 2015 and $64 million recovery in the fourth quarter of 2014 are primarily due to decreases in the Methanex Corporation share prices in the related periods.

For the year ended December 31, 2015, we recorded a $43 million mark-to-market recovery primarily due to the decline in the Methanex Corporation share price of $33.01 per share at December 31, 2015 compared to $45.83 per share at December 31, 2014.

Depreciation and Amortization

Depreciation and amortization was $50 million for the fourth quarter of 2015 compared with $51 million for the third quarter of 2015 and $36 million for the fourth quarter of 2014. Depreciation and amortization for the year ended December 31, 2015 was $195 million compared to $143 million for the year ended December 31, 2014. The increase in depreciation and amortization for the quarter and year ended December 31, 2015 compared to the same periods in 2014 is primarily due to higher sales volume of Methanex-produced methanol, higher unabsorbed depreciation recognized for production sites impacted by natural gas restrictions and production outages, and the commencement of depreciation associated with the start-up of our Geismar 1 facility early in 2015.

Finance Costs



Three Months Ended Years Ended
--------------------------------------------------
Dec 31 Sep 30 Dec 31 Dec 31 Dec 31
($ millions) 2015 2015 2014 2015 2014
----------------------------------------------------------------------------
----------------------------------------------------------------------------
Finance costs before
capitalized interest $ 21 $ 21 $ 19 $ 91 $ 65
Less capitalized interest (6) (5) (10) (21) (28)
----------------------------------------------------------------------------
Finance costs $ 15 $ 16 $ 9 $ 70 $ 37
----------------------------------------------------------------------------



Finance costs before capitalized interest primarily relates to interest expense on the unsecured notes, limited recourse debt facilities, and finance leases. For the three months and year ended December 31, 2015 compared with the same periods in 2014, finance costs were higher due to higher average debt levels in 2015 compared to 2014 and an increase in finance costs related to leased assets that were put into use on the start up of our Geismar 1 facility.

Capitalized interest relates to interest costs capitalized for the Geismar project. The Geismar 1 facility commenced production during the first quarter of 2015 and accordingly, we ceased capitalizing interest costs related to Geismar 1 from the date that the facility commenced commercial operations.

Finance Income and Other Expenses



Three Months Ended Years Ended
------------------------------------------------
Dec 31 Sep 30 Dec 31 Dec 31 Dec 31
($ millions) 2015 2015 2014 2015 2014
----------------------------------------------------------------------------
----------------------------------------------------------------------------
Finance income and other
expenses $ - $ 1 $ (3) $ (6) $ (7)
----------------------------------------------------------------------------



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 year ended December 31, 2015 compared to the year ended December 31, 2014 is as follows:



Year Ended Year Ended
December 31, 2015 December 31, 2014
------------------------------------------------
Adjusted Adjusted
($ millions, except where Net Net
noted) Net Income Income Net Income Income
----------------------------------------------------------------------------
----------------------------------------------------------------------------
Amount before income tax $ 213 $ 133 $ 662 $ 520
Income tax expense (11) (23) (156) (123)
----------------------------------------------------------------------------
$ 202 $ 110 $ 506 $ 397
----------------------------------------------------------------------------
Effective tax rate 5% 17% 24% 24%
----------------------------------------------------------------------------



We earn the majority of our earnings in New Zealand, Trinidad, the United States, Egypt, Canada and Chile. In Trinidad and Chile, the statutory tax rate is 35%. The statutory rates in Canada and New Zealand are 26.5% and 28%, respectively. The United States statutory tax rate is 36% and the Egypt statutory tax rate is 22.5%. 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 but included in the calculation of Adjusted net income.

The effective tax rate based on Adjusted net income was 17% for the year ended December 31, 2015 compared to 24% for the year ended December 31, 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 the impact of certain items associated with specific identified events. The effective tax rate differs from period to period depending on the source of earnings and the impact of foreign exchange fluctuations against the United States dollar on our tax balances. In periods with low income levels, the distribution of income and loss between jurisdictions can result in income tax rates that are not indicative of the longer term corporate tax rate.

SUPPLY/DEMAND FUNDAMENTALS

Demand

At the end of the fourth quarter of 2015, we estimate that methanol demand, excluding integrated coal-to-olefins facilities, was approximately 62 million tonnes on an annualized basis. Traditional chemical derivatives consume approximately 60% of global methanol and we believe that growth is correlated to GDP and industrial production growth rates. During the fourth quarter of 2015, traditional chemical demand growth for methanol was higher versus the third quarter of 2015, helped by seasonally strong demand in North America and China.

Energy demand continued to grow modestly in the fourth quarter, led by methanol-to-olefins ("MTO") demand as one large plant returned from maintenance. There are now twelve completed MTO/methanol-to-propylene ("MTP") plants in China which are dependent on merchant methanol supply, and these have the capacity to consume just over twelve million tonnes of methanol annually. We understand that some MTO facilities operated at slightly lower rates during the quarter as a result of low oil and olefins pricing, which continued to weigh on methanol affordability into that application. MTO related demand is anticipated to grow further in the first quarter of 2016, aided by the full impact of one new MTO facility which commenced operations in late December 2015 and has the capacity to consume approximately 1.8 million tonnes of methanol. There are also four other MTO plants at various stages of construction which are anticipated to be completed in 2016 with the capacity to consume over 6.5 million tonnes of methanol. The future operating rates and methanol consumption from these facilities will depend on a number of factors, including pricing for their various final products and the impact of feedstock costs on relative competitiveness. We estimate that at least 6 million tonnes of annual methanol demand did not operate in the fourth quarter of 2015 as a result of unaffordability, including MTO, MTP, and dimethyl-ether. Demand for direct methanol blending into gasoline in China has remained strong and we believe that future growth in this application is supported by numerous provincial fuel-blending standards. Fuel blending has continued to gain interest outside of China with several countries currently conducting demonstration programs to test the use of methanol-blended fuels.

Supply

Approximately 2.3 million tonnes of new capacity was introduced in the fourth quarter of 2015, including the 1.3 million tonne Fairway Methanol LLC plant which commenced operation late in the third quarter of 2015 in Clear Lake, Texas, and Methanex's 1.0 million tonne Geismar 2 facility which achieved first methanol on December 27, 2015. Over the next few years, outside of China, capacity additions are expected to be limited, and the majority of new capacity additions are expected in the Atlantic Basin. OCI N.V. is developing a project for the construction of a 1.8 million tonne plant in Beaumont, Texas. There are a number of other projects under discussion, but with limited committed capital to date and no projects that we are aware of in the construction phase. We expect that production from new methanol capacity in China will be consumed in that country.

Methanol Price

Our average realized price in the fourth quarter of 2015 decreased to $277 per tonne from $323 per tonne in the third quarter of 2015. The lower realized price in the fourth quarter of 2015 and lower posted pricing in all regions leading into the first quarter of 2016 reflects the combined impact of lower methanol affordability into MTO along with sufficient supply, particularly in the Atlantic Basin.

We reduced our January North America posted price by $50 per tonne to $299 per tonne, reduced our January Asia Pacific posted price by $30 per tonne to $275 per tonne, and reduced the European quarterly posted price by EUR20 to EUR275 per tonne for the first quarter of 2016. We also recently announced that North America and Asia Pacific posted prices for February will decline to $249 per tonne and $255 per tonne respectively. 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.



Methanex Non-Discounted Regional Posted Prices (1)
----------------------------------------------------------------------------
(US$ per tonne) Jan 2016 Dec 2015 Nov 2015 Oct 2015
----------------------------------------------------------------------------
North America 299 349 349 366
Europe (2) 300 330 330 330
Asia Pacific 275 305 305 305
----------------------------------------------------------------------------

(1) Discounts from our posted prices are offered to customers based on
various factors.
(2) EUR275 for Q1 2016 (Q4 2015 - EUR295) converted to United States
dollars.



LIQUIDITY AND CAPITAL RESOURCES

Cash flows from operating activities in the fourth quarter of 2015 decreased by $90 million to $44 million compared with $134 million for the third quarter of 2015 and decreased by $167 million compared to $211 million for the fourth quarter of 2014. Cash flows from operating activities for the twelve month period ended December 31, 2015 were $297 million compared with $801 million in 2014. The changes in cash flows from operating activities resulted from changes in the following:



Q4 2015 Q4 2015 2015
compared with compared with compared
($ millions) Q3 2015 Q4 2014 with 2014
----------------------------------------------------------------------------
----------------------------------------------------------------------------
Change in Adjusted EBITDA
(attributable to Methanex
shareholders) $ (15) $ (70) $ (301)
Exclude change in Adjusted EBITDA
of associate 8 (21) (67)
Dividends received from associate 6 19 51
Cash flows attributable to non-
controlling interests (5) (14) (66)
Non-cash working capital (79) (89) (110)
Income taxes paid (3) 6 4
Argentina gas settlement - - (42)
Share-based payments (3) 1 24
Other - - 3
----------------------------------------------------------------------------
Decrease in cash flows from
operating activities $ (90) $ (167) $ (504)
----------------------------------------------------------------------------



During the fourth quarter of 2015 we paid a quarterly dividend of $0.275 per share, for a total of $25 million.

On April 29, 2015, the Board of Directors approved a 5% normal course issuer bid, which allows us to repurchase for cancellation up to 4.6 million shares. Under this normal course issuer bid, we are authorized to purchase up to a further 3 million shares by May 5, 2016. During the quarter we repurchased 210,000 shares for $8 million.

We operate in a highly competitive commodity industry and believe it is appropriate to maintain a strong balance sheet and financial flexibility. At December 31, 2015, our cash balance was $255 million. 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 also have access to a $400 million unsecured and undrawn credit facility and no debt maturities until 2019.

The Egypt limited recourse debt facilities have covenants and default provisions that apply only to the Egypt entity, including restrictions on the incurrence of additional indebtedness and a requirement to fulfill certain conditions before the payment of cash or other shareholder distributions. Certain conditions have not been met, resulting in a restriction on shareholder distributions from the Egypt entity. As of December 31, 2015, the Egypt cash balance on a 100% ownership basis was $99 million (Methanex share of Egypt cash is $50 million). The Egypt entity continues to be able to fully utilize its funds for operating, capital and financing needs, including the repayment of the Egypt limited recourse debt facilities. Refer to note 5 of the Company's condensed consolidated interim financial statements for further details.

Our planned capital maintenance expenditure program directed towards maintenance, turnarounds and catalyst changes for existing operations, including our 63.1% share of Atlas, is currently estimated to be $50 million to the end of 2016. The remaining capital expenditures including payment of accrued liabilities related to our Geismar project are approximately $30 million.

We believe we are well positioned to meet our financial and capital commitments and leverage a recovery in methanol prices to generate strong future cash flows.

CONTROLS AND PROCEDURES

For the three months ended December 31, 2015, 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 throughout this document. These are Adjusted EBITDA, Adjusted net income, Adjusted net income per common share, Adjusted revenue 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 the mark-to-market impact of share-based compensation, depreciation and amortization, finance costs, finance income and other expenses, income tax expense, the 50% non-controlling interest in the Egypt facility, gain related to the termination of a terminal services agreement and Argentina gas settlement. Adjusted EBITDA includes an amount representing our 63.1% interest in the Atlas facility.

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 Years Ended
--------------------------------------------------
Dec 31 Sep 30 Dec 31 Dec 31 Dec 31
($ millions) 2015 2015 2014 2015 2014
----------------------------------------------------------------------------
----------------------------------------------------------------------------
Net income attributable to
Methanex shareholders $ 10 $ 78 $ 133 $ 201 $ 455
Mark-to-market impact of
share-based compensation 6 (67) (64) (43) (38)
Depreciation and
amortization 50 51 36 195 143
Gain related to the
termination of a terminal
services agreement - - - (65) -
Argentina gas settlement - - - - (42)
Finance costs 15 16 9 70 37
Finance income and other
expenses - (1) 3 6 7
Income tax expense (14) 10 38 11 155
Earnings of associate
adjustment (1) 15 18 6 56 32
Non-controlling interests
adjustment (1) (2) (10) (11) (30) (47)
----------------------------------------------------------------------------
Adjusted EBITDA
(attributable to Methanex
shareholders) $ 80 $ 95 $ 150 $ 401 $ 702
----------------------------------------------------------------------------

(1) These adjustments represent depreciation and amortization, finance
costs, finance income and other expenses and income tax expense
associated with our 63.1% interest in the Atlas methanol facility and
the non-controlling interests.



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 the impact of certain items associated with specific identified events. 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 Years Ended
-------------------------------------------------
($ millions except number
of shares and per share Dec 31 Sep 30 Dec 31 Dec 31 Dec 31
amounts) 2015 2015 2014 2015 2014
----------------------------------------------------------------------------
----------------------------------------------------------------------------
Net income attributable to
Methanex shareholders $ 10 $ 78 $ 133 $ 201 $ 455
Mark-to-market impact of
share-based
compensation, net of tax 5 (55) (53) (34) (31)
Gain related to the
termination of a
terminal services
agreement, net of tax - - - (57) -
Argentina gas settlement,
net of tax - - - - (27)
----------------------------------------------------------------------------
Adjusted net income $ 15 $ 23 $ 80 $ 110 $ 397
----------------------------------------------------------------------------
Diluted weighted average
shares outstanding
(millions) 90 91 94 91 96
Adjusted net income per
common share $ 0.16 $ 0.26 $ 0.85 $ 1.20 $ 4.12
----------------------------------------------------------------------------



Adjusted Revenue (attributable to Methanex shareholders)

A reconciliation from revenue to Adjusted revenue is as follows:



Three Months Ended Years Ended
--------------------------------------------------
Dec 31 Sep 30 Dec 31 Dec 31 Dec 31
($ millions) 2015 2015 2014 2015 2014
----------------------------------------------------------------------------
----------------------------------------------------------------------------
Revenue $ 484 $ 527 $ 733 $ 2,226 $ 3,223
Methanex share of Atlas
revenue (1) 79 97 60 308 231
Non-controlling interests'
share of revenue (1) (4) - (46) (27) (181)
Other adjustments (4) (5) (3) (12) (12)
----------------------------------------------------------------------------
Adjusted Revenue
(attributable to Methanex
shareholders) $ 555 $ 619 $ 744 $ 2,495 $ 3,261
----------------------------------------------------------------------------

(1) Excludes intercompany transactions with the Company.



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 Dec 31 Sep 30 Jun 30 Mar 31
share amounts) 2015 2015 2015 2015
----------------------------------------------------------------------------
----------------------------------------------------------------------------
Revenue $ 484 $ 527 $ 638 $ 577
Adjusted EBITDA 80 95 129 97
Net income 10 78 104 9
Adjusted net income 15 23 51 21
Basic net income per common
share 0.10 0.87 1.15 0.09
Diluted net income per
common share 0.10 0.54 1.15 0.09
Adjusted net income per
share 0.16 0.26 0.56 0.23
----------------------------------------------------------------------------


Three Months Ended
------------------------------------------------
($ millions, except per Dec 31 Sep 30 Jun 30 Mar 31
share amounts) 2014 2014 2014 2014
----------------------------------------------------------------------------
----------------------------------------------------------------------------
Revenue $ 733 $ 730 $ 792 $ 968
Adjusted EBITDA 150 137 160 255
Net income 133 52 125 145
Adjusted net income 80 66 91 160
Basic net income per common
share 1.43 0.55 1.30 1.51
Diluted net income per
common share 1.11 0.54 1.24 1.50
Adjusted net income per
share 0.85 0.69 0.94 1.65
----------------------------------------------------------------------------



FORWARD-LOOKING INFORMATION WARNING

This Fourth Quarter 2015 Management's Discussion and Analysis ("MD&A") as well as comments made during the Fourth Quarter 2015 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,
-- our 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 registrations and related
mortgages which require actions by Egyptian governmental entities,
-- expected impact on our results of 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,
-- 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 completion of
the Geismar project,
-- 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, and
-- expected actions of governments, government agencies, gas suppliers,
courts, tribunals or other third parties.



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 to procure natural gas feedstock on commercially acceptable
terms,
-- operating rates of our facilities,
-- 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),
-- receipt or issuance of third-party consents or approvals, including,
without limitation, governmental registrations of land title and related
mortgages in Egypt and governmental approvals related to rights to
purchase natural gas,
-- the establishment of new fuel standards,
-- 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 and price for methanol and its derivatives,
including demand for methanol for energy uses,
-- the price of natural gas, coal, oil and oil derivatives,
-- our ability to obtain natural gas feedstock on commercially acceptable
terms to underpin current operations and future production growth
opportunities,
-- the ability to 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,
-- 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, and
-- other risks described in our 2014 Management's Discussion and Analysis
and this Fourth Quarter 2015 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 implied by 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 volume. 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 volume
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.

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 Years Ended
----------------------------------------------------
Dec 31 Dec 31 Dec 31 Dec 31
2015 2014 2015 2014
----------------------------------------------------------------------------
----------------------------------------------------------------------------
Revenue $ 484,064 $ 733,499 $ 2,225,602 $ 3,223,399
Cost of sales and
operating expenses (436,121) (509,855) (1,857,899) (2,425,821)
Depreciation and
amortization (49,917) (36,047) (194,849) (142,738)
Gain on termination of
terminal services
agreement - - 65,000 -
Argentina gas settlement - - - 42,000
----------------------------------------------------------------------------
Operating (loss) income (1,974) 187,597 237,854 696,840
Earnings of associate
(note 4) 14,640 3,074 51,842 9,132
Finance costs (note 6) (14,881) (8,890) (69,859) (37,042)
Finance income and other
expenses (837) (3,348) (6,487) (7,285)
----------------------------------------------------------------------------
Income (loss) before
income taxes (3,052) 178,433 213,350 661,645
Income tax recovery
(expense):
Current (1,955) (13,653) (5,487) (79,865)
Deferred 15,771 (24,235) (5,510) (75,472)
----------------------------------------------------------------------------
13,816 (37,888) (10,997) (155,337)
----------------------------------------------------------------------------
Net income $ 10,764 $ 140,545 $ 202,353 $ 506,308
----------------------------------------------------------------------------
----------------------------------------------------------------------------
Attributable to:
Methanex Corporation
shareholders 9,310 133,144 200,617 454,610
Non-controlling
interests 1,454 7,401 1,736 51,698
----------------------------------------------------------------------------
$ 10,764 $ 140,545 $ 202,353 $ 506,308
----------------------------------------------------------------------------
----------------------------------------------------------------------------

Income per share for the
period attributable to
Methanex Corporation
shareholders
Basic net income per
common share $ 0.10 $ 1.43 $ 2.21 $ 4.79
Diluted net income per
common share (note 7) $ 0.10 $ 1.11 $ 2.01 $ 4.55

Weighted average number
of common shares
outstanding (note 7) 89,673,051 93,324,865 90,647,860 94,996,094
Diluted weighted average
number of common shares
outstanding (note 7) 89,851,013 94,340,675 91,345,723 96,193,981



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 Years Ended
------------------------------------------------
Dec 31 Dec 31 Dec 31 Dec 31
2015 2014 2015 2014
----------------------------------------------------------------------------
----------------------------------------------------------------------------
Net income $ 10,764 $ 140,545 $ 202,353 $ 506,308
Other comprehensive (loss)
income, net of taxes:
Items that may be
reclassified to income:
Change in fair value
of cash flow hedges
(note 10) (19,314) 655 (39,731) 1,306
Forward element
excluded from hedging
relationship (note
10) 6,865 - (2,826) -
Change in fair value
of interest rate swap
contracts - (6) (12) 412
Realized loss on
interest rate swap
contracts
reclassified to
finance costs - 3,279 3,205 13,181
Items that will not be
reclassified to income:
Actuarial (losses)
gains on defined
benefit pension plans (1,371) 32 (1,371) 32
Taxes on above items 4,435 (1,211) 13,427 (4,501)
----------------------------------------------------------------------------
(9,385) 2,749 (27,308) 10,430
----------------------------------------------------------------------------
Comprehensive income $ 1,379 $ 143,294 $ 175,045 $ 516,738
----------------------------------------------------------------------------
----------------------------------------------------------------------------
Attributable to:
Methanex Corporation
shareholders (75) 134,748 172,191 459,773
Non-controlling interests 1,454 8,546 2,854 56,965
----------------------------------------------------------------------------
$ 1,379 $ 143,294 $ 175,045 $ 516,738
----------------------------------------------------------------------------
----------------------------------------------------------------------------



See accompanying notes to condensed consolidated interim financial statements.



Methanex Corporation
Consolidated Statements of Financial Position (unaudited)
(thousands of U.S. dollars)

Dec 31 Dec 31
AS AT 2015 2014
----------------------------------------------------------------------------
----------------------------------------------------------------------------
ASSETS
Current assets:
Cash and cash equivalents $ 254,934 $ 951,600
Trade and other receivables 504,350 404,363
Inventories (note 2) 253,234 306,802
Prepaid expenses 19,560 23,137
----------------------------------------------------------------------------
1,032,078 1,685,902
Non-current assets:
Property, plant and equipment (note 3) 3,158,782 2,778,078
Investment in associate (note 4) 224,165 216,235
Other assets 79,018 95,125
----------------------------------------------------------------------------
3,461,965 3,089,438
----------------------------------------------------------------------------
$ 4,494,043 $ 4,775,340
----------------------------------------------------------------------------
----------------------------------------------------------------------------
LIABILITIES AND EQUITY
Current liabilities:
Trade, other payables and accrued
liabilities $ 508,639 $ 566,881
Current maturities on long-term debt (note
5) 47,864 193,831
Current maturities on other long-term
liabilities 25,439 59,118
----------------------------------------------------------------------------
581,942 819,830
Non-current liabilities:
Long-term debt (note 5) 1,488,026 1,528,207
Other long-term liabilities 231,745 140,861
Deferred income tax liabilities 223,757 233,225
----------------------------------------------------------------------------
1,943,528 1,902,293
Equity:
Capital stock 509,464 521,022
Contributed surplus 2,426 2,803
Retained earnings 1,235,615 1,262,961
Accumulated other comprehensive loss (27,776) (413)
----------------------------------------------------------------------------
Shareholders' equity 1,719,729 1,786,373
Non-controlling interests 248,844 266,844
----------------------------------------------------------------------------
Total equity 1,968,573 2,053,217
----------------------------------------------------------------------------
$ 4,494,043 $ 4,775,340
----------------------------------------------------------------------------
----------------------------------------------------------------------------



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 Income (Loss)
----------------------------------------------------------------------------
Balance, December
31, 2013 96,100,969 $531,573 $ 4,994 $1,126,700 $ (5,544)
Net income - - - 454,610 -
Other
comprehensive
income - - - 32 5,131
Compensation
expense
recorded for
stock options - - 777 - -
Issue of shares
on exercise of
stock options 536,724 10,657 - - -
Reclassification
of grant date
fair value on
exercise of
stock options - 2,968 (2,968) - -
Payment for
shares
repurchased (4,311,206) (24,176) - (228,468) -
Dividend
payments to
Methanex
Corporation
shareholders - - - (89,913) -
Distributions
made and
accrued to non-
controlling
interests - - - - -
Equity
contributions
by non-
controlling
interests - - - - -
----------------------------------------------------------------------------
Balance, December
31, 2014 92,326,487 $521,022 $ 2,803 $1,262,961 $ (413)
Net income - - - 200,617 -
Other
comprehensive
(loss) income - - - (1,063) (27,363)
Compensation
expense
recorded for
stock options - - 742 - -
Issue of shares
on exercise of
stock options 290,802 3,927 - - -
Reclassification
of grant date
fair value on
exercise of
stock options - 1,119 (1,119) - -
Payment for
shares
repurchased (2,946,091) (16,604) - (129,679) -
Dividend
payments to
Methanex
Corporation
shareholders - - - (97,221) -
Distributions
made and
accrued to non-
controlling
interests - - - - -
Equity
contributions
by non-
controlling
interests - - - - -
----------------------------------------------------------------------------
Balance, December
31, 2015 89,671,198 $509,464 $ 2,426 $1,235,615 $ (27,776)
----------------------------------------------------------------------------
----------------------------------------------------------------------------

Non-
Shareholders' Controlling Total
Equity Interests Equity
----------------------------------------------------------------------------
Balance, December
31, 2013 $ 1,657,723 $ 247,610 $ 1,905,333
Net income 454,610 51,698 506,308
Other
comprehensive
income 5,163 5,267 10,430
Compensation
expense
recorded for
stock options 777 - 777
Issue of shares
on exercise of
stock options 10,657 - 10,657
Reclassification
of grant date
fair value on
exercise of
stock options - - -
Payment for
shares
repurchased (252,644) - (252,644)
Dividend
payments to
Methanex
Corporation
shareholders (89,913) - (89,913)
Distributions
made and
accrued to non-
controlling
interests - (47,338) (47,338)
Equity
contributions
by non-
controlling
interests - 9,607 9,607
----------------------------------------------------------------------------
Balance, December
31, 2014 $ 1,786,373 $ 266,844 $ 2,053,217
Net income 200,617 1,736 202,353
Other
comprehensive
(loss) income (28,426) 1,118 (27,308)
Compensation
expense
recorded for
stock options 742 - 742
Issue of shares
on exercise of
stock options 3,927 - 3,927
Reclassification
of grant date
fair value on
exercise of
stock options - - -
Payment for
shares
repurchased (146,283) - (146,283)
Dividend
payments to
Methanex
Corporation
shareholders (97,221) - (97,221)
Distributions
made and
accrued to non-
controlling
interests - (22,554) (22,554)
Equity
contributions
by non-
controlling
interests - 1,700 1,700
----------------------------------------------------------------------------
Balance, December
31, 2015 $ 1,719,729 $ 248,844 $ 1,968,573
----------------------------------------------------------------------------
----------------------------------------------------------------------------



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 Years Ended
------------------------------------------------
Dec 31 Dec 31 Dec 31 Dec 31
2015 2014 2015 2014
----------------------------------------------------------------------------
----------------------------------------------------------------------------
CASH FLOWS FROM / (USED IN)
OPERATING ACTIVITIES
Net income $ 10,764 $ 140,545 $ 202,353 $ 506,308
Deduct earnings of
associate (14,640) (3,074) (51,842) (9,132)
Dividends received from
associate 18,930 - 75,720 25,240
Add (deduct) non-cash
items:
Depreciation and
amortization 49,917 36,047 194,849 142,738
Income tax (recovery)
expense (13,816) 37,888 10,997 155,337
Share-based compensation
expense (recovery) 10,499 (60,562) (21,989) (15,805)
Finance costs 14,881 8,890 69,859 37,042
Other 196 8,718 382 8,549
Income taxes paid (8,122) (13,962) (47,234) (51,156)
Other cash payments,
including share-based
compensation (3,967) (11,212) (19,018) (56,030)
----------------------------------------------------------------------------
Cash flows from operating
activities before
undernoted 64,642 143,278 414,077 743,091
Changes in non-cash
working capital (note 9) (20,683) 67,610 (117,126) 57,926
----------------------------------------------------------------------------
43,959 210,888 296,951 801,017
----------------------------------------------------------------------------

CASH FLOWS FROM / (USED IN)
FINANCING ACTIVITIES
Payments for repurchase of
shares (8,256) (83,480) (146,283) (252,644)
Dividend payments to
Methanex Corporation
shareholders (24,652) (23,194) (97,221) (89,913)
Interest paid, including
interest rate swap
settlements (23,780) (6,190) (82,275) (52,995)
Net proceeds on issue of
long-term debt and
limited recourse debt 4,500 592,275 4,500 592,275
Repayment of long-term
debt and limited recourse
debt (913) (913) (193,996) (41,504)
Equity contributions by
non-controlling interests 1,200 9,607 1,700 9,607
Distributions to non-
controlling interests - - (2,570) (34,158)
Proceeds on issue of
shares on exercise of
stock options 232 995 3,927 10,657
Loan to associate (31,176) (29,371) (31,176) (29,371)
Other (654) (1,071) (3,984) (4,172)
Changes in non-cash
working capital related
to financing activities
(note 9) 6,314 (2,398) (19,984) (8,913)
----------------------------------------------------------------------------
(89,813) 456,260 (567,362) 98,869
----------------------------------------------------------------------------

CASH FLOWS FROM / (USED IN)
INVESTING ACTIVITIES
Property, plant and
equipment (9,678) (23,528) (96,909) (84,168)
Geismar plants under
construction (84,443) (154,300) (328,112) (573,844)
Termination of terminal
services agreement - - 65,000 -
Other assets (1,194) - 802 (1,758)
Changes in non-cash
working capital related
to investing activities
(note 9) (30,605) (13,021) (67,036) (21,252)
----------------------------------------------------------------------------
(125,920) (190,849) (426,255) (681,022)
----------------------------------------------------------------------------
Increase (decrease) in
cash and cash equivalents (171,774) 476,299 (696,666) 218,864
Cash and cash equivalents,
beginning of period 426,708 475,301 951,600 732,736
----------------------------------------------------------------------------
Cash and cash equivalents,
end of period $ 254,934 $ 951,600 $ 254,934 $ 951,600
----------------------------------------------------------------------------
----------------------------------------------------------------------------



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, with the exception of the early adoption of IFRS 9 "Financial Instruments" as described in the Company's 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 January 27, 2016.

These condensed consolidated interim financial statements should be read in conjunction with the Company's consolidated financial statements for the year ended December 31, 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 months and year ended December 31, 2015 is $409 million (2014 - $552 million) and $1,830 million (2014 - $2,330 million), respectively.

3. Property, plant and equipment:



Buildings,
Plant
Installations Plants
& Under Finance
Machinery Construction Leases Other Total
----------------------------------------------------------------------------
----------------------------------------------------------------------------
Cost at December
31, 2015 $ 4,554,065$ - $ 121,849 $ 204,483 $ 4,880,397
Accumulated
depreciation at
December 31,
2015 1,578,064 - 6,853 136,698 1,721,615
----------------------------------------------------------------------------
Net book value
at December 31,
2015 $ 2,976,001$ - $ 114,996 $ 67,785 $ 3,158,782
----------------------------------------------------------------------------
Cost at December
31, 2014 $ 3,097,200$ 996,015 $ 32,230 $ 194,430 $ 4,319,875
Accumulated
depreciation at
December 31,
2014 1,384,100 - 30,488 127,209 1,541,797
----------------------------------------------------------------------------
Net book value
at December 31,
2014 $ 1,713,100$ 996,015 $ 1,742 $ 67,221 $ 2,778,078
----------------------------------------------------------------------------



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 Dec 31 Dec 31
position as at 2015 2014
----------------------------------------------------------------------------
----------------------------------------------------------------------------
Cash and cash equivalents $ 57,620 $ 24,834
Other current assets 45,854 70,594
Non-current assets 332,072 352,616
Current liabilities (30,440) (29,442)
Other long-term liabilities, including
current maturities (169,681) (145,336)
----------------------------------------------------------------------------
Net assets at 100% $ 235,425 $ 273,266
----------------------------------------------------------------------------
Net assets at 63.1% $ 148,553 $ 172,431
Long-term receivable from Atlas (1) 75,612 43,804
----------------------------------------------------------------------------
Investment in associate $ 224,165 $ 216,235
----------------------------------------------------------------------------

(1) During the year ended December 31, 2015, the Company extended a $31.2
million unsecured loan to Atlas due December 14, 2020 with interest due
semi-annually.



Three Months Ended Years Ended
------------------------------------------------
Consolidated statements of Dec 31 Dec 31 Dec 31 Dec 31
income 2015 2014 2015 2014
----------------------------------------------------------------------------
----------------------------------------------------------------------------
Revenue $ 95,115 $ 92,197 $ 373,034 $ 363,570
Cost of sales and
depreciation and
amortization (55,043) (85,719) (233,790) (334,648)
----------------------------------------------------------------------------
Operating income 40,072 6,478 139,244 28,922
Finance costs, finance
income and other expenses (2,411) (2,259) (9,378) (10,438)
Income tax recovery
(expense) (14,459) 653 (47,707) (4,011)
----------------------------------------------------------------------------
Net earnings at 100% $ 23,202 $ 4,872 $ 82,159 $ 14,473
----------------------------------------------------------------------------
Earnings of associate at
63.1% $ 14,640 $ 3,074 $ 51,842 $ 9,132
----------------------------------------------------------------------------

----------------------------------------------------------------------------
Dividends received from
associate $ 18,930 $ - $ 75,720 $ 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, 2007, 2008, and 2009 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 from 2005 to 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:



Dec 31 Dec 31
As at 2015 2014
----------------------------------------------------------------------------
----------------------------------------------------------------------------
Unsecured notes
$150 million at 6.00% due August 15, 2015 $ - $ 149,835
$350 million at 3.25% due December 15,
2019 346,289 345,387
$250 million at 5.25% due March 1, 2022 247,360 246,991
$300 million at 4.25% due December 1, 2024 296,219 296,073
$300 million at 5.65% due December 1, 2044 295,031 294,936
----------------------------------------------------------------------------
1,184,899 1,333,222
Egypt limited recourse debt facilities 330,003 368,678
Other limited recourse debt facilities 20,988 20,138
----------------------------------------------------------------------------
Total long-term debt (1) 1,535,890 1,722,038
Less current maturities (47,864) (193,831)
----------------------------------------------------------------------------
$ 1,488,026 $ 1,528,207
----------------------------------------------------------------------------

(1) Long-term debt is presented net of deferred financing fees.



During the year ended December 31, 2015, the Company repaid $150 million of unsecured notes bearing interest at 6.00%, made repayments on its Egypt limited recourse debt facilities of $40.3 million, made repayments on its other limited recourse debt facilities of $3.6 million, and drew down an additional $4.5 million under the other limited recourse debt facilities.

The Egypt limited recourse debt facilities are described as limited recourse as they are secured only by the assets of the Egypt entity. Accordingly, the lenders to the limited recourse debt facilities have no recourse to the Company or its other subsidiaries.

The Egypt limited recourse debt facilities contain a covenant to complete by March 31, 2016 certain land title registrations and related mortgages that require action by Egyptian government entities and which the Company does not expect to complete by March 31, 2016. The Company is seeking a waiver from the lenders. The Company does not believe that the finalization of these items is material. The Company cannot provide assurance that we will be able to obtain a waiver from the lenders.

The Egypt limited recourse debt facilities have covenants and default provisions that apply only to the Egypt entity, including restrictions on the incurrence of additional indebtedness and a requirement to fulfill certain conditions before the payment of cash or other shareholder distributions. Certain conditions have not been met, resulting in a restriction on shareholder distributions from the Egypt entity. The Company cannot provide assurance that the Egypt entity will be able to obtain a waiver to amend this restriction. As of December 31, 2015, the Egypt cash balance on a 100% ownership basis was $99 million (Methanex share of Egypt cash is $50 million). The Egypt entity continues to be able to fully utilize its funds for operating, capital and financing needs, including the repayment of the Egypt limited recourse debt facilities.

At December 31, 2015, 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 Years Ended
------------------------------------------------
Dec 31 Dec 31 Dec 31 Dec 31
2015 2014 2015 2014
----------------------------------------------------------------------------
----------------------------------------------------------------------------
Finance costs $ 21,074 $ 18,703 $ 90,965 $ 65,067
Less capitalized interest
related to Geismar plants
under construction (6,193) (9,813) (21,106) (28,025)
----------------------------------------------------------------------------
$ 14,881 $ 8,890 $ 69,859 $ 37,042
----------------------------------------------------------------------------



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 complete and ready for productive use. The Geismar 2 plant commenced production late in the quarter ended December 31, 2015 and, accordingly, we ceased capitalizing interest costs related to Geismar 2 from the date that the facility commenced commercial operations.

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 as compared to the cash-settled method.

A reconciliation of the numerator used for the purpose of calculating diluted net income per common share is as follows:



Three Months Ended Years Ended
-----------------------------------------------
Dec 31 Dec 31 Dec 31 Dec 31
2015 2014 2015 2014
----------------------------------------------------------------------------
----------------------------------------------------------------------------
Numerator for basic net
income per common share $ 9,310 $ 133,144 $ 200,617 $ 454,610
Adjustment for the effect of
TSARs:
Cash-settled recovery
included in net income - (27,524) (11,586) (11,286)
Equity-settled expense - (814) (5,308) (5,627)
----------------------------------------------------------------------------
Numerator for diluted net
income per common share $ 9,310 $ 104,806 $ 183,723 $ 437,697
----------------------------------------------------------------------------



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 Years Ended
------------------------------------------------
Dec 31 Dec 31 Dec 31 Dec 31
2015 2014 2015 2014
----------------------------------------------------------------------------
----------------------------------------------------------------------------
Denominator for basic net
income per common share 89,673,051 93,324,865 90,647,860 94,996,094
Effect of dilutive stock
options 177,962 443,804 274,961 545,421
Effect of dilutive TSARs - 572,006 422,902 652,466
----------------------------------------------------------------------------
Denominator for diluted net
income per common share 89,851,013 94,340,675 91,345,723 96,193,981
----------------------------------------------------------------------------



8. Share-based compensation:

a) Share appreciation rights ("SARs"), TSARs and stock options:

(i) Outstanding units:

Information regarding units outstanding at December 31, 2015 is as follows:



SARs TSARs
--------------------------------------------------
Weighted Weighted
Average Average
Number of Exercise Number of Exercise
(per share amounts in USD) Units Price Units Price
----------------------------------------------------------------------------
----------------------------------------------------------------------------
Outstanding at December
31, 2014 1,085,247 $ 40.78 1,732,185 $ 39.59
Granted 284,273 55.40 416,605 55.39
Exercised (94,037) 32.21 (17,300) 31.89
Cancelled (12,975) 57.68 (9,525) 60.90
----------------------------------------------------------------------------
Outstanding at September
30, 2015 1,262,508 $ 44.53 2,121,965 $ 42.66
----------------------------------------------------------------------------
Exercised - - (13,000) 31.73
Cancelled (3,300) 63.60 - -
----------------------------------------------------------------------------
Outstanding at December
31, 2015 1,259,208 $ 44.48 2,108,965 $ 42.73
----------------------------------------------------------------------------


Stock Options
------------------------------------
Weighted Average
(per share amounts in USD) Number of Units Exercise Price
----------------------------------------------------------------------------
----------------------------------------------------------------------------
Outstanding at December 31, 2014 699,261 $ 21.90
Granted 55,917 55.66
Exercised (248,981) 14.84
Cancelled (7,200) 61.50
Expired (12,690) 28.43
----------------------------------------------------------------------------
Outstanding at September 30, 2015 486,307 $ 28.64
----------------------------------------------------------------------------
Exercised (37,800) 6.33
----------------------------------------------------------------------------
Outstanding at December 31, 2015 448,507 $ 30.52
----------------------------------------------------------------------------


Units Outstanding at Units Exercisable at
December 31, 2015 December 31, 2015
---------------------------------------------------------
Weighted
Average
Range of Exercise Remaining Weighted Weighted
Prices Contractual Number Average Number Average
(per share amounts Life of Units Exercise of Units Exercise
in USD) (Years) Outstanding Price Exercisable Price
----------------------------------------------------------------------------
----------------------------------------------------------------------------
SARs:
$23.36 to $40.72 3.11 765,920 $ 32.70 649,620 $ 31.69
$46.42 to $73.13 5.73 493,288 62.77 72,567 71.77
----------------------------------------------------------------------------
4.13 1,259,208 $ 44.48 722,187 $ 35.72
----------------------------------------------------------------------------
TSARs:
$23.36 to $40.72 3.01 1,387,535 $ 32.41 1,214,235 $ 31.58
$46.42 to $73.13 5.76 721,430 62.57 102,233 72.28
----------------------------------------------------------------------------
3.95 2,108,965 $ 42.73 1,316,468 $ 34.74
----------------------------------------------------------------------------
Stock options:
$6.33 to $25.22 0.44 186,790 $ 11.35 186,790 $ 11.35
$28.43 to $73.13 4.16 261,717 44.20 158,200 36.12
----------------------------------------------------------------------------
2.61 448,507 $ 30.52 344,990 $ 22.71
----------------------------------------------------------------------------



(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 December 31, 2015 was $13.6 million compared with the recorded liability of $13.0 million. The difference between the fair value and the recorded liability of $0.6 million will be recognized over the weighted average remaining vesting period of approximately 1.67 years. The weighted average fair value was estimated at December 31, 2015 using the Black-Scholes option pricing model.

For the three months and year ended December 31, 2015, compensation expense related to SARs and TSARs included an expense in cost of sales and operating expenses of $2.8 million (2014 - recovery of $43.3 million) and a recovery of $16.8 million (2014 - recovery of $14.5 million), respectively. This included an expense of $0.7 million (2014 - recovery of $44.8 million) and a recovery of $26.1 million (2014 - recovery of $24.5 million), respectively, related to the effect of the change in the Company's share price for the three months and year ended December 31, 2015.

(iii) Compensation expense related to stock options:

For the three months and year ended December 31, 2015, compensation expense related to stock options included in cost of sales and operating expenses was $0.1 million (2014 - $0.2 million) and $0.7 million (2014 - $0.8 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 December 31, 2015 are as follows:



Number of Number of Number of
Deferred Restricted Performances
Share Units Share Units Share Units
----------------------------------------------------------------------------
----------------------------------------------------------------------------
Outstanding at December 31,
2014 302,158 30,365 798,944
Granted 6,461 6,400 169,990
Granted performance factor
(1) - - 71,100
Granted in-lieu of dividends 5,521 648 10,571
Redeemed (1,500) - (426,598)
Cancelled - - (17,730)
----------------------------------------------------------------------------
Outstanding at September 30,
2015 312,640 37,413 606,277
----------------------------------------------------------------------------
Granted 735 - -
Granted in-lieu of dividends 2,357 112 4,937
Redeemed (29,916) (23,661) -
Cancelled - - (636)
----------------------------------------------------------------------------
Outstanding at December 31,
2015 285,816 13,864 610,578
----------------------------------------------------------------------------

(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, 2015.



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 December 31, 2015 was $26.0 million compared with the recorded liability of $25.2 million. The difference between the fair value and the recorded liability of $0.8 million will be recognized over the weighted average remaining vesting period of approximately 1.61 years.

For the three months and year ended December 31, 2015, compensation expense related to deferred, restricted and performance share units included in cost of sales and operating expenses was an expense of $7.6 million (2014 - recovery of $17.5 million) and a recovery of $5.9 million (2014 - recovery of $2.1 million), respectively. This included an expense of $5.6 million (2014 - recovery of $19.7 million) and a recovery of $16.4 million (2014 - recovery of $13.6 million) related to the effect of the change in the Company's share price for the three months and year ended December 31, 2015.

9. Changes in non-cash working capital:

Changes in non-cash working capital for the three months and year ended December 31, 2015 and 2014 were as follows:



Three Months Ended Years Ended
------------------------------------------------
Dec 31 Dec 31 Dec 31 Dec 31
2015 2014 2015 2014
----------------------------------------------------------------------------
----------------------------------------------------------------------------
Changes in non-cash working
capital:
Trade and other
receivables $ (39,340) $ 52,658 $ (99,987) $ 129,767
Inventories 15,852 (21,066) 53,568 28,166
Prepaid expenses 1,108 (1,472) 3,577 (2,604)
Trade, other payables and
accrued liabilities,
including long-term
payables included in
other long-term
liabilities (41,900) 41,748 (108,779) (54,304)
----------------------------------------------------------------------------
(64,280) 71,868 (151,621) 101,025
Adjustments for items not
having a cash effect and
working capital changes
relating to taxes and
interest paid 6,678 (19,677) (52,525) (73,264)
----------------------------------------------------------------------------
Changes in non-cash working
capital having a cash
effect $ (57,602) $ 52,191 $ (204,146) $ 27,761
----------------------------------------------------------------------------
----------------------------------------------------------------------------

These changes relate to the
following activities:
Operating $ (20,683) $ 67,610 $ (117,126) $ 57,926
Financing 6,314 (2,398) (19,984) (8,913)
Investing (30,605) (13,021) (67,036) (21,252)
----------------------------------------------------------------------------
Changes in non-cash working
capital $ (57,602) $ 52,191 $ (204,146) $ 27,761
----------------------------------------------------------------------------
----------------------------------------------------------------------------



10. Financial instruments:

Financial instruments are either measured at amortized cost or fair value.

In the normal course of business, the Company's assets, liabilities and forecasted transactions, as reported in U.S. dollars, are impacted by various market risks including, but not limited to, natural gas prices and currency exchange rates. The time frame and manner in which the Company manages those risks varies for each item based on the Company's assessment of the risk and the available alternatives for mitigating risks.

The Company uses derivatives as part of its risk management program to mitigate variability associated with changing market values. Changes in fair value of derivative financial instruments are recorded in earnings unless the instruments are designated as cash flow hedges. The Company designates as cash flow hedges derivative financial instruments to hedge its risk exposure to fluctuations in the euro compared to the U.S. dollar and derivative financial instruments to hedge its risk exposure to fluctuations in natural gas prices.

The fair value of derivative instruments is determined based on industry-accepted valuation models using market observable inputs and are classified within Level 2 of the fair value hierarchy. The fair value of all of the Company's derivative contracts includes an adjustment for credit risk. The effective portion of the changes in fair value of derivative financial instruments designated as cash flow hedges is recorded in other comprehensive income. The spot element of forward contracts in the hedging relationships is recorded in other comprehensive income as the change in fair value of cash flow hedges. The change in the fair value of the forward element of forward contracts is recorded separately in other comprehensive income as the forward element excluded from hedging relationship.

Natural gas forward contracts

The Company has elected to manage its exposure to changes in natural gas prices for the Geismar 2 facility by executing a number of forward contracts which it has designated as cash flow hedges for its highly probable forecast natural gas purchases in North America.

Euro forward exchange contracts

The Company manages its foreign currency exposure to the euro that results due to sales denominated in euros by executing a number of forward contracts which it has designated as cash flow hedges for its highly probable forecast euro collections.

The following tables provide additional information on the Company's derivative financial instruments designated as cash flow hedges outstanding as at December 31, 2015:



Notional amount by term to maturity
-------------------------------------------------
1 year More than
or less 1-3 years 3-5 years 5 years Total
----------------------------------------------------------------------------
----------------------------------------------------------------------------
Natural gas forward
contracts 32,895 93,839 99,350 290,416 $ 516,500
----------------------------------------------------------------------------
Euro forward exchange
contracts 39,033 - - - $ 39,033
----------------------------------------------------------------------------


Consolidated balance Fair Value at
sheet classification December 31, 2015
----------------------------------------------------------------------------
----------------------------------------------------------------------------
Other long-term
Natural gas forward contracts liabilities $ (42,653)
----------------------------------------------------------------------------
Euro forward exchange Trade and other
contracts receivables $ 1,228
----------------------------------------------------------------------------



The carrying values of the Company's financial instruments approximate their fair values, except as follows:



December 31, 2015
------------------------------
As at Carrying Value Fair Value
----------------------------------------------------------------------------
----------------------------------------------------------------------------
Long-term debt excluding deferred financing
fees $ 1,550,903 $ 1,449,523
----------------------------------------------------------------------------



Long-term debt consists of limited recourse debt facilities and unsecured notes. 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 December 2015. The fair value of the Company's unsecured notes will fluctuate until maturity.



Methanex Corporation
Quarterly History (unaudited)

2015 Q4 Q3 Q2 Q1
----------------------------------------------------------------------------
METHANOL SALES VOLUME
(thousands of tonnes)
Methanex-produced (1) 5,050 1,372 1,238 1,203 1,237
Purchased methanol 2,780 636 679 813 652
Commission sales (1) 641 178 169 109 185
----------------------------------------------------------------------------
8,471 2,186 2,086 2,125 2,074
----------------------------------------------------------------------------
METHANOL PRODUCTION
(thousands of tonnes)
New Zealand 1,856 412 476 487 481
Atlas (Trinidad) (63.1%
interest) 912 241 226 236 209
Titan (Trinidad) 732 191 172 183 186
Geismar 1 and 2
(Louisiana, USA) (2) 959 244 259 276 180
Egypt (50% interest) 74 58 - 8 8
Medicine Hat (Canada) 456 155 123 51 127
Chile I and IV 204 88 3 40 73
----------------------------------------------------------------------------
5,193 1,389 1,259 1,281 1,264
----------------------------------------------------------------------------
AVERAGE REALIZED METHANOL
PRICE(3)
($/tonne) 322 277 323 350 337
($/gallon) 0.97 0.83 0.97 1.05 1.01
PER SHARE INFORMATION ($
per share)(4)
Adjusted net income (5) 1.20 0.16 0.26 0.56 0.23
Basic net income 2.21 0.10 0.87 1.15 0.09
Diluted net income 2.01 0.10 0.54 1.15 0.09
----------------------------------------------------------------------------

2014 Q4 Q3 Q2 Q1
----------------------------------------------------------------------------
METHANOL SALES VOLUME
(thousands of tonnes)
Methanex-produced (1) 4,878 1,249 1,258 1,143 1,228
Purchased methanol 2,685 694 694 643 654
Commission sales (1) 941 248 191 206 296
----------------------------------------------------------------------------
8,504 2,191 2,143 1,992 2,178
----------------------------------------------------------------------------
METHANOL PRODUCTION
(thousands of tonnes)
New Zealand 2,196 542 595 559 500
Atlas (Trinidad) (63.1%
interest) 907 233 234 191 249
Titan (Trinidad) 664 127 185 203 149
Geismar 1 and 2
(Louisiana, USA) (2) - - - - -
Egypt (50% interest) 416 128 50 99 139
Medicine Hat (Canada) 505 115 130 138 122
Chile I and IV 165 62 10 26 67
----------------------------------------------------------------------------
4,853 1,207 1,204 1,216 1,226
----------------------------------------------------------------------------
AVERAGE REALIZED METHANOL
PRICE(3)
($/tonne) 437 390 389 450 524
($/gallon) 1.31 1.17 1.17 1.35 1.58
PER SHARE INFORMATION ($
per share)(4)
Adjusted net income (5) 4.12 0.85 0.69 0.94 1.65
Basic net income 4.79 1.43 0.55 1.30 1.51
Diluted net income 4.55 1.11 0.54 1.24 1.50
----------------------------------------------------------------------------

(1) Methanex-produced methanol includes volume produced by Chile using
natural gas supplied from Argentina under a tolling arrangement.
Commission sales represent volume 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) We commenced methanol production from Geismar 1 in January 2015 and
from Geismar 2 in December 2015.

(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 volume of Methanex-produced (attributable to Methanex
shareholders) and purchased methanol but excluding volume produced by
Chile using natural gas supplied from Argentina under a tolling
agreement.

(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.



FOR FURTHER INFORMATION PLEASE CONTACT:
Sandra Daycock
Director, Investor Relations
Methanex Corporation
604-661-2600
www.methanex.com

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