MEOH Methanex Corporation

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NEWS RELEASE	Methanex Corporation 1800 - 200 Burrard St. Vancouver, BC Canada V6C 3M1 Investor Relations: (604) 661-2600 www.methanex.com

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FINANCIAL AND OPERATIONAL DATA

	Three Months Ended							Years Ended
($ millions except per share amounts and where noted)	Dec 31 2019		Sep 30 2019		Dec 31 2018			Dec 31 2019		Dec 31 2018
Production (thousands of tonnes) (attributable to Methanex shareholders)	2,124		1,837		1,885			7,589		7,211
Sales volume (thousands of tonnes)
Methanex-produced methanol	2,056		1,965		1,599			7,611		7,002
Purchased methanol	623		680		908			2,492		3,032
Commission sales	307		179		245			1,031		1,174
Total sales volume 1	2,986		2,824		2,752			11,134		11,208
Methanex average non-discounted posted price ($ per tonne) 2	307		330		487			353		481
Average realized price ($ per tonne) 3	256		272		401			295		405
Revenue	659		650		977			2,784		3,932
Adjusted revenue	690		723		1,008			2,988		4,033
Adjusted EBITDA	136		90		197			566		1,071
Cash flows from operating activities	114		71		218			515		980
Adjusted net income (loss)	10		(21	)	90			71		556
Net income (loss) (attributable to Methanex shareholders)	9		(10	)	161			88		569
Adjusted net income (loss) per common share	0.13		(0.27	)	1.15			0.93		6.86
Basic net income (loss) per common share	0.12		(0.13	)	2.07			1.15		7.07
Diluted net income (loss) per common share	0.12		(0.21	)	1.68			1.01		6.92
Common share information (millions of shares)
Weighted average number of common shares	76		76		78			77		80
Diluted weighted average number of common shares	76		76		78			77		81
Number of common shares outstanding, end of period	76		76		77			76		77

1

Methanex-produced methanol represents our equity share of volume produced at our facilities and excludes volume marketed on a commission basis related to the 36.9% of the Atlas facility and 50% of the Egypt facility that we do not own. Methanex-produced methanol includes any volume produced by Chile using natural gas supplied from Argentina under a tolling arrangement ("Tolling Volume"). No Tolling Volume has been produced in 2019. There was no Tolling Volume in the fourth quarter of 2018 and 108,000 MT of Tolling Volume for the year ended December 31, 2018.

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 and purchased methanol, but excluding Tolling Volume.

METHANEX CORPORATION 2019 FOURTH QUARTER NEWS RELEASE    PAGE 2

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A reconciliation from net income (loss) attributable to Methanex shareholders to Adjusted net income (loss) and the calculation of Adjusted net income (loss) per common share is as follows:

	Three Months Ended										Years Ended
($ millions except number of shares and per share amounts)	Dec 31 2019			Sep 30 2019			Dec 31 2018				Dec 31 2019			Dec 31 2018
Net income (loss) (attributable to Methanex shareholders)	$	9		$	(10	)	$	161			$	88		$	569
Mark-to-market impact of share-based compensation, net of tax	1			(11		)	(71		)		(17		)	(13		)
Adjusted net income (loss) 1	$	10		$	(21	)	$	90			$	71		$	556
Diluted weighted average shares outstanding (millions)	76			76			78				77			81
Adjusted net income (loss) per common share 1	$	0.13		$	(0.27	)	$	1.15			$	0.93		$	6.86

▪

We recorded net income attributable to Methanex shareholders of $9 million during the fourth quarter of 2019 compared to a net loss of $10 million in the third quarter of 2019. Within net income attributable to Methanex shareholders we have recorded an insurance recovery of $18 million (Methanex share, net of tax) in the fourth quarter related to the Egypt outage experienced in the second and third quarters of the year. Excluding the insurance recovery, the fourth quarter result was a net loss attributable to Methanex shareholders of $9 million compared to a net loss of $10 million in the third quarter of 2019. A decrease in our average realized methanol price in the fourth quarter was largely offset by higher sales of Methanex-produced methanol, improved costs compared to the third quarter, and the change relating to mark-to-market share-based compensation.

▪

We recorded Adjusted EBITDA of $136 million for the fourth quarter of 2019 compared with $90 million for the third quarter of 2019. The increase in Adjusted EBITDA for the fourth quarter of 2019 compared to the third quarter of 2019 includes a $25 million (Methanex share) insurance recovery related to the Egypt outage, with the remaining increase primarily due to higher sales of Methanex-produced methanol and improved costs compared to the third quarter, offsetting a lower average realized price. Adjusted EBITDA for 2019 includes the adoption of IFRS 16 which increased Adjusted EBITDA for the fourth quarter of 2019 by $31 million, the third quarter of 2019 by $26 million and the year ended December 31, 2019 by $112 million. The 2018 comparative periods have not been adjusted for IFRS 16.

▪

Adjusted net income was $10 million for the fourth quarter of 2019 compared to Adjusted net loss of $21 million for the third quarter of 2019. The increase in Adjusted net income includes the insurance recovery of $18 million (Methanex share, net of tax) related to the Egypt outage. The remaining change is primarily due to higher sales of Methanex-produced methanol and improved costs compared to the third quarter, offsetting a lower average realized price.

▪

Total sales volume for the fourth quarter of 2019 was 2,986,000 tonnes compared with 2,824,000 tonnes for the third quarter of 2019. Sales of Methanex-produced methanol were 2,056,000 tonnes in the fourth quarter of 2019 compared with 1,965,000 tonnes in the third quarter of 2019. In the fourth quarter of 2019, production exceeded sales of Methanex-produced methanol, resulting in a 68,000 tonne build of produced methanol inventory. This compares to the third quarter of 2019, when sales of Methanex-produced methanol exceeded production by 128,000 tonnes. An inventory build or draw is a result of the timing of produced and purchased methanol volume in and out of inventory.

▪

Production for the fourth quarter of 2019 increased to 2,124,000 tonnes, a new quarterly record for Methanex. This compares with 1,837,000 tonnes for the third quarter of 2019. The increase in production was primarily driven by our Chile facilities where both plants ran at higher rates and our production for the quarter reached its highest level since the second quarter of 2007, and by Egypt which returned to full operating rates following the outage experienced in the second and third quarters.

▪	During the fourth quarter we reached an agreement for natural gas supply to our Chile facilities that will underpin approximately 25% of a two-plant operation through to the end of 2025. We expect that our current gas agreements will allow for a two-plant operation in Chile during the southern hemisphere summer months and up to a maximum of 75% of a two-plant operation annually.

▪

We are currently constructing a new 1.8 million tonne methanol plant in Geismar, Louisiana adjacent to our Geismar 1 and Geismar 2 facilities. The cost of the Geismar 3 project is expected to be between $1.3 to $1.4 billion, excluding capitalized interest, with operations targeted for the second half of 2022. Capitalized costs of approximately $152 million, excluding capitalized interest of $4 million, have been incurred for the project, life to date.

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▪	During the fourth quarter of 2019 we paid a $0.36 per common share quarterly dividend to shareholders for a total of $27 million.

▪	Total distributions to shareholders in 2019 were $161 million including quarterly dividends and share repurchases. In 2019 we repurchased 1,069,893 common shares under a normal course issuer bid. No shares were repurchased in the fourth quarter of 2019.

PRODUCTION HIGHLIGHTS

(thousands of tonnes)	Annual Operating Capacity1		2019 Production		2018 Production		Q4 2019 Production		Q3 2019 Production		Q4 2018 Production
New Zealand 2	2,200		1,865		1,606		513		469		389
USA (Geismar)	2,000		1,929		2,078		480		514		527
Trinidad (Methanex interest) 3	2,000		1,743		1,702		456		474		448
Chile 4	1,720		1,050		612		373		146		206
Egypt (50% interest)	630		392		613		151		85		155
Canada (Medicine Hat)	600		610		600		151		149		160
	9,150		7,589		7,211		2,124		1,837		1,885

1

Operating capacity includes only those facilities which are currently capable of operating, but excludes any portion of an asset that is underutilized due to a lack of natural gas feedstock over a prolonged period of time. 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 is made up of the two Motunui facilities and the Waitara Valley facility. The New Zealand facilities are capable of producing up to 2.4 million tonnes annually, depending on natural gas composition and availability. We have revised the Annual Operating Capacity from 2.4 million tonnes to 2.2 million tonnes in the current quarter based on the current outlook for available high CO2 natural gas.

3	The operating capacity of Trinidad is made up of the Titan (100% interest) and Atlas (63.1% interest) facilities.

4	The operating capacity of our Chile I and IV facilities is 1.7 million tonnes annually assuming access to natural gas feedstock. For 2018, our operating capacity in Chile was 0.9 million tonnes. In the fourth quarter of 2018 we restarted our 0.8 million tonne Chile IV plant that had been idle since 2007.

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New Zealand produced 513,000 tonnes compared with 469,000 tonnes in the third quarter of 2019. We achieved higher production in the fourth quarter of 2019 compared to the third quarter of 2019 as we received higher gas deliveries. In December 2019 we took the Waitara Valley plant offline to complete unplanned repairs to be completed during the first quarter of 2020. The plant remains offline today.

▪	Geismar produced 480,000 tonnes during the fourth quarter of 2019 compared to 514,000 tonnes during the third quarter of 2019. Production in the fourth quarter is lower than the third quarter as Geismar 2 experienced unplanned outages early in the quarter resulting in lost production of approximately 45,000 tonnes.

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Trinidad produced 456,000 tonnes (Methanex interest) compared with 474,000 tonnes in the third quarter of 2019. Production in Trinidad is lower in the fourth quarter of 2019 compared to the third quarter of 2019 as production in the fourth quarter was impacted by unplanned outages at both plants. For Trinidad, we continue to guide to approximately 85% operating rates. During the fourth quarter we reached an interim agreement with the National Gas Company of Trinidad and Tobago Limited (“NGC”) for the supply of natural gas to our Titan methanol facility for a one month period to January 31, 2020. We have recently extended the term of the interim agreement to April 1, 2020 to continue operations at Titan while continuing negotiations with NGC for a longer-term natural gas supply agreement.

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▪

The Chile facilities produced 373,000 tonnes during the fourth quarter of 2019 compared to 146,000 tonnes during the third quarter of 2019. Production for the fourth quarter of 2019 is higher compared to the third quarter of 2019 as both Chile plants ran at high rates. In the quarter, we achieved our highest quarterly production from Chile since the second quarter of 2007. Only the Chile IV plant operated during the third quarter due to Chile I completing a refurbishment timed to coincide with lower gas availability in Chile.

▪	The Egypt facility produced 302,000 tonnes (Methanex interest - 151,000 tonnes) in the fourth quarter of 2019 compared with 170,000 tonnes (Methanex interest - 85,000 tonnes) in the third quarter of 2019. The Egypt facility ran at full rates through the fourth quarter of 2019 subsequent to the plant's restart in August.

▪	Medicine Hat produced 151,000 tonnes during the fourth quarter of 2019 compared to 149,000 tonnes during the third quarter of 2019.

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Kim Campbell

Manager, Investor Relations

Methanex Corporation

604-661-2600

METHANEX CORPORATION 2019 FOURTH QUARTER NEWS RELEASE    PAGE 6

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4		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 AST Trust Company (Canada) 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
	Management's Discussion and Analysis for the Three Months and Year Ended December 31, 2019
At January 28, 2020 the Company had 76,196,080 common shares issued and outstanding and stock options exercisable for 1,224,813 additional common shares.

FOURTH QUARTER MANAGEMENT’S DISCUSSION AND ANALYSIS ("MD&A")

Except where otherwise noted, all currency amounts are stated in United States dollars.

FINANCIAL AND OPERATIONAL HIGHLIGHTS

▪	A reconciliation from net income (loss) attributable to Methanex shareholders to Adjusted net income (loss) and the calculation of Adjusted net income (loss) per common share is as follows:

	Three Months Ended										Years Ended
($ millions except number of shares and per share amounts)	Dec 31 2019			Sep 30 2019			Dec 31 2018				Dec 31 2019			Dec 31 2018
Net income (loss) (attributable to Methanex shareholders)	$	9		$	(10	)	$	161			$	88		$	569
Mark-to-market impact of share-based compensation, net of tax	1			(11		)	(71		)		(17		)	(13		)
Adjusted net income (loss) 1	$	10		$	(21	)	$	90			$	71		$	556
Diluted weighted average shares outstanding (millions)	76			76			78				77			81
Adjusted net income (loss) per common share 1	$	0.13		$	(0.27	)	$	1.15			$	0.93		$	6.86

1

The Company has used the terms Adjusted EBITDA, Adjusted net income (loss), Adjusted net income (loss) per common share, Adjusted revenue and operating income (loss) throughout this document. These items are non-GAAP measures that do not have any standardized meaning prescribed by GAAP and therefore are unlikely to be comparable to similar measures presented by other companies. Refer to Additional Information - Supplemental Non-GAAP Measures on page 15 of the MD&A for reconciliations to the most comparable GAAP measures.

▪

We recorded net income attributable to Methanex shareholders of $9 million during the fourth quarter of 2019 compared to net loss of $10 million in the third quarter of 2019. Within net income attributable to Methanex shareholders we have recorded an insurance recovery of $18 million (Methanex share, net of tax) in the fourth quarter related to the Egypt outage experienced in the second and third quarters of the year. Excluding the insurance recovery, the fourth quarter result was a net loss attributable to Methanex shareholders of $9 million compared to a net loss of $10 million in the third quarter of 2019. A decrease in our average realized methanol price in the fourth quarter was largely offset by higher sales of Methanex-produced methanol, improved costs compared to the third quarter, and the change relating to mark-to-market share-based compensation.

▪

We recorded Adjusted EBITDA of $136 million for the fourth quarter of 2019 compared with $90 million for the third quarter of 2019. The increase in Adjusted EBITDA for the fourth quarter of 2019 compared to the third quarter of 2019 includes a $25 million (Methanex share) insurance recovery related to the Egypt outage, with the remaining increase primarily due to higher sales of Methanex-produced methanol and improved costs compared to the third quarter, offsetting a lower average realized price. Adjusted EBITDA for 2019 includes the adoption of IFRS 16 which increased Adjusted EBITDA for the fourth quarter of 2019 by $31 million, the third quarter of 2019 by $26 million and the year ended December 31, 2019 by $112 million. The 2018 comparative periods have not been adjusted for IFRS 16.

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▪

Adjusted net income was $10 million for the fourth quarter of 2019 compared to Adjusted net loss of $21 million for the third quarter of 2019. The increase in Adjusted net income includes the insurance recovery of $18 million (Methanex share, net of tax) related to the Egypt outage. The remaining change is primarily due to higher sales of Methanex-produced methanol and improved costs compared to the third quarter, offsetting a lower average realized price.

▪

Total sales volume for the fourth quarter of 2019 was 2,986,000 tonnes compared with 2,824,000 tonnes for the third quarter of 2019. Sales of Methanex-produced methanol were 2,056,000 tonnes in the fourth quarter of 2019 compared with 1,965,000 tonnes in the third quarter of 2019. In the fourth quarter of 2019, production exceeded sales of Methanex-produced methanol, resulting in a 68,000 tonne build of produced methanol inventory. This compares to the third quarter of 2019, when sales of Methanex-produced methanol exceeded production by 128,000 tonnes. An inventory build or draw is a result of the timing of produced and purchased methanol volume in and out of inventory.

▪

Production for the fourth quarter of 2019 increased to 2,124,000 tonnes, a new quarterly record for Methanex. This compares with 1,837,000 tonnes for the third quarter of 2019. The increase in production was primarily driven by our Chile facilities where both plants ran at higher rates and our production for the quarter reached its highest level since the second quarter of 2007, and by Egypt which returned to full operating rates following the outage experienced in the second and third quarters. Refer to the Production Summary section on page 4 of the MD&A.

▪	During the fourth quarter we reached an agreement for natural gas supply to our Chile facilities that will underpin approximately 25% of a two-plant operation through to the end of 2025. We expect that our current gas agreements will allow for a two-plant operation in Chile during the southern hemisphere summer months and up to a maximum of 75% of a two-plant operation annually.

▪

We are currently constructing a new 1.8 million tonne methanol plant in Geismar, Louisiana adjacent to our Geismar 1 and Geismar 2 facilities. The cost of the Geismar 3 project is expected to be between $1.3 to $1.4 billion, excluding capitalized interest, with operations targeted for the second half of 2022. Capitalized costs of approximately $152 million, excluding capitalized interest of $4 million, have been incurred for the project, life to date.

▪	During the fourth quarter of 2019 we paid a $0.36 per common share quarterly dividend to shareholders for a total of $27 million.

▪	Total distributions to shareholders in 2019 were $161 million including quarterly dividends and share repurchases. In 2019 we repurchased 1,069,893 common shares under a normal course issuer bid. No shares were repurchased in the fourth quarter of 2019.

METHANEX CORPORATION 2019 FOURTH QUARTER    PAGE 2

MANAGEMENT’S DISCUSSION AND ANALYSIS

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FINANCIAL AND OPERATIONAL DATA

	Three Months Ended							Years Ended
($ millions except per share amounts and where noted)	Dec 31 2019		Sep 30 2019		Dec 31 2018			Dec 31 2019		Dec 31 2018
Production (thousands of tonnes) (attributable to Methanex shareholders)	2,124		1,837		1,885			7,589		7,211
Sales volume (thousands of tonnes)
Methanex-produced methanol	2,056		1,965		1,599			7,611		7,002
Purchased methanol	623		680		908			2,492		3,032
Commission sales	307		179		245			1,031		1,174
Total sales volume 1	2,986		2,824		2,752			11,134		11,208
Methanex average non-discounted posted price ($ per tonne) 2	307		330		487			353		481
Average realized price ($ per tonne) 3	256		272		401			295		405
Revenue	659		650		977			2,784		3,932
Adjusted revenue	690		723		1,008			2,988		4,033
Adjusted EBITDA	136		90		197			566		1,071
Cash flows from operating activities	114		71		218			515		980
Adjusted net income (loss)	10		(21	)	90			71		556
Net income (loss) (attributable to Methanex shareholders)	9		(10	)	161			88		569
Adjusted net income (loss) per common share	0.13		(0.27	)	1.15			0.93		6.86
Basic net income (loss) per common share	0.12		(0.13	)	2.07			1.15		7.07
Diluted net income (loss) per common share	0.12		(0.21	)	1.68			1.01		6.92
Common share information (millions of shares)
Weighted average number of common shares	76		76		78			77		80
Diluted weighted average number of common shares	76		76		78			77		81
Number of common shares outstanding, end of period	76		76		77			76		77

1

Methanex-produced methanol represents our equity share of volume produced at our facilities and excludes volume marketed on a commission basis related to the 36.9% of the Atlas facility and 50% of the Egypt facility that we do not own. Methanex-produced methanol includes any volume produced by Chile using natural gas supplied from Argentina under a tolling arrangement ("Tolling Volume"). No Tolling Volume has been produced in 2019. There was no Tolling Volume in the fourth quarter of 2018 and 108,000 MT of Tolling Volume for the year ended December 31, 2018.

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 and purchased methanol, but excluding Tolling Volume.

METHANEX CORPORATION 2019 FOURTH QUARTER    PAGE 3

MANAGEMENT’S DISCUSSION AND ANALYSIS

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PRODUCTION SUMMARY

(thousands of tonnes)	Annual Operating Capacity1		2019 Production		2018 Production		Q4 2019 Production		Q3 2019 Production		Q4 2018 Production
New Zealand 2	2,200		1,865		1,606		513		469		389
USA (Geismar)	2,000		1,929		2,078		480		514		527
Trinidad (Methanex interest) 3	2,000		1,743		1,702		456		474		448
Chile 4	1,720		1,050		612		373		146		206
Egypt (50% interest)	630		392		613		151		85		155
Canada (Medicine Hat)	600		610		600		151		149		160
	9,150		7,589		7,211		2,124		1,837		1,885

1

Operating capacity includes only those facilities which are currently capable of operating, but excludes any portion of an asset that is underutilized due to a lack of natural gas feedstock over a prolonged period of time. 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 is made up of the two Motunui facilities and the Waitara Valley facility. The New Zealand facilities are capable of producing up to 2.4 million tonnes annually, depending on natural gas composition and availability. We have revised the Annual Operating Capacity from 2.4 million tonnes to 2.2 million tonnes in the current quarter based on the current outlook for available high CO2 natural gas. (refer to the New Zealand section below).

3	The operating capacity of Trinidad is made up of the Titan (100% interest) and Atlas (63.1% interest) facilities (refer to the Trinidad section below).

4	The operating capacity of our Chile I and IV facilities is 1.7 million tonnes annually assuming access to natural gas feedstock. For 2018, our operating capacity in Chile was 0.9 million tonnes. In the fourth quarter of 2018 we restarted our 0.8 million tonne Chile IV plant that had been idle since 2007.

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	Three Months Ended										Years Ended
($ millions)	Dec 31 2019			Sep 30 2019			Dec 31 2018				Dec 31 2019			Dec 31 2018
Consolidated statements of income (loss):
Revenue	$	659		$	650		$	977			$	2,784		$	3,932
Cost of sales and operating expenses	(553		)	(581		)	(701		)		(2,301		)	(2,857		)
Egypt insurance recovery	50			—			—				50			—
Mark-to-market impact of share-based compensation	1			(12		)	(87		)		(18		)	(17		)
Adjusted EBITDA (attributable to associate)	21			32			27				116			140
Amounts excluded from Adjusted EBITDA attributable to non-controlling interests	(42		)	1			(19		)		(65		)	(127		)
Adjusted EBITDA (attributable to Methanex shareholders)	136			90			197				566			1,071
Mark-to-market impact of share-based compensation	(1		)	12			87				18			17
Depreciation and amortization 1	(88		)	(85		)	(62		)		(344		)	(245		)
Finance costs 1	(36		)	(31		)	(23		)		(124		)	(94		)
Finance income and other expenses	—			3			2				4			4
Income tax (expense) recovery	(6		)	17			(33		)		(4		)	(153		)
Earnings of associate adjustment 2	(13		)	(18		)	(10		)		(64		)	(69		)
Non-controlling interests adjustment 2	17			2			3				36			38
Net income (loss) (attributable to Methanex shareholders)	$	9		$	(10	)	$	161			$	88		$	569
Net income (loss)	$	34		$	(13	)	$	177			$	116		$	658

1	Depreciation and amortization and finance costs for the periods ended December 31 and September 30, 2019 include the impact of the adoption of IFRS 16 "Leases". The comparative periods in 2018 have not been restated as the Company has adopted IFRS 16 using the modified retrospective approach.

2	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.

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($ millions)	Q4 2019 compared with Q3 2019			Q4 2019 compared with Q4 2018			2019 compared with 2018
Average realized price	$	(42	)	$	(385	)	$	(1,117	)
Sales volume	2			18			9
Total cash costs	81			275			491
IFRS 16 leasing impact 1	5			31			112
Increase (decrease) in Adjusted EBITDA	$	46		$	(61	)	$	(505	)

Average realized price

	Three Months Ended							Years Ended
($ per tonne)	Dec 31 2019		Sep 30 2019		Dec 31 2018			Dec 31 2019		Dec 31 2018
Methanex average non-discounted posted price	307		330		487			353		481
Methanex average realized price	256		272		401			295		405

METHANEX CORPORATION 2019 FOURTH QUARTER    PAGE 7

MANAGEMENT’S DISCUSSION AND ANALYSIS

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The changes in Adjusted EBITDA due to changes in total cash costs were due to the following:

($ millions)	Q4 2019 compared with Q3 2019			Q4 2019 compared with Q4 2018			2019 compared with 2018
Methanex-produced methanol costs	$	24		$	74		$	137
Proportion of Methanex-produced methanol sales	5			66			113
Purchased methanol costs	12			96			276
Logistics costs	(1		)	(2		)	(29		)
Egypt insurance recovery	25			25			25
Other, net	16			16			(31		)
Increase in Adjusted EBITDA due to changes in total cash costs	$	81		$	275		$	491

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	Three Months Ended										Years Ended
($ millions except share price)	Dec 31 2019			Sep 30 2019			Dec 31 2018				Dec 31 2019			Dec 31 2018
Methanex Corporation share price 1	$	38.63		$	35.47		$	48.17			$	38.63		$	48.17
Grant-date fair value expense included in Adjusted EBITDA and Adjusted net income (loss)	2			2			1				14			11
Mark-to-market impact due to change in share price 2	1			(12		)	(87		)		(18		)	(17		)
Total share-based compensation expense (recovery), before tax	$	3		$	(10	)	$	(86	)		$	(4	)	$	(6	)

2	For all periods presented, the mark-to-market impact on share-based compensation is primarily due to changes in the Methanex Corporation share price.

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Finance Costs

	Three Months Ended										Years Ended
($ millions)	Dec 31 2019			Sep 30 2019			Dec 31 2018				Dec 31 2019			Dec 31 2018
Finance costs before capitalized interest	$	37		$	32		$	23			$	127		$	95
Less capitalized interest	(1		)	(1		)	—				(3		)	(1		)
Finance costs	$	36		$	31		$	23			$	124		$	94

METHANEX CORPORATION 2019 FOURTH QUARTER    PAGE 10

MANAGEMENT’S DISCUSSION AND ANALYSIS

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Income Taxes

A summary of our income taxes for the fourth quarter of 2019 compared to the third quarter of 2019 and the year ended December 31, 2019 compared to the same period in 2018 is as follows:

	Three months ended December 31, 2019							Three months ended September 30, 2019
($ millions except where noted)	Net Income			Adjusted Net Income				Net Loss			Adjusted Net Loss
Amount before income tax	$	40		$	14			$	(30	)	$	(26	)
Income tax (expense) recovery	(6		)	(4		)		17			5
	$	34		$	10			$	(13	)	$	(21	)
Effective tax rate	15		%	29		%		56		%	18		%

	Year ended December 31, 2019							Year ended December 31, 2018
($ millions, except where noted)	Net Income			Adjusted Net Income				Net Income			Adjusted Net Income
Amount before income tax	$	121		$	102			$	811		$	737
Income tax (expense) recovery	(5		)	(31		)		(153		)	(181		)
	$	116		$	71			$	658		$	556
Effective tax rate	4		%	30		%		19		%	25		%

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($ millions)	Q4 2019 compared with Q3 2019			Q4 2019 compared with Q4 2018			2019 compared with 2018
Change in Adjusted EBITDA (attributable to Methanex shareholders) 1	$	46		$	(61	)	$	(505	)
Change in Adjusted EBITDA of associate	11			6			24
Change in dividends received from associate	(13		)	—			(7		)
Cash flows attributable to non-controlling interests	18			(2		)	(87		)
Non-cash working capital	(49		)	(106		)	3
Income taxes paid	4			33			62
Egypt insurance recovery	25			25			25
Share-based payments	(2		)	5			22
Other	5			(2		)	1
Increase (decrease) in cash flows from operating activities	$	43		$	(104	)	$	(465	)

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	Three Months Ended
	September 30, 2019
($ millions except per share amounts)	Excluding IFRS 16			IFRS 16 impact			Including IFRS 16
Adjusted EBITDA	$	64		$	26		$	90
Less:
Depreciation and amortization	64			23			87
Finance costs	24			5			29
Other	(1		)	—			(1		)
Adjusted net loss - before tax	$	(23	)	$	(2	)	$	(25	)

METHANEX CORPORATION 2019 FOURTH QUARTER    PAGE 14

MANAGEMENT’S DISCUSSION AND ANALYSIS

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	Three Months Ended
	December 31, 2019
($ millions except per share amounts)	Excluding IFRS 16			IFRS 16 impact			Including IFRS 16
Adjusted EBITDA	$	105		$	31		$	136
Less:
Depreciation and amortization	61			26			87
Finance costs	30			5			35
Other	—			—			—
Adjusted net income - before tax	$	14		$	—		$	14

	Year Ended
	December 31, 2019
($ millions except per share amounts)	Excluding IFRS 16			IFRS 16 impact			Including IFRS 16
Adjusted EBITDA	$	454		$	112		$	566
Less:
Depreciation and amortization	245			97			342
Finance costs	98			21			119
Other	3			—			3
Adjusted net income - before tax	$	108		$	(6	)	$	102

METHANEX CORPORATION 2019 FOURTH QUARTER    PAGE 15

MANAGEMENT’S DISCUSSION AND ANALYSIS

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The following table shows a reconciliation from net income (loss) attributable to Methanex shareholders to Adjusted EBITDA:

	Three Months Ended										Years Ended
($ millions)	Dec 31 2019			Sep 30 2019			Dec 31 2018				Dec 31 2019			Dec 31 2018
Net income (loss) (attributable to Methanex shareholders)	$	9		$	(10	)	$	161			$	88		$	569
Mark-to-market impact of share-based compensation	1			(12		)	(87		)		(18		)	(17		)
Depreciation and amortization 1	88			85			62				344			245
Finance costs 1	36			31			23				124			94
Finance income and other expenses	—			(3		)	(2		)		(4		)	(4		)
Income tax expense (recovery)	6			(17		)	33				4			153
Earnings of associate adjustment 2	13			18			10				64			69
Non-controlling interests adjustment 2	(17		)	(2		)	(3		)		(36		)	(38		)
Adjusted EBITDA (attributable to Methanex shareholders)	$	136		$	90		$	197			$	566		$	1,071

1	Depreciation and amortization and finance costs for the periods ended December 31, 2019 and September 30, 2019 includes the impact of the adoption of IFRS 16. The comparative periods have not been restated as the Company has adopted IFRS 16 using the modified retrospective approach.

2	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 Net Income (Loss) and Adjusted Net Income (Loss) per Common Share

Adjusted net income (loss) and Adjusted net income (loss) 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 (loss) attributable to Methanex shareholders to Adjusted net income (loss) and the calculation of Adjusted net income (loss) per common share:

	Three Months Ended										Years Ended
($ millions except number of shares and per share amounts)	Dec 31 2019			Sep 30 2019			Dec 31 2018				Dec 31 2019			Dec 31 2018
Net income (loss) (attributable to Methanex shareholders)	$	9		$	(10	)	$	161			$	88		$	569
Mark-to-market impact of share-based compensation, net of tax	1			(11		)	(71		)		(17		)	(13		)
Adjusted net income (loss) 1	$	10		$	(21	)	$	90			$	71		$	556
Diluted weighted average shares outstanding (millions)	76			76			78				77			81
Adjusted net income (loss) per common share 1	$	0.13		$	(0.27	)	$	1.15			$	0.93		$	6.86

	Three Months Ended										Years Ended
($ millions)	Dec 31 2019			Sep 30 2019			Dec 31 2018				Dec 31 2019			Dec 31 2018
Revenue	$	659		$	650		$	977			$	2,784		$	3,932
Methanex share of Atlas revenue 1	72			75			81				325			355
Non-controlling interests' share of revenue 1	(40		)	—			(49		)		(115		)	(250		)
Other adjustments	(1		)	(2		)	(1		)		(6		)	(4		)
Adjusted revenue (attributable to Methanex shareholders)	$	690		$	723		$	1,008			$	2,988		$	4,033

1	Excludes intercompany transactions with the Company.

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QUARTERLY FINANCIAL DATA (UNAUDITED)

Our operations consist of a single operating segment - the production and sale of methanol. Quarterly results vary due to the average realized price of methanol, sales volume and total cash costs. 2019 periods presented reflect the adoption of IFRS 16. Financial information in all comparative periods does not reflect the impact of IFRS 16. Refer to the Adoption of New Accounting Standards section on page 14 of the MD&A. A summary of selected financial information is as follows:

	Three Months Ended
($ millions except per share amounts)	Dec 31 2019			Sep 30 2019			Jun 30 2019			Mar 31 2019
Revenue	$	659		$	650		$	734		$	742
Adjusted EBITDA	136			90			146			194
Net income (loss) (attributable to Methanex shareholders)	9			(10		)	50			38
Adjusted net income (loss)	10			(21		)	26			56
Basic net income (loss) per common share	0.12			(0.13		)	0.65			0.50
Diluted net income (loss) per common share	0.12			(0.21		)	0.51			0.50
Adjusted net income (loss) per common share	0.13			(0.27		)	0.34			0.73

	Three Months Ended
($ millions except per share amounts)	Dec 31 2018			Sep 30 2018			Jun 30 2018			Mar 31 2018
Revenue	$	977		$	1,044		$	950		$	962
Adjusted EBITDA	197			293			275			306
Net income (attributable to Methanex shareholders)	161			128			111			169
Adjusted net income	90			152			143			171
Basic net income per common share	2.07			1.62			1.36			2.02
Diluted net income per common share	1.68			1.61			1.36			2.00
Adjusted net income per common share	1.15			1.92			1.75			2.03

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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 2019			Dec 31 2018				Dec 31 2019			Dec 31 2018
Revenue	$	658,678		$	976,551			$	2,784,494		$	3,931,847
Cost of sales and operating expenses	(553,302		)	(700,944		)		(2,300,917		)	(2,856,920		)
Depreciation and amortization	(87,934		)	(62,030		)		(344,127		)	(245,303		)
Egypt insurance recovery (note 11)	50,000			—				50,000			—
Operating income	67,442			213,577				189,450			829,624
Earnings of associate (note 4)	8,283			17,859				52,218			72,001
Finance costs (note 5)	(35,917		)	(23,378		)		(124,426		)	(94,416		)
Finance income and other expenses	(389		)	1,712				3,598			4,266
Income before income taxes	39,419			209,770				120,840			811,475
Income tax (expense) recovery:
Current	(16,273		)	(12,874		)		(38,809		)	(91,027		)
Deferred	10,515			(19,580		)		34,335			(62,464		)
	(5,758		)	(32,454		)		(4,474		)	(153,491		)
Net income	$	33,661		$	177,316			$	116,366		$	657,984
Attributable to:
Methanex Corporation shareholders	$	8,979		$	160,876			$	87,767		$	568,982
Non-controlling interests	24,682			16,440				28,599			89,002
	$	33,661		$	177,316			$	116,366		$	657,984
Income per common share for the period attributable to Methanex Corporation shareholders
Basic net income per common share	$	0.12		$	2.07			$	1.15		$	7.07
Diluted net income per common share (note 7)	$	0.12		$	1.68			$	1.01		$	6.92
Weighted average number of common shares outstanding (note 7)	76,196,080			77,689,813				76,592,413			80,494,302
Diluted weighted average number of common shares outstanding (note 7)	76,200,259			78,010,566				76,692,494			80,889,525

METHANEX CORPORATION 2019 FOURTH QUARTER    PAGE 1

CONDENSED CONSOLIDATED INTERIM FINANCIAL STATEMENTS (UNAUDITED)

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Methanex Corporation

Consolidated Statements of Comprehensive Income (Loss) (unaudited)

(thousands of U.S. dollars)

	Three Months Ended							Years Ended
	Dec 31 2019			Dec 31 2018				Dec 31 2019			Dec 31 2018
Net income	$	33,661		$	177,316			$	116,366		$	657,984
Other comprehensive income (loss):
Items that may be reclassified to income (loss):
Change in fair value of cash flow hedges (note 10)	(43,197		)	2,864				(120,540		)	362
Forward element excluded from hedging relationships (note 10)	(6,617		)	(1,585		)		30,571			(14,874		)
Items that will not be reclassified to income (loss):
Actuarial loss on defined benefit pension plans	(4,479		)	(2,328		)		(4,479		)	(1,483		)
Taxes on above items	13,111			547				22,049			3,980
	(41,182		)	(502		)		(72,399		)	(12,015		)
Comprehensive income (loss)	$	(7,521	)	$	176,814			$	43,967		$	645,969
Attributable to:
Methanex Corporation shareholders	$	(32,203	)	$	160,374			$	15,368		$	556,967
Non-controlling interests	24,682			16,440				28,599			89,002
	$	(7,521	)	$	176,814			$	43,967		$	645,969

METHANEX CORPORATION 2019 FOURTH QUARTER    PAGE 2

CONDENSED CONSOLIDATED INTERIM FINANCIAL STATEMENTS (UNAUDITED)

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Methanex Corporation

Consolidated Statements of Financial Position (unaudited)

(thousands of U.S. dollars)

AS AT	Dec 31 2019			Dec 31 2018
ASSETS
Current assets:
Cash and cash equivalents	$	416,763		$	256,077
Trade and other receivables	488,721			514,568
Inventories (note 2)	281,052			387,959
Prepaid expenses	37,805			32,541
Other assets	8,180			60,931
	1,232,521			1,252,076
Non-current assets:
Property, plant and equipment (note 3)	3,576,195			3,025,095
Investment in associate (note 4)	193,474			197,821
Deferred income tax assets	111,614			59,532
Other assets	82,811			74,475
	3,964,094			3,356,923
	$	5,196,615		$	4,608,999
LIABILITIES AND EQUITY
Current liabilities:
Trade, other payables and accrued liabilities	$	493,754		$	617,414
Current maturities on long-term debt (note 6)	38,420			383,793
Current maturities on lease liabilities	89,820			12,347
Current maturities on other long-term liabilities	26,252			33,799
	648,246			1,047,353
Non-current liabilities:
Long-term debt (note 6)	1,730,433			1,074,493
Lease liabilities	628,685			187,413
Other long-term liabilities	286,071			210,685
Deferred income tax liabilities	272,820			281,214
	2,918,009			1,753,805
Equity:
Capital stock	440,472			446,544
Contributed surplus	1,783			1,597
Retained earnings	1,039,819			1,145,476
Accumulated other comprehensive loss	(150,389		)	(82,404		)
Shareholders' equity	1,331,685			1,511,213
Non-controlling interests	298,675			296,628
Total equity	1,630,360			1,807,841
	$	5,196,615		$	4,608,999

METHANEX CORPORATION 2019 FOURTH QUARTER    PAGE 3

CONDENSED CONSOLIDATED INTERIM FINANCIAL STATEMENTS (UNAUDITED)

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Methanex Corporation

Consolidated Statements of Changes in Equity (unaudited)

(thousands of U.S. dollars, except number of common shares)

	Number of Common Shares		Capital Stock		Contributed Surplus		Retained Earnings		Accumulated Other Comprehensive Loss		Shareholders Equity		Non- Controlling Interests		Total Equity
Balance, December 31, 2017	83,770,254		$480,331		$2,124		$1,088,150		$(69,841)		1,500,764		$244,347		$1,745,111
Net income	—		—		—		568,982		—		568,982		89,002		657,984
Other comprehensive income (loss)	—		—		—		548		(12,563)		(12,015	)	—		(12,015	)
Compensation expense recorded for stock options	—		—		362		—		—		362		—		362
Issue of shares on exercise of stock options	83,114		3,210		—		—		—		3,210		—		3,210
Reclassification of grant date fair value on exercise of stock options	—		889		(889	)	—		—		—		—		—
Payments for repurchase of shares	(6,590,095	)	(37,886	)	—		(406,528	)	—		(444,414	)	—		(444,414	)
Dividend payments to Methanex Corporation shareholders	—		—		—		(105,676	)	—		(105,676	)	—		(105,676	)
Distributions made and accrued to non-controlling interests	—		—		—		—		—		—		(36,721	)	(36,721	)
Balance, December 31, 2018	77,263,273		$446,544		$1,597		$1,145,476		$(82,404)		$1,511,213		$296,628		$1,807,841
Net income	—		—		—		87,767		—		87,767		28,599		116,366
Other comprehensive loss	—		—		—		(4,414	)	(67,985)		(72,399	)	—		(72,399	)
Compensation expense recorded for stock options	—		—		212		—		—		212		—		212
Issue of shares on exercise of stock options	2,700		86		—		—		—		86		—		86
Reclassification of grant date fair value on exercise of stock options	—		26		(26	)	—		—		—		—		—
Payment for shares repurchased	(1,069,893	)	(6,184	)	—		(46,621	)	—		(52,805	)	—		(52,805	)
Dividend payments to Methanex Corporation shareholders	—		—		—		(107,876	)	—		(107,876	)	—		(107,876	)
Distributions made and accrued to non-controlling interests	—		—		—		—		—		—		(20,978	)	(20,978	)
Acquisition of non-controlling interest											—		(2,219	)	(2,219	)
Impact of adoption of IFRS 16	—		—		—		(34,513	)	—		(34,513	)	(3,355	)	(37,868	)
Balance, December 31, 2019	76,196,080		$440,472		$1,783		$1,039,819		$(150,389)		$1,331,685		$298,675		$1,630,360

METHANEX CORPORATION 2019 FOURTH QUARTER    PAGE 4

CONDENSED CONSOLIDATED INTERIM FINANCIAL STATEMENTS (UNAUDITED)

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Methanex Corporation

Consolidated Statements of Cash Flows (unaudited)

(thousands of U.S. dollars)

	Three Months Ended							Years Ended
	Dec 31 2019			Dec 31 2018				Dec 31 2019			Dec 31 2018
CASH FLOWS FROM / (USED IN) OPERATING ACTIVITIES
Net income	$	33,661		$	177,316			$	116,366		$	657,984
Deduct earnings of associate	(8,283		)	(17,859		)		(52,218		)	(72,001		)
Dividends received from associate	—			—				56,159			63,102
Add (deduct) non-cash items:
Depreciation and amortization	87,934			62,030				344,127			245,303
Income tax expense	5,758			32,454				4,474			153,491
Share-based compensation expense (recovery)	2,598			(86,082		)		(3,950		)	(6,289		)
Finance costs	35,917			23,378				124,426			94,416
Other	(955		)	4,528				(901		)	3,681
Income taxes refunded (paid)	65			(32,753		)		(43,909		)	(106,035		)
Other cash payments, including share-based compensation	(2,321		)	(10,791		)		(38,569		)	(59,444		)
Cash flows from operating activities before undernoted	154,374			152,221				506,005			974,208
Changes in non-cash working capital (note 9)	(40,232		)	65,581				9,426			5,998
	114,142			217,802				515,431			980,206
CASH FLOWS FROM / (USED IN) FINANCING ACTIVITIES
Payments for repurchase of shares	—			(78,714		)		(52,805		)	(444,414		)
Dividend payments to Methanex Corporation shareholders	(27,431		)	(25,497		)		(107,876		)	(105,676		)
Interest paid	(37,763		)	(29,359		)		(115,283		)	(90,008		)
Net proceeds on issue of long-term debt (note 6)	—			—				695,533			—
Repayment of long-term debt and financing fees	(354,939		)	(1,532		)		(388,216		)	(213,622		)
Repayment of lease obligation	(28,107		)	(2,061		)		(101,812		)	(8,293		)
Restricted cash for debt service accounts	(1,419		)	9,832				(10,067		)	3,804
Distributions to non-controlling interests	—			(30,350		)		(23,613		)	(104,258		)
Proceeds on issue of shares on exercise of stock options	—			257				86			3,210
Proceeds from other limited recourse debt	—			—				—			166,000
Restricted cash for distribution to non-controlling interests	—			7,000				—			—
Changes in non-cash working capital related to financing activities (note 9)	—			(4,000		)		—			—
	(449,659		)	(154,424		)		(104,053		)	(793,257		)
CASH FLOWS FROM / (USED IN) INVESTING ACTIVITIES
Property, plant and equipment	(28,931		)	(67,543		)		(208,467		)	(190,561		)
Geismar plant under construction	(69,969		)	(4,086		)		(115,393		)	(53,915		)
Restricted cash for capital projects	(393		)	2,135				61,657			(60,931		)
Changes in non-cash working capital related to investing activities (note 9)	(5,852		)	1,506				11,511			(944		)
	(105,145		)	(67,988		)		(250,692		)	(306,351		)
Increase (decrease) in cash and cash equivalents	(440,662		)	(4,610		)		160,686			(119,402		)
Cash and cash equivalents, beginning of period	857,425			260,687				256,077			375,479
Cash and cash equivalents, end of period	$	416,763		$	256,077			$	416,763		$	256,077

See accompanying notes to condensed consolidated interim financial statements.

METHANEX CORPORATION 2019 FOURTH QUARTER    PAGE 5

CONDENSED CONSOLIDATED INTERIM FINANCIAL STATEMENTS (UNAUDITED)

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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 except for the adoption of IFRS 16 as described in our condensed consolidated interim financial statements for the three months ended March 31, 2019.

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 29, 2020.

These condensed consolidated interim financial statements should be read in conjunction with the Company’s consolidated financial statements for the year ended December 31, 2018.

Adoption of IFRS 16 "Leases"

The Company adopted IFRS 16, Leases ("IFRS 16" or "the standard") as issued by the IASB in 2016, which eliminates the current operating/finance lease dual accounting model for lessees and replaces it with a single, on-balance sheet accounting model, similar to the previous finance lease accounting. The standard replaces IAS 17, Leases ("IAS 17") and related interpretations and is effective for annual periods beginning on or after January 1, 2019.

The Company transitioned to IFRS 16 in accordance with the modified retrospective approach, under which the cumulative effect of initial application is recognized in retained earnings at January 1, 2019. The modified retrospective approach does not require restatement of comparative periods. As part of the initial application of IFRS 16, the Company has elected to use hindsight in determining the lease term where the contract contains options to extend or terminate the lease.

METHANEX CORPORATION 2019 FOURTH QUARTER    PAGE 1

NOTES TO CONDENSED CONSOLIDATED INTERIM FINANCIAL STATEMENTS (UNAUDITED)

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On transition to IFRS 16, the Company recognized $411 million of lease assets and $453 million of lease liabilities, with the difference of $42 million ($38 million net of tax), recorded as an adjustment in equity. When measuring operating lease commitments, the Company discounted lease payments using its incremental borrowing rate at January 1, 2019. The weighted-average rate applied is 4.4%. The following reconciliation to the opening balance for lease liabilities as at January 1, 2019 is based upon the operating lease commitments as at December 31, 2018:

	Jan 1 2019
Operating lease commitments at December 31, 2018	$	427,289
Discounted using the incremental borrowing rate at January 1, 2019	4.4		%
Finance lease liabilities recognized as at December 31, 2018	$	358,440
Recognition exemption for:
Short-term leases	(777		)
Leases of low-value assets	(8		)
Extension and termination options reasonably certain to be exercised	75,753
Scope changes due to IFRS 16	18,880
Other	594
Lease liabilities at January 1, 2019	$	452,882

The Company has updated its accounting policy for leasing to reflect the adoption of IFRS 16 as detailed below.

At inception of a contract, the Company assesses whether a contract is, or contains, a lease. A contract is, or contains, a lease if the contract conveys the right to control the use of an identified asset for a period of time in exchange for consideration. To assess whether a contract conveys the right to control the use of an identified asset, the Company assesses whether:

•	the contract involves the use of an identified asset - this may be specified explicitly or implicitly and should be physically distinct or represent substantially all of the capacity of a physically distinct asset. If the supplier has a substantive substitution right, then the asset is not identified;

•	the Company has the right to obtain substantially all of the economic benefits from use of the asset throughout the period of use; and

•	the Company has the right to direct the use of the asset. The Company has the right when it has the decision-making rights that are most relevant to changing how and for what purpose the asset is used.

For contracts that contain a lease, the Company recognizes a right-of-use asset and a lease liability at the lease commencement date. The right-of-use asset is initially measured at cost, which comprises the initial amount of the lease liability adjusted for any lease payments made at or before the commencement date, plus any initial direct costs incurred and an estimate of costs to dismantle and remove the underlying asset or to restore the underlying asset or the site on which it is located, less any lease incentives received.

The right-of-use asset is subsequently depreciated using the straight-line method from the commencement date to the earlier of the end of the useful life of the right-of-use asset or the end of the lease term. The estimated useful lives of right-of-use assets are determined on the same basis as those of property, plant and equipment. In addition, the right-of-use asset is assessed for impairment losses, should a trigger be identified and adjusted for impairment if required.

The lease liability is measured at amortized cost using the effective interest method. It is remeasured when there is a change in future lease payments arising from a change in an index or rate, if there is a change in the Company’s estimate of the amount expected to be payable under a residual value guarantee or if the Company changes its assessment of whether it will exercise a purchase, extension or termination option. When the lease liability is remeasured in this way, a corresponding adjustment is made to the carrying amount of the right-of-use asset, or is recorded in profit or loss if the carrying amount of the right-of-use asset has been reduced to zero.

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Short-term leases and lease of low-value assets

The Company has elected not to recognize right-of-use assets and lease liabilities for short-term leases that have a lease term of 12 months or less and leases of low-value assets, except for terminal and vessel leases. The Company recognizes the lease payments associated with these leases as an expense on a straight-line basis over the lease term.

Critical accounting estimates and judgments

In determining the lease term, management considers all facts and circumstances that create an economic incentive to exercise an extension option, or not exercise a termination option. The assessment is reviewed upon a trigger by a significant event or a significant change in circumstances.

Certain leases contain non-lease components, excluded from the right-of-use asset and lease liability, related to operating charges for ocean vessels and terminal facilities. Judgment is applied in determination of the stand-alone price of the lease and non-lease components.

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 recognized as an expense in cost of sales and operating expenses and depreciation and amortization for the three months and year ended December 31, 2019 is $561 million (2018 - $736 million) and $2,243 million (2018 - $2,758 million), respectively.

3.	Property, plant and equipment:

	Owned Assets (a)			Right-of-use assets (b)			Total
Net book value at December 31, 2019	$	2,940,777		$	635,418		$	3,576,195
Net book value at December 31, 2018	$	2,857,266		$	167,829		$	3,025,095

a)	Owned assets:

	Buildings, Plant Installations & Machinery			Plants Under Construction			Ocean Going Vessels			Other			Total
Cost at December 31, 2019	$	4,787,515		$	155,871		$	201,947		$	154,468		$	5,299,801
Accumulated depreciation at December 31, 2019	2,215,060			—			25,448			118,516			2,359,024
Net book value at December 31, 2019	$	2,572,455		$	155,871		$	176,499		$	35,952		$	2,940,777
Cost at December 31, 2018	$	4,698,142		$	—		$	183,419		$	189,058		$	5,070,619
Accumulated depreciation at December 31, 2018	2,047,735			—			48,426			117,192			2,213,353
Net book value at December 31, 2018	$	2,650,407		$	—		$	134,993		$	71,866		$	2,857,266

In the third quarter, the Company reached a final investment decision to construct a 1.8 million tonne methanol plant in Geismar, Louisiana adjacent to its Geismar 1 and Geismar 2 facilities. The cost of the project is expected to be between $1.3 to $1.4 billion excluding capitalized interest. Approximately $152 million, excluding $4 million of capitalized interest, has been incurred to date and included in Plants Under Construction.

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b)	Right-of-use (leased) assets:

	Ocean Going Vessels			Terminals and Tanks			Plant Installations and Machinery			Other			Total
Cost at December 31, 2019	$	514,661		$	221,303		$	23,613		$	38,520		$	798,097
Accumulated depreciation at December 31, 2019	89,643			59,240			7,867			5,929			162,679
Net book value at December 31, 2019	$	425,018		$	162,063		$	15,746		$	32,591		$	635,418
Cost at December 31, 2018	$	87,800		$	113,978		$	16,032		$	—		$	217,810
Accumulated depreciation at December 31, 2018	15,204			29,333			5,444			—			49,981
Net book value at December 31, 2018	$	72,596		$	84,645		$	10,588		$	—		$	167,829
Cost at January 1, 2019	$	370,654		$	207,721		$	19,705		$	30,399		$	628,479
Accumulated depreciation at January 1, 2019	15,204			29,333			5,344			—			49,881
Net book value at January 1, 2019	$	355,450		$	178,388		$	14,361		$	30,399		$	578,598

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:

Statements of financial position	Dec 31 2019			Dec 31 2018
Cash and cash equivalents	$	50,149		$	9,367
Other current assets	60,709			104,742
Non-current assets	241,860			255,822
Current liabilities	(28,191		)	(32,022		)
Other long-term liabilities, including current maturities	(138,866		)	(145,359		)
Net assets at 100%	$	185,661		$	192,550
Net assets at 63.1%	$	117,152		$	121,499
Long-term receivable from Atlas	76,322			76,322
Investment in associate	$	193,474		$	197,821

	Three Months Ended							Years Ended
Statements of income	Dec 31 2019			Dec 31 2018				Dec 31 2019			Dec 31 2018
Revenue	$	66,637		$	158,556			$	359,425		$	512,214
Cost of sales and depreciation and amortization	(43,000		)	(111,175		)		(217,333		)	(322,325		)
Operating income	23,637			47,381				142,092			189,889
Finance costs, finance income and other expenses	(2,799		)	(2,541		)		(11,381		)	(10,841		)
Income tax expense	(7,712		)	(16,537		)		(47,957		)	(64,942		)
Net earnings at 100%	$	13,126		$	28,303			$	82,754		$	114,106
Earnings of associate at 63.1%	$	8,283		$	17,859			$	52,218		$	72,001
Dividends received from associate	$	—		$	—			$	56,159		$	63,102

METHANEX CORPORATION 2019 FOURTH QUARTER    PAGE 4

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b)	Contingent liability:

The Board of Inland Revenue of Trinidad and Tobago has audited and issued assessments against Atlas in respect of the 2005 to 2013 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 with affiliates that commenced in 2005 and continued through 2019. The long-term fixed-price sales contracts with affiliates were established as part of the formation of Atlas and management believes were reflective of market considerations at that time. Atlas had partial relief from corporation income tax until late July 2014.

During the periods under assessment and continuing through 2014, approximately 50% of Atlas produced methanol was sold under these fixed-price contracts. From late 2014 through 2019 fixed-price sales represent approximately 10% of Atlas produced methanol.

The Company believes it is impractical to disclose a reasonable estimate of the potential contingent liability due to the wide range of assumptions and interpretations implicit in the assessments.

The Company has lodged objections to the assessments. No deposits have been required to lodge objections. Based on the merits of the cases and advice from legal counsel, the Company believes its position should be sustained, that Atlas has filed its tax returns and paid applicable taxes in compliance with Trinidadian tax law, and as such has not accrued for any amounts relating to these assessments. Contingencies inherently involve the exercise of significant judgment, and as such the outcomes of these assessments and the financial impact to the Company could be material.

The Company anticipates the resolution of this matter in the court system to be lengthy and, at this time, cannot predict a date as to when this matter is expected to be resolved.

5.	Finance costs:

	Three Months Ended							Years Ended
	Dec 31 2019			Dec 31 2018				Dec 31 2019			Dec 31 2018
Finance costs	$	36,972		$	23,758			$	127,282		$	95,631
Less capitalized interest related to Geismar plant under construction	(1,055		)	(380		)		(2,856		)	(1,215		)
	$	35,917		$	23,378			$	124,426		$	94,416

Finance costs are primarily comprised of interest on the unsecured notes, limited recourse debt facilities, finance lease obligations, amortization of deferred financing fees, and accretion expense associated with site restoration costs. Interest during construction projects is capitalized until the plant is substantially completed and ready for productive use.

6.	Long-term debt:

As at	Dec 31 2019			Dec 31 2018
Unsecured notes
$350 million at 3.25% due December 15, 2019	$	—		$	349,026
$250 million at 5.25% due March 1, 2022	248,912			248,480
$300 million at 4.25% due December 1, 2024	297,607			297,232
$300 million at 5.65% due December 1, 2044	295,321			295,238
$700 million at 5.25% due December 15, 2029	693,822			—
	1,535,662			1,189,976
Egypt limited recourse debt facilities	75,165			101,226
Other limited recourse debt facilities	158,026			167,084
Total long-term debt 1	1,768,853			1,458,286
Less current maturities 1	(38,420		)	(383,793		)
	$	1,730,433		$	1,074,493

1	Long-term debt and current maturities are presented net of deferred financing fees.

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During the quarter ended December 31, 2019, the Company made repayments of $3.3 million on its other limited recourse debt facilities. Other limited recourse debt facilities relate to financing for certain of our ocean going vessels which we own through less than wholly-owned entities under the Company's control.

During the quarter, the Company repaid $350 million of unsecured notes originally due December 15, 2019. The Company holds an $800 million non-revolving construction facility for the Geismar 3 project and renewed and extended its $300 million committed revolving credit facility, both are undrawn and with a syndicate of highly rated financial institutions and expiry in July 2024.

Significant covenants and default provisions of the two facilities include:

a) the obligation to maintain an EBITDA to interest coverage ratio of greater than or equal to 2:1 calculated on a four-quarter trailing basis, where for only one quarter during the term of the credit facility the ratio can be as low as, but not less than 1.25:1, and a debt to capitalization ratio of less than or equal to 57.5%, both calculated in accordance with definitions in the credit agreement that include adjustment to limited recourse subsidiaries.

b) a default if payment is accelerated by a creditor on any indebtedness of $50 million or more of the Company and its subsidiaries, except for the limited recourse subsidiaries, and

c) a default if a default occurs that permits a creditor to demand repayment on any other indebtedness of $50 million or more of the Company and its subsidiaries, except for the limited recourse subsidiaries.

    

The credit facilities also include other customary covenants including restrictions on the incurrence of additional indebtedness, restrictions against the sale or abandonment of the Geismar 3 project, as well as requirements associated with completion of plant construction and commissioning by no later than July 2023.

The limited recourse debt facilities are described as limited recourse as they are secured only by the assets of the entity that carries the debt. 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 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.

Failure to comply with any of the covenants or default provisions of the long-term debt facilities described above could result in a default under the applicable credit agreement that would allow the lenders to not fund future loan requests, accelerate the due date of the principal and accrued interest on any outstanding loans or restrict the payment of cash or other distributions.

As at December 31, 2019, management believes the Company was in compliance with all significant terms and default provisions related to long-term debt obligations.

METHANEX CORPORATION 2019 FOURTH QUARTER    PAGE 6

NOTES TO CONDENSED CONSOLIDATED INTERIM FINANCIAL STATEMENTS (UNAUDITED)

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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. The cash-settled method was more dilutive for the three months ended December 31, 2019, and no adjustment was required for both the numerator and the denominator. The equity-settled method was more dilutive for year ended December 31, 2019, and an adjustment was required for both the numerator and the denominator. For the three months and year ended December 31, 2018, the equity-settled method was more dilutive and an adjustment was required for both the numerator and the denominator.

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. For the three months and years ended December 31, 2019 and December 31, 2018, stock options were considered dilutive, resulting in an adjustment to the denominator in both periods.

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

	Three Months Ended							Years Ended
	Dec 31 2019			Dec 31 2018				Dec 31 2019			Dec 31 2018
Numerator for basic net income per common share	$	8,979		$	160,876			$	87,767		$	568,982
Adjustment for the effect of TSARs:
Cash-settled recovery included in net income	—			(29,396		)		(5,433		)	(4,314		)
Equity-settled expense	—			(577		)		(4,807		)	(4,769		)
Numerator for basic and diluted net income per common share	$	8,979		$	130,903			$	77,527		$	559,899

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

	Three Months Ended					Years Ended
	Dec 31 2019		Dec 31 2018			Dec 31 2019		Dec 31 2018
Denominator for basic net income per common share	76,196,080		77,689,813			76,592,413		80,494,302
Effect of dilutive stock options	4,179		45,642			17,325		67,631
Effect of dilutive TSARs	—		275,111			82,756		327,592
Denominator for diluted net income per common share	76,200,259		78,010,566			76,692,494		80,889,525

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8.	Share-based compensation:

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

(i)	Outstanding units:

Information regarding units outstanding at December 31, 2019 is as follows:

	SARs						TSARs
(per share amounts in USD)	Number of Units		Weighted Average Exercise Price				Number of Units		Weighted Average Exercise Price
Outstanding at December 31, 2018	896,883		$	51.27			1,447,301		$	51.24
Granted	29,320		57.60				294,680		56.70
Exercised	(34,995	)	38.05				(44,969	)	37.13
Cancelled	(29,134	)	54.72				(34,885	)	53.38
Outstanding at September 30, 2019	862,074		$	51.91			1,662,127		$	52.54
Exercised	(4,667	)	31.25				(800	)	34.59
Outstanding at December 31, 2019	857,407		$	52.02			1,661,327		$	52.55

	Stock Options
(per share amounts in USD)	Number of Units		Weighted Average Exercise Price
Outstanding at December 31, 2018	198,221		$	48.55
Granted	7,410		57.60
Exercised	(2,700	)	31.73
Outstanding at September 30, 2019	202,931		$	49.11
Cancelled	(2,300	)	52.31
Outstanding at December 31, 2019	200,631		$	49.07

	Units Outstanding at December 31, 2019								Units Exercisable at December 31, 2019
Range of Exercise Prices (per share amounts in USD)	Weighted Average Remaining Contractual Life (Years)		Number of Units Outstanding		Weighted Average Exercise Price				Number of Units Exercisable		Weighted Average Exercise Price
SARs:
$25.97 to $35.51	3.17		186,980		$	34.59			186,980		$	34.59
$38.24 to $50.17	2.91		191,684		46.39				141,597		45.07
$54.65 to $78.59	2.91		478,743		61.08				362,759		62.73
	2.97		857,407		$	52.02			691,336		$	51.50
TSARs:
$25.97 to $35.51	3.17		308,837		$	34.59			308,837		$	34.59
$38.24 to $50.17	3.52		386,471		47.62				263,269		46.82
$54.65 to $78.59	4.06		966,019		60.27				482,156		63.91
	3.77		1,661,327		$	52.55			1,054,262		$	51.05
Stock options:
$25.97 to $35.51	3.17		53,767		$	34.59			53,767		$	34.59
$38.24 to $50.17	1.96		56,554		43.56				47,751		42.35
$54.65 to $78.59	2.88		90,310		61.14				69,033		62.82
	2.70		200,631		$	49.07			170,551		$	48.19

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(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, 2019 was $7.8 million compared with the recorded liability of $7.3 million. The difference between the fair value and the recorded liability of $0.5 million will be recognized over the weighted average remaining vesting period of approximately 1.6 years. The weighted average fair value was estimated at December 31, 2019 using the Black-Scholes option pricing model.

For the three months and year ended December 31, 2019, compensation expense related to SARs and TSARs included an expense in cost of sales and operating expenses of $1.8 million (2018 - a recovery of $48.4 million) and a recovery of $8.7 million (2018 - a recovery of $1.2 million), respectively. This included an expense of $1.1 million (2018 - a recovery of $49.3 million) and a recovery of $13.7 million (2018 - a recovery of $7.8 million), respectively, related to the effect of the change in the Company’s share price for the three months and year ended December 31, 2019.

(iii)	Compensation expense related to stock options:

For the three months and year ended December 31, 2019, compensation expense related to stock options included in cost of sales and operating expenses was negligible (2018 - $0.1 million) and $0.2 million (2018 - $0.4 million), respectively. The fair value of each stock option grant was estimated on the grant date using the Black-Scholes option pricing model.

b)	Deferred, restricted and performance share units (old plan and new plan):

Deferred, restricted and performance share units (old plan and new plan) outstanding at December 31, 2019 are as follows:

	Number of Deferred Share Units		Number of Restricted Share Units		Number of Performance Share Units (old plan)		Number of Performance Share Units (new plan)
Outstanding at December 31, 2018	209,092		17,361		579,778		—
Granted	12,497		79,240		—		134,930
Performance factor impact on redemption 1	—		—		132,215		—
Granted in-lieu of dividends	3,236		2,069		7,098		3,186
Redeemed	(96,761	)	(9,966	)	(396,635	)	—
Cancelled	—		(477	)	(20,040	)	(476	)
Outstanding at September 30, 2019	128,064		88,227		302,416		137,640
Granted	1,661		—		—		—
Granted in-lieu of dividends	795		771		2,811		1,278
Redeemed	(40,754	)	(5,462	)	—		—
Cancelled	—		(368	)	(1,782	)	(880	)
Outstanding at December 31, 2019	89,766		83,168		303,445		138,038

1	Performance share units granted prior to 2019 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, 2019.

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Performance share units granted in 2019 reflect a new long-term incentive plan. The performance share units granted under the new plan are redeemable for cash based on the market value of the Company's common shares and are non- dilutive to shareholders. They vest over three years and include two performance factors: (i) relative total shareholder return of Methanex shares versus a specific market index (the market performance factor) and (ii) three year average Return on Capital Employed (the non-market performance factor). The market performance factor is measured by the Company at the grant date and reporting date using a Monte-Carlo simulation model to determine fair value. The non-market performance factor reflects management's best estimate to determine the expected number of units to vest. Based on these performance factors the performance share unit payout will range between 0% to 200%, with the first payout of the new performance share units in 2022.

Compensation expense for deferred, restricted and performance share units (old plan and new plan) 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, 2019 was $14.7 million compared with the recorded liability of $11.0 million. The difference between the fair value and the recorded liability of $3.7 million will be recognized over the weighted average remaining vesting period of approximately 1.9 years.

For the three months and year ended December 31, 2019, compensation expense related to deferred, restricted and performance share units (old plan and new plan) included in cost of sales and operating expenses was an expense of $0.8 million (2018 - a recovery of $37.2 million) and an expense of $4.5 million (2018 - a recovery of $5.1 million), respectively. This included a recovery of $0.4 million (2018 - a recovery of $37.8 million) and $4.9 million (2018 - a recovery of $8.9 million), respectively, related to the effect of the change in the Company’s share price for the three months and year ended December 31, 2019.

9.	Changes in non-cash working capital:

Changes in non-cash working capital for the three and twelve month periods ended December 31, 2019 and 2018 were as follows:

	Three Months Ended							Years Ended
	Dec 31 2019			Dec 31 2018				Dec 31 2019			Dec 31 2018
Changes in non-cash working capital:
Trade and other receivables	$	(65,045	)	$	84,513			$	25,847		$	22,068
Inventories	19,281			(65,498		)		106,907			(83,495		)
Prepaid expenses	2,333			4,658				(5,264		)	(5,993		)
Trade, other payables and accrued liabilities	2,252			(4,601		)		(123,660		)	(9,403		)
	(41,179		)	19,072				3,830			(76,823		)
Adjustments for items not having a cash effect and working capital changes relating to taxes and interest paid	(4,905		)	44,015				17,107			81,877
Changes in non-cash working capital having a cash effect	$	(46,084	)	$	63,087			$	20,937		$	5,054
These changes relate to the following activities:
Operating	$	(40,232	)	$	65,581			$	9,426		$	5,998
Financing	—			(4,000		)		—			—
Investing	(5,852		)	1,506				11,511			(944		)
Changes in non-cash working capital	$	(46,084	)	$	63,087			$	20,937		$	5,054

METHANEX CORPORATION 2019 FOURTH QUARTER    PAGE 10

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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 natural gas prices and derivative financial instruments to hedge its risk exposure to fluctuations in the Euro compared to the U.S. dollar.

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 as presented in the consolidated statements of financial position are determined based on present values and the discount rates used are adjusted 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 the hedging relationships.

Until settled, the fair value of the derivative financial instruments will fluctuate based on changes in commodity prices or foreign currency exchange rates.

Natural gas forward contracts

The Company manages its exposure to changes in natural gas prices for a portion of its North American natural gas requirements by executing a number of fixed price forward contracts.

The Company has entered into forward contracts to manage its exposure to changes in natural gas prices for the Geismar 2 facility, and approximately one-third of the Geismar 3 facility from 2023 to 2032, which it has designated as cash flow hedges. Natural gas is fungible across the Geismar site. The Company has also entered into physical forward contracts to manage its exposure to changes in natural gas prices for the Medicine Hat facility. The Company has designated contracts for the 2021 and 2022 periods as cash flow hedges. Other costs incurred to transport natural gas from the contracted delivery point, either Henry Hub or AECO, to the relevant production facility represent an insignificant portion of the overall underlying risk and are recognized as incurred outside of the hedging relationship.

As at December 31, 2019, the Company had outstanding forward contracts in North America designated as cash flow hedges with a notional amount of $970 million (December 31, 2018 - $426 million) and a net negative fair value of $195.1 million (December 31, 2018 - negative fair value $105.7 million), all of which is included in other long-term liabilities.

Euro forward exchange contracts

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

As at December 31, 2019, the Company had outstanding forward exchange contracts designated as cash flow hedges to sell a notional amount of 18 million euros (December 31, 2018 - 45 million euros). The euro contracts had a negative fair value of $0.4 million included in current liabilities (December 31, 2018 - positive fair value $0.3 million included in current assets).

METHANEX CORPORATION 2019 FOURTH QUARTER    PAGE 11

NOTES TO CONDENSED CONSOLIDATED INTERIM FINANCIAL STATEMENTS (UNAUDITED)

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Fair value

The fair value of the Company’s derivative financial instruments as disclosed above are determined based on Bloomberg quoted market prices and confirmations received from counterparties, which are adjusted for credit risk.

The table below shows the nominal net cash flows for derivative hedging instruments, excluding credit risk adjustments, based upon contracted settlement dates. The amounts reflect the maturity profile of the hedging instruments and are subject to change based on the prevailing market rate at each of the future settlement dates. Financial asset derivative positions are held with investment-grade counterparties and therefore the settlement day risk exposure is considered to be negligible.

	Cash outflows by term to maturity
	1 year or less		1-3 years		3-5 years		More than 5 years		Total
Natural gas forward contracts	(17,240	)	(45,432	)	(56,887	)	(124,365	)	$	(243,924	)
Euro forward exchange contracts	(380	)	—		—		—		$	(380	)

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

	December 31, 2019
As at	Carrying Value			Fair Value
Long-term debt excluding deferred financing fees	$	1,786,025		$	1,831,292

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 of the limited recourse debt facilities as disclosed on a recurring basis and categorized as Level 2 within the fair value hierarchy is estimated by reference to current market rates as at the reporting date. The fair value of the unsecured notes disclosed on a recurring basis and also categorized as Level 2 within the fair value hierarchy is estimated using quoted prices and yields as at the reporting date. The fair value of the Company’s long term debt will fluctuate until maturity.

11.	Egypt Insurance Recovery:

We experienced an outage at the Egypt plant from April to August 2019. We have recorded a $50 million ($25 million our share) insurance recovery which partially offsets repair costs charged to earnings and lost margins incurred in the second and third quarters of 2019. At December 31, 2019, the insurance recovery is included in Trade and other receivables as final settlement has not been received.

    

METHANEX CORPORATION 2019 FOURTH QUARTER    PAGE 12

NOTES TO CONDENSED CONSOLIDATED INTERIM FINANCIAL STATEMENTS (UNAUDITED)

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Methanex Corporation

Quarterly History (unaudited)

	2019		Q4		Q3		Q2		Q1		2018		Q4		Q3		Q2		Q1
METHANOL SALES VOLUME
(thousands of tonnes)
Methanex-produced 1	7,611		2,056		1,965		1,669		1,921		7,002		1,599		1,790		1,729		1,884
Purchased methanol	2,492		623		680		716		473		3,032		908		802		709		613
Commission sales 1	1,031		307		179		216		329		1,174		245		279		329		321
	11,134		2,986		2,824		2,601		2,723		11,208		2,752		2,871		2,767		2,818
METHANOL PRODUCTION
(thousands of tonnes)
New Zealand	1,865		513		469		446		437		1,606		389		478		252		487
USA (Geismar)	1,929		480		514		530		405		2,078		527		520		518		513
Trinidad (Methanex interest)	1,743		456		474		384		429		1,702		448		353		442		459
Egypt (50% interest)	392		151		85		15		141		613		155		128		165		165
Canada (Medicine Hat)	610		151		149		155		155		600		160		144		143		153
Chile	1,050		373		146		290		241		612		206		112		128		166
	7,589		2,124		1,837		1,820		1,808		7,211		1,885		1,735		1,648		1,943
AVERAGE REALIZED METHANOL PRICE 2
($/tonne)	295		256		272		326		331		405		401		413		405		402
($/gallon)	0.89		0.77		0.82		0.98		1.00		1.22		1.21		1.24		1.22		1.21
ADJUSTED EBITDA 3	566		136		90		146		194		1,071		197		293		275		306
PER SHARE INFORMATION 3 ($ per common share attributable to Methanex shareholders)
Adjusted net income (loss)	0.93		0.13		(0.27	)	0.34		0.73		6.86		1.15		1.92		1.75		2.03
Basic net income (loss)	1.15		0.12		(0.13	)	0.65		0.50		7.07		2.07		1.62		1.36		2.02
Diluted net income (loss)	1.01		0.12		(0.21	)	0.51		0.50		6.92		1.68		1.61		1.36		2.00

1

Methanex-produced methanol represents our equity share of volume produced at our facilities and excludes volume marketed on a commission basis related to the 36.9% of the Atlas facility and 50% of the Egypt facility that we do not own. Methanex-produced methanol includes any volume produced by Chile using natural gas supplied from Argentina under a tolling arrangement ("Tolling Volume"). No Tolling Volume has been produced in 2019. There was no Tolling Volume in the fourth quarter of 2018 and 108,000 MT of Tolling Volume for the year ended December 31, 2018.

2	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 and purchased methanol, but excluding Tolling Volume.

3	All quarters presented for 2019 reflect the adoption of IFRS 16. Financial information in all comparative periods do not reflect the impact of IFRS 16. Refer to the Adoption of New Accounting Standards section on page 14 of the MD&A.

 

METHANEX CORPORATION 2019 FOURTH QUARTER    PAGE 13

QUARTERLY HISTORY (UNAUDITED)

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SIGNATURES

Pursuant to the requirements of the Securities Exchange Act of 1934, the registrant has duly caused this report to be signed on behalf by the undersigned, thereunto duly authorized.

	METHANEX CORPORATION
Date: January 29, 2020	By:	/s/ KEVIN PRICE
		Name:		Kevin Price
		Title:		General Counsel and Corporate Secretary