Q1 2024 Methanex Corp Earnings Call

April 25, 2024

Operator: Good morning, my name is Kathleen, and I will be your conference operator today. At this time, I would like to welcome everyone to the Methanex Corporation 2024 first quarter results conference call.

Good morning, My name is Kathleen and I will be your conference operator today.

Operator: This time I would like to welcome everyone to the Methanex Corporation 2024, our first quarter results conference call.

Operator: All lines have been placed on mute to prevent any background noise. After the speaker's remarks, there will be a question and answer session. If you would like to ask a question during this time, simply press star followed by the number 1 on your telephone keypad. If you would like to withdraw your question, press star 1 again. Thank you. I would now like to turn the conference call over to the Director of Investor Relations at Methanex, Ms. Sarah Herriott. Please go ahead, Ms. Herriott.

Operator: All lines have been placed on mute to prevent any background noise.

Sarah Herriott: After the Speakers' remarks, there will be a question and answer session.

Operator: If you would like to ask a question. During this time simply press star followed by the number one on your telephone keypad.

Sarah Herriott: If you would like to withdraw your question Star one again.

Sarah Herriott: Do you I.

Sarah Herriott: I'd now like to turn the conference call over to do they rector of Investor Relations at Mettler Next me sorry, I hear you. Please go ahead Mr. Here yet.

Sarah Herriott: Good morning, everyone. Welcome to our first quarter 2024 results conference call. Our 2024 first quarter news release, management's discussion and analysis, and financial statements can be accessed from the financial reports tab of the investor relations page on our website at Methanex.com. I would like to remind our listeners that our comments and answers to your questions today may contain forward-looking information. This information, by its nature, is subject to risks and uncertainties that may cause the stated outcome to differ materially from the actual outcome. Additionally, certain material factors or assumptions were applied in drawing the conclusions or making the forecasts or projections, which are included in the forward-looking information.

Sarah Herriott: Good morning, everyone welcome to our first quarter 2024 results conference call. Our 'twenty 'twenty four first quarter news release management's discussion and analysis and financial statements can be accessed from the financial reports tab of the Investor Relations page on our website.

Rich Sumner: As a reminder, on a run rate basis at $350 per ton realized price and 8.3 million equity tons, the business generates approximately $850 million in adjusted EBITDA and $450 million in free cash flow per year. We believe we are well positioned to maintain a strong balance sheet, profitably grow the business, and return excess cash to shareholders. We would now be happy to answer questions.

Sarah Herriott: I would like to remind our listeners that our comments and answers to your questions. Today may contain forward looking information. This information by its nature is subject to risks and uncertainties that may cause the stated outcome to differ materially from the actual outcome.

Sarah Herriott: Certain material factors or assumptions were applied in drawing a conclusion or making the forecast or projections, which are included in the forward looking information.

Operator: At this time, I would like to remind everyone, in order to ask a question, please press star then the number 1 on your telephone keypad. Your first question comes from the line of Joshua Spector from UBS; please go ahead.

Sarah Herriott: Please refer to our first quarter 2024 MD&A and to our 2023 annual report for more information. I would also like to caution our listeners that any projections provided today regarding Methanex's future financial performance are effective as of today's date. It is our policy not to comment on or update this guidance between. For clarification, any references to revenue, EBITDA, adjusted EBITDA, cash flow, adjusted income, or adjusted earnings per share made in today's remarks reflect our 63.1% economic interest in the Atlas facility, our 50% economic interest in the Egypt facility, and our 60% interest in waterfront shipping.

Sarah Herriott: Please refer to our first quarter 2024, MD&A and to our 2023 annual report for more information.

Joshua Spector: Yeah, thanks for taking my question. I guess, first, I wanted to follow up on your 2Q comments, that you're implying flat sequential EBITDA despite pricing kind of making it higher sequentially. Obviously, you talked about volumes being down, but can you talk about are there any other factors there in terms of a ramp up in any costs with the delay at G3 or any other investments that might move the needle there sequentially?

Sarah Herriott: I'd also like to caution our listeners that any projections provided today regarding <unk> future financial performance are effective as of todays date. It is our policy not to comment on or update this guidance between quarters.

Sarah Herriott: For clarification any references to revenue EBITDA adjusted EBITDA cash flow adjusted income or adjusted earnings per share made in today's remarks reflect our 63, 1% economic interest in the Atlas.

Sarah Herriott: Our 50% economic interest in the Egypt facility and our 60% interest in the waterfront shipping in.

Sarah Herriott: In addition, we report our adjusted EBITDA and adjusted net income to exclude the mark-to-market impact on share-based compensation and the impact of certain items associated with specific identified events. These items are non-GAAP measures and ratios that do not have any standardized meaning prescribed by GAAP and therefore are unlikely to be comparable to similar measures presented by other companies. We report these non-GAAP measures in this way because we believe that they are a better measure of underlying operating performance and we encourage analysts covering the company to report their estimates in this manner. I would now like to turn the call over to Methanex's President and CEO, Mr. Rich Sumner, for his comments and a question and answer period. Thank you, Sarah.

Sarah Herriott: In addition, we report our adjusted EBITDA and adjusted net income to.

Rich Sumner: If you exclude the mark to market impact on share based compensation and the impact of certain items associated with.

Rich Sumner: Yeah, I think when we look at the second quarter, we're expecting similar levels of produced product. We're expecting slightly higher prices, but we probably won't get the impact that you have in the first quarter when you're in a bit more of a rising price environment, and that has some benefits. So we're expecting it to be very similar in terms of our earnings levels for the second quarter. So hopefully, that answers the question.

Rich Sumner: That's quite a bit.

Rich Sumner: These items are non-GAAP measures and ratios I do not have any standardized meaning prescribed by GAAP and therefore unlikely to be comparable to similar measures presented by other company. We report. These non-GAAP measures in this way because we believe that there are better measure of underlying operating performance and we encourage analysts covering the company to report.

Rich Sumner: Their estimates in this manner I would now like to turn the call over to Matt <unk>, President and CEO, Mr. Rich seminar for his comments and a question and answer period.

Rich Sumner: Okay, thanks. So then, if I could just ask about G3, so in terms of you making progress, I guess specifically on the root cause analysis there, I don't know if there's anything that you could comment on that you guys have concluded thus far. I mean, obviously, you know what the issue was, but in terms of making sure the issue doesn't recur when you start up, what's the level of confidence there? How far are you down that path? We're, we're, we're, we're, we're, we're, we're, we're, we're, we're, we're, we're, we're, we're, we're, we're, we're, we're, we're, we're, we're, we're, we're, we're, we're,

Rich Sumner: Thank you Sarah and good morning, everyone. We appreciate you joining us today as we discuss our first quarter 2024 results.

Rich Sumner: Thank you, Sarah, and good morning, everyone. We appreciate you joining us today as we discuss our first quarter 2024 results. For the first quarter, an average realized price of $343 per ton and produced sales of approximately 1.7 million tons generated adjusted EBITDA of $160 million and adjusted net income of $0.65 per share. Adjusted EBITDA was higher compared to the fourth quarter of 2023, primarily due to a higher average realized price.

Rich Sumner: For the first quarter average realized price of $343 per ton and produce sales of approximately $1 7 billion tons generated adjusted EBITDA of $160 million and adjusted net income of 65 per share adjusted EBITDA was higher compared to the fourth quarter of 2023.

Rich Sumner: Due to a higher average realized price.

Rich Sumner: Our business delivered a strong quarter financially despite $25 million of G3 delay costs recognized and adjusted EBITDA during the first quarter, which was comprised of costs associated with monthly utilities take or pay contracts and employee costs, as well as the accounting recognition of overhedge gas costs through the third quarter projected restart. The safe restart of G3 continues to be our company's top priority. We announced in mid-February that the startup of the G3 plant was delayed due to complications in the autothermal reformer during the late stages of the initial startup process. Since that time, we've been working hard to understand the root cause of the issue, expedite repairs, complete comprehensive reviews of all remaining plant systems, and implement any necessary changes. These work streams are all progressing well.

Rich Sumner: Business delivered a strong quarter financially despite $25 million of G. Three delay cost.

Rich Sumner: And adjusted EBITDA during the first quarter, which was comprised of costs associated with monthly Leds and contracts and employee costs as well as the accounting recognition of overheads gas costs through the third quarter projected restart.

Rich Sumner: The safe restart with G. III continues to be our company's top priority, we announced in mid February and the startup of the <unk> plant was delayed due to complications in the autumn former during the late stages of the initial startup process since that time, we've been working hard to understand the root cause of the issue expedite repairs complete.

Rich Sumner: Brands are abuse of all remaining plant systems and implement any necessary changes. These work streams are all progressing well, we estimate that the repair costs will be approximately $15 million and I expect that total capital cost for the project will remain at approximately $1 $3 billion. The remaining capex to be spent on Jeep.

Rich Sumner: Part of the work streams we have now is to embed those restart conditions into our program for restart and train all of our people on how we're going to move back into that in the third quarter. So we're quite confident; we understand what the issue was and that we're going to have different conditions.

Rich Sumner: We estimate that the repair costs will be approximately $15 million, and we expect the total capital costs for the project will remain at approximately $1.3 billion. The remaining CapEx to be spent on G3 is $70 million, which is fully funded with cash on hand, and we expect it to be spent evenly over the second and third quarters of 2024. Given the progress to date on all work streams, we believe we will be ready to start up the plant in the third quarter of 2024.

Rich Sumner: He is $70 million, which is fully funded with cash on hand, and we expect it to be spent evenly over the second and third quarters of 'twenty 'twenty four giving.

Rich Sumner: Thanks and good luck!

Operator: Your next question comes from the line of Joel Jackson from BMO Capital Markets. Your line is now open.

Rich Sumner: Given the progress to date on all work streams, we believe we will be ready to start up the plant in the third quarter 2024.

Rich Sumner: And I want to thank all of our global and regional team members for their continuing efforts in responding to the delay and continuing to safely manage our. Another critical activity for our company during the first quarter was the major repair of the syngas compressor unit and resulting restart of our Egypt plant. We're happy to report a successful repair and safe and quality restart of the plant, all of which was executed in the timeframes we previously disclosed, and I also want to recognize our team's efforts in expediting these activities to bring us back online.

Rich Sumner: And I want to thank all of our global and regional team members for their continuing efforts in responding to the delay in continuing to safely manage our business.

Joel Jackson: Hi, good morning. I'll ask a couple questions. On the insurance settlement you'd expect, or insurance payment you'd expect out of Egypt, can you give us, maybe what the magnitude of it is now, when we would expect it?

Rich Sumner: Another critical activity for our company during the first quarter with a major repair of the syngas compressor unit and resulting restart of our Egypt plant. We're happy to report a successful repair and safe and quality restarted the plant all of which was executed in the Timeframes. We previously disclosed and I also want to recognize our team's effort.

Rich Sumner: Yeah, it's so we're going to have a claim for 100%. As you know, we own 50% of the total magnitude of the claim, which is still kind of in discussion, you know, over 50, you know, over $50 million and still being worked on. So, you know, we would be taking half, half of that.

Rich Sumner: <unk> and expediting these activities to bring us back online in Egypt.

Rich Sumner: Now turning to the fourth or first corner methanol pricing and market dynamics are first quarter global average realized price of $343 per metric ton was $21 higher than the previous quarter as global methanol markets tightened with constrained production, leading to a global inventory draw.

Rich Sumner: Now turning to first quarter methanol pricing and market dynamics, our first quarter global average realized price of $343 per metric ton, $21 higher than the previous quarter as global methanol markets tightened, with constrained production leading to a global inventory draw and increasing prices in all regions. Compared to the fourth quarter of 2023, global methanol demand was slightly lower, primarily due to two large methanol to olefins units completing turnarounds during this period of supply, while global demand for chemical and energy applications remains steady.

Joel Jackson: Okay, fair enough. When you're giving your outlook for Q2, I think you said $3.45 to $3.55 is your April-May average price. So a couple of questions there. And then you talk about similarities in Q2. So a couple of questions there.

Rich Sumner: And increasing prices in all regions.

Joel Jackson: Compared to the fourth quarter of 2023 global methanol demand was slightly lower primarily due to two large methanol to olefins units completing turnarounds. During this period of supply constraints, while global demand for chemical and energy applications remained steady.

Rich Sumner: Methanol's cost competitiveness in the current elevated energy price environment, as well as its clean burning attributes, continue to support strong demand in energy applications such as biodiesel and MTBE. On the supply side, operating rates were constrained by seasonal natural gas restrictions in Iran and China. Supply was also constrained by planned and unplanned outages in the Atlantic, and overall reduced methanol production led to a drawdown of global inventory.

Rich Sumner: Methanol is cost competitiveness in the current elevated energy price environment as well as its clean burning attributes continue to support strong demand in energy applications, such as biodiesel in MTBE.

Rich Sumner: One, it seems like you're applying an even steeper discount rate, an even wider discount rate in Q2 than you had in Q1. And then when you're talking about this, you know, general kind of soft guidance here, are you assuming June pricing is similar to April and May? Or are you assuming a drop off in pricing in June?

Rich Sumner: On the supply side operating rates were constrained by seasonal natural gas restrictions in Iran and China.

Rich Sumner: Supply was also constrained by planned and unplanned outages in the Atlantic Basin, and overall reduced methanol production led to a drawdown of global inventory.

Rich Sumner: We estimate the current methanol marginal cost of production to be between $260 and $280 per ton based on current coal pricing in China. We continue to see relatively stable methanol prices in China at between $290 and $310 per ton, and all other major methanol markets' prices are at premiums to these levels. For example, our second quarter European price was posted at 525 euros per metric ton.

Rich Sumner: We estimate the current current methanol marginal cost of production to be between 260 and $280 per ton based on current coal pricing in China.

Rich Sumner: No, no, I think we're just using like when we look at the estimate we gave you, which would point to a kind of a 350 price where you would be using that there's some, that's a small increase on an average realized price basis, but that'll be some increase, I mean, it all depends on inventory flows and that kind of thing. So it's what level of produced product we're going to be selling; we think it'll be similar levels, which ultimately gets you back to sort of similar levels of earnings for the quarter. So there's not really any stories of discounts there, like we have had an increase in pricing, and we'd be expecting that that would translate into slightly higher realized pricing as well.

Rich Sumner: We continue to see relatively stable methanol pricing in China at between $290 and $310 per tonne and all other major methanol markets pricing are at premiums to these levels, our second quarter European price was posted at 525 year olds per metric ton.

Rich Sumner: Our North America, Asia Pacific, and China prices for May were posted at 645, 400, and $390 per ton, respectively. We estimate our April and May average realized price range is between approximately $345 and $355 per metric ton. Looking ahead into the second quarter, we anticipate both supply and demand to gradually increase and exceed first quarter levels as gas restrictions are expected to ease and seasonal construction and mobility demand improve. Through 2024, from a supply perspective, we continue to monitor the potential startup of the project in Malaysia later in the year, and we expect the net supply impact from the planned startup of G3 to be somewhat muted given the significant offset from our supply reduction in Trinidad on similar timeframes.

Rich Sumner: Our North America Asia Pacific and China prices for May were posted at 645, 400 and $390 per ton respectively.

Rich Sumner: We estimate our April and May average realized price range is between approximately 345 and $355 per metric ton.

Rich Sumner: Looking ahead into the second quarter, we anticipate both supply and demand to gradually increase and exceed first quarter levels as gas restrictions are expected to ease and seasonal construction in mobility demand improve through.

Rich Sumner: Through 2024 from a supply perspective, we continue to monitor the potential startup of the project in Malaysia later in the year and we expect then that supply impact from the planned startup of G. Three to be somewhat muted given the significant offset from our supply reduction in Trinidad on similar time frames.

Rich Sumner: And just let's see, one more in. If we assume the price holds around here at $3.50 a ton of realized methanol, and GQ comes on in 2.3 as you expect, and you build up enough cash to pay down your $300 million expiring maturity this year, then at $3.50 a ton of methanol, do you think you'd be in position to be able to buy back stock in the fourth quarter?

Rich Sumner: From a demand perspective, we continue to closely monitor the macroeconomic environment and have seen some positive economic indicators that support a stable and moderate growth rate for traditional chemical applications with favorable energy pricing and policy support, particularly in China, continuing to support methanol demand for energy applications. Now turning to our current financial position and outlook, we ended the first quarter with approximately $378 million in cash, and yesterday, we announced the renewal of our $300 million dollar revolver with the addition of a $200 million dollar tranche.

Rich Sumner: From a demand perspective, we continue to closely monitor the macroeconomic environment and have seen some positive economic indicators that support our stable and moderate growth rate for traditional chemical applications with.

Rich Sumner: Favorable energy pricing and policy support, particularly in China, continuing to support methanol demand into energy applications.

Rich Sumner: Now turning to our current financial position and outlook. We ended the first quarter with approximately $378 million of cash and yesterday, we announced the renewal of our $300 million revolver with the addition of a $200 million tranche.

Rich Sumner: I mean, I think we've got to get G3, our focus is G3 right now, and then, you know, we have strong cash flows, but, so we're going to watch cash really carefully as we get to the end. The focus is G3 and getting that $300 million to pay that down. You can play with the numbers and, you know, depending, it all depends on production and methanol prices.

Rich Sumner: This provides us with additional financial flexibility to manage the business and to repay the $300 million bond due in December 2024. Looking ahead to the second quarter of 2024, we're expecting similar adjusted EBITDA and similar realized methanol price and production sales with higher Egypt production offsetting the impact of lower Chilean production as we move into the winter period in the southern hemisphere. As for annual estimates, we've updated our 2024 equity production guidance to 7 million tons.

Rich Sumner: This provides us with additional financial flexibility to manage the business and to repay the $300 million bond due in December 2024.

Rich Sumner: Looking ahead to the second quarter of 2024, we're expecting similar adjusted EBITDA and similar realized methanol price and pretty sales with higher Egypt production offsetting the impact of lower Chile production as we move into the winter period in the southern Hemisphere.

Rich Sumner: As for annual estimates, we've updated our 2024 equity production guidance to 7 million tons.

Rich Sumner: So there's scenarios where we've got more cash. I think right now we're focused on the $300 million. And beyond that, when we look into next year, given the numbers around run rate, we think there's a lot of cash to look at what we do beyond the $300 million, including share repurchases. So I wouldn't be building on any expectations on that towards the end of the year. G3, and then the $300 million.

Rich Sumner: As production has been adjusted lower for the planned startup of G. III in the third quarter with full rates through the fourth quarter and the Egypt outage, which lasted mid February of this year.

Rich Sumner: Actual production may vary by quarter based on the timing of turnarounds gas availability unplanned outages and unanticipated events.

Rich Sumner: This production has been adjusted lower for the planned start-up of G3 in the third quarter, with full rates through the fourth quarter, and the Egypt outage which lasted until mid-February of this year. However, actual production may vary by quarter based on the timing of turnarounds, gas availability, unplanned outages, and unanticipated events. We believe the planned start-up of G3 in the third quarter represents a significant improvement in the asset portfolio and cash generation capability of our... As a reminder, on a run rate basis at $350 per ton realized price and 8.3 million equity tons, the business generates approximately $850 million in adjusted EBITDA and $450 million in free cash flow per year. We believe we are well positioned to maintain a strong balance sheet, profitably grow the business We would be happy to answer questions now.

Rich Sumner: We believe the plant startup of G. III in the third quarter represents a significant improvement at the asset portfolio and cash generation capability of our business. As a reminder, on a run rate basis at $350 per tonne realized price and $8 3 million equity tonnes the business generates approximately 850.

Operator: Your next question comes from the line of Hassan Ahmed from Alembic Global. Your line is open.

Rich Sumner: <unk> million dollars, and adjusted EBITDA and $450 million in free cash flow per year.

Hassan Ahmed: Rich, obviously, you know, continued unrest in the Middle East, and yet again, Iran in the focus. What are you guys seeing in terms of, call it, operating rates domestically within Iran as well as Iranian products, you know, potentially still finding their way into the export market?

Rich Sumner: We believe we're well positioned to maintain a strong balance sheet profitably grow the business and return excess cash to shareholders, we'd now be happy to answer questions.

Speaker Change: At this time I would like to remind everyone in order to ask a question. Please press Star then the number one on your telephone keypad.

Rich Sumner: Your first question comes from the line of Joshua Spector from UBS. Please go ahead.

Hassan Ahmed: Yeah, Hi, Thanks for taking my question I guess first of all I wanted to follow up on your comments that you're implying flat sequential EBITDA.

Rich Sumner: Yeah, thanks so much. Right now, we seasonally see Iran lower into the fourth and first quarter. That's typically what we see, and some of it's hard to say how much of this is operating rates, gas constraints, and then, ultimately, are there any other factors at play? I think we saw a really quite low production quarter in the first quarter, and it's been slow to see Iran coming back into the market than what we've historically seen as we kind of move out of the first quarter.

Joshua Spector: Yeah, thanks for taking my question. I guess, first, I wanted to follow up on your 2Q comments, that you're implying flat sequential EBITDA despite pricing kind of being higher sequentially in May to date. Obviously, you talked about volumes being down, but can you talk about are there any other factors there in terms of a ramp up in any costs with the delay at G3 or any other investments that might move the needle there sequentially?

Operator: Slight pricing could have made to date higher sequentially.

Joshua Spector: You talked about volumes down, but can you talk about are there any other factors there in terms of a ramp up in any cost with the delay of T three or any other investments that might move the needle there sequentially.

Joshua Spector: Yeah, I think when we look at the second quarter, we're expecting similar levels of produced product, we're expecting slightly higher pricing.

Speaker Change: But we probably won't get the impact that you have in the first quarter when you're in a bit more of a rising price environment and that has some benefits. So we're expecting it to be a very similar in terms of in terms of our earnings levels for this for the second quarter. So hopefully hopefully that answers the question.

Rich Sumner: So we don't know, you know, is that still true, they've got gas. [inaudible] It hasn't impacted methanol markets greatly just because there aren't a lot of Middle East flows moving into Europe, where you've seen some supply chains being really impacted. As Iran has become more directly involved, we're going to continue to watch and see what, if any, impact that may have on them as we move forward. So difficult to say if what we're seeing today is – how much of that is tying back to what we're seeing geopolitically.

Speaker Change: Okay. Thanks. So then if I could just ask on <unk> three so in terms of your you're making progress I guess, specifically on the root cause analysis. There I don't know if there's anything that you can comment on that you guys have concluded, though thus far I mean, obviously you know what the issue was but in terms of.

Joshua Spector: Okay, thanks. So then, if I could just ask about G3, so in terms of you making progress, I guess specifically on the root cause analysis there, I don't know if there's anything that you could comment on that you guys have concluded thus far. I mean, obviously, you know what the issue was, but in terms of making sure the issue doesn't recur when you start up, what's the level of confidence there? How far are you down that path?

Rich Sumner: Making sure the issue doesn't recur when you start up with.

Rich Sumner: The level of confidence there how far are you down that path.

Rich Sumner: Where we're where we're very very far down that path. What we've done is we did an independent review a root cause analysis ourselves and we also had our our technology provider Johnson Matthey doing their own independent review are really a lot of this came down to the thermal.

Hassan Ahmed: Understandable. And, you know, a two-part question on demand, near-term as well as longer-term. You know, in the press release, you guys talked about sequentially global methadone demand being sort of down a smidge. And, you know, you obviously talked about some outages on the MTO side of things, but conventional demand actually holding up quite firm. So on the nearer term side of things, I mean, do you attribute the conventional demand firmness to restocking, or is it a more organic sort of demand growth that you're seeing because of the macro environment?

Rich Sumner: We're very far down that path. What we've done is we did an independent review, and we did root cause analysis ourselves, and we also had our technology provider, Johnson Matthey, do their own independent review. Really, a lot of this came down to the thermal dynamics on the startup of the plant. We've agreed on a set of different startup conditions that we feel confident in moving into the restart mode. Work streams we have now are to embed those restart conditions into our program for restart and train all of our people on how we're going to move back into that in the third quarter. So we're quite confident; we understand what the issue was and that we're going to have different conditions.

Hassan Ahmed: Next on the startup of the plant and and so we're gonna have agreed.

Hassan Ahmed: Agreed on a set of different startup conditions that we feel confident and are moving into the restart mode part of part of the.

Hassan Ahmed: The work streams, we have now is to embed that that new those restart conditions into our program for restart and trained all of our all of our people on on on how we're going to move back into that in the in the third quarter. So you know we're we're we're quite confident we understand what the issue was.

Hassan Ahmed: And then on the longer-term side of things, you know, I've been doing a fair bit of work on the marine opportunity. Could you just also sort of rehash your latest and greatest thought process on the marine opportunity, particularly with different sorts of fuel options available for that end market?

Speaker Change: Got it.

Hassan Ahmed: We're gonna have different conditions that that that will that risk is very very low so.

Joshua Spector: Thanks and good luck!

Operator: Your next question comes from the line of Joel Jackson from BMO Capital Markets. Your line is now open.

Speaker Change: Thanks, and good luck.

Hassan Ahmed: Your next question comes from the line of Joel Jackson from BMO Capital markets. Your line is now open.

Rich Sumner: Okay.

Rich Sumner: So maybe I'll address sort of what's happening, what we're seeing on demand first on the shorter term. The core, when we move through Q1, the reason we say demand was slightly down is that we're really focusing really on the MTO production rates. Overall, we estimate their production rates were maybe slightly below 80% because there were two units that took planned turnarounds. And that often happens in periods of tight supply. So they'll do their maintenance when there's not a lot of methanol available in the market. So we saw that, and now those units are back up, and the industry is operating at 85, 90% operating rates. So that was kind of an MTO story on the traditional chemical side.

Speaker Change: Hi, Good morning, I'll ask a couple questions.

Rich Sumner: On the insurance settlement, you would expect sort of an insurance payment you would expect but in Egypt can you give us maybe.

Rich Sumner: Maybe what the magnitude of it is now when we would expect it.

Rich Sumner: Yes, it's so we're gonna have a claim for 100% jaws as you know we are at 150% today. The total magnitude of the claim which is still kind of in disgusted.

Rich Sumner: Over 15 over $50 million and it still being worked on so we would be taking half of half of that right.

Rich Sumner: Yeah.

Speaker Change: Okay Fair enough. When you were giving your outlook for Q2, I think you said $3 45 to 55 years Your April may.

Speaker Change: Our average price so a couple of questions. There and then you talked about similar EBITDA in Q2. So a couple of questions. There one it seems like youre applying an even steeper discount rate or give them a wider discount rate in Q2 than you had in Q1 and then when you talk about the general kind of soft guidance. Here are you assuming June pricing is similar to April and May are you.

Rich Sumner: One, it seems like you're applying an even steeper discount rate, a wider discount rate in Q2 than you had in Q1. And then when you're talking about this, you know, general kind of soft guidance here, are you assuming June pricing is similar to April and May? Or are you assuming a drop off in pricing in June?

Rich Sumner: We saw relatively stable demand through the first quarter. Now it is the Chinese Lunar New Year, so we do see a slowdown typically in the first quarter because of that and because China consumes about 20 million tons of demand for traditional chemical applications. When we say we're, as we move out of Q1, we're seeing some positive signs there that point to modest and stable demand growth and traditional chemical applications. China's manufacturing numbers are better, their exports are a bit better, but they still have a domestic market that they're trying to manage, and that property and the housing markets are putting pressure there.

Rich Sumner: A drop off in pricing in June.

Rich Sumner: No no I I think we're just we're using like when we look at the estimate we gave you which would be point to a kind of a $3 50 price where you would be using that there's some that's a small increase on an average realized price basis, but that'll be something likely I mean, it all depends on inventory flows and that kind of thing so it's what.

Joel Jackson: No, no, I think we're just using, when we look at the estimate we gave you, which would point to a kind of a 350 price where you would be using that, there's some, that's a small increase on an average realized price basis, but that'll be some likely, I mean, it all depends on inventory flows and that kind of thing. So it's what level of produced product we're going to be selling; we think it'll be similar levels, which ultimately gets you back to sort of similar levels of earnings for the quarter. So there's not really any stories of discounts there, like we have had an increase in pricing, and we'd be expecting that that would translate into slightly higher realized pricing as well.

Rich Sumner: The level of produced product you know, we're gonna be selling we think it'll be similar levels, which ultimately gets but you're back to sort of similar levels of of earnings for the quarter. So there's not really any stories on discount there like we have had an increase in pricing and end up and we'd be expecting that that would translate.

Rich Sumner: So we're seeing kind of slow, modest growth, and that would be our projection. Outside of China, in Asia and the US and Europe, we're seeing some positive indicators around that, certainly improvements over last year. When you look at Korea, Japan, and their dependence on export markets, that's improved this year. And then Europe as well, things came off, they hit a base, and now we see slow growth.

Rich Sumner: The slightly higher realized pricing as well.

Joel Jackson: And just let's see one more in. If we assume the price holds around here at $3.50 a ton of realized methanol, and GQ comes on in 2-3, like you expect, and you build up enough cash to pay down your $300 million expiring maturity this year, then at $3.50 a ton of methanol, do you think you'd be in a position to be able to buy back stock in the fourth quarter?

Rich Sumner: We're supposed to take one more in.

Rich Sumner: If we assume the price holds route near 350, a tonne realized methanol a N.

Rich Sumner: And if it comes on in Q3 like you expect can you build up enough cash to pay down your $300 million of expiring maturity this year.

Rich Sumner: So I threw 50 methanol do you think you'd be in a position to able to buy back stock in the fourth quarter.

Rich Sumner: I I I mean, I think our we got we Gotta get gene where focus is changed three right now and then and then I.

Rich Sumner: So what we're seeing is this sort of leveling out and what we call, you know, modest, growing demand relatively stable in those sectors. So that underpins, you know, why we look at and think demand growth is probably something similar to last year, overall this year, and that's what it's pointing to today. On your longer-term question for marine fuels, you know, that area continues to grow. It has momentum around ships and continues to be really positive.

Rich Sumner: We have strong cash flows, but so we're going to we're going to watch cash really carefully as we get to the end of the focus has changed three then.

Rich Sumner: That $300 million and pay that down.

Rich Sumner: You can play with the numbers and you know depending it all depends on production of methanol prices and so there's scenarios, where we've got more cash I think right now we're focused on the 300 million in and beyond that when we look into next year.

Rich Sumner: Gave the numbers around run rate and we think Theres a lot of cash you know two two to look at our what we do beyond the $300 million, including share repurchases. So I wouldn't I wouldn't build it would be building in any expectations on that towards the end of the year. The focus is G. Three and then the $300 million.

Joel Jackson: So there's scenarios where we've got more cash. I think right now we're focused on the $300 million. And beyond that, when we look into next year, given the numbers around run rate, we think there's a lot of cash to look at what we do beyond the $300 million, including share repurchases. So I wouldn't be building on any expectations on that towards the end of the year. G3, and then the $300 million.

Rich Sumner: Last year was the first year where methanol dual-fuel ships actually outpaced LNG on the order book. The number of ships in the water now is at a level of about 280 ships, and that will be on a staged timeframe between now and 2028-2029. And it will really start in 2025 and kind of grow over the years. Now, your question is, what will that mean for demand? I think that's what we're really trying to figure out.

Speaker Change: Thank you.

Hassan Ahmed: Your next question comes from the line of hasn't Ahmed from Alembic Global Your line is open.

Rich Sumner: Rich, obviously continued unrest in the middle East and yet again, Iran, and the focus or.

Speaker Change: What are you guys seeing.

Operator: Your next question comes from the line of Hassan Ahmed from Alembic Global. Your line is open.

Rich Sumner: Or call it operating rates domestically within Iran, as well as Iranian product, you know potentially still finding its way into the export market.

Speaker Change: Yeah, Thanks, a lot right.

Rich Sumner: Right now we've we we we seasonally it seems if I write a lower.

Rich Sumner: The ships and the owners have two choices, as conventional, well, between there's methanol as a fuel or there's traditional marine marine fuel, marine bunker fuels. And so their choices are going to come down to the relative economics of conventional fuels; it's going to come down to the relative economics of low carbon fuels, and their willingness to pay for those lower carbon fuels, as well as the clean burning attributes.

Rich Sumner: Into the fourth and first quarter, that's typically what we see in some of them. It's hard to say how much of this as operating rates gas constraints and then ultimately is there any other factors at play.

Rich Sumner: Right now, we seasonally see Iran lower into the fourth and first quarter. That's typically what we see, and some of it's hard to say how much of this is operating rates, gas constraints, and then ultimately, are there any other factors at play? I think we saw a really quite a low production quarter in the first quarter, and it's been slow to see Iran coming back into the market, slower than what we've historically seen as we kind of move out of the first quarter.

Rich Sumner: I think we saw a really quite up quite a low production quarter in the first quarter and they and it's been slow to see Iran coming back in the market is slower than what we've historically seen as we kind of move out of the first quarter. So.

Rich Sumner: We don't know is that you know.

Rich Sumner: Is that still they've got gas <unk>.

Rich Sumner: Constraints happening and whereas at technical issues, but at this point we see.

Rich Sumner: You know, we're not seeing Iran.

Rich Sumner: So, we don't know if you know, is that still true, they've got gas. [inaudible] It hasn't impacted methanol markets greatly just because there aren't a lot of Middle East flows moving into Europe, where we've seen some supply chains being really impacted. As Iran has become more directly involved, we're going to continue to watch and see what, if any, impact that may have on them as we move forward. So difficult to say if what we're seeing today is – how much of that is tying back to what we're seeing geopolitically.

Rich Sumner: And so there's going to be a lot of things factoring into those decisions. That's what our low carbon solutions team is working on right now. We're in many discussions with different shipping companies about their future fuel choices and how we can bring cost-competitive fuels to that market to meet their demand. Very helpful.

Rich Sumner: Moving back into the market the way we've normally seen it I think just on the middle East conflict generally you know I think.

Rich Sumner: It it hasnt impacted methanol markets greatly just because there isn't a lot of middle East flows.

Rich Sumner: Moving into Europe, and and and where you've seen some supply chains being really impacted.

Rich Sumner: Iran has become more directly involved we're going to continue to watch and see what if any impact that may have on on on them.

Rich Sumner: As we move forward so difficult to say if if if what we're seeing today has it has how much of that is tying back to what we are seeing geopolitically.

Hassan Ahmed: Very helpful, Rich. Thank you so much.

Operator: Your next question comes from the line of Steve Hansen of Raymond James. Your line is open.

Steven P. Hansen: Understood and you know a two part question on demand near term as well as longer term.

Operator: Yeah.

Steven P. Hansen: In the press release, you guys talked about sequentially global methanol demand being sort of down a smidge and you know you obviously talked about some outages on the MTO side of things, but conventional demand actually are holding up quite firm. So on the nearer term side of things I mean do you attribute deconvert.

Steven P. Hansen: She knows demand from this do restocking or is it more organic sort of demand.

Steven P. Hansen: Demand growth that you were seeing because of the macro environment and then on the longer term side of things you know I've been doing a fair bit of work on the marine opportunity.

Hassan Ahmed: And then, on the longer-term side of things, you know, I've been doing a fair bit of work on the marine opportunity. Could you just also sort of rehash your latest and greatest thought process on the marine opportunity, particularly with different sorts of fuel options available for that end market?

Steven P. Hansen: Could you just also sort of rehash your latest and greatest thought process longer term on the marine opportunity, particularly with different sort of fuel options available for that end market.

Operator: Okay.

Steven P. Hansen: Thanks So.

Steven P. Hansen: Yeah, yeah, thanks. I appreciate your time.

Steven P. Hansen: So maybe I'll address sort of what's happening what we're seeing on demand for some of the shorter term.

Rich Sumner: Rich, I just wanted to go back to the G3 again. Is there one or two key gating items that are really important here over the next month or two that you need to get through that will de-risk it, or will you not know until you get really close to startup?

Rich Sumner: The court when we when we moved through Q1. The reason, we say demand was slightly down which is focusing really on the MTO production rates overall, we estimate their production rates were maybe slightly below 80% because of the there was two units at the plant turnarounds and that often happens in the periods of time.

Rich Sumner: I'll give you like... I know that when we originally came out with our estimate, our estimate was based on the major lead time, and the critical item was the manufacture of the brick. We have been able to expedite the manufacture of those bricks, and we do expect those to be, you know, air freighted to us on site in Louisiana before the end of the second quarter. Now, that's one of the workstreams, the materials and the repair of the ATR.

Rich Sumner: Why so they'll they'll do their maintenance when there's not a lot of methanol available in the market. So we saw that and now those units are back up in the industry is operating at 80, 590% operating rate. So so that was a kind of an MTO story on the traditional chemical side, we saw relatively stable.

Hassan Ahmed: We saw relatively stable demand through the first quarter. Now it is the Chinese Lunar New Year, so we do see a slowdown typically in the first quarter because of that and because China consumes about 20 million tons of demand for traditional chemical applications. When we say we're, as we move out of Q1, we're seeing some positive signs there that point to modest and stable demand growth and traditional chemical applications. China's manufacturing numbers are better, their exports are a bit better, but they still have a domestic market that they're trying to manage, and that property and the housing markets are putting pressure there.

Rich Sumner: Through the first quarter, Nowadays Chinese lunar new year. So we do see a slowdown typically in the first quarter because of that and because you know China consumes about 20 million tons of of the mad for traditional traditional chemical applications. When we say we are as we move out of Q1, we're seeing some.

Rich Sumner: The other things we have to do is embed all of our learnings from the root cause analysis, as well as complete a comprehensive review of all the systems that have yet to be tested through the startup. So all of those workstreams are going to be really, really important. What we are seeing is a lot of good progress, and that's why we're confident about the third quarter restart. We're not going to set an exact date here because, you know, it's all about safety and quality, and we're going to get this right. So, but hopefully, that helps provide a bit more color.

Rich Sumner: Positive signs there you know that that point to are modest and stable demand growth in traditional chemical applications. China's manufacturing numbers are better or their exports are a bit better, but they still have a domestic market that there are that they're trying to manage in that property and the housing markets putting pressure there. So.

Rich Sumner: We're seeing kind of slow modest growth and that would be our projections outside of China, and Asia and U S and Europe, where we're seeing we're seeing some positive indicators around around that certainly improvements over last year. When you look at Korea, Japan and the.

Rich Sumner: Oh, it does indeed. And just to be clear, the startup in Q3, and it sounds like the actual tons won't hit the income statement, though, until Q4. Is that what you think about it?

Speaker Change: Our dependence on export markets. That's improved this year and then in Europe as well things came off they had hit a base and now we see slow growth. So so what we're seeing is the sort of leveling out and and and and what we call.

Hassan Ahmed: So what we're seeing is this sort of leveling out and what we call, you know, modest, growing demand relatively stable in those sectors. So that underpins, you know, why we look at and think demand growth is probably something similar to last year overall this year. And that's what it's pointing to today.

Rich Sumner: It's give or take, that's probably the way to think.

Rich Sumner: Modestly growing demand relatively stable in those sectors. So so that underpins why we look and we look at and think demand growth is probably something similar to last year. Overall this year that that's what I was pointing to today on your longer term question for marine fuels.

Rich Sumner: Okay, appreciate it. And then, if I might just circle back on a bunch of commentary in the MD&A about Catalyst in Chile and some things you're planning down there. It doesn't sound like that changes too much, but you just want to maybe give us a recap on exactly what's happening and how that's going to impact future production. It sounds like there's going to be some enhanced production benefits over the Catalyst once it's up. Yeah, yeah, so I think if you look at this, I mean that chili for

Rich Sumner: On your longer-term question for marine fuels, you know, that area continues to grow. It has momentum around ships and continues to be really positive. Last year was the first year where methanol dual-fuel ships actually outpaced LNG on the order book. The number of ships in the water now is at a level of about 280 ships, and that will be on a staged timeframe between now and 2028-2029. And it will really start in 2025 and kind of grow over the years. Now, your question is, what will that mean for demand? I think that's what we're really trying to figure out.

Rich Sumner: I know that that area continues to grow it has more momentum around ships continues to to to to be really positive.

Rich Sumner: Last year was the first year, where methanol dual fueled ships actually outpace on.

Rich Sumner: The order book outpaced LNG are the number of ships.

Rich Sumner: In the water now is at a level of about 280 ships and that will be on a on a stage timeframe between now and 2028 2029 and that will really start in 2025 and kind of grow over over the years. Now. Your question is what will that mean for demand I think that's what we're.

Rich Sumner: Yeah, yeah, so I think if you look at this, I mean that chili for us these last few quarters has been really positive. It's the first time where we've, you know, we've been operating those plants at full operating rates. And this was also a period where when we went to contract gas, we probably were over-contracted for gas from Argentina, which is great. But now we still have the period where there's export restrictions in the winter months.

Rich Sumner: We're really trying to figure out they have the ships and their owners have two choices as conventional.

Hassan Ahmed: The ships and the owners have two choices, as conventional, well, between there's methanol as a fuel or there's traditional marine marine fuel, marine bunker fuels. And so their choices are going to come down to the relative economics of conventional fuels; it's going to come down to the relative economics of low carbon fuels, and their willingness to pay for those lower carbon fuels, as well as the clean burning attributes.

Rich Sumner: Well.

Rich Sumner: Between there, there's there's methanol as a fuel or there's traditional marine marine fuel marine bunker bunker fuels and so their choices are going to come down to the relative economics of conventional fuels, it's going to come down to the relative economics of low carbon in their and their willingness to pay on on all know FERC.

Rich Sumner: And so we're coming to the end of April here, and as we come to the end of April, we'll wind up producing out of one plant at around 70% rates. That'll be based on all gas from Chile. And during this period, one of the restrictions, if you see the quarter. We were probably about 25,000 tons less than what the capacity numbers would say. And that's because of a catalyst, you know, decline on one of the units there.

Rich Sumner: Those lower carbon fuels as well as the clean burning attributes and and so there's going to be a lot of things factoring into those decisions and that's what our low carbon solutions team is working on right now where we're in many discussions with different shipping companies about about their future fuel choices and and how we can.

Hassan Ahmed: And so there's going to be a lot of things factoring into those decisions. That's what our low carbon solutions team is working on right now. We're in many discussions with different shipping companies about their future fuel choices and how we can bring cost-competitive fuels to that market to meet their demand. Very helpful.

Rich Sumner: <unk> cost competitive fuels to that market to meet their demand.

Speaker Change: Very helpful. Rich. Thank you so much.

Hassan Ahmed: Very helpful, Rich. Thank you so much.

Speaker Change: Thanks Donald.

Rich Sumner: So we're gonna, that's the work that we'll complete during this period. And when we restart and we're working on getting gas now for the same period next year, we'd be able to achieve that higher production. So, yeah, positive story about Chile. And we're gonna continue to work on how we can shorten these timeframes for the winter period and also contract on multiple years of gas.

Operator: Your next question comes from the line of Steve Hansen of Raymond James. Your line is open.

Rich Sumner: Your next question comes from the line of Steve Hansen of Raymond James Your line is open.

Steven P. Hansen: Yeah, yeah, thanks. I appreciate the time.

Speaker Change: Yeah, Thanks, guys I appreciate him.

Steven P. Hansen: Rich, I just wanted to go back to the G3 again. Is there one or two key gating items that are really important here over the next month or two that you need to get through that will de-risk it, or will you not know until you get really close to startup?

Speaker Change: Richard I just wanted to go back to the G. III again is there one or two key gating items that are really important here over the next month or two that you need to get through that will derisk. It or will you not know until you get really close to start up.

Rich Sumner: Oh, Oh, Oh, I'll give you like just.

Rich Sumner: I know that when we originally when we originally came out with our estimate.

Rich Sumner: I'll give you as I know that when we originally came out with our estimate, our estimate was based on the major lead time and critical item being the manufacture of the brick. We have been able to expedite the manufacture of those bricks, and we do expect those to be, you know, air freighted to us and onsite in Louisiana before the end of the second quarter.

Rich Sumner: Our estimate was based on the major lead time on getting critical a critical item was the the manufacturer of the bricks.

Operator: Your next question comes from the line of Ben Isaacson of Scotiabank. Your line is open.

Ben Isaacson: We have been able to expedite the manufacturer of.

Ben Isaacson: Those break so we do expect those to be.

Ben Isaacson: Good morning, everyone. This is actually Victor Sayegh jumping on for Ben.

Victor Sayegh: You know are afraid it to us and on site in Louisiana before the end of the second quarter.

Rich Sumner: So, Rich, how confident are you with your production guidance in New Zealand? You know, the Q1 operating rates were below the average for the last few years, and we know some of it was maintenance-driven, but can you clarify the magnitude of a possible reduction in your production guidance? And if the gas troubles continue, what is the run rate we should think of going forward?

Rich Sumner: Now, that's one of the workstreams is the materials and the repair of the ATR. The other things we have to do are embed all of our learnings from the root cause analysis, as well as complete a comprehensive review of all the systems that have yet to be tested through the startup. So, all of those workstreams are going to be really, really important. What we are seeing is a lot of good progress, and that's why we're confident about the third quarter restart. We're not going to set an exact date here because, you know, it's all about safety and quality, and we're going to get this right. So, hopefully, that helps provide a bit more color.

Rich Sumner: Now that's one of those work streams as the as the materials and the repair of the of the ATR. The other things we have to do is embed all of our learnings from the root cause analysis as well as we're going to complete a comprehensive review of all the systems that they have yet to be tested through through the startup so.

Rich Sumner: All of those work work streams are going to be really really important what what we are seeing is a lot of good progress and that's why we're confident for the third quarter restart we're not gonna setup exact date here because you know it's.

Rich Sumner: It's all about safety and quality and we're going to get this right. So, but hopefully that helps provide a bit more color.

Rich Sumner: [inaudible] So yeah, our guidance is 1 to 1.1 million tons for the year. During the quarter, we operated two of our plants at less than full rates.

Speaker Change: So it doesn't need it just to be clear so the start up in Q3 and it sounds like the actual tons.

Steven P. Hansen: Oh, it does indeed. And just to be clear, the startup in Q3, and it sounds like the actual tons won't hit the income statement, though, until Q4. Is that what you think about it?

Rich Sumner: Even though until Q4 is that we can think about it.

Rich Sumner: It's give or take that's that's probably the way to think of it.

Rich Sumner: It's give or take, that's probably the way to think.

Rich Sumner: Okay. Appreciate it and then just.

Rich Sumner: And then towards the end of the quarter, we took one of the plants down for planned maintenance. There was planned maintenance in the gas processing in the fields, which we kind of indicated previously. So we did take one of the plants down, and we're looking to bring that plant back online.

Steven P. Hansen: Okay, appreciate it. And then, if I might just circle back on a bunch of commentary in the MD&A about Catalyst in Chile and some things you're planning down there. It doesn't sound like that changes too much, but you just want to maybe give us a recap on exactly what's happening and how that's going to impact future production. It sounds like there's going to be some enhanced production benefits over the Catalyst once it's up. Yeah, yeah, so I think if you look at this, I mean that chili for

Rich Sumner: And if I may just circling back on a bunch of commentary in the MD&A about catalyst in Chile, and some things Youre planning down there it doesn't sound like that changes too much but I just wanted maybe give us a recap on exactly what's happening out that's going to impact future production. It sounds like theres going to be some enhanced production benefits over the catalyst towards the top.

Speaker Change: Yeah, Yeah. So I think if you look at this I mean that Chile for us is it.

Rich Sumner: Yeah, yeah, so I think if you look at this, I mean, that chili for us... these last few quarters have been really positive. It's the first time where we've, you know, we've been operating those plants at full operating rates. And this was also a period where when we went to contract gas, we probably were over-contracted for gas from Argentina, which is great. But now we still have the period where there's export restrictions in the winter months. And so we're coming to the end of April here.

Rich Sumner: But you're right, there are, you know, we the production out of the existing fields we've been pointing to is something that we're monitoring really closely. So we're working with our partners OMV and Todd, which are our main gas suppliers. And they're really focused on how they can, you know, get better performance out of the wells.

Rich Sumner: This last few quarters have been really positive is the first time, where we've.

Rich Sumner: But operating those plants at full operating rates and this was also a period, where when we went to contract gas we had probably we're over contracted for gas from Argentina, which is great. So now we still have the period, where there's export restrictions in the winter months and so we're coming to the end of April here and.

Rich Sumner: And as we come to the end of April, we'll wind up producing out of one plant at around 70% rates, and that'll be based on all gas from Chile. And during this period, one of the restrictions, if you see the quarter. We were probably about 25,000 tons less than what the capacity numbers would say, and that's because of catalyst decline on one of the units there. So that's the work that we'll complete during this period, and when we restart and we're working on getting gas now for the same period next year, we'd be able to achieve that higher production. So yeah, positive story on Chile, and we're going to continue to work on how we can shorten these timeframes for the winter period and also contract on multiple years of gas.

Rich Sumner: As we come to the end of April we'll we'll we'll wind up producing out of one plant at around 70% rates that it'll be based on all of of gas from Chile and during this period one of the restrictions if you see the quarter.

Rich Sumner: What's encouraging as well is OMV is committed to a bigger drilling campaign later in the year, which we think is really positive in the medium term. So we're going to continue. I don't have a revised estimate today, but that's something we're going to continue to monitor. And, you know, I think a run rate, it's hard to give you sort of direction of, What would we reset to.

Rich Sumner: We're probably about 25000 tons less than what the capacity numbers would say and that's because of <unk>.

Rich Sumner: Catalyst a decline in on one of the units there. So we're gonna that's the work that we'll complete during this period and when we restart and we're working on getting gas now for the same period next year, we'd be able to achieve that higher production. So so yeah. The positive story on Chile, and we're going to continue to work.

Rich Sumner: Because it's all about what's happening in the fields and the work that's happening with our key suppliers there. So we'll continue to update as things progress and let you know if there are any changes to the guidance. In the medium to longer term, it's been a positive change when we think about the government there. The new government is clearly more positive and more supportive of the gas industry and the important role that gas plays in the energy mix.

Rich Sumner: On how we can shorten these timeframes for the winter period, and also called contract on multiple years of gas.

Speaker Change: I appreciate the color. Thanks.

Rich Sumner: Your next question comes from the line of Ben Isaksson of Scotiabank. Your line is open.

Operator: Your next question comes from the line of Ben Isaacson of Scotiabank. Your line is open.

Rich Sumner: Good morning, everyone. This is actually Victor say jumping on for Ben.

Ben Isaacson: Good morning, everyone. This is actually Victor Sayegh jumping on for Ben.

Victor Sayegh: So, Rich, how confident are you with your production guidance in New Zealand? You know, the Q1 operating rates were below the average for the last few years, and we know some of it was maintenance-driven, but can you clarify the magnitude of a possible reduction in your production guidance? And if the gas troubles continue, what is the run rate we should think of going forward?

Speaker Change: So rich how confident are you with your production guidance in New Zealand you know the Q1 operating rates were below the average for the last few years and we know some of it was maintenance driven but can you clarify the magnitude of the possible reduction in your production guidance and if it and if the gas turbos continue what is the run rate we should.

Rich Sumner: So we think that that's positive in the medium to long term, that that's going to be a better framework for investment. But again, we're going to have to see how that how that takes place as well. So, you know, we'll continue to give you our guidance and our outlook. But as we move through through through different

Rich Sumner: Think of going forward.

Rich Sumner: [inaudible] So yeah, we have a, our guidance is 1 to 1.1 million tons for the year. During the quarter, we operated two of our plants at less than full rates.

Rich Sumner: Yeah.

Speaker Change: Thanks Scott.

Rich Sumner: So yeah, we we have a our guidance is one to $1 1 million tons for the year during the quarter. We operated two you know two of our plants are at less than full rates and then towards the end of the quarter. We did one of the plants down for planned there was planned maintenance in the gas processing in the fields, which we.

Rich Sumner: And then towards the end of the quarter, we took one of the plants down for planned maintenance, there was planned maintenance in the gas processing in the fields, which we kind of, um, we indicated previously, so we did take one of the plants down, and we're looking to bring that plant back online, but you're right, there are, you know, we, the production out of the existing fields we've been pointing to is something that we're monitoring So we're working with our OMV and Todd, which are our main gas suppliers, and they're really focused on how they can, you know, get better performance out of the wells.

Ben Isaacson: That makes sense. Thank you.

Operator: Your next question comes from the line of Matthew Blair of TPH. Your line is open.

Matthew Blair: Are you kind of we indicated previously so we did take one of the plants down and we're looking to bring that plant back online, but you're right. There are the <unk>.

Matthew Blair: Hey, good morning. Thanks for taking my questions.

Rich Sumner: What are your expectations for China's MTO market in Q2? You know, I think we're seeing less turnaround activity planned, but then we're also seeing just lower MTO margins. So what does that mean for overall MTO utilization?

Speaker Change: <unk> out of the existing fields, we are pointing to is something that we're monitoring really closely. So we're working with our with all of the entire which are our main gas suppliers in there they're really focused on on how they can you know get better performance out of the wells, what's encouraging as well as all of the has committed to a bigger drilling campaign.

Rich Sumner: What's encouraging as well is that OMV is committed to a bigger drilling campaign later in the year, which we think is, is really, is positive in the medium term. So we're going to continue. I don't have a revised estimate today, but that's something we're going to continue to monitor and, you know, I think a run rate, it's hard to give you sort of direction of, you know, what we would Because it's all about what's happening in the fields and the work that's happening with our key suppliers there.

Rich Sumner: Yeah, MTO margins. It's something that's been under pressure for quite some time. What we've seen is that they've run pretty stably, and where we have seen them typically take lower operating rates is when there's a supply-strained environment where methanol prices are running up, we will see them often take some turnarounds to perform maintenance. Right now, they're operating at 85% operating rates, but I would say the market's pretty tight, and in Asia, in particular, they're working off low inventory levels.

Rich Sumner: In the year, which we think is really is positive in the medium term. So we're going to continue I don't have a revised estimate today, but that's something we're going to continue to monitor and.

Rich Sumner: Think a run rate, it's hard to give you sort of direction of you know what would we reset to because it's all about the what's happening in the fields and the work that's happening with our with our key suppliers. There. So we'll continue to update as things progress and and let you know in the.

Rich Sumner: So we'll continue to update you as things progress and let you know if there are any changes to the guidance. In the medium to longer term, it's been a positive change. You know, when we think about the government there, the new government is clearly more positive and, let's say, more supportive of the gas industry and the important role that gas plays in the energy mix. So we think that, in the medium to long term, that it's going to be a better framework for investment.

Rich Sumner: You know if there's any changes to the guidance in the medium to longer term. It's been a positive change you know when we think about the government there.

Rich Sumner: The new government is clearly more positive and more let's say more supportive of the gas industry and the important role that gas plays in the energy mix. So we think that that's positive in the medium to long term that that would be a better.

Rich Sumner: We haven't seen any decisions being made there that would change our view of where we are today on operating rates, but that's always something that we'll continue to monitor. A lot of times, what happens is they become the balance on the market, right? So if the market goes short, then they'll moderate their rates.

Rich Sumner: But again, we're going to have to see how that how that takes place as well. So, you know, we'll continue to give you our guidance and our outlook. But as we move through

Rich Sumner: Framework for investment, but again, we're gonna have to have to see that that how that how that takes place as well. So you know well, we'll continue to give you our our guidance and our outlook but.

Rich Sumner: As we as we move through through through different quarters here.

Speaker Change: No that makes sense. Thank you.

Victor Sayegh: That makes sense. Thank you.

Rich Sumner: Yeah.

Rich Sumner: Your next question comes from the line of Matthew Blair of BPH. Your line is open.

Operator: Your next question comes from the line of Matthew Blair of TPH. Your line is open.

Rich Sumner: Sounds good. And then, could you talk about the underlying cost dynamics of Q2 versus Q1? It seems like there would be some tailwinds in a few areas. You know, one would be G3, which Here's to be running at like a 15 million fixed cost impact in Q2 versus the 25 in Q1. And then I think in Egypt, you know, shouldn't you be rolling off some elevated shipping costs, you know, as you have that plant back online? Are there any other elements?

Speaker Change: Hey, good morning, Thanks for taking my questions are what are your expectations on China's MTO market for for Q2.

Matthew Blair: Hey, good morning. Thanks for taking my questions.

Matthew Blair: What are your expectations for China's MTO market for Q2? You know, I think we're seeing less turnaround activity planned, but then we're also seeing just lower MTO margins. So what does that mean for overall MTO utilization?

Rich Sumner: You know I think we're seeing less turnaround activity planned, but then we're also seeing just lower fuel margins. So what does that mean for overall MTO utilization.

Rich Sumner: Yeah, MTO margins are something that's been under pressure for quite some time. What we've seen is that they've run pretty stably, and where we have seen them typically take lower operating rates is when there's a supply-strained environment where methanol prices are running up. We will see them often take some turnarounds to perform maintenance. Right now, they're operating at 85% operating rates, but I would say the market's pretty tight, and in Asia, in particular, they're working off low inventory levels.

Rich Sumner: Yeah.

Rich Sumner: MTO margins as somebody that's been under pressure for quite some time.

Rich Sumner: What we've seen is is that they've ran pretty stably and where we have seen them typically if it.

Rich Sumner: Take lower operating rates as when when the there's a supply strained environment, where methanol prices are running up we will see them often take some some turnarounds to.

Rich Sumner: To to perform maintenance right now they are operating at 80%, 85% operating rates, but I would say you know met.

Rich Sumner: The market's pretty tight and then and in Asia in particular, they're working off low inventory levels. We haven't I haven't seen any decisions being made there that would change our view of where we are today on operating rates, but that's always something that that will continue to monitor a lot of times what happens is they become the balance on the market right. So if the market goes.

Rich Sumner: Yeah, I think you're right about the G3 cost impact. We brought forward the full impact of the over hedge position was all accounted for in the first quarter, so we wouldn't expect a big impact from that in the second quarter. The cost on a monthly basis for the take or pay will impact the company, which is about $4 to $5 million, like you said. So I do think that is certainly net net, and we should expect lower costs from that.

Rich Sumner: Go short and then they'll moderate their rates and putting things back into balance, but we're not seeing any indications of that right now.

Speaker Change: Sounds good and then could you talk about the underlying cost dynamics in Q2 versus Q1. It seems like there would be some tailwind in a few areas one would be <unk> three which.

Matthew Blair: Sounds good. And then, could you talk about the underlying cost dynamics of Q2 versus Q1? It seems like there would be some tailwinds in a few areas. For example, one would be G3, which appears to be running at like a $15 million fixed cost impact in Q2 versus the $25 in Q1. And then I think in Egypt, you know, shouldn't you be rolling off some elevated shipping costs, you know, as you have that plant back online? Are there any other elements on the cost side that we should be thinking about for Q2? And does that make sense that you would have some cost tailwinds in Q2 versus Q1?

Rich Sumner: Appears to be running at like a 15 million fixed.

Rich Sumner: Fixed cost impact in Q2 versus the 25 in Q1, and then I think in Egypt.

Rich Sumner: Shipping, you know, obviously shipping is all about, sometimes it's about how our mix of product gets sold and which product has a long supply chains, etc. But overall, we do expect more efficiency in our fleet than we would have experienced in the first quarter. So I think those are probably the big ones that you've identified. And there's nothing else that that would tell us anything else to factor in.

Rich Sumner: You'd be rolling off some.

Rich Sumner: Elevated shipping costs as you about plant back online.

Speaker Change: Are there any other elements on.

Rich Sumner: On the cost side that we should be thinking about for Q2 and does that make sense that you would have some cost headwinds in Q2 versus Q1.

Speaker Change: Yeah, I I I I think youre right about about the G. Three cost impact we brought forward the.

Rich Sumner: Yeah, I think you're right about the G3 cost impact. We brought forward the full impact of the over hedge position was all accounted for in the first quarter, so we wouldn't expect a big impact from that in the second quarter. The cost on a monthly basis for the take or pay will impact the project, which is about $4M-$5M, like you said. So I do think that is, you know, certainly net-net we should expect lower costs from that.

Rich Sumner: The full impact of the the over hedged position was all accounted for in the first quarter. So we wouldn't expect a big impact from from from that and in the in the second quarter. The cost on a monthly basis for the take or pay will will impact which is about four to five.

Matthew Blair: Got it. Thank you very much.

Operator: Your next question comes from the line-up, Laurence Alexander at Jeffries. Your line is open.

Laurence Alexander: Millions like you said, so I do think that is a you know certainly nothing that we should expect lower costs from that shipping you know obviously shipping is all about sometimes about how our mix of our product get sold and which product pet long supply chains et cetera, but overall, we do.

Laurence Alexander: Hey, good morning. This is Kevin Estok on behalf of Lawrence.

Kevin Estok: So just with gas restrictions easing into Q2, I guess, how do you expect operating rates to sort of evolve over the year? I'm just trying to get a sense of, you know, how we could expect inventories to go directionally. And then, you know, I guess sort of the puts and takes on pricing, just trying to get a sense of the big baseline prices for 24 and 25. And, you know, I guess how you could reasonably reach mid-cycle pricing conditions. So, so, yeah, just basically operating rates. Just how do you expect that to evolve?

Rich Sumner: Shipping, you know, obviously shipping is all about, sometimes it's about how our mix of product gets sold and which product has a long supply chains, etc. But overall, we do expect more efficiency in our fleet than we would have experienced in the first quarter. So I think those are probably the big ones that you've identified, and there's nothing else that wouldn't tell us anything else to factor in.

Kevin Estok: I expect more efficiency in our fleet then we would have experienced in the first quarter. So I think those are probably the.

Kevin Estok: The big ones that you've identified and there's nothing else that would tell us that.

Kevin Estok: Anything else to factor in.

Matthew Blair: Got it. Thank you very much.

Speaker Change: Got it thank you very much.

Operator: Your next question comes from the line-up, Laurence Alexander at Jeffries. Your line is open.

Kevin Estok: Your next question comes from the line up Laurence Alexander of Jefferies. Your line is open.

Laurence Alexander: Hey, good morning. This is Kevin Estok on for Lawrence.

Kevin Estok: Hey, Good morning. This is Kevin asked back on for Laurent.

Kevin Estok: So just with gas restrictions easing into Q2, I guess, how do you get the operating rates sort of evolve over the year I'm, just trying to get a sense of how.

Kevin Estok: Or how we could expect inventories to go Directionally and then I guess sort of the puts and takes on pricing.

Kevin Estok: I'm just trying to get some of the big baseline pricing for 'twenty, four and 'twenty five.

Kevin Estok: I guess, how you could reasonably reaching mid cycle pricing conditions. So yes, just basically operating rates, how do you expect that to evolve.

Rich Sumner: Yeah, I think, um... Yeah, overall global operating rates are kind of in this 65% range, and that factors in a whole bunch of what happens with China's low operating rates and includes low operating rates in Iran. Do typically see the Q2, Q3 periods likely being the higher quarters and then Q4 and Q1 being the lower periods. So when you average it out, it always gets to that 65% operating rate level. However, demand continues to be relatively stable across traditional chemical applications. We see reasonably positive demand for the energy application.

Speaker Change: Yeah I think.

Rich Sumner: Yeah overall global operating rates is kind of in the 65% not factors and a whole bunch of what happens with China's low operating rates since includes low operating rates in Iran. We do typically see that Q2, Q3 periods likely being the higher quarters in there.

Rich Sumner: In Q4, and Q1 being the lower periods. So when you average it out it always gets to that 65% operating rate level demand continues to be relatively stable at across traditional chemical applications and we see a.

Rich Sumner: Reasonably positive demand on the energy applications. So again, we can kind of move back to.

Rich Sumner: So again, we kind of move back to the industry growing by 2 to 3 million tons, other than the Malaysian plant that's coming. We would put that late this year, possibly even into next year, so we don't really see that impacting the market. 2024. And G3 is relatively balanced, like we said with Trinidad. So we don't see operating rates really leading to a big swing in inventories and drying down methanol prices today, but that's something we'll continue to watch, see 2024 being relatively balanced for the year.

Rich Sumner: The.

Rich Sumner: Industry is growing by two to 3 million tons other than <unk>.

Rich Sumner: <unk> plant that's coming.

Rich Sumner: We would we would put that late this year or possibly even into next year. So we don't really see that impacting the market in 2024 and <unk> three is relatively balanced like we said with a with with the Trinidad. So we don't see operating rates really leading to a big swing in inventories and drawing down methanol price.

Rich Sumner: This today, but that's something we'll continue to watch and we see 2024 being relatively balanced for the year.

Speaker Change: Okay got it thank you and if I could just sneak one more in I guess theres with prices largely you know rising I guess, how do you expect discount rates to evolve in 2024.

Kevin Estok: Okay, got it. Thank you. And if I could just sneak one more in, I guess with prices largely, you know, rising, how do you expect discount rates to evolve in 2024? Well, I think what you see is.

Kevin Estok: Well I think what you see is that typically contracts are done annually and so we've had.

Rich Sumner: Well, I think what you see is that typically contracts are done annually. And so we've had, you know, Q1 would be our first quarter of Resetted discounts in our portfolio so that typically will last Through the year and then and then again you have another recontracting period which there will be an adjustment So, you know, we really are focused more on the average realized price, If China's pricing at 300 levels today and we're realizing $350 per ton, we're happy with the way our portfolio is performing and we would expect that holding all else equal that would stay the same.

Rich Sumner: Q1 would be our first quarter of <unk>.

Rich Sumner: Resetted discounts in our portfolio. So that typically will last through the year and then and then again you have another re contracting period, which there'll be an adjustment. So we really are focused more on the average realized price in.

Rich Sumner: China's pricing at 300 levels today. It then and we're realizing $350 per ton, where we're happy with the way our portfolio is performing and we would expect that that is holding.

Rich Sumner: Holding all else equal that would stay the same.

Speaker Change: Understood. Thank you.

Rich Sumner: Again, if you would like to ask a question, please press star 1 on your telephone keypad. And your next question comes from the line of Nelson Ng from RBC Capital Markets. Your line is open. Great, thanks.

Rich Sumner: Okay.

Nelson Ng: Again, if you would like to ask a question. Please press star one on your telephone keypad and your next question comes from the line of Nelson <unk>.

Nelson Ng: From RBC capital markets. Your line is open.

Operator: Great. Thanks, and good morning, everyone.

Nelson Ng: Great. Thanks, and good morning, everyone. So you touched on methanol as a marine fuel earlier.

Nelson Ng: So you touched on methanol as a marine fuel earlier. I know green methanol is pretty expensive, but with methanol as a marine fuel kind of ramping up, is interest in low-carbon methanol picking up? And, from your perspective, are you mainly producing low-carbon methanol through the purchase of R&G in North America?

Nelson Ng: I know green methanol is pretty expensive, but with the methanol as a marine fuel kind of ramping up.

Nelson Ng: <unk> interest in low carbon methanol picking up.

Nelson Ng: And I guess from your perspective.

Nelson Ng: Or are you mainly producing.

Nelson Ng: Our low carbon ethanol through the purchase of <unk> in North America.

Rich Sumner: Thanks, Nelson. For sure, the momentum or the interest in methanol is growing, and the interest in low-carbon methanol is growing. Today, you're right, we do produce a small amount of green methanol from renewable natural gas, but we're not selling that into the marine sector today. It's actually into the traditional chemical industry, and it's a small contract.

Speaker Change: Yeah. So thanks.

Speaker Change: Thanks Nelson.

Rich Sumner: For sure the momentum or the interest in and methanol is growing.

Rich Sumner: And that's interesting and the interest in low carbon ethanol is growing.

Rich Sumner: Right today, you're right, we do produce a small amount of screen basket offer or through renewable natural gas, but that's not into the we're not selling that into the marine sector today, it's actually into the traditional chemical and its a small contract. We are looking to procure more renewable natural gas as a as a.

Rich Sumner: We are looking to procure more renewable natural gas as a supply opportunity for the marine sector, but the prices for renewable natural gas are pretty high. We're also looking at other ways to deliver cost-competitive low-carbon methanol, and we're looking at ways we can do that with our existing assets. One of the things we're looking at, as an example, is using renewable hydrogen and CO2 as a direct feed into our assets, and doing that where there are incentives and regulatory support to do that. Geismar will be one of the locations we'll be looking at.

Rich Sumner: <unk> opportunity for the marine sector, it's the prices in that for renewable natural gas a pretty high. We're also looking at other ways to deliver cost competitive low carbon methanol in and we're looking at ways, we can do that with our existing assets and.

Rich Sumner: So one of the things we're looking at as an example is using renewable hydrogen and C. O two as a direct feed into our assets and doing that where there's a there's there's our incentives are and and regulatory support to do that so geismar would be one of the locations will be broadcast. So those are some of the things that.

Rich Sumner: We're progressing and of course, we're progressing that to be able to bring that to the marine market to offer cost competitive low carbon I think the industry is still in a period of discovery in these types of investments require they would require longer term offtake.

Rich Sumner: Those are some of the things that we're progressing. Of course, we're progressing that to be able to bring that to the marine market to offer cost-competitive low-carbon. And the other thing is that investments require longer-term offtakes and agreements, but we're seeing interest there, and we're pursuing it. I hope we'll have more to talk about as we progress through our low carbon solution.

Rich Sumner: Offtake agreements, but were seeing interest there and where we're pursuing it so.

Rich Sumner: I'm, hoping we'll have more to more to talk about as we as we progress through our low carbon solutions team.

Rich Sumner: Great, thanks for the color. And just one last question I had relates to your balance sheet. So assuming G3 is completed and running smoothly next quarter, from a liquidity perspective, how much of a cash buffer do you plan to maintain afterwards? Because I know in the past it was around $200 to $300 million, so I'm not sure whether your cache buffer needs will change after G3 is completed. We don't see that change.

Speaker Change: Great. Thanks for the color and then just one last question I had was.

Rich Sumner: As it relates to your balance sheet, so assuming G. III is completed and running smoothly next quarter.

Rich Sumner: From a liquidity perspective like how much of a cash buffer do you plan to maintain afterwards, because I know in the past there was around $2 million to $300 million, So I'm not sure whether.

Rich Sumner: Your cash buffer needs will change after June <unk> completed.

Speaker Change: We don't see that changing you know just to our structure for for cash and how we move cash to fund the business, we need a certain amount of cash and so we're not gonna be changing that of course, a lot of signs that they can depend on methanol prices and we can't run at lower about 300 is there isn't a fishing.

Nelson Ng: We don't see that changing. Just our structure for cash and how we move cash to fund the business; we need a certain amount of cash, so we're not going to be changing that. Of course, a lot of times it can depend on methanol prices, and we can run it lower, but $300 is an efficient and comfortable number for us. I agree.

Nelson Ng: And comfortable number for us.

Nelson Ng: Don't see that changing.

Nelson Ng: Okay, great. Thanks. I'll leave it there.

Speaker Change: Okay, great. Thanks, I'll leave it there.

Nelson Ng: Yeah.

Nelson Ng: And we have a follow up question from Carla Jackson of BMO capital markets. Your line is open.

Operator: And we have a follow-up question from Joel Jackson of BMO Capital Markets. Your line is open.

Joel Jackson: Hey, Rich. I don't really want to be a dead horse, but I'm going to try, okay? And it's because I've been getting so much input on this question in the last 30 minutes, and it's coming back to about the similar earnings, excuse me, similar EBITDA in Q2 versus Q1. I think people are struggling to understand, right?

Joel Jackson: Hey, Rich I I don't really want to beat a dead horse.

Joel Jackson: Okay, and it's because I'm getting so much incoming on this question the last 30 minutes and it's coming back to about the similar earnings excuse me.

Joel Jackson: In Q2 versus Q1, I think people are struggling to understand right. So you're saying you're going to have similar volume right now, maybe hopefully higher pricing and you've spoken of cost tailwind on this call you said that the over hedged position for G. III you resolve that in Q1, so you'll have that problem.

Rich Sumner: So you're saying you're going to have similar volume right now, maybe slightly higher pricing. And you've spoken of cost tailwinds on this call. You said that the overhedge position for G3, you've resolved that in Q1, so you don't have that problem. I'm also looking to get about $160 million in EBITDA in Q2 of last year at a reasonably lower price tag. Similar volumes, I think.

Rich Sumner: It seems I'm also going to get to 115 on EBITDA in Q2 of last year at a reasonably.

Rich Sumner: It'll be lower price deck.

Rich Sumner: Similar volumes I think.

Joel Jackson: Yeah, yeah, I will. I think maybe I didn't describe this properly before, but in Q1, we had a bigger price move up, you know; it was around $25 a ton. When we have that type of price move in a quarter, we get a bit of a tailwind on our cost structure because what's coming through on our cost for both produced and purchased inventory reflects a price that was lower from the previous quarter.

Speaker Change: Is there something what house scribe, what what what the offsetting Trump what the offsets are sorry go ahead, yeah. Yeah, I will I will I think I think maybe I didn't describe this properly before but there in Q1, we had a bigger price move up no. It wasn't it was around $25 a ton.

Joel Jackson: When we have that type of price move in a quarter, we get a bit of a tailwind.

Joel Jackson: On our cost structure, because what's coming through on our cost for both produced and purchased inventory reflects Ah Ah Ah.

Joel Jackson: A price that was lower than from the previous quarter. So there's a bit of a tailwind.

Joel Jackson: So there's a bit of a tailwind that we got through Q1 that we won't get that same level of tailwind through Q2 because we're in like we're talking about a price move that might be five, five dollars a ton, ten dollars like that. So I think that's the missing piece, mainly. And, you know, I'd probably, maybe we could have a follow-on conversation.

Joel Jackson: That we bought through Q1 that we won't get that same level of tailwind through Q2, because we're in like we're talking about a price move that might be five $5, a tonne $10 a pound something like that so.

Joel Jackson: That's the missing piece mainly.

Joel Jackson: You know I.

Joel Jackson: I'd, probably maybe we could I follow up conversations about that if if it's shirley.

Rich Sumner: I've got a list of all the other people that I've worked with, but I'm not going to go into detail on that. I've got a list of all the other people that I've worked with, but I'm not going to go So, can you give us an order of magnitude of what was, so what you're saying is in Q1, you had some inventory right up on your purchase of methanol. Can you give us, I think you're saying that, can you give us a bit of an estimate of what that was in Q1 versus what it normally, well, not normally, but what it was in Q1?

Rich Sumner: So can you give us an order of magnitude of what was what you're saying is in Q1, you had some inventory write up on your purchase methanol could you give us I think youre, saying that can you give us a bit of a estimate of what that was in Q1 versus what normally well north of what it was in Q1.

Speaker Change: I think this is more of a you know what is the cost to produce inventory in in the fourth quarter and the cost of byproduct in the fourth quarter versus the first quarter, which is reflective of a higher methanol prices. So I think I think it's just typical flows of how things work is we.

Joel Jackson: I think this is more of a, you know, the cost to produce inventory in the fourth quarter and the cost of byproducts in the fourth quarter versus the first quarter, which is reflective of a higher methanol price. I think it's just the typical flow of how things work as we move through pricing through quarter to quarter, and I think that that had probably a $10 to $20 million positive impact on Q1 that we won't see as much of in Q2.

Joel Jackson: Move through pricing through quarter to quarter end, and I think that that has probably a $10 million to $20 million positive impact on Q1 that we won't see as much oven in Q2.

Speaker Change: Okay, I'll definitely bucks there on this afternoon. Thanks, a lot yeah.

Rich Sumner: Okay, I'll definitely bug Sarah on this this afternoon. Thanks a lot. Yeah.

Speaker Change: There are no further questions at this time I will now turn the call back over to Mr week from there.

Speaker Change: Okay, well. Thank you everyone for your questions and interest in our company and well Hope we hope you will join US in July when we update you on our second quarter results.

Operator: There are no further questions at this time. I will now turn the call back over to Mr. Rich Sumner.

Operator: Yeah.

Rich Sumner: This concludes today's conference call you may now disconnect.

Rich Sumner: Okay, well, thank you everyone for your questions and interest in our company, and we hope you'll join us in July when we update you on our second quarter results. This concludes today's conference call; you may now disconnect.

Rich Sumner: Yeah.

Rich Sumner: [music].

Rich Sumner: Uh huh.

Rich Sumner: [music].

Rich Sumner: Yes.

Rich Sumner: Okay.

Rich Sumner: [music].

Rich Sumner: Yeah.

Rich Sumner: [music].

Rich Sumner: Okay.

Rich Sumner: [music].

Operator: This concludes today's conference call. You may now disconnect.

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