Sandra Daycock - Director of Investor Relations John Floren - President and Chief Executive Officer.

Daniel Jester - Citi Hassan Ahmed - Alembic Global Jacob Bout - CIBC Carl Chen - Scotiabank Steve Hansen - Raymond James Joel Jackson - BMO Capital Markets Cherilyn Radbourne - TD Securities Robert Kwan - RBC Capital Markets Chris Shaw - Monness, Crespi.

All participants, please be advised, your conference is ready to begin. Ladies and gentlemen, thank you for standing by. And welcome to the Methanex Corporation Second Quarter 2015 Results Conference Call. I would now like to turn the conference call over to Ms. Sandra Daycock, Director of Investor Relations. Please go ahead, Ms. Daycock..

Thank you. Good morning, ladies and gentlemen. Welcome to our second quarter results conference call. Our 2015 second quarter report along with presentation slides summarizing the Q2 results can be accessed at our website at www.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.

Certain material factors or assumptions were applied in drawing the conclusions or making the forecast or projections, which are included in the forward-looking information. Please refer to our latest MD&A and to our 2014 Annual Report for more information.

For clarification, any references to revenue, EBITDA, cash flow or income made in today's remarks reflect our 63.1% interest in the Atlas facility and our 50% economic interest in the Egypt facility.

In addition, we report our adjusted EBITDA and adjusted net income to exclude the mark-to-market impact on share-based compensation, any impact of certain items associated with specific identified events. We report our results in this way to make them 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 return the call over to Methanex's President and CEO, Mr. John Floren, for his comments and a question-and-answer period..

Thank you, Sandra. In Q2, 2015, we recorded adjusted EBITDA of $129 million and adjusted net income of $51 million or $0.56 a share. Net income attributed to Methanex shareholders was $104 million, reflecting a $57 million after-tax contribution from an agreement reached in the second quarter to terminate a terminal services arrangement.

We're very pleased with this transaction that monetize the value of one of our terminal contracts. Our Q2 earnings are somewhat lower than we expected heading into the quarter.

The weaker performance is attributable to two main factors; unplanned production outages in New Zealand and Egypt and a billed and produced product inventory of over 70,000 tonnes. Although our overall sales volume increased in Q2, as a result of inventory flows, we sold proportionally more third-party products.

This means that we have not yet realized a full benefit of what we produced during the quarter. During the quarter, we continued to make solid progress on our Geismar 2 relocation project. Assuming construction and commissioning continue at the current pace, we expect that we will achieve first methanol by the end of the year.

The estimated remaining capital expenditures at the end of Q2 for Geismar 2 are approximately $185 million. The Geismar 1 plant operated exceptionally well in Q2, achieving 276,000 tonnes of production or over 3,000 metric tonnes per day. In the quarter, we undertook a major refurbishment of our Medicine Hat plant and restarted the plant in July.

The plant's operating at high rates, and we expect the plant to operate at higher rates and more reliably going forward as a result of these investments. Demand for methanol was good in Q2. Traditional chemical demand rebounded led by China, following a seasonal slowdown from Chinese New Year celebrations in Q1.

Energy demand improved as recovery in oil and related product prices restored methanol affordability into certain energy applications, notably methanol-to-olefins, methanol‐to‐propylene and dimethyl ether. New methanol-to-olefins capacity came into the market.

And there are now a total of 10 completed plants in China that can consume up to 10 million tonnes of merchant methanol supply at full rates.

There are also six more merchant methanol-to-olefins plants in China at various stages of construction, which are anticipated to be completed in the 2015, 2016 timeframe, which would add another 9 million tonnes of methanol demand at full operating rates. Production including tolling volume was slightly higher in Q1 versus - Q2 versus Q1.

In New Zealand, both Motunui undertook unplanned downtime due to a mechanical issue. With a combined production impact of approximately 110,000 tonnes, the plants - combined of 110,000 tonnes. The plants have been repaired and have recommenced operations.

Further work needs to be done to fully address the mechanical issues and this work is currently scheduled to be completed by the end of 2015. The capital expenditures for the maintenance are included in the total estimate of $130 million capital requirements to the end of 2016.

In Egypt, we operated our plant for only six days during the quarter due primarily to gas constraints as well as some technical issues at the plant. The deterioration in gas availability has continued. And we've been advised by our gas supplier that supply should be available for a restart following the peak summer gas demand period.

Based on the best information we have available, we expect intermittent operational plan when gas is available during the non-peak gas demand months.

There's too much uncertainty to give specific guidance on the operating rates but we expect that our gas supply to the plant will be significantly curtailed for the foreseeable future and we will continue to require periodic shutdowns until the country's gas deliverability is restored.

We cannot predict when the gas supply will fully recover, but there are number of positive developments in the country that we believe will allow the situation to improve in the future.

We are advised that the country is taking steps to reduce energy subsidies and to improve the efficiency of electricity generation infrastructure and both could impact domestic demand for gas.

We also understand that LNG imports have commenced to improve available gas supplies, as well there has been considerable investment announced in the upstream that we believe will result in improved domestic gas supplies in the medium term. Our Chile I plant was idled in May due to insufficient gas supply.

We current expect the plant to be restarted following the end of the Chilean winter. ENAP, the country's main gas supplier has advised that it continues to make promising progress in bringing new unconventional gas supplies to the market. We are optimistic that this may translate into higher gas supply for our Chile assets in the future.

Our plants in Trinidad ran well during the second quarter. We experienced an approximately 15% gas restriction which in line with our previous guidance. We expect gas restrictions to be similar in Q3. We continue to buy back shares in Q2 and as at June 30, 2015 we purchased approximately 15% of the normal course issuer which commenced on May 6, 2015.

We believe that buying back our own capacity continues to be an excellent use of our capital. We are in a period of transition for the company as we complete our growth initiatives and improve the reliability of our recently restarted plants in Medicine Hat in New Zealand.

We will continue to position our company for growth and we're committed to allocating capital in a manner that is optimal for shareholders. I would now be happy to take questions..

Thank you. [Operator Instructions] The first question is from Daniel Jester of Citi. Please go ahead..

Hey, good morning, John. So just a couple of questions on China.

I guess first, it seems like coal prices have - are seemingly under pressure again, so I was wondering if you could update us on your thoughts on the cost curve, and how the marginal cost of methanol production is looking these days in China?.

Thank you, Daniel. So yes, coal prices have come down slightly after being quite stable albeit at a lower rate. We do think there is a large percentage of the coal industry in China currently underwater from a cash cost point of view. Our current view of the methanol cash cost is around $300 a tonne to $320 a tonne.

And certainly spot prices today are lower than that. So we're watching carefully to see the reaction to the current pricing and the impact on production..

And then - thank you. And then secondly on the sort of the traditional end markets for methanol demand. You noted in your press release that it's relatively stable growth, but we've heard reports recently that there is some slowing in some of these traditional market.

So can you provide any additional color of how the market has evolved maybe over the past few months into July? Thank you..

Yeah. We saw Q1 to be quite soft for traditional demand, but rebounded quite nicely in Q2. And so far in Q3, it seems to be okay. So we haven't seen anything that would worry us as far as the significant downturn in regular demand at this point. But obviously we watch it closely and we'll report such if we see a difference..

Thank you very much..

Thank you. The following question is from Hassan Ahmed of Alembic Global. Please go ahead..

Good morning, John..

Hi, Hassan..

You obviously touched on the newer MTO facilities that have come online in China. Just wanted to get a sense what you're hearing in terms of the sort of operating rates they're currently running at.

I mean, are they in this energy price environment running at relatively sort of high operating rates or not?.

Yeah. Well, again each of these plants has their own specific economics. So you can't give a blanket statement that they're running at X percent. But the ones that we've seen the most pressure are the pure methanol to propylene merchant plants. And they're - they've been running at I would say lower rates.

The integrated methanol-to-olefins where they're making a number of downstream derivative products have been running at higher rates. So in the 80% to 90%. I think the numbers that we see overall for those 10 plants are in the mid-to-high 70%s at this point.

But certain ones run at higher rates and certain ones depending on their affordability, depending on what they're selling pure propylene or other derivatives are different.

I think one point, I'd like to make about this is once these plants start up and run unless there's capacity extra naphtha based olefin capacity that can run, why would you expect these to shut down. I mean, they would have to be able to source the olefins somewhere else, in order to for them to shut down their operations.

So, what we've seen, as prices of the relative substitutes go up and down, the plants continue to run, and they may throttle rates up and down by 10% or 20% depending on what their particular product slate is at any given time..

Fair enough. And just sticking to the China side of things. Obviously, some market sales relating to a potential sort of slowdown in China. What - as you sort of have gone through July, I mean, is - in this environment volatile energy prices in the light.

Leaving the MTO thing aside, fuel applications, chemical applications and the like are you seeing relatively normal demand in China in particular?.

Yeah, we haven't seen any real change, like I mentioned Q1 was not great, and Q2 was much better. So, but if you look at the growth overall, it's been a little less than forecasted, but we have quite a few MTO plants coming on in the back half of the year as well, which we think will continue to drive demand from ethanol in China.

The traditional derivatives, now they're growing probably at the rates that we would have expected at GDP rates. So, overall, we haven't seen any significant slowdown at this particular time..

Superb. Thanks, so much John..

Thank you. The following question is from Jacob Bout of CIBC. Please, go ahead..

Hi, John..

Hey, Jacob..

Hoping you can expand a bit on the determination of that terminal services agreement or just provide a bit more detail on that? And can we expect to see gains like this smooth in the future?.

Well, again, I don't predict the future. We have a number of different assets around the world that we utilize to deliver methanol, reliably, and in good quality to our customers. As our supply chain changes as we bring on more capacity, of our own production capacity in North America.

Maybe some of these assets we have become less strategic for us and if we have opportunities to monetize assets, there are no longer strategic to us, will continue to do it. Nothing imminent, that comes to mind that, similar to this particular deal, but things change all the time..

Then maybe just a question here on Medicine Hat.

Now with that's up and running, maybe talk a little bit about what the capacity there is like and maybe talk a bit about your thoughts on another plant there?.

Yeah, so, I was just Medicine Hat last week and the plants running very nicely, its looks like a brand-new plan. So, this was not a normal turnaround, it was 1/10 of the man-hours of new build. And about a $100 million, which is about 1/10 of the new-build as well. So, all of this was completed in just over 60 days.

So, an outstanding accomplishment by our team there. We think we're going to get higher rates. It's early days, we are injecting CO2, we think we can inject up to 350 tons a day of CO2, and that, at that rate, we believe we can get over 1,700 tons a day and well over 600,000 tons on an annual basis.

And we think this plant now is lined out and going to be real reliable to the end of the decade, and we've tied up gas, 40% of our gas requirements have really attractive prices. So, this dual on the Prairie will continue to generate significant EBITDA and cash flow for the company. As far as the second plant, we continue to progress that.

We've got a bit of a stumbling block on getting the product out of Medicine Hat, to the West Coast.

We wouldn't move forward with the second project until he had some sort of certainty on rail, i.e., how is going to cost us over a period of time, team's working on that issue and we hope to resolve it in the coming months and we're progressing that project in a third plant in Geismar at the same time, spending some millions of dollars on both maybe do a feed on one or both sometime next year and look to be in FID position for one or both at the end of next year.

So, I think for the next couple of years as far as capital, we don't have any significant capital spend beyond what we're completing in Geismar and if we sanction one or both of those projects the capital spending would ramp up somewhere towards the end of 2017..

Thank you very much John..

Thanks, Jacob..

Thank you. The following question is from Ben Isaacson of Scotiabank. Please go ahead..

Hi. This is Carl Chen stepping in for Ben. Thanks for taking my question. John, we're just wondering if Methanex has shipped any methanol from Geismar 1 to Asia, if so why ship into your lower net back market and if not when would that become a real possibility? Thank you..

It's too bad Ben is not on the call because I noticed in his report this morning he said the market won't care about an early start at the Geismar 2, I care about it, so hopefully the market cares too. With regard to Geismar shipping product we don't comment on where we ship product anywhere and anytime.

We have a global supply chain and a global integrated set of logistics and things happen from over time, I remind you we used to take quite a bit of product from New Zealand into the Atlantic basin and we'll use our global supply chain to optimize our deliverability to our customers in a safe, reliable, effective manner..

Great. Thank you..

Thank you. The following question is from Steve Hansen of Raymond James. Please go ahead..

Yeah. Good morning, guys. John, New Zealand, has clearly been a little bit problematic of late.

And I'm just hoping you could provide a little extra commentary or color on the expected operating rates which should expect to see here at Motunui in advance of the turnaround related to this year? And just a follow-up to that, what is the progress if any on the CO2 gas availability there?.

Yeah. So it's not a turnaround, Steve. We have some mechanical issues that we're addressing. When we started these plants up, they're older plants. And we inspected them and we thought we had inspected and caught everything that we would have to address before a startup issue that arose that we didn't catch. So we're currently addressing it.

As far as specific operating rates, I'm not going to comment for competitive reasons. But we think we will be able to get these plants back to full rates by the end of the year. So right now, they're running at full rates. And I think we're going to look to make sure that we're investing money and time to make them as reliable as possible.

And when before this issue rose, they were very reliable. And even without the high CO2 gas, if you look at Q3 last year, we ran at 600,000 tonnes or 2.4 million on an annualized basis. So these plants have the capability of running at really high rates once we get this issue resolved with or without the CO2 gas.

I'd say the progress we've got some of the high CO2 gas that we need, but the progress has been slow on getting it all for reasons of commercial within the country between some of the parties that we're dealing with. So I don't anticipate we'll get the rest of the high CO2 gas this year.

But there is activity as well in the exploration where one of the producers is finding more high CO2 gas. So it's a fairly easy tie-in, if and when it becomes available. But even when it becomes available, but even without it we've proven that, we can run these plants at an annualized rate of 2.4 million tonnes per year..

Okay, helpful. And, then, just on Geismar quickly. You mentioned how well Geismar 1 has been running.

And the upgrades you made to that unit on the move or on arrival, presumably similar upgrades have been made to the second unit as well that allow it to operate better?.

Yeah. So we've been running the plants in the second quarter at a rate of 1.1 million tonnes per year. And we're very, very excited about how well that plant has run, how well the operators have performed in maintaining the high daily rate of over 3,000 tonnes a day.

And, yes, the second plan or Geismar 2 or Chile III is actually a newer plant than the first one that relocated. And it ran extremely well in Chile. We're taking the opportunity to do the same upgrades there. I'll remind you it's a twin of the first plant. And we're very optimistic that we'll be able to run that plant at over 3,000 tonnes a day as well.

But until we turn on the furnace and start producing methanol, it's a bit academic. But we're pretty confident that we'll be able to do so..

Great. And just a final if I may on Geismar. Just can you remind us about the cadence, how you expect the cadence for Geismar 2 to ramp up from the sales standpoint? As I recall, Geismar 1 there was a bit of a delay between the startup, and the actual commercial activity of sales just due to some inventory issues.

I'm just trying to understand they'll be any different with Geismar 2 given that you've already got Geismar 1 running with the inventories available? I mean, you say by yearend methanol, but when should we expect for sales to hit the income statement?.

Well, again, you're asking me to predict the future which is impossible. And it's really a matter of what our inventories looks like around the world at any given time, and how that famous FIFO layer activity happens. And I don't think I can predict how that's going to happen next month.

So in six months, it's virtually impossible for me to give you guidance on that..

Okay, very good. Thank you..

Thank you. [Operator Instructions]. The following question is from Joel Jackson of BMO Capital Markets. Please go ahead..

Hi, good morning..

Good morning Joel..

Just want to talk about your commentary on the cost curve, in the past, you talked about the cost curve being over $300. In China, six months ago, when things are kind of little bit more doom and gloom, talk about cost curve being $260 to $280, now staying $300 to $320.

Can you talk about from the moving parts in the last six months that take your idea of the cost curve from about $270 to sort of the low $300, thanks..

Yeah, so it does move around all the time and depending on the demand for methanol, it moves it to the right or to the left of the cost curve, and on the coal price, depending on the natural gas price. So lot of factors go into it, and remind you there is over 200 plants operating in China. So there are bans on the cost curve.

Not every single plant would have the, the same actual cost, but we have a band of costs and we estimate based on all of those inputs at any given time based on our forecasts and we're probably in a narrow band like you mentioned between $280 and $320, but there is a lot of production in that band.

So if you got well below those prices, we believe there would be a lot of production that would come off, which would rebalance the market which is exactly what we saw late last year.

So, I think when you're talking $10 either way, if you are producer and you are thinking about shutting down, I think you have to have a view that pricing is going to remain lower than your cash costs for sometime as you look to layout people et cetera. So cost curves and shutdowns never react exactly.

When you're below the cash costs, it does - there is a time delay. But this cost curve has been there for some time and over the past three years, four years has demonstrated pretty closely when people are below cash costs, they turn down and our current estimate is around that $300 level..

Okay. Thanks for that. And just a follow-up on G1. You talked about hopefully trying to get to 1.1 million tonne a year run rate at G1. Looking at what the performance is like in Q2, can you give us a little more color my memory is that, and then you plan as the catalyst settles, you get a little bit of sort of over production.

I was trying to get an idea of how much of the sort of overproduction in Q2 was because it ran so great versus maybe some transitory things related to the catalyst?.

Yeah. So on the catalyst, after about six months, we would expect to see some decline. We haven't seen it yet. So I think the performance in Q2 was more operations related. The team did an outstanding job running the plant as well as the upgrades that we've made to that plant are proving to get us that extra couple hundred tonnes a day.

And we currently think it's sustainable. But it's only been five months of operations we're watching it close - or six months I guess now, but we're watching it closely. And that's why we haven't reiterated the capacity at this particular time.

And as we get more comfortable that 1.1 million tonnes is a reasonable number over the lifecycle of the catalyst, then we'll rewrite the capacity. So I'll take the extra 25,000 tonnes a quarter any day and we expect G2 to operate similarly.

So we're pretty excited and optimistic, we're going to run these plants at higher rates than when they were in Chile..

Okay. Thank you..

Thank you. The following question is from Cherilyn Radbourne of TD Securities. Please go ahead..

Thanks very much, and good morning..

Good morning..

So, Egypt had a couple of tough quarters here and I appreciate the visibility is limited.

But could you just speak to your level of confidence that you'll be able to restart the plant post the summer period?.

Good. I think I said it's very difficult to predict operating rates. What I can report is just what we've been told by the ministry and our gas suppliers. So, I think there is some good things in Egypt, country is more stable. This summer, we didn't see any burnouts, that's the first time in a number of years, there were no electricity burnouts.

So, the government is taking real seriously this supply of gas issue in Egypt and they're playing a number of levers, which I referred to in my opening remarks. They've told us to expect gas as the peak summer demand for electricity, for cooling reduces and that's what we expect, difficult to give you exact timing on that.

Because we again weather forecasting is kind of like forecasting methanol, supply demand, it's in an exact science. But as the weather cools down and there is more gas available, we would expect to start up the plant and operate. Beyond that it's the timing and operating rates, it's really too difficult to give you specific guidance..

Okay. That's fair enough. Comments are helpful. Then just on the buyback, you've bought back about a million shares per quarter, the last two years you've got 3.8 remaining.

Can you just give us your thoughts on the likelihood that you fully complete that program by May of 2016?.

Again you're asking me to get into future here. I think at the current share price, we're very likely to use all of our excess cash to buy back shares. We won't generate a lot of excess cash until we get G2 up and running. But we have some. And then, we'll continue to purchase shares every day in the market.

And as we generate more free cash flow use that cash to buy back more shares. So I think depending on what the methanol price ends up being and how our production ends up performing, we'll have excess cash to buy back shares ramping up to more excess cash as G2 comes on and we get the full benefit of the new operating rates in Medicine Hat..

Thank you. That's my two..

Thanks..

Thank you. The following question is from Robert Kwan of RBC Capital Markets. Please go ahead..

Thanks. Good morning, John..

Good morning..

Just coming back to the Medicine Hat expansion and I guess what we're hearing across the number of different infrastructure builds. And Alberta's capital costs haven't really eased yet. But there is much better cost certainty as a lot of people are getting more experienced labor.

So I'm just wondering kind of what are you seeing in your early investigations and when it comes to, what you need, do you need more cost certainty as you actually need to see, the expected capital cost come down for Medicine Hat, on top of I know you talked about the rail being able to get the product out..

Yeah. So in Medicine Hat, we need rail certainty. All of that product would be going to Asia. And we probably rail it through the West Coast and put it on our ships to Asia. So having certainty around rail is the first thing we want to check before we spend too much money on that project.

[Indiscernible] capital cost until we do a feed, frontend engineering design, we won't know exactly how many man hours and therefore capital cost. What I would say in Alberta, certainly engineering services are readily available and probably cheaper than they were a year ago.

Certainly, building things in Edmonton seemed to be quite reasonable at this time. There's still projects in Fort McMurray that are being completed. So the actual labor availability is probably better than it was this time last year. We just had over a 1,000 people as part of our major refurbishment in Medicine Hat.

And we had good availability of labor and good productivity. I'd say capital costs are down 30% for the construction labor piece in Medicine Hat because we're a U.S. dollar company and we'd be paying labor in Canadian dollars. So we've all seen what's happened to the Canadian dollar. So I don't know if it's 20% or 30%.

But certainly for the 60% of the labor hours to build a new plant in a U.S. dollar term that's looking a lot more attractive today than this time last year. So our plan is to proceed to get this rail result to do a joint venture agreement with our partner. And then to proceed to a feed.

And then make an FI - be in a position to make an FID sometime last next year. And we'll have a lot more visibility and information about labor and availability and productivity by that time..

That's great color, John. I guess last question here, just looking at balance sheet leverage and your desire to be investment grade. You had a slide highlighting three times debt to EBITDA as a key threshold. And that slide kind of had 2.8 times leverage at $350 a tonne realized, which is pretty close to where we are.

So as you start to get a little bit closer to that three times, does that change? How you think about the MCIB and the redeployment of free cash flow..

Yeah. Three times is over a cycle, right. It's not in any given point when you're - rating agencies don't look at a given low point to cycle and say you're over the three times or in a high point while you're only one time.

So we'll likely gear up another two points so, I think we look at it over the cycle of the methanol price and I think between $350 and $450 methanol which we realized prices which we think is the current kind of balance of the cycle. We're well within the investment grade rating terms that we have.

So we want to keep the investment grade and we think there is room to continue to buy back shares and keep our investment grade. And if we get into a situation where methanol prices are really depressed, then we have that flexibility through the normal course issuer bid of stopping or turning down the amount of shares that we're purchasing.

So that's what I like about the normal course as it gives you tremendous flexibility depending on how things turn out in the marketplace..

That's great. Thank you very much..

Thank you. [Operator Instructions]. The following question is from Chris Shaw of Monness, Crespi. Please go ahead..

Yeah, good morning.

How you're doing?.

Hi, Chris..

Continuing a little bit more detailed about the sort of near-term price situation it's Asia, North America contract down for August, when you sort of bring in a decent enough demand picture.

And I know it all probably comes down to oil, but I mean, is there also a supply side issue this quarter whereas volume global supply was a little bit better, if you ran better or just to dig in there a little bit to know how's working?.

Yeah. Supply was a little better in Q2 for sure. I mean, if you look at supply in Q2 versus Q1, it was better. As we go into Q3, pricing is reflecting the cost curve and the supply demand balance that we see. So number of planned outages as we go into Q3 as well we've got these other MTO plants starting up.

So, I think we sometimes focus too much on the short-term pricing any given month on spot or contract. I think we should more focus on the medium term and the supply demand balances that we see as a result of this new capacity for MTO and other energy derivatives.

So we're still really optimistic about the supply demand balance, and you're going to see these short-term ups and downs in any commodities. But I think structurally the industry is still really, really well-positioned to have growing demand and limited supply over the next four years to five years.

So we're really excited as we get our expansion projects done and get up to that 8 million tonne run rate with some optionality in Chile that will be able to really benefit from the improved demand and limited supply. So nothing has really changed..

Thanks. And then if I could follow up on capital allocation. Just - you mentioned yourself that where your shares are trading right now very attractive to buy your own capacity. So at these levels, at these shared price levels, I mean how do you view the potential for the new Medicine Hat project and potential [indiscernible].

Do you think your capacity is much cheaper now than kind of build some new capacity of those locations?.

Yeah. Again we're thinking long-term. We're thinking 10 years. Certainly, you gave me - asked me a question would I buy back shares to build new capacities, they had buyback shares all day. And that's what we're doing. But these projects won't be ready to execute till sometime in 2017, it's been big money in 2017.

So, options have value and I think we can continue to see this industry growing at 7% to 8%. And we'd like to add 1 million tonnes every two years in that kind of growth rate. We've added 3 million tones plus in three years so we're not in a rush to find projects that we have to execute.

But if there are a good projects and we think both Medicine Hat and Geismar are great locations to have further production, but really early days. And for me it's about execution and about certainty around whatever budget you're going with that you can execute.

We don't have to look to too far in the past, where we see really different things in Geismar with regards to productivity. So, we want to be cautious with whatever numbers we end up with a certain project that we can execute on it. So, we're still up. I'm very optimistic about the supply demand balance, the growth rate continues to go forward.

And I think we want to have a project that we can get up and running by the end of the decade. But by all means, if we're trading where we are now. I think it's a better use of cash to buy back our own shares that I don't know it's $700 a tonne versus building it to $1,000 plus a tonne..

Great. Excellent. Thanks..

Thank you. The following question is from Steve Hansen of Raymond James. Please go ahead..

Yeah. John, just quick follow up here on Chile. How much visibility is ENAP giving you on their unconventional gas search or progress. I think most of us is largely discounted any production growth at Chile anytime soon. But your commentary suggests they are making some progress on the unconventional side.

I'm just trying to get a sense will that actually may translate from the incremental production growth in the next two years to three years?.

Yeah. They're making solid progress in the G-7 or the tight gas. It's not really shale, it's tight gas. If you look at their hydraulic fracturing setup today versus two years ago it more looks like a North American hydraulic factoring operation, and it used to with just a few trucks, so they've learned a lot their pad drilling as well.

So ENF, I would say if they - it's the U.S. then that question that there's 2 Tcf to 3 Tcf of tight gas in the basin, and I would say that's fantastic, what are the economics and lets develop it.

So they've tied in some hundreds of thousands cubic meters a day of this tight gas over the last few months, and for the first time in a long time they haven't taken our gas in the winter time.

So there is more gas, they think there is a lot more reserves, it will come down to economics, and they're getting those economics really attractive as they use pad drilling and better techniques for hydraulic fracturing.

So again this is not going to be from where we are today to two plan operation overnight, this is going to be a gradual ramp up, and what we've seen and what they've said is probably the most optimistic we've seen for since 2007.

So it's taken a heck of the long time, it's taken a heck of the lot of capital, but I think the outlook is quite optimistic at this point in time..

Okay. That's helpful. Thanks..

Thank you. [Operator Instructions] The following question is from Laurence Alexander of Jefferies. Please go ahead. I'm sorry. Mr. Alexander has disconnected from the queue. [Operator Instructions] There are no further questions registered at this time. I'd like to turn the meeting back over to Mr. Floren..

Hey. Thank you, operator. So our sales volumes of produced methanol are expected to increase in Q3 2015. At the same time, pricing is expected to be lower in both Asia and North America, as a result, we would expect our earnings in Q3 to be lower than in Q2. Thank you for your ongoing interest in our company, and have a good day..

Thank you. The conference has now ended. Please disconnect your lines at this time. We thank you for your participation..