Methanex Corporation

Ladies and gentlemen, thank you for standing by. Welcome to the Methanex Business Update. I would now like to turn the conference call over to Ms. Kim Campbell. Please go ahead, Ms. Campbell.

Good morning, everyone. Welcome to our Methanex Corporation Business Update conference call to discuss our decision to restart construction on our Geismar 3 project and to provide a business update. A news release announcing our decision was distributed earlier this morning and posted, along with presentation materials, on the Investor Relations page of our website at methanx.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 a stated outcome to differ materially from the actual outcome. 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. Please refer to the forward-looking information warning that is at the end of our news release from earlier today regarding Methanex Restart's construction on Geisman III project or slide 22 of our investor presentation that was also posted on our website earlier today. 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 quarters. For clarification, any references to revenue, EBITDA, adjusted EBITDA, cash flow, illustrative free cash flow, or income made in today's remarks reflect our 63.1% economic interest in the Atlas facility and our 50% economic interest in the Egypt facility. These items are non-GAAP measures that do not have any standardized meaning prescribed by GAAP and therefore unlikely to be comparable to similar measures presented by other companies. We report these non-GAAP measures 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 turn the call over to Methenyx's President and CEO, Mr. John Florin, for his comments and a question and answer period.

Thanks, Kim. Hello and thank you for joining us. Our news release and presentation posted earlier today provided an update on our business and capital allocation priorities. including our decision to restart construction on our Geismar 3 project. We have a few remarks that we'd like to share this morning and then we'll open up the call for your questions. I wanted to start by sharing our outlook for the methanol industry. Current methanol industry dynamics are favorable. Methanol prices have rebounded quickly over the last year supported by a healthy recovery in methanol demand, low global inventory levels, ongoing industry supply challenges, and a constructive energy price environment. Over the last few months, we completed an in-depth review to reassess our medium to long-term industry outlook, including our growth outlook for methanol demand following the sharp demand shock we saw in 2020, our outlook for new industry capacity additions, particularly in Iran and China, and how we expect new and existing methanol plants will operate over the coming years. Our conclusion from this detailed work is that the methanol industry outlook is positive. We believe that new industry supply, including our Geismar 3 plant, will be needed to meet growing methanol demand. Forecasts for methanol demand growth are strong, and we expect growth of approximately 16 million tons over the next five years. Healthy global GDP forecasts over the next few years support this outlook. In addition, a rising energy price environment and increasing interest in methanol as a lower emission fuel provide additional support for methanol demand growth. Regarding methanol industry supply, we foresee approximately 14 million tons of new capacity additions, including G3, mainly in the US, Iran, and China over the next few years and limited new project commitments beyond 2022. Based on our forecast for methanol demand and supply, Our view on methanol prices over the coming years is positive. Now turning to our financial position. Today we have a strong financial position to restart construction on G3 project and execute on our capital allocation priorities. We have a healthy balance, a cash balance with over $800 million in cash on our balance sheet at the end of Q1 2021. We have taken steps to deliver through a strategic partnership with Mitsui OSK with proceeds of $145 million and by repaying $173 million drawn on our G3 construction facility. And we continue to generate meaningful cash flow across a wide range of methanol prices and have an undrawn backup liquidity including our $600 million G3 construction facility and our $300 million revolving credit facility. Our strategic partnership with Mitsui OSK enables us to generate value from existing assets to further enhance our financial strength and flexibility without diluting the significant cash generation potential from the G3 project. With MOL, we will expand our 30-year methanol shipping relationship and benefit from MOL's broad shipping experience to enhance our waterfront shipping operations. We will also work with MOL to advance commercialization of methanol as a lower emission marine fuel. At current realized prices of approximately $375 per ton, we estimate that we have the potential to generate approximately $125 million in free cash flow before G3 CapEx every quarter. We intend to fund our remaining G3 capital costs with cash on hand and future cash flow. We expect to be able to fund the project without incurring incremental debt at methanol prices of approximately $275 per ton and above. Now turning to our G3 project. The timing is right to restart construction on Geismar III, which is a unique project with significant capital and operating cost advantages that enhance the project's returns. An abundant and low cost natural gas supply in the US underpins production for this project. In addition, we estimate that G3 will have one of the lowest CO2 emission intensity profiles in the industry. Ultimately, Geismar 3 will strengthen our asset portfolio and substantially improve our future cash generation capability. We believe that Geismar 3 will deliver significant long-term value to our shareholders. Based on the remaining capital cost for the project, we estimate the project's IRR to be approximately 20% to 28% at methanol prices between $350 to $400 per ton. This price range is in line with current third party industry publication long run methanol price forecasts. Our capital cost estimate for the project is $1.25 billion to $1.35 billion. We expect that approximately $435 million will be committed to the project to the end of Q3 2020 through the care and maintenance period. We expect approximately $800 to $900 million of remaining capital costs after resuming construction in October 2021. The remaining budget includes healthy allowances for both cost escalation and remaining risks on the project. We are confident in our ability to compete this project on time and on budget. We have substantially reduced the project execution risk profile of the project over the last 24 months. The key remaining risks for the project are construction labor and bulk material costs. Firstly, we're well positioned from a labor availability perspective ahead of other major capital projects in the U.S. Gulf Coast. We also benefit from our proven experience in the local area gained through our Geismar I and Geismar II projects. Secondly, we have secured prices for most of our bulk material costs, which reflect mainly piping and structural steel. We will confirm prices for our remaining bulk materials before the end of 2021, limiting our cost escalation exposure. We are confident in our ability to compete G3 on time and on budget, and we believe G3 will deliver significant long-term value to our shareholders. Now turning to our capital allocation priorities. Our capital allocation priorities remain the same. We use the cash that we generate to maintain our business pursue value accretive growth opportunities and continue our strong track record of returning excess cash to shareholders. Going forward, we will increase our emphasis on financial flexibility in three ways. We plan to hold more cash targeting a minimum of $300 million of cash on hand plus our remaining G3 capital costs during construction. We plan to target lower leverage and reduce our debt levels over time to a target of approximately three times Debt to EBITDA at ethanol prices between $275 and $300 per ton. And we will increase our weighting on flexible vehicles for distribution, such as share buybacks, combined with a sustainable dividend to return capital to shareholders. We announced that we reset our quarterly dividend to 12.5 cents per share. Over the coming quarters, as we progress with the project, we anticipate that we will have the ability to further deliver increased shareholder distribution at nothing all prices of approximately $325 per ton or higher. Geismar 3 is the only significant growth capital in our plans over the next few years. We expect that G3 will substantially increase our cash generation capability and support a significant increase in our future shareholder distribution potential. It is an exciting time for our company and we believe that the steps we are taking today will enable us to deliver meaningful long-term value to shareholders. We would now be happy to answer questions.

Thank you. Please press star 1. At this time, you can have a question. There will be a brief pause for the participants to register for questions. Thank you for your patience. Our first question is from Jacob Bout with CIBC. Please go ahead.

Good morning, John.

Hey, Jacob.

First question here is just on the revision in your capital costs lower from previous estimates. How does that square with what we're seeing as far as labor inflation and material cost inflation?

Okay. Hi, Jacob. This is Mike Hurst, Senior VP, Corporate Development. So just a little bit broader answer to that. We've done a lot over the period of time that we've been in care and maintenance to advanced activities that take risk out of the project. And so when you see the cost decrease, it's reflecting that. So we have allowances when we started at FIB and announced this project, and we hadn't completed all the engineering. At this point, 95% of the engineering is complete. So that takes away risk on perhaps scope being larger than you expected. We've got all the equipment on site. We've got most of our critical equipment on site over the levee. at FID, we would have been wondering, can vendors deliver on time? Will we be able to, when the equipment arrives on site, get it over the levee and onto our site? Will the river levels be at risk? So those risks being behind us allow us to have a lot more confidence in the cost going forward. And so when you see the reduced range that we have, that reflects the reduced risk profile on the project.

And then my second question here is just about What the impact on earnings will be from the sale of the minority state concern?

Hi Jacob, it's Ian Cameron, CFO. The proceeds of the transaction are approximately $145 million and that will all go to the equity line. There's a bit of an accounting complication around how it's reported, but it all gets recorded as equity.

Okay, and then the revenue stream. Sorry, the revenue stream associated with the 40% stake?

Yeah, so obviously there's an earning stream from waterfront shipping, and so our shareholder, our new shareholder will have a part of that, and I can't remember the exact number, I don't think we want to publicly disclose it, but there'll be some earnings that they'll get from the waterfront earnings.

Okay. Water of magnitude tens of millions?

I can't say that. We just don't want to disclose that, Jacob.

All right. I'll leave it there. Thank you.

Thank you. Our next question is from Mike with Barclays. Please go ahead.

Great, thanks, and good morning, guys. Good morning. I guess first, thanks for the update, and the in-depth slides are helpful. I guess, how should we think about the priorities for excess cash flow beyond G3? It sounds like, John, the near-term focus is maintaining a higher cash balance level, lower leverage levels. Should we think about debt pay down being the flywheel, or I guess just from an equity holder perspective, how should we think about the potential for returns of excess cash?

Yeah, beyond, you know, our maintenance capital and then the G3 growth, you know, we've just reset our dividend. So that'll be, you know, first use of excess cash is to maintain that dividend. And then we'll want to retain more flexibility and how we return cash to shareholders. So there's other vehicles we could consider, but we want to have more flexibility as we've seen, you know, three pretty large volatile demand shocks in the last 12, 13 years. as well we want to hold more cash in general on the balance sheet we've targeted around 300 million plus the whatever's left in the G3 project as we move forward here over the coming quarters and then we want to de-lever you know the next opportunity at this time is the bonds that are coming in 2024 you know we've looked at you know could we retire those earlier It doesn't make sense today based on how they're priced and the penalties we'd incur. But if those bonds became more attractive due to changes in the bond market, we could consider retiring those early. So those are the things we're looking at.

That's helpful. And then maybe on that line, John, obviously there's been a good amount of shareholders that have wanted or advocated for a more aggressive buyback or return of cash approach. especially where the shares are currently trading versus restarting G3 so I understand completely why you like G3 but curious how you and the board kind of weighed or thought about the relative advantages of that project maybe versus a more aggressive buyback or a return of cash approach.

Yeah we did a detailed analysis of that and our share price would have to be substantially lower than where it is today to you know have an equivalent return to the company so We're not anticipating our share price to go substantially lower than where it is today, so it made sense to complete G3.

Thank you.

Thank you. Our next question is from Ben Isaacson with Scotiabank. Please go ahead.

Thank you very much. John, I may have missed it, but I didn't see any talk about a potential strategic partner. Is that off the table now?

No, it's not off the table, Ben, but what I would say is, you know, the project gets more and more de-risked. We've raised additional liquidity from MOL. So, you know, it would have to be a pretty compelling situation for us to take on a partner at this time. To me, you know, what the deal we did with MOL is just like a partner as far as adding liquidity without giving away a third of a really great project. So we found a way to get additional liquidity without having to give away a portion of a great project. We're still talking to a number of firms and we'll continue those conversations. But as time goes by here, I think it's less and less likely that we'll secure a strategic partner at conditions that make sense for us. But we'll continue those talks.

Can you just remind me how the gas will work for G3? I see that the forward curve has moved up over the next few years. Are you going to be contracting that gas or is that going to be on a spot basis or some kind of mix?

Yeah, it's part of our... We take a North American portfolio gas strategy. So our Medicine Hat will be our three plants in Geismar. And we like to have most of our gas fixed as it is in Medicine Hat. We have hedges in place for Geismar 1 and 2, so for about 70%. of our gas for those two plants. And we'll plan to do the same for Geismar 3. We'll look to layer in hedges here as we go forward and complete the project.

And then just very last one. I've seen some MTO plants moving upstream into CTO and eliminating that merchant methanol need. And then on the flip side, we've seen China kind of cracking down on these CTOs. Can you just talk about that balance there between what China is doing environmentally and the MTO is looking to go upstream?

Yeah, that's happening in the inner part of China, you know, inner Mongolia, Shanxi province, where there's abundant coal. This is in our forecast. So the numbers I've given you about demand and supply include the backward integration of those methanol merchant plants that are going to CTO. Just directly, you know, especially on the coast of China, we continue to see further environmental restrictions on Thank you.

Please limit yourself to one question and one follow-up question. Our next question is from Lawrence Alexander with Jefferies. Please go ahead.

Good morning. This is Dan Lizzo on for Lawrence. Thanks for taking my question. We just want to know if you can put this agreement in perspective. If MOL's entire fleet ran on methanol, what would the demand be? And given that green methanol costs so much more than conventional methanol, is the signal here that you both intend to subsidize the use of green methanol or that after Geismar 3, the next methanix capacity should be renewable methanol to sell to the new JV.

Yeah, so MOL has around 800 ships, give or take. It's a very large shipping company, one of the largest in the world. An average ship, like a 45,000-ton vessel, on a year, if it's burning methanol all year long, it's about 12,000 tons. So you can do the math. I'm not really good at math off the top of my head, but it's a lot of methanol. I don't think we should be thinking about this as converting. Thank you very much. you know two million more dollars you get all of this flexibility including being able to burn methanol so that's how we should think about it going forward the likelihood of conversions on ocean going vessels I think is low but new builds for sure we're starting to see a lot of traction with Maersk and ProMan and others really interested in in going forward so you know I have always said this is a you know second half of the decade demand driver you know it takes about two years to build a ship and So, you know, we're seeing a lot of interest. It's what, 2021 mid? So we should be seeing, you know, quite a good demand mid-decade going to the end of the decade. As far as green methanol, I mean, we've looked at green methanol. We've been pioneers in green methanol. You know, we have an investment in an Iceland or a plant in Iceland for a long time. You know, the challenge with green methanol, the technology works, that the price, I mean, the cost of producing green methanol or even blue methanol if you do carbon capture and storage is significantly higher than the methanol from natural gas. We are making some green methanol in Geismar as well using renewable natural gas or bio-natural gas, whatever you want to call it, and selling that to some of our European customers, but these are very small quantities. and there's not a market out there today that's willing to pay the price that we would need in order to commercialize at a large scale a green methanol plant but that doesn't mean that won't change in the future so we are looking at different technologies and scanning all of the announcements and everything we see that's out there and today we haven't found anything that really allows us to be confident to spend significant capital and get a return. I mean, you know, you see forecast prices for methanol in the mid 300s to 400, you know, you'd need twice that or higher to, you know, to make sense for green methanol. So we're watching the space very closely. We're not afraid to invest in it, but I think it would be, you know, instead of Geismar 1.8 million, you know, a large investment in a green methanol plant would be 100,000 tons. So you'd need 18 of those to make up a Geismar. So the capital cost would be quite a lot higher.

That's really helpful. Thank you very much. Thank you.

Thank you. Our next question is from Nelson Ng with RBC Capital Markets. Please go ahead.

Great, thanks. Good morning, John. Just a quick one. In terms of G3, the risk profile has reduced and there's obviously more clarity on that project. but could you just touch on some of the key items that could still like impact the the budget and the schedule?

Hi Nelson, Mike Herz again. You know when we look at it at this point it's it looks like a construction project and we've got all the materials and equipment on site so quite confident as we go forward but the key risks that remain are really around construction labor on that front and I probably didn't answer the last question very directly but you know we see that that market is good for us it was good at FID we were ahead of other major capital projects in the area and today we remain ahead and maybe even more ahead that other projects have pushed their time schedules back so we don't see ourselves competing aggressively for for labor in this market we see that we uh you know should be able to work with the same contractors we worked with before with some of the same people we worked with before so that's a nice position to be in and we'll have to manage very carefully productivity and the project team spent a lot of time just making sure that that one risk productivity risk as you go and do the construction with millions of man hours to go is well managed so I feel like we're in a really good spot for that there's a bit of bulk materials that we still need to procure most of it's on site but you know steel and the like and when we look at that we've got you know most of it fixed and many more in the coming months, so we're pretty comfortable that there's very limited risk there as well.

We also have a very healthy contingency, as I mentioned in my remarks. We've had third party people look at this project from a readiness point of view and they comment that we have a very large contingency versus other projects at this stage. So we're being very conservative by keeping that contingency in the estimates. you know we're also very positive with our current construction people that we've used for G1 and G2 and they're telling us labor is available and they won't be a problem so we'll see how we do but we're ahead of the curve and there's labor available and well now it's a construction project as Mike said.

Okay thanks. Then a follow-up question is just in terms of return of capital to shareholders. Can you just talk about your decision to raise the dividend versus share buybacks? Do you feel that the dividend needs to be at a certain level before you do share buybacks?

We were very disappointed last year to have to cut the dividend substantially. I never thought we'd have to do that, but here we were with a tough decision. You know, we didn't know how the world was going to turn out at that time. It was pretty uncertain and demand had fallen off a cliff, etc. And pricing, I think, was below 200 in China. So it was a pretty tough environment when we made that decision. You know, fixed dividends always been part of our distribution strategy. You know, we had three pillars to it, you know, meaningful, growing, sustainable. Obviously, our old dividend, I guess, was not sustainable because we had to cut it. I mentioned we've seen three pretty big volatile events around the financial crisis, the oil collapse in 16 and the COVID-19. So that's three big events in a very short period of time, 12, 13 years, which has led to a lot of volatility on methanol pricing and therefore our cash generation ability. So when we looked at it, we want to have a fixed dividend. We want to return cash to shareholders every quarter. So we decided to increase it to 50 cents a share. And we believe that's sustainable with even the volatility that we've experienced in the last 12, 13 years. And it kind of has a 1.5% yield based on today's share price. So I don't think we're going to get a lot more interest in our stock if we're at a 4% yield versus a 1.5% yield. And you know we have flexibility to look at it as we de-risk G3 further as we continue the construction and get more and more comfortable with the completion and the budget range that we put out there so yeah I think you know overall we want to remain more flexible in the future than we have been in the past with our distribution of cash.

Okay thanks John I'll leave it there.

Thank you.

Thank you. Our next question is from Joel Jackson with BMO Capital Markets. Please go ahead.

Hi, this is Brie O'Murphy. I'm for Joel. Thanks for taking my question. Just following up on that last question you talked about in the release, the potential to increase shareholder distribution during G3 construction if methamyl prices sustain above $325 a ton. Considering, I guess, the large likely CapEx spend in 2022, is this commentary more focused on

No, I wouldn't say that. I think we're generating about $125, $150 million a quarter now at current prices. I think at above $325, our first priority will be to make sure we keep enough cash on the balance sheet around $300 plus to complete G3. That's the first priority. If we do have delivering opportunities, I mentioned the 2024 bonds, they don't make sense today. But if that was to change, we take a look at that as well. And we'd have room to do buybacks as well. So I think at, you know, 325 and above, you shouldn't be thinking that's a 2023 story.

Okay, thanks. And then just I guess how concerned are you on the gas issues at Titan and New Zealand and how did that play a part in your decision to restart G3?

Yeah probably won't comment on those because we're really close to quarter end here and certainly you know leadership in this industry is very important to us and generates a lot of value for our company so you know we think of leadership not specific assets when we think of how we maintain and grow our leadership. Our goal is to grow in line with the market. That's still our goal. And I'll comment more about Titan in New Zealand in 10 days from now when we have our second quarter call.

Okay, thank you. Thank you. Our next question is from Eric Petrie with Citi. Please go ahead.

Hey, good morning, John. Good morning. In your IRR calculation, what is your embedded cost of freight to Asia? And I know WFS added a dual-fueled ship at the end of last year. Would you have to add any more ships to transport that methanol to Asia?

Hi, it's Vanessa James, SVP Global Marketing. So, you know, we have an embedded freight rate in the calculation around, you could call it $70, which is above where we see the market today. So we built, again, conservatism into how we look at moving that product to Asia. and I think your second question was around would we need to add vessels for G3? We're always in a fleet renewal program. We have eight vessels being delivered over the next two years as part of fleet renewal and all those vessels will be dual fuel. So I think it's fair to say we'll continue to look at our vessel program as we build to G3 and we'll continue to renew that fleet.

Yeah, with the loss of New Zealand, the loss of Titan and, you know, some less production in Chile, we, you know, we need a few less ships for those routes. So we run our shipping as a global industry, you know, basis and we're always looking, like Vanessa said, to renew with our partnership with MOL and, you know, it creates other opportunities that they may have, you know, some idle or excess capacity that we could, look at as well. So I think they got 800 ships. I know they're not all chemical tankers, but still it gives you a tremendous amount of flexibility when you've got a partner like that to think about maybe different ways of organizing our shipping.

Great, helpful. And then on slide 10, the China capacity additions of the 6.6 million tons, is that gross or net and are you expecting closures in that number of higher cost molar plants? and then what's the upside to your 14 million tons of estimated committed industry capacity additions? Is there a band that we should be thinking of compared to the 16 million tons of demand growth over the same period?

Hi, it's Vanessa James again. So within that number within China that includes the two backward integrated MTO plants within that 6 million. So that's been well foreshadowed and half of that number. and there's another coal-based plant that's been constructed which ultimately we'll see as being a replacement for an existing plant. So we have seen that's a gross number so that's capacity additions. We know China over time lower operating rates overall and I think as we go forward expectation is probably somewhere between zero to two million tons consistent with what we've seen historically and and many others. I think that's going to weigh more heavily on future additions within the methanol chemical space in China in particular.

Outside China, we have a pretty good view on what's being built. Like I said, it takes about five years to build a project. I guess one of the benefits of the COVID-19 downturn was projects that were being considered were obviously shelved. quite significantly as we've seen in the Northwest Innovation for one example in Washington. So, you know, even if you made an FID today on a new plant, it's, you know, probably going to be four or five years from now. So, pretty good timing. I think when G3 comes up, the market should be, you know, will need the product and should be a great supply-demand balance to lead to good pricing. So, we'll see. It's hard to predict next year, never mind two and a half years from now, but... based on our detailed analysis of supply demand, we're pretty confident we'll be in a good environment on pricing as G3 comes up.

Thank you, John.

Thank you.

Thank you. Our next question is from Matthew Blair with Tudor Pickering Holt & Company. Please go ahead.

Hey, good morning, John. Could you talk about the cadence of the 800 to 900 million remaining spends Looks like there's going to be about $50 million in Q4-21. And then what would be the split between 2022 and 2023?

Yeah, so when we're looking at 2021, it's about $100 million in Q4. 2022, about $410 million, and then 2023, about $355 million.

Great, thanks. And then I think you mentioned that G3 would have the lowest CO2 emissions in the industry. Could you talk about how you're able to do that? And is that something that you'll be able to monetize with customers or are we still a little ways away from that?

Okay, Mike Herz again here. Thanks. It's a good question. You know, we really like the positioning of G3 in terms of the carbon curve. You know, it's one of the lowest, it will be one of the lowest emissions in the world. And the way that happens, you know, we don't, we take the purge stream from G1 and G2, so hydrogen coming across. We have an ATR, very similar to what we did with our Chili Port plant. And when you do that, that has a much lower CO2 emission intensity than what you traditionally see, which is older SMR plants, steam methane reforming plants that have been traditionally around on gas-based methanol. and you see something that is five to seven times less than your typical plant producing methanol in China from say coal.

Great, thank you.

But to answer your question, there's no market for customers that are willing to pay specifically higher for G3 molecules at this time.

Okay, thanks.

Thank you. Our next question is from John Roberts with UBS. Please go ahead.

Great, thank you. If I look at the $145 million that MOL is paying and divide that by 40%, is it fair to say waterfront shipping is capitalized at about $360 million? And what actually is in there?

Sorry, what's in the enterprise value for waterfront?

Yeah, obviously there's no ships in there, right? It's a small number.

So Waterfront provides shipping service to Methanex and also deploys ships for backhaul in shipping markets. So the revenue stream from Methanex, the revenue that's derived from the activities in clean petroleum product shipping is the revenue that's within Waterfront and your number is ballpark appropriate. plus some debt.

And what do you think is the difference between the outlook at IHS and MMSA? Is it primarily a difference in energy forecast that they're using or do they have supply-demand differences?

I think you have to ask them, John. I don't speak for ISS or MMSA. Okay.

Thank you.

Thank you. Our next question is from Steve Hansen with Raymond James. Please go ahead.

John, to the extent that you can, can you speak to what Mall really aims to get out of this new investment in Waterfront? I can certainly understand your motivation, but given that the day-to-day operations aren't really set to change here, I'm curious what their primary objectives are near term and perhaps what the longer term objective is even. Are they looking for a complete ownership of the group over time? I'm just trying to understand what they're getting for $145 million here.

No, we're not looking to sell waterfront shipping. We want to maintain it as part of our integrated logistics. So I think it's very important that we maintain that. And we have not given up any of our flexibility, any of our ability to send the ships wherever. So we have exactly the same conditions as pre-ownership by MOL. I think MOL is a shipping company and We're a very attractive customer for them and we've been doing business with them for 30 years and they like the methanol business, they like methonex and they saw this as an opportunity to enhance their relationship with the world's largest producer and shipper of methanol and I wouldn't see this as a creeping takeover at all. I think we're happy with the 40-60 split and for both of us to cooperate on methanol and others are thinking about. We can't get there tomorrow, but we certainly can get there over time. So this is, you know, they're expanding their business all the time and this was just a nice bolt on for them and to get to work with the largest producer and shipper of methanol. So it makes a lot of sense for everybody in this transaction and that's usually the best types of transactions to conclude.

No, fair enough. I appreciate that. And do you think just on the marine opportunity, I mean, Many of us on the line here have been following this for the better part of five, six, or seven years even, and it always feels like it's just around the corner, but do you think there's been a tipping point here or some sort of collective momentum that's generated in the last six months? You've mentioned a few of the key catalysts already, but what do you think is driving that momentum in the last couple of months around some of these key orders and commitments? Is it the emissions side that's really driving it now at this point, or how do you view that?

Well, we've never said it's just around the corner, so I don't know where that's coming from. We've always been clear it's a mid to late decade demand driver. I've been very clear with that. You know, when we started the first Stena engine way back when, seems like a long time ago now, you know, we were kind of laughed at. They're never going to work. What are you doing? How is that ever going to make sense? And then we bought our first two vessels with this flexible fuel system and Again, we're probably poo-pooed. It's all going to be LNG. It's going to be LNG. What are you guys doing? Methanol is not going to be the... We had a different view. We had a view that methanol was readily available around the world, east of the bunker, which we've proven recently in Rotterdam, and a good substitute for heavy fuel oil. It could work, and we've proven that. The shipping industry looks at all the different options they have to meet today's regulations and future regulations, and LNG is pretty tough. LNG is hard to handle. It's not readily available. It's, you know, storage is difficult. So I think the realities of LNG have sunk in as shipping companies have looked at it. And, you know, they're looking at methadone and saying, yeah, there is a pathway to green. I think that's, you know, for them where they want to end up some years from now. So it works. It's available. It's cost effective. It lowers emissions today. and there's a pathway to zero. So, you know, that's why all the interest and I think shipping companies were looking to see if this worked and we proved it worked and now others are following on. So I still see it as a demand driver in the second half of this decade and going into the next decade. So we'll see.

That's great. And just squeeze one last one, if I may. It's just around the cadence on the de-bottlenecking and the existing guys. How does that interlace with the G3 restart?

Yeah, I'll comment on the de-bottlenecking at the quarter end. It's too close to quarter end to make any comments around that, but we'll have some news in a week, Steve.

Okay, very good. Thanks for the time.

Thank you. There are no further questions registered at this time. I would like to turn the meeting back over to Mr. Florence.

Thank you. Our outlook for methanol industry is positive and we have a strong financial position to restart construction on our Geismar 3 project and execute on our capital allocation priorities. Geismar 3 will strengthen our asset portfolio, substantially improve our future cash generation capability and support a significant increase in our future shareholder distribution potential. Thank you for joining us today and we'll speak with you again on July 29th to discuss our Q2 2021 financial results. Thank you for the interest in our company.