Methanex Inks Nat Gas Settlement - Analyst Blog

Methanex Corporation MEOH announced that its wholly-owned subsidiary – Methanex Chile SA – has inked a settlement deal with Total Austral SA of Argentina in regards to Total's natural gas delivery obligations under a long-term natural gas supply agreement signed between the two companies.

Per the deal, Total will make a lump sum payment of $42 million to Methanex to end the agreement and settle all potential legal disputes under it. Methanex believes that the settlement is in the best interest of the shareholders.

Methanex aims to focus its efforts in Chile on realizing full value from its remaining assets including non-performing natural gas contracts. Methanex remains optimistic of operating in Chile supported by gas supplies from both Chile and Argentina.

Recently, Methanex released its first-quarter 2014 results. The company saw its profit zoom in the quarter as higher methanol pricing and increased production resulting from its capacity expansion measures boosted the bottom line. However, the company's shares dropped as its earnings missed expectations.

Methanex posted earnings of $1.50 per share in the quarter, a more than two-fold surge from 63 cents per share logged a year-ago. Profit jumped 142% to $145 million from $60 million in the prior year. Earnings per share, however, fell well short of the Zacks Consensus Estimates of $1.84.

Revenues shot up roughly 48% year over year to $968 million in the reported quarter on better pricing and higher methanol sales volumes, backed by healthy demand. However, it missed the Zacks Consensus Estimate of $1,003 million.

Methanex is a Zacks Rank #3 (Hold) stock.

Other chemical stocks worth considering include Compass Minerals International Inc. CMP, Eastman Chemical Co. EMN, and L'Air Liquide SA (AIQUY). While Compass Minerals International carries a Zacks Rank #1 (Strong Buy), Eastman Chemical and L'Air Liquide retain a Zacks Rank #2 (Buy).