What changed in this filing

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Item 1. Financial Statements

2021-05-05 compared with 2020-11-04 · 127 added, 174 removed, 247 unchanged (55% of the section changed)

2 unchanged sentences

CONSOLIDATED BALANCE SHEETS

September 30,

2021 December 31,

(in thousands of dollars, except unit amounts)

2 unchanged sentences

Receivable under the Investment Management Agreement—Westlake Chemical Corporation ("Westlake")

187,239 123,228

Accounts receivable, net—Westlake 50,969 108,028

Accounts receivable, net—third parties 19,702 11,029

Inventories 3,171 3,474

Prepaid expenses and other current assets 217 392

1 unchanged sentence

Property, plant and equipment, net 1,039,261 1,050,677

Goodwill 5,814 5,814

Deferred charges and other assets, net 33,472 36,692

Total assets $ 1,357,134 $ 1,356,488

Current liabilities

8 unchanged sentences

Commitments and contingencies (Note 12)

Common unitholders—publicly and privately held (21,072,315 and 21,072,315 units issued

and outstanding at September 30, 2020 and December 31, 2019, respectively)

Common unitholder—Westlake (14,122,230 and 14,122,230 units issued and outstanding at

September 30, 2020 and December 31, 2019, respectively)

Common unitholders—publicly and privately held ( 21,076,673 and 21,076,673 units

issued and outstanding at March 31, 2021 and December 31, 2020, respectively)

470,834 471,701

Common unitholder—Westlake ( 14,122,230 and 14,122,230 units issued and outstanding

at March 31, 2021 and December 31, 2020, respectively)

47,690 48,270

General partner—Westlake ( 242,572 ) ( 242,572 )

1 unchanged sentence

Noncontrolling interest in Westlake Chemical OpCo LP ("OpCo") 637,156 637,738

Total equity 913,108 915,137

Total liabilities and equity $ 1,357,134 $ 1,356,488

2 unchanged sentences

CONSOLIDATED STATEMENTS OF OPERATIONS

Three Months Ended September 30,

Nine Months Ended September 30,

Three Months Ended March 31,

(in thousands of dollars, except unit amounts and per unit data)

1 unchanged sentence

Net co-product, ethylene and other sales—third parties

48,404 35,721

Total net sales 268,207 250,549

Cost of sales 180,508 147,001

Gross profit 87,699 103,548

Selling, general and administrative expenses 8,673 6,196

4 unchanged sentences

Income before income taxes 76,797 93,987

Income tax provision (benefit)

Income tax provision 175 217

Net income 76,622 93,770

Net income attributable to noncontrolling interest in OpCo

61,476 76,023

Net income attributable to Westlake Chemical Partners LP and limited partners' interest in net income

$ 15,146 $ 17,747

Net income per limited partner unit attributable to Westlake Chemical Partners LP per limited partner unit (basic and diluted)

Common units $ 0.43 $ 0.50

Weighted average limited partner units outstanding (basic and diluted)

8 unchanged sentences

Noncontrolling

in OpCo Total

(in thousands of dollars)

Balance at December 31, 2020 $ 471,701 $ 48,270 $ ( 242,572 ) $ 637,738 $ 915,137

Net income 9,069 6,077 — 61,476 76,622

Quarterly distribution to unitholders ( 9,936 ) ( 6,657 ) — — ( 16,593 )

1 unchanged sentence

Balance at March 31, 2021 $ 470,834 $ 47,690 $ ( 242,572 ) $ 637,156 $ 913,108

Quarterly distribution to unitholders

Quarterly distribution to noncontrolling interest retained in OpCo by Westlake

Balance at June 30, 2020

Quarterly distribution to unitholders

Quarterly distribution to noncontrolling interest retained in OpCo by Westlake

Balance at September 30, 2020

The accompanying notes are an integral part of the consolidated financial statements.

Common Unitholders—

Public and Privately Held

Common Unitholder—

Noncontrolling

Public and Privately Held Common Unitholder—

Westlake General

Westlake Noncontrolling

in OpCo Total

(in thousands of dollars)

Balance at December 31, 2019 $ 471,736 $ 48,350 $ ( 242,572 ) $ 674,621 $ 952,135

Net proceeds from private placement of common units

Net income 10,626 7,121 — 76,023 93,770

Quarterly distribution to unitholders ( 9,934 ) ( 6,657 ) — — ( 16,591 )

1 unchanged sentence

Balance at March 31, 2020 $ 472,428 $ 48,814 $ ( 242,572 ) $ 671,421 $ 950,091

Offering costs related to private placement of common units

Quarterly distributions to unitholders

Quarterly distribution to noncontrolling interest retained in OpCo by Westlake

Balance at June 30, 2019

Offering costs related to private placement of common units

Quarterly distributions to unitholders

Quarterly distribution to noncontrolling interest retained in OpCo by Westlake

Balance at September 30, 2019

The accompanying notes are an integral part of the consolidated financial statements.

1 unchanged sentence

CONSOLIDATED STATEMENTS OF CASH FLOWS

Nine Months Ended September 30,

Three Months Ended March 31,

(in thousands of dollars)

Cash flows from operating activities

Net income $ 76,622 $ 93,770

Adjustments to reconcile net income to net cash provided by operating activities

5 unchanged sentences

Net accounts receivable—Westlake 60,978 ( 8,573 )

Inventories 303 484

Prepaid expenses and other current assets 175 266

1 unchanged sentence

Accrued and other liabilities ( 699 ) 1,252

Other, net ( 1,606 ) ( 208 )

Net cash provided by operating activities 155,408 110,961

5 unchanged sentences

Cash flows from financing activities

Net proceeds from private placement of common units

Proceeds from debt payable to Westlake

Repayment of debt payable to Westlake

Quarterly distributions to noncontrolling interest retained in OpCo by Westlake ( 62,058 ) ( 79,223 )

1 unchanged sentence

Net cash used for financing activities ( 78,651 ) ( 95,814 )

Net increase (decrease) in cash and cash equivalents

Net increase in cash and cash equivalents 135 4,158

Cash and cash equivalents at beginning of period 17,154 19,923

9 unchanged sentences

In connection with the IPO, the Partnership acquired a 10.6 % limited partner interest in Westlake Chemical OpCo LP ("OpCo") and a 100 % interest in Westlake Chemical OpCo GP LLC ("OpCo GP"), which is the general partner of OpCo.

OpCo owns three ethylene production facilities and one common carrier ethylene pipeline.

OpCo owns three ethylene production facilities and one common carrier ethylene pipeline (collectively, the "Contributed Assets" ) .

Since the IPO, the Partnership has periodically purchased additional limited partner interest in OpCo.

5 unchanged sentences

GAAP") have not been included.

These interim consolidated financial statements should be read in conjunction with the consolidated financial statements and notes thereto of the Partnership included in the annual report on Form 10-K for the fiscal year ended December 31, 2019 (the " 2019 Form 10-K"), filed with the SEC on February 28, 2020 .

These financial statements have been prepared in conformity with the accounting principles and practices as disclosed in the notes to the consolidated financial statements of the Partnership for the fiscal year ended December 31, 2019 with the exceptions of those accounting standards adopted in 2020 as discussed in Note 1 .

These interim consolidated financial statements should be read in conjunction with the consolidated financial statements and notes thereto of the Partnership included in the annual report on Form 10-K for the fiscal year ended December 31, 2020 (the "2020 Form 10-K"), filed with the SEC on March 2, 2021.

References to "Westlake" refer collectively to Westlake Chemical Corporation and its subsidiaries, other than the Partnership, OpCo and OpCo GP.

5 unchanged sentences

Westlake's retained interest of 77.2 % is recorded as noncontrolling interest in the Partnership's consolidated financial statements.

In the opinion of the Partnership's management, the accompanying unaudited consolidated interim financial statements reflect all adjustments (consisting only of normal recurring adjustments) that are necessary for a fair statement of the Partnership's financial position as of September 30, 2020 , its results of operations for the three and nine months ended September 30, 2020 and 2019 and the changes in its cash position for the nine months ended September 30, 2020 and 2019 .

In the opinion of the Partnership's management, the accompanying unaudited consolidated interim financial statements reflect all adjustments (consisting only of normal recurring adjustments) that are necessary for a fair statement of the Partnership's financial position as of March 31, 2021, its results of operations for the three months ended March 31, 2021 and 2020 and the changes in its cash position for the three months ended March 31, 2021 and 2020.

Results of operations and changes in cash position for the interim periods presented are not necessarily indicative of the results that will be realized for the fiscal year ending December 31, 2021 or any other interim period.

5 unchanged sentences

(in thousands of dollars, except unit amounts and per unit data)

On March 11, 2020, the World Health Organization declared the ongoing coronavirus (COVID-19) outbreak a pandemic and recommended containment and mitigation measures worldwide.

The pandemic has resulted in widespread adverse impacts on the global economy and on our employees, customers and suppliers.

The Partnership did not experience significant disruptions to its business operations in the nine months ended September 30, 2020 and does not expect significant disruptions to its business operations resulting from COVID-19.

However, the impact that COVID-19 will have on the Partnership's financial condition, results of operations and cash flows cannot be estimated with certainty at this time as it will depend on future developments, including, among others, the ultimate duration, geographic spread and severity of the virus, the actions to contain the virus, the consequences of governmental and other measures designed to prevent the spread of the virus, the development of effective treatments, the impact on the operation of OpCo facilities, Westlake, customers, suppliers and other third parties and the timing and extent to which normal economic and operating conditions resume.

The COVID pandemic resulted in widespread adverse impacts on the global economy in 2020.

The Partnership has not experienced significant disruptions to its business operations in 2020 or during the three months ended March 31, 2021 and does not expect significant disruptions to its business operations resulting from COVID-19.

However, the impact that COVID-19 will have on the Partnership's financial condition, results of operations and cash flows cannot be estimated with certainty at this time as it will depend on future developments, including, among others, the timing and logistics with respect to the distribution of vaccines (in the United States, Europe and globally) and the efficacy of the available vaccines (including with respect to the more recent variants of COVID-19) and other treatments, the ultimate duration of the pandemic, geographic spread and severity of the virus, the consequences of governmental and other measures designed to prevent the spread of the virus, the impact on the operation of OpCo's facilities, Westlake, customers, suppliers and other third parties and the timing and extent to which normal economic and operating conditions resume.

Recent Accounting Pronouncements

3 unchanged sentences

The Partnership is in the process of evaluating the impact that the new accounting guidance will have on the Partnership's consolidated financial position, results of operations and cash flows.

Recently Adopted Accounting Standards

Credit Losses (ASU No.

In June 2016, the FASB issued an accounting standards update providing new guidance for the accounting for credit losses on loans and other financial instruments.

The new guidance introduces an approach based on expected losses to estimate credit losses on trade receivables and certain types of financial instruments.

The standard also modifies the impairment model for available-for-sale debt securities and provides for a simplified accounting model for purchased financial assets with credit deterioration since their origination.

The accounting standard became effective for reporting periods beginning after December 15, 2019 and did not have a material impact on the Partnership's consolidated financial position, results of operations and cash flows.

Fair Value Measurement (ASU No.

In August 2018, the FASB issued an accounting standards update to modify the disclosure requirements on fair value measurements.

The amendments became effective for reporting periods beginning after December 15, 2019.

An entity is permitted to early adopt any removed or modified disclosures and delay adoption of the additional disclosures until the effective date.

Most amendments should be applied retrospectively but certain amendments should be applied prospectively.

The Partnership adopted this accounting standard effective January 1, 2020 and the adoption did not have a material impact on the Partnership's consolidated financial position, results of operations and cash flows.

Accounts Receivable—Third Parties

Accounts receivable—third parties consist of the following:

September 30,

2021 December 31,

Trade customers $ 20,052 $ 11,344

Allowance for credit losses ( 386 ) ( 315 )

19,666 11,029

Other receivables 36 —

Accounts receivable, net—third parties $ 19,702 $ 11,029

WESTLAKE CHEMICAL PARTNERS LP

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS — Continued

(in thousands of dollars, except unit amounts and per unit data)

Inventories consist of the following:

September 30,

2021 December 31,

Finished products $ 2,749 $ 3,157

Feedstock, additives and chemicals 422 317

Inventories $ 3,171 $ 3,474

Property, Plant and Equipment

Depreciation expense on property, plant and equipment of $ 22,913 and $ 22,313 is included in cost of sales in the consolidated statements of operations for the three months ended September 30, 2020 and 2019 , respectively.

Depreciation expense on property, plant and equipment of $ 68,380 and $ 66,754 is included in cost of sales in the consolidated statements of operations for the nine months ended September 30, 2020 and 2019 , respectively.

Depreciation expense on property, plant and equipment of $ 22,802 and $ 22,753 is included in cost of sales in the consolidated statements of operations for the three months ended March 31, 2021 and 2020, respectively.

Deferred Charges and Other Assets

Amortization expense on other assets of $ 3,010 and $ 4,368 is included in costs of sales in the consolidated statements of operations for the three months ended September 30, 2020 and 2019 , respectively.

Amortization expense on other assets of $ 9,387 and $ 13,628 is included in costs of sales in the consolidated statements of operations for the nine months ended September 30, 2020 and 2019 , respectively.

Amortization expense on other assets of $ 4,740 and $ 3,278 is included in costs of sales in the consolidated statements of operations for the three months ended March 31, 2021 and 2020, respectively.

WESTLAKE CHEMICAL PARTNERS LP

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS — Continued

(in thousands of dollars, except unit amounts and per unit data)

Distributions and Net Income Per Limited Partner Unit

On October 30, 2020 , the board of directors of Westlake Chemical Partners GP LLC ("Westlake GP"), the Partnership's general partner, declared a quarterly cash distribution for the three months ended September 30, 2020 of $ 0.4714 per unit.

This distribution is payable on November 24, 2020 to the unitholders of record as of November 9, 2020 .

On May 3, 2021, the board of directors of Westlake Chemical Partners GP LLC ("Westlake GP"), the Partnership's general partner, declared a quarterly cash distribution for the three months ended March 31, 2021 of $ 0.4714 per unit.

This distribution is payable on May 27, 2021 to unitholders of record as of May 13, 2021.

Distributions are declared subsequent to quarter end;

therefore, the table below represents total cash distributions declared from earnings of the related periods pertaining to such distributions.

Three Months Ended September 30,

Nine Months Ended September 30,

Three Months Ended March 31,

Net income attributable to the Partnership $ 15,146 $ 17,747

Limited partners' distribution declared on common units

16,593 16,591

Net income in excess of distribution (distribution in excess of net income)

$ ( 1,447 ) $ 1,156

Net income per unit applicable to common limited partner units is computed by dividing the respective limited partners' interest in net income by the weighted-average number of common units outstanding for the period.

4 unchanged sentences

Basic and diluted net income per unit is the same because the Partnership does not have any potentially dilutive units outstanding for the periods presented.

WESTLAKE CHEMICAL PARTNERS LP

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS — Continued

(in thousands of dollars, except unit amounts and per unit data)

Three Months Ended September 30, 2020

Limited Partners' Common Units

Incentive Distribution Rights

Net income attributable to the Partnership:

Net income in excess of distribution

Weighted average units outstanding:

Basic and diluted

Net income per limited partner unit:

Basic and diluted

Three Months Ended September 30, 2019

Limited Partners' Common Units

Incentive Distribution Rights

Three Months Ended March 31, 2021

Limited Partners' Common Units Incentive Distribution Rights Total

Net income attributable to the Partnership:

Distribution $ 16,593 $ — $ 16,593

Distribution in excess of net income ( 1,447 ) — ( 1,447 )

Net income $ 15,146 $ — $ 15,146

Weighted average units outstanding:

2 unchanged sentences

Basic and diluted $ 0.43

Nine Months Ended September 30, 2020

Limited Partners' Common Units

Incentive Distribution Rights

Three Months Ended March 31, 2020

Limited Partners' Common Units Incentive Distribution Rights Total

Net income attributable to the Partnership:

Distribution $ 16,591 $ — $ 16,591

Net income in excess of distribution 1,156 — 1,156

Net income $ 17,747 $ — $ 17,747

Weighted average units outstanding:

5 unchanged sentences

(in thousands of dollars, except unit amounts and per unit data)

Nine Months Ended September 30, 2019

Limited Partners' Common Units

Incentive Distribution Rights

Net income attributable to the Partnership:

Distribution in excess of net income

Weighted average units outstanding:

Basic and diluted

Net income per limited partner unit:

Basic and diluted

The amended Partnership Agreement provides that the Partnership will distribute cash each quarter to all the unitholders, pro rata, until each unit has received a distribution of $ 1.2938 .

1 unchanged sentence

Marginal Percentage Interest in Distributions

Total Quarterly Distribution Per Unit

Total Quarterly Distribution Per Unit Unitholders IDR Holders

Above $ 1.2938 up to $ 1.4063

85.0 % 15.0 %

Above $ 1.4063 up to $ 1.6875

75.0 % 25.0 %

Above $ 1.6875

The Partnership's distribution for the three months ended September 30, 2020 did not exceed the $ 1.2938 per unit threshold, and, as a result, no distribution was made with respect to the Partnership's incentive distribution rights to Westlake, as the holder of the Partnership's incentive distribution rights.

50.0 % 50.0 %

The Partnership's distribution for the three months ended March 31, 2021 did not exceed the $ 1.2938 per unit threshold, and, as a result, no distribution was made with respect to the Partnership's incentive distribution rights to Westlake, as the holder of the Partnership's incentive distribution rights.

Distribution Per Common Unit

Distributions per common unit for the three and nine months ended September 30, 2020 and 2019 were as follows:

Three Months Ended September 30,

Nine Months Ended September 30,

Distributions per common unit for the three months ended March 31, 2021 and 2020 were as follows:

Three Months Ended March 31,

Distributions per common unit $ 0.4714 $ 0.4714

Partners' Equity

On October 4, 2018, the Partnership and Westlake GP, the general partner of the Partnership, entered into an Equity Distribution Agreement with UBS Securities LLC, Barclays Capital Inc., Citigroup Global Markets Inc., Deutsche Bank Securities Inc., RBC Capital Markets, LLC, Merrill Lynch, Pierce, Fenner & Smith Incorporated and Wells Fargo Securities, LLC to offer and sell the Partnership's common units, from time to time, up to an aggregate offering amount of $ 50,000 .

On October 4, 2018, the Partnership and Westlake Chemical Partners GP LLC, the general partner of the Partnership, entered into an Equity Distribution Agreement with UBS Securities LLC, Barclays Capital Inc., Citigroup Global Markets Inc., Deutsche Bank Securities Inc., RBC Capital Markets, LLC, Merrill Lynch, Pierce, Fenner & Smith Incorporated and Wells Fargo Securities, LLC to offer and sell the Partnership's common units, from time to time, up to an aggregate offering amount of $ 50,000 .

The Equity Distribution Agreement was amended on February 28, 2020 to reference a new shelf registration for utilization under this agreement.

No common units were issued under this program as of September 30, 2020 .

No common units were issued under this program as of March 31, 2021.

On March 29, 2019, the Partnership completed the issuance and sale of 2,940,818 common units at a price of $ 21.40 per unit through a private placement.

Net proceeds to the Partnership from the sale of the units were approximately $ 62,934 .

TTWF LP, Westlake's principal stockholder and a related party, acquired 1,401,869 common units out of 2,940,818 common units issued in the private placement.

WESTLAKE CHEMICAL PARTNERS LP

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS — Continued

(in thousands of dollars, except unit amounts and per unit data)

Related Party Transactions

5 unchanged sentences

Sales to related parties were as follows:

Three Months Ended September 30,

Nine Months Ended September 30,

Three Months Ended March 31,

Net sales—Westlake $ 219,803 $ 214,828

During the third quarter of 2020, the Lake Charles Petro 1 and Petro 2 facilities were impacted by Hurricane Laura, which resulted in a force majeure event under the Ethylene Sales Agreement.

As a result of the force majeure event, the Partnership recognized a buyer deficiency fee of $ 41,329 as a component of net sales in the quarter ended September 30, 2020, representing fixed margin and unavoided operating and maintenance capital expenditures and maintenance expenses per pound of volume committed by Westlake during the force majeure event.

Payment for the buyer deficiency fee is scheduled to be received by the Partnership after the conclusion of the year.

WESTLAKE CHEMICAL PARTNERS LP

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS — Continued

(in thousands of dollars, except unit amounts and per unit data)

During February and March 2021, due to the severe winter storm, OpCo's ethylene production facilities in the region experienced disruptions to their operations, resulting in lost production and additional maintenance and other costs.

OpCo declared force majeure under the Ethylene Supply Agreement.

As a result of the force majeure, the Partnership recognized a buyer deficiency fee of $ 5,500 in the three months ended March 31, 2021, as a component of net sales, representing fixed margin and unavoided operating and maintenance capital expenditures and maintenance expenses during the force majeure events.

The buyer deficiency is an estimate based on OpCo's anticipated 2021 ethylene production.

Additionally, under the Ethylene Sales Agreement, if production costs billed to Westlake on an annual basis are less than 95% of the actual production costs incurred by OpCo during the period, OpCo is entitled to recover the shortfall in the subsequent year.

During the three months ended March 31, 2021, based on the additional costs incurred during the force majeure events, the Partnership recognized a shortfall of $ 4,178 as a component of net sales.

During 2020, the Lake Charles Petro 1 and Petro 2 facilities were impacted by Hurricanes Laura and Delta, which resulted in force majeure events under the Ethylene Sales Agreement.

As a result of the force majeure events, the Partnership recognized a buyer deficiency fee of $ 69,555 as a component of net sales in 2020.

Payment for the buyer deficiency fee was received by the Partnership in January 2021.

Cost of Sales from Related Parties

1 unchanged sentence

Charges from related parties in cost of sales were as follows:

Three Months Ended September 30,

Nine Months Ended September 30,

Three Months Ended March 31,

Feedstock purchased from Westlake and included in cost of sales

$ 82,116 $ 59,638

Other charges from Westlake and included in cost of sales

WESTLAKE CHEMICAL PARTNERS LP

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS — Continued

(in thousands of dollars, except unit amounts and per unit data)

31,842 24,100

Total $ 113,958 $ 83,738

Services from Related Parties Included in Selling, General and Administrative Expenses

1 unchanged sentence

Charges from related parties included within selling, general and administrative expenses were as follows:

Three Months Ended September 30,

Nine Months Ended September 30,

Three Months Ended March 31,

Services received from Westlake and included in selling, general and administrative expenses

$ 7,912 $ 5,115

Goods and Services from Related Parties Capitalized as Assets

1 unchanged sentence

Charges from related parties for goods and services capitalized as assets were as follows:

Three Months Ended September 30,

Nine Months Ended September 30,

Three Months Ended March 31,

Goods and services purchased from Westlake and capitalized as assets

WESTLAKE CHEMICAL PARTNERS LP

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS — Continued

(in thousands of dollars, except unit amounts and per unit data)

Receivable under the Investment Management Agreement

On August 1, 2017, the Partnership, OpCo and Westlake executed an investment management agreement (the "Investment Management Agreement") that authorized Westlake to invest the Partnership and OpCo's excess cash with Westlake for a term of up to a maximum of nine months.

On August 1, 2017, the Partnership, OpCo and Westlake executed an investment management agreement (the "Investment Management Agreement") that authorized Westlake to invest the Partnership's and OpCo's excess cash with Westlake for a term of up to a maximum of nine months.

Per the terms of the Investment Management Agreement, the Partnership earns a market return plus five basis points and Westlake provides daily availability of the invested cash to meet any liquidity needs of the Partnership or OpCo.

Accrued interest of $ 69 and $ 601 was included in the receivable under the Investment Management Agreement balance at September 30, 2020 and December 31, 2019 , respectively.

Total interest earned related to the Investment Management Agreement was $ 69 and $ 716 for the three months ended September 30, 2020 and 2019 , respectively, and $ 876 and $ 2,688 for the nine months ended September 30, 2020 and 2019 , respectively.

Accrued interest of $ 67 and $ 56 was included in the receivable under the Investment Management Agreement balance at March 31, 2021 and December 31, 2020, respectively.

Total interest earned related to the Investment Management Agreement was $ 67 and $ 587 for the three months ended March 31, 2021 and 2020, respectively.

The Partnership's receivable under the Investment Management Agreement was as follows:

September 30,

2021 December 31,

Receivable under the Investment Management Agreement $ 187,239 $ 123,228

WESTLAKE CHEMICAL PARTNERS LP

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS — Continued

(in thousands of dollars, except unit amounts and per unit data)

Accounts Receivable from Related Parties

The Partnership's accounts receivable from Westlake result primarily from ethylene sales to Westlake and the buyer deficiency fee recognized under the Ethylene Sales Agreement, as discussed above under "Sales to Related Parties."

The Partnership's accounts receivable from Westlake result primarily from ethylene sales to Westlake, the buyer deficiency fee and the shortfall recognized under the Ethylene Sales Agreement, as discussed above under "Sales to Related Parties." The buyer deficiency fee and the shortfall recognized in the three months ended March 31, 2021 are scheduled to be received by the Partnership after the end of 2021.

The Partnership's accounts receivable from Westlake were as follows:

September 30,

2021 December 31,

Accounts receivable—Westlake $ 50,969 $ 108,028

2 unchanged sentences

The related party accounts payable balances were as follows:

September 30,

2021 December 31,

Accounts payable—Westlake $ 11,921 $ 7,855

1 unchanged sentence

OpCo is obligated to Westlake under various long-term and short-term noncancelable operating leases, primarily related to rail car leases and land.

Operating lease rentals paid to Westlake for such leases were $ 407 and $ 597 for the three months ended September 30, 2020 and 2019 , respectively, and $ 1,803 and $ 1,673 for the nine months ended September 30, 2020 and 2019 , respectively, and reflected in other charges from Westlake that are included in cost of sales.

Operating lease rentals paid to Westlake for such leases were $ 686 and $ 670 for the three months ended March 31, 2021 and 2020, respectively, and reflected in other charges from Westlake that are included in cost of sales.

OpCo has two site lease agreements with Westlake, each of which has a term of 50 years.

Pursuant to the site lease agreements, OpCo pays Westlake one dollar per site per year.

WESTLAKE CHEMICAL PARTNERS LP

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS — Continued

(in thousands of dollars, except unit amounts and per unit data)

Debt Payable to Related Parties

See Note 9 for a description of related party debt payable balances.

Interest on related party debt payable balances for the three months ended September 30, 2020 and 2019 was $ 2,320 and $ 4,411 , respectively.

Interest on related party debt payable balances for the nine months ended September 30, 2020 and 2019 was $ 9,701 and $ 15,436 , respectively.

Interest on related party debt payable balances for the three months ended March 31, 2021 and 2020 was $ 2,236 and $ 3,950 , respectively.

Interest on related party debt payable is presented as interest expense—Westlake in the consolidated statements of operations.

At September 30, 2020 and December 31, 2019 , accrued interest on related party debt was $ 2,320 and $ 4,187 , respectively, and is reflected as a component of accrued liabilities in the consolidated balance sheets.

At March 31, 2021 and December 31, 2020, accrued interest on related party debt was $ 2,236 and $ 2,336 , respectively, and is reflected as a component of accrued liabilities in the consolidated balance sheets.

Debt payable to related parties was as follows:

September 30,

2021 December 31,

Long-term debt payable to Westlake $ 399,674 $ 399,674

Major Customer and Concentration of Credit Risk

During the three months ended September 30, 2020 and 2019 , Westlake accounted for approximately 93.9 % and 86.7 % , respectively, of the Partnership's net sales.

During the nine months ended September 30, 2020 and 2019 , Westlake accounted for approximately 91.5 % and 85.9 % , respectively, of the Partnership's net sales.

During the three months ended March 31, 2021 and 2020, Westlake accounted for approximately 82.0 % and 85.7 %, respectively, of the Partnership's net sales.

See Note 7 above for an additional related party transaction.

WESTLAKE CHEMICAL PARTNERS LP

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS — Continued

(in thousands of dollars, except unit amounts and per unit data)

Long-term Debt Payable to Westlake

Long-term debt payable to Westlake consists of the following:

September 30,

2021 December 31,

OpCo Revolver (variable interest rate of London Interbank Offered Rate ("LIBOR") plus 2.0 %, scheduled maturity of September 25, 2023)

$ 22,619 $ 22,619

MLP Revolver (variable interest rate of LIBOR plus 2.0 %, scheduled maturity of March 19, 2023)

On April 30, 2019, the Partnership repaid $ 201,445 of borrowings under the OpCo Revolver.

On March 29, 2019, the Partnership borrowed $ 123,511 under the MLP Revolver to partially fund the purchase of the additional 4.5 % interest in OpCo.

On March 19, 2020, the Partnership entered into an amendment to the MLP Revolver, to extend the maturity date to March 19, 2023 and add a phase-out provision for LIBOR, which is to be replaced by an alternate benchmark rate.

The amended Credit Agreement bears interest at a variable rate of either (a) LIBOR plus 2.0 % or, if LIBOR is no longer available, (b) Alternate Base Rate plus 1.0 % .

The weighted average interest rate on all long-term debt was 2.3 % and 4.1 % , respectively, at September 30, 2020 and December 31, 2019 .

As of September 30, 2020 , the Partnership was in compliance with all of the covenants under the OpCo Revolver and the MLP Revolver.

Derivative Commodity Instruments

From time to time, the Partnership uses derivative instruments to reduce price volatility risk on commodities, primarily ethane and ethylene.

The Partnership does not use derivative instruments to engage in speculative activities.

The Partnership had no derivatives that were designated as fair value hedges during the nine months ended September 30, 2020 and 2019 .

Gains and losses from changes in the fair value of derivative instruments that are not designated as hedging instruments were included in net sales and cost of sales in the consolidated statements of operations for the nine months ended September 30, 2020 and 2019 .

The exposure on commodity derivatives used for price risk management includes the risk that the counterparty will not pay if the market price declines below the established fixed price.

In such case, the Partnership would lose the benefit of the derivative differential on the volume of the commodities covered.

In any event, the Partnership would continue to receive the market price on the actual volume hedge.

The Partnership also bears the risk that it could lose the benefit of market improvements over the fixed derivative price for the term and volume of the derivative instruments (as such improvements would accrue to the benefit of the counterparty).

The Partnership had non-hedge designated derivatives covering approximately 7.6 million gallons and 18.0 million pounds of commodities as of September 30, 2020 and 39.1 million gallons and 93.0 million pounds of commodities as of December 31, 2019 .

At September 30, 2020 , the fair value of these derivative instruments recorded as accrued liabilities was $ 1,147 .

At December 31, 2019 , the fair values of these derivative instruments recorded as accrued liabilities and accounts receivable, net were $ 1,959 and $ 597 , respectively.

The losses recognized in net sales and gains recognized in cost of sales related to derivatives were $ 2,539 and $ 306 , respectively, for the three months ended September 30, 2020 and losses recognized in net sales and cost of sales were $ 6,801 and $ 1,294 , respectively, for the three months ended September 30, 2019 .

The losses recognized in net sales and gains recognized in cost of sales related to derivatives were $ 384 and $ 150 , respectively, for the nine months ended September 30, 2020 and losses recognized in net sales and cost of sales related to derivatives were $ 4,375 and $ 2,678 , respectively, for the nine months ended September 30, 2019 .

The Partnership's commodity contracts are measured using forward curves supplied by industry recognized sources and unrelated third-party services and classified as Level 2 under the fair value measurement guidance.

WESTLAKE CHEMICAL PARTNERS LP

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS — Continued

(in thousands of dollars, except unit amounts and per unit data)

377,055 377,055

$ 399,674 $ 399,674

The weighted average interest rate on all long-term debt was 2.2 % at March 31, 2021 and December 31, 2020.

As of March 31, 2021, the Partnership was in compliance with all of the covenants under the OpCo Revolver and the MLP Revolver.

Fair Value Measurements

4 unchanged sentences

Unobservable inputs that are not corroborated by market data.

WESTLAKE CHEMICAL PARTNERS LP

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS — Continued

(in thousands of dollars, except unit amounts and per unit data)

The Partnership has financial assets and liabilities subject to fair value measures.

1 unchanged sentence

The amounts reported in the consolidated balance sheets for accounts receivable, net and accounts payable approximate their fair value due to the short maturities of these instruments.

The carrying and fair values of the Partnership's long-term debt at September 30, 2020 and December 31, 2019 are summarized in the table below.

The Partnership's long-term debt includes the OpCo Revolver and the MLP Revolver at September 30, 2020 .

The carrying and fair values of the Partnership's long-term debt at March 31, 2021 and December 31, 2020 are summarized in the table below.

The Partnership's long-term debt includes the OpCo Revolver and the MLP Revolver at March 31, 2021.

The fair value of debt is determined based on the present value of expected future cash flows using a discounted cash flow methodology.

1 unchanged sentence

Inputs used to estimate the fair values of the Partnership's long-term debt include the selection of an appropriate discount rate.

September 30, 2020

December 31, 2019

March 31, 2021 December 31, 2020

Value Carrying

OpCo Revolver $ 22,619 $ 22,817 $ 22,619 $ 23,301

MLP Revolver 377,055 377,520 377,055 383,284

Supplemental Information

Accrued Liabilities

Accrued liabilities were $ 16,955 and $ 17,507 at September 30, 2020 and December 31, 2019 , respectively.

Accrued taxes, accrued maintenance expense and accrued interest, which are components of accrued liabilities, were $ 5,550 , $ 4,054 and $ 2,320 , respectively, at September 30, 2020 and $ 2,611 , $ 3,225 and $ 4,187 , respectively, at December 31, 2019 .

Accrued and Other Liabilities

Accrued and other liabilities were $ 18,049 and $ 18,768 at March 31, 2021 and December 31, 2020, respectively.

Accrued taxes, accrued maintenance expense and accrued interest, which are components of accrued liabilities, were $ 3,120 , $ 6,215 and $ 2,236 , respectively, at March 31, 2021 and $ 6,207 , $ 3,905 and $ 2,336 , respectively, at December 31, 2020.

No other component of accrued liabilities was more than five percent of total current liabilities.

Non-cash Investing Activity

The non-cash investing activities related to accruals for capital expenditures were $ 1,945 and $ 1,213 for the nine months ended September 30, 2020 and 2019, respectively.

WESTLAKE CHEMICAL PARTNERS LP

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS — Continued

(in thousands of dollars, except unit amounts and per unit data)

The non-cash investing activities related to accruals for capital expenditures were $ 582 and $ 20 for the three months ended March 31, 2021 and 2020, respectively.

Commitments and Contingencies

The Partnership is subject to environmental laws and regulations that can impose civil and criminal sanctions and that may require the Partnership to mitigate the effects of contamination caused by the release or disposal of hazardous substances into the environment.

These laws include the federal Clean Air Act, the federal Water Pollution Control Act, the Resource Conservation and Recovery Act, the Comprehensive Environmental Response, Compensation, and Liability Act ("CERCLA"), the Toxic Substances Control Act and various other federal, state and local laws and regulations.

These laws include the federal Clean Air Act, the federal Water Pollution Control Act, the Resource Conservation and Recovery Act ("RCRA"), the Comprehensive Environmental Response, Compensation, and Liability Act ("CERCLA"), the Toxic Substances Control Act and various other federal, state and local laws and regulations.

Under CERCLA, an owner or operator of property may be held strictly liable for remediating contamination without regard to whether that person caused the contamination, and without regard to whether the practices that resulted in the contamination were legal at the time they occurred.

4 unchanged sentences

Compared sentence by sentence after normalising whitespace, quotation marks, case and digits, so re-formatting and restated figures do not read as changed language. Wording changes appear as one removal and one addition. The current filing and the prior one are authoritative.

What changed 10-Q

Item 1. Financial Statements