Westlake Chemical Partners LP 10-Q

Item 1. Financial Statements WESTLAKE CHEMICAL PARTNERS LP CONSOLIDATED BALANCE SHEETS (Unaudited) March 31, 2021 December 31, 2020 (in thousands of dollars, except unit amounts) ASSETS Current assets Cash and cash equivalents $ 17,289 $ 17,154 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 Total current assets 278,587 263,305 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 LIABILITIES Current liabilities Accounts payable—Westlake $ 11,921 $ 7,855 Accounts payable—third parties 12,602 13,131 Accrued and other liabilities 18,049 18,768 Total current liabilities 42,572 39,754 Long-term debt payable to Westlake 399,674 399,674 Deferred income taxes 1,574 1,542 Other liabilities 206 381 Total liabilities 444,026 441,351 Commitments and contingencies (Note 12) EQUITY 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 ) Total Westlake Chemical Partners LP partners' capital 275,952 277,399 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 The accompanying notes are an integral part of the consolidated financial statements. 1 Table of Contents WESTLAKE CHEMICAL PARTNERS LP CONSOLIDATED STATEMENTS OF OPERATIONS (Unaudited) Three Months Ended March 31, 2021 2020 (in thousands of dollars, except unit amounts and per unit data) Revenue Net sales—Westlake $ 219,803 $ 214,828 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 Income from operations 79,026 97,352 Other income (expense) Interest expense—Westlake ( 2,236 ) ( 3,950 ) Other income, net 7 585 Income before income taxes 76,797 93,987 Income tax provision 175 217 Net income 76,622 93,770 Less: 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) Common units—publicly and privately held 21,076,673 21,072,315 Common units—Westlake 14,122,230 14,122,230 The accompanying notes are an integral part of the consolidated financial statements. 2 Table of Contents WESTLAKE CHEMICAL PARTNERS LP CONSOLIDATED STATEMENTS OF CHANGES IN EQUITY (Unaudited) Partnership Common Unitholders — Public and Privately Held Common Unitholder — Westlake General Partner — Westlake Noncontrolling Interests 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 ) Quarterly distribution to noncontrolling interest retained in OpCo by Westlake — — — ( 62,058 ) ( 62,058 ) Balance at March 31, 2021 $ 470,834 $ 47,690 $ ( 242,572 ) $ 637,156 $ 913,108 Partnership Common Unitholders— Public and Privately Held Common Unitholder— Westlake General Partner— Westlake Noncontrolling Interests in OpCo Total (in thousands of dollars) Balance at December 31, 2019 $ 471,736 $ 48,350 $ ( 242,572 ) $ 674,621 $ 952,135 Net income 10,626 7,121 — 76,023 93,770 Quarterly distribution to unitholders ( 9,934 ) ( 6,657 ) — — ( 16,591 ) Quarterly distribution to noncontrolling interest retained in OpCo by Westlake — — — ( 79,223 ) ( 79,223 ) Balance at March 31, 2020 $ 472,428 $ 48,814 $ ( 242,572 ) $ 671,421 $ 950,091 The accompanying notes are an integral part of the consolidated financial statements. 3 Table of Contents WESTLAKE CHEMICAL PARTNERS LP CONSOLIDATED STATEMENTS OF CASH FLOWS (Unaudited) Three Months Ended March 31, 2021 2020 (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 Depreciation and amortization 27,542 26,031 Loss from disposition of property, plant and equipment 1,359 97 Other gains, net 103 119 Changes in operating assets and liabilities Accounts receivable—third parties ( 8,744 ) ( 3,740 ) Net accounts receivable—Westlake 60,978 ( 8,573 ) Inventories 303 484 Prepaid expenses and other current assets 175 266 Accounts payable ( 625 ) 1,463 Accrued and other liabilities ( 699 ) 1,252 Other, net ( 1,606 ) ( 208 ) Net cash provided by operating activities 155,408 110,961 Cash flows from investing activities Additions to property, plant and equipment ( 12,748 ) ( 11,989 ) Maturities of investments with Westlake under the Investment Management Agreement — 79,000 Investments with Westlake under the Investment Management Agreement ( 64,000 ) ( 78,000 ) Other 126 — Net cash used for investing activities ( 76,622 ) ( 10,989 ) Cash flows from financing activities Quarterly distributions to noncontrolling interest retained in OpCo by Westlake ( 62,058 ) ( 79,223 ) Quarterly distributions to unitholders ( 16,593 ) ( 16,591 ) Net cash used for financing activities ( 78,651 ) ( 95,814 ) Net increase in cash and cash equivalents 135 4,158 Cash and cash equivalents at beginning of period 17,154 19,923 Cash and cash equivalents at end of period $ 17,289 $ 24,081 The accompanying notes are an integral part of the consolidated financial statements. 4 Table of Contents WESTLAKE CHEMICAL PARTNERS LP NOTES TO CONSOLIDATED FINANCIAL STATEMENTS — Continued (Unaudited) (in thousands of dollars, except unit amounts and per unit data) 1. Description of Business and Basis of Presentation Description of Business Westlake Chemical Partners LP (the "Partnership") is a Delaware limited partnership formed in March 2014 to operate, acquire and develop ethylene production facilities and related assets. On August 4, 2014, the Partnership completed its initial public offering (the "IPO") of 12,937,500 common units representing limited partner interests. 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 (collectively, the "Contributed Assets" ) . Since the IPO, the Partnership has periodically purchased additional limited partner interest in OpCo. Most recently, on March 29, 2019, the Partnership purchased an additional 4.5 % newly-issued limited partner interest in OpCo for approximately $ 201,445 , resulting in an aggregate 22.8 % limited partner interest in OpCo, effective January 1, 2019. The remaining 77.2 % limited partner interest in OpCo is owned by Westlake Chemical Corporation. Basis of Presentation The accompanying unaudited consolidated interim financial statements were prepared in accordance with the rules and regulations of the Securities and Exchange Commission (the "SEC") for interim periods. Accordingly, certain information and footnotes required for complete financial statements under generally accepted accounting principles in the United States ("U.S. 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, 2020 (the "2020 Form 10-K"), filed with the SEC on March 2, 2021. 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, 2020. References to "Westlake" refer collectively to Westlake Chemical Corporation and its subsidiaries, other than the Partnership, OpCo and OpCo GP. The Partnership holds a 22.8 % limited partner interest and the entire non-economic general partner interest in OpCo. The remaining 77.2 % limited partner interest in OpCo is owned directly by Westlake, which has no rights to direct the activities that most significantly impact the economic performance of OpCo. As a result of the fact that substantially all of OpCo's activities are conducted on behalf of Westlake, and the fact that OpCo exhibits disproportionality of voting rights to economic interest, OpCo was deemed to be a variable interest entity. The Partnership, through its ownership of OpCo's general partner, has the power to direct the activities that most significantly impact the economic performance of OpCo, and it also has the obligation or right to absorb losses or receive benefits from OpCo that could potentially be significant to OpCo. As such, the Partnership was determined to be OpCo's primary beneficiary and therefore consolidates OpCo's results of operations and financial position. 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 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. The preparation of financial statements in conformity with U.S. GAAP requires management to make estimates and assumptions that affect the reported amounts of assets, liabilities, revenues and expenses and the disclosure of contingent assets and liabilities. Actual results could differ materially from those estimates. 5 Table of Contents WESTLAKE CHEMICAL PARTNERS LP NOTES TO CONSOLIDATED FINANCIAL STATEMENTS — Continued (Unaudited) (in thousands of dollars, except unit amounts and per unit data) 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 Reference Rate Reform (ASU No. 2020-04) In March 2020, the FASB issued an accounting standards update to provide optional expedients and exceptions for applying generally accepted accounting principles to contracts, hedging relationships and other transactions affected by reference rate reform if certain criteria are met. The amendments in this update are effective for all entities as of March 12, 2020 through December 31, 2022. 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. 2. Accounts Receivable—Third Parties Accounts receivable—third parties consist of the following: March 31, 2021 December 31, 2020 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 3. Inventories Inventories consist of the following: March 31, 2021 December 31, 2020 Finished products $ 2,749 $ 3,157 Feedstock, additives and chemicals 422 317 Inventories $ 3,171 $ 3,474 4. Property, Plant and Equipment 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. 5. Deferred Charges and Other Assets 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. 6 Table of Contents WESTLAKE CHEMICAL PARTNERS LP NOTES TO CONSOLIDATED FINANCIAL STATEMENTS — Continued (Unaudited) (in thousands of dollars, except unit amounts and per unit data) 6. Distributions and Net Income Per Limited Partner Unit 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 March 31, 2021 2020 Net income attributable to the Partnership $ 15,146 $ 17,747 Less: 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. Because the Partnership has more than one class of participating securities, it uses the two-class method when calculating the net income per unit applicable to limited partners. The classes of participating securities include common units and incentive distribution rights. Net income attributable to the Partnership is allocated to the unitholders in accordance with their respective ownership percentages in preparation of the consolidated statements of changes in equity. However, when distributions related to the incentive distribution rights are made, net income equal to the amount of those distributions is first allocated to the general partner before the remaining net income is allocated to the unitholders based on their respective ownership percentages. 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. 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: Basic and diluted 35,198,903 35,198,903 Net income per limited partner unit: Basic and diluted $ 0.43 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: Basic and diluted 35,194,545 35,194,545 Net income per limited partner unit: Basic and diluted $ 0.50 7 Table of Contents WESTLAKE CHEMICAL PARTNERS LP NOTES TO CONSOLIDATED FINANCIAL STATEMENTS — Continued (Unaudited) (in thousands of dollars, except unit amounts and per unit data) 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 . If cash distributions to the Partnership's unitholders exceed $ 1.2938 per common unit in any quarter, the Partnership's unitholders and Westlake, as the holder of the Partnership's incentive distribution rights, will receive distributions according to the following percentage allocations: Marginal Percentage Interest in Distributions 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 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 months ended March 31, 2021 and 2020 were as follows: Three Months Ended March 31, 2021 2020 Distributions per common unit $ 0.4714 $ 0.4714 7. Partners' Equity 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 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. 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. 8. Related Party Transactions The Partnership and OpCo regularly enter into related party transactions with Westlake. See below for a description of transactions with related parties. Sales to Related Parties OpCo sells ethylene to Westlake under the Ethylene Sales Agreement. Additionally, the Partnership and OpCo from time to time provide other services or products for which it charges Westlake a fee. Sales to related parties were as follows: Three Months Ended March 31, 2021 2020 Net sales—Westlake $ 219,803 $ 214,828 8 Table of Contents WESTLAKE CHEMICAL PARTNERS LP NOTES TO CONSOLIDATED FINANCIAL STATEMENTS — Continued (Unaudited) (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 Charges for goods and services purchased by the Partnership and OpCo from Westlake and included in cost of sales relate primarily to feedstock purchased under the Feedstock Supply Agreement and services provided under the Services and Secondment Agreement. Charges from related parties in cost of sales were as follows: Three Months Ended March 31, 2021 2020 Feedstock purchased from Westlake and included in cost of sales $ 82,116 $ 59,638 Other charges from Westlake and included in cost of sales 31,842 24,100 Total $ 113,958 $ 83,738 Services from Related Parties Included in Selling, General and Administrative Expenses Charges for services purchased by the Partnership from Westlake and included in selling, general and administrative expenses primarily relate to services Westlake performs on behalf of the Partnership under the Omnibus Agreement, including the Partnership's finance, legal, information technology, human resources, communication, ethics and compliance and other administrative functions. Charges from related parties included within selling, general and administrative expenses were as follows: Three Months Ended March 31, 2021 2020 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 Charges for goods and services purchased by the Partnership and OpCo from Westlake which were capitalized as assets relate primarily to the services of Westlake employees under the Services and Secondment Agreement. Charges from related parties for goods and services capitalized as assets were as follows: Three Months Ended March 31, 2021 2020 Goods and services purchased from Westlake and capitalized as assets $ 403 $ 480 9 Table of Contents WESTLAKE CHEMICAL PARTNERS LP NOTES TO CONSOLIDATED FINANCIAL STATEMENTS — Continued (Unaudited) (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'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 $ 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: March 31, 2021 December 31, 2020 Receivable under the Investment Management Agreement $ 187,239 $ 123,228 Accounts Receivable from 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: March 31, 2021 December 31, 2020 Accounts receivable—Westlake $ 50,969 $ 108,028 Accounts Payable to Related Parties The Partnership's accounts payable to Westlake result primarily from feedstock purchases under the Feedstock Supply Agreement and services provided under the Services and Secondment Agreement and the Omnibus Agreement. The related party accounts payable balances were as follows: March 31, 2021 December 31, 2020 Accounts payable—Westlake $ 11,921 $ 7,855 Related Party Leases 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 $ 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. 10 Table of Contents WESTLAKE CHEMICAL PARTNERS LP NOTES TO CONSOLIDATED FINANCIAL STATEMENTS — Continued (Unaudited) (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 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 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: March 31, 2021 December 31, 2020 Long-term debt payable to Westlake $ 399,674 $ 399,674 Major Customer and Concentration of Credit Risk 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. Other See Note 7 above for an additional related party transaction. 9. Long-term Debt Payable to Westlake Long-term debt payable to Westlake consists of the following: March 31, 2021 December 31, 2020 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) 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. 10. Fair Value Measurements The Partnership reports certain assets and liabilities at fair value, which is defined as the price that would be received to sell an asset or paid to transfer a liability in an orderly transaction between market participants at the measurement date (exit price). Under the accounting guidance for fair value measurements, inputs used to measure fair value are classified in one of three levels: Level 1: Quoted market prices in active markets for identical assets or liabilities. Level 2: Observable market-based inputs or unobservable inputs that are corroborated by market data. Level 3: Unobservable inputs that are not corroborated by market data. 11 Table of Contents WESTLAKE CHEMICAL PARTNERS LP NOTES TO CONSOLIDATED FINANCIAL STATEMENTS — Continued (Unaudited) (in thousands of dollars, except unit amounts and per unit data) The Partnership has financial assets and liabilities subject to fair value measures. These financial assets and liabilities include cash and cash equivalents, accounts receivable, net, accounts payable and long-term debt payable to Westlake, all of which are recorded at carrying value. 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 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. Because the Partnership's valuation methodology used for long-term debt requires the use of significant unobservable inputs, the inputs used to measure the fair value of the Partnership's long-term debt are classified as Level 3 within the fair value hierarchy. Inputs used to estimate the fair values of the Partnership's long-term debt include the selection of an appropriate discount rate. March 31, 2021 December 31, 2020 Carrying Value Fair Value Carrying Value Fair Value OpCo Revolver $ 22,619 $ 22,817 $ 22,619 $ 23,301 MLP Revolver 377,055 377,520 377,055 383,284 11. Supplemental Information 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 $ 582 and $ 20 for the three months ended March 31, 2021 and 2020, respectively. 12. 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 ("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. Because the Partnership's production sites have a history of industrial use, it is impossible to predict precisely what effect these legal requirements will have on the Partnership. Westlake will indemnify the Partnership for liabilities that occurred or existed prior to August 4, 2014. The Partnership is involved in various legal proceedings incidental to the conduct of its business. The Partnership does not believe that any of these legal proceedings will have a material adverse effect on its financial condition, results of operations or cash flows. 12 Table of Contents