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Item 2. Management’s Discussion and Analysis

2021-11-03 compared with 2021-08-04 · 80 added, 74 removed, 242 unchanged (39% of the section changed)

67 unchanged sentences

We have not experienced significant disruptions to our business operations and do not expect to experience significant disruptions to our business operations resulting from COVID-19, primarily due to the fact that 95% of our production is sold to Westlake on a take-or-pay contract.

OpCo's Petro 2 Turnaround

In September 2021, we commenced our planned major maintenance activities, or turnaround, of OpCo's Petro 2 ethylene unit in Lake Charles, Louisiana.

The turnaround was originally expected to conclude in November.

On September 27, 2021, shortly after the turnaround commenced, there was a flash fire at the quench tower of the Petro 2 facility.

Several contractors working on the quench tower were injured.

Although there was no sustained fire or offsite impact resulting from the incident and the quench tower did not sustain significant damage, due to the subsequent investigation by the Occupational Safety and Health Administration, the duration of the turnaround has been extended and is now expected to conclude in December.

There are five lawsuits pending in connection with the flash fire.

Force Majeure Events

During June 2021, OpCo's Petro 1 facility experienced an outage, which resulted in a force majeure event under the Ethylene Sales Agreement.

In addition, OpCo declared a force majeure in February 2021 due to the severe winter storm.

As a result of these force majeure events, the Partnership updated its estimate of OpCo's 2021 anticipated production as of June 30, 2021.

OpCo declared force majeure events in September 2021 during the Petro 2 facility turnaround, in June 2021 related to OpCo's Petro 1 facility outage, and in February 2021 due to the severe winter storm.

As a result of these force majeure events and the commencement of OpCo's Petro 2 ethylene unit turnaround in September 2021, the Partnership updated its estimate of OpCo's 2021 anticipated production as of September 30, 2021.

The buyer deficiency fee is measured based upon the lower of the actual production deficiency at period end or the estimated annual production deficiency based upon OpCo's annual anticipated production.

Based upon this change in estimate of OpCo's 2021 anticipated production, the Partnership has recognized buyer deficiency fees and Shortfall of $8.7 million and $18.4 million during the three and six months ended June 30, 2021, respectively.

Based upon this change in estimate of OpCo's 2021 anticipated production, the Partnership has recognized buyer deficiency fees and Shortfall of $3.0 million and $21.5 million during the three and nine months ended September 30, 2021, respectively.

The buyer deficiency fees and Shortfall are classified as a component of net sales.

Results of Operations

Three Months Ended June 30, Six Months Ended June 30,

Three Months Ended September 30, Nine Months Ended September 30,

2021 2020 2021 2020

12 unchanged sentences

Income before income taxes 65,970 91,833 263,324 266,403

Income tax provision 263 206 438 423

Income tax provision (benefit) (105) (15) 333 408

Net income 66,075 91,848 262,991 265,995

8 unchanged sentences

(2) See "Reconciliation of EBITDA to Net Income, Income from Operations and Net Cash Provided by Operating Activities" below.

Three Months Ended June 30, 2021 Six Months Ended June 30, 2021

Three Months Ended September 30, 2021 Nine Months Ended September 30, 2021

Sales Price Volume Average

2 unchanged sentences

+30.3 % +22.3 % +27.6 % -0.6 %

Three Months Ended June 30, Six Months Ended June 30,

Three Months Ended September 30, Nine Months Ended September 30,

2021 2020 2021 2020

10 unchanged sentences

The following table presents reconciliations of MLP distributable cash flow to net income and net cash provided by operating activities, the most directly comparable GAAP financial measures, for each of the periods indicated.

Three Months Ended June 30, Six Months Ended June 30,

Three Months Ended September 30, Nine Months Ended September 30,

2021 2020 2021 2020

14 unchanged sentences

The following table presents reconciliations of EBITDA to net income, income from operations and net cash provided by operating activities, the most directly comparable GAAP financial measures, for each of the periods indicated.

Three Months Ended June 30, Six Months Ended June 30,

Three Months Ended September 30, Nine Months Ended September 30,

2021 2020 2021 2020

6 unchanged sentences

Interest expense (2,190) (2,320) (6,650) (9,701)

Provision for income taxes (263) (206) (438) (423)

Benefit (Provision) for income taxes 105 15 (333) (408)

Income from operations 68,136 94,136 269,922 275,379

2 unchanged sentences

EBITDA $ 94,746 $ 120,076 $ 352,804 $ 353,871

For the quarter ended June 30, 2021, net income was $120.3 million on net sales of $322.2 million.

This represents an increase in net income of $39.9 million as compared to net income of $80.4 million on net sales of $238.5 million for the quarter ended June 30, 2020.

Net income attributable to the Partnership for the second quarter of 2021 was $25.1 million as compared to $14.9 million for the second quarter of 2020, an increase of $10.2 million.

Net income and net income attributable to the Partnership for the second quarter of 2021 as compared to the second quarter of 2020 were higher primarily due to increased sales prices and volumes to third parties and the buyer deficiency fee and Shortfall totaling $8.7 million per the terms of the Ethylene Sales Agreement with Westlake in the second quarter of 2021 due to the force majeure event in June 2021, partially offset by increased ethane feedstock and natural gas costs.

Net sales for the second quarter of 2021 increased by $83.7 million as compared to net sales for the second quarter of 2020, mainly due to higher sales prices and volumes to third parties and higher sales price to Westlake per the terms of the Ethylene Sales Agreement, as well as the buyer deficiency fee and Shortfall during the second quarter of 2021.

Income from operations was $122.8 million for the second quarter of 2021 as compared to $83.9 million for the second quarter of 2020.

Income from operations for the second quarter of 2021 increased mainly as a result of increased sales prices and volumes to third parties and the buyer deficiency fee and Shortfall recognized during the period, partially offset by increased ethane feedstock costs, natural gas costs and selling general and administrative expenses, as compared to the second quarter of 2020.

For the six months ended June 30, 2021, net income was $196.9 million on net sales of $590.4 million.

This represents an increase in net income of $22.8 million as compared to net income of $174.1 million on net sales of $489.0 million for the six months ended June 30, 2020.

Net income attributable to the Partnership for the six months ended June 30, 2021 was $40.2 million as compared to $32.6 million for the six months ended June 30, 2020, an increase of $7.6 million.

Net income and net income attributable to the Partnership for the six months ended June 30, 2021 as compared to the six months ended June 30, 2020 were higher primarily due to higher sales prices to Westlake per the terms of the Ethylene Sales Agreement, higher prices and volumes to third parties and the buyer deficiency fee and Shortfall totaling $18.4 million recognized during the period, partially offset by increased ethane feedstock and natural gas costs as well lower sales volumes to Westlake.

Net sales for the six months ended June 30, 2021 increased by $101.4 million as compared to net sales for the six months ended June 30, 2020, mainly due to higher sales prices and volumes to third parties and higher sales price to Westlake per the terms of the Ethylene Sales Agreement, as well as the buyer deficiency fee and Shortfall recognized during the six months ended June 30, 2021, partially offset by lower sales volumes to Westlake during the six months ended June 30, 2021.

Income from operations was $201.8 million for the six months ended June 30, 2021 as compared to $181.2 million for the six months ended June 30, 2020.

Income from operations for the six months ended June 30, 2021 increased mainly as a result of increased sales prices and volumes for ethylene to third parties and the buyer deficiency fee and Shortfall recognized during the period, partially offset by increased ethane feedstock costs, natural gas costs and selling general and administrative expenses as well lower sales volumes to Westlake as compared to the six months ended June 30, 2020.

For the quarter ended September 30, 2021, net income was $66.1 million on net sales of $294.0 million.

This represents a decrease in net income of $25.7 million as compared to net income of $91.8 million on net sales of $232.0 million for the quarter ended September 30, 2020.

Net income attributable to the Partnership for the third quarter of 2021 was $12.8 million as compared to $18.5 million for the third quarter of 2020, a decrease of $5.7 million.

Income from operations was $68.1 million for the third quarter of 2021 as compared to $94.1 million for the third quarter of 2020.

Net income, net income attributable to the Partnership and the operating income for the third quarter of 2021 as compared to the third quarter of 2020 were lower primarily due to decreased sales volumes to third parties and higher ethane feedstock and natural gas costs, partially offset by increased sales prices and volumes to Westlake.

Net income, net income attributable to the partnership and income from operations for the third quarter of 2020 were also higher as compared to the current quarter because of a buyer deficiency fee of $41.3 million recognized in the third quarter of 2020 due to force majeure events in that period.

Net sales for the third quarter of 2021 increased by $62.0 million as compared to net sales for the third quarter of 2020, mainly due to higher production during the current quarter resulting in higher sales volumes to Westlake and higher sales prices to Westlake and third parties, partially offset by lower sales volumes to third parties and the buyer deficiency fee of $41.3 million recognized during the third quarter of 2020.

For the nine months ended September 30, 2021, net income was $263.0 million on net sales of $884.4 million.

This represents a decrease in net income of $3.0 million as compared to net income of $266.0 million on net sales of $721.0 million for the nine months ended September 30, 2020.

Income from operations was $269.9 million for the nine months ended September 30, 2021 as compared to $275.4 million for the nine months ended September 30, 2020.

Net income and the income from operations for the nine months ended September 30, 2021 as compared to the nine months ended September 30, 2020 were lower due to decreased sales volumes to Westlake and higher ethane feedstock and natural gas costs, partially offset by increased sales prices and volumes to third parties, and increased sales prices to Westlake.

A buyer deficiency fee and Shortfall totaling $21.5 million per the terms of the Ethylene Sales Agreement with Westlake was recognized in the nine months ended September 30, 2021 as compared to the buyer deficiency fee of $41.3 million recognized in the nine months ended September 30, 2020.

Net income attributable to the Partnership for the nine months ended September 30, 2021 was $53.0 million as compared to $51.1 million for the nine months ended September 30, 2020, an increase of $1.9 million.

The higher net income attributable to the Partnership for the nine months ended September 30, 2021 as compared to the nine months ended September 30, 2020 was primarily due to lower interest expense in the nine months ended September 30, 2021.

Net sales for the nine months ended September 30, 2021 increased by $163.4 million as compared to net sales for the nine months ended September 30, 2020, mainly due to higher sales prices and volumes to third parties and higher sales price to Westlake, as well as the buyer deficiency fee and Shortfall recognized during the nine months ended September 30, 2021, partially offset by the buyer deficiency fee recognized during the first nine months of 2020 and lower sales volumes to Westlake during the nine months ended September 30, 2021.

RESULTS OF OPERATIONS

Second Quarter 2021 Compared with Second Quarter 2020

Total net sales increased by $83.7 million, or 35.1%, to $322.2 million in the second quarter of 2021 from $238.5 million in the second quarter of 2020.

The increase in net sales in the second quarter of 2021 was primarily due to higher sales prices and volumes to third parties and higher sales price to Westlake per the terms of the Ethylene Sales Agreement and the buyer deficiency fee and Shortfall recognized during the period.

The average sales price in the second quarter of 2021 contributed to a 30.5% increase in net sales, primarily due to higher ethylene sales prices to third parties and Westlake per the terms of the Ethylene Sales Agreement.

Third Quarter 2021 Compared with Third Quarter 2020

Total net sales increased by $62.0 million, or 26.7%, to $294.0 million in the third quarter of 2021 from $232.0 million in the third quarter of 2020.

The increase in net sales in the third quarter of 2021 was primarily due to higher sales prices and volumes to Westlake, higher sales prices to third parties, partially offset by lower sales volumes to third parties and the buyer deficiency fee recognized during the third quarter of 2020.

The average sales price in the third quarter of 2021 contributed to a 30.3% increase in net sales, primarily due to higher ethylene sales prices to third parties and Westlake per the terms of the Ethylene Sales Agreement.

The average sales volume in the third quarter of 2021 contributed to a 22.3% increase in net sales, primarily due to higher production resulting in increased sales volumes to Westlake as compared to the third quarter of 2020.

Gross Profit.

Gross profit increased to $131.0 million for the second quarter of 2021 from $90.0 million for the second quarter of 2020.

The gross profit margin in the second quarter of 2021 was 40.7%, as compared to 37.7% for the second quarter of 2020.

The second quarter 2021 gross profit margin was higher mainly due to higher prices and volumes for ethylene sold to third parties and the buyer deficiency fee and Shortfall recognized during the period, partially offset by higher ethane feedstock and natural gas costs in the second quarter of 2021.

Gross profit decreased to $75.9 million for the third quarter of 2021 from $100.4 million for the third quarter of 2020.

The gross profit margin in the third quarter of 2021 was 25.8%, as compared to 43.3% for the third quarter of 2020.

The third quarter 2021 gross profit margin was lower mainly due to lower sales prices to Westlake, higher ethane feedstock and natural gas costs and the buyer deficiency fee recognized during the third quarter of 2020, partially offset by higher prices for ethylene sold to third parties and higher volumes for ethylene sold to Westlake in the third quarter of 2021.

Selling, General and Administrative Expenses.

Selling, general and administrative expenses increased by $2.2 million, or 36.1%, to $8.3 million in the second quarter of 2021 as compared to $6.1 million in the second quarter of 2020.

The increase in the second quarter of 2021 was mainly attributable to increased service costs and allowance for doubtful accounts as compared to the second quarter of 2020.

Selling, general and administrative expenses increased by $1.5 million, or 23.8%, to $7.8 million in the third quarter of 2021 as compared to $6.3 million in the third quarter of 2020.

The increase in the third quarter of 2021 was mainly attributable to increased service costs and allowance for doubtful accounts as compared to the third quarter of 2020.

Interest Expense.

Interest expense decreased by $1.2 million to $2.2 million in the second quarter of 2021 from $3.4 million in the second quarter of 2020, largely due to a lower average interest rate on debt.

Interest expense of $2.2 million in the third quarter of 2021 was comparable to $2.3 million in the third quarter of 2020.

MLP Distributable Cash Flow.

MLP distributable cash flow increased by $8.6 million to $25.5 million in the second quarter of 2021 from $16.9 million in the second quarter of 2020.

The increase in the second quarter of 2021, as compared to the prior-year period, was primarily attributable to the higher earnings at OpCo, partially offset by increased turnaround reserves and higher maintenance expense.

EBITDA increased by $41.7 million to $151.5 million in the second quarter of 2021 from $109.8 million in the second quarter of 2020.

The increase, as compared to the prior-year period, was primarily due to higher sales prices and volumes to third parties, and the buyer deficiency fee and Shortfall recognized during the period, partially offset by higher ethane feedstock and natural gas costs.

Six Months Ended June 30, 2021 Compared with Six Months Ended June 30, 2020

Total net sales increased by $101.4 million, or 20.7%, to $590.4 million in the six months ended June 30, 2021 from $489.0 million in the six months ended June 30, 2020.

The increase in net sales in the six months ended June 30, 2021 was primarily due to higher sales prices and volumes to third parties and higher sales price to Westlake per the terms of the Ethylene Sales Agreement, and the buyer deficiency fee and Shortfall recognized during the period, partially offset by lower sales volumes to Westlake during the six months ended June 30, 2021.

The average sales price in the six months ended June 30, 2021 contributed to a 25.4% increase in net sales, primarily due to higher ethylene sales prices to third parties and to Westlake per the terms of the Ethylene Sales Agreement.

The lower sales volume contributed to a 8.4% decrease in net sales in the six months ended June 30, 2021 compared to the six months ended June 30, 2020.

The decrease in sales volumes for the six months ended June 30, 2021 was primarily due to the force majeure events during the period that impacted OpCo's production facilities.

MLP distributable cash flow decreased by $8.2 million to $13.0 million in the third quarter of 2021 from $21.2 million in the third quarter of 2020.

The decrease in the third quarter of 2021, as compared to the prior-year period, was primarily attributable to the decreased earnings at OpCo, increased turnaround reserves and higher maintenance expense due to OpCo's Petro 2 ethylene unit turnaround that commenced in September 2021.

EBITDA decreased by $25.4 million to $94.7 million in the third quarter of 2021 from $120.1 million in the third quarter of 2020.

The decrease was primarily due to the buyer deficiency recognized during the third quarter of 2020, higher ethane feedstock and natural gas costs, partially offset by higher sales volumes and prices to Westlake and the buyer deficiency fee and Shortfall recognized during the third quarter of 2021.

Nine Months Ended September 30, 2021 Compared with Nine Months Ended September 30, 2020

Total net sales increased by $163.4 million, or 22.7%, to $884.4 million in the nine months ended September 30, 2021 from $721.0 million in the nine months ended September 30, 2020.

The increase in net sales in the nine months ended September 30, 2021 was primarily due to higher sales prices and volumes to third parties and higher sales price to Westlake per the terms of the Ethylene Sales Agreement, as well as the buyer deficiency fee and Shortfall recognized during the nine months ended September 30, 2021, partially offset by the buyer deficiency fee recognized during the first nine months of 2020 and lower sales volumes to Westlake during the nine months ended September 30, 2021.

The average sales price in the nine months ended September 30, 2021 contributed to a 27.6% increase in net sales, primarily due to higher ethylene sales prices to third parties and to Westlake.

Gross Profit.

Gross profit increased to $218.7 million for the six months ended June 30, 2021 from $193.6 million for the six months ended June 30, 2020.

The gross profit margin in the six months ended June 30, 2021 was 37.0%, as compared to 39.6% for the six months ended June 30, 2020.

The six months ended June 30, 2021, gross profit margin was lower mainly due to increased ethane feedstock and natural gas costs, partially offset by higher prices for ethylene sold to third parties and the buyer deficiency fee and Shortfall recognized during the period compared to the six months ended June 30, 2020.

Gross profit increased to $294.7 million for the nine months ended September 30, 2021 from $294.0 million for the nine months ended September 30, 2020.

The gross profit margin in the nine months ended September 30, 2021 was 33.3%, as compared to 40.8% for the nine months ended September 30, 2020.

The decrease was lower mainly due to the decreased sales volume to Westlake, increased ethane feedstock and natural gas costs, partially offset by higher prices for ethylene sold to Westlake and third parties and the buyer deficiency fee and Shortfall recognized during the nine months ended September 30, 2021 compared to the nine months ended September 30, 2020.

Selling, General and Administrative Expenses.

Selling, general and administrative expenses increased by $4.6 million, or 37.4%, to $16.9 million in the six months ended June 30, 2021 as compared to $12.3 million in the six months ended June 30, 2020.

The increase in the six months ended June 30, 2021 was mainly attributable to higher service costs as compared to the six months ended June 30, 2020.

Selling, general and administrative expenses increased by $6.1 million, or 32.8%, to $24.7 million in the nine months ended September 30, 2021 as compared to $18.6 million in the nine months ended September 30, 2020.

The increase in the nine months ended September 30, 2021 was mainly attributable to higher service costs and allowance for doubtful accounts, as compared to the nine months ended September 30, 2020.

Interest Expense.

Interest expense decreased by $2.9 million to $4.5 million in the six months ended June 30, 2021 from $7.4 million in the six months ended June 30, 2020, largely due to a lower average interest rate on debt.

Interest expense decreased by $3.0 million to $6.7 million in the nine months ended September 30, 2021 from $9.7 million in the nine months ended September 30, 2020, largely due to a lower average interest rate on debt.

MLP Distributable Cash Flow.

MLP distributable cash flow increased by $6.6 million to $41.8 million in the six months ended June 30, 2021 from $35.2 million in the six months ended June 30, 2020.

The increase in the six months ended June 30, 2021, as compared to the prior-year period, was primarily attributable to the higher earnings at OpCo, partially offset by increased turnaround reserves and higher maintenance expense.

EBITDA increased by $24.3 million to $258.1 million in the six months ended June 30, 2021 from $233.8 million in the six months ended June 30, 2020.

The increase, as compared to the prior-year period, was primarily due to higher sales prices and volumes for ethylene sold to third parties and the buyer deficiency fee and Shortfall recognized during the period, partially offset by lower sales volumes to Westlake as a result of force majeure events and higher ethane feedstock and natural gas costs in the six months ended June 30, 2021.

CASH FLOW DISCUSSION FOR THE SIX MONTHS ENDED JUNE 30, 2021 AND 2020

MLP distributable cash flow decreased by $1.6 million to $54.8 million in the nine months ended September 30, 2021 from $56.4 million in the nine months ended September 30, 2020.

The decrease in the nine months ended September 30, 2021 was primarily attributable to the decreased earnings at OpCo, increased turnaround reserves and higher maintenance expense related to OpCo's Petro 2 ethylene unit turnaround that commenced in September 2021.

EBITDA decreased by $1.1 million to $352.8 million in the nine months ended September 30, 2021 from $353.9 million in the nine months ended September 30, 2020.

The decrease was primarily due to lower sales volumes to Westlake as a result of force majeure events, higher ethane feedstock and natural gas costs and the buyer deficiency fee recognized during the nine months ended September 30, 2020, partially offset by higher sales prices and volumes for ethylene sold to third parties, higher sales prices to Westlake and the buyer deficiency fee and Shortfall recognized in the nine months ended September 30, 2021.

CASH FLOW DISCUSSION FOR THE NINE MONTHS ENDED SEPTEMBER 30, 2021 AND 2020

Operating Activities

Operating activities provided cash of $287.1 million in the first six months of 2021 compared to cash provided by operating activities of $223.7 million in the first six months of 2020.

The $63.4 million increase in cash flows from operating activities was mainly due to an increase in cash provided for working capital and income from operations during the six months ended June 30, 2021 as compared to the prior-year period.

Changes in components of working capital, which we define for the purposes of this cash flow discussion as accounts receivable, net—Westlake, accounts receivable, net—third parties, inventories, prepaid expenses and other current assets less accounts payable—Westlake, accounts payable—third parties and accrued liabilities, provided cash of $35.0 million in the first six months of 2021 as compared to $2.1 million of cash used in the first six months of 2020, resulting in an overall favorable change of $37.1 million.

The favorable change in working capital was mainly attributable to a favorable change in Westlake, net accounts receivable due to the receipt of the buyer deficiency fee recognized in 2020 related to the force majeure events partially offset by unfavorable changes in accounts receivable, net—third parties due to higher sales prices in the six months ended June 30, 2021.

Operating activities provided cash of $386.6 million in the first nine months of 2021 compared to cash provided by operating activities of $340.9 million in the first nine months of 2020.

The $45.7 million increase in cash flows from operating activities was mainly due to an increase in cash provided from working capital during the nine months ended September 30, 2021 as compared to the prior-year period.

Changes in components of working capital, which we define for the purposes of this cash flow discussion as accounts receivable, net—Westlake, accounts receivable, net—third parties, inventories, prepaid expenses and other current assets less accounts payable—Westlake, accounts payable—third parties and accrued liabilities, provided cash of $57.3 million in the first nine months of 2021 as compared to $2.1 million of cash used in the first nine months of 2020, resulting in an overall favorable change of $59.4 million.

Investing Activities

Net cash used for investing activities during the first six months of 2021 was $126.2 million as compared to net cash used for investing activities of $29.6 million in the first six months of 2020, mainly due to increased net cash used under the Investment Management Agreement in the first six months of 2021, as compared to the prior-year period.

Capital expenditures during the first six months of 2021 and 2020 were primarily related to projects to improve production capacity or reduce costs, maintenance and safety and environmental projects at our facilities.

Net cash used for investing activities during the first nine months of 2021 was $111.4 million as compared to net cash used for investing activities of $58.2 million in the first nine months of 2020, mainly due to increased net cash used under the Investment Management Agreement in the first nine months of 2021, as compared to the prior-year period.

Capital expenditures during the first nine months of 2021 and 2020 were primarily related to projects to improve production capacity or reduce costs, maintenance and safety and environmental projects at our facilities.

Financing Activities

Net cash used for financing activities during the first six months of 2021 was $160.4 million as compared to net cash used by financing activities of $190.4 million in the first six months of 2020.

The outflows during the first six months of 2021 were related to the distribution of $127.3 million to Westlake and of $33.2 million to other unitholders by the Partnership.

The cash outflows during the first six months of 2020 were related to the distribution of $157.2 million to Westlake and of $33.2 million to other unitholders by the Partnership.

Net cash used for financing activities during the first nine months of 2021 was $273.7 million as compared to net cash used for financing activities of $279.3 million in the first nine months of 2020.

The outflows during the first nine months of 2021 were related to the distribution of $223.9 million to Westlake and of $49.8 million to other unitholders by the Partnership.

The cash outflows during the first nine months of 2020 were related to the distribution of $229.5 million to Westlake and of $49.8 million to other unitholders by the Partnership.

LIQUIDITY AND CAPITAL RESOURCES

2 unchanged sentences

The Partnership intends to use the net proceeds of sales of the common units, if any, for general partnership purposes, including the funding of potential drop-downs and other acquisitions.

No common units had been issued under the ATM Program as of June 30, 2021.

No common units had been issued under the ATM Program as of September 30, 2021.

Based on the terms of our cash distribution policy, we expect that we will distribute to our partners most of the excess cash generated by our operations.

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Westlake's credit facility and various indentures do not prevent OpCo from making distributions to us.

On August 2, 2021, the board of directors of Westlake Chemical Partners GP LLC, our general partner, approved a quarterly distribution of $0.4714 per unit payable on August 26, 2021 to unitholders of record as of August 12, 2021, which equates to a total amount of approximately $16.6 million per quarter, or approximately $66.4 million per year in aggregate, based on the number of common units outstanding on June 30, 2021.

On November 1, 2021, the board of directors of Westlake Chemical Partners GP LLC, our general partner, approved a quarterly distribution of $0.4714 per unit payable on November 29, 2021 to unitholders of record as of November 12, 2021, which equates to a total amount of approximately $16.6 million per quarter, or approximately $66.4 million per year in aggregate, based on the number of common units outstanding on September 30, 2021.

We do not have a legal or contractual obligation to pay distributions on a quarterly basis or any other basis at our minimum quarterly distribution rate or any other rate.

1 unchanged sentence

Westlake has historically funded expansion capital expenditures related to Lake Charles Olefins and Calvert City Olefins.

Total capital expenditures for the six months ended June 30, 2021 and 2020 were $27.3 million and $20.6 million, respectively.

No funding was required by OpCo to fund capital expenditures during the six months ended June 30, 2021 and 2020.

Total capital expenditures for the nine months ended September 30, 2021 and 2020 were $38.5 million and $29.2 million, respectively.

No funding was required by OpCo to fund capital expenditures during the nine months ended September 30, 2021 and 2020.

We expect that Westlake will loan additional cash to OpCo to fund its expansion capital expenditures in the future, but Westlake is under no obligation to do so.

Cash and Cash Equivalents

As of June 30, 2021, our cash and cash equivalents totaled $17.7 million.

As of September 30, 2021, our cash and cash equivalents totaled $18.6 million.

In addition, we have cash invested under the Investment Management Agreement (as described below) and a revolving credit facility with Westlake available to supplement cash if needed, as described under "Indebtedness" below.

1 unchanged sentence

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.

The Partnership had $222.2 million of cash invested under the Investment Management Agreement at June 30, 2021.

The Partnership had $196.3 million of cash invested under the Investment Management Agreement at September 30, 2021.

OpCo Revolver

1 unchanged sentence

The OpCo Revolver is scheduled to mature on September 25, 2023.

As of June 30, 2021, outstanding borrowings under the OpCo Revolver totaled $22.6 million and bore interest at the LIBOR rate plus 2.0%, which is accrued in arrears quarterly.

As of September 30, 2021, outstanding borrowings under the OpCo Revolver totaled $22.6 million and bore interest at the LIBOR rate plus 2.0%, which is accrued in arrears quarterly.

In 2015, we entered into a senior, unsecured revolving credit agreement with an affiliate of Westlake (the "MLP Revolver").

7 unchanged sentences

The repayment of borrowings under the MLP Revolver is subject to acceleration upon the occurrence of an event of default.

As of June 30, 2021, outstanding borrowings under the MLP Revolver totaled $377.1 million and bore interest at the LIBOR rate plus 2.0%, which is accrued in arrears quarterly.

As of September 30, 2021, outstanding borrowings under the MLP Revolver totaled $377.1 million and bore interest at the LIBOR rate plus 2.0%, which is accrued in arrears quarterly.

We intend to use the MLP Revolver to purchase additional limited partnership interests in OpCo in the future, in the event OpCo desires to sell such additional interests to us, for other acquisitions and for general corporate purposes.

11 unchanged sentences

• widespread outbreak of an illness or any other communicable disease, or any other public health crisis, including the COVID-19 pandemic and efforts to contain its transmission;

• our plans and Westlake's plans to respond to the challenges presented by the COVID-19 epidemic, as well as the timing and deferral of the planned turnaround at OpCo's Petro 2 ethylene unit;

• our plans and Westlake's plans to respond to the challenges presented by the COVID-19 epidemic, as well as the duration of the planned ongoing turnaround at OpCo's Petro 2 ethylene unit;

• the parties to whom we will sell ethylene and on what basis;

41 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 2. Management’s Discussion and Analysis