What changed in this filing

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Item 2. Management’s Discussion and Analysis

2022-05-04 compared with 2021-11-03 · 69 added, 117 removed, 205 unchanged (48% of the section changed)

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Unless otherwise indicated, references in this report to "we," "our," "us" or like terms, refer to Westlake Chemical Partners LP (the "Partnership"), Westlake Chemical OpCo LP ("OpCo") and Westlake Chemical OpCo GP LLC ("OpCo GP").

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

References to "Westlake" refer to Westlake Corporation (formerly known as Westlake Chemical Corporation) and its consolidated subsidiaries other than the Partnership, OpCo GP and OpCo.

The following discussion contains forward-looking statements.

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On March 29, 2019, we completed a private placement of 2,940,818 common units and used the net proceeds to purchase an additional 4.5% interest in OpCo, effective January 1, 2019, resulting in us owning an aggregate 22.8% limited partner interest in OpCo.

Our sole revenue generating asset is our 22.8% limited partner interest in OpCo, a limited partnership formed by Westlake and us in anticipation of the IPO to own and operate an ethylene production business.

Currently, our sole revenue generating asset is our 22.8% limited partner interest in OpCo, a limited partnership formed by Westlake and us in anticipation of the IPO to own and operate an ethylene production business.

We control OpCo through our ownership of its general partner.

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The Ethylene Sales Agreement is a long-term, fee-based agreement with a minimum purchase commitment and includes variable pricing based on OpCo's actual feedstock and natural gas costs and estimated other costs of producing ethylene (including OpCo's estimated operating costs and a five-year average of OpCo's expected future maintenance capital expenditures and other turnaround expenditures based on OpCo's planned ethylene production capacity for the year), plus a fixed margin per pound of $0.10 less revenue from co-products sales.

Pursuant to the Ethylene Sales Agreement, Westlake's obligation to pay for the annual minimum commitment (95% of OpCo's budgeted ethylene production), which is measured on an annual basis, is not reduced for the first 45 days of a force majeure event, but is reduced for the portion of a force majeure event extending beyond the 45th day.

In the event of a force majeure event, we recognize buyer deficiency fees representing fixed margin and unavoided operating and maintenance capital expenditures and maintenance expenses associated with ethylene that OpCo would have produced and is not expected to be produced based on anticipated production.

Pursuant to the Ethylene Sales Agreement, Westlake's obligation to pay for the annual minimum commitment (95% of OpCo's budgeted ethylene production), which is measured on an annual basis, is not reduced for a force majeure event lasting fewer than 45 consecutive days.

In the event of a force majeure event, we recognize buyer deficiency fees representing fixed margin and unavoided operating and maintenance capital expenditures and maintenance expenses per pound of volume committed by Westlake during the force majeure.

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

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Operating expenses, maintenance capital expenditures and turnaround costs are built into the price per pound of ethylene charged to Westlake under the Ethylene Sales Agreement.

Because the expenses other than feedstock costs and natural gas are based on forecasted amounts and remain a fixed component of the price per pound of ethylene sold under the Ethylene Sales Agreement for any given 12-month period, our ability to manage operating expenses, maintenance expenditures and turnaround cost may directly affect our profitability and cash flows.

Because the expenses other than feedstock costs and natural gas are based on forecasted amounts and remain a fixed component of the price per pound of ethylene sold under the Ethylene Sales Agreement for any given 12-month period, our ability to manage operating expenses, maintenance expenditures and turnaround costs may directly affect our profitability and cash flows.

The impact on profitability is partially mitigated by the fact that we generally recognize any Shortfall as revenue in the period such costs and expenses are incurred.

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Reconciliations for each of MLP distributable cash flow and EBITDA are included in the "Results of Operations" section below.

Significant Developments Affecting Industry Conditions and Our Business

COVID-19, Industry Conditions and Our Business

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.

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

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 $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 September 30, Nine Months Ended September 30,

2021 2020 2021 2020

Three Months Ended March 31,

(dollars in thousands)

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Interest expense—Westlake (2,199) (2,236)

Other income, net 24 17 52 725

Other expense (income), net (25) 7

Income before income taxes 80,988 76,797

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

Income tax provision 163 175

Net income 80,825 76,622

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

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

Sales Price Volume Average

Three Months Ended March 31, 2022

Sales Price Volume

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+22.0 % +18.1 %

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

2021 2020 2021 2020

Three Months Ended March 31,

Average industry prices (1)

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_____________

(1) Industry pricing data was obtained through IHS Markit ("IHS").

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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 September 30, Nine Months Ended September 30,

2021 2020 2021 2020

Three Months Ended March 31,

(dollars in thousands)

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34,253 28,898

Mark-to-market adjustment loss (gain) on derivative contracts — 1,572 — (215)

Contribution to turnaround reserves (7,204) (12,332)

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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 September 30, Nine Months Ended September 30,

2021 2020 2021 2020

Three Months Ended March 31,

(dollars in thousands)

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Net Income 80,825 76,622

Other income, net 24 17 52 725

Other income (expense), net (25) 7

Interest expense (2,199) (2,236)

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

Provision for income taxes (163) (175)

Income from operations 83,212 79,026

Depreciation and amortization 31,282 27,542

Other income, net 24 17 52 725

Other income (expense), net (25) 7

EBITDA $ 114,469 $ 106,575

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.

For the quarter ended March 31, 2022, net income was $80.8 million on net sales of $362.4 million.

This represents an increase in net income of $4.2 million as compared to net income of $76.6 million on net sales of $268.2 million for the quarter ended March 31, 2021.

Net income attributable to the Partnership for the first quarter of 2022 was $16.2 million as compared to $15.1 million for the first quarter of 2021, an increase of $1.1 million.

Income from operations was $83.2 million for the first quarter of 2022 as compared to $79.0 million for the first quarter of 2021.

Net income, net income attributable to the Partnership and operating income for the first quarter of 2022 as compared to the first quarter of 2021 were higher primarily due to increased ethylene sales volumes and prices to Westlake per the terms of the Ethylene Sales Agreement and higher co-products sales, partially offset by a decrease in ethylene sales prices to third parties and higher ethane feedstock and natural gas costs.

Net sales for the first quarter of 2022 increased by $94.2 million as compared to net sales for the first quarter of 2021, mainly due to higher production during the current quarter resulting in higher sales volumes and higher prices for co-products sales and ethylene sold to Westlake, partially offset by lower ethylene sales prices to third parties.

RESULTS OF OPERATIONS

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 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 $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 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 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.

First Quarter 2022 Compared with First Quarter 2021

Total net sales increased by $94.2 million, or 35.1%, to $362.4 million in the first quarter of 2022 from $268.2 million in the first quarter of 2021.

The increase in net sales in the first quarter of 2022 was primarily due to higher sales prices and volumes for ethylene and co-products driven by increased production during the first quarter of 2022 compared to the first quarter of 2021.

Production volumes during the first quarter of 2021 were lower due to unplanned outages related to Winter storm Uri.

The average sales price in the first quarter of 2022 contributed to a 22.0% increase in net sales, primarily due to higher ethylene sales prices to Westlake per the terms of the Ethylene Sales Agreement and co-product sales prices.

The average sales volume in the first quarter of 2022 contributed to a 18.1% increase in net sales, primarily due to higher production resulting in increased sales volumes to Westlake and increased co-product sales volumes as compared to the first quarter of 2021.

Gross Profit.

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.

Gross profit increased to $91.4 million for the first quarter of 2022 from $87.7 million for the first quarter of 2021.

The gross profit margin in the first quarter of 2022 was 25.2%, as compared to 32.7% for the first quarter of 2021.

The increase in gross profit was primarily due to the higher ethylene sales prices and volumes sold to Westlake and higher co-product sales, partially offset by lower ethylene sales prices to third parties in the first quarter of 2022 compared to the first quarter of 2021 .

The first quarter 2022 gross profit margin was lower than the first quarter of 2021 mainly due to higher ethane feedstock and natural gas costs, partially offset by higher prices and volumes for co-products sales and ethylene sold to Westlake in the first quarter of 2022.

Selling, General and Administrative Expenses.

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.

Selling, general and administrative expenses decreased by $0.5 million, or 5.7%, to $8.2 million in the first quarter of 2022 as compared to $8.7 million in the first quarter of 2021.

The decrease in the first quarter of 2022 was mainly attributable to a decrease in service costs, partially offset by an increase in provision for doubtful accounts as compared to the first quarter of 2021.

Interest Expense.

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.

Interest expense of $2.2 million in the first quarter of 2022 was comparable to the first quarter of 2021.

MLP Distributable Cash Flow.

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

MLP distributable cash flow increased by $3.1 million to $19.3 million in the first quarter of 2022 from $16.2 million in the first quarter of 2021.

The increase in the first quarter of 2022, as compared to the prior-year period, was primarily attributable to the increased earnings at OpCo and decreased turnaround reserves, partially offset by higher maintenance expense.

EBITDA increased by $7.9 million to $114.5 million in the first quarter of 2022 from $106.6 million in the first quarter of 2021.

The increase was primarily due to higher ethylene sales volumes and prices to Westlake and higher co-product sales, partially offset by lower third party ethylene sales prices, higher ethane feedstock and natural gas costs.

CASH FLOW DISCUSSION FOR THE THREE MONTHS ENDED MARCH 31, 2022 AND 2021

Operating Activities

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.

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 nine months ended September 30, 2021.

Operating activities provided cash of $104.8 million in the first three months of 2022 compared to cash provided by operating activities of $155.4 million in the first three months of 2021.

The $50.6 million decrease in cash flows from operating activities was mainly due to a decrease in cash used from working capital during the three months ended March 31, 2022 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, used cash of $10.7 million in the first three months of 2022 as compared to $51.5 million of cash provided in the first three months of 2021, resulting in an overall unfavorable change of $62.2 million.

The unfavorable change in working capital was mainly attributable to an unfavorable change in accounts payable and accrued and other liabilities due to the timing of payment of accruals related to the Petro 2 turnaround activities in 2021, as well as Westlake and third party net accounts receivable due to higher sales prices and volumes in the three months ended March 31, 2022.

Investing Activities

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.

Net cash used for investing activities during the first three months of 2022 was $25.3 million as compared to net cash used for investing activities of $76.6 million in the first three months of 2021, mainly due to decreased net cash used under the Investment Management Agreement, partially offset by increased capital expenditures in the first three months of 2022, as compared to the prior-year period.

Capital expenditures during the first three months of 2022 and 2021 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 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.

Net cash used for financing activities during the first three months of 2022 was $77.3 million as compared to net cash used for financing activities of $78.7 million in the first three months of 2021.

The outflows during the first three months of 2022 were related to the distribution of $60.7 million to Westlake and of $16.6 million to other unitholders by the Partnership.

The cash outflows during the first three months of 2021 were related to the distribution of $62.1 million to Westlake and of $16.6 million to other unitholders by the Partnership.

LIQUIDITY AND CAPITAL RESOURCES

Liquidity and Financing Arrangements

Pursuant to the terms of the ATM Agreement, entered in October 2018 and amended in February 2020, among the Partnership and various investment banks, the Partnership may offer and sell the Partnership's common units from time to time to or through the Managers, as the Partnership's sales agents or as principals, having an aggregate offering amount of up to $50.0 million (the "ATM Program").

Pursuant to the terms of the Equity Distribution Agreement, entered in October 2018 and amended in February 2020, among the Partnership and various investment banks, the Partnership may offer and sell the Partnership's common units from time to time to or through the investment banks, as the Partnership's sales agents or as principals, having an aggregate offering amount of up to $50.0 million (the "ATM Program").

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 September 30, 2021.

No common units had been issued under the ATM Program as of March 31, 2022.

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.

To the extent we do not generate sufficient cash flow to fund capital expenditures, we expect to fund them primarily from external sources, including borrowing directly from Westlake, as well as future issuances of equity and debt interests.

The Partnership maintains separate bank accounts, but Westlake continues to provide treasury services on our behalf under the Services and Secondment Agreement.

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We believe that cash generated from these sources will be sufficient to meet our short-term working capital requirements and long-term capital expenditure requirements and to make quarterly cash distributions.

Westlake may also provide other direct and indirect financing to us from time to time, although it is not required to do so.

Westlake may also provide other direct and indirect financing to us from time to time, although it is not obligated to do so.

In order to fund non-annual turnaround expenditures, we cause OpCo to reserve an amount for turnaround costs during each twelve-month period designed to cover future turnaround activities.

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

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.

On May 2, 2022, the board of directors of Westlake Chemical Partners GP LLC, our general partner, approved a quarterly distribution of $0.4714 per unit payable on May 26, 2022 to unitholders of record as of May 12, 2022, 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 March 31, 2022.

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.

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

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.

Total capital expenditures for the three months ended March 31, 2022 and 2021 were $20.3 million and $12.7 million, respectively.

No such funding was required by OpCo during the three months ended March 31, 2022 and 2021.

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

As of March 31, 2022, our cash and cash equivalents totaled $19.2 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.

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

The Partnership had $111.2 million of cash invested under the Investment Management Agreement at March 31, 2022.

OpCo Revolver

In connection with the IPO, OpCo entered into a $600.0 million revolving credit facility with Westlake, as amended in August and December 2017 and March 2020 (the "OpCo Revolver") that may be used to fund growth projects and working capital needs.

In connection with the IPO, OpCo entered into a $600.0 million revolving credit facility with an affiliate of Westlake, as amended in August and December 2017 and March 2020 (the "OpCo Revolver") that may be used to fund growth projects and working capital needs.

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

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.

As of March 31, 2022, outstanding borrowings under the OpCo Revolver totaled $22.6 million and bore interest at the London Interbank Offered Rate ("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").

The MLP Revolver has a borrowing capacity of $600.0 million and is scheduled to mature in 2023.

On March 29, 2019, the Partnership borrowed $123.5 million under the MLP Revolver to partially fund the purchase of an additional 4.5% interest in OpCo.

The MLP Revolver has a borrowing capacity of $600.0 million and is scheduled to mature in March 2023, although we intend to extend the term prior to the scheduled maturity date.

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.

4 unchanged sentences

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

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.

As of March 31, 2022, 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.

10 unchanged sentences

• industry market outlook, including prices and margins in third-party ethylene and co-products sales;

• 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 duration of the planned ongoing turnaround at OpCo's Petro 2 ethylene unit;

• widespread outbreak of an illness or any other communicable disease, or any other public health crisis, including the coronavirus ("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 pandemic;

• the impact of ongoing supply chain constraints and workforce availability caused by the COVID-19 pandemic and the conflict between Russia and Ukraine;

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

4 unchanged sentences

• timing of and amount of capital expenditures;

• the Partnership's At-the-Market program and the use of any net proceeds from any sales under that program;

• our At-the-Market program and the use of any net proceeds from any sales under that program;

• our and OpCo's ability to extend our credit agreements with Westlake;

• potential loans from Westlake to OpCo to fund OpCo's expansion capital expenditures in the future;

11 unchanged sentences

• the availability, cost and volatility of raw materials and energy;

• low crude oil prices reducing the cost advantage of ethane-based ethylene producers;

• uncertainties associated with the United States and worldwide economies, including those due to political tensions and unrest in the Middle East and elsewhere;

• lower crude oil prices reducing the cost advantage of ethane-based ethylene producers;

• uncertainties associated with the United States and worldwide economies, including those due to political tensions and unrest in the Middle East and elsewhere, including the conflict between Russia and Ukraine;

• uncertainties associated with pandemic infectious diseases, particularly COVID-19;

9 unchanged sentences

• technological developments;

• information systems failures and cyberattacks;

• our ability to integrate acquired businesses;

8 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