What changed in this filing

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Item 8. Financial Statements and Supplementary Data

2023-03-01 compared with 2022-03-02 · 108 added, 117 removed, 626 unchanged (26% of the section changed)

15 unchanged sentences

In making this assessment, management used the criteria set forth by the Committee of Sponsoring Organizations of the Treadway Commission in Internal Control—Integrated Framework (2013).

Based on its assessment, Partnership's management has concluded that the Partnership's internal control over financial reporting was effective as of December 31, 2021 based on those criteria.

Based on its assessment, the Partnership's management has concluded that the Partnership's internal control over financial reporting was effective as of December 31, 2022 based on those criteria.

PricewaterhouseCoopers LLP, the independent registered public accounting firm that audited the financial statements included in this Annual Report on Form 10-K, has also audited the effectiveness of internal control over financial reporting as of December 31, 2022 as stated in their report that appears on the following page.

31 unchanged sentences

Revenue from the Ethylene Sales Agreement

As described in Notes 2 and 11 to the consolidated financial statements, the Partnership recognized net sales to Westlake Chemical Corporation ("Westlake") of $1,027 million for the year ended December 31, 2021, including a buyer deficiency fee of $51 million and a shortfall of $59 million.

As described in Notes 2 and 11 to the consolidated financial statements, the Partnership recognized net sales to Westlake Corporation ("Westlake") of $1,343 million for the year ended December 31, 2022, including a buyer deficiency fee of $24 million.

The Ethylene Sales Agreement requires Westlake to purchase a minimum volume of ethylene each year equal to 95% of Westlake Chemical OpCo LP's ("OpCo") planned ethylene production per year, subject to certain exceptions and a maximum commitment of 3.8 billion pounds per year.

3 unchanged sentences

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 contract year, OpCo is entitled to recover the shortfall in such production costs (proportionate to the volume sold to Westlake) in the subsequent year ("Shortfall").

As a result of force majeure events during 2021, the Partnership recognized a buyer deficiency fee and Shortfall.

The principal considerations for our determination that performing procedures relating to revenue from the Ethylene Sales Agreement is a critical audit matter are the significant audit effort in performing procedures and evaluating the calculation of the fee for each pound of ethylene, the buyer deficiency fee and Shortfall.

In the event Westlake purchases less than its annual commitment, the Partnership recognizes buyer deficiency fees representing fixed margin and all expenses and expenditures incurred per pound of volume committed but not taken by Westlake.

The Partnership has recognized buyer deficiency fees of $24 million during 2022.

Addressing the matter involved performing procedures and evaluating audit evidence in connection with forming our overall opinion on the consolidated financial statements.

These procedures included testing the effectiveness of controls relating to the accuracy of the fees used to determine revenue from the Ethylene Sales Agreement.

These procedures also included, among others, testing the completeness and accuracy of underlying inputs used in the price, buyer deficiency fee and Shortfall calculation, and testing the accuracy of the minimum volume of ethylene purchased by Westlake as part of the Ethylene Sales Agreement.

These procedures also included, among others, testing the completeness and accuracy of underlying inputs used in the fee for each pound of ethylene purchased by Westlake, buyer deficiency fee and Shortfall calculation, and testing the accuracy of the volume of ethylene purchased by Westlake as part of the Ethylene Sales Agreement.

/s/ PricewaterhouseCoopers LLP

4 unchanged sentences

CONSOLIDATED BALANCE SHEETS

2021 December 31,

(in thousands of dollars,

2 unchanged sentences

Cash and cash equivalents $ 64,782 $ 17,057

Receivable under the Investment Management Agreement—Westlake Chemical

Receivable under the Investment Management Agreement—Westlake

Corporation ("Westlake") 64,996 106,243

15 unchanged sentences

Deferred income taxes 1,656 1,530

Other liabilities — 381

Total liabilities 468,271 508,000

45 unchanged sentences

Common Unitholders -

Public and Privately Held Common Unitholder -

Publicly and Privately Held Common Unitholder -

Westlake General

5 unchanged sentences

Units issued for vested phantom units 81 — — — 81

Net proceeds from private placement of common units

62,661 — — — 62,661

Quarterly distribution to unitholders ( 39,734 ) ( 26,629 ) — — ( 66,363 )

12 unchanged sentences

Quarterly distribution to noncontrolling interest retained in OpCo by Westlake — — — ( 337,598 ) ( 337,598 )

— — — ( 277,856 ) ( 277,856 )

Balances at December 31, 2022 $ 480,643 $ 53,859 $ ( 242,572 ) $ 611,778 $ 903,708

11 unchanged sentences

Loss from disposition of property, plant and equipment 4,707 4,198 1,000

Other gains, net ( 276 ) ( 269 ) ( 459 )

Other losses (gains), net 356 ( 276 ) ( 269 )

Changes in operating assets and liabilities

3 unchanged sentences

Prepaid expenses and other current assets 91 ( 4 ) 78

Accounts payable 19,782 4,247 421

Accounts payable—third parties ( 17,001 ) 19,782 4,247

Accrued and other liabilities ( 37,533 ) 37,574 1,672

9 unchanged sentences

Cash flows from financing activities

Net proceeds from private placement of common units — — 62,661

Proceeds from debt payable to Westlake 32,000 — —

Repayment of debt payable to Westlake ( 32,000 ) — —

Quarterly distributions to noncontrolling interest retained in OpCo by

1 unchanged sentence

Quarterly distributions to unitholders ( 66,411 ) ( 66,379 ) ( 66,363 )

Repayment of debt payable to Westlake — — ( 201,445 )

Net cash used for financing activities ( 404,009 ) ( 344,235 ) ( 378,198 )

15 unchanged sentences

The remaining 77.2 % limited partner interest in OpCo is owned by Westlake Corporation.

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

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

OpCo and Westlake entered into an ethylene sales agreement (the "Ethylene Sales Agreement") pursuant to which the Partnership generates a substantial majority of its revenue.

29 unchanged sentences

Capitalized interest costs are included in property, plant and equipment and are depreciated over the useful life of the related asset.

Capitalized interest was zero for the years ended December 31, 2021 and 2020 and $ 175 for the year ended December 31, 2019.

Capitalized interest was $ 80 , $ 0 , and $ 0 for the years ended December 31, 2022, 2021 and 2020.

Repair and maintenance costs are charged to operations as incurred.

22 unchanged sentences

The accounting guidance requires that goodwill be tested for impairment at least annually, or when events or changes in circumstances indicate the fair value of a reporting unit with goodwill has been reduced below its carrying value.

The impairment test for the recorded goodwill was performed in October 2021 and did not indicate impairment of the goodwill.

The impairment test for the recorded goodwill was performed in the fourth quarter of 2022 and did not indicate impairment of the goodwill.

As of December 31, 2022, the Partnership's recorded goodwill was $ 5,814 .

4 unchanged sentences

The costs related to the significant overhaul and refurbishment activities include maintenance materials, parts and direct labor costs.

The costs of the turnaround are deferred when incurred at the time of the turnaround and amortized (within depreciation and amortization) on a straight-line basis until the next planned turnaround, which ranges from five to six years .

Deferred turnaround costs are presented as a component of other assets, net.

Deferred turnaround costs are presented as a component of deferred charges and other assets, net.

The cash outflows related to these costs are included in operating activities in the consolidated statement of cash flows.

19 unchanged sentences

See Note 2 for a description of the terms of the Ethylene Sales Agreement.

Partnership's direct commodity price risk is limited to the sales to third parties.

The Partnership's direct commodity price risk is limited to the sales to third parties.

See the Partnership's consolidated statement of operations for the disaggregation of net sales to Westlake and net sales to third parties.

23 unchanged sentences

Actual results could differ from those estimates.

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 for the fiscal years ended December 31, 2020 and 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 (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.

Other Comprehensive Income

The Partnership has not reported consolidated statements of comprehensive income for the years ended December 31, 2022, 2021 and 2020 due to immateriality of the components of other comprehensive income.

WESTLAKE CHEMICAL PARTNERS LP

1 unchanged sentence

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

Other Comprehensive Income

The Partnership has not reported consolidated statements of comprehensive income for the years ended December 31, 2021, 2020 and 2019 due to immateriality of the components of other comprehensive income.

Recently Adopted Accounting Standards

Reference Rate Reform (ASU No.

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 from March 12, 2020 through December 31, 2022.

The Partnership adopted this accounting standard effective October 1, 2021, and the adoption did not have a material impact on the Partnership's consolidated financial position, results of operations and cash flows.

Agreements with Westlake and Related Parties

12 unchanged sentences

The estimated operating costs and the expected future maintenance capital expenditures and other turnaround expenditures will be adjusted at the end of each year, to be applicable for the fee for the next calendar year, to reflect certain changes in forecasted costs.

Under the Ethylene Sales Agreement OpCo has the option to curtail up to approximately 5% of its ethylene production annually in the event OpCo reasonably determines that its sales of such ethylene to third parties during the relevant period would be uneconomic.

Certain of the pricing components that make up the price for ethylene sold under the Ethylene Sales Agreement are modified to reflect the portion of OpCo's production capacity that is used to process Westlake's purge gas instead of producing ethylene.

Costs specific to the processing of Westlake's purge gas are recovered under the Services and Secondment Agreement (as described below), and not the Ethylene Sales Agreement.

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, the Partnership recognizes 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 p eriod.

Payment for the buyer deficiency fee is scheduled to be received by the Partnership after the conclusion of the year in which the force majeure event occurred.

WESTLAKE CHEMICAL PARTNERS LP

1 unchanged sentence

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

The result of the fee structure is that OpCo should generally recover the portion of its total operating costs and maintenance capital expenditures and other turnaround expenditures corresponding to the portion of OpCo's aggregate production that is purchased by Westlake.

1 unchanged sentence

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 contract year, OpCo is entitled to recover the shortfall in such production costs (proportionate to the volume sold to Westlake) in the subsequent year ("Shortfall").

The Ethylene Sales Agreement provides that, if compliance with any law adopted or modified following our IPO results in OpCo incurring additional costs in excess of $ 500,000 in any contract year, OpCo is entitled to charge Westlake a monthly surcharge following efforts to mitigate the effects of such matter.

The Ethylene Sales Agreement provides that, if compliance with any law adopted or modified following the IPO results in OpCo incurring additional costs in excess of $ 500,000 in any contract year, OpCo is entitled to charge Westlake a monthly surcharge following efforts to mitigate the effects of such matter.

The Ethylene Sales Agreement has an initial term extending until December 31, 2026 and automatically renews thereafter for successive 12 -month terms unless terminated.

14 unchanged sentences

Westlake and OpCo each can terminate the Services and Secondment Agreement under certain circumstances, including if the other party materially defaults on the performance of its obligations and such default continues for a 30 -day period.

WESTLAKE CHEMICAL PARTNERS LP

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS—(Continued)

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

Site Lease Agreements

3 unchanged sentences

Each of the site lease agreements may be renewed if agreed by the parties.

WESTLAKE CHEMICAL PARTNERS LP

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS—(Continued)

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

Omnibus Agreement

11 unchanged sentences

Investment Management Agreement

The Partnership, OpCo and Westlake are parties to an Investment Management Agreement that authorizes Westlake to invest the Partnership 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.

6 unchanged sentences

Accounts receivable, net—third parties $ 20,030 $ 5,825

WESTLAKE CHEMICAL PARTNERS LP

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS—(Continued)

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

Inventories consist of the following:

2 unchanged sentences

Inventories $ 4,715 $ 8,898

WESTLAKE CHEMICAL PARTNERS LP

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS—(Continued)

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

Property, Plant and Equipment

10 unchanged sentences

The Partnership's goodwill balance was $ 5,814 at December 31, 2022 and 2021.

The impairment assessment for the recorded goodwill was performed in October 2021 and did not indicate impairment of the goodwill.

The impairment assessment for the recorded goodwill was performed during the fourth quarter of 2022 and did not indicate impairment of the goodwill.

The fair value of the goodwill was calculated using both a discounted cash flow methodology and a market value methodology.

The discounted cash flow projections were based on a long-term forecast to reflect the cyclicality of the Partnership's business.

The forecast was based on prices and spreads projected by IHS Markit, a chemical industry organization offering market and business advisory services for the chemical market, for the same period, and estimates by management, including their strategic and operational plans.

The forecast was based on projected market prices and spreads and estimates by management, including their strategic and operational plans.

Other significant assumptions used in the discounted cash flow projection included sales volumes based on production capacities.

3 unchanged sentences

Deferred charges and other assets, net consist of the following:

Year Ended December 31,

Turnaround costs, net $ 127,647 $ 146,942

Other 2,512 3,193

Total deferred charges and other assets $ 150,135 $ 36,692

Deferred charges and other assets, net $ 130,159 $ 150,135

Amortization expense on other assets of $ 26,330 , $ 16,962 and $ 12,386 is included in the consolidated statements of operations for the years ended December 31, 2022, 2021 and 2020, respectively.

Certain other assets are amortized over periods ranging from five to fifteen years using the straight-line method.

WESTLAKE CHEMICAL PARTNERS LP

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS—(Continued)

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

Long-Term Debt

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

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

OpCo Revolver $ 22,619 $ 22,619

MLP Revolver 377,055 377,055

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

WESTLAKE CHEMICAL PARTNERS LP

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS—(Continued)

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

On August 4, 2014, OpCo entered into a $ 600,000 senior unsecured revolving credit facility agreement with Westlake (as subsequently amended, the "OpCo Revolver").

The OpCo Revolver is scheduled to mature on September 25, 2023 and bears interest at a rate of LIBOR plus 2.0 %, which may be paid-in-kind as an addition to the principal at OpCo's option.

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

On July 12, 2022, OpCo entered into the Second Amendment (the "OpCo Revolver Amendment") to the OpCo Revolver.

Prior to the OpCo Revolver Amendment, the OpCo Revolver bore interest at the London Interbank Offered Rate ("LIBOR") plus 2.0 %.

The OpCo Revolver Amendment, among other things, extended the maturity date of the OpCo Revolver from September 25, 2023 to July 12, 2027 and provided for the replacement of LIBOR with the Secured Overnight Financing Rate, as administered by the Federal Reserve Bank of New York ("SOFR").

Borrowings under the OpCo Revolver now bear interest at a variable rate of either (a) SOFR plus the Applicable Margin plus a 0.10 % credit spread adjustment or, if SOFR is no longer available, (b) the Alternate Base Rate plus the Applicable Margin minus 1.0 %.

The Applicable Margin under the OpCo Revolver is 1.75 %.

As of December 31, 2022, outstanding borrowings under the OpCo Revolver bore interest at SOFR plus the Applicable Margin and credit spread adjustment.

On April 29, 2015, the Partnership entered into a $ 300,000 revolving credit facility agreement with an affiliate of Westlake (as subsequently amended, the "MLP Revolver") to fund the Partnership's purchase of an additional 2.7 % newly-issued, limited partner interest in OpCo for $ 135,341 .

In 2017, the Partnership entered into an amendment to the MLP Revolver credit agreement, increasing borrowing capacity from $ 300,000 to $ 600,000 .

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.

Pursuant to the amended credit agreement, borrowings under the MLP Revolver bear interest at a variable rate of either (a) LIBOR plus 2.0% or, if LIBOR is no longer available, (b) Alternate Base Rate plus 1.0%.

The MLP Revolver bears interest at LIBOR plus a spread ranging from 2.0 % to 3.0 % (depending on the Partnership's consolidated leverage ratio), payable quarterly.

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

On July 12, 2022, the Partnership entered into the Fourth Amendment (the "MLP Revolver Amendment") to the MLP Revolver.

Prior to the MLP Revolver Amendment, the MLP Revolver bore interest at a variable rate of either (a) LIBOR plus 2.0 % or, if LIBOR were no longer available, (b) the Alternate Base Rate plus 1.0 %.

The MLP Revolver Amendment, among other things, extended the maturity date of the MLP Revolver from March 19, 2023 to July 12, 2027 and provided for the replacement of LIBOR with SOFR as the reference rate.

Borrowings under the MLP Revolver now bear interest at a variable rate of either (a) SOFR plus the Applicable Margin plus a 0.10 % credit spread adjustment or, if SOFR is no longer available, (b) the Alternate Base Rate plus the Applicable Margin minus 1.0 %.

The Applicable Margin under the MLP Revolver varies between 1.75 % and 2.75 %, depending on the Partnership's Consolidated Leverage Ratio.

As of December 31, 2022, outstanding borrowings under the MLP Revolver bore interest at SOFR plus the Applicable Margin and credit spread adjustment.

The MLP Revolver provides that the Partnership may pay all or a portion of the interest on any borrowings in kind, in which case any such amounts would be added to the principal amount of the loan.

2 unchanged sentences

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

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

As of December 31, 2022, the Partnership was in compliance with all of the covenants under the OpCo Revolver and the MLP Revolver.

1 unchanged sentence

As of December 31, 2022, the Partnership had no scheduled maturities of long-term debt until 2027.

The OpCo Revolver is scheduled to mature on September 25, 2023, and the MLP Revolver is scheduled to mature on March 19, 2023.

The OpCo Revolver and the MLP Revolver are scheduled to mature on July 12, 2027.

Distributions and Net Income Per Limited Partner Unit

1 unchanged sentence

This distribution was paid on February 16, 2023 to unitholders of record on February 2, 2023.

WESTLAKE CHEMICAL PARTNERS LP

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS—(Continued)

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

Distributions are declared subsequent to quarter end;

4 unchanged sentences

Limited partners' distribution declared on common units 66,403 66,388 66,365

Distributions declared with respect to the incentive distribution rights — — —

Net income in excess of distribution (Distribution in excess of net income) $ ( 2,230 ) $ 16,159 $ ( 198 )

WESTLAKE CHEMICAL PARTNERS LP

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS—(Continued)

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

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

9 unchanged sentences

Distribution $ 66,403 $ — $ 66,403

Net income in excess of distribution 16,159 — 16,159

Distribution in excess of net income ( 2,230 ) — ( 2,230 )

Net income $ 64,173 $ — $ 64,173

7 unchanged sentences

Distribution $ 66,388 $ — $ 66,388

Distribution in excess of net income ( 198 ) — ( 198 )

Net income in excess of distribution 16,159 — 16,159

Net income $ 82,547 $ — $ 82,547

3 unchanged sentences

Basic and diluted $ 2.34

WESTLAKE CHEMICAL PARTNERS LP

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS—(Continued)

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

Year Ended December 31, 2020

8 unchanged sentences

Basic and diluted $ 1.88

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 .

WESTLAKE CHEMICAL PARTNERS LP

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS—(Continued)

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

The amended Partnership Agreement provides that the Partnership will distribute cash that is deemed to be operating surplus 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:

7 unchanged sentences

50.0 % 50.0 %

The Partnership's distribution for the three months ended December 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' incentive distribution rights.

The Partnership's distribution for each quarter in the year ended December 31, 2022 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' incentive distribution rights.

Distribution Per Common Unit

5 unchanged sentences

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 December 31, 2021.

The Equity Distribution Agreement was amended on February 28, 2020 to reference a new shelf registration for utilization under this agreement that expired on February 28, 2023.

To date, no common units have been issued under this program.

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.

WESTLAKE CHEMICAL PARTNERS LP

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS—(Continued)

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

Related Party Transactions

8 unchanged sentences

Net sales—Westlake $ 1,342,910 $ 1,026,586 $ 888,245

Under the Services and Secondment Agreement, OpCo uses a portion of its production capacity to process purge gas for Westlake.

On August 4, 2016, OpCo and Westlake entered into an amendment to the Ethylene Sales Agreement in order to provide that certain of the pricing components that make up the price for ethylene sold thereunder would be modified to reflect the portion of OpCo's production capacity that is used to process Westlake's purge gas instead of producing ethylene and to clarify that costs specific to the processing of Westlake's purge gas would be recovered under the Services and Secondment Agreement, and not the Ethylene Sales Agreement.

WESTLAKE CHEMICAL PARTNERS LP

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS—(Continued)

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

Based on OpCo's 2022 production, the Partnership recognized buyer deficiency fees of $ 23,835 during the year ended December 31, 2022.

The buyer deficiency fee is measured periodically 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.

These periodic estimates are updated at the end of the year based on actual annual production.

The buyer deficiency fees are classified as a component of net sales—Westlake.

The buyer deficiency fee was received by the Partnership in January 2023.

OpCo declared force majeure events in 2021 related to the flash fire at the Petro 2 facility, OpCo's Petro 1 facility outage, and due to the severe winter storm.

As a result of these events, the Partnership recognized revenue for a buyer deficiency fee and Shortfall in 2021.

As a result of these force majeure events in 2021, the Partnership recognized revenue for a buyer deficiency fee and Shortfall in 2021 of $ 51,395 and of $ 58,906 , respectively.

These periodic estimates are updated at the end of the year based on actual annual production.

Based upon OpCo's 2021 production, the Partnership recognized buyer deficiency fees of $ 51,395 and Shortfall of $ 58,906 during 2021.

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

The buyer deficiency fee was collected from Westlake in January 2022 and Shortfall recognized in 2021 is recoverable during 2022 per the Ethylene Sales Agreement.

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

The buyer deficiency fee recognized in 2021 was received by the Partnership in January 2022 and out of the total Shortfall of $ 58,906 recognized in 2021, $ 51,713 was received by the Partnership in 2022, $ 5,010 was received in January 2023 and the remaining amount will be collected in 2023 pursuant to the terms of the Ethylene Sales Agreement.

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.

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

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

7 unchanged sentences

Total $ 936,884 $ 534,900 $ 359,183

WESTLAKE CHEMICAL PARTNERS LP

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS—(Continued)

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

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

5 unchanged sentences

administrative expenses $ 26,621 $ 28,577 $ 22,162

WESTLAKE CHEMICAL PARTNERS LP

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS—(Continued)

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

Goods and Services from Related Parties Capitalized as Assets

5 unchanged sentences

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.

5 unchanged sentences

The Partnership's accounts receivable from Westlake result primarily from ethylene sales to Westlake and any buyer deficiency fee and Shortfall recognized under the Ethylene Sales Agreement.

As discussed above under "Sales to Related Parties", the buyer deficiency fee for the year ended December 31, 2021 was received by the Partnership in January 2022 and the Shortfall recognized in 2021 is recoverable during 2022 per the Ethylene Sales Agreement.

Payment for the buyer deficiency fee recognized during 2020 was received by the Partnership in January 2021.

As discussed above under "Sales to Related Parties", the buyer deficiency fee for the year ended December 31, 2022 was received by the Partnership in January 2023.

Payment for the buyer deficiency fee recognized during 2021 was received by the Partnership in January 2022, and out of the total Shortfall recognized in 2021, $ 51,713 was received by the Partnership in 2022, $ 5,010 was received in January 2023 and the remaining amount will be collected in 2023 pursuant to the terms of the Ethylene Sales Agreement.

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

Accounts receivable—Westlake $ 90,965 $ 142,791

WESTLAKE CHEMICAL PARTNERS LP

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS—(Continued)

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

Accounts Payable to Related Parties

2 unchanged sentences

Accounts payable—Westlake $ 34,087 $ 10,796

WESTLAKE CHEMICAL PARTNERS LP

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS—(Continued)

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

Debt Payable to Related Parties

See Note 8 for a description of related party debt payable balances.

Interest on related party debt payable balances, net of capitalized interest, for the years ended December 31, 2021, 2020 and 2019 was $ 8,816 , $ 12,038 and $ 19,623 , respectively, and is reflected as a component of other income (expense) in the consolidated and statements of operations.

At December 31, 2021, 2020 and 2019, accrued interest on related party debt was $ 2,176 , $ 2,336 and $ 4,187 , and is reflected as a component of accrued liabilities in the consolidated balance sheets.

Interest on related party debt payable balances, net of capitalized interest, for the years ended December 31, 2022, 2021 and 2020 was $ 13,407 , $ 8,816 and $ 12,038 , respectively, and is reflected as a component of interest expense—Westlake in the consolidated statements of operations.

At December 31, 2022 and 2021, accrued interest on related party debt was $ 4,733 and $ 2,176 , respectively, and is reflected as a component of accrued and other liabilities in the consolidated balance sheets.

Debt payable to related parties was as follows:

2 unchanged sentences

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 $ 3,037 , $ 3,038 and $ 2,343 for the years ended December 31, 2021, 2020 and 2019, respectively, and reflected in other charges from Westlake that are included in cost of sales.

Operating lease rentals paid to Westlake for such leases were $ 2,624 , $ 3,037 and $ 3,038 for the years ended December 31, 2022, 2021 and 2020, respectively, and are 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.

4 unchanged sentences

See Note 10 above for an additional related party transaction.

WESTLAKE CHEMICAL PARTNERS LP

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS—(Continued)

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

Unit-based Compensation

8 unchanged sentences

There were no forfeitures under the Plan during 2022, 2021 and 2020.

During each of the years 2020 and 2019, the vesting of 4,638 phantom units were accelerated in connection with the retirement of one of the Partnership's non-employee directors.

During the year 2020, the vesting of 4,638 phantom units was accelerated in connection with the retirement of one of the Partnership's non-employee directors.

The total fair value of phantom units that vested during the year ended December 31, 2022 was $ 284 .

Non-vested phantom unit awards as of December 31, 2021 and 2020 and awards granted during the respective periods were as follows:

WESTLAKE CHEMICAL PARTNERS LP

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS—(Continued)

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

Non-vested phantom unit awards as of December 31, 2022 and 2021 and changes during the respective periods were as follows:

Units Weighted

11 unchanged sentences

The total units available for grant at December 31, 2022 were 1,211,151 .

The total compensation cost recognized during the years ended December 31, 2021, 2020 and 2019 was $ 436 , $ 375 and $ 387 , respectively, and is included in selling, general and administrative expenses and the related liability is classified as accrued and other liability in the consolidated financial statements of the Partnership.

The total compensation cost recognized during the years ended December 31, 2022, 2021 and 2020 was $ 282 , $ 436 and $ 375 , respectively, and is included in selling, general and administrative expenses and the related liability is classified as accrued and other liabilities in the consolidated financial statements of the Partnership.

The unrecognized compensation cost associated with all grants under the Plan at December 31, 2022 was $ 178 and the weighted average remaining term of the units at December 31, 2022 was 0.6 years.

5 unchanged sentences

Unobservable inputs that are not corroborated by market data.

WESTLAKE CHEMICAL PARTNERS LP

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS—(Continued)

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

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

2 unchanged sentences

The carrying and fair values of the Partnership's long-term debt at December 31, 2022 and December 31, 2021 are summarized in the table below.

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

The fair value of long-term 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.

4 unchanged sentences

MLP Revolver 377,055 382,666 377,055 383,574

WESTLAKE CHEMICAL PARTNERS LP

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS—(Continued)

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

The Partnership is a limited partnership and is treated as a partnership for U.S.

15 unchanged sentences

Total provision $ 1,017 $ 549 $ 564

WESTLAKE CHEMICAL PARTNERS LP

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS—(Continued)

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

The tax effects of the principal temporary differences between financial reporting and income tax reporting are as follows:

8 unchanged sentences

Accrued and other liabilities were $ 17,537 and $ 60,895 at December 31, 2022 and 2021, respectively.

Accruals related to maintenance expenses, turnaround costs, and capital expenditures, which are components of accrued liabilities, were $ 5,597 , $ 40,250 and $ 7,491 at December 31, 2021, respectively, and were $ 3,905 , $ 0 and $ 2,286 at December 31, 2020, respectively.

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

Accruals related to maintenance expenses and intercompany interest expenses, which are components of accrued and other liabilities, were $ 3,752 and $ 4,733 at December 31, 2022, respectively, and were $ 5,597 and $ 2,176 at December 31, 2021, respectively.

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

Cash Flow Information

1 unchanged sentence

Capital expenditure related liabilities, included in accounts payable—third parties and accrued and other liabilities, were $ 6,372 , $ 14,415 , and $ 6,854 at December 31, 2022, 2021, and 2020, respectively.

WESTLAKE CHEMICAL PARTNERS LP

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS—(Continued)

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

Interest and Income Taxes

10 unchanged sentences

There are lawsuits pending in connection with the flash fire.

We expect insurance to cover most of the costs associated with these lawsuits.

The Partnership expects insurance to cover most of the costs associated with these lawsuits.

The Partnership is also involved in other 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.

WESTLAKE CHEMICAL PARTNERS LP

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS—(Continued)

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

Other Commitments

2 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-K

Item 8. Financial Statements and Supplementary Data