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Item 8. Financial Statements and Supplementary Data

2024-02-28 compared with 2023-03-01 · 115 added, 106 removed, 628 unchanged (26% of the section changed)

26 unchanged sentences

Basis for Opinions

The Partnership's management is responsible for these consolidated financial statements, for maintaining effective internal control over financial reporting, and for its assessment of the effectiveness of internal control over financial reporting, included in the accompanying Management's Report on Internal Control over Financial Reporting.

The Partnership's management is responsible for these consolidated financial statements, for maintaining effective internal control over financial reporting, and for its assessment of the effectiveness of internal control over financial reporting, included in Management's Report on Internal Control over Financial Reporting appearing under Item 8.

Our responsibility is to express opinions on the Partnership's consolidated financial statements and on the Partnership's internal control over financial reporting based on our audits.

20 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 Corporation ("Westlake") of $1,343 million for the year ended December 31, 2022, including a buyer deficiency fee of $24 million.

As described in Notes 2 and 11 to the consolidated financial statements, the Partnership recognized net sales to Westlake Corporation ("Westlake") of $1,027 million for the year ended December 31, 2023.

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.

4 unchanged sentences

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.

There was no Shortfall or buyer deficiency fee recognized by the Partnership in 2023.

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 and the buyer deficiency fee.

4 unchanged sentences

Houston, Texas

March 1, 2023

February 28, 2024

We have served as the Partnership's auditor since 2014.

23 unchanged sentences

Deferred income taxes 1,632 1,656

Other liabilities 2,951 —

Total liabilities 460,592 468,271

32 unchanged sentences

Net income attributable to noncontrolling interest in OpCo 280,343 270,656 318,838

Net income attributable to Westlake Chemical Partners LP and limited

partners' interest in net income $ 64,173 $ 82,547 $ 66,167

Net income attributable to Westlake Chemical Partners LP per limited partner

unit (basic and diluted)

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

$ 54,283 $ 64,173 $ 82,547

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

Common units $ 1.54 $ 1.82 $ 2.34

7 unchanged sentences

Common Unitholders—

Publicly and Privately Held Common Unitholder -

Westlake General

Westlake Noncontrolling Interest

Publicly and Privately Held

Common Unitholder—

Noncontrolling Interest

in OpCo Total

3 unchanged sentences

Units issued for vested phantom units 411 — — — 411

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

Quarterly distribution to noncontrolling interest retained in OpCo by Westlake

— — — ( 311,835 ) ( 311,835 )

Distribution to unitholders ( 39,751 ) ( 26,628 ) — — ( 66,379 )

Distribution to noncontrolling interest retained in OpCo by Westlake — — — ( 277,856 ) ( 277,856 )

Balances at December 31, 2021 $ 481,796 $ 54,754 $ ( 242,572 ) $ 678,720 $ 972,698

1 unchanged sentence

Units issued for vested phantom units 190 — — — 190

Quarterly distribution to unitholders ( 39,751 ) ( 26,628 ) — — ( 66,379 )

Quarterly distribution to noncontrolling interest retained in OpCo by Westlake

— — — ( 277,856 ) ( 277,856 )

Distribution to unitholders ( 39,782 ) ( 26,629 ) — — ( 66,411 )

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

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

1 unchanged sentence

Units issued for vested phantom units 141 — — — 141

Quarterly distribution to unitholders ( 39,782 ) ( 26,629 ) — — ( 66,411 )

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

Distribution to unitholders ( 39,790 ) ( 26,630 ) — — ( 66,420 )

Distribution to noncontrolling interest retained in OpCo by Westlake — — — ( 315,805 ) ( 315,805 )

Balances at December 31, 2023 $ 473,513 $ 48,993 $ ( 242,572 ) $ 576,316 $ 856,250

24 unchanged sentences

Investments with Westlake under the Investment Management Agreement ( 174,116 ) ( 319,884 ) ( 276,000 )

Maturities of investments with Westlake under the Investment Management

Agreement 362,000 293,000 388,000

Maturities of investments with Westlake under the Investment Management Agreement

145,000 362,000 293,000

Other — — ( 130 )

Net cash provided by (used for) investing activities ( 12,002 ) ( 64,301 ) 2,032

Net cash used for investing activities

( 75,937 ) ( 12,002 ) ( 64,301 )

Cash flows from financing activities

1 unchanged sentence

Repayment of debt payable to Westlake ( 209,250 ) ( 32,000 ) —

Quarterly distributions to noncontrolling interest retained in OpCo by

Westlake ( 337,598 ) ( 277,856 ) ( 311,835 )

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

Distributions to noncontrolling interest retained in OpCo by Westlake

( 315,805 ) ( 337,598 ) ( 277,856 )

Distributions to unitholders

( 66,420 ) ( 66,411 ) ( 66,379 )

Net cash used for financing activities ( 382,225 ) ( 404,009 ) ( 344,235 )

8 unchanged sentences

Description of Business

Westlake Chemical Partners LP ("Westlake Chemical Partners LP" or the "Partnership") is a Delaware limited partnership formed in March 2014 to operate, acquire and develop ethylene production facilities and related assets.

Westlake Chemical Partners LP (the "Partnership") is a Delaware limited partnership formed in March 2014 to operate, acquire and develop ethylene production facilities and related assets.

On August 4, 2014, the Partnership completed its initial public offering (the "IPO") of 12,937,500 common units representing limited partner interests.

4 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 Chemical Corporation) and its subsidiaries, other than the Partnership, OpCo and OpCo GP.

References to "Westlake" refer collectively to Westlake 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 $ 80 , $ 0 , and $ 0 for the years ended December 31, 2022, 2021 and 2020.

Capitalized interest was $ 164 , $ 80 and $ 0 for the years ended December 31, 2023, 2022 and 2021, respectively.

Repair and maintenance costs are charged to operations as incurred.

15 unchanged sentences

Other factors considered by the Partnership when determining if an impairment assessment is necessary include, but are not limited to, significant changes or projected changes in supply and demand fundamentals (which would have a negative impact on operating rates or margins), new technological developments, new competitors with significant raw material or other cost advantages, adverse changes associated with the United States and world economies and uncertainties associated with governmental actions.

Long-lived assets assessed for impairment are grouped at the lowest level for which identifiable cash flows are largely independent of the cash flows of other assets and liabilities.

Recoverability of assets to be held and used is measured by a comparison of the carrying amount of an asset to future net undiscounted cash flows expected to be generated by the asset.

Long-lived assets assessed for impairment are grouped by asset group, the lowest level for which identifiable cash flows are largely independent of the cash flows of other groups of assets and liabilities.

Recoverability of assets to be held and used is measured by a comparison of the carrying amount of an asset to future net undiscounted cash flows expected to be generated by the asset group.

Assets are considered to be impaired if the carrying amount of an asset exceeds the future undiscounted cash flows.

2 unchanged sentences

Impairment of Goodwill

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 the fourth quarter of 2023 and did not indicate impairment of the goodwill.

21 unchanged sentences

Provisions for discounts, rebates and returns are incorporated in the estimate of variable consideration and reflected as reduction to revenue in the same period as the related sales.

The Partnership does not disclose the value of unsatisfied performance obligations because its contracts with customers (1) have an original expected duration of one year or less or (2) have only variable consideration which is allocated to wholly unsatisfied performance obligations that is calculated based on market prices at a specified date and is allocated to wholly unsatisfied performance obligations.

The Partnership does not disclose the value of unsatisfied performance obligations because its contracts with customers (1) have an original expected duration of one year or less or (2) have only variable consideration that is calculated based on market prices at a specified date and is allocated to wholly unsatisfied performance obligations.

WESTLAKE CHEMICAL PARTNERS LP

9 unchanged sentences

Transportation and freight costs incurred by the Partnership on outbound shipments are included in cost of sales in the consolidated statements of operations.

Derivative Instruments

The accounting guidance for derivative instruments and hedging activities requires that the Partnership recognize all derivative instruments on the balance sheet at fair value, and changes in the derivative's fair value must be currently recognized in earnings or comprehensive income, depending on the designation of the derivative.

If the derivative is designated as a fair value hedge, the changes in the fair value of the derivative and of the hedged item attributable to the hedged risk are recognized in earnings.

If the derivative is designated as a cash flow hedge, the effective portion of the change in the fair value of the derivative is recorded in comprehensive income and is recognized in the statement of operations when the hedged item affects earnings.

Ineffective portions of changes in the fair value of cash flow hedges are recognized in earnings currently.

Environmental Costs

16 unchanged sentences

The Partnership has not reported consolidated statements of comprehensive income for the years ended December 31, 2023, 2022 and 2021 due to immateriality of the components of other comprehensive income.

Recent Accounting Pronouncements

Segment Reporting (ASU No.

In November 2023, the Financial Accounting Standards Board ("FASB") issued an accounting standards update.

The update requires public entities to disclose on an annual and interim basis, significant segment expenses that are regularly provided to the chief operating decision maker ("CODM"), the title and position of the CODM and an explanation of how the CODM uses the reported measure(s) of segment profit or loss in assessing segment performance and deciding how to allocate resources.

The update also requires that a public entity that has a single reportable segment provide all disclosures required by the update as well as all existing segment disclosures in Topic 280.

The amendments in this update will be effective for fiscal years beginning after December 15, 2023, and interim periods within fiscal years beginning after December 15, 2024 and are to be applied retrospectively to all prior periods presented in the financial statements.

Early adoption is permitted.

The Partnership is currently evaluating the impact of the update on the disclosures in the Partnership's financial statements.

WESTLAKE CHEMICAL PARTNERS LP

1 unchanged sentence

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

Income Taxes (ASU No.

In December 2023, the FASB issued an accounting standards update to require additional tax disclosures under Topic 740 primarily related to the rate reconciliation and income taxes paid disclosures.

The amendments in this update will be effective for fiscal years beginning after December 15, 2024 and are to be applied on a prospective basis.

Retrospective application is also permitted.

The update is not expected to have a material impact on the Partnership's disclosures.

Agreements with Westlake and Related Parties

15 unchanged sentences

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.

WESTLAKE CHEMICAL PARTNERS LP

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS—(Continued)

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

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.

2 unchanged sentences

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

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS—(Continued)

(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.

18 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

OpCo has entered into two site lease agreements with Westlake pursuant to which Westlake leases to OpCo the real property underlying Lake Charles Olefins and Calvert City Olefins, respectively, and grants OpCo rights to access and use certain other portions of Westlake's ethylene production facilities that are necessary to operate OpCo's production facilities.

OpCo has entered into two site lease agreements with Westlake pursuant to which Westlake leases to OpCo the real property underlying Lake Charles Olefins and Calvert City Olefins and grants OpCo rights to access and use certain other portions of Westlake's ethylene production facilities that are necessary to operate OpCo's production facilities.

OpCo owes Westlake one dollar per site per year.

1 unchanged sentence

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

20 unchanged sentences

Accounts receivable, net—third parties $ 18,701 $ 20,030

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 $ 4,432 $ 4,715

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

11 unchanged sentences

The impairment assessment for the recorded goodwill was performed during the fourth quarter of 2023 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 fair value of the reporting unit 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 projected market prices and spreads 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 its strategic and operational plans.

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

The future cash flows were discounted to present value using a discount rate of 10.5 %.

The significant assumptions used in determining the fair value of the reporting unit using the market value methodology include the determination of appropriate market comparables and the estimated multiples of EBITDA a willing buyer is likely to pay.

Deferred Charges and Other Assets

3 unchanged sentences

Deferred charges and other assets, net $ 140,982 $ 130,159

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.

Amortization expense on deferred charges and other assets of $ 25,692 , $ 26,330 and $ 16,962 is included in cost of sales in the consolidated statements of operations for the years ended December 31, 2023, 2022 and 2021, respectively.

Certain other assets are amortized over periods ranging from five to twenty 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

3 unchanged sentences

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").

24 unchanged sentences

On January 22, 2024, the board of directors of Westlake Chemical Partners GP LLC ("Westlake GP"), the Partnership's general partner, declared a quarterly cash distribution for the period from October 1, 2023 to December 31, 2023 of $ 0.4714 per common unit.

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

This distribution was paid on February 20, 2024 to unitholders of record as of February 2, 2024.

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;

5 unchanged sentences

Net income in excess of distribution (Distribution in excess of net income) $ ( 12,138 ) $ ( 2,230 ) $ 16,159

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.

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

Because the Partnership has more than one class of participating securities, it uses the two-class method when calculating the net income per unit applicable to limited partners.

The classes of participating securities include common units, subordinated units and incentive distribution rights.

The classes of participating securities include common units and incentive distribution rights.

Net income attributable to the Partnership is allocated to the unitholders in accordance with their respective ownership percentages in preparation of the consolidated statements of changes in equity.

1 unchanged sentence

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

All of the subordinated units, which were owned by Westlake, were converted into common units in 2017.

Year Ended December 31, 2023

12 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

3 unchanged sentences

Basic and diluted $ 1.82

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, 2021

2 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)

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 .

8 unchanged sentences

50.0 % 50.0 %

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.

The Partnership's distribution for each quarter in the year ended December 31, 2023 did not exceed the $ 1.2938 per unit threshold, and, as a result, no distribution was made with respect to the Partnership's incentive distribution rights to Westlake, as the holder of the Partnership's incentive distribution rights.

Distribution Per Common Unit

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 that expired on February 28, 2023.

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

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

1 unchanged sentence

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 $ 1,026,655 $ 1,342,910 $ 1,026,586

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.

3 unchanged sentences

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.

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

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.

2 unchanged sentences

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—Westlake in 2020.

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

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 and $ 7,004 was received in 2023 pursuant to the terms of the Ethylene Sales Agreement.

Cost of Sales from Related Parties

6 unchanged sentences

Total $ 521,739 $ 936,884 $ 534,900

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 $ 27,085 $ 26,621 $ 28,577

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

14 unchanged sentences

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.

Further, out of the total Shortfall recognized in 2021, $ 7,193 remained to be collected by the Partnership as of December 31, 2022.

Of this amount, $ 7,004 was received during the year ended December 31, 2023 pursuant to the terms of the Ethylene Sales Agreement.

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

Accounts receivable—Westlake $ 49,565 $ 90,965

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 $ 15,166 $ 34,087

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, 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.

Interest on related party debt payable balances, net of capitalized interest, for the years ended December 31, 2023, 2022 and 2021 was $ 26,501 , $ 13,407 and $ 8,816 , respectively.

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

At December 31, 2023 and 2022, accrued interest on related party debt was $ 6,675 and $ 4,733 , respectively, and is reflected as a component of accrued and other liabilities in the consolidated balance sheets.

2 unchanged sentences

Related Party Leases

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

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

Operating lease rentals paid to Westlake for such leases were $ 1,869 , $ 2,624 and $ 3,037 for the years ended December 31, 2023, 2022 and 2021, respectively, and are reflected in other charges from Westlake that are included in cost of sales.

5 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 2023, 2022 and 2021.

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, 2023 was $ 278 .

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, 2023 and 2022 and changes during the respective periods were as follows:

20 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.

7 unchanged sentences

Value Carrying

OpCo Revolver $ 22,619 $ 23,213 $ 22,619 $ 23,276

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)

Long-term debt payable to Westlake

$ 399,674 $ 408,110 $ 399,674 $ 405,879

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

22 unchanged sentences

Total deferred tax liabilities $ ( 1,632 ) $ ( 1,656 )

WESTLAKE CHEMICAL PARTNERS LP

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS—(Continued)

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

Supplemental Information

1 unchanged sentence

Accrued and other liabilities were $ 24,980 and $ 17,537 at December 31, 2023 and 2022, respectively.

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.

Accrued maintenance expense, accrued capital expenditures, accrued interest on related party debt and accrued taxes, which are components of accrued and other liabilities, were $ 5,170 , $ 4,627 , $ 6,675 and $ 3,033 at December 31, 2023, respectively, and were $ 3,752 , $ 2,442 , $ 4,733 and $ 2,652 at December 31, 2022, respectively.

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

2 unchanged sentences

Capital expenditure related liabilities, included in accounts payable—third parties and accrued and other liabilities, were $ 7,809 , $ 6,372 , and $ 14,415 at December 31, 2023, 2022, and 2021, 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

1 unchanged sentence

Income tax paid by the Partnership was $ 827 , $ 683 and $ 676 for the years ended December 31, 2023, 2022 and 2021, respectively, of which $ 480 , $ 440 and $ 490 was paid directly to the tax authorities for the years ended December 31, 2023, 2022 and 2021, and $ 347 , $ 243 and $ 186 was paid to Westlake as reimbursements for the years ended December 31, 2023, 2022 and 2021.

Operating Leases

Right-of-use assets obtained in exchange for operating lease obligations were $ 5,079 , $ 0 and $ 0 for the years ended December 31, 2023, 2022 and 2021, respectively.

Commitments and Contingencies

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

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

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

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

Because the Partnership's production sites have a history of industrial use, it is impossible to predict precisely what effect these legal requirements will have on the Partnership.

Westlake will indemnify the Partnership for liabilities that occurred or existed prior to August 4, 2014.

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

Several contractors working on the quench tower were injured.

There are lawsuits pending in connection with the flash fire.

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

Pursuant to the Omnibus Agreement, certain subsidiaries of Westlake will indemnify the Partnership for liabilities that occurred or existed prior to August 4, 2014.

In September 2021, shortly after the turnaround on OpCo's Petro 2 facility commenced, there was a flash fire at the quench tower of the Petro 2 facility.

Contractors and employees working on and near the quench tower were injured and multiple lawsuits were filed against Westlake and OpCo.

Final settlements were reached with all of the plaintiffs to fully resolve the lawsuits by Westlake, but payment by the insurance carriers has not yet been completed.

Westlake is responsible for indemnifying the Partnership in connection to any loss OpCo may have incurred as a result of the fire.

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.

After considering all relevant facts and circumstances, including applicable insurance and indemnification by Westlake, 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.

Other Commitments

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What changed 10-K

Item 8. Financial Statements and Supplementary Data