Westlake Chemical Partners LP 10-Q

Item 1. Financial Statements WESTLAKE CHEMICAL PARTNERS LP CONSOLIDATED BALANCE SHEETS (Unaudited) June 30, 2024 December 31, 2023 (in thousands of dollars, except unit amounts) ASSETS Current assets Cash and cash equivalents $ 65,999 $ 58,619 Receivable under the Investment Management Agreement—Westlake Corporation ("Westlake") 94,478 94,444 Accounts receivable, net—Westlake 39,090 49,565 Accounts receivable, net—third parties 27,128 18,701 Inventories 4,487 4,432 Prepaid expenses and other current assets 944 442 Total current assets 232,126 226,203 Property, plant and equipment, net 912,752 943,843 Goodwill 5,814 5,814 Deferred charges and other assets, net 137,670 140,982 Total assets $ 1,288,362 $ 1,316,842 LIABILITIES Current liabilities Accounts payable—Westlake $ 10,581 $ 15,166 Accounts payable—third parties 17,186 16,189 Accrued and other liabilities 21,840 24,980 Total current liabilities 49,607 56,335 Long-term debt payable to Westlake 399,674 399,674 Deferred income taxes 1,680 1,632 Other liabilities 2,554 2,951 Total liabilities 453,515 460,592 Commitments and contingencies (Note 12) EQUITY Common unitholders—publicly and privately held ( 21,108,346 and 21,105,904 units issued and outstanding at June 30, 2024 and December 31, 2023, respectively) 471,199 473,513 Common unitholder—Westlake ( 14,122,230 and 14,122,230 units issued and outstanding at June 30, 2024 and December 31, 2023, respectively) 47,408 48,993 General partner—Westlake ( 242,572 ) ( 242,572 ) Total Westlake Chemical Partners LP partners' capital 276,035 279,934 Noncontrolling interest in Westlake Chemical OpCo LP ("OpCo") 558,812 576,316 Total equity 834,847 856,250 Total liabilities and equity $ 1,288,362 $ 1,316,842 The accompanying notes are an integral part of the consolidated financial statements. 1 Table of Contents WESTLAKE CHEMICAL PARTNERS LP CONSOLIDATED STATEMENTS OF OPERATIONS (Unaudited) Three Months Ended June 30, Six Months Ended June 30, 2024 2023 2024 2023 (in thousands of dollars, except unit amounts and per unit data) Revenue Net sales—Westlake $ 239,527 $ 224,575 $ 474,736 $ 482,046 Net co-products, ethylene and other sales—third parties 44,641 39,602 94,105 89,808 Total net sales 284,168 264,177 568,841 571,854 Cost of sales 182,936 176,455 365,429 378,059 Gross profit 101,232 87,722 203,412 193,795 Selling, general and administrative expenses 7,605 7,229 14,682 15,143 Income from operations 93,627 80,493 188,730 178,652 Other income (expense) Interest expense—Westlake ( 6,651 ) ( 6,117 ) ( 13,232 ) ( 13,432 ) Other income, net 1,257 1,061 2,591 1,881 Income before income taxes 88,233 75,437 178,089 167,101 Provision for income taxes 207 173 417 385 Net income 88,026 75,264 177,672 166,716 Less: Net income attributable to noncontrolling interest in OpCo 73,599 63,378 148,412 139,938 Net income attributable to Westlake Chemical Partners LP and limited partners' interest in net income $ 14,427 $ 11,886 $ 29,260 $ 26,778 Net income per limited partner unit attributable to Westlake Chemical Partners LP (basic and diluted) Common units $ 0.41 $ 0.34 $ 0.83 $ 0.76 Weighted average limited partner units outstanding (basic and diluted) Common units—publicly and privately held 21,107,299 21,099,638 21,106,602 21,099,638 Common units—Westlake 14,122,230 14,122,230 14,122,230 14,122,230 The accompanying notes are an integral part of the consolidated financial statements. 2 Table of Contents WESTLAKE CHEMICAL PARTNERS LP CONSOLIDATED STATEMENTS OF CHANGES IN EQUITY (Unaudited) Partnership Common Unitholders — Publicly and Privately Held Common Unitholder — Westlake General Partner — Westlake Noncontrolling Interest in OpCo Total (in thousands of dollars) Balances at December 31, 2023 $ 473,513 $ 48,993 $ ( 242,572 ) $ 576,316 $ 856,250 Net income 8,887 5,946 — 74,813 89,646 Distribution to unitholders ( 9,950 ) ( 6,657 ) — — ( 16,607 ) Distribution to noncontrolling interest retained in OpCo by Westlake — — — ( 81,044 ) ( 81,044 ) Balances at March 31, 2024 $ 472,450 $ 48,282 $ ( 242,572 ) $ 570,085 $ 848,245 Net income 8,644 5,783 — 73,599 88,026 Units issued for vested phantom units 55 — — — 55 Distribution to unitholders ( 9,950 ) ( 6,657 ) — — ( 16,607 ) Distribution to noncontrolling interest retained in OpCo by Westlake — — — ( 84,872 ) ( 84,872 ) Balances at June 30, 2024 $ 471,199 $ 47,408 $ ( 242,572 ) $ 558,812 $ 834,847 The accompanying notes are an integral part of the consolidated financial statements. 3 Table of Contents WESTLAKE CHEMICAL PARTNERS LP CONSOLIDATED STATEMENTS OF CHANGES IN EQUITY (Unaudited) Partnership Common Unitholders— Publicly and Privately Held Common Unitholder— Westlake General Partner— Westlake Noncontrolling Interest in OpCo Total (in thousands of dollars) Balances at December 31, 2022 $ 480,643 $ 53,859 $ ( 242,572 ) $ 611,778 $ 903,708 Net income 8,921 5,971 — 76,560 91,452 Distribution to unitholders ( 9,947 ) ( 6,657 ) — — ( 16,604 ) Distribution to noncontrolling interest retained in OpCo by Westlake — — — ( 88,678 ) ( 88,678 ) Balances at March 31, 2023 $ 479,617 $ 53,173 $ ( 242,572 ) $ 599,660 $ 889,878 Net income 7,120 4,766 — 63,378 75,264 Distribution to unitholders ( 9,946 ) ( 6,657 ) — — ( 16,603 ) Distribution to noncontrolling interest retained in OpCo by Westlake — — — ( 80,581 ) ( 80,581 ) Balances at June 30, 2023 $ 476,791 $ 51,282 $ ( 242,572 ) $ 582,457 $ 867,958 The accompanying notes are an integral part of the consolidated financial statements. 4 Table of Contents WESTLAKE CHEMICAL PARTNERS LP CONSOLIDATED STATEMENTS OF CASH FLOWS (Unaudited) Six Months Ended June 30, 2024 2023 (in thousands of dollars) Cash flows from operating activities Net income $ 177,672 $ 166,716 Adjustments to reconcile net income to net cash provided by operating activities Depreciation and amortization 56,309 53,676 Loss from disposition of property, plant and equipment 1,825 422 Other losses, net 45 303 Changes in operating assets and liabilities Accounts receivable—third parties ( 8,424 ) 2,266 Net accounts receivable—Westlake 8,537 21,481 Inventories ( 55 ) 1,455 Prepaid expenses and other current assets ( 502 ) ( 413 ) Accounts payable—third parties 1,622 15,372 Accrued and other liabilities ( 844 ) 9,489 Other, net ( 9,724 ) ( 27,364 ) Net cash provided by operating activities 226,461 243,403 Cash flows from investing activities Additions to property, plant and equipment ( 19,951 ) ( 17,169 ) Investments with Westlake under the Investment Management Agreement — ( 164,116 ) Maturities of investments with Westlake under the Investment Management Agreement — 135,000 Net cash used for investing activities ( 19,951 ) ( 46,285 ) Cash flows from financing activities Proceeds from debt payable to Westlake 108,000 98,500 Repayment of debt payable to Westlake ( 108,000 ) ( 98,500 ) Distributions to noncontrolling interest retained in OpCo by Westlake ( 165,916 ) ( 169,259 ) Distributions to unitholders ( 33,214 ) ( 33,207 ) Net cash used for financing activities ( 199,130 ) ( 202,466 ) Net increase (decrease) in cash and cash equivalents 7,380 ( 5,348 ) Cash and cash equivalents at beginning of period 58,619 64,782 Cash and cash equivalents at end of period $ 65,999 $ 59,434 The accompanying notes are an integral part of the consolidated financial statements. 5 Table of Contents WESTLAKE CHEMICAL PARTNERS LP NOTES TO CONSOLIDATED FINANCIAL STATEMENTS — Continued (Unaudited) (in thousands of dollars, except unit amounts and per unit data) 1. Description of Business and Basis of Presentation Description of Business Westlake Chemical Partners LP (the "Partnership") is a Delaware limited partnership formed in March 2014 to operate, acquire and develop ethylene production facilities and related assets. On August 4, 2014, the Partnership completed its initial public offering (the "IPO") of 12,937,500 common units representing limited partner interests. In connection with the IPO, the Partnership acquired a 10.6 % limited partner interest in Westlake Chemical OpCo LP ("OpCo") and a 100 % interest in Westlake Chemical OpCo GP LLC ("OpCo GP"), which is the general partner of OpCo. OpCo owns three ethylene production facilities and one common carrier ethylene pipeline (collectively, the "Contributed Assets"). Since the IPO, the Partnership has periodically purchased additional limited partner interest in OpCo. Most recently, on March 29, 2019, the Partnership purchased an additional 4.5 % newly-issued limited partner interest in OpCo for approximately $ 201,445 , resulting in an aggregate 22.8 % limited partner interest in OpCo, effective January 1, 2019. The remaining 77.2 % limited partner interest in OpCo is owned by Westlake Corporation. Basis of Presentation The accompanying unaudited consolidated interim financial statements were prepared in accordance with the rules and regulations of the Securities and Exchange Commission (the "SEC") for interim periods. Accordingly, certain information and footnotes required for complete financial statements under generally accepted accounting principles in the United States ("U.S. GAAP") have not been included. These interim consolidated financial statements should be read in conjunction with the consolidated financial statements and notes thereto of the Partnership included in the annual report on Form 10-K for the fiscal year ended December 31, 2023 (the "2023 Form 10-K"), filed with the SEC on February 28, 2024. These financial statements have been prepared in conformity with the accounting principles and practices as disclosed in the notes to the consolidated financial statements of the Partnership for the fiscal year ended December 31, 2023. References to "Westlake" refer collectively to Westlake Corporation and its subsidiaries, other than the Partnership, OpCo and OpCo GP. The Partnership holds a 22.8 % limited partner interest and the entire non-economic general partner interest in OpCo. The remaining 77.2 % limited partner interest in OpCo is owned directly by Westlake, which has no rights to direct the activities that most significantly impact the economic performance of OpCo. As a result of the fact that substantially all of OpCo's activities are conducted on behalf of Westlake, and the fact that OpCo exhibits disproportionality of voting rights to economic interest, OpCo was deemed to be a variable interest entity. The Partnership, through its ownership of OpCo's general partner, has the power to direct the activities that most significantly impact the economic performance of OpCo, and it also has the obligation or right to absorb losses or receive benefits from OpCo that could potentially be significant to OpCo. As such, the Partnership was determined to be OpCo's primary beneficiary and therefore consolidates OpCo's results of operations and financial position. The Partnership's operations consist exclusively of the variable interest entity's operations and, as such, no additional variable interest entity disclosures are considered necessary. Westlake's retained interest of 77.2 % is recorded as noncontrolling interest in the Partnership's consolidated financial statements. In the opinion of the Partnership's management, the accompanying unaudited consolidated interim financial statements reflect all adjustments (consisting only of normal recurring adjustments) that are necessary for a fair statement of the Partnership's financial position as of June 30, 2024, its results of operations for the three and six months ended June 30, 2024 and 2023 and the changes in its cash position for the six months ended June 30, 2024 and 2023. Results of operations and changes in cash position for the interim periods presented are not necessarily indicative of the results that will be realized for the fiscal year ending December 31, 2024 or any other interim period. The preparation of financial statements in conformity with U.S. GAAP requires management to make estimates and assumptions that affect the reported amounts of assets, liabilities, revenues and expenses and the disclosure of contingent assets and liabilities. Actual results could differ materially from those estimates. 6 Table of Contents WESTLAKE CHEMICAL PARTNERS LP NOTES TO CONSOLIDATED FINANCIAL STATEMENTS — Continued (Unaudited) (in thousands of dollars, except unit amounts and per unit data) Recently Issued Accounting Pronouncement Income Taxes (ASU No. 2023-09) In December 2023, the Financial Accounting Standards Board ("FASB") issued an accounting standards update requiring 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. Recently Adopted Accounting Standard Segment Reporting (ASU No. 2023-07) In November 2023, the FASB issued an accounting standards update requiring 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 adopted this accounting standard effective January 1, 2024, and the adoption will result in additional segment disclosures in the Partnership's annual financial statements for the year ending December 31, 2024 and the interim periods thereafter. 2. Accounts Receivable—Third Parties Accounts receivable—third parties consist of the following: June 30, 2024 December 31, 2023 Trade customers $ 24,268 $ 15,622 Allowance for credit losses ( 275 ) ( 278 ) Other receivables 3,135 3,357 Accounts receivable, net—third parties $ 27,128 $ 18,701 3. Inventories Inventories consist of the following: June 30, 2024 December 31, 2023 Finished products $ 3,951 $ 4,147 Feedstock, additives and chemicals 536 285 Inventories $ 4,487 $ 4,432 4. Property, Plant and Equipment Depreciation expense on property, plant and equipment of $ 21,830 and $ 20,928 is included in cost of sales in the consolidated statements of operations for the three months ended June 30, 2024 and 2023, respectively. Depreciation expense on property, plant and equipment of $ 43,367 and $ 41,885 is included in cost of sales in the consolidated statements of operations for the six months ended June 30, 2024 and 2023 , respectively. 7 Table of Contents WESTLAKE CHEMICAL PARTNERS LP NOTES TO CONSOLIDATED FINANCIAL STATEMENTS — Continued (Unaudited) (in thousands of dollars, except unit amounts and per unit data) 5. Deferred Charges and Other Assets Amortization expense on deferred charges and other assets of $ 6,485 and $ 6,112 is included in cost of sales in the consolidated statements of operations for the three months ended June 30, 2024 and 2023, respectively . Amortization expense on deferred charges and other assets of $ 12,942 and $ 11,791 is included in cost of sales in the consolidated statements of operations for the six months ended June 30, 2024 and 2023 , respectively. 6. Distributions and Net Income Per Limited Partner Unit On July 30, 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 three months ended June 30, 2024 of $ 0.4714 per unit. This distribution is payable on August 27, 2024 to unitholders of record as of August 12, 2024. Distributions are declared subsequent to quarter end; therefore, the table below represents total cash distributions declared from earnings of the related periods pertaining to such distributions. Three Months Ended June 30, Six Months Ended June 30, 2024 2023 2024 2023 Net income attributable to the Partnership $ 14,427 $ 11,886 $ 29,260 $ 26,778 Less: Limited partners' distribution declared on common units 16,608 16,604 33,215 33,207 Distribution in excess of net income $ ( 2,181 ) $ ( 4,718 ) $ ( 3,955 ) $ ( 6,429 ) Net income per unit applicable to common limited partner units is computed by dividing the respective limited partners' interest in net income by the weighted-average number of common units outstanding for the period. Because the Partnership has more than one class of participating securities, it uses the two-class method when calculating the net income per unit applicable to limited partners. The classes of participating securities include common units and incentive distribution rights. Net income attributable to the Partnership is allocated to the unitholders in accordance with their respective ownership percentages in preparation of the consolidated statements of changes in equity. However, when distributions related to the incentive distribution rights are made, net income equal to the amount of those distributions is first allocated to the general partner before the remaining net income is allocated to the unitholders based on their respective ownership percentages. Basic and diluted net income per unit is the same because the Partnership does not have any potentially dilutive units outstanding for the periods presented. Three Months Ended June 30, 2024 Limited Partners' Common Units Incentive Distribution Rights Total Net income attributable to the Partnership: Distribution $ 16,608 $ — $ 16,608 Distribution in excess of net income ( 2,181 ) — ( 2,181 ) Net income $ 14,427 $ — $ 14,427 Weighted average units outstanding: Basic and diluted 35,229,529 35,229,529 Net income per limited partner unit: Basic and diluted $ 0.41 8 Table of Contents WESTLAKE CHEMICAL PARTNERS LP NOTES TO CONSOLIDATED FINANCIAL STATEMENTS — Continued (Unaudited) (in thousands of dollars, except unit amounts and per unit data) Three Months Ended June 30, 2023 Limited Partners' Common Units Incentive Distribution Rights Total Net income attributable to the Partnership: Distribution $ 16,604 $ — $ 16,604 Distribution in excess of net income ( 4,718 ) — ( 4,718 ) Net income $ 11,886 $ — $ 11,886 Weighted average units outstanding: Basic and diluted 35,221,868 35,221,868 Net income per limited partner unit: Basic and diluted $ 0.34 Six Months Ended June 30, 2024 Limited Partners' Common Units Incentive Distribution Rights Total Net income attributable to the Partnership: Distribution $ 33,215 $ — $ 33,215 Distribution in excess of net income ( 3,955 ) — ( 3,955 ) Net income $ 29,260 $ — $ 29,260 Weighted average units outstanding: Basic and diluted 35,228,832 35,228,832 Net income per limited partner unit: Basic and diluted $ 0.83 Six Months Ended June 30, 2023 Limited Partners' Common Units Incentive Distribution Rights Total Net income attributable to the Partnership: Distribution $ 33,207 $ — $ 33,207 Distribution in excess of net income ( 6,429 ) — ( 6,429 ) Net income $ 26,778 $ — $ 26,778 Weighted average units outstanding: Basic and diluted 35,221,868 35,221,868 Net income per limited partner unit: Basic and diluted $ 0.76 The amended Partnership Agreement provides that the Partnership will distribute cash that is deemed to be an appropriate portion of the Partnership's total operating surplus. If cash distributions to the Partnership's unitholders exceed $ 1.2938 per common unit in any quarter, the Partnership's unitholders and Westlake, as the holder of the Partnership's incentive distribution rights, will receive distributions according to the following percentage allocations: Marginal Percentage Interest in Distributions Total Quarterly Distribution Per Unit Unitholders IDR Holders Above $ 1.2938 up to $ 1.4063 85.0 % 15.0 % Above $ 1.4063 up to $ 1.6875 75.0 % 25.0 % Above $ 1.6875 50.0 % 50.0 % 9 Table of Contents WESTLAKE CHEMICAL PARTNERS LP NOTES TO CONSOLIDATED FINANCIAL STATEMENTS — Continued (Unaudited) (in thousands of dollars, except unit amounts and per unit data) The Partnership's distribution for the three months ended June 30, 2024 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. Distributions Per Common Unit Distributions per common unit for the three and six months ended June 30, 2024 and 2023 were as follows: Three Months Ended June 30, Six Months Ended June 30, 2024 2023 2024 2023 Distributions per common unit $ 0.4714 $ 0.4714 $ 0.9428 $ 0.9428 7. Partners' Equity On October 4, 2018, the Partnership and Westlake Chemical Partners GP LLC, the general partner of the Partnership, entered into an Equity Distribution Agreement with UBS Securities LLC, Barclays Capital Inc., Citigroup Global Markets Inc., Deutsche Bank Securities Inc., RBC Capital Markets, LLC, Merrill Lynch, Pierce, Fenner & Smith Incorporated and Wells Fargo Securities, LLC to offer and sell the Partnership's common units, from time to time, up to an aggregate offering amount of $ 50,000 . The Equity Distribution Agreement was amended on February 28, 2020 to reference a new shelf registration and subsequent renewals thereof for utilization under this agreement. No common units were issued under this program as of June 30, 2024. On March 29, 2019, the Partnership completed the issuance and sale of 2,940,818 common units at a price of $ 21.40 per unit through a private placement. TTWF LP, Westlake's principal stockholder and a related party, acquired 1,401,869 common units out of 2,940,818 common units issued in the private placement. 8. Related Party Transactions Related party transactions between the Partnership, OpCo and Westlake are primarily based on agreements such as the Ethylene Sales Agreement, the Feedstock Supply Agreement, the Services and Secondment Agreement, Site Lease Agreements, the Omnibus Agreement, the Investment Management Agreement, the Exchange Agreement, the OpCo Partnership Agreement, the OpCo Revolver and the MLP Revolver. These agreements, discussed in detail in the Partnership's 2023 consolidated financial statements included in the 2023 Form 10-K filed on February 28, 2024, reflect the pervasive effect of the relationship with Westlake on the Partnership's operations and its consolidated financial statements. Pursuant to these agreements, the Partnership and OpCo regularly enter into transactions with Westlake. See below for descriptions and details of significant related party transactions. Sales to Related Parties OpCo sells ethylene to Westlake under the Ethylene Sales Agreement. Additionally, the Partnership and OpCo from time to time provide other services or products for which it charges Westlake a fee. OpCo sells a significant portion of its ethylene production to Westlake. Sales to related parties were as follows: Three Months Ended June 30, Six Months Ended June 30, 2024 2023 2024 2023 Net sales—Westlake $ 239,527 $ 224,575 $ 474,736 $ 482,046 10 Table of Contents WESTLAKE CHEMICAL PARTNERS LP NOTES TO CONSOLIDATED FINANCIAL STATEMENTS — Continued (Unaudited) (in thousands of dollars, except unit amounts and per unit data) Cost of Sales from Related Parties Charges for goods and services purchased by the Partnership and OpCo from Westlake and included in cost of sales relate primarily to feedstock purchased under the Feedstock Supply Agreement and services provided under the Services and Secondment Agreement. A significant portion of the Partnership's inputs included in cost of sales are supplied by Westlake. Charges from related parties for significant inputs included in cost of sales were as follows: Three Months Ended June 30, Six Months Ended June 30, 2024 2023 2024 2023 Feedstock purchased from Westlake and included in cost of sales $ 77,007 $ 80,727 $ 155,544 $ 183,769 Other charges from Westlake and included in cost of sales 29,598 29,729 61,666 60,635 Services from Related Parties Included in Selling, General and Administrative Expenses Charges for services purchased by the Partnership from Westlake and included in selling, general and administrative expenses primarily relate to services Westlake performs on behalf of the Partnership under the Omnibus Agreement, including the Partnership's finance, legal, information technology, human resources, communication, ethics and compliance and other administrative functions. Charges from related parties included within selling, general and administrative expenses were as follows: Three Months Ended June 30, Six Months Ended June 30, 2024 2023 2024 2023 Services received from Westlake and included in selling, general and administrative expenses $ 7,076 $ 6,625 $ 13,175 $ 13,296 Goods and Services from Related Parties Capitalized as Assets Charges for goods and services purchased by the Partnership and OpCo from Westlake, which were capitalized as assets, relate primarily to the services of Westlake employees under the Services and Secondment Agreement. Charges from related parties for goods and services capitalized as assets were as follows: Three Months Ended June 30, Six Months Ended June 30, 2024 2023 2024 2023 Goods and services purchased from Westlake and capitalized as assets $ 437 $ 1,173 $ 849 $ 1,872 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 durations of up to a maximum of nine months. Per the terms of the Investment Management Agreement, the Partnership earns a market return plus five basis points and Westlake provides daily availability of the invested cash to meet any liquidity needs of the Partnership or OpCo. Accrued interest of $ 1,306 and $ 1,272 was included in the receivable under the Investment Management Agreement balance at June 30, 2024 and December 31, 2023, respectively. Total interest earned related to the Investment Management Agreement was $ 1,306 and $ 1,058 for the three months ended June 30, 2024 and 2023, respectively, and $ 2,611 and $ 1,965 for the six months ended June 30, 2024 and 2023, respectively. The Partnership's receivable under the Investment Management Agreement was as follows: June 30, 2024 December 31, 2023 Receivable under the Investment Management Agreement $ 94,478 $ 94,444 11 Table of Contents WESTLAKE CHEMICAL PARTNERS LP NOTES TO CONSOLIDATED FINANCIAL STATEMENTS — Continued (Unaudited) (in thousands of dollars, except unit amounts and per unit data) Accounts Receivable from Related Parties The Partnership's accounts receivable from Westlake result primarily from ethylene sales to Westlake and the buyer deficiency fee and shortfall fee recognized under the Ethylene Sales Agreement. As a result of force majeure events in 2021, the Partnership recognized a shortfall fee of $ 58,906 during 2021, of which $ 189 remained to be collected by the Partnership as of December 31, 2023 and was received in the six months ended June 30, 2024. The Partnership's accounts receivable from Westlake were as follows: June 30, 2024 December 31, 2023 Accounts receivable—Westlake $ 39,090 $ 49,565 Accounts Payable to Related Parties The Partnership's accounts payable to Westlake result primarily from feedstock purchases under the Feedstock Supply Agreement and services provided under the Services and Secondment Agreement and the Omnibus Agreement. The Partnership's accounts payable to Westlake were as follows: June 30, 2024 December 31, 2023 Accounts payable—Westlake $ 10,581 $ 15,166 Related Party Leases 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 $ 430 and $ 310 for the three months ended June 30, 2024 and 2023, respectively, an d $ 855 and $ 1,047 for the six months ended June 30, 2024 and 2023 , respectively, an d 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. Pursuant to the site lease agreements, OpCo pays Westlake one dollar per site per year. Debt Payable to Related Parties See Note 9 for a description of related party debt payable balances. Interest on related party debt payable balances, net of capitalized interest, for the three months ended June 30, 2024 and 2023 was $ 6,651 and $ 6,117 , respecti vely. Interest on related party debt payable balances, net of capitalized interest, for the six months ended June 30, 2024 and 2023 was $ 13,232 and $ 13,432 , respectively. Interest on related party debt payable is presented as interest expense—Westlake in the consolidated statements of operations. At June 30, 2024 and December 31, 2023, accrued interest on related party debt was $ 6,679 and $ 6,675 , 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: June 30, 2024 December 31, 2023 Long-term debt payable to Westlake $ 399,674 $ 399,674 Major Customer and Concentration of Credit Risk During the three months ended June 30, 2024 and 2023, Westlake accounted for approximately 84.3 % and 85.0 %, respectively, of the Partnership's net sale s. During the six months ended June 30, 2024 and 2023 , Westlake accounted for approximately 83.5 % and 84.3 %, respectively, of the Partnership's net sales. 12 Table of Contents WESTLAKE CHEMICAL PARTNERS LP NOTES TO CONSOLIDATED FINANCIAL STATEMENTS — Continued (Unaudited) (in thousands of dollars, except unit amounts and per unit data) 9. Long-Term Debt Payable to Westlake Long-term debt payable to Westlake consists of the following: June 30, 2024 December 31, 2023 OpCo Revolver $ 22,619 $ 22,619 MLP Revolver 377,055 377,055 Long-term debt payable to Westlake $ 399,674 $ 399,674 As of June 30, 2024, outstanding borrowings under the OpCo Revolver and the MLP Revolver bore interest at the Secured Overnight Financing Rate, as administered by the Federal Reserve Bank of New York ("SOFR") plus the Applicable Margin plus a 0.10 % credit spread adjustment. The Applicable Margin under the OpCo Revolver is 1.75 %. The Applicable Margin under the MLP Revolver varies between 1.75 % and 2.75 %, depending on the Partnership's Consolidated Leverage Ratio. The OpCo Revolver and the MLP Revolver are scheduled to mature on July 12, 2027. The weighted average interest rate on all long-term debt was 7.2 % and 7.2 % at June 30, 2024 and December 31, 2023, respectively. As of June 30, 2024, the Partnership was in compliance with all of the covenants under the OpCo Revolver and the MLP Revolver. 10. Fair Value Measurements The Partnership reports certain assets and liabilities at fair value, which is defined as the price that would be received to sell an asset or paid to transfer a liability in an orderly transaction between market participants at the measurement date (exit price). Under the accounting guidance for fair value measurements, inputs used to measure fair value are classified in one of three levels: Level 1: Quoted market prices in active markets for identical assets or liabilities. Level 2: Observable market-based inputs or unobservable inputs that are corroborated by market data. Level 3: Unobservable inputs that are not corroborated by market data. The Partnership has financial assets and liabilities subject to fair value measures. These financial assets and liabilities include cash and cash equivalents, accounts receivable, net, accounts payable and long-term debt payable to Westlake, all of which are recorded at carrying value. The amounts reported in the consolidated balance sheets for accounts receivable, net and accounts payable approximate their fair value due to the short maturities of these instruments. The carrying and fair values of the Partnership's long-term debt at June 30, 2024 and December 31, 2023 are summarized in the table below. 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. Inputs used to estimate the fair values of the Partnership's long-term debt include the selection of an appropriate discount rate. June 30, 2024 December 31, 2023 Carrying Value Fair Value Carrying Value Fair Value Long-term debt payable to Westlake $ 399,674 $ 412,110 $ 399,674 $ 408,110 13 Table of Contents WESTLAKE CHEMICAL PARTNERS LP NOTES TO CONSOLIDATED FINANCIAL STATEMENTS — Continued (Unaudited) (in thousands of dollars, except unit amounts and per unit data) 11. Supplemental Information Accrued and Other Liabilities Accrued and other liabilities were $ 21,840 and $ 24,980 at June 30, 2024 and December 31, 2023, respectively. Accrued maintenance expense, accrued interest on related party debt and accrued taxes, which are components of accrued and other liabilities, were $ 4,096 , $ 6,679 and $ 4,807 , respectively, at June 30, 2024 and $ 5,170 , $ 6,675 and $ 3,033 , respectively, at December 31, 2023. No other component of accrued and other liabilities was more than five percent of total current liabilities. Cash Flow Information Non-cash Investing Activity Capital expenditure related liabilities, included in accounts payable—third parties and accrued and other liabilities, were $ 4,640 and $ 4,368 at June 30, 2024 and 2023, respectively. Interest Paid Interest paid by the Partnership, net of interest capitalized, was $ 13,228 and $ 11,987 for the six months ended June 30, 2024 and 2023, respectively. Operating Leases Right-of-use assets obtained in exchange for operating lease obligations were $ 616 and $ 0 for the six months ended June 30, 2024 and 2023, respectively. 12. Commitments and Contingencies The Partnership is subject to environmental laws and regulations that can impose civil and criminal sanctions and that may require the Partnership to mitigate the effects of contamination caused by the release or disposal of hazardous substances into the environment. These laws include the federal Clean Air Act, the federal Water Pollution Control Act, the Resource Conservation and Recovery Act, 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. 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, and payment by Westlake and the insurance carriers is complete. Westlake and its subsidiaries are responsible for indemnifying the Partnership in connection with any losses incurred by OpCo as a result of the fire. The Partnership is also involved in other legal proceedings incidental to the conduct of its business. 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. 14 Table of Contents