Related-Party Transactions | Related-Party Transactions Related-party amounts included on the unaudited condensed consolidated statements of operations were as follows: Three Months Ended June 30, Six Months Ended June 30, 2020 2019 2020 2019 Other revenue $ 658 $ 235 $ 1,264 $ 827 Cost of goods sold 39,739 34,623 75,996 54,621 General and administrative expenses 6,947 9,263 14,636 15,559 Management Services Agreements Enviva Partners, LP and the Hamlet JV are parties to management services agreements (together, the “MSAs”) with Enviva Management Company, LLC , a Delaware limited liability company and wholly owned subsidiary of our sponsor (together with its affiliates that provide services to us, as applicable, “Enviva Management”). Enviva Management provides us with operations, general administrative, management and other services. We reimburse Enviva Management for all direct or indirect internal or third-party expenses it incurs in connection with the provision of such services. The MSAs include rent-related amounts for noncancelable operating leases for office space in Maryland and North Carolina held by our sponsor. Under the Hamlet JV’s management services agreement (the “Hamlet JV MSA”), the Hamlet JV pays an annual management fee to Enviva Management and to the extent allocated costs exceed the annual management fee, the additional costs are recorded with an increase to partners’ capital. In connection with the Hamlet Drop-Down, Enviva Management waived the Hamlet JV’s obligation to pay approximately $2.7 million of management fees payable to Enviva Management from the date thereof until July 1, 2020 (the “Hamlet JV MSA Fee Waiver”). Related-party amounts included on the unaudited condensed consolidated balance sheets and the unaudited condensed consolidated statements of operations under our MSAs were as follows: June 30, 2020 December 31, 2019 Finished goods inventory $ 1,325 $ 419 Related party payables 8,047 18,703 Three Months Ended June 30, Six Months Ended June 30, 2020 2019 2020 2019 Cost of goods sold $ 14,613 $ 20,159 $ 30,513 $ 33,713 Related-party management services agreement fees 6,947 9,263 14,636 15,559 During the three and six months ended June 30, 2020, $0.6 million and $1.3 million, respectively, of fees expensed under the Hamlet JV MSA were waived pursuant to the Hamlet JV MSA Fee Waiver and recorded as an increase to partners’ capital. During the three and six months ended June 30, 2019, $0.9 million of fees expensed under the Hamlet JV MSA were waived pursuant to the Hamlet JV MSA Fee Waiver and recorded as an increase to partners’ capital. Hamlet Drop-Down Agreements On the date of the Hamlet Drop-Down: • We entered into an agreement with our sponsor, pursuant to which (1) our sponsor agreed to guarantee certain cash flows from the Hamlet plant until June 30, 2020, (2) our sponsor agreed to reimburse us for construction cost overruns in excess of budgeted capital expenditures for the Hamlet plant, subject to certain exceptions, (3) we agreed to pay to our sponsor quarterly incentive payments for any wood pellets produced by the Hamlet plant in excess of forecast production levels through June 30, 2020 and (4) our sponsor agreed to retain liability for certain claims payable, if any, by the Hamlet JV (the “Make-Whole Agreement”). • We entered into an agreement with Enviva Management to waive our obligation to pay an aggregate of approximately $13.0 million in fees payable under our management services agreement with Enviva Management (the “EVA MSA”) with respect to the period from the date of the Hamlet Drop-Down through the second quarter of 2020 (the “First EVA MSA Fee Waiver”). • The Hamlet JV entered into an interim services agreement (the “ISA”) with Enviva Hamlet Operator, LLC, a wholly owned subsidiary of our sponsor (“Hamlet Operator”), pursuant to which Hamlet Operator, as an independent contractor, agreed to manage, operate, maintain and repair the Hamlet plant and provide other services to the Hamlet JV for the period from July 1, 2019 through June 30, 2020 in exchange for a fixed fee per metric ton (“MT”) of wood pellets produced by the Hamlet plant during such period and delivered at place to the Wilmington terminal. Under and during the term of the ISA, Hamlet Operator agreed to (1) pay all operating and maintenance expenses at the Hamlet plant, (2) cover all reimbursable general and administrative expenses associated with the Hamlet plant and (3) pay other costs and expenses incurred by the Hamlet plant to produce and sell the wood pellets delivered to the Wilmington terminal from the Hamlet plant. Our sponsor guarantees all obligations of Hamlet Operator under the ISA. Pursuant to the agreements we entered into on the date of the Hamlet Drop-Down, during the three and six months ended June 30, 2020, $1.0 million and $3.5 million, respectively, was recorded as an increase to partners’ capital consisting of expenses waived under the First EVA MSA Fee Waiver. Cost of goods sold included $14.6 million and $25.2 million, respectively, net of a cost of cover deficiency fee from our sponsor pursuant to the Make-Whole Agreement as a result of Hamlet Operator’s failure to meet specified production levels, offset by the agreed-upon price due to Hamlet Operator for the wood pellets produced by the Hamlet plant that we have sold. Additionally, at June 30, 2020 and December 31, 2019, $1.3 million and $0.5 million, respectively, was included in finished goods inventory. As of June 30, 2020, included in related-party receivables, net are $16.1 million related to the ISA and $1.2 million related to the Make-Whole Agreement. Second EVA MSA Fee Waiver In June 2019, we entered into an agreement with Enviva Management (the “Second EVA MSA Fee Waiver”) pursuant to which we received a $5.0 million waiver of fees under the EVA MSA through September 30, 2019 as consideration for an assignment of two shipping contracts to our sponsor to rebalance our and our sponsor’s respective shipping obligations under our existing off-take contracts. During the three and six months ended June 30, 2019, $2.7 million of EVA MSA fees expensed were waived and recorded as an increase to partners’ capital pursuant to the Second EVA MSA Fee Waiver. Greenwood Contract We are a party to a contract with Greenwood to purchase wood pellets produced by the Greenwood plant through March 2022 (the “Greenwood contract”) and had a take-or-pay obligation with respect to 550,000 MTPY of wood pellets from July 2019 through March 2022, subject to Greenwood’s option to increase or decrease the volume by 10% each contract year. Pursuant to amendments to the Greenwood Contract, our take-or-pay obligation with respect to 550,000 MTPY of wood pellets was deferred to 2021. During the three months ended June 30, 2020, we purchased $10.1 million of wood pellets from Greenwood and recorded no cost of cover deficiency fee from Greenwood. During the six months ended June 30, 2020, we purchased $18.8 million of wood pellets from Greenwood and recorded a cost of cover deficiency fee of approximately $0.3 million from Greenwood. During the three and six months ended and June 30, 2019, we purchased $13.7 million and $24.2 million, respectively, of wood pellets from Greenwood and recorded a cost of cover deficiency fee of approximately $0.3 million and $3.3 million, respectively, from Greenwood as it was unable to satisfy certain commitments. As of June 30, 2020 and 2019, the net purchased amounts related to the Greenwood contract of $18.5 million and $20.9 million, respectively, included $18.1 million and $20.8 million, respectively, in cost of goods sold and $0.4 million and $0.1 million, respectively, in finished goods inventory. Holdings TSA We have a long-term terminal services agreement with our sponsor (the “Holdings TSA”). Pursuant to the Holdings TSA, our sponsor agreed to deliver a minimum of 125,000 MT of wood pellets per quarter for receipt, storage, handling and loading services by the Wilmington terminal and pay a fixed fee on a per-ton basis for such terminal services. The Holdings TSA remains in effect until September 1, 2026. The Holdings TSA was amended and assigned to Greenwood and deficiency payments are due to Wilmington if quarterly minimum throughput requirements are not met. During the three and six months ended June 30, 2020 and 2019, we recorded $0.7 million and $1.3 million and $0.2 million and $0.8 million, respectively, of deficiency fees from Greenwood, which are included in other revenue. Enviva FiberCo, LLC We purchase raw materials from Enviva FiberCo, LLC (“FiberCo”), a wholly owned subsidiary of our sponsor, including through a wood supply agreement that provided for deficiency fees in the event that FiberCo did not satisfy certain volume commitments. Raw materials purchased and included in cost of goods sold during the three and six months ended June 30, 2020, was $0.8 million and $2.2 million, respectively. No cost of cover deficiency fees were recognized during the three and six months ended June 30, 2020. During the three and six months ended June 30, 2019, we purchased raw materials of $1.7 million and $3.6 million, respectively, from FiberCo. No cost of cover deficiency fees were recognized during the three months ended June 30, 2019. Offsetting our raw material purchases during the six months ended June 30, 2019, we recognized $2.9 million of cost of cover deficiency fees, which is included in related-party receivables as of June 30, 2019. As of June 30, 2020, an insignificant amount is included in related-party payables related to raw material purchased from FiberCo. |