Related Party Transactions | Related Party Transactions The Partnership and OpCo regularly enter into related party transactions with Westlake. See below for a description of transactions with related parties. 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. Sales to related parties were as follows: Three Months Ended September 30, Nine Months Ended September 30, 2022 2021 2022 2021 Net sales—Westlake $ 364,273 $ 247,887 $ 1,020,042 $ 708,646 As of September 30, 2022, OpCo has estimated an annual deficiency for the full year 2022, and thus, the Partnership has recognized buyer deficiency fees of $13,940 during the three and nine months ended September 30, 2022. The buyer deficiency fee is measured based upon the lower of the actual production deficiency at period end or the estimated annual production deficiency. The buyer deficiency fees are classified as a component of net sales—Westlake. 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. Charges from related parties in cost of sales were as follows: Three Months Ended September 30, Nine Months Ended September 30, 2022 2021 2022 2021 Feedstock purchased from Westlake and included in cost of sales $ 201,044 $ 119,000 $ 603,243 $ 302,095 Other charges from Westlake and included in cost of sales 49,144 35,615 135,574 94,923 Total $ 250,188 $ 154,615 $ 738,817 $ 397,018 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 September 30, Nine Months Ended September 30, 2022 2021 2022 2021 Services received from Westlake and included in selling, general and administrative expenses $ 7,080 $ 6,925 $ 20,510 $ 21,837 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 September 30, Nine Months Ended September 30, 2022 2021 2022 2021 Goods and services purchased from Westlake and capitalized as assets $ 832 $ 3,606 $ 2,205 $ 4,542 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. 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 $691 and $71 was included in the receivable under the Investment Management Agreement balance at September 30, 2022 and December 31, 2021, respectively. Total interest earned related to the Investment Management Agreement was $691 and $81 for the three months ended September 30, 2022 and 2021, respectively, and $934 and $225 for the nine months ended September 30, 2022 and 2021, respectively. The Partnership's receivable under the Investment Management Agreement was as follows: September 30, December 31, Receivable under the Investment Management Agreement $ 135,863 $ 106,243 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. The buyer deficiency fees discussed above under "Sales to Related Parties" recognized in the nine months ended September 30, 2022 are scheduled to be received by the Partnership after December 31, 2022. As a result of the force majeure events in 2021, the Partnership recognized revenue for a buyer deficiency fee of $51,395 and a shortfall fee of $58,906 during 2021. The buyer deficiency fee was collected from Westlake in January 2022 and the shortfall fee recognized in 2021 is recoverable during 2022 per the Ethylene Sales Agreement. The Partnership's accounts receivable from Westlake were as follows: September 30, December 31, Accounts receivable—Westlake $ 98,399 $ 142,791 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: September 30, December 31, Accounts payable—Westlake $ 35,583 $ 10,796 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. Operating lease rentals paid to Westlake for such leases were $719 and $997 for the three months ended September 30, 2022 and 2021, respectively, and $1,979 and $2,292 for the nine months ended September 30, 2022 and 2021, respectively, and 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 for the three months ended September 30, 2022 and 2021 was $3,645 and $2,190, respectively. Interest on related party debt payable balances for the nine months ended September 30, 2022 and 2021 was $8,703 and $6,650, respectively. Interest on related party debt payable is presented as interest expense—Westlake in the consolidated statements of operations. At September 30, 2022 and December 31, 2021, accrued interest on related party debt was $3,544 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: September 30, December 31, Total debt payable to Westlake $ 399,674 $ 399,674 Major Customer and Concentration of Credit Risk During the three months ended September 30, 2022 and 2021, Westlake accounted for approximately 87.8% and 84.3%, respectively, of the Partnership's net sales. During the nine months ended September 30, 2022 and 2021, Westlake accounted for approximately 83.2% and 80.1%, respectively, of the Partnership's net sales. |