10q10k10q10k.net

What changed in Westlake Chemical Partners LP's 10-K — 2024 vs 2025

vs

Paragraph-level year-over-year comparison of Westlake Chemical Partners LP's 2024 and 2025 10-K annual filings, covering the Business, Risk Factors, Legal Proceedings, Cybersecurity, MD&A and Market Risk sections. Every new, removed and edited paragraph is highlighted side-by-side so you can see exactly what management changed in the 2025 report.

+233 added−216 removedSource: 10-K (2026-03-04) vs 10-K (2025-03-05)

Top changes in Westlake Chemical Partners LP's 2025 10-K

233 paragraphs added · 216 removed · 186 edited across 7 sections

Item 1. Business

Business — how the company describes what it does

19 edited+7 added−5 removed50 unchanged
Biggest changeThe Ethylene Sales Agreement provides that, if compliance with any law adopted or modified following our IPO results in OpCo incurring additional costs in excess of $500,000 in any contract year, OpCo is entitled to charge Westlake a monthly surcharge following efforts to mitigate the effects of such compliance. 4 Table of Contents Feedstock Supply Agreement OpCo and Westlake are parties to the Feedstock Supply Agreement, which has an initial term through December 31, 2026 and automatic 12-month renewal periods until terminated at the end of the initial term or any renewal term on 12-months' notice.
Biggest changeThe Shortfall is generally recognized during the period in which the related operating, maintenance or turnaround activities occur. 4 Table of Contents The Ethylene Sales Agreement provides that, if compliance with any law adopted or modified following our IPO results in OpCo incurring additional costs in excess of $500,000 in any contract year, OpCo is entitled to charge Westlake a monthly surcharge following efforts to mitigate the effects of such compliance.
OpCo owns: • two ethylene production facilities at Westlake's Lake Charles, Louisiana site ("Petro 1" and "Petro 2," collectively referred to as "Lake Charles Olefins"), with an annual combined capacity of approximately 3.0 billion pounds; • one ethylene production facility at Westlake's Calvert City, Kentucky site ("Calvert City Olefins"), with an annual capacity of approximately 730 million pounds; and • a 200-mile common carrier ethylene pipeline that runs from Mont Belvieu, Texas to the Longview, Texas chemical site, which includes Westlake's Longview PE production facility (the "Longview Pipeline").
OpCo owns: • two ethylene production facilities at Westlake's Lake Charles, Louisiana site ("Petro 1" and "Petro 2," collectively referred to as "Lake Charles Olefins"), with an annual combined capacity of approximately 3 billion pounds; • one ethylene production facility at Westlake's Calvert City, Kentucky site ("Calvert City Olefins"), with an annual capacity of approximately 730 million pounds; and • a 200-mile common carrier ethylene pipeline that runs from Mont Belvieu, Texas to the Longview, Texas chemical site, which includes Westlake's Longview PE production facility (the "Longview Pipeline").
The combined capacity of these two ethylene production facilities is approximately 3.0 billion pounds per year. Within Westlake's Lake Charles site, Petro 1 and Petro 2 are connected by pipeline systems to Westlake's polyethylene plants.
The combined capacity of these two ethylene production facilities is approximately 3 billion pounds per year. Within Westlake's Lake Charles site, Petro 1 and Petro 2 are connected by pipeline systems to Westlake's polyethylene plants.
The following table provides information regarding OpCo's ethylene production facilities as of December 31, 2024: Plant Location (Description) Annual Production Capacity (millions of pounds) Feedstock Primary Uses of Ethylene Lake Charles, Louisiana (Petro 1) 1,500 Ethane PE and PVC Lake Charles, Louisiana (Petro 2) 1,490 Ethane, ethane/propane mix, propane, butane or naphtha PE and PVC Calvert City, Kentucky (Calvert City Olefins) 730 Ethane or propane PVC Total 3,720 Lake Charles Olefins Two of OpCo's ethylene production facilities, which we refer to as Petro 1 and Petro 2 and, collectively, as Lake Charles Olefins, are located at Westlake's Lake Charles site.
The following table provides information regarding OpCo's ethylene production facilities as of December 31, 2025: Plant Location (Description) Annual Production Capacity (millions of pounds) Feedstock Primary Uses of Ethylene Lake Charles, Louisiana (Petro 1) 1,500 Ethane PE and PVC Lake Charles, Louisiana (Petro 2) 1,490 Ethane, ethane/propane mix, propane, butane or naphtha PE and PVC Calvert City, Kentucky (Calvert City Olefins) 730 Ethane or propane PVC Total 3,720 Lake Charles Olefins Two of OpCo's ethylene production facilities, which we refer to as Petro 1 and Petro 2 and, collectively, as Lake Charles Olefins, are located at Westlake's Lake Charles site.
It is our policy to comply with all environmental, health and safety requirements in the jurisdictions in which we and OpCo operate and to provide safe and environmentally sound workplaces for our employees. In some cases, compliance can be achieved only by incurring capital expenditures. In 2024, OpCo incurred capital expenditures of $3.5 million related to environmental compliance.
It is our policy to comply with all environmental, health and safety requirements in the jurisdictions in which we and OpCo operate and to provide safe and environmentally sound workplaces for our employees. In some cases, compliance can be achieved only by incurring capital expenditures. In 2025, OpCo incurred capital expenditures of $5.3 million related to environmental compliance.
Because we own OpCo's general partner, we have control over all of OpCo's assets and operations. As of December 31, 2024, Westlake held a 77.2% limited partner interest in OpCo and held a 40.1% limited partner interest in us (consisting of 14,122,230 common units), our general partner interest and our incentive distribution rights.
Because we own OpCo's general partner, we have control over all of OpCo's assets and operations. As of December 31, 2025, Westlake held a 77.2% limited partner interest in OpCo and held a 40.1% limited partner interest in us (consisting of 14,122,230 common units), our general partner interest and our incentive distribution rights.
Ethylene Sales Agreement OpCo and Westlake are parties to the Ethylene Sales Agreement, which has an initial term through December 31, 2026 and automatic 12-month renewal periods until terminated at the end of the initial term or any renewal term on 12-months' notice.
Ethylene Sales Agreement OpCo and Westlake are parties to the Ethylene Sales Agreement, which has an initial term through December 31, 2026 and automatic 12-month renewal periods until terminated at the end of the initial term or any renewal term on not less than 12-months' notice.
In the event Westlake purchases less than its annual commitment, we recognize buyer deficiency fees representing fixed margin and all expenses and expenditures incurred per pound of volume committed but not taken by Westlake.
In the event Westlake purchases less than its annual commitment, we recognize a buyer deficiency fee ( " Buyer Deficiency Fee " ) representing fixed margin and all expenses and expenditures incurred per pound of volume committed but not taken by Westlake.
We estimate that OpCo will make capital expenditures of approximately $3.6 million in 2025 and $3.6 million in 2026, respectively, related to environmental compliance. We anticipate that stringent environmental regulations will continue to be imposed on us and the industry in general.
We estimate that OpCo will make capital expenditures of approximately $1.5 million in 2026 and $1.2 million in 2027, respectively, related to environmental compliance. We anticipate that stringent environmental regulations will continue to be imposed on us and the industry in general.
Under the exchange agreement, OpCo may require Westlake to deliver up to 200 million pounds of ethylene for OpCo per year from the Site Leases to an ethylene hub in Mont Belvieu, Texas, for which OpCo would be required to pay Westlake an exchange fee of $0.006 per pound.
Under the exchange agreement, OpCo may require Westlake to deliver up to 200 million pounds of ethylene for OpCo per year from the Site Leases to an ethylene hub in Mont Belvieu, Texas, for which OpCo would be required to pay Westlake an exchange fee of $0.006 per pound. 5 Table of Contents OpCo Partnership Agreement We, OpCo GP and Westlake are parties to an agreement of limited partnership for OpCo (the "OpCo LP Agreement").
OpCo also entered into a feedstock supply agreement with Westlake that supplies OpCo with ethane (and any other feedstocks) required for OpCo to produce ethylene under the Ethylene Sales Agreement (the "Feedstock Supply Agreement").
OpCo also entered into a feedstock supply agreement with Westlake that supplies OpCo with ethane (and any other feedstocks) required for OpCo to produce ethylene under the Ethylene Sales Agreement (the "Feedstock Supply Agreement"). OpCo primarily uses ethane (a component of natural gas liquids, or NGLs) to produce ethylene.
We control OpCo GP, as its sole member, subject to certain approval rights held by Westlake. 5 Table of Contents Investment Management Agreement On August 1, 2017, we, OpCo and Westlake executed an Investment Management Agreement that authorizes Westlake to invest the Partnership's and OpCo's excess cash with Westlake for durations of up to a maximum of nine months.
Investment Management Agreement On August 1, 2017, we, OpCo and Westlake executed an Investment Management Agreement that authorizes Westlake to invest the Partnership's and OpCo's excess cash with Westlake for durations of up to a maximum of nine months.
Legal Proceedings In the ordinary conduct of our business, we and Westlake and our and Westlake's subsidiaries, including OpCo, are subject to lawsuits, investigations and claims, including environmental claims and employee related matters.
Westlake is responsible for human capital management policies, including any human capital measures and objectives that management focuses on in managing the business. Legal Proceedings In the ordinary conduct of our business, we and Westlake and our and Westlake's subsidiaries, including OpCo, are subject to lawsuits, investigations and claims, including environmental claims and employee related matters.
Under the Feedstock Supply Agreement, Westlake sells OpCo ethane and other feedstock in amounts sufficient for OpCo to produce the ethylene to be sold under the Ethylene Sales Agreement. The price at which ethane and feedstock is sold includes an indexed price for spot gas liquids at Mont Belvieu and applicable transportation, storage and other costs.
The price at which ethane and feedstock is sold includes an indexed price for spot gas liquids at Mont Belvieu and applicable transportation, storage and other costs.
OpCo Partnership Agreement We, OpCo GP and Westlake are parties to an agreement of limited partnership for OpCo (the "OpCo LP Agreement"). The OpCo LP Agreement governs the ownership and management of OpCo and designates OpCo GP as the general partner of OpCo. OpCo GP generally has complete authority to manage OpCo's business and affairs.
The OpCo LP Agreement governs the ownership and management of OpCo and designates OpCo GP as the general partner of OpCo. OpCo GP generally has complete authority to manage OpCo's business and affairs. We control OpCo GP, as its sole member, subject to certain approval rights held by Westlake.
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.
Payment of the Buyer Deficiency Fee is scheduled to be received by the Partnership after the conclusion of the year in which the annual commitment was not purchased and taken by Westlake.
In the event of a force majeure event, the Partnership recognizes buyer deficiency fees representing fixed margin and unavoided operating and maintenance capital expenditures and maintenance expenses per pound of volume committed by Westlake during the force majeure p eriod.
The annual commitment is not reduced for a force majeure event affecting OpCo's plants that lasts fewer than 45 consecutive days; however, in the event of such a force majeure event, the Partnership recognizes a Buyer Deficiency Fee representing fixed margin and unavoided operating and maintenance capital expenditures and maintenance expenses per pound of volume committed by Westlake during the force majeure period.
OpCo primarily uses ethane (a component of natural gas liquids, or NGLs) to produce ethylene. 1 Table of Contents Ownership of Westlake Chemical Partners LP The following simplified diagram depicts our organizational structure as of December 31, 2024: Public Common Units 59.9 % Interests of Westlake: Common Units 40.1 % Non-Economic General Partner Interest — Incentive Distribution Rights (1) — 100.0 % ______________________________ (1) Incentive distribution rights represent a variable interest in distributions and thus are not expressed as a fixed percentage.
As we navigate market conditions, we evaluate future growth opportunities, including the following four potential levers: • increases of our ownership interest in OpCo; • acquisitions of other qualified income streams; • organic growth opportunities such as expansions of our current ethylene facilities; and • negotiation of a higher fixed-margin in our Ethylene Sales Agreement with Westlake. 1 Table of Contents Ownership of Westlake Chemical Partners LP The following simplified diagram depicts our organizational structure as of December 31, 2025: Public Common Units 59.9 % Interests of Westlake: Common Units 40.1 % Non-Economic General Partner Interest — Incentive Distribution Rights (1) — 100.0 % ______________________________ (1) Incentive distribution rights represent a variable interest in distributions and thus are not expressed as a fixed percentage.
Pursuan t 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.
Pursuant to the Ethylene Sales Agreement, Westlake is obligated to pay for the annual minimum quantity (95% of OpCo's budgeted ethylene production), which is measured on an annual basis.
Removed
The Shortfall is generally recognized during the period in which the related operating, maintenance or turnaround activities occur.
Added
Our Strategy We remain focused on our ability to continue to provide long-term value and distributions to our unitholders.
Removed
As of December 31, 2024, 153 employees of Westlake were seconded to OpCo. Of these, 25 are covered by collective bargaining agreements.
Added
On October 28, 2025, OpCo and Westlake agreed to renew the Ethylene Sales Agreement through December 31, 2027 in accordance with its terms.
Removed
On November 1, 2024, bargaining unit employees of Local Lodge No. 2781 of the International Association of Machinists and Aerospace Workers ("IAM") began a strike at our Calvert City, Kentucky, facility, after the IAM members, who work in the OpCo's ethylene facility and Westlake's chlorine units, did not accept Westlake's final offer for a new collective bargaining agreement.
Added
Feedstock Supply Agreement OpCo and Westlake are parties to the Feedstock Supply Agreement, which has an initial term through December 31, 2026 and automatic 12-month renewal periods until terminated at the end of the initial term or any renewal term on not less than 12-months' notice.
Removed
The ethylene unit continued to operate without disruption with the use of management and other salaried personnel. The strike ended on November 8, 2024, after the IAM accepted Westlake's offer for a new collective bargaining agreement, which will expire on November 9, 2029.
Added
On October 28, 2025, OpCo and Westlake agreed to renew the Feedstock Supply Agreement through December 31, 2027 in accordance with its terms. Under the Feedstock Supply Agreement, Westlake sells OpCo ethane and other feedstock in amounts sufficient for OpCo to produce the ethylene to be sold under the Ethylene Sales Agreement.
Removed
Despite the recent strike, we believe that Westlake's relationship with local union officials and bargaining committees is open and positive. Westlake is responsible for human capital management policies, including any human capital measures and objectives that management focuses on in managing the business.
Added
In connection with the renewals of the Ethylene Sales Agreement and the Feedstock Supply Agreement, on October 28, 2025, OpCo and certain affiliates of Westlake entered into an amendment to the Services and Secondment Agreement to align the date of expiration of such agreement with the date of expiration of the Ethylene Sales Agreement.
Added
In connection with the renewals of the Ethylene Sales Agreement and the Feedstock Supply Agreement, on October 28, 2025, the Partnership, OpCo and certain affiliates of Westlake entered into an amendment to the Omnibus Agreement to provide that the Omnibus Agreement would terminate upon termination of the Ethylene Sales Agreement.
Added
As of December 31, 2025, 155 employees of Westlake were seconded to OpCo. As of December 31, 2025, 15% of such seconded employees were covered by a collective bargaining agreement, which will expire in November 2029. We believe that Westlake's relationship with local union representatives is open and positive.

Item 1A. Risk Factors

Risk Factors — what could go wrong, per management

84 edited+16 added−15 removed219 unchanged
Biggest changeCost reimbursements due to our general partner and Westlake for services provided to us or on our behalf reduce our earnings and therefore our cash available for distribution to our unitholders. The amount and timing of such reimbursements are determined by our general partner.
Biggest changeFor example, so long as Westlake is not in default under the Ethylene Sales Agreement, Westlake has the right to purchase 95% of OpCo's production in excess of planned capacity. 12 Table of Contents We are obligated to reimburse our general partner and Westlake for services provided to us or on our behalf, which may reduce our earnings and therefore our cash available for distribution to our unitholders.
Westlake's obligations under the Ethylene Sales Agreement, the Feedstock Supply Agreement and the related Services and Secondment Agreement continue in effect until December 31, 2026, after which such agreements will extend on an annual basis unless and until terminated by either party upon at least 12 months' prior written notice.
Westlake's obligations under the Ethylene Sales Agreement, the Feedstock Supply Agreement and the related Services and Secondment Agreement continue in effect until December 31, 2026, after which such agreements extend on an annual basis unless and until terminated by either party upon at least 12 months' prior written notice.
These conflicts include the following situations, among others: • our general partner is allowed to take into account the interests of parties other than us, such as Westlake, in exercising certain rights under our partnership agreement; • neither our partnership agreement nor any other agreement requires Westlake to pursue a business strategy that favors us; • our partnership agreement replaces the fiduciary duties that would otherwise be owed by our general partner with contractual standards governing its duties, limits our general partner's liabilities and restricts the remedies available to our unitholders for actions that, without such limitations, might constitute breaches of fiduciary duty; 19 Table of Contents • except in limited circumstances, our general partner has the power and authority to conduct our business without unitholder approval; • our general partner determines the amount and timing of asset purchases and sales, borrowings, issuances of additional partnership securities and the level of reserves, each of which can affect the amount of cash that is distributed to our unitholders; • our general partner determines the amount and timing of any cash expenditure and whether an expenditure is classified as a maintenance capital expenditure, which reduces operating surplus, or an expansion capital expenditure, which does not reduce operating surplus.
These conflicts include the following situations, among others: • our general partner is allowed to take into account the interests of parties other than us, such as Westlake, in exercising certain rights under our partnership agreement; • neither our partnership agreement nor any other agreement requires Westlake to pursue a business strategy that favors us; • our partnership agreement replaces the fiduciary duties that would otherwise be owed by our general partner with contractual standards governing its duties, limits our general partner's liabilities and restricts the remedies available to our unitholders for actions that, without such limitations, might constitute breaches of fiduciary duty; • except in limited circumstances, our general partner has the power and authority to conduct our business without unitholder approval; • our general partner determines the amount and timing of asset purchases and sales, borrowings, issuances of additional partnership securities and the level of reserves, each of which can affect the amount of cash that is distributed to our unitholders; • our general partner determines the amount and timing of any cash expenditure and whether an expenditure is classified as a maintenance capital expenditure, which reduces operating surplus, or an expansion capital expenditure, which does not reduce operating surplus.
If our general partner exercised its limited call right, the effect would be to take us private and, if the units were subsequently deregistered, we would no longer be subject to the reporting requirements of the Securities Exchange Act of 1934, as amended, or the Exchange Act.
If our general partner exercised its limited call right, the effect would be to take us private and, if the units were subsequently deregistered, we would no longer be subject to the reporting requirements of the Securities Exchange Act of 1934, as amended (the "Exchange Act").
The issuance of additional common units or other equity interests of equal or senior rank will have the following effects: • our existing unitholders' proportionate ownership interest in us will decrease; • the amount of earnings per each unit may decrease; • the ratio of taxable income to distributions may increase; • the relative voting strength of each previously outstanding unit may be diminished; and • the market price of the common units may decline. 24 Table of Contents The market price of our common units could be adversely affected by sales of substantial amounts of our common units in the public or private markets, including sales by Westlake or other large holders.
The issuance of additional common units or other equity interests of equal or senior rank will have the following effects: • our existing unitholders' proportionate ownership interest in us will decrease; • the amount of earnings per each unit may decrease; • the ratio of taxable income to distributions may increase; • the relative voting strength of each previously outstanding unit may be diminished; and • the market price of the common units may decline. 23 Table of Contents The market price of our common units could be adversely affected by sales of substantial amounts of our common units in the public or private markets, including sales by Westlake or other large holders.
If Westlake does not pay us under the terms of the Ethylene Sales Agreement or if our assets fail to perform as intended, we may not have sufficient cash from operations following the establishment of cash reserves and payment of costs and expenses, including cost reimbursements to our general partner and its affiliates, to enable us to pay the minimum quarterly distribution to our unitholders. • OpCo is subject to the credit risk of Westlake on a substantial majority of its revenues, and Westlake's leverage and creditworthiness could adversely affect our ability to make distributions to our unitholders. • OpCo is a restricted subsidiary under certain indentures governing Westlake's senior notes. • The ethylene sales price charged under the Ethylene Sales Agreement is designed to permit OpCo to cover the substantial majority of its operating costs, but not our public partnership, debt and other OpCo costs, which reduce our net operating profit. • If OpCo is unable to renew or extend the Ethylene Sales Agreement beyond the initial 12-year term or the other agreements with Westlake upon expiration of these agreements, our ability to make distributions in the future could be materially adversely affected and the value of our units could decline. • OpCo has the right to use the real property underlying Lake Charles Olefins and Calvert City Olefins pursuant to two, 50-year site lease agreements with Westlake.
If Westlake does not pay us under the terms of the Ethylene Sales Agreement or if our assets fail to perform as intended, we may not have sufficient cash from operations following the establishment of cash reserves and payment of costs and expenses, including cost reimbursements to our general partner and its affiliates, to enable us to pay the minimum quarterly distribution to our unitholders. • OpCo is subject to the credit risk of Westlake on a substantial majority of its revenues, and Westlake's leverage and creditworthiness could adversely affect our ability to make distributions to our unitholders. • OpCo is a restricted subsidiary under certain indentures governing Westlake's senior notes. • The ethylene sales price charged under the Ethylene Sales Agreement is designed to permit OpCo to cover the substantial majority of its operating costs, but not our public partnership, debt and other OpCo costs, which reduce our net operating profit. • If OpCo is unable to renew or extend the Ethylene Sales Agreement or the other agreements with Westlake upon expiration of these agreements, our ability to make distributions in the future could be materially adversely affected and the value of our units could decline. • OpCo has the right to use the real property underlying Lake Charles Olefins and Calvert City Olefins pursuant to two, 50-year site lease agreements with Westlake.
The incurrence of additional commercial borrowings or other debt to finance our growth strategy would result in increased interest expense, which, in turn, may impact the cash that we have available to distribute to our unitholders. 23 Table of Contents The holder or holders of our incentive distribution rights may elect to cause us to issue common units to it in connection with a resetting of the target distribution levels related to the incentive distribution rights, without the approval of the conflicts committee of our board of directors or the holders of our common units.
The incurrence of additional commercial borrowings or other debt to finance our growth strategy would result in increased interest expense, which, in turn, may impact the cash that we have available to distribute to our unitholders. 22 Table of Contents The holder or holders of our incentive distribution rights may elect to cause us to issue common units to it in connection with a resetting of the target distribution levels related to the incentive distribution rights, without the approval of the conflicts committee of our board of directors or the holders of our common units.
Any acquisition involves potential risks, some of which are beyond our control, including, among other things: • mistaken assumptions about revenues and costs, including synergies; • the inability to successfully integrate the businesses we acquire; • the inability to hire, train or retain qualified personnel to manage and operate our business and newly acquired assets; • the assumption of unknown liabilities; • limitations on rights to indemnity from the seller; • mistaken assumptions about the overall costs of equity or debt; • the diversion of management's attention from other business concerns; • unforeseen difficulties in connection with operating in new product areas or new geographic areas; and • customer or key employee losses at the acquired businesses.
Any acquisition involves potential risks, some of which are beyond our control, including, among other things: • mistaken assumptions about revenues and costs, including synergies; • the inability to successfully integrate the businesses we acquire; • the inability to hire, train or retain qualified personnel to manage and operate our business and newly acquired assets; 13 Table of Contents • the assumption of unknown liabilities; • limitations on rights to indemnity from the seller; • mistaken assumptions about the overall costs of equity or debt; • the diversion of management's attention from other business concerns; • unforeseen difficulties in connection with operating in new product areas or new geographic areas; and • customer or key employee losses at the acquired businesses.
For example, virtually all of our income allocated to organizations that are exempt from U.S. federal income tax, including IRAs and other retirement plans, will be unrelated business taxable income ("UBTI") and will be taxable to them. Tax-exempt entities should consult a tax advisor before investing in our common units. 28 Table of Contents Non-U.S.
For example, virtually all of our income allocated to organizations that are exempt from U.S. federal income tax, including IRAs and other retirement plans, will be unrelated business taxable income ("UBTI") and will be taxable to them. Tax-exempt entities should consult a tax advisor before investing in our common units. 27 Table of Contents Non-U.S.
If the IRS were to challenge our proration method, we may be required to change the allocation of items of income, gain, loss and deduction among our unitholders. 29 Table of Contents A unitholder whose units are the subject of a securities loan (e.g., a loan to a "short seller" to cover a short sale of units) may be considered to have disposed of those units.
If the IRS were to challenge our proration method, we may be required to change the allocation of items of income, gain, loss and deduction among our unitholders. 28 Table of Contents A unitholder whose units are the subject of a securities loan (e.g., a loan to a "short seller" to cover a short sale of units) may be considered to have disposed of those units.
Moreover, given the integration of OpCo's ethylene production facilities and Westlake's Lake Charles and Calvert City facilities, it may not be practical for us or for a third party to provide site services or labor for OpCo's ethylene production facilities separately. Additionally, certain of Westlake's employees in North America are represented by labor unions and works councils.
Moreover, given the integration of OpCo's ethylene production facilities and Westlake's Lake Charles and Calvert City facilities, it may not be practical for us or for a third party to provide site services or labor for OpCo's ethylene production facilities separately. Additionally, certain of Westlake's employees in North America are represented by labor unions.
Our strategy to grow our business and increase distributions to unitholders is dependent on our ability to make acquisitions that result in an increase in our cash distributions per unit.
Our ability to grow our business and increase distributions to unitholders is dependent on our ability to make acquisitions that result in an increase in our cash distributions per unit.
As a result, our ability to pay the minimum quarterly distribution is based on the following factors, some of which are beyond our control: • severe financial hardship or bankruptcy of Westlake or one of our other customers, or the occurrence of other events affecting our ability to collect payments from Westlake or our other customers, including any of our customers' default; • volatility and cyclical downturns in the chemicals industry and other industries which materially and adversely impact Westlake and our other customers; • Westlake's inability to perform, or any other default on its obligations, under the Ethylene Sales Agreement, the Services and Secondment Agreement and the Omnibus Agreement; • the age of, and changes in the reliability, efficiency and capacity of the various equipment and operating facilities used in OpCo's operations, and in the operations of Westlake and our other customers, business partners and/or suppliers; • the cost of environmental remediation at OpCo's facilities not covered by Westlake or third parties; • changes in the expected operating levels of OpCo's assets; • OpCo's ability to meet minimum volume requirements, yield standards and ethylene quality requirements in the Ethylene Sales Agreement; • OpCo's ability to renew the Ethylene Sales Agreement or to enter into new, long-term agreements for the sale of ethylene under terms that are similar or more favorable; • changes in the marketplace that may affect supply and demand for ethane or ethylene, including decreased availability of ethane (which may result from greater restrictions on hydraulic fracturing, any reduction in hydraulic fracturing due to low crude oil prices or exports of natural gas liquids from the United States, for example), increased production of ethylene (a number of new ethylene capacity expansions have been recently completed) or export of ethane or ethylene from the United States; • changes in overall levels of production, production capacity, pricing and/or margins for ethylene; • OpCo's ability to secure adequate supplies of ethane, other feedstocks and natural gas from Westlake or third parties; • the need to use higher priced or less attractive feedstock due to the unavailability of ethane; • the effects of pipeline, railroad, barge, truck and other transportation performance and costs, including any transportation disruptions; • the effects of inflation and fluctuations in interest rates; • the availability and cost of labor; • risks related to employees and workplace safety; • the effects of adverse events relating to the operation of OpCo's facilities and to the transportation and storage of hazardous materials (including equipment malfunction, explosions, fires, spills and the effects of severe weather conditions); • changes in product specifications for the ethylene that we produce; • changes in insurance markets and the level, types and costs of coverage available, and the financial ability and willingness of our insurers to meet their obligations; 10 Table of Contents • changes in, or new, statutes, regulations or governmental policies by federal, state and local authorities with respect to protection of the environment; • changes in accounting rules and/or tax laws or their interpretations; • nonperformance or force majeure by, or disputes with or changes in contract terms with, Westlake, our other major customers, suppliers, dealers, distributors or other business partners; and • changes in, or new, statutes, regulations, governmental policies and taxes, or their interpretations.
As a result, our ability to pay the minimum quarterly distribution is based on the following factors, some of which are beyond our control: • severe financial hardship or bankruptcy of Westlake or one of our other customers, or the occurrence of other events affecting our ability to collect payments from Westlake or our other customers, including any of our customers' default; • volatility and cyclical downturns in the chemicals industry and other industries which materially and adversely impact Westlake and our other customers; • Westlake's inability to perform, or any other default on its obligations, under the Ethylene Sales Agreement, the Feedstock Supply Agreement, the Services and Secondment Agreement and the Omnibus Agreement; • the age of, and changes in the reliability, efficiency and capacity of the various equipment and operating facilities used in OpCo's operations, and in the operations of Westlake and our other customers, business partners and/or suppliers; • the cost of environmental remediation at OpCo's facilities not covered by Westlake or third parties; • changes in the expected operating levels of OpCo's assets; • OpCo's ability to meet minimum volume requirements, yield standards and ethylene quality requirements in the Ethylene Sales Agreement; • OpCo's ability to renew the Ethylene Sales Agreement or to enter into new, long-term agreements for the sale of ethylene under terms that are similar or more favorable; 9 Table of Contents • changes in the marketplace that may affect supply and demand for ethane or ethylene, including decreased availability of ethane (which may result from greater restrictions on hydraulic fracturing, any reduction in hydraulic fracturing due to low crude oil prices or exports of natural gas liquids from the United States, for example), increased production of ethylene (a number of new ethylene capacity expansions have been recently completed) or export of ethane or ethylene from the United States; • changes in overall levels of production, production capacity, pricing and/or margins for ethylene; • OpCo's ability to secure adequate supplies of ethane, other feedstocks and natural gas from Westlake or third parties; • the need to use higher priced or less attractive feedstock due to the unavailability of ethane; • the effects of pipeline, railroad, barge, truck and other transportation performance and costs, including any transportation disruptions; • the outcome of legal proceedings involving our property or assets, and our ability to receive indemnification from Westlake for certain liabilities and losses; • the effects of inflation and fluctuations in interest rates; • the availability and cost of labor; • risks related to employees and workplace safety; • the effects of adverse events relating to the operation of OpCo's facilities and to the transportation and storage of hazardous materials (including equipment malfunction, explosions, fires, spills and the effects of severe weather conditions); • changes in product specifications for the ethylene that we produce; • changes in insurance markets and the level, types and costs of coverage available, and the financial ability and willingness of our and Westlake's insurers to meet their obligations; • changes in, or new, statutes, regulations or governmental policies by federal, state and local authorities with respect to protection of the environment; • changes in accounting rules and/or tax laws or their interpretations; • nonperformance or force majeure by, or disputes with or changes in contract terms with, Westlake, our other major customers, suppliers, dealers, distributors or other business partners; and • changes in, or new, statutes, regulations, governmental policies and taxes, or their interpretations.
Comprehensive Environmental Response, Compensation, and Liability Act ("CERCLA") and similar state laws impose joint and several liability for the costs of remedial investigations and actions on the entities that generated waste, arranged for disposal of the waste, transported to or selected the disposal sites, and the past and present owners and operators of disposal sites.
The U.S. Comprehensive Environmental Response, Compensation, and Liability Act ("CERCLA") and similar state laws impose joint and several liability for the costs of remedial investigations and actions on the entities that generated waste, arranged for disposal of the waste, transported to or selected the disposal sites, and the past and present owners and operators of disposal sites.
This effectively permits a "change of control" without the vote or consent of the unitholders. 22 Table of Contents Our general partner has a call right that may require unitholders to sell their common units at an undesirable time or price.
This effectively permits a "change of control" without the vote or consent of the unitholders. 21 Table of Contents Our general partner has a call right that may require unitholders to sell their common units at an undesirable time or price.
Examples of decisions that our general partner may make in its individual capacity include: • how to allocate business opportunities among us and its affiliates; • whether to exercise its call right; • how to exercise its voting rights with respect to the units it owns; 20 Table of Contents • whether to exercise its registration rights; • whether to elect to reset target distribution levels; and • whether or not to consent to any merger or consolidation of the partnership or amendment to the partnership agreement.
Examples of decisions that our general partner may make in its individual capacity include: • how to allocate business opportunities among us and its affiliates; • whether to exercise its call right; • how to exercise its voting rights with respect to the units it owns; • whether to exercise its registration rights; • whether to elect to reset target distribution levels; and • whether or not to consent to any merger or consolidation of the partnership or amendment to the partnership agreement.
The amendments may require us to incur further capital expenditures and increase operating costs. 16 Table of Contents Our operations also produce greenhouse gas ("GHG") emissions, which have been the subject of increased scrutiny and regulation.
The amendments may require us to incur further capital expenditures and increase operating costs. 15 Table of Contents Our operations also produce greenhouse gas ("GHG") emissions, which have been the subject of increased scrutiny and regulation.
This election may result in lower distributions to the common unitholders in certain situations. In addition, we may compete directly with Westlake and entities in which it has an interest for acquisition opportunities and potentially will compete with these entities for new business or extensions of the existing services provided by us.
This election may result in lower distributions to the common unitholders in certain situations. 19 Table of Contents In addition, we may compete directly with Westlake and entities in which it has an interest for acquisition opportunities and potentially will compete with these entities for new business or extensions of the existing services provided by us.
Members of Congress and the President have frequently proposed and considered substantive changes to the existing U.S. federal income tax laws that would affect publicly-traded partnerships, including proposals that would eliminate our ability to qualify for partnership tax treatment.
Members of Congress and the President have frequently proposed and considered substantive changes to the existing U.S. federal income tax laws that would affect publicly-traded partnerships, including proposals that would eliminate our ability to qualify for partnership tax treatment. Although Pub. L.
If the Internal Revenue Service ("IRS"), were to treat us as a corporation for U.S. federal income tax purposes, or we become subject to entity-level taxation for state tax purposes, our cash available for distribution to our unitholders would be substantially reduced.
If the IRS, were to treat us as a corporation for U.S. federal income tax purposes, or we become subject to entity-level taxation for state tax purposes, our cash available for distribution to our unitholders would be substantially reduced.
The actual ratio of taxable income to cash distributions could be higher or lower than expected, and any differences could be material and could materially affect the value of the common units. 27 Table of Contents Tax gain or loss on the disposition of our common units could be more or less than expected.
The actual ratio of taxable income to cash distributions could be higher or lower than expected, and any differences could be material and could materially affect the value of the common units. Tax gain or loss on the disposition of our common units could be more or less than expected.
If we were to incur a significant liability for which we were not fully insured, it could have a material adverse effect on our financial position. 15 Table of Contents Our operations and assets are subject to extensive environmental, health and safety laws and regulations. We use hazardous substances and generate hazardous wastes and emissions in our manufacturing operations.
If we were to incur a significant liability for which we were not fully insured, it could have a material adverse effect on our financial position. Our operations and assets are subject to extensive environmental, health and safety laws and regulations. We use hazardous substances and generate hazardous wastes and emissions in our manufacturing operations.
These and similar events have caused and may again cause supply chain constraints and disruptions and workforce availability issues as well. Risks Relating to Our Partnership Structure Our General Partner Westlake owns and controls our general partner, which has sole responsibility for conducting our business and managing our operations.
These and similar events have caused and may again cause supply chain constraints and disruptions and workforce availability issues as well. 18 Table of Contents Risks Relating to Our Partnership Structure Our General Partner Westlake owns and controls our general partner, which has sole responsibility for conducting our business and managing our operations.
The vote, including Westlake, of the holders of at least 66 2 / 3 % of all outstanding common and subordinated units voting together as a single class is required to remove our general partner. As of February 26, 2025, Westlake owned an aggregate of 40.1% of our common units.
The vote, including Westlake, of the holders of at least 66 2 / 3 % of all outstanding common and subordinated units voting together as a single class is required to remove our general partner. As of February 25, 2026, Westlake owned an aggregate of 40.1% of our common units.
For example, our partnership agreement provides that: • whenever our general partner makes a determination or takes, or declines to take, any other action in its capacity as our general partner, our general partner is generally required to make such determination, or take or decline to take such other action, in good faith, and will not be subject to any higher standard imposed by our partnership agreement, Delaware law, or any other law, rule or regulation, or at equity; • our general partner and its officers and directors will not be liable for monetary damages or otherwise to us or our limited partners resulting from any act or omission unless there has been a final and non-appealable judgment entered by a court of competent jurisdiction determining that such losses or liabilities were the result of conduct in which our general partner or its officers or directors engaged in bad faith, meaning that they believed that the decision was adverse to the interest of the partnership or, with respect to any criminal conduct, with knowledge that such conduct was unlawful; and • our general partner will not be in breach of its obligations under the partnership agreement or its duties to us or our limited partners if a transaction with an affiliate or the resolution of a conflict of interest is: (1) approved by the conflicts committee of the board of directors, although our general partner is not obligated to seek such approval; or (2) approved by the vote of a majority of the outstanding common units, excluding any common units owned by our general partner and its affiliates.
For example, our partnership agreement provides that: • whenever our general partner makes a determination or takes, or declines to take, any other action in its capacity as our general partner, our general partner is generally required to make such determination, or take or decline to take such other action, in good faith, and will not be subject to any higher standard imposed by our partnership agreement, Delaware law, or any other law, rule or regulation, or at equity; • our general partner and its officers and directors will not be liable for monetary damages or otherwise to us or our limited partners resulting from any act or omission unless there has been a final and non-appealable judgment entered by a court of competent jurisdiction determining that such losses or liabilities were the result of conduct in which our general partner or its officers or directors engaged in bad faith, meaning that they believed that the decision was adverse to the interest of the partnership or, with respect to any criminal conduct, with knowledge that such conduct was unlawful; and • our general partner will not be in breach of its obligations under the partnership agreement or its duties to us or our limited partners if a transaction with an affiliate or the resolution of a conflict of interest is: (1) approved by the conflicts committee of the board of directors, although our general partner is not obligated to seek such approval; or (2) approved by the vote of a majority of the outstanding common units, excluding any common units owned by our general partner and its affiliates. 20 Table of Contents In connection with a situation involving a transaction with an affiliate or a conflict of interest, other than one where our general partner is permitted to act in its sole discretion, any determination by our general partner must be made in good faith.
The amount paid by Westlake will depend upon its ability to satisfy its minimum obligations under the Ethylene Sales Agreement and its ability and election to increase volumes above the minimums specified in the Ethylene Sales Agreement, which in turn are dependent upon, among other things, the level of polyethylene and polyvinyl chloride production at Westlake's other facilities, as well as industry capacity expansion in these downstream products in North America, a number of which have been recently completed.
The amount paid by Westlake will depend upon its ability to satisfy its minimum obligations under the Ethylene Sales Agreement and its ability and election to increase volumes above the minimums specified in the Ethylene Sales Agreement, which in turn are dependent upon, among other things, the level of polyethylene and polyvinyl chloride production at Westlake's other facilities, as well as industry capacity expansion in these downstream products in North America.
For a transfer of interests in a publicly traded partnership that is effected through a broker on or after January 1, 2023, the obligation to withhold is imposed on the transferor's broker. Current and prospective non-U.S. unitholders should consult their tax advisors regarding the impact of these rules on an investment in our common units.
For a transfer of interests in a publicly traded partnership that is effected through a broker, the obligation to withhold is imposed on the transferor's broker. Current and prospective non-U.S. unitholders should consult their tax advisors regarding the impact of these rules on an investment in our common units.
If OpCo is not able to renew the site lease agreements or if the site lease agreements are terminated by Westlake, OpCo may have to relocate Lake Charles Olefins and Calvert City Olefins, abandon the assets or sell the assets to Westlake. • OpCo depends upon Westlake for numerous services and for its labor force. • Cost reimbursements due to our general partner and Westlake for services provided to us or on our behalf reduce our earnings and therefore our cash available for distribution to our unitholders.
If OpCo is not able to renew the site lease agreements or if the site lease agreements are terminated by Westlake, OpCo may have to relocate Lake Charles Olefins and Calvert City Olefins, abandon the assets or sell the assets to Westlake. • OpCo depends upon Westlake for numerous services and for its labor force. • We are obligated to reimburse our general partner and Westlake for services provided to us or on our behalf, which may reduce our earnings and therefore our cash available for distribution to our unitholders.
If OpCo is unable to renew or extend the Ethylene Sales Agreement beyond the initial 12-year initial term or the other agreements with Westlake upon expiration of these agreements, our ability to make distributions in the future could be materially adversely affected and the value of our units could decline.
If OpCo is unable to renew or extend the Ethylene Sales Agreement or the other agreements with Westlake upon expiration of these agreements, our ability to make distributions in the future could be materially adversely affected and the value of our units could decline.
Pursuant to the Services and Secondment Agreement, Westlake is obligated to provide OpCo operating services, utility access services and other key site services. Westlake provides the services of certain of its employees, who act as OpCo's agents in operating and maintaining OpCo's ethylene production facilities and other assets.
OpCo depends upon Westlake for numerous services and for its labor force. Pursuant to the Services and Secondment Agreement, Westlake is obligated to provide OpCo operating services, utility access services and other key site services. Westlake provides the services of certain of its employees, who act as OpCo's agents in operating and maintaining OpCo's ethylene production facilities and other assets.
Our ability to make payments on and refinance this debt will depend on our ability to generate cash in the future, which is subject to the same factors described above in connection with our ability to pay quarterly distributions to unitholders. Cash that is used to service debt will be unavailable for distributions to our unitholders.
Our ability to make payments on and refinance this debt will depend on our ability to generate cash in the future, which is subject to the same factors described above in connection with our ability to pay quarterly distributions to unitholders.
Any adverse developments at any of these facilities or sites could have a material adverse effect on our results of operations and therefore our ability to distribute cash to unitholders. OpCo's operations are subject to significant hazards and risks inherent in ethylene production operations.
Business Operations Substantially all of OpCo's sales are generated at three facilities located at two sites. Any adverse developments at any of these facilities or sites could have a material adverse effect on our results of operations and therefore our ability to distribute cash to unitholders. OpCo's operations are subject to significant hazards and risks inherent in ethylene production operations.
Based upon our current operations and current Treasury Regulations, we believe we satisfy the qualifying income requirement. 25 Table of Contents Prior to our initial public offering, we requested and obtained a favorable private letter ruling from the IRS to the effect that, based on facts presented in the private letter ruling request, our income from the production, transportation, storage and marketing of ethylene and its co-products constitutes "qualifying income" within the meaning of Section 7704 of the Internal Revenue Code of 1986, as amended (the "Code").
Prior to our initial public offering, we requested and obtained a favorable private letter ruling from the IRS to the effect that, based on facts presented in the private letter ruling request, our income from the production, transportation, storage and marketing of ethylene and its co-products constitutes "qualifying income" within the meaning of Section 7704 of the Internal Revenue Code of 1986, as amended (the "Code").
Legislation to regulate GHG emissions has periodically been introduced in the United States Congress, and such legislation may be proposed or adopted in the future. There has been a wide-ranging policy debate regarding the impact of these gases and possible means for their regulation.
Pursuant to the terms of the Paris Agreement, the withdrawal took effect in January 2026. Legislation to regulate GHG emissions has periodically been introduced in the United States Congress, and such legislation may be proposed or adopted in the future. There has been a wide-ranging policy debate regarding the impact of these gases and possible means for their regulation.
We are obligated under our partnership agreement to reimburse our general partner and its affiliates for all expenses they incur and payments they make on our behalf, including expenses we and OpCo incur under the Services and Secondment Agreement and the Omnibus Agreement.
The amount and timing of such reimbursements are determined by our general partner. We are obligated under our partnership agreement to reimburse our general partner and its affiliates for all expenses they incur and payments they make on our behalf, including expenses we and OpCo incur under the Services and Secondment Agreement and the Omnibus Agreement.
We are subject to operational and financial risks and liabilities associated with the implementation of and efforts to achieve carbon emission reduction goals. Westlake has publicly announced a target 20% reduction in its Scope 1 and Scope 2 CO2 equivalent emissions intensity per ton of production by 2030 from a 2016 baseline.
We are subject to operational and financial risks and liabilities associated with the implementation of and efforts to achieve carbon emission reduction goals. In November 2025, Westlake announced that in 2024 it successfully met its publicly disclosed target to reduce its Scope 1 and Scope 2 CO2 equivalent emissions intensity per ton of production by 20% from a 2016 baseline.
If OpCo is unable to renew the site lease agreements or if Westlake terminates one or both of the site lease agreements, OpCo may have to relocate Lake Charles Olefins and Calvert City Olefins, abandon the assets or sell the assets to Westlake, the result of which may have a material adverse effect on our business, results of operations and financial condition. 12 Table of Contents OpCo depends upon Westlake for numerous services and for its labor force.
If OpCo is unable to renew the site lease agreements or if Westlake terminates one or both of the site lease agreements, OpCo may have to relocate Lake Charles Olefins and Calvert City Olefins, abandon the assets or sell the assets to Westlake, the result of which may have a material adverse effect on our business, results of operations and financial condition.
Despite the fact that we are organized as a limited partnership under Delaware law, we would be treated as a corporation for U.S. federal income tax purposes unless we satisfy a "qualifying income" requirement.
Despite the fact that we are organized as a limited partnership under Delaware law, we would be treated as a corporation for U.S. federal income tax purposes unless we satisfy a "qualifying income" requirement. Based upon our current operations and current Treasury Regulations, we believe we satisfy the qualifying income requirement.
Tax-exempt entities face unique tax issues from owning our common units that may result in adverse tax consequences to them . Investment in our common units by tax-exempt entities, such as employee benefit plans and individual retirement accounts (known as IRAs) raises issues unique to them.
Investment in our common units by tax-exempt entities, such as employee benefit plans and individual retirement accounts (known as IRAs) raises issues unique to them.
OpCo's ability to increase throughput volumes through its assets is constrained by the capacity limitations of those assets, which are currently operating at close to full capacity. OpCo's ability to increase its cash flow by selling ethylene to third parties may be limited by the Ethylene Sales Agreement.
OpCo's ability to receive greater cash flows from increased production may be limited by the Ethylene Sales Agreement. OpCo's ability to increase throughput volumes through its assets is constrained by the capacity limitations of those assets, which are currently operating at close to full capacity.
Our operations are subject to the usual hazards associated with commodity chemical manufacturing and the related use, storage, transportation and disposal of feedstocks, products and wastes, including: • pipeline leaks and ruptures; • explosions; • fires; • severe weather and natural disasters; • long-term impacts of climate change; including rising sea levels and changes in weather patterns, such as drought and flooding; • mechanical failure; • unscheduled downtime; • labor difficulties; • transportation interruptions; • chemical spills; • discharges or releases of toxic or hazardous substances or gases; • storage tank leaks; • other environmental risks; and • terrorist attacks.
Our operations are subject to the usual hazards associated with commodity chemical manufacturing and the related use, storage, transportation and disposal of feedstocks, products and wastes, including: • pipeline leaks and ruptures; • explosions; • fires; • severe weather and natural disasters; • long-term impacts of climate change; including rising sea levels and changes in weather patterns, such as drought and flooding; • mechanical failure; • unscheduled downtime; • labor difficulties; • transportation interruptions; • chemical spills; • discharges or releases of toxic or hazardous substances or gases; • storage tank leaks; • other environmental risks; and • terrorist attacks. 14 Table of Contents All of these hazards can cause personal injury and loss of life, catastrophic damage to or destruction of property and equipment and environmental damage, and may result in a suspension of operations and the imposition of civil or criminal penalties.
If our unitholders are dissatisfied with the performance of our general partner, they currently cannot remove our general partner. Unitholders currently are unable to remove our general partner without its consent because our general partner and its affiliates own sufficient units to be able to prevent its removal.
Unitholders currently are unable to remove our general partner without its consent because our general partner and its affiliates own sufficient units to be able to prevent its removal.
Various jurisdictions have considered or adopted laws and regulations on GHG emissions, with the general aim of reducing such emissions. The EPA currently requires certain industrial facilities to report their GHG emissions, and to obtain permits with stringent control requirements before constructing or modifying new facilities with significant GHG emissions. On March 6, 2024, the U.S.
The EPA currently requires certain industrial facilities to report their GHG emissions, and to obtain permits with stringent control requirements before constructing or modifying new facilities with significant GHG emissions. On March 6, 2024, the U.S.
If we consummate any future acquisitions, our capitalization and results of operations may change significantly, and unitholders will not have the opportunity to evaluate the economic, financial and other relevant information that we will consider in determining the application of our funds and other resources. 14 Table of Contents Many of our assets have been in service for many years and require significant expenditures to maintain them.
If we consummate any future acquisitions, our capitalization and results of operations may change significantly, and unitholders will not have the opportunity to evaluate the economic, financial and other relevant information that we will consider in determining the application of our funds and other resources.
A unitholder's share of our taxable income may be increased as a result of the IRS successfully contesting any of the U.S. federal income tax positions we take. • Tax-exempt entities and non-U.S. unitholders face unique tax issues from owning our common units that may result in adverse tax consequences to them.
A unitholder's share of our taxable income may be increased as a result of the IRS successfully contesting any of the U.S. federal income tax positions we take. • Tax-exempt entities and non-U.S. unitholders face unique tax issues from owning our common units that may result in adverse tax consequences to them. 8 Table of Contents Risks Inherent in Our Business Operational Relationship with Westlake We are substantially dependent on Westlake for our cash flows.
As a result, we may continue to face increasing pressure regarding our sustainability disclosures and practices. Additionally, members of the investment community may screen companies such as ours for sustainability disclosures and performance before investing in our common units.
Additionally, members of the investment community may screen companies such as ours for sustainability disclosures and performance before investing in our common units.
OpCo is subject to the credit risk of Westlake on a substantial majority of its revenues, and Westlake's leverage and creditworthiness could adversely affect our ability to make distributions to our unitholders.
Cash that is used to service debt will be unavailable for distributions to our unitholders. 10 Table of Contents OpCo is subject to the credit risk of Westlake on a substantial majority of its revenues, and Westlake's leverage and creditworthiness could adversely affect our ability to make distributions to our unitholders.
From time to time, in connection with an offering of our common units, we may state an estimate of the ratio of U.S. federal taxable income to cash distributions that a purchaser of common units in that offering may receive in a given period.
A unitholder's ratio of its share of taxable income to the cash received by it may also be affected by changes in law. 26 Table of Contents From time to time, in connection with an offering of our common units, we may state an estimate of the ratio of U.S. federal taxable income to cash distributions that a purchaser of common units in that offering may receive in a given period.
The Final Regulations, consistent with our private letter ruling, treat our income from the production, transportation, storage and marketing of ethylene and its co-products as "qualifying income." There can be no assurance that there will not be further changes to U.S. federal income tax laws or the Treasury Department's interpretation of the qualifying income rules in a manner that could impact our ability to qualify as a partnership in the future.
The Final Regulations, consistent with our private letter ruling, treat our income from the production, transportation, storage and marketing of ethylene and its co-products as "qualifying income." There can be no assurance that there will not be further changes to U.S. federal income tax laws or the Treasury Department's interpretation of the qualifying income rules in a manner that could impact our ability to qualify as a partnership in the future. 25 Table of Contents Any modification to the U.S. federal income tax laws and interpretations thereof may or may not be retroactively applied and could make it more difficult or impossible for us to meet the exception for certain publicly-traded partnerships to be treated as partnerships for U.S. federal income tax purposes.
As a result, our maintenance or repair costs may increase in the future. In addition, while we establish cash reserves in order to cover turnaround expenditures, the amounts we reserve may not be sufficient to fully cover such expenditures. Many of the assets we use to produce ethylene are long-lived assets.
Many of our assets have been in service for many years and require significant expenditures to maintain them. As a result, our maintenance or repair costs may increase in the future. In addition, while we establish cash reserves in order to cover turnaround expenditures, the amounts we reserve may not be sufficient to fully cover such expenditures.
Any contest with the IRS may materially and adversely impact the market for our common units and the price at which they trade. Moreover, the costs of any contest between us and the IRS will result in a reduction in our cash available for distribution to our unitholders and thus will be borne indirectly by our unitholders.
Moreover, the costs of any contest between us and the IRS will result in a reduction in our cash available for distribution to our unitholders and thus will be borne indirectly by our unitholders.
A loss or shutdown of operations over an extended period at any one of our three major operating facilities would have a material adverse effect on us.
We could become subject to environmental claims brought by governmental entities or third parties. A loss or shutdown of operations over an extended period at any one of our three major operating facilities would have a material adverse effect on us.
The EPA currently requires certain industrial facilities to report their GHG emissions and to obtain permits with stringent control requirements before constructing or modifying new facilities with significant criteria pollutant and GHG emissions. As our chemical processing results in GHG emissions, these and other GHG laws and regulations could affect our costs of doing business.
The EPA currently requires certain industrial facilities to report their GHG emissions and to obtain permits with stringent control requirements before constructing or modifying new facilities with significant criteria pollutant and GHG emissions.
If our "business interest" is subject to limitation under these rules, our unitholders will be limited in their ability to deduct their share of any interest expense that has been allocated to them. As a result, unitholders may be subject to limitation on their ability to deduct interest expense incurred by us.
The OBBBA also extends the limitation to interest that is required to be capitalized under the Code, subject to certain exceptions. If our "business interest" is subject to limitation under these rules, our unitholders will be limited in their ability to deduct their share of any interest expense that has been allocated to them.
Compared to the holders of common stock in a corporation, unitholders have limited voting rights and, therefore, limited ability to influence management's decisions regarding our business. Unitholders will have no right on an annual or ongoing basis to elect our general partner or its board of directors.
Holders of our common units have limited voting rights and are not entitled to elect our general partner or its directors, which could reduce the price at which our common units trade. Compared to the holders of common stock in a corporation, unitholders have limited voting rights and, therefore, limited ability to influence management's decisions regarding our business.
If we or our securities are unable to meet the sustainability standards or investment criteria set by these investors and funds, we may lose investors or investors may allocate a portion of their capital away from us, our cost of capital may increase, and our common unit price may be negatively impacted.
If we or our securities are unable to meet the sustainability standards or investment criteria set by these investors and funds, we may lose investors or investors may allocate a portion of their capital away from us, our cost of capital may increase, and our common unit price may be negatively impacted. 24 Table of Contents Tax Risks Our tax treatment depends on our status as a partnership for U.S. federal income tax purposes, and not being subject to a material amount of entity-level taxation.
In addition, any acceleration of debt under Westlake's credit facility will constitute a default under some of Westlake's other debt, including the indentures governing its senior notes. 11 Table of Contents The ethylene sales price charged under the Ethylene Sales Agreement is designed to permit OpCo to cover the substantial majority of its operating costs, but not our public partnership, debt and other OpCo costs, which reduce our net operating profit.
The ethylene sales price charged under the Ethylene Sales Agreement is designed to permit OpCo to cover the substantial majority of its operating costs, but not our public partnership, debt and other OpCo costs, which reduce our net operating profit.
All such potentially responsible parties (or any one of them, including us) may be required to bear all of such costs regardless of fault, legality of the original disposal or ownership of the disposal site.
All such potentially responsible parties (or any one of them, including us) may be required to bear all of such costs regardless of fault, legality of the original disposal or ownership of the disposal site. In addition, CERCLA and similar state laws could impose liability for damages to natural resources caused by contamination.
Multiple lawsuits have been filed challenging the SEC's new climate rules, and on April 4, 2024, the SEC issued an order staying the final rules until judicial review is complete. In September 2023, California passed climate-related disclosure mandates that are broader than the SEC's rules.
Multiple lawsuits have been filed challenging the SEC's new climate rules, and on April 4, 2024, the SEC issued an order staying the final rules until judicial review is complete. The SEC's final climate-related disclosure rules remain stayed pending resolution of judicial challenges and further action by the SEC.
Multiple lawsuits have been filed challenging the SEC's new climate rules, and on April 4, 2024, the SEC issued an order staying the final rules until judicial review is complete. In September 2023, California passed climate-related disclosure mandates that are broader than the SEC's rules.
Multiple lawsuits have been filed challenging the SEC's new climate rules, and on April 4, 2024, the SEC issued an order staying the final rules until judicial review is complete. The SEC's final climate-related disclosure rules remain stayed pending resolution of judicial challenges and further action by the SEC.
If OpCo were unable to reach agreement with Westlake on an extension or replacement of these agreements, then our ability to make distributions on our common units could be materially adversely affected and the value of our common units could decline.
If OpCo were unable to reach agreement with Westlake on an extension or replacement of these agreements in the future, then our ability to make distributions on our common units could be materially adversely affected and the value of our common units could decline. 11 Table of Contents OpCo has the right to use the real property underlying Lake Charles Olefins and Calvert City Olefins pursuant to two, 50-year site lease agreements with Westlake.
Our operations may be adversely affected by strikes, work stoppages and other labor disputes involving those employees that operate and maintain OpCo's ethylene production facilities and other assets.
Our operations have been and may in the future be adversely affected by strikes, work stoppages and other labor disputes involving those employees that operate and maintain OpCo's ethylene production facilities and other assets. Any future strikes or work stoppages could be significant and have an adverse effect on our financial condition and results of operations.
As our chemical processing results in GHG emissions, these and other environmental disclosure laws and regulations could affect our costs of doing business. We also may face liability for alleged personal injury or property damage due to exposure to chemicals or other hazardous substances at our facilities or to chemicals that we otherwise manufacture, handle or own.
We also may face liability for alleged personal injury or property damage due to exposure to chemicals or other hazardous substances at our facilities or to chemicals that we otherwise manufacture, handle or own.
Information technology system failures, network disruptions and breaches of data security due to internal or external factors including cyber-attacks could have material adverse impacts on our business or cause disruptions to our operations.
We use these technologies for internal and operational purposes, including data storage, processing, and transmission, as well as in our interactions with our business associates, such as customers and suppliers. 17 Table of Contents Information technology system failures, network disruptions and breaches of data security due to internal or external factors including cyber-attacks could have material adverse impacts on our business or cause disruptions to our operations.
Ownership of Our Common Units • We may issue additional units without unitholder approval, which would dilute existing unitholder ownership interests. • The market price of our common units could be adversely affected by sales of substantial amounts of our common units in the public or private markets, including sales by Westlake or other large holders. 8 Table of Contents Tax Risks • Our tax treatment depends on our status as a partnership for U.S. federal income tax purposes, and not being subject to a material amount of entity-level taxation.
Ownership of Our Common Units • We may issue additional units without unitholder approval, which would dilute existing unitholder ownership interests. • The market price of our common units could be adversely affected by sales of substantial amounts of our common units in the public or private markets, including sales by Westlake or other large holders.
Terrorist activities, anti-terrorist efforts and other armed conflicts involving the United States or other jurisdictions could adversely affect the United States and global economies and could prevent us from meeting financial and other obligations.
A reduction in demand for our common units may cause their trading price to decline. A terrorist attack or armed conflict could harm our business. Terrorist activities, anti-terrorist efforts and other armed conflicts involving the United States or other jurisdictions could adversely affect the United States and global economies and could prevent us from meeting financial and other obligations.
We are exposed to interest rate risk with respect to our outstanding debt, all of which is variable-rate debt. At December 31, 2024, we had $399.7 million in principal amount of variable-rate debt outstanding, including $22.6 million outstanding under the OpCo Revolver and $377.1 million outstanding under the MLP Revolver.
At December 31, 2025, we had $399.7 million in principal amount of variable-rate debt outstanding, including $22.6 million outstanding under the OpCo Revolver and $377.1 million outstanding under the MLP Revolver. Each of the OpCo Revolver and the MLP Revolver have interest rates in-part based on SOFR at the time of any borrowing.
Environmental laws may have a significant effect on the nature and scope of, and responsibility for, cleanup of contamination at our current and former operating facilities, the costs of transportation and storage of raw materials and finished products, the costs of reducing emissions and the costs of the storage and disposal of wastewater. The U.S.
Although these types of claims have not historically had a material impact on our operations, a significant increase in the success of these types of claims could have a material adverse effect on our business, financial condition, operating results or cash flow. 16 Table of Contents Environmental laws may have a significant effect on the nature and scope of, and responsibility for, cleanup of contamination at our current and former operating facilities, the costs of transportation and storage of raw materials and finished products, the costs of reducing emissions and the costs of the storage and disposal of wastewater.
A suspension of Westlake's obligations under the Ethylene Sales Agreement, including during periods where OpCo's facilities are not operating due to scheduled or unscheduled maintenance or turnarounds, would reduce OpCo's revenues and cash flows, and could materially adversely affect our ability to make distributions to our unitholders. 9 Table of Contents Westlake may be unable to generate enough cash flow from operations to meet its minimum obligations under the Ethylene Sales Agreement if its business is adversely impacted by competition, operational problems, international trade barriers, general adverse economic conditions or the inability to obtain feedstock.
A suspension of Westlake's obligations under the Ethylene Sales Agreement, including during periods where OpCo's facilities are not operating due to scheduled or unscheduled maintenance or turnarounds, would reduce OpCo's revenues and cash flows, and could materially adversely affect our ability to make distributions to our unitholders.
You are urged to consult with your own tax advisor with respect to the status of regulatory or administrative developments and proposals and their potential effect on your investment in our common units. 26 Table of Contents If the IRS were to contest the U.S. federal income tax positions we take, it may adversely impact the market for our common units, and the costs of any such contest would reduce our cash available for distribution to our unitholders.
If the IRS were to contest the U.S. federal income tax positions we take, it may adversely impact the market for our common units, and the costs of any such contest would reduce our cash available for distribution to our unitholders. The IRS may adopt positions that differ from the positions we take.
The Ethylene Sales Agreement provisions may prohibit OpCo from competing effectively for third party business for this excess production given the limited volumes available for sale. For example, so long as Westlake is not in default under the Ethylene Sales Agreement, Westlake has the right to purchase 95% of OpCo's production in excess of planned capacity.
The Ethylene Sales Agreement provisions may prohibit OpCo from competing effectively for third party business for this excess production given the limited volumes available for sale.
As a result, some of those assets have been in service for many decades. The age and condition of these assets could result in increased maintenance or repair expenditures. In addition, while we establish certain cash reserves to cover our expected turnaround expenditures, the amounts we reserve may be insufficient to fully cover such expenditures.
Many of the assets we use to produce ethylene are long-lived assets. As a result, some of those assets have been in service for many decades. The age and condition of these assets could result in increased maintenance or repair expenditures.
Recent proposals have provided for the expansion of the qualifying income exception for publicly traded partnerships in certain circumstances and other proposals have provided for the total elimination of the qualifying income exception upon which we rely for our partnership tax treatment.
No. 119-21, commonly known as "The One Big Beautiful Bill Act" (the "OBBBA"), which President Trump signed into law on July 4, 2025, provided for the expansion of the qualifying income exception for publicly traded partnerships in certain circumstances, other proposals have provided for the total elimination of the qualifying income exception upon which we rely for our partnership tax treatment.
In addition, CERCLA and similar state laws could impose liability for damages to natural resources caused by contamination. 17 Table of Contents Although we seek to take preventive action, our operations are inherently subject to accidental spills, discharges or other releases of hazardous substances that may make us liable to governmental entities or private parties.
Although we seek to take preventive action, our operations are inherently subject to accidental spills, discharges or other releases of hazardous substances that may make us liable to governmental entities or private parties. This may involve contamination associated with our current and former facilities, facilities to which we sent wastes or by-products for treatment or disposal and other contamination.
The IRS may adopt positions that differ from the positions we take. It may be necessary to resort to administrative or court proceedings to sustain some or all of the positions we take. A court may not agree with some or all of the positions we take.
It may be necessary to resort to administrative or court proceedings to sustain some or all of the positions we take. A court may not agree with some or all of the positions we take. Any contest with the IRS may materially and adversely impact the market for our common units and the price at which they trade.
The board of directors, including the independent directors, is chosen entirely by Westlake, as a result of it owning our general partner, and not by our unitholders. Unlike publicly-traded corporations, we do not conduct annual meetings of our unitholders to elect directors or conduct other matters routinely conducted at annual meetings of stockholders of corporations.
Unitholders will have no right on an annual or ongoing basis to elect our general partner or its board of directors. The board of directors, including the independent directors, is chosen entirely by Westlake, as a result of it owning our general partner, and not by our unitholders.
In addition, laws and regulations governing cybersecurity, data privacy, and the unauthorized disclosure of confidential or protected information pose increasingly complex compliance challenges, and failure to comply with these laws could result in penalties and legal liability. 18 Table of Contents Our variable-rate debt exposes us to increases in interest rates, which could have a material impact on our financial position, results of operation and cash flows, and could reduce the price at which our common units trade.
In addition, laws and regulations governing cybersecurity, data privacy, and the unauthorized disclosure of confidential or protected information pose increasingly complex compliance challenges, and failure to comply with these laws could result in penalties and legal liability.
The reimbursement of expenses and payment of fees, if any, to our general partner and its affiliates reduce the amount of our earnings and, thereby, our ability to distribute cash to our unitholders. 13 Table of Contents Business Operations Substantially all of OpCo's sales are generated at three facilities located at two sites.
Our partnership agreement provides that our general partner determines the expenses that are allocable to us. The reimbursement of expenses and payment of fees, if any, to our general partner and its affiliates reduce the amount of our earnings and, thereby, our ability to distribute cash to our unitholders.
An increase in interest rates may also cause a corresponding decline in demand for equity securities in general, and in particular, for yield-based equity securities such as our common units. A reduction in demand for our common units may cause their trading price to decline. A terrorist attack or armed conflict could harm our business.
As a result, significant increases in interest rates could have a material impact on our financial position, results of operations and cash flows. An increase in interest rates may also cause a corresponding decline in demand for equity securities in general, and in particular, for yield-based equity securities such as our common units.
Any significant and unexpected increase in these expenditures could adversely affect our results of operations, financial position or cash flows, as well as our ability to pay cash distributions. Our production facilities process volatile and hazardous materials that subject us to operating risks that could adversely affect our operating results.
Our production facilities process volatile and hazardous materials that subject us to operating risks that could adversely affect our operating results.

… 35 more changes not shown on this page.

Item 1C. Cybersecurity

Cybersecurity — threats and controls disclosure

4 edited+0 added−0 removed12 unchanged
Biggest changeThe focus is on protecting our highest-value information assets, which include manufacturing systems, financial systems, and confidential, personal, and private information. To safeguard our networks and systems, Westlake has a dedicated cybersecurity organization overseen by its Chief Information Security Officer, which operates within its information technology department overseen by its Chief Information Officer.
Biggest changeThe focus is on protecting our highest-value information assets, which include manufacturing systems, financial systems, and confidential, personal, and private information. To safeguard our networks and systems, Westlake has a dedicated cybersecurity organization overseen by its Senior Director, Cybersecurity and Network Operations, which operates within its information technology department overseen by its Chief Information Officer.
As a result, Westlake's Corporate Risk and Sustainability Committee assists with the oversight of our cybersecurity risks. Westlake's Corporate Risk and Sustainability Committee includes directors with cybersecurity experience and expertise, primarily through supervision of information technology departments as executive officers.
As a result, Westlake's Corporate Risk and Sustainability Committee assists with the oversight of our cybersecurity risks. Westlake's Corporate Risk and Sustainability Committee includes directors with cybersecurity experience and expertise through supervision of information technology departments as executive officers.
Westlake follows industry standard cybersecurity frameworks, including the National Institute of Standards and Technology's Cybersecurity Framework to design, assess and update our cybersecurity strategy, controls and processes. Westlake regularly assesses industry best practices and standards and endeavors to implement them in its efforts to manage cybersecurity risk for us.
Westlake follows industry standard cybersecurity frameworks, including the National Institute of Standards and Technology Cybersecurity Framework to design, assess and update our cybersecurity strategy, controls and processes. Westlake regularly assesses industry best practices and standards and endeavors to implement them in its efforts to manage cybersecurity risk for us.
Both Westlake's Chief Information Officer and its Chief Information Security Officer have extensive experience in assessing and managing cybersecurity risks, including through decades of collective experience in information technology and cybersecurity roles of increasing responsibility both at Westlake and in prior positions.
Both Westlake's Chief Information Officer and its Senior Director, Cybersecurity and Network Operations have extensive experience in assessing and managing cybersecurity risks, including through decades of collective experience in information technology and cybersecurity roles of increasing responsibility both at Westlake and in prior positions.

Item 3. Legal Proceedings

Legal Proceedings — active lawsuits and investigations

1 edited+1 added−0 removed3 unchanged
Biggest changeBusiness — Environmental" and Note 16 to the consolidated financial statements included in Item 8 of this Form 10-K.
Biggest changeBusiness — Environmental" and Note 16, "Commitments and Contingencies," to Consolidated Financial Statements included in Item 8 of this Form 10-K.
Added
Pursuant to the Services and Secondment Agreement, certain subsidiaries of Westlake have agreed to indemnify the Partnership for certain liabilities incurred in connection with the performance of Westlake's services under such agreement.

Item 5. Market for Registrant's Common Equity

Market for Common Equity — stock, dividends, buybacks

5 edited+1 added−1 removed14 unchanged
Biggest changeIncentive distribution rights represent the right to receive increasing percentages (15.0%, 25.0% and 50.0%) of quarterly distributions from operating surplus after the target distribution levels have been achieved. Westlake currently holds the incentive distribution rights, but may transfer these rights separately from its general partner interest.
Biggest changeHowever, our general partner may in the future own common units or other equity interests in us and will be entitled to receive distributions on any such interests. Incentive distribution rights represent the right to receive increasing percentages (15.0%, 25.0% and 50.0%) of quarterly distributions from operating surplus after the target distribution levels have been achieved.
In determining operating surplus and capital surplus, we will only take into account our proportionate share of our consolidated subsidiaries that are not wholly owned, such as OpCo. 33 Table of Contents Minimum Quarterly Distribution On July 27, 2018, the partnership agreement was amended to revise the minimum quarterly distribution thresholds for the Partnership's incentive distribution rights.
In determining operating surplus and capital surplus, we will only take into account our proportionate share of our consolidated subsidiaries that are not wholly owned, such as OpCo. 32 Table of Contents Minimum Quarterly Distribution On July 27, 2018, the partnership agreement was amended to revise the minimum quarterly distribution thresholds for the Partnership's incentive distribution rights.
Unregistered Sales of Equity Securities We did not have any unregistered sales of equity securities during the quarter or fiscal year ended December 31, 2024 that we have not previously reported on a Quarterly Report on Form 10-Q or a Current Report on Form 8-K. Issuer Purchases of Equity Securities None. 34 Table of Contents
Unregistered Sales of Equity Securities We did not have any unregistered sales of equity securities during the quarter or fiscal year ended December 31, 2025 that we have not previously reported on a Quarterly Report on Form 10-Q or a Current Report on Form 8-K. Issuer Purchases of Equity Securities None. 33 Table of Contents
Market for Registrant's Common Equity, Related Stockholder Matters and Issuer Purchases of Equity Securities Our Partnership Interests Our common units are listed and traded on the New York Stock Exchange ("NYSE") under the symbol "WLKP." As of the close of business on February 26, 2025, based upon information received from our transfer agent, there were five holders of record of our common units.
Market for Registrant's Common Equity, Related Stockholder Matters and Issuer Purchases of Equity Securities Our Partnership Interests Our common units are listed and traded on the New York Stock Exchange ("NYSE") under the symbol "WLKP." As of the close of business on February 25, 2026, based upon information received from our transfer agent, there were four holders of record of our common units.
For more information on the Partnership's amended distribution allocation percentages, see Note 9, "Distributions and Net Income Per Limited Partner Unit," to the consolidated financial statements included in Item 8 of this form 10-K.
For more information on the Partnership's amended distribution allocation percentages, see Note 9, "Distributions and Net Income Per Limited Partner Unit," to Consolidated Financial Statements included in Item 8 of this form 10-K. General Partner Interests and Incentive Distribution Rights Our general partner owns a non-economic general partner interest in us, which does not entitle it to receive cash distributions.
Removed
General Partner Interests and Incentive Distribution Rights Our general partner owns a non-economic general partner interest in us, which does not entitle it to receive cash distributions. However, our general partner may in the future own common units or other equity interests in us and will be entitled to receive distributions on any such interests.
Added
Westlake currently holds the incentive distribution rights, but may transfer these rights separately from its general partner interest.

Item 7. Management's Discussion & Analysis

Management's Discussion & Analysis (MD&A) — revenue / margin commentary

69 edited+22 added−9 removed62 unchanged
Biggest changeYear Ended December 31, 2024 2023 (in thousands of dollars, except unit amounts and per unit data) Net sales—Westlake $ 950,801 $ 1,026,655 Net co-products, ethylene and other sales—third parties 185,095 164,136 Total net sales 1,135,896 1,190,791 Gross profit 418,939 387,459 Selling, general and administrative expenses 28,495 29,751 Income from operations 390,444 357,708 Other income (expense) Interest expense—Westlake (25,701) (26,501) Other income, net 5,251 4,232 Income before income taxes 369,994 335,439 Provision for income taxes 835 813 Net income 369,159 334,626 Less: Net income attributable to noncontrolling interest in OpCo 306,767 280,343 Net income attributable to Westlake Chemical Partners LP and limited partners' interest in net income $ 62,392 $ 54,283 Net income per limited partner unit attributable to Westlake Chemical Partners LP (basic and diluted) Common units $ 1.77 $ 1.54 Weighted average limited partner units outstanding (basic and diluted) Common units—publicly and privately held 21,110,640 21,102,110 Common units—Westlake 14,122,230 14,122,230 MLP distributable cash flow (1) $ 66,864 $ 62,574 EBITDA (1) $ 507,594 $ 472,143 Year Ended December 31, 2024 2023 Average Sales Price Volume Average Sales Price Volume Net sales percentage change from prior-year period due to average sales price and volume -6.6 % +2.0 % -25.5 % +1.4% Year Ended December 31, 2024 2023 Domestic US prices percentage change from prior-year period for fuel cost and feedstock Fuel cost (Natural Gas) -17.3 % -58.5 % Feedstock (Ethane) -22.6 % -48.8 % ______________________________ (1) See above for discussions on non-GAAP financial measures.
Biggest changeYear Ended December 31, 2025 2024 (in thousands of dollars, except unit amounts and per unit data) Net sales—Westlake $ 1,033,276 $ 950,801 Net co-products, ethylene and other sales—third parties 133,419 185,095 Total net sales 1,166,695 1,135,896 Gross profit 347,848 418,939 Selling, general and administrative expenses 28,271 28,495 Income from operations 319,577 390,444 Other income (expense) Interest expense—Westlake (22,899) (25,701) Other income, net 2,445 5,251 Income before income taxes 299,123 369,994 Provision for income taxes 547 835 Net income 298,576 369,159 Less: Net income attributable to noncontrolling interest in OpCo 249,878 306,767 Net income attributable to Westlake Chemical Partners LP and limited partners' interest in net income $ 48,698 $ 62,392 Net income per limited partner unit attributable to Westlake Chemical Partners LP (basic and diluted) Common units $ 1.38 $ 1.77 Weighted average limited partner units outstanding (basic and diluted) Common units—publicly and privately held 21,119,275 21,110,640 Common units—Westlake 14,122,230 14,122,230 MLP distributable cash flow (1) $ 53,398 $ 66,864 EBITDA (1) $ 450,000 $ 507,594 ____________ (1) See above for discussions on non-GAAP financial measures.
While we believe that the amounts recorded in the accompanying consolidated financial statements related to these contingencies are based on the best estimates and judgments available, the actual outcomes could differ from our estimates. Additional information about certain legal proceedings and environmental matters appears in "Item 1.
While we believe that the amounts recorded in the accompanying consolidated financial statements related to these contingencies are based on the best estimates and judgments available, the actual outcomes could differ from our estimates. Additional information about legal proceedings and environmental matters appears in "Item 1.
As of December 31, 2024, outstanding borrowings under the OpCo Revolver totaled $22.6 million and bore interest at SOFR plus the Applicable Margin and credit spread adjustment, which is accrued in arrears quarterly. 43 Table of Contents MLP Revolver In 2015, we entered into a senior, unsecured revolving credit agreement with an affiliate of Westlake, as amended in August and November 2017, March 2020 and July 2022 (the "MLP Revolver").
As of December 31, 2025, outstanding borrowings under the OpCo Revolver totaled $22.6 million and bore interest at SOFR plus the Applicable Margin and credit spread adjustment, which is accrued in arrears quarterly. 43 Table of Contents MLP Revolver In 2015, we entered into a senior, unsecured revolving credit agreement with an affiliate of Westlake, as amended in August and November 2017, March 2020 and July 2022 (the "MLP Revolver").
There were no derivative positions during the years ended December 31, 2024, 2023 and 2022. However, we may enter into derivative arrangements in the future. Goodwill. Goodwill is evaluated for impairment when events or changes in circumstances indicate the fair value of a reporting unit with goodwill has been reduced below its carrying value, and otherwise at least annually.
There were no derivative positions during the years ended December 31, 2025, 2024 and 2023. However, we may enter into derivative arrangements in the future. Goodwill. Goodwill is evaluated for impairment when events or changes in circumstances indicate the fair value of a reporting unit with goodwill has been reduced below its carrying value, and otherwise at least annually.
We do not have a legal or contractual obligation to pay distributions on a quarterly basis or any other basis at our minimum quarterly distribution rate or any other rate. Capital Expenditures Westlake has historically funded expansion capital expenditures related to Lake Charles Olefins and Calvert City Olefins. No such funding was required by OpCo during 2024, 2023 or 2022.
We do not have a legal or contractual obligation to pay distributions on a quarterly basis or any other basis at our minimum quarterly distribution rate or any other rate. Capital Expenditures Westlake has historically funded expansion capital expenditures related to Lake Charles Olefins and Calvert City Olefins. No such funding was required by OpCo during 2025, 2024 or 2023.
At December 31, 2024, recorded goodwill was $5.8 million, all of which was associated with the acquisition of the Longview Pipeline as part of the past acquisition of Westlake's Longview production facilities. We perform our annual impairment assessment in the fourth quarter. We may elect to perform an optional qualitative assessment to determine whether a quantitative impairment analysis is required.
At December 31, 2025, recorded goodwill was $5.8 million, all of which was associated with the acquisition of the Longview Pipeline as part of the past acquisition of Westlake's Longview production facilities. We perform our annual impairment assessment in the fourth quarter. We may elect to perform an optional qualitative assessment to determine whether a quantitative impairment analysis is required.
OpCo's assets include (1) two ethylene production facilities ("Petro 1" and "Petro 2" and, collectively, "Lake Charles Olefins") at Westlake's Lake Charles, Louisiana site; (2) one ethylene production facility ("Calvert City Olefins") at Westlake's Calvert City, Kentucky site; and (3) a 200-mile common carrier ethylene pipeline (the "Longview Pipeline") that runs from Mont Belvieu, Texas to Westlake's Longview, Texas facility.
OpCo's assets include (1) two ethylene production facilities ("Petro 1" and "Petro 2" and, collectively, "Lake Charles Olefins") at Westlake's Lake Charles, Louisiana site; (2) one ethylene production facility ("Calvert City Olefins") at Westlake's Calvert City, Kentucky sit e; and (3) a 200-mile common carrier ethylene pipeline (the "Longview Pipeline") that runs from Mont Belvieu, Texas to Westlake's Longview, Texas facility.
The repayment of borrowings under the MLP Revolver is subject to acceleration upon the occurrence of an event of default. As of December 31, 2024, the outstanding borrowings under the MLP Revolver totaled $377.1 million and bore interest at SOFR plus the Applicable Margin and credit spread adjustment, which is accrued in arrears quarterly.
The repayment of borrowings under the MLP Revolver is subject to acceleration upon the occurrence of an event of default. As of December 31, 2025, the outstanding borrowings under the MLP Revolver totaled $377.1 million and bore interest at SOFR plus the Applicable Margin and credit spread adjustment, which is accrued in arrears quarterly.
Business — Environmental" and in Note 16 to the consolidated financial statements included in Item 8 of this form 10-K. The Partnership has conditional asset retirement obligations for the removal and disposal of hazardous materials and the remediation of the cause of any such release from certain of the Partnership's manufacturing facilities.
Business — Environmental" and in Note 16, "Commitments and Contingencies," to Consolidated Financial Statements included in Item 8 of this form 10-K. The Partnership has conditional asset retirement obligations for the removal and disposal of hazardous materials and the remediation of the cause of any such release from certain of the Partnership's manufacturing facilities.
On August 4, 2016, OpCo and Westlake entered into an amendment to the Ethylene Sales Agreement in order to provide that certain of the pricing components that make up the price for ethylene sold thereunder would be modified to reflect the portion of OpCo's production capacity that is used to process Westlake's purge gas instead of producing ethylene and to clarify that costs specific to the processing of Westlake's purge gas would be recovered under the Services and Secondment Agreement, and not the Ethylene Sales Agreement.
On August 4, 2016, OpCo and Westlake entered into an amendment to the Ethylene Sales Agreement in order to provide that certai n of the pricing components that make up the price for ethylene sold thereunder would be modified to reflect the portion of OpCo's production capacity that is used to process Westlake's purge gas instead of producing ethylene and to clarify that costs specific to the processing of Westlake's purge gas would be recovered under the Services and Secondment Agreement, and not the Ethylene Sales Agreement.
The Partnership intends to use the net proceeds of sales of the common units, if any, for general partnership purposes, which may include the funding of potential drop-downs and other acquisitions. No common units had been issued under the ATM Program as of December 31, 2024 .
The Partnership intends to use the net proceeds of sales of the common units, if any, for general partnership purposes, which may include the funding of potential drop-downs and other acquisitions. No common units had been issued under the ATM Program as of December 31, 2025 .
We have evaluated the accounting policies used in the preparation of the accompanying consolidated financial statements and related notes and believe those policies are reasonable and appropriate. Our significant accounting policies are summarized in Note 1 in the Notes to Consolidated Financial Statements in Item 8 of this form 10-K.
We have evaluated the accounting policies used in the preparation of the accompanying consolidated financial statements and related notes and believe those policies are reasonable and appropriate. Our significant accounting policies are summarized in Note 1, "Description of Business and Significant Accounting Policies," in the Notes to Consolidated Financial Statements in Item 8 of this form 10-K.
Contractual Obligations and Commercial Commitments The Partnership's material cash requirements for contractual obligations and commercial commitments in the near term (next 12 months) and the long-term period (2026 and thereafter) include repayment of long-term debt, interest payments, operating leases and purchase obligations. Debt Obligations and Interest Payments.
Contractual Obligations and Commercial Commitments The Partnership's material cash requirements for contractual obligations and commercial commitments in the near term (next 12 months) and the long-term period (2027 and thereafter) include repayment of long-term debt, interest payments, operating leases and purchase obligations. Debt Obligations and Interest Payments.
Recent Accounting Pronouncements See Note 1 to the consolidated financial statements included in Item 8 of this form 10-K for a full description of recent accounting pronouncements, including expected dates of adoption and estimated effects on results of operations and financial condition, which is incorporated herein by reference.
Recent Accounting Pronouncements See Note 1, "Description of Business and Significant Accounting Policies," to Consolidated Financial Statements included in Item 8 of this form 10-K for a full description of recent accounting pronouncements, including expected dates of adoption and estimated effects on results of operations and financial condition, which is incorporated herein by reference.
Cash and Cash Equivalents As of December 31, 2024, our cash and cash equivalents totaled $58.3 million. In addition, we have cash invested under the Investment Management Agreement and a revolving credit facility with Westlake available to supplement cash on hand, if needed, as described under "Indebtedness" below.
Cash and Cash Equivalents As of December 31, 2025, our cash and cash equivalents totaled $44.3 million. In addition, we have cash invested under the Investment Management Agreement and a revolving credit facility with Westlake available to supplement cash on hand, if needed, as described under "Indebtedness" below.
We defer the costs of planned major maintenance activities, or turnarounds, and amortize the costs over the period until the next planned turnaround of the affected unit. Total costs deferred on turnarounds were $21.5 million, $30.9 million and $6.7 million in 2024, 2023 and 2022, respectively.
We defer the costs of planned major maintenance activities, or turnarounds, and amortize the costs over the period until the next planned turnaround of the affected unit. Total costs deferred on turnarounds were $124.6 million, $21.5 million and $30.9 million in 2025, 2024 and 2023, respectively.
Total capital expenditures for the years ended December 31, 2024, 2023 and 2022 were $49.0 million, $46.8 million, and $54.1 million, respectively. We expect that Westlake will loan additional cash to OpCo to fund its expansion capital expenditures in the future, but Westlake is under no obligation to do so.
Total capital expenditures for the years ended December 31, 2025, 2024 and 2023 were $78.8 million, $49.0 million, and $46.8 million, respectively. We expect that Westlake will loan additional cash to OpCo to fund its expansion capital expenditures in the future, but Westlake is under no obligation to do so.
On January 27, 2025, the board of directors of Westlake Chemical Partners GP LLC, our general partner, approved a quarterly distribution of $0.4714 per unit payable on February 25, 2025 to unitholders of record as of February 7, 2025, which equates to a total amount of approximately $16.6 million per quarter, or approximately $66.4 million per year in aggregate, based on the number of common units outstanding on December 31, 2024.
On January 27, 2026, the board of directors of Westlake Chemical Partners GP LLC, our general partner, approved a quarterly distribution of $0.4714 per unit payable on February 23, 2026 to unitholders of record as of February 6, 2026, which equates to a total amount of approximately $16.6 million per quarter, or approximately $66.5 million per year in aggregate, based on the number of common units outstanding on December 31, 2025.
Depreciation and amortization of these assets, including amortization of deferred turnaround costs, under the straight-line method over their estimated useful lives totaled $111.9 million, $110.2 million and $121.1 million in 2024, 2023 and 2022, respectively. If the useful lives of the assets were found to be shorter than originally estimated, depreciation or amortization charges would be accelerated.
Depreciation and amortization of these assets, including amortization of deferred turnaround costs, under the straight-line method over their estimated useful lives totaled $128.0 million, $111.9 million and $110.2 million in 2025, 2024 and 2023, respectively. If the useful lives of the assets were found to be shorter than originally estimated, depreciation or amortization charges would be accelerated.
We use each of MLP distributable cash flow and EBITDA to analyze our performance. Fees for a buyer deficiency and Shortfall are included in net income in the periods in which they are recognized.
We use each of MLP distributable cash flow and EBITDA to analyze our performance. Buyer Deficiency Fee and Shortfall are included in net income in the periods in which they are recognized.
As described above, we, OpCo and Westlake are parties to an Investment Management Agreement that authorizes Westlake to invest the Partnership's and OpCo's excess cash with Westlake for durations of up to a maximum of nine months. The Partnership had $134.6 million of cash invested under the Investment Management Agreement at December 31, 2024.
As described above, we, OpCo and Westlake are parties to an Investment Management Agreement that authorizes Westlake to invest the Partnership's and OpCo's excess cash with Westlake for durations of up to a maximum of nine months. The Partnership had $23.4 million of cash invested under the Investment Management Agreement at December 31, 2025.
Purchase obligations include agreements to purchase goods and services that are enforceable and legally binding and that specify all significant terms, including a minimum quantity and price. As of December 31, 2024, we had $128.7 million of enforceable and legally binding purchase commitments due within the near term, and none due over the long-term period.
Purchase obligations include agreements to purchase goods and services that are enforceable and legally binding and that specify all significant terms, including a minimum quantity and price. As of December 31, 2025, we had $67.2 million of enforceable and legally binding purchase commitments due within the near term, and none due over the long-term period.
As of December 31, 2024, there was $1.7 million in operating lease obligations due within the near term and $2.2 million due over the long-term period related to noncancelable operating leases with respect to rail cars that are subleased to OpCo. Purchase Obligations.
As of December 31, 2025, there was $1.4 million in operating lease obligations due within the near term and $1.8 million due over the long-term period related to noncancelable operating leases with respect to rail cars that are subleased to OpCo. Purchase Obligations.
During 2024, all third-party ethylene and associated co-products sales generated 16.3% of our total revenues. Under the Services and Secondment Agreement, OpCo uses a portion of its production capacity to process purge gas for Westlake.
During 2025, all third-party ethylene and associated co-products sales generated 11.4% of our total revenues. Under the Services and Secondment Agreement, OpCo uses a portion of its production capacity to process purge gas for Westlake.
Although Westlake has committed to purchasing minimum volumes from us under the Ethylene Sales Agreement, our results of operations are impacted by our ability to: • produce sufficient volumes of ethylene to meet our commitments under the Ethylene Sales Agreement or recover our estimated costs through the pricing provisions of the Ethylene Sales Agreement; • contract with third parties for the remaining uncommitted production capacity; • add or increase capacity at our existing production facilities, or add additional production capacity via organic expansion projects and acquisitions; and • achieve or exceed the specified yield factors for natural gas, ethane and other feedstock under the Ethylene Sales Agreement. 36 Table of Contents Operating Expenses, Maintenance Capital Expenditures and Turnaround Costs Our management seeks to maximize the profitability of our operations by effectively managing operating expenses, maintenance capital expenditures and turnaround costs.
Although Westlake has committed to purchasing minimum volumes from us under the Ethylene Sales Agreement, our results of operations are impacted by our ability to: • produce sufficient volumes of ethylene to meet our commitments under the Ethylene Sales Agreement or recover our estimated costs through the pricing provisions of the Ethylene Sales Agreement; • contract with third parties for the remaining uncommitted production capacity; • add or increase capacity at our existing production facilities, or add additional production capacity via organic expansion projects and acquisitions; and • achieve or exceed the specified yield factors for natural gas, ethane and other feedstock under the Ethylene Sales Agreement.
Changes in components of working capital, which we define for the purposes of this cash flow discussion as accounts receivable, net—Westlake, accounts receivable, net—third parties, inventories, prepaid expenses and other current assets less accounts payable—Westlake, accounts payable—third parties and accrued and other liabilities, provided cash of $24.8 million in 2024 as compared to $34.4 million of cash provided in 2023, resulting in a unfavorable change of $9.6 million.
Changes in components of working capital, which we define for the purposes of this cash flow discussion as accounts receivable, net—Westlake, accounts receivable, net—third parties, inventories, prepaid expenses and other current assets less accounts payable—Westlake, accounts payable—third parties and accrued and other liabilities, used cash of $23.7 million in 2025 as compared to $24.8 million of cash provided in 2024, resulting in a unfavorable change of $48.5 million.
The cash outflows during 2023 were related to distributions of $315.8 million to the noncontrolling interest retained in OpCo by Westlake and of $66.4 million to unitholders by the Partnership.
The cash outflows during 2024 were related to distributions of $329.9 million to the noncontrolling interest retained in OpCo by Westlake and of $66.4 million to unitholders by the Partnership.
As of December 31, 2024, we had $25.8 million of debt related interest expense due within the near term, and debt obligations of $399.7 million and related interest expense of $39.4 million due over the long-term period, respectively. All $399.7 million of our outstanding debt matures in 2027.
As of December 31, 2025, we had $23.3 million of debt related interest expense due within the near term, and debt obligations of $399.7 million and related interest expense of $12.3 million due over the long-term period, respectively. All $399.7 million of our outstanding debt matures in 2027.
Financing Activities Net cash used for financing activities during 2024 was $396.3 million as compared to net cash used for financing activities of $382.2 million in 2023. The cash outflows during 2024 were related to distributions of $329.9 million to the noncontrolling interest retained in OpCo by Westlake and of $66.4 million to unitholders by the Partnership.
Financing Activities Net cash used for financing activities during 2025 was $325.7 million as compared to net cash used for financing activities of $396.3 million in 2024. The cash outflows during 2025 were related to distributions of $259.2 million to the noncontrolling interest retained in OpCo by Westlake and of $66.5 million to unitholders by the Partnership.
Amortization of previously deferred turnaround costs was $25.1 million, $25.4 million and $26.0 million in 2024, 2023 and 2022, respectively. As of December 31, 2024, deferred turnaround costs, net of accumulated amortization, totaled $129.6 million.
Amortization of previously deferred turnaround costs was $40.3 million, $25.1 million and $25.4 million in 2025, 2024 and 2023, respectively. As of December 31, 2025, deferred turnaround costs, net of accumulated amortization, totaled $214.0 million.
How We Generate Revenue We generate revenue primarily by selling ethylene and the resulting co-products we produce. OpCo and Westlake have entered into an ethylene sales agreement (the "Ethylene Sales Agreement") pursuant to which we generate a substantial majority of our revenue.
OpCo and Westlake have entered into an ethylene sales agreement (the "Ethylene Sales Agreement") pursuant to which we generate a substantial majority of our revenue.
We commenced the planned maintenance turnaround in the first quarter of 2025. Westlake's purchase price for ethylene purchased under the Ethylene Sales Agreement includes a component (adjusted annually) designed to cover, over the long term, substantially all of OpCo's turnaround expenditures. Our cash is generated from cash distributions from OpCo.
Westlake's purchase price for its minimum commitment of ethylene under the Ethylene Sales Agreement includes a component (adjusted annually) designed to cover, over the long term, substantially all of OpCo's turnaround expenditures. Our cash is generated from cash distributions from OpCo.
The Shortfall is generally recognized during the period in which the related operating, maintenance or turnaround activities occur. 35 Table of Contents The Ethylene Sales Agreement provides that, if compliance with any law adopted or modified following our IPO results in OpCo incurring additional costs in excess of $500,000 in any contract year, OpCo is entitled to charge Westlake a monthly surcharge following efforts to mitigate the effects of such compliance.
The Ethylene Sales Agreement provides that, if compliance with any law adopted or modified following our IPO results in OpCo incurring additional costs in excess of $500,000 in any contract year, OpCo is entitled to charge Westlake a monthly surcharge following efforts to mitigate the effects of such compliance.
While we believe we have substantially mitigated our indirect exposure to commodity price fluctuations during the term of the Ethylene Sales Agreement through the minimum purchase commitment and the cost-plus based pricing, our ability to execute our growth strategy in our areas of operation will depend, in part, on the demand for ethylene derivatives in the geographical areas served by our ethylene production facilities.
While we believe we have substantially mitigated our indirect exposure to commodity price fluctuations during the term of the Ethylene Sales Agreement through the minimum purchase commitment and the cost-plus based pricing, our ability to execute our growth strategy in our areas of operation will depend, in part, on the demand for ethylene derivatives in the geographical areas served by our ethylene production facilities. 38 Table of Contents Results of Operations The table below and descriptions that follow represent the consolidated results of operations of the Partnership for the years ended December 31, 2025 and 2024.
Other income, net increased by $1.1 million to $5.3 million in 2024 from $4.2 million in 2023 primarily due to an increase in interest earned on the balance with Westlake under the Investment Management Agreement due to a higher average amount of cash invested in 2024 as compared to 2023. Provision for Income Taxes.
Other income, net decreased by $2.9 million to $2.4 million in 2025 from $5.3 million in 2024 primarily due to a decrease in interest earned on investments with Westlake under the Investment Management Agreement due to a lower average amount of cash invested and lower interest rates in 2025 as compared to 2024. Provision for Income Taxes.
Lower average sales prices in 2024 contributed to a 6.6% decrease in net sales compared to 2023. Higher sales volumes in 2024 contributed to a 2.0% increase in net sales compared to 2023. Gross Profit . Gross profit was $418.9 million in 2024, as compared to gross profit of $387.5 million in 2023.
Higher average sales prices in 2025 contributed to a 10.4% increase in net sales compared to 2024. Lower sales volumes in 2025 contributed to an 8.2% decrease in net sales compared to 2024. Gross Profit . Gross profit was $347.8 million in 2025 as compared to gross profit of $418.9 million in 2024.
How We Evaluate Operations Our management uses a variety of financial and operating metrics to analyze our performance. These metrics are significant factors in assessing our operating results and profitability and include: (1) production volumes, (2) operating and maintenance expenses, including turnaround costs, and (3) MLP distributable cash flow and EBITDA.
These metrics are significant factors in assessing our operating results and profitability and include: (1) production volumes, (2) operating and maintenance expenses, including turnaround costs, and (3) MLP distributable cash flow and EBITDA.
Capital expenditures were $49.0 million in 2024 as compared to $46.8 million in 2023. Capital expenditures during 2024 and 2023 were related to projects to improve production capacity or reduce costs, maintenance and safety and environmental projects at our facilities.
Capital expenditures increased to $78.8 million in 2025 as compared to $49.0 million in 2024 due to the Petro 1 turnaround. Capital expenditures in 2025 and 2024 were primarily related to projects to increase production capacity or reduce costs, maintenance costs and safety and environmental projects at our facilities.
We use the non-GAAP measures of MLP distributable cash flow and EBITDA to analyze our performance. We define distributable cash flow as net income plus depreciation, amortization and disposition of property, plant and equipment, less contributions for turnaround reserves, maintenance capital expenditures and mark-to-market adjustment on derivative contracts.
We define MLP distributable cash flow as net income plus depreciation, amortization and disposition of property, plant and equipment, less contributions for turnaround reserves, maintenance capital expenditures and mark-to-market adjustment on derivative contracts less distributable cash flow attributable to Westlake's noncontrolling interest in OpCo and distributions attributable to the incentive distribution rights holder.
The gross profit margin was 36.9% in 2024 as compared to 32.5% in 2023. The increased gross profit margin in 2024 was primarily due to lower ethane feedstock and natural gas costs and higher third-party ethylene sales prices in 2024 as compared to 2023. Selling, General and Administrative Expenses .
The gross profit margin was 29.8% in 2025 as compared to 36.9% in 2024. The decreased gross profit margin in 2025 was primarily due to higher ethane feedstock and natural gas costs in 2025 as compared to 2024. Selling, General and Administrative Expenses .
Our operating expenses are comprised primarily of feedstock costs and natural gas, labor expenses (including contractor services), utility costs (other than natural gas) and turnaround and maintenance expenses.
Operating Expenses, Maintenance Capital Expenditures and Turnaround Costs Our management seeks to maximize the profitability of our operations by effectively managing operating expenses, maintenance capital expenditures and turnaround costs. Our operating expenses are comprised primarily of feedstock costs and natural gas, labor expenses (including contractor services), utility costs (other than natural gas) and turnaround and maintenance expenses.
Operating expenses, maintenance capital expenditures and turnaround costs are built into the price per pound of ethylene charged to Westlake under the Ethylene Sales Agreement.
We capitalize the costs of major maintenance activities, or turnarounds, and amortize the costs over the period until the next planned turnaround of the affected facility. Operating expenses, maintenance capital expenditures and turnaround costs are built into the price per pound of ethylene charged to Westlake under the Ethylene Sales Agreement.
In addition, we reserve cash on an annual basis from what we would otherwise distribute to minimize the impact of turnaround costs in the year of incurrence. The purchase price under the Ethylene Sales Agreement is not designed to cover capital expenditures for expansions.
In addition, we reserve cash on an annual basis from what we would otherwise distribute to minimize the impact of turnaround costs in the year of incurrence.
We define MLP distributable cash flow as distributable cash flow less distributable cash flow attributable to Westlake's noncontrolling interest in OpCo and distributions attributable to the incentive distribution rights holder. MLP distributable cash flow does not reflect changes in working capital balances. We define EBITDA as net income before interest expense, income taxes, depreciation and amortization.
There were no mark-to-market adjustments on derivative contracts or distributions attributable to the incentive distribution rights holder during the years ended December 31, 2024 or 2025. MLP distributable cash flow does not reflect changes in working capital balances. We define EBITDA as net income before interest expense, income taxes, depreciation and amortization.
Year Ended December 31, 2024 2023 2022 (in thousands of dollars) Net cash provided by operating activities $ 485,001 $ 451,999 $ 463,736 Loss from disposition of property, plant and equipment (2,345) (4,933) (4,707) Changes in operating assets and liabilities and other (113,497) (112,440) (124,200) Net income 369,159 334,626 334,829 Add: Depreciation, amortization and disposition of property, plant and equipment 114,244 115,136 125,781 Less: Contribution to turnaround reserves (43,880) (29,520) (29,175) Maintenance capital expenditures (50,731) (49,212) (45,249) Distributable cash flow attributable to noncontrolling interest in OpCo (321,928) (308,456) (310,316) MLP distributable cash flow $ 66,864 $ 62,574 $ 75,870 Reconciliation of EBITDA to Net Income, Income from Operations and Net Cash Provided by Operating Activities The following table presents reconciliations of EBITDA to net income, income from operations and net cash provided by operating activities, the most directly comparable GAAP financial measures, for each of the periods indicated.
Year Ended December 31, 2025 2024 (in thousands of dollars) Net cash provided by operating activities $ 280,469 $ 485,001 Loss from disposition of property, plant and equipment (2,754) (2,345) Changes in operating assets and liabilities and other 20,861 (113,497) Net income 298,576 369,159 Add: Depreciation, amortization and disposition of property, plant and equipment 130,732 114,244 Less: Contribution to turnaround reserves (39,017) (43,880) Maintenance capital expenditures (71,081) (50,731) Distributable cash flow attributable to noncontrolling interest in OpCo (265,812) (321,928) MLP distributable cash flow $ 53,398 $ 66,864 Reconciliation of EBITDA to Net Income, Income from Operations and Net Cash Provided by Operating Activities The following table presents reconciliations of EBITDA to net income, income from operations and net cash provided by operating activities, the most directly comparable GAAP financial measures, for each of the periods indicated.
Westlake has an option to take 95% of volumes in excess of the minimum commitment on an annual basis under the Ethylene Sales Agreement if we produce more than our planned production.
Payment of the Buyer Deficiency Fee is scheduled to be received by the Partnership after the conclusion of the year in which the annual commitment was not purchased and taken by Westlake.Westlake has an option to take 95% of volumes in excess of the minimum commitment on an annual basis under the Ethylene Sales Agreement if we produce more than our planned production.
Provision for income taxes remained consistent at $0.8 million in 2024 as compared to $0.8 million in 2023. MLP Distributable Cash Flow. MLP distributable cash flow increased by $4.3 million to $66.9 million in 2024 from $62.6 million in 2023.
Provision for income taxes remained relatively consistent at $0.5 million in 2025 as compared to $0.8 million in 2024. MLP Distributable Cash Flow.
Income from operations, net income and net income attributable to the Partnership for 2024 increased compared to 2023 due to higher third-party ethylene sales prices, lower ethane feedstock and natural gas costs and higher ethylene and co-products sales volumes, partially offset by lower ethylene sales prices to Westlake including the impact of the sale of excess quantities of ethylene at prices that excluded certain non-variable costs of production. 2024 Compared with 2023 Net Sales .
Income from operations, net income and net income attributable to the Partnership for 2025 decreased compared to 2024 due to lower sales volumes and higher ethane feedstock and natural gas costs, partially offset by higher ethylene sales prices to Westlake. 2025 Compared with 2024 Net Sales .
This represents an increase in net income of $34.6 million as compared to net income of $334.6 million on net sales of $1,190.8 million for the year ended December 31, 2023. Net income attributable to the Partnership in 2024 was $62.4 million as compared to $54.3 million in 2023, an increase of $8.1 million.
This represents a decrease in net income of $70.6 million as compared to net income of $369.2 million on net sales of $1,135.9 million for the year ended December 31, 2024. Net income attributable to the Partnership in 2025 was $48.7 million as compared to $62.4 million in 2024, a decrease of $13.7 million.
For its approximately 5% merchant sales, OpCo may purchase the ethane and other feedstocks to produce ethylene and resulting co-products to sell to unrelated third parties from Westlake Petrochemicals LLC. Please refer to Note 2 to the consolidated financial statements included in Item 8 of this form 10-K for more information on the Feedstock Supply Agreement.
For its approximately 5% merchant sales, OpCo may purchase the ethane and other feedstocks to produce ethylene and resulting co-products to sell to unrelated third parties from Westlake Petrochemicals LLC.
Settlement of these conditional asset retirement obligations is not expected to have a material adverse effect on the Partnership's financial condition, results of operations or cash flows in any individual reporting period.
As such, the impact of the settlement of these conditional asset retirement obligations on the Partnership's financial condition, results of operations or cash flows in any individual reporting period cannot be determined at this time.
In the event of a force majeure event, we recognize buyer deficiency fees representing fixed margin and unavoid ed operating and maintenance capital expenditures and maintenance expenses per pound of volume committed by Westlake during the force majeure period.
The annual commitment is not reduced for a force majeure event affecting OpCo's plants that lasts fewer than 45 consecutive days; however, in the event of such a force majeure event, we recognize a Buyer Deficiency Fee representing fixed margin and unavoided operating and maintenance capital expenditures and maintenance expenses per pound of volume committed by Westlake during the force majeure period.
Selling, general and administrative expenses decreased by $1.3 million , or 4.4%, to $28.5 million in 2024 from $29.8 million in 2023. The decrease in 2024, as compared to 2023, was mainly attributable to lower service costs. Interest Expense—Westlake . Interest expense remained relatively consistent at $25.7 million in 2024 compared to $26.5 million in 2023. Other Income, net.
Selling, general and administrative expenses remained relatively consistent at $28.3 million in 2025 as compared to $28.5 million in 2024. Interest Expense—Westlake . Interest expense decreased to $22.9 million in 2025 compared to $25.7 million in 2024, primarily due to lower interest rates on the outstanding debt in 2025 as compared to 2024. Other Income, net.
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.
Pursuant to the Ethylene Sales Agreement, Westlake is obligated to pay for the annual minimum quantity (95% of OpCo's budgeted ethylene production), which is measured on an annual basis, is not reduced for a force majeure event lasting fewer than 45 consecutive days.In the event Westlake purchases less than its annual commitment, we recognize a buyer deficiency fee ("Buyer Deficiency Fee") representing fixed margin and all expenses and expenditures incurred per pound of volume committed but not taken by Westlake.
Year Ended December 31, 2024 2023 2022 (in thousands of dollars) Net cash provided by operating activities $ 485,001 $ 451,999 $ 463,736 Loss from disposition of property, plant and equipment (2,345) (4,933) (4,707) Changes in operating assets and liabilities and other (113,497) (112,440) (124,200) Net income 369,159 334,626 334,829 Less: Other income, net 5,251 4,232 1,566 Interest expense—Westlake (25,701) (26,501) (13,407) Provision for income taxes (835) (813) (1,017) Income from operations 390,444 357,708 347,687 Add: Depreciation and amortization 111,899 110,203 121,074 Other income, net 5,251 4,232 1,566 EBITDA $ 507,594 $ 472,143 $ 470,327 40 Table of Contents Summary For the year ended December 31, 2024, net income was $369.2 million on net sales of $1,135.9 million.
Year Ended December 31, 2025 2024 (in thousands of dollars) Net cash provided by operating activities $ 280,469 $ 485,001 Loss from disposition of property, plant and equipment (2,754) (2,345) Changes in operating assets and liabilities and other 20,861 (113,497) Net income 298,576 369,159 Less: Other income, net 2,445 5,251 Interest expense—Westlake (22,899) (25,701) Provision for income taxes (547) (835) Income from operations 319,577 390,444 Add: Depreciation and amortization 127,978 111,899 Other income, net 2,445 5,251 EBITDA $ 450,000 $ 507,594 40 Table of Contents Summary For the year ended December 31, 2025, net income was $298.6 million on net sales of $1,166.7 million.
Net sales decreased by $54.9 million, or 4.6%, to $1,135.9 million in 2024 from $1,190.8 million in 2023.
Net sales increased by $30.8 million, or 2.7%, to $1,166.7 million in 2025 from $1,135.9 million in 2024.
Expensing turnaround costs as incurred would likely result in greater variability of our quarterly operating results and would adversely affect our financial position and results of operations. Additional information concerning long-lived assets and related depreciation and amortization appears in Notes 5 and 7 to the consolidated financial statements included in Item 8 of this form 10-K. Fair Value Estimates.
Additional information concerning long-lived assets and related depreciation and amortization appears in Note 5, "Property, Plant and Equipment," and Note 7, "Deferred Charges and Other Assets," to Consolidated Financial Statements included in Item 8 of this form 10-K. Fair Value Estimates.
On April 29, 2015, we purchased an additional 2.7% newly-issued limited partner interest in OpCo, resulting in an aggregate 13.3% limited partner interest in OpCo effective April 1, 2015. The 12,686,115 subordinated units of the Partnership, all of which were previously owned by Westlake, were converted into common units of the Partnership on August 30, 2017.
The 12,686,115 subordinated units of the Partnership, all of which were previously owned by Westlake, were converted into common units of the Partnership on August 30, 2017.
Please refer to Note 2 to the consolidated financial statements included in Item 8 of this form 10-K for more information on the Ethylene Sales Agreement.
Please refer to Note 2, "Agreements with Westlake and Related Parties," to Consolidated Financial Statements included in Item 8 of this form 10-K for more information on the Feedstock Supply Agreement. How We Evaluate Operations Our management uses a variety of financial and operating metrics to analyze our performance.
Income from operations was $390.4 million for 2024, as compared to $357.7 million for 2023, an increase of $32.7 million .
Income from operations was $319.6 million for 2025, as compared to $390.4 million for 2024, a decrease of $70.8 million .
The increased EBITDA, as compared to the prior year, was primarily due to higher third-party ethylene sales prices, lower ethane feedstock and natural gas costs and higher ethylene and co-products sales volumes in 2024 as compared to 2023, partially offset by lower ethylene sales prices to Westlake including the impact of the sale of excess quantities of ethylene at prices that excluded certain non-variable costs of production. 41 Table of Contents Cash Flows Operating Activities Operating activities provided cash of $485.0 million in 2024 as compared to cash provided by operating activities of $452.0 million in 2023.
The decrease in EBITDA, as compared to the prior year, was primarily due to higher ethane feedstock and natural gas costs and lower ethylene and co-products sales volumes to Westlake and third parties as a result of lower production volumes in 2025 attributable to the Petro 1 turnaround, partially offset by higher ethylene sales prices to Westlake as well as a Buyer Deficiency Fee of $5.8 million f rom an annual production deficiency as a result of the Petro 1 turnaround extending into April 2025, which was later than the planned completion in March 2025. 41 Table of Contents Cash Flows Operating Activities Operating activities provided cash of $280.5 million in 2025 as compared to cash provided by operating activities of $485.0 million in 2024.
Item 7. Management's Discussion and Analysis of Financial Condition and Results of Operations Overview This Management's Discussion and Analysis of Financial Condition and Results of Operations should be read in conjunction with the accompanying consolidated financial statements, the notes thereto, and the other financial information appearing elsewhere in this report.
Item 7. Management's Discussion and Analysis of Financial Condition and Results of Operations The following discussion and analysis is management's perspective of our current financial condition and results of operations and should be read in conjunction with "Items 1A. "Risk Factors" and "Item 8. Financial Statements and Supplementary Data" included in this report.
The $33.0 million increase in cash flows from operating activities was mainly due to higher income from operations, which was partially offset by a decrease in cash provided by working capital.
The $204.5 million decrease in cash flows from operating activities was mainly due to cash used in connection with the Petro 1 turnaround, lower income from operations in 2025 as compared to 2024 and a decrease in cash provided by working capital.
How We Source Feedstock OpCo has entered into a 12-year feedstock supply agreement (the "Feedstock Supply Agreement") with Westlake Petrochemicals LLC, a wholly owned subsidiary of Westlake, under which Westlake Petrochemicals LLC supplies OpCo with ethane and other feedstocks that OpCo uses to produce ethylene under the Ethylene Sales Agreement.
Please refer to Note 2, "Agreements with Westlake and Related Parties," to Consolidated Financial Statements included in Item 8 of this form 10-K for more information on the Ethylene Sales Agreement. 35 Table of Contents How We Source Feedstock OpCo is party to a feedstock supply agreement (the "Feedstock Supply Agreement") with Westlake Petrochemicals LLC, a wholly owned subsidiary of Westlake, under which Westlake Petrochemicals LLC supplies OpCo with ethane and other feedstocks that OpCo uses to produce ethylene under the Ethylene Sales Agreement.
Reconciliations for each of MLP distributable cash flow and EBITDA are included below. 39 Table of Contents Reconciliation of MLP Distributable Cash Flow to Net Income and Net Cash Provided by Operating Activities The following table presents reconciliations of MLP distributable cash flow to net income and net cash provided by operating activities, the most directly comparable GAAP financial measures, for each of the periods indicated.
Year Ended December 31, 2025 2024 Average Sales Price Volume Average Sales Price Volume Net sales percentage change from prior-year period due to average sales price and volume +10.4 % -8.2 % -6.6 % +2.0 % Year Ended December 31, 2025 2024 Domestic US prices percentage change from prior-year period for fuel cost and feedstock Fuel cost (Natural Gas) +50.7 % -17.3 % Feedstock (Ethane) +32.8 % -22.6 % 39 Table of Contents Reconciliation of MLP Distributable Cash Flow to Net Income and Net Cash Provided by Operating Activities The following table presents reconciliations of MLP distributable cash flow to net income and net cash provided by operating activities, the most directly comparable GAAP financial measures, for each of the periods indicated.
On August 4, 2014, we closed our initial public offering (the "IPO") of 12,937,500 common units. In connection with the IPO, we acquired a 10.6% interest in OpCo and a 100% interest in OpCo GP, which is the general partner of OpCo.
In connection with the IPO, we acquired a 10.6% interest in OpCo and a 100% interest in OpCo GP, which is the general partner of OpCo. On April 29, 2015, we purchased an additional 2.7% newly-issued limited partner interest in OpCo, resulting in an aggregate 13.3% limited partner interest in OpCo effective April 1, 2015.
The decrease in net sales in 2024 was primarily due to lower ethylene sales prices to Westlake in 2024 as compared to 2023 including the impact of the sale of excess quantities of ethylene at prices that excluded certain non-variable costs of production, partially offset by higher ethylene and co-products sales volumes and higher third-party ethylene sales prices.
The increase in net sales in 2025 was primarily due to higher ethylene sales prices to Westlake in 2025 as compared to 2024 as well as a Buyer Deficiency Fee of $5.8 million from an annual production deficiency as a result of the Petro 1 turnaround extending into April 2025, which was later than the planned completion in March 2025, partially offset by lower ethylene and co-products sales volumes to Westlake and third parties as a result of lower production volumes attributable to the Petro 1 turnaround.
These unfavorable changes were partially offset by a favorable change in accounts receivable, net—third parties due to collection of a maintenance cost reimbursement and lower third party receivables at the end of 2024. Investing Activities Net cash used for investing activities during 2024 was $89.0 million as compared to net cash used for investing activities of $75.9 million in 2023.
Investing Activities Net cash provided by investing activities during 2025 was $31.2 million as compared to net cash used for investing activities of $89.0 million in 2024, resulting in an overall favorable change of $120.2 million in investing cash flows.
Net sales for 2024 decreased by $54.9 million as compared to 2023 primarily due to lower ethylene sales prices to Westlake in 2024 compared to 2023, including the impact of the sale of excess quantities of ethylene in 2024 at prices that excluded certain non-variable costs of production pursuant to the Ethylene Sales Agreement, partially offset by higher ethylene and co-products sales volumes and higher third-party ethylene sales prices.
Net sales for 2025 increased by $30.8 million as compared to 2024 primarily due to higher ethylene sales prices to Westlake in 2025 as well as a Buyer Deficiency Fee of $5.8 million from an annual production deficiency as a result of the Petro 1 turnaround extending into April 2025, which was later than the planned completion in March 2025, partially offset by lower ethylene and co-products sales volumes to Westlake and third parties as a result of lower production volumes attributable to the Petro 1 turnaround.
Removed
The following discussion includes forward-looking statements that involve certain risks and uncertainties. See "Cautionary Statement Regarding Forward-Looking Statements" and "Item 1A. Risk Factors" included within this report. We are a Delaware limited partnership formed by Westlake to operate, acquire and develop ethylene production facilities and related assets.
Added
This discussion and analysis includes the years ended December 31, 2025 and 2024 and comparison between such years.
Removed
In the event Westlake purchases less than its annual commitment, we recognize buyer deficiency fees representing fixed margin and all expenses and expenditures incurred per pound of volume committed but not taken by Westlake. Payment for the buyer deficiency fee is scheduled to be received by the Partnership after the conclusion of the year.
Added
The discussion for the year ended December 31, 2023 and comparison between the years ended December 31, 2024 and 2023 have been omitted from this Annual Report on Form 10-K for the year ended December 31, 2025, as such information can be found in Part II, "Item 7.
Removed
We capitalize the costs of major maintenance activities, or turnarounds, and amortize the costs over the period until the next planned turnaround of the affected facility. We commenced the next maintenance turnaround at Petro 1 in the first quarter of 2025.
Added
Management's Discussion and Analysis of Financial Condition and Results of Operations" of our Annual Report on Form 10-K for the year ended December 31, 2024 which was filed with the Securities and Exchange Commission on March 5, 2025. The following discussion includes forward-looking statements that involve certain risks and uncertainties. See "Cautionary Statement Regarding Forward-Looking Statements" included within this report.
Removed
Recent Development Petro 1 Turnaround During the first quarter of 2025, we commenced our planned maintenance turnaround of the Petro 1 production facility. 38 Table of Contents Results of Operations The table below and descriptions that follow represent the consolidated results of operations of the Partnership for the years ended December 31, 2024 and 2023.
Added
Overview We are a Delaware limited partnership formed by Westlake to operate, acquire and develop ethylene production facilities and related assets. On August 4, 2014, we closed our initial public offering (the "IPO") of 12,937,500 common units.
Removed
A detailed comparison of the Partnership's 2023 operating results to its 2022 operating results can be found in the Management's Discussion and Analysis of Financial Condition and Results of Operations section in the Partnership's 2023 Annual Report on Form 10-K filed February 28, 2024.
Added
Neither we nor OpCo has any employees. OpCo and Westlake are parties to the Services and Secondment Agreement, pursuant to which Westlake provides OpCo with various utility services, comprehensive operating services for OpCo's units, services for the maintenance and operation of the common facilities and seconded employees to perform all services required under the agreement.
Removed
The increase in MLP distributable cash flow was primarily a result of higher net income, partially offset by higher reserves for future turnarounds. EBITDA. EBITDA increased by $35.5 million to $507.6 million in 2024 from EBITDA of $472.1 million in 2023.

… 20 more changes not shown on this page.

Item 7A. Quantitative and Qualitative Disclosures About Market Risk

Market Risk — interest-rate, FX, commodity exposure

4 edited+0 added−0 removed6 unchanged
Biggest changeThere were no derivative positions during the years ended December 31, 2024, 2023 and 2022. Interest Rate Risk We are exposed to interest rate risk with respect to our outstanding debt, all of which is variable rate debt.
Biggest changeThere were no derivative positions during the years ended December 31, 2025, 2024 and 2023. Interest Rate Risk We are exposed to interest rate risk with respect to our outstanding debt, all of which is variable rate debt.
As of December 31, 2024, we had variable rate debt of $399.7 million outstanding, all of which was owed to wholly-owned subsidiaries of Westlake. On July 12, 2022, OpCo entered into the OpCo Revolver Amendment. The OpCo Revolver Amendment, among other things, provided for the replacement of LIBOR with SOFR as the reference rate.
As of December 31, 2025, we had variable rate debt of $399.7 million outstanding, all of which was owed to wholly-owned subsidiaries of Westlake. On July 12, 2022, OpCo entered into the OpCo Revolver Amendment. The OpCo Revolver Amendment, among other things, provided for the replacement of LIBOR with SOFR as the reference rate.
A hypothetical increase in our average interest rate on variable rate debt by 100 basis points would increase our annual interest expense by approximately $4.0 million, of which $3.8 million would relate to the MLP Revolver and $0.2 million would relate to the OpCo Revolver based on the December 31, 2024 debt balance. 46 Table of Contents
A hypothetical increase in our average interest rate on variable rate debt by 100 basis points would increase our annual interest expense by approximately $4.0 million, of which $3.8 million would relate to the MLP Revolver and $0.2 million would relate to the OpCo Revolver based on the December 31, 2025 debt balance. 46 Table of Contents
The Applicable Margin under the MLP Revolver varies between 1.75% and 2.75%, depending on the Partnership's Consolidated Leverage Ratio. The weighted average variable interest rate of our debt as of December 31, 2024 was 6.4%.
The Applicable Margin under the MLP Revolver varies between 1.75% and 2.75%, depending on the Partnership's Consolidated Leverage Ratio. The weighted average variable interest rate of our debt as of December 31, 2025 was 5.8%.

Other WLKP 10-K year-over-year comparisons