This renewal is expected to maintain the stable distributable cash flow that has supported 45 consecutive quarterly distributions to unitholders since the Partnership's IPO in 2014.
Westlake Chemical Partners LP has announced the successful renewal of its critical Ethylene Sales Agreement with Westlake Chemical OpCo LP and Westlake Corporation, a move designed to secure the Partnership’s revenue and distribution stability for the coming years.
The renewed agreement is initially set to run through December 31, 2026, and includes provisions for automatic 12-month renewal periods. It will remain in effect until terminated at the end of the initial or any subsequent renewal term, requiring not less than 12 months’ notice. Based on the terms, the agreement is now effectively secured through at least December 31, 2027, barring early termination.
This extension is pivotal for the Partnership, as it ensures the continued offtake on attractive terms for 95% of the ethylene produced by OpCo. Ethylene is a foundational petrochemical used in the production of plastics, fibers, and other industrial materials, making the guaranteed sale of the vast majority of OpCo’s output a cornerstone of the Partnership's financial model.
A key highlight of the renewed agreement is the maintenance of the same pricing formula and sales volume protections that were in place under the previous terms. These protections have been instrumental in providing the Partnership with the stable distributable cash flow necessary to maintain its history of distributions. Since its initial public offering (IPO) in 2014, the Partnership has made 45 consecutive quarterly distributions to unitholders without any decreases, a track record that demonstrates the effectiveness and reliability of this sales structure.
In conjunction with the Ethylene Sales Agreement renewal, several ancillary agreements between the parties were also amended to align with the new term structure. OpCo and certain affiliates of Westlake executed an amendment to the Services and Secondment Agreement, ensuring its term aligns with that of the Ethylene Sales Agreement.
Furthermore, the Partnership, OpCo, and certain affiliates of Westlake amended the Omnibus Agreement. This amendment specifies that the Omnibus Agreement will now terminate upon the termination of the Ethylene Sales Agreement. The amendment also addressed certain procedural requirements relating to Westlake’s obligation to indemnify the Partnership for a range of matters under the Omnibus Agreement, including key areas such as environmental and tax matters.
The renewal of this foundational agreement underscores the continued strong relationship between Westlake Chemical Partners LP, OpCo, and Westlake Corporation, and provides significant visibility and confidence in the Partnership's ability to maintain its financial commitments and provide long-term value to its unitholders.
