Westlake Chemical Partners LP

Previous wording

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. Under the Ethylene Sales Agreement, the price for the sale of such excess ethylene to Westlake is based on a formula similar to that used for the minimum purchase commitment, with the exception of certain fixed costs. In addition, under the Ethylene Sales Agreement, if production costs billed to Westlake on an annual basis are less than 95% of the actual production costs incurred by OpCo during the contract year, OpCo is entitled to recover the shortfall in such production costs (proportionate to the volume sold to Westlake) in the subsequent year ("Shortfall"). The Shortfall is generally recognized during the period in which the related operating, maintenance or turnaround activities occur.

Current wording

In addition, under the Ethylene Sales Agreement, if production costs billed to Westlake on an annual basis are less than 95% of the actual production costs incurred by OpCo during the contract year, OpCo is entitled to recover the shortfall in such production costs (proportionate to the volume sold to Westlake) in the subsequent year ("Shortfall"). The Shortfall is generally recognized during the period in which the related operating, maintenance or turnaround activities occur.

Previous wording

We sell ethylene production in excess of volumes sold to Westlake, as well as all associated co-products resulting from the ethylene production, directly to third parties on either a spot or contract basis. Net proceeds (after transportation and other costs) from the sales of associated co-products that result from the production of ethylene purchased by Westlake are netted against the ethylene price charged to Westlake under the Ethylene Sales Agreement, thereby substantially reducing our exposure to fluctuations in the market prices of these co-products. During 2023, all third-party ethylene and associated co-products sales generated 13.8% of our total revenues.

Current wording

We sell ethylene production in excess of volumes sold to Westlake, as well as all associated co-products resulting from the ethylene production, directly to third parties on either a spot or contract basis. Net proceeds (after transportation and other costs) from the sales of associated co-products that result from the production of ethylene purchased by Westlake are netted against the ethylene price charged to Westlake under the Ethylene Sales Agreement, thereby substantially reducing our exposure to fluctuations in the market prices of these co-products. During 2024, all third-party ethylene and associated co-products sales generated 16.3% of our total revenues.

Previous wording

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. With the exception of feedstock (including natural gas) and utilities-related expenses, operating expenses generally remain relatively stable across broad ranges of production volumes but can fluctuate from period to period depending on the circumstances, particularly maintenance and turnaround activities. Our maintenance capital expenditures and turnaround costs are comprised primarily of maintenance of our ethylene production facilities and the amortization of capitalized turnaround costs. These capital expenditures relate to the maintenance and integrity of our facilities. 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.

Current wording

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. With the exception of feedstock (including natural gas) and utilities-related expenses, operating expenses generally remain relatively stable across broad ranges of production volumes but can fluctuate from period to period depending on the circumstances, particularly maintenance and turnaround activities. Our maintenance capital expenditures and turnaround costs are comprised primarily of maintenance of our ethylene production facilities and the amortization of capitalized turnaround costs. These capital expenditures relate to the maintenance and integrity of our facilities. 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.

Previous wording

For the year ended December 31, 2023, net income was $334.6 million on net sales of $1,190.8 million. This represents a decrease in net income of $0.2 million as compared to net income of $334.8 million on net sales of $1,593.1 million for the year ended December 31, 2022. Net income attributable to the Partnership in 2023 was $54.3 million as compared to $64.2 million in 2022, a decrease of $9.9 million. Income from operations was $357.7 million for 2023, as compared to $347.7 million for 2022. Net sales for 2023 decreased by$402.3 million as compared to 2022 primarily due to lower ethylene and co-products sales prices in 2023 compared to 2022. Additionally, net sales in 2022 includes a buyer deficiency fee of $23.8 million. Income from operations for 2023 increased compared to 2022 due to lower ethane feedstock and natural gas costs, partially offset by lower ethylene and co-products sales prices. Net income and net income attributable to the Partnership for 2023 decreased as compared to 2022 despite the higher income from operations due to higher interest expense.

Current wording

For the year ended December 31, 2024, net income was $369.2 million on net sales of $1,135.9 million. 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. Income from operations was $390.4 million for 2024, as compared to $357.7 million for 2023, an increase of$32.7 million. 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. 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.

Previous wording

Net Sales. Net sales decreased by $402.3 million, or 25.3%, to $1,190.8 million in 2023 from $1,593.1 million in 2022. The decrease in net sales in 2023 was primarily due to lower ethylene and co-products sales prices in 2023 as compared to 2022. Additionally, net sales in 2022 includes a buyer deficiency fee of $23.8 million. Lower average sales prices in 2023 contributed to a 25.5% decrease in net sales compared to 2022. Higher sales volumes in 2023 contributed to a 1.4% increase in net sales compared to 2022.

Current wording

Net Sales. Net sales decreased by $54.9 million, or 4.6%, to $1,135.9 million in 2024 from $1,190.8 million in 2023. 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. 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.

Previous wording

Gross Profit. Gross profit was $387.5 million in 2023, as compared to gross profit of $377.4 million in 2022. The gross profit margin was 32.5% in 2023 as compared to 23.7% in 2022. The increased gross profit margin in 2023 was primarily due to lower ethane feedstock and natural gas costs in 2023 as compared to 2022.

Current wording

Gross Profit. Gross profit was $418.9 million in 2024, as compared to gross profit of $387.5 million in 2023. 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.

Previous wording

Selling, General and Administrative Expenses. Selling, general and administrative expenses remained relatively unchanged at $29.8 million in 2023 as compared to $29.7 million in 2022.

Current wording

Selling, General and Administrative Expenses. 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.

Previous wording

Other Income, net. Other income, net increased by $2.6 million to $4.2 million in 2023 from $1.6 million in 2022 primarily due to an increase in interest earned on the balance with Westlake under the Investment Management Agreement.

Current wording

Other Income, net. 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.

Previous wording

Provision for Income Taxes. Provision for income taxes was $0.8 million in 2023 as compared to $1.0 million in 2022.

Current wording

Provision for Income Taxes. Provision for income taxes remained consistent at $0.8 million in 2024 as compared to $0.8 million in 2023.

Previous wording

MLP Distributable Cash Flow. MLP distributable cash flow decreased by $13.3 million to $62.6 million in 2023 from $75.9 million in 2022. The decrease in MLP distributable cash flow was primarily a result of higher interest expense.

Current wording

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. The increase in MLP distributable cash flow was primarily a result of higher net income, partially offset by higher reserves for future turnarounds.

Previous wording

EBITDA. EBITDA increased by $1.8 million to $472.1 million in 2023 from EBITDA of $470.3 million in 2022. The increased EBITDA, as compared to the prior year, was primarily due to lower ethane feedstock and natural gas costs in 2023 as compared to 2022, partially offset by lower ethylene and co-products sales prices.

Current wording

EBITDA. EBITDA increased by $35.5 million to $507.6 million in 2024 from EBITDA of $472.1 million in 2023. 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.

Previous wording

Operating activities provided cash of $452.0 million in 2023 as compared to cash provided by operating activities of $463.7 million in 2022. The $11.7 million decrease in cash flows from operating activities was mainly due to cash used for the Calvert City Olefins turnaround activity and higher interest expense, which was partially offset by an increase in cash provided by working capital. 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 $34.4 million in 2023 as compared to $9.5 million of cash provided in 2022, resulting in a favorable change of $24.9 million. The favorable change in working capital was mainly attributable to a favorable change in accounts receivable—third parties, accounts payable—third parties and accrued and other liabilities, primarily due to the timing of payment of accruals and the impact on accounts receivable of the Petro 2 turnaround activities in 2021, which impacted the changes in working capital during 2022. These favorable changes were partially offset by an unfavorable change in net accounts receivable—Westlake due to fluctuating ethane feedstock costs and a smaller buyer deficiency fee and Shortfall collected in 2023 compared to 2022.

Current wording

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 $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. 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. The unfavorable change in working capital was mainly attributable to unfavorable changes in accrued and other liabilities and accounts payable—third parties primarily due to higher maintenance costs accrual at December 31, 2023 as compared to December 31, 2024. 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.

Previous wording

Net cash used for investing activities during 2023 was $75.9 million as compared to net cash used for investing activities of $12.0 million in 2022. The $63.9 million increase in cash used for investing activities was mainly due to an increase in net cash invested under the Investment Management Agreement in 2023 as compared to 2022. During 2023, we invested $174.1 million with Westlake, and $145.0 million of such investments matured. During 2022, we invested $319.9 million with Westlake, and $362.0 million of such investments matured. Capital expenditures were $46.8 million in 2023 as compared to $54.1 million in 2022. Capital expenditures during 2023 and 2022 were related to projects to improve production capacity or reduce costs, maintenance and safety and environmental projects at our facilities.

Current wording

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. The $13.1 million increase in cash used for investing activities was mainly due to an increase in net cash invested under the Investment Management Agreement in 2024 as compared to 2023. During 2024, we invested $40.0 million with Westlake. During 2023, we invested $174.1 million with Westlake, and $145.0 million of such investments matured. 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.

Previous wording

Net cash used for financing activities during 2023 was $382.2 million as compared to net cash used for financing activities of $404.0 million in 2022. 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 2022 were related to distributions of $337.6 million to the noncontrolling interest retained in OpCo by Westlake and of $66.4 million to unitholders by the Partnership.

Current wording

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. 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.

Previous wording

In order to fund non-annual turnaround expenditures, we cause OpCo to reserve an amount for turnaround costs during each twelve-month period designed to cover future turnaround activities. Each of OpCo's ethylene production facilities requires turnaround maintenance approximately every five years. By reserving additional cash annually, we intend to reduce the variability in OpCo's cash flow. 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.

Current wording

In order to fund non-annual turnaround expenditures, we cause OpCo to reserve an amount for turnaround costs during each twelve-month period designed to cover future turnaround activities. Each of OpCo's ethylene production facilities requires turnaround maintenance approximately every five to eight years. By reserving additional cash annually, we intend to reduce the variability in OpCo's cash flow. Although we had previously planned to commence the next maintenance turnaround at the Petro 1 ethylene unit in the third quarter of 2024, we made the decision to defer the planned turnaround in order to maintain production and capitalize on higher average third-party ethylene sales prices during the third quarter of 2024. 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.

Previous wording

On January 22, 2024, 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 20, 2024 to unitholders of record as of February 2, 2024, which equates to 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, 2023. 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.

Current wording

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. 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.

Previous wording

Westlake has historically funded expansion capital expenditures related to Lake Charles Olefins and Calvert City Olefins. No such funding was required by OpCo during 2023, 2022 or 2021. Total capital expenditures for the years ended December 31, 2023, 2022 and 2021 were $46.8 million, $54.1 million, and $81.2 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.

Current wording

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. 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.

Previous wording

As of December 31, 2023, our cash and cash equivalents totaled $58.6 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.

Current wording

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.

Previous wording

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 $94.4 million of cash invested under the Investment Management Agreement at December 31, 2023.

Current wording

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.

Previous wording

Debt Obligations and Interest Payments. As of December 31, 2023, we had $29.0 million of debt related interest expense due within the near term, and debt obligations of $399.7 million and related interest expense of $73.2 million due over the long-term period, respectively. All $399.7 million of our outstanding debt matures in 2027. See Note 8, "Long-Term Debt," in the Notes to Consolidated Financial Statements in Item 8 of this form 10-K for further information on our debt obligations and the expected timing of future principal and interest payments.

Current wording

Debt Obligations and Interest Payments. 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. See Note 8, "Long-Term Debt," in the Notes to Consolidated Financial Statements in Item 8 of this form 10-K for further information on our debt obligations and the expected timing of future principal and interest payments.

Previous wording

Operating leases. As of December 31, 2023, there was $1.6 million in operating lease obligations due within the near term and $3.1 million due over the long-term period related to noncancelable operating leases with respect to rail cars that are subleased to OpCo.

Current wording

Operating Leases. 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.

Previous wording

Purchase Obligations. 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, 2023, we had $69.8 million of enforceable and legally binding purchase commitments due within the near term, and none due over the long-term period. Additionally, we are party to various agreements to purchase goods and services, including the Services and Secondment Agreement, in the ordinary course of our business, as well as various agreements related to our capital projects.

Current wording

Purchase Obligations. 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. Additionally, we are party to various agreements to purchase goods and services, including the Services and Secondment Agreement, in the ordinary course of our business, as well as various agreements related to our capital projects.

Previous wording

The estimated useful lives of long-lived assets range from three to 40 years. Depreciation and amortization of these assets, including amortization of deferred turnaround costs, under the straight-line method over their estimated useful lives totaled $110.2 million, $121.1 million and $108.8 million in 2023, 2022 and 2021, respectively. If the useful lives of the assets were found to be shorter than originally estimated, depreciation or amortization charges would be accelerated.

Current wording

The estimated useful lives of long-lived assets range from three to 40 years. 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.

Previous wording

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 $30.9 million, $6.7 million and $131.2 million in 2023, 2022 and 2021, respectively. Amortization of previously deferred turnaround costs was $25.4 million, $26.0 million and $16.5 million in 2023, 2022 and 2021, respectively. As of December 31, 2023, deferred turnaround costs, net of accumulated amortization, totaled $133.2 million. 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.

Current wording

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. 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. 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.

Previous wording

Fair Value Estimates. We develop estimates of fair value to allocate the purchase price paid to acquire a business to the assets acquired and liabilities assumed in an acquisition, to assess impairment of long-lived assets and goodwill and to record derivative instruments. We use all available information to make these fair value determinations, including the engagement of third-party consultants. We record all derivative instruments at fair value. The fair value of the financial instruments is estimated using quoted market prices in active markets and observable market-based inputs or unobservable inputs that are corroborated by market data when active markets are not available or unobservable inputs that are not corroborated by market data. We settled all derivatives in 2020 and did not enter into any new derivative arrangements during 2021, 2022 or 2023; however, we may enter into derivative arrangements in the future.

Current wording

Fair Value Estimates. We develop estimates of fair value to allocate the purchase price paid to acquire a business to the assets acquired and liabilities assumed in an acquisition, to assess impairment of long-lived assets and goodwill and to record derivative instruments. We use all available information to make these fair value determinations, including the engagement of third-party consultants. We record all derivative instruments at fair value. The fair value of the financial instruments is estimated using quoted market prices in active markets and observable market-based inputs or unobservable inputs that are corroborated by market data when active markets are not available or unobservable inputs that are not corroborated by market data. 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.

Previous wording

Goodwill impairment. 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. At December 31, 2023, 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. The qualitative assessment considers factors such as macroeconomic conditions, industry and market considerations, cost factors related to raw materials and labor, current and projected financial performance, changes in management or strategy, and market capitalization. Alternatively, we may unconditionally elect to bypass the qualitative assessment and perform a quantitative goodwill impairment assessment in any period. Significant assumptions used in the discounted cash flow projection impairment assessment for goodwill include future sales volumes based on production capacities. The future cash flows are discounted to present value using a discount rate. The significant assumptions used in determining the fair value of the reporting unit using the market value methodology include the determination of appropriate market comparables and the estimated multiples of EBITDA a willing buyer is likely to pay. We elected to perform the quantitative assessment during 2023, and such assessment did not indicate impairment of the goodwill. Under the discounted cash flow methodology, even if the fair value of OpCo decreased by 10%, the carrying value of OpCo would not exceed its fair value.

Current wording

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. 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. The qualitative assessment considers factors such as macroeconomic conditions, industry and market considerations, cost factors related to raw materials and labor, current and projected financial performance, changes in management or strategy, and market capitalization. Alternatively, we may unconditionally elect to bypass the qualitative assessment and perform a quantitative goodwill impairment assessment in any period. Significant assumptions used in the discounted cash flow projection impairment assessment for goodwill include future sales volumes based on production capacities. The future cash flows are discounted to present value using a discount rate. The significant assumptions used in determining the fair value of the reporting unit using the market value methodology include the determination of appropriate market comparables and the estimated multiples of EBITDA a willing buyer is likely to pay. We elected to perform the qualitative assessment in the fourth quarter of 2024 and concluded that it is more likely than not that the fair value of the reporting unit exceeds the carrying amount and, as such, the quantitative impairment test was not required.