Good morning. Thank you for standing by. Welcome to the Westlake Chemical Partners Third Quarter 2021 Earnings Conference Call. During the presentation, all participants will be in a listen only mode. After the speakers' remarks, you will be invited to participate in a question-and-answer session. As a reminder, this conference is being recorded today, November 2, 2021. I would now like to turn the call over to your host, Jeff Holy, Westlake Chemical Partners Vice President and Treasurer. Sir, you may begin.
Thank you. Good morning or afternoon, everyone, and welcome to the Westlake Chemical Partners Third Quarter 2021 Conference Call. I'm joined today by Albert Chao, our President and CEO, Steve Bender, our Executive Vice President and CFO, and other members of our management team. During this call, we refer to ourselves as Westlake Partners or the Partnership. References to Westlake or Westlake Chemical refer to our parent company, Westlake Chemical Corporation, and references to OpCo refer to Westlake Chemical OpCo LP, a subsidiary of Westlake Chemical and the Partnership, which owns certain Olefins assets. Additionally, when we refer to distributable cash flow, we are referring to Westlake Chemical Partners MLP distributable cash flow. Definitions of these terms are available on the Partnership's website.
Today's management is going to discuss certain topics that will contain forward-looking information that is based on management's beliefs as well as assumptions made by management and information currently available to management. These forward-looking statements suggest predictions or expectations and, thus, are subject to risks or uncertainties. Actual results could differ materially based upon many factors, including operating difficulties, the volume of ethylene that we are able to sell, the price at which we are able to sell ethylene, changes in the prevailing economic conditions, actual and proposed governmental regulatory actions, competitive products and pricing pressures, the COVID-19 pandemic, extreme weather events, our ability to borrow funds and access capital markets at a reasonable cost, and other risk factors discussed in our SEC filings. This morning, Westlake Partners issued a press release with details of our third quarter 2021 financial and operating results.
This document is available in the press release section of our webpage at wlkpartners.com. A replay of today's call will be available beginning two hours after the conclusion of this call. The replay may be accessed by dialing the following numbers. Domestic callers should dial 855-859-2056. International callers may access the replay at 404-537-3406. The access code is 828-5407. Please note that information reported on this call speaks only as of today, November 2, 2021, and therefore, you're advised that time-sensitive information may no longer be accurate as of the time of any replay. I would finally advise you that this conference call is being broadcast live through an internet webcast system that can be accessed on our webpage at wlkpartners.com.
Now, I would like to turn the call over to Albert Chao. Albert?
Thank you, Jeff. Good morning or good afternoon, everyone, and thank you for joining us to discuss our third quarter 2021 results. In this morning's press release, we reported Westlake Partners' third quarter 2021 net income of $13 million or $0.36 per unit. During the quarter, higher ethylene production contributed to consolidated net income, including OpCo's of $66 million. In mid-September, we began our planned turnaround at OpCo's Petro 2 facility in Lake Charles, Louisiana, which we now anticipate to be completed in December. Westlake Partners' financial results in the third quarter continued to demonstrate the stability generated from our fixed margin ethylene sales agreement for 95% of annual plant production each year, insulating us from market volatility and other production risks. This certainty, combined with our investment-grade sponsor, Westlake Chemical, produces predictable earnings and stable cash flows.
I would now like to turn our call over to Steve to provide more detail on the financial and operating results for the quarter. Steve?
Thank you, Albert, and good morning or good afternoon, depending on the time zone you're in. In this morning's press release, we reported Westlake Partners' third quarter 2021 net income was $13 million or $0.36 per unit. Consolidated net income, including OpCo's earnings, was $66 million on consolidated net sales of $294 million. The Partnership had distributable cash flow for the quarter of $13 million or $0.37 per unit. Third quarter 2021 net income for Westlake Partners of $13 million decreased by $6 million compared to third quarter 2020 net income of $19 million.
The decreased net income was primarily due to lower planned production attributable to the turnaround of Petro 2, which started in September, and the buyer deficiency fee recognized in the third quarter of 2020. Distributable cash flow of $13 million for the third quarter of 2021 decreased by $8 million compared to the third quarter of 2020 distributable cash flow of $21 million. The year-over-year decrease was attributable to lower earnings at OpCo from lower production during our planned turnaround and higher maintenance cost. Turning to the balance sheet and cash flows. At the end of the third quarter, we had a consolidated cash balance and cash investments with Westlake Chemical through our investment management agreement, totaling $215 million.
At the end of the third quarter, Westlake Chemical had payment obligations to OpCo of $21 million, representing the buyer deficiency fee for the lost production and cost recovery. These payment obligations will be received in 2022 under the terms of the ethylene sales agreement. Long-term debt at the end of the quarter was $400 million, of which $377 million was at the partnership and the remaining $23 million was at OpCo. In the third quarter, OpCo incurred $15 million in capital expenditures. For the third quarter of 2021, we maintained our strong leverage metrics with a consolidated leverage ratio of approximately 1x and a debt to total capitalization ratio near 15%.
As Albert mentioned, we are currently undergoing the turnaround of our Petro 2 ethylene unit, which began in September of this year and is projected to be completed in December. The cost of this turnaround has been included in the amount we charge Westlake Chemical under the terms of our ethylene sales agreement and funded at commencement of the turnaround. On November 1, 2021, we announced distributions of $0.4714 per unit with respect to the third quarter of 2021. Since our IPO in 2014, the partnership has made 29 consecutive quarterly distributions to unitholders, and we've grown distributions 71% since the partnership's original minimum quarterly distribution of $0.275 per unit.
For the 12 months ending September 30, 2021, distributable cash flow provided coverage of 1.06 times the declared distribution. The third quarter's partnership distribution will be paid on November 29, 2021 to unitholders of record November 12, 2021. The partnership's predictable fee-based cash flow provides benefits in today's economic environment and is differentiated by the consistency of our earnings and cash flows. The structure of our ethylene sales agreement and the associated cash flow allow the partnership to continue distributions at our current level while sustaining our long-term targeted 1.1 times distribution coverage ratio, thus eliminating the need to access equity capital in the markets. Looking back, since our IPO, we have maintained a cumulative coverage ratio above this targeted level.
Now I'd like to turn the call back over to Albert to make some closing comments. Albert?
Thank you, Steve. We are pleased with the partnership's financial and operational performance through the third quarter. The stability of our business model and associated cash flows demonstrate the benefit of our ethylene sales agreement, and its protective provisions provide the partnership predictable long-term earnings and cash flows, despite both planned and unplanned production outages. We remain optimistic about the continuing demand for ethylene, driven by robust downstream derivative needs by our parent, Westlake Chemical, as well as strong end-use demand in packaging. Our ethylene sales agreement, which provides a predictable fee-based cash flow structure from our take-or-pay contract with Westlake Chemical for 95% of OpCo's production, will continue to deliver these stable and predictable cash flows. We maintain a strong balance sheet with conservative financial and leverage metrics.
As we continue to navigate market conditions, we will evaluate opportunities via our four levers of growth in the future, including increases of our ownership interest of OpCo, acquisitions of other qualified income streams, organic growth opportunities, such expansions of our current ethylene facilities, and negotiations of a higher fixed margin in our ethylene sales agreement with Westlake. We remain focused on our ability to continue to provide long-term value to our unit holders. As always, we will continue to operate safely, along with being good stewards of the environment where we work and live. Thank you very much for listening to our third quarter earnings call. Now I'll turn the call back over to Jeff.
Thank you, Albert. Before I begin taking questions, I'd like to remind you that a replay of this teleconference will be available two hours after the call has ended. We'll provide that number again at the end of the call. Dexter, we'll now take questions.
Thank you. Participants, to ask a question, you'll need to press star one on your telephone. To withdraw your question, press the pound key. Again, that's star, then the number one on your telephone keypad to ask a question. First question is from Matthew Blair from Tudor, Pickering, Holt & Co Your line is open.
Hey. Good morning, Albert and Steve
Good morning.
Good morning, Matthew.
You mentioned the turnaround is lasting a little bit longer. Should we think about that as an incremental headwind to Westlake LP in Q4?
No, because of the extended outage, the operating company declared a force majeure protecting the partnership from any extended delays. Therefore, there should not be any impact to the partnership as a result of that.
Okay, sounds good. As far as the potential for restarting distribution growth, what are the key benchmarks you're looking for in order to make that decision?
Yes. I'm looking for really an appreciation of the predictability and the stability that we've been able to demonstrate. I think the unit price has done well and has performed, but hasn't performed entirely up to the company's expectations. Certainly we do expect that demonstration of performance this year, given the number of events that have arisen. When you think of the number of events, whether they've been freezes or turnarounds or other unplanned outages, we've demonstrated incredible predictability and continue to make distributions as expected. With that performance, I do expect the unit price to be reflective of that predictability and cash flow performance. With that, I think we'll continue to be able to then provide growth in distributions if the market rewards accordingly.
Okay. It sounds like mostly an evaluation issue. What about what's your sense of how open are the equity capital markets? Do you see investor appetite for drop-down transactions?
You know, given the size of the distributions that we've been making over the years, I think there is adequate capital to make those kinds of distribution growth opportunities, assuming valuations are reasonable in our view. I certainly think that the scale and size of the capital asset we would need to fund any future growth are certainly achievable in the markets today. That may not have been the case for some of the very, very large partnerships that existed. Certainly in our case, given the scale of our business and the growth in distributions that we've been able to provide over the recent past, I think they are achievable in the markets, assuming we have an appropriate valuation for the unit price.
Sounds good. Thank you very much.
You're welcome.
At this time, the Q&A session has ended. I will now turn the call back over to Jeff Holy.
Thank you again for participating in today's call. We hope you'll join us for our next conference call to discuss our fourth quarter and full year results.
Thank you for participating in today's Westlake Chemical Partners Third Quarter Earnings Conference Call. As a reminder, this call will be available for replay beginning two hours after the call has ended and may be accessed until 11:59 P.M. Eastern Time on Tuesday, November 9, 2021. The replay can be accessed by calling the following numbers: Domestic calls should dial 855-859-2056. Again, it's 855-859-2056 for domestic calls. International calls may access the replay at 404-537-3406. Again, it's 404-537-3406. The access code is 828-5407. This will conclude today's conference call. Goodbye.