HOUSTON--(BUSINESS WIRE)--Westlake Chemical Partners LP (NYSE: WLKP) today reported net income attributable to the Partnership of $18.5 million, or $0.53 per limited partner unit, for the three months ended September 30, 2020. In connection with Hurricane Laura, which struck Lake Charles, Louisiana on August 27, 2020, Westlake Chemical OpCo LP ("OpCo") declared a force majeure event with respect to its Petro 1 and Petro 2 facilities located in Lake Charles under OpCo's ethylene sales agreement with Westlake Chemical Corporation ("Westlake Chemical"). Under this agreement, Westlake Chemical is obligated to purchase a defined amount of ethylene from OpCo each calendar year at cost plus a fixed price per pound. In the third quarter, Westlake Chemical was obligated to pay OpCo the fixed margin and certain other costs associated with ethylene that OpCo would have produced but could not as a result of this force majeure event. As a result of this agreement, net income in the third quarter of 2020 included a benefit of $41.3 million related to the fixed margin and certain other costs to which OpCo is entitled for the ethylene that it would have sold to Westlake Chemical had the force majeure event not occurred.
As a result of the impact from the force majeure event, which includes the benefit of the ethylene sales agreement and lower production costs, as well as lower third-party sales volumes and increased maintenance expense, net income attributable to the Partnership in the third quarter of 2020 of $18.5 million increased by $3.6 million compared to third quarter 2019 net income attributable to the Partnership of $14.9 million. Cash flows from operating activities in the third quarter of 2020 were $117.2 million, a decrease of $4.3 million compared to third quarter 2019 cash flows from operating activities of $121.5 million. This decrease in cash flows from operating activities was primarily due to an increase in working capital. For the three months ended September 30, 2020, MLP distributable cash flow of $21.2 million increased by $0.7 million from third quarter 2019 MLP distributable cash flow of $20.5 million. The increase in MLP distributable cash flow was primarily attributable to higher earnings and lower interest expense, partially offset by higher reserves for turnaround expense.
Third quarter 2020 net income attributable to the Partnership of $18.5 million increased by $3.6 million from second quarter 2020 net income attributable to the Partnership of $14.9 million. The increase in net income attributable to the Partnership was primarily due to the impact of the force majeure event and lower interest expense. Third quarter 2020 cash flows from operating activities of $117.2 million increased by $4.4 million compared to second quarter 2020 cash flows from operating activities of $112.8 million. The increase in cash flows from operating activities was primarily attributable to higher earnings and lower interest expense. Third quarter 2020 MLP distributable cash flow of $21.2 million increased by $4.3 million compared to second quarter 2020 MLP distributable cash flow of $16.9 million. The increase in MLP distributable cash flow was primarily due to higher earnings.
Net income attributable to the Partnership of $51.1 million, or $1.45 per limited partner unit, for the nine months ended September 30, 2020 increased by $7.5 million compared to the first nine months of 2019 net income attributable to the Partnership of $43.6 million. The increase in net income attributable to the Partnership was due to the impact of the force majeure event and lower interest expense, partially offset by lower ethylene production costs and lower third-party sales. Cash flows from operating activities in the first nine months of 2020 of $340.9 million increased by $5.7 million compared to the first nine months of 2019 cash flows from operating activities of $335.2 million due to the higher earnings during the current-year period. For the nine months ended September 30, 2020, MLP distributable cash flow of $56.4 million increased by $2.0 million compared to the first nine months of 2019 MLP distributable cash flow of $54.4 million. The increase in MLP distributable cash flow as compared to the prior-year period was primarily attributable to the Partnership's higher earnings and lower interest expense, partially offset by higher reserves for turnaround expense.
"In August, Southwest Louisiana was severely impacted by Hurricane Laura, resulting in significant damage to the power and utility infrastructure in the region as well as many of the homes of our employees. Hurricane Laura was one of the strongest hurricanes to hit the Gulf Coast in over 40 years. But due to the dedication of our employees at these facilities, we were able to quickly begin the process of resuming operations at our facilities. I would like to say a special thank you to these employees," said Albert Chao, President and Chief Executive Officer. "While the extensive damage to the infrastructure in the Lake Charles area led to production outages at our Petro 1 and Petro 2 facilities, our long-term ethylene sales agreement with Westlake Chemical enabled us to continue to deliver reliable earnings and cash flow for the quarter, which provides us the ability to deliver predictable distributions to our unitholders."
OpCo's Ethylene Sales Agreement with Westlake Chemical is designed to provide for stable and predictable cash flows. The agreement provides that 95% of OpCo's ethylene production is sold to Westlake Chemical for a cash margin of $0.10 per pound, net of operating costs, maintenance capital expenditures and reserves for future turnaround expenditures.
On October 30, 2020, the Partnership announced that the Board of Directors of Westlake Chemical Partners GP LLC had approved a quarterly distribution for the third quarter of 2020 of $0.4714 per unit to be payable on November 24, 2020 to unitholders of record as of November 9, 2020, representing the 25th consecutive quarterly distribution to our unitholders. MLP distributable cash flow provided trailing twelve-month coverage of 1.13x the declared distributions for the third quarter of 2020.
Westlake Chemical Partners LP
Westlake Chemical Partners is a limited partnership formed by Westlake Chemical Corporation to operate, acquire and develop ethylene production facilities and other qualified assets. Headquartered in Houston, the Partnership owns a 22.8% interest in Westlake Chemical OpCo LP. Westlake Chemical OpCo LP's assets consist of three ethylene production facilities in Calvert City, Kentucky, and Lake Charles, Louisiana and an ethylene pipeline. For more information about Westlake Chemical Partners LP, please visit http://www.wlkpartners.com.
