Westlake about to create new publicly traded ethylene feedstock business

By Frank Esposito
Senior Staff Reporter

Published: April 29, 2014 3:07 pm ET
Updated: May 1, 2014 1:16 pm ET

Image By: Westlake Chemical Houston-based Westlake Chemical is about to develop a new business, Westlake Chemical Partners LP.

Related to this story

Topics Materials Mergers & Acquisitions Materials Suppliers
Companies & Associations Westlake Polymers Corp.

The ongoing natural gas boom is leading Westlake Chemical Corp. to file an initial public stock offering for Westlake Chemical Partners LP, a new business that will operate, develop and acquire production facilities and assets related to plastic feedstock ethylene.

Pipeline assets also are expected to be included in the new firm, according to an April 29 news release. Houston-based Westlake will be majority owner of the new entity. The IPO is expected to raise $272 million, but no listing date or per-share price range was included in the release.

The new company will trade under the symbol WLKP.

The new firm will include Westlake’s ethylene plants in Lake Charles, La., and Calvert City, Ky. Those plants have a combined annual capacity of almost 3.4 billion pounds. The Longview Pipeline — a 200-mile common carrier ethylene pipeline that runs from Mont Belvieu to Longview in Texas — also will be included in the new firm’s assets. Westlake has a polyethylene production unit in Longview.

These assets already have been placed into Westlake Chemical OpCo LP, a business entity owned by both Westlake and the new firm. Westlake’s downstream PE and PVC production facilities will consume a substantial majority of the ethylene produced by OpCo, officials said in an April 29 filing with the Securities and Exchange Commission.

Westlake will enter into a 12-year ethylene sales agreement with the new firm, under which Westalek will agree to buy 95 percent of the new firm’s ethylene output at a price that’s expected to generate a fixed 10-cent per-pound margin. Westlake, in turn, will supply the new firm with the ethane it needs to produce ethylene.

In the filing, officials said that the agreement “will promote more stable and predictable cash flows for OpCo.”

One industry source praised Westlake’s move to form the new firm, saying that Westlake was “a well-managed firm that’s made a lot of good decisions.” Investors apparently agreed with that assessment, driving Westlake’s per-share stock price up almost 10 percent to $70.53 on April 29, the day the move was announced. That hike has been sustained, as the firm’s per-share price was near $71 in early trading May 1.

At the Motley Fool financial web site, market analyst Travis Hoium wrote that the new firm would be a master limited partnership (MLP), adding that MLPs “have become a very popular tool for companies looking to squeeze as much value from energy and chemical-related products as possible.”

Westlake already is flush with the success of a surging per-share stock price that led to a two-for-one stock split on March 18. For full-year 2013, the firm’s profit grew almost 60 percent to more than $610 million. Annual sales grew more than five percent tom almost $3.8 billion.

Westlake — with major businesses in ethylene, polyethylene and PVC resin and pipe — has benefited from low-priced natural gas feedstock at many points of its production chain. The firm added 230 million pounds of ethylene capacity last year at its plant in Lake Charles, La. In 2014, Westlake plans to add almost 200 million pounds of PVC resin capacity and 180 million pounds of ethylene capacity at a site in Calvert City, Ky.


Comments

Westlake about to create new publicly traded ethylene feedstock business

By Frank Esposito
Senior Staff Reporter

Published: April 29, 2014 3:07 pm ET
Updated: May 1, 2014 1:16 pm ET

Post Your Comments


Back to story


More stories

Image

PolyOne launches Geon BIO PVC using soy-based materials

April 24, 2015 11:48 am ET

More than a decade of research is paying off for Battelle Memorial Institute in the form of Geon BIO PVC compounds from PolyOne Corp.    More

Image

Study suggests infants at lower risk from BPA exposure than expected

April 23, 2015 4:58 pm ET

A new study shows that newborn babies may have less risk from bisphenol A exposure than originally thought.    More

Image

Braskem and Odebrecht reconsidering West Virginia plastics project

April 23, 2015 2:54 pm ET

Brazilian firms Braskem and Odebrecht have confirmed that they are re-evaluating Project Ascent, the major plastics and petrochemicals project they...    More

Image

DuPont center in India gets LEED Certification

April 23, 2015 1:07 pm ET

DuPont Co.'s Knowledge Center in Hyderabad, India, was awarded LEED certification by the U.S. Green Building Council.    More

Image

SiVance opens new R&D lab

April 23, 2015 12:07 pm ET

Milliken & Co. unit SiVance LLC has opened a new research and development lab for silicone and silane technologies in Gainesville, Fla.    More

Market Reports

Plastics Recycling Trends in North America

This report is a review and analysis of the North American Plastics Recycling Industry, including key trends and statistics based on 2013 performance. We examine market environment factors, regulatory issues, industry challenges, key drivers and emerging trends in post-consumer and post-industrial recycling.

Learn more

Injection Molding Market Analysis & Processor Rankings

Plastics News BUNDLED package contains our in-depth Market Analysis of the Injection Molding segment. You will gain keen insight on current trends and our economic outlook.

As a BONUS this includes PN's updated 2014 database of North American Injection Molders RANKED by sales volume. Sort, merge, mail & prospect by end market, materials processed, region, # of plants and more.

Learn more

Plastics Caps & Closures Market Report

The annual recap of top trends and future outlook for the plastics caps & closures market features interviews with industry thought leaders and Bill Wood’s economic forecast of trends in growing end markets. You will also gain insight on trends in caps design, materials, machinery, molds & tooling and reviews of mergers & acquisitions.

Learn more

Upcoming Plastics News Events

June 2, 2015 - June 3, 2015Plastics Financial Summit - Chicago 2015

September 15, 2015 - September 17, 2015Plastics Caps & Closures - September 2015

More Events