Westlake Expects to Wrap Up Big Ethylene Expansions in 2016, 2017

Researched by Industrial Info Resources (Sugar Land, Texas)--Executives with Westlake Chemical Corporation (NYSE: WLK) (Houston, Texas) and Westlake Chemical Partners LP (NYSE: WLKP) (Houston) say they see no large growth projects on the horizon following the completion of expansions at ethylene facilities in Louisiana and Kentucky. Industrial Info is tracking $687.95 million in active Westlake projects.

Speaking at the company's earnings conference call, Westlake leaders said they expect capital expenditures for 2016 to run between $475 million and $525 million. Capital expenditures for 2015 totaled $491 million.

Chief Financial Officer Steve Bender said that following the completion of the two key expansions in 2016 and 2017, capital expenditures should subside to about $200 million per year.

This year will include the completion of a 250-million-pound expansion at Westlake Chemical Partner's Petro 1 ethylene facility, located in Lake Charles, Louisiana, Bender said. The $350 million project will increase annual ethylene production at Petro 1 to 1.5 billion pounds. An 80-day maintenance turnaround and upgrade at the plant in the second quarter is expected to cost the company $35 million in unrealized sales.

Westlake Partners recently announced it will expand annual ethylene production capacity at the Calvert City, Kentucky facility by 70 million pounds. The $70 million project, to be completed during the first half of 2017, will increase the facility's total capacity to 700 million pounds. Technip SA (Paris, France) is providing engineering for the project. The Kentucky facility is owned by Westlake's affiliate, Westlake Chemical OpCo. Ninety-five percent of the additional ethylene from Calvert City and Petro 1 will be sold to Westlake Chemical Corporation.

Westlake Chemical Corporation reported $110 million in net income for fourth-quarter 2015, down 39% from $183 million in the fourth quarter of 2014. Net sales for the just-ended quarter totaled $986.8 million, down 13% from $1.14 billion in fourth-quarter 2014. Westlake said lower selling prices led to the drop in margins. Also, income from operations for fourth-quarter 2015 was hurt by lower production rates as well as higher manufacturing costs and other costs associated with several polyethylene turnarounds.

For all of 2015, net income was $646 million, down 5% from $678.5 million in 2014. Westlake said several plant turnarounds last year contributed to the drop, along with lower olefins sales prices. The drop in oil prices helped to push down olefins and vinyls prices, it said. Net sales for 2015 were $4.46 billion, up 1% from $4.42 billion in 2014. Westlake attributed the increase to its specialty polyvinyl chloride (PVC) resin business, Vinnolit.

Westlake Chemical Corporation is pushing to acquire Axiall Corporation (NYSE:AXLL) (Atlanta, Georgia) in a $2.9 billion transaction, but Axiall's board of directors has thus far snubbed Westlake's overtures. Westlake announced last week it plans to nominate 10 people to Axiall's board of directors at that company's next annual meeting. Axiall had yet to schedule the meeting. For more Axiall-related information, see December 22, 2015, article - Axiall, Lotte Plant Spearheads Second Wave of Ethylene Projects.

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