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11. Agreements

6 Months Ended

Jun. 30, 2015

Working Capital Arrangement. In May 2013 we extended the annual Grain Procurement and Working Capital Agreement with J.D. Heiskell that has been in place since March 2011. Pursuant to the agreement we agreed to procure whole yellow corn and grain sorghum (also called “milo”) from J.D. Heiskell. The Company has the ability to obtain grain from other sources subject to certain conditions, however, in the past all of our grain purchases have been from J.D. Heiskell. Title and risk of loss of the corn pass to the Company when the corn is deposited into the weigh bin. The term of the Agreement expires on December 31, 2015 and is automatically renewed for additional one-year terms. J.D. Heiskell further agrees to sell all ethanol to Kinergy Marketing or another marketing purchaser designated by the Company and all WDG and condensed distillers solubles to A.L. Gilbert. Our relationships with J.D. Heiskell, Kinergy Marketing, and A.L. Gilbert are well established and the Company believes that the relationships are beneficial to all parties involved in utilizing the distribution logistics, reaching out to widespread customer base, managing inventory, and building working capital relationships. Revenue is recognized upon delivery of ethanol to J. D. Heiskell as revenue recognition criteria have been met and any performance required of the Company subsequent to the sale to J.D. Heiskell is inconsequential. These agreements are ordinary purchase and sale agency agreements for an ethanol plant.

The J.D. Heiskell sales activity associated with the Purchasing Agreement, Grain Procurement and Working Capital greements during the three and six months ended June 30, 2015 and 2014 are as follows:

		Three months ended June 30,				Six months ended June 30,
		2015		2014		2015		2014
Ethanol sales	$	24,247	$	40,799	$	46,859	$	87,747
Wet distiller's grains sales		6,609		11,708		13,959		21,423
Corn oil sales		1,071		1,344		1,936		2,245
Corn purchases		24,934		33,619		50,893		66,947
Accounts receivable		329		458		329		458
Accounts payable		1,673		2,122		1,673		2,122

Ethanol and Wet Distillers Grains Marketing Arrangement. The Company entered into an Ethanol Marketing Agreement with Kinergy Marketing and a Wet Distillers Grains marketing agreement with A.L. Gilbert. Under the terms of the agreements, subject to certain conditions, the initial terms of the agreements expire on August 31, 2015 with automatic one-year renewals thereafter. For the three months ended June 30, 2015 and 2014, the Company expensed marketing costs of $0.6 million and $0.8 million, respectively, under the terms of both ethanol and wet distiller’s grains agreements. For the six months ended June 30, 2015 and 2014, the Company expensed marketing costs of $1.2 million and $1.6 million, respectively.