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6. Agreements

9 Months Ended

Sep. 30, 2016

Working Capital Arrangement. Pursuant to a Corn Procurement and Working Capital Agreement with J.D. Heiskell & Co. (J.D. Heiskell). The Company agreed to procure whole yellow corn and grain sorghum, primarily from J.D. Heiskell. The Company has the ability to obtain grain from other sources subject to certain conditions; however, in the past all the Company’s 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 Keyes plant weigh bin. The term of the Agreement expires on December 31, 2016 and is automatically renewed for additional one-year terms. J.D. Heiskell further agrees to sell all ethanol the Company produces to Kinergy Marketing or other marketing purchasers designated by the Company and all WDG the Company produces to A.L. Gilbert. The Company markets and sells distillers corn oil to A.L. Gilbert and other third parties. The Company’s 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 the Keyes plant.

The J.D. Heiskell sales activity associated with the Purchasing Agreement, Corn Procurement and Working Capital Agreements during the three and nine months ended September 30, 2016 and 2015 are as follows:

	As of and for the three months ended September 30,				As of and for the nine months ended September 30,
	2016		2015		2016		2015
Ethanol sales	$	24,687	$	23,906	$	68,993	$	70,765
Wet distiller's grains sales		6,114		5,609		16,918		19,568
Corn oil sales		788		835		2,232		2,771
Corn/milo purchases		23,098		24,056		67,766		74,949
Accounts receivable		345		312		345		312
Accounts payable		1,241		1,539		1,241		1,539

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 agreements with Kinergy Marketing and with A.L. Gilbert mature on August 31, 2017 and on December 31, 2016, respectively, each with automatic one-year renewals thereafter. For the three months ended September 30, 2016 and 2015, the Company expensed marketing costs of $0.6 million for each period, respectively, under the terms of both ethanol and wet distiller’s grains marketing agreements. For the nine months ended September 30, 2016 and 2015, the Company expensed marketing costs of $1.7 million and $1.8 million, respectively.