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6. Agreements

3 Months Ended

Mar. 31, 2017

Working Capital Arrangement. Pursuant to a Corn Procurement and Working Capital Agreement with J.D. Heiskell, the Company agreed to procure whole yellow corn and milo 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 of our grain purchases have been from J.D. Heiskell. Title and risk of loss of the corn and milo pass to the Company when the corn and milo are deposited into the weigh bin. The term of the Agreement expires on December 31, 2017 and is automatically renewed for additional one-year terms. J.D. Heiskell further agrees to sell all ethanol to Kinergy Marketing or other marketing purchasers designated by the Company and all WDG and corn oil 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 delivery 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 and the Corn Procurement and Working Capital Agreement during the three months ended March 31, 2017 and 2016 were as follows:

	As of and for the three months ended March 31,
	2017		2016
Ethanol sales	$	22,544	$	20,251
Wet distiller's grains sales		4,564		5,175
Corn oil sales		798		707
Corn/milo purchases		23,468		21,353
Accounts receivable		336		302
Accounts payable		1,616		1,391

Ethanol and Wet Distillers Grains Marketing Arrangement. The Company has 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, 2017, respectively, each with automatic one-year renewals thereafter. For the three months ended March 31, 2017 and 2016, the Company expensed marketing costs of $0.5 million each, under the terms of both the Ethanol Marketing Agreement and the Wet Distillers Grains Marketing Agreement.