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7. Agreements

9 Months Ended

Sep. 30, 2018

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 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 Corn Procurement and Working Capital Agreement expires on December 31, 2018 and the term can be 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 DCO 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, 2018 and 2017 are as follows:

	As of and for the three months ended September 30,				As of and for the nine months ended September 30,
	2018		2017		2018		2017
Ethanol sales	$	29,661	$	27,996	$	88,002	$	79,672
Wet distiller's grains sales		8,116		6,938		24,443		18,975
Corn oil sales		714		1,043		2,530		2,693
Corn purchases		27,786		26,338		84,291		49,727
Accounts receivable		1,079		776		1,079		776
Accounts payable		2,416		1,976		2,416		1,976

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 Ethanol Marketing Agreement matures on August 31, 2018 and the Wet Distillers Grains Marketing Agreement matures on December 31, 2018 with automatic one-year renewals thereafter. For the three months ended September 30, 2018 and 2017, the Company expensed marketing costs of $0.7 million and $0.6 million for each period, respectively, under the terms of both the Ethanol and the Wet Distiller’s Grains Marketing agreements. For the nine months ended September 30, 2018 and 2017, the Company expensed marketing costs of $2.1 million and $1.8 million, respectively.

As of September 30, 2018, the Company has forward sales commitments for approximately 97 thousand tons of WDG. These committed sales will be expected through December 2018.