XML 27 R16.htm IDEA: XBRL DOCUMENT

9. Agreements

3 Months Ended

Mar. 31, 2019

Commitments and Contingencies Disclosure [Abstract]

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, 2019 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 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, 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 and purchases activity associated with the Purchasing Agreement, the Corn Procurement and Working Capital Agreement during the three months ended March 31, 2019, and 2018 were as follows:

	As of and for the three months ended March 31,
	2019		2018
Ethanol sales	$	27,189	$	28,212
Wet distiller's grains sales		8,603		7,828
Corn oil sales		800		923
Corn/milo purchases		29,261		27,745
Accounts receivable		1,340		1,193
Accounts payable		2,766		2,573

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, 2019 and with A.L Gilbert on December 31, 2019 with automatic one-year renewals thereafter. For the three months ended March 31, 2019 and 2018, the Company expensed marketing costs of $0.6 million for each period respectively, under the terms of both ethanol and wet distillers’ grains agreements.

As of March 31, 2019, the Company has forward sales commitments for approximately 95 thousand tons of WDG. These committed sales will be expected through June 2019.

Unrealized gains and losses on forward contracts and commitments, in which delivery has not occurred, are deemed “normal purchases and normal sales”, and therefore are not marked to market in the Company’s financial statements, but are subject to a lower of cost or market assessment.