8-K

UNITED STATES

SECURITIES AND EXCHANGE COMMISSION

Washington, D.C. 20549

FORM 8-K

CURRENT REPORT

Pursuant to Section 13 or 15(d)

of the Securities Exchange Act of 1934

Date of report (date of earliest event reported): November 9, 2011

BLUEKNIGHT ENERGY PARTNERS, L.P.

(Exact name of Registrant as specified in its charter)

DELAWARE	001-33503	20-8536826
(State of incorporation or organization)	(Commission file number)	(I.R.S. employer identification number)

Two Warren Place 6120 South Yale Avenue, Suite 500 Tulsa, Oklahoma	74136
(Address of principal executive offices)	(Zip code)

Registrant’s telephone number, including area code:  (918) 237-4000

(Former name or former address, if changed since last report)

Check the appropriate box below if the Form 8-K filing is intended to simultaneously satisfy the filing obligation of the registrant under any of the following provisions (see General Instruction A.2. below):

[ ]  Written communications pursuant to Rule 425 under the Securities Act (17 CFR 230.425)

[ ]  Soliciting material pursuant to Rule 14a-12 under the Exchange Act (17 CFR 240.14a-12)

[ ]  Pre-commencement communications pursuant to Rule 14d-2(b) under the Exchange Act(17 CFR 240.14d-2(b))

[ ]  Pre-commencement communications pursuant to Rule 13e-4(c) under the Exchange Act(17 CFR 240.13e-4(c))

Item 2.02. Results of Operations and Financial Condition.

On November 9, 2011, Blueknight Energy Partners, L.P. issued a press release announcing its financial results for the quarter ended September 30, 2011. A copy of the press release is furnished as Exhibit 99.1 to this Current Report and is incorporated herein in its entirety by reference.  In accordance with General Instruction B.2 of Form 8-K, the information set forth herein and in the press release is deemed to be “furnished” and shall not be deemed to be “filed” for purposes of the Securities Exchange Act of 1934, as amended (the “Exchange Act”).

Item 9.01. Financial Statements and Exhibits.

(d)           Exhibits

In accordance with General Instruction B.2 of Form 8-K, the information set forth in the attached Exhibit 99.1 is deemed to be “furnished” and shall not be deemed to be “filed” for purposes of the Exchange Act.

EXHIBIT NUMBER		DESCRIPTION
99.1	—	Press release dated November 9, 2011.

SIGNATURES

Pursuant to the requirements of the Securities Exchange Act of 1934, the registrant has duly caused this report to be signed on its behalf by the undersigned hereunto duly authorized.

	BLUEKNIGHT ENERGY PARTNERS, L.P.
	By:	Blueknight Energy Partners G.P., L.L.C.
		its General Partner
Date:  November 9, 2011	By:	/s/ Alex G. Stallings
		Alex G. Stallings
		Chief Financial Officer and Secretary

INDEX TO EXHIBITS

EXHIBIT NUMBER		DESCRIPTION
99.1	—	Press release dated November 9, 2011.

EX-99.1

Exhibit 99.1

Blueknight Energy Partners, L.P.

Announces Third Quarter 2011 Results

TULSA, Okla., November 9, 2011 -- Blueknight Energy Partners, L.P.  (“BKEP” or the “Partnership”) (NASDAQ: BKEP and BKEPP), a midstream energy company focused on providing integrated services for companies engaged in the production, distribution and marketing of crude oil, asphalt and other petroleum products, today announced adjusted EBITDA of $19.9 million and $48.4 million for the three and nine months ended September 30, 2011, respectively.  This represents increases of $3.8 million or 24% and $2.3 million or 5% as compared to the three and nine months ended September 30, 2010, respectively.  An explanation of adjusted EBITDA, including a reconciliation of such measure to net income (loss), is provided in the section of this release entitled “Non-GAAP Financial Measures.”

The Partnership reported net income of $28.6 million on total revenues of $46.5 million for the quarter ended September 30, 2011, compared to a net loss of $2.8 million on total revenues of $38.1 million for the quarter ended September 30, 2010.  For the nine months ended September 30, 2011, the Partnership reported net income of $25.9 million on total revenues of $131.1 million, compared to a net loss of $10.6 million on total revenues of $113.5 million for the nine months ended September 30, 2010.  The Partnership’s financial results for the three and nine months ended September 30, 2011 were impacted by  non-cash gains of approximately $23.6 million and $22.1 million, respectively related to the change in estimated fair market value of the embedded derivative related to its outstanding convertible debentures and the rights offering liability.  For further information regarding the Partnership’s results of operations, please see the Partnership’s Quarterly Report on Form 10-Q, which was filed today with the Securities and Exchange Commission.

 “We had a solid third quarter bolstered by our asphalt business which recognized incremental revenues of $1.9 million due to several customers exceeding annual contractual thresholds and by the recognition of a $1.1 million gain on the sale of excess equipment and assets.  Furthermore, demand for our crude oil pipeline and truck transportation services continues to strengthen as evidenced by increased volumes and revenues on our pipelines and truck transportation assets.   The construction of one million barrels of crude oil storage in Cushing, Oklahoma for TransMontaigne and the construction of a one million barrel crude oil terminal in Midland, Texas for Vitol are underway and progressing as scheduled.  In addition we are pleased with the outcome of our recently completed rights offering which was significantly over-subscribed.  With the imminent issuance of the preferred units, we can finally announce that we have successfully completed our recapitalization plan started in October of 2010.  We appreciate our unitholders’ efforts and support for the transaction,” said J. Michael Cockrell, Blueknight Energy Partners’ president and chief operating officer.

1

Results of Operations

The following table summarizes the financial results for the three and nine months ended September 30, 2010 and 2011 (in thousands except per unit data):

	Three Months Ended September 30,						Nine Months Ended September 30,
	2010			2011			2010			2011
Service revenue:
Third party revenue	$	31,113		$	35,124		$	97,895		$	99,748
Related party revenue		6,943			11,387			15,637			31,377
Total revenue		38,056			46,511			113,532			131,125
Expenses:
Operating		23,441			27,617			73,442			85,726
General and administrative		3,883			4,679			11,037			14,065
Total expenses		27,324			32,296			84,479			99,791
Operating income		10,732			14,215			29,053			31,334
Other (income) expenses:
Interest expense		13,530			9,120			39,502			27,284
Change in fair value of embedded derivative within convertible debt		—			(15,358	)		—			(20,224	)
Change in fair value of rights offering liability		—			(8,224	)		—			(1,838	)
Income (loss) before income taxes		(2,798	)		28,677			(10,449	)		26,112
Provision for income taxes		50			72			151			219
Net income (loss)	$	(2,848	)	$	28,605		$	(10,600	)	$	25,893
Allocation of net income (loss) for calculation of earnings per unit:
General partner interest in net income (loss)	$	(57	)	$	643		$	(209	)	$	754
Preferred interest in net income	$	—		$	2,975		$	—		$	11,124
Beneficial conversion feature attributable to preferred units	$	—		$	11,141		$	—		$	33,061
Income (loss) available to common and subordinated unitholders	$	(2,791	)	$	13,846		$	(10,391	)	$	(19,046	)
Basic and diluted net income (loss) per common unit	$	(0.08	)	$	0.38		$	(0.30	)	$	(0.56	)
Basic and diluted net income (loss) per subordinated unit	$	(0.08	)	$	0.42		$	(0.30	)	$	(0.52	)
Weighted average common units outstanding - basic and diluted		21,728			21,890			21,728			21,890
Weighted average subordinated units outstanding - basic and diluted		12,571			10,248			12,571			11,788

Non-GAAP Financial Measures

This press release contains the non-GAAP financial measure of adjusted EBITDA.  Adjusted EBITDA is defined as earnings before interest, income taxes, depreciation, amortization, impairment and other miscellaneous non-cash items, including changes in the fair values of the embedded derivative within convertible debt and the rights offering contingency.   The use of adjusted EBITDA should not be considered as an alternative to GAAP measures such as net income or cash flows from operating activities. Adjusted EBITDA is presented because the Partnership believes it provides additional information with respect to its business activities and is used as a supplemental financial measure by management and external users of the Partnership’s financial statements, such as investors, commercial banks and others, to assess, among other things, the Partnership’s operating performance and return on capital as compared to those of other companies in the midstream energy sector, without regard to financing or capital structure.

2

The following table presents a reconciliation of adjusted EBITDA to net income (loss) for the periods shown (in thousands):

	Three Months Ended  September 30,						Nine Months Ended  September 30,
	2010			2011			2010			2011
Net income (loss)	$	(2,848	)	$	28,605		$	(10,600	)	$	25,893
Interest expense		13,530			9,120			39,502			27,284
Income taxes		50			72			151			219
Depreciation and amortization		5,315			5,651			16,228			17,066
Asset impairment charge		—			—			779			—
Change in fair value of embedded derivative within convertible debt		—			(15,358	)		—			(20,224	)
Change in fair value of rights offering liability		—			(8,224	)		—			(1,838	)
Adjusted EBITDA	$	16,047		$	19,866		$	46,060		$	48,400

Investor Conference Call

The Partnership will hold a conference call on Wednesday, November 16, 2011 at 2:00 p.m. Central Time (3:00 p.m. Eastern Time) to discuss the results of the third quarter. The conference call can be accessed through the Investors section of the Partnership's Web site at http://investor.bkep.com/presentations or by telephone at 1-877-317-6789. International locations may dial-in by calling 1-412-317-6789.

Participants should dial in five to ten minutes prior to the scheduled start time. An audio replay will be available on the Web site for at least 30 days, and a recording will be available by phone for 3 days. To hear the replay, call 1-877-344-7529 in the U.S. or call 1-412-317-0088 from international locations. The pass code for both is 10006743.

Forward-Looking Statements

This release includes forward-looking statements. Statements included in this release that are not historical facts (including, without limitation, any statements concerning plans and objectives of management for future operations or economic performance or assumptions related thereto) are forward-looking statements. Such forward-looking statements are subject to various risks and uncertainties. These risks and uncertainties include, among other things, uncertainties relating to the impact of the refinancing of the Partnership’s debt and recapitalization of its partnership interests upon the price of its common units, the Partnership’s future cash flows and operations, pending legal proceedings, future market conditions, current and future governmental regulation, future taxation and other factors discussed in the Partnership’s filings with the Securities and Exchange Commission. If any of these risks or uncertainties materializes, or should underlying assumptions prove incorrect, actual results or outcomes may vary materially from those expected. The Partnership undertakes no obligation to publicly update or revise any forward-looking statement, whether as a result of new information, future events or otherwise.

3

About Blueknight Energy Partners, L.P.

BKEP owns and operates a diversified portfolio of complementary midstream energy assets consisting of approximately 8.1 million barrels of crude oil storage located in Oklahoma and Texas, approximately 6.7 million barrels of which are located at the Cushing, Oklahoma Interchange; approximately 1,285 miles of crude oil pipeline located primarily in Oklahoma and Texas; approximately 300 crude oil transportation and oilfield services vehicles deployed in Kansas, Colorado, New Mexico, Oklahoma and Texas; and approximately 7.4 million barrels of combined asphalt product and residual fuel oil storage located at 45 terminals in 22 states. BKEP provides integrated services for companies engaged in the production, distribution and marketing of crude oil, asphalt and other petroleum products. BKEP is based in Oklahoma City, Oklahoma, and Tulsa, Oklahoma. For more information, visit the Partnership’s web site at www.bkep.com.

Contact:

BKEP Investor Relations

918-237-4032

investor@bkep.com

or

BKEP Media Contact:

Brent Gooden (405) 715-3232 or (405) 818-1900

4