-----BEGIN PRIVACY-ENHANCED MESSAGE----- Proc-Type: 2001,MIC-CLEAR Originator-Name: webmaster@www.sec.gov Originator-Key-Asymmetric: MFgwCgYEVQgBAQICAf8DSgAwRwJAW2sNKK9AVtBzYZmr6aGjlWyK3XmZv3dTINen TWSM7vrzLADbmYQaionwg5sDW3P6oaM5D3tdezXMm7z1T+B+twIDAQAB MIC-Info: RSA-MD5,RSA, Iuaf1gDVr0yUvKcFg0VrrzLmwcaAT6lDDZ+/sbtGoGDYm7zpA/4hrGTw3CP42M7T ymsIC/ui7i2yntEoyovlkQ== 0000793306-98-000013.txt : 19981111 0000793306-98-000013.hdr.sgml : 19981111 ACCESSION NUMBER: 0000793306-98-000013 CONFORMED SUBMISSION TYPE: 10-Q PUBLIC DOCUMENT COUNT: 2 CONFORMED PERIOD OF REPORT: 19980930 FILED AS OF DATE: 19981110 FILER: COMPANY DATA: COMPANY CONFORMED NAME: BLUE DOLPHIN ENERGY CO CENTRAL INDEX KEY: 0000793306 STANDARD INDUSTRIAL CLASSIFICATION: CRUDE PETROLEUM & NATURAL GAS [1311] IRS NUMBER: 731268729 STATE OF INCORPORATION: DE FISCAL YEAR END: 1231 FILING VALUES: FORM TYPE: 10-Q SEC ACT: SEC FILE NUMBER: 000-15905 FILM NUMBER: 98743272 BUSINESS ADDRESS: STREET 1: 801 TRAVIS SUITE 2100 CITY: HOUSTON STATE: TX ZIP: 77002-5729 BUSINESS PHONE: 713-227-7660 MAIL ADDRESS: STREET 2: 11 GREENWAY PLAZA SUITE 1606 CITY: HOUSTON STATE: TX ZIP: 77046 FORMER COMPANY: FORMER CONFORMED NAME: MUSTANG RESOURCES CORP DATE OF NAME CHANGE: 19900122 FORMER COMPANY: FORMER CONFORMED NAME: ZIM ENERGY CORP DATE OF NAME CHANGE: 19870921 10-Q 1 QUARTERLY REPORT FOR 09/30/98 UNITED STATES SECURITIES AND EXCHANGE COMMISSION WASHINGTON, D.C. 20549 FORM 10-Q [X] Quarterly Report Pursuant to Section 13 or 15(d) of the Securities Exchange Act of 1934 For the period ended: SEPTEMBER 30, 1998 or [ ] Transition Report Pursuant to Section 13 or 15(d) of the Securities Exchange Act of 1934 For the transition period from ..................to................... Commission File Number: 0-15905 BLUE DOLPHIN ENERGY COMPANY (Exact name of registrant as specified in its charter) DELAWARE 73-1268729 (State or other jurisdiction of (I.R.S. Employer incorporation or organization) Identification No.) 801 TRAVIS, SUITE 2100, HOUSTON, TEXAS 77002 (Address of principal executive offices) (Zip Code) (713)227-7660 (Registrant's telephone number, including area code) ELEVEN GREENWAY PLAZA, SUITE 1606, HOUSTON, TEXAS 77046 (Former name, former address and former fiscal year, if changed since last report.) Indicate by check mark whether the registrant (1) has filed all reports required to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during the preceding 12 months (or for such shorter period that the registrant was required to file such reports), and (2) has been subject to such filing requirements for the past 90 days. YES X NO APPLICABLE ONLY TO CORPORATE ISSUERS: Indicate the number of shares outstanding of each of the issuer's classes of common stock as of the latest practicable date. 4,491,847 shares $.01 par value outstanding at October 30, 1998 1 BLUE DOLPHIN ENERGY COMPANY AND SUBSIDIARIES PART. I. FINANCIAL INFORMATION ITEM 1. FINANCIAL STATEMENTS The condensed consolidated financial statements of Blue Dolphin Energy Company and Subsidiaries (the "Company") included herein have been prepared by the Company, without audit, pursuant to the rules and regulations of the Securities and Exchange Commission and, in the opinion of management, reflect all adjustments necessary to present a fair statement of operations, financial position and cash flows. The Company follows the full cost method of accounting for oil and gas properties, wherein costs incurred in the acquisition, exploration and development of oil and gas reserves are capitalized. The Company believes that the disclosures are adequate and the information presented is not misleading, although certain information and footnote disclosures normally included in financial statements prepared in accordance with generally accepted accounting principles have been condensed or omitted pursuant to such rules and regulations. 2 BLUE DOLPHIN ENERGY COMPANY AND SUBSIDIARIES CONDENSED CONSOLIDATED BALANCE SHEETS
September 30, December 31, 1998 1997 -------------- ------------- (Unaudited) ASSETS Current Assets: Cash $ 380,542 $ 1,756,294 Trade accounts receivable 1,021,557 861,740 Crude oil inventory 18,335 7,570 Prepaid expenses 118,387 87,268 ------------------ -------------- Total Current Assets 1,538,821 2,712,872 Property and Equipment, at cost, using full cost method for oil and gas properties. Includes $976,779 and $992,293 of leases held for sale at September 30, 1998 and December 31, 1997, respectively 24,868,198 23,811,679 Accumulated depletion, depreciation and amortization (5,074,758) (4,841,211) ------------------ -------------- 19,793,440 18,970,468 Land 1,133,333 1,133,333 Acquisition and Development Costs - Petroport 1,458,791 766,485 Other Assets 1,119,266 1,344,105 ------------------ -------------- Total Assets $ 25,043,651 $ 24,927,263 ================== ============== LIABILITIES AND STOCKHOLDERS' EQUITY Current Liabilities: Accounts payable and accrued expenses $ 731,372 $ 700,315 Accrued interest payable 52,683 105,957 Current portion of accrued abandonment costs 231,000 231,000 Accrued income taxes payable 86,225 50,267 ------------------ -------------- Total Current Liabilities 1,101,280 1,087,539 Long-Term Debt, less current portion 2,060,600 2,060,600 Accrued Abandonment Costs, less current portion 94,172 51,876 Deferred Income Taxes 1,114,976 1,103,921 Common Stock 44,918 44,918 Additional Paid-in Capital 17,665,323 17,669,515 Accumulated Earnings since January 1, 1990 2,962,382 2,908,894 ------------------ -------------- Total Liabilities and Stockholders' Equity $ 25,043,651 $ 24,927,263 ================== ==============
3 BLUE DOLPHIN ENERGY COMPANY AND SUBSIDIARIES CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS - UNAUDITED
Three Months Ended September 30, 1998 1997 ------ ------ Revenue from operations: Pipeline operations $ 666,612 $ 1,255,628 Oil and gas sales and operating fees 191,389 185,961 -------------- -------------- REVENUE FROM OPERATIONS 858,001 1,441,589 Cost of operations: Pipeline operating expenses 197,969 188,220 Lease operating expenses 141,631 162,183 Repair and maintenance costs 35,559 91,889 Depletion, depreciation, and amortization 100,506 90,107 -------------- -------------- COST OF OPERATIONS 475,665 532,399 ============== ============== INCOME FROM OPERATIONS 382,336 909,190 Other income (expense): General and administrative (367,590) (316,004) Interest expense (53,475) (54,801) Interest and other income 23,763 28,283 -------------- -------------- INCOME (LOSS) BEFORE INCOME TAXES (14,966) 566,668 Provision for income taxes (1,050) (202,666) -------------- -------------- NET INCOME (LOSS) $ (16,016) $ 364,002 ============== ============== Earnings per share: Basic $ 0 $ 0.08 ============== ============== Diluted $ 0 $ 0.08 ============== ============== Weighted average number of common shares outstanding and dilutive potential common shares: Basic 4,491,847 4,459,167 ============== ============== Diluted 4,499,284 4,523,378 ============== ==============
4 BLUE DOLPHIN ENERGY COMPANY AND SUBSIDIARIES CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS - UNAUDITED
Nine Months Ended September 30, 1998 1997 ---------- ---------- Revenue from operations: Pipeline operations $ 2,204,808 $ 3,188,320 Oil and gas sales and operating fees 591,283 620,786 -------------- -------------- REVENUE FROM OPERATIONS 2,796,091 3,809,106 Cost of operations: Pipeline operating expenses 592,532 606,523 Lease operating expenses 437,591 486,704 Repair and maintenance costs 192,971 310,808 Depletion, depreciation, and amortization 297,761 276,784 ------------- -------------- COST OF OPERATIONS 1,520,855 1,680,819 ------------- -------------- INCOME FROM OPERATIONS 1,275,236 2,128,287 Other income (expense): General and administrative (1,089,590) (983,763) Interest expense (159,589) (165,731) Interest and other income 90,386 76,601 -------------- -------------- INCOME BEFORE INCOME TAXES 116,443 1,055,394 Provision for income taxes (62,955) (388,414) -------------- -------------- NET INCOME $ 53,488 $ 666,980 ============== ============== Earnings per share: Basic $ 0.01 $ 0.15 ============== ============== Diluted $ 0.01 $ 0.15 ============== ============== Weighted average number of common shares outstanding and dilutive potential common shares: Basic 4,491,847 4,456,075 ============== ============== Diluted 4,503,619 4,510,170 ============== ==============
5 BLUE DOLPHIN ENERGY COMPANY AND SUBSIDIARIES CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS - UNAUDITED
Nine Months Ended September 30, 1998 1997 ----------- ---------- OPERATING ACTIVITIES Net income $ 53,488 $ 666,980 Adjustments to reconcile net income to net cash provided by operating activities: Depletion, depreciation and amortization 297,761 276,784 Deferred income taxes 11,055 342,596 Changes in operating assets and liabilities: (Increase) in trade accounts receivable (159,817) (394,035) (Increase) in crude oil inventory and prepaid expenses (41,884) (19,211) Increase (Decrease) in accounts payable and other current liabilities 13,739 (292,717) -------------- -------------- NET CASH PROVIDED BY OPERATING ACTIVITIES 174,342 580,397 INVESTING ACTIVITIES Oil and gas prospect generation costs (659,503) (518,111) Proceeds from sales of oil and gas prospects 0 1,018,289 Purchases of property and equipment (317,179) (208,158) Development costs - Petroport (701,441) (50,311) Increase in other assets (11,359) 0 Funds escrowed for abandonment costs (357,632) (339,999) Reduction of escrowed abandonment fund 593,830 0 Abandonment of oil and gas properties 0 (569,147) Exploration and development costs (92,618) (10,627) -------------- -------------- NET CASH (USED IN) INVESTING ACTIVITIES (1,545,902) (678,064) FINANCING ACTIVITIES Net proceeds from the exercise of stock options and other (4,192) 13,126 -------------- -------------- NET CASH PROVIDED BY (USED IN) FINANCING ACTIVITIES (4,192) 13,126 (DECREASE) IN CASH (1,375,752) (84,541) CASH AT BEGINNING OF YEAR 1,756,294 1,207,323 -------------- -------------- CASH AT SEPTEMBER 30 $ 380,542 $ 1,122,782 ============== ============== SUPPLEMENTARY CASH FLOW INFORMATION Interest paid $ 212,497 $ 110,470 ============== ============== Income taxes paid $ (109,639) $ 39,600 ============== ==============
6 BLUE DOLPHIN ENERGY COMPANY AND SUBSIDIARIES FOOTNOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS UNAUDITED SEPTEMBER 30, 1998 EARNINGS PER SHARE Effective December 31, 1997, the Company adopted Statement of Financial Accounting Standards No. 128 (SFAS No. 128), Earnings per Share. SFAS No. 128 replaces the presentation of primary earnings per share (EPS) with the presentation of basic EPS, which excludes dilution and is computed by dividing income available to common stockholders by the weighted-average number of shares of common stock outstanding for the period. SFAS No. 128 also requires dual presentation of basic EPS and diluted EPS on the face of the income statement and requires a reconciliation of the numerators and denominators of basic EPS and diluted EPS. The following table provides a reconciliation between basic and diluted earnings per share: Weighted average common shares outstanding and dilutive Per Net potential share income common shares amount -------- --------------- -------- Nine Months ended September 30, 1998: Basic earnings $ 53,488 4,491,847 $ 0.01 Effect of dilutive stock options 11,772 ---------- ---------- -------- Diluted earnings $ 53,488 4,503,619 $ 0.01 ========== ========== ======== Nine Months ended September 30, 1997: Basic Earnings $ 666,980 4,456,075 $ 0.15 Effect of dilutive stock options 54,095 ---------- ---------- -------- $ 666,980 4,510,170 $ 0.15 ========== ========= ======== 7 BLUE DOLPHIN ENERGY COMPANY AND SUBSIDIARIES FOOTNOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS UNAUDITED (Continued) LEASES The Company entered into a new office lease with an effective date of September 1, 1998. The following is a schedule of future minimum lease payments required under long-term noncancelable operating leases: YEARS ENDING FUTURE MINIMUM DECEMBER 31, LEASE PAYMENTS ------------ -------------- 1998 $ 34,077 1999 136,310 2000 136,310 2001 136,310 2002 136,310 Thereafter 595,723 -------------- $ 1,175,040 ============== RECENTLY ISSUED ACCOUNTING PRONOUNCEMENTS In June 1997, the Financial Accounting Standards Board (FASB) issued Statement of Financial Accounting Standards No. 130 Reporting Comprehensive Income (SFAS No. 130), which establishes standards for reporting and display of comprehensive income and its components. Adoption by the Company of SFAS No. 130 effective January 1, 1998, has had no impact to the Company's financial statements presented herein. Statement of Financial Accounting Standards No. 133, Accounting for Derivative Instruments and Hedging Activities (SFAS No. 133), was issued by the Financial Accounting Standards Board in June 1998. SFAS No. 133 standardizes the accounting for derivative instruments, including certain derivative instruments embedded in other contracts. The Company will adopt SFAS No. 133 beginning in calendar year 2000. The Company has not determined the impact that SFAS No. 133 will have on its financial statements and believes that such determination will not be meaningful until closer to the date of initial adoption. 8 BLUE DOLPHIN ENERGY COMPANY AND SUBSIDIARIES ITEM 2. MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS The following is a review of certain aspects of the financial condition and results of operations of the Company and should be read in conjunction with the Condensed Consolidated Financial Statements included in Item 1. of this report. Certain of the statements included below, including those regarding future financial performance or results, or that are not historical facts, are or contain "forward-looking" information as that term is defined in the Securities Act of 1933, as amended. The words "expect," "believe," "anticipate," "project," "estimate," and similar expressions are intended to identify forward-looking statements. The Company cautions readers that any such statements are not guarantees of future performance or events and such statements involve risks, uncertainties and assumptions, including but not limited to industry conditions, prices of crude oil and natural gas, regulatory changes, general economic conditions, interest rates, competition, and other factors discussed below. Should one or more of these risks or uncertainties materialize or should the underlying assumptions prove incorrect, actual results and outcomes may differ materially from those indicated in the forward-looking statements. Readers are cautioned not to place undue reliance on these forward-looking statements which speak only as of the date hereof. The Company undertakes no obligation to republish revised forward-looking statements to reflect events or circumstances after the date hereof or to reflect the occurrence of unanticipated events. FINANCIAL CONDITION At September 30, 1998, the Company's working capital (current assets less current liabilities) was $437,541, representing a decrease of $1,187,792 as compared with working capital of $1,625,333 at December 31, 1997. The decrease in working capital is attributable to planned investments in longer term, high potential programs. Approximately $700,000 was invested in the Petroport project and $650,000 to generate oil & gas prospects. Pursuant to the rules of the full cost method of accounting for oil and gas properties, $976,779 and $992,293 of lease acquisition costs associated with the Company's oil and gas prospect generation activities, which costs the Company expects to recover in 1998 or early 1999 through sale of prospects, are excluded from working capital at September 30, 1998 and December 31, 1997, respectively. The Company maintains a $10,000,000 reducing revolving credit facility with Bank One, Texas, N.A. On August 1, 1998, the borrowing base was adjusted to $1,040,000, reducing by $60,000 per month beginning September 1, 1998. The borrowing base and reducing amount are redetermined semi-annually. The maturity date is January 14, 2000, when the then outstanding principal balance, if any, is due and payable. The current outstanding balance under the credit facility is $10,000. In July 1998, the Company renegotiated the terms of its supplemental surety bonds that provide for certain of the estimated future abandonment obligations associated with the Buccaneer Field. The supplemental surety bonds total $1,300,000. The previous terms required the escrowing of $10,000 per month until the bonds were fully funded. Under the new terms, the Company is no longer required to escrow funds. In July 1998, approximately $593,000 of escrowed funds were released to the Company. 9 BLUE DOLPHIN ENERGY COMPANY AND SUBSIDIARIES ITEM 2. MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS (Continued) Offshore activity in the vicinity of the Blue Dolphin Pipeline System remains active. In February 1998, an existing producer / shipper completed a new well. In October 1998, a new field discovery was tied into the system. The Company has entered into a purchase agreement with a Texas based company to acquire a Gulf Coast pipeline system which totals approximately 75 miles of pipeline of several sizes. The purchase agreement provides for certain preconditions being met to the satisfaction of the Company. The purchase is expected to close in the first quarter of 1999. Future utilization of the Company's pipelines and related facilities will depend upon the success of drilling programs in the pipeline corridors, and attraction and retention of producer / shippers to the systems. The Company will remove an inactive satellite platform and perform required site clearance in its' Buccaneer Field during the fourth quarter of 1998, at an estimated cost of approximately $231,000. In September 1997, the Company entered into an agreement with industry participants, whereby in exchange for certain participation rights, these companies partially funded the costs associated with the Company's 1997/1998 offshore prospect generation program. The remaining program costs are reimbursed to the Company as prospects are developed and leases acquired. The program focus area includes approximately 2,000,000 acres in Federal waters in the western Gulf of Mexico covered by 3-D seismic data. The Company had previously entered into a multi- year 3-D seismic data acquisition and licensing agreement, whereby a minimum of $1,500,000 has been committed over a 5 year period to acquire 3-D seismic data. Under the agreement the Company has access to over 2,000,000 acres of 3-D seismic data, primarily in the western Gulf of Mexico, and over 200,000 line miles of close grid 2-D seismic data. Additionally, in March 1998, the program participants agreed to expand the program area with a focus in Texas State waters along the Gulf Coast. The participants reimbursed the Company upfront for additional 3-D seismic costs. The initial program with these partners has terminated. At the August 26, 1998 western Gulf of Mexico federal lease sale, the participants submitted a successful bid on a lease block. In addition, the Company, along with certain of the participants, submitted bids on two additional lease blocks, one of which has been awarded. The bid on the remaining lease block is currently being evaluated by the Minerals Management Service. A decision is expected within 90 days. The Company's participation in the above two lease blocks is 30%. Acquisition costs, to the Company's interest, are $60,048 for the lease awarded and $49,248 for the pending lease. The Company currently holds interests in two lease blocks prospective for oil and gas in the High Island Area of the Gulf of Mexico. The lease blocks were acquired in January 1996. Approximately $825,000 was invested to acquire the two leases, in addition to approximately $86,000 for lease rentals and $65,000 associated with technical development of the prospects. A 43.75% interest in each of these prospective lease blocks has been sold. Efforts to sell the remaining 56.25% interest in each lease block are ongoing. An exploratory well was drilled in August 1998 on a lease block that the Company sold in July 1997. The well was dry and has been plugged and abandoned. Another prospect on this lease is currently being evaluated. 10 BLUE DOLPHIN ENERGY COMPANY AND SUBSIDIARIES ITEM 2. MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS (Continued) In order to enhance the productivity of the prospect generation program, the Company has transitioned from use of consulting geologists and geophysicists to a 100% in house effort. A highly experienced team of geologists and geophysicists, utilizing state of the art work stations, has been assembled. The Company currently is also seeking participants for available interests in its 1998/1999 program. Additionally, funding is being sought which would permit the Company to directly participate as a working interest owner in and be designated operator for prospects generated. The Company believes the necessary funding can be in place by year end. In the first quarter 1998, the Company drilled an unsuccessful well on its Embar Field acreage in west Texas. The Company has terminated the farmin and lease option agreement covering the acreage following reevaluation of the risks of future drilling in light of the outcome of the initial well. Drilling and workover costs incurred to the Company's interest were approximately $275,000. Development of the Petroport deepwater terminal and offshore storage facility continues to proceed as anticipated. The design, engineering, costing and overall facility commercial evaluation have been completed, with favorable results. Discussions have commenced with prospective partners who would participate in taking the project forward. The facility has been designed by engineering firms retained by the Company, and will be located 45 miles off the Texas coast in approximately 120 feet of water. The design incorporates subsea salt caverns for the storage of crude oil and refined products, and three single point mooring buoys to enable offloading of two vessels simultaneously. The design capacity of the facility will be 1.25 million barrels per day. Crude will be delivered by pipeline to shore, with access to the major Texas and Mid- Continent refining centers. Petroport will offer an efficient and cost effective alternative for receipt of imported crude oil. The Company believes Petroport's commercial success will be driven primarily by economies of scale derived from use of larger fully loaded tankers discharging short haul cargoes from Venezuela and Mexico into Petroport, and efficiencies gained by supertankers discharging intermediate and long haul West African North Sea, and Persian Gulf crudes directly into Petroport versus current use of lightering operations. Petroport will also be available to serve producers of deepwater discoveries in the western Gulf of Mexico. Petroport's future business environment is expected to be characterized by a continuing significant requirement by refiners for imports, with use of short haul crudes as the dominant source of foreign supply to Texas Gulf coast refineries. Oil transportation savings afforded by Petroport, combined with the Texas Gulf coast market demand for imported crude will, the Company believes, provide a sound and strong outlook for Petroport. Cost of the offshore terminal and its onshore support facilities is estimated to be $527 million. The Company expects to submit the Petroport deepwater port license application and associated permit requests in 1999, with operations planned to commence in the year 2002. The Company has conducted a review of its computer software to 11 BLUE DOLPHIN ENERGY COMPANY AND SUBSIDIARIES ITEM 2. MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS (Continued) identify the systems that could be affected by the "Year 2000" issue. The Year 2000 issue results from computer programs being written using two digits (rather than four) to define the applicable year. As a result, certain of the Company's programs that have time-sensitive software may recognize a date using "00" as the year 1900 rather than the year 2000. This calculation could result in a major system failure or miscalculations. In connection with its assessment of Year 2000 compliance, the Company has reviewed its business application software and is not aware of any matters at this time that would result in material adverse consequences to the Company. The Company is implementing procedures to confirm Year 2000 compliance with all third parties with which it has material relationships. As of September 30, 1998, the Company has incurred minimal costs in connection with Year 2000 compliance, and intends to complete its Year 2000 compliance projects by July 1999. In general, the Company believes that it has or can obtain adequate capital resources and liquidity to continue to finance and otherwise meet its anticipated business requirements. The availability of capital resources may, however, affect the Company's timing for major pipeline acquisitions, further development of the Buccaneer Field, growth in oil and gas prospect generation activities and the Petroport project. RESULTS OF OPERATIONS The Company reported net income for the nine months ended September 30, 1998, ("current period") of $53,488, compared to net income of $666,980 reported for the nine months ended September 30, 1997 ("previous period"). REVENUES: Revenues for the current period decreased by $1,013,016 or 27% to $2,796,090 compared to revenues of $3,809,106 reported for the previous period. Revenues from pipeline operations decreased by $983,512 or 31% from the previous period due to a decrease in oil transportation revenues of $1,045,966, primarily due to the loss of a producer/shipper in October 1997. The decrease in oil transportation revenues was offset in part by an increase in gas transportation revenues of $62,454, due to new wells tied into the pipeline system during 1997 and 1998. Revenues from oil and gas sales, and operating fees for the current period decreased by $29,503 from those of the previous period. Operating fees declined $32,985, due to normal production declines. COSTS AND EXPENSES: Current period lease operating expenses decreased $49,113 or 10% from those of the previous period. The decrease is due primarily to lower insurance costs. 12 BLUE DOLPHIN ENERGY COMPANY AND SUBSIDIARIES ITEM 2. MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS (Continued) Repair and maintenance costs for the current period decreased by $117,837, due in part to nonrecurring repairs and modifications to the Buccaneer Field production platforms and facilities of approximately $65,000, incurred in the previous period. General and administrative expenses for the current period increased $105,827 or 11% from the previous period, principally due to an increase in staff costs and consulting fees of approximately $100,908, associated with potential asset acquisitions. 13 BLUE DOLPHIN ENERGY COMPANY AND SUBSIDIARIES PART II. OTHER INFORMATION ITEM 6. EXHIBITS AND REPORT ON FORM 8-K A) Exhibits - None B) Form 8-K - None 14 BLUE DOLPHIN ENERGY COMPANY AND SUBSIDIARIES 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 thereunto duly authorized. By: BLUE DOLPHIN ENERGY COMPANY Date: 11/6/98 /s/ Michael J. Jacobson Michael J. Jacobson President and Chief Executive Officer /s/ G. Brian Lloyd G. Brian Lloyd Vice President, Treasurer 15 EX-27 2 FINANCIAL DATA SCHEDULE
5 THIS SCHEDULE CONTAINS SUMMARY FINANCIAL INFORMATION EXTRACTED FROM BLUE DOLPHIN ENERGY COMPANY AND SUBSIDIARIES CONSOLIDATED FINANCIAL STATEMENTS AND INCORPORATED HEREIN BY REFERENCE. 9-MOS DEC-31-1998 SEP-30-1998 380,542 0 1,021,557 0 18,335 1,538,821 26,001,531 5,074,758 25,043,651 1,101,280 2,060,600 0 0 44,918 20,627,705 25,043,651 315,889 2,796,091 596,882 1,520,855 0 0 159,589 116,443 (62,955) 53,488 0 0 0 53,488 .01 .01
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