BLUE
DOLPHIN ENERGY COMPANY
|
|
FORM
10-Q 9/30/18
|
☑
|
QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES
EXCHANGE ACT OF 1934
|
☐
|
TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES
EXCHANGE ACT OF 1934
|
Delaware
|
|
73-1268729
|
(State
or other jurisdiction of incorporation or
organization)
|
|
(I.R.S.
Employer Identification No.)
|
801 Travis Street, Suite 2100, Houston, Texas
|
|
77002
|
(Address
of principal executive offices)
|
|
(Zip
Code)
|
713-568-4725
|
(Registrant’s
telephone number, including area code)
|
Large
accelerated filer
|
☐
|
Accelerated
filer
|
☐
|
Non-accelerated
filer
|
☐ (Do not check
if a smaller reporting company)
|
Smaller
reporting company
|
☑
|
BLUE
DOLPHIN ENERGY COMPANY
|
|
FORM
10-Q 9/30/18
|
GLOSSARY OF SELECTED ENERGY AND FINANCIAL TERMS
|
4
|
|
|
|
|
PART I. FINANCIAL INFORMATION
|
6
|
|
ITEM 1. FINANCIAL STATEMENTS
|
6
|
|
|
Consolidated Balance Sheets (Unaudited)
|
6
|
|
Consolidated Statements of Operations (Unaudited)
|
7
|
|
Consolidated Statements of Cash Flows (Unaudited)
|
8
|
|
Notes to Consolidated Financial Statements
|
9
|
ITEM 2. MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL
CONDITION AND RESULTS OF OPERATIONS
|
36
|
|
ITEM 3. QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET
RISK
|
53
|
|
ITEM 4. CONTROLS AND PROCEDURES
|
53
|
|
|
|
|
PART II. OTHER INFORMATION
|
54
|
|
ITEM 1. LEGAL PROCEEDINGS
|
54
|
|
ITEM 1A. RISK FACTORS
|
54
|
|
ITEM 2. UNREGISTERED SALES OF EQUITY SECURITIES AND USE OF
PROCEEDS
|
54
|
|
ITEM 3. DEFAULTS UPON SENIOR SECURITIES
|
55
|
|
ITEM 4. MINE SAFETY DISCLOSURES
|
55
|
|
ITEM 5. OTHER INFORMATION
|
55
|
|
ITEM 6. EXHIBITS
|
55
|
|
|
|
|
SIGNATURES
|
56
|
BLUE
DOLPHIN ENERGY COMPANY
|
|
FORM
10-Q 9/30/18
|
BLUE
DOLPHIN ENERGY COMPANY
|
|
FORM
10-Q 9/30/18
|
BLUE
DOLPHIN ENERGY COMPANY
|
|
FORM
10-Q 9/30/18
|
BLUE
DOLPHIN ENERGY COMPANY
|
|
FORM
10-Q 9/30/18
|
|
September 30,
|
December 31,
|
|
2018
|
2017
|
|
(in
thousands, except share amounts)
|
|
ASSETS
|
|
|
CURRENT
ASSETS
|
|
|
Cash and cash
equivalents
|
$24
|
$495
|
Restricted
cash
|
49
|
49
|
Accounts
receivable, net
|
1,669
|
1,357
|
Accounts
receivable, related party
|
-
|
653
|
Prepaid
expenses and other current assets
|
447
|
1,207
|
Deposits
|
194
|
129
|
Inventory
|
2,627
|
3,089
|
Refundable
federal income tax, current
|
108
|
-
|
Total current
assets
|
5,118
|
6,979
|
|
|
|
LONG-TERM
ASSETS
|
|
|
Total
property and equipment, net
|
65,109
|
64,597
|
Restricted
cash, noncurrent
|
1,602
|
1,602
|
Surety
bonds
|
230
|
230
|
Deferred tax
assets, net
|
108
|
-
|
Total
long-term assets
|
67,049
|
66,429
|
|
|
|
TOTAL
ASSETS
|
$72,167
|
$73,408
|
|
|
|
LIABILITIES
AND STOCKHOLDERS' EQUITY (DEFICIT)
|
|
|
CURRENT
LIABILITIES
|
|
|
Long-term
debt less unamortized debt issue costs, current portion, in
default
|
$34,988
|
35,544
|
Long-term
debt, related party, current portion, in default
|
6,532
|
4,000
|
Interest
payable, in default
|
2,734
|
2,135
|
Interest
payable, related party, in default
|
1,374
|
892
|
Accounts
payable
|
2,617
|
2,344
|
Accounts
payable, related party
|
1,378
|
974
|
Asset
retirement obligations, current portion
|
2,519
|
2,315
|
Accrued
expenses and other current liabilities
|
863
|
1,160
|
Accrued
arbitration award payable
|
23,128
|
27,128
|
Total current
liabilities
|
76,133
|
76,492
|
|
|
|
LONG-TERM
LIABILITIES
|
|
|
Deferred
revenues and expenses
|
10
|
42
|
Capital lease
obligation, net of current portion
|
10
|
-
|
Long-term
debt, related party, net of current portion
|
-
|
1,608
|
Total
long-term liabilities
|
20
|
1,650
|
|
|
|
TOTAL
LIABILITIES
|
76,153
|
78,142
|
|
|
|
Commitments
and contingencies (Note 18)
|
|
|
|
|
|
STOCKHOLDERS'
DEFICIT
|
|
|
Common stock
($0.01 par value, 20,000,000 shares authorized;
10,925,513
|
|
|
shares issued
at September 30, 2018 and December 31, 2017,
respectively)
|
109
|
109
|
Additional
paid-in capital
|
36,907
|
36,907
|
Retained earnings
(deficit)
|
(41,002)
|
(41,750)
|
TOTAL
STOCKHOLDERS' DEFICIT
|
(3,986)
|
(4,734)
|
|
|
|
TOTAL
LIABILITIES AND STOCKHOLDERS' DEFICIT
|
$72,167
|
$73,408
|
BLUE
DOLPHIN ENERGY COMPANY
|
|
FORM
10-Q 9/30/18
|
|
Three
Months Ended September 30,
|
Nine
Months Ended September 30,
|
||
|
2018
|
2017
|
2018
|
2017
|
|
(in
thousands, except share and per-share amounts)
|
|||
REVENUE
FROM OPERATIONS
|
|
|
|
|
Refinery
operations
|
$94,468
|
$66,133
|
$254,245
|
$174,668
|
Tolling
and terminaling
|
1,075
|
766
|
2,659
|
2,174
|
Total
revenue from operations
|
95,543
|
66,899
|
256,904
|
176,842
|
|
|
|
|
|
COST
OF OPERATIONS
|
|
|
|
|
Cost
of sales
|
93,195
|
58,786
|
245,786
|
165,185
|
Refinery
operating expenses
|
1,085
|
1,758
|
4,384
|
6,223
|
Other
operating expenses
|
33
|
68
|
133
|
183
|
Arbitration
award and associated fees
|
-
|
-
|
-
|
24,339
|
General
and administrative expenses
|
929
|
1,240
|
2,277
|
2,854
|
Depletion,
depreciation and amortization
|
478
|
455
|
1,396
|
1,356
|
Accretion
of asset retirement obligations
|
61
|
72
|
205
|
216
|
Total
cost of operations
|
95,781
|
62,379
|
254,181
|
200,356
|
|
|
|
|
|
Income
(loss) from operations
|
(238)
|
4,520
|
2,723
|
(23,514)
|
|
|
|
|
|
OTHER
INCOME (EXPENSE)
|
|
|
|
|
Easement,
interest and other income
|
18
|
27
|
20
|
410
|
Interest
and other expense
|
(760)
|
(601)
|
(2,255)
|
(2,028)
|
Gain
on disposal of property
|
-
|
-
|
-
|
1,834
|
Total
other income (expense)
|
(742)
|
(574)
|
(2,235)
|
216
|
|
|
|
|
|
Income
(loss) before income taxes
|
(980)
|
3,946
|
488
|
(23,298)
|
|
|
|
-
|
|
Income
tax benefit
|
43
|
-
|
260
|
-
|
|
|
|
|
|
Net
income (loss)
|
$(937)
|
$3,946
|
$748
|
$(23,298)
|
|
|
|
|
|
|
|
|
|
|
Income
(loss) per common share:
|
|
|
|
|
Basic
|
$(0.09)
|
$0.36
|
$0.07
|
$(2.19)
|
Diluted
|
$(0.09)
|
$0.36
|
$0.07
|
$(2.19)
|
|
|
|
|
|
Weighted
average number of common shares outstanding:
|
|
|
|
|
Basic
|
10,925,513
|
10,818,371
|
10,925,513
|
10,644,654
|
Diluted
|
10,925,513
|
10,818,371
|
10,925,513
|
10,644,654
|
|
|
|
|
|
Dividends
declared per common share outstanding
|
$0.00
|
$0.00
|
$0.00
|
$0.00
|
BLUE
DOLPHIN ENERGY COMPANY
|
|
FORM
10-Q 9/30/18
|
|
Nine Months Ended September 30,
|
|
|
2018
|
2017
|
|
(in
thousands)
|
|
OPERATING
ACTIVITIES
|
|
|
Net
income (loss)
|
$748
|
$(23,298)
|
Adjustments
to reconcile net income (loss) to net cash
|
|
|
provided by (used
in) operating activities:
|
|
|
Depletion,
depreciation and amortization
|
1,396
|
1,356
|
Deferred income
tax
|
(216)
|
-
|
Amortization of
debt issue costs
|
96
|
96
|
Accretion of asset
retirement obligations
|
205
|
216
|
Common stock issued
for services
|
-
|
30
|
Changes in
operating assets and liabilities
|
|
|
Accounts
receivable
|
(312)
|
1,395
|
Accounts
receivable, related party
|
653
|
101
|
Prepaid expenses
and other current assets
|
760
|
(585)
|
Deposits and other
assets
|
(65)
|
(25)
|
Inventory
|
462
|
(700)
|
Accrued arbitration
award
|
(4,000)
|
27,628
|
Accounts payable,
accrued expenses and other liabilities
|
1,023
|
(12,804)
|
Accounts payable,
related party
|
404
|
454
|
Net cash provided
by (used in) operating activities
|
1,154
|
(6,136)
|
|
|
|
INVESTING
ACTIVITIES
|
|
|
Capital
expenditures
|
(1,826)
|
(1,777)
|
Net cash used in
investing activities
|
(1,826)
|
(1,777)
|
|
|
|
FINANCING
ACTIVITIES
|
|
|
Proceeds from
issuance of debt
|
-
|
3,678
|
Payments on
debt
|
(723)
|
(1,120)
|
Net activity on
related-party debt
|
924
|
968
|
Net
cash provided by financing activities
|
201
|
3,526
|
Net change in cash,
cash equivalents, and restricted cash
|
(471)
|
(4,387)
|
|
|
|
CASH,
CASH EQUIVALENTS, AND RESTRICTED CASH AT BEGINNING OF
PERIOD
|
2,146
|
6,083
|
CASH,
CASH EQUIVALENTS, AND RESTRICTED CASH AT END OF PERIOD
|
$1,675
|
$1,696
|
|
|
|
Supplemental
Information:
|
|
|
Non-cash investing
and financing activities:
|
|
|
Financing of
capital expenditures via accounts payable and capital
leases
|
$82
|
$1,651
|
Financing of
guaranty fees via long-term debt, related party
|
$485
|
$171
|
Conversion of
accounts payable to short-term notes
|
$-
|
$-
|
Conversion of
related-party notes to common stock
|
$-
|
$831
|
Interest
paid
|
$2,173
|
$1,574
|
Income
taxes paid
|
$-
|
$-
|
BLUE
DOLPHIN ENERGY COMPANY
|
|
FORM
10-Q 9/30/18
|
|
Notes to Consolidated
Financial Statements
|
|
|
|
(1)
|
Organization
|
BLUE
DOLPHIN ENERGY COMPANY
|
|
FORM
10-Q 9/30/18
|
Notes
to Consolidated Financial Statements (Continued)
|
BLUE
DOLPHIN ENERGY COMPANY
|
|
FORM
10-Q 9/30/18
|
Notes
to Consolidated Financial Statements (Continued)
|
BLUE
DOLPHIN ENERGY COMPANY
|
|
FORM
10-Q 9/30/18
|
Notes
to Consolidated Financial Statements (Continued)
|
BLUE
DOLPHIN ENERGY COMPANY
|
|
FORM
10-Q 9/30/18
|
Notes
to Consolidated Financial Statements (Continued)
|
(2)
|
Basis of Presentation
|
(3)
|
Significant Accounting Policies
|
BLUE
DOLPHIN ENERGY COMPANY
|
|
FORM
10-Q 9/30/18
|
Notes
to Consolidated Financial Statements (Continued)
|
BLUE
DOLPHIN ENERGY COMPANY
|
|
FORM
10-Q 9/30/18
|
Notes
to Consolidated Financial Statements (Continued)
|
BLUE
DOLPHIN ENERGY COMPANY
|
|
FORM
10-Q 9/30/18
|
Notes
to Consolidated Financial Statements (Continued)
|
BLUE
DOLPHIN ENERGY COMPANY
|
|
FORM
10-Q 9/30/18
|
Notes
to Consolidated Financial Statements (Continued)
|
BLUE
DOLPHIN ENERGY COMPANY
|
|
FORM
10-Q 9/30/18
|
Notes
to Consolidated Financial Statements (Continued)
|
(4)
|
Business
Segment Information
|
|
Three Months Ended September 30,
|
||||||
|
2018
|
2017
|
|||||
|
(in
thousands)
|
||||||
|
Segments
|
|
|
Segment
|
|
|
|
|
Refinery
|
Tolling
and
|
Corporate
|
|
Refinery
|
Corporate
|
|
|
Operations
|
Terminaling
|
&
Other
|
Total
|
Operations
|
&
Other
|
Total
|
|
|
|
|
|
|
|
|
Net revenues
(excluding intercompany fees and sales)
|
$94,468
|
$1,075
|
$-
|
$95,543
|
$66,899
|
$-
|
$66,899
|
Intercompany fees
and sales
|
(873)
|
873
|
-
|
-
|
-
|
-
|
-
|
Operation costs and
expenses(1)
|
|
|
|
|
|
|
|
Cost of
materials and other
|
(92,571)
|
-
|
-
|
(92,571)
|
(58,786)
|
-
|
(58,786)
|
Operating expenses
(excluding depreciation and amortization and general and
administrative expenses presented below)
|
(1,085)
|
(624)
|
(94)
|
(1,803)
|
(1,758)
|
(140)
|
(1,898)
|
Segment
contribution margin
|
$(61)
|
$1,324
|
$(94)
|
$1,169
|
$6,355
|
$(140)
|
$6,215
|
General and
administrative expenses
|
(375)
|
(65)
|
(489)
|
(929)
|
(913)
|
(327)
|
(1,240)
|
Depreciation and
amortization
|
(432)
|
(46)
|
-
|
(478)
|
(452)
|
(3)
|
(455)
|
Interest and other
non-operating expenses, net
|
|
|
|
(742)
|
|
|
(574)
|
|
|
|
|
|
|
|
|
Income (loss)
before income taxes
|
|
|
|
(980)
|
|
|
3,946
|
|
|
|
|
|
|
|
|
Income tax
benefit
|
|
|
|
43
|
|
|
-
|
|
|
|
|
|
|
|
|
Net
income (loss)
|
|
|
|
$(937)
|
|
|
$3,946
|
|
|
|
|
|
|
|
|
Capital
expenditures
|
$372
|
$223
|
$-
|
$595
|
$539
|
$-
|
$539
|
|
|
|
|
|
|
|
|
Identifiable
assets
|
$51,816
|
$19,425
|
$926
|
$72,167
|
$70,792
|
$2,068
|
$72,860
|
(1)
|
Operation
costs within Refinery Operations includes the arbitration award and
associated fees. Operation cost within Tolling and Terminaling
includes terminal operating expenses, an allocation of other costs
(e.g. insurance and maintenance), and associated refinery fuel
costs. Operation cost within Corporate and Other includes expenses
associated with our pipeline assets and oil and gas leasehold
interests (such as accretion).
|
BLUE
DOLPHIN ENERGY COMPANY
|
|
FORM
10-Q 9/30/18
|
Notes
to Consolidated Financial Statements (Continued)
|
|
Nine Months Ended September 30,
|
||||||
|
2018
|
2017
|
|||||
|
(in
thousands)
|
||||||
|
Segments
|
|
|
Segment
|
|
|
|
|
Refinery
|
Tolling
and
|
Corporate
|
|
Refinery
|
Corporate
|
|
|
Operations
|
Terminaling
|
&
Other
|
Total
|
Operations
|
&
Other
|
Total
|
|
|
|
|
|
|
|
|
Net revenues
(excluding intercompany fees and sales)
|
$254,245
|
$2,659
|
$-
|
$256,904
|
$176,842
|
$-
|
$176,842
|
Intercompany fees
and sales
|
(2,419)
|
2,419
|
-
|
-
|
-
|
-
|
-
|
Operation costs and
expenses(1)
|
|
|
|
|
|
|
|
Cost of
materials and other
|
(244,380)
|
-
|
-
|
(244,380)
|
(189,525)
|
-
|
(189,525)
|
Operating expenses
(excluding depreciation and amortization and general and
administrative expenses presented below)
|
(3,698)
|
(2,092)
|
(338)
|
(6,128)
|
(6,223)
|
(399)
|
(6,622)
|
Segment
contribution margin
|
$3,748
|
$2,986
|
$(338)
|
$6,396
|
$(18,906)
|
$(399)
|
$(19,305)
|
General and
administrative expenses
|
(929)
|
(156)
|
(1,192)
|
(2,277)
|
(1,960)
|
(894)
|
(2,854)
|
Depreciation and
amortization
|
(1,258)
|
(138)
|
-
|
(1,396)
|
(1,348)
|
(8)
|
(1,356)
|
Interest and other
non-operating income (expenses), net(2)
|
|
|
|
(2,235)
|
|
|
217
|
|
|
|
|
|
|
|
|
Income (loss)
before income taxes
|
|
|
|
488
|
|
|
(23,298)
|
|
|
|
|
|
|
|
|
Income tax
benefit
|
|
|
|
260
|
|
|
-
|
|
|
|
|
|
|
|
|
Net
income (loss)
|
|
|
|
$748
|
|
|
$(23,298)
|
|
|
|
|
|
|
|
|
Capital
expenditures
|
$1,141
|
$767
|
$-
|
$1,908
|
$3,428
|
$-
|
$3,428
|
|
|
|
|
|
|
|
|
Identifiable
assets
|
$51,816
|
$19,425
|
$926
|
$72,167
|
$70,792
|
$2,068
|
$72,860
|
(1)
|
Operation
costs within Refinery Operations includes the arbitration award and
associated fees. Operation cost within Tolling and Terminaling
includes terminal operating expenses, an allocation of other costs
(e.g. insurance and maintenance), and associated refinery fuel
costs. Operation cost within Corporate and Other includes expenses
associated with our pipeline assets and oil and gas leasehold
interests (such as accretion).
|
(2)
|
Reflects
FLNG Land II, Inc. easement revenue in 2017. See “Note (18)
Commitments and Contingencies – FLNG Easements” for
further discussion related to FLNG.
|
(5)
|
NPS Assignment
|
BLUE
DOLPHIN ENERGY COMPANY
|
|
FORM
10-Q 9/30/18
|
Notes
to Consolidated Financial Statements (Continued)
|
(6)
|
Prepaid Expenses and Other Current Assets
|
|
September 30,
|
December 31,
|
|
2018
|
2017
|
|
(in
thousands)
|
|
|
|
|
Prepaid
insurance
|
$408
|
$294
|
Other
prepaids
|
39
|
-
|
Prepaid
crude oil and condensate
|
-
|
913
|
|
|
|
|
$447
|
$1,207
|
(7)
|
Inventory
|
|
September 30,
|
December 31,
|
|
2018
|
2017
|
|
(in
thousands)
|
|
|
|
|
Crude
oil and condensate
|
$1,571
|
$961
|
AGO
|
449
|
213
|
HOBM
|
256
|
1,558
|
Naphtha
|
234
|
170
|
Chemicals
|
94
|
162
|
Propane
|
18
|
17
|
LPG
mix
|
5
|
8
|
|
|
|
|
$2,627
|
$3,089
|
(8)
|
Property, Plant and Equipment, Net
|
|
September 30,
|
December 31,
|
|
2018
|
2017
|
|
(in
thousands)
|
|
|
|
|
Refinery
and facilities
|
$54,210
|
$51,432
|
Land
|
566
|
566
|
Other
property and equipment
|
747
|
653
|
|
55,523
|
52,651
|
|
|
|
Less:
Accumulated depletion, depreciation, and amortization
|
(9,892)
|
(8,495)
|
|
45,631
|
44,156
|
|
|
|
Construction
in progress
|
19,478
|
20,441
|
|
|
|
|
$65,109
|
$64,597
|
BLUE
DOLPHIN ENERGY COMPANY
|
|
FORM
10-Q 9/30/18
|
Notes
to Consolidated Financial Statements (Continued)
|
(9)
|
Related Party Transactions
|
BLUE
DOLPHIN ENERGY COMPANY
|
|
FORM
10-Q 9/30/18
|
Notes
to Consolidated Financial Statements (Continued)
|
BLUE
DOLPHIN ENERGY COMPANY
|
|
FORM
10-Q 9/30/18
|
Notes
to Consolidated Financial Statements (Continued)
|
|
September 30,
|
December 31,
|
|
2018
|
2017
|
|
(in
thousands)
|
|
|
|
|
LEH
|
$4,303
|
$4,000
|
Ingleside
|
1,263
|
1,169
|
Jonathan
Carroll
|
966
|
439
|
|
|
|
|
6,532
|
5,608
|
|
|
|
Less:
Long-term debt, related party,
|
|
|
current
portion
|
(6,532)
|
(4,000)
|
|
|
|
|
$-
|
$1,608
|
BLUE
DOLPHIN ENERGY COMPANY
|
|
FORM
10-Q 9/30/18
|
Notes
to Consolidated Financial Statements (Continued)
|
|
Three
Months Ended September 30,
|
Nine
Months Ended September 30,
|
||||||
|
2018
|
2017
|
2018
|
2017
|
||||
|
(in
thousands, except percent amounts)
|
|||||||
|
|
|
|
|
|
|
|
|
Refinery
operations
|
|
|
|
|
|
|
|
|
LEH
|
$27,299
|
28.7%
|
$20,803
|
31.1%
|
$73,415
|
28.6%
|
$59,786
|
33.8%
|
Other
customers
|
67,169
|
70.4%
|
45,330
|
67.8% |
180,830
|
70.4%
|
114,882
|
65.0%
|
Tolling
and terminaling
|
|
|
|
|
|
|
|
|
LEH
|
-
|
0.0%
|
56
|
0.1%
|
-
|
0.0%
|
675
|
0.4%
|
Other
customers
|
1,075
|
0.9%
|
710
|
1.0%
|
2,659
|
1.0%
|
1,499
|
0.8%
|
|
|
|
|
|
|
|
|
|
|
$95,543
|
100.0%
|
$66,899
|
100.0%
|
$256,904
|
100.0%
|
$176,842
|
100.0%
|
|
Three Months Ended September 30,
|
Nine Months Ended September 30,
|
||||||
|
2018
|
2017
|
2018
|
2017
|
||||
|
Amount
|
per bbl
|
Amount
|
per bbl
|
Amount
|
per bbl
|
Amount
|
per bbl
|
|
(in
thousands, except per bbl amounts)
|
|||||||
|
|
|
|
|
|
|
|
|
Blue
Dolphin's direct operating expenses
|
|
|
|
|
|
|
|
|
$1,033
|
0.85
|
$1,674
|
1.46
|
$4,175
|
1.22
|
$5,927
|
1.84
|
|
LEH
operating fee
|
52
|
0.04
|
84
|
0.07
|
209
|
0.06
|
296
|
0.09
|
|
|
|
|
|
|
|
|
|
Total
refinery operating expenses
|
$1,085
|
$0.89
|
$1,758
|
$1.53
|
$4,384
|
$1.28
|
$6,223
|
$1.93
|
BLUE
DOLPHIN ENERGY COMPANY
|
|
FORM
10-Q 9/30/18
|
Notes
to Consolidated Financial Statements (Continued)
|
|
Three Months Ended September 30,
|
Nine Months Ended September 30,
|
||
|
2018
|
2017
|
2018
|
2017
|
|
(in
thousands)
|
|||
|
|
|
|
|
Jonathan
Carroll
|
$180
|
$171
|
$519
|
$521
|
LEH
|
166
|
164
|
489
|
542
|
Ingleside
|
25
|
23
|
96
|
69
|
|
|
|
|
|
|
$371
|
$358
|
$1,104
|
$1,132
|
(10)
|
Accrued Expenses and Other Current Liabilities
|
|
September
30,
|
December
31,
|
|
2018
|
2017
|
|
(in
thousands)
|
|
|
|
|
Board
of director fees payable
|
$270
|
$207
|
Other
payable
|
205
|
116
|
Unearned
revenue
|
125
|
450
|
Property
taxes
|
122
|
131
|
Customer
deposits
|
109
|
109
|
Excise
and income taxes payable
|
32
|
79
|
Insurance
|
-
|
68
|
|
|
|
|
$863
|
$1,160
|
(11)
|
Long-Term Debt, Net
|
|
September 30,
|
December 31,
|
|
2018
|
2017
|
|
(in
thousands)
|
|
|
|
|
First
Term Loan Due 2034 (in default)
|
$22,663
|
$23,199
|
Second
Term Loan Due 2034 (in default)
|
9,344
|
9,502
|
Notre
Dame Debt (in default)
|
4,978
|
4,978
|
Capital
leases
|
51
|
-
|
|
$37,036
|
$37,679
|
|
|
|
Less:
Current portion of long-term debt, net
|
(34,988)
|
(35,544)
|
|
|
|
Less:
Unamortized debt issue costs
|
(2,038)
|
(2,135)
|
|
|
|
|
$10
|
$-
|
BLUE DOLPHIN ENERGY
COMPANY
|
FORM 10-Q
9/30/18
|
Notes to
Consolidated Financial Statements (Continued)
|
|
|
September 30,
|
December 31,
|
|
2018
|
2017
|
|
(in
thousands)
|
|
|
|
|
First
Term Loan Due 2034 (in default)
|
$1,674
|
$1,674
|
Second
Term Loan Due 2034 (in default)
|
768
|
768
|
|
|
|
Less:
Accumulated amortization
|
(404)
|
(307)
|
|
|
|
|
$2,038
|
$2,135
|
|
September 30,
|
December 31,
|
|
2018
|
2017
|
|
(in
thousands)
|
|
|
|
|
Notre
Dame Debt (in default)
|
$2,643
|
$2,046
|
BDPL
Loan Agreement (related party, in default)
|
1,374
|
892
|
Second
Term Loan Due 2034 (in default)
|
52
|
49
|
First
Term Loan Due 2034 (in default)
|
39
|
40
|
|
|
|
|
4,108
|
3,027
|
|
|
|
Less:
Interest payable, current portion
|
(4,108)
|
(3,027)
|
|
|
|
Long-term
interest payable, net of current portion
|
$-
|
$-
|
BLUE DOLPHIN ENERGY
COMPANY
|
FORM 10-Q
9/30/18
|
Notes to
Consolidated Financial Statements (Continued)
|
|
BLUE
DOLPHIN ENERGY COMPANY
|
|
FORM
10-Q 9/30/18
|
Notes
to Consolidated Financial Statements (Continued)
|
BLUE
DOLPHIN ENERGY COMPANY
|
|
FORM
10-Q 9/30/18
|
Notes
to Consolidated Financial Statements (Continued)
|
|
September
30,
|
December
31,
|
|
2018
|
2017
|
|
(in
thousands)
|
|
|
|
|
Crane
|
$94
|
$-
|
Less:
accumulated depreciation
|
(10)
|
-
|
|
|
|
|
$84
|
$-
|
(12)
|
Asset Retirement Obligations
|
|
September
30,
|
December
31,
|
|
2018
|
2017
|
|
(in
thousands)
|
|
|
|
|
Asset
retirement obligations, at the beginning of the period
|
$2,315
|
$2,028
|
Liabilities
settled
|
(1)
|
-
|
Accretion
expense
|
205
|
287
|
|
2,519
|
2,315
|
Less:
asset retirement obligations, current portion
|
(2,519)
|
(2,315)
|
|
|
|
Long-term
asset retirement obligations, at the end of the period
|
$-
|
$-
|
(13)
|
Treasury Stock
|
BLUE
DOLPHIN ENERGY COMPANY
|
|
FORM
10-Q 9/30/18
|
Notes
to Consolidated Financial Statements (Continued)
|
(14)
|
Concentration of Risk
|
BLUE
DOLPHIN ENERGY COMPANY
|
|
FORM
10-Q 9/30/18
|
Notes
to Consolidated Financial Statements (Continued)
|
|
Three Months
Ended September 30,
|
Nine Months
Ended September 30,
|
||||||
|
2018
|
2017
|
2018
|
2017
|
||||
|
(in
thousands)
|
|||||||
|
|
|
|
|
|
|
|
|
LPG
mix
|
$-
|
0.0%
|
$-
|
0.0%
|
$3
|
0.0%
|
$121
|
0.1%
|
Naphtha
|
24,127
|
25.5%
|
14,266
|
21.6%
|
64,093
|
25.2%
|
41,283
|
24.9%
|
Jet
fuel
|
27,299
|
28.9%
|
20,803
|
31.5%
|
73,415
|
28.9%
|
56,361
|
32.8%
|
HOBM
|
21,735
|
23.0%
|
17,011
|
25.7%
|
60,594
|
23.8%
|
38,580
|
19.9%
|
AGO
|
21,307
|
22.6%
|
14,053
|
21.2%
|
56,140
|
22.1%
|
38,323
|
22.3%
|
|
|
|
|
|
|
|
|
|
|
$94,468
|
100.0%
|
$66,133
|
100.0%
|
$254,245
|
100.0%
|
$174,668
|
100.0%
|
(15)
|
Leases
|
(16)
|
Income Taxes
|
|
September 30,
|
December 31,
|
|
2018
|
2017
|
|
(in
thousands)
|
|
|
|
|
Current
|
|
|
Federal
|
$108
|
$-
|
State
|
43
|
-
|
Deferred
|
|
|
Impact
of change in enacted tax rates
|
-
|
(6,654)
|
Change
in valuation allowance
|
109
|
6,654
|
Total
provision for income taxes
|
$260
|
$-
|
BLUE
DOLPHIN ENERGY COMPANY
|
|
FORM
10-Q 9/30/18
|
Notes
to Consolidated Financial Statements (Continued)
|
|
September
30,
|
December
31,
|
|
2018
|
2017
|
|
(in
thousands)
|
|
|
|
|
Deferred
tax assets:
|
|
|
Net
operating loss and capital loss carryforwards
|
$11,814
|
$9,767
|
Accrued
arbitration award payable
|
3,048
|
4,122
|
Start-up
costs (crude oil and condensate processing facility)
|
699
|
763
|
Asset
retirement obligations liability/deferred revenue
|
6
|
495
|
AMT
credit and other
|
15
|
217
|
Total
deferred tax assets
|
14,033
|
15,365
|
|
|
|
Deferred
tax liabilities:
|
|
|
Basis
differences in property and equipment
|
(4,936)
|
(4,415)
|
Total
deferred tax liabilities
|
(4,936)
|
(4,415)
|
|
|
|
|
9,097
|
10,950
|
|
|
|
Valuation
allowance
|
(10,538)
|
(10,950)
|
|
|
|
Deferred
tax assets, net
|
$108
|
$-
|
BLUE DOLPHIN ENERGY
COMPANY
|
FORM 10-Q
9/30/18
|
Notes to
Consolidated Financial Statements (Continued)
|
|
|
Net Operating
Loss Carryforward
|
|
|
|
Pre-Ownership
Change
|
Post-Ownership
Change
|
Total
|
|
(in
thousands)
|
||
|
|
|
|
Balance
at December 31, 2016
|
$9,614
|
$23,562
|
$33,176
|
|
|
|
|
Net
operating losses
|
-
|
6,656
|
6,656
|
|
|
|
|
Balance
at December 31, 2017
|
$9,614
|
$30,218
|
$39,832
|
|
|
|
|
Net
operating losses
|
-
|
9,747
|
9,747
|
|
|
|
|
Balance
at September 30, 2018
|
$9,614
|
$39,965
|
$49,579
|
(17)
|
Earnings Per Share
|
|
Three Months Ended September 30,
|
Nine Months Ended September 30,
|
||
|
2018
|
2017
|
2018
|
2017
|
|
(in
thousands, except share and
|
|||
|
per
share amounts)
|
|||
|
|
|
|
|
Net
income (loss)
|
$(937)
|
$3,946
|
$748
|
$(23,298)
|
|
|
|
|
|
Basic
and diluted income (loss) per share
|
$(0.09)
|
$0.36
|
$0.07
|
$(2.19)
|
|
|
|
|
|
Basic and Diluted
|
|
|
|
|
Weighted
average number of shares of
|
|
|
|
|
common
stock outstanding and potential
|
|
|
|
|
dilutive
shares of common stock
|
10,925,513
|
10,818,371
|
10,925,513
|
10,644,654
|
BLUE
DOLPHIN ENERGY COMPANY
|
|
FORM
10-Q 9/30/18
|
Notes
to Consolidated Financial Statements (Continued)
|
(18)
|
Commitments and Contingencies
|
BLUE
DOLPHIN ENERGY COMPANY
|
|
FORM
10-Q 9/30/18
|
Notes
to Consolidated Financial Statements (Continued)
|
BLUE
DOLPHIN ENERGY COMPANY
|
|
FORM
10-Q 9/30/18
|
|
BLUE
DOLPHIN ENERGY COMPANY
|
|
FORM
10-Q 9/30/18
|
Management’s
Discussion and Analysis of Financial Condition and Results of
Operations (Continued)
|
BLUE
DOLPHIN ENERGY COMPANY
|
|
FORM
10-Q 9/30/18
|
Management’s
Discussion and Analysis of Financial Condition and Results of
Operations (Continued)
|
BLUE
DOLPHIN ENERGY COMPANY
|
|
FORM
10-Q 9/30/18
|
Management’s
Discussion and Analysis of Financial Condition and Results of
Operations (Continued)
|
BLUE
DOLPHIN ENERGY COMPANY
|
|
FORM
10-Q 9/30/18
|
Management’s
Discussion and Analysis of Financial Condition and Results of
Operations (Continued)
|
BLUE
DOLPHIN ENERGY COMPANY
|
|
FORM
10-Q 9/30/18
|
Management’s
Discussion and Analysis of Financial Condition and Results of
Operations (Continued)
|
BLUE
DOLPHIN ENERGY COMPANY
|
|
FORM
10-Q 9/30/18
|
Management’s
Discussion and Analysis of Financial Condition and Results of
Operations (Continued)
|
|
Three Months Ended September 30,
|
||||||
|
2018
|
2017
|
|||||
|
(in
thousands)
|
||||||
|
Segments
|
|
|
Segment
|
|
|
|
|
Refinery
|
Tolling
and
|
Corporate
|
|
Refinery
|
Corporate
|
|
|
Operations
|
Terminaling
|
&
Other
|
Total
|
Operations
|
&
Other
|
Total
|
|
|
|
|
|
|
|
|
Net revenues
(excluding intercompany fees and sales)
|
$94,468
|
$1,075
|
$-
|
$95,543
|
$66,899
|
$-
|
$66,899
|
Intercompany fees
and sales
|
(873)
|
873
|
-
|
-
|
-
|
-
|
-
|
Operation costs and
expenses(1)
|
|
|
|
|
|
|
|
Cost of materials
and other
|
(92,571)
|
-
|
-
|
(92,571)
|
(58,786)
|
-
|
(58,786)
|
Operating expenses
(excluding depreciation and amortization
|
|
|
|
|
|
|
|
and
general and administrative expenses presented below)
|
(1,085)
|
(624)
|
(94)
|
(1,803)
|
(1,758)
|
(140)
|
(1,898)
|
Segment
contribution margin
|
$(61)
|
$1,324
|
$(94)
|
$1,169
|
$6,355
|
$(140)
|
$6,215
|
General
and administrative expenses
|
(375)
|
(65)
|
(489)
|
(929)
|
(913)
|
(327)
|
(1,240)
|
EBITDA
|
$(436)
|
$1,259
|
$(583)
|
$240
|
$5,442
|
$(467)
|
$4,975
|
|
|
|
|
|
|
|
|
Depreciation and
amortization
|
(432)
|
(46)
|
-
|
(478)
|
(452)
|
(3)
|
(455)
|
Interest and other
non-operating expenses, net
|
|
|
|
(742)
|
|
|
(574)
|
|
|
|
|
|
|
|
|
Income (loss)
before income taxes
|
|
|
|
(980)
|
|
|
3,946
|
|
|
|
|
|
|
|
|
Income tax
benefit
|
|
|
|
43
|
|
|
-
|
|
|
|
|
|
|
|
|
Net
income (loss)
|
|
|
|
$(937)
|
|
|
$3,946
|
(1)
|
Operation
costs within Refinery Operations includes the arbitration award and
associated fees. Operation cost within Tolling and Terminaling
includes terminal operating expenses, an allocation of other costs
(e.g. insurance and maintenance), and associated refinery fuel
costs. Operation cost within Corporate and Other includes expenses
associated with our pipeline assets and oil and gas leasehold
interests (such as accretion).
|
BLUE DOLPHIN ENERGY
COMPANY
|
FORM 10-Q
9/30/18
|
Management’s
Discussion and Analysis of Financial Condition and Results of
Operations (Continued)
|
|
|
Nine Months Ended September 30,
|
||||||
|
2018
|
2017
|
|||||
|
(in
thousands)
|
||||||
|
Segments
|
|
|
Segment
|
|
|
|
|
Refinery
|
Tolling
and
|
Corporate
|
|
Refinery
|
Corporate
|
|
|
Operations
|
Terminaling
|
&
Other
|
Total
|
Operations
|
&
Other
|
Total
|
|
|
|
|
|
|
|
|
Net revenues
(excluding intercompany fees and sales)
|
$254,245
|
$2,659
|
$-
|
$256,904
|
$176,842
|
$-
|
$176,842
|
Intercompany fees
and sales
|
(2,419)
|
2,419
|
-
|
-
|
-
|
-
|
-
|
Operation costs and
expenses(1)
|
|
|
|
|
|
|
|
Cost of materials
and other
|
(244,380)
|
-
|
-
|
(244,380)
|
(189,525)
|
-
|
(189,525)
|
Operating expenses
(excluding depreciation and amortization
|
|
|
|
|
|
|
|
and
general and administrative expenses presented below)
|
(3,698)
|
(2,092)
|
(338)
|
(6,128)
|
(6,223)
|
(399)
|
(6,622)
|
Segment
contribution margin
|
$3,748
|
$2,986
|
$(338)
|
$6,396
|
$(18,906)
|
$(399)
|
$(19,305)
|
General
and administrative expenses
|
(929)
|
(156)
|
(1,192)
|
(2,277)
|
(1,960)
|
(894)
|
(2,854)
|
EBITDA
|
$2,819
|
$2,830
|
$(1,530)
|
$4,119
|
$(20,866)
|
$(1,293)
|
$(22,159)
|
|
|
|
|
|
|
|
|
Depreciation and
amortization
|
(1,258)
|
(138)
|
-
|
(1,396)
|
(1,348)
|
(8)
|
(1,356)
|
Interest and other
non-operating income (expenses)(2)
|
|
|
|
(2,235)
|
|
|
217
|
|
|
|
|
|
|
|
|
Income (loss)
before income taxes
|
|
|
|
488
|
|
|
(23,298)
|
|
|
|
|
|
|
|
|
Income tax
benefit
|
|
|
|
260
|
|
|
-
|
|
|
|
|
|
|
|
|
Net
income (loss)
|
|
|
|
$748
|
|
|
$(23,298)
|
(1)
|
Operation
costs within Refinery Operations includes the arbitration award and
associated fees. Operation cost within Tolling and Terminaling
includes terminal operating expenses, an allocation of other costs
(e.g. insurance and maintenance), and associated refinery fuel
costs. Operation cost within Corporate and Other includes expenses
associated with our pipeline assets and oil and gas leasehold
interests (such as accretion).
|
(2)
|
Reflects FLNG
easement revenue in 2017. See “Part I, Item 1. – Notes
to Consolidated Financial Statements – Note (18) Commitments
and Contingencies – FLNG Easements” for further
discussion related to FLNG.
|
BLUE
DOLPHIN ENERGY COMPANY
|
|
FORM
10-Q 9/30/18
|
Management’s
Discussion and Analysis of Financial Condition and Results of
Operations (Continued)
|
|
Three Months
Ended September 30,
|
Nine Months
Ended September 30,
|
||
|
2018
|
2017
|
2018
|
2017
|
|
(in
thousands, except uptime data
|
|||
|
and
percent amounts)
|
|||
|
|
|
|
|
Calendar
Days
|
92
|
92
|
273
|
273
|
Refinery
downtime
|
(3)
|
(3)
|
(24)
|
(17)
|
Operating
Days
|
89
|
89
|
249
|
256
|
|
|
|
|
|
Total
refinery throughput (bbls)
|
1,220
|
1,145
|
3,411
|
3,228
|
Operating
days:
|
|
|
|
|
bpd
|
14
|
13
|
14
|
13
|
Capacity
utilization rate
|
91.4%
|
85.8%
|
91.3%
|
84.1%
|
Calendar
days:
|
|
|
|
|
bpd
|
13
|
12
|
12
|
12
|
Capacity
utilization rate
|
88.4%
|
83.0%
|
83.3%
|
78.8%
|
|
|
|
|
|
Total
refinery production (bbls)
|
1,184
|
1,111
|
3,314
|
3,127
|
Operating
days:
|
|
|
|
|
bpd
|
13
|
12
|
13
|
12
|
Capacity
utilization rate
|
88.7%
|
83.2%
|
88.7%
|
81.4%
|
Calendar
days:
|
|
|
|
|
bpd
|
13
|
12
|
12
|
11
|
Capacity
utilization rate
|
85.8%
|
80.5%
|
80.9%
|
76.4%
|
Note:
|
The
small difference between total refinery throughput (volume
processed as input) and total refinery production (volume processed
as output) represents a combination of multiple factors including
refinery fuel use, elimination of some impurities originally
present in the crude oil, loss, and other factors.
|
BLUE
DOLPHIN ENERGY COMPANY
|
|
FORM
10-Q 9/30/18
|
Management’s
Discussion and Analysis of Financial Condition and Results of
Operations (Continued)
|
BLUE
DOLPHIN ENERGY COMPANY
|
|
FORM
10-Q 9/30/18
|
Management’s
Discussion and Analysis of Financial Condition and Results of
Operations (Continued)
|
|
Three Months
Ended September 30,
|
Nine Months
Ended September 30,
|
||
|
2018
|
2017
|
2018
|
2017
|
|
(in
thousands)
|
|||
|
|
|
|
|
Beginning cash,
cash equivalents, and restricted cash
|
$2,012
|
$2,110
|
$2,146
|
$6,083
|
|
|
|
|
|
Cash flow from
operations
|
|
|
|
|
Adjusted profit
(loss) from operations
|
(366)
|
4,505
|
2,229
|
(21,600)
|
Change in assets
and current liabilities
|
400
|
(5,673)
|
(1,075)
|
15,464
|
|
|
|
|
|
Total cash flow
from operations
|
34
|
(1,168)
|
1,154
|
(6,136)
|
|
|
|
|
|
Cash inflows
(outflows)
|
|
|
|
|
Proceeds from
issuance of debt
|
-
|
3,678
|
-
|
3,678
|
Payments on
debt
|
(248)
|
(265)
|
(723)
|
(1,120)
|
Net activity on
related-party debt
|
472
|
(2,289)
|
924
|
968
|
Capital
expenditures
|
(595)
|
(370)
|
(1,826)
|
(1,777)
|
|
|
|
|
|
Total
cash inflows (outflows)
|
(371)
|
754
|
(1,625)
|
1,749
|
|
|
|
|
|
Total change in
cash flows
|
(337)
|
(414)
|
(471)
|
(4,387)
|
|
|
|
|
|
Ending
cash, cash equivalents, and restricted cash
|
$1,675
|
$1,696
|
$1,675
|
$1,696
|
BLUE
DOLPHIN ENERGY COMPANY
|
|
FORM
10-Q 9/30/18
|
Management’s
Discussion and Analysis of Financial Condition and Results of
Operations (Continued)
|
|
September 30,
|
December 31,
|
|
2018
|
2017
|
|
(in
thousands)
|
|
|
|
|
First
Term Loan Due 2034 (in default)
|
$22,663
|
$23,199
|
Second
Term Loan Due 2034 (in default)
|
9,344
|
9,502
|
Notre
Dame Debt (in default)
|
4,978
|
4,978
|
BDPL
Loan Agreement (in default)
|
4,000
|
4,000
|
March
Ingleside Note
|
1,263
|
1,169
|
March
Carroll Note
|
966
|
439
|
Capital
Leases
|
51
|
-
|
June
LEH Note
|
303
|
-
|
|
43,568
|
43,287
|
|
|
|
Less:
Current portion of long-term debt, net
|
(41,520)
|
(39,544)
|
|
|
|
Less:
Unamoritized debt issue costs
|
(2,038)
|
(2,135)
|
|
|
|
|
|
|
|
|
|
|
$10
|
$1,608
|
BLUE
DOLPHIN ENERGY COMPANY
|
|
FORM
10-Q 9/30/18
|
Management’s
Discussion and Analysis of Financial Condition and Results of
Operations (Continued)
|
BLUE
DOLPHIN ENERGY COMPANY
|
|
FORM
10-Q 9/30/18
|
Management’s
Discussion and Analysis of Financial Condition and Results of
Operations (Continued)
|
BLUE
DOLPHIN ENERGY COMPANY
|
|
FORM
10-Q 9/30/18
|
Management’s
Discussion and Analysis of Financial Condition and Results of
Operations (Continued)
|
BLUE
DOLPHIN ENERGY COMPANY
|
|
FORM
10-Q 9/30/18
|
Management’s
Discussion and Analysis of Financial Condition and Results of
Operations (Continued)
|
BLUE
DOLPHIN ENERGY COMPANY
|
|
FORM
10-Q 9/30/18
|
Management’s
Discussion and Analysis of Financial Condition and Results of
Operations (Continued)
|
BLUE
DOLPHIN ENERGY COMPANY
|
|
FORM
10-Q 9/30/18
|
|
BLUE
DOLPHIN ENERGY COMPANY
|
|
FORM
10-Q 9/30/18
|
|
No.
|
|
Description
|
10.1
|
|
Settlement
Agreement, dated as of July 20, 2018, by and among Lazarus Energy,
LLC, Blue Dolphin Energy Company, Lazarus Energy Holdings, LLC,
Nixon Product Storage, LLC, Carroll & Carroll Financial
Holdings, L.P., and Jonathan Carroll.
|
10.2*
|
|
First
Amendment to the Settlement Agreement, dated as of October 17,
2018, by and among Lazarus Energy, LLC, Blue Dolphin Energy
Company, Lazarus Energy Holdings, LLC, Nixon Product Storage, LLC,
Carroll & Carroll Financial Holdings, L.P., and Jonathan
Carroll.
|
31.1*
|
|
Jonathan
P. Carroll Certification Pursuant to 18 U.S.C. Section 1350, as
adopted pursuant to section 302 of the Sarbanes-Oxley Act of
2002.
|
31.2*
|
|
Tommy
L. Byrd Certification Pursuant to 18 U.S.C. Section 1350, as
adopted pursuant to section 302 of the Sarbanes-Oxley Act of
2002.
|
32.1*
|
|
Jonathan
P. Carroll Certification Pursuant to 18 U.S.C. Section 1350, as
adopted pursuant to section 906 of the Sarbanes-Oxley Act of
2002.
|
32.2*
|
|
Tommy
L. Byrd Certification Pursuant to 18 U.S.C. Section 1350, as
adopted pursuant to section 906 of the Sarbanes-Oxley Act of
2002.
|
101.INS*
|
|
XBRL
Instance Document.
|
101.SCH*
|
|
XBRL
Taxonomy Schema Document.
|
101.CAL*
|
|
XBRL
Calculation Linkbase Document.
|
101.LAB*
|
|
XBRL
Label Linkbase Document.
|
101.PRE*
|
|
XBRL
Presentation Linkbase Document.
|
101.DEF*
|
|
XBRL
Definition Linkbase Document.
|
BLUE
DOLPHIN ENERGY COMPANY
|
|
FORM
10-Q 9/30/18
|
|
|
BLUE DOLPHIN ENERGY COMPANY
|
|
|
|
(Registrant)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
November
14, 2018
|
|
By:
|
/s/
JONATHAN P. CARROLL
|
|
|
|
Jonathan
P. Carroll
Chief
Executive Officer, President,
Assistant
Treasurer and Secretary
(Principal
Executive Officer)
|
|
|
|
|
|
|
|
|
|
|
|
|
November
14, 2018
|
|
By:
|
/s/
TOMMY L. BYRD
|
|
|
|
Tommy
L. Byrd
Chief
Financial Officer,
Treasurer
and Assistant Secretary
(Principal
Financial Officer)
|
|
|
|
|
|
|
|
|
By:
|
/s/ R.V. DEERE
|
Name:
|
Robert
V. Deere
|
Title:
|
Chief
Financial Officer
|
By:
|
/s/ JONATHAN CARROLL
|
Name:
|
Jonathan
Carroll
|
Title:
|
President
|
By:
|
/s/
JONATHAN CARROLL
|
Name:
|
Jonathan
Carroll
|
Title:
|
President
|
By:
|
/s/ JONATHAN CARROLL
|
Name:
|
Jonathan
Carroll
|
Title:
|
President
|
By:
|
/s/ JONATHAN CARROLL
|
Name:
|
Jonathan
Carroll
|
Title:
|
President
|
By:
|
/s/ JONATHAN
CARROLL
|
Name:
|
Lazarus
Financial, LLC
|
Title:
|
General
Partner
|
By:
|
/s/ JONATHAN
CARROLL
|
|
Jonathan
Carroll
|
1.
|
I have
reviewed this Quarterly Report on Form 10-Q of Blue Dolphin Energy
Company (the “Registrant”).
|
2.
|
Based
on my knowledge, this report does not contain any untrue statement
of a material fact or omit to state a material fact necessary to
make the statements made, in light of the circumstances under which
such statements were made, not misleading with respect to the
period covered by this report;
|
3.
|
Based
on my knowledge, the financial statements and other financial
information included in this report, fairly present in all material
respects the financial condition, results of operations and cash
flows of the Registrant as of, and for, the periods presented in
this report;
|
4.
|
The
Registrant’s other certifying officer and I are responsible
for establishing and maintaining disclosure controls and procedures
(as defined in Exchange Act Rules 13a-15(e) and 15d-15(e)) and
internal control over financial reporting (as defined in Exchange
Act Rules 13a-15(f) and 15d-15(f)) for the Registrant and we
have:
|
a)
|
Designed
such disclosure controls and procedures, or caused such disclosure
controls and procedures to be designed under our supervision, to
ensure that material information relating to the Registrant,
including its consolidated subsidiaries, is made known to us by
others within those entities, particularly during the period in
which this report is being prepared;
|
b)
|
Designed
such internal control over financial reporting, or caused such
internal control over financial reporting to be designed under our
supervision, to provide reasonable assurance regarding the
reliability of financial reporting and the preparation of financial
statements for external purposes in accordance with generally
accepted accounting principles;
|
c)
|
Evaluated
the effectiveness of the Registrant’s disclosure controls and
procedures and presented in this report our conclusions about the
effectiveness of the disclosure controls and procedures, as of the
end of the period covered by this report based on such evaluation;
and
|
d)
|
Disclosed
in this report any change in the Registrant’s internal
control over financial reporting that occurred during the
Registrant’s most recent fiscal quarter that has materially
affected, or is reasonably likely to materially affect, the
Registrant’s internal control over financial
reporting;
|
5.
|
The
Registrant’s other certifying officer and I have disclosed,
based on our most recent evaluation of internal control over
financial reporting, to the Registrant’s auditors and the
audit committee of the Registrant’s board of directors (or
persons performing the equivalent functions):
|
a)
|
All
significant deficiencies and material weaknesses in the design or
operation of internal control over financial reporting which are
reasonably likely to adversely affect the Registrant’s
ability to record, process, summarize and report financial
information; and
|
b)
|
Any
fraud, whether or not material, that involves management or other
employees who have a significant role in the Registrant’s
internal control over financial reporting.
|
Date:
November 14, 2018
|
By:
|
/s/ Jonathan P.
Carroll |
|
|
|
Jonathan
P. Carroll
|
|
|
|
Chairman
of the Board,
Chief
Executive Officer, President, Assistant Treasurer and
Secretary
|
|
|
|
(Principal
Executive Officer)
|
|
1.
|
I have
reviewed this Quarterly Report on Form 10-Q of Blue Dolphin Energy
Company (the “Registrant”).
|
2.
|
Based
on my knowledge, this report does not contain any untrue statement
of a material fact or omit to state a material fact necessary to
make the statements made, in light of the circumstances under which
such statements were made, not misleading with respect to the
period covered by this report;
|
3.
|
Based
on my knowledge, the financial statements and other financial
information included in this report, fairly present in all material
respects the financial condition, results of operations and cash
flows of the Registrant as of, and for, the periods presented in
this report;
|
4.
|
The
Registrant’s other certifying officer and I are responsible
for establishing and maintaining disclosure controls and procedures
(as defined in Exchange Act Rules 13a-15(e) and 15d-15(e)) and
internal control over financial reporting (as defined in Exchange
Act Rules 13a-15(f) and 15d-15(f)) for the Registrant and we
have:
|
a)
|
Designed
such disclosure controls and procedures, or caused such disclosure
controls and procedures to be designed under our supervision, to
ensure that material information relating to the Registrant,
including its consolidated subsidiaries, is made known to us by
others within those entities, particularly during the period in
which this report is being prepared;
|
b)
|
Designed
such internal control over financial reporting, or caused such
internal control over financial reporting to be designed under our
supervision, to provide reasonable assurance regarding the
reliability of financial reporting and the preparation of financial
statements for external purposes in accordance with generally
accepted accounting principles;
|
c)
|
Evaluated
the effectiveness of the Registrant’s disclosure controls and
procedures and presented in this report our conclusions about the
effectiveness of the disclosure controls and procedures, as of the
end of the period covered by this report based on such evaluation;
and
|
d)
|
Disclosed
in this report any change in the Registrant’s internal
control over financial reporting that occurred during the
Registrant’s most recent fiscal quarter that has materially
affected, or is reasonably likely to materially affect, the
Registrant’s internal control over financial
reporting;
|
5.
|
The
Registrant’s other certifying officer and I have disclosed,
based on our most recent evaluation of internal control over
financial reporting, to the Registrant’s auditors and the
audit committee of the Registrant’s board of directors (or
persons performing the equivalent functions):
|
a)
|
All
significant deficiencies and material weaknesses in the design or
operation of internal control over financial reporting which are
reasonably likely to adversely affect the Registrant’s
ability to record, process, summarize and report financial
information; and
|
b)
|
Any
fraud, whether or not material, that involves management or other
employees who have a significant role in the Registrant’s
internal control over financial reporting.
|
Date:
November 14, 2018
|
By:
|
/s/
TOMMY L. BYRD
|
|
|
|
Tommy
L. Byrd
|
|
|
|
Chief
Financial Officer, Treasurer and Assistant Secretary
|
|
|
|
(Principal
Financial Officer)
|
|
Date:
November 14, 2018
|
By:
|
/s/
JONATHAN P. CARROLL
|
|
|
|
Jonathan
P. Carroll
|
|
|
|
Chairman
of the Board,
Chief
Executive Officer, President, Assistant Treasurer and
Secretary
|
|
|
|
(Principal
Executive Officer)
|
|
Date:
November 14, 2018
|
By:
|
/s/
TOMMY L. BYRD
|
|
|
|
Tommy
L. Byrd
|
|
|
|
Chief
Financial Officer, Treasurer and Assistant Secretary
|
|
|
|
(Principal
Financial Officer)
|
|
Document and Entity Information - shares |
9 Months Ended | |
---|---|---|
Sep. 30, 2018 |
Nov. 14, 2018 |
|
Document And Entity Information | ||
Entity Registrant Name | BLUE DOLPHIN ENERGY CO | |
Entity Central Index Key | 0000793306 | |
Document Type | 10-Q | |
Document Period End Date | Sep. 30, 2018 | |
Amendment Flag | false | |
Current Fiscal Year End Date | --12-31 | |
Is Entity's Reporting Status Current? | Yes | |
Entity Filer Category | Non-accelerated Filer | |
Entity Emerging Growth Company | false | |
Entity Small Business | true | |
Entity Common Stock, Shares Outstanding | 10,925,513 | |
Document Fiscal Period Focus | Q3 | |
Document Fiscal Year Focus | 2018 |
Consolidated Balance Sheets (Unaudited) (Parenthetical) - $ / shares |
Sep. 30, 2018 |
Dec. 31, 2017 |
---|---|---|
STOCKHOLDERS' DEFICIT | ||
Common stock, par value | $ 0.01 | $ 0.01 |
Common stock, shares authorized | 20,000,000 | 20,000,000 |
Common stock, shares issued | 10,925,513 | 10,925,513 |
Common stock, shares outstanding | 10,925,513 | 10,925,513 |
Consolidated Statements of Operations (Unaudited) - USD ($) $ in Thousands |
3 Months Ended | 9 Months Ended | ||
---|---|---|---|---|
Sep. 30, 2018 |
Sep. 30, 2017 |
Sep. 30, 2018 |
Sep. 30, 2017 |
|
REVENUE FROM OPERATIONS | ||||
Refinery operations | $ 94,468 | $ 66,133 | $ 254,245 | $ 174,668 |
Tolling and terminaling | 1,075 | 766 | 2,659 | 2,174 |
Total revenue from operations | 95,543 | 66,899 | 256,904 | 176,842 |
COST OF OPERATIONS | ||||
Cost of sales | 93,195 | 58,786 | 245,786 | 165,185 |
Refinery operating expenses | 1,085 | 1,758 | 4,384 | 6,223 |
Other operating expenses | 33 | 68 | 133 | 183 |
Arbitration award and associated fees | 0 | 0 | 0 | 24,339 |
General and administrative expenses | 929 | 1,240 | 2,277 | 2,854 |
Depletion, depreciation and amortization | 478 | 455 | 1,396 | 1,356 |
Accretion of asset retirement obligations | 61 | 72 | 205 | 216 |
Total cost of operations | 95,781 | 62,379 | 254,181 | 200,356 |
Income (loss) from operations | (238) | 4,520 | 2,723 | (23,514) |
OTHER INCOME (EXPENSE) | ||||
Easement, interest and other income | 18 | 27 | 20 | 410 |
Interest and other expense | (760) | (601) | (2,255) | (2,028) |
Gain on disposal of property | 0 | 0 | 0 | 1,834 |
Total other income (expense) | (742) | (574) | (2,235) | 216 |
Income (loss) before income taxes | (980) | 3,946 | 488 | (23,298) |
Income tax benefit | 43 | 0 | 260 | 0 |
Net income (loss) | $ (937) | $ 3,946 | $ 748 | $ (23,298) |
Income (loss) per common share: | ||||
Basic | $ (0.09) | $ 0.36 | $ 0.07 | $ (2.19) |
Diluted | $ (0.09) | $ 0.36 | $ 0.07 | $ (2.19) |
Weighted average number of common shares outstanding: | ||||
Basic | 10,925,513 | 10,818,371 | 10,925,513 | 10,644,654 |
Diluted | 10,925,513 | 10,818,371 | 10,925,513 | 10,644,654 |
Dividends declared per common share outstanding | $ .00 | $ .00 | $ .00 | $ .00 |
1. Organization |
9 Months Ended | ||||||||||||||||||||||||||||||||||||||||||
---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|
Sep. 30, 2018 | |||||||||||||||||||||||||||||||||||||||||||
Organization, Consolidation and Presentation of Financial Statements [Abstract] | |||||||||||||||||||||||||||||||||||||||||||
Organization | Nature of Operations. Blue Dolphin Energy Company is a publicly-traded Delaware corporation primarily engaged in the refining and marketing of petroleum products. We also provide tolling and storage terminaling services. Our assets, which are located in Nixon, Texas, primarily include a 15,000-bpd crude distillation tower and approximately 1.1 million bbls of petroleum storage tanks (collectively the “Nixon Facility”). Pipeline transportation and oil and gas operations are no longer active.
Structure and Management. Blue Dolphin is controlled by Lazarus Energy Holdings, LLC (“LEH”). LEH operates and manages all Blue Dolphin properties pursuant to an Amended and Restated Operating Agreement (the “Amended and Restated Operating Agreement”). Jonathan Carroll is Chairman of the Board of Directors (the “Board”), Chief Executive Officer, and President of Blue Dolphin, as well as a majority owner of LEH. Together LEH and Jonathan Carroll own 80.2% of our common stock, par value $0.01 per share (the “Common Stock”). (See “Note (9) Related Party Transactions,” “Note (11) Long-Term Debt, Net” and “Note (18) Commitments and Contingencies – Financing Agreements” for additional disclosures related to LEH, the Amended and Restated Operating Agreement, and Jonathan Carroll.)
We have the following active subsidiaries:
In June 2018, Blue Dolphin acquired 100% of the issued and outstanding membership interests of NPS from Lazarus Midstream Partners, L.P., an affiliate of LEH, pursuant to an Assignment Agreement. The assignment was accounted for as a combination of entities under common control. See “Note (5) NPS Assignment” of this Quarterly Report for further information related to the NPS assignment.
See “Part I, Item 1. Business” and “Item 2. Properties” in the Annual Report for additional information regarding our operating subsidiaries, principal facilities, and assets.
Going Concern. Management has determined that certain factors raise substantial doubt about our ability to continue as a going concern. These factors include the following:
As previously disclosed, a hearing on confirmation of the Final Arbitration Award was scheduled to occur on September 18, 2017 in state district court in Harris County, Texas. Prior to the scheduled hearing, LE and GEL jointly notified the court that the hearing would be continued for a period of no more than 90 days after September 18, 2017 (the “Continuance Period”), to facilitate settlement discussions between the parties. On September 26, 2017, LE and Blue Dolphin, together with LEH and Jonathan Carroll, entered into a Letter Agreement with GEL, effective September 18, 2017 (the “GEL Letter Agreement”), confirming the parties’ agreement to the continuation of the confirmation hearing during the Continuance Period, subject to the terms of the GEL Letter Agreement. The GEL Letter Agreement was subsequently amended nine times to extend the Continuance Period through July 2018.
On July 20, 2018, LE, NPS, and Blue Dolphin, together with LEH, Carroll & Company Financial Holdings, L.P. (“C&C”), and Jonathan Carroll (collectively referred to herein as the “Lazarus Parties”), entered into a Settlement Agreement with GEL (the “Settlement Agreement”), whereby GEL and the Lazarus Parties agreed to mutually release all claims against each other and to file a stipulation of dismissal with prejudice in connection with the GEL Arbitration (the “Settlement”), subject to the terms and conditions set forth in the Settlement Agreement. The Settlement is conditioned upon payment by the Lazarus Parties to GEL of $10.0 million in cash (the “Settlement Payment”) and $0.5 million in cash at the end of each calendar month until the Settlement Payment is paid (the “Interim Payments”) or the Settlement Agreement is terminated. The Interim Payments will not be applied to reduce the amount of the Settlement Payment, but such payments will reduce the Final Arbitration Award. At September 30, 2018 and December 31, 2017, accrued arbitration award payable on our consolidated balance sheet was $23.1 million and $27.1 million, respectively. At the time of the Settlement, the difference between the Settlement Payment and the amount we have accrued on our consolidated balance sheet for arbitration award payable will be recognized as a gain on our consolidated statement of operations.
The Settlement Agreement restricts the Lazarus Parties from taking certain actions without the prior written consent of GEL, including: (i) the incurrence of any debt not specifically excepted in the Settlement Agreement, (ii) the establishment of any liens not specifically excepted in the Settlement Agreement, (iii) the disposition of any assets other than certain ordinary course sales to unaffiliated third parties, payments to unaffiliated third-party trade creditors and scheduled debt payments, (iv) the entrance into any transactions with affiliates not specifically excepted in the Settlement Agreement, (v) the failure to pay debts generally as they become due, and (vi) the entrance into a bankruptcy, reorganization or similar proceeding. A violation of any of the restrictions in the Settlement Agreement, as well as the failure of the Lazarus Parties to make Interim Payments as they become due, will constitute an event of default under the Settlement Agreement which, subject to certain cure periods, would allow GEL to terminate the Settlement Agreement and enforce its rights under the Final Arbitration Award.
The Lazarus Parties are exploring the possibility of obtaining a commercial loan or other financing in an aggregate principal amount equal to the Settlement Payment (the “Settlement Financing”), subject to obtaining the consent of Veritex Community Bank (“Veritex”), as lender under certain loan agreements with the Lazarus Parties and their affiliates. Under the Settlement Agreement, the Lazarus Parties are required to work in good faith and take reasonable actions necessary to obtain the Settlement Financing in accordance with the terms of the Settlement Agreement. Prior to the consummation of the Settlement Financing, the Lazarus Parties are required to: (i) cause NPS to consummate the Settlement Financing and restrict its ability to commence a bankruptcy case, (ii) assign to NPS certain tank leases that will constitute collateral for the Settlement Financing, and (iii) cause NPS to assume joint and several liability for all or a portion of the Final Arbitration Award. The failure to achieve certain milestones in connection with obtaining the Settlement Financing will constitute an event of default under the Settlement Agreement, which would allow GEL to terminate the Settlement Agreement and enforce its rights under the Final Arbitration Award.
Simultaneously with the execution of the Settlement Agreement, Jonathan Carroll and C&C entered into a Security Agreement pursuant to which Jonathan Carroll and C&C agreed to secure up to $10.0 million of LE’s obligations under the Final Arbitration Award with a security interest in their equity in LEH.
The Settlement Agreement will terminate, unless extended in writing by GEL, on December 31, 2018 if the Settlement Payment is not made on or before such date, and the Settlement Agreement may be terminated by GEL following the occurrence of an event of default under the Settlement Agreement, as described above. Pursuant to the Settlement Agreement, the parties agreed to terminate the Letter Agreement, and GEL agreed not to take any action to execute or collect on the Final Arbitration Award and to take all action necessary to continue the District Court Action until the earlier of: (i) the date on which the Settlement Payment is paid or (ii) the termination of the Settlement Agreement.
Blue Dolphin can provide no assurance that the conditions necessary for consummation of the Settlement will be met. If certain conditions are not met or the Settlement Agreement is terminated, GEL may seek to enforce the Final Arbitration Award against the Lazarus Parties, in which case: (i) our business operations, including crude oil and condensate procurement and our customer relationships; financial condition; and results of operations will be materially affected, and (ii) Blue Dolphin and its affiliates would likely be required to seek protection under bankruptcy laws.
We can provide no assurance as to whether Veritex, as first lienholder, will approve the Settlement. If Veritex does not approve the Settlement Agreement, any exercise by Veritex of its rights and remedies under the secured loan agreements would have a material adverse effect on our business, financial condition, and results of operations, and Blue Dolphin would likely be required to seek protection under bankruptcy laws.
Operating Risks. Successful execution of our business plan depends on several key factors, including the Settlement with GEL, having adequate crude oil and condensate supplies, maintaining safe and reliable operations at the Nixon Facility, having favorable margins on refined petroleum products, and meeting contractual obligations. (See “Part I, Item 1. Business – Business Strategies” in the Annual Report for information related to our business plan.)
For the three months ended September 30, 2018, we reported a net loss of $0.9 million, or a loss of $0.09 per share, compared to net income of $3.9 million, or income of $0.36 per share, for the three months ended September 30, 2017. Net loss for the three months ended September 30, 2018 was primarily the result of lower and sometimes negative margins on refined petroleum products, while net income for the three months ended September 30, 2017 was primarily the result of favorable margins for refined petroleum products.
For the nine months ended September 30, 2018, we reported net income of $0.7 million, or income of $0.07 per share, compared to a net loss of $23.3 million, or a loss of $2.19 per share, for the nine months ended September 30, 2017. The nine months ended September 30, 2017 included the net effect to our consolidated statement of operations of the Final Arbitration Award, which was an expense of $24.3 million in arbitration award and associated fees and represented an expense of $2.29 per share. Including the Final Arbitration Award, net income (loss) on a per share basis improved $2.26 between the periods. Excluding the Final Arbitration Award, net income (loss) on a per share basis declined $0.03 between the periods, which was primarily the result of slightly lower margins for refined petroleum products.
Execution of our business plan was hindered during the three months ended September 30, 2018 by several factors, including:
We are continuing aggressive actions to improve operations and liquidity. Management believes that it is continuing to take the appropriate steps to improve operations at the Nixon Facility and our overall financial stability. However, there can be no assurance that our business plan will be successful, that LEH and its affiliates will continue to fund our working capital needs, or that we will be able to obtain additional financing on commercially reasonable terms or at all. If Veritex does not approve the Settlement or if the Settlement Agreement with GEL is terminated and GEL seeks to confirm and enforce the Final Arbitration Award, our business, financial condition, and results of operations will be materially adversely affected, and Blue Dolphin and its affiliates would likely be required to seek protection under bankruptcy laws.
For additional disclosures related to the Final Arbitration Award, the GEL Letter Agreement, the Settlement Agreement, defaults under secured loan agreements, and risk factors that could materially affect our future business, financial condition and results of operations, refer to the following sections in this Quarterly Report:
|
2. Basis of Presentation |
9 Months Ended |
---|---|
Sep. 30, 2018 | |
Accounting Policies [Abstract] | |
Basis of Presentation | The accompanying unaudited consolidated financial statements, which include Blue Dolphin and its subsidiaries, have been prepared in accordance with GAAP for interim consolidated financial information pursuant to the rules and regulations of the SEC under Articles 8 and 10 of Regulation S-X and the instructions to Form 10-Q. Accordingly, certain information and footnote disclosures normally included in our audited financial statements have been condensed or omitted pursuant to the SEC’s rules and regulations. Significant intercompany transactions have been eliminated in the consolidation. In management’s opinion, all adjustments considered necessary for a fair presentation have been included, disclosures are adequate, and the presented information is not misleading.
The consolidated balance sheet as of December 31, 2017 was derived from the audited financial statements at that date. The accompanying consolidated financial statements should be read in conjunction with the consolidated financial statements and notes thereto included in our Annual Report. Operating results for the three and nine months ended September 30, 2018 are not necessarily indicative of the results that may be expected for the fiscal year ending December 31, 2018, or for any other period.
|
3. Significant Accounting Policies |
9 Months Ended |
---|---|
Sep. 30, 2018 | |
Accounting Policies [Abstract] | |
Significant Accounting Policies | The summary of significant accounting policies of Blue Dolphin is presented to assist in understanding our consolidated financial statements. Our consolidated financial statements and accompanying notes are representations of management, who is responsible for their integrity and objectivity. These accounting policies conform to GAAP and have been consistently applied in the preparation of our consolidated financial statements.
Use of Estimates. We have made several estimates and assumptions related to the reporting of our consolidated assets and liabilities and to the disclosure of contingent assets and liabilities to prepare these consolidated financial statements in conformity with GAAP. We believe our current estimates are reasonable and appropriate; however, actual results could differ from those estimated.
Cash and Cash Equivalents. Cash and cash equivalents represent liquid investments with an original maturity of three months or less. Cash balances are maintained in depository and overnight investment accounts with financial institutions that, at times, may exceed insured deposit limits. We monitor the financial condition of the financial institutions and have experienced no losses associated with these accounts.
Restricted Cash. Restricted cash (current portion) primarily represents: (i) amounts held in our disbursement account with Veritex attributable to construction invoices awaiting payment from that account, (ii) a payment reserve account held by Veritex as security for payments under a loan agreement, and (iii) a construction contingency account under which Veritex will fund contingencies. Restricted cash, noncurrent represents funds held in the Veritex disbursement account for payment of future construction related expenses to build new petroleum storage tanks.
Inventory. Our inventory primarily consists of refined petroleum products, crude oil and condensate, and chemicals. Inventory is valued at lower of cost or net realizable value with cost being determined by the average cost method, and net realizable value being determined based on estimated selling prices less any associated delivery costs. If the net realizable value of our refined petroleum products inventory declines to an amount less than our average cost, we record a write-down of inventory and an associated adjustment to cost of sales. (See “Note (7) Inventory” for additional disclosures related to our inventory.)
Property and Equipment.
Refinery and Facilities. Management expects to continue making improvements to the crude distillation tower based on operational needs and technological advances. Additions to refinery and facilities assets are capitalized. Expenditures for repairs and maintenance are expensed as incurred and included as operating expenses under the Amended and Restated Operating Agreement.
We record refinery and facilities at cost less any adjustments for depreciation or impairment. Adjustment of the asset and the related accumulated depreciation accounts are made for the refinery and facilities asset’s retirement and disposal, with the resulting gain or loss included in the consolidated statements of operations. For financial reporting purposes, depreciation of refinery and facilities assets is computed using the straight-line method using an estimated useful life of 25 years beginning when the refinery and facilities assets are placed in service. As a result of the Final Arbitration Award, which represents a significant adverse change that could affect the value of a long-lived asset, management performed potential impairment testing of our refinery and facilities assets in the fourth quarter of 2017. Upon completion of that testing, we determined that no impairment was necessary at December 31, 2017. We did not record any impairment of our refinery and facilities assets for the periods presented.
Pipelines and Facilities. Our pipelines and facilities are recorded at cost less any adjustments for depreciation or impairment. Depreciation is computed using the straight-line method over estimated useful lives ranging from 10 to 22 years. In accordance with Financial Accounting Standards Board (“FASB”) Accounting Standards Codification (“ASC”) guidance on accounting for the impairment or disposal of long-lived assets, management performed periodic impairment testing of our pipeline and facilities assets in the fourth quarter of 2016. Upon completion of that testing, our pipeline assets were fully impaired. All pipeline transportation services to third parties have ceased, existing third-party wells along our pipeline corridor have been permanently abandoned, and no new third-party wells are being drilled near our pipelines.
Oil and Gas Properties. Our oil and gas properties are accounted for using the full-cost method of accounting, whereby all costs associated with acquisition, exploration and development of oil and gas properties, including directly related internal costs, are capitalized on a cost center basis. Amortization of such costs and estimated future development costs are determined using the unit-of-production method. All leases associated with our oil and gas properties have expired, and our oil and gas properties were fully impaired in 2011.
Construction in Progress. Construction in progress expenditures, which relate to construction and refurbishment activities at the Nixon Facility, are capitalized as incurred. Depreciation begins once the asset is placed in service.
(See “Note (8) Property, Plant and Equipment, Net” for additional disclosures related to our refinery and facilities assets, oil and gas properties, pipelines and facilities assets, and construction in progress.)
Intangibles – Other. Trade name, an intangible asset, represents the “Blue Dolphin Energy Company” brand name. We account for intangible assets under FASB ASC guidance related to intangibles, goodwill, and other. Under the guidance, we determined trade name to have an indefinite useful life, and we test intangible assets with indefinite lives annually for impairment. Management performed its regular annual impairment testing of trade name in the fourth quarter of 2017. Upon completion of that testing, our trade name asset was fully impaired at December 31, 2017.
Debt Issue Costs. We have debt issue costs related to certain refinery and facilities assets debt. Debt issue costs are capitalized and amortized over the term of the related debt using the straight-line method, which approximates the effective interest method. Debt issue costs are presented net with the related debt liability. (See “Note (11) Long-Term Debt, Net” for additional disclosures related to debt issue costs.)
Revenue Recognition.
We adopted the provisions of FASB ASU (defined below) 2014-09, Revenue from Contracts with Customers (ASC 606), on January 1, 2018, as described below in “New Pronouncements Adopted.” Accordingly, our revenue recognition accounting policy has been revised to reflect the adoption of this standard.
Refinery Operations Revenue. Revenue from the sale of refined petroleum products is recognized when the product is sold to a customer in fulfillment of performance obligations. Each barrel of refined petroleum product, or other unit of measure, is separately identifiable and represents a distinct performance obligation to which the transaction price is allocated. Performance obligations are met when control is transferred to the customer in accordance with the terms of the respective sales agreement. We consider a variety of facts and circumstances in assessing the point of control transfer, including but not limited to: whether the purchaser can direct the use of the refined petroleum product, the transfer of significant risks and rewards, our rights to payment, and transfer of legal title. In each case, the term between delivery and when payments are due is not significant. Transportation, shipping, and handling costs incurred are included in cost of sales. Excise and other taxes that are collected from customers and remitted to governmental authorities are not included in revenue.
Tolling and Terminaling Revenue. Revenues for tolling and terminaling include fees pursuant to: (i) tolling agreements, whereby a customer agrees to pay a certain fee per gallon or barrel for throughput volumes moving through the naphtha stabilizer unit and a fixed monthly reservation fee for use of the naphtha stabilizer unit and (ii) tank storage agreements, whereby a customer agrees to pay a certain fee per tank based on tank size over a period of time for the storage of products. We typically satisfy performance obligations for tolling and terminaling operations with the passage of time. We determine the transaction price at agreement inception based on the guaranteed minimum amount of revenue over the term of the agreement. We allocate the transaction price to the single performance obligation that exists under the agreement, and we recognize revenue in the amount for which we have a right to invoice. Generally, payment terms do not exceed 30 days.
Revenue from tank storage customers may, from time to time, include fees for ancillary services, such as in-tank and tank-to-tank blending. These services are considered optional to the customer, and the price we charge for such services is not included in the fixed cost under the customer’s tank storage agreement. Ancillary services are considered a separate performance obligation by us under the tank storage agreement. The performance obligation is satisfied when the requested service has been performed in the applicable period.
Income Taxes. We account for income taxes under FASB ASC guidance related to income taxes, which requires recognition of income taxes based on amounts payable with respect to the current reporting period and the effects of deferred taxes for the expected future tax consequences of events that have been included in our financial statements or tax returns. Under this method, deferred tax assets and liabilities are determined based on the differences between the financial accounting and tax basis of assets and liabilities, as well as for operating losses and tax credit carryforwards using enacted tax rates in effect for the year in which the differences are expected to reverse.
As of each reporting date, management considers new evidence, both positive and negative, to determine the realizability of deferred tax assets. Management considers whether it is more likely than not that a portion or all of the deferred tax assets will be realized, which is dependent upon the generation of future taxable income prior to the expiration of any net operating loss (“NOL”) carryforwards. When management determines that it is more likely than not that a tax benefit will not be realized, a valuation allowance is recorded to reduce deferred tax assets. A significant piece of objective negative evidence evaluated was the cumulative loss incurred over the three-year period ended December 31, 2017. Such objective evidence limits the ability to consider other subjective evidence, such as our projections for future growth. Based on this evaluation, we recorded a valuation allowance against the deferred tax assets for which realization was not deemed more likely than not as of September 30, 2018 and December 31, 2017. We expect to recover deferred tax assets related to the Alternative Minimum Tax (“AMT”).
The benefit of an uncertain tax position is recognized in the financial statements if it meets a minimum recognition threshold. A determination is first made as to whether it is more likely than not that the income tax position will be sustained, based upon technical merits, upon examination by the taxing authorities. If the income tax position is expected to meet the more-likely-than-not criteria, the benefit recorded in the financial statements equals the largest amount that is greater than 50% likely to be realized upon its ultimate settlement. At September 30, 2018 and December 31, 2017, there were no uncertain tax positions for which a reserve or liability was necessary. (See “Note (16) Income Taxes” for further information related to income taxes.)
Impairment or Disposal of Long-Lived Assets. In accordance with FASB ASC guidance on accounting for the impairment or disposal of long-lived assets, we periodically evaluate our long-lived assets for impairment. Additionally, we evaluate our long-lived assets when events or circumstances indicate that the carrying value of these assets may not be recoverable. The carrying value is not recoverable if it exceeds the sum of the undiscounted cash flows expected to result from the use and eventual disposition of the asset or group of assets. If the carrying value exceeds the sum of the undiscounted cash flows, an impairment loss equal to the amount by which the carrying value exceeds the fair value of the asset or group of assets is recognized. Significant management judgment is required in the forecasting of future operating results that are used in the preparation of projected cash flows and, should different conditions prevail or judgments be made, material impairment charges could be necessary. As a result of the Final Arbitration Award, which represents a significant adverse change that could affect the value of a long-lived asset, management performed potential impairment testing of our refinery and facilities assets in the fourth quarter of 2017. Upon completion of that testing, we determined that no impairment was necessary at December 31, 2017. We did not record any impairment of our refinery and facilities assets for the periods presented.
Asset Retirement Obligations. FASB ASC guidance related to asset retirement obligations (“AROs”) requires that a liability for the discounted fair value of an ARO be recorded in the period in which incurred and the corresponding cost capitalized by increasing the carrying amount of the related long-lived asset. The liability is accreted towards its future value each period, and the capitalized cost is depreciated over the useful life of the related asset. If the liability is settled for an amount other than the recorded amount, a gain or loss is recognized.
Management has concluded that there is no legal or contractual obligation to dismantle or remove the refinery and facilities assets. Further, management believes that these assets have indeterminate lives under FASB ASC guidance for estimating AROs because dates or ranges of dates upon which we would retire these assets cannot reasonably be estimated at this time. When a legal or contractual obligation to dismantle or remove the refinery and facilities assets arises and a date or range of dates can reasonably be estimated for the retirement of these assets, we will estimate the cost of performing the retirement activities and record a liability for the fair value of that cost using present value techniques.
We recorded an ARO liability related to future asset retirement costs associated with dismantling, relocating, or disposing of our offshore platform, pipeline systems, and related onshore facilities, as well as for plugging and abandoning wells and restoring land and sea beds. We developed these cost estimates for each of our assets based upon regulatory requirements, structural makeup, water depth, reservoir characteristics, reservoir depth, equipment demand, current retirement procedures, and construction and engineering consultations. Because these costs typically extend many years into the future, estimating future costs are difficult and require management to make judgments that are subject to future revisions based upon numerous factors, including changing technology, political, and regulatory environments. We review our assumptions and estimates of future abandonment costs on an annual basis. (See “Note (12) Asset Retirement Obligations” for additional information related to our AROs.)
Computation of Earnings Per Share. We apply the provisions of FASB ASC guidance for computing earnings per share (“EPS”). The guidance requires the presentation of basic EPS, which excludes dilution and is computed by dividing net income available to common stockholders by the weighted-average number of shares of common stock outstanding for the period. The guidance requires dual presentation of basic EPS and diluted EPS on the face of our consolidated statements of operations and requires a reconciliation of the denominator of basic EPS and diluted EPS. Diluted EPS is computed by dividing net income available to common stockholders by the diluted weighted average number of common shares outstanding, which includes the potential dilution that could occur if securities or other contracts to issue shares of common stock were converted to common stock that then shared in the earnings of the entity.
The number of shares related to options, warrants, restricted stock, and similar instruments included in diluted EPS is based on the “Treasury Stock Method” prescribed in FASB ASC guidance for computation of EPS. This method assumes theoretical repurchase of shares using proceeds of the respective stock option or warrant exercised, and, for restricted stock, the amount of compensation cost attributed to future services that has not yet been recognized and the amount of any current and deferred tax benefit that would be credited to additional paid-in-capital upon the vesting of the restricted stock, at a price equal to the issuer’s average stock price during the related earnings period. Accordingly, the number of shares includable in the calculation of EPS in respect of the stock options, warrants, restricted stock, and similar instruments is dependent on this average stock price and will increase as the average stock price increases. (See “Note (17) Earnings Per Share” for additional information related to EPS.)
New Pronouncements Adopted. The FASB issues an Accounting Standards Update (“ASU”) to communicate changes to the FASB ASC, including changes to non-authoritative SEC content. Recently adopted ASUs include:
ASU 2014-09, Revenue from Contracts with Customers (ASC 606). We adopted this accounting pronouncement effective January 1, 2018, using a modified retrospective approach, which required us to apply the new revenue standard to: (i) all new revenue contracts entered into after January 1, 2018 and (ii) all existing revenue contracts as of January 1, 2018. In accordance with this approach, our consolidated revenues for the periods prior to January 1, 2018 will not be revised. Our implementation activities related to ASC 606 are complete, and we will not have any material differences in the amount or timing of revenues as a result of the adoption of ASC 606. Our largest revenue streams consist of orders received from our customers for crude-oil derived specialty products based on market prices. These revenues are recognized at a point in time upon transfer of control of the product in accordance with contractual terms.
New Pronouncements Issued, Not Yet Effective. The following are recently issued, but not yet effective, ASU’s that may influence our consolidated financial position, results of operations, or cash flows:
ASUs 2018-11, 2018-10, and 2016-02, Leases (Topic 842). In February 2016, FASB issued ASU 2016-02. This guidance increases transparency and comparability among organizations by recognizing lease assets and lease liabilities on the balance sheet and disclosing key information about leasing arrangements. In July 2018, FASB issued ASUs 2018-11 and 2018-10. ASU 2018-11 provides entities with relief from the costs of implementing certain aspects of ASU 2016-02 (codified as ASC 842). Specifically, under the amendments in ASU 2018-11: (i) Entities may elect not to recast the comparative periods presented when transitioning to ASC 842 (Issue 1), and (ii) Lessors may elect not to separate lease and non-lease components when certain conditions are met (Issue 2). ASU 2018-10 made 16 separate amendments to ASC 842. For a public business entity, the amendments in ASUs 2018-11 and 2018-10 affect the amendments in ASU 2016-02, which are not yet effective, but for which early adoption upon issuance is permitted. For entities that early adopted Topic 842, the amendments are effective upon issuance of ASUs 2018-11 and 2018-10, and the transition requirements are the same as those in Topic 842. For entities that have not adopted Topic 842, the effective date and transition requirements will be the same as the effective date and transition requirements in Topic 842. Adoption of this guidance affects leases with a term of greater than 12-months and will result in: (i) the recognition of a liability to make lease payments and a right-to-use asset representing our right to use the underlying asset on our consolidated balance sheets and (ii) the recognition of an expense on our consolidated statements of operations each month as we amortize the right-to-use asset.
ASU 2018-09, Codification Improvements. In July 2018, FASB issued ASU 2018-09. This guidance affects a wide variety of topics in the codification and represents changes to clarify, correct errors in, or make minor improvements to the codification. The amendments make the codification easier to understand and easier to apply by eliminating inconsistencies and providing clarifications. The amendments apply to all reporting entities within the scope of the affected accounting guidance. Some of the amendments in ASU 2018-09 do not require transition guidance and will be effective upon issuance. However, many of the amendments do have transition guidance with effective dates for annual periods beginning after December 15, 2018, for public business entities. We are currently evaluating the impact ASU 2018-09 may have on our consolidated financial statements.
ASU 2018-07, Compensation – Stock Compensation (Topic 718). In June 2018, FASB issued ASU 2018-07. This guidance expands the scope of Topic 718 to include share-based payment transactions for acquiring goods and services from non-employees. The amendments in ASU 2018-07 are effective for public business entities for fiscal years beginning after December 15, 2018, including interim periods within that fiscal year. Early adoption is permitted, but no earlier than an entity’s adoption date of Topic 606. We do not expect adoption of this guidance to have a significant impact on our consolidated financial statements.
ASU 2018-05, Income Taxes (Topic 740). In March 2018, FASB issued ASU 2018-05. This guidance amends SEC paragraphs in ASC 740, Income Taxes, to reflect SAB 118, which provides guidance for companies that are not able to complete their accounting for the income tax effects of the Tax Cuts and Jobs Act in the period of enactment. This guidance also includes amendments to the XBRL Taxonomy. For public business entities, the amendments in ASU 2018-05 are effective for fiscal years ending after December 15, 2020. Early adoption is permitted. We do not expect adoption of this guidance to have a significant impact on our consolidated financial statements.
Other new pronouncements issued but not yet effective are not expected to have a material impact on our financial position, results of operations, or liquidity.
|
4. Business Segment Information |
9 Months Ended | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|
Sep. 30, 2018 | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Segment Reporting [Abstract] | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Business Segment Information | We have two reportable business segments: (i) Refinery Operations and (ii) Tolling and Terminaling. Refinery operations relate to the refining and marketing of petroleum products at our 15,000-bpd crude distillation tower. Tolling and terminaling operations relate to tolling and storage terminaling services under related-party and third-party lease agreements. Both operations are conducted at the Nixon Facility.
Business segment information for the periods indicated (and as of the dates indicated) was as follows:
|
5. NPS Assignment |
9 Months Ended |
---|---|
Sep. 30, 2018 | |
Nps Assignment | |
NPS Assignment | In June 2018, Blue Dolphin obtained 100% of the issued and outstanding membership interest of NPS, a Delaware limited liability company, from Lazarus Midstream Partners, L.P. (“Lazarus Midstream”), an affiliate of LEH, pursuant to an Assignment Agreement. The transaction represents transfer of a vacant shell entity owned by Lazarus Midstream to Blue Dolphin for the nominal fee of $10.00. The assignment of interest facilitates the Lazarus Parties exploring the possibility of obtaining the Settlement Financing under the Settlement Agreement.
The assignment was accounted for as a combination of entities under common control. Accordingly, the recognized assets and liabilities of NPS were transferred at their carrying amounts at the date of transfer and the results of operations are included for the three and nine months ended September 30, 2018. NPS did not have significant assets, liabilities or results of operations for the three and nine months ended September 30, 2017. NPS holds a leasehold interest in petroleum storage tanks at the Nixon Facility. NPS’ revenues and expenses are included in our Tolling and Terminaling business segment.
|
6. Prepaid Expenses and Other Current Assets |
9 Months Ended | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|
Sep. 30, 2018 | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Deferred Costs, Capitalized, Prepaid, and Other Assets Disclosure [Abstract] | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Prepaid Expenses and Other Current Assets | Prepaid expenses and other current assets as of the dates indicated consisted of the following:
|
7. Inventory |
9 Months Ended | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|
Sep. 30, 2018 | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Inventory Disclosure [Abstract] | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Inventory | Inventory as of the dates indicated consisted of the following:
|
8. Property, Plant and Equipment, Net |
9 Months Ended | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|
Sep. 30, 2018 | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Property, Plant and Equipment [Abstract] | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Property, Plant and Equipment, Net | Property, plant and equipment, net, as of the dates indicated consisted of the following:
We capitalize interest cost incurred on funds used to construct property, plant, and equipment. Capitalized interest, which is recorded as part of the asset to which it relates, is depreciated over the asset’s useful life. Interest cost capitalized, which is currently included in construction in progress, was $4.2 million and $3.9 million at September 30, 2018 and December 31, 2017, respectively. We expect construction of petroleum storage tanks at the Nixon Facility to continue until year end.
|
9. Related Party Transactions |
9 Months Ended | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|
Sep. 30, 2018 | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Related Party Transactions [Abstract] | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Related Party Transactions | Blue Dolphin and certain of its subsidiaries are party to several agreements with LEH and its affiliates. Management believes that these related party transactions were consummated on terms equivalent to those that prevail in arm's-length transactions.
Related Parties.
LEH. LEH is our controlling shareholder. Jonathan Carroll, Chairman of the Board, Chief Executive Officer, and President of Blue Dolphin, is the majority owner of LEH. Together, LEH and Jonathan Carroll own 80.2% of our Common Stock. Related party agreements with LEH include: (i) an Amended and Restated Operating Agreement with Blue Dolphin and LE, (ii) a Jet Fuel Sales Agreement with LE, (iii) a Loan Agreement with BDPL, (iv) an Amended and Restated Promissory Note with Blue Dolphin, and (v) a Debt Assumption Agreement with LE. Additionally, in June 2018, Blue Dolphin obtained 100% of the issued and outstanding membership interest of NPS from Lazarus Midstream pursuant to an Assignment Agreement. (See “Note (5) NPS Assignment” for further discussion related to the NPS transaction.)
Ingleside Crude, LLC (“Ingleside”). Ingleside is a related party of LEH and Jonathan Carroll. Blue Dolphin is party to an Amended and Restated Promissory Note with Ingleside.
Lazarus Marine Terminal I, LLC (“LMT”). LMT is a related party of LEH and Jonathan Carroll. LE is party to a Dock Tolling Agreement with LMT.
Jonathan Carroll. Jonathan Carroll is Chairman of the Board, Chief Executive Officer, and President of Blue Dolphin. Related party agreements with Jonathan Carroll include: (i) Amended and Restated Guaranty Fee Agreements with LE and LRM and (ii) an Amended and Restated Promissory Note with Blue Dolphin.
Currently, we depend on LEH and its affiliates (including Jonathan Carroll and Ingleside) for financing when revenue from operations and borrowings under bank facilities are insufficient to meet our liquidity needs. Such borrowings are reflected in our consolidated balance sheets in accounts payable, related party, and/or long-term debt, related party.
Operations Related Agreements.
Amended and Restated Operating Agreement. LEH operates and manages all Blue Dolphin properties pursuant to the Amended and Restated Operating Agreement. The Amended and Restated Operating Agreement, which was restructured in 2017 following cessation of crude supply and marketing activities under the Crude Supply Agreement and Joint Marketing Agreement with GEL, expires: (i) April 1, 2020, (ii) upon written notice by either party to the Amended and Restated Operating Agreement of a material breach by the other party, or (iii) upon 90 days’ notice by the Board if the Board determines that the Amended and Restated Operating Agreement is not in our best interest. LEH receives an operating fee of 5% of Blue Dolphin’s direct operating expenses. LEH’s operating fee and Blue Dolphin’s direct operating expenses are reflected within refinery operating expenses in our consolidated statements of operations.
Jet Fuel Sales Agreement. LE sells jet fuel to LEH pursuant to a Jet Fuel Sales Agreement. LEH resells the jet fuel purchased from LE to a government agency. LEH bids for jet fuel contracts are evaluated under preferential pricing terms due to its HUBZone certification. The Jet Fuel Sales Agreement terminates on the earliest to occur of: (a) a one-year term expiring March 31, 2019 plus a 30-day carryover or (b) delivery of a maximum quantity of jet fuel as defined therein. Sales to LEH under the Jet Fuel Sales Agreement are reflected within refinery operations revenue in our consolidated statements of operations. (LRM previously leased petroleum storage tanks to LEH for the storage of the jet fuel under a Terminal Services Agreement. The Terminal Services Agreement was terminated as described below).
Terminal Services Agreement. Pursuant to a Terminal Services Agreement, LEH leased petroleum storage tanks from LRM for the storage of LEH purchased jet fuel under the Jet Fuel Sales Agreement (as described above). The Terminal Services Agreement was terminated in June 2017. Rental fees received from LEH under the Terminal Services Agreement are reflected within tolling and terminaling revenue in our consolidated statements of operations.
Amended and Restated Tank Lease Agreement. Pursuant to an Amended and Restated Tank Lease Agreement with Ingleside, LE leased petroleum storage tanks to meet periodic, additional storage needs. The Amended and Restated Tank Lease Agreement was terminated in July 2017. Rental fees owed to Ingleside under the tank lease agreement are reflected within long-term debt, related party, net of current portion in our consolidated balance sheets. Amounts expensed as rental fees to Ingleside under the Amended and Restated Tank Lease Agreement are reflected within refinery operating expenses in our consolidated statements of operations.
Dock Tolling Agreement. In May 2016, LE entered a Dock Tolling Agreement with LMT to facilitate loading and unloading of petroleum products by barge at LMT’s dock facility in Ingleside, Texas. The Dock Tolling Agreement has a five-year term and may be terminated at any time by the agreement of both parties. LE pays LMT a flat reservation fee monthly. The reservation fee includes tolling volumes up to 84,000 gallons per day. Excess tolling volumes are subject to an increased per gallon rate. Amounts expensed as tolling fees under the Dock Tolling Agreement are reflected in the cost of sales in our consolidated statements of operations.
Financial Agreements.
BDPL Loan Agreement (In Default). In August 2016, BDPL entered a loan and security agreement with LEH as evidenced by a promissory note in the original principal amount of $4.0 million (the “BDPL Loan Agreement”). The BDPL Loan Agreement matured on August 15, 2018. Interest is still accruing at a rate of 16.00%. The BDPL Loan Agreement is currently in default due to non-payment.
The proceeds of the BDPL Loan Agreement were used for working capital. There are no financial maintenance covenants associated with the BDPL Loan Agreement. The BDPL Loan Agreement is secured by certain property owned by BDPL. Outstanding principal owed to LEH under the BDPL Loan Agreement is reflected in long-term debt, related party, current portion in our consolidated balance sheets. Accrued interest under the BDPL Loan Agreement is reflected in interest payable, related party, current portion in our consolidated balance sheets.
Promissory Notes. We currently rely on LEH and its affiliates (including Jonathan Carroll) to fund our working capital requirements. During 2017, LEH and its affiliates (Ingleside and Jonathan Carroll) provided working capital to Blue Dolphin in the form of non-cash advances, such as conversions of accounts payable to debt. These non-cash advances are reflected in the below promissory notes. There can be no assurance that LEH and its affiliates will continue to fund our working capital requirements. Outstanding principal and accrued interest owed under these promissory notes are reflected in long-term debt, related party, current portion in our consolidated balance sheets.
Debt Assumption Agreement. On September 18, 2017, LEH paid, on LE’s behalf, certain obligations totaling $3.6 million to GEL relating to the GEL Arbitration and the GEL Letter Agreement. In exchange for such payments, LE agreed to assume $3.7 million of LEH’s existing indebtedness pursuant to the Debt Assumption Agreement, entered on November 14, 2017 and made effective September 18, 2017, by and among LE, LEH and John Kissick. Debt held by John Kissick, including the debt associated with the Debt Assumption Agreement, is reported in this Quarterly Report as the Notre Dame Debt (defined below) and is reflected in long-term debt less unamortized debt issue costs, current portion in our consolidated balance sheets, as it is currently in default. (See “Note (11) Long-Term Debt, Net” for further discussion related to the Notre Dame Debt.)
Amended and Restated Guaranty Fee Agreements. Pursuant to Amended and Restated Guaranty Fee Agreements, Jonathan Carroll earns fees for providing his personal guarantee on certain LE and LRM long-term debt. Jonathan Carroll was required to guarantee repayment of funds borrowed and interest accrued under certain LE and LRM loan agreements. Amounts owed to Jonathan Carroll under Amended and Restated Guaranty Fee Agreements are reflected within long-term debt, related party, net of current portion in our consolidated balance sheets. Amounts expensed related to Amended and Restated Guarantee Fee Agreements are reflected within interest and other expense in our consolidated statements of operations.
Financial Statements Impact.
Consolidated Balance Sheets. Accounts receivable, related party from LEH associated with the Jet Fuel Sales Agreement were $0 and $0.7 million at September 30, 2018 and December 31, 2017, respectively. Accounts payable, related party to LMT associated with the Dock Tolling Agreement were $1.4 million and $1.0 million at September 30, 2018 and December 31, 2017, respectively.
Long-term debt, related party associated with the BDPL Loan Agreement, March Ingleside Note, and the March Carroll Note as of the dates indicated was as follows:
Accrued interest associated with the BDPL Loan Agreement was $1.4 million and $0.9 million at September 30, 2018 and December 31, 2017, respectively.
Consolidated Statements of Operations. Revenue from related parties was as follows:
Fees associated with the Dock Tolling Agreement with LMT totaled $0.2 million for both the three months ended September 30, 2018 and 2017. Fees associated with the Dock Tolling Agreement with LMT totaled $0.6 million for both the nine months ended September 30, 2018 and 2017.
Expenses and fees associated with the Amended and Restated Operating Agreement with LEH for the periods indicated were as follows:
For the three months ended September 30, 2018, refinery operating expenses decreased approximately $0.7 million, or $0.64 per bbl, compared to the same period a year earlier. For the nine months ended September 30, 2018, refinery operating expenses decreased approximately $1.8 million, or $0.65 per bbl, compared to the same nine-month period a year earlier. The decrease in refinery operating expenses was due to the revised cost-plus expense reimbursement structure under the Amended and Restated Operating Agreement, as well as management’s efforts to reduce spending.
Interest expense associated with the BDPL Loan Agreement, the Restated Guaranty Fee Agreements, and the related-party promissory notes (the June LEH Note, the March Ingleside Note, and March Carroll Note) for the periods indicated was as follows:
|
10. Accrued Expenses and Other Current Liabilities |
9 Months Ended | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|
Sep. 30, 2018 | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Disclosure Text Block Supplement [Abstract] | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Accrued Expenses and Other Current Liabilities | Accrued expenses and other current liabilities as of the dates indicated consisted of the following:
|
11. Long-Term Debt, Net |
9 Months Ended | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|
Sep. 30, 2018 | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Debt Disclosure [Abstract] | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Long-Term Debt, Net | Long-term debt, net represents the outstanding principal of long-term debt less associated debt issue costs. Long-term debt, net as of the dates indicated consisted of the following:
Unamortized debt issue costs, which relate to secured loan agreements with Veritex, as of the dates indicated consisted of the following:
Amortization expense was $0.03 million for both the three months ended September 30, 2018 and 2017. Amortization expense was $0.1 million for both the nine months ended September 30, 2018 and 2017.
Accrued interest associated with long-term debt, net is reflected as interest payable, in default and interest payable, related party, in default in our consolidated balance sheets. Accrued interest as of the dates indicated consisted of the following:
Related Party. See “Note (9) Related Party Transactions” for additional disclosures with respect to related party long-term debt.
First Term Loan Due 2034 (In Default). LE has a 2015 loan agreement and related security agreement with Veritex as administrative agent and lender. The loan agreement is for a term loan in the principal amount of $25.0 million (the “First Term Loan Due 2034”). The First Term Loan Due 2034 matures in June 2034, has a current monthly payment of principal and interest of $0.2 million, and accrues interest at a rate based on the Wall Street Journal Prime Rate plus 2.75%. Pursuant to a construction rider in the First Term Loan Due 2034, proceeds available for use were placed in a disbursement account whereby Veritex makes payments for construction related expenses. Amounts held in the disbursement account are reflected as restricted cash (current portion) and restricted cash, noncurrent in our consolidated balance sheets.
As described elsewhere in this Quarterly Report, Veritex notified LE that the Final Arbitration Award constitutes an event of default under the First Term Loan Due 2034. In addition to existing events of default related to the Final Arbitration Award, at September 30, 2018, LE was in violation of the debt service coverage ratio, the current ratio, and debt-to-net worth ratio financial covenants related to the first Term Loan Due 2034. LE also failed to replenish a payment reserve account as required. The occurrence of events of default under the First Term Loan Due 2034 permits Veritex to declare the amounts owed under the First Term Loan Due 2034 immediately due and payable, exercise its rights with respect to collateral securing LE’s obligations under the loan agreement, and/or exercise any other rights and remedies available. Veritex informed obligors that it is not currently exercising its rights, privileges and remedies under the First Term Loan Due 2034 considering the Settlement Agreement. However, Veritex expressly reserved all its rights, privileges and remedies related to events of default under the First Term Loan Due 2034 and informed LE that it would consider a final confirmation of the Final Arbitration Award to be a material event of default under the loan agreement. Additionally, Veritex must ultimately approve the Settlement. Any exercise by Veritex of its rights and remedies under the First Term Loan Due 2034 would have a material adverse effect on our business, financial condition, and results of operations and would likely require Blue Dolphin to seek protection under bankruptcy laws. (See “Note (1) Organization – "Going Concern" and " - Operating Risks” for additional disclosures related to the First Term Loan Due 2034, the Final Arbitration Award and financial covenant violations.)
As a condition of the First Term Loan Due 2034, Jonathan Carroll was required to guarantee repayment of funds borrowed and interest accrued under the loan. For his personal guarantee, LE entered a Guaranty Fee Agreement with Jonathan Carroll whereby he earns a fee equal to 2.00% per annum of the outstanding principal balance owed under the First Term Loan Due 2034. Effective in April 2017, the Guaranty Fee Agreement associated with the First Term Loan Due 2034 was amended and restated to reflect payment in cash and shares of Blue Dolphin Common Stock. Guaranty fees earned by Jonathan Carroll related to the First Term Loan Due 2034 totaled $0.1 million for both the three months ended September 30, 2018 and 2017. Guaranty fees earned by Jonathan Carroll related to the First Term Loan Due 2034 totaled $0.3 million and $0.4 million for the nine months ended September 30, 2018 and 2017. Guaranty fees are recognized monthly as incurred and are included in interest and other expense in our consolidated statements of operations. LEH, LRM and Blue Dolphin also guaranteed the First Term Loan Due 2034. (See “Note (9) Related Party Transactions” for additional disclosures related to LEH and Jonathan Carroll.)
A portion of the proceeds of the First Term Loan Due 2034 were used to refinance approximately $8.5 million of debt owed under a previous debt facility with American First National Bank. Remaining proceeds are being used primarily to construct new petroleum storage tanks at the Nixon Facility. The First Term Loan Due 2034 is secured by: (i) a first lien on all Nixon Facility business assets (excluding accounts receivable and inventory), (ii) assignment of all Nixon Facility contracts, permits, and licenses, (iii) absolute assignment of Nixon Facility rents and leases, including tank rental income, (iv) a payment reserve account held by Veritex, and (v) a pledge of $5.0 million of a life insurance policy on Jonathan Carroll. The First Term Loan Due 2034 contains representations and warranties, affirmative, restrictive, and financial covenants, as well as events of default which are customary for bank facilities of this type.
Second Term Loan Due 2034 (In Default). LRM has a 2015 loan agreement and related security agreement with Veritex as administrative agent and lender. The loan agreement is for a term loan in the principal amount of $10.0 million (the “Second Term Loan Due 2034”). The Second Term Loan Due 2034 matures in December 2034, has a current monthly payment of principal and interest of $0.1 million, and accrues interest at a rate based on the Wall Street Journal Prime Rate plus 2.75%. Pursuant to a construction rider in the Second Term Loan Due 2034, proceeds available for use were placed in a disbursement account whereby Veritex makes payments for construction related expenses. Amounts held in the disbursement account are reflected as restricted cash (current portion) and restricted cash, noncurrent in our consolidated balance sheets.
As described elsewhere in this Quarterly Report, Veritex notified LRM that the Final Arbitration Award constitutes an event of default under the Second Term Loan Due 2034. In addition to existing events of default related to the Final Arbitration Award, at September 30, 2018, LRM was in violation of the debt service coverage ratio, the current ratio, and debt-to-net worth ratio financial covenants related to the Second Term Loan Due 2034. The occurrence of events of default under the Second Term Loan Due 2034 permits Veritex to declare the amounts owed under the Second Term Loan Due 2034 immediately due and payable, exercise its rights with respect to collateral securing LRM’s obligations under the loan agreement, and/or exercise any other rights and remedies available. Veritex informed obligors that it is not currently exercising its rights, privileges and remedies under the Second Term Loan Due 2034 considering the Settlement Agreement. However, Veritex expressly reserved all its rights, privileges and remedies related to events of default under the Second Term Loan Due 2034 and informed LRM that it would consider a final confirmation of the Final Arbitration Award to be a material event of default under the loan agreement. Additionally, Veritex must ultimately approve the Settlement. Any exercise by Veritex of its rights and remedies under the Second Term Loan Due 2034 would have a material adverse effect on our business, financial condition, and results of operations and would likely require Blue Dolphin to seek protection under bankruptcy laws. (See “Note (1) Organization – "Going Concern" and " - Operating Risks” for additional disclosures related to the First Term Loan Due 2034, the Final Arbitration Award and financial covenant violations.)
As a condition of the Second Term Loan Due 2034, Jonathan Carroll was required to guarantee repayment of funds borrowed and interest accrued under the loan. For his personal guarantee, LRM entered a Guaranty Fee Agreement with Jonathan Carroll whereby he earns a fee equal to 2.00% per annum of the outstanding principal balance owed under the Second Term Loan Due 2034. Effective in April 2017, the Guaranty Fee Agreement associated with the Second Term Loan Due 2034 was amended and restated to reflect payment in cash and shares of Blue Dolphin Common Stock. Guaranty fees earned by Jonathan Carroll related to the Second Term Loan Due 2034 totaled $0.05 million and $0.05 million for the three months ended September 30, 2018 and 2017. Guaranty fees earned by Jonathan Carroll related to the Second Term Loan Due 2034 totaled $0.1 million and $0.1 million for the nine months ended September 30, 2018 and 2017. Guaranty fees are recognized monthly as incurred and are included in interest and other expense in our consolidated statements of operations. LEH, LE and Blue Dolphin also guaranteed the Second Term Loan Due 2034. (See “Note (9) Related Party Transactions” for additional disclosures related to LEH and Jonathan Carroll.)
A portion of the proceeds of the Second Term Loan Due 2034 were used to refinance a previous bridge loan from Veritex in the amount of $3.0 million, the funds of which were used to purchase idle refinery equipment for refurbishment and use at the Nixon Facility. Remaining proceeds are being used primarily to construct additional new petroleum storage tanks at the Nixon Facility. The Second Term Loan Due 2034 is secured by: (i) a second priority lien on the rights of LE in the crude distillation tower and the other collateral of LE pursuant to a security agreement; (ii) a first priority lien on the real property interests of LRM; (iii) a first priority lien on all of LRM’s fixtures, furniture, machinery and equipment; (iv) a first priority lien on all of LRM’s contractual rights, general intangibles and instruments, except with respect to LRM’s rights in its leases of certain specified tanks, with respect to which Veritex has a second priority lien in such leases subordinate to a prior lien granted by LRM to Veritex to secure obligations of LRM under the Term Loan Due 2017; and (v) all other collateral as described in the security documents. The Second Term Loan Due 2034 contains representations and warranties, affirmative, restrictive, and financial covenants, as well as events of default which are customary for bank facilities of this type.
Notre Dame Debt (In Default). LE entered a loan with Notre Dame Investors, Inc. as evidenced by a promissory note in the original principal amount of $8.0 million, which is currently held by John Kissick (the “Notre Dame Debt”). Pursuant to a Sixth Amendment to the Notre Dame Debt, entered on November 14, 2017 and made effective September 18, 2017, the Notre Dame Debt was amended to increase the principal amount by $3.7 million (the “Additional Principal”). The Additional Principal was used to make payments to GEL to reduce the balance of the Final Arbitration Award in the amount of $3.6 million in accordance with the GEL Letter Agreement. Interest on the principal accrues at a rate of 16.00%. The Notre Dame Debt matured in January 2018, however, pursuant to a Subordination Agreement dated June 2015, the holder of the Notre Dame Debt agreed to subordinate its right to payments, as well as any security interest and liens on the Nixon Facility, in favor of Veritex as holder of the First Term Loan Due 2034.
The Notre Dame Debt is secured by a Deed of Trust, Security Agreement and Financing Statements (the “Subordinated Deed of Trust”), which encumbers the crude distillation tower and general assets of LE. There are no financial maintenance covenants associated with the Notre Dame Debt.
Capital Leases.
Boiler Equipment Lease. In 2014, LRM entered a 36-month build-to-suit capital lease for the purchase two new boilers for the Nixon Facility. One of the boilers was placed in service during the second quarter of 2017. The other boiler remains in construction in progress. The lease was paid off during the three months ended March 31, 2018.
Crane Lease. In January 2018, LE entered a 24-month capital lease for the purchase of a 20-ton crane for use at the Nixon Facility. The lease requires a negligible monthly payment and matures in January 2020.
A summary of equipment held under long-term capital leases as of the dates indicated follows:
|
12. Asset Retirement Obligations |
9 Months Ended | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|
Sep. 30, 2018 | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Asset Retirement Obligation Disclosure [Abstract] | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Asset Retirement Obligations | Refinery and Facilities. Management has concluded that there is no legal or contractual obligation to dismantle or remove the refinery and facilities assets. Management believes that the refinery and facilities assets have indeterminate lives under FASB ASC guidance for estimating AROs because dates or ranges of dates upon which we would retire these assets cannot reasonably be estimated at this time. When a legal or contractual obligation to dismantle or remove the refinery and facilities assets arises and a date or range of dates can reasonably be estimated for the retirement of these assets, we will estimate the cost of performing the retirement activities and record a liability for the fair value of that cost using present value techniques.
Pipelines and Facilities and Oil and Gas Properties. We have AROs associated with the dismantlement and abandonment in place of our pipelines and facilities assets, as well as the plugging and abandonment of our oil and gas properties. We recorded a discounted liability for the fair value of an ARO with a corresponding increase to the carrying value of the related long-lived asset at the time the asset was installed or placed in service. We depreciate the amount added to property and equipment and recognize accretion expense relating to the discounted liability over the remaining life of the asset. Plugging and abandonment costs are recorded during the period incurred or as information becomes available to substantiate actual and/or probable costs.
Changes to our ARO liability for the periods indicated were as follows:
|
13. Treasury Stock |
9 Months Ended |
---|---|
Sep. 30, 2018 | |
Equity [Abstract] | |
Treasury Stock | At September 30, 2018 and December 31, 2017, we had 0 shares of treasury stock. In May 2017, we issued 150,000 shares of treasury stock to Jonathan Carroll as payment for amounts due under the March Carroll Note. The issuance price of the treasury stock issued to Mr. Carroll was $2.48 per share, which represents the preceding 30-day average closing price of the Common Stock, in accordance with the Amended and Restated Guaranty Fee Agreements. The shares of treasury stock issued to Mr. Carroll are restricted per applicable securities holding periods for affiliates.
|
14. Concentration of Risk |
9 Months Ended | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|
Sep. 30, 2018 | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Risks and Uncertainties [Abstract] | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Concentration of Risk | Bank Accounts. Financial instruments that potentially subject us to concentrations of risk consist primarily of cash, trade receivables and payables. We maintain our cash balances at financial institutions located in Houston, Texas. In the U.S., the Federal Deposit Insurance Corporation (the “FDIC”) insures certain financial products up to a maximum of $250,000 per depositor. At September 30, 2018 and December 31, 2017, we had cash balances (including restricted cash) of more than the FDIC insurance limit per depositor in the amount of $1.2 million and $1.6 million, respectively.
Key Supplier.
Operation of the Nixon Facility depends on our ability to purchase adequate amounts of crude oil and condensate, which is primarily dependent on our liquidity and access to capital. We currently have in place a month-to-month evergreen crude supply contract with a major integrated oil and gas company. This supplier currently provides us with adequate amounts of crude oil and condensate on favorable terms, and we expect the supplier to continue to do so for the foreseeable future. Our ability to purchase adequate amounts of crude oil and condensate could be adversely affected if the Settlement Agreement is terminated and GEL seeks to confirm and enforce the Final Arbitration Award, as well as other factors, including as net losses, working capital deficits, and financial covenant defaults in secured loan agreements.
Significant Customers. We routinely assess the financial strength of our customers and have not experienced significant write-downs in our accounts receivable balances. Therefore, we believe that our accounts receivable credit risk exposure is limited.
For the three months ended September 30, 2018, we had 4 customers that accounted for approximately 94% of refinery operations revenue. LEH, a related party, was 1 of these 4 significant customers and accounted for approximately 29% of refinery operations revenue. At September 30, 2018, these 4 customers represented approximately $1.3 million in accounts receivable. LEH represented approximately $0 in accounts receivable. LEH purchases our jet fuel and resells the jet fuel to a government agency. LEH bids for jet fuel contracts are evaluated under preferential pricing terms due to its HUBZone certification. (See “Note (9) Related Party Transactions,” “Note (11) Long-Term Debt, Net,” and “Note (18) Commitments and Contingencies – Financing Agreements” for additional disclosures related to LEH.)
For the three months ended September 30, 2017, we had 4 customers that accounted for approximately 84% of our refined petroleum product sales. LEH was 1 of these 4 significant customers and accounted for approximately 32% of our refined petroleum product sales. At September 30, 2017, these 4 customers represented approximately $1.5 million in accounts receivable. LEH represented approximately $1.1 million in accounts receivable.
For the nine months ended September 30, 2018, we had 4 customers that accounted for approximately 90% of our refined petroleum product sales. LEH was 1 of these 4 significant customers and accounted for approximately 29% of our refined petroleum product sales. At September 30, 2018, these 4 customers represented approximately $1.3 million in accounts receivable. LEH represented approximately $0 in accounts receivable.
For the nine months ended September 30, 2017, we had 3 customers that accounted for approximately 67% of our refined petroleum product sales. LEH was 1 of these 3 significant customers and accounted for approximately 34% of our refined petroleum product sales. At September 30, 2017, these 3 customers represented approximately $1.2 million in accounts receivable. LEH represented approximately $1.1 million in accounts receivable.
Refined Petroleum Product Sales. Our refined petroleum products are primarily sold in the U.S. However, with the opening of the Mexican diesel market to private companies, we occasionally sell low-sulfur diesel to customers that export to Mexico. Total refined petroleum product sales by distillation (from light to heavy) for the periods indicated consisted of the following:
|
15. Leases |
9 Months Ended |
---|---|
Sep. 30, 2018 | |
Leases, Operating [Abstract] | |
Leases | BDSC leases our principal office space in Houston, Texas under a 2006 lease agreement. Effective January 1, 2018, BDSC entered an amended lease agreement (the “Lease Amendment”) that extended the lease period by sixty-eight (68) months expiring on August 31, 2023. Under the Lease Amendment, our base rent for 6,489 square feet is $0.01 million per month. The Lease Amendment includes an allowance for lessee improvements, rent abatements, and a five-year renewal option. For both the three months ended September 30, 2018 and 2017, rent expense totaled $0.03 million. For both the nine months ended September 30, 2018 and 2017, rent expense totaled $0.1 million.
|
16. Income Taxes |
9 Months Ended | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|
Sep. 30, 2018 | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Income Tax Disclosure [Abstract] | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Income Taxes | On December 22, 2017, the Tax Cuts and Jobs Act was signed into law. The principal element of the Tax Cuts and Jobs Act relevant to our financial statements is a reduction in the U.S. federal corporate tax rate from 34% to 21%, effective January 1, 2018. Other provisions of the Tax Cuts and Jobs Act did not have a significant impact on our financial statements for the three and nine months ended September 30, 2018.
For the three months ended September 30, 2018 and 2017, we recognized an income tax benefit of $0.04 million and $0, respectively. For the nine months ended September 30, 2018 and 2017, we recognized an income tax benefit of $0.2 million and $0, respectively.
The provision for income tax benefit (expense) as of the dates indicated consisted of the following:
In 2018, our effective tax rate differed from the U.S. federal statutory rate primarily due to Alternative Minimum Tax credits made refundable by the Tax Cuts and Jobs Act. In 2017, our effective tax rate differed from the U.S. federal statutory rate primarily due to re-measuring deferred income taxes at the new statutory tax rate and the related change of the valuation allowance over our deferred tax assets. At the date of enactment of the Tax Cuts and Jobs Act, we re-measured our deferred tax assets and liabilities using a rate of 21%, which is the rate expected to be in place when such deferred assets and liabilities are expected to reverse in the future. The re-measurement was offset by a change in our valuation allowance. This had no impact on our net deferred tax assets.
The state of Texas has a Texas margins tax (“TMT”), which is a form of business tax imposed on gross margin. Although TMT is imposed on an entity’s gross profit rather than on its net income, certain aspects of TMT make it like an income tax. Accordingly, TMT is treated as an income tax for financial reporting purposes. For the three and nine months ended September 30, 2018 and 2017, we recognized income relating to state income tax of $0.04 million and $0, respectively.
Deferred income taxes as of the dates indicated consisted of the following:
Deferred Income Taxes. Deferred income tax balances reflect the effects of temporary differences between the carrying amounts of assets and liabilities and their tax basis, as well as from NOL carryforwards. We state those balances at the enacted tax rates we expect will be in effect when taxes are paid. NOL carryforwards and deferred tax assets represent amounts available to reduce future taxable income.
NOL Carryforwards. Under IRC Section 382, a corporation that undergoes an “ownership change” is subject to limitations on its use of pre-change NOL carryforwards to offset future taxable income. Within the meaning of IRC Section 382, an “ownership change” occurs when the aggregate stock ownership of certain stockholders (generally 5% shareholders, applying certain look-through rules) increases by more than 50 percentage points over such stockholders' lowest percentage ownership during the testing period (generally three years). For income tax purposes, we experienced ownership changes in 2005, relating to a series of private placements, and in 2012, because of a reverse acquisition, that limit the use of pre-change NOL carryforwards to offset future taxable income. In general, the annual use limitation equals the aggregate value of common stock at the time of the ownership change multiplied by a specified tax-exempt interest rate. The 2012 ownership change will subject approximately $16.3 million in NOL carryforwards that were generated prior to the ownership change to an annual use limitation of approximately $0.6 million per year. Unused portions of the annual use limitation amount may be used in subsequent years. Because of the annual use limitation, approximately $6.7 million in NOL carryforwards that were generated prior to the 2012 ownership change will expire unused. NOL carryforwards that were generated after the 2012 ownership change are not subject to an annual use limitation under IRC Section 382 and may be used for a period of 20 years in addition to available amounts of NOL carryforwards generated prior to the ownership change.
NOL carryforwards that remained available for future use for the periods indicated were as follow (amounts shown are net of NOLs that will expire unused because of the IRC Section 382 limitation):
Valuation Allowance. As of each reporting date, management considers new evidence, both positive and negative, to determine the realizability of deferred tax assets. Management considers whether it is more likely than not that some portion or all the deferred tax assets will be realized, which is dependent upon the generation of future taxable income prior to the expiration of any NOL carryforwards. At September 30, 2018 and December 31, 2017, management determined that cumulative losses incurred over the prior three-year period provided significant objective evidence that limited the ability to consider other subjective evidence, such as projections for future growth. Based on this evaluation, we recorded a valuation allowance against the deferred tax assets for which realization was not deemed more likely than not as of September 30, 2018 and December 31, 2017.
|
17. Earnings Per Share |
9 Months Ended | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|
Sep. 30, 2018 | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Earnings Per Share [Abstract] | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Earnings Per Share | A reconciliation between basic and diluted income per share for the periods indicated was as follows:
Diluted EPS is computed by dividing net income available to common stockholders by the weighted average number of shares of common stock outstanding. Diluted EPS for the three and nine months ended September 30, 2018 and 2017 was the same as basic EPS as there were no stock options or other dilutive instruments outstanding.
|
18. Commitments and Contingencies |
9 Months Ended |
---|---|
Sep. 30, 2018 | |
Commitments and Contingencies Disclosure [Abstract] | |
Commitments and Contingencies | Legal Matters.
Final Arbitration Award and Settlement Agreement. See “Note (1) Organization – Going Concern – Final Arbitration Award and Settlement Agreement” and "Part II, Item 1. Legal Proceedings” for additional disclosures related to the Final Arbitration Award and the Settlement Agreement.
Veritex Secured Loan Agreement Event of Default. See “Note (1) Organization – Going Concern – Veritex Secured Loan Agreement Event of Default” and “Note (11) Long-Term Debt, Net” for disclosures related to defaults under secured loan agreements.
Other Legal Matters. From time to time we are involved in routine lawsuits, claims, and proceedings incidental to the conduct of our business, including mechanic’s liens and administrative proceedings. Management does not believe that such matters will have a material adverse effect on our financial position, earnings, or cash flows.
Amended and Restated Operating Agreement. See “Note (9) Related Party Transactions” for additional disclosures related to the Amended and Restated Operating Agreement.
FLNG Easements. BDPL and FLNG were parties to a Pipeline Easement dated November 5, 2005 (the “FLNG Pipeline Easement”) and the FLNG Master Easement Agreement (together with the FLNG Pipeline Easement, the “FLNG Easements”). The FLNG Easements provided FLNG and its affiliates: (i) a pipeline easement and right of way across BDPL-owned property to certain property owned by FLNG and (ii) rights of ingress and egress across BDPL-owned property to the property owned by FLNG. Under the FLNG Easements, FLNG made payments to us in the amount of $0.5 million each year. The FLNG Easements were terminated in February 2017.
Financing Agreements. See “Note (11) Long-Term Debt, Net” for additional disclosures related to financing agreements.
Guarantees. LEH and Jonathan Carroll have provided guarantees on certain Blue Dolphin-related long-term debt. The maximum amount of any guarantee is reduced as payments are made. See “Note (11) Long-Term Debt, Net” for additional disclosures related to guarantees.
Health, Safety and Environmental Matters. All our operations and properties are subject to extensive federal, state, and local environmental, health, and safety regulations governing, among other things, the generation, storage, handling, use and transportation of petroleum and hazardous substances; the emission and discharge of materials into the environment; waste management; characteristics and composition of jet fuel and other products; and the monitoring, reporting and control of greenhouse gas emissions. Our operations also require numerous permits and authorizations under various environmental, health, and safety laws and regulations. Failure to obtain and comply with these permits or environmental, health, or safety laws generally could result in fines, penalties or other sanctions, or a revocation of our permits.
Nixon Facility Expansion. We have made and continue to make capital and efficiency improvements at the Nixon Facility. Therefore, we incurred and will continue to incur capital expenditures related to these improvements, which include, among other things, facility and land improvements and completion of petroleum storage tanks.
Supplemental Pipeline Bonds. In a letter dated March 30, 2018, the Bureau of Ocean Energy Management (the “BOEM”) ordered BDPL to provide additional supplemental bonds or acceptable financial assurance of approximately $4.8 million (the “Separate Orders”) within sixty (60) calendar days of receipt of the letter. The Separate Orders relate to five (5) existing pipeline rights-of-way. BOEM issued an Incident of Noncompliance (“INC”) for each Separate Order dated June 8, 2018 and received by BDPL on June 11, 2018. BOEM asserts that the INCs authorize BOEM to impose financial penalties on BDPL if it does not comply with the Separate Orders within twenty days. BOEM asserts that potential penalties accrue for each day BDPL failed to comply after June 28, 2018. BDPL appealed the INCs on August 8, 2018 and its deadline for filing a Statement of Reasons with BOEM has been extended by the Interior Board of Land Appeals (the “IBLA”). BDPL’s appeal of the Separate Orders was denied by the IBLA on October 18, 2018. BDPL’s pending appeal of the INCs does not relieve BDPL of its obligations to provide additional financial assurance in accordance with the Separate Orders, or of BOEM’s authority to impose financial penalties.
BDPL has initiated settlement discussions with BOEM to resolve the Separate Orders and the INCs. There can be no assurance that BOEM will: (i) accept a proposal for a reduced amount of supplemental financial assurance, (ii) not require additional supplemental pipeline bonds related to BDPL’s existing pipeline rights-of-way, and/or (iii) not impose penalties under the INCs. As a result, we are unable to predict the outcome of the discussions with BOEM or their ultimate impact, if any, on our business, financial condition or results of operations. Accordingly, we have not recorded a liability on our consolidated balance sheet as of September 30, 2018. As of September 30, 2018 and December 31, 2017, BDPL maintained approximately $0.9 million in credit and cash-backed pipeline rights-of-way bonds issued to the BOEM. If BDPL is required by BOEM to provide significant additional supplemental bonds or acceptable financial assurance or is assessed significant penalties under the INCs, we will experience a significant and material adverse effect on our operations, liquidity, and financial condition. |
3. Significant Accounting Policies (Policies) |
9 Months Ended |
---|---|
Sep. 30, 2018 | |
Accounting Policies [Abstract] | |
Use of Estimates | Use of Estimates. We have made several estimates and assumptions related to the reporting of our consolidated assets and liabilities and to the disclosure of contingent assets and liabilities to prepare these consolidated financial statements in conformity with GAAP. We believe our current estimates are reasonable and appropriate; however, actual results could differ from those estimated.
|
Cash and Cash Equivalents | Cash and Cash Equivalents. Cash and cash equivalents represent liquid investments with an original maturity of three months or less. Cash balances are maintained in depository and overnight investment accounts with financial institutions that, at times, may exceed insured deposit limits. We monitor the financial condition of the financial institutions and have experienced no losses associated with these accounts.
|
Restricted Cash | Restricted Cash. Restricted cash (current portion) primarily represents: (i) amounts held in our disbursement account with Veritex attributable to construction invoices awaiting payment from that account, (ii) a payment reserve account held by Veritex as security for payments under a loan agreement, and (iii) a construction contingency account under which Veritex will fund contingencies. Restricted cash, noncurrent represents funds held in the Veritex disbursement account for payment of future construction related expenses to build new petroleum storage tanks.
|
Inventory | Inventory. Our inventory primarily consists of refined petroleum products, crude oil and condensate, and chemicals. Inventory is valued at lower of cost or net realizable value with cost being determined by the average cost method, and net realizable value being determined based on estimated selling prices less any associated delivery costs. If the net realizable value of our refined petroleum products inventory declines to an amount less than our average cost, we record a write-down of inventory and an associated adjustment to cost of sales. (See “Note (7) Inventory” for additional disclosures related to our inventory.)
|
Property and Equipment | Property and Equipment.
Refinery and Facilities. Management expects to continue making improvements to the crude distillation tower based on operational needs and technological advances. Additions to refinery and facilities assets are capitalized. Expenditures for repairs and maintenance are expensed as incurred and included as operating expenses under the Amended and Restated Operating Agreement.
We record refinery and facilities at cost less any adjustments for depreciation or impairment. Adjustment of the asset and the related accumulated depreciation accounts are made for the refinery and facilities asset’s retirement and disposal, with the resulting gain or loss included in the consolidated statements of operations. For financial reporting purposes, depreciation of refinery and facilities assets is computed using the straight-line method using an estimated useful life of 25 years beginning when the refinery and facilities assets are placed in service. As a result of the Final Arbitration Award, which represents a significant adverse change that could affect the value of a long-lived asset, management performed potential impairment testing of our refinery and facilities assets in the fourth quarter of 2017. Upon completion of that testing, we determined that no impairment was necessary at December 31, 2017. We did not record any impairment of our refinery and facilities assets for the periods presented.
Pipelines and Facilities. Our pipelines and facilities are recorded at cost less any adjustments for depreciation or impairment. Depreciation is computed using the straight-line method over estimated useful lives ranging from 10 to 22 years. In accordance with Financial Accounting Standards Board (“FASB”) Accounting Standards Codification (“ASC”) guidance on accounting for the impairment or disposal of long-lived assets, management performed periodic impairment testing of our pipeline and facilities assets in the fourth quarter of 2016. Upon completion of that testing, our pipeline assets were fully impaired. All pipeline transportation services to third parties have ceased, existing third-party wells along our pipeline corridor have been permanently abandoned, and no new third-party wells are being drilled near our pipelines.
Oil and Gas Properties. Our oil and gas properties are accounted for using the full-cost method of accounting, whereby all costs associated with acquisition, exploration and development of oil and gas properties, including directly related internal costs, are capitalized on a cost center basis. Amortization of such costs and estimated future development costs are determined using the unit-of-production method. All leases associated with our oil and gas properties have expired, and our oil and gas properties were fully impaired in 2011.
Construction in Progress. Construction in progress expenditures, which relate to construction and refurbishment activities at the Nixon Facility, are capitalized as incurred. Depreciation begins once the asset is placed in service.
(See “Note (8) Property, Plant and Equipment, Net” for additional disclosures related to our refinery and facilities assets, oil and gas properties, pipelines and facilities assets, and construction in progress.)
|
Intangibles - Other | Intangibles – Other. Trade name, an intangible asset, represents the “Blue Dolphin Energy Company” brand name. We account for intangible assets under FASB ASC guidance related to intangibles, goodwill, and other. Under the guidance, we determined trade name to have an indefinite useful life, and we test intangible assets with indefinite lives annually for impairment. Management performed its regular annual impairment testing of trade name in the fourth quarter of 2017. Upon completion of that testing, our trade name asset was fully impaired at December 31, 2017.
|
Debt Issue Costs | Debt Issue Costs. We have debt issue costs related to certain refinery and facilities assets debt. Debt issue costs are capitalized and amortized over the term of the related debt using the straight-line method, which approximates the effective interest method. Debt issue costs are presented net with the related debt liability. (See “Note (11) Long-Term Debt, Net” for additional disclosures related to debt issue costs.) |
Revenue Recognition | Revenue Recognition.
We adopted the provisions of FASB ASU (defined below) 2014-09, Revenue from Contracts with Customers (ASC 606), on January 1, 2018, as described below in “New Pronouncements Adopted.” Accordingly, our revenue recognition accounting policy has been revised to reflect the adoption of this standard.
Refinery Operations Revenue. Revenue from the sale of refined petroleum products is recognized when the product is sold to a customer in fulfillment of performance obligations. Each barrel of refined petroleum product, or other unit of measure, is separately identifiable and represents a distinct performance obligation to which the transaction price is allocated. Performance obligations are met when control is transferred to the customer in accordance with the terms of the respective sales agreement. We consider a variety of facts and circumstances in assessing the point of control transfer, including but not limited to: whether the purchaser can direct the use of the refined petroleum product, the transfer of significant risks and rewards, our rights to payment, and transfer of legal title. In each case, the term between delivery and when payments are due is not significant. Transportation, shipping, and handling costs incurred are included in cost of sales. Excise and other taxes that are collected from customers and remitted to governmental authorities are not included in revenue.
Tolling and Terminaling Revenue. Revenues for tolling and terminaling include fees pursuant to: (i) tolling agreements, whereby a customer agrees to pay a certain fee per gallon or barrel for throughput volumes moving through the naphtha stabilizer unit and a fixed monthly reservation fee for use of the naphtha stabilizer unit and (ii) tank storage agreements, whereby a customer agrees to pay a certain fee per tank based on tank size over a period of time for the storage of products. We typically satisfy performance obligations for tolling and terminaling operations with the passage of time. We determine the transaction price at agreement inception based on the guaranteed minimum amount of revenue over the term of the agreement. We allocate the transaction price to the single performance obligation that exists under the agreement, and we recognize revenue in the amount for which we have a right to invoice. Generally, payment terms do not exceed 30 days.
Revenue from tank storage customers may, from time to time, include fees for ancillary services, such as in-tank and tank-to-tank blending. These services are considered optional to the customer, and the price we charge for such services is not included in the fixed cost under the customer’s tank storage agreement. Ancillary services are considered a separate performance obligation by us under the tank storage agreement. The performance obligation is satisfied when the requested service has been performed in the applicable period.
|
Income Taxes | Income Taxes. We account for income taxes under FASB ASC guidance related to income taxes, which requires recognition of income taxes based on amounts payable with respect to the current reporting period and the effects of deferred taxes for the expected future tax consequences of events that have been included in our financial statements or tax returns. Under this method, deferred tax assets and liabilities are determined based on the differences between the financial accounting and tax basis of assets and liabilities, as well as for operating losses and tax credit carryforwards using enacted tax rates in effect for the year in which the differences are expected to reverse.
As of each reporting date, management considers new evidence, both positive and negative, to determine the realizability of deferred tax assets. Management considers whether it is more likely than not that a portion or all of the deferred tax assets will be realized, which is dependent upon the generation of future taxable income prior to the expiration of any net operating loss (“NOL”) carryforwards. When management determines that it is more likely than not that a tax benefit will not be realized, a valuation allowance is recorded to reduce deferred tax assets. A significant piece of objective negative evidence evaluated was the cumulative loss incurred over the three-year period ended December 31, 2017. Such objective evidence limits the ability to consider other subjective evidence, such as our projections for future growth. Based on this evaluation, we recorded a valuation allowance against the deferred tax assets for which realization was not deemed more likely than not as of September 30, 2018 and December 31, 2017. We expect to recover deferred tax assets related to the Alternative Minimum Tax (“AMT”).
The benefit of an uncertain tax position is recognized in the financial statements if it meets a minimum recognition threshold. A determination is first made as to whether it is more likely than not that the income tax position will be sustained, based upon technical merits, upon examination by the taxing authorities. If the income tax position is expected to meet the more-likely-than-not criteria, the benefit recorded in the financial statements equals the largest amount that is greater than 50% likely to be realized upon its ultimate settlement. At September 30, 2018 and December 31, 2017, there were no uncertain tax positions for which a reserve or liability was necessary. (See “Note (16) Income Taxes” for further information related to income taxes.)
|
Impairment or Disposal of Long-Lived Assets | Impairment or Disposal of Long-Lived Assets. In accordance with FASB ASC guidance on accounting for the impairment or disposal of long-lived assets, we periodically evaluate our long-lived assets for impairment. Additionally, we evaluate our long-lived assets when events or circumstances indicate that the carrying value of these assets may not be recoverable. The carrying value is not recoverable if it exceeds the sum of the undiscounted cash flows expected to result from the use and eventual disposition of the asset or group of assets. If the carrying value exceeds the sum of the undiscounted cash flows, an impairment loss equal to the amount by which the carrying value exceeds the fair value of the asset or group of assets is recognized. Significant management judgment is required in the forecasting of future operating results that are used in the preparation of projected cash flows and, should different conditions prevail or judgments be made, material impairment charges could be necessary. As a result of the Final Arbitration Award, which represents a significant adverse change that could affect the value of a long-lived asset, management performed potential impairment testing of our refinery and facilities assets in the fourth quarter of 2017. Upon completion of that testing, we determined that no impairment was necessary at December 31, 2017. We did not record any impairment of our refinery and facilities assets for the periods presented.
|
Asset Retirement Obligations | Asset Retirement Obligations. FASB ASC guidance related to asset retirement obligations (“AROs”) requires that a liability for the discounted fair value of an ARO be recorded in the period in which incurred and the corresponding cost capitalized by increasing the carrying amount of the related long-lived asset. The liability is accreted towards its future value each period, and the capitalized cost is depreciated over the useful life of the related asset. If the liability is settled for an amount other than the recorded amount, a gain or loss is recognized.
Management has concluded that there is no legal or contractual obligation to dismantle or remove the refinery and facilities assets. Further, management believes that these assets have indeterminate lives under FASB ASC guidance for estimating AROs because dates or ranges of dates upon which we would retire these assets cannot reasonably be estimated at this time. When a legal or contractual obligation to dismantle or remove the refinery and facilities assets arises and a date or range of dates can reasonably be estimated for the retirement of these assets, we will estimate the cost of performing the retirement activities and record a liability for the fair value of that cost using present value techniques.
We recorded an ARO liability related to future asset retirement costs associated with dismantling, relocating, or disposing of our offshore platform, pipeline systems, and related onshore facilities, as well as for plugging and abandoning wells and restoring land and sea beds. We developed these cost estimates for each of our assets based upon regulatory requirements, structural makeup, water depth, reservoir characteristics, reservoir depth, equipment demand, current retirement procedures, and construction and engineering consultations. Because these costs typically extend many years into the future, estimating future costs are difficult and require management to make judgments that are subject to future revisions based upon numerous factors, including changing technology, political, and regulatory environments. We review our assumptions and estimates of future abandonment costs on an annual basis. (See “Note (12) Asset Retirement Obligations” for additional information related to our AROs.)
|
Computation of Earnings Per Share | Computation of Earnings Per Share. We apply the provisions of FASB ASC guidance for computing earnings per share (“EPS”). The guidance requires the presentation of basic EPS, which excludes dilution and is computed by dividing net income available to common stockholders by the weighted-average number of shares of common stock outstanding for the period. The guidance requires dual presentation of basic EPS and diluted EPS on the face of our consolidated statements of operations and requires a reconciliation of the denominator of basic EPS and diluted EPS. Diluted EPS is computed by dividing net income available to common stockholders by the diluted weighted average number of common shares outstanding, which includes the potential dilution that could occur if securities or other contracts to issue shares of common stock were converted to common stock that then shared in the earnings of the entity.
The number of shares related to options, warrants, restricted stock, and similar instruments included in diluted EPS is based on the “Treasury Stock Method” prescribed in FASB ASC guidance for computation of EPS. This method assumes theoretical repurchase of shares using proceeds of the respective stock option or warrant exercised, and, for restricted stock, the amount of compensation cost attributed to future services that has not yet been recognized and the amount of any current and deferred tax benefit that would be credited to additional paid-in-capital upon the vesting of the restricted stock, at a price equal to the issuer’s average stock price during the related earnings period. Accordingly, the number of shares includable in the calculation of EPS in respect of the stock options, warrants, restricted stock, and similar instruments is dependent on this average stock price and will increase as the average stock price increases. (See “Note (17) Earnings Per Share” for additional information related to EPS.)
|
New Pronouncements Adopted | New Pronouncements Adopted. The FASB issues an Accounting Standards Update (“ASU”) to communicate changes to the FASB ASC, including changes to non-authoritative SEC content. Recently adopted ASUs include:
ASU 2014-09, Revenue from Contracts with Customers (ASC 606). We adopted this accounting pronouncement effective January 1, 2018, using a modified retrospective approach, which required us to apply the new revenue standard to: (i) all new revenue contracts entered into after January 1, 2018 and (ii) all existing revenue contracts as of January 1, 2018. In accordance with this approach, our consolidated revenues for the periods prior to January 1, 2018 will not be revised. Our implementation activities related to ASC 606 are complete, and we will not have any material differences in the amount or timing of revenues as a result of the adoption of ASC 606. Our largest revenue streams consist of orders received from our customers for crude-oil derived specialty products based on market prices. These revenues are recognized at a point in time upon transfer of control of the product in accordance with contractual terms.
|
New Pronouncements Issued but Not Yet Effective | New Pronouncements Issued, Not Yet Effective. The following are recently issued, but not yet effective, ASU’s that may influence our consolidated financial position, results of operations, or cash flows:
ASUs 2018-11, 2018-10, and 2016-02, Leases (Topic 842). In February 2016, FASB issued ASU 2016-02. This guidance increases transparency and comparability among organizations by recognizing lease assets and lease liabilities on the balance sheet and disclosing key information about leasing arrangements. In July 2018, FASB issued ASUs 2018-11 and 2018-10. ASU 2018-11 provides entities with relief from the costs of implementing certain aspects of ASU 2016-02 (codified as ASC 842). Specifically, under the amendments in ASU 2018-11: (i) Entities may elect not to recast the comparative periods presented when transitioning to ASC 842 (Issue 1), and (ii) Lessors may elect not to separate lease and non-lease components when certain conditions are met (Issue 2). ASU 2018-10 made 16 separate amendments to ASC 842. For a public business entity, the amendments in ASUs 2018-11 and 2018-10 affect the amendments in ASU 2016-02, which are not yet effective, but for which early adoption upon issuance is permitted. For entities that early adopted Topic 842, the amendments are effective upon issuance of ASUs 2018-11 and 2018-10, and the transition requirements are the same as those in Topic 842. For entities that have not adopted Topic 842, the effective date and transition requirements will be the same as the effective date and transition requirements in Topic 842. Adoption of this guidance affects leases with a term of greater than 12-months and will result in: (i) the recognition of a liability to make lease payments and a right-to-use asset representing our right to use the underlying asset on our consolidated balance sheets and (ii) the recognition of an expense on our consolidated statements of operations each month as we amortize the right-to-use asset.
ASU 2018-09, Codification Improvements. In July 2018, FASB issued ASU 2018-09. This guidance affects a wide variety of topics in the codification and represents changes to clarify, correct errors in, or make minor improvements to the codification. The amendments make the codification easier to understand and easier to apply by eliminating inconsistencies and providing clarifications. The amendments apply to all reporting entities within the scope of the affected accounting guidance. Some of the amendments in ASU 2018-09 do not require transition guidance and will be effective upon issuance. However, many of the amendments do have transition guidance with effective dates for annual periods beginning after December 15, 2018, for public business entities. We are currently evaluating the impact ASU 2018-09 may have on our consolidated financial statements.
ASU 2018-07, Compensation – Stock Compensation (Topic 718). In June 2018, FASB issued ASU 2018-07. This guidance expands the scope of Topic 718 to include share-based payment transactions for acquiring goods and services from non-employees. The amendments in ASU 2018-07 are effective for public business entities for fiscal years beginning after December 15, 2018, including interim periods within that fiscal year. Early adoption is permitted, but no earlier than an entity’s adoption date of Topic 606. We do not expect adoption of this guidance to have a significant impact on our consolidated financial statements.
ASU 2018-05, Income Taxes (Topic 740). In March 2018, FASB issued ASU 2018-05. This guidance amends SEC paragraphs in ASC 740, Income Taxes, to reflect SAB 118, which provides guidance for companies that are not able to complete their accounting for the income tax effects of the Tax Cuts and Jobs Act in the period of enactment. This guidance also includes amendments to the XBRL Taxonomy. For public business entities, the amendments in ASU 2018-05 are effective for fiscal years ending after December 15, 2020. Early adoption is permitted. We do not expect adoption of this guidance to have a significant impact on our consolidated financial statements.
Other new pronouncements issued but not yet effective are not expected to have a material impact on our financial position, results of operations, or liquidity. |
4. Business Segment Information (Tables) |
9 Months Ended | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|
Sep. 30, 2018 | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Segment Reporting [Abstract] | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Business segment reporting |
|
6. Prepaid Expenses and Other Current Assets (Tables) |
9 Months Ended | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|
Sep. 30, 2018 | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Deferred Costs, Capitalized, Prepaid, and Other Assets Disclosure [Abstract] | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Prepaid balances |
|
7. Inventory (Tables) |
9 Months Ended | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|
Sep. 30, 2018 | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Inventory Disclosure [Abstract] | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Inventory |
|
8. Property, Plant and Equipment, Net (Tables) |
9 Months Ended | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|
Sep. 30, 2018 | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Property, Plant and Equipment [Abstract] | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Property and equipment |
|
9. Related Party Transactions (Tables) |
9 Months Ended | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|
Sep. 30, 2018 | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Related Party Transactions [Abstract] | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Accounts Payable, Related Party |
|
||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Accrued interest Expenses |
|
||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Refinery operating expenses |
|
10. Accrued Expenses and Other Current Liabilities (Tables) |
9 Months Ended | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|
Sep. 30, 2018 | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Disclosure Text Block Supplement [Abstract] | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Accrued expenses and other current liabilities |
|
11. Long-Term Debt, Net (Tables) |
9 Months Ended | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|
Sep. 30, 2018 | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Debt Disclosure [Abstract] | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Schedule of Long Term Debt |
|
|||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Schedule of Debt issue costs |
|
|||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Accrued interest related to our long-term debt, net |
|
|||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Schedule of summary of equipment held under long-term capital leases |
|
12. Asset Retirement Obligations (Tables) |
9 Months Ended | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|
Sep. 30, 2018 | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Asset Retirement Obligation Disclosure [Abstract] | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Asset retirement obligations |
|
14. Concentration of Risk (Tables) |
9 Months Ended | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|
Sep. 30, 2018 | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Risks and Uncertainties [Abstract] | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Percentages of all refined petroleum products sales to total sales |
|
16. Income Taxes (Tables) |
9 Months Ended | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|
Sep. 30, 2018 | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Income Tax Disclosure [Abstract] | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Income tax benefit (expense) |
|
|||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Deferred tax assets and deferred tax liabilities |
|
|||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
NOL carryforwards |
|
17. Earnings Per Share (Tables) |
9 Months Ended | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|
Sep. 30, 2018 | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Earnings Per Share [Abstract] | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Earnings per share |
|
1. Organization (Details Narrative) - USD ($) $ / shares in Units, $ in Thousands |
3 Months Ended | 9 Months Ended | |||
---|---|---|---|---|---|
Sep. 30, 2018 |
Sep. 30, 2017 |
Sep. 30, 2018 |
Sep. 30, 2017 |
Dec. 31, 2017 |
|
Organization, Consolidation and Presentation of Financial Statements [Abstract] | |||||
Net income (loss) | $ (937) | $ 3,946 | $ 748 | $ (23,298) | |
Net Loss per common share | $ (0.09) | $ 0.36 | $ 0.07 | $ (2.19) | |
Working capital deficit current portion | $ (71,000) | $ (71,000) | $ (69,500) | ||
Working capital deficit payment of Operations | $ (29,500) | $ (29,500) | $ (30,000) |
3. Significant Accounting Policies (Details Narrative) - USD ($) $ in Thousands |
3 Months Ended | 9 Months Ended | |||
---|---|---|---|---|---|
Sep. 30, 2018 |
Sep. 30, 2017 |
Sep. 30, 2018 |
Sep. 30, 2017 |
Dec. 31, 2017 |
|
Accounting Policies [Abstract] | |||||
Restricted cash (current portion) | $ 49 | $ 49 | $ 49 | ||
Restricted cash, noncurrent | 1,602 | 1,602 | $ 1,602 | ||
Gain on the disposal of property | $ 0 | $ 0 | $ 0 | $ 1,834 |
6. Prepaid Expenses and Other Current Assets (Details) - USD ($) $ in Thousands |
Sep. 30, 2018 |
Dec. 31, 2017 |
---|---|---|
Deferred Costs, Capitalized, Prepaid, and Other Assets Disclosure [Abstract] | ||
Prepaid insurance | $ 408 | $ 294 |
Other prepaids | 39 | 0 |
Prepaid crude oil and condensate | 0 | 913 |
Prepaid expenses, net | $ 447 | $ 1,207 |
7. Inventory (Details) - USD ($) $ in Thousands |
Sep. 30, 2018 |
Dec. 31, 2017 |
---|---|---|
Inventory Disclosure [Abstract] | ||
Crude oil and condensate | $ 1,571 | $ 961 |
AGO | 449 | 213 |
HOBM | 256 | 1,558 |
Naphtha | 234 | 170 |
Chemicals | 94 | 162 |
Propane | 18 | 17 |
LPG mix | 5 | 8 |
Inventories, net | $ 2,627 | $ 3,089 |
8. Property, Plant and Equipment, Net (Details) - USD ($) $ in Thousands |
Sep. 30, 2018 |
Dec. 31, 2017 |
---|---|---|
Property, Plant and Equipment [Abstract] | ||
Refinery and facilities | $ 54,210 | $ 51,432 |
Land | 566 | 566 |
Other property and equipment | 747 | 653 |
Property, Plant and Equipment, Gross | 55,523 | 52,651 |
Less: Accumulated depletion, depreciation and amortization | (9,892) | (8,495) |
Property, plant and equipment, gross | 45,631 | 44,156 |
Construction in progress | 19,478 | 20,441 |
Property, plant and equipment, net | $ 65,109 | $ 64,597 |
8. Property, Plant and Equipment, Net (Details Narrative) - USD ($) $ in Thousands |
9 Months Ended | 12 Months Ended |
---|---|---|
Sep. 30, 2018 |
Dec. 31, 2017 |
|
Property, Plant and Equipment [Abstract] | ||
Interest cost capitalized | $ 4,200 | $ 3,900 |
9. Related Party Transactions (Details) - USD ($) $ in Thousands |
Sep. 30, 2018 |
Dec. 31, 2017 |
---|---|---|
Prepaid operating expenses, related party | $ 6,532 | $ 5,608 |
Less: Long-term debt - current portion, related party | (6,532) | (4,000) |
Long-term debt - net of current portion, related party | 0 | 1,608 |
LEH [Member] | ||
Prepaid operating expenses, related party | 4,303 | 4,000 |
Ingleside [Member] | ||
Prepaid operating expenses, related party | 1,263 | 1,169 |
Jonathan Carroll [Member] | ||
Prepaid operating expenses, related party | $ 966 | $ 439 |
9. Related Party Transactions (Details 1) - USD ($) $ in Thousands |
3 Months Ended | 9 Months Ended | ||
---|---|---|---|---|
Sep. 30, 2018 |
Sep. 30, 2017 |
Sep. 30, 2018 |
Sep. 30, 2017 |
|
Total revenues | $ 95,543 | $ 66,899 | $ 256,904 | $ 176,842 |
Total revenues, percent | 100.00% | 100.00% | 100.00% | 100.00% |
LEH [Member] | ||||
Refinery operations revenues | $ 24,299 | $ 20,803 | $ 73,415 | $ 59,786 |
Tolling and terminaling revenues | $ 0 | $ 56 | $ 0 | $ 675 |
Refinery operations revenues, percent | 28.70% | 31.10% | 28.60% | 33.80% |
Tolling and terminaling revenues, percent | 0.00% | 0.10% | 0.00% | 0.40% |
Other Customers [Member] | ||||
Refinery operations revenues | $ 67,169 | $ 45,330 | $ 180,830 | $ 114,882 |
Tolling and terminaling revenues | $ 1,075 | $ 710 | $ 2,659 | $ 1,499 |
Refinery operations revenues, percent | 70.40% | 67.80% | 70.40% | 65.00% |
Tolling and terminaling revenues, percent | 0.90% | 1.00% | 1.00% | 0.80% |
9. Related Party Transactions (Details 2) $ in Thousands |
3 Months Ended | 9 Months Ended | ||
---|---|---|---|---|
Sep. 30, 2018
USD ($)
$ / bbl
|
Sep. 30, 2017
USD ($)
$ / bbl
|
Sep. 30, 2018
USD ($)
$ / bbl
|
Sep. 30, 2017
USD ($)
$ / bbl
|
|
Refinery operating expenses, Amount | $ | $ 1,085 | $ 1,758 | $ 4,384 | $ 6,223 |
Refinery operating expenses, Per bbl | $ / bbl | .89 | 1.53 | 1.28 | 1.93 |
Blue Dolphin's Direct Operating [Member] | ||||
Refinery operating expenses, Amount | $ | $ 1,033 | $ 1,674 | $ 4,175 | $ 5,927 |
Refinery operating expenses, Per bbl | $ / bbl | .85 | 1.46 | 1.22 | 1.84 |
LEH [Member] | ||||
Refinery operating expenses, Amount | $ | $ 52 | $ 84 | $ 209 | $ 296 |
Refinery operating expenses, Per bbl | $ / bbl | .04 | .07 | .06 | .09 |
9. Related Party Transactions (Details 3) - USD ($) $ in Thousands |
3 Months Ended | 9 Months Ended | ||
---|---|---|---|---|
Sep. 30, 2018 |
Sep. 30, 2017 |
Sep. 30, 2018 |
Sep. 30, 2017 |
|
Interest expenses under loan and guarantee, related party | $ 371 | $ 358 | $ 1,104 | $ 1,132 |
Jonathan Carroll [Member] | ||||
Interest expenses under loan and guarantee, related party | 180 | 171 | 519 | 521 |
LEH [Member] | ||||
Interest expenses under loan and guarantee, related party | 166 | 164 | 489 | 542 |
Ingleside [Member] | ||||
Interest expenses under loan and guarantee, related party | $ 25 | $ 23 | $ 96 | $ 69 |
9. Related Party Transactions (Details Narrative) - USD ($) $ in Thousands |
Sep. 30, 2018 |
Dec. 31, 2017 |
---|---|---|
Prepaid related party operating expenses | $ 6,532 | $ 5,608 |
Accounts payable, related party | 1,378 | 974 |
Jonathan Carroll [Member] | ||
Prepaid related party operating expenses | 966 | 439 |
Ingleside [Member] | ||
Prepaid related party operating expenses | 1,263 | 1,169 |
LEH [Member] | ||
Prepaid related party operating expenses | $ 4,303 | $ 4,000 |
10. Accrued Expenses and Other Current Liabilities (Details) - USD ($) $ in Thousands |
Sep. 30, 2018 |
Dec. 31, 2017 |
---|---|---|
Disclosure Text Block Supplement [Abstract] | ||
Board of director fees payable | $ 270 | $ 207 |
Other payable | 205 | 116 |
Unearned revenue | 125 | 450 |
Property taxes | 122 | 131 |
Customer deposits | 109 | 109 |
Excise and income taxes payable | 32 | 79 |
Insurance | 0 | 68 |
Accrued Expenses and Other Current Liabilities, Net | $ 863 | $ 1,160 |
11. Long-Term Debt, Net (Details) - USD ($) $ in Thousands |
Sep. 30, 2018 |
Dec. 31, 2017 |
---|---|---|
Principal balance outstanding | $ 37,036 | $ 37,679 |
Less: Current portion of long-term debt, net | (34,988) | (35,544) |
Less: Unamortized debt issue costs | (2,038) | (2,135) |
Long term debt | 10 | 0 |
First Term Loan Due 2034 [Member] | ||
Principal balance outstanding | 22,663 | 23,199 |
Second Term Loan Due 2034 [Member] | ||
Principal balance outstanding | 9,344 | 9,502 |
Notre Dame Debt [Member] | ||
Principal balance outstanding | 4,978 | 4,978 |
Capital Leases [Member] | ||
Principal balance outstanding | $ 51 | $ 0 |
11. Long-Term Debt, Net (Details 1) - USD ($) $ in Thousands |
Sep. 30, 2018 |
Dec. 31, 2017 |
---|---|---|
Debt Disclosure [Abstract] | ||
First Term Loan Due 2034 | $ 1,674 | $ 1,674 |
Second Term Loan Due 2034 | 768 | 768 |
Less: Accumulated amortization | (404) | (307) |
Long term debt | $ 2,038 | $ 2,135 |
11. Long-Term Debt, Net (Details 2) - USD ($) $ in Thousands |
Sep. 30, 2018 |
Dec. 31, 2017 |
---|---|---|
Long-term Debt Net Details 2 | ||
Notre Dame Debt (in default) | $ 2,643 | $ 2,046 |
BDPL Loan Agreement (related party, in default) | 1,374 | 892 |
Second Term Loan Due 2034 | 52 | 49 |
First Term Loan Due 2034 | 39 | 40 |
Total | 4,108 | 3,027 |
Less: Interest payable, current portion | (4,108) | (3,027) |
Long term debt | $ 0 | $ 0 |
11. Long-Term Debt, Net (Details 3) - USD ($) $ in Thousands |
Sep. 30, 2018 |
Dec. 31, 2017 |
---|---|---|
Debt Disclosure [Abstract] | ||
Crane | $ 94 | $ 0 |
Less: accumulated depreciation | (10) | 0 |
Capital lease obligation | $ 84 | $ 0 |
11. Long-Term Debt, Net (Details Narrative) - USD ($) $ in Thousands |
3 Months Ended | 9 Months Ended | ||
---|---|---|---|---|
Sep. 30, 2018 |
Sep. 30, 2017 |
Sep. 30, 2018 |
Sep. 30, 2017 |
|
Amortization expense | $ 30 | $ 30 | $ 100 | $ 100 |
First Term Loan Due 2034 | ||||
Guaranty fees | 100 | 100 | 300 | 400 |
Second Term Loan Due 2034 | ||||
Guaranty fees | $ 50 | $ 50 | $ 100 | $ 100 |
12. Asset Retirement Obligations (Details) - USD ($) $ in Thousands |
3 Months Ended | 9 Months Ended | 12 Months Ended | ||
---|---|---|---|---|---|
Sep. 30, 2018 |
Sep. 30, 2017 |
Sep. 30, 2018 |
Sep. 30, 2017 |
Dec. 31, 2017 |
|
Asset Retirement Obligation Disclosure [Abstract] | |||||
Asset retirement obligations, at the beginning of the period | $ 2,315 | $ 2,028 | $ 2,028 | ||
Liabilities settled | (1) | 0 | |||
Accretion expense | $ 61 | $ 72 | 205 | $ 216 | 287 |
Asset retirement obligations | 2,519 | 2,519 | 2,315 | ||
Less: asset retirement obligations, current portion | (2,519) | (2,519) | (2,315) | ||
Long-term asset retirement obligations, at the end of the period | $ 0 | $ 0 | $ 0 |
13. Treasury Stock (Details Narrative) - shares |
Sep. 30, 2018 |
Dec. 31, 2017 |
---|---|---|
Equity [Abstract] | ||
Treasury stock | 0 | 0 |
14. Concentration of Risk (Details) - USD ($) $ in Thousands |
3 Months Ended | 9 Months Ended | ||
---|---|---|---|---|
Sep. 30, 2018 |
Sep. 30, 2017 |
Sep. 30, 2018 |
Sep. 30, 2017 |
|
Total refined petroleum product sales | $ 94,468 | $ 66,133 | $ 254,245 | $ 174,668 |
Concentration Risk | 100.00% | 100.00% | 100.00% | 100.00% |
LPG mix | ||||
Total refined petroleum product sales | $ 0 | $ 0 | $ 3 | $ 121 |
Concentration Risk | 0.00% | 0.00% | 0.00% | 0.10% |
Naphtha | ||||
Total refined petroleum product sales | $ 24,127 | $ 14,266 | $ 64,093 | $ 41,283 |
Concentration Risk | 25.50% | 21.60% | 25.20% | 24.90% |
Jet Fuel | ||||
Total refined petroleum product sales | $ 27,299 | $ 20,803 | $ 73,415 | $ 56,361 |
Concentration Risk | 28.90% | 31.50% | 28.90% | 32.80% |
HOBM | ||||
Total refined petroleum product sales | $ 21,735 | $ 17,011 | $ 60,594 | $ 38,580 |
Concentration Risk | 23.00% | 25.70% | 23.80% | 19.90% |
AGO | ||||
Total refined petroleum product sales | $ 21,307 | $ 14,053 | $ 56,140 | $ 38,323 |
Concentration Risk | 22.60% | 21.20% | 22.10% | 22.30% |
14. Concentration of Risk (Details Narrative) - USD ($) $ in Thousands |
Sep. 30, 2018 |
Dec. 31, 2017 |
---|---|---|
Risks and Uncertainties [Abstract] | ||
FDIC insurance limit | $ 1,200 | $ 1,600 |
15. Leases (Details Narrative) - USD ($) $ in Thousands |
3 Months Ended | 9 Months Ended | ||
---|---|---|---|---|
Sep. 30, 2018 |
Sep. 30, 2017 |
Sep. 30, 2018 |
Sep. 30, 2017 |
|
Leases, Operating [Abstract] | ||||
Rent expense | $ 30 | $ 30 | $ 100 | $ 100 |
16. Income Taxes (Details) - USD ($) $ in Thousands |
3 Months Ended | 9 Months Ended | 12 Months Ended | ||
---|---|---|---|---|---|
Sep. 30, 2018 |
Sep. 30, 2017 |
Sep. 30, 2018 |
Sep. 30, 2017 |
Dec. 31, 2017 |
|
Income Taxes Details Abstract | |||||
Current federal | $ 108 | $ 0 | |||
Current state | 43 | 0 | |||
Impact of change in enacted tax rates | 0 | (6,654) | |||
Change in valuation allowance | 109 | 6,654 | |||
Total provision for income taxes | $ (43) | $ 0 | $ (260) | $ 0 | $ 0 |
16. Income Taxes (Details 1) - USD ($) $ in Thousands |
Sep. 30, 2018 |
Dec. 31, 2017 |
---|---|---|
Deferred tax assets: | ||
Net operating loss and capital loss carryforwards | $ 11,814 | $ 9,767 |
Accrued arbitration award payable | 3,048 | 4,122 |
Start-up costs (crude oil and condensate processing facility) | 699 | 763 |
Asset retirement obligations liability/deferred revenue | 6 | 495 |
AMT credit and other | 15 | 217 |
Total deferred tax assets | 14,033 | 15,365 |
Deferred tax liabilities: | ||
Basis differences in property and equipment | (4,936) | (4,415) |
Total deferred tax liabilities | (4,936) | (4,415) |
Deferred tax assets, net | 9,097 | 10,950 |
Valuation allowance | (10,538) | (10,950) |
Deferred tax assets, net | $ 108 | $ 0 |
16. Income Taxes (Details 2) - USD ($) $ in Thousands |
9 Months Ended | 12 Months Ended |
---|---|---|
Sep. 30, 2018 |
Dec. 31, 2017 |
|
Beginning balance | $ 39,832 | $ 33,176 |
Net operating losses | 9,747 | 6,656 |
Ending balance | 49,579 | 39,832 |
Pre-Ownership Change [Member] | ||
Beginning balance | 9,614 | 9,614 |
Net operating losses | 0 | 0 |
Ending balance | 9,614 | 9,614 |
Post-Ownership Change [Member] | ||
Beginning balance | 30,218 | 23,562 |
Net operating losses | 9,747 | 6,656 |
Ending balance | $ 39,965 | $ 30,218 |
16. Income Taxes (Details Narrative) - USD ($) $ in Thousands |
3 Months Ended | 9 Months Ended | 12 Months Ended | ||
---|---|---|---|---|---|
Sep. 30, 2018 |
Sep. 30, 2017 |
Sep. 30, 2018 |
Sep. 30, 2017 |
Dec. 31, 2017 |
|
Income Tax Disclosure [Abstract] | |||||
Income Tax Benefit | $ (43) | $ 0 | $ (260) | $ 0 | $ 0 |
17. Earnings per share (Details) - USD ($) $ / shares in Units, $ in Thousands |
3 Months Ended | 9 Months Ended | ||
---|---|---|---|---|
Sep. 30, 2018 |
Sep. 30, 2017 |
Sep. 30, 2018 |
Sep. 30, 2017 |
|
Earnings Per Share [Abstract] | ||||
Net income (loss) | $ (937) | $ 3,946 | $ 748 | $ (23,298) |
Basic and diluted income per share | $ (.09) | $ .36 | $ .07 | $ (2.19) |
Basic and diluted | ||||
Weighted average number of shares of common stock outstanding and potential dilutive shares of common stock | 10,925,513 | 10,818,371 | 10,925,513 | 10,644,654 |
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
2=L?/.C,]_J,[,LS[0: CU>5L? F(C ,UDNM1/6."Z8G3RV+Q9(U;?1+B)Y6(>U:!>.STGJ^5R]%;'15&A
MFS):-+M9$ZTTT6M%XU#\-T$2X$X1.2DB'1^_HBC=!K'3(-8&R=J@#(PR9DVN
M-<,,F26Q48E#%"29&R5QHB0.E-! F37I*DL8YXF!8HN*,G*3I$Z2U"8I,H,D
MM9*DYN;:DN2-O
M1V%&;M:HUVP[33321.\5.T2Q'"3$ P4$4H1N?CD'<7DC&VG63A-[30TC:<@
M+
MDJ(<*<*1X@84-: /O& ZPTSB8%+Z'2*Z6],%BK) 4"ANL$0-E@_DLIR7/*+3
M7!!12%