Blue Dolphin Reports Fourth Quarter And Fiscal Year 2012 Financial Results, Record Full Year Revenue

HOUSTON, April 5, 2013 /PRNewswire/ -- Blue Dolphin Energy Company ("Blue Dolphin," "we" and "our") announced financial results for the quarter and year ended December 31, 2012.

For the year ended December 31, 2012, we reported a net loss of $18,284,632 (which includes $13,879,311 in non-cash charges related to impairment and discontinued operations as described below), or a loss of $1.78 per fully diluted share, on record total revenue from operations of $352,094,714 compared to a net income of $183,854, or an income of $0.02 per fully diluted share, with no revenue from operations for the year ended December 31, 2011. 



Three Months Ended


Year Ended



December 31,


December 31,



2012


2011


2012


2011










Total revenue from operations


$  117,168,511


$                -


$  352,094,714


$                -

Total cost of operations


(120,792,500)


(146,047)


(365,527,510)


(663,128)










Loss from continuing operations


(3,623,989)


(146,047)


(13,432,796)


(663,128)










Total other income (expense)


(92,553)


92,752


(398,592)


846,982










Income (loss) from continuing operations before income taxes

(3,716,542)


(53,295)


(13,831,388)


183,854

Income tax expense


5,969


-


(9,678)


-

Net income (loss) from continuing operations, net of tax


(3,710,573)


(53,295)


(13,841,066)


183,854

Loss from discontinued operations, net of tax


(4,443,566)


-


(4,443,566)


-

Net income (loss)


$    (8,154,139)


$       (53,295)


$  (18,284,632)


$     183,854










Basic and diluted earnings (loss) per common share









Continuing operations


$             (0.35)


$           (0.01)


$             (1.35)


$          0.02

Discontinued operations


$             (0.42)


$                   -


$             (0.43)


$                -

Basic and diluted earnings (loss) per common share


$             (0.77)


$           (0.01)


$             (1.78)


$           0.02

Financial Highlights

Financial results for the year ended December 31, 2012 included:

  • positive cash flow from operations of $67,327; for the three months ended December 31, 2012, we experienced positive cash flow from operations of $3,112,606. This represented an increase compared to negative cash flow from operations of $28,017 for the third quarter of 2012, negative cash flow from operations of $1,438,903 for the second quarter of 2012 and negative cash flow from operations of $1,578,359 for the first quarter of 2012.  Our liquidity improvement quarter over quarter was primarily the result of improved margins on sales of refined products;
  • non-cash charges totaling $13,879,311 related to impairment and discontinued operations were as follows:
    • an impairment totaling $9,435,745, consisting of $7,990,025 related to our pipeline fixed assets and $1,445,720 related to goodwill.  Due to the continued weakness in our pipeline transportation and oil and gas exploration production business segments and the uncertainty of the timing and speed of recovery, an impairment of the pipeline was deemed necessary.  All of the goodwill was associated with our pipeline transportation and oil and gas exploration production business segments; and
    • discontinued operations, net of tax, totaling $4,443,566.  In November 2012 we entered into a sale and purchase agreement with Blue Sky Langsa, Ltd. for the disposal of our 7% working interest in the North Sumatra Basin-Langsa Field ("Indonesia").  Operations associated with Indonesia were discontinued in 2012; and
  • an abandonment expense of $1,184,549 associated with plugging and abandonment costs for High Island A-7. The amount recognized reflects the amount incurred less the amount reserved for the abandonment retirement obligation liability, which was $141,099.

Business Segments

In February 2012, we acquired 100% of the membership interest of Lazarus Energy, LLC ("LE"), which owns a crude oil and condensate processing facility located on a 56-acre site in Nixon, Wilson County, Texas (the "Nixon Facility").  In October 2012, we acquired 100% of the membership interest of Lazarus Refining & Marketing, LLC ("LRM"), which conducts petroleum storage and terminaling operations under third-party lease agreements at the Nixon Facility. As a result of the acquisitions of LE and LRM, our primary business segment is refinery operations, which includes (i) refining of crude oil into marketable finished and refined products, such as Non-Road, Locomotive and Marine Diesel Fuel ("NRLM" or "off-road diesel"), naphtha and atmospheric gas oil and (ii) petroleum storage and terminaling.  Increases in Blue Dolphin's revenue, operating expenses and other related costs in 2012 compared to 2011 were primarily attributable to the refinery operations business segment.

Operational Update

For the quarter and year ended December 31, 2012, the Nixon Facility operated for 88 days and 326 days, respectively.  For the same period, average throughput at the Nixon Facility was approximately 11,900 barrels per day ("bpd"), or 79% of operating capacity, and approximately 9,700 bpd, or 65% of operating capacity, respectively.  For the quarter and year ended December 31, 2012, feedstock runs at the Nixon Facility, which represents barrels of crude oil processed, totaled 1,050,189 barrels ("bbls") and 3,175,283 bbls, respectively.  For the same period, refinery production totaled 1,030,680 bbls and 3,116,649 bbls, respectively. The Nixon Facility generated earnings before interest, income taxes and depreciation ("EBITDA") of $1,259,012 for the year ended December 31, 2012.  The Nixon Facility had 85,000 bbls of tankage under lease agreement for the year ended December 31, 2012 compared to 20,000 bbls of tankage under lease agreement for the year ended December 31, 2011.

Non-GAAP Financial Measures

This press release and its attachments include EBITDA, a financial measures defined as non-GAAP by the Securities and Exchange Commission. EBITDA is adjusted for:  (i) items that do not impact Blue Dolphin's income or loss from continuing operations, such as the impact of accounting changes, (ii) income taxes and (iii) interest expense (or income).  Management excludes interest expense (or income) and other expenses or income not pertaining to the operations of Blue Dolphin's business segments from this measure so that investors may evaluate Blue Dolphin's current operating results without regard to Blue Dolphin's financing methods or capital structure.

Blue Dolphin's financial measures may be different than non-GAAP financial measures used by other companies.  The presentation of this financial information is not intended to be considered in isolation or as a substitute for the financial information prepared and presented in accordance with generally accepted accounting principles ("GAAP").  An explanation of our non-GAAP financial measure and a reconciliation of the financial measure to the GAAP financial measure Blue Dolphin considers most comparable are presented in "Part II, Item 7. Management's Discussion of Financial Condition and Results of Operations -- EBITDA" and "Part II, Item 8. Financial Statements and Supplementary Data -- Note (6) Business Segment Information" of Blue Dolphin's annual report on Form 10-K for the year ended December 31, 2012.

About Blue Dolphin

Blue Dolphin Energy Company (OTCQX: BDCO) is an independent refiner and marketer of petroleum products in the Eagle Ford Shale. Our primary business is refinery operations, which includes the refining of crude oil into marketable finished and refined products and petroleum storage and terminaling. We also gather and transport oil and natural gas, as well as hold leasehold interests in oil and natural gas properties.  For additional information, visit Blue Dolphin's corporate website at http://www.blue-dolphin-energy.com.

Certain of the statements included in this press release, which express a belief, expectation or intention, as well as those regarding future financial performance or results, or which are not historical facts, are "forward-looking" statements as that term is defined in the Securities Act of 1933, as amended, and the Securities Exchange Act of 1934, as amended.  These forward-looking statements are not guarantees of future performance or events and such statements involve a number of risks, uncertainties and assumptions, including but not limited to: the potential reorganization of Blue Dolphin from a publicly traded "C" corporation to a publicly traded master limited partnership; crude oil  and refined petroleum product price fluctuations; significant dependent relationship with Genesis Energy, LLC and its affiliates; key supplier failure; loss of market share with or by a key customer; declaration of an event of default related to our long-term indebtedness; failure to comply with other forbearance agreements relating to our long-term indebtedness; and the factors set forth under the heading "Risk Factors" in Part I, Item 1A of Blue Dolphin's annual report on Form 10-K for the year ended December 31, 2012.  Should one or more of these risks or uncertainties materialize or should the underlying assumptions prove incorrect, actual results and outcomes may differ materially from those indicated in the forward-looking statements.  Readers are cautioned not to place undue reliance on these forward-looking statements, which speak only as of the date hereof.  The Company undertakes no obligation to republish revised forward-looking statements to reflect events or circumstances after the date hereof or to reflect the occurrence of unanticipated events.

 

BLUE DOLPHIN ENERGY COMPANY & SUBSIDIARIES

Condensed Consolidated Balance Sheets

 






December 31,



2012


2011
















 ASSETS 





 CURRENT ASSETS 





 Cash and cash equivalents 


$          420,896


$               1,822

 Restricted cash 


89,593


192,004

 Accounts receivable, net 


15,398,755


-

 Prepaid expenses and other current assets  


228,314


58,713

 Deposits 


1,236,447


473,026

 Inventory 


2,300,692


4,533,961

 Total current assets 


19,674,697


5,259,526






 Property, plant and equipment, net 


35,862,085


32,307,929






 Debt issue costs, net 


532,335


566,133

 Other assets  


9,463


10,468

 Trade name  


303,346


-






 TOTAL ASSETS 


$     56,381,926


$      38,144,056






 LIABILITIES AND STOCKHOLDERS' EQUITY 










 CURRENT LIABILITIES 





 Accounts payable  


$     19,171,013


$        4,841,859

 Accounts payable, related party 


1,594,021


908,139

 Note payable 


43,941


46,318

 Accrued expenses and other current liabilities 


725,238


744,921

 Interest payable, current portion 


640,352


995,916

 Long-term debt, current portion 


1,816,960


1,839,501

 Total current liabilities 


23,991,525


9,376,654






 Long-term liabilities: 





 Asset retirement obligations 


921,260


-

 Long-term debt, net of current portion 


13,989,517


12,455,102

 Long-term interest payable, net of current portion 


858,784


650,214

 Total long-term liabilities 


15,769,561


13,105,316






 TOTAL LIABILITIES 


39,761,086


22,481,970






 Commitments and contingencies 










 STOCKHOLDERS' EQUITY 





 Common stock ($0.01 par value, 20,000,000 shares authorized, 10,563,297 and 8,426,456 shares issued and outstanding at December 31, 2012 and December 31, 2011, respectively) 


105,633


84,265

 Additional paid-in capital 


36,524,142


17,302,124

 Accumulated deficit 


(20,008,935)


(1,724,303)

 Total stockholders' equity 


16,620,840


15,662,086






 TOTAL LIABILITIES AND STOCKHOLDERS' EQUITY  


$     56,381,926


$      38,144,056


 

See Notes to Consolidated Financial Statements in Blue Dolphin's

annual report on Form 10-K for the year ended December 31, 2012.

 

BLUE DOLPHIN ENERGY COMPANY & SUBSIDIARIES

Condensed Consolidated Statements of Operations

 




Twelve Months Ended December 31,








2012


2011






REVENUE FROM OPERATIONS





Refined product sales


$       351,665,234


$                         -

Pipeline operations


406,812


-

Oil and gas sales


22,668


-






Total revenue from operations


352,094,714


-






COST OF OPERATIONS





Cost of refined products sold 


342,035,755


-

Refinery operating expenses


8,603,155


-

Pipeline operating expenses


391,169


-

Lease operating expenses


57,122


-

General and administrative expenses


2,076,946


645,444

Depletion, depreciation and amortization


1,622,864


17,684

Abandonment expense


1,184,549


-

Impairment expense


9,435,745


-

Bad debt expense


9,508


-

Accretion expense


105,032


-

Loss on disposal of property and equipment


5,665


-






Total cost of operations


365,527,510


663,128






Loss from operations


(13,432,796)


(663,128)






OTHER INCOME (EXPENSE)





Net tank rental revenue


534,047


874,421

Interest and other income


21,940


23,901

Interest expense


(954,579)


(51,340)

Total other income (expense)


(398,592)


846,982






Income (loss) from continuing operations before income taxes


(13,831,388)


183,854

Tax expense





Current 


(9,678)


-

Deferred 


-


-

Income tax expense


(9,678)


-

Income (loss) from continuing operations, net of tax


$       (13,841,066)


$              183,854






Loss from discontinued operations, net of tax


$         (4,443,566)


$                          -

Net income (loss) 


$       (18,284,632)


$              183,854











Basic earnings (loss) per common share





Continuing operations


$                  (1.35)


$                    0.02

Discontinued operations


$                  (0.43)


$                          -

Basic earnings (loss) per common share


$                  (1.78)


$                    0.02






Diluted earnings (loss) per common share





Continuing operations


$                  (1.35)


$                    0.02

Discontinued operations


$                  (0.43)


$                          -

Diluted earnings (loss) per common share


$                  (1.78)


$                    0.02






Weighted average number of common shares outstanding:





Basic


10,284,152


8,426,456

Diluted


10,284,152


8,426,456






 

See Notes to Consolidated Financial Statements in Blue Dolphin's

annual report on Form 10-K for the year ended December 31, 2012.

 

 

BLUE DOLPHIN ENERGY COMPANY & SUBSIDIARIES

Condensed Consolidated Statements of Cash Flows

 









Twelve Months Ended December 31,








2012


2011

OPERATING ACTIVITIES





   Net income (loss)


$ (18,284,632)


$   183,854

   Loss from discontinued operations


4,443,566


-

   Adjustments to reconcile net income (loss) to net cash





provided by (used in) operating activities:





Depletion, depreciation and amortization


1,611,708


17,684

Impairment expense


9,435,745


-

Unrealized loss on derivatives


136,100


-

Amortization of debt issue costs


33,799


33,799

Amortization of intangible assets


10,468


(10,468)

Accretion expense


105,032


-

Abandonment expense


503,454


-

Common stock issued for services


163,499


-

Bad debt expense


9,508


-

Changes in operating assets and liabilities (net of effects of acquisition in 2012)





Restricted cash


102,411


33,797

Accounts receivable


(14,724,996)


-

Prepaid expenses and other current assets


43,894


(58,712)

Deposits


(763,421)


(397,407)

Inventory


2,288,436


(4,484,521)

Accounts payable, accrued expenses and other liabilities


12,160,088


4,950,484

Accounts payable, related party


3,228,128


(16,227)

Net cash provided by operating activities - continuing operations


502,787


252,283

Net cash used in operating activities - discontinued operations


(435,460)


-

Net cash provided by operating activities


67,327


252,283






INVESTING ACTIVITIES





Capital expenditures


(2,852,460)


(3,507,850)

Cash acquired on acquisition


1,674,709


-

Net cash used in investing activities


(1,177,751)


(3,507,850)






FINANCING ACTIVITIES





Proceeds from issuance of debt


4,788,623


3,304,300

Payments on long term debt


(3,276,748)


(42,610)

Proceeds from notes payable


24,548


-

Payments on notes payable


(26,925)


(5,034)

Proceeds from excercse of stock options


20,000


-

Net cash provided by financing activities


1,529,498


3,256,656






Net increase in cash and cash equivalents


419,074


1,089











CASH AND CASH EQUIVALENTS AT BEGINNING OF PERIOD


1,822


733

CASH AND CASH EQUIVALENTS AT END OF PERIOD


$       420,896


$       1,822






Supplemental Information:





Non-cash investing and financing activities:





Related party payable converted to equity


$       993,732


$               -

Issuance of stock for acquisition of Blue Dolphin at fair value, inclusive





of cash acquired of $1,674,709


$  18,046,154


$               -

Accrued services payable converted to common stock


$       183,500


$               -


 

See Notes to Consolidated Financial Statements in Blue Dolphin's

annual report on Form 10-K for the year ended December 31, 2012.

 

BLUE DOLPHIN ENERGY COMPANY & SUBSIDIARIES

GAAP to Non-GAAP Reconciliation -- EBITDA

 















Twelve Months Ended December 31, 2012





Segment











Oil and Gas







Refinery


Pipeline


Exploration &


Corporate & 





Operations


Transportation


Production


Other(1)


Total

Revenue


$   351,665,234


$        406,812


$        22,668


$                  -


$   352,094,714

Operation cost(2)


$   350,940,269


$     8,676,242


$   2,018,126


$   2,270,009


363,904,646

Other non-interest income


$          534,047


-


-


-


534,047

EBITDA


$       1,259,012


$   (8,269,430)


$  (1,995,458)


$  (2,270,009)














Depletion, depreciation and











amortization










(1,622,864)

Other income (expense), net










(932,639)












Loss from continuing operations,










before income taxes










$    (13,831,388)












Loss from discontinued operations









$      (4,443,566)












Capital expenditures


$       2,852,460


$                   -


$                -


$                 -


$       2,852,460












Identifiable assets(3)


$     52,745,767


$     1,861,055


$       48,247


$   1,726,857


$     56,381,926



(1)

Includes unallocated general and administrative costs associated with corporate maintenance costs (such as director fees and legal expenses) and goodwill impairment.

(2)

General and administrative costs are allocated based on revenue.  In addition, the effect of the economic hedges on refined products, executed by Genesis Energy, LLC ("Genesis"), is included within the operation cost of our Refinery Operations group.  Cost of refined products sold includes a realized loss of $90,507 and an unrealized gain of $136,100 for the year ended December 31, 2012.

(3)

Identifiable assets contain related legal obligations of each segment including cash, accounts receivable and payable and recorded net assets.

 



Twelve Months Ended December 31, 2011





Segment











Oil and Gas







Refinery


Pipeline


Exploration &


Corporate & 





Operations


Transportation


Production


Other(1)


Total

Revenue


$                    -


$                   -


$                  -


$                 -


$                     -

Operation cost(2)


645,444


-


-


-


645,444

Other non-interest income


874,421


-


-


-


874,421

EBITDA


$         228,977


$                   -


$                  -


$                 -














Depletion, depreciation and











amortization










(17,684)

Other income (expense), net










(27,439)












Income from continuing operations










before income taxes










$         183,854












Capital expenditures


$      3,507,850


$                   -


$                  -


$                 -


$      3,507,850












Identifiable assets(3)


$    38,144,056


$                   -


$                  -


$                 -


$    38,144,056



(1)

Includes unallocated general and administrative costs associated with corporate maintenance costs (such as director fees and legal expenses).

(2)

General and administrative costs are allocated based on revenue.

(3)

Identifiable assets contain related legal obligations of each segment including cash, accounts receivable and payable and recorded net assets.

SOURCE Blue Dolphin Energy Company



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