SOURCE: Blue Dolphin Energy Company

Blue Dolphin Energy Company

April 01, 2015 19:56 ET

Blue Dolphin Announces Improved Full Year 2014 Financial Results

HOUSTON, TX--(Marketwired - Apr 1, 2015) - Blue Dolphin Energy Company ("Blue Dolphin") (OTCQX: BDCO) today announced financial results for the full year ended December 31, 2014.

2014 Full Year Financial Highlights:

  • Net income of $15.8 million, or $1.51 per share, including an income tax benefit of $5.6 million; and
  • Total EBITDA of $12.6 million and refinery operations EBITDA of $13.8 million.

For the full year 2014, Blue Dolphin reported an increase in net income of $19.6 million to $15.8 million, or $1.51 per share, from a net loss of $3.8 million, or a loss of $0.36 per share, for the full year 2013. The significant increase in net income in 2014 was primarily attributable to favorable refining margins, improved product mix, and recognition of a net deferred tax asset of $5.7 million. The net deferred tax asset was primarily related to net operating losses generated before and after Blue Dolphin's reverse acquisition of Lazarus Energy, LLC in 2012, the primary asset of which is the Nixon Facility.

Total earnings before interest, income taxes and depreciation ("EBITDA") increased $13.9 million to $12.6 million for the full year 2014 from a negative EBITDA of $1.3 million for the same 2013 period. Refinery operations EBITDA increased $13.2 million to $13.8 million for the full year 2014 from an EBITDA of $0.6 million for the full year 2013 due to improved refining margins.

Total cash flow from operations totaled $7.2 million for the full year 2014 compared to $1.0 million for the full year 2013, representing an increase of $6.2 million. During 2014, Blue Dolphin repaid $4.6 million of debt, net of new proceeds.

       
    Years Ended December 31,  
    2014     2013  
    (in millions)  
                 
Total revenue from operations   $ 387.5     $ 409.5  
Total cost of operations     (377.9 )     (413.3 )
                 
Income (loss) from operations     9.6       (3.8 )
                 
Total other income     0.6       0.1  
                 
Income (loss) before income taxes     10.2       (3.7 )
Income tax benefit (expense)     5.6       (0.1 )
Net income (loss)     15.8       (3.8 )
                 
Income (loss) per common share                
  Basic   $ 1.51     $ (0.36 )
  Diluted   $ 1.51     $ (0.36 )
                 

2014 Full Year Operational Highlights

  • Refinery operating income of $12.8 million; and
  • Refinery operating income per barrel sold of $3.40.

Blue Dolphin's refinery operations business segment, which represents more than 99% of total operations, consists of crude oil and condensate processing at the 15,000 bpd Nixon Facility, as well as the storage and terminaling of petroleum under third-party lease agreements. Refinery operating income increased by $13.4 million to $12.8 million for the full year 2014 compared to a refinery operating loss of $0.5 million for the full year 2013. Refinery operating income per barrel sold increased $3.54 to $3.40 for the full year 2014 from a refinery operating loss per barrel sold of $0.14 for the full year 2013. The increase in refinery operating income and refinery operating income per barrel sold was the result of improved refining margins.

Key Nixon Facility Operational Metrics

             
    Year Ended December 31,     Increase  
    2014     2013     (Decrease)  
                   
Operating Days   333     341     (8 )
                   
Downtime   32     24     8  
                   
Total refinery throughput(1)                  
  bbls   3,862,351     3,822,128     40,223  
  bpd   11,599     11,209     390  
                   
Total refinery production                  
  bbls   3,788,710     3,743,482     45,228  
  bpd   11,378     10,978     400  
                   
Total refined petroleum product sales                  
  bbls   3,779,677     3,709,294     70,383  
                   
Fuel and energy losses                  
  bbls   73,641     78,646     (5,005 )
  bpd   221     231     (9 )
                   
Capacity utilization rate                  
  refinery throughput   77.3 %   74.7 %   2.6 %
  refinery production   75.9 %   73.2 %   2.7 %
                   
(1) Throughput represents feedstocks. The Nixon Facility's feedstock consists of crude oil and condensate.
   

Downtime at the Nixon Facility during 2014 primarily related to a planned maintenance turnaround and repair of an overhead accumulator. Downtime during 2013 primarily related to a planned maintenance turnaround. Despite operating for fewer days, refinery production increased slightly for 2014 compared to 2013, rising 45,228 barrels ("bbls"), or 400 bbls per day ("bpd"), as the Nixon Facility increased throughput volumes to capitalize on lower crude oil and condensate acquisition costs and increase jet fuel production. Capacity utilization rates improved as a result of increased refinery throughput and refinery production. The nominal decrease in fuel and energy losses of 5,005 bbls, or 9 bpd, was the result of operational efficiency improvements.

Non-GAAP Financial Measures

This press release and its accompanying financial schedules report refinery operating income, refinery operating income per barrel sold, and EBITDA, which are financial measures defined as non-GAAP by the Securities and Exchange Commission (the "SEC"). These non-GAAP measures are used by management to assess Blue Dolphin's operating results and the effectiveness of its business segments. 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 Blue Dolphin's non-GAAP financial measure and a reconciliation of the financial measure to the GAAP financial measure that Blue Dolphin considers most comparable are presented in "Part II, Item 7. Management's Discussion and Analysis of Financial Condition and Results of Operations - Non-GAAP Performance Measures" and "Part II, Item 8. Financial Statements and Supplementary Data - Notes to Consolidated Financial Statements, Note (4) Business Segment Information" of Blue Dolphin's annual report on Form 10-K for the year ended December 31, 2014, as filed with the SEC on March 31, 2015.

About Blue Dolphin
Blue Dolphin Energy Company (OTCQX: BDCO) is an independent refiner and marketer of refined petroleum products in the Eagle Ford Shale. Blue Dolphin's primary business is refinery operations at the 15,000 bpd Nixon Facility, which includes the refining of crude oil and condensate into marketable finished and intermediate products, as well as petroleum storage and terminaling. Blue Dolphin also owns and operates pipeline assets and has leasehold interests in oil and gas properties, which are considered non-core. 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: our dependence on Lazarus Energy Holdings, LLC ("LEH") for financing and management of our property and the property of our subsidiaries; capital needs for which our internally generated cash flows and other sources of liquidity may not be adequate; our ability to use net operating loss carryforwards, which are subject to limitation, to offset future taxable income for U.S. federal income tax purposes; dangers inherent in oil and gas operations that could cause disruptions and expose us to potentially significant losses, costs or liabilities and reduce our liquidity; geographic concentration of our assets, which creates a significant exposure to the risks of the regional economy; competition from companies having greater financial and other resources; laws and regulations regarding personnel and process safety, as well as environmental, health and safety, for which failure to comply may result in substantial fines, criminal sanctions, permit revocations, injunctions, facility shutdowns and/or significant capital expenditures; insurance coverage that may be inadequate or expensive; related party transactions with LEH and its affiliates, which may cause conflicts of interest; and loss of executive officers or key employees, as well as a shortage of skilled labor or disruptions in our labor force, which may make it difficult to maintain productivity; and the factors set forth under the heading "Risk Factors" in Part I, Item 1A of Blue Dolphin's previously filed Annual Report on Form 10-K for the fiscal year ended December 31, 2014. 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. Blue Dolphin 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  
   
Consolidated Balance Sheets  
         
    December 31,  
    2014     2013  
                 
                 
                 
ASSETS                
CURRENT ASSETS                
Cash and cash equivalents   $ 1,293,233     $ 434,717  
Restricted cash     1,008,514       327,388  
Accounts receivable     8,340,303       13,487,106  
Prepaid expenses and other current assets     771,458       333,683  
Deposits     68,498       1,219,660  
Inventory     3,200,651       4,686,399  
  Total current assets     14,682,657       20,488,953  
                 
Total property and equipment, net     37,371,075       36,388,666  
Surety bonds     1,642,000       -  
Debt issue costs, net     479,737       498,536  
Trade name     303,346       303,346  
Deferred tax assets, net     5,928,342       -  
TOTAL ASSETS   $ 60,407,157     $ 57,679,501  
                 
LIABILITIES AND STOCKHOLDERS' EQUITY                
                 
CURRENT LIABILITIES                
Accounts payable   $ 12,370,179     $ 20,783,541  
Accounts payable, related party     1,174,168       3,659,340  
Notes payable     -       11,884  
Asset retirement obligations, current portion     85,846       107,388  
Accrued expenses and other current liabilities     2,783,704       1,600,444  
Interest payable, current portion     56,039       40,272  
Long-term debt, current portion     1,245,476       2,215,918  
Deferred tax liabilities     168,236       -  
  Total current liabilities     17,883,648       28,418,787  
                 
Long-term liabilities:                
Asset retirement obligations, net of current portion     1,780,924       1,490,273  
Deferred revenues and expenses     691,525       -  
Long-term debt, net of current portion     10,808,803       13,889,349  
Long-term interest payable, net of current portion     1,274,789       1,767,381  
  Total long-term liabilities     14,556,041       17,147,003  
                 
TOTAL LIABILITIES     32,439,689       45,565,790  
                 
Commitments and contingencies (Note 22)                
                 
STOCKHOLDERS' EQUITY                
Common stock ($0.01 par value, 20,000,000 shares authorized;10,599,444 and 10,580,973                
shares issued at December 31, 2014 and 2013, respectively)     105,995       105,810  
Additional paid-in capital     36,718,781       36,623,965  
Accumulated deficit     (8,057,308 )     (23,816,064 )
Treasury stock, 150,000 shares at cost     (800,000 )     (800,000 )
  Total stockholders' equity     27,967,468       12,113,711  
TOTAL LIABILITIES AND STOCKHOLDERS' EQUITY   $ 60,407,157     $ 57,679,501  
                 
See notes to consolidated financial statements in Blue Dolphin's
annual report on Form 10-K for the year ended December 31, 2014.
 
                 
   
Blue Dolphin Energy Company & Subsidiaries  
   
Consolidated Statements of Operations  
             
    Years Ended December 31,  
    2014     2013  
                 
REVENUE FROM OPERATIONS                
  Refined product sales   $ 387,304,774     $ 409,239,747  
  Pipeline operations     220,200       303,122  
  Oil and gas sales     -       200  
    Total revenue from operations     387,524,974       409,543,069  
                 
COST OF OPERATIONS                
  Cost of refined products sold     363,762,292       399,101,182  
  Refinery operating expenses     10,698,023       10,673,722  
  Pipeline operating expenses     208,037       163,163  
  Lease operating expenses     26,428       67,923  
  General and administrative expenses     1,427,707       1,794,053  
  Depletion, depreciation and amortization     1,570,962       1,342,563  
  Abandonment expense     -       63,767  
  Accretion expense     211,995       112,686  
    Total cost of operations     377,905,444       413,319,059  
Income (loss) from operations     9,619,530       (3,775,990 )
                 
OTHER INCOME (EXPENSE)                
  Tank rental and easement revenue     1,400,898       1,155,064  
  Interest and other income     47,522       3,105  
  Interest expense     (892,372 )     (1,100,053 )
  Loss on disposal of property and equipment     (4,400 )     -  
    Total other income     551,648       58,116  
                 
Income (loss) before income taxes     10,171,178       (3,717,874 )
                 
Income tax benefit (expense)     5,587,578       (89,255 )
                 
Net income (loss)   $ 15,758,756     $ (3,807,129 )
                 
                 
Income (loss) per common share                
Basic   $ 1.51     $ (0.36 )
                 
Diluted   $ 1.51     $ (0.36 )
                 
Weighted average number of common shares outstanding:                
Basic     10,441,464       10,445,883  
Diluted     10,441,464       10,445,883  
                 
See notes to consolidated financial statements in Blue Dolphin's
annual report on Form 10-K for the year ended December 31, 2014.
 
                 
   
Blue Dolphin Energy Company & Subsidiaries  
   
Consolidated Statements of Cash Flows  
             
    Years Ended December 31,  
    2014     2013  
OPERATING ACTIVITIES                
  Net income (loss)   $ 15,758,756     $ (3,807,129 )
  Adjustments to reconcile net income (loss) to net cashprovided by (used in) operating activities:                
    Depletion, depreciation and amortization     1,570,962       1,342,563  
    Unrealized gain on derivatives     (488,950 )     (143,050 )
    Deferred taxes     (5,760,106 )     -  
    Amortization of debt issue costs     33,799       33,800  
    Amortization of intangible assets     -       9,463  
    Accretion expense     211,995       112,686  
    Abandonment costs incurred     -       63,767  
    Common stock issued for services     95,001       100,000  
    Loss on disposal of assets     4,400       -  
  Changes in operating assets and liabilities                
    Restricted cash     (681,126 )     (237,795 )
    Accounts receivable     5,146,803       1,111,649  
    Prepaid expenses and other current assets     (437,775 )     (105,369 )
    Deposits and other assets     (505,838 )     16,787  
    Inventory     1,485,748       (2,385,707 )
    Accounts payable, accrued expenses and other liabilities     (6,770,318 )     2,846,834  
    Accounts payable, related party     (2,485,172 )     2,065,319  
      Net cash provided by operating activities     7,178,179       1,023,818  
                 
INVESTING ACTIVITIES                
  Capital expenditures     (1,720,156 )     (1,477,729 )
  Proceeds from sale of assets     -       201,000  
      Net cash used in investing activities     (1,720,156 )     (1,276,729 )
                 
FINANCING ACTIVITIES                
  Proceeds from issuance of debt     -       5,750,611  
  Payments on long-term debt     (6,226,521 )     (5,274,106 )
  Proceeds from notes payable     2,000,000       15,032  
  Payments on notes payable     (372,986 )     (224,805 )
      Net cash provided by (used in) financing activities     (4,599,507 )     266,732  
Net increase in cash and cash equivalents     858,516       13,821  
                 
CASH AND CASH EQUIVALENTS AT BEGINNING OF PERIOD     434,717       420,896  
CASH AND CASH EQUIVALENTS AT END OF PERIOD   $ 1,293,233     $ 434,717  
                 
Supplemental Information:                
Non-cash operating activities                
  Reduction in accounts receivable in exchange for treasury stock received   $ -     $ 800,000  
  Surety bond funded by seller of pipeline interest   $ 850,000     $ -  
Non-cash investing and financing activities:                
  New asset retirement obligations   $ 300,980     $ -  
  Changes in estimates of existing ARO obligations   $ -     $ 592,415  
  Financing of capital expenditures via capital lease   $ 536,635     $ -  
  Accrued services payable converted to common stock   $ -     $ 50,000  
Interest paid   $ 1,369,197     $ 791,536  
                 
See notes to consolidated financial statements in Blue Dolphin's
annual report on Form 10-K for the year ended December 31, 2014.
 
   
 
Blue Dolphin Energy Company & Subsidiaries
 
GAAP to Non-GAAP Reconciliation
 

Refinery Operating Income and Refinery Operating Income Per Barrel Sold. The following table provides a reconciliation of refinery operating income and refinery operating income per barrel sold to refined petroleum product sales, cost of refined petroleum products sold, and refinery operating expenses for the periods indicated. For a reconciliation of refined petroleum product sales to total revenue from operations for our consolidated operations, see "Part II, Item 8. Financial Statements and Supplementary Data - Consolidated Statements of Operations" of this report.

       
    December 31,  
    2014     2013  
                 
Total refined petroleum product sales   $ 387,304,774     $ 409,239,747  
Less:                
  Cost of refined petroleum products sold     (363,762,292 )     (399,101,182 )
  Refinery operating expenses     (10,698,023 )     (10,673,722 )
      (374,460,315 )     (409,774,904 )
                 
Refinery operating income   $ 12,844,459     $ (535,157 )
                 
Total refined petroleum product sales (bbls)     3,779,677       3,709,294  
                 
Refinery operating income per bbl sold   $ 3.40     $ (0.14 )
                 

EBITDA. EBITDA should be considered in conjunction with net income (loss) and other performance measures such as operating cash flows. Following is a reconciliation of EBITDA, capital expenditures, and identifiable assets by business segment for the year ended December 31, 2014 (and at December 31, 2014) and the year ended December 31, 2013 (and at December 31, 2013):

       
    Year Ended December 31, 2014  
    Segment              
    Refinery     Pipeline     Corporate &        
    Operations     Transportation     Other     Total  
Revenue   $ 387,304,774     $ 220,200     $ -     $ 387,524,974  
Less: Operation cost(1)     (374,613,154 )     (483,262 )     (1,242,466 )     (376,338,882 )
Other non-interest income     1,130,065       270,833       -       1,400,898  
EBITDA   $ 13,821,685     $ 7,771     $ (1,242,466 )   $ 12,586,990  
                                 
Depletion, depreciation and amortization                             (1,570,962 )
Interest expense, net                             (844,850 )
                                 
Income before income taxes                           $ 10,171,178  
                                 
Capital expenditures   $ 1,720,156     $ -     $ -     $ 1,720,156  
                                 
Identifiable assets(2)   $ 50,950,050     $ 3,028,719     $ 6,428,388     $ 60,407,157  
                                 
(1) Operation cost within the "Refinery Operations" and "Pipeline Transportation" segments includes related general, administrative, and accretion expenses. Operation cost within "Corporate and Other" includes general and administrative expenses associated with corporate maintenance costs, such as accounting fees, director fees and legal expense.
(2) Identifiable assets contain related legal obligations of each business segment including cash, accounts receivable and recorded net assets.
   
         
    Year Ended December 31, 2013  
    Segment              
    Refinery     Pipeline     Corporate &        
    Operations     Transportation     Other     Total  
Revenue   $ 409,239,747     $ 303,322     $ -     $ 409,543,069  
Less: Operation cost(1)     (409,800,285 )     (524,051 )     (1,652,160 )     (411,976,496 )
Other non-interest income     1,113,397       41,667       -       1,155,064  
EBITDA   $ 552,859     $ (179,062 )   $ (1,652,160 )   $ (1,278,363 )
                                 
Depletion, depreciation and amortization                             (1,342,563 )
Interest expense, net                             (1,096,948 )
                                 
Loss before income taxes                           $ (3,717,874 )
                                 
Capital expenditures   $ 1,477,729     $ -     $ -     $ 1,477,729  
                                 
Identifiable assets(2)   $ 54,470,723     $ 2,399,467     $ 809,311     $ 57,679,501  
                                 
(1) Operation cost within the "Refinery Operations" and "Pipeline Transportation" segments includes related general, administrative, and accretion expenses. Operation cost within "Corporate and Other" includes general and administrative expenses associated with corporate maintenance costs, such as accounting fees, director fees and legal expense.
(2) Identifiable assets contain related legal obligations of each business segment including cash, accounts receivable and recorded net assets.
   

Contact Information

  • Contact:
    Jonathan P. Carroll
    Chief Executive Officer and President
    713-568-4725