SOURCE: Blue Dolphin Energy Company

Blue Dolphin Energy Company

May 18, 2015 16:30 ET

Blue Dolphin Reports First Quarter 2015 Results

HOUSTON, TX--(Marketwired - May 18, 2015) -   Blue Dolphin Energy Company ("Blue Dolphin") (OTCQX: BDCO), an independent refiner and marketer of refined petroleum products in the Eagle Ford Shale, reported first quarter 2015 results.

Performance Highlights

  • Total adjusted EBITDA increased $1.7 million, or nearly 25%, for the quarter ended March 31, 2015 compared to the quarter ended March 31, 2014; and
  • Refinery operations adjusted EBITDA increased $1.8 million, or nearly 25%, for the first quarter of 2015 compared to the same period a year earlier. 

Blue Dolphin reported total adjusted EBITDA of $8.7 million for the quarter ended March 31, 2015 compared to total adjusted EBITDA of $7.0 million for the prior year period. Blue Dolphin reported refinery operations adjusted EBITDA of $9.1 million for the quarter ended March 31, 2015 compared to refinery operations adjusted EBITDA of $7.3 million for the prior year period. (See "Non-GAAP Performance Measures" in this press release for the definition of adjusted EBITDA. A reconciliation of adjusted EBITDA to net income is also provided herein.) Blue Dolphin reported net income of $3.7 million, or income of $0.35 per share, for the quarter ended March 31, 2015 compared to net income of $6.2 million, or income of $0.59 per share, for the same quarter in 2014.

"Our refinery operations adjusted EBITDA improved significantly between the periods, driven by lower crude costs and improved refining margins despite relatively flat throughput and production volumes," said Jonathan P. Carroll, Chairman, Chief Executive Officer and President of Blue Dolphin.

       
    Three Months Ended  
    March 31,  
    2015     2014  
    (in millions)  
                 
Total revenue from operations   $ 61.4     $ 120.7  
Total cost of operations     (55.6 )     (114.2 )
                 
Income from operations     5.8       6.5  
                 
Total other expense     (0.1 )     (0.1 )
                 
Income before income taxes     5.7       6.4  
Income tax expense     (2.0 )     (0.2 )
Net income   $ 3.7     $ 6.2  
                 
Income per common share                
  Basic   $ 0.35     $ 0.59  
  Diluted   $ 0.35     $ 0.59  
                 

Total cash flow from operations totaled $2.6 million for quarter ended March 31, 2015 compared to $5.2 million for the same quarter a year earlier, representing a decrease of $2.6 million. The decrease in total cash flow from operations was primarily due to payments of $1.8 million and $1.0 million in JMA Profit Share and accounts payable, related party.

Refinery Operations Summary

       
    Three Months Ended March 31,  
    2015     2014  
             
Operating Days   90     90  
             
Downtime   -     -  
             
Total refinery throughput(1)            
  bbls   1,062,388     1,092,007  
  bpd   11,804     12,133  
             
Total refinery production            
  bbls   1,044,210     1,073,638  
  bpd   11,602     11,929  
             
Total refined petroleum product sales            
  bbls   1,026,884     1,076,764  
             
Fuel and energy losses            
  bbls   18,178     18,369  
  bpd   202     204  
             
Capacity utilization rate            
  refinery throughput   78.7 %   80.9 %
  refinery production   77.3 %   79.5 %
             

(1) Throughput represents feedstocks. The Nixon Facility's feedstock consists of crude oil and condensate.

The Nixon Facility experienced no days for downtime in the quarter ended March 31, 2015 or 2014. The Nixon Facility processed 1,062,388 barrels ("bbls"), or 11,804 barrels per day ("bpd"), of crude oil and condensate in the first quarter 2015 compared to 1,092,007 bbls, or 12,133 bpd, of crude oil and condensate for first quarter 2014. The Nixon Facility produced 1,044,210 bbls, or 11,602 bpd, of refined petroleum products in the first quarter 2015 compared to 1,073,638 bbls, or 11,929 bpd, of refined petroleum products in the same period a year earlier. Total refinery throughput and total refinery production remained relatively stable between the periods.

The capacity utilization rate for refinery throughput for the first quarter 2015 was 78.7% compared to 80.9% for the first quarter 2014, reflecting a nominal decrease of approximately 2%. The capacity utilization rate for refinery production for the same periods was 77.3% and 79.5%, respectively, reflecting a nominal decrease of approximately 2%. The decrease in capacity utilization rates for refinery throughput and refinery production related to slight decreases in throughput and production volumes. Fuel and energy losses at the Nixon Facility were 18,178 bbls, or 202 bpd, compared to 18,369, or 204 bpd, for comparable periods. The nominal decrease in fuel and energy losses of 191 bbls, or 2 bpd, was the result of operational efficiency improvements.

Refinery operating income before the JMA Profit Share was $8.8 million for the quarter ended March 31, 2015 compared to $7.0 million for the same period a year earlier. Refinery operating income including the JMA Profit Share was $6.4 million for the quarter ended March 31, 2015 compared to $7.0 million for the comparable period a year earlier. 

Non-GAAP Performance Measures

This press release and its accompanying financial schedules report adjusted EBITDA, EBITDA, and refinery operating income, which are financial performance measures defined as non-GAAP by the Securities and Exchange Commission (the "SEC"). These non-GAAP financial performance measures are used by management to assess Blue Dolphin's operating results and the effectiveness of its business segments. Blue Dolphin's financial performance measures may be different than non-GAAP financial performance 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").

Below are the definitions of non-GAAP performance measures used by management in this press release:

  • Adjusted earnings before interest, income taxes and depreciation ("EBITDA") reflects EBITDA less the JMA Profit Share. The JMA Profit Share represents the GEL Profit Share plus the GEL Performance Fee for the period pursuant to the Joint Marketing Agreement. Refinery operations adjusted EBITDA reflects adjusted EBITDA for our refinery operations business segment. Total adjusted EBITDA reflects adjusted EBITDA for our refinery operations and pipeline transportation business segments, as well as corporate and other;

  • EBITDA earnings are adjusted for: (i) interest income (expense), (ii) income taxes, and (iii) depreciation and amortization. We exclude from EBITDA other expenses or income not pertaining to the operations of our business segments. Refinery operations EBITDA reflects EBITDA for our refinery operations business segment. Total EBITDA reflects EBITDA for our refinery operations and pipeline transportation business segments, as well as corporate and other; and

  • Refinery operating income reflects refined petroleum product sales less direct operating costs (including cost of refined products sold and refinery operating expenses) and the JMA profit share, which is an indirect operating expense.

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.

Cautionary Statement Regarding Forward-Looking Statements

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: 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; 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; 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, and other 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  
         
    March 31,     December 31,  
    2015     2014  
             
ASSETS                
CURRENT ASSETS                
Cash and cash equivalents   $ 2,279,206     $ 1,293,233  
Restricted cash     1,011,112       1,008,514  
Accounts receivable     9,876,395       8,340,303  
Prepaid expenses and other current assets     120,764       771,458  
Deposits     120,176       68,498  
Inventory     3,070,710       3,200,651  
Deferred tax assets, current portion, net     17,779       -  
  Total current assets     16,496,142       14,682,657  
Total property and equipment, net     38,263,759       37,371,075  
Surety bonds     1,642,000       1,642,000  
Debt issue costs, net     500,122       479,737  
Trade name     303,346       303,346  
Deferred tax assets, net     3,934,843       5,928,342  
TOTAL ASSETS   $ 61,140,212     $ 60,407,157  
LIABILITIES AND STOCKHOLDERS' EQUITY                
CURRENT LIABILITIES                
Accounts payable   $ 9,882,225     $ 12,370,179  
Accounts payable, related party     119,645       1,174,168  
Asset retirement obligations, current portion     86,341       85,846  
Accrued expenses and other current liabilities     3,773,607       2,783,704  
Interest payable, current portion     47,310       56,039  
Long-term debt, current portion     1,263,057       1,245,476  
Deferred tax liabilities, net     -       168,236  
  Total current liabilities     15,172,185       17,883,648  
LONG-TERM LIABILITIES                
Asset retirement obligations, net of current portion     1,833,693       1,780,924  
Deferred revenues and expenses     648,305       691,525  
Long-term debt, net of current portion     10,491,117       10,808,803  
Long-term interest payable, net of current portion     1,326,080       1,274,789  
  Total long-term liabilities     14,299,195       14,556,041  
TOTAL LIABILITIES     29,471,380       32,439,689  
                 
Commitments and contingencies (Note 20)                
                 
STOCKHOLDERS' EQUITY                
Common stock ($0.01 par value, 20,000,000 shares authorized; 10,599,444 shares issued at March 31, 2015 and December 31, 2014)     105,995       105,995  
Additional paid-in capital     36,718,781       36,718,781  
Accumulated deficit     (4,355,944 )     (8,057,308 )
Treasury stock, 150,000 shares at cost     (800,000 )     (800,000 )
  Total stockholders' equity     31,668,832       27,967,468  
TOTAL LIABILITIES AND STOCKHOLDERS' EQUITY   $ 61,140,212     $ 60,407,157  
                 
See notes to consolidated financial statements in Blue Dolphin's quarterly report on Form 10-Q for the quarter ended March 31, 2015.  
   
   
Blue Dolphin Energy Company & Subsidiaries  
   
Consolidated Statements of Operations  
         
    Three Months Ended March 31,  
    2015     2014  
                 
REVENUE FROM OPERATIONS                
  Refined product sales   $ 61,067,062     $ 120,376,151  
  Tank rental revenue     286,892       282,516  
  Pipeline operations     38,395       54,031  
    Total revenue from operations     61,392,349       120,712,698  
                 
COST OF OPERATIONS                
  Cost of refined products sold     49,387,449       110,415,607  
  Refinery operating expenses     2,880,971       2,955,019  
  Joint Marketing Agreement profit share     2,438,637       -  
  Pipeline operating expenses     46,596       27,729  
  Lease operating expenses     7,316       7,176  
  General and administrative expenses     345,884       369,484  
  Depletion, depreciation and amortization     399,231       390,605  
  Accretion expense     53,215       50,802  
                 
    Total cost of operations     55,559,299       114,216,422  
                 
Income from operations     5,833,050       6,496,276  
                 
OTHER INCOME (EXPENSE)                
  Easement, interest and other income     66,007       154,220  
  Interest expense     (208,075 )     (253,800 )
    Total other income (expense)     (142,068 )     (99,580 )
                 
Income before income taxes     5,690,982       6,396,696  
                 
Income tax expense     (1,989,618 )     (202,423 )
                 
Net income   $ 3,701,364     $ 6,194,273  
                 
                 
Income per common share                
Basic   $ 0.35     $ 0.59  
Diluted   $ 0.35     $ 0.59  
                 
Weighted average number of common shares outstanding:                
Basic     10,449,444       10,430,973  
Diluted     10,449,444       10,430,973  
                 
See notes to consolidated financial statements in Blue Dolphin's quarterly report on Form 10-Q for the quarter ended March 31, 2015.  
   
   
Blue Dolphin Energy Company & Subsidiaries  
   
Consolidated Statements of Cash Flows  
         
    Three Months Ended March 31,  
    2015     2014  
OPERATING ACTIVITIES                
  Net income   $ 3,701,364     $ 6,194,273  
  Adjustments to reconcile net income to net cash provided by operating activities:                
    Depletion, depreciation and amortization     399,231       390,605  
    Unrealized gain on derivatives     548,190       127,100  
    Deferred taxes     1,807,484       -  
    Amortization of debt issue costs     8,450       8,450  
    Accretion expense     53,215       50,802  
  Changes in operating assets and liabilities                
    Restricted cash     (2,598 )     (675,736 )
    Accounts receivable     (1,536,092 )     3,738,092  
    Prepaid expenses and other current assets     650,694       70,655  
    Deposits and other assets     (80,513 )     (449,553 )
    Inventory     129,941       289,506  
    Accounts payable, accrued expenses and other liabilities     (2,046,849 )     (4,506,163 )
    Accounts payable, related party     (1,054,523 )     (38,693 )
      Net cash provided by operating activities     2,577,994       5,199,338  
                 
INVESTING ACTIVITIES                
  Capital expenditures     (1,291,915 )     (59,178 )
      Net cash used in investing activities     (1,291,915 )     (59,178 )
                 
FINANCING ACTIVITIES                
  Payments on long-term debt     (300,106 )     (5,267,116 )
  Payments on notes payable     -       (11,884 )
      Net cash used in financing activities     (300,106 )     (5,279,000 )
Net increase (decrease) in cash and cash equivalents     985,973       (138,840 )
                 
CASH AND CASH EQUIVALENTS AT BEGINNING OF PERIOD     1,293,233       434,717  
CASH AND CASH EQUIVALENTS AT END OF PERIOD   $ 2,279,206     $ 295,877  
                 
Supplemental Information:                
Non-cash operating activities                
  Surety bond funded by seller of pipeline interest   $ -     $ 850,000  
Non-cash investing and financing activities:                
  New asset retirement obligations   $ -     $ 300,980  
Interest paid   $ 165,513     $ 902,176  
Income taxes paid   $ -     $ -  
                 
See notes to consolidated financial statements in Blue Dolphin's quarterly report on Form 10-Q for the quarter ended March 31, 2015.  
   
   
Blue Dolphin Energy Company & Subsidiaries
 
Reconciliation of Adjusted EBITDA and EBITDA to Net Income
 
  Three Months Ended March 31, 2015     Three Months Ended March 31, 2014  
  Segment                 Segment              
  Refinery     Pipeline     Corporate &           Refinery     Pipeline     Corporate &        
  Operations     Transportation     Other     Total     Operations     Transportation     Other     Total  
Revenue from operations $ 61,353,954     $ 38,395     $ -     $ 61,392,349     $ 120,658,667     $ 54,031     $ -     $ 120,712,698  
Less: cost of operations(1)   (52,259,470 )     (53,912 )     (408,048 )     (52,721,430 )     (113,368,578 )     (122,510 )     (334,729 )     (113,825,817 )
Other non-interest income   -       62,500       -       62,500       -       125,000       -       125,000  
Adjusted EBITDA   9,094,484       46,983       (408,048 )     8,733,419       7,290,089       56,521       (334,729 )     7,011,881  
Less: JMA Profit Share(2)   (2,438,637 )     -       -       (2,438,637 )     -       -       -       -  
EBITDA $ 6,655,847     $ 46,983     $ (408,048 )   $ 6,294,782     $ 7,290,089     $ 56,521     $ (334,729 )   $ 7,011,881  
                                                               
Depletion, depreciation and amortization                           (399,231 )                             (390,605 )
Interest expense, net                           (204,569 )                             (224,580 )
                                                               
Income before income taxes                           5,690,982                               6,396,696  
                                                               
Income tax expense                           (1,989,618 )                             (202,423 )
                                                               
Net income                         $ 3,701,364                             $ 6,194,273  
                                                               
(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) The JMA Profit Share represents the GEL Profit Share plus the GEL Performance Fee for the period pursuant to the Joint Marketing Agreement. For additional information related to the Joint Marketing Agreement, see "Part 1, Item 1 - Note (20) Commitments and Contingencies" and "Part 1, Item 2. Management's Discussion and Analysis and Results of Operations - Relationship with Genesis" in our quarterly report on Form 10-Q for the quarter ended March 31, 2015.
   
   
Blue Dolphin Energy Company & Subsidiaries  
   
Reconciliation of Refinery Operating Income to Refined Petroleum Product Sales, Cost of Refined Petroleum Products Sold, Refinery Operating Expenses and JMA Profit Share  
 
   
    March 31,  
    2015     2014  
                 
Total refined petroleum product sales   $ 61,067,062     $ 120,376,151  
Less: Cost of refined products sold     (49,387,449 )     (110,415,607 )
Less: Refinery operating expenses     (2,880,971 )     (2,955,019 )
Refinery operating income before JMA Profit Share     8,798,642       7,005,525  
Less: JMA Profit Share     (2,438,637 )     -  
                 
Refinery operating income   $ 6,360,005     $ 7,005,525  
                 
Total refined petroleum product sales (bbls)     1,026,884       1,076,764  
                 
For a reconciliation of refined petroleum product sales to total revenue from operations for our consolidated operations, refer to the Consolidated Statements of Operations" contained within this press release.  
   

Contact Information

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