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 November 23, 2015 - 5:37 PM EST
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Blue Dolphin Reports Improved Third Quarter 2015 Results

HOUSTON, TX--(Marketwired - Nov 23, 2015) - Blue Dolphin Energy Company ("Blue Dolphin") (OTCQX: BDCO), an independent refiner and marketer of refined petroleum products in the Eagle Ford Shale, reported net income for the third quarter of 2015 of $1.3 million, or income of $0.12 per share, compared to $0.8 million, or income of $0.08 per share, for the same quarter in 2014. Refinery operations adjusted earnings before interest, income taxes and depreciation ("EBITDA"), a non-GAAP financial measure, totaled $3.8 million for the third quarter of 2015 compared to $2.9 million for the third quarter of 2014. Total adjusted EBITDA totaled $4.2 million compared to $2.5 million for same comparative periods. Refinery operating income for the third quarter of 2015 totaled $2.1 million compared to $1.5 million for the third quarter of 2014.

Net income for the first nine months of 2015 was $5.1 million, or income of $0.49 per share, compared to net income of $8.4 million, or income of $0.81 per share, for the first nine months in 2014. Refinery operations adjusted EBITDA totaled $15.5 million for the first nine months of 2015 compared to $13.8 million for the first nine months of 2014. Total adjusted EBITDA totaled $15.2 million compared to $12.9 million for the same comparative periods. Refinery operating income for the first nine months of 2015 totaled $10.0 million compared to $10.7 million for the first nine months of 2014.

Refinery Operations

For the third quarter of 2015, the Nixon Facility processed 1,109,411 barrels ("bbls"), or 12,752 barrels per day ("bpd"), of crude oil and condensate compared to 849,402 bbls, or 10,890 bpd, of crude oil and condensate for the third quarter of 2014. For the same comparative periods, the Nixon Facility produced 1,084,246 bbls, or 12,463 bpd, of refined petroleum products compared to 831,771 bbls, or 10,664 bpd. The capacity utilization rate for refinery throughput for the third quarter of 2015 was 85.0% compared to 72.6% for the third quarter of 2014. The capacity utilization rate for refinery production for the third quarter of 2015 was 83.1% compared to 71.1% for the third quarter of 2014. Total refinery throughput, total refinery production, and capacity utilization rates increased as a result of: (i) less downtime in the third quarter of 2015 compared to the third quarter of 2014, (ii) debottlenecking efforts in the third quarter of 2015, and (iii) completion of refurbishment of key components of the naphtha stabilizer and depropanizer units late in the third quarter of 2015, all of which contributed to an increase in average refinery throughput for the Current Quarter.

Use of Non-GAAP Financial Measures

To supplement our actual results in accordance with generally accepted accounting principles ("GAAP") for the applicable periods, Blue Dolphin also uses the non-GAAP financial measures noted above. These non-GAAP financial measures are reconciled to GAAP-based results below. These non-GAAP financial measures should not be considered an alternative for GAAP results. The adjustments are provided to enhance an overall understanding of Blue Dolphin's financial performance for the applicable periods and are indicators management believes are relevant and useful. These performance measures may differ from similar calculations used by other companies within the petroleum industry, thereby limiting their usefulness as a comparative measure.

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

  • EBITDA reflects earnings before: (i) interest income (expense), (ii) income taxes, and (iii) depreciation and amortization. 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;

  • Adjusted EBITDA reflects EBITDA plus the Joint Marketing Agreement Profit Share (the "JMA Profit Share"). The JMA Profit Share represents the GEL TEX Marketing, LLC ("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; 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.

Forward-Looking Statements

This press release contains forward-looking statements. You can generally identify forward-looking statements by our use of forward-looking terminology such as "outlook," "anticipate," "believe," "continue," "could," "estimate," "expect," "intend," "may," "might," "plan," "potential," "predict," "seek," "should," or "will," or the negative thereof or other variations thereon or comparable terminology. These forward-looking statements are only predictions and involve known and unknown risks and uncertainties, many of which are beyond our control. For a discussion of risk factors which may affect our results, please see the risk factors and other disclosures included in our most recent Annual Report on Form 10-K, any subsequently filed Quarterly Reports on Form 10-Q, and our other Securities and Exchange Commission ("SEC") filings. These risks may cause our actual results, performance, or achievements to differ materially from any future results, performance, or achievements expressed or implied by these forward-looking statements. Given these risks and uncertainties, you are cautioned not to place undue reliance on such forward-looking statements. The forward-looking statements included in this press release are made only as of the date hereof. Blue Dolphin disclaims any intention or obligation to update publicly or revise its forward-looking statements, whether as a result of new information, future events or otherwise, except to the extent required by law.

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. For additional information, visit Blue Dolphin's corporate website at http://www.blue-dolphin-energy.com.

Blue Dolphin Energy Company & Subsidiaries

Financial and operational data presented in this press release is unaudited except as otherwise noted. The consolidated balance sheets, consolidated statements of income and consolidated statements of cash flows should be read in conjunction with Blue Dolphin's quarterly report on Form 10-Q for the quarterly period ended September 30, 2015.

 
Consolidated Balance Sheets
 
    September 30,     December 31,  
    2015     2014  
             
ASSETS            
CURRENT ASSETS            
Cash and cash equivalents   $ 1,518,359     $ 1,293,233  
Restricted cash     5,834,197       1,008,514  
Accounts receivable     7,833,519       8,340,303  
Prepaid expenses and other current assets     1,045,893       771,458  
Deposits     420,176       68,498  
Inventory     5,620,827       3,200,651  
Deferred tax assets, current portion, net     2,892,459       -  
  Total current assets     25,165,430       14,682,657  
                   
Total property and equipment, net     46,054,365       37,371,075  
Restricted cash, noncurrent     11,277,441       -  
Surety bonds     1,667,000       1,642,000  
Debt issue costs, net     1,296,480       479,737  
Trade name     303,346       303,346  
Deferred tax assets, net     387,824       5,928,342  
  Total long-term assets     60,986,456       45,724,500  
TOTAL ASSETS   $ 86,151,886     $ 60,407,157  
                 
LIABILITIES AND STOCKHOLDERS' EQUITY                
                 
CURRENT LIABILITIES                
Accounts payable   $ 16,459,787     $ 12,370,179  
Accounts payable, related party     -       1,174,168  
Asset retirement obligations, current portion     38,644       85,846  
Accrued expenses and other current liabilities     2,005,206       2,783,704  
Interest payable, current portion     57,140       56,039  
Long-term debt, current portion     1,631,539       1,245,476  
Deferred tax liabilities, net     -       168,236  
  Total current liabilities     20,192,316       17,883,648  
Long-term liabilities:                
Asset retirement obligations, net of current portion     1,928,371       1,780,924  
Deferred revenues and expenses     561,864       691,525  
Long-term debt, net of current portion     28,948,021       10,808,803  
Long-term interest payable, net of current portion     1,430,371       1,274,789  
  Total long-term liabilities     32,868,627       14,556,041  
                 
TOTAL LIABILITIES     53,060,943       32,439,689  
                 
Commitments and contingencies (Note 21)                
                 
STOCKHOLDERS' EQUITY                
Common stock ($0.01 par value, 20,000,000 shares authorized;10,603,802 and 10,599,444 shares issued at September 30, 2015 and December 31, 2014, respectively)     106,038       105,995  
Additional paid-in capital     36,738,737       36,718,781  
Accumulated deficit     (2,953,832 )     (8,057,308 )
Treasury stock, 150,000 shares at cost     (800,000 )     (800,000 )
  Total stockholders' equity     33,090,943       27,967,468  
TOTAL LIABILITIES AND STOCKHOLDERS' EQUITY   $ 86,151,886     $ 60,407,157  
                 
                 
                 
Consolidated Statements of Income
 
    Three Months Ended September 30,     Nine Months Ended September 30,  
    2015     2014     2015     2014  
                         
REVENUE FROM OPERATIONS                        
  Refined petroleum product sales   $ 54,924,070     $ 87,846,757     $ 174,830,292     $ 310,938,981  
  Tank rental revenue     286,892       282,516       860,676       847,548  
  Pipeline operations     45,925       56,900       119,882       178,793  
    Total revenue from operations     55,256,887       88,186,173       175,810,850       311,965,322  
COST OF OPERATIONS                                
  Cost of refined products sold     48,415,627       82,781,856       151,604,774       289,819,720  
  Refinery operating expenses     2,953,528       2,496,514       8,420,650       8,092,738  
  Joint Marketing Agreement profit share     1,435,376       1,094,383       4,812,674       2,334,487  
  Pipeline operating expenses     63,099       50,100       170,582       139,542  
  Lease operating expenses     (1,143 )     7,041       20,271       21,037  
  General and administrative expenses     312,365       253,437       1,058,267       1,049,981  
  Depletion, depreciation and amortization     414,837       393,871       1,217,005       1,175,643  
  Accretion expense     52,720       53,731       158,655       158,264  
    Total cost of operations     53,646,409       87,130,933       167,462,878       302,791,412  
Income from operations     1,610,478       1,055,240       8,347,972       9,173,910  
OTHER INCOME (EXPENSE)                                
  Easement, interest and other income     724,349       1,813       856,816       253,745  
  Interest expense     (382,191 )     (214,407 )     (1,322,562 )     (675,586 )
  Loss on disposal of property and equipment     -       (4,400 )     -       (4,400 )
    Total other income (expense)     342,158       (216,994 )     (465,746 )     (426,241 )
                                 
Income before income taxes     1,952,636       838,246       7,882,226       8,747,669  
                                 
Income tax expense     (688,403 )     (22,199 )     (2,778,750 )     (298,792 )
                                 
Net income   $ 1,264,233     $ 816,047     $ 5,103,476     $ 8,448,877  
                                 
                                 
Income per common share                                
Basic   $ 0.12     $ 0.08     $ 0.49     $ 0.81  
Diluted   $ 0.12     $ 0.08     $ 0.49     $ 0.81  
                                 
Weighted average number of common shares outstanding:                                
Basic     10,453,802       10,446,218       10,451,168       10,439,684  
Diluted     10,453,802       10,446,218       10,451,168       10,439,684  
                                 
                                 
                                 
Consolidated Statements of Cash Flows
 
    Nine Months Ended September 30,  
             
    2015     2014  
OPERATING ACTIVITIES            
  Net income   $ 5,103,476     $ 8,448,877  
  Adjustments to reconcile net income to net cash                
  provided by operating activities:                
    Depletion, depreciation and amortization     1,217,005       1,175,643  
    Unrealized loss on derivatives     362,750       26,150  
    Deferred taxes     2,479,823       -  
    Amortization of debt issue costs     517,652       25,350  
    Accretion expense     158,655       158,264  
    Common stock issued for services     19,999       75,001  
    Loss on disposal of assets     -       4,400  
  Changes in operating assets and liabilities                
    Accounts receivable     506,784       2,058,624  
    Prepaid expenses and other current assets     (274,435 )     152,655  
    Deposits and other assets     (1,711,073 )     (490,838 )
    Inventory     (2,420,176 )     (2,879,729 )
    Accounts payable, accrued expenses and other liabilities     2,916,973       (5,144 )
    Accounts payable, related party     (1,174,168 )     (1,857,964 )
      Net cash provided by operating activities     7,703,265       6,891,289  
                 
INVESTING ACTIVITIES                
  Capital expenditures     (9,900,295 )     (1,145,720 )
  Change in restricted cash for investing activities     (13,021,438 )     -  
    Net cash used in investing activities     (22,921,733 )     (1,145,720 )
                 
FINANCING ACTIVITIES                
  Proceeds from issuance of debt     25,000,000       -  
  Payments on long-term debt     (9,474,720 )     (6,103,131 )
  Proceeds from notes payable     3,000,000       2,000,000  
  Payments on notes payable     -       (216,182 )
  Change in restricted cash for financing activities     (3,081,686 )     (678,498 )
    Net cash provided by (used in) financing activities     15,443,594       (4,997,811 )
Net increase in cash and cash equivalents     225,126       747,758  
                 
CASH AND CASH EQUIVALENTS AT BEGINNING OF PERIOD     1,293,233       434,717  
CASH AND CASH EQUIVALENTS AT END OF PERIOD   $ 1,518,359     $ 1,182,475  
                 
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  
  Financing of capital expenditures via capital lease   $ -     $ 536,635  
Interest paid   $ 959,665     $ 1,211,773  
Income taxes paid   $ 139,500     $ 231,552  
                 
                 
                 
Reconciliation of Adjusted EBITDA and EBITDA to Net Income
 
    Three Months Ended September 30, 2015        Three Months Ended September 30, 2014     
    Segment                    Segment                 
    Refinery     Pipeline     Corporate &           Refinery     Pipeline     Corporate &        
    Operations     Transportation     Other     Total     Operations     Transportation     Other     Total  
Revenue from operations   $ 55,210,962     $ 45,925     $ -       55,256,887     $ 88,129,273     $ 56,900     $ -     $ 88,186,173  
Less: cost of operations1     (51,444,705 )     (114,675 )     (236,816 )     (51,796,196 )     (85,261,533 )     (110,872 )     (274,674 )     (85,647,079 )
Other non-interest income2     -       62,500       660,000       722,500       -       -       -       -  
Adjusted EBITDA     3,766,257       (6,250 )     423,184       4,183,191       2,867,740       (53,972 )     (274,674 )     2,539,094  
Less: JMA Profit Share3     (1,435,376 )     -       -       (1,435,376 )     (1,094,383 )     -       -       (1,094,383 )
EBITDA   $ 2,330,881     $ (6,250 )   $ 423,184     $ 2,747,815     $ 1,773,357     $ (53,972 )   $ (274,674 )   $ 1,444,711  
                                                                 
Depletion, depreciation and amortization                             (414,837 )                             (393,871 )
Interest expense, net                             (380,342 )                             (212,594 )
                                                                 
Income before income taxes                             1,952,636                               838,246  
                                                                 
Income tax expense                             (688,403 )                             (22,199 )
                                                                 
Net income                           $ 1,264,233                             $ 816,047  
                                                                 
                                                                 
                                                                 
    Nine Months Ended September 30, 2015     Nine Months Ended September 30, 2014  
    Segment                 Segment              
    Refinery     Pipeline     Corporate &           Refinery     Pipeline     Corporate &        
    Operations     Transportation     Other     Total     Operations     Transportation     Other     Total  
Revenue from operations   $ 175,690,968     $ 119,882     $ -     $ 175,810,850     $ 311,786,529     $ 178,793     $ -     $ 311,965,322  
Less: cost of operations1     (160,208,576 )     (296,291 )     (928,331 )     (161,433,198 )     (297,956,882 )     (355,645 )     (973,154 )     (299,285,681 )
Other non-interest income2     -       187,500       660,000       847,500       -       208,333       -       208,333  
Adjusted EBITDA     15,482,392       11,091       (268,331 )     15,225,152       13,829,647       31,481       (973,154 )     12,887,974  
Less: JMA Profit Share3     (4,812,674 )     -       -       (4,812,674 )     (2,334,487 )     -       -       (2,334,487 )
EBITDA   $ 10,669,718     $ 11,091     $ (268,331 )   $ 10,412,478     $ 11,495,160     $ 31,481     $ (973,154 )   $ 10,553,487  
                                                                 
Depletion, depreciation and amortization                             (1,217,005 )                             (1,175,643 )
Interest expense, net                             (1,313,247 )                             (630,175 )
                                                                 
Income before income taxes                             7,882,226                               8,747,669  
                                                                 
Income tax expense                             (2,778,750 )                             (298,792 )
                                                                 
Net income                           $ 5,103,476                             $ 8,448,877  
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 Other non-interest income reflects FLNG Land II, Inc., a Delaware corporation ("FLNG"), easement revenue and recognition of a one-time gain of $660,000 related to settlement proceeds from a nearly two decades-old case involving Jack J. Grynberg and several defendants in the oil and gas industry, including Blue Dolphin Pipe Line Company (the "Grynberg Matter").  See "Part 1, Item 1. Financial Statements - Note (21) Commitments and Contingencies - FLNG Master Easement Agreement and Grynberg Settlement Agreement" of Blue Dolphin's Form 10-Q for the quarterly period ended September 30, 2015 as filed with the SEC for further discussion related to FLNG and the Grynberg Matter.
3 The JMA Profit Share represents the GEL Profit Share plus the GEL Performance Fee for the period pursuant to the Joint Marketing Agreement.  See "Part 1, Item 1. Financial Statements - Note (21) Commitments and Contingencies" and "Part 1, Item 2. Management's Discussion and Analysis of Financial Condition and Results of Operations - Relationship with Genesis" of Blue Dolphin's Form 10-Q for the quarterly period ended September 30, 2015 as filed with the SEC for further discussion related to the Joint Marketing Agreement.
   
   
   
Reconciliation of Refinery Operating Income to Refined Petroleum Product Sales,
Cost of Refined Petroleum Products Sold, Refinery Operating Expenses and JMA Profit Share
 
    Three Months Ended September 30,     Nine Months Ended September 30,  
    2015     2014     2015     2014  
                         
Total refined petroleum product sales   $ 54,924,070     $ 87,846,757     $ 174,830,292     $ 310,938,981  
Less: Cost of refined petroleum products sold     (48,415,627 )     (82,781,856 )   $ (151,604,774)       (289,819,720 )
Less: Refinery operating expenses     (2,953,528 )     (2,496,514 )     (8,420,650 )     (8,092,738 )
Refinery operating income before JMA Profit Share     3,554,915       2,568,387       14,804,868       13,026,523  
Less: JMA Profit Share     (1,435,376 )     (1,094,383 )     (4,812,674 )     (2,334,487 )
                                 
Refinery operating income   $ 2,119,539     $ 1,474,004     $ 9,992,194     $ 10,692,036  
                                 
Total refined petroleum product sales (bbls)     1,035,275       823,399       2,958,865       2,818,270  
                                 

For a reconciliation of refined petroleum product sales to total revenue from operations for our consolidated operations, refer to the consolidated statements of income contained within this press release.

Refinery Throughput and Production Data
 
    Three Months Ended September 30,     Nine Months Ended September 30,  
    2015     2014     2015     2014  
                         
Operating Days   87     78     257     252  
Downtime   5     14     16     21  
                         
Total refinery throughput                        
  bbls   1,109,411     849,402     3,086,749     2,909,669  
  bpd   12,752     10,890     12,011     11,546  
                         
Total refinery production                        
  bbls   1,084,246     831,771     3,024,579     2,855,054  
  bpd   12,463     10,664     11,769     11,330  
                         
Capacity utilization rate                        
  refinery throughput   85.0 %   72.6 %   80.1 %   77.0 %
  refinery production   83.1 %   71.1 %   78.5 %   75.5 %
                         
                         
Note: The difference between total refinery throughput (volume processed as input) and total refinery production (volume processed as output) represents refinery fuel and energy use.

Contact

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


Source: Marketwired (November 23, 2015 - 5:37 PM EST)

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