UNITED STATES

SECURITIES AND EXCHANGE COMMISSION

WASHINGTON, D.C. 20549

FORM 10-Q

[X] QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934

For the quarterly period ended June 30, ~~2014~~2015

[ ] TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT

OF 1934

For the transition period from _________ to __________

COMMISSION FILE NUMBER 1-33926

TRECORA RESOURCES

(Exact name of registrant as specified in its charter)

DELAWARE	75-1256622
(State or other jurisdiction of	(I.R.S. employer incorporation or
organization)	identification no.)

1650 Hwy 6 South, Suite 190	77478
Sugar Land, Texas	(Zip code)
(Address of principal executive offices)

Registrant’s telephone number, including area code: (409) 385-8300

~~Arabian American Development Company~~

Former name, former address and former fiscal year, if

changed since last report.

Indicate by check mark whether the registrant (1) has filed all reports required to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during the preceding 12 months (or for such shorter period that the registrant was required to file such reports) and (2) has been subject to such filing requirements for the past 90 days.

Yes X No

Indicate by check mark whether the registrant has submitted electronically and posted on its corporate Web site, if any, every Interactive Date File required to be submitted and posted pursuant to Rule 405 of Regulation S-T (§232.405 of this chapter) during the preceding 12 months (or for such shorter period that the registrant was required to submit and post such files).

Yes X No

Indicate by check mark whether the registrant is a large accelerated filer, an accelerated filer, a non-accelerated filer, or a smaller reporting company. See the definitions of “large accelerated filer,” “accelerated filer,” and “smaller reporting company” in Rule 12b-2 of the Exchange Act.

Large accelerated filer ____ Accelerated filer _ X__

Non-accelerated filer _____ Smaller reporting company ____

Indicate by check mark whether the registrant is a shell company (as defined in Rule 12b-2 of the Act).

Yes No X_

Number of shares of the Registrant's Common Stock (par value $0.10 per share), outstanding at August 5, ~~2014: 24,164,700.~~2015: 24,369,178.

TABLE OF CONTENTS

Item Number and Description

PART I – FINANCIAL INFORMATION
ITEM 1. Financial Statements
	Consolidated Balance Sheets	1
	Consolidated Statements of Income	2
	Consolidated Statements of Comprehensive Income	3
	Consolidated Statement of Stockholders’ Equity	4
	Consolidated Statements of Cash Flows	5
	Notes to Consolidated Financial Statements	6

ITEM 2. Management’s Discussion and Analysis of Financial Condition and Results of Operations		1517

ITEM 3. Quantitative and Qualitative Disclosures About Market Risk		2224

ITEM 4. Controls and Procedures		2224
	PART II – OTHER INFORMATION
ITEM 1. Legal Proceedings		2225

ITEM 1A. Risk Factors		2225

ITEM 6. Exhibits		2225

Table of Contents

PART I. FINANCIAL INFORMATION

ITEM 1. FINANCIAL STATEMENTS.

TRECORA RESOURCES AND SUBSIDIARIES

CONSOLIDATED BALANCE SHEETS

	JUNE 30, 2014 (unaudited)			DECEMBER 31, 2013			JUNE 30, 2015 (unaudited)		DECEMBER 31, 2014
ASSETS	(thousands of dollars)						(thousands of dollars)
Current Assets
Cash and cash equivalents	$	6,379		$	7,608		$	8,654	$	8,506
Trade receivables, net		28,176			22,069			22,122		28,271
Advance to AMAK		-			536
Inventories		11,702			12,063			15,058		12,815
Prepaid expenses and other assets		2,269			2,075			3,400		3,257
Contractual based intangible assets, net		-			104
Taxes receivable		-			571			-		434
Deferred income taxes		1,113			1,324			1,481		1,652
Total current assets		49,639			46,350			50,715		54,935

Plant, pipeline and equipment, net		43,222			41,925			86,652		73,811

Goodwill								21,798		21,750
Other intangible assets, net								25,293		26,235
Investment in AMAK		53,751			54,095			52,712		53,023
Mineral properties in the United States		588			588			588		588
Other assets		586			709			1,186		1,732

TOTAL ASSETS	$	147,786		$	143,667		$	238,944	$	232,074
LIABILITIES
Current Liabilities
Accounts payable	$	7,006		$	7,362		$	8,180	$	9,535
Accrued interest		80			102
Current portion of derivative instruments		215			292			152		362
Accrued liabilities		4,338			3,060			3,407		5,020
Accrued liabilities in Saudi Arabia		140			140			495		495
Current portion of post-retirement benefit		282			278			290		286
Current portion of long-term debt		1,400			1,400			7,263		7,000
Current portion of other liabilities		1,425			1,654			2,691		2,183
Total current liabilities		14,886			14,288			22,478		24,881

Long-term debt, net of current portion		8,139			11,839			69,687		73,450
Post-retirement benefit, net of current portion		649			649			649		649
Derivative instruments, net of current portion		251			319			117		196
Other liabilities, net of current portion		775			1,369			901		1,039
Deferred income taxes		11,141			11,984			10,231		10,471
Total liabilities		35,841			40,448			104,063		110,686

EQUITY
Common stock-authorized 40 million shares of $.10 par value; issued and outstanding 23.9 million and 23.8 million shares in 2014 and 2013, respectively		2,386			2,383
Common stock-authorized 40 million shares of $.10 par value; issued and outstanding 24.1 million and 24.0 million shares in 2015 and 2014, respectively								2,407		2,397
Additional paid-in capital		47,125			46,064			49,607		48,282
Accumulated other comprehensive loss		(303	)		(366	)
Retained earnings		62,448			54,849			82,578		70,420
Total Trecora Resources Stockholders’ Equity		111,656			102,930			134,592		121,099
Noncontrolling Interest		289			289			289		289
Total equity		111,945			103,219			134,881		121,388

TOTAL LIABILITIES AND EQUITY	$	147,786		$	143,667		$	238,944	$	232,074

See notes to consolidated financial statements.

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TRECORA RESOURCES AND SUBSIDIARIES

CONSOLIDATED STATEMENTS OF INCOME (UNAUDITED)

	THREE MONTHS ENDED						SIX MONTHS ENDED						THREE MONTHS ENDED						SIX MONTHS ENDED
	JUNE 30,						JUNE 30,						JUNE 30,						JUNE 30,
	2014			2013			2014			2013			2015			2014			2015			2014
	(thousands of dollars)												(thousands of dollars)
REVENUES
Petrochemical Product Sales	$	72,842		$	54,762		$	135,234		$	106,382
Petrochemical and Product Sales													$	56,665		$	72,842		$	107,206		$	135,234
Processing Fees		1,711			1,213			3,419			2,338			2,685			1,711			7,287			3,419
		74,553			55,975			138,653			108,720			59,350			74,553			114,493			138,653

OPERATING COSTS AND EXPENSES
Cost of Sales and Processing
(including depreciation of $868, $838, $1,733, and $1,663, respectively)		62,853			47,408			118,239			93,474
(including depreciation and amortization of $1,939, $868, $3,965, and $1,733, respectively)														44,166			62,853			83,596			118,239

GROSS PROFIT		11,700			8,567			20,414			15,246			15,184			11,700			30,897			20,414

GENERAL AND ADMINISTRATIVE EXPENSES
General and Administrative		4,154			3,452			8,343			6,957			5,523			4,154			11,288			8,343
Depreciation		136			131			275			260			170			136			385			275
		4,290			3,583			8,618			7,217			5,693			4,290			11,673			8,618

OPERATING INCOME		7,410			4,984			11,796			8,029			9,491			7,410			19,224			11,796

OTHER INCOME (EXPENSE)
Interest Income		9			--			18			1			7			9			13			18
Interest Expense		11			(123	)		(99	)		(238	)		(570	)		11			(1,183	)		(99	)
Losses on Cash Flow Hedge Reclassified from OCI		(63	)		(80	)		(130	)		(158	)		-			(63	)		-			(130	)
Equity in earnings (loss) of AMAK		6			4,732			(344	)		7,696
Equity in Earnings (Losses) of AMAK														(369	)		6			(310	)		(344	)
Miscellaneous Expense		(4	)		(69	)		(49	)		(89	)		(40	)		(4	)		(14	)		(49	)
		(41	)		4,460			(604	)		7,212			(972	)		(41	)		(1,494	)		(604	)

INCOME BEFORE INCOME TAXES		7,369			9,444			11,192			15,241			8,519			7,369			17,730			11,192

INCOME TAXES		2,369			3,135			3,593			4,146			2,145			2,369			5,572			3,593

NET INCOME		5,000			6,309			7,599			11,095			6,374			5,000			12,158			7,599

NET LOSS ATTRIBUTABLE TO NONCONTROLLING INTEREST		--			--			--			--			--			--			--			--

NET INCOME ATTRIBUTABLE TO TRECORA RESOURCES	$	5,000		$	6,309		$	7,599		$	11,095		$	6,374		$	5,000		$	12,158		$	7,599

Basic Earnings per Common Share
Net Income Attributable to Trecora Resources (dollars)	$	0.21		$	0.26		$	0.32		$	0.46		$	0.26		$	0.21		$	0.50		$	0.32

Basic Weighted Average Number of Common Shares Outstanding		24,165			24,110			24,158			24,108			24,354			24,165			24,331			24,158

Diluted Earnings per Common Share
Net Income Attributable to Trecora Resources (dollars)	$	0.20		$	0.26		$	0.31		$	0.45		$	0.25		$	0.20		$	0.48		$	0.31

Diluted Weighted Average Number of Common Shares Outstanding		24,813			24,652			24,866			24,655			25,155			24,813			25,150			24,866

See notes to consolidated financial statements.

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TRECORA RESOURCES AND SUBSIDIARIES

CONSOLIDATED STATEMENTS OF COMPREHENSIVE INCOME (UNAUDITED)

	THREE MONTHS ENDED				SIX MONTHS ENDED				THREE MONTHS ENDED				SIX MONTHS ENDED
	JUNE 30,				JUNE 30,				JUNE 30,				JUNE 30,
	2014		2013		2014		2013		2015		2014		2015		2014
	(thousands of dollars)								(thousands of dollars)

NET INCOME	$	5,000	$	6,309	$	7,599	$	11,095	$	6,374	$	5,000	$	12,158	$	7,599

OTHER COMPREHENSIVE GAIN, NET OF TAX
OTHER COMPREHENSIVE INCOME, NET OF TAX
Unrealized holding gains arising during period		82		152		193		285		-		82		-		193
Less: reclassification adjustment for losses included in net income		63		80		130		158
Less: reclassification adjustment included in net income										-		63		-		130

OTHER COMPREHENSIVE GAIN, NET OF TAX		19		72		63		127
OTHER COMPREHENSIVE INCOME, NET OF TAX										-		19		-		63

COMPREHENSIVE INCOME	$	5,019	$	6,381	$	7,662	$	11,222	$	6,374	$	5,019	$	12,158	$	7,662

See notes to consolidated financial statements.

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TRECORA RESOURCES AND SUBSIDIARIES

CONSOLIDATED STATEMENT OF STOCKHOLDERS' EQUITY (UNAUDITED)

	TRECORA RESOURCES STOCKHOLDERS																	TRECORA RESOURCES STOCKHOLDERS
	COMMON STOCK				ADDITIONAL PAID-IN		ACCUMULATED OTHER COMPREHENSIVE			RETAINED				NON- CONTROLLING		TOTAL		COMMON STOCK				ADDITIONAL PAID-IN			RETAINED				NON- CONTROLLING		TOTAL
	SHARES		AMOUNT		CAPITAL		LOSS			EARNINGS		TOTAL		INTEREST		EQUITY		SHARES		AMOUNT		CAPITAL			EARNINGS		TOTAL		INTEREST		EQUITY
	(thousands)		(thousands of dollars)															(thousands)
JANUARY 1, 2014		23,832	$	2,383	$	46,064	$	(366	)	$	54,849	$	102,930	$	289	$	103,219
JANUARY 1, 2015																			23,975	$	2,397	$	48,282		$	70,420	$	121,099	$	289	$	121,388

Stock options
Issued to Directors		-		-		218		-			-		218		-		218		-		-		128			-		128		-		128
Issued to Employees		-		-		701		-			-		701		-		701		-		-		657			-		657		-		657
Warrants		-		-		54		-			-		54		-		54
Issued to Former Director																			-		-		48			-		48		-		48
Restricted Common Stock
Issued to Employees																			14		-		180			-		180		-		180
Issued to Directors																			-		-		6			-		6		-		6
Common stock
Issued to Employees		32		3		88		-			-		91		-		91		64		8		308			-		316		-		316
Unrealized Gain on Interest Rate Swap (net of income tax expense of $34)		-		-		-		63			-		63		-		63
Issued to Directors																			16		2		(2	)		-		-		-		-
Net Income		-		-		-		-			7,599		7,599		-		7,599		-		-		-			12,158		12,158		-		12,158

JUNE 30, 2014		23,864	$	2,386	$	47,125	$	(303	)	$	62,448	$	111,656	$	289	$	111,945
JUNE 30, 2015																			24,069	$	2,407	$	49,607		$	82,578	$	134,592	$	289	$	134,881

See notes to consolidated financial statements.

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TRECORA RESOURCES AND SUBSIDIARIES

CONSOLIDATED STATEMENTS OF CASH FLOWS (UNAUDITED)

SIX MONTHS ENDED
JUNE 30,
2014 2013
(thousands of dollars)
OPERATING ACTIVITIES
  Net Income Attributable to Trecora Resources $ 7,599 $ 11,095
  Adjustments to Reconcile Net Income Attributable to Trecora Resources
    To Net Cash Provided by Operating Activities:
    Depreciation 2,008 1,923
    Amortization of Contractual Based Intangible Asset 104 125
    Accretion of Notes Receivable Discounts (18 ) (2 )
    Unrealized Gain on Derivative Instruments (48 ) -
    Stock-based Compensation 973 548
    Deferred Income Taxes (665 ) 1,148
    Postretirement Obligation 4 5
    Equity in (earnings) losses of AMAK 344 (3,700 )
    Gain from additional equity issuance by AMAK - (3,996 )
  Changes in Operating Assets and Liabilities:
    Increase in Trade Receivables (6,107 ) (5,279 )
    Decrease in Notes Receivable 141 20
    Decrease in Taxes Receivable 571 1,182
    (Increase) Decrease in Inventories 361 (2,476 )
    Increase in Prepaid Expenses (196 ) (547 )
    Increase in Accounts Payable and Accrued Liabilities 922 249
    Increase (Decrease) in Accrued Interest (22 ) 2
    Increase in Other Liabilities - 500

    Net Cash Provided by Operating Activities 5,971 797

INVESTING ACTIVITIES
  Additions to Plant, Pipeline and Equipment (4,127 ) (3,142 )
  Addition to Investment in AMAK - (7,500 )
  Advance to AMAK, net 536 1,719

    Net Cash Used in Investing Activities (3,591 ) (8,923 )

FINANCING ACTIVITIES
  Issuance of Common Stock 91 44
  Additions to Long-Term Debt 3,000 6,000
  Repayment of Long-Term Debt (6,700 ) (2,700 )

    Net Cash Provided by (Used in) Financing Activities (3,609 ) 3,344

NET DECREASE IN CASH AND CASH EQUIVALENTS (1,229 ) (4,782 )

CASH AND CASH EQUIVALENTS AT BEGINNING OF PERIOD 7,608 9,508

CASH AND CASH EQUIVALENTS AT END OF PERIOD $ 6,379 $ 4,726

Supplemental disclosure of cash flow information:
  Cash payments for interest $ 245 $ 388
  Cash payments for taxes $ 2,659 $ 1,390
Supplemental disclosure of non-cash items:
  Capital expansion amortized to depreciation expense $ 823 $ 540
  Unrealized gain on interest rate swap, net of tax expense $ 63 $ 127

	SIX MONTHS ENDED
	JUNE 30,
	2015			2014
	(thousands of dollars)
OPERATING ACTIVITIES
Net Income	$	12,158		$	7,599
Adjustments to Reconcile Net Income of Trecora Resources
To Net Cash Provided by Operating Activities:
Depreciation		3,409			2,008
Amortization of Intangible Assets		942			104
Unrealized Gain on Derivative Instruments		(289	)		(48	)
Share-based Compensation		1,289			973
Deferred Income Taxes		(69	)		(665	)
Postretirement Obligation		4			4
Equity in losses of AMAK		310			344
Changes in Operating Assets and Liabilities:
(Increase) Decrease in Trade Receivables		6,149			(6,107	)
Decrease in Taxes Receivable		434			571
(Increase) Decrease in Inventories		(2,243	)		361
Increase in Prepaid Expenses		(15	)		(196	)
Decrease in Other Assets		419			101
Increase (Decrease) in Accounts Payable and Accrued Liabilities		(2,968	)		922
Increase in Other Liabilities		969			-

Net Cash Provided by Operating Activities		20,499			5,971

INVESTING ACTIVITIES
Additions to Plant, Pipeline and Equipment		(16,850	)		(4,127	)
Acquisition Goodwill Adjustment		(47	)		-
Advance to AMAK, net		-			536
Net Cash Used in Investing Activities		(16,897	)		(3,591	)

FINANCING ACTIVITIES
Issuance of Common Stock		46			91
Additions to Long-Term Debt		-			3,000
Repayment of Long-Term Debt		(3,500	)		(6,700	)

Net Cash Used in Financing Activities		(3,454	)		(3,609	)

NET INCREASE (DECREASE) IN CASH AND CASH EQUIVALENTS		148			(1,229	)

CASH AND CASH EQUIVALENTS AT BEGINNING OF PERIOD		8,506			7,608

CASH AND CASH EQUIVALENTS AT END OF PERIOD	$	8,654		$	6,379

Supplemental disclosure of cash flow information:
Cash payments for interest	$	1,147	$	245
Cash payments for taxes, net of refunds	$	6,902	$	2,659
Supplemental disclosure of non-cash items:
Capital expansion amortized to depreciation expense	$	599	$	823

See notes to consolidated financial statements.

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TRECORA RESOURCES AND SUBSIDIARIES

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (UNAUDITED)

1. ~~BASIS OF PRESENTATION~~GENERAL

Organization

Trecora Resources (the “Company”), was incorporated in the State of Delaware in 1967. Our principal business activities are the manufacturing of various specialty hydrocarbons and synthetic waxes and the provision of custom processing services. Unless the context requires otherwise, references to “we,” “us,” “our,” and the “Company” are intended to mean Trecora Resources and its subsidiaries.

This document includes the following abbreviations:

(1)TREC – Trecora Resources

(2) TOCCO - Texas Oil & Chemical Co. II, Inc. - Wholly owned subsidiary of TREC and parent of SHR and TC

(3)SHR – South Hampton Resources, Inc. – Petrochemical segment

(4)GSPL – Gulf State Pipe Line Co, Inc. – Pipeline support for the petrochemical segment

(5)TC – Trecora Chemical, Inc. – Specialty wax segment

(6)AMAK – Al Masane Al Kobra Mining Company – Mining equity investment – 35% ownership

(7)PEVM – Pioche Ely Valley Mines, Inc. – Inactive mine - 55% ownership

(8)Acquisition – October 1, 2014, purchase of Trecora Chemical, Inc.

Basis of Presentation

The accompanying unaudited consolidated financial statements have been prepared in accordance with generally accepted accounting principles in the United States of America (“GAAP”) for interim financial information and in conformity with the instructions to Form 10-Q and Article 10 of Regulation S-X. Accordingly, these unaudited financial statements do not include all of the information and footnotes required by GAAP for complete financial statements and, therefore, should be read in conjunction with the financial statements and related notes contained in the Company’s Annual Report on Form 10-K for the year ended December 31, ~~2013.~~2014.

The unaudited condensed financial statements included in this document have been prepared on the same basis as the annual condensed financial statements and in management’s opinion reflect all adjustments, including normal recurring adjustments, necessary to present fairly the Company’s financial position, results of operations and cash flows for the interim periods presented. We have made estimates and judgments affecting the amounts reported in this document. The actual results that we experience may differ materially from our estimates. In the opinion of management, the disclosures included in these financial statements are adequate to make the information presented not misleading.

~~Unless the context requires otherwise, references to “we,” “us,” “our,” and the “Company” are intended to mean consolidated Trecora Resources and its subsidiaries.~~

Operating results for the three and six months ended June 30, ~~2014,~~2015, are not necessarily indicative of results for the year ending December 31, ~~2014.~~2015.

We currently operate in ~~one segment~~two segments, specialty petrochemical products and ~~all~~specialty synthetic waxes. All revenue originates from United States’ sources, and all long-lived assets owned are located in the United States.

The Company owns a 35% interest in ~~Al Masane Al Kobra Mining Company (“AMAK”),~~AMAK, a Saudi Arabian closed joint stock company which owns and is developing mining assets in Saudi Arabia. We account for our investment under the equity method of accounting. See Note ~~13.~~15.

2. RECENT ACCOUNTING PRONOUNCEMENTS

In May 2014 the Financial Accounting Standards Board ("FASB") issued Accounting Standards Update ("ASU") 2014-09, Revenue from Contracts with Customers ("ASU 2014-09"). ASU 2014-09 supersedes the revenue recognition requirements of FASB Accounting Standards Codification ("ASC") Topic 605, Revenue Recognition and most industry-specific guidance throughout the Accounting Standards Codification, resulting in the creation of FASB ASC Topic 606, Revenue from Contracts with ~~Customers.~~Customers. ASU 2014-09 requires entities to recognize revenue in a way that depicts the transfer of promised goods or services to customers in an amount that reflects the consideration to which the entity expects to be entitled to in exchange for those goods or services. This ASU provides alternative methods of retrospective adoption and is effective for fiscal years, and interim periods within those years, beginning after December 15, ~~2016.~~2017. Early adoption iswould

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be permitted but not ~~permitted.~~before annual periods beginning after December 15, 2016. We are currently assessing the potential impact of adopting this ASU on its consolidated financial statements and related disclosures.

In June 2014 the FASB issued ASU No. 2014-12, Compensation – Stock Compensation (Topic 718): Accounting for Share-Based Payments When the Terms of an Award Provide That a Performance Target Could Be Achieved after the Requisite Service ~~Period.~~Period. The new standard requires that a performance target that affects vesting, and that could be achieved after the requisite service period, be treated as a performance condition. As such, the performance target should not be reflected in estimating the grant date fair value of the award. This update further clarifies that compensation cost should be recognized in the period in which it becomes probable that the performance target will be achieved and should represent the compensation cost attributable to the periods for which the requisite service has already been rendered. The new standard is effective for fiscal years, and interim periods within those fiscal years, beginning after December 15, 2015 and can be applied either prospectively or retrospectively to all awards outstanding as of the beginning of the earliest annual period presented as an adjustment to opening retained earnings. Early adoption is permitted. We are currently assessing the potential impact of adopting this ASU on its consolidated financial statements and related disclosures.

In April 2015 the FASB issued ASU No. 2015-03, Interest - Imputation of Interest (Subtopic 835-30): Simplifying the Presentation of Debt Issuance Costs. The amendments in this ASU require that debt issuance costs related to a recognized debt liability be presented in the balance sheet as a direct deduction from the carrying amount of that debt liability, consistent with debt discounts. The recognition and measurement guidance for debt issuance costs are not affected by the amendments in this ASU. The standard is effective for fiscal years, and interim periods within those fiscal years, beginning after December 15, 2015, and should be applied retrospectively. Early adoption is permitted. We are currently assessing the potential impact of adopting this ASU on its consolidated financial statements and related disclosures.

3. TRADE RECEIVABLES

Trade receivables, net, ~~at June 30, 2014, and December 31, 2013,~~ consisted of the following:

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	June 30, 2014			December 31, 2013			June 30, 2015			December 31, 2014
	(thousands of dollars)						(thousands of dollars)
Trade receivables	$	28,386		$	22,279		$	22,332		$	28,481
Less allowance for doubtful accounts		(210	)		(210	)		(210	)		(210	)
Trade receivables, net	$	28,176		$	22,069		$	22,122		$	28,271

Trade receivables ~~serving~~serves as collateral for ~~the Company’s line of credit with a domestic bank were $21.4 million~~our amended and ~~$17.7 million at June 30, 2014, and December 31, 2013, respectively (see~~restated loan agreement. See Note ~~7).~~8.

4. INVENTORIES

Inventories include the following:

	June 30, 2014		December 31, 2013		June 30, 2015		December 31, 2014
	(thousands of dollars)				(thousands of dollars)
Raw material	$	3,059	$	2,403	$	2,930	$	2,826
Petrochemical products		8,643		9,660
Work in process						76		49
Finished products						12,052		9,940
Total inventory	$	11,702	$	12,063	$	15,058	$	12,815

~~Inventories are~~The difference between the calculated value of inventory under the FIFO and LIFO bases generates either a recorded LIFO reserve (i.e., where FIFO value exceeds the LIFO value) or an unrecorded negative LIFO reserve (i.e., where LIFO value exceeds the FIFO value). In the latter case, in order to ensure that inventory is reported at the lower of cost ~~determined on~~or market and in accordance with ASC 330-10, we do not increase the ~~last-in, first-out method (LIFO), or market.~~ stated value of our inventory to the LIFO value.

At June 30, ~~2014,~~2015, and December 31, ~~2013, current cost exceeded~~2014, LIFO value ~~by approximately $2.4 million and $1.5 million, respectively.~~of petrochemical inventory exceeded FIFO; therefore, in accordance with the above policy, no LIFO reserve was recorded.

~~Inventories serving~~Inventory serves as collateral for ~~the Company’s line of credit with a domestic bank were $4.4 million~~our amended and ~~$4.9 million at June 30, 2014, and December 31, 2013, respectively (see~~restated loan agreement. See Note ~~7).~~8.

Inventory included petrochemical products in transit valued at approximately ~~$5.8~~$2.8 million and ~~$4.4~~$3.5 million at June 30, ~~2014,~~2015, and December 31, ~~2013,~~2014, respectively.

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5. PLANT, PIPELINE AND EQUIPMENT

Plant, pipeline and equipment ~~at June 30, 2014, and December 31, 2013,~~ consisted of the following:

	June 30, 2014			December 31, 2013			June 30, 2015			December 31, 2014
	(thousands of dollars)						(thousands of dollars)
Platinum catalyst	$	1,612		$	1,612		$	1,612		$	1,612
Land		1,577			1,577			4,577			4,577
Plant, pipeline and equipment		73,458			71,115			97,576			95,351
Construction in progress		2,606			824			26,025			11,590
Total plant, pipeline and equipment		79,253			75,128			129,790			113,130
Less accumulated depreciation and amortization		(36,031	)		(33,203	)
Less accumulated depreciation								(43,138	)		(39,319	)
Net plant, pipeline and equipment	$	43,222		$	41,925		$	86,652		$	73,811

Plant, pipeline, and equipment serve as collateral for ~~a $14.0 million term~~our amended and restated loan ~~with a domestic bank (see~~agreement. See Note ~~7).~~8.

Interest capitalized for construction was approximately $56,000 and $95,000 for the three and six months ended June 30, 2015. No amounts were capitalized during 2014.

Construction in progress during the first six months of ~~2014~~2015 included ~~preparation for~~petrochemical construction on the ~~D-Train~~D Train expansion, ~~construction~~purchase of additional ~~warehousing, installation of additional truck loading stations,~~manufacturing equipment such as towers and ~~various other improvements facility-wide.~~tanks, additions to the tank farm, upgrades to the electrical and flaring systems, and initial construction on the specialty wax hydrogenation project at TC.

Amortization relating to the platinum catalyst which is included in cost of sales was ~~$21,068, $3,184, $42,135 and $6,368~~$21,067 for the three months and $42,135 for the six months ended June 30, ~~2014,~~2015, and ~~2013, respectively.~~2014.

6. GOODWILL AND INTANGIBLE ASSETS, NET

Goodwill and intangible assets were recorded in relation to the acquisition of TC on October 1, 2014.

Goodwill

The balance of Goodwill was $21.8 million at June 30, 2015, and December 31, 2014. We believe due to the recent nature of the Acquisition, no goodwill impairment existed at June 30, 2015.

Intangible Assets

The following tables summarize the gross carrying amounts and accumulated amortization of intangible assets by major class (in thousands):

	June 30, 2015
Intangible assets subject to amortization (Definite-lived)	Gross		Accumulated Amortization			Net
Customer relationships	$	16,852	$	(842	)	$	16,010
Non-compete agreements		94		(14	)		80
Licenses and permits		1,471		(97	)		1,374
Developed technology		6,131		(460	)		5,671
		24,548		(1,413	)		23,135
Intangible assets not subject to amortization (Indefinite-lived)
Trade name		2,158		-			2,158
Total	$	26,706	$	(1,413	)	$	25,293

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	December 31, 2014
Intangible assets subject to amortization (Definite-lived)	Gross		Accumulated Amortization			Net
Customer relationships	$	16,852	$	(281	)	$	16,571
Non-compete agreements		94		(5	)		89
Licenses and permits		1,471		(32	)		1,439
Developed technology		6,131		(153	)		5,978
		24,548		(471	)		24,077
Intangible assets not subject to amortization (Indefinite-lived)
Trade name		2,158		-			2,158
Total	$	26,706	$	(471	)	$	26,235

Amortization expense for intangible assets included in cost of sales for the three months was approximately $471,000 and $942,000 for the six months ended June 30, 2015. There was no amortization expense in the first half of 2014 for these assets.

Based on identified intangible assets that are subject to amortization as of June 30, 2015, we expect future amortization expenses for each period to be as follows (in thousands):

	Remainder of 2015		2016		2017		2018		2019
Customer relationships	$	562	$	1,123	$	1,123	$	1,123	$	1,123
Non-compete agreements		9		19		19		19		14
Licenses and permits		65		123		106		106		106
Developed technology		306		613		613		613		613
Total future amortization expense	$	942	$	1,878	$	1,861		1,861	$	1,856

7. NET INCOME PER COMMON SHARE ATTRIBUTABLE TO TRECORA RESOURCES

The following table (in thousands, except per share amounts) sets forth the computation of basic and diluted net income per share attributable to Trecora Resources for the three and six months ended June 30, ~~2014,~~2015, and ~~2013,~~2014, respectively.

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	Three Months Ended June 30, 2015						Three Months Ended June 30, 2014
					Per Share						Per Share
	Income		Shares		Amount		Income		Shares		Amount
Basic Net Income per Share:
Net Income Attributable to Trecora Resources	$	6,374		24,354	$	0.26	$	5,000		24,165	$	0.21

Unvested restricted stock grant				148						-
Dilutive stock options outstanding				653						648

Diluted Net Income per Share:
Net Income Attributable to Trecora Resources	$	6,374		25,155	$	0.25	$	5,000		24,813	$	0.20

Three Months Ended
June 30, 2014

Three Months Ended
June 30, 2013

Per Share Per Share
Income Shares Amount Income Shares Amount
Basic Net Income per Share:
Net Income Attributable to Trecora Resources $ 5,000 24,165 $ 0.21 $ 6,309 24,110 $ 0.26

Dilutive stock options outstanding 648 542

Diluted Net Income per Share:
Net Income Attributable to Trecora Resources $ 5,000 24,813 $ 0.20 $ 6,309 24,652 $ 0.26

	Six Months Ended June 30, 2014						Six Months Ended June 30, 2013						Six Months Ended June 30, 2015						Six Months Ended June 30, 2014
					Per Share						Per Share						Per Share						Per Share
	Income		Shares		Amount		Income		Shares		Amount		Income		Shares		Amount		Income		Shares		Amount
Basic Net Income per Share:
Net Income Attributable to Trecora Resources	$	7,599		24,158	$	0.32	$	11,095		24,108	$	0.46	$	12,158		24,331	$	0.50	$	7,599		24,158	$	0.32

Unvested restricted stock grant																133
Dilutive stock options outstanding				708						547						686						708

Diluted Net Income per Share:
Net Income Attributable to Trecora Resources	$	7,599		24,866	$	0.31	$	11,095		24,655	$	0.45	$	12,158		25,150	$	0.48	$	7,599		24,866	$	0.31

At June 30, 2015, and 2014, 1,497,771 and ~~2013,~~ 662,068 ~~and 449,189~~ potential common stock shares, respectively were issuable upon the exercise of ~~options.~~options and warrants.

The earnings per share calculations for the periods ended June 30, ~~2014,~~2015, and ~~2013,~~2014, include 300,000 shares of the Company that are held in the treasury of TOCCO.

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8. LIABILITIES AND LONG-TERM DEBT

~~In September 2007~~On October 1, 2014, we entered into ~~a $10.0 million term loan agreement~~an Amended and Restated Credit Agreement (“ARC”) with ~~a domestic bank~~the lenders which from time to ~~finance the expansion of the petrochemical facility. An amendment was entered into in November 2008 which increased the term loan to $14.0 million due~~time are parties to the ~~increased cost~~ARC and Bank of America, N.A., as Administrative Agent for the ~~expansion. This note is collateralized by plant, pipeline~~Lenders, and ~~equipment. The agreement expires~~Merrill Lynch, Pierce, Fenner & Smith Incorporated as Lead Arranger.

Under the ARC, we may borrow, repay and re-borrow revolving loans from time to time during the period ending September 30, 2019, up to but not exceeding $40.0 million. All outstanding loans under the revolving loans must be repaid on October ~~31, 2018. At~~1, 2019. As of June 30, 2015, and December 31, 2014, there was a ~~short-term amount of $1.4 million and a~~ long-term amount of ~~$4.7 million outstanding. At December 31, 2013, there was a short-term amount of $1.4 million and a long-term amount of $5.4~~$7.2 million outstanding. The interest rate on the loan varies according to several options. At June 30, 2014, and December 31, 2013, the rate was 2.25%. However, as discussed in Note 9, effective August 2008, the Company entered into a pay-fixed, receive-variable interest rate swap with the lending bank which has the effect of converting the interest rate on $10.0 million of the loan to a fixed rate. Principal payments of $350,000 are paid quarterly with interest paid monthly.

In May 2006 we entered into a $12.0 million revolving loan agreement with a domestic bank secured by accounts receivable and inventory. The loan was originally due to expire on October 31, 2008, but was amended to extend the termination date to June 30, 2018, and ultimately increase the availability of the line to $18.0 million based upon our accounts receivable and inventory. At June 30, 2014, and December 31, 2013, there was a long-term amount outstanding of $3.5 million and $6.5 million, respectively. The credit agreement contains a sub-limit of $3.0 million available to be used in support of the hedging program. The interest rate on the loan varies according to several options. At June 30, 2014, and December 31, 2013, the rate was 2.25%. The borrowing base is determined by a formula in the loan agreement. If the amount outstanding exceeds the borrowing base, a principal payment is due to reduce the amount outstanding to the calculated borrowing base. Interest is paid monthly. Loan covenants that must be maintained quarterly include EBITDA, capital expenditures, dividends payable to parent, and leverage ratio. Interest on the loan is paid monthly and a commitment fee of ~~0.25%~~0.37% is due quarterly on the unused portion of the loan. At June 30, ~~2014,~~2015, approximately ~~$14.5~~$32.8 million was available to be ~~drawn, and the Company was in compliance with all covenants.~~drawn.

~~On July 10, 2014,~~Under the ARC, we ~~entered into~~also borrowed $70.0 million in a ~~credit agreement with a domestic bank for a $25.0 million multiple~~single advance term loan ~~facility~~(the “Acquisition Loan”) to partially finance the ~~construction~~acquisition of TC. Interest on the Acquisition Loan is payable quarterly using a ten year commercial style amortization. Principal is also payable on the last business day of each March, June, September and December in an amount equal to $1,750,000, provided that the final installment on the September 30, 2019, maturity date shall be in an amount equal to the then outstanding unpaid principal balance of the ~~capital expansion project known as “D-Train”~~Acquisition Loan. At June 30, 2015, there was a short-term amount of $7.0 million and a long-term amount of $57.8 million outstanding. At December 31, 2014, there was a short-term amount of $7.0 million and a long-term amount of $61.3 million outstanding.

Under the ARC, we also have the right to borrow $25.0 million in 2014 through 2015. D-Train will be located at South Hampton’s petrochemical facility in Silsbee, Texas and will increase penhex capacity from 6,700 barrels per day to approximately 11,000 barrels per day. Thea multiple advance loan ~~will be secured by a Deed of Trust, Security Agreement and UCC Financing Statement for Fixture Filing, an Assignment of Rights Under Construction Contracts, Permits, Plans and Contracts.~~(“Term Loans”). Borrowing availability under the ~~loan began on July 10, 2014 and~~Term Loans ends on December 31, 2015. The ~~loan converts~~Term Loans convert from a multiple advance loan to a “mini-perm” loan once wecertain obligations have been fulfilled ~~certain obligations~~ such as certification that construction ~~was~~of D-Train has been completed in a good and workmanlike manner, receipt of applicable permits and releases from governmental authorities, and receipt of releases of liens from the contractor and each subcontractor and ~~supplier; provided that~~supplier. Interest on the ~~conversion date may not occur after~~Term Loans is paid monthly. At June 30, 2015, and December 31, ~~2015. On the date the loan converts into mini-perm loan, the~~2014, there was a short-term amount of $0.3 million and $0 and a long-term amount due of $4.7 million and $5.0 million, respectively with $20.0 million available to be drawn.

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loan will amortize based on a fifteen year commercial style amortization method and installments of principal and interest shall be due on the first business day of each January, April, July and October until the maturity date when all outstanding principal and interest is due and payable. The interest rate on all of the ~~loan~~above loans varies according to several options. At June 30, 2015, and December 31, 2014, ~~no amounts~~the rate was 2.44 % and 2.67%. We were ~~outstanding.~~in compliance with all covenants at June 30, 2015.

8.9. FAIR VALUE MEASUREMENTS

The following items are measured at fair value on a recurring basis subject to disclosure requirements of ASC Topic 820 at June 30, ~~2014,~~2015, and December 31, ~~2013:~~2014:

Assets and Liabilities Measured at Fair Value on a Recurring Basis

			Fair Value Measurements Using								Fair Value Measurements Using
	June 30, 2014		Level 1		Level 2		Level 3		June 30, 2015		Level 1		Level 2		Level 3
	(thousands of dollars)								(thousands of dollars)
Liabilities:
Interest rate swap	$	466	$	-	$	466	$	-	$	269		-	$	269		-

			Fair Value Measurements Using								Fair Value Measurements Using
	December 31, 2013		Level 1		Level 2		Level 3		December 31, 2014		Level 1		Level 2		Level 3
	(thousands of dollars)								(thousands of dollars)
Liabilities:
Interest rate swap	$	563	$	-	$	563	$	-	$	378		-	$	378		-
Commodity financial instruments		48		48						180		180		-		-

The carrying value of cash and cash equivalents, ~~accounts receivable, notes receivable, taxes receivable, advance to AMAK,~~trade receivables, accounts payable, ~~accrued interest,~~ accrued liabilities, accrued liabilities in Saudi Arabia and other liabilities approximate ~~the~~ fair value due to the immediate or short-term maturity of these financial instruments. The fair value of variable rate long term debt and notes payable reflect recent market transactions and approximate carrying value. We used other observable inputs that would qualify as Level 2 inputs to make our assessment of the approximate fair value of ~~accounts receivable, notes receivable, taxes receivable, advance to AMAK,~~our cash and cash equivalents, trade receivables, accounts payable, ~~accrued interest,~~ accrued liabilities, accrued liabilities in Saudi Arabia, other liabilities and variable rate long term ~~debt and notes payable. We used observable inputs that would qualify as Level 1 inputs to make our assessment of the approximate fair value of cash and cash equivalents.~~debt. The fair value of the derivative instruments are described below.

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Commodity Financial Instruments

We periodically enter into financial instruments to hedge the cost of natural gasoline (the primary feedstock) and natural gas (used as fuel to operate the plant).

We assess the fair value of the financial swaps on feedstock using quoted prices in active markets for identical assets or liabilities (Level 1 of fair value hierarchy). At June 30, ~~2014,~~2015, no commodity financial instruments were outstanding. At December 31, ~~2013,~~2014, we had derivative contracts with settlement dates through ~~February 2014.~~January 2015. For additional information see Note 9.10.

Interest Rate Swap

In March 2008 we entered into an interest rate swap agreement with Bank of America related to ~~the~~a $10.0 million term loan secured by plant, pipeline and equipment. The interest rate swap was designed to minimize the effect of changes in the London InterBank Offered Rate (“LIBOR”) rate. We ~~have~~had designated the interest rate swap as a cash flow hedge under ASC Topic 815, Derivatives and ~~Hedging.~~Hedging; however, due to the ARC, we felt that the hedge was no longer entirely effective. Due to the time required to make the determination and the immateriality of the hedge, we began treating it as ineffective as of October 1, 2014.

~~South Hampton assesses~~We assess the fair value of the interest rate swap using a present value model that includes quoted LIBOR rates and the nonperformance risk of the Company and Bank of America based on the Credit Default Swap Market (Level 2 of fair value hierarchy).

We have consistently applied valuation techniques in all periods presented and believe we have obtained the most accurate information available for the types of derivative contracts ~~it holds.~~we hold. See discussion of our derivative instruments in Note 9.10.

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9.10. DERIVATIVE INSTRUMENTS

Commodity Financial Contracts

Hydrocarbon based manufacturers, such as the Company, are significantly impacted by changes in feedstock and natural gas prices. Not considering derivative transactions, feedstock and natural gas used for the six months ended June 30, ~~2014,~~2015, and ~~2013,~~2014, represented approximately ~~81.8%~~69.2% and ~~79.7%~~81.8% of our petrochemical operating expenses, respectively. The significant percentage decrease of petrochemical operating expenses illustrates the impact that feedstock price changes have on our operations. During the first half of 2015, feedstock prices declined industry-wide.

We endeavor to acquire feedstock and natural gas at the lowest possible cost. Our primary feedstock (natural gasoline) is traded over the counter and not on organized futures exchanges. Financially settled instruments (fixed price swaps) are the principal vehicle used to give some predictability to feed prices. We do not purchase or hold any derivative financial instruments for trading or speculative purposes and ~~are~~hedging is limited by our risk management policy to ~~hedging~~ a maximum of 40% of monthly feedstock requirements.

~~Generally,~~Typically, financial contracts are not designated as hedges. As of June 30, ~~2014, South Hampton~~2015, we had no outstanding committed financial contracts.

The following tables detail (in thousands) the impact the agreements had on the financial statements:

Three Months Ended Six Months Ended
June 30, June 30,
2014 2013 2014 2013

Unrealized loss $ - $ - $ (48 ) $ -
Realized gain - - 87 -
Net gain $ - $ - $ 39 $ -

	Three Months Ended				Six Months Ended
	June 30,				June 30,
	2015		2014		2015			2014

Unrealized gain (loss)	$	-	$	-	$	180		$	(48	)
Realized gain (loss)		-		-		(180	)		87
Net gain	$	-	$	-	$	-		$	39

June 30, 2014 December 31, 2013

Fair value of financial contracts – liability $ - $ 48

	June 30, 2015		December 31, 2014

Fair value of financial contracts – liability	$	-	$	180

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The realized and unrealized gains/(losses) are recorded in Cost of Sales and Processing for the periods ended June 30, ~~2014,~~2015, and ~~2013.~~2014. As a percentage of Cost of Sales and Processing, realized and unrealized gains/(losses) accounted for 0% ~~and 0%~~ for the three ~~months~~ and ~~0% and 0% for the~~ six months ended June 30, ~~2014,~~2015, and ~~2013, respectively.~~2014.

Interest Rate Swap

OnIn March ~~21,~~ 2008, we entered into a pay-fixed, receive-variable interest rate swap agreement with Bank of America related to a $10.0 million ~~of our~~(later increased to $14 ~~million~~million) term loan secured by plant, pipeline and equipment. The effective date of the interest rate swap agreement iswas August 15, 2008, and terminates on December 15, 2017. The notional amount of the interest rate swap was $3.25 million and $3.75 million at June 30, ~~2014. South Hampton receives~~2015, and December 31, 2014, respectively. We receive credit for payments of variable rate interest made on the term loan at the loan’s variable rates, which are based upon ~~LIBOR,~~the London InterBank Offered Rate (LIBOR), and ~~pays~~pay Bank of America an interest rate of 5.83% less the credit on the interest rate swap. We ~~have~~originally designated the transaction as a cash flow ~~hedge.~~hedge according to ASC Topic 815, Derivatives and Hedging. Beginning on August 15, 2008, the derivative instrument was reported at fair value with any changes in fair value reported within other comprehensive income (loss) in the Company’s Statement of ~~Comprehensive Income.~~Stockholders’ Equity. We entered into the interest rate swap to minimize the effect of changes in the LIBOR rate.

The following tables detail (in thousands) the impact the agreement had on the financial statements:

	June 30,						June 30,
	2014			2013			2015		2014
Other Comprehensive Loss
Cumulative loss	$	(466	)	$	(696	)	$	-	$	(466	)
Deferred tax benefit		163			243			-		163
Net cumulative loss	$	(303	)	$	(453	)	$	-	$	(303	)

Interest expense reclassified from other comprehensive loss	$	130		$	158		$	-	$	130

June 30, 2014 December 31, 2013

Fair value of interest rate swap - liability $ 466 $ 563

	June 30, 2015		December 31, 2014

Fair value of interest rate swap - liability	$	269	$	378

Due to the ARC, we believe that the hedge is no longer entirely effective; therefore, we began treating the interest rate swap as ineffective at that point. The changes in fair value are now recorded in the Statement of Income. For the three months ended June 30, 2015, an unrealized loss of approximately $1,000 and a realized loss of approximately $49,000 were recorded. For the six months ended June 30, 2015, an unrealized gain of approximately $9,000 and a realized loss of approximately $101,000 were recorded.

11. STOCK-BASED COMPENSATION

Stock-based compensation of approximately $588,000 and $548,000 during the three months and $1,289,000 and $973,000 during the six months ended June 30, 2015, and 2014, respectively, was recognized.

Restricted Stock Awards

On May 20, 2015, we awarded 30,000 shares of restricted stock to a director at a grant date price of $12.39. The restricted stock award vests over 5 years in 20% increments with the first tranche to be issued on May 19, 2016. Compensation expense recognized during the three and six months ended June 30, 2015, was approximately $6,000.

On April 14, 2015, we awarded 1,000 shares of restricted stock to two of our 30 year employees at a grant date price of $12.03. The restricted stock award was fully vested. Compensation expense recognized during the three and six months ended June 30, 2015, was approximately $12,000.

On February 12, 2015, we awarded 18,000 shares of fully vested restricted stock to various employees at a grant date price of $14.34. Compensation expense recognized during the three and six months ended June 30, 2015, was approximately $77,000 and $258,000.

On February 10, 2015, we awarded 118,040 shares of restricted stock to our officers at a grant date price of $14.59. The restricted stock award vests over 4 years in 25% increments with the first tranche to be issued on February 9, 2016.

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The cumulative loss from the changes in the swap contract’s fair value that is included in other comprehensive loss will be reclassified into income when interest is paid. The net amount of pre-tax loss in other comprehensive income (loss) as of June 30, 2014, predicted to be reclassified into earnings within the next 12 months is approximately $215,000. See further discussion of the fair value of the derivative instruments in Note 8.

~~10. STOCK-BASED COMPENSATION~~

On February 21, 2014, we awarded 10 year options to various employees for 500,000 shares. These options have an exercise price equal to the closing price of the stock on February 21, 2014, which was $12.26 and vest in 25% increments over a 4 year period. Compensation expense recognized during the three ~~months~~ and six months ended June 30, ~~2014,~~2015, was approximately ~~$277,000~~$108,000 and ~~$400,000, respectively. The fair value of the options granted was calculated using the Black-Scholes option valuation model with the following assumptions:~~$179,000.

~~Expected volatility~~	~~84%~~
~~Expected dividends~~	~~None~~
~~Expected term (in years)~~	~~6.25~~
~~Risk free interest rate~~	~~1.95%~~

Restricted stock activity in the first six months of 2015 was as follows:

	Shares of Restricted Stock			Weighted Average Grant Date Price per Share

Outstanding at January 1, 2015		-		$	-
Granted		167,040			14.56
Vested		(19,000	)		14.34
Outstanding at June 30, 2015		148,040		$	14.59

Stock Option and Warrant Awards

A summary of the status of our stock option awards and warrants is presented below:

	Number of Stock Options & Warrants			Weighted Average Exercise Price per Share		Weighted Average Remaining Contractual Life		Number of Stock Options & Warrants			Weighted Average Exercise Price per Share		Weighted Average Remaining Contractual Life

Outstanding at January 1, 2014		1,326,360		$	4.75
Outstanding at January 1, 2015									1,598,191		$	7.16
Granted		500,000			12.26				--			--
Exercised		(31,820	)		2.86				(100,420	)		4.13
Expired		--			--				--			--
Cancelled		--			--				--			--
Forfeited		(20,000	)	$	2.82				--			--
Outstanding at June 30, 2014		1,774,540		$	6.92		7.1
Exercisable at June 30, 2014		662,068		$	4.53		5.9
Outstanding at June 30, 2015									1,497,771		$	7.36		6.4
Exercisable at June 30, 2015									735,271		$	6.23		5.7

The fair value of the ~~previously issued~~ options granted below was calculated using the Black Scholes option valuation model with the assumptions as disclosed in prior quarterly and annual filings.

Directors’ compensation of approximately ~~$76,000~~$53,000 and ~~$94,000~~$76,000 during the three months and ~~$170,000~~$128,000 and ~~$189,000~~$170,000 during the six months ended June 30, 2015, and 2014, ~~and 2013,~~ respectively, ~~were~~was recognized related to options to purchase shares vesting through 2017.

~~Excluding the options granted in 2014 as disclosed above, employee~~Employee compensation of approximately ~~$150,000~~$309,000 and ~~$119,000~~$427,000 during the three months and ~~$300,000~~$657,000 and ~~$238,000~~$701,000 during the six months ended June 30, ~~2014,~~2015, and ~~2013,~~2014, respectively, was recognized related to options with a 4 year vesting period which were awarded to officers and key employees. These options vest through ~~2017.~~2018.

Post-retirement compensation of approximately $24,000 was recognized during the three months and $49,000 during the six months ended June 30, ~~2014,~~2015, and ~~2013,~~2014, related to options awarded to Mr. Hatem El Khalidi in July 2009. On May 9, 2010, the Board of Directors determined that Mr. El Khalidi forfeited these options and other retirement benefits when he made various demands against the Company and other AMAK Saudi shareholders which would benefit him personally and were not in the best interests of the Company and its shareholders. The Company is litigating its right to withdraw the options and benefits and as such, these options and benefits continue to be shown as outstanding. See further discussion in Note ~~15.~~17.

Investor relations expense of approximately ~~$21,000~~$0 and ~~$42,000~~$21,000 during the three months and ~~$54,000~~$0 and ~~$71,000~~$54,000 during the six months ended June 30, ~~2014,~~2015, and ~~2013,~~2014, respectively, was recognized related to warrants issued for the purchase of 100,000 shares of common stock to Genesis Select Corporation (“Genesis”). ~~These warrants vest through 2017 contingent upon continuous investor relations service under the consulting~~Our agreement with ~~Genesis.~~

Genesis was terminated effective September 30, 2014; therefore, no additional amounts will vest going forward.

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See the Company’s Annual Report on Form 10-K for the year ended December 31, ~~2013,~~2014, for additional information.

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~~11.~~12. SEGMENT INFORMATION

We operate through business segments according to the nature and economic characteristics of our products as well as the manner in which the information is used internally by our key decision maker, who is our Chief Executive Officer.

Our petrochemical segment includes SHR and GSPL. Our specialty wax segment includes TC. We also separately identify our corporate overhead and investing which includes financing and administrative activities such as legal, accounting, consulting, investor relations, officer and director compensation, corporate insurance, and other administrative costs.

The tables below reflect only 2015 transactions for TC since that is the time period affected by segment reporting due to the acquisition closing in the fourth quarter of 2014.

	Three Months Ended June 30, 2015
	Petrochemical		Specialty Wax			Corporate			Consolidated
	(in thousands)
Product sales	$	52,342	$	4,323		$	-		$	56,665
Processing fees		1,521		1,164			-			2,685
Net revenues		53,863		5,487			-			59,350
Operating profit before depreciation and amortization		12,850		430			(1,679	)		11,601
Operating profit (loss)		11,902		(732	)		(1,679	)		9,491
Depreciation and amortization		949		1,161			-			2,110
Capital expenditures		6,204		2,903						9,107

	Six Months Ended June 30, 2015
	Petrochemical		Specialty Wax		Corporate			Consolidated
	(in thousands)
Product sales	$	99,525	$	7,681	$	-		$	107,206
Processing fees		3,045		4,242		-			7,287
Net revenues		102,570		11,923		-			114,493
Operating profit before depreciation and amortization		24,562		2,504		(3,491	)		23,575
Operating profit (loss)		22,519		196		(3,491	)		19,224
Depreciation and amortization		2,044		2,307		-			4,351
Capital expenditures		13,019		3,831					16,850

	June 30, 2015
	Petrochemical		Specialty Wax		Corporate		Eliminations			Consolidated
	(in thousands)
Goodwill and intangible assets, net	$	-	$	47,091	$	-	$	-		$	47,091
Total assets		180,025		82,399		100,516		(123,996	)		238,944

	Year Ended December 31, 2014
	Petrochemical		Specialty Wax		Corporate		Eliminations			Consolidated
	(in thousands)
Goodwill and intangible assets, net	$	-	$	47,985	$	-	$	-		$	47,985
Total assets		172,945		79,135		99,360		(119,366	)		232,074

13. INCOME TAXES

We file an income tax return in the U.S. federal jurisdiction and a margin tax return in Texas. Tax returns for the years 2010 through 2013 remain open for examination ~~in various tax jurisdictions in which we operate.~~ As of June 30, ~~2014,~~2015, and December 31, ~~2013,~~2014, we recognized no material adjustments in connection with uncertain tax positions. The effective tax rate varies from the federal statutory rate of 35% primarily as a result of state tax expense, stock option based compensation and the manufacturing deduction.

~~12.~~Our state income tax rate was affected by Texas House Bill 32 which was signed in June 2015. The Texas margin tax rate was reduced for tax reports due on or after January 1, 2016. We have adopted the U.S. Treasury Department and IRS final regulations that address costs incurred in acquiring, producing, or improving tangible property. These final regulations

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require a tax accounting method change to be filed with the IRS. We do not anticipate the impact of these changes to be material to our consolidated financial statements.

14. POST-RETIREMENT OBLIGATIONS

In January 2008 an amended retirement agreement ~~replacing the February 2007 agreement,~~ was entered into with Mr. Hatem El Khalidi. The amended agreement provides $6,000 per month in benefits to Mr. El Khalidi upon his retirement for the remainder of his life. Additionally, upon his death $4,000 per month will be paid to his surviving spouse for the remainder of her life. A health insurance benefit will also be provided. An additional $382,000 was accrued in January 2008 for the increase in benefits. A liability of approximately $900,000 based upon an annuity single premium value contract plus accrued interest was outstanding at June 30, 2014, and was included in post-retirement benefits. As of June 30, 2014, no payments have been made pursuant to this agreement.

In June 2009 the Company’s Board of Directors awarded Mr. El Khalidi a retirement bonus in the amount of $31,500 for 42 years of service. While there is no written policy regarding retirement bonus compensation, the Company has historically awarded all employees (regardless of job position) a retirement bonus equal to $750 for each year of service. Since Mr. El Khalidi was employed by the Company for 42 years, the Board of Directors voted to award him a $31,500 retirement bonus, consistent with that provided to all other retired employees. This amount remained outstanding at June 30, 2014, and was included in post-retirement benefits.

OnKhalidi; however, on May 9, 2010, the Board of Directors terminated the ~~retirement~~ agreement ~~options, retirement bonus, and any outstanding directors’ fees~~ due to actions of Mr. El ~~Khalidi; however, due to the outstanding litigation discussed in~~Khalidi. See Note ~~15, all~~17. All amounts which have not met termination dates remain recorded until a resolution is achieved. As of June 30, 2015, and 2014, approximately $1.0 million and $0.9 million, respectively, remained outstanding and was included in post-retirement benefits.

~~13.~~See the Company’s Annual Report on Form 10-K for the year ended December 31, 2014, for additional information.

15. INVESTMENT IN ~~AL MASANE AL KOBRA MINING COMPANY (“AMAK”)~~AMAK

As of June 30, ~~2014,~~2015, and December 31, ~~2013,~~2014, the Company had a non-controlling equity interest (35%) of approximately ~~$53.8~~$52.7 million and ~~$54.1~~$53.0 million, respectively. This investment is accounted for under the equity method. There were no events or changes in circumstances that may have an adverse effect on the fair value of our investment in AMAK at June 30, ~~2014.~~2015.

AMAK’s financial statements were prepared in the functional currency of AMAK which is the Saudi Riyal (SR). In June 1986 the SR was officially pegged to the U. S. Dollar (USD) at a fixed exchange rate of 1 USD to 3.75 SR.

The summarized results of operation and financial position for AMAK are as follows:

Results of Operations

Three Months Ended June 30, Six Months Ended June 30,
2014 2013 2014 2013
(Thousands of Dollars)
Sales $ 30,431 $ 15,333 $ 30,698 $ 46,495
Gross Profit 4,045 8,128 4,684 18,034
General, administrative and other expenses 4,982 7,029 7,570 9,815
Net Income (loss) $ (937 ) $ 1,099 $ (2,886 ) $ 8,219

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	Three Months Ended June 30,						Six Months Ended June 30,
	2015			2014			2015			2014
	(Thousands of Dollars)
Sales	$	13,283		$	30,431		$	18,584		$	30,698
Gross Profit		1,034			4,045			2,746			4,684
General, administrative and other expenses		3,036			4,982			5,538			7,570
Net Loss	$	(2,002	)	$	(937	)	$	(2,792	)	$	(2,886	)
Depreciation, depletion and amortization		5,905			4,157			11,015			10,814
Net Income before depreciation, depletion and amortization	$	3,903		$	3,220		$	8,223		$	7,928

Financial Position

	June 30,		December 31,		June 30,		December 31,
	2014		2013		2015		2014
	(Thousands of Dollars)				(Thousands of Dollars)
Current assets	$	26,558	$	32,923	$	40,478	$	17,782
Noncurrent assets		263,961		264,997		262,920		265,584
Total assets	$	290,519	$	297,920	$	303,398	$	283,366

Current liabilities	$	16,109	$	22,497	$	24,336	$	23,034
Long term liabilities		77,700		75,826		89,120		67,598
Shareholders' equity		196,710		199,597		189,942		192,734
	$	290,519	$	297,920	$	303,398	$	283,366

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The equity in the income or loss of AMAK reflected on the consolidated statement of income for the three and six months ended June 30, ~~2014,~~2015, and ~~2013,~~2014, is comprised of the following:

Three months ended
June 30,

Six months ended
June 30,

2014 2013 2014 2013
(Thousands of Dollars)
Company’s share of income (loss) reported by AMAK $ (331 ) $ 399 $ (1,018 ) $ 3,026
Amortization of difference between Company’s investment in AMAK and Company’s share of net assets of AMAK 337 337 674 674
Gain from additional equity issuance by AMAK - 3,996 - 3,996
Equity in income (loss) of AMAK $ 6 $ 4,732 $ (344 ) $ 7,696

At December 31, 2013, we had an outstanding advance to AMAK of approximately $0.5 million for interim funding on a short term basis. The entire balance owed was paid in the second quarter of 2014; therefore, at June 30, 2014, there was no amount outstanding.

	Three months ended June 30,						Six months ended June 30,
	2015			2014			2015			2014
	(Thousands of Dollars)
Company’s share of loss reported by AMAK	$	(706	)	$	(331	)	$	(984	)	$	(1,018	)
Amortization of difference between Company’s investment in AMAK and Company’s share of net assets of AMAK		337			337			674			674
Equity in earnings (loss) of AMAK	$	(369	)	$	6		$	(310	)	$	(344	)

See our Annual Report on Form 10-K for the year ended December 31, ~~2013,~~2014, for additional information.

~~14.~~16. RELATED PARTY TRANSACTIONS

Ghazi Sultan, a former Company director, was paid $35,000 during both three month periods and $69,000 during both six month periods ended June 30, 2014, and 2013, respectively for serving as the Company’s Saudi branch representative.

Consulting fees of approximately $0 and ~~$35,000~~$0 were incurred during the three ~~month periods~~months and ~~$21,000~~$25,000 and ~~$55,000~~$21,000 during the six ~~month periods~~months ended June 30, ~~2014,~~2015, and ~~2013,~~2014, respectively from IHS Global FZ LLC of which Company Director Gary K Adams holds the position of Chief Advisor – Chemicals.

~~15.~~17. COMMITMENTS AND CONTINGENCIES

Guarantees –

South Hampton, in 1977, guaranteed a $160,000 note payable of a limited partnership in which it has a 19% interest. Included in Accrued Liabilities at June 30, 2014, and 2013, is $66,570 related to this guaranty.

On October 24, 2010, we executed a limited Guarantee in favor of the Saudi Industrial Development Fund (“SIDF”) whereby we agreed to guaranty up to 41% of the SIDF loan to AMAK in the principal amount of 330.0 million Saudi Riyals (US$88.0 million) (the “Loan”). The term of the loan is through June 2019. As a condition of the Loan, SIDF required all shareholders of AMAK to execute personal or corporate Guarantees; as a result, our guarantee is for approximately 135.33 million Saudi Riyals (US$36.1 million). The loan was necessary to continue construction of the AMAK facilities and provide working capital needs. We received no consideration in connection with extending the guarantee and did so to maintain and enhance the value of its investment. The total amount outstanding to the SIDF at June 30, ~~2014,~~2015, was ~~269.8~~310.0 million Saudi Riyals (US$~~71.9~~82.7 million).

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Litigation -

On May 9, 2010, after numerous attempts to resolve certain issues with Mr. Hatem El Khalidi, the Board of Directors terminated the retirement agreement, options, retirement bonuses, and all outstanding directors’ fees due to Mr. El Khalidi, former CEO, President and Director of the Company. In June 2010 Mr. El Khalidi filed suit against the Company in the labor courts of Saudi Arabia alleging additional compensation owed to him for holidays and overtime. The Company believes that the claims are unsubstantiated and continues to vigorously defend the case.

In March 21, 2011, Mr. El Khalidi filed suit against the Company in Texas alleging breach of contract and other claims. ~~On July 24, 2013, the 88~~thThe 88th Judicial District Court of Hardin County, Texas dismissed all claims and counterclaims for want of prosecution in this ~~matter. On May 22, 2014, the~~matter on July 24, 2013. The Ninth Court of Appeals subsequently affirmed the dismissal for want of ~~prosecution.~~prosecution and the Supreme Court of Texas denied Mr. ~~El-Khalidi recently filed a motion for extension of time to file~~El Khalidi’s petition for ~~review with the Texas Supreme Court on July 18, 2014 presumably evidencing his intent to further appeal the dismissal. In addition, on~~review. On May 1, 2014, Mr. ~~El-Khalidi~~El Khalidi refiled his lawsuit against the Company for breach of contract and defamation in the ~~356~~th356th Judicial District Court of Hardin County, Texas. The case was transferred to the 88th88th Judicial District Court of Hardin County, Texas where it is currently pending. ~~The Company believes~~On April 6, 2015, Mr. El-Khalidi nonsuited his defamation claim. We believe that the remaining claims are unsubstantiated and ~~plans~~plan to vigorously defend the case. Liabilities of approximately ~~$1.1~~$1.0 million remain recorded, and the ~~stock~~ options ~~at issue~~ will continue to accrue in accordance with their own terms until all matters are resolved.

On September 14, 2010, ~~South Hampton~~SHR received notice of a lawsuit filed in the 58th Judicial District Court of Jefferson County, Texas which was subsequently transferred to the ~~11th~~11th Judicial District Court of Harris County, Texas. The suit alleges that the plaintiff became ill from exposure to asbestos. There are approximately 44 defendants named in the suit. ~~South Hampton~~SHR has placed its insurers on notice of the claim and plans to vigorously defend the case.

No accrual has been recorded for ~~the last~~this claim. ~~We are involved in various claims and lawsuits incidental to our business.~~

On April 30, 2015, TC and TREC received notice of a lawsuit filed in the 152~~Environmental Remediation~~nd -Judicial District Court of Harris County, Texas. The suit alleges that the plaintiff, an independent contractor employee, was injured while working on a product line at TC. We have placed our insurers on notice and plan to vigorously defend the case.

In 2008 we learned of a claim by the U.S. Bureau of Land Management (“BLM”) against World Hydrocarbons, Inc. for contamination of real property owned by the BLM north of and immediately adjacent to the processing mill situated on property owned by Pioche Ely Valley Mines, Inc. (“PEVM”). The BLM’s claim alleged that mine tailings from the processing mill containing lead and arsenic migrated onto BLM property during the first half of the twentieth century. World Hydrocarbons, Inc. responded to the BLM by stating that it does not own the mill and that PEVM is the owner and responsible party. PEVM subsequently retained an environmental consultant and a local contractor to assist with the cleanup. In June and July 2013 the contractor excavated and transported tailings from BLM property and other surrounding properties to an impoundment area located on PEVM property. PEVM completed the cleanup during the first quarter of 2014, and the contractor demobilized from the site. PEVM received a no-further-action letter (NFA) from BLM in July 2014. The environmental consultant submitted a report to the Nevada Division of Environmental Protection on the entire removal project including a neighbor’s adjoining property, and PEVM received an NFA in October 2013. We agreed to advance approximately $250,000 to PEVM for payment of the contractor and in return, PEVM will transfer interest in selected patented mining claims of equivalent value to the Company. An accrual for $350,000 was recorded by PEVM in 2010 and $171,000 remained outstanding at June 30, 2014.

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ITEM 2. MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS.

FORWARD LOOKING AND CAUTIONARY STATEMENTS

Except for the historical information and discussion contained herein, statements contained in this release may constitute forward-looking statements within the meaning of the Private Securities Litigation Reform Act of 1995. These statements involve a number of risks, uncertainties and other factors that could cause actual results to differ materially, including the following: a downturn in the economic environment; the Company’s failure to meet growth and productivity objectives; fluctuations in revenues and purchases; impact of local legal, economic, political and health conditions; adverse effects from environmental matters, tax matters and the Company’s pension plans; ineffective internal controls; the Company’s use of accounting estimates; competitive conditions; the Company’s ability to attract and retain key personnel and its reliance on critical skills; impact of relationships with critical suppliers; currency fluctuations; impact of changes in market liquidity conditions and customer credit risk on receivables; the Company’s ability to successfully manage acquisitions and alliances; general economic conditions domestically and internationally; insufficient cash flows from operating activities; difficulties in obtaining financing; outstanding debt and other financial and legal obligations; industry cycles; specialty petrochemical product and mineral prices; feedstock availability; technological developments; regulatory changes; foreign government instability; foreign legal and political concepts; and foreign currency fluctuations, as well as other risks detailed in the Company's filings with the U.S. Securities and Exchange Commission, including this release, all of which are difficult to predict and many of which are beyond the Company's control.

Overview

The following discussion and analysis of our financial results, as well as the accompanying unaudited consolidated financial statements and related notes to consolidated financial statements to which they refer, are the responsibility of our management. Our accounting and financial reporting fairly reflect our business model involving the manufacturing and marketing of petrochemical ~~products.~~products and synthetic waxes. Our business model involves the manufacture and sale of tangible ~~products.~~products and the provision of custom processing services. Our consistent approach to providing high purity products and quality services to our customers has helped to sustain our current position as a preferred supplier of various petrochemical products.

The discussion and analysis of financial condition and the results of operations which appears below should be read in conjunction with the Management’s Discussion and Analysis of Financial Condition and Results of Operations and the consolidated financial statements which appear in our Annual Report on Form 10-K for the year ended December 31, ~~2013.~~2014.

We believe we are well-positioned to participate in new investments to grow the Company. While petrochemical prices are volatile on a short-term basis and our volume expectations depend on the demand of our customers’ products, our investment decisions are based on our long-term business outlook using a disciplined approach in selecting and pursuing the most attractive investment opportunities. The drop in petroleum prices, which began in mid-September of last year and continued through February, reduced our average feedstock price per gallon approximately 44% over the first half of 2014. The price reduction had a positive effect on our business. Typically as prices drop, we see increased cash flow as the cash required for replacement feedstock is less at lower prices. Also, the formulas we use to sell our products typically have a 30 day trailing feed cost basis; and therefore, are slightly favorable to us during falling prices but are unfavorable when prices rise. In addition, we have not seen that reduced petroleum prices would be unfavorable to our customers or would require them to curtail operations in any manner. The chemical industry in general remains robust and is experiencing unprecedented capital investment.

Review of Second Quarter and Year-to-Date ~~2014~~2015 Results

We reported second quarter ~~2014~~2015 earnings of ~~$5.0~~$6.4 million ~~down $1.3~~up from $5.0 million from the second quarter of ~~2013. Basic~~2014. Diluted earnings per share of ~~$0.21~~$0.25 were reported for ~~second quarter 2014, down $0.05~~2015, up from ~~2013. Second quarter 2013 earnings included a gain~~$0.20 from ~~the additional equity issuance by AMAK of approximately $4.0 million and equity in earnings of about $0.7 million whereas there was no gain in second quarter 2014 and only minimal equity in earnings.~~2014. Sales volume of our petrochemical products ~~increased 32.0%~~decreased 5.5%, and sales revenue from our petrochemical products ~~increased 33.0%~~decreased 28.1% as compared to the second quarter of ~~2013. Second quarter 2014 represented~~2014. However, due to a ~~record quarter~~significant decrease in ~~terms~~petrochemical feedstock cost, our gross profit increased $3.5 million. This, combined with a reduction of ~~both~~approximately 0.5 million gallons of by-product sales, ~~volume and revenue.~~generated an increase in operating income of $2.1 million from 2014.

We reported year-to-date ~~2014~~2015 earnings of ~~approximately~~$12.2 million up from $7.6 ~~million down $3.5~~ million from the first half of ~~2013. Basic~~2014. Diluted earnings per share of ~~$0.32~~$0.48 were reported for ~~the first half of 2014, down $0.14~~2015, up from ~~the first half of 2013. As reported above, there was a gain~~$0.31 from ~~the additional equity issuance by AMAK of approximately $4.0 million in the first half of 2013.~~2014. Sales volume of our petrochemical products ~~increased 30.0%~~decreased 4.7%, and sales revenue from our petrochemical products decreased 26.4% as compared to the first half of ~~2013, and~~2014. However,

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due to a significant decrease in petrochemical feedstock cost, our gross profit increased $10.5 million. This, combined with a reduction of approximately 1.9 million gallons of by-product sales, ~~revenue~~generated an increase in operating income of $7.4 million from ~~petrochemical products increased 27.1%.~~2014.

Liquidity and Capital Resources

Working Capital

Our approximate working capital days are summarized as follows:

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	June 30, 2014		December 31, 2013		June 30, 2013		June 30, 2015		December 31, 2014		June 30, 2014
Days sales outstanding in accounts receivable		36.8		34.1		35.1		35.0		35.6		36.8
Days sales outstanding in inventory		15.3		18.6		20.5		23.8		16.1		15.3
Days sales outstanding in accounts payable		9.1		11.4		9.9		12.9		12.0		9.1
Days of working capital		42.9		41.4		45.7		45.8		39.8		42.9

Our days sales outstanding in accounts receivable remained fairly consistent. Our days sales outstanding in inventory increased as of the end of the second quarter of ~~2014~~2015 due to ~~an increase~~decreases in ~~deferred sales. Deferred sales increased~~volume sold for both segments, additional raw material purchases by ~~approximately $1.4 million over the second quarter of 2013. Deferred sales are not recognized until the customer accepts delivery of the product~~TC, and ~~title has transferred. The majority of these sales are to foreign customers with longer payment terms due to increased shipping times.~~inventory for hurricane backup purposes at SHR. Our days sales outstanding in ~~inventory decreased as of the end of the~~accounts payable also remained fairly consistent from year-end 2014 but higher than second quarter ~~of 2014~~2015 due to expenditures for the D Train expansion. Since days of working capital is calculated using the above three metrics, it increased ~~demand~~ for ~~our products.~~

~~Sources and Uses of Cash~~the reasons discussed.

Cash and cash equivalents ~~decreased $1.2~~increased $0.1 million during the six months ended June 30, ~~2014,~~2015, as compared to a decrease of ~~$4.8~~$1.2 million for the six months ended June 30, ~~2013.~~2014.

The change in cash and cash equivalents is summarized as follows:

	2014			2013			2015			2014
Net cash provided by (used in)	(thousands of dollars)						(thousands of dollars)
Operating activities	$	5,971		$	797		$	20,499		$	5,971
Investing activities		(3,591	)		(8,923	)		(16,897	)		(3,591	)
Financing activities		(3,609	)		3,344			(3,454	)		(3,609	)
Decrease in cash and equivalents	$	(1,229	)	$	(4,782	)
Increase (decrease) in cash and equivalents							$	148		$	(1,229	)
Cash and cash equivalents	$	6,379		$	4,726		$	8,654		$	6,379

Operating Activities

Cash provided by operating activities totaled ~~$6.0~~$20.5 million for the first half of ~~2014 which was $5.2~~2015, $14.3 million higher than ~~the first half of 2013.~~2014. For the first half of ~~2014~~2015 net income ~~decreased~~increased by approximately ~~$3.5~~$4.6 million as compared to the corresponding period of ~~2013.~~2014. Major non-cash items affecting income included ~~a decrease~~increases in ~~the~~depreciation and amortization of $2.2 million, unrealized gain ~~from additional equity issuance by AMAK~~ of ~~$4.0 million, a decrease in the equity in earnings from AMAK of $4.0 million, an increase in the share-based compensation of approximately $0.4~~$0.2 million, and ~~a decrease in~~ deferred ~~income~~ taxes of ~~approximately $1.8~~$0.6 million.

~~Significant factors~~Factors leading to an increase in cash provided by operating activities included:

~~Inventory~~Trade receivables decreased approximately ~~$0.4~~$6.1 million (due to ~~increased demand for our products)~~a decrease in sales volume from fourth quarter 2014) as compared to an increase of approximately ~~$2.5 million (due to an increase in the amount of deferred sales at the end of the second quarter and an intentional build in preparation for hurricane season) in 2013 and~~

·	Accounts payable and accrued liabilities increased approximately $0.9 million (due to an increase in transportation, fuel gas, and property tax accruals and additional purchases relating to the D Train expansion) as compared to an increase of approximately $0.2$6.1 million in ~~2013.~~

~~These sources of cash were partially offset by the following decreases in cash provided by operations:~~

~~Trade receivables increased approximately $6.1 million~~2014 (due to a 5.3% increase ofin volume sold and a 6.6% increase in average selling price as compared to the fourth quarter of 2013 and an increase in foreign sales with longer payment terms) ~~as compared to an increase of approximately $5.3 million in 2013 (due to a 13.5% increase of volume sold compared to the fourth quarter of 2012~~ and ~~an increase in foreign sales with longer payment terms),~~

·	~~Income tax receivable~~Other liabilities increased approximately $1.0 million (due to payments received from processing customers) as compared to no change in 2014.

These provisions of cash were partially offset by the following decreases in cash used by operations:

Accounts payable and accrued liabilities decreased approximately ~~$0.6~~$3.0 million (due to the ~~receivable being used for estimated taxes)~~variability in payment dates and decreases in federal and state taxes and officer compensation accruals) as compared to ~~a decrease~~an increase of ~~$1.2~~approximately $0.9 million in ~~2013~~2014 (due to an increase in transportation, fuel gas, and property tax accruals and additional purchases relating to the ~~receivable being used for the 2013 estimated tax payment).~~D Train expansion) and

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·	Inventory increased approximately $2.2 million (due to lower sales volume and increased raw material purchases) as compared to a slight decrease of approximately $0.4 million in 2014 (due to increased sales volume).

Investing Activities

Cash used by investing activities during the first half of ~~2014~~2015 was approximately ~~$3.6~~$16.9 million, representing ~~a decrease~~an increase of approximately ~~$5.3~~$13.3 million over the corresponding period of ~~2013.~~2014. During the first half of 2015 we purchased equipment for the D train expansion, tank farm improvements, spare equipment, various facility upgrades, hydrogenation expansion and improvements at our specialty wax facility. During the first half of 2014 we began preparing for the expansion of our penhex unit (D-Train) and made various other facility improvements. During the first half of 2013 we purchased an additional $7.5 million of stock in AMAK, and expended $3.1 million for equipment for debottlenecking South Hampton’s penhex unit, expansion of the sales loading rack facility, and various other improvements. These uses of cash were partially offset by the return of approximately $1.7 million from AMAK which was previously advanced.

Financing Activities

Cash used by financing activities during the first half of ~~2014~~2015 was approximately ~~$3.6~~$3.5 million versus cash ~~provided~~used of ~~$3.3~~$3.6 million during the corresponding period of ~~2013.~~2014. During 2015 we made principal payments on our acquisition loan of $3.5 million. During 2014 we drew $3.0 million on our line of credit and made principal payments on our line of credit of $6.7 million and $0.7 million on our term debt. During 2013 we drew $6.0 million on our line of credit for working capital purposes and to fund the capital contribution to AMAK and made principal payments of $0.7 million on our term debt and $2.0 million on our line of credit.

Anticipated Cash Needs

We believe that the Company is capable of supporting its operating requirements and capital expenditures through internally generated funds supplemented with debt.

Results of Operations

Comparison of Three Months Ended June 30, ~~2014~~2015 and ~~2013~~2014

2014

2013

Change

%Change

(in thousands)
Petrochemical Product Sales $ 72,842 $ 54,762 $ 18,080 33.0 %
Processing 1,711 1,213 498 41.1 %
Gross Revenue $ 74,553 $ 55,975 $ 18,578 33.2 %

Volume of Sales (gallons)
  Petrochemical Products 20,745 15,711 5,034 32.0 %

  Cost of Sales $ 62,853 $ 47,408 $ 15,445 32.6 %
  Total Operating Expense** 12,890 11,499 1,391 12.1 %
  Natural Gas Expense** 1,573 1,535 38 2.5 %
  Operating Labor Costs** 2,973 2,627 346 13.2 %
  Transportation Costs** 5,837 4,916 921 18.7 %
  General & Administrative Expense 4,154 3,452 702 20.3 %
  Depreciation* 1,004 969 35 3.6 %

  Equity in Earnings of AMAK 6 735 (729 ) (99.2 %)
  Gain on Equity Issuance AMAK - 3,996 (3,996 ) (100.0 %)
  Capital Expenditures 2,407 1,650 757 45.9 %

Specialty Petrochemical Segment (including corporate transactions for comparative purposes)

These tables do not include the results for our specialty wax segment since it was acquired in the fourth quarter of 2014; therefore, we have no basis for comparison.

	2015			2014		Change			%Change
	(thousands of dollars)
Petrochemical Product Sales	$	52,342		$	72,842	$	(20,500	)		(28.1	%)
Processing		1,521			1,711		(190	)		(11.1	%)
Net Revenue	$	53,863		$	74,553	$	(20,690	)		(27.8	%)

Volume of Sales (gallons)
Petrochemical Products		19,603			20,745		(1,142	)		(5.5	%)

Cost of Sales	$	38,997		$	62,853	$	(23,856	)		(38.0	%)
Total Operating Expense**		12,523			12,890		(367	)		(2.8	%)
Natural Gas Expense**		962			1,573		(611	)		(38.8	%)
Operating Labor Costs**		3,437			2,973		464			15.6	%
Transportation Costs**		5,515			5,837		(322	)		(5.5	%)
General & Administrative Expense		4,494			4,154		340			8.2	%
Depreciation and Amortization*		949			1,004		(55	)		(5.5	%)
Equity in Earnings (Losses) of AMAK		(369	)		6		(375	)		(6,250.0	%)
Capital Expenditures	$	6,204		$	2,407	$	3,797			157.7	%

*Includes $801 and $868 for 2015 and ~~$838 for~~ 2014, ~~and 2013,~~ respectively, which is included in operating expense

** Included in cost of sales

Gross Revenue

Gross Revenue ~~increased~~decreased during the second quarter of 2015 from 2014 ~~from 2013~~ by ~~33.2%~~27.8% primarily due to ~~an increase~~a decrease in the average selling price of 24.0% coupled with a decrease in volume of ~~32.0% and an increase in processing fees~~5.5%.

Table of ~~41.1%.~~Contents

Petrochemical Product Sales

Petrochemical product sales ~~increased 33.0%~~decreased by 28.1% during the second quarter of ~~2014~~2015 from ~~2013~~2014 due to ~~an increase~~a decrease in the average selling price of 24.0% and a decrease in volume sold of ~~32.0% as noted above.~~5.5%. Our average selling price decreased because a large portion of our sales are contracted with formulas which are tied to Natural Gas Liquid (NGL) prices which is our primary ~~competitor experienced production interruptions which increased~~feedstock. NGL prices fell significantly during the first half of 2015 reflecting the drop in petroleum prices. Sales volume decreased slightly primarily because of fluctuations in demand from ~~customers who typically purchase product elsewhere. In addition, one customer continued to require shipments above~~

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~~contracted volumes during the quarter. As a note, deferred sales volume increased 15.0% during the second quarter of 2014 from 2013 which delays recognition until the subsequent quarter.~~our primary oil sands customer.

Processing

Processing revenues ~~increased 41.1%~~decreased 11.1% during the second quarter of 2015 from 2014 ~~from 2013 as we continue~~due to ~~see the benefit of the increase~~a decrease in ~~fees charged under new contracts.~~production required by our customers.

Cost of Sales

Cost of Sales ~~increased 32.6%~~decreased 38.0% during the second quarter of ~~2014~~2015 from ~~2013~~2014 due to ~~higher volumes processed to support~~ the ~~demand~~substantial decrease in NGL prices as mentioned above. ~~Volume processed increased 28.0%, and~~Our average feedstock ~~price~~cost per gallon ~~increased 6.1% during the second quarter of 2014 from 2013.~~decreased 41.6% and volume processed decreased 8.0%. We use natural gasoline as feedstock which is the heavier liquid remaining after butane and propane are removed from liquids produced by natural gas wells. The material is a commodity product in the oil/petrochemical markets and generally is readily available. The price of natural gasoline normally correlates approximately 93% with the price of crude oil. We continue to investigate alternative feedstock sources which contain lower percentages of less desirable components in an effort to reduce the amount of byproduct sold into fuel markets at lower prices, thereby increasing overall profitability.

Total Operating Expense

Total Operating Expense ~~increased 12.1%~~decreased 2.8% during the second quarter of ~~2014~~2015 from ~~2013.~~2014. Natural gas, labor and transportation are the largest individual expenses in this category.

The cost of natural gas purchased ~~increased 2.5%~~decreased 38.8% during ~~the second quarter of~~2015 from 2014 ~~as compared to the second quarter of 2013 primarily~~ due to ~~an increase~~a decrease in the average per unit ~~cost.~~cost and in the quantity purchased. The average price per MMBTU for the second quarter of ~~2014~~2015 was ~~$4.58~~$2.94 whereas, for ~~the second quarter of 2013~~2014 the per-unit cost was ~~$4.32. In addition, volume consumed increased slightly~~$4.58. Volume decreased to approximately ~~347,000~~334,000 MMBTU from about ~~345,000 MMBTU during~~347,000 MMBTU. The volume of natural gas consumed in the ~~same period in 2013.~~quarter decreased due to lower sales volumes.

Labor costs were higher by ~~13.2% during the second quarter~~approximately15.6% due to cost of ~~2014 as compared~~living and competitive wage adjustments averaging 3% to ~~the second quarter of 2013~~4%, operational overtime because of ~~higher~~loading demands and training, maintenance overtime because of turnarounds, and additional profit sharing ~~distributions during second quarter of 2014 based upon higher operating income.~~

~~Transportation costs were higher by 18.7% during the second quarter of 2014 as compared to the second quarter of 2013~~ due to the increase in operating income and personnel. We are studying ways to reduce overtime caused by the ~~number~~short term surge of ~~rail shipments. We experienced~~loading iso-containers which occurs periodically. The overtime created by the training for the new equipment and processes of D Train will continue until the project is complete and operating routinely. The maintenance overtime was higher than traditionally seen during turnarounds due to the extended nature of the work including the arrangements for testing capacities for higher volumes of production.

Transportation costs decreased 5.5% due to a ~~24.8% increase~~decrease in the number of ~~rail shipments in the second quarter of 2014 as compared to the second quarter of 2013. These shipments were primarily in support of the one customer requiring volumes above contracted amounts.~~shipments. These costs are ~~recovered through~~included in our selling ~~price.~~prices.

General and Administrative Expense

General and Administrative costs for the second quarter of 2015 from 2014 ~~from 2013~~ increased ~~20.3%~~by 8.2% due primarily to increases in officer compensation ~~(stock option grant), insurance premiums (health, property~~(due to a restricted stock grant and ~~liability increased), property taxes (increased basis), consulting fees (use~~the accrual for end of ~~additional contractors),~~year bonuses) and ~~accounting and auditing fees (additional costs associated with accounting for AMAK)~~contributions to the 401(k) plan (due to contributions being generated from profit sharing distributions).

Depreciation and Amortization

Depreciation ~~increased 3.6%~~and amortization decreased 5.5% during the second quarter of ~~2014~~2015 from ~~2013~~2014 due to ~~an increase~~construction in progress accounting for most of the ~~amount of depreciable assets.~~

~~Equity~~capital purchases. Depreciation will begin on these purchases when complete and in ~~Earnings (Losses) of AMAK/Gain on Equity Issuance of AMAK~~use.

Equity in Earnings (Losses) of AMAK

Equity in Earnings of AMAK decreased ~~$0.7~~$0.4 million during the second quarter of ~~2014~~2015 from ~~2013.~~2014. See discussion in six months ~~ended June 30, 2014,~~ section below.

~~Our equity in AMAK’s results of operations for the three months ended June 30, 2013, included a gain from the additional equity issuance by AMAK of $4.0 million. There was no gain in 2014.~~

~~Capital Expenditures~~

Capital Expenditures increased 45.9% during the second quarter of 2014 from 2013 primarily due to preparations for our D-Train expansion, expanding the sales loading rack and various other improvements.

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Capital Expenditures

Capital Expenditures increased 157.7% during the second quarter of 2015 from 2014 primarily due to improvements in the petrochemical facility as detailed above under “Investing Activities”.

Comparison of Six Months Ended June 30, ~~2014~~2015 and ~~2013~~2014

2014

2013

Change

%Change

(in thousands)
Petrochemical Product Sales $ 135,234 $ 106,382 $ 28,852 27.1 %
Processing 3,419 2,338 1,081 46.2 %
Gross Revenue $ 138,653 $ 108,720 $ 29,933 27.5 %

Volume of sales (thousand gallons)
  Petrochemical products 39,570 30,432 9,138 30.0 %

Cost of Sales $ 118,239 $ 93,474 $ 24,765 26.5 %
Total Operating Expense** 24,951 21,732 3,219 14.8 %
Natural Gas Expense** 3,400 2,777 623 22.4 %
Operating Labor Costs** 5,722 5,138 584 11.4 %
Transportation Costs** 10,645 8,957 1,688 18.8 %
General & Administrative Expense 8,343 6,957 1,386 19.9 %
Depreciation* 2,008 1,923 85 4.4 %

  Equity in Earnings (Losses) of AMAK (344 ) 3,699 (4,043 ) (109.3 %)
  Gain on Equity Issuance AMAK - 3,996 (3,996 ) (100.0 %)
  Capital Expenditures 4,127 3,142 985 31.3 %

Specialty Petrochemical Segment (including corporate transactions for comparative purposes)

These tables do not include the results for our specialty wax segment since it was acquired in the fourth quarter of 2014; therefore, we have no basis for comparison.

	2015			2014			Change			%Change
	(thousands of dollars)
Petrochemical Product Sales	$	99,525		$	135,234		$	(35,709	)		(26.4	%)
Processing		3,045			3,419			(374	)		(10.9	%)
Net Revenue	$	102,570		$	138,653		$	(36,083	)		(26.0	%)

Volume of Sales (gallons)
Petrochemical Products		37,707			39,570			(1,863	)		(4.7	%)

Cost of Sales	$	73,996		$	118,239		$	(44,243	)		(37.4	%)
Total Operating Expense**		25,020			24,951			69			0.3	%
Natural Gas Expense**		2,270			3,400			(1,130	)		(33.2	%)
Operating Labor Costs**		6,910			5,722			1,188			20.8	%
Transportation Costs**		10,423			10,645			(222	)		(2.1	%)
General & Administrative Expense		9,204			8,343			861			10.3	%
Depreciation and Amortization*		2,044			2,008			36			1.8	%
Equity in Earnings (Losses) of AMAK		(310	)		(344	)		34			(9.9	%)
Capital Expenditures	$	13,019		$	4,127		$	8,892			215.5	%

*Includes*Includes $1,701 and $1,733 for 2015 and ~~$1,663 for~~ 2014, ~~and 2013,~~ respectively, which is included in operating expense

** Included in cost of sales

Gross Revenue

Gross Revenue ~~increased 27.5%~~decreased during the first half of 2015 from 2014 ~~from 2013~~by 26.0% primarily due to ~~an increase~~a decrease in ~~total sales~~the average selling price of 22.8%, a decrease in volume of ~~30.0%~~4.7%, and ~~an increase~~a 10.9% decrease in processing ~~fees of 46.2%.~~fees.

Petrochemical Product Sales

Petrochemical product sales ~~increased 27.1%~~decreased by 26.4% during the first half of 2015 from 2014 ~~from~~due to a decrease in the average selling price of 22.8% and a decrease in volume sold of 4.7%. Our average selling price decreased because a large portion of our sales are contracted with formulas which are tied to Natural Gas Liquid (NGL) prices which is our primary feedstock. NGL prices fell significantly during the first half of ~~2013 due to an increase~~2015 reflecting the drop in ~~total sales~~petroleum prices. Sales volume decreased primarily because of ~~30.0% as noted above. As stated under the quarterly discussion,~~fluctuations in demand from our ~~volume increased primarily due a competitor’s production issues and one customer taking volumes above contracted amounts.~~primary oil sands customer.

Processing

Processing revenues ~~increased~~decreased 10.9% during the first half of ~~2014~~2015 from ~~2013 by 46.2%~~2014 due to ~~an increase~~a decrease in ~~tolling fees charged under new contracts.~~production required by our customers.

Cost of Sales

Cost of Sales ~~increased 26.5%~~decreased 37.4% during the first half of ~~2014~~2015 from ~~2013~~2014 due to ~~an increase~~the substantial decrease in NGL prices as mentioned above. Our average feedstock cost per gallon decreased 44.3% and volume processed decreased 2.9%. We use natural gasoline as feedstock which is the heavier liquid remaining after butane and propane are removed from liquids produced by natural gas wells. The material is a commodity product in the oil/petrochemical markets and generally is readily available. The price of ~~24.2%~~natural gasoline normally correlates approximately 93% with the price of crude oil. We continue to investigate alternative feedstock sources which contain lower percentages of less desirable components in ~~support~~an effort to reduce the amount of ~~the growth in demand.~~byproduct sold into fuel markets at lower prices, thereby increasing overall profitability.

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Total Operating Expense

Total Operating Expense increased ~~14.8%~~0.3% during the first half of ~~2014~~2015 from ~~2013.~~2014. Natural gas, labor and transportation are the largest individual expenses in this category.

The cost of natural gas purchased ~~increased 22.4%~~decreased 33.2% during ~~the first half of~~2015 from 2014 ~~from 2013~~ due to ~~higher per-unit costs~~a decrease in the average per unit cost and ~~1.1 % higher volumes.~~in the quantity purchased. The average price per MMBTU for the first half of 2015 was $3.13 whereas, for 2014 the per-unit cost was ~~$4.78; whereas,~~$4.78. Volume increased slightly to approximately 707,000 MMBTU from about 705,000 MMBTU. The volume of natural gas consumed in 2015 increased despite lower sales volumes due to testing of the newly increased capacities of the units and catalyst treatments during maintenance shutdowns. These activities use fuel gas but do not produce product.

Labor costs were higher by approximately 20.8% due to cost of living and competitive wage adjustments averaging 3% to 4%, operational overtime because of loading demands and training, maintenance overtime because of turnarounds, and additional profit sharing due to the increase in operating income and personnel. We are studying ways to reduce overtime caused by the short term surge of loading iso-containers which occurs periodically. The overtime created by the training for the new equipment and processes of D Train will continue until the project is complete and operating routinely. The maintenance overtime was higher than traditionally seen during turnarounds due to the extended nature of the work including the arrangements for testing capacities for higher volumes of production.

Transportation costs decreased 2.1% due to a decrease in the number of shipments.

General and Administrative Expense

General and Administrative costs for the first half of ~~2013~~2015 from 2014 increased by 10.3% due primarily to increases in officer compensation (due to a restricted stock grant and the ~~per-unit cost was $3.94. Volume purchased~~accrual for end of year bonuses) and contributions to the 401(k) plan (due to contributions being generated from profit sharing distributions).

Depreciation and Amortization

Depreciation and amortization increased slightly by 1.8% during the first half of 2015 from 2014 due to ~~approximately 705,000 MMBTU~~a fairly stable asset base. In addition, due to construction in progress accounting for most of the capital purchases during the quarter, depreciation will begin on these purchases when complete and in use.

Equity in Earnings (Losses) of AMAK

Equity in Earnings of AMAK decreased slightly during the first half of 2015 from 2014.

For the six months ended June 30, ~~2014, from about 697,000 MMBTU during~~2015, shipments were 56.1% short of budgeted volumes as indicated in the table below. There was only one shipment of zinc in the first quarter of 2015 and one shipment of copper in the second quarter of 2015 due to ship availability delays, moving shipments into the following quarters.

AMAK volumes in dry metric tons (dmt) for the six months ended June 30, ~~2013.~~2015, were as follows:

~~Labor costs were higher by 11.4% during the first half of 2014 from 2013 because of higher profit sharing distributions during the first half of 2014 based upon higher operating income.~~

	Actual		Budgeted		Variance
Ore tons processed		330,791		350,481		(19,690	)
Concentrate to the port
Copper		13,680		13,476		204
Zinc		19,634		21,509		(1,875	)
		33,314		34,985		(1,671	)

Shipments
Copper		8,959		15,180		(6,221	)
Zinc		8,214		23,920		15,706
		17,173		39,100		(21,927	)

~~Transportation costs were higher~~The water issues experienced by ~~18.8% during the first half of 2014 from 2013 mainly due to the increase in rail shipments. We experienced a 29.4% increase in the number of rail shipments~~AMAK in the first ~~half~~quarter were largely resolved by the end of ~~2014~~the second quarter as ~~compared~~the region experienced significant rains in addition to, ~~the~~some water storage improvements that have been made. There was not a

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first half of 2013. These costs are recovered through our selling price. Higher transportation costs accounted for 52.4% of the increase in operating expense during the first six months of 2014.

~~General and Administrative Expense~~

General and Administrative costs increased 19.9% during the first half of 2014 from 2013 due to increases in officer compensation (stock option grant), insurance premiums (health, property and liability increased), property taxes (increased basis), consulting fees (use of additional contractors), accounting and auditing fees (additional costs associated with accounting for AMAK).

~~Depreciation~~

~~Depreciation increased 4.4% during the first half of 2014 from 2013 due to an increase~~large maintenance shutdown in the ~~amount of depreciable assets.~~

~~Equity in Earnings (Losses) of AMAK/Gain on Equity Issuance of AMAK~~

Equity in Earnings (Losses) of AMAK decreased 109.3% during the first half of 2014 from 2013 due to reasons detailed below. Our equity in AMAK’s results of operations for the six months ended June 30, 2013, also included a gain from the additional equity issuance by AMAK of $4.0 million. There was no gain in 2014.

~~The mining sector~~second quarter, and as a whole has been depressed due to low metal prices and demand. However, the performance of AMAK to date has been below our expectation, and steps are being taken to improve performance and solidify its position over the long term. The project is self-supporting and cash flow is adequate to meet current needs.

~~For the six months ended June 30, 2014, shipments~~result, ore tons processed were ~~12.9% short of budgeted volumes as indicated~~26% higher in the ~~table below. There were no shipments~~second quarter (plant run time was approximately 90%) than in the first quarter ~~of 2014 due~~(plant run time was approximately 75%). Feed chute issues that AMAK was experiencing in the first quarter have also been largely resolved.

The new management team continues to ~~logistics delays~~make progress on improving recoveries and operating efficiencies. A few additional personnel will be added where specific skill sets are required, and some existing personnel will be replaced. We expect to see real improvement from these changes in late 2015; thereby, positioning AMAK for a successful IPO on the ~~rebuilding~~Saudi Arabian Stock Exchange which is currently targeted for late 2016.The precious metals circuit was down for most of ~~warehouse stocks. Sales on shipments in~~ the second quarter due to governmental concern with storage of ~~2014, while up in number (4), were limited by volume shipped. AMAK volumes (dmt)~~the cyanide required for ~~the six months ended June 30, 2014, were as follows:~~

Actual Budgeted Variance

Ore tons processed
328,394 341,020 (12,626 )

Concentrate to the port

  Copper 14,997 14,699 298
  Zinc 15,830 16,215 (385 )
30,827 30,914 (87 )

Shipments
   Copper 11,856 14,699 (2,843 )
   Zinc 15,057 16,216 (1,159 )
26,913 30,915 (4,002 )

~~In addition, AMAK faced operational issues including mechanical issues and water shortage which caused the plant run time to decrease to 64% versus the 80+% which~~this process. The issue has been ~~the norm over the first 18 months of operation. The water issues have been largely~~ resolved, ~~with the addition of more wells, purchases of supplemental water via truck from nearby sources,~~ and the ~~addition~~circuit should run all of ~~a dam~~the second half of 2015. The talc circuit is now operational leading to further recovery and holding area in a nearby drainage area. The mechanical problems, while a continued concern due to the remote location and lack of expertise within the country, are being addressed with the identification and stocking of critical spares and a change of management staff.

During 2014 AMAK hired a new CEO (who is a US citizen), a new mining engineer (who is a Canadian citizen), and a new mill manager (who is an Australian citizen). Individuals previously in those positions did a creditable job in starting up the facility and getting it to the point of production. However, the AMAK Board felt that for AMAK to advance to a consistent and profitable operation, a different set of skills was needed. AMAK incurred expenses to transition the new and old personnel.other operational improvements.

Finally, in an area inover which AMAK has little to no control, average metal prices were ~~softer~~slightly better for the ~~period~~second quarter than the first due to a run up in spot commodity prices in April but have declined somewhat since. Copper prices are at numbers last seen six years ago and ~~affected AMAK’s financial results. While copper prices may~~will likely continue to be volatile ~~zinc~~as they are largely affected by economic data announcements from China. Zinc prices are ~~predicted~~expected to be stronger as time passes due to the rundown and closure of several large mines this year and ~~next.~~next; however, there are no guarantees.

Specialty Synthetic Wax Segment

~~Table~~Although no quarter by quarter comparative data exists, TC continues to make progress. TC generated a slight profit during the first half of ~~Contents~~

2015; however, there were $1.7 million in processing fees which had been generated during the twelve months ended March 31, 2015, which were recognized during the first quarter of 2015 due to contract wording that dictated revenue recognition.

~~Improvements are expected over the last half of 2014.~~ Our expectation for better performance is based upon the activation of the precious metal circuit scheduled for October 2014; improved recoveries and product quality based upon better process control and improvements being installed in the mill equipment; an ore blending program whichinitial focus has been ~~initiated and will help the~~on ensuring wax production capacity along with product quality and ~~production levels:~~consistency. We have now proven our throughput capability and ~~beginning in November 2014~~are growing wax volumes on a ~~favorably revised~~market by market basis. Customers are excited about our new product which has now been qualified by four different adhesive customers.

Our processing fees continue to lag as some custom processing capacity has been used to produce high quality wax. A new wax distillation column has been installed, and ~~amended contract~~custom processing capacity has been released.

As previously mentioned, we are also adding new hydrogenation and distillation capabilities which will help us leverage existing relationships with our petrochemical customers and drive new custom processing business. We expect the ~~Chinese company who supplies~~project to be completed on schedule by the ~~labor and many~~end of the ~~chemicals for the mill operation.~~first quarter of 2016. We do not expect significant customer processing growth before this unit comes on stream.

Capital Expenditures

Capital Expenditures increased ~~31.3%~~215.5% during the first half of ~~2014~~2015 from ~~2013~~2014 primarily due to ~~preparations for D-Train expansion, expanding~~improvements in the ~~sales loading rack and various other improvements.~~petrochemical facility as detailed above under “Investing Activities”.

Contractual Obligations

The table below summarizes the following contractual obligations (in thousands) of the ~~Company:~~Company at June 30, 2015:

	Payments due by period										Payments due by period
	Total		Less than 1 year		1-3 years		3-5 years		More than 5 years		Total		Less than 1 year		1-3 years		3-5 years		More than 5 years
Operating Lease Obligations	$	5,781	$	1,821	$	2,764	$	738	$	458	$	8,327	$	2,294	$	3,213	$	1,541	$	1,279
Long-Term Debt Obligations		9,539		1,400		2,800		5,339		-		76,950		7,667		16,667		52,616		-
Total	$	15,320	$	3,221	$	5,564	$	6,077	$	458	$	85,056	$	8,957	$	19,291	$	55,905	$	903

On October 1, 2014, we entered into an Amended and Restated Credit Agreement with the lenders which from time to time are parties to the Amended and Restated Credit Agreement (collectively, the “Lenders”) and Bank of America, N.A., a national banking association, as Administrative Agent for the Lenders, and Merrill Lynch, Pierce, Fenner & Smith Incorporated as Lead Arranger. Refer to Note 8 on pages 9 through 10 of this Form 10-Q for a detailed discussion.

Guarantee of Saudi Industrial Development Fund (“SIDF”) Loan to AMAK

As discussed in Note 1517 to the consolidated financial statements, as a condition of the Loan from the SIDF in the principal amount of 330.0 million SR (US$88.0 million) to AMAK, we were required to execute a Guarantee of up to 41% of the Loan. The decision to provide a limited corporate guarantee in favor of AMAK was difficult as we considered numerous facts and circumstances. One of the factors considered was that without the US$88.0 million from the SIDF, construction

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activity on the project would likely have ceased. Another factor considered was that prior to making a firm commitment regarding funding, the SIDF performed its own exhaustive due diligence of the project and obviously reached the conclusion that the project is viable and capable of servicing the debt. Yet another factor considered was our ability to reach agreement with various AMAK Saudi shareholders whereby they agreed to use best efforts to have their personal guarantees stand ahead of and pay required payments to SIDF before our corporate guarantee. Finally, we researched numerous loans made by the SIDF to others and were unable to find a single instance where the SIDF actually called a guarantee or foreclosed on a project. Based on the above, we determined that it was in the best interest of the Company and its shareholders to provide the limited corporate guarantee to facilitate completion of the mining project in a timely manner. We also determined that the stand-in-front agreement in conjunction with the actual value of plant and equipment on the ground should act in concert to minimize any exposure arising from the corporate guarantee. The total amount outstanding to the SIDF at June 30, ~~2014,~~2015, was ~~269.8~~310.0 million Saudi Riyals (US$~~71.9~~82.7 million).

Critical Accounting Policies and Estimates

Our critical accounting policies are more fully described in Note 2 of the Notes to Consolidated Financial Statements included in our Annual Report on Form 10-K for the year ended December 31, ~~2013.~~2014. The preparation of consolidated financial statements in accordance with generally accepted accounting principles requires management to make estimates, assumptions and judgments that affect the reported amounts of assets and liabilities and the disclosure of contingent assets and liabilities at the date of the consolidated financial statements, and the reported amounts of revenue and expenses during the period reported. By their nature, these estimates, assumptions and judgments are subject to an inherent degree of uncertainty. We base our estimates, assumptions and judgments on historical experience, market trends and other factors that are believed to be reasonable under the circumstances. Estimates, assumptions and judgments are reviewed on an ongoing basis and the effects of revisions are reflected in the consolidated financial statements in the period they are determined to be necessary. Actual results may differ from these estimates under different assumptions or conditions. Our critical accounting policies have been discussed with the Audit Committee of the Board of Directors. We believe there have been no material changes to our critical accounting policies and estimates compared to those discussed in our Annual Report on Form 10-K for the year ended December 31, ~~2013.~~

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2014.

Recent and New Accounting Standards

See Note 2 to the Consolidated Financial Statements for a summary of recent accounting guidance.

ITEM 3. QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET RISK.

Derivative Instrument Risk

Refer to Note 810 on ~~page 9~~pages 11 through 12 of this Form 10-Q.

Interest Rate Risk

Refer to Note 810 on ~~page 9~~pages 11 through 12 of this Form 10-Q.

Except as noted above, there have been no material changes in the Company’s exposure to market risk from the disclosure included in the Company’s Annual Report on Form 10-K for the fiscal year ended December 31, ~~2013.~~2014.

ITEM 4. CONTROLS AND PROCEDURES.

(a)

Evaluation of disclosure controls and procedures. Our chief executive officer and chief financial officer, with the participation of management, have evaluated the effectiveness of our “disclosure controls and procedures” (as defined in Rules 13a-15(e) and 15(d)-15(e) under the Securities Exchange Act of 1934) and determined that our disclosure controls and procedures were effective as of the end of the period covered by this report.

(b)

Changes in internal control. There ~~was~~were no ~~change~~significant changes in our internal control over financial reporting that occurred during the quarter ended June 30, ~~2014,~~2015, that ~~has~~have materially affected, or isare reasonably likely to materially affect, our internal control over financial reporting. On October 1, 2014, we completed the TC Acquisition which included certain existing information systems and internal controls over financial reporting. We are currently evaluating and integrating TC’s historical internal controls over financial reporting with ours. We expect to complete the integration in 2015.

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PART II. OTHER INFORMATION

ITEM 1. LEGAL PROCEEDINGS.

None other than the pending claims and lawsuits as discussed in Note 1517 to the consolidated financial statements.

ITEM 1A. RISK FACTORS.

~~There have been no material changes from~~As of the date of this filing, the Company and its operations continue to be subject to the risk factors previously disclosed in our "Risk Factors" in the ~~Company’s~~2014 Annual Report, ~~on Form 10-K for~~as well as the ~~year ended December 31, 2013.~~following risk factor:

AMAK’s operations could be negatively affected by the conflict in Yemen

The conflict and hostilities in Yemen could disrupt or interfere with the operations of AMAK whose corporate offices and mining assets are located in Najran province of Saudi Arabia.

ITEM 6. EXHIBITS.

The following documents are filed or incorporated by reference as exhibits to this Report. Exhibits marked with an asterisk (*) are management contracts or a compensatory plan, contract or arrangement.

Exhibit Number	Description
3(a)	- Certificate of Incorporation of the Company as amended through the Certificate of Amendment filed with the Delaware Secretary of State on May 22, 2014 (incorporated by reference to Exhibit 3(a) to the Company’s Quarterly Report on Form 10-Q for the quarter ended June 30, 2014 (file No. 001-33926))
3(b)	- Restated Bylaws of the Company dated August 1, 2014 (incorporated by reference to Exhibit 3(b) to the Company’s Quarterly Report on Form 10-Q for the quarter ended June 30, 2014 (file No. 001-33926))
10(a)*	- Retirement Awards Program dated January 15, 2008 between Arabian American Development Company and Hatem El Khalidi (incorporated by reference to Exhibit 10(h) to the Company’s Quarterly Report on Form 10-Q for the quarter ended March 31, 2008 (file No. 001-33926))

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~~Exhibit~~ ~~Number~~	~~Description~~
10(b)*	- Arabian American Development Company Stock and Incentive Plan adopted April 3, 2012 (incorporated by reference to Exhibit A to the Company’s Form DEF 14A filed April 25, 2012 (file No. 001-33926))
10(c)	- Articles of Association of Al Masane Al Kobra Mining Company, dated July 10, 2006 (incorporated by reference to Exhibit 10(m) to the Company’s Annual Report on Form 10-K for the year ended December 31, 2009 (file No. 001-33926))
10(d)	- Bylaws of Al Masane Al Kobra Mining Company (incorporated by reference to Exhibit 10(n) to the Company’s Annual Report on Form 10-K for the year ended December 31, 2009 (file No. 001-33926))
10(e)	- Letter Agreement dated August 5, 2009, between Arabian American Development Company and the other Al Masane Al Kobra Company shareholders named therein (incorporated by reference to Exhibit 10.1 to the Company’s Form 8-K filed on August 27, 2009 (file No. 001-33926))
10(f)	- Limited Guarantee dated October 24, 2010, between Arabian American Development Company and the Saudi Industrial Development Fund (incorporated by reference to Exhibit 10.1 to the Company’s Form 8-K filed on October 27, 2010 (file No. 001-33926))

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Exhibit Number	Description
10(g)	- ~~Fourteenth Amendment to~~Amended and Restated Credit Agreement dated ~~July 10,~~October 1, 2014, between ~~South Hampton Resources,~~Texas Oil & Chemical Co. II, Inc. and certain subsidiaries and Bank of America, N.A. as administrative agent (incorporated by reference to Exhibit ~~99.1~~10.2 to the Company’s Form 8-K filed on ~~July 16,~~October 3, 2014 (file No. 001-33926))
10(h)	-Stock Purchase Agreement dated September 19, 2014, between Trecora Resources, Texas Oil & Chemical Co. II, Inc., SSI Chusei, Inc. and Schumann/Steier Holdings, LLC (incorporated by reference to Exhibit 2.1 to the Company’s Form 8-K filed on September 25, 2014 (file No. 001-33926))
31.1	- Certification of Chief Executive Officer pursuant to Rule 13A-14(A) of the Securities Exchange Act of 1934
31.2	- Certification of Chief Financial Officer pursuant to Rule 13A-14(A) of the Securities Exchange Act of 1934
32.1	- Certification of Chief Executive Officer pursuant to 18 U.S.C. Section 1350, as adopted pursuant to Section 906 of the Sarbanes-Oxley Act of 2002
32.2	- Certification of Chief Financial Officer 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 Taxonomy Calculation Linkbase Document
101.LAB	- XBRL Taxonomy Label Linkbase Document
101.PRE	- XBRL Taxonomy Extension Presentation Linkbase Document
101.DEF	- XBRL Taxonomy Extension Definition Linkbase Document

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SIGNATURES

Pursuant to the requirements of the Securities Exchange Act of 1934, the registrant has duly caused this report to be signed on its behalf by the undersigned thereunto duly authorized.

DATE: August ~~6, 2014~~7, 2015 TRECORA RESOURCES

(Registrant)

By: /s/Connie Cook

Connie Cook

Chief Financial Officer

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Supplemental disclosure of cash flow information:
Cash payments for interest	$	245	$	388
Cash payments for taxes	$	2,659	$	1,390
Supplemental disclosure of non-cash items:
Capital expansion amortized to depreciation expense	$	823	$	540
Unrealized gain on interest rate swap, net of tax expense	$	63	$	127

	Three Months Ended June 30, 2014						Three Months Ended June 30, 2013
					Per Share						Per Share
	Income		Shares		Amount		Income		Shares		Amount
Basic Net Income per Share:
Net Income Attributable to Trecora Resources	$	5,000		24,165	$	0.21	$	6,309		24,110	$	0.26

Dilutive stock options outstanding				648						542

Diluted Net Income per Share:
Net Income Attributable to Trecora Resources	$	5,000		24,813	$	0.20	$	6,309		24,652	$	0.26