The accompanying notes are an integral part of these unaudited condensed consolidated financial statements.

4.	DISCONTINUED OPERATIONS

On December 21, 2020, the Partnership announced ~~executed~~that it entered into agreements to sell its crude oil trucking services, crude oil pipeline services, and crude oil terminalling services segments. These segments are reported as discontinued operations in the results of operations and financial position for all periods presented. The crude oil trucking services agreement closed in two phases, one on December 15, 2020, and one on February 2, 2021. The crude oil pipeline services agreement closed on February 1, 2021. Loss recognized on the ~~disposal and~~ classification of held for sale and disposal of these assets was recorded in the year ended December 31, 2020. The transaction related to the crude oil terminalling services segment closed on March 1, 2021. The Partnership has allocated interest to discontinued operations on debt that was required to be repaid as a result of the sales of the crude oil pipeline and terminalling services segment for the three and nine months ended ~~March 31,~~September 30, 2020 and 2021.

As part of the crude oil pipeline sale, ~~$1.5~~$1.4 million of the gross sale proceeds are currently being held in escrow, subject to post-closing settlement terms and conditions. The Partnership expects to receive the majority of this in increments over the ~~next~~ two ~~years.~~ years following the date of sale.

Exit and disposal costs related to these sales, in the form of employee severance payments, ~~are expected to total approximately $1.6~~totaled $1.9 million. The Partnership ~~is providing~~provided limited transition services to both of the buyers of the crude oil pipeline and terminalling services ~~segments. These services are expected to last approximately six months beyond~~segments, with the final ~~closing date.~~transition services being completed during the third quarter of 2021. The contracts were designed to recover the costs of providing services, so athere is minimal income statement impact ~~is expected~~ for these services.

During the three months ended March 31,2020, an impairment of $4.9 million was recognized to write-down the value of the Partnership's crude oil linefill based on the market price of crude oil as of March 31, 2020.During the three months ended June 30, 2020, the Partnership recognized asset impairment expense of $1.3 million in its crude trucking services segment based on expected future cash flows and market interest compared to carrying value.

Assets and Liabilities of Discontinued Operations (in thousands)	*As of December 31, 2020*
	*Crude Oil Trucking Services*		*Crude Oil Pipeline Services*		*Crude Oil Terminalling Services*		*Total*
ASSETS
Accounts receivable, net	$	81	$	13,711	$	167	$	13,959
Plant, property, and equipment		442		23,541		52,854		76,837
Other assets		331		547		5,271		6,149
Total assets of discontinued operations	$	854	$	37,799	$	58,292	$	96,945

LIABILITIES
Current liabilities	$	1,017	$	14,921	$	1,310	$	17,248
Total liabilities of discontinued operations	$	1,017	$	14,921	$	1,310	$	17,248

Assets and Liabilities of Discontinued Operations (in thousands)	As of March 31, 2021								*As of September 30, 2021*
	Crude Oil Trucking Services		Crude Oil Pipeline Services		Crude Oil Terminalling Services		Total		*Crude Oil Trucking Services*		*Crude Oil Pipeline Services*		*Crude Oil Terminalling Services*		*Total*
ASSETS
Accounts receivable, net	$	-	$	287	$	48	$	335	$	0	$	0	$	299	$	299
Other assets		40		-		136		176
Total assets of discontinued operations	$	40	$	287	$	184	$	511	$	0	$	0	$	299	$	299

LIABILITIES
Current liabilities	$	32	$	936	$	1,631	$	2,599	$	12	$	232	$	104	$	348
Total liabilities of discontinued operations	$	32	$	936	$	1,631	$	2,599	$	12	$	232	$	104	$	348

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Statement of Operations for Discontinued Operations (in thousands)		*Three Months Ended September 30, 2020*
	*Crude Oil Trucking Services*			*Crude Oil Pipeline Services*			*Crude Oil Terminalling Services*		*Total*
Revenue:
Third-party service revenue	$	770		$	412		$	4,190	$	5,372
Intercompany service revenue		1,434			0			0		1,434
Third-party product sales revenue		0			51,390			0		51,390
Costs and expenses:
Operating expense		2,415			3,366			2,363		8,144
Intercompany operating expense		0			1,434			0		1,434
Cost of product sales		0			19,833			0		19,833
Cost of product sales from related party		0			22,627			0		22,627
General and administrative expense		71			93			0		164
(Gain)loss on disposal of assets		76			(261	)		0		(185	)
Interest expense		2			206			962		1,170
Income(loss) before income taxes		(360	)		4,504			865		5,009
Provision for income taxes		1			0			0		1
Net income(loss) from discontinued operations	$	(361	)	$	4,504		$	865	$	5,008

Statement of Operations for Discontinued Operations (in thousands) Three Months Ended March 31, 2020

Crude Oil Trucking Services

Crude Oil Pipeline Services

Crude Oil Terminalling Services

Total

Revenue:

Third-party service revenue
$ 2,543 $ 502 $ 3,330 $ 6,375
Intercompany service revenue
1,425 - - 1,425
Third-party product sales revenue
- 47,052 - 47,052
Costs and expenses:

Operating expense
4,025 3,302 2,023 9,350
Intercompany operating expense
- 1,425 - 1,425
Cost of product sales
- 14,221 - 14,221
Cost of product sales from related party
- 28,254 - 28,254
General and administrative expense
69 105 - 174
Tangible asset impairment expense
35 2,820 2,266 5,121
(Gain)loss on disposal of assets
(10 ) 121 - 111
Interest expense
3 325 1,384 1,712
Loss before income taxes
(154 ) (3,019 ) (2,343 ) (5,516 )
Provision for income taxes
3 - - 3
Net loss from discontinued operations
$ (157 ) $ (3,019 ) $ (2,343 ) $ (5,519 )

Statement of Operations for Discontinued Operations (in thousands)	*Three Months Ended September 30, 2021*
	*Crude Oil Trucking Services*			*Crude Oil Pipeline Services*			*Crude Oil Terminalling Services*			*Total*
Revenue:
Third-party service revenue	$	0		$	0		$	656		$	656
Costs and expenses:
Operating expense		(7	)		(1	)		676			668
General and administrative expense		0			(11	)		0			(11	)
(Gain)loss on disposal of assets		26			0			(7	)		19
Income(loss) before income taxes		(19	)		12			(13	)		(20	)
Provision for income taxes		0			0			0			0
Net income(loss) from discontinued operations	$	(19	)	$	12		$	(13	)	$	(20	)

Statement of Operations for Discontinued Operations (in thousands)

Three Months Ended March 31, 2021

Crude Oil Trucking Services

Crude Oil Pipeline Services

Crude Oil Terminalling Services

Total

Revenue:

Third-party service revenue
$ 9 $ 413 $ 3,643 $ 4,065
Intercompany service revenue
409 - - 409
Third-party product sales revenue
- 15,591 - 15,591
Costs and expenses:

Operating expense
1,333 1,438 910 3,681
Intercompany operating expense
- 409 - 409
Cost of product sales
- 4,994 - 4,994
Cost of product sales from related party
- 9,461 - 9,461
General and administrative expense
59 118 - 177
Tangible asset impairment expense 92 41 23 156
Gain on disposal of assets
(3 ) (1,694 ) (73,372 ) (75,069 )
Interest expense
- 72 634 706
Income (loss) before income taxes
(1,063 ) 1,165 75,448 75,550
Provision for income taxes
- - - -
Net income (loss) from discontinued operations
$ (1,063 ) $ 1,165 $ 75,448 $ 75,550

Select cash flow information (in thousands)

Crude Oil Trucking Services

Crude Oil Pipeline Services

Crude Oil Terminalling Services

Total

Three Months Ended March 31, 2020

Depreciation and amortization
$ 200 $ 1,170 $ 1,139 $ 2,509
Capital expenditures
$ 180 $ 882 $ 89 $ 1,152

Three Months Ended March 31, 2021

Amortization
$ 3 $ 14 $ 15 $ 32
Capital expenditures
$ - $ 10 $ 109 $ 119

Statement of Operations for Discontinued Operations (in thousands)	*Nine Months Ended September 30, 2020*
	*Crude Oil Trucking Services*			*Crude Oil Pipeline Services*			*Crude Oil Terminalling Services*		*Total*
Revenue:
Third-party service revenue	$	4,834		$	1,287		$	12,613	$	18,734
Intercompany service revenue		4,364			0			0		4,364
Third-party product sales revenue		0			119,068			0		119,068
Costs and expenses:
Operating expense		9,890			10,149			6,566		26,605
Intercompany operating expense		0			4,364			0		4,364
Cost of product sales		0			41,133			0		41,133
Cost of product sales from related party		0			63,671			0		63,671
General and administrative expense		212			295			0		507
Tangible asset impairment expense		1,330			2,821			2,266		6,417
Gain on disposal of assets		(120	)		(56	)		0		(176	)
Interest expense		9			762			3,398		4,169
Income(loss) before income taxes		(2,123	)		(2,784	)		383		(4,524	)
Provision for income taxes		9			0			0		9
Net income(loss) from discontinued operations	$	(2,132	)	$	(2,784	)	$	383	$	(4,533	)

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Statement of Operations for Discontinued Operations (in thousands)	*Nine Months Ended September 30, 2021*
	*Crude Oil Trucking Services*			*Crude Oil Pipeline Services*			*Crude Oil Terminalling Services*			*Total*
Revenue:
Third-party service revenue	$	9		$	535		$	5,097		$	5,641
Intercompany service revenue		409			0			0			409
Third-party product sales revenue		0			15,591			0			15,591
Costs and expenses:
Operating expense		1,419			1,552			2,184			5,155
Intercompany operating expense		0			409			0			409
Cost of product sales		0			4,994			0			4,994
Cost of product sales from related party		0			9,461			0			9,461
General and administrative expense		61			112			0			173
Tangible asset impairment expense		92			41			23			156
(Gain)loss on disposal of assets		23			(1,644	)		(73,498	)		(75,119	)
Interest expense		0			72			635			707
Income(loss) before income taxes		(1,177	)		1,129			75,753			75,705
Provision for income taxes		0			0			0			0
Net income(loss) from discontinued operations	$	(1,177	)	$	1,129		$	75,753		$	75,705

Select cash flow information (in thousands)
	*Crude Oil Trucking Services*		*Crude Oil Pipeline Services*		*Crude Oil Terminalling Services*		*Total*
	*Nine Months Ended September 30, 2020*
Depreciation and amortization	$	531	$	3,435	$	3,409	$	7,375
Capital expenditures	$	2,019	$	2,974	$	472	$	5,465

	*Nine Months Ended September 30, 2021*
Amortization	$	3	$	14	$	41	$	58
Capital expenditures	$	0	$	30	$	106	$	136

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DEBT

On May ~~11, 2017,~~ 26, 2021, the Partnership entered into an amended and restated credit ~~agreement. On June 28, 2018, the credit~~ agreement ~~was amended to, among other things, reduce the~~with a revolving loan facility from $450.0 million to $400.0 million and amend the maximum permitted consolidated total leverage ratio as discussed below. On January 8, 2021, the credit facility was amended a second time to, among other things, reduce the revolving loan facility from $400.0 million to $350.0 million upon the sale of ~~the crude oil terminalling segment, which became effective on March 1, 2021 (the “ January 2021 Amendment”).~~

$300.0 million. As of ~~April 28,~~November 4, 2021, ~~approximately~~ approximately $~~106.6~~96.0 million of revolver borrowings and $0.7 million of letters of credit were outstanding under the credit agreement, leaving the Partnership with approximately $~~242.7~~203.3 million ~~available~~available capacity for additional revolver borrowings and letters of credit under the credit agreement, although the Partnership’s ability to borrow such funds is limited by the financial covenants in the credit agreement. The proceeds of loans made under the credit agreement may be used for working capital and other general corporate purposes of the Partnership.

The credit agreement is guaranteed by all of the Partnership’s existing subsidiaries. Obligations under the credit agreement are secured by first priority liens on substantially all of the Partnership’s assets and those of the guarantors.

The credit agreement includes procedures for additional financial institutions to become revolving lenders, or for any existing lender to increase its revolving commitment thereunder, subject to an aggregate maximum of ~~$600.0~~$450.0 million for all revolving loan commitments under the credit agreement.

The credit agreement will mature on May ~~11, 2022,~~ 26, 2025, and all amounts outstanding under the credit agreement will become due and payable on such date. The credit agreement requires mandatory prepayments of amounts outstanding thereunder with the net proceeds of certain asset sales, property or casualty insurance claims and condemnation proceedings, unless the Partnership reinvests such proceeds in accordance with the credit agreement, but these mandatory prepayments will not require any reduction of the lenders’ commitments under the credit agreement.

Borrowings under the credit agreement bear interest, at the Partnership’s option, at either the reserve-adjusted eurodollar rate (as defined in the credit agreement) (“Eurodollar Rate”) plus an applicable margin that ranges from 2.0% to 3.25% or the alternate base rate (the highest of the agent bank’s prime rate, the federal funds effective rate plus 0.5%, and the ~~30-day~~30-day Eurodollar Rate plus 1.0%) plus an applicable margin that ranges from 1.0% to 2.25%. The Partnership pays a per annum fee on all letters of credit issued under the credit agreement, which fee equals the applicable margin for loans accruing interest based on the Eurodollar Rate, and the Partnership pays a commitment fee ranging from 0.375% to 0.5% on the unused commitments under the credit agreement. The applicable margins for the Partnership’s interest rate, the letter of credit fee and the commitment fee vary quarterly based on the Partnership’s consolidated total leverage ratio (as defined in the credit agreement, being generally computed as the ratio of consolidated total debt to consolidated earnings before interest, taxes, depreciation, amortization, and certain other non-cash charges).

The credit agreement includes financial covenants that are tested on a quarterly basis, based on the rolling ~~four-quarter~~four-quarter period that ends on the last day of each fiscal quarter.

Prior to the date on which the Partnership issues qualified senior notes in an aggregate principal amount (when combined with all other qualified senior notes previously or concurrently issued) that equals or exceeds $200.0 million, the maximum permitted consolidated total leverage ratio ~~will be~~is 4.75 to 1.00; provided that the maximum permitted consolidated total leverage ratio may be increased to 5.25 to 1.00 for certain quarters, based on the occurrence of a specified acquisition (as defined in the credit agreement, but generally being an acquisition for which the aggregate consideration is $15.0 million or more).

From and after the date on which the Partnership issues qualified senior notes in an aggregate principal amount (when combined with all other qualified senior notes previously or concurrently issued) that equals or exceeds ~~$200.0~~$200.0 million, the maximum permitted consolidated total leverage ratio is 5.00 to 1.00; provided that from and after the fiscal quarter ending immediately preceding the fiscal quarter in which a specified acquisition occurs to and including the last day of the second full fiscal quarter following the fiscal quarter in which such acquisition occurred, the maximum permitted consolidated total leverage ratio will be 5.50 to 1.00.

The maximum permitted consolidated senior secured leverage ratio (as defined in the credit agreement, but generally computed as the ratio of consolidated total secured debt to consolidated earnings before interest, taxes, depreciation, amortization and certain other non-cash charges) is 3.50 to 1.00, but this covenant is only tested from and after the date on which the Partnership issues qualified senior notes in an aggregate principal amount (when combined with all other qualified senior notes previously or concurrently issued) that equals or exceeds ~~$200.0~~$200.0 million.

The minimum permitted consolidated interest coverage ratio (as defined in the credit agreement, but generally computed as the ratio of consolidated earnings before interest, taxes, depreciation, amortization and certain other non-cash charges to consolidated interest expense) is 2.50 to 1.00.

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In addition, the credit agreement contains various covenants that, among other restrictions, limit the Partnership’s ability to:

~~create, issue, incur or assume indebtedness;~~

~~create, incur or assume liens;~~

~~engage in mergers or acquisitions;~~

~~sell, transfer, assign or convey assets;~~

~~repurchase the Partnership’s equity, make distributions to unitholders and make certain other restricted payments;~~

~~make investments;~~

~~modify the terms of certain indebtedness, or prepay certain indebtedness;~~

~~engage in transactions with affiliates;~~

~~enter into certain hedging contracts;~~

~~enter into certain burdensome agreements;~~

~~change the nature of the Partnership’s business; and~~

~~make certain amendments to the Fourth Amended and Restated Agreement of Limited Partnership of the Partnership (the “Partnership’s partnership agreement”).~~

•

create, issue, incur or assume indebtedness;

•

create, incur or assume liens;

•

consummate mergers or acquisitions;

•

sell, transfer, assign or convey assets;

•

repurchase the Partnership’s equity, make distributions to unitholders, and make certain other restricted payments;

•

make investments;

•

modify the terms of certain indebtedness, or prepay certain indebtedness;

•

engage in transactions with affiliates;

•

enter into certain hedging contracts;

•

enter into certain burdensome agreements;

•

change the nature of the Partnership’s business; and

•

make certain amendments to the Fourth Amended and Restated Agreement of Limited Partnership of the Partnership (the “Partnership’s partnership agreement”).

At ~~March 31,~~September 30, 2021, the Partnership’s consolidated total leverage ratio was ~~2.12~~1.87 to 1.00 and the consolidated interest coverage ratio was ~~11.68~~14.83 to 1.00. The Partnership was in compliance with all covenants of its credit agreement as of ~~March 31,~~September 30, 2021. Based on current operating plans and forecasts, the Partnership expects to remain in compliance with all covenants of the credit agreement for at least the next year.

The credit agreement permits the Partnership to make quarterly distributions of available cash (as defined in the Partnership’s partnership agreement) to unitholders so long as, on a pro forma basis after giving effect to such distributions, the Partnership is in compliance with its financial covenants under the credit agreement and no default or event of default exists under the credit agreement. Additionally, the credit agreement permits the Partnership to repurchase up to an aggregate of $40.0 million of its units (including preferred units), up to $10.0 million for each calendar year, so long as, on a pro forma basis after giving effect to such repurchases, the Partnership’s total leverage ratio is less than 4.00 to 1.00,no default or event of default exists under the credit agreement, ~~on a pro forma basis after giving effect to such distribution. The Partnership~~and availability under the revolving credit facility is currently allowed to make distributions to its unitholders in accordance with this covenant; however, the Partnership will only make distributions to the extent it has sufficient cash from operations after establishment of cash reserves as determined by the Board of Directors (the “Board”) of Blueknight Energy Partners G.P., L.L.C. (the “general partner”) in accordance with the Partnership’s cash distribution policy, including the establishment of any reserves for the proper conductat least 20% of the ~~Partnership’s business. See Note 7 for additional information regarding distributions.~~total commitments thereunder.

In addition to other customary events of default, the credit agreement includes an event of default if:

(i)

the general partner ceases to own 100% of the Partnership’s general partner interest or ceases to control the Partnership;

~~(i)~~(ii)

~~the general partner~~Ergon ceases to own ~~100%~~and control 50% or more of the ~~Partnership’s general partner interest or ceases to control the Partnership;~~

~~(ii)~~

~~Ergon ceases to own and control 50% or more~~membership interests of the ~~membership interests of the~~ general partner; or

(iii)

during any period of 12 consecutive months, a majority of the members of the ~~members~~Board of the ~~Board~~general partner ceases to be composed of ~~the general partner ceases to be composed of~~ individuals:

(A)

who were members of the Board on the first day of such period;

(B)

whose election or nomination to the Board was approved by individuals referred to in clause (A) above constituting at the time of such election or nomination toat least a majority of the ~~Board was approved by individuals referred to in clause (A) above constituting at the time of such election~~Board; or ~~nomination at least a majority of the Board; or~~

(C)

whose election or nomination to the Board was approved by individuals referred to in clauses (A) and (B) above constituting at the time of such election or nomination at least a majority of the Board, provided that any changes to the composition of individuals serving as members of the Board approved by Ergon will not cause an event of default.

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If an event of default relating to bankruptcy or other insolvency events occurs with respect to the general partner or the Partnership, all indebtedness under the credit agreement will immediately become due and payable. If any other event of default exists under the credit agreement, the lenders may accelerate the maturity of the obligations outstanding under the credit agreement and exercise other rights and remedies. In addition, if any event of default exists under the credit agreement, the lenders may commence foreclosure or other actions against the collateral.

If any default occurs under the credit agreement, or if the Partnership is unable to make any of the representations and warranties in the credit agreement, the Partnership will be unable to borrow funds or to have letters of credit issued under the credit agreement.

~~Upon the March 1,~~On May 26, 2021, ~~effective date~~as part of the ~~January 2021 Amendment, the Partnership expensed~~ ~~$0.1~~credit agreement refinancing, there was a non-cash increase in credit borrowings of $2.9 million ofand a non-cash increase in debt issuance costs ~~due~~of $2.5 million.

The following table sets forth financial information pertaining to the ~~reduction in available borrowing capacity. Debt issuance costs are being amortized over the term of the~~ credit ~~agreement. Interest expense related to debt issuance cost amortization~~agreement (in thousands, except for ~~both the three months ended~~ ~~three months ended March 31, 2020 and 2021, was~~ ~~$0.3~~ ~~million and~~ ~~$0.2~~ ~~million, respectively.~~interest rate):

	*Three Months Ended September 30,*						*Nine Months Ended September 30,*
	*2020*			*2021*			*2020*			*2021*
Debt issuance costs capitalized	$	0		$	51		$	0		$	2,897
Write off of debt issuance costs due to amendments		0			0			0			147
Write off of debt issuance costs due to new credit facility		0			0			0			583
Interest expense related to amortization of debt issuance costs		251			193			753			655
Credit facility interest expense⁽¹⁾		1,046			771			3,652			2,606
Weighted average interest rate under credit facility⁽¹⁾		3.56	%		3.47	%		4.11	%		3.73	%

~~During the three months ended~~ ~~March 31, 2020 and 2021, the weighted average interest rate under the Partnership’s credit agreement was~~ ~~4.90%~~ ~~and~~ ~~3.83%, respectively, resulting in interest expense of approximately~~ ~~$1.7~~ ~~million and~~ ~~$1.2~~ ~~million, respectively, excluding the~~ ~~$0.1~~ ~~million of debt issuance costs that were expensed as described above.~~ ___________________

(1)	Excludes interest expense related to amortization and write off of debt issuance costs for the nine months ending September 30, 2021.

6.	NET INCOME PER LIMITED PARTNER UNIT

For purposes of calculating earnings per unit, preferred units, general partner units, and common units are first allocated net income to the extent they receive a distribution. Next, the excess of distributions over earnings or excess of earnings over distributions for each period are allocated to the Partnership’s general partner based on the general partner’s ownership interest at the time. For the ~~three~~nine months ended ~~March 31,~~September 30, 2021, the preferred units were also allocated income for the excess consideration paid over carrying value for the repurchase of ~~688,417~~ preferred units. The remainder is allocated to common units. The following sets forth the computation of basic and diluted net income per common unit (in thousands, except per unit data):

	Three Months Ended March 31,						*Three Months Ended September 30,*				*Nine Months Ended September 30,*
	2020			2021			*2020*		*2021*		*2020*			*2021*
Net income	$	-		$	81,653		$	14,393	$	12,596	$	15,744		$	101,532
General partner interest in net income		-			1,292			228		200		249			1,608
Preferred interest in net income		6,279			6,341			6,278		6,177		18,836			18,674
Net income(loss) available to limited partners	$	(6,279	)	$	74,020		$	7,887	$	6,219	$	(3,341	)	$	81,250

Basic weighted average number of units:
Common units		41,015			41,430			41,166		41,514		41,072			41,471
Restricted and phantom units		983			1,166			1,354		1,549		1,259			1,422
Total units		41,998			42,596			42,520		43,063		42,331			42,893

Basic and diluted net income(loss) from discontinued operations per common unit	$	(0.13	)	$	1.75		$	0.12	$	0	$	(0.11	)	$	1.74
Basic and diluted net loss from continuing operations per common unit	$	(0.02	)	$	(0.01	)
Basic and diluted net income from continuing operations per common unit							$	0.07	$	0.14	$	0.03		$	0.15
Basic and diluted net income(loss) per common unit	$	(0.15	)	$	1.74		$	0.19	$	0.14	$	(0.08	)	$	1.89

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7.	PARTNERS’ CAPITAL AND DISTRIBUTIONS

~~On March 12,~~During the three months ended September 30, 2021, the Partnership repurchased ~~688,417~~a total of 30,102 outstanding preferred units at ~~$7.50~~a weighted average cost of $8.11 per unit or total cash consideration of ~~$5.2~~$0.2 million. During the nine months ended September 30, 2021, the Partnership repurchased a total of 718,519 outstanding preferred units at a weighted average cost of $7.53 per unit or total cash consideration of $5.4 million. The consideration paid was based on the fair market value of the units at the time of purchase. The carrying value of the units was $7.23 per ~~unit, or total carrying value of $5.0 million.~~unit. The preferred units were allocated additional net income for the three and nine months ended September 30, 2021, of less than $0.1 million and $0.2 million, ofrespectively, for the consideration paid in excess of carrying value. ~~The~~All repurchased units were ~~retired on March 24, 2021.~~subsequently retired.

On ~~April 21,~~October 26, 2021, the Board approved a cash distribution of ~~$0.17875~~$0.17875 per outstanding preferred unit for the three months ended ~~March 31,~~September 30, 2021. The Partnership will pay this distribution on ~~May 14,~~November 12, 2021, to unitholders of record as of ~~May 7,~~November 5, 2021. The total distribution will be approximately ~~$6.3~~$6.2 million, with approximately ~~$6.2~~$6.2 million and ~~$0.1~~$0.1 million paid to the Partnership’s preferred unitholders and general partner, respectively.

In addition, the Board approved a cash distribution of ~~$0.04~~$0.04 per outstanding common unit for the three months ended ~~March 31,~~September 30, 2021. The Partnership will pay this distribution on ~~May 14,~~November 12, 2021, to unitholders of record on ~~May 7,~~November 5, 2021. The total distribution will be approximately ~~$1.7~~$1.8 million, with approximately ~~$1.7~~ ~~million and less than~~ ~~$0.1~~$1.7 million to be paid to the Partnership’s common unitholders, ~~and~~less than $0.1 million to be paid to the general partner, ~~respectively,~~ and approximately ~~$0.1~~$0.1 million to be paid to holders of phantom and restricted units pursuant to awards granted under the Partnership’s Long-Term Incentive Plan.

8.	RELATED-PARTY TRANSACTIONS

The Partnership leases asphalt facilities and provides asphalt terminalling services to Ergon. For the three months ended ~~March 31,~~September 30, 2020 and 2021, the Partnership recognized related-party revenues of ~~$9.0~~$12.4 million and ~~$11.9~~$13.2 million, respectively, for services provided to Ergon. For the nine months ended September 30, 2020 and 2021, the Partnership recognized related-party revenues of $32.3 million and $37.1 million, respectively, for services provided to Ergon. As of December 31, 2020, and ~~March 31,~~September 30, 2021, the Partnership had receivables from Ergon of ~~$0.5~~$0.5 million and ~~$0.7~~$1.2 million, respectively. As of December 31, 2020, and ~~March 31,~~September 30, 2021, the Partnership had unearned revenues from Ergon of ~~$8.8~~$8.8 million and ~~$8.6~~$9.5 million, respectively.

Ergon also provides certain operations and maintenance services to certain asphalt facilities that it leases under an agreement dated August 1, 2020. For the three months ended September 30, 2020 and 2021, the Partnership recognized operating expense of $3.1 million and $4.6 million, respectively, for these services. For the nine months ended September 30, 2020 and 2021, the Partnership recognized operating expense of $3.1 million and $13.9 million, respectively.

As of December 31, 2019, the Partnership had a contingent liability to Ergon of $12.2 million related to the Cimarron Express project, a previously disclosed joint venture between Kingfisher Midstream and ~~Ergon's~~Ergon’s development company (“DEVCO”) that was cancelled in December 2018. The contingent liability reflected Ergon's investment in the joint venture and accrued interest, for which the Partnership, in accordance with the membership interest purchase agreement with Ergon, was meant to bear the risk of loss related to DEVCO’s portion of the project. The Partnership paid this liability in full on January 3, 2020, and it is reflected as an acquisition of the DEVCO on the consolidated statement of cash flows for the ~~three~~nine months ended ~~March 31, 2020.~~September 30, 2020.

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9.	LONG-TERM INCENTIVE PLAN

In July 2007, the general partner adopted the Long-Term Incentive Plan (the “LTIP”), which is administered by the compensation committee of the Board. The Partnership’s unitholders have approved 8.1 million common units to be reserved for issuance under the incentive plan, subject to adjustments for certain events. Although other types of awards are contemplated under the LTIP, currently outstanding awards include “phantom” units, which convey the right to receive common units upon vesting, and “restricted” units, which are grants of common units restricted until the time of vesting. The phantom unit awards also include distribution equivalent rights (“DERs”).

Subject to applicable earning criteria, a DER entitles the grantee to a cash payment equal to the cash distribution paid on an outstanding common unit prior to the vesting date of the underlying award. Recipients of restricted and phantom units are entitled to receive cash distributions paid on common units during the vesting period which are reflected initially as a reduction of partners’ capital. Distributions paid on units which ultimately do not vest are reclassified as compensation expense. Awards granted to date are equity awards and, accordingly, the fair value of the awards as of the grant date is expensed over the vesting period.

Restricted common units are granted to the independent directors on each anniversary of joining the Board. The units vest in ~~one-third~~one-third increments over three years. The following table includes information on outstanding grants made to the directors under the LTIP:

Grant Date	*Number of Units*		*Weighted Average Grant Date Fair Value(1)*		*Grant Date Total Fair Value (in thousands)*
December 2018		23,436	$	1.20	$	28
December 2019		7,500	$	1.07	$	8
December 2020		7,500	$	2.06	$	15

~~(1)~~(1)

Fair value is the closing market price on the grant date of the awards.

The Partnership also grants phantom units to employees. These grants are equity awards under ASC 718 – Stock Compensation and, accordingly, the fair value of the awards as of the grant date is expensed over the ~~three-year~~three-year vesting period. The following table includes information on the outstanding grants:

Grant Date	*Number of Units*		*Weighted Average Grant Date Fair Value(1)*		*Grant Date Total Fair Value (in thousands)*
March 2019		524,997	$	1.14	$	598
June 2019		46,168	$	1.08	$	50
March 2020		600,396	$	0.90	$	540
October 2020		16,339	$	1.53	$	25
March 2021		530,435	$	2.71	$	1,437

~~(1)~~(1)

Fair value is the closing market price on the grant date of the awards.

The unrecognized estimated compensation cost of outstanding phantom and restricted units at ~~March 31,~~September 30, 2021, was ~~$1.7~~$1.2 million, which will be expensed over the remaining vesting period.

The Partnership’s equity-based incentive compensation expense for each of the three months ended ~~March 31,~~September 30, 2020 and 2021, was ~~$0.2~~$0.2 million. The Partnership’s equity-based incentive compensation expense for the nine months ended September 30, 2020 and 2021, was $0.6 million and ~~$0.1~~$0.5 million, respectively.

Activity pertaining to phantom and restricted common unit awards granted under the LTIP iswas as follows:

	Number of Units		Weighted Average Grant Date Fair Value		*Number of Units*		*Weighted Average Grant Date Fair Value*
Nonvested at December 31, 2020		1,350,366	$	1.81		1,350,366	$	1.81
Granted		530,435		2.71		530,435	$	2.71
Vested		329,996		4.20		335,444	$	4.15
Forfeited		-		-		0	$	0
Nonvested at March 31, 2021		1,550,805	$	1.61
Nonvested at September 30, 2021						1,545,357	$	1.61

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10.

FAIR VALUE MEASUREMENTS

The Partnership uses valuation techniques, such as the market approach (comparable market prices), the income approach (present value of future income or cash flow), and the cost approach (cost to replace the service capacity of an asset or replacement cost) to value assets and liabilities required to be measured at fair value, as appropriate. The Partnership uses an exit price when determining the fair value. The exit price represents amounts that would be received to sell an asset or paid to transfer a liability in an orderly transaction between market participants.

The Partnership utilizes a ~~three-tier~~three-tier fair value hierarchy that prioritizes the inputs to valuation techniques used to measure fair value into three broad levels. The following is a brief description of those three levels:

Level 1

Observable inputs such as quoted prices (unadjusted) in active markets for identical assets or liabilities.

Level 2

Inputs other than quoted prices that are observable for these assets or liabilities, either directly or indirectly. These include quoted prices for similar assets or liabilities in active markets and quoted prices for identical or similar assets or liabilities in markets that are not active.

Level 3

Unobservable inputs in which there is little market data, which requires the reporting entity to develop its own assumptions.

This hierarchy requires the use of observable market data, when available, to minimize the use of unobservable inputs when determining fair value.

As of December 31, 2020, and ~~March 31,~~September 30, 2021, the Partnership had no0 recurring financial assets or liabilities subject to fair value measurement.

Fair Value of Other Financial Instruments

The following disclosure of the estimated fair value of financial instruments is made in accordance with accounting guidance for financial instruments. The Partnership has determined the estimated fair values by using available market information and valuation methodologies. Considerable judgment is required in interpreting market data to develop the estimates of fair value. The use of different market assumptions or valuation methodologies may have a material effect on the estimated fair value amounts.

At ~~March 31,~~September 30, 2021, the carrying values on the unaudited condensed consolidated balance sheets for cash and cash equivalents (classified as Level 1)1), accounts receivable, and accounts payable approximate their fair value because of their short-term nature.

Based on the borrowing rates currently available to the Partnership for credit agreement debt with similar terms and maturities and consideration of the Partnership’s non-performance risk, long-term debt associated with the Partnership’s credit agreement at ~~March 31,~~September 30, 2021, approximates its fair value. The fair value of the Partnership’s long-term debt was calculated using observable inputs (Eurodollar Rate for the risk-free component) and unobservable company-specific credit spread information. As such, the Partnership considers this debt to be Level 3.

11.

COMMITMENTS AND CONTINGENCIES

The Partnership is from time to time subject to various legal actions and claims incidental to its business. Management believes that these legal proceedings will not have a material adverse effect on the financial position, results of operations or cash flows of the Partnership. Once management determines that information pertaining to a legal proceeding indicates that it is probable that a liability has been incurred and the amount of such liability can be reasonably estimated, an accrual is established equal to its estimate of the likely exposure.

The Partnership has contractual obligations to perform dismantlement and removal activities in the event that some of its asphalt product and residual fuel oil terminalling and storage assets are abandoned. These obligations include varying levels of activity including completely removing the assets and returning the land to its original state. The Partnership has determined that the settlement dates related to the retirement obligations are indeterminate. The assets with indeterminate settlement dates have been in existence for many years and with regular maintenance will continue to be in service for many years to come. Also, it is not possible to predict when demands for the Partnership’s terminalling and storage services will cease, and the Partnership does not believe that such demand will cease for the foreseeable future. Accordingly, the Partnership believes the date when these assets will be abandoned is indeterminate. With no reasonably determinable abandonment date, the Partnership cannot reasonably estimate the fair value of the associated asset retirement obligations. Management believes that if the Partnership’s asset retirement obligations were settled in the foreseeable future the present value of potential cash flows that would be required to settle the obligations based on current costs are not material. The Partnership will record asset retirement obligations for these assets in the period in which sufficient information becomes available for it to reasonably determine the settlement dates.

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12.

RECENTLY ISSUED ACCOUNTING STANDARDS

Except as discussed in the 2020 Form ~~10-K,~~10-K, there have been no new accounting pronouncements that have become effective or have been issued during the ~~three~~nine months ended ~~March 31,~~September 30, 2021, that are of significance or potential significance to the Partnership.

13.

SUBSEQUENT EVENTS

On October 8,2021, Ergon publicly announced that it submitted to the Board a non-binding proposal, pursuant to which Ergon would acquire all common units and preferred units of the Partnership that Ergon and its affiliates do not already own in exchange for $3.32 per common unit and $8.46 per preferred unit. The transaction, as proposed, is subject to a number of contingencies, including the approval of the conflicts committee of the Board, the approval by the Partnership’s unitholders and the satisfaction of any conditions to the consummation of a transaction set forth in any definitive agreement concerning the transaction. There can be no assurance that a definitive agreement will be executed or that any transaction will materialize.

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Item 2. Management’s Discussion and Analysis of Financial Condition and Results of ~~Operations.~~Operations

As used in this quarterly report, unless we indicate otherwise: (1) “Blueknight,” “our,” “we,” “us” and similar terms refer to Blueknight Energy Partners, L.P., together with its subsidiaries, (2) our “General Partner” refers to Blueknight Energy Partners G.P., L.L.C., and (3) “Ergon” refers to Ergon, Inc., its affiliates and subsidiaries (other than our General Partner and us). The following discussion analyzes the historical financial condition and results of operations of the Partnership and should be read in conjunction with our financial statements and notes thereto, and Management’s Discussion and Analysis of Financial Condition and Results of Operations presented in our Annual Report on Form 10-K for the year ended December 31, 2020,, which was filed with the Securities and Exchange Commission (the “SEC”) on March 10, 2021 (the “~~2020~~“2020 Form 10-K”).

Forward-Looking Statements

This report contains “forward-looking statements” within the meaning of the federal securities laws. Statements included in this quarterly report that are not historical facts (including any statements regarding plans and objectives of management for future operations or economic performance, or assumptions or forecasts related thereto), including, without limitation, the information set forth in this Management’s Discussion and Analysis of Financial Condition and Results of Operations, are forward-looking statements. These statements can be identified by the use of forward-looking terminology including “may,” “will,” “should,” “believe,” “expect,” “intend,” “anticipate,” “estimate,” “continue,” or other similar words. These statements discuss future expectations, contain projections of results of operations or of financial condition, or state other “forward-looking” information. We and our representatives may from time to time make other oral or written statements that are also forward-looking statements.

Such forward-looking statements are subject to various risks and uncertainties that could cause actual results to differ materially from those anticipated as of the date of the filing of this report. Although we believe that the expectations reflected in these forward-looking statements are based on reasonable assumptions, no assurance can be given that these expectations will prove to be correct. Important factors that could cause our actual results to differ materially from the expectations reflected in these forward-looking statements include, among other things, those set forth in “Part I, Item 1A. Risk Factors” in the 2020 Form 10-K.

All forward-looking statements included in this report are based on information available to us on the date of this report. We undertake no obligation to publicly update or revise any forward-looking statement, whether as a result of new information, future events or otherwise. All subsequent written and oral forward-looking statements attributable to us or persons acting on our behalf are expressly qualified in their entirety by the cautionary statements contained throughout this report.

Overview

We are a publicly traded master limited partnership with operations in 26 states. We have the largest independent asphalt facility footprint in the nation, and through that we provide integrated terminalling services for companies engaged in the production, distribution, and marketing of liquid asphalt for infrastructure or other end markets. We manage our operations through a single operating segment, asphalt terminalling services.

We previously provided integrated terminalling, gathering, and transportation services for companies engaged in the production, distribution, and marketing of crude oil in three different operating segments: (i) crude oil terminalling services, (ii) crude oil pipeline services, and (iii) crude oil trucking services. On December 21, 2020, we announced that we had entered into multiple definitive agreements to sell these segments. The transactions closed in February and March of 2021, and these segments are presented as discontinued operations for all periods.

Our 53 asphalt facilities are well-positioned to provide asphalt terminalling services in the market areas they serve throughout the continental United States. With our approximately 8.7 million barrels of total liquid asphalt storage capacity, we provide our customers the ability to effectively manage their liquid asphalt inventories in their processing and marketing activities. Our asphalt terminalling business delivers a stable cash flow profile through long-term take-or-pay contracts that generally have original terms of 5 to 7 years with options to extend the term. The stability comes from the contract structure that is comprised primarily of take-or-pay fixed fees, which make up approximately 95% of our revenues on an annual basis after excluding cost reimbursements primarily for utilities. The remaining revenue is variable, primarily consisting of volume-based throughput fees.

We have contractual agreements in place for all of our asphalt terminalling facilities. We lease certain facilities for operation by our customers and at the remaining facilities our employees operate the facility to meet our customers’ specifications. The agreements have, based on a weighted average by remaining fixed revenue, approximately ~~5.6~~5.2 years remaining under their terms as of ~~April 28, 2021~~.November 4, 2021. Approximately ~~18%~~5% of our tank capacity will expire at the end of 2021 if not renewed with the current customer or a new customer, and the remaining capacity expires at varying times thereafter, through ~~2027.~~2028. Our varying contract expiration dates provide for staggered renewals, which provides additional stability to the cash flow.

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Potential Impact of Certain Factors on Future Revenues

Due to the high percentage of fixed and reimbursement revenue from our long-term contracts, our focus and our primary risk is renewing contracts at favorable terms. Our ability to renew agreements on favorable terms, or at all, could be impacted if our customers experience negative market conditions. These factors include infrastructure spending, the strength of state and local economies, and the level of allocations of tax funding to transportation spending from state or federal funds. Public transportation infrastructure projects historically have been a relatively stable portion of state and federal budgets and represent a significant share of the United States construction market. Federal funds are allocated on a state-by-state basis, and each state is required to match a portion of the federal funds that it receives. Currently, from a macroeconomic view, there are positive indicators for the infrastructure and construction sector, such as continued discussion and support for infrastructure spending from all sides of the federal government, low interest rates, and a recovering economy since mid-2020. However, due to the novel coronavirus disease (“COVID-19”), as discussed below, some uncertainty exists.

Due to the global pandemic related to COVID-19, the economy experienced a significant downturn during part of 2020. Despite this economic volatility, our cash flows remained stable and are expected to remain stable moving forward. While our customers may be impacted by the economic volatility, they are primarily high-quality counterparties, with over 50% of our revenues earned from those that are investment grade quality, which minimizes our counterparty credit risk. We do not expect any supply chain disruptions from COVID-19 to affect our customers. While we are unaware of any potential negative impact of COVID-19 on our business at this time, we are continuing to monitor the situation and have prepared our employees to take precautions and planning for unexpected events, which may include disruptions to our workforce, customers, vendors, facilities and communities in which we operate. In an effort to protect the health and safety of our employees and the customers and vendors we interact with, we took proactive action to adopt social distancing policies at our locations, including working from home, limiting the number of employees attending meetings, and reducing the number of people in our sites at any one time.

Infrastructure spending is currently a focus at the federal, state, and local levels, and the initiatives are receiving high approval ratings. At the same time, state revenue is down due to COVID-19, so we remain cautious about future spending on infrastructure and road construction absent an infrastructure bill passed by the federal government to support funding efforts.levels. The current federal administration has targeted infrastructure as a top priority. Based on recent history, infrastructure investment has been renewed at increased levels, and, based on recent federal proposals, we expect the funding to continue to increase. Increased funding potentially impacts us through favorable customer contract renewals as well as increased customer volumes through our terminals. Any new federal infrastructure spending will likely not have a significant impact on customers’ 2021 throughput volumes, but it could for future years. This asphalt season, customer throughput volumes are trending in line with prior years, and as such we expect the financial impact of variable throughput revenues to trend in line with prior years as well.

Another factor impacting us and our customers, from a short-term perspective, is weather patterns. Our customers’ volumes could be significantly impacted by prolonged rain or snow seasons or any severe weather that occurs. Damage to our terminal facilities from severe weather, such as flooding or hurricanes, could impact our operating results through additional costs and/or loss of revenue.

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Results of Operations

Non-GAAP Financial Measures

To supplement our financial information presented in accordance with ~~GAAP,~~generally accepted accounting principles, or “GAAP”, management uses additional measures that are known as “non-GAAP financial measures” in its evaluation of past performance and prospects for the future. The primary measure used by management is operating margin, excluding depreciation and amortization.

Management believes that the presentation of such additional financial measures provides useful information to investors regarding our performance and results of operations because these measures, when used in conjunction with related GAAP financial measures, (i) provide additional information about our core operating performance and ability to generate and distribute cash flow; (ii) provide investors with the financial analytical framework upon which management bases financial, operational, compensation and planning decisions and (iii) present measurements that investors, rating agencies and debt holders have indicated are useful in assessing us and our results of operations. These additional financial measures are reconciled to the most directly comparable measures as reported in accordance with GAAP, and should be viewed in addition to, and not in lieu of, our unaudited condensed consolidated financial statements and footnotes.

The table below summarizes our financial results for the three and nine months ended ~~March 31,~~September 30, 2020 and 2021,, reconciled to the most directly comparable GAAP measure:

	Three Months Ended						Favorable/(Unfavorable)					Three Months Ended						Three Months Variance						Nine Months Ended						Nine Months Variance
Operating results	March 31,						Three Months					September 30,						Favorable/(Unfavorable)						September 30,						Favorable/(Unfavorable)
(dollars in thousands)	2020			2021			$				%	2020			2021						$%			2020			2021						$%
Fixed fee revenue	$	22,356		$	24,371		$	2,015		9	%	$	23,494		$	24,413		$	919			4	%	$	67,572		$	73,195		$	5,623			8	%
Variable cost recovery revenue		3,303			2,584			(719	)	(22	)%		2,870			3,126			256			9	%		9,736			8,658			(1,078	)		(11	)%
Variable throughput and other revenue		1			120			119		11900	%		2,631			2,800			169			6	%		3,128			3,320			192			6	%
Total revenue		25,660			27,075			1,415		6	%		28,995			30,339			1,344			5	%		80,436			85,173			4,737			6	%
Operating expenses, excluding depreciation and amortization		(12,075	)		(12,847	)		(772	)	(6	)%		(12,517	)		(12,917	)		(400	)		(3	)%		(36,137	)		(38,880	)		(2,743	)		(8	)%
Total operating margin, excluding depreciation and amortization		13,585			14,228			643		5	%		16,478			17,422			944			6	%		44,299			46,293			1,994			5	%

Depreciation and amortization		3,585			3,033			552		15	%		3,054			2,919			135			4	%		10,324			8,919			1,405			14	%
General and administrative expense		3,366			3,982			(616	)	(18	)%		3,237			2,967			270			8	%		10,501			9,921			580			6	%
Loss on disposal of assets		74			-			74		100	%
(Gain)loss on disposal of assets													(324	)		129			(453	)		(140	)%		(250	)		129			(379	)		(152	)%
Operating income		6,560			7,213			653		10	%		10,511			11,407			896			9	%		23,724			27,324			3,600			15	%

Other income (expenses):
Other income(expenses):
Other income		650			233			(417	)	(64	)%		176			2,187			2,011			1,143	%		969			2,529			1,560			161	%
Interest expense		(1,686	)		(1,333	)		353		21	%		(1,302	)		(968	)		334			26	%		(4,417	)		(3,996	)		421			10	%
Provision for income taxes		(5	)		(10	)		(5	)	(100	)%		-			(10	)		(10	)		N/A			1			(30	)		(31	)		(3,100	)%
Income from continuing operations		5,519			6,103			584		11	%		9,385			12,616			3,231			34	%		20,277			25,827			5,550			27	%
Income(loss) from discontinued operations, net		(5,519	)		75,550			81,069		1469	%		5,008			(20	)		(5,028	)		(100	)%		(4,533	)		75,705			80,238			1,770	%
Net income	$	-		$	81,653		$	81,653		N/A		$	14,393		$	12,596		$	(1,797	)		(12	)%	$	15,744		$	101,532		$	85,788			545	%

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Revenues. Total revenues increased to ~~$27.1~~$30.3 million for the three months ended ~~March 31,~~September 30, 2021,, as compared ~~$25.7~~to $29.0 million for the same period in 2020, and increased to $85.2 million for the nine months ended September 30, 2021, as compared to $80.4 million for the same period in 2020. Revenues consist primarily of fixed fees for items such as storage and minimum throughput requirements, with consideration of annual ~~CPI~~consumer price index ~~increases~~(“CPI”) adjustments built into our agreements. ~~The~~In addition to CPI escalations, the increase in fixed fee revenue is primarily due to certain contracts that changed from a lease arrangement to an operating arrangement. Variable cost recovery revenue is driven by certain reimbursable operating expenses, such as utility costs, and therefore have no net impact on operating margin or net income. Variable throughput revenue is primarily driven by our customers’ excess volumes over annual minimum thresholds and the timing of those thresholds being reached during the year. The increase in variable throughput revenue for the three and nine month periods is due to the timing of certain customers reaching their thresholds and certain customer volumes trending favorably.

Operating expenses, excluding depreciation and amortization. Operating expense, excluding depreciation and amortization, increased to ~~$12.8~~$12.9 million for the three months ended ~~March 31,~~September 30, 2021,, as compared to ~~$12.1~~$12.5 million for the same period in 2020, and increased to $38.9 million for the nine months ended September 30, 2021, as compared to $36.1 million for the same period in 2020. Significant factors contributing to this change include certain contracts that changed from a lease arrangement to an operating arrangement and ~~increases in insurance premiums due to overall market conditions~~higher utility costs from ~~second quarter 2020 renewals.~~rising prices, which are recoverable costs from our customers.

Depreciation and amortization expense. Depreciation and amortization expense decreased slightly to ~~$3.0~~$2.9 million for the three months ended ~~March 31,~~September 30, 2021,, as compared to ~~$3.6~~$3.1 million for the same period in 2020,. and decreased to $8.9 million for the nine months ended September 30, 2021, as compared to $10.3 million for the same period in 2020. This decrease is primarily the result of certain assets reaching the end of their depreciable lives.

General and administrative expense. General and administrative expense ~~increased~~decreased to ~~$4.0~~$3.0 million for the three months ended ~~March 31,~~September 30, 2021,, as compared to ~~$3.4~~$3.2 million for the same period in 2020,~~, primarily~~ and decreased to $9.9 million for the nine months ended September 30, 2021, as compared to $10.5 million for the same period in 2020. The decrease for the three month period was due to ~~severance costs and professional fees associated with~~corporate cost synergies realized after the completion of the crude ~~oil~~business sales, which included lower compensation costs in 2021 due to reductions in corporate overhead in the first quarter of 2021. For the nine month period, decreases due to separation costs incurred in the second quarter of 2020 related to the resignation of the former Chief Executive Officer of our general partner and the lower compensation costs in 2021 due to reductions in corporate overhead were partially offset by severance paid in the first quarter of 2021 related to the crude business sales.

Other income. Other income for the three and nine months ended ~~March 31,~~September 30, 2021 and 2020, primarily ~~relates~~related to insurance claim recoveries related to ~~flood~~ damages incurred in 2019 and 2020 at certain asphalt facilities.

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Interest expense. Interest expense represents interest on borrowings under our credit agreement as well as amortization of debt issuance costs. The following table presents the significant components of interest expense (dollars in thousands):

	Three Months Ended				Favorable/(Unfavorable)							Three Months Ended					Three Months Variance						Nine Months Ended					Nine Months Variance
	March 31,				Three Months							September 30,					Favorable/(Unfavorable)						September 30,					Favorable/(Unfavorable)
	2020		2021		$			%			2020			2021					$%			2020			2021						$%
Credit agreement interest	$	1,435	$	942	$	493			34	%		$	1,046		$	771	$	275		26	%		$	3,652		$	2,606	$	1,046			29	%
Amortization of debt issuance costs		251		244		7			3	%			251			193		58		23	%		$	753			655		98			13	%
Write-off of debt issuance costs		-		147		(147	)		N/A				-			-		-		0	%		$	-			730		(730	)		N/A
Other													5			4		1		20	%		$	12			5		7			58	%
Total interest expense	$	1,686	$	1,333	$	353			21	%		$	1,302		$	968	$	334		26	%		$	4,417		$	3,996	$	421			10	%

The decrease in credit agreement interest is due to lower floating ~~eurodollar interest rates,~~Eurodollar Rates, lower average borrowings outstanding during the period, and favorable changes to the applicable margin based on an improved leverage ratio.

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Distributions

The amount of distributions we pay and the decision to make any distribution is determined by the Board of Directors of our General Partner (the “Board”), which has broad discretion to establish cash reserves for the proper conduct of our business and for future distributions to our unitholders. In addition, our cash distribution policy is subject to restrictions on distributions under our credit agreement.

On ~~April 21,~~October 26, 2021,, the Board approved a cash distribution of ~~$0.17875~~$0.17875 per outstanding preferred unit for the three months ended ~~March 31, 2021~~.September 30, 2021. We will pay this distribution on ~~May 14,~~November 12, 2021,, to unitholders of record as of ~~May 7, 2021~~.November 5, 2021. The total distribution will be approximately ~~$6.3~~$6.2 million, with approximately ~~$6.2~~$6.2 million and ~~$0.1~~$0.1 million paid to our preferred unitholders and general partner, respectively.

In addition, the Board approved a cash distribution of ~~$0.04~~$0.04 per outstanding common unit for the three months ended ~~March 31, 2021~~.September 30, 2021. We will pay this distribution on ~~May 14,~~November 12, 2021,, to unitholders of record as of ~~May 7, 2021~~.November 5, 2021. The total distribution will be approximately ~~$1.7~~$1.8 million, with approximately ~~$1.7~~ ~~million and less than~~ ~~$0.1~~$1.7 million paid to our common unitholders, ~~and~~less than $0.1 million paid to our general partner, ~~respectively,~~ and approximately ~~$0.1~~$0.1 million paid to holders of phantom and restricted units pursuant to awards granted under our Long-Term Incentive Plan.

Off-Balance Sheet Arrangements

We do not have any off-balance sheet arrangements as defined by Item 303 of Regulation S-K.

~~Table of Contents~~

Liquidity and Capital Resources

Cash Flows

The following table summarizes our sources and uses of cash, inclusive of both continuing and discontinued operations, for the ~~three~~nine months ended ~~March 31,~~September 30, 2020 and ~~2021~~:2021:

	Three Months Ended March 31,						Nine Months Ended September 30,
	2020			2021			2020			2021
	(in millions)						(in thousands)
Net cash provided by operating activities	$	7.9		$	5.4		$	43,900		$	35,272
Net cash provided by (used in) investing activities	$	(15.1	)	$	153.3		$	(22,193	)	$	149,838
Net cash provided by (used in) financing activities	$	7.3		$	(159.4	)	$	(21,293	)	$	(185,360	)

Operating Activities. Net cash provided by operating activities decreased to ~~$5.4~~$35.3 million for the ~~three~~nine months ended ~~March 31,~~September 30, 2021,, as compared to ~~$7.9~~$43.9 million for the ~~three~~nine months ended ~~March 31,~~September 30, 2020,, primarily due to changes in working capital.

Investing Activities. Net cash provided by investing activities was ~~$153.3~~$149.8 million for the ~~three~~nine months ended ~~March 31,~~September 30, 2021,, compared to net cash used in investing activities of ~~$15.1~~$22.2 million for the ~~three~~nine months ended ~~March 31, 2020~~.September 30, 2020. The ~~three~~nine months ended ~~March 31,~~September 30, 2021,, included net proceeds from the sale of the crude oil businesses of ~~$155.3~~$155.2 million, which excludes ~~$1.5~~$1.4 million of funds held in escrow for right of way renewals. ~~The three~~Capital expenditures for the nine months ended ~~March 31,~~September 30, 2021, inclusive of both continuing and discontinued operations, included maintenance capital expenditures of $5.1 million and expansion capital expenditures of $1.3 million. In addition, we received $1.1 million of insurance proceeds during the nine months ended September 30, 2021, from claims related to property damage repairs. The nine months ended September 30, 2020, included a $12.2 million payment to Ergon related to our purchase of Ergon’s DEVCO entity related to Cimarron Express. Capital expenditures for the ~~three~~nine months ended ~~March 31, 2021~~,September 30, 2020, inclusive of both continuing and discontinued operations, included maintenance capital expenditures of ~~$1.5~~ ~~million and expansion capital expenditures~~ ~~$0.5~~ ~~million. Capital expenditures for the~~ ~~three months ended March 31, 2020, inclusive of both continuing and discontinued operations, included maintenance capital expenditures of~~ ~~$1.8~~$7.5 million and expansion capital expenditures of ~~$1.1~~$4.9 million.

Financing Activities. Net cash used in financing activities was ~~$159.4~~$185.4 million for the ~~three~~nine months ended ~~March 31,~~September 30, 2021,, compared to ~~net cash~~ ~~provided by~~ ~~financing activities of~~ ~~$7.3~~$21.3 million for the ~~three~~nine months ended ~~March 31, 2020~~.September 30, 2020. Cash used in financing activities for the ~~three~~nine months ended ~~March 31,~~September 30, 2021,, consisted primarily of net payments on long-term debt of ~~$146.0~~$154.5 million, ~~$8.1~~$24.1 million in distributions to our unitholders, and the repurchase of preferred units of ~~$5.2~~$5.4 million. Net cash ~~provided by~~used in financing activities for the ~~three~~nine months ended ~~March 31,~~September 30, 2020,, consisted primarily of ~~net~~ ~~borrowings~~ ~~on long-term debt of~~ ~~$16.0~~ ~~million partially offset by~~ ~~$8.1~~$24.3 million in distributions to our ~~unitholders.~~unitholders partially offset by net borrowings on long-term debt of $5.0 million.

Liquidity and Capital Resources

Cash flows from operations and availability under our revolving credit facility are our primary sources of liquidity. At ~~March 31,~~September 30, 2021,, we had a working capital deficit of ~~$7.6~~$10.7 million. This is primarily a function of our approach to cash management. At ~~March 31,~~September 30, 2021,, we had approximately ~~$106.6~~$101.0 million of revolver borrowings and approximately $0.7 million of letters of credit outstanding under the credit agreement, leaving us with approximately ~~$242.7~~$198.3 million of availability under our credit agreement subject to covenant restrictions, which limited our availability to ~~$132.9~~$157.2 million. As of ~~April 28,~~November 4, 2021,, we have ~~approximately~~ approximately $~~106.6~~96.0 million of revolver borrowings and approximately $0.7 million of letters of credit outstanding under the credit agreement, leaving us with aggregate unused commitments under our revolving credit facility of approximately $~~242.7~~203.3 million and cash on hand of approximately $~~1.2~~0.1 million. ~~The~~The credit agreement is scheduled to mature on May ~~11, 2022.~~26, 2025.

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Our credit agreement contains certain financial covenants which include a maximum permitted consolidated total leverage ratio, which may limit our availability to borrow funds thereunder. The consolidated total leverage ratio is assessed quarterly based on the trailing twelve months of EBITDA, as defined in the credit agreement. The maximum permitted consolidated total leverage ratio as of ~~March 31,~~September 30, 2021,, and for each fiscal quarter thereafter, is 4.75. Our consolidated total leverage ratio was ~~2.12~~1.87 to 1.00 as of ~~March 31, 2021~~.September 30, 2021. Based on current operating plans and forecasts, we expect to remain in compliance with all covenants of the credit agreement for at least the next year.

~~Table of Contents~~

Capital Requirements. Our capital requirements consist of the following:

maintenance capital expenditures, which are capital expenditures made to maintain the existing integrity and operating capacity of our assets and related cash flows, further extending the useful lives of the assets; and

~~expansion capital expenditures, which are capital expenditures made to expand the operating capacity or revenue of existing or new assets, whether through construction, acquisition or modification.~~

•

expansion capital expenditures, which are capital expenditures made to expand the operating capacity or revenue of existing or new assets, whether through construction, acquisition or modification.

The following table breaks out capital expenditures from continuing operations for the ~~three~~nine months ended ~~March 31,~~September 30, 2020 and 2021 (in thousands):

	Three Months Ended March 31,						Nine Months Ended September 30,
	2020			2021			2020			2021
Acquisitions	$	12,221		$	-		$	12,221		$	-

Gross expansion capital expenditures	$	214		$	517		$	836		$	1,312
Reimbursable expenditures		(93	)		-			(284	)		(154	)
Net expansion capital expenditures	$	121		$	517		$	552		$	1,158

Gross maintenance capital expenditures	$	1,534		$	1,408		$	6,080		$	4,946
Reimbursable expenditures		(97	)		(19	)		(1,114	)		(19	)
Net maintenance capital expenditures	$	1,437		$	1,389		$	4,966		$	4,927

________________

(1)	Related to the acquisition of DEVCO from Ergon as described in Note 8 to our unaudited condensed consolidated financial statements.

We currently expect our 2021 expansion capital expenditures for organic growth projects to be approximately ~~$0.5~~$1.0 million to $1.5 million and our maintenance capital expenditures to be approximately ~~$6.0~~$6.0 million to $6.5 million, each net of reimbursable expenditures.

Our Ability to Grow Depends on Our Ability to Access External Expansion Capital. Our partnership agreement requires that we distribute all of our available cash to our unitholders. Available cash is reduced by cash reserves established by our General Partner to provide for the proper conduct of our business (including for future capital expenditures) and to comply with the provisions of our credit agreement. We may not grow as quickly as businesses that reinvest their available cash to expand ongoing operations because we distribute all of our available cash.

Recent Accounting Pronouncements

For information regarding recent accounting developments that may affect our future financial statements, see Note 12 to our unaudited condensed consolidated financial statements.

Item 3. Quantitative and Qualitative Disclosures ~~about~~About Market Risk

Pursuant to Item 305(e) of Regulation S-K (§ 229.305(e)), the Partnership is not required to provide the information required by this Item as it is a “smaller reporting company,” as defined by Rule 229.10(f)(1).

Item 4. Controls and ~~Procedures.~~Procedures

Evaluation of disclosure controls and procedures. Our General Partner’s management, including the Chief Executive Officer and Chief Financial Officer of our General Partner, evaluated, as of the end of the period covered by this report, the effectiveness of our disclosure controls and procedures as defined in Rule 13a-15(e) under the Securities Exchange Act of 1934. Based on that evaluation, the Chief Executive Officer and Chief Financial Officer of our General Partner concluded that our disclosure controls and procedures, as of ~~March 31,~~September 30, 2021,, were effective.

Changes in internal control over financial reporting. There were no changes to our internal control over financial reporting that occurred during the three months ended ~~March 31,~~September 30, 2021,, that have materially affected, or are reasonably likely to materially affect, our internal control over financial reporting.

2022

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PART II. OTHER INFORMATION

Item 1. Legal Proceedings.

The information required by this item is included under the caption “Commitments and Contingencies” in Note 11 to our unaudited condensed consolidated financial statements and is incorporated herein by reference thereto.

Item 1A. Risk Factors.

See the risk factors set forth in Part I, Item 1A, of our Annual Report on Form 10-K for the year ended December 31, ~~2020~~.2020.

Item 2. Unregistered Sales of Equity Securities

The following table sets forth a summary of our purchases during the three months ended ~~March 31,~~September 30, 2021,, of equity securities that are registered by Blueknight pursuant to Section 12 of the Securities Exchange Act of 1934, as amended.

Period

Total Number of Series A Preferred Units Purchased(1)

Average Price Paid per Series A Preferred Unit(1)

Total Number of Series A Preferred Units Purchased as Part of Publicly Announced Plans or Programs

Maximum Dollar Value of Series A Preferred Units that May Yet Be Purchased Under the Plans or Programs

03/01/2021-03/31/2021
688,417 $ 7.50 - $ -
02/01/2021-02/28/2021 - $ - - $ -
01/01/2021-01/31/2021 - $ - - $ -

Period	Total Number of Series A Preferred Units Purchased(1)		Average Price Paid per Series A Preferred Unit(1)		Total Number of Series A Preferred Units Purchased as Part of Publicly Announced Plans or Programs		Maximum Dollar Value of Series A Preferred Units that May Yet Be Purchased Under the Plans or Programs
09/01/2021-09/30/2021		102	$	8.10		-	$	-
08/01/2021-08/31/2021		30,000	$	8.11		-	$	-
07/01/2021-07/31/2021		-	$	-		-	$	-

___________________

(1)	The August repurchase was made pursuant to a single privately negotiated ~~transaction on March 12, 2021.~~transaction. The September repurchase consisted of multiple open-market transactions.

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Item 6. Exhibits.

The information required by this Item 6 is set forth in the Index to Exhibits accompanying this quarterly report and is incorporated herein by reference.

INDEX TO EXHIBITS

Exhibit Number		Description
3.1		Amended and Restated Certificate of Limited Partnership of the Partnership, dated November 19, 2009, but effective as of December 1, 2009 (filed as Exhibit 3.1 to the Partnership’s Current Report on Form 8-K, filed November 25, 2009 (Commission File No. 001-33503), and incorporated herein by reference).
3.2		First Amendment to the Amended and Restated Certificate of Limited Partnership of Blueknight Energy Partners L.P., dated July 18, 2019 (filed as Exhibit 3.2 to the Partnership’s Current Report on Form 8-K, filed on July 22, 2019, and incorporated herein by reference).
3.3		Fourth Amended and Restated Agreement of Limited Partnership of the Partnership, dated September 14, 2011 (filed as Exhibit 3.1 to the Partnership’s Current Report on Form 8-K, filed September 14, 2011, and incorporated herein by reference).
3.4		Amended and Restated Certificate of Formation of the General Partner, dated November 20, 2009 but effective as of December 1, 2009 (filed as Exhibit 3.2 to the Partnership’s Current Report on Form 8-K, filed November 25, 2009 (Commission File No. 001-33503), and incorporated herein by reference).
3.5		First Amendment to the Amended and Restated Certificate of Formation of Blueknight Energy Partners G.P., L.L.C., dated July 18, 2019 (filed as Exhibit 3.1 to the Partnership’s Current Report on Form 8-K, filed on July 22, 2019, and incorporated herein by reference).
3.6		Second Amended and Restated Limited Liability Company Agreement of the General Partner, dated December 1, 2009 (filed as Exhibit 3.2 to the Partnership’s Current Report on Form 8-K, filed December 7, 2009 (Commission File No. 001-33503), and incorporated herein by reference).
4.1		Registration Rights Agreement, dated October 5, 2016, by and among the Partnership, Ergon Asphalt & Emulsions, Inc., Ergon Terminaling, Inc. and Ergon Asphalt Holdings, LLC (filed as Exhibit 4.1 to the Partnership’s Current Report on Form 8-K, filed October 5, 2016, and incorporated herein by reference).
31.1*		Certifications of Chief Executive Officer Pursuant to Section 302 of the Sarbanes-Oxley Act of 2002.
31.2*		Certifications of Chief Financial Officer Pursuant to Section 302 of the Sarbanes-Oxley Act of 2002.
32.1#		Certification of Chief Executive Officer and Chief Financial Officer pursuant to 18 U.S.C., Section 1350, as adopted pursuant to Section 906 of the Sarbanes-Oxley Act of 2002. Pursuant to SEC Release 34-47551, this Exhibit is furnished to the SEC and shall not be deemed to be “filed.”
~~101#~~101.INS		~~The following financial information from Blueknight Energy Partners, L.P.’s Quarterly Report on Form 10-Q for~~Inline XBRL Instance Document - the ~~quarter ended~~ ~~March 31, 2021, formatted~~instance document does not appear in the Interactive Data File because its XBRL ~~(eXtensible Business Reporting Language): (i) Document~~tags are embedded within the Inline XBRL document.
101.SCH		Inline XBRL Taxonomy Extension Schema Document.
101.CAL		Inline XBRL Taxonomy Calculation Linkbase Document.
101.DEF		Inline XBRL Taxonomy Extension Definitions Document.
101.LAB		Inline XBRL Taxonomy Label Linkbase Document.
101.PRE		Inline XBRL Taxonomy Presentation Linkbase Document.
104		Cover Page Interactive Data File (embedded within the Inline XBRL document and ~~Entity Information; (ii) Unaudited Condensed Consolidated Balance Sheets as of~~ ~~December 31, 2020~~ ~~and~~ ~~March 31, 2021; (iii) Unaudited Condensed Consolidated Statements of Operations for the~~ ~~three months ended March 31, 2020 and 2021; (iv) Unaudited Condensed Consolidated Statement of Changes~~contained in ~~Partners’ Capital (Deficit) for the~~ ~~three months ended March 31, 2020 and 2021; (v) Unaudited Condensed Consolidated Statements of Cash Flows for the~~ ~~three months ended March 31, 2020 and 2021~~;Exhibit 101).

Attached as Exhibit 101 to this Quarterly Report are the following Inline XBRL-related documents: (i) Document and Entity Information; (ii) Unaudited Condensed Consolidated Balance Sheets as of December 31, 2020 and September 30, 2021; (iii) Unaudited Condensed Consolidated Statements of Operations for the three and nine months ended September 30, 2020 and 2021; (iv) Unaudited Condensed Consolidated Statement of Changes in Partners’ Capital (Deficit) for the three and nine months ended September 30, 2020 and 2021; (v) Unaudited Condensed Consolidated Statements of Cash Flows for the nine months ended September 30, 2020 and 2021; and (vi) Notes to Unaudited Condensed Consolidated Financial Statements.

____________________

* Filed herewith.

# Furnished herewith

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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.

		BLUEKNIGHT ENERGY PARTNERS, L.P.

		By:	Blueknight Energy Partners, G.P., L.L.C.
			its General Partner

Date:	~~May 5,~~November 12, 2021	By:	/s/ Matthew R. Lewis
			Matthew R. Lewis
			Chief Financial Officer

Date:	~~May 5,~~November 12, 2021	By:	/s/ Michael G. McLanahan
			Michael G. McLanahan
			~~Michael G. McLanahan~~
			Chief Accounting Officer

2325

Large accelerated filer ☐		Accelerated filer ☐
Non-accelerated filer ☒		Smaller reporting company ☒
		Emerging growth company ☐

Title of each class	Trading Symbol(s)	Name of each exchange on which registered
Common Units	BKEP	The Nasdaq Global Market
Series A Preferred Units	BKEPP	The Nasdaq Global Market
~~Series A Preferred Units~~	~~BKEPP~~	~~The Nasdaq Global Market~~

	As of			As of			*As of*			*As of*
	December 31, 2020			March 31, 2021			*December 31, 2020*			*September 30, 2021*
	(unaudited)						(unaudited)
ASSETS
Current assets:
Cash and cash equivalents	$	805		$	13		$	805		$	555
Accounts receivable, net		3,297			6,897			3,297			4,258
Receivables from related parties, net		507			664			507			1,193
Other current assets		2,355			3,693			2,355			2,876
Current assets of discontinued operations		96,945			511			96,945			299
Total current assets		103,909			11,778			103,909			9,181
Property, plant and equipment, net of accumulated depreciation of $197,561 and $199,895 at December 31, 2020, and March 31, 2021, respectively		104,709			104,256
Property, plant and equipment, net of accumulated depreciation of $197,561 and $202,164 at December 31, 2020, and September 30, 2021, respectively								104,709			105,978
Goodwill		6,728			6,728			6,728			6,728
Debt issuance costs, net		1,340			998			1,340			2,852
Operating lease assets		8,548			8,020			8,548			7,281
Intangible assets, net		7,531			6,935			7,531			5,744
Other noncurrent assets		252			282			252			605
Total assets	$	233,017		$	138,997		$	233,017		$	138,369
LIABILITIES AND PARTNERS’ CAPITAL(DEFICIT)
Current liabilities:
Accounts payable	$	1,635		$	2,313		$	1,635		$	1,669
Accounts payable to related parties		31			14			31			960
Accrued interest payable		274			279			274			234
Accrued property taxes payable		1,757			1,505			1,757			2,076
Unearned revenue		1,789			1,852			1,789			3,362
Unearned revenue with related parties		4,603			4,594			4,603			4,748
Accrued payroll		4,977			2,377			4,977			3,998
Current operating lease liability		1,684			1,532			1,684			1,271
Other current liabilities		1,349			2,327			1,349			1,259
Current liabilities of discontinued operations		17,248			2,599			17,248			348
Total current liabilities		35,347			19,392			35,347			19,925
Long-term unearned revenue with related parties		4,153			3,985			4,153			4,702
Other long-term liabilities		168			162			168			253
Noncurrent operating lease liability		6,980			6,735			6,980			6,210
Long-term debt		252,592			106,592			252,592			101,000
Commitments and contingencies (Note 11)
Partners’ capital(deficit):
Common unitholders (41,214,856 and 41,468,125 units issued and outstanding at December 31, 2020, and March 31, 2021, respectively)		312,591			384,755
Preferred unitholders (35,125,202 and 34,436,785 units issued and outstanding at December 31, 2020, and March 31, 2021, respectively)		253,923			248,946
General partner interest (1.6% interest with 1,225,409 general partner units outstanding at both dates)		(632,737	)		(631,570	)
Common unitholders (41,214,856 and 41,516,643 units issued and outstanding at December 31, 2020, and September 30, 2021, respectively)								312,591			389,053
Preferred unitholders (35,125,202 and 34,406,683 units issued and outstanding at December 31, 2020, and September 30, 2021, respectively)								253,923			248,728
General partner interest (1.6% interest with 1,225,409 general partner units outstanding at both dates)								(632,737	)		(631,502	)
Total partners’ capital(deficit)		(66,223	)		2,131			(66,223	)		6,279
Total liabilities and partners’ capital(deficit)	$	233,017		$	138,997		$	233,017		$	138,369

	Common Unitholders			Series A Preferred Unitholders			General Partner Interest			Total Partners’ Capital (Deficit)			*Common Unitholders*			*Series A Preferred Unitholders*			*General Partner Interest*			*Total Partners’ Capital (Deficit)*
													(unaudited)
Balance, June 30, 2020													$	342,651		$	253,923		$	(632,252	)	$	(35,678	)
Net income(loss)														7,887			6,278			228			14,393
Equity-based incentive compensation														210			0			3			213
Distributions														(1,703	)		(6,278	)		(128	)		(8,109	)
Proceeds from sale of 104,954 common units pursuant to the Employee Unit Purchase Plan														115			0			0			115
Balance, September 30, 2020													$	349,160		$	253,923		$	(632,149	)	$	(29,066	)
	(unaudited)
Balance, December 31, 2019	$	356,777		$	253,923		$	(632,023	)	$	(21,323	)	$	356,777		$	253,923		$	(632,023	)	$	(21,323	)
Net income(loss)		(6,279	)		6,279			-			-			(3,341	)		18,836			249			15,744
Equity-based incentive compensation		105			-			3			108			630			0			10			640
Distributions		(1,675	)		(6,279	)		(128	)		(8,082	)		(5,076	)		(18,836	)		(385	)		(24,297	)
Proceeds from sale of 53,372 common units pursuant to the Employee Unit Purchase Plan		55			-			-			55
Balance, March 31, 2020	$	348,983		$	253,923		$	(632,148	)	$	(29,242	)
Proceeds from sale of 158,326 common units pursuant to the Employee Unit Purchase Plan														170			0			0			170
Balance, September 30, 2020													$	349,160		$	253,923		$	(632,149	)	$	(29,066	)

Balance, June 30, 2021													$	384,265		$	248,946		$	(631,578	)	$	1,633
Net income														6,214		$	6,182		$	200			12,596
Equity-based incentive compensation														191		$	0		$	3			194
Repurchase of Preferred Shares														0		$	(244	)	$	0			(244	)
Distributions														(1,723	)	$	(6,156	)	$	(127	)		(8,006	)
Proceeds from sale of 44,958 common units pursuant to the Employee Unit Purchase Plan														106		$	0		$	0			106
Balance, September 30, 2021													$	389,053		$	248,728		$	(631,502	)	$	6,279

Balance, December 31, 2020	$	312,591		$	253,923		$	(632,737	)	$	(66,223	)	$	312,591		$	253,923		$	(632,737	)	$	(66,223	)
Net income		73,896			6,465			1,292			81,653			81,121			18,803			1,608			101,532
Equity-based incentive compensation		(80	)		-			3			(77	)		330			0			9			339
Repurchase of preferred units		-			(5,163	)		-			(5,163	)		0			(5,407	)		0			(5,407	)
Distributions		(1,700	)		(6,279	)		(128	)		(8,107	)		(5,143	)		(18,591	)		(382	)		(24,116	)
Proceeds from sale of 32,696 common units pursuant to the Employee Unit Purchase Plan		48			-			-			48
Balance, March 31, 2021	$	384,755		$	248,946		$	(631,570	)	$	2,131
Proceeds from sale of 77,654 common units pursuant to the Employee Unit Purchase Plan														154			0			0			154
Balance, September 30, 2021													$	389,053		$	248,728		$	(631,502	)	$	6,279

	Three Months Ended March 31,						*Nine Months Ended September 30,*
	2020			2021			*2020*			*2021*
	(unaudited)						(unaudited)
Cash flows from operating activities:
Net income	$	-		$	81,653		$	15,744		$	101,532
Adjustments to reconcile net income to net cash provided by operating activities:
Depreciation and amortization		6,094			3,065			17,698			8,977
Amortization and write-off of debt issuance costs		251			391			753			1,385
Tangible asset impairment charge		5,122			156			6,417			156
(Gain)loss on sale of assets		185			(75,069	)
Gain on sale of assets								(426	)		(74,990	)
Gain from insurance settlement related to investing activities								0			(1,059	)
Equity-based incentive compensation		108			(77	)		640			339
Changes in assets and liabilities:
Decrease in accounts receivable		4,201			10,022			8,677			12,699
Decrease(increase) in receivables from related parties		168			(157	)
Decrease (increase) in receivables from related parties								104			(686	)
Decrease in other current assets		1,345			1,630			3,032			2,554
Decrease in other non-current assets		566			379			1,767			846
Increase in accounts payable		104			412
Decrease in accounts payable								(379	)		(433	)
Decrease in payables to related parties		(17	)		(17	)		(1,256	)		(31	)
Decrease in accrued crude oil purchases		(3,466	)		(3,868	)		(4,244	)		(3,868	)
Decrease in accrued crude oil purchases to related parties		(4,463	)		(8,842	)		(4,382	)		(8,842	)
Increase in accrued interest payable		8			5			25			289
Decrease in accrued property taxes		(381	)		(743	)
Increase(decrease) in unearned revenue		1,205			(373	)
Decrease in unearned revenue from related parties		(285	)		(227	)
Increase (decrease) in accrued property taxes								204			(183	)
Increase in unearned revenue								318			972
Increase(decrease) in unearned revenue from related parties								1,382			(257	)
Decrease in accrued payroll		(2,329	)		(3,822	)		(29	)		(2,367	)
Increase(decrease) in other accrued liabilities		(542	)		860
Decrease in other accrued liabilities								(2,145	)		(1,761	)
Net cash provided by operating activities		7,874			5,378			43,900			35,272
Cash flows from investing activities:
Acquisition of DEVCO from Ergon (Note 8)		(12,221	)		-			(12,221	)		0
Capital expenditures		(2,900	)		(2,044	)		(12,381	)		(6,394	)
Net proceeds from sale of assets		25			155,316			2,409			155,173
Proceeds from insurance settlement related to investing activities								0			1,059
Net cash provided by(used in) investing activities		(15,096	)		153,272			(22,193	)		149,838
Cash flows from financing activities:
Payments on other financing activities		(638	)		(171	)		(2,166	)		(1,105	)
Debt issuance costs		-			(49	)		0			(372	)
Borrowings under credit agreement		78,000			48,000			181,000			79,486
Payments under credit agreement		(62,000	)		(194,000	)		(176,000	)		(234,000	)
Proceeds from equity issuance		55			48			170			154
Repurchase of preferred units		-			(5,163	)		0			(5,407	)
Distributions		(8,082	)		(8,107	)		(24,297	)		(24,116	)
Net cash provided by(used in) financing activities		7,335			(159,442	)
Net cash used in financing activities								(21,293	)		(185,360	)
Net increase(decrease) in cash and cash equivalents		113			(792	)		414			(250	)
Cash and cash equivalents at beginning of period		558			805			558			805
Cash and cash equivalents at end of period	$	671		$	13		$	972		$	555

Supplemental disclosure of non-cash financing and investing cash flow information:
Non-cash changes in property, plant and equipment	$	1,241		$	(74	)	$	1,185		$	2,013
Increase in accrued liabilities related to insurance premium financing agreement	$	1,517		$	1,208		$	2,324		$	1,208

		Page
PART I	FINANCIAL INFORMATION	1
Item 1.	Unaudited Condensed Consolidated Financial Statements	1
	Condensed Consolidated Balance Sheets as of December 31, 2020, and ~~March 31,~~September 30, 2021	1
	Condensed Consolidated Statements of Operations for the Three andNine~~Three~~Months Ended ~~March 31,~~September 30, 2020 and 2021	2
	Condensed Consolidated Statements of Changes in Partners’ Capital (Deficit) for the Three and Nine~~Three~~ Months Ended ~~March 31,~~September 30, 2020 and 2021	3
	Condensed Consolidated Statements of Cash Flows for the Nine~~Three~~ Months Ended ~~March 31,~~September 30, 2020 and 2021	4
	Notes to the Unaudited Condensed Consolidated Financial Statements	5
	1. Organization and Nature of Business	5
	2. Basis of Presentation	5
	3. Revenue	5
	4. Discontinued Operations	7
	5. Debt	910
	6. Net Income Per Limited ~~Partnership~~Partner Unit	11
	~~7. Partners’ Capital and Distributions~~	12
	~~8. Related-party Transactions~~	12
	~~9. Long-term Incentive Plan~~7. Partners’ Capital and Distributions	13
	~~10. Fair Value Measurements~~8. Related-party Transactions	13
	9. Long-Term Incentive Plan	14
	~~11. Commitments and Contingencies~~10. Fair Value Measurements	1415
	11. Commitments and Contingencies	15
	12. Recently Issued Accounting Standards	1416
	13. Subsequent Events	16
Item 2.	Management’s Discussion and Analysis of Financial Condition and Results of Operations	1517
Item 3.	Quantitative and Qualitative Disclosures ~~about~~About Market Risk	2022
Item 4.	Controls and Procedures	2022

PART II	OTHER INFORMATION	2123
Item 1.	Legal Proceedings	2123
Item 1A.	Risk Factors	2123
Item 2.	Unregistered Sales of Equity Securities	2123
Item 6.	Exhibits	2224

	Revenue from Contracts with Customers(1)		Revenue from Leases		Revenue from Contracts with Customers(1)		Revenue from Leases		Total
Remainder of 2021	$	29,431	$	43,923	$	9,813	$	14,644	$	24,457
2022		31,808		49,739		35,825		55,044		90,869
2023		28,131		42,546		28,126		43,483		71,609
2024		28,174		42,593		28,169		43,520		71,689
2025		26,857		37,595		26,852		38,523		65,375
Thereafter		37,078		43,000		37,666		45,820		83,486
Total revenue related to future performance obligations	$	181,479	$	259,396	$	166,451	$	241,034	$	407,485

	Three Months Ended March 31, 2020								*Three Months Ended September 30, 2020*
	Revenue from contracts with customers				Lease revenue				*Revenue from contracts with customers*				*Lease revenue*
	Third-party revenue		Related-party revenue		Third-party revenue		Related-party revenue		*Third-party revenue*		*Related-party revenue*		*Third-party revenue*		*Related-party revenue*		*Total*
Fixed storage and throughput revenue	$	5,245	$	3,084	$	-	$	-	$	5,097	$	4,079	$	-	$	-	$	9,176
Fixed lease revenue		-		-		9,227		4,800		-		-		7,766		6,552		14,318
Variable cost recovery revenue		1,607		971		604		121		1,665		552		499		154		2,870
Variable throughput and other revenue		1		-		-		-		752		218		877		784		2,631
Total	$	6,853	$	4,055	$	9,831	$	4,921	$	7,514	$	4,849	$	9,142	$	7,490	$	28,995

	Three Months Ended March 31, 2021
	Revenue from contracts with customers				Lease revenue
		Third-party revenue		Related-party revenue		Third-party revenue		Related-party revenue
Fixed storage and throughput revenue	$	5,064	$	4,721	$	-	$	-
Fixed lease revenue		-		-		7,801		6,785
Variable cost recovery revenue		1,735		128		502		219
Variable throughput and other revenue		120		-		-		-
Total	$	6,919	$	4,849	$	8,303	$	7,004