PRESS RELEASE
FOR IMMEDIATE RELEASE
August 14, 2012
BLUE DOLPHIN REPORTS SECOND QUARTER FINANCIAL RESULTS AND
PROVIDES NIXON FACILITY OPERATIONAL UPDATE
Houston, August 14 / PR Newswire / -- Blue Dolphin Energy Company (“Blue Dolphin”), which acquired Lazarus Energy, LLC (“LE”) from Lazarus Energy Holdings, LLC (“LEH”) in a reverse acquisition effective February 15, 2012, announced condensed consolidated financial results for the three and six months ended June 30, 2012.
LE’s primary asset is a crude oil processing facility located near Nixon, Texas (the “Nixon Facility”), which began operations on a reduced basis in February 2012. The Nixon Facility operated for a total of 88 days for the three months ended June 30, 2012 (the “current quarter”) and for a total of 148 days for the six months ended June 30, 2012 (the “current period”). On average, the Nixon Facility operated at a rate of approximately 8,900 bpd, or 59% of operating capacity, during the current quarter and at a rate of approximately 8,000 bpd, or 53% of operating capacity, during the current period. Management anticipates that the Nixon Facility may approach its operating capacity throughput of 15,000 bpd on a consistent basis during the second half of 2012.
The Nixon Facility had no operations during the three and six months ended June 30, 2011. Under reverse acquisition accounting, LE (the legal subsidiary) has been treated as the accounting parent (acquirer) and Blue Dolphin (the legal parent) has been treated as the accounting subsidiary (acquiree). Accordingly, the financial statements subsequent to the date of the transaction are presented as the continuation of LE.
For the current quarter, we reported a net loss of $7,397,834 on total revenue of $84,790,853. For the current period, we reported a net loss of 9,367,728 on total revenue of $130,832,066. These net losses were primarily attributable to: (i) negative gross margins generated from (a) initial costs related to acquisition of specificallydesired feedstocks and (b) lower refined product prices due to significant discounts offered to new customers, particularly for certain initial refined product runs that did not conform to normal specifications and (ii) the write-down of initial refined product inventory during the current quarter and (iii) the overhang related to processing of unhedged, higher-cost feedstock.
During the current quarter, we took steps to improve the quality, consistency and availability of the specifically desired feedstocks processed by our Nixon Facility, as well as to improve the quality, consistency and market acceptance of our refined products. We also instituted an inventory risk management program with Genesis Energy, LLC (“Genesis”), the purpose of which is to reduce the risk of having a mismatch of crude oil and refined products inventory at higher prices when crude oil and refined product prices are decreasing. Under the inventory risk management program, Genesis may, but is not required to, use derivative instruments as economic hedges on our refined products when our inventory levels exceed targeted levels (currently 1.5 days of production). Although the decision to enter into a futures contract is made solely by Genesis, Genesis typically confers with management as part of their decision making process.
Blue Dolphin Energy Company (OTCQX: BDCO) is engaged in crude oil and condensate processing, as well as the gathering and transportation and the exploration and production of oil and natural gas. For additional company information, visit Blue Dolphin’s corporate website at http://www.blue-dolphin-energy.com.
Contact:
Jonathan P. Carroll
Chief Executive Officer and President
713-568-4725
Certain of the statements included in this press release, which express a belief, expectation or intention, as well as those regarding future financial performance or results, or which are not historical facts, are “forward-looking” statements as that term is defined in the Securities Act of 1933, as amended, and the Securities Exchange Act of 1934, as amended. These forward-looking statements are not guarantees of future performance or events and such statements involve a number of risks, uncertainties and assumptions, including but not limited to:significant dependent relationship with Genesis and its affiliates; key supplier failure; loss of market share with or by a key customer; failure to comply with forbearance agreements relating to long-term indebtedness under which Blue Dolphin is in default; continued declines in throughput volumes and production rates from Blue Dolphin’s U.S. Gulf of Mexico leasehold properties; and the factors set forth under the heading “Risk Factors” in Part I, Item 1A of Blue Dolphin’s annual report on Form 10-K for the twelve month period ended December 31, 2011. Should one or more of these risks or uncertainties materialize or should the underlying assumptions prove incorrect, actual results and outcomes may differ materially from those indicated in the forward-looking statements. Readers are cautioned not to place undue reliance on these forward-looking statements, which speak only as of the date hereof. The Company undertakes no obligation to republish revised forward-looking statements to reflect events or circumstances after the date hereof or to reflect the occurrence of unanticipated events.
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BLUE DOLPHIN ENERGY COMPANY & SUBSIDIARIES
Condensed Consolidated Balance Sheets
| | | June 30, 2012 | | | December 31, 2011 | |
ASSETS CURRENT ASSETS | | (Unaudited) | | | | |
| Cash and cash equivalents | | $ | 478,288 | | | $ | 1,822 | |
| Restricted cash | | | 192,542 | | | | 192,004 | |
| Accounts receivable | | | 6,113,419 | | | | - | |
| Prepaid expenses and other current assets | | | 247,933 | | | | 58,713 | |
| Deposits | | | 1,248,947 | | | | 473,026 | |
| Inventory | | | 3,778,534 | | | | 4,533,961 | |
| Total current assets | | | 12,059,663 | | | | 5,259,526 | |
| Property, plant and equipment, net | | | 49,037,772 | | | | 32,307,929 | |
| Debt issue costs | | | 549,234 | | | | 566,133 | |
| Other assets | | | 14,221 | | | | 10,468 | |
| Trade name | | | 303,346 | | | | - | |
| Goodwill | | | 1,445,720 | | | | - | |
| TOTAL ASSETS | | $ | 63,409,956 | | | $ | 38,144,056 | |
| | | | | | | | | |
| LIABILITIES AND STOCKHOLDERS' EQUITY | | | | | | | | |
| CURRENT LIABILITIES | | | | | | | | |
| Accounts payable | | $ | 14,261,292 | | | $ | 4,841,859 | |
| Accounts payable, related party | | | 1,028,817 | | | | 908,139 | |
| Note payable | | | 43,392 | | | | 46,318 | |
| Asset retirement obligations, current portion | | | 149,271 | | | | - | |
| Accrued expenses and other current liabilities | | | 931,361 | | | | 744,921 | |
| Interest payable, current portion | | | 1,371,208 | | | | 995,916 | |
| Long-term debt, current portion | | | 1,846,812 | | | | 1,839,501 | |
| Total current liabilities | | | 19,632,153 | | | | 9,376,654 | |
| Long-term liabilities: | | | | | | | | |
| Asset retirement obligations, net of current portion | | | 1,206,643 | | | | - | |
| Long-term debt, net of current portion | | | 16,343,987 | | | | 12,455,102 | |
| Long-term interest payable, net of current portion | | | 753,929 | | | | 650,214 | |
| Total long-term liabilities | | | 18,304,559 | | | | 13,105,316 | |
| | | | | | | | | |
| TOTAL LIABILITIES | | | 37,936,712 | | | | 22,481,970 | |
| | | | | | | | | |
| Commitments and contingencies | | | | | | | | |
| | | | | | | | | |
| STOCKHOLDERS' EQUITY | | | | | | | | |
Common stock ($0.01 par value, 20,000,000 shares authorized, 10,545,690 and 2,098,390 shares issued and outstanding at June 30, 2012 and December 31, 2011, respectively) | | | 105,457 | | | | 20,984 | |
| Additional paid-in capital | | | 36,459,818 | | | | 17,365,405 | |
| Accumulated deficit | | | (11,092,031 | ) | | | (1,724,303 | ) |
| Total stockholders' equity | | | 25,473,244 | | | | 15,662,086 | |
| TOTAL LIABILITIES AND STOCKHOLDERS' EQUITY | | $ | 63,409,956 | | | $ | 38,144,056 | |
See accompanying notes to condensed consolidated financial statements in Blue Dolphin’s
quarterly report on Form 10-Q for the three and six months ended June 30, 2012.
BLUE DOLPHIN ENERGY COMPANY & SUBSIDIARIES
Condensed Consolidated Statements of Operations (Unaudited)
| | | Three Months Ended June 30, | | | Six Months Ended June 30, | |
| | | 2012 | | | 2011 | | | 2012 | | | 2011 | |
| REVENUE FROM OPERATIONS | | | | | | | | | | | | |
| Refined product sales | | $ | 84,416,296 | | | $ | - | | | $ | 130,187,259 | | | $ | - | |
| Pipeline operations | | | 124,476 | | | | - | | | | 194,386 | | | | - | |
| Oil and gas sales | | | 250,081 | | | | - | | | | 450,421 | | | | - | |
| Total revenue from operations | | | 84,790,853 | | | | - | | | | 130,832,066 | | | | - | |
| | | | | | | | | | | | | | | | | |
| COST OF OPERATIONS | | | | | | | | | | | | | | | | |
| Cost of refined products sold | | | 88,051,229 | | | | - | | | | 133,692,455 | | | | - | |
| Refinery operating expenses | | | 2,239,914 | | | | - | | | | 3,302,665 | | | | - | |
| Pipeline operating expenses | | | 127,502 | | | | - | | | | 237,120 | | | | - | |
| Lease operating expenses | | | 298,962 | | | | - | | | | 500,675 | | | | - | |
| Depletion, depreciation and amortization | | | 520,390 | | | | 4,306 | | | | 798,352 | | | | 8,614 | |
| General and administrative expenses | | | 734,720 | | | | 177,112 | | | | 1,260,307 | | | | 290,940 | |
| Accretion expense | | | 41,685 | | | | - | | | | 65,460 | | | | - | |
| Total cost of operations | | | 92,014,402 | | | | 181,418 | | | | 139,857,034 | | | | 299,554 | |
| Loss from operations | | | (7,223,549 | ) | | | (181,418 | ) | | | (9,024,968 | ) | | | (299,554 | ) |
| | | | | | | | | | | | | | | | | |
| OTHER INCOME (EXPENSE) | | | | | | | | | | | | | | | | |
| Net tank rental revenue | | | 81,364 | | | | 353,709 | | | | 175,319 | | | | 696,454 | |
| Interest and other income | | | 2,265 | | | | 295 | | | | 3,915 | | | | 6,389 | |
| Interest expense | | | (275,333 | ) | | | (12,061 | ) | | | (508,850 | ) | | | (24,372 | ) |
| Unrealized gain (loss) on derivatives | | | - | | | | - | | | | - | | | | - | |
| Total other income (expense) | | | (191,704 | ) | | | 341,943 | | | | (329,616 | ) | | | 678,471 | |
| | | | | | | | | | | | | | | | | |
| Income (loss) before income taxes | | | (7,415,253 | ) | | | 160,525 | | | | (9,354,584 | ) | | | 378,917 | |
| | | | | | | | | | | | | | | | | |
| Income tax benefit (expense) | | | 17,419 | | | | - | | | | (13,144 | ) | | | - | |
| | | | | | | | | | | | | | | | | |
| Net income (loss) | | $ | (7,397,834 | ) | | $ | 160,525 | | | $ | (9,367,728 | ) | | $ | 378,917 | |
| | | | | | | | | | | | | | | | | |
| Income (loss) per common share: | | | | | | | | | | | | | | | | |
| Basic | | $ | (0.70 | ) | | $ | 160,525 | | | $ | (1.18 | ) | | $ | 378,917 | |
| Diluted | | $ | (0.70 | ) | | $ | 160,525 | | | $ | (1.18 | ) | | $ | 378,917 | |
| | | | | | | | | | | | | | | | | |
| Weighted average number of common shares outstanding: | | | | | | | | | | | | | | | | |
| Basic | | | 10,541,853 | | | | 1 | | | | 7,916,129 | | | | 1 | |
| Diluted | | | 10,541,853 | | | | 1 | | | | 7,916,129 | | | | 1 | |
See accompanying notes to condensed consolidated financial statements in Blue Dolphin’s
quarterly report on Form 10-Q for the three and six months ended June 30, 2012.
