Document and Entity Information
Document and Entity Information - shares | 3 Months Ended | |
Mar. 31, 2017 | May 15, 2017 | |
Document And Entity Information | ||
Entity Registrant Name | BLUE DOLPHIN ENERGY CO | |
Entity Central Index Key | 793,306 | |
Document Type | 10-Q | |
Document Period End Date | Mar. 31, 2017 | |
Amendment Flag | false | |
Current Fiscal Year End Date | --12-31 | |
Is Entity a Well-known Seasoned Issuer? | No | |
Is Entity a Voluntary Filer? | No | |
Is Entity's Reporting Status Current? | Yes | |
Entity Filer Category | Smaller Reporting Company | |
Entity Common Stock, Shares Outstanding | 10,474,714 | |
Document Fiscal Period Focus | Q1 | |
Document Fiscal Year Focus | 2,017 |
Consolidated Balance Sheets (Un
Consolidated Balance Sheets (Unaudited) - USD ($) | Mar. 31, 2017 | Dec. 31, 2016 |
CURRENT ASSETS | ||
Cash and cash equivalents | $ 0 | $ 1,152,628 |
Restricted cash | 2,756,713 | 3,347,835 |
Accounts receivable, net | 206,235 | 2,022,166 |
Accounts receivable, related party | 0 | 1,161,589 |
Prepaid expenses and other current assets | 1,600,432 | 1,046,191 |
Deposits | 138,957 | 138,957 |
Inventory | 4,409,954 | 2,075,538 |
Total current assets | 9,112,291 | 10,944,904 |
Total property and equipment, net | 63,904,532 | 62,324,463 |
Restricted cash, noncurrent | 765,092 | 1,582,305 |
Surety bonds | 230,000 | 205,000 |
Trade name | 303,346 | 303,346 |
Total long-term assets | 65,202,970 | 64,415,114 |
TOTAL ASSETS | 74,315,261 | 75,360,018 |
CURRENT LIABILITIES | ||
Accounts payable | 13,231,591 | 14,552,383 |
Accounts payable, related party | 520,800 | 369,600 |
Notes payable | 89,660 | 0 |
Asset retirement obligations, current portion | 17,510 | 17,510 |
Accrued expenses and other current liabilities | 2,243,753 | 1,281,582 |
Interest payable, current portion | 2,220,840 | 323,756 |
Long-term debt less unamortized debt issue costs, current portion | 32,570,879 | 31,712,336 |
Long-term debt, related party, current portion | 500,000 | 500,000 |
Total current liabilities | 51,395,033 | 48,757,167 |
Long-term liabilities: | ||
Asset retirement obligations, net of current portion | 2,081,973 | 2,010,129 |
Deferred revenues and expenses | 72,966 | 83,390 |
Long-term debt less unamortized debt issue costs, net of current portion | 0 | 1,300,000 |
Long-term debt, related party, net of current portion | 5,911,980 | 4,814,690 |
Long-term interest payable, net of current portion | 0 | 1,691,383 |
Total long-term liabilities | 8,066,919 | 9,899,592 |
TOTAL LIABILITIES | 59,461,952 | 58,656,759 |
Commitments and contingencies (Note 19) | ||
STOCKHOLDERS' EQUITY | ||
Common stock (0.01 par value, 20,000,000 shares authorized; 10,624,714 shares issued at March 31,2017 and December 31, 2016, respectively | 106,248 | 106,248 |
Additional paid-in capital | 36,818,528 | 36,818,528 |
Accumulated deficit | (21,271,467) | (19,421,517) |
Treasury stock, 150,000 shares at cost | (800,000) | (800,000) |
Total stockholders' equity | 14,853,309 | 16,703,259 |
TOTAL LIABILITIES AND STOCKHOLDERS' EQUITY | $ 74,315,261 | $ 75,360,018 |
Consolidated Balance Sheets (U3
Consolidated Balance Sheets (Unaudited) (Parenthetical) - $ / shares | Mar. 31, 2017 | Dec. 31, 2016 |
STOCKHOLDERS' EQUITY | ||
Common stock, par value | $ 0.01 | $ 0.01 |
Common stock, shares authorized | 20,000,000 | 20,000,000 |
Common stock, shares issued | 10,624,714 | 10,624,714 |
Treasury stock, shares | 150,000 | 150,000 |
Consolidated Statements of Oper
Consolidated Statements of Operations (Unaudited) - USD ($) | 3 Months Ended | |
Mar. 31, 2017 | Mar. 31, 2016 | |
REVENUE FROM OPERATIONS | ||
Refined petroleum product sales | $ 51,902,038 | $ 31,193,137 |
Tank rental revenue | 703,711 | 291,487 |
Other operations | 0 | 27,652 |
Total revenue from operations | 52,605,749 | 31,512,276 |
COST OF OPERATIONS | ||
Cost of refined products sold | 51,774,502 | 30,993,477 |
Refinery operating expenses | 2,813,103 | 3,437,015 |
Joint Marketing Agreement profit share | 0 | (671,092) |
Other operating expenses | 60,844 | 93,942 |
General and administrative expenses | 906,090 | 357,004 |
Depletion, depreciation and amortization | 451,025 | 440,453 |
Bad debt recovery | 0 | (139,868) |
Accretion expense | 71,844 | 28,186 |
Total cost of operations | 56,077,408 | 34,539,117 |
Loss from operations | (3,471,659) | (3,026,841) |
OTHER INCOME (EXPENSE) | ||
Easement, interest and other income | 381,993 | 131,763 |
Interest and other expense | (594,784) | (419,907) |
Gain on disposal of property | 1,834,500 | 0 |
Total other expense | 1,621,709 | (288,144) |
loss before income taxes | (1,849,950) | (3,314,985) |
Income tax benefit | 0 | 1,165,901 |
Net loss | $ (1,849,950) | $ (2,149,084) |
Loss per common share: | ||
Basic | $ 0.18 | $ 0.21 |
Diluted | $ (0.18) | $ (0.21) |
Weighted average number of common shares outstanding: | ||
Basic | 10,474,714 | 10,457,794 |
Diluted | 10,474,714 | 10,457,794 |
Consolidated Statements of Cash
Consolidated Statements of Cash Flows (Unaudited) - USD ($) | 3 Months Ended | 12 Months Ended | |
Mar. 31, 2017 | Mar. 31, 2016 | Dec. 31, 2016 | |
OPERATING ACTIVITIES | |||
Net loss | $ (1,849,950) | $ (2,149,084) | |
Adjustments to reconcile net loss to net cash used in operating activities: | |||
Depletion, depreciation and amortization | 451,025 | 440,453 | |
Unrealized loss (gain) on derivatives | 0 | (1,374,040) | |
Deferred tax expense (benefit) | 0 | (1,165,901) | |
Amortization of debt issue costs | 32,121 | 32,122 | |
Accretion of asset retirement obligations | 71,844 | 28,186 | $ 112,744 |
Common stock issued for services | 0 | 20,000 | |
Recovery of bad debt | 0 | (139,868) | |
Changes in operating assets and liabilities | |||
Accounts receivable | 1,815,931 | 2,270,552 | |
Accounts receivable, related party | 1,161,589 | 0 | |
Prepaid expenses and other current assets | (554,241) | 772,658 | |
Deposits and other assets | (25,000) | 165,481 | |
Inventory | (2,334,416) | (7,042,649) | |
Accounts payable, accrued expenses and other liabilities | (1,293,946) | 7,631,014 | |
Accounts payable, related party | 151,200 | 108,556 | |
Net cash used in operating activities | (2,373,843) | (402,520) | |
INVESTING ACTIVITIES | |||
Capital expenditures | (810,832) | (3,639,645) | |
Net cash used in investing activities | (810,832) | (3,639,645) | |
FINANCING ACTIVITIES | |||
Proceeds from issuance of debt | 1,097,290 | 0 | |
Payments on debt | (473,578) | (478,431) | |
Net cash provided by (used in) financing activities | 623,712 | (478,431) | |
Net decrease in cash, cash equivalents, and restricted cash | (2,560,963) | (4,520,596) | |
CASH, CASH EQUIVALENTS, AND RESTRICTED CASH AT BEGINNING OF PERIOD | 1,152,628 | 20,645,652 | 20,645,652 |
CASH, CASH EQUIVALENTS, AND RESTRICTED CASH AT END OF PERIOD | 3,521,805 | 16,125,056 | $ 1,152,628 |
Non-cash investing and financing activities: | |||
Financing of capital expenditures via accounts payable | 1,220,262 | 1,106,205 | |
Financing of guaranty fees via long-term debt, related party | 183,030 | 0 | |
Conversion of accounts payable to short-term notes | 89,660 | 0 | |
Interest paid | 559,299 | 668,343 | |
Income taxes paid | $ 0 | $ 0 |
1. Organization
1. Organization | 3 Months Ended |
Mar. 31, 2017 | |
Organization, Consolidation and Presentation of Financial Statements [Abstract] | |
Organization | Nature of Operations Structure and Management Our operations are conducted through the following active subsidiaries: ● Lazarus Energy, LLC, a Delaware limited liability company (LE). ● Lazarus Refining & Marketing, LLC, a Delaware limited liability company (LRM). ● Blue Dolphin Pipe Line Company (BDPL), a Delaware corporation. ● Blue Dolphin Petroleum Company, a Delaware corporation. ● Blue Dolphin Services Co., a Texas corporation. See "Part I, Item 1. Business and Item 2. Properties in our Form 10-K for the fiscal year ended December 31, 2016 (the Annual Report) as filed with the Securities and Exchange Commission (the SEC) for additional information regarding our operating subsidiaries, principal facilities, and assets. References in this Quarterly Report to we, us, and our are to Blue Dolphin and its subsidiaries unless otherwise indicated or the context otherwise requires. Operating Risks Going Concern ● Net Losses For the three months ended March 31, 2017, we reported a net loss of $1,849,950, or a loss of $0.18 per share, compared to a net loss of $2,149,084, or a loss of $0.21 per share, for the three months ended March 31, 2016. The $0.03 per share improvement in net loss between the periods was the result of a gain on the sale of property and lower refinery operating expenses. ● Working Capital Deficits We had a working capital deficit of $42,282,742 at March 31, 2017 compared to a working capital deficit of $37,812,263 at December 31, 2016. Excluding long-term debt, we had a working capital deficit of $9,211,863 at March 31, 2017, compared to working capital of $5,599,927 at December 31, 2016. The significant increase in working capital deficit between the periods primarily related to a decrease in cash and cash equivalents due to inventory buildup. ● Termination of Relationship with Genesis Energy, LP (Genesis) and GEL Tex Marketing, LLC (GEL) As previously disclosed, we are involved in an on-going dispute with GEL related to a Crude Oil Supply and Throughput Services Agreement (the Crude Supply Agreement) and a Joint Marketing Agreement (the Joint Marketing Agreement), each dated August 12, 2011. GEL materially breached these agreements in April 2016 by refusing to deliver our operational requirements of crude oil for an extended period. Consequently, we ceased purchases of crude oil and condensate from GEL under the Crude Supply Agreement in November 2016 and suspended the marketing and sale of refined petroleum products under the Joint Marketing Agreement following the processing of all crude oil and condensate supplied by GEL. The Crude Supply Agreement and Joint Marketing Agreement have been terminated. Arbitration proceedings related to the dispute with GEL are currently in progress. We are unable to predict the outcome of these proceedings or their ultimate impact, if any, on our business, financial condition, or results of operations. ● Crude Supply Issues We began using another crude oil and condensate supplier during 2016. We believe that adequate supplies of crude oil and condensate for the Nixon Facility will continue to be available to us from the new supplier. We are working to put a long-term crude supply agreement in place, however, our ability to purchase adequate supplies of crude oil and condensate is dependent on our liquidity and access to capital, which have been adversely affected by the contract-related dispute with GEL and other factors, as noted above. ● Financial Covenant Defaults At March 31, 2017, we were in violation of certain financial covenants in secured loan agreements with Sovereign Bank (Sovereign). Covenant defaults under the secured loan agreements would permit Sovereign to declare the amounts owed under these loan agreements immediately due and payable, exercise its rights with respect to collateral securing our obligations under these loan agreements, and/or exercise any other rights and remedies available. Sovereign waived the financial covenant defaults as of March 31, 2017. However, the debt associated with these loans was classified within the current portion of long-term debt on our consolidated balance sheet at March 31, 2017 due to the uncertainty of our ability to meet the financial covenants in the future. There can be no assurance that Sovereign will provide future waivers, which may have an adverse impact on our financial position and results of operations. We are taking aggressive actions to improve operations and liquidity by: (i) continuing with Nixon Facility capital improvements, including upgrading the refinerys heat exchangers and increasing petroleum storage tank capacity, (ii) increasing military jet fuel sales and low-sulfur diesel exports to Mexico, (iii) restructuring customer contracts as they come up for renewal to incorporate minimum sales volumes, (iv) working to secure a long-term crude oil and condensate supply arrangement, (v) exploring alternative funding sources for crude oil and condensate purchases, and (vi) seeking additional financing to meet ongoing liquidity needs. There can be no assurance that our plan will be successful or that we will be able to obtain additional financing on commercially reasonable terms or at all. For additional disclosures related to our agreements and the contract-related dispute with GEL, financial covenant violations, and risk factors that could materially affect our future results of operations, refer to the following sections within this Quarterly Report: ● Part I, Item 1. Financial Statements, Notes to Consolidated Financial Statements: Note (8) Related Party Transactions Note (11) Long-Term Debt, Net Note (19) Commitments and Contingencies Genesis Agreements and Legal Matters Note (20) Subsequent Events ● Part I, Item 2. Managements Discussion and Analysis of Financial Condition and Results of Operations: Key Relationships Relationship with Genesis and GEL Results of Operations Non-GAAP Financial Measures |
2. Basis of Presentation
2. Basis of Presentation | 3 Months Ended |
Mar. 31, 2017 | |
Accounting Policies [Abstract] | |
Basis of Presentation | The accompanying unaudited consolidated financial statements, which include Blue Dolphin and subsidiaries, have been prepared in accordance with U.S. generally accepted accounting principles (GAAP) for interim consolidated financial information and with the instructions to Form 10-Q and Article 10 of Regulation S-X. Accordingly, certain information and footnote disclosures normally included in our audited financial statements have been condensed or omitted pursuant to the SECs rules and regulations. Significant intercompany transactions have been eliminated in the consolidation. In managements opinion, all adjustments considered necessary for a fair presentation have been included, disclosures are adequate, and the presented information is not misleading. The consolidated balance sheet as of December 31, 2016 was derived from the audited financial statements at that date. The accompanying consolidated financial statements should be read in conjunction with the consolidated financial statements and notes thereto included in our Annual Report. Operating results for the three months ended March 31, 2017 are not necessarily indicative of the results that may be expected for the fiscal year ending December 31, 2017, or for any other period. |
3. Significant Accounting Polic
3. Significant Accounting Policies | 3 Months Ended |
Mar. 31, 2017 | |
Accounting Policies [Abstract] | |
Significant Accounting Policies | The summary of significant accounting policies of Blue Dolphin is presented to assist in understanding our consolidated financial statements. Our consolidated financial statements and accompanying notes are representations of management who is responsible for their integrity and objectivity. These accounting policies conform to GAAP and have been consistently applied in the preparation of our consolidated financial statements. Use of Estimates Cash and Cash Equivalents Restricted Cash Accounts Receivable and Allowance for Doubtful Accounts Inventory Property and Equipment Refinery and Facilities We record refinery and facilities at cost less any adjustments for depreciation or impairment. Adjustment of the asset and the related accumulated depreciation accounts are made for the refinery and facilities assets retirement and disposal, with the resulting gain or loss included in the consolidated statements of operations. For financial reporting purposes, depreciation of refinery and facilities assets is computed using the straight-line method using an estimated useful life of 25 years beginning when the refinery and facilities assets are placed in service. We did not record any impairment of our refinery and facilities assets for any period presented. Pipelines and Facilities Management performed periodic impairment testing of our pipeline and facilities assets in the fourth quarter of 2016. Upon completion of that testing, our pipeline assets were fully impaired. All pipeline transportation services to third-parties have ceased, existing third-party wells along our pipeline corridor have been permanently abandoned, and no new third-party wells are being drilled near our pipelines. However, management believes our pipeline assets have future value based on large-scale, third-party production facility expansion projects near the pipelines. Oil and Gas Properties Construction in Progress Intangibles Other Debt Issue Costs Revenue Recognition Refined Petroleum Products Revenue Tank Rental Revenue Easement Revenue Pipeline Transportation Revenue Deferred Revenue Income Taxes As of each reporting date, management considers new evidence, both positive and negative, to determine the realizability of deferred tax assets. Management considers whether it is more likely than not that a portion or all the deferred tax assets will be realized, which is dependent upon the generation of future taxable income prior to the expiration of any net operating loss (NOL) carryforwards. When management determines that it is more likely than not that a tax benefit will not be realized, a valuation allowance is recorded to reduce deferred tax assets. A significant piece of objective negative evidence evaluated was the cumulative loss incurred over the three-year period ended December 31, 2016. Such objective evidence limits the ability to consider other subjective evidence, such as our projections for future growth. Based on this evaluation, we recorded a full valuation allowance against the deferred tax assets as of December 31, 2016. FASB ASC guidance related to income taxes also prescribes a recognition threshold and measurement attribute for the financial statement recognition and measurement of a tax position taken or expected to be taken in a tax return, as well as guidance on derecognition, classification, interest and penalties, accounting in interim periods, disclosures, and transition. (See Note (16) Income Taxes for further information related to income taxes.) Impairment or Disposal of Long-Lived Assets Asset Retirement Obligations Management has concluded that there is no legal or contractual obligation to dismantle or remove the refinery and facilities assets. Further, management believes that these assets have indeterminate lives under FASB ASC guidance for estimating AROs because dates or ranges of dates upon which we would retire these assets cannot reasonably be estimated at this time. When a legal or contractual obligation to dismantle or remove the refinery and facilities assets arises and a date or range of dates can reasonably be estimated for the retirement of these assets, we will estimate the cost of performing the retirement activities and record a liability for the fair value of that cost using present value techniques. We recorded an ARO liability related to future asset retirement costs associated with dismantling, relocating, or disposing of our offshore platform, pipeline systems, and related onshore facilities, as well as for plugging and abandoning wells and restoring land and sea beds. We developed these cost estimates for each of our assets based upon regulatory requirements, structural makeup, water depth, reservoir characteristics, reservoir depth, equipment demand, current retirement procedures, and construction and engineering consultations. Because these costs typically extend many years into the future, estimating future costs are difficult and require management to make judgments that are subject to future revisions based upon numerous factors, including changing technology, political, and regulatory environments. We review our assumptions and estimates of future abandonment costs on an annual basis. (See Note (12) Asset Retirement Obligations for additional information related to our AROs.) Computation of Earnings Per Share The number of shares related to options, warrants, restricted stock, and similar instruments included in diluted EPS is based on the Treasury Stock Method prescribed in FASB ASC guidance for computation of EPS. This method assumes theoretical repurchase of shares using proceeds of the respective stock option or warrant exercised, and, for restricted stock, the amount of compensation cost attributed to future services that has not yet been recognized and the amount of any current and deferred tax benefit that would be credited to additional paid-in-capital upon the vesting of the restricted stock, at a price equal to the issuers average stock price during the related earnings period. Accordingly, the number of shares includable in the calculation of EPS in respect of the stock options, warrants, restricted stock, and similar instruments is dependent on this average stock price and will increase as the average stock price increases. (See Note (17) Earnings Per Share for additional information related to EPS.) Treasury Stock New Pronouncements Adopted ASU 2015-11, Inventory (Topic 330): Simplifying the Measurement of Inventory New Pronouncements Issued, Not Yet Effective ASU 2017-04, Intangibles Goodwill and Other (Topic 350): Simplifying the Test for Goodwill Impairment. ASU 2016-13, Financial Instruments Credit Losses (Topic 326): Measurement of Credit Losses on Financial Instruments) ASU 2016-02, Leases (Topic 842) Other new pronouncements issued but not yet effective are not expected to have a material impact on our financial position, results of operations, or liquidity. Reclassification |
4. Business Segment Information
4. Business Segment Information | 3 Months Ended |
Mar. 31, 2017 | |
Segment Reporting [Abstract] | |
Business Segment Information | Effective January 1, 2017, we began reporting a single business segment Refinery Operations. Business activities related to our Refinery Operations business segment are conducted at the Nixon Facility. Due to their small size, current and prior period amounts associated with Pipeline Transportation operations have been reclassified to Corporate and Other. Pipeline Transportation operations diminished significantly as services to third-parties ceased and third-party wells along our pipeline corridor were permanently abandoned. Business segment information for the periods indicated (and as of the dates indicated), was as follows: Three Months Ended March 31, 2017 2016 Segment Segment Refinery Refinery Operations Corporate & Other Total Operations Corporate &Other Total Revenue from operations $ 52,605,749 $ - $ 52,605,749 $ 31,484,624 $ 27,652 $ 31,512,276 Less: cost of operations(1) (55,195,761 ) (430,622 ) (55,626,383 ) (34,422,853 ) (346,903 ) (34,769,756 ) Other non-interest income(2) - 2,216,251 2,216,251 - 130,665 130,665 Less: JMA Profit Share(3) - - - 671,092 - 671,092 EBITDA(4) $ (2,590,012 ) $ 1,785,629 $ (2,267,137 ) $ (188,586 ) Depletion, depreciation and amortization (451,025 ) (440,453 ) Interest expense, net (594,542 ) (418,809 ) Income (loss) before income taxes ) ) Income tax benefit - 1,165,901 Net income (loss) $ (1,849,950 ) $ (2,149,084 ) Capital expenditures $ 2,031,094 $ - $ 2,031,094 $ 4,745,850 $ - $ 4,745,850 Identifiable assets $ 73,246,878 $ 1,068,383 $ 74,315,261 $ 87,970,266 $ 7,237,943 $ 95,208,209 (1) Operation cost within the Refinery Operations segment includes related general and administrative expenses. Operation cost within Corporate and Other includes general and administrative expenses associated with corporate maintenance costs (such as accounting fees, director fees, and legal expense), as well as expenses associated with our pipeline assets and oil and/or gas leasehold interests (such as accretion and impairment expenses). (2) Other non-interest income reflects FLNG Land II, Inc. (FLNG) easement revenue. (See Note (19) Commitments and Contingencies FLNG Easements for further discussion related to FLNG.) (3) The JMA Profit Share represents the GEL Profit Share plus the Performance Fee for the period pursuant to the Joint Marketing Agreement, which has terminated. (See Note (19) Commitments and Contingencies Genesis Agreements for further discussion related to the Joint Marketing Agreement and the contract-related dispute with GEL.) (4) EBITDA is a non-GAAP financial measure. See Part I, Item 2. Managements Discussion and Analysis of Financial Condition and Results of Operations Results of Operations Non-GAAP Financial Measures for additional information related to EBITDA. |
5. Prepaid Expenses and Other C
5. Prepaid Expenses and Other Current Assets | 3 Months Ended |
Mar. 31, 2017 | |
Deferred Costs, Capitalized, Prepaid, and Other Assets Disclosure [Abstract] | |
Prepaid Expenses and Other Current Assets | Prepaid expenses and other current assets as of the dates indicated consisted of the following: March 31, December 31, 2017 2016 Prepaid crude oil and condensate $ 1,337,252 $ - Prepaid insurance 263,180 248,853 Short-term tax bond - 505,000 Prepaid exise taxes - 292,338 $ 1,600,432 $ 1,046,191 |
6. Inventory
6. Inventory | 3 Months Ended |
Mar. 31, 2017 | |
Inventory Disclosure [Abstract] | |
Inventory | Inventory as of the dates indicated consisted of the following: March 31, December 31, 2017 2016 Jet fuel $ 2,401,460 $ 964,124 HOBM 1,119,732 212,987 Crude oil and condensate 410,842 26,123 AGO 197,140 143,362 Chemicals 135,678 182,751 Naphtha 122,748 533,580 Propane 18,101 11,318 LPG mix 4,253 1,293 $ 4,409,954 $ 2,075,538 |
7. Property, Plant and Equipmen
7. Property, Plant and Equipment, Net | 3 Months Ended |
Mar. 31, 2017 | |
Property, Plant and Equipment [Abstract] | |
Property, Plant and Equipment, Net | Property, plant and equipment, net, as of the dates indicated consisted of the following: March 31, December 31, 2017 2016 Refinery and facilities $ 51,004,382 $ 50,814,309 Land 566,159 602,938 Other property and equipment 652,795 652,795 52,223,336 52,070,042 Less: Accumulated depletion, depreciation, and amortization (7,136,269 ) (6,685,244 ) 45,087,067 45,384,798 Construction in progress 18,817,465 16,939,665 $ 63,904,532 $ 62,324,463 We capitalize interest cost incurred on funds used to construct property, plant, and equipment. The capitalized interest is recorded as part of the asset to which it relates and is depreciated over the assets useful life. Interest cost capitalized was $2,526,041 and $2,108,298 at March 31, 2017 and December 31, 2016, respectively. |
8. Related Party Transactions
8. Related Party Transactions | 3 Months Ended |
Mar. 31, 2017 | |
Related Party Transactions [Abstract] | |
Related Party Transactions | We are party to several agreements with related parties. We believe these related party transactions were consummated on terms equivalent to those that prevail in arm's-length transactions. Related Parties LEH Ingleside Crude, LLC (“Ingleside”) Lazarus Marine Terminal I, LLC (“LMT”) Jonathan Carroll Operations Related Agreements . Amended and Restated Operating Agreement Jet Fuel Sales Agreement Terminal Services Agreement Amended and Restated Tank Lease Agreement Tolling Agreement Financial Agreements . Loan and Security Agreement The proceeds of the LEH Loan Agreement were used for working capital. There are no financial maintenance covenants associated with the LEH Loan Agreement. The LEH Loan Agreement is secured by the BDPL Property. Outstanding principal and interest less associated debt issue costs owed to LEH under the LEH Loan Agreement are reflected in long-term debt, related party, current portion and long-term debt, related party, net of current portion in our consolidated balance sheets. Promissory Notes ● LEH Note ● Amended and Restated Ingleside Note ● Amended and Restated Carroll Note Guaranty Fee Agreements Financial Statements Impact Consolidated Balance Sheets March 31, December 31, 2017 2016 LEH $ 4,440,815 $ 4,000,000 Ingleside 1,195,723 722,278 Jonathan Carroll 775,442 592,412 6,411,980 5,314,690 Less: Long-term debt, related party, current portion (500,000 ) (500,000 ) $ 5,911,980 $ 4,814,690 Accrued interest associated with the LEH Loan Agreement was $403,556 and $243,556 at March 31, 2017 and December 31, 2016, respectively. There was no accrued interest associated with the LEH Note, the Amended and Restated Ingleside Note, and the Amended and Restated Carroll Note. Consolidated Statements of Operations Related party cost of goods sold associated with the Tolling Agreement with LMT totaled $151,200 and $0 for the three months ended March 31, 2017 and 2016. Related party refinery operating expenses associated with the Amended and Restated Operating Agreement with LEH and the Amended and Restated Tank Lease Agreement with Ingleside for the periods indicated were as follows: Three Months Ended March 31, 2017 2016 Amount Per bbl Amount Per bbl LEH $ 2,813,103 $ 2.80 $ 3,162,017 $ 2.67 Ingleside - - 274,998 $ 0.23 $ 2,813,103 $ 2.80 $ 3,437,015 $ 2.90 Interest expense associated with the LEH Loan Agreement and Guaranty Fee Agreements for the periods indicated was as follows: Three Months Ended March 31, 2017 2016 LEH $ 207,294 $ - Jonathan Carroll 167,825 176,388 $ 375,119 $ 176,388 |
9. Notes payable
9. Notes payable | 3 Months Ended |
Mar. 31, 2017 | |
Notes Payable [Abstract] | |
Notes Payable | Our notes payable consist of a short-term note for financing costs, as follows: March 31, December31, 2017 2016 Short-term note for financing costs $ 89,660 $ - $ 89,660 $ - Short-Term Note for Financing Services |
10. Accrued Expenses and Other
10. Accrued Expenses and Other Current Liabilities | 3 Months Ended |
Mar. 31, 2017 | |
Disclosure Text Block Supplement [Abstract] | |
Accrued Expenses and Other Current Liabilities | Accrued expenses and other current liabilities as of the dates indicated consisted of the following: March 31, December 31, 2017 2016 Unearned revenue $ 1,336,302 $ 408,770 Customer deposits 450,000 450,000 Board of director fees payable 168,929 136,429 Other payable 113,123 189,719 Insurance 88,206 67,783 Excise and income taxes payable 50,957 24,187 Property taxes 36,236 4,694 $ 2,243,753 $ 1,281,582 |
11. Long-Term Debt, Net
11. Long-Term Debt, Net | 3 Months Ended |
Mar. 31, 2017 | |
Debt Disclosure [Abstract] | |
Long-Term Debt, Net | Long-term debt, net, which includes related-party, represents the outstanding principal and interest of our long-term debt less associated debt issue costs. Long-term debt, net as of the dates indicated consisted of the following: March 31, December 31, 2017 2016 First Term Loan Due 2034 $ 23,745,152 $ 23,924,607 Second Term Loan Due 2034 9,663,450 9,729,853 LEH Loan Agreement 4,000,000 4,000,000 Amended and Restated Ingleside Note 1,195,723 722,278 Notre Dame Debt 1,300,000 1,300,000 Amended and Restated Carroll Note 775,442 592,412 LEH Note 440,815 - Term Loan Due 2017 - 184,994 Capital Leases 93,153 135,879 $ 41,213,735 $ 40,590,023 Less: Current portion of long-term debt, net (33,070,879 ) (32,212,336 ) Less: Unamortized debt issue costs (2,230,876 ) (2,262,997 ) $ 5,911,980 $ 6,114,690 Debt issue costs, which relate to secured loan agreements with Sovereign, as of the dates indicated consisted of the following: March 31, December 31, 2017 2016 First Term Loan Due 2034 $ 1,673,545 $ 1,673,545 Second Term Loan Due 2034 767,673 767,673 Less: Accumulated amortization (210,342 ) (178,221 ) $ 2,230,876 $ 2,262,997 Amortization expense associated with our long-term debt, net, which is included in interest expense, was $32,121 and $31,869 for the three months ended March 31, 2017 and 2016, respectively. Accrued interest associated with our long-term debt, net is reflected as interest payable, current portion and long-term interest payable, net of current portion in our consolidated balance sheets and includes related party interest. Accrued interest as of the dates indicated consisted of the following: March 31, December 31, 2017 2016 Notre Dame Debt $ 1,742,673 $ 1,691,383 LEH Loan Agreement 403,556 243,556 Second Term Loan Due 2034 45,726 44,984 First Term Loan Due 2034 28,090 33,866 Capital Leases 795 1,165 Term Loan Due 2017 - 185 2,220,840 2,015,139 Less: Interest payable, current portion (2,220,840 ) (323,756 ) $ - $ 1,691,383 Related Party First Term Loan Due 2034 providing for a term loan in the principal amount of $25.0 million At March 31, 2017, LE was in violation of the debt service coverage ratio, the current ratio, and debt to net worth ratio financial covenants related to the First Term Loan Due 2034. Consequently, Sovereign could declare the amounts owed under the First Term Loan Due 2034 immediately due and payable, exercise its rights with respect to collateral securing LEs obligations under the loan agreement, and/or exercise any other rights and remedies available. Sovereign waived the financial covenant defaults as of March 31, 2017. However, the debt associated with the loan was classified within the current portion of long-term debt on our consolidated balance sheet at March 31, 2017 due to the uncertainty of our ability to meet the financial covenants in the future. There can be no assurance that Sovereign will provide future waivers, which may have an adverse impact on our financial position and results of operations. (See Note (1) Organization Operating Risks-Going Concern and Note (20) Subsequent Events for additional disclosures related to the First Term Loan Due 2034 and financial covenant violations.) As a condition of the First Term Loan Due 2034, Jonathan Carroll was required to guarantee r epayment A portion of the proceeds of the First Term Loan Due 2034 were used to refinance approximately $8.5 million of debt owed under a previous debt facility with American First National Bank. Remaining proceeds are being used primarily to construct new petroleum storage tanks at the Nixon Facility. The First Term Loan Due 2034 is secured by: (i) a first lien on all Nixon Facility business assets (excluding accounts receivable and inventory), (ii) assignment of all Nixon Facility contracts, permits, and licenses, (iii) absolute assignment of Nixon Facility rents and leases, including tank rental income, (iv) a $1.0 million payment reserve account held by Sovereign, and (v) a pledge of $5.0 million of a life insurance policy on Jonathan Carroll. The First Term Loan Due 2034 contains representations and warranties, affirmative, restrictive, and financial covenants, as well as events of default which are customary for bank facilities of this type. Second Term Loan Due 2034 At March 31, 2017, LRM was in violation of the debt service coverage ratio, the current ratio, and the debt to net worth ratio financial covenants related to the Second Term Loan Due 2034. Consequently, Sovereign could declare the amounts owed under the Second Term Loan Due 2034 immediately due and payable, exercise its rights with respect to collateral securing LRMs obligations under the loan agreement, and/or exercise any other rights and remedies available. Sovereign waived the financial covenant defaults as of March 31, 2017. However, the debt associated with the loan was classified within the current portion of long-term debt on our consolidated balance sheet at March 31, 2017 due to the uncertainty of our ability to meet the financial covenants in the future. There can be no assurance that Sovereign will provide future waivers, which may have an adverse impact on our financial position and results of operations. (See Note (1) Organization Operating Risks-Going Concern and Note (20) Subsequent Events for additional disclosures related to the Second Term Loan Due 2034 and financial covenant violations.) As a condition of the Second Term Loan Due 2034, Jonathan Carroll was required to guarantee repayment of funds borrowed and interest accrued under the loan. For his personal guarantee, LRM entered a Guaranty Fee Agreement with Jonathan Carroll whereby he receives a fee equal to 2.00% per annum, paid monthly, of the outstanding principal balance owed under the Second Term Loan Due 2034. For the three months ended March 31, 2017 and 2016, guaranty fees related to the Second Term Loan Due 2034 totaled $48,423 and $49,747, respectively. Guaranty fees are recognized monthly as incurred and are included in interest and other expense in our consolidated statements of operations. LEH, LE and Blue Dolphin also guaranteed the Second Term Loan Due 2034. (See Note (8) Related Party Transactions for additional disclosures related to LEH and Jonathan Carroll; see Note (20) Subsequent Events for further discussion related to guaranty fee agreements.) A portion of the proceeds of the Second Term Loan Due 2034 were used to refinance a previous bridge loan from Sovereign in the amount of $3.0 million. Remaining proceeds are being used primarily to construct additional new petroleum storage tanks at the Nixon Facility. The Second Term Loan Due 2034 is secured by: (i) a second priority lien on the rights of LE in the Nixon Facility and the other collateral of LE pursuant to a security agreement; (ii) a first priority lien on the real property interests of LRM; (iii) a first priority lien on all of LRMs fixtures, furniture, machinery and equipment; (iv) a first priority lien on all of LRMs contractual rights, general intangibles and instruments, except with respect to LRMs rights in its leases of certain specified tanks, with respect to which Sovereign has a second priority lien in such leases subordinate to a prior lien granted by LRM to Sovereign to secure obligations of LRM under the Term Loan Due 2017; and (v) all other collateral as described in the security documents. The Second Term Loan Due 2034 contains representations and warranties, affirmative, restrictive, and financial covenants, as well as events of default which are customary for bank facilities of this type. Notre Dame Debt The Notre Dame Debt is secured by a Deed of Trust, Security Agreement and Financing Statements (the Subordinated Deed of Trust), which encumbers the Nixon Facility and general assets of LE. There are no financial maintenance covenants associated with the Notre Dame Debt. Pursuant to a Subordination Agreement dated June 2015, the holder of the Notre Dame Debt agreed to subordinate any security interest and liens on the Nixon Facility, as well as its right to payments, in favor of Sovereign as holder of the First Term Loan Due 2034. Term Loan Due 2017 As a condition of the Term Loan Due 2017, Jonathan Carroll was required to guarantee r epayment Capital Leases A summary of equipment held under long-term capital leases as of the dates indicated follows: March 31, December 31, 2017 2016 Boiler equipment $ 538,598 $ 538,598 Less: accumulated depreciation - - $ 538,598 $ 538,598 |
12. Asset Retirement Obligation
12. Asset Retirement Obligations | 3 Months Ended |
Mar. 31, 2017 | |
Asset Retirement Obligation Disclosure [Abstract] | |
Asset Retirement Obligations | Refinery and Facilities Pipelines and Facilities and Oil and Gas Properties Changes to our ARO liability for the periods indicated were as follows: March 31, December 31, 2017 2016 Asset retirement obligations, at the beginning of the period $ 2,027,639 $ 1,985,864 Liabilities settled - (70,969 ) Accretion expense 71,844 112,744 2,099,483 2,027,639 Less: asset retirement obligations, current portion (17,510 ) (17,510 ) Long-term asset retirement obligations, at the end of the period $ 2,081,973 $ 2,010,129 Liabilities settled represents amounts paid for plugging and abandonment costs against the assets ARO liability. At March 31, 2017 and December 31, 2016, we recognized $0 and $70,969, respectively, in liabilities settled. Abandonment expense represents amounts paid for plugging and abandonment costs that exceed the assets ARO liability. For the three months ended March 31, 2017 and 2016, we recognized $0 in abandonment expense. |
13. Treasury Stock
13. Treasury Stock | 3 Months Ended |
Mar. 31, 2017 | |
Equity [Abstract] | |
Treasury Stock | At March 31, 2017 and December 31, 2016, we had 150,000 shares of treasury stock. |
14. Concentration of Risk
14. Concentration of Risk | 3 Months Ended |
Mar. 31, 2017 | |
Risks and Uncertainties [Abstract] | |
Concentration of Risk | Bank Accounts Key Supplier We purchased light crude oil and condensate for the Nixon Facility from GEL pursuant to the Crude Supply Agreement. GEL materially breached the Crude Supply Agreement in April 2016 by refusing to deliver our operational requirements for crude oil for an extended period. Consequently, we ceased purchases of crude oil and condensate from GEL under the Crude Supply Agreement in November 2016. The Crude Supply Agreement has terminated. As previously disclosed, we are involved in an on-going dispute with GEL related to the Crude Supply Agreement. Arbitration proceedings related to the dispute with GEL are currently in progress. We are unable to predict the outcome of these proceedings or their ultimate impact, if any, on our business, financial condition, or results of operations. (See Part I, Item 1A. Risk Factors in our Annual Report, as well as Part I, Item 1 Financial Statements Note (19) Commitments and Contingencies Genesis Agreements and Legal Matters in this Quarterly Report for disclosures related to the Crude Supply Agreement and the current contract-related dispute with GEL.) We currently have in place a month-to-month evergreen crude supply contract with a major integrated oil and gas company. We believe that adequate supplies of crude oil and condensate for the Nixon Facility are and will continue to be available to us from our new supplier. We are working to put a long-term crude supply agreement in place, however, our ability to purchase crude oil and condensate is dependent on our liquidity and access to capital, which have been adversely affected by net losses, working capital deficits, the contract-related dispute with GEL, and financial covenant defaults in secured loan agreements. Significant Customers For the three months ended March 31, 2017, we had 3 customers that accounted for approximately 82% of our refined petroleum product sales. At March 31, 2017, these 3 customers represented approximately $0 million in accounts receivable. For the three months ended March 31, 2016, we had 5 customers that accounted for approximately 75% of our refined petroleum products sales. These 5 customers represented approximately $2.3 million in accounts receivable at March 31, 2016. For the three months ended March 31, 2017, LEH, a related party, was 1 of our 3 significant customers. LEH accounted for approximately 36% of our refined petroleum product sales for the three months ended March 31, 2017. LEH, which purchases our jet fuel and resells the jet fuel to a government agency, represented approximately $0 million in accounts receivable at March 31, 2017. LEH was not a significant customer for the three months ended March 31, 2016. (See Note (8) Related Party Transactions for additional disclosures related to our sale of jet fuel to LEH under the Jet Fuel Sales Agreement and the associated storage of LEHs purchased jet fuel under the Terminal Services Agreement.) Refined Petroleum Product Sales Three Months Ended March 31, 2017 2016 LPG mix $ 120,542 0.2 % $ 250,547 0.8 % Naphtha 13,762,944 26.5 % 9,025,521 28.9 % Jet fuel 15,399,994 29.7 % 8,506,313 27.3 % HOBM 10,685,740 20.6 % 3,163,495 10.1 % Reduced Crude - 0.0 % 3,245,807 10.4 % AGO 11,932,818 23.0 % 7,001,454 22.5 % $ 51,902,038 100.0 % $ 31,193,137 100.0 % |
15. Leases
15. Leases | 3 Months Ended |
Mar. 31, 2017 | |
Leases, Operating [Abstract] | |
Leases | Our company headquarters is in downtown Houston, Texas. We lease 13,878 square feet of office space, 7,389 square feet of which is used and paid for by LEH. The office lease has a 10-year term that expires in September 2017. The lease included a free rent period, has escalating rent payment provisions, and requires payment of a portion of operating expenses. Rent expense is recognized on a straight-line basis. For the three months ended March 31, 2017 and 2016, rent expense totaled $31,081 and $29,857, respectively. |
16. Income Taxes
16. Income Taxes | 3 Months Ended |
Mar. 31, 2017 | |
Income Tax Disclosure [Abstract] | |
Income Taxes | Income Tax Benefit Deferred Income Taxes NOL Carryforwards NOL carryforwards that remained available for future use for the periods indicated were as follow (amounts shown are net of NOLs that will expire unused because of the IRC Section 382 limitation): Net Operating Loss Carryforward Pre-Ownership Change Post-Ownership Change Total Balance at December 31, 2015 $ 9,614,449 $ 9,616,941 $ 19,231,390 Net operating losses - 13,945,128 13,945,128 Balance at December 31, 2016 $ 9,614,449 $ 23,562,069 $ 33,176,518 Net operating losses - 2,816,718 2,816,718 Balance at March 31, 2017 $ 9,614,449 $ 26,378,787 $ 35,993,236 Deferred Tax Assets and Liabilities March 31, December 31, 2017 2016 Deferred tax assets: Net operating loss and capital loss carryforwards $ 14,508,022 $ 13,550,338 Start-up costs (Nixon Facility) 1,339,029 1,373,363 Asset retirement obligations liability/deferred revenue 738,633 717,751 AMT credit and other 237,818 266,522 Total deferred tax assets 16,823,502 15,907,974 Deferred tax liabilities: Basis differences in property and equipment (6,182,489 ) (5,895,943 ) Total deferred tax liabilities (6,182,489 ) (5,895,943 ) 10,641,013 10,012,031 Valuation allowance (10,641,013 ) (10,012,031 ) Deferred tax assets, net $ - $ - Valuation Allowance Uncertain Tax Positions As part of this guidance, we record income tax related interest and penalties, if applicable, as a component of the provision for income tax benefit (expense). However, there were no amounts recognized relating to interest and penalties in the consolidated statements of operations for the three months ended March 31, 2017 and 2016. Our federal income tax returns are subject to examination by the Internal Revenue Service for tax years ending December 31, 2013, or after and by the state of Texas for tax years ending December 31, 2012, or after. We believe there are no uncertain tax positions for both federal and state income taxes. |
17. Earnings Per Share
17. Earnings Per Share | 3 Months Ended |
Mar. 31, 2017 | |
Earnings Per Share [Abstract] | |
Earnings Per Share | A reconciliation between basic and diluted income per share for the periods indicated was as follows: Three Months Ended March 31, 2017 2016 Net income (loss) $ (1,849,950 ) $ (2,149,084 ) Basic and diluted income per share $ (0.18 ) $ (0.21 ) Basic and Diluted Weighted average number of shares of common stock outstanding and potential dilutive shares of common stock 10,474,714 10,457,794 Diluted EPS is computed by dividing net income available to common stockholders by the weighted average number of shares of common stock outstanding. Diluted EPS for the three months ended March 31, 2017 and 2016 was the same as basic EPS as there were no stock options or other dilutive instruments outstanding. |
18. Inventory Risk Management
18. Inventory Risk Management | 3 Months Ended |
Mar. 31, 2017 | |
Derivative Instruments and Hedging Activities Disclosure [Abstract] | |
Inventory Risk Management | Management periodically determines whether to maintain, increase, or decrease inventory levels based on various factors, including the crude pricing market in the U.S. Gulf Coast region, the refined petroleum products market in the same region, the relationship between these two markets, fulfilling contract demands, and other factors that may impact our operations, financial condition, and cash flows. Under our inventory risk management policy, commodity futures contracts may be used to mitigate the change in value for certain of our refined petroleum product inventories subject to market price fluctuations in our inventory. The physical inventory volumes are not exchanged, and these contracts are net settled with cash. When active, the fair value of commodity futures contracts is reflected in our consolidated balance sheets and the related net gain or loss is recorded within cost of refined products sold in our consolidated statements of operations. Quoted prices for identical assets or liabilities in active markets (Level 1) are considered to determine the fair values for marking to market the financial instruments at each period end. Commodity transactions are executed to minimize transaction costs, monitor consolidated net exposures, and allow for increased responsiveness to changes in market factors. Due to mark-to-market accounting during the term of the commodity futures contracts, significant unrealized non-cash net gains and losses could be recorded in our results of operations. At March 31, 2017, we had no futures contracts of refined petroleum products and crude oil and condensate that were entered as economic hedges. We also had no derivative instruments that were reported in our consolidated balance sheets at March 31, 2017 and December 31, 2016. The following table provides the effect of derivative instruments in our consolidated statements of operations for the three months ended March 31, 2017 and 2016: Gain (Loss) Recognized Three Months Ended March 31, Derivatives Statements of Operations Location 2017 2016 Commodity contracts Cost of refined products sold $ - $ (492,528 ) |
19. Commitments and Contingenci
19. Commitments and Contingencies | 3 Months Ended |
Mar. 31, 2017 | |
Commitments and Contingencies Disclosure [Abstract] | |
Commitments and Contingencies | Amended and Restated Operating Agreement Genesis Agreements Crude Supply Agreement Joint Marketing Agreement GEL materially breached these agreements in April 2016 by refusing to deliver our operational requirements of crude oil for an extended period. Consequently, we ceased purchases of crude oil and condensate from GEL under the Crude Supply Agreement in November 2016 and suspended the marketing and sale of refined petroleum products under the Joint Marketing Agreement following the processing of all crude oil and condensate supplied by GEL. The Joint Marketing Agreement has terminated. GEL Contract-Related Dispute FLNG Easements In February 2017, BDPL sold approximately 15 acres of certain of the BDPL Property to FLIQ Common Facilities, LLC, an affiliate of FLNG, for cash proceeds of approximately $535,000. In conjunction with the sale of real estate, FLNG paid to BDPL approximately $1,336,000 as consideration for the full satisfaction and discharge of FLNGs future annual payment and other obligations to BDPL under the FLNG Easements. Excluding the value of the land from the proceeds, we recognized a gain totaling $1,834,500 related to the FLNG transactions for the three months ended March 31, 2017. Supplemental Pipeline Bonds In October 2016, we received a letter from the BOEM summarizing the amount required as additional security on our existing pipeline rights-of-way. The letter, which is a courtesy and does not constitute a formal order by the BOEM, requested that we provide additional supplemental pipeline bonds or acceptable financial reassurance of approximately $4.6 million. At March 31, 2017 and December 31, 2016, we maintained approximately $0.9 million in credit and cash-backed pipeline rights-of-way bonds issued to the BOEM. Of the five (5) pipeline rights-of-ways reflected in the BOEMs October 2016 letter: (i) the pipeline associated with one (1) right-of-way was decommissioned in 1997, and (ii) the pipelines associated with three (3) rights-of-way (Segment Nos. 15635, 13101, and 9428) are the subject of decommissioning permit requests submitted to the Bureau of Safety and Environmental Enforcement (the BSEE) by Blue Dolphin in April 2016 (the request for Segment No. 9428 also requires approval by the U.S. Army Corps of Engineers). In August 2016, BSEE approved decommissioning operations for Segment No. 15635. In April 2017, BSEE approved removal of the junction platform associated with Segment No. 13101, and the U.S. Army Corps of Engineers posted public notice related to the decommissioning request for Segment No. 9428. There can be no assurance that the BOEM will accept a reduced amount of supplemental financial assurance or not require additional supplemental pipeline bonds related to our existing pipeline rights-of-way. If we are required by the BOEM to provide significant additional supplemental bonds or acceptable financial assurance, we may experience a significant and material adverse effect on our operations, liquidity, and financial condition. Financing Agreements Nixon Facility Expansion e Legal Matters GEL Contract-Related Dispute. In May 2016, GEL filed, in state district court in Harris County, Texas, a petition and application for a temporary restraining order, temporary injunction, and permanent injunction (the Petition) against LE and LEH. The Petition alleges that LE breached the Joint Marketing Agreement, and that LEH tortiously interfered with the Joint Marketing Agreement, in connection with an agreement by LEH to supply jet fuel acquired from LE to a government agency. The Petition primarily sought temporary and permanent injunctions related to sales of product from the Nixon Facility to this customer. In June 2016, the court issued a temporary injunction against LE and LEH as requested by GEL. LE believes that GELs claims in the Petition are without merit and is defending the matter vigorously. In a matter separate from the above referenced Petition, LE asserted that GEL materially breached the parties agreements in April 2016 by refusing to deliver our operational requirements of crude oil for an extended period. LE filed a demand for arbitration in June 2016, pursuant to the terms of a Dispute Resolution Agreement between the parties (the Arbitration). The Arbitration alleges that GEL breached the Crude Supply Agreement by: (i) overcharging for crude oil and condensate based on Genesis cost as defined in the Crude Supply Agreement, (ii) overcharging for trucking costs, and (iii) significantly under-delivering crude oil and condensate, resulting in significant refinery downtime and significant decreases in refinery throughput, refinery production, and refined petroleum product sales during 2016. GEL has made counter claims in the Arbitration with allegations against LE like those made in the Petition. GEL is seeking substantial damages, as well as recovery of attorneys fee and costs, totaling approximately $44.0 million in the aggregate, based on allegations of breach of contract, fraudulent transfer and unjust enrichment. We believe GELs counter claims are without merit and are defending them vigorously in the Arbitration. GEL recently relinquished its claims for equitable and declaratory relief and its ability to keep the contracts in force and effect on a going-forward basis. Thus, the Crude Supply Agreement and the Joint Marketing Agreement have terminated. The contract-related dispute has affected our ability to obtain financings, prevented us from taking advantage of business opportunities, disrupted normal business operations, and diverted managements focus away from operations. We expect these effects to continue until the dispute is resolved. We are unable to predict the outcome of the current proceedings with Genesis and GEL or their ultimate impact, if any, on our business, financial condition or results of operations. Accordingly, we have not recorded an asset or a liability on our consolidated balance sheet at March 31, 2017. Any determination by the arbitrator that we owe significant damages to GEL would have a material adverse effect on our business, liquidity and financial condition and results of operations. If GEL were awarded significant damages, we may not be able to pay such damages, which would affect our ability to continue as a going concern. Other Legal Matters Health, Safety and Environmental Matters |
20. Subsequent Events
20. Subsequent Events | 3 Months Ended |
Mar. 31, 2017 | |
Subsequent Events [Abstract] | |
Subsequent Events | Financial Covenant Defaults By letter dated May 10, 2017, Sovereign waived the financial covenant defaults as of March 31, 2017. However, the debt associated with these loans was classified within the current portion of long-term debt on our consolidated balance sheets due to the uncertainty of our ability to meet the financial covenants in the future. There can be no assurance that Sovereign will provide future waivers, which may have an adverse impact on our financial position and results of operations. LEH Note On May 9, 2017, the Board approved the LEH Note effective March 31, 2017. The LEH Note has a principal amount of $440,815, accrues interest, compounded annually, at a rate of 8.00%, and matures in January 2019. Under the LEH Note, prepayment, in whole or in part, is permissible at any time and from time to time, without premium or penalty. (See Note (8) Related Party Transactions and Part II, Item 5. Other Information for additional disclosures related to the LEH Note.) Amended and Restated Ingleside Note On May 9, 2017, the Board approved the Amended and Restated Ingleside Note. The Amended and Restated Ingleside Note has a principal amount of $1,195,723, accrues interest, compounded annually, at a rate of 8.00%, and matures in January 2019. Under the Amended and Restated Ingleside Note, prepayment, in whole or in part, is permissible at any time and from time to time, without premium or penalty. (See Note (8) Related Party Transactions and Part II, Item 5. Other Information for additional disclosures related to the Amended and Restated Ingleside Note.) Amended and Restated Carroll Note On May 9, 2017, the Board approved the Amended and Restated Carroll Note. The Amended and Restated Carroll Note has a principal amount of $775,442, accrues interest, compounded annually, at a rate of 8.00%, and matures in January 2019. Under the Amended and Restated Carroll Note, prepayment, in whole or in part, is permissible at any time and from time to time, without premium or penalty. (See Note (8) Related Party Transactions and Part II, Item 5. Other Information for additional disclosures related to the Amended and Restated Carroll Note.) Amended and Restated Operating Agreement As previously disclosed, we are involved in an on-going dispute with GEL related to the Crude Supply Agreement and Joint Marketing Agreement, each dated August 12, 2011. Pursuant to an Operating Agreement (the Operating Agreement) dated February 15, 2012 between LEH, LE, and Blue Dolphin, the Operating Agreement expired upon the earliest to occur of: (a) the date of the termination of the Joint Marketing Agreement pursuant to its terms, (b) August 2018, or (c) upon written notice of either party of a material breach of the Operating Agreement by the other party. Due to termination of the Joint Marketing Agreement, the Operating Agreement was amended and restated to modify the compensation and term provisions. The Board approved the Amended and Restated Operating Agreement on May 9, 2017 with an effective date of April 1, 2017. For services rendered under the Amended and Restated Operating Agreement, we reimburse LEH at cost plus five percent (5%) for all reasonable Blue Dolphin expenses incurred while LEH performs the Services. The Amended and Restated Operating Agreement expires: (i) April 1, 2020, (ii) upon written notice of either party to the Amended and Restated Operating Agreement of a material breach by the other party, or (iii) upon 90 days’ notice by the Board if the Board determines that the Amended and Restated Operating Agreement is not in our best interest. (See “Note (8) Related Party Transactions” and “Part II, Item 5. Other Information” for additional disclosures related to the Amended and Restated Operating Agreement.) |
3. Significant Accounting Pol26
3. Significant Accounting Policies (Policies) | 3 Months Ended |
Mar. 31, 2017 | |
Accounting Policies [Abstract] | |
Use of Estimates | Use of Estimates |
Cash and Cash Equivalents | Cash and Cash Equivalents |
Restricted Cash | Restricted Cash . Restricted cash (current portion) primarily represents: (i) amounts held in our disbursement account with Sovereign attributable to construction invoices awaiting payment from that account, (ii) a payment reserve account held by Sovereign as security for payments under a loan agreement, and (iii) a construction contingency account under which Sovereign will fund contingencies. Restricted cash, noncurrent represents funds held in the Sovereign disbursement account for payment of future construction related expenses to build new petroleum storage tanks. At March 31, 2017, total restricted cash was $3,521,805, comprised of restricted cash (current portion) totaling $2,756,713 and restricted cash, noncurrent totaling $765,092. At December 31, 2016, total restricted cash was $4,930,140, comprised of restricted cash (current portion) totaling $3,347,835 and restricted cash, noncurrent totaling $1,582,305 (See Note (11) Long-Term Debt, Net for additional disclosures related to our loan agreements with Sovereign.) |
Accounts Receivable and Allowance for Doubtful Accounts | Accounts Receivable and Allowance for Doubtful Accounts . Accounts receivable are customer obligations due under normal trade terms. The allowance for doubtful accounts represents our estimate of the amount of probable credit losses existing in our accounts receivable. We have a limited number of customers with individually large amounts due on any given date. Any unanticipated change in any one of these customers credit worthiness or other matters affecting the collectability of amounts due from such customers could have a material adverse effect on our results of operations in the period in which such changes or events occur. We regularly review all our aged accounts receivable for collectability and establish an allowance for individual customer balances as necessary. Allowance for doubtful accounts totaled $0 at March 31, 2017 and December 31, 2016. |
Inventory | Inventory . The nature of our business requires us to maintain inventory, which primarily consists of refined petroleum products and chemicals. Our overall inventory is valued at lower of cost or net realizable value with cost being determined by the average cost method, and net realizable value being determined based on estimated selling prices less any associated delivery costs. If the net realizable value of our refined petroleum product inventories declines to an amount less than our average cost, we record a write-down of inventory and an associated adjustment to cost of refined products sold. (See Note (6) Inventory for additional disclosures related to our inventory.) |
Property and Equipment | Property and Equipment Refinery and Facilities We record refinery and facilities at cost less any adjustments for depreciation or impairment. Adjustment of the asset and the related accumulated depreciation accounts are made for the refinery and facilities assets retirement and disposal, with the resulting gain or loss included in the consolidated statements of operations. For financial reporting purposes, depreciation of refinery and facilities assets is computed using the straight-line method using an estimated useful life of 25 years beginning when the refinery and facilities assets are placed in service. We did not record any impairment of our refinery and facilities assets for any period presented. Pipelines and Facilities Management performed periodic impairment testing of our pipeline and facilities assets in the fourth quarter of 2016. Upon completion of that testing, our pipeline assets were fully impaired. All pipeline transportation services to third-parties have ceased, existing third-party wells along our pipeline corridor have been permanently abandoned, and no new third-party wells are being drilled near our pipelines. However, management believes our pipeline assets have future value based on large-scale, third-party production facility expansion projects near the pipelines. Oil and Gas Properties Construction in Progress |
Intangibles - Other | Intangibles Other . We have an intangible asset consisting of the Blue Dolphin Energy Company trade name in the amount of $303,346 on our consolidated balance sheets at March 31, 2017 and December 31, 2016. We have determined the trade name to have an indefinite useful life. We account for other intangible assets under FASB ASC guidance related to intangibles, goodwill, and other. Under the guidance, we test intangible assets with indefinite lives annually for impairment. Management performed its regular annual impairment testing of trade name in the fourth quarter of 2016. Upon completion of that testing, we determined that no impairment was necessary at December 31, 2016. |
Debt Issue Costs | Debt Issue Costs . We have debt issue costs related to certain refinery and facilities assets debt. Debt issue costs are capitalized and amortized over the term of the related debt using the straight-line method, which approximates the effective interest method. Debt issue costs are presented net with the related debt liability. (See Note (11) Long-Term Debt, Net for additional disclosures related to debt issue costs.) |
Revenue Recognition | Revenue Recognition Refined Petroleum Products Revenue Tank Rental Revenue Easement Revenue Pipeline Transportation Revenue Deferred Revenue |
Income Taxes | Income Taxes As of each reporting date, management considers new evidence, both positive and negative, to determine the realizability of deferred tax assets. Management considers whether it is more likely than not that a portion or all the deferred tax assets will be realized, which is dependent upon the generation of future taxable income prior to the expiration of any net operating loss (NOL) carryforwards. When management determines that it is more likely than not that a tax benefit will not be realized, a valuation allowance is recorded to reduce deferred tax assets. A significant piece of objective negative evidence evaluated was the cumulative loss incurred over the three-year period ended December 31, 2016. Such objective evidence limits the ability to consider other subjective evidence, such as our projections for future growth. Based on this evaluation, we recorded a full valuation allowance against the deferred tax assets as of December 31, 2016. FASB ASC guidance related to income taxes also prescribes a recognition threshold and measurement attribute for the financial statement recognition and measurement of a tax position taken or expected to be taken in a tax return, as well as guidance on derecognition, classification, interest and penalties, accounting in interim periods, disclosures, and transition. (See Note (16) Income Taxes for further information related to income taxes.) |
Impairment or Disposal of Long-Lived Assets | Impairment or Disposal of Long-Lived Assets . In accordance with FASB ASC guidance on accounting for the impairment or disposal of long-lived assets, we periodically evaluate our long-lived assets for impairment. Additionally, we evaluate our long-lived assets when events or circumstances indicate that the carrying value of these assets may not be recoverable. The carrying value is not recoverable if it exceeds the sum of the undiscounted cash flows expected to result from the use and eventual disposition of the asset or group of assets. If the carrying value exceeds the sum of the undiscounted cash flows, an impairment loss equal to the amount by which the carrying value exceeds the fair value of the asset or group of assets is recognized. Significant management judgment is required in the forecasting of future operating results that are used in the preparation of projected cash flows and, should different conditions prevail or judgments be made, material impairment charges could be necessary. |
Asset Retirement Obligations | Asset Retirement Obligations Management has concluded that there is no legal or contractual obligation to dismantle or remove the refinery and facilities assets. Further, management believes that these assets have indeterminate lives under FASB ASC guidance for estimating AROs because dates or ranges of dates upon which we would retire these assets cannot reasonably be estimated at this time. When a legal or contractual obligation to dismantle or remove the refinery and facilities assets arises and a date or range of dates can reasonably be estimated for the retirement of these assets, we will estimate the cost of performing the retirement activities and record a liability for the fair value of that cost using present value techniques. We recorded an ARO liability related to future asset retirement costs associated with dismantling, relocating, or disposing of our offshore platform, pipeline systems, and related onshore facilities, as well as for plugging and abandoning wells and restoring land and sea beds. We developed these cost estimates for each of our assets based upon regulatory requirements, structural makeup, water depth, reservoir characteristics, reservoir depth, equipment demand, current retirement procedures, and construction and engineering consultations. Because these costs typically extend many years into the future, estimating future costs are difficult and require management to make judgments that are subject to future revisions based upon numerous factors, including changing technology, political, and regulatory environments. We review our assumptions and estimates of future abandonment costs on an annual basis. (See Note (12) Asset Retirement Obligations for additional information related to our AROs.) |
Computation of Earnings Per Share | Computation of Earnings Per Share The number of shares related to options, warrants, restricted stock, and similar instruments included in diluted EPS is based on the Treasury Stock Method prescribed in FASB ASC guidance for computation of EPS. This method assumes theoretical repurchase of shares using proceeds of the respective stock option or warrant exercised, and, for restricted stock, the amount of compensation cost attributed to future services that has not yet been recognized and the amount of any current and deferred tax benefit that would be credited to additional paid-in-capital upon the vesting of the restricted stock, at a price equal to the issuers average stock price during the related earnings period. Accordingly, the number of shares includable in the calculation of EPS in respect of the stock options, warrants, restricted stock, and similar instruments is dependent on this average stock price and will increase as the average stock price increases. (See Note (17) Earnings Per Share for additional information related to EPS.) |
Treasury Stock | Treasury Stock . We account for treasury stock under the cost method. When treasury stock is re-issued, the net change in share price after acquisition of the treasury stock is recognized as a component of additional paid-in-capital in our consolidated balance sheets. (See Note (13) Treasury Stock for additional disclosures related to treasury stock.) |
New Pronouncements Adopted | New Pronouncements Adopted ASU 2015-11, Inventory (Topic 330): Simplifying the Measurement of Inventory |
New Pronouncements Issued but Not Yet Effective | New Pronouncements Issued, Not Yet Effective ASU 2017-04, Intangibles Goodwill and Other (Topic 350): Simplifying the Test for Goodwill Impairment. ASU 2016-13, Financial Instruments Credit Losses (Topic 326): Measurement of Credit Losses on Financial Instruments) ASU 2016-02, Leases (Topic 842) Other new pronouncements issued but not yet effective are not expected to have a material impact on our financial position, results of operations, or liquidity. |
Reclassification | Reclassification . Effective January 1, 2017, we reclassified current and prior period amounts associated with our Pipeline Transportation operations to Corporate and Other. |
4. Business Segment Informati27
4. Business Segment Information (Tables) | 3 Months Ended |
Mar. 31, 2017 | |
Segment Reporting [Abstract] | |
Business segment reporting | Business segment information for the periods indicated (and as of the dates indicated), was as follows: Three Months Ended March 31, 2017 2016 Segment Segment Refinery Refinery Operations Corporate & Other Total Operations Corporate &Other Total Revenue from operations $ 52,605,749 $ - $ 52,605,749 $ 31,484,624 $ 27,652 $ 31,512,276 Less: cost of operations(1) (55,195,761 ) (430,622 ) (55,626,383 ) (34,422,853 ) (346,903 ) (34,769,756 ) Other non-interest income(2) - 2,216,251 2,216,251 - 130,665 130,665 Less: JMA Profit Share(3) - - - 671,092 - 671,092 EBITDA(4) $ (2,590,012 ) $ 1,785,629 $ (2,267,137 ) $ (188,586 ) Depletion, depreciation and amortization (451,025 ) (440,453 ) Interest expense, net (594,542 ) (418,809 ) Income (loss) before income taxes ) ) Income tax benefit - 1,165,901 Net income (loss) $ (1,849,950 ) $ (2,149,084 ) Capital expenditures $ 2,031,094 $ - $ 2,031,094 $ 4,745,850 $ - $ 4,745,850 Identifiable assets $ 73,246,878 $ 1,068,383 $ 74,315,261 $ 87,970,266 $ 7,237,943 $ 95,208,209 (1) Operation cost within the Refinery Operations segment includes related general and administrative expenses. Operation cost within Corporate and Other includes general and administrative expenses associated with corporate maintenance costs (such as accounting fees, director fees, and legal expense), as well as expenses associated with our pipeline assets and oil and/or gas leasehold interests (such as accretion and impairment expenses). (2) Other non-interest income reflects FLNG Land II, Inc. (FLNG) easement revenue. (See Note (19) Commitments and Contingencies FLNG Easements for further discussion related to FLNG.) (3) The JMA Profit Share represents the GEL Profit Share plus the Performance Fee for the period pursuant to the Joint Marketing Agreement, which has terminated. (See Note (19) Commitments and Contingencies Genesis Agreements for further discussion related to the Joint Marketing Agreement and the contract-related dispute with GEL.) (4) EBITDA is a non-GAAP financial measure. See Part I, Item 2. Managements Discussion and Analysis of Financial Condition and Results of Operations Results of Operations Non-GAAP Financial Measures for additional information related to EBITDA. |
5. Prepaid Expenses and Other28
5. Prepaid Expenses and Other Current Assets (Tables) | 3 Months Ended |
Mar. 31, 2017 | |
Deferred Costs, Capitalized, Prepaid, and Other Assets Disclosure [Abstract] | |
Prepaid balances | Prepaid expenses and other current assets as of the dates indicated consisted of the following: March 31, December 31, 2017 2016 Prepaid crude oil and condensate $ 1,337,252 $ - Prepaid insurance 263,180 248,853 Short-term tax bond - 505,000 Prepaid exise taxes - 292,338 $ 1,600,432 $ 1,046,191 |
6. Inventory (Tables)
6. Inventory (Tables) | 3 Months Ended |
Mar. 31, 2017 | |
Inventory Disclosure [Abstract] | |
Inventory | Inventory as of the dates indicated consisted of the following: March 31, December 31, 2017 2016 Jet fuel $ 2,401,460 $ 964,124 HOBM 1,119,732 212,987 Crude oil and condensate 410,842 26,123 AGO 197,140 143,362 Chemicals 135,678 182,751 Naphtha 122,748 533,580 Propane 18,101 11,318 LPG mix 4,253 1,293 $ 4,409,954 $ 2,075,538 |
7. Property, Plant and Equipm30
7. Property, Plant and Equipment, Net (Tables) | 3 Months Ended |
Mar. 31, 2017 | |
Property, Plant and Equipment [Abstract] | |
Property and equipment | Property, plant and equipment, net, as of the dates indicated consisted of the following: March 31, December 31, 2017 2016 Refinery and facilities $ 51,004,382 $ 50,814,309 Land 566,159 602,938 Other property and equipment 652,795 652,795 52,223,336 52,070,042 Less: Accumulated depletion, depreciation, and amortization (7,136,269 ) (6,685,244 ) 45,087,067 45,384,798 Construction in progress 18,817,465 16,939,665 $ 63,904,532 $ 62,324,463 |
8. Related Party Transactions (
8. Related Party Transactions (Tables) | 3 Months Ended |
Mar. 31, 2017 | |
Related Party Transactions [Abstract] | |
Accounts Payable, Related Party | Consolidated Balance Sheets March 31, December 31, 2017 2016 LEH $ 4,440,815 $ 4,000,000 Ingleside 1,195,723 722,278 Jonathan Carroll 775,442 592,412 6,411,980 5,314,690 Less: Long-term debt, related party, current portion (500,000 ) (500,000 ) $ 5,911,980 $ 4,814,690 |
Refinery operating expenses | Related party refinery operating expenses associated with the Amended and Restated Operating Agreement with LEH and the Amended and Restated Tank Lease Agreement with Ingleside for the periods indicated were as follows: Three Months Ended March 31, 2017 2016 Amount Per bbl Amount Per bbl LEH $ 2,813,103 $ 2.80 $ 3,162,017 $ 2.67 Ingleside - - 274,998 $ 0.23 $ 2,813,103 $ 2.80 $ 3,437,015 $ 2.90 |
Interest Expenses | Interest expense associated with the LEH Loan Agreement and Guaranty Fee Agreements for the periods indicated was as follows: Three Months Ended March 31, 2017 2016 LEH $ 207,294 $ - Jonathan Carroll 167,825 176,388 $ 375,119 $ 176,388 |
9. Notes Payable (Tables)
9. Notes Payable (Tables) | 3 Months Ended |
Mar. 31, 2017 | |
Notes Payable Tables | |
Schedule Of Short Term Notes Payable | Our notes payable consist of a short-term note for financing costs, as follows: March 31, December31, 2017 2016 Short-term note for financing costs $ 89,660 $ - $ 89,660 $ - |
10. Accrued Expenses and Othe33
10. Accrued Expenses and Other Current Liabilities (Tables) | 3 Months Ended |
Mar. 31, 2017 | |
Disclosure Text Block Supplement [Abstract] | |
Accrued expenses and other current liabilities | Accrued expenses and other current liabilities as of the dates indicated consisted of the following: March 31, December 31, 2017 2016 Unearned revenue $ 1,336,302 $ 408,770 Customer deposits 450,000 450,000 Board of director fees payable 168,929 136,429 Other payable 113,123 189,719 Insurance 88,206 67,783 Excise and income taxes payable 50,957 24,187 Property taxes 36,236 4,694 $ 2,243,753 $ 1,281,582 |
11. Long-Term Debt, Net (Tables
11. Long-Term Debt, Net (Tables) | 3 Months Ended |
Mar. 31, 2017 | |
Debt Disclosure [Abstract] | |
Schedule of Long Term Debt | Long-term debt, net, which includes related-party, represents the outstanding principal and interest of our long-term debt less associated debt issue costs. Long-term debt, net as of the dates indicated consisted of the following: March 31, December 31, 2017 2016 First Term Loan Due 2034 $ 23,745,152 $ 23,924,607 Second Term Loan Due 2034 9,663,450 9,729,853 LEH Loan Agreement 4,000,000 4,000,000 Amended and Restated Ingleside Note 1,195,723 722,278 Notre Dame Debt 1,300,000 1,300,000 Amended and Restated Carroll Note 775,442 592,412 LEH Note 440,815 - Term Loan Due 2017 - 184,994 Capital Leases 93,153 135,879 $ 41,213,735 $ 40,590,023 Less: Current portion of long-term debt, net (33,070,879 ) (32,212,336 ) Less: Unamortized debt issue costs (2,230,876 ) (2,262,997 ) $ 5,911,980 $ 6,114,690 |
Schedule of Debt issue costs | Debt issue costs, which relate to secured loan agreements with Sovereign, as of the dates indicated consisted of the following: March 31, December 31, 2017 2016 First Term Loan Due 2034 $ 1,673,545 $ 1,673,545 Second Term Loan Due 2034 767,673 767,673 Less: Accumulated amortization (210,342 ) (178,221 ) $ 2,230,876 $ 2,262,997 |
Accrued interest related to our long-term debt, net | Accrued interest associated with our long-term debt, net is reflected as interest payable, current portion and long-term interest payable, net of current portion in our consolidated balance sheets and includes related party interest. Accrued interest as of the dates indicated consisted of the following: March 31, December 31, 2017 2016 Notre Dame Debt $ 1,742,673 $ 1,691,383 LEH Loan Agreement 403,556 243,556 Second Term Loan Due 2034 45,726 44,984 First Term Loan Due 2034 28,090 33,866 Capital Leases 795 1,165 Term Loan Due 2017 - 185 2,220,840 2,015,139 Less: Interest payable, current portion (2,220,840 ) (323,756 ) $ - $ 1,691,383 |
Schedule of summary of equipment held under long-term capital leases | A summary of equipment held under long-term capital leases as of the dates indicated follows: March 31, December 31, 2017 2016 Boiler equipment $ 538,598 $ 538,598 Less: accumulated depreciation - - $ 538,598 $ 538,598 |
12. Asset Retirement Obligati35
12. Asset Retirement Obligations (Tables) | 3 Months Ended |
Mar. 31, 2017 | |
Asset Retirement Obligation Disclosure [Abstract] | |
Asset retirement obligations | Changes to our ARO liability for the periods indicated were as follows: March 31, December 31, 2017 2016 Asset retirement obligations, at the beginning of the period $ 2,027,639 $ 1,985,864 Liabilities settled - (70,969 ) Accretion expense 71,844 112,744 2,099,483 2,027,639 Less: asset retirement obligations, current portion (17,510 ) (17,510 ) Long-term asset retirement obligations, at the end of the period $ 2,081,973 $ 2,010,129 |
14. Concentration of Risk (Tabl
14. Concentration of Risk (Tables) | 3 Months Ended |
Mar. 31, 2017 | |
Risks and Uncertainties [Abstract] | |
Percentages of all refined petroleum products sales to total sales | Total refined petroleum product sales by distillation (from light to heavy) for the periods indicated consisted of the following: Three Months Ended March 31, 2017 2016 LPG mix $ 120,542 0.2 % $ 250,547 0.8 % Naphtha 13,762,944 26.5 % 9,025,521 28.9 % Jet fuel 15,399,994 29.7 % 8,506,313 27.3 % HOBM 10,685,740 20.6 % 3,163,495 10.1 % Reduced Crude - 0.0 % 3,245,807 10.4 % AGO 11,932,818 23.0 % 7,001,454 22.5 % $ 51,902,038 100.0 % $ 31,193,137 100.0 % |
16. Income Taxes (Tables)
16. Income Taxes (Tables) | 3 Months Ended |
Mar. 31, 2017 | |
Income Tax Disclosure [Abstract] | |
NOL carryforwards | NOL carryforwards that remained available for future use for the periods indicated were as follow (amounts shown are net of NOLs that will expire unused because of the IRC Section 382 limitation): Net Operating Loss Carryforward Pre-Ownership Change Post-Ownership Change Total Balance at December 31, 2015 $ 9,614,449 $ 9,616,941 $ 19,231,390 Net operating losses - 13,945,128 13,945,128 Balance at December 31, 2016 $ 9,614,449 $ 23,562,069 $ 33,176,518 Net operating losses - 2,816,718 2,816,718 Balance at March 31, 2017 $ 9,614,449 $ 26,378,787 $ 35,993,236 |
Deferred tax assets and deferred tax liabilities | Deferred Tax Assets and Liabilities March 31, December 31, 2017 2016 Deferred tax assets: Net operating loss and capital loss carryforwards $ 14,508,022 $ 13,550,338 Start-up costs (Nixon Facility) 1,339,029 1,373,363 Asset retirement obligations liability/deferred revenue 738,633 717,751 AMT credit and other 237,818 266,522 Total deferred tax assets 16,823,502 15,907,974 Deferred tax liabilities: Basis differences in property and equipment (6,182,489 ) (5,895,943 ) Total deferred tax liabilities (6,182,489 ) (5,895,943 ) 10,641,013 10,012,031 Valuation allowance (10,641,013 ) (10,012,031 ) Deferred tax assets, net $ - $ - |
17. Earnings Per Share (Tables)
17. Earnings Per Share (Tables) | 3 Months Ended |
Mar. 31, 2017 | |
Earnings Per Share [Abstract] | |
Earnings per share | A reconciliation between basic and diluted income per share for the periods indicated was as follows: Three Months Ended March 31, 2017 2016 Net income (loss) $ (1,849,950 ) $ (2,149,084 ) Basic and diluted income per share $ (0.18 ) $ (0.21 ) Basic and Diluted Weighted average number of shares of common stock outstanding and potential dilutive shares of common stock 10,474,714 10,457,794 |
18. Inventory Risk Management (
18. Inventory Risk Management (Tables) | 3 Months Ended |
Mar. 31, 2017 | |
Derivative Instruments and Hedging Activities Disclosure [Abstract] | |
Effect of derivative instruments | The following table provides the effect of derivative instruments in our consolidated statements of operations for the three months ended March 31, 2017 and 2016: Gain (Loss) Recognized Three Months Ended March 31, Derivatives Statements of Operations Location 2017 2016 Commodity contracts Cost of refined products sold $ - $ (492,528 ) |
1. Organization (Details Narrat
1. Organization (Details Narrative) - USD ($) | 3 Months Ended | ||
Mar. 31, 2017 | Mar. 31, 2016 | Dec. 31, 2016 | |
Organization, Consolidation and Presentation of Financial Statements [Abstract] | |||
Net income (loss) | $ (1,849,950) | $ (2,149,084) | |
Net Loss per common share | $ 0.18 | $ 0.21 | |
Improvement in net loss | $ 0.03 | $ 0.03 | |
Working capital deficit current portion | $ 42,282,742 | $ 37,812,263 | |
Working capital deficit payment of Operations | $ 9,211,863 | $ 5,599,927 |
3. Significant Accounting Pol41
3. Significant Accounting Policies (Details Narrative) - USD ($) | 3 Months Ended | ||
Mar. 31, 2017 | Mar. 31, 2016 | Dec. 31, 2016 | |
Accounting Policies [Abstract] | |||
Cash and cash equivalents | $ 3,521,805 | $ 6,082,768 | |
Restricted cash | 3,521,805 | 4,930,140 | |
Restricted cash (current portion) | 2,756,713 | 3,347,835 | |
Restricted cash, noncurrent | 765,092 | 1,582,305 | |
Allowance for doubtful accounts | 0 | 0 | |
Trade name | 303,346 | $ 303,346 | |
Gain on the disposal of property | $ 1,834,500 | $ 0 |
4. Business Segment Informati42
4. Business Segment Information (Details) - USD ($) | 3 Months Ended | ||
Mar. 31, 2017 | Mar. 31, 2016 | ||
Revenue from operations | $ 52,605,749 | $ 31,512,276 | |
Depletion, depreciation and amortization | (32,121) | (31,869) | |
Income tax benefit | 0 | (1,165,901) | |
Net income (loss) | (1,849,950) | (2,149,084) | |
Refinery Operations [Member] | |||
Revenue from operations | 52,605,749 | 31,484,624 | |
Less: cost of operations (1) | [1] | (55,195,761) | (34,422,853) |
Other non-interest income (2) | [2] | 0 | 0 |
Less: JMA Profit Share (3) | [3] | 0 | 671,092 |
EBITDA (4) | [4] | (2,590,012) | (2,267,137) |
Capital expenditures | 2,031,094 | 4,745,850 | |
Identifiable assets | 73,246,878 | 87,970,266 | |
Corporate and Other [Member] | |||
Revenue from operations | 0 | 27,652 | |
Less: cost of operations (1) | [1] | (430,622) | (346,903) |
Other non-interest income (2) | [2] | 2,216,251 | 130,665 |
Less: JMA Profit Share (3) | [3] | 0 | 0 |
EBITDA (4) | [4] | 1,785,629 | (188,586) |
Capital expenditures | 0 | 0 | |
Identifiable assets | 1,068,383 | 7,237,943 | |
Total | |||
Revenue from operations | 52,605,749 | 31,512,276 | |
Less: cost of operations (1) | [1] | (55,626,383) | (34,769,756) |
Other non-interest income (2) | [2] | 2,216,251 | 130,665 |
Less: JMA Profit Share (3) | [3] | 0 | 671,092 |
Depletion, depreciation and amortization | (451,025) | (440,453) | |
Interest expense, net | (594,542) | (418,809) | |
Income (loss) before income taxes | (1,849,950) | (3,314,985) | |
Income tax benefit | 0 | 1,165,901 | |
Net income (loss) | (1,849,950) | (2,149,084) | |
Capital expenditures | 2,031,094 | 4,745,850 | |
Identifiable assets | $ 74,315,261 | $ 95,208,209 | |
[1] | Operation cost within the Refinery Operations segment includes related general and administrative expenses. Operation cost within Corporate and Other includes general and administrative expenses associated with corporate maintenance costs (such as accounting fees, director fees, and legal expense), as well as expenses associated with our pipeline assets and oil and/or gas leasehold interests (such as accretion and impairment expenses). | ||
[2] | Other non - interest income reflects FLNG Land II, Inc, ("FLNG") easement revenue. (See Note (19) Commitments and Contingencies - FLNG Easements for further discussion related to FLNG.) | ||
[3] | The JMA Profit Share represents the GEL Profit Share plus the Performance Fee for the period pursuant to the Joint Marketing Agreement, which has terminated. (See "Note (19) Commitments and Contingencies - Genesis Agreements "for further discussion related to the Joint Marketing Agreement and the contract - related dispute with GEL.) | ||
[4] | EBITDA is a non - GAAP financial measure. See "Part I, Item 2. Management's Discussion and Analysis of Financial Condition and Results of Operations - Results of Operations - Non-GAAP Financial Measures "for additional information related to EBITDA. |
5. Prepaid Expenses and Other43
5. Prepaid Expenses and Other Current Assets (Details) - USD ($) | Mar. 31, 2017 | Dec. 31, 2016 |
Deferred Costs, Capitalized, Prepaid, and Other Assets Disclosure [Abstract] | ||
Prepaid crude oil and condensate | $ 1,337,252 | $ 0 |
Prepaid insurance | 263,180 | 248,853 |
Short-term tax bond | 0 | 505,000 |
prepaid exise taxes | 0 | 292,338 |
Prepaid expenses, net | $ 1,600,432 | $ 1,046,191 |
6. Inventory (Details)
6. Inventory (Details) - USD ($) | Mar. 31, 2017 | Dec. 31, 2016 |
Inventory Disclosure [Abstract] | ||
Jet fuel | $ 2,401,460 | $ 964,124 |
HOBM | 1,119,732 | 212,987 |
Crude oil and condensate | 410,842 | 26,123 |
AGO | 197,140 | 143,362 |
Chemicals | 135,678 | 182,751 |
Naphtha | 122,748 | 533,580 |
Propane | 18,101 | 11,318 |
LPG mix | 4,253 | 1,293 |
Inventories, net | $ 4,409,954 | $ 2,075,538 |
7. Property, Plant and Equipm45
7. Property, Plant and Equipment, Net (Details) - USD ($) | Mar. 31, 2017 | Dec. 31, 2016 |
Property, Plant and Equipment [Abstract] | ||
Refinery and facilities | $ 51,004,382 | $ 50,814,309 |
Land | 566,159 | 602,938 |
Other property and equipment | 652,795 | 652,795 |
Property, Plant and Equipment, Gross | 52,223,336 | 52,070,042 |
Less: Accumulated depletion, depreciation and amortization | (7,136,269) | (6,685,244) |
Property, plant and equipment, gross | 45,087,067 | 45,384,798 |
Construction in progress | 18,817,465 | 16,939,665 |
Property, plant and equipment, net | $ 63,904,532 | $ 62,324,463 |
8. Property, Plant and Equipmen
8. Property, Plant and Equipment, Net (Details Narrative) - USD ($) | 3 Months Ended | 12 Months Ended |
Mar. 31, 2017 | Dec. 31, 2016 | |
Property, Plant and Equipment [Abstract] | ||
Interest cost capitalized | $ 2,526,041 | $ 2,108,298 |
8. Related Party Transactions47
8. Related Party Transactions (Details) - USD ($) | Mar. 31, 2017 | Dec. 31, 2016 | Dec. 30, 2016 | Mar. 31, 2016 |
Prepaid operating expenses, related party | $ 6,411,980 | $ 5,314,690 | ||
Less: Long-term debt - current portion, related party | 500,000 | 500,000 | ||
Long-term debt - net of current portion, related party | 5,911,980 | 4,814,690 | ||
LEH [Member] | ||||
Prepaid operating expenses, related party | 4,440,815 | $ 4,000,000 | ||
Ingleside [Member] | ||||
Prepaid operating expenses, related party | 1,195,723 | $ 722,278 | ||
Jonathan Carroll [Member] | ||||
Prepaid operating expenses, related party | $ 775,442 | $ 592,412 |
8. Related Party Transactions48
8. Related Party Transactions (Details 1) | 3 Months Ended | |
Mar. 31, 2017USD ($)$ / bbl | Mar. 31, 2016USD ($)$ / bbl | |
Refinery operating expenses, Amount | $ | $ 2,813,103 | $ 3,437,015 |
Refinery operating expenses, Per bbl | $ / bbl | 2.80 | 2.90 |
LEH [Member] | ||
Refinery operating expenses, Amount | $ | $ 2,813,103 | $ 3,162,017 |
Refinery operating expenses, Per bbl | $ / bbl | 2.80 | 2.67 |
Ingleside [Member] | ||
Refinery operating expenses, Amount | $ | $ 0 | $ 274,998 |
Refinery operating expenses, Per bbl | $ / bbl | 0 | 0.23 |
8. Related Party Transactions49
8. Related Party Transactions (Details 2) - USD ($) | 3 Months Ended | |
Mar. 31, 2017 | Mar. 31, 2016 | |
Interest expenses under loan and guarantee, related party | $ 375,119 | $ 176,388 |
LEH [Member] | ||
Interest expenses under loan and guarantee, related party | 207,294 | 0 |
Jonathan Carroll [Member] | ||
Interest expenses under loan and guarantee, related party | $ 167,825 | $ 176,388 |
8. Related Party Transactions50
8. Related Party Transactions (Details Narrative) - USD ($) | 3 Months Ended | ||
Mar. 31, 2017 | Mar. 31, 2016 | Dec. 31, 2016 | |
Expense for service | $ 375,000 | ||
Prepaid related party operating expenses | 6,411,980 | $ 5,314,690 | |
Outstanding principal and interest | 775,442 | 592,412 | |
Accounts payable, related party | 520,800 | 369,600 | |
Sales to LMT totaled | 151,200 | $ 0 | |
Product Sales Agreement | 375,000 | 0 | |
Services Agreement Fees | 18,769,063 | ||
Accounts receivable related to LEH | 1,161,589 | 1,161,589 | |
Accrued interest | 403,556 | 243,556 | |
Jet Fuel | |||
Services Agreement Fees | 18,769,063 | 0 | |
Ingleside [Member] | |||
Prepaid related party operating expenses | 1,195,723 | $ 722,278 | |
Accounts receivable related to LEH | 1,161,589 | ||
LEH Note [Member] | |||
Prepaid related party operating expenses | $ 0 | $ 440,815 |
9. Notes Payable (Details)
9. Notes Payable (Details) - USD ($) | Mar. 31, 2017 | Dec. 31, 2016 |
Notes Payable Details | ||
Short-term note for financing costs | $ 89,660 | $ 0 |
Total Short-term note for financing costs | $ 89,660 | $ 0 |
9. Notes Payable (Details Narra
9. Notes Payable (Details Narrative) | Mar. 31, 2017USD ($) |
Notes Payable Details Narrative | |
Short-term promissory note | $ 36,969 |
Principal amount | $ 10,000 |
Interest rate | 10.00% |
10. Accrued Expenses and Othe53
10. Accrued Expenses and Other Current Liabilities (Details) - USD ($) | Mar. 31, 2017 | Dec. 31, 2016 |
Disclosure Text Block Supplement [Abstract] | ||
Unearned revenue | $ 1,336,302 | $ 408,770 |
Customer deposits | 450,000 | 450,000 |
Board of director fees payable | 168,929 | 136,429 |
Other payable | 113,123 | 189,719 |
Insurance | 88,206 | 67,783 |
Excise and income taxes payable | 50,957 | 24,187 |
Property taxes | 36,236 | 4,694 |
Accrued Expenses and Other Current Liabilities, Net | $ 2,243,753 | $ 1,281,582 |
11. Long-Term Debt, Net (Detail
11. Long-Term Debt, Net (Details) - USD ($) | Mar. 31, 2017 | Dec. 31, 2016 | Mar. 31, 2016 |
Debt Issue Costs | $ 41,213,735 | $ 40,590,023 | |
Less: Current portion of long-term debt, net | (33,070,879) | (32,212,336) | |
Less: Unamortized debt issue costs | (2,230,876) | (2,262,997) | |
Long term debt | 0 | 1,300,000 | |
First Term Loan Due 2034 [Member] | |||
Principal balance outstanding | 23,745,152 | 23,924,607 | |
Second Term Loan Due 2034 [Member] | |||
Principal balance outstanding | 9,663,450 | 9,729,853 | |
LEH Loan Agreement [Member] | |||
Principal balance outstanding | 4,000,000 | 4,000,000 | |
Amended and Restated Ingleside Note [Member] | |||
Principal balance outstanding | 1,195,723 | 722,278 | |
Notre Dame Debt [Member] | |||
Principal balance outstanding | 1,300,000 | 1,300,000 | |
Amended and Restated Carroll Note [Member] | |||
Principal balance outstanding | 775,442 | 592,412 | |
LEH Note [Member] | |||
Principal balance outstanding | 440,815 | 0 | |
Term Loan Due 2017 [Member] | |||
Principal balance outstanding | 0 | 184,994 | |
Long term debt | $ 2,000,000 | ||
Capital Leases [Member] | |||
Principal balance outstanding | $ 93,153 | $ 135,879 |
11. Long-Term Debt, Net (Deta55
11. Long-Term Debt, Net (Details 1) - USD ($) | Mar. 31, 2017 | Dec. 31, 2016 |
Debt Disclosure [Abstract] | ||
First Term Loan Due 2034 | $ 1,673,545 | $ 1,673,545 |
Second Term Loan Due 2034 | 767,673 | 767,673 |
Less: Accumulated amortization | (210,342) | (178,221) |
Long term debt | $ 2,230,876 | $ 2,262,997 |
11 Long-Term Debt, Net (Details
11 Long-Term Debt, Net (Details 2) - USD ($) | Mar. 31, 2017 | Dec. 31, 2016 |
Long-term Debt Net Details 2 | ||
Notre Dame Debt | $ 1,742,673 | $ 1,691,383 |
LEH Loan Agreement | 403,556 | 243,556 |
Second Term Loan Due 2034 | 45,726 | 44,984 |
First Term Loan Due 2034 | 1,673,545 | 1,673,545 |
Capital leases | 795 | 1,165 |
Term Loan Due 2017 | 0 | 185 |
Total | 2,220,840 | 2,015,139 |
Less: Interest payable, current portion | (2,220,840) | (323,756) |
Long term debt | $ 0 | $ 1,691,383 |
11. Long-Term Debt, Net (Detai
11. Long-Term Debt, Net (Details 3) - USD ($) | Mar. 31, 2017 | Dec. 31, 2016 |
Debt Disclosure [Abstract] | ||
Boiler equipment | $ 538,598 | $ 538,598 |
Less: accumulated depreciation | 0 | 0 |
Capital lease obligation | $ 538,598 | $ 538,598 |
11.Long-Term Debt, Net (Details
11.Long-Term Debt, Net (Details Narrative) - USD ($) | 3 Months Ended | 12 Months Ended | |
Mar. 31, 2017 | Mar. 31, 2016 | Dec. 31, 2016 | |
Amortization expense | $ 32,121 | $ 31,869 | |
Principal balance outstanding | 0 | $ 1,300,000 | |
Guaranty fees | $ 122,633 | ||
First Term Loan Due 2034 [Member] | |||
Guaranty fees | 118,991 | ||
Term Loan Due 2017 [Member] | |||
Principal balance outstanding | 2,000,000 | ||
Guaranty fees | 411 | $ 4,008 | |
Second Term Loan Due 2034 [Member] | |||
Interest accrued | 2.00% | ||
Guaranty fees | $ 48,423 | $ 49,747 |
12. Asset Retirement Obligati59
12. Asset Retirement Obligations (Details) - USD ($) | 3 Months Ended | 12 Months Ended | |
Mar. 31, 2017 | Mar. 31, 2016 | Dec. 31, 2016 | |
Asset Retirement Obligation Disclosure [Abstract] | |||
Asset retirement obligations, at the beginning of the period | $ 2,027,639 | $ 1,985,864 | $ 1,985,864 |
Liabilities settled | 0 | (70,969) | |
Accretion expense | 71,844 | $ 28,186 | 112,744 |
Asset retirement obligations | 2,099,483 | 2,027,639 | |
Less: asset retirement obligations, current portion | (17,510) | (17,510) | |
Long-term asset retirement obligations, at the end of the period | $ 2,081,973 | $ 2,010,129 |
12. Asset Retirement Obligati60
12. Asset Retirement Obligations (Details Narrative) - USD ($) | 3 Months Ended | 12 Months Ended | |
Mar. 31, 2017 | Mar. 31, 2016 | Dec. 31, 2016 | |
Asset Retirement Obligation Disclosure [Abstract] | |||
Liabilities settled recognized | $ 0 | $ 70,969 | |
Abandonment expense | $ 0 | $ 0 |
13. Treasury Stock (Details Nar
13. Treasury Stock (Details Narrative) - shares | Mar. 31, 2017 | Dec. 31, 2016 |
Equity [Abstract] | ||
Treasury stock | 150,000 | 150,000 |
14. Concentration of Risk (Deta
14. Concentration of Risk (Details) - USD ($) | 3 Months Ended | |
Mar. 31, 2017 | Mar. 31, 2016 | |
Total refined petroleum product sales | $ 51,902,038 | $ 31,193,137 |
Concentration Risk | 100.00% | 100.00% |
LPG mix | ||
Total refined petroleum product sales | $ 120,542 | $ 250,547 |
Concentration Risk | 0.20% | 0.80% |
Naphtha | ||
Total refined petroleum product sales | $ 13,762,944 | $ 9,025,521 |
Concentration Risk | 26.50% | 28.90% |
Jet Fuel | ||
Total refined petroleum product sales | $ 15,399,994 | $ 8,506,313 |
Concentration Risk | 29.70% | 27.30% |
HOBM | ||
Total refined petroleum product sales | $ 10,685,740 | $ 3,163,495 |
Concentration Risk | 20.60% | 10.10% |
Reduced crude | ||
Total refined petroleum product sales | $ 0 | $ 3,245,807 |
Concentration Risk | 0.00% | 10.40% |
AGO | ||
Total refined petroleum product sales | $ 11,932,818 | $ 7,001,454 |
Concentration Risk | 23.00% | 22.50% |
14. Concentration of Risk (De63
14. Concentration of Risk (Details Narrative) - USD ($) | 3 Months Ended | ||
Mar. 31, 2017 | Mar. 31, 2016 | Dec. 31, 2016 | |
Concentration Risk | 100.00% | 100.00% | |
Account Receivable | $ 0 | ||
FDIC insurance limit | 250,000 | $ 250,000 | |
Excess of the FDIC insurance limit | $ 3,028,945 | $ 3,028,945 | |
LEH [Member] | |||
Concentration Risk | 36.00% | ||
Concentration risk accounts receivable | $ 0 | ||
Account receivable [Member] | Five customers [Member] | |||
Concentration Risk | 75.00% | ||
Concentration risk accounts receivable | $ 23,000,000 | ||
Sales Revenue [Member] | Three customers [Member] | |||
Concentration Risk | 82.00% | ||
Concentration risk accounts receivable | $ 0 |
15. Leases (Details Narrative)
15. Leases (Details Narrative) - USD ($) | 3 Months Ended | |
Mar. 31, 2017 | Mar. 31, 2016 | |
Leases, Operating [Abstract] | ||
Rent expense | $ 31,081 | $ 29,857 |
16. Income Taxes (Details)
16. Income Taxes (Details) - USD ($) | 3 Months Ended | 12 Months Ended |
Mar. 31, 2017 | Dec. 31, 2016 | |
Balance | $ 33,176,518 | $ 19,231,390 |
Net operating losses | 2,816,718 | 13,945,128 |
Balance at December 31, 2016 | 35,993,236 | 33,176,518 |
Pre-Ownership Change [Member] | ||
Balance | 9,614,449 | 9,614,449 |
Net operating losses | 0 | 0 |
Balance at December 31, 2016 | 9,614,449 | 9,614,449 |
Post-Ownership Change [Member] | ||
Balance | 23,562,069 | 9,616,941 |
Net operating losses | 2,816,718 | 13,945,128 |
Balance at December 31, 2016 | $ 26,378,787 | $ 23,562,069 |
16. Income Taxes (Details 1)
16. Income Taxes (Details 1) - USD ($) | Mar. 31, 2017 | Dec. 31, 2016 |
Deferred tax assets: | ||
Net operating loss and capital loss carryforwards | $ 14,508,022 | $ 13,550,338 |
Start-up costs (Nixon Facility) | 1,339,029 | 1,373,363 |
Asset retirement obligations liability/deferred revenue | 738,633 | 717,751 |
AMT credit and other | 237,818 | 266,522 |
Total deferred tax assets | 16,823,502 | 15,907,974 |
Deferred tax liabilities: | ||
Basis differences in property and equipment | (6,182,489) | (5,895,943) |
Total deferred tax liabilities | (6,182,489) | (5,895,943) |
Deferred tax assets, net | 10,641,013 | 10,012,031 |
Valuation allowance | (10,641,013) | (10,012,031) |
Deferred tax assets, net | $ 0 | $ 0 |
16. Income Taxes (Details Narra
16. Income Taxes (Details Narrative) - USD ($) | 3 Months Ended | ||
Mar. 31, 2017 | Mar. 31, 2016 | Dec. 31, 2016 | |
Income Tax Disclosure [Abstract] | |||
Deferred Tax Assets | $ 0 | $ 0 | |
Income Tax Benefit | $ 0 | $ 1,165,901 |
17. Earnings per share (Details
17. Earnings per share (Details) - USD ($) | 3 Months Ended | |
Mar. 31, 2017 | Mar. 31, 2016 | |
Earnings Per Share [Abstract] | ||
Net income (loss) | $ (1,849,950) | $ (2,149,084) |
Basic and diluted income per share | $ (0.18) | $ (0.21) |
Basic and diluted | ||
Weighted average number of shares of common stock outstanding and potential dilutive shares of common stock | 10,474,714 | 10,457,794 |
18. Inventory Risk Management69
18. Inventory Risk Management (Details 1) - USD ($) | 3 Months Ended | |
Mar. 31, 2017 | Mar. 31, 2016 | |
Commodity Contracts [Member] | ||
Cost of refined products sold | $ 0 | $ (492,528) |
19. Commitments and Contingen70
19. Commitments and Contingencies (Details Narrative) - USD ($) | Mar. 31, 2017 | Dec. 31, 2016 |
Commitments and Contingencies Disclosure [Abstract] | ||
Credit and cash backed rights of way bonds issued to the BOEM | $ 4,600,000 | $ 900,000 |