Document and Entity Information
Document and Entity Information - shares | 9 Months Ended | |
Sep. 30, 2017 | Nov. 16, 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 | Sep. 30, 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 | 10,818,371 | |
Document Fiscal Period Focus | Q3 | |
Document Fiscal Year Focus | 2,017 |
Consolidated Balance Sheets (Un
Consolidated Balance Sheets (Unaudited) - USD ($) | Sep. 30, 2017 | Dec. 31, 2016 |
CURRENT ASSETS | ||
Cash and cash equivalents | $ 44,931 | $ 1,152,628 |
Restricted cash | 1,500,380 | 3,347,835 |
Accounts receivable, net | 627,604 | 2,022,166 |
Accounts receivable, related party | 1,060,154 | 1,161,589 |
Prepaid expenses and other current assets | 1,631,352 | 1,046,191 |
Deposits | 138,957 | 138,957 |
Inventory | 2,775,440 | 2,075,538 |
Total current assets | 7,778,818 | 10,944,904 |
Total property and equipment, net | 64,396,811 | 62,324,463 |
Restricted cash, noncurrent | 150,530 | 1,582,305 |
Surety bonds | 230,000 | 205,000 |
Trade name | 303,346 | 303,346 |
Total long-term assets | 65,080,687 | 64,415,114 |
TOTAL ASSETS | 72,859,505 | 75,360,018 |
CURRENT LIABILITIES | ||
Long-term debt less unamortized debt issue costs, current portion | 35,756,045 | 31,712,336 |
Long-term debt, related party, current portion | 4,000,000 | 500,000 |
Accounts payable | 2,759,479 | 14,552,383 |
Accounts payable, related party | 823,200 | 369,600 |
Asset retirement obligations, current portion | 17,065 | 17,510 |
Accrued expenses and other current liabilities | 1,220,074 | 1,281,582 |
Accrued arbitration award payable | 27,627,863 | 0 |
Interest payable, current portion | 2,659,786 | 323,756 |
Total current liabilities | 74,863,512 | 48,757,167 |
Long-term liabilities: | ||
Asset retirement obligations, net of current portion | 2,225,661 | 2,010,129 |
Deferred revenues and expenses | 52,119 | 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 | 1,451,655 | 4,814,690 |
Long-term interest payable, net of current portion | 0 | 1,691,383 |
Total long-term liabilities | 3,729,435 | 9,899,592 |
TOTAL LIABILITIES | 78,592,947 | 58,656,759 |
Commitments and contingencies (Note 18) | ||
STOCKHOLDERS' EQUITY (DEFICIT) | ||
Common stock (0.01 par value, 20,000,000 shares authorized; 10,818,371 and 10,624,714 shares issued at September 30,2017 and December 31, 2016, respectively | 108,184 | 106,248 |
Additional paid-in capital | 36,877,604 | 36,818,528 |
Accumulated deficit | (42,719,230) | (19,421,517) |
Treasury stock (0 and 150,000 shares at cost at September 30, 2017 and December 31, 2016, respectively | 0 | (800,000) |
Total stockholders' equity (deficit) | (5,733,442) | 16,703,259 |
TOTAL LIABILITIES AND STOCKHOLDERS' EQUITY (DEFICIT) | $ 72,859,505 | $ 75,360,018 |
Consolidated Balance Sheets (U3
Consolidated Balance Sheets (Unaudited) (Parenthetical) - $ / shares | Sep. 30, 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 | 10,818,371 | 10,624,714 |
Common stock, shares Outstanding | 10,818,371 | 10,624,714 |
Treasury stock, shares | 0 | 150,000 |
Consolidated Statements of Oper
Consolidated Statements of Operations (Unaudited) - USD ($) | 3 Months Ended | 9 Months Ended | ||
Sep. 30, 2017 | Sep. 30, 2016 | Sep. 30, 2017 | Sep. 30, 2016 | |
REVENUE FROM OPERATIONS | ||||
Refined petroleum product sales | $ 66,132,959 | $ 53,951,293 | $ 174,667,617 | $ 126,546,716 |
Tank rental revenue | 766,133 | 717,487 | 2,173,555 | 1,624,461 |
Other operations | 0 | 19,526 | 0 | 71,865 |
Total revenue from operations | 66,899,092 | 54,688,306 | 176,841,172 | 128,243,042 |
COST OF OPERATIONS | ||||
Cost of refined products sold | 58,785,827 | 51,689,474 | 165,185,276 | 125,316,249 |
Refinery operating expenses | 1,758,005 | 3,153,646 | 6,222,771 | 9,468,409 |
Joint Marketing Agreement profit share | 0 | 965,627 | 0 | 392,062 |
Other operating expenses | 67,969 | 100,974 | 183,095 | 298,566 |
Arbitration award and associated fees | 0 | 0 | 24,338,628 | 0 |
General and administrative expenses | 1,239,813 | 891,210 | 2,854,294 | 1,503,533 |
Depletion, depreciation and amortization | 455,437 | 504,719 | 1,355,780 | 1,415,519 |
Bad debt recovery | 0 | 0 | 0 | (139,868) |
Accretion expense | 71,844 | 28,186 | 215,532 | 84,558 |
Total cost of operations | 62,378,895 | 57,333,836 | 200,355,376 | 138,339,028 |
Income (loss) from operations | 4,520,197 | (2,645,530) | (23,514,204) | (10,095,986) |
OTHER INCOME (EXPENSE) | ||||
Easement, interest and other income | 26,657 | 157,840 | 409,739 | 415,700 |
Interest and other expense | (601,335) | (485,659) | (2,027,748) | (1,305,125) |
Gain on disposal of property | 0 | 0 | 1,834,500 | 0 |
Total other income (expense) | (574,678) | (327,819) | 216,491 | (889,425) |
Income (loss) before income taxes | 3,945,519 | (2,973,349) | (23,297,713) | (10,985,411) |
Income tax benefit | 0 | 1,034,798 | 0 | 3,735,040 |
Net income (loss) | $ 3,945,519 | $ (1,938,551) | $ (23,297,713) | $ (7,250,371) |
Loss per common share: | ||||
Basic | $ 0.36 | $ (0.19) | $ (2.19) | $ (0.69) |
Diluted | $ 0.36 | $ (0.19) | $ (2.19) | $ (0.69) |
Weighted average number of common shares outstanding: | ||||
Basic | 10,818,371 | 10,464,715 | 10,644,654 | 10,460,849 |
Diluted | 10,818,371 | 10,464,715 | 10,644,654 | 10,460,849 |
Consolidated Statements of Cash
Consolidated Statements of Cash Flows (Unaudited) - USD ($) | 3 Months Ended | 9 Months Ended | 12 Months Ended | ||
Sep. 30, 2017 | Sep. 30, 2016 | Sep. 30, 2017 | Sep. 30, 2016 | Dec. 31, 2016 | |
OPERATING ACTIVITIES | |||||
Net loss | $ 3,945,519 | $ (1,938,551) | $ (23,297,713) | $ (7,250,371) | |
Adjustments to reconcile net loss to net cash used in operating activities: | |||||
Depletion, depreciation and amortization | 1,355,780 | 1,415,519 | |||
Unrealized gain on derivatives | 0 | 1,143,490 | |||
Deferred tax benefit | 0 | (3,735,040) | |||
Amortization of debt issue costs | 96,363 | 96,364 | |||
Accretion of asset retirement obligations | 71,844 | 28,186 | 215,532 | 84,558 | $ 112,744 |
Common stock issued for services | 30,000 | 50,000 | |||
Recovery of bad debt | 0 | 0 | 0 | (139,868) | |
Changes in operating assets and liabilities | |||||
Accounts receivable | 1,394,563 | (1,815,584) | |||
Accounts receivable, related party | 101,435 | 0 | |||
Prepaid expenses and other current assets | (585,161) | 945,539 | |||
Deposits and other assets | (25,000) | 570,444 | |||
Inventory | (699,902) | (1,011,662) | |||
Accrued arbitration award | 27,627,863 | 0 | |||
Accounts payable, accrued expenses and other liabilities | (12,802,731) | 5,269,224 | |||
Accounts payable, related party | 453,600 | (300,000) | |||
Net cash used in operating activities | (6,135,371) | (4,677,387) | |||
INVESTING ACTIVITIES | |||||
Capital expenditures | (1,777,219) | (11,255,725) | |||
Net cash used in investing activities | (1,777,219) | (11,255,725) | |||
FINANCING ACTIVITIES | |||||
Proceeds from issuance of debt | 3,677,953 | 6,898,931 | |||
Payments on debt | (1,120,267) | (1,414,406) | |||
Net activity on related-party debt | 967,977 | 0 | |||
Net cash provided by financing activities | 3,525,663 | 5,484,525 | |||
Net decrease in cash, cash equivalents, and restricted cash | (4,386,927) | (10,448,587) | |||
CASH, CASH EQUIVALENTS, AND RESTRICTED CASH AT BEGINNING OF PERIOD | 6,082,768 | 20,645,652 | 20,645,652 | ||
CASH, CASH EQUIVALENTS, AND RESTRICTED CASH AT END OF PERIOD | $ 1,695,841 | $ 10,197,065 | 1,695,841 | 10,197,065 | $ 6,082,768 |
Non-cash investing and financing activities: | |||||
Financing of capital expenditures via accounts payable | 1,650,910 | 2,601,709 | |||
Financing of guaranty fees via long-term debt, related party | 170,636 | 0 | |||
Conversion of related-party notes to common stock | 831,012 | 0 | |||
Interest paid | 1,573,996 | 1,827,794 | |||
Income taxes paid | $ 0 | $ 0 |
1. Organization
1. Organization | 9 Months Ended |
Sep. 30, 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 Annual Report on 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. Going Concern · Final GEL Arbitration Award – As previously disclosed, LE was involved in arbitration proceedings (the “GEL Arbitration”) with GEL Tex Marketing, LLC (“GEL”), an affiliate of Genesis Energy, LP (“Genesis”), related to a contractual dispute involving a Crude Oil Supply and Throughput Services Agreement (the “Crude Supply Agreement”) and a Joint Marketing Agreement (the “Joint Marketing Agreement”), each between LE and GEL and dated August 12, 2011. On August 11, 2017, the arbitrator delivered its final award in the GEL Arbitration (the “Final Arbitration Award”). The Final Arbitration Award denied all of LE’s claims against GEL and granted substantially all of the relief requested by GEL in its counterclaims. Among other matters, the Final Arbitration Award awarded damages, legal and administrative fees and court costs to GEL in the aggregate amount of approximately $31.3 million. A hearing on confirmation of the Final Arbitration Award was scheduled to occur on September 18, 2017 in state district court in Harris County, Texas. Prior to the scheduled hearing, LE and GEL jointly notified the court that the hearing would be continued for a period of no more than 90 days after September 18, 2017 (the “Continuance Period”), to facilitate settlement discussions between the parties. On September 26, 2017, LE and Blue Dolphin, together with LEH and Jonathan Carroll, entered into a Letter Agreement with GEL, effective September 18, 2017 (the “GEL Letter Agreement”), confirming the parties’ agreement to the continuation of the confirmation hearing during the Continuance Period, subject to the terms of the GEL Letter Agreement. Under the GEL Letter Agreement, GEL could have terminated the GEL Letter Agreement on the 45 th · Veritex Secured Loan Agreement Event of Default – Veritex Community Bank (“Veritex”), as successor in interest to Sovereign Bank by merger, has delivered to obligors notices of default under secured loan agreements with Veritex, stating that the Final Arbitration Award constitutes an event of default under the secured loan agreements. The occurrence of an event of default permits Veritex to declare the amounts owed under these loan agreements immediately due and payable, exercise its rights with respect to collateral securing obligors’ obligations under these loan agreements, and/or exercise any other rights and remedies available. Veritex has informed obligors that it is not currently exercising its rights and remedies under the secured loan agreements in light of the ongoing settlement discussions with GEL and the continuance of the hearing on confirmation of the Final Arbitration Award and to allow Veritex to evaluate any proposed settlement agreement related to the Final Arbitration Award, which would require Veritex’s approval. However, Veritex expressly reserved all of its rights, privileges and remedies related to events of default under the secured loan agreements and informed obligors that it would consider a final confirmation of the Final Arbitration Award to be a material event of default under the loan agreements. Any exercise by Veritex of its rights and remedies under the secured loan agreements would have a material adverse effect on our business, financial condition and results of operations and likely would require us to seek protection under bankruptcy laws. The debt associated with loans under secured loan agreements was classified within the current portion of long-term debt on our consolidated balance sheet at September 30, 2017 due to existing or potential events of default related to the Final Arbitration Award as well as the uncertainty of LE and LRM’s ability to meet financial covenants in the secured loan agreements in the future. We are currently evaluating the effects of the Final Arbitration Award on our business, financial condition and results of operations. In addition to the matters described above, the Final Arbitration Award could materially and adversely affect our ability to procure adequate amounts of crude oil and condensate or our relationships with our customers. The contract-related dispute has negatively affected our customer relationships, prevented us from taking advantage of business opportunities, disrupted refinery operations, diverted management’s focus away from running the business, and impacted our ability to obtain financing. We can provide no assurance as to whether negotiations with GEL will result in a settlement or as to the potential terms of any such settlement or whether Veritex would approve any such settlement. If LE is unable to reach an acceptable settlement with GEL or Veritex does not approve any such settlement and GEL seeks to confirm and enforce the Final Arbitration Award, our business, financial condition and results of operations will be materially adversely affected and we likely would be required to seek protection under bankruptcy laws. Operating Risks ● Net Losses – We saw an improvement in net income for the three months ended September 30, 2017. For the three months ended September 30, 2017, we reported net income of $3,945,519, or income of $0.36 per share, compared to a net loss of $1,938,551, or a loss of $0.19 per share, for the three months ended September 30, 2016. The $0.55 per share increase between the periods was primarily the result of favorable refining margins in the current three-month period. For the nine months ended September 30, 2017, we reported a net loss of $23,297,713, or a loss of $2.19 per share, compared to a net loss of $7,250,371, or a loss of $0.69 per share, for the nine months ended September 30, 2016. The $1.50 per share increase in net loss between the periods was primarily the result of the Final Arbitration Award. ● Working Capital Deficits – We had a working capital deficit of $67,084,694 at September 30, 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 $27,328,649 at September 30, 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 the Final Arbitration Award and a decrease in cash and cash equivalents. ● Termination of Relationship with Genesis and GEL – As previously disclosed and discussed elsewhere in this Quarterly Report, LE 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. ● Crude Supply Issues – We currently have in place a month-to-month evergreen crude supply contract with a major integrated oil and gas company. This new supplier currently provides us with adequate amounts of crude oil and condensate, and we expect the supplier to continue to do so for the foreseeable future. However, our ability to purchase adequate amounts 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. The Final Arbitration Award could have a material adverse effect on our ability to procure adequate amounts of crude oil and condensate from our current supplier or otherwise. ● Financial Covenant Defaults – In addition to existing or potential events of default related to the Final Arbitration Award, at September 30, 2017, LE and LRM were in violation of certain financial covenants in obligors’ secured loan agreements with Veritex. Covenant defaults under the secured loan agreements would permit Veritex to declare the amounts owed under these loan agreements immediately due and payable, exercise its rights with respect to collateral securing obligors’ obligations under these loan agreements, and/or exercise any other rights and remedies available. The debt associated with these loans was classified within the current portion of long-term debt on our consolidated balance sheet at September 30, 2017 due to existing or potential events of default related to the Final Arbitration Award as well as the uncertainty of LE and LRM’s ability to meet the financial covenants in the future. There can be no assurance that Veritex will provide a waiver of events of default related to the Final Arbitration Award, consent to any proposed settlement with GEL or provide future waivers of any financial covenant defaults, which may have an adverse impact on our financial position and results of operations. During the nine months ended September 30, 2017, we continued aggressive actions to improve operations and liquidity. We began selling all our jet fuel immediately following production, which minimizes inventory, improves cash flow, and reduces commodity risk/exposure. We also completed construction of several new petroleum storage tanks at the Nixon Facility. Increasing petroleum storage capacity: (i) assists with de-bottlenecking the facility, (ii) supports increased refinery throughput up to approximately 17,000 bpd, and (iii) provides an opportunity to generate additional tank rental revenue by leasing to third-parties. Additional ongoing efforts to improve operations and liquidity include restructuring customer contracts on more favorable terms as they come up for renewal. Management believes that it is taking the appropriate steps to improve our financial stability. However, there can be no assurance that our plan will be successful, LEH and its affiliates will continue to fund our working capital needs, or that we will be able to obtain additional financing on commercially reasonable terms or at all. Among other factors, the Final Arbitration Award could prevent us from successfully executing our plan. For additional disclosures related to the contract-related dispute with GEL, the Final Arbitration Award, the GEL Letter Agreement, defaults under secured loan agreements, and risk factors that could materially affect our future business, financial condition and 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 (10) Long-Term Debt, Net - Note (18) Commitments and Contingencies –Legal Matters - Note (19) Subsequent Events ● Part I, Item 2. Management’s Discussion and Analysis of Financial Condition and Results of Operations: - GEL Contract-Related Dispute and Final Arbitration Award - Results of Operations - Liquidity and Capital Resources ● Part II, Item 1. Legal Proceedings ● Part II, Item 1A. Risk Factors |
2. Basis of Presentation
2. Basis of Presentation | 9 Months Ended |
Sep. 30, 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 SEC’s rules and regulations. Significant intercompany transactions have been eliminated in the consolidation. In management’s 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 and nine months ended September 30, 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 | 9 Months Ended |
Sep. 30, 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 asset’s 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 Oil and Gas Properties Construction in Progress (See “Note (7) Property, Plant and Equipment, Net” for additional disclosures related to our refinery and facilities assets, oil and gas properties, pipelines and facilities assets, and construction in progress.) Intangibles – Other Debt Issue Costs Revenue Recognition Refined Petroleum Products Revenue Tank Rental Revenue Easement Revenue Pipeline Transportation 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 de-recognition, classification, interest and penalties, accounting in interim periods, disclosures, and transition. (See “Note (15) 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 (11) 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 issuer’s 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 (16) Earnings Per Share” for additional information related to EPS.) Treasury Stock New Pronouncements Adopted ASU 2016-18, Statement of Cash Flows (Topic 230: Restricted Cash (A Consensus of the FASB Emerging Issues Task Force) 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 2016-02,Leases (Topic 842) ASU 2014-09, Revenue from Contracts with Customers , evenue from Contracts with Customers (Topic 606): Deferral of the Effective Date Revenue from Contracts with Customers (Topic 606): Principal Versus Agent Considerations (Reporting Revenue Gross Versus Net) Revenue from Contracts with Customers (Topic 606): Identifying Performance Obligations and Licensing Revenue Recognition (Topic 605) and Derivatives and Hedging (Topic 815): Rescission of SEC Guidance Because of Accounting Standards Updates 2014-09 and 2014-16 Pursuant to Staff Announcements at the March 3, 2016 EITF Meeting (SEC Update) Revenue from Contracts with Customers (Topic 606): Narrow-Scope Improvements and Practical Expedients Technical Corrections and Improvements to Topic 606, Revenue from Contracts with Customers 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 | 9 Months Ended |
Sep. 30, 2017 | |
Segment Reporting [Abstract] | |
Business Segment Information | Effective January 1, 2017, we began reporting as 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 three and nine months’ amounts associated with Pipeline Transportation operations were 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 September 30, 2017 2016 Segment Segment Refinery Corporate & Refinery Corporate & Operations Other Total Operations Other Total Revenue from operations $ 66,899,092 $ - $ 66,899,092 $ 54,668,780 $ 19,526 $ 54,688,306 Less: cost of operations (1) (61,456,546 ) (466,912 ) (61,923,458 ) (55,495,575 ) (367,915 ) (55,863,490 ) Other non-interest income (2) - - - - 156,396 156,396 Less: JMA Profit Share (3) - - - (965,627 ) - (965,627 ) EBITDA (4) $ 5,442,546 $ (466,912 ) $ (1,792,422 ) $ (191,993 ) Depletion, depreciation and amortization (455,437 ) (504,719 ) Interest expense, net (574,678 ) (484,215 ) Income (loss) before income taxes 3,945,519 (2,973,349 ) Income tax benefit - 1,034,798 Net income (loss) $ 3,945,519 $ (1,938,551 ) Capital expenditures $ 538,801 $ - $ 538,801 $ 4,191,077 $ - $ 4,191,077 Identifiable assets $ 70,791,236 $ 2,068,269 $ 72,859,505 $ 85,585,499 $ 10,816,664 $ 96,402,163 (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 easement revenue. (3) The JMA Profit Share represents the GEL Profit Share plus the Performance Fee for the period pursuant to the Joint Marketing Agreement, under which marketing activities have ceased. (See “Note (1) Organization - Going Concern - Final Arbitration Award” for further discussion related to 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. Nine Months Ended September 30, 2017 2016 Segment Segment Refinery Corporate & Refinery Corporate & Operations Other Total Operations Other Total Revenue from operations $ 176,841,172 $ - $ 176,841,172 $ 128,171,177 $ 71,865 $ 128,243,042 Less: cost of operations (1) (197,706,434 ) (1,293,162 ) (198,999,596 ) (135,452,537 ) (1,078,910 ) (136,531,447 ) Other non-interest income (2) - - - (392,062 ) - (392,062 ) Less: JMA Profit Share (3) - 2,216,251 2,216,251 - 412,061 412,061 EBITDA (4) $ (20,865,262 ) $ 923,089 $ (7,673,422 ) $ (594,984 ) Depletion, depreciation and amortization (1,355,780 ) (1,415,519 ) Interest expense, net (1,999,760 ) (1,301,486 ) Loss before income taxes (23,297,713 ) (10,985,411 ) Income tax benefit - 3,735,040 Net loss $ (23,297,713 ) $ (7,250,371 ) Capital expenditures $ 3,428,129 $ - $ 3,428,129 $ 13,857,434 $ - $ 13,857,434 Identifiable assets $ 70,791,236 $ 2,068,269 $ 72,859,505 $ 85,585,499 $ 10,816,664 $ 96,402,163 (1) Operation cost within the Refinery Operations segment includes related general and administrative expenses and the arbitration award and associated fees. 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 easement revenue. (3) The JMA Profit Share represents the GEL Profit Share plus the Performance Fee for the period pursuant to the Joint Marketing Agreement, under which marketing activities have ceased. (See “Note (18) Commitments and Contingencies – Legal Matters” for further discussion related to 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 Other C
5. Prepaid Expenses and Other Current Assets | 9 Months Ended |
Sep. 30, 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: September 30, December 31, 2017 2016 Prepaid crude oil and condensate $ 1,332,439 $ - Prepaid insurance 298,913 248,853 Short-term tax bond - 505,000 Prepaid exise taxes - 292,338 $ 1,631,352 $ 1,046,191 |
6. Inventory
6. Inventory | 9 Months Ended |
Sep. 30, 2017 | |
Inventory Disclosure [Abstract] | |
Inventory | Inventory as of the dates indicated consisted of the following: September 30, December 31, 2017 2016 Crude oil and condensate $ 1,207,865 $ 26,123 AGO 910,189 143,362 HOBM 341,660 212,987 Chemicals 156,535 182,751 Naphtha 135,554 533,580 Propane 18,377 11,318 LPG mix 5,260 1,293 Jet fuel - 964,124 $ 2,775,440 $ 2,075,538 |
7. Property, Plant and Equipmen
7. Property, Plant and Equipment, Net | 9 Months Ended |
Sep. 30, 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: September 30, December 31, 2017 2016 Refinery and facilities $ 51,432,434 $ 50,814,309 Land 566,159 602,938 Other property and equipment 652,795 652,795 52,651,388 52,070,042 Less: Accumulated depletion, depreciation, and amortization (8,041,024 ) (6,685,244 ) 44,610,364 45,384,798 Construction in progress 19,786,447 16,939,665 $ 64,396,811 $ 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 asset’s useful life. Interest cost capitalized was $3,413,428 and $2,108,298 at September 30, 2017 and December 31, 2016, respectively. |
8. Related Party Transactions
8. Related Party Transactions | 9 Months Ended |
Sep. 30, 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 Currently, we depend on LEH and its affiliates (including Jonathan Carroll and Ingleside) for financing when revenue from operations and borrowings under bank facilities are insufficient to meet our liquidity needs. Such borrowings are reflected in our consolidated balance sheets in accounts payable, related party, and/or long-term debt, related party. Each quarter amounts we owe to related parties are settled with amounts owed to us by LEH and its affiliates under certain related-party agreements as discussed within this Note (8), Related Party Transactions. As a result, these related-party transactions do not always reflect cash payments between the parties. 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 certain property owned by BDPL. Outstanding principal owed to LEH under the LEH Loan Agreement is reflected in long-term debt, related party, current portion in our consolidated balance sheets. Accrued interest under the LEH Loan Agreement is reflected in interest payable, current portion in our consolidated balance sheets. Promissory Notes ● June LEH Note ● March Ingleside Note ● March Carroll Note Debt Assumption Agreement Amended and Restated Guaranty Fee Agreements Financial Statements Impact Consolidated Balance Sheets September 30, December 31, 2017 2016 LEH $ 4,000,000 $ 4,000,000 Ingleside 1,168,748 722,278 Jonathan Carroll 282,907 592,412 5,451,655 5,314,690 Less: Long-term debt, related party, current portion (4,000,000 ) (500,000 ) $ 1,451,655 $ 4,814,690 Accrued interest associated with the LEH Loan Agreement was $728,889 and $243,556 at September 30, 2017 and December 31, 2016, respectively. Consolidated Statements of Operations Three Months Ended September 30, Nine Months Ended September 30, 2017 2016 2017 2016 Jet fuel sales $ 20,802,789 $ 14,536,997 $ 56,360,756 $ 23,449,071 Jet fuel storage fees 56,386 426,000 675,000 750,000 HOBM sales - - 3,425,455 - $ 20,859,175 $ 14,962,997 $ 60,461,211 $ 24,199,071 Related party cost of goods sold associated with the Tolling Agreement with LMT totaled $151,200 and $0 for the three months ended September 30, 2017 and 2016; related party cost of goods sold for the nine months ended September 30, 2017 and 2016 totaled $453,600 and $0. 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 September 30, 2017 2016 Amount Per bbl Amount Per bbl LEH $ 1,758,005 $ 1.53 $ 3,028,646 $ 2.66 Ingleside - - 125,000 0.11 $ 1,758,005 $ 1.53 $ 3,153,646 $ 2.77 Nine Months Ended September 30, 2017 2016 Amount Per bbl Amount Per bbl LEH $ 6,222,771 $ 1.93 $ 8,618,409 $ 2.84 Ingleside - - 850,000 0.28 $ 6,222,771 $ 1.93 $ 9,468,409 $ 3.12 For the three months ended September 30, 2017, refinery operating expenses per bbl decreased compared to the three months ended September 30, 2016 due to the revised cost-plus expense reimbursement structure under the Amended and Restated Operating Agreement. The Amended and Restated Operating Agreement was effective in April 2017. For the nine months ended September 2017, refinery operating expenses per bbl decreased compared to the nine months ended September 30, 2017 due to the revised cost-plus expense reimbursement structure as noted above. In addition, refinery operating expenses per bbl were higher during the nine months ended September 30, 2016 due to significant refinery downtime. Interest expense associated with the LEH Loan Agreement and Amended and Restated Guaranty Fee Agreements for the periods indicated was as follows: Three Months Ended September 30, Nine Months Ended September 30, 2017 2016 2017 2016 LEH $ 201,361 $ 80,000 $ 643,046 $ 80,000 Jonathan Carroll 165,089 172,300 499,184 522,931 $ 366,450 $ 252,300 $ 1,142,230 $ 602,931 |
9. Accrued Expenses and Other C
9. Accrued Expenses and Other Current Liabilities | 9 Months Ended |
Sep. 30, 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: September 30, December 31, 2017 2016 Unearned revenue $ 708,567 $ 408,770 Board of director fees payable 203,929 136,429 Customer deposits 109,029 450,000 Property taxes 99,236 4,694 Excise and income taxes payable 60,692 24,187 Other payable 38,621 189,719 Insurance - 67,783 $ 1,220,074 $ 1,281,582 |
10. Long-Term Debt, Net
10. Long-Term Debt, Net | 9 Months Ended |
Sep. 30, 2017 | |
Debt Disclosure [Abstract] | |
Long-Term Debt, Net | Long-term debt, net represents the outstanding principal of long-term debt less associated debt issue costs. Long-term debt, net as of the dates indicated consisted of the following: September 30, December 31, 2017 2016 First Term Loan Due 2034 (in default) $ 23,382,570 $ 23,924,607 Second Term Loan Due 2034 (in default) 9,553,728 9,729,853 Notre Dame Debt 4,977,953 1,300,000 Term Loan Due 2017 - 184,994 Capital Leases 8,427 135,879 $ 37,922,678 $ 35,275,333 Less: Current portion of long-term debt, net (35,756,045 ) (31,712,336 ) Less: Unamortized debt issue costs (2,166,633 ) (2,262,997 ) $ - $ 1,300,000 Unamortized debt issue costs, which relate to secured loan agreements with Veritex, as of the dates indicated consisted of the following: September 30, December 31, 2017 2016 First Term Loan Due 2034 (in default) $ 1,673,545 $ 1,673,545 Second Term Loan Due 2034 (in default) 767,673 767,673 Less: Accumulated amortization (274,585 ) (178,221 ) $ 2,166,633 $ 2,262,997 Amortization expense associated with long-term debt, net, which is included in interest expense, was $32,121 and $32,121 for the three months ended September 30, 2017 and 2016, respectively. Amortization expense was $96,363 and $96,364 for the nine months ended September 30, 2017 and 2016, respectively. Accrued interest associated with 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: June 30, December 31, 2017 2016 Notre Dame Debt $ 1,846,964 $ 1,691,383 LEH Loan Agreement (related party) 728,889 243,556 Second Term Loan Due 2034 (in default) 47,635 44,984 First Term Loan Due 2034 (in default) 35,875 33,866 Capital Leases 423 1,165 Term Loan Due 2017 - 185 2,659,786 2,015,139 Less: Interest payable, current portion (2,659,786 ) (323,756 ) Long-term interest payable, net of current portion $ - $ 1,691,383 Related Party First Term Loan Due 2034 (In Default) a term loan in the principal amount of $25.0 million As described elsewhere in this Quarterly Report, Veritex notified LE that the Final Arbitration Award constitutes an event of default under the First Term Loan Due 2034. In addition to existing or potential events of default related to the Final Arbitration Award, at September 30, 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. LE also failed to replenish a payment reserve account as required. The occurrence of events of default under the First Term Loan Due 2034 permits Veritex to declare the amounts owed under the First Term Loan Due 2034 immediately due and payable, exercise its rights with respect to collateral securing LE’s obligations under the loan agreement, and/or exercise any other rights and remedies available. Veritex informed obligors that it is not currently exercising its rights, privileges and remedies under the First Term Loan Due 2034 in light of the ongoing settlement discussions with GEL and the continuance of the hearing on confirmation of the Final Arbitration Award and to allow Veritex to evaluate any proposed settlement agreement related to the Final Arbitration Award, which would require Veritex’s approval. However, Veritex expressly reserved all its rights, privileges and remedies related to events of default under the First Term Loan Due 2034 and informed LE that it would consider a final confirmation of the Final Arbitration Award to be a material event of default under the loan agreement. Any exercise by Veritex of its rights and remedies under the First Term Loan Due 2034 would have a material adverse effect on our business, financial condition and results of operations and likely would require us to seek protection under bankruptcy laws. (See “Note (1) Organization – Going Concern and Operating Risks” for additional disclosures related to the First Term Loan Due 2034, the Final Arbitration Award 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 payment reserve account held by Veritex, 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 (In Default) As described elsewhere in this Quarterly Report, Veritex notified LRM that the Final Arbitration Award constitutes an event of default under the Second Term Loan Due 2034. In addition to existing or potential events of default related to the Final Arbitration Award, at September 30, 2017, LRM was in violation of the debt service coverage ratio, the current ratio, and debt to net worth ratio financial covenants related to the Second Term Loan Due 2034. The occurrence of events of default under the Second Term Loan Due 2034 permits Veritex to declare the amounts owed under the Second Term Loan Due 2034 immediately due and payable, exercise its rights with respect to collateral securing LRM’s obligations under the loan agreement, and/or exercise any other rights and remedies available. Veritex informed obligors that it is not currently exercising its rights, privileges and remedies under the Second Term Loan Due 2034 considering the ongoing settlement discussions with GEL and the continuance of the hearing on confirmation of the Final Arbitration Award and to allow Veritex to evaluate any proposed settlement agreement related to the Final Arbitration Award, which would require Veritex’s approval. However, Veritex expressly reserved all its rights, privileges and remedies related to events of default under the Second Term Loan Due 2034 and informed LRM that it would consider a final confirmation of the Final Arbitration Award to be a material event of default under the loan agreement. Any exercise by Veritex of its rights and remedies under the Second Term Loan Due 2034 would have a material adverse effect on our business, financial condition and results of operations and likely would require us to seek protection under bankruptcy laws. (See “Note (1) Organization – Going Concern and Operating Risks” for additional disclosures related to the First Term Loan Due 2034, the Final Arbitration Award 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. Effective in April 2017, the Guaranty Fee Agreement associated with the Second Term Loan Due 2034 was amended and restated to reflect payment in cash and shares of Blue Dolphin Common Stock. For the three months ended September 30, 2017 and 2016, guaranty fees related to the Second Term Loan Due 2034 totaled $47,874 and $49,094, respectively. For the nine months ended September 30, 2017 and 2016, guaranty fees related to the Second Term Loan Due 2034 totaled $144,487 and $148,261, 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.) A portion of the proceeds of the Second Term Loan Due 2034 were used to refinance a previous bridge loan from Veritex 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 LRM’s fixtures, furniture, machinery and equipment; (iv) a first priority lien on all of LRM’s contractual rights, general intangibles and instruments, except with respect to LRM’s rights in its leases of certain specified tanks, with respect to which Veritex has a second priority lien in such leases subordinate to a prior lien granted by LRM to Veritex 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 Pursuant to a Sixth Amendment to the Notre Dame Debt , entered into on November 14, 2017 and made effective September 18, 2017, the Notre Dame Debt was amended to increase the principal amount by $3,677,953 (the “Additional Principal”). The Additional Principal was used to make payments to GEL to reduce the balance of the Final Arbitration Award in the amount of $3,648,742 in accordance with the GEL Letter Agreement. 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 Veritex 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: September 30, December 31, 2017 2016 Boiler equipment $ 538,598 $ 538,598 Less: accumulated depreciation - - $ 538,598 $ 538,598 |
11. Asset Retirement Obligation
11. Asset Retirement Obligations | 9 Months Ended |
Sep. 30, 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: September 30, December 31, 2017 2016 Asset retirement obligations, at the beginning of the period $ 2,027,639 $ 1,985,864 Liabilities settled (445 ) (70,969 ) Accretion expense 215,532 112,744 2,242,726 2,027,639 Less: asset retirement obligations, current portion (17,065 ) (17,510 ) Long-term asset retirement obligations, at the end of the period $ 2,225,661 $ 2,010,129 Liabilities settled represents amounts paid for plugging and abandonment costs against the asset’s ARO liability. At September 30, 2017 and December 31, 2016, we recognized $445 and $70,969, respectively, in liabilities settled. Abandonment expense represents amounts paid for plugging and abandonment costs that exceed the asset’s ARO liability. For the three and nine months ended September 30, 2017 and 2016, we recognized $0 in abandonment expense. |
12. Treasury Stock
12. Treasury Stock | 9 Months Ended |
Sep. 30, 2017 | |
Equity [Abstract] | |
Treasury Stock | At September 30, 2017 and December 31, 2016, we had 0 and 150,000 shares of treasury stock, respectively. In May 2017, we issued 150,000 shares of treasury stock to Jonathan Carroll as payment for amounts due under the March Carroll Note. The issuance price of the treasury stock issued to Mr. Carroll was $2.48 per share, which represents the preceding 30-day average closing price of the Common Stock, in accordance with the Amended and Restated Guaranty Fee Agreements. The shares of treasury stock issued to Mr. Carroll are restricted per applicable securities holding periods for affiliates. |
13. Concentration of Risk
13. Concentration of Risk | 9 Months Ended |
Sep. 30, 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. As discussed elsewhere in this Quarterly Report, we ceased purchases of crude oil and condensate from GEL under the Crude Supply Agreement in November 2016. (See “Part I, Item 1 Financial Statements – Note (18) Commitments and Contingencies – Legal Matters” in this Quarterly Report for disclosures related to the Crude Supply Agreement, the contract-related dispute with GEL, and the Final Arbitration Award.) We currently have in place a month-to-month evergreen crude supply contract with a major integrated oil and gas company. This new supplier currently provides us with adequate amounts of crude oil and condensate, and we expect the supplier to continue to do so for the foreseeable future. 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. The Final Arbitration Award could have a material adverse effect on our ability to procure adequate amounts and crude oil and condensate from our current supplier or otherwise. Significant Customers For the three months ended September 30, 2017, we had 4 customers that accounted for approximately 84% of our refined petroleum product sales. LEH, a related party, was 1 of these 4 significant customers and accounted for approximately 32% of our refined petroleum product sales. At September 30, 2017, these 4 customers represented approximately $1.5 million in accounts receivable. LEH represented approximately $1.1 million in accounts receivable. For the three months ended September 30, 2016, we had 4 customers that accounted for approximately 70% of our refined petroleum product sales. LEH was one of these 4 significant customers and accounted for approximately 27% of our refined petroleum product sales. At September 30, 2016, these 4 customers represented approximately $6.7 million in accounts receivable. LEH represented approximately $2.9 million in accounts receivable. For the nine months ended September 30, 2017, we had 3 customers that accounted for approximately 67% of our refined petroleum product sales. LEH was 1 of these 3 significant customers and accounted for approximately 34% of our refined petroleum product sales. At September 30, 2017, these 3 customers represented approximately $1.2 million in accounts receivable. LEH represented approximately $1.1 million in accounts receivable. For the nine months ended September 30, 2016, we had 4 customers that accounted for approximately 64% of our refined petroleum product sales. LEH was one of these 4 significant customers and accounted for approximately 19% of our refined petroleum product sales. At September 30, 2016, these 4 customers represented approximately $5.5 in accounts receivable. LEH represented approximately $2.9 million in accounts receivable. LEH purchases our jet fuel and resells the jet fuel to a government agency. (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 LEH’s purchased jet fuel under the Terminal Services Agreement.) Refined Petroleum Product Sales Three Months Ended September 30, Nine Months Ended September 30, 2017 2016 2017 2016 LPG mix $ - 0.0 % $ 237,009 0.4 % $ 120,542 0.1 % $ 621,313 0.5 % Naphtha 14,266,056 21.6 % 11,870,484 22.0 % 41,282,969 24.9 % 28,183,809 22.3 % Jet fuel 20,802,789 31.5 % 15,104,900 28.0 % 56,360,757 32.8 % 41,150,686 32.5 % HOBM 17,011,443 25.7 % 14,206,759 26.4 % 38,580,236 19.9 % 25,259,753 20.0 % Reduced Crude - 0.0 % - 0.0 % - 0.0 % 3,791,919 3.0 % AGO 14,052,671 21.2 % 12,532,141 23.2 % 38,323,113 22.3 % 27,539,236 21.7 % $ 66,132,959 100.0 % $ 53,951,293 100.0 % $ 174,667,617 100.0 % $ 126,546,716 100.0 % |
14. Leases
14. Leases | 9 Months Ended |
Sep. 30, 2017 | |
Leases, Operating [Abstract] | |
Leases | Our company headquarters are 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 had a 10-year term expiring in September 2017, but we extended the lease through December 2017. We are currently exploring our leasing options. Rent expense is recognized on a straight-line basis. For the three months ended September 30, 2017 and 2016, rent expense totaled $31,681 and $33,251, respectively. For the nine months ended September 30, 2017 and 2016, rent expense totaled $107,853 and $92,966, respectively. |
15. Income Taxes
15. Income Taxes | 9 Months Ended |
Sep. 30, 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 - 6,469,611 6,469,611 Balance at September 30, 2017 $ 9,614,449 $ 30,031,680 $ 39,646,129 Deferred Tax Assets and Liabilities September 30, December 31, 2017 2016 Deferred tax assets: Net operating loss and capital loss carryforwards $ 15,750,006 $ 13,550,338 Accrued arbitration award payable 6,674,017 - Start-up costs (Nixon Facility) 1,270,361 1,373,363 Asset retirement obligations liability/deferred revenue 780,249 717,751 AMT credit and other 224,647 266,522 Total deferred tax assets 24,699,280 15,907,974 Deferred tax liabilities: Basis differences in property and equipment (6,762,850 ) (5,895,943 ) Total deferred tax liabilities (6,762,850 ) (5,895,943 ) 17,936,430 10,012,031 Valuation allowance (17,936,430 ) (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 and nine months ended September 30, 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. |
16. Earnings Per Share
16. Earnings Per Share | 9 Months Ended |
Sep. 30, 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 September 30, Nine Months Ended September 30, 2017 2016 2017 2016 Net income (loss) $ 3,945,519 $ (1,938,551 ) $ (23,297,713 ) $ (7,250,371 ) Basic and diluted income per share $ 0.36 $ (0.19 ) $ (2.19 ) $ (0.69 ) Basic and Diluted Weighted average number of shares of common stock outstanding and potential dilutive shares of common stock 10,818,371 10,464,715 10,644,654 10,460,849 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 and nine months ended September 30, 2017 and 2016 was the same as basic EPS as there were no stock options or other dilutive instruments outstanding. |
17. Inventory Risk Management
17. Inventory Risk Management | 9 Months Ended |
Sep. 30, 2017 | |
Derivative Instruments and Hedging Activities Disclosure [Abstract] | |
Inventory Risk Management | During 2017, we began selling all our jet fuel immediately following production, which minimizes inventory, improves cash flow, and reduces commodity risk/exposure. Previously, Genesis/GEL used commodity futures contracts to mitigate the volatile change in value for our crude oil and refined petroleum products inventory. When active, the fair value of commodity futures contracts was reflected in our consolidated balance sheets and the related net gain or loss was 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) were considered to determine the fair values for marking to market the financial instruments at each period end. Commodity transactions were executed to minimize transaction costs, monitor consolidated net exposures, and allow for increased responsiveness to changes in market factors. At September 30, 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 September 30, 2017 and December 31, 2016. The following table provides the effect of derivative instruments in our consolidated statements of operations for the three and nine months ended September 30, 2017 and 2016: Gain (Loss) Recognized Three Months Ended September 30, Nine Months Ended September 30, Derivatives Statements of Operations Location 2017 2016 2017 2016 Commodity contracts Cost of refined products sold $ — $ 770,838 $ — $ (2,588,734 ) |
18. Commitments and Contingenci
18. Commitments and Contingencies | 9 Months Ended |
Sep. 30, 2017 | |
Commitments and Contingencies Disclosure [Abstract] | |
Commitments and Contingencies | Debt Assumption Agreement Amended and Restated Guaranty Fee Agreements Financial Statements Impact Consolidated Balance Sheets Other Legal Matters Amended and Restated Operating Agreement Financing Agreements Health, Safety and Environmental Matters Nixon Facility Expansion 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 September 30, 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 BOEM’s 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) have been approved for decommissioning by the Bureau of Safety and Environmental Enforcement (the “BSEE”); decommissioning of Segment No. 9428 also requires approval by the U.S. Army Corps of Engineers, which has not yet been granted. 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. |
19. Subsequent Events
19. Subsequent Events | 9 Months Ended |
Sep. 30, 2017 | |
Subsequent Events [Abstract] | |
Subsequent Events | Amended GEL Letter Agreement Debt Assumption Agreement Sixth Amendment to Notre Dame Debt |
3. Significant Accounting Pol25
3. Significant Accounting Policies (Policies) | 9 Months Ended |
Sep. 30, 2017 | |
Accounting Policies [Abstract] | |
Use of Estimates | Use of Estimates |
Cash and Cash Equivalents | Cash and Cash Equivalents |
Restricted Cash | Restricted Cash |
Accounts Receivable and Allowance for Doubtful Accounts | Accounts Receivable and Allowance for Doubtful Accounts |
Inventory | 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 asset’s 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 Oil and Gas Properties Construction in Progress (See “Note (7) Property, Plant and Equipment, Net” for additional disclosures related to our refinery and facilities assets, oil and gas properties, pipelines and facilities assets, and construction in progress.) |
Intangibles - Other | Intangibles – Other |
Debt Issue Costs | Debt Issue Costs |
Revenue Recognition | Revenue Recognition Refined Petroleum Products Revenue Tank Rental Revenue Easement Revenue Pipeline Transportation 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 de-recognition, classification, interest and penalties, accounting in interim periods, disclosures, and transition. (See “Note (15) Income Taxes” for further information related to income taxes.) |
Impairment or Disposal of Long-Lived Assets | Impairment or Disposal of Long-Lived Assets |
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 (11) 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 issuer’s 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 (16) Earnings Per Share” for additional information related to EPS.) |
Treasury Stock | Treasury Stock |
New Pronouncements Adopted | New Pronouncements Adopted ASU 2016-18, Statement of Cash Flows (Topic 230: Restricted Cash (A Consensus of the FASB Emerging Issues Task Force) 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 2016-02,Leases (Topic 842) ASU 2014-09, Revenue from Contracts with Customers , evenue from Contracts with Customers (Topic 606): Deferral of the Effective Date Revenue from Contracts with Customers (Topic 606): Principal Versus Agent Considerations (Reporting Revenue Gross Versus Net) Revenue from Contracts with Customers (Topic 606): Identifying Performance Obligations and Licensing Revenue Recognition (Topic 605) and Derivatives and Hedging (Topic 815): Rescission of SEC Guidance Because of Accounting Standards Updates 2014-09 and 2014-16 Pursuant to Staff Announcements at the March 3, 2016 EITF Meeting (SEC Update) Revenue from Contracts with Customers (Topic 606): Narrow-Scope Improvements and Practical Expedients Technical Corrections and Improvements to Topic 606, Revenue from Contracts with Customers 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 |
4. Business Segment Informati26
4. Business Segment Information (Tables) | 9 Months Ended |
Sep. 30, 2017 | |
Segment Reporting [Abstract] | |
Business segment reporting | Three Months Ended September 30, 2017 2016 Segment Segment Refinery Corporate & Refinery Corporate & Operations Other Total Operations Other Total Revenue from operations $ 66,899,092 $ - $ 66,899,092 $ 54,668,780 $ 19,526 $ 54,688,306 Less: cost of operations (1) (61,456,546 ) (466,912 ) (61,923,458 ) (55,495,575 ) (367,915 ) (55,863,490 ) Other non-interest income (2) - - - - 156,396 156,396 Less: JMA Profit Share (3) - - - (965,627 ) - (965,627 ) EBITDA (4) $ 5,442,546 $ (466,912 ) $ (1,792,422 ) $ (191,993 ) Depletion, depreciation and amortization (455,437 ) (504,719 ) Interest expense, net (574,678 ) (484,215 ) Income (loss) before income taxes 3,945,519 (2,973,349 ) Income tax benefit - 1,034,798 Net income (loss) $ 3,945,519 $ (1,938,551 ) Capital expenditures $ 538,801 $ - $ 538,801 $ 4,191,077 $ - $ 4,191,077 Identifiable assets $ 70,791,236 $ 2,068,269 $ 72,859,505 $ 85,585,499 $ 10,816,664 $ 96,402,163 (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 easement revenue. (3) The JMA Profit Share represents the GEL Profit Share plus the Performance Fee for the period pursuant to the Joint Marketing Agreement, under which marketing activities have ceased. (See “Note (1) Organization - Going Concern - Final Arbitration Award” for further discussion related to 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. Nine Months Ended September 30, 2017 2016 Segment Segment Refinery Corporate & Refinery Corporate & Operations Other Total Operations Other Total Revenue from operations $ 176,841,172 $ - $ 176,841,172 $ 128,171,177 $ 71,865 $ 128,243,042 Less: cost of operations (1) (197,706,434 ) (1,293,162 ) (198,999,596 ) (135,452,537 ) (1,078,910 ) (136,531,447 ) Other non-interest income (2) - - - (392,062 ) - (392,062 ) Less: JMA Profit Share (3) - 2,216,251 2,216,251 - 412,061 412,061 EBITDA (4) $ (20,865,262 ) $ 923,089 $ (7,673,422 ) $ (594,984 ) Depletion, depreciation and amortization (1,355,780 ) (1,415,519 ) Interest expense, net (1,999,760 ) (1,301,486 ) Loss before income taxes (23,297,713 ) (10,985,411 ) Income tax benefit - 3,735,040 Net loss $ (23,297,713 ) $ (7,250,371 ) Capital expenditures $ 3,428,129 $ - $ 3,428,129 $ 13,857,434 $ - $ 13,857,434 Identifiable assets $ 70,791,236 $ 2,068,269 $ 72,859,505 $ 85,585,499 $ 10,816,664 $ 96,402,163 (1) Operation cost within the Refinery Operations segment includes related general and administrative expenses and the arbitration award and associated fees. 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 easement revenue. (3) The JMA Profit Share represents the GEL Profit Share plus the Performance Fee for the period pursuant to the Joint Marketing Agreement, under which marketing activities have ceased. (See “Note (1) Organization - Going Concern - Final Arbitration Award” for further discussion related to 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 Other27
5. Prepaid Expenses and Other Current Assets (Tables) | 9 Months Ended |
Sep. 30, 2017 | |
Deferred Costs, Capitalized, Prepaid, and Other Assets Disclosure [Abstract] | |
Prepaid balances | September 30, December 31, 2017 2016 Prepaid crude oil and condensate $ 1,332,439 $ - Prepaid insurance 298,913 248,853 Short-term tax bond - 505,000 Prepaid exise taxes - 292,338 $ 1,631,352 $ 1,046,191 |
6. Inventory (Tables)
6. Inventory (Tables) | 9 Months Ended |
Sep. 30, 2017 | |
Inventory Disclosure [Abstract] | |
Inventory | September 30, December 31, 2017 2016 Crude oil and condensate $ 1,207,865 $ 26,123 AGO 910,189 143,362 HOBM 341,660 212,987 Chemicals 156,535 182,751 Naphtha 135,554 533,580 Propane 18,377 11,318 LPG mix 5,260 1,293 Jet fuel - 964,124 $ 2,775,440 $ 2,075,538 |
7. Property, Plant and Equipm29
7. Property, Plant and Equipment, Net (Tables) | 9 Months Ended |
Sep. 30, 2017 | |
Property, Plant and Equipment [Abstract] | |
Property and equipment | September 30, December 31, 2017 2016 Refinery and facilities $ 51,432,434 $ 50,814,309 Land 566,159 602,938 Other property and equipment 652,795 652,795 52,651,388 52,070,042 Less: Accumulated depletion, depreciation, and amortization (8,041,024 ) (6,685,244 ) 44,610,364 45,384,798 Construction in progress 19,786,447 16,939,665 $ 64,396,811 $ 62,324,463 |
8. Related Party Transactions (
8. Related Party Transactions (Tables) | 9 Months Ended |
Sep. 30, 2017 | |
Related Party Transactions [Abstract] | |
Accounts Payable, Related Party | September 30, December 31, 2017 2016 LEH $ 4,000,000 $ 4,000,000 Ingleside 1,168,748 722,278 Jonathan Carroll 282,907 592,412 5,451,655 5,314,690 Less: Long-term debt, related party, current portion (4,000,000 ) (500,000 ) $ 1,451,655 $ 4,814,690 |
Accrued interest Expenses | Three Months Ended September 30, Nine Months Ended September 30, 2017 2016 2017 2016 Jet fuel sales $ 20,802,789 $ 14,536,997 $ 56,360,756 $ 23,449,071 Jet fuel storage fees 56,386 426,000 675,000 750,000 HOBM sales - - 3,425,455 - $ 20,859,175 $ 14,962,997 $ 60,461,211 $ 24,199,071 |
Refinery operating expenses | Three Months Ended September 30, 2017 2016 Amount Per bbl Amount Per bbl LEH $ 1,758,005 $ 1.53 $ 3,028,646 $ 2.66 Ingleside - - 125,000 0.11 $ 1,758,005 $ 1.53 $ 3,153,646 $ 2.77 Nine Months Ended September 30, 2017 2016 Amount Per bbl Amount Per bbl LEH $ 6,222,771 $ 1.93 $ 8,618,409 $ 2.84 Ingleside - - 850,000 0.28 $ 6,222,771 $ 1.93 $ 9,468,409 $ 3.12 Interest expense associated with the LEH Loan Agreement and Amended and Restated Guaranty Fee Agreements for the periods indicated was as follows: Three Months Ended September 30, Nine Months Ended September 30, 2017 2016 2017 2016 LEH $ 201,361 $ 80,000 $ 643,046 $ 80,000 Jonathan Carroll 165,089 172,300 499,184 522,931 $ 366,450 $ 252,300 $ 1,142,230 $ 602,931 |
9. Accrued Expenses and Other31
9. Accrued Expenses and Other Current Liabilities (Tables) | 9 Months Ended |
Sep. 30, 2017 | |
Disclosure Text Block Supplement [Abstract] | |
Accrued expenses and other current liabilities | September 30, December 31, 2017 2016 Unearned revenue $ 708,567 $ 408,770 Board of director fees payable 203,929 136,429 Customer deposits 109,029 450,000 Property taxes 99,236 4,694 Excise and income taxes payable 60,692 24,187 Other payable 38,621 189,719 Insurance - 67,783 $ 1,220,074 $ 1,281,582 |
10. Long-Term Debt, Net (Tables
10. Long-Term Debt, Net (Tables) | 9 Months Ended |
Sep. 30, 2017 | |
Debt Disclosure [Abstract] | |
Schedule of Long Term Debt | September 30, December 31, 2017 2016 First Term Loan Due 2034 (in default) $ 23,382,570 $ 23,924,607 Second Term Loan Due 2034 (in default) 9,553,728 9,729,853 Notre Dame Debt 4,977,953 1,300,000 Term Loan Due 2017 - 184,994 Capital Leases 8,427 135,879 $ 37,922,678 $ 35,275,333 Less: Current portion of long-term debt, net (35,756,045 ) (31,712,336 ) Less: Unamortized debt issue costs (2,166,633 ) (2,262,997 ) $ - $ 1,300,000 |
Schedule of Debt issue costs | September 30, December 31, 2017 2016 First Term Loan Due 2034 (in default) $ 1,673,545 $ 1,673,545 Second Term Loan Due 2034 (in default) 767,673 767,673 Less: Accumulated amortization (274,585 ) (178,221 ) $ 2,166,633 $ 2,262,997 |
Accrued interest related to our long-term debt, net | June 30, December 31, 2017 2016 Notre Dame Debt $ 1,846,964 $ 1,691,383 LEH Loan Agreement (related party) 728,889 243,556 Second Term Loan Due 2034 (in default) 47,635 44,984 First Term Loan Due 2034 (in default) 35,875 33,866 Capital Leases 423 1,165 Term Loan Due 2017 - 185 2,659,786 2,015,139 Less: Interest payable, current portion (2,659,786 ) (323,756 ) Long-term interest payable, net of current portion $ - $ 1,691,383 |
Schedule of summary of equipment held under long-term capital leases | September 30, December 31, 2017 2016 Boiler equipment $ 538,598 $ 538,598 Less: accumulated depreciation - - $ 538,598 $ 538,598 |
11. Asset Retirement Obligati33
11. Asset Retirement Obligations (Tables) | 9 Months Ended |
Sep. 30, 2017 | |
Asset Retirement Obligation Disclosure [Abstract] | |
Asset retirement obligations | September 30, December 31, 2017 2016 Asset retirement obligations, at the beginning of the period $ 2,027,639 $ 1,985,864 Liabilities settled (445 ) (70,969 ) Accretion expense 215,532 112,744 2,242,726 2,027,639 Less: asset retirement obligations, current portion (17,065 ) (17,510 ) Long-term asset retirement obligations, at the end of the period $ 2,225,661 $ 2,010,129 |
13. Concentration of Risk (Tabl
13. Concentration of Risk (Tables) | 9 Months Ended |
Sep. 30, 2017 | |
Risks and Uncertainties [Abstract] | |
Percentages of all refined petroleum products sales to total sales | Three Months Ended September 30, Nine Months Ended September 30, 2017 2016 2017 2016 LPG mix $ - 0.0 % $ 237,009 0.4 % $ 120,542 0.1 % $ 621,313 0.5 % Naphtha 14,266,056 21.6 % 11,870,484 22.0 % 41,282,969 24.9 % 28,183,809 22.3 % Jet fuel 20,802,789 31.5 % 15,104,900 28.0 % 56,360,757 32.8 % 41,150,686 32.5 % HOBM 17,011,443 25.7 % 14,206,759 26.4 % 38,580,236 19.9 % 25,259,753 20.0 % Reduced Crude - 0.0 % - 0.0 % - 0.0 % 3,791,919 3.0 % AGO 14,052,671 21.2 % 12,532,141 23.2 % 38,323,113 22.3 % 27,539,236 21.7 % $ 66,132,959 100.0 % $ 53,951,293 100.0 % $ 174,667,617 100.0 % $ 126,546,716 100.0 % |
15. Income Taxes (Tables)
15. Income Taxes (Tables) | 9 Months Ended |
Sep. 30, 2017 | |
Income Tax Disclosure [Abstract] | |
NOL carryforwards | 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 - 6,469,611 6,469,611 Balance at September 30, 2017 $ 9,614,449 $ 30,031,680 $ 39,646,129 |
Deferred tax assets and deferred tax liabilities | September 30, December 31, 2017 2016 Deferred tax assets: Net operating loss and capital loss carryforwards $ 15,750,006 $ 13,550,338 Accrued arbitration award payable 6,674,017 - Start-up costs (Nixon Facility) 1,270,361 1,373,363 Asset retirement obligations liability/deferred revenue 780,249 717,751 AMT credit and other 224,647 266,522 Total deferred tax assets 24,699,280 15,907,974 Deferred tax liabilities: Basis differences in property and equipment (6,762,850 ) (5,895,943 ) Total deferred tax liabilities (6,762,850 ) (5,895,943 ) 17,936,430 10,012,031 Valuation allowance (17,936,430 ) (10,012,031 ) Deferred tax assets, net $ - $ - |
16. Earnings Per Share (Tables)
16. Earnings Per Share (Tables) | 9 Months Ended |
Sep. 30, 2017 | |
Earnings Per Share [Abstract] | |
Earnings per share | Three Months Ended September 30, Nine Months Ended September 30, 2017 2016 2017 2016 Net income (loss) $ 3,945,519 $ (1,938,551 ) $ (23,297,713 ) $ (7,250,371 ) Basic and diluted income per share $ 0.36 $ (0.19 ) $ (2.19 ) $ (0.69 ) Basic and Diluted Weighted average number of shares of common stock outstanding and potential dilutive shares of common stock 10,818,371 10,464,715 10,644,654 10,460,849 |
17. Inventory Risk Management (
17. Inventory Risk Management (Tables) | 9 Months Ended |
Sep. 30, 2017 | |
Derivative Instruments and Hedging Activities Disclosure [Abstract] | |
Effect of derivative instruments | Gain (Loss) Recognized Three Months Ended September 30, Nine Months Ended September 30, Derivatives Statements of Operations Location 2017 2016 2017 2016 Commodity contracts Cost of refined products sold $ — $ 770,838 $ — $ (2,588,734 ) |
1. Organization (Details Narrat
1. Organization (Details Narrative) - USD ($) | 3 Months Ended | 9 Months Ended | |||
Sep. 30, 2017 | Sep. 30, 2016 | Sep. 30, 2017 | Sep. 30, 2016 | Dec. 31, 2016 | |
Organization, Consolidation and Presentation of Financial Statements [Abstract] | |||||
Net income (loss) | $ 3,945,519 | $ (1,938,551) | $ (23,297,713) | $ (7,250,371) | |
Net Loss per common share | $ 0.36 | $ (0.19) | $ (2.19) | $ (0.69) | |
Improvement in net loss | $ .55 | $ (1.50) | |||
Working capital deficit current portion | $ 67,084,694 | $ 67,084,694 | $ 37,812,263 | ||
Working capital deficit payment of Operations | $ 27,328,649 | $ 27,328,649 | $ 5,599,927 |
3. Significant Accounting Pol39
3. Significant Accounting Policies (Details Narrative) - USD ($) | 3 Months Ended | 9 Months Ended | |||
Sep. 30, 2017 | Sep. 30, 2016 | Sep. 30, 2017 | Sep. 30, 2016 | Dec. 31, 2016 | |
Accounting Policies [Abstract] | |||||
Cash and cash equivalents | $ 44,931 | $ 44,931 | $ 1,152,628 | ||
Restricted cash | 1,650,910 | 1,650,910 | 4,930,140 | ||
Restricted cash (current portion) | 1,500,380 | 1,500,380 | 3,347,835 | ||
Restricted cash, noncurrent | 150,530 | 150,530 | 1,582,305 | ||
Allowance for doubtful accounts | 0 | 0 | 0 | ||
Trade name | 303,346 | 303,346 | $ 303,346 | ||
Gain on the disposal of property | $ 0 | $ 0 | $ 1,834,500 | $ 0 |
4. Business Segment Informati40
4. Business Segment Information (Details) - USD ($) | 3 Months Ended | 9 Months Ended | |||
Sep. 30, 2017 | Sep. 30, 2016 | Sep. 30, 2017 | Sep. 30, 2016 | ||
Revenue from operations | $ 66,899,092 | $ 54,688,306 | $ 176,841,172 | $ 128,243,042 | |
Depletion, depreciation and amortization | (32,121) | (32,121) | (96,363) | (96,364) | |
Income tax benefit | 0 | (1,034,798) | 0 | (3,735,040) | |
Net income (loss) | 3,945,519 | (1,938,551) | (23,297,713) | (7,250,371) | |
Refinery Operations [Member] | |||||
Revenue from operations | 66,899,092 | 54,668,780 | 176,841,172 | 128,171,177 | |
Less: cost of operations (1) | [1] | (61,456,546) | (55,495,575) | (197,706,434) | (135,452,537) |
Other non-interest income (2) | [2] | 0 | 0 | 0 | (392,062) |
Less: JMA Profit Share (3) | [3] | 0 | (965,627) | 0 | 0 |
EBITDA (4) | [4] | 5,442,546 | (1,792,422) | (20,865,262) | (7,673,422) |
Capital expenditures | 538,801 | 4,191,077 | 3,428,129 | 13,857,434 | |
Identifiable assets | 70,791,236 | 85,585,499 | 70,791,236 | 85,585,499 | |
Corporate and Other [Member] | |||||
Revenue from operations | 0 | 19,526 | 0 | 71,865 | |
Less: cost of operations (1) | [1] | (466,912) | (367,915) | (1,293,162) | (1,078,910) |
Other non-interest income (2) | [2] | 0 | 156,396 | 0 | 0 |
Less: JMA Profit Share (3) | [3] | 0 | 0 | 2,216,251 | 412,061 |
EBITDA (4) | [4] | (466,912) | (191,993) | 923,089 | (594,984) |
Capital expenditures | 0 | 0 | 0 | 0 | |
Identifiable assets | 2,068,269 | 10,816,664 | 2,068,269 | 10,816,664 | |
Total | |||||
Revenue from operations | 66,899,092 | 54,688,306 | 176,841,172 | 128,243,042 | |
Less: cost of operations (1) | [1] | (61,923,458) | (55,863,490) | (198,999,596) | (136,531,447) |
Other non-interest income (2) | [2] | 0 | 156,396 | 0 | (392,062) |
Less: JMA Profit Share (3) | [3] | 0 | (965,627) | 2,216,251 | 412,061 |
Depletion, depreciation and amortization | (455,437) | (504,719) | (1,355,780) | (1,415,519) | |
Interest expense, net | (574,678) | (484,215) | (1,999,760) | (1,301,486) | |
Income (loss) before income taxes | 3,945,519 | (2,973,349) | (23,297,713) | (10,985,411) | |
Income tax benefit | 0 | 1,034,798 | 0 | 3,735,040 | |
Net income (loss) | 3,945,519 | (1,938,551) | (23,297,713) | (7,250,371) | |
Capital expenditures | 538,801 | 4,191,077 | 3,428,129 | 13,857,434 | |
Identifiable assets | $ 72,859,505 | $ 96,402,163 | $ 72,859,505 | $ 96,402,163 | |
[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 easement revenue. | ||||
[3] | The JMA Profit Share represents the GEL Profit Share plus the Performance Fee for the period pursuant to the Joint Marketing Agreement, under which marketing activities have ceased. (See "Note (1) Organization - Going Concern - Final Arbitration Award" for further discussion related to 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 Other41
5. Prepaid Expenses and Other Current Assets (Details) - USD ($) | Sep. 30, 2017 | Dec. 31, 2016 |
Deferred Costs, Capitalized, Prepaid, and Other Assets Disclosure [Abstract] | ||
Prepaid crude oil and condensate | $ 1,332,439 | $ 0 |
Prepaid insurance | 298,913 | 248,853 |
Short-term tax bond | 0 | 505,000 |
Prepaid exise taxes | 0 | 292,338 |
Prepaid expenses, net | $ 1,631,352 | $ 1,046,191 |
6. Inventory (Details)
6. Inventory (Details) - USD ($) | Sep. 30, 2017 | Dec. 31, 2016 |
Inventory Disclosure [Abstract] | ||
Crude oil and condensate | $ 1,207,865 | $ 26,123 |
AGO | 910,189 | 143,362 |
HOBM | 341,660 | 212,987 |
Chemicals | 156,535 | 182,751 |
Naphtha | 135,554 | 533,580 |
Propane | 18,377 | 11,318 |
LPG mix | 5,260 | 1,293 |
Jet fuel | 0 | 964,124 |
Inventories, net | $ 2,775,440 | $ 2,075,538 |
7. Property, Plant and Equipm43
7. Property, Plant and Equipment, Net (Details) - USD ($) | Sep. 30, 2017 | Dec. 31, 2016 |
Property, Plant and Equipment [Abstract] | ||
Refinery and facilities | $ 51,432,434 | $ 50,814,309 |
Land | 566,159 | 602,938 |
Other property and equipment | 652,795 | 652,795 |
Property, Plant and Equipment, Gross | 52,651,388 | 52,070,042 |
Less: Accumulated depletion, depreciation and amortization | (8,041,024) | (6,685,244) |
Property, plant and equipment, gross | 44,610,364 | 45,384,798 |
Construction in progress | 19,786,447 | 16,939,665 |
Property, plant and equipment, net | $ 64,396,811 | $ 62,324,463 |
8. Property, Plant and Equipmen
8. Property, Plant and Equipment, Net (Details Narrative) - USD ($) | 9 Months Ended | 12 Months Ended |
Sep. 30, 2017 | Dec. 31, 2016 | |
Property, Plant and Equipment [Abstract] | ||
Interest cost capitalized | $ 3,413,428 | $ 2,108,298 |
8. Related Party Transactions45
8. Related Party Transactions (Details) - USD ($) | Sep. 30, 2017 | Dec. 31, 2016 | Dec. 30, 2016 | Jun. 30, 2016 |
Prepaid operating expenses, related party | $ 5,451,655 | $ 5,314,690 | ||
Less: Long-term debt - current portion, related party | (4,000,000) | (500,000) | ||
Long-term debt - net of current portion, related party | 1,451,655 | 4,814,690 | ||
LEH [Member] | ||||
Prepaid operating expenses, related party | 4,000,000 | $ 4,000,000 | ||
Ingleside [Member] | ||||
Prepaid operating expenses, related party | 1,168,748 | $ 722,278 | ||
Jonathan Carroll [Member] | ||||
Prepaid operating expenses, related party | $ 282,907 | $ 592,412 |
8. Related Party Transactions46
8. Related Party Transactions (Details 1) - LEH [Member] - USD ($) | 3 Months Ended | 9 Months Ended | ||
Sep. 30, 2017 | Sep. 30, 2016 | Sep. 30, 2017 | Sep. 30, 2016 | |
Jet fuel sales | $ 20,802,789 | $ 14,536,997 | $ 56,360,756 | $ 23,449,071 |
Jet fuel storag fees | 56,386 | 426,000 | 675,000 | 750,000 |
HOBM sales | 0 | 0 | 3,425,455 | 0 |
Total | $ 20,859,175 | $ 14,962,997 | $ 60,461,211 | $ 24,199,071 |
8. Related Party Transactions47
8. Related Party Transactions (Details 2) | 3 Months Ended | 9 Months Ended | ||
Sep. 30, 2017USD ($)$ / bbl | Sep. 30, 2016USD ($)$ / bbl | Sep. 30, 2017USD ($)$ / bbl | Sep. 30, 2016USD ($)$ / bbl | |
Refinery operating expenses, Amount | $ | $ 1,758,005 | $ 3,153,646 | $ 6,222,771 | $ 9,468,409 |
Refinery operating expenses, Per bbl | $ / bbl | 1.53 | 2.77 | 1.93 | 3.12 |
LEH [Member] | ||||
Refinery operating expenses, Amount | $ | $ 1,758,005 | $ 3,028,646 | $ 6,222,771 | $ 8,618,409 |
Refinery operating expenses, Per bbl | $ / bbl | 1.53 | 2.66 | 1.93 | 2.84 |
Ingleside [Member] | ||||
Refinery operating expenses, Amount | $ | $ 0 | $ 125,000 | $ 0 | $ 850,000 |
Refinery operating expenses, Per bbl | $ / bbl | 0 | .11 | 0 | .28 |
8. Related Party Transactions48
8. Related Party Transactions (Details 3) - USD ($) | 3 Months Ended | 9 Months Ended | ||
Sep. 30, 2017 | Sep. 30, 2016 | Sep. 30, 2017 | Sep. 30, 2016 | |
Interest expenses under loan and guarantee, related party | $ 366,450 | $ 252,300 | $ 1,142,230 | $ 602,931 |
LEH [Member] | ||||
Interest expenses under loan and guarantee, related party | 201,361 | 80,000 | 643,046 | 80,000 |
Jonathan Carroll [Member] | ||||
Interest expenses under loan and guarantee, related party | $ 165,089 | $ 172,300 | $ 499,184 | $ 522,931 |
8. Related Party Transactions49
8. Related Party Transactions (Details Narrative) - USD ($) | 9 Months Ended | |||
Sep. 30, 2017 | Dec. 31, 2016 | Dec. 30, 2016 | Jun. 30, 2016 | |
Prepaid related party operating expenses | $ 5,451,655 | $ 5,314,690 | ||
Outstanding principal and interest | 282,904 | 592,412 | ||
Accounts payable, related party | 823,200 | 369,600 | ||
Sales to LMT totaled | 151,200 | |||
Accrued interest | 728,889 | 243,556 | ||
Jonathan Carroll [Member] | ||||
Prepaid related party operating expenses | 282,907 | 592,412 | ||
Outstanding principal and interest | 592,412 | 592,412 | ||
Ingleside [Member] | ||||
Prepaid related party operating expenses | 1,168,748 | $ 722,278 | ||
Outstanding principal and interest | 722,278 | 722,278 | ||
LEH [Member] | ||||
Prepaid related party operating expenses | 4,000,000 | $ 4,000,000 | ||
LEH Note [Member] | ||||
Outstanding principal and interest | $ 2,043,482 | $ 0 |
9. Accrued Expenses and Other50
9. Accrued Expenses and Other Current Liabilities (Details) - USD ($) | Sep. 30, 2017 | Dec. 31, 2016 |
Disclosure Text Block Supplement [Abstract] | ||
Unearned revenue | $ 708,567 | $ 408,770 |
Board of director fees payable | 203,929 | 136,429 |
Customer deposits | 109,029 | 450,000 |
Property taxes | 99,236 | 4,694 |
Excise and income taxes payable | 60,692 | 24,187 |
Other payable | 38,621 | 189,719 |
Insurance | 0 | 67,783 |
Accrued Expenses and Other Current Liabilities, Net | $ 1,220,074 | $ 1,281,582 |
10. Long-Term Debt, Net (Detail
10. Long-Term Debt, Net (Details) - USD ($) | Sep. 30, 2017 | Dec. 31, 2016 |
Principal balance outstanding | $ 37,922,678 | $ 35,275,333 |
Less: Current portion of long-term debt, net | (35,756,045) | 35,275,333 |
Less: Unamortized debt issue costs | (216,633) | (2,262,997) |
Long term debt | 0 | 1,300,000 |
First Term Loan Due 2034 [Member] | ||
Principal balance outstanding | 23,382,570 | 23,924,607 |
Second Term Loan Due 2034 [Member] | ||
Principal balance outstanding | 9,553,728 | 9,729,853 |
Notre Dame Debt [Member] | ||
Principal balance outstanding | 4,977,953 | 1,300,000 |
Term Loan Due 2017 [Member] | ||
Principal balance outstanding | 0 | 184,994 |
Capital Leases [Member] | ||
Principal balance outstanding | $ 8,427 | $ 135,879 |
10. Long-Term Debt, Net (Deta52
10. Long-Term Debt, Net (Details 1) - USD ($) | Sep. 30, 2017 | Dec. 31, 2016 |
Debt Disclosure [Abstract] | ||
First Term Loan Due 2034 | $ 1,673,545 | $ 33,866 |
Second Term Loan Due 2034 | 767,673 | 767,673 |
Less: Accumulated amortization | (274,585) | (178,221) |
Long term debt | $ 2,166,633 | $ 2,262,997 |
10 Long-Term Debt, Net (Details
10 Long-Term Debt, Net (Details 2) - USD ($) | Sep. 30, 2017 | Dec. 31, 2016 |
Long-term Debt Net Details 2 | ||
Notre Dame Debt | $ 1,846,964 | $ 1,691,383 |
LEH Loan Agreement (related party) | 728,889 | 243,556 |
Second Term Loan Due 2034 | 47,635 | 44,984 |
First Term Loan Due 2034 | 35,875 | 33,866 |
Capital leases | 423 | 1,165 |
Term Loan Due 2017 | 0 | 185 |
Total | 2,659,786 | 2,015,139 |
Less: Interest payable, current portion | (2,659,786) | (323,756) |
Long term debt | $ 0 | $ 1,691,383 |
10. Long-Term Debt, Net (Deta54
10. Long-Term Debt, Net (Details 3) - USD ($) | Sep. 30, 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 |
10.Long-Term Debt, Net (Details
10.Long-Term Debt, Net (Details Narrative) - USD ($) | 3 Months Ended | 9 Months Ended | ||
Sep. 30, 2017 | Sep. 30, 2016 | Sep. 30, 2017 | Sep. 30, 2016 | |
Amortization expense | $ 32,121 | $ 32,121 | $ 96,363 | $ 96,364 |
First Term Loan Due 2034 | ||||
Guaranty fees | 117,214 | 121,048 | 354,286 | 365,420 |
Second Term Loan Due 2034 | ||||
Guaranty fees | 47,874 | 49,094 | 144,487 | 148,261 |
Term Loan Due 2017 [Member] | ||||
Guaranty fees | $ 0 | $ 2,158 | $ 411 | $ 9,250 |
11. Asset Retirement Obligati56
11. Asset Retirement Obligations (Details) - USD ($) | 3 Months Ended | 9 Months Ended | 12 Months Ended | ||
Sep. 30, 2017 | Sep. 30, 2016 | Sep. 30, 2017 | Sep. 30, 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 | (445) | (70,969) | |||
Accretion expense | $ 71,844 | $ 28,186 | 215,532 | $ 84,558 | 112,744 |
Asset retirement obligations | 2,242,726 | 2,242,726 | 2,027,639 | ||
Less: asset retirement obligations, current portion | (17,065) | (17,065) | (17,510) | ||
Long-term asset retirement obligations, at the end of the period | $ 2,225,661 | $ 2,225,661 | $ 2,010,129 |
11. Asset Retirement Obligati57
11. Asset Retirement Obligations (Details Narrative) - USD ($) | 9 Months Ended | 12 Months Ended |
Sep. 30, 2017 | Dec. 31, 2016 | |
Asset Retirement Obligation Disclosure [Abstract] | ||
Liabilities settled recognized | $ 445 | $ 70,969 |
12. Treasury Stock (Details Nar
12. Treasury Stock (Details Narrative) - shares | Sep. 30, 2017 | Dec. 31, 2016 |
Equity [Abstract] | ||
Treasury stock | 0 | 150,000 |
13. Concentration of Risk (Deta
13. Concentration of Risk (Details) - USD ($) | 3 Months Ended | 9 Months Ended | ||
Sep. 30, 2017 | Sep. 30, 2016 | Sep. 30, 2017 | Sep. 30, 2016 | |
Total refined petroleum product sales | $ 66,132,959 | $ 53,951,293 | $ 174,667,617 | $ 126,546,716 |
Concentration Risk | 100.00% | 100.00% | 100.00% | 100.00% |
LPG mix | ||||
Total refined petroleum product sales | $ 0 | $ 237,009 | $ 120,542 | $ 621,313 |
Concentration Risk | 0.00% | 0.40% | 0.10% | 0.50% |
Naphtha | ||||
Total refined petroleum product sales | $ 14,266,056 | $ 11,870,484 | $ 41,282,969 | $ 28,183,809 |
Concentration Risk | 21.60% | 22.00% | 24.90% | 22.30% |
Jet Fuel | ||||
Total refined petroleum product sales | $ 20,802,789 | $ 15,104,900 | $ 56,360,757 | $ 41,150,686 |
Concentration Risk | 31.50% | 28.00% | 32.80% | 32.50% |
HOBM | ||||
Total refined petroleum product sales | $ 17,011,443 | $ 14,206,759 | $ 38,580,236 | $ 25,259,753 |
Concentration Risk | 25.70% | 26.40% | 19.90% | 20.00% |
Reduced crude | ||||
Total refined petroleum product sales | $ 0 | $ 0 | $ 0 | $ 3,791,919 |
Concentration Risk | 0.00% | 0.00% | 0.00% | 3.00% |
AGO | ||||
Total refined petroleum product sales | $ 14,052,671 | $ 12,532,141 | $ 38,323,113 | $ 27,539,236 |
Concentration Risk | 21.20% | 23.20% | 22.30% | 21.70% |
13. Concentration of Risk (De60
13. Concentration of Risk (Details Narrative) - USD ($) | 3 Months Ended | 9 Months Ended | |||
Sep. 30, 2017 | Sep. 30, 2016 | Sep. 30, 2017 | Sep. 30, 2016 | Dec. 31, 2016 | |
Concentration Risk | 100.00% | 100.00% | 100.00% | 100.00% | |
FDIC insurance limit | $ 1,183,652 | $ 1,183,652 | $ 5,372,689 | ||
LEH [Member] | |||||
Concentration Risk | 32.00% | 27.00% | 34.00% | 19.00% | |
Concentration risk accounts receivable | $ 1,100,000 | $ 2,900,000 | $ 1,100,000 | $ 2,900,000 |
14. Leases (Details Narrative)
14. Leases (Details Narrative) - USD ($) | 3 Months Ended | 9 Months Ended | ||
Sep. 30, 2017 | Sep. 30, 2016 | Sep. 30, 2017 | Sep. 30, 2016 | |
Leases, Operating [Abstract] | ||||
Rent expense | $ 31,681 | $ 33,251 | $ 107,853 | $ 92,966 |
15. Income Taxes (Details)
15. Income Taxes (Details) - USD ($) | 9 Months Ended | 12 Months Ended |
Sep. 30, 2017 | Dec. 31, 2016 | |
Balance | $ 33,176,518 | $ 19,231,390 |
Net operating losses | 6,469,611 | 13,945,128 |
Balance at December 31 | 39,646,129 | 33,176,518 |
Pre-Ownership Change [Member] | ||
Balance | 9,614,449 | 9,614,449 |
Net operating losses | 0 | 0 |
Balance at December 31 | 9,614,449 | 9,614,449 |
Post-Ownership Change [Member] | ||
Balance | 23,562,069 | 9,616,941 |
Net operating losses | 6,469,611 | 13,945,128 |
Balance at December 31 | $ 30,031,680 | $ 23,562,069 |
15. Income Taxes (Details 1)
15. Income Taxes (Details 1) - USD ($) | Sep. 30, 2017 | Dec. 31, 2016 |
Deferred tax assets: | ||
Net operating loss and capital loss carryforwards | $ 15,750,006 | $ 13,550,338 |
Accrued arbitration award payable | 6,674,017 | 0 |
Start-up costs (Nixon Facility) | 1,270,361 | 1,373,363 |
Asset retirement obligations liability/deferred revenue | 780,249 | 717,751 |
AMT credit and other | 224,647 | 266,522 |
Total deferred tax assets | 24,699,280 | 15,907,974 |
Deferred tax liabilities: | ||
Basis differences in property and equipment | (6,762,850) | (5,895,943) |
Total deferred tax liabilities | (6,762,850) | (5,895,943) |
Deferred tax assets, net | 17,936,430 | 10,012,031 |
Valuation allowance | (17,936,430) | (10,012,031) |
Deferred tax assets, net | $ 0 | $ 0 |
15. Income Taxes (Details Narra
15. Income Taxes (Details Narrative) - USD ($) | 3 Months Ended | 9 Months Ended | ||
Sep. 30, 2017 | Sep. 30, 2016 | Sep. 30, 2017 | Sep. 30, 2016 | |
Income Tax Disclosure [Abstract] | ||||
Income Tax Benefit | $ 0 | $ 1,034,798 | $ 0 | $ 3,735,040 |
16. Earnings per share (Details
16. Earnings per share (Details) - USD ($) | 3 Months Ended | 9 Months Ended | ||
Sep. 30, 2017 | Sep. 30, 2016 | Sep. 30, 2017 | Sep. 30, 2016 | |
Earnings Per Share [Abstract] | ||||
Net income (loss) | $ 3,945,519 | $ (1,938,551) | $ (23,297,713) | $ (7,250,371) |
Basic and diluted income per share | $ .36 | $ (.19) | $ (2.19) | $ (.69) |
Basic and diluted | ||||
Weighted average number of shares of common stock outstanding and potential dilutive shares of common stock | 10,818,371 | 10,464,715 | 10,644,654 | 10,460,849 |
17. Inventory Risk Management66
17. Inventory Risk Management (Details 1) - USD ($) | 3 Months Ended | 9 Months Ended | ||
Sep. 30, 2017 | Sep. 30, 2016 | Sep. 30, 2017 | Sep. 30, 2016 | |
Commodity Contracts [Member] | ||||
Cost of refined products sold | $ 0 | $ 770,838 | $ 0 | $ (2,588,734) |
18. Commitments and Contingen67
18. Commitments and Contingencies (Details Narrative) - USD ($) | Sep. 30, 2017 | Dec. 31, 2016 |
Commitments and Contingencies Disclosure [Abstract] | ||
Credit and cash backed rights of way bonds issued to the BOEM | $ 900,000 | $ 900,000 |