EXHIBIT 99.1

                           BLUE DOLPHIN ENERGY COMPANY


                                  NEWS RELEASE

FOR IMMEDIATE RELEASE                                             May 26, 1999


HOUSTON, TEXAS - BLUE DOLPHIN ENERGY COMPANY (NASDAQ SYMBOL: BDCO)

Blue Dolphin Energy Company announced today that it has signed a letter of
intent, through its wholly owned subsidiary Blue Dolphin Exploration Company, to
acquire a 75% ownership interest of American Resources Offshore, Inc. ("ARO")
(NASD: GASS), through subscription of new shares. At the time of closing, ARO's
assets will be limited to its Gulf of Mexico assets. Concurrently with, and as a
condition to the transaction, ARO will dispose of all of its Appalachian assets,
and an 80% interest in its Gulf of Mexico assets to third parties. After
closing, the primary assets of ARO will consist of 20% of the Gulf of Mexico
assets formerly held. Blue Dolphin will manage the 80% interest in the Gulf of
Mexico assets sold.

The purchase price will consist of approximately $5.3 million cash, subject to
adjustments for operations of ARO from the January 1, 1999 effective date, and
cancellation of certain indebtedness of ARO. It is expected that Blue Dolphin
will acquire from ARO's secured lender, approximately $21 million of secured
indebtedness owed by ARO at a nominal cost to Blue Dolphin. At a post closing
date to be determined, the ARO indebtedness then held by Blue Dolphin would be
cancelled. The proceeds from the sale to Blue Dolphin and to third parties will
be used principally to retire secured indebtedness of ARO.

ARO's Gulf of Mexico assets currently consist of an average twenty nine percent
(29%) non-operated working interests in 49 offshore federal lease blocks located
in the Central and Western Gulf of Mexico, with proven reserves of approximately
36 billion cubic feet of gas equivalent. Significant probable and possible
reserves and exploratory drilling opportunities also exist.

"This acquisition is consistent with our business plan to increase reserves
during the current industry down cycle", stated Ivar Siem, Chairman of Blue
Dolphin. Siem noted, "we will continue to look for opportunities to consolidate
companies and assets with quality reserves in our core operating area, the Gulf
of Mexico".

The effective date of the transaction will be January 1, 1999. A definitive
agreement is being negotiated, and is expected to be executed by mid June with
closing to occur in the third quarter. The transaction is subject to the
approval of the Board of Directors of Blue Dolphin Energy Company and ARO, the
approval of ARO's Shareholders, and satisfactory resolution of certain trade
liabilities.

BLUE DOLPHIN ENERGY COMPANY is engaged in the gathering and transportation of
natural gas and condensate, exploration and acquisition of oil and gas
properties, and development of an offshore terminal and storage facility to
handle crude oil and refined products. Questions should be directed to G. Brian
Lloyd, Vice President, Treasurer, at the Company's offices in Houston, Texas,
(713) 227-7660. For further information see our home page at
http://www.blue-dolphin.com.


                801 Travis o Suite 2100 o Houston, Texas 77002
                         (713) 227-7660 o FAX (713) 227-7626