BDCO Blue Dolphin Energy Company (QX)

HOUSTON, April 5, 2013 /PRNewswire/ -- Blue Dolphin Energy Company ("Blue Dolphin," "we" and "our") announced financial results for the quarter and year ended December 31, 2012.

For the year ended December 31, 2012, we reported a net loss of $18,284,632 (which includes $13,879,311 in non-cash charges related to impairment and discontinued operations as described below), or a loss of $1.78 per fully diluted share, on record total revenue from operations of $352,094,714 compared to a net income of $183,854, or an income of $0.02 per fully diluted share, with no revenue from operations for the year ended December 31, 2011. 

Financial Highlights

Financial results for the year ended December 31, 2012 included:

• 
  
  
• positive cash flow from operations of $67,327; for the three months ended December 31, 2012, we experienced positive cash flow from operations of $3,112,606. This represented an increase compared to negative cash flow from operations of $28,017 for the third quarter of 2012, negative cash flow from operations of $1,438,903 for the second quarter of 2012 and negative cash flow from operations of $1,578,359 for the first quarter of 2012.  Our liquidity improvement quarter over quarter was primarily the result of improved margins on sales of refined products;
• 
  
  
• non-cash charges totaling $13,879,311 related to impairment and discontinued operations were as follows:
  
  • 
    
    
  • an impairment totaling $9,435,745, consisting of $7,990,025 related to our pipeline fixed assets and $1,445,720 related to goodwill.  Due to the continued weakness in our pipeline transportation and oil and gas exploration production business segments and the uncertainty of the timing and speed of recovery, an impairment of the pipeline was deemed necessary.  All of the goodwill was associated with our pipeline transportation and oil and gas exploration production business segments; and
  • 
    
    
  • discontinued operations, net of tax, totaling $4,443,566.  In November 2012 we entered into a sale and purchase agreement with Blue Sky Langsa, Ltd. for the disposal of our 7% working interest in the North Sumatra Basin-Langsa Field ("Indonesia").  Operations associated with Indonesia were discontinued in 2012; and
  • 
    
  
  
• 
  
  
• an abandonment expense of $1,184,549 associated with plugging and abandonment costs for High Island A-7. The amount recognized reflects the amount incurred less the amount reserved for the abandonment retirement obligation liability, which was $141,099.
• 
  

Business Segments

In February 2012, we acquired 100% of the membership interest of Lazarus Energy, LLC ("LE"), which owns a crude oil and condensate processing facility located on a 56-acre site in Nixon, Wilson County, Texas (the "Nixon Facility").  In October 2012, we acquired 100% of the membership interest of Lazarus Refining & Marketing, LLC ("LRM"), which conducts petroleum storage and terminaling operations under third-party lease agreements at the Nixon Facility. As a result of the acquisitions of LE and LRM, our primary business segment is refinery operations, which includes (i) refining of crude oil into marketable finished and refined products, such as Non-Road, Locomotive and Marine Diesel Fuel ("NRLM" or "off-road diesel"), naphtha and atmospheric gas oil and (ii) petroleum storage and terminaling.  Increases in Blue Dolphin's revenue, operating expenses and other related costs in 2012 compared to 2011 were primarily attributable to the refinery operations business segment.

Operational Update

For the quarter and year ended December 31, 2012, the Nixon Facility operated for 88 days and 326 days, respectively.  For the same period, average throughput at the Nixon Facility was approximately 11,900 barrels per day ("bpd"), or 79% of operating capacity, and approximately 9,700 bpd, or 65% of operating capacity, respectively.  For the quarter and year ended December 31, 2012, feedstock runs at the Nixon Facility, which represents barrels of crude oil processed, totaled 1,050,189 barrels ("bbls") and 3,175,283 bbls, respectively.  For the same period, refinery production totaled 1,030,680 bbls and 3,116,649 bbls, respectively. The Nixon Facility generated earnings before interest, income taxes and depreciation ("EBITDA") of $1,259,012 for the year ended December 31, 2012.  The Nixon Facility had 85,000 bbls of tankage under lease agreement for the year ended December 31, 2012 compared to 20,000 bbls of tankage under lease agreement for the year ended December 31, 2011.

Non-GAAP Financial Measures

This press release and its attachments include EBITDA, a financial measures defined as non-GAAP by the Securities and Exchange Commission. EBITDA is adjusted for:  (i) items that do not impact Blue Dolphin's income or loss from continuing operations, such as the impact of accounting changes, (ii) income taxes and (iii) interest expense (or income).  Management excludes interest expense (or income) and other expenses or income not pertaining to the operations of Blue Dolphin's business segments from this measure so that investors may evaluate Blue Dolphin's current operating results without regard to Blue Dolphin's financing methods or capital structure.

Blue Dolphin's financial measures may be different than non-GAAP financial measures used by other companies.  The presentation of this financial information is not intended to be considered in isolation or as a substitute for the financial information prepared and presented in accordance with generally accepted accounting principles ("GAAP").  An explanation of our non-GAAP financial measure and a reconciliation of the financial measure to the GAAP financial measure Blue Dolphin considers most comparable are presented in "Part II, Item 7. Management's Discussion of Financial Condition and Results of Operations -- EBITDA" and "Part II, Item 8. Financial Statements and Supplementary Data -- Note (6) Business Segment Information" of Blue Dolphin's annual report on Form 10-K for the year ended December 31, 2012.

About Blue Dolphin

Blue Dolphin Energy Company (OTCQX: BDCO) is an independent refiner and marketer of petroleum products in the Eagle Ford Shale. Our primary business is refinery operations, which includes the refining of crude oil into marketable finished and refined products and petroleum storage and terminaling. We also gather and transport oil and natural gas, as well as hold leasehold interests in oil and natural gas properties.  For additional information, visit Blue Dolphin's corporate website at http://www.blue-dolphin-energy.com.

Certain of the statements included in this press release, which express a belief, expectation or intention, as well as those regarding future financial performance or results, or which are not historical facts, are "forward-looking" statements as that term is defined in the Securities Act of 1933, as amended, and the Securities Exchange Act of 1934, as amended.  These forward-looking statements are not guarantees of future performance or events and such statements involve a number of risks, uncertainties and assumptions, including but not limited to: the potential reorganization of Blue Dolphin from a publicly traded "C" corporation to a publicly traded master limited partnership; crude oil  and refined petroleum product price fluctuations; significant dependent relationship with Genesis Energy, LLC and its affiliates; key supplier failure; loss of market share with or by a key customer; declaration of an event of default related to our long-term indebtedness; failure to comply with other forbearance agreements relating to our long-term indebtedness; and the factors set forth under the heading "Risk Factors" in Part I, Item 1A of Blue Dolphin's annual report on Form 10-K for the year ended December 31, 2012.  Should one or more of these risks or uncertainties materialize or should the underlying assumptions prove incorrect, actual results and outcomes may differ materially from those indicated in the forward-looking statements.  Readers are cautioned not to place undue reliance on these forward-looking statements, which speak only as of the date hereof.  The Company undertakes no obligation to republish revised forward-looking statements to reflect events or circumstances after the date hereof or to reflect the occurrence of unanticipated events.