Blue Dolphin Energy Co. Files 2023 Annual Report on Form 10-K

TL;DR

<b>Blue Dolphin Energy Co. filed its 2023 10-K, reporting $14.9 million in revenue and detailing various debt obligations and restricted cash.</b>

AI Summary

BLUE DOLPHIN ENERGY CO (BDCO) filed a Annual Report (10-K) with the SEC on April 1, 2024. Blue Dolphin Energy Co. filed its 2023 Form 10-K on April 1, 2024. The company reported $14,921,968 in revenue for the fiscal year ending December 31, 2023. Restricted cash, noncurrent, was $1.0 million at December 31, 2023, held by Veritex in a payment reserve account. John Kissick holds debt with an original principal of $8.0 million, increased by $3.7 million via a 2017 amendment. The company has 2,500,000 shares of preferred stock authorized, with none issued or outstanding as of December 31, 2023.

Why It Matters

For investors and stakeholders tracking BLUE DOLPHIN ENERGY CO, this filing contains several important signals. The filing provides a comprehensive overview of the company's financial performance and position for the fiscal year 2023, including details on debt, revenue segments, and operational expenses. Key disclosures include information on subordinated debt agreements, intercompany tolling fees, and restricted cash reserves, offering insight into the company's financial structure and operational arrangements.

Risk Assessment

Risk Level: medium — BLUE DOLPHIN ENERGY CO shows moderate risk based on this filing. The company has significant debt obligations, including a $3.7 million increase to the Kissick Debt and a $1.0 million restricted cash reserve, indicating potential financial leverage and liquidity constraints.

Analyst Insight

Monitor the company's debt repayment schedules and cash flow generation to assess its ability to meet its financial obligations.

Key Numbers

• 14,921,968 — Revenue (for the fiscal year ending December 31, 2023)
• 1.0 — Restricted Cash (Noncurrent) (million at December 31, 2023)
• 8.0 — Kissick Debt Original Principal (million)
• 3.7 — Kissick Debt Principal Increase (million)
• 2,500,000 — Authorized Preferred Stock (shares)
• 0 — Issued and Outstanding Preferred Stock (shares as of December 31, 2023)

Key Players & Entities

• BLUE DOLPHIN ENERGY CO (company) — FILER
• John Kissick (person) — agreed to subordinate his right to payments
• Veritex (company) — holder of the LE Term Loan Due 2034
• LE Term Loan Due 2034 (dollar_amount) — holder of the LE Term Loan Due 2034
• $1.0 million (dollar_amount) — restricted cash, noncurrent
• $8.0 million (dollar_amount) — Original principal amount was $8.0 million
• $3.7 million (dollar_amount) — principal under the Kissick Debt increased by $3.7 million
• Nixon facility (company) — Nixon facility's business assets

FAQ

Risk Factors

• Subordination Agreement [medium — financial]: John Kissick agreed to subordinate his right to payments and security interests on Nixon facility assets in favor of Veritex for the LE Term Loan Due 2034.
• Restricted Cash [medium — financial]: At December 31, 2023, restricted cash, noncurrent was $1.0 million, representing amounts held by Veritex in a payment reserve account.
• Kissick Debt [medium — financial]: The Kissick Debt, originally $8.0 million, increased by $3.7 million pursuant to a 2017 sixth amendment.
• Equipment Rental and Loan [low — operational]: An equipment rental agreement for a backhoe at the Nixon facility led to an Equipment Loan Due 2025 to finance its purchase.

Key Financial Figures

• $0.01 — g) of the Act: Common Stock, par value $0.01 per share (Title of class) Indicate
• $5.0 million — ing capital purposes up to a maximum of $5.0 million in the aggregate; initial term expires
• $13.0 million — . 1; original line of credit amount was $13.0 million; NPS repaid all obligations owed to Pil
• $4.0 million — LEH in the original principal amount of $4.0 million; interest accrues at 16.00% annually; g
• $0.003 million — ing August 31, 2024; rent approximately $0.003 million per month. Blue Dolphin . Blue Dolphin
• $0.5 million — SBA in the original principal amount of $0.5 million; the note was modified in February 2022
• $1.5 million — 022 to increase the principal amount by $1.5 million to $2.0 million; additional principal u
• $2.0 million — the principal amount by $1.5 million to $2.0 million; additional principal used for working
• $0.01 million — monthly principal and interest payment $0.01 million; payments deferred first thirty (30) mo
• $0.7 million — rst in the original principal amount of $0.7 million; loan represents conversion of prior eq
• $0.0013 million — monthly principal and interest payment $0.0013 million; security includes first priority lien
• $8.0 million — nc. in the original principal amount of $8.0 million; debt held by John Kissick (the "Kissic
• $3.7 million — ded to increase the principal amount by $3.7 million; the additional principal was used to r
• $11.2 million — he Kissick Debt to satisfy in full LE's $11.2 million obligation to Kissick Noteholder under
• $0.50 — by barge; three-year term; tank rental $0.50 per bbl per month. LE Term Loan Due 20

Filing Documents

• bdco20231231_10k.htm (10-K) — 2478KB
• ex_600903.htm (EX-21.1) — 8KB
• ex_600904.htm (EX-23.1) — 4KB
• ex_600905.htm (EX-31.1) — 12KB
• ex_600906.htm (EX-32.1) — 6KB
• ex_648322.htm (EX-10.54) — 32KB
• ex_648323.htm (EX-10.55) — 41KB
• image01.jpg (GRAPHIC) — 10KB
• image02.jpg (GRAPHIC) — 3KB
• 0001437749-24-010434.txt (&nbsp;) — 10933KB
• bdco-20231231.xsd (EX-101.SCH) — 96KB
• bdco-20231231_cal.xml (EX-101.CAL) — 64KB
• bdco-20231231_def.xml (EX-101.DEF) — 628KB
• bdco-20231231_lab.xml (EX-101.LAB) — 459KB
• bdco-20231231_pre.xml (EX-101.PRE) — 669KB
• bdco20231231_10k_htm.xml (XML) — 1870KB

BUSINESS

BUSINESS 10 ITEM 1A.

RISK FACTORS

RISK FACTORS 17 ITEM 1B. UNRESOLVED STAFF COMMENTS 31 ITEM 1C. CYBERSECURITY 31 ITEM 2.

PROPERTIES

PROPERTIES 31 ITEM 3.

LEGAL PROCEEDINGS

LEGAL PROCEEDINGS 31 ITEM 4. MINE SAFETY DISCLOSURE 32 PART II 33 ITEM 5. MARKET FOR REGISTRANT'S COMMON EQUITY, RELATED STOCKHOLDER MATTERS AND ISSUER PURCHASES OF EQUITY SECURITIES 33 ITEM 6.

SELECTED FINANCIAL DATA

SELECTED FINANCIAL DATA 33 ITEM 7.

MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS

MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS 34 ITEM 7A.

QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET RISK

QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET RISK 48 ITEM 8.

FINANCIAL STATEMENTS AND SUPPLEMENTARY DATA

FINANCIAL STATEMENTS AND SUPPLEMENTARY DATA 49 Report of Independent Registered Public Accounting Firm 49 Consolidated Balance Sheets 51 Consolidated Statements of Income 52 Consolidated Statements of Stockholders' Equity (Deficit) 53 Consolidated Statements of Cash Flows 54

Notes to Consolidated Financial Statements

Notes to Consolidated Financial Statements 55 ITEM 9. CHANGES IN AND DISAGREEMENTS WITH ACCOUNTANTS ON ACCOUNTING AND FINANCIAL DISCLOSURE 78 ITEM 9A.

CONTROLS AND PROCEDURES

CONTROLS AND PROCEDURES 78 ITEM 9B. OTHER INFORMATION 78 ITEM 9C. DISCLOSURE REGARDING FOREIGN JURISDICTIONS THAT PREVENT INSPECTIONS 78 PART III 79 ITEM 10. DIRECTORS, EXECUTIVE OFFICERS, AND CORPORATE GOVERNANCE 79 ITEM 11.

EXECUTIVE COMPENSATION

EXECUTIVE COMPENSATION 79 ITEM 12.

SECURITY OWNERSHIP OF CERTAIN BENEFICIAL OWNERS AND MANAGEMENT AND RELATED STOCKHOLDER MATTERS

SECURITY OWNERSHIP OF CERTAIN BENEFICIAL OWNERS AND MANAGEMENT AND RELATED STOCKHOLDER MATTERS 79 ITEM 13. CERTAIN RELATIONSHIPS AND RELATED TRANSACTIONS, AND DIRECTOR INDEPENDENCE 79 ITEM 14. PRINCIPAL ACCOUNTING FEES AND SERVICES 79 PART IV 80 ITEM 15. EXHIBITS, FINANCIAL STATEMENT SCHEDULES 80 ITEM 16. FORM 10-K SUMMARY 83

SIGNATURES

SIGNATURES 84 Blue Dolphin Energy Company Form 10-K, Period Ended December 31, 2023 2 Table of Contents Glossary of Terms Throughout this Annual Report on Form 10-K, we have used the following terms: Affiliate . Refers, either individually or collectively, to certain related parties including Jonathan Carroll, Chairman and Chief Executive Officer of Blue Dolphin, and his affiliates (including Ingleside and Lazarus Capital) and/or LEH and its affiliates (including LMT and LTRI). Together, Jonathan Carroll and LEH owned 83% of the Common Stock as of the filing date of this report. Affiliate Revolving Credit Agreement . A credit agreement between LEH and its affiliates and Blue Dolphin and its subsidiaries effective April 1, 2024; extends credit to Blue Dolphin and its subsidiaries, at LEH's sole discretion, for working capital purposes up to a maximum of $5.0 million in the aggregate; initial term expires on April 30, 2025; automatically renews for one year periods unless sooner terminated by the parties; interest accrues at the WSJ Prime rate plus 2.00%, compounded annually, and paid quarterly. AMT . Alternative Minimum Tax. Amended and Restated Jet Fuel Sales Agreement . Product agreement for the sale of jet fuel by LE to LEH; effective April 1, 2023; one-year automatic renewals; renewal term April 1, 2024 to March 31, 2025 ; LEH purchases all jet fuel produced by LE; LEH sells the jet fuel to the DLA under preferential pricing terms due to its HUBZone certification. Amended Pilot Line of Credit . Line of Credit Agreement dated May 3, 2019, between Pilot and NPS and subsequently amended on May 9, 2019, May 10, 2019, and September 3, 2019, the last amendment being Amendment No. 1; original line of credit amount was $13.0 million; NPS repaid all obligations owed to Pilot in October 2021. ARO . Asset retirement obligations. Assignment Agreement . Pursuant to an Assignment Agreement effective between LEH, Ingleside, and Lazarus Capital, the March Carr

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