Item 2. Discussion and analysis of management's financial status and operating performance
Unless the context requires otherwise, references to "we", "our" or "our" in this report refer to Blue Dolphin, one or more of the subsidiaries of Blue Dolphin, or as a whole
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· Veritex Loan-for the three-month period ending September 30, 2021, and
In 2020, the total amount of principal and interest paid to Veritex is $0. for
For the nine months ending September 30, 2021 and 2020, principal and interest
The payments to Veritex were $0 and $300,000. As of
The date of submission of this report, LE and LRM are related to the required
Monthly payments under the LE term loan due in 2034 and the LRM term loan due in 2034.
Default under the LE Term Loan Due 2034 and LRM Term Loan Due 2034 licenses
Veritex immediately declares the arrears under these loan agreements
Due and payable, exercise its rights in relation to the secured debtor
Obligations under these loan agreements and exercise any other rights and
Available remedies. Veritex exercises rights and remedies
These secured loan agreements will have a material adverse effect on us
Business operations, including crude oil and condensate procurement and our
Customer relations; economic conditions; and business results. These
Unfavorable market behavior may cause holders of our common stock to lose their
Overall investment. We cannot assure investors that: (i) our assets
Or the cash flow will be sufficient to repay the borrowings under our secured loan
Fully reach an agreement with Veritex, whether at expiration or acceleration, (ii)
LE and LRM will be able to refinance or restructure debt,
Or (iii) Veritex, as the first lien holder, will provide future default waivers.
Borrower and Veritex maintain an ongoing dialogue on potential
Restructuring and refinancing opportunities related to this debt.
· Revised the pilot credit limit-on October 4, 2021, NPS repaid all debts
The amount owed to the pilot based on the revised pilot credit line. However, NPS
The defaults on September 30, 2021 and December 31, 2020, because
The borrower or any guarantor pays overdue debts when they are due. debt,
Accumulate interest at a default rate of fourteen percent (14%) per year,
Is classified as the current portion of our long-term debt
Consolidated balance sheet as of September 30, 2021 and December 31, 2020.
As NPS defaulted under the revised pilot credit line, the pilot application
Amount owed to NPS under two terminal service agreements for NPS
From June, the obligation to pay Pilot based on the revised pilot credit line
2020 to September 2021. For the three-month period ending September 30,
In 2021 and 2020, the total offset of tank lease payments is USD 600,000. for
For the nine-month period ending September 30, 2021 and 2020, storage tank lease payments
The total offsets were US$1.7 million and US$800,000 respectively.
The amount of NPS interest generated based on the revised pilot credit line
The total for the three months is US$200,000 and US$400,000 respectively
As of September 30, 2021 and 2020. For the nine months ended September 30,
In 2021 and 2020, the interest will be USD 700,000 and USD 1.1 million respectively. Look
"Part One, Item 1. Financial Statements-Note (11)" and "Note (17)" to us
Consolidate financial statements to obtain more information related to the revised edition
· Kissick debt-According to the 2015 affiliation agreement, John Kissick agreed
Subordinate his right to payment and any security interests and liens
Commercial assets of the Nixon plant, supporting Veritex as the holder
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Historical net loss and working capital deficit.
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Our main business goal is to improve our financial situation by implementing the following strategies and making modifications as necessary to reflect the changing economic conditions and other conditions:
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Segment contribution rate per barrel (deficit) and refining gross profit (deficit)
Refinery output and production data
The Nixon Refinery will experience scheduled and unplanned temporary shutdowns on a regular basis. Any planned or unplanned downtime will result in lost profit opportunities, reduced inventory of refined products, and potentially increased maintenance costs, all of which may reduce our ability to meet payment obligations.
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(1) Net income does not include inter-company crude oil sales.
· Compared with the total deficit, the total refining deficit per barrel in the third quarter of 2021 was US$0.61
The deficit per barrel in the third quarter of 2020 was US$2.45, which is equivalent to an improvement of US$1.84 per barrel
bbl. Improvements between periods associated with higher refining profit margins;
Sales are relatively flat. Commodity prices and demand for refined oil
Compared with the third quarter of 2020, the third quarter of 2021 experienced a recovery because more companies
Resume operations and remove restrictions related to the pandemic.
· Compared with Q3, the deficit of Q3 segment contribution in 2021 will be significantly improved
In 2020, due to the aforementioned economic recovery and refinery downtime reduction.
· Refinery downtime was reduced from 11 days in the third quarter to 6 days in the third quarter of 2021
2020. Refinery shutdown due to crude oil shortage in the third quarter of 2021
(1) Net income does not include inter-company crude oil sales.
· Compared with the total deficit, the total refining deficit for 9 months of 2021 is US$1.25 per barrel
The deficit per barrel for 9 months of 2020 is US$2.12, representing improvement
USD 0.87 per barrel. Improvements between periods related to higher refinement
Margins and sales are slightly higher. Commodity prices and refinement
Compared with 9 months, demand for products in the 9 months of 2021 has rebounded
In 2020, as more businesses resume operations and restrictions related to the pandemic
lift. In 9 months of 2021, the impact of winter storm Uri offset the economic
· Compared with the nine months of 2021, the segment contribution deficit has improved significantly
As a result of the economic recovery mentioned above, to 9 months of 2020. However
The effects of winter storm Uri offset the economic recovery.
· Reduced refinery downtime in 9 months from 37 days to 21 days in 2021
Nine months of 2020. Two major incidents led to a severe shutdown of the refinery
9 months of 2021 compared with 9 months of 2020: (i) power outages in winter
Storm Uri and (ii) COVID-19 related shutdowns and market turmoil. this
Long-term work stoppages have led to cash shortages, further affecting
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(1) Net income does not include inter-company crude oil sales.
· Toll and terminal net income in the third quarter of 2021 decreased by nearly 8% year-on-year
By the third quarter of 2020, it is mainly due to lower storage tank rents.
· Intercompany expenses and sales, reflecting expenses related to a certain business
Inter-company fee agreements related to naphtha production will increase in the third quarter of 2021
Compared with the third quarter of 2020. Sales of naphtha increased in different periods
· In the third quarter of 2021, the contribution margin of the segment increased by nearly 19% to US$1.1 million
Compared with the US$900,000 in the third quarter of 2020.
(1) Net income does not include inter-company crude oil sales.
· Nine months of 2021 toll and terminal net income drop by nearly 14%
Compared with the 9 months of 2020, due to lower storage tank lease fees.
· Intercompany expenses and sales, reflecting expenses related to a certain business
Inter-company fee agreements related to naphtha production increased within 9 months
2021 compared with 9 months of 2020. Naphtha sales in
The period of recovery due to demand.
· In the nine months of 2021, the contribution margin of the segment decreased by 8% to $3.3 million
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Reconciliation of segment contribution margin (deficit)
(1) General and administrative expenses in refinery operations include LEH operating expenses.
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Total debt and accrued interest
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LRM term loan maturity default event financial contract: 2034 (default) under other guaranteed debt service coverage ratio,
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As of September 30, 2021 and September 2020, affiliated companies accounted for 29% and 28% of total operating income, respectively. The accounts receivable of the affiliated company on September 30, 2021 and 2020 are USD 0 respectively.
BOEM Additional Financial Guarantee (Supplementary Pipeline Bond)
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BSEE offshore pipeline and platform decommissioning
In April 2020, BSEE issued another INC to BDPL because it failed to perform the required structural investigation on the GA-288C platform. BDPL requested an extension to comply with INC, and BSEE approved BDPL's extension request. BDPL completed the structural investigation and resolved the INC in June 2020.
696 3,451 Cash and cash equivalents decreased by $2,168 $238 $1,114 $170
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Key accounting policies and estimates
New accounting standards and disclosures
For discussion of the new accounting standards and disclosures, please refer to "Part One, Item 1. Financial Statements-Note (2)".
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