SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
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FORM 8-K
CURRENT REPORT
Pursuant to Section 13 or 15(d) of
the Securities and Exchange Act of 1934
Date of Report: (Date of earliest event reported): December 20, 2001
(December 7, 2001)
BLUE DOLPHIN ENERGY COMPANY
(Exact name of registrant as specified in its charter)
DELAWARE 0-15905 73-1268729
(State of Incorporation) (Commission File Number) IRS Employer Identification No.)
801 TRAVIS, SUITE 2100
HOUSTON, TEXAS 77002
(Address of Registrant's principal executive offices)
(713) 227-7660
(Registrant's telephone number, including area code)
(NOT APPLICABLE)
(Former name or former address, if changed since last report)
ITEM 5. OTHER EVENTS
AMENDED AND RESTATED AGREEMENT AND PLAN OF MERGER
On December 19, 2001, Blue Dolphin Energy Company (the "Company"), BDCO
Merger Sub, Inc., a Delaware corporation and a wholly owned subsidiary of the
Company, and American Resources Offshore, Inc., a Delaware corporation ("ARO"),
entered into the Amended and Restated Agreement and Plan of Merger (the "Amended
Agreement"), which amends the existing Agreement and Plan of Merger, dated as of
August 30, 2001. Pursuant to the Amended Agreement, the holders, other than the
Company and its affiliates, of ARO's shares of common stock, par value $0.00001
per share (the "Common Stock"), may elect to receive .0276 of a share of the
Company's common stock, par value $0.01 per share (the "BDCO Common Stock"), or
$.06 in cash in exchange for each share of Common Stock they own and the
holders, other than the Company and its affiliates, of ARO's Series 1993
Preferred Stock, par value $12.00 per share (the "Preferred Stock"), may elect
to receive .0301 of a share of BDCO Common Stock or $.07 in cash in exchange for
each share of Preferred Stock they own. The Amended Agreement provides that no
more than 70% of the aggregate merger consideration paid to holders of Common
Stock will be paid in cash.
The merger requires the approval of (i) a majority of ARO's outstanding
Common Stock and Preferred Stock, voting together as a class and (ii) a majority
of ARO's outstanding Preferred Stock, voting separately as a class. The Company
beneficially owns, as of December 19, 2001, approximately 77% of the issued and
outstanding shares of Common Stock and 50.4% of the issued and outstanding
shares of Preferred Stock and intends to vote its shares in favor of approval of
the Amended Agreement and the transactions contemplated thereby.
ARO's board of directors unanimously approved the Amended Agreement,
the transactions contemplated thereby and its submission to stockholders
following a determination by a special committee of the board, composed of
individuals who are not directors or officers of the Company, that the merger is
fair to, and in the best interest of, ARO's minority shareholders. The closing
of the merger is subject to stockholder approval and other customary closing
conditions.
A copy of the Amended Agreement is filed as an exhibit hereto and is
incorporated herein by reference. The description of the Amended Agreement set
forth above does not purport to be complete and is qualified in its entirety by
reference to the provisions of such agreement.
LETTER AGREEMENT WITH FIDELITY EXPLORATION & PRODUCTION COMPANY
On December 7, 2001, Blue Dolphin Exploration Company, a wholly owned
subsidiary of the Company ("BDEX"), entered into a letter agreement (the "Letter
Agreement") with, and sold its reversionary interest in certain oil and natural
gas properties located in the Gulf of Mexico to,
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Fidelity Exploration & Production Company ("Fidelity") for $1.36 million in
cash. In connection with this transaction Fidelity agreed to assume any
indebtedness BDEX may have to Den norske Bank, ASA ("Den norske") under the Note
Purchase Agreement among BDEX, Den norske and DNB Energy Assets, Inc. dated
November 11, 1999 relating to the reversionary interest that was purchased by
Fidelity.
A copy of the Letter Agreement is filed as an exhibit hereto and is
incorporated herein by reference. The description of the Letter Agreement set
forth above does not purport to be complete and is qualified in its entirety by
reference to the provisions of such agreement.
RECENT DEVELOPMENTS
In November 2001 the Company announced that it expected to begin
receiving revenues in the third quarter of 2002 from its 8.9% reversionary
working interest in the field located in the High Island Area Block A-7 of the
Gulf of Mexico. The Company will begin to receive revenues from its reversionary
interest after "payout"occurs. Payout will occur after all of the other working
interest owners have been reimbursed for their costs and expenses associated
with developing the field from sales of production from the field. In the fourth
quarter of 2001, an exploratory well was drilled which ultimately resulted in a
dry hole, which the Company believes will be plugged and abandoned. As a result
of this occurrence and previous activity in this field the Company now expects
to begin to receive revenues from its reversionary working interest in this
field in the fourth quarter of 2002 or the first quarter of 2003.
Previously, the Company believed that it needed to raise between $4.5
to $7.0 million of capital to meet its obligations and operating needs for the
current fiscal year. In light of the sale of the reversionary working interest
to Fidelity, the Company now believes that it will need to raise between $3.0 to
$5.5 million to meet its obligations and operating needs. The Company will need
to seek external financing and/or sell additional assets to raise the necessary
capital. There can be no assurance that the Company will be able to obtain
financing or sell assets on commercially reasonable terms. The Company's
inability to raise capital may have a material adverse effect on its financial
condition, ability to meet its obligations and operating needs and results of
operations.
CAUTIONARY NOTE REGARDING FORWARD LOOKING STATEMENTS
Certain of the statements included above, including those regarding
future financial performance or results or that are not historical facts, are
"forward-looking" statements as that term is defined in Section 21E of the
Securities Exchange Act of 1934, as amended. The words "expect," "plan,"
"believe," "anticipate," "project," "estimate," and similar expressions are
intended to identify forward-looking statements. The Company cautions readers
that any such statements are not guarantees of future performance or events and
such statements involve risks and uncertainties that may cause actual results
and outcomes to differ materially from those indicated in forward-looking
statements. Important factors that could cause actual results to differ
materially from those described in the forward-looking statements include the
following:
o the Company's ability, or inability, to raise capital; and
o the production from, and further development of, the High Island
Area Block A-7 field.
Additional factors that could cause actual results to vary from
forward-looking statements are discussed under the caption "Risk Factors" in the
Company's registration statement on Form S-3 filed with the Securities and
Exchange Commission on January 11, 2001. The Risk Factors section of that
registration statement is incorporated by reference into this report. 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 duty to update
these forward-looking statements.
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ITEM 7. FINANCIAL STATEMENTS, PRO FORMA FINANCIAL INFORMATION AND EXHIBITS
(c) EXHIBITS
2.1 The Amended and Restated Agreement and Plan of Merger
among Blue Dolphin Energy Company, BDCO Merger Sub,
Inc. and American Resources Offshore, Inc. dated as of
December 19, 2001
99.1 Letter Agreement between Blue Dolphin Exploration
Company and Fidelity Exploration & Production Company
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SIGNATURE
Pursuant to the requirements of the Securities Exchange Act of 1934, as
amended, the registrant has duly caused this report to be signed on its behalf
by the undersigned thereunto duly authorized.
Date: December 20, 2001
BLUE DOLPHIN ENERGY COMPANY
/s/ G. BRIAN LLOYD
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G. Brian Lloyd
Vice President, Treasurer
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INDEX TO EXHIBITS
EXHIBIT DESCRIPTION OF EXHIBIT
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2.1 Amended and Restated the Agreement and Plan of Merger among
Blue Dolphin Energy Company, BDCO Merger Sub, Inc. and
American Resources Offshore, Inc. dated as of December 19,
2001
99.1 Letter Agreement between Blue Dolphin Exploration Company and
Fidelity Exploration & Production Company
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