UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
FORM 10-QSB/A
AMENDMENT NO. 1
[X] Quarterly Report Under Section 13 or 15(d) of the Securities Exchange Act
of 1934
For the quarterly period ended: JUNE 30, 2005
[ ] Transition Report Under Section 13 or 15(d) of the Securities Exchange
Act of 1934
For the transition period from__________to________
Commission File Number: 0-15905
BLUE DOLPHIN ENERGY COMPANY
(Exact name of small business issuer as specified in its charter)
DELAWARE 73-1268729
(State or other jurisdiction of (I.R.S. Employer
incorporation or organization) Identification No.)
801 TRAVIS, SUITE 2100, HOUSTON, TEXAS 77002
(Address of principal executive offices)
(713) 227-7660
(Issuer's telephone number, including area code)
(Former name, former address and former fiscal year, if changed since
last report.)
Check whether the issuer (1) filed all reports required to be filed by
Section 13 or 15(d) of the Exchange Act during the past 12 months (or for such
shorter period that the registrant was required to file such reports), and (2)
has been subject to such filing requirements for the past 90 days.
Yes [X] No [ ]
Indicate by check mark whether the registrant is a shell company (as
defined in Rule 12b-2 of the Exchange Act). Yes [ ] No [X]
State the number of shares outstanding of each of the issuer's classes of
common stock as of the latest practicable date.
As of November 10, 2005, there were 9,939,302 shares of the registrant's common
stock, par value $.01 per share, outstanding.
Transitional Small Business Disclosure Format (Check one): Yes [ ] No [X]
BLUE DOLPHIN ENERGY COMPANY AND SUBSIDIARIES
EXPLANATORY NOTE
This Amendment No. 1 on Form 10-QSB/A amends the Quarterly Report on Form 10-QSB
for the quarter ended June 30, 2005, filed with the Securities and Exchange
Commission (the "SEC") on August 15, 2005. As previously disclosed in the
Current Report on Form 8-K filed with the SEC on October 31, 2005, our
management, in consultation with members of our Audit Committee and UHY Mann
Frankfort Stein & Lipp CPAs, LLP, our independent registered public accounting
firm, concluded that our previously issued financial statements for the
quarterly period ended June 30, 2005 should no longer be relied upon because of
errors in the financial statements. The underlying errors relate to our
treatment of the "cashless" exercise of compensatory stock options by certain of
our directors and employees. This amendment is being filed solely to reflect the
restatement of certain financial information for the quarter ended June 30, 2005
to address the errors.
The non-cash compensation expense recognized in this amendment increases the net
loss for the quarter ended June 30, 2005 by approximately $153,000, or $.02 per
common share. For a more detailed description, see Note 5. "Stock Based
Compensation" of the Notes to Condensed Interim Consolidated Financial
Statements.
This Form 10-QSB/A amends and restates "Item 1. Financial Statements," "Item 2.
Management's Discussion and Analysis of Financial Condition and Results of
Operations," and "Item 3. Controls and Procedures" of Part I of the Form 10-QSB,
for the quarter ended June 30, 2005 to reflect the restatement of certain
financial information. Except for Items 1, 2 and 3 of Part I, pursuant to Rule
12b-15 of the Securities Exchange Act of 1934, and new certifications from the
Chief Executive Officer and Principal Accounting and Financial Officer, no other
information included in the original Quarterly Report on Form 10-QSB is amended
by this Form 10-QSB/A. This report continues to be presented as of the date of
the original Quarterly Report on Form 10-QSB and we have not updated the
disclosure in this report to a later date.
PART I. FINANCIAL INFORMATION
ITEM 1. FINANCIAL STATEMENTS
The condensed consolidated financial statements of Blue Dolphin Energy Company
and subsidiaries (referred to herein, with its predecessors and subsidiaries, as
"Blue Dolphin," "we," "us" and "our") included herein have been prepared by us,
without audit, pursuant to the rules and regulations of the SEC and, in the
opinion of management, reflect all adjustments necessary to present a fair
statement of operations, financial position and cash flows. We follow the
full-cost method of accounting for oil and gas properties, wherein costs
incurred in the acquisition, exploration and development of oil and gas reserves
are capitalized. We believe that the disclosures are adequate and the
information presented is not misleading, although certain information and
footnote disclosures normally included in financial statements prepared in
accordance with U.S. generally accepted accounting principles have been
condensed or omitted pursuant to such rules and regulations.
Our accompanying condensed consolidated financial statements should be read in
conjunction with the consolidated financial statements and notes thereto
included in our Annual Report on Form 10-KSB, as amended, for the year ended
December 31, 2004.
2
BLUE DOLPHIN ENERGY COMPANY AND SUBSIDIARIES
CONDENSED CONSOLIDATED BALANCE SHEET - UNAUDITED
JUNE 30, 2005
RESTATED
-------------
ASSETS
Current assets:
Cash and cash equivalents $ 870,260
Accounts receivable 298,975
Prepaid expenses and other assets 192,691
-------------
TOTAL CURRENT ASSETS 1,361,926
Property and Equipment, at cost:
Oil and Gas properties, including $104,616 of unproved leasehold cost (full-cost method) 444,571
Pipelines 4,547,362
Onshore separation and handling facilities 1,664,128
Land 860,275
Other property and equipment 259,366
-------------
7,775,702
Less: Accumulated depletion, depreciation, amortization and impairment 2,689,817
-------------
5,085,885
Other Assets 11,359
-------------
TOTAL ASSETS $ 6,459,170
=============
LIABILITIES AND STOCKHOLDERS' EQUITY
Current Liabilities:
Accounts payable $ 597,587
Notes payable 750,000
Current portion of long-term debt 120,000
Accrued expenses and other liabilities 108,231
-------------
TOTAL CURRENT LIABILITIES 1,575,818
Long-term debt 560,000
Asset retirement obligations 1,670,538
Common Stock, ($.01 par value, 25,000,000 shares authorized, 9,123,287 shares 91,233
issued and outstanding)
Additional Paid-in Capital 27,793,038
Accumulated Deficit (25,231,457)
-------------
TOTAL STOCKHOLDERS' EQUITY 2,652,814
TOTAL LIABILITIES AND STOCKHOLDERS' EQUITY $ 6,459,170
=============
See accompanying notes to the condensed consolidated financial statements.
3
BLUE DOLPHIN ENERGY COMPANY AND SUBSIDIARIES
CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS - UNAUDITED
Three Months
Ended June 30,
RESTATED
2005 2004
------------- ------------
Revenue from operations:
Pipeline operations $ 327,093 $ 193,498
Oil and gas sales 42,336 126,278
Gain on sale of oil and gas property - 25,809
------------- -------------
369,429 345,585
------------- -------------
Cost of operations:
Pipeline operating expenses 200,189 405,281
Lease operating expenses 41,225 35,187
Depletion, depreciation and amortizaton 85,056 119,726
General and administrative 648,086 400,227
Accretion expense 24,404 23,286
------------- -------------
998,960 983,707
------------- -------------
LOSS FROM OPERATIONS (629,531) (638,122)
Other Income (expense):
Interest and other expense (41,184) (213,960)
Interest and other income 2,892 53,744
Equity in loss of affiliate - (25,068)
------------- -------------
LOSS BEFORE INCOME TAXES (667,823) (823,406)
Income taxes - -
------------- -------------
Net loss $ (667,823) $ (823,406)
============= =============
Loss per common share
- basic and diluted $ (0.08) $ (0.12)
============= =============
Weighted average number of common shares outstanding
- basic and diluted 8,777,142 6,712,438
============ =============
See accompanying notes to the condensed consolidated financial statements.
4
BLUE DOLPHIN ENERGY COMPANY AND SUBSIDIARIES
CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS - UNAUDITED
Six Months
Ended June 30,
RESTATED
2005 2004
------------- ------------
Revenue from operations:
Pipeline operations $ 648,708 $ 397,537
Oil and gas sales 79,751 281,170
Gain on sale of oil and gas property - 25,809
------------- ------------
728,459 704,516
------------- ------------
Cost of operations:
Pipeline operating expenses 488,049 648,532
Lease operating expenses 57,859 67,026
Depletion, depreciation and amortizaton 170,885 254,508
General and administrative 1,608,826 896,241
Accretion expense 48,809 46,642
------------- ------------
2,374,428 1,912,949
------------- ------------
LOSS FROM OPERATIONS (1,645,969) (1,208,433)
Other Income (expense):
Interest and other expense (80,631) (225,662)
Interest and other income 328,340 139,453
Equity in loss of affiliate - (48,370)
------------- ------------
LOSS BEFORE INCOME TAXES (1,398,260) (1,343,012)
------------- ------------
Income taxes - -
------------- ------------
Net loss $ (1,398,260) $ (1,343,012)
============= ============
Loss per common share
- basic and diluted $ (0.18) $ (0.20)
============= ============
Weighted average number of common shares outstanding
- basic and diluted 7,871,972 6,688,082
============ ============
See accompanying notes to the condensed consolidated financial statements.
5
BLUE DOLPHIN ENERGY COMPANY AND SUBSIDIARIES
CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS - UNAUDITED
Six Months
Ended June 30,
RESTATED
2005 2004
------------- ------------
OPERATING ACTIVITIES
Net loss $ (1,398,260) $ (1,343,012)
Adjustments to reconcile net loss to net cash used in operating activities:
Depletion, depreciation and amortization 170,885 254,508
Amortization of debt issue costs 27,501 -
Gain on sale of oil and gas property (140,409) (25,809)
Accretion of asset retirement obligations 48,809 46,642
Equity in loss of affiliate - 48,370
Common stock issued for services - 83,000
Gain on debt restructuring (132,368) -
Compensation expense for exercise of stock options 686,472
Changes in operating assets and liabilities:
Accounts receivable 17,389 245,318
Prepaid expenses and other assets (26,523) (27,990)
Accounts payable and other liabilities (78,950) (936,866)
------------- ------------
NET CASH USED IN
OPERATING ACTIVITIES (825,454) (1,655,839)
------------- ------------
INVESTING ACTIVITIES
Property, equipment and other assets (7,192) (9,556)
Proceeds from sale of assets 214,632 34,183
Development costs - New Avoca - (41,667)
------------- ------------
NET CASH PROVIDED BY (USED IN) 207,440 (17,040)
------------- ------------
INVESTING ACTIVITIES
FINANCING ACTIVITIES
Payments on Borrowings (70,000) -
Financing costs (2,275) -
------------- ------------
NET CASH USED IN FINANCING ACTIVITIES (72,275) -
------------- ------------
DECREASE IN CASH AND CASH EQUIVALENTS (690,289) (1,672,879)
CASH AND CASH EQUIVALENTS AT BEGINNING OF PERIOD 1,560,549 2,702,892
------------- ------------
CASH AND CASH EQUIVALENTS AT END OF PERIOD $ 870,260 $ 1,030,013
============= ============
See accompanying notes to the condensed consolidated financial statements.
6
BLUE DOLPHIN ENERGY COMPANY AND SUBSIDIARIES
NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
UNAUDITED
JUNE 30, 2005
1. LIQUIDITY
At June 30, 2005, our working capital deficit was approximately $200,000. Even
though we continue to incur losses from operations due to the poor performance
of our pipeline assets, we currently believe that we have sufficient resources
in order to satisfy our working capital and capital expenditure requirements for
the twelve months ending June 30, 2006. However, we must achieve positive
operating results or acquire assets with positive cash flows in order to satisfy
our cash requirements thereafter.
Because of our recurring losses and negative cash flows from operations, our
independent registered public accounting firm included a "going concern"
explanatory paragraph in their report on our audited financial statements as of
December 31, 2004 and for the two-year period ended December 31, 2004. There was
substantial doubt about our ability to continue as a going concern. As of
December 31, 2004, in order to satisfy our debt, working capital and capital
expenditure requirements for the year ending December 31, 2005, we believed that
we would need to raise approximately $500,000.
During April 2005, we arranged an extension of the maturity date and deferred
the payment of interest on $450,000 aggregate principle amount of promissory
notes we originally issued pursuant to the Note and Warrant Purchase Agreement
dated September 8, 2004. Under the revised terms, these promissory notes will
now mature on June 30, 2006 and all interest is deferred until maturity.
In July 2005, we entered into gas and condensate transportation and handling
agreements with Manti Operating Company to deliver production through the Blue
Dolphin Pipeline System. Deliveries are expected to commence within 60 days.
Volumes to be transported are not known at this time.
In early August 2005, we received notice that a contractual after-payout
reversionary interest we retained in High Island Block 37 in the Gulf of Mexico
has reached payout. At this time, we are uncertain of the amount that we will
receive from this interest, however, we believe that the proceeds will be in
excess of $500,000.
The net cash provided by or used in operating, investing and financing
activities is summarized below:
Six Months Ended June 30,
(amounts in thousands)
---------------------------------
RESTATED
2005 2004
------ --------
Net cash provided by (used in):
Operating activities $(825) $(1,656)
Investing activities 207 (17)
Financing activities (72) -
----- -------
Net decrease in cash $(690) $(1,673)
===== =======
7
BLUE DOLPHIN ENERGY COMPANY AND SUBSIDIARIES
NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
UNAUDITED - CONTINUED
JUNE 30, 2005
2. CONTINGENCIES
We are involved in various claims and legal actions arising in the ordinary
course of business. In our opinion, the ultimate disposition of these matters
will not have a material effect on our financial position, results of operations
or cash flows.
3. EARNINGS PER SHARE
We apply the provisions of Statement of Financial Accounting Standards No. 128
("SFAS 128"), "Earnings per Share." SFAS 128 requires the presentation of basic
earnings per share ("EPS") which excludes dilution and is computed by dividing
net income (loss) available to common stockholders by the weighted-average
number of shares of common stock outstanding for the period. SFAS 128 requires
dual presentation of basic EPS and diluted EPS on the face of the income
statement and requires a reconciliation of the numerators and denominators of
basic EPS and diluted EPS.
Employee stock options and stock warrants at June 30, 2005 and 2004 were not
included in the computation of diluted earnings per share because their assumed
exercise and conversion would have an antidilutive effect on the computation of
diluted loss per share.
Weighted-
Average Number
of Common Shares RESTATED
Outstanding and Per
RESTATED Potential Dilutive Share
Net Loss Common Shares Amount
------------ ------------------ --------
Six Months ended June 30, 2005
Basic and diluted loss per share $ (1,398,260) 7,871,972 $ (0.18)
============ ========= ========
Six Months ended June 30, 2004
Basic and diluted loss per share $ (1,343,012) 6,688,082 $ (0.20)
============ ========= ========
Quarter ended June 30, 2005
Basic and diluted loss per share $ (667,823) 8,777,142 $ (0.08)
============ ========= ========
Quarter ended June 30, 2004
Basic and diluted loss per share $ (823,406) 6,712,438 $ (0.12)
============ ========= ========
8
BLUE DOLPHIN ENERGY COMPANY AND SUBSIDIARIES
NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
UNAUDITED - CONTINUED
JUNE 30, 2005
4. BUSINESS SEGMENT INFORMATION
Our income producing operations are conducted in two principal business
segments: pipeline transportation services and oil and gas exploration and
production. There were no intersegment revenues during the periods presented.
Information concerning these segments for the six months and three months ended
June 30, 2005 and 2004, and at June 30, 2005 are as follows:
RESTATED Depletion,
Operating Depreciation and
Revenues Loss(*) Amortization
-------- --------- -----------------
Six months ended June 30, 2005
Pipeline operations $648,708 (613,326) 161,795
Oil and gas exploration and production 79,751 (58,179) 4,305
Other - (974,464) 4,785
-------- ---------- -------
Consolidated 728,459 (1,645,969) 170,885
-------- -------
Other income (loss), net 247,709
----------
Loss before income taxes (1,398,260)
Six months ended June 30, 2004
Pipeline operations $397,537 (800,888) 163,671
Oil and gas exploration and production 281,170 (121,170) 84,789
Other - (312,184) 6,048
-------- ---------- -------
Consolidated 678,707 (1,234,242) 254,508
-------- -------
Other income (loss), net (108,770)
----------
Loss before income taxes (1,343,012)
Quarter ended June 30, 2005
Pipeline operations $327,093 (263,722) 79,921
Oil and gas exploration and production 42,336 (42,121) 2,934
Other - (323,688) 2,201
-------- ---------- -------
Consolidated 369,429 (629,531) 85,056
-------- -------
Other income (loss), net (38,292)
----------
Loss before income taxes (667,823)
Quarter ended June 30, 2004
Pipeline operations $193,498 (482,974) 81,874
Oil and gas exploration and production 126,278 (57,293) 34,997
Other - (123,664) 2,855
-------- ---------- -------
Consolidated 319,776 (663,931) 119,726
-------- -------
Other income (loss), net (159,475)
----------
Loss before income taxes (823,406)
9
BLUE DOLPHIN ENERGY COMPANY AND SUBSIDIARIES
NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
UNAUDITED - CONTINUED
JUNE 30, 2005
June 30, 2005
-------------
Identifiable assets:
Pipeline operations $ 5,712,683
Oil and gas exploration and production 260,424
Other 486,063
-------------
Consolidated $ 6,459,170
=============
----------
(*) Consolidated loss from operations includes $969,699 and $306,136 in
unallocated general and administrative expenses, and unallocated
depletion, depreciation and amortization of $4,785 and $6,048 for the six
months ended June 30, 2005 and 2004, respectively. All unallocated amounts
are included in "Other."
Consolidated loss from operations includes $321,488 and $120,809 in
unallocated general and administrative expenses, and unallocated
depletion, depreciation and amortization of $2,201 and $2,855 for the
quarters ended June 30, 2005 and 2004, respectively. All unallocated
amounts are included in "Other."
5. STOCK BASED COMPENSATION
We account for stock-based compensation granted under our long-term incentive
plans using the intrinsic value method prescribed by Accounting Principles Board
Opinion No. 25, "Accounting for Stock Issued to Employees" and related
interpretations. Stock-based compensation expense of $153,027 and $686,472 was
recognized in the three months and six months ended June 30, 2005, respectively.
Recognition of this non-cash expense is required by Financial Accounting
Standards Board Interpretation No. 44 "Accounting for Certain Transactions
involving Stock Compensation - - An Interpretation of APB Opinion No. 25" ("FIN
44"). Pursuant to FIN 44, stock options exercised in a "cashless" manner by
surrendering a portion of the option shares issued to pay the option exercise
price, trigger variable accounting treatment, requiring the measurement of
compensation expense at a period beyond the date of grant.
In the fiscal quarter ending March 31, 2006, we will begin accounting for
stock-based compensation under Statement of Financial Accounting Standards No.
123R "Share-Based Payment". SFAS No. 123R is a revision to Statement of
Financial Accounting Standards No. 123 "Accounting for Stock-Based
Compensation," and eliminates the ability to account for share-based
compensation transaction using APB Opinion No. 25. It requires that such
transactions be accounted for using a fair value-based method.
10
BLUE DOLPHIN ENERGY COMPANY AND SUBSIDIARIES
NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
UNAUDITED - CONTINUED
JUNE 30, 2005
The following table illustrates the effect on net loss and loss per share if we
had applied the fair value recognition provisions of Statement of Financial
Accounting Standards No. 123, "Accounting for Stock-Based Compensation" to
stock-based employee compensation:
Three months ended Six months ended
June 30, June30,
------------------- ------------------
RESTATED RESTATED
2005 2004 2005 2004
------- -------- ------- -------
(in thousands, except per share amounts)
-----------------------------------------
Net loss, as reported.......................................... $ (668) $ (823) $(1,398) $(1,343)
Add: Total stock-based employee compensation
included in reported net loss, net of related tax effects... $ 153 - $ 686 -
Deduct: Total stock-based employee compensation
expense determined under fair value based
method for awards, net of related tax effects................ - - (66) -
------- -------- ------- -------
Pro forma net loss............................................. $ (515) $ (823) $ (778) $(1,343)
======= ======== ======= =======
Net loss per share:
Basic and Diluted - as reported................................ $ (0.06) $ (0.12) $ (0.09) $ (0.20)
======= ======== ======= =======
Basic and Diluted - pro forma.................................. $ (0.06) $ (0.12) $ (0.10) $ (0.20)
======= ======== ======= =======
During the six months ended June 30, 2005, 236,821 stock options were exercised,
with exercise prices ranging from $.35 per share to $1.90 per share. All of the
stock options exercised were done so by using the quoted market value of the
shares of common stock issued to pay the option exercise price. As a result,
51,259 shares of common stock issued were surrendered to us for payment of the
option exercise price. At June 30, 2005 there were 199,497 stock options
outstanding with exercise prices ranging from $.35 per share to $6.00 per share.
6. EXERCISE OF WARRANTS
As of January 1, 2005, there were 3,100,000 warrants outstanding that were
issued pursuant to the Note and Warrant Purchase Agreement dated September 8,
2004. During the six months ended June 30, 2005, 2,291,671 warrants were
exercised.
The exercise of the warrants was accomplished via net exercises, whereby holders
surrendered their right to purchase a portion of the shares of common stock,
resulting in 217,637 shares of common stock being surrendered to us for payment
of the warrant exercise price and 2,074,034 shares issued to warrant holders.
As of the filing of this report, there were 808,329 warrants outstanding. The
outstanding warrants are fully vested, exercisable at $.25 per warrant into one
share of common stock, and expire between September 8, 2009 and November 30,
2009.
11
BLUE DOLPHIN ENERGY COMPANY AND SUBSIDIARIES
NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
UNAUDITED - CONTINUED
JUNE 30, 2005
7. RECENT ACCOUNTING DEVELOPMENTS
In December, 2004, the FASB issued Statement of Financial Accounting Standards
No. 123R, "Share-Based Payment," that addresses the accounting for share-based
payment transactions in which a company receives employee services in exchange
for equity instruments of the company, such as stock options and restricted
stock. SFAS No. 123R eliminates the ability to account for share-based
compensation transactions using APB Opinion No. 25 and requires instead that
such transactions be accounted for using a fair value-based method. We currently
account for stock-based compensation using the intrinsic method pursuant to APB
Opinion No. 25. SFAS No. 123R requires that all stock-based payments to
employees, including grants of employee stock options and restricted stock, be
recognized as compensation expense in the financial statements based on their
fair values. Public entities that file as small business issuers will be
required to apply Statement 123R in the first interim or annual reporting period
that begins after December 15, 2005. Accordingly, we will be required to apply
SFAS No. 123R beginning in the fiscal quarter ending March 31, 2006.
The FASB has issued FASB Statement No. 154, Accounting Changes and Error
Corrections. This new standard replaces APB Opinion No. 20, Accounting Changes,
and FASB Statement No. 3, Reporting Accounting Changes in Interim Financial
Statements, and represents another step in the FASB's goal to converge its
standards with those issued by the IASB. Among other changes, Statement 154
requires that a voluntary change in accounting principle be applied
retrospectively with all prior period financial statements presented on the new
accounting principle, unless it is impracticable to do so. Statement 154 also
provides that (1) a change in method of depreciating or amortizing a long-lived
non-financial asset be accounted for as a change in estimate (prospectively)
that was effected by a change in accounting principle, and (2) correction of
errors in previously issued financial statements should be termed a
"restatement." The new standard is effective for accounting changes and
correction of errors made in fiscal years beginning after December 15, 2005.
On March 30, 2005, FASB Interpretation (FIN) No. 47, Accounting for Conditional
Asset Retirement Obligations - An Interpretation of FASB Statement No. 143, was
issued. The FASB issued FIN 47 to address diverse accounting practices that
developed with respect to the timing of liability recognition for legal
obligations associated with the retirement of a tangible long-lived asset when
the timing and (or) method of settlement of the obligation are conditional on a
future event. For example, some entities recognize the fair value of the
obligation prior to the retirement of the asset with the uncertainty about the
timing and (or) method of settlement incorporated into the fair value of the
liability. Other entities recognize the fair value of the obligation only when
it is probable the asset will be retired as of a specified date using a
specified method or when the asset is actually retired. FIN 47 concludes that an
entity is required to recognize a liability for the fair value of a conditional
asset retirement obligation when incurred if the liability's fair value can be
reasonably estimated.
We are currently assessing the impact on our consolidated financial statements
of all the recent accounting developments discussed above in this note.
12
BLUE DOLPHIN ENERGY COMPANY AND SUBSIDIARIES
ITEM 2. MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS
OF OPERATIONS
CAUTIONARY NOTE REGARDING FORWARD LOOKING STATEMENTS
Forward Looking Statements. Certain of the statements included in this quarterly
report on Form 10-QSB, 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 "Exchange Act"), and Section 27A of the Securities Act of 1933 (the
"Securities Act"), as amended. The words "expect," "plan," "believe,"
"anticipate," "project," "estimate," and similar expressions are intended to
identify forward-looking statements. Blue Dolphin Energy Company (referred to
herein, with its predecessors and subsidiaries, as "Blue Dolphin," "we," "us"
and "our") cautions readers that these 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. Some of the important factors, risks and
uncertainties that could cause actual results to vary from forward-looking
statements include:
- the level of utilization of our pipelines;
- availability and cost of capital;
- actions or inactions of third party operators for properties where
we have an interest;
- the risks associated with exploration;
- the level of production from oil and gas properties;
- gas and oil price volatility;
- uncertainties in the estimation of proved reserves and in the
projection of future rates of production and timing of development
expenditures;
- regulatory developments; and
- general economic conditions.
Additional factors that could cause actual results to differ materially from
those indicated in the forward-looking statements are discussed under the
caption "Risk Factors" in our annual report on Form 10-KSB, as amended, for the
year ended December 31, 2004. Readers are cautioned not to place undue reliance
on these forward-looking statements which speak only as of the date thereof. We
undertake no duty to update these forward-looking statements. Readers are urged
to carefully review and consider the various disclosures made by us which
attempt to advise interested parties of the additional factors which may affect
our business, including the disclosures made under the caption "Management's
Discussion and Analysis of Financial Condition and Results of Operations" in
this report.
13
BLUE DOLPHIN ENERGY COMPANY AND SUBSIDIARIES
ITEM 2. MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS
OF OPERATIONS - CONTINUED
EXECUTIVE SUMMARY
We are engaged in two lines of business: (i) pipeline transportation services
for producer/shippers, and (ii) oil and gas exploration and production. We
conduct our operations through our subsidiaries and our assets are located
offshore and onshore in the Texas Gulf coast area. In addition to satisfying our
liquidity and capital needs, our focus in 2005 is to increase utilization of our
pipelines, strategic acquisitions and continued cost management. Our long-term
goal is to create greater value for our stockholders through the addition of
assets. Although we continue to have interest in oil and gas properties and will
consider acquiring interests in producing oil and gas properties, as a result of
implementing cost savings measures in 2004, we are primarily focused on our
pipeline business.
At the beginning of 2004 we faced, and we continue to face, a significant
liquidity shortage. We estimated that we would need to raise approximately
$1,500,000 to satisfy our liquidity and working capital requirements through
2004. To address our liquidity shortage and improve our financial performance in
2004 we:
- Implemented cost savings measures that included, among other
things, reducing the number of employees and contract
personnel,
- Extended the payment terms of $668,000 of indebtedness that
was due in August and September 2004,
- Raised capital through the issuance of $750,000 of promissory
notes in September 2004,
- Sold our interest in New Avoca Gas Storage, LLC for
approximately $930,000 in October 2004, and
- Negotiated an increase in gas transportation rates on the Blue
Dolphin System effective October 2004,
As a result of our ongoing liquidity problems, our independent, registered
public accounting firm, UHY Mann Frankfort Stein & Lipp CPAs, LLP added an
explanatory paragraph in their opinion on our consolidated financial statements
as of the year ended December 31, 2004, indicating that substantial doubt exists
about our ability to continue as a going concern. Although we took certain steps
in 2004 to address our liquidity shortage and improve our financial performance
at the beginning of 2005, we estimated that we would need to raise approximately
$500,000 to satisfy our liquidity and working capital requirements through 2005.
At June 30, 2005 we had a working capital deficit of $200,000. To address our
liquidity shortage in 2005 we:
- Extended the maturity date and deferred interest payments on
$450,000 aggregate principal amount of promissory notes issued
in September 2004, and
- Restructured the terms of our indebtedness to MCNIC Pipeline
and Processing Group, Inc. ("MCNIC") by reducing the principal
amount of the indebtedness to $250,000 and having all accrued
and unpaid interest forgiven.
14
BLUE DOLPHIN ENERGY COMPANY AND SUBSIDIARIES
ITEM 2. MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS
OF OPERATIONS - CONTINUED
We were also recently notified that payout has occurred on our after-payout
reversionary interest in High Island Block 37. At this point we are not able to
determine the exact amount that we are due, however, we believe that it will be
in excess of $500,000. Absent receipt of these funds we believe we have
sufficient liquidity to satisfy our working capital requirements through June
30, 2006.
LIQUIDITY AND CAPITAL RESOURCES
While we have been able to implement cost savings measures and restructure the
terms of some of our indebtedness we were not able to generate sufficient cash
from operations to cover operating costs and general and administrative
expenses. For the six months ended June 30, 2005, we generated total revenues of
approximately $728,000 while operating costs and general administrative expenses
totaled approximately $2,154,734, including non-cash compensation expense of
$686,472 associated with "cashless" exercises of stock options. We had a working
capital deficit of approximately $200,000. Our financial condition has been
significantly and negatively affected by the poor performance of our businesses
and our significant indebtedness.
On February 28, 2005 (effective as of January 1, 2005), we entered into an
amendment to our purchase agreement with MCNIC. Under the terms of the original
purchase agreement, we acquired MCNIC's one-third interests in both the Blue
Dolphin System and the inactive Omega Pipeline. Pursuant to the terms of the
amendment, the original promissory note was exchanged for a new promissory note
in the principal amount of $250,000, and all accrued interest on the original
promissory note was forgiven, approximately $132,000. We made a principal
payment on the new promissory note of $30,000 upon the execution of the
amendment. Under the terms of the new promissory note, we will make monthly
principal payments of $10,000 through its maturity date of December 31, 2006. In
addition, MCNIC may receive additional payments of up to $500,000 from 50% of
the net profits, if any, realized from the one-third interest in the Blue
Dolphin System through December 31, 2006, and the principal amount of the new
promissory note may be increased by up to $500,000, if 50% or more of our 83%
interest in the Blue Dolphin System is sold before December 31, 2006.
In July 2005, we entered into gas and condensate transportation and handling
contracts with Manti Operating Company to deliver production into the Blue
Dolphin Pipeline System in Galveston area state tract 348. We expect to begin
providing services related to these contracts in at the end of the third quarter
or the beginning of the fourth quarter. The amount of revenue derived from these
contracts will be based on the volume of gas or condensate that we transport,
which we cannot predict at this time.
On August 1, 2005, we made our final payment to Tetra Applied Technologies, Inc.
("Tetra"). In August 2004, we restructured our indebtedness to Tetra for the
abandonment/reefing of the Buccaneer Field. Under the revised terms, on
September 1, 2004 we began paying Tetra the outstanding balance in twelve
monthly installments of $55,667 plus interest on the outstanding balance at the
rate of six percent per annum. At June 30, 2005, the remaining balance due Tetra
was approximately $111,000.
On September 8, 2004, we entered into a Note and Warrant Purchase Agreement
("Purchase Agreement") with certain accredited investors and certain of our
directors for the purchase and sale of promissory notes in an aggregate
principal amount of $750,000 (the "Promissory Notes") and 2,800,000 warrants
("Warrants") to purchase shares of our common stock at a purchase price of
$0.003 per Warrant. We
15
BLUE DOLPHIN ENERGY COMPANY AND SUBSIDIARIES
ITEM 2. MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS
OF OPERATIONS - CONTINUED
received proceeds of $758,400 from the issuance of the Promissory Notes and the
Warrants. The Promissory Notes mature on September 8, 2005, and accrue interest
at a rate of 12.0% per annum, of which 4% is payable monthly and 8% is payable
at maturity. However, in April 2005, the holders of $450,000 aggregate principal
amount of Promissory Notes agreed to extend the maturity date of their
Promissory Notes to June 30, 2006 and to defer the payment of all interest on
their Promissory Notes until maturity. As of June 30, 2005, we have issued
2,074,034 shares of common stock as a result of the exercise of Warrants. The
exercise of the Warrants was accomplished via net exercises, whereby holders
surrendered their right to receive 217,637 shares of common stock.
In October 2004, we sold our 25% equity interest in New Avoca for approximately
$930,000 and may receive an additional payment of up to approximately $375,000,
subject to the commencement of commercial operations at the New Avoca natural
gas storage facility prior to October 29, 2011. The proceeds from the sale of
our interest in New Avoca are being used for general corporate purposes.
The following table summarizes certain of our contractual obligations and other
commercial commitments at June 30, 2005 (amounts in thousands):
Payments Due by Period
-------------------------------------------------------
Contractual Obligations and Other 1 year After
Commercial Commitments Total or less 1-3 years 3-5 years 5 years
--------------------------------- ------------- --------- --------- --------- -------
Accounts Payable - Tetra $ 111 111 - - -
Notes Payable and Long-Term Debt 1,484 924 560 - -
Operating Leases, net of sublease 205 123 70 12 -
Abandonment - Costs 1,671 - 194 - 1,477
------------- --------- --------- --------- -------
Total Contractual Obligations
and Other Commercial Commitments $ 3,471 1,158 824 12 1,477
============= ========= ========= ========= =======
16
BLUE DOLPHIN ENERGY COMPANY AND SUBSIDIARIES
ITEM 2. MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS
OF OPERATIONS - CONTINUED
The following table summarizes our financial position for the periods indicated
(amounts in thousands):
RESTATED
June 30, December 31,
2005 2004
----------------------- ------------------------
Amount % Amount %
------------ --------- ------------- ---------
Working Capital $ (214) (4) $ 404 7
Property and equipment, net 5,086 104 5,324 93
Other noncurrent assets 11 - 11 -
------------ --------- ------------- ---------
Total $ 4,883 100 $ 5,739 100
============ ========= ============= =========
Long-term Liabilities $ 2,230 46 $ 2,374 41
Stockholders' equity 2,653 54 3,365 59
============ ========= ============= =========
Total $ 4,883 100 $ 5,739 100
============ ========= ============= =========
Our financial condition continues to be adversely affected by the poor
performance of our business and we have not been able to generate sufficient
cash from operations to cover operating costs and general and administrative
expenses. Natural gas transportation throughput on our Blue Dolphin System is
currently 6 MMBtu per day representing approximately 4% of system capacity.
However, we believe, that the Blue Dolphin System is in a market area that is
experiencing an increased level of interest by oil and gas operators based on
the recent leasing activity in the lease blocks surrounding the pipelines.
Effective October 1, 2004, we renegotiated the gas transportation rates on the
Blue Dolphin System due to operating losses incurred from operating the system.
As a result, gas transportation revenues from the Blue Dolphin System for the
first half of 2005 totaled approximately $436,000. Without the increased rates,
gas transportation revenues would have been approximately $121,000 for this same
period. Future utilization of our pipelines and related facilities will depend
upon the success of drilling programs around our pipeline systems, and
attraction and retention of producer/shippers to the systems. Three new
successful wells have recently been drilled in lease blocks in the vicinity of
the Blue Dolphin Pipeline. We have entered into transportation and handling
agreements with the operator of one of the wells and are currently negotiating
with the operators of the other two wells. As a result of current and
anticipated drilling activity around the Blue Dolphin System, we expect that
utilization of the Blue Dolphin System will increase in late 2005.
During the six months ended June 30, 2005, we incurred no capital expenditures
for the development of our proved reserves. However, we do expect to make
capital expenditures totaling $40,000 and $203,000 in the years ending December
31, 2005 and 2007, respectively. Capital expenditures in 2005 represent workover
costs, net to our interest, for the producing well in the High Island Block A-7
field and in 2007, the abandonment costs of our High Island Block A-7 field, net
to our interest.
17
BLUE DOLPHIN ENERGY COMPANY AND SUBSIDIARIES
ITEM 2. MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS
OF OPERATIONS - CONTINUED
RESULTS OF OPERATIONS
We reported a net loss for the six months ended June 30, 2005 ("current period")
of $1,398,260 compared a net loss of $1,343,012 reported for the six months
ended June 30, 2004 ("previous period"). For the three months ended June 30,
2005 ("current quarter"), we reported a net loss of $667,823, compared to a net
loss of $823,406 for the three months ended June 30, 2004 ("previous quarter").
FIRST HALF OF 2005 COMPARED TO FIRST HALF OF 2004
Revenue from pipeline operations. Revenues from pipeline operations increased by
$251,171 or 63% in the current period to $648,708. Revenues in the current
period from the Blue Dolphin System totaled approximately $521,000 compared to
approximately $254,000 in the previous period primarily as a result of an
increase in our average gas transportation rates on the Blue Dolphin System
effective as of October 2004. The increased rates will decrease as our net
operating results from the Blue Dolphin System improve, but in any case, the
rates will be no lower than the rates that were in effect prior to October 2004.
Revenue from oil and gas sales. Revenues from oil and gas sales decreased by
$201,419 to $79,751 in the current period from those of the previous period
primarily due to a significant production decline in the High Island Block A-7
field, which provided revenues from oil and gas sales of approximately $80,000
in the current period compared to approximately $217,000 in the previous period.
We expect that revenue from oil and gas sales will continue to decline as we
anticipate that production from the reservoir currently producing will cease in
the third quarter of 2005. However there is an additional reservoir in which a
recompletion in the existing well is possible. Oil and gas sales from this
additional reservoir are not expected to significantly increase our total
revenues in 2005. Previous period oil and gas sales include approximately
$64,000 from our interest in the High Island Block 34 field, which was sold in
June 2004.
Pipeline operating expenses. Pipeline operating expenses in the current period
decreased by $160,483 to $488,049 due to lower repairs and maintenance costs of
approximately $170,000 and lower insurance costs of approximately $85,000,
partially offset by an increase in legal costs of approximately $52,000. The
decrease in insurance costs is due to a refund received for having no claims in
the previous policy period and the elimination of property insurance coverage on
our pipelines. The increase in legal costs is associated with an ongoing action
against us, the outcome of which we do not believe will have a material impact.
However, as this litigation continues we will continue to incur significant
legal expenses which could have a material adverse effect on our financial
condition.
18
BLUE DOLPHIN ENERGY COMPANY AND SUBSIDIARIES
ITEM 2. MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS
OF OPERATIONS - CONTINUED
General and administrative. General and administrative expenses increased by
$712,585 to $1,608,826 in the current period. The increase was due primarily to
recognition of $686,472 of non-cash compensation expense associated with
"cashless" exercises of 236,821 stock options by certain of our directors and
employees and to a lesser extent by higher legal and consulting expenses
associated with our efforts to raise capital, offset by lower personnel and
other costs as a result of our cost reduction plans implemented in 2003 and
2004. The 2004 cost reductions included the termination of certain employees in
mid 2004. If our business activities expand, we will need to hire additional
employees, and our personnel and associated costs will increase.
Depletion, depreciation and amortization. Depletion, depreciation and
amortization expense decreased by $83,623 in the current period to $170,885. In
the previous period we recorded depletion of approximately $63,000 associated
with our oil and gas properties. The decrease in depletion was a result of there
being no remaining unamortized oil and gas costs in the current period.
Interest and other expense. Interest and other expense decreased $145,031 in the
current period. Other expense in the prior period includes approximately
$200,000 in legal and other fees associated with a proposed financing
transaction that was subsequently terminated, offset by increased interest
expense in the current period of approximately $29,000, and amortization of debt
issuance costs of approximately $28,000 due to the issuance of the Promissory
Notes in September 2004.
Interest and other income. Interest and other income increased $188,887 in the
current period. Other income in the current period includes a gain on the
placement of our interests in the Galveston Block 287/297 leases of
approximately $140,000, a gain on the elimination of accrued interest pursuant
to the restructuring of the MCNIC promissory note of approximately $132,000 and
the collection of accounts receivable that were previously written off of
approximately $45,000. Other income in the previous period includes fees
generated for consulting services we provided, associated with the evaluation of
oil and gas properties of $50,000 and the collection of accounts receivable that
were previously written off of $75,000.
Equity in loss of affiliate. In the previous period we recorded a loss from our
equity interest in New Avoca of $48,370. Our interest in New Avoca was sold in
October 2004.
SECOND QUARTER OF 2005 COMPARED TO SECOND QUARTER OF 2004
Revenue from pipeline operations. Revenues from pipeline operations increased by
$133,595 or 69% in the current quarter to $327,093. Revenues in the current
quarter from the Blue Dolphin System totaled approximately $267,000 compared to
approximately $130,000 in the previous quarter primarily as a result of an
increase in our average gas transportation rates on the Blue Dolphin System
effective as of October 2004.
19
BLUE DOLPHIN ENERGY COMPANY AND SUBSIDIARIES
ITEM 2. MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS
OF OPERATIONS - CONTINUED
Revenue from oil and gas sales. Revenues from oil and gas sales decreased by
$83,942 in the current quarter from those of the previous quarter primarily due
to a significant production decline in the High Island Block A-7 field, which
provided revenues from oil and gas sales of approximately $42,000 in the current
quarter compared to approximately $99,000 in the previous quarter. Oil and gas
sales in the previous quarter include approximately $28,000 from our interest in
the High Island Block 34 field, which was sold in June 2004.
Pipeline operating expenses. Pipeline operating expenses in the current quarter
decreased by $205,092 to $200,189 due to lower repairs and maintenance costs of
approximately $170,000 and lower legal costs of approximately $41,000. The legal
costs are associated with an ongoing action against us, the outcome of which we
do not believe will have a material impact.
General and administrative. General and administrative expenses increased by
$247,859 to $648,086 in the current quarter. The increase was primarily due to
recognition of $153,027 of non-cash compensation expense associated with
"cashless" exercises of 80,571 stock options by certain of our directors and
employees and to a lesser extent by higher legal and consulting expenses
associated with our efforts to raise capital, offset by lower personnel and
other costs as a result of our cost reduction plans implemented in 2003 and
2004.
Depletion, depreciation and amortization. Depletion, depreciation and
amortization expense decreased by $34,670 in the current quarter to $85,056. In
the previous quarter we recorded depletion of approximately $25,000 associated
with our oil and gas properties. The decrease in depletion was a result of there
being no remaining unamortized oil and gas costs in the current quarter.
Interest and other expense. Interest and other expense decreased $172,776 in the
current quarter. Other expense in the prior quarter includes approximately
$200,000 in legal and other fees associated with a proposed financing
transaction that was subsequently terminated, partially offset by increased
interest expense and amortization of debt issuance costs in the current quarter
due to the issuance of the Promissory Notes in September 2004.
Interest and other income. Interest and other income decreased $50,852 in the
current quarter Other income in the previous quarter includes $45,000 associated
with the collection of accounts receivable that were previously written off .
Equity in loss of affiliate. In the previous quarter we recorded a loss from our
equity interest in New Avoca of $25,068. Our interest in New Avoca was sold in
October 2004.
RECENT ACCOUNTING DEVELOPMENTS
See Note 7 in Item 1.
20
BLUE DOLPHIN ENERGY COMPANY AND SUBSIDIARIES
ITEM 3. CONTROLS AND PROCEDURES
As of the end of the period covered by this report, we carried out an
evaluation, under the supervision and with the participation of our management,
including our Chief Executive Officer and Principal Accounting and Financial
Officer, of the effectiveness of the design and operation of our disclosure
controls and procedures (as defined in Rules 13a-15(e) and 15d-15(e) under the
Exchange Act). Based upon this evaluation, the Chief Executive Officer and
Principal Accounting and Financial Officer concluded that our disclosure
controls and procedures were effective to ensure that information required to be
disclosed by us in reports that we file or submit under the Exchange Act, are
recorded, processed, summarized and reported within the time periods specified
in the SEC's rules and forms.
Subsequent to the filing of the Form 10-QSB for the period ending June 30, 2005,
it was determined that the adequacy of our disclosure controls and procedures
was impacted by a deficiency in our internal control over financial reporting
with respect to the application of generally accepted accounting principles
("GAAP") to the "cashless" exercise of stock options by certain directors and
employees. We account for stock-based compensation as fixed awards under the
Intrinsic Value Method as prescribed by Accounting Principles Board Opinion No.
25 "Accounting for Stock Issued to Employees" ("APB No. 25"). Under APB No. 25,
the compensation expense associated with option grants that receive fixed
accounting treatment is measured at the grant date. When variable accounting
treatment is applied, compensation expense is measured again and recognized at
periods after the initial measurement date. We have concluded, after
consultation with UHY, that options exercised in the first and second quarters
of 2005 using the "cashless" exercise method require variable accounting
treatment under Financial Accounting Standards Board Interpretation No. 44
"Accounting for Certain Transactions involving Stock Compensation - An
Interpretation of APB Opinion No. 25" ("FIN 44"). The error in our reporting of
compensation expense which was discovered after the filing of the Quarterly
Report for the quarter ended June 30, 2005, resulted in the restatement of the
financial information for the quarter ended June 30, 2005, as described in
Part I, Item 1, Note 5. "Stock Based Compensation" to the condensed interim
consolidated financial statements included in this Form 10-QSB/A.
Management had previously concluded that our disclosure controls and procedures
were effective as of June 30, 2005 and reported that there was no change in our
internal control over financial reporting that occurred during the quarter ended
June 30, 2005 that materially affected, or was reasonably likely to materially
affect, the internal control over financial reporting. However, upon discovery
of this error in application of GAAP, management has concluded that a
significant deficiency existed in our internal control over financial reporting
with respect to the application of GAAP to our financial statements and our
disclosure controls and procedures were not effective as of June 30, 2005.
In response to the identified deficiency, we have taken remedial steps to
improve the control processes regarding the application of GAAP and preparation
and review of the consolidated financial statements. Specifically, key personnel
involved in our financial reporting process have enhanced the process through
which authoritative guidance will be monitored on a regular basis. On-going
reviews of authoritative guidance are being conducted in order to ensure that
the guidance is being complied with in the preparation of the financial
statements, related disclosures and periodic filings with the SEC. As previously
disclosed, there were also changes in our internal controls over financial
reporting in the form of more in-depth project status review procedures. All of
these changes were designed to enhance our existing disclosure controls and
procedures. Other than the changes discussed above, there have been no changes
made in our internal control over financial reporting that materially affected,
or is reasonably likely to materially affect, the internal control over
financial reporting.
21
BLUE DOLPHIN ENERGY COMPANY AND SUBSIDIARIES
PART II. OTHER INFORMATION
ITEM 6. EXHIBITS
A) Exhibits
3.1 (1) Amended and Restated Certificate of Incorporation of the Company.
3.2 (2) Amended and Restated Bylaws of the Company.
31.1 Ivar Siem Certification Pursuant to 18 U.S.C. Section 1350, as
adopted pursuant to section 302 of the Sarbanes-Oxley Act of 2002.
31.2 Gregory W. Starks Certification Pursuant to 18 U.S.C. Section
1350, as adopted pursuant to section 302 of the Sarbanes-Oxley Act
of 2002.
32.1 Ivar Siem Certification Pursuant to 18 U.S.C. Section 1350, as
adopted pursuant to section 906 of the Sarbanes-Oxley Act of 2002.
32.2 Gregory W. Starks Certification Pursuant to 18 U.S.C. Section
1350, as adopted pursuant to section 906 of the Sarbanes-Oxley Act
of 2002.
--------------------
(1) Incorporated herein by reference to Exhibits filed in connection with the
definitive Proxy Statement of Blue Dolphin Energy Company under the
Securities and Exchange Act of 1934, dated October 13, 2004 (Commission
File No. 000-15905).
(2) Incorporated herein by reference to Exhibits filed in connection with Form
10-QSB of Blue Dolphin Energy Company for the quarter ended June 30, 2004
under the Securites and Exchange Act of 1934, dated August 20, 2004
(Commission File No. 000-15905).
22
BLUE DOLPHIN ENERGY COMPANY AND SUBSIDIARIES
SIGNATURES
Pursuant to the requirements of the Securities Exchange Act of 1934, the
Registrant has duly caused this report to be signed on its behalf by the
undersigned thereunto duly authorized.
By: BLUE DOLPHIN ENERGY COMPANY
Date: November 10, 2005 /s/ Ivar Siem
-------------------------------------
Ivar Siem
Chairman and Chief Executive Officer
/s/ Gregory W. Starks
-------------------------------------
Gregory W. Starks
Treasurer
(Principal Accounting and Financial
Officer)
23
INDEX TO EXHIBITS
3.1 (1) Amended and Restated Certificate of Incorporation of the Company.
3.2 (2) Amended and Restated Bylaws of the Company.
31.1 Ivar Siem Certification Pursuant to 18 U.S.C. Section 1350, as
adopted pursuant to section 302 of the Sarbanes-Oxley Act of 2002.
31.2 Gregory W. Starks Certification Pursuant to 18 U.S.C. Section 1350,
as adopted pursuant to section 302 of the Sarbanes-Oxley Act of
2002.
32.1 Ivar Siem Certification Pursuant to 18 U.S.C. Section 1350, as
adopted pursuant to section 906 of the Sarbanes-Oxley Act of 2002.
32.2 Gregory W. Starks Certification Pursuant to 18 U.S.C. Section 1350,
as adopted pursuant to section 906 of the Sarbanes-Oxley Act of
2002.
--------------------
(1) Incorporated herein by reference to Exhibits filed in connection with the
definitive Proxy Statement of Blue Dolphin Energy Company under the
Securities and Exchange Act of 1934, dated October 13, 2004 (Commission
File No. 000-15905).
(2) Incorporated herein by reference to Exhibits filed in connection with Form
10-QSB of Blue Dolphin Energy Company for the quarter ended June 30, 2004
under the Securites and Exchange Act of 1934, dated August 20, 2004
(Commission File No. 000-15905).