Blue Dolphin Announces Improved Full Year 2014 Financial Results

HOUSTON, TX--(Marketwired - Apr 1, 2015) - Blue Dolphin Energy Company ("Blue Dolphin") (OTCQX: BDCO) today announced financial results for the full year ended December 31, 2014.

2014 Full Year Financial Highlights:

• Net income of $15.8 million, or $1.51 per share, including an income tax benefit of $5.6 million; and

• Total EBITDA of $12.6 million and refinery operations EBITDA of $13.8 million.

For the full year 2014, Blue Dolphin reported an increase in net income of $19.6 million to $15.8 million, or $1.51 per share, from a net loss of $3.8 million, or a loss of $0.36 per share, for the full year 2013. The significant increase in net income in 2014 was primarily attributable to favorable refining margins, improved product mix, and recognition of a net deferred tax asset of $5.7 million. The net deferred tax asset was primarily related to net operating losses generated before and after Blue Dolphin's reverse acquisition of Lazarus Energy, LLC in 2012, the primary asset of which is the Nixon Facility.

Total earnings before interest, income taxes and depreciation ("EBITDA") increased $13.9 million to $12.6 million for the full year 2014 from a negative EBITDA of $1.3 million for the same 2013 period. Refinery operations EBITDA increased $13.2 million to $13.8 million for the full year 2014 from an EBITDA of $0.6 million for the full year 2013 due to improved refining margins.

Total cash flow from operations totaled $7.2 million for the full year 2014 compared to $1.0 million for the full year 2013, representing an increase of $6.2 million. During 2014, Blue Dolphin repaid $4.6 million of debt, net of new proceeds.

			Years Ended December 31,
			2014				2013
			(in millions)
Total revenue from operations			$	387.5			$	409.5
Total cost of operations				(377.9	)			(413.3	)
Income (loss) from operations				9.6				(3.8	)
Total other income				0.6				0.1
Income (loss) before income taxes				10.2				(3.7	)
Income tax benefit (expense)				5.6				(0.1	)
Net income (loss)				15.8				(3.8	)
Income (loss) per common share
	Basic		$	1.51			$	(0.36	)
	Diluted		$	1.51			$	(0.36	)

2014 Full Year Operational Highlights

• Refinery operating income of $12.8 million; and

• Refinery operating income per barrel sold of $3.40.

Blue Dolphin's refinery operations business segment, which represents more than 99% of total operations, consists of crude oil and condensate processing at the 15,000 bpd Nixon Facility, as well as the storage and terminaling of petroleum under third-party lease agreements. Refinery operating income increased by $13.4 million to $12.8 million for the full year 2014 compared to a refinery operating loss of $0.5 million for the full year 2013. Refinery operating income per barrel sold increased $3.54 to $3.40 for the full year 2014 from a refinery operating loss per barrel sold of $0.14 for the full year 2013. The increase in refinery operating income and refinery operating income per barrel sold was the result of improved refining margins.

Key Nixon Facility Operational Metrics

			Year Ended December 31,						Increase
			2014			2013			(Decrease)
Operating Days			333			341			(8	)
Downtime			32			24			8
Total refinery throughput(1)
	bbls		3,862,351			3,822,128			40,223
	bpd		11,599			11,209			390
Total refinery production
	bbls		3,788,710			3,743,482			45,228
	bpd		11,378			10,978			400
Total refined petroleum product sales
	bbls		3,779,677			3,709,294			70,383
Fuel and energy losses
	bbls		73,641			78,646			(5,005	)
	bpd		221			231			(9	)
Capacity utilization rate
	refinery throughput		77.3	%		74.7	%		2.6	%
	refinery production		75.9	%		73.2	%		2.7	%

(1)	Throughput represents feedstocks. The Nixon Facility's feedstock consists of crude oil and condensate.

Downtime at the Nixon Facility during 2014 primarily related to a planned maintenance turnaround and repair of an overhead accumulator. Downtime during 2013 primarily related to a planned maintenance turnaround. Despite operating for fewer days, refinery production increased slightly for 2014 compared to 2013, rising 45,228 barrels ("bbls"), or 400 bbls per day ("bpd"), as the Nixon Facility increased throughput volumes to capitalize on lower crude oil and condensate acquisition costs and increase jet fuel production. Capacity utilization rates improved as a result of increased refinery throughput and refinery production. The nominal decrease in fuel and energy losses of 5,005 bbls, or 9 bpd, was the result of operational efficiency improvements.

Non-GAAP Financial Measures

This press release and its accompanying financial schedules report refinery operating income, refinery operating income per barrel sold, and EBITDA, which are financial measures defined as non-GAAP by the Securities and Exchange Commission (the "SEC"). These non-GAAP measures are used by management to assess Blue Dolphin's operating results and the effectiveness of its business segments. 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 Blue Dolphin's non-GAAP financial measure and a reconciliation of the financial measure to the GAAP financial measure that Blue Dolphin considers most comparable are presented in "Part II, Item 7. Management's Discussion and Analysis of Financial Condition and Results of Operations - Non-GAAP Performance Measures" and "Part II, Item 8. Financial Statements and Supplementary Data - Notes to Consolidated Financial Statements, Note (4) Business Segment Information" of Blue Dolphin's annual report on Form 10-K for the year ended December 31, 2014, as filed with the SEC on March 31, 2015.

About Blue Dolphin
Blue Dolphin Energy Company (OTCQX: BDCO) is an independent refiner and marketer of refined petroleum products in the Eagle Ford Shale. Blue Dolphin's primary business is refinery operations at the 15,000 bpd Nixon Facility, which includes the refining of crude oil and condensate into marketable finished and intermediate products, as well as petroleum storage and terminaling. Blue Dolphin also owns and operates pipeline assets and has leasehold interests in oil and gas properties, which are considered non-core. 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: our dependence on Lazarus Energy Holdings, LLC ("LEH") for financing and management of our property and the property of our subsidiaries; capital needs for which our internally generated cash flows and other sources of liquidity may not be adequate; our ability to use net operating loss carryforwards, which are subject to limitation, to offset future taxable income for U.S. federal income tax purposes; dangers inherent in oil and gas operations that could cause disruptions and expose us to potentially significant losses, costs or liabilities and reduce our liquidity; geographic concentration of our assets, which creates a significant exposure to the risks of the regional economy; competition from companies having greater financial and other resources; laws and regulations regarding personnel and process safety, as well as environmental, health and safety, for which failure to comply may result in substantial fines, criminal sanctions, permit revocations, injunctions, facility shutdowns and/or significant capital expenditures; insurance coverage that may be inadequate or expensive; related party transactions with LEH and its affiliates, which may cause conflicts of interest; and loss of executive officers or key employees, as well as a shortage of skilled labor or disruptions in our labor force, which may make it difficult to maintain productivity; and the factors set forth under the heading "Risk Factors" in Part I, Item 1A of Blue Dolphin's previously filed Annual Report on Form 10-K for the fiscal year ended December 31, 2014. 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. Blue Dolphin 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.

Blue Dolphin Energy Company & Subsidiaries
Consolidated Balance Sheets
			December 31,
			2014				2013
ASSETS
CURRENT ASSETS
Cash and cash equivalents			$	1,293,233			$	434,717
Restricted cash				1,008,514				327,388
Accounts receivable				8,340,303				13,487,106
Prepaid expenses and other current assets				771,458				333,683
Deposits				68,498				1,219,660
Inventory				3,200,651				4,686,399
	Total current assets			14,682,657				20,488,953
Total property and equipment, net				37,371,075				36,388,666
Surety bonds				1,642,000				-
Debt issue costs, net				479,737				498,536
Trade name				303,346				303,346
Deferred tax assets, net				5,928,342				-
TOTAL ASSETS			$	60,407,157			$	57,679,501
LIABILITIES AND STOCKHOLDERS' EQUITY
CURRENT LIABILITIES
Accounts payable			$	12,370,179			$	20,783,541
Accounts payable, related party				1,174,168				3,659,340
Notes payable				-				11,884
Asset retirement obligations, current portion				85,846				107,388
Accrued expenses and other current liabilities				2,783,704				1,600,444
Interest payable, current portion				56,039				40,272
Long-term debt, current portion				1,245,476				2,215,918
Deferred tax liabilities				168,236				-
	Total current liabilities			17,883,648				28,418,787
Long-term liabilities:
Asset retirement obligations, net of current portion				1,780,924				1,490,273
Deferred revenues and expenses				691,525				-
Long-term debt, net of current portion				10,808,803				13,889,349
Long-term interest payable, net of current portion				1,274,789				1,767,381
	Total long-term liabilities			14,556,041				17,147,003
TOTAL LIABILITIES				32,439,689				45,565,790
Commitments and contingencies (Note 22)
STOCKHOLDERS' EQUITY
Common stock ($0.01 par value, 20,000,000 shares authorized;10,599,444 and 10,580,973
shares issued at December 31, 2014 and 2013, respectively)				105,995				105,810
Additional paid-in capital				36,718,781				36,623,965
Accumulated deficit				(8,057,308	)			(23,816,064	)
Treasury stock, 150,000 shares at cost				(800,000	)			(800,000	)
	Total stockholders' equity			27,967,468				12,113,711
TOTAL LIABILITIES AND STOCKHOLDERS' EQUITY			$	60,407,157			$	57,679,501
See notes to consolidated financial statements in Blue Dolphin's annual report on Form 10-K for the year ended December 31, 2014.

Blue Dolphin Energy Company & Subsidiaries
Consolidated Statements of Operations
				Years Ended December 31,
				2014				2013
REVENUE FROM OPERATIONS
	Refined product sales			$	387,304,774			$	409,239,747
	Pipeline operations				220,200				303,122
	Oil and gas sales				-				200
		Total revenue from operations			387,524,974				409,543,069
COST OF OPERATIONS
	Cost of refined products sold				363,762,292				399,101,182
	Refinery operating expenses				10,698,023				10,673,722
	Pipeline operating expenses				208,037				163,163
	Lease operating expenses				26,428				67,923
	General and administrative expenses				1,427,707				1,794,053
	Depletion, depreciation and amortization				1,570,962				1,342,563
	Abandonment expense				-				63,767
	Accretion expense				211,995				112,686
		Total cost of operations			377,905,444				413,319,059
Income (loss) from operations					9,619,530				(3,775,990	)
OTHER INCOME (EXPENSE)
	Tank rental and easement revenue				1,400,898				1,155,064
	Interest and other income				47,522				3,105
	Interest expense				(892,372	)			(1,100,053	)
	Loss on disposal of property and equipment				(4,400	)			-
		Total other income			551,648				58,116
Income (loss) before income taxes					10,171,178				(3,717,874	)
Income tax benefit (expense)					5,587,578				(89,255	)
Net income (loss)				$	15,758,756			$	(3,807,129	)
Income (loss) per common share
Basic				$	1.51			$	(0.36	)
Diluted				$	1.51			$	(0.36	)
Weighted average number of common shares outstanding:
Basic					10,441,464				10,445,883
Diluted					10,441,464				10,445,883
See notes to consolidated financial statements in Blue Dolphin's annual report on Form 10-K for the year ended December 31, 2014.

Blue Dolphin Energy Company & Subsidiaries
Consolidated Statements of Cash Flows
					Years Ended December 31,
					2014				2013
OPERATING ACTIVITIES
	Net income (loss)				$	15,758,756			$	(3,807,129	)
	Adjustments to reconcile net income (loss) to net cashprovided by (used in) operating activities:
		Depletion, depreciation and amortization				1,570,962				1,342,563
		Unrealized gain on derivatives				(488,950	)			(143,050	)
		Deferred taxes				(5,760,106	)			-
		Amortization of debt issue costs				33,799				33,800
		Amortization of intangible assets				-				9,463
		Accretion expense				211,995				112,686
		Abandonment costs incurred				-				63,767
		Common stock issued for services				95,001				100,000
		Loss on disposal of assets				4,400				-
	Changes in operating assets and liabilities
		Restricted cash				(681,126	)			(237,795	)
		Accounts receivable				5,146,803				1,111,649
		Prepaid expenses and other current assets				(437,775	)			(105,369	)
		Deposits and other assets				(505,838	)			16,787
		Inventory				1,485,748				(2,385,707	)
		Accounts payable, accrued expenses and other liabilities				(6,770,318	)			2,846,834
		Accounts payable, related party				(2,485,172	)			2,065,319
			Net cash provided by operating activities			7,178,179				1,023,818
INVESTING ACTIVITIES
	Capital expenditures					(1,720,156	)			(1,477,729	)
	Proceeds from sale of assets					-				201,000
			Net cash used in investing activities			(1,720,156	)			(1,276,729	)
FINANCING ACTIVITIES
	Proceeds from issuance of debt					-				5,750,611
	Payments on long-term debt					(6,226,521	)			(5,274,106	)
	Proceeds from notes payable					2,000,000				15,032
	Payments on notes payable					(372,986	)			(224,805	)
			Net cash provided by (used in) financing activities			(4,599,507	)			266,732
Net increase in cash and cash equivalents						858,516				13,821
CASH AND CASH EQUIVALENTS AT BEGINNING OF PERIOD						434,717				420,896
CASH AND CASH EQUIVALENTS AT END OF PERIOD					$	1,293,233			$	434,717
Supplemental Information:
Non-cash operating activities
	Reduction in accounts receivable in exchange for treasury stock received				$	-			$	800,000
	Surety bond funded by seller of pipeline interest				$	850,000			$	-
Non-cash investing and financing activities:
	New asset retirement obligations				$	300,980			$	-
	Changes in estimates of existing ARO obligations				$	-			$	592,415
	Financing of capital expenditures via capital lease				$	536,635			$	-
	Accrued services payable converted to common stock				$	-			$	50,000
Interest paid					$	1,369,197			$	791,536
See notes to consolidated financial statements in Blue Dolphin's annual report on Form 10-K for the year ended December 31, 2014.

Blue Dolphin Energy Company & Subsidiaries

GAAP to Non-GAAP Reconciliation

Refinery Operating Income and Refinery Operating Income Per Barrel Sold. The following table provides a reconciliation of refinery operating income and refinery operating income per barrel sold to refined petroleum product sales, cost of refined petroleum products sold, and refinery operating expenses for the periods indicated. For a reconciliation of refined petroleum product sales to total revenue from operations for our consolidated operations, see "Part II, Item 8. Financial Statements and Supplementary Data - Consolidated Statements of Operations" of this report.

			December 31,
			2014				2013
Total refined petroleum product sales			$	387,304,774			$	409,239,747
Less:
	Cost of refined petroleum products sold			(363,762,292	)			(399,101,182	)
	Refinery operating expenses			(10,698,023	)			(10,673,722	)
				(374,460,315	)			(409,774,904	)
Refinery operating income			$	12,844,459			$	(535,157	)
Total refined petroleum product sales (bbls)				3,779,677				3,709,294
Refinery operating income per bbl sold			$	3.40			$	(0.14	)

EBITDA. EBITDA should be considered in conjunction with net income (loss) and other performance measures such as operating cash flows. Following is a reconciliation of EBITDA, capital expenditures, and identifiable assets by business segment for the year ended December 31, 2014 (and at December 31, 2014) and the year ended December 31, 2013 (and at December 31, 2013):

		Year Ended December 31, 2014
		Segment
		Refinery				Pipeline				Corporate &
		Operations				Transportation				Other				Total
Revenue		$	387,304,774			$	220,200			$	-			$	387,524,974
Less: Operation cost(1)			(374,613,154	)			(483,262	)			(1,242,466	)			(376,338,882	)
Other non-interest income			1,130,065				270,833				-				1,400,898
EBITDA		$	13,821,685			$	7,771			$	(1,242,466	)		$	12,586,990
Depletion, depreciation and amortization															(1,570,962	)
Interest expense, net															(844,850	)
Income before income taxes														$	10,171,178
Capital expenditures		$	1,720,156			$	-			$	-			$	1,720,156
Identifiable assets(2)		$	50,950,050			$	3,028,719			$	6,428,388			$	60,407,157

(1)	Operation cost within the "Refinery Operations" and "Pipeline Transportation" segments includes related general, administrative, and accretion expenses. Operation cost within "Corporate and Other" includes general and administrative expenses associated with corporate maintenance costs, such as accounting fees, director fees and legal expense.
(2)	Identifiable assets contain related legal obligations of each business segment including cash, accounts receivable and recorded net assets.

		Year Ended December 31, 2013
		Segment
		Refinery				Pipeline				Corporate &
		Operations				Transportation				Other				Total
Revenue		$	409,239,747			$	303,322			$	-			$	409,543,069
Less: Operation cost(1)			(409,800,285	)			(524,051	)			(1,652,160	)			(411,976,496	)
Other non-interest income			1,113,397				41,667				-				1,155,064
EBITDA		$	552,859			$	(179,062	)		$	(1,652,160	)		$	(1,278,363	)
Depletion, depreciation and amortization															(1,342,563	)
Interest expense, net															(1,096,948	)
Loss before income taxes														$	(3,717,874	)
Capital expenditures		$	1,477,729			$	-			$	-			$	1,477,729
Identifiable assets(2)		$	54,470,723			$	2,399,467			$	809,311			$	57,679,501

(1)	Operation cost within the "Refinery Operations" and "Pipeline Transportation" segments includes related general, administrative, and accretion expenses. Operation cost within "Corporate and Other" includes general and administrative expenses associated with corporate maintenance costs, such as accounting fees, director fees and legal expense.
(2)	Identifiable assets contain related legal obligations of each business segment including cash, accounts receivable and recorded net assets.