UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
FORM 8-K
CURRENT REPORT
Pursuant to Section 13 or 15(d) of the Securities Exchange Act of 1934
Date of Report (Date of earliest event reported)
November 4, 2002 (November 1, 2002)
BLUE DOLPHIN ENERGY COMPANY
(Exact name of registrant as specified in its charter)
Delaware 0-15905 73-1268729
(State or other jurisdiction of Commission File Number: (I.R.S. Employer
incorporation or organization) Identification No.)
801 Travis, Suite 2100, Houston, Texas 77002
(Address of principal executive offices) (Zip Code)
(713) 227-7660
(Registrant's telephone number, including area code)
BLUE DOLPHIN ENERGY COMPANY AND SUBSIDIARIES
ITEM 2. ACQUISITION OR DISPOSITION OF ASSETS.
On November 4, 2002, Blue Dolphin Energy Company (the "Company") issued a press
release announcing the sale by American Resources Offshore, Inc., a wholly owned
subsidiary of the Company ("American Resources"), of all of its interest in
proved and non-proved oil and natural gas properties and other related assets to
Fidelity Exploration and Production Company ("Fidelity"), for approximately $2.7
million.
The property interests being sold are located offshore Louisiana and Texas in
the Gulf of Mexico, and include 11 offshore lease blocks with non-operated
interests ranging from 1% to 10%. These properties accounted for approximately
64% of the Company's total net proved reserves on a million cubic feet of gas
equivalent basis, and 63% of the discounted present value of estimated future
net revenues from proved oil and gas reserves. Combined with the South Timbalier
Block 148 property that was sold in July 2002, these properties represented over
99% of the Company's proved reserves at December 31, 2001. The Company's
remaining oil and gas properties include working interests in 3 leased offshore
prospects and reversionary working interests in 13 offshore lease blocks.
The July 2002 property sale in the Company's Form 8-K filed on July 23, 2002 is
incorporated herein by reference.
ITEM 7. FINANCIAL STATEMENTS, PROFORMA FINANCIAL INFORMATION AND EXHIBITS.
(b) Pro Forma Financial Information
The Company's Pro Forma Consolidated Balance Sheet at June 30, 2002, and Pro
Forma Consolidated Statements of Operations for the year ended December 31, 2001
and for the six months ended June 30, 2002 (collectively the "Financial
Statements") are presented assuming that the sale of the Company's interest in
the South Timbalier Block 148 property that was consummated in July 2002, and
the sale to Fidelity in October 2002, occurred as of the date of the Pro Forma
Balance Sheet and at the beginning of the period for each respective Statement
of Operations presented. The Financial Statements have been prepared based on
the historical financial statements as of the same date or for the same period
indicated.
Index to Pro Forma Financial Statements: Page
Pro Forma Consolidated Balance Sheet, at June 30, 2002 . . . . . . . . . . 3
Pro Forma Consolidated Statement of Operations, for the year
ended December 31, 2001 . . . . . . . . . . . . . . . . . . . . . . . 5
Pro Forma Consolidated Statement of Operations, for the six
months ended June 30, 2002 . . . . . . . . . . . . . . . . . . . . . . . . 7
2
BLUE DOLPHIN ENERGY COMPANY AND SUBSIDIARIES
Pro Forma Consolidated Balance Sheet
June 30, 2002
Adjustments Debit (Credit)
-----------------------------------
July 2002 October 2002
Assets Unaudited Property sale (1) Property sale (2) Pro Forma
------ --------------------------------------------------------------------
Current assets:
Cash and cash equivalents $ 720,859 2,300,000 2,700,000 5,720,859
Trade accounts receivable 1,193,425 1,193,425
Prepaid expenses and other assets 258,161 258,161
-------------- --------------
Total current assets 2,172,445 7,202,445
-------------- --------------
Property and equipment, at cost:
Oil and gas properties (full-cost method) 27,141,910 (1,966,784) (3,496,506) 21,678,620
Onshore separation and handling facilities 1,664,128 1,664,128
Land 860,275 860,275
Pipelines 3,639,940 3,639,940
Other property and equipment 272,091 272,091
-------------- --------------
33,578,344 28,115,054
Less accumulated depletion, depreciation
and amortization 27,287,637 1,110,982 1,975,079 24,201,576
-------------- --------------
6,290,707 3,913,478
Deferred federal income tax 244,444 244,444
Other assets 460,501 460,501
-------------- --------------
Total Assets $ 9,168,097 11,820,868
============== ==============
Liabilities and Stockholders' Equity
------------------------------------
Current liabilities:
Trade accounts payable $ 1,126,193 1,126,193
Accrued expenses and other liabilities 3,455,903 3,455,903
-------------- --------------
Total current liabilities 4,582,096 4,582,096
Note payable 750,000 750,000
Common Stock 63,718 63,718
Additional paid-in capital 26,107,141 26,107,141
Accumulated deficit (22,334,858) 1,444,198 1,208,573 (19,712,087)
-------------- --------------
Total Liabilities and
Stockholders' Equity $ 9,168,097 11,820,868
============== ==============
3
BLUE DOLPHIN ENERGY COMPANY AND SUBSIDIARIES
Pro Forma Consolidated Balance Sheet
June 30, 2002
(1) To reflect the sale of the Company's interest in the South Timbalier
Block 148 property on July 9, 2002.
(2) To reflect the sale of the Company's interest in substantially all of
its remaining proved and un-proved oil and gas reserves. The Company
sold its interests in these properties on October XX, 2002, effective
November 1, 2002.
4
BLUE DOLPHIN ENERGY COMPANY AND SUBSIDIARIES
Pro Forma Consolidated Statement of Operations
Year ended December 31, 2001
Adjustments Debit (Credit) (*)
------------------------------
July 2002 October 2002
Audited Property sale Property sale Pro Forma
----------------------------------------------------------------
Revenue from operations:
Oil and gas sales $ 4,694,202 886,954 3,806,917 331
Pipeline operations 991,823 991,823
------------- -------------
Revenue from operations 5,686,025 992,154
------------- -------------
Cost of operations:
Lease operating expenses 1,155,549 (157,212) (705,044) 293,293
Pipeline operating expenses 517,054 517,054
Impairment of assets 2,940,464 2,940,464
Depletion, depreciation and amortization 1,817,770 (252,713) (1,374,913) 190,144
General and administrative expenses 2,845,459 2,845,459
------------- -------------
Cost of operations 9,276,296 6,786,414
------------- -------------
Loss from operations (3,590,271) (5,794,260)
Other income (expense):
Interest and other expense (243,591) (243,591)
Interest and other income 116,417 116,417
Gain on sale of assets 1,417,626 1,417,626
Equity in losses of affiliates (245,201) (245,201)
------------- -------------
Loss before minority interest (2,545,020) (4,749,009)
Minority interest (104,122) 5,574 98,548 --
------------- -------------
Net loss $ (2,649,142) (4,749,009)
============= =============
Loss per share
Basic and Diluted $ (0.44) (0.79)
============= =============
Weighted average number of common shares 6,004,019 6,004,019
============= =============
5
BLUE DOLPHIN ENERGY COMPANY AND SUBSIDIARIES
Pro Forma Consolidated Statement of Operations
Year ended December 31, 2001
* To record effective as of January 1, 2001 reductions in revenues, lease
operating expenses, depletion, depreciation and amortization and
minority interest as a result of the sale of the Company's interest in
the South Timbalier Block 148 property (sold effective July 1, 2002)
and the sale of substantially all of the Company's remaining proved and
un-proved oil and gas reserves (sold effective October 1, 2002). The
gain from the sale of these properties is not included in this Pro
Forma Consolidated Statement of Operations, due to its nonrecurring
nature.
6
BLUE DOLPHIN ENERGY COMPANY AND SUBSIDIARIES
Pro Forma Consolidated Statement of Operations
Six Months ended June 30, 2002
Adjustments Debit (Credit) (*)
-------------------------------
July 2002 October 2002
Unaudited Property sale Property sale Pro Forma
-----------------------------------------------------------------
Revenue from operations:
Oil and gas sales $ 1,267,751 238,254 1,029,497 --
Pipeline operations 686,753 686,753
------------- -------------
Revenue from operations 1,954,504 686,753
------------- -------------
Cost of operations:
Lease operating expenses 392,859 (85,080) (252,718) 55,061
Pipeline operating expenses 287,435 287,435
Depletion, depreciation and amortization 552,757 (83,397) (374,137) 95,223
Impairment of assets 339,984 339,984
General and administrative expenses 1,376,155 1,376,155
------------- -------------
Cost of operations 2,949,190 2,153,858
------------- -------------
Loss from operations (994,686) (1,467,105)
Other income (expense):
Interest and other expense (121,715) (121,715)
Bad debt expense (197,500) (197,500)
Interest and other income 56,648 56,648
------------- -------------
Income/(loss) before minority interest (1,257,253) (1,729,672)
Minority interest (55,746) 16,048 39,698 --
------------- -------------
Net loss $ (1,312,999) (1,729,672)
============= =============
Loss per common share-basic and diluted: $ (0.21) (0.27)
============= =============
Weighted average number of common shares 6,293,022 6,293,022
============= =============
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BLUE DOLPHIN ENERGY COMPANY AND SUBSIDIARIES
Pro Forma Consolidated Statement of Operations
Six Months ended June 30, 2002
* To record effective as of January 1, 2002 reductions in revenues, lease
operating expenses, depletion, depreciation and amortization and
minority interest as a result of the sale of the Company's interest in
the South Timbalier Block 148 property (sold effective July 1, 2002)
and the sale of substantially all of the Company's remaining proved and
non-proved oil and gas reserves (sold effective October 1, 2002). The
gain from the sale of these properties is not included in this Pro
Forma Consolidated Statement of Operations due to its nonrecurring
nature.
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BLUE DOLPHIN ENERGY COMPANY AND SUBSIDIARIES
(c) Exhibits
10.1 Purchase and Sale Agreement between Blue Dolphin Energy Company and
Fidelity Exploration and Production Company.
99.1 Press Release issued November 4, 2002.
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BLUE DOLPHIN ENERGY COMPANY AND SUBSIDIARIES
SIGNATURES
Pursuant to the requirements of the Securities and Exchange Act of 1934, the
registrant has duly caused this report to be signed on its behalf by the
undersigned hereunto duly authorized.
BLUE DOLPHIN ENERGY COMPANY
Date: November 4, 2002 /s/ Michael J. Jacobson
----------------------------------------
Michael J. Jacobson
President and Chief Executive Officer
/s/ G. Brian Lloyd
----------------------------------------
G. Brian Lloyd
Vice President, Treasurer
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