v3.26.1
Note 3 - Related-party Transactions
6 Months Ended
Jun. 30, 2026
Notes to Financial Statements  
Related Party Transactions Disclosure [Text Block]

(3)

Related-Party Transactions

 

Affiliate Agreements

 

Financial and Operating Agreements. Blue Dolphin and certain of its subsidiaries are currently parties to the following financial and operating agreements with Affiliates:

 

Agreement / Transaction

Parties

Effective Date

Key Terms

Fifth Amended and Restated Operating Agreement

Blue Dolphin and subsidiaries

LEH

04/01/2026

 

For LEH operation and management of all Blue Dolphin's assets; 1-year term; expires 04/01/2027 or notice by either party at any time of material breach or 90 days Board notice; LEH receives a management fee of 5% of all consolidated operating costs of Blue Dolphin and its subsidiaries, excluding crude costs, depreciation, amortization and interest; LEH-provided services include personnel serving in a variety of capacities across all Blue Dolphin entities, including, but not limited to corporate executives such as the principal executive officer and principal financial and accounting officer; as a result, Blue Dolphin and its subsidiaries have no employees for reporting purposes; all personnel are employed and  paid by LEH.

Amended and Restated Jet Fuel Sales Agreement

LE

LEH

04/01/2023

Jet fuel sales by LE to LEH; 1-year automatic renewals; LEH lifts the jet fuel from LE as needed and sells it to the DLA under preferential pricing terms due to LEH's HUBZone certification.

NPS Terminal Services Agreement

NPS

LEH

11/01/2022

LEH pays NPS a tank rental fee of $ 0.2 million per month to store jet fuel at the Nixon facility; 1-year term; either party may cancel upon 60 days' prior written notice.

Third Amended and Restated Master Services Agreement

LE

Ingleside

03/01/2026

For storage of LE products intended for customer receipt by barge; LE pays Ingleside a tank rental fee of $ 0.1 million per month; the agreement expires 03/01/2027.

LE Amended and Restated Guaranty Fee Agreement

LE

Jonathan Carroll

01/01/2023

Relates to payoff of LE $ 25.0 million Huntington loan; as consideration for providing his personal guarantee, Jonathan Carroll receives a cash fee equal to 2.00% per annum of outstanding principal balance owed under the LE Term Loan Due 2034.

NPS Guaranty Fee Agreement

NPS

Jonathan Carroll

01/01/2023

Relates to payoff of NPS $ 10.0 million GNCU loan; as consideration for providing his personal guarantee, Jonathan Carroll receives a cash fee equal to 2.00% per annum of outstanding principal balance owed under the NPS Term Loan Due 2031.

LRM Amended and Restated Guaranty Fee Agreement

LRM

Jonathan Carroll

01/01/2023

Relates to payoff of LRM $ 10.0 million Huntington loan; as consideration for providing his personal guarantee, Jonathan Carroll receives a cash fee equal to 2.00% per annum of outstanding principal owed under the LRM Term Loan Due 2034.

Blue Dolphin Guaranty Fee Agreement

Blue Dolphin

Jonathan Carroll

01/01/2023

Relates to payoff of Blue Dolphin $ 2.0 million SBA loan; as consideration for providing his personal guarantee, Jonathan Carroll receives a cash fee equal to 2.00% per annum of outstanding principal balance owed under the Blue Dolphin Term Loan Due 2051.

Office Sub-Lease Agreement

LEH

BDSC

09/01/2024

LEH office space in Houston, Texas; sub-lease executed 10/30/24; 24-month extension of prior office sub-lease agreement; term expires 08/31/2026; rent is approximately $0.003 million per month.

Ground Lease Agreement

LEH

NPS

07/01/2025LEH pays NPS a ground storage fee of $0.015 million per month to store equipment at the Nixon facility; month-to-month basis to end with a 30 days' notice of cancellation.
Master Terminal Services Agreement

LE

MTI

03/17/2026Governs LE's storage of petroleum products, through individual Terminal Services Release, see below, at MTI's terminal facility for a term of 3/17/2026 through 7/31/2026, then month to month, thereafter. 
Terminal Services Release (as amended)

LE

MTI

3/17/2026Subject to the Master Terminal Services Agreement, LE pays MTI for storage of petroleum products for a fee of $0.1 million per month, plus additional terminaling fees. MTI was acquired by a subsidiary of LEH effective May 29,2026.

 


Notes to Consolidated Financial Statements (Continued)

 

Debt Agreements. Blue Dolphin and certain subsidiaries are parties to the following debt agreements with Affiliates:

 

  

Original

  

Monthly

  
  

Principal

  

Payment

  

Loan Description

Parties

(in millions)

Maturity Date

 

(in millions)

Interest Rate

Loan Purpose

Second Amended and Restated Affiliate Revolving Credit Agreement

Blue Dolphin and Subsidiaries

$15 maximumApril 2027 

Set-off against other obligations Borrower owes to Lender

WSJ Prime + 2.00%

Working capital

 

LEH and Subsidiaries

      

Amended and Restated BDPL-LEH Loan Agreement

LEH

$4.0

April 2027

 

$0.25

12.00%

Working capital

 

BDPL

      

 

Covenants, Guarantees and Security. The Amended and Restated BDPL-LEH Loan Agreement contains representations and warranties, affirmative and negative covenants, and events of default that we consider usual and customary for a credit facility of this type.  Certain BDPL property serves as collateral under the Amended and Restated BDPL-LEH Loan Agreement.

 

Related-Party Financial Impact

 

Consolidated Balance Sheets.

 

Accounts receivable and accounts payable, related party.  W e net settle amounts owed between Blue Dolphin and its subsidiaries and Affiliates under financial and operating agreements (as discussed elsewhere within this "Note (3)").  Amounts owed between the parties can vary significantly from period to period even if underlying transactions remain relatively stable based on settlement dates. We reflect any excess amounts owed by Affiliates to Blue Dolphin and its subsidiaries on our consolidated balance sheets within accounts receivable — related party. Except for debt, we reflect any excess amounts owed by Blue Dolphin and its subsidiaries to Affiliates on our consolidated balance sheets within accounts payable, related party. Accounts receivable and accounts payable, related-party as of the dates indicated was as follows:

 

  June 30,  December 31, 
  

2026

  

2025

 
  

(in thousands)

 
         

Current assets

        

Accounts receivable, related party

 $11,281  $8,068 

Current liabilities

        

Accounts payable, related party

  -   - 

 

Accounts receivable, related party at  June 30, 2026 and December 31, 2025 reflected amounts owed by LEH to LE under the Amended and Restated Jet Fuel Sales Agreement.  

 

Related-Party Debt. We reflect the amounts owed by Blue Dolphin and its subsidiaries to Affiliates under debt agreements on our consolidated balance sheets within line of credit, related party, long-term debt, related party and interest payable, related party.  Related-party debt as of the dates indicated was as follows:

 

  June 30,  December 31 
  

2026

  

2025

 
  

(in thousands)

 

LEH

        

Amended and Restated BDPL-LEH Loan Agreement

 $2,138  $3,463 

Line of credit, related party

  3,427   9,847 

LEH Total

  5,565   13,310 
         

Less: Long-term debt, related party, current portion

  (2,138)  (2,731)

Less: Line of credit, related party

  (3,427)  (9,847)

Long-term debt, related party, net of current portion

 $-  $732 

 


Notes to Consolidated Financial Statements (Continued)

 

Related-party accrued interest associated with long-term debt and line of credit, related party, as of the dates indicated was as follows:

 

  June 30,  December 31 
  

2026

  

2025

 
  

(in thousands)

 

LEH

        

Amended and Restated BDPL-LEH Loan Agreement

 $-  $17 

Jonathan Carroll

        

Guaranty fee agreements

  10   7 
   10   24 
         

Less: Interest payable, related party - current portion

  (10)  (24)

Long-term interest payable, related party, net of current portion

 $-  $- 

 

Consolidated Statements of Income.

 

Total revenue from operations. Revenue from Affiliates under the Amended and Restated Jet Fuel Sales Agreement, the NPS Terminal Services Agreement and the Ground Lease Agreement as of the dates indicated was as follows:
 
  

Three Months Ended June 30,

  

Six Months Ended June 30,

 
  

2026

  

2025

  

2026

  

2025

 
  

(in thousands, except percent amounts)

  

(in thousands, except percent amounts)

 

Refinery operations

                                

LEH

 $44,221   30.7% $24,121   42.6% $78,801   34.9% $49,069   35.0%

Third-Parties

  99,269   68.8%  31,674   56.0%  145,414   64.4%  89,594   63.8%

Tolling and terminaling

                                

LEH

  585   0.4%  540   1.0%  1,170   0.5%  1,080   0.8%

Third-Parties

  180   0.1%  248   0.4%  360   0.2%  532   0.4%
  $144,255   100.0% $56,583   100.0% $225,745   100.0% $140,275   100.0%

 

Interest expense. Interest expense associated with guaranty fee agreements and a debt agreement with Affiliates as of the dates indicated was as follows:

 

  

Three Months Ended June 30,

  

Six Months Ended June 30,

 
  

2026

  

2025

  

2026

  

2025

 
  

(in thousands)

  

(in thousands)

 

Jonathan Carroll

                

Guaranty Fee Agreements

                

Tied to First Term Loan Due 2034

 $86  $92  $173  $185 

Tied to NPS Term Loan Due 2031

  40   47   82   93 

Tied to Second Term Loan Due 2034

  36   38   72   77 

Tied to Blue Dolphin Term Loan Due 2051

  10   10   20   20 

LEH

                

Amended and Restated BDPL-LEH Loan Agreement

  78   153   158   259 

Second Amended and Restated Affiliate Revolving Credit Agreement

  133   93   338   332 
  $383  $433  $843  $966 

 

Other. BDSC received income from LEH under the office sub-lease agreement totaling $0.02 million for both the three months ended June 30, 2026 and 2025 and $0.03 for both the six months ended June 30, 2026 and 2025.

 

Lease expense associated with the Third Amended and Restated Master Services Agreement, as discussed elsewhere within this "Note (3)" and in "Note (11)", totaled $0.3 million for both the  three months ended June 30, 2026 and 2025, and $0.6 million for both the six months ended June 30, 2026 and 2025.

 

Lease expense associated with the Terminal Services Release, as discussed elsewhere within this "Note (3)" and in "Note (11)", was $0.1 million and none for the three months ended June 30, 2026 and 2025, and $0.1 million and none for the  six months ended June 30, 2026 and 2025.

 


Notes to Consolidated Financial Statements (Continued)

 

The LEH operating fee, related party under the Fifth Amended and Restated Operating Agreement totaled $0.3 million and $0.3 million for the three months ended June 30, 2026 and 2025, respectively and $0.5 million and $0.5 million for the six months ended June 30, 2026 and 2025, respectively.