Affiliate Agreements

Financial and Operating Agreements. Blue Dolphin and certain subsidiaries are parties to several financial and operational agreements with Affiliates.

See “Note (16)” for additional information regarding recent updates to related party financial and operating agreements.

Debt Agreements. Blue Dolphin was a party to the June LEH Note with LEH at December 31, 2022.  BDPL was a party to the BDPL-LEH Loan Agreement with LEH at  December 31, 2023 and 2022. Summaries of the debt agreements follow:

June LEH Note.  Pursuant to the Assignment Agreement, the March Ingleside Note and March Carroll Note were assigned to and assumed by LEH under the June LEH Note effective December 31, 2022.  Pursuant to a payoff letter dated March 31, 2023, Blue Dolphin fully satisfied the debt and defaults associated with the June LEH Note; as a result, debt and defaults under the March Ingleside Note and March Carroll Note that were assigned to LEH effective December 31, 2022 were also satisfied.  All encumbrances that the lender or assignee had against Blue Dolphin were thereby terminated.

Forbearance and Defaults. 

LEH Forbearance Agreement.  Pursuant to the LEH Forbearance Agreement, LEH agreed to forbear from exercising any of its rights and remedies related to existing defaults pertaining to payment violations under the BDPL-LEH Loan Agreement.  Under the terms of the LEH Forbearance Agreement, BDPL agreed to make interest-only monthly payments approximating $0.05 million beginning in May 2023, continuing on the fifteenth of each month through April 2025. Beginning in May 2025, BDPL agreed to make principal and interest monthly payments approximating $0.4 million through April 2027. Interest will be incurred throughout the agreement term, including the interest-only payment period. BDPL paid LEH approximately $3.4 millionfor the twelve months ended December 31, 2023. As of the filing date of this report, the BDPL-LEH Loan Agreement was in forbearance related to past defaults.

Covenants, Guarantees and Security. The 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 BDPL-LEH Loan Agreement.

See “Notes (1) and (10)” for additional information regarding defaults under our secured loan agreements and their potential effects on our business, financial condition, and results of operations.

Related-Party Financial Impact

Working Capital. We historically relied on Affiliates for funding during periods of working capital deficits.  We reflected such borrowings in our consolidated balance sheets in accounts payable, related party, or long-term debt, related party.

Consolidated Balance Sheets.

Accounts receivable, related party.  Accounts receivable, related party for the sale of jet fuel to LEH totaled $4.2 million and $0.0 at December 31, 2023 and 2022, respectively. Amounts Blue Dolphin owed to LEH under the Second Amended and Restated Operating Agreement were net settled against amounts LEH owed to LE under a prior jet fuel sales agreement between the parties. Excess amounts owed by LEH to LE were reflected in accounts receivable, related party on our consolidated balance sheet.

Accounts payable, related party. Accounts payable, related party totaled approximately $0.9 million and $0.2 million at December 31, 2023 and 2022, respectively.  Accounts payable, related party at December 31, 2023 reflected tank rental fees owed by LE to Ingleside under the LE Amended and Restated Master Services Agreement plus amounts owed to LTRI for previously purchased refinery equipment.  Accounts payable, related party at December 31, 2022 reflected amounts owed to LTRI for previously purchased refinery equipment. 

Long-term debt, related party, current portion and accrued interest payable, related party, net of current portion.

In 2023, LE purchased jet fuel from LEH pursuant to to Jet Fuel Purchase Agreements.  The first transaction occurred in April 2023 for approximately $4.0 million.  The second transaction occurred in May 2023 for approximately $4.4 million.

Consolidated Statements of Income.

Total revenue from operations.

Interest expense.

Other. BDSC received sublease income from LEH totaling $0.03 million for both twelve-month periods ended December 31, 2023 and 2022.

The LEH operating fee, related party totaled $0.5 million for the twelve months ended December 31, 2023 compared to approximately $0.7 million for the twelve months ended December 31, 2022. The decrease in both comparative periods was related to lower refinery operating expenses on lower throughput and lower inventory impairment.

Lease expense associated with the LE Amended and Restated Master Services Agreement totaled $1.2 million and $0 for the twelve months ended December 31, 2023 and 2022.