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x
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Quarterly
Report Pursuant to Section 13 or 15(d) of the Securities Exchange Act of 1934
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o
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TRANSITION REPORT PURSUANT TO SECTION 13 or 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934
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Delaware
(State or other jurisdiction of incorporation or organization)
|
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20-8536826
(IRS Employer
Identification No.)
|
|
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201 NW 10th, Suite 200
Oklahoma City, Oklahoma 73103
(Address of principal executive offices, zip code)
Registrant’s telephone number, including area code: (405) 278-6400
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Large accelerated filer
o
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Accelerated filer
x
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Non-accelerated filer
o
(Do not check if a smaller reporting company)
|
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Smaller reporting company
o
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Emerging growth company
o
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Table of Contents
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Page
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FINANCIAL INFORMATION
|
||
Unaudited Condensed Consolidated Financial Statements
|
||
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Condensed Consolidated Balance Sheets as of December 31, 2017, and June 30, 2018
|
|
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Condensed Consolidated Statements of Operations for the Three and Six Months Ended June 30, 2017 and 2018
|
|
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Condensed Consolidated Statement of Changes in Partners’ Capital (Deficit) for the Six Months Ended June 30, 2018
|
|
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Condensed Consolidated Statements of Cash Flows for the Six Months Ended June 30, 2017 and 2018
|
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Notes to the Unaudited Condensed Consolidated Financial Statements
|
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Management’s Discussion and Analysis of Financial Condition and Results of Operations
|
||
Quantitative and Qualitative Disclosures about Market Risk
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Controls and Procedures
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OTHER INFORMATION
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Legal Proceedings
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Risk Factors
|
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Item 5.
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Other Information
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Exhibits
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BLUEKNIGHT ENERGY PARTNERS, L.P.
CONDENSED CONSOLIDATED BALANCE SHEETS
(in thousands, except unit data)
|
|||||||
|
As of
|
|
As of
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||||
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December 31, 2017
|
|
June 30, 2018
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||||
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(unaudited)
|
||||||
ASSETS
|
|
|
|
||||
Current assets:
|
|
|
|
||||
Cash and cash equivalents
|
$
|
2,469
|
|
|
$
|
1,193
|
|
Accounts receivable, net of allowance for doubtful accounts of $28 and $29 at December 31, 2017 and June 30, 2018, respectively
|
7,589
|
|
|
31,268
|
|
||
Receivables from related parties, net of allowance for doubtful accounts of $0 at both dates
|
3,070
|
|
|
1,219
|
|
||
Prepaid insurance
|
2,009
|
|
|
2,093
|
|
||
Other current assets
|
8,438
|
|
|
12,716
|
|
||
Total current assets
|
23,575
|
|
|
48,489
|
|
||
Property, plant and equipment, net of accumulated depreciation of $316,591 and $269,978 at December 31, 2017 and June 30, 2018, respectively
|
296,069
|
|
|
295,711
|
|
||
Assets held for sale, net of accumulated depreciation of $55,583 at June 30, 2018
|
—
|
|
|
16,857
|
|
||
Goodwill
|
3,870
|
|
|
6,728
|
|
||
Debt issuance costs, net
|
4,442
|
|
|
3,802
|
|
||
Intangibles and other assets, net
|
12,913
|
|
|
18,919
|
|
||
Total assets
|
$
|
340,869
|
|
|
$
|
390,506
|
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LIABILITIES AND PARTNERS’ CAPITAL
|
|
|
|
||||
Current liabilities:
|
|
|
|
||||
Accounts payable
|
$
|
4,439
|
|
|
$
|
5,244
|
|
Accounts payable to related parties
|
2,268
|
|
|
12,878
|
|
||
Accrued interest payable
|
694
|
|
|
644
|
|
||
Accrued property taxes payable
|
2,432
|
|
|
3,365
|
|
||
Unearned revenue
|
2,393
|
|
|
2,039
|
|
||
Unearned revenue with related parties
|
551
|
|
|
4,384
|
|
||
Accrued payroll
|
6,119
|
|
|
3,671
|
|
||
Other current liabilities
|
4,747
|
|
|
17,379
|
|
||
Total current liabilities
|
23,643
|
|
|
49,604
|
|
||
Long-term unearned revenue with related parties
|
1,052
|
|
|
960
|
|
||
Other long-term liabilities
|
3,673
|
|
|
3,715
|
|
||
Long-term interest rate swap liabilities
|
225
|
|
|
—
|
|
||
Long-term debt
|
307,592
|
|
|
349,592
|
|
||
Commitments and contingencies (Note 15)
|
|
|
|
||||
Partners’ capital:
|
|
|
|
||||
Common unitholders (40,158,342 and 40,326,571 units issued and outstanding at December 31, 2017 and June 30, 2018, respectively)
|
454,358
|
|
|
436,416
|
|
||
Preferred Units (35,125,202 units issued and outstanding at both dates)
|
253,923
|
|
|
253,923
|
|
||
General partner interest (1.6% interest with 1,225,409 general partner units outstanding at both dates)
|
(703,597
|
)
|
|
(703,704
|
)
|
||
Total partners’ capital
|
4,684
|
|
|
(13,365
|
)
|
||
Total liabilities and partners’ capital
|
$
|
340,869
|
|
|
$
|
390,506
|
|
BLUEKNIGHT ENERGY PARTNERS, L.P.
CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS
(in thousands, except per unit data)
|
||||||||||||||||
|
|
Three Months ended
June 30, |
|
Six Months ended
June 30, |
||||||||||||
|
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2017
|
|
2018
|
|
2017
|
|
2018
|
||||||||
|
|
(unaudited)
|
||||||||||||||
Service revenue:
|
|
|
|
|
|
|
|
|
||||||||
Third-party revenue
|
|
$
|
28,145
|
|
|
$
|
14,103
|
|
|
$
|
56,808
|
|
|
$
|
31,421
|
|
Related-party revenue
|
|
13,505
|
|
|
6,063
|
|
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27,147
|
|
|
12,384
|
|
||||
Lease revenue:
|
|
|
|
|
|
|
|
|
||||||||
Third-party revenue
|
|
—
|
|
|
10,237
|
|
|
—
|
|
|
20,041
|
|
||||
Related-party revenue
|
|
—
|
|
|
7,475
|
|
|
—
|
|
|
15,178
|
|
||||
Product sales revenue:
|
|
|
|
|
|
|
|
|
||||||||
Third-party revenue
|
|
2,227
|
|
|
45,615
|
|
|
6,262
|
|
|
49,129
|
|
||||
Total revenue
|
|
43,877
|
|
|
83,493
|
|
|
90,217
|
|
|
128,153
|
|
||||
Costs and expenses:
|
|
|
|
|
|
|
|
|
||||||||
Operating expense
|
|
30,610
|
|
|
28,988
|
|
|
62,516
|
|
|
60,123
|
|
||||
Third-party cost of product sales
|
|
1,669
|
|
|
20,041
|
|
|
4,808
|
|
|
22,678
|
|
||||
Related-party cost of product sales
|
|
—
|
|
|
23,747
|
|
|
—
|
|
|
23,747
|
|
||||
General and administrative expense
|
|
4,322
|
|
|
4,486
|
|
|
8,907
|
|
|
8,707
|
|
||||
Asset impairment expense
|
|
17
|
|
|
—
|
|
|
45
|
|
|
616
|
|
||||
Total costs and expenses
|
|
36,618
|
|
|
77,262
|
|
|
76,276
|
|
|
115,871
|
|
||||
Gain (loss) on sale of assets
|
|
(754
|
)
|
|
599
|
|
|
(879
|
)
|
|
363
|
|
||||
Operating income
|
|
6,505
|
|
|
6,830
|
|
|
13,062
|
|
|
12,645
|
|
||||
Other income (expenses):
|
|
|
|
|
|
|
|
|
||||||||
Equity earnings in unconsolidated affiliate
|
|
—
|
|
|
—
|
|
|
61
|
|
|
—
|
|
||||
Gain on sale of unconsolidated affiliate
|
|
4,172
|
|
|
—
|
|
|
4,172
|
|
|
2,225
|
|
||||
Interest expense (net of capitalized interest of $3, $43, $5 and $72, respectively)
|
|
(4,265
|
)
|
|
(5,024
|
)
|
|
(7,295
|
)
|
|
(8,593
|
)
|
||||
Income before income taxes
|
|
6,412
|
|
|
1,806
|
|
|
10,000
|
|
|
6,277
|
|
||||
Provision for income taxes
|
|
41
|
|
|
21
|
|
|
87
|
|
|
50
|
|
||||
Net income
|
|
$
|
6,371
|
|
|
$
|
1,785
|
|
|
$
|
9,913
|
|
|
$
|
6,227
|
|
|
|
|
|
|
|
|
|
|
||||||||
Allocation of net income for calculation of earnings per unit:
|
|
|
|
|
|
|
|
|
||||||||
General partner interest in net income
|
|
$
|
256
|
|
|
$
|
28
|
|
|
$
|
465
|
|
|
$
|
259
|
|
Preferred interest in net income
|
|
$
|
6,279
|
|
|
$
|
6,279
|
|
|
$
|
12,558
|
|
|
$
|
12,557
|
|
Net loss available to limited partners
|
|
$
|
(164
|
)
|
|
$
|
(4,522
|
)
|
|
$
|
(3,110
|
)
|
|
$
|
(6,589
|
)
|
|
|
|
|
|
|
|
|
|
||||||||
Basic and diluted net loss per common unit
|
|
$
|
—
|
|
|
$
|
(0.11
|
)
|
|
$
|
(0.08
|
)
|
|
$
|
(0.16
|
)
|
|
|
|
|
|
|
|
|
|
||||||||
Weighted average common units outstanding - basic and diluted
|
|
38,155
|
|
|
40,324
|
|
|
38,151
|
|
|
40,306
|
|
BLUEKNIGHT ENERGY PARTNERS, L.P.
CONDENSED CONSOLIDATED STATEMENT OF CHANGES IN PARTNERS’ CAPITAL (DEFICIT)
(in thousands)
|
|||||||||||||||
|
Common Unitholders
|
|
Series A Preferred Unitholders
|
|
General Partner Interest
|
|
Total Partners’ Capital (Deficit)
|
||||||||
|
(unaudited)
|
||||||||||||||
Balance, December 31, 2017
|
$
|
454,358
|
|
|
$
|
253,923
|
|
|
$
|
(703,597
|
)
|
|
$
|
4,684
|
|
Net income (loss)
|
(6,745
|
)
|
|
12,557
|
|
|
415
|
|
|
6,227
|
|
||||
Equity-based incentive compensation
|
669
|
|
|
—
|
|
|
18
|
|
|
687
|
|
||||
Distributions
|
(11,958
|
)
|
|
(12,557
|
)
|
|
(723
|
)
|
|
(25,238
|
)
|
||||
Capital contributions
|
—
|
|
|
—
|
|
|
183
|
|
|
183
|
|
||||
Proceeds from sale of 21,246 common units pursuant to the Employee Unit Purchase Plan
|
92
|
|
|
—
|
|
|
—
|
|
|
92
|
|
||||
Balance, June 30, 2018
|
$
|
436,416
|
|
|
$
|
253,923
|
|
|
$
|
(703,704
|
)
|
|
$
|
(13,365
|
)
|
BLUEKNIGHT ENERGY PARTNERS, L.P.
CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS
(in thousands)
|
|||||||
|
Six Months ended
June 30, |
||||||
|
2017
|
|
2018
|
||||
|
(unaudited)
|
||||||
Cash flows from operating activities:
|
|
|
|
||||
Net income
|
$
|
9,913
|
|
|
$
|
6,227
|
|
Adjustments to reconcile net income to net cash provided by operating activities:
|
|
|
|
||||
Provision for uncollectible receivables from third parties
|
(12
|
)
|
|
1
|
|
||
Depreciation and amortization
|
15,905
|
|
|
14,779
|
|
||
Amortization and write-off of debt issuance costs
|
1,307
|
|
|
949
|
|
||
Unrealized gain related to interest rate swaps
|
(975
|
)
|
|
(314
|
)
|
||
Intangible asset impairment charge
|
—
|
|
|
189
|
|
||
Fixed asset impairment charge
|
45
|
|
|
427
|
|
||
Loss (gain) on sale of assets
|
879
|
|
|
(363
|
)
|
||
Gain on sale of unconsolidated affiliate
|
(4,172
|
)
|
|
(2,225
|
)
|
||
Equity-based incentive compensation
|
524
|
|
|
687
|
|
||
Equity earnings in unconsolidated affiliate
|
(61
|
)
|
|
—
|
|
||
Changes in assets and liabilities:
|
|
|
|
||||
Increase in accounts receivable
|
(1,785
|
)
|
|
(23,680
|
)
|
||
Decrease in receivables from related parties
|
326
|
|
|
1,851
|
|
||
Decrease in prepaid insurance
|
1,194
|
|
|
1,494
|
|
||
Decrease (increase) in other current assets
|
148
|
|
|
(2,920
|
)
|
||
Decrease in other non-current assets
|
111
|
|
|
90
|
|
||
Increase (decrease) in accounts payable
|
183
|
|
|
(502
|
)
|
||
Increase in payables to related parties
|
156
|
|
|
10,504
|
|
||
Increase (decrease) in accrued interest payable
|
316
|
|
|
(50
|
)
|
||
Increase in accrued property taxes
|
232
|
|
|
933
|
|
||
Increase (decrease) in unearned revenue
|
1,352
|
|
|
(346
|
)
|
||
Increase in unearned revenue from related parties
|
3,953
|
|
|
3,679
|
|
||
Decrease in accrued payroll
|
(2,017
|
)
|
|
(2,448
|
)
|
||
Increase (decrease) in other accrued liabilities
|
(961
|
)
|
|
12,113
|
|
||
Net cash provided by operating activities
|
26,561
|
|
|
21,075
|
|
||
Cash flows from investing activities:
|
|
|
|
||||
Acquisitions
|
—
|
|
|
(21,959
|
)
|
||
Capital expenditures
|
(10,331
|
)
|
|
(22,125
|
)
|
||
Proceeds from sale of assets
|
8,474
|
|
|
3,893
|
|
||
Proceeds from sale of unconsolidated affiliate
|
25,324
|
|
|
2,225
|
|
||
Net cash provided by (used in) investing activities
|
23,467
|
|
|
(37,966
|
)
|
||
Cash flows from financing activities:
|
|
|
|
||||
Payment on insurance premium financing agreement
|
(1,271
|
)
|
|
(1,113
|
)
|
||
Debt issuance costs
|
(4,017
|
)
|
|
(309
|
)
|
||
Borrowings under credit agreement
|
335,592
|
|
|
113,000
|
|
||
Payments under credit agreement
|
(356,000
|
)
|
|
(71,000
|
)
|
||
Proceeds from equity issuance
|
84
|
|
|
92
|
|
||
Capital contributions
|
104
|
|
|
183
|
|
||
Distributions
|
(24,550
|
)
|
|
(25,238
|
)
|
||
Net cash provided by (used in) financing activities
|
(50,058
|
)
|
|
15,615
|
|
||
Net decrease in cash and cash equivalents
|
(30
|
)
|
|
(1,276
|
)
|
||
Cash and cash equivalents at beginning of period
|
3,304
|
|
|
2,469
|
|
||
Cash and cash equivalents at end of period
|
$
|
3,274
|
|
|
$
|
1,193
|
|
|
|
|
|
||||
Supplemental disclosure of non-cash financing and investing cash flow information:
|
|
|
|
||||
Non-cash changes in property, plant and equipment
|
$
|
1,545
|
|
|
$
|
294
|
|
Increase in accrued liabilities related to insurance premium financing agreement
|
$
|
2,281
|
|
|
$
|
1,578
|
|
(1)
|
Excluded from the table is revenue that is either constrained or related to performance obligations that are wholly unsatisfied as of
June 30, 2018
.
|
|
|
Three Months ended June 30, 2018
|
||||||||||||||||||
|
|
Asphalt Terminalling Services
|
|
Crude Oil Terminalling Services
|
|
Crude Oil Pipeline Services
|
|
Crude Oil Trucking Services
|
|
Total
|
||||||||||
Third-party revenue:
|
|
|
|
|
|
|
|
|
|
|
||||||||||
Fixed storage, throughput and other revenue
|
|
$
|
4,622
|
|
|
$
|
2,767
|
|
|
$
|
—
|
|
|
$
|
—
|
|
|
$
|
7,389
|
|
Variable throughput revenue
|
|
242
|
|
|
143
|
|
|
—
|
|
|
—
|
|
|
385
|
|
|||||
Variable reimbursement revenue
|
|
1,775
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
1,775
|
|
|||||
Crude oil transportation revenue
|
|
—
|
|
|
—
|
|
|
1,045
|
|
|
3,509
|
|
|
4,554
|
|
|||||
Crude oil product sales revenue
|
|
—
|
|
|
—
|
|
|
45,612
|
|
|
3
|
|
|
45,615
|
|
|||||
Related-party revenue:
|
|
|
|
|
|
|
|
|
|
|
||||||||||
Fixed storage, throughput and other revenue
|
|
4,632
|
|
|
—
|
|
|
48
|
|
|
—
|
|
|
4,680
|
|
|||||
Variable reimbursement revenue
|
|
1,349
|
|
|
—
|
|
|
34
|
|
|
—
|
|
|
1,383
|
|
|||||
Total revenue from contracts with customers
|
|
$
|
12,620
|
|
|
$
|
2,910
|
|
|
$
|
46,739
|
|
|
$
|
3,512
|
|
|
$
|
65,781
|
|
|
|
Six Months ended June 30, 2018
|
||||||||||||||||||
|
|
Asphalt Terminalling Services
|
|
Crude Oil Terminalling Services
|
|
Crude Oil Pipeline Services
|
|
Crude Oil Trucking Services
|
|
Total
|
||||||||||
Third-party revenue:
|
|
|
|
|
|
|
|
|
|
|
||||||||||
Fixed storage, throughput and other revenue
|
|
$
|
8,171
|
|
|
$
|
6,849
|
|
|
$
|
—
|
|
|
$
|
—
|
|
|
$
|
15,020
|
|
Variable throughput revenue
|
|
359
|
|
|
647
|
|
|
—
|
|
|
—
|
|
|
1,006
|
|
|||||
Variable reimbursement revenue
|
|
3,241
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
3,241
|
|
|||||
Crude oil transportation revenue
|
|
—
|
|
|
—
|
|
|
3,105
|
|
|
9,049
|
|
|
12,154
|
|
|||||
Crude oil product sales revenue
|
|
—
|
|
|
—
|
|
|
49,120
|
|
|
9
|
|
|
49,129
|
|
|||||
Related-party revenue:
|
|
|
|
|
|
|
|
|
|
|
||||||||||
Fixed storage, throughput and other revenue
|
|
9,263
|
|
|
—
|
|
|
48
|
|
|
—
|
|
|
9,311
|
|
|||||
Variable reimbursement revenue
|
|
3,039
|
|
|
—
|
|
|
34
|
|
|
—
|
|
|
3,073
|
|
|||||
Total revenue from contracts with customers
|
|
$
|
24,073
|
|
|
$
|
7,496
|
|
|
$
|
52,307
|
|
|
$
|
9,058
|
|
|
$
|
92,934
|
|
|
Three Months ended
June 30, |
|
Six Months ended
June 30, |
||||||||||||
|
2017
|
|
2018
|
|
2017
|
|
2018
|
||||||||
Beginning balance
|
$
|
428
|
|
|
$
|
237
|
|
|
$
|
474
|
|
|
$
|
286
|
|
Cash payments
|
46
|
|
|
237
|
|
|
92
|
|
|
286
|
|
||||
Ending balance
|
$
|
382
|
|
|
$
|
—
|
|
|
$
|
382
|
|
|
$
|
—
|
|
|
Period ended
April 3, 2017
|
||
Income Statement
|
|
||
Operating revenues
|
$
|
3,150
|
|
Operating expenses
|
$
|
465
|
|
Net income
|
$
|
187
|
|
|
Estimated Useful Lives (Years)
|
|
December 31, 2017
|
|
June 30,
2018 |
||||
|
|
|
|||||||
|
|
|
(dollars in thousands)
|
||||||
Land
|
N/A
|
|
$
|
24,776
|
|
|
$
|
25,067
|
|
Land improvements
|
10-20
|
|
6,787
|
|
|
5,815
|
|
||
Pipelines and facilities
|
5-30
|
|
166,004
|
|
|
167,624
|
|
||
Storage and terminal facilities
|
10-35
|
|
370,056
|
|
|
319,344
|
|
||
Transportation equipment
|
3-10
|
|
3,293
|
|
|
1,056
|
|
||
Office property and equipment and other
|
3-20
|
|
32,011
|
|
|
26,958
|
|
||
Pipeline linefill and tank bottoms
|
N/A
|
|
3,233
|
|
|
11,694
|
|
||
Construction-in-progress
|
N/A
|
|
6,500
|
|
|
8,131
|
|
||
Property, plant and equipment, gross
|
|
|
612,660
|
|
|
565,689
|
|
||
Accumulated depreciation
|
|
|
(316,591
|
)
|
|
(269,978
|
)
|
||
Property, plant and equipment, net
|
|
|
$
|
296,069
|
|
|
$
|
295,711
|
|
•
|
the maximum permitted consolidated total leverage ratio will be
5.50
to 1.00 for the fiscal quarters ending June 30, 2018, through December 31, 2018;
5.25
to 1.00 for the fiscal quarters ending March 31, 2019, and June 30, 2019;
5.00
to 1.00 for the fiscal quarters ending September 30, 2019, and December 31, 2019; and
4.75
to 1.00 for the fiscal quarter ending March 31, 2020, and each fiscal quarter thereafter; and
|
•
|
based on the occurrence of a specified acquisition (as defined in the credit agreement, but generally being an acquisition for which the aggregate consideration is
$15.0 million
or more), the maximum permitted consolidated total leverage ratio may be increased to
5.25
to 1.00 for the fiscal quarter ending March 31, 2020, and for certain fiscal quarters thereafter.
|
•
|
create, issue, incur or assume indebtedness;
|
•
|
create, incur or assume liens;
|
•
|
engage in mergers or acquisitions;
|
•
|
sell, transfer, assign or convey assets;
|
•
|
repurchase the Partnership’s equity, make distributions to unitholders and make certain other restricted payments;
|
•
|
make investments;
|
•
|
modify the terms of certain indebtedness, or prepay certain indebtedness;
|
•
|
engage in transactions with affiliates;
|
•
|
enter into certain hedging contracts;
|
•
|
enter into certain burdensome agreements;
|
•
|
change the nature of the Partnership’s business; and
|
•
|
make certain amendments to the Partnership’s partnership agreement.
|
(i)
|
the general partner ceases to own
100%
of the Partnership’s general partner interest or ceases to control the Partnership;
|
(ii)
|
Ergon, Inc. (“Ergon”) ceases to own and control
50%
or more of the membership interests of the general partner; or
|
(iii)
|
during any period of 12 consecutive months, a majority of the members of the Board of the general partner ceases to be composed of individuals:
|
(A)
|
who were members of the Board on the first day of such period;
|
(B)
|
whose election or nomination to the Board was approved by individuals referred to in clause (A) above constituting at the time of such election or nomination at least a majority of the Board; or
|
(C)
|
whose election or nomination to the Board was approved by individuals referred to in clauses (A) and (B) above constituting at the time of such election or nomination at least a majority of the Board, provided that any changes to the composition of individuals serving as members of the Board approved by Ergon will not cause an event of default.
|
Derivatives Not Designated as Hedging Instruments
|
|
Balance Sheet Location
|
|
Fair Value of Derivatives
|
||||||
|
|
|
|
December 31, 2017
|
|
June 30,
2018 |
||||
Interest rate swap assets - current
|
|
Other current assets
|
|
$
|
68
|
|
|
$
|
157
|
|
Interest rate swap liabilities - noncurrent
|
|
Long-term interest rate swap liabilities
|
|
$
|
225
|
|
|
$
|
—
|
|
Derivatives Not Designated as Hedging Instruments
|
|
Location of Gain (Loss) Recognized in Net Income on Derivatives
|
|
Amount of Gain (Loss) Recognized in Net Income on Derivatives
|
||||||||||||||
|
|
|
|
Three Months ended
June 30, |
|
Six Months ended
June 30, |
||||||||||||
|
|
|
|
2017
|
|
2018
|
|
2017
|
|
2018
|
||||||||
Interest rate swaps
|
|
Interest expense, net of capitalized interest
|
|
$
|
223
|
|
|
$
|
(40
|
)
|
|
$
|
975
|
|
|
$
|
314
|
|
|
Three Months ended
June 30, |
|
Six Months ended
June 30, |
||||||||||||
|
2017
|
|
2018
|
|
2017
|
|
2018
|
||||||||
Net income
|
$
|
6,371
|
|
|
$
|
1,785
|
|
|
$
|
9,913
|
|
|
$
|
6,227
|
|
General partner interest in net income
|
256
|
|
|
28
|
|
|
465
|
|
|
259
|
|
||||
Preferred interest in net income
|
6,279
|
|
|
6,279
|
|
|
12,558
|
|
|
12,557
|
|
||||
Net loss available to limited partners
|
$
|
(164
|
)
|
|
$
|
(4,522
|
)
|
|
$
|
(3,110
|
)
|
|
$
|
(6,589
|
)
|
|
|
|
|
|
|
|
|
||||||||
Basic and diluted weighted average number of units:
|
|
|
|
|
|
|
|
||||||||
Common units
|
38,155
|
|
|
40,324
|
|
|
38,151
|
|
|
40,306
|
|
||||
Restricted and phantom units
|
923
|
|
|
1,133
|
|
|
806
|
|
|
983
|
|
||||
Total units
|
39,078
|
|
|
41,457
|
|
|
38,957
|
|
|
41,289
|
|
||||
|
|
|
|
|
|
|
|
||||||||
Basic and diluted net loss per common unit
|
$
|
—
|
|
|
$
|
(0.11
|
)
|
|
$
|
(0.08
|
)
|
|
$
|
(0.16
|
)
|
Grant Date
|
Number of Units
|
|
Weighted Average Grant Date Fair Value
(1)
|
|
Grant Date Total Fair Value
|
|||||
(in thousands)
|
||||||||||
December 2016
|
10,950
|
|
|
$
|
6.85
|
|
|
$
|
75
|
|
December 2017
|
15,306
|
|
|
$
|
4.85
|
|
|
$
|
74
|
|
Grant Date
|
Number of Units
|
|
Weighted Average Grant Date Fair Value
(1)
|
|
Grant Date Total Fair Value
|
|||||
(in thousands)
|
||||||||||
December 2016
|
10,220
|
|
|
$
|
6.85
|
|
|
$
|
70
|
|
December 2017
|
14,286
|
|
|
$
|
4.85
|
|
|
$
|
69
|
|
Grant Date
|
Number of Units
|
|
Weighted Average Grant Date Fair Value
(1)
|
|
Grant Date Total Fair Value
|
|||||
(in thousands)
|
||||||||||
March 2016
|
416,131
|
|
|
$
|
4.77
|
|
|
$
|
1,985
|
|
October 2016
|
9,960
|
|
|
$
|
5.85
|
|
|
$
|
58
|
|
March 2017
|
323,339
|
|
|
$
|
7.15
|
|
|
$
|
2,312
|
|
March 2018
|
457,984
|
|
|
$
|
4.77
|
|
|
$
|
2,185
|
|
|
Number of Units
|
|
Weighted Average Grant Date Fair Value
|
|||
Nonvested at December 31, 2017
|
923,551
|
|
|
$
|
6.29
|
|
Granted
|
457,984
|
|
|
4.77
|
|
|
Vested
|
241,629
|
|
|
7.46
|
|
|
Forfeited
|
10,865
|
|
|
5.39
|
|
|
Nonvested at June 30, 2018
|
1,129,041
|
|
|
$
|
5.88
|
|
Level 1
|
Observable inputs such as quoted prices (unadjusted) in active markets for identical assets or liabilities.
|
Level 2
|
Inputs other than quoted prices that are observable for these assets or liabilities, either directly or indirectly. These include quoted prices for similar assets or liabilities in active markets and quoted prices for identical or similar assets or liabilities in markets that are not active.
|
Level 3
|
Unobservable inputs in which there is little market data, which requires the reporting entity to develop its own assumptions.
|
|
Fair Value Measurements as of December 31, 2017
|
||||||||||||||
Description
|
Total
|
|
Quoted Prices
in Active
Markets for
Identical Assets
(Level 1)
|
|
Significant
Other
Observable
Inputs
(Level 2)
|
|
Significant
Unobservable
Inputs
(Level 3)
|
||||||||
Assets:
|
|
|
|
|
|
|
|
||||||||
Interest rate swap assets
|
$
|
68
|
|
|
$
|
—
|
|
|
$
|
68
|
|
|
$
|
—
|
|
Total swap assets
|
$
|
68
|
|
|
$
|
—
|
|
|
$
|
68
|
|
|
$
|
—
|
|
Liabilities:
|
|
|
|
|
|
|
|
||||||||
Interest rate swap liabilities
|
$
|
225
|
|
|
$
|
—
|
|
|
$
|
225
|
|
|
$
|
—
|
|
Total swap liabilities
|
$
|
225
|
|
|
$
|
—
|
|
|
$
|
225
|
|
|
$
|
—
|
|
|
Fair Value Measurements as of June 30, 2018
|
||||||||||||||
Description
|
Total
|
|
Quoted Prices
in Active
Markets for
Identical Assets
(Level 1)
|
|
Significant
Other
Observable
Inputs
(Level 2)
|
|
Significant
Unobservable
Inputs
(Level 3)
|
||||||||
Assets:
|
|
|
|
|
|
|
|
||||||||
Interest rate swap assets
|
$
|
157
|
|
|
$
|
—
|
|
|
$
|
157
|
|
|
$
|
—
|
|
Total swap assets
|
$
|
157
|
|
|
$
|
—
|
|
|
$
|
157
|
|
|
$
|
—
|
|
|
|
Three Months ended
June 30, |
|
Six Months ended
June 30, |
||||||||||||
|
|
2017
|
|
2018
|
|
2017
|
|
2018
|
||||||||
Asphalt Terminalling Services
|
|
|
|
|
|
|
|
|
||||||||
Service revenue:
|
|
|
|
|
|
|
|
|
||||||||
Third-party revenue
|
|
$
|
13,259
|
|
|
$
|
6,639
|
|
|
$
|
26,482
|
|
|
$
|
11,771
|
|
Related-party revenue
|
|
13,505
|
|
|
5,981
|
|
|
26,837
|
|
|
12,302
|
|
||||
Lease revenue:
|
|
|
|
|
|
|
|
|
||||||||
Third-party revenue
|
|
—
|
|
|
10,016
|
|
|
—
|
|
|
19,473
|
|
||||
Related-party revenue
|
|
—
|
|
|
7,475
|
|
|
—
|
|
|
15,178
|
|
||||
Total revenue for reportable segment
|
|
26,764
|
|
|
30,111
|
|
|
53,319
|
|
|
58,724
|
|
||||
Operating expense, excluding depreciation and amortization
|
|
11,935
|
|
|
13,393
|
|
|
24,255
|
|
|
26,728
|
|
||||
Operating margin, excluding depreciation and amortization
|
|
$
|
14,829
|
|
|
$
|
16,718
|
|
|
$
|
29,064
|
|
|
$
|
31,996
|
|
Total assets (end of period)
|
|
$
|
147,832
|
|
|
$
|
167,849
|
|
|
$
|
147,832
|
|
|
$
|
167,849
|
|
|
|
|
|
|
|
|
|
|
||||||||
Crude Oil Terminalling Services
|
|
|
|
|
|
|
|
|
|
|||||||
Service revenue:
|
|
|
|
|
|
|
|
|
|
|||||||
Third-party revenue
|
|
$
|
5,726
|
|
|
$
|
2,910
|
|
|
$
|
11,851
|
|
|
$
|
7,496
|
|
Intersegment revenue
|
|
—
|
|
|
170
|
|
|
—
|
|
|
170
|
|
||||
Lease revenue:
|
|
|
|
|
|
|
|
|
||||||||
Third-party revenue
|
|
—
|
|
|
12
|
|
|
—
|
|
|
27
|
|
||||
Total revenue for reportable segment
|
|
5,726
|
|
|
3,092
|
|
|
11,851
|
|
|
7,693
|
|
||||
Operating expense, excluding depreciation and amortization
|
|
992
|
|
|
913
|
|
|
2,003
|
|
|
2,188
|
|
||||
Operating margin, excluding depreciation and amortization
|
|
$
|
4,734
|
|
|
$
|
2,179
|
|
|
$
|
9,848
|
|
|
$
|
5,505
|
|
Total assets (end of period)
|
|
$
|
69,834
|
|
|
$
|
67,150
|
|
|
$
|
69,834
|
|
|
$
|
67,150
|
|
|
|
|
|
|
|
|
|
|
||||||||
Crude Oil Pipeline Services
|
|
|
|
|
|
|
|
|
|
|||||||
Service revenue:
|
|
|
|
|
|
|
|
|
|
|||||||
Third-party revenue
|
|
$
|
2,720
|
|
|
$
|
1,045
|
|
|
$
|
5,324
|
|
|
$
|
3,105
|
|
Related-party revenue
|
|
—
|
|
|
82
|
|
|
310
|
|
|
82
|
|
||||
Lease revenue:
|
|
|
|
|
|
|
|
|
||||||||
Third-party revenue
|
|
—
|
|
|
177
|
|
|
—
|
|
|
412
|
|
||||
Product sales revenue:
|
|
|
|
|
|
|
|
|
||||||||
Third-party revenue
|
|
2,227
|
|
|
45,612
|
|
|
5,877
|
|
|
49,120
|
|
||||
Total revenue for reportable segment
|
|
4,947
|
|
|
46,916
|
|
|
11,511
|
|
|
52,719
|
|
||||
Operating expense, excluding depreciation and amortization
|
|
3,142
|
|
|
2,542
|
|
|
6,383
|
|
|
5,327
|
|
||||
Operating expense (intersegment)
|
|
74
|
|
|
1,156
|
|
|
244
|
|
|
1,599
|
|
||||
Third-party cost of product sales
|
|
1,669
|
|
|
20,041
|
|
|
4,808
|
|
|
22,678
|
|
||||
Related-party cost of product sales
|
|
—
|
|
|
23,747
|
|
|
—
|
|
|
23,747
|
|
||||
Operating margin, excluding depreciation and amortization
|
|
$
|
62
|
|
|
$
|
(570
|
)
|
|
$
|
76
|
|
|
$
|
(632
|
)
|
Total assets (end of period)
|
|
$
|
117,222
|
|
|
$
|
152,105
|
|
|
$
|
117,222
|
|
|
$
|
152,105
|
|
|
|
|
|
|
|
|
|
|
|
|
Three Months ended
June 30, |
|
Six Months ended
June 30, |
||||||||||||
|
|
2017
|
|
2018
|
|
2017
|
|
2018
|
||||||||
Crude Oil Trucking Services
|
|
|
|
|
|
|
|
|
|
|||||||
Service revenue:
|
|
|
|
|
|
|
|
|
|
|||||||
Third-party revenue
|
|
$
|
6,440
|
|
|
$
|
3,509
|
|
|
$
|
13,151
|
|
|
$
|
9,049
|
|
Intersegment revenue
|
|
74
|
|
|
986
|
|
|
244
|
|
|
1,429
|
|
||||
Lease revenue:
|
|
|
|
|
|
|
|
|
||||||||
Third-party revenue
|
|
—
|
|
|
32
|
|
|
—
|
|
|
129
|
|
||||
Product sales revenue:
|
|
|
|
|
|
|
|
|
||||||||
Third-party revenue
|
|
—
|
|
|
3
|
|
|
385
|
|
|
9
|
|
||||
Total revenue for reportable segment
|
|
6,514
|
|
|
4,530
|
|
|
13,780
|
|
|
10,616
|
|
||||
Operating expense, excluding depreciation and amortization
|
|
6,702
|
|
|
4,727
|
|
|
13,970
|
|
|
11,101
|
|
||||
Operating margin, excluding depreciation and amortization
|
|
$
|
(188
|
)
|
|
$
|
(197
|
)
|
|
$
|
(190
|
)
|
|
$
|
(485
|
)
|
Total assets (end of period)
|
|
$
|
11,208
|
|
|
$
|
3,402
|
|
|
$
|
11,208
|
|
|
$
|
3,402
|
|
|
|
|
|
|
|
|
|
|
||||||||
Total operating margin, excluding depreciation and amortization
(1)
|
|
$
|
19,437
|
|
|
$
|
18,130
|
|
|
$
|
38,798
|
|
|
$
|
36,384
|
|
|
|
|
|
|
|
|
|
|
||||||||
Total segment revenues
|
|
$
|
43,951
|
|
|
$
|
84,649
|
|
|
$
|
90,461
|
|
|
$
|
129,752
|
|
Elimination of intersegment revenues
|
|
(74
|
)
|
|
(1,156
|
)
|
|
(244
|
)
|
|
(1,599
|
)
|
||||
Consolidated revenues
|
|
$
|
43,877
|
|
|
$
|
83,493
|
|
|
$
|
90,217
|
|
|
$
|
128,153
|
|
|
Three Months ended
June 30, |
|
Six Months ended
June 30, |
||||||||||||
|
2017
|
|
2018
|
|
2017
|
|
2018
|
||||||||
Operating margin, excluding depreciation and amortization
|
$
|
19,437
|
|
|
$
|
18,130
|
|
|
$
|
38,798
|
|
|
$
|
36,384
|
|
Depreciation and amortization
|
(7,839
|
)
|
|
(7,413
|
)
|
|
(15,905
|
)
|
|
(14,779
|
)
|
||||
General and administrative expense
|
(4,322
|
)
|
|
(4,486
|
)
|
|
(8,907
|
)
|
|
(8,707
|
)
|
||||
Asset impairment expense
|
(17
|
)
|
|
—
|
|
|
(45
|
)
|
|
(616
|
)
|
||||
Gain (loss) on sale of assets
|
(754
|
)
|
|
599
|
|
|
(879
|
)
|
|
363
|
|
||||
Interest expense
|
(4,265
|
)
|
|
(5,024
|
)
|
|
(7,295
|
)
|
|
(8,593
|
)
|
||||
Gain on sale of unconsolidated affiliate
|
4,172
|
|
|
—
|
|
|
4,172
|
|
|
2,225
|
|
||||
Equity earnings in unconsolidated affiliate
|
—
|
|
|
—
|
|
|
61
|
|
|
—
|
|
||||
Income before income taxes
|
$
|
6,412
|
|
|
$
|
1,806
|
|
|
$
|
10,000
|
|
|
$
|
6,277
|
|
Deferred Tax Asset
|
|
||
Difference in bases of property, plant and equipment
|
$
|
444
|
|
Net operating loss carryforwards
|
11
|
|
|
Deferred tax asset
|
455
|
|
|
Less: valuation allowance
|
444
|
|
|
Net deferred tax asset
|
$
|
11
|
|
•
|
taxable income projections in future years;
|
•
|
whether the carryforward period is so brief that it would limit realization of tax benefits;
|
•
|
future revenue and operating cost projections that will produce more than enough taxable income to realize the deferred tax asset based on existing service rates and cost structures; and
|
•
|
our earnings history exclusive of the loss that created the future deductible amount coupled with evidence indicating that the loss is an aberration rather than a continuing condition.
|
Operating Results
|
Three Months ended
June 30, |
|
Six Months
ended
June 30, |
|
Favorable/(Unfavorable)
|
||||||||||||||||||||||||
|
|
Three Months
|
|
Six Months
|
|||||||||||||||||||||||||
(dollars in thousands)
|
2017
|
|
2018
|
|
2017
|
|
2018
|
|
$
|
|
%
|
|
$
|
|
%
|
||||||||||||||
Operating margin, excluding depreciation and amortization:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
||||||||||||||
Asphalt terminalling services
|
$
|
14,829
|
|
|
$
|
16,718
|
|
|
$
|
29,064
|
|
|
$
|
31,996
|
|
|
$
|
1,889
|
|
|
13
|
%
|
|
$
|
2,932
|
|
|
10
|
%
|
Crude oil terminalling services
|
4,734
|
|
|
2,179
|
|
|
9,848
|
|
|
5,505
|
|
|
(2,555
|
)
|
|
(54
|
)%
|
|
(4,343
|
)
|
|
(44
|
)%
|
||||||
Crude oil pipeline services
|
62
|
|
|
(570
|
)
|
|
76
|
|
|
(632
|
)
|
|
(632
|
)
|
|
(1,019
|
)%
|
|
(708
|
)
|
|
(932
|
)%
|
||||||
Crude oil trucking services
|
(188
|
)
|
|
(197
|
)
|
|
(190
|
)
|
|
(485
|
)
|
|
(9
|
)
|
|
(5
|
)%
|
|
(295
|
)
|
|
(155
|
)%
|
||||||
Total operating margin, excluding depreciation and amortization
|
19,437
|
|
|
18,130
|
|
|
38,798
|
|
|
36,384
|
|
|
(1,307
|
)
|
|
(7
|
)%
|
|
(2,414
|
)
|
|
(6
|
)%
|
||||||
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
||||||||||||||
Depreciation and amortization
|
(7,839
|
)
|
|
(7,413
|
)
|
|
(15,905
|
)
|
|
(14,779
|
)
|
|
426
|
|
|
5
|
%
|
|
1,126
|
|
|
7
|
%
|
||||||
General and administrative expense
|
(4,322
|
)
|
|
(4,486
|
)
|
|
(8,907
|
)
|
|
(8,707
|
)
|
|
(164
|
)
|
|
(4
|
)%
|
|
200
|
|
|
2
|
%
|
||||||
Asset impairment expense
|
(17
|
)
|
|
—
|
|
|
(45
|
)
|
|
(616
|
)
|
|
17
|
|
|
100
|
%
|
|
(571
|
)
|
|
(1,269
|
)%
|
||||||
Gain (loss) on sale of assets
|
(754
|
)
|
|
599
|
|
|
(879
|
)
|
|
363
|
|
|
1,353
|
|
|
179
|
%
|
|
1,242
|
|
|
141
|
%
|
||||||
Operating income
|
6,505
|
|
|
6,830
|
|
|
13,062
|
|
|
12,645
|
|
|
325
|
|
|
5
|
%
|
|
(417
|
)
|
|
(3
|
)%
|
||||||
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
||||||||||||||
Other income (expenses):
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
||||||||||||||
Equity earnings in unconsolidated affiliate
|
—
|
|
|
—
|
|
|
61
|
|
|
—
|
|
|
N/A
|
|
N/A
|
|
(61
|
)
|
|
(100
|
)%
|
||||||||
Gain on sale of unconsolidated affiliate
|
4,172
|
|
|
—
|
|
|
4,172
|
|
|
2,225
|
|
|
(4,172
|
)
|
|
(100
|
)%
|
|
(1,947
|
)
|
|
(47
|
)%
|
||||||
Interest expense
|
(4,265
|
)
|
|
(5,024
|
)
|
|
(7,295
|
)
|
|
(8,593
|
)
|
|
(759
|
)
|
|
(18
|
)%
|
|
(1,298
|
)
|
|
(18
|
)%
|
||||||
Provision for income taxes
|
(41
|
)
|
|
(21
|
)
|
|
(87
|
)
|
|
(50
|
)
|
|
20
|
|
|
49
|
%
|
|
37
|
|
|
43
|
%
|
||||||
Net income
|
$
|
6,371
|
|
|
$
|
1,785
|
|
|
$
|
9,913
|
|
|
$
|
6,227
|
|
|
$
|
(4,586
|
)
|
|
(72
|
)%
|
|
$
|
(3,686
|
)
|
|
(37
|
)%
|
Operating results
|
|
Three Months ended
June 30, |
|
Six Months
ended June 30, |
|
Favorable/(Unfavorable)
|
||||||||||||||||||||||||
|
|
Three Months
|
|
Six Months
|
||||||||||||||||||||||||||
(dollars in thousands)
|
|
2017
|
|
2018
|
|
2017
|
|
2018
|
|
$
|
|
%
|
|
$
|
|
%
|
||||||||||||||
Service revenue:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
||||||||||||||
Third-party revenue
|
|
$
|
13,259
|
|
|
$
|
6,639
|
|
|
$
|
26,482
|
|
|
$
|
11,771
|
|
|
$
|
(6,620
|
)
|
|
(50
|
)%
|
|
$
|
(14,711
|
)
|
|
(56
|
)%
|
Related-party revenue
|
|
13,505
|
|
|
5,981
|
|
|
26,837
|
|
|
12,302
|
|
|
(7,524
|
)
|
|
(56
|
)%
|
|
(14,535
|
)
|
|
(54
|
)%
|
||||||
Lease revenue:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
||||||||||||||
Third-party revenue
|
|
—
|
|
|
10,016
|
|
|
—
|
|
|
19,473
|
|
|
10,016
|
|
|
N/A
|
|
19,473
|
|
|
N/A
|
||||||||
Related-party revenue
|
|
—
|
|
|
7,475
|
|
|
—
|
|
|
15,178
|
|
|
7,475
|
|
|
N/A
|
|
15,178
|
|
|
N/A
|
||||||||
Total revenue
|
|
26,764
|
|
|
30,111
|
|
|
53,319
|
|
|
58,724
|
|
|
3,347
|
|
|
13
|
%
|
|
5,405
|
|
|
10
|
%
|
||||||
Operating expense, excluding depreciation and amortization
|
|
11,935
|
|
|
13,393
|
|
|
24,255
|
|
|
26,728
|
|
|
(1,458
|
)
|
|
(12
|
)%
|
|
(2,473
|
)
|
|
(10
|
)%
|
||||||
Operating margin, excluding depreciation and amortization
|
|
$
|
14,829
|
|
|
$
|
16,718
|
|
|
$
|
29,064
|
|
|
$
|
31,996
|
|
|
$
|
1,889
|
|
|
13
|
%
|
|
$
|
2,932
|
|
|
10
|
%
|
•
|
Due to the adoption of
ASC 606 - Revenue from Contracts with Customers
, revenue from contracts with customers is now presented separately from lease revenue. Prior periods were not reclassified.
|
•
|
Overall revenues have increased for the
three and six months ended June 30,
2018
, as compared to the
three and six months ended June 30,
2017
, primarily due to the acquisition of two asphalt facilities, one from Ergon in December 2017 and one from a third party in March 2018. In addition, a third facility converted from a lease contract to a storage, throughput and handling contract, which generates higher gross revenue. Third-party revenues also increased overall due to increases in fuel and power reimbursement revenues.
|
•
|
Operating expenses increased for the
three and six months ended June 30,
2018
, as compared to the
three and six months ended June 30,
2017
, primarily as a result of the acquisitions noted above. In addition, ad valorem taxes increased due to increases in the assessed values of some of our asphalt terminals.
|
Operating results
|
Three Months ended
June 30, |
|
Six Months
ended June 30, |
|
Favorable/(Unfavorable)
|
||||||||||||||||||||||||
|
|
Three Months
|
|
Six Months
|
|||||||||||||||||||||||||
(dollars in thousands)
|
2017
|
|
2018
|
|
2017
|
|
2018
|
|
$
|
|
%
|
|
$
|
|
%
|
||||||||||||||
Service revenue:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
||||||||||||||
Third-party revenue
|
$
|
5,726
|
|
|
$
|
2,910
|
|
|
$
|
11,851
|
|
|
$
|
7,496
|
|
|
$
|
(2,816
|
)
|
|
(49
|
)%
|
|
$
|
(4,355
|
)
|
|
(37
|
)%
|
Intersegment revenue
|
—
|
|
|
170
|
|
|
—
|
|
|
170
|
|
|
$
|
170
|
|
|
N/A
|
|
$
|
170
|
|
|
N/A
|
||||||
Lease revenue:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
||||||||||||||
Third-party revenue
|
—
|
|
|
12
|
|
|
—
|
|
|
27
|
|
|
12
|
|
|
N/A
|
|
27
|
|
|
N/A
|
||||||||
Total revenue
|
5,726
|
|
|
3,092
|
|
|
11,851
|
|
|
7,693
|
|
|
(2,634
|
)
|
|
(46
|
)%
|
|
(4,158
|
)
|
|
(35
|
)%
|
||||||
Operating expense, excluding depreciation and amortization
|
992
|
|
|
913
|
|
|
2,003
|
|
|
2,188
|
|
|
79
|
|
|
8
|
%
|
|
(185
|
)
|
|
(9
|
)%
|
||||||
Operating margin, excluding depreciation and amortization
|
$
|
4,734
|
|
|
$
|
2,179
|
|
|
$
|
9,848
|
|
|
$
|
5,505
|
|
|
$
|
(2,555
|
)
|
|
(54
|
)%
|
|
$
|
(4,343
|
)
|
|
(44
|
)%
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
||||||||||||||
Average crude oil stored per month at our Cushing terminal (in thousands of barrels)
|
5,484
|
|
|
1,126
|
|
|
5,719
|
|
|
1,485
|
|
|
(4,358
|
)
|
|
(79
|
)%
|
|
(4,234
|
)
|
|
(74
|
)%
|
||||||
Average crude oil delivered to our Cushing terminal (in thousands of barrels per day)
|
50
|
|
|
36
|
|
|
47
|
|
|
59
|
|
|
(14
|
)
|
|
(28
|
)%
|
|
12
|
|
|
26
|
%
|
•
|
Total revenues for
three and six months ended June 30,
2018
, have decreased as compared to the same period in 2017 due to a decrease in market rates for storage contracts. In addition, a 2.2-million-barrel storage contract expired on April 30, 2018, and was not renewed or replaced as of June 30, 2018.
|
•
|
Operating expenses for the
three and six months ended June 30,
2018
, varied compared to the
three and six months ended June 30,
2017
, primarily due to the timing of routine tank maintenance and utility costs.
|
•
|
As of
July 27, 2018
, we had approximately
5.0 million
barrels of crude oil storage under service contracts, including an intercompany contract for
0.3 million
barrels and a contract for
2.0 million
barrels that commences November 1, 2018, out of our total storage capacity of 6.6 million barrels. Of these agreements, service contracts relating to
1.7 million
barrels expire in 2018.
|
Operating results
|
Three Months ended
June 30, |
|
Six Months ended
June 30, |
|
Favorable/(Unfavorable)
|
||||||||||||||||||||||||
|
Three Months
|
|
Six Months
|
||||||||||||||||||||||||||
(dollars in thousands)
|
2017
|
|
2018
|
|
2017
|
|
2018
|
|
$
|
|
%
|
|
$
|
|
%
|
||||||||||||||
Service revenue:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
||||||||||||||
Third-party revenue
|
$
|
2,720
|
|
|
$
|
1,045
|
|
|
$
|
5,324
|
|
|
$
|
3,105
|
|
|
$
|
(1,675
|
)
|
|
(62
|
)%
|
|
$
|
(2,219
|
)
|
|
(42
|
)%
|
Related-party revenue
|
—
|
|
|
82
|
|
|
310
|
|
|
82
|
|
|
82
|
|
|
N/A
|
|
(228
|
)
|
|
(74
|
)%
|
|||||||
Product sales revenue:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
||||||||||||||
Third-party revenue
|
2,227
|
|
|
45,612
|
|
|
5,877
|
|
|
49,120
|
|
|
43,385
|
|
|
1,948
|
%
|
|
43,243
|
|
|
736
|
%
|
||||||
Lease revenue:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
||||||||||||||
Third-party revenue
|
—
|
|
|
177
|
|
|
—
|
|
|
412
|
|
|
177
|
|
|
N/A
|
|
412
|
|
|
N/A
|
||||||||
Total revenue
|
4,947
|
|
|
46,916
|
|
|
11,511
|
|
|
52,719
|
|
|
41,969
|
|
|
848
|
%
|
|
41,208
|
|
|
358
|
%
|
||||||
Operating expense, excluding depreciation and amortization
|
3,142
|
|
|
2,542
|
|
|
6,383
|
|
|
5,327
|
|
|
600
|
|
|
19
|
%
|
|
1,056
|
|
|
17
|
%
|
||||||
Operating expense (intersegment)
|
74
|
|
|
1,156
|
|
|
244
|
|
|
1,599
|
|
|
(1,082
|
)
|
|
(1,462
|
)%
|
|
(1,355
|
)
|
|
(555
|
)%
|
||||||
Third-party cost of product sales
|
1,669
|
|
|
20,041
|
|
|
4,808
|
|
|
22,678
|
|
|
(18,372
|
)
|
|
(1,101
|
)%
|
|
(17,870
|
)
|
|
(372
|
)%
|
||||||
Related-party cost of product sales
|
—
|
|
|
23,747
|
|
|
—
|
|
|
23,747
|
|
|
(23,747
|
)
|
|
N/A
|
|
(23,747
|
)
|
|
N/A
|
||||||||
Operating margin, excluding depreciation and amortization
|
$
|
62
|
|
|
$
|
(570
|
)
|
|
$
|
76
|
|
|
$
|
(632
|
)
|
|
$
|
(632
|
)
|
|
(1,019
|
)%
|
|
$
|
(708
|
)
|
|
(932
|
)%
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
||||||||||||||
Average throughput volume (in thousands of barrels per day)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
||||||||||||||
Mid-Continent
|
23
|
|
|
20
|
|
|
23
|
|
|
21
|
|
|
(3
|
)
|
|
(13
|
)%
|
|
(2
|
)
|
|
(9
|
)%
|
||||||
East Texas
(1)
|
—
|
|
|
—
|
|
|
2
|
|
|
—
|
|
|
—
|
|
|
N/A
|
|
(2
|
)
|
|
(100
|
)%
|
•
|
In late April 2016, as a precautionary measure we suspended service on our Mid-Continent pipeline system due to discovery of a pipeline exposure caused by heavy rains and the erosion of a riverbed in southern Oklahoma. There was no damage to the pipe and no loss of product. In the second quarter of 2016, we took action to mitigate the service suspension and worked with customers to divert volumes and, in certain circumstances, transported volumes to a third-party pipeline system via truck. In addition, the term of the throughput and deficiency agreement on our Eagle pipeline system expired on June 30, 2016, and in July 2016 we completed a connection of the southeastern-most portion of our Mid-Continent pipeline system to our Eagle pipeline system and concurrently reversed the Eagle pipeline system. This enabled us to recapture diverted volumes and deliver those barrels to Cushing, Oklahoma. We are currently operating one Oklahoma mainline system, which is a combination of both the Mid-Continent and Eagle pipeline systems, instead of two separate systems, providing us with a current capacity of approximately 20,000 to 25,000 Bpd. We restored service of the second Oklahoma pipeline system in July 2018, increasing the transportation capacity of our pipeline systems by approximately 20,000 Bpd. The ability to fully utilize the capacity of these systems may be impacted by the market price of crude oil and producers’ decisions to increase or decrease production in the areas we serve.
|
•
|
Service revenues for the
three and six months ended June 30,
2018
, decreased as compared to the
three and six months ended June 30,
2017
, primarily as a result of a decrease in volume transported for third parties on our Mid-Continent pipeline system. For the
three and six months ended June 30,
2018
, approximately 39% and 20%, respectively, of the total volume transported on our Mid-Continent system was comprised of barrels that we are purchasing from producers in the field and transporting to our Cushing terminal to support our crude oil marketing operations.
|
•
|
Product sales revenues for the
three and six months ended June 30,
2018
, increased as compared to the
three and six months ended June 30,
2017
, as a result of supplementing a portion of the crude oil volumes transported for third party customers with barrels that are being transported for our internal crude oil marketing operations. As a result of our marketing operations utilizing a portion of the capacity of our Mid-Continent system, we have increased our balance of the total linefill requirements of the pipeline system. This increasing of our linefill balance during the
three months ended June 30,
2018
, resulted in the total volume of crude oil we purchased during this period exceeding the volume of crude oil we sold in the period, and we expect our operating margin in this segment to increase in future periods when we are no longer building linefill balances.
|
•
|
On April 18, 2017, we sold the East Texas pipeline system. We received cash proceeds at closing of approximately $4.8 million and recorded a gain of less than $0.1 million. The sale of the East Texas pipeline system resulted in decreased service revenues of $0.5 million for the
six months ended June 30,
2018
, as compared to the
six months ended June 30,
2017
.
|
•
|
Operating expenses decreased for the
six months ended June 30,
2018
, as compared to the
six months ended June 30,
2017
, by $0.6 million as a result of the sale of the East Texas pipeline system, by $0.4 million as a result of decreased repair and maintenance expenses and by $0.2 million as a result of the sale of our investment in Advantage Pipeline, for which we provided operational and administrative services through August 1, 2017.
|
•
|
Intersegment operating expenses for the
six months ended June 30,
2018
, as compared to the
six months ended June 30,
2017
, increased by $1.4 million as a result of an increase in our crude oil marketing operations. These expenses represent intersegment charges for our crude oil marketing operations’ utilization of our crude oil trucking services to gather crude oil purchased at production leases and deliver it to our pipelines.
|
Operating results
|
Three Months ended
June 30, |
|
Six Months ended
June 30, |
|
Favorable/(Unfavorable)
|
||||||||||||||||||||||||
|
|
Three Months
|
|
Six Months
|
|||||||||||||||||||||||||
(dollars in thousands)
|
2017
|
|
2018
|
|
2017
|
|
2018
|
|
$
|
|
%
|
|
$
|
|
%
|
||||||||||||||
Service revenue:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
||||||||||||||
Third-party revenue
|
$
|
6,440
|
|
|
$
|
3,509
|
|
|
$
|
13,151
|
|
|
$
|
9,049
|
|
|
$
|
(2,931
|
)
|
|
(46
|
)%
|
|
$
|
(4,102
|
)
|
|
(31
|
)%
|
Intersegment revenue
|
74
|
|
|
986
|
|
|
244
|
|
|
1,429
|
|
|
912
|
|
|
1,232
|
%
|
|
1,185
|
|
|
486
|
%
|
||||||
Product sales revenue:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
||||||||||||||
Third-party revenue
|
—
|
|
|
3
|
|
|
385
|
|
|
9
|
|
|
3
|
|
|
N/A
|
|
(376
|
)
|
|
(98
|
)%
|
|||||||
Lease revenue:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
||||||||||||||
Third-party revenue
|
—
|
|
|
32
|
|
|
—
|
|
|
129
|
|
|
32
|
|
|
N/A
|
|
129
|
|
|
N/A
|
||||||||
Total revenue
|
6,514
|
|
|
4,530
|
|
|
13,780
|
|
|
10,616
|
|
|
(1,984
|
)
|
|
(30
|
)%
|
|
(3,164
|
)
|
|
(23
|
)%
|
||||||
Operating expense, excluding depreciation and amortization
|
6,702
|
|
|
4,727
|
|
|
13,970
|
|
|
11,101
|
|
|
1,975
|
|
|
29
|
%
|
|
2,869
|
|
|
21
|
%
|
||||||
Operating margin, excluding depreciation and amortization
|
$
|
(188
|
)
|
|
$
|
(197
|
)
|
|
$
|
(190
|
)
|
|
$
|
(485
|
)
|
|
$
|
(9
|
)
|
|
(5
|
)%
|
|
$
|
(295
|
)
|
|
(155
|
)%
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
||||||||||||||
Average volume (in thousands of barrels per day)
|
22
|
|
|
26
|
|
|
22
|
|
|
25
|
|
|
4
|
|
|
18
|
%
|
|
3
|
|
|
14
|
%
|
•
|
Service revenues have decreased despite an increase in volumes as the volumes hauled in 2018 were, on average, over a shorter distance than in 2017, which results in lower revenue per barrel transported. Additionally, service revenues decreased for the
three and six months ended June 30,
2018
, as compared to the
three and six months ended June 30,
2017
, by
$1.8 million
and
$2.3 million
, respectively, due to the sale of the producer field services business.
|
•
|
Employment costs and vehicle-related expenses decreased for the
three and six months ended June 30,
2018
, as compared to the
three and six months ended June 30,
2017
, as we reduced our headcount and fleet size to better match demand.
|
•
|
Operating expense, excluding depreciation and amortization, decreased for the
three and six months ended June 30,
2018
, as compared to the
three and six months ended June 30,
2017
, by
$1.7 million
and
$2.0 million
, respectively, due to the sale of our producer field services business.
|
•
|
Product sales revenues for the
six months ended June 30,
2017, were the result of crude oil sales in our field services business, and there were minimal such sales during the three and six months ended June 30, 2018.
|
|
Six Months ended
June 30,
|
||||||
|
2017
|
|
2018
|
||||
|
(in millions)
|
||||||
Net cash provided by operating activities
|
$
|
26.6
|
|
|
$
|
21.1
|
|
Net cash provided by (used in) investing activities
|
$
|
23.5
|
|
|
$
|
(38.0
|
)
|
Net cash provided by (used in) financing activities
|
$
|
(50.1
|
)
|
|
$
|
15.6
|
|
•
|
maintenance capital expenditures, which are capital expenditures made to maintain the existing integrity and operating capacity of our assets and related cash flows, further extending the useful lives of the assets; and
|
•
|
expansion capital expenditures, which are capital expenditures made to expand the operating capacity or revenue of existing or new assets, whether through construction, acquisition or modification.
|
|
|
BLUEKNIGHT ENERGY PARTNERS, L.P.
|
|
|
|
|
|
|
|
By:
|
Blueknight Energy Partners, G.P., L.L.C
|
|
|
|
its General Partner
|
|
|
|
|
Date:
|
August 2, 2018
|
By:
|
/s/ Alex G. Stallings
|
|
|
|
Alex G. Stallings
|
|
|
|
Chief Financial Officer and Secretary
|
|
|
|
|
Date:
|
August 2, 2018
|
By:
|
/s/ James R. Griffin
|
|
|
|
James R. Griffin
|
|
|
|
Chief Accounting Officer
|
Exhibit Number
|
|
Description
|
2.1
|
|
|
3.1
|
|
|
3.2
|
|
|
3.3
|
|
|
3.4
|
|
|
4.1
|
|
|
10.1
|
|
|
10.2
|
|
|
10.3
|
|
|
31.1#
|
|
|
31.2#
|
|
|
32.1#
|
|
|
101#
|
|
The following financial information from Blueknight Energy Partners, L.P.’s Quarterly Report on Form 10-Q for the quarter ended June 30, 2018, formatted in XBRL (eXtensible Business Reporting Language): (i) Document and Entity Information; (ii) Unaudited Condensed Consolidated Balance Sheets as of December 31, 2017 and June 30, 2018; (iii) Unaudited Condensed Consolidated Statements of Operations for the three and six months ended June 30, 2017 and 2018; (iv) Unaudited Condensed Consolidated Statement of Changes in Partners’ Capital (Deficit) for the six months ended June 30, 2018; (v) Unaudited Condensed Consolidated Statements of Cash Flows for the six months ended June 30, 2017 and 2018; and (vi) Notes to Unaudited Condensed Consolidated Financial Statements.
|
3/22/2018
|
|
BKEP Contact:
|
Bryan Adcock
|
|
|
BKEP Contract #:
|
2018-00097
|
|
|
Ergon’s BKEP Contract:
|
|
|
|
|
(Please Supply)
|
Company:
|
Ergon Oil Purchasing, Inc.
|
|
|
Marketer:
|
Barton Lampton
|
|
|
|
P.O. Box 1308
|
|
|
|
Jackson, MS 39215
|
|
|
Email:
|
Barton.Lampton@ergon.com
|
1.
|
Quality:
|
Oklahoma Sweet Crude Oil
|
|
|
|
2.
|
Quantity:
|
100% of Seller’s owned or controlled production from the leases listed in Exhibit A
|
|
|
|
3.
|
Price:
|
Price as indicated on Exhibit A
|
|
|
|
4.
|
Term:
|
Commencing April 1, 2018 through April 30, 2018, thereafter month to month until either party provides thirty (30) days’ advance written notice of cancellation
|
|
|
|
5.
|
Payment:
|
Commencing April 1, 2018 through April 30, 2018, thereafter month to month until either party provides thirty (30) days’ advance written notice of cancellation
|
|
|
|
6.
|
Payment:
|
Commencing April 1, 2018 through April 30, 2018, thereafter month to month until either party provides thirty (30) days’ advance written notice of cancellation
|
|
|
|
7.
|
General Terms and Provisions:
|
All other terms and conditions not specifically stated shall be governed by COP General Provisions as revised January 1, 2017, and by Exhibit B, both attached hereto and made a part hereof:
|
BUYER:
|
|
SELLER:
|
||
|
|
|
|
|
BKEP Supply and Marketing LLC
|
|
Ergon Oil Purchasing, Inc.
|
||
|
|
|
|
|
By
|
/s/ Brian L Melton
|
|
Signed
|
/s/ Leslie Barton Lampton, IV
|
|
|
|
|
|
Title
|
Chief Commercial Officer
|
|
Printed Name
|
Vice President-General Manager
|
|
|
|
|
|
Date
|
3/28/2018
|
|
Date
|
3/22/2018
|
1.1
|
The quantity of Product received or delivered by pipeline shall be determined by one of the following methods in the following order of preference:
|
1.1.1
|
Calibrated custody transfer meters, or
|
|
|
1.1.1
|
Tank gauge with appropriate application of certified tank strapping tables before and after transfer.
|
1.2
|
The quantity of Product received or delivered by truck or rail car shall be determined by one of the following methods in order of preference:
|
1.2.1
|
Calibrated custody transfer meters,
|
|
|
1.2.2
|
Tank gauge of static tanks with the appropriate application of certified tank strapping tables before and after transfer,
|
|
|
1.2.3
|
Certified Scales, or
|
|
|
1.2.4
|
Truck or railcar gauge with appropriate application of certified truck/ railcar strapping tables.
|
2.1
|
The quantity and quality of marine cargo received or delivered shall be determined by a mutually appointed Independent Inspection Company (IIC).
|
2.2
|
The quantity of Product received or delivered shall be determined by one of the following methods in order of preference
|
2.2.1
|
Calibrated custody transfer meters,
|
|
|
2.2.2
|
Shore tank gauge of static shore tanks with the appropriate application of certified tank strapping tables before and after transfer,
|
|
|
2.2.3
|
Vessel gauge before and after transfer, with application of a valid Vessel Experience Factor (VEF) as determined from API MPMS Chapter 17.9, or
|
|
|
2.2.4
|
By agreement between the Buyer and Seller.
|
2.3
|
Gauged quantities shall not be made through unslotted standpipes. Tanks shall be static, and measurements shall not be taken in critical zones, or when tanks or vessels contain insufficient Product to allow for an accurate measurement.
|
2.4
|
A line fullness verification shall be performed prior to custody transfer of the Product using any of the approved methods in API MPMS Chapter 17.6. Adjustments to the quantities received or delivered shall be consistent with the methodologies in API MPMS Chapter 17.6. When the line displacement method of line fullness verification is employed, it will be performed by the delivering vessel pumping to the furthermost receiving shore tank to be utilized during each marine vessel transfer.
|
2.5
|
Quantity as determined by the IIC shall be final and binding on all parties and will be the basis for preparing relevant shipping documents and invoices save fraud and/or manifest error. If, for any reason an IIC is not in attendance or if terminal operating procedures prevail, then quantity as determined by terminal personnel shall be final and binding on all parties and will be the basis for preparing relevant shipping documents and invoices save fraud and/or manifest error.
|
3.1
|
Volume measurements shall be corrected to 60 degrees Fahrenheit and one atmosphere (14.696 psia) in accordance with the latest revision of API MPMS Chapter 11 Table 6A. Gravity measurements shall be corrected to 60 degrees Fahrenheit and one atmosphere (14.696 psia).
|
3.2
|
Product shall be sampled for quality analysis based on one of the following methods in order of preference:
|
3.2.1
|
In-line sampler, obtained by a flow-proportional in-line sampler that performs in accordance with API MPMS Chapter 8.2,
|
|
|
3.2.2
|
Spot samples by manually sampling tanks, vessels, trucks/ cars, or pipelines in accordance with API MPMS Chapter 8.1, or
|
|
|
3.2.3
|
As mutually agreed by Buyer and Seller.
|
3.3
|
S&W shall be determined from samples of Product using one of the following methods in order of preference:
|
3.3.1
|
Membrane Filtration (ASTM D4807) and Karl Fischer (ASTM D4928),
|
|
|
3.3.2
|
Extraction (ASTM D473) and Distillation (D4006), or
|
|
|
3.3.3
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Centrifuge (ASTM D4007),
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3.4
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A full deduction for all free water and S&W shall be made in accordance with the API MPMS methods and standards.
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3.5
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Seller and Buyer shall have the right to have a representative witness all measurements and tests. Measurements and tests conducted in the absence of a party’s representative shall be presumed to be correct and binding on both parties and will be the basis for the preparation of relevant shipping documents and invoices except in the case of fraud or manifest error.
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1.
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I have reviewed this quarterly report on Form 10-Q of Blueknight Energy Partners, L.P.;
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2.
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Based on my knowledge, this report does not contain any untrue statement of a material fact or omit to state a material fact necessary to make the statements made, in light of the circumstances under which such statements were made, not misleading with respect to the period covered by this report;
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3.
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Based on my knowledge, the financial statements, and other financial information included in this report, fairly present in all material respects the financial condition, results of operations and cash flows of the registrant as of, and for, the periods presented in this report;
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4.
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The registrant's other certifying officer(s) and I are responsible for establishing and maintaining disclosure controls and procedures (as defined in Exchange Act Rules 13a-15(e) and 15d-15(e)) and internal control over financial reporting (as defined in Exchange Act Rules 13a-15(f) and 15d-15(f)) for the registrant and have:
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a.
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Designed such disclosure controls and procedures, or caused such disclosure controls and procedures to be designed under our supervision, to ensure that material information relating to the registrant, including its consolidated subsidiaries, is made known to us by others within those entities, particularly during the period in which this report is being prepared;
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b.
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Designed such internal control over financial reporting, or caused such internal control over financial reporting to be designed under our supervision, to provide reasonable assurance regarding the reliability of financial reporting and the preparation of financial statements for external purposes in accordance with generally accepted accounting principles;
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c.
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Evaluated the effectiveness of the registrant's disclosure controls and procedures and presented in this report our conclusions about the effectiveness of the disclosure controls and procedures, as of the end of the period covered by this report based on such evaluation; and
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d.
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Disclosed in this report any change in the registrant's internal control over financial reporting that occurred during the registrant's most recent fiscal quarter (the registrant's fourth fiscal quarter in the case of an annual report) that has materially affected, or is reasonably likely to materially affect, the registrant's internal control over financial reporting; and
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5.
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The registrant's other certifying officer(s) and I have disclosed, based on our most recent evaluation of internal control over financial reporting, to the registrant's auditors and the audit committee of the registrant's board of directors (or persons performing the equivalent functions):
|
a.
|
All significant deficiencies and material weaknesses in the design or operation of internal control over financial reporting which are reasonably likely to adversely affect the registrant's ability to record, process, summarize and report financial information; and
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b.
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Any fraud, whether or not material, that involves management or other employees who have a significant role in the registrant's internal control over financial reporting.
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Date:
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August 2, 2018
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|
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/s/ Mark Hurley
|
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Mark Hurley
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|
Chief Executive Officer
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|
Blueknight Energy Partners, G.P., L.L.C.,
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|
general partner of Blueknight Energy Partners, L.P.
|
1.
|
I have reviewed this quarterly report on Form 10-Q of Blueknight Energy Partners, L.P.;
|
2.
|
Based on my knowledge, this report does not contain any untrue statement of a material fact or omit to state a material fact necessary to make the statements made, in light of the circumstances under which such statements were made, not misleading with respect to the period covered by this report;
|
3.
|
Based on my knowledge, the financial statements, and other financial information included in this report, fairly present in all material respects the financial condition, results of operations and cash flows of the registrant as of, and for, the periods presented in this report;
|
4.
|
The registrant's other certifying officer(s) and I are responsible for establishing and maintaining disclosure controls and procedures (as defined in Exchange Act Rules 13a-15(e) and 15d-15(e)) and internal control over financial reporting (as defined in Exchange Act Rules 13a-15(f) and 15d-15(f)) for the registrant and have:
|
a.
|
Designed such disclosure controls and procedures, or caused such disclosure controls and procedures to be designed under our supervision, to ensure that material information relating to the registrant, including its consolidated subsidiaries, is made known to us by others within those entities, particularly during the period in which this report is being prepared;
|
b.
|
Designed such internal control over financial reporting, or caused such internal control over financial reporting to be designed under our supervision, to provide reasonable assurance regarding the reliability of financial reporting and the preparation of financial statements for external purposes in accordance with generally accepted accounting principles;
|
c.
|
Evaluated the effectiveness of the registrant's disclosure controls and procedures and presented in this report our conclusions about the effectiveness of the disclosure controls and procedures, as of the end of the period covered by this report based on such evaluation; and
|
d.
|
Disclosed in this report any change in the registrant's internal control over financial reporting that occurred during the registrant's most recent fiscal quarter (the registrant's fourth fiscal quarter in the case of an annual report) that has materially affected, or is reasonably likely to materially affect, the registrant's internal control over financial reporting; and
|
5.
|
The registrant's other certifying officer(s) and I have disclosed, based on our most recent evaluation of internal control over financial reporting, to the registrant's auditors and the audit committee of the registrant's board of directors (or persons performing the equivalent functions):
|
a.
|
All significant deficiencies and material weaknesses in the design or operation of internal control over financial reporting which are reasonably likely to adversely affect the registrant's ability to record, process, summarize and report financial information; and
|
b.
|
Any fraud, whether or not material, that involves management or other employees who have a significant role in the registrant's internal control over financial reporting.
|
Date:
|
August 2, 2018
|
|
|
/s/ Alex G. Stallings
|
|
Alex G. Stallings
|
|
Chief Financial Officer and Secretary of
|
|
Blueknight Energy Partners, G.P., L.L.C.,
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|
general partner of Blueknight Energy Partners, L.P.
|
(1)
|
the Report fully complies with the requirements of Section 13(a) or 15(d) of the Securities Exchange Act of 1934; and
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(2)
|
the information contained in the Report fairly presents, in all material respects, the financial condition and result of operations of the Partnership.
|
/s/ Mark Hurley
|
Mark Hurley
|
Chief Executive Officer of
|
Blueknight Energy Partners G.P., L.L.C.,
|
general partner of Blueknight Energy Partners, L.P.
|
|
August 2, 2018
|
|
|
/s/ Alex G. Stallings
|
Alex G. Stallings
|
Chief Financial Officer and Secretary of
|
Blueknight Energy Partners G.P., L.L.C.,
|
general partner of Blueknight Energy Partners, L.P.
|
|
August 2, 2018
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*
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A signed original of this written statement required by Section 906 has been provided to the Partnership and will be retained by the Partnership and furnished to the Securities and Exchange Commission or its staff upon request. The foregoing certification is being furnished to the Securities and Exchange Commission as an exhibit to the Report.
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