10-Q

UNITED STATES

SECURITIES AND EXCHANGE COMMISSION

Washington, D.C. 20549

FORM 10-Q

☒ Quarterly Report Pursuant to Section 13 or 15(d) of the Securities Exchange Act of 1934

For the quarterly period ended March 31, 2021

OR

☐ TRANSITION REPORT PURSUANT TO SECTION 13 or 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934 

For the transition period from __________ to _________ 

Commission File Number 001-33503

BLUEKNIGHT ENERGY PARTNERS, L.P.

(Exact name of registrant as specified in its charter)

Delaware (State or other jurisdiction of incorporation or organization)	20-8536826 (IRS Employer Identification No.)
6060 American Plaza, Suite 600 Tulsa, Oklahoma 74135 (Address of principal executive offices, zip code) Registrant’s telephone number, including area code: (918) 237-4000

Indicate by check mark whether the registrant (1) has filed all reports required to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during the preceding 12 months (or for such shorter period that the registrant was required to file such reports), and (2) has been subject to such filing requirements for the past 90 days.    Yes    ☒    No   ☐

Indicate by check mark whether the registrant has submitted electronically every Interactive Data File required to be submitted pursuant to Rule 405 of Regulation S-T (§232.405 of this chapter) during the preceding 12 months (or for such shorter period that the registrant was required to submit such files).  Yes   ☒   No   ☐

Indicate by check mark whether the registrant is a large accelerated filer, an accelerated filer, a non-accelerated filer, smaller reporting company, or an emerging growth company. See the definitions of “large accelerated filer,” “accelerated filer,” “smaller reporting company” and “emerging growth company” in Rule 12b-2 of the Exchange Act. (Check one):

Large accelerated filer ☐	Accelerated filer ☐
Non-accelerated filer ☒	Smaller reporting company ☒
	Emerging growth company ☐

If an emerging growth company, indicate by check mark if the registrant has elected not to use the extended transition period for complying with any new or revised financial accounting standards provided pursuant to Section 13(a) of the Exchange Act. ☐

Indicate by check mark whether the registrant is a shell company (as defined in Rule 12b-2 of the Exchange Act). Yes  ☐  No ☒

Securities registered pursuant to Section 12(b) of the Exchange Act:

Title of each class	Trading Symbol(s)	Name of each exchange on which registered
Common Units	BKEP	The Nasdaq Global Market
Series A Preferred Units	BKEPP	The Nasdaq Global Market

 As of April 28, 2021, there were 34,436,785 Series A Preferred Units and 41,468,125 common units outstanding.  
 

Table of Contents

		Page
PART I	FINANCIAL INFORMATION	1
Item 1.	Unaudited Condensed Consolidated Financial Statements	1
	Condensed Consolidated Balance Sheets as of December 31, 2020, and March 31, 2021	1
	Condensed Consolidated Statements of Operations for the Three Months Ended March 31, 2020 and 2021	2
	Condensed Consolidated Statements of Changes in Partners’ Capital (Deficit) for the Three Months Ended March 31, 2020 and 2021	3
	Condensed Consolidated Statements of Cash Flows for the Three Months Ended March 31, 2020 and 2021	4
	Notes to the Unaudited Condensed Consolidated Financial Statements	5
	1. Organization and Nature of Business	5
	2. Basis of Presentation	5
	3. Revenue	5
	4. Discontinued Operations	7
	5. Debt	9
	6. Net Income Per Limited Partnership Unit	11
	7. Partners’ Capital and Distributions	12
	8. Related-party Transactions	12
	9. Long-term Incentive Plan	13
	10. Fair Value Measurements	14
	11. Commitments and Contingencies	14
	12. Recently Issued Accounting Standards	14
Item 2.	Management’s Discussion and Analysis of Financial Condition and Results of Operations	15
Item 3.	Quantitative and Qualitative Disclosures about Market Risk	20
Item 4.	Controls and Procedures	20
PART II	OTHER INFORMATION	21
Item 1.	Legal Proceedings	21
Item 1A.	Risk Factors	21
Item 2.	Unregistered Sales of Equity Securities	21
Item 6.	Exhibits	22

i

PART I. FINANCIAL INFORMATION

Item 1.    Unaudited Condensed Consolidated Financial Statements

BLUEKNIGHT ENERGY PARTNERS, L.P.

CONDENSED CONSOLIDATED BALANCE SHEETS

(in thousands, except unit data)

	As of			As of
	December 31, 2020			March 31, 2021
	(unaudited)
ASSETS
Current assets:
Cash and cash equivalents	$	805		$	13
Accounts receivable, net		3,297			6,897
Receivables from related parties, net		507			664
Other current assets		2,355			3,693
Current assets of discontinued operations		96,945			511
Total current assets		103,909			11,778
Property, plant and equipment, net of accumulated depreciation of $197,561 and $199,895 at December 31, 2020, and March 31, 2021, respectively		104,709			104,256
Goodwill		6,728			6,728
Debt issuance costs, net		1,340			998
Operating lease assets		8,548			8,020
Intangible assets, net		7,531			6,935
Other noncurrent assets		252			282
Total assets	$	233,017		$	138,997
LIABILITIES AND PARTNERS’ CAPITAL(DEFICIT)
Current liabilities:
Accounts payable	$	1,635		$	2,313
Accounts payable to related parties		31			14
Accrued interest payable		274			279
Accrued property taxes payable		1,757			1,505
Unearned revenue		1,789			1,852
Unearned revenue with related parties		4,603			4,594
Accrued payroll		4,977			2,377
Current operating lease liability		1,684			1,532
Other current liabilities		1,349			2,327
Current liabilities of discontinued operations		17,248			2,599
Total current liabilities		35,347			19,392
Long-term unearned revenue with related parties		4,153			3,985
Other long-term liabilities		168			162
Noncurrent operating lease liability		6,980			6,735
Long-term debt		252,592			106,592
Commitments and contingencies (Note 11)
Partners’ capital(deficit):
Common unitholders (41,214,856 and 41,468,125 units issued and outstanding at December 31, 2020, and March 31, 2021, respectively)		312,591			384,755
Preferred unitholders (35,125,202 and 34,436,785 units issued and outstanding at December 31, 2020, and March 31, 2021, respectively)		253,923			248,946
General partner interest (1.6% interest with 1,225,409 general partner units outstanding at both dates)		(632,737	)		(631,570	)
Total partners’ capital(deficit)		(66,223	)		2,131
Total liabilities and partners’ capital(deficit)	$	233,017		$	138,997

The accompanying notes are an integral part of these unaudited condensed consolidated financial statements.

1

BLUEKNIGHT ENERGY PARTNERS, L.P.

CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS

(in thousands, except per unit data)

	Three Months Ended March 31,
	2020			2021
	(unaudited)
Service revenue:
Third-party revenue	$	6,853		$	6,919
Related-party revenue		4,055			4,849
Lease revenue:
Third-party revenue		9,831			8,303
Related-party revenue		4,921			7,004
Total revenue		25,660			27,075
Costs and expenses:
Operating expense		15,660			15,880
General and administrative expense		3,366			3,982
Total costs and expenses		19,026			19,862
Loss on disposal of assets		(74	)		-
Operating income		6,560			7,213
Other income(expenses):
Other income		650			233
Interest expense		(1,686	)		(1,333	)
Income before income taxes		5,524			6,113
Provision for income taxes		5			10
Income from continuing operations		5,519			6,103
Income(loss) from discontinued operations, net		(5,519	)		75,550
Net income	$	-		$	81,653
Allocation of net income(loss) for calculation of earnings per unit:
General partner interest in net income	$	-		$	1,292
Preferred interest in net income	$	6,279		$	6,341
Net income(loss) available to limited partners	$	(6,279	)	$	74,020
Basic and diluted net income(loss) from discontinued operations per common unit	$	(0.13	)	$	1.75
Basic and diluted net loss from continuing operations per common unit	$	(0.02	)	$	(0.01	)
Basic and diluted net income(loss) per common unit	$	(0.15	)	$	1.74
Weighted average common units outstanding - basic and diluted		41,015			41,430

The accompanying notes are an integral part of these unaudited condensed consolidated financial statements.

2

BLUEKNIGHT ENERGY PARTNERS, L.P.

CONDENSED CONSOLIDATED STATEMENTS 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, 2019	$	356,777		$	253,923		$	(632,023	)	$	(21,323	)
Net income(loss)		(6,279	)		6,279			-			-
Equity-based incentive compensation		105			-			3			108
Distributions		(1,675	)		(6,279	)		(128	)		(8,082	)
Proceeds from sale of 53,372 common units pursuant to the Employee Unit Purchase Plan		55			-			-			55
Balance, March 31, 2020	$	348,983		$	253,923		$	(632,148	)	$	(29,242	)
Balance, December 31, 2020	$	312,591		$	253,923		$	(632,737	)	$	(66,223	)
Net income		73,896			6,465			1,292			81,653
Equity-based incentive compensation		(80	)		-			3			(77	)
Repurchase of preferred units		-			(5,163	)		-			(5,163	)
Distributions		(1,700	)		(6,279	)		(128	)		(8,107	)
Proceeds from sale of 32,696 common units pursuant to the Employee Unit Purchase Plan		48			-			-			48
Balance, March 31, 2021	$	384,755		$	248,946		$	(631,570	)	$	2,131

The accompanying notes are an integral part of these unaudited condensed consolidated financial statements.

3

BLUEKNIGHT ENERGY PARTNERS, L.P.

CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS

(in thousands)

	Three Months Ended March 31,
	2020			2021
	(unaudited)
Cash flows from operating activities:
Net income	$	-		$	81,653
Adjustments to reconcile net income to net cash provided by operating activities:
Depreciation and amortization		6,094			3,065
Amortization and write-off of debt issuance costs		251			391
Tangible asset impairment charge		5,122			156
(Gain)loss on sale of assets		185			(75,069	)
Equity-based incentive compensation		108			(77	)
Changes in assets and liabilities:
Decrease in accounts receivable		4,201			10,022
Decrease(increase) in receivables from related parties		168			(157	)
Decrease in other current assets		1,345			1,630
Decrease in other non-current assets		566			379
Increase in accounts payable		104			412
Decrease in payables to related parties		(17	)		(17	)
Decrease in accrued crude oil purchases		(3,466	)		(3,868	)
Decrease in accrued crude oil purchases to related parties		(4,463	)		(8,842	)
Increase in accrued interest payable		8			5
Decrease in accrued property taxes		(381	)		(743	)
Increase(decrease) in unearned revenue		1,205			(373	)
Decrease in unearned revenue from related parties		(285	)		(227	)
Decrease in accrued payroll		(2,329	)		(3,822	)
Increase(decrease) in other accrued liabilities		(542	)		860
Net cash provided by operating activities		7,874			5,378
Cash flows from investing activities:
Acquisition of DEVCO from Ergon (Note 8)		(12,221	)		-
Capital expenditures		(2,900	)		(2,044	)
Net proceeds from sale of assets		25			155,316
Net cash provided by(used in) investing activities		(15,096	)		153,272
Cash flows from financing activities:
Payments on other financing activities		(638	)		(171	)
Debt issuance costs		-			(49	)
Borrowings under credit agreement		78,000			48,000
Payments under credit agreement		(62,000	)		(194,000	)
Proceeds from equity issuance		55			48
Repurchase of preferred units		-			(5,163	)
Distributions		(8,082	)		(8,107	)
Net cash provided by(used in) financing activities		7,335			(159,442	)
Net increase(decrease) in cash and cash equivalents		113			(792	)
Cash and cash equivalents at beginning of period		558			805
Cash and cash equivalents at end of period	$	671		$	13
Supplemental disclosure of non-cash financing and investing cash flow information:
Non-cash changes in property, plant and equipment	$	1,241		$	(74	)
Increase in accrued liabilities related to insurance premium financing agreement	$	1,517		$	1,208

The accompanying notes are an integral part of these unaudited condensed consolidated financial statements. 

4

BLUEKNIGHT ENERGY PARTNERS, L.P.

NOTES TO UNAUDITED CONDENSED CONSOLIDATED FINANCIAL STATEMENTS

1. ORGANIZATION AND NATURE OF BUSINESS

Blueknight Energy Partners, L.P. and subsidiaries (collectively, the “Partnership”) is a publicly traded master limited partnership with operations in 26 states. The Partnership provides integrated terminalling services for companies engaged in the production, distribution, and marketing of liquid asphalt. The Partnership manages its operations through one operating segment, asphalt terminalling services. The Partnership’s common units and preferred units, which represent limited partnership interests in the Partnership, are listed on the Nasdaq Global Market under the symbols “BKEP” and “BKEPP,” respectively. The Partnership was formed in February 2007 as a Delaware master limited partnership.

The Partnership previously provided integrated terminalling, gathering, and transportation services for companies engaged in the production, distribution, and marketing of crude oil in three different operating segments: (i) crude oil terminalling services, (ii) crude oil pipeline services, and (iii) crude oil trucking services. On December 21, 2020, the Partnership announced it had entered into multiple definitive agreements to sell these segments. These transactions closed in February and March of 2021. These segments are presented as discontinued operations for all periods presented. Unless otherwise noted, information in these notes to the consolidated financial statements relates to continuing operations. As the Partnership is only operating through one operating segment, a segment footnote is no longer required.

2. BASIS OF PRESENTATION

The consolidated financial statements have been prepared in accordance with accounting principles generally accepted in the United States of America (“GAAP”). The condensed consolidated balance sheet as of March 31, 2021, the condensed consolidated statements of operations for the three months ended March 31, 2020 and 2021, the condensed consolidated statements of changes in partners’ capital (deficit) for the three months ended March 31, 2020 and 2021, and the condensed consolidated statements of cash flows for the three months ended March 31, 2020 and 2021, are unaudited. In the opinion of management, the unaudited condensed consolidated financial statements have been prepared on the same basis as the audited financial statements and include all adjustments necessary to state fairly the financial position and results of operations for the respective interim periods. All adjustments are of a recurring nature unless otherwise disclosed herein. The 2020 year-end condensed consolidated balance sheet data was derived from audited financial statements but does not include all disclosures required by GAAP. These unaudited condensed consolidated financial statements and notes should be read in conjunction with the consolidated financial statements and notes thereto included in the Partnership’s annual report on Form 10-K for the year ended December 31, 2020, filed with the Securities and Exchange Commission (the “SEC”) on March 10, 2021 (the “2020 Form 10-K”).  Interim financial results are not necessarily indicative of the results to be expected for an annual period. The Partnership’s significant accounting policies are consistent with those disclosed in Note 3 of the Notes to Consolidated Financial Statements in its 2020 Form 10-K.

3. REVENUE

The Partnership recognizes revenue from contracts with customers as well as lease revenue.  The following table includes revenue associated with contractual commitments in place related to future performance obligations as of the end of the reporting period, which are expected to be recognized in revenue in the specified periods (in thousands):

	Revenue from Contracts with Customers(1)		Revenue from Leases
Remainder of 2021	$	29,431	$	43,923
2022		31,808		49,739
2023		28,131		42,546
2024		28,174		42,593
2025		26,857		37,595
Thereafter		37,078		43,000
Total revenue related to future performance obligations	$	181,479	$	259,396

___________________

(1) Excluded from the table is revenue that is either constrained or related to performance obligations that are wholly unsatisfied as of March 31, 2021.

5

Disaggregation of Revenue

Disaggregation of revenue from contracts with customers and lease revenue by revenue type is presented as follows (in thousands):

	Three Months Ended March 31, 2020
	Revenue from contracts with customers				Lease revenue
	Third-party revenue		Related-party revenue		Third-party revenue		Related-party revenue
Fixed storage and throughput revenue	$	5,245	$	3,084	$	-	$	-
Fixed lease revenue		-		-		9,227		4,800
Variable cost recovery revenue		1,607		971		604		121
Variable throughput and other revenue		1		-		-		-
Total	$	6,853	$	4,055	$	9,831	$	4,921

	Three Months Ended March 31, 2021
	Revenue from contracts with customers				Lease revenue
		Third-party revenue		Related-party revenue		Third-party revenue		Related-party revenue
Fixed storage and throughput revenue	$	5,064	$	4,721	$	-	$	-
Fixed lease revenue		-		-		7,801		6,785
Variable cost recovery revenue		1,735		128		502		219
Variable throughput and other revenue		120		-		-		-
Total	$	6,919	$	4,849	$	8,303	$	7,004

Contract Balances

Billed accounts receivable from contracts with customers were $2.1 million and $3.7 million at December 31, 2020, and March 31, 2021, respectively.

The Partnership records unearned revenues when cash payments are received in advance of performance. Unearned revenue related to contracts with customers was $3.2 million at both December 31, 2020, and March 31, 2021. For the three months ended March 31, 2021, the Partnership recognized $2.2 million of revenues that were previously included in the unearned revenue balance.

Practical Expedients and Exemptions

The Partnership does not disclose the value of unsatisfied performance obligations for contracts with an original expected length of one year or less.

6

4. DISCONTINUED OPERATIONS

On December 21, 2020, the Partnership announced executed agreements to sell its crude oil trucking services, crude oil pipeline services, and crude oil terminalling services segments. These segments are reported as discontinued operations in the results of operations and financial position for all periods presented. The crude oil trucking services agreement closed in two phases, one on December 15, 2020, and one on February 2, 2021. The crude oil pipeline services agreement closed on February 1, 2021.  Loss recognized on the disposal and classification of held for sale of these assets was recorded in the year ended December 31, 2020. The transaction related to the crude oil terminalling services segment closed on March 1, 2021. The Partnership has allocated interest to discontinued operations on debt that was required to be repaid as a result of the sales of the crude oil pipeline and terminalling services segment for the three months ended March 31, 2020 and 2021.

As part of the crude oil pipeline sale, $1.5 million of the gross sale proceeds are currently being held in escrow, subject to post-closing settlement terms and conditions. The Partnership expects to receive the majority of this in increments over the next two years.

Exit and disposal costs related to these sales, in the form of employee severance payments, are expected to total approximately $1.6 million. The Partnership is providing limited transition services to both of the buyers of the crude oil pipeline and terminalling services segments. These services are expected to last approximately six months beyond the final closing date. The contracts were designed to recover the costs of providing services, so a minimal income statement impact is expected for these services.

During the three months ended March 31, 2020, an impairment of $4.9 million was recognized to write-down the value of the Partnership's crude oil linefill based on the market price of crude oil as of March 31, 2020.

Assets and Liabilities of Discontinued Operations (in thousands)	As of December 31, 2020
	Crude Oil Trucking Services		Crude Oil Pipeline Services		Crude Oil Terminalling Services		Total
ASSETS
Accounts receivable, net	$	81	$	13,711	$	167	$	13,959
Plant, property, and equipment		442		23,541		52,854		76,837
Other assets		331		547		5,271		6,149
Total assets of discontinued operations	$	854	$	37,799	$	58,292	$	96,945
LIABILITIES
Current liabilities	$	1,017	$	14,921	$	1,310	$	17,248
Total liabilities of discontinued operations	$	1,017	$	14,921	$	1,310	$	17,248

Assets and Liabilities of Discontinued Operations (in thousands)	As of March 31, 2021
	Crude Oil Trucking Services		Crude Oil Pipeline Services		Crude Oil Terminalling Services		Total
ASSETS
Accounts receivable, net	$	-	$	287	$	48	$	335
Other assets		40		-		136		176
Total assets of discontinued operations	$	40	$	287	$	184	$	511
LIABILITIES
Current liabilities	$	32	$	936	$	1,631	$	2,599
Total liabilities of discontinued operations	$	32	$	936	$	1,631	$	2,599

7

Statement of Operations for Discontinued Operations (in thousands)		Three Months Ended March 31, 2020
	Crude Oil Trucking Services			Crude Oil Pipeline Services			Crude Oil Terminalling Services			Total
Revenue:
Third-party service revenue	$	2,543		$	502		$	3,330		$	6,375
Intercompany service revenue		1,425			-			-			1,425
Third-party product sales revenue		-			47,052			-			47,052
Costs and expenses:
Operating expense		4,025			3,302			2,023			9,350
Intercompany operating expense		-			1,425			-			1,425
Cost of product sales		-			14,221			-			14,221
Cost of product sales from related party		-			28,254			-			28,254
General and administrative expense		69			105			-			174
Tangible asset impairment expense		35			2,820			2,266			5,121
(Gain)loss on disposal of assets		(10	)		121			-			111
Interest expense		3			325			1,384			1,712
Loss before income taxes		(154	)		(3,019	)		(2,343	)		(5,516	)
Provision for income taxes		3			-			-			3
Net loss from discontinued operations	$	(157	)	$	(3,019	)	$	(2,343	)	$	(5,519	)

Statement of Operations for Discontinued Operations (in thousands)	Three Months Ended March 31, 2021
	Crude Oil Trucking Services			Crude Oil Pipeline Services			Crude Oil Terminalling Services			Total
Revenue:
Third-party service revenue	$	9		$	413		$	3,643		$	4,065
Intercompany service revenue		409			-			-			409
Third-party product sales revenue		-			15,591			-			15,591
Costs and expenses:
Operating expense		1,333			1,438			910			3,681
Intercompany operating expense		-			409			-			409
Cost of product sales		-			4,994			-			4,994
Cost of product sales from related party		-			9,461			-			9,461
General and administrative expense		59			118			-			177
Tangible asset impairment expense		92			41			23			156
Gain on disposal of assets		(3	)		(1,694	)		(73,372	)		(75,069	)
Interest expense		-			72			634			706
Income (loss) before income taxes		(1,063	)		1,165			75,448			75,550
Provision for income taxes		-			-			-			-
Net income (loss) from discontinued operations	$	(1,063	)	$	1,165		$	75,448		$	75,550

Select cash flow information (in thousands)
	Crude Oil Trucking Services		Crude Oil Pipeline Services		Crude Oil Terminalling Services		Total
	Three Months Ended March 31, 2020
Depreciation and amortization	$	200	$	1,170	$	1,139	$	2,509
Capital expenditures	$	180	$	882	$	89	$	1,152
	Three Months Ended March 31, 2021
Amortization	$	3	$	14	$	15	$	32
Capital expenditures	$	-	$	10	$	109	$	119

8

5. DEBT

On May 11, 2017, the Partnership entered into an amended and restated credit agreement. On June 28, 2018, the credit agreement was amended to, among other things, reduce the revolving loan facility from $450.0 million to $400.0 million and amend the maximum permitted consolidated total leverage ratio as discussed below.  On January 8, 2021, the credit facility was amended a second time to, among other things, reduce the revolving loan facility from $400.0 million to $350.0 million upon the sale of the crude oil terminalling segment, which became effective on March 1, 2021 (the “ January 2021 Amendment”).

As of April 28, 2021, approximately $106.6 million of revolver borrowings and $0.7 million of letters of credit were outstanding under the credit agreement, leaving the Partnership with approximately $242.7 million available capacity for additional revolver borrowings and letters of credit under the credit agreement, although the Partnership’s ability to borrow such funds is limited by the financial covenants in the credit agreement.  The proceeds of loans made under the credit agreement may be used for working capital and other general corporate purposes of the Partnership.

The credit agreement is guaranteed by all of the Partnership’s existing subsidiaries. Obligations under the credit agreement are secured by first priority liens on substantially all of the Partnership’s assets and those of the guarantors.

The credit agreement includes procedures for additional financial institutions to become revolving lenders, or for any existing lender to increase its revolving commitment thereunder, subject to an aggregate maximum of $600.0 million for all revolving loan commitments under the credit agreement.

The credit agreement will mature on May 11, 2022, and all amounts outstanding under the credit agreement will become due and payable on such date. The credit agreement requires mandatory prepayments of amounts outstanding thereunder with the net proceeds of certain asset sales, property or casualty insurance claims and condemnation proceedings, unless the Partnership reinvests such proceeds in accordance with the credit agreement, but these mandatory prepayments will not require any reduction of the lenders’ commitments under the credit agreement.

Borrowings under the credit agreement bear interest, at the Partnership’s option, at either the reserve-adjusted eurodollar rate (as defined in the credit agreement) (“Eurodollar Rate”) plus an applicable margin that ranges from 2.0% to 3.25% or the alternate base rate (the highest of the agent bank’s prime rate, the federal funds effective rate plus 0.5%, and the 30-day Eurodollar Rate plus 1.0%) plus an applicable margin that ranges from 1.0% to 2.25%.  The Partnership pays a per annum fee on all letters of credit issued under the credit agreement, which fee equals the applicable margin for loans accruing interest based on the Eurodollar Rate, and the Partnership pays a commitment fee ranging from 0.375% to 0.5% on the unused commitments under the credit agreement.  The applicable margins for the Partnership’s interest rate, the letter of credit fee and the commitment fee vary quarterly based on the Partnership’s consolidated total leverage ratio (as defined in the credit agreement, being generally computed as the ratio of consolidated total debt to consolidated earnings before interest, taxes, depreciation, amortization, and certain other non-cash charges).

The credit agreement includes financial covenants that are tested on a quarterly basis, based on the rolling four-quarter period that ends on the last day of each fiscal quarter.

Prior to the date on which the Partnership issues qualified senior notes in an aggregate principal amount (when combined with all other qualified senior notes previously or concurrently issued) that equals or exceeds $200.0 million, the maximum permitted consolidated total leverage ratio will be 4.75 to 1.00; provided that the maximum permitted consolidated total leverage ratio may be increased to 5.25 to 1.00 for certain quarters, 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).

From and after the date on which the Partnership issues qualified senior notes in an aggregate principal amount (when combined with all other qualified senior notes previously or concurrently issued) that equals or exceeds $200.0 million, the maximum permitted consolidated total leverage ratio is 5.00 to 1.00; provided that from and after the fiscal quarter ending immediately preceding the fiscal quarter in which a specified acquisition occurs to and including the last day of the second full fiscal quarter following the fiscal quarter in which such acquisition occurred, the maximum permitted consolidated total leverage ratio will be 5.50 to 1.00.

The maximum permitted consolidated senior secured leverage ratio (as defined in the credit agreement, but generally computed as the ratio of consolidated total secured debt to consolidated earnings before interest, taxes, depreciation, amortization and certain other non-cash charges) is 3.50 to 1.00, but this covenant is only tested from and after the date on which the Partnership issues qualified senior notes in an aggregate principal amount (when combined with all other qualified senior notes previously or concurrently issued) that equals or exceeds $200.0 million.

The minimum permitted consolidated interest coverage ratio (as defined in the credit agreement, but generally computed as the ratio of consolidated earnings before interest, taxes, depreciation, amortization and certain other non-cash charges to consolidated interest expense) is 2.50 to 1.00.

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In addition, the credit agreement contains various covenants that, among other restrictions, limit the Partnership’s ability to:

• 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 Fourth Amended and Restated Agreement of Limited Partnership of the Partnership (the “Partnership’s partnership agreement”).

At March 31, 2021, the Partnership’s consolidated total leverage ratio was 2.12 to 1.00 and the consolidated interest coverage ratio was 11.68 to 1.00.  The Partnership was in compliance with all covenants of its credit agreement as of March 31, 2021. Based on current operating plans and forecasts, the Partnership expects to remain in compliance with all covenants of the credit agreement for at least the next year.

The credit agreement permits the Partnership to make quarterly distributions of available cash (as defined in the Partnership’s partnership agreement) to unitholders so long as no default or event of default exists under the credit agreement on a pro forma basis after giving effect to such distribution. The Partnership is currently allowed to make distributions to its unitholders in accordance with this covenant; however, the Partnership will only make distributions to the extent it has sufficient cash from operations after establishment of cash reserves as determined by the Board of Directors (the “Board”) of Blueknight Energy Partners G.P., L.L.C. (the “general partner”) in accordance with the Partnership’s cash distribution policy, including the establishment of any reserves for the proper conduct of the Partnership’s business.  See Note 7 for additional information regarding distributions.

In addition to other customary events of default, the credit agreement includes an event of default if:

(i) the general partner ceases to own 100% of the Partnership’s general partner interest or ceases to control the Partnership;

(ii) 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.

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If an event of default relating to bankruptcy or other insolvency events occurs with respect to the general partner or the Partnership, all indebtedness under the credit agreement will immediately become due and payable.  If any other event of default exists under the credit agreement, the lenders may accelerate the maturity of the obligations outstanding under the credit agreement and exercise other rights and remedies.  In addition, if any event of default exists under the credit agreement, the lenders may commence foreclosure or other actions against the collateral.

If any default occurs under the credit agreement, or if the Partnership is unable to make any of the representations and warranties in the credit agreement, the Partnership will be unable to borrow funds or to have letters of credit issued under the credit agreement. 

Upon the March 1, 2021 effective date of the January 2021 Amendment, the Partnership expensed $0.1 million of debt issuance costs due to the reduction in available borrowing capacity. Debt issuance costs are being amortized over the term of the credit agreement. Interest expense related to debt issuance cost amortization for both the three months ended three months ended March 31, 2020 and 2021, was $0.3 million and $0.2 million, respectively.

During the three months ended March 31, 2020 and 2021, the weighted average interest rate under the Partnership’s credit agreement was 4.90% and 3.83%, respectively, resulting in interest expense of approximately $1.7 million and $1.2 million, respectively, excluding the $0.1 million of debt issuance costs that were expensed as described above. 

6. NET INCOME PER LIMITED PARTNER UNIT

For purposes of calculating earnings per unit, preferred units, general partner units, and common units are first allocated net income to the extent they receive a distribution. Next, the excess of distributions over earnings or excess of earnings over distributions for each period are allocated to the Partnership’s general partner based on the general partner’s ownership interest at the time. For the three months ended March 31, 2021, the preferred units were also allocated income for the excess consideration paid over carrying value for the repurchase of 688,417 preferred units. The remainder is allocated to common units. The following sets forth the computation of basic and diluted net income per common unit (in thousands, except per unit data): 

	Three Months Ended March 31,
	2020			2021
Net income	$	-		$	81,653
General partner interest in net income		-			1,292
Preferred interest in net income		6,279			6,341
Net income(loss) available to limited partners	$	(6,279	)	$	74,020
Basic weighted average number of units:
Common units		41,015			41,430
Restricted and phantom units		983			1,166
Total units		41,998			42,596
Basic and diluted net income(loss) from discontinued operations per common unit	$	(0.13	)	$	1.75
Basic and diluted net loss from continuing operations per common unit	$	(0.02	)	$	(0.01	)
Basic and diluted net income(loss) per common unit	$	(0.15	)	$	1.74

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7. PARTNERS’ CAPITAL AND DISTRIBUTIONS

On March 12, 2021, the Partnership repurchased 688,417 outstanding preferred units at $7.50 per unit or total cash consideration of $5.2 million. The consideration paid was based on the fair market value of the units at the time of purchase. The carrying value of the units was $7.23 per unit, or total carrying value of $5.0 million. The preferred units were allocated additional net income for the $0.2 million of consideration paid in excess of carrying value. The units were retired on March 24, 2021.

On April 21, 2021, the Board approved a cash distribution of $0.17875 per outstanding preferred unit for the three months ended March 31, 2021. The Partnership will pay this distribution on May 14, 2021, to unitholders of record as of May 7, 2021. The total distribution will be approximately $6.3 million, with approximately $6.2 million and $0.1 million paid to the Partnership’s preferred unitholders and general partner, respectively.

In addition, the Board approved a cash distribution of $0.04 per outstanding common unit for the three months ended March 31, 2021. The Partnership will pay this distribution on May 14, 2021, to unitholders of record on May 7, 2021. The total distribution will be approximately $1.7 million, with approximately $1.7 million and less than $0.1 million to be paid to the Partnership’s common unitholders and general partner, respectively, and approximately $0.1 million to be paid to holders of phantom and restricted units pursuant to awards granted under the Partnership’s Long-Term Incentive Plan.

8. RELATED-PARTY TRANSACTIONS

The Partnership leases asphalt facilities and provides asphalt terminalling services to Ergon. For the three months ended March 31, 2020 and 2021, the Partnership recognized related-party revenues of $9.0 million and $11.9 million, respectively, for services provided to Ergon. As of December 31, 2020, and March 31, 2021, the Partnership had receivables from Ergon of $0.5 million and $0.7 million, respectively. As of December 31, 2020, and March 31, 2021, the Partnership had unearned revenues from Ergon of $8.8 million and $8.6 million, respectively.

As of December 31, 2019, the Partnership had a contingent liability to Ergon of $12.2 million related to the Cimarron Express project, a previously disclosed joint venture between Kingfisher Midstream and Ergon's development company (“DEVCO”) that was cancelled in December 2018. The contingent liability reflected Ergon's investment in the joint venture and accrued interest, for which the Partnership, in accordance with the membership interest purchase agreement with Ergon, was meant to bear the risk of loss related to DEVCO’s portion of the project. The Partnership paid this liability in full on January 3, 2020, and it is reflected as an acquisition of the DEVCO on the consolidated statement of cash flows for the three months ended March 31, 2020.

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9. LONG-TERM INCENTIVE PLAN

In July 2007, the general partner adopted the Long-Term Incentive Plan (the “LTIP”), which is administered by the compensation committee of the Board. The Partnership’s unitholders have approved 8.1 million common units to be reserved for issuance under the incentive plan, subject to adjustments for certain events. Although other types of awards are contemplated under the LTIP, currently outstanding awards include “phantom” units, which convey the right to receive common units upon vesting, and “restricted” units, which are grants of common units restricted until the time of vesting. The phantom unit awards also include distribution equivalent rights (“DERs”).

Subject to applicable earning criteria, a DER entitles the grantee to a cash payment equal to the cash distribution paid on an outstanding common unit prior to the vesting date of the underlying award. Recipients of restricted and phantom units are entitled to receive cash distributions paid on common units during the vesting period which are reflected initially as a reduction of partners’ capital. Distributions paid on units which ultimately do not vest are reclassified as compensation expense. Awards granted to date are equity awards and, accordingly, the fair value of the awards as of the grant date is expensed over the vesting period.

Restricted common units are granted to the independent directors on each anniversary of joining the Board. The units vest in one-third increments over three years. The following table includes information on outstanding grants made to the directors under the LTIP:

Grant Date	Number of Units		Weighted Average Grant Date Fair Value(1)		Grant Date Total Fair Value (in thousands)
December 2018		23,436	$	1.20	$	28
December 2019		7,500	$	1.07	$	8
December 2020		7,500	$	2.06	$	15

(1) Fair value is the closing market price on the grant date of the awards.

The Partnership also grants phantom units to employees. These grants are equity awards under ASC 718 – Stock Compensation and, accordingly, the fair value of the awards as of the grant date is expensed over the three-year vesting period. The following table includes information on the outstanding grants:

Grant Date	Number of Units		Weighted Average Grant Date Fair Value(1)		Grant Date Total Fair Value (in thousands)
March 2019		524,997	$	1.14	$	598
June 2019		46,168	$	1.08	$	50
March 2020		600,396	$	0.90	$	540
October 2020		16,339	$	1.53	$	25
March 2021		530,435	$	2.71	$	1,437

(1) Fair value is the closing market price on the grant date of the awards.

The unrecognized estimated compensation cost of outstanding phantom and restricted units at March 31, 2021, was $1.7 million, which will be expensed over the remaining vesting period.

The Partnership’s equity-based incentive compensation expense for the three months ended March 31, 2020 and 2021, was $0.2 million and $0.1 million, respectively. 

Activity pertaining to phantom and restricted common unit awards granted under the LTIP is as follows:

	Number of Units		Weighted Average Grant Date Fair Value
Nonvested at December 31, 2020		1,350,366	$	1.81
Granted		530,435		2.71
Vested		329,996		4.20
Forfeited		-		-
Nonvested at March 31, 2021		1,550,805	$	1.61

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10. FAIR VALUE MEASUREMENTS

The Partnership uses valuation techniques, such as the market approach (comparable market prices), the income approach (present value of future income or cash flow), and the cost approach (cost to replace the service capacity of an asset or replacement cost) to value assets and liabilities required to be measured at fair value, as appropriate. The Partnership uses an exit price when determining the fair value. The exit price represents amounts that would be received to sell an asset or paid to transfer a liability in an orderly transaction between market participants.

The Partnership utilizes a three-tier fair value hierarchy that prioritizes the inputs to valuation techniques used to measure fair value into three broad levels. The following is a brief description of those three levels:

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.

This hierarchy requires the use of observable market data, when available, to minimize the use of unobservable inputs when determining fair value.

As of December 31, 2020, and March 31, 2021, the Partnership had no recurring financial assets or liabilities subject to fair value measurement.

Fair Value of Other Financial Instruments

The following disclosure of the estimated fair value of financial instruments is made in accordance with accounting guidance for financial instruments. The Partnership has determined the estimated fair values by using available market information and valuation methodologies. Considerable judgment is required in interpreting market data to develop the estimates of fair value. The use of different market assumptions or valuation methodologies may have a material effect on the estimated fair value amounts.

At March 31, 2021, the carrying values on the unaudited condensed consolidated balance sheets for cash and cash equivalents (classified as Level 1), accounts receivable, and accounts payable approximate their fair value because of their short-term nature.

Based on the borrowing rates currently available to the Partnership for credit agreement debt with similar terms and maturities and consideration of the Partnership’s non-performance risk, long-term debt associated with the Partnership’s credit agreement at March 31, 2021, approximates its fair value. The fair value of the Partnership’s long-term debt was calculated using observable inputs (Eurodollar Rate for the risk-free component) and unobservable company-specific credit spread information. As such, the Partnership considers this debt to be Level 3.

11. COMMITMENTS AND CONTINGENCIES

The Partnership is from time to time subject to various legal actions and claims incidental to its business. Management believes that these legal proceedings will not have a material adverse effect on the financial position, results of operations or cash flows of the Partnership. Once management determines that information pertaining to a legal proceeding indicates that it is probable that a liability has been incurred and the amount of such liability can be reasonably estimated, an accrual is established equal to its estimate of the likely exposure.

The Partnership has contractual obligations to perform dismantlement and removal activities in the event that some of its asphalt product and residual fuel oil terminalling and storage assets are abandoned. These obligations include varying levels of activity including completely removing the assets and returning the land to its original state. The Partnership has determined that the settlement dates related to the retirement obligations are indeterminate. The assets with indeterminate settlement dates have been in existence for many years and with regular maintenance will continue to be in service for many years to come. Also, it is not possible to predict when demands for the Partnership’s terminalling and storage services will cease, and the Partnership does not believe that such demand will cease for the foreseeable future.  Accordingly, the Partnership believes the date when these assets will be abandoned is indeterminate. With no reasonably determinable abandonment date, the Partnership cannot reasonably estimate the fair value of the associated asset retirement obligations.  Management believes that if the Partnership’s asset retirement obligations were settled in the foreseeable future the present value of potential cash flows that would be required to settle the obligations based on current costs are not material.  The Partnership will record asset retirement obligations for these assets in the period in which sufficient information becomes available for it to reasonably determine the settlement dates.

12. RECENTLY ISSUED ACCOUNTING STANDARDS

Except as discussed in the 2020 Form 10-K, there have been no new accounting pronouncements that have become effective or have been issued during the three months ended March 31, 2021, that are of significance or potential significance to the Partnership.

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Item 2.    Management’s Discussion and Analysis of Financial Condition and Results of Operations.

As used in this quarterly report, unless we indicate otherwise: (1) “Blueknight,” “our,” “we,” “us” and similar terms refer to Blueknight Energy Partners, L.P., together with its subsidiaries, (2) our “General Partner” refers to Blueknight Energy Partners G.P., L.L.C., and (3) “Ergon” refers to Ergon, Inc., its affiliates and subsidiaries (other than our General Partner and us).  The following discussion analyzes the historical financial condition and results of operations of the Partnership and should be read in conjunction with our financial statements and notes thereto, and Management’s Discussion and Analysis of Financial Condition and Results of Operations presented in our Annual Report on Form 10-K for the year ended December 31, 2020, which was filed with the Securities and Exchange Commission (the “SEC”) on March 10, 2021 (the “2020 Form 10-K”). 

Forward-Looking Statements

This report contains “forward-looking statements” within the meaning of the federal securities laws.  Statements included in this quarterly report that are not historical facts (including any statements regarding plans and objectives of management for future operations or economic performance, or assumptions or forecasts related thereto), including, without limitation, the information set forth in this Management’s Discussion and Analysis of Financial Condition and Results of Operations, are forward-looking statements. These statements can be identified by the use of forward-looking terminology including “may,” “will,” “should,” “believe,” “expect,” “intend,” “anticipate,” “estimate,” “continue,” or other similar words. These statements discuss future expectations, contain projections of results of operations or of financial condition, or state other “forward-looking” information. We and our representatives may from time to time make other oral or written statements that are also forward-looking statements.

Such forward-looking statements are subject to various risks and uncertainties that could cause actual results to differ materially from those anticipated as of the date of the filing of this report. Although we believe that the expectations reflected in these forward-looking statements are based on reasonable assumptions, no assurance can be given that these expectations will prove to be correct. Important factors that could cause our actual results to differ materially from the expectations reflected in these forward-looking statements include, among other things, those set forth in “Part I, Item 1A. Risk Factors” in the 2020 Form 10-K.

All forward-looking statements included in this report are based on information available to us on the date of this report. We undertake no obligation to publicly update or revise any forward-looking statement, whether as a result of new information, future events or otherwise. All subsequent written and oral forward-looking statements attributable to us or persons acting on our behalf are expressly qualified in their entirety by the cautionary statements contained throughout this report.

Overview

We are a publicly traded master limited partnership with operations in 26 states. We have the largest independent asphalt facility footprint in the nation, and through that we provide integrated terminalling services for companies engaged in the production, distribution, and marketing of liquid asphalt for infrastructure or other end markets.  We manage our operations through a single operating segment, asphalt terminalling services.

We previously provided integrated terminalling, gathering, and transportation services for companies engaged in the production, distribution, and marketing of crude oil in three different operating segments: (i) crude oil terminalling services, (ii) crude oil pipeline services, and (iii) crude oil trucking services. On December 21, 2020, we announced we had entered into multiple definitive agreements to sell these segments. The transactions closed in February and March of 2021, and these segments are presented as discontinued operations for all periods.

Our 53 asphalt facilities are well-positioned to provide asphalt terminalling services in the market areas they serve throughout the continental United States. With our approximately 8.7 million barrels of total liquid asphalt storage capacity, we provide our customers the ability to effectively manage their liquid asphalt inventories in their processing and marketing activities. Our asphalt terminalling business delivers a stable cash flow profile through long-term take-or-pay contracts that generally have original terms of 5 to 7 years with options to extend the term. The stability comes from the contract structure that is comprised primarily of take-or-pay fixed fees, which make up approximately 95% of our revenues on an annual basis after excluding cost reimbursements primarily for utilities. The remaining revenue is variable, primarily consisting of volume-based throughput fees.

We have contractual agreements in place for all of our asphalt terminalling facilities. We lease certain facilities for operation by our customers and at the remaining facilities our employees operate the facility to meet our customers’ specifications. The agreements have, based on a weighted average by remaining fixed revenue, approximately 5.6 years remaining under their terms as of April 28, 2021. Approximately 18% of our tank capacity will expire at the end of 2021 if not renewed with the current customer or a new customer, and the remaining capacity expires at varying times thereafter, through 2027. Our varying contract expiration dates provide for staggered renewals, which provides additional stability to the cash flow. 

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Potential Impact of Certain Factors on Future Revenues

Due to the high percentage of fixed and reimbursement revenue from our long-term contracts, our focus and our primary risk is renewing contracts at favorable terms. Our ability to renew agreements on favorable terms, or at all, could be impacted if our customers experience negative market conditions. These factors include infrastructure spending, the strength of state and local economies, and the level of allocations of tax funding to transportation spending from state or federal funds. Public transportation infrastructure projects historically have been a relatively stable portion of state and federal budgets and represent a significant share of the United States construction market. Federal funds are allocated on a state-by-state basis, and each state is required to match a portion of the federal funds that it receives. Currently, from a macroeconomic view, there are positive indicators for the infrastructure and construction sector, such as continued discussion and support for infrastructure spending from all sides of the federal government, low interest rates, and a recovering economy since mid-2020. However, due to the novel coronavirus disease (“ COVID-19”), as discussed below, some uncertainty exists.

Due to the global pandemic related to COVID-19, the economy experienced a significant downturn during part of 2020. Despite this economic volatility, our cash flows remained stable and are expected to remain stable moving forward. While our customers may be impacted by the economic volatility, they are primarily high-quality counterparties, with over 50% of our revenues earned from those that are investment grade quality, which minimizes our counterparty credit risk. We do not expect any supply chain disruptions from COVID-19 to affect our customers. While we are unaware of any potential negative impact of COVID-19 on our business at this time, we are continuing to monitor the situation and have prepared our employees to take precautions and planning for unexpected events, which may include disruptions to our workforce, customers, vendors, facilities and communities in which we operate. In an effort to protect the health and safety of our employees and the customers and vendors we interact with, we took proactive action to adopt social distancing policies at our locations, including working from home, limiting the number of employees attending meetings, and reducing the number of people in our sites at any one time.

Infrastructure spending is currently a focus at the federal, state, and local levels, and the initiatives are receiving high approval ratings. At the same time, state revenue is down due to COVID-19, so we remain cautious about future spending on infrastructure and road construction absent an infrastructure bill passed by the federal government to support funding efforts. The current federal administration has targeted infrastructure as a top priority. Based on recent history, infrastructure investment has been renewed at increased levels, and, based on recent federal proposals, we expect the funding to continue to increase. Increased funding potentially impacts us through favorable customer contract renewals as well as increased customer volumes through our terminals.

Another factor impacting us and our customers, from a short-term perspective, is weather patterns. Our customers’ volumes could be significantly impacted by prolonged rain or snow seasons or any severe weather that occurs. Damage to our terminal facilities from severe weather, such as flooding or hurricanes, could impact our operating results through additional costs and/or loss of revenue.

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Results of Operations

Non-GAAP Financial Measures

To supplement our financial information presented in accordance with GAAP, management uses additional measures that are known as “non-GAAP financial measures” in its evaluation of past performance and prospects for the future. The primary measure used by management is operating margin, excluding depreciation and amortization.

Management believes that the presentation of such additional financial measures provides useful information to investors regarding our performance and results of operations because these measures, when used in conjunction with related GAAP financial measures, (i) provide additional information about our core operating performance and ability to generate and distribute cash flow; (ii) provide investors with the financial analytical framework upon which management bases financial, operational, compensation and planning decisions and (iii) present measurements that investors, rating agencies and debt holders have indicated are useful in assessing us and our results of operations. These additional financial measures are reconciled to the most directly comparable measures as reported in accordance with GAAP, and should be viewed in addition to, and not in lieu of, our unaudited condensed consolidated financial statements and footnotes. 

The table below summarizes our financial results for the three months ended March 31, 2020 and 2021, reconciled to the most directly comparable GAAP measure:

	Three Months Ended						Favorable/(Unfavorable)
Operating results	March 31,						Three Months
(dollars in thousands)	2020			2021			$				%
Fixed fee revenue	$	22,356		$	24,371		$	2,015		9	%
Variable cost recovery revenue		3,303			2,584			(719	)	(22	)%
Variable throughput and other revenue		1			120			119		11900	%
Total revenue		25,660			27,075			1,415		6	%
Operating expenses, excluding depreciation and amortization		(12,075	)		(12,847	)		(772	)	(6	)%
Total operating margin, excluding depreciation and amortization		13,585			14,228			643		5	%
Depreciation and amortization		3,585			3,033			552		15	%
General and administrative expense		3,366			3,982			(616	)	(18	)%
Loss on disposal of assets		74			-			74		100	%
Operating income		6,560			7,213			653		10	%
Other income (expenses):
Other income		650			233			(417	)	(64	)%
Interest expense		(1,686	)		(1,333	)		353		21	%
Provision for income taxes		(5	)		(10	)		(5	)	(100	)%
Income from continuing operations		5,519			6,103			584		11	%
Income(loss) from discontinued operations, net		(5,519	)		75,550			81,069		1469	%
Net income	$	-		$	81,653		$	81,653		N/A

Revenues. Total revenues increased to $27.1 million for the three months ended March 31, 2021, as compared $25.7 million for the same period in 2020. Revenues consist primarily of fixed fees for items such as storage and minimum throughput requirements, with consideration of annual CPI index increases built into our agreements. The increase in fixed fee revenue is primarily due to certain contracts that changed from a lease arrangement to an operating arrangement. Variable cost recovery revenue is driven by certain reimbursable operating expenses, such as utility costs, and therefore have no net impact on operating margin or net income.

       Operating expenses, excluding depreciation and amortization. Operating expense, excluding depreciation and amortization, increased to $12.8 million for the three months ended March 31, 2021, as compared to $12.1 million for the same period in 2020.  Significant factors contributing to this change include certain contracts that changed from a lease arrangement to an operating arrangement and increases in insurance premiums due to overall market conditions from second quarter 2020 renewals.

Depreciation and amortization expense. Depreciation and amortization expense decreased to $3.0 million for the three months ended March 31, 2021, compared to $3.6 million for the same period in 2020. This decrease is primarily the result of certain assets reaching the end of their depreciable lives.

General and administrative expense.  General and administrative expense increased to $4.0 million for the three months ended March 31, 2021, compared to $3.4 million for the same period in 2020, primarily due to severance costs and professional fees associated with the crude oil business sales.

Other income. Other income for the three months ended March 31, 2021 and 2020, primarily relates to insurance recoveries related to flood damages incurred in 2019 and 2020 at certain asphalt facilities.

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Interest expense. Interest expense represents interest on borrowings under our credit agreement as well as amortization of debt issuance costs. The following table presents the significant components of interest expense (dollars in thousands):

	Three Months Ended				Favorable/(Unfavorable)
	March 31,				Three Months
	2020		2021		$			%
Credit agreement interest	$	1,435	$	942	$	493			34	%
Amortization of debt issuance costs		251		244		7			3	%
Write-off of debt issuance costs		-		147		(147	)		N/A
Total interest expense	$	1,686	$	1,333	$	353			21	%

The decrease in credit agreement interest is due to lower floating eurodollar interest rates, lower average borrowings outstanding during the period, and favorable changes to the applicable margin based on an improved leverage ratio.

Distributions

The amount of distributions we pay and the decision to make any distribution is determined by the Board of Directors of our General Partner (the “Board”), which has broad discretion to establish cash reserves for the proper conduct of our business and for future distributions to our unitholders. In addition, our cash distribution policy is subject to restrictions on distributions under our credit agreement. 

On April 21, 2021, the Board approved a cash distribution of $0.17875 per outstanding preferred unit for the three months ended March 31, 2021. We will pay this distribution on May 14, 2021, to unitholders of record as of May 7, 2021. The total distribution will be approximately $6.3 million, with approximately $6.2 million and $0.1 million paid to our preferred unitholders and general partner, respectively.

In addition, the Board approved a cash distribution of $0.04 per outstanding common unit for the three months ended March 31, 2021. We will pay this distribution on May 14, 2021, to unitholders of record as of May 7, 2021. The total distribution will be approximately $1.7 million, with approximately $1.7 million and less than $0.1 million paid to our common unitholders and general partner, respectively, and approximately $0.1 million paid to holders of phantom and restricted units pursuant to awards granted under our Long-Term Incentive Plan.

Off-Balance Sheet Arrangements

We do not have any off-balance sheet arrangements as defined by Item 303 of Regulation S-K.

18

Liquidity and Capital Resources

Cash Flows

The following table summarizes our sources and uses of cash, inclusive of both continuing and discontinued operations, for the three months ended March 31, 2020 and 2021: 

	Three Months Ended March 31,
	2020			2021
	(in millions)
Net cash provided by operating activities	$	7.9		$	5.4
Net cash provided by (used in) investing activities	$	(15.1	)	$	153.3
Net cash provided by (used in) financing activities	$	7.3		$	(159.4	)

Operating Activities.  Net cash provided by operating activities decreased to $5.4 million for the three months ended March 31, 2021, as compared to $7.9 million for the three months ended March 31, 2020, due to changes in working capital.

Investing Activities.  Net cash provided by investing activities was $153.3 million for the three months ended March 31, 2021, compared to net cash used in investing activities of $15.1 million for the three months ended March 31, 2020. The three months ended March 31, 2021, included net proceeds from the sale of the crude oil businesses of $155.3 million, which excludes $1.5 million of funds held in escrow for right of way renewals. The three months ended March 31, 2020, included a $12.2 million payment to Ergon related to our purchase of Ergon’s DEVCO entity related to Cimarron Express. Capital expenditures for the three months ended March 31, 2021, inclusive of both continuing and discontinued operations, included maintenance capital expenditures of $1.5 million and expansion capital expenditures $0.5 million. Capital expenditures for the three months ended March 31, 2020, inclusive of both continuing and discontinued operations, included maintenance capital expenditures of $1.8 million and expansion capital expenditures of $1.1 million. 

Financing Activities.  Net cash used in financing activities was $159.4 million for the three months ended March 31, 2021, compared to net cash provided by financing activities of $7.3 million for the three months ended March 31, 2020. Cash used in financing activities for the three months ended March 31, 2021, consisted primarily of net payments on long-term debt of $146.0 million, $8.1 million in distributions to our unitholders, and the repurchase of preferred units of $5.2 million. Net cash provided by financing activities for the three months ended March 31, 2020, consisted primarily of net borrowings on long-term debt of $16.0 million partially offset by $8.1 million in distributions to our unitholders.

Liquidity and Capital Resources

Cash flows from operations and availability under our revolving credit facility are our primary sources of liquidity. At March 31, 2021, we had a working capital deficit of $7.6 million. This is primarily a function of our approach to cash management. At March 31, 2021, we had approximately $106.6 million of revolver borrowings and approximately $0.7 million of letters of credit outstanding under the credit agreement, leaving us with approximately $242.7 million of availability under our credit agreement subject to covenant restrictions, which limited our availability to $132.9 million. As of April 28, 2021, we have approximately $106.6 million of revolver borrowings and approximately $0.7 million of letters of credit outstanding under the credit agreement, leaving us with aggregate unused commitments under our revolving credit facility of approximately $242.7 million and cash on hand of approximately $1.2 million. The credit agreement is scheduled to mature on May 11, 2022.

Our credit agreement contains certain financial covenants which include a maximum permitted consolidated total leverage ratio, which may limit our availability to borrow funds thereunder.  The consolidated total leverage ratio is assessed quarterly based on the trailing twelve months of EBITDA, as defined in the credit agreement. The maximum permitted consolidated total leverage ratio as of March 31, 2021, and for each fiscal quarter thereafter, is 4.75. Our consolidated total leverage ratio was 2.12 to 1.00 as of March 31, 2021.  Based on current operating plans and forecasts, we expect to remain in compliance with all covenants of the credit agreement for at least the next year.

19

Capital Requirements. Our capital requirements consist of the following:

• 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.

The following table breaks out capital expenditures from continuing operations for the three months ended March 31, 2020 and 2021 (in thousands):

	Three Months Ended March 31,
	2020			2021
Acquisitions	$	12,221		$	-
Gross expansion capital expenditures	$	214		$	517
Reimbursable expenditures		(93	)		-
Net expansion capital expenditures	$	121		$	517
Gross maintenance capital expenditures	$	1,534		$	1,408
Reimbursable expenditures		(97	)		(19	)
Net maintenance capital expenditures	$	1,437		$	1,389

We currently expect our 2021 expansion capital expenditures for organic growth projects to be approximately $0.5 million and our maintenance capital expenditures to be approximately $6.0 million, each net of reimbursable expenditures.

Our Ability to Grow Depends on Our Ability to Access External Expansion Capital. Our partnership agreement requires that we distribute all of our available cash to our unitholders. Available cash is reduced by cash reserves established by our General Partner to provide for the proper conduct of our business (including for future capital expenditures) and to comply with the provisions of our credit agreement.  We may not grow as quickly as businesses that reinvest their available cash to expand ongoing operations because we distribute all of our available cash. 

Recent Accounting Pronouncements

For information regarding recent accounting developments that may affect our future financial statements, see Note 12 to our unaudited condensed consolidated financial statements.

Item 3.   Quantitative and Qualitative Disclosures about Market Risk

Pursuant to Item 305(e) of Regulation S-K (§ 229.305(e)), the Partnership is not required to provide the information required by this Item as it is a “smaller reporting company,” as defined by Rule 229.10(f)(1).

Item 4.    Controls and Procedures.

Evaluation of disclosure controls and procedures.  Our General Partner’s management, including the Chief Executive Officer and Chief Financial Officer of our General Partner, evaluated, as of the end of the period covered by this report, the effectiveness of our disclosure controls and procedures as defined in Rule 13a-15(e) under the Securities Exchange Act of 1934. Based on that evaluation, the Chief Executive Officer and Chief Financial Officer of our General Partner concluded that our disclosure controls and procedures, as of March 31, 2021, were effective. 

Changes in internal control over financial reporting.  There were no changes to our internal control over financial reporting that occurred during the three months ended March 31, 2021, that have materially affected, or are reasonably likely to materially affect, our internal control over financial reporting.

20

PART II. OTHER INFORMATION

Item 1.    Legal Proceedings.

The information required by this item is included under the caption “Commitments and Contingencies” in Note 11 to our unaudited condensed consolidated financial statements and is incorporated herein by reference thereto.

Item 1A.    Risk Factors.

See the risk factors set forth in Part I, Item 1A, of our Annual Report on Form 10-K for the year ended December 31, 2020.

Item 2. Unregistered Sales of Equity Securities

The following table sets forth a summary of our purchases during the three months ended March 31, 2021, of equity securities that are registered by Blueknight pursuant to Section 12 of the Securities Exchange Act of 1934, as amended.

Period	Total Number of Series A Preferred Units Purchased(1)		Average Price Paid per Series A Preferred Unit(1)		Total Number of Series A Preferred Units Purchased as Part of Publicly Announced Plans or Programs		Maximum Dollar Value of Series A Preferred Units that May Yet Be Purchased Under the Plans or Programs
03/01/2021-03/31/2021		688,417	$	7.50		-	$	-
02/01/2021-02/28/2021		-	$	-		-	$	-
01/01/2021-01/31/2021		-	$	-		-	$	-

___________________

(1) The repurchase was made pursuant to a privately negotiated transaction on March 12, 2021.

21

Item 6.    Exhibits.

The information required by this Item 6 is set forth in the Index to Exhibits accompanying this quarterly report and is incorporated herein by reference.

INDEX TO EXHIBITS

Exhibit Number	Description
3.1	Amended and Restated Certificate of Limited Partnership of the Partnership, dated November 19, 2009, but effective as of December 1, 2009 (filed as Exhibit 3.1 to the Partnership’s Current Report on Form 8-K, filed November 25, 2009 (Commission File No. 001-33503), and incorporated herein by reference).
3.2	First Amendment to the Amended and Restated Certificate of Limited Partnership of Blueknight Energy Partners L.P., dated July 18, 2019 (filed as Exhibit 3.2 to the Partnership’s Current Report on Form 8-K, filed on July 22, 2019, and incorporated herein by reference).
3.3	Fourth Amended and Restated Agreement of Limited Partnership of the Partnership, dated September 14, 2011 (filed as Exhibit 3.1 to the Partnership’s Current Report on Form 8-K, filed September 14, 2011, and incorporated herein by reference).
3.4	Amended and Restated Certificate of Formation of the General Partner, dated November 20, 2009 but effective as of December 1, 2009 (filed as Exhibit 3.2 to the Partnership’s Current Report on Form 8-K, filed November 25, 2009 (Commission File No. 001-33503), and incorporated herein by reference).
3.5	First Amendment to the Amended and Restated Certificate of Formation of Blueknight Energy Partners G.P., L.L.C., dated July 18, 2019 (filed as Exhibit 3.1 to the Partnership’s Current Report on Form 8-K, filed on July 22, 2019, and incorporated herein by reference).
3.6	Second Amended and Restated Limited Liability Company Agreement of the General Partner, dated December 1, 2009 (filed as Exhibit 3.2 to the Partnership’s Current Report on Form 8-K, filed December 7, 2009 (Commission File No. 001-33503), and incorporated herein by reference).
4.1	Registration Rights Agreement, dated October 5, 2016, by and among the Partnership, Ergon Asphalt & Emulsions, Inc., Ergon Terminaling, Inc. and Ergon Asphalt Holdings, LLC (filed as Exhibit 4.1 to the Partnership’s Current Report on Form 8-K, filed October 5, 2016, and incorporated herein by reference).
31.1*	Certifications of Chief Executive Officer Pursuant to Section 302 of the Sarbanes-Oxley Act of 2002.
31.2*	Certifications of Chief Financial Officer Pursuant to Section 302 of the Sarbanes-Oxley Act of 2002.
32.1#	Certification of Chief Executive Officer and Chief Financial Officer pursuant to 18 U.S.C., Section 1350, as adopted pursuant to Section 906 of the Sarbanes-Oxley Act of 2002. Pursuant to SEC Release 34-47551, this Exhibit is furnished to the SEC and shall not be deemed to be “filed.”
101#	The following financial information from Blueknight Energy Partners, L.P.’s Quarterly Report on Form 10-Q for the quarter ended March 31, 2021, formatted in XBRL (eXtensible Business Reporting Language): (i) Document and Entity Information; (ii) Unaudited Condensed Consolidated Balance Sheets as of December 31, 2020 and March 31, 2021; (iii) Unaudited Condensed Consolidated Statements of Operations for the three months ended March 31, 2020 and 2021; (iv) Unaudited Condensed Consolidated Statement of Changes in Partners’ Capital (Deficit) for the three months ended March 31, 2020 and 2021; (v) Unaudited Condensed Consolidated Statements of Cash Flows for the three months ended March 31, 2020 and 2021; and (vi) Notes to Unaudited Condensed Consolidated Financial Statements.

____________________

*    Filed herewith.

#     Furnished herewith

22

SIGNATURES

Pursuant to the requirements of the Securities Exchange Act of 1934, the registrant has duly caused this report to be signed on its behalf by the undersigned thereunto duly authorized.

		BLUEKNIGHT ENERGY PARTNERS, L.P.
		By:	Blueknight Energy Partners, G.P., L.L.C.
			its General Partner
Date:	May 5, 2021	By:	/s/ Matthew R. Lewis
			Matthew R. Lewis
			Chief Financial Officer
Date:	May 5, 2021	By:	/s/ Michael G. McLanahan
			Michael G. McLanahan
			Chief Accounting Officer

23

EX-31.1

Exhibit 31.1

CERTIFICATION

PURSUANT TO AND IN CONNECTION WITH THE REPORTS

TO BE FILED UNDER SECTION 13 AND 15(d) OF THE

SECURITIES EXCHANGE ACT OF 1934, AS AMENDED

I, D. Andrew Woodward, certify that:

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:	May 5, 2021
/s/ D. Andrew Woodward
D. Andrew Woodward
Chief Executive Officer
Blueknight Energy Partners, G.P., L.L.C.,
general partner of Blueknight Energy Partners, L.P.

EX-31.2

Exhibit 31.2

CERTIFICATION

PURSUANT TO AND IN CONNECTION WITH THE REPORTS

TO BE FILED UNDER SECTION 13 AND 15(d) OF THE

SECURITIES EXCHANGE ACT OF 1934, AS AMENDED

I, Matthew R. Lewis, certify that:

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:	May 5, 2021
/s/ Matthew R. Lewis
Matthew R. Lewis
Chief Financial Officer
Blueknight Energy Partners, G.P., L.L.C.,
general partner of Blueknight Energy Partners, L.P.

EX-32.1

Exhibit 32.1

CERTIFICATION PURSUANT TO SECTION 906 OF THE

SARBANES-OXLEY ACT OF 2002 (18 U.S.C. SECTION 1350)*

In connection with the Quarterly Report of Blueknight Energy Partners, L.P., a Delaware limited partnership (the “Partnership”), on Form 10-Q for the quarter ended March 31, 2021, as filed with the Securities and Exchange Commission (the “Report”), each of the undersigned, D. Andrew Woodward, Chief Executive Officer of Blueknight Energy Partners G.P., L.L.C., and Matthew R. Lewis, Chief Financial Officer of Blueknight Energy Partners G.P., L.L.C., certifies, pursuant to Section 906 of the Sarbanes-Oxley Act of 2002 (18 U.S.C. Section 1350), that to his knowledge:

(1) the Report fully complies with the requirements of Section 13(a) or 15(d) of the Securities Exchange Act of 1934; and

(2) the information contained in the Report fairly presents, in all material respects, the financial condition and result of operations of the Partnership.

/s/ D. Andrew Woodward

D. Andrew Woodward

Chief Executive Officer of

Blueknight Energy Partners G.P., L.L.C.,

general partner of Blueknight Energy Partners, L.P.

May 5, 2021

/s/ Matthew R. Lewis

Matthew R. Lewis

Chief Financial Officer

Blueknight Energy Partners G.P., L.L.C.,

general partner of Blueknight Energy Partners, L.P.

May 5, 2021

* 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.

XML

Document And Entity Information - shares	3 Months Ended
	Mar. 31, 2021	Apr. 28, 2021
Document Information [Line Items]
Entity Registrant Name	Blueknight Energy Partners, L.P.
Entity Central Index Key	0001392091
Trading Symbol	bkep
Current Fiscal Year End Date	--12-31
Entity Filer Category	Non-accelerated Filer
Entity Current Reporting Status	Yes
Entity Emerging Growth Company	false
Entity Small Business	true
Entity Interactive Data Current	Yes
Entity Shell Company	false
Document Type	10-Q
Document Period End Date	Mar. 31, 2021
Document Fiscal Year Focus	2021
Document Fiscal Period Focus	Q1
Amendment Flag	false
Title of 12(b) Security	Common Units
Series A Preferred Unit [Member]
Document Information [Line Items]
Entity Common Stock, Shares Outstanding (in shares)		34,436,785
Common Unit [Member]
Document Information [Line Items]
Entity Common Stock, Shares Outstanding (in shares)		41,468,125

XML

Condensed Consolidated Balance Sheets (Current Period Unaudited) - USD ($) $ in Thousands	Mar. 31, 2021	Dec. 31, 2020
Current assets:
Cash and cash equivalents	$ 13	$ 805
Accounts receivable, net	6,897	3,297
Receivables from related parties, net	664	507
Other current assets	3,693	2,355
Current assets of discontinued operations	511	96,945
Total current assets	11,778	103,909
Property, plant and equipment, net of accumulated depreciation of $197,561 and $199,895 at December 31, 2020, and March 31, 2021, respectively	104,256	104,709
Goodwill	6,728	6,728
Debt issuance costs, net	998	1,340
Operating lease assets	8,020	8,548
Intangible assets, net	6,935	7,531
Other noncurrent assets	282	252
Total assets	138,997	233,017
Current liabilities:
Accounts payable	2,313	1,635
Accounts payable to related parties	14	31
Accrued interest payable	279	274
Accrued property taxes payable	1,505	1,757
Accrued payroll	2,377	4,977
Current operating lease liability	1,532	1,684
Other current liabilities	2,327	1,349
Current liabilities of discontinued operations	2,599	17,248
Total current liabilities	19,392	35,347
Other long-term liabilities	162	168
Noncurrent operating lease liability	6,735	6,980
Long-term debt	106,592	252,592
Commitments and contingencies (Note 11)
Partners’ capital(deficit):
Common unitholders (41,214,856 and 41,468,125 units issued and outstanding at December 31, 2020, and March 31, 2021, respectively)	384,755	312,591
Preferred unitholders (35,125,202 and 34,436,785 units issued and outstanding at December 31, 2020, and March 31, 2021, respectively)	248,946	253,923
General partner interest (1.6% interest with 1,225,409 general partner units outstanding at both dates)	(631,570)	(632,737)
Total partners’ capital(deficit)	2,131	(66,223)
Total liabilities and partners’ capital(deficit)	138,997	233,017
Third Party [Member]
Current liabilities:
Unearned revenue	1,852	1,789
Related Party [Member]
Current liabilities:
Unearned revenue	4,594	4,603
Long-term unearned revenue with related parties	$ 3,985	$ 4,153

XML

Condensed Consolidated Balance Sheets (Current Period Unaudited) (Parentheticals) - USD ($) $ in Thousands	Mar. 31, 2021	Dec. 31, 2020
Accumulated depreciation	$ 199,895	$ 197,561
Common units, issued (in shares)	41,468,125	41,214,856
Common units, outstanding (in shares)	41,468,125	41,214,856
Preferred units, issued (in shares)	34,436,785	35,125,202
Preferred units, outstanding (in shares)	34,436,785	35,125,202
General partner units, interest	1.60%	1.60%
General partner units, outstanding (in shares)	1,225,409	1,225,409

XML

Condensed Consolidated Statements of Operations (Unaudited) - USD ($) shares in Thousands, $ in Thousands	3 Months Ended
	Mar. 31, 2021	Mar. 31, 2020
Total revenue	$ 27,075	$ 25,660
Costs and expenses:
Operating expense	15,880	15,660
General and administrative expense	3,982	3,366
Total costs and expenses	19,862	19,026
Loss on disposal of assets		(74)
Operating income	7,213	6,560
Other income(expenses):
Other income	233	650
Interest expense	(1,333)	(1,686)
Income before income taxes	6,113	5,524
Provision for income taxes	10	5
Income from continuing operations	6,103	5,519
Income(loss) from discontinued operations, net	75,550	(5,519)
Net income	81,653
Allocation of net income(loss) for calculation of earnings per unit:
General partner interest in net income	1,292
Preferred interest in net income	6,341	6,279
Net income(loss) available to limited partners	$ 74,020	$ (6,279)
Basic and diluted net income(loss) from discontinued operations per common unit (in dollars per share)	$ 1.75	$ (0.13)
Basic and diluted net loss from continuing operations per common unit (in dollars per share)	(0.01)	(0.02)
Basic and diluted net income(loss) per common unit (in dollars per share)	$ 1.74	$ (0.15)
Weighted average common units outstanding - basic and diluted (in shares)	41,430	41,015
Third Party [Member]
Revenue	$ 6,919	$ 6,853
Revenue	8,303	9,831
Related Party [Member]
Revenue	4,849	4,055
Revenue	7,004	4,921
Service [Member] | Third Party [Member]
Revenue	6,919	6,853
Service [Member] | Related Party [Member]
Revenue	$ 4,849	$ 4,055

XML

Condensed Consolidated Statements of Changes in Partners' Capital (Deficit) (Unaudited) - USD ($) $ in Thousands	Total	Limited Partner [Member]	Preferred Partner [Member]	General Partner [Member]
Balance at Dec. 31, 2019	$ (21,323)	$ 356,777	$ 253,923	$ (632,023)
Net income (loss)		(6,279)	6,279
Equity-based incentive compensation	108	105		3
Distributions	(8,082)	(1,675)	(6,279)	(128)
Proceeds from sale of common units pursuant to the Employee Unit Purchase Plan	55	55
Balance at Mar. 31, 2020	(29,242)	348,983	253,923	(632,148)
Balance at Dec. 31, 2020	(66,223)	312,591	253,923	(632,737)
Net income (loss)	81,653	73,896	6,465	1,292
Equity-based incentive compensation	(77)	(80)		3
Distributions	(8,107)	(1,700)	(6,279)	(128)
Proceeds from sale of common units pursuant to the Employee Unit Purchase Plan	48	48
Repurchase of preferred units	(5,163)		(5,163)
Balance at Mar. 31, 2021	$ 2,131	$ 384,755	$ 248,946	$ (631,570)

XML

Condensed Consolidated Statements of Changes in Partners' Capital (Deficit) (Unaudited) (Parentheticals) - shares shares in Thousands	3 Months Ended
	Mar. 31, 2021	Mar. 31, 2020
Limited Partner [Member]
Common units issued pursuant to the Employee Unit Purchase Plan (in shares)	32,696	53,372

XML

Condensed Consolidated Statements of Cash Flows (Unaudited) - USD ($) $ in Thousands	3 Months Ended
	Mar. 31, 2021	Mar. 31, 2020
Cash flows from operating activities:
Net income	$ 81,653
Adjustments to reconcile net income to net cash provided by operating activities:
Depreciation and amortization	3,065	6,094
Amortization and write-off of debt issuance costs	391	251
Tangible asset impairment charge	156	5,122
(Gain)loss on sale of assets	(75,069)	185
Equity-based incentive compensation	(77)	108
Changes in assets and liabilities:
Decrease in accounts receivable	10,022	4,201
Decrease(increase) in receivables from related parties	(157)	168
Decrease in other current assets	1,630	1,345
Decrease in other non-current assets	379	566
Increase in accounts payable	412	104
Decrease in payables to related parties	(17)	(17)
Increase in accrued interest payable	5	8
Decrease in accrued property taxes	(743)	(381)
Increase(decrease) in unearned revenue	(373)	1,205
Decrease in accrued payroll	(3,822)	(2,329)
Increase(decrease) in other accrued liabilities	860	(542)
Net cash provided by operating activities	5,378	7,874
Cash flows from investing activities:
Acquisition of DEVCO from Ergon (Note 8)		(12,221)
Capital expenditures	(2,044)	(2,900)
Net proceeds from sale of assets	155,316	25
Net cash provided by(used in) investing activities	153,272	(15,096)
Cash flows from financing activities:
Payments on other financing activities	(171)	(638)
Debt issuance costs	(49)
Borrowings under credit agreement	48,000	78,000
Payments under credit agreement	(194,000)	(62,000)
Proceeds from equity issuance	48	55
Repurchase of preferred units	(5,163)
Distributions	(8,107)	(8,082)
Net cash provided by(used in) financing activities	(159,442)	7,335
Net increase(decrease) in cash and cash equivalents	(792)	113
Cash and cash equivalents at beginning of period	805	558
Cash and cash equivalents at end of period	13	671
Supplemental disclosure of non-cash financing and investing cash flow information:
Non-cash changes in property, plant and equipment	(74)	1,241
Increase in accrued liabilities related to insurance premium financing agreement	1,208	1,517
Third Party [Member]
Changes in assets and liabilities:
Increase (decrease) in accrued crude oil purchases	(3,868)	(3,466)
Related Party [Member]
Changes in assets and liabilities:
Increase (decrease) in accrued crude oil purchases	(8,842)	(4,463)
Increase(decrease) in unearned revenue	$ (227)	$ (285)

XML

Note 1 - Organization and Nature of Business

3 Months Ended

Mar. 31, 2021

Notes to Financial Statements

Business Description and Basis of Presentation [Text Block]

1. ORGANIZATION AND NATURE OF BUSINESS

Blueknight Energy Partners, L.P. and subsidiaries (collectively, the “Partnership”) is a publicly traded master limited partnership with operations in

26

 states. The Partnership provides integrated terminalling services for companies engaged in the production, distribution, and marketing of liquid asphalt. The Partnership manages its operations through

one

operating segment, asphalt terminalling services. The Partnership's common units and preferred units, which represent limited partnership interests in the Partnership, are listed on the Nasdaq Global Market under the symbols “BKEP” and “BKEPP,” respectively. The Partnership was formed in

February 2007

as a Delaware master limited partnership.

The Partnership previously provided integrated terminalling, gathering, and transportation services for companies engaged in the production, distribution, and marketing of crude oil in

three

different operating segments: (i) crude oil terminalling services, (ii) crude oil pipeline services, and (iii) crude oil trucking services. On

December 21, 2020,

the Partnership announced it had entered into multiple definitive agreements to sell these segments. These transactions closed in

February

and

March

of

2021.

These segments are presented as discontinued operations for all periods presented. Unless otherwise noted, information in these notes to the consolidated financial statements relates to continuing operations. As the Partnership is only operating through

one

operating segment, a segment footnote is

no

longer required.

XML

Note 2 - Basis of Presentation

3 Months Ended

Mar. 31, 2021

Notes to Financial Statements

Basis of Accounting [Text Block]

2. BASIS OF PRESENTATION

The consolidated financial statements have been prepared in accordance with accounting principles generally accepted in the United States of America (“GAAP”). The condensed consolidated balance sheet as of

March 31, 2021

, the condensed consolidated statements of operations for the

three

months ended

March 31, 2020

and

2021

, the condensed consolidated statements of changes in partners' capital (deficit) for the

three

months ended

March 31, 2020

and

2021

, and the condensed consolidated statements of cash flows for the

three

months ended

March 31, 2020

and

2021

, are unaudited. In the opinion of management, the unaudited condensed consolidated financial statements have been prepared on the same basis as the audited financial statements and include all adjustments necessary to state fairly the financial position and results of operations for the respective interim periods. All adjustments are of a recurring nature unless otherwise disclosed herein. The

2020

year-end condensed consolidated balance sheet data was derived from audited financial statements but does

not

include all disclosures required by GAAP. These unaudited condensed consolidated financial statements and notes should be read in conjunction with the consolidated financial statements and notes thereto included in the Partnership's annual report on Form

10

-K for the year ended

December 31, 2020

, filed with the Securities and Exchange Commission (the “SEC”) on

March 10, 2021 (

the “

2020

Form

10

-K”).  Interim financial results are

not

necessarily indicative of the results to be expected for an annual period. The Partnership's significant accounting policies are consistent with those disclosed in Note

3

of the Notes to Consolidated Financial Statements in its

2020

Form

10

-K.

XML

Note 3 - Revenue

3 Months Ended

Mar. 31, 2021

Notes to Financial Statements

Revenue [Text Block]

3. REVENUE

The Partnership recognizes revenue from contracts with customers as well as lease revenue.  The following table includes revenue associated with contractual commitments in place related to future performance obligations as of the end of the reporting period, which are expected to be recognized in revenue in the specified periods (in thousands):

	Revenue from Contracts with Customers(1)		Revenue from Leases
Remainder of 2021	$	29,431	$	43,923
2022		31,808		49,739
2023		28,131		42,546
2024		28,174		42,593
2025		26,857		37,595
Thereafter		37,078		43,000
Total revenue related to future performance obligations	$	181,479	$	259,396

___________________

( 1 ) Excluded from the table is revenue that is either constrained or related to performance obligations that are wholly unsatisfied as of March 31, 2021 .

Disaggregation of Revenue

Disaggregation of revenue from contracts with customers and lease revenue by revenue type is presented as follows (in thousands):

	Three Months Ended March 31, 2020
	Revenue from contracts with customers				Lease revenue
	Third-party revenue		Related-party revenue		Third-party revenue		Related-party revenue
Fixed storage and throughput revenue	$	5,245	$	3,084	$	-	$	-
Fixed lease revenue		-		-		9,227		4,800
Variable cost recovery revenue		1,607		971		604		121
Variable throughput and other revenue		1		-		-		-
Total	$	6,853	$	4,055	$	9,831	$	4,921

	Three Months Ended March 31, 2021
	Revenue from contracts with customers				Lease revenue
		Third-party revenue		Related-party revenue		Third-party revenue		Related-party revenue
Fixed storage and throughput revenue	$	5,064	$	4,721	$	-	$	-
Fixed lease revenue		-		-		7,801		6,785
Variable cost recovery revenue		1,735		128		502		219
Variable throughput and other revenue		120		-		-		-
Total	$	6,919	$	4,849	$	8,303	$	7,004

Contract Balances

Billed accounts receivable from contracts with customers were

$2.1

 million and

$3.7

 million at

December 31, 2020

, and

March 31, 2021

, respectively.

The Partnership records unearned revenues when cash payments are received in advance of performance. Unearned revenue related to contracts with customers was

$3.2

 million at both 

December 31, 2020

, and

March 31, 2021

. For the

three

months ended

March 31, 2021

, the Partnership recognized 

$2.2

 million of revenues that were previously included in the unearned revenue balance.

Practical Expedients and Exemptions

The Partnership does

not

disclose the value of unsatisfied performance obligations for contracts with an original expected length of

one

year or less.

XML

Note 4 - Discontinued Operations

3 Months Ended

Mar. 31, 2021

Notes to Financial Statements

Disposal Groups, Including Discontinued Operations, Disclosure [Text Block]

4. DISCONTINUED OPERATIONS

On

December 21, 2020,

the Partnership announced executed agreements to sell its crude oil trucking services, crude oil pipeline services, and crude oil terminalling services segments. These segments are reported as discontinued operations in the results of operations and financial position for all periods presented. The crude oil trucking services agreement closed in

two

phases,

one

on

December 15, 2020,

and

one

on

February 2, 2021. 

The crude oil pipeline services agreement closed on

February 1, 2021. 

Loss recognized on the disposal and classification of held for sale of these assets was recorded in the year ended 

December 31, 2020.

The transaction related to the crude oil terminalling services segment closed on

March 1, 2021.

The Partnership has allocated interest to discontinued operations on debt that was required to be repaid as a result of the sales of the crude oil pipeline and terminalling services segment for the

three

months ended

March 

31,

2020

 and

2021.

As part of the crude oil pipeline sale,

$1.5

million of the gross sale proceeds are currently being held in escrow, subject to post-closing settlement terms and conditions. The Partnership expects to receive the majority of this in increments over the next

two

years.

Exit and disposal costs related to these sales, in the form of employee severance payments, are expected to total approximately

$1.6

million. The Partnership is providing limited transition services to both of the buyers of the crude oil pipeline and terminalling services segments. These services are expected to last approximately

six

months beyond the final closing date. The contracts were designed to recover the costs of providing services, so a minimal income statement impact is expected for these services.

During the

three

months ended

March 

31,

2020,

 an impairment of

$4.9

million was recognized to write-down the value of the Partnership's crude oil linefill based on the market price of crude oil as of

March 31, 2020.

Assets and Liabilities of Discontinued Operations (in thousands)	As of December 31, 2020
	Crude Oil Trucking Services		Crude Oil Pipeline Services		Crude Oil Terminalling Services		Total
ASSETS
Accounts receivable, net	$	81	$	13,711	$	167	$	13,959
Plant, property, and equipment		442		23,541		52,854		76,837
Other assets		331		547		5,271		6,149
Total assets of discontinued operations	$	854	$	37,799	$	58,292	$	96,945
LIABILITIES
Current liabilities	$	1,017	$	14,921	$	1,310	$	17,248
Total liabilities of discontinued operations	$	1,017	$	14,921	$	1,310	$	17,248

Assets and Liabilities of Discontinued Operations (in thousands)	As of March 31, 2021
	Crude Oil Trucking Services		Crude Oil Pipeline Services		Crude Oil Terminalling Services		Total
ASSETS
Accounts receivable, net	$	-	$	287	$	48	$	335
Other assets		40		-		136		176
Total assets of discontinued operations	$	40	$	287	$	184	$	511
LIABILITIES
Current liabilities	$	32	$	936	$	1,631	$	2,599
Total liabilities of discontinued operations	$	32	$	936	$	1,631	$	2,599

Statement of Operations for Discontinued Operations (in thousands)		Three Months Ended March 31, 2020
	Crude Oil Trucking Services			Crude Oil Pipeline Services			Crude Oil Terminalling Services			Total
Revenue:
Third-party service revenue	$	2,543		$	502		$	3,330		$	6,375
Intercompany service revenue		1,425			-			-			1,425
Third-party product sales revenue		-			47,052			-			47,052
Costs and expenses:
Operating expense		4,025			3,302			2,023			9,350
Intercompany operating expense		-			1,425			-			1,425
Cost of product sales		-			14,221			-			14,221
Cost of product sales from related party		-			28,254			-			28,254
General and administrative expense		69			105			-			174
Tangible asset impairment expense		35			2,820			2,266			5,121
(Gain)loss on disposal of assets		(10	)		121			-			111
Interest expense		3			325			1,384			1,712
Loss before income taxes		(154	)		(3,019	)		(2,343	)		(5,516	)
Provision for income taxes		3			-			-			3
Net loss from discontinued operations	$	(157	)	$	(3,019	)	$	(2,343	)	$	(5,519	)

Statement of Operations for Discontinued Operations (in thousands)	Three Months Ended March 31, 2021
	Crude Oil Trucking Services			Crude Oil Pipeline Services			Crude Oil Terminalling Services			Total
Revenue:
Third-party service revenue	$	9		$	413		$	3,643		$	4,065
Intercompany service revenue		409			-			-			409
Third-party product sales revenue		-			15,591			-			15,591
Costs and expenses:
Operating expense		1,333			1,438			910			3,681
Intercompany operating expense		-			409			-			409
Cost of product sales		-			4,994			-			4,994
Cost of product sales from related party		-			9,461			-			9,461
General and administrative expense		59			118			-			177
Tangible asset impairment expense		92			41			23			156
Gain on disposal of assets		(3	)		(1,694	)		(73,372	)		(75,069	)
Interest expense		-			72			634			706
Income (loss) before income taxes		(1,063	)		1,165			75,448			75,550
Provision for income taxes		-			-			-			-
Net income (loss) from discontinued operations	$	(1,063	)	$	1,165		$	75,448		$	75,550

Select cash flow information (in thousands)
	Crude Oil Trucking Services		Crude Oil Pipeline Services		Crude Oil Terminalling Services		Total
	Three Months Ended March 31, 2020
Depreciation and amortization	$	200	$	1,170	$	1,139	$	2,509
Capital expenditures	$	180	$	882	$	89	$	1,152
	Three Months Ended March 31, 2021
Amortization	$	3	$	14	$	15	$	32
Capital expenditures	$	-	$	10	$	109	$	119

XML

Note 5 - Debt

3 Months Ended

Mar. 31, 2021

Notes to Financial Statements

Debt Disclosure [Text Block]

5. DEBT

On

May 11, 2017,

the Partnership entered into an amended and restated credit agreement. On

June 28, 2018,

the credit agreement was amended to, among other things, reduce the revolving loan facility from

$450.0

 million to

$400.0

 million and amend the maximum permitted consolidated total leverage ratio as discussed below.  On

January 8, 2021,

the credit facility was amended a

second

time to, among other things, reduce the revolving loan facility from

$400.0

million to

$350.0

million upon the sale of the crude oil terminalling segment, which became effective on

March 1, 2021 (

the “

January 2021

Amendment”).

As of 

April 28, 2021

, approximately

$106.6

 million of revolver borrowings and

$0.7

 million of letters of credit were outstanding under the credit agreement, leaving the Partnership with approximately

$242.7

 million available capacity for additional revolver borrowings and letters of credit under the credit agreement, although the Partnership's ability to borrow such funds is limited by the financial covenants in the credit agreement.  The proceeds of loans made under the credit agreement

may

be used for working capital and other general corporate purposes of the Partnership.

The credit agreement is guaranteed by all of the Partnership's existing subsidiaries. Obligations under the credit agreement are secured by

first

priority liens on substantially all of the Partnership's assets and those of the guarantors.

The credit agreement includes procedures for additional financial institutions to become revolving lenders, or for any existing lender to increase its revolving commitment thereunder, subject to an aggregate maximum of

$600.0

 million for all revolving loan commitments under the credit agreement.

The credit agreement will mature on

May 

11,

2022,

and all amounts outstanding under the credit agreement will become due and payable on such date. The credit agreement requires mandatory prepayments of amounts outstanding thereunder with the net proceeds of certain asset sales, property or casualty insurance claims and condemnation proceedings, unless the Partnership reinvests such proceeds in accordance with the credit agreement, but these mandatory prepayments will

not

require any reduction of the lenders' commitments under the credit agreement.

Borrowings under the credit agreement bear interest, at the Partnership's option, at either the reserve-adjusted eurodollar rate (as defined in the credit agreement) (“Eurodollar Rate”) plus an applicable margin that ranges from

2.0%

to

3.25%

or the alternate base rate (the highest of the agent bank's prime rate, the federal funds effective rate plus

0.5%,

and the

30

-day Eurodollar Rate plus

1.0%

) plus an applicable margin that ranges from

1.0%

to

2.25%.

  The Partnership pays a per annum fee on all letters of credit issued under the credit agreement, which fee equals the applicable margin for loans accruing interest based on the Eurodollar Rate, and the Partnership pays a commitment fee ranging from

0.375%

to

0.5%

on the unused commitments under the credit agreement.  The applicable margins for the Partnership's interest rate, the letter of credit fee and the commitment fee vary quarterly based on the Partnership's consolidated total leverage ratio (as defined in the credit agreement, being generally computed as the ratio of consolidated total debt to consolidated earnings before interest, taxes, depreciation, amortization, and certain other non-cash charges).

The credit agreement includes financial covenants that are tested on a quarterly basis, based on the rolling

four

-quarter period that ends on the last day of each fiscal quarter.

Prior to the date on which the Partnership issues qualified senior notes in an aggregate principal amount (when combined with all other qualified senior notes previously or concurrently issued) that equals or exceeds

$200.0

 million, the maximum permitted consolidated total leverage ratio will be

4.75

 to

1.00;

provided that the maximum permitted consolidated total leverage ratio

may

be increased to

5.25

 to

1.00

for certain quarters, 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).

From and after the date on which the Partnership issues qualified senior notes in an aggregate principal amount (when combined with all other qualified senior notes previously or concurrently issued) that equals or exceeds

$200.0

 million, the maximum permitted consolidated total leverage ratio is

5.00

 to

1.00;

provided that from and after the fiscal quarter ending immediately preceding the fiscal quarter in which a specified acquisition occurs to and including the last day of the

second

full fiscal quarter following the fiscal quarter in which such acquisition occurred, the maximum permitted consolidated total leverage ratio will be

5.50

 to

1.00.

The maximum permitted consolidated senior secured leverage ratio (as defined in the credit agreement, but generally computed as the ratio of consolidated total secured debt to consolidated earnings before interest, taxes, depreciation, amortization and certain other non-cash charges) is 

3.50

 to

1.00,

but this covenant is only tested from and after the date on which the Partnership issues qualified senior notes in an aggregate principal amount (when combined with all other qualified senior notes previously or concurrently issued) that equals or exceeds

$200.0

 million.

The minimum permitted consolidated interest coverage ratio (as defined in the credit agreement, but generally computed as the ratio of consolidated earnings before interest, taxes, depreciation, amortization and certain other non-cash charges to consolidated interest expense) is

2.50

 to

1.00.

In addition, the credit agreement contains various covenants that, among other restrictions, limit the Partnership's ability to:

• 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 Fourth Amended and Restated Agreement of Limited Partnership of the Partnership (the “Partnership's partnership agreement”).

At 

March 31, 2021

, the Partnership's consolidated total leverage ratio was 

2.12

 to

1.00

and the consolidated interest coverage ratio was

11.68

 to

1.00.

  The Partnership was in compliance with all covenants of its credit agreement as of 

March 31, 2021

. B ased on current operating plans and forecasts, the Partnership expects to remain in compliance with all covenants of the credit agreement for at least the next year.

The credit agreement permits the Partnership to make quarterly distributions of available cash (as defined in the Partnership's partnership agreement) to unitholders so long as

no

default or event of default exists under the credit agreement on a pro forma basis after giving effect to such distribution. The Partnership is currently allowed to make distributions to its unitholders in accordance with this covenant; however, the Partnership will only make distributions to the extent it has sufficient cash from operations after establishment of cash reserves as determined by the Board of Directors (the “Board”) of Blueknight Energy Partners G.P., L.L.C. (the “general partner”) in accordance with the Partnership's cash distribution policy, including the establishment of any reserves for the proper conduct of the Partnership's business.  See Note

7

 for additional information regarding distributions.

In addition to other customary events of default, the credit agreement includes an event of default if:

(i) the general partner ceases to own 100% of the Partnership's general partner interest or ceases to control the Partnership;

(ii) 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.

If an event of default relating to bankruptcy or other insolvency events occurs with respect to the general partner or the Partnership, all indebtedness under the credit agreement will immediately become due and payable.  If any other event of default exists under the credit agreement, the lenders

may

accelerate the maturity of the obligations outstanding under the credit agreement and exercise other rights and remedies.  In addition, if any event of default exists under the credit agreement, the lenders

may

commence foreclosure or other actions against the collateral.

If any default occurs under the credit agreement, or if the Partnership is unable to make any of the representations and warranties in the credit agreement, the Partnership will be unable to borrow funds or to have letters of credit issued under the credit agreement. 

Upon the

March 1, 2021

effective date of the

January 2021

Amendment, the Partnership expensed 

$0.1

 million of debt issuance costs due to the reduction in available borrowing capacity. Debt issuance costs are being amortized over the term of the credit agreement. Interest expense related to debt issuance cost amortization for both the

three

months ended 

three

months ended

March 31, 2020

and

2021

, was 

$0.3

million and 

$0.2

million, respectively.

During the

three

months ended

March 31, 2020

and

2021

, the weighted average interest rate under the Partnership's credit agreement was 

4.90%

and

3.83%

, respectively, resulting in interest expense of approximately 

$1.7

million and 

$1.2

million, respectively, excluding the

$0.1

 million of debt issuance costs that were expensed as described above. 

XML

Note 6 - Net Income Per Limited Partner Unit

3 Months Ended

Mar. 31, 2021

Notes to Financial Statements

Earnings Per Share [Text Block]

6. NET INCOME PER LIMITED PARTNER UNIT

For purposes of calculating earnings per unit, preferred units, general partner units, and common units are

first

allocated net income to the extent they receive a distribution. Next, the excess of distributions over earnings or excess of earnings over distributions for each period are allocated to the Partnership's general partner based on the general partner's ownership interest at the time. For the

three

months ended

March 31, 2021,

the preferred units were also allocated income for the excess consideration paid over carrying value for the repurchase of

688,417

preferred units. The remainder is allocated to common units. The following sets forth the computation of basic and diluted net income per common unit (in thousands, except per unit data): 

	Three Months Ended March 31,
	2020			2021
Net income	$	-		$	81,653
General partner interest in net income		-			1,292
Preferred interest in net income		6,279			6,341
Net income(loss) available to limited partners	$	(6,279	)	$	74,020
Basic weighted average number of units:
Common units		41,015			41,430
Restricted and phantom units		983			1,166
Total units		41,998			42,596
Basic and diluted net income(loss) from discontinued operations per common unit	$	(0.13	)	$	1.75
Basic and diluted net loss from continuing operations per common unit	$	(0.02	)	$	(0.01	)
Basic and diluted net income(loss) per common unit	$	(0.15	)	$	1.74

XML

Note 7 - Partners' Capital and Distributions

3 Months Ended

Mar. 31, 2021

Notes to Financial Statements

Partners' Capital Notes Disclosure [Text Block]

7. PARTNERS' CAPITAL AND DISTRIBUTIONS

On

March 12, 2021,

the Partnership repurchased

688,417

outstanding preferred units at 

$7.50

per unit or total cash consideration of

$5.2

million. The consideration paid was based on the fair market value of the units at the time of purchase. The carrying value of the units was

$7.23

per unit, or total carrying value of

$5.0

million. The preferred units were allocated additional net income for the

$0.2

million of consideration paid in excess of carrying value. The units were retired on

March 24, 2021.

On

April 21, 2021

, the Board approved a cash distribution of

$0.17875

 per outstanding preferred unit for the

three

months ended

March 31, 2021

. The Partnership will pay this distribution on

May 14, 2021

, to unitholders of record as of

May 7, 2021

. The total distribution will be approximately

$6.3

 million, with approximately

$6.2

 million and

$0.1

 million paid to the Partnership's preferred unitholders and general partner, respectively.

In addition, the Board approved a cash distribution of

$0.04

 per outstanding common unit for the

three

months ended

March 31, 2021

. The Partnership will pay this distribution on

May 14, 2021

, to unitholders of record on

May 7, 2021

. The total distribution will be approximately

$1.7

 million, with approximately

$1.7

 million and less than

$0.1

 million to be paid to the Partnership's common unitholders and general partner, respectively, and approximately 

$0.1

 million to be paid to holders of phantom and restricted units pursuant to awards granted under the Partnership's Long-Term Incentive Plan.

XML

Note 8- Related-party Transactions

3 Months Ended

Mar. 31, 2021

Notes to Financial Statements

Related Party Transactions Disclosure [Text Block]

8. RELATED-PARTY TRANSACTIONS

The Partnership leases asphalt facilities and provides asphalt terminalling services to Ergon. For the

three

months ended

March 31, 2020

and

2021

, the Partnership recognized related-party revenues of 

$9.0

million and 

$11.9

million, respectively, for services provided to Ergon. As of

December 31, 2020

, and

March 31, 2021

, the Partnership had receivables from Ergon of 

$0.5

million and 

$0.7

million, respectively. As of

December 31, 2020

, and

March 31, 2021

, the Partnership had unearned revenues from Ergon of 

$8.8

million and 

$8.6

million, respectively.

As of

December 31, 2019,

the Partnership had a contingent liability to Ergon of

$12.2

million related to the Cimarron Express project, a previously disclosed joint venture between Kingfisher Midstream and Ergon's development company (“DEVCO”) that was cancelled in

December 2018. 

The contingent liability reflected Ergon's investment in the joint venture and accrued interest, for which the Partnership, in accordance with the membership interest purchase agreement with Ergon, was meant to bear the risk of loss related to DEVCO's portion of the project. The Partnership paid this liability in full on

January 3, 2020,

and it is reflected as an acquisition of the DEVCO on the consolidated statement of cash flows for the

three

months ended

March 31, 2020.

XML

Note 9 - Long-term Incentive Plan

3 Months Ended

Mar. 31, 2021

Notes to Financial Statements

Share-based Payment Arrangement [Text Block]

9. LONG-TERM INCENTIVE PLAN

In

July 2007,

the general partner adopted the Long-Term Incentive Plan (the “LTIP”), which is administered by the compensation committee of the Board. The Partnership's unitholders have approved

8.1

million common units to be reserved for issuance under the incentive plan, subject to adjustments for certain events. Although other types of awards are contemplated under the LTIP, currently outstanding awards include “phantom” units, which convey the right to receive common units upon vesting, and “restricted” units, which are grants of common units restricted until the time of vesting. The phantom unit awards also include distribution equivalent rights (“DERs”).

Subject to applicable earning criteria, a DER entitles the grantee to a cash payment equal to the cash distribution paid on an outstanding common unit prior to the vesting date of the underlying award. Recipients of restricted and phantom units are entitled to receive cash distributions paid on common units during the vesting period which are reflected initially as a reduction of partners' capital. Distributions paid on units which ultimately do

not

vest are reclassified as compensation expense. Awards granted to date are equity awards and, accordingly, the fair value of the awards as of the grant date is expensed over the vesting period.

Restricted common units are granted to the independent directors on each anniversary of joining the Board. The units vest in

one

-

third

increments over

three

years. The following table includes information on outstanding grants made to the directors under the LTIP:

Grant Date	Number of Units		Weighted Average Grant Date Fair Value(1)		Grant Date Total Fair Value (in thousands)
December 2018		23,436	$	1.20	$	28
December 2019		7,500	$	1.07	$	8
December 2020		7,500	$	2.06	$	15

( 1 ) Fair value is the closing market price on the grant date of the awards.

The Partnership also grants phantom units to employees. These grants are equity awards under

ASC

718

– Stock Compensation

and, accordingly, the fair value of the awards as of the grant date is expensed over the

three

-year vesting period. The following table includes information on the outstanding grants:

Grant Date	Number of Units		Weighted Average Grant Date Fair Value(1)		Grant Date Total Fair Value (in thousands)
March 2019		524,997	$	1.14	$	598
June 2019		46,168	$	1.08	$	50
March 2020		600,396	$	0.90	$	540
October 2020		16,339	$	1.53	$	25
March 2021		530,435	$	2.71	$	1,437

( 1 ) Fair value is the closing market price on the grant date of the awards.

The unrecognized estimated compensation cost of outstanding phantom and restricted units at

March 31, 2021

, was

$1.7

 million, which will be expensed over the remaining vesting period.

The Partnership's equity-based incentive compensation expense for the

three

months ended

March 31, 2020

and

2021

, was

$0.2

 million and

$0.1

 million, respectively. 

Activity pertaining to phantom and restricted common unit awards granted under the LTIP is as follows:

	Number of Units		Weighted Average Grant Date Fair Value
Nonvested at December 31, 2020		1,350,366	$	1.81
Granted		530,435		2.71
Vested		329,996		4.20
Forfeited		-		-
Nonvested at March 31, 2021		1,550,805	$	1.61

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Note 10 - Fair Value Measurements

3 Months Ended

Mar. 31, 2021

Notes to Financial Statements

Fair Value Disclosures [Text Block]

10. FAIR VALUE MEASUREMENTS

The Partnership uses valuation techniques, such as the market approach (comparable market prices), the income approach (present value of future income or cash flow), and the cost approach (cost to replace the service capacity of an asset or replacement cost) to value assets and liabilities required to be measured at fair value, as appropriate. The Partnership uses an exit price when determining the fair value. The exit price represents amounts that would be received to sell an asset or paid to transfer a liability in an orderly transaction between market participants.

The Partnership utilizes a

three

-tier fair value hierarchy that prioritizes the inputs to valuation techniques used to measure fair value into

three

broad levels. The following is a brief description of those

three

levels:

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.

This hierarchy requires the use of observable market data, when available, to minimize the use of unobservable inputs when determining fair value.

As of

December 31, 2020,

and 

March 31, 2021

, the Partnership had

no

recurring financial assets or liabilities subject to fair value measurement.

Fair Value of Other Financial Instruments

The following disclosure of the estimated fair value of financial instruments is made in accordance with accounting guidance for financial instruments. The Partnership has determined the estimated fair values by using available market information and valuation methodologies. Considerable judgment is required in interpreting market data to develop the estimates of fair value. The use of different market assumptions or valuation methodologies

may

have a material effect on the estimated fair value amounts.

At

March 31, 2021

, the carrying values on the unaudited condensed consolidated balance sheets for cash and cash equivalents (classified as Level

1

), accounts receivable, and accounts payable approximate their fair value because of their short-term nature.

Based on the borrowing rates currently available to the Partnership for credit agreement debt with similar terms and maturities and consideration of the Partnership's non-performance risk, long-term debt associated with the Partnership's credit agreement at

March 31, 2021

, approximates its fair value. The fair value of the Partnership's long-term debt was calculated using observable inputs (Eurodollar Rate for the risk-free component) and unobservable company-specific credit spread information. As such, the Partnership considers this debt to be Level

3.

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Note 11 - Commitments and Contingencies

3 Months Ended

Mar. 31, 2021

Notes to Financial Statements

Commitments and Contingencies Disclosure [Text Block]

11. COMMITMENTS AND CONTINGENCIES

The Partnership is from time to time subject to various legal actions and claims incidental to its business. Management believes that these legal proceedings will

not

have a material adverse effect on the financial position, results of operations or cash flows of the Partnership. Once management determines that information pertaining to a legal proceeding indicates that it is probable that a liability has been incurred and the amount of such liability can be reasonably estimated, an accrual is established equal to its estimate of the likely exposure.

The Partnership has contractual obligations to perform dismantlement and removal activities in the event that some of its asphalt product and residual fuel oil terminalling and storage assets are abandoned. These obligations include varying levels of activity including completely removing the assets and returning the land to its original state. The Partnership has determined that the settlement dates related to the retirement obligations are indeterminate. The assets with indeterminate settlement dates have been in existence for many years and with regular maintenance will continue to be in service for many years to come. Also, it is

not

possible to predict when demands for the Partnership's terminalling and storage services will cease, and the Partnership does

not

believe that such demand will cease for the foreseeable future.  Accordingly, the Partnership believes the date when these assets will be abandoned is indeterminate. With

no

reasonably determinable abandonment date, the Partnership cannot reasonably estimate the fair value of the associated asset retirement obligations.  Management believes that if the Partnership's asset retirement obligations were settled in the foreseeable future the present value of potential cash flows that would be required to settle the obligations based on current costs are

not

material.  The Partnership will record asset retirement obligations for these assets in the period in which sufficient information becomes available for it to reasonably determine the settlement dates.

XML

Note 12 - Recently Issued Accounting Standards

3 Months Ended

Mar. 31, 2021

Notes to Financial Statements

Accounting Standards Update and Change in Accounting Principle [Text Block]

12. RECENTLY ISSUED ACCOUNTING STANDARDS

Except as discussed in the

2020

Form

10

-K, there have been

no

new accounting pronouncements that have become effective or have been issued during the

three

months ended

March 31, 2021

, that are of significance or potential significance to the Partnership.

XML

Note 3 - Revenue (Tables)

3 Months Ended

Mar. 31, 2021

Notes Tables

Revenue, Remaining Performance Obligation, Expected Timing of Satisfaction [Table Text Block]

	Revenue from Contracts with Customers(1)		Revenue from Leases
Remainder of 2021	$	29,431	$	43,923
2022		31,808		49,739
2023		28,131		42,546
2024		28,174		42,593
2025		26,857		37,595
Thereafter		37,078		43,000
Total revenue related to future performance obligations	$	181,479	$	259,396

Disaggregation of Revenue [Table Text Block]

	Three Months Ended March 31, 2020
	Revenue from contracts with customers				Lease revenue
	Third-party revenue		Related-party revenue		Third-party revenue		Related-party revenue
Fixed storage and throughput revenue	$	5,245	$	3,084	$	-	$	-
Fixed lease revenue		-		-		9,227		4,800
Variable cost recovery revenue		1,607		971		604		121
Variable throughput and other revenue		1		-		-		-
Total	$	6,853	$	4,055	$	9,831	$	4,921

	Three Months Ended March 31, 2021
	Revenue from contracts with customers				Lease revenue
		Third-party revenue		Related-party revenue		Third-party revenue		Related-party revenue
Fixed storage and throughput revenue	$	5,064	$	4,721	$	-	$	-
Fixed lease revenue		-		-		7,801		6,785
Variable cost recovery revenue		1,735		128		502		219
Variable throughput and other revenue		120		-		-		-
Total	$	6,919	$	4,849	$	8,303	$	7,004

XML

Note 4 - Discontinued Operations (Tables)

3 Months Ended

Mar. 31, 2021

Notes Tables

Disposal Groups, Including Discontinued Operations [Table Text Block]

Assets and Liabilities of Discontinued Operations (in thousands)	As of December 31, 2020
	Crude Oil Trucking Services		Crude Oil Pipeline Services		Crude Oil Terminalling Services		Total
ASSETS
Accounts receivable, net	$	81	$	13,711	$	167	$	13,959
Plant, property, and equipment		442		23,541		52,854		76,837
Other assets		331		547		5,271		6,149
Total assets of discontinued operations	$	854	$	37,799	$	58,292	$	96,945
LIABILITIES
Current liabilities	$	1,017	$	14,921	$	1,310	$	17,248
Total liabilities of discontinued operations	$	1,017	$	14,921	$	1,310	$	17,248

Assets and Liabilities of Discontinued Operations (in thousands)	As of March 31, 2021
	Crude Oil Trucking Services		Crude Oil Pipeline Services		Crude Oil Terminalling Services		Total
ASSETS
Accounts receivable, net	$	-	$	287	$	48	$	335
Other assets		40		-		136		176
Total assets of discontinued operations	$	40	$	287	$	184	$	511
LIABILITIES
Current liabilities	$	32	$	936	$	1,631	$	2,599
Total liabilities of discontinued operations	$	32	$	936	$	1,631	$	2,599

Statement of Operations for Discontinued Operations (in thousands)		Three Months Ended March 31, 2020
	Crude Oil Trucking Services			Crude Oil Pipeline Services			Crude Oil Terminalling Services			Total
Revenue:
Third-party service revenue	$	2,543		$	502		$	3,330		$	6,375
Intercompany service revenue		1,425			-			-			1,425
Third-party product sales revenue		-			47,052			-			47,052
Costs and expenses:
Operating expense		4,025			3,302			2,023			9,350
Intercompany operating expense		-			1,425			-			1,425
Cost of product sales		-			14,221			-			14,221
Cost of product sales from related party		-			28,254			-			28,254
General and administrative expense		69			105			-			174
Tangible asset impairment expense		35			2,820			2,266			5,121
(Gain)loss on disposal of assets		(10	)		121			-			111
Interest expense		3			325			1,384			1,712
Loss before income taxes		(154	)		(3,019	)		(2,343	)		(5,516	)
Provision for income taxes		3			-			-			3
Net loss from discontinued operations	$	(157	)	$	(3,019	)	$	(2,343	)	$	(5,519	)

Statement of Operations for Discontinued Operations (in thousands)	Three Months Ended March 31, 2021
	Crude Oil Trucking Services			Crude Oil Pipeline Services			Crude Oil Terminalling Services			Total
Revenue:
Third-party service revenue	$	9		$	413		$	3,643		$	4,065
Intercompany service revenue		409			-			-			409
Third-party product sales revenue		-			15,591			-			15,591
Costs and expenses:
Operating expense		1,333			1,438			910			3,681
Intercompany operating expense		-			409			-			409
Cost of product sales		-			4,994			-			4,994
Cost of product sales from related party		-			9,461			-			9,461
General and administrative expense		59			118			-			177
Tangible asset impairment expense		92			41			23			156
Gain on disposal of assets		(3	)		(1,694	)		(73,372	)		(75,069	)
Interest expense		-			72			634			706
Income (loss) before income taxes		(1,063	)		1,165			75,448			75,550
Provision for income taxes		-			-			-			-
Net income (loss) from discontinued operations	$	(1,063	)	$	1,165		$	75,448		$	75,550

Select cash flow information (in thousands)
	Crude Oil Trucking Services		Crude Oil Pipeline Services		Crude Oil Terminalling Services		Total
	Three Months Ended March 31, 2020
Depreciation and amortization	$	200	$	1,170	$	1,139	$	2,509
Capital expenditures	$	180	$	882	$	89	$	1,152
	Three Months Ended March 31, 2021
Amortization	$	3	$	14	$	15	$	32
Capital expenditures	$	-	$	10	$	109	$	119

XML

Note 6 - Net Income Per Limited Partner Unit (Tables)

3 Months Ended

Mar. 31, 2021

Notes Tables

Schedule of Earnings Per Share, Basic and Diluted [Table Text Block]

	Three Months Ended March 31,
	2020			2021
Net income	$	-		$	81,653
General partner interest in net income		-			1,292
Preferred interest in net income		6,279			6,341
Net income(loss) available to limited partners	$	(6,279	)	$	74,020
Basic weighted average number of units:
Common units		41,015			41,430
Restricted and phantom units		983			1,166
Total units		41,998			42,596
Basic and diluted net income(loss) from discontinued operations per common unit	$	(0.13	)	$	1.75
Basic and diluted net loss from continuing operations per common unit	$	(0.02	)	$	(0.01	)
Basic and diluted net income(loss) per common unit	$	(0.15	)	$	1.74

XML

Note 9 - Long-term Incentive Plan (Tables)

3 Months Ended

Mar. 31, 2021

Notes Tables

Share-based Compensation Arrangements by Share-based Payment Award, Restricted Stock Units, Vested and Expected to Vest [Table Text Block]

Grant Date	Number of Units		Weighted Average Grant Date Fair Value(1)		Grant Date Total Fair Value (in thousands)
December 2018		23,436	$	1.20	$	28
December 2019		7,500	$	1.07	$	8
December 2020		7,500	$	2.06	$	15

Disclosure of Share-based Compensation Arrangements by Share-based Payment Award [Table Text Block]

Grant Date	Number of Units		Weighted Average Grant Date Fair Value(1)		Grant Date Total Fair Value (in thousands)
March 2019		524,997	$	1.14	$	598
June 2019		46,168	$	1.08	$	50
March 2020		600,396	$	0.90	$	540
October 2020		16,339	$	1.53	$	25
March 2021		530,435	$	2.71	$	1,437

Share-based Payment Arrangement, Activity [Table Text Block]

	Number of Units		Weighted Average Grant Date Fair Value
Nonvested at December 31, 2020		1,350,366	$	1.81
Granted		530,435		2.71
Vested		329,996		4.20
Forfeited		-		-
Nonvested at March 31, 2021		1,550,805	$	1.61

XML

Note 1 - Organization and Nature of Business (Details Textual)	3 Months Ended
	Mar. 31, 2021
Number of States in which Entity Operates	26
Number of Operating Segments	1

XML

Note 3 - Revenue (Details Textual) - USD ($) $ in Millions	3 Months Ended
	Mar. 31, 2021	Dec. 31, 2020
Billed Contracts Receivable	$ 3.7	$ 2.1
Contract with Customer, Liability, Total	3.2	$ 3.2
Contract with Customer, Liability, Revenue Recognized	$ 2.2

XML

Note 3 - Revenue - Future Performance Obligations (Details) $ in Thousands	Mar. 31, 2021 USD ($)
Remainder of 2021, revenue from leases	$ 43,923
2022, revenue from leases	49,739
2023, revenue from leases	42,546
2024, revenue from leases	42,593
2025, revenue from leases	37,595
Thereafter, revenue from leases	43,000
Revenue related to future performance obligation	181,479	[1]
Revenue from Leases	$ 259,396

[1] Excluded from the table is revenue that is either constrained or related to performance obligations that are wholly unsatisfied as of March 31, 2021.

XML

Note 3 - Revenue - Future Performance Obligations 2 (Details) $ in Thousands	Mar. 31, 2021 USD ($)
Revenue related to future performance obligation	$ 181,479	[1]
Revenue, Remaining Performance Obligation, Expected Timing of Satisfaction, Start Date [Axis]: 2021-04-01
Revenue related to future performance obligation	$ 29,431	[2]
Expected Timing of Satisfaction, Period (Year)	273 days
Revenue, Remaining Performance Obligation, Expected Timing of Satisfaction, Start Date [Axis]: 2022-01-01
Revenue related to future performance obligation	$ 31,808	[2]
Expected Timing of Satisfaction, Period (Year)	1 year
Revenue, Remaining Performance Obligation, Expected Timing of Satisfaction, Start Date [Axis]: 2023-01-01
Revenue related to future performance obligation	$ 28,131	[2]
Expected Timing of Satisfaction, Period (Year)	1 year
Revenue, Remaining Performance Obligation, Expected Timing of Satisfaction, Start Date [Axis]: 2024-01-01
Revenue related to future performance obligation	$ 28,174	[2]
Expected Timing of Satisfaction, Period (Year)	1 year
Revenue, Remaining Performance Obligation, Expected Timing of Satisfaction, Start Date [Axis]: 2025-01-01
Revenue related to future performance obligation	$ 26,857	[2]
Expected Timing of Satisfaction, Period (Year)	1 year
Revenue, Remaining Performance Obligation, Expected Timing of Satisfaction, Start Date [Axis]: 2026-01-01
Revenue related to future performance obligation	$ 37,078	[2]
Expected Timing of Satisfaction, Period (Year)

[1] Excluded from the table is revenue that is either constrained or related to performance obligations that are wholly unsatisfied as of March 31, 2021.

[2] Excluded from the table is revenue that is either constrained or related to performance obligations that are wholly unsatisfied as of March 31, 2021.

XML

Note 3 - Revenue - Disaggregation of Revenue (Details) - USD ($) $ in Thousands	3 Months Ended
	Mar. 31, 2021	Mar. 31, 2020
Third Party [Member]
Revenue from contracts with customers	$ 6,919	$ 6,853
Lease revenue	8,303	9,831
Third Party [Member] | Fixed Storageand Throughput Revenue [Member]
Revenue from contracts with customers	5,064	5,245
Lease revenue
Third Party [Member] | Fixed Lease Revenue [Member]
Revenue from contracts with customers
Lease revenue	7,801	9,227
Third Party [Member] | Variable Cost Recovery Revenue [Member]
Revenue from contracts with customers	1,735	1,607
Lease revenue	502	604
Third Party [Member] | Variable Throughput Revenue [Member]
Revenue from contracts with customers	120	1
Lease revenue
Related Party [Member]
Revenue from contracts with customers	4,849	4,055
Lease revenue	7,004	4,921
Related Party [Member] | Fixed Storageand Throughput Revenue [Member]
Revenue from contracts with customers	4,721	3,084
Lease revenue
Related Party [Member] | Fixed Lease Revenue [Member]
Revenue from contracts with customers
Lease revenue	6,785	4,800
Related Party [Member] | Variable Cost Recovery Revenue [Member]
Revenue from contracts with customers	128	971
Lease revenue	219	121
Related Party [Member] | Variable Throughput Revenue [Member]
Revenue from contracts with customers
Lease revenue

XML

Note 4 - Discontinued Operations (Details Textual) - USD ($) $ in Millions	3 Months Ended
	Mar. 31, 2020	Dec. 21, 2020
Pipeline Linefill [Member]
Asset Impairment Charges, Total	$ 4.9
Crude Oil Pipeline Services [Member] | Discontinued Operations, Held-for-sale [Member]
Proceeds from Divestiture of Businesses, Held in Escrow		$ 1.5
Expected Exit and Disposal Costs		$ 1.6

XML

Note 4 - Discontinued Operations - Financial Information (Details) - USD ($) $ in Thousands	3 Months Ended
	Mar. 31, 2021	Mar. 31, 2020	Dec. 31, 2020
ASSETS
Accounts receivable, net	$ 335		$ 13,959
Plant, property, and equipment			76,837
Other assets	176		6,149
Total assets of discontinued operations	511		96,945
LIABILITIES
Current liabilities	2,599		17,248
Total liabilities of discontinued operations	2,599		17,248
Operating expense	3,681	$ 9,350
General and administrative expense	177	174
Tangible asset impairment expense	156	5,121
(Gain)loss on disposal of assets	(75,069)	111
Interest expense	706	1,712
Loss before income taxes	75,550	(5,516)
Provision for income taxes		3
Net loss from discontinued operations	75,550	(5,519)
Gain on disposal of assets	(75,069)	111
Intersegment Eliminations [Member]
LIABILITIES
Operating expense	409	1,425
Service [Member] | Intersegment Eliminations [Member]
LIABILITIES
Revenue	409	1,425
Third Party [Member]
LIABILITIES
Cost of product sales	4,994	14,221
Third Party [Member] | Service [Member]
LIABILITIES
Revenue	4,065	6,375
Third Party [Member] | Product [Member]
LIABILITIES
Revenue	15,591	47,052
Related Party [Member]
LIABILITIES
Cost of product sales	9,461	28,254
Discontinued Operations, Held-for-sale [Member]
LIABILITIES
Depreciation and amortization	32	2,509
Capital expenditures	119	1,152
Crude Oil Trucking Services [Member] | Discontinued Operations, Held-for-sale [Member]
ASSETS
Accounts receivable, net			81
Plant, property, and equipment			442
Other assets	40		331
Total assets of discontinued operations	40		854
LIABILITIES
Current liabilities	32		1,017
Total liabilities of discontinued operations	32		1,017
Operating expense	1,333	4,025
General and administrative expense	59	69
Tangible asset impairment expense	92	35
(Gain)loss on disposal of assets	(3)	(10)
Interest expense		3
Loss before income taxes	(1,063)	(154)
Provision for income taxes		3
Net loss from discontinued operations	(1,063)	(157)
Gain on disposal of assets	(3)	(10)
Depreciation and amortization	3	200
Capital expenditures		180
Crude Oil Trucking Services [Member] | Discontinued Operations, Held-for-sale [Member] | Intersegment Eliminations [Member]
LIABILITIES
Operating expense
Crude Oil Trucking Services [Member] | Discontinued Operations, Held-for-sale [Member] | Service [Member] | Intersegment Eliminations [Member]
LIABILITIES
Revenue	409	1,425
Crude Oil Trucking Services [Member] | Discontinued Operations, Held-for-sale [Member] | Third Party [Member]
LIABILITIES
Cost of product sales
Crude Oil Trucking Services [Member] | Discontinued Operations, Held-for-sale [Member] | Third Party [Member] | Service [Member]
LIABILITIES
Revenue	9	2,543
Crude Oil Trucking Services [Member] | Discontinued Operations, Held-for-sale [Member] | Third Party [Member] | Product [Member]
LIABILITIES
Revenue
Crude Oil Trucking Services [Member] | Discontinued Operations, Held-for-sale [Member] | Related Party [Member]
LIABILITIES
Cost of product sales
Crude Oil Pipeline Services [Member] | Discontinued Operations, Held-for-sale [Member]
ASSETS
Accounts receivable, net	287		13,711
Plant, property, and equipment			23,541
Other assets			547
Total assets of discontinued operations	287		37,799
LIABILITIES
Current liabilities	936		14,921
Total liabilities of discontinued operations	936		14,921
Operating expense	1,438	3,302
General and administrative expense	118	105
Tangible asset impairment expense	41	2,820
(Gain)loss on disposal of assets	(1,694)	121
Interest expense	72	325
Loss before income taxes	1,165	(3,019)
Provision for income taxes
Net loss from discontinued operations	1,165	(3,019)
Gain on disposal of assets	(1,694)	121
Depreciation and amortization	14	1,170
Capital expenditures	10	882
Crude Oil Pipeline Services [Member] | Discontinued Operations, Held-for-sale [Member] | Intersegment Eliminations [Member]
LIABILITIES
Operating expense	409	1,425
Crude Oil Pipeline Services [Member] | Discontinued Operations, Held-for-sale [Member] | Service [Member] | Intersegment Eliminations [Member]
LIABILITIES
Revenue
Crude Oil Pipeline Services [Member] | Discontinued Operations, Held-for-sale [Member] | Third Party [Member]
LIABILITIES
Cost of product sales	4,994	14,221
Crude Oil Pipeline Services [Member] | Discontinued Operations, Held-for-sale [Member] | Third Party [Member] | Service [Member]
LIABILITIES
Revenue	413	502
Crude Oil Pipeline Services [Member] | Discontinued Operations, Held-for-sale [Member] | Third Party [Member] | Product [Member]
LIABILITIES
Revenue	15,591	47,052
Crude Oil Pipeline Services [Member] | Discontinued Operations, Held-for-sale [Member] | Related Party [Member]
LIABILITIES
Cost of product sales	9,461	28,254
Crude Oil Terminalling Services [Member] | Discontinued Operations, Held-for-sale [Member]
ASSETS
Accounts receivable, net	48		167
Plant, property, and equipment			52,854
Other assets	136		5,271
Total assets of discontinued operations	184		58,292
LIABILITIES
Current liabilities	1,631		1,310
Total liabilities of discontinued operations	1,631		$ 1,310
Operating expense	910	2,023
General and administrative expense
Tangible asset impairment expense	23	2,266
(Gain)loss on disposal of assets	(73,372)
Interest expense	634	1,384
Loss before income taxes	75,448	(2,343)
Provision for income taxes
Net loss from discontinued operations	75,448	(2,343)
Gain on disposal of assets	(73,372)
Depreciation and amortization	15	1,139
Capital expenditures	109	89
Crude Oil Terminalling Services [Member] | Discontinued Operations, Held-for-sale [Member] | Intersegment Eliminations [Member]
LIABILITIES
Operating expense
Crude Oil Terminalling Services [Member] | Discontinued Operations, Held-for-sale [Member] | Service [Member] | Intersegment Eliminations [Member]
LIABILITIES
Revenue
Crude Oil Terminalling Services [Member] | Discontinued Operations, Held-for-sale [Member] | Third Party [Member]
LIABILITIES
Cost of product sales
Crude Oil Terminalling Services [Member] | Discontinued Operations, Held-for-sale [Member] | Third Party [Member] | Service [Member]
LIABILITIES
Revenue	3,643	3,330
Crude Oil Terminalling Services [Member] | Discontinued Operations, Held-for-sale [Member] | Third Party [Member] | Product [Member]
LIABILITIES
Revenue
Crude Oil Terminalling Services [Member] | Discontinued Operations, Held-for-sale [Member] | Related Party [Member]
LIABILITIES
Cost of product sales

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Note 5 - Debt (Details Textual) $ in Thousands		3 Months Ended
	Mar. 01, 2021 USD ($)	Mar. 31, 2021 USD ($)	Mar. 31, 2020 USD ($)	Apr. 28, 2021 USD ($)	Jan. 08, 2021 USD ($)	Jun. 28, 2018 USD ($)	Jun. 27, 2018 USD ($)
Amortization of Debt Issuance Costs		$ 391	$ 251
Credit Agreement [Member]
Line of Credit Facility, Maximum Borrowing Capacity Including Additional Lenders		600,000
Debt Instrument Covenant, Issued Qualified Senior Notes		$ 200,000
Debt Instrument Covenant, Prior to Issuance of Qualified Senior Notes, Maximum Permitted Consolidated Total Leverage Ratio		4.75
Debt Instrument Covenant, Prior to Issuance of Qualified Senior Notes, Based on Occurence of Acquisition, Maximum Permitted Consolidated Total Leverage Ratio		5.25
Debt Instrument Covenant, Specified Acquisition, Aggregate Consideration		$ 15,000
Debt Instrument Covenant, Prior to Issuance of Qualified Senior Notes, Maximum Permitted Consolidated Total Leverage Ratio		5
Debt Instrument Covenant, After Issuance of Qualified Senior Notes, Based on Occurence of Acquisition, Maximum Permitted Consolidated Total Leverage Ratio		5.5
Debt Instrument Covenant, Maximum Permitted Consolidated Senior Secured Leverage Ratio		3.5
Debt Instrument Covenant, Minimum Permitted Consolidated Interest Coverage Ratio		2.5
Consolidated Total Leverage Ratio		2.12
Consolidated Interest Coverage Ratio		11.68
Debt Instrument Covenant, Default, Percentage of General Partner Interest Cease		100.00%
Write off of Deferred Debt Issuance Cost	$ 100
Amortization of Debt Issuance Costs		$ 200	$ 300
Debt Instrument, Interest Rate During Period		3.83%	4.90%
Interest Expense, Long-term Debt, Total		$ 1,200	$ 1,700
Credit Agreement [Member] | Ergon [Member]
Debt Instrument Covenant, Default, Percentage of Membership Interest Cease		50.00%
Credit Agreement [Member] | Federal Funds Effective Rate [Member]
Debt Instrument, Basis Spread on Variable Rate		0.50%
Credit Agreement [Member] | Eurodollar Rate [Member]
Debt Instrument, Basis Spread on Variable Rate		1.00%
Credit Agreement [Member] | Minimum [Member]
Line of Credit Facility, Commitment Fee Percentage		0.375%
Credit Agreement [Member] | Minimum [Member] | Applicable Margin Based on Eurodollar Rate [Member]
Debt Instrument, Basis Spread on Variable Rate		2.00%
Credit Agreement [Member] | Minimum [Member] | Applicable Margin on Based on Alternate Base Rate [Member]
Debt Instrument, Basis Spread on Variable Rate		1.00%
Credit Agreement [Member] | Maximum [Member]
Line of Credit Facility, Commitment Fee Percentage		0.50%
Credit Agreement [Member] | Maximum [Member] | Applicable Margin Based on Eurodollar Rate [Member]
Debt Instrument, Basis Spread on Variable Rate		3.25%
Credit Agreement [Member] | Maximum [Member] | Applicable Margin on Based on Alternate Base Rate [Member]
Debt Instrument, Basis Spread on Variable Rate		2.25%
Credit Agreement [Member] | Revolving Credit Facility [Member]
Line of Credit Facility, Maximum Borrowing Capacity					$ 350,000	$ 400,000	$ 450,000
Credit Agreement [Member] | Revolving Credit Facility [Member] | Subsequent Event [Member]
Long-term Line of Credit, Total				$ 106,600
Letters of Credit Outstanding, Amount				700
Line of Credit Facility, Remaining Borrowing Capacity				$ 242,700

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Note 6 - Net Income Per Limited Partner Unit (Details Textual) - shares		3 Months Ended
	Mar. 12, 2021	Mar. 31, 2021
Preferred Partner [Member]
Partners' Capital Account, Units, Treasury Units Purchased (in shares)	688,417	688,417

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Note 6 - Net Income Per Limited Partner Unit - Earning Per Unit (Details) - USD ($) $ / shares in Units, shares in Thousands, $ in Thousands	3 Months Ended
	Mar. 31, 2021	Mar. 31, 2020
Net income	$ 81,653
General partner interest in net income	1,292
Preferred interest in net income	6,341	6,279
Net income(loss) available to limited partners	$ 74,020	$ (6,279)
Common units (in shares)	41,430	41,015
Restricted and phantom units (in shares)	1,166	983
Total units (in shares)	42,596	41,998
Basic and diluted net income(loss) from discontinued operations per common unit (in dollars per share)	$ 1.75	$ (0.13)
Basic and diluted net loss from continuing operations per common unit (in dollars per share)	(0.01)	(0.02)
Basic and diluted net income(loss) per common unit (in dollars per share)	$ 1.74	$ (0.15)

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Note 7 - Partners' Capital and Distributions (Details Textual) - USD ($) $ / shares in Units, $ in Thousands		3 Months Ended
	Mar. 12, 2021	Mar. 31, 2021
Partners' Capital Account, Treasury Units, Purchased		$ 5,163
Preferred Unit, Cash Distribution [Member]
Distribution Made to Limited Partner, Declaration Date		Apr. 21, 2021
Distribution Made to Limited Partner, Distributions Declared, Per Unit (in dollars per share)		$ 0.17875
Distribution Made to Limited Partner, Distribution Date		May 14, 2021
Distribution Made to Limited Partner, Date of Record		May 07, 2021
Distribution Made to Limited Partner, Cash Distributions Declared		$ 6,300
Common Unit, Cash Distribution [Member]
Distribution Made to Limited Partner, Declaration Date		Apr. 21, 2021
Distribution Made to Limited Partner, Distributions Declared, Per Unit (in dollars per share)		$ 0.04
Distribution Made to Limited Partner, Distribution Date		May 14, 2021
Distribution Made to Limited Partner, Date of Record		May 07, 2021
Distribution Made to Limited Partner, Cash Distributions Declared		$ 1,700
Preferred Partner [Member]
Partners' Capital Account, Units, Treasury Units Purchased (in shares)	688,417	688,417
Partners' Capital Account, Treasury Units, Purchased, Per Unit (in dollars per share)	$ 7.50
Partners' Capital Account, Treasury Units, Purchased	$ 5,200	$ 5,163
Preferred Units, Per Unit (in dollars per share)	$ 7.23
Partners Capital Account, Treasury Units, Purchases, Carrying Value	$ 5,000
Partners Capital Account, Treasury Units, Purchases, Additional Value	$ 200
Preferred Partner [Member] | Preferred Unit, Cash Distribution [Member]
Distribution Made to Limited Partner, Cash Distributions Declared		6,200
General Partner [Member]
Partners' Capital Account, Treasury Units, Purchased
General Partner [Member] | Preferred Unit, Cash Distribution [Member]
Distribution Made to Limited Partner, Cash Distributions Declared		100
General Partner [Member] | Common Unit, Cash Distribution [Member]
Distribution Made to Limited Partner, Cash Distributions Declared		100
Common Unitholder [Member] | Common Unit, Cash Distribution [Member]
Distribution Made to Limited Partner, Cash Distributions Declared		1,700
Holders of Phantom and Restricted Units [Member] | Common Unit, Cash Distribution [Member]
Distribution Made to Limited Partner, Cash Distributions Declared		$ 100

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Note 8- Related-party Transactions (Details Textual) - USD ($) $ in Thousands	3 Months Ended
	Mar. 31, 2021	Mar. 31, 2020	Dec. 31, 2020	Dec. 31, 2019
Due from Related Parties, Current, Total	$ 664		$ 507
Ergon [Member]
Revenue from Related Parties	11,900	$ 9,000
Due from Related Parties, Current, Total	700		500
Deferred Revenue, Total	$ 8,600		$ 8,800
Ergon [Member] | Cimarron Express [Member]
Due to Related Parties, Contingent Liability				$ 12,200

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Note 9 - Long-term Incentive Plan (Details Textual) - USD ($) $ in Thousands, shares in Millions	3 Months Ended
	Mar. 31, 2021	Mar. 31, 2020
Share-based Payment Arrangement, Noncash Expense, Total	$ (77)	$ 108
Long-Term Incentive Plan [Member]
Share-based Compensation Arrangement by Share-based Payment Award, Number of Shares Authorized (in shares)	8.1
Long-Term Incentive Plan [Member] | Restricted Stock [Member]
Share-based Compensation Arrangement by Share-based Payment Award, Award Vesting Period (Year)	3 years
Long-Term Incentive Plan [Member] | Restricted Stock [Member] | Share-based Payment Arrangement, Tranche Two [Member]
Share-based Compensation Arrangement by Share-based Payment Award, Award Vesting Rights, Percentage	33.33%
Long-Term Incentive Plan [Member] | Restricted Stock [Member] | Share-based Payment Arrangement, Tranche One [Member]
Share-based Compensation Arrangement by Share-based Payment Award, Award Vesting Rights, Percentage	33.33%
Long-Term Incentive Plan [Member] | Restricted Stock [Member] | Share-based Payment Arrangement, Tranche Three [Member]
Share-based Compensation Arrangement by Share-based Payment Award, Award Vesting Rights, Percentage	33.33%
Long-Term Incentive Plan [Member] | Phantom Share Units (PSUs) [Member]
Share-based Compensation Arrangement by Share-based Payment Award, Award Vesting Period (Year)	3 years
Share-based Payment Arrangement, Nonvested Award, Excluding Option, Cost Not yet Recognized, Amount	$ 1,700
Share-based Payment Arrangement, Noncash Expense, Total	$ 100	$ 200

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Note 9 - Long-term Incentive Plan - Information on Outstanding Grants Made to Directors Under the LTIP (Details) - Long-Term Incentive Plan [Member] - Restricted Stock [Member] - Director [Member] - USD ($) $ / shares in Units, $ in Thousands		12 Months Ended
		Dec. 31, 2020	Dec. 31, 2019	Dec. 31, 2018
Granted, number of units (in shares)		7,500	7,500	23,436
Weighted Average Grant Date Fair Value (in dollars per share)	[1]	$ 2.06	$ 1.07	$ 1.20
Grant Date Total Fair Value		$ 15	$ 8	$ 28

[1] Fair value is the closing market price on the grant date of the awards.

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Note 9 - Long-term Incentive Plan - Information on Outstanding Grants Made to Employees Under the LTIP (Details) - Long-Term Incentive Plan [Member] - Phantom Share Units (PSUs) [Member] - Employees [Member] - USD ($) $ / shares in Units, $ in Thousands	1 Months Ended
	Mar. 31, 2021	Oct. 31, 2020		Mar. 31, 2020		Jun. 30, 2019		Mar. 31, 2019
Granted, number of units (in shares)	530,435	16,339		600,396		46,168		524,997
Weighted Average Grant Date Fair Value (in dollars per share)	$ 2.71	$ 1.53	[1]	$ 0.90	[1]	$ 1.08	[1]	$ 1.14	[1]
Grant Date Total Fair Value	$ 1,437	$ 25		$ 540		$ 50		$ 598

[1] Fair value is the closing market price on the grant date of the awards.

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Note 9 - Long-term Incentive Plan - Activity Pertaining to Phantom and Restricted Common Stock Unit Awards (Details) - Long-Term Incentive Plan [Member] - Phantom and Restricted Units Holders [Member]	3 Months Ended
	Mar. 31, 2021 $ / shares shares
Nonvested, number of units, beginning balance (in shares) | shares	1,350,366
Nonvested, weighted average grant date fair value, beginning balance (in dollars per share) | $ / shares	$ 1.81
Granted, number of units (in shares) | shares	530,435
Weighted Average Grant Date Fair Value (in dollars per share) | $ / shares	$ 2.71
Vested, number of units (in shares) | shares	329,996
Vested, weighted average grant date fair value (in dollars per share) | $ / shares	$ 4.20
Forfeited, number of units (in shares) | shares
Forfeited, weighted average grant date fair value (in dollars per share) | $ / shares
Nonvested, number of units, ending balance (in shares) | shares	1,550,805
Nonvested, weighted average grant date fair value, ending balance (in dollars per share) | $ / shares	$ 1.61

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Note 10 - Fair Value Measurements (Details Textual) - Fair Value, Recurring [Member] - USD ($) $ in Thousands	Mar. 31, 2021	Dec. 31, 2020
Assets, Fair Value Disclosure	$ 0	$ 0
Financial Liabilities Fair Value Disclosure, Total	$ 0	$ 0