UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
FORM
| | Quarterly Report Pursuant to Section 13 or 15(d) of the Securities Exchange Act of 1934 |
For the quarterly period ended
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
BLUEKNIGHT ENERGY PARTNERS, L.P.
(Exact name of registrant as specified in its charter)
| (State or other jurisdiction of incorporation or organization) | (IRS Employer Identification No.) |
|
(Address of principal executive offices, zip code)
Registrant’s telephone number, including area code: ( | |
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.
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).
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 ☐ |
| |
| 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
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 |
| | | The |
| | | The |
As of November 4, 2021, there were
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 | September 30, 2021 | |||||||
| (unaudited) | ||||||||
| ASSETS | ||||||||
| Current assets: | ||||||||
| Cash and cash equivalents | $ | $ | ||||||
| Accounts receivable, net | ||||||||
| Receivables from related parties, net | ||||||||
| Other current assets | ||||||||
| Current assets of discontinued operations | ||||||||
| Total current assets | ||||||||
| Property, plant and equipment, net of accumulated depreciation of $197,561 and $202,164 at December 31, 2020, and September 30, 2021, respectively | ||||||||
| Goodwill | ||||||||
| Debt issuance costs, net | ||||||||
| Operating lease assets | ||||||||
| Intangible assets, net | ||||||||
| Other noncurrent assets | ||||||||
| Total assets | $ | $ | ||||||
| LIABILITIES AND PARTNERS’ CAPITAL(DEFICIT) | ||||||||
| Current liabilities: | ||||||||
| Accounts payable | $ | $ | ||||||
| Accounts payable to related parties | ||||||||
| Accrued interest payable | ||||||||
| Accrued property taxes payable | ||||||||
| Unearned revenue | ||||||||
| Unearned revenue with related parties | ||||||||
| Accrued payroll | ||||||||
| Current operating lease liability | ||||||||
| Other current liabilities | ||||||||
| Current liabilities of discontinued operations | ||||||||
| Total current liabilities | ||||||||
| Long-term unearned revenue with related parties | ||||||||
| Other long-term liabilities | ||||||||
| Noncurrent operating lease liability | ||||||||
| Long-term debt | ||||||||
| Commitments and contingencies (Note 11) | ||||||||
| Partners’ capital(deficit): | ||||||||
| Common unitholders ( and units issued and outstanding at December 31, 2020, and September 30, 2021, respectively) | ||||||||
| Preferred unitholders ( and units issued and outstanding at December 31, 2020, and September 30, 2021, respectively) | ||||||||
| General partner interest ( interest with general partner units outstanding at both dates) | ( | ) | ( | ) | ||||
| Total partners’ capital(deficit) | ( | ) | ||||||
| Total liabilities and partners’ capital(deficit) | $ | $ | ||||||
The accompanying notes are an integral part of these unaudited condensed consolidated financial statements.
| BLUEKNIGHT ENERGY PARTNERS, L.P. CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS (in thousands, except per unit data) |
| Three Months Ended September 30, |
Nine Months Ended September 30, |
|||||||||||||||
| 2020 |
2021 |
2020 |
2021 |
|||||||||||||
| (unaudited) |
||||||||||||||||
| Service revenue: |
||||||||||||||||
| Third-party revenue |
$ | $ | $ | $ | ||||||||||||
| Related-party revenue |
||||||||||||||||
| Lease revenue: |
||||||||||||||||
| Third-party revenue |
||||||||||||||||
| Related-party revenue |
||||||||||||||||
| Total revenue |
||||||||||||||||
| Costs and expenses: |
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| Operating expense |
||||||||||||||||
| General and administrative expense |
||||||||||||||||
| Total costs and expenses |
||||||||||||||||
| Gain(loss) on disposal of assets |
( |
) | ( |
) | ||||||||||||
| Operating income |
||||||||||||||||
| Other income(expenses): |
||||||||||||||||
| Other income |
||||||||||||||||
| Interest expense |
( |
) | ( |
) | ( |
) | ( |
) | ||||||||
| Income before income taxes |
||||||||||||||||
| Provision for income taxes |
( |
) | ||||||||||||||
| Income from continuing operations |
||||||||||||||||
| Income(loss) from discontinued operations, net |
( |
) | ( |
) | ||||||||||||
| Net income |
$ | $ | $ | $ | ||||||||||||
| Allocation of net income(loss) for calculation of earnings per unit: |
||||||||||||||||
| General partner interest in net income |
$ | $ | $ | $ | ||||||||||||
| Preferred interest in net income |
$ | $ | $ | $ | ||||||||||||
| Net income(loss) available to limited partners |
$ | $ | $ | ( |
) | $ | ||||||||||
| Basic and diluted net income(loss) from discontinued operations per common unit |
$ | $ | $ | ( |
) | $ | ||||||||||
| Basic and diluted net income from continuing operations per common unit |
$ | $ | $ | $ | ||||||||||||
| Basic and diluted net income(loss) per common unit |
$ | $ | $ | ( |
) | $ | ||||||||||
| Weighted average common units outstanding - basic and diluted |
||||||||||||||||
The accompanying notes are an integral part of these unaudited condensed consolidated financial statements.
| 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, June 30, 2020 | $ | $ | $ | ( | ) | $ | ( | ) | ||||||||
| Net income(loss) | ||||||||||||||||
| Equity-based incentive compensation | ||||||||||||||||
| Distributions | ( | ) | ( | ) | ( | ) | ( | ) | ||||||||
| Proceeds from sale of common units pursuant to the Employee Unit Purchase Plan | ||||||||||||||||
| Balance, September 30, 2020 | $ | $ | $ | ( | ) | $ | ( | ) | ||||||||
| Balance, December 31, 2019 | $ | $ | $ | ( | ) | $ | ( | ) | ||||||||
| Net income(loss) | ( | ) | ||||||||||||||
| Equity-based incentive compensation | ||||||||||||||||
| Distributions | ( | ) | ( | ) | ( | ) | ( | ) | ||||||||
| Proceeds from sale of common units pursuant to the Employee Unit Purchase Plan | ||||||||||||||||
| Balance, September 30, 2020 | $ | $ | $ | ( | ) | $ | ( | ) | ||||||||
| Balance, June 30, 2021 | $ | $ | $ | ( | ) | $ | ||||||||||
| Net income | $ | $ | ||||||||||||||
| Equity-based incentive compensation | $ | $ | ||||||||||||||
| Repurchase of Preferred Shares | $ | ( | ) | $ | ( | ) | ||||||||||
| Distributions | ( | ) | $ | ( | ) | $ | ( | ) | ( | ) | ||||||
| Proceeds from sale of common units pursuant to the Employee Unit Purchase Plan | $ | $ | ||||||||||||||
| Balance, September 30, 2021 | $ | $ | $ | ( | ) | $ | ||||||||||
| Balance, December 31, 2020 | $ | $ | $ | ( | ) | $ | ( | ) | ||||||||
| Net income | ||||||||||||||||
| Equity-based incentive compensation | ||||||||||||||||
| Repurchase of preferred units | ( | ) | ( | ) | ||||||||||||
| Distributions | ( | ) | ( | ) | ( | ) | ( | ) | ||||||||
| Proceeds from sale of common units pursuant to the Employee Unit Purchase Plan | ||||||||||||||||
| Balance, September 30, 2021 | $ | $ | $ | ( | ) | $ | ||||||||||
The accompanying notes are an integral part of these unaudited condensed consolidated financial statements.
| BLUEKNIGHT ENERGY PARTNERS, L.P. CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS (in thousands) |
| Nine Months Ended September 30, | |||||||||
| 2020 | 2021 | ||||||||
| (unaudited) | |||||||||
| Cash flows from operating activities: | |||||||||
| Net income | $ | $ | |||||||
| Adjustments to reconcile net income to net cash provided by operating activities: | |||||||||
| Depreciation and amortization | |||||||||
| Amortization and write-off of debt issuance costs | |||||||||
| Tangible asset impairment charge | |||||||||
| Gain on sale of assets | ( | ) | ( | ) | |||||
| Gain from insurance settlement related to investing activities | ( | ) | |||||||
| Equity-based incentive compensation | |||||||||
| Changes in assets and liabilities: | |||||||||
| Decrease in accounts receivable | |||||||||
| Decrease (increase) in receivables from related parties | ( | ) | |||||||
| Decrease in other current assets | |||||||||
| Decrease in other non-current assets | |||||||||
| Decrease in accounts payable | ( | ) | ( | ) | |||||
| Decrease in payables to related parties | ( | ) | ( | ) | |||||
| Decrease in accrued crude oil purchases | ( | ) | ( | ) | |||||
| Decrease in accrued crude oil purchases to related parties | ( | ) | ( | ) | |||||
| Increase in accrued interest payable | |||||||||
| Increase (decrease) in accrued property taxes | ( | ) | |||||||
| Increase in unearned revenue | |||||||||
| Increase(decrease) in unearned revenue from related parties | ( | ) | |||||||
| Decrease in accrued payroll | ( | ) | ( | ) | |||||
| Decrease in other accrued liabilities | ( | ) | ( | ) | |||||
| Net cash provided by operating activities | |||||||||
| Cash flows from investing activities: | |||||||||
| Acquisition of DEVCO from Ergon (Note 8) | ( | ) | |||||||
| Capital expenditures | ( | ) | ( | ) | |||||
| Net proceeds from sale of assets | |||||||||
| Proceeds from insurance settlement related to investing activities | |||||||||
| Net cash provided by(used in) investing activities | ( | ) | |||||||
| Cash flows from financing activities: | |||||||||
| Payments on other financing activities | ( | ) | ( | ) | |||||
| Debt issuance costs | ( | ) | |||||||
| Borrowings under credit agreement | |||||||||
| Payments under credit agreement | ( | ) | ( | ) | |||||
| Proceeds from equity issuance | |||||||||
| Repurchase of preferred units | ( | ) | |||||||
| Distributions | ( | ) | ( | ) | |||||
| Net cash used in financing activities | ( | ) | ( | ) | |||||
| Net increase(decrease) in cash and cash equivalents | ( | ) | |||||||
| Cash and cash equivalents at beginning of period | |||||||||
| Cash and cash equivalents at end of period | $ | $ | |||||||
| Supplemental disclosure of non-cash financing and investing cash flow information: | |||||||||
| Non-cash changes in property, plant and equipment | $ | $ | |||||||
| Increase in accrued liabilities related to insurance premium financing agreement | $ | $ | |||||||
The accompanying notes are an integral part of these unaudited condensed consolidated financial statements.
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
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 September 30, 2021, the condensed consolidated statements of operations for the three and nine months ended September 30, 2020 and 2021, the condensed consolidated statements of changes in partners’ capital (deficit) for the three and nine months ended September 30, 2020 and 2021, and the condensed consolidated statements of cash flows for the nine months ended September 30, 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 | Total | ||||||||||
| Remainder of 2021 | $ | $ | $ | |||||||||
| 2022 | ||||||||||||
| 2023 | ||||||||||||
| 2024 | ||||||||||||
| 2025 | ||||||||||||
| Thereafter | ||||||||||||
| Total revenue related to future performance obligations | $ | $ | $ | |||||||||
___________________
| (1) | Excluded from the table is revenue that is either constrained or related to performance obligations that are wholly unsatisfied as of September 30, 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 September 30, 2020 | ||||||||||||||||||||
| Revenue from contracts with customers | Lease revenue | |||||||||||||||||||
| Third-party revenue | Related-party revenue | Third-party revenue | Related-party revenue | Total | ||||||||||||||||
| Fixed storage and throughput revenue | $ | $ | $ | - | $ | - | $ | |||||||||||||
| Fixed lease revenue | - | - | ||||||||||||||||||
| Variable cost recovery revenue | ||||||||||||||||||||
| Variable throughput and other revenue | ||||||||||||||||||||
| Total | $ | $ | $ | $ | $ | |||||||||||||||
| Three Months Ended September 30, 2021 | ||||||||||||||||||||
| Revenue from contracts with customers | Lease revenue | |||||||||||||||||||
| Third-party revenue | Related-party revenue | Third-party revenue | Related-party revenue | Total | ||||||||||||||||
| Fixed storage and throughput revenue | $ | $ | $ | - | $ | - | $ | |||||||||||||
| Fixed lease revenue | - | - | ||||||||||||||||||
| Variable cost recovery revenue | ||||||||||||||||||||
| Variable throughput and other revenue | ||||||||||||||||||||
| Total | $ | $ | $ | $ | $ | |||||||||||||||
| Nine Months Ended September 30, 2020 | ||||||||||||||||||||
| Revenue from contracts with customers | Lease revenue | |||||||||||||||||||
| Third-party revenue | Related-party revenue | Third-party revenue | Related-party revenue | Total | ||||||||||||||||
| Fixed storage and throughput revenue | $ | $ | $ | - | $ | - | $ | |||||||||||||
| Fixed lease revenue | - | - | ||||||||||||||||||
| Variable cost recovery revenue | ||||||||||||||||||||
| Variable throughput and other revenue | ||||||||||||||||||||
| Total | $ | $ | $ | $ | $ | |||||||||||||||
| Nine Months Ended September 30, 2021 | ||||||||||||||||||||
| Revenue from contracts with customers | Lease revenue | |||||||||||||||||||
| Third-party revenue | Related-party revenue | Third-party revenue | Related-party revenue | Total | ||||||||||||||||
| Fixed storage and throughput revenue | $ | $ | $ | - | $ | - | $ | |||||||||||||
| Fixed lease revenue | - | - | ||||||||||||||||||
| Variable cost recovery revenue | ||||||||||||||||||||
| Variable throughput and other revenue | ||||||||||||||||||||
| Total | $ | $ | $ | $ | $ | |||||||||||||||
Contract Balances
Billed accounts receivable from contracts with customers were $
The Partnership records unearned revenues when cash payments are received in advance of performance. Unearned revenue related to contracts with customers was $
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.
| 4. | DISCONTINUED OPERATIONS |
On December 21, 2020, the Partnership announced that it entered into 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 classification of held for sale and disposal 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 and nine months ended September 30, 2020 and 2021.
As part of the crude oil pipeline sale, $
Exit and disposal costs related to these sales, in the form of employee severance payments, totaled $
During the three months ended March 31, 2020, an impairment of $
| 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 | $ | $ | $ | $ | ||||||||||||
| Plant, property, and equipment | ||||||||||||||||
| Other assets | ||||||||||||||||
| Total assets of discontinued operations | $ | $ | $ | $ | ||||||||||||
| LIABILITIES | ||||||||||||||||
| Current liabilities | $ | $ | $ | $ | ||||||||||||
| Total liabilities of discontinued operations | $ | $ | $ | $ | ||||||||||||
| Assets and Liabilities of Discontinued Operations (in thousands) | As of September 30, 2021 | |||||||||||||||
| Crude Oil Trucking Services | Crude Oil Pipeline Services | Crude Oil Terminalling Services | Total | |||||||||||||
| ASSETS | ||||||||||||||||
| Accounts receivable, net | $ | $ | $ | $ | ||||||||||||
| Total assets of discontinued operations | $ | $ | $ | $ | ||||||||||||
| LIABILITIES | ||||||||||||||||
| Current liabilities | $ | $ | $ | $ | ||||||||||||
| Total liabilities of discontinued operations | $ | $ | $ | $ | ||||||||||||
| Statement of Operations for Discontinued Operations (in thousands) | Three Months Ended September 30, 2020 | |||||||||||||||
| Crude Oil Trucking Services | Crude Oil Pipeline Services | Crude Oil Terminalling Services | Total | |||||||||||||
| Revenue: | ||||||||||||||||
| Third-party service revenue | $ | $ | $ | $ | ||||||||||||
| Intercompany service revenue | ||||||||||||||||
| Third-party product sales revenue | ||||||||||||||||
| Costs and expenses: | ||||||||||||||||
| Operating expense | ||||||||||||||||
| Intercompany operating expense | ||||||||||||||||
| Cost of product sales | ||||||||||||||||
| Cost of product sales from related party | ||||||||||||||||
| General and administrative expense | ||||||||||||||||
| (Gain)loss on disposal of assets | ( | ) | ( | ) | ||||||||||||
| Interest expense | ||||||||||||||||
| Income(loss) before income taxes | ( | ) | ||||||||||||||
| Provision for income taxes | ||||||||||||||||
| Net income(loss) from discontinued operations | $ | ( | ) | $ | $ | $ | ||||||||||
| Statement of Operations for Discontinued Operations (in thousands) | Three Months Ended September 30, 2021 | |||||||||||||||
| Crude Oil Trucking Services | Crude Oil Pipeline Services | Crude Oil Terminalling Services | Total | |||||||||||||
| Revenue: | ||||||||||||||||
| Third-party service revenue | $ | $ | $ | $ | ||||||||||||
| Costs and expenses: | ||||||||||||||||
| Operating expense | ( | ) | ( | ) | ||||||||||||
| General and administrative expense | ( | ) | ( | ) | ||||||||||||
| (Gain)loss on disposal of assets | ( | ) | ||||||||||||||
| Income(loss) before income taxes | ( | ) | ( | ) | ( | ) | ||||||||||
| Provision for income taxes | ||||||||||||||||
| Net income(loss) from discontinued operations | $ | ( | ) | $ | $ | ( | ) | $ | ( | ) | ||||||
| Statement of Operations for Discontinued Operations (in thousands) | Nine Months Ended September 30, 2020 | |||||||||||||||
| Crude Oil Trucking Services | Crude Oil Pipeline Services | Crude Oil Terminalling Services | Total | |||||||||||||
| Revenue: | ||||||||||||||||
| Third-party service revenue | $ | $ | $ | $ | ||||||||||||
| Intercompany service revenue | ||||||||||||||||
| Third-party product sales revenue | ||||||||||||||||
| Costs and expenses: | ||||||||||||||||
| Operating expense | ||||||||||||||||
| Intercompany operating expense | ||||||||||||||||
| Cost of product sales | ||||||||||||||||
| Cost of product sales from related party | ||||||||||||||||
| General and administrative expense | ||||||||||||||||
| Tangible asset impairment expense | ||||||||||||||||
| Gain on disposal of assets | ( | ) | ( | ) | ( | ) | ||||||||||
| Interest expense | ||||||||||||||||
| Income(loss) before income taxes | ( | ) | ( | ) | ( | ) | ||||||||||
| Provision for income taxes | ||||||||||||||||
| Net income(loss) from discontinued operations | $ | ( | ) | $ | ( | ) | $ | $ | ( | ) | ||||||
| Statement of Operations for Discontinued Operations (in thousands) | Nine Months Ended September 30, 2021 | |||||||||||||||
| Crude Oil Trucking Services | Crude Oil Pipeline Services | Crude Oil Terminalling Services | Total | |||||||||||||
| Revenue: | ||||||||||||||||
| Third-party service revenue | $ | $ | $ | $ | ||||||||||||
| Intercompany service revenue | ||||||||||||||||
| Third-party product sales revenue | ||||||||||||||||
| Costs and expenses: | ||||||||||||||||
| Operating expense | ||||||||||||||||
| Intercompany operating expense | ||||||||||||||||
| Cost of product sales | ||||||||||||||||
| Cost of product sales from related party | ||||||||||||||||
| General and administrative expense | ||||||||||||||||
| Tangible asset impairment expense | ||||||||||||||||
| (Gain)loss on disposal of assets | ( | ) | ( | ) | ( | ) | ||||||||||
| Interest expense | ||||||||||||||||
| Income(loss) before income taxes | ( | ) | ||||||||||||||
| Provision for income taxes | ||||||||||||||||
| Net income(loss) from discontinued operations | $ | ( | ) | $ | $ | $ | ||||||||||
| Select cash flow information (in thousands) | ||||||||||||||||
| Crude Oil Trucking Services | Crude Oil Pipeline Services | Crude Oil Terminalling Services | Total | |||||||||||||
| Nine Months Ended September 30, 2020 | ||||||||||||||||
| Depreciation and amortization | $ | $ | $ | $ | ||||||||||||
| Capital expenditures | $ | $ | $ | $ | ||||||||||||
| Nine Months Ended September 30, 2021 | ||||||||||||||||
| Amortization | $ | $ | $ | $ | ||||||||||||
| Capital expenditures | $ | $ | $ | $ | ||||||||||||
| 5. | DEBT |
On May 26, 2021, the Partnership entered into an amended and restated credit agreement with a revolving loan facility of $
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 $
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
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 $
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
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
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
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; |
| • | consummate 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”). |
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, on a pro forma basis after giving effect to such distributions, the Partnership is in compliance with its financial covenants under the credit agreement and no default or event of default exists under the credit agreement. Additionally, the credit agreement permits the Partnership to repurchase up to an aggregate of $
In addition to other customary events of default, the credit agreement includes an event of default if:
| (i) | the general partner ceases to own |
| (ii) | Ergon ceases to own and control |
| (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.
On May 26, 2021, as part of the credit agreement refinancing, there was a non-cash increase in credit borrowings of $
The following table sets forth financial information pertaining to the credit agreement (in thousands, except for interest rate):
| Three Months Ended September 30, | Nine Months Ended September 30, | |||||||||||||||
| 2020 | 2021 | 2020 | 2021 | |||||||||||||
| Debt issuance costs capitalized | $ | $ | $ | $ | ||||||||||||
| Write off of debt issuance costs due to amendments | ||||||||||||||||
| Write off of debt issuance costs due to new credit facility | ||||||||||||||||
| Interest expense related to amortization of debt issuance costs | ||||||||||||||||
| Credit facility interest expense(1) | ||||||||||||||||
| Weighted average interest rate under credit facility(1) | % | % | % | % | ||||||||||||
___________________
| (1) | Excludes interest expense related to amortization and write off of debt issuance costs for the nine months ending September 30, 2021. |
| 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 nine months ended September 30, 2021, the preferred units were also allocated income for the excess consideration paid over carrying value for the repurchase of 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 September 30, | Nine Months Ended September 30, | |||||||||||||||
| 2020 | 2021 | 2020 | 2021 | |||||||||||||
| Net income | $ | $ | $ | $ | ||||||||||||
| General partner interest in net income | ||||||||||||||||
| Preferred interest in net income | ||||||||||||||||
| Net income(loss) available to limited partners | $ | $ | $ | ( | ) | $ | ||||||||||
| Basic weighted average number of units: | ||||||||||||||||
| Common units | ||||||||||||||||
| Restricted and phantom units | ||||||||||||||||
| Total units | ||||||||||||||||
| Basic and diluted net income(loss) from discontinued operations per common unit | $ | $ | $ | ( | ) | $ | ||||||||||
| Basic and diluted net income from continuing operations per common unit | $ | $ | $ | $ | ||||||||||||
| Basic and diluted net income(loss) per common unit | $ | $ | $ | ( | ) | $ | ||||||||||
| 7. | PARTNERS’ CAPITAL AND DISTRIBUTIONS |
During the three months ended September 30, 2021, the Partnership repurchased a total of
On , the Board approved a cash distribution of $
In addition, the Board approved a cash distribution of $
| 8. | RELATED-PARTY TRANSACTIONS |
The Partnership leases asphalt facilities and provides asphalt terminalling services to Ergon. For the three months ended September 30, 2020 and 2021, the Partnership recognized related-party revenues of $
Ergon also provides certain operations and maintenance services to certain asphalt facilities that it leases under an agreement dated August 1, 2020. For the three months ended September 30, 2020 and 2021, the Partnership recognized operating expense of $
As of December 31, 2019, the Partnership had a contingent liability to Ergon of $
| 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
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 -third increments over 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 | $ | $ | ||||||||||
| December 2019 | $ | $ | ||||||||||
| December 2020 | $ | $ | ||||||||||
| (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 -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 | $ | $ | ||||||||||
| June 2019 | $ | $ | ||||||||||
| March 2020 | $ | $ | ||||||||||
| October 2020 | $ | $ | ||||||||||
| March 2021 | $ | $ | ||||||||||
| (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 September 30, 2021, was $
The Partnership’s equity-based incentive compensation expense for each of the three months ended September 30, 2020 and 2021, was $
Activity pertaining to phantom and restricted common unit awards granted under the LTIP was as follows:
| Number of Units | Weighted Average Grant Date Fair Value | |||||||
| Nonvested at December 31, 2020 | $ | |||||||
| Granted | $ | |||||||
| Vested | $ | |||||||
| Forfeited | $ | |||||||
| Nonvested at September 30, 2021 | $ | |||||||
| 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 September 30, 2021, the Partnership had
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 September 30, 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 September 30, 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 nine months ended September 30, 2021, that are of significance or potential significance to the Partnership.
| 13. | SUBSEQUENT EVENTS |
On October 8, 2021, Ergon publicly announced that it submitted to the Board a non-binding proposal, pursuant to which Ergon would acquire all common units and preferred units of the Partnership that Ergon and its affiliates do not already own in exchange for $
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 that 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 5.2 years remaining under their terms as of November 4, 2021. Approximately 5% 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 2028. Our varying contract expiration dates provide for staggered renewals, which provides additional stability to the cash flow.
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.
Infrastructure spending is currently a focus at the federal, state, and local levels. 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. Any new federal infrastructure spending will likely not have a significant impact on customers’ 2021 throughput volumes, but it could for future years. This asphalt season, customer throughput volumes are trending in line with prior years, and as such we expect the financial impact of variable throughput revenues to trend in line with prior years as well.
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.
Results of Operations
Non-GAAP Financial Measures
To supplement our financial information presented in accordance with generally accepted accounting principles, or “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 and nine months ended September 30, 2020 and 2021, reconciled to the most directly comparable GAAP measure:
| Three Months Ended |
Three Months Variance |
Nine Months Ended |
Nine Months Variance |
|||||||||||||||||||||||||||||
| Operating results |
September 30, |
Favorable/(Unfavorable) |
September 30, |
Favorable/(Unfavorable) |
||||||||||||||||||||||||||||
| (dollars in thousands) |
2020 |
2021 |
|
$% |
2020 |
2021 |
|
$% |
||||||||||||||||||||||||
| Fixed fee revenue |
$ | 23,494 | $ | 24,413 | $ | 919 | 4 | % | $ | 67,572 | $ | 73,195 | $ | 5,623 | 8 | % | ||||||||||||||||
| Variable cost recovery revenue |
2,870 | 3,126 | 256 | 9 | % | 9,736 | 8,658 | (1,078 | ) | (11 | )% | |||||||||||||||||||||
| Variable throughput and other revenue |
2,631 | 2,800 | 169 | 6 | % | 3,128 | 3,320 | 192 | 6 | % | ||||||||||||||||||||||
| Total revenue |
28,995 | 30,339 | 1,344 | 5 | % | 80,436 | 85,173 | 4,737 | 6 | % | ||||||||||||||||||||||
| Operating expenses, excluding depreciation and amortization |
(12,517 | ) | (12,917 | ) | (400 | ) | (3 | )% | (36,137 | ) | (38,880 | ) | (2,743 | ) | (8 | )% | ||||||||||||||||
| Total operating margin, excluding depreciation and amortization |
16,478 | 17,422 | 944 | 6 | % | 44,299 | 46,293 | 1,994 | 5 | % | ||||||||||||||||||||||
| Depreciation and amortization |
3,054 | 2,919 | 135 | 4 | % | 10,324 | 8,919 | 1,405 | 14 | % | ||||||||||||||||||||||
| General and administrative expense |
3,237 | 2,967 | 270 | 8 | % | 10,501 | 9,921 | 580 | 6 | % | ||||||||||||||||||||||
| (Gain)loss on disposal of assets |
(324 | ) | 129 | (453 | ) | (140 | )% | (250 | ) | 129 | (379 | ) | (152 | )% | ||||||||||||||||||
| Operating income |
10,511 | 11,407 | 896 | 9 | % | 23,724 | 27,324 | 3,600 | 15 | % | ||||||||||||||||||||||
| Other income(expenses): |
||||||||||||||||||||||||||||||||
| Other income |
176 | 2,187 | 2,011 | 1,143 | % | 969 | 2,529 | 1,560 | 161 | % | ||||||||||||||||||||||
| Interest expense |
(1,302 | ) | (968 | ) | 334 | 26 | % | (4,417 | ) | (3,996 | ) | 421 | 10 | % | ||||||||||||||||||
| Provision for income taxes |
- | (10 | ) | (10 | ) | N/A | 1 | (30 | ) | (31 | ) | (3,100 | )% | |||||||||||||||||||
| Income from continuing operations |
9,385 | 12,616 | 3,231 | 34 | % | 20,277 | 25,827 | 5,550 | 27 | % | ||||||||||||||||||||||
| Income(loss) from discontinued operations, net |
5,008 | (20 | ) | (5,028 | ) | (100 | )% | (4,533 | ) | 75,705 | 80,238 | 1,770 | % | |||||||||||||||||||
| Net income |
$ | 14,393 | $ | 12,596 | $ | (1,797 | ) | (12 | )% | $ | 15,744 | $ | 101,532 | $ | 85,788 | 545 | % | |||||||||||||||
Revenues. Total revenues increased to $30.3 million for the three months ended September 30, 2021, as compared to $29.0 million for the same period in 2020, and increased to $85.2 million for the nine months ended September 30, 2021, as compared to $80.4 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 consumer price index (“CPI”) adjustments built into our agreements. In addition to CPI escalations, 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. Variable throughput revenue is primarily driven by our customers’ excess volumes over annual minimum thresholds and the timing of those thresholds being reached during the year. The increase in variable throughput revenue for the three and nine month periods is due to the timing of certain customers reaching their thresholds and certain customer volumes trending favorably.
Operating expenses, excluding depreciation and amortization. Operating expense, excluding depreciation and amortization, increased to $12.9 million for the three months ended September 30, 2021, as compared to $12.5 million for the same period in 2020, and increased to $38.9 million for the nine months ended September 30, 2021, as compared to $36.1 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 higher utility costs from rising prices, which are recoverable costs from our customers.
Depreciation and amortization expense. Depreciation and amortization expense decreased slightly to $2.9 million for the three months ended September 30, 2021, as compared to $3.1 million for the same period in 2020, and decreased to $8.9 million for the nine months ended September 30, 2021, as compared to $10.3 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 decreased to $3.0 million for the three months ended September 30, 2021, as compared to $3.2 million for the same period in 2020, and decreased to $9.9 million for the nine months ended September 30, 2021, as compared to $10.5 million for the same period in 2020. The decrease for the three month period was due to corporate cost synergies realized after the completion of the crude business sales, which included lower compensation costs in 2021 due to reductions in corporate overhead in the first quarter of 2021. For the nine month period, decreases due to separation costs incurred in the second quarter of 2020 related to the resignation of the former Chief Executive Officer of our general partner and the lower compensation costs in 2021 due to reductions in corporate overhead were partially offset by severance paid in the first quarter of 2021 related to the crude business sales.
Other income. Other income for the three and nine months ended September 30, 2021 and 2020, primarily related to insurance claim recoveries related to damages incurred in 2019 and 2020 at certain asphalt facilities.
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 |
Three Months Variance |
Nine Months Ended |
Nine Months Variance |
|||||||||||||||||||||||||||||
| September 30, |
Favorable/(Unfavorable) |
September 30, |
Favorable/(Unfavorable) |
|||||||||||||||||||||||||||||
| 2020 |
2021 |
|
$% |
2020 |
2021 |
|
$% |
|||||||||||||||||||||||||
| Credit agreement interest |
$ | 1,046 | $ | 771 | $ | 275 | 26 | % | $ | 3,652 | $ | 2,606 | $ | 1,046 | 29 | % | ||||||||||||||||
| Amortization of debt issuance costs |
251 | 193 | 58 | 23 | % | $ | 753 | 655 | 98 | 13 | % | |||||||||||||||||||||
| Write-off of debt issuance costs |
- | - | - | 0 | % | $ | - | 730 | (730 | ) | N/A | |||||||||||||||||||||
| Other |
5 | 4 | 1 | 20 | % | $ | 12 | 5 | 7 | 58 | % | |||||||||||||||||||||
| Total interest expense |
$ | 1,302 | $ | 968 | $ | 334 | 26 | % | $ | 4,417 | $ | 3,996 | $ | 421 | 10 | % | ||||||||||||||||
The decrease in credit agreement interest is due to lower floating Eurodollar 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 October 26, 2021, the Board approved a cash distribution of $0.17875 per outstanding preferred unit for the three months ended September 30, 2021. We will pay this distribution on November 12, 2021, to unitholders of record as of November 5, 2021. The total distribution will be approximately $6.2 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 September 30, 2021. We will pay this distribution on November 12, 2021, to unitholders of record as of November 5, 2021. The total distribution will be approximately $1.8 million, with approximately $1.7 million paid to our common unitholders, less than $0.1 million paid to our general partner, 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.
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 nine months ended September 30, 2020 and 2021:
| Nine Months Ended September 30, | ||||||||
| 2020 |
2021 |
|||||||
| (in thousands) |
||||||||
| Net cash provided by operating activities |
$ | 43,900 | $ | 35,272 | ||||
| Net cash provided by (used in) investing activities |
$ | (22,193 | ) | $ | 149,838 | |||
| Net cash provided by (used in) financing activities |
$ | (21,293 | ) | $ | (185,360 | ) | ||
Operating Activities. Net cash provided by operating activities decreased to $35.3 million for the nine months ended September 30, 2021, as compared to $43.9 million for the nine months ended September 30, 2020, primarily due to changes in working capital.
Investing Activities. Net cash provided by investing activities was $149.8 million for the nine months ended September 30, 2021, compared to net cash used in investing activities of $22.2 million for the nine months ended September 30, 2020. The nine months ended September 30, 2021, included net proceeds from the sale of the crude oil businesses of $155.2 million, which excludes $1.4 million of funds held in escrow for right of way renewals. Capital expenditures for the nine months ended September 30, 2021, inclusive of both continuing and discontinued operations, included maintenance capital expenditures of $5.1 million and expansion capital expenditures of $1.3 million. In addition, we received $1.1 million of insurance proceeds during the nine months ended September 30, 2021, from claims related to property damage repairs. The nine months ended September 30, 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 nine months ended September 30, 2020, inclusive of both continuing and discontinued operations, included maintenance capital expenditures of $7.5 million and expansion capital expenditures of $4.9 million.
Financing Activities. Net cash used in financing activities was $185.4 million for the nine months ended September 30, 2021, compared to $21.3 million for the nine months ended September 30, 2020. Cash used in financing activities for the nine months ended September 30, 2021, consisted primarily of net payments on long-term debt of $154.5 million, $24.1 million in distributions to our unitholders, and the repurchase of preferred units of $5.4 million. Net cash used in financing activities for the nine months ended September 30, 2020, consisted primarily of $24.3 million in distributions to our unitholders partially offset by net borrowings on long-term debt of $5.0 million.
Liquidity and Capital Resources
Cash flows from operations and availability under our revolving credit facility are our primary sources of liquidity. At September 30, 2021, we had a working capital deficit of $10.7 million. This is primarily a function of our approach to cash management. At September 30, 2021, we had approximately $101.0 million of revolver borrowings and approximately $0.7 million of letters of credit outstanding under the credit agreement, leaving us with approximately $198.3 million of availability under our credit agreement subject to covenant restrictions, which limited our availability to $157.2 million. As of November 4, 2021, we have approximately $96.0 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 $203.3 million and cash on hand of approximately $0.1 million. The credit agreement is scheduled to mature on May 26, 2025.
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 September 30, 2021, and for each fiscal quarter thereafter, is 4.75. Our consolidated total leverage ratio was 1.87 to 1.00 as of September 30, 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.
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 nine months ended September 30, 2020 and 2021 (in thousands):
| Nine Months Ended September 30, |
||||||||
| 2020 |
2021 |
|||||||
| Acquisitions |
$ | 12,221 | $ | - | ||||
| Gross expansion capital expenditures |
$ | 836 | $ | 1,312 | ||||
| Reimbursable expenditures |
(284 | ) | (154 | ) | ||||
| Net expansion capital expenditures |
$ | 552 | $ | 1,158 | ||||
| Gross maintenance capital expenditures |
$ | 6,080 | $ | 4,946 | ||||
| Reimbursable expenditures |
(1,114 | ) | (19 | ) | ||||
| Net maintenance capital expenditures |
$ | 4,966 | $ | 4,927 | ||||
________________
| (1) |
Related to the acquisition of DEVCO from Ergon as described in Note 8 to our unaudited condensed consolidated financial statements. |
We currently expect our 2021 expansion capital expenditures for organic growth projects to be approximately $1.0 million to $1.5 million and our maintenance capital expenditures to be approximately $6.0 million to $6.5 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 September 30, 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 September 30, 2021, that have materially affected, or are reasonably likely to materially affect, our internal control over financial reporting.
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.
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 September 30, 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 |
||||||||||||
| 09/01/2021-09/30/2021 |
102 | $ | 8.10 | - | $ | - | ||||||||||
| 08/01/2021-08/31/2021 |
30,000 | $ | 8.11 | - | $ | - | ||||||||||
| 07/01/2021-07/31/2021 |
- | $ | - | - | $ | - | ||||||||||
___________________
| (1) |
The August repurchase was made pursuant to a single privately negotiated transaction. The September repurchase consisted of multiple open-market transactions. |
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 |
|
|
| 3.2 |
|
|
| 3.3 |
|
|
| 3.4 |
|
|
| 3.5 |
|
|
| 3.6 |
|
|
| 4.1 |
|
|
| 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# |
|
|
| 101.INS |
|
Inline XBRL Instance Document - the instance document does not appear in the Interactive Data File because its XBRL tags are embedded within the Inline XBRL document. |
| 101.SCH | Inline XBRL Taxonomy Extension Schema Document. | |
| 101.CAL | Inline XBRL Taxonomy Calculation Linkbase Document. | |
| 101.DEF | Inline XBRL Taxonomy Extension Definitions Document. | |
| 101.LAB | Inline XBRL Taxonomy Label Linkbase Document. | |
| 101.PRE | Inline XBRL Taxonomy Presentation Linkbase Document. | |
| 104 | Cover Page Interactive Data File (embedded within the Inline XBRL document and contained in Exhibit 101). |
Attached as Exhibit 101 to this Quarterly Report are the following Inline XBRL-related documents: (i) Document and Entity Information; (ii) Unaudited Condensed Consolidated Balance Sheets as of December 31, 2020 and September 30, 2021; (iii) Unaudited Condensed Consolidated Statements of Operations for the three and nine months ended September 30, 2020 and 2021; (iv) Unaudited Condensed Consolidated Statement of Changes in Partners’ Capital (Deficit) for the three and nine months ended September 30, 2020 and 2021; (v) Unaudited Condensed Consolidated Statements of Cash Flows for the nine months ended September 30, 2020 and 2021; and (vi) Notes to Unaudited Condensed Consolidated Financial Statements.
____________________
* Filed herewith.
# Furnished herewith
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: |
November 12, 2021 |
By: |
/s/ Matthew R. Lewis |
|
|
|
|
Matthew R. Lewis |
|
|
|
|
Chief Financial Officer |
|
|
|
|
|
| Date: |
November 12, 2021 |
By: |
/s/ Michael G. McLanahan |
|
|
|
|
Michael G. McLanahan |
|
|
|
|
Chief Accounting Officer |
25
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: |
|
|
|
|
|
/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. |
|
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: |
|
|
|
|
|
/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. |
|
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 September 30, 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. |
|
|
|
|
|
|
|
/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. |
|
|
| November 12, 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. |
Condensed Consolidated Balance Sheets (Current Period Unaudited) (Parentheticals) - shares |
Sep. 30, 2021 |
Dec. 31, 2020 |
|---|---|---|
| Common units, issued (in shares) | 41,516,643 | 41,214,856 |
| Common units, outstanding (in shares) | 41,516,643 | 41,214,856 |
| Preferred units, issued (in shares) | 34,406,683 | 35,125,202 |
| Preferred units, outstanding (in shares) | 34,406,683 | 35,125,202 |
| General partner units, interest | 1.60% | 1.60% |
| General partner units, outstanding (in shares) | 1,225,409 | 1,225,409 |
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) | 15,744 | (3,341) | 18,836 | 249 |
| Equity-based incentive compensation | 640 | 630 | 0 | 10 |
| Distributions | (24,297) | (5,076) | (18,836) | (385) |
| Proceeds from sale of common units pursuant to the Employee Unit Purchase Plan | 170 | 170 | 0 | 0 |
| Balance at Sep. 30, 2020 | (29,066) | 349,160 | 253,923 | (632,149) |
| Balance at Jun. 30, 2020 | (35,678) | 342,651 | 253,923 | (632,252) |
| Net income (loss) | 14,393 | 7,887 | 6,278 | 228 |
| Equity-based incentive compensation | 213 | 210 | 0 | 3 |
| Distributions | (8,109) | (1,703) | (6,278) | (128) |
| Proceeds from sale of common units pursuant to the Employee Unit Purchase Plan | 115 | 115 | 0 | 0 |
| Balance at Sep. 30, 2020 | (29,066) | 349,160 | 253,923 | (632,149) |
| Balance at Dec. 31, 2020 | (66,223) | 312,591 | 253,923 | (632,737) |
| Net income (loss) | 101,532 | 81,121 | 18,803 | 1,608 |
| Equity-based incentive compensation | 339 | 330 | 0 | 9 |
| Distributions | (24,116) | (5,143) | (18,591) | (382) |
| Proceeds from sale of common units pursuant to the Employee Unit Purchase Plan | 154 | 154 | 0 | 0 |
| Repurchase of Preferred Shares | (5,407) | 0 | (5,407) | 0 |
| Balance at Sep. 30, 2021 | 6,279 | 389,053 | 248,728 | (631,502) |
| Balance at Jun. 30, 2021 | 1,633 | 384,265 | 248,946 | (631,578) |
| Net income (loss) | 12,596 | 6,214 | 6,182 | 200 |
| Equity-based incentive compensation | 194 | 191 | 0 | 3 |
| Distributions | (8,006) | (1,723) | (6,156) | (127) |
| Proceeds from sale of common units pursuant to the Employee Unit Purchase Plan | 106 | 106 | 0 | 0 |
| Repurchase of Preferred Shares | (244) | 0 | (244) | 0 |
| Balance at Sep. 30, 2021 | $ 6,279 | $ 389,053 | $ 248,728 | $ (631,502) |
Condensed Consolidated Statements of Changes in Partners' Capital (Deficit) (Unaudited) (Parentheticals) - shares shares in Thousands |
3 Months Ended | 9 Months Ended | ||
|---|---|---|---|---|
Sep. 30, 2021 |
Sep. 30, 2020 |
Sep. 30, 2021 |
Sep. 30, 2020 |
|
| Limited Partner [Member] | ||||
| Common units issued pursuant to the Employee Unit Purchase Plan (in shares) | 44,958 | 104,954 | 77,654 | 158,326 |
Note 1 - Organization and Nature of Business |
9 Months Ended | ||
|---|---|---|---|
Sep. 30, 2021 | |||
| Notes to Financial Statements | |||
| Business Description and Basis of Presentation [Text Block] |
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.
|
Note 2 - Basis of Presentation |
9 Months Ended | ||
|---|---|---|---|
Sep. 30, 2021 | |||
| Notes to Financial Statements | |||
| Basis of Accounting [Text Block] |
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 September 30, 2021, the condensed consolidated statements of operations for the three and nine months ended September 30, 2020 and 2021, the condensed consolidated statements of changes in partners’ capital (deficit) for the three and nine months ended September 30, 2020 and 2021, and the condensed consolidated statements of cash flows for the nine months ended September 30, 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.
|
Note 3 - Revenue |
9 Months Ended | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
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| Notes to Financial Statements | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
| Revenue [Text Block] |
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):
___________________
Disaggregation of Revenue
Disaggregation of revenue from contracts with customers and lease revenue by revenue type is presented as follows (in thousands):
Contract Balances
Billed accounts receivable from contracts with customers were $2.1 million and $3.0 million at December 31, 2020, and September 30, 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 and $4.0 million at December 31, 2020, and September 30, 2021, respectively. For the nine months ended September 30, 2021, the Partnership recognized $2.3 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.
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Note 4 - Discontinued Operations |
9 Months Ended | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
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Sep. 30, 2021 | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
| Notes to Financial Statements | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
| Disposal Groups, Including Discontinued Operations, Disclosure [Text Block] |
On December 21, 2020, the Partnership announced that it entered into 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 classification of held for sale and disposal 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 and nine months ended September 30, 2020 and 2021.
As part of the crude oil pipeline sale, $1.4 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 two years following the date of sale.
Exit and disposal costs related to these sales, in the form of employee severance payments, totaled $1.9 million. The Partnership provided limited transition services to both of the buyers of the crude oil pipeline and terminalling services segments, with the final transition services being completed during the third quarter of 2021. The contracts were designed to recover the costs of providing services, so there is minimal income statement impact 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. During the three months ended June 30, 2020, the Partnership recognized asset impairment expense of $1.3 million in its crude trucking services segment based on expected future cash flows and market interest compared to carrying value.
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Note 5 - Debt |
9 Months Ended | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
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Sep. 30, 2021 | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
| Notes to Financial Statements | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
| Debt Disclosure [Text Block] |
On May 26, 2021, the Partnership entered into an amended and restated credit agreement with a revolving loan facility of $300.0 million. As of November 4, 2021, approximately $96.0 million of revolver borrowings and $0.7 million of letters of credit were outstanding under the credit agreement, leaving the Partnership with approximately $203.3 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 $450.0 million for all revolving loan commitments under the credit agreement.
The credit agreement will mature on
May 26, 2025, 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 is 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:
At
September 30, 2021, the Partnership’s consolidated total leverage ratio was
1.87 to
1.00 and the consolidated interest coverage ratio was
14.83 to
1.00. The Partnership was in compliance with all covenants of its credit agreement as of
September 30, 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, on a pro forma basis after giving effect to such distributions, the Partnership is in compliance with its financial covenants under the credit agreement and no default or event of default exists under the credit agreement. Additionally, the credit agreement permits the Partnership to repurchase up to an aggregate of $40.0 million of its units (including preferred units), up to $10.0 million for each calendar year, so long as, on a pro forma basis after giving effect to such repurchases, the Partnership’s total leverage ratio is less than 4.00 to 1.00, no default or event of default exists under the credit agreement, and availability under the revolving credit facility is at least 20% of the total commitments thereunder.
In addition to other customary events of default, the credit agreement includes an event of default if:
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.
On May 26, 2021, as part of the credit agreement refinancing, there was a non-cash increase in credit borrowings of $2.9 million and a non-cash increase in debt issuance costs of $2.5 million.
The following table sets forth financial information pertaining to the credit agreement (in thousands, except for interest rate):
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Note 6 - Net Income Per Limited Partner Unit |
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| Earnings Per Share [Text Block] |
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 nine months ended September 30, 2021, the preferred units were also allocated income for the excess consideration paid over carrying value for the repurchase of 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):
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Note 7 - Partners' Capital and Distributions |
9 Months Ended | ||
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Sep. 30, 2021 | |||
| Notes to Financial Statements | |||
| Partners' Capital Notes Disclosure [Text Block] |
During the three months ended September 30, 2021, the Partnership repurchased a total of 30,102 outstanding preferred units at a weighted average cost of $8.11 per unit or total cash consideration of $0.2 million. During the nine months ended September 30, 2021, the Partnership repurchased a total of 718,519 outstanding preferred units at a weighted average cost of $7.53 per unit or total cash consideration of $5.4 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. The preferred units were allocated additional net income for the three and nine months ended September 30, 2021, of less than $0.1 million and $0.2 million, respectively, for the consideration paid in excess of carrying value. All repurchased units were subsequently retired.
On , the Board approved a cash distribution of $0.17875 per outstanding preferred unit for the three months ended September 30, 2021. The Partnership will pay this distribution on , to unitholders of record as of . The total distribution will be approximately $6.2 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 September 30, 2021. The Partnership will pay this distribution on , to unitholders of record on . The total distribution will be approximately $1.8 million, with approximately $1.7 million to be paid to the Partnership’s common unitholders, less than $0.1 million to be paid to the general partner, 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.
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Note 8 - Related-party Transactions |
9 Months Ended | ||
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Sep. 30, 2021 | |||
| Notes to Financial Statements | |||
| Related Party Transactions Disclosure [Text Block] |
The Partnership leases asphalt facilities and provides asphalt terminalling services to Ergon. For the three months ended September 30, 2020 and 2021, the Partnership recognized related-party revenues of $12.4 million and $13.2 million, respectively, for services provided to Ergon. For the nine months ended September 30, 2020 and 2021, the Partnership recognized related-party revenues of $32.3 million and $37.1 million, respectively, for services provided to Ergon. As of December 31, 2020, and September 30, 2021, the Partnership had receivables from Ergon of $0.5 million and $1.2 million, respectively. As of December 31, 2020, and September 30, 2021, the Partnership had unearned revenues from Ergon of $8.8 million and $9.5 million, respectively.
Ergon also provides certain operations and maintenance services to certain asphalt facilities that it leases under an agreement dated August 1, 2020. For the three months ended September 30, 2020 and 2021, the Partnership recognized operating expense of $3.1 million and $4.6 million, respectively, for these services. For the nine months ended September 30, 2020 and 2021, the Partnership recognized operating expense of $3.1 million and $13.9 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 nine months ended September 30, 2020.
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Note 9 - Long-term Incentive Plan |
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| Share-based Payment Arrangement [Text Block] |
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 -third increments over years. The following table includes information on outstanding grants made to the directors under the LTIP:
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 -year vesting period. The following table includes information on the outstanding grants:
The unrecognized estimated compensation cost of outstanding phantom and restricted units at September 30, 2021, was $1.2 million, which will be expensed over the remaining vesting period.
The Partnership’s equity-based incentive compensation expense for each of the three months ended September 30, 2020 and 2021, was $0.2 million. The Partnership’s equity-based incentive compensation expense for the nine months ended September 30, 2020 and 2021, was $0.6 million and $0.5 million, respectively.
Activity pertaining to phantom and restricted common unit awards granted under the LTIP was as follows:
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Note 10 - Fair Value Measurements |
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| Fair Value Disclosures [Text Block] |
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:
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 September 30, 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 September 30, 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 September 30, 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 |
9 Months Ended | ||
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Sep. 30, 2021 | |||
| Notes to Financial Statements | |||
| Commitments and Contingencies Disclosure [Text Block] |
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.
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Note 12 - Recently Issued Accounting Standards |
9 Months Ended | ||
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Sep. 30, 2021 | |||
| Notes to Financial Statements | |||
| Accounting Standards Update and Change in Accounting Principle [Text Block] |
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 nine months ended September 30, 2021, that are of significance or potential significance to the Partnership. |
Note 13 - Subsequent Events |
9 Months Ended | ||
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Sep. 30, 2021 | |||
| Notes to Financial Statements | |||
| Subsequent Events [Text Block] |
On October 8, 2021, Ergon publicly announced that it submitted to the Board a non-binding proposal, pursuant to which Ergon would acquire all common units and preferred units of the Partnership that Ergon and its affiliates do not already own in exchange for $3.32 per common unit and $8.46 per preferred unit. The transaction, as proposed, is subject to a number of contingencies, including the approval of the conflicts committee of the Board, the approval by the Partnership’s unitholders and the satisfaction of any conditions to the consummation of a transaction set forth in any definitive agreement concerning the transaction. There can be no assurance that a definitive agreement will be executed or that any transaction will materialize.
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Note 3 - Revenue (Tables) |
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| Revenue, Remaining Performance Obligation, Expected Timing of Satisfaction [Table Text Block] |
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| Disaggregation of Revenue [Table Text Block] |
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Note 4 - Discontinued Operations (Tables) |
9 Months Ended | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
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| Notes Tables | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
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Note 5 - Debt (Tables) |
9 Months Ended | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
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Note 6 - Net Income Per Limited Partner Unit (Tables) |
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Note 9 - Long-term Incentive Plan (Tables) |
9 Months Ended | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
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| Share-based Compensation Arrangements by Share-based Payment Award, Restricted Stock Units, Vested and Expected to Vest [Table Text Block] |
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| Share-based Payment Arrangement, Activity [Table Text Block] |
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Note 1 - Organization and Nature of Business (Details Textual) |
9 Months Ended |
|---|---|
Sep. 30, 2021 | |
| Number of States in which Entity Operates | 26 |
| Number of Operating Segments | 1 |
Note 3 - Revenue (Details Textual) - USD ($) $ in Millions |
9 Months Ended | |
|---|---|---|
Sep. 30, 2021 |
Dec. 31, 2020 |
|
| Billed Contracts Receivable | $ 3.0 | $ 2.1 |
| Contract with Customer, Liability, Total | 4.0 | $ 3.2 |
| Contract with Customer, Liability, Revenue Recognized | $ 2.3 |
Note 3 - Revenue - Future Performance Obligations (Details) $ in Thousands |
Sep. 30, 2021
USD ($)
|
|||
|---|---|---|---|---|
| Remainder of 2021, Revenue from Leases | $ 14,644 | |||
| Total, Remainder of 2021 | 24,457 | |||
| 2022, Revenue from Leases | 55,044 | |||
| Total, 2022 | 90,869 | |||
| 2023, Revenue from Leases | 43,483 | |||
| Total, 2023 | 71,609 | |||
| 2024, Revenue from Leases | 43,520 | |||
| Total, 2024 | 71,689 | |||
| 2025, Revenue from Leases | 38,523 | |||
| Total, 2025 | 65,375 | |||
| Thereafter, Revenue from Leases | 45,820 | |||
| Total, Thereafter | 83,486 | |||
| Revenue related to future performance obligation | 166,451 | [1] | ||
| Revenue from Leases | 241,034 | |||
| Total revenue related to future performance obligations | $ 407,485 | |||
| ||||
Note 3 - Revenue - Disaggregation of Revenue (Details) - USD ($) $ in Thousands |
3 Months Ended | 9 Months Ended | ||
|---|---|---|---|---|
Sep. 30, 2021 |
Sep. 30, 2020 |
Sep. 30, 2021 |
Sep. 30, 2020 |
|
| Fixed storage and throughput revenue | $ 30,339 | $ 28,995 | $ 85,173 | $ 80,436 |
| Third Party [Member] | ||||
| Fixed storage and throughput revenue | 7,919 | 7,514 | 22,150 | 21,201 |
| Fixed lease revenue | 9,222 | 9,142 | 25,926 | 27,051 |
| Related Party [Member] | ||||
| Fixed storage and throughput revenue | 5,153 | 4,849 | 15,037 | 12,945 |
| Fixed lease revenue | 8,045 | 7,490 | 22,060 | 19,239 |
| Fixed Storageand Throughput Revenue [Member] | ||||
| Fixed storage and throughput revenue | 9,805 | 9,176 | 29,394 | 25,179 |
| Fixed Storageand Throughput Revenue [Member] | Third Party [Member] | ||||
| Fixed storage and throughput revenue | 5,084 | 5,097 | 15,232 | 15,318 |
| Fixed Storageand Throughput Revenue [Member] | Related Party [Member] | ||||
| Fixed storage and throughput revenue | 4,721 | 4,079 | 14,162 | 9,861 |
| Fixed Lease Revenue [Member] | ||||
| Fixed storage and throughput revenue | 14,608 | 14,318 | 43,801 | 42,393 |
| Fixed Lease Revenue [Member] | Third Party [Member] | ||||
| Fixed lease revenue | 7,823 | 7,766 | 23,445 | 24,479 |
| Fixed Lease Revenue [Member] | Related Party [Member] | ||||
| Fixed lease revenue | 6,785 | 6,552 | 20,356 | 17,914 |
| Variable Cost Recovery Revenue [Member] | ||||
| Fixed storage and throughput revenue | 3,126 | 2,870 | 8,658 | 9,736 |
| Variable Cost Recovery Revenue [Member] | Third Party [Member] | ||||
| Fixed storage and throughput revenue | 2,296 | 1,665 | 6,125 | 4,754 |
| Fixed lease revenue | 420 | 499 | 1,387 | 1,575 |
| Variable Cost Recovery Revenue [Member] | Related Party [Member] | ||||
| Fixed storage and throughput revenue | 160 | 552 | 452 | 2,866 |
| Fixed lease revenue | 250 | 154 | 694 | 541 |
| Variable Throughput Revenue [Member] | ||||
| Fixed storage and throughput revenue | 2,800 | 2,631 | 3,320 | 3,128 |
| Variable Throughput Revenue [Member] | Third Party [Member] | ||||
| Fixed storage and throughput revenue | 539 | 752 | 793 | 1,129 |
| Fixed lease revenue | 979 | 877 | 1,094 | 997 |
| Variable Throughput Revenue [Member] | Related Party [Member] | ||||
| Fixed storage and throughput revenue | 272 | 218 | 423 | 218 |
| Fixed lease revenue | $ 1,010 | $ 784 | $ 1,010 | $ 784 |
Note 4 - Discontinued Operations (Details Textual) - USD ($) $ in Millions |
3 Months Ended | ||
|---|---|---|---|
Jun. 30, 2020 |
Mar. 31, 2020 |
Dec. 21, 2020 |
|
| Pipeline Linefill [Member] | |||
| Asset Impairment Charges, Total | $ 4.9 | ||
| Crude Oil Trucking Services [Member] | |||
| Asset Impairment Charges, Total | $ 1.3 | ||
| Crude Oil Pipeline Services [Member] | Discontinued Operations, Held-for-sale [Member] | |||
| Proceeds from Divestiture of Businesses, Held in Escrow | $ 1.4 | ||
| Expected Exit and Disposal Costs | $ 1.9 | ||
Note 4 - Discontinued Operations - Financial Information (Details) - USD ($) $ in Thousands |
3 Months Ended | 9 Months Ended | |||
|---|---|---|---|---|---|
Sep. 30, 2021 |
Sep. 30, 2020 |
Sep. 30, 2021 |
Sep. 30, 2020 |
Dec. 31, 2020 |
|
| Accounts receivable, net | $ 299 | $ 299 | $ 13,959 | ||
| Plant, property, and equipment | 76,837 | ||||
| Other assets | 6,149 | ||||
| Total assets of discontinued operations | 299 | 299 | 96,945 | ||
| Current liabilities | 348 | 348 | 17,248 | ||
| Total liabilities of discontinued operations | 348 | 348 | 17,248 | ||
| Operating expense | 668 | $ 8,144 | 5,155 | $ 26,605 | |
| General and administrative expense | (11) | 164 | 173 | 507 | |
| (Gain)loss on disposal of assets | 19 | (185) | (75,119) | (176) | |
| Interest expense | 1,170 | 707 | 4,169 | ||
| Income(loss) before income taxes | (20) | 5,009 | 75,705 | (4,524) | |
| Provision for income taxes | 0 | 1 | 0 | 9 | |
| Net income(loss) from discontinued operations | (20) | 5,008 | 75,705 | (4,533) | |
| Tangible asset impairment expense | 156 | 6,417 | |||
| Intersegment Eliminations [Member] | |||||
| Operating expense | 1,434 | 409 | 4,364 | ||
| Service [Member] | Intersegment Eliminations [Member] | |||||
| Revenue | 1,434 | 409 | 4,364 | ||
| Third Party [Member] | |||||
| Cost of product sales | 19,833 | 4,994 | 41,133 | ||
| Third Party [Member] | Service [Member] | |||||
| Revenue | 656 | 5,372 | 5,641 | 18,734 | |
| Third Party [Member] | Product [Member] | |||||
| Revenue | 51,390 | 15,591 | 119,068 | ||
| Related Party [Member] | |||||
| Cost of product sales | 22,627 | 9,461 | 63,671 | ||
| Discontinued Operations, Disposed of by Sale [Member] | |||||
| Depreciation and amortization | 58 | 7,375 | |||
| Capital expenditures | 136 | 5,465 | |||
| Crude Oil Trucking Services [Member] | Discontinued Operations, Disposed of by Sale [Member] | |||||
| Accounts receivable, net | 0 | 0 | 81 | ||
| Plant, property, and equipment | 442 | ||||
| Other assets | 331 | ||||
| Total assets of discontinued operations | 0 | 0 | 854 | ||
| Current liabilities | 12 | 12 | 1,017 | ||
| Total liabilities of discontinued operations | 12 | 12 | 1,017 | ||
| Operating expense | (7) | 2,415 | 1,419 | 9,890 | |
| General and administrative expense | 0 | 71 | 61 | 212 | |
| (Gain)loss on disposal of assets | 26 | 76 | 23 | (120) | |
| Interest expense | 2 | 0 | 9 | ||
| Income(loss) before income taxes | (19) | (360) | (1,177) | (2,123) | |
| Provision for income taxes | 0 | 1 | 0 | 9 | |
| Net income(loss) from discontinued operations | (19) | (361) | (1,177) | (2,132) | |
| Tangible asset impairment expense | 92 | 1,330 | |||
| Depreciation and amortization | 3 | 531 | |||
| Capital expenditures | 0 | 2,019 | |||
| Crude Oil Trucking Services [Member] | Discontinued Operations, Disposed of by Sale [Member] | Intersegment Eliminations [Member] | |||||
| Operating expense | 0 | 0 | 0 | ||
| Crude Oil Trucking Services [Member] | Discontinued Operations, Disposed of by Sale [Member] | Service [Member] | Intersegment Eliminations [Member] | |||||
| Revenue | 1,434 | 409 | 4,364 | ||
| Crude Oil Trucking Services [Member] | Discontinued Operations, Disposed of by Sale [Member] | Third Party [Member] | |||||
| Cost of product sales | 0 | 0 | 0 | ||
| Crude Oil Trucking Services [Member] | Discontinued Operations, Disposed of by Sale [Member] | Third Party [Member] | Service [Member] | |||||
| Revenue | 0 | 770 | 9 | 4,834 | |
| Crude Oil Trucking Services [Member] | Discontinued Operations, Disposed of by Sale [Member] | Third Party [Member] | Product [Member] | |||||
| Revenue | 0 | 0 | 0 | ||
| Crude Oil Trucking Services [Member] | Discontinued Operations, Disposed of by Sale [Member] | Related Party [Member] | |||||
| Cost of product sales | 0 | 0 | 0 | ||
| Crude Oil Pipeline Services [Member] | Discontinued Operations, Disposed of by Sale [Member] | |||||
| Accounts receivable, net | 0 | 0 | 13,711 | ||
| Plant, property, and equipment | 23,541 | ||||
| Other assets | 547 | ||||
| Total assets of discontinued operations | 0 | 0 | 37,799 | ||
| Current liabilities | 232 | 232 | 14,921 | ||
| Total liabilities of discontinued operations | 232 | 232 | 14,921 | ||
| Operating expense | (1) | 3,366 | 1,552 | 10,149 | |
| General and administrative expense | (11) | 93 | 112 | 295 | |
| (Gain)loss on disposal of assets | 0 | (261) | (1,644) | (56) | |
| Interest expense | 206 | 72 | 762 | ||
| Income(loss) before income taxes | 12 | 4,504 | 1,129 | (2,784) | |
| Provision for income taxes | 0 | 0 | 0 | 0 | |
| Net income(loss) from discontinued operations | 12 | 4,504 | 1,129 | (2,784) | |
| Tangible asset impairment expense | 41 | 2,821 | |||
| Depreciation and amortization | 14 | 3,435 | |||
| Capital expenditures | 30 | 2,974 | |||
| Crude Oil Pipeline Services [Member] | Discontinued Operations, Disposed of by Sale [Member] | Intersegment Eliminations [Member] | |||||
| Operating expense | 1,434 | 409 | 4,364 | ||
| Crude Oil Pipeline Services [Member] | Discontinued Operations, Disposed of by Sale [Member] | Service [Member] | Intersegment Eliminations [Member] | |||||
| Revenue | 0 | 0 | 0 | ||
| Crude Oil Pipeline Services [Member] | Discontinued Operations, Disposed of by Sale [Member] | Third Party [Member] | |||||
| Cost of product sales | 19,833 | 4,994 | 41,133 | ||
| Crude Oil Pipeline Services [Member] | Discontinued Operations, Disposed of by Sale [Member] | Third Party [Member] | Service [Member] | |||||
| Revenue | 0 | 412 | 535 | 1,287 | |
| Crude Oil Pipeline Services [Member] | Discontinued Operations, Disposed of by Sale [Member] | Third Party [Member] | Product [Member] | |||||
| Revenue | 51,390 | 15,591 | 119,068 | ||
| Crude Oil Pipeline Services [Member] | Discontinued Operations, Disposed of by Sale [Member] | Related Party [Member] | |||||
| Cost of product sales | 22,627 | 9,461 | 63,671 | ||
| Crude Oil Terminalling Services [Member] | Discontinued Operations, Disposed of by Sale [Member] | |||||
| Accounts receivable, net | 299 | 299 | 167 | ||
| Plant, property, and equipment | 52,854 | ||||
| Other assets | 5,271 | ||||
| Total assets of discontinued operations | 299 | 299 | 58,292 | ||
| Current liabilities | 104 | 104 | 1,310 | ||
| Total liabilities of discontinued operations | 104 | 104 | $ 1,310 | ||
| Operating expense | 676 | 2,363 | 2,184 | 6,566 | |
| General and administrative expense | 0 | 0 | 0 | 0 | |
| (Gain)loss on disposal of assets | (7) | 0 | (73,498) | 0 | |
| Interest expense | 962 | 635 | 3,398 | ||
| Income(loss) before income taxes | (13) | 865 | 75,753 | 383 | |
| Provision for income taxes | 0 | 0 | 0 | 0 | |
| Net income(loss) from discontinued operations | (13) | 865 | 75,753 | 383 | |
| Tangible asset impairment expense | 23 | 2,266 | |||
| Depreciation and amortization | 41 | 3,409 | |||
| Capital expenditures | 106 | 472 | |||
| Crude Oil Terminalling Services [Member] | Discontinued Operations, Disposed of by Sale [Member] | Intersegment Eliminations [Member] | |||||
| Operating expense | 0 | 0 | 0 | ||
| Crude Oil Terminalling Services [Member] | Discontinued Operations, Disposed of by Sale [Member] | Service [Member] | Intersegment Eliminations [Member] | |||||
| Revenue | 0 | 0 | 0 | ||
| Crude Oil Terminalling Services [Member] | Discontinued Operations, Disposed of by Sale [Member] | Third Party [Member] | |||||
| Cost of product sales | 0 | 0 | 0 | ||
| Crude Oil Terminalling Services [Member] | Discontinued Operations, Disposed of by Sale [Member] | Third Party [Member] | Service [Member] | |||||
| Revenue | $ 656 | 4,190 | 5,097 | 12,613 | |
| Crude Oil Terminalling Services [Member] | Discontinued Operations, Disposed of by Sale [Member] | Third Party [Member] | Product [Member] | |||||
| Revenue | 0 | 0 | 0 | ||
| Crude Oil Terminalling Services [Member] | Discontinued Operations, Disposed of by Sale [Member] | Related Party [Member] | |||||
| Cost of product sales | $ 0 | $ 0 | $ 0 | ||
Note 5 - Debt (Details Textual) - Credit Agreement [Member] $ in Millions |
9 Months Ended | ||
|---|---|---|---|
|
May 26, 2021
USD ($)
|
Sep. 30, 2021
USD ($)
|
Nov. 04, 2021
USD ($)
|
|
| Line of Credit Facility, Maximum Borrowing Capacity Including Additional Lenders | $ 450.0 | ||
| Debt Instrument Covenant, Issued Qualified Senior Notes | $ 200.0 | ||
| 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 | $ 15.0 | ||
| Debt Instrument Covenant, Prior to Issuance of Qualified Senior Notes, Maximum Permitted Consolidated Total Leverage Ratio | 5.00 | ||
| Debt Instrument Covenant, After Issuance of Qualified Senior Notes, Based on Occurence of Acquisition, Maximum Permitted Consolidated Total Leverage Ratio | 5.50 | ||
| Debt Instrument Covenant, Maximum Permitted Consolidated Senior Secured Leverage Ratio | 3.50 | ||
| Debt Instrument Covenant, Minimum Permitted Consolidated Interest Coverage Ratio | 2.50 | ||
| Consolidated Total Leverage Ratio | 1.87 | ||
| Consolidated Interest Coverage Ratio | 14.83 | ||
| Debt Instrument, Covenant, Maximum Aggregate Unit Repurchases | $ 40.0 | ||
| Debt Instrument, Covenant, Maximum Yearly Unit Repurchases | $ 10.0 | ||
| Debt Instrument, Covenant, Unit Repurchases, Maximum Total Leverage Ratio | 4.00 | ||
| Debt Instrument, Covenant, Unit Repurchases, Minimum Percentage of Revolving Credit Facility to Total Commitments | 20.00% | ||
| Debt Instrument Covenant, Default, Percentage of General Partner Interest Cease | 100.00% | ||
| Line of Credit Assumed | $ 2.9 | ||
| Debt Issuance Costs Incurred During Noncash or Partial Noncash Transaction | 2.5 | ||
| Ergon [Member] | |||
| Debt Instrument Covenant, Default, Percentage of Membership Interest Cease | 50.00% | ||
| Federal Funds Effective Rate [Member] | |||
| Debt Instrument, Basis Spread on Variable Rate | 0.50% | ||
| Eurodollar Rate [Member] | |||
| Debt Instrument, Basis Spread on Variable Rate | 1.00% | ||
| Minimum [Member] | |||
| Line of Credit Facility, Commitment Fee Percentage | 0.375% | ||
| Minimum [Member] | Applicable Margin Based on Eurodollar Rate [Member] | |||
| Debt Instrument, Basis Spread on Variable Rate | 2.00% | ||
| Minimum [Member] | Applicable Margin on Based on Alternate Base Rate [Member] | |||
| Debt Instrument, Basis Spread on Variable Rate | 1.00% | ||
| Maximum [Member] | |||
| Line of Credit Facility, Commitment Fee Percentage | 0.50% | ||
| Maximum [Member] | Applicable Margin Based on Eurodollar Rate [Member] | |||
| Debt Instrument, Basis Spread on Variable Rate | 3.25% | ||
| Maximum [Member] | Applicable Margin on Based on Alternate Base Rate [Member] | |||
| Debt Instrument, Basis Spread on Variable Rate | 2.25% | ||
| Revolving Credit Facility [Member] | |||
| Line of Credit Facility, Maximum Borrowing Capacity | $ 300.0 | ||
| Revolving Credit Facility [Member] | Subsequent Event [Member] | |||
| Long-term Line of Credit, Total | $ 96.0 | ||
| Letters of Credit Outstanding, Amount | 0.7 | ||
| Line of Credit Facility, Remaining Borrowing Capacity | $ 203.3 |
Note 5 - Debt - Credit Agreement (Details) - USD ($) $ in Thousands |
3 Months Ended | 9 Months Ended | ||||
|---|---|---|---|---|---|---|
Sep. 30, 2021 |
Sep. 30, 2020 |
Sep. 30, 2021 |
Sep. 30, 2020 |
|||
| Interest expense related to amortization of debt issuance costs | $ 1,385 | $ 753 | ||||
| Credit Agreement [Member] | ||||||
| Debt issuance costs capitalized | $ 51 | $ 0 | 2,897 | 0 | ||
| Interest expense related to amortization of debt issuance costs | 193 | 251 | 655 | 753 | ||
| Credit facility interest expense(1) | [1] | $ 771 | $ 1,046 | $ 2,606 | $ 3,652 | |
| Weighted average interest rate under credit facility(1) | [1] | 3.47% | 3.56% | 3.73% | 4.11% | |
| Credit Agreement [Member] | Debt Issuance Costs Due to Amendments [Member] | ||||||
| Write off of debt issuance costs | $ 0 | $ 0 | $ 147 | $ 0 | ||
| Credit Agreement [Member] | Debt Issuance Costs Due to New Credit Facility [Member] | ||||||
| Write off of debt issuance costs | $ 0 | $ 0 | $ 583 | $ 0 | ||
| ||||||
Note 6 - Net Income Per Limited Partner Unit - Earning Per Unit (Details) - USD ($) $ / shares in Units, shares in Thousands, $ in Thousands |
3 Months Ended | 9 Months Ended | ||
|---|---|---|---|---|
Sep. 30, 2021 |
Sep. 30, 2020 |
Sep. 30, 2021 |
Sep. 30, 2020 |
|
| Net income | $ 12,596 | $ 14,393 | $ 101,532 | $ 15,744 |
| General partner interest in net income | 200 | 228 | 1,608 | 249 |
| Preferred interest in net income | (6,177) | (6,278) | (18,674) | (18,836) |
| Net income(loss) available to limited partners | $ 6,219 | $ 7,887 | $ 81,250 | $ (3,341) |
| Common units (in shares) | 41,514 | 41,166 | 41,471 | 41,072 |
| Restricted and phantom units (in shares) | 1,549 | 1,354 | 1,422 | 1,259 |
| Total units (in shares) | 43,063 | 42,520 | 42,893 | 42,331 |
| Basic and diluted net income(loss) from discontinued operations per common unit (in dollars per share) | $ 0 | $ 0.12 | $ 1.74 | $ (0.11) |
| Basic and diluted net income from continuing operations per common unit (in dollars per share) | 0.14 | 0.07 | 0.15 | 0.03 |
| Basic and diluted net income(loss) per common unit (in dollars per share) | $ 0.14 | $ 0.19 | $ 1.89 | $ (0.08) |
Note 7 - Partners' Capital and Distributions (Details Textual) - USD ($) $ / shares in Units, $ in Thousands |
3 Months Ended | 9 Months Ended | |
|---|---|---|---|
Sep. 30, 2021 |
Sep. 30, 2021 |
Mar. 12, 2021 |
|
| Partners' Capital Account, Treasury Units, Purchased | $ 244 | $ 5,407 | |
| Preferred Unit, Cash Distribution [Member] | |||
| Distribution Made to Limited Partner, Distributions Declared, Per Unit (in dollars per share) | $ 0.17875 | ||
| Distribution Made to Limited Partner, Cash Distributions Declared | $ 6,200 | ||
| Distribution Made to Limited Partner, Declaration Date | Oct. 26, 2021 | ||
| Distribution Made to Limited Partner, Distribution Date | Nov. 12, 2021 | ||
| Distribution Made to Limited Partner, Date of Record | Nov. 05, 2021 | ||
| Common Unit, Cash Distribution [Member] | |||
| Distribution Made to Limited Partner, Distributions Declared, Per Unit (in dollars per share) | $ 0.04 | ||
| Distribution Made to Limited Partner, Cash Distributions Declared | $ 1,800 | ||
| Distribution Made to Limited Partner, Declaration Date | Oct. 26, 2021 | ||
| Distribution Made to Limited Partner, Distribution Date | Nov. 12, 2021 | ||
| Distribution Made to Limited Partner, Date of Record | Nov. 05, 2021 | ||
| Preferred Partner [Member] | |||
| Partners' Capital Account, Units, Treasury Units Purchased (in shares) | 30,102 | 718,519 | |
| Partners' Capital Account, Treasury Units, Purchased, Per Unit (in dollars per share) | $ 8.11 | $ 7.53 | |
| Partners' Capital Account, Treasury Units, Purchased | $ 244 | $ 5,407 | |
| Preferred Units, Per Unit (in dollars per share) | $ 7.23 | ||
| Partners Capital Account, Treasury Units, Purchases, Additional Value | 100 | 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 | (0) | $ (0) | |
| 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 |
Note 8 - Related-party Transactions (Details Textual) - USD ($) $ in Thousands |
3 Months Ended | 9 Months Ended | ||||
|---|---|---|---|---|---|---|
Sep. 30, 2021 |
Sep. 30, 2020 |
Sep. 30, 2021 |
Sep. 30, 2020 |
Dec. 31, 2020 |
Dec. 31, 2019 |
|
| Due from Related Parties, Current, Total | $ 1,193 | $ 1,193 | $ 507 | |||
| Ergon [Member] | ||||||
| Revenue from Related Parties | 13,200 | $ 12,400 | 37,100 | $ 32,300 | ||
| Due from Related Parties, Current, Total | 1,200 | 1,200 | 500 | |||
| Deferred Revenue, Total | 9,500 | 9,500 | $ 8,800 | |||
| Related Party Transaction, Expenses from Transactions with Related Party | $ 4,600 | $ 3,100 | $ 13,900 | $ 3,100 | ||
| Ergon [Member] | Cimarron Express [Member] | ||||||
| Due to Related Parties, Contingent Liability | $ 12,200 | |||||
Note 9 - Long-term Incentive Plan (Details Textual) - USD ($) $ in Thousands, shares in Millions |
3 Months Ended | 9 Months Ended | ||
|---|---|---|---|---|
Sep. 30, 2021 |
Sep. 30, 2020 |
Sep. 30, 2021 |
Sep. 30, 2020 |
|
| Share-based Payment Arrangement, Noncash Expense, Total | $ 339 | $ 640 | ||
| Long-Term Incentive Plan [Member] | ||||
| Share-based Compensation Arrangement by Share-based Payment Award, Number of Shares Authorized (in shares) | 8.1 | 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 | $ 1,200 | $ 1,200 | ||
| Share-based Payment Arrangement, Noncash Expense, Total | $ 200 | $ 200 | $ 500 | $ 600 |
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 | ||
| |||||
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) | [1] | $ 2.71 | $ 1.53 | $ 0.90 | $ 1.08 | $ 1.14 | |
| Grant Date Total Fair Value | $ 1,437 | $ 25 | $ 540 | $ 50 | $ 598 | ||
| |||||||
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] |
9 Months Ended |
|---|---|
|
Sep. 30, 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 | 335,444 |
| Vested, weighted average grant date fair value (in dollars per share) | $ / shares | $ 4.15 |
| Forfeited, number of units (in shares) | shares | 0 |
| Forfeited, weighted average grant date fair value (in dollars per share) | $ / shares | $ 0 |
| Nonvested, number of units, ending balance (in shares) | shares | 1,545,357 |
| Nonvested, weighted average grant date fair value, ending balance (in dollars per share) | $ / shares | $ 1.61 |
Note 10 - Fair Value Measurements (Details Textual) - Fair Value, Recurring [Member] - USD ($) $ in Thousands |
Sep. 30, 2021 |
Dec. 31, 2020 |
|---|---|---|
| Assets, Fair Value Disclosure | $ 0 | $ 0 |
| Financial Liabilities Fair Value Disclosure, Total | $ 0 | $ 0 |
Note 13 - Subsequent Events (Details Textual) - Subsequent Event [Member] |
Oct. 08, 2021
$ / shares
|
|---|---|
| Exchange Price for Common Unit (in dollars per share) | $ 3.32 |
| Exchange Price for Preferred Unit (in dollars per share) | $ 8.46 |