10-Q

UNITED STATES

SECURITIES AND EXCHANGE COMMISSION

WASHINGTON, D. C. 20549

FORM 10Q

(Mark one)

 þ QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF

THE SECURITIES EXCHANGE ACT OF 1934

For the quarterly period ended June 30, 2018 

OR

 o 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: 1-07908

ADAMS RESOURCES & ENERGY, INC.

(Exact Name of Registrant as Specified in Its Charter)

Delaware	74-1753147
(State or Other Jurisdiction of Incorporation or Organization)	(I.R.S. Employer Identification No.)

17 South Briar Hollow Lane, Suite 100

Houston, Texas 77027

(Address of Principal Executive Offices, including Zip Code)

(713) 881-3600

(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. Yes þ   No o

Indicate by check mark whether the registrant has submitted electronically and posted on its corporate Web site, if any, every Interactive Data File required to be submitted and posted 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 and post such files). Yes þ   No ¨

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

Large accelerated filer o	Accelerated filer þ
Non-accelerated filer   o (Do not check if a smaller reporting company)	Smaller reporting company o
Emerging growth company   o

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. o

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

A total of 4,217,596 shares of Common Stock were outstanding at August 1, 2018. Our Common Stock trades on the NYSE American (formerly the NYSE MKT) under the ticker symbol “AE.”

ADAMS RESOURCES & ENERGY, INC. AND SUBSIDIARIES

TABLE OF CONTENTS

		Page No.
PART I.  FINANCIAL INFORMATION
Item 1.	Financial Statements
	Unaudited Condensed Consolidated Balance Sheets	2
	Unaudited Condensed Consolidated Statements of Operations	3
	Unaudited Condensed Consolidated Statements Cash Flows	4
	Unaudited Condensed Consolidated Statements of Shareholders’ Equity	5
	Notes to Unaudited Condensed Consolidated Financial Statements	6
Item 2.	Management’s Discussion and Analysis of Financial Condition and Results of Operations	24
Item 3.	Quantitative and Qualitative Disclosures About Market Risk	34
Item 4.	Controls and Procedures	34
PART II.  OTHER INFORMATION
Item 1.	Legal Proceedings	34
Item 1A.	Risk Factors	34
Item 2.	Unregistered Sales of Equity Securities and Use of Proceeds	35
Item 3.	Defaults Upon Senior Securities	35
Item 4.	Mine Safety Disclosures	35
Item 5.	Other Information	35
Item 6.	Exhibits	36
Signatures		37

1

PART I. FINANCIAL INFORMATION

Item 1. Financial Statements

ADAMS RESOURCES & ENERGY, INC. AND SUBSIDIARIES

UNAUDITED CONDENSED CONSOLIDATED BALANCE SHEETS

(In thousands, except share data)

	June 30,		December 31,
	2018		2017
ASSETS
Current assets:
Cash and cash equivalents	$	126,999	$	109,393
Accounts receivable, net of allowance for doubtful
accounts of $271 and $303, respectively	118,533		121,353
Inventory	21,513		12,192
Derivative assets	538		166
Income tax receivable	—		1,317
Prepayments and other current assets	1,197		1,264
Total current assets	268,780		245,685
Property and equipment, net	27,304		29,362
Investments in unconsolidated affiliates	425		425
Cash deposits and other assets	6,618		7,232
Total assets	$	303,127	$	282,704
LIABILITIES AND SHAREHOLDERS’ EQUITY
Current liabilities:
Accounts payable	$	140,296	$	124,706
Accounts payable – related party	5		5
Derivative liabilities	514		145
Current portion of capital lease obligations	345		338
Other current liabilities	6,845		4,404
Total current liabilities	148,005		129,598
Other long-term liabilities:
Asset retirement obligations	1,405		1,273
Capital lease obligations	1,177		1,351
Deferred taxes and other liabilities	2,516		3,363
Total liabilities	153,103		135,585
Commitments and contingencies (Note 12)
Shareholders’ equity:
Preferred stock – $1.00 par value, 960,000 shares
authorized, none outstanding	—		—
Common stock – $0.10 par value, 7,500,000 shares
authorized, 4,217,596 shares outstanding	422		422
Contributed capital	11,696		11,693
Retained earnings	137,906		135,004
Total shareholders’ equity	150,024		147,119
Total liabilities and shareholders’ equity	$	303,127	$	282,704

See Notes to Unaudited Condensed Consolidated Financial Statements.

2

ADAMS RESOURCES & ENERGY, INC. AND SUBSIDIARIES

UNAUDITED CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS

(In thousands, except per share data)

	Three Months Ended				Six Months Ended
	June 30,				June 30,
	2018		2017		2018		2017
Revenues:
Marketing	$	438,791	$	301,176	$	812,429	$	589,791
Transportation	13,626		13,616		27,244		27,071
Oil and natural gas	—		410		—		1,427
Total revenues	452,417		315,202		839,673		618,289
Costs and expenses:
Marketing	431,683		297,508		800,866		582,661
Transportation	11,890		11,851		24,191		24,013
Oil and natural gas	—		201		—		951
General and administrative	2,284		1,460		4,567		4,097
Depreciation, depletion and amortization	2,262		3,563		4,674		7,532
Total costs and expenses	448,119		314,583		834,298		619,254
Operating earnings (losses)	4,298		619		5,375		(965)
Other income (expense):
Loss on deconsolidation of subsidiary	—		(1,635)		—		(1,635)
Interest income	498		260		885		419
Interest expense	(15)		(1)		(34)		(2)
Total other income (expense), net	483		(1,376)		851		(1,218)
(Losses) earnings before income taxes	4,781		(757)		6,226		(2,183)
Income tax benefit (provision)	(1,161)		475		(1,468)		1,041
Net (losses) earnings	$	3,620	$	(282)	$	4,758	$	(1,142)
Earnings (losses) per share:
Basic net (losses) earnings per common share	$	0.86	$	(0.07)	$	1.13	$	(0.27)
Diluted net (losses) earnings per common share	$	0.86	$	(0.07)	$	1.13	$	(0.27)
Dividends per common share	$	0.22	$	0.22	$	0.44	$	0.44

See Notes to Unaudited Condensed Consolidated Financial Statements.

3

ADAMS RESOURCES & ENERGY, INC. AND SUBSIDIARIES

UNAUDITED CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS

(In thousands)

	Six Months Ended
	June 30,
	2018		2017
Operating activities:
Net (losses) earnings	$	4,758	$	(1,142)
Adjustments to reconcile net (losses) earnings to net cash
provided by operating activities:
Depreciation, depletion and amortization	4,674		7,532
Gains on sales of property	(446)		(129)
Impairment of oil and natural gas properties	—		3
Provision for doubtful accounts	(32)		(8)
Stock-based compensation expense	3		—
Deferred income taxes	(832)		(926)
Net change in fair value contracts	(3)		(700)
Loss on deconsolidation of subsidiary	—		1,635
Changes in assets and liabilities:
Accounts receivable	2,852		13,581
Accounts receivable/payable, affiliates	—		(151)
Inventories	(9,321)		(2,887)
Income tax receivable	1,317		(336)
Prepayments and other current assets	67		887
Accounts payable	15,634		3,357
Accrued liabilities	2,441		(483)
Other	125		(461)
Net cash provided by operating activities	21,237		19,772
Investing activities:
Property and equipment additions	(2,728)		(2,108)
Proceeds from property sales	655		190
Insurance and state collateral (deposits) refunds	465		347
Net cash used in investing activities	(1,608)		(1,571)
Financing activities:
Principal repayments of capital lease obligations	(167)		—
Dividends paid on common stock	(1,856)		(1,856)
Net cash used in financing activities	(2,023)		(1,856)
Increase in cash and cash equivalents	17,606		16,345
Cash and cash equivalents at beginning of period	109,393		87,342
Cash and cash equivalents at end of period	$	126,999	$	103,687

See Notes to Unaudited Condensed Consolidated Financial Statements.

4

ADAMS RESOURCES & ENERGY, INC. AND SUBSIDIARIES

UNAUDITED CONDENSED CONSOLIDATED STATEMENTS OF SHAREHOLDERS’ EQUITY

(In thousands)

							Total
	Common		Contributed		Retained		Shareholders’
	Stock		Capital		Earnings		Equity
Balance, January 1, 2018	$	422	$	11,693	$	135,004	$	147,119
Net earnings	—		—		4,758		4,758
Stock-based compensation expense	—		3		—		3
Dividends paid on common stock	—		—		(1,856)		(1,856)
Balance, June 30, 2018	$	422	$	11,696	$	137,906	$	150,024

							Total
	Common		Contributed		Retained		Shareholders’
	Stock		Capital		Earnings		Equity
Balance, January 1, 2017	$	422	$	11,693	$	139,197	$	151,312
Net losses	—		—		(1,142)		(1,142)
Dividends paid on common stock	—		—		(1,856)		(1,856)
Balance, June 30, 2017	$	422	$	11,693	$	136,199	$	148,314

See Notes to Unaudited Condensed Consolidated Financial Statements.

5

ADAMS RESOURCES & ENERGY, INC. AND SUBSIDIARIES

NOTES TO UNAUDITED CONDENSED CONSOLIDATED FINANCIAL STATEMENTS

Note 1. Organization and Basis of Presentation

Organization

Adams Resources & Energy, Inc. (“AE”) is a publicly traded Delaware corporation organized in 1973, the common shares of which are listed on the NYSE American LLC under the ticker symbol “AE”. We and our subsidiaries are primarily engaged in the business of crude oil marketing, transportation and storage in various crude oil and natural gas basins in the lower 48 states of the United States (“U.S.”). We also conduct tank truck transportation of liquid chemicals and dry bulk and ISO tank container storage and transportation primarily in the lower 48 states of the U.S. with deliveries into Canada and Mexico and with terminals in the Gulf Coast region of the U.S. Unless the context requires otherwise, references to “we,” “us,” “our,” the “Company” or “AE” are intended to mean the business and operations of Adams Resources & Energy, Inc. and its consolidated subsidiaries.  

Historically, we have operated and reported in three business segments: (i) crude oil marketing, transportation and storage, (ii) tank truck transportation of liquid chemicals and dry bulk and ISO tank container storage and transportation, and (iii) upstream crude oil and natural gas exploration and production. We exited the upstream crude oil and natural gas exploration and production business during 2017 with the sale of our upstream crude oil and natural gas exploration and production assets as a result of a voluntary bankruptcy filing for this subsidiary. We expect the bankruptcy case involving the wholly owned subsidiary through which this business was conducted to be dismissed during the second half of 2018.  

Basis of Presentation

Our results of operations for the three and six months ended June 30, 2018 are not necessarily indicative of results expected for the full year of 2018. In the opinion of management, the accompanying unaudited condensed consolidated financial statements reflect all adjustments consisting of normal recurring accruals necessary for fair presentation.  The condensed consolidated financial statements and the accompanying notes are prepared in accordance with U.S. generally accepted accounting principles (“GAAP”) for interim financial statements and the rules of the U.S. Securities and Exchange Commission (“SEC”). Certain information and footnote disclosures required by GAAP for complete annual financial statements have been omitted and, therefore, these interim financial statements should be read in conjunction with our audited consolidated financial statements included in our Annual Report on Form 10-K for the year ended December 31, 2017 (the “2017 Form 10-K”) filed with the SEC on March 12, 2018. All significant intercompany transactions and balances have been eliminated in consolidation.

Use of Estimates

The preparation of our financial statements in conformity with GAAP requires management to use estimates and assumptions that affect the reported amount of assets and liabilities and disclosure of contingent assets and liabilities at the date of the financial statements and the reported amounts of revenues and expenses during the reporting period. We base our estimates and judgments on historical experience and on various other assumptions and information we believe to be reasonable under the circumstances. Estimates and assumptions about future events and their effects cannot be perceived with certainty and, accordingly, these estimates may change as new events occur, as more experience is acquired, as additional information is obtained and as the operating environment changes. While we believe the estimates and assumptions used in the preparation of these condensed consolidated financial statements are appropriate, actual results could differ from those estimates.

6

ADAMS RESOURCES & ENERGY, INC. AND SUBSIDIARIES

NOTES TO UNAUDITED CONDENSED CONSOLIDATED FINANCIAL STATEMENTS

Note 2. Summary of Significant Accounting Policies

Earnings Per Share

Basic earnings (losses) per share is computed by dividing our net earnings (losses) by the weighted average number of shares of common stock outstanding during the period. Diluted earnings (losses) per share is computed by giving effect to all potential shares of common stock outstanding, including our stock related to unvested restricted stock awards. Unvested restricted stock awards granted under the Adams Resources & Energy, Inc. 2018 Long-Term Incentive Plan (“2018 LTIP”) are not considered to be participating securities as the holders of these shares do not have non-forfeitable dividend rights in the event of our declaration of a dividend for common shares (see Note 10 for further discussion).

A reconciliation of the denominator used in the calculation of basic and diluted earnings (losses) per share is as follows (in thousands, except per share data):

	Three Months Ended				Six Months Ended
	June 30,				June 30,
	2018		2017		2018		2017
Basic earnings (losses) per share:
Net earnings (losses)	$	3,620	$	(282)	$	4,758	$	(1,142)
Weighted average number of shares outstanding – Basic	4,218		4,218		4,218		4,218
Basic earnings (losses) per share	$	0.86	$	(0.07)	$	1.13	$	(0.27)
Diluted earnings (losses) per share:
Net earnings (losses)	$	3,620	$	(282)	$	4,758	$	(1,142)
Diluted weighted average number of shares outstanding:
Common shares	4,218		4,218		4,218		4,218
Restricted stock unit awards (1)	—		—		—		—
Performance share unit awards (2)	—		—		—		—
Total	4,218		4,218		4,218		4,218
Diluted earnings (losses) per share	$	0.86	$	(0.07)	$	1.13	$	(0.27)

_______________

(1) The dilutive effect of restricted stock unit awards for the three and six months ended June 30, 2018 is de minimis.

(2) Performance share awards will be included in the calculation of diluted earnings per share when the performance conditions have been achieved.

Fair Value Measurements

The carrying amounts reported in the unaudited condensed consolidated balance sheets for cash and cash equivalents, accounts receivable and accounts payable approximates fair value because of the immediate or short-term maturity of these financial instruments. Marketable securities are recorded at fair value based on market quotations from actively traded liquid markets.

A three-tier hierarchy has been established that classifies fair value amounts recognized in the financial statements based on the observability of inputs used to estimate such fair values.  The hierarchy considers fair value amounts based on observable inputs (Levels 1 and 2) to be more reliable and predictable than those based primarily on unobservable inputs (Level 3).  At each balance sheet reporting date, we categorize our financial assets and liabilities using this hierarchy.

7

ADAMS RESOURCES & ENERGY, INC. AND SUBSIDIARIES

NOTES TO UNAUDITED CONDENSED CONSOLIDATED FINANCIAL STATEMENTS

Fair value contracts consist of derivative financial instruments and are recorded as either an asset or liability measured at its fair value. Changes in fair value are recognized immediately in earnings unless the derivatives qualify for, and we elect, cash flow hedge accounting. We had no contracts designated for hedge accounting during any current reporting periods (see Note 9 for further information).

Income Taxes

Income taxes are accounted for using the asset and liability method. Under this approach, deferred tax assets and liabilities are recognized based on anticipated future tax consequences attributable to differences between financial statement carrying amounts of these items and their respective tax basis. On December 22, 2017, the Tax Cut and Jobs Act was enacted into law resulting in a reduction in the federal corporate income tax rate from 35 percent to 21 percent for years beginning in 2018, which impacts our income tax provision or benefit.

Investments in Unconsolidated Affiliates

In April 2017, one of our wholly owned subsidiaries, Adams Resources Exploration Corporation (“AREC”), filed a voluntary petition in the United States Bankruptcy Court for the District of Delaware seeking relief under Chapter 11 of Title 11 of the United States Code. As a result of the voluntary bankruptcy filing, we no longer controlled the operations of AREC; therefore, we deconsolidated AREC in April 2017, and we recorded our investment in this subsidiary under the cost method of accounting. During the second quarter of 2017, we recorded a non-cash charge of approximately $1.6 million associated with the deconsolidation of AREC. At June 30, 2018, our remaining investment in AREC was $0.4 million. We expect the bankruptcy case to be dismissed during the second half of 2018.  

Letter of Credit Facility

We maintain a Credit and Security Agreement with Wells Fargo Bank, National Association to provide up to a $60 million stand-by letter of credit facility used to support crude oil purchases within our crude oil marketing segment and for other purposes. We are currently using the letter of credit facility for a letter of credit related to our insurance program. This facility is collateralized by the eligible accounts receivable within our crude oil marketing segment and expires on August 27, 2019.

The issued stand-by letters of credit are canceled as the underlying purchase obligations are satisfied by cash payment when due. The letter of credit facility places certain restrictions on Gulfmark Energy, Inc., one of our wholly owned subsidiaries. These restrictions include the maintenance of positive net earnings excluding inventory valuation changes, as defined, among other restrictions. We are currently in compliance with all such financial covenants. At June 30, 2018 and December 31, 2017, we had $0.4 million and $2.2 million, respectively, outstanding under this facility.

Property and Equipment

Property and equipment is recorded at cost. Expenditures for additions, improvements and other enhancements to property and equipment are capitalized, and minor replacements, maintenance and repairs that do not extend asset life or add value are charged to expense as incurred. When property and equipment assets are retired or otherwise disposed of, the related cost and accumulated depreciation is removed from the accounts and any resulting gain or loss is included in results of operations in operating costs and expenses for the respective period. Property and equipment, except for land, is depreciated using the straight-line method over the estimated average useful lives ranging from two to thirty-nine years.

We review our long-lived assets for impairment whenever there is evidence that the carrying value of these assets may not be recoverable. Any impairment recognized is permanent and may not be restored. Property and equipment is reviewed at the lowest level of identifiable cash flows. For properties requiring impairment, the fair value is estimated based on an internal discounted cash flow model of future cash flows.  

8

ADAMS RESOURCES & ENERGY, INC. AND SUBSIDIARIES

NOTES TO UNAUDITED CONDENSED CONSOLIDATED FINANCIAL STATEMENTS

See Note 5 for additional information regarding our property and equipment.

Recent Accounting Developments

In February 2016, the Financial Accounting Standards Board (“FASB”) issued Accounting Standards Codification (“ASC”) 842, Leases (“ASC 842”), which requires substantially all leases (with the exception of leases with a term of one year or less) to be recorded on the balance sheet using a method referred to as the right-of-use (“ROU”) asset approach. We plan to adopt the new standard on January 1, 2019 using the modified retrospective approach.

The new standard introduces two lease accounting models, which result in a lease being classified as either a “finance” or “operating” lease on the basis of whether the lessee effectively obtains control of the underlying asset during the lease term. A lease would be classified as a finance lease if it meets one of five classification criteria, four of which are generally consistent with current lease accounting guidance. By default, a lease that does not meet the criteria to be classified as a finance lease will be deemed an operating lease. Regardless of classification, the initial measurement of both lease types will result in the balance sheet recognition of a ROU asset representing a company’s right to use the underlying asset for a specified period of time and a corresponding lease liability. The lease liability will be recognized at the present value of the future lease payments, and the ROU asset will equal the lease liability adjusted for any prepaid rent, lease incentives provided by the lessor, and any indirect costs.

The subsequent measurement of each type of lease varies. Leases classified as a finance lease will be accounted for using the effective interest method. Under this approach, a lessee will amortize the ROU asset (generally on a straight-line basis in a manner similar to depreciation) and the discount on the lease liability (as a component of interest expense). Leases classified as an operating lease will result in the recognition of a single lease expense amount that is recorded on a straight-line basis (or another systematic basis, if more appropriate).

We have started the process of reviewing our lease agreements in light of the new guidance. Although we are in the early stages of our ASC 842 implementation project, we anticipate that this new lease guidance will cause significant changes to the way leases are recorded, presented and disclosed in our consolidated financial statements.

Stock-Based Compensation

We measure all share-based payments, including the issuance of restricted stock units and performance share units to employees and board members, using a fair-value based method. The cost of services received from employees and non-employee board members in exchange for awards of equity instruments is recognized in the consolidated statement of operations based on the estimated fair value of those awards on the grant date and amortized on a straight-line basis over the requisite service period. The fair value of restricted stock unit awards and performance share unit awards is based on the closing price of our common stock on the grant date. We account for forfeitures as they occur. See Note 10 for additional information regarding our 2018 LTIP.  

Note 3. Revenue Recognition

Adoption of ASC 606

On January 1, 2018, we adopted ASC 606, Revenue from Contracts with Customers (“ASC 606”) and all related Accounting Standards Updates by applying the modified retrospective method to all contracts that were not completed on January 1, 2018. The modified retrospective approach required us to recognize the cumulative effect of initially applying the new standard as an adjustment to the opening balance of retained earnings. The comparative information has not been restated and continues to be reported under the accounting standards in effect for those periods. The adoption of the new revenue standard did not result in a cumulative effect adjustment to our retained earnings since there was no significant impact upon adoption. We expect the impact of the adoption of the new standard to remain immaterial to our net earnings on an ongoing basis.

9

ADAMS RESOURCES & ENERGY, INC. AND SUBSIDIARIES

NOTES TO UNAUDITED CONDENSED CONSOLIDATED FINANCIAL STATEMENTS

Revenue Recognition

The new revenue standard’s core principle is that a company will recognize revenue when it transfers promised goods or services to customers in an amount that reflects the consideration to which the company expects to be entitled in exchange for those goods or services. The new revenue standard requires entities to recognize revenue through the application of a five-step model, which includes: identification of the contract, identification of the performance obligations, determination of the transaction price, allocation of the transaction price to the performance obligations, and recognition of revenue as the entity satisfies the performance obligations.

Our revenues are primarily generated from the marketing, transportation and storage of crude oil and other related products and the tank truck transportation of liquid chemicals and dry bulk. A performance obligation is a promise in a contract to transfer a distinct good or service to the customer and is the unit of account in ASC 606. To identify the performance obligations, we considered all of the products or services promised in the contracts with customers, whether explicitly stated or implied based on customary business practices. Revenue is recognized when, or as, each performance obligation is satisfied under terms of the contract.

For our crude oil marketing segment, most of our crude oil purchase and sale contracts qualify and are designated as non-trading activities, and we consider these contracts as normal purchases and sales activity. For normal purchases and sales, our customers are invoiced monthly based upon contractually agreed upon terms with revenue recognized in the month in which the physical product is delivered to the customer, generally upon delivery of the product to the customer. Revenue is recognized based on the transaction price and the quantity delivered.

The majority of our crude oil sales contracts have multiple distinct performance obligations as the promise to transfer the individual goods (e.g., barrels of crude oil) is separately identifiable from the other goods promised within the contracts. Our performance obligations are satisfied at a point in time. For normal sales arrangements, revenue is recognized in the month in which control of the physical product is transferred to the customer, generally upon delivery of the product to the customer.

For our transportation segment, each sales order associated with our master transportation agreements is considered a distinct performance obligation. The performance obligations associated with this segment are satisfied over time as the goods and services are delivered.

Practical Expedients

In connection with our adoption of ASC 606, we used significant judgment when assessing our contracts for impact upon adoption. For example, our contracts often include promises to transfer various goods and services to a customer. Determining whether goods and services are considered distinct performance obligations that should be accounted for separately versus together will continue to require significant judgment. We also used practical expedients permitted by ASC 606 when applicable. These practical expedients included:

• Applying the new guidance only to contracts that were not completed as of January 1, 2018; and

• Not accounting for the effects of significant financing components if the company expects that the period between when the entity transfers a promised good or service to a customer and when the customer pays for that good or service will be one year or less.

Contract Balances

The timing of revenue recognition, billings and cash collections results in billed accounts receivable and customer advances and deposits (contract liabilities) on our consolidated balance sheet. Currently, we do not record any contract assets in our financial statements due to the timing of revenue recognized and when our customers are billed. Our crude oil marketing customers are generally billed monthly based on contractually agreed upon terms. However, we sometimes receive advances or deposits from customers before revenue is recognized, resulting in contract liabilities. These contract assets and liabilities, if any, are reported on our consolidated balance sheets at the end of each reporting period.

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ADAMS RESOURCES & ENERGY, INC. AND SUBSIDIARIES

NOTES TO UNAUDITED CONDENSED CONSOLIDATED FINANCIAL STATEMENTS

Revenue Disaggregation

The following table disaggregates our revenue by segment and by major source for the periods indicated (in thousands):

	Reporting Segments
	Marketing		Transportation		Total
Three Months Ended June 30, 2018
Revenues from contracts with customers	$	419,365	$	13,626	$	432,991
Other (1)	19,426		—		19,426
Total revenues	$	438,791	$	13,626	$	452,417
Timing of revenue recognition:
Goods transferred at a point in time	$	419,365	$	—	$	419,365
Services transferred over time	—		13,626		13,626
Total revenues from contracts with customers	$	419,365	$	13,626	$	432,991
Six Months Ended June 30, 2018
Revenues from contracts with customers	$	779,450	$	27,244	$	806,694
Other (1)	32,979		—		32,979
Total revenues	$	812,429	$	27,244	$	839,673
Timing of revenue recognition:
Goods transferred at a point in time	$	779,450	$	—	$	779,450
Services transferred over time	—		27,244		27,244
Total revenues from contracts with customers	$	779,450	$	27,244	$	806,694

_______________

(1) Other marketing revenues are recognized under ASC 815, Derivatives and Hedging, and ASC 845, Nonmonetary Transactions – Purchases and Sales of Inventory with the Same Counterparty.

Other Marketing Revenue

Certain of the commodity purchase and sale contracts utilized by our crude oil marketing business qualify as derivative instruments with certain specifically identified contracts also designated as trading activity. From the time of contract origination, these contracts are marked-to-market and recorded on a net revenue basis in the accompanying consolidated financial statements.

Certain of our crude oil contracts may be with a single counterparty to provide for similar quantities of crude oil to be bought and sold at different locations. These contracts are entered into for a variety of reasons, including effecting the transportation of the commodity, to minimize credit exposure, and/or to meet the competitive demands of the customer. These buy/sell arrangements are reflected on a net revenue basis in the accompanying consolidated financial statements.

Reporting these crude oil contracts on a gross revenue basis would increase our reported revenues as follows for the periods indicated (in thousands):

	Three Months Ended				Six Months Ended
	June 30,				June 30,
	2018		2017		2018		2017
Revenue gross-up	$	56,335	$	44,908	$	102,026	$	102,473

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ADAMS RESOURCES & ENERGY, INC. AND SUBSIDIARIES

NOTES TO UNAUDITED CONDENSED CONSOLIDATED FINANCIAL STATEMENTS

Note 4. Prepayments and Other Current Assets

The components of prepayments and other current assets were as follows at the dates indicated (in thousands):

	June 30,		December 31,
	2018		2017
Insurance premiums	$	582	$	425
Rents, licenses and other	615		839
Total	$	1,197	$	1,264

Note 5. Property and Equipment

The historical costs of our property and equipment and related accumulated depreciation balances were as follows at the dates indicated (in thousands):

	Estimated
	Useful Life	June 30,		December 31,
	in Years	2018		2017
Tractors and trailers (1)	5 – 6	$	83,686	$	88,065
Field equipment	2 – 5	19,811		18,490
Buildings	5 – 39	15,727		15,727
Office equipment	2 – 5	1,808		1,929
Land		1,790		1,790
Construction in progress		960		275
Total		123,782		126,276
Less accumulated depreciation		(96,478)		(96,914)
Property and equipment, net		$	27,304	$	29,362

______________

(1) Amounts include assets held under capital leases for certain tractors in our marketing segment. Gross property and equipment associated with assets held under capital leases were $1.8 million and $1.8 million at June 30, 2018 and December 31, 2017, respectively. Accumulated amortization associated with assets held under capital leases were $0.3 million and $0.1 million at June 30, 2018 and December 31, 2017, respectively (see Note 12 for further information).

Components of depreciation, depletion and amortization expense were as follows for the periods indicated (in thousands):

	Three Months Ended				Six Months Ended
	June 30,				June 30,
	2018		2017		2018		2017
Depreciation, depletion and amortization,
excluding amounts under capital leases	$	2,171	$	3,563	$	4,493	$	7,532
Amortization of property and equipment
under capital leases	91		—		181		—
Total depreciation, depletion and amortization	$	2,262	$	3,563	$	4,674	$	7,532

12

ADAMS RESOURCES & ENERGY, INC. AND SUBSIDIARIES

NOTES TO UNAUDITED CONDENSED CONSOLIDATED FINANCIAL STATEMENTS

Note 6. Cash Deposits and Other Assets

Components of cash deposits and other assets were as follows at the dates indicated (in thousands):

	June 30,		December 31,
	2018		2017
Amounts associated with liability insurance program:
Insurance collateral deposits	$	3,517	$	3,767
Excess loss fund	2,093		2,284
Accumulated interest income	642		814
Other amounts:
State collateral deposits	57		57
Materials and supplies	273		273
Other	36		37
Total	$	6,618	$	7,232

We have established certain deposits to support participation in our liability insurance program and remittance of state crude oil severance taxes and other state collateral deposits. Insurance collateral deposits are held by the insurance company to cover past or potential open claims based upon a percentage of the maximum assessment under our insurance policies. Insurance collateral deposits are invested at the discretion of our insurance carrier. Excess amounts in our loss fund represent premium payments in excess of claims incurred to date that we may be entitled to recover through settlement or commutation as claim periods are closed. Interest income is earned on the majority of amounts held by the insurance companies and will be paid to us upon settlement of policy years.

13

ADAMS RESOURCES & ENERGY, INC. AND SUBSIDIARIES

NOTES TO UNAUDITED CONDENSED CONSOLIDATED FINANCIAL STATEMENTS

Note 7. Segment Reporting

Historically, our three reporting segments have been: (i) crude oil marketing, transportation and storage, (ii) tank truck transportation of liquid chemicals and dry bulk and ISO tank container storage and transportation, and (iii) upstream crude oil and natural gas exploration and production. Our upstream crude oil and natural gas exploration and production wholly owned subsidiary filed for bankruptcy in April 2017, and as a result of our loss of control of the wholly owned subsidiary, AREC was deconsolidated and is accounted for under the cost method of accounting. AREC remained a reportable segment until its deconsolidation, effective April 30, 2017.

Information concerning our various business activities was as follows for the periods indicated (in thousands):

	Reporting Segments
	Marketing		Transportation		Oil and Gas		Total
Three Months Ended June 30, 2018
Revenues	$	438,791	$	13,626	$	—	$	452,417
Segment operating (losses) earnings (1)	5,772		810		—		6,582
Depreciation, depletion and amortization	1,336		926		—		2,262
Property and equipment additions (2)	277		1,572		—		1,849
Three Months Ended June 30, 2017
Revenues	$	301,176	$	13,616	$	410	$	315,202
Segment operating (losses) earnings (1)	1,691		293		95		2,079
Depreciation, depletion and amortization	1,977		1,472		114		3,563
Property and equipment additions	191		(92)		1,003		1,102
Six Months Ended June 30, 2018
Revenues	$	812,429	$	27,244	$	—	$	839,673
Segment operating (losses) earnings (1)	8,730		1,212		—		9,942
Depreciation, depletion and amortization	2,833		1,841		—		4,674
Property and equipment additions (2)	1,070		1,645		—		2,715
Six Months Ended June 30, 2017
Revenues	$	589,791	$	27,071	$	1,427	$	618,289
Segment operating (losses) earnings (1)	3,084		(5)		53		3,132
Depreciation, depletion and amortization	4,046		3,063		423		7,532
Property and equipment additions	273		10		1,825		2,108

_______________

(1) Our marketing segment’s operating earnings included inventory liquidation gains of $1.9 million and $2.5 million for the three and six months ended June 30, 2018, respectively, and inventory valuation losses of $1.4 million and $2.1 million for the three and six months ended June 30, 2017, respectively.

(2) During the six months ended June 30, 2018, we had $13 thousand of property and equipment additions for leasehold improvements at our corporate headquarters level, which is not attributed or allocated to any of our reporting segments.

14

ADAMS RESOURCES & ENERGY, INC. AND SUBSIDIARIES

NOTES TO UNAUDITED CONDENSED CONSOLIDATED FINANCIAL STATEMENTS

Segment operating earnings reflect revenues net of operating costs and depreciation, depletion and amortization expense and are reconciled to earnings (losses) before income taxes, as follows for the periods indicated (in thousands):

	Three Months Ended				Six Months Ended
	June 30,				June 30,
	2018		2017		2018		2017
Segment operating earnings	$	6,582	$	2,079	$	9,942	$	3,132
General and administrative	(2,284)		(1,460)		(4,567)		(4,097)
Operating earnings (losses)	4,298		619		5,375		(965)
Loss on deconsolidation of subsidiary	—		(1,635)		—		(1,635)
Interest income	498		260		885		419
Interest expense	(15)		(1)		(34)		(2)
(Losses) earnings before income taxes	$	4,781	$	(757)	$	6,226	$	(2,183)

Identifiable assets by industry segment were as follows at the dates indicated (in thousands):

	June 30,		December 31,
	2018		2017
Reporting segment:
Marketing	$	139,687	$	134,745
Transportation	28,803		29,069
Oil and Gas (1)	425		425
Cash and other assets	134,212		118,465
Total assets	$	303,127	$	282,704

____________________

(1) Amounts represent our cost method investment in this segment.

Intersegment sales are insignificant. Other identifiable assets are primarily corporate cash, corporate accounts receivable, investments and properties not identified with any specific segment of our business. Accounting policies for transactions between reportable segments are consistent with applicable accounting policies as disclosed herein.

Note 8. Transactions with Affiliates

We enter into certain transactions in the normal course of business with affiliated entities including direct cost reimbursement for shared phone and administrative services. In addition, we lease our corporate office space from an affiliated entity.

We utilize our former affiliate, Bencap LLC (“Bencap”), to administer certain of our employee medical benefit programs including a detail audit of individual medical claims. Bencap earns a fee from us for providing these services at a discounted amount from its standard charge to non-affiliates. We had an equity method investment in Bencap, which was forfeited during the first quarter of 2017. As a result, we have no further ownership interest in Bencap.

15

ADAMS RESOURCES & ENERGY, INC. AND SUBSIDIARIES

NOTES TO UNAUDITED CONDENSED CONSOLIDATED FINANCIAL STATEMENTS

Activities with affiliates were as follows for the periods indicated (in thousands):

	Three Months Ended				Six Months Ended
	June 30,				June 30,
	2018		2017		2018		2017
Affiliate billings to us	$	25	$	24	$	40	$	36
Billings to affiliates	1		1		3		2
Rentals paid to affiliate	122		158		244		325
Fees paid to Bencap (1)	—		—		—		108

___________________

(1) Amount represents fees paid to Bencap through the date of the forfeiture of our investment during the first quarter of 2017. As a result of the investment forfeiture, Bencap is no longer an affiliate.

Note 9. Derivative Instruments and Fair Value Measurements

Derivative Instruments

In the normal course of our operations, our crude oil marketing segment purchases and sells crude oil. We seek to profit by procuring the commodity as it is produced and then delivering the material to the end users or the intermediate use marketplace. As typical for the industry, these transactions are made pursuant to the terms of forward month commodity purchase and/or sale contracts. Some of these contracts meet the definition of a derivative instrument, and therefore, we account for these contracts at fair value, unless the normal purchase and sale exception is applicable. These types of underlying contracts are standard for the industry and are the governing document for our crude oil marketing segment. None of our derivative instruments have been designated as hedging instruments.

At June 30, 2018, we had in place 16 commodity purchase and sale contracts, of which four of these contracts had no fair value associated with them as the contractual prices of crude oil were within the range of prices specified in the agreements. These commodity purchase and sale contracts encompassed approximately:

• 646 barrels per day of crude oil during July 2018;

• 322 barrels per day of crude oil during August through September 2018;

• 258 barrels per day of crude oil during October through December 2018;  

• 322 barrels per day of crude oil during January 2019 through April 2019; and

• 258 barrels per day of crude oil during May 2019.

16

ADAMS RESOURCES & ENERGY, INC. AND SUBSIDIARIES

NOTES TO UNAUDITED CONDENSED CONSOLIDATED FINANCIAL STATEMENTS

The estimated fair value of forward month commodity contracts (derivatives) reflected in the accompanying unaudited condensed consolidated balance sheet were as follows at the date indicated (in thousands):

	June 30, 2018
	Balance Sheet Location and Amount
	Current		Other		Current		Other
	Assets		Assets		Liabilities		Liabilities
Asset derivatives:
Fair value forward hydrocarbon commodity
contracts at gross valuation	$	538	$	—	$	—	$	—
Liability derivatives:
Fair value forward hydrocarbon commodity
contracts at gross valuation	—		—		514		—
Less counterparty offsets	—		—		—		—
As reported fair value contracts	$	538	$	—	$	514	$	—

At December 31, 2017, we had in place 20 commodity purchase and sale contracts, of which four of these contracts had no fair value associated with them as the contractual prices of crude oil were within the range of prices specified in the agreements. These commodity purchase and sale contracts encompassed approximately:

• 452 barrels per day of crude oil during January 2018;

• 322 barrels per day of crude oil during February through May 2018;

• 258 barrels per day of crude oil during June 2018;

• 646 barrels per day of crude oil during July 2018;

• 322 barrels per day of crude oil during August through September 2018; and

• 258 barrels per day of crude oil during October through December 2018.

The estimated fair value of forward month commodity contracts (derivatives) reflected in the accompanying unaudited condensed consolidated balance sheet were as follows at the date indicated (in thousands):

	December 31, 2017
	Balance Sheet Location and Amount
	Current		Other		Current		Other
	Assets		Assets		Liabilities		Liabilities
Asset derivatives:
Fair value forward hydrocarbon commodity
contracts at gross valuation	$	166	$	—	$	—	$	—
Liability derivatives:
Fair value forward hydrocarbon commodity
contracts at gross valuation	—		—		145		—
Less counterparty offsets	—		—		—		—
As reported fair value contracts	$	166	$	—	$	145	$	—

17

ADAMS RESOURCES & ENERGY, INC. AND SUBSIDIARIES

NOTES TO UNAUDITED CONDENSED CONSOLIDATED FINANCIAL STATEMENTS

We only enter into commodity contracts with creditworthy counterparties and evaluate our exposure to significant counterparties on an ongoing basis. At June 30, 2018 and December 31, 2017, we were not holding nor have we posted any collateral to support our forward month fair value derivative activity. We are not subject to any credit-risk related trigger events. We have no other financial investment arrangements that would serve to offset our derivative contracts.

Forward month commodity contracts (derivatives) reflected in the accompanying unaudited condensed consolidated statements of operations were as follows for the periods indicated (in thousands):

	Gains (losses)
	Three Months Ended				Six Months Ended
	June 30,				June 30,
	2018		2017		2018		2017
Revenues – marketing	$	1	$	280	$	2	$	700

Fair Value Measurements

The following tables set forth, by level with the Level 1, 2 and 3 fair value hierarchy, the carrying values of our financial assets and liabilities at the dates indicated (in thousands):

	June 30, 2018
	Fair Value Measurements Using
	Quoted Prices
	in Active		Significant
	Markets for		Other		Significant
	Identical Assets		Observable		Unobservable
	and Liabilities		Inputs		Inputs		Counterparty
	(Level 1)		(Level 2)		(Level 3)		Offsets		Total
Derivatives:
Current assets	$	—	$	538	$	—	$	—	$	538
Current liabilities	—		(514)		—		—		(514)
Net value	$	—	$	24	$	—	$	—	$	24

	December 31, 2017
	Fair Value Measurements Using
	Quoted Prices
	in Active		Significant
	Markets for		Other		Significant
	Identical Assets		Observable		Unobservable
	and Liabilities		Inputs		Inputs		Counterparty
	(Level 1)		(Level 2)		(Level 3)		Offsets		Total
Derivatives:
Current assets	$	—	$	166	$	—	$	—	$	166
Current liabilities	—		(145)		—		—		(145)
Net value	$	—	$	21	$	—	$	—	$	21

18

ADAMS RESOURCES & ENERGY, INC. AND SUBSIDIARIES

NOTES TO UNAUDITED CONDENSED CONSOLIDATED FINANCIAL STATEMENTS

These assets and liabilities are measured on a recurring basis and are classified based on the lowest level of input used to estimate their fair value. Our assessment of the relative significance of these inputs requires judgments.

When determining fair value measurements, we make credit valuation adjustments to reflect both our own nonperformance risk and our counterparty’s nonperformance risk. When adjusting the fair value of derivative contracts for the effect of nonperformance risk, we consider the impact of netting and any applicable credit enhancements. Credit valuation adjustments utilize Level 3 inputs, such as credit scores to evaluate the likelihood of default by us or our counterparties. At June 30, 2018 and December 31, 2017, credit valuation adjustments were not significant to the overall valuation of our fair value contracts. As a result, applicable fair value assets and liabilities are included in their entirety in the fair value hierarchy.

Note 10. Share-Based Compensation Plan

In May 2018, our shareholders approved the 2018 LTIP, a long-term incentive plan under which any employee or non-employee director who provides services to us is eligible to participate in the plan. The 2018 LTIP, which is overseen by the Compensation Committee of our Board of Directors, provides for the grant of various types of equity awards, of which restricted stock unit awards and performance-based compensation awards were granted during the second quarter of 2018. The maximum number of shares authorized for issuance under the 2018 LTIP is 150,000 shares, and the 2018 LTIP is effective until May 8, 2028. We began awarding share-based compensation to eligible employees and directors in June 2018. After giving effect to awards granted under the 2018 LTIP and assuming the potential achievement of the maximum amounts of the performance factors through June 30, 2018, a total of 120,403 shares were available for issuance. During the six months ended June 30, 2018, we recognized a nominal amount of compensation expense in connection with equity-based awards as the grant date for all awards under the 2018 LTIP was June 29, 2018.

If dividends are paid with respect to our common shares during the vesting period, an equivalent amount will accrue and be held by us without interest until the restricted stock and performance unit awards vest, at which time the amount will be paid to the recipient. If the award is forfeited prior to vesting, the accrued dividends will also be forfeited. At June 30, 2018, there were no accrued dividend amounts for awards granted under the 2018 LTIP.  

Restricted Stock Unit Awards

A restricted stock unit award is a grant of a right to receive our common shares in the future at no cost to the recipient apart from fulfilling service and other conditions once a defined vesting period expires, subject to customary forfeiture provisions. A restricted stock unit award will either be settled by the delivery of common shares or by the payment of cash based upon the fair market value of a specified number of shares, at the discretion of the Compensation Committee, subject to the terms of the applicable award agreement. The Compensation Committee intends for these awards to vest with the settlement of common shares. Restricted stock unit awards generally vest at a rate of 33% per year beginning one year after the grant date and are non-vested until the required service periods expire.

The fair value of a restricted stock unit award is based on the market price per share of our common shares on the date of grant. Compensation expense is recognized based on the grant date fair value over the requisite service or vesting period.

19

ADAMS RESOURCES & ENERGY, INC. AND SUBSIDIARIES

NOTES TO UNAUDITED CONDENSED CONSOLIDATED FINANCIAL STATEMENTS

The following table presents restricted stock unit award activity for the periods indicated:

		Weighted-
		Average Grant
	Number of	Date Fair Value
	Shares	per Share (1)
Restricted stock unit awards at January 1, 2018	—	$	—
Granted (2)	13,733	$	43.00
Vested	—	$	—
Forfeited	—	$	—
Restricted stock unit awards at June 30, 2018	13,733	$	—

____________________

(1) Determined by dividing the aggregate grant date fair value of awards by the number of awards issued.

(2)  The aggregate grant date fair value of restricted stock unit awards issued during 2018 was $0.6 million based on a grant date market price of our common shares of $43.00 per share.  

Unrecognized compensation cost associated with restricted stock unit awards was approximately $0.6 million. Due to the graded vesting provisions of these awards, we expect to recognize the remaining compensation cost for these awards over a weighted-average period of 1.7 years. 

Performance Share Unit Awards

An award granted as performance-based compensation is awarded to a participant contingent upon attainment of our future performance goals during a performance cycle. The performance goals were pre-established by the Compensation Committee. Following the end of the performance period, the holder of a performance-based compensation award is entitled to receive payment of an amount not exceeding the number of shares of common stock subject to, or the maximum value of, the performance-based compensation award, based on the achievement of the performance measures for the performance period. The performance share unit awards generally vest in full approximately three years after grant date, and are non-vested until the required service period expires.   

The fair value of a performance share unit award is based on the market price per share of our common shares on the date of grant. Compensation expense is recognized based on the grant date fair value over the requisite service or vesting period. Compensation expense will be adjusted for the performance goals on a quarterly basis.

The following table presents performance share unit award activity for the periods indicated:

		Weighted-
		Average Grant
	Number of	Date Fair Value
	Shares	per Share (1)
Performance share unit awards at January 1, 2018	—	$	—
Granted (2)	7,932	$	43.00
Vested	—	$	—
Forfeited	—	$	—
Performance share unit awards at June 30, 2018	7,932	$	—

____________________

(1) Determined by dividing the aggregate grant date fair value of awards by the number of awards issued.

(2) The aggregate grant date fair value of performance share unit awards issued during 2018 was $0.4 million based on a grant date market price of our common share of $43.00 per share and assuming a performance factor of 100 percent.

20

ADAMS RESOURCES & ENERGY, INC. AND SUBSIDIARIES

NOTES TO UNAUDITED CONDENSED CONSOLIDATED FINANCIAL STATEMENTS

Unrecognized compensation cost associated with performance share unit awards was approximately $0.4 million. We expect to recognize the remaining compensation cost for these awards over a weighted-average period of 2.9 years.

Note 11. Supplemental Cash Flow Information

Supplemental cash flows and non-cash transactions were as follows for the periods indicated (in thousands):

	Six Months Ended
	June 30,
	2018		2017
Cash paid for interest	$	34	$	2
Cash paid for federal and state income taxes	210		225
Non-cash transactions:
Change in accounts payable related to property and equipment additions	(44)		455

Note 12. Commitments and Contingencies

Capital Lease Obligations

We have entered into capital leases for certain of our tractors in our crude oil marketing segment. The following table summarizes our principal contractual commitments outstanding under our capital leases at June 30, 2018 for the next five years, and in total thereafter (in thousands):

Remainder of 2018	$	199
2019	398
2020	398
2021	398
2022	255
Thereafter	—
Total minimum lease payments	1,648
Less: Amount representing interest	(126)
Present value of capital lease obligations	1,522
Less current portion of capital lease obligations	(345)
Total long-term capital lease obligations	$	1,177

Operating Lease Obligations

We lease certain property and equipment under noncancelable and cancelable operating leases. Our significant lease agreements consist of (i) arrangements with independent truck owner-operators for use of their equipment and driver services; (ii) leased office space; and (iii) certain lease and terminal access contracts in order to provide tank storage and dock access for our crude oil marketing business. Currently, our significant lease agreements have terms that range from one to eight years.

21

ADAMS RESOURCES & ENERGY, INC. AND SUBSIDIARIES

NOTES TO UNAUDITED CONDENSED CONSOLIDATED FINANCIAL STATEMENTS

Lease expense is charged to operating costs and expenses on a straight-line basis over the period of expected economic benefit. Contingent rental payments are expensed as incurred. We are generally required to perform routine maintenance on the underlying leased assets. Maintenance and repairs of leased assets resulting from our operations are charged to expense as incurred. Rental expense was as follows for the periods indicated (in thousands):

	Three Months Ended				Six Months Ended
	June 30,				June 30,
	2018		2017		2018		2017
Rental expense	$	2,835	$	3,230	$	5,422	$	6,458

At June 30, 2018, rental obligations under non-cancelable operating leases and terminal arrangements with terms in excess of one year for the next five years and thereafter are payable as follows (in thousands):

Remainder of 2018	$	2,986
2019	3,336
2020	1,641
2021	1,531
2022	1,499
Thereafter	2,966
Total operating lease payments	$	13,959

Insurance Policies

Under our automobile and workers’ compensation insurance policies that were in place through September 30, 2017, we pre-funded our estimated losses, and therefore, we could either receive a return of premium paid or be assessed for additional premiums up to pre-established limits. Additionally, in certain instances, the risk of insured losses was shared with a group of similarly situated entities through an insurance captive. We have appropriately recognized estimated expenses and liabilities related to these policies for losses incurred but not reported to us or our insurance carrier. The amount of pre-funded insurance premiums left to cover potential future losses are presented in the table below. If the potential insurance claims do not further develop, the pre-funded premiums will be returned to us as a premium refund.

Effective October 1, 2017, we changed the structure of our automobile and workers’ compensation insurance policies. We exited the group captive and now establish a liability for expected claims incurred but not reported on a monthly basis as we move forward. As claims are paid, the liability is relieved. The amount of pre-funded insurance premiums left to cover potential future losses and our accruals for automobile and workers’ compensation claims were as follows at the dates indicated (in thousands):

	June 30,		December 31,
	2018		2017
Pre-funded premiums for losses incurred but not reported	$	516	$	988
Accrued automobile and workers’ compensation claims	1,262		450

22

ADAMS RESOURCES & ENERGY, INC. AND SUBSIDIARIES

NOTES TO UNAUDITED CONDENSED CONSOLIDATED FINANCIAL STATEMENTS

We maintain a self-insurance program for managing employee medical claims. A liability for expected claims incurred but not reported is established on a monthly basis. As claims are paid, the liability is relieved. We also maintain third party insurance stop-loss coverage for annual aggregate medical claims exceeding $6.0 million. Medical accrual amounts were as follows at the dates indicated (in thousands):

	June 30,		December 31,
	2018		2017
Accrued medical claims	$	1,439	$	1,329

Litigation

From time to time as incidental to our operations, we may become involved in various lawsuits and/or disputes. Primarily as an operator of an extensive trucking fleet, we are a party to motor vehicle accidents, worker compensation claims and other items of general liability as would be typical for the industry. We are presently unaware of any claims against us that are either outside the scope of insurance coverage or that may exceed the level of insurance coverage and could potentially represent a material adverse effect on our financial position or results of operations.

23

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

The following information should be read in conjunction with our Unaudited Condensed Consolidated Financial Statements and accompanying Notes included in this quarterly report on Form 10-Q and the Audited Consolidated Financial Statements and related Notes, together with our discussion and analysis of financial position and results of operations, included in our annual report on Form 10-K for the year ended December 31, 2017 (the “2017 Form 10-K”), as filed on March 12, 2018 with the U.S. Securities and Exchange Commission (“SEC”).  Our financial statements have been prepared in accordance with generally accepted accounting principles in the United States (“GAAP”).

Cautionary Statement Regarding Forward-Looking Information

This quarterly report on Form 10-Q contains various forward-looking statements within the meaning of Section 27A of the Securities Act of 1933, as amended, and Section 21E of the Securities Exchange Act of 1934, as amended (the “Exchange Act”) and information that are based on our beliefs, as well as assumptions made by us and information currently available to us. When used in this document, words such as “anticipate,” “project,” “expect,” “plan,” “seek,” “goal,” “estimate,” “forecast,” “intend,” “could,” “should,” “would,” “will,” “believe,” “may,” “potential” and similar expressions and statements regarding our plans and objectives for future operations are intended to identify forward-looking statements. Although we believe that our expectations reflected in such forward-looking statements are reasonable, we cannot give any assurances that such expectations will prove to be correct.  Forward-looking statements are subject to a variety of risks, uncertainties and assumptions as described in more detail under Part I, Item 1A of our 2017 Form 10-K and within Part II, Item 1A of this quarterly report.  If one or more of these risks or uncertainties materialize, or if underlying assumptions prove incorrect, our actual results may vary materially from those anticipated, estimated, projected or expected.  You should not put undue reliance on any forward-looking statements.  The forward-looking statements in this quarterly report speak only as of the date hereof.  Except as required by federal and state securities laws, we undertake no obligation to publicly update or revise any forward-looking statements, whether as a result of new information, future events or any other reason.

Overview of Business

Adams Resources & Energy, Inc. (“AE”), a Delaware corporation organized in 1973, and its subsidiaries are primarily engaged in the business of crude oil marketing, transportation and storage in various crude oil and natural gas basins in the lower 48 states of the United States (“U.S.”). We also conduct tank truck transportation of liquid chemicals and dry bulk and ISO tank container storage and transportation primarily in the lower 48 states of the U.S. with deliveries into Canada and Mexico, and with terminals in the Gulf Coast region of the U.S. Unless the context requires otherwise, references to “we,” “us,” “our,” the “Company” or “AE” are intended to mean the business and operations of Adams Resources & Energy, Inc. and its consolidated subsidiaries.  

Historically, we have operated and reported in three business segments: (i) crude oil marketing, transportation and storage, (ii) tank truck transportation of liquid chemicals and dry bulk and ISO tank container storage and transportation, and (iii) upstream crude oil and natural gas exploration and production. We exited the upstream crude oil and natural gas exploration and production business during 2017 with the sale of our upstream crude oil and natural gas exploration and production assets as a result of a voluntary bankruptcy filing for this subsidiary. We expect the bankruptcy case involving the wholly owned subsidiary through which this business was conducted to be dismissed during the second half of 2018.

24

Results of Operations

Marketing

Our crude oil marketing segment revenues, operating earnings and selected costs were as follows for the periods indicated (in thousands):

	Three Months Ended						Six Months Ended
	June 30,						June 30,
	2018		2017		Change (1)		2018		2017		Change (1)
Revenues	$	438,791	$	301,176	46	%	$	812,429	$	589,791	38	%
Operating earnings	5,772		1,691		241	%	8,730		3,084		183	%
Depreciation and amortization	1,336		1,977		(32)	%	2,833		4,046		(30)	%
Driver commissions	3,001		3,129		(4)	%	6,056		6,191		(2)	%
Insurance	1,125		1,258		(11)	%	2,414		2,497		(3)	%
Fuel	1,653		1,284		29	%	3,168		2,638		20	%

_________________________________

(1) Represents the percentage increase (decrease) from the prior year period.

Volume and price information were as follows for the periods indicated:

	Three Months Ended				Six Months Ended
	June 30,				June 30,
	2018		2017		2018		2017
Field level purchase volumes – per day (1)
Crude oil – barrels	70,389		66,817		67,815		66,605
Average purchase price
Crude oil – per barrel	$	68.24	$	46.34	$	66.22	$	47.67

_________________________________

(1) Reflects the volume purchased from third parties at the field level of operations.

Revenues and Operating Earnings. Crude oil marketing revenues increased by $137.6 million during the three months ended June 30, 2018 as compared to the three months ended June 30, 2017, primarily as a result of an increase in the market price of crude oil, which increased revenues by approximately $115.3 million, and higher overall crude oil volumes, which increased revenues by approximately $22.3 million. The average crude oil price received was $46.34 for the three months ended June 30, 2017, which increased to $68.24 for the three months ended June 30, 2018.

Our crude oil marketing operating earnings for the three months ended June 30, 2018 increased by $4.1 million as compared to the same period in 2017, due to low margin contracts being canceled or renegotiated and increased crude oil volumes. Operating earnings were also impacted by inventory valuation changes (as shown in the table below).

Crude oil marketing revenues increased by $222.6 million during the six months ended June 30, 2018 as compared to the six months ended June 30, 2017, primarily as a result of an increase in the market price of crude oil, which increased revenues by approximately $208.1 million, and higher overall crude oil volumes, which increased revenues by approximately $14.5 million. The average crude oil price received was $47.67 for the six months ended June 30, 2017, which increased to $66.22 for the six months ended June 30, 2018.

Our crude oil marketing operating earnings for the six months ended June 30, 2018 increased by $5.6 million as compared to the same period in 2017, due to improved market conditions. Operating earnings were also impacted by inventory valuation changes.

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Expenses. Driver commissions decreased by $0.1 million during the three months ended June 30, 2018 as compared to the same period in 2017, primarily due to a decrease in the number of drivers in the 2018 period as compared to the 2017 period, partially offset by an increase in crude oil marketing volumes in the 2018 period.  Insurance costs decreased by $0.1 million during the three months ended June 30, 2018 as compared to the same period in 2017, primarily as a result of decreased mileage during the 2018 period as compared to the 2017 period, and favorable driver safety performance during the 2018 period. Fuel costs increased by $0.4 million during the three months ended June 30, 2018 as compared to the same period in 2017 consistent with higher crude oil prices during the 2018 period and an increase in the price of diesel fuel during the 2018 period as compared to the 2017 period. Depreciation and amortization expense decreased by $0.6 million during the three months ended June 30, 2018 as compared to the same period in 2017, primarily as a result of certain tractors, trailers and field equipment being fully depreciated during 2017.

Driver commissions decreased by $0.1 million during the six months ended June 30, 2018 as compared to the same period in 2017, primarily due to a decrease in the number of drivers in the 2018 period as compared to the 2017 period, partially offset by an increase in crude oil marketing volumes in the 2018 period. Insurance costs decreased by $0.1 million during the six months ended June 30, 2018 as compared to the same period in 2017, primarily as a result of decreased mileage during the 2018 period as compared to the 2017 period, and favorable driver safety performance during the 2018 period. Fuel costs increased by $0.5 million during the six months ended June 30, 2018 as compared to the same period in 2017 consistent with higher crude oil prices during the 2018 period and an increase in the price of diesel fuel during the 2018 period as compared to the 2017 period. Depreciation and amortization expense decreased by $1.2 million during the six months ended June 30, 2018 as compared to the same period in 2017, primarily as a result of certain tractors, trailers and field equipment being fully depreciated during 2017.

Field Level Operating Earnings (Non-GAAP Financial Measure). Inventory valuations and forward commodity contract (derivatives or mark-to-market) valuations are two significant factors affecting comparative crude oil marketing segment operating earnings. As a purchaser and shipper of crude oil, we hold inventory in storage tanks and third-party pipelines. During periods of increasing crude oil prices, we recognize inventory liquidation gains while during periods of falling prices, we recognize inventory liquidation and valuation losses.

Crude oil marketing operating earnings can be affected by the valuations of our forward month commodity contracts (derivative instruments). These non-cash valuations are calculated and recorded at each period end based on the underlying data existing as of such date. We generally enter into these derivative contracts as part of a pricing strategy based on crude oil purchases at the wellhead (field level). The valuation of derivative instruments at period end requires the recognition of non-cash “mark-to-market” gains and losses.

26

The impact of inventory liquidations and derivative valuations on our crude oil marketing segment operating earnings is summarized in the following reconciliation of our non-GAAP financial measure for the periods indicated (in thousands):

	Three Months Ended				Six Months Ended
	June 30,				June 30,
	2018		2017		2018		2017
As reported segment operating earnings (1)	$	5,772	$	1,691	$	8,730	$	3,084
Add (subtract):
Inventory liquidation gains	(1,923)		—		(2,475)		—
Inventory valuation losses	—		1,405		—		2,063
Derivative valuation (gains) losses	(1)		(280)		(2)		(700)
Field level operating earnings (2)	$	3,848	$	2,816	$	6,253	$	4,447

________________________________

(1) Segment operating earnings included inventory liquidation gains of $1.9 million and $2.5 million for the three and six months ended June 30, 2018, respectively, and inventory valuation losses of $1.4 million and $2.1 million for the three and six months ended June 30, 2017, respectively.

(2) The use of field level operating earnings is (a) unique to us, (b) not a substitute for a GAAP measure and (c) may not be comparable to any similar measures developed by industry participants. We utilize this data to evaluate the profitability of our operations.

Field level operating earnings and field level purchase volumes depict our day-to-day operation of acquiring crude oil at the wellhead, transporting the product and delivering the product to market sales point. Field level operating earnings increased during the three and six months ended June 30, 2018 as compared to the same periods in 2017 due to an increase in the market price of crude oil, which increased revenues, the effects of lower barge costs, reducing operating expenses, increased crude oil volumes and improved market conditions.

We held crude oil inventory at a weighted average composite price as follows at the dates indicated (in barrels):

	June 30, 2018			December 31, 2017
		Average			Average
	Barrels	Price		Barrels	Price
Crude oil inventory	302,591	$	71.10	198,011	$	61.57

Historically, prices received for crude oil have been volatile and unpredictable with price volatility expected to continue. See “Part I, Item 1A. Risk Factors” in our 2017 Form 10-K.

27

Transportation

Our transportation segment revenues, operating earnings (losses) and selected costs were as follows for the periods indicated (in thousands):

	Three Months Ended						Six Months Ended
	June 30,						June 30,
	2018		2017		Change (1)		2018		2017		Change (1)
Revenues	$	13,626	$	13,616	—	%	$	27,244	$	27,071	1	%
Operating earnings (losses)	$	810	$	293	176	%	$	1,212	$	(5)	(24,340)	%
Depreciation and amortization	$	926	$	1,472	(37)	%	$	1,841	$	3,063	(40)	%
Driver commissions	$	2,726	$	2,892	(6)	%	$	5,606	$	5,728	(2)	%
Insurance	$	1,202	$	1,072	12	%	$	2,604	$	2,453	6	%
Fuel	$	1,722	$	1,477	17	%	$	3,598	$	3,109	16	%
Maintenance expense	$	1,548	$	1,471	5	%	$	3,075	$	3,109	(1)	%
Mileage (000s)	4,699		5,625		(16)	%	9,769		11,243		(13)	%

________________________________

(1) Represents the percentage increase (decrease) from the prior year period.

Our revenue rate structure includes a component for fuel costs in which fuel cost fluctuations are largely passed through to the customer over time. Revenues, net of fuel cost, were as follows for the periods indicated (in thousands):

	Three Months Ended				Six Months Ended
	June 30,				June 30,
	2018		2017		2018		2017
Total transportation revenue	$	13,626	$	13,616	$	27,244	$	27,071
Diesel fuel cost	(1,722)		(1,477)		(3,598)		(3,109)
Revenues, net of fuel cost (1)	$	11,904	$	12,139	$	23,646	$	23,962

________________________________

(1) Revenues, net of fuel cost, is a non-GAAP financial measure and is utilized for internal analysis of the results of our transportation segment.

Transportation revenues during the three months ended June 30, 2018 were generally consistent with transportation revenues during the three months ended June 30, 2017, with a slight increase as a result of a new transportation agreement entered into in January 2018 and higher transportation rates in the 2018 period offset by a decrease in revenues as a result of less miles traveled. Revenues, net of fuel cost, decreased by $0.2 million during the three months ended June 30, 2018, primarily as a result of an increase in the price of diesel and lower miles traveled during the 2018 period. Transportation activity has been increasing, and we continue to pursue our strategy of streamlining operations and diversifying offerings in our transportation segment. We have been working with customers to increase our transportation rates as well as streamlining operations in low margin areas. This increase in services has resulted in an increase in revenues, an increase in variable expenses related to transportation activities and a decrease in mileage as we reduce low margin operations. Fuel costs increased by $0.2 million as a result of an increase in the price of diesel during the 2018 period as compared to the 2017 period, partially offset by a decrease in miles traveled. Depreciation and amortization expense decreased by $0.5 million during the three months ended June 30, 2018 as compared to the same period in 2017, primarily as a result of certain tractors, trailers and field equipment being fully depreciated during 2017, partially offset by the purchase of new tractors in the the second quarter of 2018, which will result in increased depreciation expense in future periods.

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Transportation revenues increased by $0.2 million during the six months ended June 30, 2018, primarily as a result of the new transportation agreement entered into in January 2018 and higher transportation rates in the 2018 period. Revenues, net of fuel cost, decreased by $0.3 million during the six months ended June 30, 2018, primarily as a result of an increase in the price of diesel during the 2018 period, partially offset by increased activity in our transportation segment. This increase in services resulted in an increase in variable expenses related to transportation activities.  Fuel costs increased by $0.5 million as a result of an increase in the price of diesel during the 2018 period as compared to the 2017 period. Depreciation and amortization expense decreased by $1.2 million during the six months ended June 30, 2018 as compared to the same period in 2017, primarily as a result of certain tractors, trailers and field equipment being fully depreciated during 2017, partially offset by the purchase of new tractors in the second quarter of 2018, which will result in increased depreciation expense in future periods. During the remainder of 2018, we expect to purchase additional tractors, which will reduce the age of our fleet and increase depreciation expense. See “Other Items” below for further information regarding our purchase commitments.   

Oil and Gas

Our upstream crude oil and natural gas exploration and production segment revenues and operating earnings (losses) were primarily a function of crude oil and natural gas prices and volumes. We accounted for our upstream operations under the successful efforts method of accounting. As a result of AREC’s bankruptcy filing in April 2017 and our loss of control of this subsidiary, we deconsolidated AREC effective with its bankruptcy filing in 2017 and recorded our investment in AREC under the cost method of accounting. Our results for the three and six months ended June 30, 2017 were for the period in which AREC was consolidated.

Our upstream crude oil and natural gas exploration and production segment revenues, operating losses and depreciation and depletion expense were as follows for the periods indicated (in thousands):

	Three Months Ended		Six Months Ended
	June 30,		June 30,
	2017		2017
Revenues	$	410	$	1,427
Operating losses	95		53
Depreciation and depletion	114		423

Volume and price information were as follows for the periods indicated (volumes in thousands): 

	Three Months		Six Months
	Ended		Ended
	June 30,		June 30,
	2017		2017
Crude oil
Volume – barrels (1)	3,169		11,643
Average price per barrel	$	51.20	$	49.44
Natural gas
Volume – Mcf (1)	48,781		189,488
Average price per Mcf	$	2.48	$	2.86
Natural gas liquids
Volume – barrels (1)	3,911		11,204
Average price per barrel	$	30.06	$	26.77

_________________________________

(1) Volumes for the six months ended June 30, 2017 are only through April 30, 2017, as a result of the deconsolidation of this subsidiary due to its bankruptcy filing.

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General and Administrative Expense

General and administrative expense increased by $0.8 million during the three months ended June 30, 2018 as compared to the same period in 2017 primarily due to the reversal in the 2017 period of certain legal accruals of approximately $0.7 million related to legal matters and higher legal and outside service fees in the 2018 period, partially offset by lower personnel costs in the 2018 period.

General and administrative expense increased by $0.5 million during the six months ended June 30, 2018 as compared to the same period in 2017 primarily due to the reversal in the 2017 period of certain legal accruals of approximately $0.7 million related to legal matters and higher legal and outside service fees in the 2018 period, partially offset by the deconsolidation of AREC in April 2017.  

Income Taxes

Provision for (benefit from) income taxes is based upon federal and state tax rates, and variations in amounts are consistent with taxable income (loss) in the respective accounting periods.

On December 22, 2017, the Tax Cut and Jobs Act was enacted into law resulting in a reduction in the federal corporate income tax rate from 35 percent to 21 percent for years beginning in 2018. As a result of the lower tax rate, our provision for income taxes reflects the effects of the new tax rate during the three and six months ended June 30, 2018 as compared to the same periods in 2017.

Outlook

We plan to operate our remaining business segments with internally generated cash flows during 2018, but intend to remain flexible as the focus will be on increasing efficiencies and on business development opportunities. During 2018, we plan to leverage our investment in our transportation segment’s Houston terminal with the continued efforts to diversify service offerings, and we plan to grow in new or existing areas with our crude oil marketing segment.

Liquidity and Capital Resources

Liquidity

Our liquidity is from our cash balance and net cash provided by operating activities and is therefore dependent on the success of future operations. If our cash inflow subsides or turns negative, we will evaluate our investment plan accordingly and remain flexible.

One of our wholly owned subsidiaries, AREC, filed for bankruptcy in April 2017. Over the past few years, we have de-emphasized our upstream operations and do not expect this Chapter 11 filing by AREC to have a material adverse impact on any of our core businesses. As a result of an auction process, AREC sold its assets for approximately $5.2 million during 2017. After settlement of certain claims in late 2017, AE received approximately $2.8 million from AREC in December 2017. AE anticipates receiving an additional $0.4 million in the second half of 2018 when the bankruptcy case is dismissed.

30

At June 30, 2018 and December 31, 2017, we had no bank debt or other forms of debenture obligations. We maintain cash balances in order to meet the timing of day-to-day cash needs. Cash and working capital, the excess of current assets over current liabilities, were as follows at the dates indicated (in thousands):

	June 30,		December 31,
	2018		2017
Cash and cash equivalents	$	126,999	$	109,393
Working capital	120,775		116,087

We maintain a stand-by letter of credit facility with Wells Fargo Bank, National Association to provide for the issuance of up to $60 million in stand-by letters of credit for the benefit of suppliers of crude oil within our crude oil marketing segment and for other purposes. Stand-by letters of credit are issued as needed and are canceled as the underlying purchase obligations are satisfied by cash payment when due. The issuance of stand-by letters of credit enables us to avoid posting cash collateral when procuring crude oil supply. We are currently using the letter of credit facility for a letter of credit related to our insurance program. At June 30, 2018 and December 31, 2017, we had $0.4 million and $2.2 million, respectively, outstanding under this facility.

We believe current cash balances, together with expected cash generated from future operations, and the ease of financing truck and trailer additions through leasing arrangements (should the need arise) will be sufficient to meet our short-term and long-term liquidity needs.

We utilize cash from operations to make discretionary investments in our marketing and transportation businesses. With the exception of operating and capital lease commitments primarily associated with storage tank terminal arrangements, leased office space and tractors, our future commitments and planned investments can be readily curtailed if operating cash flows decrease. See “Other Items” below for information regarding our operating and capital lease obligations.

The most significant item affecting future increases or decreases in liquidity is earnings from operations, and these earnings are dependent on the success of future operations. See “Part I, Item 1A. Risk Factors” in our 2017 Form 10-K.

Cash Flows from Operating, Investing and Financing Activities

Our consolidated cash flows from operating, investing and financing activities were as follows for the periods indicated (in thousands):

	Six Months Ended
	June 30,
	2018		2017
Cash provided by (used in):
Operating activities	$	21,237	$	19,772
Investing activities	(1,608)		(1,571)
Financing activities	(2,023)		(1,856)

Operating activities. Net cash flows provided by operating activities for the six months ended June 30, 2018 increased by $1.5 million when compared to the same period in 2017. This increase was primarily due to an increase in revenues and the timing of collections of accounts receivable and payments of accounts payable, partially offset by a decrease in operating expenses.

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At various times each month, we may make cash prepayments and/or early payments in advance of the normal due date to certain suppliers of crude oil within our crude oil marketing operations. Crude oil supply prepayments are recouped and advanced from month to month as the suppliers deliver product to us. In addition, in order to secure crude oil supply, we may also “early pay” our suppliers in advance of the normal payment due date of the twentieth of the month following the month of production. These “early payments” reduce cash and accounts payable as of the balance sheet date. We also require certain customers to make similar early payments or to post cash collateral with us in order to support their purchases from us. Early payments and cash collateral received from customers increases cash and reduces accounts receivable as of the balance sheet date.

Early payments were as follows at the dates indicated (in thousands):

	June 30,		December 31,
	2018		2017
Early payments received	$	29,839	$	20,078
Early payments to suppliers	4,500		6,100

We rely heavily on our ability to obtain open-line trade credit from our suppliers especially with respect to our crude oil marketing operations. During the fourth quarter of 2017 and during the second quarter of 2018, we elected to make several early payments in our crude oil marketing operations. Our cash balance increased by approximately $17.6 million as of June 30, 2018 relative to the year ended December 31, 2017 primarily as a result of the timing of the early payments and prepayments made and received during each period.

Investing activities. Net cash flows used in investing activities for the six months ended June 30, 2018 was consistent with the same period in 2017. Increases during the 2018 period of $0.5 million in cash proceeds from the sales of assets and $0.1 million in insurance and state collateral refunds were offset by an increase of $0.6 million in capital spending for property and equipment (see following table).

Capital spending was as follows for the periods indicated (in thousands):

	Six Months Ended
	June 30,
	2018		2017
Crude oil marketing (1)	$	1,070	$	273
Truck transportation (2)	1,645		10
Oil and natural gas exploration	—		1,825
Other	13		—
Capital spending	$	2,728	$	2,108

__________________

(1) 2018 amount primarily relates to construction of a pipeline connection.

(2) 2018 amount primarily relates to the purchase of 10 tractors, five of which were placed into service in June 2018 and five of which were placed into service in July 2018.

Financing activities. Cash used in financing activities for the six months ended June 30, 2018 increased by $0.2 million when compared to the same period in 2017. During each of the six months ended June 30, 2018 and 2017, we paid a quarterly dividend of $0.22 per common share, or a total of $1.9 million during each six month period. During the 2018 period, we paid $0.2 million of principal repayments on capital lease obligations that we entered into in September 2017 for certain of our tractors in our crude oil marketing segment, with principal contractual commitments to be paid over a period of five years. See “Other Items” below for further information regarding our capital leases. 

32

Other Items

Contractual Obligations

The following table summarizes our significant contractual obligations at June 30, 2018 (in thousands):

			Payments due by period
	Total		Less than 1 year		1-3 years		3-5 years		More than 5 years
Capital lease obligations (1)	$	1,648	$	398	$	796	$	454	$	—
Operating lease obligations (2)	13,959		2,986		4,977		3,030		2,966
Purchase obligations (3)	5,000		5,000		—		—		—
Total contractual obligations	$	20,607	$	8,384	$	5,773	$	3,484	$	2,966

______________

(1) Amounts represent our principal contractual commitments, including interest, outstanding under capital leases for certain tractors in our crude oil marketing segment.

(2) Amounts represent rental obligations under non-cancelable operating leases and terminal arrangements with terms in excess of one year.

(3) Amount represents commitments to purchase 41 new tractors during the remainder of 2018 in connection with our transportation business.

We maintain certain lease arrangements with independent truck owner-operators for use of their equipment and driver services on a month-to-month basis. In addition, we enter into office space and certain lease and terminal access contracts in order to provide tank storage and dock access for our crude oil marketing business. These storage and access contracts require certain minimum monthly payments for the term of the contracts. Rental expense was as follows for the periods indicated (in thousands):

	Three Months Ended				Six Months Ended
	June 30,				June 30,
	2018		2017		2018		2017
Rental expense	$	2,835	$	3,230	$	5,422	$	6,458

Off-Balance Sheet Arrangements

We have no off-balance sheet arrangements that have or are reasonably expected to have a material current or future effect on our financial position, results of operations or cash flows.

Recent Accounting Pronouncements    

For information regarding recent accounting pronouncements, see Note 2 in the Notes to Unaudited Condensed Consolidated Financial Statements.

Related Party Transactions

For more information regarding related party transactions, see Note 8 in the Notes to Unaudited Condensed Consolidated Financial Statements.

Critical Accounting Policies and Use of Estimates

A discussion of our critical accounting policies and estimates is included in our 2017 Form 10-K. Certain of these accounting policies require the use of estimates. There have been no material changes to our accounting policies since the disclosures provided in our 2017 Form 10-K.

33

Item 3. Quantitative and Qualitative Disclosures about Market Risk

There have been no material changes to our “Quantitative and Qualitative Disclosures about Market Risk” that have occurred since the disclosures provided in our 2017 Form 10-K.

Item 4. Disclosure Controls and Procedures

As of the end of the period covered by this quarterly report, our management carried out an evaluation, with the participation of our Executive Chairman and Chief Financial Officer, of the effectiveness of our disclosure controls and procedures pursuant to Rule 13a-15 and 15d-15(e) of the Exchange Act. Based on this evaluation, as of the end of the period covered by this quarterly report, our Executive Chairman and our Chief Financial Officer concluded:

(i)  that our disclosure controls and procedures are designed to ensure that information required to be disclosed by us in the reports that we file or submit under the Exchange Act is recorded, processed, summarized and reported within the time periods specified in the SEC’s rules and forms, and that such information is accumulated and communicated to our management, including our principal executive and financial officers, as appropriate to allow for timely decisions regarding required disclosures; and

(ii) that our disclosure controls and procedures are effective.

Changes in Internal Control over Financial Reporting

There were no changes in our internal control over financial reporting (as defined in Rule 13a-15(f) and 15d-15(e) under the Exchange Act) during the fiscal quarter ended June 30, 2018, that have materially affected, or are reasonably likely to materially affect, our internal control over financial reporting.

PART II. OTHER INFORMATION

Item 1. Legal Proceedings

From time to time as incidental to our operations, we may become involved in various lawsuits and/or disputes. Primarily as an operator of an extensive trucking fleet, we are a party to motor vehicle accidents, worker compensation claims and other items of general liability as would be typical for the industry. We are presently unaware of any claims against us that are either outside the scope of insurance coverage or that may exceed the level of insurance coverage and could potentially represent a material adverse effect on our financial position or results of operations.

Item 1A. Risk Factors

In addition to the other information set forth in this Quarterly Report, you should carefully consider the risk factors and other cautionary statements described under the heading “Item 1A. Risk Factors” included in our 2017 Form 10-K and the risk factors and other cautionary statements contained in our other SEC filings, which could materially affect our businesses, financial condition or future results. Additional risks and uncertainties not currently known to us or that we currently deem to be immaterial also may materially adversely affect our business, financial condition or future results. There have been no material changes in our risk factors from those disclosed in our 2017 Form 10-K or our other SEC filings.

34

Item 2. Unregistered Sales of Equity Securities and Use of Proceeds

None.

Item 3. Defaults Upon Senior Securities

None.

Item 4. Mine Safety Disclosures

Not applicable.

Item 5. Other Information

None.

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Item 6. Exhibits

Exhibit
Number	Exhibit
3.1	Certificate of Incorporation of Adams Resources & Energy, Inc., as amended (incorporated by reference to Exhibit 3(a) to Form 10-K for the fiscal year ended December 31, 1987).
3.2	Bylaws of Adams Resources & Energy, Inc., as amended (incorporated by reference to Exhibit 3(b) to Form 10-K for the year ended December 31, 2012).
10.1+*	Form of Director Restricted Stock Unit Award Agreement under the Adams Resources & Energy, Inc. 2018 Long-Term Incentive Plan.
10.2+*	Form of Employee Restricted Stock Unit Award Agreement under the Adams Resources & Energy, Inc. 2018 Long-Term Incentive Plan.
10.3+*	Form of Employee Performance Share Unit Award Agreement under the Adams Resources & Energy, Inc. 2018 Long-Term Incentive Plan.
31.1*	Sarbanes-Oxley Section 302 certification of Executive Chairman pursuant to Exchange Act Rules 13a-14(a) and 15d-14(a), as adopted pursuant to Section 302 of the Sarbanes-Oxley Act of 2002.
31.2*	Sarbanes-Oxley Section 302 certification of Chief Financial Officer pursuant to Exchange Act Rules 13a-14(a) and 15d-14(a), as adopted pursuant to Section 302 of the Sarbanes-Oxley Act of 2002.
32.1*	Sarbanes-Oxley Section 906 certification of Executive Chairman pursuant to 18. U.S.C. Section 1350, as adopted pursuant to Section 906 of the Sarbanes-Oxley Act of 2002.
32.2*	Sarbanes-Oxley Section 906 certification of Chief Financial Officer pursuant to 18. U.S.C. Section 1350, as adopted pursuant to Section 906 of the Sarbanes-Oxley Act of 2002.
101.CAL*	XBRL Calculation Linkbase Document
101.DEF*	XBRL Definition Linkbase Document
101.INS*	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.LAB*	XBRL Labels Linkbase Document
101.PRE*	XBRL Presentation Linkbase Document
101.SCH*	XBRL Schema Document

____________

+ Management contract or compensation plan or arrangement.

*Filed or furnished (in the case of Exhibit 32.1 and 32.2) with this report.

36

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.

		ADAMS RESOURCES & ENERGY, INC.
		(Registrant)
Date: August 8, 2018	By:	/s/ Townes G. Pressler
		Townes G. Pressler
		Executive Chairman
		(Principal Executive Officer)
	By:	/s/ Tracy E. Ohmart
		Tracy E. Ohmart
		Chief Financial Officer
		(Principal Financial Officer and Principal
		Accounting Officer)

37

EX-10.1

Exhibit 10.1

RESTRICTED STOCK UNIT AWARD AGREEMENT

THIS RESTRICTED STOCK UNIT AWARD AGREEMENT (this “Agreement”) is made as of the 29th day of June, 2018 (the “Grant Date”), between ADAMS RESOURCES & ENERGY, INC., a Delaware corporation (“Company”), and all of its Affiliates (collectively, the “Company”), and _______________ (the “Director”). A copy of the Adams Resources & Energy, Inc. 2018 Long-Term Incentive Plan (the “Plan”) is annexed to this Agreement and shall be deemed a part hereof as if fully set forth herein. Unless the context otherwise requires, all terms that are not defined in this Agreement but which are defined in the Plan shall have the same meaning given to them in the Plan when used herein.

1.Award. Pursuant to the Plan, as of the Grant Date, __________________ Restricted Stock Units (the “Restricted Stock Units”) shall be granted to Director as a matter of separate inducement and not in lieu of any other compensation for Director’s services, subject to the acceptance by the Director of the terms and conditions of this Agreement. The Director acknowledges receipt of a copy of the Plan, and agrees that this award of Restricted Stock Units shall be subject to all of the terms and provisions of the Plan, including future amendments thereto, if any, pursuant to the terms thereof, and to all of the terms and conditions of this Agreement.

2.Restricted Stock Units. The Director hereby accepts the Restricted Stock Units when issued and agrees with respect thereto as follows:

(a)Payment and Determination of Value. Except as otherwise provided in Section 10 below, Company shall provide to the Director one share of the Company’s common stock, $0.10 par value per share for each Restricted Stock Unit on its vesting date. If any dividends are paid with respect to a share of the Company’s common stock during the vesting period, an equivalent amount shall accrue and be held by the Company without interest until the Restricted Stock Units become vested, at which time such amount shall be paid to the Employee, or are forfeited, at which time such amount shall be forfeited.

(b)Vesting. The Director’s Restricted Stock Units shall become vested on the first anniversary of the Vesting Commencement Date without further action by the Committee. For purposes of this Agreement, the “Vesting Commencement Date” shall be May 8, 2018.

(c)Termination of Service. Any portion of the Restricted Stock Units that does not become vested in accordance with the provisions of Section 2(b) shall be forfeited to the Company for no consideration as of the date of the termination of the Director’s service with the Company, except that:

(i)if the Director is determined to be Disabled or in the event of the death of the Director, all of the Director’s then outstanding Restricted Stock Units shall become vested as of the date of such determination of Disability or death, as applicable. In such case, the Director (or the Director’s legal representative, or the person, if any, who acquired the Restricted Stock Units by bequest or inheritance or by reason of the death of the Director), shall be entitled to receive any payment with respect to the Restricted Stock Units in accordance with this Agreement; and

(ii)if the Director’s service on the Board ceases due to such individual not being reelected to the Board, then all of the Director’s then outstanding Restricted Stock Units shall become vested as of the date the Director’s period of service on the Board ends.

3.Transfer Restrictions. The Restricted Stock Units may not be sold, assigned, pledged, exchanged, hypothecated or otherwise transferred, encumbered or otherwise disposed of by the Director.

4.Shareholder Rights. The Director shall not have any of the rights of a shareholder of the Company with respect to the Restricted Stock Units.

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5.Corporate Acts. The existence of the Restricted Stock Units shall not affect in any way the right or power of the Board of Directors of the Company or the shareholders of the Company to make or authorize any adjustment, recapitalization, reorganization or other change in the Company’s capital structure or its business, any merger or consolidation of the Company, any issue of debt or equity securities, the dissolution or liquidation of the Company or any sale, lease, exchange or other disposition of all or any part of its assets or business or any other corporate act or proceeding.

6.Withholding of Tax. To the extent that the receipt of the Restricted Stock Units results in compensation income to the Director for federal or state income tax purposes, the Director may elect to either (i) deliver to the Company at the time of such receipt, as the case may be, such amount of money as the Company may require to meet its withholding obligation under applicable tax laws or regulations, or (ii) have the Company withhold a portion of the shares of the Company’s common stock distributable to the Director under this Agreement that does not exceed the amount of taxes to be withheld by reason of such resulting compensation income. If the Director does not make a timely election regarding the manner this tax withholding obligation will be satisfied, then the Company shall withhold a portion of the shares of the Company’s common stock distributable to the Director under this Agreement that does not exceed the amount of taxes to be withheld by reason of such resulting compensation income.

7.Service Relationship. Nothing in the adoption of the Plan or the award of the Restricted Stock Units thereunder pursuant to this Agreement shall confer upon the Director the right to continued service on the Company’s Board of Directors or affect in any way the right of the Company Board of Directors or shareholders to terminate such service at any time. Any question as to whether and when there has been a termination of the Director’s service on the Board shall be determined by the Committee, and its determination shall be final.

8.Notices. Any notices or other communications provided for in this Agreement shall be sufficient if in writing. In the case of the Director, such notices or communications shall be effectively delivered when hand delivered to the Director at his or her principal place of residence or when sent by registered or certified mail to the Director at the last address the Director has filed with the Company. In the case of the Company, such notices or communications shall be effectively delivered when sent by registered or certified mail to the Company at its principal executive offices.

9.Entire Agreement; Amendment. This Agreement replaces and merges all previous agreements and discussions relating to the same or similar subject matters between the Director and the Company and constitutes the entire agreement between the Director and the Company with respect to the subject matter of this Agreement. This Agreement may not be modified in any respect by any verbal statement, representation or agreement made by any Director, officer, or representative of the Company or by any written agreement unless signed by an officer of the Company who is expressly authorized by the Company to execute such document. In addition, if it is subsequently determined by the Committee, in its sole discretion, that the terms and conditions of this Agreement and/or the Plan are not compliant with Code Section 409A, or any Treasury regulations or Internal Revenue Service guidance promulgated thereunder, this Agreement and/or the Plan may be amended by the Company accordingly.

10.Code Section 409A. If and to the extent any portion of any payment provided to the Director under this Agreement in connection with the Director’s separation from service (as defined in Section 409A of Internal Revenue Code of 1986, as amended (“Code Section 409A”) is determined to constitute “nonqualified deferred compensation” within the meaning of Code Section 409A and the Director is a “specified Director” as defined in Code Section 409A(a)(2)(B)(i), as determined by the Company in accordance with the procedures separately adopted by the Company for this purpose, by which determination the Director, as a condition to accepting benefits under this Agreement and the Plan, agrees that he or she is bound, such portion of the shares of Company’s common stock to be delivered on a vesting date shall not be delivered before the earlier of (i) the day that is six months plus one day after the date of separation from service (as determined under Code Section 409A) or (ii) the tenth (10th) day after the date of the Director’s death (as applicable, the “New Payment Date”). The shares that otherwise would have been delivered to the Director during the period between the date of separation from service and the New Payment Date shall be delivered to the Director on such New Payment Date, and any remaining shares will be delivered on their original schedule. Neither the Company nor the Director shall have the right to accelerate or defer the delivery of any such shares except to the extent specifically permitted or required by Code

2

Section 409A. If the Director becomes Disabled and such disability does not satisfy the requirements of Code Section 409A, then the Director’s shares shall be delivered on the original scheduled vesting date. This Agreement is intended to comply with the provisions of Code Section 409A and this Agreement and the Plan shall, to the extent practicable, be construed in accordance therewith. Terms defined in this Agreement and the Plan shall have the meanings given such terms under Code Section 409A if and to the extent required to comply with Code Section 409A. In any event, the Company makes no representations or warranty and shall have no liability to the Director or any other person if any provisions of or payments under this Agreement are determined to constitute deferred compensation subject to Code Section 409A but not to satisfy the conditions of that section.

11.Binding Effect. This Agreement shall be binding upon and inure to the benefit of any successors to the Company and all persons lawfully claiming under the Director.

12.Miscellaneous. In the event of any conflict or inconsistency between the terms of this Agreement and the terms of the Plan, including any amendments or supplements thereto, the terms of this Agreement shall be controlling.

[Remainder of page intentionally left blank]

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IN WITNESS WHEREOF, the Company has caused this Agreement to be duly executed by an officer thereunto duly authorized, and the Director has agreed to and accepted the terms of this Agreement, all as of the date first above written.

COMPANY 

ADAMS RESOURCES & ENERGY, INC. 

By: 

Name: 

Title: 

DIRECTOR 

By: 

4

EX-10.2

Exhibit 10.2

RESTRICTED STOCK UNIT AWARD AGREEMENT

THIS RESTRICTED STOCK UNIT AWARD AGREEMENT (this “Agreement”) is made as of the 29th day of June, 2018 (the “Grant Date”), between ADAMS RESOURCES & ENERGY, INC., a Delaware corporation (“Company”), and all of its Affiliates (collectively, the “Company”), and _______________ (the “Employee”). A copy of the Adams Resources & Energy, Inc. 2018 Long-Term Incentive Plan (the “Plan”) is annexed to this Agreement and shall be deemed a part hereof as if fully set forth herein. Unless the context otherwise requires, all terms that are not defined in this Agreement but which are defined in the Plan shall have the same meaning given to them in the Plan when used herein.

1.Award. Pursuant to the Plan, as of the Grant Date, __________________ Restricted Stock Units (the “Restricted Stock Units”) shall be granted to Employee as a matter of separate inducement and not in lieu of any salary or other compensation for Employee’s services, subject to the acceptance by the Employee of the terms and conditions of this Agreement. The Employee acknowledges receipt of a copy of the Plan, and agrees that this award of Restricted Stock Units shall be subject to all of the terms and provisions of the Plan, including future amendments thereto, if any, pursuant to the terms thereof, and to all of the terms and conditions of this Agreement.

2.Restricted Stock Units. The Employee hereby accepts the Restricted Stock Units when issued and agrees with respect thereto as follows:

(a)Payment and Determination of Value. Except as otherwise provided in Section 10 below, Company shall provide to the Employee one share of the Company’s common stock, $0.10 par value per share for each Restricted Stock Unit on its scheduled vesting date. If any dividends are paid with respect to a share of the Company’s common stock during the vesting period, an equivalent amount shall accrue and be held by the Company without interest until the Restricted Stock Units become vested, at which time such amount shall be paid to the Employee, or are forfeited, at which time such amount shall be forfeited.

(b)Vesting. An Employee’s Restricted Stock Units shall become vested as follows:

(i)on the first anniversary of the Vesting Commencement Date, one-third of the aggregate number of the Restricted Stock Units shall be vested without further action by the Committee; and

(ii)on the second anniversary of the Vesting Commencement Date, one-third of the aggregate number of the Restricted Stock Units shall be vested without further action by the Committee; and

(iii)on the third anniversary of the Vesting Commencement Date, one-third of the aggregate number of the Restricted Stock Units shall be vested without further action by the Committee.

For purposes of this Agreement, the “Vesting Commencement Date” shall be May 8, 2018.

(c)Termination of Employment. Any portion of the Restricted Stock Units that does not become vested in accordance with the provisions of Section 2(b) shall be forfeited to the Company for no consideration as of the date of the termination of the Employee’s employment with the Company, except that:

(i)if the Employee is determined to be Disabled or in the event of the death of the Employee, all of the Employee’s then outstanding Restricted Stock Units shall become vested as of the date of such determination of Disability or death, as applicable. In such case, Employee (or Employee’s legal representative, or the person, if any, who acquired the Restricted Stock Units by bequest or inheritance or by reason of the death of Employee), shall be entitled to receive any payment with respect to the Restricted Stock Units in accordance with this Agreement; and

(ii)if the Employee’s employment with the Company terminates by reason of retirement following the date on which such Employee has either (I) (A) reached sixty (60) years of age, and (B) completed at least ten (10) years of service as an employee of the Company, or (II) reached sixty-five (65) years of

1

age, then all of the Employee’s then outstanding Restricted Stock Units shall become vested as of such date, provided, however, that the Employee shall not receive such shares until their original scheduled vesting date.

Any payment made in connection with Section 2(c)(i) above shall be paid thirty (30) days after the Employee’s termination date.

3.Transfer Restrictions. The Restricted Stock Units may not be sold, assigned, pledged, exchanged, hypothecated or otherwise transferred, encumbered or otherwise disposed of by the Employee.

4.Shareholder Rights. The Employee shall not have any of the rights of a shareholder of the Company with respect to the Restricted Stock Units.

5.Corporate Acts. The existence of the Restricted Stock Units shall not affect in any way the right or power of the Board of Directors of the Company or the shareholders of the Company to make or authorize any adjustment, recapitalization, reorganization or other change in the Company’s capital structure or its business, any merger or consolidation of the Company, any issue of debt or equity securities, the dissolution or liquidation of the Company or any sale, lease, exchange or other disposition of all or any part of its assets or business or any other corporate act or proceeding.

6.Withholding of Tax. To the extent that the receipt of the Restricted Stock Units results in compensation income to the Employee for federal or state income tax purposes, the Employee may elect to either (i) deliver to the Company at the time of such receipt, as the case may be, such amount of money as the Company may require to meet its withholding obligation under applicable tax laws or regulations, or (ii) have the Company withhold a portion of the shares of the Company’s common stock distributable to the Employee under this Agreement that does not exceed the amount of taxes to be withheld by reason of such resulting compensation income. If the Employee does not make a timely election regarding the manner this tax withholding obligation will be satisfied, then the Company shall withhold a portion of the shares of the Company’s common stock distributable to the Employee under this Agreement that does not exceed the amount of taxes to be withheld by reason of such resulting compensation income.

7.Employment Relationship. For purposes of this Agreement, the Employee shall be considered to be in the employment of the Company as long as the Employee remains an employee of either the Company or an Affiliate (as such term is defined in the Plan). Nothing in the adoption of the Plan or the award of the Restricted Stock Units thereunder pursuant to this Agreement shall confer upon the Employee the right to continued employment by the Company or affect in any way the right of the Company to terminate such employment at any time. Unless otherwise provided in a written employment agreement or by applicable law, the Employee’s employment by the Company shall be on an at-will basis, and the employment relationship may be terminated at any time by either the Employee or the Company for any reason whatsoever, with or without cause. Any question as to whether and when there has been a termination of such employment, and the cause of such termination, shall be determined by the Committee, and its determination shall be final.

8.Notices. Any notices or other communications provided for in this Agreement shall be sufficient if in writing. In the case of the Employee, such notices or communications shall be effectively delivered when hand delivered to the Employee at his or her principal place of employment or when sent by registered or certified mail to the Employee at the last address the Employee has filed with the Company. In the case of the Company, such notices or communications shall be effectively delivered when sent by registered or certified mail to the Company at its principal executive offices.

9.Entire Agreement; Amendment. This Agreement replaces and merges all previous agreements and discussions relating to the same or similar subject matters between the Employee and the Company and constitutes the entire agreement between the Employee and the Company with respect to the subject matter of this Agreement. This Agreement may not be modified in any respect by any verbal statement, representation or agreement made by any employee, officer, or representative of the Company or by any written agreement unless signed by an officer of the Company who is expressly authorized by the Company to execute such document. In addition, if it is subsequently determined by the Committee, in its sole discretion, that the terms and conditions of this Agreement and/or the Plan are not compliant with Code Section 409A, or any Treasury regulations or Internal

2

Revenue Service guidance promulgated thereunder, this Agreement and/or the Plan may be amended by the Company accordingly.

10.Code Section 409A. If and to the extent any portion of any payment provided to the Employee under this Agreement in connection with the Employee’s separation from service (as defined in Section 409A of Internal Revenue Code of 1986, as amended (“Code Section 409A”) is determined to constitute “nonqualified deferred compensation” within the meaning of Code Section 409A and the Employee is a “specified employee” as defined in Code Section 409A(a)(2)(B)(i), as determined by the Company in accordance with the procedures separately adopted by the Company for this purpose, by which determination the Employee, as a condition to accepting benefits under this Agreement and the Plan, agrees that he or she is bound, such portion of the shares of Company’s common stock to be delivered on a vesting date shall not be delivered before the earlier of (i) the day that is six months plus one day after the date of separation from service (as determined under Code Section 409A) or (ii) the tenth (10th) day after the date of the Employee’s death (as applicable, the “New Payment Date”). The shares that otherwise would have been delivered to the Employee during the period between the date of separation from service and the New Payment Date shall be delivered to the Employee on such New Payment Date, and any remaining shares will be delivered on their original schedule. If the Employee becomes Disabled and such disability does not satisfy the requirements of Code Section 409A, then the Employee’s shares shall be delivered on the original scheduled vesting date. Neither the Company nor the Employee shall have the right to accelerate or defer the delivery of any such shares except to the extent specifically permitted or required by Code Section 409A. This Agreement is intended to comply with the provisions of Code Section 409A and this Agreement and the Plan shall, to the extent practicable, be construed in accordance therewith. Terms defined in this Agreement and the Plan shall have the meanings given such terms under Code Section 409A if and to the extent required to comply with Code Section 409A. In any event, the Company makes no representations or warranty and shall have no liability to the Employee or any other person if any provisions of or payments under this Agreement are determined to constitute deferred compensation subject to Code Section 409A but not to satisfy the conditions of that section.

11.Binding Effect. This Agreement shall be binding upon and inure to the benefit of any successors to the Company and all persons lawfully claiming under the Employee.

12.Miscellaneous. In the event of any conflict or inconsistency between the terms of this Agreement and the terms of the Plan, including any amendments or supplements thereto, the terms of this Agreement shall be controlling.

[Remainder of page intentionally left blank]

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IN WITNESS WHEREOF, the Company has caused this Agreement to be duly executed by an officer thereunto duly authorized, and the Employee has agreed to and accepted the terms of this Agreement, all as of the date first above written.

COMPANY 

ADAMS RESOURCES & ENERGY, INC. 

By: 

Name: 

Title: 

EMPLOYEE 

By: 

4

EX-10.3

Exhibit 10.3

PERFORMANCE SHARE UNIT AWARD AGREEMENT

THIS PERFORMANCE SHARE UNIT AWARD AGREEMENT (this “Agreement”) is made as of the 29th day of June, 2018 (the “Grant Date”), between ADAMS RESOURCES & ENERGY, INC., a Delaware corporation (“Company”), and all of its Affiliates (collectively, the “Company”), and _______________ (the “Employee”). A copy of the Adams Resources & Energy, Inc. 2018 Long-Term Incentive Plan (the “Plan”) is annexed to this Agreement and shall be deemed a part hereof as if fully set forth herein. Unless the context otherwise requires, all terms that are not defined in this Agreement but which are defined in the Plan shall have the same meaning given to them in the Plan when used herein.

1. Award. Pursuant to the Plan, as of the Grant Date, _________________ Restricted Stock Units (the “Performance Share Units”) shall be granted to Employee as a matter of separate inducement and not in lieu of any salary or other compensation for Employee’s services, subject to the acceptance by the Employee of the terms and conditions of this Agreement. The Employee acknowledges receipt of a copy of the Plan, and agrees that the Performance Share Units shall be subject to all of the terms and provisions of the Plan, including future amendments thereto, if any, pursuant to the terms thereof, and to all of the terms and conditions of this Agreement.

2.Performance Share Units. The Employee hereby accepts the Performance Share Units when issued and agrees with respect thereto as follows:

(a)Payment and Determination of Value. Except as otherwise provided in Section 10 below, Company shall provide to the Employee one share of the Company’s common stock, $0.10 par value per share for each Performance Share Unit on its scheduled vesting date. If any dividends are paid with respect to a share of the Company’s common stock during the vesting period, an equivalent amount shall accrue and be held by the Company without interest until the Performance Share Units become vested, at which time such amount shall be paid to the Employee, or are forfeited, at which time such amount shall be forfeited.

(b)Vesting. An Employee’s Performance Share Units shall become vested based on (i) continued service with the Company until the third (3rd) anniversary of the Vesting Commencement Date, and (ii) the attainment of the Performance Criteria specified on Exhibit A to this Agreement. Any portion of the Performance Share Units that does not become vested in accordance with the preceding provisions of this Section 2(b) and Exhibit A shall be forfeited to the Company for no consideration as of the date of the termination of the Employee’s employment with the Company. For purposes of this Agreement, the “Vesting Commencement Date” shall be May 8, 2018.

(c)Termination of Employment. If the Employee terminates his or her employment with the Company prior to the third (3rd) anniversary of the Vesting Commencement Date, then the Performance Share Units shall be forfeited to the Company for no consideration as of the date of the termination of the Employee’s employment with the Company, except that:

(i)if the Employee is determined to be Disabled or in the event of the death of the Employee, all of the Employee’s Performance Share Units shall become vested upon the later of (A) the completion of the Performance Period (as specified on Exhibit A), or (B) the date the Employee terminates employment with the Company, based upon the actual level of performance. In such case, Employee (or Employee’s legal representative, or the person, if any, who acquired the Performance Share Units by bequest or inheritance or by reason of the death of Employee), shall be entitled to receive any payment with respect to the Performance Share Units in accordance with this Agreement; and

(ii)if the Employee’s employment with the Company terminates by reason of retirement following the date on which such Employee has either (I) reached sixty (60) years of age, and completed at least ten (10) years of service as an employee of the Company, or (II) reached sixty-five (65) years of age, then the Performance Share Units shall become vested upon the later of (A) the completion of the Performance Period, or (B)

1

the date the Employee terminates employment with the Company, based upon the actual level of performance, provided, however, that the Employee shall not receive such shares until their original scheduled vesting date.

Any payment made in connection with Section 2(c)(i) above shall be paid on the later of (i) April 30, 2019, or (ii) thirty (30) days after the Employee’s termination date.

3.Transfer Restrictions. The Performance Share Units may not be sold, assigned, pledged, exchanged, hypothecated or otherwise transferred, encumbered or otherwise disposed of by the Employee.

4.Shareholder Rights. The Employee shall not have any of the rights of a shareholder of the Company with respect to the Performance Share Units.

5.Corporate Acts. The existence of the Performance Share Units shall not affect in any way the right or power of the Board of Directors of the Company or the shareholders of the Company to make or authorize any adjustment, recapitalization, reorganization or other change in the Company’s capital structure or its business, any merger or consolidation of the Company, any issue of debt or equity securities, the dissolution or liquidation of the Company or any sale, lease, exchange or other disposition of all or any part of its assets or business or any other corporate act or proceeding.

6.Withholding of Tax. To the extent that the receipt of the Performance Share Units results in compensation income to the Employee for federal or state income tax purposes, the Employee may elect to either (i) deliver to the Company at the time of such receipt, as the case may be, such amount of money as the Company may require to meet its withholding obligation under applicable tax laws or regulations, or (ii) have the Company withhold a portion of the shares of the Company’s common stock distributable to the Employee under this Agreement that does not exceed the amount of taxes to be withheld by reason of such resulting compensation income. If the Employee does not make a timely election regarding the manner this tax withholding obligation will be satisfied, then the Company shall withhold a portion of the shares of the Company’s common stock distributable to the Employee under this Agreement that does not exceed the amount of taxes to be withheld by reason of such resulting compensation income.

7.Employment Relationship. For purposes of this Agreement, the Employee shall be considered to be in the employment of the Company as long as the Employee remains an employee of either the Company or an Affiliate (as such term is defined in the Plan). Nothing in the adoption of the Plan or the award of the Performance Share Units thereunder pursuant to this Agreement shall confer upon the Employee the right to continued employment by the Company or affect in any way the right of the Company to terminate such employment at any time. Unless otherwise provided in a written employment agreement or by applicable law, the Employee’s employment by the Company shall be on an at-will basis, and the employment relationship may be terminated at any time by either the Employee or the Company for any reason whatsoever, with or without cause. Any question as to whether and when there has been a termination of such employment, and the cause of such termination, shall be determined by the Committee, and its determination shall be final.

8.Notices. Any notices or other communications provided for in this Agreement shall be sufficient if in writing. In the case of the Employee, such notices or communications shall be effectively delivered when hand delivered to the Employee at his or her principal place of employment or when sent by registered or certified mail to the Employee at the last address the Employee has filed with the Company. In the case of the Company, such notices or communications shall be effectively delivered when sent by registered or certified mail to the Company at its principal executive offices.

9.Entire Agreement; Amendment. This Agreement replaces and merges all previous agreements and discussions relating to the same or similar subject matters between the Employee and the Company and constitutes the entire agreement between the Employee and the Company with respect to the subject matter of this Agreement. This Agreement may not be modified in any respect by any verbal statement, representation or agreement made by any employee, officer, or representative of the Company or by any written agreement unless signed by an officer of the Company who is expressly authorized by the Company to execute such document. In addition, if it is subsequently determined by the Committee, in its sole discretion, that the terms and conditions of this Agreement and/or the Plan are not compliant with Code Section 409A, or any Treasury regulations or Internal

2

Revenue Service guidance promulgated thereunder, this Agreement and/or the Plan may be amended by the Company accordingly.

10.Code Section 409A. If and to the extent any portion of any payment provided to the Employee under this Agreement in connection with the Employee’s separation from service (as defined in Section 409A of Internal Revenue Code of 1986, as amended (“Code Section 409A”) is determined to constitute “nonqualified deferred compensation” within the meaning of Code Section 409A and the Employee is a “specified employee” as defined in Code Section 409A(a)(2)(B)(i), as determined by the Company in accordance with the procedures separately adopted by the Company for this purpose, by which determination the Employee, as a condition to accepting benefits under this Agreement and the Plan, agrees that he or she is bound, such portion of the shares of Company’s common stock to be delivered on a vesting date shall not be delivered before the earlier of (i) the day that is six months plus one day after the date of separation from service (as determined under Code Section 409A) or (ii) the tenth (10th) day after the date of the Employee’s death (as applicable, the “New Payment Date”). The shares that otherwise would have been delivered to the Employee during the period between the date of separation from service and the New Payment Date shall be delivered to the Employee on such New Payment Date, and any remaining shares will be delivered on their original schedule. If the Employee becomes Disabled and such disability does not satisfy the requirements of Code Section 409A, then the Employee’s shares shall be delivered on the original scheduled vesting date. Neither the Company nor the Employee shall have the right to accelerate or defer the delivery of any such shares except to the extent specifically permitted or required by Code Section 409A. This Agreement is intended to comply with the provisions of Code Section 409A and this Agreement and the Plan shall, to the extent practicable, be construed in accordance therewith. Terms defined in this Agreement and the Plan shall have the meanings given such terms under Code Section 409A if and to the extent required to comply with Code Section 409A. In any event, the Company makes no representations or warranty and shall have no liability to the Employee or any other person if any provisions of or payments under this Agreement are determined to constitute deferred compensation subject to Code Section 409A but not to satisfy the conditions of that section.

11.Binding Effect. This Agreement shall be binding upon and inure to the benefit of any successors to the Company and all persons lawfully claiming under the Employee.

12.Miscellaneous. In the event of any conflict or inconsistency between the terms of this Agreement and the terms of the Plan, including any amendments or supplements thereto, the terms of this Agreement shall be controlling.

[Remainder of page intentionally left blank]

3

IN WITNESS WHEREOF, the Company has caused this Agreement to be duly executed by an officer thereunto duly authorized, and the Employee has agreed to and accepted the terms of this Agreement, all as of the date first above written.

COMPANY 

ADAMS RESOURCES & ENERGY, INC. 

By: 

Name: 

Title: 

EMPLOYEE 

By: 

4

Exhibit A

Performance Criteria

The Employee’s Performance Share Units shall become vested based on the satisfaction of both the (i) the time vesting requirement described in Section 2(b)(i) of the Agreement, and (ii) the Performance Criteria described in this Exhibit A. The initial number of Performance Share Units specified in Section 1 of the Agreement shall be the “target” number of shares of Stock that may be delivered upon settlement of the Performance Share Units subject to the Agreement. This initial number of Performacne Share Units shall be adjusted based on the attainment of the Performance Criteria described in Section 3 below.

1.Performance Period: The performance period shall be the period between January 1, 2018 and December 31, 2018.

2.Award Value: The Performance Share Units subject to this Agreement will be earned based on the Company’s performance for the Performance Period. Following the end of the Performance Period, the Committee shall determine the number of Performance Share Units earned for the Performance Period.

3.Performance Criteria: Seventy-five percent (75%) of the Award shall be earned based on the Company’s attainment of the Adjusted Pre-Tax Cash Flow (“APTCF”) factor described in Section 3(a) below. Twenty-five percent (25%) of the Award shall be earned based on the Company’s attainment of Adjusted Pre-Tax Earnings (“APTE”) factor described in Section 3(b) below.

(a)Adjusted Pre-Tax Cash Flow – APTCF is defined as pre-tax cash flow as adjusted to reflect (i) net earnings or losses; (ii) income tax benefits; (iii) depreciation, depletion and amortization; (iv) gains or losses on sales of property; (v) inventory liquidation gains; (vi) inventory valuation losses; (vii) net changes in the fair value of contracts, as each such adjustment is reported in the Company’s publicly filed financial statements for the fiscal year ending December 31, 2018; and (viii) any other adjustments the Company includes in the calculation of adjusted cash flow, as approved by the Company’s Board of Directors and reported in the Company’s earnings release. The Award Level for the APTCF factor for the Performance Period shall be determined based on the following table:

	Adjusted Pre-Tax Cash	% of Target Performance Share
Performance Level	Flow Amount	Units Earned1
Maximum	$26,800,000.00	200%
Target	$21,400,000.00	100%
Threshold	$16,000,000.00	50%
<Threshold	<$16,000,000	—%

_____________

¹Linear interpolation will be applicable to the percentages between the Performance Levels.

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(b)Adjusted Pre-Tax Earnings – APTE shall be determined based on the Company’s net earnings during the Performance Period, as adjusted to reflect (i) income tax benefits; (ii) gains or losses on sales of property; (iii) inventory liquidation gains; (iv) inventory valuation losses; (v) net changes in the fair value of contracts, as each such adjustment is reported in the Company’s publicly filed financial statements for the fiscal year ending December 31, 2018; and (vi) any other adjustments included by the Company in the calculation of its net earnings, as approved by the Company’s Board of Directors and reported in its earnings release. The Award Level for the APTE factor for the Performance Period shall be determined based on the following table:

	Adjusted Pre-Tax	% of Target Performance Share
Performance Level	Earnings Amount	Units Earned1
Maximum	$13,800,000.00	200%
Target	$11,000,000.00	100%
Threshold	$8,300,000.00	50%
<Threshold	<$8,300,000	—%

_____________

¹Linear interpolation will be applicable to the percentages between the Performance Levels.

(c)Forfeiture. Any portion of the Performance Share Units which are not earned at the end of the Performance Period shall be forfeited as of the last day of the Performance Period.

6

EX-31.1

Exhibit 31.1

SARBANES-OXLEY SECTION 302 CERTIFICATION

I, Townes G. Pressler, certify that:

1. I have reviewed this quarterly report on Form 10-Q of Adams Resources & Energy, Inc.;

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 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 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 registrant’s board of directors (or persons performing the equivalent functions):

(a) All significant deficiencies and material weaknesses in the design or operation of internal control over financial reporting which are reasonably likely to adversely affect the registrant’s ability to record, process, summarize and report financial information; and

(b) Any fraud, whether or not material, that involves management or other employees who have a significant role in the registrant’s internal control over financial reporting.

Date:	August 8, 2018	By:	/s/ Townes G. Pressler
			Townes G. Pressler
			Executive Chairman

EX-31.2

Exhibit 31.2

SARBANES-OXLEY SECTION 302 CERTIFICATION

I, Tracy E. Ohmart, certify that:

1.I have reviewed this quarterly report on Form 10-Q of Adams Resources & Energy, Inc.;

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 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 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 registrant’s board of directors (or persons performing the equivalent functions):

(a) All significant deficiencies and material weaknesses in the design or operation of internal control over financial reporting which are reasonably likely to adversely affect the registrant’s ability to record, process, summarize and report financial information; and

(b) Any fraud, whether or not material, that involves management or other employees who have a significant role in the registrant’s internal control over financial reporting.

Date:	August 8, 2018	By:	/s/ Tracy E. Ohmart
			Tracy E. Ohmart
			Chief Financial Officer

EX-32.1

Exhibit 32.1

SARBANES-OXLEY SECTION 906 CERTIFICATION

CERTIFICATION OF TOWNES G. PRESSLER,

EXECUTIVE CHAIRMAN OF ADAMS RESOURCES & ENERGY, INC.

In connection with this quarterly report of Adams Resources & Energy, Inc. (the “Registrant”) on Form 10-Q for the quarterly period endedJune 30, 2018, as filed with the Securities and Exchange Commission on the date hereof (the “Report”), I, Townes G. Pressler, Executive Chairman of the Registrant, certify, pursuant to 18 U.S.C. § 1350, as adopted pursuant to § 906 of the Sarbanes-Oxley Act of 2002, that:

(1)The Report fully complies with the requirements of Section 13(a) 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 results of operations of the Registrant.

Date:	August 8, 2018	By:	/s/ Townes G. Pressler
			Townes G. Pressler
			Executive Chairman

EX-32.2

Exhibit 32.2

SARBANES-OXLEY SECTION 906 CERTIFICATION

CERTIFICATION OF TRACY E. OHMART,

CHIEF FINANCIAL OFFICER OF ADAMS RESOURCES & ENERGY, INC.

In connection with this quarterly report of Adams Resources & Energy, Inc. (the “Registrant”) on Form 10-Q for the quarterly period ended June 30, 2018, as filed with the Securities and Exchange Commission on the date hereof (the “Report”), I, Tracy E. Ohmart, Chief Financial Officer of the Registrant, certify, pursuant to 18 U.S.C. § 1350, as adopted pursuant to § 906 of the Sarbanes-Oxley Act of 2002, that:

(1)The Report fully complies with the requirements of Section 13(a) 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 results of operations of the Registrant.

Date:	August 8, 2018	By:	/s/ Tracy E. Ohmart
			Tracy E. Ohmart
			Chief Financial Officer

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Document and Entity Information - shares	6 Months Ended
	Jun. 30, 2018	Aug. 01, 2018
Document and Entity Information [Abstract]
Entity Registrant Name	ADAMS RESOURCES & ENERGY, INC.
Entity Central Index Key	0000002178
Current Fiscal Year End Date	--12-31
Entity Filer Category	Accelerated Filer
Document Fiscal Year Focus	2018
Document Fiscal Period Focus	Q2
Document Type	10-Q
Amendment Flag	false
Document Period End Date	Jun. 30, 2018
Entity Common Stock, Shares Outstanding		4,217,596

XML

UNAUDITED CONDENSED CONSOLIDATED BALANCE SHEETS - USD ($) $ in Thousands	Jun. 30, 2018	Dec. 31, 2017
Current assets:
Cash and cash equivalents	$ 126,999	$ 109,393
Accounts receivable, net of allowance for doubtful accounts of $271 and $303, respectively	118,533	121,353
Inventory	21,513	12,192
Derivative assets	538	166
Income tax receivable	0	1,317
Prepayments and other current assets	1,197	1,264
Total current assets	268,780	245,685
Property and equipment, net	27,304	29,362
Investments in unconsolidated affiliates	425	425
Cash deposits and other assets	6,618	7,232
Total assets	303,127	282,704
Current liabilities:
Accounts payable	140,296	124,706
Accounts payable – related party	5	5
Derivative liabilities	514	145
Current portion of capital lease obligations	345	338
Other current liabilities	6,845	4,404
Total current liabilities	148,005	129,598
Other long-term liabilities:
Asset retirement obligations	1,405	1,273
Capital lease obligations	1,177	1,351
Deferred taxes and other liabilities	2,516	3,363
Total liabilities	153,103	135,585
Commitments and contingencies (Note 12)
Shareholders’ equity:
Preferred stock - $1.00 par value, 960,000 shares authorized, none outstanding	0	0
Common stock - $0.10 par value, 7,500,000 shares authorized, 4,217,596 shares outstanding	422	422
Contributed capital	11,696	11,693
Retained earnings	137,906	135,004
Total shareholders’ equity	150,024	147,119
Total liabilities and shareholders’ equity	$ 303,127	$ 282,704

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UNAUDITED CONDENSED CONSOLIDATED BALANCE SHEETS (Parenthetical) - USD ($) $ in Thousands	Jun. 30, 2018	Dec. 31, 2017
Current assets:
Allowance for doubtful accounts	$ 271	$ 303
Shareholders’ equity:
Preferred stock - par value (in dollars per share)	$ 1.00	$ 1.00
Preferred stock - shares authorized (in shares)	960,000	960,000
Preferred stock - shares outstanding (in shares)	0	0
Common stock - par value (in dollars per share)	$ 0.10	$ 0.10
Common stock - shares authorized (in shares)	7,500,000	7,500,000
Common stock - shares outstanding (in shares)	4,217,596	4,217,596

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UNAUDITED CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS - USD ($) $ in Thousands	3 Months Ended		6 Months Ended
	Jun. 30, 2018	Jun. 30, 2017	Jun. 30, 2018	Jun. 30, 2017
Revenues:
Marketing	$ 438,791	$ 301,176	$ 812,429	$ 589,791
Transportation	13,626	13,616	27,244	27,071
Oil and natural gas	0	410	0	1,427
Total revenues	452,417	315,202	839,673	618,289
Costs and expenses:
Marketing	431,683	297,508	800,866	582,661
Transportation	11,890	11,851	24,191	24,013
Oil and natural gas	0	201	0	951
General and administrative	2,284	1,460	4,567	4,097
Depreciation, depletion and amortization	2,262	3,563	4,674	7,532
Total costs and expenses	448,119	314,583	834,298	619,254
Operating earnings (losses)	4,298	619	5,375	(965)
Other income (expense):
Loss on deconsolidation of subsidiary	0	(1,635)	0	(1,635)
Interest income	498	260	885	419
Interest expense	(15)	(1)	(34)	(2)
Total other income (expense), net	483	(1,376)	851	(1,218)
(Losses) earnings before income taxes	4,781	(757)	6,226	(2,183)
Income tax benefit (provision)	(1,161)	475	(1,468)	1,041
Net (losses) earnings	$ 3,620	$ (282)	$ 4,758	$ (1,142)
Earnings (losses) per share:
Basic net (losses) earnings per common share (in dollars per share)	$ 0.86	$ (0.07)	$ 1.13	$ (0.27)
Diluted net (losses) earnings per common share (in dollars per share)	0.86	(0.07)	1.13	(0.27)
Dividends per common share (in dollars per share)	$ 0.22	$ 0.22	$ 0.44	$ 0.44

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UNAUDITED CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS - USD ($) $ in Thousands	6 Months Ended
	Jun. 30, 2018	Jun. 30, 2017
Operating activities:
Net (losses) earnings	$ 4,758	$ (1,142)
Adjustments to reconcile net (losses) earnings to net cash provided by operating activities:
Depreciation, depletion and amortization	4,674	7,532
Gains on sales of property	(446)	(129)
Impairment of oil and natural gas properties	0	3
Provision for doubtful accounts	(32)	(8)
Stock-based compensation expense	3	0
Deferred income taxes	(832)	(926)
Net change in fair value contracts	(3)	(700)
Loss on deconsolidation of subsidiary	0	(1,635)
Changes in assets and liabilities:
Accounts receivable	2,852	13,581
Accounts receivable/payable, affiliates	0	(151)
Inventories	(9,321)	(2,887)
Income tax receivable	1,317	(336)
Prepayments and other current assets	67	887
Accounts payable	15,634	3,357
Accrued liabilities	2,441	(483)
Other	125	(461)
Net cash provided by operating activities	21,237	19,772
Investing activities:
Property and equipment additions	(2,728)	(2,108)
Proceeds from property sales	655	190
Insurance and state collateral (deposits) refunds	465	347
Net cash used in investing activities	(1,608)	(1,571)
Financing activities:
Principal repayments of capital lease obligations	(167)	0
Dividends paid on common stock	(1,856)	(1,856)
Net cash used in financing activities	(2,023)	(1,856)
Increase in cash and cash equivalents	17,606	16,345
Cash and cash equivalents at beginning of period	109,393	87,342
Cash and cash equivalents at end of period	$ 126,999	$ 103,687

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UNAUDITED CONDENSED CONSOLIDATED STATEMENTS OF SHAREHOLDERS' EQUITY - USD ($) $ in Thousands	Total	Common Stock	Contributed Capital	Retained Earnings
Beginning balance at Dec. 31, 2016	$ 151,312	$ 422	$ 11,693	$ 139,197
Increase (Decrease) in Stockholders' Equity [Roll Forward]
Net earnings (losses)	(1,142)			(1,142)
Dividends paid on common stock	(1,856)			(1,856)
Ending balance at Jun. 30, 2017	148,314	422	11,693	136,199
Beginning balance at Dec. 31, 2017	147,119	422	11,693	135,004
Increase (Decrease) in Stockholders' Equity [Roll Forward]
Net earnings (losses)	4,758			4,758
Stock-based compensation expense	3		3
Dividends paid on common stock	(1,856)			(1,856)
Ending balance at Jun. 30, 2018	$ 150,024	$ 422	$ 11,696	$ 137,906

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Organization and Basis of Presentation

6 Months Ended

Jun. 30, 2018

Organization, Consolidation and Presentation of Financial Statements [Abstract]

Organization and Basis of Presentation

Organization and Basis of Presentation

Organization

Adams Resources & Energy, Inc. (“AE”) is a publicly traded Delaware corporation organized in 1973, the common shares of which are listed on the NYSE American LLC under the ticker symbol “AE”. We and our subsidiaries are primarily engaged in the business of crude oil marketing, transportation and storage in various crude oil and natural gas basins in the lower 48 states of the United States (“U.S.”). We also conduct tank truck transportation of liquid chemicals and dry bulk and ISO tank container storage and transportation primarily in the lower 48 states of the U.S. with deliveries into Canada and Mexico and with terminals in the Gulf Coast region of the U.S. Unless the context requires otherwise, references to “we,” “us,” “our,” the “Company” or “AE” are intended to mean the business and operations of Adams Resources & Energy, Inc. and its consolidated subsidiaries.  

Historically, we have operated and reported in three business segments: (i) crude oil marketing, transportation and storage, (ii) tank truck transportation of liquid chemicals and dry bulk and ISO tank container storage and transportation, and (iii) upstream crude oil and natural gas exploration and production. We exited the upstream crude oil and natural gas exploration and production business during 2017 with the sale of our upstream crude oil and natural gas exploration and production assets as a result of a voluntary bankruptcy filing for this subsidiary. We expect the bankruptcy case involving the wholly owned subsidiary through which this business was conducted to be dismissed during the second half of 2018.  

Basis of Presentation

Our results of operations for the three and six months ended June 30, 2018 are not necessarily indicative of results expected for the full year of 2018. In the opinion of management, the accompanying unaudited condensed consolidated financial statements reflect all adjustments consisting of normal recurring accruals necessary for fair presentation.  The condensed consolidated financial statements and the accompanying notes are prepared in accordance with U.S. generally accepted accounting principles (“GAAP”) for interim financial statements and the rules of the U.S. Securities and Exchange Commission (“SEC”). Certain information and footnote disclosures required by GAAP for complete annual financial statements have been omitted and, therefore, these interim financial statements should be read in conjunction with our audited consolidated financial statements included in our Annual Report on Form 10-K for the year ended December 31, 2017 (the “2017 Form 10-K”) filed with the SEC on March 12, 2018. All significant intercompany transactions and balances have been eliminated in consolidation.

Use of Estimates

The preparation of our financial statements in conformity with GAAP requires management to use estimates and assumptions that affect the reported amount of assets and liabilities and disclosure of contingent assets and liabilities at the date of the financial statements and the reported amounts of revenues and expenses during the reporting period. We base our estimates and judgments on historical experience and on various other assumptions and information we believe to be reasonable under the circumstances. Estimates and assumptions about future events and their effects cannot be perceived with certainty and, accordingly, these estimates may change as new events occur, as more experience is acquired, as additional information is obtained and as the operating environment changes. While we believe the estimates and assumptions used in the preparation of these condensed consolidated financial statements are appropriate, actual results could differ from those estimates.

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Summary of Significant Accounting Policies

6 Months Ended

Jun. 30, 2018

Accounting Policies [Abstract]

Summary of Significant Accounting Policies

Summary of Significant Accounting Policies

Earnings Per Share

Basic earnings (losses) per share is computed by dividing our net earnings (losses) by the weighted average number of shares of common stock outstanding during the period. Diluted earnings (losses) per share is computed by giving effect to all potential shares of common stock outstanding, including our stock related to unvested restricted stock awards. Unvested restricted stock awards granted under the Adams Resources & Energy, Inc. 2018 Long-Term Incentive Plan (“2018 LTIP”) are not considered to be participating securities as the holders of these shares do not have non-forfeitable dividend rights in the event of our declaration of a dividend for common shares (see Note 10 for further discussion).

A reconciliation of the denominator used in the calculation of basic and diluted earnings (losses) per share is as follows (in thousands, except per share data):

	Three Months Ended				Six Months Ended
	June 30,				June 30,
	2018		2017		2018		2017
Basic earnings (losses) per share:
Net earnings (losses)	$	3,620	$	(282)	$	4,758	$	(1,142)
Weighted average number of shares outstanding – Basic	4,218		4,218		4,218		4,218
Basic earnings (losses) per share	$	0.86	$	(0.07)	$	1.13	$	(0.27)
Diluted earnings (losses) per share:
Net earnings (losses)	$	3,620	$	(282)	$	4,758	$	(1,142)
Diluted weighted average number of shares outstanding:
Common shares	4,218		4,218		4,218		4,218
Restricted stock unit awards (1)	—		—		—		—
Performance share unit awards (2)	—		—		—		—
Total	4,218		4,218		4,218		4,218
Diluted earnings (losses) per share	$	0.86	$	(0.07)	$	1.13	$	(0.27)

_______________

(1) The dilutive effect of restricted stock unit awards for the three and six months ended June 30, 2018 is de minimis.

(2) Performance share awards will be included in the calculation of diluted earnings per share when the performance conditions have been achieved.

Fair Value Measurements

The carrying amounts reported in the unaudited condensed consolidated balance sheets for cash and cash equivalents, accounts receivable and accounts payable approximates fair value because of the immediate or short-term maturity of these financial instruments. Marketable securities are recorded at fair value based on market quotations from actively traded liquid markets.

A three-tier hierarchy has been established that classifies fair value amounts recognized in the financial statements based on the observability of inputs used to estimate such fair values.  The hierarchy considers fair value amounts based on observable inputs (Levels 1 and 2) to be more reliable and predictable than those based primarily on unobservable inputs (Level 3).  At each balance sheet reporting date, we categorize our financial assets and liabilities using this hierarchy.

Fair value contracts consist of derivative financial instruments and are recorded as either an asset or liability measured at its fair value. Changes in fair value are recognized immediately in earnings unless the derivatives qualify for, and we elect, cash flow hedge accounting. We had no contracts designated for hedge accounting during any current reporting periods (see Note 9 for further information).

Income Taxes

Income taxes are accounted for using the asset and liability method. Under this approach, deferred tax assets and liabilities are recognized based on anticipated future tax consequences attributable to differences between financial statement carrying amounts of these items and their respective tax basis. On December 22, 2017, the Tax Cut and Jobs Act was enacted into law resulting in a reduction in the federal corporate income tax rate from 35 percent to 21 percent for years beginning in 2018, which impacts our income tax provision or benefit.

Investments in Unconsolidated Affiliates

In April 2017, one of our wholly owned subsidiaries, Adams Resources Exploration Corporation (“AREC”), filed a voluntary petition in the United States Bankruptcy Court for the District of Delaware seeking relief under Chapter 11 of Title 11 of the United States Code. As a result of the voluntary bankruptcy filing, we no longer controlled the operations of AREC; therefore, we deconsolidated AREC in April 2017, and we recorded our investment in this subsidiary under the cost method of accounting. During the second quarter of 2017, we recorded a non-cash charge of approximately $1.6 million associated with the deconsolidation of AREC. At June 30, 2018, our remaining investment in AREC was $0.4 million. We expect the bankruptcy case to be dismissed during the second half of 2018.  

Letter of Credit Facility

We maintain a Credit and Security Agreement with Wells Fargo Bank, National Association to provide up to a $60 million stand-by letter of credit facility used to support crude oil purchases within our crude oil marketing segment and for other purposes. We are currently using the letter of credit facility for a letter of credit related to our insurance program. This facility is collateralized by the eligible accounts receivable within our crude oil marketing segment and expires on August 27, 2019.

The issued stand-by letters of credit are canceled as the underlying purchase obligations are satisfied by cash payment when due. The letter of credit facility places certain restrictions on Gulfmark Energy, Inc., one of our wholly owned subsidiaries. These restrictions include the maintenance of positive net earnings excluding inventory valuation changes, as defined, among other restrictions. We are currently in compliance with all such financial covenants. At June 30, 2018 and December 31, 2017, we had $0.4 million and $2.2 million, respectively, outstanding under this facility.

Property and Equipment

Property and equipment is recorded at cost. Expenditures for additions, improvements and other enhancements to property and equipment are capitalized, and minor replacements, maintenance and repairs that do not extend asset life or add value are charged to expense as incurred. When property and equipment assets are retired or otherwise disposed of, the related cost and accumulated depreciation is removed from the accounts and any resulting gain or loss is included in results of operations in operating costs and expenses for the respective period. Property and equipment, except for land, is depreciated using the straight-line method over the estimated average useful lives ranging from two to thirty-nine years.

We review our long-lived assets for impairment whenever there is evidence that the carrying value of these assets may not be recoverable. Any impairment recognized is permanent and may not be restored. Property and equipment is reviewed at the lowest level of identifiable cash flows. For properties requiring impairment, the fair value is estimated based on an internal discounted cash flow model of future cash flows.  

See Note 5 for additional information regarding our property and equipment.

Recent Accounting Developments

In February 2016, the Financial Accounting Standards Board (“FASB”) issued Accounting Standards Codification (“ASC”) 842, Leases (“ASC 842”), which requires substantially all leases (with the exception of leases with a term of one year or less) to be recorded on the balance sheet using a method referred to as the right-of-use (“ROU”) asset approach. We plan to adopt the new standard on January 1, 2019 using the modified retrospective approach.

The new standard introduces two lease accounting models, which result in a lease being classified as either a “finance” or “operating” lease on the basis of whether the lessee effectively obtains control of the underlying asset during the lease term. A lease would be classified as a finance lease if it meets one of five classification criteria, four of which are generally consistent with current lease accounting guidance. By default, a lease that does not meet the criteria to be classified as a finance lease will be deemed an operating lease. Regardless of classification, the initial measurement of both lease types will result in the balance sheet recognition of a ROU asset representing a company’s right to use the underlying asset for a specified period of time and a corresponding lease liability. The lease liability will be recognized at the present value of the future lease payments, and the ROU asset will equal the lease liability adjusted for any prepaid rent, lease incentives provided by the lessor, and any indirect costs.

The subsequent measurement of each type of lease varies. Leases classified as a finance lease will be accounted for using the effective interest method. Under this approach, a lessee will amortize the ROU asset (generally on a straight-line basis in a manner similar to depreciation) and the discount on the lease liability (as a component of interest expense). Leases classified as an operating lease will result in the recognition of a single lease expense amount that is recorded on a straight-line basis (or another systematic basis, if more appropriate).

We have started the process of reviewing our lease agreements in light of the new guidance. Although we are in the early stages of our ASC 842 implementation project, we anticipate that this new lease guidance will cause significant changes to the way leases are recorded, presented and disclosed in our consolidated financial statements.

Stock-Based Compensation

We measure all share-based payments, including the issuance of restricted stock units and performance share units to employees and board members, using a fair-value based method. The cost of services received from employees and non-employee board members in exchange for awards of equity instruments is recognized in the consolidated statement of operations based on the estimated fair value of those awards on the grant date and amortized on a straight-line basis over the requisite service period. The fair value of restricted stock unit awards and performance share unit awards is based on the closing price of our common stock on the grant date. We account for forfeitures as they occur. See Note 10 for additional information regarding our 2018 LTIP.  

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Revenue Recognition

6 Months Ended

Jun. 30, 2018

Revenue from Contract with Customer [Abstract]

Revenue Recognition

Revenue Recognition

Adoption of ASC 606

On January 1, 2018, we adopted ASC 606, Revenue from Contracts with Customers (“ASC 606”) and all related Accounting Standards Updates by applying the modified retrospective method to all contracts that were not completed on January 1, 2018. The modified retrospective approach required us to recognize the cumulative effect of initially applying the new standard as an adjustment to the opening balance of retained earnings. The comparative information has not been restated and continues to be reported under the accounting standards in effect for those periods. The adoption of the new revenue standard did not result in a cumulative effect adjustment to our retained earnings since there was no significant impact upon adoption. We expect the impact of the adoption of the new standard to remain immaterial to our net earnings on an ongoing basis.

Revenue Recognition

The new revenue standard’s core principle is that a company will recognize revenue when it transfers promised goods or services to customers in an amount that reflects the consideration to which the company expects to be entitled in exchange for those goods or services. The new revenue standard requires entities to recognize revenue through the application of a five-step model, which includes: identification of the contract, identification of the performance obligations, determination of the transaction price, allocation of the transaction price to the performance obligations, and recognition of revenue as the entity satisfies the performance obligations.

Our revenues are primarily generated from the marketing, transportation and storage of crude oil and other related products and the tank truck transportation of liquid chemicals and dry bulk. A performance obligation is a promise in a contract to transfer a distinct good or service to the customer and is the unit of account in ASC 606. To identify the performance obligations, we considered all of the products or services promised in the contracts with customers, whether explicitly stated or implied based on customary business practices. Revenue is recognized when, or as, each performance obligation is satisfied under terms of the contract.

For our crude oil marketing segment, most of our crude oil purchase and sale contracts qualify and are designated as non-trading activities, and we consider these contracts as normal purchases and sales activity. For normal purchases and sales, our customers are invoiced monthly based upon contractually agreed upon terms with revenue recognized in the month in which the physical product is delivered to the customer, generally upon delivery of the product to the customer. Revenue is recognized based on the transaction price and the quantity delivered.

The majority of our crude oil sales contracts have multiple distinct performance obligations as the promise to transfer the individual goods (e.g., barrels of crude oil) is separately identifiable from the other goods promised within the contracts. Our performance obligations are satisfied at a point in time. For normal sales arrangements, revenue is recognized in the month in which control of the physical product is transferred to the customer, generally upon delivery of the product to the customer.

For our transportation segment, each sales order associated with our master transportation agreements is considered a distinct performance obligation. The performance obligations associated with this segment are satisfied over time as the goods and services are delivered.

Practical Expedients

In connection with our adoption of ASC 606, we used significant judgment when assessing our contracts for impact upon adoption. For example, our contracts often include promises to transfer various goods and services to a customer. Determining whether goods and services are considered distinct performance obligations that should be accounted for separately versus together will continue to require significant judgment. We also used practical expedients permitted by ASC 606 when applicable. These practical expedients included:

• Applying the new guidance only to contracts that were not completed as of January 1, 2018; and

• Not accounting for the effects of significant financing components if the company expects that the period between when the entity transfers a promised good or service to a customer and when the customer pays for that good or service will be one year or less.

Contract Balances

The timing of revenue recognition, billings and cash collections results in billed accounts receivable and customer advances and deposits (contract liabilities) on our consolidated balance sheet. Currently, we do not record any contract assets in our financial statements due to the timing of revenue recognized and when our customers are billed. Our crude oil marketing customers are generally billed monthly based on contractually agreed upon terms. However, we sometimes receive advances or deposits from customers before revenue is recognized, resulting in contract liabilities. These contract assets and liabilities, if any, are reported on our consolidated balance sheets at the end of each reporting period.

Revenue Disaggregation

The following table disaggregates our revenue by segment and by major source for the periods indicated (in thousands):

	Reporting Segments
	Marketing		Transportation		Total
Three Months Ended June 30, 2018
Revenues from contracts with customers	$	419,365	$	13,626	$	432,991
Other (1)	19,426		—		19,426
Total revenues	$	438,791	$	13,626	$	452,417
Timing of revenue recognition:
Goods transferred at a point in time	$	419,365	$	—	$	419,365
Services transferred over time	—		13,626		13,626
Total revenues from contracts with customers	$	419,365	$	13,626	$	432,991
Six Months Ended June 30, 2018
Revenues from contracts with customers	$	779,450	$	27,244	$	806,694
Other (1)	32,979		—		32,979
Total revenues	$	812,429	$	27,244	$	839,673
Timing of revenue recognition:
Goods transferred at a point in time	$	779,450	$	—	$	779,450
Services transferred over time	—		27,244		27,244
Total revenues from contracts with customers	$	779,450	$	27,244	$	806,694

_______________

(1) Other marketing revenues are recognized under ASC 815, Derivatives and Hedging, and ASC 845, Nonmonetary Transactions – Purchases and Sales of Inventory with the Same Counterparty.

Other Marketing Revenue

Certain of the commodity purchase and sale contracts utilized by our crude oil marketing business qualify as derivative instruments with certain specifically identified contracts also designated as trading activity. From the time of contract origination, these contracts are marked-to-market and recorded on a net revenue basis in the accompanying consolidated financial statements.

Certain of our crude oil contracts may be with a single counterparty to provide for similar quantities of crude oil to be bought and sold at different locations. These contracts are entered into for a variety of reasons, including effecting the transportation of the commodity, to minimize credit exposure, and/or to meet the competitive demands of the customer. These buy/sell arrangements are reflected on a net revenue basis in the accompanying consolidated financial statements.

Reporting these crude oil contracts on a gross revenue basis would increase our reported revenues as follows for the periods indicated (in thousands):

	Three Months Ended				Six Months Ended
	June 30,				June 30,
	2018		2017		2018		2017
Revenue gross-up	$	56,335	$	44,908	$	102,026	$	102,473

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Prepayments and Other Current Assets

6 Months Ended

Jun. 30, 2018

Deferred Costs, Capitalized, Prepaid, and Other Assets Disclosure [Abstract]

Prepayments and Other Current Assets

Prepayments and Other Current Assets

The components of prepayments and other current assets were as follows at the dates indicated (in thousands):

	June 30,		December 31,
	2018		2017
Insurance premiums	$	582	$	425
Rents, licenses and other	615		839
Total	$	1,197	$	1,264

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Property and Equipment

6 Months Ended

Jun. 30, 2018

Property, Plant and Equipment [Abstract]

Property and Equipment

Property and Equipment

The historical costs of our property and equipment and related accumulated depreciation balances were as follows at the dates indicated (in thousands):

	Estimated
	Useful Life	June 30,		December 31,
	in Years	2018		2017
Tractors and trailers (1)	5 – 6	$	83,686	$	88,065
Field equipment	2 – 5	19,811		18,490
Buildings	5 – 39	15,727		15,727
Office equipment	2 – 5	1,808		1,929
Land		1,790		1,790
Construction in progress		960		275
Total		123,782		126,276
Less accumulated depreciation		(96,478)		(96,914)
Property and equipment, net		$	27,304	$	29,362

______________

(1) Amounts include assets held under capital leases for certain tractors in our marketing segment. Gross property and equipment associated with assets held under capital leases were $1.8 million and $1.8 million at June 30, 2018 and December 31, 2017, respectively. Accumulated amortization associated with assets held under capital leases were $0.3 million and $0.1 million at June 30, 2018 and December 31, 2017, respectively (see Note 12 for further information).

Components of depreciation, depletion and amortization expense were as follows for the periods indicated (in thousands):

	Three Months Ended				Six Months Ended
	June 30,				June 30,
	2018		2017		2018		2017
Depreciation, depletion and amortization,
excluding amounts under capital leases	$	2,171	$	3,563	$	4,493	$	7,532
Amortization of property and equipment
under capital leases	91		—		181		—
Total depreciation, depletion and amortization	$	2,262	$	3,563	$	4,674	$	7,532

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Cash Deposits and Other Assets

6 Months Ended

Jun. 30, 2018

Deferred Costs, Capitalized, Prepaid, and Other Assets Disclosure [Abstract]

Cash Deposits and Other Assets

Cash Deposits and Other Assets

Components of cash deposits and other assets were as follows at the dates indicated (in thousands):

	June 30,		December 31,
	2018		2017
Amounts associated with liability insurance program:
Insurance collateral deposits	$	3,517	$	3,767
Excess loss fund	2,093		2,284
Accumulated interest income	642		814
Other amounts:
State collateral deposits	57		57
Materials and supplies	273		273
Other	36		37
Total	$	6,618	$	7,232

We have established certain deposits to support participation in our liability insurance program and remittance of state crude oil severance taxes and other state collateral deposits. Insurance collateral deposits are held by the insurance company to cover past or potential open claims based upon a percentage of the maximum assessment under our insurance policies. Insurance collateral deposits are invested at the discretion of our insurance carrier. Excess amounts in our loss fund represent premium payments in excess of claims incurred to date that we may be entitled to recover through settlement or commutation as claim periods are closed. Interest income is earned on the majority of amounts held by the insurance companies and will be paid to us upon settlement of policy years.

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Segment Reporting

6 Months Ended

Jun. 30, 2018

Segment Reporting [Abstract]

Segment Reporting

Segment Reporting

Historically, our three reporting segments have been: (i) crude oil marketing, transportation and storage, (ii) tank truck transportation of liquid chemicals and dry bulk and ISO tank container storage and transportation, and (iii) upstream crude oil and natural gas exploration and production. Our upstream crude oil and natural gas exploration and production wholly owned subsidiary filed for bankruptcy in April 2017, and as a result of our loss of control of the wholly owned subsidiary, AREC was deconsolidated and is accounted for under the cost method of accounting. AREC remained a reportable segment until its deconsolidation, effective April 30, 2017.

Information concerning our various business activities was as follows for the periods indicated (in thousands):

	Reporting Segments
	Marketing		Transportation		Oil and Gas		Total
Three Months Ended June 30, 2018
Revenues	$	438,791	$	13,626	$	—	$	452,417
Segment operating (losses) earnings (1)	5,772		810		—		6,582
Depreciation, depletion and amortization	1,336		926		—		2,262
Property and equipment additions (2)	277		1,572		—		1,849
Three Months Ended June 30, 2017
Revenues	$	301,176	$	13,616	$	410	$	315,202
Segment operating (losses) earnings (1)	1,691		293		95		2,079
Depreciation, depletion and amortization	1,977		1,472		114		3,563
Property and equipment additions	191		(92)		1,003		1,102
Six Months Ended June 30, 2018
Revenues	$	812,429	$	27,244	$	—	$	839,673
Segment operating (losses) earnings (1)	8,730		1,212		—		9,942
Depreciation, depletion and amortization	2,833		1,841		—		4,674
Property and equipment additions (2)	1,070		1,645		—		2,715
Six Months Ended June 30, 2017
Revenues	$	589,791	$	27,071	$	1,427	$	618,289
Segment operating (losses) earnings (1)	3,084		(5)		53		3,132
Depreciation, depletion and amortization	4,046		3,063		423		7,532
Property and equipment additions	273		10		1,825		2,108

_______________

(1) Our marketing segment’s operating earnings included inventory liquidation gains of $1.9 million and $2.5 million for the three and six months ended June 30, 2018, respectively, and inventory valuation losses of $1.4 million and $2.1 million for the three and six months ended June 30, 2017, respectively.

(2) During the six months ended June 30, 2018, we had $13 thousand of property and equipment additions for leasehold improvements at our corporate headquarters level, which is not attributed or allocated to any of our reporting segments.

Segment operating earnings reflect revenues net of operating costs and depreciation, depletion and amortization expense and are reconciled to earnings (losses) before income taxes, as follows for the periods indicated (in thousands):

	Three Months Ended				Six Months Ended
	June 30,				June 30,
	2018		2017		2018		2017
Segment operating earnings	$	6,582	$	2,079	$	9,942	$	3,132
General and administrative	(2,284)		(1,460)		(4,567)		(4,097)
Operating earnings (losses)	4,298		619		5,375		(965)
Loss on deconsolidation of subsidiary	—		(1,635)		—		(1,635)
Interest income	498		260		885		419
Interest expense	(15)		(1)		(34)		(2)
(Losses) earnings before income taxes	$	4,781	$	(757)	$	6,226	$	(2,183)

Identifiable assets by industry segment were as follows at the dates indicated (in thousands):

	June 30,		December 31,
	2018		2017
Reporting segment:
Marketing	$	139,687	$	134,745
Transportation	28,803		29,069
Oil and Gas (1)	425		425
Cash and other assets	134,212		118,465
Total assets	$	303,127	$	282,704

____________________

(1) Amounts represent our cost method investment in this segment.

Intersegment sales are insignificant. Other identifiable assets are primarily corporate cash, corporate accounts receivable, investments and properties not identified with any specific segment of our business. Accounting policies for transactions between reportable segments are consistent with applicable accounting policies as disclosed herein.

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Transactions with Affiliates

6 Months Ended

Jun. 30, 2018

Related Party Transactions [Abstract]

Transactions with Affiliates

Transactions with Affiliates

We enter into certain transactions in the normal course of business with affiliated entities including direct cost reimbursement for shared phone and administrative services. In addition, we lease our corporate office space from an affiliated entity.

We utilize our former affiliate, Bencap LLC (“Bencap”), to administer certain of our employee medical benefit programs including a detail audit of individual medical claims. Bencap earns a fee from us for providing these services at a discounted amount from its standard charge to non-affiliates. We had an equity method investment in Bencap, which was forfeited during the first quarter of 2017. As a result, we have no further ownership interest in Bencap.

Activities with affiliates were as follows for the periods indicated (in thousands):

	Three Months Ended				Six Months Ended
	June 30,				June 30,
	2018		2017		2018		2017
Affiliate billings to us	$	25	$	24	$	40	$	36
Billings to affiliates	1		1		3		2
Rentals paid to affiliate	122		158		244		325
Fees paid to Bencap (1)	—		—		—		108

___________________

(1) Amount represents fees paid to Bencap through the date of the forfeiture of our investment during the first quarter of 2017. As a result of the investment forfeiture, Bencap is no longer an affiliate.

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Derivative Instruments and Fair Value Measurements

6 Months Ended

Jun. 30, 2018

Derivative Instruments and Hedging Activities Disclosure [Abstract]

Derivative Instruments and Fair Value Measurements

Derivative Instruments and Fair Value Measurements

Derivative Instruments

In the normal course of our operations, our crude oil marketing segment purchases and sells crude oil. We seek to profit by procuring the commodity as it is produced and then delivering the material to the end users or the intermediate use marketplace. As typical for the industry, these transactions are made pursuant to the terms of forward month commodity purchase and/or sale contracts. Some of these contracts meet the definition of a derivative instrument, and therefore, we account for these contracts at fair value, unless the normal purchase and sale exception is applicable. These types of underlying contracts are standard for the industry and are the governing document for our crude oil marketing segment. None of our derivative instruments have been designated as hedging instruments.

At June 30, 2018, we had in place 16 commodity purchase and sale contracts, of which four of these contracts had no fair value associated with them as the contractual prices of crude oil were within the range of prices specified in the agreements. These commodity purchase and sale contracts encompassed approximately:

• 646 barrels per day of crude oil during July 2018;

• 322 barrels per day of crude oil during August through September 2018;

• 258 barrels per day of crude oil during October through December 2018;  

• 322 barrels per day of crude oil during January 2019 through April 2019; and

• 258 barrels per day of crude oil during May 2019.

The estimated fair value of forward month commodity contracts (derivatives) reflected in the accompanying unaudited condensed consolidated balance sheet were as follows at the date indicated (in thousands):

	June 30, 2018
	Balance Sheet Location and Amount
	Current		Other		Current		Other
	Assets		Assets		Liabilities		Liabilities
Asset derivatives:
Fair value forward hydrocarbon commodity
contracts at gross valuation	$	538	$	—	$	—	$	—
Liability derivatives:
Fair value forward hydrocarbon commodity
contracts at gross valuation	—		—		514		—
Less counterparty offsets	—		—		—		—
As reported fair value contracts	$	538	$	—	$	514	$	—

At December 31, 2017, we had in place 20 commodity purchase and sale contracts, of which four of these contracts had no fair value associated with them as the contractual prices of crude oil were within the range of prices specified in the agreements. These commodity purchase and sale contracts encompassed approximately:

• 452 barrels per day of crude oil during January 2018;

• 322 barrels per day of crude oil during February through May 2018;

• 258 barrels per day of crude oil during June 2018;

• 646 barrels per day of crude oil during July 2018;

• 322 barrels per day of crude oil during August through September 2018; and

• 258 barrels per day of crude oil during October through December 2018.

The estimated fair value of forward month commodity contracts (derivatives) reflected in the accompanying unaudited condensed consolidated balance sheet were as follows at the date indicated (in thousands):

	December 31, 2017
	Balance Sheet Location and Amount
	Current		Other		Current		Other
	Assets		Assets		Liabilities		Liabilities
Asset derivatives:
Fair value forward hydrocarbon commodity
contracts at gross valuation	$	166	$	—	$	—	$	—
Liability derivatives:
Fair value forward hydrocarbon commodity
contracts at gross valuation	—		—		145		—
Less counterparty offsets	—		—		—		—
As reported fair value contracts	$	166	$	—	$	145	$	—

We only enter into commodity contracts with creditworthy counterparties and evaluate our exposure to significant counterparties on an ongoing basis. At June 30, 2018 and December 31, 2017, we were not holding nor have we posted any collateral to support our forward month fair value derivative activity. We are not subject to any credit-risk related trigger events. We have no other financial investment arrangements that would serve to offset our derivative contracts.

Forward month commodity contracts (derivatives) reflected in the accompanying unaudited condensed consolidated statements of operations were as follows for the periods indicated (in thousands):

	Gains (losses)
	Three Months Ended				Six Months Ended
	June 30,				June 30,
	2018		2017		2018		2017
Revenues – marketing	$	1	$	280	$	2	$	700

Fair Value Measurements

The following tables set forth, by level with the Level 1, 2 and 3 fair value hierarchy, the carrying values of our financial assets and liabilities at the dates indicated (in thousands):

	June 30, 2018
	Fair Value Measurements Using
	Quoted Prices
	in Active		Significant
	Markets for		Other		Significant
	Identical Assets		Observable		Unobservable
	and Liabilities		Inputs		Inputs		Counterparty
	(Level 1)		(Level 2)		(Level 3)		Offsets		Total
Derivatives:
Current assets	$	—	$	538	$	—	$	—	$	538
Current liabilities	—		(514)		—		—		(514)
Net value	$	—	$	24	$	—	$	—	$	24

	December 31, 2017
	Fair Value Measurements Using
	Quoted Prices
	in Active		Significant
	Markets for		Other		Significant
	Identical Assets		Observable		Unobservable
	and Liabilities		Inputs		Inputs		Counterparty
	(Level 1)		(Level 2)		(Level 3)		Offsets		Total
Derivatives:
Current assets	$	—	$	166	$	—	$	—	$	166
Current liabilities	—		(145)		—		—		(145)
Net value	$	—	$	21	$	—	$	—	$	21

These assets and liabilities are measured on a recurring basis and are classified based on the lowest level of input used to estimate their fair value. Our assessment of the relative significance of these inputs requires judgments.

When determining fair value measurements, we make credit valuation adjustments to reflect both our own nonperformance risk and our counterparty’s nonperformance risk. When adjusting the fair value of derivative contracts for the effect of nonperformance risk, we consider the impact of netting and any applicable credit enhancements. Credit valuation adjustments utilize Level 3 inputs, such as credit scores to evaluate the likelihood of default by us or our counterparties. At June 30, 2018 and December 31, 2017, credit valuation adjustments were not significant to the overall valuation of our fair value contracts. As a result, applicable fair value assets and liabilities are included in their entirety in the fair value hierarchy.

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Share-Based Compensation Plan

6 Months Ended

Jun. 30, 2018

Disclosure of Compensation Related Costs, Share-based Payments [Abstract]

Share-Based Compensation Plan

Share-Based Compensation Plan

In May 2018, our shareholders approved the 2018 LTIP, a long-term incentive plan under which any employee or non-employee director who provides services to us is eligible to participate in the plan. The 2018 LTIP, which is overseen by the Compensation Committee of our Board of Directors, provides for the grant of various types of equity awards, of which restricted stock unit awards and performance-based compensation awards were granted during the second quarter of 2018. The maximum number of shares authorized for issuance under the 2018 LTIP is 150,000 shares, and the 2018 LTIP is effective until May 8, 2028. We began awarding share-based compensation to eligible employees and directors in June 2018. After giving effect to awards granted under the 2018 LTIP and assuming the potential achievement of the maximum amounts of the performance factors through June 30, 2018, a total of 120,403 shares were available for issuance. During the six months ended June 30, 2018, we recognized a nominal amount of compensation expense in connection with equity-based awards as the grant date for all awards under the 2018 LTIP was June 29, 2018.

If dividends are paid with respect to our common shares during the vesting period, an equivalent amount will accrue and be held by us without interest until the restricted stock and performance unit awards vest, at which time the amount will be paid to the recipient. If the award is forfeited prior to vesting, the accrued dividends will also be forfeited. At June 30, 2018, there were no accrued dividend amounts for awards granted under the 2018 LTIP.  

Restricted Stock Unit Awards

A restricted stock unit award is a grant of a right to receive our common shares in the future at no cost to the recipient apart from fulfilling service and other conditions once a defined vesting period expires, subject to customary forfeiture provisions. A restricted stock unit award will either be settled by the delivery of common shares or by the payment of cash based upon the fair market value of a specified number of shares, at the discretion of the Compensation Committee, subject to the terms of the applicable award agreement. The Compensation Committee intends for these awards to vest with the settlement of common shares. Restricted stock unit awards generally vest at a rate of 33% per year beginning one year after the grant date and are non-vested until the required service periods expire.

The fair value of a restricted stock unit award is based on the market price per share of our common shares on the date of grant. Compensation expense is recognized based on the grant date fair value over the requisite service or vesting period.

The following table presents restricted stock unit award activity for the periods indicated:

		Weighted-
		Average Grant
	Number of	Date Fair Value
	Shares	per Share (1)
Restricted stock unit awards at January 1, 2018	—	$	—
Granted (2)	13,733	$	43.00
Vested	—	$	—
Forfeited	—	$	—
Restricted stock unit awards at June 30, 2018	13,733	$	—

____________________

(1) Determined by dividing the aggregate grant date fair value of awards by the number of awards issued.

(2)  The aggregate grant date fair value of restricted stock unit awards issued during 2018 was $0.6 million based on a grant date market price of our common shares of $43.00 per share.  

Unrecognized compensation cost associated with restricted stock unit awards was approximately $0.6 million. Due to the graded vesting provisions of these awards, we expect to recognize the remaining compensation cost for these awards over a weighted-average period of 1.7 years. 

Performance Share Unit Awards

An award granted as performance-based compensation is awarded to a participant contingent upon attainment of our future performance goals during a performance cycle. The performance goals were pre-established by the Compensation Committee. Following the end of the performance period, the holder of a performance-based compensation award is entitled to receive payment of an amount not exceeding the number of shares of common stock subject to, or the maximum value of, the performance-based compensation award, based on the achievement of the performance measures for the performance period. The performance share unit awards generally vest in full approximately three years after grant date, and are non-vested until the required service period expires.   

The fair value of a performance share unit award is based on the market price per share of our common shares on the date of grant. Compensation expense is recognized based on the grant date fair value over the requisite service or vesting period. Compensation expense will be adjusted for the performance goals on a quarterly basis.

The following table presents performance share unit award activity for the periods indicated:

		Weighted-
		Average Grant
	Number of	Date Fair Value
	Shares	per Share (1)
Performance share unit awards at January 1, 2018	—	$	—
Granted (2)	7,932	$	43.00
Vested	—	$	—
Forfeited	—	$	—
Performance share unit awards at June 30, 2018	7,932	$	—

____________________

(1) Determined by dividing the aggregate grant date fair value of awards by the number of awards issued.

(2) The aggregate grant date fair value of performance share unit awards issued during 2018 was $0.4 million based on a grant date market price of our common share of $43.00 per share and assuming a performance factor of 100 percent.

Unrecognized compensation cost associated with performance share unit awards was approximately $0.4 million. We expect to recognize the remaining compensation cost for these awards over a weighted-average period of 2.9 years.

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Supplemental Cash Flow Information

6 Months Ended

Jun. 30, 2018

Supplemental Cash Flow Elements [Abstract]

Supplemental Cash Flow Information

Supplemental Cash Flow Information

Supplemental cash flows and non-cash transactions were as follows for the periods indicated (in thousands):

	Six Months Ended
	June 30,
	2018		2017
Cash paid for interest	$	34	$	2
Cash paid for federal and state income taxes	210		225
Non-cash transactions:
Change in accounts payable related to property and equipment additions	(44)		455

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Commitments and Contingencies

6 Months Ended

Jun. 30, 2018

Commitments and Contingencies Disclosure [Abstract]

Commitments and Contingencies

Commitments and Contingencies

Capital Lease Obligations

We have entered into capital leases for certain of our tractors in our crude oil marketing segment. The following table summarizes our principal contractual commitments outstanding under our capital leases at June 30, 2018 for the next five years, and in total thereafter (in thousands):

Remainder of 2018	$	199
2019	398
2020	398
2021	398
2022	255
Thereafter	—
Total minimum lease payments	1,648
Less: Amount representing interest	(126)
Present value of capital lease obligations	1,522
Less current portion of capital lease obligations	(345)
Total long-term capital lease obligations	$	1,177

Operating Lease Obligations

We lease certain property and equipment under noncancelable and cancelable operating leases. Our significant lease agreements consist of (i) arrangements with independent truck owner-operators for use of their equipment and driver services; (ii) leased office space; and (iii) certain lease and terminal access contracts in order to provide tank storage and dock access for our crude oil marketing business. Currently, our significant lease agreements have terms that range from one to eight years.

Lease expense is charged to operating costs and expenses on a straight-line basis over the period of expected economic benefit. Contingent rental payments are expensed as incurred. We are generally required to perform routine maintenance on the underlying leased assets. Maintenance and repairs of leased assets resulting from our operations are charged to expense as incurred. Rental expense was as follows for the periods indicated (in thousands):

	Three Months Ended				Six Months Ended
	June 30,				June 30,
	2018		2017		2018		2017
Rental expense	$	2,835	$	3,230	$	5,422	$	6,458

At June 30, 2018, rental obligations under non-cancelable operating leases and terminal arrangements with terms in excess of one year for the next five years and thereafter are payable as follows (in thousands):

Remainder of 2018	$	2,986
2019	3,336
2020	1,641
2021	1,531
2022	1,499
Thereafter	2,966
Total operating lease payments	$	13,959

Insurance Policies

Under our automobile and workers’ compensation insurance policies that were in place through September 30, 2017, we pre-funded our estimated losses, and therefore, we could either receive a return of premium paid or be assessed for additional premiums up to pre-established limits. Additionally, in certain instances, the risk of insured losses was shared with a group of similarly situated entities through an insurance captive. We have appropriately recognized estimated expenses and liabilities related to these policies for losses incurred but not reported to us or our insurance carrier. The amount of pre-funded insurance premiums left to cover potential future losses are presented in the table below. If the potential insurance claims do not further develop, the pre-funded premiums will be returned to us as a premium refund.

Effective October 1, 2017, we changed the structure of our automobile and workers’ compensation insurance policies. We exited the group captive and now establish a liability for expected claims incurred but not reported on a monthly basis as we move forward. As claims are paid, the liability is relieved. The amount of pre-funded insurance premiums left to cover potential future losses and our accruals for automobile and workers’ compensation claims were as follows at the dates indicated (in thousands):

	June 30,		December 31,
	2018		2017
Pre-funded premiums for losses incurred but not reported	$	516	$	988
Accrued automobile and workers’ compensation claims	1,262		450

We maintain a self-insurance program for managing employee medical claims. A liability for expected claims incurred but not reported is established on a monthly basis. As claims are paid, the liability is relieved. We also maintain third party insurance stop-loss coverage for annual aggregate medical claims exceeding $6.0 million. Medical accrual amounts were as follows at the dates indicated (in thousands):

	June 30,		December 31,
	2018		2017
Accrued medical claims	$	1,439	$	1,329

Litigation

From time to time as incidental to our operations, we may become involved in various lawsuits and/or disputes. Primarily as an operator of an extensive trucking fleet, we are a party to motor vehicle accidents, worker compensation claims and other items of general liability as would be typical for the industry. We are presently unaware of any claims against us that are either outside the scope of insurance coverage or that may exceed the level of insurance coverage and could potentially represent a material adverse effect on our financial position or results of operations.

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Summary of Significant Accounting Policies (Policies)

6 Months Ended

Jun. 30, 2018

Accounting Policies [Abstract]

Organization

Organization

Adams Resources & Energy, Inc. (“AE”) is a publicly traded Delaware corporation organized in 1973, the common shares of which are listed on the NYSE American LLC under the ticker symbol “AE”. We and our subsidiaries are primarily engaged in the business of crude oil marketing, transportation and storage in various crude oil and natural gas basins in the lower 48 states of the United States (“U.S.”). We also conduct tank truck transportation of liquid chemicals and dry bulk and ISO tank container storage and transportation primarily in the lower 48 states of the U.S. with deliveries into Canada and Mexico and with terminals in the Gulf Coast region of the U.S. Unless the context requires otherwise, references to “we,” “us,” “our,” the “Company” or “AE” are intended to mean the business and operations of Adams Resources & Energy, Inc. and its consolidated subsidiaries.  

Historically, we have operated and reported in three business segments: (i) crude oil marketing, transportation and storage, (ii) tank truck transportation of liquid chemicals and dry bulk and ISO tank container storage and transportation, and (iii) upstream crude oil and natural gas exploration and production. We exited the upstream crude oil and natural gas exploration and production business during 2017 with the sale of our upstream crude oil and natural gas exploration and production assets as a result of a voluntary bankruptcy filing for this subsidiary. We expect the bankruptcy case involving the wholly owned subsidiary through which this business was conducted to be dismissed during the second half of 2018.

Basis of Presentation

Basis of Presentation

Our results of operations for the three and six months ended June 30, 2018 are not necessarily indicative of results expected for the full year of 2018. In the opinion of management, the accompanying unaudited condensed consolidated financial statements reflect all adjustments consisting of normal recurring accruals necessary for fair presentation.  The condensed consolidated financial statements and the accompanying notes are prepared in accordance with U.S. generally accepted accounting principles (“GAAP”) for interim financial statements and the rules of the U.S. Securities and Exchange Commission (“SEC”). Certain information and footnote disclosures required by GAAP for complete annual financial statements have been omitted and, therefore, these interim financial statements should be read in conjunction with our audited consolidated financial statements included in our Annual Report on Form 10-K for the year ended December 31, 2017 (the “2017 Form 10-K”) filed with the SEC on March 12, 2018. All significant intercompany transactions and balances have been eliminated in consolidation.

Use of Estimates

Use of EstimatesThe preparation of our financial statements in conformity with GAAP requires management to use estimates and assumptions that affect the reported amount of assets and liabilities and disclosure of contingent assets and liabilities at the date of the financial statements and the reported amounts of revenues and expenses during the reporting period. We base our estimates and judgments on historical experience and on various other assumptions and information we believe to be reasonable under the circumstances. Estimates and assumptions about future events and their effects cannot be perceived with certainty and, accordingly, these estimates may change as new events occur, as more experience is acquired, as additional information is obtained and as the operating environment changes. While we believe the estimates and assumptions used in the preparation of these condensed consolidated financial statements are appropriate, actual results could differ from those estimates.

Earnings Per Share

Earnings Per ShareBasic earnings (losses) per share is computed by dividing our net earnings (losses) by the weighted average number of shares of common stock outstanding during the period. Diluted earnings (losses) per share is computed by giving effect to all potential shares of common stock outstanding, including our stock related to unvested restricted stock awards. Unvested restricted stock awards granted under the Adams Resources & Energy, Inc. 2018 Long-Term Incentive Plan (“2018 LTIP”) are not considered to be participating securities as the holders of these shares do not have non-forfeitable dividend rights in the event of our declaration of a dividend for common shares (see Note 10 for further discussion).

Fair Value Measurements

Fair Value Measurements

The carrying amounts reported in the unaudited condensed consolidated balance sheets for cash and cash equivalents, accounts receivable and accounts payable approximates fair value because of the immediate or short-term maturity of these financial instruments. Marketable securities are recorded at fair value based on market quotations from actively traded liquid markets.

A three-tier hierarchy has been established that classifies fair value amounts recognized in the financial statements based on the observability of inputs used to estimate such fair values.  The hierarchy considers fair value amounts based on observable inputs (Levels 1 and 2) to be more reliable and predictable than those based primarily on unobservable inputs (Level 3).  At each balance sheet reporting date, we categorize our financial assets and liabilities using this hierarchy.

Fair value contracts consist of derivative financial instruments and are recorded as either an asset or liability measured at its fair value. Changes in fair value are recognized immediately in earnings unless the derivatives qualify for, and we elect, cash flow hedge accounting. We had no contracts designated for hedge accounting during any current reporting periods (see Note 9 for further information).

Income Taxes

Income Taxes

Income taxes are accounted for using the asset and liability method. Under this approach, deferred tax assets and liabilities are recognized based on anticipated future tax consequences attributable to differences between financial statement carrying amounts of these items and their respective tax basis. On December 22, 2017, the Tax Cut and Jobs Act was enacted into law resulting in a reduction in the federal corporate income tax rate from 35 percent to 21 percent for years beginning in 2018, which impacts our income tax provision or benefit.

Investments in Unconsolidated Affiliates

Investments in Unconsolidated AffiliatesIn April 2017, one of our wholly owned subsidiaries, Adams Resources Exploration Corporation (“AREC”), filed a voluntary petition in the United States Bankruptcy Court for the District of Delaware seeking relief under Chapter 11 of Title 11 of the United States Code. As a result of the voluntary bankruptcy filing, we no longer controlled the operations of AREC; therefore, we deconsolidated AREC in April 2017, and we recorded our investment in this subsidiary under the cost method of accounting. During the second quarter of 2017, we recorded a non-cash charge of approximately $1.6 million associated with the deconsolidation of AREC. At June 30, 2018, our remaining investment in AREC was $0.4 million. We expect the bankruptcy case to be dismissed during the second half of 2018.

Letter of Credit Facility

Letter of Credit Facility

We maintain a Credit and Security Agreement with Wells Fargo Bank, National Association to provide up to a $60 million stand-by letter of credit facility used to support crude oil purchases within our crude oil marketing segment and for other purposes. We are currently using the letter of credit facility for a letter of credit related to our insurance program. This facility is collateralized by the eligible accounts receivable within our crude oil marketing segment and expires on August 27, 2019.

The issued stand-by letters of credit are canceled as the underlying purchase obligations are satisfied by cash payment when due. The letter of credit facility places certain restrictions on Gulfmark Energy, Inc., one of our wholly owned subsidiaries. These restrictions include the maintenance of positive net earnings excluding inventory valuation changes, as defined, among other restrictions. We are currently in compliance with all such financial covenants. At June 30, 2018 and December 31, 2017, we had $0.4 million and $2.2 million, respectively, outstanding under this facility.

Property and Equipment

Property and Equipment

Property and equipment is recorded at cost. Expenditures for additions, improvements and other enhancements to property and equipment are capitalized, and minor replacements, maintenance and repairs that do not extend asset life or add value are charged to expense as incurred. When property and equipment assets are retired or otherwise disposed of, the related cost and accumulated depreciation is removed from the accounts and any resulting gain or loss is included in results of operations in operating costs and expenses for the respective period. Property and equipment, except for land, is depreciated using the straight-line method over the estimated average useful lives ranging from two to thirty-nine years.

We review our long-lived assets for impairment whenever there is evidence that the carrying value of these assets may not be recoverable. Any impairment recognized is permanent and may not be restored. Property and equipment is reviewed at the lowest level of identifiable cash flows. For properties requiring impairment, the fair value is estimated based on an internal discounted cash flow model of future cash flows.

Recent Accounting Developments

Recent Accounting Developments

In February 2016, the Financial Accounting Standards Board (“FASB”) issued Accounting Standards Codification (“ASC”) 842, Leases (“ASC 842”), which requires substantially all leases (with the exception of leases with a term of one year or less) to be recorded on the balance sheet using a method referred to as the right-of-use (“ROU”) asset approach. We plan to adopt the new standard on January 1, 2019 using the modified retrospective approach.

The new standard introduces two lease accounting models, which result in a lease being classified as either a “finance” or “operating” lease on the basis of whether the lessee effectively obtains control of the underlying asset during the lease term. A lease would be classified as a finance lease if it meets one of five classification criteria, four of which are generally consistent with current lease accounting guidance. By default, a lease that does not meet the criteria to be classified as a finance lease will be deemed an operating lease. Regardless of classification, the initial measurement of both lease types will result in the balance sheet recognition of a ROU asset representing a company’s right to use the underlying asset for a specified period of time and a corresponding lease liability. The lease liability will be recognized at the present value of the future lease payments, and the ROU asset will equal the lease liability adjusted for any prepaid rent, lease incentives provided by the lessor, and any indirect costs.

The subsequent measurement of each type of lease varies. Leases classified as a finance lease will be accounted for using the effective interest method. Under this approach, a lessee will amortize the ROU asset (generally on a straight-line basis in a manner similar to depreciation) and the discount on the lease liability (as a component of interest expense). Leases classified as an operating lease will result in the recognition of a single lease expense amount that is recorded on a straight-line basis (or another systematic basis, if more appropriate).

We have started the process of reviewing our lease agreements in light of the new guidance. Although we are in the early stages of our ASC 842 implementation project, we anticipate that this new lease guidance will cause significant changes to the way leases are recorded, presented and disclosed in our consolidated financial statements.

Stock-Based Compensation

We measure all share-based payments, including the issuance of restricted stock units and performance share units to employees and board members, using a fair-value based method. The cost of services received from employees and non-employee board members in exchange for awards of equity instruments is recognized in the consolidated statement of operations based on the estimated fair value of those awards on the grant date and amortized on a straight-line basis over the requisite service period. The fair value of restricted stock unit awards and performance share unit awards is based on the closing price of our common stock on the grant date. We account for forfeitures as they occur. See Note 10 for additional information regarding our 2018 LTIP.

Revenue Recognition, Practical Expedients, Contract Balances and Other Marketing Revenue

Revenue Recognition

The new revenue standard’s core principle is that a company will recognize revenue when it transfers promised goods or services to customers in an amount that reflects the consideration to which the company expects to be entitled in exchange for those goods or services. The new revenue standard requires entities to recognize revenue through the application of a five-step model, which includes: identification of the contract, identification of the performance obligations, determination of the transaction price, allocation of the transaction price to the performance obligations, and recognition of revenue as the entity satisfies the performance obligations.

Our revenues are primarily generated from the marketing, transportation and storage of crude oil and other related products and the tank truck transportation of liquid chemicals and dry bulk. A performance obligation is a promise in a contract to transfer a distinct good or service to the customer and is the unit of account in ASC 606. To identify the performance obligations, we considered all of the products or services promised in the contracts with customers, whether explicitly stated or implied based on customary business practices. Revenue is recognized when, or as, each performance obligation is satisfied under terms of the contract.

For our crude oil marketing segment, most of our crude oil purchase and sale contracts qualify and are designated as non-trading activities, and we consider these contracts as normal purchases and sales activity. For normal purchases and sales, our customers are invoiced monthly based upon contractually agreed upon terms with revenue recognized in the month in which the physical product is delivered to the customer, generally upon delivery of the product to the customer. Revenue is recognized based on the transaction price and the quantity delivered.

The majority of our crude oil sales contracts have multiple distinct performance obligations as the promise to transfer the individual goods (e.g., barrels of crude oil) is separately identifiable from the other goods promised within the contracts. Our performance obligations are satisfied at a point in time. For normal sales arrangements, revenue is recognized in the month in which control of the physical product is transferred to the customer, generally upon delivery of the product to the customer.

For our transportation segment, each sales order associated with our master transportation agreements is considered a distinct performance obligation. The performance obligations associated with this segment are satisfied over time as the goods and services are delivered.

Practical Expedients

In connection with our adoption of ASC 606, we used significant judgment when assessing our contracts for impact upon adoption. For example, our contracts often include promises to transfer various goods and services to a customer. Determining whether goods and services are considered distinct performance obligations that should be accounted for separately versus together will continue to require significant judgment. We also used practical expedients permitted by ASC 606 when applicable. These practical expedients included:

• Applying the new guidance only to contracts that were not completed as of January 1, 2018; and

• Not accounting for the effects of significant financing components if the company expects that the period between when the entity transfers a promised good or service to a customer and when the customer pays for that good or service will be one year or less.

Contract Balances

The timing of revenue recognition, billings and cash collections results in billed accounts receivable and customer advances and deposits (contract liabilities) on our consolidated balance sheet. Currently, we do not record any contract assets in our financial statements due to the timing of revenue recognized and when our customers are billed. Our crude oil marketing customers are generally billed monthly based on contractually agreed upon terms. However, we sometimes receive advances or deposits from customers before revenue is recognized, resulting in contract liabilities. These contract assets and liabilities, if any, are reported on our consolidated balance sheets at the end of each reporting period.

Revenue Disaggregation

The following table disaggregates our revenue by segment and by major source for the periods indicated (in thousands):

	Reporting Segments
	Marketing		Transportation		Total
Three Months Ended June 30, 2018
Revenues from contracts with customers	$	419,365	$	13,626	$	432,991
Other (1)	19,426		—		19,426
Total revenues	$	438,791	$	13,626	$	452,417
Timing of revenue recognition:
Goods transferred at a point in time	$	419,365	$	—	$	419,365
Services transferred over time	—		13,626		13,626
Total revenues from contracts with customers	$	419,365	$	13,626	$	432,991
Six Months Ended June 30, 2018
Revenues from contracts with customers	$	779,450	$	27,244	$	806,694
Other (1)	32,979		—		32,979
Total revenues	$	812,429	$	27,244	$	839,673
Timing of revenue recognition:
Goods transferred at a point in time	$	779,450	$	—	$	779,450
Services transferred over time	—		27,244		27,244
Total revenues from contracts with customers	$	779,450	$	27,244	$	806,694

_______________

(1) Other marketing revenues are recognized under ASC 815, Derivatives and Hedging, and ASC 845, Nonmonetary Transactions – Purchases and Sales of Inventory with the Same Counterparty.

Other Marketing Revenue

Certain of the commodity purchase and sale contracts utilized by our crude oil marketing business qualify as derivative instruments with certain specifically identified contracts also designated as trading activity. From the time of contract origination, these contracts are marked-to-market and recorded on a net revenue basis in the accompanying consolidated financial statements.

Certain of our crude oil contracts may be with a single counterparty to provide for similar quantities of crude oil to be bought and sold at different locations. These contracts are entered into for a variety of reasons, including effecting the transportation of the commodity, to minimize credit exposure, and/or to meet the competitive demands of the customer. These buy/sell arrangements are reflected on a net revenue basis in the accompanying consolidated financial statements.

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Summary of Significant Accounting Policies (Tables)

6 Months Ended

Jun. 30, 2018

Accounting Policies [Abstract]

Schedule of Earnings Per Share, Basic and Diluted

A reconciliation of the denominator used in the calculation of basic and diluted earnings (losses) per share is as follows (in thousands, except per share data):

	Three Months Ended				Six Months Ended
	June 30,				June 30,
	2018		2017		2018		2017
Basic earnings (losses) per share:
Net earnings (losses)	$	3,620	$	(282)	$	4,758	$	(1,142)
Weighted average number of shares outstanding – Basic	4,218		4,218		4,218		4,218
Basic earnings (losses) per share	$	0.86	$	(0.07)	$	1.13	$	(0.27)
Diluted earnings (losses) per share:
Net earnings (losses)	$	3,620	$	(282)	$	4,758	$	(1,142)
Diluted weighted average number of shares outstanding:
Common shares	4,218		4,218		4,218		4,218
Restricted stock unit awards (1)	—		—		—		—
Performance share unit awards (2)	—		—		—		—
Total	4,218		4,218		4,218		4,218
Diluted earnings (losses) per share	$	0.86	$	(0.07)	$	1.13	$	(0.27)

_______________

(1) The dilutive effect of restricted stock unit awards for the three and six months ended June 30, 2018 is de minimis.

(2) Performance share awards will be included in the calculation of diluted earnings per share when the performance conditions have been achieved.

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Revenue Recognition (Tables)

6 Months Ended

Jun. 30, 2018

Revenue from Contract with Customer [Abstract]

Disaggregation of Revenue

The following table disaggregates our revenue by segment and by major source for the periods indicated (in thousands):

	Reporting Segments
	Marketing		Transportation		Total
Three Months Ended June 30, 2018
Revenues from contracts with customers	$	419,365	$	13,626	$	432,991
Other (1)	19,426		—		19,426
Total revenues	$	438,791	$	13,626	$	452,417
Timing of revenue recognition:
Goods transferred at a point in time	$	419,365	$	—	$	419,365
Services transferred over time	—		13,626		13,626
Total revenues from contracts with customers	$	419,365	$	13,626	$	432,991
Six Months Ended June 30, 2018
Revenues from contracts with customers	$	779,450	$	27,244	$	806,694
Other (1)	32,979		—		32,979
Total revenues	$	812,429	$	27,244	$	839,673
Timing of revenue recognition:
Goods transferred at a point in time	$	779,450	$	—	$	779,450
Services transferred over time	—		27,244		27,244
Total revenues from contracts with customers	$	779,450	$	27,244	$	806,694

_______________

(1) Other marketing revenues are recognized under ASC 815, Derivatives and Hedging, and ASC 845, Nonmonetary Transactions – Purchases and Sales of Inventory with the Same Counterparty.

Schedule of New Accounting Pronouncements and Changes in Accounting Principles

Reporting these crude oil contracts on a gross revenue basis would increase our reported revenues as follows for the periods indicated (in thousands):

	Three Months Ended				Six Months Ended
	June 30,				June 30,
	2018		2017		2018		2017
Revenue gross-up	$	56,335	$	44,908	$	102,026	$	102,473

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Prepayments and Other Current Assets (Tables)

6 Months Ended

Jun. 30, 2018

Deferred Costs, Capitalized, Prepaid, and Other Assets Disclosure [Abstract]

Components of Prepayments and Other Current Assets

The components of prepayments and other current assets were as follows at the dates indicated (in thousands):

	June 30,		December 31,
	2018		2017
Insurance premiums	$	582	$	425
Rents, licenses and other	615		839
Total	$	1,197	$	1,264

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Property and Equipment (Tables)

6 Months Ended

Jun. 30, 2018

Property, Plant and Equipment [Abstract]

Property and equipment

The historical costs of our property and equipment and related accumulated depreciation balances were as follows at the dates indicated (in thousands):

	Estimated
	Useful Life	June 30,		December 31,
	in Years	2018		2017
Tractors and trailers (1)	5 – 6	$	83,686	$	88,065
Field equipment	2 – 5	19,811		18,490
Buildings	5 – 39	15,727		15,727
Office equipment	2 – 5	1,808		1,929
Land		1,790		1,790
Construction in progress		960		275
Total		123,782		126,276
Less accumulated depreciation		(96,478)		(96,914)
Property and equipment, net		$	27,304	$	29,362

______________

(1) Amounts include assets held under capital leases for certain tractors in our marketing segment. Gross property and equipment associated with assets held under capital leases were $1.8 million and $1.8 million at June 30, 2018 and December 31, 2017, respectively. Accumulated amortization associated with assets held under capital leases were $0.3 million and $0.1 million at June 30, 2018 and December 31, 2017, respectively (see Note 12 for further information).

Components of depreciation, depletion and amortization expense were as follows for the periods indicated (in thousands):

	Three Months Ended				Six Months Ended
	June 30,				June 30,
	2018		2017		2018		2017
Depreciation, depletion and amortization,
excluding amounts under capital leases	$	2,171	$	3,563	$	4,493	$	7,532
Amortization of property and equipment
under capital leases	91		—		181		—
Total depreciation, depletion and amortization	$	2,262	$	3,563	$	4,674	$	7,532

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Cash Deposits and Other Assets (Tables)

6 Months Ended

Jun. 30, 2018

Deferred Costs, Capitalized, Prepaid, and Other Assets Disclosure [Abstract]

Components of cash deposits and other assets

Components of cash deposits and other assets were as follows at the dates indicated (in thousands):

	June 30,		December 31,
	2018		2017
Amounts associated with liability insurance program:
Insurance collateral deposits	$	3,517	$	3,767
Excess loss fund	2,093		2,284
Accumulated interest income	642		814
Other amounts:
State collateral deposits	57		57
Materials and supplies	273		273
Other	36		37
Total	$	6,618	$	7,232

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Segment Reporting (Tables)

6 Months Ended

Jun. 30, 2018

Segment Reporting [Abstract]

Information concerning business activities

Information concerning our various business activities was as follows for the periods indicated (in thousands):

	Reporting Segments
	Marketing		Transportation		Oil and Gas		Total
Three Months Ended June 30, 2018
Revenues	$	438,791	$	13,626	$	—	$	452,417
Segment operating (losses) earnings (1)	5,772		810		—		6,582
Depreciation, depletion and amortization	1,336		926		—		2,262
Property and equipment additions (2)	277		1,572		—		1,849
Three Months Ended June 30, 2017
Revenues	$	301,176	$	13,616	$	410	$	315,202
Segment operating (losses) earnings (1)	1,691		293		95		2,079
Depreciation, depletion and amortization	1,977		1,472		114		3,563
Property and equipment additions	191		(92)		1,003		1,102
Six Months Ended June 30, 2018
Revenues	$	812,429	$	27,244	$	—	$	839,673
Segment operating (losses) earnings (1)	8,730		1,212		—		9,942
Depreciation, depletion and amortization	2,833		1,841		—		4,674
Property and equipment additions (2)	1,070		1,645		—		2,715
Six Months Ended June 30, 2017
Revenues	$	589,791	$	27,071	$	1,427	$	618,289
Segment operating (losses) earnings (1)	3,084		(5)		53		3,132
Depreciation, depletion and amortization	4,046		3,063		423		7,532
Property and equipment additions	273		10		1,825		2,108

_______________

(1) Our marketing segment’s operating earnings included inventory liquidation gains of $1.9 million and $2.5 million for the three and six months ended June 30, 2018, respectively, and inventory valuation losses of $1.4 million and $2.1 million for the three and six months ended June 30, 2017, respectively.

(2) During the six months ended June 30, 2018, we had $13 thousand of property and equipment additions for leasehold improvements at our corporate headquarters level, which is not attributed or allocated to any of our reporting segments.

Reconciliation of segment earnings to earnings before income taxes

Segment operating earnings reflect revenues net of operating costs and depreciation, depletion and amortization expense and are reconciled to earnings (losses) before income taxes, as follows for the periods indicated (in thousands):

	Three Months Ended				Six Months Ended
	June 30,				June 30,
	2018		2017		2018		2017
Segment operating earnings	$	6,582	$	2,079	$	9,942	$	3,132
General and administrative	(2,284)		(1,460)		(4,567)		(4,097)
Operating earnings (losses)	4,298		619		5,375		(965)
Loss on deconsolidation of subsidiary	—		(1,635)		—		(1,635)
Interest income	498		260		885		419
Interest expense	(15)		(1)		(34)		(2)
(Losses) earnings before income taxes	$	4,781	$	(757)	$	6,226	$	(2,183)

Identifiable assets by industry segment

Identifiable assets by industry segment were as follows at the dates indicated (in thousands):

	June 30,		December 31,
	2018		2017
Reporting segment:
Marketing	$	139,687	$	134,745
Transportation	28,803		29,069
Oil and Gas (1)	425		425
Cash and other assets	134,212		118,465
Total assets	$	303,127	$	282,704

____________________

(1) Amounts represent our cost method investment in this segment.

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Transactions with Affiliates (Tables)

6 Months Ended

Jun. 30, 2018

Related Party Transactions [Abstract]

Activities with affiliates

Activities with affiliates were as follows for the periods indicated (in thousands):

	Three Months Ended				Six Months Ended
	June 30,				June 30,
	2018		2017		2018		2017
Affiliate billings to us	$	25	$	24	$	40	$	36
Billings to affiliates	1		1		3		2
Rentals paid to affiliate	122		158		244		325
Fees paid to Bencap (1)	—		—		—		108

___________________

(1) Amount represents fees paid to Bencap through the date of the forfeiture of our investment during the first quarter of 2017. As a result of the investment forfeiture, Bencap is no longer an affiliate.

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Derivative Instruments and Fair Value Measurements (Tables)

6 Months Ended

Jun. 30, 2018

Derivative Instruments and Hedging Activities Disclosure [Abstract]

Derivatives reflected in the consolidated balance sheet

The estimated fair value of forward month commodity contracts (derivatives) reflected in the accompanying unaudited condensed consolidated balance sheet were as follows at the date indicated (in thousands):

	June 30, 2018
	Balance Sheet Location and Amount
	Current		Other		Current		Other
	Assets		Assets		Liabilities		Liabilities
Asset derivatives:
Fair value forward hydrocarbon commodity
contracts at gross valuation	$	538	$	—	$	—	$	—
Liability derivatives:
Fair value forward hydrocarbon commodity
contracts at gross valuation	—		—		514		—
Less counterparty offsets	—		—		—		—
As reported fair value contracts	$	538	$	—	$	514	$	—

At December 31, 2017, we had in place 20 commodity purchase and sale contracts, of which four of these contracts had no fair value associated with them as the contractual prices of crude oil were within the range of prices specified in the agreements. These commodity purchase and sale contracts encompassed approximately:

• 452 barrels per day of crude oil during January 2018;

• 322 barrels per day of crude oil during February through May 2018;

• 258 barrels per day of crude oil during June 2018;

• 646 barrels per day of crude oil during July 2018;

• 322 barrels per day of crude oil during August through September 2018; and

• 258 barrels per day of crude oil during October through December 2018.

The estimated fair value of forward month commodity contracts (derivatives) reflected in the accompanying unaudited condensed consolidated balance sheet were as follows at the date indicated (in thousands):

	December 31, 2017
	Balance Sheet Location and Amount
	Current		Other		Current		Other
	Assets		Assets		Liabilities		Liabilities
Asset derivatives:
Fair value forward hydrocarbon commodity
contracts at gross valuation	$	166	$	—	$	—	$	—
Liability derivatives:
Fair value forward hydrocarbon commodity
contracts at gross valuation	—		—		145		—
Less counterparty offsets	—		—		—		—
As reported fair value contracts	$	166	$	—	$	145	$	—

Derivatives reflected in the consolidated statement of operations

Forward month commodity contracts (derivatives) reflected in the accompanying unaudited condensed consolidated statements of operations were as follows for the periods indicated (in thousands):

	Gains (losses)
	Three Months Ended				Six Months Ended
	June 30,				June 30,
	2018		2017		2018		2017
Revenues – marketing	$	1	$	280	$	2	$	700

Fair value assets and liabilities

The following tables set forth, by level with the Level 1, 2 and 3 fair value hierarchy, the carrying values of our financial assets and liabilities at the dates indicated (in thousands):

	June 30, 2018
	Fair Value Measurements Using
	Quoted Prices
	in Active		Significant
	Markets for		Other		Significant
	Identical Assets		Observable		Unobservable
	and Liabilities		Inputs		Inputs		Counterparty
	(Level 1)		(Level 2)		(Level 3)		Offsets		Total
Derivatives:
Current assets	$	—	$	538	$	—	$	—	$	538
Current liabilities	—		(514)		—		—		(514)
Net value	$	—	$	24	$	—	$	—	$	24

	December 31, 2017
	Fair Value Measurements Using
	Quoted Prices
	in Active		Significant
	Markets for		Other		Significant
	Identical Assets		Observable		Unobservable
	and Liabilities		Inputs		Inputs		Counterparty
	(Level 1)		(Level 2)		(Level 3)		Offsets		Total
Derivatives:
Current assets	$	—	$	166	$	—	$	—	$	166
Current liabilities	—		(145)		—		—		(145)
Net value	$	—	$	21	$	—	$	—	$	21

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Share-Based Compensation Plan (Tables)

6 Months Ended

Jun. 30, 2018

Disclosure of Compensation Related Costs, Share-based Payments [Abstract]

Share-based Compensation, Activity

The following table presents restricted stock unit award activity for the periods indicated:

		Weighted-
		Average Grant
	Number of	Date Fair Value
	Shares	per Share (1)
Restricted stock unit awards at January 1, 2018	—	$	—
Granted (2)	13,733	$	43.00
Vested	—	$	—
Forfeited	—	$	—
Restricted stock unit awards at June 30, 2018	13,733	$	—

____________________

(1) Determined by dividing the aggregate grant date fair value of awards by the number of awards issued.

(2)  The aggregate grant date fair value of restricted stock unit awards issued during 2018 was $0.6 million based on a grant date market price of our common shares of $43.00 per share.  

Unrecognized compensation cost associated with restricted stock unit awards was approximately $0.6 million. Due to the graded vesting provisions of these awards, we expect to recognize the remaining compensation cost for these awards over a weighted-average period of 1.7 years. 

Performance Share Unit Awards

An award granted as performance-based compensation is awarded to a participant contingent upon attainment of our future performance goals during a performance cycle. The performance goals were pre-established by the Compensation Committee. Following the end of the performance period, the holder of a performance-based compensation award is entitled to receive payment of an amount not exceeding the number of shares of common stock subject to, or the maximum value of, the performance-based compensation award, based on the achievement of the performance measures for the performance period. The performance share unit awards generally vest in full approximately three years after grant date, and are non-vested until the required service period expires.   

The fair value of a performance share unit award is based on the market price per share of our common shares on the date of grant. Compensation expense is recognized based on the grant date fair value over the requisite service or vesting period. Compensation expense will be adjusted for the performance goals on a quarterly basis.

The following table presents performance share unit award activity for the periods indicated:

		Weighted-
		Average Grant
	Number of	Date Fair Value
	Shares	per Share (1)
Performance share unit awards at January 1, 2018	—	$	—
Granted (2)	7,932	$	43.00
Vested	—	$	—
Forfeited	—	$	—
Performance share unit awards at June 30, 2018	7,932	$	—

____________________

(1) Determined by dividing the aggregate grant date fair value of awards by the number of awards issued.

(2) The aggregate grant date fair value of performance share unit awards issued during 2018 was $0.4 million based on a grant date market price of our common share of $43.00 per share and assuming a performance factor of 100 percent.

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Supplemental Cash Flow Information (Tables)

6 Months Ended

Jun. 30, 2018

Supplemental Cash Flow Elements [Abstract]

Supplemental Cash Flow Information

Supplemental cash flows and non-cash transactions were as follows for the periods indicated (in thousands):

	Six Months Ended
	June 30,
	2018		2017
Cash paid for interest	$	34	$	2
Cash paid for federal and state income taxes	210		225
Non-cash transactions:
Change in accounts payable related to property and equipment additions	(44)		455

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Commitments and Contingencies (Tables)

6 Months Ended

Jun. 30, 2018

Commitments and Contingencies Disclosure [Abstract]

Schedule of principal contractual commitments outstanding under capital leases

The following table summarizes our principal contractual commitments outstanding under our capital leases at June 30, 2018 for the next five years, and in total thereafter (in thousands):

Remainder of 2018	$	199
2019	398
2020	398
2021	398
2022	255
Thereafter	—
Total minimum lease payments	1,648
Less: Amount representing interest	(126)
Present value of capital lease obligations	1,522
Less current portion of capital lease obligations	(345)
Total long-term capital lease obligations	$	1,177

Rental expense

Rental expense was as follows for the periods indicated (in thousands):

	Three Months Ended				Six Months Ended
	June 30,				June 30,
	2018		2017		2018		2017
Rental expense	$	2,835	$	3,230	$	5,422	$	6,458

Long-term non-cancelable operating leases and terminal arrangements for the next five years

At June 30, 2018, rental obligations under non-cancelable operating leases and terminal arrangements with terms in excess of one year for the next five years and thereafter are payable as follows (in thousands):

Remainder of 2018	$	2,986
2019	3,336
2020	1,641
2021	1,531
2022	1,499
Thereafter	2,966
Total operating lease payments	$	13,959

Schedule of expenses and losses incurred but not reported and accrued workers' compensation

The amount of pre-funded insurance premiums left to cover potential future losses and our accruals for automobile and workers’ compensation claims were as follows at the dates indicated (in thousands):

	June 30,		December 31,
	2018		2017
Pre-funded premiums for losses incurred but not reported	$	516	$	988
Accrued automobile and workers’ compensation claims	1,262		450

Schedule of accrued medical claims

Medical accrual amounts were as follows at the dates indicated (in thousands):

	June 30,		December 31,
	2018		2017
Accrued medical claims	$	1,439	$	1,329

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Organization and Basis of Presentation (Details)	6 Months Ended
	Jun. 30, 2018 segment state
Organization, Consolidation and Presentation of Financial Statements [Abstract]
Number of states in which entity operates | state	48
Number of operating segments	3
Number of reportable segments	3

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Summary of Significant Accounting Policies - Reconciliation of Basic and Diluted Earnings (Losses) per Share (Details) - USD ($) $ / shares in Units, $ in Thousands	3 Months Ended		6 Months Ended
	Jun. 30, 2018	Jun. 30, 2017	Jun. 30, 2018	Jun. 30, 2017
Basic earnings (losses) per share:
Net earnings (losses)	$ 3,620	$ (282)	$ 4,758	$ (1,142)
Weighted average number of shares outstanding – Basic (in shares)	4,218,000	4,218,000	4,218,000	4,218,000
Basic earnings (losses) per share (in dollars per share)	$ 0.86	$ (0.07)	$ 1.13	$ (0.27)
Share-based Compensation Arrangement by Share-based Payment Award [Line Items]
Net (losses) earnings	$ 3,620	$ (282)	$ 4,758	$ (1,142)
Diluted earnings (losses) per share:
Total (in shares)	4,218,000	4,218,000	4,218,000	4,218,000
Diluted earnings (losses) per share (in dollars per share)	$ 0.86	$ (0.07)	$ 1.13	$ (0.27)
Restricted stock units awards
Diluted earnings (losses) per share:
Unit awards	0	0	0	0
Performance share unit awards
Diluted earnings (losses) per share:
Unit awards	0	0	0	0

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Summary of Significant Accounting Policies - Investments in Unconsolidated Affiliates (Details) - USD ($) $ in Thousands	3 Months Ended		6 Months Ended
	Jun. 30, 2018	Jun. 30, 2017	Jun. 30, 2018	Jun. 30, 2017
Accounting Policies [Abstract]
Deconsolidation, non-cash charge	$ 0	$ 1,635	$ 0	$ 1,635
AREC
Investments [Abstract]
Cost method investments	$ 400		$ 400

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Summary of Significant Accounting Policies - Letters of Credit Facility (Details) - Wells Fargo Bank - Standby Letter of Credit - USD ($)	Jun. 30, 2018	Dec. 31, 2017
Letter of Credit Facility [Abstract]
Line of credit facility, maximum borrowing capacity	$ 60,000,000
Stand-by letters of credit	$ 400,000	$ 2,200,000

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Summary of Significant Accounting Policies - Property and Equipment (Details)	6 Months Ended
	Jun. 30, 2018
Minimum
Property, Plant and Equipment [Abstract]
Property and equipment, useful life	2 years
Maximum
Property, Plant and Equipment [Abstract]
Property and equipment, useful life	39 years

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Revenue Recognition - Revenue Disaggregation (Details) - USD ($) $ in Thousands	3 Months Ended		6 Months Ended
	Jun. 30, 2018	Jun. 30, 2017	Jun. 30, 2018	Jun. 30, 2017
Disaggregation of Revenue [Line Items]
Total revenues from contracts with customers	$ 432,991		$ 806,694
Total revenues	452,417	$ 315,202	839,673	$ 618,289
Goods transferred at a point in time
Disaggregation of Revenue [Line Items]
Total revenues from contracts with customers	419,365		779,450
Services transferred over time
Disaggregation of Revenue [Line Items]
Total revenues from contracts with customers	13,626		27,244
Revenues from contracts with customers
Disaggregation of Revenue [Line Items]
Total revenues from contracts with customers	432,991		806,694
Other
Disaggregation of Revenue [Line Items]
Total revenues from contracts with customers	19,426		32,979
Marketing
Disaggregation of Revenue [Line Items]
Total revenues from contracts with customers	419,365		779,450
Total revenues	438,791		812,429
Marketing | Goods transferred at a point in time
Disaggregation of Revenue [Line Items]
Total revenues from contracts with customers	419,365		779,450
Marketing | Services transferred over time
Disaggregation of Revenue [Line Items]
Total revenues from contracts with customers	0		0
Marketing | Revenues from contracts with customers
Disaggregation of Revenue [Line Items]
Total revenues from contracts with customers	419,365		779,450
Marketing | Other
Disaggregation of Revenue [Line Items]
Total revenues from contracts with customers	19,426		32,979
Transportation
Disaggregation of Revenue [Line Items]
Total revenues from contracts with customers	13,626		27,244
Total revenues	13,626		27,244
Transportation | Goods transferred at a point in time
Disaggregation of Revenue [Line Items]
Total revenues from contracts with customers	0		0
Transportation | Services transferred over time
Disaggregation of Revenue [Line Items]
Total revenues from contracts with customers	13,626		27,244
Transportation | Revenues from contracts with customers
Disaggregation of Revenue [Line Items]
Total revenues from contracts with customers	13,626		27,244
Transportation | Other
Disaggregation of Revenue [Line Items]
Total revenues from contracts with customers	$ 0		$ 0

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Revenue Recognition - Other Revenue (Details) - USD ($) $ in Thousands	3 Months Ended		6 Months Ended
	Jun. 30, 2018	Jun. 30, 2017	Jun. 30, 2018	Jun. 30, 2017
Revenue, Initial Application Period Cumulative Effect Transition [Line Items]
Total revenues from contracts with customers	$ 432,991		$ 806,694
Accounting Standards Update 2014-09 | Revenue gross-up
Revenue, Initial Application Period Cumulative Effect Transition [Line Items]
Total revenues from contracts with customers	$ 56,335	$ 44,908	$ 102,026	$ 102,473

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Prepayments and Other Current Assets (Details) - USD ($) $ in Thousands	Jun. 30, 2018	Dec. 31, 2017
Deferred Costs, Capitalized, Prepaid, and Other Assets Disclosure [Abstract]
Insurance premiums	$ 582	$ 425
Rents, licenses and other	615	839
Total	$ 1,197	$ 1,264

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Property and Equipment (Details) - USD ($) $ in Thousands	3 Months Ended		6 Months Ended
	Jun. 30, 2018	Jun. 30, 2017	Jun. 30, 2018	Jun. 30, 2017	Dec. 31, 2017
Property, Plant and Equipment [Line Items]
Property and equipment, gross	$ 123,782		$ 123,782		$ 126,276
Less accumulated depreciation, depletion and amortization	(96,478)		(96,478)		(96,914)
Property and equipment, net	27,304		27,304		29,362
Total depreciation, depletion and amortization	2,262	$ 3,563	$ 4,674	$ 7,532
Minimum
Property, Plant and Equipment [Line Items]
Property and equipment, useful life			2 years
Maximum
Property, Plant and Equipment [Line Items]
Property and equipment, useful life			39 years
Tractors and trailers
Property, Plant and Equipment [Line Items]
Property and equipment, gross	83,686		$ 83,686		88,065
Tractors and trailers | Minimum
Property, Plant and Equipment [Line Items]
Property and equipment, useful life			5 years
Tractors and trailers | Maximum
Property, Plant and Equipment [Line Items]
Property and equipment, useful life			6 years
Field equipment
Property, Plant and Equipment [Line Items]
Property and equipment, gross	19,811		$ 19,811		18,490
Field equipment | Minimum
Property, Plant and Equipment [Line Items]
Property and equipment, useful life			2 years
Field equipment | Maximum
Property, Plant and Equipment [Line Items]
Property and equipment, useful life			5 years
Buildings
Property, Plant and Equipment [Line Items]
Property and equipment, gross	15,727		$ 15,727		15,727
Buildings | Minimum
Property, Plant and Equipment [Line Items]
Property and equipment, useful life			5 years
Buildings | Maximum
Property, Plant and Equipment [Line Items]
Property and equipment, useful life			39 years
Office equipment
Property, Plant and Equipment [Line Items]
Property and equipment, gross	1,808		$ 1,808		1,929
Office equipment | Minimum
Property, Plant and Equipment [Line Items]
Property and equipment, useful life			2 years
Office equipment | Maximum
Property, Plant and Equipment [Line Items]
Property and equipment, useful life			5 years
Land
Property, Plant and Equipment [Line Items]
Property and equipment, gross	1,790		$ 1,790		1,790
Construction in progress
Property, Plant and Equipment [Line Items]
Property and equipment, gross	960		960		275
Assets not held under capital leases
Property, Plant and Equipment [Line Items]
Total depreciation, depletion and amortization	2,171	3,563	4,493	7,532
Assets held under capital leases
Property, Plant and Equipment [Line Items]
Property and equipment, gross	1,800		1,800		1,800
Less accumulated depreciation, depletion and amortization	(300)		(300)		$ (100)
Total depreciation, depletion and amortization	$ 91	$ 0	$ 181	$ 0

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Cash Deposits and Other Assets (Details) - USD ($) $ in Thousands	Jun. 30, 2018	Dec. 31, 2017
Deferred Costs, Capitalized, Prepaid, and Other Assets Disclosure [Abstract]
Insurance collateral deposits	$ 3,517	$ 3,767
Excess loss fund	2,093	2,284
Accumulated interest income	642	814
State collateral deposits	57	57
Materials and supplies	273	273
Other	36	37
Total	$ 6,618	$ 7,232

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Segment Reporting - Information Concerning Business Activities (Details) $ in Thousands	3 Months Ended		6 Months Ended
	Jun. 30, 2018 USD ($)	Jun. 30, 2017 USD ($)	Jun. 30, 2018 USD ($) segment	Jun. 30, 2017 USD ($)
Segment Reporting [Abstract]
Number of reportable segments | segment			3
Segment Reporting Information [Line Items]
Revenues	$ 452,417	$ 315,202	$ 839,673	$ 618,289
Segment operating (losses) earnings	4,298	619	5,375	(965)
Depreciation, depletion and amortization	2,262	3,563	4,674	7,532
Leasehold Improvements
Segment Reporting Information [Line Items]
Property and equipment additions			13
Marketing
Segment Reporting Information [Line Items]
Revenues	438,791		812,429
Inventory liquidation gains and valuation (losses)	1,900	(1,400)	2,500	(2,100)
Transportation
Segment Reporting Information [Line Items]
Revenues	13,626		27,244
Reporting Segments
Segment Reporting Information [Line Items]
Revenues	452,417	315,202	839,673	618,289
Segment operating (losses) earnings	6,582	2,079	9,942	3,132
Depreciation, depletion and amortization	2,262	3,563	4,674	7,532
Property and equipment additions	1,849	1,102	2,715	2,108
Reporting Segments | Marketing
Segment Reporting Information [Line Items]
Revenues	438,791	301,176	812,429	589,791
Segment operating (losses) earnings	5,772	1,691	8,730	3,084
Depreciation, depletion and amortization	1,336	1,977	2,833	4,046
Property and equipment additions	277	191	1,070	273
Reporting Segments | Transportation
Segment Reporting Information [Line Items]
Revenues	13,626	13,616	27,244	27,071
Segment operating (losses) earnings	810	293	1,212	(5)
Depreciation, depletion and amortization	926	1,472	1,841	3,063
Property and equipment additions	1,572	(92)	1,645	10
Reporting Segments | Oil and Gas
Segment Reporting Information [Line Items]
Revenues	0	410	0	1,427
Segment operating (losses) earnings	0	95	0	53
Depreciation, depletion and amortization	0	114	0	423
Property and equipment additions	$ 0	$ 1,003	$ 0	$ 1,825

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Segment Reporting - Reconciliation of Segment Earnings to Earnings Before Income Taxes (Details) - USD ($) $ in Thousands	3 Months Ended		6 Months Ended
	Jun. 30, 2018	Jun. 30, 2017	Jun. 30, 2018	Jun. 30, 2017
Reconciliation of Operating Profit (Loss) from Segments to Consolidated [Abstract]
Operating earnings (losses)	$ 4,298	$ 619	$ 5,375	$ (965)
Loss on deconsolidation of subsidiary	0	(1,635)	0	(1,635)
Interest income	498	260	885	419
Interest expense	(15)	(1)	(34)	(2)
(Losses) earnings before income taxes	4,781	(757)	6,226	(2,183)
Reporting Segments
Reconciliation of Operating Profit (Loss) from Segments to Consolidated [Abstract]
Operating earnings (losses)	6,582	2,079	9,942	3,132
General and administrative
Reconciliation of Operating Profit (Loss) from Segments to Consolidated [Abstract]
Operating earnings (losses)	(2,284)	(1,460)	(4,567)	(4,097)
Segment reconciling items
Reconciliation of Operating Profit (Loss) from Segments to Consolidated [Abstract]
Loss on deconsolidation of subsidiary	0	(1,635)	0	(1,635)
Interest income	498	260	885	419
Interest expense	$ (15)	$ (1)	$ (34)	$ (2)

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Segment Reporting - Identifiable Assets by Industry Segment (Details) - USD ($) $ in Thousands	Jun. 30, 2018	Dec. 31, 2017
Segment Reconciliation [Abstract]
Total assets	$ 303,127	$ 282,704
Reporting Segments
Segment Reconciliation [Abstract]
Total assets	303,127	282,704
Reporting Segments | Marketing
Segment Reconciliation [Abstract]
Total assets	139,687	134,745
Reporting Segments | Transportation
Segment Reconciliation [Abstract]
Total assets	28,803	29,069
Reporting Segments | Oil and Gas
Segment Reconciliation [Abstract]
Total assets	425	425
Cash and other assets
Segment Reconciliation [Abstract]
Total assets	$ 134,212	$ 118,465

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Transactions with Affiliates (Details) - USD ($) $ in Thousands	3 Months Ended		6 Months Ended
	Jun. 30, 2018	Jun. 30, 2017	Jun. 30, 2018	Jun. 30, 2017
Affiliated entities
Transactions with Affiliates [Abstract]
Affiliate billings to us	$ 25	$ 24	$ 40	$ 36
Billings to affiliates	1	1	3	2
Rentals paid to affiliates	122	158	244	325
Fees paid to Bencap	$ 0	$ 0	$ 0	$ 108
Bencap LLC
Related Party Transaction [Line Items]
Percentage of equity method investment	0.00%		0.00%

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Derivative Instruments and Fair Value Measurements - Narrative (Details) - Commodity Contract	6 Months Ended	12 Months Ended
	Jun. 30, 2018 barrelOfOilPerDay contract	Dec. 31, 2017 barrelOfOilPerDay contract
Derivative Instruments, Gain (Loss) [Line Items]
Number of contracts held | contract	16	20
Reported Value Measurement
Derivative Instruments, Gain (Loss) [Line Items]
Number of contracts held | contract	4	4
July 2018
Derivative Instruments, Gain (Loss) [Line Items]
Production	646	646
August through September 2018
Derivative Instruments, Gain (Loss) [Line Items]
Production	322	322
October through December 2018
Derivative Instruments, Gain (Loss) [Line Items]
Production	258	258
January 2019 through April 2019
Derivative Instruments, Gain (Loss) [Line Items]
Production	322
May 2019
Derivative Instruments, Gain (Loss) [Line Items]
Production	258
January 2018
Derivative Instruments, Gain (Loss) [Line Items]
Production		452
February through May 2018
Derivative Instruments, Gain (Loss) [Line Items]
Production		322
June 2018
Derivative Instruments, Gain (Loss) [Line Items]
Production		258

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Derivative Instruments and Fair Value Measurements - Use of Derivative Instruments (Details) - Commodity Contract - Not Designated as Hedging Instrument - USD ($) $ in Thousands	3 Months Ended		6 Months Ended
	Jun. 30, 2018	Jun. 30, 2017	Jun. 30, 2018	Jun. 30, 2017	Dec. 31, 2017
Revenues – marketing
Derivatives, Fair Value [Line Items]
Gain (loss) on derivative	$ 1	$ 280	$ 2	$ 700
Current Assets
Derivatives, Fair Value [Line Items]
Asset derivatives	538		538		$ 166
Liability derivatives	0		0		0
Less counterparty offsets	0		0		0
As reported fair value contracts	538		538		166
Other Assets
Derivatives, Fair Value [Line Items]
Asset derivatives	0		0		0
Liability derivatives	0		0		0
Less counterparty offsets	0		0		0
As reported fair value contracts	0		0		0
Current Liabilities
Derivatives, Fair Value [Line Items]
Asset derivatives	0		0		0
Liability derivatives	514		514		145
Less counterparty offsets	0		0		0
As reported fair value contracts	514		514		145
Other Liabilities
Derivatives, Fair Value [Line Items]
Asset derivatives	0		0		0
Liability derivatives	0		0		0
Less counterparty offsets	0		0		0
As reported fair value contracts	$ 0		$ 0		$ 0

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Derivative Instruments and Fair Value Measurements - Fair Value Measurements (Details) - Fair Value, Measurements, Recurring - USD ($) $ in Thousands	Jun. 30, 2018	Dec. 31, 2017
Derivatives:
Current assets	$ 538	$ 166
Current assets, counterparty offsets	0	0
Current liabilities	(514)	(145)
Current liabilities, counterparty offsets	0	0
Net value	24	21
Net value, counterparty offsets	0	0
Quoted Prices in Active Markets for Identical Assets and Liabilities (Level 1)
Derivatives:
Current assets	0	0
Current liabilities	0	0
Net value	0	0
Significant Unobservable Inputs (Level 2)
Derivatives:
Current assets	538	166
Current liabilities	(514)	(145)
Net value	24	21
Significant Unobservable Inputs (Level 3)
Derivatives:
Current assets	0	0
Current liabilities	0	0
Net value	$ 0	$ 0

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Share-Based Compensation Plan (Details) - The 2018 LTIP - USD ($)	3 Months Ended	6 Months Ended
	Jun. 30, 2018	Jun. 30, 2018	May 31, 2018
Share-based Compensation Arrangement by Share-based Payment Award [Line Items]
Number of shares authorized (in shares)			150,000
Number of shares available for grant (in shares)	120,403	120,403
Accrued dividends	$ 0	$ 0
Restricted stock units awards
Share-based Compensation Arrangement by Share-based Payment Award [Line Items]
Award vesting rights, percentage		33.00%
Number of Shares
Unit awards at January 1, 2018 (in shares)		0
Granted (in shares)		13,733
Vested (in shares)		0
Forfeited (in shares)		0
Unit awards at June 30, 2018 (in shares)	13,733	13,733
Weighted Average Grant Date Fair Value per Share
Unit awards at January 1, 2018 (in dollars per share)		$ 0
Granted (in dollars per share)		43.00
Vested (in dollars per share)		0
Forfeited (in dollars per share)		0
Unit awards at June 30, 2018 (in dollars per share)	$ 0	$ 0
Aggregate grant date fair value awards issues		$ 600,000
Unrecognized compensation cost	$ 600,000	$ 600,000
Period for recognition for remaining compensation cost		1 year 8 months 12 days
Performance share unit awards
Number of Shares
Unit awards at January 1, 2018 (in shares)		0
Granted (in shares)		7,932
Vested (in shares)		0
Forfeited (in shares)		0
Unit awards at June 30, 2018 (in shares)	7,932	7,932
Weighted Average Grant Date Fair Value per Share
Unit awards at January 1, 2018 (in dollars per share)		$ 0
Granted (in dollars per share)	$ 43.00	43.00
Vested (in dollars per share)		0
Forfeited (in dollars per share)		0
Unit awards at June 30, 2018 (in dollars per share)	$ 0	$ 0
Aggregate grant date fair value awards issues		$ 400,000
Performance factor		100.00%
Unrecognized compensation cost	$ 400,000	$ 400,000
Period for recognition for remaining compensation cost		2 years 10 months 24 days
Award vesting period		3 years

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Supplemental Cash Flow Information (Details) - USD ($) $ in Thousands	6 Months Ended
	Jun. 30, 2018	Jun. 30, 2017
Supplemental Cash Flow Elements [Abstract]
Cash paid for interest	$ 34	$ 2
Cash paid for federal and state income taxes	210	225
Non-cash transactions:
Change in accounts payable related to property and equipment additions	$ (44)	$ 455

XML

Commitments and Contingencies - Capital Lease Obligations (Details) - USD ($) $ in Thousands	Jun. 30, 2018	Dec. 31, 2017
Commitments and Contingencies Disclosure [Abstract]
Remainder of 2018	$ 199
2019	398
2020	398
2021	398
2022	255
Thereafter	0
Total minimum lease payments	1,648
Less: Amount representing interest	(126)
Present value of capital lease obligations	1,522
Less current portion of capital lease obligations	(345)	$ (338)
Total long-term capital lease obligations	$ 1,177	$ 1,351

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Commitments and Contingencies - Operating Lease Obligations (Details)	6 Months Ended
	Jun. 30, 2018
Minimum
Loss Contingencies [Line Items]
Operating lease term	1 year
Maximum
Loss Contingencies [Line Items]
Operating lease term	8 years

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Commitments and Contingencies - Rental Expense (Details) - USD ($) $ in Thousands	3 Months Ended		6 Months Ended
	Jun. 30, 2018	Jun. 30, 2017	Jun. 30, 2018	Jun. 30, 2017
Commitments and Contingencies Disclosure [Abstract]
Rental expense	$ 2,835	$ 3,230	$ 5,422	$ 6,458

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Commitments and Contingencies - Rental Obligations (Details) $ in Thousands	Jun. 30, 2018 USD ($)
Commitments and Contingencies Disclosure [Abstract]
Remainder of 2018	$ 2,986
2019	3,336
2020	1,641
2021	1,531
2022	1,499
Thereafter	2,966
Total operating lease payments	$ 13,959

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Commitments and Contingencies - Pre-funded Insurance (Details) - USD ($) $ in Thousands	Jun. 30, 2018	Dec. 31, 2017
Commitments and Contingencies Disclosure [Abstract]
Pre-funded premiums for losses incurred but not reported	$ 516	$ 988
Accrued automobile and workers’ compensation claims	$ 1,262	$ 450

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Commitments and Contingencies - Schedule of Accrued Medical Claims (Details) - USD ($) $ in Thousands	Jun. 30, 2018	Dec. 31, 2017
Commitments and Contingencies Disclosure [Abstract]
Aggregate medical claims for umbrella insurance coverage per calendar year	$ 6,000
Accrued medical claims	$ 1,439	$ 1,329