Concentration of Credit Risk

12 Months Ended

Dec. 31, 2014

Concentration of Credit Risk [Abstract]

Concentration of Credit Risk

(3)  Concentration of Credit Risk

Credit risk represents the amount of loss the Company would absorb if its customers fail to perform pursuant to contractual terms.  Management of credit risk involves a number of considerations, such as the financial profile of the customer, the value of collateral held, if any, specific terms and duration of the contractual agreement, and the customer’s sensitivity to economic developments.  The Company has established various procedures to manage credit exposure, including initial credit approval, credit limits, and rights of offset.  Letters of credit and guarantees are also utilized to limit credit risk. Accounts receivable associated with crude oil marketing activities comprise approximately 90 percent of the Company’s total receivables and industry practice requires payment for such sales to occur within 20 days of the end of the month following a transaction.  The Company’s customer makeup, credit policies and the relatively short duration of receivables mitigate the uncertainty typically associated with receivables management.

The Company’s largest customers consist of large multinational integrated oil companies and independent domestic refiners of crude oil.  In addition, the Company transacts business with independent oil producers, major chemical concerns, crude oil trading companies and a variety of commercial energy users.  Within this group of customers, the Company generally derives approximately 50 percent of its revenues from three to five large crude oil refining concerns.  While the Company has ongoing established relationships with certain domestic refiners of crude oil, alternative markets are readily available since the Company supplies less than one percent of U.S. domestic refiner demand.  As a fungible commodity delivered to major Gulf Coast supply points, the Company’s crude oil sales can be readily delivered to alternative end markets.  Management believes that a loss of any of those customers where the Company currently derives more than 10 percent of its revenues would not have a material adverse effect on the Company’s operations.

During 2014, the Company had revenues from two customers that comprised 20.3 percent and 14.0 percent, respectively, of total revenues.  The Company had revenues from four customers in 2013 that comprised 18.5 percent, 17.7 percent, 15.8 percent and 10.4 percent of total revenues, respectively.  During 2012, three customers comprised 20.2 percent, 17.9 percent and 16.8 percent of total revenues.

As of December 31, 2014 the Company had accounts receivable from three customers that comprised 16.6 percent, 16.6 percent and 10.4 percent, respectively, of total accounts receivable.  As of December 31, 2013 the Company had accounts receivable from three customers that comprised 16.0 percent, 15.8 percent and 12.7 percent, respectively of total accounts receivables.  As of December 31, 2012 three customers comprised 22.1 percent, 21.4 percent and 11.4 percent, respectively, of total accounts receivable.

An allowance for doubtful accounts is provided where appropriate and accounts receivable presented herein are net of allowances for doubtful accounts of $179,000 and $252,000 at December 31, 2014 and 2013, respectively.

An analysis of the changes in the allowance for doubtful accounts is presented as follows (in thousands):

	2014			2013			2012
Balance, beginning of year	$	252		$	206		$	357
Provisions for bad debts		50			147			-
Less:  Write-offs and recoveries		(123	)		(101	)		(151	)
Balance, end of year	$	179		$	252		$	206