Note 10 - AROs

6 Months Ended

Jun. 30, 2025

Notes to Financial Statements

Asset Retirement Obligation Disclosure [Text Block]

(10) AROs

Refinery and Facilities. Management has concluded that there is no legal or contractual obligation to dismantle or remove our refinery and facilities assets. Management believes that our refinery and facilities assets have indeterminate lives under FASB ASC guidance for estimating AROs because dates or ranges of dates upon which we would retire these assets cannot reasonably be estimated at this time. When a legal or contractual obligation to dismantle or remove refinery and facilities assets arises and a date or range of dates can reasonably be estimated for the retirement of these assets, we will estimate the cost of performing the retirement activities and record a liability for the fair value of that cost using present value techniques.

Pipelines and Facilities and Oil and Gas Properties. We have AROs associated with decommissioning our pipelines and facilities assets, as well as for plugging and abandoning our oil and gas properties. We recorded a liability for the fair value of an ARO at the time the asset was installed or placed in service. From time to time we adjust the liability due to changes in estimates or the timing of decommissioning the assets. ARO liability as of the dates indicated was as follows:

	June 30,		December 31
	2025		2024
	(in thousands)
AROs, at the beginning of the period	$	2,999	$	4,504
Liabilities settled		-		(1,505	)
		2,999		2,999
Less: AROs, current portion		2,999		2,999
Long-term AROs, at the end of the period	$	-	$	-

BDPL maintained $3.0 million in AROs related to decommissioning pipeline and facilities assets at both  June 30, 2025 and December 31, 2024, respectively. During the six months ended June 30, 2024, we settled ARO liabilities totaling $1.5 million related to our pipeline and facilities assets. We also incurred approximately $0.9 million in additional decommissioning related expenses during six months ended June 30, 2024 due to the impact of poor weather conditions. 

BSEE mandated that BDPL's pipelines and facilities assets offshore in federal waters be decommissioned due to their extended period of inactivity.  Beginning in April 2025, management began meeting with BSEE on a monthly basis to review BDPL's progress toward meeting its offshore decommissioning obligations.  In June 2025, BDPL engaged Chapman Consulting, Inc. ("Chapman") to oversee the decommissioning project, and as of the filing date of this report, Chapman was soliciting contractor bids.  

On March 17, 2025, BSEE issued BDPL an INC for failing to decommission Pipeline Segment No. 8437.  On April 9, 2025, BSEE issued BDPL an INC for failing to conduct monthly platform pollution inspections; BDPL corrected this INC on April 22, 2025, which was reviewed and approved by BSEE on June 3, 2025. BDPL's delay in decommissioning its offshore assets does not relieve BDPL of its obligations to comply with BSEE's mandate or of BSEE's authority to impose civil penalties. Further, there can be no assurance that BDPL will be able to complete the anticipated work or predict the outcome of BSEE INCs. If BDPL is unable to perform its decommissioning obligations, BOEM may exercise its rights under supplemental pipeline surety bonds or exercise any other rights and remedies it has available.

BSEE Civil Penalties. BDPL has the following open civil penalty referrals from BSEE: 

● Civil Penalty G-2024-054. In  August 2024, BDPL received a civil penalty referral letter from BSEE for failing to remove its GA-288C junction platform offshore in federal waters. The civil penalty referral is associated with BSEE INC No. G-114 issued in  October 2023. In  March 2025, BSEE calculated a proposed civil penalty of $1.0 million against BDPL, and BSEE reserved its rights to assess additional civil penalties in the amount of $3,097 per day per violation until the referenced INC is fully remediated. In April 2025, BDPL exercised its right to request a meeting with the penalty reviewing officer to submit additional information for consideration. BSEE held the meeting on June 11, 2025. On July 21, 2025, BSEE sent BDPL a final decision letter that assigned a civil penalty of $1.3 million against BDPL.  The revised amount includes assessment of additional civil penalties in the amount of $3.097 per day from March 25, 2025 to July 21, 2025, for which the company had already booked an accrual through June 30, 2025.

● Civil Penalty G-2024-056. In  August 2024, BDPL received a civil penalty referral letter from BSEE for failing to flush, fill, and abandon its lateral pipeline from GA-245 to the GA-273 subsea tie-in (Pipeline Segment No. 15635) offshore in federal waters. The civil penalty referral is associated with BSEE INC No. G-802 issued in  November 2023. In  January 2025, BSEE calculated a proposed civil penalty of $0.4 million against BDPL, and BSEE reserved its right to assess additional civil penalties in the amount of $3,097 per day per violation until the referenced INC is fully remediated.  In  March 2025, BDPL exercised its right to request a meeting with the penalty reviewing officer to submit additional information for consideration. BSEE held the meeting, which reviewing officers combined with Civil Penalty G-2024-054 above, on June 11, 2025. On July 21, 2025, BSEE sent BDPL a final decision letter that assigned a civil penalty of $0.9 million against BDPL. The revised amount includes assessment of additional civil penalties in the amount of $3.097 per day from January 29, 2025 to July 21, 2025, for which the company had already booked an accrual through June 30, 2025.

BDPL remains subject to additional civil penalties until the violation(s) have been corrected.  Within 60 days of BDPL's receipt of BSEE's final decision, BDPL must pay the civil penalty, request an informal resolution with the reviewing officer's next-level supervisor, or appeal BSEE's decision to the IBLA.  BDPL intends to request a follow up meeting with the reviewing officer's next-level supervisor. At  June 30, 2025, we accrued $2.1 million on our balance sheet within accrued expenses and other current liabilities related to BSEE civil penalties. We will record a liability of approximately $0.3 million per quarter for each of Civil Penalties G-2024-054 and G-2024-056 for potential future civil penalties.

The following BDPL civil penalty referral was closed:

● Civil Penalty G-2024-010. In  April 2024, BDPL received a civil penalty referral letter from BSEE for failing to remediate certain BSEE INCs issued in  September 2023 associated with its GA-288C junction platform offshore in federal waters. Specifically, remediation is associated with BSEE INC Nos. E120 (physically boarding platform monthly, performing visual inspections for environmental pollution, and maintaining monthly inspection records), G112 (removing 55-gallon drum leaking oil on platform deck), L141 (flushing and filling Pipeline Segment No. 13101 with inhibited seawater), and L142 (decommissioning in place Pipeline Segment No. 13101). In  March 2025, BSEE calculated a proposed civil penalty of $1.1 million against BDPL. In April 2025, BDPL exercised its right to request a meeting with the penalty reviewing officer to submit additional information for consideration. BSEE held the meeting, which reviewing officers combined with Civil Penalties G-2024-054 and G-2024-056 above, on June 11, 2025. On July 16, 2025, BSEE sent BDPL a Notice of Civil Penalty Case Dismissal that indicated that no penalty would be assessed against BDPL based on the underlying INCs.  At  June 30, 2025, we reversed the $1.1 million previous accrual for penalties associated with this matter in General and administrative expenses.

See "Note ( 14)" for additional disclosures related to AROs and BSEE civil penalties.