Note 3 - Related-Party Transactions

9 Months Ended

Sep. 30, 2025

Notes to Financial Statements

Related Party Transactions Disclosure [Text Block]

(3) Related-Party Transactions

Affiliate Agreements. 

Financial and Operating Agreements. Blue Dolphin and certain of its subsidiaries are currently parties to the following financial and operating agreements with Affiliates:

Agreement / Transaction	Parties	Effective Date	Key Terms
Fourth Amended and Restated Operating Agreement	Blue Dolphin and subsidiaries LEH	04/01/2025	For LEH operation and management of all Blue Dolphin's assets; 1-year term; expires 04/01/2026 or notice by either party at any time of material breach or 90 days Board notice; LEH receives a management fee of 5% of all consolidated operating costs of Blue Dolphin and its subsidiaries, excluding crude costs, depreciation, amortization and interest; LEH-provided services include personnel serving in a variety of capacities across all Blue Dolphin entities, including, but not limited to corporate executives such as the principal executive officer and principal financial and accounting officer; as a result, Blue Dolphin and its subsidiaries have no employees for reporting purposes; all personnel are employed and  paid by LEH.
Amended and Restated Jet Fuel Sales Agreement	LE LEH	04/01/2023	Jet fuel sales by LE to LEH; 1-year automatic renewals; LEH lifts the jet fuel from LE as needed and sells it to the DLA under preferential pricing terms due to LEH's HUBZone certification.
NPS Terminal Services Agreement	NPS LEH	11/01/2022	LEH pays NPS a tank rental fee of $ 0.2 million per month to store jet fuel at the Nixon facility; 1-year evergreen term; either party may cancel upon 60 days' prior written notice.
Second Amended and Restated Master Services Agreement	LE Ingleside	03/01/2025	For storage of LE products intended for customer receipt by barge; LE pays Ingleside a tank rental fee of $ 0.1 million per month; the agreement expires 03/01/2026.
LE Amended and Restated Guaranty Fee Agreement	LE Jonathan Carroll	01/01/2023	Relates to payoff of LE $ 25.0 million Veritex loan; as consideration for providing his personal guarantee, Jonathan Carroll receives a cash fee equal to 2.00% per annum of outstanding principal balance owed under the LE Term Loan Due 2034.
NPS Guaranty Fee Agreement	NPS Jonathan Carroll	01/01/2023	Relates to payoff of NPS $ 10.0 million GNCU loan; as consideration for providing his personal guarantee, Jonathan Carroll receives a cash fee equal to 2.00% per annum of outstanding principal balance owed under the NPS Term Loan Due 2031.
LRM Amended and Restated Guaranty Fee Agreement	LRM Jonathan Carroll	01/01/2023	Relates to payoff of LRM $ 10.0 million Veritex loan; as consideration for providing his personal guarantee, Jonathan Carroll receives a cash fee equal to 2.00% per annum of outstanding principal owed under the LRM Term Loan Due 2034.
Blue Dolphin Guaranty Fee Agreement	Blue Dolphin Jonathan Carroll	01/01/2023	Relates to payoff of Blue Dolphin $ 2.0 million SBA loan; as consideration for providing his personal guarantee, Jonathan Carroll receives a cash fee equal to 2.00% per annum of outstanding principal balance owed under the Blue Dolphin Term Loan Due 2051.
Office Sub-Lease Agreement	LEH BDSC	09/01/2024	LEH office space in Houston, Texas; sub-lease executed 10/30/24; 24-month extension of prior office sub-lease agreement; term expires 08/31/2026; rent is approximately $0.005 million per month.
Ground Lease Agreement	LEH NPS	07/01/2025	LEH pays NPS a ground storage fee of $0.015 million per month to store equipment at the Nixon facility; month-to-month basis to end with a 30 days' notice of cancellation.

Debt Agreements. Blue Dolphin and certain subsidiaries are parties to the following debt agreements with Affiliates:

		Original		Monthly
		Principal		Payment
Loan Description	Parties	(in millions)	Maturity Date	(in millions)	Interest Rate	Loan Purpose
Second Amended and Restated Affiliate Revolving Credit Agreement	Blue Dolphin and Subsidiaries	$15 maximum(1)	April 2026	Set-off against other obligations Borrower owes to Lender	WSJ Prime + 2.00%	Working capital
	LEH and Subsidiaries
Amended and Restated BDPL-LEH Loan Agreement	LEH	$4.0	April 2027	$0.25	12.00%	Working capital
	BDPL

^{(1) Effective June 1, 2025, the maximum borrowing limit under the agreement was increased to $ 15.0 million.}

Covenants, Guarantees and Security. The Amended and Restated BDPL-LEH Loan Agreement contains representations and warranties that we consider usual and customary for a credit facility of this type. There are no financial covenants in the Amended and Restated BDPL-LEH Loan Agreement, but certain other customary business covenants are included.  Certain BDPL property serves as collateral under the Amended and Restated BDPL-LEH Loan Agreement.

Related-Party Financial Impact

Consolidated Balance Sheets.

Accounts receivable and accounts payable, related party.  W e net settle amounts owed between Blue Dolphin and its subsidiaries and Affiliates under financial and operating agreements (as discussed elsewhere within this "Note (3)").  Amounts owed between the parties can vary significantly from period to period even if underlying transactions remain relatively stable based on settlement dates. We reflect any excess amounts owed by Affiliates to Blue Dolphin and its subsidiaries on our consolidated balance sheets within accounts receivable — related party. Except for debt, we reflect any excess amounts owed by Blue Dolphin and its subsidiaries to Affiliates on our consolidated balance sheets within accounts payable, related party. Accounts receivable and accounts payable, related-party as of the dates indicated was as follows:

	September 30,		December 31,
	2025		2024
	(in thousands)
Current assets
Accounts receivable, related party	$	8,056	$	5,247
Current liabilities
Accounts payable, related party		-		-

Accounts receivable, related party at  September 30, 2025 reflected amounts owed by LEH to LE under the Amended and Restated Jet Fuel Sales Agreement.  

Related-Party Debt. We reflect the amounts owed by Blue Dolphin and its subsidiaries to Affiliates under debt agreements on our consolidated balance sheets within line of credit, related party, long-term debt, related party and interest payable, related party.  Related-party debt as of the dates indicated was as follows:

	September 30,			December 31
	2025			2024
	(in thousands)
LEH
Amended and Restated BDPL-LEH Loan Agreement	$	4,000		$	4,000
Line of credit, related party		11,925			3,250
LEH Total		15,925			7,250
Less: Long-term debt, related party, current portion		(2,555	)		(1,459	)
Less: Line of credit, related party		(11,925	)		(3,250	)
Long-term debt, related party, net of current portion	$	1,445		$	2,541

Related-party accrued interest associated with long-term debt and line of credit, related party, as of the dates indicated was as follows:

	September 30,			December 31
	2025			2024
	(in thousands)
LEH
Amended and Restated BDPL-LEH Loan Agreement	$	96		$	1,308
Line of credit, related party		-			-
LEH Total		96			1,308
Jonathan Carroll
Guaranty fee agreements		185			129
		281			1,437
Less: Long-term debt, related party, current portion		(281	)		(1,437	)
Long-term interest payable, related party, net of current portion	$	-		$	-

Consolidated Statements of Income.

Total revenue from operations. Revenue from Affiliates under the Amended and Restated Jet Fuel Sales Agreement and the NPS Terminal Services Agreement as of the dates indicated was as follows:

	Three Months Ended September 30,								Nine Months Ended September 30,
	2025				2024				2025				2024
	(in thousands, except percent amounts)								(in thousands, except percent amounts)
Refinery operations
LEH	$	28,123	40.0	%	$	21,185	25.8	%	$	77,192	36.6	%	$	84,591	34.8	%
Third-Parties		41,467	58.9	%		60,095	73.2	%		131,061	62.2	%		155,152	63.9	%
Tolling and terminaling
LEH		585	0.8	%		540	0.7	%		1,665	0.8	%		1,620	0.7	%
Third-Parties		180	0.3	%		289	0.4	%		712	0.3	%		1,427	0.6	%
	$	70,355	100.0	%	$	82,109	100.0	%	$	210,630	100.0	%	$	242,790	100.0	%

Interest expense. Interest expense associated with guaranty fee agreements and a debt agreement with Affiliates as of the dates indicated was as follows:

	Three Months Ended September 30,				Nine Months Ended September 30,
	2025		2024		2025		2024
	(in thousands)				(in thousands)
Jonathan Carroll
Guaranty Fee Agreements
Tied to First Term Loan Due 2034	$	90	$	96	$	275	$	291
Tied to NPS Term Loan Due 2031		45		66		138		166
Tied to Second Term Loan Due 2034		38		40		115		121
Tied to Blue Dolphin Term Loan Due 2051		10		10		30		30
LEH
Amended and Restated BDPL-LEH Loan Agreement		135		106		394		318
	$	318	$	318	$	952	$	926

Other. BDSC received sub-lease income from LEH totaling $0.02 million and $0.01 million for the three months ended September 30, 2025 and 2024, and $0.05 million and $0.02 million for the  nine months ended September 30, 2025 and 2024. NPS received ground lease income from LEH totaling $0.045 million and $0.0 million for the three and nine months ended September 30, 2025 and 2024.

The LEH operating fee, related party under the Fourth Amended and Restated Operating Agreement totaled $0.3 million and  $0.2 million for the  three months ended September 30, 2025 and 2024, respectively, and  $0.7  million and  $0.6 million for the  nine months ended September 30, 2025 and 2024, respectively.

Lease expense associated with the Second Amended and Restated Master Services Agreement (as discussed elsewhere within this "Note ( 3)" and in "Note ( 12)" to our consolidated financial statements) totaled $0.3 million for both the  three months ended September 30, 2025 and 2024, and $0.9 million for both the  nine months ended September 30, 2025 and 2024.