Table of Contents

UNITED STATES<br> <br>SECURITIES AND EXCHANGE COMMISSION<br> <br>Washington, D.C. 20549

FORM 10-K

(Mark One)

☑	ANNUAL REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934

For the fiscal year ended December 31, 2024

☐	TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934

For the transition period from to

Commission File No. 0-15905

BLUE DOLPHIN ENERGY COMPANY
(Exact name of registrant as specified in its charter)
Delaware	73-1268729
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(State or other jurisdiction of incorporation or organization)	(I.R.S. Employer Identification No.)
801 Travis Street, Suite 2100, Houston, Texas	77002
(Address of principal executive offices)	(Zip Code)
713-568-4725
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(Registrant’s telephone number, including area code)

Securities registered pursuant to Section 12(b) of the Act: None

Securities registered pursuant to Section 12(g) of the Act:

Common Stock, par value $0.01 per share
(Title of class)

Indicate by check mark if the registrant is a well-known seasoned issuer, as defined in Rule 405 of the Securities Act. Yes ☐ No ☑

Indicate by check mark if the registrant is not required to file reports pursuant to Section 13 or Section 15(d) of the Act. Yes ☐ No ☑

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 ☑ No ☐

Indicate by check mark whether the registrant has submitted electronically every Interactive Data File required to be submitted pursuant to Rule 405 of Regulation S-T (§232.405 of this chapter) during the preceding 12 months (or for such shorter period that the registrant was required to submit such files). Yes ☑ 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 emerging growth company. See the definition of “large accelerated filer,” “accelerated filer,” “smaller reporting company,” and “emerging growth company” in Rule 12b-2 of the Act.

Large accelerated filer	☐	Accelerated filer	☐
Non-accelerated filer	☑	Smaller reporting company	☑
		Emerging growth company	☐

If an emerging growth company, indicate by check mark if the registrant has elected not to use the extended transition period for complying with any new or revised financial accounting standards provided pursuant to Section 13(a) of the Exchange Act. ☐

Indicate by check mark whether the registrant has filed a report on and attestation to its management’s assessment of the effectiveness of its internal control over financial reporting under Section 404(b) of the Sarbanes-Oxley Act (15 U.S.C.7262(b)) by the registered public accounting firm that prepared or issued its audit report. ☐

If securities are registered pursuant to Section 12(b) of the Act, indicate by check mark whether the financial statements of the registrant included in the filing reflect the correction of an error to previously issued financial statements. ☐

Indicate by check mark whether any of those error corrections are restatements that required a recovery analysis of incentive-based compensation received by any of the registrant’s executive officers during the relevant recovery period pursuant to §240.10D-1(b). ☐

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

The aggregate market value of shares of common stock held by non-affiliates of the registrant was $7,681,421 as of June 28, 2024, (the last trading day of the registrant’s most recently completed second fiscal quarter) based on the number of shares of common stock held by non-affiliates and the last reported sale price of the registrant's common stock on June 28, 2024.

Number of shares of common stock, par value $0.01 per share, outstanding at April 1, 2025: 14,921,968

Table of Contents

Table of Contents

PART I		7
ITEM 1.	BUSINESS	7
ITEM 1A.	RISK FACTORS	11
ITEM 1B.	UNRESOLVED STAFF COMMENTS	23
ITEM 1C.	CYBERSECURITY	23
ITEM 2.	PROPERTIES	23
ITEM 3.	LEGAL PROCEEDINGS	24
ITEM 4.	MINE SAFETY DISCLOSURE	25
PART II		26
ITEM 5.	MARKET FOR REGISTRANT’S COMMON EQUITY, RELATED STOCKHOLDER MATTERS AND ISSUER PURCHASES OF EQUITY SECURITIES	26
ITEM 6.	SELECTED FINANCIAL DATA	26
ITEM 7.	MANAGEMENT’S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS	26
ITEM 7A.	QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET RISK	36
ITEM 8.	FINANCIAL STATEMENTS AND SUPPLEMENTARY DATA	36
	Report of Independent Registered Public Accounting Firm	36
	Consolidated Balance Sheets	38
	Consolidated Statements of Operations	39
	Consolidated Statements of Stockholders’ Equity (Deficit)	40
	Consolidated Statements of Cash Flows	41
	Notes to Consolidated Financial Statements	42
ITEM 9.	CHANGES IN AND DISAGREEMENTS WITH ACCOUNTANTS ON ACCOUNTING AND FINANCIAL DISCLOSURE	60
ITEM 9A.	CONTROLS AND PROCEDURES	60
ITEM 9B.	OTHER INFORMATION	60
ITEM 9C.	DISCLOSURE REGARDING FOREIGN JURISDICTIONS THAT PREVENT INSPECTIONS	60
PART III		61
ITEM 10.	DIRECTORS, EXECUTIVE OFFICERS, AND CORPORATE GOVERNANCE	61
ITEM 11.	EXECUTIVE COMPENSATION	62
ITEM 12.	SECURITY OWNERSHIP OF CERTAIN BENEFICIAL OWNERS AND MANAGEMENT AND RELATED STOCKHOLDER MATTERS	63
ITEM 13.	CERTAIN RELATIONSHIPS AND RELATED TRANSACTIONS, AND DIRECTOR INDEPENDENCE	64
ITEM 14.	PRINCIPAL ACCOUNTING FEES AND SERVICES	65
PART IV		66
ITEM 15.	EXHIBITS, FINANCIAL STATEMENT SCHEDULES	66
ITEM 16.	FORM 10-K SUMMARY	69
SIGNATURES		70

Blue Dolphin Energy Company

December 31, 2024 | Page 2

Glossary of Terms

Throughout this Annual Report on Form 10-K, we have used the following terms:

Affiliate. Refers, either individually or collectively, to certain related parties including Jonathan Carroll, Chairman and Chief Executive Officer of Blue Dolphin, and his affiliates (including Ingleside and Lazarus Capital) and LEH and its affiliates (including LMT and LTRI). Together, Jonathan Carroll and LEH owned 83% of the Common Stock as of the filing date of this report. AMT. Alternative Minimum Tax. API Gravity. American Petroleum Institute (API) gravity; measures how heavy or light petroleum liquids are compared to water; standard used in the oil and gas industry to classify crude oil. ARO. Asset retirement obligations. ASU. Accounting Standards Update issued by FASB. AGO. Atmospheric gas oil (also known as atmospheric tower bottoms) is the heaviest product boiled by a crude distillation tower operating at atmospheric pressure. This fraction ordinarily sells as distillate fuel oil, either in pure form or blended with cracked stocks. Certain ethylene plants, called heavy oil crackers, can take AGO as feedstock. bbl(s). Barrel; a unit of volume equal to 42 U.S. gallons. BDEX. Blue Dolphin Exploration Company, a wholly owned subsidiary of Blue Dolphin. BDPC. Blue Dolphin Petroleum Company, a wholly owned subsidiary of Blue Dolphin. BDPL. Blue Dolphin Pipe Line Company, a wholly owned subsidiary of Blue Dolphin. BDSC. Blue Dolphin Services Co., a wholly owned subsidiary of Blue Dolphin. Blue Dolphin. Blue Dolphin Energy Company, one or more of its consolidated subsidiaries, or all of them taken as a whole. bpd. Barrel per day; a measure of the bbls of daily output produced in a refinery or transported through a pipeline. Board. Board of Directors of Blue Dolphin. BOEM. Bureau of Ocean Energy Management; an agency within the U.S. Department of the Interior. BSEE. Bureau of Safety and Environmental Enforcement; an agency within the U.S. Department of the Interior. CAA. Clean Air Act. CERLA. Comprehensive Environmental Response, Compensation, and Liability Act of 1980. CIP. Construction in progress. Common Stock. Blue Dolphin common stock, par value $0.01 per share. Blue Dolphin has 20,000,000 shares of Common Stock authorized and 14,921,968 shares of Common Stock issued and outstanding as of the filing date of this report. Complexity. A numerical score that denotes, for a given refinery, the extent, capability, and capital intensity of the refining processes downstream of the crude distillation tower. Refinery complexities range from the relatively simple crude distillation tower (“topping unit”), which has a complexity of 1.0, to the more complex deep conversion (“coking”) refineries, which have a complexity of 12.0. Condensate. Liquid hydrocarbons that are produced in conjunction with natural gas. Although condensate is sometimes like crude oil, it is usually lighter. Consolidated EBITDA. Income (loss) before interest, taxes, and depreciation and amortization on a consolidated basis. Cost of goods sold. For refinery operations, calculated as crude oil, fuel use, and chemicals plus other conversion costs plus intercompany processing fees plus associated depreciation and amortization. For tolling and terminaling, calculated as tolling and terminaling costs plus associated depreciation and amortization. Crude distillation tower. A tall column-like vessel in which crude oil and condensate is heated and its vaporized components are distilled by means of distillation trays. This process refines crude oil and other inputs into intermediate and finished petroleum products; commonly referred to as a crude distillation unit or an atmospheric distillation unit. Crude oil. A mixture of thousands of chemicals and compounds, primarily hydrocarbons. Crude oil quality is measured in terms of density (light to heavy) and sulfur content (sweet to sour). Light crude oil is thinner, has a high API Gravity, and requires less processing; heavy crude oil is thicker, has a low API Gravity, and requires more processing. Sweet crude contains sulfur content of less than 0.5% while sour crude contains sulfur content of greater than 0.5%. Crude oil must be broken down into its various components (distillates) by distillation before use as fuels or conversion to other products.

CWA. Clean Water Act. Depropanizer unit. A distillation column that isolates propane from a mixture containing butane and other heavy components. Distillates. The result of crude distillation and therefore any refined oil product. Distillate is more commonly used as an abbreviated form of middle distillate. There are mainly four (4) types of distillates: (i) very light oils or light distillates (such as naphtha), (ii) light oils or middle distillates (such as our jet fuel), (iii) medium oils, and (iv) heavy oils (such as our low-sulfur diesel and HOBM, reduced crude, and AGO). Distillation. The first step in the refining process whereby crude oil and condensate are heated at atmospheric pressure in the base of a distillation tower. As the temperature increases, the various compounds vaporize in succession at their various boiling points and then rise to prescribed levels within the tower based on their densities (from lightest to heaviest). They then condense in distillation trays and are drawn off individually for further refining. Distillation is also used at other points in the refining process to remove impurities. DLA. Defense Logistics Agency. Downtime. Scheduled and unscheduled periods in which the crude distillation tower is not operating. Downtime may occur for a variety of reasons, including severe weather, power failures, and preventive maintenance. EIA. Energy Information Administration. EIDL. Economic Injury Disaster Loan; an SBA program that provides economic relief to businesses within a declared disaster area. EPA. Environmental Protection Agency. Eagle Ford Shale. A **** hydrocarbon-producing geological formation extending across South Texas from the Mexican border into East Texas; crude oil is typically characterized as light, sweet crude with a high API Gravity; particularly suitable for refining into gasoline and other light products. Exchange Act. Securities Exchange Act of 1934, as amended. FASB. Financial Accounting Standards Board. FDIC. Federal Deposit Insurance Corporation. Feedstocks. Crude oil and other hydrocarbons, such as condensate and intermediate products, used as basic input materials in a refining process. Feedstocks are transformed into one or more finished products. Finished petroleum products. Materials or products which have received the final increments of value through processing operations, and which are being held in inventory for delivery, sale, or use. Freeport facility. Onshore terminal facility consisting of processing units for: (i) crude oil and natural gas separation and dehydration, (ii) natural gas processing, treating, and redelivery, and (iii) vapor recovery; also includes the onshore portion of a 20-inch, 34 mile gathering pipeline originating at an offshore anchor platform in Galveston Area Block 288, a 16-inch natural gas pipeline connecting the Freeport facility to the Dow Chemical Plant complex, and 162 acres of land; facility is currently inactive. GNCU. Greater Nevada Credit Union. Greenhouse gases (GHGs). Molecules in the Earth’s atmosphere, such as carbon dioxide, methane, and chlorofluorocarbons that warm the atmosphere because they absorb some of the thermal radiation emitted from the Earth’s surface. GHG process emissions from the petroleum refining sector include emissions from venting, flares, and fugitive leaks from equipment (e.g., valves, flanges, pumps); GHG emissions also include combustion emissions from stationary combustion units. Gross profit (deficit). **** Calculated as total revenue less total cost of goods sold; reflected as a dollar ($) amount. HOBM. Heavy oil-based mud blendstock; see also “distillates.” HUBZone. Historically Underutilized Business Zones program established by the SBA to help small businesses in both urban and rural communities. IBLA. Interior Board of Land Appeals; an appellate review body within the U.S. Department of the Interior. INC. Incident of Noncompliance issued by BOEM or BSEE. Ingleside. Ingleside Crude, LLC, an affiliate of Jonathan Carroll. Intercompany processing fees . Fees associated with an intercompany tolling agreement related to naphtha volumes.

Blue Dolphin Energy Company

December 31, 2024 | Page 3

Glossary of Terms (Continued)
Intermediate petroleum products. A petroleum product that might require further processing before being saleable to the ultimate consumer; further processing might be done by the producer or by another processor. Thus, an intermediate petroleum product might be a final product for one company and an input for another company to process it further.<br> <br><br> <br>IRC Section 382. Title 26, Internal Revenue Code, Subtitle A – Income Taxes, Subchapter C – Corporate Distributions and Adjustments, Part V Carryovers, § 382. Limits NOL carryforwards and certain built-in losses following ownership change.<br> <br><br> <br>IRS. Internal Revenue Service.<br> <br><br> <br>Jet fuel. A high-quality kerosene product primarily used in aviation. Kerosene-type jet fuel (including Jet A and Jet A-1) has a carbon number distribution between 8 and 16 carbon atoms per molecule; wide-cut or naphtha-type jet fuel (including Jet B) has between 5 and 15 carbon atoms per molecule.<br> <br><br> <br>Kissick Noteholder. John H. Kissick.<br> <br><br> <br>Lazarus Capital. Lazarus Capital, LLC, an affiliate of Jonathan Carroll.<br> <br><br> <br>LE. Lazarus Energy, LLC, a wholly owned subsidiary of Blue Dolphin.<br> <br><br> <br>LEH. Lazarus Energy Holdings, LLC, an affiliate of Jonathan Carroll and controlling shareholder of Blue Dolphin as of the date of this report.<br> <br><br> <br>Leasehold interest. The percent interest of a lessee under an oil and gas lease.<br> <br><br> <br>LMT. Lazarus Marine Terminal I, LLC, an affiliate of LEH.<br> <br><br> <br>LRM. Lazarus Refining & Marketing, LLC, a wholly owned subsidiary of Blue Dolphin.<br> <br><br> <br>LTRI. Lazarus Texas Refinery I, an affiliate of LEH.<br> <br><br> <br>Mbbls. One thousand bbls.<br> <br><br> <br>Mbbls/d. One thousand barrels of oil per day; a measure of the barrels of daily output produced in a refinery or transported through a pipeline.<br> <br><br> <br>MVP. MV Purchasing, LLC.<br> <br><br> <br>NAAQS. National Ambient Air Quality Standards.<br> <br><br> <br>Naphtha. A refined or partly refined light distillate fraction of crude oil. Blended further or mixed with other materials, it can make high-grade motor gasoline or jet fuel. It is also a generic term for the lightest and most volatile petroleum fractions.<br> <br><br> <br>Natural gas. A naturally occurring hydrocarbon gas mixture consisting primarily of methane but commonly including varying amounts of other higher alkanes and sometimes a small percentage of carbon dioxide, nitrogen, hydrogen sulfide, or helium.<br> <br><br> <br>Nixon facility. Encompasses the Nixon refinery, petroleum storage tanks, loading and unloading facilities, and 56 acres of land in Nixon, Texas.<br> <br><br> <br>Nixon refinery. The 15,000-bpd crude distillation tower and associated processing units in Nixon, Texas.<br> <br><br> <br>NOL. Net operating losses.<br> <br><br> <br>NPS. Nixon Product Storage, LLC, a wholly owned subsidiary of Blue Dolphin.<br> <br><br> <br>NSR/PSD. New Source Review/Prevention of Significant Deterioration.<br> <br><br> <br>OPA 90. Oil Pollution Act of 1990.<br> <br><br> <br>OPEC. Organization of Petroleum Exporting Countries.	Operating days. Represents the number of days in a period in which the crude distillation tower operated; operating days are calculated by subtracting downtime in a period from calendar days in the same period.<br> <br><br> <br>OSHA. Occupational Safety and Health Administration.<br> <br><br> <br>Other conversion costs. Represents the combination of direct labor costs and manufacturing overhead costs. These are the costs that are necessary to convert our raw materials into refined products.<br> <br><br> <br>PADD. Petroleum Administration for Defense Districts; PADD regions enable regional analysis of petroleum product supply and movements by the EIA.<br> <br><br> <br>Petroleum. A naturally occurring flammable liquid consisting of a complex mixture of hydrocarbons of various molecular weights and other liquid organic compounds. The name petroleum covers both the naturally occurring unprocessed crude oils and petroleum products that are made up of refined crude oil.<br> <br><br> <br>PFAS. Per- and polyfluorinated substances. PFAS has been used in oil and gas-related operations, notably in emergency response activities, including in aqueous film forming foam as a vapor and fire suppressant.<br> <br><br> <br>PHMSA. Pipeline and Hazardous Materials Safety Administration of the U.S. Department of Transportation.<br> <br><br> <br>Pilot. Pilot Travel Centers LLC, a Delaware limited liability company.<br> <br><br> <br>Preferred Stock. Blue Dolphin preferred stock, par value $0.10 per share. Blue Dolphin has 2,500,000 shares of Preferred Stock authorized and no shares of Preferred Stock issued and outstanding as of the filing date of this report.<br> <br><br> <br>Production. The volume processed as output from the crude distillation tower. Refinery production includes finished petroleum products, such as jet fuel, and intermediate petroleum products, such as naphtha, HOBM and AGO.<br> <br><br> <br>Product slate. Represents type and quality of products produced.<br> <br><br> <br>Propane. A by-product of natural gas processing and petroleum refining. Propane is one of a group of liquified petroleum gases. Others include butane, propylene, butadiene, butylene, isobutylene, and mixtures thereof.<br> <br><br> <br>Refined products. Hydrocarbon compounds, such as jet fuel and residual fuel, produced by a refinery.<br> <br><br> <br>Refinery. Within the oil and gas industry, a refinery is an industrial processing plant where crude oil, condensate, and intermediate feeds are separated and transformed into petroleum products.<br> <br><br> <br>Refining EBITDA. Income (loss) before interest, taxes, and depreciation and amortization for our refinery operations business segment.<br> <br><br> <br>Refining operations EBITDA per bbl. Refining EBITDA divided by sales (Mbbls) for the reporting period.<br> <br><br> <br>RCRA. Federal Resource Conservation and Recovery Act.<br> <br><br> <br>RFS. First Renewable Fuels Standard.<br> <br><br> <br>RFS2. Second Renewable Fuels Standard.<br> <br><br> <br>ROU. Right-of-use.<br> <br><br><br> <br>SBA. Small Business Administration.<br> <br><br><br> <br>SEC. Securities and Exchange Commission.<br><br> <br><br><br> <br>Securities Act. The Securities Act of 1933, as amended.
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Glossary of Terms (Continued)

Intermediate petroleum products. A petroleum product that might require further processing before being saleable to the ultimate consumer; further processing might be done by the producer or by another processor. Thus, an intermediate petroleum product might be a final product for one company and an input for another company to process it further. IRC Section 382. Title 26, Internal Revenue Code, Subtitle A – Income Taxes, Subchapter C – Corporate Distributions and Adjustments, Part V Carryovers, § 382. Limits NOL carryforwards and certain built-in losses following ownership change. IRS. Internal Revenue Service. Jet fuel. A high-quality kerosene product primarily used in aviation. Kerosene-type jet fuel (including Jet A and Jet A-1) has a carbon number distribution between 8 and 16 carbon atoms per molecule; wide-cut or naphtha-type jet fuel (including Jet B) has between 5 and 15 carbon atoms per molecule. Kissick Noteholder. John H. Kissick. Lazarus Capital. Lazarus Capital, LLC, an affiliate of Jonathan Carroll. LE. Lazarus Energy, LLC, a wholly owned subsidiary of Blue Dolphin. LEH. Lazarus Energy Holdings, LLC, an affiliate of Jonathan Carroll and controlling shareholder of Blue Dolphin as of the date of this report. Leasehold interest. The percent interest of a lessee under an oil and gas lease. LMT. Lazarus Marine Terminal I, LLC, an affiliate of LEH. LRM. Lazarus Refining & Marketing, LLC, a wholly owned subsidiary of Blue Dolphin. LTRI. Lazarus Texas Refinery I, an affiliate of LEH. Mbbls. One thousand bbls. Mbbls/d. One thousand barrels of oil per day; a measure of the barrels of daily output produced in a refinery or transported through a pipeline. MVP. MV Purchasing, LLC. NAAQS. National Ambient Air Quality Standards. Naphtha. A refined or partly refined light distillate fraction of crude oil. Blended further or mixed with other materials, it can make high-grade motor gasoline or jet fuel. It is also a generic term for the lightest and most volatile petroleum fractions. Natural gas. A naturally occurring hydrocarbon gas mixture consisting primarily of methane but commonly including varying amounts of other higher alkanes and sometimes a small percentage of carbon dioxide, nitrogen, hydrogen sulfide, or helium. Nixon facility. Encompasses the Nixon refinery, petroleum storage tanks, loading and unloading facilities, and 56 acres of land in Nixon, Texas. Nixon refinery. The 15,000-bpd crude distillation tower and associated processing units in Nixon, Texas. NOL. Net operating losses. NPS. Nixon Product Storage, LLC, a wholly owned subsidiary of Blue Dolphin. NSR/PSD. New Source Review/Prevention of Significant Deterioration. OPA 90. Oil Pollution Act of 1990. OPEC. Organization of Petroleum Exporting Countries.

Operating days. Represents the number of days in a period in which the crude distillation tower operated; operating days are calculated by subtracting downtime in a period from calendar days in the same period. OSHA. Occupational Safety and Health Administration. Other conversion costs. Represents the combination of direct labor costs and manufacturing overhead costs. These are the costs that are necessary to convert our raw materials into refined products. PADD. Petroleum Administration for Defense Districts; PADD regions enable regional analysis of petroleum product supply and movements by the EIA. Petroleum. A naturally occurring flammable liquid consisting of a complex mixture of hydrocarbons of various molecular weights and other liquid organic compounds. The name petroleum covers both the naturally occurring unprocessed crude oils and petroleum products that are made up of refined crude oil. PFAS. Per- and polyfluorinated substances. PFAS has been used in oil and gas-related operations, notably in emergency response activities, including in aqueous film forming foam as a vapor and fire suppressant. PHMSA. Pipeline and Hazardous Materials Safety Administration of the U.S. Department of Transportation. Pilot. Pilot Travel Centers LLC, a Delaware limited liability company. Preferred Stock. Blue Dolphin preferred stock, par value $0.10 per share. Blue Dolphin has 2,500,000 shares of Preferred Stock authorized and no shares of Preferred Stock issued and outstanding as of the filing date of this report. Production. The volume processed as output from the crude distillation tower. Refinery production includes finished petroleum products, such as jet fuel, and intermediate petroleum products, such as naphtha, HOBM and AGO. Product slate. Represents type and quality of products produced. Propane. A by-product of natural gas processing and petroleum refining. Propane is one of a group of liquified petroleum gases. Others include butane, propylene, butadiene, butylene, isobutylene, and mixtures thereof. Refined products. Hydrocarbon compounds, such as jet fuel and residual fuel, produced by a refinery. Refinery. Within the oil and gas industry, a refinery is an industrial processing plant where crude oil, condensate, and intermediate feeds are separated and transformed into petroleum products. Refining EBITDA. Income (loss) before interest, taxes, and depreciation and amortization for our refinery operations business segment. Refining operations EBITDA per bbl. Refining EBITDA divided by sales (Mbbls) for the reporting period. RCRA. Federal Resource Conservation and Recovery Act. RFS. First Renewable Fuels Standard. RFS2. Second Renewable Fuels Standard. ROU. Right-of-use. SBA. Small Business Administration. SEC. Securities and Exchange Commission. Securities Act. The Securities Act of 1933, as amended.

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Blue Dolphin Energy Company

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Glossary of Terms (Continued)
Significant customer. A customer who represents more than 10% of our total revenue from operations.<br> <br><br> <br>Stabilizer unit. A distillation column intended to remove the lighter boiling compounds, such as butane or propane, from a product.<br> <br><br> <br>Sulfur. Present at various levels of concentration in many hydrocarbon deposits, such as petroleum, coal, or natural gas. Also, produced as a by-product of removing sulfur-containing contaminants from natural gas and petroleum. Some of the most commonly used hydrocarbon deposits are categorized based on their sulfur content, with lower sulfur fuels (e.g., ultra low sulfur diesel) selling at a higher, premium price and higher sulfur fuels (e.g., HOBM) selling at a lower, discounted price.<br> <br><br> <br>Tartan. Tartan Oil LLC, an affiliate of Pilot.<br> <br><br> <br>Texas First. Texas First Rentals, LLC.<br> <br><br> <br>TCEQ. Texas Commission on Environmental Quality.<br> <br><br><br> <br>Throughput. The volume processed as input through the crude distillation tower. Refinery throughput includes crude oil or condensate.<br><br> <br><br><br> <br>Tolling and terminaling EBITDA. Income (loss) before interest, taxes, and depreciation and amortization for our tolling and terminaling business segment.<br><br> <br><br><br> <br>Topping unit. A type of petroleum refinery that engages in only the first step of the refining process crude distillation. A topping unit uses atmospheric distillation to separate crude oil and condensate into constituent petroleum products. A topping unit has a refinery complexity range of 1.0 to 2.0.	Turnaround. A planned period of time when an industrial plant shuts down one or more units (and sometimes an entire facility) to perform maintenance, inspections, repairs, or upgrades.<br> <br><br> <br>USACOE. U.S. Army Corps of Engineers.<br> <br><br> <br>USDA. U.S. Department of Agriculture.<br> <br><br> <br>USDOI. U.S. Department of the Interior.<br> <br><br> <br>U.S. GAAP. Accounting principles generally accepted in the United States of America.<br> <br><br> <br>Veritex. Veritex Community Bank, successor in interest to Sovereign Bank by merger.<br> <br><br> <br>WHO. World Health Organization.<br> <br><br> <br>WSJ Prime rate. The base rate on corporate loans posted by at least 70% of the ten largest U.S. as published by the Wall Street Journal. Effective December 19, 2024, the WSJ Prime rate decreased to 7.50%.<br> <br><br> <br>XBRL. eXtensible Business Reporting Language.<br> <br><br> <br>Yield. The percentage of refined products that is produced from crude oil and other feedstocks.
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Glossary of Terms (Continued)

Significant customer. A customer who represents more than 10% of our total revenue from operations. Stabilizer unit. A distillation column intended to remove the lighter boiling compounds, such as butane or propane, from a product. Sulfur. Present at various levels of concentration in many hydrocarbon deposits, such as petroleum, coal, or natural gas. Also, produced as a by-product of removing sulfur-containing contaminants from natural gas and petroleum. Some of the most commonly used hydrocarbon deposits are categorized based on their sulfur content, with lower sulfur fuels (e.g., ultra low sulfur diesel) selling at a higher, premium price and higher sulfur fuels (e.g., HOBM) selling at a lower, discounted price. Tartan. Tartan Oil LLC, an affiliate of Pilot. Texas First. Texas First Rentals, LLC. TCEQ. Texas Commission on Environmental Quality. Throughput. The volume processed as input through the crude distillation tower. Refinery throughput includes crude oil or condensate. Tolling and terminaling EBITDA. Income (loss) before interest, taxes, and depreciation and amortization for our tolling and terminaling business segment. Topping unit. A type of petroleum refinery that engages in only the first step of the refining process crude distillation. A topping unit uses atmospheric distillation to separate crude oil and condensate into constituent petroleum products. A topping unit has a refinery complexity range of 1.0 to 2.0.

Turnaround. A planned period of time when an industrial plant shuts down one or more units (and sometimes an entire facility) to perform maintenance, inspections, repairs, or upgrades. USACOE. U.S. Army Corps of Engineers. USDA. U.S. Department of Agriculture. USDOI. U.S. Department of the Interior. U.S. GAAP. Accounting principles generally accepted in the United States of America. Veritex. Veritex Community Bank, successor in interest to Sovereign Bank by merger. WHO. World Health Organization. WSJ Prime rate. The base rate on corporate loans posted by at least 70% of the ten largest U.S. as published by the Wall Street Journal. Effective December 19, 2024, the WSJ Prime rate decreased to 7.50%. XBRL. eXtensible Business Reporting Language. Yield. The percentage of refined products that is produced from crude oil and other feedstocks.

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Blue Dolphin Energy Company

December 31, 2024 | Page 5

Important Information Regarding Forward-Looking Statements

This report (including information incorporated by reference) contains “forward-looking statements” within the meaning of Section 27A of the Securities Act, and Section 21E of the Exchange Act, including, but not limited to, those under “Part I, Item 1. Business” and “Part I, Item 1A. Risk Factors,” as well as “Part II, Item 7. Management’s Discussion and Analysis of Financial Condition and Results of Operations.” All statements other than statements of historical fact, including without limitation statements regarding expectations regarding revenue, cash flows, capital expenditures, and other financial items, our business strategy, goals, and expectations concerning our market position, future operations, and profitability, are forward-looking statements. Forward-looking statements may be identified by use of the words “anticipate,” “believe,” “could,” “estimate,” “expect,” “intend,” “may,” “plan,” “predict,” “project,” “will,” “would” and similar terms and phrases. Although we believe our assumptions concerning future events are reasonable, several risks, uncertainties, and other factors could cause actual results and trends to differ materially from those projected, including but not limited to:

Business and Industry ● Significant debt in current liabilities, certain of which is in default. ● Inability to meet financial covenants under certain loan agreements. ● Restrictive covenants in our debt instruments that limit our ability to undertake certain types of transactions. ● Increased costs of capital or a reduction in the availability of credit. ● Affiliate Common Stock ownership and transactions that could cause conflicts of interest. ● Operational hazards inherent in transporting, processing, and storing crude oil and condensate and refined products. ● Geographical concentration of our assets and customers in West Texas. ● Competition from companies with more significant financial and other resources. ● Market changes in insurance that impact premium costs and available coverages. ● Industry technological developments that outpace our ability to keep up. ● Use of NOL carryforwards to offset future taxable income for U.S. federal income tax purposes, which is subject to limitation. ● Variable interest rates on certain of our debt. Downstream and Midstream Operations ● Commodity price and refined product demand volatility, which can adversely affect our refining margins. ● Crude oil, other feedstocks, and refined products commodity price volatility. ● Availability and cost of crude oil and other feedstocks to operate the Nixon facility. ● Downtime at the Nixon refinery. ● Reliable supply and price of electricity to operate the Nixon facility. ● Potential impairment in the carrying value of long-lived assets, which could negatively affect our operating results. ● Adverse changes in operational cash flow and working capital, shortfalls for which Affiliates may not fund. ● Critical personnel loss, labor actions, and workplace safety issues. ● Market share loss, an unfavorable financial condition shift, or the bankruptcy or insolvency of a significant customer. ● Increases in the cost or availability of third-party vessels, pipelines, trucks, and other means of delivering and transporting our crude oil and condensate, feedstocks, and refined products. ● Sourcing of a substantial amount, if not all, of our crude oil and condensate from the Eagle Ford Shale. ● Geographical concentration of our refining operations and customers within the Eagle Ford Shale. ● Severe weather or other climate-related events that affect our facilities or those of our vendors, suppliers, or customers. ● Our ability to implement a new business strategy, such as renewable fuels, may be materially and adversely affected by many known and unknown factors. ● Our ability to effect and integrate potential acquisitions.

Legal, Government, and Regulatory ● Environmental laws and regulations that may require us to make substantial capital improvements to remain compliant or remediate current or future contamination that could lead to material liabilities. ● Strict laws and regulations regarding personnel and process safety. ● Uncertainty regarding the impact of current and future sanctions (including tariffs) imposed by governments, including the U.S., and other authorities in response to economic and geopolitical tensions. ● General economic, political, or regulatory developments, including recession, inflation, tariffs, interest rates, or changes in governmental policies relating to refined petroleum products, crude oil, or taxation. ● Assessment of penalties by regulatory agencies, such as BOEM, BSEE, OSHA and the TCEQ for violations. ● Our estimates of future AROs related to our pipeline and facilities assets, which may increase. ● Regulatory changes and other measures related to GHG emissions, climate change, and an ongoing desire to transition to greater renewable energy solutions. Security ● A terrorist attack or armed conflict. ● Increased activism against oil and gas companies. ● Actual or potential cybersecurity threats or loss of data privacy. Common Stock ● Fluctuations in our stock price that may result in a substantial investment loss. ● Increasing attention to environmental, social, and governance matters. ● Declines in our stock price due to share sales. ● Dilution of the equity of current stockholders and the potential decline of our stock price due to the issuance of new Common Stock or Preferred Stock from the pool of authorized shares that we have available to issue. ● The potential sale of shares in accordance with Rule 144, which may adversely affect the market. ● The lack of dividend payments.

See also the risk factors described in greater detail under “Part I, Item 1A. Risk Factors” of this report. All forward-looking statements included in this report are based on information available to us on the date of this report. We undertake no obligation to revise or update any forward-looking statements as a result of new information, future events, or otherwise.

Unless the context otherwise requires, references in this report to “Blue Dolphin,” “we,” “us,” “our,” or “ours” refer to Blue Dolphin Energy Company, one or more of its consolidated subsidiaries, or all of them taken as a whole.

Part I should be read in conjunction with “Part II, Item 7. Management’s Discussion and Analysis and Results of Operations” and “Part II, Item 8. Financial Statements and Supplementary Data”.

Blue Dolphin Energy Company

December 31, 2024 | Page 6

PART I

ITEM 1. BUSINESS

The following section of this Annual Report on Form 10-K generally refers to business developments during the twelve months ended December 31, 2024. Discussion of, or references to, prior period business developments that are not included in this Form 10-K can be found in “Part I, Item 1. Business” of our Annual Report on Form 10-K for the year ended December 31, 2023.

Company Overview

Blue Dolphin was formed in 1986 as a Delaware corporation. The company is an independent downstream energy company operating in the Gulf Coast region of the U.S. Operations primarily consist of a light sweet-crude, 15,000-bpd crude distillation tower, and approximately 1.25 million bbls of petroleum storage tank capacity in Nixon, Texas. Blue Dolphin trades on the OTCQX under the ticker symbol “BDCO.”

Unless the context otherwise requires, references in this report to “we,” “us,” “our,” or “ours” refer to Blue Dolphin, one or more of its consolidated subsidiaries, or all of them taken as a whole.

Jonathan Carroll, our Chief Executive Officer, and an Affiliate together controlled 83.7% of the voting power of our Common Stock as of the filing date of this report. An Affiliate also operates and manages all Blue Dolphin properties, funds working capital requirements during periods of working capital deficits, guarantees certain of our third-party secured debt, and is a significant customer. Blue Dolphin and certain subsidiaries are currently parties to various agreements with Affiliates. See “Part I, Item 1A. Risk Factors” and “Part II, Item 8. Financial Statements and Supplementary Data – Note (3)” for additional disclosures related to Affiliate agreements, arrangements, and risks associated with working capital deficits.

Our Operations

Our assets are organized into two business segments:

●	refinery operations (also referred to herein as downstream operations), which is owned by LE; and
●	tolling and terminaling services (also referred to herein as midstream operations), which is owned by LRM and NPS

‘Corporate and other’ includes Blue Dolphin subsidiaries BDPL (inactive pipeline and facilities assets), BDPC (inactive leasehold interests in offshore oil and gas wells), and BDSC (administrative services). For more information related to our business segments, see “—Downstream Operations, —Midstream Operations, and — Inactive Operations” and “Part I. Item 2. Properties” in this report.

Downstream Operations. The refinery operations business segment consists of the following assets and operations:

Property	Key Products Handled	Operating Subsidiary	Location
Nixon facility<br> <br>● Crude distillation tower (15,000 bpd)<br> <br>● Petroleum storage tanks<br> <br>● Loading and unloading facilities<br> <br>● Land (56 acres)	Crude Oil<br> <br>Refined Products	LE	Nixon, Texas

Crude Oil and Condensate Supply. Operation of the Nixon refinery depends on our ability to purchase adequate amounts of crude oil and condensate. During 2023, we operated under the Tartan Crude Supply Agreement. Tartan also stored crude oil at the Nixon facility under a terminal services agreement. In a letter dated October 31, 2023, Tartan provided LE and NPS the required 60 days’ notice of its intention to terminate the Tartan Crude Supply Agreement and terminal services agreement. The effective date of the termination was December 31, 2023. During 2023, the vast majority of our crude was sourced from Tartan under the Tartan Crude Supply Agreement.

On December 29, 2023, we entered a new crude supply agreement with MVP, effective January 1, 2024. This agreement provides a firm source of light-sweet Eagle Ford crude oil to the Nixon facility under improved credit terms, and the crude supply agreement renews on a quarterly evergreen basis. Related to the crude supply agreement, MVP stores crude oil at the Nixon facility under a terminal services agreement. Management believes that MVP can provide us with adequate amounts of crude oil and condensate for the foreseeable future. Because we obtain our crude oil and condensate without the benefit of a long-term crude supply agreement, our exposure to the risks associated with volatile crude oil prices may increase, crude oil transportation costs could increase, and our liquidity may be reduced. Similarly, if producers experience crude supply constraints and increased transportation costs, our crude acquisition costs may rise, or we may not receive sufficient amounts to meet our needs, which could result in refinery downtime and could materially affect our business, financial condition, and results of operations. If we are unable to manage this, we may have to consider other options, such as selling assets, raising additional debt or equity capital, filing bankruptcy, or ceasing operations.

Products and Markets. Our market is the Gulf Coast region of the U.S., which is represented by the EIA as PADD 3. We sell our products primarily in the U.S. within PADD 3. Occasionally, we sell refined products to customers that export to other countries, such as naphtha and HOBM to Mexico. The Nixon refinery’s product slate is adjusted based on market demand. We currently produce a single finished product – jet fuel – and several intermediate products, including naphtha, HOBM, and AGO. An Affiliate, LEH, purchases most of our jet fuel under the Amended and Restated Jet Fuel Sales Agreement; LEH then sells the jet fuel to the DLA under preferential pricing terms due to the Affiliate's HUBZone certification. The agreement with LEH has a one-year term with automatic renewals. Our intermediate products are primarily sold in nearby markets to wholesalers and refiners as a feedstock for further blending and processing.

Customer s. Customers for our refined products include distributors, wholesalers, and refineries primarily in the lower portion of the Texas Triangle (the Houston – San Antonio – Dallas/Fort Worth area). An Affiliate, LEH, is a significant customer. Most of our contracts require our customers to prepay, with us selling them fixed quantities or minimum quantities of finished and intermediate petroleum products. Many of these arrangements are subject to periodic renegotiation on a forward-looking basis, which could result in higher or lower relative prices on future sales of our refined products.

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Business (Continued)

Competition. Most of our competitors are larger than us and are engaged on a national or international level in many segments of the oil and gas industry, including exploration and production, gathering and transportation, and marketing. These competitors may have greater flexibility in responding to or absorbing market changes occurring in one or more of these business segments. We compete primarily based on cost. Due to the low complexity of our simple “topping unit” refinery, we can be relatively nimble in adjusting our refined products slate because of changing commodity prices, market demand, and refinery operating costs.

Safety and Downtime. We operate the refinery in a manner that is materially consistent with industry safety practices and standards. EPA, OSHA, and comparable state and local regulatory agencies provide oversight for personnel safety, process safety management, and risk management to prevent or minimize the accidental release of toxic, reactive, flammable, or explosive chemicals. Our storage tanks are equipped with leak detection devices. We also have response and control plans in place for spill prevention and emergencies.

The Nixon refinery periodically undergoes planned and unplanned temporary shutdowns. We periodically complete a planned turnaround to repair, restore, refurbish, or replace refinery equipment. The timing of planned turnarounds is adjusted to capitalize on favorable market conditions. Occasionally, unplanned shutdowns occur. Unplanned downtime can occur for a variety of reasons. Common reasons for unplanned downtime include repair/replacement of disabled equipment, crude deficiencies associated with cash constraints, extreme temperatures (high or low), and power outages.

We are particularly vulnerable to operational disruptions because all our refining operations occur at a single facility. Shutdowns for maintenance may result in lost margin opportunity, potential increased maintenance expense, and reduced refined products inventory, which could adversely impact our ability to meet our payment obligations.

Midstream Operations. Our tolling and terminaling segment consists of the following assets and operations:

Property	Key Products Handled	Operating Subsidiary	Location
Nixon facility<br> <br>● Petroleum storage tanks (third-party leasing)<br> <br>● Loading and unloading facilities	Crude Oil<br> <br>Refined Products	LRM, NPS	Nixon, Texas

Products and Customers. The Nixon facility’s petroleum storage tanks and infrastructure are primarily suited for crude oil and condensate and refined products, such as naphtha, jet fuel, diesel, and fuel oil. Our storage customers are typically from the lower portion of the Texas Triangle (the Houston – San Antonio – Dallas/Fort Worth area). Shipments are received and redelivered from the Nixon facility via third party trucks.

Operations Safety. Our midstream operations are operated in a manner materially consistent with industry safe practices and standards. These operations are subject to OSHA regulations and comparable state and local regulators. Storage tanks used for terminal operations are designed for crude oil and condensate and refined products, and most are equipped with appropriate controls that minimize emissions and promote safety. Our terminal operations have response and control plans, spill prevention and other programs to respond to emergencies.

Inactive Operations. We own pipeline and facilities assets and have leasehold interests in offshore oil and gas properties. These assets are inactive. Our pipeline assets were fully impaired in 2016 and our leasehold interests in offshore oil and gas wells were fully impaired in 2011. Our pipeline assets and oil and gas leasehold interests had no revenue during the years ended December 31, 2024 and 2023.

Property	Operating Subsidiary	Location
Freeport facility<br> <br>● Crude oil and natural gas separation and dehydration<br> <br>● Natural gas processing, treating, and redelivery<br> <br>● Vapor recovery unit<br> <br>● Two onshore pipelines (the onshore portion of the 20-inch offshore pipeline and a 16-inch natural gas pipeline connecting the Freeport facility to the Dow Chemical Plant complex)<br> <br>● Land (162 acres)	BDPL	Freeport, Texas
Offshore Pipelines<br> <br>● 20-inch, 34 mile gathering pipeline with lateral lines originating at an offshore anchor platform in Galveston Area Block 288<br> <br>● 8-inch, 13-mile offshore pipeline extending from Galveston Area Block 350 to an interconnect at a transmission pipeline in Galveston Area Block 391	BDPL	U.S. Gulf of America
Leasehold Interests in Offshore Oil and Gas Wells	BDPC	U.S. Gulf of America

Pipeline and Facilities Safety. Although our pipeline and facility assets are inactive, they require upkeep and maintenance and are subject to safety regulations under OSHA, PHMSA, BOEM, BSEE, and comparable state and local regulators. We have response and control plans, spill prevention and other programs to respond to emergencies related to these assets.

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Business (Continued)

Operating Risks

Successful execution of our business strategy depends on several critical factors, including having adequate working capital, favorable refining margins, and maintaining operation of the Nixon refinery.

Working Capital. We have historically had working capital deficits primarily due to having significant debt in current liabilities, certain of which was in default. Having sufficient working capital is necessary to meet contractual, operational, regulatory, and safety needs. Our short-term working capital needs are primarily related to: (i) purchasing crude oil and condensate to operate the Nixon refinery, (ii) reimbursing LEH for direct operating expenses and paying the LEH operating fee under the Third Amended and Restated Operating Agreement, (iii) servicing debt, (iv) maintaining and improving the Nixon facility through capital expenditures, and (v) meeting regulatory compliance requirements. Our long-term working capital needs are primarily related to repayment of long-term debt obligations. To avoid business disruptions and manage cash flow, we optimize receivables and payables by prioritizing payments, optimize inventory levels based on demand, monitor discretionary spending, and carefully managing capital expenditures.

As of December 31, 2024 and the filing date of this report, certain conditions and events existed, in the aggregate, that caused management to evaluate Blue Dolphin's ability to continue as a going concern. Those conditions and events included historical working capital deficits and significant debt in current liabilities, certain of which was in default. Management believes that we have sufficient liquidity to meet our obligations as they become due through the generation of cash flows from operations and liquidation of current working capital amounts for a reasonable period (defined as one year from the issuance of these financial statements). Management acknowledges that uncertainty remains related to future operating margins; however, management has a reasonable expectation of Blue Dolphin's ability to generate adequate working capital for, amongst other requirements, purchasing crude oil and condensate and making payments on our long-term debt.

We had a working capital deficit of $19.1 million at December 31, 2024 compared to a working capital deficit of $6.1 million at December 31, 2023, representing a $13.0 million decrease. Our significant debt in current liabilities at December 31, 2024 consisted of bank debt to Veritex and GNCU and related-party debt. Excluding accrued interest, we had current related-party and third-party debt of $40.6 million and $39.4 million as of December 31, 2024 and 2023, respectively. The $1.2 million increase in current debt between the periods primarily related to a $3.3 million draw under the Affiliate Revolving Credit Agreement offset by loan payments. We continue to engage with potential lenders to obtain additional funding to refinance and restructure debt and further improve working capital.

Refining Margins. Refining margins, which are affected by commodity prices and refined product demand, are volatile, and a reduction in refining margins will adversely affect the amount of cash we will have available for working capital. Crude oil refining is primarily a margin-based business. To improve margins, we must maximize yields of higher value finished petroleum products and minimize costs of feedstocks and operating expenses. When the spread between these commodity prices decreases, our margins are negatively affected. Although an increase or decrease in the commodity price for crude oil and other feedstocks generally results in a similar increase or decrease in commodity prices for finished petroleum products, typically there is a time lag between the two. Therefore, the effect of crude oil commodity price changes on our finished petroleum product commodity prices depends, in part, on how quickly and how fully the market adjusts to reflect these changes. Unfavorable margins may have a material adverse effect on our earnings, cash flows, and liquidity. To remain competitive in a volatile commodity price environment, we adjust throughput and production and our product slate based on market conditions, including commodity price and refined product demand.

Nixon Refinery Operations. We maintain relationships with suppliers that source and repair key components of the Nixon refinery. We expect our suppliers to maintain an adequate supply of component products and, when components are sent out for repair, to timely deliver components. However, in some cases, increases in demand or supply chain disruptions have led to part and component constraints. We use several suppliers and monitor supplier financial viability to mitigate supply-based risks that could cause a business disruption.

Uncertainties remain surrounding general macroeconomic conditions related to inflation, tariffs, interest rates, capital and credit markets, and geopolitical tensions (including military conflicts in Ukraine and Israel and escalations in the Middle East), and the extent to which these factors may impact working capital, commodity prices, refined product demand, our supply chain, financial condition, liquidity, results of operations, and future prospects will depend on future developments, which cannot be predicted with any degree of confidence. We can provide no guarantees that: our business strategy will be successful, Affiliates will continue to fund our working capital needs when we experience working capital deficits, we will meet regulatory requirements to provide additional financial assurance (supplemental pipeline bonds) and decommission offshore pipelines and platform assets, we can obtain additional financing on commercially reasonable terms or at all, or margins on our refined products will be favorable. Further, if third parties exercise their rights and remedies under secured loan agreements that are in default, our business, financial condition, and results of operations will be materially adversely affected.

Insurance and Risk Management

Our operations are subject to significant hazards and risks inherent in crude oil and condensate refining operations, as well as the transportation and storage of crude oil and condensate and refined products. We have property damage, business interruption, and pollution liability coverages at the Nixon facility and Freeport facility. Business interruption coverage is for 24 months from the date of the loss, subject to a deductible with a 45-day waiting period. Pollution liability provides coverage due to named perils for claims involving pollutants where the discharge is sudden, accidental, and first commences at a specific day and time during the policy period. The pollution policy is subject to a retention and deductible and contains discovery requirements, reporting requirements, exclusions, definitions, conditions, and limitations that could apply to a particular pollution claim. As a result, there can be no assurance that any claim will be adequately insured for all potential damages.

Additional coverage includes umbrella, excess liability, workers’ compensation, directors’ and officers’ liability, environmental liability, and other business risks. These coverages are supported by safety and other risk management programs. Our insurance program may not cover all operational risks and costs and may not provide sufficient coverage in the event of a claim. We do not maintain insurance coverage against all potential losses and could suffer losses for uninsurable or uninsured risks or for losses in excess of existing insurance coverage. Losses in excess of our insurance coverage or cancellation of policies could have a material adverse effect on our business, financial condition, and results of operations.

Intellectual Property

We rely on intellectual property laws to protect our brand, as well as those of our subsidiaries. “Blue Dolphin Energy Company” is a registered trademark in the U.S. in name and logo form. “Petroport, Inc.,” an inactive wholly owned subsidiary, is a registered trademark in the U.S. in name form. In addition, “www.blue-dolphin-energy.com” is a registered domain name.

Human Capital Management

General. Our operations and activities are managed by an Affiliate, LEH, under the Third Amended and Restated Operating Agreement. Blue Dolphin and its subsidiaries do not have any employees. As of December 31, 2024,112 employees of the Affiliate provided support for our operations. None of these employees were covered by collective bargaining agreements. We believe that our personnel provide a competitive advantage for our success. We strive to attract and retain highly qualified and motivated individuals, foster a culture that supports diversity and inclusion, and provide a safe, healthy, and rewarding work environment for our personnel.

Safety, Health, and Wellness. We must comply with a number of federal and state laws and regulations related to safety that protect the health and safety of our workforce. We operate a safety and health program with participation by personnel at all levels of the organization. We use eCompliance, a mobile software solution that increases frontline adoption of health and safety policies and reduces on-site risks. Although we strive to achieve excellence in our safety and health performance, there can be no assurances that there will not be accidents resulting in injuries or even fatalities.

Government Regulations

General. Our operations are subject to extensive and frequently changing federal, state, and local laws, regulations, permits, and ordinances relating to the protection of the environment. Among other things, these laws and regulations govern obtaining and maintaining construction and operating permits, the emission and discharge of pollutants into or onto the land, air, and water, the handling and disposal of solid, liquid, and hazardous wastes and the remediation of contamination. Compliance with existing and anticipated environmental laws and regulations increases our overall cost of business, including our capital costs to construct, maintain, operate, and upgrade equipment and facilities. Failing to comply with these laws and regulations may trigger a variety of administrative, civil, and criminal enforcement measures, including the assessment of monetary penalties. Certain environmental statutes impose strict, joint and several liability for costs required to clean up and restore sites where hazardous substances, hydrocarbons, or wastes have been disposed of or otherwise released. Moreover, it is not uncommon for neighboring landowners and other third parties to file claims for personal injury and property damage allegedly caused by the release of hazardous substances, hydrocarbons, or other waste products into the environment. These requirements may also significantly affect our customers’ operations and may have an indirect effect on our business, financial condition, and results of operations. However, we do not expect such effects will have a material impact on our financial position, results of operations, or liquidity.

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Air Emissions and Climate Change Regulations. **** Our operations are subject to the CAA and comparable state and local statutes. Under these laws, we are required to obtain permits, as well as test, monitor, report, and implement control requirements. If regulations become more stringent, additional emission control technologies may be required to be installed at the Nixon facility, Freeport facility, and certain emission sources located offshore, and our ability to secure future permits may become less certain. Any such future obligations could require us to incur significant additional capital or operating costs.

The EPA has undertaken significant regulatory initiatives, including the Petroleum Refinery National Initiative, under authority of the CAA’s NSR/PSD program to further reduce emissions of volatile organic compounds, nitrogen oxides, sulfur dioxide, and particulate matter. These regulatory initiatives have targeted industries with large manufacturing facilities that are significant sources of emissions, such as refining, paper and pulp, and electric power generating industries. The basic premise of these initiatives is the EPA’s assertion that many of these industrial establishments have modified or expanded their operations over time without complying with NSR/PSD regulations, which result in emission increases above threshold limits. As part of these regulatory initiatives, the EPA obtained consent decrees with several refiners that require refiners to make significant capital expenditures to install emissions control equipment at selected facilities. We are not under a consent decree, and as a small refiner, we do not expect any additional requirements under the Petroleum Refinery National Initiative to have a material impact on our financial position, results of operations, or liquidity.

In February 2024, the EPA released a final rule to lower the annual health-based NAAQS for fine particulate matter to 9 micrograms per cubic liter from the current level of 12 micrograms per cubic liter. To implement the revised fine particulate matter NAAQS, all states were to review their existing air quality management infrastructure State Implementation Plan for fine particulate matter and ensure it is appropriate and adequate. Where areas remain in non-attainment or come into non-attainment as a result of the revised NAAQS, additional planning and emissions control obligations may be required. The ongoing and potential future requirements imposed by states to meet the fine particulate matter NAAQS could have direct impacts on terminaling facilities through additional requirements and increased permitting costs and could have indirect impacts through changing or decreasing fuel demand.

Pursuant to the Energy Policy Act of 2005 and Energy Independence and Security Act of 2007, the EPA promulgated RFS and RFS2, respectively, which requires obligated parties, defined by the EPA as refiners or importers of transportation fuels, to either blend “renewable fuels,” such as ethanol and biofuels, into their transportation fuels or purchase renewable fuel credits, known as renewable identification numbers, in lieu of blending. The EPA granted the Nixon refinery a small refinery exemption from RFS2 requirements for 2013 and 2014. In 2014, the Nixon refinery began producing HOBM, a non-transportation lubricant blend product. As a result of our 2014 product slate change, our refined products no longer fall under RFS or RFS2 requirements.

Currently, multiple legislative and regulatory measures to address GHG emissions are in various phases of discussion or implementation. These include actions to develop national, state, or regional programs, each of which would require reductions in our GHG emissions or those of our customers. In 2015, the EPA amended the Petroleum and Natural Gas Systems source category (Subpart W) of the Greenhouse Gas Reporting Program, to include among other things, a new Onshore Petroleum and Natural Gas Gathering and Boosting segment that encompasses GHG emissions from equipment and sources within the petroleum and natural gas gathering boosting systems. In 2016, the EPA promulgated regulations regarding performance standards for methane emissions from new and modified oil and gas production and natural gas processing and transmission facilities, and in September 2018, proposed targeted improvements to these standards to streamline implementation of the rules. In August 2022, Congress passed and President Biden signed into law the Inflation Reduction Act of 2022, which included nearly $370 billion in climate-related provisions that provide funding, programs, and incentives to accelerate the U.S.'s transition to a clean energy economy. The Inflation Reduction Act of 2022 also imposes a tax, or "methane fee," on energy producers that exceed a certain level of methane emissions. On January 26, 2024, the EPA published a proposed rule to implement the methane fee. These and other legislative regulatory measures will impose additional burdens on our business and those of our customers, and the impact of future GHG regulations on our operations and financial condition is unknown. In January 2025, President Trump signed an executive order directing the U.S. to withdraw from the Paris Agreement, and it is expected that President Trump and the Republican-led Congress will diverge from the previous administration’s positions and GHG commitments. However, future emission reduction targets and other provisions of legislative or regulatory initiatives and policies enacted in the future by the U.S. could be brought by future administrations or, in the absence of federal action, states may become more active and focused on taking legislative or regulatory actions aimed at climate change and minimizing GHG emissions.

Hazardous Substances and Waste Regulations. The CERCLA imposes strict, joint and several liability on a broad group of potentially responsible parties for response actions necessary to address a release of hazardous substances into the environment. The law authorizes two kinds of response actions: (i) short-term removals, where actions may be taken to address releases or threatened releases requiring prompt response, and (ii) long-term remedial response actions, that permanently and significantly reduce the dangers associated with releases or threats of releases of hazardous substances that are serious, but not immediately life threatening. Neither we nor any of our predecessors have been designated as a potentially responsible party under CERCLA or a similar state statute.

We are subject to RCRA requirements for the generation, transportation, treatment, storage, and disposal of solid and hazardous wastes. When feasible, RCRA-regulated materials are recycled instead of being disposed of on-site or off-site. RCRA establishes standards for the management of solid and hazardous wastes. We generate petroleum product wastes, solid wastes, and ordinary industrial wastes, such as from paints and solvents, that are regulated under RCRA and comparable state statues.

Besides governing current waste disposal practices, RCRA also addresses the environmental effects of certain past waste disposal practices. We currently own properties where crude oil, refined petroleum hydrocarbons, and fuel additives were handled for many years by previous owners. At some sites, hydrocarbons or other waste may have been disposed of or released on or under the properties owned by us or on or under other locations where these wastes have been taken for disposal. Although prior owners and operators may have used operating and waste disposal practices that were standard in the industry at the time, these properties and wastes disposed thereon are now subject to CERCLA, RCRA, and analogous state laws. Under current laws, we could be required to remove or remediate previously disposed or released wastes (including wastes disposed of or released by prior owners or operators), to clean up contaminated property (including impacted groundwater), or to perform remedial operations to prevent future contamination to the extent we are not indemnified for such matters.

Additionally, regulation of PFAS has significantly increased in recent years, at both the federal and state levels. PFAS has been used in oil and gas-related operations, notably in emergency response activities, including in aqueous film forming foam as a vapor and fire suppressant. In January 2024, the EPA announced two waste-related proposed rulemakings. The first proposed rule would list nine (9) PFAS as "hazardous constituents" under RCRA; listing a substance as a hazardous constituent is a preliminary step toward classifying a substance as hazardous waste. The second proposed rule would amend the definition of "hazardous waste" to clarify that the RCRA corrective action authority may be utilized to address emerging contaminants, including PFAS. Moreover, an increasing number of states have sought to regulate PFAS, creating a patchwork of PFAS standards throughout the U.S. We cannot currently predict the impact of PFAS-related regulations on our compliance or remediation costs.

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Water Pollution Regulations. Our operations can result in the discharge of pollutants, including chemical components of crude oil and refined products, into federal and state waters. The CWA prohibits the discharge of pollutants into U.S. waters except as authorized by the terms of a permit issued by the EPA or a state agency with delegated authority. The transportation and storage of crude oil and refined products over and adjacent to water involves risks and subjects us to the provisions of the CWA, OPA 90, and related state requirements. Uncertainty has persisted in the federal government's applicable jurisdictional reach under the CWA, and in particular what constitutes a regulated "water of the U.S." ("WOTUS"). The EPA and the USACOE under the Obama, first Trump, and Biden Administrations have pursued multiple rulemakings in an attempt to determine the scope of such reach. Most recently, in response to the U.S. Supreme Court's May 2023 ruling in Sackett v. EPA ("Sackett"), the EPA and the USACOE issued a final WOTUS rule that became effective September 8, 2023. In accordance with the U.S. Supreme Court's directive in Sackett, the final rule significantly narrowed the jurisdictional reach of the CWA, but the U.S. Supreme Court's decision also left unaddressed a number of questions and interpretational uncertainties. Multiple lawsuits challenging the final WOTUS rule remain ongoing, and implementation of the rule is enjoined in about half the states and for certain parties. Continued challenges over the jurisdictional reach of the CWA could result in permitting delays and uncertainty as to compliance requirements.

Spill prevention, control, and countermeasure requirements mandate the use of structures, such as berms and other secondary containment, to prevent hydrocarbons or other pollutants from reaching a jurisdictional body of water in the event of a spill or leak. These requirements prevent pollutant releases and minimize potential impacts should a release occur. We have federally certified oil spill response organizations available to respond to an oil spill and, in the case of our offshore pipelines, we maintain the required statutory coverage of financial responsibility at $35.0 million. In the event of an oil spill into navigable waters, we could be subject to strict, joint, and potentially unlimited liability for removal costs and other consequences.

Wastewater is subject to restrictions and strict controls under the CWA. Federal and state regulatory agencies can impose administrative, civil, and criminal penalties for non-compliance with discharge permits. Process wastewater from the Nixon refinery is tested and discharged to a nearby municipal treatment facility pursuant to applicable process wastewater permits. Wastewater from our offshore facilities, including our oil and natural gas pipelines and anchor platform, is tested and discharged pursuant to applicable produced water permits. Stormwater at the Nixon facility is tested and discharged pursuant to applicable stormwater permits.

The EPA established an Action Plan for PFAS in 2021. In furtherance of this plan, the EPA proposed national drinking water standards for six (6) PFAS' in March 2023. The EPA requested public comment on the proposed regulation, and the public comment period ended in May 2023. In April 2024, the EPA announced the final PFAS National Primary Drinking Water Regulation for six (6) PFAS in public water systems. A number of states have also issued their own drinking water, surface water, and groundwater limits for various PFAS. We cannot currently predict the impact of PFAS-related regulations will have on our compliance or remediation costs.

Offshore Decommissioning Requirement. In April 2023, BSEE updated its guidance and regulations on decommissioning that mandates lessees and rights-of-way holders to permanently abandon and remove platform and other structures within one year of expiration of a lease or right-of-way grant or when no longer useful for operations. To cover various obligations of lessees and rights-of-way holders operating in federal waters of the U.S. Gulf of America, BOEM evaluates an operator's financial ability to carry out present and future work obligations to determine whether the operator must provide additional security beyond minimum bonding requirements. Such obligations include the cost of plugging and abandoning wells and decommissioning and removing platforms and pipelines at the end of production or service activities. Once plugging and abandonment work has been completed, the collateral backing the financial assurance is released by BOEM. In June 2023, BOEM issued a proposed rule that would significantly strengthen the financial assurance and bonding requirements for the offshore oil and gas industry. In April 2024, the U.S. Department of the Interior announced BOEM's final rule titled, "Risk Management and Financial Assurance for OCS Lease and Grant Obligations." BOEM's final rule became effective in June 2024. However, pursuant to an order issued in early 2025 by the Secretary of the U.S. Department of the Interior implementing Trump Administration Executive Order 14154 “Unleashing American Energy,” BOEM’s final rule is to be suspended, revised, or rescinded.

We are required by BOEM to: (i) maintain acceptable financial assurance (pipeline bonds) for the decommissioning of our assets offshore in federal waters and (ii) decommission these assets following expiration of a lease or right-of-way or after a certain period of inactivity. respectively. At both December 31, 2024 and 2023, BDPL maintained $0.9 million in cash-backed pipeline bonds issued to the BOEM through RLI Corp. BDPL maintained $3.0 million and $4.5 million in AROs related to decommissioning its pipeline and facilities assets at December 31, 2024 and 2023, respectively. See “Part I, Item 1A. Risk Factors—Legal, Government, and Regulatory (Section C)" and "Part II, Item 8. Financial Statements and Supplementary Data—Notes (15) and (16)" for additional disclosures related to decommissioning obligations for our pipelines and facilities assets and related risks.

OSHA. We are subject to the requirements of OSHA and comparable state statutes that regulate the protection of the health and safety of workers. In addition, the OSHA hazard communication standard requires that information be maintained about hazardous materials used or produced in operations and that this information be provided to employees, state and local government authorities, and the public.

Website Access to Reports and Other Information

We make certain filings with the SEC, including our annual report on Form 10-K, quarterly reports on Form 10-Q, current reports on Form 8-K, and all amendments and exhibits to those reports, which are available free of charge through the SEC’s website (http://www.sec.gov) or through our website (http://www.blue-dolphin-energy.com), as soon as reasonably practicable after they are filed with the SEC. We have also posted our Code of Business Ethics, board committee charters and other corporate governance documents on our website. Our website and the information contained on that site, or connected to that site, are not incorporated by reference into this report.

ITEM 1A. RISK FACTORS

*You should carefully consider the risks described below, in addition to the other information contained in this document. Realization of any of the following risks could have a material adverse effect on our business, financial condition, cash flows and results of operations.*These risk factors do not identify all risks that we face; our operations could also be affected by factors, events, or uncertainties that are not presently known to us or that we do not currently consider to present significant risks to our operations.

A.	Risks Related to Our Business and Industry
A1.	Our significant debt in current liabilities, certain of which is in default, could adversely affect our financial health and make us more vulnerable to adverse economic conditions.
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Excluding accrued interest, we had current related-party and third-party debt of $40.6 million and $39.4 million as of December 31, 2024 and 2023, respectively. Our significant debt in current liabilities, certain of which was in default at December 31, 2024, consisted of bank debt to Veritex and GNCU and related-party debt. We classified the debt associated with the LE Term Loan Due 2034, LRM Term Loan Due 2034, and NPS Term Loan Due 2031 within long-term debt, current portion on our consolidated balance sheets at December 31, 2024 and 2023 due to being in default.

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Risk Factors (Continued)

Blue Dolphin, as parent company, has guaranteed the indebtedness of certain subsidiaries. In addition, Affiliates have guaranteed the indebtedness of Blue Dolphin and certain of its subsidiaries. This level of debt in current liabilities and the cross guarantee agreements could have important consequences, such as: (i) limiting our ability to obtain additional financing to fund our working capital, capital expenditures, debt service requirements, potential growth, or for other purposes; (ii) increasing the cost of future borrowings; (iii) limiting our ability to use operating cash flow in other areas of our business because we must dedicate a substantial portion of these funds to make payments on our debt; (iv) placing us at a competitive disadvantage compared to competitors with less debt; and (v) increasing our vulnerability to adverse economic and industry conditions.

Our ability to service our debt is dependent upon, among other things, business conditions, our financial and operating performance, our ability to raise capital, and regulatory and other factors, many of which are beyond our control. If our working capital is not sufficient to service our debt, and any future indebtedness that we incur, our business, financial condition, and results of operations will be materially adversely affected. In such a case, we may consider other options, including selling assets, raising additional debt or equity capital, cutting costs, reducing cash requirements, restructuring debt obligations, filing for bankruptcy, or ceasing operating.

A2.	Our continued inability to meet covenants under certain of our secured loan agreements could adversely impact our ability to obtain new debt, refinance, or restructure existing debt.

As described elsewhere in this report, certain of our secured loan agreements with third parties require us to meet financial covenants. Financial covenants applicable to our secured loan agreements with Veritex and GNCU require us to maintain covenants related to debt to tangible net worth, current assets to current liabilities, debt service coverage, and current ratio. At December 31, 2024 and through the filing date of this report, NPS was in default related to non-financial covenants under the NPS Term Loan Due 2031. LE and LRM were in default related to financial covenants under the LE Term Loan Due 2034 and LRM Term Loan Due 2034, respectively. Defaults may permit lenders to declare amounts owed under the related loan agreement immediately due and payable, exercise their rights with respect to collateral securing obligors’ obligations, and exercise any other rights and remedies available. We can provide no assurance that: (i) our assets or cash flow will be sufficient to fully repay borrowings under the secured loan agreements that are in default, either upon maturity or if accelerated, (ii) NPS, LE, or LRM will be able to refinance or restructure the debt, or (iii) the lender will provide a future forbearance or default waiver. Any exercise by the lender of their rights and remedies under the secured loan agreements that are in default could have a material adverse effect on our business operations, including crude oil and condensate procurement and our customer relationships; financial condition; and results of operations. In such a case, the trading price of our Common Stock and the value of an investment in our Common Stock could significantly decrease, which could lead to holders of our Common Stock losing their investment in our Common Stock in its entirety. If we are unable to manage this, we may have to consider other options, such as selling assets, raising additional debt or equity capital, filing bankruptcy, or ceasing operations.

Our ability to meet financial and non-financial covenants depends on numerous factors, including sustained positive operating margins and adequate working capital for, amongst other requirements, purchasing crude oil and condensate and making payments on our long-term debt. Our ability to generate sustained positive margins depends on, among other things, business conditions and the general condition of the financial markets. Uncertainties surrounding general macroeconomic conditions related to inflation, tariffs, interest rates, capital and credit markets, and geopolitical tensions (including military conflicts in Ukraine and Israel and escalations in the Middle East) may adversely impact our working capital, commodity prices, refined product demand, and our supply chain, which would impact our ability to successfully generate sufficient cash from operations to repay our outstanding debt or otherwise restructure or refinance the debt. We could be forced to undertake alternate financings, including a sale of additional common stock, negotiate for an extension of the maturity, or sell assets and delay capital expenditures in order to generate proceeds that could be used to repay such indebtedness. We can provide no assurance that we will be able to consummate any such transaction on terms that are commercially reasonable, on terms acceptable to us or at all. If new debt or other liabilities are added to our current consolidated debt levels, the related risks that it now faces could intensify. If new debt or other liabilities are added to LE, LRM, or NPS’ current debt levels, their inability to meet financial and non-financial covenants could intensify.

A3.	Restrictive covenants in our debt instruments may limit our ability to undertake certain types of transactions, which could adversely affect our business, financial condition, results of operations, and our ability to service our indebtedness.

Various covenants in our debt instruments restrict our financial flexibility in a number of ways. Our current indebtedness subjects us to significant financial and other restrictive covenants, including restrictions on our ability to incur additional indebtedness, place liens upon assets, pay dividends or make certain other restricted payments and investments, consummate certain asset sales or asset swaps, conduct businesses other than our current businesses, or sell, assign, transfer, lease, convey or otherwise dispose of all or substantially all of our assets. Some of our debt instruments also require us to satisfy or maintain certain financial condition tests in certain circumstances. Our ability to meet these financial condition tests can be affected by events beyond our control and we may not meet such tests. In addition, failing to comply with the provisions of our existing debt could result in a further event of default that could enable our lenders, subject to the terms and conditions of such debt, to declare the outstanding principal, together with accrued interest, to be immediately due and payable. Events beyond our control, including pandemics, volatility in commodity prices, and extreme weather resulting from climate change may affect our ability to comply with our covenants. If we are unable to repay the accelerated amounts, our lenders could proceed against the collateral granted to them to secure such debt. If the payment of our debt is accelerated, defaults under our other debt instruments, if any, may be triggered, and our assets may be insufficient to repay such debt in full. In addition, loans provided or guaranteed by the U.S. government subject us to additional restrictions on our operations, including limitations on personnel headcount and compensation reductions and other cost reduction activities that could adversely affect us.

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Risk Factors (Continued)
A4.	Our business, financial condition, and operating results may be adversely affected by increased costs of capital or a reduction in the availability of credit.
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Adverse changes to the availability, terms, cost of capital, interest rates, or our credit ratings (which would have a corresponding impact on the credit ratings of our subsidiaries that are party to any cross-guarantee agreements) could cause our cost of doing business to increase by limiting our access to capital, including our ability to refinance maturing or accelerated existing indebtedness on similar terms. In addition, increased crude acquisition costs could adversely impact our working capital. As a result, we cannot provide any assurance that any financing will be available to us in the future on acceptable terms or at all. Any such financing could be dilutive to our existing stockholders. If we cannot raise required funds on acceptable terms, we may further reduce our expenses and we may not be able to, among other things, (i) maintain our general and administrative expenses at current levels; (ii) successfully implement our business strategy; (iii) fund certain obligations as they become due; (iv) respond to competitive pressures or unanticipated capital requirements; (v) repay our indebtedness, or (vi) purchase crude oil to operate the Nixon facility.

A5.	Affiliates hold a significant ownership interest in us and exert considerable influence over us, and their interests may conflict with the interests of our other stockholders; and affiliate transactions may cause conflicts of interest that may adversely affect us.

We have an indirect controlling stockholder. As a related party of an Affiliate, Jonathan Carroll indirectly owned 83.7% of the voting power of our Common Stock as of the filing date of this report, and by virtue of such stock ownership, Mr. Carroll can control or exert substantial influence over us, including:

●	Election and appointment of directors.
●	Business strategy and policies.
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●	Mergers and other business combinations.
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●	Acquisition or disposition of assets.
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●	Future issuances of Common Stock or other securities.
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●	Incurrence of debt or obtaining other sources of financing.
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The existence of a controlling stockholder may have the effect of making it difficult for, or may discourage or delay, a third party from seeking to acquire a majority of our outstanding Common Stock, which may adversely affect the market price of our Common Stock.

Affiliate interest may not always be consistent with our interests or with the interests of our other stockholders. Affiliates may also pursue acquisitions or business opportunities in industries in which we compete, and there is no requirement that any additional business opportunities be presented to us. We also have and may in the future enter transactions to purchase goods or services from and sell products to Affiliates. To the extent that conflicts of interest may arise between us and Affiliates, those conflicts may be resolved in a manner adverse to us or its other stockholders.

These relationships could create, or appear to create, potential conflicts of interest when our Board is faced with decisions that could have different implications for us and Affiliates. The appearance of conflicts, even if such conflicts do not materialize, might adversely affect the public’s perception of us, as well as our relationship with other companies and our ability to enter new relationships in the future, which may have a material adverse effect on our ability to do business.

A6.	The dangers inherent in oil and gas operations could expose us to potentially significant losses, costs, or liabilities, and reduce our liquidity.

Oil and gas operations are inherently subject to significant hazards and risks. We process, store, and handle crude oil and condensate, which, under certain circumstances, can be extremely dangerous. Hazards and risks related to the Nixon facility include, but are not limited to, catastrophic events caused by fires, explosions, pressure vessel ruptures, spills, third-party interference, electricity, and mechanical breakdown, any of which could result in interruption or termination of operations, pollution, personal injury and death, or damage to our assets and the property of others.

Offshore operations are also subject to a variety of operating risks peculiar to the marine environment. Although our pipeline assets and leasehold interests in offshore oil and gas wells are inactive, natural disasters and other events, such as hurricanes, can result in blowouts, cratering, explosions, and loss of well control. These hazards can cause injury to persons, loss of life, and damage to property or the environment.

Any of these risks could result in substantial losses to us from a significant decrease in operations, significant additional costs to replace, repair, and insure assets, and from potential civil lawsuits, fines, penalties, and regulatory enforcement proceedings. We may also become subject to more extensive governmental regulation. These regulations may, in certain circumstances, impose strict liability for pollution damage or result in the interruption or termination of operations. These risks could also harm our reputation and business, result in claims against us, and have a material adverse effect on our results of operations and financial condition.

A7.	The geographic concentration of our assets creates a significant exposure to the risks of the regional economy and other regional adverse conditions.

Our primary operating assets are in Nixon, Texas in the Eagle Ford Shale, and we market our refined products in a single, relatively limited geographic area. In addition, we have facilities and related onshore pipeline assets in Freeport, Texas, and offshore pipelines and oil and gas properties in the U.S. Gulf of America. As a result, our operations are more susceptible to regional economic conditions than our more geographically diversified competitors. Any changes in market conditions, unforeseen circumstances, or other events affecting the area in which our assets are located could have a material adverse effect on our business, financial condition, and results of operations. These factors include, among other things, changes in the economy, weather, demographics, and population.

A8.	Competition from companies having greater financial and other resources could materially and adversely affect our business and results of operations.

The refining industry is highly competitive. Our refining operations compete with domestic refiners and marketers in PADD 3 (Gulf Coast), domestic refiners in other PADD regions, and foreign refiners that import products into the U.S. Certain of our competitors have larger, more complex refineries and may be able to realize higher margins per barrel of product produced. Several of our principal competitors are integrated national or international oil companies that are larger and have greater resources than we do and have access to proprietary sources of controlled crude oil production. Unlike these competitors, we obtain all our feedstocks from a single supplier. Because of their integrated operations and larger capitalization, larger, more complex refineries may be more flexible in responding to volatile industry or market conditions, such as crude oil and other feedstocks supply shortages or commodity price fluctuations. If we are unable to compete effectively, we may lose existing customers or fail to acquire new customers.

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Risk Factors (Continued)
A9.	Our insurance policies do not cover all losses, costs, or liabilities that we may experience, and insurance companies that currently insure companies in the energy industry may cease to do so or substantially increase premiums.
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Our insurance program may not cover all operational risks and costs and may not provide sufficient coverage in the event of a claim. We do not maintain insurance coverage against all potential losses and could suffer losses for uninsurable or uninsured risks or in amounts in excess of existing insurance coverage. The occurrence of an event that is not fully covered by insurance, failure by one or more of our insurers to honor its coverage commitments for an insured event, or losses in excess of our insurance coverage could have a material adverse effect on our business, financial condition, and results of operations.

There is finite capacity in the commercial insurance industry engaged in underwriting energy industry risk, and factors impacting cost and availability include: (i) losses in our industries, (ii) natural disasters, (iii) specific losses incurred by us, and (iv) inadequate investment returns earned by the insurance industry. If the supply of commercial insurance is curtailed, we may not be able to continue our present limits of insurance coverage, obtain sufficient insurance capacity to adequately insure our risks, or we may be unable to obtain and maintain adequate insurance at a reasonable cost. There is no assurance that our insurers will renew their insurance coverage on acceptable terms, if at all, or that we will be able to arrange for adequate alternative coverage in the event of non-renewal. The unavailability of full insurance coverage to cover events in which we suffer significant losses or cancellation of insurance policies could have a material adverse effect on our business, financial condition, and results of operations.

A10.	Our ability to use NOL carryforwards to offset future taxable income for U.S. federal income tax purposes is subject to limitation.

Under IRC Section 382, a corporation that undergoes an “ownership change” is subject to limitations on its ability to utilize its pre-change NOL carryforwards to offset future taxable income. Within the meaning of IRC Section 382, an “ownership change” occurs when the aggregate stock ownership of certain stockholders (generally 5% stockholders, applying certain look-through rules) increases by more than 50 percentage points over such stockholders' lowest percentage ownership during the testing period (generally three years).

Blue Dolphin experienced ownership changes in 2005 because of a series of private placements, and in 2012 because of a reverse acquisition. The 2012 ownership change limits our ability to utilize NOLs following the 2005 ownership change that were not previously subject to limitation. Limitations imposed on our ability to use NOLs to offset future taxable income could cause U.S. federal income taxes to be paid earlier than otherwise would be paid if such limitations were not in effect, and could cause such NOLs to expire unused, in each case reducing or eliminating the benefit of such NOLs. Similar rules and limitations may apply for state income tax purposes. NOLs generated after the 2012 ownership change are not subject to limitation. If the IRS were to challenge our NOLs in an audit, we cannot assure that we would prevail against such challenge. If the IRS were successful in challenging our NOLs, all or some portion of our NOLs would not be available to offset any future consolidated income, which would negatively impact our results of operations and cash flows. Certain provisions of the Tax Cuts and Jobs Act, enacted in 2017, may also limit our ability to utilize our net operating tax loss carryforwards.

At December 31, 2024, management determined that realization of the deferred tax assets from NOLs is more likely than not based on positive evidence that was evaluated, including recent earnings history and expectations for future taxable income. Based on management’s evaluation, we recorded no valuation allowances against our deferred tax assets as of December 31, 2024.

A11.	We may not be able to keep pace with technological developments in our industry.

The oil and natural gas industry is characterized by rapid and significant technological advancements and introductions of new products and services using innovative technologies. As others use or develop innovative technologies, we may be placed at a competitive disadvantage or may be forced by competitive pressures to implement those innovative technologies at substantial costs. We may not be able to respond to these competitive pressures or implement recent technologies on a timely basis or at an acceptable cost. If one or more of the technologies we use now or in the future were to become obsolete, our business, financial condition or results of operations could be materially and adversely affected.

A12.	Our variable rate indebtedness under certain of our secured loan agreements subjects us to interest rate risk, which could cause our debt service obligations to increase significantly.

Borrowings under certain of our secured loan agreements with third parties are at variable rates of interest and expose us to interest rate risk. If interest rates increase, our debt service obligations on the variable rate indebtedness will increase even though the amount borrowed remains the same, and our net income and cash flows, including cash available for servicing our indebtedness, would correspondingly decrease. As of December 31, 2024, approximately $29.8 million of our debt was variable rate debt. Our anticipated annual interest expense on $29.8 million of variable rate debt at the current rate of 10.25% would be $3.1 million.

B.	Downstream and Midstream Operations
B1.	Refining margins, which are affected by commodity prices and refined product demand, are volatile, and a reduction in refining margins will adversely affect the amount of cash we will have available for working capital.
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Our financial results are affected by the relationship, or margin, between our refined product prices and the price for crude oil, which can vary based on global, regional, and local market conditions. Historically, refining margins have been volatile, and we believe they will continue to be volatile in the future. Our cost to acquire feedstocks and the price at which we can ultimately sell products depend upon several factors beyond our control, including regional and global supplies of and demand for feedstocks (such as crude oil), liquid transportation fuels, and other products. These in turn depend on, among other things, the availability and quantity of feedstocks and liquid transportation fuels imported into the U.S., the production levels of suppliers, levels of product inventories, productivity and growth (or the lack thereof) of the U.S. and global economies, the U.S. government’s relationships with foreign governments, political affairs, the extent of government regulation, including tariffs, and the events described in many of the other risk factors below. The ability of the members of the OPEC to agree on and to maintain crude oil price and production controls has also had, and is likely to continue to have, a significant impact on the market prices of crude oil and certain of our products.

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Risk Factors (Continued)

Some of these factors can vary by region and may change quickly, adding to market volatility, while others may have longer-term effects. The longer-term effects of these and other factors on refining margins are uncertain. We do not produce crude oil, and we must purchase nearly all of the feedstock we process. Price level changes during the period between purchasing crude oil and selling the resulting refined products has had, and could continue to have, a significant effect on our financial results. A decline in market prices for our refined products and crude oil has had, and could again have, a negative impact to the carrying value of our inventories. Factors outside of our control, such as economic uncertainty, inflation (and the potential for increased prices to create demand destruction), tariffs, persistently high interest rates, public health crises, and political unrest or hostilities, have affected, and could continue to affect, economic activity and growth levels of the U.S. and other countries. A decrease in the demand for and consumption of our products due to lower economic activity and growth levels has caused, and could again cause, declines in our revenues and refining margins and could negatively impact our growth prospects and capital allocation decisions.

B2.	The volatility of commodity prices for crude oil, other feedstocks, and refined products may have a material adverse effect on our earnings, cash flows, and liquidity.

Crude oil refining is primarily a margin-based business. To improve margins, we must maximize yields of higher value finished petroleum products and minimize costs of feedstocks and operating expenses. When the spread between these commodity prices decreases, our margins are negatively affected. Although an increase or decrease in the commodity price for crude oil and other feedstocks generally results in a similar increase or decrease in commodity prices for finished petroleum products, typically there is a time lag between the two. For example, if the price per barrel of crude oil decreases, the price of jet fuel per barrel will also generally decreases, as jet fuel is a refined product derived from crude oil. Therefore, the effect of crude oil commodity price changes on our finished petroleum product commodity prices depends, in part, on how quickly and how fully the market adjusts to reflect these changes. Unfavorable margins may have a material adverse effect on our earnings, cash flows, and liquidity.

The markets and commodity prices for crude oil and condensate and our finished products have historically been volatile, are likely to continue to be volatile, and depend on factors beyond our control. These factors include:

●	The level of domestic and offshore production.
●	The availability of crude oil and U.S. and global demand for this commodity.
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●	A general downturn in economic conditions.
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●	The impact of weather, including abnormally mild or extreme winter or summer weather that causes lower or higher energy usage for heating or cooling purposes, respectively, or extreme weather that may disrupt our operations or related upstream or downstream operations.
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●	Actions taken by foreign oil and gas producing and importing nations, including the ability or willingness of OPEC and OPEC+ to set and maintain pricing and production levels for oil.
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●	The availability of local, intrastate, and interstate transportation systems.
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●	U.S. and global economic conditions, including inflationary pressures, tariffs, further increases in interest rates, and a general economic slowdown or recession.
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●	Geopolitical tensions, including conflicts and war (such as the ongoing military conflicts in Ukraine and Israel and escalations in the Middle East).
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●	The availability and marketing of competitive fuels.
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●	The extent of governmental regulation and taxation.
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B3.	Our ability to acquire sufficient levels of crude oil on favorable terms impacts our ability to operate the Nixon refinery.
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Operation of the Nixon refinery depends on our ability to purchase adequate amounts of crude oil and condensate on favorable terms. During 2023, we operated under the Tartan Crude Supply Agreement. Related to the Tartan Crude Supply Agreement, Tartan stored crude oil at the Nixon facility under a terminal services agreement. In a letter dated October 31, 2023, Tartan provided LE and NPS the required 60 days’ notice of its intention to terminate the Tartan Crude Supply Agreement and terminal services agreement. The effective date of the termination was December 31, 2023. Under the volume-based Tartan Crude Supply Agreement, Tartan was to deliver 24.8 million net bbls of crude oil. For the twelve months ended December 31, 2023, volume delivered under the Tartan Crude Supply Agreement, as a percentage of the total net bbls of crude oil deliverable, was 71.0%. During the twelve months ended December 31, 2023, substantially all our crude was sourced from Tartan.

Given the large dollar amount required to make crude oil purchases, liquidity constraints could cause us to delay purchases of crude oil or otherwise acquire less than the desired amounts. This, in turn, could cause us to operate the Nixon facility at a lower rate on a bpd basis to meet customer demand. During the twelve-month periods ended December 31, 2024 and 2023, the refinery experienced no days of downtime due to lack of crude associated with cash constraints. Failing to operate the Nixon facility at the desired run rate, or at all, could adversely affect our profitability and cash flows.

B4.	Downtime at the Nixon refinery could result in lost margin opportunity, increased maintenance expense, increased inventory, and a reduction in cash available for payment of our obligations.

The Nixon refinery periodically undergoes planned shutdowns to repair, restore, refurbish, or replace refinery equipment. Occasionally, unplanned temporary shutdowns occur. Unplanned downtime can occur for a variety of reasons; however, common reasons for unplanned downtime include repair/replacement of disabled equipment, crude deficiencies associated with cash constraints, extreme temperatures, weather, and power outages. We are particularly vulnerable to operation disruptions because all our refining operations occur at a single facility. Any scheduled or unscheduled downtime results in lost margin opportunity, reduced refined products inventory, and potential increased maintenance expense, all of which could reduce our ability to meet our payment obligations.

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Risk Factors (Continued)
B5.	Our operations depend on the reliable supply of electricity, which exposes us to various risks.
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Our operations depend on the reliable supply of electricity. We consume significant amounts of electricity to operate the Nixon facility, and electricity price has a measurable effect on the total cost of our operations. Additionally, the availability and cost of electricity has been, and could continue to be, affected by numerous events, such as government regulations, weather (e.g., hurricanes and periods of considerable heat or cold, such as Winter Storm Uri in 2021), logistics interruptions, electric grid outages, cybersecurity incidents, intermittent electricity generation (particularly from wind and solar), hostilities, sanctions, human error, and supply and demand imbalances for electricity. For example, the real-time market structure of the primary grid provider in Texas exposes the Nixon facility and our other locations in Texas to “scarcity pricing” during periods of supply and demand imbalance. As electrification continues to grow, or if there are increased restrictions or costs imposed on the ability of utilities or power suppliers to utilize certain energy sources (such as through restrictions on fossil fuel or nuclear-generated electricity or environmental, social, and governance pressure not to use such sources of electricity generation), there will likely be increased strains on and risks to the integrity, reliability, and resilience of electrical grids, and increased volatility and tightness in electricity supplies across the world. These events could negatively affect the cost, reliability, and availability of our electricity supply and may cause sporadic outages that disrupt our operations. Growing electrification and rapidly developing and increasing technology use (such as artificial intelligence, computer processing, cryptocurrency mining, and cloud storage, and the data centers and power supplies required to support these activities) will also likely increase the intermittency and decrease the reliability of electricity supplies, particularly for grids highly dependent upon wind and solar power, which would exacerbate the foregoing challenges. Additionally, increased government regulations and public opposition to pipeline construction and electricity generation and transmission projects have resulted in, and could continue to result in, the underinvestment in, or unavailability of, the infrastructure and logistics assets needed to obtain natural gas feedstocks and electricity in a reliable and cost-efficient manner. Increases in prices for electricity, or disruptions to our supply thereof, have in the past, and could again, materially and adversely affect our business, financial condition, results of operations, and liquidity.

B6.	Potential impairment in the carrying value of long-lived assets could negatively affect our operating results.

We have a significant amount of long-lived assets on our consolidated balance sheet. Under generally accepted accounting principles, long-lived assets are required to be reviewed for impairment annually or whenever adverse events or changes in circumstances indicate a possible impairment. If business conditions or other factors cause the undiscounted estimated pretax cash flows for long-lived assets to fall below their carrying value, we may be required to record non-cash impairment charges. Events and conditions that could result in impairment in the value of our long-lived assets include lower realized refining margins, decreased refinery production, other factors leading to a reduction in expected long-term sales or profitability, or significant changes in the manner of use for the assets or the overall business strategy.

Significant management judgment is required in the forecasting of future operating results that are used in the preparation of projected cash flows. As a result, there can be no assurance that the estimates and assumptions made for purposes of our impairment analysis will prove to be an accurate prediction of the future. Should our assumptions significantly change in future periods, it is possible we may later determine the carrying values of our refinery and facilities assets exceed the undiscounted estimated pretax cash flows, which would result in a future impairment charge.

B7.	We may have capital needs for which internally generated cash flows and external financing are inadequate. Affiliates may, but are not required to, fund our working capital requirements in such instances.

We have historically relied on Affiliates for funding when revenue from operations and availability under bank facilities were insufficient to meet our liquidity and working capital needs. During such times, Affiliate borrowings are reflected in our consolidated balance sheets in accounts payable, related party, or long-term debt, related party. Accounts payable, related party totaled approximately $0.0 million and $0.9 million at December 31, 2024 and 2023, respectively. Accounts payable, related party at December 31, 2023 reflected tank rental fees owed by LE to Ingleside under the LE Amended and Restated Master Services Agreement plus amounts owed to LTRI for previously purchased refinery equipment. No amounts for either period related to Affiliate borrowings for working capital.

If we are unable to generate sufficient cash flows from operations, obtain additional external financing, or secure sufficient liquidity from Affiliates, we may not be able to meet our short- and long-term working capital needs. Our short-term working capital needs are primarily related to: (i) purchasing crude oil and condensate to operate the Nixon refinery, (ii) reimbursing LEH for direct operating expenses and paying the LEH operating fee under the Third Amended and Restated Operating Agreement, (iii) servicing debt, (iv) meeting regulatory compliance mandates, and (v) maintaining the Nixon facility through capital expenditures. Our long-term working capital needs are primarily related to repayment of long-term debt obligations. There can be no assurance that Affiliates will continue to fund our working capital requirements. If we are unable to generate sufficient working capital or raise additional capital on acceptable terms, or at all, we may not, in the short term, be able to purchase crude oil and condensate or meet debt payment obligations. In the long term, we may not be able to withstand business disruptions, or execute our business strategy. We may have to consider other options, such as selling assets, raising additional debt or equity capital, seeking bankruptcy protection, or ceasing operations.

Blue Dolphin Energy Company

December 31, 2024 | Page 16

Risk Factors (Continued)
B8.	Our business may suffer if any of the executive officers or other key personnel discontinue employment with us. Furthermore, a shortage of skilled labor or disruptions in our labor force may make it difficult for us to maintain productivity.
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Our future success depends on the services of the executive officers and other key personnel and on our continuing ability to recruit, train and retain highly qualified personnel in all areas of our operations. In particular, Jonathan Carroll currently serves as our principal executive officer; Bryce Klug currently serves as our principal financial and accounting officer; and William Christopher McDougall currently serves as our Corporate Development Officer. We are highly dependent on their continued services to execute our business plan and strategy. Furthermore, our operations require skilled and experienced personnel with proficiency in multiple tasks. Competition for skilled personnel with industry-specific experience is intense, and the loss of these executives or personnel could harm our business. If any of these executives or other key personnel resign or become unable to continue in their present roles and are not adequately replaced, our business could be materially adversely affected.

B9.	Loss of business from, or the bankruptcy or insolvency of, one or more of our significant customers, one of which is an Affiliate, could have a material adverse effect on our financial condition, results of operations, liquidity, and cash flows.

Most of our contracts require our customers to prepay and for us to sell to our customers fixed quantities or minimum quantities of finished and intermediate petroleum products. Many of these arrangements are subject to periodic renegotiation on a forward-looking basis, which could result in higher or lower relative commodity prices on future sales of our refined products.

Our customers have a variety of suppliers to choose from. As a result, they can make substantial demands on us, including demands for more favorable product pricing or contractual terms. Our ability to maintain strong relationships with our principal customers is essential to our future performance. Our operating results could be harmed if we lose a key customer, a key customer reduces their order quantity, or a key customer requires us to reduce our commodity prices. We may further be harmed if a key customer is acquired by a competitor or suffers financial hardship. Additionally, our profitability could be adversely affected if there is consolidation among our customer base and our customers command increased leverage in negotiating commodity prices and other terms of sale. We could decide not to sell our refined products to a certain customer if, because of increased leverage, the customer pressures us to reduce our pricing such that our gross profits are diminished, which could result in a decrease in our revenue. Consolidation may also lead to reduced demand for our products, replacement of our products by the combined entity with those of our competitors, and cancellations of orders, each of which could harm our operating results. Loss of business from, or the bankruptcy or insolvency of, one or more of our major customers could similarly affect our financial condition, results of operations, liquidity, and cash flows.

B10.	We are dependent on third parties for the transportation of crude oil and condensate into and refined products out of our Nixon facility. If these third parties become unavailable to us, our ability to process crude oil and condensate and sell refined products to wholesale markets could be materially and adversely affected.

We rely on trucks for the receipt of crude oil and condensate into and the sale of refined products out of our Nixon facility. Since we do not own or operate any of these trucks, their continuing operation is not within our control. If any of the third-party trucking companies that we use, or the trucking industry in general, become unavailable to transport crude oil, condensate, or our refined products or experience interruptions in transportation because of acts of God, accidents, government regulation, terrorism or other events, our revenue and net income would be materially and adversely affected.

B11.	Our suppliers source a substantial amount, if not all, of our crude oil and condensate from the Eagle Ford Shale and may experience interruptions of supply from that region.

Our suppliers source a substantial amount, if not all, of our crude oil and condensate from the Eagle Ford Shale. Consequently, we may be disproportionately exposed to the impact of delays or interruptions of supply from that region caused by transportation capacity constraints, curtailment of production, unavailability of equipment, facilities, personnel or services, significant governmental regulation, severe weather, plant closures for scheduled maintenance, or the interruption of oil or natural gas being transported from wells in that area.

B12.	Our refining operations and customers are primarily located within the Eagle Ford Shale and changes in the supply/demand balance in this region could result in lower refining margins.

Our primary operating assets are in Nixon, Texas in the Eagle Ford Shale, and we market our refined products in a single, limited geographic area. Therefore, we are more susceptible to regional economic conditions than our more geographically diversified competitors. Should the supply/demand balance shift in our region due to changes in the local economy, an increase in refining capacity or other reasons, resulting in supply in the PADD 3 (Gulf Coast) region to exceed demand, we would have to deliver refined products to customers outside of our current operating region and thus incur considerably higher transportation costs, resulting in lower refining margins.

Blue Dolphin Energy Company

December 31, 2024 | Page 17

Risk Factors (Continued)
B13.	Severe weather or other events affecting our facilities, or those of our vendors, suppliers, or customers could have a material adverse effect on our liquidity, business, financial condition, and results of operations.
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Our operations are subject to all the risks and operational hazards inherent in receiving, handling, storing, and transferring crude oil and petroleum products. These risks include damages to facilities, related equipment and surrounding properties caused by severe weather (such as extreme cold or hot temperatures, hurricanes, floods, and other natural disasters) or other events (such as equipment malfunctions, mechanical or structural failures, explosions, fires, spills, or acts of terrorism) and can occur at our facilities or at third-party facilities on which our operations are dependent. Severe weather or other events could cause severe damage or destruction to our assets or the temporary or permanent shut-down of our operations. If we are unable to operate, our liquidity, business, financial condition, and results of operations could be materially affected.

B14.	Our renewable energy strategy may not materialize or underperform expectations.

Our business strategy to leverage existing infrastructure and capitalize on green energy growth depends on our ability to find commercial partners and government loans as vehicles to enter the renewable energy space. The plans are subject to business, economic and competitive uncertainties, many of which are beyond our control. Additionally, we may be forced to develop or implement recent technologies at substantial costs to achieve our strategy. While the Biden Administration advanced significant climate-related initiatives, including incentives to promote renewable energy, recent changes under the Trump Administration following the 2024 U.S. presidential election have begun to, and may further shift, regulatory priorities away from renewable energy. Through executive orders and regulatory rollbacks, certain Biden-era initiatives have been curtailed or reevaluated and incentives to increase fossil fuel production have been promoted, creating a more uncertain regulatory landscape which may materially impact our plans to capture renewable energy opportunities. Throughout 2024, management had meaningful discussions with potential commercial partners. However, reductions or modifications to, or the elimination of, governmental incentives or policies that support renewable energy or the imposition of additional taxes, tariffs, duties, or other assessments on renewable energy projects, could result in, among other things, the lack of a satisfactory market for the development or financing of new renewable energy projects and us abandoning the development of renewable energy projects.

C.	Legal, Government, and Regulatory
C1.	Environmental laws and regulations could require us to make substantial capital expenditures to remain in compliance or to remediate current or future contamination that could give rise to material liabilities.
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Our operations are subject to a variety of federal, state, and local environmental laws and regulations relating to the protection of the environment and natural resources, including those governing the emission or discharge of pollutants into the environment, product specifications and the generation, treatment, storage, transportation, disposal, and remediation of solid and hazardous wastes. Violations of these laws and regulations or permit conditions can result in substantial penalties, injunctive orders compelling installation of additional controls, civil and criminal sanctions, permit revocations, or facility shutdowns. These and further actions could restrict or limit operations as currently conducted at the Nixon Facility. In addition, new environmental laws and regulations, new interpretations of existing laws and regulations, increased governmental enforcement of laws and regulations, or other developments could require us to make additional unforeseen expenditures. Many of these laws and regulations are becoming increasingly stringent, and the cost of compliance with these requirements can be expected to increase over time. The requirements to be met, as well as the technology and length of time available to meet those requirements, continue to develop and change. Expenditures or costs for environmental compliance could have a material adverse effect on our results of operations, financial condition, and profitability.

The Nixon facility operates under several federal and state permits, licenses, and approvals with terms and conditions that contain a substantial number of prescriptive limits and performance standards. These permits, licenses, approvals, limits, and standards require a significant amount of monitoring, record keeping and reporting to demonstrate compliance with the underlying permit, license, approval, limit or standard. Non-compliance or incomplete documentation of our compliance status may result in the imposition of fines, penalties, and injunctive relief. Additionally, there may be times when we are unable to meet the standards and terms and conditions of our permits, licenses, and approvals due to operational upsets or malfunctions, which may lead to the imposition of fines and penalties or operating restrictions that may have a material adverse effect on our ability to operate our facilities, and accordingly our financial performance.

C2.	We are subject to strict laws and regulations regarding personnel and process safety, and failing to comply with these laws and regulations could have a material adverse effect on our results of operations, financial condition, and profitability.

We are subject to the requirements of OSHA, and comparable state statutes that regulate the protection, health, and safety of workers, and the proper design, operation, and maintenance of our equipment. In addition, OSHA and certain other environmental regulations require that we maintain information about hazardous materials used or produced in our operations and that we provide this information to personnel and state and local governmental authorities. Failing to comply with these requirements, including general industry standards, record keeping requirements and monitoring and control of occupational exposure to regulated substances, may result in significant fines or compliance costs, which could have a material adverse effect on our results of operations, financial condition, and cash flows.

C3.	The impact of current and future sanctions (including tariffs) imposed by governments, including the U.S., and other authorities in response to economic and geopolitical tensions, may impact our business, financial condition, and results of operations .

In February 2025, the Trump Administration imposed tariffs on imports to the U.S. from Canada, China, and Mexico as part of an emergency response to deemed national threats. While the Trump Administration initially negotiated a temporary stay in implementation of the tariffs against Canada and Mexico, the tariffs went into effect in March 2025. In response to U.S. tariffs, Canada, China, and Mexico each imposed retaliatory tariffs on certain U.S. goods. While we obtain our crude oil and condensate from the Eagle Ford Shale (domestically sourced crude), U.S. refiners that have historically sourced heavy crude oil from Canada and Mexico are identifying lighter, domestic crude oil to use as an alternative in their refining processes. The shift in demand for U.S.-sourced crude oil could adversely impact the cost and supply of crude oil and condensate that we acquire from the Eagle Ford Shale, as well as the price for our refined products, which may lower our refining margins and could have a material adverse effect on our financial results and financial condition.

Blue Dolphin Energy Company

December 31, 2024 | Page 18

Risk Factors (Continued)

In February 2022, Russia initiated significant military action against Ukraine. In response, the U.S. and certain other countries imposed significant sanctions and export controls against Russia. In October 2023, Hamas launched a surprise attack on Israel. In response, the U.S. and certain other countries imposed sanctions against Hamas and key Hamas terrorist group members. The U.S. and certain other countries could impose further sanctions, trade restrictions, and other retaliatory actions should these conflicts continue or worsen. It is not possible to predict the broader consequences of these conflicts, including related geopolitical tensions, the measures and retaliatory actions taken by the U.S. and other countries, counter measures or retaliatory actions by Russia or Hamas in response (e.g., potential cyberattacks or the disruption of energy exports). Such consequences are likely to cause regional instability, geopolitical shifts, and could materially adversely affect global trade, currency exchange rates, regional economies, and the global economy. While it is difficult to predict the impact of any of the foregoing, these conflicts and actions taken in response could increase our costs for crude oil, disrupt our supply chain, reduce our sales and earnings, impair our ability to raise additional capital when needed on acceptable terms, if at all, or otherwise adversely affect our business, financial condition, and results of operations.

C4.	General U.S. economic, political, or regulatory developments, including those related to recession, inflation, tariffs, interest rates, or governmental policies relating to refined petroleum products, crude oil, or taxation could adversely affect our business, operating results, and financial condition.

U.S. economic slowdowns may have serious negative consequences for our business and operating results because our performance is subject to domestic economic conditions and their impact on levels of consumer spending (e.g., consumer airline travel relating to jet fuel). Some of the factors affecting consumer spending include unemployment rates, consumer debt levels, recession, inflation rates, the impact of tariffs on goods and services, net worth reductions based on declines in equity markets and residential real estate values, interest rates for mortgages and other loans, taxation, energy prices, consumer confidence, and other macroeconomic factors. Political instability and health crises, among many other factors, can also impact the global economy and decrease worldwide demand for oil and refined products. During periods of economic weakness or uncertainty, current or potential customers may travel less, reduce, or defer purchases, go out of business, or have insufficient funds to buy or pay for our products and services. Moreover, a financial market crisis may have a material adverse impact on financial institutions and limit access to capital and credit. This could, among other things, make it more difficult for us to obtain (or increase our cost of obtaining) capital and financing for our operations. Our access to additional capital may not be available on terms acceptable to us or at all.

Because our refinery is located in the Gulf Coast Region, we primarily market our refined products in a relatively limited geographic area. As a result, we are more susceptible to regional economic conditions compared to our more geographically diversified competitors, and any unforeseen events or circumstances that affect the Gulf Coast Region could also materially and adversely affect our revenues and cash flows. Primary factors include, among other things, changes in the economy, weather conditions, demographics and population, increased supply of refined products from competitors and reductions in the supply of crude oil or other feedstocks. In the event of a shift in the supply/demand balance in the Gulf Coast Region due to changes in the local economy, an increase in aggregate refining capacity or other reasons, resulting in supply exceeding the demand in the region, our refinery may have to deliver refined products to more customers outside of the Gulf Coast Region and thus incur considerably higher transportation costs, resulting in lower refining margins, if any.

C5.	Penalty assessments by regulatory agencies, such as BOEM, BSEE, OSHA, and TCEQ for failing to meet regulatory requirements could adversely affect our business, operating results, and financial condition.

BOEM Supplemental Pipeline Bonds. To cover the various obligations of lessees and rights-of-way holders operating in federal waters of the U.S. Gulf of America, BOEM evaluates an operator’s financial ability to carry out present and future obligations to determine whether the operator must provide additional security beyond the statutory bonding requirements. Such obligations include the cost of plugging and abandoning wells and decommissioning pipelines and platforms at the end of production or service activities. Once plugging and abandonment work has been completed, the collateral backing the financial assurance is released by BOEM.

Historically, BDPL maintained $0.9 million in pipeline bonds with BOEM to decommission its trunk pipeline offshore in federal waters. In March 2018, BOEM ordered BDPL to provide additional financial assurance totaling approximately $5.7 million for five (5) existing pipeline rights-of-way, an increase of approximately $4.8 million. In June 2018, BOEM issued BDPL INCs for each right-of-way that failed to comply. BDPL appealed the INCs to the IBLA. Although the IBLA granted multiple extension requests, the Office of the Solicitor of the U.S. Department of the Interior indicated that BOEM would not consent to further extensions. The Solicitor’s office signaled that BDPL’s adherence to decommissioning its offshore pipelines and platform would likely help in future discussions with BOEM related to the INCs. Fulfilling abandonment obligations related to the subject assets will significantly reduce or eliminate the amount of supplemental pipeline bonds required by BOEM, which may serve to partially or fully resolve the INCs.

BDPL’s pending appeal of the BOEM INCs does not relieve BDPL of its obligations to provide additional financial assurance or of BOEM’s authority to impose financial penalties. There can be no assurance that we will be able to meet additional supplemental pipeline bond requirements. If BDPL is required by BOEM to provide significant additional supplemental pipeline bonds or is assessed significant penalties under the INCs, we will experience a significant and material adverse effect on our operations, liquidity, and financial condition. We cannot predict the outcome of the supplemental pipeline bond INCs. Accordingly, we did not record a liability on our consolidated balance sheets as of December 31, 2024 and 2023. At both December 31, 2024 and 2023, BDPL maintained $0.9 million in cash-backed pipeline bonds issued to the BOEM through RLI Corp.

RLI Corp. Surety Bonds. Blue Dolphin currently has several surety bonds through RLI Corp. as required by different regulatory agencies, including BOEM and the Railroad Commission of Texas. The bonds total approximately $1.25 million in the aggregate, of which $0.2 million was collateralized in cash. In February 2024, RLI Corp. filed suit against Blue Dolphin, BDPL, and BDEX seeking an injunction for the payment of approximately $1.0 million of additional cash collateral for the bonds. BDPL filed its answer to RLI Corp.'s lawsuit in April 2024 denying RLI Corp.'s claims, and in July 2024 BDPL presented a settlement proposal to RLI Corp. to resolve the matter through a series of payments collateralizing the bonds with cash. In July 2024, RLI Corp. informed the court that the parties reached a settlement in principle, and the parties executed a settlement agreement in September 2024. From September to December 2024, BDPL made payments to RLI Corp. under the settlement agreement totaling $0.6 million. As of the filing date of this report, BDPL was in compliance with the settlement agreement with RLI Corp. Once complete, abandonment of BDPL’s offshore pipeline and platform assets will eliminate the need for all BOEM supplemental pipeline bonds, which would reduce the amount of surety bonds held by RLI Corp. from $1.25 million to $0.25 million.

BSEE Offshore Platform Inspections, Decommissioning Obligations, and Civil Penalties. BDPL has pipelines and platform assets subject to BSEE’s idle iron regulations. Idle iron regulations require lessees and rights-of-way holders to permanently abandon or remove platforms and other structures when they are no longer useful for operations. Until such structures are abandoned or removed, lessees and rights-of-way holders are required to inspect and maintain the assets in accordance with regulatory requirements.

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December 31, 2024 | Page 19

Risk Factors (Continued)

Platform Inspection Obligation. We are required by BSEE to perform annual structural inspections of our offshore platform, as well as to perform monthly platform checks of navigational aids, fog horns, and lifesaving equipment. In March 2023, BSEE issued BDPL an INC for failing to perform the required 2021 and 2022 structural surveys for the GA-288C platform and for failing to provide BSEE with such survey results. In April 2023, BSEE granted BDPL an extension for completing the required platform inspection until May 30, 2023. Although BDPL requested a second extension, BSEE denied BDPL’s request. BDPL completed the platform inspection on August 26, 2023 and submitted the survey report to BSEE on September 6, 2023.

Decommissioning Obligations. Because our pipelines and facilities assets have been inactive for an extended period, BSEE mandated that they be decommissioned. In October 2023, management met BSEE to discuss BDPL’s path forward for meeting decommissioning requirements. Management worked with a consultant to develop a decommissioning plan, and BDPL submitted its decommissioning plan to the agency in November 2023. Although the decommissioning of these assets was delayed due to cash constraints associated with historical net losses during the pandemic, a sizeable portion of the decommissioning project was completed from late December 2023 to mid-February 2024. Additional work was planned for 2024; however, no additional work was performed due to significant cost overruns under the first phase of work due to poor weather conditions. In July 2024, BDPL requested a BSEE extension to decommission the remaining portion of the Blue Dolphin Pipeline System and associated platform until the second quarter of 2025; BDPL’s request for a decommissioning extension was denied by BSEE in September 2024. On March 17, 2025, BSEE issued BDPL an INC for failing to comply with certain of its decommissioning obligations; see "Note (16) for additional disclosures related to this BSEE INC.

Management is currently assessing the feasibility and cost of performing decommissioning work. Separately, management is also exploring alternatives to reactivate the assets under a potential alternate Right-of-Use and Easement (RUE). 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 bonds or exercise any other rights and remedies it has available.

BSEE Civil Penalties. During the twelve months ended December 31, 2024 and 2023 BDPL received the following BSEE civil penalty referral letters:

●	Civil Penalty G-2023-021. In September 2023, BDPL received a civil penalty referral letter from BSEE for failing to timely submit a platform inspection report associated with BSEE INC No. G822 issued in March 2023. In October 2023, BSEE calculated a proposed civil penalty of $0.2 million against BDPL; BSEE finalized the penalty amount in January 2024. BDPL paid the final civil penalty amount in full in April 2024.
●	Civil Penalty G-2024-054. In August 2024, BDPL received a civil penalty referral letter from BSEE for failing to timely 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. See "Part II, Item 8—Financial Statements and Supplementary Data -- Note (16)" for additional disclosures related to this BSEE civil penalty.
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●	Civil Penalty G-2024-056. In August 2024, BDPL received a civil penalty referral letter from BSEE for failing to timely 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. See "Part II, Item 8—Financial Statements and Supplementary Data -- Note (16)" for additional disclosures related to this BSEE civil penalty.
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●	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 (timely removing 55-gallon drum leaking oil on platform deck), L141 (timely flushing and filling Pipeline Segment No. 13101 with inhibited seawater), and L142 (timely decommissioning in place Pipeline Segment No. 13101). See "Part II, Item 8—Financial Statements and Supplementary Data -- Note (16)" for additional disclosures related to this BSEE civil penalty.
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At December 31, 2024 and 2023, BDPL maintained $3.0 million and $4.5 million, respectively, in AROs related to abandonment of its pipeline and facilities assets. See "Part II, Item 8—Financial Statements and Supplementary Data -- Notes (11), (15), and (16)" for additional disclosures related to AROs and BSEE civil penalties.

TCEQ Final Agreed Order. In October 2021, LRM received a proposed agreed order from the TCEQ for alleged solid and hazardous waste violations discovered during an investigation from January to March 2020. The proposed agreed order assessed an administrative penalty of $0.4 million and identified actions needed to correct the alleged violations. In September 2023, TCEQ presented its final penalty offer of $0.35 million, which LRM accepted. Although LRM believed the penalty matter is resolved in September 2023, TCEQ referred the matter to the State Office of Administrative Hearings ("SOAH"). A preliminary hearing, the purpose of which was to set a hearing schedule, was held on August 8, 2024; management participated in the hearing. Although a follow-up hearing was scheduled for January 2025, TCEQ presented, and LRM signed, a revised draft Agreed Order in November 2024. Under the terms of the revised draft Agreed Order, TCEQ acknowledged that LRM had ceased unauthorized disposal of industrial solid waste and industrial hazardous waste and LRM accepted a final penalty amount of approximately $0.4 million, which will be paid in monthly installments over a three-year period. The SOAH case was dismissed and the matter was remanded back to the TCEQ December 2024; TCEQ finalized the Agreed Order in February 2025. At both December 31, 2024 and 2023, we accrued $0.4 million on our balance sheet within accrued expenses and other current liabilities related to this matter.

Blue Dolphin Energy Company

December 31, 2024 | Page 20

Risk Factors (Continued)
C6.	O ur estimates of future AROs related to our pipeline and facilities assets may increase.
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We recorded an ARO liability related to future asset retirement costs associated with dismantling, relocating, or disposing of our offshore platform, pipeline systems, and related onshore facilities, as well as for plugging and abandoning wells and restoring the seafloor. We based asset retirement cost estimates on regulatory requirements and then current market rates for decommissioning and removal of assets with our given structural and water depth specifications. Estimating future costs are difficult and require management to make judgments that are subject to future revisions based upon numerous factors, including changing technology, political, and regulatory environments. In addition, dive operation market rates are subject to fluctuations based on season, fuel costs, insurance rates, equipment availability, and industry changes, and actual work performed is subject to cost overruns due to unforeseen events and conditions, such as severe weather. A significant change in any of these factors could increase our ARO liability, which could have a material adverse effect on our business, financial condition, and results of operations. See Risk Factor C5. within this "Item 1A. Risk Factors" section and "Part II, Item 8—Financial Statements and Supplementary Data -- Notes (11), (15), and (16)" for additional disclosures related to our AROs.

C7.	We may incur significant costs and liabilities resulting from performance of pipeline integrity programs and related repairs.

PHMSA has established a series of rules requiring pipeline operators to develop and implement integrity management programs for hazardous liquid pipelines that, in the event of a pipeline leak or rupture, could affect high consequence areas ("HCAs"), which are areas where a release could have the most significant adverse consequences, including high-population areas, certain drinking water sources, and unusually sensitive ecological areas. Although our pipelines are inactive, PHMSA regulations require pipelines to be maintained and monitored to ensure safety standards are met until the subject pipeline is officially taken out of service and properly abandoned. The rules require pipeline operators to:

●	Perform ongoing assessments of pipeline integrity.
●	Identify and characterize applicable threats to pipeline segments that could impact an HCA.
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●	Improve data collection, integration, and analysis.
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●	Repair and remediate the pipeline as necessary.
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●	Implement preventative and mitigating actions.
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In addition, certain states have also adopted regulations similar to existing PHMSA regulations for intrastate gathering and transmission lines. These requirements could require us to install new or modified safety controls, pursue additional capital projects, or conduct maintenance programs on an accelerated basis, any or all of which tasks could result in us incurring increased operating costs that could be significant and have a material adverse effect on our financial position or results of operations. Additionally, we are subject to periodic inspections and audits regarding these requirements. Moreover, changes to pipeline safety laws by Congress and regulations by PHMSA that result in more stringent or costly safety standards could result in our incurring increased operating costs that could have a material adverse effect on our financial position or results of operations.

C8.	Regulatory changes, as well as proposed measures that are reasonably likely to be enacted, related to GHG emissions, climate change, and an ongoing desire to transition to greater renewable energy solutions could require us to incur significant costs or could result in a decrease in demand for our refined products, which could adversely affect our business.

Scientific studies conclusively show that, in the absence of human intervention, the rate of increase of carbon dioxide in the atmosphere will significantly increase in the next 100 years. This increase in carbon dioxide has enhanced the Earth’s natural greenhouse effect, resulting in global warming. Higher concentrations of GHGs (including carbon dioxide, methane, and nitrous oxides) in the atmosphere can produce changes in climate with significant physical effects, including increased frequency and severity of storms, floods, and other extreme weather events that could affect our operations. Increased concern over the effects of climate change have begun to affect our competition and customers’ energy strategies, consumer consumption patterns, and government and private sector alternative energy initiatives. In recent years, more aggressive efforts by governments and non-governmental organizations to put in place laws requiring or otherwise driving reductions in GHG emissions were gaining approval. Any such future laws and regulations could result in increased compliance costs or additional operating restrictions to us and our customers, and any increase in the prices of refined products resulting from such increased costs, GHG cap-and-trade programs or taxes on GHGs, could result in reduced demand for our refined petroleum products. Additionally, changing customer sentiment towards renewable and sustainable energy products may reduce demand for our products, and an excess of supply over demand could reduce fossil fuel prices. If we fail to stay in step with the pace and extent of the market shift, we could impact future earnings; if we move too fast, we risk investing in technologies, markets, and low-carbon products that will be unsuccessful. These factors could also have a material adverse effect on our business, financial condition, and results of operations.

Although the Biden Administration focused on reducing GHG emissions by: (i) having the U.S. rejoin the Paris Agreement (February 2021), (ii) announcing a new U.S. target to achieve a 50% to 52% reduction from 2005 levels in economy-wide net GHG pollution by 2030 (April 2021), and (iii) signing into law the Inflation Reduction Act of 2022, which includes nearly $370 billion in climate-related provisions that provide funding, programs, and incentives to accelerate the U.S.'s transition to a clean energy economy, President Trump signed an executive order directing the U.S. to withdraw from the Paris Agreement (January 2025), and it is expected that President Trump and the Republican-led Congress will diverge from the previous administration’s positions and GHG commitments.

The Inflation Reduction Act of 2022 imposes a tax, or "methane fee," on energy producers that exceed a certain level of methane emissions. In January 2024, the EPA published a proposed rule to implement the methane fee. These and similar regulations could require us to incur costs to monitor, report, and reduce GHG emissions associated with our operations. However, future emission reduction targets and other provisions of legislative or regulatory initiatives and policies enacted in the future by the U.S. could be brought by future administrations or, in the absence of federal action, states may become more active and focused on taking legislative or regulatory actions aimed at climate change and minimizing GHG emissions.

Federal and state requirements to reduce GHG emissions could result in increased costs to operate and maintain the Nixon facility as well as implement and manage new emission controls and programs. Cap-and-trade places a cap on GHGs and refiners are required to acquire a sufficient number of credits to cover emissions from their refinery and in-state sales of gasoline and diesel. Similarly, low carbon fuel standards require an established percentage reduction in the carbon intensity of gasoline and diesel by a specified time period. Compliance with the low carbon fuel standard is achieved through blending lower carbon intensity biofuels into gasoline and diesel or by purchasing credits. Compliance with each of these programs is facilitated through a market-based credit system. If sufficient credits are unavailable for purchase or refiners are unable to pass through costs to their customers, they must pay a higher price for credits. The Nixon refinery does not produce gasoline or diesel. In the event we do incur increased costs as a result of increased efforts to control GHG emissions, we may not be able to pass on any of these costs to our customers. Regulatory requirements also could adversely affect demand for the refined petroleum products that we produce. Any increased costs or reduced demand could materially and adversely affect our business and results of operations.

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Risk Factors (Continued)
D.	Security
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D1.	A terrorist attack or armed conflict could harm our business.
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Terrorist activities, anti-terrorist efforts, and other armed conflicts involving the U.S. or other countries may adversely affect national and global economies and could prevent us from meeting our financial and other obligations. For example, Russia’s February 2022 invasion of Ukraine and Hamas' October 2023 surprise attack on Israel and resulting sanctions and export controls by the U.S. and other countries could have wide-ranging impacts that have yet to be identified. Given the evolving geopolitical situation, there are many unknown factors and events that could materially impact our operations, which may be temporary or permanent in nature. These tensions also create heightened risk of a terrorist attack or armed conflict involving the U.S. If any of these events occur, the resulting political instability and societal disruption could reduce overall demand for oil and natural gas, potentially putting downward pressure on demand for our production and causing a reduction in our revenues. Oil and natural gas related facilities could be direct targets of terrorist attacks, and our operations could be adversely impacted if infrastructure integral to our operations or the operations of our customers’ is destroyed or damaged. Costs for insurance and other security may increase as a result of these threats, and some insurance coverage may become more difficult to obtain, if available at all.

D2.	We face various risks associated with increased activism against oil and natural gas companies.

Opposition toward oil and natural gas companies has been growing globally and is particularly pronounced in the U.S. Companies in the oil and natural gas industry are often the target of activist efforts from both individuals and non-governmental organizations regarding safety, human rights, environmental matters, such as climate change, sustainability efforts, including environmental justice, and business practices. Anti-development activists are working to, among other things, reduce access to federal and state government lands, delay or cancel certain operations, stop or rescind operating permits, or curtail emissions. Any restrictions or limitations on our business or operations resulting from such opposition could have a material adverse effect on our financial condition and results of operations.

D3.	Our business could be negatively affected by cybersecurity threats.

A cyberattack or similar incident could occur and result in information theft, data corruption, loss of data privacy, operational disruption, damage to our reputation, or economic loss. Our industry has become increasingly dependent on digital technologies to conduct certain exploration, development, production, processing, and financial activities. Our technologies, systems, networks, or other proprietary information, and those of our vendors, suppliers, and other business partners, may become the target of cyberattacks or information security breaches that could result in the unauthorized release, gathering, monitoring, misuse, loss, or destruction of proprietary and other information, or could otherwise lead to the disruption of our business operations. Cyberattacks are becoming more sophisticated and certain cyber incidents, such as surveillance, may remain undetected for an extended period and could lead to disruptions in critical systems or the unauthorized release of confidential or otherwise protected information. These events could lead to economic loss from remedial actions, loss of business, disruption of operations, damage to our reputation, or potential liability. Also, computers control nearly all the oil and gas distribution systems in the U.S. and abroad, which are necessary for transporting our production to market. A cyberattack directed at oil and gas distribution systems could damage critical distribution and storage assets or the environment, delay or prevent delivery of production to markets, and make it difficult or impossible to accurately account for production and settle transactions. Cyber incidents have increased, and the U.S. government has issued warnings indicating that energy assets may be specific targets of cybersecurity threats. Our systems and insurance coverage for protecting against cybersecurity risks may not be sufficient. Further, as cyberattacks continue to evolve, we may be required to expend significant additional resources to continue to modify or enhance our protective measures or to investigate and remediate any vulnerability to cyberattacks.

E.	Common Stock
E1.	Our stock price has experienced fluctuations and may continue to do so, resulting in a substantial loss in your investment.
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The market for our Common Stock has been characterized by volatile prices. As a result, investors in our Common Stock may experience a decrease in the value of their securities, including decreases unrelated to our operating performance or prospects. The market price of our Common Stock is likely to be highly unpredictable and subject to wide fluctuations in response to numerous factors, many of which are beyond our control. These factors include:

●	Quarterly variations in our operating results and achievement of key business metrics.
●	Changes in the global economy and the local economies in which we operate.
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●	Our ability to obtain working capital financing.
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●	Changes in the federal, state, and local laws and regulations to which we are subject.
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●	Market reaction to any acquisitions, joint ventures or strategic investments announced by us or our competitors.
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●	The departure of any of our key executive officers and directors.
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●	Future sales of our securities.
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E2.	Increasing attention to environmental, social, and governance matters may impact our business.
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In recent years, increasing attention to environmental, social, and governance matters, including those related to climate change and sustainability, increasing societal, investor and legislative pressure on companies to address environmental, social, and governance matters, may result in increased costs, reduced demand for our products, reduced profits, increased investigations and litigation or threats thereof, negative impacts on our stock price and access to capital markets, and damage to our reputation. Some investors have been divesting and promoting divestment of or screening out of fossil fuel equities and urging lenders to limit funding to companies engaged in the extraction of fossil fuel reserves. Further, voluntary carbon-related and target-setting frameworks have developed, and continue to develop, that limit the ability of certain sectors, including the oil and gas sector, from participating, and may result in exclusion of our equity from being included as an investment option in portfolios. In addition, organizations that provide information to investors on corporate governance and related matters have developed ratings processes for evaluating companies on their approach to environmental, social, and governance matters, including climate change and climate-related risks (including entities commonly referred to as “raters and rankers”). Such ratings are used by some investors to inform their investment and voting decisions. Unfavorable environmental, social, and governance ratings and investment community divestment initiatives, among other actions, may lead to negative investor sentiment toward us and to the diversion of investment to other industries, which could have a negative impact on our stock price and our access to and costs of capital. Additionally, evolving expectations on various environmental, social, and governance matters, including biodiversity, waste, and water, may increase costs, require changes in how we operate and lead to negative shareholder sentiment.

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Risk Factors (Continued)

Conversely, environmental, social, and governance has become a politically charged issue, and “anti-environmental, social, and governance” sentiment and increased scrutiny and skepticism of environmental, social, and governance policies and practices have resulted in, and could continue to result in, additional demands and strains on companies. Responding to such environmental, social, and governance focused activism has been, and will likely continue to be, costly and time-consuming. Such response efforts have resulted in, and could continue to result in, the implementation of certain practices and disclosures that may present a heightened level of legal and regulatory risk, or that threaten our credibility with other investors and stakeholders. The methodologies and standards for tracking and reporting on environmental, social, and governance matters are relatively new, have not been standardized, and continue to evolve. As a result, our environmental, social, and governance related metrics, targets, ambitions, and other disclosures, may not necessarily be calculated or presented in the same manner or be comparable to similarly titled measures presented by us in other contexts, or by other companies or third-party estimates or disclosures, and our interpretation of reporting standards may differ from those of others. While we believe that our environmental, social, and governance disclosures and methodologies reflect our business strategy and are reasonable at the time made or used, as our business or applicable methodologies, standards, or regulations develop and evolve, we may revise or cease reporting or using certain disclosures and methodologies if we determine that they are no longer advisable or appropriate, or are otherwise required to do so.

E3.	Our stock price may decline due to sales of shares.

Affiliates sales of substantial amounts of our Common Stock, or the perception that these sales may occur, may adversely affect the price of our Common Stock and impede our ability to raise capital through the issuance of equity securities in the future. Affiliates could elect in the future to request that we file a registration statement to them to sell shares of our Common Stock. If Affiliates were to sell a large number of shares into the public markets, Affiliates could cause the price of our Common Stock to decline.

E4.	We are authorized to issue up to a total of 20 million shares of our Common Stock and 2.5 million shares of preferred stock; issuance of additional shares would further dilute the equity ownership of current holders and potentially dilute the share price of our Common Stock.

We periodically issue Common Stock to non-employee directors for services rendered to the Board and to Jonathan Carroll pursuant to the Guaranty Fee Agreements. In the past, we have also issued Common Stock, Preferred Stock, convertible securities (such as convertible notes), and warrants in order to raise capital. We believe that it is necessary to maintain a sufficient number of available authorized shares of our Common Stock and Preferred Stock to provide us with the flexibility to issue Common Stock or Preferred Stock for business purposes that may arise as deemed advisable by our Board. These purposes could include, among other things: (i) future stock splits, which may increase the liquidity of our shares; (ii) the sale of stock to obtain additional capital or to acquire other companies or businesses, which could enhance our growth strategy or allow us to reduce debt if needed; and (iii) for other bona fide purposes. Our Board may authorize us to issue the available authorized shares of Common Stock or Preferred Stock without notice to, or further action by, our stockholders, unless stockholder approval is required by law or the rules of the OTCQX. The issuance of additional shares of Common Stock or new shares of Preferred Stock, convertible securities, or warrants may significantly dilute the equity ownership of the current holders of our Common Stock, affect the rights of our stockholders, or could reduce the market price of our Common Stock. In addition, the issuance or sale of enormous amounts of our Common Stock, or the potential for issuance or sale even if they do not actually occur, may have the effect of depressing the market price of our Common Stock.

E5.	Shares eligible for future sale pursuant to Rule 144 may adversely affect the market.

From time to time, certain of our stockholders may be eligible to sell all or some of their shares of Common Stock by means of ordinary brokerage transactions in the open market pursuant to Rule 144 promulgated under the Securities Act, subject to certain limitations. In general, pursuant to Rule 144, stockholders who have been non-affiliates for the preceding three months may sell shares of our Common Stock freely after six months subject only to the current public information requirement. Affiliates may sell shares of our Common Stock after six months subject to the Rule 144 volume, manner of sale, current public information, and notice requirements. Any substantial sales of our Common Stock pursuant to Rule 144 may have a material adverse effect on the market price of our Common Stock.

E6.	We do not expect to pay cash dividends in the foreseeable future and therefore investors should not anticipate cash dividends on their investment.

Under certain of our secured loan agreements, we are restricted from declaring or paying any dividend on our Common Stock without the prior written consent of the lender. We have historically not declared any dividends on our Common Stock and there can be no assurance that cash dividends will ever be paid on our Common Stock.

ITEM 1B. UNRESOLVED STAFF COMMENTS

None.

ITEM 1C. CYBERSECURITY

We depend on information technology and systems for various operations (including refinery processes and refined product loading) and for capturing accounting, technical, and regulatory data for reporting, analysis, and archiving. Our primary business systems mostly consist of purchased and licensed software programs that integrate with our internal solutions. As of the filing date of this report, our risk monitoring process related to cybersecurity includes conducting periodic vulnerability assessments using a combination of internal and third-party capabilities to perform technical assessments, vulnerability scanning, and incident and event monitoring. We are working to: (i) identify and assess threats and (ii) establish a thorough, risk-based cybersecurity program, including the potential adoption of a formal cybersecurity policy if deemed necessary by the Board, aimed at safeguarding our data, along with the data of our customers and partners. We anticipate that such a program will follow well-organized cybersecurity frameworks and be managed by a central control figure with Board oversight.

We did not experience a significant cybersecurity breach or associated expenses, penalties, or settlements for the twelve months ended December 31, 2024 and 2023.

ITEM 2. PROPERTIES

An Affiliate operates and manages all our properties under the Third Amended and Restated Operating Agreement. Our owned facilities have been constructed or acquired over a period of years and vary in age and operating efficiency. We believe that all our properties and facilities are adequate for our operations and that our facilities are adequately maintained. At our corporate headquarters, BDSC leases 9,961 square feet of office space in Houston, Texas. The location and general description of our other properties are described within “Part I. Item 1. Business—Downstream Operations, —Midstream Operations, and — Inactive Operations”.

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December 31, 2024 | Page 23

ITEM 3. LEGAL PROCEEDINGS

In the ordinary course of business, we are involved in legal matters incidental to the routine operation of our business, such as mechanic’s liens and contract-related disputes. We may also become party to lawsuits, administrative proceedings, and governmental investigations, including environmental, regulatory, and other matters. Large, sometimes unspecified, damages or penalties may be sought from us in some matters, which may require years to resolve. Although we cannot provide assurance, we believe that an adverse resolution of the matters described below would not have a material impact on our liquidity, consolidated financial position, or consolidated results of operations.

Resolved Matters

Pilot Dispute Related to Terminal Services Agreement. As previously disclosed, NPS and Pilot were involved in a contract-related dispute involving to a Terminal Services Agreement pursuant to which NPS stored jet fuel purchased by Pilot at the Nixon facility. The parties entered into a confidential settlement agreement on December 29, 2023. As part of the confidential settlement agreement, the parties agreed to mutually release all claims against each other. Further, all contractual agreements between the parties, including the Terminal Services Agreement, were terminated.

Unresolved Matters

BSEE Offshore Platform Inspections, Decommissioning Obligations, and Civil Penalties. BDPL has pipelines and platform assets subject to BSEE’s idle iron regulations. Idle iron regulations require lessees and rights-of-way holders to permanently abandon and remove platforms and other structures when they are no longer useful for operations. Until such structures are abandoned or removed, lessees and rights-of-way holders are required to inspect and maintain the assets in accordance with regulatory requirements.

Platform Inspection Obligation. We are required by BSEE to perform annual structural inspections of our offshore platform, as well as to perform monthly platform checks of navigational aids, fog horns, and lifesaving equipment. In March 2023, BSEE issued BDPL an INC for failing to perform the required 2021 and 2022 structural surveys for the GA-288C platform and for failing to provide BSEE with such survey results. In April 2023, BSEE granted BDPL an extension for completing the required platform inspection until May 30, 2023. Although BDPL requested a second extension, BSEE denied BDPL’s request. BDPL completed the platform inspection on August 26, 2023 and submitted the survey report to BSEE on September 6, 2023.

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Legal Proceedings (Continued)

Decommissioning Obligations. Because our pipelines and facilities assets have been inactive for an extended period, BSEE mandated that they be decommissioned. In October 2023, management met BSEE to discuss BDPL’s path forward for meeting decommissioning requirements. Management worked with a consultant to develop a decommissioning plan, and BDPL submitted its decommissioning plan to the agency in November 2023. Although the decommissioning of these assets was delayed due to cash constraints associated with historical net losses during the pandemic, a sizeable portion of the decommissioning project was completed from late December 2023 to mid-February 2024. Additional work was planned for 2024; however, no additional work was performed due to significant cost overruns under the first phase of work due to poor weather conditions. In July 2024, BDPL requested a BSEE extension to decommission the remaining portion of the Blue Dolphin Pipeline System and associated platform until the second quarter of 2025; BDPL’s request for a decommissioning extension was denied by BSEE in September 2024. On March 17, 2025, BSEE issued BDPL an INC for failing to comply with certain of its decommissioning obligations; see "Note (16) for additional disclosures related to this BSEE INC.

BSEE Civil Penalties. During the twelve months ended December 31, 2024 and 2023 BDPL received the following BSEE civil penalty referral letters:

●	Civil Penalty G-2023-021. In September 2023, BDPL received a civil penalty referral letter from BSEE for failing to timely submit a platform inspection report associated with BSEE INC No. G822 issued in March 2023. In October 2023, BSEE calculated a proposed civil penalty of $0.2 million against BDPL; BSEE finalized the penalty amount in January 2024. BDPL paid the final civil penalty amount in full in April 2024.
●	Civil Penalty G-2024-054. In August 2024, BDPL received a civil penalty referral letter from BSEE for failing to timely 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. See "Part II, Item 8—Financial Statements and Supplementary Data -- Note (16)" for additional disclosures related to this BSEE civil penalty.
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●	Civil Penalty G-2024-056. In August 2024, BDPL received a civil penalty referral letter from BSEE for failing to timely 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. See "Part II, Item 8—Financial Statements and Supplementary Data -- Note (16)" for additional disclosures related to this BSEE civil penalty.
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●	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 (timely removing 55-gallon drum leaking oil on platform deck), L141 (timely flushing and filling Pipeline Segment No. 13101 with inhibited seawater), and L142 (timely decommissioning in place Pipeline Segment No. 13101). See "Part II, Item 8—Financial Statements and Supplementary Data -- Note (16)" for additional disclosures related to this BSEE civil penalty.
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Default under a Secured Loan Agreement. As of December 31, 2024 and the filing date of this report, certain of our bank debt to Veritex was in default related to a financial covenant violation, and bank debt to GNCU was in default related to non-financial covenant violations. See “Note (10)” to our consolidated financial statements for additional disclosures related to third-party debt, default on such debt, and the potential effects of such a default on our business, financial condition, and results of operations. If the lenders exercises their rights and remedies due to the defaults under our secured loan agreement, our business, financial condition, and results of operations will be materially adversely affected.

ITEM 4. MINE SAFETY DISCLOSURES

Not applicable.

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December 31, 2024 | Page 25

PART II

ITEM 5. MARKET FOR REGISTRANT’S COMMON EQUITY, RELATED STOCKHOLDER MATTERS AND ISSUER PURCHASES OF EQUITY SECURITIES

Market Information

Our Common Stock trades on the OTCQX U.S. tier of the OTC Markets under the ticker symbol “BDCO.” The quotations reflect inter-dealer prices, without adjustment for retail mark-ups, markdowns or commissions and may not represent actual transactions. We had 14,921,968 shares of Common Stock issued and outstanding at both December 31, 2024 and 2023, respectively. Affiliates controlled 83.7% of our Common Stock's voting power as of this report's filing date. See “Part I, Item 1A. Risk Factors—Common Stock (Section E)” for risks associated with investments in our Common Stock.

Stockholders

We had 272 record holders at both December 31, 2024 and 2023. We had approximately 3,000 beneficial holders of our Common Stock at both December 31, 2024 and 2023.

Dividends

Stockholders are entitled to receive such dividends as may be declared by our Board out of funds legally available for such purpose. However, no dividend may be declared or paid unless after-tax profit was made in the preceding fiscal year, we comply with covenants in our secured loan agreements, we are current on all required debt payments, and we have received prior written concurrence from certain lenders. We have not declared any dividends on our Common Stock during the last two fiscal years.

ITEM 6. SELECTED FINANCIAL DATA

[Reserved]

ITEM 7. MANAGEMENT’S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS

The following discussion and analysis is management’s perspective of our current financial condition and results of operations and should be read in conjunction with “Important Information Regarding Forward-Looking Statements,” **** “Part I, Item 1A. Risk Factors,” and “Part II, Item 8. Financial Statements and Supplementary Data” included in this report.

This discussion and analysis includes the twelve months ended December 31, 2024 and 2023 and a comparison between such periods. The discussions of the twelve months ended December 31, 2022 and year-to-year comparisons between the twelve months ended December 31, 2023 and 2022 that are not included in this report can be found in “Part II, Item 7. Management’s Discussion and Analysis of Financial Condition and Results of Operations” in our Annual Report on Form 10-K for the twelve months ended December 31, 2023, which was filed on April 1, 2024, and such discussions are incorporated by reference into this report.

Company Overview

Our Operations

Our assets are organized into two business segments:

●	refinery operations (also referred to herein as downstream operations), which is owned by LE; and
●	tolling and terminaling services (also referred to herein as midstream operations), which is owned by LRM and NPS

Corporate and other’ includes Blue Dolphin subsidiaries BDPL (inactive pipeline and facilities assets), BDPC (inactive leasehold interests in offshore oil and gas wells), and BDSC (administrative services). For more information related to our business segments, see “Part I., Item 1. Business, —Downstream Operations, —Midstream Operations, and — Inactive Operations” and “Part I. Item 2. Properties” in this report.

Business Operations Update

For the twelve months ended December 31, 2024, refining margins were less favorable compared to the twelve months ended December 31, 2023. Less favorable refining margins on lower sales volumes contributed to Blue Dolphin reporting a net loss of $8.6 million, or $0.58 per share, for the twelve months ended December 31, 2024 ("2024") compared net income of $31.0 million, or $2.08 per share, for the twelve months ended December 31, 2023 (“2023”). Our full operating results for 2024 and 2023, including operating results by segment, can be found within ‘Results of Operations.’

We used cash flow from operations of $15.7 million for the twelve months ended December 31, 2024. The use of cash flow from operations was primarily due to a buildup of inventory. Inventory increased due primarily to unfavorable product pricing, limited opportunities for customers who export to Mexico, and an intentional buildup of inventory by us during periods of low refining margins. At December 31, 2024, we had $0.1 million in cash and cash equivalents. The components of our liquidity and descriptions of our cash flows, capital investments, and other matters impacting our liquidity and capital resources can be found within ‘Liquidity and Capital Resources.’

General Trends and Outlook

●	Light crude oil commodity pricing and demand.
●	Jet fuel commodity pricing and demand.
●	Naphtha commodity pricing and demand.
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We can provide no guarantees that: our business strategy will be successful, Affiliates will continue to fund our working capital needs when we experience working capital deficits, we will meet regulatory requirements to provide additional financial assurance (supplemental pipeline bonds) and decommission offshore pipelines and platform assets, we can obtain additional financing on commercially reasonable terms or at all, or margins on our refined products will be favorable. Further, if lenders exercise their rights and remedies under secured loan agreements that are in default, our business, financial condition, and results of operations will be materially adversely affected.

Liquidity and Access to Capital Markets

We continue efforts to improve our balance sheet. During 2024 and 2023, we entered into payment agreements with the Kissick Noteholder and LEH related to our secured loan agreements, and we continue to engage with potential lenders to obtain additional funding to refinance and restructure our debt. There can be no assurance that we will be able to raise additional capital on acceptable terms, if at all, or refinance existing debt. If we are unable to refinance or restructure our debt, certain of which is currently in default, or forbear or waive defaults and lenders exercise their rights with respect to the debt, we may not, in the short term, be able to purchase crude oil and condensate or meet debt payment obligations. In the long term, we may not be able to manage business disruptions or execute our business strategy. We may have to consider other options, such as selling assets, raising additional debt or equity capital, filing bankruptcy, or ceasing operations.

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Management Discussion and Analysis (Continued)

Regulation Changes

Our operations and the operations of our customers have been, and will continue to be, affected by political developments and federal, state, tribal, local, and other laws and regulations that are increasing in number and becoming more stringent and complex. These laws and regulations include, among other things, permitting requirements, environmental protection measures such as limitations on methane and other GHG emissions, and renewable fuels standards. The number and scope of the regulations with which we and our customers must comply has a meaningful impact on our and their businesses, and new or revised regulations, reinterpretations of existing regulations, and permitting delays or denials could adversely affect the profitability of our assets.

2024 Business Strategy and Accomplishments

We have outlined the below strategic business objectives to improve our financial profile and refining margins. These objectives are modified, as necessary, to reflect changing economic conditions and other circumstances.

Optimize Existing Asset Base	● Maintain safe operations and enhance health, safety, and environmental systems.<br> <br>● Plan and manage turnarounds and downtime.
Improve Operational Efficiencies	● Reduce or streamline variable costs incurred in production.<br> <br>● Increase throughput capacity and optimize product slate.<br> <br>● Increase tolling and terminaling revenue.
Seize Market Opportunities	● Leverage existing infrastructure to engage in renewable energy projects.<br> <br>● Take advantage of market opportunities as they arise.

Optimize Existing Asset Base. During the twelve months ended December 31, 2024, the Nixon facility underwent two planned maintenance turnarounds -- one major (13 days) and one minor (9 days). Optimizing the Nixon refinery's processing units through maintenance turnarounds leverages our ability to meet customer demand and manage refining margins. Additional improvements to the Nixon facility during the twelve months ended December 31, 2024 included the addition of anti-icing chemical storage, an upgrade to the chiller system, and installation of a 'cool down room' to reduce heat-related injuries for personnel, contractors, and drivers.

Improve Operational Efficiencies. During the twelve months ended December 31, 2024 we completed the upgrade of the Nixon facility's terminal management software. Capital expenditures associated with the upgrade totaled $0.05 million during the twelve months ended December 31, 2024. As a result of project completion, key elements of the plant's terminal loading functions are automated, improving order management, bills of lading delivery, and reporting.

Seize Market Opportunities. In 2021, we announced plans to leverage our existing infrastructure to establish adjacent lines of business, capture growing market opportunities, and capitalize on renewable energy growth. Rising demand for renewable energy had been attributable to numerous factors, including growing public support, U.S. governmental actions to increase energy independence, and environmental concerns related to climate change. While the Biden Administration advanced significant climate-related initiatives, including incentives to promote renewable energy, recent changes under the Trump Administration following the 2024 U.S. presidential election have begun to and may further shift regulatory priorities away from renewable energy. Through executive orders and regulatory rollbacks, certain Biden-era initiatives have been curtailed or reevaluated and incentives to increase fossil fuel production have been promoted, creating a more uncertain regulatory landscape which may materially impact our plans to capture renewable energy opportunities. Throughout 2024, management had meaningful discussions with potential commercial partners. However, reductions or modifications to, or the elimination of, governmental incentives or policies that support renewable energy or the imposition of additional taxes, tariffs, duties, or other assessments on renewable energy projects, could result in, among other things, the lack of a satisfactory market for the development or financing of new renewable energy projects and us abandoning the development of renewable energy projects.

Successful execution of our business strategy depends on multiple factors. These factors include (i) having adequate working capital to meet operational needs and regulatory requirements, (ii) maintaining safe and reliable operations at the Nixon facility, (iii) meeting contractual obligations, (iv) having favorable margins on refined products, and (v) collaborating with new partners to develop and finance clean energy projects. Our business strategy involves risks. Accordingly, we cannot assure investors that our plans will be successful. If we are unsuccessful, we would likely have to consider other options, such as selling assets, raising additional debt or equity capital, cutting costs, or otherwise reducing our cash requirements, negotiating with our creditors to restructure our applicable obligations, filing bankruptcy, or ceasing operating. In such a case, the trading price of our common stock and the value of an investment in our common stock could significantly decrease, which could lead to holders of our common stock losing their investment in our common stock in its entirety.

Results of Operations

Below is a discussion and analysis of the factors contributing to our consolidated financial results of operations. This information should be read in conjunction with our financial statements in “Part II, Item 8. Financial Statements and Supplementary Data.” While management intends for the financial statements, together with the following information, to provide investors with a reasonable basis for assessing our historical operations, they should not serve as the only criteria for predicting future performance.

Major Influences on Results of Operations. Our results of operations and liquidity are highly dependent upon the margins that we receive for our refined products. The dollar per barrel commodity price difference between crude oil and condensate (input) and refined products (output) is the most significant driver of refining margins, and they have historically been subject to wide fluctuations. When the spread between these commodity prices decreases, our margins are negatively affected. To improve margins, we must maximize yields of higher-value finished petroleum products and minimize costs of feedstocks and operating expenses. Although an increase or decrease in the commodity price for crude oil and other feedstocks generally result in a similar increase or decrease in commodity prices for finished petroleum products, typically there is a time lag between the two. For example, if the price per barrel of crude oil increases, the price of jet fuel per barrel will also generally increase, as jet fuel is a refined product derived from crude oil. Therefore, the effect of crude oil commodity price changes on our finished petroleum product commodity prices depends, in part, on how quickly and how fully the market adjusts to reflect these changes. Unfavorable margins may have a material adverse effect on our earnings, cash flows, and liquidity.

The general outlook for the oil and natural gas industry for the remainder of 2025 remains unclear given uncertainties surrounding general macroeconomic conditions related to inflation, tariffs, interest rates, capital and credit markets, and geopolitical tensions (including military conflicts in Ukraine and Israel and escalations in the Middle East). We can provide no assurances that refining margins will be positive and demand will increase.

How We Evaluate Our Operations. Management uses certain financial and operating measures to analyze segment performance. These measures are significant factors in assessing our operating results and profitability and include: Earnings before interest, income taxes, and depreciation and amortization ("EBITDA") on a consolidated and segment basis, refinery throughput, production and sales data, refinery downtime, tolling and terminaling revenue, and intercompany processing fees. We modified our segment presentation to incorporate applicable depreciation and amortization into our cost of goods sold subtotal. We believe this provides a more complete representation of our cost of goods sold. Prior periods have been modified to conform with this presentation.

Blue Dolphin Energy Company

December 31, 2024 | Page 27

Management Discussion and Analysis (Continued)

Consolidated Results. Our consolidated results of operations include certain other unallocated corporate activities and the elimination of intercompany transactions and therefore do not equal the sum of the operating results of our refinery operations and tolling and terminaling business segments.

2024 Versus 2023.

Overview. Net loss for 2024 was $8.6 million, or $0.58 per share, compared to net income of $31.0 million, or $2.08 per share, in 2023. The $39.6 million, or $2.66 per share, decrease in net income between the periods was the result of less favorable refining margins and lower sales volumes. The Nixon refinery was down for 27 days in 2024 relating to pre-planned maintenance turnarounds (22 days), maintenance and repairs (2 days), and freezing weather conditions (3 days). The Nixon refinery was down for 12 days in 2023 relating to a pre-planned maintenance turnaround (3 days) and maintenance and repairs (9 days).

Total Revenue from Operations. Total revenue from operations was $317.5 million for 2024 compared to total revenue from operations of $396.0 million for 2023, representing a decrease of 19.8%. The decrease in 2024 related to declines in both refinery operations and tolling and terminaling revenue. Refinery operations revenue in 2024 decreased primarily due to lower market pricing and nearly 11% lower sales volumes; tolling and terminaling revenue in 2024 declined primarily due to lower tank rental fees. Tank rental fees for 2023 included temporary terminal service fees associated with Pilot.

Total Cost of Goods Sold. Total cost of goods sold was $313.6 million for 2024 compared to total cost of goods sold of $353.9 million for 2023, representing a decrease of 11.4%. The decrease in 2024 related to lower sales volume and market pricing associated with product sales mix.

Gross Profit. Gross profit totaled $3.9 million for 2024 compared to gross profit of $42.1 million for 2023. Less favorable commodity prices and nearly 11% lower sales volume adversely impacted refinery operations gross profit in 2024 compared to 2023.

LEH Operating Fee, Related Party. For 2024 the LEH operating fee, related party totaled $0.8 million compared to $0.5 million for 2023, representing a 52.2% increase. The increase related to turnaround expenses and higher conversion costs.

Other Operating Expenses*.* Other operating expenses totaled $0.6 million for 2024 compared to $0.2 million for 2023. The $0.4 million, or 207.7% increase related to decommissioning of our pipeline assets.

General and Administrative Expenses. General and administrative expenses totaled $6.4 million in 2024 compared to other operating and general and administrative expenses of $3.1 million in 2023. The $3.3 million, or 105.6%, increase in 2024 primarily related to professional service fees, insurance, and regulatory penalties.

Interest and Other Non-Operating Expenses, Net. Total other expense in 2024 was flat compared to 2023, totaling $5.9 million for both periods. Total other expense primarily relates to interest expense associated with related party-party and third-party secured loan agreements.

Consolidated EBITDA. Consolidated EBITDA in 2024 totaled $1.5 million compared to $39.2 million in 2023, representing a decrease of $40.7 million. The significant decrease in 2024 was related to less favorable refining margins, 10.7% lower sales volume, an $8.3 million inventory impairment due to recognizing inventory at the lower of cost or net realizable value, maintenance turnaround expenses, and lower tolling and terminaling total revenue.

	Twelve Months Ended
	December 31,
	2024			2023
Total revenue from operations	$	317,519		$	396,048
Total costs of good sold		313,629			353,949
Gross profit		3,890			42,099
LEH operating fee, related party		811			533
Other operating expenses		640			208
General and administrative expenses		6,443			3,134
Depreciation and amortization		232			219
Impairment of fixed assets		-			1,558
Bad debt expense		70			-
Accretion of asset retirement obligations		-			59
Interest, net		5,859			5,862
Total costs and expenses		14,055			11,573
Income (loss) before income taxes		(10,165	)		30,526
Income tax benefit		1,529			485
Net income (loss)	$	(8,636	)	$	31,011
Income (loss) per common share
Basic	$	(0.58	)	$	2.08
Diluted	$	(0.58	)	$	2.08
	Twelve Months Ended
---	---	---	---	---	---
	December 31,
	2024			2023
Income (loss) before income taxes	$	(10,165	)	$	30,526
Add: depreciation and amortization		2,806			2,798
Add: interest, net		5,859			5,862
Consolidated EBITDA	$	(1,500	)	$	39,186

Downstream Operations. Our refinery operations business segment is owned by LE. Assets within this segment consist of a light sweet-crude, 15,000-bpd crude distillation tower, petroleum storage tanks, loading and unloading facilities, and approximately 56 acres of land. Refinery operations revenue is derived from refined product sales.

2024 Versus 2023

Total refined product sales by distillation (from light to heavy) for the periods indicated consisted of the following:

	Twelve Months Ended December 31,
	2024				2023
	(in thousands, except percent amounts)
LPG mix	$	318	0.1	%	$	302	0.1	%
Naphtha		77,845	24.8	%		76,050	19.5	%
Jet fuel		114,011	36.4	%		123,395	31.6	%
HOBM		39,045	12.5	%		92,947	23.8	%
AGO		82,360	26.4	%		97,322	25.0	%
	$	313,579	100.0	%	$	390,016	100.0	%

Blue Dolphin Energy Company

December 31, 2024 | Page 28

Management Discussion and Analysis (Continued)

Refinery Downtime. Refinery downtime increased from 12 days in 2023 to 27 days in 2024. Refinery downtime in 2024 related to pre-planned maintenance turnarounds (22 days), maintenance and repairs (2 days), and freezing weather conditions (3 days). Refinery downtime in 2023 related to a pre-planned maintenance turnaround (3 days) and maintenance and repairs (9 days).

Refinery Operations Revenue. Refinery operations revenue was $313.6 million for 2024 compared to $390.0 million for 2023, representing a decrease of 19.6%. The decrease in 2024 related to lower market pricing and lower sales volumes.

Cost of Goods Sold. Cost of goods sold for refinery operations was $310.6 million for 2024 compared to $350.9 million for 2023, representing a decrease of 11.5%. The decrease in 2024 was related to lower sales volume and market pricing associated with product sales mix.

Refining EBITDA. Refining EBITDA was $2.3 million in 2024 compared to $38.6 million in 2023, representing a decrease of 94.2%. The significant decrease in 2024 was related to less favorable refining margins and 10.7% lower sales volume. Refining EBITDA was adversely impacted by maintenance turnaround expenses and an $8.3 million inventory impairment due to recognizing inventory at the lower of cost or net realizable value.

Refining Operations EBITDA per Bbl. On a per barrel basis, refining EBITDA was $0.61 for 2024 compared to $9.37 for 2023, representing a decrease of $8.76 per barrel. The decrease in 2024 related to less favorable refining margins and 10.7% lower sales volume compared to the same period a year earlier.

	Twelve Months Ended
	December 31,
	2024			2023
	(in thousands)
Refinery operations revenue	$	313,579		$	390,016
Crude oil, fuel use, and chemicals		292,873			340,268
Other conversion costs		19,175			12,059
Intercompany processing fees^(1)^		(2,636	)		(2,590	)
Depreciation and amortization		1,206			1,211
Cost of goods sold		310,618			350,948
LEH operating fee, related party		811			533
General and administrative expenses		1,105			1,105
Interest, net		3,313			3,130
Total costs and expenses		315,847			355,716
Income (loss) before income taxes		(2,268	)		34,300
Add: depreciation and amortization		1,206			1,211
Add: interest, net		3,313			3,130
Refining EBITDA	$	2,251		$	38,641
Sales (Mbbls)		3,685			4,126
Refining operations EBITDA per bbl	$	0.61		$	9.37
^(1)^	Fees associated with an intercompany tolling agreement related to naphtha volumes.
---	---

Midstream Operations**.** Our tolling and terminaling business segment is owned by LRM and NPS. Assets within this segment include petroleum storage tanks and loading and unloading facilities. Tolling and terminaling revenue is derived from storage tank rental fees, ancillary services fees (such as in-tank blending), and tolling and reservation fees for use of the naphtha stabilizer.

2024 Versus 2023

Tolling and Terminaling Total Revenue. Tolling and terminaling total revenue was $3.9 million in 2024 compared to $6.0 million in 2023, representing a decrease of 34.7%. The decrease in 2024 related to lower tank rental fees. Tank rental fees in 2023 included temporary terminal service fees associated with Pilot.

Tolling and Terminaling EBITDA. We had tolling and terminaling EBITDA of $2.1 million in 2024 compared to $4.3 million in 2023, representing a decrease of $2.2 million. The significant decrease in 2024 compared to 2023 related to lower tolling and terminaling total revenue.

	Twelve Months Ended
	December 31,
	2024			2023
	(in thousands)
Tolling and terminaling revenue	$	6,576		$	8,622
Less: intercompany^(1)^		(2,636	)		(2,590	)
Total tolling and terminaling revenue		3,940			6,032
Tolling and terminaling costs		1,642			1,633
Depreciation and amortization		1,368			1,368
Cost of goods sold		3,010			3,001
General and administrative expenses		231			87
Interest, net		1,961			1,964
Total costs and expenses		5,202			5,052
Income (loss) before income taxes		(1,262	)		980
Add: depreciation and amortization		1,368			1,368
Add: interest, net		1,961			1,964
Tolling and terminaling EBITDA	$	2,067		$	4,312
(1)	Fees associated with an intercompany tolling agreement related to naphtha volumes.
---	---

Blue Dolphin Energy Company

December 31, 2024 | Page 29

Management Discussion and Analysis (Continued)

Non-U.S. GAAP Measures.

The following are non-U.S. GAAP measures we present for the years ended December 31, 2024 and 2023:

Consolidated EBITDA. Income (loss) before interest, taxes, and depreciation and amortization on a consolidated basis.

Refining EBITDA. Income (loss) before interest, taxes, and depreciation and amortization for our refinery operations business segment.

Refining operations EBITDA per bbl. Refining EBITDA divided by sales (Mbbls) for the reporting period.

Tolling and terminaling EBITDA. Income (loss) before interest, taxes, and depreciation and amortization for our tolling and terminaling business segment.

We present these measures because they provide management and investors with (i) important supplemental indicators of the operational performance of our business, (ii) additional criteria for evaluation of our performance relative to our peers, and (iii) supplemental information to investors about certain material non-cash and other items that may not continue at the same level in the future. EBITDA has limitations as an analytical tool and should not be considered in isolation or as substitutes for analysis of our results as reported under U.S. GAAP or as alternatives to net income (loss), operating income (loss), gross margin, or any other measure of financial performance presented in accordance with U.S. GAAP.

	Twelve Months Ended
	December 31,
	2024												2023
	Refinery Operations			Tolling & Terminaling			Corporate & Other			Total			Refinery Operations		Tolling & Terminaling		Corporate & Other			Total
	(in thousands)
Income (loss) before income taxes	$	(2,268	)	$	(1,262	)	$	(6,635	)	$	(10,165	)	$	34,300	$	980	$	(4,754	)	$	30,526
Add: depreciation and amortization		1,206			1,368			232			2,806			1,211		1,368		219			2,798
Add: interest, net		3,313			1,961			585			5,859			3,130		1,964		768			5,862
EBITDA	$	2,251		$	2,067		$	(5,818	)	$	(1,500	)	$	38,641	$	4,312	$	(3,767	)	$	39,186

Capital Resources and Liquidity

Working Capital.

Our current assets totaled $44.8 million at December 31, 2024 compared to $49.3 million at December 31, 2023, representing a $4.5 million decrease. Our current liabilities totaled $63.9 million at December 31, 2024 compared to $55.4 million at December 31, 2023, representing a $8.5 million increase.

Liquidity. Cash and cash equivalents totaled $0.1 million and $18.7 million at December 31, 2024 and 2023, respectively, representing a decrease of $18.6 million. A significant portion of our liquidity at December 31, 2024 was invested in inventory. Restricted cash, current totaled $1.0 million and $0.0 at December 31, 2024 and 2023, respectively. Restricted cash, current related to a Veritex payment reserve account. Although the payment reserve account had a balance of $0.0 at December 31, 2023, the account was fully replenished on January 2, 2024. Accounts receivable—related party, which was associated with the sale of jet fuel to LEH, totaled $5.2 million and $4.2 million at December 31, 2024 and 2023, respectively.

We generally rely on revenue from operations, including sales of refined products and rental of petroleum storage tanks, Affiliates, and financing to meet our liquidity needs. Our short-term working capital needs are primarily related to: (i) purchasing crude oil and condensate to operate the Nixon refinery, (ii) reimbursing LEH for direct operating expenses and paying the LEH operating fee under the Third Amended and Restated Operating Agreement, (iii) servicing debt, (iv) maintaining and improving the Nixon facility through capital expenditures, and (v) meeting regulatory compliance requirements. Our long-term working capital needs are primarily related to repayment of long-term debt obligations.

Refining margins, which are affected by commodity prices and refined product demand, are volatile, and a reduction in refining margins will adversely affect the amount of cash we will have available for working capital. Similarly, capital, credit, and commodity markets, tariffs, as well as armed conflicts in the Middle East and Europe continue to evolve, and the extent to which these factors may impact our working capital, commodity prices, refined product demand, supply chain, financial condition, liquidity, results of operations, and prospects will depend on future developments, which cannot be predicted with any degree of confidence. In the long term, we may not be able to manage business disruptions or execute our business strategy. We may have to consider other options, such as selling assets, raising additional debt or equity capital, filing bankruptcy, or ceasing operations.

Sources and Use of Cash.

Components of Cash Flows.

	Twelve Months Ended
	December 31,
	2024			2023
	(in thousands)
Cash Flows Provided By (Used In):
Operating activities	$	(15,674	)	$	20,005
Investing activities		(46	)		(102	)
Financing activities		(1,917	)		(2,706	)
Increase (decrease) in Cash and Cash Equivalents	$	(17,637	)	$	17,197

Blue Dolphin Energy Company

December 31, 2024 | Page 30

Management Discussion and Analysis (Continued)

Cash Flow from Operations. We used $15.7 million in cash flow from operations during the twelve months ended December 31, 2024 compared to generating $20.0 million in cash flow from operations during the twelve months ended December 31, 2023. The $35.7 million decrease in cash flow used from operations between the periods was primarily due to a buildup of inventory in 2024 and lower refining margins. Inventory increased due primarily to unfavorable product pricing, limited opportunities for customers who export to Mexico, and an intentional buildup of inventory by us during periods of low refining margins.

Capital Expenditures. Capital expenditures totaled $0.0 for the twelve months ended December 31, 2024 compared to capital expenditures of $0.1 million for the twelve months ended December 31, 2023. Due to continued uncertainties surrounding general macroeconomic conditions related to inflation, tariffs, interest rates, capital and credit markets, and geopolitical tensions (including military conflicts in Ukraine and Israel and escalations in the Middle East), we anticipate continuing to limit capital expenditures for the remainder of 2025. However, to the extent we can capitalize on green energy growth opportunities, we may finance capital expenditures through project-based government loans.

We account for capital expenditures in accordance with U.S. GAAP. We also classify capital expenditures as ‘maintenance’ if the expenditure maintains capacity or throughput or as ‘expansion’ if the expenditure increases capacity or throughput capabilities. Although classification is generally a straightforward process, in certain circumstances the determination is a matter of management judgment and discretion. We budget for maintenance capital expenditures throughout the year on a project-by-project basis. Management determines projects based on maintaining safe and efficient operations, meeting customer needs, complying with operating policies and applicable law, and producing economic benefits, such as increasing efficiency or lowering future expenses.

Financing Activities. During the twelve months ended December 31, 2024, Blue Dolphin made payments on debt principal totaling $5.2 million compared to payments on debt principal totaling $1.5 for the twelve months ended December 31, 2023. Proceeds from debt totaled $3.3 million for the twelve months ended December 31, 2024 compared to proceeds from debt totaling $0.0 for the twelve months ended December 31, 2023. In 2024, proceeds from debt related to the Affiliate Revolving Credit Agreement. In 2023, Blue Dolphin paid off amounts owed to LEH totaling $1.2 million related to a June 2017 promissory note, as amended, for Blue Dolphin working capital. See "Part II, Item 8. Financial Statements and Supplementary Data —Notes (3) and (16)" to our consolidated financial statements for additional disclosures related to related-party transactions.

Debt and Lease Obligations.

Debt Agreements.

Related-Party Agreements Summary. Blue Dolphin and certain of its subsidiaries are parties to the following debt agreements with related parties:

		Original		Monthly
		Principal		Payment
Loan Description	Parties	(in millions)	Maturity Date	(in millions)		Interest Rate			Loan Purpose
Affiliate Revolving Credit Agreement(^1)^	Blue Dolphin and Subsidiaries	$5.0 million maximum^(2)^	Expiration of Initial Term or Renewal Term	Set-off against other obligations Borrower owes to Lender		WSJ Prime + 2.00%			Working capital
	LEH and Subsidiaries
BDPL-LEH Loan Agreement (in forbearance)^(1)^	LEH	$4.0 million	April 2027	$	0.05		8.00	%	Working capital
	BDPL
^(1)^	On March 26, 2025 the Board approved modifications to the terms of these agreements. See "Part II, Item 8. Financial Statements and Supplementary Data —Notes (3) and (16)" to our consolidated financial statements for additional disclosures related to these related-party debt agreements and other related party transactions.
---	---
^(2)^	As of December 31, 2024, $3.3 million was drawn under the agreement.

Third-Party Agreements Summary. Blue Dolphin and certain of its subsidiaries are parties to the following debt agreements with third parties:

		Original			Monthly Principal
		Principal			and Interest Payment
Loan Description	Parties	(in millions)		Maturity	(in millions)		Interest Rate			Loan Purpose
Veritex Loans
LE Term Loan Due 2034 (in default)^(1)^	LE	$	25.0	June 2034	$	0.3	WSJ Prime + 2.75%			Capital improvements
	Veritex
LRM Term Loan Due 2034 (in default)^(1)^	LRM	$	10.0	December 2034	$	0.1	WSJ Prime + 2.75%			Capital improvements
	Veritex
Kissick Debt (in forbearance)^(2)^	LE	$	11.7	March 2025	$	0.5		6.25	%	Working capital
	Kissick Noteholder
GNCU Loan
NPS Term Loan Due 2031 (in default)^(3)^	NPS	$	10.0	October 2031	$	0.1		5.75	%	Working capital
	GNCU
SBA Economic Injury Disaster Loans
Blue Dolphin Term Loan Due 2051^(4)^	Blue Dolphin	$	2.0	June 2051	$	0.01		3.75	%	Working capital
	SBA
LE Term Loan Due 2050^(5)^	LE	$	0.15	August 2050	$	0.0007		3.75	%	Working capital
	SBA
NPS Term Loan Due 2050^(5)^	NPS	$	0.15	August 2050	$	0.0007		3.75	%	Working capital
	SBA
Equipment Loan Due 2025^(6)^	LE	$	0.07	October 2025	$	0.0013		4.5	%	Equipment Purchase
	Texas First

Blue Dolphin Energy Company

December 31, 2024 | Page 31

Management Discussion and Analysis (Continued)
^(1)^	Our secured loan agreements with Veritex are subject to certain financial and non-financial covenants. As of December 31, 2024, LE and LRM were in default related to financial covenants under the LE Term Loan Due 2034 and LRM Term Loan Due 2034, respectively. With respect to non-financial covenants, we are required to have a balance of $1.0 million in a payment reserve account held by Veritex. At December 31, 2024 restricted cash, current and noncurrent totaled $1.0 million and $0.0, respectively. At December 31, 2023, both restricted cash, current and noncurrent totaled $0.0. Although the payment reserve account was $0.0 at December 31, 2023, we replenished the account in early January 2024.
---	---
^(2)^	Original principal amount was $8.0 million; pursuant to a 2017 sixth amendment, principal under the Kissick Debt increased by $3.7 million.
---	---
^(3)^	Loan requires monthly interest-only payments for the first thirty-six (36) months. Afterwards, principal and interest payments are due monthly through loan maturity. First payment due in November 2024. As of December 31, 2024 and the filing date of this report, the NPS Term Loan Due 2031 was in technical default for failure to have an active deposit account with the lender and provide standalone audited financial statements for NPS, a wholly-owned subsidiary.
---	---
^(4)^	Original principal amount was $0.5 million; the Blue Dolphin Term Loan Due 2051 was modified to increase the principal amount by $1.5 million. Payments deferred for thirty (30) months; first payment due and paid in November 2023; interest accrues during deferral period; loan not forgivable.
---	---
^(5)^	Payments deferred for thirty (30) months; first payment made in February 2023; interest accrued during deferral period; loan not forgivable.
---	---
^(6)^	In October 2020, LE entered into the Equipment Loan Due 2025 to purchase a backhoe; the backhoe is used at the Nixon facility.
---	---

Guarantees and Security.

Loan Description	Guarantees	Security
Veritex Loans
LE Term Loan Due 2034	● USDA	●	First priority lien on Nixon facility’s business assets (excluding accounts receivable and inventory)
	● Jonathan Carroll^(1)^	●	Assignment of all Nixon facility contracts, permits, and licenses
	● Affiliate cross-guarantees	●	Absolute assignment of Nixon facility rents and leases, including tank rental income
		●	$5.0 million life insurance policy on Jonathan Carroll
LRM Term Loan Due 2034	● USDA	●	Second priority lien on rights of LE in crude distillation tower and other collateral of LE
	● Jonathan Carroll^(1)^	●	First priority lien on real property interests of LRM
	● Affiliate cross-guarantees	●	First priority lien on all LRM fixtures, furniture, machinery, and equipment
		●	First priority lien on all LRM contractual rights, general intangibles, and instruments, except with respect to LRM rights in its leases of certain specified tanks for which Veritex has second priority lien
		●	Substantially all assets
Kissick Debt (in forbearance)^(2)^	---	●	Subordinated deed of trust that encumbers the crude distillation tower and general assets of LE
GNCU Loan
NPS Term Loan Due 2031 (in default)	● USDA	●	Deed of trust lien on approximately 56 acres of land and improvements owned by LE
	● Jonathan Carroll^(1)^	●	Leasehold deed of trust lien on certain property leased by NPS from LE
	● Affiliate cross-guarantees	●	Assignment of leases and rents and certain personal property
BDPL-LEH Loan Agreement (in forbearance)	---		Certain BDPL property
SBA Economic Injury Disaster Loans
Blue Dolphin Term Loan Due 2051	---	●	Business assets (e.g., machinery and equipment, furniture, fixtures, etc.)
LE Term Loan Due 2050	---	●	Business assets (e.g., machinery and equipment, furniture, fixtures, etc.)
NPS Term Loan Due 2050	---	●	Business assets (e.g., machinery and equipment, furniture, fixtures, etc.)
Equipment Loan Due 2025	---	●	First priority security interest in the equipment (backhoe).
^(1)^	Jonathan Carroll was required to personally guarantee repayment of borrowed funds and accrued interest.
---	---
^(2)^	Subject to the Kissick Subordination Agreement.
---	---

Lease Agreements.

Office Lease. We maintain our corporate headquarters in Houston, Texas. In October 2024, BDSC signed a new 24-month extension, the sixth amendment, to its operating lease. The sixth amendment was deemed to be a separate contract and not a lease modification. The first two months of the lease cover the holdover period of September and October 2024 wherein management negotiated the lease with the landlord; BDSC was not subject to a holdover rate during the holdover period. During months 3 through 12, which began on November 1, 2024, the landlord reduced the annual base rent to $29.00 per square foot. During months 13 through 24 the annual base rent will increase to $30.00 per square foot. As additional rent, BDSC will pay a proportionate share of basic building costs (e.g., utilities) up to a maximum of $1,500 per month. The total rental area under the sixth amendment is 9,961 square feet, an increase of 2,268 square feet to accommodate additional personnel. Under the lease amendment, BDSC will receive an improvement allowance of $1.50 per square foot; the improvement allowance will expire six months from the lease signing date. See "Part II, Item 8. Financial Statements and Supplementary Data—Note (12)" to our consolidated financial statements for additional disclosures related to the BDSC office lease.

An Affiliate, LEH, sub-leases a portion of the Houston office space. BDSC received sub-lease income from LEH totaling $0.03 million for both twelve months ended December 31, 2024 and 2023.

Tank Lease. LE leases tanks from Ingleside under the LE Amended and Restated Master Services Agreement. Lease expense associated with the LE Amended and Restated Master Services Agreement totaled $1.3 million and $1.0 million for the twelve months ended December 31, 2024 and 2023, respectively. See "Part II, Item 8. Financial Statements and Supplementary Data—Note (16)" to our consolidated financial statements for additional disclosures related to the LE Amended and Restated Master Services Agreement.

Blue Dolphin Energy Company

December 31, 2024 | Page 32

Management Discussion and Analysis (Continued)

Outstanding Original Principal, Debt Issue Costs, and Accrued Interest. Related-party and third-party long-term debt, including outstanding original principal and accrued interest, as of the dates indicated was as follows:

Outstanding Original Principal.

	December 31,
	2024			2023
	(in thousands)
Veritex Loans
LE Term Loan Due 2034 (in default)	$	18,753		$	19,677
LRM Term Loan Due 2034 (in default)		7,793			8,190
Kissick Debt (in forbearance)		1,432			4,978
GNCU Loan
NPS Term Loan Due 2031 (in default)		9,671			9,958
LEH
Line of credit payable, related party		3,250			-
BDPL-LEH Loan Agreement (in forbearance)		4,000			4,000
SBA Economic Injury Disaster Loans
Blue Dolphin Term Loan Due 2051		2,000			2,000
LE Term Loan Due 2050		150			150
NPS Term Loan Due 2050		150			150
Equipment Loan Due 2025		14			29
		47,213			49,132
Less: Line of credit, related party		(3,250	)		-
Less: Current portion of long-term debt, net		(37,379	)		(39,440	)
Less: Unamortized debt issue costs		(1,743	)		(1,947	)
	$	4,841		$	7,745

We classified the debt associated with the LE Term Loan Due 2034, LRM Term Loan Due 2034, and NPS Term Loan Due 2031 within long-term debt, current portion on our consolidated balance sheets at December 31, 2024 and 2023 due to being in default.

Debt Issue Costs. Unamortized debt issue costs associated with the Veritex and GNCU loans as of the dates indicated consisted of the following:

	December 31,
	2024			2023
	(in thousands)
Veritex Loans
LE Term Loan Due 2034 (in default)	$	1,674		$	1,674
LRM Term Loan Due 2034 (in default)		768			768
GNCU Loan
NPS Term Loan Due 2031 (in default)		730			730
Less: Accumulated amortization		(1,429	)		(1,225	)
	$	1,743		$	1,947

Amortization expense was $0.2 million for both 2024 and 2023.

Accrued Interest. Related-party and third-party accrued interest payable associated with long-term debt in our consolidated balance sheets, as of the dates indicated consisted of the following:

	December 31,
	2024			2023
	(in thousands)
LEH
BDPL-LEH Loan Agreement (in forbearance)	$	1,308		$	1,308
Jonathan Carroll
Guaranty fee agreements		129		$	-
Veritex Loans
LE Term Loan Due 2034 (in default)		48			181
LRM Term Loan Due 2034 (in default)		61			70
GNCU Loan
NPS Term Loan Due 2031 (in default)		17			17
SBA Economic Injury Disaster Loans
Blue Dolphin Term Loan Due 2051		93			135
LE Term Loan Due 2050		8			12
NPS Term Loan Due 2053		8			12
Kissick Debt (in forbearance)		-			2,169
Equipment Loan Due 2025		-			-
		1,672			3,904
Less: Accrued interest payable, current portion		(1,672	)		(2,596	)
Long-term interest payable, net of current portion	$	-		$	1,308

Blue Dolphin Energy Company

December 31, 2024 | Page 33

Management Discussion and Analysis (Continued)

Forbearance Agreements, Waivers, and Default.

Veritex Forbearance Agreements and Waivers. Under a November 2022 forbearance agreement, LE and LRM paid Veritex: (i) $4.3 million in past due principal and interest at the non-default rate (excluding late fees), (ii) $1.0 million into a payment reserve account, and (iii) $0.04 million in Veritex attorney fees. The Veritex forbearance agreement expired in September 2023, and was superseded by a first amendment. The first amendment expired in December 2023, and was superseded by a second amendment. The second amendment expired in March 2024. During each of these forbearance periods, Veritex agreed to forbear from testing borrowers’ compliance with financial covenants as specified in the LE Term Loan Due 2034 and LRM Term Loan Due 2034 and forbear from exercising its rights or remedies with respect to non-compliance with the financial covenants. On July 8, 2024, LE and LRM received a confirmation letter from Veritex dated July 2, 2024 waiving all covenant violations under the LE Term Loan Due 2034 and LRM Term Loan Due 2034 for calendar years 2021, 2022, and 2023. Pursuant to a letter dated June 25, 2024, the USDA approved Veritex's April 18, 2024 letter request for a waiver for the same periods.

Kissick Payment Agreement. Pursuant to a Payment Agreement between LE and the Kissick Noteholder dated April 30, 2023, the Kissick Noteholder agreed to forbear from exercising any of its rights and remedies related to a default pertaining to previous payment violations under the Kissick Debt. Under the terms of the Kissick payment agreement, LE agreed to make monthly principal and interest payments totaling $0.5 million beginning in April 2023, continuing on the first of each month through February 2025, with a final payment in March 2025. LE paid the Kissick Noteholder $5.9 million and $4.5 million in principal and interest during the twelve months ended December 31, 2024 and 2023, respectively. As of the filing date of this report, the Kissick Debt was paid in full.

LEH Payment Agreement. Pursuant to the LEH Payment Agreement dated May 9, 2023, LEH agreed to forbear from exercising any of its rights and remedies related to a default pertaining to previous payment violations under the BDPL-LEH Loan Agreement. Under the terms of the LEH Payment Agreement, BDPL agreed to make interest-only monthly payments approximating $0.05 million beginning in May 2023, continuing on the fifteenth of each month through April 2025. Beginning in May 2025, BDPL agreed to make principal and interest monthly payments approximating $0.4 million through April 2027. Interest is being incurred throughout the agreement term, including the interest-only payment period. BDPL paid LEH approximately $0.4 million and $3.4 million in interest during the twelve months ended December 31, 2024 and 2023, respectively. As of the filing date of this report, the BDPL-LEH Loan Agreement was in forbearance related to payment violations prior to May 2023.

Defaults. As of December 31, 2024 and through the filing date of this report, LE and LRM were in default related to financial covenants under the LE Term Loan Due 2034 and LRM Term Loan Due 2034, respectively. NPS was in default related to non-financial covenants under the NPS Term Loan Due 2031. Defaults may permit lenders to declare the amounts owed under the related loan agreements immediately due and payable, exercise their rights with respect to collateral securing obligors’ obligations, and exercise any other rights and remedies available. We can provide no assurance that: (i) our assets or cash flow will be sufficient to fully repay borrowings under the secured loan agreements that are in default, either upon maturity or if accelerated, (ii) LE or NPS will be able to refinance or restructure the debt, or (iii) the third party will provide a future forbearance or default waiver. Any exercise by lenders of their rights and remedies under secured loan agreements that are in default could have a material adverse effect on our business operations, including crude oil and condensate procurement and our customer relationships; financial condition; and results of operations. In such a case, the trading price of our Common Stock and the value of an investment in our Common Stock could significantly decrease, which could lead to holders of our Common Stock losing their investment in our Common Stock in its entirety. If we are unable to manage this, we may have to consider other options, such as selling assets, raising additional debt or equity capital, filing bankruptcy, or ceasing operations.

Proceeds from Debt. Proceeds from debt totaled $3.3 million for the twelve months ended December 31, 2024 compared to proceeds from debt totaling $0.0 for the twelve months ended December 31, 2023. In 2024, proceeds from debt related to the Affiliate Revolving Credit Agreement.

Total Debt and Lease Obligations by Settlement. The table below summarizes our principal contractual debt and lease obligations at December 31, 2024, by expected settlement period:

			Between		Between
	Less than		1 and 3		3 and 5		5 Years
	1 Year		Years		Years		and Later		Total
	(in thousands)
Long-term debt
Third-party	$	37,663	$	48	$	107	$	2,145	$	39,963
Related-party		4,709		2,541		-		-		7,250
Total long-term debt		42,372		2,589		107		2,145		47,213
Lease obligations		264		191		-		-		455
	$	42,636	$	2,780	$	107	$	2,145	$	47,668

See “Part II, Item 8. Financial Statements and Supplementary Data—Notes (3), (10), and (16)” for additional disclosures related to disclosures related to third-party and related-party debt.

Blue Dolphin Energy Company

December 31, 2024 | Page 34

Management Discussion and Analysis (Continued)

Concentration of Customers Risk

Customers. **** We routinely assess the financial strength of our customers. To date, we have not experienced significant write-downs in accounts receivable balances. We believe that our accounts receivable credit risk exposure is limited.

						Portion of
						Accounts
	Number of		% Total			Receivable at
	Significant		Revenue			December 31,
Twelve Months Ended	Customers		from Operations			(in millions)
December 31, 2024		3		69.6	%	$	5.2
December 31, 2023		3		75.0	%	$	4.2

One of our significant customers is LEH, an Affiliate. LEH purchases most of our jet fuel under the Amended and Restated Jet Fuel Sales Agreement and sells the jet fuel to the DLA under preferential pricing terms due to its HUBZone certification. The Affiliate lifts the jet fuel, which is stored at the Nixon Facility, as needed. LEH accounted for 30.8% and 31.7% of our total revenue from operations for the twelve months ended December 31, 2024 and 2023, respectively. The Affiliate represented $5.2 and $4.2 million in accounts receivable, related party at December 31, 2024 and 2023, respectively.

Bank Accounts. Financial instruments that potentially subject us to concentrations of risk consist primarily of cash, trade receivables and payables. We maintain cash balances at financial institutions in Houston, Texas. The FDIC insures certain financial products up to a maximum of $250,000 per depositor. At December 31, 2024 and 2023, our cash balances (including restricted cash) exceeded the FDIC insurance limit per depositor by $0.7 million and $18.2 million, respectively. Instability and volatility in the capital, credit, and commodity markets, as well as with financial institutions, could adversely affect our cash balances (including restricted cash) in excess of FDIC insurance limits per depositor. In the event that banks in which we maintain our cash balances (including restricted cash) fail, there can be no assurance that the federal government and the Federal Reserve would intervene.

Regulatory Activities.

BOEM. See "Part I, Item 3. Legal Proceedings —Unresolved Matters—BOEM Supplemental Pipeline Bonds" and "Part I, Item 3 Legal Proceedings—Unresolved Matters—RLI Corp. Surety Bonds."

BSEE. See "Part I, Item 1A. Risk Factors—Risk Factor C5," "Part I., Item 3. Legal Proceedings—Unresolved Matters—BSEE Offshore Platform Inspections, Decommissioning Obligations, and Civil Penalties" and "Part II, Item 8. Financial Statements and Supplementary Data—Notes (11), (15), and (16)."

TCEQ. See "Part I, Item 3. Legal Proceedings—Resolved Matters—TCEQ Final Agreed Order."

Off-Balance Sheet Arrangements. None.

Accounting Standards.

Critical Accounting Policies and Estimates

Significant Accounting Policies. Our significant accounting policies relate to use of estimates; cash, cash equivalents, and restricted cash; accounts receivable and allowance for credit losses; financial instruments and fair value measurements; inventory; property and equipment; leases; revenue recognition; income taxes; impairment or disposal of long-lived assets; asset retirement obligations; contract balances; and computation of earnings per share.

Estimates. The nature of our business requires that we make estimates and assumptions in accordance with U.S. GAAP. These estimates and assumptions affect the reported amounts of assets and liabilities and the disclosure of contingent assets and liabilities at the date of the financial statements, as well as the reported amounts of revenue and expenses during the reporting period. Although commodity price volatility, recession, inflation, tariffs, armed conflicts in the Middle East and Europe and associated sanctions on Russian crude products, and severe weather resulting from climate change may impact our estimates and assumptions, we are continually working to mitigate future risks. However, the extent to which these factors may impact our business, financial condition, liquidity, results of operations, and prospects will depend on future developments, which cannot be predicted with any degree of certainty.

We assessed certain accounting matters that require consideration of forecasted financial information in context with information reasonably available to us as of December 31, 2024 and through the filing date of this report. The accounting matters assessed included, but not limited to, our allowance for credit losses, inventory, and related reserves, and the carrying value of long-lived assets.

New Accounting Standards and Disclosures

New Pronouncements Adopted. During the twelve months ended December 31, 2024 we adopted the following ASU:

●

ASU 2023-07 — Segment Reporting (Topic 280): Improvements to Reportable Segment Disclosures (ASU 2023-07). In November 2023, the FASB issued Accounting Standards Update 2023-07, Segment Reporting—Improvements to Reportable Segment Disclosures (“ASU 2023-07”), which requires incremental disclosures related to a public entity’s reportable segments. Required disclosures include, on an annual and interim basis: (i) significant segment expenses that are regularly provided to the chief operating decision maker (“CODM”) and included within each reported measure of segment profit or loss, an amount for other segment items (which is the difference between segment revenue less segment expenses and less segment profit or loss), and a description of its composition, (ii) the title and position of the CODM, and (iii) an explanation of how the CODM uses the reported measure(s) of segment profit or loss in assessing segment performance and deciding how to allocate resources. ASU 2023-07 permits disclosure of more than one measure of segment profit. ASU 2023-07 is effective for fiscal years beginning after December 15, 2023, and interim periods within fiscal years beginning after December 15, 2024. The adoption of ASU 2023-07 did not have a significant impact on our financial statements.

Blue Dolphin Energy Company

December 31, 2024 | Page 35

Management Discussion and Analysis (Continued)

New Pronouncements Issued, Not Yet Effective. We expect to adopt the following ASUs in future periods:

●

ASU 2024-03 — Income Statement—Reporting Comprehensive Income—Expense Disaggregation Disclosures (Subtopic 220-40) ("ASU 2024-03"). In November 2024, the FASB issued ASU 2024-03, requiring additional disclosure of certain costs and expenses within the notes to the consolidated financial statements. This ASU is effective for annual periods beginning after December 15, 2026, and interim periods beginning after December 15, 2027, with early adoption permitted. We are evaluating the provisions of ASU 2024-03 and the incremental disclosures that will be required in our consolidated financial statements.

●

ASU 2023-09 — Income Taxes (Topic 740): Improvements to Income Tax Disclosures ("ASU 2023-09"). In December 2023, the FASB issued ASU 2023-09, requiring us to disclose specified additional information in our income tax rate reconciliation and provide additional information for reconciling items that meet a quantitative threshold. ASU 2023-09 will also require us to disaggregate our income taxes paid disclosure by federal and state taxes, with further disaggregation required for significant individual jurisdictions. ASU 2023-09 allows for adoption using either a prospective or retrospective transition method. We will adopt ASU 2023-09 for our financial statements covering the fiscal year ending December 31, 2025. We are currently evaluating the impact of adopting this ASU.

---

ITEM 7A. QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET RISK

Not applicable.

ITEM 8. FINANCIAL STATEMENTS AND SUPPLEMENTARY DATA

Report of Independent Registered Public Accounting Firm

To the Board of Directors and Stockholders of Blue Dolphin Energy Company

Opinion on the Consolidated Financial Statements

We have audited the accompanying consolidated balance sheets of Blue Dolphin Energy Company and Subsidiaries (the “Company”) as of December 31, 2024 and 2023, and the related consolidated statements of operations, stockholders’ equity (deficit), and cash flows for the years then ended, and the related notes (collectively referred to as the “consolidated financial statements”). In our opinion, the consolidated financial statements present fairly, in all material respects, the financial position of the Company as of December 31, 2024 and 2023, and the results of its operations and its cash flows for the years then ended, in conformity with accounting principles generally accepted in the United States of America.

Basis for Opinion

These consolidated financial statements are the responsibility of the Company’s management. Our responsibility is to express an opinion on the Company’s consolidated financial statements based on our audits. We are a public accounting firm registered with the Public Company Accounting Oversight Board (United States) (PCAOB) and are required to be independent with respect to the Company in accordance with the U.S. federal securities laws and the applicable rules and regulations of the Securities and Exchange Commission and the PCAOB.

We conducted our audits in accordance with the standards of the PCAOB. Those standards require that we plan and perform the audit to obtain reasonable assurance about whether the consolidated financial statements are free of material misstatement, whether due to error or fraud. The Company is not required to have, nor were we engaged to perform, an audit of its internal control over financial reporting. As part of our audits, we are required to obtain an understanding of internal control over financial reporting, but not for the purpose of expressing an opinion on the effectiveness of the Company’s internal control over financial reporting. Accordingly, we express no such opinion.

Our audits included performing procedures to assess the risks of material misstatement of the consolidated financial statements, whether due to error or fraud, and performing procedures that respond to those risks. Such procedures include examining, on a test basis, evidence regarding the amounts and disclosures in the consolidated financial statements. Our audits also included evaluating the accounting principles used and significant estimates made by management, as well as evaluating the overall presentation of the consolidated financial statements. We believe that our audits provide a reasonable basis for our opinion.

Critical Audit Matters

The critical audit matters communicated below are matters arising from the current period audit of the consolidated financial statements that were communicated or required to be communicated to the audit committee and that: (1) relates to accounts or disclosures that are material to the consolidated financial statements and (2) involved especially challenging, subjective, or complex judgments. The communication of critical audit matters does not alter in any way our opinion on the consolidated financial statements, taken as a whole, and we are not, by communicating the critical audit matters below, providing a separate opinion on the critical audit matters or on the accounts or disclosures to which they relate.

Related Party Transactions

As described in Note 3 to the consolidated financial statements, Lazarus Energy Holdings (LEH) is a controlling stockholder of the Company. In addition, there is a director and executive officer in common between the companies. Each of these entities and individuals have been identified as a related party as of and for the year ended December 31, 2024. The Company is party to several transactions with related parties, including but not limited to, agreements for management of the operating facility, sale of jet fuel to LEH, and various credit facilities provided to the Company by LEH.

We identified the evaluation of the Company’s identification of related parties and related party transactions as a critical audit matter. This required a high degree of auditor judgment and subjectivity in performing procedures to evaluate the reasonableness of management’s procedures performed to identify related parties and identify and account for related party transactions.

Blue Dolphin Energy Company

December 31, 2024 | Page 36

Report of Independent Registered Public Accounting Firm (Continued)

Our audit procedures included (i) inquiring of executive officers, key members of management, the Audit Committee of the Board of Directors, and others within the Company regarding the existence of related party relationships and transactions, (ii) gaining an understanding of the Company’s process for identifying, authorizing, accounting for and disclosing related parties and related party transactions, (iii) confirming related party balances, (iv) reading agreements and contracts with related parties and evaluating whether authorization and approvals were obtained and if the terms and other information about the transactions are consistent with management’s responses from inquiries and other audit evidence obtained about the business purpose of the transactions, (v) reading the Company’s minutes from meetings of the Board of Directors, and (vi) evaluating the completeness and accuracy of disclosures in the consolidated financial statements.

Going Concern

As described in Note 1 to the consolidated financial statements, the Company has significant debt in default and has a working capital deficiency. The ability of the Company to continue as a going concern is dependent on its ability to generate sufficient cash to fund operations and meet its obligations as they become due. The Company has concluded that its plans, as described in Note 1, alleviate the substantial doubt related to its ability to continue as a going concern.

We identified the Company’s ability to continue as a going concern as a critical audit matter. Assessing the Company’s assertion on its ability to continue as a going concern is complex and involves a high degree of subjectivity and judgment as it relates to the reasonableness of the assumptions used and judgements made in the determination.

Our audit procedures included (i) inquiring of executive officers, key members of management, the Audit Committee of the Board of Directors, and others within the Company regarding factors that would have an impact on the Company’s ability to continue as a going concern, (ii) evaluating management’s plan for addressing the adverse effects of the conditions identified, including assessing the reasonableness of forecasted information and underlying assumptions by comparing to actual results of prior periods and actual results achieved to date, and utilizing our knowledge of the entity, its business and management in considering liquidity needs and the Company’s ability to generate sufficient cash flow, (iii) assessing the availability of additional credit, and (iv) evaluating the completeness and accuracy of disclosures in the consolidated financial statements.

We have served as the Company's auditor since 2002.

/s/ UHY LLP
UHY LLP
Sterling Heights, Michigan<br> <br>April 1, 2025<br> <br>PCAOB Number: 01195

Blue Dolphin Energy Company

December 31, 2024 | Page 37

Consolidated Balance Sheets


			2023

ASSETS		****
CURRENT ASSETS
Cash and cash equivalents	81		$	18,713
Restricted cash, current	1,000			-
Accounts receivable, net	713			116
Accounts receivable, related party	5,247			4,184
Prepaid expenses and other current assets	1,874			1,591
Deposits	185			110
Inventory	35,662			24,576
Total current assets	44,762			49,290
LONG-TERM ASSETS
Total property and equipment, net	52,433			54,958
Operating lease right-of-use assets, net	456			158
Restricted cash, noncurrent	-			5
Surety bonds	1,255			230
Deferred tax assets, net	2,990			1,436
Total long-term assets	57,134			56,787
TOTAL ASSETS	101,896		$	106,077
LIABILITIES AND STOCKHOLDERS' EQUITY
CURRENT LIABILITIES
Long-term debt less unamortized debt issue costs, current portion (in default)	35,920		$	39,440
Line of credit, related party	3,250			-
Long-term debt, related party, current portion	1,459			-
Interest payable	235			2,596
Interest payable, related party	1,437			-
Accounts payable	11,630			1,814
Accounts payable, related party	-			889
Current portion of lease liabilities	264			147
Income taxes payable	18			951
Asset retirement obligations, current portion	2,999			4,504
Accrued expenses and other current liabilities	6,689			5,084
Total current liabilities	63,901			55,425
LONG-TERM LIABILITIES
Long-term lease liabilities, net of current	191			-
Long-term debt, net of current portion	2,300			3,745
Long-term debt, related party, net of current portion	2,541			4,000
Long-term interest payable, related party, net of current portion	-			1,308
Total long-term liabilities	5,032			9,053
TOTAL LIABILITIES	68,933			64,478
Commitments and contingencies (Note 15)
STOCKHOLDERS' EQUITY
Common stock (0.01 par value, 20,000,000 shares authorized; 14,921,968 shares issued and outstanding at December 31, 2024 and 2023, respectively)(1)	149			149
Additional paid-in capital	39,758			39,758
Retained earnings (deficit)	(6,944	)		1,692
TOTAL STOCKHOLDERS' EQUITY	32,963			41,599
TOTAL LIABILITIES AND STOCKHOLDERS' EQUITY	101,896		$	106,077

All values are in US Dollars.

^(1)^	Blue Dolphin has 2,500,000 shares of preferred stock, par value $0.10 per share, authorized. At both December 31, 2024 and 2023, there were no shares of preferred stock issued and outstanding.

The accompanying notes are an integral part of these consolidated financial statements.

Blue Dolphin Energy Company

December 31, 2024 | Page 38

Consolidated Statements of Operations

	Twelve Months Ended December 31,
	2024			2023
	(in thousands, except share and per-share amounts)
REVENUE FROM OPERATIONS
Refinery operations	$	313,579		$	390,016
Tolling and terminaling		3,940			6,032
Total revenue from operations		317,519			396,048
COSTS AND EXPENSES
Crude oil, fuel use, and chemicals		292,255			339,210
Other conversion costs		17,010			10,148
Tolling and terminaling costs		1,790			2,012
Depreciation and amortization		2,574			2,579
Total cost of goods sold		313,629			353,949
Other operating costs
LEH operating fee, related party		811			533
Other operating expenses		640			208
General and administrative expenses		6,443			3,134
Depreciation and amortization		232			219
Impairment of fixed assets		-			1,558
Bad debt expense		70			-
Accretion of asset retirement obligations		-			59
Total cost of operations		321,825			359,660
Income (loss) from operations		(4,306	)		36,388
OTHER INCOME (EXPENSE)
Interest and other income		205			241
Interest and other expense		(6,064	)		(6,103	)
Total other expense		(5,859	)		(5,862	)
Income (loss) before income taxes		(10,165	)		30,526
Income tax benefit		1,529			485
Net income (loss)	$	(8,636	)	$	31,011
Income (loss) per common share:
Basic	$	(0.58	)	$	2.08
Diluted	$	(0.58	)	$	2.08
Weighted average number of common shares outstanding:
Basic		14,921,968			14,921,968
Diluted		14,921,968			14,921,968

The accompanying notes are an integral part of these consolidated financial statements.

Blue Dolphin Energy Company

December 31, 2024 | Page 39

Consolidated Statements of Stockholders’ Equity (Deficit)

	Common Stock
	Shares Issued and				Additional Paid-In		Retained Earnings			Total Stockholders'
	Outstanding		Par Value		Capital		(Deficit)			Equity (Deficit)
	(in thousands except share amounts)
Balance at December 31, 2022		14,921,968	$	149	$	39,758	$	(29,319	)	$	10,588
Net income		-		-		-		31,011			31,011
Balance at December 31, 2023		14,921,968	$	149	$	39,758	$	1,692		$	41,599
Net loss		-		-		-		(8,636	)		(8,636	)
Balance at December 31, 2024		14,921,968	$	149	$	39,758	$	(6,944	)	$	32,963

The accompanying notes are an integral part of these consolidated financial statements.

Blue Dolphin Energy Company

December 31, 2024 | Page 40

Consolidated Statements of Cash Flows

	Twelve Months Ended December 31,
	2024			2023
	(in thousands)
OPERATING ACTIVITIES
Net income (loss)	$	(8,636	)	$	31,011
Adjustments to reconcile net income (loss) to net cash used in operating activities:
Depreciation and amortization		2,806			2,798
Accretion of asset retirement obligations		-			59
Deferred income tax		(1,554	)		(1,436	)
Amortization of debt issue costs		203			204
Bad debt (recovery of bad debt)		70			-
Impairment of fixed assets		-			1,558
Changes in operating assets and liabilities
Restricted cash		-			1,032
Accounts receivable		(667	)		(4,184	)
Accounts receivable, related party		(1,063	)		(1,140	)
Prepaid expenses and other current assets		(358	)		1,875
Inventory		(11,086	)		(4,732	)
Long-term bond assets		(1,025	)		-
Asset retirement obligations		(1,505	)		-
Accounts payable, accrued expenses and other liabilities		8,030			(7,774	)
Accounts payable, related party		(889	)		734
Net cash provided by (used in) operating activities		(15,674	)		20,005
INVESTING ACTIVITIES
Capital expenditures		(46	)		(102	)
Net cash used in investing activities		(46	)		(102	)
FINANCING ACTIVITIES
Proceeds from related-party debt		3,250			-
Payments on debt principal		(5,167	)		(1,495	)
Net activity on related-party debt		-			(1,211	)
Net cash used in financing activities		(1,917	)		(2,706	)
Net change in cash, cash equivalents, and restricted cash		(17,637	)		17,197
CASH, CASH EQUIVALENTS, AND RESTRICTED CASH AT BEGINNING OF PERIOD		18,718			1,521
CASH, CASH EQUIVALENTS, AND RESTRICTED CASH AT END OF PERIOD	$	1,081		$	18,718
Supplemental Information:
Non-cash investing and financing activities:
Right of use assets financed via operating leases	$	497		$	215
Interest paid	$	6,911		$	11,288

The accompanying notes are an integral part of these consolidated financial statements.

Blue Dolphin Energy Company

December 31, 2024 | Page 41

Notes to Consolidated Financial Statements
(1)	Organization
---	---

Company Overview. Blue Dolphin was formed in 1986 as a Delaware corporation. The company is an independent downstream energy company operating in the Gulf Coast region of the U.S. Operations primarily consist of a light sweet-crude, 15,000-bpd crude distillation tower, and approximately 1.25 million bbls of petroleum storage tank capacity in Nixon, Texas. Blue Dolphin trades on the OTCQX under the ticker symbol “BDCO.”

Assets are organized into two business segments: ‘refinery operations’ (owned by LE) and ‘tolling and terminaling services’ (owned by LRM and NPS). ‘Corporate and other’ includes Blue Dolphin subsidiaries BDPL (inactive pipeline and facilities assets), BDPC (inactive leasehold interests in offshore oil and gas wells), and BDSC (administrative services). See “Note (4)” to our consolidated financial statements for more information about our business segments.

Unless the context otherwise requires, references in this report to “we,” “us,” “our,” or “ours” refer to Blue Dolphin, one or more of its consolidated subsidiaries, or all of them taken as a whole.

Jonathan Carroll, our Chief Executive Officer, and an Affiliate together controlled 83.7% of the voting power of our Common Stock as of the filing date of this report. An Affiliate also operates and manages all Blue Dolphin properties, funds working capital requirements during periods of working capital deficits, guarantees certain of our third-party secured debt, and is a significant customer. Blue Dolphin and certain subsidiaries are currently parties to various agreements with Affiliates. See “Note (3)” to our consolidated financial statements for additional disclosures related to Affiliate agreements, arrangements, and risks associated with working capital deficits.

Working Capital. As of December 31, 2024 and the filing date of this report, certain conditions and events existed, in the aggregate, that caused management to evaluate Blue Dolphin's ability to continue as a going concern. Those conditions and events included historical working capital deficits and significant debt in current liabilities, certain of which was in default. Management believes that we have sufficient liquidity to meet our obligations as they become due through the generation of cash flows from operations and liquidation of current working capital amounts for a reasonable period (defined as one year from the issuance of these financial statements). Management acknowledges that uncertainty remains related to future operating margins; however, management has a reasonable expectation of Blue Dolphin's ability to generate adequate working capital for, amongst other requirements, purchasing crude oil and condensate and making payments on our long-term debt.

We had a working capital deficit of $19.1 million at December 31, 2024 compared to a working capital deficit of $6.1 million at December 31, 2023, representing a $13.0 million decrease. Our significant debt in current liabilities at December 31, 2024 consisted of bank debt to Veritex and GNCU and related-party debt. Excluding accrued interest, we had current related-party and third-party debt of $40.6 million and $39.4 million as of December 31, 2024 and 2023, respectively. The $1.2 million increase in current debt between the periods primarily related to a $3.3 million draw under the Affiliate Revolving Credit Agreement offset by loan payments. We continue to engage with potential lenders to obtain additional funding to refinance and restructure debt and further improve working capital.

Our current assets totaled $44.8 million at December 31, 2024 compared to $49.3 million at December 31, 2023, representing a $4.5 million decrease. Our current liabilities totaled $63.9 million at December 31, 2024 compared to $55.4 million at December 31, 2023, representing a $8.5 million increase.

(2)	Principles of Consolidation and Significant Accounting Policies

Basis of Presentation. The accompanying consolidated financial statements, which include Blue Dolphin and its subsidiaries, have been prepared in accordance with U.S. generally accepted accounting principles and the rules and regulations of the SEC. These rules and regulations conform to the accounting principles contained in FASB’s ASC, the sole source of U.S. GAAP. All significant intercompany items have been eliminated in consolidation. Additionally, any material subsequent events that occurred after the date through which this report covers have been properly recognized or disclosed in our financial statements. In management’s opinion, all adjustments necessary for a fair presentation have been included, disclosures are adequate, and the presented information is not misleading.

Reclassifications. When necessary, we reclassified prior period financial information to conform to the current year's presentation.

Significant Accounting Policies. We present a summary of significant Blue Dolphin accounting policies to assist investors and other stakeholders in understanding our consolidated financial statements. Our consolidated financial statements and accompanying notes are representations of management, who are responsible for their integrity and objectivity. These accounting policies conform to U.S. GAAP and management consistently applied these accounting policies in the preparation of our consolidated financial statements.

Use of Estimates. The nature of our business requires that we make estimates and assumptions in accordance with U.S.GAAP. These estimates and assumptions affect the reported amounts of assets and liabilities and the disclosure of contingent assets and liabilities at the date of the financial statements, as well as the reported amounts of revenue and expenses during the reporting period. We assessed certain accounting matters that require consideration of forecasted financial information in context with information reasonably available to us as of December 31, 2024 and through the filing date of this report. We base our estimates and judgments on historical experience, various 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, we may adjust estimates as the operating environment changes, new events occur, or we gain greater insights or experience. While we believe the estimates and assumptions used to prepare these consolidated financial statements are appropriate, actual results could differ from our estimates.

Cash, Cash Equivalents, and Restricted Cash. Cash and cash equivalents represent liquid investments with an original maturity of three months or less. Cash balances are maintained in depository and overnight investment accounts with financial institutions that, at times, may exceed insured deposit limits. Although management historically deemed this a normal business risk, management continues to evaluate options to limit risk given current capital, credit, and commodity markets and financial institution health. Restricted cash, current and restricted cash, noncurrent at December 31, 2024 and 2023, if any, reflected amounts held in a payment reserve account by Veritex as security for payments under the LE Term Loan Due 2034. In the event that banks in which we maintain our cash balances (including restricted cash) fail, there can be no assurance that the federal government and the Federal Reserve would intervene. See "Notes (3) and (10)" to our consolidated financial statements for additional disclosures associated with covenants related to our secured loan agreements with related parties and third parties.

The following table provides a reconciliation of cash, cash equivalents, and restricted cash as reported in the consolidated statements of cash flows:

	December 31,
	2024		2023
	(in thousands)
Cash and cash equivalents	$	81	$	18,713
Restricted cash, current		1,000		-
Restricted cash, noncurrent		-		5
	$	1,081	$	18,718

Accounts Receivable and Allowance for Credit Losses. Accounts receivable are presented net of any necessary allowance(s) for credit losses. Receivables are recorded at the invoiced amount and generally do not bear interest. When necessary, an allowance for credit losses is established based on prior experience and other factors which, in management’s judgment, deserve consideration in estimating bad debts. Management assesses the collectability of the customer’s account based on current aging status, collection history, and financial condition. Based on a review of these factors, management establishes or adjusts the allowance for specific customers and the entire accounts receivable portfolio. We had an allowance for credit losses of $0 and $0.06 million at December 31, 2024 and 2023, respectively.

Blue Dolphin Energy Company

December 31, 2024 | Page 42

Notes to Consolidated Financial Statements (Continued)

Financial Instruments and Fair Value Measurements. Our financial instruments consist of cash and cash equivalents, restricted cash, accounts receivable, accounts payable, and long-term debt. As of December 31, 2024 and 2023, the carrying amounts of cash and cash equivalents, restricted cash, accounts receivable and accounts payable approximate their fair values because they are highly liquid or due to the short-term nature of these instruments. The carrying value of long-term debt approximates fair value as it carries interest rates that fluctuate with the prime rate.

We established a three-tier hierarchy that classifies fair value amounts recognized in the financial statements based on the observability of inputs used to estimate these 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. The fair value of our longer term debt was $45.4 million and $47.2 million, at December 31, 2024 and 2023, respectively.

Inventory. Inventory primarily consists of refined products, crude oil and condensate, and chemicals. We value inventory at the lower of cost or net realizable value with cost determined by the average cost method, and net realizable value determined based on estimated selling prices less associated delivery costs. If the net realizable value of our refined products inventory declines to an amount less than our average cost, we record a write-down of inventory and an associated adjustment to cost of goods sold. See “Note (7)” to our consolidated financial statements for additional disclosures related to inventory.

Property and Equipment.

Refinery and Facilities. We typically make ongoing improvements to the Nixon facility based on operational needs, technological advances, and safety and regulatory requirements. We capitalize additions to refinery and facilities assets, and we expense costs for repairs and maintenance as incurred. We record refinery and facilities at cost less any adjustments for depreciation or impairment. We adjust the asset and the related accumulated depreciation accounts for the refinery and facilities asset’s retirement and disposal, with the resulting gain or loss included in the consolidated statements of operations. For financial reporting purposes, we compute refinery and facilities assets depreciation using the straight-line method with an estimated useful life of 25 years; we depreciate refinery and facilities assets when placed in service. We did not record any impairment of our refinery and facilities assets for the periods presented.

Pipelines and Facilities. We record our pipelines and facilities at cost less any adjustments for depreciation or impairment. We computed depreciation using the straight-line method over estimated useful lives ranging from 10 to 22 years. Per FASB ASC guidance, we performed impairment testing of our pipeline and facilities assets in 2016 . Upon completion of testing, we fully impaired our pipeline assets at December 31, 2016 . See "Notes (11), (15), and (16)” for additional disclosures related to the decommissioning of our pipelines and facilities assets, related risks, and AROs.

Oil and Gas Properties. Our oil and gas properties are accounted for using the full-cost method of accounting, whereby all costs associated with the acquisition, exploration, and development of oil and gas properties, including directly related internal costs, are capitalized on a cost-center basis. Amortization of such costs and estimated future development costs are determined using the unit-of-production method. All leases associated with our oil and gas properties have expired, and our oil and gas properties have been fully impaired since 2011 .

Construction in Progress (CIP). CIP expenditures, including capitalized interest, relate to the Nixon facility's construction and refurbishment activities and equipment. These expenditures are capitalized as incurred. Depreciation begins once the asset is placed in service. See "Note (8)” for additional disclosures related to refinery and facilities assets, oil and gas properties, pipelines and facilities assets, and CIP.

Leases**.** We determine whether a contract or agreement is or contains a lease at inception. If the contract is or includes a lease with a term greater than one year, we recognize an ROU asset and lease liability as of the commencement date based on the present value of the lease payments over the lease term. We determine the present value of the lease payments by using the implicit rate when readily determinable. If the implicit rate is not defined, we use the incremental borrowing rate to discount lease payments to present value. We adjust lease terms to include options to extend or terminate the lease when it is reasonably certain we will exercise those options.

For operating leases, we record lease costs on a straight-line basis over the lease term; we record lease expenses in the appropriate line on the income statement based on the leased asset’s intended use. For finance leases (previously referred to under U.S. GAAP as capital leases), we amortize lease payments for the ROU asset on a straight-line basis over the lesser of the leased asset’s useful life or the lease term; we record amortization expenses on the income statement in ‘depreciation and amortization expense;’ we record interest expense on the income statement in ‘interest and other expense.’

Revenue Recognition.

Refinery Operations Revenue. We recognize revenue from refined products sales when we meet our performance obligation to the customer. We meet our performance obligation when the customer receives control of the product. The customer accepts control of the product when the product is lifted. Under bill and hold arrangements, the customer takes control of the product when added to the customer’s bulk inventory as stored at the Nixon facility. We allocate a transaction price to each separately identifiable refined product load.

We consider a variety of facts and circumstances in assessing the point of a control transfer, including but not limited to: whether the purchaser can direct the use of the refined product, the transfer of significant risks and rewards, our rights to payment, and transfer of legal title. In each case, the term between the sale and when payment is due is not significant. We include incurred transportation, shipping, and handling costs in the cost of goods sold. We do not include excise and other taxes collected from customers and remitted to governmental authorities in revenue.

Tolling and Terminaling Revenue. Tolling and terminaling revenue represents fees under (i) terminal services agreements whereby a customer agrees to pay a certain fee per storage tank based on tank size over time for the storage of products and (ii) tolling agreements, whereby a customer agrees to pay a certain fee per gallon or barrel for throughput volumes moving through the naphtha stabilizer unit and a fixed monthly reservation fee for the use of the naphtha stabilizer unit.

We typically satisfy performance obligations for tolling and terminaling operations over time. We determine the transaction price at agreement inception based on the guaranteed minimum amount of revenue over the agreement term. We allocate the transaction price to the single performance obligation that exists under the agreement. We recognize revenue in the amount for which we have a right to invoice. Generally, payment terms do not exceed 30 days.

Revenue from storage tank customers may, from time to time, include fees for ancillary services, such as in-tank and tank-to-tank blending. These are optional customer services. The fixed cost under the customer’s storage tank agreement does not include ancillary services fees. We consider ancillary services as a separate performance obligation under the storage tank agreement. We satisfy the performance obligation and recognize the associated fee when we complete the requested service.

Deferred Revenue. Deferred revenue represents a liability related to a revenue-producing activity as of the balance sheet date. We record unearned revenue, which usually consists of customer prepayments, when we receive the cash payment. Once we satisfy the performance obligation, we recognize revenue in conformity with U.S. GAAP.

Income Taxes. Income tax expense includes federal and state taxes currently payable and deferred taxes arising from temporary differences between income for financial reporting and income tax purposes. Income taxes are calculated utilizing the applicable rates on items included in income determination for income tax purposes. Our effective tax rate maybe different than expected if the federal and state statutory rates were applied to income from continuing operations due to certain items that are deductible or included in income for tax purposes that are not deductible or included for financial statement purpose.

The benefit of an uncertain tax position is recognized in the financial statements if it meets a minimum recognition threshold. A determination is first made as to whether it is more likely than not that the income tax position will be sustained, based upon technical merits, upon examination by the taxing authorities. If the income tax position is expected to meet the more-likely-than-not criteria, the benefit recorded in the financial statements equals the largest amount that is greater than 50% likely to be realized upon its ultimate settlement. At December 31, 2024 and 2023, there were no uncertain tax positions for which a reserve or liability was necessary.

Impairment or Disposal of Long-Lived Assets. We periodically evaluate our long-lived assets for impairment. Additionally, we reassess our long-lived assets when events or circumstances indicate that the carrying value of these assets may not be recoverable. The carrying value is not recoverable if it exceeds the sum of the undiscounted cash flows expected from the use and eventual disposition of the asset or group of assets. If the carrying value exceeds the sum of the undiscounted cash flows, an impairment loss equal to the amount by which the carrying value exceeds the fair value of the asset or group of assets is recognized. Management uses significant judgment in forecasting future operating results and projected cash flows. If conditions or assumptions change, material impairment charges could be necessary.

Commodity price market volatility associated with general macroeconomic conditions related to inflation, tariffs, interest rates, capital and credit markets, and geopolitical tensions (including military conflicts in Ukraine and Israel and escalations in the Middle East) may adversely impact the carrying value of certain of our long-lived assets. Management evaluated refinery and facilities assets for impairment as of December 31, 2024. We did not record any impairment of our long-lived assets for the periods presented.

Asset Retirement Obligations. We record a liability for the discounted fair value of an ARO in the period incurred. We also capitalize the corresponding cost by increasing the carrying amount of the related long-lived asset. The liability is accreted towards its future value each period, and we depreciate the capitalized cost over the useful life of the related asset. We recognize a gain or loss if we settle the liability for an amount other than the amount recorded.

Refinery and Facilities. We have no legal or contractual obligation to dismantle or remove the refinery and facilities assets. Further, we believe these assets have indeterminate lives because we cannot reasonably estimate the dates or ranges upon which we would retire these assets. Management will record an asset retirement obligation for these assets when a definitive obligation arises, and retirement dates are evident.

Pipeline and Facilities; Oil and Gas Properties. Management uses significant judgment to estimate future asset retirement costs for our pipelines, related facilities, and oil and gas properties. These costs relate to dismantling and disposing of certain physical assets, plugging and abandoning wells, and restoring land and sea beds. Factors considered include regulatory requirements, structural integrity, water depth, reservoir depth, equipment availability, and mobilization efforts. We review our assumptions and estimates of future abandonment costs annually. See "Notes (11), (15), and (16)” for additional information related to AROs.

Contract Balances. The timing of revenue recognition, billings, and cash collections results in billed accounts receivable and customer pre-payments and deposits (contract liabilities) on our consolidated balance sheet. We bill amounts as customers lift products or upon signing of bulk sales contracts. We sometimes receive advances or deposits from our customers before revenue is recognized, resulting in contract liabilities. These deposits liquidate when we recognize the revenue.

Computation of Earnings Per Share. We present basic and diluted EPS. Basic EPS excludes dilution and is computed by dividing net income available to common stockholders by the weighted average number of shares of common stock outstanding for the period. We calculate diluted EPS by dividing net income available to common stockholders by the diluted weighted average number of common shares outstanding. Diluted EPS includes the potential dilution that could occur if securities or other contracts to issue shares of common stock were converted to common stock that then shared in the entity’s earnings. We do not currently have issued options, warrants, or similar instruments. Convertible shares, if granted, are not included in the computation of earnings per share if anti-dilutive. See "Note (14)” for additional information related to EPS.

New Accounting Standards and Disclosures

New Pronouncements Adopted. During the twelve months ended December 31, 2024 we adopted the following ASU:

●

ASU 2023-07 — Segment Reporting (Topic 280): Improvements to Reportable Segment Disclosures (ASU 2023-07). In November 2023, the FASB issued Accounting Standards Update 2023-07, Segment Reporting—Improvements to Reportable Segment Disclosures (“ASU 2023-07”), which requires incremental disclosures related to a public entity’s reportable segments. Required disclosures include, on an annual and interim basis: (i) significant segment expenses that are regularly provided to the chief operating decision maker (“CODM”) and included within each reported measure of segment profit or loss, an amount for other segment items (which is the difference between segment revenue less segment expenses and less segment profit or loss), and a description of its composition, (ii) the title and position of the CODM, and (iii) an explanation of how the CODM uses the reported measure(s) of segment profit or loss in assessing segment performance and deciding how to allocate resources. ASU 2023-07 permits disclosure of more than one measure of segment profit. ASU 2023-07 is effective for fiscal years beginning after December 15, 2023, and interim periods within fiscal years beginning after December 15, 2024. The adoption of ASU 2023-07 did not have a significant impact on our financial statements.

New Pronouncements Issued, Not Yet Effective. We expect to adopt the following ASUs in future periods:

●

ASU 2024-03 — Income Statement—Reporting Comprehensive Income—Expense Disaggregation Disclosures (Subtopic 220-40) ("ASU 2024-03"). In November 2024, the FASB issued ASU 2024-03, requiring additional disclosure of certain costs and expenses within the notes to the consolidated financial statements. This ASU is effective for annual periods beginning after December 15, 2026, and interim periods beginning after December 15, 2027, with early adoption permitted. We are evaluating the provisions of ASU 2024-03 and the incremental disclosures that will be required in our consolidated financial statements.

●

ASU 2023-09 — Income Taxes (Topic 740): Improvements to Income Tax Disclosures ("ASU 2023-09"). In December 2023, the FASB issued ASU 2023-09, requiring us to disclose specified additional information in our income tax rate reconciliation and provide additional information for reconciling items that meet a quantitative threshold. ASU 2023-09 will also require us to disaggregate our income taxes paid disclosure by federal and state taxes, with further disaggregation required for significant individual jurisdictions. ASU 2023-09 allows for adoption using either a prospective or retrospective transition method. We will adopt ASU 2023-09 for our financial statements covering the fiscal year ending *December 31, 2025.*We are currently evaluating the impact of adopting this ASU.

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Blue Dolphin Energy Company

December 31, 2024 | Page 43

Notes to Consolidated Financial Statements (Continued)
(3)	Related-Party Transactions
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Affiliate Agreements.

Financial and Operating Agreements. During 2024 and 2023, Blue Dolphin and certain subsidiaries were parties to the following financial and operating agreements with Affiliates:

Agreement/Transaction	Parties	Effective Date	Key Terms
Third Amended and Restated Operating Agreement^(1)^	Blue Dolphin and subsidiaries<br> <br>LEH	04/01/2024	For LEH operation and management of all Blue Dolphin’s assets; 1-year term; expires 04/01/2025 or notice by either party at any time of material breach or 90 days Board notice; LEH receives 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<br> <br>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.
Jet Fuel Purchase Agreements	LE<br> <br>LEH	04/21/2023	Product agreements for 2023 purchases of jet fuel by LE from LEH; jet fuel priced at LEH’s product cost; LE sold the jet fuel back to LEH under a prior jet fuel sales agreement between the parties.
NPS Terminal Services Agreement	NPS<br> <br>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.
LE Amended and Restated Master Services Agreement^(1)^	LE<br> <br>Ingleside	03/01/2023	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 term is month-to-month.
LE Amended and Restated Guaranty Fee Agreement	LE<br> <br>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<br> <br>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<br> <br>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<br> <br>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<br> <br>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 approximately $0.003 million per month.
^(1)^	On March 26, 2025 the Board approved modifications to the terms of these agreements. See "Note (16)" to our consolidated financial statements for additional disclosures related to these related-party financial operating agreements and other related party transactions.
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Debt Agreements. During 2024 and 2023, Blue Dolphin and certain subsidiaries were 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
Affiliate Revolving Credit Agreement^(1)^	Blue Dolphin and Subsidiaries	$5.0 million maximum^(2)^	Expiration of Initial Term or Renewal Term	Set-off against other obligations Borrower owes to Lender		WSJ Prime + 2.00%			Working capital
	LEH and Subsidiaries
BDPL-LEH Loan Agreement (in forbearance)^(1)^	LEH	$4.0 million	April 2027	$	0.05		8.00	%	Working capital
	BDPL
^(1)^	On March 26, 2025 the Board approved modifications to the terms of these agreements. See "Note (16)" to our consolidated financial statements for additional disclosures related to these related-party debt agreements and other related party transactions.
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^(2)^	As of December 31, 2024, $3.3 million was drawn under the agreement.

See "Note (16) for additional disclosures related to related-party transactions.

Forbearance and Defaults.

LEH Payment Agreement. Pursuant to the LEH Payment Agreement dated May 9, 2023, LEH agreed to forbear from exercising any of its rights and remedies related to a default pertaining to previous payment violations under the BDPL-LEH Loan Agreement. Under the terms of the LEH Payment Agreement, BDPL agreed to make interest-only monthly payments approximating $0.05 million beginning in May 2023, continuing on the fifteenth of each month through April 2025. Beginning in May 2025, BDPL agreed to make principal and interest monthly payments approximating $0.4 million through April 2027. Interest is being incurred throughout the agreement term, including the interest-only payment period. BDPL paid LEH approximately $0.4 million and $3.4 million in interest during the twelve months ended December 31, 2024 and 2023, respectively. As of the filing date of this report, the BDPL-LEH Loan Agreement was in forbearance related to payment violations prior to May 2023.

Covenants, Guarantees and Security. The BDPL-LEH Loan Agreement contains representations and warranties, affirmative and negative covenants, and events of default that we consider usual and customary for a credit facility of this type. Certain BDPL property serves as collateral under the BDPL-LEH Loan Agreement.

See “Note (10)” to our consolidated financial statements for additional information regarding defaults under our secured loan agreements with third parties and their potential effects on our business, financial condition, and results of operations.

Blue Dolphin Energy Company

December 31, 2024 | Page 44

Notes to Consolidated Financial Statements (Continued)

Related-Party Financial Impact

Consolidated Balance Sheets.

Accounts receivable and accounts payable, related party. We 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:

	December 31,
	2024	2023
	(in thousands)
Current assets
Accounts receivable, related party	$ 5,247	$ 4,184
Current liabilities
Accounts payable, related party	-	889

Accounts receivable, related party at December 31, 2024 reflected amounts owed by LEH to LE under the Amended and Restated Jet Fuel Sales Agreement. Accounts payable, related party at December 31, 2023 reflected amounts owed by LE to Ingleside under the LE Amended and Restated Master Services 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 long-term debt, related party and interest payable, related party. Related-party long-term debt, including outstanding original principal, as of the dates indicated was as follows:

	December 31,
	2024			2023
	(in thousands)
LEH
BDPL-LEH Loan Agreement (in forbearance)	$	4,000		$	4,000
Line of credit, related party		3,250			-
LEH Total		7,250			4,000
Less: Long-term debt, related party, current portion		(1,459	)		-
Less: Line of credit, related party		(3,250	)		-
	$	2,541		$	4,000

Related-party accrued interest associated with long-term debt as of the dates indicated consisted was as follows:

	December 31,
	2024			2023
	(in thousands)
LEH
BDPL-LEH Loan Agreement (in forbearance)	$	1,308		$	1,308
Line of credit, related party		-			-
LEH Total		1,308			1,308
Jonathan Carroll
Guaranty fee agreements		129			-
	1,437			1,308
Less: Long-term debt, related party, current portion		(1,437	)		-
Long-term interest payable, related party, net of current portion	$	-		$	1,308
Years Ending December 31,	Principal
---	---	---
	(in thousands)
2025	$	4,709
2026		2,541
2027		-
2028		-
2029		-
Subsequent to 2029		-
	$	7,250

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:

	Twelve Months Ended December 31,
	2024				2023
	(in thousands, except percent amounts)
Refinery operations
LEH	$	114,011	35.8	%	$	123,395	31.2	%
Third-Parties		199,568	62.9	%		266,621	67.3	%
Tolling and terminaling
LEH		2,160	0.7	%		2,160	0.5	%
Third-Parties		1,780	0.6	%		3,872	1.0	%
	$	317,519	100.0	%	$	396,048	100.0	%

In 2023, LE purchased jet fuel from LEH pursuant to Jet Fuel Purchase Agreements. The first transaction occurred in April 2023 for approximately $4.0 million. The second transaction occurred in May 2023 for approximately $4.4 million. There were no transactions under jet fuel purchase agreements by LE in 2024.

Blue Dolphin Energy Company

December 31, 2024 | Page 45

Notes to Consolidated Financial Statements (Continued)

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

	Twelve Months Ended December 31,
	2024		2023
	(in thousands)
Jonathan Carroll
Guaranty Fee Agreements
Tied to First Term Loan Due 2034	$	386	$	403
Tied to NPS Term Loan Due 2031		199		200
Tied to Second Term Loan Due 2034		161		167
Tied to Blue Dolphin Term Loan Due 2051		40		40
LEH
BDPL-LEH Loan Agreement (in forbearance)		424		657
	$	1,210	$	1,467

*Other.*BDSC received sub-lease income from LEH totaling $0.03 million for both twelve months ended December 31, 2024 and 2023.

The LEH operating fee, related party under the Third Amended and Restated Operating Agreement totaled $0.8 million for the twelve months ended December 31, 2024 compared to approximately $0.5 million for the twelve months ended December 31, 2023. The increase was related to higher manufacturing overhead costs, including insurance.

Lease expense associated with the LE Amended and Restated Master Services Agreement (as discussed elsewhere within this "Note (3)" and in "Note (12)" to our consolidated financial statements) totaled $1.3 million and $1.0 million for the twelve months ended December 31, 2024 and 2023, respectively.

Consolidated Cash Flow Statements.

Net Activity on Related-Party Debt. Pursuant to a payoff letter dated March 31, 2023, Blue Dolphin fully satisfied the debt and defaults associated with certain related-party promissory notes, which were previously assigned to LEH. As a result, all encumbrances that the lender or assignee had against Blue Dolphin were thereby terminated. In 2023, Blue Dolphin reflected the $1.2 million satisfaction of the amount owed to LEH on its consolidated cash flow statements as net activity on related-party debt.

(4)	Revenue and Segment Information

We have two reportable business segments: (i) refinery operations, which derives revenue from refined product sales, and (ii) tolling and terminaling, which derives revenue from storage tank rental fees, ancillary services fees (such as for in-tank blending) and tolling and reservation fees for use of the naphtha stabilizer at the Nixon refinery. ‘Corporate and other’ includes information for BDSC, BDPL, and BDPC.

Through implementation of ASU 2023-07, “Segment Reporting (Topic 280)—Improvements to Reportable Segment Disclosures,” we are including additional disclosures regarding significant segment expenses regularly provided to our chief operating decision maker ("CODM"), who is our Chief Executive Officer. For our refining segment, significant expenses relate to crude oil, fuel use, and chemicals, other conversion costs, and the LEH operating fee. For our tolling and terminaling segment, significant expenses relate to fees associated with an intercompany tolling agreement. The CODM reviews segment profit or loss on a monthly and quarterly basis and considers trend analyses as well as other market factors when making decisions about resource allocation. The measure of segment assets reported on our consolidated balance sheets and reviewed by our CODM is total assets.

Revenue from Contracts with Customers.

Disaggregation of Revenue. We present revenue in the table below under ‘Segment Information’ separated by business segment because management believes this presentation is beneficial to users of our financial information.

Receivables from Contracts with Customers. We present accounts receivable from contracts with customers as accounts receivable, net on our consolidated balance sheets.

Contract Liabilities. Our contract liabilities consist of unearned revenue from customers in the form of prepayments. We include unearned revenue in accrued expenses and other current liabilities on our consolidated balance sheets. See “Note (9)” to our consolidated financial statements for more information related to unearned revenue.

Remaining Performance Obligations. Most of our customer contracts are settled immediately and therefore have no remaining performance obligations.

Contract Balances.

	December 31,
	2024		2023
	(in thousands)
Accounts receivable (including related-party), beginning of period	$	4,300	$	1,148
Accounts receivable (including related-party), end of period		5,960		4,300
Unearned revenue, beginning of period	$	3,243	$	3,888
Unearned revenue, end of period		2,727		3,243

Segment Information. We modified our segment presentation to incorporate applicable depreciation and amortization into our cost of goods sold subtotal. We believe this provides a more complete representation of our cost of goods sold. Prior periods were modified to conform with this presentation.

Blue Dolphin Energy Company

December 31, 2024 | Page 46

Notes to Consolidated Financial Statements (Continued)

Business segment information for the periods indicated (and as of the dates indicated) was as follows:

	Twelve Months Ended
	December 31,
	2024									2023
	Refinery Operations			Tolling & Terminaling			Corporate & Other			Refinery Operations			Tolling & Terminaling			Corporate & Other
	(in thousands)
Segment revenue	$	313,579		$	6,576		$	-		$	390,016		$	8,622		$	-
Intercompany^(1)^		-			(2,636	)		-			-			(2,590	)		-
Total revenue from operations		313,579			3,940			-			390,016			6,032			-
Crude oil, fuel use, and chemicals		292,873			-			-			340,268			-			-
Other conversion costs		19,175			-			-			12,059			-			-
Intercompany processing fees		(2,636	)		-			-			(2,590	)		-			-
Tolling and terminaling costs		-			1,642			-			-			1,633			-
Depreciation and amortization		1,206			1,368			-			1,211			1,368			-
Total costs of goods sold		310,618			3,010			-			350,948			3,001			-
LEH operating fee, related party		811			-			-			533			-			-
General and administrative expenses		1,105			231			5,177			1,105			87			3,559
Other operating expenses^(2)^		-			-			641			-			-			208
Depreciation and amortization		-			-			232			-			-			219
Interest, net		3,313			1,961			585			3,130			1,964			768
Total costs and expenses		315,847			5,202			6,635			355,716			5,052			4,754
Income (loss) before income taxes		(2,268	)		(1,262	)		(6,635	)		34,300			980			(4,754	)
Income tax benefit		-			-			1,529			-			-			485
Net income (loss)	$	(2,268	)	$	(1,262	)	$	(5,106	)	$	34,300		$	980		$	(4,269	)
^(1)^	Fees associated with an intercompany tolling agreement related to naphtha volumes.
---	---
^(2)^	Includes costs and expenses associated with our pipeline and facilities assets.
---	---
	Twelve Months Ended
---	---	---	---	---
	December 31,
	2024		2023
	(in thousands)
Capital expenditures
Refinery operations	$	46	$	102
Total capital expenditures	$	46	$	102
	December 31,
---	---	---	---	---
	2024		2023
	(in thousands)
Identifiable assets
Refinery operations	$	78,996	$	86,565
Tolling and terminaling		16,904		16,464
Corporate and other		5,996		3,048
Total identifiable assets	$	101,896	$	106,077

Blue Dolphin Energy Company

December 31, 2024 | Page 47

Notes to Consolidated Financial Statements (Continued)
(5)	Concentration of Risk
---	---

Bank Accounts. Financial instruments that potentially subject us to concentrations of risk consist primarily of cash, trade receivables and payables. We maintain cash balances at financial institutions in Houston, Texas. The FDIC insures certain financial products up to a maximum of $250,000 per depositor. At December 31, 2024 and 2023, our cash balances (including restricted cash) exceeded the FDIC insurance limit per depositor by $0.7 million and $18.2 million, respectively. Instability and volatility in the capital, credit, and commodity markets, as well as with financial institutions, could adversely affect our cash balances (including restricted cash) in excess of FDIC insurance limits per depositor. In the event that banks in which we maintain our cash balances (including restricted cash) fail, there can be no assurance that the federal government and the Federal Reserve would intervene.

Key Supplier. Operation of the Nixon refinery depends on our ability to purchase adequate amounts of crude oil and condensate. During 2023, we operated under the Tartan Crude Supply Agreement. Tartan also stored crude oil at the Nixon facility under a terminal services agreement. In a letter dated October 31, 2023, Tartan provided LE and NPS the required 60 days’ notice of its intention to terminate the Tartan Crude Supply Agreement and terminal services agreement. The effective date of the termination was *December 31, 2023.*During 2023, the vast majority of our crude was sourced from Tartan under the Tartan Crude Supply Agreement.

On December 29, 2023, we entered a new crude supply agreement with MVP, effective January 1, 2024. This agreement provides a firm source of light-sweet Eagle Ford crude oil to the Nixon facility under improved credit terms, and the crude supply agreement renews on a quarterly evergreen basis. Related to the crude supply agreement, MVP stores crude oil at the Nixon facility under a terminal services agreement. Management believes that MVP can provide us with adequate amounts of crude oil and condensate for the foreseeable future. Because we obtain our crude oil and condensate without the benefit of a long-term crude supply agreement, our exposure to the risks associated with volatile crude oil prices mayincrease, crude oil transportation costs could increase, and our liquidity maybe reduced. Similarly, if producers experience crude supply constraints and increased transportation costs, our crude acquisition costs mayrise, or we may not receive sufficient amounts to meet our needs, which could result in refinery downtime and could materially affect our business, financial condition, and results of operations. If we are unable to manage this, we may have to consider other options, such as selling assets, raising additional debt or equity capital, filing bankruptcy, or ceasing operations.

Significant Customers. We routinely assess the financial strength of our customers. To date, we have not experienced significant write-downs in accounts receivable balances. We believe that our accounts receivable credit risk exposure is limited.

						Portion of
						Accounts
	Number of		% Total			Receivable at
	Significant		Revenue			December 31,
Twelve Months Ended	Customers		from Operations			(in millions)
December 31, 2024		3		69.6	%	$	5.2
December 31, 2023		3		75.0	%	$	4.2

One of our significant customers is LEH, an Affiliate. LEH purchases most of our jet fuel under the Amended and Restated Jet Fuel Sales Agreement and sells the jet fuel to the DLA under preferential pricing terms due to its HUBZone certification. The Affiliate lifts the jet fuel, which is stored at the Nixon Facility, as needed. LEH accounted for 30.8% and 31.7% of our total revenue from operations for the twelve months ended December 31, 2024 and 2023, respectively. The Affiliate represented $5.2 and $4.2 million in accounts receivable, related party at December 31, 2024 and 2023, respectively.

Concentration of Customers. Our customer base consists of refined petroleum product wholesalers. Economic changes affect our customers positively or negatively, impacting our overall credit risk exposure. Economic changes include uncertainties surrounding general macroeconomic conditions related to inflation, tariffs, interest rates, capital and credit markets, and geopolitical tensions (including military conflicts in Ukraine and Israel and escalations in the Middle East). Historically, we have had no significant problems collecting our accounts receivable.

Refined Product Sales. We sell our products primarily in the U.S. within PADD 3. Occasionally, we sell refined products to customers that export to other countries, such as low-sulfur diesel to Mexico. Total refined product sales by distillation (from light to heavy) for the periods indicated consisted of the following:

	Twelve Months Ended December 31,
	2024				2023
	(in thousands, except percent amounts)
LPG mix	$	318	0.1	%	$	302	0.1	%
Naphtha		77,845	24.8	%		76,050	19.5	%
Jet fuel		114,011	36.4	%		123,395	31.6	%
HOBM		39,045	12.5	%		92,947	23.8	%
AGO		82,360	26.4	%		97,322	25.0	%
	$	313,579	100.0	%	$	390,016	100.0	%

An Affiliate, LEH, purchases all our jet fuel. See "Note (3)” for additional disclosures related to Affiliate agreements and arrangements.

Blue Dolphin Energy Company

December 31, 2024 | Page 48

(6)	Prepaid Expenses and Other Current Assets

Prepaid expenses and other current assets, as of the dates indicated, consisted of the following:

	December 31,
	2024		2023
	(in thousands)
Prepaid insurance	$	1,382	$	1,168
Other prepaids		483		230
Prepaid easement renewal fees		9		32
Prepaid crude oil and condensate		-		161
	$	1,874	$	1,591
(7)	Inventory
---	---

Inventory, as of the dates indicated, consisted of the following:

	December 31,
	2024		2023
	(in thousands)
HOBM	$	28,364	$	5,144
Jet fuel		3,403		8,570
Naphtha		2,814		8,782
Crude oil and condensate		754		1,494
AGO		157		392
Chemicals		154		160
Propane		13		24
LPG mix		3		10
	$	35,662	$	24,576

We incurred an inventory impairment expense of $8.3 million and $5.2 million for the twelve months ended December 31, 2024 and 2023, respectively.

(8)	Property, Plant and Equipment, Net

Property, plant and equipment, net, as of the dates indicated, consisted of the following:

	December 31,
	2024			2023
	(in thousands)
Refinery and facilities	$	72,776		$	72,675
Land		566			566
Other property and equipment		913			913
		74,255			74,154
Less: Accumulated depreciation and amortization		(25,537	)		(22,966	)
		48,718			51,188
Construction in progress		3,715			3,770
	$	52,433		$	54,958
(9)	Accrued Expenses and Other Current Liabilities
---	---

Accrued expenses and other current liabilities, as of the dates indicated, consisted of the following:

	December 31,
	2024		2023
	(in thousands)
Unearned revenue from contracts with customers	$	2,727	$	3,243
Accrued fines and penalties		2,146		522
Insurance		793		467
Taxes payable		427		142
Other payable		308		297
Customer deposits		163		163
Board of director fees payable		125		250
	$	6,689	$	5,084

Blue Dolphin Energy Company

December 31, 2024 | Page 49

Notes to Consolidated Financial Statements (Continued)
(10)	Third-Party Long-Term Debt
---	---

Debt Agreements.****Blue Dolphin and certain of its subsidiaries are currently parties to the following debt agreements with third parties:

		Original			Monthly Principal
		Principal			and Interest Payment
Loan Description	Parties	(in millions)		Maturity	(in millions)		Interest Rate			Loan Purpose
Veritex Loans
LE Term Loan Due 2034 (in default)^(1)^	LE	$	25.0	June 2034	$	0.3	WSJ Prime + 2.75%			Capital improvements
	Veritex
LRM Term Loan Due 2034 (in default)^(1)^	LRM	$	10.0	December 2034	$	0.1	WSJ Prime + 2.75%			Capital improvements
	Veritex
Kissick Debt (in forbearance)^(2)^	LE	$	11.7	March 2025	$	0.5		6.25	%	Working capital
	Kissick Noteholder
GNCU Loan
NPS Term Loan Due 2031 (in default)^(3)^	NPS	$	10.0	October 2031	$	0.1		5.75	%	Working capital
	GNCU
SBA Economic Injury Disaster Loans
Blue Dolphin Term Loan Due 2051^(4)^	Blue Dolphin	$	2.0	June 2051	$	0.01		3.75	%	Working capital
	SBA
LE Term Loan Due 2050^(5)^	LE	$	0.15	August 2050	$	0.0007		3.75	%	Working capital
	SBA
NPS Term Loan Due 2050^(5)^	NPS	$	0.15	August 2050	$	0.0007		3.75	%	Working capital
	SBA
Equipment Loan Due 2025^(6)^	LE	$	0.07	October 2025	$	0.0013		4.5	%	Equipment Purchase
	Texas First
^(1)^	Our secured loan agreements with Veritex are subject to certain financial and non-financial covenants. As of December 31, 2024, LE and LRM were in default related to financial covenants under the LE Term Loan Due 2034 and LRM Term Loan Due 2034, respectively. With respect to non-financial covenants, we are required to have a balance of $1.0 million in a payment reserve account held by Veritex. At December 31, 2024 restricted cash, current and noncurrent totaled $1.0 million and $0.0, respectively. At December 31, 2023, both restricted cash, current and noncurrent totaled $0.0. Although the payment reserve account was $0.0 at December 31, 2023, we replenished the account in early January 2024.
---	---
^(2)^	Original principal amount was $8.0 million; pursuant to a 2017 sixth amendment, principal under the Kissick Debt increased by $3.7 million.
---	---
^(3)^	Loan requires monthly interest-only payments for the first thirty-six (36) months. Afterwards, principal and interest payments are due monthly through loan maturity. First payment due in November 2024.As of December 31, 2024 and the filing date of this report, the NPS Term Loan Due 2031 was in technical default for failure to have an active deposit account with the lender and provide standalone audited financial statements for NPS, a wholly-owned subsidiary.
---	---
^(4)^	Original principal amount was $0.5 million; the Blue Dolphin Term Loan Due 2051 was modified to increase the principal amount by $1.5 million. Payments deferred for thirty (30) months; first payment due and paid in November 2023; interest accrues during deferral period; loan not forgivable.
---	---
^(5)^	Payments deferred for thirty (30) months; first payment made in February 2023; interest accrued during deferral period; loan not forgivable.
---	---
^(6)^	In October 2020, LE entered into the Equipment Loan Due 2025 to purchase a backhoe; the backhoe is used at the Nixon facility.
---	---

Outstanding Principal, Debt Issue Costs, and Accrued Interest. Third-party long-term debt, including outstanding original principal, as of the dates indicated, was as follows:

	December 31,
	2024			2023
	(in thousands)
Veritex Loans
LE Term Loan Due 2034 (in default)	$	18,753		$	19,677
LRM Term Loan Due 2034 (in default)		7,793			8,190
Kissick Debt (in forbearance)		1,432			4,978
GNCU Loan
NPS Term Loan Due 2031 (in default)		9,671			9,958
SBA Economic Injury Disaster Loans
Blue Dolphin Term Loan Due 2051		2,000			2,000
LE Term Loan Due 2050		150			150
NPS Term Loan Due 2050		150			150
Equipment Loan Due 2025		14			29
		39,963			45,132
Less: Long-term debt, net, current portion		(35,920	)		(39,440	)
Less: Unamortized debt issue costs		(1,743	)		(1,947	)
	$	2,300		$	3,745

Blue Dolphin Energy Company

December 31, 2024 | Page 50

Notes to Consolidated Financial Statements (Continued)

Unamortized debt issue costs associated with the Veritex and GNCU loans, as of the dates indicated, consisted of the following:

	December 31,
	2024			2023
	(in thousands)
Veritex Loans
LE Term Loan Due 2034 (in default)	$	1,674		$	1,674
LRM Term Loan Due 2034 (in default)		768			768
GNCU Loan
NPS Term Loan Due 2031 (in default)		730			730
Less: Accumulated amortization		(1,429	)		(1,225	)
	$	1,743		$	1,947

Amortization expense was $0.2 million for both twelve-month periods ended December 31, 2024 and 2023.

Accrued interest related to third-party long-term debt, reflected as accrued interest payable in our consolidated balance sheets, as of the dates indicated, consisted of the following:

	December 31,
	2024			2023
	(in thousands)
SBA Economic Injury Disaster Loans
Blue Dolphin Term Loan Due 2051	$	93		$	135
LE Term Loan Due 2050		8			12
NPS Term Loan Due 2053		8			12
Veritex Loans
LE Term Loan Due 2034 (in default)		48			181
LRM Term Loan Due 2034 (in default)		61			70
GNCU Loan
NPS Term Loan Due 2031 (in default)		17			17
Kissick Debt (in forbearance)		-			2,169
Equipment Loan Due 2025		-			-
		235			2,596
Less: Accrued interest payable, current portion		(235	)		(2,596	)
Long-term interest payable, net of current portion	$	-		$	-

We classified the debt associated with the LE Term Loan Due 2034, LRM Term Loan Due 2034, and NPS Term Loan Due 2031 within long-term debt, current portion on our consolidated balance sheets at December 31, 2024 and 2023 due to being in default.

Forbearance Agreements and Default.

Veritex Forbearance Agreements and Waivers. Under a November 2022 forbearance agreement, LE and LRM paid Veritex: (i) $4.3 million in past due principal and interest at the non-default rate (excluding late fees), (ii) $1.0 million into a payment reserve account, and (iii) $0.04 million in Veritex attorney fees. The Veritex forbearance agreement expired in September 2023, and was superseded by a first amendment. The first amendment expired in December 2023, and was superseded by a second amendment. The second amendment expired in March 2024. During each of these forbearance periods, Veritex agreed to forbear from testing borrowers’ compliance with financial covenants as specified in the LE Term Loan Due 2034 and LRM Term Loan Due 2034 and forbear from exercising its rights or remedies with respect to non-compliance with the financial covenants. On July 8, 2024, LE and LRM received a confirmation letter from Veritex dated July 2, 2024 waiving all covenant violations under the LE Term Loan Due 2034 and LRM Term Loan Due 2034 for calendar years 2021, 2022, and 2023. Pursuant to a letter dated June 25, 2024, the USDA approved Veritex's April 18, 2024 letter request for a waiver for the same periods.

Kissick Payment Agreement. Pursuant to a Payment Agreement between LE and the Kissick Noteholder dated April 30, 2023, the Kissick Noteholder agreed to forbear from exercising any of its rights and remedies related to a default pertaining to previous payment violations under the Kissick Debt. Under the terms of the Kissick payment agreement, LE agreed to make monthly principal and interest payments totaling $0.5 million beginning in April 2023, continuing on the first of each month through February 2025, with a final payment in March 2025. LE paid the Kissick Noteholder $5.9 million and $4.5 million in principal and interest during the twelve months ended December 31, 2024 and 2023, respectively. As of the filing date of this report, the Kissick Debt was paid in full.

Defaults. As of December 31, 2024 and through the filing date of this report, LE and LRM were in default related to financial covenants under the LE Term Loan Due 2034 and LRM Term Loan Due 2034, respectively. NPS was in default related to non-financial covenants under the NPS Term Loan Due 2031. Defaults may permit lenders to declare the amounts owed under the related loan agreements immediately due and payable, exercise their rights with respect to collateral securing obligors’ obligations, and exercise any other rights and remedies available. We can provide no assurance that: (i) our assets or cash flow will be sufficient to fully repay borrowings under secured loan agreements that are in default, either upon maturity or if accelerated, (ii) LE, LRM, NPS, or BDPL will be able to refinance or restructure the debt, or (iii) third parties will provide future forbearances or default waivers, particularly if the banks with whom we have relationships fail. If one or more banks fail, we could be exposed to additional events of default (if not cured or waived) under existing secured loan agreements. Defaults under our secured loan agreements and any exercise by third parties of their rights and remedies related to such defaults may have a material adverse effect on our business, the trading price of our Common Stock, and on the value of an investment in our Common Stock, and holders of our Common Stock could lose their investment in our Common Stock in its entirety. If the debt associated with secured loan agreements is accelerated and we are unable to refinance or restructure the debt or obtain default waivers, we may have to consider other options, including selling assets, raising additional debt or equity capital, cutting costs, reducing cash requirements, filing bankruptcy, or ceasing operating. See “Notes (3) and (10)” to our consolidated financial statements for additional information regarding defaults under our secured loan agreements with related parties and third parties and their potential effects on our business, financial condition, and results of operations.

Blue Dolphin Energy Company

December 31, 2024 | Page 51

Notes to Consolidated Financial Statements (Continued)

Guarantees and Security.

Loan Description	Guarantees	Security
Veritex Loans
LE Term Loan Due 2034 (in default)	● USDA	●	First priority lien on Nixon facility’s business assets (excluding accounts receivable and inventory)
	● Jonathan Carroll^(1)^	●	Assignment of all Nixon facility contracts, permits, and licenses
	● Affiliate cross-guarantees	●	Absolute assignment of Nixon facility rents and leases, including tank rental income
		●	$5.0 million life insurance policy on Jonathan Carroll
LRM Term Loan Due 2034 (in default)	● USDA	●	Second priority lien on rights of LE in crude distillation tower and other collateral of LE
	● Jonathan Carroll^(1)^	●	First priority lien on real property interests of LRM
	● Affiliate cross-guarantees	●	First priority lien on all LRM fixtures, furniture, machinery, and equipment
		●	First priority lien on all LRM contractual rights, general intangibles, and instruments, except with respect to LRM rights in its leases of certain specified tanks for which Veritex has second priority lien
		●	Substantially all assets
Kissick Debt (in forbearance)^(2)^	---	●	Subordinated deed of trust that encumbers the crude distillation tower and general assets of LE
GNCU Loan
NPS Term Loan Due 2031 (in default)	● USDA	●	Deed of trust lien on approximately 56 acres of land and improvements owned by LE
	● Jonathan Carroll^(1)^	●	Leasehold deed of trust lien on certain property leased by NPS from LE
	● Affiliate cross-guarantees	●	Assignment of leases and rents and certain personal property
SBA Economic Injury Disaster Loans
BDEC Term Loan Due 2051	---	●	Business assets (e.g., machinery and equipment, furniture, fixtures, etc.)
LE Term Loan Due 2050	---	●	Business assets (e.g., machinery and equipment, furniture, fixtures, etc.)
NPS Term Loan Due 2050	---	●	Business assets (e.g., machinery and equipment, furniture, fixtures, etc.)
Equipment Loan Due 2025	---	●	First priority security interest in the equipment (backhoe).
^(1)^	Lender required Jonathan Carroll to personally guarantee repayment of borrowed funds and accrued interest.
---	---
^(2)^	Subject to the Kissick Subordination Agreement between the Kissick Noteholder and Sovereign Bank (predecessor to Veritex) dated June 22, 2015. Under the agreement, the Kissick Noteholder agreed, and LE consented, to subordinate its rights to security interest and liens in favor of Sovereign (now Veritex) as holder of the LE Term Loan Due 2034.
---	---

Representations, Warranties, and Covenants. The First Term Loan Due 2034, Second Term Loan Due 2034, NPS Term Loan Due 2031, BDEC Term Loan Due 2051, LE Term Loan Due 2050, and NPS Term Loan Due 2050 contain representations and warranties, affirmative and negative covenants, and events of default that we consider usual and customary for bank facilities of these types. Specifically, The First Term Loan Due 2034 and Second Term Loan Due 2034 contain quarterly debt service coverage, total combined current assets, total combined current liabilities, and total combined debt ratios and annual current and debt to net worth ratios. The First Term Loan Due 2034 also requires that a $1.0 million payment reserve account be maintained. The NPS Term Loan Due 2031 requires NPS to have an active deposit account with the lender, provide standalone audited financial statements for NPS, a wholly owned subsidiary, and meet annual maintenance of debt service coverage and current ratios. There are no covenants associated with the Kissick Debt, BDEC Term Loan Due 2051, LE Term Loan Due 2050, NPS Term Loan Due 2050, and the Equipment Loan Due 2025.

Future annual third-party long-term debt payments, certain of which are reflected as current due to defaults, are as follows:

Years Ending December 31,	Principal		Debt Issue Costs			Total
	(in thousands)
2025	$	37,663	$	(1,743	)	$	35,920
2026		1		-			1
2027		47		-			47
2028		53		-			53
2029		54		-			54
Subsequent to 2029		2,145		-			2,145
	$	39,963	$	(1,743	)	$	38,220

Blue Dolphin Energy Company

December 31, 2024 | Page 52

Notes to Consolidated Financial Statements (Continued)
(11)	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:

	December 31,
	2024			2023
	(in thousands)
AROs, at the beginning of the period	$	4,504		$	3,710
Changes in estimates of existing obligations		-			1,558
Liabilities settled		(1,505	)		(823	)
Accretion expense		-			59
		2,999			4,504
Less: AROs, current portion		(2,999	)		(4,504	)
Long-term AROs, at the end of the period	$	-		$	-

BDPL maintained $3.0 million and $4.5 million in AROs related to decommissioning pipeline and facilities assets at December 31, 2024 and 2023, respectively. During the twelve months ended December 31, 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 the twelve months ended December 31, 2024 due to the impact of poor weather conditions. During the twelve months ended December 31, 2023, we recorded an increase in ARO liabilities of $1.6 million due to a change in the timing and cost of decommissioning these assets, settled ARO liabilities totaling $0.8 million, and recognized accretion expense of $0.06 million.

BOEM mandated that our pipelines and facilities assets offshore in federal waters be decommissioned due to their extended period of inactivity. In October 2023, management met with BSEE to discuss BDPL’s path forward for meeting decommissioning requirements. Management worked with a consultant to develop a decommissioning plan, and BDPL was following the plan. BDPL completed a sizeable portion of the project from late December 2023to mid- February 2024. However, due to poor weather conditions that contributed to significant cost overruns, in July 2024 BDPL requested a BSEE extension to decommission the remaining portion of the Blue Dolphin Pipeline System and associated platform until the second quarter of 2025. BDPL’s request for a decommissioning extension was denied by BSEE in *September 2024.*On March 17, 2025, BSEE issued BDPL an INC for failing to comply with certain of its decommissioning obligations; see "Note (16) for additional disclosures related to this BSEE INC. Management is currently assessing the feasibility and cost of performing decommissioning work. Separately, management is also exploring alternatives to reactivate the assets under a potential alternate Right-of-Use and Easement (RUE). 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 bonds or exercise any other rights and remedies it has available.

BSEE Civil Penalties. During the twelve months ended December 31, 2024 and 2023 BDPL received the following BSEE civil penalty referral letters:

●	Civil Penalty G-2023-021. In September 2023, BDPL received a civil penalty referral letter from BSEE for failing to timely submit a platform inspection report associated with BSEE INC No. G822 issued in March 2023. In October 2023, BSEE calculated a proposed civil penalty of $0.2 million against BDPL; BSEE finalized the penalty amount in January 2024. BDPL paid the final civil penalty amount in full in April 2024.
●	Civil Penalty G-2024-054. In August 2024, BDPL received a civil penalty referral letter from BSEE for failing to timely 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.See "Note (16)" for additional disclosures related to this BSEE civil penalty. 2024
	---	---
	●	Civil Penalty G--056. In August 2024, BDPL received a civil penalty referral letter from BSEE for failing to timely 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. See "Note (16)" for additional disclosures related to this BSEE civil penalty.
---	---
●	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 (timely removing 55-gallon drum leaking oil on platform deck), L141 (timely flushing and filling Pipeline Segment No. 13101 with inhibited seawater), and L142 (timely decommissioning in place Pipeline Segment No. 13101). See "Note (16)" for additional disclosures related to this BSEE civil penalty.
---	---

At December 31, 2024 and 2023, BDPL maintained $3.0 million and $4.5 million, respectively, in AROs related to abandonment of its pipeline and facilities assets. See "Notes ( 15) and ( 16)" for additional disclosures related to AROs and BSEE civil penalties.

Blue Dolphin Energy Company

December 31, 2024 | Page 53

Notes to Consolidated Financial Statements (Continued)
(12)	Lease Obligations
---	---

Lease Obligations

Office Lease. We maintain our corporate headquarters in Houston, Texas. In October 2024, BDSC signed a new 24-month extension, the sixth amendment, to its operating lease. The sixth amendment was deemed to be a separate contract and not a lease modification.

An Affiliate, LEH, sub-leases a portion of the Houston office space. BDSC received sub-lease income from LEH totaling $0.03 million for both twelve months ended December 31, 2024 and 2023. See “Notes (3)” to our consolidated financial statements for additional disclosures related to the Affiliate sub-lease.

Tank Lease. LE leases tanks from Ingleside under the LE Amended and Restated Master Services Agreement. Lease expense associated with the LE Amended and Restated Master Services Agreement totaled $1.3 million and $1.0 million for the twelve months ended December 31, 2024 and 2023. Due to its one-year term, the lease is being treated as short term. As a result, the lease was not recorded on our balance sheet. See “Notes (3) and (16)” to our consolidated financial statements for additional disclosures related to the LE Amended and Restated Master Services Agreement.

The following table presents the lease-related assets and liabilities recorded on the consolidated balance sheet:

		December 31,
	Balance Sheet Location	2024			2023
		(in thousands)
Assets
Operating lease ROU assets	Operating lease ROU assets	$	497		$	787
Less: Accumulated amortization on operating lease assets	Operating lease ROU assets		(41	)		(629	)
Total lease assets			456			158
Liabilities
Current
Operating lease	Current portion of lease liabilities		264			147
Noncurrent
Operating lease	Long-term lease liabilities, net of current		191			-
Total lease liabilities		$	455		$	147
Weighted average remaining lease term in years
---	---	---
Operating lease	1.67
Weighted average discount rate
Operating lease	8.25	%

The following table presents information related to lease costs incurred for operating and finance leases:

	Twelve Months Ended
	December 31,
	2024		2023
	(in thousands)
Operating lease costs	$	207	$	206
Short-term lease expense, related party		1,250		1,000
Total lease cost	$	1,457	$	1,206

The table below presents supplemental cash flow information related to leases as follows:

	Twelve Months Ended
	December 31,
	2024		2023
	(in thousands)
Cash paid for amounts included in the measurement of lease liabilities:
Operating cash flows for operating lease	$	168	$	237

As of December 31, 2024, maturities of lease liabilities for the periods indicated was as follows:

December 31,	Operating Lease
	(in thousands)
2025	$	264
2026		191
	$	455

Blue Dolphin Energy Company

December 31, 2024 | Page 54

Notes to Consolidated Financial Statements (Continued)

Future minimum annual lease commitments that are non-cancelable:

December 31,	Operating Lease
	(in thousands)
2025	$	264
2026		191
	$	455
(13)	Income Taxes
---	---

The Inflation Reduction Act ("IRA") was enacted in August 2022. The IRA imposes a 15% alternative minimum tax on corporations whose average annual adjusted financial statement income during the most recently completed three-year period exceeds $1.0 billion. We do not fall within the “applicable corporations” category and are therefore exempt from paying an alternative minimum tax.

Tax Provision. The provision for income tax benefit (expense) for the periods indicated was as follows:

	Twelve Months Ended
	December 31,
	2024			2023
	(in thousands)
Current
Federal	$	(15	)	$	(653	)
State		(10	)		(298	)
Deferred
Federal		1,554			(6,121	)
Change in valuation allowance		-			7,557
Total provision for income taxes	$	1,529		$	485

We record income tax related interest and penalties, if applicable, as a component of the provision for income tax expense. Furthermore, none of our federal and state income tax returns are currently under examination by the IRS or state authorities. As of the twelve months ended December 31, 2024, fiscal years 2021 and later remain subject to examination by the IRS and fiscal years 2020 and later remain subject to examination by the State of Texas. We believe there are no uncertain tax positions for both federal and state income taxes.

U.S. GAAP treats Texas margins tax, a form of business tax imposed on an entity’s gross profit rather than its net income, like an income tax for financial reporting purposes.

Effective Tax Rate. Our effective tax rate was as follows:

	December 31,
	2024					2023
	(in thousands, except percent amounts)
Expected tax rate	$	(2,134	)	(21.00	)%	$	6,410		21.00	%
Permanent differences		450		4.43	%		-		0.00	%
State tax		18		0.18	%		298		0.98	%
Federal tax		15		0.15	%		653		2.14	%
True up adjustments		(12	)	(0.12	)%		(289	)	(0.95	)%
Utilization of net deferred tax assets		134		1.32	%		(6,121	)	(20.05	)%
Reversal of valuation allowance		-		0.00	%		(1,436	)	(4.70	)%
	$	(1,529	)	(15.04	)%	$	(485	)	(1.58	)%

Our effective tax rate differed from the U.S. federal statutory rate primarily due to changes in the valuation allowance related to anticipated utilization of the net deferred tax assets and state income taxes.

Blue Dolphin Energy Company

December 31, 2024 | Page 55

Notes to Consolidated Financial Statements (Continued)

Deferred income taxes as of the dates indicated consisted of the following:

	December 31,
	2024			2023
	(in thousands)
Deferred tax assets:
NOL and capital loss carryforwards	$	6,771		$	6,014
Business interest expense		3,792			2,534
Start-up costs (crude oil and condensate processing facility)		169			254
ARO liability/deferred revenue		630			946
Other		76			54
Total deferred tax assets		11,438			9,802
Deferred tax liabilities:
Basis differences in property and equipment		(8,448	)		(8,366	)
Total deferred tax liabilities		(8,448	)		(8,366	)
		2,990			1,436
Deferred tax assets, net	$	2,990		$	1,436

Deferred Income Taxes. Balances for deferred income tax represent the effects of temporary differences between carrying amounts and the actual income tax basis of our assets and liabilities; the balances also reflect NOL carryforwards. We record the balances based on tax rates we expect to be in effect when paid. NOL carryforwards and deferred tax assets represent amounts available to reduce future taxable income.

Valuation Allowance. As of each reporting date, management considers new evidence, both positive and negative, to determine the realizability of deferred tax assets. This assessment (of whether there is more than a 50% probability that our deferred tax asset is realizable) depends on the generation of future taxable income before the expiration of any NOL carryforwards. During the year ended *December 31, 2023,*the valuation allowance was reduced to zero based upon the expected utilization of the net deferred tax asset as a result of positive evidence that was evaluated, including recent earnings history and expectations for future taxable income. We recorded no valuation allowance against our deferred tax assets as of December 31, 2024.

At December 31, 2024, there were no uncertain tax positions for which a reserve or liability was necessary.

NOL Carryforwards. Under IRC Section 382, a corporation that undergoes an “ownership change” is subject to limitations on using pre-change NOL carryforwards to offset future taxable income. Within the meaning of IRC Section 382, an “ownership change” occurs when the aggregate stock ownership of stockholders who own more than 5% (after applying certain look-through rules) increases by more than fifty percent [50% over such stockholders’ lowest percentage ownership during the testing period (generally three years)]. Based on the tax rule, ownership changes occurred in 2005 and 2012. The 2005 ownership change related to a series of private placements; the 2012 ownership change related to a reverse acquisition.

The 2005 and 2012 ownership changes limit the use of pre-change NOL carryforwards to offset future taxable income. The annual use limitation generally equals the value of the common stock, on an aggregate basis, when the ownership change occurred multiplied by a specified tax-exempt interest rate. The 2012 ownership change will subject approximately $16.3 million in NOL carryforwards generated before the ownership change to an annual use limitation of approximately $0.6 million per year. We mayuse any unused portions of the limitation in subsequent years. Because of the yearly restriction, approximately $6.7 million in NOL carryforwards generated before the 2012 ownership change will expire unused and are excluded in the NOL carryforward presented below. NOL carryforwards generated after the 2012 ownership change but before 2018 are not subject to an annual use limitation; we can use these NOL carryforwards for 20 years in addition to NOL carryforward amounts generated before the ownership change. NOL carryforwards generated beginning in 2018 mayonly be used to offset 80% of taxable income and are carried forward indefinitely.

NOL carryforwards that remained available for future use for the periods indicated was as follows (amounts shown are net of NOLs that will expire unused because of the IRC Section 382 limitation):

	Net Operating Loss Carryforward
	Pre-Ownership			Post-Ownership
	Change			Change			Total
	(in thousands)
Balance at December 31, 2022	$	5,147		$	45,624		$	50,771
Net operating losses used and expired		(638	)		(21,493	)		(22,131	)
Balance at December 31, 2023	$	4,509		$	24,131		$	28,640
Net operating losses		(638	)		4,243			3,605
Balance at December 31, 2024	$	3,871		$	28,374		$	32,245

Blue Dolphin Energy Company

December 31, 2024 | Page 56

Notes to Consolidated Financial Statements (Continued)
(14)	Earnings and Dividends Per Share
---	---

A reconciliation between basic and diluted income per share for the periods indicated was as follows:

	Twelve Months Ended
	December 31,
	2024			2023
	(in thousands,
	except share and per share amounts)
Net income (loss)	$	(8,636	)	$	31,011
Basic and diluted earnings (loss) per share	$	(0.58	)	$	2.08
Basic and diluted shares used in computing earnings (loss) per share		14,921,968			14,921,968

Diluted EPS for the twelve months ended December 31, 2024 and 2023 was the same as basic EPS as there were no stock options or other dilutive instruments outstanding. Basic and diluted EPS is computed by dividing net income (loss) available to common stockholders by the weighted average number of shares of common stock outstanding.

Stockholders are entitled to receive such dividends as maybe declared by our Board out of funds legally available for such purpose. However, no dividend maybe declared or paid unless after-tax profit was made in the preceding fiscal year, we comply with covenants in our secured loan agreements, we are current on all required debt payments, and we have received prior written concurrence from certain lenders.

(15)	Commitments and Contingencies

Third Amended and Restated Operating Agreement. See “Notes (3) and (16)” to our consolidated financial statements for additional disclosures related to operation and management of all Blue Dolphin assets by an Affiliate under the Third Amended and Restated Operating Agreement and modifications to this agreement.

Defaults Under Secured Loan Agreements. See “Note (10)” to our consolidated financial statements for additional information regarding defaults under secured loan agreements with related parties and third parties and their potential effects on our business, financial condition, and results of operations.

Financing Agreements and Guarantees

Indebtedness. See “Notes (3), (10), and (16)” to our consolidated financial statements for disclosures related to related-party and third-party indebtedness and defaults thereto.

Guarantees. Affiliates provided guarantees on certain debt of Blue Dolphin and its subsidiaries. The maximum amount of any guarantee is equal to the principal amount and accrued interest, which amounts are reduced as payments are made. See “Notes (3) and (10)” to our consolidated financial statements for additional disclosures related to related-party and third-party guarantees associated with indebtedness and defaults thereto.

Health, Safety and Environmental Matters. The operations of certain Blue Dolphin subsidiaries are subject to extensive federal, state, and local environmental, health, and safety regulations governing, among other things, the generation, storage, handling, use and transportation of petroleum products and hazardous substances; the emission and discharge of materials into the environment; waste management; characteristics and composition of jet fuel and other products; and the monitoring, reporting and control of air emissions. These operations also require numerous permits and authorizations under various environmental, health, and safety laws and regulations. Failing to obtain and comply with these permits or environmental, health, or safety laws could result in fines, penalties or other sanctions, or a revocation of our permits.

Legal Matters. In the ordinary course of business, we are involved in legal matters incidental to the routine operation of our business, such as mechanic’s liens and contract-related disputes. We mayalso become party to lawsuits, administrative proceedings, and governmental investigations, including environmental, regulatory, and other matters. Large, sometimes unspecified, damages or penalties maybe sought from us in some matters, which mayrequire years to resolve. Although we cannot provide assurance, we believe that an adverse resolution of the matters described below would not have a material impact on our liquidity, consolidated financial position, or consolidated results of operations.

Resolved Matters.

RLI Corp. Surety Bonds. Blue Dolphin currently has several surety bonds through RLI Corp. as required by different regulatory agencies, including BOEM and the Railroad Commission of Texas. The bonds total approximately $1.25 million in the aggregate, of which $0.2 million was collateralized in cash. In *February 2024,*RLI Corp. filed suit against Blue Dolphin, BDPL, and BDEX seeking an injunction for the payment of approximately $1.0 million of additional cash collateral for the bonds. BDPL filed its answer to RLI Corp.'s lawsuit in April 2024 denying RLI Corp.'s claims, and in July 2024 BDPL presented a settlement proposal to RLI Corp. to resolve the matter through a series of payments collateralizing the bonds with cash. In July 2024, RLI Corp. informed the court that the parties reached a settlement in principle, and the parties executed a settlement agreement in September 2024. From September to December 2024, BDPL made payments to RLI Corp. under the settlement agreement totaling $0.6 million. As of the filing date of this report, BDPL was in compliance with the settlement agreement with RLI Corp. Once complete, abandonment of BDPL’s offshore pipeline and platform assets will eliminate the need for all BOEM supplemental pipeline bonds, which would reduce the amount of surety bonds held by RLI Corp. from $1.25 million to $0.25 million.

Pilot Dispute Related to Terminal Services Agreement. As previously disclosed, NPS and Pilot were involved in a contract-related dispute involving to a Terminal Services Agreement pursuant to which NPS stored jet fuel purchased by Pilot at the Nixon facility. The parties entered into a confidential settlement agreement on *December 29, 2023.*As part of the confidential settlement agreement, the parties agreed to mutually release all claims against each other. Further, all contractual agreements between the parties, including the Terminal Services Agreement, were terminated.

Blue Dolphin Energy Company

December 31, 2024 | Page 57

Notes to Consolidated Financial Statements (Continued)

TCEQ Final Agreed Order. In October 2021, LRM received a proposed agreed order from the TCEQ for alleged solid and hazardous waste violations discovered during an investigation from January to March 2020. The proposed agreed order assessed an administrative penalty of $0.4 million and identified actions needed to correct the alleged violations. In September 2023, TCEQ presented its final penalty offer of $0.35 million, which LRM accepted. Although LRM believed the penalty matter is resolved in *September 2023,*TCEQ referred the matter to the State Office of Administrative Hearings ("SOAH"). A preliminary hearing, the purpose of which was to set a hearing schedule, was held on August 8, 2024; management participated in the hearing. Although a follow-up hearing was scheduled for January 2025, TCEQ presented, and LRM signed, a revised draft Agreed Order in November 2024. Under the terms of the revised draft Agreed Order, TCEQ acknowledged that LRM had ceased unauthorized disposal of industrial solid waste and industrial hazardous waste and LRM accepted a final penalty amount of approximately $0.4 million, which will be paid in monthly installments over a three-year period. The SOAH case was dismissed and the matter was remanded back to the TCEQ December 2024; TCEQ finalized the Agreed Order in *February 2025.*At both December 31, 2024 and 2023, we accrued $0.4 million on our balance sheet within accrued expenses and other current liabilities related to this matter.

Unresolved Matters

BOEM Supplemental Pipeline Bonds. To cover the various obligations of lessees and rights-of-way holders operating in federal waters of the U.S. Gulf of America, BOEM evaluates an operator’s financial ability to carry out present and future obligations to determine whether the operator must provide additional security beyond the statutory bonding requirements. Such obligations include the cost of plugging and abandoning wells and decommissioning pipelines and platforms at the end of production or service activities. Once plugging and abandonment work has been completed, the collateral backing the financial assurance is released by BOEM.

Historically, BDPL maintained $0.9 million in pipeline bonds with BOEM to decommission its trunk pipeline offshore in federal waters. In March 2018, BOEM ordered BDPL to provide additional financial assurance totaling approximately $5.7 million for five (5) existing pipeline rights-of-way, an increase of $4.8 million. In June 2018, BOEM issued BDPL INCs for each right-of-way that failed to comply. BDPL appealed the INCs to the IBLA. Although the IBLA granted multiple extension requests, the Office of the Solicitor of the U.S. Department of the Interior indicated that BOEM would not consent to further extensions. The Solicitor’s office signaled that BDPL’s adherence to decommissioning its offshore pipelines and platform would likely help in future discussions with BOEM related to the INCs. Fulfilling abandonment obligations related to the subject assets will significantly reduce or eliminate the amount of supplemental pipeline bonds required by BOEM, which may serve to partially or fully resolve the INCs. See "Note (16)" for additional disclosures related to this BOEM appeal.

BDPL’s pending appeal of the BOEM INCs does not relieve BDPL of its obligations to provide additional financial assurance or of BOEM’s authority to impose financial penalties. There can be no assurance that we will be able to meet additional supplemental pipeline bond requirements. If BDPL is required by BOEM to provide significant additional supplemental pipeline bonds or is assessed significant penalties under the INCs, we will experience a significant and material adverse effect on our operations, liquidity, and financial condition. We cannot predict the outcome of the supplemental pipeline bond INCs. Accordingly, we did not record a liability on our consolidated balance sheets as of December 31, 2024 and 2023. At both December 31, 2024 and 2023, BDPL maintained $0.9 million in cash-backed pipeline bonds issued to the BOEM through RLI Corp.

BSEE Offshore Platform Inspections, Decommissioning Obligations, and Civil Penalties. BDPL has pipelines and platform assets subject to BSEE’s idle iron regulations. Idle iron regulations require lessees and rights-of-way holders to permanently abandon and remove platforms and other structures when they are no longer useful for operations. Until such structures are abandoned or removed, lessees and rights-of-way holders are required to inspect and maintain the assets in accordance with regulatory requirements.

Platform Inspection Obligation. We are required by BSEE to perform annual structural inspections of our offshore platform, as well as to perform monthly platform checks of navigational aids, fog horns, and lifesaving equipment. In March 2023, BSEE issued BDPL an INC for failing to perform the required 2021 and 2022 structural surveys for the GA-288C platform and for failing to provide BSEE with such survey results. In April 2023, BSEE granted BDPL an extension for completing the required platform inspection until May 30, 2023. Although BDPL requested a second extension, BSEE denied BDPL’s request. BDPL completed the platform inspection on August 26, 2023 and submitted the survey report to BSEE on September 6, 2023.

Decommissioning Obligations. Because our pipelines and facilities assets have been inactive for an extended period, BSEE mandated that they be decommissioned. In October 2023, management met BSEE to discuss BDPL’s path forward for meeting decommissioning requirements. Management worked with a consultant to develop a decommissioning plan, and BDPL submitted its decommissioning plan to the agency in November 2023. Although the decommissioning of these assets was delayed due to cash constraints associated with historical net losses during the pandemic, a sizeable portion of the decommissioning project was completed from late December 2023 to mid- February 2024. Additional work was planned for 2024; however, no additional work was performed due to significant cost overruns under the first phase of work due to poor weather conditions. In July 2024, BDPL requested a BSEE extension to decommission the remaining portion of the Blue Dolphin Pipeline System and associated platform until the second quarter of 2025; BDPL’s request for a decommissioning extension was denied by BSEE in *September 2024.*On March 17, 2025, BSEE issued BDPL an INC for failing to comply with certain of its decommissioning obligations; see "Note (16) for additional disclosures related to this BSEE INC.

Management is currently assessing the feasibility and cost of performing decommissioning work. Separately, management is also exploring alternatives to reactivate the assets under a potential alternate Right-of-Use and Easement (RUE). 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 bonds or exercise any other rights and remedies it has available.

BSEE Civil Penalties. During the twelve months ended December 31, 2024 and 2023 BDPL received the following BSEE civil penalty referral letters:

●

Civil Penalty G-2023-021. In September 2023, BDPL received a civil penalty referral letter from BSEE for failing to timely submit a platform inspection report associated with BSEE INC No. G822 issued in March 2023. In October 2023, BSEE calculated a proposed civil penalty of $0.2 million against BDPL; BSEE finalized the penalty amount in January 2024. BDPL paid the final civil penalty amount in full in April 2024.

●

Civil Penalty G-2024-054. In August 2024, BDPL received a civil penalty referral letter from BSEE for failing to timely 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. See "Note (16)" for additional disclosures related to this BSEE civil penalty.

---

Blue Dolphin Energy Company

December 31, 2024 | Page 58

Notes to Consolidated Financial Statements (Continued)
●	Civil Penalty G-2024-056. In August 2024, BDPL received a civil penalty referral letter from BSEE for failing to timely 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. See "Note (16)" for additional disclosures related to this BSEE civil penalty.
---	---
●	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 (timely removing 55-gallon drum leaking oil on platform deck), L141 (timely flushing and filling Pipeline Segment No. 13101 with inhibited seawater), and L142 (timely decommissioning in place Pipeline Segment No. 13101). See "Note (16)" for additional disclosures related to this BSEE civil penalty.
---	---

At December 31, 2024 and 2023, BDPL maintained $3.0 million and $4.5 million, respectively, in AROs related to abandonment of its pipeline and facilities assets. See "Notes (11) and (16)" for additional disclosures related to AROs and BSEE civil penalties.

(16)	Subsequent Events

Related Party Transactions

Fourth Amended and Restated Operating Agreement**.**An amendment and restatement of the Third Amended and Restated Operating Agreement between LEH, Blue Dolphin, and Blue Dolphin's subsidiaries was approved by the Board on March 26, 2025with an effective date of April 1, 2025. The renewal term of the Fourth Amended and Restated Operating Agreement begins on the effective date and expires upon the earliest to occur of the following: (a) the first anniversary of the effective date, which termination date shall be *April 1, 2026, (*b) written notice of either party upon the material breach of the agreement by the other party, or (c) upon 90 days’ notice by the Board if the Board determines that the Fourth Amended and Restated Operating Agreement is not in the best interest of Blue Dolphin and its subsidiaries. The terms of the Fourth Amended and Restated Operating Agreement are substantially the same as the Third Amended and Restated Operating Agreement. For services rendered: (a) Blue Dolphin and its subsidiaries shall reimburse LEH at cost for all direct expenses, either paid directly by LEH or financed with LEH’s credit card. Amounts payable to LEH shall be invoiced by LEH weekly but maybe reimbursed sooner and (b) Blue Dolphin shall also pay to LEH a management fee equal to 5% of all consolidated operating costs, excluding crude costs, depreciation, amortization, and interest.

Amended and Restated Affiliate Revolving Credit Agreement**.**An Amended and Restated Affiliate Revolving Credit Agreement between LEH, Blue Dolphin, and Blue Dolphin's subsidiaries was approved by the Board on March 26, 2025effective as of February1, 2025 . The maximum borrowing limit under the Amended and Restated Affiliate Revolving Credit Agreement increased from $5.0 million to $10.0 million. All other terms of the Amended and Restated Affiliate Revolving Credit Agreement are materially the same.

Second Amended and Restated Master Service Agreement. A Second Amended and Restated Master Services Agreement between Ingleside and LE was approved by the Board on March 26, 2025with an effective date of March 1, 2025. Under the agreement, LE stores product intended for customer receipt by barge at Ingleside's facility in Ingleside, Texas. The agreement has a one-year term, expiring on *March 1, 2026.*All other terms of the Second Amended and Restated Master Services Agreement are materially the same.

Amended and Restated Loan and Security Agreement / Amended Promissory Note. An Amended and Restated Loan and Security Agreement and an associated Amended Promissory Note between LEH and BDPL was approved by the Board on March 26, 2025effective as of *March 1, 2025.*The Amended and Restated Loan and Security Agreement was modified to change the maturity date to April 15, 2027, consistent with the LEH Payment Agreement between LEH and BDPL dated May 9, 2023. Additionally, the lender increased the interest rate from 8.00% to 12.00% and removed default provisions. The associated promissory note was modified to reflect the revised interest rate, maturity date, and default provisions in the Amended and Restated Loan and Security Agreement.

Together, Jonathan Carroll and LEH owned 83.7% of Blue Dolphin’s Common Stock as of the filing date of this report. See "Note (3)” for additional disclosures related to agreements with Affiliates.

Regulatory Matters

BOEM Supplemental Pipeline Bonds Appeal. In March 2018, BOEM ordered BDPL to provide additional financial assurance totaling approximately $5.7 million for five (5) existing pipeline rights-of-way, representing an increase of $4.8 million. In June 2018, BOEM issued BDPL INCs for each right-of-way that failed to comply. In June 2018, BDPL appealed the INCs to the IBLA, filing its statement of reasons in July 2018.

In February 2025, the USDOI directed BOEM and BDPL to submit either a joint status report, or separate status reports, to update the court relative to the facts in the case. If joint, submissions were due by March 11, 2025; if separate, BOEM’s submission was due by March 11, 2025 and BDPL’s response to BOEM’s submission was due by March 25, 2025. Although BOEM submitted its report by its respective deadline, BDPL missed its deadline as notifications were sent to BDPL’s former counsel in the matter. On March 10, 2025, the USDOI notified BDPL by letter that the agency granted BDPL until March 31, 2025 to submit its response; however, management was not in receipt of the USDOI’s notification letter until March 25, 2025. On March 27, 2025, BDPL filed a motion through new counsel requesting an extension of its deadline to file its status report response no later than April 30, 2025.

BSEE Civil Penalty G-2024-056. In August 2024, BDPL received a civil penalty referral letter from BSEE for failing to timely 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. BSEE reserved its right to assess additional civil penalties in the amount of $3,097 per day until the referenced INC is fully remediated. In March 2023, BDPL exercised its right to request a meeting with the penalty reviewing officer to submit additional information for consideration. At December 31, 2024, we accrued $0.4 million on our balance sheet within accrued expenses and other current liabilities related to this matter. We will record a liability of approximately $0.3 million per quarter related to potential penalties associated with Civil Penalty G-2024-056 beginning in the first quarter of 2025.

BSEE Civil Penalty G-2024-054. In August 2024, BDPL received a civil penalty referral letter from BSEE for failing to timely 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. BSEE reserved its rights to assess additional civil penalties in the amount of $3,097 per day under the referenced INC is fully remediated. BDPL has 30 calendar days from the date of BSEE’s proposed civil penalty letter ( March 25, 2025) to request a meeting with the penalty reviewing officer to submit additional information for consideration. At December 31, 2024, we accrued $0.7 million on our balance sheet within accrued expenses and other current liabilities related to this matter. We will record a liability of approximately $0.3 million per quarter related to potential penalties associated with Civil Penalty G-2024-054 beginning in the first quarter of 2025.

BSEE 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 (timely removing 55-gallon drum leaking oil on platform deck), L141 (timely flushing and filling Pipeline Segment No. 13101 with inhibited seawater), and L142 (timely decommissioning in place Pipeline Segment No. 13101). In March 2025, BSEE calculated a proposed civil penalty of $1.1 million against BDPL. BDPL has 30 calendar days from the date of BSEE’s proposed civil penalty letter ( March 25, 2025) to request a meeting with the penalty reviewing officer to submit additional information for consideration. At December 31, 2024, we accrued $1.1 million on our balance sheet within accrued expenses and other current liabilities related to this matter.

BSEE INC. On March 17, 2025, BSEE issued BDPL an INC for failing to decommission improvements to Right-of-Way OCS-G 10098 (Pipeline Segment No. 8437) offshore in federal waters.

See "Notes (11) and (15)" for additional disclosures related to our AROs.

Blue Dolphin Energy Company

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ITEM 9. CHANGES IN AND DISAGREEMENTS WITH ACCOUNTANTS ON ACCOUNTING AND FINANCIAL DISCLOSURE

None.

ITEM 9A. CONTROLS AND PROCEDURES

Disclosure Controls and Procedures. Disclosure controls and procedures are controls and other procedures that are designed to ensure that information required to be disclosed by us in the reports we file or submit under the Exchange Act is recorded, processed, summarized, and reported within the time periods specified by SEC rules and forms. Disclosure controls and procedures include, without limitation, controls and procedures designed to ensure that information required to be disclosed by us in the reports we file or submit under the Exchange Act is accumulated and communicated to our Principal Executive Officer (our chief executive officer) and Principal Financial and Accounting Officer to allow timely decisions regarding required disclosure. Under the supervision of, and with the participation of our management, including our Principal Executive Officer and our Principal Financial and Accounting Officer, we conducted an evaluation of the effectiveness of our disclosure controls and procedures, as defined in Rules 13a-15(e) and 15d-15(e) under the Exchange Act, as of the end of the period covered by this report. Based on our evaluation, our Principal Executive Officer and Principal Financial and Accounting Officer concluded that our disclosure controls and procedures were effective as of the end of the period covered by this report to ensure that information required to be disclosed by us in reports that we file or submit under the Exchange Act, are recorded, processed, summarized, and reported within the time periods specified in the SEC’s rules and forms.

Management’s Report on Internal Control over Financial Reporting

Management’s Responsibility. Management is responsible for establishing and maintaining adequate internal control over financial reporting, as such term is defined in Rules 13a-15(f) and 15d-15(f) under the Exchange Act. A company’s internal control over financial reporting is a process designed 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 in the U.S.

There are inherent limitations in the effectiveness of any control system, including the potential for human error and the possible circumvention or overriding of controls and procedures. Additionally, judgments in decision-making can be faulty and breakdowns can occur because of a simple error or mistake. An effective control system can provide only reasonable, not absolute, assurance that the control objectives of the system are adequately met. Accordingly, management does not expect that the control system can prevent or detect all errors or fraud. Further, projections of any evaluation or assessment of effectiveness of a control system to future periods are subject to the risks that, over time, controls may become inadequate because of changes in an entity’s operating environment or deterioration in the degree of compliance with policies or procedures.

Management’s Assessment. Management, under the supervision and with the participation of our Principal Executive Officer (our chief executive officer) and Principal Financial and Accounting Officer, assessed the effectiveness of our internal controls over financial reporting at December 31, 2024. In making this assessment, management used the criteria set forth by the 2013 Committee of Sponsoring Organizations of the Treadway Commission Framework and SOX Compliance. Management determined that our internal controls over financial reporting were effective for the twelve months ended December 31, 2024.

Changes in Internal Control over Financial Reporting. **** There have been no changes in our internal control over financial reporting that materially affected, or is reasonably likely to materially affect, our internal control over financial reporting.

Exemption from Management's Report on Internal Control over Financial Reporting. This report does not include an attestation report of our registered public accounting firm regarding internal control over financial reporting. Management’s report was not subject to attestation by our registered public accounting firm pursuant to rules of the SEC for smaller reporting companies that permit us to provide only management’s attestation in this report.

ITEM 9B. OTHER INFORMATION

Related Party Transactions

Fourth Amended and Restated Operating Agreement. An amendment and restatement of the Third Amended and Restated Operating Agreement between LEH, Blue Dolphin, and Blue Dolphin's subsidiaries was approved by the Board on March 26, 2025with an effective date of April 1, 2025. The renewal term of the Fourth Amended and Restated Operating Agreement begins on the effective date and expires upon the earliest to occur of the following: (a) the first anniversary of the effective date, which termination date shall be *April 1, 2026, (*b) written notice of either party upon the material breach of the agreement by the other party, or (c) upon 90 days’ notice by the Board if the Board determines that the Fourth Amended and Restated Operating Agreement is not in the best interest of Blue Dolphin and its subsidiaries. The terms of the Fourth Amended and Restated Operating Agreement are substantially the same as the Third Amended and Restated Operating Agreement. For services rendered: (a) Blue Dolphin and its subsidiaries shall reimburse LEH at cost for all direct expenses, either paid directly by LEH or financed with LEH’s credit card. Amounts payable to LEH shall be invoiced by LEH weekly but maybe reimbursed sooner and (b) Blue Dolphin shall also pay to LEH a management fee equal to 5% of all consolidated operating costs, excluding crude costs, depreciation, amortization, and interest.

Amended and Restated Affiliate Revolving Credit Agreement. An Amended and Restated Affiliate Revolving Credit Agreement between LEH, Blue Dolphin, and Blue Dolphin's subsidiaries was approved by the Board on March 26, 2025effective as of February 1, 2025 . The maximum borrowing limit under the Amended and Restated Affiliate Revolving Credit Agreement increased from $5.0 million to $10.0 million. All other terms of the Amended and Restated Affiliate Revolving Credit Agreement are materially the same.

Second Amended and Restated Master Service Agreement. A Second Amended and Restated Master Services Agreement between Ingleside and LE was approved by the Board on March 26, 2025 with an effective date of March 1, 2025. Under the agreement, LE stores product intended for customer receipt by barge at Ingleside's facility in Ingleside, Texas. The agreement has a one-year term, expiring on *March 1, 2026.*All other terms of the Second Amended and Restated Master Services Agreement are materially the same.

Amended and Restated Loan and Security Agreement / Amended Promissory Note. An Amended and Restated Loan and Security Agreement and an associated Amended Promissory Note between LEH and BDPL was approved by the Board on March 26, 2025 effective as of *March 1, 2025.*The Amended and Restated Loan and Security Agreement was modified to change the maturity date to April 15, 2027, consistent with the LEH Payment Agreement between LEH and BDPL dated May 9, 2023. Additionally, the lender increased the interest rate from 8.00% to 12.00% and removed default provisions. The associated promissory note was modified to reflect the revised interest rate, maturity date, and default provisions in the Amended and Restated Loan and Security Agreement.

Together, Jonathan Carroll and LEH owned 83.7% of Blue Dolphin’s Common Stock as of the filing date of this report. See "Note ( 3)” for additional disclosures related to agreements with Affiliates.

ITEM 9C. DISCLOSURE REGARDING FOREIGN JURISDICTIONS THAT PREVENT INSPECTIONS

Not applicable.

Blue Dolphin Energy Company

December 31, 2024 | Page 60

PART III

ITEM 10. DIRECTORS, EXECUTIVE OFFICERS, AND CORPORATE GOVERNANCE

Directors

The below table reflects each Director’s name, age as of the filing date of this report, principal occupation, directorships during the past five (5) years, and relevant knowledge and experience leading to their service on the Board:

Name, Age Principal Occupation and Directorships During Past 5 Years

Knowledge and Experience

Jonathan P. Carroll, 63 Blue Dolphin Energy Company Chairman of the Board (since 2014) Chief Executive Officer, President, Assistant Treasurer and Secretary (since 2012) Lazarus Energy Holdings, LLC (“LEH”) Manager (since 2006) and Majority Owner Together, LEH and Jonathan Carroll owned 83.7% of our outstanding Common Stock as of the filing date of this report. Mr. Carroll has served on Blue Dolphin’s Board since 2014. He is currently Chairman of the Board. He previously served on the Board of Trustees of the Salient Fund Group from 2004 to 2022, and served on the compliance, audit, and nominating committees of several of Salient’s private and public closed-end and mutual funds at various times within that period. Mr. Carroll also previously served on the Board of Directors of the General Partner of LRR Energy, L.P. (NYSE: LRE) from January 2014 until its merger with Vanguard Natural Resources, LLC in October 2015.

Mr. Carroll earned a Bachelor of Arts degree in Human Biology and a Bachelor of Arts degree in Economics from Stanford University, and he completed a Directed Reading in Economics at Oxford University. Based on his educational and professional experiences, Mr. Carroll possesses particular knowledge and experience in business management, finance and business development that strengthen the Board’s collective qualifications, skills, and experience.

Ryan A. Bailey, 49

Paradigm Institutional Investments<br> <br>Chief Investment Officer and Managing Partner (April 2023 to Present)<br> <br>Investment Office Resources<br> <br>Crewe Capital<br> <br>Strategic Advisor (2023 to Present)<br> <br>Co-CIO and Partner (June 2022 to March 2023)<br> <br>Carbonado Partners<br> <br>Strategic Advisor (June 2022 to March 2023)<br> <br>Managing Partner (September 2020 to June 2022) and Founder<br> <br>Pacenote Capital<br> <br>Managing Partner (2019 to 2020) and Co-founder<br> <br>Children’s Health System of Texas<br> <br>Head of Investments (2014 to 2019)<br> <br>Mr. Bailey was appointed to Blue Dolphin’s Board in November 2015. He is currently a member of the Audit and Compensation Committees. He also serves as an advisor and mentor to Texas Wall Street Women, a non-profit member organization; serves as member of the board of directors of Bridgeway Capital Management and Portfolios with Purpose. Mr. Bailey is also a member of the investment committees of Texas Employee Retirement System, American Heart Association, Dallas Police and Fire, and Dallas Parkland Hospital.	Mr. Bailey earned a Bachelor of Arts in Economics from Yale University and completed a graduate course in tax planning from the Yale School of Management. He holds professional credentialing as a Chartered Financial Analyst (CFA), Financial Risk Manager (FRM), Chartered Alternative Investment Analyst (CAIA) and Chartered Market Technician (CMT). Based on his educational and professional experiences, Mr. Bailey possesses particular knowledge and experience in finance, financial analysis and modeling, investment management, risk assessment and strategic planning, and cybersecurity risk management and data protection that strengthen the Board’s collective qualifications, skills, and experience.
Amitav Misra, 47<br> <br>HighRadius Corporation<br> <br>Vice President of Corporate Development(since December 2023)<br> <br>Vice President of Experiential Marketing and Partnerships (December 2022 to December 2023)<br> <br>Vice President of Global Marketing, Mid-Market (July 2022 to December 2022)<br> <br>Vice President of Treasury Line of Business (December 2020 to July 2022)<br> <br>Vice President of Treasury Marketing (July 2020 to July 2022)<br> <br>Arundo Analytics, Inc.<br> <br>General Manager Americas (2018 to 2020)<br> <br>Vice President of Marketing (2017 to 2020)<br> <br>Mr. Misra has served on Blue Dolphin’s Board since 2014. He is currently a member of the Audit and Compensation Committees. Mr. Misra serves as an advisor to several energy, technology, and private investment companies.	Mr. Misra earned a Bachelor of Arts in Economics from Stanford University and has held FINRA Series 79 and Series 63 licenses. Mr. Misra possesses particular knowledge and experience in artificial intelligence, economics, business development, cybersecurity risk management and data protection, private equity, and strategic planning that strengthen the Board’s collective qualifications, skills, and experience.
---	---
Christopher T. Morris, 63<br> <br>MPact Partners LLC<br> <br>President (2011 to Present)<br> <br>Board Veritas<br> <br>Managing Partner (2018 to Present)<br> <br>Bonaventure Realty Group<br> <br>Executive Vice President (2020 to 2022)<br> <br>Impact Partners LLC<br> <br>President (2017 to 2020)<br> <br>Mr. Morris has served on Blue Dolphin’s Board since 2012; he is currently Chairman of the Audit and Compensation Committees.	Mr. Morris earned a Bachelor of Arts in Economics from Stanford University and a Masters in Business Administration from the Harvard Business School. Based on his educational and professional experiences, Mr. Morris possesses particular knowledge and experience in business management, finance, strategic planning, and business development that strengthen the Board’s collective qualifications, skills, and experience.

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Directors, Executive Officers, and Corporate Governance (Continued)
Name, Age<br> <br>Principal Occupation and Directorships During Past 5 Years	Knowledge and Experience
---	---
Herbert N. Whitney, 84<br> <br>Wildcat Consulting, LLC<br> <br>President (since 2006) and Founder<br> <br>Mr. Whitney has served on Blue Dolphin’s Board since 2012. He previously served on the Board of Directors of Blackwater Midstream Corporation, the Advisory Board of Sheetz, Inc., as Chairman of the Board of Directors of Colonial Pipeline Company, and as Chairman of the Executive Committee of the Association of Oil Pipelines.	Mr. Whitney has more than 40 years of experience in pipeline operations, crude oil supply, product supply, distribution and trading, as well as marine operations and logistics having served as the President of CITGO Pipeline Company and in various general manager positions at CITGO Petroleum Corporation. He earned his Bachelor of Science in Civil Engineering from Kansas State University. Based on his educational and professional experiences, he possesses extensive knowledge in the supply and distribution of crude oil and petroleum products, which strengthens the Board’s collective qualifications, skills, and expertise.

Executive Officers

The below table reflects the name and age of each executive officer, as well as their principal occupation during the past five (5) years:

Name	Position	Since	Age
Jonathan P. Carroll	Chief Executive Officer	2014	63
	President, Assistant Treasurer, and Secretary	2012
	(Principal Executive Officer)
Bryce D. Klug	Treasurer and Assistant Secretary	August 2024	44
	(Principal Financial and Accounting Officer)

Jonathan P. Carroll was appointed Chairman of the Board of Blue Dolphin in 2014 and appointed Chief Executive Officer, President, Assistant Treasurer, and Secretary of Blue Dolphin in 2012. He has also been LEH's Manager since 2006 and is its majority owner. Together, LEH and Jonathan Carroll owned 83.7% of Blue Dolphin’s Common Stock as of the filing date of this report. Before founding LEH, Mr. Carroll was a private investor focused on direct debt and equity investments, primarily in distressed assets. He previously served on the Board of Trustees of the Salient Fund Group from 2004 to 2022, and served on the compliance, audit, and nominating committees of several of Salient’s private and public closed-end and mutual funds at various times within that period. Mr. Carroll also previously served on the Board of Directors of the General Partner of LRR Energy, L.P. (NYSE: LRE) from January 2014 until its merger with Vanguard Natural Resources, LLC in October 2015. He earned a Bachelor of Arts in Human Biology and a Bachelor of Arts in Economics from Stanford University, and he completed a Directed Reading in Economics at Oxford University.

Bryce D. Klug was appointed Treasurer and Assistant Secretary of Blue Dolphin in September 2024. Prior to Blue Dolphin, he served as a consultant at Nassau Bay Investments. From 2021 to 2023, Mr. Klug served as a manager and then as Senior Manager for transactional advisory services at Grant Thornton LLP. He was External Reporting Manager at Talos Energy, Inc. from 2019 to 2021 and Senior Manager of External Reporting at Noble Drilling from 2017 to 2019. He earned his Bachelor of Arts in Economics from the University of Michigan and a Masters in Accounting from Eastern Michigan University. He also holds a professional credential as a Certified Public Accountant (CPA).

Corporate Governance

Audit Committee. The Audit Committee consists of Messrs. Morris, Bailey, and Misra, with Mr. Morris serving as Chairman. During 2024, the Audit Committee met four (4) times. The Board has affirmatively determined that all members of the Audit Committee are independent under OTCQX and SEC rules and that each of Messrs. Bailey, Morris, and Misra qualify as an Audit Committee Financial Expert. The Audit Committee's duties include overseeing financial reporting and internal control functions. The Audit Committee’s written charter is available on our corporate website (http://www.blue-dolphin-energy.com). Blue Dolphin's Amended and Restated Audit Committee Charter, which is available on our corporate website (http://www.blue-dolphin-energy.com), was last reviewed by the Audit Committee in May 2024. In addition, the charter was included as an appendix to Blue Dolphin's proxy statement that was filed with the SEC on June 4, 2024. Blue Dolphin is required to include the charter as an appendix to its proxy statement at least once every three years.

Code of Ethics and Code of Conduct. In compliance with the Sarbanes-Oxley Act of 2002, the Board adopted a code of ethics policy and a code of conduct policy. The Audit Committee established procedures to enable anyone who has a concern about our conduct, policies, accounting, internal control over financial reporting, or auditing matters to communicate that concern directly to the Chairman of the Audit Committee. Our code of ethics and code of conduct policies are available on our website (http://www.blue-dolphin-energy.com). Any amendments or waivers to provisions of our code of ethics or code of conduct will be disclosed on Form 8-K as filed with the SEC and posted on our website.

Section 16(a) Beneficial Ownership Reporting Compliance. Section 16(a) of the Exchange Act requires our directors, executive officers, and stockholders who own more than ten percent (10%) of the Common Stock, to file reports of stock ownership and changes in ownership with the SEC and to furnish us with copies of all such reports as filed. Based solely on a review of the copies of the Section 16(a) reports furnished to us, we are unaware of any late filings made during 2024.

ITEM 11. EXECUTIVE COMPENSATION

Executive Compensation Policy and Procedures

An Affiliate, LEH, operates and manages all Blue Dolphin assets pursuant to the Third Amended and Restated Operating Agreement. Services under the Third Amended and Restated Operating Agreement include personnel serving in a variety of capacities, including, but not limited to corporate executives. All personnel work for and are paid by the Affiliate. See "Part II, Item 8. Financial Statements and Supplementary Data—Note (16)" for additional disclosures related to modifications to this operating agreement.

Compensation for Named Executives

Jonathan Carroll and Bryce Klug are our executive officers. As noted above under “Executive Compensation Policy and Procedures,” Messrs. Carroll and Klug's remuneration are provided by LEH under the Third Amended and Restated Operating Agreement. We do not provide any of their remuneration, but rather pay a management fee to LEH under the Third Amended and Restated Operating Agreement. During the twelve months ended December 31, 2024 and 2023, we paid LEH $0.8 million and $0.5 million under operating agreements with the Affiliate. Also, as disclosed under “Part III, Item 13. Certain Relationships and Related Transactions, and Director Independence," Mr. Carroll receives certain fees under various other affiliate agreements.

Summary Compensation Table
Name and Principal Position	Year		Salary		Total
			^(in thousands)^
Jonathan P. Carroll<br> <br>Chief Executive Officer, President,<br> <br>Assistant Treasurer, and Secretary<br> <br>(Principal Executive Officer)		2024<br> <br>2023	$<br> <br>$	----<br> <br>----	$<br> <br>$	----<br> <br>----
Bryce D. Klug<br> Treasurer and Assistant Secretary<br> <br>(Principal Financial and Accounting Officer)		2024	$	----	$	----

Compensation Risk Assessment

LEH’s approach to compensation practices and policies applicable for non-executive personnel throughout our organization is consistent with the base pay market median for each position. LEH believes its practices and policies in this regard are not reasonably likely to have a material adverse effect on us.

Outstanding Equity Awards

None.

Blue Dolphin Energy Company

December 31, 2024 | Page 62

Executive Compensation (Continued)

Director Compensation Policy and Procedures

Although Jonathan Carroll is a director of Blue Dolphin, his services as Chief Executive Officer are provided under the Third Amended and Restated Operating Agreement (see above under “Executive Compensation Policy and Procedures.”) Therefore, we do not have any directors that are also employed by Blue Dolphin. The Compensation Committee reviews and recommends to the Board for its approval all compensation for directors.

Compensation for Non-Employee Directors

For the twelve months ended December 31, 2024, non-employee, independent directors earned $80,000 in cash ($20,000 quarterly) for their service on the Board. For the twelve months ended December 31, 2023, non-employee, independent directors also earned additional compensation for serving on the Audit Committee. The chairperson of the Audit Committee earned an additional $2,500 in cash in each of the second and fourth quarters of the year, for a total of $5,000 annually. Members of the Audit Committee earned an additional $1,250 in cash in each of the second and fourth quarters of the year, for a total of $2,500 annually. This additional compensation was discontinued effective January 1, 2024. Non-employee, independent directors serving on the Compensation Committee did not earn any additional compensation for their service as directors in 2023. Non-employee, independent directors are reimbursed for reasonable out-of-pocket expenses related to in-person meeting attendance.

Accrued and Unpaid Non-Employee, Independent Director Compensation

	Twelve Months Ended
	December 31, 2024
Name	Paid		Unpaid		Total
	(in thousands)
Christopher T. Morris	$	127	$	43	$	170
Ryan A. Bailey		124		41		165
Amitav Misra		124		41		165
	$	375	$	125	$	500
	Twelve Months Ended
	December 31, 2023
Name	Paid		Unpaid		Total
	(in thousands)
Christopher T. Morris	$	75	$	84	$	159
Ryan A. Bailey		68		83	$	151
Amitav Misra		68		83	$	151
	$	211	$	250	$	461

Pay Versus Performance

Although the following disclosure for principal executive officer ("PEO") and named executive officer ("NEO") pay are required by SEC rules, it is not reflective of how we or the Compensation Committee determine executive compensation for our executive officers, Jonathan Carroll and Bryce Klug. As noted above under “Executive Compensation Policy and Procedures,” Messrs. Carroll and Klug’s remuneration is provided by LEH under the Third Amended and Restated Operating Agreement. As a result, there is no applicable information to be provided pursuant to this table.

Year	Summary Compensation Table Total for PEO		Compensation Actually Paid to PEO		Average Summary Compensation Table Total for Non-PEO NEOs		Average Compensation Actually Paid to Non-PEO NEOs		Net Income
	^(in thousands)^
2024	$	----	$	----	$	----	$	----	$	----
2023	$	----	$	----	$	----	$	----	$	----

All values are in US Dollars.

Equity Compensation Plan Information

None.

ITEM 12. SECURITY OWNERSHIP OF CERTAIN BENEFICIAL OWNERS AND MANAGEMENT AND RELATED STOCKHOLDER MATTERS

Security Ownership of Certain Beneficial Owners

This table shows information with respect to persons or groups known to us to be the beneficial owners of more than five percent (5%) of our Common Stock as of the filing date of this report. Unless otherwise indicated, each named party has sole voting and dispositive power with respect to such shares.

Title of Class	Name of Beneficial Owner	Amount and Nature of Beneficial Ownership	Percent of Class^(1)^
Common Stock	Lazarus Energy Holdings, LLC	8,426,456	56.5%
	801 Travis Street, Suite 2100
	Houston, Texas 77002
(1)	Based upon 14,921,968 shares of Common Stock issued and outstanding as of the filing date of this report.
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Security Ownership (Continued)

Security Ownership of Management

This table shows information as of the filing date of this report with respect to: (i) directors, (ii) executive officers, and (iii) directors and executive officers as a group beneficially owning our Common Stock. Unless otherwise indicated, each of the following persons has sole voting and dispositive power with respect to such shares.

Title of Class	Name of Beneficial Owner	Amount and Nature of Beneficial Ownership	Percent of Class^(1)^
Common Stock	Jonathan P. Carroll^(2)^	12,496,235	83.7%
Common Stock	Christopher T. Morris / Mpact Partners, LLC	212,400	*
Common Stock	Amitav Misra	204,141	*
Common Stock	Ryan A. Bailey	198,050	*
Common Stock	Herbert N. Whitney	9,683	*
Common Stock	Williams Christopher McDougall	100	*
Common Stock	Bryce D. Klug	1,000	*
Directors/Nominees and Executive Officers as a Group (7 Persons)		13,121,609	87.9%
^(1)^	Based upon 14,921,968 shares of Common Stock issued and outstanding as of the filing date of this report.
---	---
^(2)^	Includes 8,426,456 shares issued to LEH. Mr. Carroll and his affiliates have an approximate 80% ownership interest in LEH.
---	---
*	Less than 1%.
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ITEM 13. CERTAIN RELATIONSHIPS AND RELATED TRANSACTIONS, AND DIRECTOR INDEPENDENCE

Affiliate Agreements

Financial and Operating Agreements. During 2024 and 2023, Blue Dolphin and certain subsidiaries were parties to the following financial and operating agreements with Affiliates:

Agreement/Transaction	Parties	Effective Date	Key Terms
Third Amended and Restated Operating Agreement^(1)^	Blue Dolphin and subsidiaries<br><br> <br>LEH	04/01/2024	For LEH operation and management of all Blue Dolphin’s assets; 1-year term; expires 04/01/2025 or notice by either party at any time of material breach or 90 days Board notice; LEH receives 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<br><br> <br>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.
Jet Fuel Purchase Agreements	LE<br><br> <br>LEH	04/21/2023	Product agreements for 2023 purchases of jet fuel by LE from LEH; jet fuel priced at LEH’s product cost; LE sold the jet fuel back to LEH under a prior jet fuel sales agreement between the parties.
NPS Terminal Services Agreement	NPS<br><br> <br>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.
LE Amended and Restated Master Services Agreement^(1)^	LE<br><br> <br>Ingleside	03/01/2023	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 term is month-to-month.
LE Amended and Restated Guaranty Fee Agreement	LE<br><br> <br>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<br><br> <br>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<br><br> <br>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<br><br> <br>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<br><br> <br>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 approximately $0.003 million per month.
^(1)^	On March 26, 2025 the Board approved modifications to the terms of these agreements. See "Note (16)" to our consolidated financial statements for additional disclosures related to these related-party financial operating agreements and other related party transactions.
---	---

Blue Dolphin Energy Company

December 31, 2024 | Page 64

Certain Relationships and Related Transactions (Continued)

Debt Agreements. During 2024 and 2023, Blue Dolphin and certain subsidiaries were 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
Affiliate Revolving Credit Agreement^(1)^	Blue Dolphin and Subsidiaries	$5.0 million maximum^(2)^	Expiration of Initial Term or Renewal Term	Set-off against other obligations Borrower owes to Lender	WSJ Prime + 2.00%	Working capital
	LEH and Subsidiaries
BDPL-LEH Loan Agreement (in forbearance)^(1)^	LEH	$4.0 million	April 2027	$0.05	8.00%	Working capital
	BDPL
^(1)^	On March 26, 2025 the Board approved modifications to the terms of these agreements. See "Notes (3) and (16)" to our consolidated financial statements for additional disclosures related to these related-party debt agreements and other related party transactions.
---	---
^(2)^	As of December 31, 2024, $3.3 million was drawn under the agreement.

Forbearance and Defaults

Covenants, Guarantees and Security. The BDPL-LEH Loan Agreement contains representations and warranties, affirmative and negative covenants, and events of default that we consider usual and customary for a credit facility of this type. Certain BDPL property serves as collateral under the BDPL-LEH Loan Agreement. See “Note (10)” to our consolidated financial statements for additional information regarding defaults under our secured loan agreements with third parties and their potential effects on our business, financial condition, and results of operations.

Director Independence

The Board has affirmatively determined that each of Ryan A. Bailey, Amitav Misra, and Christopher T. Morris, each an outside director, are considered an “Independent Director” as such term is defined by OTCQX and SEC rules. Jonathan P. Carroll, our Chief Executive Officer and President, and Herbert N. Whitney, are not independent directors. Mr. Whitney serves as a consultant.

ITEM 14. PRINCIPAL ACCOUNTING FEES AND SERVICES

This table shows fees paid to UHY during the periods indicated:

	December 31,
	2024		2023
	(in thousands)
Audit fees	$	372	$	277
Audit-related fees		-		-
Tax fees		-		-
	$	372	$	277

Amounts billed but unpaid for each of the corresponding twelve months ended December 31, 2024 and 2023 totaled approximately $0.09 million and $0.1 million, respectively. Audit fees for 2024 and 2023 related to the audit of our consolidated financial statements and the review of our quarterly reports that are filed with the SEC. The Audit Committee must pre-approve all audit and non-audit services provided to us by our independent registered public accounting firm.

Blue Dolphin Energy Company

December 31, 2024 | Page 65

PART IV

ITEM 15. EXHIBITS, FINANCIAL STATEMENT SCHEDULES

Exhibits and Financial Statement Schedules

Following is a list of documents filed as part of this report:

●	Consolidated balance sheets, consolidated statements of operations, consolidated statements of stockholders’ equity (deficit), and consolidated statements of cash flows, which appear in “Part II, Item 8.Financial Statements and Supplementary Data”.
●	Exhibits as listed in the exhibit index of this report, which is incorporated herein by reference.
---	---

Exhibits Index

No.	Description
3.1	Amended and Restated Certificate of Incorporation of Blue Dolphin (incorporated by reference to Exhibit 3.1 filed with Blue Dolphin’s Form 8-K on June 2, 2009, Commission File No. 000-15905)
3.2	Amended and Restated By-Laws of Blue Dolphin (incorporated by reference to Exhibit 3.1 filed with Blue Dolphin’s Form 8-K on December 26, 2007, Commission File No. 000-15905)
4.1	Specimen Stock Certificate (incorporated by reference to exhibits filed with Blue Dolphin’s Form 10-K on March 30, 1990, Commission File No. 000-15905)
4.2	Description of company securities.
10.1*	Blue Dolphin 2000 Stock Incentive Plan (incorporated by reference to Appendix 1 filed with Blue Dolphin’s Proxy Statement on Form DEF 14A on April 20, 2000, Commission File No. 000-15905)
10.2*	First Amendment to the Blue Dolphin 2000 Stock Incentive Plan (incorporated by reference to Appendix B filed with Blue Dolphin’s Proxy Statement on Form DEF 14A on April 16, 2003, Commission File No. 000-15905)
10.3*	Second Amendment to the Blue Dolphin 2000 Stock Incentive Plan (incorporated by reference to Appendix A filed with Blue Dolphin’s Proxy Statement on Form DEF 14A on April 27, 2006, Commission File No. 000-15905)
10.4*	Fourth Amendment to the Blue Dolphin 2000 Stock Incentive Plan (incorporated by reference to Exhibit B filed with Blue Dolphin’s Proxy Statement on Form DEFA on December 28, 2011, Commission File No. 000-15905)
10.5	Promissory Note between Lazarus Energy LLC as maker and Notre Dame Investors Inc. as Payee in the Principal Amount of $8,000,000 dated June 1, 2006 (incorporated by reference to Exhibit 10.6 filed with Blue Dolphin’s Form 10-Q on March 31, 2012, Commission File No. 000-15905)
10.6	Subordination Agreement dated June 3, 2015 by and among John H. Kissick and Sovereign Bank
10.7	First Amendment to Promissory Note by and between Lazarus Energy, LLC and John H. Kissick effective as of July 1, 2013 (incorporated by reference to Exhibit 10.1 filed with Blue Dolphin’s Form 10-Q on November 14, 2013, Commission File No. 000-15905)
10.8	Second Amendment to Promissory Note by and between Lazarus Energy, LLC and John H. Kissick effective as of October 1, 2014 (incorporated by reference to Exhibit 10.48 filed with Blue Dolphin’s Form 10-K on March 31, 2015, Commission File No. 000-15905)
10.9	Second Amendment to Promissory Note by and between Lazarus Energy, LLC and John H. Kissick effective as of October 1, 2014 (incorporated by reference to Exhibit 10.48 filed with Blue Dolphin’s Form 10-K on March 31, 2015, Commission File No. 000-15905)
10.10	Loan Agreement among Sovereign Bank, Lazarus Energy, LLC and Jonathan Pitts Carroll, Sr., Blue Dolphin Energy Company, Lazarus Refining & Marketing, LLC, and Lazarus Energy Holdings dated June 22, 2015 (incorporated by reference to Exhibit 10.1 filed with Blue Dolphin’s Form 8-K on June 26, 2015, Commission File No. 000-15905)
10.11	Promissory Note between Lazarus Energy, LLC and Sovereign Bank for the principal sum of $25,000,000 dated June 22, 2015 (incorporated by reference to Exhibit 10.2 filed with Blue Dolphin’s Form 8-K on June 26, 2015, Commission File No. 000-15905)
10.12	Security Agreement of Lazarus Energy, LLC in favor of Sovereign Bank dated June 22, 2015 (incorporated by reference to Exhibit 10.3 filed with Blue Dolphin’s Form 8-K on June 26, 2015, Commission File No. 000-15905)
10.13	Deed of Trust, Mortgage, Security Agreement, Assignment of Leases and Rents, Financing Statement and Fixture Filing for Lazarus Energy, LLC dated June 22, 2015 (incorporated by reference to Exhibit 10.4 filed with Blue Dolphin’s Form 8-K on June 26, 2015, Commission File No. 000-15905)
10.14	Security Agreement of Lazarus Energy, LLC for the benefit of Lazarus Refining & Marketing, LLC dated June 22, 2015 (incorporated by reference to Exhibit 10.5 filed with Blue Dolphin’s Form 8-K on June 26, 2015, Commission File No. 000-15905)

Blue Dolphin Energy Company

December 31, 2024 | Page 66

Exhibit Index (Continued)
10.15	Loan and Security Agreement between Sovereign Bank and Lazarus Refining & Marketing, LLC dated June 22, 2015 (incorporated by reference to Exhibit 10.6 filed with Blue Dolphin’s Form 8-K on June 26, 2015, Commission File No. 000-15905)
---	---
10.16	Pledge Agreement by Lazarus Refining & Marketing, LLC in favor of Sovereign Bank dated June 22, 2015 (incorporated by reference to Exhibit 10.8 filed with Blue Dolphin’s Form 8-K on June 26, 2015, Commission File No. 000-15905)
10.17	Collateral Assignment executed by Blue Dolphin Pipe Line Company for the benefit of Sovereign Bank dated June 22, 2015 (incorporated by reference to Exhibit 10.9 filed with Blue Dolphin’s Form 8-K on June 26, 2015, Commission File No. 000-15905)
10.18	Loan Agreement among Sovereign Bank, Lazarus Refining & Marketing, LLC, Jonathan Pitts Carroll, Sr., Blue Dolphin Energy Company, Lazarus Energy, LLC, and Lazarus Energy Holdings dated December 4, 2015 (incorporated by reference to Exhibit 10.1 filed with Blue Dolphin’s Form 8-K on December 10, 2015, Commission File No. 000-15905)
10.19	Promissory Note between Lazarus Refining & Marketing, LLC and Sovereign Bank for the principal sum of $10,000,000 dated December 4, 2015 (incorporated by reference to Exhibit 10.2 filed with Blue Dolphin’s Form 8-K on December 10, 2015, Commission File No. 000-15905)
10.20	Security Agreement of Lazarus Refining & Marketing, LLC in favor of Sovereign Bank dated December 4, 2015 (incorporated by reference to Exhibit 10.3 filed with Blue Dolphin’s Form 8-K on December 10, 2015, Commission File No. 000-15905)
10.21	Deed of Trust, Mortgage, Security Agreement, Assignment of Leases and Rents, Financing Statement and Fixture Filing for Lazarus Refining & Marketing, LLC dated December 4, 2015 (incorporated by reference to Exhibit 10.4 filed with Blue Dolphin’s Form 8-K on December 10, 2015, Commission File No. 000-15905)
10.22	Absolute Assignment of Leases and Rents dated December 4, 2015 (incorporated by reference to Exhibit 10.6 filed with Blue Dolphin’s Form 8-K on December 10, 2015, Commission File No. 000-15905)
10.23	Indemnification Agreement dated December 4, 2015 (incorporated by reference to Exhibit 10.7 filed with Blue Dolphin’s Form 8-K on December 10, 2015, Commission File No. 000-15905)
10.24	Pledge Agreement by Lazarus Energy Holdings, LLC in favor of Sovereign Bank dated December 4, 2015 (incorporated by reference to Exhibit 10.8 filed with Blue Dolphin’s Form 8-K on December 10, 2015, Commission File No. 000-15905)
10.25	Collateral Assignment of Key Agreements dated December 4, 2015 (incorporated by reference to Exhibit 10.9 filed with Blue Dolphin’s Form 8-K on December 10, 2015, Commission File No. 000-15905)
10.26	First Amendment to Lazarus Energy, LLC Loan Agreement and Loan Documents dated December 4, 2015 (incorporated by reference to Exhibit 10.10 filed with Blue Dolphin’s Form 8-K on December 10, 2015, Commission File No. 000-15905)
10.27	First Amendment to Lazarus Energy, LLC Deed of Trust, Mortgage, Security Agreement, Assignment of Leases and Rents, Financing Statement and Fixture Filing dated December 4, 2015 (incorporated by reference to Exhibit 10.11 filed with Blue Dolphin’s Form 8-K on December 10, 2015, Commission File No. 000-15905)
10.28	Loan and Security Agreement by and between Lazarus Energy Holdings, LLC and Blue Dolphin Pipe Line Company dated August 15, 2016 (incorporated by reference to Exhibit 10.1 filed with Blue Dolphin’s Form 8-K on August 19, 2016, Commission File No. 000-15905)
10.29	Promissory Note by and between Lazarus Energy Holdings, LLC and Blue Dolphin Pipe Line Company dated August 15, 2016 (incorporated by reference to Exhibit 10.2 filed with Blue Dolphin’s Form 8-K on August 19, 2016, Commission File No. 000-15905)
10.30	Deed of Trust, Mortgage, Security Agreement, Assignment of Leases and Rents, Financing Statement and Fixture Filing for Blue Dolphin Pipe Line Company dated August 15, 2016 (incorporated by reference to Exhibit 10.3 filed with Blue Dolphin’s Form 8-K on August 19, 2016, Commission File No. 000-15905)
10.31	Notice from Veritex Community Bank to Lazarus Energy, LLC, Blue Dolphin Energy Company, Lazarus Refining & Marketing, LLC, Lazarus Energy Holdings, LLC, Lazarus Marine Terminal I, LLC and Jonathan Pitts Carroll, Sr. dated April 30, 2019 (incorporated by reference to Exhibit 10.7 filed with Blue Dolphin’s Form 10-Q on August 14, 2019, Commission File No. 000-15905)
10.32	Loan Authorization and Agreement between Blue Dolphin Energy Company and the Small Business Administration effective May 4, 2021 (incorporated by reference to Exhibit 10.1 filed with Blue Dolphin’s Form 10-Q on August 17, 2021, Commission File No. 000-15905).
10.33	Loan Authorization and Agreement between Blue Dolphin Energy Company and the Small Business Administration dated May 11, 2021 (incorporated by reference to Exhibit 10.1 filed with Blue Dolphin’s Form 8-K on May 17, 2021, Commission File No. 000-15905).
10.34	Loan Agreement between Greater Nevada Credit Union, Nixon Product Storage, LLC, and Guarantors (as defined therein) dated September 20, 2021 (incorporated by reference to Exhibit 10.52 filed with Blue Dolphin’s Form 10-K on April 1, 2022, Commission File No. 000-15905).

Blue Dolphin Energy Company

December 31, 2024 | Page 67

Exhibit Index (Continued)
10.35	Guaranteed Note between Nixon Product Storage, LLC and Greater Nevada Credit Union dated September 20, 2021. (incorporated by reference to Exhibit 10.53 filed with Blue Dolphin’s Form 10-K on April 1, 2022, Commission File No. 000-15905).
---	---
10.36	Non-Guaranteed Note between Nixon Product Storage, LLC and Greater Nevada Credit Union dated September 20, 2021. (incorporated by reference to Exhibit 10.54 filed with Blue Dolphin’s Form 10-K on April 1, 2022, Commission File No. 000-15905).
10.37	1st Loan Modification of Note between Blue Dolphin Energy Company and the Small Business Administration dated February 18, 2022. (incorporated by reference to Exhibit 10.55 filed with Blue Dolphin’s Form 10-K on April 1, 2022, Commission File No. 000-15905).
10.38	Forbearance Agreement dated November 18, 2022 among Lazarus Energy LLC, Lazarus Refining & Marketing LLC, Blue Dolphin Energy Company, Lazarus Energy Holdings LLC, Jonathan Carroll and Veritex Community Bank (incorporated by reference to Exhibit 10.1 filed with Blue Dolphin’s Form 8-K on November 25, 2022, Commission File No. 000-15905).
10.39	Guaranty Fee Agreement dated January 1, 2023 between Blue Dolphin Energy Company and Jonathan P. Carroll. (incorporated by reference to Exhibit 10.43 filed with Blue Dolphin's Form 10-K on April 3, 2023, Commission File No. 000-15905).
10.40	Guaranty Fee Agreement dated January 1, 2023 between Nixon Product Storage, LLC and Jonathan P. Carroll. (incorporated by reference to Exhibit 10.44 filed with Blue Dolphin’s Form 10-K on April 3, 2023, Commission File No. 000-15905).
10.41	Amended and Restated Guaranty Fee Agreement dated January 1, 2023 between Lazarus Energy, LLC and Jonathan P. Carroll. (incorporated by reference to Exhibit 10.45 of Blue Dolphin’s Form 10-K on April 3, 2023, Commission File No. 000-15905).
10.42	Amended and Restated Guaranty Fee Agreement dated January 1, 2023 between Lazarus Refining & Marketing, LLC and Jonathan P. Carroll. (incorporated by reference to Exhibit 10.4 filed with Blue Dolphin’s Form 10-K on April 3, 2023, Commission File No. 000-15905).
10.43	Payment Agreement dated April 30, 2023 by and between Lazarus Energy, LLC and John H. Kissick. (incorporated by reference to Exhibit 10.1 filed with Blue Dolphin's Form 8-K on May 4, 2023, Commission File No. 000-15905).
10.44	Payment Agreement dated May 9, 2023 by and between Blue Dolphin Pipe Line Company and Lazarus Energy Holdings, LLC. (incorporated by reference to Exhibit 10.1 filed with Blue Dolphin's Form 8-K on May 15, 2023, Commission File No. 000-15905).
10.45	First Amended Forbearance Agreement effective September 30, 2023 among Lazarus Energy LLC, Lazarus Refining & Marketing LLC, Blue Dolphin Energy Company, Lazarus Energy Holdings LLC, Jonathan Carroll, and Veritex Community Bank. (incorporated by reference to Exhibit 10.1 filed with Blue Dolphin's Form 8-K on November 3, 2023, Commission File No. 000-15905).
10.46	Amended and Restated Master Services Agreement between Lazarus Energy, LLC and Ingleside Crude, LLC dated March 31, 2023. (incorporated by reference to Exhibit 10.10 filed with Blue Dolphin's Form 10-Q on May 15, 2023, Commission File No. 000-15905).
10.47	Third Amended and Restated Operating Agreement effective as of April 1, 2024 by and between Lazarus Energy Holdings, LLC and Blue Dolphin Energy Company and its subsidiaries. (incorporated by reference to Exhibit 10.54 of Blue Dolphin’s Form 10-K on April 1, 2024, Commission File No. 000-15905).
10.48	Affiliate Revolving Credit Agreement effective as of April 1, 2024 by and between Lazarus Energy Holdings, LLC and its affiliates and Blue Dolphin Energy Company and its subsidiaries. (incorporated by reference to Exhibit 10.55 of Blue Dolphin’s Form 10-K on April 1, 2024, Commission File No. 000-15905).
10.49	Second Amended Forbearance Agreement effective December 29, 2023 among Lazarus Energy, LLC, Lazarus Refining & Marketing, LLC, Blue Dolphin Energy Company, Lazarus Energy Holdings, LLC, Jonathan Carroll, and Veritex Community Bank. (incorporated by reference to Exhibit 10.1 filed with Blue Dolphin's Form 8-K on January 4, 2024, Commission File No. 000-15905).
10.50	Sixth Amendment to Office Lease dated October 30, 2024 and effective September 1, 2024 by and between Blue Dolphin Services Co. and TR 801 Travis LLC. (incorporated by reference to Exhibit 10.1 filed with Blue Dolphin's Form 8-K on November 5, 2024, Commission File No. 000-15905).
10.51**	Fourth Amended and Restated Operating Agreement effective April 1, 2025 between Lazarus Energy Holdings, LLC, Blue Dolphin Energy Company, and Blue Dolphin's Subsidiaries.
10.52**	Amended and Restated Affiliate Revolving Credit Agreement effective February 1, 2025 between Lazarus Energy Holdings, LLC and its affiliates and Blue Dolphin Energy Company and its Subsidiaries.
10.53**	Second Amended and Restated Master Services Agreement dated March 1, 2025 between Ingleside Crude, LLC and Lazarus Energy, LLC.
10.54**	Amended and Restated Loan and Security Agreement amended March 1, 2025 between Lazarus Energy Holdings, LLC and Blue Dolphin Pipe Line Company.
10.55**	Amended Promissory Note amended March 1, 2025 between Lazarus Energy Holdings, LLC and Blue Dolphin Pipe Line Company.
14.1	Code of Ethics applicable to the Chairman, Chief Executive Officer and Senior Financial Officer (incorporated by reference to Exhibit 14.1 filed with Blue Dolphin’s Form 10-KSB on March 25, 2005, Commission File No. 000-15905)
21.1**	List of Subsidiaries of Blue Dolphin
23.1**	Consent of UHY LLP
31.1**	Jonathan P. Carroll Certification Pursuant to 18 U.S.C. Section 1350, as adopted pursuant to section 302 of the Sarbanes-Oxley Act of 2002
31.2**	Bryce D. Klug Certification Pursuant to 18 U.S.C. Section 1350, as adopted pursuant to section 302 of the Sarbanes-Oxley Act of 2002
32.1**	Jonathan P. Carroll Certification Pursuant to 18 U.S.C. Section 1350, as adopted pursuant to section 906 of the Sarbanes-Oxley Act of 2002
32.2**	Bryce D. Klug Certification Pursuant to 18 U.S.C. Section 1350, as adopted pursuant to section 906 of the Sarbanes-Oxley Act of 2002

Blue Dolphin Energy Company

December 31, 2024 | Page 68

Exhibit Index (Continued)
97.01**	Clawback Policy of Blue Dolphin Energy Company
---	---
97.02**	Insider Trading Policy of Blue Dolphin Energy Company
99.1	Amended and Restated Audit Committee Charter as reviewed by the Board of Directors of Blue Dolphin on November 15, 2018 (incorporated by reference to Appendix A filed with Blue Dolphin’s Proxy Statement on Form DEF 14A on November 15, 2018, Commission File No. 000-15905)
99.2	Compensation Committee Charter as reviewed by the Board of Directors of Blue Dolphin on November 15, 2018 (incorporated by reference to Appendix B filed with Blue Dolphin’s Proxy Statement on Form DEF 14A on November 15, 2018, Commission File No. 000-15905)
101.INS***	Inline XBRL Instance Document - the instance document does not appear in the Interactive Data File because its XBRL tags are embedded within the Inline XBRL Document.
101.SCH***	Inline XBRL Taxonomy Extension Schema Document.
101.CAL***	Inline XBRL Taxonomy Extension Calculation Linkbase Document.
101.LAB***	Inline XBRL Taxonomy Extension Label Linkbase Document.
101.PRE***	Inline XBRL Taxonomy Extension Presentation Linkbase Document.
101.DEF***	Inline XBRL Taxonomy Extension Definition Linkbase Document.
104***	Cover Page Interactive Data File (formatted as Inline XBRL and contained in Exhibit 101).

* Management Compensation Plan.

** Filed herewith.

*** Submitted electronically herewith.

ITEM 16. FORM 10-K SUMMARY

Not applicable.

Blue Dolphin Energy Company

December 31, 2024 | Page 69

SIGNATURES

Pursuant to the requirements of Section 13 or 15(d) 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.

	BLUE DOLPHIN ENERGY COMPANY
	(Registrant)
April 1, 2025	By:	/s/ JONATHAN P. CARROLL
		Jonathan P. Carroll<br> <br>Chief Executive Officer, President,<br> <br>Assistant Treasurer and Secretary<br> <br>(Principal Executive Officer)
	By:	/s/ BRYCE D. KLUG
		Bryce D. Klug<br> <br>Treasurer and Assistant Secretary
		(Principal Financial and Accounting Officer)

Pursuant to the requirements of the Securities Exchange Act of 1934, this report has been signed below by the following persons on behalf of the registrant and in the capacities and on the dates indicated.

Signature	Title	Date
/s/ JONATHAN P. CARROLL
Jonathan P. Carroll	Chairman of the Board, Chief Executive Officer, President, Assistant Treasurer and Secretary (Principal Executive Officer)	April 1, 2025
/s/ BRYCE D. KLUG	Treasurer and Assistant Secretary (Principal Financial and Accounting Officer)	April 1, 2025
Bryce D. Klug
/s/ RYAN A. BAILEY
Ryan A. Bailey	Director	April 1, 2025
/s/ AMITAV MISRA
Amitav Misra	Director	April 1, 2025
/s/ CHRISTOPHER T. MORRIS
Christopher T. Morris	Director	April 1, 2025
/s/ HERBERT N. WHITNEY
Herbert N. Whitney	Director	April 1, 2025

Blue Dolphin Energy Company

December 31, 2024 | Page 70

ex_700985.htm

EXHIBIT 21.1 ****

List of subsidiaries of Blue Dolphin Energy Company (“Blue Dolphin”):

●	Lazarus Energy, LLC, a Delaware limited liability company;
●	Lazarus Refining & Marketing, LLC, a Delaware limited liability company
●	Nixon Product Storage, LLC, a Delaware limited liability company
●	Blue Dolphin Pipe Line Company, a Delaware corporation;
●	Blue Dolphin Petroleum Company, a Delaware corporation;
●	Blue Dolphin Services Co., a Texas corporation;
●	Blue Dolphin Exploration Company, a Delaware corporation; and
●	Petroport, Inc., a Delaware corporation.
●	Victoria Product Storage LLC, a Delaware limited liability company
●	Victoria Clean Products LLC, a Delaware limited liability company
●	Industrial Gas Services LLC, a Delaware limited liability company
●	Lazarus Energy Alternative Fuel - Mobile LLC, a Delaware limited liability company

ex_700986.htm

EXHIBIT 23.1

CONSENT OF INDEPENDENT REGISTERED PUBLIC ACCOUNTING FIRM

We hereby consent to the incorporation by reference in the Registration Statements on Form S-3 (Nos. 333-134156, 333-38606 and 333-124908) of Blue Dolphin Energy Company of our report dated April 1, 2025, relating to our audit of the consolidated financial statements, which appear in this Annual Report on Form 10-K for the year ended December 31, 2024.

/s/ UHY LLP
UHY LLP

Sterling Heights, Michigan

April 1, 2025

ex_700987.htm

EXHIBIT 31.1

I, Jonathan P. Carroll, certify that:

1.	I have reviewed this annual report on Form 10-K of Blue Dolphin Energy Company (the “Registrant”).
2.	Based on my knowledge, this annual 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 periods covered by this annual report;
---	---
3.	Based on my knowledge, the financial statements and other financial information included in this annual 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 annual report;
---	---
4.	I am 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 I have:
---	---
a)	Designed such disclosure controls and procedures, or caused such disclosure controls and procedures to be designed under my supervision, to ensure that material information relating to the Registrant, including its consolidated subsidiaries, is made known to me by others within those entities, particularly during the period in which this annual report is being prepared;
---	---
b)	Designed such internal control over financial reporting, or caused such internal control over financial reporting to be designed under my 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 annual report my conclusions about the effectiveness of the disclosure controls and procedures, as of the end of the period covered by this annual report based on such evaluation; and
d)	Disclosed in this annual 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 this annual report) that has materially affected, or is reasonably likely to materially affect, the Registrant’s internal control over financial reporting; and
5.	I have disclosed, based on my most recent evaluation of internal control over financial reporting, to the Registrant’s auditors and the Audit Committee of the Registrant’s Board of Directors:
---	---
(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: April 1, 2025

/s/ JONATHAN P. CARROLL
Jonathan P. Carroll

Chief Executive Officer, President, Assistant Treasurer, and Secretary

(Principal Executive Officer)

ex_784764.htm

Exhibit 31.2

I, Bryce D. Klug, certify that:

1.	I have reviewed this annual report on Form 10-K of Blue Dolphin Energy Company (the “Registrant”).
2.	Based on my knowledge, this annual 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 periods covered by this annual report;
---	---
3.	Based on my knowledge, the financial statements and other financial information included in this annual 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 annual report;
---	---
4.	I am 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 I have:
---	---

a) Designed such disclosure controls and procedures, or caused such disclosure controls and procedures to be designed under my supervision, to ensure that material information relating to the Registrant, including its consolidated subsidiaries, is made known to me by others within those entities, particularly during the period in which this annual report is being prepared;

b) Designed such internal control over financial reporting, or caused such internal control over financial reporting to be designed under my 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 annual report my conclusions about the effectiveness of the disclosure controls and procedures, as of the end of the period covered by this annual report based on such evaluation; and

d) Disclosed in this annual 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 this annual report) that has materially affected, or is reasonably likely to materially affect, the Registrant’s internal control over financial reporting; and

5.	I have disclosed, based on my most recent evaluation of internal control over financial reporting, to the Registrant’s auditors and the Audit Committee of the Registrant’s Board of Directors:

(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: April 1, 2025

/s/ BRYCE D. KLUG
Bryce D. Klug

Treasurer and Assistant Secretary

(Principal Financial and Accounting Officer)

ex_700988.htm

EXHIBIT 32.1

CERTIFICATION OF

PRINCIPAL EXECUTIVE OFFICER AND

PRINCIPAL FINANCIAL OFFICER

PURSUANT TO 18 U.S.C. SECTION 1350,

AS ADOPTED PURSUANT TO SECTION 906

OF THE SARBANES-OXLEY ACT OF 2002

In connection with the Annual Report of Blue Dolphin Energy Company (the “Blue Dolphin”) on Form 10-K for the period ended December 31, 2024 (the “Report”), as filed with the Securities and Exchange Commission on the date hereof, I, Jonathan P. Carroll, Chief Executive Officer, President, and Assistant Treasurer (Principal Executive Officer) of Blue Dolphin, certify, pursuant to 18 U.S.C. §1350, as adopted pursuant to §906 of the Sarbanes-Oxley Act of 2002, that to my knowledge:

1.	The Report fully complies with the requirements of section 13(a) or 15(d) of the Securities Exchange Act of 1934, as amended; and
2.	The information contained in the Report fairly presents, in all material respects, the financial condition and results of operations of Blue Dolphin.
/s/ JONATHAN P. CARROLL
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Jonathan P. Carroll

Chief Executive Officer, President, Assistant Treasurer, and Secretary

(Principal Executive Officer)

April 1, 2025

ex_784765.htm

Exhibit 32.2

CERTIFICATION OF

PRINCIPAL EXECUTIVE OFFICER AND

PRINCIPAL FINANCIAL OFFICER

PURSUANT TO 18 U.S.C. SECTION 1350,

AS ADOPTED PURSUANT TO SECTION 906

OF THE SARBANES-OXLEY ACT OF 2002

In connection with the Annual Report of Blue Dolphin Energy Company (the “Blue Dolphin”) on Form 10-K for the period ended December 31, 2024 (the “Report”), as filed with the Securities and Exchange Commission on the date hereof, I, Bryce D. Klug, Treasurer and Assistant Secretary (Principal Financial and Accounting Officer) of Blue Dolphin, certify, pursuant to 18 U.S.C. §1350, as adopted pursuant to §906 of the Sarbanes-Oxley Act of 2002, that to my knowledge:

The Report fully complies with the requirements of section 13(a) or 15(d) of the Securities Exchange Act of 1934, as amended; and
The information contained in the Report fairly presents, in all material respects, the financial condition and results of operations of Blue Dolphin.

/s/ BRYCE D. KLUG
Bryce D. Klug

Treasurer and Assistant Secretary

(Principal Financial and Accounting Officer)

April 1, 2025

ex_794802.htm

Exhibit 10.51

FOURTH AMENDED AND RESTATED OPERATING AGREEMENT

THIS FOURTH AMENDED AND RESTATED OPERATING AGREEMENT (this “Fourth Amended and Restated Operating Agreement”) is effective as of April 1, 2025 (the “Effective Date”), by and between Lazarus Energy Holdings, LLC, a Delaware limited liability company (“LEH”), Blue Dolphin Energy Company, a Delaware corporation (“Blue Dolphin”), Lazarus Energy, LLC, a Delaware limited liability company (“LE”), Lazarus Refining & Marketing, LLC, a Delaware limited liability company (“LRM”), Nixon Product Storage, LLC, a Delaware limited liability company (“NPS”), Blue Dolphin Pipe Line Company, a Delaware corporation (“BDPL”), Blue Dolphin Petroleum Company, a Delaware corporation (“BDPC”), Blue Dolphin Services Co., a Texas corporation (“BDSC”), and other existing, newly formed, or newly acquired entities of Blue Dolphin (each individually a “Subsidiary” or collectively “Subsidiaries”). (LEH, Blue Dolphin, and Subsidiaries are collectively referred to herein as the “Parties”).

W I T N E S S E T H:

WHEREAS, Blue Dolphin and the Subsidiaries engaged LEH to manage and operate the companies thereto, and LEH has provided management services in the areas of operations and management of the business of the companies thereto (collectively the “Services”) and desires to continue to do so; and

WHEREAS, in anticipation of the expiration of the Third Amended and Restated Operating Agreement on April 1, 2025, by and among LEH, Blue Dolphin, and the Subsidiaries, the Parties agree to renewal terms as stipulated herein.

WHEREAS, LEH has successfully provided the Services to Blue Dolphin and the Subsidiaries from February 15, 2012 through the present date.

NOW, THEREFORE, in consideration of the premises and the mutual covenants contained herein, the Parties hereto agree as follows:

1. Commencing on the Effective Date and throughout the Term of this Fourth Amended and Restated Operating Agreement, **** LEH agrees to perform the Services in the interest of Blue Dolphin and the Subsidiaries, subject to the terms and conditions stated herein. The Services shall be performed on a continuing basis without any further specific requests or instructions.

For the purposes of certainty, it is understood and agreed that the term “Services” does not include any activities that can be exercised by LEH as a shareholder, and the Services shall be provided in a way that is independent of any such shareholding.

3. Quality. The Services provided by LEH hereunder shall be provided in a good and workmanlike manner in accordance with prevailing industry standards.

4. Compensation. In consideration for the Services hereunder:

(a) Blue Dolphin and the Subsidiaries shall reimburse LEH at cost for all direct expenses, either paid directly by LEH or financed with LEH’s credit card. Amounts payable to LEH shall be invoiced by LEH weekly but may be reimbursed sooner.

(b) Blue Dolphin shall also pay to LEH a management fee equal to 5% of all consolidated operating costs, excluding crude costs, depreciation, amortization, and interest (the “Management Fee”).

5. Term. The “Term” of this Fourth Amended and Restated Operating Agreement shall begin on the Effective Date and shall expire upon the earliest to occur of the following:

(a) the first anniversary of the Effective Date, which termination date shall be April 1, 2026.

(b) written notice of either party upon the material breach of this Fourth Amended and Restated Operating Agreement by the other party.

(c) Upon 90 days’ notice by the Board of Directors of Blue Dolphin (the “Board”) if the Board determines that this Fourth Amended and Restated Operating Agreement is not in the best interest of Blue Dolphin and/or the Subsidiaries.

The termination of this Fourth Amended and Restated Operating Agreement shall not affect the survival of Section 6 of this Fourth Amended and Restated Operating Agreement.

6. Indemnification.

(a) LEH will indemnify, defend, and hold harmless Blue Dolphin and the Subsidiaries and their affiliates, and their respective officers, directors, and employees, from and against any claim or liability arising from the negligence or willful misconduct of LEH, or from any injury suffered or alleged to be suffered by any employee of LEH.

(b) Blue Dolphin and the Subsidiaries will indemnify, defend, and hold harmless LEH, its affiliates, and their respective officers, directors, and employees, from and against any claim or liability arising from the negligence or willful misconduct of Blue Dolphin and the Subsidiaries.

7. Remedies. If any legal action or other proceeding is brought for the enforcement of this Fourth Amended and Restated Operating Agreement or because of an alleged dispute, breach, default, or misrepresentation in connection with any of the provisions of this Fourth Amended and Restated Operating Agreement, the successful or prevailing party or parties shall be entitled to recover reasonable attorneys' fees and other costs incurred in that action or proceeding in addition to any other relief to which it or he may be entitled at law or equity.

8. Successors. This Fourth Amended and Restated Operating Agreement shall be binding upon each of the Parties upon their execution and inure to the benefit of the Parties hereto and their successors and assigns. Any assignee whatsoever will be bound by the obligations of the assigning party under this Fourth Amended and Restated Operating Agreement, and any assignment shall not diminish the liability or obligation of the assignor under the terms of this Fourth Amended and Restated Operating Agreement unless otherwise agreed.

9. Severability. In the event that any one or more of the provisions contained in this Fourth Amended and Restated Operating Agreement or in any other instrument referred to herein, shall, for any reason, be held to be invalid, illegal, or unenforceable in any respect, such invalidity, illegality, or unenforceability shall not affect any other provision of this Fourth Amended and Restated Operating Agreement or any such other instrument.

10. Paragraph Headings. The paragraph headings used herein are descriptive only and shall have no legal force or effect whatsoever.

11. Gender. Whenever the context so requires, the masculine shall include the feminine and neuter, and the singular shall include the plural and conversely.

12. Governing Law. This Fourth Amended and Restated Operating Agreement shall be governed by and construed in accordance with the laws of the state of Texas applicable to agreements and contracts executed and to be wholly performed there, without giving effect to the conflicts of law principles thereof. The venue for any action brought in connection herewith shall lie in Harris County, Texas.

13. Remedies. In the event of any action, dispute or litigation from the Parties hereto relating to the interpretation or enforcement of this Fourth Amended and Restated Operating Agreement or otherwise relating to the subject matter hereof, the prevailing party shall be entitled to recover reasonable attorneys’ fees and court costs.

14. Multiple Counterparts. This Fourth Amended and Restated Operating Agreement may be executed in multiple counterparts, each of which shall be deemed an original.

15. Waiver. Any waiver by either party to be enforceable must be in writing and no waiver by either party shall constitute a continuing waiver.

16. Cross References. References in this Fourth Amended and Restated Operating Agreement to Articles, Sections, Exhibits, or Schedules shall be deemed to be references to Articles, Sections, Exhibits, and Schedules of this Fourth Amended and Restated Operating Agreement unless the context specifically and expressly requires otherwise.

17. Entire Agreement. This Fourth Amended and Restated Operating Agreement and the other agreements referred to herein set forth the entire understanding of the Parties hereto relating to the subject matter hereof and thereof and supersede all prior agreements and understandings among or between any of the Parties relating to the subject matter hereof and thereof.

[Remainder of page intentionally left blank; signature page to follow.]

WITNESS WHEREOF, the Parties have executed this Fourth Amended and Restated Operating Agreement as of the date and year first set forth above.

BLUE DOLPHIN ENERGY COMPANY	LAZARUS ENERGY HOLDINGS, LLC
Jonathan P. Carroll	Jonathan P. Carroll
President	Managing Member
LAZARUS ENERGY, LLC
Jonathan P. Carroll
President
LAZARUS REFINING & MARKETING, LLC
Jonathan P. Carroll
President
NIXON PRODUCT STORAGE, LLC
Jonathan P. Carroll
President
BLUE DOLPHIN PIPE LINE COMPANY
Jonathan P. Carroll
President
BLUE DOLPHIN PETROLEUM COMPANY
Jonathan P. Carroll
President
BLUE DOLPHIN SERVICES CO.
Jonathan P. Carroll
President

ex_794807.htm

Exhibit 10.52

AMENDED AND RESTATED AFFILIATE REVOLVING CREDIT AGREEMENT

THIS AMENDED AND RESTATED AFFILIATE REVOLVING CREDIT AGREEMENT (this “Agreement”) is made and entered into as of February 1, 2025 (the “Amendment Date”), by and between Lazarus Energy Holdings, LLC., a Delaware limited liability company and its affiliates (“Lender”), and Blue Dolphin Energy Company and each of its wholly owned subsidiaries (“Borrower(s)” and, together with Lender, the “Parties” and each, a “Party”).

RECITALS

WHEREAS, Lender previously extended credit to Borrowers pursuant to certain promissory notes for working capital purposes;

WHEREAS, Borrower requested that the Lender provide additional extensions of credit as provided herein, all on the terms and subject to the conditions described herein;

WHEREAS, Lender extended additional credit to the Borrower(s) at its sole discretion under the Affiliate Revolving Credit Agreement; and

WHEREAS, Borrower(s) desire to increase the maximum amount of borrowings available by Lender under the revolving credit facility, and Lender is willing to increase the limit as of the Amendment Date as stipulated herein.

AGREEMENT

NOW, THEREFORE, in consideration of the foregoing and the mutual covenants and agreements set forth below, and other good and valuable consideration, the receipt and adequacy of which is hereby acknowledged, the Parties hereby agree as follows:

1.1 Loan(s).

(b) Borrowing. Following the date hereof, Borrowers may at any time and from time to time, request to borrow and reborrow from Lender (an “Advance”) up to a maximum amount of borrowings outstanding of $10,000,000 in the aggregate. Lender shall consider Borrower’s request, and shall make a determination of such request(s) in light of satisfaction of all of the conditions set forth herein and other factors as determined by Lender, in its sole discretion. Lender shall not be obligated to make an Advance and shall not make an Advance if Lender disapproves of the proposed use thereof by Borrower for such Advance.

(c) Interest. Borrower shall be charged interest on a daily basis for the outstanding balance of borrowings and accrued and unpaid interest under this Agreement. The interest rate to be paid by Borrower(s) shall be at a rate equal to the Wall Street Journal (“WSJ”) Prime rate plus two percent (WSJ Prime rate + 2.00%) per annum, compounded annually, and shall continue to accrue until paid. Interest shall be computed based on a 365-day year. Borrower agrees to pay interest on the outstanding balance monthly.

(d) Schedules. Borrowings and accrued and unpaid interest hereunder shall be evidenced by one or more loan accounts or records maintained by Lender in the ordinary course of business. Lender shall also attach and update on at least a quarterly basis Schedule I to this Agreement, detailing the balances and payments made hereunder during each fiscal quarter of Lender.

1.2 Repayment. Borrower(s) may repay at any time any and all outstanding borrowings hereunder without penalty. On the Maturity Date (defined below), Borrower(s) shall be obligated to repay in full the entire amount of outstanding borrowings hereunder plus accrued and unpaid interest thereon. Repayment of borrowings hereunder and interest thereon may be made in cash, set off against other obligations owed by Borrower(s) to Lender, between the Parties, or such other form as may be agreed by the Parties.

1.3 Term of Agreement. The term of this Agreement shall commence on April 1, 2024 (the “Effective Date”) and shall continue until April 30, 2025 (the “Initial Term”), unless terminated earlier as provided below or extended by the mutual agreement of the Parties. This Agreement shall automatically renew for successive one (1) year terms (each a “Renewal Term”), unless either party provides written notice of its intention not to renew at least sixty (60) days prior to the expiration of the Initial Term or any Renewal Term, as applicable. Each end of term, whether the Initial Term or any Renewal Term, shall constitute the maturity date for borrowings within the respective period (the “Maturity Date”). For the avoidance of doubt, the Maturity Date for the Initial Term shall be April 30, 2025.

1.4 Termination. Either Party shall have the right to terminate this Agreement upon the occurrence of any of the following events:

(a) A material breach of this Agreement by either Party that is not cured within thirty (30) days after receipt of written notice of such breach from the other Party;

(b) In no way limiting the foregoing, the Parties may terminate this Agreement by mutual consent memorialized in a writing reasonably satisfactory to both Lender and Borrower(s) upon sixty (60) days prior notice.

1.5 Miscellaneous. The terms set forth in Schedule A attached hereto are incorporated by reference herein and shall apply to this Agreement as if fully set forth herein.

(Signature Page Follows)

IN WITNESS WHEREOF, Lender and Borrower have each caused this Agreement to be executed on the date first written above.

LAZARUS ENERGY HOLDINGS, LLC	BLUE DOLPHIN ENERGY COMPANY
Jonathan P. Carroll<br> Managing Member	Jonathan P. Carroll<br><br> <br>President

SCHEDULE A

Additional Terms

The term “Agreement” shall refer to the agreement to which this Schedule A is attached. To the extent that there is any conflict between any provision of this Schedule and any provision set forth in the body of this Agreement, the provision set forth in the body of this Agreement shall control.

A.	Governing Law. The internal laws of the State of Texas (without reference to its principles of conflicts of law) govern the construction, interpretation and other matters arising out of, relating to, or in connection with this Agreement, unless expressly provided otherwise in this Agreement.
B.	Notices. Any notice to be provided under this Agreement shall be provided by certified mail, return receipt requested, courier delivery, or by electronic means, such as facsimile or email. Notice shall be deemed to have been properly given upon receipt of such written communication at the following addresses of the parties (or such other addresses as may be specified in a subsequent written notice):
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Lender:	Borrower(s):
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To:<br><br> <br>Jonathan Carroll<br><br> <br>Lazarus Energy Holdings, LLC<br><br> <br>801 Travis Street, Suite 2100<br><br> <br>Houston, Texas 77002 jcarroll@lazarusenergy.com	To:<br><br> <br>Jonathan Carroll<br><br> <br>Blue Dolphin Energy Company<br><br> <br>801 Travis Street, Suite 2100<br><br> <br>Houston, Texas 77002<br><br> <br>jonathan.carroll@blue-dolphin.com
C.	Binding Effect and Assignment. This Agreement binds and benefits the Parties and their respective successors and assigns. No Party may assign any of its rights or delegate any of its obligations under this Agreement without the written consent of Lender and Borrower(s), which consent shall not be unreasonably withheld or delayed. Notwithstanding the preceding sentence, Lender may assign this Agreement in connection with (a) a merger transaction in which Lender is not the surviving entity or
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(b) the sale of all or substantially all its assets.

D.	Severability. If any provision of this Agreement is determined to be invalid, illegal, or unenforceable, the remaining provisions of this Agreement shall remain in full force.
E.	Counterparts. The Parties may execute this Agreement in multiple counterparts, each of which constitutes an original as against the Party that signed it, and all of which together constitute one agreement. The signatures of the Parties need not appear on the same counterpart. The delivery of signed counterparts by facsimile or e-mail transmission that includes a copy of the sending Party’s signature is as effective as signing and delivering the counterpart in person.
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F.	Certain Expenses. Each Party will be responsible its own respective costs, fees and expenses relating to this Agreement and the transactions hereunder.
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G.	Amendment. The Parties may amend this Agreement only by a written agreement signed by each of the Parties that identifies itself as an amendment to this Agreement.
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H.	Waiver. No course of dealing and no delay or failure of any Party in exercising any right, power, remedy or privilege under this Agreement shall affect any other or future exercise thereof or operate as a waiver thereof, nor shall any single or partial exercise thereof or any abandonment or discontinuance of steps to enforce such a right, power, remedy or privilege preclude any further exercise thereof or of any other right, power, remedy or privilege. The rights and remedies of the Parties under this Agreement are cumulative and not exclusive of any rights or remedies which they would otherwise have. Any waiver, permission, consent or approval of any kind or character on the part of any Party of any breach or default under this Agreement or any such waiver of any provision or condition of this Agreement must be in writing and shall be effective only to the extent specifically set forth in such writing.
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I.	Authority. Each Party represents to the other that (a) it has the corporate or other requisite power and authority to execute, deliver and perform this Agreement, (b) the execution, delivery and performance of this Agreement have been duly authorized by all necessary corporate or other action, (c) it has duly and validly executed and delivered this Agreement, and (d) this Agreement is a legal, valid and binding obligation, enforceable against it in accordance with its terms, subject to applicable bankruptcy, insolvency, reorganization, moratorium or other similar laws affecting creditors’ rights generally and general equity principles.
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J.	Damages. IN NO EVENT WILL ANY PARTY BE LIABLE TO ANY OTHER PARTY FOR ANY SPECIAL, INCIDENTAL, INDIRECT, COLLATERAL, CONSEQUENTIAL OR PUNITIVE DAMAGES INCLUDING BUT NOT LIMITED TO LOST PROFITS OR BUSINESS INTERRUPTION DAMAGES, HOWEVER CAUSED BASED UPON ANY THEORY OF LIABILITY.
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SCHEDULE I

Quarterly Loan Balances and Payments

Quarterly Period	Loan Amount Made During Quarter	Interest Accrued During Quarter	Outstanding Balance (Net of Repayment and Offsets) at End of Quarter

ex_794808.htm

Exhibit 10.53

INGLESIDE CRUDE, LLC / LAZARUS ENERGY, LLC

SECOND AMENDED AND RESTATED MASTER SERVICE AGREEMENT

This Second Amended and Restated Master Service Agreement (“Second Amended MSA”), effective as of March 1, 2025 (the “Effective Date”), between Ingleside Crude, LLC, 801 Travis Street, Suite 2100, Houston, Texas 77002, herein referred to as “INGLESIDE” and Lazarus Energy, LLC, 801 Travis Street, Suite 2100, Houston, Texas 77002, hereinafter called “LE,” covers the furnishing of facilities for the terminaling of various material, hereinafter called “MATERIAL” by INGLESIDE for LE, at INGLESIDE’s Petroleum Terminal Facility located in Ingleside, Texas (San Patricio County) at the intersection of Bishop Road and FM 2725 (the “Terminal”), as further specified in the attached Schedules, predicated upon the terms and conditions set forth below in Sections I and II, and in the Schedules made a part of this Second Amended MSA pursuant to Section III.

WHEREAS, INGLESIDE and LE entered that certain Master Service Agreement (“MSA”) effective March 1, 2023, which was executed by the parties on March 14, 2023;

WHEREAS, INGLESIDE and LE amended and restated the MSA to revise the term on May 9, 2023; and

WHEREAS, INGLESIDE and LE desire to extend the term as specified in the attached schedules as stipulated therein .

NOW, THEREFORE, in consideration of the premises, the agreements hereinafter set forth, and other good and valuable consideration, the receipt and sufficiency of which are hereby acknowledged, the parties hereto hereby covenant and agree as follows:

This Amended MSA and the Schedules hereto constitute the entire agreement of the parties with respect to the subject matter hereof and supersede all prior agreements, whether oral or written, and may not be modified or terminated except by written agreement signed by the parties hereto, with the exception that a Schedule will automatically terminate without any further action by the parties as provided in Section III. In the event a conflict exists between a specific Schedule provision and the Second Amended MSA, the Schedule provision shall control, and if a conflict exists between Section I and Section II of this Second Amended MSA, the provisions contained in Section I will control.

SECTION I

SPECIAL TERMS

1.	TERM. The term of this Amended MSA shall be as specified in the attached Schedules and shall continue so long as the term contained in any of the attached Schedules, or subsequently executed Schedule(s), is in effect. Upon the expiration or other valid termination of this Second Amended MSA, subject to the lien rights provided INGLESIDE hereunder, INGLESIDE agrees to promptly surrender all MATERIAL owned by LE and remaining in INGLESIDE’ possession to LE.
2.	FACILITIES. INGLESIDE provides to LE hereunder, at the Terminal, the tanks (the “Tanks”) identified by number and equipment as specified on the Schedules. INGLESIDE represents and warrants to LE that:
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a.	the Tanks are specified in the applicable Schedule(s);
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b.	the Tanks are appropriately equipped (as specified in the applicable Schedule(s)) for the storage of MATERIAL;
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c.	the Tanks will be cleaned prior to receipt of LE’s MATERIAL; and
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d.	the Tanks, and INGLESIDE’s facilities ancillary thereto, shall comply with applicable governmental laws and regulations relating to the storage and handling of LE’s MATERIAL, including any governmental law or regulation enacted prior to execution of this Second Amended MSA, but enforcement thereof is delayed until a subsequent date; provided, however, if any alterations to a Tank or INGLESIDE’ ancillary facilities is required due to the nature of LE’s MATERIAL after the date a Schedule becomes effective, whether due to applicable law or otherwise, INGLESIDE will either make the necessary alterations at LE’s sole cost and expense, or terminate this Second Amended MSA, and each Schedule then applicable thereto, by written notice to LE within thirty (30) days of INGLESIDE’ notice of the need for such alternation.
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The Tanks shall be used exclusively in connection with the storage of LE’s MATERIAL. INGLESIDE has the right, at its sole option, from time to time and at any time, to substitute a tank or tanks for the Tanks; provided that any such substitution shall not result in any diminution or degradation in the services provided hereunder. The substituted tank(s) will be of equal or higher capacity (in the aggregate) to the Tank that is substituted and will not alter the quality or specifications of the MATERIAL stored. INGLESIDE shall repair and maintain the Tanks as necessary to keep them in good operational condition.

EXCEPT AS EXPRESSLY PROVIDED IN THIS SECOND AMENDED MSA, THERE ARE NO GUARANTEES OR WARRANTIES OF ANY KIND, EXPRESS OR IMPLIED, INCLUDING BUT NOT LIMITED TO, ANY WARRANTIES OF MERCHANTABILITY OR FITNESS FOR A PARTICULAR PURPOSE, WHETHER ARISING BY OPERATION OF LAW OR OTHERWISE.

SERVICES. MATERIAL will be received and redelivered by mutually acceptable procedures to and from the Tanks. INGLESIDE shall provide labor and other services as necessary for such receipt and redelivery of LE’s MATERIAL. All receiving lines and equipment will be sized to permit the maximum average receipt/delivery rate to/from tank trucks as may be limited by equipment, governmental regulation, safety requirements, or by the receiving or redelivering tank truck.

LE agrees to execute in its name, pay for and furnish to INGLESIDE all information, documents, labels, placards, containers, forms, BOL seals and other materials (hereinafter collectively referred to as “Required Materials”) which may be required by applicable law or any governmental authority, including OSHA, the Departments of Transportation or Energy, or the Environmental Protection Agency, relating to the describing, packaging, receiving, storing, handling, disposal or shipping of the MATERIAL (the foregoing being hereinafter collectively referred to as the “Regulations”) at or from the Terminal, together with detailed written instructions as to their use and disposition. Notwithstanding the foregoing, if Required Materials are supplied by a third party, LE will take reasonable care to ensure such Required Materials are in accordance with the Regulations, but ultimate liability for the Required Materials will remain with LE. LE AGREES THAT IT SHALL DEFEND, INDEMNIFY, AND HOLD INGLESIDE, ITS PARENTS, SUBSIDIARIES AND AFFILIATES, AND EACH OF THEIR RESPECTIVE OFFICERS, DIRECTORS, EMPLOYEES, AND AGENTS (COLLECTIVELY, “INGLESIDE INDEMNIFIED PARTIES”) FROM AND AGAINST ANY CLAIMS RESULTING FROM LE’S VIOLATION OF THE REGULATIONS OR FROM ANY PROCEEDINGS IN WHICH SUCH A VIOLATION OF THE REGULATIONS IS CHARGED, EXCEPT WHEN DIRECTLY ARISING FROM INGLESIDE’ FAILURE TO MATERIALLY FOLLOW LE’S REASONABLE WRITTEN INSTRUCTIONS.

CHARGES. The monthly base charge for services provided hereunder and other applicable charges are set forth in the Schedules. INGLESIDE’s invoice for such charges will be due and payable upon receipt. Any charges, fees or other amounts, other than for the tankage services provided hereunder, shall be for LE’s account, including, but not limited to, leased trackage, demurrage, U.S. Customs services, surveying, lab testing, truck loading and unloading, and tinkering. If INGLESIDE’ pays any such amounts on LE’s behalf, LE will reimburse INGLESIDE such amounts on demand. All amounts due hereunder shall be payable by wire transfer in the lawful currency of the United States of America. Charges for services hereunder shall commence on the commencement date as specified in the Schedules, the first payment to be prorated if such commencement date is not the first day of a calendar month. If any undisputed amount due hereunder remains unpaid sixty (60) days after the applicable invoice date, or upon termination of the Schedule applicable to such outstanding amount, INGLESIDE may retain sufficient MATERIAL as collateral for the payment of such amount.

INDEMNIFICATION. INGLESIDE AGREES THAT IT SHALL DEFEND, INDEMNIFY, AND HOLD LE, ITS PARENTS, SUBSIDIARIES AND AFFILIATES, AND EACH OF THEIR RESPECTIVE OFFICERS, DIRECTORS, EMPLOYEES, AND AGENTS (COLLECTIVELY, LE INDEMNIFIED PARTIES), HARMLESS FROM AND AGAINST ANY AND ALL LIABILITY, SUITS, LOSSES, DEMANDS, ACTIONS, CAUSES OF ACTION, FINES, PENALTIES, DAMAGES AND CLAIMS OF ANY KIND OR NATURE, INCLUDING WITHOUT LIMITATION REASONABLE ATTORNEY FEES AND COSTS (COLLECTIVELY, “CLAIMS”), FOR WHICH ANY OF LE INDEMNIFIED PARTIES MAY HEREAFTER INCUR, PAY, OR BECOME RESPONSIBLE FOR AS A RESULT OF DEATH OR BODILY INJURY TO ANY PERSON (INCLUDING EMPLOYEES OF INGLESIDE), DESTRUCTION OR DAMAGE TO PROPERTY OTHER THAN THE MATERIAL, CONTAMINATION OF OR ADVERSE EFFECTS ON, IMMINENT OR SUBSTANTIAL ENDANGERMENT OF, OR ANY THREATENED OR ACTUAL RELEASE TO THE ENVIRONMENT, OR ANY VIOLATION OR ALLEGED VIOLATION OF LAWS (INCLUDING WITHOUT LIMITATION RCRA AND CERCLA), WHICH IS RELATED TO, OR ARISES OUT OF INGLESIDE’S GROSS NEGLIGENCE, WILLFUL MISCONDUCT, OR A BREACH OF INGLESIDE’S DUTIES AND OBLIGATIONS UNDER THIS SECOND AMENDED MSA.

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LE AGREES THAT IT SHALL DEFEND, INDEMNIFY, AND HOLD THE INGLESIDE INDEMNIFIED PARTIES, HARMLESS FROM AND AGAINST ANY AND ALL CLAIMS WHICH ANY OF THE INGLESIDE INDEMNIFIED PARTIES MAY HEREAFTER INCUR, PAY OR BECOME RESPONSIBLE FOR AS A RESULT OF DEATH OR BODILY INJURY TO ANY PERSON (INCLUDING EMPLOYEES OF LE), DESTRUCTION OR DAMAGE TO PROPERTY, CONTAMINATION OF OR ADVERSE EFFECTS ON, IMMINENT OR SUBSTANTIAL ENDANGERMENT OF, OR ANY THREATENED OR ACTUAL RELEASE TO THE ENVIRONMENT, OR ANY VIOLATION OR ALLEGED VIOLATION OF LAWS (INCLUDING WITHOUT LIMITATION RCRA OR CERCLA), WHICH IS RELATED TO, OR ARISES OUT OF, LE’S GROSS NEGLIGENCE, WILLFUL MISCONDUCT, OR A BREACH OF LE’S DUTIES AND OBLIGATIONS UNDER THIS SECOND AMENDED MSA.

In the event that an indemnified party hereunder seeks the benefits and protections afforded by the foregoing provisions, such party shall, immediately upon becoming aware of any CLAIM for which indemnification is sought, provide to the indemnifying party written notice of such CLAIM and turn over the defense of the CLAIM, together with all rights of compromise and settlement, and shall fully cooperate with the indemnifying party in the defense of any such CLAIM.

Further, it is specifically agreed between the parties that the respective indemnities granted hereby shall remain in effect and be valid notwithstanding the contributory negligence of the indemnified party in connection with any CLAIM or the imposition of strict liability upon any party and that such indemnities shall not be subject to the provisions of Section 33.001 et. Seq. of the Texas Civil Practice and Remedies Code, as amended. Accordingly, in the event that an indemnified party is determined (by a court or regulatory authority of competent jurisdiction or by separate written agreement between the parties) to be contributorily negligent or otherwise at fault in connection with a CLAIM for which indemnification is sought hereunder, then the amount of indemnification that such indemnified party would otherwise be afforded under this provision shall be reduced in proportion to such contributory negligence or fault of the indemnified party.

6.	CHANGE OF PRODUCT(S). The Tanks are for the exclusive use of LE for storage of LE’s MATERIAL as identified in the Schedules and the Tanks shall not be used for the handling of any other material or commodity unless advance written consent of INGLESIDE is obtained.
7.	INDEPENDENT CONTRACTOR. In the performance of this Second Amended MSA, INGLESIDE shall be an independent contractor with respect to all work done and services performed hereunder, and neither INGLESIDE nor anyone used or employed by INGLESIDE shall be deemed for any purpose to be the agent, servant, or representative of LE in the performance of such work or services or any part thereof, and LE shall have no direction or control of INGLESIDE or its employees and agents. Nothing contained herein will be construed or constitute either party as the agent, partner, or joint venturer of the other party.
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8.	CONFLICT OF INTEREST. Conflicts of interest relating to this Second Amended MSA are strictly prohibited. No director, employee, or agent of either party will give or receive any commission, fee, rebate, gift, or entertainment of significant cost or value to a director, employee or agent of the other party in connection with this Agreement. Each party will promptly notify the other party of any violation of this Paragraph 9. In the event of any violation of this Section 9 by either party, including any violation occurring prior to the date of this Second Amended MSA, resulting directly or indirectly in the other party’s consent to enter into this Second Amended MSA, such other party may terminate this Second Amended MSA as to the violating party at any time. During the term of this Second Amended MSA and for two years thereafter, each Party has the right to audit the applicable records of the other party solely for the purpose of determining whether there has been compliance with this Paragraph 9. The provisions of this Paragraph 9 will survive termination of this Second Amended MSA.
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SECTION II

STANDARD TERMS

TITLE AND CUSTODY. LE represents and warrants to INGLESIDE that it has good title to MATERIAL stored hereunder, free and clear of all liens and encumbrances (other than a lien that is subordinated to INGLESIDE’s lien in such MATERIAL). Except as otherwise set forth herein, title to LE’s MATERIAL stored and handled under this Agreement remains at all times with LE, subject to any lien in favor of INGLESIDE while such MATERIAL is in INGLESIDE’s custody. If title to any of LE’s MATERIAL stored in a Tank is transferred to a third party by LE, LE will nonetheless be deemed the owner of such MATERIAL for purposes of this Agreement, and without limitation of the foregoing, LE remains responsible for any charges incurred under or in connection with this Second Amended MSA. Notwithstanding the preceding sentence, LE’s rights to services hereunder only extend to MATERIAL to which LE holds title. LE will have no right to deliver any product to INGLESIDE hereunder that is not MATERIAL, nor to resell, market, or subcontract the services (or any part thereof) or the Tanks without the express, prior written consent of INGLESIDE, in INGLESIDE’s sole and absolute discretion. LE WILL RELEASE, PROTECT, DEFEND, INDEMNIFY, AND HOLD HARMLESS THE INGLESIDE INDEMNIFIED PARTIES FROM AND AGAINST ANY AND ALL CLAIMS BY ANY THIRD PARTY OR OTHER PERSON CLAIMING TO HAVE SUPERIOR RIGHT, TITLE, CUSTODY, AND/OR INTERESTS IN THE MATERIAL AND/OR LIENS IN AND AGAINST SUCH MATERIAL.

For receipts of LE’s MATERIAL at the Terminal, custody of such MATERIAL under this Second Amended MSA will pass to INGLESIDE when such MATERIAL passes the last permanent flange connection at the applicable receipt point into the Terminal and INGLESIDE’ designated connection point. For redeliveries of LE’s MATERIAL from the Terminal, custody of such MATERIAL will pass back to LE when such MATERIAL passes the Terminal’s designated connection point to a third party pipeline, truck or vessel loading connection, or other designated delivery point. LE is deemed to have custody of MATERIAL at all other times.

2.	HOURS OF OPERATION. The Terminal shall be available to deliver MATERIAL to or discharge MATERIAL from the Tanks Monday through Friday (including holidays) from 7:00 a.m. to 3:00 p.m. central time. If such receipt or delivery services are needed outside this period, and if such services can be provided by INGLESIDE, such services will be subject to an overtime surcharge of 50%. LE shall provide INGLESIDE sufficient advance notice of the delivery of MATERIAL to or from the Terminal, as applicable, to permit INGLESIDE to make adequate arrangements therefor. Notwithstanding any such advance notice, any presented truck or vessel shall be on a first come, first served basis. Without limiting the foregoing, all receipts, redeliveries, and movements of MATERIAL into, from and within the Terminal may not exceed the safe operating limits (under normal operating conditions) and then-available capacities of the Terminal. All receipts and deliveries from or to tank truck, or otherwise, shall be arranged by LE, and INGLESIDE shall be responsible only to receive or discharge, as the case may be, the MATERIAL at its facilities.
3.	FORCE MAJEURE. Either party hereto shall be released from liability hereunder for failure to perform any of the obligations herein imposed for the time and to the extent such failure is occasioned by acts of God, federal, state, county, municipal, or other governmental order, rule, legislation or regulation, or by war, acts of the public enemy, strikes, lockouts, or other labor disturbances, riots, floods, hurricanes, fire, explosion, destruction of the facilities or any other cause or causes of any kind or character reasonably beyond the control of the party failing to perform. In the event of destruction of or damage to any part of the Terminal (including any attendant facilities), INGLESIDE will not be required to rebuild the part of the Terminal destroyed and/or damaged, or furnish additional or alternate facilities.
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4.	TAXES. LE agrees to pay all taxes, fees, penalties, assessments, or other charges imposed or assessed with respect to MATERIAL received and redelivered hereunder or levied upon MATERIAL stored in the Tanks or elsewhere within the Terminal or on the use or occupancy of any of the other facilities appurtenant to the Terminal.
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5.	INSURANCE. Insurance shall be carried by LE at its own expense. INGLESIDE will carry liability and other insurance in accordance with usual industry practices for the services provided hereunder. Upon reasonable request, INGLESIDE will provide LE with certificates evidencing its insurance coverage.
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6.	RESPONSIBILITY FOR LOSS OR DAMAGE. The parties acknowledge and agree that the Tanks and appurtenant facilities are sufficient for LE’s intended purpose. INGLESIDE shall not be liable for any loss or damage to LE’s MATERIAL, except to the extent caused by INGLESIDE’s gross negligence or willful misconduct. LE acknowledges and agrees that: (a) in the terminalling or storage of MATERIAL hereunder, there may be evaporation, shrinkage, line loss, clingage, metering inaccuracies, interface losses, or other normal losses of the MATERIAL while in INGLESIDE’s custody (any such loss, “Normal Losses”); and (b) if LE delivers a certain quantity of MATERIAL to INGLESIDE for terminalling or storage, then INGLESIDE may not redeliver the same quantity back to LE due to Normal Losses. Company shall not be liable to LE for any Normal Losses or for any discoloration that may occur to the MATERIAL. Notwithstanding anything in this Second Amended MSA to the contrary, in no event will INGLESIDE be liable for more than the actual cost of the MATERIAL (reduced, but not increased, to take into account any hedging). Furthermore, any liability of either party is limited to direct actual damages as a sole and exclusive remedy, and all other remedies or damages at law or in equity are expressly waived by the parties. NEITHER PARTY IS LIABLE FOR THE OTHER PARTY’S LOST PROFITS, INDIRECT, SPECIAL, CONSEQUENTIAL OR PUNITIVE DAMAGES, NO MATTER HOW SUCH LOSS OR DAMAGE HAS OCCURRED, WHETHER IN CONTRACT OR TORT, EVEN IF SUCH PARTY HAS BEEN NOTIFIED OF THE POSSIBILITY OF SUCH DAMAGE, AND EVEN IF SUCH PARTY WAS NEGLIGENT; PROVIDED, HOWEVER, THAT THIS WAIVER DOES NOT APPLY TO (a) CLAIMS MADE OR DAMAGES INCURRED BY THIRD PARTIES, AND (b) A PARTY’S GROSS NEGLIGENCE OR WILLFUL MISCONDUCT. FOR THE AVOIDANCE OF DOUBT, ALL AMOUNTS PAYABLE TO INGLESIDE PURSUANT TO THIS SECOND AMENDED MSA ARE NOT DISCLAIMED OR RELEASED BY THIS PARAGRAPH 6.
7.	QUALITY AND QUANTITY. INGLESIDE agrees, in accordance with the terms of this Second Amended MSA and the Schedules, to handle the MATERIAL into and out of the Tanks and to provide the facilities necessary to perform such handling. INGLESIDE agrees to furnish LE inbound, outbound, and monthly stock reports as to the quantity of MATERIAL stored and handled hereunder. The quality of the MATERIAL handled and stored hereunder shall be determined by an independent inspector appointed by LE and acceptable to INGLESIDE, whose determination thereof shall be final and binding on the parties. In the event LE does not provide a mutually acceptable independent inspector, INGLESIDE’s quality determination shall be accepted as final and binding. Quantity of receipts and deliveries shall be based on increases or decreases of the storage tank’s physical gauge or by meter facilities.
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8.	STORAGE FACILITIES. LE shall use the Tanks only for the storage of the MATERIAL specified in the applicable Schedules. Upon termination of LE’s use of any Tank, LE will reimburse INGLESIDE for all costs and expenses incurred by INGLESIDE or on its behalf in connection with cleaning and degassing such Tank, including, without limitation, MATERIAL removal and disposal costs. Upon LE’s request, at LE’s sole cost and expense, INGLESIDE will return to LE all residual material retained from such Tank cleaning. Should disposal of Tank residual be required, LE agrees to obtain and furnish to INGLESIDE the appropriate federal and state Environmental Protection Agency Hazardous Waste Generator identification numbers applicable thereto.
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9.	TERMINATION OF AGREEMENT. This Second Amended MSA shall commence on the Effective Date by the parties and shall continue in full force and effect until the end of the term of the last then effective Schedule(s). Termination of this Second Amended MSA, or any Schedule hereto, shall not affect the continued operation or enforcement of LE’s payment obligations, the confidentiality and indemnity provisions, and any other provision of this Second Amended MSA that by its express terms is to survive termination or cancellation. Upon termination of this Second Amended MSA, LE agrees to pay all charges remaining due hereunder and, subject to INGLESIDE’s lien rights hereunder, to promptly remove all MATERIAL on INGLESIDE’s premises.
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10.	LIEN. INGLESIDE has a possessory lien on all of LE’s MATERIAL accepted for storage hereunder to secure the payment of all amounts due hereunder, and INGLESIDE may withhold from delivery to LE, a portion of said MATERIAL with a value equivalent to the amounts then due and payable by LE to INGLESIDE under this Second Amended MSA, until all of such amounts have been paid in cash in full. This lien (a) may be foreclosed by INGLESIDE in accordance with applicable law, including but not limited to the provisions of Article 9 of the Texas Uniform Commercial Code in effect from time to time, (b) is not exclusive but is cumulative and in addition to all other statutory liens, rights, and remedies of INGLESIDE, and (c) will only be applicable to past-due amounts due and payable to INGLESIDE by LE under this Second Amended MSA. If INGLESIDE elects to enforce the lien by foreclosure, then INGLESIDE must notify LE prior to any such foreclosure. Such notification will include a statement of the amount then due and payable by LE, the nature of the proposed foreclosure, and the time and place of any foreclosure sale. Before any sale pursuant to the foregoing, LE may pay the amount necessary to satisfy the lien. Proceeds of any foreclosure sale, minus outstanding amounts due and payable to INGLESIDE by LE and expenses incurred as a result of such sale, including transportation costs incurred by INGLESIDE, will be remitted to LE as payment in full for MATERIAL that is removed from the Facility.
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11.	ASSIGNMENT. This Second Amended MSA shall be binding upon and inure to the benefit of the successors and assigns of each of the parties hereto; provided, however, that LE shall not sublease any of the tanks, or transfer or assign this Second Amended MSA, in whole or in part, without the prior written consent of INGLESIDE, and any attempted subletting or assignment without such consent shall be null and void.
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12.	HEADINGS. The section and paragraph headings contained herein are for the purpose of convenience only and in no way define, limit, modify, or describe the scope and nature of the subject matter contained herein or any of the terms or provisions hereof.
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13.	GOVERNING LAW. This Second Amended MSA (including all Schedules hereto) and any and all amendments hereof shall be governed by and construed in accordance with internal laws of the state of Texas, without regard to its choice of law rules.
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14.	SEVERABILITY. Any provision of this Second Amended MSA that is prohibited or unenforceable in any jurisdiction shall, as to such jurisdiction, be ineffective as to the extent of such prohibition or unenforceability without invalidating the remaining provisions of this Second Amended MSA or affecting the validity or enforcement of such provision in any other jurisdiction.
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15.	COUNTERPARTS. This Second Amended MSA may be executed in any number of counterparts, each of which when so executed shall be deemed to be an original and all of which when taken together shall constitute one and the same Second Amended MSA.
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16.	MODIFICATION. This Second Amended MSA shall not be modified or changed except by written instrument executed by the duly authorized personnel of the parties hereto, annual escalation notwithstanding.
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17.	EQUAL EMPLOYMENT OPPORTUNITY. INGLESIDE is an equal opportunity employer and complies with the Equal Opportunity clause of Effective Order 11246, as amended (41 CFR 60-1.4) and the Affirmative Action clauses of 38 USG 2012, the Vietnam Era Veterans Readjustment Act of 1972, as amended (41 CFR 60 – 741.4), and the American with Disabilities Act of 1990.
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18.

CONFIDENTIALITY. INGLESIDE acknowledges that it may obtain confidential or proprietary information (CONFIDENTIAL INFORMATION) of LE, including without limitation, information regarding MATERIAL or LE’s business plans or operations. INGLESIDE shall at all times keep confidential and not disclose to any third party or use any CONFIDENTIAL INFORMATION for any purpose other than in performance of the services hereunder. CONFIDENTIAL INFORMATION will not include information: 1) generally available to the public through no fault of INGLESIDE, 2) in INGLESIDE’s possession in written form prior to disclosure to or acquisition by INGLESIDE hereunder, or 3) disclosed to INGLESIDE by a third party owing no confidentiality commitment to LE. Upon termination of this Second Amended MSA, INGLESIDE shall forthwith deliver to LE all materials deemed to be of a confidential nature and not required to be retained on file at the Terminal by governmental regulation (including proprietary computer source codes) in its possession or control. The disclosure to or acquisition by INGLESIDE of CONFIDENTIAL INFORMATION shall not be construed to grant to INGLESIDE any right or license. Notwithstanding the foregoing, CONFIDENTIAL INFORMATION may be disclosed: (a) with LE’S consent, (b) to any governmental authority in compliance with any bona fide governmental or legal requirements, or as may be required to enforce or protect rights under this Second Amended MSA; and (c) to any affiliate, to a legal, accounting, or other professional, business, or technical consultant/adviser. The obligations under this Paragraph 18, shall survive the termination, cancellation, or expiration of this Second Amended MSA for a period of one year.

19.

NOTICES. Notices or other communications required to be given hereunder shall be deemed properly served with in writing, delivered personally, mailed by certified mail, overnight delivery, courier service, or by facsimile to INGLESIDE at its principal office or to LE at the address shown in the preamble to this Second Amended MSA.

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SECTION III

SCHEDULES IN FORCE

Attached hereto is a list of alphabetically identified Schedules specifying the appropriate agreement information (service) for each tank provided (LIST OF SCHEDULES) In the event the tank(s) and equipment covered by one or more of the Schedules shall, in accordance with the terms of such Schedule(s), cease to be a part of this Second Amended MSA, then such Schedule(s) shall be cancelled and the LIST OF SCHEDULES will be revised to reflect the cancellation of the Schedule(s) no longer in effect.

Remainder of Page Intentionally Left Blank

IN WITNESS THEREOF, this Second Amended MSA is executed as of the date below.

INGLESIDE CRUDE, LLC		LAZARUS ENERGY, LLC ~~~~
By:	Jonathan P. Carroll	By:	Jonathan P. Carroll
Date:		Date:

Schedule A

Tank No. 12 (100,000 bbls)

Terms and conditions are as follow:

Term: March 1, 2025 to March 1, 2026

Base Monthly Storage Charge : $50,000.00

Throughput: Lease rates allow two full tank cycles each month; additional throughput shall be billed at $0.005 per gallon.

Dock Usage: There will be a $0.08 per barrel fee for any shipments across the dock.

Ancillary Equipment: Pumps, meters and loading flare.

Base Labor Charge (Prior to Overtime Charges, if Applicable): INGLESIDE will provide all equipment, labor, utilities, etc. to facilitate throughput of MATERIAL at the Terminal.

Logistics: LE will have inbound /outbound dock access and inbound truck access. If outbound truck access is desired, INGLESIDE will make good faith efforts to put such systems in place with LE reimbursing on a cost plus 15% basis.

Charges for Other Services: All material lab costs will be the responsibility of LE.

Truck unloading/loading -- $1.00 per bbl with minimum of $170.00

Testing -- $100.00 per test

Mixing and Sampling -- $400.00 per occurrence

Approved by:

INGLESIDE CRUDE, LLC		LAZARUS ENERGY, LLC
By:	Jonathan P. Carroll	By:	Jonathan P. Carroll
Date:		Date:

Schedule B

Tank No. 14 (100,000 bbls)

Terms and conditions are as follow:

Term: March 1, 2025 to March 1, 2026

Base Monthly Storage Charge : $50,000.00

Throughput: Lease rates allow two full tank cycles each month; additional throughput shall be billed at $0.005 per gallon.

Dock Usage: There will be a $0.08 per barrel fee for any shipments across the dock.

Ancillary Equipment: Pumps, meters and loading flare.

Base Labor Charge (Prior to Overtime Charges, if Applicable): INGLESIDE will provide all equipment, labor, utilities, etc. to facilitate throughput of MATERIAL at the Terminal.

Charges for Other Services: All material lab costs will be the responsibility of LE.

Truck unloading/loading -- $1.00 per bbl with minimum of $170.00

Testing -- $100.00 per test

Mixing and Sampling -- $400.00 per occurrence

Approved by:

INGLESIDE CRUDE, LLC		LAZARUS ENERGY, LLC
By:	Jonathan P. Carroll	By:	Jonathan P. Carroll
Date:		Date:

ex_794809.htm

Exhibit 10.54

AMENDED AND RESTATED LOAN AND SECURITY AGREEMENT

THIS AMENDED AND RESTATED LOAN AND SECURITY AGREEMENT (as amended, modified or restated from time to time, this “Amended Agreement”) dated as of March 1, 2025 (the “Amendment Date”), is between LAZARUS ENERGY HOLDINGS, LLC, a Delaware limited liability company **** (together with its successors and assigns, “Lender”), and Blue Dolphin Pipe Line Company, a Delaware corporation (“Debtor”).

RECITALS

WHEREAS, Debtor requested that the Lender extend the Credit Facility to Debtor;

WHEREAS, Lender made a the Credit Facility available to Debtor effective August 14, 2016; and

WHEREAS, Lendar and Debtor entered into a Payment Agreement dated May 9, 2023 (the Payment Agreement”), wherein the Note Holder and Obligor (as defined therein) agreed to modify the terms of the Promissory Note as contained in the Loan Documents and with respect to principal and accumulated interest;

WHEREAS, Lender is willing to modify the provisions, terms and conditions set forth in the Loan Documents as stipulated herein, and effective as of the Amendment Date; and

WHEREAS, as of March 1, 2025, the principal and accumulated interest under the Credit Facility as was $5,307,555 (the “Payoff Amount”).

NOW THEREFORE, the parties hereto, intending to be legally bound, agree as follows:

1.Definitions. As used in this Amended Agreement, all exhibits, appendices and schedules hereto, and in any other Loan Documents made or delivered pursuant to this Amended Agreement, the following terms will have the meanings given such terms in this Section 1 or in the provisions, sections or recitals herein:

“Affiliate” means, with respect to a specified Person, another Person that directly or indirectly through one or more intermediaries, Controls or is Controlled by or is under common Control with the Person specified.

“BDPL” means BLUE DOLPHIN PIPE LINE COMPANY, a Delaware corporation.

“Business Day” means any day other than a Saturday, Sunday or any other day on which the Federal Reserve Bank of Dallas, Texas, is closed.

“Carroll” means JONATHAN PITTS CARROLL, SR., a natural person.

“Code” means the Uniform Commercial Code as the same may, from time to time, be enacted and in effect in the State of Texas; provided, that to the extent that the Code is used to define any term herein or in any Loan Document and such term is defined differently in different articles or divisions of the Code, the definition of such term contained in Article 9 shall govern; provided further, that in the event that, by reason of mandatory provisions of law, any or all of the attachment, perfection or priority of, or remedies with respect to, Lender’s lien on any Collateral is governed by the Uniform Commercial Code as enacted and in effect in a jurisdiction other than the State of Texas, the term “Code” shall mean the Uniform Commercial Code as enacted and in effect in such other jurisdiction solely for purposes of the provisions thereof relating to such attachment, perfection, priority or remedies and for purposes of definitions related to such provisions.

“Collateral” means:

(a) The “Subject Agreement” and all “Payment Rights,” each as defined in the Collateral Assignment.

(b) The Property.

(c) All present and future accounts, chattel paper (including electronic chattel paper), commercial tort claims, commodity accounts, commodity contracts, deposit accounts, documents, financial assets, general intangibles, health care insurance receivables, instruments, Intellectual Property, investment property, letters of credit, letter of credit rights, payment intangibles, securities, security accounts and security entitlements now or hereafter owned, held or acquired.

(d) All present and hereafter acquired inventory and goods (including without limitation, all raw materials, work in process and finished goods) held, possessed, owned, held on consignment or held for sale, lease, return or to be furnished under contracts of services, in whole or in part, wherever located.

(e) All equipment and fixtures of whatsoever kind and character now or hereafter possessed, held, acquired, leased or owned, together with all replacements, accessories, additions, substitutions and accessions to all of the foregoing, and all records relating in any way to the foregoing.

(f) All books, records, data, plans, manuals, computer software, computer tapes, computer systems, computer disks, computer programs, source codes and object codes containing any information pertaining directly or indirectly to the Collateral and all rights to retrieve data and other information pertaining directly or indirectly to the Collateral from third parties.

The term “Collateral,” as used herein, shall also include (a) any other property or assets, real or personal, tangible or intangible, now existing or hereafter acquired, of any Obligor that may at any time be or become subject to a security interest or lien in favor of Lender as security for the Indebtedness, and (b) all SUPPORTING OBLIGATIONS, PRODUCTS and PROCEEDS of all of the foregoing (including without limitation, insurance payable by reason of loss or damage to the foregoing property) and any property, assets securities, guaranties or monies of Debtor which may at any time come into the possession of Lender. The designation of proceeds does not authorize Debtor to sell, transfer or otherwise convey any of the foregoing property except in the ordinary course of Debtor’s business or as otherwise provided herein. When reference is herein made to Collateral of Debtor, for purposes of such references the “Collateral” shall be deemed limited to only the Collateral in which Debtor has “rights” as defined in the Code.

“Collateral Assignment” means that certain COLLATERAL ASSIGNMENT dated as of the Effective Date, executed by Debtor in favor of Lender (as such collateral assignment may be amended, restated or modified from time to time).

“Constituent Documents” means (a) in the case of a corporation, its articles or certificate of incorporation and bylaws; (b) in the case of a general partnership, its partnership agreement; (c) in the case of a limited partnership, its certificate of limited partnership and partnership agreement; (d) in the case of a trust, its trust agreement; (e) in the case of a joint venture, its joint venture agreement; (f) in the case of a limited liability company, its articles of organization or certificate of formation and operating agreement or regulations; and (g) in the case of any other entity, its organizational and governance documents and agreements.

“Control” means the possession, directly or indirectly, of the power to direct or cause the direction of the management or policies of a Person, whether through the ability to exercise voting power, by contract or otherwise. “Controlling” and “Controlled” have meanings correlative thereto.

“Debt” means as to any Person at any time (without duplication) all items of indebtedness, obligation or liability of a Person, whether mature or unmatured, liquidated or unliquidated, direct or indirect, absolute or contingent, joint or several, that should be classified as liabilities in accordance with GAAP.

“Deed of Trust” means the DEED OF TRUST, MORTGAGE, SECURITY AGREEMENT, ASSIGNMENT OF LEASES AND RENTS, FINANCING STATEMENT AND FIXTURE FILING dated as of the Effective Date, executed by Debtor for the benefit of Lender (as the same may be amended, modified or restated from time to time), covering the Property.

“Dollars” and “$” mean lawful money of the United States of America.

“Effective Date” means August 15, 2016.

“Environmental Laws” means all laws, rules, regulations, codes, ordinances, orders, decrees, judgments, injunctions, notices or binding agreements issued, promulgated or entered into by any Governmental Authority, relating in any way to the environment, preservation or reclamation of natural resources, the management, release or threatened release of any Hazardous Material or to health and safety matters.

“Environmental Liabilities” means, as to any Person, all liabilities, obligations, responsibilities, remedial actions, losses, damages, punitive damages, consequential damages, treble damages, costs, expenses (including, without limitation, all reasonable fees, disbursements and expenses of counsel, expert and consulting fees and costs of investigation and feasibility studies), fines, penalties, sanctions, and interest incurred as a result of any claim or demand, by any Person, whether based in contract, tort, implied or express warranty, strict liability, criminal or civil statute, including any Environmental Law, permit, order or agreement with any Governmental Authority or other Person, arising from environmental, health or safety conditions or the release or threatened release of a Hazardous Material into the environment, resulting from the past, present or future operations of such Person or its Affiliates.

“GAAP” means generally accepted accounting principles, applied on a consistent basis, as set forth in Opinions of the Accounting Principles Board of the American Institute of Certified Public Accountants and/or in statements of the Financial Accounting Standards Board and/or their respective successors and which are applicable in the circumstances as of the date in question. Accounting principles are applied on a “consistent basis” when the accounting principles applied in a current period are comparable in all material respects to those accounting principles applied in a preceding period.

“Governmental Authority” means the government of the United States of America, any other nation or any political subdivision thereof, whether state or local, and any agency, authority, instrumentality, regulatory body, court, central bank or other entity exercising executive, legislative, judicial, taxing, regulatory or administrative powers or functions of or pertaining to government.

“Hazardous Materials” means all explosive or radioactive substances or wastes and all hazardous or toxic substances, wastes or other pollutants, and all other substances or wastes of any nature regulated pursuant to any Environmental Law.

“Indebtedness” means (a) all indebtedness, obligations and liabilities of Debtor to Lender of any kind or character, now existing or hereafter arising, whether direct, indirect, related, unrelated, fixed, contingent, liquidated, unliquidated, joint, several or joint and several, and regardless of whether such indebtedness, obligations and liabilities may, prior to their acquisition by Lender, be or have been payable to or in favor of a third party and subsequently acquired by Lender (it being contemplated that Lender may make such acquisitions from third parties), including without limitation all indebtedness, obligations and liabilities of Debtor to Lender now existing or hereafter arising under (i) the Note, this Amended Agreement, the other Loan Documents or any draft, acceptance, endorsement, letter of credit, assignment, purchase, overdraft, discount or indemnity agreement, (ii) any agreement (including related confirmations and schedules) between Debtor and Lender or any Affiliate of Lender now existing or hereafter entered into which is, or relates to, a rate swap, basis swap, forward rate transaction, cap transaction, floor transaction, collar transaction or any other similar transactions (including any option with respect to any of these transactions) or any combination thereof, or (iii) otherwise, (b) all accrued but unpaid interest on any of the indebtedness described in (a) above, (c) all obligations of Obligors to Lender, (d) all costs and expenses incurred by Lender in connection with the collection and administration of all or any part of the indebtedness and obligations described in (a), (b) and (c) above or the protection or preservation of, or realization upon, the collateral securing all or any part of such indebtedness and obligations, including without limitation all reasonable attorneys’ fees and (e) all renewals, extensions, modifications and rearrangements of the indebtedness and obligations described in (a), (b), (c) and (d) above

“Intellectual Property” means the copyrights, copyright licenses, patents, patent licenses, trademarks and trademark licenses now owned or hereafter acquired by Debtor.

“LEH” means LAZARUS ENERGY HOLDINGS, LLC, a Delaware limited liability company.

“Loan” means the advance under the Credit Facility.

“Loan Documents” means this Amended Agreement, the Note, the Collateral Assignment, the Deed of Trust, the Payment Agreement, and the other agreements, instruments and documents evidencing, securing, governing, or pertaining to the Loan.

“Material Adverse Effect” means a material adverse effect on (a) the business, assets, property, operations, condition (financial or otherwise) or prospects of an Obligor (individually or taken as a whole), (b) the ability of an Obligor to pay or perform the Indebtedness, (c) any of the rights of or benefits available to Lender under the Loan Documents or (d) the validity or enforceability of the Loan Documents.

“Note” means, collectively, any promissory note evidencing all or part of the Indebtedness from time to time (as any such Note may be amended, modified or restated from time to time).

“Obligors” means Debtor or any other Person who is otherwise obligated to pay or perform all or any portion of Indebtedness.

“Person” means any individual, corporation, limited liability company, business trust, association, company, partnership, joint venture, Governmental Authority, or other entity, and shall include such Person’s heirs, administrators, personal representatives, executors, successors and assigns.

“Permitted Encumbrances” means the following encumbrances: (a) liens for taxes, assessments or governmental charges or levies not yet due and payable or liens for taxes, assessments or governmental charges or levies being contested in good faith and by appropriate proceedings for which adequate reserves have been established in accordance with GAAP; (b) liens in respect of property of a Person imposed by law which were incurred in the ordinary course of business and which have not arisen to secure Debt for borrowed money, such as carriers’, materialmen’s, warehousemen’s and mechanics’ liens, statutory and common law landlord’s liens, and other similar liens arising in the ordinary course of business, and which either (i) do not in the aggregate materially detract from the value of such property or materially impair the use thereof in the operation of the business of a Person, or (ii) are being contested in good faith by appropriate proceedings, which proceedings have the effect of preventing the forfeiture or sale of the property subject to such lien; and (c) liens created by or pursuant to the Loan Documents.

“Easement” means that certain EASEMENT AGREEMENT dated as of December 11, 2013, executed by Debtor and FLNG II.

All words and phrases used herein shall have the meaning specified in the Code except to the extent such meaning is inconsistent with this Amended Agreement. All definitions contained in this Amended Agreement are equally applicable to the singular and plural forms of the terms defined. The words “hereof,” “herein” and “hereunder” and words of similar import referring to this Amended Agreement refer to this Amended Agreement as a whole and not to any particular provision of this Amended Agreement. Any accounting term used in the Loan Documents shall have, unless otherwise specifically provided therein, the meaning customarily given such term in accordance with GAAP, and all financial computations thereunder shall be computed, unless otherwise specifically provided therein, in accordance with GAAP consistently applied; provided, that all financial covenants and calculations in the Loan Documents shall be made in accordance with GAAP as in effect on the Effective Date unless Debtor and Lender shall otherwise specifically agree in writing. That certain items or computations are explicitly modified by the phrase “in accordance with GAAP” shall in no way be construed to limit the foregoing.

2.Credit Facility.

(a)Term Loan. Subject to the terms and conditions set forth in this Amended Agreement and the other Loan Documents, Lender hereby agrees to lend to Debtor in a single advance an aggregate sum of FOUR MILLION AND NO/100 DOLLARS ($4,000,000.00) (the “Credit Facility”), on the Effective Date, which shall be due and payable on April 15, 2027 (the “Maturity Date”).

(b)Use of Proceeds. The Loan under the Credit Facility shall be used by Debtor to provide working capital.

3.Note, Rate and Computation of Interest. The Credit Facility shall be evidenced by a Note duly executed by Debtor and payable to the order of Lender, in form and substance acceptable to Lender. Interest on the Note shall accrue at the rates set forth therein. The principal of and interest on the Note shall be due and payable in accordance with the terms and conditions set forth in the Note and in this Amended Agreement. All payments made by Debtor under this Amended Agreement and the other Loan Documents shall be made to Lender at Lender’s offices as set forth herein in Dollars and immediately available funds, without setoff, deduction or counterclaim, and free and clear of all taxes, at the time and in the manner provided in the Note.

4.Payment.

(a)Monthly Payments. Beginning on April 15, 2025 and continuing through April 15, 2027, Debtor shall make or cause to be made monthly payments as set forth on Schedule 1 of this Amended Agreement on the fifteenth day of each month. On or about April 15, 2027, Debtor shall make a final payment, resulting in aggregate payments under this Section 4 totaling the Payoff Amount plus the going forward interest calculated per Section 4(b) herein. Each monthly payment shall be first applied to any outstanding accrued and unpaid interest with any remainder applied to the principal.

(b)Interest Calculation. As of the Amendment Date, the Rate shall be 12.00%.

(c)Pre-Payment. Debtor shall be permitted to pre-pay, in whole or in part, any portion of the Payoff Amount.

(d)Method of Payment. All payments shall be made by wire to the Lender per the wire instructions set forth on Schedule 2 of this Amended Agreement.

5.Collateral.

(a)Grant of Security Interest. As collateral security for the prompt payment in full when due (whether at stated maturity, by acceleration or otherwise) of the Indebtedness, Debtor hereby pledges to and grants Lender, a security interest in, all of Debtor’s right, title and interest in the Collateral, whether now owned by Debtor or hereafter acquired and whether now existing or hereafter coming into existence. If Debtor at any time holds or acquires a commercial tort claim, Debtor shall notify Lender in writing within FIVE (5) Business Days of such occurrence with the details thereof and grant to Lender a security interest therein or lien thereon and in the proceeds thereof, in form and substance satisfactory to Lender. If the security interest granted hereby in any rights of Debtor under any contract or other agreement included in the Collateral is expressly prohibited by such contract, then the security interest hereby granted therein nonetheless remains effective to the extent allowed by Article 9 of the Code or other applicable law, but is otherwise limited by that prohibition.

(b)Debtor Remains Liable. Notwithstanding anything to the contrary contained herein, (i) Debtor shall remain liable under the contracts and agreements included in the Collateral to the extent set forth therein to perform all of Debtor’s respective duties and obligations thereunder to the same extent as if this Amended Agreement had not been executed; (ii) the exercise by Lender of any of its rights hereunder shall not release Debtor from any of its duties or obligations under the contracts and agreements included in the Collateral and (iii) Lender shall not have any obligation or liability under any of the contracts and agreements included in the Collateral by reason of this Amended Agreement, nor shall Lender be obligated to perform any of the obligations or duties of Debtor thereunder or to take any action to collect or enforce any claim for payment assigned hereunder.

(c)Intellectual Property. All material Intellectual Property owned or used by Debtor (if any) is listed, together with application or registration numbers, where applicable, in Schedule II. Debtor owns, or is licensed to use, all Intellectual Property necessary to conduct its business as currently conducted except for such Intellectual Property the failure of which to own or license could not reasonably be expected to have a Material Adverse Effect. Debtor will maintain the patenting and registration of all Intellectual Property with the United States Patent and Trademark Office, the United States Copyright Office, or other appropriate Governmental Authority, and Debtor will promptly patent or register, as the case may be, all new Intellectual Property and notify Lender in writing FIVE (5) Business Days prior to filing any such new patent or registration.

(d)Additional Documents. To secure full and complete payment and performance of the Indebtedness, each Obligor shall execute and deliver or cause to be executed and delivered all of the Loan Documents reasonably required by Lender covering the Collateral. Each Obligor shall execute and cause to be executed such further documents and instruments, as Lender, in its reasonable discretion, deems necessary or desirable to create, evidence, preserve and perfect its liens and security interests in the Collateral. In the event any of the Loan Documents evidencing or securing the Indebtedness misrepresents or inaccurately reflects the correct terms and/or provisions of the Indebtedness, each Obligor shall upon request by Lender and in order to correct such mistake, execute such new documents or initial corrected, original documents as Lender may deem reasonably necessary to remedy said errors or mistakes. Each Obligor shall execute such other documents as Lender shall deem reasonably necessary to correct any defects or deficiencies in the Loan Documents.

(e)Setoff. As further security for the Indebtedness, Debtor grants to Lender a first lien and contractual right of set-off in and to all money and property of Debtor now or at any time hereafter coming within the custody or control of Lender, including (without limitation) all certificates of deposit and other accounts, whether such certificates of deposit and/or accounts have matured or not, and whether the exercise of such right of set-off results in loss of interest or other penalty under the terms of the certificate of deposit or account agreement. It is further agreed that Lender shall have a first lien on all deposits and other sums at any time credited by or due from Lender to Debtor as security for the payment of the Indebtedness, and Lender, at its option may without notice and without any liability, hold all or any part of any such deposits or other sums until all amounts owing under the Loan Documents have been paid in full, and/or Lender may apply or set-off all or any part of any such deposits or other sums credited by or due from Lender to or against any sums due under the Loan Documents in any manner and in any order of preference which Lender, in its sole discretion, chooses. The rights and remedies of Lender hereunder are in addition to any other rights and remedies (including, without limitation, other rights of setoff) which Lender may have.

(f)Satisfaction of Indebtedness. Until the Indebtedness has been indefeasibly paid and fully satisfied (other than contingent indemnification obligations to the extent no unsatisfied claim has been asserted) and the commitments of Lender under the Credit Facility have been terminated, Lender shall be entitled to retain the security interests in the Collateral granted under the Loan Documents and the ability to exercise all rights and remedies available to Lender under the Loan Documents and applicable laws.

6.Conditions Precedent. The obligation of Lender to make the Loan under the Credit Facility is subject to the condition precedent that Lender shall have received, or such condition shall be otherwise satisfied, as of the Effective Date, to Lender’s satisfaction:

(a)Closing Certificate. A CLOSING CERTIFICATE of an officer of each Obligor that is not a natural Person, or an officer of the governing body of such Obligor, which certifies: (i) the resolutions of such Person authorizing the execution, delivery, and performance of the Loan Documents that such Obligor is a party to; (ii) certificates of the appropriate government officials of the state of organization of each such Obligor and any governing body of such Obligor, and any state any such Person is currently doing business as to the existence, qualification and good standing of such Person, dated no more than TEN (10) days prior to the Effective Date; (iii) the true and correct Constituent Documents of each such Obligor and any governing body of such Obligor and (iv) the names of the individuals or other Persons authorized to sign the Loan Documents that such Obligor is a party to, together with specimen signatures of such Persons.

(b)Loan Documents. The Loan Documents executed by each Obligor party thereto.

(c)Lien Search. The results of a Code or other lien search showing all financing statements and other documents or instruments on file against each Obligor in such locations as Lender may reasonably request, dated no more than TEN (10) days prior to the Effective Date.

(d)Financing Statements. Code financing statements covering the Collateral shall have been filed with such filing offices as Lender may request.

(e)Insurance Matters. Copies of insurance certificates describing all insurance policies as may be required by Lender, together with loss payee and lender endorsements in favor of Lender with respect to all insurance policies covering the Collateral.

(f)Fees and Expenses. Evidence that the costs and expenses of Lender (including reasonable attorneys’ fees) and all fees owing to Lender, shall have been paid in full by Debtor.

(g)Other Matters. Such other documents and agreements as may be required by Lender in its reasonable discretion.

7.Representations and Warranties. Each Obligor hereby represents and warrants to Lender as follows:

(a)Existence. Each Obligor that is not a natural person (i) is duly organized, validly existing, and in good standing under the laws of the jurisdiction of its organization; (ii) has all requisite power and authority to own its assets and carry on its business as now being or as proposed to be conducted; and (iii) is qualified to do business in all jurisdictions in which the nature of its business makes such qualification necessary and where failure to so qualify would have a Material Adverse Effect. Each Obligor has the power and authority to execute, deliver, and perform its obligations under the Loan Documents to which it is or may become a party.

(b)Binding Obligations. The execution, delivery, and performance of the Loan Documents by each Obligor have been duly authorized by all necessary action by such Obligor, and constitute legal, valid and binding obligations of such Obligor, enforceable in accordance with their respective terms, except as limited by bankruptcy, insolvency or similar laws of general application relating to the enforcement of creditors’ rights and except to the extent specific remedies may generally be limited by equitable principles.

(c)No Consent. The execution, delivery and performance of the Loan Documents, and the consummation of the transactions contemplated thereby, do not (i) conflict with or result in a violation of (1) any provision of the Constituent Documents (if any) or other instrument binding upon any Obligor, (2) any law, governmental regulation, court decree or order applicable to any Obligor, or (3) any contractual obligation, agreement, judgment, license, order or permit applicable to or binding upon any Obligor, (ii) require the consent, approval or authorization of any third party, or (iii) result in or require the creation of any lien, charge or encumbrance upon any property or asset of any Obligor except as may be expressly contemplated in the Loan Documents.

(d)Financial Condition. Each financial statement of each Obligor supplied to Lender truly discloses and fairly presents such Person’s financial condition as of the date of each such statement. There has been no material adverse change in such financial condition or results of operations of any Obligor subsequent to the date of the most recent financial statement supplied to Lender.

(e)Operation of Business. Debtor possesses all contracts, licenses, permits, franchises, patents, copyrights, trademarks, and trade names, or rights thereto, necessary to conduct its businesses substantially as now conducted and as presently proposed to be conducted, and Debtor is not in violation of any valid rights of others with respect to any of the foregoing, except any violations that could not reasonably be expected to have a Material Adverse Effect.

(f)Litigation and Judgments. There is no action, suit, investigation, or proceeding before or by any Governmental Authority or arbitrator pending, or to the knowledge of any Obligor, threatened against or affecting such Obligor that would, if adversely determined, have a Material Adverse Effect. There are no outstanding judgments against any Obligor.

(g)Rights in Properties; Liens. Debtor has good and indefeasible title to or valid leasehold interests in its properties, including the properties and assets reflected in the financial statements provided to Lender, and none of the properties of Debtor is subject to any lien, except Permitted Encumbrances.

(h)Debt. Debtor has no Debt other than the Permitted Debt.

(i)Disclosure. No statement, information, report, representation, or warranty made by any Obligor in the Loan Documents or furnished to Lender in connection with the Loan Documents or any of the transactions contemplated hereby contains any untrue statement of a material fact or omits to state any material fact necessary to make the statements herein or therein not misleading. There is no fact known to any Obligor which could reasonably be expected to have a Material Adverse Effect that has not been disclosed in writing to Lender.

(j)Agreements. Debtor is not a party to any indenture, loan, or credit agreement, or to any lease or other agreement or instrument, or subject to any charter or corporate or other organizational restriction which could reasonably be expected to have a Material Adverse Effect. Debtor is not in default in any material respect in the performance, observance, or fulfillment of any of the obligations, covenants, or conditions contained in any agreement or instrument material to its business.

(k)Compliance with Laws. No Obligor is in violation of any law, rule, regulation, order, or decree of any Governmental Authority or arbitrator, the violation of which could reasonably be expected to have a Material Adverse Effect.

(l)Taxes; Governmental Charges. Each Obligor has filed all federal, state and local tax reports and returns required by any law or regulation to be filed by it and has either duly paid all taxes, duties and charges indicated due on the basis of such returns and reports, or made adequate provision for the payment thereof, and the assessment of any material amount of additional taxes in excess of those paid and reported is not reasonably expected. No Obligor has knowledge of any pending investigation of such Obligor by any taxing authority or any pending but unassessed tax liability.

(m)ERISA. Debtor is in compliance in all material respects with all applicable provisions of the Employee Retirement Income Security Act of 1974, as amended from time to time, and the regulations and published interpretations thereunder (“ERISA”). Neither a reportable event nor a prohibited transaction has occurred and is continuing with respect to any plan. No notice of intent to terminate a plan has been filed, nor has any plan been terminated. No circumstances exist which constitute grounds entitling the Pension Benefit Guaranty Corporation or any entity succeeding to all or any of its functions under ERISA (the “PBGC”) to institute proceedings to terminate, or appoint a trustee to administer, a plan, nor has the PBGC instituted any such proceedings. Neither Debtor nor any ERISA Affiliate (as defined below) has completely or partially withdrawn from a multiemployer plan. Debtor and each ERISA Affiliate have met their minimum funding requirements under ERISA with respect to all of their plans, and the present value of all vested benefits under each plan do not exceed the fair market value of all plan assets allocable to such benefits, as determined on the most recent valuation date of the plan and in accordance with ERISA. Neither Debtor nor any ERISA Affiliate has incurred any liability to the PBGC under ERISA. “ERISA Affiliate” means each trade or business (whether or not incorporated) which together with Debtor would be deemed to be a “single employer” within the meaning of section 4001(b)(1) of ERISA or subsections (b), (c), (m) or (o) of section 414 of the Internal Revenue Code of 1986.

(n)Location. Debtor’s chief executive office is at its address set forth on the signature page hereof.

(o)Environmental Matters. Except for matters disclosed in writing to Lender:

(i)Notice of Non-Compliance. Debtor and all of its property and operations are in full compliance with all Environmental Laws, except where non-compliance could not reasonably be expected to have a Material Adverse Effect. Debtor is not aware of, nor has Debtor received notice of, any past, present, or future conditions, events, activities, practices, or incidents which may interfere with or prevent the compliance or continued compliance of Debtor with all Environmental Laws except where non-compliance would be reasonably be expected to have a Material Adverse Effect;

(ii)Permits. Debtor has obtained all permits, licenses, and authorizations that are required under applicable Environmental Laws, and all such permits are in good standing and Debtor is in compliance with all of the terms and conditions of such permits, except where non-compliance could not reasonably be expected to have a Material Adverse Effect;

(iii)Hazardous Materials. No Hazardous Materials exist on, about, or within or have been used, generated, stored, transported, disposed of on, or released by Debtor from any of the property of Debtor, except to the extent in compliance with Environmental Laws or where such action could not reasonably be expected to have a Material Adverse Effect. The use which Debtor makes and intends to make of their respective properties and assets will not result in the use, generation, storage, transportation, accumulation, disposal, or release of any Hazardous Material on, in, or from any of their properties or assets, except to the extent in compliance with Environmental Laws or where such action could not reasonably be expected to have a Material Adverse Effect;

(iv)No Pending or Threatened Actions. To the knowledge of Debtor, neither Debtor or any of its currently or previously owned or leased property or operations is subject to any outstanding or threatened order from or agreement with any Governmental Authority or other Person or subject to any judicial or docketed administrative proceeding with respect to failure to comply with Environmental Laws; and

(v)No Conditions. There are no conditions or circumstances associated with the currently or previously owned or leased property or operations of Debtor that could reasonably be expected to give rise to any Environmental Liabilities of Debtor.

(p)Security Interest. Debtor has and will have at all times full right, power and authority to grant a security interest in the Collateral to Lender in the manner provided herein, free and clear of any lien, security interest or other charge or encumbrance other than for the Permitted Encumbrances. This Amended Agreement creates a legal, valid and binding first priority security interest (subject to Permitted Encumbrances) in favor of Lender in the Collateral securing the Indebtedness. Possession by Lender of certain types of Collateral from time to time or the filing of the financing statements delivered prior hereto or concurrently herewith by Debtor to Lender will perfect and establish the first priority of Lender’s security interest hereunder in the Collateral (to the extent that perfection can be accomplished through the filing of a financing statement or the possession of such Collateral) other than for the Permitted Encumbrances.

(q)Location. Debtor’s chief executive office and the office where the records concerning the Collateral are kept are at its address set forth on the signature page hereof.

8.Affirmative Covenants. Until all Indebtedness is indefeasibly paid or performed, Debtor agrees and covenants as follows:

(a)Payment of Obligations. Debtor will pay its obligations, including tax liabilities, that, if not paid, could become a lien on any of its property, before the same shall become delinquent or in default, except where (i) the validity or amount thereof is being contested in good faith by appropriate proceedings, and (ii) Debtor has set aside on its books adequate reserves with respect thereto in accordance with GAAP.

(b)Maintenance and Conduct of Business. Debtor will (i) keep, maintain and preserve all property (tangible and intangible) material to the conduct of its business in good working order and condition, ordinary wear and tear excepted, (ii) do or cause to be done all things necessary to preserve, renew and keep in full force and effect its legal existence and the rights, licenses, permits, privileges, agreements and franchises material to the conduct of its business, and (iii) engage in an efficient and economical manner in a business of the same general type and within Debtor’s powers under Constituent Documents.

(c)Books and Records; Inspection Rights. Debtor will keep proper books of record and account in which full, true and correct entries are made of all dealings and transactions in relation to its business and activities. Debtor will permit any representatives designated by Lender, upon reasonable prior notice, to visit and inspect its properties, to examine and make extracts from its books and records, and to discuss its affairs, finances and condition with its officers and independent accountants, all at such reasonable times and as often as reasonably requested.

(d)Insurance. Debtor will maintain insurance, including but not limited to, fire insurance, comprehensive property damage, public liability, worker’s compensation, business interruption and other insurance deemed reasonably necessary by Lender. Debtor will, at its own expense, maintain insurance with respect to all Collateral in such amounts, against such risks, in such form and with such insurers, as shall be satisfactory to Lender from time to time. Each policy of insurance maintained by Debtor shall (i) name Debtor and Lender as insured parties thereunder (without any representation or warranty by or obligation upon Lender) as their interests may appear, (ii) contain the agreement by the insurer that any loss thereunder shall be payable to Lender notwithstanding any action, inaction or breach of representation or warranty by Debtor, and (iii) provide prior written notice of cancellation or of lapse shall be given to Lender by the insurer in accordance with the insurer’s commercial practices as adopted from time to time. Debtor will deliver to Lender original or duplicate policies of such insurance. Debtor will also, at the request of Lender, duly execute and deliver instruments of assignment of such insurance policies and cause the respective insurers to acknowledge notice of such assignment. All insurance payments in respect of loss of or damage to any Collateral shall be paid to Lender and applied by Lender in accordance with the Loan Documents.

(e)Compliance with Laws. Debtor will comply with all laws, rules, regulations and orders of any Governmental Authority applicable to it or its property, except where the failure to do so, individually or in the aggregate, could not reasonably be expected to result in a Material Adverse Effect.

(f)Compliance with Agreements. Debtor will comply, in all material respects with all material agreements, contracts, and instruments binding on it or affecting its properties, assets or business.

(g)Notices of Material Events. Debtor will furnish to Lender prompt written notice of the following:

(i) the filing or commencement of any action, suit or proceeding by or before any arbitrator or Governmental Authority against any Obligor that, if adversely determined, could reasonably be expected to result in a Material Adverse Effect; and

(ii) any and all material adverse changes in any Obligor’s financial condition and all claims made against any Obligor that could materially affect the financial condition of such Obligor.

Each notice delivered under this Section shall be accompanied by a statement of an officer of Debtor setting forth the details of the event or development requiring such notice and any action taken or proposed to be taken with respect thereto.

(h)Ownership and Liens. Debtor will maintain good and indefeasible title to the Collateral free and clear of all liens, security interests, encumbrances or adverse claims, except for Permitted Encumbrances. Debtor will cause any financing statement or other security instrument with respect to the Collateral to be terminated, except for Permitted Encumbrances. Debtor will defend at its expense Lender’s right, title and security interest in and to the Collateral against the claims of any third party.

(i)Accounts and General Intangibles. Debtor will, except as otherwise provided herein, collect, at Debtor’s own expense, all amounts due or to become due under each of the accounts and general intangibles. In connection with such collections, Debtor may and, at Lender’s direction, will take such action not otherwise forbidden herein as Debtor or Lender may deem reasonably necessary or advisable to enforce collection or performance of each of the accounts and general intangibles. Debtor will also duly perform and cause to be performed all of its material obligations with respect to the goods or services, the sale or lease or rendition of which gave rise or will give rise to each account and all of its obligations to be performed under or with respect to the general intangibles. Debtor also covenants and agrees to take any action and/or execute any documents that Lender may reasonably request in order to comply with law relating to the assignment of the accounts.

(j)Chattel Paper, Documents and Instruments. Debtor will take such action as may be reasonably requested by Lender in order to cause any chattel paper, documents or instruments to be valid and enforceable and will cause all chattel paper, and instruments to have only one original counterpart. Upon request by Lender, Debtor will deliver to Lender all originals of chattel paper, documents or instruments and unless such request is made, Debtor will not deliver possession of such chattel paper, documents or instruments to any Person and will mark all chattel paper, documents or instruments with a legend indicating that such chattel paper, document or instrument is subject to the security interest granted hereunder.

(k)Waivers and Consents Relating to Real Property Interests. Upon the request of Lender, Debtor shall cause each mortgagee of real property owned by Debtor and each landlord of real property leased by Debtor to execute and deliver agreements satisfactory in form and substance to Lender by which such mortgagee or landlord (i) waives or subordinates any rights it may have in the Collateral, or (ii) consents to the mortgage or other encumbrance of Debtor’s interest in such real property.

9.Negative Covenants. Until all Indebtedness is indefeasibly paid or performed, each Obligor agrees and covenants as follows:

(a)Fundamental Change. Obligors will not (i) make any material change in the nature of its business as carried on as of the Effective Date, (ii) amend or permit the amendment of any of its Constituent Documents, (iii) liquidate, merge or consolidate with or into any other Person, (iv) make a change in organizational structure or the jurisdiction in which it is organized, or (v) permit any change in any Obligor’s legal name, or the state of Obligor’s organization, to another jurisdiction.

(b)Debt. Debtor shall not create, incur, assume or permit to exist any Debt except for the following (“Permitted Debt”):

(i) The Indebtedness and any other obligation or liability owing to Lender;

(ii) Trade payables or similar obligations from time to time incurred in the ordinary course of business other than for borrowed money; and

(iii) With Lender’s prior written consent, Debt payable to holders of equity interests in Debtor that is fully subordinated to the payment of the Indebtedness under a written subordination agreement acceptable to Lender in its sole discretion (“Subordinate Debt”).

(c)OTHER CHANGES . DEBTOR WILL NOT, WITHOUT THE PRIOR WRITTEN CONSENT OF LENDER, (i) CREATE, INCUR OR ASSUME INDEBTEDNESS FOR BORROWED MONEY, INCLUDING CAPITAL LEASES, OTHER THAN INDEBTEDNESS EXPRESSLY PERMITTED BY THE LOAN DOCUMENTS, (ii) SELL, TRANSFER, MORTGAGE, ASSIGN, PLEDGE, LEASE (OTHER THAN IN THE ORDINARY COURSE OF BUSINESS), GRANT A SECURITY INTEREST IN OR ENCUMBER ANY OF DEBTOR’S ASSETS (EXCEPT AS EXPRESSLY PERMITTED BY THE LOAN DOCUMENTS), OR (iii) SELL ANY OF DEBTOR’S ACCOUNTS, EXCEPT TO LENDER.

(d)Dividends or Distributions. Debtor will not declare or pay any dividends or distributions on any equity interest of Debtor to any Person.

(e)Change In Control. Obligors shall not permit any change in Control of any Obligor.

(f)Impairment of Security Interest. Debtor will not take any action that would in any manner impair the enforceability of Lender’s security interest in any Collateral.

(g)Compromise of Collateral. Debtor will not adjust, settle, compromise, amend or modify any Collateral, except an adjustment, settlement, compromise, amendment or modification in good faith and in the ordinary course of business. Debtor shall provide to Lender such information concerning (i) any adjustment, settlement, compromise, amendment or modification of any Collateral, and (ii) any claim asserted by any account debtor for credit, allowance, adjustment, dispute, setoff or counterclaim, as Lender may reasonably request from time to time.

10.Reporting Requirements. Until all Indebtedness is indefeasibly paid and satisfied, and Lender has no further commitment to lend under the Credit Facility, Debtor agrees and covenants that it will furnish or cause to be furnished the following.

(a)General Information. Debtor shall promptly deliver such other information concerning any Obligor as Lender may request.

11.Rights of Lender. Lender shall have the rights contained in this Section at all times that this Amended Agreement is effective.

(a)Financing Statements. Debtor hereby authorizes Lender to file one or more financing or continuation statements, and amendments thereto, relating to the Collateral. Debtor hereby irrevocably authorizes Lender at any time and from time to time to file in any Code jurisdiction any initial financing statements and amendments thereto that (i) indicate the Collateral (1) as all assets of Debtor or words of similar effect; regardless of whether any particular asset comprised in the Collateral falls within the scope of Article 9 of the Code, or (2) as being of an equal or lesser scope or with greater detail, and (ii) contain any other information required by Article 9 of the Code for the sufficiency or filing office acceptance of any financing statement or amendment.

(b)Power of Attorney. Each Obligor hereby irrevocably appoints Lender as such Obligor’s attorney-in-fact, such power of attorney being coupled with an interest, with full authority in the place and stead of such Obligor and in the name of such Obligor or otherwise, in Lender’s reasonable discretion, to take any action and to execute any instrument which Lender may deem necessary or appropriate to accomplish the purposes of this Amended Agreement, including without limitation: (i) to obtain and adjust insurance required by Lender hereunder; (ii) to demand, collect, sue for, recover, compound, receive and give acquittance and receipts for moneys due and to become due under or in respect of the Collateral; (iii) to receive, endorse and collect any drafts or other instruments, documents and chattel paper in connection with clause (i) or (ii) above; (iv) to file any claims or take any action or institute any proceedings which Lender may deem necessary or appropriate for the collection and/or preservation of the Collateral or otherwise to enforce the rights of Lender with respect to the Collateral; and (v) to act on such Obligor’s behalf as permitted by any other Loan Document.

(c)Performance by Lender. If any Obligor fails to perform any agreement or obligation provided for in any Loan Document, Lender may itself perform, or cause performance of, such agreement or obligation, and the expenses of Lender incurred in connection therewith shall be a part of the Indebtedness, secured by the Collateral and payable by Debtor on demand.

(d)Deficiency. In the event that the proceeds of any sale of, collection from, or other realization upon, all or any part of the Collateral by Lender are insufficient to pay all amounts to which Lender is legally entitled, each Obligor (unless otherwise provided) shall be liable for the deficiency, together with interest thereon as provided in the Loan Documents.

(e)Other Recourse. Each Obligor waives any right to require Lender to proceed against any third party, exhaust any Collateral or other security for the Indebtedness, or to have any third party joined with Debtor in any suit arising out of the Indebtedness or any of the Loan Documents, or pursue any other remedy available to Lender. Each Obligor further waives any and all notice of acceptance of this Amended Agreement and of the creation, modification, rearrangement, renewal or extension of the Indebtedness. Each Obligor further waives any defense arising by reason of any disability or other defense of any third party or by reason of the cessation from any cause whatsoever of the liability of any third party. Until all of the Indebtedness shall have been paid in full, Obligor shall have no right of subrogation and each Obligor waives the right to enforce any remedy which Lender has or may hereafter have against any third party, and waives any benefit of and any right to participate in any other security whatsoever now or hereafter held by Lender. Each Obligor authorizes Lender, and without notice or demand and without any reservation of rights against such Obligor and without affecting such Obligor’s liability hereunder or on the Indebtedness to (i) take or hold any other property of any type from any third party as security for the Indebtedness, and exchange, enforce, waive and release any or all of such other property, (ii) apply such other property and direct the order or manner of sale thereof as Lender may in its discretion determine, (iii) renew, extend, accelerate, modify, compromise, settle or release any of the Indebtedness or other security for the Indebtedness, (iv) waive, enforce or modify any of the provisions of any of the Loan Documents executed by any third party, and (v) release or substitute any third party.

(f)No Waiver; Cumulative Remedies. No failure on the part of Lender to exercise and no delay in exercising, and no course of dealing with respect to, any right, power, or privilege under this Amended Agreement shall operate as a waiver thereof, nor shall any single or partial exercise of any right, power, or privilege under this Amended Agreement preclude any other or further exercise thereof or the exercise of any other right, power, or privilege. The rights and remedies provided for in this Amended Agreement and the other Loan Documents are cumulative and not exclusive of any rights and remedies provided by law.

(g)Equitable Relief. Debtor recognizes that in the event Debtor fails to pay, perform, observe, or discharge any or all of the Indebtedness, any remedy at law may prove to be inadequate relief to Lender. Debtor therefore agrees that Lender, if Lender so requests, shall be entitled to temporary and permanent injunctive relief in any such case without the necessity of proving actual damages.

12.Indemnity. Debtor hereby indemnifies and agrees to hold harmless Lender, and its officers, directors, employees, agents and representatives (each an “Indemnified Person”) from and against any and all liabilities, obligations, claims, losses, damages, penalties, actions, judgments, suits, costs, expenses or disbursements of any kind or nature (collectively, the “Claims”) which may be imposed on, incurred by, or asserted against, any Indemnified Person arising in connection with the Loan Documents, the Indebtedness or the Collateral (including without limitation, the enforcement of the Loan Documents and the defense of any Indemnified Person’s actions and/or inactions in connection with the Loan Documents). WITHOUT LIMITATION, THE FOREGOING INDEMNITIES SHALL APPLY TO EACH INDEMNIFIED PERSON WITH RESPECT TO ANY CLAIMS WHICH IN WHOLE OR IN PART ARE CAUSED BY OR ARISE OUT OF THE NEGLIGENCE OF SUCH INDEMNIFIED PERSON, EXCEPT TO THE LIMITED EXTENT THE CLAIMS AGAINST AN INDEMNIFIED PERSON ARE PROXIMATELY CAUSED BY SUCH INDEMNIFIED PERSON’S GROSS NEGLIGENCE OR WILLFUL MISCONDUCT. If Debtor or any third party ever alleges such gross negligence or willful misconduct by any Indemnified Person, the indemnification provided for in this Section shall nonetheless be paid upon demand, subject to later adjustment or reimbursement, until such time as (a) a court of competent jurisdiction enters a final judgment as to the extent and effect of the alleged gross negligence or willful misconduct, or (b) Lender has expressly agreed in writing with Debtor that such Claim is proximately caused by such Indemnified Person’s gross negligence or willful misconduct. The indemnification provided for in this Section shall survive the termination of this Amended Agreement and shall extend and continue to benefit each individual or entity that is or has at any time been an Indemnified Person hereunder.

13.Limitation of Liability. Neither Lender nor any officer, director, employee, attorney, or agent of Lender shall have any liability with respect to, and Debtor hereby waives, releases, and agrees not to sue any of them upon, any claim for any special, indirect, incidental, or consequential damages suffered or incurred by Debtor in connection with, arising out of, or in any way related to, this Amended Agreement or any of the other Loan Documents, or any of the transactions contemplated by this Amended Agreement or any of the other Loan Documents. Debtor hereby waives, releases, and agrees not to sue Lender or any of Lender’s Affiliates, officers, directors, employees, attorneys, or agents for punitive damages in respect of any claim in connection with, arising out of, or in any way related to, this Amended Agreement or any of the other Loan Documents, or any of the transactions contemplated by this Amended Agreement or any of the other Loan Documents.

14.Lender not Fiduciary. The relationship between Obligors and Lender is solely that of debtor and creditor, and Lender has no fiduciary or other special relationship with any Obligor, and no term or condition of any of the Loan Documents shall be construed so as to deem the relationship between any Obligor and Lender to be other than that of debtor and creditor.

15.Waiver and Agreement. Neither the failure nor any delay on the part of Lender to exercise any right, power or privilege herein or under any of the other Loan Documents shall operate as a waiver thereof, nor shall any single or partial exercise of any such right, power or privilege preclude any other or further exercise thereof or the exercise of any other right, power or privilege. No waiver of any provision in this Amended Agreement or in any of the other Loan Documents and no departure by any Obligor therefrom shall be effective unless the same shall be in writing and signed by Lender, and then shall be effective only in the specific instance and for the purpose for which given and to the extent specified in such writing. No modification or amendment to this Amended Agreement or to any of the other Loan Documents shall be valid or effective unless the same is signed by the party against whom it is sought to be enforced.

16.Benefits. This Amended Agreement shall be binding upon and inure to the benefit of Lender and Obligors, and their respective heirs, personal representatives, successors and assigns, provided, however, that no Obligor may, without the prior written consent of Lender, assign any rights, powers, duties or obligations under this Amended Agreement or any of the other Loan Documents.

17.Notices. All notices or other communications required or permitted to be given pursuant to this Amended Agreement or the other Loan Documents (unless otherwise expressly stated therein) shall be in writing and shall be considered as properly given if (a) mailed by first class United States mail, postage prepaid, registered or certified with return receipt requested, (b) by delivering same in person to the intended addressee, or (c) by delivery to an independent third party commercial delivery service for same day or next day delivery and providing for evidence of receipt at the office of the intended addressee. Notice so mailed shall be effective upon its deposit with the United States Postal Service or any successor thereto; notice sent by such a commercial delivery service shall be effective upon delivery to such commercial delivery service; notice given by personal delivery shall be effective only if and when received by the addressee; and notice given by other means shall be effective only if and when received at the office or designated place or machine of the intended addressee. For purposes of notice, the addresses of the parties shall be as set forth herein; provided, however, that either party shall have the right to change its address for notice hereunder to any other location within the continental United States by the giving notice to the other party in the manner set forth herein.

18.Construction; Venue; Service of Process. The Loan Documents have been executed and delivered in the State of Texas, shall be governed by and construed in accordance with the laws of the State of Texas, and shall be performable by the parties hereto in the county in Texas where Lender’s address set forth on Lender’s signature page hereof is located (the “Venue Site”). Any action or proceeding against any Obligor under or in connection with any of the Loan Documents may be brought in any state or federal court within the Venue Site. Each Obligor hereby irrevocably (a) submits to the nonexclusive jurisdiction of such courts, and (b) waives any objection it may now or hereafter have as to the venue of any such action or proceeding brought in any such court or that any such court is an inconvenient forum. Each Obligor agrees that service of process upon it may be made by certified or registered mail, return receipt requested, at its address specified or determined in accordance with the provisions of this Amended Agreement. Nothing in any of the other Loan Documents shall affect the right of Lender to serve process in any other manner permitted by law or shall limit the right of Lender to bring any action or proceeding against any Obligor or with respect to any of its property in courts in other jurisdictions. Any action or proceeding by any Obligor against Lender shall be brought only in a court located in the Venue Site.

19.Invalid Provisions. If any provision of the Loan Documents is held to be illegal, invalid or unenforceable under present or future laws, such provision shall be fully severable and the remaining provisions of the Loan Documents shall remain in full force and effect and shall not be affected by the illegal, invalid or unenforceable provision or by its severance.

20.Expenses. Debtor shall pay all reasonable costs and expenses (including, without limitation, reasonable attorneys’ fees) in connection with (a) the drafting and execution of the Loan Documents and the transactions contemplated therein, (b) any action required in the course of administration of the Indebtedness and obligations evidenced by the Loan Documents.

21.Participation of the Lender. Debtor agrees that Lender may, at its option, sell interests in the Loan and its rights under this Amended Agreement to a financial institution or institutions and, in connection with each such sale, Lender may disclose any financial and other information available to Lender concerning Debtor to each prospective purchaser subject to obtaining a confidentiality agreement with each prospective purchaser prior to disclosing Debtor’s confidential information.

22.Conflicts. Except as otherwise expressly provided in the Note, in the event any term or provision of this Amended Agreement is inconsistent with or conflicts with any provision of the other Loan Documents, the terms and provisions contained in this Amended Agreement shall be controlling.

23.Counterparts. The Loan Documents may be separately executed in any number of counterparts, each of which shall be an original, but all of which, taken together, shall be deemed to constitute one and the same instrument.

24.Survival. All representations and warranties made in the Loan Documents or in any document, statement, or certificate furnished in connection with this Amended Agreement shall survive the execution and delivery of the Loan Documents, and no investigation by Lender or any closing shall affect the representations and warranties or the right of Lender to rely upon them.

25.Waiver of Right to Trial by Jury . THE PARTIES HEREBY IRREVOCABLY AND UNCONDITIONALLY WAIVE ALL RIGHT TO TRIAL BY JURY IN ANY ACTION, SUIT, PROCEEDING, OR COUNTERCLAIM THAT RELATES TO OR ARISES OUT OF THE LOAN DOCUMENTS OR THE ACTS OR FAILURE TO ACT OF OR BY LENDER IN THE ENFORCEMENT OF ANY OF THE TERMS OR PROVISIONS OF THIS AMENDED AGREEMENT OR THE OTHER LOAN DOCUMENTS.

26.Notice of Right to Receive a Copy of Appraisal. If the Indebtedness is secured by a lien in real property, Debtor has a right to receive a copy of the appraisal report used in connection with the Loan. If Debtor would like to receive a copy, Debtor must contact Lender at the address set forth herein and request a copy of the appraisal report. Lender must receive such a request from Debtor no later than NINETY (90) days the Effective Date.

27.Notice of Final Agreement. It is the intention of each Obligor and Lender that the following NOTICE OF FINAL AGREEMENT be incorporated by reference into each of the Loan Documents (as the same may be amended, modified or restated from time to time). Each Obligor and Lender warrant and represent that the entire agreement made and existing by or among each Obligor and Lender with respect to the NOTICE OF FINAL AGREEMENT is and shall be contained within the Loan Documents, and that no agreements or promises exist or shall exist by or among, any Obligor and Lender that are not reflected in the Loan Documents.

NOTICE OF FINAL AGREEMENT

THIS AMENDED AGREEMENT AND THE OTHER LOAN DOCUMENTS REPRESENT THE FINAL AGREEMENT BETWEEN THE PARTIES, AND THE SAME MAY NOT BE CONTRADICTED BY EVIDENCE OF PRIOR, CONTEMPORANEOUS OR SUBSEQUENT ORAL AGREEMENTS BETWEEN THE PARTIES. THERE ARE NO UNWRITTEN ORAL AGREEMENTS BETWEEN THE PARTIES.

REMAINDER OF PAGE LEFT INTENTIONALLY BLANK

AGREED as of the Amendment Date.

LENDER: ADDRESS:

LAZARUS ENERGY HOLDINGS, LLC

801 Travis, Suite 2100

Houston, Texas 77002

By:

Name: Jonathan Pitts Carroll, Sr.

Title: Member

DEBTOR: ADDRESS:

BLUE DOLPHIN PIPE LINE COMPANY

801 Travis Street, Suite 2100

Houston, TX 77002

By: BLUE DOLPHIN ENERGY COMPANY

Its: Sole Shareholder

By:

Name: Jonathan Pitts Carroll, Sr.

Title: President

Schedule 1

Payment Schedule

Schedule 2

Wire Instructions

ex_794810.htm

Exhibit 10.55

AMENDED PROMISSORY NOTE

$4,000,000.00 March 1, 2025

FOR VALUE RECEIVED, BLUE DOLPHIN PIPE LINE COMPANY, a Delaware corporation (“Debtor”), unconditionally promises to pay to the order of LAZARUS ENERGY HOLDINGS, LLC, a Delaware corporation (together with its successors and assigns, “Lender”), without setoff, at its offices at 801 Travis, Suite 2100 Houston, Texas 77002, or at such other place as may be designated by Lender, the principal amount of FOUR MILLION AND NO/100 DOLLARS ($4,000,000.00), together with interest computed daily on the outstanding principal balance hereunder, at an annual interest rate (the “Rate”), and in accordance with the payment schedule indicated below. This PROMISSORY NOTE (this “Note”) is executed pursuant to and evidences a loan funded by Lender under that certain AMENDED AND RESTATED LOAN AND SECURITY AGREEMENT dated **** as of even date herewith (the “Amendment Date”), between Debtor and Lender (as amended, restated or otherwise modified from time to time, the “Loan Agreement”), to which reference is made for a statement of the collateral, rights and obligations of Debtor and Lender in relation thereto, but neither this reference to the Loan Agreement nor any provision thereof shall affect or impair the absolute and unconditional obligation of Debtor to pay unpaid principal of and interest on this Note when due. As of March 1, 2025, the principal and accumulated interest was $5,307,555.00. The effective date of this Note is August 15, 2016 (the “Effective Date”). Capitalized terms not otherwise defined herein shall have the same meanings as in the Loan Agreement.

1. Rate. Prior to the Maturity Date, the Rate shall be the LESSER of (a) the MAXIMUM RATE (defined below), or (b) TWELVE PERCENT (12.0%). Notwithstanding any provision of this Note or any other agreement or commitment between Debtor and Lender, whether written or oral, express or implied, Lender shall never be entitled to charge, receive or collect, nor shall amounts received hereunder be credited so that Lender shall be paid, as interest a sum greater than interest at the Maximum Rate. It is the intention of the parties that this Note, and all instruments securing the payment of this Note or executed or delivered in connection therewith, shall comply with applicable law. If Lender ever contracts for, charges, receives or collects anything of value which is deemed to be interest under applicable law, and if the occurrence of any circumstance or contingency, whether acceleration of maturity of this Note, prepayment of this Note, delay in advancing proceeds of this Note or any other event, should cause such interest to exceed the Maximum Rate, any amount which exceeds interest at the Maximum Rate shall be applied to the reduction of the unpaid principal balance of this Note or any other Indebtedness, and if this Note and such other Indebtedness are paid in full, any remaining excess shall be paid to Debtor. In determining whether the interest exceeds interest at the Maximum Rate, the total amount of interest shall be spread, prorated and amortized throughout the entire term of this Note until its payment in full. The term “Maximum Rate” as used in this Note means the maximum nonusurious rate of interest per annum permitted by whichever of applicable United States federal law or Texas law permits the higher interest rate, including to the extent permitted by applicable law, any amendments thereof hereafter or any new law hereafter coming into effect to the extent a higher Maximum Rate is permitted thereby. If at any time the Rate shall exceed the Maximum Rate, the Rate shall be automatically limited to the Maximum Rate until the total amount of interest accrued hereunder equals the amount of interest which would have accrued if there had been no limitation to the Maximum Rate. To the extent, if any, that Chapter 303 of the Texas Finance Code, as amended, (the “Act”) is relevant to Lender for purposes of determining the Maximum Rate, the parties elect to determine the Maximum Rate under the Act pursuant to the “weekly ceiling” from time to time in effect, as referred to and defined in §303.001-303.016 of the Act; subject, however, to any right Lender subsequently may have under applicable law to change the method of determining the Maximum Rate.

2. Accrual Method. Interest on the Indebtedness evidenced by this Note shall be computed on the basis of a THREE HUNDRED SIXTY (360) day year and shall accrue on the actual number of days elapsed for any whole or partial month in which interest is being calculated. In computing the number of days during which interest accrues, the day on which funds are initially advanced shall be included regardless of the time of day such advance is made, and the day on which funds are repaid shall be included unless repayment is credited prior to the close of business on the Business Day received as provided herein.

3. Payment Schedule. Except as expressly provided herein to the contrary, all payments on this Note shall be applied in the following order of priority: (a) the payment or reimbursement of any expenses, costs or obligations (other than the outstanding principal balance hereof and interest hereon) for which either Debtor shall be obligated or Lender shall be entitled pursuant to the provisions of this Note or the other Loan Documents, (b) the payment of accrued but unpaid interest hereon, and (c) the payment of all or any portion of the principal balance hereof then outstanding hereunder, in the direct order of maturity. If any payment of principal or interest on this Note shall become due on a day other than a Business Day, such payment shall be made on the next succeeding Business Day and such extension of time shall be included in computing interest in connection with such payment. This Note shall be due and payable as follows:

(a)****Principal and interest payments in the amount of $250,000.00 per month beginning April 15, 2025 through February 15, 2027; and

(b)****A final payment of the outstanding principal balance of this Note, including all accrued and unpaid interest thereon, in the amount of $245,820.27 on March 15, 2027 or by APRIL 15, 2027 (the later of such dates being the “Maturity Date”).

4. Waivers, Consents and Covenants. Debtor (a) waives presentment, demand, protest, notice of demand, notice of intent to accelerate, notice of acceleration of maturity, notice of protest, notice of nonpayment, notice of dishonor, and any other notice required to be given under the law in connection with the delivery, acceptance, performance or enforcement of this Note or any other documents executed in connection with this Note or any other Loan Documents now or hereafter executed in connection with any obligation of Debtor to Lender; (b) consents to all delays, extensions, renewals or other modifications of this Note or the Loan Documents, or waivers of any term hereof or of the Loan Documents, or release or discharge by Lender, or release, substitution or exchange of any security for the payment hereof, or the failure to act on the part of Lender, or any indulgence shown by Lender (without notice to or further assent); (c) agrees that no such action, failure to act or failure to exercise any right or remedy by Lender shall in any way affect or impair the obligations of Debtor or be construed as a waiver by Lender of, or otherwise affect, any of Lender’s rights under this Note or under any of the Loan Documents; and (d) agrees to pay, on demand, all costs and expenses of collection or defense of this Note and/or the enforcement or defense of Lender’s rights with respect to, or the administration, supervision, preservation, or protection of, or realization upon, any property securing payment hereof, including, without limitation, reasonable attorney’s fees, including fees related to any suit, mediation or arbitration proceeding, out of court payment agreement, trial, appeal, bankruptcy proceedings or other proceeding, in such amount as may be determined reasonable by any arbitrator or court, whichever is applicable.

5. Prepayments. Prepayments may be made in whole or in part at any time without premium or penalty.

6. Waiver. The failure at any time of Lender to exercise any of its options or any other rights hereunder shall not constitute a waiver thereof, nor shall it be a bar to the exercise of any of its options or rights at a later date. All rights and remedies of Lender shall be cumulative and may be pursued singly, successively or together, at the option of Lender. The acceptance by Lender of any partial payment shall not constitute a waiver of Lender’s rights under this Note. No waiver of any of its rights hereunder, and no modification or amendment of this Note, shall be deemed to be made by Lender unless the same shall be in writing, duly signed on behalf of Lender; each such waiver shall apply only with respect to the specific instance involved, and shall in no way impair the rights of Lender or the obligations of Debtor to Lender in any other respect at any other time.

7. Applicable Law, Venue and Jurisdiction. Debtor agrees that this Note shall be deemed to have been made in the State of Texas at Lender’s address indicated at the beginning of this Note and shall be governed by, and construed in accordance with, the laws of the State of Texas and is performable in the City and County of Texas indicated at the beginning of this Note. In any litigation in connection with or to enforce this Note or any Loan Documents, Debtor irrevocably consents to and confers personal jurisdiction on the courts of the State of Texas or the United States courts located within the State of Texas. Nothing contained herein shall, however, prevent Lender from bringing any action or exercising any rights within any other state or jurisdiction or from obtaining personal jurisdiction by any other means available under applicable law.

8. Partial Invalidity. The unenforceability or invalidity of any provision of this Note shall not affect the enforceability or validity of any other provision herein and the invalidity or unenforceability of any provision of this Note or of the Loan Documents to any person or circumstance shall not affect the enforceability or validity of such provision as it may apply to other persons or circumstances.

9. Binding Effect. This Note shall be binding upon and inure to the benefit of Debtor and Lender and their respective successors, assigns, heirs and personal representatives, provided, however, that no obligations of Debtor hereunder can be assigned without prior written consent of Lender.

10. Controlling Document. To the extent that this Note conflicts with or is in any way incompatible with any other document related specifically to the loan evidenced by this Note, this Note shall control over any other such document, and if this Note does not address an issue, then each other such document shall control to the extent that it deals most specifically with an issue.

11. Commercial Purpose. DEBTOR REPRESENTS TO LENDER THAT THE PROCEEDS OF THIS LOAN ARE TO BE USED PRIMARILY FOR BUSINESS, COMMERCIAL OR AGRICULTURAL PURPOSES AND NOT FOR PERSONAL, FAMILY OR HOUSEHOLD PURPOSES. DEBTOR ACKNOWLEDGES HAVING READ AND UNDERSTOOD, AND AGREES TO BE BOUND BY, ALL TERMS AND CONDITIONS OF THIS NOTE.

12. Collection. If this Note is placed in the hands of an attorney for collection, or if it is collected through any legal proceeding at law or in equity or in bankruptcy, receivership or other court proceedings, Debtor agrees to pay all costs of collection, including, but not limited to, court costs and reasonable attorneys’ fees.

13. Waiver of Jury Trial. DEBTOR HEREBY IRREVOCABLY AND UNCONDITIONALLY WAIVES ALL RIGHT TO TRIAL BY JURY IN ANY ACTION, SUIT, PROCEEDING, OR COUNTERCLAIM THAT RELATES TO OR ARISES OUT OF THIS NOTE OR ANY OF THE LOAN DOCUMENTS OR THE ACTS OR FAILURE TO ACT OF OR BY LENDER IN THE ENFORCEMENT OF ANY OF THE TERMS OR PROVISIONS OF THIS NOTE OR THE OTHER LOAN DOCUMENTS.

REMAINDER OF PAGE LEFT INTENTIONALLY BLANK

EXECUTED as of the Amendment Date.

DEBTOR: ADDRESS:

BLUE DOLPHIN PIPE LINE COMPANY

801 Travis Street, Suite 2100

Houston, TX 77002

By: BLUE DOLPHIN ENERGY COMPANY

Its: Sole Shareholder

By:

Name: Jonathan P. Carroll

Title: President

ex_794010.htm

Exhibit 97.01

CLAWBACK POLICY

BLUE DOLPHIN ENERGY COMPANY

Effective as of March 26, 2025

Introduction

The Board of Directors (the "Board") of Blue Dolphin Energy Company (the “Company”) believes that it is in the best interests of the Company and its shareholders to create and maintain a culture that emphasizes integrity and accountability and that reinforces the Company's pay-for-performance compensation philosophy. The Board has therefore adopted this policy which provides for the recoupment of certain executive compensation in the event of an accounting restatement resulting from material noncompliance with financial reporting requirements under the federal securities laws (the "Policy"). This Policy is designed to comply with Section 10D of the Securities Exchange Act of 1934 (the "Exchange Act"), as well as Section 303A.14 of the New York Stock Exchange Listed Company Manual and Nasdaq Listing Rule 5608 (collectively the "Clawback Listing Standards").

Administration

This Policy shall be administered by the Board or, if so, designated by the Board, the Compensation Committee, in which case references herein to the Board shall be deemed references to the Compensation Committee. Any determinations made by the Board shall be final and binding on all affected individuals.

Covered Executives

This Policy applies to the Company's current and former executive officers, as determined by the Board in accordance with the definition in Section 10D of the Exchange Act and the Clawback Listing Standards, and such other senior executives/employees who may from time to time be deemed subject to the Policy by the Board ("Covered Executives").

Recoupment; Accounting Restatement

In the event the Company is required to prepare an accounting restatement of its financial statements due to the Company's material noncompliance with any financial reporting requirement under the securities laws, including any required accounting restatement to correct an error in previously issued financial statements that is material to the previously issued financial statements or that would result in a material misstatement if the error were corrected in the current period or left uncorrected in the current period, the Board will require reimbursement or forfeiture of any excess Incentive Compensation (as defined herein) received by any Covered Executive during the three (3) completed fiscal years immediately preceding the date on which the Company is required to prepare an accounting restatement.

Incentive Compensation

For purposes of this Policy, Incentive Compensation means any of the following; provided that, such compensation was granted, earned, or vested based wholly or in part on the attainment of a stipulated financial reporting measure:

●	Annual bonuses and other short- and long-term cash incentives.
●	Stock options.
---	---
●	Stock appreciation rights.
---	---
●	Restricted stock.
---	---
●	Restricted stock units.
---	---
●	Performance shares.
---	---
●	Performance units.
---	---

Financial reporting measures, such as:

●	Company stock price.
●	Total shareholder return.
---	---
●	Revenues.
---	---
●	Net income.
---	---
●	Earnings before interest, taxes, depreciation, and amortization (EBITDA).
---	---
●	Funds from operations.
---	---
●	Liquidity measures such as working capital or operating cash flow.
---	---
●	Return measures such as return on invested capital or return on assets.
---	---
●	Earnings measures such as earnings per share.
---	---

Excess Incentive Compensation: Amount Subject to Recovery

The amount to be recovered will be the excess of the Incentive Compensation paid to the Covered Executive based on the erroneous data over the Incentive Compensation that would have been paid to the Covered Executive had it been based on the restated results, as determined by the Board, without regard to any taxes paid by the Covered Executive in respect of the Incentive Compensation paid based on the erroneous data.

If the Board cannot determine the amount of excess Incentive Compensation received by the Covered Executive directly from the information in the accounting restatement, then it will make its determination based on a reasonable estimate of the effect of the accounting restatement.

Method of Recoupment

The Board will determine, in its sole discretion, the method for recouping Incentive Compensation hereunder which may include, without limitation:

(a)	requiring the reimbursement of cash Incentive Compensation previously paid;
(b)	seeking recovery of any gain realized on the vesting, exercise, settlement, sale, transfer, or other disposition of any equity-based awards;
---	---
(c)	offsetting the recouped amount from any compensation otherwise owed by the Company to the Covered Executive;
---	---
(d)	cancelling outstanding vested or unvested equity awards; and/or
---	---
(e)	taking any other remedial and recovery action permitted by law, as determined by the Board.
---	---

No Indemnification

The Company shall not indemnify any Covered Executives against the loss of any incorrectly awarded Incentive Compensation.

Interpretation

The Board is authorized to interpret and construe this Policy and to make all determinations necessary, appropriate, or advisable for the administration of this Policy. It is intended that this Policy be interpreted in a manner that is consistent with the requirements of Section 10D of the Exchange Act, any applicable rules or standards adopted by the Securities and Exchange Commission, and the Clawback Listing Standards.

Effective Date

This Policy shall be effective as of the date adopted by the Board (the "Effective Date") and shall apply to Incentive Compensation that is received by Covered Executives on or after the Effective Date, even if such Incentive Compensation was approved, awarded, or granted to Covered Executives prior to the Effective Date.

Amendment; Termination

The Board may amend this Policy from time to time in its discretion and shall amend this Policy as it deems necessary to reflect final regulations adopted by the Securities and Exchange Commission under Section 10D of the Exchange Act and to comply with the Clawback Listing Standards and any other rules or standards adopted by a national securities exchange on which the Company's securities are listed. The Board may terminate this Policy at any time.

Other Recoupment Rights

Any right of recoupment under this Policy is in addition to, and not in lieu of, any other remedies or rights of recoupment that may be available to the Company pursuant to the terms of any similar policy in any employment agreement, equity award agreement, or similar agreement and any other legal remedies available to the Company.

Relationship to Other Plans and Agreements

The Board intends that this Policy will be applied to the fullest extent of the law. The Board may require that any employment agreement, equity award agreement, or similar agreement entered into on or after the Effective Date shall, as a condition to the grant of any benefit thereunder, require a Covered Executive to agree to abide by the terms of this Policy. In the event of any inconsistency between the terms of the Policy and the terms of any employment agreement, equity award agreement, or similar agreement under which Incentive Compensation has been granted, awarded, earned or paid to a Covered Executive, whether or not deferred, the terms of this Policy shall govern.

Acknowledgment

The Covered Executive shall sign an acknowledgment form in the form attached hereto as Exhibit A in which they acknowledge that they have read and understand the terms of the Policy and are bound by the Policy.

Impracticability

The Board shall recover any excess Incentive Compensation in accordance with this Policy unless such recovery is impracticable, as determined by the Board in accordance with Rule 10D-1 of the Exchange Act and the listing standards of the national securities exchange on which the Company's securities are listed.

Successors

This Policy shall be binding and enforceable against all Covered Executives and their beneficiaries, heirs, executors, administrators, or other legal representatives.

Exhibit A

FORM OF ACKNOWLEDGEMENT

PERTAINING TO BLUE DOLPHIN ENERGY COMPANY CLAWBACK POLICY

The Board of Directors of Blue Dolphin Energy Company (“the Company”) has adopted a Clawback Policy applicable to Covered Executives. Such policy states:

I acknowledge and agree that all future Incentive Compensation, provided that such compensation was granted, earned, or vested based wholly or in part on the attainment of a stipulated financial reporting measure, and conditioned upon my acceptance of such Incentive Compensation, shall be subject to the terms of the Clawback Policy as it relates to recoupment of excess Incentive Compensation.

I further acknowledge and agree that I am not entitled to indemnification against the loss of any incorrectly awarded Incentive Compensation or right of advancement of expenses in connection with any enforcement of the Clawback Policy by the Company.

(Signature)
(Print Name)
(Title)

ex_790200.htm

Exhibit 97.02

INSIDER TRADING POLICY

BLUE DOLPHIN ENERGY COMPANY

Effective as of November 1, 2007

Blue Dolphin Energy Company (the “Company”) has adopted this Insider Trading Policy (the “Policy”), which prohibits trading based on Material Nonpublic Information (defined below) regarding the Company, in order to take an active role in the prevention of insider trading violations. This Policy applies to all transactions in the Company’s securities, including common stock, options to buy or sell common stock or any other securities the Company may issue from time to time, such as preferred stock, warrants and convertible securities, as well as to derivative securities relating to the Company’s common stock, whether or not issued by the Company, such as exchange-traded options. This Policy applies to all officers, directors, and all other employees, consultants and contractors of the Company who receive or have access to Material Nonpublic Information, as well as members of their immediate families in each case where such persons have or may have access to Material Nonpublic Information. The Policy is to be delivered to all new employees and consultants upon the commencement of their relationships with the Company. You should read this Policy carefully, consult with the Company’s Insider Trading Compliance Officer regarding any questions you may have. The Insider Trading Compliance Officer shall be the Secretary of the Company. Promptly sign and return the attached Certification acknowledging receipt thereof to the Insider Trading Compliance Officer.

I.	DEFINITION OF MATERIAL NONPUBLIC INFORMATION

What Information is “Material”?

It is not possible to define all categories of material information. However, information should be regarded as material if there is a reasonable likelihood that it would be considered important to an investor in making an investment decision regarding the purchase or sale of the Company’s securities. Information that is likely to affect the price of a company’s securities is almost always material. It is also important to remember that either positive or negative information may be material.

While it may be difficult under this standard to determine whether particular information is material, there are various categories of information that are particularly sensitive and, as a general rule, should always be considered material. Examples of such information may include:

—	Financial results (quarterly, annual or otherwise)
—	Projections of future earnings or losses
---	---
—	Significant regulatory developments
---	---
—	News of a pending or proposed merger
---	---
—	News of the disposition or acquisition of significant assets
---	---
—	New discoveries
---	---
—	Impending bankruptcy or financial liquidity problems
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—	Gain or loss of a substantial customer or supplier
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—	Changes in dividend policy
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—	New contract announcements of a significant nature
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—	Stock splits
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—	New equity or debt offerings
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—	Significant litigation exposure due to actual or threatened litigation
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—	Major changes in senior management
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If your securities transactions become the subject of scrutiny, they will be viewed after-the-fact with the benefit of hindsight. As a result, before engaging in any securities transaction, you should consider carefully how Securities and Exchange Commission (“SEC”) regulators and others might view your transaction in hindsight with all of the facts disclosed.

What Information is “Nonpublic”?

Nonpublic information is information that has not been previously disclosed to the general public and is otherwise not available to the general public.

II.	GENERAL POLICY

This Policy prohibits you from trading or tipping others who may trade in the securities of the Company while in possession of Material Nonpublic Information about the Company. You are also prohibited from trading or tipping others who may trade in the securities of another company if you are in possession of Material Nonpublic Information about the other company in connection with your employment or position at the Company.

Trading on Material Nonpublic Information

No director, officer, employee, consultant or contractor of the Company, and no Family Member (as defined below) of any such person, shall engage in any transaction involving a purchase or sale of the Company’s securities, including any offer to purchase or offer to sell, during any period commencing with the date that he or she possesses Material Nonpublic Information concerning the Company, and ending at the beginning of the third Trading Day (as defined below) following the date of public disclosure of such Material Nonpublic Information, or at such time as such information is no longer material. As used herein, with respect to any person, “Family Member” means any child, stepchild, grandchild, parent, stepparent, grandparent, spouse, sibling, mother-in-law, father-in-law, son-in-law, daughter-in-law, brother-in-law, or sister-in-law (including adoptive relationships), who shares the same household as such person. As used herein, the term “Trading Day” shall mean a day on which national stock exchanges and the National Association of Securities Dealers, Inc. Automated Quotation System (“NASDAQ”) are open for trading. A “Trading Day” begins at the time trading begins on such day. This restriction on trading does not apply to transactions made under a trading plan adopted pursuant to SEC Rule 10b5-1 and approved by the Board of Directors.

Tipping Others of Material Nonpublic Information

No director, officer, employee, consultant or contractor of the Company shall disclose or tip Material Nonpublic Information to any other person (including Family Members) where such Material Nonpublic Information may be used by such person to his or her profit by trading in the securities of companies to which such Material Nonpublic Information relates, nor shall such director, officer, employee, consultant or contractor of the Company or related person make recommendations or express opinions on the basis of Material Nonpublic Information as to trading in the Company’s securities.

Confidentiality of Material Nonpublic Information

Material Nonpublic Information relating to the Company is the property of the Company and the unauthorized disclosure of such Material Nonpublic Information is prohibited. If any officer, director or employee of the Company receives any inquiry from outside the Company, such as from a securities analyst, for information (particularly financial results and/or projections) that may be Material Nonpublic Information, the inquiry should be referred to the Company’s President or Vice Presidents, who are responsible for coordinating and overseeing the release of such information to the investing public, securities analysts and others in compliance with applicable laws and regulations.

III.	APPLICABILITY OF POLICY TO MATERIAL NONPUBLIC INFORMATION REGARDING OTHER COMPANIES

This Policy and the guidelines described herein also apply to Material Nonpublic Information relating to other companies, including the Company’s customers, vendors or suppliers (“business partners”), when such Material Nonpublic Information is obtained in the course of employment with, or other services performed on behalf of, the Company. Civil and criminal penalties and termination of employment may result from trading on inside information regarding the Company’s business partners. All officers, directors, employees, consultants and contractors should treat Material Nonpublic Information about the Company’s business partners with the same care required with respect to Material Nonpublic Information related directly to the Company.

IV.	TRADING GUIDELINES AND REQUIREMENTS

Blackout Period

The period beginning at the close of market on the tenth Trading Day following the last day of the third month of each fiscal quarter and ending at the beginning of the third Trading Day following the date of public disclosure of the financial results for that quarter is a particularly sensitive period of time for transactions in the Company’s stock from the perspective of compliance with applicable securities laws. This sensitivity is due to the fact that officers, directors and certain employees will, during that period, often possess Material Nonpublic Information about the expected financial results for the quarter during that period. Accordingly, this period of time is referred to as a “Blackout Period”. All directors and officers and those other employees identified by the Company from time to time and who have been notified that they have been so identified are prohibited from trading during such Blackout Period.

In addition, from time to time, the Company may impose a special Blackout Period prohibiting directors, officers and potentially a larger group of employees, consultants and contractors from trading securities of the Company because of material developments known to the Company and not yet disclosed to the public. In such event, directors, officers and such employees, consultants and contractors may not engage in any transaction involving the purchase or sale of the Company’s securities and should not disclose to others the fact of such suspension of trading. This restriction on trading does not apply to transactions made under an approved Rule 10b5-1 trading plan. The Company would re-open the Trading Window at the beginning of the third Trading Day following the date of public disclosure of the information, or at such time as the information is no longer material.

The prohibition against trading during the Blackout Period encompasses the fulfillment of “limit orders” by any broker for a director, executive officer or other identified person, and the brokers with whom any such limit order is placed must be so instructed at the time it is placed.

Trading Window

To ensure compliance with this Policy and applicable federal and state securities laws, the Company requires that all directors and officers and those certain identified employees of the Company refrain from conducting transactions involving the purchase or sale of the Company’s securities other than during the period commencing at the open of market on the third Trading Day following the date of public disclosure of the financial results for a particular fiscal quarter or year and continuing until the close of market on the tenth Trading Day following the last day of the third calendar month of the next fiscal quarter. This restriction on trading does not apply to transactions made under an approved Rule 10b5-1 trading plan.

It should be noted that even during the Trading Window, any person possessing Material Nonpublic Information concerning the Company, whether or not subject to the Blackout Period and Trading Window, should not engage in any transactions in the Company’s securities until such information has been known publicly for at least two full Trading Days, whether or not the Company has recommended a suspension of trading to that person. This restriction on trading does not apply to transactions made under an approved Rule 10b5-1 trading plan. Trading in the Company’s securities during the Trading Window should not be considered a “safe harbor,” and all directors, officers and other persons should use good judgment at all times.

Preclearance of Trades

The Company has determined that each officer, director, consultant and certain other persons identified by the Company from time to time must refrain from trading in the Company’s securities, even during any applicable Trading Window, without first complying with the Company’s “preclearance” process. Each such person should contact the Company’s Insider Trading Compliance Officer prior to commencing any trade in the Company’s securities. The Insider Trading Compliance Officer will consult as necessary with senior management and counsel of the Company before clearing any proposed trade. Although a director, officer, employee, consultant or contractor of the Company wishing to trade pursuant to an approved Rule 10b5-1 trading plan need not seek preclearance from the Company’s Insider Trading Compliance Officer before each trade takes place, such a director, officer, employee, consultant or contractor of the Company must obtain Company approval of the proposed Rule 10b5-1 trading plan before it is adopted.

Individual Responsibility

Every officer, director, employee, consultant and contractor of the Company is responsible for complying with this Policy. A director, officer, employee, consultant or contractor of the Company may, from time to time, have to forego a proposed transaction in the Company’s securities even if he or she planned to make the transaction before learning of the Material Nonpublic Information and even though the director, officer, employee, consultant or contractor of the Company believes he or she may suffer an economic loss or forego anticipated profit by waiting.

V.	CERTAIN EXCEPTIONS

For purposes of this Policy, the Company considers that the exercise of stock options for cash under the Company’s stock option plan are exempt from this Policy, since the other party to these transactions is the Company itself and the price does not vary with the market, but is fixed by the terms of the option agreement. In addition, for purposes of this Policy, the Company considers that bona fide gifts of the securities of the Company are exempt from this Policy.

VI.	PROHIBITED TRANSACTIONS

Because the Company believes it is improper and inappropriate for its directors, officers and employees to engage in short-term or speculative transactions involving certain securities, it is the Company’s policy that directors, officers and employees may not engage in any of the following transactions:

Purchases of Company Common Stock on Margin

Any common stock of the Company purchased in the open market should be paid for in full at the time of purchase. Purchasing the Company’s common stock on margin (i.e., borrowing money from a broker or other third party to fund the stock purchase) is strictly prohibited by this Policy.

Short Sales of Company Common Stock

Selling the Company’s common stock short is strictly prohibited by this Policy. Selling short is the practice of selling more shares than you own, which is a technique used to speculate on a decline in the share price.

Buying or Selling Puts or Calls on Company Common Stock

The purchase or sale of options of any kind, whether puts or calls, or other derivative securities relating to the Company’s common stock is strictly prohibited by this Policy. A put is a right to sell at a specified price a specific number of shares by a certain date and is utilized in anticipation of a decline in the share price. A call is a right to buy at a specified price a specified number of shares by a certain date and is utilized in anticipation of a rise in the share price.

VII.	POTENTIAL CRIMINAL AND CIVIL LIABILITY AND/OR DISCIPLINARY ACTION

SEC Enforcement Action

The adverse consequences of insider trading violations can be staggering and currently include, without limitation, the following:

For individuals who trade on inside information (or tip information to others):

—	A civil penalty of up to three times the profit gained or loss avoided;
—	A criminal fine (no matter how small the profit) of up to $5 million; and/or
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—	A jail term of up to twenty (20) years.
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For a company (as well as possibly any supervisory person) that fails to take appropriate steps to prevent illegal trading:

—	A civil penalty of the greater of $1 million or three times the profit gained or loss avoided as a result of the employee’s violation; and/or
—	A criminal penalty of up to $25 million.
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—	The civil penalties may extend personal liability to the Company’s directors, officers and other supervisory personnel if they fail to take appropriate steps to prevent insider trading.
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Disciplinary Action by the Company

Directors, officers, employees, consultants or contractors of the Company who violate this Policy shall also be subject to disciplinary action by the Company, which may include termination or other appropriate action.

VIII.	PLANNED TRADING PROGRAMS (ONLY APPLICABLE TO DIRECTORS AND OFFICERS)

Rule 10b5-1 under the Securities Exchange Act of 1934 provides an affirmative defense from insider trading liability under Rule 10b-5.

Rule 10b5-1 Plans are designed to provide flexibility to those who would like to plan securities transactions in advance at a time when they are not aware of Material Nonpublic Information, and then carry out those pre-planned transactions at a later time, even if they later become aware of Material Nonpublic Information after the Rule 10b5-1 Plan is implemented but before the trade is executed. In general, a 10b5-1 plan must be entered into at a time when there is no undisclosed material information. Once the plan is adopted, the director, officer, employee, consultant or contractor of the Company must not exercise any influence over the amount of securities to be traded, the price at which they are to be traded or the date of the trade. The plan must either specify the amount, pricing and timing of transactions in advance or delegate discretion on these matters to an independent third party.

All Rule 10b5-1 Plans must be approved by the Company’s Board of Directors. If you are interested in effecting trades in the Company’s securities pursuant to a 10b5-1 Plan, you should contact your broker who should be able to assist you with formulating an acceptable plan.

IX.	ADDITIONAL INFORMATION (ONLY APPLICABLE TO DIRECTORS AND EXECUTIVE OFFICERS)

Section 16 Reporting Persons

The Company’s directors and certain executive officers (“Reporting Persons”) are required to file Section 16 reports with the SEC when they engage in transactions in the Company’s securities. Although the Company may generally assist Reporting Persons in preparing and filing the required reports, Reporting Persons retain responsibility for the reports. Reporting Persons are required to provide advance notice to the Company’s Insider Trading Compliance Officer of any proposed transactions involving the Company’s securities. The Company’s Board of Directors will designate the executive officers that are Reporting Persons.

Reporting Persons are also subject to the limitations on “short-swing” transactions set forth in the federal securities laws. The practical effect of these provisions is that Reporting Persons who purchase and sell the Company’s securities within a six-month period (including a sale followed by a purchase within six months) will be required to refund all profits from the transactions to the Company, whether or not such person had knowledge of any Material Nonpublic Information at the time of the transactions, unless an exception is applicable to the transaction or security.

In addition, Section 16 of the Exchange Act and the reporting requirements related thereto apply to transactions in the Company’s securities by Family Members of the Reporting Persons.

Rule 144 Reports

Reporting Persons are also generally required to comply with the provisions of Rule 144 (“Rule 144”) under the Securities Act of 1933, including the filing of Form 144 with the SEC, to dispose of the Company’s securities. Form 144 notifies the SEC of such person’s intent to sell the Company’s securities. The Form 144 is generally prepared and filed by the Reporting Person’s broker and is in addition to any Section 16 reports that may be required to be filed (as discussed above) in connection with such transactions. In addition, Family Members of Reporting Persons may also be required to comply with Rule 144 in connection with sales of the Company’s securities.

X.	INQUIRIES

Please direct your questions as to any of the matters discussed in this Policy to the Company’s Insider Trading Compliance Officer.

CERTIFICATION

To Blue Dolphin Energy Company:

I have received a copy of Blue Dolphin Energy Company’s Insider Trading Policy. I have read and understand the Policy. I will comply with the policies and procedures set forth in the Policy. I understand and agree that my failure to comply in all respects with this Insider Trading Policy is a basis for termination for cause of my employment with Blue Dolphin Energy Company and any subsidiary or other affiliate to which my employment relates.

^Signature^	^Date^
^Printed Name^

This document states a policy of Blue Dolphin Energy Company and

is not intended to be regarded as the rendering of legal advice.