Blue Dolphin Energy Company (BDCO)

[mrholty]

Bob-

I like you $19 target and you are correct that we could see that amount if we have a few quarters together of positive results.

That said here are some of my concerns:
- Mgmt concentration. This thing is basically owned by the President (LEH).
- Related Party transaction(s) - Property was bought from LEH and staffing to run the plant is done by 100% to LEH. Why didn't LEH just do this on his own instead of sharing 19% of the business in BDCO that he didn't own.
- Capital Investments going forward. My understanding is the diesel they produce is not wholly salable but instead must be blended with other refinery outputs. I believe the cost to upgrade to the higher diesel standard was estimated at $50M by BDCO in a prior Q.

Positives:
the basic ban of refiners in the US has created this opportunity as they save on shipping/logistics costs. I expect this to continue.

-However other refiners in the Texas region are growing capacity so margins may get hit in 2015 when some come online.

- Even further upside if they end up buying the shuttered plant in Corpus Christi from LEH or if they become an MLP.

All in a good position to have.