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Note 6. Brunswick Terminal and Salisbury Terminal Asset Purchases
 9 Months Ended
Dec. 31, 2011
Business Acquisition, Pro Forma Information, Description
6.          BRUNSWICK TERMINAL AND SALISBURY TERMINAL ASSET PURCHASES.

Brunswick, Georgia Terminal

On July 15, 2010 Blackwater Georgia, L.L.C. (“BWGA”), a wholly-owned subsidiary of the Company, finalized the acquisition of the Brunswick Terminal for $1,800,000 from NuStar Terminals Operations Partnership, L.P.

Presented below are unaudited pro-forma consolidated statements of operations for the nine-month period ending December 31, 2010, when considering the operating results of the Brunswick Terminal, if acquired as of April 1, 2010.  Actual financial results for the nine-month period ending December 31, 2011 include the operation results from the Brunswick Terminal.

Salisbury, Maryland Terminal

On December 22, 2011, Blackwater Maryland, L.L.C. (“BWMD”), a wholly-owned subsidiary of the Company, acquired the 172,000 barrel Salisbury Terminal, including storage tanks and other improvements for $1,600,000.  The terminal consists of sixteen leasable above ground storage tanks (ranging in size from 2,500-50,000 barrels), two office buildings, a three-bay covered truck loading rack, a barge dock and other site improvements located on approximately 27 acres of land, located along the Wicomico River in Salisbury, Maryland.

We commissioned and obtained a market valuation appraisal (the “Salisbury Terminal Appraisal”) from a third-party independent appraisal firm.  The Salisbury Terminal Appraisal concluded that the market value of the Salisbury Terminal as of June 30, 2011 was $2,570,000.  Therefore, we valued the combined assets at the Salisbury Terminal for $2,570,000 and recorded a $970,000 “bargain purchase” gain for the difference, which is recorded in the Company’s consolidated statement of operations.  The Company determined that the market value of the Salisbury Terminal did not change materially from the date of the appraisal on June 30, 2011 and the date of the acquisition on December 22, 2011.  Included in the acquired assets were the tangible terminal assets described above as well as four in-place customer contracts with a fair value of $287,766 and various prepaid permits and taxes with a fair value of $48,799.  The fair value of the in-place customer contacts was determined using a discounted cash flow projection over the one-year life of the contracts and this amount will be amortized over a useful life of one-year.

The following table sets forth the costs and final purchase price allocation related to the Salisbury Terminal acquisition.

Cost of the acquisition:
     
Cash paid from the proceeds of debt
 
$
1,600,000
 
Less: fair market value of identifiable assets acquired
   
(2,570,000)
 
Gain on bargain purchase of asset
   
(970,000)
 
         
Purchase price allocation:
       
Plant and Equipment
   
2,233,435
 
Intangible assets
   
336,565
 
 Identifiable assets
 
$
2,570,000
 

Presented below are unaudited pro-forma consolidated statements of operations for the nine-month period ending December 31, 2011 and for the nine-month periods ending December 31, 2010, when considering the operating results of the Salisbury Terminal, if acquired as of April 1, 2010.

BLACKWATER MIDSTREAM CORP.

CONSOLIDATED PRO-FORMA STATEMENTS OF OPERATIONS

(UNAUDITED)

   
Nine-Months Ended 31-Dec-2011
     
Nine-Months Ended 31-Dec-2010
 
   
Blackwater Midstream, Westwego & Brunswick Terminals Actual
   
Salisbury
Terminal
Pro-Forma for Period 1/Apr/2011-21/Dec/2011
   
Consolidated
Pro-Forma
     
Blackwater Midstream and Westwego
Terminal Actual
   
Brunswick Terminal
Pro-Forma for Period 1/Apr/2010-14/Jul/2010
   
Salisbury
Terminal
Pro-Forma for Period 1/Apr/2010-31/Dec/2010
   
Consolidated
Pro-Forma
 
Revenue
  $ 7,135,635     $ 364,140     $ 7,499,775       $ 5,006,646     $ 140,000     $ 378,000     $ 5,524,646  
                                                           
Net income
  $ 5,190,252     $ 81,065     $ 5,271,317       $ 54,700     $ 1,213     $ 84,150     $ 140,063  
                                                           
NET INCOME PER COMMON SHARE,
                                                         
BASIC
  $ 0.09     $ 0.00     $ 0.09       $ 0.00     $ 0.00     $ 0.00     $ 0.00  
DILUTED
  $ (0.02 )   $ 0.00     $ (0.02 )     $ 0.00     $ 0.00     $ 0.00     $ 0.00  
                                                           
Weighted average number of shares outstanding:
                                                         
BASIC
    55,551,397       55,551,397       55,551,397         54,559,830       54,559,830       54,559,830       54,559,830  
DILUTED
    65,498,476       65,498,476       65,498,476         65,646,763       65,646,763       65,646,763       65,646,763