Table of Contents

UNITED STATES

SECURITIES AND EXCHANGE COMMISSION

WASHINGTON, D. C. 20549

FORM 10-Q

(Mark ~~one)~~One)

☑ QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF

THE SECURITIES EXCHANGE ACT OF 1934

For the quarterly period ended ~~September 30, 2020~~March 31, 2021

☐ TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF

THE SECURITIES EXCHANGE ACT OF 1934

For the transition period from ___ to ___.

Commission file number: 1-07908

ADAMS RESOURCES & ENERGY, INC.

(Exact Name of Registrant as Specified in Its Charter)


Delaware						74-1753147
(State or Other Jurisdiction of Incorporation or Organization)						(I.R.S. Employer Identification No.)


17 South Briar Hollow Lane, Suite 100 Houston, Texas 77027
(Address of Principal Executive Offices, including Zip Code)

(713) 881-3600

(Registrant’s Telephone Number, including Area Code)

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

Title of each class

Trading Symbol(s)

Name of each exchange on which registered

Common Stock, $0.10 Par Value

NYSE American LLC

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 þ No o

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 þ 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 an emerging growth company. See definitions of “large accelerated filer,” “accelerated filer,” “smaller reporting company” and “emerging growth company” in Rule 12b-2 of the Exchange 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. o

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

A total of ~~4,242,284~~4,251,015 shares of Common Stock were outstanding at ~~November~~May 1, ~~2020.~~2021.

Table of Contents

ADAMS RESOURCES & ENERGY, INC. AND SUBSIDIARIES

TABLE OF CONTENTS


		Page No.
PART I. FINANCIAL INFORMATION
Item 1.	Financial Statements
	Unaudited Condensed Consolidated Balance Sheets	2
	Unaudited Condensed Consolidated Statements of Operations	3
	Unaudited Condensed Consolidated Statements of Cash Flows	4
	Unaudited Condensed Consolidated Statements of Shareholders’ Equity	5
	Notes to Unaudited Condensed Consolidated Financial Statements	76
Item 2.	Management’s Discussion and Analysis of Financial Condition and Results of Operations	2825
Item 3.	Quantitative and Qualitative Disclosures About Market Risk	3936
Item 4.	Controls and Procedures	4036

PART II. OTHER INFORMATION
Item 1.	Legal Proceedings	4036
Item 1A.	Risk Factors	4036
Item 2.	Unregistered Sales of Equity Securities and Use of Proceeds	4137
Item 3.	Defaults Upon Senior Securities	4137
Item 4.	Mine Safety Disclosures	4137
Item 5.	Other Information	4137
Item 6.	Exhibits	4238

Signatures		4339

Table of Contents

PART I. FINANCIAL INFORMATION

Item 1. Financial Statements

ADAMS RESOURCES & ENERGY, INC. AND SUBSIDIARIES

UNAUDITED CONDENSED CONSOLIDATED BALANCE SHEETS

(In thousands, except share data)


		September 30,		December 31,			March 31,		December 31,
		2020		2019			2021		2020
ASSETS	ASSETS					ASSETS
Current assets:	Current assets:					Current assets:
Cash and cash equivalents	Cash and cash equivalents	$	53,106	$	112,994	Cash and cash equivalents	$	58,985	$	39,293
Restricted cash	Restricted cash	4,865		9,261		Restricted cash	12,377		12,772
Accounts receivable, net of allowance for doubtful	Accounts receivable, net of allowance for doubtful					Accounts receivable, net of allowance for doubtful
accounts of $114 and $141, respectively		94,654		94,534

accounts of $113 and $114, respectively						accounts of $113 and $114, respectively	111,068		99,799
Accounts receivable – related party						Accounts receivable – related party	13		0
Inventory	Inventory	15,942		26,407		Inventory	29,223		19,336
Derivative assets	Derivative assets	3		0		Derivative assets	576		61
Income tax receivable	Income tax receivable	7,054		2,569		Income tax receivable	11,638		13,288
Prepayments and other current assets	Prepayments and other current assets	1,417		1,559		Prepayments and other current assets	3,621		2,964
Total current assets	Total current assets	177,041		247,324		Total current assets	227,501		187,513
Property and equipment, net	Property and equipment, net	64,469		69,046		Property and equipment, net	90,643		94,134
Operating lease right-of-use assets, net	Operating lease right-of-use assets, net	8,453		9,576		Operating lease right-of-use assets, net	7,774		8,051
Intangible assets, net	Intangible assets, net	4,304		1,597		Intangible assets, net	3,902		4,106
Cash deposits and other assets		2,193		3,299
Other assets						Other assets	2,482		2,383
Total assets	Total assets	$	256,460	$	330,842	Total assets	$	332,302	$	296,187

LIABILITIES AND SHAREHOLDERS’ EQUITY	LIABILITIES AND SHAREHOLDERS’ EQUITY					LIABILITIES AND SHAREHOLDERS’ EQUITY
Current liabilities:	Current liabilities:					Current liabilities:
Accounts payable	Accounts payable	$	76,407	$	147,851	Accounts payable	$	122,155	$	85,991
Accounts payable – related party		158		5

Derivative liabilities						Derivative liabilities	546		52
Current portion of finance lease obligations	Current portion of finance lease obligations	2,505		2,167		Current portion of finance lease obligations	4,494		4,112
Current portion of operating lease liabilities	Current portion of operating lease liabilities	2,137		2,252		Current portion of operating lease liabilities	2,172		2,050
Other current liabilities	Other current liabilities	11,687		7,302		Other current liabilities	19,888		22,343
Total current liabilities	Total current liabilities	92,894		159,577		Total current liabilities	149,255		114,548
Other long-term liabilities:	Other long-term liabilities:					Other long-term liabilities:
Asset retirement obligations	Asset retirement obligations	1,610		1,573		Asset retirement obligations	2,325		2,308
Finance lease obligations	Finance lease obligations	4,011		4,376		Finance lease obligations	12,202		11,507
Operating lease liabilities	Operating lease liabilities	6,314		7,323		Operating lease liabilities	5,603		6,000
Deferred taxes and other liabilities	Deferred taxes and other liabilities	7,547		6,352		Deferred taxes and other liabilities	11,900		12,732
Total liabilities	Total liabilities	112,376		179,201		Total liabilities	181,285		147,095

Commitments and contingencies (Note 14)	Commitments and contingencies (Note 14)					Commitments and contingencies (Note 14)	0		0

Shareholders’ equity:	Shareholders’ equity:					Shareholders’ equity:
Preferred stock – $1.00 par value, 960,000 shares	Preferred stock – $1.00 par value, 960,000 shares					Preferred stock – $1.00 par value, 960,000 shares
authorized, NaN outstanding	authorized, NaN outstanding	0		0		authorized, NaN outstanding	0		0
Common stock – $0.10 par value, 7,500,000 shares	Common stock – $0.10 par value, 7,500,000 shares					Common stock – $0.10 par value, 7,500,000 shares
authorized, 4,242,284 and 4,235,533 shares outstanding, respectively		423		423
authorized, 4,251,015 and 4,243,716 shares outstanding, respectively						authorized, 4,251,015 and 4,243,716 shares outstanding, respectively	423		423
Contributed capital	Contributed capital	13,150		12,778		Contributed capital	13,494		13,340
Retained earnings	Retained earnings	130,511		138,440		Retained earnings	137,100		135,329
Total shareholders’ equity	Total shareholders’ equity	144,084		151,641		Total shareholders’ equity	151,017		149,092
Total liabilities and shareholders’ equity	Total liabilities and shareholders’ equity	$	256,460	$	330,842	Total liabilities and shareholders’ equity	$	332,302	$	296,187

See Notes to Unaudited Condensed Consolidated Financial Statements.

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ADAMS RESOURCES & ENERGY, INC. AND SUBSIDIARIES

UNAUDITED CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS

(In thousands, except per share data)


		Three Months Ended				Nine Months Ended					Three Months Ended
		September 30,				September 30,					March 31,
		2020		2019		2020		2019			2021		2020
Revenues:	Revenues:									Revenues:
Marketing	Marketing	$	245,184	$	434,609	$	722,546	$	1,331,410	Marketing	$	304,023	$	337,221
Transportation	Transportation	21,720		15,698		50,121		48,498		Transportation	21,235		16,256
Pipeline and storage										Pipeline and storage	233		0
Total revenues	Total revenues	266,904		450,307		772,667		1,379,908		Total revenues	325,491		353,477

Costs and expenses:	Costs and expenses:									Costs and expenses:
Marketing	Marketing	237,479		429,507		721,798		1,313,822		Marketing	295,207		352,865
Transportation	Transportation	17,105		13,365		41,178		40,902		Transportation	17,460		13,185
Pipeline and storage										Pipeline and storage	544		0
General and administrative	General and administrative	1,405		2,739		7,030		8,005		General and administrative	3,376		2,894
Depreciation and amortization	Depreciation and amortization	4,859		4,393		13,610		12,266		Depreciation and amortization	5,053		4,473
Total costs and expenses	Total costs and expenses	260,848		450,004		783,616		1,374,995		Total costs and expenses	321,640		373,417

Operating (losses) earnings		6,056		303		(10,949)		4,913
Operating earnings (losses)										Operating earnings (losses)	3,851		(19,940)

Other income (expense):	Other income (expense):									Other income (expense):
Gain on dissolution of investment		0		0		0		573
Interest income		105		758		614		2,145
Interest and other income										Interest and other income	134		365
Interest expense	Interest expense	(70)		(242)		(288)		(424)		Interest expense	(220)		(150)
Total other income (expense), net		35		516		326		2,294
Total other (expense) income, net										Total other (expense) income, net	(86)		215

(Losses) Earnings before income taxes		6,091		819		(10,623)		7,207
Income tax benefit (provision)		(3,018)		(179)		5,772		(1,653)
Earnings (Losses) before income taxes										Earnings (Losses) before income taxes	3,765		(19,725)
Income tax (provision) benefit										Income tax (provision) benefit	(957)		8,298

Net (losses) earnings		$	3,073	$	640	$	(4,851)	$	5,554
Net earnings (losses)										Net earnings (losses)	$	2,808	$	(11,427)

(Losses) Earnings per share:
Basic net (losses) earnings per common share		$	0.72	$	0.15	$	(1.14)	$	1.31
Diluted net (losses) earnings per common share		$	0.72	$	0.15	$	(1.14)	$	1.31
Earnings (Losses) per share:										Earnings (Losses) per share:
Basic net earnings (losses) per common share										Basic net earnings (losses) per common share	$	0.66	$	(2.70)
Diluted net earnings (losses) per common share										Diluted net earnings (losses) per common share	$	0.66	$	(2.69)

Dividends per common share	Dividends per common share	$	0.24	$	0.24	$	0.72	$	0.70	Dividends per common share	$	0.24	$	0.24

See Notes to Unaudited Condensed Consolidated Financial Statements.

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ADAMS RESOURCES & ENERGY, INC. AND SUBSIDIARIES

UNAUDITED CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS

(In thousands)


		Nine Months Ended					Three Months Ended
		September 30,					March 31,
		2020		2019			2021		2020
Operating activities:	Operating activities:					Operating activities:
Net (losses) earnings		$	(4,851)	$	5,554
Adjustments to reconcile net (losses) earnings to net cash
Net earnings (losses)						Net earnings (losses)	$	2,808	$	(11,427)
Adjustments to reconcile net earnings (losses) to net cash						Adjustments to reconcile net earnings (losses) to net cash
provided by (used in) operating activities:	provided by (used in) operating activities:					provided by (used in) operating activities:
Depreciation and amortization	Depreciation and amortization	13,610		12,266		Depreciation and amortization	5,053		4,473
Gains on sales of property	Gains on sales of property	(985)		(1,386)		Gains on sales of property	(83)		(140)
Provision for doubtful accounts	Provision for doubtful accounts	(27)		(36)		Provision for doubtful accounts	(1)		(24)
Stock-based compensation expense	Stock-based compensation expense	453		352		Stock-based compensation expense	185		134
Deferred income taxes	Deferred income taxes	(1,503)		1,493		Deferred income taxes	(829)		(2,689)
Net change in fair value contracts	Net change in fair value contracts	(3)		20		Net change in fair value contracts	(21)		(19)
Gain on dissolution of AREC		0		(573)
Changes in assets and liabilities:	Changes in assets and liabilities:					Changes in assets and liabilities:
Accounts receivable	Accounts receivable	(93)		8,520		Accounts receivable	(11,268)		41,617
Accounts receivable/payable, affiliates	Accounts receivable/payable, affiliates	153		(23)		Accounts receivable/payable, affiliates	(13)		1
Inventories	Inventories	10,465		(2,121)		Inventories	(9,887)		16,386
Income tax receivable	Income tax receivable	(1,782)		(135)		Income tax receivable	1,650		(5,530)
Prepayments and other current assets	Prepayments and other current assets	142		166		Prepayments and other current assets	(657)		253
Accounts payable	Accounts payable	(70,082)		13,613		Accounts payable	36,127		(68,384)
Accrued liabilities	Accrued liabilities	4,396		4,561		Accrued liabilities	51		1,506
Other	Other	17		871		Other	(114)		(3)
Net cash provided by (used in) operating activities	Net cash provided by (used in) operating activities	(50,090)		43,142		Net cash provided by (used in) operating activities	23,001		(23,846)

Investing activities:	Investing activities:					Investing activities:
Property and equipment additions	Property and equipment additions	(3,589)		(25,425)		Property and equipment additions	(170)		(2,212)
Asset acquisition		(9,163)		(5,624)

Proceeds from property sales	Proceeds from property sales	2,282		2,853		Proceeds from property sales	1,005		502
Proceeds from dissolution of AREC		0		998
Insurance and state collateral (deposits) refunds	Insurance and state collateral (deposits) refunds	1,127		750		Insurance and state collateral (deposits) refunds	0		1,128
Net cash used in investing activities		(9,343)		(26,448)
Net cash provided by (used in) investing activities						Net cash provided by (used in) investing activities	835		(582)

Financing activities:	Financing activities:					Financing activities:
Principal repayments of finance lease obligations	Principal repayments of finance lease obligations	(1,677)		(1,171)		Principal repayments of finance lease obligations	(1,014)		(532)
Payment for financed portion of VEX acquisition						Payment for financed portion of VEX acquisition	(2,500)		0
Payment of contingent consideration liability	Payment of contingent consideration liability	(111)		0		Payment of contingent consideration liability	0		(54)
Dividends paid on common stock	Dividends paid on common stock	(3,063)		(2,960)		Dividends paid on common stock	(1,025)		(1,016)
Net cash used in financing activities	Net cash used in financing activities	(4,851)		(4,131)		Net cash used in financing activities	(4,539)		(1,602)

(Decrease) Increase in cash and cash equivalents, including restricted cash		(64,284)		12,563
Increase (Decrease) in cash and cash equivalents, including restricted cash						Increase (Decrease) in cash and cash equivalents, including restricted cash	19,297		(26,030)
Cash and cash equivalents, including restricted cash, at beginning of period	Cash and cash equivalents, including restricted cash, at beginning of period	122,255		117,066		Cash and cash equivalents, including restricted cash, at beginning of period	52,065		122,255
Cash and cash equivalents, including restricted cash, at end of period	Cash and cash equivalents, including restricted cash, at end of period	$	57,971	$	129,629	Cash and cash equivalents, including restricted cash, at end of period	$	71,362	$	96,225

See Notes to Unaudited Condensed Consolidated Financial Statements.

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ADAMS RESOURCES & ENERGY, INC. AND SUBSIDIARIES

UNAUDITED CONDENSED CONSOLIDATED STATEMENTS OF SHAREHOLDERS’ EQUITY

(In thousands, except per share data)

Total
Common Contributed Retained Shareholders’
Stock Capital Earnings Equity
Balance, January 1, 2020 $ 423 $ 12,778 $ 138,440 $ 151,641
Net losses — — (11,427) (11,427)
Stock-based compensation expense — 134 — 134
Dividends declared:
Common stock, $0.24/share — — (1,016) (1,016)
Awards under LTIP, $0.24/share — — (6) (6)
Balance, March 31, 2020 423 12,912 125,991 139,326
Net earnings — — 3,503 3,503
Stock-based compensation expense — 170 — 170
Cancellation of shares withheld to cover
taxes upon vesting of restricted awards — (81) — (81)
Dividends declared:
Common stock, $0.24/share — — (1,018) (1,018)
Awards under LTIP, $0.24/share — — (10) (10)
Balance, June 30, 2020 423 13,001 128,466 141,890
Net earnings — — 3,073 3,073
Stock-based compensation expense — 149 — 149
Dividends declared:
Common stock, $0.24/share — — (1,018) (1,018)
Awards under LTIP, $0.24/share — — (10) (10)
Balance, September 30, 2020 $ 423 $ 13,150 $ 130,511 $ 144,084

~~See Notes to Unaudited Condensed Consolidated Financial Statements.~~


							Total
	Common		Contributed		Retained		Shareholders’
	Stock		Capital		Earnings		Equity

Balance, January 1, 2021	$	423	$	13,340	$	135,329	$	149,092
Net earnings	—		—		2,808		2,808
Stock-based compensation expense	—		185		—		185
Cancellation of shares withheld to
cover taxes upon vesting	—		(31)		—		(31)
Dividends declared:
Common stock, $0.24/share	—		—		(1,019)		(1,019)
Awards under LTIP, $0.24/share	—		—		(18)		(18)
Balance, March 31, 2021	$	423	$	13,494	$	137,100	$	151,017

~~Table of Contents~~

~~ADAMS RESOURCES & ENERGY, INC. AND SUBSIDIARIES~~

~~UNAUDITED CONDENSED CONSOLIDATED STATEMENTS OF SHAREHOLDERS’ EQUITY~~

~~(In thousands, except per share data)~~

Total
Common Contributed Retained Shareholders’
Stock Capital Earnings Equity
Balance, January 1, 2019 $ 422 $ 11,948 $ 134,228 $ 146,598
Net earnings — — 4,908 4,908
Stock-based compensation expense — 123 — 123
Dividends declared:
Common stock, $0.22/share — — (928) (928)
Awards under LTIP, $0.22/share — — (2) (2)
Balance, March 31, 2019 422 12,071 138,206 150,699
Net earnings — — 6 6
Stock-based compensation expense — 74 — 74
Issuance of common shares for acquisition 1 391 — 392
Cancellation of shares withheld to cover
taxes upon vesting of restricted awards — (39) — (39)
Dividends declared:
Common stock, $0.24/share — — (1,016) (1,016)
Awards under LTIP, $0.24/share — — (8) (8)
Balance, June 30, 2019 423 12,497 137,188 150,108
Net earnings — — 640 640
Stock-based compensation expense — 155 — 155
Dividends declared:
Common stock, $0.24/share — — (1,016) (1,016)
Awards under LTIP, $0.24/share — — (6) (6)
Balance, September 30, 2019 $ 423 $ 12,652 $ 136,806 $ 149,881


							Total
	Common		Contributed		Retained		Shareholders’
	Stock		Capital		Earnings		Equity

Balance, January 1, 2020	$	423	$	12,778	$	138,440	$	151,641
Net losses	—		—		(11,427)		(11,427)
Stock-based compensation expense	—		134		—		134
Dividends declared:
Common stock, $0.24/share	—		—		(1,016)		(1,016)
Awards under LTIP, $0.24/share	—		—		(6)		(6)
Balance, March 31, 2020	$	423	$	12,912	$	125,991	$	139,326

See Notes to Unaudited Condensed Consolidated Financial Statements.

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ADAMS RESOURCES & ENERGY, INC. AND SUBSIDIARIES

NOTES TO UNAUDITED CONDENSED CONSOLIDATED FINANCIAL STATEMENTS

Note 1. Organization and Basis of Presentation

Organization

Adams Resources & Energy, Inc. is a publicly traded Delaware corporation organized in 1973, the common shares of which are listed on the NYSE American LLC under the ticker symbol “AE”. Through our subsidiaries, we are primarily engaged in ~~the business of~~ crude oil marketing, transportation, terminalling and storage in various crude oil and natural gas basins in the lower 48 states of the United States (“U.S.”). We also conduct tank truck transportation of liquid chemicals, pressurized gases, asphalt and dry bulk primarily in the lower 48 states of the U.S. with deliveries into Canada and Mexico, and with fifteen terminals ~~in the Gulf Coast region of~~across the U.S. Unless the context requires otherwise, references to “we,” “us,” “our” or “Company” are intended to mean the business and operations of Adams Resources & Energy, Inc. and its consolidated subsidiaries.

We operate and report in 23 business segments: (i) crude oil marketing, transportation and ~~storage, and~~storage; (ii) tank truck transportation of liquid chemicals, pressurized gases, asphalt and dry ~~bulk.~~bulk; and (iii) pipeline transportation, terminalling and storage of crude oil. See Note 87 for further information regarding our business segments.

Basis of Presentation

Our results of operations for the three ~~and nine~~ months ended ~~September 30, 2020~~March 31, 2021 are not necessarily indicative of results expected for the full year of ~~2020.~~2021. In the opinion of management, the accompanying unaudited condensed consolidated financial statements reflect all adjustments consisting of normal recurring accruals necessary for fair presentation. The condensed consolidated financial statements and the accompanying notes are prepared in accordance with U.S. generally accepted accounting principles (“GAAP”) for interim financial statements and the rules of the U.S. Securities and Exchange Commission (“SEC”). Certain information and footnote disclosures required by GAAP for complete annual financial statements have been omitted and, therefore, these interim financial statements should be read in conjunction with our audited consolidated financial statements included in our Annual Report on Form 10-K for the year ended December 31, ~~2019~~2020 (the ~~“2019~~“2020 Form 10-K”) filed with the SEC on March ~~6, 2020.~~5, 2021. All significant intercompany transactions and balances have been eliminated in consolidation.

Use of Estimates

The preparation of our financial statements in conformity with GAAP requires management to use estimates and assumptions that affect the reported amount of assets and liabilities and disclosure of contingent assets and liabilities at the date of the financial statements and the reported amounts of revenues and expenses during the reporting period. We base our estimates and judgments on historical experience and on various other 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, these estimates may change as new events occur, as more experience is acquired, as additional information is obtained and as the operating environment changes. While we believe the estimates and assumptions used in the preparation of these condensed consolidated financial statements are appropriate, actual results could differ from those estimates.

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ADAMS RESOURCES & ENERGY, INC. AND SUBSIDIARIES

NOTES TO UNAUDITED CONDENSED CONSOLIDATED FINANCIAL STATEMENTS

Note 2. Summary of Significant Accounting Policies

Cash, Cash Equivalents and Restricted Cash

~~Restricted~~At March 31, 2021 and December 31, 2020, $5.1 million and $5.1 million, respectively, of the restricted cash ~~represents an amount~~balance represented amounts held in a segregated bank account by Wells Fargo as collateral for outstanding letters of credit. At March 31, 2021 and December 31, 2020, $1.5 million and $1.5 million, respectively, of the restricted cash balance related to the initial capitalization of our captive insurance company formed in late 2020 and $5.7 million and $6.1 million, respectively, represented the amount paid to our captive insurance company for insurance premiums.

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~~ADAMS RESOURCES & ENERGY, INC. AND SUBSIDIARIES~~

~~NOTES TO UNAUDITED CONDENSED CONSOLIDATED FINANCIAL STATEMENTS~~

The following table provides a reconciliation of cash and cash equivalents and restricted cash as reported in the unaudited condensed consolidated balance sheets that totals to the amounts shown in the unaudited condensed consolidated statements of cash flows at the dates indicated (in thousands):


		September 30,		December 31,			March 31,		December 31,
		2020		2019			2021		2020

Cash and cash equivalents	Cash and cash equivalents	$	53,106	$	112,994	Cash and cash equivalents	$	58,985	$	39,293
Restricted cash	Restricted cash	4,865		9,261		Restricted cash	12,377		12,772
Total cash, cash equivalents and restricted cash shown in the	Total cash, cash equivalents and restricted cash shown in the					Total cash, cash equivalents and restricted cash shown in the
unaudited condensed consolidated statements of cash flows	unaudited condensed consolidated statements of cash flows	$	57,971	$	122,255	unaudited condensed consolidated statements of cash flows	$	71,362	$	52,065

Common Shares Outstanding

The following table reconciles our outstanding common stock for the periods indicated:


						Common
						shares

Balance, January 1, ~~2020~~2021						~~4,235,533~~4,243,716
Vesting of restricted stock unit awards						~~217~~
~~Balance, March 31, 2020~~						~~4,235,750~~
~~Vesting of restricted stock unit awards~~						~~8,641~~8,544
Shares withheld to cover taxes upon vesting of restricted stock unit awards						~~(2,107)~~(1,245)
Balance, ~~June 30, 2020~~March 31, 2021						~~4,242,284~~4,251,015
~~No activity~~						—
~~Balance, September 30, 2020~~						~~4,242,284~~

Earnings Per Share

Basic earnings (losses) per share is computed by dividing our net earnings (losses) by the weighted average number of shares of common stock outstanding during the period. Diluted earnings (losses) per share is computed by giving effect to all potential shares of common stock outstanding, including our stock related to unvested restricted stock unit awards. Unvested restricted stock unit awards granted under the Adams Resources & Energy, Inc. 2018 Long-Term Incentive Plan (“2018 LTIP”) are not considered to be participating securities as the holders of these shares do not have non-forfeitable dividend rights in the event of our declaration of a dividend for common shares (see Note 11 for further discussion).

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NOTES TO UNAUDITED CONDENSED CONSOLIDATED FINANCIAL STATEMENTS

A reconciliation of the calculation of basic and diluted earnings (losses) ~~earnings~~ per share was as follows for the periods indicated (in thousands, except per share data):

Three Months Ended Nine Months Ended
September 30, September 30,
2020 2019 2020 2019
Earnings (losses) per share — numerator:
Net (losses) earnings $ 3,073 $ 640 $ (4,851) $ 5,554
Denominator:
Basic weighted average number of shares
outstanding 4,242 4,234 4,239 4,226
Basic (losses) earnings per share $ 0.72 $ 0.15 $ (1.14) $ 1.31
Diluted (losses) earnings per share:
Diluted weighted average number of shares
outstanding:
Common shares 4,242 4,234 4,239 4,226
Restricted stock unit awards (1)
9 3 0 4
Performance share unit awards (1) (2)
2 1 0 0
Total diluted shares 4,253 4,238 4,239 4,230
Diluted (losses) earnings per share $ 0.72 $ 0.15 $ (1.14) $ 1.31


	Three Months Ended
	March 31,
	2021		2020
Earnings (losses) per share — numerator:
Net earnings (losses)	$	2,808	$	(11,427)

Denominator:
Basic weighted average number of shares outstanding	4,246		4,236

Basic earnings (losses) per share	$	0.66	$	(2.70)

Diluted earnings (losses) per share:
Diluted weighted average number of shares outstanding:
Common shares	4,246		4,236
Restricted stock unit awards	18		12
Performance share unit awards (1)	7		2
Total diluted shares	4,271		4,250

Diluted earnings (losses) per share	$	0.66	$	(2.69)

_______________

(1)~~For the nine months ended September 30, 2020, the effect of the restricted stock unit awards and the performance share awards on losses per share is anti-dilutive.~~

~~(2)~~The dilutive effect of performance share awards are included in the calculation of diluted earnings per share when the performance share award performance conditions have been achieved. ~~For the nine months ended September 30, 2019, the effect of the performance share awards on earnings per share is anti-dilutive.~~

Fair Value Measurements

The carrying amounts reported in the unaudited condensed consolidated balance sheets for cash and cash equivalents, accounts receivable and accounts payable approximates fair value because of the immediate or short-term maturity of these financial instruments. Marketable securities are recorded at fair value based on market quotations from actively traded liquid markets.

A three-tier hierarchy has been established 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.

~~See Note 6 for a discussion of the Level 3 inputs used in the determination of the fair value of the intangible assets acquired in an asset acquisition that occurred in June 2020.~~

Fair value contracts consist of derivative financial instruments and are recorded as either an asset or liability measured at its fair value. Changes in fair value are recognized immediately in earnings unless the derivatives qualify for, and we elect, cash flow hedge accounting. We had 0 contracts designated for hedge accounting during any current reporting periods (see Note 10 for further information).

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Income Taxes

Income taxes are accounted for using the asset and liability method. Under this approach, deferred tax assets and liabilities are recognized based on anticipated future tax consequences attributable to differences between financial statement carrying amounts of these items and their respective tax basis.

On March 27, 2020, the Coronavirus Aid, Relief, and Economic Security Act (“CARES Act”) was enacted and signed into law in response to the COVID-19 pandemic. The CARES Act, among other things, permits net operating losses (“NOL”) incurred in tax years 2018, 2019 and 2020 to offset 100 percent of taxable income and be carried back to each of the five preceding taxable years to generate a refund of previously paid income taxes.

We ~~are continuing to evaluate the full impact of the CARES Act. However, we~~ have determined that the NOL carryback provision in the CARES Act would result in a cash benefit to us for the fiscal years 2018 and 2019. We carried back our NOL for fiscal year 2018 to 2013, and in June 2020, we received a cash refund of approximately $2.7 million. We have an income tax ~~receivable~~receivables at ~~September 30, 2020~~March 31, 2021 of approximately $3.7 million for the benefit of carrying back the NOL for the fiscal year 2019 to ~~2014. We are forecasting an~~2014 and approximately $6.8 million for the benefit of carrying back the NOL for the fiscal year 2020 to 2015 and ~~expect to carry it back to previous years. As a result, we have also included the 2020 provisional amounts in income tax receivable at September 30, 2020.~~2016. As we are carrying the losses back to years beginning before January 1, 2018, the receivables were recorded at the previous 35 percent federal tax rate rather than the current statutory rate of 21 percent.

Inventory

Inventory consists of crude oil held in storage tanks and at third-party pipelines as part of our crude oil marketing and pipeline and storage operations. Crude oil inventory is carried at the lower of cost or net realizable value. At the end of each reporting period, we assess the carrying value of our inventory and make adjustments necessary to reduce the carrying value to the applicable net realizable value. Any resulting adjustments are a component of marketing costs and expenses or pipeline and storage expenses on our consolidated statements of operations. During the ~~nine~~three months ended ~~September 30,~~March 31, 2020, we recorded a ~~write-down~~charge of ~~$18.2~~$24.2 million related to the write-down of our crude oil inventory in our crude oil marketing segment due to ~~significant~~ declines in ~~prices in 2020.~~prices.

Property and Equipment

Property and equipment is recorded at cost. Expenditures for additions, improvements and other enhancements to property and equipment are capitalized, and minor replacements, maintenance and repairs that do not extend asset life or add value are charged to expense as incurred. When property and equipment assets are retired or otherwise disposed of, the related cost and accumulated depreciation is removed from the accounts and any resulting gain or loss is included in results of operations in operating costs and expenses for the respective period. Property and equipment, except for land, is depreciated using the straight-line method over the estimated average useful lives ranging from two to thirty-nine years.

We review our long-lived assets for impairment whenever there is evidence that the carrying value of these assets may not be recoverable. Any impairment recognized is permanent and may not be restored. Property and equipment is reviewed at the lowest level of identifiable cash flows. For property and equipment requiring impairment, the fair value is estimated based on an internal discounted cash flow model of future cash flows.

See Note 5 for additional information regarding our property and equipment.

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~~Recent Accounting Pronouncements~~

~~In December 2019, the Financial Accounting Standards Board (“FASB”) issued Accounting Standards Update (“ASU”) No. 2019-12,~~ ~~Income Taxes (Topic 740): Simplifying the Accounting for Income Taxes~~ (“ASU 2019-12”). This new standard eliminates certain exceptions in Accounting Standards Codification (“ASC”) 740 related to the approach for intraperiod tax allocation, the methodology for calculating income taxes in an interim period, and the recognition of deferred tax liabilities for outside basis differences. It also clarifies and simplifies other aspects of the accounting for income taxes. ASU 2019-12 is effective for fiscal years, and interim periods within those years, beginning after December 15, 2020, with early adoption permitted in any interim period within that year.

We elected to early adopt this standard during the period ended June 30, 2020, and most amendments within the standard were required to be applied on a prospective basis as of January 1, 2020, while certain amendments were applied on a retrospective or modified retrospective basis. The most significant impact to us is the removal of a limit on the tax benefit recognized on pre-tax losses in interim periods, which was required to be applied on a prospective basis. As a result of our adoption of ASU 2019-12, we calculated our quarterly income tax benefits based on ordinary losses incurred during the first, second and third quarters of 2020, no longer limiting the computed benefit if it exceeds the amount of benefit that would be recognized if the year-to-date ordinary loss were the anticipated ordinary loss for the full fiscal year.

Stock-Based Compensation

We measure all share-based ~~payments,~~payment awards, including the issuance of restricted stock ~~units~~unit awards and performance share ~~units~~unit awards to employees and board members, using a fair-value based method. The cost of services received from employees and non-employee board members in exchange for awards of equity instruments is recognized in the consolidated statements of operations based on the estimated fair value of those awards on the grant date and is amortized on a straight-line basis over the requisite service period. The fair value of restricted stock unit awards and performance share unit awards is based on the closing price of our common stock on the grant date. We account for forfeitures as they occur. See Note 11 for additional information regarding our 2018 LTIP.

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~~NOTES TO UNAUDITED CONDENSED CONSOLIDATED FINANCIAL STATEMENTS~~

Note 3. Revenue Recognition

Revenue Disaggregation

The following table disaggregates our revenue by segment and by major source for the periods indicated (in thousands):


		Reporting Segments							Reporting Segments
		Marketing		Transportation		Total			Marketing		Transportation		Pipeline and storage		Total

Three Months Ended September 30, 2020
Three Months Ended March 31, 2021								Three Months Ended March 31, 2021
Revenues from contracts with customers	Revenues from contracts with customers	$	242,267	$	21,720	$	263,987	Revenues from contracts with customers	$	297,475	$	21,235	$	233	$	318,943
Other (1)	Other (1)	2,917		0		2,917		Other (1)	6,548		0		0		6,548
Total revenues	Total revenues	$	245,184	$	21,720	$	266,904	Total revenues	$	304,023	$	21,235	$	233	$	325,491

Timing of revenue recognition:	Timing of revenue recognition:							Timing of revenue recognition:
Goods transferred at a point in time	Goods transferred at a point in time	$	242,267	$	0	$	242,267	Goods transferred at a point in time	$	297,475	$	0	$	0	$	297,475
Services transferred over time	Services transferred over time	0		21,720		21,720		Services transferred over time	0		21,235		233		21,468
Total revenues from contracts with customers	Total revenues from contracts with customers	$	242,267	$	21,720	$	263,987	Total revenues from contracts with customers	$	297,475	$	21,235	$	233	$	318,943

Three Months Ended September 30, 2019
Three Months Ended March 31, 2020								Three Months Ended March 31, 2020
Revenues from contracts with customers	Revenues from contracts with customers	$	396,001	$	15,698	$	411,699	Revenues from contracts with customers	$	319,717	$	16,256	$	0	$	335,973
Other (1)	Other (1)	38,608		0		38,608		Other (1)	17,504		0		0		17,504
Total revenues	Total revenues	$	434,609	$	15,698	$	450,307	Total revenues	$	337,221	$	16,256	$	0	$	353,477

Timing of revenue recognition:	Timing of revenue recognition:							Timing of revenue recognition:
Goods transferred at a point in time	Goods transferred at a point in time	$	396,001	$	0	$	396,001	Goods transferred at a point in time	$	319,717	$	0	$	0	$	319,717
Services transferred over time	Services transferred over time	0		15,698		15,698		Services transferred over time	0		16,256		0		16,256
Total revenues from contracts with customers	Total revenues from contracts with customers	$	396,001	$	15,698	$	411,699	Total revenues from contracts with customers	$	319,717	$	16,256	$	0	$	335,973

Nine Months Ended September 30, 2020
Revenues from contracts with customers		$	693,513	$	50,121	$	743,634
Other (1)		29,033		0		29,033
Total revenues		$	722,546	$	50,121	$	772,667

Timing of revenue recognition:
Goods transferred at a point in time		$	693,513	$	0	$	693,513
Services transferred over time		0		50,121		50,121
Total revenues from contracts with customers		$	693,513	$	50,121	$	743,634

Nine Months Ended September 30, 2019
Revenues from contracts with customers		$	1,147,139	$	48,498	$	1,195,637
Other (1)		184,271		0		184,271
Total revenues		$	1,331,410	$	48,498	$	1,379,908

Timing of revenue recognition:
Goods transferred at a point in time		$	1,147,139	$	0	$	1,147,139
Services transferred over time		0		48,498		48,498
Total revenues from contracts with customers		$	1,147,139	$	48,498	$	1,195,637

_______________

(1)Other crude oil marketing revenues are recognized under ASC 815, Derivatives and Hedging, and ASC 845, Nonmonetary Transactions – Purchases and Sales of Inventory with the Same Counterparty.

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~~NOTES TO UNAUDITED CONDENSED CONSOLIDATED FINANCIAL STATEMENTS~~

Other Crude Oil Marketing Revenue

Certain of the commodity purchase and sale contracts utilized by our crude oil marketing business qualify as derivative instruments with certain specifically identified contracts also designated as trading activity. From the time of contract origination, these contracts are marked-to-market and recorded on a net revenue basis in the accompanying consolidated financial statements.

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NOTES TO UNAUDITED CONDENSED CONSOLIDATED FINANCIAL STATEMENTS

Certain of our crude oil contracts may be with a single counterparty to provide for similar quantities of crude oil to be bought and sold at different locations. These contracts are entered into for a variety of reasons, including effecting the transportation of the commodity, to minimize credit exposure, and/or to meet the competitive demands of the customer. These buy/sell arrangements are reflected on a net revenue basis in the accompanying consolidated financial statements.

Reporting these crude oil contracts on a gross revenue basis would increase our reported revenues as follows for the periods indicated (in thousands):

Three Months Ended Nine Months Ended
September 30, September 30,
2020 2019 2020 2019
Revenue gross-up $ 97,566 $ 193,440 $ 315,049 $ 658,606


	Three Months Ended
	March 31,
	2021		2020

Revenue gross-up	$	134,866	$	157,439

Note 4. Prepayments and Other Current Assets

The components of prepayments and other current assets were as follows at the dates indicated (in thousands):


		September 30,		December 31,			March 31,		December 31,
		2020		2019			2021		2020

Insurance premiums	Insurance premiums	$	153	$	473	Insurance premiums	$	793	$	690
Vendor prepayment						Vendor prepayment	1,690		1,085
Rents, licenses and other	Rents, licenses and other	1,264		1,086		Rents, licenses and other	1,138		1,189
Total prepayments and other current assets	Total prepayments and other current assets	$	1,417	$	1,559	Total prepayments and other current assets	$	3,621	$	2,964

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Note 5. Property and Equipment

The historical costs of our property and equipment and related accumulated depreciation and amortization balances were as follows at the dates indicated (in thousands):


		Estimated						Estimated
		Useful Life	September 30,		December 31,			Useful Life	March 31,		December 31,
		in Years	2020		2019			in Years	2021		2020

Tractors and trailers ~~(1)~~	Tractors and trailers ~~(1)~~	5 – 6	$	115,809	$	115,693	Tractors and trailers ~~(1)~~	5 – 6	$	101,535	$	101,813
Field equipment ~~(2)~~	Field equipment ~~(2)~~	2 – 5	25,152		25,094		Field equipment ~~(2)~~	2 – 5	22,318		22,139
Finance lease ROU assets (1)							Finance lease ROU assets (1)	3 – 6	22,357		20,266
Pipeline and related facilities							Pipeline and related facilities	20 – 25	21,275		21,265
Linefill and base gas (2)							Linefill and base gas (2)	N/A	3,333		3,333
Buildings	Buildings	5 – 39	14,939		16,055		Buildings	5 – 39	14,977		14,977
Office equipment	Office equipment	2 – 5	1,893		1,951		Office equipment	2 – 5	1,905		1,893
Land	Land		1,790		1,790		Land	N/A	1,790		1,790
Construction in progress	Construction in progress		606		3,661		Construction in progress	N/A	716		1,626
Total	Total		160,189		164,244		Total		190,206		189,102
Less accumulated depreciation			(95,720)		(95,198)
Less accumulated depreciation and amortization							Less accumulated depreciation and amortization		(99,563)		(94,968)
Property and equipment, net	Property and equipment, net		$	64,469	$	69,046	Property and equipment, net		$	90,643	$	94,134

_______________

(1)~~Amounts include~~Our finance lease right-of-use (“ROU)” assets arise from leasing arrangements for the right to use various classes of underlying assets including tractors, ~~in our crude oil marketing segment~~trailers, a tank storage and ~~trailers in our transportation segment held under finance leases. At September 30, 2020~~throughput arrangement and ~~December 31, 2019, gross property and~~office equipment associated with these assets held under finance leases were $7.2 million and $5.5 million, respectively. Accumulated amortization associated with these assets held under these finance leases were $2.6 million and $1.7 million at September 30, 2020 and December 31, 2019, respectively (see Note 13 for further information). Accumulated amortization of the assets presented as “Finance lease ROU assets” was $6.2 million and $5.0 million at March 31, 2021 and December 31, 2020, respectively.

(2)~~Amounts include a tank storage~~Linefill and ~~throughput arrangement in our~~base gas represents crude oil ~~marketing segment held under a finance lease. At September 30, 2020~~in the VEX pipeline and ~~December 31, 2019, gross property~~storage tanks we own, and equipment associated with these assets held under a finance lease were $3.3 million and $3.3 million, respectively. Accumulated amortization associated with these assets held under a finance lease was $1.6 million and $0.7 millionthe crude oil is recorded at ~~September 30, 2020 and December 31, 2019, respectively (see Note 13 for further information).~~historical cost.

Components of depreciation and amortization expense were as follows for the periods indicated (in thousands):

Three Months Ended Nine Months Ended
September 30, September 30,
2020 2019 2020 2019
Depreciation and amortization, excluding
amounts under finance leases $ 4,237 $ 3,840 $ 11,882 $ 11,012
Amortization of property and equipment
under finance leases 622 553 1,728 1,254
Total depreciation and amortization $ 4,859 $ 4,393 $ 13,610 $ 12,266


	Three Months Ended
	March 31,
	2021		2020

Depreciation and amortization, excluding amounts under finance leases	$	3,913	$	3,920
Amortization of property and equipment under finance leases	1,140		553
Total depreciation and amortization	$	5,053	$	4,473

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Note 6. ~~Acquisition~~

On May 17, 2020, we entered into a purchase and sale agreement with Comcar Industries, Inc. (“Comcar”), a bulk carrier trucking company, for the purchase of substantially all of the transportation assets of Comcar’s subsidiary, CTL Transportation, LLC (“CTL”). CTL provides delivery services to customers in the chemical industry, with operations in 9 locations in the southeastern United States. On June 26, 2020, we closed on the asset acquisition for approximately $9.0 million in cash. This acquisition added approximately 163 tractors and 328 trailers to our existing transportation fleet, and these assets were included in our transportation segment. This acquisition added new customers, new market areas and new product lines to our transportation segment portfolio. As a result of the acquisition, we added services to new and existing customers in 6 new market areas, including new terminals in Louisiana, Missouri, Ohio, Georgia and Florida.

We also incurred approximately $0.1 million of acquisition costs in connection with this acquisition, which has been included in the allocation of the total purchase price of $9.2 million to the assets acquired.

~~The following table summarizes the estimated fair value of the assets acquired at the acquisition date (in thousands):~~


~~Property and equipment — tractors and trailers~~	$	~~5,901~~
~~Materials and supplies~~	87
~~Intangible assets — customer relationships~~	~~3,175~~
~~Total purchase price~~	$	~~9,163~~

The estimated fair value of the acquired property and equipment was determined using the estimated market value of each type of asset. The estimated fair value of the acquired customer relationship intangible assets was determined using an income approach, specifically a discounted cash flow analysis. The income approach estimates the future benefits of the customer relationships and deducts the expenses incurred in servicing the relationships and the contributions from the other business assets to derive the future net benefits of these assets. The future net benefits are discounted back to present value using the appropriate discount rate, which results in the value of the customer relationships.

A customer relationship intangible asset is the relationship between CTL and various customers to whom we did not have a previous relationship. The customer relationships we acquired in this transaction provide us with access to those customers to whom we did not have a previous relationship and allows us to enter product markets in which we have not previously participated. Because of the highly competitive and fragmented transportation market, we believe access to these customers will provide us with an entry into new market areas.

The discounted cash flow analysis used to estimate the fair value of the CTL customer relationships relied on Level 3 fair value inputs. Level 3 fair values are based on unobservable inputs. Unobservable inputs are used to measure fair value to the extent that observable inputs are not available, thereby allowing for situations in which there is little, if any, market activity for the asset at the measurement date. With respect to the CTL customer relationships, the Level 3 inputs included the rate of retention of the current customers of CTL as of the valuation date, our transportation segment’s historical customer retention rate and projected future revenues associated with the customers. The CTL customers expected to remain with us after the transaction were included in the valuation of the customer relationships. We are amortizing the customer relationship intangible assets over a period of seven years, using a modified straight-line approach.

~~For the period from acquisition to September 30, 2020, we recorded $0.1 million of amortization expense related to these intangible assets.~~

~~In connection with the acquisition, we entered into a finance lease agreement for an additional 40 trailers with a~~ ~~six~~ ~~year term. See Note 13 for further information regarding finance leases.~~

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~~NOTES TO UNAUDITED CONDENSED CONSOLIDATED FINANCIAL STATEMENTS~~

~~Note 7. Cash Deposits and~~ Other Assets

Components of ~~cash deposits and~~ other assets were as follows at the dates indicated (in thousands):


		September 30,		December 31,			March 31,		December 31,
		2020		2019			2021		2020

Amounts associated with liability insurance program:	Amounts associated with liability insurance program:					Amounts associated with liability insurance program:
Insurance collateral deposits	Insurance collateral deposits	$	675	$	1,233	Insurance collateral deposits	$	714	$	714
Excess loss fund	Excess loss fund	521		943		Excess loss fund	617		617
Accumulated interest income	Accumulated interest income	425		609		Accumulated interest income	459		449
Other amounts:	Other amounts:					Other amounts:
State collateral deposits	State collateral deposits	65		37		State collateral deposits	42		31
Materials and supplies	Materials and supplies	507		477		Materials and supplies	460		488

Total cash deposits and other assets		$	2,193	$	3,299
Other						Other	190		84
Total other assets						Total other assets	$	2,482	$	2,383

We have established certain deposits to support participation in our liability insurance program and remittance of state crude oil severance taxes and other state collateral deposits. Insurance collateral deposits are held by the insurance company to cover past or potential open claims based upon a percentage of the maximum assessment under our insurance policies. Insurance collateral deposits are invested at the discretion of our insurance carrier. Excess amounts in our loss fund represent premium payments in excess of claims incurred to date that we may be entitled to recover through settlement or commutation as claim periods are closed. Interest income is earned on the majority of amounts held by the insurance companies and will be paid to us upon settlement of policy years.

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Note 8.7. Segment Reporting

Financial information by reporting segment was as follows for the periods indicated (in thousands):

Reporting Segments
Marketing Transportation Other Total
Three Months Ended September 30, 2020
Revenues $ 245,184 $ 21,720 $ 0 $ 266,904
Segment operating earnings (1)
5,869 1,592 0 7,461
Depreciation and amortization 1,836 3,023 0 4,859
Property and equipment additions (2) (3)
684 (32) 52 704
Three Months Ended September 30, 2019
Revenues $ 434,609 $ 15,698 $ 0 $ 450,307
Segment operating earnings (1)
2,888 154 0 3,042
Depreciation and amortization 2,214 2,179 0 4,393
Property and equipment additions (3)
3,894 8,410 0 12,304
Nine Months Ended September 30, 2020
Revenues $ 722,546 $ 50,121 $ 0 $ 772,667
Segment operating (losses) earnings (1)
(4,952) 1,033 0 (3,919)
Depreciation and amortization 5,700 7,910 0 13,610
Property and equipment additions (2) (3)
2,734 332 523 3,589
Nine Months Ended September 30, 2019
Revenues $ 1,331,410 $ 48,498 $ 0 $ 1,379,908
Segment operating earnings (1)
10,948 1,970 0 12,918
Depreciation and amortization 6,640 5,626 0 12,266
Property and equipment additions (3)
6,896 18,529 0 25,425


	Reporting Segments
	Marketing		Transportation		Pipeline and storage		Other		Total

Three Months Ended March 31, 2021
Segment revenues (1)	$	304,023	$	21,268	$	419	$	0	$	325,710
Less: Intersegment revenues (1)	0		(33)		(186)		0		(219)
Revenues	$	304,023	$	21,235	$	233	$	0	$	325,491

Segment operating earnings (losses) (2)	7,018		774		(565)		0		7,227
Depreciation and amortization	1,798		3,001		254		0		5,053
Property and equipment additions (3)(4)(5)	210		(58)		10		8		170

Three Months Ended March 31, 2020
Segment revenues	$	337,221	$	16,256	$	0	$	0	$	353,477
Less: Intersegment revenues	0		0		0		0		0
Revenues	$	337,221	$	16,256	$	0	$	0	$	353,477

Segment operating earnings (losses) (2)	(17,651)		605		0		0		(17,046)
Depreciation and amortization	2,007		2,466		0		0		4,473
Property and equipment additions (3) (4)	2,032		41		0		139		2,212

_______________

(1)Segment revenues include intersegment amounts that are eliminated in operating costs and expenses in our unaudited condensed consolidated statements of operations. Intersegment activities are conducted at posted tariff rates where applicable, or otherwise at rates similar to those charged to third parties or rates that we believe approximate market at the time the agreement is executed.

(2)Our crude oil marketing segment’s operating (losses) earnings included inventory liquidation gains of $6.9 million and inventory valuation losses of ~~$12 thousand and $2.1~~$24.2 million for the three months ended ~~September 30,~~March 31, 2021 and 2020, respectively.

(3)Our segment property and ~~2019, respectively. For~~equipment additions do not include assets acquired under finance leases during the ~~nine~~three months ended September 30, 2020 and 2019, our crude oil marketing segment’s operating (losses) earnings included inventory valuation losses of $18.2 million and inventory liquidation gains of $1.5 million, respectively.March 31, 2021. See Note 13 for further information.

~~(2)~~(4)During the three ~~and nine~~ months ended ~~September 30,~~March 31, 2021 and 2020, we had ~~$0.1 million~~$8.0 thousand and ~~$0.5~~$0.1 million, respectively, of property and equipment additions for computer equipment and leasehold improvements at our corporate headquarters, which iswere not attributed or allocated to any of our reporting segments.

~~(3)~~(5)~~Our~~During the three months ended March 31, 2021, we received a refund of approximately $0.3 million for amounts previously spent in our transportation ~~segment’s~~segment, which has been reflected as a reduction in property and equipment additions do not include approximately $1.7 million of assets acquired under finance leases during the nine months ended September 30, 2020. Our crude oil marketing segment’s property and equipment additions do not include approximately $4.1 million of assets acquired under finance leases during the nine months ended September 30, 2019. See Note 13 for further information.additions.

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NOTES TO UNAUDITED CONDENSED CONSOLIDATED FINANCIAL STATEMENTS

Segment operating earnings (losses) ~~earnings~~ reflect revenues net of operating costs and depreciation and amortization expense and are reconciled to earnings (losses) ~~earnings~~ before income taxes, as follows for the periods indicated (in thousands):

Three Months Ended Nine Months Ended
September 30, September 30,
2020 2019 2020 2019
Segment operating (losses) earnings $ 7,461 $ 3,042 $ (3,919) $ 12,918
General and administrative (1,405) (2,739) (7,030) (8,005)
Operating (losses) earnings 6,056 303 (10,949) 4,913
Gain on dissolution of investment 0 0 0 573
Interest income 105 758 614 2,145
Interest expense (70) (242) (288) (424)
Earnings (losses) before income taxes $ 6,091 $ 819 $ (10,623) $ 7,207


	Three Months Ended
	March 31,
	2021		2020

Segment operating earnings (losses)	$	7,227	$	(17,046)
General and administrative	(3,376)		(2,894)
Operating earnings (losses)	3,851		(19,940)
Interest and other income	134		365
Interest expense	(220)		(150)
Earnings (losses) before income taxes	$	3,765	$	(19,725)

Identifiable assets by business segment were as follows at the dates indicated (in thousands):


		September 30,		December 31,			March 31,		December 31,
		2020		2019			2021		2020

Reporting segment:	Reporting segment:					Reporting segment:
Marketing	Marketing	$	119,758	$	141,402	Marketing	$	153,723	$	128,441
Transportation	Transportation	67,310		58,483		Transportation	65,572		72,247
Cash and other		69,392		130,957
Pipeline and storage						Pipeline and storage	24,290		24,541
Cash and other (1)						Cash and other (1)	88,717		70,958
Total assets	Total assets	$	256,460	$	330,842	Total assets	$	332,302	$	296,187

_______________

(1)

~~There were 0 significant intersegment sales during the three and nine months ended September 30, 2020 and 2019, respectively.~~ Other identifiable assets are primarily corporate cash, corporate accounts receivable, properties and ~~properties~~operating lease right-of-use assets not identified with any specific segment of our business.

Accounting policies for transactions between reportable segments are consistent with applicable accounting policies as disclosed herein.

Note 9.8. Transactions with Affiliates

We enter into certain transactions in the normal course of business with affiliated entities including direct cost reimbursement for shared phone and administrative services. In addition, we lease our corporate office space in a building operated by 17 South Briar Hollow Lane, LLC, an affiliate of KSA Industries, Inc., which is an affiliated entity.

Activities with affiliates were as follows for the periods indicated (in thousands):

Three Months Ended Nine Months Ended
September 30, September 30,
2020 2019 2020 2019
Affiliate billings (refunds) to us (1)
$ (15) $ 20 $ 17 $ 63
Billings to affiliates 1 1 3 3
Rentals paid to affiliate (2)
256 122 500 366

~~_______________~~


	Three Months Ended
	March 31,
	2021		2020

Affiliate billings to us	$	12	$	17
Billings to affiliates	1		1
Rentals paid to affiliate	174		122

~~(1)During the third quarter of 2020, we received a refund for overpayment of certain affiliate billings.~~

~~(2)2020 amounts include the payment of rental adjustments for common area maintenance.~~

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NOTES TO UNAUDITED CONDENSED CONSOLIDATED FINANCIAL STATEMENTS

Note 9. Other Current Liabilities

The components of other current liabilities were as follows at the dates indicated (in thousands):


	March 31,		December 31,
	2021		2020

Accrued purchase price for VEX acquisition	$	7,500	$	10,000
Accrual for payroll, benefits and bonuses	5,865		6,575
Accrued automobile and workers’ compensation claims	3,913		3,171
Accrued medical claims	1,033		915
Other	1,577		1,682
Total other current liabilities	$	19,888	$	22,343

Note 10. Derivative Instruments and Fair Value Measurements

Derivative Instruments

In the normal course of our operations, our crude oil marketing segment purchases and sells crude oil. We seek to profit by procuring the commodity as it is produced and then delivering the material to the end users or the intermediate use marketplace. As typical for the industry, these transactions are made pursuant to the terms of forward month commodity purchase and/or sale contracts. Some of these contracts meet the definition of a derivative instrument, and therefore, we account for these contracts at fair value, unless the normal purchase and sale exception is applicable. These types of underlying contracts are standard for the industry and are the governing document for our crude oil marketing segment. None of our derivative instruments have been designated as hedging instruments.

At ~~September 30, 2020,~~March 31, 2021, we had in place 47 commodity purchase and sale contracts, ~~one~~ of which 5 had fair value associated with it as the contractual price of crude oil was outside of the range of prices specified in the agreement. These commodity purchase and sale contracts encompassed approximately:

•~~258 barrels per day of crude oil during October 2020 through December 2020; and~~

•~~64 barrels per day of crude oil during January 2021 through December 2021.~~

~~At December 31, 2019, we had in place 6 commodity purchase and sale contracts with no~~a fair value associated with them as the contractual prices of crude oil were ~~within~~outside of the range of prices specified in the agreements. These commodity purchase and sale contracts encompassed ~~approximately:~~approximately 740 barrels per day of crude oil during April 2021 through December 2021.

•~~258~~At December 31, 2020, we had in place 6 commodity purchase and sale contracts, of which 3 had a fair value associated with them as the contractual prices of crude oil were outside the range of prices specified in the agreements. These commodity purchase and sale contracts encompassed approximately 192 barrels per day of crude oil during January ~~2020 through February 2020;~~

•~~322 barrels per day of crude oil during March 2020 through April 2020; and~~

•~~258 barrels per day of crude oil during May 2020~~2021 through December ~~2020.~~2021.

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The estimated fair value of forward month commodity contracts (derivatives) reflected in the accompanying unaudited condensed consolidated balance ~~sheet~~sheets were as follows at the dates indicated (in thousands):


		Balance Sheet Location and Amount									Balance Sheet Location and Amount
		Current		Other		Current		Other			Current		Other		Current		Other
		Assets		Assets		Liabilities		Liabilities			Assets		Assets		Liabilities		Liabilities
September 30, 2020
March 31, 2021										March 31, 2021
Asset derivatives:	Asset derivatives:									Asset derivatives:
Fair value forward hydrocarbon commodity	Fair value forward hydrocarbon commodity									Fair value forward hydrocarbon commodity
contracts at gross valuation	contracts at gross valuation	$	3	$	0	$	0	$	0	contracts at gross valuation	$	576	$	0	$	0	$	0
Liability derivatives:	Liability derivatives:									Liability derivatives:
Fair value forward hydrocarbon commodity	Fair value forward hydrocarbon commodity									Fair value forward hydrocarbon commodity
contracts at gross valuation	contracts at gross valuation	0		0		0		0		contracts at gross valuation	0		0		546		0
Less counterparty offsets	Less counterparty offsets	0		0		0		0		Less counterparty offsets	0		0		0		0
As reported fair value contracts	As reported fair value contracts	$	3	$	0	$	0	$	0	As reported fair value contracts	$	576	$	0	$	546	$	0

December 31, 2019
December 31, 2020										December 31, 2020
Asset derivatives:	Asset derivatives:									Asset derivatives:
Fair value forward hydrocarbon commodity	Fair value forward hydrocarbon commodity									Fair value forward hydrocarbon commodity
contracts at gross valuation	contracts at gross valuation	$	0	$	0	$	0	$	0	contracts at gross valuation	$	61	$	0	$	0	$	0
Liability derivatives:	Liability derivatives:									Liability derivatives:
Fair value forward hydrocarbon commodity	Fair value forward hydrocarbon commodity									Fair value forward hydrocarbon commodity
contracts at gross valuation	contracts at gross valuation	0		0		0		0		contracts at gross valuation	0		0		52		0
Less counterparty offsets	Less counterparty offsets	0		0		0		0		Less counterparty offsets	0		0		0		0
As reported fair value contracts	As reported fair value contracts	$	0	$	0	$	0	$	0	As reported fair value contracts	$	61	$	0	$	52	$	0

We only enter into commodity contracts with creditworthy counterparties and evaluate our exposure to significant counterparties on an ongoing basis. At ~~September 30, 2020~~March 31, 2021 and December 31, ~~2019,~~2020, we were not holding nor have we posted any collateral to support our forward month fair value derivative activity. We are not subject to any credit-risk related trigger events. We have no other financial investment arrangements that would serve to offset our derivative contracts.

Forward month commodity contracts (derivatives) reflected in the accompanying unaudited condensed consolidated statements of operations were as follows for the periods indicated (in thousands):

Gains (losses)
Three Months Ended Nine Months Ended
September 30, September 30,
2020 2019 2020 2019
Revenues – marketing $ (9) $ (1) $ 3 $ (21)


	Gains (losses)
	Three Months Ended
	March 31,
	2021		2020

Revenues – marketing	$	20	$	19

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NOTES TO UNAUDITED CONDENSED CONSOLIDATED FINANCIAL STATEMENTS

Fair Value Measurements

The following tables set forth, by level with the Level 1, 2 and 3 fair value hierarchy, the carrying values of our financial assets and liabilities at the dates indicated (in thousands):


		Fair Value Measurements Using											Fair Value Measurements Using
		Quoted Prices											Quoted Prices
		in Active		Significant									in Active		Significant
		Markets for		Other		Significant							Markets for		Other		Significant
		Identical Assets		Observable		Unobservable							Identical Assets		Observable		Unobservable
		and Liabilities		Inputs		Inputs		Counterparty					and Liabilities		Inputs		Inputs		Counterparty
		(Level 1)		(Level 2)		(Level 3)		Offsets		Total			(Level 1)		(Level 2)		(Level 3)		Offsets		Total
September 30, 2020
March 31, 2021												March 31, 2021
Derivatives:	Derivatives:											Derivatives:
Current assets	Current assets	$	0	$	3	$	0	$	0	$	3	Current assets	$	0	$	576	$	0	$	0	$	576
Current liabilities	Current liabilities	0		0		0		0		0		Current liabilities	0		(546)		0		0		(546)
Net value	Net value	$	0	$	3	$	0	$	0	$	3	Net value	$	0	$	30	$	0	$	0	$	30

December 31, 2019
December 31, 2020												December 31, 2020
Derivatives:	Derivatives:											Derivatives:
Current assets	Current assets	$	0	$	0	$	0	$	0	$	0	Current assets	$	0	$	61	$	0	$	0	$	61
Current liabilities	Current liabilities	0		0		0		0		0		Current liabilities	0		(52)		0		0		(52)
Net value	Net value	$	0	$	0	$	0	$	0	$	0	Net value	$	0	$	9	$	0	$	0	$	9

These assets and liabilities are measured on a recurring basis and are classified based on the lowest level of input used to estimate their fair value. Our assessment of the relative significance of these inputs requires judgments.

When determining fair value measurements, we make credit valuation adjustments to reflect both our own nonperformance risk and our counterparty’s nonperformance risk. When adjusting the fair value of derivative contracts for the effect of nonperformance risk, we consider the impact of netting and any applicable credit enhancements. Credit valuation adjustments utilize Level 3 inputs, such as credit scores to evaluate the likelihood of default by us or our counterparties. At ~~September 30, 2020~~March 31, 2021 and December 31, ~~2019,~~2020, credit valuation adjustments were not significant to the overall valuation of our fair value contracts. As a result, applicable fair value assets and liabilities are included in their entirety in the fair value hierarchy.

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Note 11. Stock-Based Compensation Plan

We have in place a long-term incentive plan in which any employee or non-employee director who provides services to us is eligible to participate. The 2018 LTIP, which is overseen by the Compensation Committee of our Board of Directors, provides for the grant of various types of equity awards, of which restricted stock unit awards and performance-based compensation awards have been granted. The maximum number of shares authorized for issuance under the 2018 LTIP is 150,000 shares, and the 2018 LTIP is effective until May 8, 2028. After giving effect to awards granted and forfeitures made under the 2018 LTIP, the achievement of performance factors through December 31, 2020, and assuming the potential achievement of the maximum amounts of the performance factors through ~~September 30, 2020,~~March 31, 2021, a total of ~~81,735~~37,761 shares were available for issuance.

Compensation expense recognized in connection with equity-based awards was as follows for the periods indicated (in thousands):

Three Months Ended Nine Months Ended
September 30, September 30,
2020 2019 2020 2019
Compensation expense $ 149 $ 155 $ 453 $ 352


	Three Months Ended
	March 31,
	2021		2020

Compensation expense	$	185	$	134

At ~~September 30, 2020~~March 31, 2021 and December 31, ~~2019,~~2020, we had ~~$37,900~~$62,900 and ~~$23,600,~~$50,800, respectively, of accrued dividend amounts for awards granted under the 2018 LTIP.

Restricted Stock Unit Awards

The following table presents restricted stock unit award activity for the periods indicated:


			Weighted-				Weighted-
			Average Grant				Average Grant
		Number of	Date Fair Value			Number of	Date Fair Value
		Shares	per Share (1)			Shares	per Share (1)

Restricted stock unit awards at January 1, 2020		18,782	$	37.05
Restricted stock unit awards at January 1, 2021					Restricted stock unit awards at January 1, 2021	27,490	$	28.64
Granted (2)	Granted (2)	20,346	$	24.85	Granted (2)	26,369	$	29.70
Vested	Vested	(8,858)	$	36.87	Vested	(8,544)	$	24.83
Forfeited	Forfeited	(1,804)	$	32.29	Forfeited	0	$	0
Restricted stock unit awards at September 30, 2020		28,466	$	28.68
Restricted stock unit awards at March 31, 2021					Restricted stock unit awards at March 31, 2021	45,315	$	29.97

_______________

(1)Determined by dividing the aggregate grant date fair value of awards by the number of awards issued.

(2)The aggregate grant date fair value of restricted stock unit awards issued during ~~2020~~2021 was ~~$0.5~~$0.8 million based on a grant date market price of our common shares ranging from ~~$24.77~~$29.70 to ~~$26.23~~$30.00 per share.

Unrecognized compensation cost associated with restricted stock unit awards was approximately ~~$0.4~~$0.9 million at ~~September 30, 2020.~~March 31, 2021. Due to the graded vesting provisions of these awards, we expect to recognize the remaining compensation cost for these awards over a weighted-average period of ~~1.4~~1.7 years.

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Performance Share Unit Awards

The following table presents performance share unit award activity for the periods indicated:


			Weighted-				Weighted-
			Average Grant				Average Grant
		Number of	Date Fair Value			Number of	Date Fair Value
		Shares	per Share (1)			Shares	per Share (1)

Performance share unit awards at January 1, 2020		2,787	$	43.00
Performance share unit awards at January 1, 2021					Performance share unit awards at January 1, 2021	16,241	$	27.67
Granted (2)	Granted (2)	10,781	$	24.92	Granted (2)	12,205	$	29.70

Vested	Vested	0	$	0	Vested	0	$	0
Forfeited	Forfeited	(595)	$	30.22	Forfeited	0	$	0
Performance share unit awards at September 30, 2020		12,973	$	28.56
Performance share unit awards at March 31, 2021					Performance share unit awards at March 31, 2021	28,446	$	28.54

_______________

(1)Determined by dividing the aggregate grant date fair value of awards by the number of awards issued.

(2)The aggregate grant date fair value of performance share unit awards issued during ~~2020~~2021 was ~~$0.2~~$0.4 million based on a grant date market price of our common shares ~~ranging from $24.77 to $26.23~~of $29.70 per share and assuming a performance factor of 100 percent.

Unrecognized compensation cost associated with performance share unit awards was approximately ~~$0.2~~$0.6 million at ~~September 30, 2020.~~March 31, 2021. We expect to recognize the remaining compensation cost for these awards over a weighted-average period of ~~2.2~~2.5 years.

Note 12. Supplemental Cash Flow Information

Supplemental cash flows and non-cash transactions were as follows for the periods indicated (in thousands):


		Nine Months Ended					Three Months Ended
		September 30,					March 31,
		2020		2019			2021		2020

Cash paid for interest	Cash paid for interest	$	288	$	424	Cash paid for interest	$	220	$	150
Cash paid for federal and state income taxes	Cash paid for federal and state income taxes	419		234		Cash paid for federal and state income taxes	2		21
Cash refund for NOL carryback under CARES Act		2,703		0

Non-cash transactions:	Non-cash transactions:					Non-cash transactions:
Change in accounts payable related to property and equipment additions	Change in accounts payable related to property and equipment additions	(1,232)		(1,538)		Change in accounts payable related to property and equipment additions	(44)		1,129
Property and equipment acquired under finance leases	Property and equipment acquired under finance leases	1,655		4,148		Property and equipment acquired under finance leases	2,091		0
Issuance of common shares in asset acquisition		0		392

See Note 13 for information related to other non-cash transactions related to leases.

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Note 13. Leases

The following table provides the components of lease expense for the periods indicated (in thousands):


		Three Months Ended				Nine Months Ended					Three Months Ended
		September 30,				September 30,					March 31,
		2020		2019		2020		2019			2021		2020
Finance lease cost:	Finance lease cost:									Finance lease cost:
Amortization of ROU assets	Amortization of ROU assets	$	622	$	553	$	1,728	$	1,254	Amortization of ROU assets	$	1,140	$	553
Interest on lease liabilities	Interest on lease liabilities	70		87		212		214		Interest on lease liabilities	110		74
Operating lease cost	Operating lease cost	681		675		2,038		2,254		Operating lease cost	623		679
Short-term lease cost	Short-term lease cost	3,085		2,527		7,756		7,355		Short-term lease cost	3,212		2,503
Variable lease cost										Variable lease cost	1		—
Total lease expense	Total lease expense	$	4,458	$	3,842	$	11,734	$	11,077	Total lease expense	$	5,086	$	3,809

The following table provides supplemental cash flow and other information related to leases for the periods indicated (in thousands):


		Nine Months Ended					Three Months Ended
		September 30,					March 31,
		2020		2019			2021		2020
Cash paid for amounts included in measurement of lease liabilities:	Cash paid for amounts included in measurement of lease liabilities:					Cash paid for amounts included in measurement of lease liabilities:
Operating cash flows from operating leases (1)	Operating cash flows from operating leases (1)	$	2,037	$	2,254	Operating cash flows from operating leases (1)	$	622	$	678
Operating cash flows from finance leases	Operating cash flows from finance leases	295		197		Operating cash flows from finance leases	109		105
Financing cash flows from finance leases	Financing cash flows from finance leases	1,677		1,171		Financing cash flows from finance leases	1,014		532

ROU assets obtained in exchange for new lease liabilities:	ROU assets obtained in exchange for new lease liabilities:					ROU assets obtained in exchange for new lease liabilities:
Finance leases ~~(2)~~	Finance leases ~~(2)~~	1,655		4,148		Finance leases ~~(2)~~	2,091		0
Operating leases	Operating leases	630		12,006		Operating leases	264		81

______________

(1)Amounts are included in Other operating activities on the unaudited condensed consolidated statements of cash flows.

~~(2)2020 amount consists of a finance lease agreement for 40 trailers with a~~ ~~six~~ ~~year term that we entered into in connection with the CTL acquisition. See Note 6 for further information.~~

The following table provides the lease terms and discount rates for the periods indicated:


		Nine Months Ended			Three Months Ended
		September 30,			March 31,
		2020	2019		2021	2020
Weighted-average remaining lease term (years):	Weighted-average remaining lease term (years):			Weighted-average remaining lease term (years):
Finance leases	Finance leases	3.18	3.28	Finance leases	4.10	2.78
Operating leases	Operating leases	4.46	4.98	Operating leases	4.32	4.58

Weighted-average discount rate:	Weighted-average discount rate:			Weighted-average discount rate:
Finance leases	Finance leases	4.3%	4.9%	Finance leases	2.8%	4.9%
Operating leases	Operating leases	4.4%	5.0%	Operating leases	4.2%	5.0%

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The following table provides supplemental balance sheet information related to leases at the dates indicated (in thousands):

September 30, December 31,
2020 2019
Assets
Finance lease ROU assets (1)
$ 6,307 $ 6,384
Operating lease ROU assets 8,453 9,576
Liabilities
Current
Finance lease liabilities 2,505 2,167
Operating lease liabilities 2,137 2,252
Noncurrent
Finance lease liabilities 4,011 4,376
Operating lease liabilities 6,314 7,323


	March 31,		December 31,
	2021		2020
Assets
Finance lease ROU assets (1)	$	16,202	$	15,251
Operating lease ROU assets	7,774		8,051

Liabilities
Current
Finance lease liabilities	4,494		4,112
Operating lease liabilities	2,172		2,050
Noncurrent
Finance lease liabilities	12,202		11,507
Operating lease liabilities	5,603		6,000

______________

(1)Amounts are included in Property and equipment, net on the unaudited condensed consolidated balance sheets.

The following table provides maturities of undiscounted lease liabilities at ~~September 30, 2020~~March 31, 2021 (in thousands):


		Finance		Operating			Finance		Operating
		Lease		Lease			Lease		Lease

Remainder of 2020		$	681	$	678
2021		2,723		2,343
Remainder of 2021						Remainder of 2021	$	3,657	$	1,845
2022	2022	1,789		2,002		2022	3,942		2,128
2023	2023	939		1,821		2023	3,145		1,839
2024	2024	336		1,700		2024	2,350		1,702
2025						2025	3,773		222
Thereafter	Thereafter	445		679		Thereafter	802		674
Total lease payments	Total lease payments	6,913		9,223		Total lease payments	17,669		8,410
Less: Interest	Less: Interest	(397)		(772)		Less: Interest	(973)		(635)
Present value of lease liabilities	Present value of lease liabilities	6,516		8,451		Present value of lease liabilities	16,696		7,775
Less: Current portion of lease obligation	Less: Current portion of lease obligation	(2,505)		(2,137)		Less: Current portion of lease obligation	(4,494)		(2,172)
Total long-term lease obligation	Total long-term lease obligation	$	4,011	$	6,314	Total long-term lease obligation	$	12,202	$	5,603

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The following table provides maturities of undiscounted lease liabilities at December 31, ~~2019~~2020 (in thousands):


		Finance		Operating			Finance		Operating
		Lease		Lease			Lease		Lease

2020		$	2,426	$	2,660
2021	2021	2,426		2,256		2021	$	4,496	$	2,343
2022	2022	1,492		1,914		2022	3,562		2,002
2023	2023	642		1,776		2023	2,764		1,821
2024	2024	37		1,668		2024	1,969		1,700
2025						2025	2,992		222
Thereafter	Thereafter	0		443		Thereafter	802		675
Total lease payments	Total lease payments	7,023		10,717		Total lease payments	16,585		8,763
Less: Interest	Less: Interest	(480)		(1,142)		Less: Interest	(966)		(713)
Present value of lease liabilities	Present value of lease liabilities	6,543		9,575		Present value of lease liabilities	15,619		8,050
Less: Current portion of lease obligation	Less: Current portion of lease obligation	(2,167)		(2,252)		Less: Current portion of lease obligation	(4,112)		(2,050)
Total long-term lease obligation	Total long-term lease obligation	$	4,376	$	7,323	Total long-term lease obligation	$	11,507	$	6,000

Note 14. Commitments and Contingencies

Insurance ~~Policies~~

We ~~establish a liability under our automobile and~~have accrued liabilities for estimated workers’ compensation ~~insurance policies~~and other casualty claims incurred based upon claim reserves plus an estimate for ~~expected claims~~loss development and incurred but not reported claims. We self-insure a significant portion of expected losses relating to workers’ compensation, general liability and automobile liability, with a self-insured retention of $1.0 million. Insurance is purchased over our retention to reduce our exposure to catastrophic events. We also share 20 percent of the risk of loss, capped at $1.0 million for any claims in excess of $5.0 million. Estimates are recorded for potential and incurred outstanding liabilities for workers’ compensation, auto and general liability claims and claims that are incurred but not reported. Estimates are based on adjusters’ estimates, historical experience and statistical methods commonly used within the insurance industry that we believe are reliable. We have also engaged a ~~monthly basis.~~third-party actuary to perform a review of our accrued liability for these claims as well as potential funded losses in our captive insurance company. Insurance estimates include certain assumptions and management judgments regarding the frequency and severity of claims, claim development and settlement practices and the selection of estimated loss among estimates derived using different methods. Unanticipated changes in these factors may produce materially different amounts of expense that would be reported under these programs.

On October 1, 2020, we elected to utilize a wholly owned insurance captive to insure the self-insured retention for our workers’ compensation, general liability and automobile liability insurance programs.All accrued liabilities associated with periods from October 1, 2017 through current were transferred to the captive.

We maintain excess property and casualty reinsurance programs with third-party insurers in an effort to limit the financial impact of significant events covered under these programs. Our operating subsidiaries pay premiums to both the excess and reinsurance carriers and our captive for the estimated losses based on an external actuarial analysis. These premiums held by our wholly owned captive are currently held in a restricted account, resulting in a transfer of risk from our operating subsidiaries to the captive.

We also maintain a self-insurance program for managing employee medical claims in excess of employee deductibles. As claims are paid, the liability is relieved. ~~Our accruals~~We also maintain third party insurance stop-loss coverage for ~~automobile and workers’ compensation~~individual medical claims ~~are presented in the table below.~~

exceeding a certain minimum threshold

~~For periods prior to October 1, 2017,~~. In addition, we ~~pre-funded our estimated~~maintain $1.4 million of umbrella insurance coverage for annual aggregate medical claims and therefore, we could either receive a return of premium paid or be assessed for additional premiums up to pre-established limits. Additionally, in certain instances, the risk of insured losses was shared with a group of similarly situated entities through an insurance captive. We have appropriately recognized estimated expenses and liabilities related to these policies for losses incurred but not reported to us or our insurance carrier. The amount of pre-funded insurance premiums left to cover potential future losses are presented in the table below. If the potential insurance claims do not further develop, the pre-funded premiums will be returned to us as a premium refund.

The amount of pre-funded insurance premiums left to cover potential future losses related to periods prior to October 1, 2017, and our accruals for automobile and workers’ compensation claims were as follows at the dates indicated (in thousands):

September 30, December 31,
2020 2019
Pre-funded premiums for losses incurred but not reported $ 57 $ 168
Accrued automobile and workers’ compensation claims 2,686 2,956

exceeding approximately $7.5 million.

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ADAMS RESOURCES & ENERGY, INC. AND SUBSIDIARIES

NOTES TO UNAUDITED CONDENSED CONSOLIDATED FINANCIAL STATEMENTS

~~We maintain a self-insurance program~~Our accruals for ~~managing employee~~automobile, workers’ compensation and medical ~~claims. A liability for expected~~ claims incurred but not reported is established on a monthly basis. As claims are paid, the liability is relieved. We also maintain third party insurance stop-loss coverage for individual medical claims exceeding a certain minimum threshold. In addition, we maintain $1.4 million of umbrella insurance coverage for annual aggregate medical claims exceeding approximately $7.5 million. Medical accrual amounts were as follows at the dates indicated (in thousands):

September 30, December 31,
2020 2019
Accrued medical claims $ 2,249 $ 1,016

~~Legal Proceedings~~

On August 15, 2019, we received a notice from the Internal Revenue Service (the “IRS”) regarding a proposed penalty of approximately $1.2 million for our 2017 tax year information returns. The notice alleges that certain taxpayer identification numbers supplied to the IRS for our returns in 2017 were either missing or incorrect and that certain filings were late. We responded to the IRS on September 25, 2019 disputing the proposed penalty and requesting that the amount be waived, abated or a hearing held. On March 11, 2020, we received a response from the IRS indicating that they had reviewed our response and waived the full penalty. As such, this matter will not have a material impact on our consolidated financial position, results of operations or cash flows.


	March 31,		December 31,
	2021		2020

Pre-funded premiums for losses incurred but not reported	$	55	$	55
Accrued automobile and workers’ compensation claims	3,913		3,171
Accrued medical claims	1,033		915

Litigation

From time to time as incidental to our operations, we may become involved in various lawsuits and/or disputes. Primarily as an operator of an extensive trucking fleet, we are a party to motor vehicle accidents, worker compensation claims and other items of general liability as would be typical for the industry. We are presently unaware of any claims against us that are either outside the scope of insurance coverage or that may exceed the level of insurance coverage and could potentially represent a material adverse effect on our financial position, or results of ~~operations.~~operations or cash flows.

Note 15. Subsequent Event

On ~~October 22, 2020,~~May 4, 2021, we ~~acquired the outstanding equity interests~~entered into a Credit Agreement (“Credit Agreement”) with Wells Fargo Bank, National Association, as Agent and Issuing Lender, under which we may borrow an aggregate of ~~Victoria Express Pipeline, LLC (“VEX”~~up to $40.0 million under a revolving credit facility (the “Revolving Credit Facility”) ~~and~~, which will mature on May 4, 2024, subject to our compliance with certain related pipeline terminal facility assets from EnLink Midstream Operating, L.P. for $20.0 million. Of the total purchase price, $10.0 million was paid at closing, with the remainder to be paid in 4 quarterly installments of $2.5 million, plus interest at a rate of 4.0% per annum, beginning in March 2021. The equity interests in GulfMark Terminals, LLC, VEX and the other acquired assets were pledged to secure the payment of the installment portions of the purchase price as part of the agreement.financial covenants.

For each borrowing under the Revolving Credit Facility, we can elect whether the loans bear interest at (i) the Base Rate plus Applicable Margin; or (ii) the LIBOR Rate plus Applicable Margin. Base Rate is the highest of (a) the Prime Rate, (b) the Federal Funds Rate, plus 0.50% and (c) LIBOR for an interest period of three months plus 1.00%. The ~~VEX Pipeline System, with truck and storage terminals at both Cuero and~~Applicable Margin to be added to a Base Rate borrowing is 0.75%. The LIBOR Rate is (x) LIBOR (which shall not be less than 1.00%) divided by (y) 1.00 minus the ~~Port~~Eurodollar Reserve Percentage. The Applicable Margin to be added to a LIBOR borrowing is 1.75%. A commitment fee of ~~Victoria, Texas, is a crude oil and condensate pipeline system, which connects~~0.25% per annum will accrue on the ~~heart~~daily average unused amount of the ~~Eagle Ford Basin to~~commitments under the Gulf Coast waterborne market. The VEX Pipeline System includes 56 miles of 12-inch pipeline, which spans DeWitt county to Victoria County, Texas, with 350,000 barrels of above ground storage, 2 8 bay truck offload stations, and access to 2 docks at the Port of Victoria. The VEX Pipeline System can receive crude oil by pipeline and truck, and has downstream pipeline connections to 2 terminals today, with potential for additional downstream connection opportunities in the future. The pipeline system has a current capacity of 90,000 barrels per day.Revolving Credit Facility.

~~We plan~~Under the Credit Agreement, we are required to ~~integrate the VEX Pipeline System into our Gulf Coast marketing business, which we expect will further strengthen our ability to provide excellent service to the producers~~maintain compliance with certain financial covenants, as described in the ~~region, as well as more effectively service~~Credit Agreement, commencing with the quarter ending June 30, 2021. Our obligations under the Credit Agreement are secured by a pledge of substantially all of our ~~end-user markets along~~personal property and substantially all of the ~~Gulf Coast. In addition, the VEX Pipeline System complements~~personal property of certain of our ~~existing storage terminal~~other direct and ~~dock at the Port of Victoria, where we now control 450,000 barrels of storage with 3 docks after giving effect to the acquisition.~~indirect subsidiaries.

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Item 2. Management’s Discussion and Analysis of Financial Condition and Results of Operations

The following information should be read in conjunction with our Unaudited Condensed Consolidated Financial Statements and accompanying Notes included in this quarterly report on Form 10-Q and the Audited Consolidated Financial Statements and related Notes, together with our discussion and analysis of financial position and results of operations, included in our annual report on Form 10-K for the year ended December 31, ~~2019~~2020 (the ~~“2019~~“2020 Form 10-K”), as filed on March ~~6, 2020~~5, 2021 with the U.S. Securities and Exchange Commission (“SEC”). Our financial statements have been prepared in accordance with generally accepted accounting principles in the United States (“GAAP”).

Cautionary Statement Regarding Forward-Looking Information

This quarterly report on Form 10-Q contains various forward-looking statements within the meaning of Section 27A of the Securities Act of 1933, as amended, and Section 21E of the Securities Exchange Act of 1934, as amended (the “Exchange Act”) and information that are based on our beliefs, as well as assumptions made by us and information currently available to us. When used in this document, words such as “anticipate,” “project,” “expect,” “plan,” “seek,” “goal,” “estimate,” “forecast,” “intend,” “could,” “should,” “would,” “will,” “believe,” “may,” “potential” and similar expressions and statements regarding our plans and objectives for future operations are intended to identify forward-looking statements. Although we believe that our expectations reflected in such forward-looking statements are reasonable, we cannot give any assurances that such expectations will prove to be correct. Forward-looking statements are subject to a variety of risks, uncertainties and assumptions as described in more detail under Part I, Item 1A of our ~~2019~~2020 Form ~~10-K and within Part II, Item 1A of this quarterly report.~~10-K. If one or more of these risks or uncertainties materialize, or if underlying assumptions prove incorrect, our actual results may vary materially from those anticipated, estimated, projected or expected. You should not put undue reliance on any forward-looking statements. The forward-looking statements in this quarterly report speak only as of the date hereof. Except as required by federal and state securities laws, we undertake no obligation to publicly update or revise any forward-looking statements, whether as a result of new information, future events or any other reason.

Overview of Business

Adams Resources & Energy, Inc., a Delaware corporation organized in 1973, and its subsidiaries are primarily engaged in ~~the business of~~ crude oil marketing, transportation, terminalling and storage in various crude oil and natural gas basins in the lower 48 states of the United States (“U.S.”). We also conduct tank truck transportation of liquid chemicals, pressurized gases, asphalt and dry bulk primarily in the lower 48 states of the U.S. with deliveries into Canada and Mexico, and with fifteen terminals ~~in the Gulf Coast region of~~across the U.S. Unless the context requires otherwise, references to “we,” “us,” “our” or the “Company” are intended to mean the business and operations of Adams Resources & Energy, Inc. and its consolidated subsidiaries.

We operate and report in ~~two~~three business segments: (i) crude oil marketing, transportation and ~~storage, and~~storage; (ii) tank truck transportation of liquid chemicals, pressurized gases, asphalt and dry ~~bulk.~~bulk; and (iii) pipeline transportation, terminalling and storage of crude oil. See Note 87 in the Notes to Unaudited Condensed Consolidated Financial Statements for further information regarding our business segments.

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Recent Developments and Outlook

~~CTL Asset Acquisition~~COVID-19 Update

On May 17, 2020, we entered into a purchase and sale agreement with Comcar Industries, Inc. (“Comcar”), a bulk carrier trucking company, for the purchase of substantially all of the transportation assets of Comcar’s subsidiary, CTL Transportation, LLC (“CTL”). CTL provides delivery services to customers in the chemical industry, with operations in nine locations in the southeastern United States. On June 26, 2020, we closed on the asset acquisition for approximately $9.2 million in cash, including acquisition costs. This acquisition added approximately 163 tractors and 328 trailers to our existing transportation fleet, and these assets were included in our transportation segment.

~~Global Pandemic and Industry Supply Events~~

~~On January 30, 2020, the World Health Organization (“WHO”) announced a~~The global ~~health emergency because of a new strain of coronavirus originating in Wuhan, China (the “COVID-19 outbreak”). In March 2020, the WHO classified the~~ COVID-19 outbreak, ~~as a pandemic, based on the rapid increase in exposure globally. The COVID-19 pandemic and the emergency response measures enacted~~associated countermeasures implemented by ~~the United States and~~ governments around the world, ~~have caused material disruptions to many businesses resulting in a severe slowdown in global economies, including the United States, leading to~~as well as increased ~~volatility in financial markets worldwide and reduced demand for crude oil and other commodities.~~

In March 2020, members of OPEC failed to agree on crude oil production levels, which resulted in an increased supply of crude oil and led to a substantial decline in crude oil prices and an increasingly volatile market. During the second quarter of 2020, while members of OPEC reached agreements to cut crude oil production, downward pressure on crude oil prices continued due to concerns regarding an oversupply of crude oil inventories. Crude oil prices weakened during the third quarter of 2020, with the price at the end of September being slightly below $40 per barrel after trading around $42 per barrel in August.

The COVID-19 outbreak continues to spread globally, which is slowing U.S. and global crude oil demand recovery. U.S. crude oil production levels are well below where they were at the beginning of 2020, with shale crude production significantly lower than production amounts in the first quarter of 2020. Refinery margins continue to weaken, resulting in a number of U.S. refineries shutting in, and nearly all domestic refineries running well below capacity. As markets compete for the limited crude oil supply, buy-sell margins have been tightening. As a result, prices of crude oil and other commodities continue to remain volatile.

~~The adverse economic effects of the COVID-19 outbreak, including the restrictions in place by governments,~~business uncertainty, changes in consumer behavior related to the slowdown of the economy and the disruption of historical supply and demand patterns ~~and the volatility of the crude oil markets have~~during 2020 resulted in a decline in our crude oil marketing operations and significantly decreased demand for our transportation ~~services. Our crude oil marketing operations have declined as low crude oil prices have negatively impacted production~~services through global shutdowns and supply chain and operational disruptions at times during 2020. We took a variety of ~~crude oil,~~actions in 2020 to help mitigate the financial impact, including executing temporary cost saving measures and ~~demand for crude oil and other related products has significantly decreased due~~reducing our capital spending. As economic conditions improve, we are beginning to resume normal capital spending activities, but may implement additional cost saving measures in the global economic slowdown from COVID-19. During the first quarter of 2020, our overall transportation operations remained steady as we transported products including bleach, disinfectant, soap and other similar products in high demand, while seeing an offsetting drop in demand for other products we typically transport. During April and May 2020, we saw a significant decline in our overall transportation operations primarily due to the continuation of the governmental restrictions and the adverse economic effects. However, beginning in late June, demand for transportation of products began to increase. During the third quarter of 2020, demand for transportation of chemicals and personal care products, along with automotive plants coming back online and strong home building product lines, resulted in an increase in our transportation operations.future, if needed.

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At September 30, 2020, we had 411,380 barrels of crude oil in inventory, and during the nine months ended September 30, 2020, we recognized an inventory valuation loss of approximately $18.2 million as the price of our crude oil inventory declined from $61.93 per barrel at December 31, 2019 to $38.75 per barrel at September 30, 2020. Further valuation losses may occur if the price of crude oilOur primary focus continues to ~~decline.~~

We are dependent on our workforce of truck drivers to transport crude oil and products for our customers. Developments such as social distancing and shelter-in-place directives thus far have not had a significant impact on our ability to deploy our workforce effectively asbe the transportation industry has been deemed an essential service under current Cybersecurity and Infrastructure Security Agency guidelines. We have taken measures to seek to ensure the safety of our employees and operations while maintaining uninterrupted service to our customers. The safety of our employees and operations while providing uninterrupted service to our ~~customers remains~~customers. We will continue to maintain the safety protocols we established, including encouraging our ~~primary focus.~~employees to seek vaccination when eligible. We are actively monitoring the global situation and its effect on our financial condition, liquidity, operations, customers, industry and workforce. Given the daily evolution of the COVID-19 outbreak and the global responses to curb its spread, we cannot estimate the length or gravity of the impacts of these events at this time. While we consider the ~~decreased demand for crude oil and in transportation services and~~overall effects of the ~~lower crude oil prices~~pandemic to be temporary, if the pandemic and ~~decline in oil prices~~its economic effects continue, ~~they~~it may have a material adverse effect on our results of future operations, financial position and liquidity in 2021.

We plan to continue to operate our remaining business segments with internally generated cash flows during the remainder of ~~2020,~~2021, but intend to remain flexible as the focus will be on increasing efficiencies and on business development opportunities. During the remainder of ~~2020,~~2021, we plan to integrate our newly acquired terminals and leverage back haul opportunities with the continued efforts to diversify service offerings, and we plan to grow in new or existing areas with our crude oil marketing segment.

~~Voluntary Early Retirement Program and Terminations~~

In May 2020, primarily as a result of the economic downturn, we implemented a voluntary early retirement program for certain employees, which resulted in an increase in personnel expenses of approximately $0.4 million. Of this amount, approximately $0.3 million was included in general and administrative expenses and $0.1 million was included in operating expenses.

~~Acquisition of Pipeline and Related Terminal Facility Assets~~Credit Agreement

On ~~October 22, 2020,~~May 4, 2021, we ~~acquired the outstanding equity interests of Victoria Express Pipeline, LLC~~entered into a Credit Agreement (“~~VEX”~~Credit Agreement”) with Wells Fargo Bank, National Association, as Agent and certain related pipeline terminal facility assets from EnLink Midstream Operating, L.P. for $20.0 million. The VEX Pipeline System, with truck and storage terminals at both Cuero and the Port of Victoria, Texas, is a crude oil and condensate pipeline system, which connects the heart of the Eagle Ford Basin to the Gulf Coast waterborne market. The VEX Pipeline System includes 56 miles of 12-inch pipeline, which spans DeWitt county to Victoria County, Texas, with 350,000 barrels of above ground storage, two 8 bay truck offload stations, and access to two docks at the Port of Victoria. The VEX Pipeline System can receive crude oil by pipeline and truck, and has downstream pipeline connections to two terminals today, with potential for additional downstream connection opportunities in the future. The pipeline system has a current capacity of 90,000 barrels per day.

~~We plan to integrate the VEX Pipeline System into our Gulf Coast marketing business,~~Issuing Lender, under which we ~~expect~~may borrow an aggregate of up to $40.0 million under a revolving credit facility (the “Revolving Credit Facility”), which will ~~further strengthen~~mature on May 4, 2024, subject to our ability to provide excellent service to the producers in the region, as well as more effectively service our end-user markets along the Gulf Coast. In addition, the VEX Pipeline System complements our existing storage terminal and dock at the Port of Victoria, where we now control 450,000 barrels of storagecompliance with ~~three docks after giving effect to the acquisition.~~

certain financial covenants. See Note 15 in the Notes to Unaudited Condensed Consolidated Financial Statements for further information.

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Results of Operations

Crude Oil Marketing

Our crude oil marketing segment revenues, operating earnings (losses) ~~earnings~~ and selected costs were as follows for the periods indicated (in thousands):


		Three Months Ended						Nine Months Ended							Three Months Ended
		September 30,						September 30,							March 31,
		2020		2019		Change (1)		2020		2019		Change (1)			2021		2020		Change (1)

Revenues	Revenues	$	245,184	$	434,609	(44	%)	$	722,546	$	1,331,410	(46	%)	Revenues	$	304,023	$	337,221	(10	%)
Operating (losses) earnings (2)		5,869		2,888		103	%	(4,952)		10,948		(145	%)
Operating earnings (losses) (2)														Operating earnings (losses) (2)	7,018		(17,651)		(140	%)
Depreciation and amortization	Depreciation and amortization	1,836		2,214		(17	%)	5,700		6,640		(14	%)	Depreciation and amortization	1,798		2,007		(10	%)
Driver compensation	Driver compensation	4,579		5,728		(20	%)	13,961		17,439		(20	%)	Driver compensation	4,390		5,293		(17	%)
Insurance	Insurance	553		2,104		(74	%)	5,193		6,336		(18	%)	Insurance	1,977		2,474		(20	%)
Fuel	Fuel	1,372		2,154		(36	%)	4,538		6,952		(35	%)	Fuel	1,741		2,034		(14	%)

_______________

(1)Represents the percentage increase (decrease) from the prior year period.

(2)Operating earnings (losses) ~~earnings~~ included inventory liquidation gains of $6.9 million and inventory valuation losses of ~~$12 thousand and $2.1~~$24.2 million for the three months ended ~~September 30,~~March 31, 2021 and 2020, ~~and 2019,~~ respectively. For the nine months ended September 30, 2020 and 2019, operating (losses) earnings included inventory valuation losses of $18.2 million and inventory liquidation gains of $1.5 million, respectively, as discussed further below.

Volume and price information were as follows for the periods indicated:


		Three Months Ended				Nine Months Ended					Three Months Ended
		September 30,				September 30,					March 31,
		2020		2019		2020		2019			2021		2020
Field level purchase volumes – per day (1)	Field level purchase volumes – per day (1)									Field level purchase volumes – per day (1)
Crude oil – barrels	Crude oil – barrels	90,896		105,801		93,762		106,965		Crude oil – barrels	82,889		109,253

Average purchase price	Average purchase price									Average purchase price
Crude oil – per barrel	Crude oil – per barrel	$	37.12	$	55.84	$	36.38	$	56.61	Crude oil – per barrel	$	54.91	$	44.87

_______________

(1)Reflects the volume purchased from third parties at the field level of operations.

~~Three Months Ended September 30, 2020 vs. Three Months Ended September 30, 2019~~. Crude oil marketing revenues decreased by ~~$189.4~~$33.2 million during the three months ended ~~September 30, 2020~~March 31, 2021 as compared to the three months ended ~~September 30, 2019,~~March 31, 2020, primarily as a result of ~~a decrease in the market price of crude oil, which decreased revenues by approximately $149.2 million, and~~ lower overall crude oil volumes, which decreased revenues by approximately ~~$40.2~~$101.2 million, partially offset by an increase in the market price of crude oil, which increased revenues by approximately $68.0 million. The average crude oil price received was ~~$55.84~~$44.87 during the three months ended ~~September 30, 2019,~~March 31, 2020, which ~~decreased~~increased to ~~$37.12~~$54.91 during the three months ended ~~September 30, 2020.~~March 31, 2021. The ~~decrease in the~~2020 period was impacted by a lower market price of crude oil ~~and the lower crude oil volumes produced and available for purchase were~~ due to the effects of the COVID-19 outbreak and the delay of OPEC to agree on crude oil production levels, ~~during the second quarter,~~ both of which resulted in market disruptions that decreased the demand for and price of crude oil during the three months ended ~~September 30,~~March 31, 2020. The 2021 period was impacted by increased demand for crude oil, but with less supply as production has not yet increased to previous levels, thus increasing the market price of crude oil. Volumes decreased during the 2021 period as compared to the prior year period as a result of increased competition for supply from shippers and marketers to fill obligations to pipelines with the lower crude oil production available.

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Our crude oil marketing operating earnings ~~for~~increased by $24.7 million during the three months ended ~~September 30,~~March 31, 2021 as compared to the same period in 2020, ~~increased by $3.0 million,~~ primarily due to inventory valuation changes (as shown in the table below) and lower insurance, fuel and driver compensation costs and higher crude oil prices, partially offset by lower crude oil ~~prices and~~ volumes.

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Driver compensation decreased by ~~$1.1~~$0.9 million during the three months ended ~~September 30, 2020~~March 31, 2021 as compared to the same period in ~~2019,~~2020, primarily as a result of a decrease in the number of drivers required for volumes transported in the ~~2020~~2021 period as compared to the ~~2019~~2020 period.

Insurance costs decreased by ~~$1.6~~$0.5 million during the three months ended ~~September 30, 2020~~March 31, 2021 as compared to the same period in ~~2019,~~2020, primarily due to ~~favorable adjustments to reserves for insurance claims resulting from our favorable safety record over the policy period,~~ a lower driver count and lower miles driven in the ~~2020~~2021 period. Fuel costs decreased by ~~$0.8~~$0.3 million during the three months ended ~~September 30, 2020~~March 31, 2021 as compared to the same period in ~~2019,~~2020, consistent with a lower driver count and lower miles driven in the current period.

Depreciation and amortization expense decreased by ~~$0.4~~$0.2 million during the three months ended ~~September 30, 2020~~March 31, 2021 as compared to the same period in ~~2019,~~2020, primarily due to the timing of purchases and retirements of tractors and other field equipment during ~~2019~~2020 and ~~2020.~~

~~Nine Months Ended September 30, 2020 vs. Nine Months Ended September 30, 2019~~. Crude oil marketing revenues decreased by $608.9 million during the nine months ended September 30, 2020 as compared to the nine months ended September 30, 2019, primarily as a result of a decrease in the market price of crude oil, which decreased revenues by approximately $510.2 million, and lower overall crude oil volumes, which decreased revenues by approximately $98.7 million. The average crude oil price received was $56.61 during the nine months ended September 30, 2019, which decreased to $36.38 during the nine months ended September 30, 2020. The decrease in the market price of crude oil and the lower crude oil volumes produced and available for purchase were due to the effects of the COVID-19 outbreak and the delay of OPEC to agree on crude oil production levels during the second quarter, both of which resulted in market disruptions that decreased the demand for and price of crude oil.

Our crude oil marketing operating (losses) earnings for the nine months ended September 30, 2020 decreased by $15.9 million, from earnings of $10.9 million during the 2019 period to a loss of $5.0 million in the 2020 period, primarily due to inventory valuation changes (as shown in the table below) and lower revenues due to lower crude oil prices and volumes, partially offset by lower insurance, fuel and driver compensation costs.

Driver compensation decreased by $3.5 million during the nine months ended September 30, 2020 as compared to the same period in 2019, primarily as a result of a decrease in the number of drivers required for volumes transported in the 2020 period as compared to the 2019 period.

Insurance costs decreased by $1.1 million during the nine months ended September 30, 2020 as compared to the same period in 2019, primarily due to favorable adjustments to reserves for insurance claims resulting from our favorable safety record over the policy period, lower hours worked by drivers and lower miles driven in the 2020 period. Fuel costs decreased by $2.4 million during the nine months ended September 30, 2020 as compared to the same period in 2019, consistent with the lower driver count and lower miles driven in the current period.

Depreciation and amortization expense decreased by $0.9 million during the nine months ended September 30, 2020 as compared to the same period in 2019, primarily due to the timing of purchases and retirements of tractors and other field equipment during 2019 and 2020.2021.

Field Level Operating Earnings (Non-GAAP Financial Measure). Inventory valuations and forward commodity contract (derivatives or mark-to-market) valuations are two significant factors affecting comparative crude oil marketing segment operating earnings (losses) ~~earnings.~~. As a purchaser and shipper of crude oil, we hold inventory in storage tanks and third-party pipelines. During periods of increasing crude oil prices, we recognize inventory liquidation gains while during periods of falling prices, we recognize inventory liquidation and valuation losses.

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Crude oil marketing operating earnings (losses) ~~earnings~~ can be affected by the valuations of our forward month commodity contracts (derivative instruments). These non-cash valuations are calculated and recorded at each period end based on the underlying data existing as of such date. We generally enter into these derivative contracts as part of a pricing strategy based on crude oil purchases at the wellhead (field level). The valuation of derivative instruments at period end requires the recognition of non-cash “mark-to-market” gains and losses.

The impact of inventory liquidations and valuations and derivative valuations on our crude oil marketing segment operating earnings (losses) ~~earnings~~ is summarized in the following reconciliation of our non-GAAP financial measure for the periods indicated (in thousands):


		Three Months Ended				Nine Months Ended					Three Months Ended
		September 30,				September 30,					March 31,
		2020		2019		2020		2019			2021		2020

As reported segment operating (losses) earnings (1)		$	5,869	$	2,888	$	(4,952)	$	10,948
As reported segment operating earnings (losses) (1)										As reported segment operating earnings (losses) (1)	$	7,018	$	(17,651)
Add (subtract):	Add (subtract):									Add (subtract):
Inventory liquidation gains	Inventory liquidation gains	—		—		—		(1,459)		Inventory liquidation gains	(6,943)		—
Inventory valuation losses	Inventory valuation losses	12		2,051		18,196		—		Inventory valuation losses	—		24,215
Derivative valuation (gains) losses	Derivative valuation (gains) losses	9		1		(3)		21		Derivative valuation (gains) losses	(20)		(19)
Field level operating earnings (2)	Field level operating earnings (2)	$	5,890	$	4,940	$	13,241	$	9,510	Field level operating earnings (2)	$	55	$	6,545

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(1)Our crude oil marketing segment’s operating earnings (losses) ~~earnings~~ included inventory liquidation gains of $6.9 million and inventory valuation losses of ~~$12 thousand and $2.1~~$24.2 million for the three months ended ~~September 30,~~March 31, 2021 and 2020, and 2019, respectively. For the nine months ended September 30, 2020 and 2019, operating (losses) earnings included inventory valuation losses of $18.2 million and inventory liquidation gains of $1.5 million, respectively.

(2)The use of field level operating earnings is unique to us, not a substitute for a GAAP measure and may not be comparable to any similar measures developed by industry participants. We utilize this data to evaluate the profitability of our operations.

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Field level operating earnings and field level purchase volumes depict our day-to-day operation of acquiring crude oil at the wellhead, transporting the product and delivering the product to market sales point. Field level operating earnings ~~increased~~decreased during the three months ended ~~September 30, 2020~~March 31, 2021 as compared to the same period in ~~2019~~2020 primarily due to ~~lower insurance, fuel and driver compensation costs, partially offset by~~ lower revenues resulting from lower crude oil ~~margins and volumes. Field level operating earnings increased during the nine months ended September 30, 2020 as compared to the same period in 2019 primarily due to~~volumes, partially offset by lower insurance, fuel and driver compensation ~~costs, partially offset by lower crude oil margins and volumes.~~costs.

We held crude oil inventory at a weighted average composite price as follows at the dates indicated (in barrels):

September 30, 2020 December 31, 2019
Average Average
Barrels Price Barrels Price
Crude oil inventory 411,380 $ 38.75 426,397 $ 61.93


	March 31, 2021			December 31, 2020
		Average			Average
	Barrels	Price		Barrels	Price

Crude oil inventory	469,226	$	62.20	421,759	$	45.83

Prices received for crude oil have been volatile and unpredictable with price volatility expected to continue. See ~~“Recent Developments and Outlook” above, “Part II, Item 1A.~~ ~~Risk Factors” of this Quarterly Report on Form 10-Q and~~ “Part I, Item 1A. Risk Factors” in our ~~2019~~2020 Form 10-K.

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Transportation

Our transportation segment revenues, operating earnings and selected costs were as follows for the periods indicated (in thousands):

Three Months Ended Nine Months Ended
September 30, September 30,
2020 2019
Change (1)
2020 2019
Change (1)
Revenues $ 21,720 $ 15,698 38 % $ 50,121 $ 48,498 3 %
Operating earnings $ 1,592 $ 154 934 % $ 1,033 $ 1,970 (48 %)
Depreciation and amortization $ 3,023 $ 2,179 39 % $ 7,910 $ 5,626 41 %
Driver commissions $ 4,069 $ 2,588 57 % $ 8,627 $ 8,352 3 %
Insurance $ 1,711 $ 1,379 24 % $ 4,797 $ 4,557 5 %
Fuel $ 1,599 $ 1,454 10 % $ 3,486 $ 4,934 (29 %)
Maintenance expense $ 1,295 $ 981 32 % $ 2,746 $ 3,072 (11 %)
Mileage (000s) 7,625 5,152 48 % 16,755 15,866 6 %


	Three Months Ended
	March 31,
	2021		2020		Change (1)

Revenues	$	21,235	$	16,256	31	%
Operating earnings	$	774	$	605	28	%
Depreciation and amortization	$	3,001	$	2,466	22	%
Driver commissions	$	3,596	$	2,607	38	%
Insurance	$	2,148��	$	1,524	41	%
Fuel	$	1,875	$	1,281	46	%
Maintenance expense	$	913	$	831	10	%
Mileage (000s)	6,932		5,240		32	%

_______________

(1)Represents the percentage increase (decrease) from the prior year period.

Our revenue rate structure includes a component for fuel costs in which fuel cost fluctuations are largely passed through to the customer. Revenues, net of fuel cost, were as follows for the periods indicated (in thousands):


		Three Months Ended				Nine Months Ended					Three Months Ended
		September 30,				September 30,					March 31,
		2020		2019		2020		2019			2021		2020

Total transportation revenue	Total transportation revenue	$	21,720	$	15,698	$	50,121	$	48,498	Total transportation revenue	$	21,235	$	16,256
Diesel fuel cost	Diesel fuel cost	(1,599)		(1,454)		(3,486)		(4,934)		Diesel fuel cost	(1,875)		(1,281)
Revenues, net of fuel cost (1)	Revenues, net of fuel cost (1)	$	20,121	$	14,244	$	46,635	$	43,564	Revenues, net of fuel cost (1)	$	19,360	$	14,975

_______________

(1) Revenues, net of fuel cost, is a non-GAAP financial measure and is utilized for internal analysis of the results of our transportation segment.

~~Three Months Ended September 30, 2020 vs. Three Months Ended September 30, 2019~~.

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Transportation revenues increased by ~~$6.0~~$5.0 million during the three months ended ~~September 30, 2020~~March 31, 2021 as compared to the three months ended ~~September 30, 2019,~~March 31, 2020. Transportation revenues, net of fuel cost, increased by $4.4 million during the three months ended March 31, 2021, as compared to the prior year period. These increases were primarily ~~as a result~~due to increased revenues resulting from the acquisition of substantially all of the transportation assets of CTL ~~acquisition~~Transportation, LLC, a subsidiary of Comcar Industries, Inc. (the “CTL acquisition”) in June 2020 and increased transportation rates, partially offset by a decrease in business activities of our customers as a result of the continuing effects of the COVID-19 ~~outbreak.~~outbreak and the effects of extreme weather conditions in February 2021. On June 26, 2020, we completed the CTL acquisition, ~~of the transportation assets of CTL,~~ which added new customers, new market areas and new product lines to our portfolio. As a result of the CTL acquisition, we added services to new and existing customers in six new market areas, including new terminals in Louisiana, Missouri, Ohio, Georgia and Florida. We also hired approximately 140 additional drivers in connection with this acquisition. ~~Revenues, net~~We have also been working with our customers to increase our transportation rates, which has resulted in an increase in revenues as compared to the prior year period.

The adverse economic effects of ~~fuel cost, increased~~the COVID-19 outbreak, including the continued restrictions in place by ~~$5.9 million~~governments, changes in consumer behavior related to the slowdown of the economy and the disruption of historical supply and demand patterns, decreased demand for our transportation services during early to mid-2020. However, during the ~~three months ended September 30,~~second half of 2020, ~~primarily~~demand for transportation of chemicals and personal care products, along with automotive plants coming back online and strong home building product lines, resulted in an increase in our transportation operations, which continued into the first quarter of 2021. In February 2021, a severe winter storm and resulting power outages affected Texas, which resulted in a significant decline in transportation services for over a week and a temporary loss of revenues. When production and customer facilities resumed normal operating conditions, demand for truck transportation increased to even higher levels as a result of the ~~higher transportation revenues and increased miles traveled during the 2020 period as a result~~disruption of the ~~CTL acquisition.~~supply chain normally serviced by rail capacity shifting to truck transportation in an effort to get products to the end users in a more timely manner.

As a result of the COVID-19 outbreak, our transportation operations declined primarily during April and May 2020, after having remained steady through March 2020. During the first quarter of 2020, we transported products in higher demand, including bleach, disinfectant, soap and other similar products, which had offset decreased transportation demand for certain other products that we transported. However, during the second quarter of 2020, we experienced a significant decline in transportation operations. During the third quarter of 2020, we experienced an increase in transportation operations, as well as the additional revenues related to the CTL acquisition. As a result, revenues, net of fuel cost, increased by $5.9 million during the three months ended September 30, 2020, primarily as a result of increased miles traveled during the 2020 period.

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Our transportation operating earnings increased by $0.2 million for the three months ended ~~September 30, 2020 increased by $1.4 million~~March 31, 2021 as compared to the same period in ~~2019,~~2020, primarily due to higher revenues resulting from increased miles traveled primarily as a result of the CTL acquisition, partially offset by higher depreciation and amortization expense related to new assets placed into service and higher insurance, fuel costs, maintenance expense and other operating expenses.

Fuel costs increased by ~~$0.1~~$0.6 million during the three months ended ~~September 30, 2020~~March 31, 2021 as compared to the three months ended ~~September 30, 2019,~~March 31, 2020, primarily as a result of the CTL acquisition, which increased the number of miles traveled during the ~~2020~~2021 period. Insurance costs increased by ~~$0.3~~$0.6 million during the three months ended ~~September 30, 2020~~March 31, 2021 as compared to the same period in ~~2019,~~2020, primarily due to the CTL acquisition which resulted in a higher driver count and increased miles driven in the ~~2020~~2021 period. Depreciation and amortization expense increased by ~~$0.8~~$0.5 million during the three months ended ~~September 30, 2020~~March 31, 2021 as compared to the same period in ~~2019,~~2020, primarily as a result of the CTL asset acquisition in June 2020 and the purchase and lease of new tractors and trailers in ~~2019.~~2020.

~~Nine Months Ended September~~

30 ~~2020 vs. Nine Months Ended September 30, 2019~~. ~~Transportation revenues increased by $1.6 million during the nine months ended September 30, 2020 as compared to the nine months ended September 30, 2019, primarily as a result~~

Table of ~~the CTL acquisition in June 2020~~Contents

Pipeline and the previously announced acquisition of assets of a transportation company (the “EH Transport acquisition”) in May 2019, partially offset by a decrease in certain business activities of our customers as a result of the COVID-19 outbreak resulting in lower miles traveled. Revenues, net of fuel cost, increased by $3.1 million during the nine months ended September 30, 2020, primarily as a result of the higher transportation revenues and increased miles traveled during the 2020 period.Storage

Our ~~transportation~~pipeline and storage segment revenues, operating ~~earnings~~losses and selected costs were as follows for the ~~nine months ended September 30, 2020 decreased by $0.9 million as compared to~~period indicated (in thousands):


	Three Months
	Ended
	March 31,
	2021

Segment revenues (1)	$	419
Less: Intersegment revenues (1)	(186)
Revenues	$	233

Operating losses	(565)
Depreciation and amortization	254
Insurance	210

_______________

(1)Segment revenues represent revenues from the ~~same period~~crude oil marketing segment, which are eliminated in 2019, primarily due to higher depreciation and amortization expense related to the CTL acquisition, the EH Transport acquisition and new assets placed into service, and higher insurance and other operating expenses, partially offset by higher revenues and increased miles traveled during the 2020 period.our unaudited condensed consolidated statements of operations.

~~Fuel costs decreased~~We are continuing to focus on opportunities to increase our pipeline and storage capacity utilization, by ~~$1.4 million during~~identifying opportunities with our existing and new customers to increase volumes. In addition, we are exploring new connections for the nine months ended September 30, 2020 as compared to the nine months ended September 30, 2019, primarily as a result of lower miles traveled during the first six months of 2020, partially offset by an increase in the number of miles traveled as a resultpipeline system both upstream and downstream of the ~~CTL asset acquisition in June 2020. Insurance costs increased by $0.2 million during~~pipeline, to increase the ~~nine months ended September 30, 2020 as compared to the same period in 2019, primarily due to the CTL acquisition which resulted in a higher driver count~~crude oil supply and increased miles driven in the 2020 period. Depreciation and amortization expense increased by $2.3 million during the nine months ended September 30, 2020 as compared to the same period in 2019, primarily as a resulttake-away capability of the ~~CTL asset acquisition in June 2020, the EH Transport acquisition during the second quarter of 2019 and the purchase of new tractors and trailers in 2019.~~system.

General and Administrative Expense

General and administrative expense ~~decreased~~increased by ~~$1.3~~$0.5 million during the three months ended ~~September 30, 2020~~March 31, 2021 as compared to the same period in ~~2019,~~2020, primarily due to lower insurance costs due to insurance premium true-ups and lower salaries and wages and outside service costs, partially offset by higher audit fees, office rental costs due to true-ups related to common area maintenance and legal fees.

General and administrative expense decreased by $1.0 million during the nine months ended September 30, 2020 as compared to the same period in 2019, primarily due to lower insurance costs due to insurance premium true-ups and lower audit fees, partially offset by higher salaries and wages, outside service costs, insurance costs and office rental ~~costs due to true-ups related to common area maintenance and legal fees.~~

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~~Gain on Dissolution of Investment~~

During the nine months ended September 30, 2019, we received a cash payment from Adams Resources Exploration Corporation (“AREC”) totaling approximately $1.0 million, related to the final settlement of its bankruptcy and dissolution. AREC had been one of our wholly owned subsidiaries, until its bankruptcy filing in April 2017. Of the amount received, approximately $0.4 million was offset against a receivable that had been set up as of December 31, 2018 and $0.6 million was recorded as a gain in our unaudited condensed consolidated financial statements during the nine months ended September 30, 2019.costs.

Income Taxes

Provision for (benefit from) income taxes is based upon federal and state tax rates, and variations in amounts are consistent with taxable income (loss) in the respective accounting periods.

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Liquidity and Capital Resources

Liquidity

Our liquidity is from our cash balance and net cash provided by operating activities and is therefore dependent on the success of future operations. If our cash inflow subsides or turns negative, we will evaluate our investment plan accordingly and remain flexible.

At ~~September 30, 2020~~March 31, 2021 and December 31, ~~2019,~~2020, we had no bank debt or other forms of debenture obligations. On May 4, 2021, we entered into a Credit Agreement (“Credit Agreement”) with Wells Fargo Bank, National Association, as Agent and Issuing Lender, under which we may borrow an aggregate of up to $40.0 million under a revolving credit facility (the “Revolving Credit Facility”), which will mature on May 4, 2024, subject to our compliance with certain financial covenants. See Note 15 in the Notes to Unaudited Condensed Consolidated Financial Statements for further information.

We maintain cash balances in order to meet the timing of day-to-day cash needs. Cash and cash equivalents (excluding restricted cash) and working capital, the excess of current assets over current liabilities, were as follows at the dates indicated (in thousands):


		September 30,		December 31,			March 31,		December 31,
		2020		2019			2021		2020

Cash and cash equivalents	Cash and cash equivalents	$	53,106	$	112,994	Cash and cash equivalents	$	58,985	$	39,293
Working capital	Working capital	84,147		87,747		Working capital	78,246		72,965

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~~Although our~~Our cash balance at ~~September 30, 2020 decreased~~March 31, 2021 increased by 5350 percent from December 31, ~~2019,~~2020, as discussed further ~~below, we~~below. We believe current cash balances, together with expected cash generated from future operations, and the ease of financing truck and trailer additions through leasing arrangements (should the need arise) will be sufficient to meet our short-term and long-term liquidity needs. ~~During June 2020,~~In March 2021, we made a cash payment of ~~approximately $9.2~~$2.5 million, ~~including acquisition costs,~~representing the first of four quarterly installments, plus interest of 4.0 percent per annum, of the remaining $10.0 million purchase price for the acquisition of CTL transportation assets. In October 2020, we also made a cash payment of approximately $10.0 million for the acquisition of a pipeline and related terminal facilities (see Note 15 in the Notes to Unaudited Condensed Consolidated Financial Statements for further information). In addition, we have significantly curtailed our capital spending asVEX acquisition. As a result of the ~~current business environment.~~continued uncertainty relating to the economic environment resulting from the COVID-19 pandemic, we have also continued to significantly curtail our capital spending.

On December 23, 2020, we entered into an At Market Issuance Sales Agreement (“ATM Agreement”) with B. Riley Securities, Inc., as agent (the “Agent”). Pursuant to the ATM Agreement, we may offer to sell shares of our common stock through or to the Agent for cash from time to time. We ~~are currently evaluating other long-term financing options~~filed a registration statement initially registering an aggregate of $20.0 million of shares of common stock for sale under the ATM Agreement. The total number of shares of common stock to be sold, if any, and the price the shares will be sold at will be determined by us periodically in connection with any such sales, though the total amount sold may not exceed the limitations stated in the ~~event~~registration statement. We did not sell any shares of common stock under the ~~need arises.~~ATM Agreement during the first quarter of 2021.

We utilize cash from operations to make discretionary investments in our crude oil marketing, transportation and ~~transportation~~pipeline and storage businesses. With the exception of operating and finance lease commitments primarily associated with storage tank terminal arrangements, leased office space, tractors, trailers and ~~trailers,~~other equipment, and payment of our remaining purchase price for the VEX Pipeline System, our future commitments and planned investments can be readily curtailed if operating cash flows decrease. See “Other Items” below for information regarding our operating and finance lease obligations.

The most significant item affecting future increases or decreases in liquidity is earnings from operations, and these earnings are dependent on the success of future operations. See “Part ~~II, Item 1A.~~ ~~Risk Factors” of this Quarterly Report on Form 10-Q and “Part~~ I, Item 1A. Risk Factors” in our ~~2019~~2020 Form 10-K.

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Cash Flows from Operating, Investing and Financing Activities

Our consolidated cash flows from operating, investing and financing activities were as follows for the periods indicated (in thousands):


		Nine Months Ended					Three Months Ended
		September 30,					March 31,
		2020		2019			2021		2020

Cash provided by (used in):	Cash provided by (used in):					Cash provided by (used in):
Operating activities	Operating activities	$	(50,090)	$	43,142	Operating activities	$	23,001	$	(23,846)
Investing activities	Investing activities	(9,343)		(26,448)		Investing activities	835		(582)
Financing activities	Financing activities	(4,851)		(4,131)		Financing activities	(4,539)		(1,602)

Operating activities. Net cash flows ~~used in~~provided by operating activities was ~~$50.1~~$23.0 million for the ~~nine~~three months ended ~~September 30, 2020~~March 31, 2021 as compared to net cash flows ~~provided by~~used in operating activities of ~~$43.1~~$23.8 million for the ~~nine~~three months ended ~~September 30, 2019.~~March 31, 2020. The ~~decrease~~increase in net cash flows from operating activities of ~~$93.2~~$46.8 million was primarily due to ~~lower~~higher earnings in the current period and changes in our working capital accounts.

At various times each month, we may make cash prepayments and/or early payments in advance of the normal due date to certain suppliers of crude oil within our crude oil marketing operations. Crude oil supply prepayments are recouped and advanced from month to month as the suppliers deliver product to us. In addition, in order to secure crude oil supply, we may also “early pay” our suppliers in advance of the normal payment due date of the twentieth of the month following the month of production. These “early payments” reduce cash and accounts payable as of the balance sheet date. ~~At September 30, 2020, we had no cash prepayments or early payments outstanding.~~

We also require certain customers to make similar early payments or to post cash collateral with us in order to support their purchases from us. Early payments and cash collateral received from customers increases cash and reduces accounts receivable as of the balance sheet date.

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Early payments received from customers and prepayments to suppliers were as follows at the dates indicated (in thousands):

September 30, December 31,
2020 2019
Early payments received $ — $ 54,108


	March 31,		December 31,
	2021		2020

Early payments received	$	20,095	$	939
Prepayments to suppliers	7,358		1,085

We rely heavily on our ability to obtain open-line trade credit from our suppliers especially with respect to our crude oil marketing operations. During December ~~2019,~~2020, we received ~~several~~a small amount of early payments from certain customers in our crude oil marketing operations, while during ~~September 2020,~~March 2021, we ~~did not receive any~~received an increase in early payments from customers. Our cash balance ~~decreased~~increased by approximately ~~$59.9~~$19.7 million as of ~~September 30, 2020~~March 31, 2021 relative to the year ended December 31, ~~2019~~2020 primarily as a result of the timing of the receipt of these early payments received during each period resulting from ~~the decrease~~an increase in crude oil marketing ~~activities.~~activities, partially offset by early payments made to our suppliers.

Investing activities. Net cash flows provided by investing activities was $0.8 million for the three months ended March 31, 2021 as compared to net cash flows used in investing activities of $0.6 million for the ~~nine~~three months ended ~~September 30, 2020 decreased by $17.1~~March 31, 2020. This increase in net cash flows from investing activities of $1.4 million ~~when compared to the same period in 2019. This decrease~~ was primarily due to a decrease of ~~$21.8~~$2.0 million in capital spending for property and equipment (see following table) and an increase of $0.4 million in insurance and state collateral refunds, partially offset by an increase of $3.5 million in cash paid for asset acquisitions ($9.2 million was paid in June 2020 for the purchase of the CTL transportation assets while $5.6 million was paid in May 2019 for the purchase of the EH Transport assets — both in our transportation segment), the receipt in 2019 of $1.0 million in cash proceeds related to the final settlement of AREC’s bankruptcy and a decrease of $0.6$0.5 million in cash proceeds from the sales of ~~assets.~~assets, partially offset by a decrease of $1.1 million in insurance and state collateral refunds.

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Capital spending was as follows for the periods indicated (in thousands):

Nine Months Ended
September 30,
2020 2019
Crude oil marketing (1)
$ 2,734 $ 6,896
Transportation (2)
332 18,529
Other (3)
523 —
Capital spending $ 3,589 $ 25,425


	Three Months Ended
	March 31,
	2021		2020
Crude oil marketing (1)	$	210	$	2,032
Transportation (2)	(58)		41
Pipeline and storage	10		—
Other (3)	8		139
Capital spending	$	170	$	2,212

_______________

(1)2021 amount primarily relates to the purchase of other field equipment. 2020 amount primarily relates to the purchase of 16 tractors and other field equipment. ~~2019~~

(2)During the three months ended March 31, 2021, we received a refund of approximately $0.3 million for amounts previously spent in our transportation segment, which has been reflected as a reduction in property and equipment additions. The remaining 2021 amount ~~primarily~~ relates to the purchase of ~~28 tractors~~two trailers and ~~other field~~computer software and equipment.

~~(2)~~(3)~~2020~~2021 amount ~~does not include approximately $9.2 million of capital spending related to the CTL asset acquisition. 2019 amount primarily~~ relates to the purchase of ~~86 tractors, 46 trailers~~computer software and ~~other field~~ equipment, and ~~does not include approximately $5.6 million of capital spending related to~~ the ~~EH Transport asset acquisition.~~

~~(3)Amount~~2020 amount relates to leasehold improvements at our corporate headquarters, both of which isare not attributed to any of our reporting segments.

Financing activities. Cash used in financing activities for the ~~nine~~three months ended ~~September 30, 2020~~March 31, 2021 increased by ~~$0.7~~$2.9 million when compared to the same period in ~~2019.~~2020. The increase was primarily due to the payment of the first $2.5 million installment related to the purchase of the VEX pipeline in October 2020, and an increase of $0.5 million in principal repayments made for finance lease obligations for certain of our tractors, trailers and a tank storage and throughput arrangement. During the nine months ended September 30, 2020, we paid cash dividends of $0.72 per common share, or a total of $3.1 million, while during the nine months ended September 30, 2019, we paid a cash dividend of $0.70 per common share, or a total of $3.0 million.obligations. See “Other Items” below for further information regarding our finance leases. During each of the three months ended March 31, 2021 and 2020, we paid a cash dividend of $0.24 per common share, or a total of $1.0 million.

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Other Items

Contractual Obligations

The following table summarizes our significant contractual obligations at ~~September 30, 2020~~March 31, 2021 (in thousands):


				Payments due by period											Payments due by period
Contractual Obligations	Contractual Obligations	Total		Less than 1 year		1-3 years		3-5 years		More than 5 years		Contractual Obligations	Total		Less than 1 year		1-3 years		3-5 years		More than 5 years
Finance lease obligations (1)	Finance lease obligations (1)	$	6,913	$	2,725	$	3,279	$	687	$	222	Finance lease obligations (1)	$	17,669	$	4,876	$	6,486	$	5,580	$	727
Operating lease obligations (2)	Operating lease obligations (2)	9,223		2,451		3,971		2,291		510		Operating lease obligations (2)	8,410		2,400		3,837		1,553		620

Payments for VEX Pipeline												Payments for VEX Pipeline
System acquisition (3)												System acquisition (3)	7,750		7,750		—		—		—
Purchase obligations (4)												Purchase obligations (4)	15,670		15,670		—		—		—
Total contractual obligations	Total contractual obligations	$	16,136	$	5,176	$	7,250	$	2,978	$	732	Total contractual obligations	$	49,499	$	30,696	$	10,323	$	7,133	$	1,347

_______________

(1)Amounts represent our principal contractual commitments, including interest, outstanding under finance leases for certain tractors, ~~and~~trailers, tank storage and throughput arrangements ~~in our crude oil marketing segment~~ and ~~for certain trailers in our transportation segment.~~other equipment.

(2)Amounts represent rental obligations under non-cancelable operating leases and terminal arrangements with terms in excess of one year.

(3)Amount represents our contractual obligation, including interest, related to the remaining three equal quarterly installments for the remaining purchase price for the acquisition of the VEX Pipeline System in October 2020.

(4)Amount represents commitments to purchase 31 new tractors and 50 new trailers in our transportation business and 51 new tractors in our crude oil marketing business.

See Note 13 in the Notes to Unaudited Condensed Consolidated Financial Statements for further information regarding our finance and operating leases.

Off-Balance Sheet Arrangements

We have no off-balance sheet arrangements that have or are reasonably expected to have a material current or future effect on our financial position, results of operations or cash flows.

Recent Accounting Pronouncements

For information regarding recent accounting pronouncements, see Note 2 in the Notes to Unaudited Condensed Consolidated Financial Statements.

Related Party Transactions

For more information regarding related party transactions, see Note 98 in the Notes to Unaudited Condensed Consolidated Financial Statements.

Critical Accounting Policies and Use of Estimates

A discussion of our critical accounting policies and estimates is included in our ~~2019~~2020 Form 10-K. Certain of these accounting policies require the use of estimates. There have been no material changes to our accounting policies since the disclosures provided in our ~~2019~~2020 Form 10-K, except as discussed in Note 2 and Note 6 in the Notes to Unaudited Condensed Consolidated Financial Statements in relation to Level 3 inputs used in the determination of fair value of intangible assets acquired.10-K.

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Item 3. Quantitative and Qualitative Disclosures about Market Risk

There have been no material changes to our “Quantitative and Qualitative Disclosures about Market Risk” that have occurred since the disclosures provided in our ~~2019~~2020 Form 10-K.

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Item 4. ~~Disclosure~~ Controls and Procedures

As of the end of the period covered by this quarterly report, our management carried out an evaluation, with the participation of our Chief Executive Officer and Chief Financial Officer, of the effectiveness of our disclosure controls and procedures pursuant to Rule 13a-15 and 15d-15(e) of the Exchange Act. Based on this evaluation, as of the end of the period covered by this quarterly report, our Chief Executive Officer and our Chief Financial Officer concluded:

(i)that our disclosure controls and procedures are designed to ensure that information required to be disclosed by us in the reports that we file or submit under the Exchange Act is recorded, processed, summarized and reported within the time periods specified in the SEC’s rules and forms, and that such information is accumulated and communicated to our management, including our principal executive and financial officers, as appropriate to allow for timely decisions regarding required disclosures; and

(ii)that our disclosure controls and procedures are effective.

Changes in Internal Control over Financial Reporting

There were no changes in our internal control over financial reporting (as defined in Rule 13a-15(f) and 15d-15(e) under the Exchange Act) during the fiscal quarter ended ~~September 30, 2020,~~March 31, 2021, that have materially affected, or are reasonably likely to materially affect, our internal control over financial reporting.

PART II. OTHER INFORMATION

Item 1. Legal Proceedings

Item 1A. Risk Factors

In addition to the other information set forth in this Quarterly Report, you should carefully consider the risk factors and other cautionary statements described under the heading “Item 1A. Risk Factors” included in our ~~2019~~2020 Form 10-K and the risk factors and other cautionary statements contained in our other SEC filings, which could materially affect our businesses, financial condition or future results. Additional risks and uncertainties not currently known to us or that we currently deem to be immaterial also may materially adversely affect our business, financial condition or future results. ~~Except as set forth below, there~~There have been no material changes in our Risk Factors from those disclosed in Item 1A of our ~~2019~~2020 Form 10-K or our other SEC filings.

~~The ongoing COVID-19 pandemic and the recent OPEC price war could disrupt our operations and adversely impact our business and financial results.~~

The outbreak of COVID-19 has resulted in the implementation of significant governmental measures to control the spread of the virus, including quarantines, travel restrictions, business shutdowns and restrictions on non-essential activities in the United States and abroad. As a result, the global economy has been marked by significant slowdown and uncertainty, which has led to a precipitous decline in crude oil prices in response to demand concerns, further exacerbated by the OPEC price war during the first quarter of 2020 and global storage considerations. During the second quarter of 2020, while members of OPEC reached agreements to cut crude oil production,

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downward pressure on crude oil prices continues and could continue into the foreseeable future, due to concerns regarding an oversupply of crude oil inventories. As a result, prices of crude oil and other commodities continue to remain volatile.

The ongoing COVID-19 pandemic has caused a number of adverse economic effects, including government restrictions, changes in consumer behavior related to the economic slowdown, and disruption of historical supply and demand patterns, which have negatively affected our business and the businesses of our customers.

As a result, our crude oil marketing operations have declined, as low crude oil prices have negatively impacted production of crude oil, and demand for crude oil and other related products has significantly decreased. While we consider the lower crude oil prices and decrease in demand to be temporary, if the pandemic and decline in crude oil prices continue, they may have a material adverse on our results of future operations, financial position and liquidity in 2021. We are actively monitoring our financial condition, liquidity, operations, customers, industry and workforce. Although we cannot estimate the length or gravity of the impacts of these events at this time, if the pandemic and decline in oil prices continue, we expect that they will have an adverse effect on our results of future operations, financial position and liquidity.

Additionally, during the second quarter of 2020, we saw a significant decline in our overall transportation operations primarily due to the continuation of the governmental restrictions and the adverse economic effects. While we have seen signs that demand for transportation of products has begun to increase, such demand may decrease again in the future, particularly if governmental restrictions are renewed or reinstituted.

The implementation of governmental restrictions related to COVID-19 has not to date had a significant impact on our ability to deploy our workforce effectively, as the transportation industry has been deemed an essential service, but limitations or restrictions could be enacted in the future that would impact our operations. Additionally, we may also experience disruptions in our workforce related to COVID-19, which may negatively affect our revenues in 2020 and our overall liquidity.

Item 2. Unregistered Sales of Equity Securities and Use of Proceeds

None.

Item 3. Defaults Upon Senior Securities

None.

Item 4. Mine Safety Disclosures

Not applicable.

Item 5. Other Information

None.

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Item 6. Exhibits


Exhibit
Number						Exhibit

3.1						Certificate of Incorporation of Adams Resources & Energy, Inc., as amended (incorporated by reference to Exhibit 3.1 to Form 10-K for the fiscal year ended December 31, 2019).
3.2						Bylaws of Adams Resources & Energy, Inc., as amended (incorporated by reference to Exhibit 3(b) to Form 10-K for the year ended December 31, 2012).
10.1+*						Form of Employee Performance Share Unit Award Agreement for 2021 Awards under the Adams Resources & Energy, Inc. 2018 Long-Term Incentive Plan.
31.1*						Sarbanes-Oxley Section 302 certification of Executive Chairman pursuant to Exchange Act Rules 13a-14(a) and 15d-14(a), as adopted pursuant to Section 302 of the Sarbanes-Oxley Act of 2002.
31.2*						Sarbanes-Oxley Section 302 certification of Chief Financial Officer pursuant to Exchange Act Rules 13a-14(a) and 15d-14(a), as adopted pursuant to Section 302 of the Sarbanes-Oxley Act of 2002.
32.1*						Sarbanes-Oxley Section 906 certification of Executive Chairman pursuant to 18. U.S.C. Section 1350, as adopted pursuant to Section 906 of the Sarbanes-Oxley Act of 2002.
32.2*						Sarbanes-Oxley Section 906 certification of Chief Financial Officer pursuant to 18. U.S.C. Section 1350, as adopted pursuant to Section 906 of the Sarbanes-Oxley Act of 2002.
101.CAL*						Inline XBRL Calculation Linkbase Document
101.DEF*						Inline XBRL Definition Linkbase Document
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.LAB*						Inline XBRL Labels Linkbase Document
101.PRE*						Inline XBRL Presentation Linkbase Document
101.SCH*						Inline XBRL Schema Document
104*						Cover Page Interactive Data File (formatted as inline XBRL and contained in Exhibit 101)

____________

*Filed or furnished (in the case of Exhibits 32.1 and 32.2) with this report.

+ Management contract or compensation plan or arrangement.

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SIGNATURES

Pursuant to the requirements 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.


			ADAMS RESOURCES & ENERGY, INC.
			(Registrant)



Date:	~~November 5, 2020~~May 6, 2021	By:	/s/ Kevin J. Roycraft
			Kevin J. Roycraft
			Chief Executive Officer
			(Principal Executive Officer)

		By:	/s/ Tracy E. Ohmart
			Tracy E. Ohmart
			Chief Financial Officer
			(Principal Financial Officer and Principal
			Accounting Officer)

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