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What changed in Delek Logistics Partners, LP's 10-K — 2023 vs 2024

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Paragraph-level year-over-year comparison of Delek Logistics Partners, LP's 2023 and 2024 10-K annual filings, covering the Business, Risk Factors, Legal Proceedings, Cybersecurity, MD&A and Market Risk sections. Every new, removed and edited paragraph is highlighted side-by-side so you can see exactly what management changed in the 2024 report.

+210 added−185 removedSource: 10-K (2025-02-26) vs 10-K (2024-02-28)

Top changes in Delek Logistics Partners, LP's 2024 10-K

210 paragraphs added · 185 removed · 141 edited across 6 sections

Item 1A. Risk Factors

Risk Factors — what could go wrong, per management

33 edited+6 added−4 removed494 unchanged
Biggest changeWith respect to the releases that have occurred, or for an event that occurs or is discovered in the future, whether in connection with any of our assets or any other facility to which we send or have sent waste or by-products for treatment or disposal, or a facility or assets that we may acquire from time to time as part of our ongoing growth strategy, we could be liable for all costs and penalties associated with the remediation of such facilities under federal, state and local environmental laws or common law.
Biggest change"Business and Properties—Governmental Regulation and Environmental Matters—Water." Among other things, the OPA requires us to prepare a facility response plan identifying the personnel and equipment necessary to remove, to the maximum extent practicable, a “worst case discharge.” While our plans are designed to mitigate environmental impacts, such plans may not protect us from all liability associated with the discharge of crude oil or products into navigable waters. 30 | Risk Factors With respect to the releases that have occurred, or for an event that occurs or is discovered in the future, whether in connection with any of our assets or any other facility to which we send or have sent waste or by-products for treatment or disposal, or a facility or assets that we may acquire from time to time as part of our ongoing growth strategy, we could be liable for all costs and penalties associated with the remediation of such facilities under federal, state and local environmental laws or common law.
Similarly, the respective indentures governing the 2025 Notes and 2028 Notes contain covenants that, among other things, limit our ability and the ability of our restricted subsidiaries to (i) incur, assume or guarantee additional indebtedness or issue certain convertible or redeemable equity securities; (ii) create liens to secure indebtedness; (iii) pay distributions on equity interests, repurchase equity securities or redeem subordinated securities; (iv) make investments; (v) make distributions, loans or other asset transfers from our restricted subsidiaries; (vi) consolidate with or merge with or into, or sell substantially all of our properties to, another person; (vii) sell or otherwise dispose or assets, including equity interests in subsidiaries; and (viii) enter into transactions with affiliates.
Similarly, the respective indentures governing the 2028 Notes and 2029 Notes contain covenants that, among other things, limit our ability and the ability of our restricted subsidiaries to (i) incur, assume or guarantee additional indebtedness or issue certain convertible or redeemable equity securities; (ii) create liens to secure indebtedness; (iii) pay distributions on equity interests, repurchase equity securities or redeem subordinated securities; (iv) make investments; (v) make distributions, loans or other asset transfers from our restricted subsidiaries; (vi) consolidate with or merge with or into, or sell substantially all of our properties to, another person; (vii) sell or otherwise dispose or assets, including equity interests in subsidiaries; and (viii) enter into transactions with affiliates.
Furthermore, under many of our commercial agreements with them, Delek Holdings' consent is required before we may enter into an agreement with any third party with respect to certain of our assets, including those that serve the El Dorado, Tyler and Big Spring Refineries, and Delek Holdings has an incentive to cause us not to pursue such third-party contracts in certain circumstances. • Our general partner is allowed to take into account the interests of parties other than us, such as Delek Holdings, in resolving conflicts of interest. • All of the officers and three of the directors of our general partner are also officers and/or directors of Delek Holdings and owe fiduciary duties to Delek Holdings.
Furthermore, under many of our commercial agreements with them, Delek Holdings' consent is required before we may enter into an agreement with any third party with respect to certain of our assets, including those that serve the El Dorado, Tyler and Big Spring Refineries, and Delek Holdings has an incentive to cause us not to pursue such third-party contracts in certain circumstances. • Our general partner is allowed to take into account the interests of parties other than us, such as Delek Holdings, in resolving conflicts of interest. • All of the officers and two of the directors of our general partner are also officers and/or directors of Delek Holdings and owe fiduciary duties to Delek Holdings.
Potential difficulties that may be encountered in the integration process include, among others: • the inability to successfully integrate the Delaware Gathering business into our business in a manner that permits us to achieve the revenue and cost savings that we announced as anticipated from the acquisition; 28 | Risk Factors • complexities associated with managing the larger, integrated business; • potential unknown liabilities and unforeseen expenses, delays or regulatory conditions associated with the Delaware Gathering Acquisition; • integrating personnel from the two companies while maintaining focus on providing consistent, high-quality products and services; • loss of key employees; • integrating relationships with customers, vendors and business partners; • performance shortfalls at either or both of our existing businesses or the acquired business as a result of the diversion of management's attention caused by completing the acquisition and integration of Delaware Gathering's operations into the Partnership; and • the disruption or loss in momentum in, each company’s ongoing business or inconsistencies in standards, controls, procedures and policies.
Potential difficulties that may be encountered in the integration process include, among others: • the inability to successfully integrate the H2O Midstream or Gravity business into our business in a manner that permits us to achieve the revenue and cost savings that we announced as anticipated from the acquisition; 28 | Risk Factors • complexities associated with managing the larger, integrated business; • potential unknown liabilities and unforeseen expenses, delays or regulatory conditions associated with the Delaware Gathering Acquisition; • integrating personnel from the two companies while maintaining focus on providing consistent, high-quality products and services; • loss of key employees; • integrating relationships with customers, vendors and business partners; • performance shortfalls at either or both of our existing businesses or the acquired business as a result of the diversion of management's attention caused by completing the acquisition and integration of operations into the Partnership; and • the disruption or loss in momentum in, each company’s ongoing business or inconsistencies in standards, controls, procedures and policies.
In addition, a failure to comply with the provisions of our revolving credit facility or the indentures governing the 2025 Notes and 2028 Notes could result in a default or an event of default that could enable our lenders to declare the outstanding principal of that debt, together with accrued and unpaid interest and certain other indebtedness and other outstanding amounts, to be immediately due and payable.
In addition, a failure to comply with the provisions of our revolving credit facility or the indentures governing the 2028 Notes and 2029 Notes could result in a default or an event of default that could enable our lenders to declare the outstanding principal of that debt, together with accrued and unpaid interest and certain other indebtedness and other outstanding amounts, to be immediately due and payable.
Any loss of our key customers, including Delek Holdings, could adversely affect our financial condition, results of operations, cash flows, ability to service our indebtedness and ability to make distributions to our unitholders. 36 | Risk Factors Restrictions in our revolving credit facility and in the respective indentures governing the 2025 Notes and 2028 Notes could adversely affect our business, financial condition, results of operations and ability to make quarterly cash distributions to our unitholders.
Any loss of our key customers, including Delek Holdings, could adversely affect our financial condition, results of operations, cash flows, ability to service our indebtedness and ability to make distributions to our unitholders. 36 | Risk Factors Restrictions in our revolving credit facility and in the respective indentures governing the 2028 Notes and 2029 Notes could adversely affect our business, financial condition, results of operations and ability to make quarterly cash distributions to our unitholders.
Our revolving credit facility and the respective indentures governing the 2025 Notes and 2028 Notes (as defined in Note 11 to our consolidated financial statements in Item 8, Financial Statements and Supplementary Data, of this Annual Report on Form 10-K) contain, and any future financing agreements may contain, operating and financial restrictions and covenants that could limit our ability to finance future operations or capital needs, or to expand or pursue our business activities, which may, in turn, limit our ability to make cash distributions to our unitholders.
Our revolving credit facility and the respective indentures governing the 2028 Notes and 2029 Notes (as defined in Note 10 to our consolidated financial statements in Item 8, Financial Statements and Supplementary Data, of this Annual Report on Form 10-K) contain, and any future financing agreements may contain, operating and financial restrictions and covenants that could limit our ability to finance future operations or capital needs, or to expand or pursue our business activities, which may, in turn, limit our ability to make cash distributions to our unitholders.
The provisions of our revolving credit facility and of the respective indentures governing the 2025 Notes and 2028 Notes may affect our ability to obtain future financing and pursue attractive business opportunities and our flexibility in planning for, and reacting to, changes in business conditions.
The provisions of our revolving credit facility and of the respective indentures governing the 2028 Notes and 2029 Notes may affect our ability to obtain future financing and pursue attractive business opportunities and our flexibility in planning for, and reacting to, changes in business conditions.
Transportation of crude oil and products over water, or proximate to navigable bodies of water, involves inherent risks (including risks of spills) and could subject us to the provisions of the OPA, the Clean Water Act and similar state environmental 30 | Risk Factors laws should a spill occur from our facilities. See Items 1 and 2.
Transportation of crude oil and products over water, or proximate to navigable bodies of water, involves inherent risks (including risks of spills) and could subject us to the provisions of the OPA, the Clean Water Act and similar state environmental laws should a spill occur from our facilities. See Items 1 and 2.
We have the ability to incur additional debt; however, such ability is subject to limitations under our revolving credit facility and the respective indentures governing the 2025 Notes and 2028 Notes.
We have the ability to incur additional debt; however, such ability is subject to limitations under our revolving credit facility and the respective indentures governing the 2028 Notes and 2029 Notes.
Delek Holdings controls our general partner and appoints all of the officers and directors of our general partner. In addition, all of the officers and three of the directors of our general partner are also officers and/or directors of Delek Holdings. See Item 10. Directors, Executive Officers and Corporate Governance.
Delek Holdings controls our general partner and appoints all of the officers and directors of our general partner. In addition, all of the officers and two of the directors of our general partner are also officers and/or directors of Delek Holdings. See Item 10. Directors, Executive Officers and Corporate Governance.
Fixed rate debt, such as the 2025 Notes and 2028 Notes, exposes us to changes in the fair value of our debt due to changes in market interest rates.
Fixed rate debt, such as the 2028 Notes and 2029 Notes, exposes us to changes in the fair value of our debt due to changes in market interest rates.
We could also be liable under laws that protect the privacy of personal information, subject to regulatory penalties, experience damage to our reputation or a loss of consumer confidence, or incur additional costs for remediation and modification or enhancement of our information systems to prevent future occurrences, all of which could adversely affect our reputation, business, operations or financial results. 44 | Risk Factors We may be adversely affected by the effects of inflation.
We could also be liable under laws that protect the privacy of personal information, subject to regulatory penalties, experience 44 | Risk Factors damage to our reputation or a loss of consumer confidence, or incur additional costs for remediation and modification or enhancement of our information systems to prevent future occurrences, all of which could adversely affect our reputation, business, operations or financial results.
We have filed a shelf registration statement with the SEC for the re-sale or other disposition from time to time by Delek Holdings of up to 14.0 million common limited partner units. We will not receive any proceeds from the sale of these units by Delek Holdings.
We have filed a shelf registration statement with the SEC for the re-sale or other disposition from time to time by Delek Holdings of up to 13.6 million common limited partner units. We will not receive any proceeds from the sale of these units by Delek Holdings.
In addition, as technologies evolve, work trends change such as the increase in remote work in the wake of the COVID-19 Pandemic, and cyber-attacks become more sophisticated, we may incur significant costs to upgrade or enhance our security measures to protect against such attacks and we may face difficulties in fully anticipating or implementing adequate preventive measures or mitigating potential harm.
In addition, as technologies evolve, work trends change such as the increase in remote work, and cyber-attacks become more sophisticated, we may incur significant costs to upgrade or enhance our security measures to protect against such attacks and we may face difficulties in fully anticipating or implementing adequate preventive measures or mitigating potential harm.
Inflation has the potential to adversely affect our liquidity, business, financial condition and results of operations by increasing our overall cost structure, particularly if we are unable to achieve commensurate increases in the prices we charge our customers.
We may be adversely affected by the effects of inflation. Inflation has the potential to adversely affect our liquidity, business, financial condition and results of operations by increasing our overall cost structure, particularly if we are unable to achieve commensurate increases in the prices we charge our customers.
Delek Holdings may sell units in the public or private markets, and such sales could have an adverse impact on the trading price of the common units. As of February 24, 2023, Delek Holdings held 34,311,278 common limited partner units. In addition, we have agreed to provide Delek Holdings with certain registration rights on a portion of these units.
Delek Holdings may sell units in the public or private markets, and such sales could have an adverse impact on the trading price of the common units. As of February 20, 2025, Delek Holdings held 34,111,278 common limited partner units. In addition, we have agreed to provide Delek Holdings with certain registration rights on a portion of these units.
We rely on commercially available systems, software, tools and monitoring to provide security for processing, transmission and storage of confidential customer information, such as payment card and personal credit information. Despite our security measures, we experience attempts by external parties to penetrate and attack our networks and systems.
We rely on commercially available systems, software, tools and monitoring, which may also include embedded AI, to provide security for processing, transmission and storage of confidential customer information, such as payment card and personal credit information. Despite our security measures, we experience attempts by external parties to penetrate and attack our networks and systems.
The revolving credit facility and the respective indentures governing the 2025 Notes and 2028 Notes also have cross-default provisions that would apply to certain other indebtedness we may have. Our debt levels may limit our flexibility to obtain financing and to pursue other business opportunities. As of December 31, 2023, we had approximately $1,711.8 million in debt outstanding.
The revolving credit facility and the respective indentures governing the 2028 Notes and 2029 Notes also have cross-default provisions that would apply to certain other indebtedness we may have. Our debt levels may limit our flexibility to obtain financing and to pursue other business opportunities. As of December 31, 2024, we had approximately $1,885.4 million in debt outstanding.
Our unitholders may also incur a tax liability upon any such sale of their units to Delek Holdings. At February 21, 2024, Delek Holdings owned 34,311,278 common limited partner units, or 78.7% of our total outstanding common limited partner units. Our unitholders' liability may not be limited if a court finds that unitholder action constitutes control of our business.
Our unitholders may also incur a tax liability upon any such sale of their units to Delek Holdings. At February 20, 2025, Delek Holdings owned 34,111,278 common limited partner units, or 63.6% of our total outstanding common limited partner units. Our unitholders' liability may not be limited if a court finds that unitholder action constitutes control of our business.
On January 20, 2021, the Acting Secretary for the Department of the Interior signed an order effectively suspending new fossil fuel leasing and permitting on federal lands for 60 days.
Additionally, certain of our customers produce oil and gas on federal lands. On January 20, 2021, the Acting Secretary for the Department of the Interior signed an order effectively suspending new fossil fuel leasing and permitting on federal lands for 60 days.
However, under the Tax Reform Act, for taxable years beginning after December 31, 2017, our deduction for “business interest” is limited to the sum of our business interest income and 30% of our “adjusted taxable income.” For purposes of this limitation, our adjusted taxable income is computed without regard to any business interest expense or business interest income. ITEM 1B.
However, under the Tax Reform Act, for taxable years beginning after December 31, 2017, our deduction for “business interest” is limited to the sum of our business interest income and 30% of our “adjusted taxable income.” For purposes of this limitation, our adjusted taxable income is computed without regard to any business interest expense or business interest income. 55 | Unresolved Staff Comments, Cybersecurity Related Matters, Legal Proceedings and Mine Safety Disclosures ITEM 1B.
As of February 21, 2024, Delek Holdings owned 78.7% of our outstanding common limited partner units. Our Partnership Agreement restricts the voting rights of unitholders owning 20% or more of our common limited partner units.
As of February 20, 2025, Delek Holdings owned 63.6% of our outstanding common limited partner units. Our Partnership Agreement restricts the voting rights of unitholders owning 20% or more of our common limited partner units.
Separately, increased attention to climate change risks has increased the possibility of claims brought by public and private entities against oil and gas companies in connection with their GHG emissions.
Concern over the threat of climate change may also result in political action deleterious to our interests. Separately, increased attention to climate change risks has increased the possibility of claims brought by public and private entities against oil and gas companies in connection with their GHG emissions.
A direct attack on our assets, or the assets of others used by us, could have a material adverse effect on our business, financial condition and results of operations. 43 | Risk Factors Uncertainty surrounding new or continued global hostilities or other sustained military campaigns, and the possibility that infrastructure facilities could be direct targets of, or indirect casualties of, an act of terror, armed conflict or war, may affect our operations in unpredictable ways, including disruptions of crude oil supplies and markets for refined products.
Uncertainty surrounding new or continued global hostilities or other sustained military campaigns, and the possibility that infrastructure facilities could be direct targets of, or indirect casualties of, an act of terror, armed conflict or war, may affect our operations in unpredictable ways, including disruptions of crude oil supplies and markets for refined products.
However, in December 2017, the BLM published a final rule rescinding the 2015 rule. The U.S. District Court for the Northern District of California upheld the December 2017 rescission rule in a March 2020 decision, and the State of California and environmental plaintiffs appealed.
However, in December 2017, the BLM published a final rule rescinding the 2015 rule and the U.S. District Court for the Northern District of California upheld the December 2017 rescission rule in a March 2020 decision. Further, several federal governmental agencies have conducted reviews and studies on the environmental aspects of hydraulic fracturing, including the EPA.
State and federal regulatory agencies recently have focused on a possible connection between the hydraulic fracturing related activities and the increased occurrence of seismic activity. When caused by human activity, such events are called induced seismicity. Some state regulatory agencies, including those in Colorado, Ohio, and Texas, have modified their regulations or guidance to account for induced seismicity.
The results of such reviews or studies could spur initiatives to further regulate hydraulic fracturing. 42 | Risk Factors State and federal regulatory agencies recently have focused on a possible connection between the hydraulic fracturing related activities and the increased occurrence of seismic activity. When caused by human activity, such events are called induced seismicity.
We also utilize information technology systems and controls throughout our operations to capture accounting, technical and regulatory data for subsequent archiving, analysis and reporting. Disruption, failure, or cyber security breaches affecting or targeting our computer or telecommunications systems, our infrastructure, or the infrastructure of our cloud-based IT service providers may materially impact our business and operations.
Disruption, failure, or cyber security breaches affecting or targeting our computer or telecommunications systems, our infrastructure, or the infrastructure of our cloud-based IT service providers may materially impact our business and operations.
The EPA has also moved forward with various regulatory actions, including a proposal to issue new regulations under the New Source Performance Standards (NSPS) to expand and strengthen emissions reduction requirements under NSPS OOOOa for new, modified and reconstructed oil and natural gas sources, and require states to reduce methane emissions from existing sources nationwide.
The EPA finalized new regulations under the New Source Performance Standards (NSPS) OOOOa, OOOOb and OOOOc in March 2024 to expand and strengthen emissions reduction requirements for new, modified and reconstructed oil and natural gas sources, and require states to reduce methane emissions from existing sources nationwide. Compliance costs are not expected to be material.
The adoption and implementation of new or more stringent legislation or regulations could result in increased costs of compliance or costs of consuming, and thereby reduce demand for, oil and natural gas, which could reduce demand for our services and products. Concern over the threat of climate change may also result in political action deleterious to our interests.
On January 20, 2025, the U.S. again began the process to withdraw from participating in the Paris Agreement. The adoption and implementation of new or more stringent legislation or regulations could result in increased costs of compliance or costs of consuming, and thereby reduce demand for, oil and natural gas, which could reduce demand for our services and products.
On June 1, 2022, we completed the Delaware Gathering Acquisition, which has required management to devote significant attention and resources to integrating the Delaware Gathering business with our business.
On September 11, 2024, we completed the H2O Midstream Acquisition and on January 2, 2025, we completed the Gravity Acquisition, which has required management to devote significant attention and resources to integrating these operations with our business.
These developments could result in additional regulation and restrictions on the use of injection disposal wells and hydraulic fracturing. Such regulations and restrictions could cause delays and impose additional costs and restrictions on our customers. Additionally, certain of our customers produce oil and gas on federal lands.
Some state regulatory agencies, including those in Colorado, Ohio, and Texas, have modified their regulations or guidance to account for induced seismicity. These developments could result in additional regulation and restrictions on the use of injection disposal wells and hydraulic fracturing. Such regulations and restrictions could cause delays and impose additional costs and restrictions on our customers.
We may be more susceptible to a direct attack as a result of our connection to Israel.
We may be more susceptible to a direct attack as a result of our connection to Israel. 43 | Risk Factors A direct attack on our assets, or the assets of others used by us, could have a material adverse effect on our business, financial condition and results of operations.
Removed
The effect of the conflicts between Russia and Ukraine beginning in February 2022 and between Israel and Hamas beginning in October 2023, on our business, financial condition, and results of operations are impossible to predict.
Added
In February 2025, the U.S. announced the imposition of tariffs on imports from several U.S. trade partners and could announce additional tariffs in future periods. There is significant uncertainty as to the duration of these and any further tariffs, and the impacts these tariffs and any corresponding retaliatory tariffs will have on us, our suppliers and our customers.
Removed
Any increase in sanctions, escalating of the conflicts, including the regional or global expansion of hostilities, and other future developments could significantly affect the global economy, lead to market volatility and supply chain disruptions, have an adverse impact on energy prices, including prices of crude oil, other feedstocks, and refined petroleum products, have an adverse impact on the margins from our petroleum product marketing operations, and have a material adverse effect on our business, financial condition, and results of operations.
Added
The financial impacts of the tariffs on our results of operations and financial condition remain uncertain at the time of filing this report.
Removed
"Business and Properties—Governmental Regulation and Environmental Matters—Water." Among other things, the OPA requires us to prepare a facility response plan identifying the personnel and equipment necessary to remove, to the maximum extent practicable, a “worst case discharge.” While our plans are designed to mitigate environmental impacts, such plans may not protect us from all liability associated with the discharge of crude oil or products into navigable waters.
Added
More recently there has also been growing opposition to ESG matters from U.S. federal, state and local governments, with the President having recently issued an executive order opposing diversity equity and inclusion (“DEI”) initiatives in the private sector.
Removed
Litigation is currently ongoing. 42 | Risk Factors Further, several federal governmental agencies have conducted reviews and studies on the environmental aspects of hydraulic fracturing, including the EPA. The results of such reviews or studies could spur initiatives to further regulate hydraulic fracturing.
Added
Such anti-ESG and anti-DEI-related policies, legislation, initiatives, litigation, and scrutiny could result in additional compliance obligations, litigation risks, and governmental investigations or enforcement actions, which could impact how we conduct our operations or result in reputational harm.
Added
We also utilize information technology systems and controls, some of which include embedded artificial intelligence ("AI"), throughout our operations to capture accounting, technical and regulatory data for subsequent archiving, analysis and reporting.
Added
Additionally, our use of AI software may create additional risks related to the unintentional disclosure of proprietary, confidential, personal or otherwise sensitive information.

Item 1C. Cybersecurity

Cybersecurity — threats and controls disclosure

10 edited+0 added−0 removed12 unchanged
Biggest changeBuilding upon the success of the two drills conducted in 2023, we are dedicated to continuous improvement and proactive readiness in addressing potential challenges and ensuring the effective management of incidents. The Partnership has not experienced a significant cybersecurity breach or associated expenses, penalties, or settlements for years ended December 31, 2023, 2022 and 2021.
Biggest changeBuilding upon the success of the drill conducted in 2024 and previous years, we remain committed to continuous improvement and proactive preparedness in addressing potential challenges and effectively managing incidents. The Partnership has not experienced a significant cybersecurity breach or associated expenses, penalties, or settlements for years ended December 31, 2024, 2023 and 2022.
Our Chief Technology & Digital Officer/Chief Information Officer has nearly 20 years of IT experience including areas of technology, cybersecurity, data, analytics, and digital transformation as well as being an Adjunct Lecturer at Tel-Aviv University and the Technion for Big Data Technologies, Data Science and Data Visualization. Representing the state of Israel at MIT’s CDOIQ forum.
Our Chief Technology & Data Officer has nearly 20 years of IT experience including areas of technology, cybersecurity, data, analytics, and digital transformation as well as being an Adjunct Lecturer at Tel-Aviv University and the Technion for Big Data Technologies, Data Science and Data Visualization. Representing the state of Israel at MIT’s CDOIQ forum.
Our Chief Technology & Digital Officer oversees a team of security professionals and regularly updates the Board of Directors on any potential risks and threats to the Partnership. Senior leadership including our Chief Technology & Digital Officer/Chief Information Officer and the Chief Information Security Officer brief the Board on information security matters multiple times throughout the year.
Our Chief Technology & Data Officer oversees a team of security professionals and regularly updates the Board of Directors on any potential risks and threats to the Partnership. Senior leadership including our Chief Technology & Data Officer/Chief Information Officer and the Chief Information Security Officer brief the Board on information security matters multiple times throughout the year.
Our Chief Technology & Digital Officer/Chief Information Officer reports to the President, dedicating a substantial amount of their efforts to ensure the safety and security of our networks and systems.
Our Chief Technology & Data Officer reports to the President, dedicating a substantial amount of their efforts to ensure the safety and security of our networks and systems.
Cybersecurity risks and Partnership programs are discussed with the Board of Directors by the Chief Technology & Digital Officer Chief Information Officer and others.
Cybersecurity risks and Partnership programs are discussed with the Board of Directors by the Chief Technology & Data Officer and others.
We established a thorough, risk-based cybersecurity program aimed at safeguarding our data, along with the data of our customers and partners. The identification, assessment, and management of cyber risks fall under our Enterprise Risk Management (“ERM”) program, overseen by the board of directors of our general partner.
We maintain and continually enhance a comprehensive, risk-based cybersecurity program aimed at safeguarding our data, along with the data of our customers and partners. The identification, assessment, and management of cyber risks fall under our Enterprise Risk Management (“ERM”) program, overseen by the board of directors of our general partner.
To assist in these efforts, the board of directors of our general partner has assigned a number of cybersecurity related responsibilities to its standing committees while retaining overall responsibility for the oversight of Delek's cybersecurity activities. 56 | Unresolved Staff Comments & Properties In overseeing cybersecurity risks, the Board of Directors follows the principles identified by the National Association of Corporate Directors in the oversight of cybersecurity risks.
To assist in these efforts, the board of directors of our general partner has assigned a number of cybersecurity related responsibilities to its standing committees while retaining overall responsibility for the oversight of Delek's cybersecurity activities. 56 | Unresolved Staff Comments, Cybersecurity Related Matters, Legal Proceedings and Mine Safety Disclosures In overseeing cybersecurity risks, the Board of Directors follows the principles identified by the National Association of Corporate Directors in the oversight of cybersecurity risks.
The Technology Committee’s designated focus on these areas of the Partnership’s digitalization, information and operational security policies help ensure strategic alignment of the Partnership’s strategies with information security and risk management. 57 | Unresolved Staff Comments & Properties Management Oversight Our senior leadership team is actively involved in cybersecurity governance, ensuring the highest level of oversight of cybersecurity risks.
The Technology Committee’s designated focus on these areas of the Partnership’s digitalization, information and operational security policies help ensure strategic alignment of the Partnership’s strategies with information security and risk management. 57 | Unresolved Staff Comments, Cybersecurity Related Matters, Legal Proceedings and Mine Safety Disclosures Management Oversight Our senior leadership team is actively involved in cybersecurity governance, ensuring the highest level of oversight of cybersecurity risks.
Our Chief Technology Officer & Digital Officer/Chief Information Officer holds overall 55 | Unresolved Staff Comments & Properties responsibility for IT, OT, and cybersecurity. The Partnership follows well-organized cybersecurity frameworks with a Chief Information Security Officer dedicated to overseeing cybersecurity initiatives throughout the entire enterprise.
Our Chief Technology & Data Officer/Chief Information Officer holds overall responsibility for IT, OT, and cybersecurity. The Partnership follows well-organized cybersecurity frameworks with a Chief Information Security Officer dedicated to overseeing cybersecurity initiatives throughout the entire enterprise.
Furthermore, we have reinforced our data protection capabilities by investing in both hardware and software. Recognizing that humans are often the most vulnerable element of even the most secure computer architectures, The Partnership has increased the frequency and sophistication of the mandatory training and phishing campaign program for our employees.
Furthermore, we have reinforced our data protection capabilities by investing in both hardware and software. Recognizing that humans are often the most vulnerable element of even the most secure computer architectures, The Partnership upholds a robust mandatory security awareness program, including required training and phishing campaigns for our employees.

Item 3. Legal Proceedings

Legal Proceedings — active lawsuits and investigations

1 edited+0 added−0 removed2 unchanged
Biggest changeSee Note 14 to the consolidated financial statements in Item 8, Financial Statements and Supplementary Data, of this Annual Report on Form 10-K, which is incorporated by reference in this Item 3, for additional information.
Biggest changeSee Note 15 to the consolidated financial statements in Item 8, Financial Statements and Supplementary Data, of this Annual Report on Form 10-K, which is incorporated by reference in this Item 3, for additional information.

Item 5. Market for Registrant's Common Equity

Market for Common Equity — stock, dividends, buybacks

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Biggest changeOur common units trade on the NYSE under the symbol "DKL." There were two holders of record of our common units held by the public as of February 21, 2024. In addition, as of February 21, 2024, Delek Holdings and its affiliates owned 34,311,278 of our common units.
Biggest changeOur common units trade on the NYSE under the symbol "DKL." There were three holders of record of our common units held by the public as of February 20, 2025. In addition, as of February 20, 2025, Delek Holdings and its affiliates owned 34,111,278 of our common units.

Item 7. Management's Discussion & Analysis

Management's Discussion & Analysis (MD&A) — revenue / margin commentary

95 edited+63 added−40 removed82 unchanged
Biggest changeSuch decreases were partially offset by the following: • increase in terminalling and marketing revenue primarily due to increased volume and rates associated with Big Spring marketing operations. 77 | Management's Discussion and Analysis The following charts show summaries of the average sales prices per gallon of gasoline and diesel and refined products volume impacting our West Texas operations for the years ended December 31, 2023, 2022: Cost of Materials and Other 2023 vs. 2022 Cost of materials and other for the wholesale marketing and terminalling segment decreased by $102.9 million, or 20.9% , in the year ended December 31, 2023 compared to the year ended December 31, 2022, primarily driven by the following: • decreased costs of materials and other of $101.9 million in our West Texas marketing operations primarily driven by decreases in the average cost per gallon and the volumes of gasoline and diesel sold: ◦ the average cost per gallon of gasoline and diesel sold decreased by $0.49 per gallon and $0.74 per gallon, respectively; and ◦ the volumes of diesel sold decreased by 3.6 million gallons, partially offset by a 0.6 million increase in gallons of gasoline sold.
Biggest changeOperational Comparison of the Year Ended December 31, 2024 versus the Year Ended December 31, 2023: Net Revenues 2024 vs. 2023 Net revenues for the wholesale marketing and terminalling segment decreased by $54.2 million, or 10.7%, in the year ended December 31, 2024 compared to the year ended December 31, 2023, primarily driven by the following: • decreased revenue of $47.3 million in our West Texas marketing operations primarily driven by a decrease in average sales prices per gallon and decrease in RINs revenue: ◦ the average sales prices per gallon of gasoline and diesel sold decreased by $0.19 and $0.40 per gallon, respectively; and ◦ RINs revenue decreased from $11.0 million in the year ended December 31, 2023 to $5.0 million in the year ended December 31, 2024, due to decrease in RINs prices. • decrease due to recording certain throughput fees as interest income under sales-type lease accounting that were previously recorded as revenue in the prior year period. 77 | Management's Discussion and Analysis of Financial Condition and Results of Operations The following charts show summaries of the average sales prices per gallon of gasoline and diesel and refined products volume impacting our West Texas operations for the years ended December 31, 2024 and 2023.
In addition, past financial and/or operating performance is not necessarily a reliable indicator of future performance, and you should not use our historical performance to anticipate results or future period trends.
In addition, past financial and/or operating performance is not necessarily a reliable indicator of future performance, and you should not use our historical performance to anticipate results or future period trends.
The strategic benefit for each is described below: • The RIO Pipeline is positioned in the Delaware Basin and benefits from drilling activity in the area, while also offering producers and shippers connections to Midland, Texas takeaway pipelines; • The Caddo Pipeline provides crude oil logistics connectivity for shippers from Longview, Texas area to Shreveport, Louisiana area; and • The Red River Pipeline provides crude oil transportation and optionality from Cushing, Oklahoma to Longview, Texas area and connectivity to our Caddo JV along with the Partnership's Paline pipeline for access to Gulf Coast markets.
The strategic benefit for each is described below: • The RIO Pipeline is positioned in the Delaware Basin and benefits from drilling activity in the area, while also offering producers and shippers connections to Midland, Texas takeaway pipelines; • The Caddo Pipeline provides crude oil logistics connectivity for shippers from Longview, Texas area to Shreveport, Louisiana area; • The Red River Pipeline provides crude oil transportation and optionality from Cushing, Oklahoma to Longview, Texas area and connectivity to our Caddo JV along with the Partnership's Paline pipeline for access to Gulf Coast markets.
Finally, our gathering and processing assets are integrated with our pipeline assets, which we use to transport gathered crude oil as well as provide other crude oil, intermediate and refined products transportation in support of Delek Holdings' refining operations in Tyler, Texas, El Dorado, Arkansas and Big Spring, Texas, as well as to certain third parties.
Finally, our gathering and processing assets are integrated with our pipeline assets, which we use to transport gathered crude oil as well as provide other crude oil, intermediate and refined products transportation mainly in support of Delek Holdings' refining operations in Tyler, Texas, El Dorado, Arkansas and Big Spring, Texas, as well as to certain third parties.
The Partnership announces material information to the public about the Partnership, its products and services and other matters through a variety of means, including filings with the Securities and Exchange Commission, press releases, public conference calls, the Partnership's website (www.deleklogistics.com), the investor relations section of the website (ir.deleklogistics.com), the news section of its website (www.deleklogistics.com/news), and/or social media, including its X (formerly known as Twitter) account (@DelekLogistics).
The Partnership announces material information to the public about the Partnership, its products and services and other matters through a variety of means, including filings with the Securities and Exchange Commission, press releases, public conference calls, the Partnership's website (www.deleklogistics.com), the investor relations section of the website (www.deleklogistics.com/overview), the news section of its website (www.deleklogistics.com/news-releases), and/or social media, including its X (formerly known as Twitter) account (@DelekLogistics).
See the Consolidated Statements of Income included in Item 8. Financial Statements and Supplementary Data, of this Annual Report on Form 10-K for more detail regarding our results of operations. (2) For a definition of EBITDA, see "Non-GAAP Measures" above. (3) EBITDA includes $14.8 million of goodwill impairment expense for the year ended December 31, 2023.
See the Consolidated Statements of Income and Comprehensive Income included in item 8. Financial Statements and Supplementary Data, of this Annual Report on Form 10-K for more detail regarding our results of operations. (2) For a definition of EBITDA see "Non-GAAP Measures" above. (3) EBITDA includes $14.8 million of goodwill impairment for the year ended December 31, 2023.
Floating interest rate debt is calculated using rates in effect on December 31, 2023. (2) Amounts reflect future estimated lease payments under operating leases having remaining non-cancelable terms in excess of one year as of December 31, 2023. We also have other non-current liabilities pertaining to environmental liabilities and asset retirement obligations.
Floating interest rate debt is calculated using rates in effect on December 31, 2024. (2) Amounts reflect future estimated lease payments under operating leases having remaining non-cancelable terms in excess of one year as of December 31, 2024. We also have other non-current liabilities pertaining to environmental liabilities and asset retirement obligations.
Forward-looking statements include, among other things, statements regarding the effect, impact, potential duration or other implications of, or expectations expressed with respect to, the actions of members of the Organization of Petroleum Exporting Countries ("OPEC") and other leading oil producing countries (together with OPEC, "OPEC+") with respect to oil production and pricing, and statements regarding our efforts and plans in response to such events, the information concerning our possible future results of operations, business and growth strategies, financing plans, expectations that regulatory developments or other matters will not have a material adverse effect on our business or financial condition, our competitive position and the effects of competition, the projected growth of the industry in which we operate, the benefits and synergies to be obtained from our completed and any future acquisitions, statements of management’s goals and objectives, and other similar expressions concerning matters that are not historical facts.
Forward-looking statements include, among other things, statements regarding the effect, impact, potential duration or other implications of, or expectations expressed with respect to, the actions of members of the Organization of Petroleum Exporting Countries ("OPEC") and other leading oil producing countries (together with OPEC, "OPEC+") with respect to oil production and pricing, and statements regarding our efforts and plans in response to such events, the information concerning our possible future results of operations, business and growth strategies, financing plans, expectations that regulatory developments or other matters will not have a material adverse effect on our business or financial condition, our competitive position and the effects of competition, the projected growth of the industry in which we operate, the benefits and synergies to be obtained from our completed and any future acquisitions, including the H2O Midstream and Gravity acquisitions, statements of management’s goals and objectives, and other similar expressions concerning matters that are not historical facts.
Although Delek Holdings has committed to minimum volumes under certain of the commercial agreements, as described above, our results of operations will be impacted by: • Delek Holdings’ utilization of our assets in excess of its minimum volume commitments; • our ability to identify and execute acquisitions and organic expansion projects and capture incremental volume increases from Delek Holdings or third parties; • our ability to increase throughput volumes at our refined products terminals and provide additional ancillary services at those terminals; • our ability to identify and serve new customers in our marketing and trucking operations; and • our ability to make connections to third-party facilities and pipelines. 66 | Management's Discussion and Analysis Operating and Maintenance Expenses We seek to maximize the profitability of our operations by effectively managing operating and maintenance expenses.
Although Delek Holdings has committed to minimum volumes under certain of the commercial agreements, as described above, our results of operations will be impacted by: • Delek Holdings’ utilization of our assets in excess of its minimum volume commitments; • our ability to identify and execute acquisitions and organic expansion projects and capture incremental volume increases from Delek Holdings or third parties; • our ability to increase throughput volumes at our refined products terminals and provide additional ancillary services at those terminals; • our ability to identify and serve new customers in our marketing and trucking operations; and • our ability to make connections to third-party facilities and pipelines. 67 | Management's Discussion and Analysis of Financial Condition and Results of Operations Operating and Maintenance Expenses We seek to maximize the profitability of our operations by effectively managing operating and maintenance expenses.
A majority of our existing assets are both integral to and dependent upon the success of Delek Holdings' refining operations, as many of our assets are contracted exclusively to Delek Holdings in support of its Tyler, Texas (the "Tyler Refinery"), El Dorado, Arkansas (the "El Dorado Refinery") and Big Spring, Texas (the "Big Spring Refinery").
A majority of our existing assets are both integral to and dependent upon the success of Delek Holdings' refining operations, as many of our assets are contracted exclusively to Delek Holdings in support of its the Tyler Refinery, the El Dorado Refinery and the Big Spring Refinery.
Words such as “may,” “will,” “should,” “could,” “would,” “predicts,” “potential,” “continue,” “expects,” “anticipates,” “future,” “intends,” “plans,” “believes,” “estimates,” “appears,” “projects” and similar expressions, as well as statements in future tense, identify forward-looking statements.
Words such as “may,” “will,” “should,” “could,” “would,” "forecasts", “predicts,” "strategy", “potential,” “continue,” “expects,” “anticipates,” “future,” “intends,” “plans,” “believes,” “estimates,” “appears,” “projects” and similar expressions, as well as statements in future tense, identify forward-looking statements.
Contractual Rate Adjustments to Keep Pace with Inflation On July 1, 2023, the tariffs on certain of our FERC regulated pipelines and the throughput fees and storage fees under certain of our agreements with Delek Holdings and third parties that are subject to adjustments using FERC indexing increased by approximately 13.3%, which was the amount of the change in the FERC oil pipeline index.
Contractual Rate Adjustments to Keep Pace with Inflation On July 1, 2024, the tariffs on certain of our FERC regulated pipelines and the throughput fees and storage fees under certain of our agreements with Delek Holdings and third parties that are subject to adjustments using FERC indexing increased by approximately 1.3%, which was the amount of the change in the FERC oil pipeline index.
Important factors that, individually or in the aggregate, could cause such differences include, but are not limited to: • our substantial dependence on Delek Holdings or its assignees and their support of and respective ability to pay us under our commercial agreements; • our future coverage, leverage, financial flexibility and growth, and our ability to improve performance and achieve distribution growth at any level or at all; • Delek Holdings' future growth, strategic priorities, financial performance, share repurchases, crude oil supply pricing and flexibility and product distribution; • industry dynamics, including Permian Basin growth, ownership concentration, efficiencies and takeaway capacity; • the age and condition of our assets and operating hazards and other risks incidental to transporting, storing and gathering crude oil, intermediate and refined products, including, but not limited to, costs, penalties, regulatory or legal actions and other effects related to spills, releases and tank failures; • changes in insurance markets impacting costs and the level and types of coverage available; • the timing and extent of changes in commodity prices and demand for refined products and the impact of the COVID-19 Pandemic on such demand; • the wholesale marketing margins we are able to obtain and the number of barrels of product we are able to purchase and sell in our West Texas wholesale business; • the suspension, reduction or termination of Delek Holdings' or its assignees' or third-party's obligations under our commercial agreements including the duration, fees or terms thereof; • the results of our investments in joint ventures; • the ability to secure commercial agreements with Delek Holdings or third parties upon expiration of existing agreements; 60 | Management's Discussion and Analysis • the possibility of inefficiencies, curtailments, or shutdowns in refinery operations or pipelines, whether due to infection in the workforce or in response to reductions in demand as a result of a public health crisis; • disruptions due to equipment interruption or failure, or other events, including terrorism, sabotage or cyber-attacks, at our facilities, Delek Holdings’ facilities or third-party facilities on which our business is dependent; • changes in the availability and cost of capital of debt and equity financing; • our reliance on information technology systems in our day-to-day operations; • changes in general economic conditions, including uncertainty regarding the timing, pace and extent of economic recovery in the United States due to governmental fiscal policy or a public health crisis; • the effects of existing and future laws and governmental regulations, including, but not limited to, the rules and regulations promulgated by the Federal Energy Regulatory Commission ("FERC") and state commissions and those relating to environmental protection, pipeline integrity and safety as well as current and future restrictions on commercial and economic activities in response to a public heal; • significant operational, investment or other changes required by existing or future environmental statutes and regulations, including international agreements and national or regional societal, legislation; and regulatory measures to limit or reduce greenhouse gas emissions; • competitive conditions in our industry including capacity overbuild in areas where we operate; • actions taken by our customers and competitors; • the demand for crude oil, refined products and transportation and storage services; • our ability to successfully implement our business plan; • inability to complete growth projects on time and on budget; • our ability to successfully complete acquisitions and integrate acquired businesses, and to achieve the anticipated benefits therefrom; • disruptions due to acts of God, natural disasters, casualty losses, severe weather patterns, such as freezing conditions, cyber or other attacks on our electronic systems, and other matters beyond our control which might cause damage to our pipelines, terminal facilities and other assets and could impact our operating results through increased costs and/or loss of revenue; • changes in the price of RINs could affect our results of operations; • future decisions by OPEC+ regarding production and pricing and disputes between OPEC+ regarding such; • changes or volatility in interest and inflation rates; • labor relations; • large customer defaults; • changes in tax status and regulations; • the effects of future litigation or environmental liabilities that are not covered by insurance; and • other factors discussed elsewhere in this Annual Report on Form 10-K.
Important factors that, individually or in the aggregate, could cause such differences include, but are not limited to: • our substantial dependence on Delek Holdings or its assignees and their support of and respective ability to pay us under our commercial agreements; • our future coverage, leverage, financial flexibility and growth, and our ability to improve performance and achieve distribution growth at any level or at all; • Delek Holdings' future growth, strategic priorities, financial performance, share repurchases, crude oil supply pricing and flexibility and product distribution; • industry dynamics, including Permian Basin growth, ownership concentration, efficiencies and takeaway capacity; • the age and condition of our assets and operating hazards and other risks incidental to transporting, storing and gathering crude oil, intermediate and refined products, including, but not limited to, costs, penalties, regulatory or legal actions and other effects related to spills, releases and tank failures; • changes in insurance markets impacting costs and the level and types of coverage available; 60 | Management's Discussion and Analysis of Financial Condition and Results of Operations • the timing and extent of changes in commodity prices and demand for refined products, and the impact of events such as the conflicts in Ukraine and the Middle East, and the global response to such conflicts, and any future public health crisis on such demand; • the wholesale marketing margins we are able to obtain and the number of barrels of product we are able to purchase and sell in our West Texas wholesale business; • the shift from hydrocarbon energy sources to alternative energy sources; • the suspension, reduction or termination of Delek Holdings' or its assignees' or third-party's obligations under our commercial agreements including the duration, fees or terms thereof; • the ability to attract and retain key personnel; • the results of our investments in joint ventures; • the ability to secure commercial agreements with Delek Holdings or third parties upon expiration of existing agreements; • the possibility of inefficiencies, curtailments, or shutdowns in refinery operations or pipelines, whether due to infection in the workforce or in response to reductions in demand as a result of a public health crisis; • disruptions due to equipment interruption or failure, or other events, including terrorism, sabotage or cyber-attacks, at our facilities, Delek Holdings’ facilities or third-party facilities on which our business is dependent; • changes in the availability and cost of capital of debt and equity financing; • our reliance on information technology systems in our day-to-day operations; • changes in general economic conditions, including uncertainty regarding the timing, pace and extent of economic recovery in the United States due to governmental fiscal policy or a public health crisis; • the effects of existing and future laws and governmental regulations, including, but not limited to, the rules and regulations promulgated by the Federal Energy Regulatory Commission ("FERC") and state commissions and those relating to environmental protection, pipeline integrity and safety as well as current and future restrictions on commercial and economic activities in response to a public health crisis; • the timely receipt of required government approvals and permits; • significant operational, investment or other changes required by existing or future environmental statutes and regulations, including international agreements and national or regional societal, legislation; and regulatory measures to limit or reduce greenhouse gas emissions; • competitive conditions in our industry including capacity overbuild in areas where we operate; • actions taken by our customers and competitors; • the demand for crude oil, refined products and transportation and storage services; • our ability to successfully implement our business plan; • inability to complete growth projects on time and on budget; • our ability to successfully complete acquisitions and integrate acquired businesses, and to achieve the anticipated benefits therefrom; • disruptions due to acts of God, natural disasters, casualty losses, severe weather patterns, such as freezing conditions, cyber or other attacks on our electronic systems, and other matters beyond our control which might cause damage to our pipelines, terminal facilities and other assets and could impact our operating results through increased costs and/or loss of revenue; • changes in the price of RINs could affect our results of operations; • future decisions by OPEC+ regarding production and pricing and disputes between OPEC+ regarding such; • changes or volatility in interest and inflation rates; • labor relations; • large customer defaults; • changes in tax status and regulations; • the effects of future litigation or environmental liabilities that are not covered by insurance; and • other factors discussed elsewhere in this Annual Report on Form 10-K.
The following chart shows a summary of the average prices per gallon of gasoline and diesel purchased in our West Texas operations for the years ended December 31, 2023 and 2022.
The following chart shows a summary of the average prices per gallon of gasoline and diesel purchased in our West Texas operations for the years ended December 31, 2024 and 2023.
We believe we were in compliance with the covenants in all debt facilities as of December 31, 2023. See Note 10 to our consolidated financial statements in Item 8, Financial Statements and Supplementary Data, of this Annual Report on Form 10-K for a complete discussion of our indebtedness. Agreements Governing Certain Indebtedness of Delek Holdings Please read Item 1A.
We believe we were in compliance with the covenants in all debt facilities as of December 31, 2024. See Note 10 to our consolidated financial statements in Item 8, Financial Statements and Supplementary Data, of this Annual Report on Form 10-K for a complete discussion of our third-party indebtedness. Agreements Governing Certain Indebtedness of Delek Holdings Please read Item 1A.
The charts on the following page provide historical commodity pricing statistics for crude oil, refined product and natural gas. 68 | Management's Discussion and Analysis 69 | Management's Discussion and Analysis Non-GAAP Measures Our management uses certain "non-GAAP" operational measures to evaluate our operating segment performance and non-GAAP financial measures to evaluate past performance and prospects for the future to supplement our financial information presented in accordance with United States Generally Accepted Accounting Principles ("GAAP").
The charts on the following page provide historical commodity pricing statistics for crude oil, refined product and natural gas. 69 | Management's Discussion and Analysis of Financial Condition and Results of Operations Non-GAAP Measures Our management uses certain "non-GAAP" operational measures to evaluate our operating segment performance and non-GAAP financial measures to evaluate past performance and prospects for the future to supplement our financial information presented in accordance with United States Generally Accepted Accounting Principles ("GAAP").
Investments in Pipeline Joint Ventures The Partnership owns a portion of three joint ventures (accounted for as equity method investments) that have constructed separate crude oil pipeline systems and related ancillary assets primarily in the Permian Basin and Gulf Coast regions and with strategic connections to Cushing, Midland and other key exchange points, which provide crude oil and refined product pipeline transportation to third parties and subsidiaries of Delek Holdings.
Investments in Pipeline Joint Ventures The Partnership owns a portion of four joint ventures (accounted for as equity method investments) that have constructed separate crude oil pipeline systems and related ancillary assets primarily in the Permian Basin and Gulf Coast regions and with strategic connections to Cushing, Midland and connections from Wink, Texas to Webster, Texas and other key exchange points, which provide crude oil and refined product pipeline transportation to third parties and subsidiaries of Delek Holdings.
Therefore, as we look forward to 2024, we expect that liquid transportation fuels will continue to be in high demand, and we expect to continue to leverage the strength of our cash flows and balance sheet in order to continue maximizing unitholder returns and the long-term prospects for return on investment.
Therefore, we expect that liquid transportation fuels will continue to be in high demand, and we expect to continue to leverage the strength of our cash flows and balance sheet in order to continue maximizing unitholder returns and the long-term prospects for return on investment.
Refer to Note 8 - Goodwill to our accompanying consolidated financial statements included in Item 8. Financial Statements and Supplementary Data, of this Annual Report on Form 10-K for further information.
Refer to Note 8 - Goodwill to our accompanying consolidated financial statements included in Item 8, Financial Statements and Supplementary Data, of this Annual Report on Form 10-K.
The tariff on FERC regulated system acquired from Delaware Gathering (formerly 3 Bear) was adjusted as of January 1, 2023, but adjustments under agreements already in place will be capped at 3.0%.
The tariff on FERC regulated system acquired from Delaware Gathering was adjusted as of January 1, 2024, but adjustments under agreements already in place will be capped at 3.0%.
Segment reporting is discussed in more detail in Note 13 to our accompanying consolidated financial statements included in Item 8. Financial Statements and Supplementary Data, of this Annual Report on Form 10-K. Gathering and Processing The operational assets in our gathering and processing segment consist of Midland Gathering Assets and Delaware Gathering Assets.
Segment reporting is discussed in more detail in Note 14 to our consolidated financial statements included in Item 8, Financial Statements and Supplementary Data, of this Annual Report on Form 10-K. Gathering and Processing The operational assets in our gathering and processing segment consist of our pipeline assets, Midland Gathering Assets, Midland Water Gathering Assets and Delaware Gathering Assets.
Generate Stable Cash Flow II. Focus on Growing Our Business through Acquisitions and Investments in Joint Ventures III. Engage in Mutually Beneficial Transactions with Delek Holdings IV. Pursue Attractive Expansion and Construction Opportunities V. Optimize Our Existing Assets and Expand Our Customer Base VI.
Focus on Growing Our Business through Acquisitions and Investments in Joint Ventures III. Engage in Mutually Beneficial Transactions with Delek Holdings IV. Pursue Attractive Expansion and Construction Opportunities V. Optimize Our Existing Assets and Expand Our Customer Base VI.
A detailed discussion of the fiscal year 2022 compared to year-over-year changes from fiscal year 2021 can be found in Part II, Item 7. Management's Discussion and Analysis, "Results of Operations", of our 2022 Annual Report on Form 10-K, filed on March 1, 2023.
A detailed discussion of the fiscal year 2023 compared to year-over-year changes from fiscal year 2022 can be found in Part II, Item 7. Management's Discussion and Analysis, "Results of Operations", of our 2023 Annual Report on Form 10-K, filed on February 28, 2024.
For our other reporting units in 2023, we assessed qualitative factors such as macroeconomic conditions, industry considerations, cost factors, and reporting unit financial performance and determined it was not more likely than not that the fair value of our reporting units were less than the respective carrying value.
For our other reporting units in 2023, we assessed qualitative factors such as macroeconomic conditions, industry considerations, cost factors, and reporting unit financial performance and determined it was not more likely than not that the fair value of our reporting units were less than the respective carrying value. Therefore, in accordance with GAAP, further testing was not required.
Operating Expenses 2023 vs. 2022 Operating expenses for the storage and transportation segment increased by $0.3 million, or 1.5%, in the year ended December 31, 2023 compared to the year ended December 31, 2022.
Operating Expenses 2024 vs. 2023 Operating expenses for the storage and transportation segment increased by $0.2 million, or 1.1%, in the year ended December 31, 2024 compared to the year ended December 31, 2023.
New Accounting Pronouncements See Note 2 to the consolidated financial statements in Item 8, Financial Statements and Supplementary Data, of this Annual Report on Form 10-K for a discussion of new accounting pronouncements applicable to us.
New Accounting Pronouncements See Note 2 to the consolidated financial statements in Item 8, Financial Statements and Supplementary Data, of this Annual Report on Form 10-K for a discussion of new accounting pronouncements applicable to us. 87 | Quantitative and Qualitative Disclosures about Market Risk
Management measures the operating performance of each of its reportable segments based on the segment EBITDA. 72 | Management's Discussion and Analysis Results of Operations Consolidated Results of Operations - Comparison of the Year Ended December 31, 2023 versus the Year Ended December 31, 2022 Net Revenues 2023 vs. 2022 Net revenues decreased by $16.0 million, or 1.5%, in the year ended December 31, 2023 compared to the year ended December 31, 2022.
Management measures the operating performance of each of its reportable segments based on the segment EBITDA. 72 | Management's Discussion and Analysis of Financial Condition and Results of Operations Results of Operations Consolidated Results of Operations - Comparison of the Year Ended December 31, 2024 versus the Year Ended December 31, 2023 and the Year Ended December 31, 2023 versus the Year Ended December 31, 2022 Net Revenues 2024 vs. 2023 Net revenues decreased by $79.8 million, or 7.8%, in the year ended December 31, 2024 compared to the year ended December 31, 2023.
Additionally, continue to seek opportunities to further diversify our customer base by increasing third-party throughput volumes running through certain of our existing systems and expanding our existing asset portfolio to service more third-party customers. • Expand our ESG Consciousness and Lower Our Carbon Footprint.
Additionally, we are seeking opportunities to further diversify our customer base by increasing third-party throughput volumes utilizing certain of our existing systems and expanding our existing asset portfolio to service more third-party customers. • Expand our ESG Consciousness and Lower Our Carbon Footprint.
It also has additional expansion optionality. Market Trends Fluctuations in crude oil, natural gas and NGL prices and the prices of related refined and other hydrocarbon products impact operations in the midstream energy sector.
Market Trends Fluctuations in crude oil, natural gas and NGL prices and the prices of related refined and other hydrocarbon products impact operations in the midstream energy sector.
Under certain of our agreements with Delek Holdings and third parties, the fees that are subject to adjustments using the consumer price index increased 17.6% and the fees that are subject to adjustments using the producer price index increased approximately 18.9%.
Under certain of our agreements with Delek Holdings and third parties, the fees that are subject to adjustments using the consumer price index increased 3.3% and the fees that are subject to adjustments using the producer price index increased approximately 0.8%.
Refer to the Cash Flow section for our operating activities spend in 2023. While many of the expenses related to the operating activities are variable in nature, some of the expenditures can be somewhat fixed in the short-term due to forward planning on our level of activity.
While many of the expenses related to the operating activities are variable in nature, some of the expenditures can be somewhat fixed in the short-term due to forward planning on our level of activity. Refer to Cash Distributions section for cash distributions made in 2024 and planned distributions for 2025.
Off-Balance Sheet Arrangements We have no off-balance sheet arrangements through the date of the filing of this Annual Report on Form 10-K. 84 | Management's Discussion and Analysis Critical Accounting Estimates The fundamental objective of financial reporting is to provide useful information that allows a reader to comprehend our business activities.
Refer to the capital spending section for our capital expenditures for 2024 and our planned capital expenditures for 2025. 84 | Management's Discussion and Analysis of Financial Condition and Results of Operations Off-Balance Sheet Arrangements We have no off-balance sheet arrangements through the date of the filing of this Annual Report on Form 10-K. 85 | Critical Accounting Estimates Critical Accounting Estimates The fundamental objective of financial reporting is to provide useful information that allows a reader to comprehend our business activities.
(2) Reimbursement from Delek Holdings for capital expenditures represents amounts for certain capital expenditures reimbursable to us from Delek Holdings pursuant to the terms of the Omnibus Agreement (as defined in Note 4 to our accompanying consolidated financial statements). 71 | Management's Discussion and Analysis Summary of Financial and Other Information A discussion and analysis of the factors contributing to our results of operations is presented below.
(2) Reimbursement from Delek Holdings for capital expenditures represents amounts for certain capital expenditures reimbursable to us from Delek Holdings pursuant to the terms of the Omnibus Agreement (as defined in Note 4 to our consolidated financial statements included in Item 8, Financial Statements and Supplementary Data, of this Annual Report on Form 10-K). 71 | Management's Discussion and Analysis of Financial Condition and Results of Operations Summary of Financial and Other Information A discussion and analysis of the factors contributing to our results of operations is presented below.
The cash receipts from customer activities increased by $14.7 million and cash payments to suppliers and for allocations to Delek Holdings for salaries decreased by $71.0 million. In addition, cash dividends received from equity method investments increased by $5.8 million and cash paid for debt interest increased by $58.3 million.
The cash receipts from customer activities decreased by $49.9 million and cash payments to suppliers and for allocations to Delek Holdings for salaries increased by $2.5 million. In addition, cash dividends received from equity method investments increased by $14.2 million and cash paid for debt interest decreased by $19.1 million.
As a result, the Partnership expects to fund future capital expenditures primarily from operating cash flows, borrowings under our revolving credit facility and any potential future issuances of equity and debt securities.
Our Partnership Agreement requires that the Partnership distribute all of its available cash (as defined in the Partnership Agreement) to its unitholders quarterly. As a result, the Partnership expects to fund future capital expenditures primarily from operating cash flows, borrowings under our revolving credit facility and any potential future issuances of equity and debt securities.
The Distribution will be paid on February 12, 2024 to common unitholders of record on February 5, 2024 and represents a 3.4% increase over the fourth quarter 2022 distribution. This increase in the distribution is consistent with our intent to maintain an attractive distribution growth profile over the long term.
The Distribution was paid on February 11, 2025 to common unitholders of record on February 4, 2025 and represents a 4.7% increase over the fourth quarter 2023 distribution. This increase in the distribution is consistent with our intent to maintain an attractive distribution growth profile over the long term.
Refer to Note 8 - Goodwill to our accompanying consolidated financial statements included in Item 8. Financial Statements and Supplementary Data, of this Annual Report on Form 10-K for further information.
See Note 3 to our consolidated financial statements included in Item 8, Financial Statements and Supplementary Data, of this Annual Report on Form 10-K.
Refer to Note 8 - Goodwill to our accompanying consolidated financial statements included in Item 8. Financial Statements and Supplementary Data, of this Annual Report on Form 10-K for further information.
See Note 3 to our consolidated financial statements included in Item 8, Financial Statements and Supplementary Data, of this Annual Report on Form 10-K.
This financial stability also allows us to seize emerging opportunities that align with our strategic goals, ensuring that we can continue to deliver value to our unitholders. 2023 Strategic Scorecard Description of Strategic Success Generate Stable Cash Flow Focus on Growing Our Business through Acquisitions and Investments in Joint Ventures Engage in Mutually Beneficial Transactions with Delek Holdings Pursue Attractive Expansion and Construction Opportunities Optimize Our Existing Assets and Expand Our Customer Base Expand our ESG Consciousness and Lower our Carbon Footprint Integration and expansion of Delaware Gathering operations ü ü ü ü Implemented measures to reduce our overall debt profile ü ü ü ü Expansion of our Midland operations ü ü ü Zero lost time injuries ü Continue in Co-Developing our ESG Strategy with our General Partner ü Looking Forward: 2024 Strategic Focus Areas As we look to 2024, we continue to believe that our strategic focus areas are the right ones.
This financial stability also allows us to seize emerging opportunities that align with our strategic goals, ensuring that we can continue to deliver value to our unitholders. 2024 Strategic Scorecard Description of Strategic Success Generate Stable Cash Flow Focus on Growing Our Business through Acquisitions and Investments in Joint Ventures Engage in Mutually Beneficial Transactions with Delek Holdings Pursue Attractive Expansion and Construction Opportunities Optimize Our Existing Assets and Expand Our Customer Base Expand our ESG Consciousness and Lower our Carbon Footprint Acquisition of Gravity and H2O Midstream ü ü ü ü Acquisition of indirect interest in Wink to Webster ü ü ü ü Expansion of natural gas processing plant and sour gas processing capabilities ü ü ü Implemented measures to reduce our overall debt profile ü ü ü ü Amended and extended commercial agreements with Delek Holdings ü ü Expansion of dedicated crude acreage in our gathering operations ü ü ü Zero lost time injuries ü Continue in Co-Developing our ESG Strategy with our General Partner ü 66 | Management's Discussion and Analysis of Financial Condition and Results of Operations Looking Forward: 2025 Strategic Focus Areas We continue to believe that our strategic focus areas are the right ones.
That said, we are well positioned to manage through an economic downturn because of built-in recessionary protections which include minimum volume commitments on throughput and dedicated acreage agreements. Furthermore, the Partnership benefited from inflationary-linked rate increases effective July 1, 2023, as discussed further below. Additionally, the Partnership has embraced opportunities to enhance our environmental stewardship.
That said, we are well positioned to manage through an economic downturn because of built-in recessionary protections which include minimum volume commitments on throughput and dedicated acreage agreements. Additionally, the Partnership has embraced opportunities to enhance our environmental stewardship.
As such, we continue to refine our processes for evaluating risks and returns while maintaining a keen eye on our overarching Long-Term Strategic Objectives and our desire to create long-term operational sustainability. To that end, our 2024 Strategic Focus Areas are as follows: • Generate Stable Cash Flow.
As such, we continue to refine our processes for evaluating risks and returns while maintaining a keen eye on our overarching Long-Term Strategic Objectives and our desire to create long-term operational sustainability.
Refer to the Refined Products Volume - Gallons chart above for a summary of volumes impacting our West Texas operations. 78 | Management's Discussion and Analysis Operating Expenses 2023 vs. 2022 Operating expenses for the wholesale marketing and terminalling segment decreased by $1.7 million, or 8.5%, in the year ended December 31, 2023 compared to the year ended December 31, 2022.
Refer to the Refined Products Volume - Gallons chart above for a summary of volumes impacting our West Texas operations. 78 | Management's Discussion and Analysis of Financial Condition and Results of Operations Operating Expenses 2024 vs. 2023 Operating expenses for the wholesale marketing and terminalling segment decreased by $3.0 million, or 16.7%, in the year ended December 31, 2024 compared to the year ended December 31, 2023, driven primarily by a decrease in outside service costs.
We undertake no obligation to revise or update any forward-looking statements as a result of new information, future events or otherwise. 61 | Management's Discussion and Analysis Executive Summary: Management's View of Our Business and Strategic Overview Management's View of Our Business The Partnership provides gathering, pipeline and other transportation services primarily for crude oil and natural gas customers, storage, wholesale marketing and terminalling services primarily for intermediate and refined product customers, and water disposal and recycling services through its owned assets and joint ventures located primarily in the Permian Basin (including the Delaware sub-basin) and other select areas in the Gulf Coast region.
Executive Summary: Management's View of Our Business and Strategic Overview Management's View of Our Business The Partnership provides gathering, pipeline and other transportation services primarily for crude oil and natural gas customers, storage, wholesale marketing and terminalling services primarily for intermediate and refined product customers, and water disposal and recycling services through its owned assets and joint ventures located primarily in the Permian Basin (including the Delaware sub-basin) and other select areas in the Gulf Coast region.
Alternatively, if a company concludes based on the qualitative assessment that it is not more likely than not that the fair value of a reporting unit is less than its carrying amount, it has completed its goodwill impairment test and does not need to perform the quantitative impairment test.
Alternatively, if a company concludes based on the qualitative assessment that it is not more likely than not that the fair value of a reporting unit is less than its carrying amount, it has completed its goodwill impairment test and does not need to perform the quantitative impairment test. 86 | Critical Accounting Estimates At December 31, 2024, we had two reporting units with goodwill totaling approximately $12.2 million.
Cost of Materials and Other 2023 vs. 2022 Cost of materials and other for the storage and transportation segment decreased by $3.2 million, or 4.8%, in the year ended December 31, 2023 compared to the year ended December 31, 2022.
Cost of Materials and Other 2024 vs. 2023 Cost of materials and other for the storage and transportation segment decreased by $6.2 million, or 9.7%, in the year ended December 31, 2024 compared to the year ended December 31, 2023 primarily due to decrease in trucking activity.
See additional information on asset retirement obligations and environmental liabilities in Notes 2 and 14, respectively, to our consolidated financial statements in Item 8. Other Cash Requirements Our other cash requirements consisted of operating activities and cash distributions to unitholders. Operating activities included cash outflows related to payments to suppliers for crude and other materials and payments for services.
See additional information on asset retirement obligations and environmental liabilities in Notes 2 and 15, respectively, to our consolidated financial statements included in Item 8, Financial Statements and Supplementary Data, of this Annual Report on Form 10-K. Other Cash Requirements Our other cash requirements consisted of operating activities and cash distributions to unitholders.
Financial Statements and Supplementary Data, of this Annual Report on Form 10-K. Refer to Consolidated Results of Operations above for details and discussion of the investments in pipeline joint ventures segment for the year ended December 31, 2023.
Refer to Consolidated Results of Operations above for details and discussion of the investments in pipeline joint ventures segment for the year ended December 31, 2024.
At December 31, 2023, we had three reporting units with goodwill totaling approximately $12.2 million. Our annual goodwill impairment testing was performed on a quantitative basis for our Delaware Gathering reporting unit during the fourth quarter of 2023.
For our 2023 annual goodwill impairment testing, our annual goodwill impairment testing was performed on a quantitative basis for our Delaware Gathering reporting unit during the fourth quarter of 2023.
The Midland Gathering Assets support our crude oil gathering activities which primarily serves Delek Holdings refining needs throughout the Permian Basin. The Delaware Gathering Assets support our crude oil and natural gas gathering, processing and transportation businesses, as well as water disposal and recycling operations, located in the Delaware Basin of New Mexico, and serving primarily third-party producers and customers.
The Delaware Gathering Assets support our crude oil and natural gas gathering, processing and transportation businesses, as well as water disposal and recycling operations, located in the Delaware Basin of New Mexico.
EBITDA 2023 vs. 2022 EBITDA increased by $7.6 million, or 13.5%, in the year ended December 31, 2023 compared to the year ended December 31, 2022, primarily driven by an increase in storage and transportation rates. 80 | Management's Discussion and Analysis Investments in Pipeline Joint Ventures Segment The Investments in Pipeline Joint Ventures segment relates to strategic Joint Venture investments, accounted for as equity method investments, to support the Delek Holdings operations in terms of offering connection to takeaway pipelines, alternative crude supply sources and flow of high quality crude oil to the Delek Holdings refining system.
EBITDA 2024 vs. 2023 EBITDA decreased by $15.5 million, or 24.3%, in the year ended December 31, 2024 compared to the year ended December 31, 2023, primarily due to decrease in revenue associated with sales-type lease accounting, partially offset by lower cost associated with decrease in trucking activity. 80 | Management's Discussion and Analysis of Financial Condition and Results of Operations Investments in Pipeline Joint Ventures Segment The Investments in Pipeline Joint Ventures segment relates to strategic Joint Venture investments, accounted for as equity method investments, to support the Delek Holdings operations in terms of offering connection to takeaway pipelines, alternative crude supply sources and flow of high quality crude oil to the Delek Holdings refining system.
The following table provides summary financial data (in thousands, except unit and per unit amounts): Summary Statement of Operations Data (1) Year Ended December 31, 2023 2022 Net revenues: Gathering and Processing $ 371,110 $ 305,427 Wholesale marketing and terminalling 505,701 588,884 Storage and transportation 143,598 142,096 Total 1,020,409 1,036,407 Cost of materials and other 532,627 641,363 Operating expenses (excluding depreciation and amortization presented below) 118,101 88,307 General and administrative expenses 24,766 34,181 Depreciation and amortization 92,384 62,988 Impairment of goodwill 14,848 — Gain on disposal of assets (1,266) (114) Operating income $ 238,949 $ 209,682 Interest expense, net 143,244 82,304 Income from equity method investments (31,433) (31,683) Other income, net (303) (373) Total non-operating expenses, net 111,508 50,248 Income before income tax expense 127,441 159,434 Income tax expense 1,205 382 Net income attributable to partners $ 126,236 $ 159,052 Comprehensive income attributable to partners $ 126,236 $ 159,052 EBITDA (2) (3) $ 370,280 $ 311,937 Net income per limited partner unit: Basic $ 2.90 $ 3.66 Diluted $ 2.89 $ 3.66 Weighted average limited partner units outstanding: Basic 43,583,938 43,487,910 Diluted 43,611,314 43,511,650 (1)This information is presented at a summary level for your reference.
The following table provides summary financial data (in thousands, except unit and per unit amounts): Summary Statement of Operations Data (1) Year Ended December 31, 2024 2023 Net revenues: Gathering and Processing $ 364,719 $ 371,110 Wholesale marketing and terminalling 451,522 505,701 Storage and transportation 124,395 143,598 Total 940,636 1,020,409 Cost of materials and other 483,735 532,627 Operating expenses (excluding depreciation and amortization presented below) 122,734 118,101 General and administrative expenses 35,944 24,766 Depreciation and amortization 96,375 92,384 Impairment of goodwill — 14,848 Other operating income, net (978) (1,266) Operating income $ 202,826 $ 238,949 Interest income (47,792) — Interest expense 150,960 143,244 Income from equity method investments (43,301) (31,433) Other income, net (205) (303) Total non-operating expenses, net 59,662 111,508 Income before income tax expense 143,164 127,441 Income tax expense 479 1,205 Net income 142,685 126,236 Comprehensive income 142,685 126,236 Less: Preferred unitholder's interest in net income 768 — Net income attributable to limited partners $ 141,917 $ 126,236 EBITDA (2) (3) $ 346,913 $ 370,280 Net income per limited partner unit: Basic $ 2.99 $ 2.90 Diluted $ 2.99 $ 2.89 Weighted average limited partner units outstanding: Basic 47,452,138 43,583,938 Diluted 47,479,248 43,611,314 (1) This information is presented at a summary level for your reference.
Cost of Materials and Other These costs include: (i) all costs of purchased refined products in our wholesale marketing and terminalling segment, as well as additives and related transportation of such products; (ii) costs associated with the operation of our trucking assets, which primarily include allocated employee costs and other costs related to fuel, truck leases and repairs and maintenance; (iii) the cost of pipeline capacity leased from any third parties; and (iv) gains and losses related to our commodity hedging activities.
Cost of Materials and Other These costs include: (i) all costs of purchased refined products in our wholesale marketing and terminalling segment, as well as additives and related transportation of such products; (ii) costs associated with the operation of our trucking assets, which primarily include allocated employee costs and other costs related to fuel, truck leases and repairs and maintenance; (iii) the cost of pipeline capacity leased from any third parties; and Financing The Partnership anticipates paying a cash distribution to its unitholders at a distribution rate of $1.105 per unit for the quarter ended December 31, 2024 ($4.420 per unit on an annualized basis).
In light of these risks, uncertainties and assumptions, our actual results of operations and execution of our business strategy could differ materially from those expressed in, or implied by, the forward-looking statements, and you should not place undue reliance upon them.
We can give no assurances that any of the events anticipated by the forward-looking statements will occur or, if any of them do, what impact they will have on our results of operations and financial condition. 61 | Management's Discussion and Analysis of Financial Condition and Results of Operations In light of these risks, uncertainties and assumptions, our actual results of operations and execution of our business strategy could differ materially from those expressed in, or implied by, the forward-looking statements, and you should not place undue reliance upon them.
Finally, fluctuations in demand and commodity prices for refined products, as well as the value attributable to RINs, directly impacts our wholesale marketing operations, where we are subject to short-term commodity price fluctuations at the rack. 67 | Management's Discussion and Analysis Most of the logistics services we provide (including transportation, gathering and processing services) are subject to long-term fee-based contracts with minimum volume commitments or long-term dedicated acreage agreements which mitigate most of our short-term financial risk to price and demand volatility.
Most of the logistics services we provide (including transportation, gathering and processing services) are subject to long-term fee-based contracts with minimum volume commitments or long-term dedicated acreage agreements which mitigate most of our short-term financial risk to price and demand volatility.
As producers continue to ramp up production within the Permian Basin, the Partnership is well positioned to continue to add value through our gathering and processing services as a result of integrating our Delaware Gathering operations which complement our existing Midland Gathering System assets.
As producers continue to ramp up production within the Permian Basin, the Partnership is well positioned to continue to add value through our gathering and processing services as we have expanded our dedicated crude acreage in our Midland Gathering system.
EBITDA 2023 vs. 2022 EBITDA increased by $24.2 million, or 13.8%, in the year ended December 31, 2023 compared to the year ended December 31, 2022, primarily driven by the following: • additional EBITDA associated with the Delaware Gathering operations, which began in June 2022; • increase in throughput associated with new connections in our Midland Gathering operations; and • partially offset by the impairment of goodwill associated the Delaware Gathering Acquisition. 76 | Management's Discussion and Analysis Wholesale Marketing and Terminalling Segment The table and discussion below present the results of operations and certain operating statistics of the wholesale marketing and terminalling segment for the years ended December 31, 2023 and 2022: Wholesale Marketing and Terminalling Year Ended December 31, 2023 2022 Net Revenues $ 505,701 $ 588,884 Cost of materials and other $ 388,536 $ 491,452 Operating expenses (excluding depreciation and amortization presented below) $ 17,796 $ 19,458 Segment EBITDA $ 106,512 $ 83,098 Operating Information Year Ended December 31, 2023 2022 East Texas - Tyler Refinery sales volumes (average bpd) (1) 60,626 66,058 Big Spring marketing throughputs (average bpd) 77,897 71,580 West Texas marketing throughputs (average bpd) 10,032 10,206 West Texas marketing gross margin per barrel $ 5.18 $ 4.45 Terminalling throughputs (average bpd) (2) 113,803 132,262 (1) Excludes jet fuel and petroleum coke.
EBITDA 2024 vs. 2023 EBITDA increased by $7.7 million, or 3.9%, in the year ended December 31, 2024 compared to the year ended December 31, 2023 primarily driven by the following: • incremental EBITDA of $12.1 million associated with H20 Midstream operations which began in the third quarter of 2024; • impairment of $14.8 million taken in prior year associated with Delaware Gathering reporting unit; and • partially offset by lower revenue related to sales-type lease accounting. 76 | Management's Discussion and Analysis of Financial Condition and Results of Operations Wholesale Marketing and Terminalling Segment The table and discussion below present the results of operations and certain operating statistics of the wholesale marketing and terminalling segment for the years ended December 31, 2024 and 2023: Wholesale Marketing and Terminalling Year Ended December 31, 2024 2023 Net revenues $ 451,522 $ 505,701 Cost of materials and other $ 349,049 $ 388,536 Operating expenses (excluding depreciation and amortization) $ 14,820 $ 17,796 Segment EBITDA $ 91,729 $ 106,512 Operating Information Year Ended December 31, 2024 2023 East Texas - Tyler Refinery sales volumes (average bpd) (1) 67,682 60,626 Big Spring marketing throughputs (average bpd) 44,999 77,897 West Texas marketing throughputs (average bpd) 5,828 10,032 West Texas marketing gross margin per barrel $ 3.18 $ 5.18 Terminalling throughputs (average bpd) (2) 154,217 113,803 (1) Excludes jet fuel and petroleum coke.
Cost of Materials and Other 2023 vs. 2022 Cost of materials and other decreased by $108.7 million, or 17.0%, in the year ended December 31, 2023 compared to the year ended December 31, 2022, primarily driven by the following: • decrease in costs of materials and other of $101.9 million in our West Texas marketing operations primarily driven by decreases in the average cost per gallon and the volumes of diesel sold: ◦ the average cost per gallon of gasoline and diesel sold decreased by $0.49 per gallon and $0.74 per gallon, respectively; and ◦ the volumes of diesel sold decreased by 3.6 million gallons, partially offset by a 0.6 million increase in gallons of gasoline sold.
Cost of Materials and Other 2024 vs. 2023 Cost of materials and other decreased by $48.9 million, or 9.2%, in the year ended December 31, 2024 compared to the year ended December 31, 2023, primarily driven by the following: • decreased costs of materials and other of $40.1 million in our West Texas marketing operations primarily driven by decreased costs per gallon: ◦ the average cost per gallon of gasoline and diesel sold decreased by $0.20 per gallon and $0.36 per gallon, respectively. • decrease of $6.1 million in our gathering and processing segment driven primarily by lower natural gas costs.
Our positioning allows our customers the ability to control quality and adds optionality to place barrels in a variety of markets. Through our joint venture projects, we have increased our supply network to take advantage of growth opportunities in expanding markets and added additional flexibility which has delivered realized value through the Partnership system.
The Partnership also acquired from Delek Holdings a joint venture with an indirect interest in the Wink to Webster Pipeline. Through our joint venture projects, we have increased our supply network to take advantage of growth opportunities in expanding markets and added additional flexibility which has delivered realized value through the Partnership system.
The increase of $41.3 million in our long-term debt balance compared to the balance at December 31, 2022 resulted from the borrowings under the DKL Credit Facility during the year ended December 31, 2023.
The increase of $173.7 million in our long-term debt balance compared to the balance at December 31, 2023 resulted from the issuance of the 2029 Notes during the year ended December 31, 2024, which was partially offset by the payments under the DKL Credit Facility and the 2025 Notes.
These financial and operational non-GAAP measures include: • Earnings before interest, taxes, depreciation and amortization ("EBITDA") - calculated as net income before net interest expense, income tax expense, depreciation and amortization expense, including amortization of marketing contract intangible, which is included as a component of net revenues in our accompanying consolidated statements of income. • Distributable cash flow - calculated as net cash flow from operating activities plus or minus changes in assets and liabilities, less maintenance capital expenditures net of reimbursements and other adjustments not expected to settle in cash.
These financial and operational non-GAAP measures include: • Earnings before interest, taxes, depreciation and amortization ("EBITDA") - calculated as net income before net interest expense, income tax expense, depreciation and amortization expense, including amortization of marketing contract intangible, which is included as a component of net revenues in our Consolidated Statements of Income and Comprehensive Income included in item 8.
The other Joint Venture owners are usually major shippers on the pipelines resulting in a majority of the revenue of the Joint Venture entities coming from MVC agreements with related entities. Investments in pipeline joint ventures segment include the Partnership's joint ventures investments described in Note 12 to our accompanying consolidated financial statements included in Item 8.
The other Joint Venture owners are usually major shippers on the pipelines resulting in a majority of the revenue of the Joint Venture entities coming from MVC agreements with related entities.
We have successfully avoided lost time injuries for four years, demonstrating our strong safety protocols and adherence to regulations. This commitment protects employees, assets, and operations, minimizing financial losses and maintaining stakeholder trust. Additionally, we have prioritized reducing our leverage ratio, providing us with more financial flexibility to pursue opportunities and expand operations.
The Partnership prioritizes safe and reliable operation of its assets to maintain financial stability and growth. We have successfully avoided lost time injuries for four years, demonstrating our strong safety protocols and adherence to regulations. This commitment protects employees, assets, and operations, minimizing financial losses and maintaining stakeholder trust.
However, sustained depressed demand/prices over the longer term could not only curb exploration and production expansion opportunities under our agreements, it could also impact our customers' willingness or ability to renew commercial agreements or result in liquidity or credit constraints that could impact our longer term relationship with them.
However, sustained depressed demand/prices over the longer term could not only curb exploration and production expansion opportunities under our agreements, it could also impact our customers' willingness or ability to renew commercial agreements or result in liquidity or credit constraints that could impact our longer term relationship with them. 68 | Management's Discussion and Analysis of Financial Condition and Results of Operations That said, our recent expansion of our gas processing capabilities have improved both our customer and geographic diversification which lowers concentration risk in those areas, in addition to adding service offerings to our portfolio.
Revolving Credit Commitments (as defined in the DKL Credit Facility) by an amount equal to $150.0 million, resulting in aggregate lender commitments under the DKL Revolving Credit Facility of $1.050 billion and (iv) increased the limit allowed for general unsecured debt (as defined in the DKL Credit Facility) by an amount equal to $95.0 million, resulting in an unsecured general debt limit of $150.0 million.
Revolving Credit Commitments (as defined in the DKL Credit Facility) by an amount equal to $100.0 million resulting in aggregate lender commitments under the DKL Revolving Credit Facility in an amount of $1,150.0 million, including up to $146.9 million for letters of credit and $31.9 million in swing line loans.
Any excess or surplus of the purchase consideration when compared to the fair value of the net tangible assets acquired, if any, is recorded as goodwill or gain from a bargain purchase.
Business Combinations We recognize and measure the assets acquired and liabilities assumed in a business combination based on their estimated fair values at the acquisition date. Any excess or deficiency of the purchase consideration when compared to the fair value of the net tangible assets acquired, if any, is recorded as goodwill or gain from a bargain purchase.
Reconciliation of net cash from operating activities to distributable cash flow (in thousands) Year Ended December 31, 2023 2022 Net cash provided by operating activities $ 225,319 $ 192,168 Changes in assets and liabilities 29,474 49,423 Distributions from equity method investments in investing activities 9,002 1,737 Non-cash lease expense (9,549) (16,254) Regulatory and sustaining capital expenditures not distributable (1) (7,272) (9,684) Reimbursement from Delek Holdings for capital expenditures (2) 1,280 1,176 Accretion of asset retirement obligations (705) (596) Deferred income taxes (638) (5) Gain on disposal of assets 1,266 114 Distributable cash flow $ 248,177 $ 218,079 70 | Management's Discussion and Analysis (1) Regulatory and sustaining capital expenditures represent cash expenditures (including for the addition or improvement to, or the replacement of, our capital assets, and for the acquisition of existing, or the construction or development of new, capital assets) made to maintain our long-term operating income or operating capacity.
Reconciliation of net income to EBITDA (in thousands) Year Ended December 31, 2024 2023 Net income $ 142,685 $ 126,236 Add: Income tax expense 479 1,205 Depreciation and amortization 96,375 92,384 Amortization of marketing contract intangible 4,206 7,211 Interest expense, net 103,168 143,244 EBITDA $ 346,913 $ 370,280 70 | Management's Discussion and Analysis of Financial Condition and Results of Operations Reconciliation of net cash from operating activities to distributable cash flow (in thousands) Year Ended December 31, 2024 2023 Net cash provided by operating activities $ 206,339 $ 225,319 Changes in assets and liabilities 48,769 29,474 Distributions from equity method investments in investing activities 4,277 9,002 Non-cash lease expense (8,112) (9,549) Regulatory and sustaining capital expenditures not distributable (1) (12,658) (7,272) Reimbursement from (refund to) Delek Holdings for capital expenditures (2) 335 1,280 Sales-type lease receipts, net of income recognized 11,843 — Accretion (920) (705) Deferred income taxes (479) (638) Gain on disposal of assets 6,410 1,266 Distributable cash flow $ 255,804 $ 248,177 (1) Regulatory and sustaining capital expenditures represent cash expenditures (including for the addition or improvement to, or the replacement of, our capital assets, and for the acquisition of existing, or the construction or development of new, capital assets) made to maintain our long-term operating income or operating capacity.
Operational Comparison of the Year Ended December 31, 2023 versus the Year Ended December 31, 2022: Net Revenues 2023 vs. 2022 Net revenues for the gathering and processing segment increased by $65.7 million, or 21.5%, in the year ended December 31, 2023 compared to the year ended December 31, 2022, driven primarily by the following: • incremental revenues as a result of our Delaware Gathering operations, which began in June 2022, partially offset by lower natural gas prices; and • increase in throughput associated with Midland Gathering operations primarily due to new connections finalized during 2022. 75 | Management's Discussion and Analysis Cost of Materials and Other 2023 vs. 2022 Cost of materials and other for the gathering and processing segment increased by $1.6 million, or 2.0%, in the year ended December 31, 2023 compared to the year ended December 31, 2022, driven primarily by the following: • incremental cost of materials and other as a result of our Delaware Gathering operations which began in June 2022; and • partially offset by lower natural gas costs.
Operational Comparison of the Year Ended December 31, 2024 versus the Year Ended December 31, 2023: Net Revenues 2024 vs. 2023 Net revenues for the gathering and processing segment decreased by $6.4 million, or 1.7%, in the year ended December 31, 2024 compared to the year ended December 31, 2023, primarily due to the following: • recording certain throughput fees as interest income under sales-type lease accounting that were previously recorded as revenue in the prior year period; and • partially offset by an increase in revenue associated with the H20 Midstream operations of $19.5 million which began in the third quarter of 2024. 75 | Management's Discussion and Analysis of Financial Condition and Results of Operations Cost of Materials and Other 2024 vs. 2023 Cost of materials and other for the gathering and processing segment decreased by $6.1 million, or 7.3%, in the year ended December 31, 2024 compared to the year ended December 31, 2023, driven primarily by the following: • lower natural gas costs; and • partially offset by incremental costs of $1.2 million associated with H20 Midstream operations which began in the third quarter of 2024.
By reducing our debt profile and maintaining a strong financial position, we are better equipped to navigate challenges that may arise.
Additionally, we have prioritized reducing our leverage ratio, providing us with more financial flexibility to pursue opportunities and expand operations. By reducing our leverage and maintaining a strong financial position, we are better equipped to navigate challenges that may arise.
For the 2022 annual impairment assessment, we performed a qualitative assessment on all reporting units, as we determined it was more likely than not that the fair value of the reporting units exceeded the carrying value. Therefore, in accordance with GAAP, further testing was not required.
For our 2024 annual goodwill impairment testing, we assessed qualitative factors such as macroeconomic conditions, industry considerations, cost factors, and reporting unit financial performance and determined it was not more likely than not that the fair value of our reporting units were less than the respective carrying value. Therefore, in accordance with GAAP, further testing was not required.
We believe we were in compliance with the covenants in all our debt facilities as of December 31, 2023. 81 | Management's Discussion and Analysis Cash Distributions On January 24, 2024, the board of directors of our general partner declared a distribution of 1.055 per common unit (the "Distribution"), which equates to approximately $46.0 million per quarter, or approximately $184.0 million per year, based on the number of common units outstanding as of February 5, 2024.
Cash Distributions On January 24, 2025, the board of directors of our general partner declared a distribution of $1.105 per common unit (the "Distribution"), which equates to an estimated amount of approximately $59.3 million per quarter, or approximately $237.2 million per year, based on the number of common units outstanding as of December 31, 2024.
Operational Comparison of the Year Ended December 31, 2023 versus the Year Ended December 31, 2022: Net Revenues 2023 vs. 2022 Net revenues for the wholesale marketing and terminalling segment decreased by $83.2 million, or 14.1%, in the year ended December 31, 2023 compared to the year ended December 31, 2022, primarily driven by the following: • decreased revenue of $99.6 million in our West Texas marketing operations primarily driven by decreases in the average sales prices per gallon and the volumes of diesel sold in our West Texas marketing operations: ◦ the average sales prices per gallon of gasoline and diesel sold decreased by $0.46 per gallon and $0.73 per gallon, respectively; and ◦ the average volumes of diesel sold decreased by 3.6 million gallons, partially offset by a 0.6 million increase in gallons of gasoline sold.
Cost of Materials and Other 2024 vs. 2023 Cost of materials and other for the wholesale marketing and terminalling segment decreased by $39.5 million, or 10.2% , in the year ended December 31, 2024 compared to the year ended December 31, 2023, primarily driven by the following: • decreased costs of materials and other of $40.1 million in our West Texas marketing operations primarily driven by decreased costs per gallon: ◦ the average cost per gallon of gasoline and diesel sold decreased by $0.20 per gallon and $0.36 per gallon, respectively.
Operating Expenses 2023 vs. 2022 Operating expenses for the gathering and processing segment increased by $26.9 million, or 55.8%, in the year ended December 31, 2023 compared to the year ended December 31, 2022, primarily driven by the following: • increase due to additional expenses associated with our Delaware Gathering operations, which began in June 2022; and • increase in outside services associated with Midland Gathering operations.
Operating Expenses 2024 vs. 2023 Operating expenses for the gathering and processing segment increased by $5.2 million, or 6.9%, in the year ended December 31, 2024 compared to the year ended December 31, 2023, primarily driven by incremental costs of $6.1 million associated with H20 Midstream operations which began in the third quarter of 2024.
See Note 11 to the consolidated financial statements in Item 8, Financial Statements and Supplementary Data, of this Annual Report on Form 10-K for a discussion of historic cash distributions.
See Note 11 to the accompanying consolidated financial statements for a discussion of historic cash distributions.
Corporate and Other The corporate and other segment primarily consists of general and administrative expenses not allocated to a reportable segment, interest expense and depreciation and amortization. When applicable, it may also contain operating segments that are not reportable and do not meet the criteria for aggregation with any of our existing reportable segments.
Corporate and Other The corporate and other segment primarily consists of general and administrative expenses not allocated to a reportable segment, interest expense and depreciation and amortization.
Depending on the magnitude, funding for such projects may include cash generated from operations, borrowings under existing credit facilities, or issuances of additional debt or equity securities. 83 | Management's Discussion and Analysis The following table summarizes our actual capital expenditures, including any material capital expenditure payments made or forecasted to be made in advance of receipt of goods and materials, for the year ended December 31, 2023: (in thousands) Full Year 2024 Forecast Year Ended December 31, 2023 Gathering and Processing Regulatory $ 750 $ 31 Sustaining 3,900 2,016 Growth 49,500 72,636 Gathering and Processing Segment Total $ 54,150 $ 74,683 Wholesale Marketing and Terminalling Regulatory $ 3,300 $ 924 Sustaining 2,379 163 Growth — 1,024 Wholesale Marketing and Terminalling Segment Total $ 5,679 $ 2,111 Storage and Transportation Regulatory $ 1,500 $ 2,005 Sustaining 8,500 2,543 Growth — — Storage and Transportation Segment Total $ 10,000 $ 4,548 Total Capital Spending $ 69,829 $ 81,342 The amount of our capital expenditure forecast is subject to change due to unanticipated increases in the cost, scope and completion time for our capital projects.
Depending on the magnitude, funding for such projects may include cash generated from operations, borrowings under existing credit facilities, or issuances of additional debt or equity securities. 83 | Management's Discussion and Analysis of Financial Condition and Results of Operations The following table summarizes our actual capital expenditures, including any material capital expenditure payments made or forecasted to be made in advance of receipt of goods and materials, for the year ended December 31, 2024: (in thousands) Full Year 2025 Forecast Year Ended December 31, 2024 (1) Gathering and Processing Regulatory $ — $ — Sustaining 2,715 1,599 Growth 209,300 31,881 Gathering and Processing Segment Total $ 212,015 $ 33,480 Wholesale Marketing and Terminalling Regulatory $ 6,958 $ 791 Sustaining 3,022 1,936 Growth 6,800 — Wholesale Marketing and Terminalling Segment Total $ 16,780 $ 2,727 Storage and Transportation Regulatory $ — $ 1,155 Sustaining 6,515 7,177 Growth — — Storage and Transportation Segment Total $ 6,515 $ 8,332 Total Capital Spending $ 235,310 $ 44,539 (1) 2024 excludes capital spending of $95.5 million related to the new gas processing plant.
These adjustments allow us to maintain compliance with FERC regulations as well as to ensure that our results are reflective of current market conditions. 63 | Management's Discussion and Analysis Segment Overview We review operating results in four reportable segments: (i) gathering and processing; (ii) wholesale marketing and terminalling; (iii) storage and transportation; and (iv) investments in pipeline joint ventures.
Underwriting discounts totaled $6.6 million. 64 | Management's Discussion and Analysis of Financial Condition and Results of Operations Segment Overview We review operating results in four reportable segments: (i) gathering and processing; (ii) wholesale marketing and terminalling; (iii) storage and transportation; and (iv) investments in pipeline joint ventures.
The market approach includes both the guideline public company and guideline transaction methods. Both market approach methods use pricing multiples derived from historical market transactions of other like-kind assets.
The market approach includes both the guideline public company and guideline transaction methods. Both market approach methods use pricing multiples derived from historical market transactions of other like-kind assets. These fair value measurements involve significant unobservable inputs (Level 3 inputs). Significant judgment is involved in performing these fair value estimates since the results are based on forecasted assumptions.
EBITDA 2023 vs. 2022 EBITDA increased by $23.4 million, or 28.2%, in the year ended December 31, 2023 compared to the year ended December 31, 2022, primarily driven by the following: • increases in terminalling utilization and improved wholesale margins. 79 | Management's Discussion and Analysis Storage and Transportation Segment The table and discussion below present the results of operations and certain operating statistics of the storage and transportation segment for the years ended December 31, 2023 and 2022: Storage and Transportation Year Ended December 31, 2023 2022 Net revenues $ 143,598 $ 142,096 Cost of materials and other $ 63,710 $ 66,953 Operating expenses (excluding depreciation and amortization presented below) $ 18,104 $ 17,843 Segment EBITDA $ 63,850 $ 56,269 Operational Comparison of the Year Ended December 31, 2023 versus the Year Ended December 31, 2022: Net Revenues 2023 vs. 2022 Net revenues for the storage and transportation segment increased by $1.5 million, or 1.1%, in the year ended December 31, 2023 compared to the year ended December 31, 2022.
EBITDA 2024 vs. 2023 EBITDA decreased by $14.8 million, or 13.9%, in the year ended December 31, 2024 compared to the year ended December 31, 2023, primarily driven by the following: • a decline in wholesale margins partially due to lower RINs prices; • lower revenue related to sales-type lease accounting; and • partially offset by decrease in operating expenses. 79 | Management's Discussion and Analysis of Financial Condition and Results of Operations Storage and Transportation Segment The table and discussion below present the results of operations and certain operating statistics of the storage and transportation segment for the years ended December 31, 2024 and 2023: Storage and Transportation Year Ended December 31, 2024 2023 Net revenues $ 124,395 $ 143,598 Cost of materials and other $ 57,539 $ 63,710 Operating expenses (excluding depreciation and amortization) $ 18,299 $ 18,104 Segment EBITDA $ 48,325 $ 63,850 Operational Comparison of the Year Ended December 31, 2024 versus the Year Ended December 31, 2023: Net Revenues 2024 vs. 2023 Net revenues for the storage and transportation segment decreased by $19.2 million, or 13.4%, in the year ended December 31, 2024 compared to the year ended December 31, 2023, primarily due to recording certain storage fees as interest income under sales-type lease accounting that were previously recorded as revenue in the prior year period.
(iii) potential issuance of additional equity; At December 31, 2023, our total liquidity amounted to $343.3 million comprised of $269.5 million and $70.0 million in unused credit commitments under the DKL Credit Facility and the Related Party Revolving Credit Facility, respectively, and $3.8 million in cash and cash equivalents.
(iii) potential issuance of additional equity; At December 31, 2024, our total liquidity amounted to $720.0 million comprised of $714.6 million in unused credit commitments under our third-party revolving credit facility (as discussed in Note 10 of our consolidated financial statements included in Item 8, Financial Statements and Supplementary Data, of this Annual Report on Form 10-K), and $5.4 million in cash and cash equivalents.
That said, our recent expansion of our gas processing capabilities have improved both our customer and geographic diversification which lowers concentration risk in those areas, in addition to adding service offerings to our portfolio. Furthermore, our dedicated acreage agreements provide significant growth opportunities in strong economic conditions (e.g., high demand/high commodity prices) without incremental customer acquisition cost.
Furthermore, our dedicated acreage agreements provide significant growth opportunities in strong economic conditions (e.g., high demand/high commodity prices) without incremental customer acquisition cost.

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Item 7A. Quantitative and Qualitative Disclosures About Market Risk

Market Risk — interest-rate, FX, commodity exposure

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Biggest changeThe outstanding floating rate borrowings totaled approximately $1,061.8 million as of December 31, 2023. The annualized impact of a hypothetical one percent change in interest rates on our floating rate debt outstanding as of December 31, 2023 would be to change interest expense by approximately $10.6 million.
Biggest changeThe outstanding floating rate borrowings totaled approximately $435.4 million as of December 31, 2024. The annualized impact of a hypothetical one percent change in interest rates on our floating rate debt outstanding as of December 31, 2024 would be to change interest expense by approximately $4.4 million.

Other DKL 10-K year-over-year comparisons