What changed in this filing

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Item 1. Financial Statements

2022-08-05 compared with 2022-05-05 · 426 added, 241 removed, 871 unchanged (43% of the section changed)

3 unchanged sentences

(In millions, except share and per share data)

March 31, 2022 December 31, 2021 As Adjusted (1)

June 30, 2022 December 31, 2021 As Adjusted (1)

Current assets:

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Preferred stock, $ 0.01 par value, 10,000,000 shares authorized, no shares issued and outstanding

Common stock, $ 0.01 par value, 110,000,000 shares authorized, 88,320,612 shares and 91,772,080 shares issued at March 31, 2022 and December 31, 2021, respectively

Common stock, $ 0.01 par value, 110,000,000 shares authorized, 88,610,583 shares and 91,772,080 shares issued at June 30, 2022 and December 31, 2021, respectively

Additional paid-in capital 1,159.1 1,206.5

Accumulated other comprehensive loss ( 3.9 ) ( 3.8 )

Treasury stock, 17,575,527 shares, at cost, as of March 31, 2022 and December 31, 2021

Treasury stock, 17,575,527 shares, at cost, as of June 30, 2022 and December 31, 2021

( 694.1 ) ( 694.1 )

10 unchanged sentences

(In millions, except share and per share data)

Three Months Ended

Three Months Ended Six Months Ended

June 30, June 30,

2022 As Adjusted (1)

Net revenues $ 5,982.6 $ 2,191.5 $ 10,441.7 $ 4,583.7

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Depreciation and amortization 5.2 5.8 10.8 12.0

Other operating (income) expense, net ( 28.4 ) 1.9

Other operating income, net ( 10.3 ) ( 4.9 ) ( 38.7 ) ( 3.0 )

Total operating costs and expenses 5,489.3 2,241.7 9,901.7 4,681.3

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Income from equity method investments ( 15.7 ) ( 6.8 ) ( 26.6 ) ( 11.6 )

Other expense (income), net 1.3 ( 1.0 )

Other (income) expense, net ( 3.6 ) 6.8 ( 2.3 ) 5.8

Total non-operating expense, net 24.3 33.1 53.1 56.7

13 unchanged sentences

(In millions)

Three Months Ended

Three Months Ended Six Months Ended

June 30, June 30,

2022 As Adjusted (1)

Net income (loss) $ 368.6 $ ( 48.1 ) $ 383.4 $ ( 110.8 )

13 unchanged sentences

Condensed Consolidated Statements of Changes in Stockholders' Equity (Unaudited)

(In millions, except share and per share data)

Three Months Ended March 31, 2022

(In millions, except share data)

Three Months Ended June 30, 2022

Common Stock Additional Paid-in Capital Accumulated Other Comprehensive Income Retained Earnings Treasury Stock Non-Controlling Interest in Subsidiaries Total Stockholders' Equity

Shares Amount Shares Amount

Balance at March 31, 2022

88,320,612 $ 0.9 $ 1,156.0 $ ( 3.9 ) $ 391.3 ( 17,575,527 ) $ ( 694.1 ) $ 124.5 $ 974.7

Net income — — — — 361.8 — — 6.8 368.6

Distributions to non-controlling interests — — — — — — — ( 9.0 ) ( 9.0 )

Equity-based compensation expense — — 7.1 — — — — 0.1 7.2

Taxes paid due to the net settlement of equity-based compensation — — ( 4.0 ) — — — — — ( 4.0 )

Exercise of equity-based awards 289,971 — — — — — — — —

Other — — — — ( 0.1 ) — — ( 0.1 )

Balance at June 30, 2022

88,610,583 $ 0.9 $ 1,159.1 $ ( 3.9 ) $ 753.0 ( 17,575,527 ) $ ( 694.1 ) $ 122.4 $ 1,337.4

Three Months Ended June 30, 2021

Common Stock Additional Paid-in Capital Accumulated Other Comprehensive Income Retained Earnings As Adjusted (1)

Treasury Stock Non-Controlling Interest in Subsidiaries Total Stockholders' Equity

As Adjusted (1)

Shares Amount Shares Amount

Balance at March 31, 2021

91,450,724 $ 0.9 $ 1,188.6 $ ( 7.4 ) $ 443.1 ( 17,575,527 ) $ ( 694.1 ) $ 117.7 $ 1,048.8

Net (loss) income — — — — ( 56.7 ) — — 8.6 ( 48.1 )

Distribution to non-controlling interest — — — — — — — ( 7.9 ) ( 7.9 )

Equity-based compensation expense — — 5.9 — — — — — 5.9

Taxes paid due to the net settlement of equity-based compensation — — ( 1.9 ) — — — — — ( 1.9 )

Exercise of equity-based awards 186,937 — — — — — — — —

Other — — — — ( 0.1 ) — — — ( 0.1 )

Balance at June 30, 2021, As Adjusted (1)

91,637,661 $ 0.9 $ 1,192.6 $ ( 7.4 ) $ 386.3 ( 17,575,527 ) $ ( 694.1 ) $ 118.4 $ 996.7

Financial Statements

Delek US Holdings, Inc.

Condensed Consolidated Statements of Changes in Stockholders' Equity (Unaudited)

(In millions, except share data)

Six Months Ended June 30, 2022

Common Stock Additional Paid-in Capital Accumulated Other Comprehensive Income Retained Earnings Treasury Stock Non-Controlling Interest in Subsidiaries Total Stockholders' Equity

Shares Amount Shares Amount

Balance at December 31, 2021, As Adjusted (1)

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Other — — — ( 0.1 ) ( 0.1 ) — — — ( 0.2 )

Balance at March 31, 2022

Balance at June 30, 2022

88,610,583 $ 0.9 $ 1,159.1 $ ( 3.9 ) $ 753.0 ( 17,575,527 ) $ ( 694.1 ) $ 122.4 $ 1,337.4

Three Months Ended March 31, 2021

Six Months Ended June 30, 2021

Common Stock Additional Paid-in Capital Accumulated Other Comprehensive Income Retained Earnings As Adjusted (1)

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Other — — — — ( 0.3 ) — — — ( 0.3 )

Balance at March 31, 2021, As Adjusted (1)

Balance at June 30, 2021, As Adjusted (1)

91,637,661 $ 0.9 $ 1,192.6 $ ( 7.4 ) $ 386.3 ( 17,575,527 ) $ ( 694.1 ) $ 118.4 $ 996.7

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(In millions)

Three Months Ended March 31,

Six Months Ended June 30,

2022 As Adjusted (1)

1 unchanged sentence

Net income (loss) $ 383.4 $ ( 110.8 )

Adjustments to reconcile net income (loss) to net cash provided by (used in) operating activities:

Adjustments to reconcile net income (loss) to net cash provided by operating activities:

Depreciation and amortization 136.3 134.8

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Non-current assets and liabilities, net ( 7.9 ) ( 16.3 )

Net cash provided by (used in) operating activities 26.8 ( 34.3 )

Net cash provided by operating activities 585.9 134.9

Cash flows from investing activities:

Acquisition of 3 Bear ( 621.7 ) —

Equity method investment contributions ( 0.1 ) ( 1.6 )

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Proceeds from sale of property, plant and equipment 1.1 10.9

Insurance proceeds 0.1 —

Net cash used in investing activities ( 720.9 ) ( 118.7 )

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Payments on long-term revolvers ( 848.0 ) ( 1,501.3 )

Proceeds from term debt — 400.0

Payments on term debt ( 26.7 ) ( 26.7 )

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Purchase of Delek common stock from IEP Energy Holding LLC ( 64.0 ) —

Deferred financing costs paid ( 0.7 ) ( 6.3 )

Net cash provided by financing activities 523.1 29.3

Net (decrease) increase in cash and cash equivalents ( 2.4 ) 6.0

Net increase in cash and cash equivalents 388.1 45.5

Cash and cash equivalents at the beginning of the period 856.5 787.5

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(In millions)

Three Months Ended March 31,

Six Months Ended June 30,

2022 As Adjusted (1)

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Cash paid during the period for:

Interest, net of capitalized interest of $ 0.4 million in both the 2022 and 2021 periods

Interest, net of capitalized interest of $ 0.7 million and $ 0.5 million in the 2022 and 2021 periods, respectively

$ 75.4 $ 55.7

1 unchanged sentence

Non-cash investing activities:

Increase in accrued capital expenditures $ 3.4 $ 18.8

(Decrease) increase in accrued capital expenditures $ ( 4.8 ) $ 0.1

Non-cash financing activities:

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Our condensed consolidated financial statements include Delek Logistics Partners, LP ("Delek Logistics", NYSE:DKL), which is a variable interest entity ("VIE").

On June 1, 2022, DKL Delaware Gathering, LLC, a subsidiary of the Delek Logistics, acquired 100 % of the limited liability company interests in 3 Bear Delaware Holding – NM, LLC ("3 Bear") from 3 Bear Energy – New Mexico LLC, related to their 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 (the "3 Bear Acquisition").

See Note 2 - Acquisitions for additional information.

As the indirect owner of the general partner of Delek Logistics, we have the ability to direct the activities of this entity that most significantly impact its economic performance.

We are also considered to be the primary beneficiary for accounting purposes for this entity and are Delek Logistics' primary customer.

As Delek Logistics does not derive an amount of gross margin material to us from third parties, there is limited risk to Delek associated with Delek Logistics' operations.

However, in the event that Delek Logistics incurs a loss, our operating results will reflect such loss, net of intercompany eliminations, to the extent of our ownership interest in this entity.

In the event that Delek Logistics incurs a loss, our operating results will reflect such loss, net of intercompany eliminations, to the extent of our ownership interest in this entity.

In the opinion of management, all adjustments necessary for a fair presentation of the financial condition and the results of operations for the interim periods have been included.

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With the exception of the policy updates below, there have been no new or material changes to the significant accounting policies discussed in the Company’s Annual Report on Form 10-K for the fiscal year ended December 31, 2021.

Risks and Uncertainties Related to the COVID-19 Pandemic

During the quarter ended March 31, 2022, the economic environment in which we operate continued to improve as a result of the widespread availability of vaccines and testing in the U.S.

over recent months which, in turn, has contributed to return to work, return to schools, and increased travel, with a corresponding increase in the demand for vehicle motor fuel and jet fuel.

While we continue to face uncertainties around the COVID-19 Pandemic in terms of new variants, these stabilization trends as well as other factors impacting demand for our products, such as the global supply constraints caused by the military conflict between Russia and the Ukraine have mitigated the risks that remaining Pandemic-related uncertainties could have a material adverse impact on our financial position or results of operations.

While these remaining uncertainties did not have a material impact on the preparation of our unaudited financial statements as of and for the three months ended March 31, 2022, to the extent these uncertainties were identified and were believed to have had a material impact on our prior year period results of operations or financial position based on the requirements for assessing such financial statement impact under GAAP, we have considered them in the preparation of our unaudited financial statements as of and for the three months ended March 31, 2022.

The application of accounting policies impacted by such considerations include (but are not necessarily limited to) the following:

• The interim evaluation of indefinite-lived intangibles and goodwill for potential impairment, where indicators exist, as defined by GAAP;

• The interim evaluation of long-lived assets for potential impairment, where indicators exist, as defined by GAAP;

• The interim evaluation of joint ventures for potential impairment, where indicators exist, as defined by GAAP;

• The evaluation of derivatives and hedge accounting for counterparty risk and changes in forecasted transactions, as provided for under GAAP;

• The evaluation of inventory valuation allowances that may be warranted under the lower of cost or net realizable value analysis, for first-in, first-out (“FIFO”) costing method, pursuant to GAAP;

• The consideration of debt modifications and/or covenant requirements, as applicable;

• The evaluation of commitments and contingencies, including changes in concentrations, as applicable;

• The interim evaluation of the impact of changing forecasts on our assessment of deferred tax asset valuation allowances and annual effective tax rates;

• The interim evaluation of our ability to continue as a going concern.

Notes to Condensed Consolidated Financial Statements (Unaudited)

Change in Accounting Principle

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Certain prior period amounts have been reclassified in order to conform to the current period presentation.

Notes to Condensed Consolidated Financial Statements (Unaudited)

New Accounting Pronouncements Adopted During 2022

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The Company is currently evaluating the impact this guidance may have on its condensed consolidated financial statements and related disclosures.

Note 2 - Acquisitions

3 Bear Delaware Holding - NM, LLC Acquisition

Delek Logistics completed the 3 Bear Acquisition on June 1, 2022 (the "Acquisition Date"), in which it acquired crude oil and natural gas gathering, processing and transportation and storage operations, as well as water disposal and recycling operations, located in the Delaware Basin of New Mexico.

The base purchase price for 3 Bear was $ 624.7 million, subject to adjustments for net working capital and closing indebtedness, as defined in the 3 Bear Purchase Agreement.

The 3 Bear Acquisition was financed through a combination of cash on hand and borrowings under the Delek Logistics' Credit Facility (as defined in Note 9 of the condensed consolidated financial statements in Item 1.

Financial Statements).

For the three and six months ended June 30, 2022, we incurred $ 6.2 million and $ 6.4 million, respectively, in incremental direct acquisition and integration costs that principally consist of legal, advisory and other professional fees.

Such costs are included in general and administrative expenses in the accompanying condensed consolidated statements of income for these periods.

Our consolidated financial and operating results reflect the 3 Bear Acquisition operations beginning June1, 2022.

Our results of operations included revenue and net income of $ 20.6 million and $ 1.5 million, respectively, for the period from June 1, 2022 through June 30, 2022 related to these operations.

The 3 Bear Acquisition was accounted for using the acquisition method of accounting, whereby the preliminary purchase price was allocated to the tangible and intangible assets acquired and the liabilities assumed based on their fair values.

The excess of the consideration paid over the fair value of the net assets acquired was recorded as goodwill.

Determination of Purchase Price

The table below represents the estimated purchase price (in millions):

Base purchase price:

closing net working capital (as defined in the 3 Bear Purchase Agreement) (1)

closing indebtedness (as defined in the 3 Bear Purchase Agreement) (1)

Cash paid for the adjusted purchase price 544.0

Cash paid to payoff 3 Bear credit agreement (as defined in the 3 Bear Purchase Agreement) 80.4

Preliminary purchase price $ 624.4

(1) These amounts are based upon estimates at closing, but are subject to a subsequent review and revision period pursuant to the 3 Bear Purchase Agreement at which time final settlements for these components will be determined.

Such subsequent adjustments may result in changes to the preliminary purchase price.

Notes to Condensed Consolidated Financial Statements (Unaudited)

Purchase Price Allocation

The following table summarizes the preliminary fair values of assets acquired and liabilities assumed in the 3 Bear Acquisition as of June 1, 2022 (in millions):

Assets acquired:

Cash and cash equivalents $ 2.7

Accounts receivables, net 28.9

Inventories 1.8

Other current assets 1.0

Property, plant and equipment 382.8

Operating lease right-of-use assets 7.4

Goodwill 10.6

Other intangibles, net (1)

Other non-current assets 0.5

Total assets acquired 659.3

Liabilities assumed:

Accounts payable 8.0

Accrued expenses and other current liabilities 22.1

Current portion of operating lease liabilities 1.1

Asset retirement obligations 2.3

Operating lease liabilities, net of current portion 1.4

Total liabilities assumed 34.9

Fair value of net assets acquired $ 624.4

(1) The acquired intangible assets amount includes the following identified intangibles:

• Customer relationship intangible that is subject to amortization with a preliminary fair value of $ 210.0 million, which will be amortized over an 11.6 -year useful life.

We recognized amortization expense for the three and six months ended June 30, 2022 of $ 1.5 million.

The estimated amortization is $ 18.0 million for each of the five succeeding fiscal years.

• Rights-of-way intangible valued at $ 13.6 million, which has an indefinite life.

These fair value estimates are preliminary and therefore, the final fair value of assets acquired and liabilities assumed and the resulting effect on our financial position may change once all necessary information has become available, the final working capital adjustment is complete, and we finalize our valuations.

To the extent possible, estimates have been considered and recorded, as appropriate, for the items above based on the information available as of June 30, 2022.

We will continue to evaluate these items until they are satisfactorily resolved and adjust our purchase price allocation accordingly, within the allowable measurement period (not to exceed one year from the date of acquisition), as defined by Accounting Standards Codification ("ASC") 805, Business Combinations ("ASC 805").

The fair value of property, plant and equipment was based on the combination of the cost and market approaches.

Key assumptions in the cost approach include determining the replacement cost by evaluating recently published data and adjusting replacement cost for physical deterioration, functional and economic obsolescence.

We used the market approach to measure the value of certain assets through an analysis of recent sales or offerings of comparable properties.

The fair value of customer relationships was based on the income approach.

Key assumptions in the income approach include projected revenue attributable to customer relationships, attrition rate, operating margins and discount rates.

The fair values discussed above were based on significant inputs that are not observable in the market and, therefore, represent Level 3 measurements.

The fair values of all other current assets and payables were equivalent to their carrying values due to their short-term nature.

The goodwill recognized in the 3 Bear Acquisition is primarily attributable to enhancing our third party revenues, further diversification of our customer and product mix, expanding our footprint into the Delaware basin and bolstering our Environmental, Social and Governance ("ESG") optionality through furthering carbon capture opportunities and greenhouse gas reduction projects currently underway.

This goodwill is deductible for income tax purposes.

Goodwill related to the 3 Bear Acquisition is included in the logistics segment.

Notes to Condensed Consolidated Financial Statements (Unaudited)

Unaudited Pro Forma Financial Information

The following table summarizes the unaudited pro forma financial information of the Company assuming the 3 Bear Acquisition had occurred on January 1, 2021.

The unaudited pro forma financial information has been adjusted to give effect to certain pro forma adjustments that are directly related to the 3 Bear Acquisition based on available information and certain assumptions that management believes are factually supportable.

The most significant pro forma adjustments relate to (i) incremental interest expense and amortization of deferred financing costs associated with revolving credit facility borrowings incurred in connection with the 3 Bear Acquisition, (ii) incremental depreciation resulting from the estimated fair values of acquired property, plant and equipment, (iii) incremental amortization resulting from the estimated fair values of acquired customer relationship intangibles (iv) accounting policy alignment, and (v) transaction costs.

The unaudited pro forma financial information excludes any expected cost savings or other synergies as a result of the 3 Bear Acquisition.

The unaudited pro forma financial information is not necessarily indicative of the results of operations that would have been achieved had the 3 Bear Acquisition been effective as of the dates presented, nor is it indicative of future operating results of the combined company.

Actual results may differ significantly from the unaudited pro forma financial information.

Three Months Ended June 30, Six Months Ended June 30,

(in millions, except per share data) 2022 2021 2022 2021

Net sales $ 6,030.8 $ 2,222.2 $ 10,540.3 $ 4,645.3

Net income (loss) attributable to Delek $ 365.4 $ ( 83.9 ) $ 368.6 $ ( 196.3 )

Net income (loss) per share:

Basic income (loss) per share $ 5.16 $ ( 1.14 ) $ 5.12 $ ( 2.66 )

Diluted income (loss) per share $ 5.10 $ ( 1.14 ) $ 5.07 $ ( 2.66 )

Note 3 - Segment Data

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The refining segment processes crude oil and other feedstocks for the manufacture of transportation motor fuels, including various grades of gasoline, diesel fuel and aviation fuel, asphalt and other petroleum-based products that are distributed through owned and third-party product terminals.

The refining segment has a combined nameplate capacity of 302,000 barrels per day ("bpd") as of March 31, 2022, including the following:

The refining segment has a combined nameplate capacity of 302,000 barrels per day ("bpd") as of June 30, 2022, including the following:

• 75,000 bpd Tyler, Texas refinery (the "Tyler refinery");

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• 74,000 bpd Krotz Springs, Louisiana refinery (the "Krotz Springs refinery").

Notes to Condensed Consolidated Financial Statements (Unaudited)

The refining segment also owns and operates three biodiesel facilities involved in the production of biodiesel fuels and related activities, located in Crossett, Arkansas, Cleburne, Texas and New Albany, Mississippi.

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The blender's tax credit was re-enacted in December 2019 for the years 2020 through 2022.

Notes to Condensed Consolidated Financial Statements (Unaudited)

On May 7, 2020, we sold our equity interests in Alon Bakersfield Property, Inc., an indirect wholly-owned subsidiary that owned our non-operating refinery located in Bakersfield, California, to a subsidiary of Global Clean Energy Holdings, Inc.

As part of the transaction, GCE granted a call option to Delek to acquire up to a 33 1/3% limited member interest in the acquiring subsidiary of GCE for up to $ 13.3 million, subject to certain adjustments.

Such option is exercisable by Delek through the 90th day after GCE demonstrates commercial operations, as contractually defined, which has not yet occurred as of March 31, 2022.

Such option is exercisable by Delek through the 90th day after GCE demonstrates commercial operations, as contractually defined, which has not yet occurred as of June 30, 2022.

The refining segment's petroleum-based products are marketed primarily in the south central, southwestern and western regions of the United States.

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Logistics Segment

Our logistics segment owns and operates crude oil and refined products logistics and marketing assets.

The logistics segment generates revenue by charging fees for gathering, transporting and storing crude oil and for marketing, distributing, transporting and storing intermediate and refined products in select regions of the southeastern United States and West Texas for our refining segment and third parties, and sales of wholesale products in the West Texas market.

Our logistics segment owns and operates crude oil, refined products and natural gas logistics and marketing assets as well as water disposal and recycling assets.

The logistics segment generates revenue by charging fees for gathering, transporting and storing crude oil and natural gas, marketing, distributing, transporting and storing intermediate and refined products and disposing and recycling water in select regions of the southeastern United States, the Delaware Basin in New Mexico and West Texas for our refining segment and third parties, and sales of wholesale products in the West Texas market.

The operating results and assets acquired in the 3 Bear Acquisition have been included in the Logistics segment beginning on June 1, 2022.

Retail Segment

Our retail segment consists of 248 owned and leased convenience store sites as of March 31, 2022, located primarily in West Texas and New Mexico.

Our retail segment consists of 248 owned and leased convenience store sites as of June 30, 2022, located primarily in West Texas and New Mexico.

These convenience stores typically offer various grades of gasoline and diesel primarily under the Alon or Delek brand name and food products, food service, tobacco products, non-alcoholic and alcoholic beverages, general merchandise as well as money grams to the public, primarily under the 7-Eleven and DK or Alon brand names.

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The following is a summary of business segment operating performance as measured by contribution margin for the period indicated (in millions):

Three Months Ended March 31, 2022

Three Months Ended June 30, 2022

Refining Logistics Retail Corporate,

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Capital spending (excluding business combinations) $ 19.0 $ 26.7 $ 6.0 $ 8.7 $ 60.4

Three Months Ended March 31, 2021

Three Months Ended June 30, 2021

Logistics Retail Corporate,

Other and Eliminations (1)(2)

Consolidated (1)(2)

Net revenues (excluding inter-segment fees and revenues)

$ 2,226.9 $ 66.1 $ 209.0 $ ( 310.5 ) $ 2,191.5

Inter-segment fees and revenues

188.8 102.4 — ( 291.2 ) —

Operating costs and expenses:

Cost of materials and other 2,286.6 88.8 164.7 ( 579.5 ) 1,960.6

Operating expenses (excluding depreciation and amortization presented below) 115.0 15.5 22.4 13.3 166.2

Segment contribution margin $ 14.1 $ 64.2 $ 21.9 $ ( 35.5 ) 64.7

Income from equity method investments 0.1 6.7 — —

Segment contribution margin and income (loss) from equity method investments $ 14.2 $ 70.9 $ 21.9 $ ( 35.5 )

Depreciation and amortization $ 51.0 $ 10.0 $ 3.4 $ 1.9 66.3

General and administrative expenses

Other operating income, net ( 4.9 )

Operating loss $ ( 50.2 )

Capital spending (excluding business combinations)

$ 60.7 $ 2.6 $ 0.5 $ 1.9 $ 65.7

Notes to Condensed Consolidated Financial Statements (Unaudited)

Six Months Ended June 30, 2022

Refining Logistics Retail Corporate,

Other and Eliminations Consolidated

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Inter-segment fees and revenues 538.1 248.1 — ( 786.2 ) —

Operating costs and expenses:

Cost of materials and other 7,304.1 302.6 406.8 1,221.6 9,235.1

Operating expenses (excluding depreciation and amortization presented below) 284.9 39.1 47.8 17.6 389.4

Segment contribution margin $ 715.2 $ 131.6 $ 32.0 $ ( 61.6 ) 817.2

Income from equity method investments 0.4 14.1 — 12.1

Segment contribution margin and income (loss) from equity method investments $ 715.6 $ 145.7 $ 32.0 $ ( 49.5 )

Depreciation and amortization $ 102.7 $ 23.7 $ 6.7 $ 3.2 136.3

General and administrative expenses

Other operating income, net ( 38.7 )

Operating income $ 540.0

Capital spending (excluding business combinations) $ 33.3 $ 35.8 $ 9.0 $ 15.2 $ 93.3

Six Months Ended June 30, 2021

Logistics Retail Corporate,

Other and Eliminations Consolidated (1)

Net revenues (excluding inter-segment fees and revenues)

$ 3,811.4 $ 122.8 $ 383.8 $ 265.7 $ 4,583.7

Inter-segment fees and revenues

344.4 198.6 — ( 543.0 ) —

Operating costs and expenses:

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General and administrative expenses

Other operating expense, net 1.9

Other operating income, net ( 3.0 )

Operating loss $ ( 97.6 )

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See Note 7 for further discussion.

(2) Reflects an adjustment to net down year-to-date net revenues and cost of materials and other of approximately $ 362 million related to certain crude wholesale net settled transactions included in corporate, other and eliminations that occurred during the three months ended March 31, 2021, which was not reflected in the unaudited condensed consolidated financial statements as of and for the three months ended March 31, 2021, as filed on our March 31, 2021 Quarterly Report on Form 10-Q on May 6, 2021.

Such uncorrected adjustment, as well as the subsequent out-of-period correction reflected above, did not relate to any of our reportable segments, had no impact on segment contribution margin, consolidated contribution margin or consolidated operating loss, and are not considered material to the condensed consolidated financial statements in either period.

Notes to Condensed Consolidated Financial Statements (Unaudited)

Other Segment Information

Total assets by segment were as follows as of March 31, 2022 (in millions):

Total assets by segment were as follows as of June 30, 2022 (in millions):

Refining Logistics Retail Corporate,

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Total assets, excluding inter-segment notes receivable and right of use assets $ 6,988.4 $ 1,609.3 $ 258.5 $ 68.4 $ 8,924.6

Property, plant and equipment and accumulated depreciation as of March 31, 2022 and depreciation expense by reporting segment for the three months ended March 31, 2022 are as follows (in millions):

Property, plant and equipment and accumulated depreciation as of June 30, 2022 and depreciation expense by reporting segment for the three and six months ended June 30, 2022 are as follows (in millions):

Refining Logistics Retail Corporate,

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Property, plant and equipment, net $ 1,653.4 $ 853.8 $ 111.2 $ 41.6 $ 2,660.0

Depreciation expense for the three months ended March 31, 2022 $ 51.1 $ 10.4 $ 3.3 $ 1.6 $ 66.4

Depreciation expense for the three months ended June 30, 2022 $ 48.5 $ 11.8 $ 3.0 $ 1.6 $ 64.9

Depreciation expense for the six months ended June 30, 2022 $ 99.6 $ 22.2 $ 6.3 $ 3.2 $ 131.3

In accordance with Accounting Standards Codification ("ASC") 360, Property, Plant and Equipment ("ASC 360"), Delek evaluates the realizability of property, plant and equipment as events occur that might indicate potential impairment.

There were no indicators of impairment related to our property, plant and equipment as of March 31, 2022 (see Note 1 for further discussion on the impact of the COVID-19 Pandemic).

There were no indicators of impairment related to our property, plant and equipment as of June 30, 2022.

Note 4 - Earnings (Loss) Per Share

Basic earnings per share (or "EPS") is computed by dividing net income (loss) by the weighted average common shares outstanding.

Diluted earnings per share is computed by dividing net income (loss), as adjusted for changes to income that would result from the assumed settlement of the dilutive equity instruments included in diluted weighted average common shares outstanding, by the diluted weighted average common shares outstanding.

Diluted earnings per share is computed by dividing net income (loss) attributable to Delek, as adjusted for changes to income that would result from the assumed settlement of the dilutive equity instruments included in diluted weighted average common shares outstanding, by the diluted weighted average common shares outstanding.

For all periods presented, we have outstanding various equity-based compensation awards that are considered in our diluted EPS calculation (when to do so would be dilutive), and is inclusive of awards disclosed in Note 16 to these condensed consolidated financial statements.

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Notes to Condensed Consolidated Financial Statements (Unaudited)

Three Months Ended

Three Months Ended Six Months Ended

June 30, June 30,

2022 2021 (1)

Numerator for EPS

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Note 5 - Delek Logistics

Delek Logistics is a publicly traded limited partnership that was formed by Delek in 2012 to own, operate, acquire and construct crude oil and refined products logistics and marketing assets.

Delek Logistics is a publicly traded limited partnership formed by Delek in 2012 that owns and operates crude oil, refined products, and natural gas logistics and marketing assets as well as water disposal and recycling assets.

A substantial majority of Delek Logistics' assets are integral to Delek’s refining and marketing operations.

As of March 31, 2022, we owned a 78.9 % interest in Delek Logistics, consisting of 34,311,278 common limited partner units and the non-economic general partner interest.

As of June 30, 2022, we owned a 78.9 % interest in Delek Logistics, consisting of 34,311,278 common limited partner units and the non-economic general partner interest.

The limited partner interests in Delek Logistics not owned by us are reflected in net income attributable to non-controlling interest in the accompanying condensed consolidated statements of income and in non-controlling interest in subsidiaries in the accompanying condensed consolidated balance sheets.

On April 14, 2022, Delek Logistics filed a shelf registration statement with the SEC registering for the potential sale, from time to time by Delek Logistics, of up to $ 200.0 million of common limited partner units of Delek Logistics.

On December 20, 2021, Delek commenced a program to sell up to 434,590 common limited partner units representing limited partner interests in Delek Logistics over the next three months in open market transactions conducted pursuant to Rule 144 under the Securities Act of 1933, as amended, and a Rule 10b5-1 trading plan all of which were sold as of March 18, 2022.

For the three months ended March 31, 2022, we sold 385,522 units for gross proceeds of $ 16.4 million;

$ 13.6 million net of taxes.

On June1, 2022, DKL Delaware Gathering, LLC, a subsidiary of Delek Logistics, completed the 3 Bear Acquisition related to crude oil and natural gas gathering, processing and transportation businesses, as well as water disposal and recycling operations, in the Delaware Basin in New Mexico.

The purchase price was $ 624.7 million, subject to customary closing adjustments.

See Note 2 - Acquisitions for additional information.

On April 14, 2022, Delek Logistics filed a shelf registration statement with the SEC registering, which was declared effective on April 29th, for the potential sale, from time to time by Delek Logistics, of up to $ 200.0 million of common limited partner units of Delek Logistics.

For the six months ended June 30, 2022, we sold 385,522 units for gross proceeds of $ 16.4 million or $ 13.6 million net of taxes, all of which was received in the first quarter.

In August 2020, Delek Logistics filed a shelf registration statement, which subsequently became effective, with the SEC for the proposed re-sale or other disposition from time to time by Delek of up to 14.0 million common limited partner units representing our limited partner interests in Delek Logistics.

No units were sold as of March 31, 2022.

No units were sold under this registration as of June 30, 2022.

We have agreements with Delek Logistics that, among other things, establish fees for certain administrative and operational services provided by us and our subsidiaries to Delek Logistics, provide certain indemnification obligations and establish terms for fee-based commercial logistics and marketing services provided by Delek Logistics and its subsidiaries to us.

The revenues and expenses associated with these agreements are eliminated in consolidation.

Notes to Condensed Consolidated Financial Statements (Unaudited)

Delek Logistics is a VIE, as defined under GAAP, and is consolidated into our condensed consolidated financial statements, representing our logistics segment.

The assets of Delek Logistics can only be used to settle its own obligations and its creditors have no recourse to our assets.

Exclusive of intercompany balances and the marketing agreement intangible asset between Delek Logistics and Delek which are

Notes to Condensed Consolidated Financial Statements (Unaudited)

eliminated in consolidation, the Delek Logistics condensed consolidated balance sheets as presented below are included in the condensed consolidated balance sheets of Delek (unaudited, in millions).

March 31, 2022 December 31, 2021

Exclusive of intercompany balances and the marketing agreement intangible asset between Delek Logistics and Delek which are eliminated in consolidation, the Delek Logistics condensed consolidated balance sheets as presented below are included in the condensed consolidated balance sheets of Delek (unaudited, in millions).

June 30, 2022 December 31, 2021

Cash and cash equivalents $ 13.8 $ 4.3

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In connection with the arrangement, both Delek Energy and MPLX contributed their respective 15 % ownership interests in WWP to the WWP Project Financing JV as collateral for and in service of the related project financing.

Accordingly, distributions received from WWP through the WWP Project Financing JV will first be applied in service of the related project financing debt, with excess distributions being made to the members of the WWP Project Financing JV as provided for in the W2W Holdings LLC Agreement and as allowed under the project financing debt.

On June 2, 2022, the WWP Project Financing JV refinanced its project finance debt using the proceeds from a $ 535.0 million senior secured notes issuance due January 31, 2032.

In connection with this notes issuance, on June 2, 2022 the WWP Project Financing JV also entered into a senior secured credit agreement that provides for revolving loan commitments in an amount of up to $ 75.0 million and the issuance of letters of credit in an amount of up to $ 44.0 million.

The maturity date of the revolver and letter credit commitments is June 2, 2027.

Distributions received from WWP through the WWP Project Financing JV will first be applied in service of its debt, with excess distributions being made to the members of the WWP Project Financing JV as provided for in the W2W Holdings LLC Agreement and as allowed for under its debt agreements.

The obligations of the members under the W2W Holdings LLC Agreement are guaranteed by the parents of the members of the WWP Project Financing JV.

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The Company accounts for its investment in HoldCo using the equity method of accounting due to its significant influence with its 50 % membership interest.

The Company's maximum exposure to any losses incurred by HoldCo is limited to its investment.

As of March 31, 2022, except for the guarantee of member obligations under the W2W Holdings LLC Agreement, the Company does not have other existing guarantees with or to HoldCo, or any third-party for work contracted with it.

As of March 31, 2022 and December 31, 2021, Delek's investment balance in WWP Project Financing Joint Venture totaled $ 51.4 million and $ 49.3 million, respectively, and is included as part of total assets in corporate, other and eliminations in our segment disclosure.

Notes to Condensed Consolidated Financial Statements (Unaudited)

addition on the investment, we recognized an income (loss) of $ 2.1 million and $( 0.3 ) million for the three months ended March 31, 2022 and 2021, respectively.

The Company's maximum exposure to any losses incurred by HoldCo is limited to its investment.

As of June 30, 2022, except for the guarantee of member obligations under the W2W Holdings LLC Agreement, the Company does not have other existing guarantees with or to HoldCo, or any third-party for work contracted with it.

As of June 30, 2022 and December 31, 2021, Delek's investment balance in WWP Project Financing Joint Venture totaled $ 53.5 million and $ 49.3 million, respectively, and is included as part of total assets in corporate, other and eliminations in our segment disclosure.

In addition on the investment, we recognized income of $ 2.1 million and $ 4.2 million for the three and six months ended June 30, 2022, respectively, and a loss of $ 3.9 million and $ 4.1 million for the three and six months ended June 30, 2021, respectively.

Delek Logistics Investments

Delek Logistics has a 33 % membership interest in Red River Pipeline Company LLC (“Red River”), which owns a 16-inch crude oil pipeline running from Cushing, Oklahoma to Longview, Texas.

As of March 31, 2022 and December 31, 2021, Delek's investment balance in Red River totaled $ 144.6 million and $ 144.0 million, respectively.

During the three months ended March 31, 2022 and 2021, respectively, we made no capital contributions and $1.4 million in capital contributions based on capital calls received.

We recognized income on the investment totaling $ 5.2 million and $ 2.2 million for the three months ended March 31, 2022 and 2021, respectively.

As of June 30, 2022 and December 31, 2021, Delek's investment balance in Red River totaled $ 144.8 million and $ 144.0 million, respectively.

We made no capital contributions during the six months ended June 30, 2022 and made $ 1.4 million in capital contributions during the six months ended June 30, 2021 based on capital calls.

We recognized income on the investment totaling $ 4.6 million and $ 9.9 million for the three and six months ended June 30, 2022, respectively, and $ 3.7 million and $ 6.0 million for the three and six months ended June 30, 2021, respectively.

This investment is accounted for using the equity method and is included as part of total assets in our logistics segment.

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to operate one of these pipeline systems (the "Caddo Pipeline") and a 33 % membership interest in Andeavor Logistics Rio Pipeline LLC which operates the other pipeline system (the "Rio Pipeline").

As of March 31, 2022 and December 31, 2021, Delek Logistics' investment balances in these joint ventures totaled $ 105.3 million and $ 106.0 million, respectively, and were accounted for using the equity method.

We recognized income on these investments totaling $ 1.8 million for both the three months ended March 31, 2022 and 2021.

As of June 30, 2022 and December 31, 2021, Delek Logistics' investment balances in these joint ventures totaled $ 103.9 million and $ 106.0 million, respectively, and were accounted for using the equity method.

We recognized income on these investments totaling $ 2.4 million and $ 4.2 million for the three and six months ended June 30, 2022, respectively, and $ 2.9 million and $ 4.6 million for the three and six months ended June 30, 2021, respectively.

Other Investments

We have a 50 % interest in a joint venture that owns an asphalt terminal located in Brownwood, Texas.

As of March 31, 2022 and December 31, 2021, Delek's investment balance in this joint venture was $ 43.2 million and $ 41.6 million, respectively.

We recognized income on this investment totaling $ 1.6 million and $ 0.9 million for the three months ended March 31, 2022 and 2021, respectively.

This investment is accounted for using the equity method and is included as part of total assets in corporate, other and eliminations in our segment disclosure.

Delek Renewables, LLC, a wholly-owned subsidiary of Delek, has a joint venture that owns, operates and maintains a terminal consisting of an ethanol unit train facility with an ethanol tank in North Little Rock, Arkansas.

As of March 31, 2022 and December 31, 2021, Delek Renewables, LLC's investment balance in this joint venture was $ 3.3 million and $ 3.2 million, respectively, and was accounted for using the equity method.

We recognized income on this investment totaling $ 0.2 million and $ 0.2 million for the three months ended March 31, 2022 and 2021, respectively.

The investment in this joint venture is reflected in the refining segment.

In addition to our pipeline joint ventures, we also have a 50 % interest in a joint venture that owns asphalt terminals located in the southwestern region of the U.S., as well as a 50 % interest in a joint venture that owns, operates and maintains a terminal consisting of an ethanol unit train facility with an ethanol tank in Arkansas.

As of June 30, 2022 and December 31, 2021, Delek's investment balance in these joint ventures was $ 52.4 million and $ 44.8 million, respectively.

We recognized income on these investments totaling $ 6.6 million and $ 8.3 million for the three and six months ended June 30, 2022, respectively, and $ 4.1 million and $ 5.1 million for the three and six months ended June 30, 2021, respectively.

These investments are accounted for using the equity method and is included as part of total assets in corporate, other and eliminations in our segment disclosure.

Note 7 - Inventory

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The following table presents the components of inventory for each period presented reflecting the accounting method change discussed above:

(In millions):

December 31, 2021

March 31, 2022 As Adjusted (1)

(in millions) June 30, 2022 As Adjusted (1)

Refinery raw materials and supplies $ 768.1 $ 516.0

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(1) Adjusted to reflect the retrospective change in accounting policy from LIFO to FIFO for certain inventories, as described above.

In addition, certain financial statement line items in our Condensed Consolidated Statement of Income and our Condensed Consolidated Statement of Cash Flows for the three months ended March 31, 2021 and our Consolidated Condensed Balance Sheet as of December 31, 2021, were retrospectively adjusted as follows:

Three Months Ended March 31, 2021

In addition, certain financial statement line items in our Condensed Consolidated Statement of Income for the three and six months ended June 30, 2021, our Condensed Consolidated Statement of Cash Flows for the six months ended June 30, 2021 and our Consolidated Condensed Balance Sheet as of December 31, 2021, were retrospectively adjusted as follows:

Three Months Ended June 30, 2021

(In millions) As Reported (using LIFO) Adjustment As Adjusted (using FIFO)

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Diluted $ ( 1.10 ) $ 0.33 $ ( 0.77 )

Six Months Ended June 30, 2021

(In millions) As Reported (using LIFO) Adjustment As Adjusted (using FIFO)

Condensed Consolidated Statements of Income

Cost of materials and other $ 4,201.3 $ ( 67.9 ) $ 4,133.4

Total cost of sales $ 4,584.8 $ ( 67.9 ) $ 4,516.9

Loss before income tax benefit $ ( 222.2 ) $ 67.9 $ ( 154.3 )

Income tax benefit $ ( 58.4 ) $ 14.9 $ ( 43.5 )

Net loss $ ( 163.8 ) $ 53.0 $ ( 110.8 )

Net loss attributable to Delek $ ( 179.7 ) $ 53.0 $ ( 126.7 )

Net loss per share attributable to Delek

Basic $ ( 2.43 ) $ 0.71 $ ( 1.72 )

Diluted $ ( 2.43 ) $ 0.71 $ ( 1.72 )

Notes to Condensed Consolidated Financial Statements (Unaudited)

December 31, 2021

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Total liabilities and stockholders' equity $ 6,728.0 $ 84.6 $ 6,812.6

Three Months Ended March 31, 2021

Six Months Ended June 30, 2021

(In millions) As Reported (using LIFO) Adjustment As Adjusted (using FIFO)

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$ ( 302.5 ) $ ( 85.2 ) $ ( 387.7 )

Accounts payable and other current liabilities 524.5 ( 14.2 ) 510.3

Notes to Condensed Consolidated Financial Statements (Unaudited)

Non-current assets and liabilities, net $ ( 6.1 ) $ ( 10.2 ) $ ( 16.3 )

The following tables reflect the effect of the change in the accounting principle on the current period Condensed Consolidated Financial Statements:

Three Months Ended March 31, 2022

Three Months Ended June 30, 2022

(In millions) As Computed (using LIFO) As Reported (using FIFO) Effect of Change

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Diluted $ 4.57 $ 5.05 $ ( 0.48 )

March 31, 2022

Six Months Ended June 30, 2022

(In millions) As Computed (using LIFO) As Reported (using FIFO) Effect of Change

Condensed Consolidated Statements of Income

Cost of materials and other $ 9,401.6 $ 9,235.1 $ 166.5

Total cost of sales $ 9,855.1 $ 9,688.6 $ 166.5

(Loss) income before income tax (benefit) expense $ 320.4 $ 486.9 $ ( 166.5 )

Income tax (benefit) expense $ 68.1 $ 103.5 $ ( 35.4 )

Net (loss) income attributable to Delek $ 237.3 $ 368.4 $ ( 131.1 )

Net (loss) income per share attributable to Delek

Basic $ 3.30 $ 5.12 $ ( 1.82 )

Diluted $ 3.27 $ 5.07 $ ( 1.80 )

Notes to Condensed Consolidated Financial Statements (Unaudited)

June 30, 2022

(In millions) As Computed (using LIFO) As Reported (using FIFO) Effect of Change

Condensed Consolidated Balance Sheet

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Total liabilities and stockholders' equity $ 8,693.9 $ 8,924.6 $ ( 230.7 )

Three Months Ended March 31, 2022

Six Months Ended June 30, 2022

(In millions) As Computed (using LIFO) As Reported (using FIFO) Effect of Change

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Accounts payable and other current liabilities $ 794.0 $ 777.4 $ 16.6

At March 31, 2022, we recorded a pre-tax inventory valuation reserve of $ 0.8 million due to a market price decline below our cost of certain inventory products.

At June 30, 2022, we recorded a pre-tax inventory valuation reserve of $ 8.1 million due to a market price decline below our cost of certain inventory products.

At December 31, 2021, we recorded a pre-tax inventory valuation reserve of $ 9.3 million.

We recognized a net reduction (increase) in cost of materials and other in the accompanying condensed consolidated statements of income related to the change in pre-tax inventory valuation of $ 8.5 million and $( 0.9 ) million for the three months ended March 31, 2022 and 2021, respectively.

We recognized a net reduction (increase) in cost of materials and other in the accompanying condensed consolidated statements of income related to the change in pre-tax inventory valuation of $( 7.3 ) million and $ 1.2 million for the three and six months ended June 30, 2022, respectively, and $ 0.8 million and $( 0.1 ) million for the three and six months ended June 30, 2021, respectively.

Note 8 - Crude Oil Supply and Inventory Purchase Agreement

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Baseline Volumes pursuant to the respective Supply and Offtake Agreements 2.0 0.8 1.3

Barrels of inventory consigned under the respective Supply and Offtake Agreements as of March 31, 2022 (1)

Barrels of inventory consigned under the respective Supply and Offtake Agreements as of June 30, 2022 (1)

Barrels of inventory consigned under the respective Supply and Offtake Agreements as of December 31, 2021 (1)

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The Supply and Offtake Agreements have certain termination provisions, which may include requirements to negotiate with third parties for the assignment to us of certain contracts, commitments and arrangements, including procurement contracts, commitments for the sale of product, and pipeline, terminalling, storage and shipping arrangements.

In April 2020, we amended and restated our three Supply and Offtake Agreements to renew and extend the terms to December 30, 2022, with J.

Aron having the sole discretion to further extend to May 30, 2025 by giving at least 6 months prior notice to the current maturity date.

As part of this amendment, there were changes to the underlying market index, annual fee, the crude purchase fee, crude roll fees and timing of cash settlements related to periodic price adjustments (the "Periodic Price Adjustments").

In April 2020, we amended and restated our three Supply and Offtake Agreements to renew and extend the terms to December 30, 2022.

Aron has the sole discretion to further extend the three Supply and Offtake Agreements to May 30, 2025 by giving notice at least 6 months prior to the current maturity date.

As of June 30, 2022, J.

Aron did not provide notice to further extend to May 30, 2025.

As part of the April 2020 amendment, there were changes to the underlying market index, annual fee, the crude purchase fee, crude roll fees and timing of cash settlements related to periodic price adjustments (the "Periodic Price Adjustments").

The repurchase of Baseline Volumes at the end of the Supply and Offtake Agreement term (representing the "Baseline Step-Out Liability" or, collectively, the "Baseline Step-Out Liabilities") continue to be recorded at fair value under the fair value election included under ASC 815 and ASC 825.

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The Baseline Step-Out Liabilities are reflected as non-current liabilities on our condensed consolidated balance sheet to the extent that they are not contractually due within twelve months.

Monthly activity resulting in over and short volumes are be valued using market-indexed pricing, and are included in current liabilities (or receivables) on our condensed consolidated balance sheet.

Monthly activity resulting in over and short volumes are valued using market-indexed pricing, and are included in current liabilities (or receivables) on our condensed consolidated balance sheet.

Pursuant to the Periodic Price Adjustments provision in the Supply and Offtake Agreements, the Company may be required to pay down all or a portion of the fixed component of the Baseline Step-Out Liabilities or may receive additional proceeds depending on the change in fair value of the inventory collateral subject to a threshold at certain specified periodic pricing dates (the "Periodic Pricing Dates"), which occur on October 1st and May 1st, annually, not to extend beyond expiration of the Supply and Offtake Agreements.

Additionally, at the Periodic Pricing Dates, if a Periodic Price Adjustment is triggered, the prospective pricing underlying the fixed component of the Baseline Step-Out Liabilities will be adjusted to reflect either the pay-down or the incremental proceeds, accordingly.

As of March 31, 2022, the fixed component of the Baseline Step-Out Liabilities subject to the Periodic Price Adjustments amounted to approximately $ 39.2 million.

As of June 30, 2022, the fixed component of the Baseline Step-Out Liabilities subject to the Periodic Price Adjustments amounted to approximately $ 72.8 million.

Some portion of that amount may become due or payable if Periodic Price Adjustments are triggered on the Periodic Pricing Dates.

Gains (losses) related to changes in fair value due to commodity-index price are recorded as a component of cost of materials and other in the consolidated statements of income.

With respect to the Baseline Step-Out liabilities, we recognized gains (losses) in cost of materials and other attributable to changes in fair value due to commodity-index price totaling $ 148.8 million and $ 62.3 million for the three months ended March 31, 2022 and 2021, respectively.

With respect to the Baseline Step-Out liabilities, we recognized gains (losses) in cost of materials and other attributable to changes in fair value due to commodity-index price totaling $ 58.1 million and $ 206.9 million during the three and six months ended June 30, 2022, respectively, and $ 41.8 million and $ 104.1 million during the three and six months ended June 30, 2021, respectively.

Net balances payable (receivable) under the Supply and Offtake Agreements were as follows as of the balance sheet dates (in millions):

El Dorado Big Spring Krotz Springs Total

Balances as of March 31, 2022:

Balances as of June 30, 2022:

Baseline Step-Out Liability $ 261.0 $ 110.6 $ 165.8 $ 537.4

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Total Obligations Under Supply and Offtake Agreements - Current portion $ 422.1 $ 169.9 $ 178.5 $ 770.5

Other payable for monthly activity true-up $ 20.5 $ 3.7 $ 3.3 $ 27.5

Other (receivable) payable for monthly activity true-up $ ( 9.5 ) $ 1.0 $ 14.8 $ 6.3

El Dorado Big Spring Krotz Springs Total

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El Dorado Big Spring Krotz Springs Total

Recurring cash fees paid during the three months ended March 31, 2022

Recurring cash fees paid during the three months ended June 30, 2022

$ 3.0 $ 1.0 $ 1.2 $ 5.2

Recurring cash fees paid during the three months ended March 31, 2021

Recurring cash fees paid during the three months ended June 30, 2021

$ 2.8 $ 0.8 $ 1.1 $ 4.7

Recurring cash fees paid during the six months ended June 30, 2022

$ 5.9 $ 2.0 $ 2.3 $ 10.2

Recurring cash fees paid during the six months ended June 30, 2021

$ 5.2 $ 1.5 $ 2.2 $ 8.9

We maintained letters of credit under the Supply and Offtake Agreements as follows (in millions):

Letters of credit outstanding as of March 31, 2022

Letters of credit outstanding as of June 30, 2022

Letters of credit outstanding as of December 31, 2021

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Outstanding borrowings, net of unamortized debt discounts and certain deferred financing costs, under Delek’s existing debt instruments are as follows (in millions):

March 31, 2022 December 31, 2021

June 30, 2022 December 31, 2021

Revolving Credit Facility $ — $ —

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$ 2,745.7 $ 2,125.8

(1) Net of deferred financing costs of $ 2.0 million and $ 2.2 million and debt discount of $ 16.5 million and $ 17.8 million at March 31, 2022 and December 31, 2021, respectively.

(2) Net of deferred financing costs of $ 0.1 million and $ 0.1 million and debt discount of $ 0.1 million and $ 0.1 million at March 31, 2022 and December 31, 2021, respectively.

(3) Net of deferred financing costs of $ 2.3 million and $ 2.5 million and debt discount of $ 0.7 million and $ 0.8 million at March 31, 2022 and December 31, 2021, respectively.

(4) Net of deferred financing costs of $ 5.5 million and $ 5.7 million at March 31, 2022 and December 31, 2021, respectively.

Notes to Condensed Consolidated Financial Statements (Unaudited)

(1) Net of deferred financing costs of $ 1.9 million and $ 2.2 million at June 30, 2022 and December 31, 2021, respectively and debt discount of $ 15.0 million and $ 17.8 million at June 30, 2022 and December 31, 2021, respectively.

(2) Net of deferred financing costs of $ 0.1 million and $ 0.1 million at June 30, 2022 and December 31, 2021, respectively and a nominal debt discount and $ 0.1 million debt discount at June 30, 2022 and December 31, 2021, respectively.

(3) Net of deferred financing costs of $ 0.6 million at June 30, 2022.

(4) Net of deferred financing costs of $ 2.1 million and $ 2.5 million at June 30, 2022 and December 31, 2021, respectively and debt discount of $ 0.7 million and $ 0.8 million at June 30, 2022 and December 31, 2021, respectively.

(5) Net of deferred financing costs of $ 5.3 million and $ 5.7 million at June 30, 2022 and December 31, 2021, respectively.

Delek Revolver and Term Loan

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Pursuant to the Incremental Amendment, the Company borrowed $ 250.0 million in aggregate principal amount of incremental term loans (the “Incremental Term Loans”) at an original issue discount of 0.75 %.

On November 12, 2019 (the "Second Incremental Effective Date"), we amended the Term Loan Credit facility agreement pursuant to the terms of the Second Incremental Amendment to the Term Loan Credit Agreement (the "Second Incremental Amendment") and borrowed $ 150.0 million in aggregate principal amount of incremental term loans (the "Incremental Loans") at an original issue discount of 1.21 %.

Notes to Condensed Consolidated Financial Statements (Unaudited)

"Second Incremental Amendment") and borrowed $ 150.0 million in aggregate principal amount of incremental term loans (the "Incremental Loans") at an original issue discount of 1.21 %.

The terms of the Incremental Term Loans and Incremental Loans are substantially identical to the terms applicable to the initial term loans under the Term Loan Credit Facility borrowed in March 2018.

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The applicable margin for Revolving Credit Facility borrowings is based on Delek’s excess availability as determined by reference to a borrowing base, ranging from 0.25 % to 0.75 % per annum with respect to base rate borrowings and from 1.25 % to 1.75 % per annum with respect to LIBOR and CDOR borrowings.

Notes to Condensed Consolidated Financial Statements (Unaudited)

In addition, the Revolving Credit Facility requires Delek to pay an unused line fee on the average amount of unused commitments thereunder in each quarter, which fee is at a rate of 0.25 % or 0.375 % per annum, depending on average commitment usage for such quarter.

As of March 31, 2022, the unused line fee was 0.375 % per annum.

As of June 30, 2022, the unused line fee was 0.375 % per annum.

Maturity and Repayments

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Borrowings under the New Credit Facilities are also guaranteed by DK Canada Energy ULC, a British Columbia unlimited liability company and a wholly-owned restricted subsidiary of Delek.

The Revolving Credit Facility is secured by a first priority lien over substantially all of Delek’s and each guarantor's receivables, inventory, renewable identification numbers ("RINs"), instruments, intercompany loan receivables, deposit and securities accounts and related books and records and certain other personal property, subject to certain customary exceptions (the "Revolving Priority Collateral"), and a second priority lien over substantially all of Delek's and each guarantor's other assets, including all of the equity interests of any subsidiary held by Delek or any guarantor (other than equity interests in certain MLP Subsidiaries) subject to certain customary exceptions, but excluding real property (such real property and equity interests, the "Term Priority Collateral").

Notes to Condensed Consolidated Financial Statements (Unaudited)

Delek or any guarantor (other than equity interests in certain MLP Subsidiaries) subject to certain customary exceptions, but excluding real property (such real property and equity interests, the "Term Priority Collateral").

The Term Loan Credit Facility is secured by a first priority lien on the Term Priority Collateral and a second priority lien on the Revolving Priority Collateral, all in accordance with an intercreditor agreement between the Term Administrative Agent and the Revolver Administrative Agent and acknowledged by Delek and the subsidiary guarantors.

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Additional Information

At March 31, 2022, the borrowing rate for base rate loans under the Revolving Credit Facility was 3.75 % and there were no principal amounts outstanding thereunder.

Additionally, there were letters of credit issued of approximately $ 362.5 million as of March 31, 2022 under the Revolving Credit Facility.

Unused credit commitments under the Revolving Credit Facility, as of March 31, 2022, were approximately $ 637.5 million.

At March 31, 2022, the weighted average borrowing rate under the Term Loan Credit Facility was approximately 3.00 % comprised entirely of LIBOR borrowings, and the principal amount outstanding thereunder was $ 1,256.8 million.

As of March 31, 2022, the effective interest rate related to the Term Loan Credit Facility was 3.52 %.

At June 30, 2022, the borrowing rate for base rate loans under the Revolving Credit Facility was 5.00 % and there was a nominal principal amount outstanding thereunder.

Additionally, there were letters of credit issued of approximately $ 363.9 million as of June 30, 2022 under the Revolving Credit Facility.

Unused credit commitments under the Revolving Credit Facility, as of June 30, 2022, were approximately $ 636.1 million.

At June 30, 2022, the weighted average borrowing rate under the Term Loan Credit Facility was approximately 4.42 % comprised entirely of LIBOR borrowings, and the principal amount outstanding thereunder was $ 1,253.5 million.

As of June 30, 2022, the effective interest rate related to the Term Loan Credit Facility was 4.96 %.

Delek Hapoalim Term Loan

On December 31, 2019, Delek entered into an unsecured term loan credit and guaranty agreement (the "Agreement") with Bank Hapoalim B.M.

On December 31, 2019, Delek entered into an unsecured term loan credit and guaranty agreement (the "BHI Agreement") with Bank Hapoalim B.M.

("BHI") as the administrative agent.

Pursuant to the Agreement, on December 31, 2019, Delek borrowed $ 40.0 million (the "BHI Term Loan").

The interest rate under the Agreement is equal to LIBOR plus a margin of 3.00 %.

The Agreement has a current maturity of December 31, 2022 and requires quarterly loan amortization payments of $ 0.1 million, commencing March 31, 2020.

Pursuant to the BHI Agreement, on December 31, 2019, Delek borrowed $ 40.0 million (the "BHI Term Loan").

The interest rate under the BHI Agreement is equal to LIBOR plus a margin of 3.00 %.

The BHI Agreement has a current maturity of December 31, 2022 and requires quarterly loan amortization payments of $ 0.1 million, commencing March 31, 2020.

Proceeds may be used for general corporate purposes.

On December 30, 2020 and June 28, 2021, we amended the BHI Term Loan to modify one of the required quarterly financial covenant metrics;

On December 30, 2020 and June 28, 2021, we amended the BHI Agreement to modify one of the required quarterly financial covenant metrics;

there were no other changes as a result of these amendments.

At March 31, 2022, the weighted average borrowing rate under the term loan was approximately 3.46 % comprised entirely of a LIBOR borrowing and the principal amount outstanding thereunder was $ 19.1 million.

On July 30, 2021 and January 31, 2022, we elected to voluntarily prepay $ 10.0 million each period in principal of the term loan.

As of March 31, 2022, the effective interest rate related to the BHI Term Loan was 4.33 %.

At June 30, 2022, the weighted average borrowing rate under the term loan was approximately 4.67 % comprised entirely of a LIBOR borrowing and the principal amount outstanding thereunder was $ 9.0 million.

On July 30, 2021, January 31, 2022, and June 30, 2022, we elected to voluntarily prepay $ 10.0 million each period in principal of the term loan.

As of June 30, 2022, the effective interest rate related to the BHI Term Loan was 6.52 %.

Delek Logistics Credit Facility

On September 28, 2018, Delek Logistics and all of its subsidiaries entered into a third amended and restated senior secured revolving credit agreement with Fifth Third Bank ("Fifth Third") as administrative agent and a syndicate of lenders (hereafter, the "Delek Logistics Credit Facility") with lender commitments of $ 850.0 million.

The Delek Logistics Credit Facility also contains an accordion feature whereby

Notes to Condensed Consolidated Financial Statements (Unaudited)

Delek Logistics can increase the size of the credit facility to an aggregate of $ 1.0 billion, subject to receiving increased or new commitments from lenders and the satisfaction of certain other conditions precedent.

The Delek Logistics Credit Facility also contains an accordion feature whereby Delek Logistics can increase the size of the credit facility to an aggregate of $ 1.0 billion, subject to receiving increased or new commitments from lenders and the satisfaction of certain other conditions precedent.

The obligations under the Delek Logistics Credit Facility remain secured by first priority liens on substantially all of Delek Logistics' tangible and intangible assets.

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Borrowings under the Delek Logistics Credit Facility bear interest at either a U.S.

dollar prime rate , Canadian dollar prime rate , LIBOR , or a CDOR rate, in each case plus applicable margins, at the election of the borrowers and as a function of draw down currency.

dollar prime rate , Canadian dollar prime rate , or recently amended term Secured Overnight Financing Rate (“Term SOFR”), or a CDOR rate, in each case plus applicable margins, at the election of the borrowers and as a function of draw down currency.

The applicable margin in each case and the fee payable for the unused revolving commitments vary based upon Delek Logistics' most recent total leverage ratio calculation delivered to the lenders, as called for and defined under the terms of the Delek Logistics Credit Facility.

At March 31, 2022, the weighted average borrowing rate was approximately 2.67 %.

At June 30, 2022, the weighted average borrowing rate was approximately 3.35 %.

Additionally, the Delek Logistics Credit Facility requires Delek Logistics to pay a leverage ratio dependent quarterly fee on the average unused revolving commitment.

As of March 31, 2022, this fee was 0.30 % on an annualized basis.

As of June 30, 2022, this fee was 0.30 % on an annualized basis.

In August 2020, Delek Logistics entered into a First Amendment to the Delek Logistics Credit Facility which, among other things, permitted the transfer of cash and equity consideration for the elimination of incentive distribution rights held by Delek Logistics GP, LLC, the general partner.

It also modified the total leverage ratio and the senior leverage ratio (each as defined in the Delek Logistics Credit Facility) calculations to reduce the total funded debt (as defined in the Delek Logistics Credit Facility) component thereof by the total amount of unrestricted consolidated cash and cash equivalents on the balance sheet of the Delek Logistics and its subsidiaries up to $ 20.0 million.

As of March 31, 2022, Delek Logistics had $ 264.1 million of outstanding borrowings under the Delek Logistics Credit Facility, with no letters of credit in place.

Unused credit commitments under the Delek Logistics Credit Facility, as of March 31, 2022, were $ 585.9 million.

On May 13, 2022, Delek Logistics entered into a Second Amendment to the Delek Logistics Credit Facility which, among other things, provided for the transition from a LIBOR benchmark to Term SOFR with credit spread adjustments for 1-month and 3-month Term SOFR loans and provided consent and flexibility related to the previously announced 3 Bear Acquisition with respect to certain covenants in the Delek Logistics Credit Facility.

On May 26, 2022, Delek Logistics entered into a Third Amendment to the Delek Logistics Credit Facility which, among other things,

Notes to Condensed Consolidated Financial Statements (Unaudited)

provides for certain changes to the Delek Logistics Credit Facility in connection with the previously announced acquisition of 3 Bear in respect of pro forma calculations and certain other requirements under the Delek Logistics Credit Facility.

Further, on May 26, 2022, Delek Logistics entered into a Fourth Amendment (the “Fourth Amendment”) to the Delek Logistics Credit Facility.

Among other things, the Fourth Amendment:

(i) increased the U.S.

Revolving Credit Commitments (as defined in the Delek Logistics Credit Facility) by an amount equal to $ 150.0 million, resulting in aggregate lender commitments under the Delek Logistics Credit Facility in an amount of $ 1.0 billion, (ii) increased the U.S.

L/C Sublimit (as defined in the Delek Logistics Credit Facility) to an aggregate amount equal to $ 90.0 million and (iii) increased the U.S.

Swing Line Sublimit (as defined in the Delek Logistics Credit) to an aggregate amount equal to $ 18.0 million.

As of June 30, 2022, Delek Logistics had $ 880.9 million of outstanding borrowings under the Delek Logistics Credit Facility, with no letters of credit in place.

Unused credit commitments under the Delek Logistics Credit Facility, as of June 30, 2022, were $ 119.1 million.

Delek Logistics 2025 Notes

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In May 2018, the Delek Logistics 2025 Notes were exchanged for new notes with terms substantially identical in all material respects with the Delek Logistic 2025 Notes except the new notes do not contain terms with respect to transfer restrictions.

All or part of the Delek Logistics 2025 Notes are currently redeemable, subject to certain conditions and limitations, at a redemption price of 103.375 % of the redeemed principal, plus accrued and unpaid interest, if any.

Beginning on May 15, 2022, th e Issuers may, subject to certain conditions and limitations, redeem all or part of the Delek Logistics 2025 Notes, at a redemption price of 101.688 % of the redeemed principal for the twelve-month period beginning on May 15, 2022, and 100.00 % beginning on May 15, 2023 and thereafter, plus accrued and unpaid interest, if any.

All or part of the Delek Logistics 2025 Notes are currently redeemable, subject to certain conditions and limitations, at a redemption price of 101.688 % of the redeemed principal for the twelve-month period beginning on May 15, 2022, and 100.00 % beginning on May 15, 2023 and thereafter, plus accrued and unpaid interest, if any.

In the event of a change of control, accompanied or followed by a ratings downgrade within a certain period of time, subject to certain conditions and limitations, the Issuers will be obligated to make an offer for the purchase of the Delek Logistics 2025 Notes from holders at a price equal to 101 % of the principal amount thereof, plus accrued and unpaid interest.

As of March 31, 2022, we had $ 250.0 million in outstanding principal amount under the Delek Logistics 2025 Notes, and the effective interest rate was 7.20 %.

As of June 30, 2022, we had $ 250.0 million in outstanding principal amount under the Delek Logistics 2025 Notes, and the effective interest rate was 7.19 %.

Delek Logistics 2028 Notes

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At any time prior to June 1, 2024, the Co-issuers may redeem up to 35 % of the aggregate principal amount of the Delek Logistics 2028 Notes with the net cash proceeds of one or more equity offerings by Delek Logistics at a redemption price of 107.125 % of the redeemed principal amount, plus accrued and unpaid interest, if any, subject to certain conditions and limitations.

Prior to June 1, 2024, the Co-issuers may also redeem all or part of the Delek Logistics 2028 Notes at a redemption price of the principal amount plus accrued and

Notes to Condensed Consolidated Financial Statements (Unaudited)

unpaid interest, if any, plus a "make whole" premium, subject to certain conditions and limitations.

Prior to June 1, 2024, the Co-issuers may also redeem all or part of the Delek Logistics 2028 Notes at a redemption price of the principal amount plus accrued and unpaid interest, if any, plus a "make whole" premium, subject to certain conditions and limitations.

In addition, beginning on June 1, 2024, the Co-issuers may, subject to certain conditions and limitations, redeem all or part of the Delek Logistics 2028 Notes, at a redemption price of 103.563 % of the redeemed principal for the twelve-month period beginning on June 1, 2024, 101.781 % for the twelve-month period beginning on June 1, 2025, and 100.00 % beginning on June 1, 2026 and thereafter, plus accrued and unpaid interest, if any.

In the event of a change of control, accompanied or followed by a ratings downgrade within a certain period of time, subject to certain conditions and limitations, the Co-issuers will be obligated to make an offer for the purchase of the Delek Logistics 2028 Notes from holders at a price equal to 101 % of the principal amount thereof, plus accrued and unpaid interest.

As of March 31, 2022, we had $ 400.0 million in outstanding principal amount under the Delek Logistics 2028 Notes, and the effective interest rate was 7.05 %.

As of June 30, 2022, we had $ 400.0 million in outstanding principal amount under the Delek Logistics 2028 Notes, and the effective interest rate was 7.40 %.

Notes to Condensed Consolidated Financial Statements (Unaudited)

Reliant Bank Revolver

Delek has an unsecured revolving credit agreement with Reliant Bank (the "Reliant Bank Revolver").

On December 16, 2019, we amended the Reliant Bank Revolver to extend the maturity date to June 30, 2022, reduce the fixed interest rate to 4.50 % per annum and increase the revolver commitment amount to $ 50.0 million.

There were no other significant changes to the agreement in connection with this amendment .

On December 9, 2020 and June 17, 2021, we amended the Reliant Bank Revolver to modify a required quarterly financial covenant metric;

there were no other changes as a result of these amendments.

Delek has an unsecured revolving credit agreement with Reliant Bank (the "Reliant Bank Revolver") with a maximum borrowing commitment of $ 50.0 million.

On June 30, 2022, among other things, we amended the Reliant Bank Revolver to extend the maturity date to June 30, 2023 and change the fixed interest rate of 4.50 % per annum to a variable rate loan equal to the Wall Street Journal Prime Rate plus 0.75% effective July 1, 2022.

The revolving credit agreement requires us to pay a quarterly fee of 0.50 % on an annualized basis on the average unused revolving commitment.

As of March 31, 2022, we had $ 50.0 million outstanding and had no unused credit commitments under the Reliant Bank Revolver.

As of June 30, 2022, we had $ 50.0 million outstanding and had no unused credit commitments under the Reliant Bank Revolver.

Restrictive Covenants

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The Term Loan Credit Facility does not have any financial maintenance covenants.

We believe we were in compliance with all covenant requirements under each of our credit facilities as of March 31, 2022.

We believe we were in compliance with all covenant requirements under each of our credit facilities as of June 30, 2022.

Certain of our debt facilities contain limitations on the incurrence of additional indebtedness, making of investments, creation of liens, dispositions and acquisitions of assets, and making of restricted payments and transactions with affiliates.

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Because these derivatives are entered into to achieve objectives specifically related to our inventory and production risks, such gains and losses (to the extent not designated as accounting hedges and recognized on an unrealized basis in other comprehensive income) are recognized in cost of materials and other.

Forward contracts are agreements to buy or sell a commodity at a predetermined price at a specified future date, and for our transactions,

Notes to Condensed Consolidated Financial Statements (Unaudited)

generally require physical delivery.

Forward contracts are agreements to buy or sell a commodity at a predetermined price at a specified future date, and for our transactions, generally require physical delivery.

Forward contracts where the underlying commodity will be used or sold in the normal course of business qualify as normal purchases and normal sales ("NPNS") pursuant to ASC 815.

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Our Canadian crude trading operations are accounted for as derivative instruments, and the related unrealized and realized gains and losses are recognized in other operating income, net on the condensed consolidated statements of income.

Additionally, as of and for the three months ended March 31, 2022, other forward contracts accounted for as derivatives that are specific to managing crude costs rather than for trading purposes are recognized in cost of materials and other on the accompanying condensed consolidated statements of income in our refining segment, and are included in our disclosures of commodity derivatives in the tables below.

Additionally, as of and for the three and six months ended June 30, 2022, other forward contracts accounted for as derivatives that are specific to managing crude costs rather than for trading purposes are recognized in cost of materials and other on the accompanying condensed consolidated statements of income in our refining segment, and are included in our disclosures of commodity derivatives in the tables below.

Futures, swaps or other commodity related derivative instruments that are utilized to specifically provide economic hedges on our Canadian forward contract or investment positions are recognized in other operating income, net because that is where the related underlying transactions are reflected.

Notes to Condensed Consolidated Financial Statements (Unaudited)

From time to time, we also enter into future commitments to purchase or sell RINs at fixed prices and quantities, which are used to manage the costs associated with our RINs Obligation.

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Changes in the fair value of these future RINs commitment contracts are recorded in cost of materials and other on the condensed consolidated statements of income.

As of March 31, 2022, we do not believe there is any material credit risk with respect to the counterparties to any of our derivative contracts.

As of June 30, 2022, we do not believe there is any material credit risk with respect to the counterparties to any of our derivative contracts.

In accordance with ASC 815, certain of our commodity swap contracts have been designated as cash flow hedges and the change in fair value between the execution date and the end of period has been recorded in other comprehensive income.

The fair value of these contracts is recognized in income in the same financial statement line item as hedged transaction at the time the positions are closed and the hedged transactions are recognized in income.

The following table presents the fair value of our derivative instruments as of March 31, 2022 and December 31, 2021.

The following table presents the fair value of our derivative instruments as of June 30, 2022 and December 31, 2021.

The fair value amounts below are presented on a gross basis and do not reflect the netting of asset and liability positions permitted under our master netting arrangements, including cash collateral on deposit with our counterparties.

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See Note 11 for further information regarding the fair value of derivative instruments (in millions).

March 31, 2022 December 31, 2021

June 30, 2022 December 31, 2021

Derivative Type Balance Sheet Location Assets Liabilities Assets Liabilities

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Commodity derivatives (1)

Other long-term assets 0.4 — — —

Commodity derivatives (1)

Other long-term liabilities — — 6.1 ( 6.1 )

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Total net fair value of derivatives $ 167.1 $ ( 228.0 ) $ 23.6 $ ( 26.7 )

(1) As of March 31, 2022 and December 31, 2021, we had open derivative positions representing 200,455,511 and 182,525,893 barrels, respectively, of crude oil and refined petroleum products.

There were no open positions designated as cash flow hedging instruments as of March 31, 2022 and December 31, 2021.

(1) As of June 30, 2022 and December 31, 2021, we had open derivative positions representing 112,028,194 and 182,525,893 barrels, respectively, of crude oil and refined petroleum products.

There were no open positions designated as cash flow hedging instruments as of June 30, 2022 and December 31, 2021.

Additionally, as of December 31, 2021, we had open derivative positions representing and 1,320,000 MMBTU of natural gas products.

(2) As of March 31, 2022 and December 31, 2021, we had open RINs commitment contracts representing 108,950,000 and 16,325,000 RINs, respectively.

(3) As of March 31, 2022 and December 31, 2021, $ 142.8 million and $( 24.7 ) million, respectively, of cash collateral (obligation) held by counterparties has been netted with the derivatives with each counterparty.

Notes to Condensed Consolidated Financial Statements (Unaudited)

(2) As of June 30, 2022 and December 31, 2021, we had open RINs commitment contracts representing 117,750,000 and 16,325,000 RINs, respectively.

(3) As of June 30, 2022 and December 31, 2021, $ 66.3 million and $( 24.7 ) million, respectively, of cash collateral (obligation) held by counterparties has been netted with the derivatives with each counterparty.

Total gains (losses) on our non-trading commodity derivatives and RINs commitment contracts recorded in the condensed consolidated statements of income are as follows (in millions):

Three Months Ended March 31,

Three Months Ended June 30, Six Months Ended June 30,

2022 2021 2022 2021

(Losses) gains on hedging derivatives not designated as hedging instruments recognized in cost of materials and other (1)

$ ( 34.4 ) $ 22.2 $ ( 105.8 ) $ 79.6

Losses on non-trading physical forward contract commodity derivatives in cost of materials and other ( 3.4 ) ( 1.1 )

(Losses) gains on non-trading physical forward contract commodity derivatives in cost of materials and other 8.2 ( 4.4 ) 4.8 ( 5.5 )

(Losses) gains on hedging derivatives not designated as hedging instruments recognized in operating expenses ( 1.7 ) — ( 1.7 ) —

Realized gains reclassified out of accumulated other comprehensive income and into cost of materials and other on commodity derivatives designated as cash flow hedging instruments — — — 0.2

Total (losses) gains $ ( 27.9 ) $ 17.8 $ ( 102.7 ) $ 74.3

(1) Gains (losses) on commodity derivatives that are economic hedges but not designated as hedging instruments include unrealized gains (losses) of $( 70.7 ) million and $ 11.2 million for the three months ended March 31, 2022 and 2021.

(2) See separate table below for disclosures about "trading derivatives."

(1) Gains (losses) on commodity derivatives that are economic hedges but not designated as hedging instruments include unrealized gains (losses) of $ 66.1 million and $( 4.6 ) million for the three and six months ended June 30, 2022, respectively, and $( 21.2 ) million and $( 9.4 ) million for the three and six months ended June 30, 2021, respectively.

Notes to Condensed Consolidated Financial Statements (Unaudited)

The effect of cash flow hedge accounting on the condensed consolidated statements of income is as follows (in millions):

Three Months Ended March 31,

Three Months Ended June 30, Six Months Ended June 30,

2022 2021 2022 2021

Gain (loss) on cash flow hedging relationships recognized in cost of materials and other:

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Total $ — $ — $ — $ —

For cash flow hedges, no component of the derivative instruments’ gains or losses was excluded from the assessment of hedge effectiveness for the three months ended March 31, 2022 or 2021.

There were no gains (losses), net of tax, on settled commodity contracts during the three months ended March 31, 2022, and $ 0.2 million during the three months ended March 31, 2021, respectively, which were reclassified into cost of materials and other in the condensed consolidated statements of income.

As of March 31, 2022, we estimate that no amount of deferred gains related to commodity cash flow hedges will be reclassified into cost of materials and other over the next 12 months as a result of hedged transactions that are forecasted to occur.

For cash flow hedges, no component of the derivative instruments’ gains or losses was excluded from the assessment of hedge effectiveness for the three and six months ended June 30, 2022 or 2021.

There were no gains (losses), net of tax, on settled commodity contracts during the three and six months ended June 30, 2022 and $ 0.2 million during the six months ended June 30, 2021, respectively, which were reclassified into cost of materials and other in the condensed consolidated statements of income.

As of June 30, 2022, we estimate that no amount of deferred gains related to commodity cash flow hedges will be reclassified into cost of materials and other over the next 12 months as a result of hedged transactions that are forecasted to occur.

Total (losses) gains on our trading derivatives (none of which were designated as hedging instruments) recorded in other operating income, net on the condensed consolidated statements of income are as follows (in millions):

Three Months Ended March 31,

Three Months Ended June 30, Six Months Ended June 30,

2022 2021 2022 2021

Trading Physical Forward Contract Commodity Derivatives

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Realized gains (losses) $ ( 3.0 ) $ ( 4.6 ) $ 11.9 $ ( 5.0 )

Unrealized losses ( 17.2 ) ( 0.6 )

Unrealized gains (losses) 0.6 0.1 ( 16.5 ) ( 0.5 )

Total $ ( 2.4 ) $ ( 4.5 ) $ ( 4.6 ) $ ( 5.5 )

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ASC 820 requires disclosures that categorize assets and liabilities measured at fair value into one of three different levels depending on the observability of the inputs employed in the measurement.

Level 1 inputs are quoted prices in active markets for identical assets or

Notes to Condensed Consolidated Financial Statements (Unaudited)

Level 1 inputs are quoted prices in active markets for identical assets or liabilities.

Level 2 inputs are observable inputs other than quoted prices included within Level 1 for the asset or liability, either directly or indirectly through market-corroborated inputs.

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These RINs commitment contracts (which are forward contracts accounted for as derivatives – see Note 10) are categorized as Level 2, and are measured at fair value based on quoted prices from an independent pricing service.

Our environmental credits obligation surplus or deficit includes the Consolidated Net RINs Obligation surplus or deficit, as well as other environmental credit obligation surplus or deficit positions subject to fair value accounting pursuant to our accounting policy (see Note 14).

The environmental credits obligation surplus or deficit is categorized as Level 2 if measured at fair value either directly through observable inputs or indirectly through market-corroborated inputs.

As of and for the three months ended March 31, 2022 and 2021, we elected to account for our J.

The environmental credits obligation surplus or deficit is categorized as Level 2, if measured at fair value either directly through observable

Notes to Condensed Consolidated Financial Statements (Unaudited)

inputs or indirectly through market-corroborated inputs, and gains (losses) related to changes in fair value are recorded as a component of cost of materials and other in the consolidated statements of income.

With respect to our Consolidated Net RINs Obligation surplus or deficit, we recognized gains (losses) on changes in fair value totaling $( 39.8 ) million and $( 41.0 ) million for three and six months ended June 30, 2022, respectively, and $( 49.8 ) million and $( 104.9 ) million for three and six months ended June 30, 2021, respectively, primarily attributable to changes in the market prices of the underlying credits that occurred at the end of each quarter including changes in volume requirements related to the 2020, 2021 and 2022 RINs Obligation to reflect the June 2022 EPA finalized volume requirements.

As of and for the six months ended June 30, 2022 and 2021, we elected to account for our J.

Aron step-out liability at fair value in accordance with ASC 825 , as it pertains to the fair value option.

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The fair value hierarchy for our financial assets and liabilities accounted for at fair value on a recurring basis was as follows (in millions):

March 31, 2022

June 30, 2022

Level 1 Level 2 Level 3 Total

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Net liabilities $ 16.1 $ ( 969.0 ) $ — $ ( 952.9 )

Notes to Condensed Consolidated Financial Statements (Unaudited)

December 31, 2021

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In the table above, derivative assets and liabilities with the same counterparty are not netted where the legal right of offset exists.

This differs from the presentation in the financial statements which reflects our policy, wherein we have elected to offset the fair value amounts recognized for multiple derivative instruments executed with the same counterparty and where the legal right of offset exists.

As of March 31, 2022 and December 31, 2021, $ 142.8 million and $( 24.7 ) million, respectively, of cash collateral (obligation) was held by counterparty brokerage firms and has been netted with the net derivative positions with each counterparty.

This differs from the presentation in the financial statements which reflects our policy, wherein we have elected to offset the fair value amounts

Notes to Condensed Consolidated Financial Statements (Unaudited)

recognized for multiple derivative instruments executed with the same counterparty and where the legal right of offset exists.

As of June 30, 2022 and December 31, 2021, $ 66.3 million and $( 24.7 ) million, respectively, of cash collateral (obligation) was held by counterparty brokerage firms and has been netted with the net derivative positions with each counterparty.

See Note 10 for further information regarding derivative instruments.

Non-Recurring Fair Value Measurements

The 3 Bear Acquisition was accounted for as a business combination using the acquisition method of accounting, with the assets acquired and liabilities assumed at their respective acquisition date fair values at the closing date.

The fair value measurements were based on a combination of valuation methods including discounted cash flows, the market approach and obsolescence adjusted replacement costs, all of which are Level 3 inputs.

Note 12 - Commitments and Contingencies

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In June 2019, the court found in favor of the plaintiffs and assessed damages against such subsidiary, which were reduced in the fourth quarter of 2019 to $ 6.4 million.

Such amount is included as of March 31, 2022 and December 31, 2021 in accrued expenses and other current liabilities on the accompanying condensed consolidated balance sheet.

Such amount is included as of June 30, 2022 and December 31, 2021 in accrued expenses and other current liabilities on the accompanying condensed consolidated balance sheet.

The matter was appealed and has been remanded to the district court regarding jurisdictional issues.

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In addition to the $ 2.3 million of the settlement that was not covered by insurance, we accrued $ 4.2 million of estimated unpaid and remaining legal fees .

As of March 31, 2022 the remaining unpaid balance is $ 0.7 million, and is included in accrued expenses and other current liabilities on the accompanying condensed consolidated balance sheet.

As of June 30, 2022 the remaining unpaid balance is $ 0.2 million, and is included in accrued expenses and other current liabilities on the accompanying condensed consolidated balance sheet.

Self-insurance

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We have umbrella liability insurance available to each of our segments in an amount determined reasonable by management.

Notes to Condensed Consolidated Financial Statements (Unaudited)

Environmental, Health and Safety

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We believe that our current operations are in substantial compliance with existing environmental and safety requirements.

Notes to Condensed Consolidated Financial Statements (Unaudited)

However, there have been and will continue to be ongoing discussions about environmental and safety matters between us and federal and state authorities, including notices of violations, citations and other enforcement actions, some of which have resulted or may result in changes to operating procedures and in capital expenditures.

While it is often difficult to quantify future environmental or safety related expenditures, we anticipate that continuing capital investments and changes in operating procedures will be required for the foreseeable future to comply with existing and new requirements, as well as evolving interpretations and more strict enforcement of existing laws and regulations.

As of March 31, 2022, we have recorded an environmental liability of approximately $ 111.9 million, primarily related to the estimated probable costs of remediating or otherwise addressing certain environmental issues of a non-capital nature at our refineries, as well as terminals, some of which we no longer own.

As of June 30, 2022, we have recorded an environmental liability of approximately $ 115.4 million, primarily related to the estimated probable costs of remediating or otherwise addressing certain environmental issues of a non-capital nature at our refineries, as well as terminals, some of which we no longer own.

This liability includes estimated costs for ongoing investigation and remediation efforts for known contamination of soil and groundwater.

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In the future, we could be required to extend the expected remediation period or undertake additional investigations of our refineries, pipelines and terminal facilities, which could result in the recognition of additional remediation liabilities.

Included in our environmental liabilities as of both March 31, 2022 and December 31, 2021 is a liability totaling $ 78.5 million related to a property that we have historically operated as an asphalt and marine fuel terminal both as an owner and, subsequently, as a lessee under an in-substance lease agreement (the “License Agreement”).

The License Agreement, which provided us the license to continue operating our asphalt and marine fuel terminal operations on the property for a term of ten years (expiring in June 2020), also ascribed a contractual noncontingent indemnification guarantee to certain of our wholly-owned subsidiaries related to certain incremental environmental remediation activities, predicated on the completion of certain property development activities ascribed to the lessor.

Included in our environmental liabilities as of both June 30, 2022 and December 31, 2021 is a liability totaling $ 78.5 million related to a property that we historically operated as an asphalt and marine fuel terminal both as an owner and, subsequently, as a lessee under an in-substance lease agreement (the “License Agreement”).

The License Agreement, which provided us the license to continue operating our asphalt and marine fuel terminal operations on the property for a term of ten years and expired in June 2020, also ascribed a contractual noncontingent indemnification guarantee to certain of our wholly-owned subsidiaries related to certain incremental environmental remediation activities, predicated on the completion of certain property development activities ascribed to the lessor.

Our combined liability, comprised of our environmental liability plus the estimated fair value of the noncontingent guarantee liability, was recorded when Delek acquired the outstanding common stock of Alon, effective July 1, 2017 ("Delek/Alon Merger").

While the License Agreement expired in June 2020, it is currently being disputed in litigation where we have determined that no loss accrual is necessary and that the amount of incremental loss that is reasonably possible is immaterial as of March 31, 2022.

Such ongoing dispute causes sufficient uncertainty around the release of risk and the appropriate joint and several liability allocations thereunder that we cannot currently determine a more reasonable estimate of the potential total contingent liability that is probable, nor do we have sufficient information to better estimate the fair value of any remaining noncontingent guarantee liability.

As such, as of March 31, 2022 and December 31, 2021, except for accretion and expenditures, our combined environmental liability related to the terminal and property remained unchanged.

As such, as of June 30, 2022 and December 31, 2021, except for accretion and expenditures, our combined environmental liability related to the terminal and property remained unchanged.

We are also subject to various regulatory requirements related to carbon emissions and the compliance requirements to remit environmental credit obligations due to the EPA or other regulatory agencies, the most significant of which relates to the RINs Obligation subject to the EPA’s RFS-2 regulations (as defined in our accounting policies in Note 2 to the audited consolidated financial statements included in Item.

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We have also self-reported our related instances of non-compliance to the EPA, and while we cannot yet estimate the extent of penalties that may be assessed, it is not expected to be material in relation to our total RINs Obligation.

Notes to Condensed Consolidated Financial Statements (Unaudited)

In June 2022, the EPA finalized volumes for compliance years 2020, 2021 and 2022 under the RFS program (as defined in our accounting policies in Note 2 to the audited consolidated financial statements included in Item.

8 Financial Statements and Supplementary Data, of our December 31, 2021 Annual Report on Form 10-K), announced supplemental volume obligations for compliance years 2022 and 2023 and established new provisions of the RFS which addressed bio-intermediates.

Additionally, the EPA denied the petitions for small refinery exemptions for prior period compliance years.

Other Losses and Contingencies

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On February 27, 2021, our El Dorado refinery experienced a fire in its Penex unit.

Six employees were injured in the fire.

Contrary to initial assessments, and despite occurring during the early stages of turnaround activity, the facility did suffer operational disruptions as a result of the fire.

During the three months ended March 31, 2021, we incurred workers' compensation losses of $ 3.8 million associated with the fire, which is included in operating expenses in the accompanying condensed consolidated statements of income.

Additionally, we recognized accelerated depreciation of $ 1.0 million in the three months ended March 31, 2021 due to property damaged in the fire, which was recovered during 2021.

No expense was recorded related to the El Dorado refinery fire during the three months ended March 31, 2022.

During the six months ended June 30, 2021, we incurred workers' compensation losses of $ 3.8 million associated with the fire, which is included in operating expenses in the accompanying condensed consolidated statements of income.

Additionally, we recognized accelerated depreciation of

Notes to Condensed Consolidated Financial Statements (Unaudited)

$ 1.0 million in the six months ended June 30, 2021 due to property damaged in the fire, which was recovered during 2021.

No expense was recorded related to the El Dorado refinery fire during the three and six months ended June 30, 2022.

We continue to incur repair costs that may be recoverable under property and casualty insurance policies.

In addtion, during the three months ended March 31, 2022, we recognized a gain of $ 4.3 million related to business interruption claims.

In addition, during the three and six months ended June 30, 2022, we recognized a gain of $ 3.3 million and $ 7.6 million, respectively, related to business interruption claims.

Such gain is included in other operating income in the consolidated statements of income.

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Due to the extreme freezing conditions, we experienced reduced throughputs at our refineries as there was a disruption in the crude supply, as well as damages to various units at our refineries requiring additional operating and capital expenditures.

We recognized additional operating expenses in the amount of $ 9.8 million in the three months ended March 31, 2021 due to property damaged in the freeze, which was recovered during 2021.

No expense was recorded related to the Winter Storm Uri during the three months ended March 31, 2022.

An additional $ 0.1 million was recognized as a gain, in excess of losses during the three months ended March 31, 2022.

We recognized additional operating expenses in the amount of $ 6.1 million and $ 15.9 million in the three and six months ended June 30, 2021 due to property damaged in the freeze, which was recovered during 2021.

No expense was recorded related to the Winter Storm Uri during the three and six months ended June 30, 2022.

An additional $ 0.1 million was recognized as a gain in excess of losses during the six months ended June 30, 2022.

We continue to incur repair costs that may be recoverable under property and casualty insurance policies.

In addtion, during the three months ended March 31, 2022, we recognized a gain of $ 5.7 million related to business interruption claims.

In addition, during the three and six months ended June 30, 2022, we recognized a gain of $ 5.3 million and $ 11.0 million, respectively, related to business interruption claims.

If applicable, we accrue receivables for probable insurance or other third-party recoveries.

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We have experienced several crude oil and other releases involving our assets.

There were no material releases that occurred during the three months ended March 31, 2022.

There were no material releases that occurred during the six months ended June 30, 2022.

For other releases that occurred in prior years, we have received regulatory closure or a majority of the cleanup and remediation efforts are substantially complete.

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Letters of Credit

As of March 31, 2022, we had in place letters of credit totaling approximately $ 362.5 million with various financial institutions securing obligations primarily with respect to our commodity transactions for the refining segment and certain of our insurance programs.

There were no amounts drawn by beneficiaries of these letters of credit at March 31, 2022.

As of June 30, 2022, we had in place letters of credit totaling approximately $ 363.9 million with various financial institutions securing obligations primarily with respect to our commodity transactions for the refining segment and certain of our insurance programs.

There were no amounts drawn by beneficiaries of these letters of credit at June 30, 2022.

Note 13 - Income Taxes

Under ASC 740 we used an estimated annual tax rate to record income taxes for the three months ended March 31, 2022 and March 31, 2021.

Our effective tax rate was 17.3 % and 11.7 % for the three months ended March 31, 2022 and 2021, respectively.

Under ASC 740 we used an estimated annual tax rate to record income taxes for the three and six months ended June 30, 2022 and June 30, 2021.

Our effective tax rate was 21.4 % and 21.3 % for the three and six months ended June 30, 2022, respectively, and 42.3 % and 28.2 % for the three and six months ended June 30, 2021, respectively.

The difference between the effective tax rate and the statutory rate is generally attributable to permanent differences and discrete items.

The change in our effective tax rate for the three months ended March 31, 2022 as compared to the three months ended March 31, 2021 was primarily due to net increase in valuation allowance on certain state tax attributes in 2021 and increased 2022 projected pre-tax earnings.

Notes to Condensed Consolidated Financial Statements (Unaudited)

The change in our effective tax rate for the three and six months ended June 30, 2022 as compared to the three and six months ended June 30, 2021 was primarily due to the impact of credits and permanent differences on the tax rate due to changes in pre-tax income and changes in the second quarter estimated annual effective tax rate applied to year-to-date loss for the six months ended June 30, 2021 .

Note 14 - Related Party Transactions

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Transactions with our related parties were as follows for the periods presented (in millions):

Three Months Ended March 31,

Three Months Ended June 30, Six Months Ended June 30,

2022 2021 2022 2021

$ 27.2 $ 19.2 $ 43.9 $ 29.6

Cost of materials and other (2)

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(2) Consists primarily of pipeline throughput fees paid by the refining segment and asphalt purchases.

Notes to Condensed Consolidated Financial Statements (Unaudited)

Note 15 - Other Current Assets and Liabilities

The detail of other current assets is as follows (in millions):

Other Current Assets March 31, 2022 December 31, 2021

Prepaid expenses $ 181.3 $ 44.9

Other Current Assets June 30, 2022 December 31, 2021

Short-term derivative assets (see Note 10) $ 92.9 $ 23.6

Prepaid expenses 62.0 44.9

Investment commodities 16.1 45.0

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The detail of accrued expenses and other current liabilities is as follows (in millions):

Accrued Expenses and Other Current Liabilities March 31, 2022 December 31, 2021

Accrued Expenses and Other Current Liabilities June 30, 2022 December 31, 2021

Product financing agreements $ 258.5 $ 249.6

Crude purchase liabilities 227.6 107.4

Consolidated Net RINs Obligation deficit (see Note 11) 203.9 172.2

Income and other taxes payable 151.8 124.8

Deferred revenue 53.7 44.6

Crude purchase liabilities 101.7 107.4

Employee costs 96.9 44.4

Short-term derivative liabilities (see Note 10) 21.6 26.8

Deferred revenue 8.0 44.6

Other 43.2 28.0

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2005 Long-Term Incentive Plans (collectively, the "Incentive Plans")

The Delek US Holdings, Inc.

2016 Long-Term Incentive Plan has 14,235,000 shares of common stock authorized for issuance;

On May 3, 2022, the Company's stockholders approved an amendment to the Delek US Holdings, Inc.

2016 Long-Term Incentive Plan that increased the number of shares of common stock available for issuance under this plan by 760,000 shares to 14,995,000 shares;

no awards will be made under this plan after May 5, 2026.

Compensation expense related to equity-based awards granted under the Incentive Plans amounted to $ 5.1 million and $ 4.5 million for the three months ended March 31, 2022 and 2021, respectively.

Compensation expense related to equity-based awards granted under the Incentive Plans amounted to $ 6.7 million and $ 11.8 million for the three and six months ended June 30, 2022, respectively, and $ 5.7 million and $ 10.1 million for the three and six months ended June 30, 2021, respectively.

These amounts are included in general and administrative expenses and operating expenses in the accompanying condensed consolidated statements of income.

As of March 31, 2022, there was $ 39.2 million of total unrecognized compensation cost related to non-vested share-based compensation arrangements, which is expected to be recognized over a weighted-average period of 1.3 years.

We issued net shares of common stock of 45,800 and 93,856 as a result of exercised or vested equity-based awards during the three months ended March 31, 2022 and 2021, respectively.

These amounts are net of 17,829 and 58,851 shares withheld to satisfy employee tax obligations related to the exercises and vesting during the three months ended March 31, 2022 and 2021, respectively.

Notes to Condensed Consolidated Financial Statements (Unaudited)

As of June 30, 2022, there was $ 55.0 million of total unrecognized compensation cost related to non-vested share-based compensation arrangements, which is expected to be recognized over a weighted-average period of 1.6 years.

We issued net shares of common stock of 289,971 and 335,771 as a result of exercised or vested equity-based awards during the three and six months ended June 30, 2022, respectively, and 186,937 and 280,793 for the three and six months ended June 30, 2021, respectively.

These amounts are net of 250,334 and 268,163 shares withheld to satisfy employee tax obligations related to the exercises and vesting during the three and six months ended June 30, 2022, respectively, and 88,478 and 147,329 shares during the three and six months ended June 30, 2021, respectively.

Delek Logistics GP, LLC 2012 Long-Term Incentive Plan

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The LTIP has 912,207 common units representing limited partner interests in Delek Logistics authorized for issuance and expires June 9, 2031.

Notes to Condensed Consolidated Financial Statements (Unaudited)

Delek US Holdings, Inc.

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There are four offering periods of three months during each fiscal year, beginning each January 1st, April 1st, July 1st, and October 1st.

No shares of common stock were issued under the ESPP as of March 31, 2022.

Implementation of the plan will be effective during the second quarter of 2022.

No shares of common stock were issued under the ESPP as of June 30, 2022.

Implementation of the plan became effective June 1, 2022.

Note 17 - Shareholders' Equity

Dividends Suspension

We elected to suspend dividends beginning in the fourth quarter of 2020 in order to conserve capital.

On June 21, 2022, Delek announced that its Board of Directors declared a special cash dividend on its common stock of $ 0.20 per share payable to all shareholders of record of the Company’s common stock as of the close of business on July 12, 2022.

The payment date for the special dividend was July 20, 2022.

On August 1, 2022, our Board of Directors voted to declare a quarterly cash dividend of $ 0.20 per share of our common stock, payable on September 6, 2022 to shareholders of record on August 22, 2022.

Stock Repurchase Program

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The timing, price and size of repurchases are made at the discretion of management and will depend on prevailing market prices, general economic and market conditions and other considerations.

The repurchase program does not obligate us to acquire any particular amount of stock and does not expire.

In the second quarter of 2020, we elected to suspend the share repurchase program.

No repurchases of our common stock were made in the three months ended March 31, 2022 or 2021.

As of March 31, 2022, there was $ 229.7 million of authorization remaining under Delek's aggregate stock repurchase program.

No repurchases of our common stock were made in the three and six months ended June 30, 2022 or 2021.

As of June 30, 2022, there was $ 229.7 million of authorization remaining under Delek's aggregate stock repurchase program.

On August 1, 2022, the Board of Directors approved an approximately $ 170.0 million increase in its share repurchase authorization, bringing the total amount available for repurchases under current authorizations to $ 400.0 million.

Stock Purchase and Cooperation Agreement

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Our sublease portfolio consists primarily of operating leases within our retail stores and crude storage equipment.

As of March 31, 2022, $ 24.1 million of our net property, plant, and equipment balance is subject to an operating lease.

As of June 30, 2022, $ 23.6 million of our net property, plant, and equipment balance is subject to an operating lease.

This agreement does not include options for the lessee to purchase our leasing equipment, nor does it include any material residual value guarantees or material restrictive covenants.

1 unchanged sentence

The following table presents additional information related to our operating leases in accordance ASC 842, Leases ("ASC 842"):

Three Months Ended March 31,

Three Months Ended June 30, Six Months Ended June 30,

(in millions) 2022 2021 2022 2021

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Short-term lease costs (2)

8.6 11.0 17.3 20.5

Sublease income — ( 1.9 ) ( 0.1 ) ( 3.8 )

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Leased assets obtained in exchange for new financing lease liabilities $ — $ 0.2 $ — $ 12.4

March 31, 2022 March 31, 2021

June 30, 2022 June 30, 2021

Weighted-average remaining lease term (years) operating leases 4.4 4.9

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(3) Our discount rate is primarily based on our incremental borrowing rate in accordance with ASC 842 .

Note 18 - Subsequent Events

Planned 3 Bear Energy - New Mexico, LLC Acquisition

On April 8, 2022, DKL Delaware Gathering, LLC (the “Purchaser”), a subsidiary of Delek Logistics, entered into a Membership Interest Purchase Agreement with 3 Bear Energy – New Mexico LLC (the “Seller”) to purchase 100 % of the limited liability company interests in 3 Bear Delaware Holding – NM, LLC (the “Purchased Interests”), related to Seller’s crude oil and gas gathering, processing and transportation businesses, as well as water disposal and recycling operations, in the Delaware Basin in New Mexico (the “Purchase Agreement”).

Delek Logistics also entered into a guaranty agreement with the Seller in order to guaranty the payment obligations of the Purchaser under the Purchase Agreement.

The purchase price for the Purchased Interests is $ 624.7 million, subject to customary adjustments under the Purchase Agreement for net working capital and indebtedness.

The Purchaser paid a deposit under the Purchase Agreement of approximately $ 31.2 million.

The deposit may be retained by the Seller upon certain termination events described in the Purchase Agreement.

At closing, the deposit will be applied to the purchase price to be paid under the Purchase Agreement.

The transactions contemplated by the Purchase Agreement are expected to close around mid-year 2022.

The closing is subject to customary closing conditions set forth in the Purchase Agreement, including regulatory approvals.

The Purchase Agreement also contains representations and warranties of the parties, indemnification obligations, termination rights, and other covenants and agreements.

Management's Discussion and Analysis

Compared sentence by sentence after normalising whitespace, quotation marks, case and digits, so re-formatting and restated figures do not read as changed language. Wording changes appear as one removal and one addition. The current filing and the prior one are authoritative.

What changed 10-Q

Item 1. Financial Statements