What changed in this filing

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Item 1. Financial Statements

2023-11-08 compared with 2023-08-09 · 109 added, 89 removed, 505 unchanged (28% of the section changed)

3 unchanged sentences

(in thousands, except unit and per unit data)

June 30, 2023 December 31, 2022

September 30, 2023 December 31, 2022

Current assets:

35 unchanged sentences

Common unitholders - public;

9,274,898 units issued and outstanding at June 30, 2023 ( 9,257,305 at December 31, 2022)

9,284,741 units issued and outstanding at September 30, 2023 ( 9,257,305 at December 31, 2022)

165,472 172,119

Common unitholders - Delek Holdings;

34,311,278 units issued and outstanding at June 30, 2023 ( 34,311,278 at December 31, 2022)

34,311,278 units issued and outstanding at September 30, 2023 ( 34,311,278 at December 31, 2022)

( 304,624 ) ( 282,819 )

6 unchanged sentences

(In thousands, except unit and per unit data)

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

Three Months Ended September 30, Nine Months Ended September 30,

2023 2022 2023 2022

13 unchanged sentences

Depreciation and amortization 1,324 473 3,923 1,421

(Gain) loss on disposal of assets ( 455 ) — ( 313 ) 12

Gain on disposal of assets ( 491 ) ( 132 ) ( 804 ) ( 120 )

Total operating costs and expenses 213,270 235,008 579,827 619,295

22 unchanged sentences

Common - Public Common - Delek Holdings Total

Balance as of March 31, 2023 $ 170,522 $ ( 287,944 ) $ ( 117,422 )

Balance as of June 30, 2023 $ 167,760 $ ( 297,262 ) $ ( 129,502 )

Cash distributions ( 9,757 ) ( 35,513 ) ( 45,270 )

1 unchanged sentence

7,412 27,413 34,825

( 49 ) 737 688

Balance as of June 30, 2023 $ 167,760 $ ( 297,262 ) $ ( 129,502 )

Balance as of September 30, 2023 $ 165,472 $ ( 304,624 ) $ ( 139,152 )

Common - Public Common - Delek Holdings Total

Balance as of Balance as of March 31, 2022 $ 170,696 $ ( 277,218 ) $ ( 106,522 )

Balance as of June 30, 2022 $ 168,611 $ ( 285,070 ) $ ( 116,459 )

Cash distributions ( 9,229 ) ( 33,797 ) ( 43,026 )

1 unchanged sentence

9,430 35,244 44,674

Balance as of Balance as of June 30, 2022 $ 168,611 $ ( 285,070 ) $ ( 116,459 )

Balance as of September 30, 2022 $ 168,911 $ ( 283,168 ) $ ( 114,257 )

Common - Public Common - Delek Holdings Total

3 unchanged sentences

Other ( 87 ) 1,921 1,834

Balance as of June 30, 2023 $ 167,760 $ ( 297,262 ) $ ( 129,502 )

Balance as of September 30, 2023 $ 165,472 $ ( 304,624 ) $ ( 139,152 )

Common - Public Common - Delek Holdings Total

4 unchanged sentences

Other ( 30 ) 1,443 1,413

Balance as of June 30, 2022 $ 168,611 $ ( 285,070 ) $ ( 116,459 )

Balance as of September 30, 2022 $ 168,911 $ ( 283,168 ) $ ( 114,257 )

See accompanying notes to the condensed consolidated financial statements

3 unchanged sentences

(in thousands)

Six Months Ended June 30,

Nine Months Ended September 30,

Cash flows from operating activities:

40 unchanged sentences

Non-cash investing activities:

Increase in accrued capital expenditures and other $ 53 $ 306

Increase (decrease) in accrued capital expenditures and other $ 10,084 $ ( 1,019 )

Non-cash financing activities:

8 unchanged sentences

("Delek Holdings") and its subsidiary Delek Logistics GP, LLC, our general partner (our "general partner").

On April 8, 2022, DKL Delaware Gathering, LLC, a subsidiary of the Partnership, entered into a Membership Interest Purchase Agreement (the “3 Bear 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 (“3 Bear”) (subsequently renamed to DKL Delaware Gathering - NM, LLC ("Delaware Gathering")), related to the Seller’s crude oil and natural gas gathering, processing and transportation businesses, as well as water disposal and recycling operations, in the Delaware Basin of New Mexico (the “Delaware Gathering Acquisition”).

On April 8, 2022, DKL Delaware Gathering, LLC, a subsidiary of the Partnership ("Delaware Gathering"), entered into a Membership Interest Purchase Agreement (the “3 Bear 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 (“3 Bear”) (subsequently renamed to DKL Delaware Holding - NM, LLC), related to the Seller’s crude oil and natural gas gathering, processing and transportation businesses, as well as water disposal and recycling operations, in the Delaware Basin of New Mexico (the “Delaware Gathering Acquisition”).

The Delaware Gathering Acquisition was completed on June 1, 2022 (the "Acquisition Date").

1 unchanged sentence

A substantial majority of our existing assets are both integral to and dependent upon the success of Delek Holdings' refining operations, as many of our assets are contracted exclusively to Delek Holdings in support of its Tyler, El Dorado and Big Spring refineries.

Certain information and footnote disclosures normally included in annual financial statements prepared in accordance with United States ("U.S.") Generally Accepted Accounting Principles ("GAAP") have been condensed or omitted, although management believes that the disclosures herein are adequate to make the financial information presented not misleading.

Certain information and footnote disclosures normally included in annual financial statements prepared in accordance with United States Generally Accepted Accounting Principles ("GAAP") have been condensed or omitted, although management believes that the disclosures herein are adequate to make the financial information presented not misleading.

Our unaudited condensed consolidated financial statements have been prepared in conformity with GAAP applied on a consistent basis with those of the annual audited financial statements included in our Annual Report on Form 10-K for the year ended December 31, 2022 (our "Annual Report on Form 10-K"), filed with the U.S.

8 unchanged sentences

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

New Accounting Pronouncements Adopted During 2023

ASU 2023-03 , Presentation of Financial Statements (Topic 205), Income Statement - Reporting Comprehensive Income (Topic 220), Distinguishing Liabilities from Equity (Topic 480), Equity (Topic 505), and Compensation - Stock Compensation (Topic 718)

In July 2023, the Financial Accounting Standards Board (“FASB”) issued Accounting Standards Update (“ASU”) 2023-03, Presentation of Financial Statements (Topic 205), Income Statement-Reporting Comprehensive Income (Topic 220), Distinguishing Liabilities from Equity (Topic 480), Equity (Topic 505), and Compensation-Stock Compensation (Topic 718) (“ASU 2023-03”).

This ASU amends or supersedes various SEC paragraphs within the FASB Accounting Standards Codification to conform to past SEC announcements and guidance issued by the SEC.

ASU 2023-03 does not provide any new guidance, so there is no transition or effective date.

We adopted ASU 2023-03 in July 2023.

There was no material impact on our condensed consolidated financial statements.

Notes to Condensed Consolidated Financial Statements (Unaudited)

Accounting Pronouncements Not Yet Adopted

ASU 2023-06, Codification Amendments in Response to the SEC's Disclosure Update and Simplification Initiative

In October 2023, the FASB issued ASU 2023-06 Codification Amendments in Response to the SEC's Disclosure Update and Simplification Initiative ("ASU 2023-06").

The main provision of ASU 2023-06 is to clarify or improve disclosure and presentation requirements of a variety of topics, which will allow users to more easily compare entities subject to the SEC's existing disclosures with those entities that were not previously subject to the requirements, and align the requirements in the FASB accounting standard codification with the SEC's regulations.

The effective date for each amendment will be the date on which the SEC’s removal of that related disclosure from Regulation S-X or Regulation S-K becomes effective, with early adoption prohibited.

The Partnership is currently evaluating the provisions of the amendments and the impact on its future consolidated statements, but does not currently expect adopting this new guidance will have a material impact on its consolidated financial statements and related disclosures.

Delaware Gathering (formerly 3 Bear)

2 unchanged sentences

The Delaware Gathering Acquisition was financed through a combination of cash on hand and borrowings under the DKL Credit Facility.

For the three and six months ended June 30, 2023, we incurred no incremental direct acquisition and integration costs.

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.

For the three and nine months ended September 30, 2023, we incurred no incremental direct acquisition and integration costs.

For the three and nine months ended September 30, 2022, we incurred $ 4.2 million and $ 10.6 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.

1 unchanged sentence

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

Notes to Condensed Consolidated Financial Statements (Unaudited)

Determination of Purchase Price

6 unchanged sentences

Purchase price $ 628,300

Notes to Condensed Consolidated Financial Statements (Unaudited)

Purchase Price Allocation

30 unchanged sentences

Goodwill related to the Delaware Gathering Acquisition is included in the Gathering and Processing segment.

Notes to Condensed Consolidated Financial Statements (Unaudited)

Unaudited Pro Forma Financial Information

5 unchanged sentences

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

(in thousands, except per unit data) Three Months Ended June 30, 2022 Six Months Ended June 30, 2022

Notes to Condensed Consolidated Financial Statements (Unaudited)

(in thousands, except per unit data) Three Months Ended September 30, 2022 Nine Months Ended September 30, 2022

Net sales $ 294,025 $ 865,874

17 unchanged sentences

These amounts are recorded in other long-term liabilities and are amortized to revenue over the life of the underlying revenue agreement corresponding to the asset.

There was no reimbursement by Delek Holdings during the three and six months ended June 30, 2023.

We were reimbursed a nominal amount by Delek Holdings during the three and six months ended June 30, 2022.

There was no reimbursement by Delek Holdings during the three and nine months ended September 30, 2023.

We were reimbursed a nominal amount by Delek Holdings during the nine months ended September 30, 2022, with no such reimbursements during the three months ended September 30, 2022.

Additionally, we are reimbursed or indemnified, as the case may be, for costs incurred in excess of certain amounts related to certain asset failures, pursuant to the terms of the Omnibus Agreement.

As of June 30, 2023 and December 31, 2022, there was no receivable from related parties for these matters.

As of September 30, 2023 and December 31, 2022, there was no receivable from related parties for these matters.

These reimbursements are recorded as reductions to operating expenses.

There were no reimbursements for these matters in each of the three and six month periods ended June 30, 2023 and 2022.

Notes to Condensed Consolidated Financial Statements (Unaudited)

There were no reimbursements for these matters in each of the three and nine month periods ended September 30, 2023 and 2022.

Other Transactions

4 unchanged sentences

The agreement extends through December 2023.

Total fees paid to the Partnership were $ 0.4 million for both the three months ended June 30, 2023 and 2022, respectively, and $ 0.8 million for both the six months ended June 30, 2023 and 2022, respectively, which are recorded in affiliate revenue in our condensed consolidated statements of income.

Total fees paid to the Partnership were $ 0.4 million for both the three months ended September 30, 2023 and 2022, respectively, and $ 1.2 million for both the nine months ended September 30, 2023 and 2022, respectively, which are recorded in affiliate revenue in our condensed consolidated statements of income.

Additionally, the Partnership incurs the costs in connection with the construction of the assets and is subsequently reimbursed by Delek Holdings.

Amounts reimbursable by Delek Holdings are recorded in accounts receivable from related parties.

Notes to Condensed Consolidated Financial Statements (Unaudited)

Related Party Revolving Credit Facility

On November 6, 2023, the Partnership and certain of its subsidiaries, as guarantors, entered into the Related Party Revolving Credit Facility (as defined below) with Delek Holdings.

See Note 6 - Long-Term Obligations for further information.

Summary of Transactions

5 unchanged sentences

A summary of revenue, purchases and expense transactions with Delek Holdings and its affiliates are as follows (in thousands):

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

Three Months Ended September 30, Nine Months Ended September 30,

2023 2022 2023 2022

10 unchanged sentences

August 14, 2023

November 13, 2023 (1)

Total $ 141,534

2 unchanged sentences

August 11, 2022 $ 33,797

November 10, 2022 $ 33,968

Total $ 135,219

( 1) On July 26, 2023, the board of directors of our general partner declared this quarterly cash distribution based on the available cash as of the date of determination.

(1) On October 25, 2023, the board of directors of our general partner declared this quarterly cash distribution based on the available cash as of the date of determination.

Notes to Condensed Consolidated Financial Statements (Unaudited)

We generate revenue by charging fees for gathering, transporting, offloading and storing crude oil;

for storing intermediate products and feed stocks;

for distributing, transporting and storing refined products;

for marketing refined products output of Delek Holdings' Tyler and Big Spring refineries;

and for wholesale marketing in the West Texas area.

A significant portion of our revenue is derived from long-term commercial agreements with Delek Holdings, which provide for annual fee adjustments for increases or decreases in the CPI, PPI or the FERC index (refer to Note 3 for a more detailed description of these agreements).

In addition to the services we provide to Delek Holdings, we also generate substantial revenue from crude oil, intermediate and refined products transportation services for, and terminalling and marketing services to, third parties primarily in Texas, New Mexico, Tennessee and Arkansas.

Certain of these services are provided pursuant to contractual agreements with third parties.

Payment terms require customers to pay shortly after delivery and do not contain significant financing components.

The majority of our commercial agreements with Delek Holdings meet the definition of a lease because:

(1) performance of the contracts is dependent on specified property, plant or equipment and (2) it is remote that one or more parties other than Delek Holdings will take more than a minor amount of the output associated with the specified property, plant or equipment.

As part of our adoption of ASC 842, Leases ("ASC 842"), we applied the permitted practical expedient to not separate lease and non-lease components under the predominance principle to designated asset classes associated with the provision of logistics services.

We have determined that the predominant component of the related agreements currently in effect is the lease component.

Therefore, the combined component is accounted for under the applicable lease accounting guidance.

Of our $ 941.7 million net property, plant, and equipment balance as of June 30, 2023, $ 339.7 million is subject to operating leases under our commercial agreements.

These agreements do not include options for the lessee to purchase our leased assets, nor do they include any material residual value guarantees or material restrictive covenants.

The following table represents a disaggregation of revenue for the gathering and processing, wholesale marketing and terminalling, and storage and transportation segments for the periods indicated (in thousands):

Three Months Ended June 30, 2023

Three Months Ended September 30, 2023

Gathering and Processing Wholesale Marketing and Terminalling Storage and Transportation Consolidated

7 unchanged sentences

Total Revenue $ 94,825 $ 147,110 $ 33,889 $ 275,824

Three Months Ended June 30, 2022

Three Months Ended September 30, 2022

Gathering and Processing Wholesale Marketing and Terminalling Storage and Transportation Consolidated

7 unchanged sentences

Total Revenue $ 108,610 $ 147,865 $ 37,550 $ 294,025

Six Months Ended June 30, 2023

Nine Months Ended September 30, 2023

Gathering and Processing Wholesale Marketing and Terminalling Storage and Transportation Consolidated

6 unchanged sentences

Total Revenue $ 280,494 $ 378,246 $ 107,520 $ 766,260

Notes to Condensed Consolidated Financial Statements (Unaudited)

Six Months Ended June 30, 2022

Nine Months Ended September 30, 2022

Gathering and Processing Wholesale Marketing and Terminalling Storage and Transportation Consolidated

6 unchanged sentences

Total Revenue $ 215,480 $ 444,181 $ 107,695 $ 767,356

(1) Net of $ 1.8 million of amortization expense for both the three months ended June 30, 2023 and June 30, 2022 and $ 3.6 million for the six months ended June 30, 2023 and June 30, 2022, related to a customer contract intangible asset recorded in the wholesale marketing and terminalling segment.

As of June 30, 2023, we expect to recognize approximately $ 1.3 billion in lease revenues related to our unfulfilled performance obligations pertaining to the minimum volume commitments and capacity utilization under the non-cancelable terms of our commercial agreements with Delek Holdings.

(1) Net of $ 1.8 million of amortization expense for both the three months ended September 30, 2023 and 2022 and $ 5.4 million for the nine months ended September 30, 2023 and 2022, related to a customer contract intangible asset recorded in the wholesale marketing and terminalling segment.

As of September 30, 2023, we expect to recognize approximately $ 1.2 billion in lease revenues related to our unfulfilled performance obligations pertaining to the minimum volume commitments and capacity utilization under the non-cancelable terms of our commercial agreements with Delek Holdings.

Most of these agreements have an initial term ranging from five to ten years , which may be extended for various renewal terms.

We disclose information about remaining performance obligations that have original expected durations of greater than one year.

Our unfulfilled performance obligations as of June 30, 2023 were as follows (in thousands):

Notes to Condensed Consolidated Financial Statements (Unaudited)

Our unfulfilled performance obligations as of September 30, 2023 were as follows (in thousands):

Remainder of 2023 $ 81,164

4 unchanged sentences

Diluted net income per unit applicable to common limited partners includes the effects of potentially dilutive units on our common units.

As of June 30, 2023, the only potentially dilutive units outstanding consist of unvested phantom units.

As of September 30, 2023, the only potentially dilutive units outstanding consist of unvested phantom units.

The table below represents total cash distributions applicable to the period in which the distributions are earned.

1 unchanged sentence

The calculation of net income per unit is as follows (dollars in thousands, except units and per unit amounts):

Notes to Condensed Consolidated Financial Statements (Unaudited)

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

Three Months Ended September 30, Nine Months Ended September 30,

2023 2022 2023 2022

1 unchanged sentence

Limited partners' distribution 45,558 43,057 135,334 128,493

Earnings in excess (deficit) of distributions $ ( 13,216 ) $ ( 10,668 ) $ ( 20,513 ) $ ( 13,758 )

Earnings in (deficit) excess of distributions $ ( 10,733 ) $ 1,617 $ ( 31,246 ) $ ( 12,141 )

Limited partners' earnings on common units:

Distributions $ 45,558 $ 43,057 $ 135,334 $ 128,493

Allocation of earnings in excess (deficit) of distributions ( 13,216 ) ( 10,668 ) ( 20,513 ) ( 13,758 )

Allocation of earnings in (deficit) excess of distributions ( 10,733 ) 1,617 ( 31,246 ) ( 12,141 )

Total limited partners' earnings on common units $ 34,825 $ 44,674 $ 104,088 $ 116,352

5 unchanged sentences

$ 0.80 $ 1.03 $ 2.39 $ 2.67

(1) Outstanding common units totaling 11,180 and 35,383 were excluded from the diluted earnings per unit calculation for the three and six months ended June 30, 2023, respectively.

Outstanding common units totaling 2,153 and 1,083 were excluded from the diluted earnings per unit calculation for the three and six months ended June 30, 2022, respectively.

(1) Outstanding common units totaling 48,597 and 35,519 were excluded from the diluted earnings per unit calculation for the three and nine months ended September 30, 2023, respectively.

There were no outstanding common units excluded from the diluted earnings per unit calculation for the three months ended September 30, 2022.

Outstanding common units totaling 3,862 were excluded from the diluted earnings per unit calculation for the nine months ended September 30, 2022.

Notes to Condensed Consolidated Financial Statements (Unaudited)

Long-Term Obligations

Outstanding borrowings under the Partnership’s debt instruments are as follows (in thousands):

June 30, 2023 December 31, 2022

September 30, 2023 December 31, 2022

DKL Revolving Facility $ 811,200 $ 720,500

8 unchanged sentences

DKL Credit Facility

The DKL Term Facility principal $ 300.0 million was drawn on October 13, 2022.

This senior secured facility requires four quarterly amortization payments of $ 3.8 million in 2023 and three quarterly amortization payments of $ 7.5 million in 2024 with final maturity and principal due on October 13, 2024.

The DKL Term Facility principal of $ 300.0 million was drawn on October 13, 2022.

On November 6, 2023, the Partnership entered into a First Amendment, a Second Amendment and a Third Amendment to the DKL Credit Facility (together, the “Amendments” ) to the DKL Credit Facility to extend the maturity of the Term Loan Facility to April 15, 2025.

In addition, the Amendments added a maturity acceleration clause which will accelerate the maturity of the DKL Term Loan Facility to 180 days prior to the stated maturity date of the 2025 Notes if any of the 2025 Notes remain outstanding on that date.

This senior secured facility requires four quarterly amortization payments of $ 3.8 million in 2023, four quarterly amortization payments of $ 7.5 million in 2024 and one quarterly amortization payment of $ 7.5 million in 2025 with final maturity and principal due on April 15, 2025.

At the Partnership's option, borrowings bear interest at either the Adjusted Term Secured Overnight Financing Rate benchmark (“SOFR”) or U.S.

3 unchanged sentences

SOFR rate borrowings include a credit spread adjustment of 0.10 % to 0.25 % plus an applicable margin of 3.50 % for the first year and 4.00 % for the second year.

At June 30, 2023 and December 31, 2022, the weighted average borrowing rate was approximately 8.41 % and 7.92 %, respectively.

The effective interest rate was 9.98 % as of June 30, 2023.

At September 30, 2023 and December 31, 2022, the weighted average borrowing rate was approximately 8.92 % and 7.92 %, respectively.

The effective interest rate was 9.48 % as of September 30, 2023.

The DKL Revolving Facility has a total capacity of $ 900.0 million, including up to $ 115.0 million for letters of credit and $ 25.0 million in swing line loans.

This facility has a maturity date of October 13, 2027 and requires a quarterly unused commitment fee based on average commitment usage, currently at 0.50 % per annum.

This facility has a maturity date of October 13, 2027 which will accelerate to 180 days prior to the stated maturity date of the Delek Logistics 2025 Notes if any of the Delek Logistics 2025 Notes remain outstanding on that date.

On November 6, 2023, the Partnership entered into the Amendments which among other things:

(i) increased the U.S.

Revolving Credit Commitments (as defined in the DKL Credit Facility) by an amount equal to $ 150.0 million, resulting in aggregate lender commitments under the DKL Revolving Credit Facility in an amount of $ 1.050 billion and (ii) increased the limit allowed for general unsecured debt (as defined in the DKL Credit Facility) by an amount equal to $ 95.0 million, resulting in an unsecured general debt limit of $ 150.0 million.

The DKL Revolving Facility requires a quarterly unused commitment fee based on average commitment usage, currently at 0.50 % per annum.

Interest is measured at either the U.S.

dollar prime rate plus an applicable margin of 1.00 % to 2.00 % depending on the Partnership’s Total Leverage Ratio (as defined in the DKL Credit Agreement), or a SOFR rate plus a credit spread adjustment of 0.10 % or 0.25 % and an applicable margin ranging from 2.00 % to 3.00 % depending on the Partnership’s Total Leverage Ratio.

As of June 30, 2023 and December 31, 2022, the weighted average interest rate was 7.57 % and 7.55 %, respectively.

There were no letters of credit outstanding as of June 30, 2023 or December 31, 2022.

Notes to Condensed Consolidated Financial Statements (Unaudited)

As of September 30, 2023 and December 31, 2022, the weighted average interest rate was 8.45 % and 7.55 %, respectively.

There were no letters of credit outstanding as of September 30, 2023 or December 31, 2022.

The obligations under the 2022 DKL Credit Facility are secured by first priority liens on substantially all of the Partnership’s and its subsidiaries’ tangible and intangible assets.

The carrying values of outstanding borrowings under the 2022 DKL Credit Facility as of June 30, 2023 and December 31, 2022 approximate their fair values.

The carrying values of outstanding borrowings under the 2022 DKL Credit Facility as of September 30, 2023 and December 31, 2022 approximate their fair values.

Our debt facilities contain affirmative and negative covenants and events of default the Partnership considers usual and customary.

As of June 30, 2023, we were in compliance with covenants on all of our debt instruments.

As of September 30, 2023, we were in compliance with covenants on all of our debt instruments.

Related Party Revolving Credit Facility

On November 6, 2023, the Partnership and certain of its subsidiaries, as guarantors, entered into a certain Promissory Note (the “Related Party Revolving Credit Facility”) with Delek Holdings.

The Related Party Revolving Credit Facility provides for revolving borrowings with aggregate commitments of $ 70.0 million comprised of a (i) $ 55.0 million senior tranche and a (ii) $ 15.0 million subordinated tranche (the “Subordinated Tranche”), with the initial borrowings under the Subordinated Tranche conditioned upon the Partnership and Delek Holdings reaching an agreement with Fifth Third Bank, National Association, as administrative agent under the DKL Credit Facility, on subordination provisions and other material terms related to the Subordinated Tranche.

The Related Party Revolving Credit Facility will bear interest at Term SOFR (as defined in the Related Party Revolving Credit Facility) plus 3.00 %.

The Related Party Revolving Credit Facility proceeds will be used for the Partnership’s working capital purposes and other general corporate purposes.

The Related Party Revolving Credit Facility will mature on June 30, 2028.

The Related Party Revolving Credit Facility contains certain affirmative covenants, mandatory prepayments and events of

Notes to Condensed Consolidated Financial Statements (Unaudited)

default that the Partnership considers to be customary for an arrangement of this sort.

The obligations under the Related Party Revolving Credit Facility are unsecured.

Our 2028 Notes are general unsecured senior obligations comprised of $ 400.0 million in aggregate principal of 7.125 % senior notes maturing June 1, 2028.

The 2028 Notes are unconditionally guaranteed jointly and severally on a senior unsecured basis by the Partnership's existing subsidiaries (other than Delek Logistics Finance Corp.) and will be unconditionally guaranteed on the same basis by certain of the Partnership's future subsidiaries.

As of June 30, 2023, the effective interest rate was 7.39 %.

The estimated fair value of the 2028 Notes was $ 372.1 million and $ 359.7 million as of June 30, 2023 and December 31, 2022, respectively, measured based upon quoted market prices in an active market, defined as Level 1 in the fair value hierarchy.

As of September 30, 2023, the effective interest rate was 7.39 %.

The estimated fair value of the 2028 Notes was $ 365.5 million and $ 359.7 million as of September 30, 2023 and December 31, 2022, respectively, measured based upon quoted market prices in an active market, defined as Level 1 in the fair value hierarchy.

Our 2025 Notes are general unsecured senior obligations comprised of $ 250.0 million in aggregate principal of 6.75 % senior notes maturing on May 15, 2025.

The 2025 Notes are unconditionally guaranteed jointly and severally on a senior unsecured basis by the Partnership's existing subsidiaries (other than Delek Logistics Finance Corp.) and will be unconditionally guaranteed on the same basis by certain of the Partnership's future subsidiaries.

As of June 30, 2023, the effective interest rate was 7.17 %.

The estimated fair value of the 2025 Notes was $ 247.0 million and $ 243.4 million as of June 30, 2023 and December 31, 2022, respectively, measured based upon quoted market prices in an active market, defined as Level 1 in the fair value hierarchy.

As of September 30, 2023, the effective interest rate was 7.18 %.

The estimated fair value of the 2025 Notes was $ 245.6 million and $ 243.4 million as of September 30, 2023 and December 31, 2022, respectively, measured based upon quoted market prices in an active market, defined as Level 1 in the fair value hierarchy.

Equity Activity

The table below summarizes the changes in the number of limited partner units outstanding from December 31, 2022 through June 30, 2023.

The table below summarizes the changes in the number of limited partner units outstanding from December 31, 2022 through September 30, 2023.

Common - Public Common - Delek Holdings (1)

2 unchanged sentences

27,436 — 27,436

Balance at June 30, 2023 9,274,898 34,311,278 43,586,176

(1) As of June 30, 2023, Delek Holdings owned a 78.7 % limited partner interest in us.

(2) Unit-based compensation awards are presented net of 5,371 units withheld for taxes as of June 30, 2023.

Balance at September 30, 2023 9,284,741 34,311,278 43,596,019

(1) As of September 30, 2023, Delek Holdings owned a 78.7 % limited partner interest in us.

(2) Unit-based compensation awards are presented net of 10,714 units withheld for taxes as of September 30, 2023.

Our Partnership Agreement sets forth the calculation to be used to determine the amount and priority of available cash distributions that our limited partner unitholders will receive.

4 unchanged sentences

June 30, 2022 $ 0.985 $ 42,832

September 30, 2022 $ 0.990 $ 43,057

March 31, 2023 $ 1.025 $ 44,664

June 30, 2023 $ 1.035 $ 45,112

September 30, 2023 $ 1.045 $ 45,558

Equity Method Investments

3 unchanged sentences

Notes to Condensed Consolidated Financial Statements (Unaudited)

As of June 30, 2023 As of December 31, 2022

As of September 30, 2023 As of December 31, 2022

Current Assets $ 35,187 $ 33,365

1 unchanged sentence

Current liabilities $ 8,544 $ 5,144

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

Three Months Ended September 30, Nine Months Ended September 30,

2023 2022 2023 2022

7 unchanged sentences

Combined summarized financial information for these two equity method investees on a 100% basis is shown below (in thousands):

As of June 30, 2023 As of December 31, 2022

As of September 30, 2023 As of December 31, 2022

Current assets $ 22,421 $ 18,888

1 unchanged sentence

Current liabilities $ 2,855 $ 1,973

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

Three Months Ended September 30, Nine Months Ended September 30,

2023 2022 2023 2022

5 unchanged sentences

The Partnership's investment balances in these joint ventures were as follows (in thousands):

As of June 30, 2023 As of December 31, 2022

As of September 30, 2023 As of December 31, 2022

Red River $ 140,939 $ 149,635

29 unchanged sentences

The following is a summary of business segment operating performance as measured by EBITDA for the periods indicated (in thousands):

Three Months Ended June 30, 2023

Three Months Ended September 30, 2023

(In thousands) Gathering and Processing Wholesale Marketing and Terminalling Storage and Transportation Investments in Pipeline Joint Ventures Corporate and Other Consolidated

10 unchanged sentences

Capital spending $ 12,002 $ 2,123 $ 522 $ — $ — $ 14,647

Three Months Ended June 30, 2022

Three Months Ended September 30, 2022

(In thousands) Gathering and Processing Wholesale Marketing and Terminalling Storage and Transportation Investments in Pipeline Joint Ventures Corporate and Other Consolidated

10 unchanged sentences

Capital spending $ 30,895 $ 1,065 $ — $ — $ — $ 31,960

Six Months Ended June 30, 2023

Nine Months Ended September 30, 2023

(In thousands) Gathering and Processing Wholesale Marketing and Terminalling Storage and Transportation Investments in Pipeline Joint Ventures Corporate and Other Consolidated

11 unchanged sentences

Notes to Condensed Consolidated Financial Statements (Unaudited)

Six Months Ended June 30, 2022

Nine Months Ended September 30, 2022

(In thousands) Gathering and Processing Wholesale Marketing and Terminalling Storage and Transportation Investments in Pipeline Joint Ventures Corporate and Other Consolidated

24 unchanged sentences

Distribution Declaration

On July 26, 2023, our general partner's board of directors declared a quarterly cash distribution of $ 1.035 per unit, payable on August 14, 2023, to unitholders of record on August 7, 2023.

On October 25, 2023, our general partner's board of directors declared a quarterly cash distribution of $ 1.045 per unit, payable on November 13, 2023, to unitholders of record on November 6, 2023.

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