What changed in this filing

/stocks — the workspaceLOADING

Item 2. Management’s Discussion and Analysis

2023-11-08 compared with 2023-08-09 · 181 added, 189 removed, 503 unchanged (42% of the section changed)

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and any of its subsidiaries, other than the Partnership and its subsidiaries and its general partner.

The Partnership announces material information to the public about the Partnership, its products and services and other matters through a variety of means, including filings with the Securities and Exchange Commission, press releases, public conference calls, the Partnership's website (www.deleklogistics.com), the investor relations section of the website (ir.deleklogistics.com), the news section of its website (www.deleklogistics.com/news), and/or social media, including its Twitter account (@DelekLogistics).

The Partnership encourages investors and others to review the information it makes public in these locations, as such information could be deemed to be material information.

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We gather, transport, offload and store crude oil and intermediate products and market, distribute, transport and store refined products primarily in select regions of the southeastern United States and Texas for Delek Holdings and third parties.

In June 2022, we acquired 100% of the interest in 3 Bear Delaware Holding – NM, LLC ("3 Bear") (subsequently renamed to DKL Delaware Gathering - NM, LLC ("Delaware Gathering")), which expands our third-party revenue and includes 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 Business").

In June 2022, our DKL Delaware Gathering, LLC subsidiary ("Delaware Gathering") acquired 100% of the interest in 3 Bear Delaware Holding – NM, LLC ("3 Bear") (subsequently renamed to DKL Delaware Holding - NM, LLC), which expands our third-party revenue and includes 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 Business").

As we continue the process of integrating these operations into our existing businesses and assessing the long-term impact to our business, management (including the designated Chief Operating Decision Maker or “CODM”) has changed the way that the business is managed and reviewed, including from a financial reporting perspective.

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Business and Economic Environment Overview

During much of six months ended June 30, 2023, domestic markets have experienced an elevated hydrocarbon pricing environment that has resulted in a strong demand for hydrocarbons and presented an opportunity for the Partnership to leverage its extensive network of logistics assets, resulting in increased throughputs and higher utilization as compared to the prior year.

During much of nine months ended September 30, 2023, domestic markets have experienced an elevated hydrocarbon pricing environment that has resulted in a strong demand for hydrocarbons and presented an opportunity for the Partnership to leverage its extensive network of logistics assets, resulting in increased throughputs and higher utilization as compared to the prior year.

Additionally, the successful integration of Delaware Gathering further diversifies our logistics customer base to include significantly more third-party customers, and it allows us to provide comprehensive logistics services in the Delaware Basin, while also serving as a funnel into our existing midstream Permian activities.

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Through our joint venture projects, we have increased our supply network to take advantage of growth opportunities in expanding markets and added additional flexibility which has delivered realized value through the entire Delek Logistics system.

While we experienced a $2.4 million decrease in net income for the six months ended June 30, 2023, our EBITDA (as defined in "Non GAAP Measures" section below) increased $55.4 million in 2023 as compared to 2022.

Our gathering and processing segment which had segment EBITDA of $108.1 million in 2023 compared to $70.6 million in 2022, benefited from additional EBITDA associated with the Delaware Gathering Acquisition as well new connections in our Midland Gathering operations.

While we experienced a $12.3 million decrease in net income for the nine months ended September 30, 2023, our EBITDA (as defined in "Non GAAP Measures" section below) increased $64.7 million in 2023 as compared to 2022.

Our gathering and processing segment which had segment EBITDA of $161.0 million in 2023 compared to $127.1 million in 2022, benefited from additional EBITDA associated with the Delaware Gathering Acquisition as well as rate increases and new connections in our Midland Gathering operations.

Our wholesale marketing and terminalling segment saw a $18.3 million increase in segment EBITDA.

Segment EBITDA for our investments in pipeline joint ventures decreased by $0.5 million.

Segment EBITDA for our investments in pipeline joint ventures increased by $0.2 million.

See the “Results of Operations” section below for further discussion.

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That said, we are well positioned to manage through an economic downturn because of built-in recessionary protections which include minimum volume commitments on throughput and dedicated acreage agreements.

Furthermore, the Partnership will benefit from inflationary-linked rate increases effective July 1, 2023, as discussed further below.

Furthermore, the Partnership benefited from inflationary-linked rate increases effective July 1, 2023, as discussed further below.

Additionally, the Partnership has embraced opportunities to enhance our environmental stewardship.

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however, a material reduction in the reliance on oil and gas for energy consumption is unlikely in the near term.

Therefore, as we look forward to the second half of 2023, we expect that liquid transportation fuels will continue to be in high demand, and we expect to continue to leverage the strength of our cash flows and balance sheet in order to continue maximizing unitholder returns and the long-term prospects for return on investment.

Therefore, as we look forward to the fourth quarter of 2023, we expect that liquid transportation fuels will continue to be in high demand, and we expect to continue to leverage the strength of our cash flows and balance sheet in order to continue maximizing unitholder returns and the long-term prospects for return on investment.

Management's Discussion and Analysis

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On July 1, 2023, the tariffs on certain of our FERC regulated pipelines and the throughput fees and storage fees under certain of our agreements with Delek Holdings and third parties that are subject to adjustments using FERC indexing increased by approximately 13.3%, which was the amount of the change in the FERC oil pipeline index.

The tariff on FERC regulated system acquired from Delaware Gathering (formerly 3 Bear) will be adjusted as of January 1, 2023, but adjustments under agreement already in place will be capped at 3.0%.

The tariff on FERC regulated system acquired from Delaware Gathering (formerly 3 Bear) was adjusted as of January 1, 2023, but adjustments under agreements already in place will be capped at 3.0%.

Under certain of our agreements with Delek Holdings and third parties, the fees that are subject to adjustments using the consumer price index increased 17.6% and the fees that are subject to adjustments using the producer price index increased approximately 18.9%.

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The Partnership’s Long-Term Strategic Objectives have been focused on maintaining stable cash flows and to grow the quarterly distributions paid to our unitholders over time.

To that end, we have been focused on growing our asset base within our geographic area through acquisitions, project development, joint ventures, enhancing our existing systems and lowering our carbon footprint, as we continued to evaluate ways to provide Delek Holdings with logistics services and look for ways to reduce our reliance on Delek Holdings as our primary customer.

To that end, we have been focused on growing our asset base within our geographic area through acquisitions, project development, joint ventures, enhancing our existing systems and lowering our carbon footprint, as we continue to evaluate ways to provide Delek Holdings with logistics services and look for ways to reduce our reliance on Delek Holdings as our primary customer.

2023 Strategic Focus Areas

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Pursue strategic acquisitions that both complement our existing assets and provide attractive returns for our unitholders, with a focus on expanding our third-party business.

Leverage our current asset base, and our knowledge of the regional markets in which we operate, to target and complete attractive third-party acquisitions.

Leverage our current asset base, and our knowledge of the regional markets in which we operate, to target and complete attractive third-party acquisitions, which will enhance our third-party revenues and margin, further diversifying our customer and product mix.

◦ Investments in Joint Ventures.

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The Partnership manages long-term capital projects on behalf of Delek Holdings pursuant to a construction management and operating agreement (the "DPG Management Agreement") for the construction of gathering systems in the Permian Basin (the "Delek Permian Gathering Project").

The majority of the gathering systems has been constructed, however, additional costs pertaining to a pipeline connection that was not acquired by the Partnership continue to be incurred and are still subject to the terms of the DPG Management Agreement.

The majority of the gathering systems have been constructed, however, additional costs pertaining to a pipeline connection that was not acquired by the Partnership continue to be incurred and are still subject to the terms of the DPG Management Agreement.

The Partnership is also considered the operator for the project and is responsible for the oversight of the project design, procurement and construction of project segments and for providing other related services.

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(iv) gains and losses related to our commodity hedging activities.

The Partnership anticipates paying a cash distribution to its unitholders at a distribution rate of $1.035 per unit for the quarter ended June 30, 2023 ($4.140 per unit on an annualized basis).

Our Partnership Agreement requires that the Partnership distribute all of its available cash (as

The Partnership anticipates paying a cash distribution to its unitholders at a distribution rate of $1.045 per unit for the quarter ended September 30, 2023 ($4.180 per unit on an annualized basis).

Our Partnership Agreement requires that the Partnership distribute all of its available cash

Management's Discussion and Analysis

defined in the Partnership Agreement) to its unitholders quarterly.

(as defined in the Partnership Agreement) to its unitholders quarterly.

As a result, the Partnership expects to fund future capital expenditures primarily from operating cash flows, borrowings under our revolving credit facility and any potential future issuances of equity and debt securities.

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• The Caddo Pipeline provides crude oil logistics connectivity for shippers from Longview, Texas area to Shreveport, Louisiana area;

• The Red River Pipeline provides crude oil transportation and optionality from Cushing, Oklahoma to Longview, Texas area and connectivity to our Caddo JV along with DKL's Paline pipeline for access to Gulf Coast markets.

• The Red River Pipeline provides crude oil transportation and optionality from Cushing, Oklahoma to Longview, Texas area and connectivity to our Caddo JV along with the Partnership's Paline pipeline for access to Gulf Coast markets.

It also has additional expansion optionality.

Market Trends

Fluctuations in crude oil, natural gas and NGLs prices and the prices of related refined and other hydrocarbon products impact operations in the midstream energy sector.

Fluctuations in crude oil, natural gas and NGL prices and the prices of related refined and other hydrocarbon products impact operations in the midstream energy sector.

For example, the prices of each of these products have the ability to influence drilling activity in many basins and the amounts of capital spending that crude oil exploration and production companies incur to support future growth.

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Non-GAAP Measures

Our management uses certain "non-GAAP" operational measures to evaluate our operating segment performance and non-GAAP financial measures to evaluate past performance and prospects for the future to supplement our financial information presented in accordance with United States ("U.S.") Generally Accepted Accounting Principles ("GAAP").

These financial and operational non-GAAP measures include:

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Reconciliation of net income to EBITDA (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

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Reconciliation of net cash from operating activities to distributable cash flow (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

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(2,069) (2,143) (5,924) (3,183)

Reimbursement from (refund to) Delek Holdings for capital expenditures (2)

(Refund to) reimbursement from Delek Holdings for capital expenditures (2)

(69) 19 942 5

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Deferred income taxes (124) (76) (753) (76)

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

Gain on disposal of assets 491 132 804 120

Distributable cash flow $ 61,396 $ 65,639 $ 183,608 $ 166,728

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Examples include expenditures for the repair, refurbishment and replacement of pipelines and terminals, to maintain equipment reliability, integrity and safety and to address environmental laws and regulations.

(2) For the three and six months ended June 30, 2023 and 2022, Delek Holdings reimbursed us for certain capital expenditures pursuant to the terms of the Omnibus Agreement (as defined in Note 3 to our accompanying condensed consolidated financial statements).

(2) For the three and nine months ended September 30, 2023 and 2022, Delek Holdings reimbursed us for certain capital expenditures pursuant to the terms of the Omnibus Agreement (as defined in Note 3 to our accompanying condensed consolidated financial statements).

Management's Discussion and Analysis

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The financial statements, together with the following information, are intended to provide investors with a reasonable basis for assessing our historical operations, but should not serve as the only criteria for predicting our future performance.

The following table and discussion present a summary of our consolidated results of operations for the three and six months ended June 30, 2023 and 2022, including a reconciliation of net income to EBITDA and net cash flow provided by operating activities to distributable cash flow.

Statement of Operations Data (in thousands, except unit and per unit amounts)

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

The following table provides summary financial data (in thousands, except unit and per unit amounts):

Summary Statement of Operations Data (1)

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

2023 2022 2023 2022

Statement of Operations Data:

Net revenues:

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Total 275,824 294,025 766,260 767,356

Operating costs and expenses:

Cost of materials and other 150,628 177,740 404,849 480,295

Operating expenses (excluding depreciation and amortization) 28,476 20,284 52,691 37,827

Depreciation and amortization 22,469 12,948 42,233 22,809

Total cost of sales 179,070 209,592 349,145 363,190

Operating expenses related to wholesale business (excluding depreciation and amortization presented below) 480 705 1,005 1,269

Operating expenses (excluding depreciation and amortization presented below) 33,003 25,901 86,699 64,997

General and administrative expenses 5,545 11,959 19,666 30,826

Depreciation and amortization 24,585 19,540 69,417 43,297

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

Total operating costs and expenses 186,964 224,544 366,557 384,287

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

Operating income $ 62,554 $ 59,017 $ 186,433 $ 148,061

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Other income, net (3) (36) (24) (39)

Total non-operating costs and expenses 27,795 9,737 54,058 16,960

Total non-operating expenses, net 27,602 13,956 81,660 30,916

Income before income tax expense 34,952 45,061 104,773 117,145

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Diluted 43,604,791 43,515,960 43,598,547 43,499,837

(1) This information is presented at a summary level for your reference.

See the Condensed Consolidated Statements of Income in Item 1.

to this Quarterly Report on Form 10-Q for more detail regarding our results of operations.

(2) For a definition of EBITDA, please see "Non-GAAP Measures" above.

Management's Discussion and Analysis

Results of Operations

A discussion and analysis of the factors contributing to our results of operations is presented below.

The financial statements, together with the following information, are intended to provide investors with a reasonable basis for assessing our historical operations but should not serve as the only criteria for predicting our future performance.

We report operating results in four reportable segments:

• Gathering and Processing

• Wholesale Marketing and Terminalling

• Storage and Transportation

• Investments in Pipeline Joint Ventures

Decisions concerning the allocation of resources and assessment of operating performance are made based on this segmentation.

Management measures the operating performance of each of its reportable segments based on the segment EBITDA.

Effective in the fourth quarter 2022, we revised our reportable segments.

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Additionally, we are also now segregating out certain non-segment specific costs and expenses and, when applicable, immaterial operating segments that may not fit into our existing reportable segments as Corporate and Other activities.

Consolidated Results of Operations — Comparison of the three and six months ended June 30, 2023 compared to the three and six months ended June 30, 2022

The table below presents a summary of our consolidated results of operations (in thousands).

The discussion immediately following presents the consolidated results of operations.

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

2023 2022 2023 2022

Net revenues:

Affiliate $ 132,993 $ 124,366 $ 257,992 $ 248,120

Third-Party 113,918 142,384 232,444 225,211

Total Consolidated 246,911 266,750 490,436 473,331

Cost of materials and other 128,125 176,360 254,221 302,554

Operating expenses (excluding depreciation and amortization presented below) 28,956 20,989 53,696 39,096

General and administrative expenses 6,611 13,773 14,121 18,868

Depreciation and amortization 23,727 13,422 44,832 23,757

Other operating income, net (455) — (313) 12

Operating income $ 59,947 $ 42,206 $ 123,879 $ 89,044

Interest expense, net 35,099 16,812 67,680 31,062

Income from equity method investments (7,285) (7,073) (13,601) (14,099)

Other expense, net (19) (2) (21) (3)

Total non-operating expenses, net 27,795 9,737 54,058 16,960

Income before income tax expense 32,152 32,469 69,821 72,084

Income tax expense 256 305 558 406

Net income attributable to partners $ 31,896 $ 32,164 $ 69,263 $ 71,678

Net revenues decreased by $19.8 million, or 7.4%, in the second quarter of 2023 compared to the second quarter of 2022, primarily driven by the following:

• decreased revenue of $50.9 million in our West Texas marketing operations primarily driven by decreases in the average sales prices per gallon and the average volumes sold:

◦ the average sales prices per gallon of gasoline and diesel sold decreased by $0.93 per gallon and $1.53 per gallon, respectively;

◦ the average volumes of gasoline and diesel sold decreased by 0.6 million gallons and 1.5 million gallons, respectively.

• partially offset by an increase in revenue as a result of our Delaware Gathering operations, which began in June 2022.

Net revenues increased by $17.1 million, or 3.6%, in the six months ended June 30, 2023 compared to the six months ended June 30, 2022.

The increase was primarily driven by the following:

• increase in revenue as a result of our Delaware Gathering operations, which began in June 2022;

Management's Discussion and Analysis

• increase in volumes associated with Midland Gathering operations due to new connections finalized during 2022;

• partially offset by decreased revenue of $66.3 million in our West Texas marketing operations primarily driven by decreases in the average sales prices per gallon and the average volumes of gasoline and diesel sold in our West Texas marketing operations:

◦ the average sales prices per gallon of gasoline and diesel sold decreased by $0.58 per gallon and $0.79 per gallon, respectively;

◦ the average volumes of gasoline and diesel sold decreased by 3.4 million gallons and 2.4 million gallons, respectively.

Results of Operations

Consolidated Results of Operations — Comparison of the three and nine months ended September 30, 2023 compared to the three and nine months ended September 30, 2022

Net revenues decreased by $18.2 million, or 6.2%, in the third quarter of 2023 compared to the third quarter of 2022, primarily driven by the following:

• decrease in revenue in our Delek Delaware Gathering operations of $17.2 million primarily due to a decrease in natural gas prices which declined from an average of $8.20 MMBtu during the third quarter of 2022 to $2.54 MMBtu in the third quarter of 2023, slightly offset by increases in water, crude oil and natural gas volumes;

• decreased revenue of $3.6 million in our West Texas marketing operations primarily driven by decreases in the average diesel sales prices per gallon, partially offset by an increase in the volumes sold:

◦ the average sales prices per gallon of diesel sold decreased by $0.56 per gallon;

◦ the volumes of gasoline sold increased by 5.3 million gallons, partially offset by a 1.2 million decrease of diesel gallons sold.

Such decreases were partially offset by the following:

• increase in throughput associated with Midland Gathering operations primarily due to new connections finalized during 2022.

Net revenues decreased by $1.1 million, or 0.1%, in the nine months ended September 30, 2023 compared to the nine months ended September 30, 2022.

The decrease was primarily driven by the following:

• decreased revenue of $66.7 million in our West Texas marketing operations primarily driven by decreases in the average sales prices per gallon and the volumes of gasoline and diesel sold:

◦ the average sales prices per gallon of gasoline and diesel sold decreased by $0.39 per gallon and $0.71, respectively;

◦ the volumes of diesel sold decreased by 3.6 million gallons, partially offset by a 1.9 million increase in gallons of gasoline sold.

Such decreases were partially offset by the following:

• increase in revenue as a result of our Delaware Gathering operations, which began in June 2022;

• increase in volumes associated with Midland Gathering operations primarily due to new connections finalized during 2022.

Cost of Materials and Other

Cost of materials and other decreased by $48.2 million, or 27.4%, in the second quarter of 2023 compared to the second quarter of 2022, primarily driven by the following:

• decrease in costs of materials and other of $53.2 million in our West Texas marketing operations primarily driven by decreases in the average cost per gallon and the average volumes of gasoline and diesel sold:

Cost of materials and other decreased by $27.1 million, or 15.3%, in the third quarter of 2023 compared to the third quarter of 2022, primarily driven by the following:

• decrease of $16.9 million primarily as a result of a decrease in natural gas prices impacting our Delaware Gathering operations;

• decrease of $4.3 million primarily due to a decrease in trucking activity;

• decrease in costs of materials and other of $7.3 million in our West Texas marketing operations primarily driven by decreases in the average cost per gallon, partially offset by an increase in the gasoline volumes sold:

◦ the average cost per gallon of gasoline and diesel sold decreased by $0.41 per gallon and $0.52 per gallon, respectively;

◦ the average volumes of gasoline and diesel sold decreased by 0.6 million gallons and 1.5 million gallons, respectively.

• partially offset by increase in costs of materials and other as a result of our Delaware Gathering operations, which began in June 2022.

Cost of materials and other decreased by $48.3 million, or 16.0%, in the six months ended June 30, 2023 compared to the six months ended June 30, 2022, primarily driven by the following:

• decrease in costs of materials and other of $69.4 million in our West Texas marketing operations primarily driven by decreases in the average cost per gallon and the average volumes of gasoline and diesel sold in our West Texas marketing operations:

◦ the volumes of gasoline sold increased by 5.3 million gallons, partially offset by a 1.2 million decrease of diesel gallons sold.

Cost of materials and other decreased by $75.4 million, or 15.7%, in the nine months ended September 30, 2023 compared to the nine months ended September 30, 2022, primarily driven by the following:

• decrease in costs of materials and other of $78.4 million in our West Texas marketing operations primarily driven by decreases in the average cost per gallon and the volumes of diesel sold:

◦ the average cost per gallon of gasoline and diesel sold decreased by $0.55 per gallon and $0.74 per gallon, respectively;

◦ the average volumes of gasoline and diesel sold decreased by 3.4 million gallons and 2.4 million gallons, respectively.

• partially offset by increase in cost of materials and other as a result of our Delaware Gathering operations, which began in June 2022.

◦ the volumes of diesel sold decreased by 3.6 million gallons, partially offset by a 1.9 million increase in gallons of gasoline sold.

Management's Discussion and Analysis

Such decreases were partially offset by the following:

• increase in cost of materials and other as a result of our Delaware Gathering operations, which began in June 2022.

Operating Expenses

Operating expenses increased by $8.0 million, or 38.0%, in the second quarter of 2023 compared to the second quarter of 2022, primarily driven by incremental expenses associated with our Delaware Gathering operations which began in June 2022.

Operating expenses increased by $14.6 million, or 37.3%, in the six months ended June 30, 2023 compared to the six months ended June 30, 2022, primarily driven by incremental expenses associated with our Delaware Gathering operations which began in June 2022.

Operating expenses increased by $7.1 million, or 27.4%, in the third quarter of 2023 compared to the third quarter of 2022, primarily driven by the following:

• increase in variable expenses due to higher throughput;

• increase in operating expenses due to one time credit received in the third quarter of 2022.

Operating expenses increased by $21.7 million, or 33.4%, in the nine months ended September 30, 2023 compared to the nine months ended September 30, 2022, primarily driven by incremental expenses associated with our Delaware Gathering operations which began in June 2022.

General and Administrative Expenses

General and administrative expenses decreased by $7.2 million, or 52.0%, in the second quarter of 2023 compared to the second quarter of 2022 primarily due to higher outside services associated with the Delaware Gathering Acquisition in the prior year.

General and administrative expenses decreased by $4.7 million, or 25.2%, in the six months ended June 30, 2023 compared to the six months ended June 30, 2022, primarily driven by the following:

General and administrative expenses decreased by $6.4 million, or 53.6%, in the third quarter of 2023 compared to the third quarter of 2022 primarily due to higher outside services associated with the Delaware Gathering Acquisition in the prior year.

General and administrative expenses decreased by $11.2 million, or 36.2%, in the nine months ended September 30, 2023 compared to the nine months ended September 30, 2022, primarily driven by the following:

• higher outside services associated with the Delaware Gathering Acquisition in the prior year;

• partially offset by lower allocated employee related expenses.

Management's Discussion and Analysis

Depreciation and Amortization

Depreciation and amortization increased by $10.3 million, or 76.8%, in the second quarter of 2023 compared to the second quarter of 2022, primarily driven by the following:

Depreciation and amortization increased by $5.0 million, or 25.8%, in the third quarter of 2023 compared to the third quarter of 2022, primarily driven by the following:

• depreciation amortization associated with assets acquired as part of the Delaware Gathering Acquisition;

• deprecation associated with new projects in-serviced during the period.

Depreciation and amortization increased by $21.1 million, or 88.7%, in the six months ended June 30, 2023 compared to the six months ended June 30, 2022, primarily driven by the following:

Depreciation and amortization increased by $26.1 million, or 60.3%, in the nine months ended September 30, 2023 compared to the nine months ended September 30, 2022, primarily driven by the following:

• the acquisition of property, plant and equipment and customer relationship intangible as part of the Delaware Gathering Acquisition;

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Interest Expense

During the second quarter of 2023 we incurred $35.1 million of interest expense, compared to $16.8 million during the second quarter of 2022, an increase of $18.3 million, or 108.8%.

This increase was primarily driven by the following:

Interest expense increased by $14.3 million, or 63.6%, in the third quarter of 2023 compared to the third quarter of 2022, primarily driven by the following:

• increased borrowings under the DKL Credit Facility;

• higher floating interest rates applicable to the DKL Credit Facility.

During the six months ended June 30, 2023 we incurred $67.7 million of interest expense, compared to $31.1 million during the six months ended June 30, 2022, an increase of $36.6 million, or 117.9%.

This increase was primarily driven by the following:

Interest expense increased by $51.0 million, or 95.0%, in the nine months ended September 30, 2023 compared to the nine months ended September 30, 2022, primarily driven by the following:

Management's Discussion and Analysis

• increased borrowings under the DKL Credit Facility to fund the Delaware Gathering Acquisition;

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Results from Equity Method Investments

We recognized income of $7.3 million from equity method investments during the second quarter of 2023 compared to $7.1 million for the second quarter of 2022, an increase of $0.2 million, or 3.0%.

This increase was primarily driven by the following:

• increase in income from our Rio equity method investment due to higher throughput volumes and resulting revenue increases.

During the six months ended June 30, 2023 we recognized income of $13.6 million from equity method investments, compared to $14.1 million during the six months ended June 30, 2022, a decrease of $0.5 million, or 3.5%.

This decrease was primarily driven by the following:

• decrease in income from our Red River and CP LLC equity method investments;

• partially offset by an increase from our Andeavor Logistics equity method investment due to higher throughput volumes and resulting revenue increases.

Income from equity method investments increased by $0.7 million, or 8.5%, in the third quarter of 2023 compared to the third quarter of 2022.

Income from equity method investments increased by $0.2 million, or 1.0%, in the nine months ended September 30, 2023 compared to the nine months ended September 30, 2022.

Management's Discussion and Analysis

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• assets acquired in the Delaware Gathering Acquisition

The following tables and discussion present the results of operations and certain operating statistics of the gathering and processing segment for the three and six months ended June 30, 2023 and 2022:

The following tables and discussion present the results of operations and certain operating statistics of the gathering and processing segment for the three and nine months ended September 30, 2023 and 2022:

Gathering and Processing

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

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

2023 2022 2023 2022

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Throughputs (average bpd)

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

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

2023 2022 2023 2022

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Delaware Gathering Assets Volumes

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

2023 2022 (1)

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

2023 2022 2023 2022 (1)

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99,158 69,411 104,920 66,043

( 1) Volumes for the three and six months ended June 30, 2022 are for period from June 1 through June 30, 2022 we owned Delaware Gathering Assets.

(1) Volumes for the nine months ended September 30, 2022 are for period from June 1 through September 30, 2022 we owned Delaware Gathering Assets.

(2) Mcfd - average thousand cubic feet per day.

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Management's Discussion and Analysis

Comparison of the three and six months ended June 30, 2023 compared to the three and six months ended June 30, 2022

Net revenues for the gathering and processing segment increased by $28.4 million, or 43.8%, in the second quarter of 2023 compared to the second quarter of 2022, driven primarily by the following:

• increase in revenue of $26.7 million as a result of our Delaware Gathering operations, which began in June 2022;

• increase in volumes associated with Midland Gathering operations due to new connections finalized during 2022.

Net revenues for the gathering and processing segment increased by $78.8 million, or 73.7%, in the six months ended June 30, 2023 compared to the six months ended June 30, 2022, driven primarily by the following:

• increase in revenue of $71.0 million as a result of our Delaware Gathering operations, which began in June 2022;

• increase in volumes associated with Midland Gathering operations due to new connections finalized during 2022.

Comparison of the three and nine months ended September 30, 2023 compared to the three and nine months ended September 30, 2022

Net revenues for the gathering and processing segment decreased by $13.8 million, or 12.7%, in the third quarter of 2023 compared to the third quarter of 2022, driven primarily by the following:

• decrease in revenue our Delek Delaware Gathering operations of $17.2 million primarily due to decrease in natural gas prices which declined from an average of $8.20 MMBtu during the third quarter of 2022 to $2.54 MMBtu in the third quarter of 2023, slightly offset by increases in water, crude oil and natural gas volumes;

• such decrease was partially offset by increase in throughput associated with Midland Gathering operations primarily due to new connections finalized during 2022.

Net revenues for the gathering and processing segment increased by $65.0 million, or 30.2%, in the nine months ended September 30, 2023 compared to the nine months ended September 30, 2022, driven primarily by the following:

• incremental revenues of as a result of our Delaware Gathering operations, which began in June 2022;

• increase in throughput associated with Midland Gathering operations primarily due to new connections finalized during 2022.

Cost of Materials and Other

Cost of materials and other for the gathering and processing segment increased by $6.7 million, or 43.7%, in the second quarter of 2023 compared to the second quarter of 2022, driven primarily by the following:

• increase in cost of materials and other as a result of our Delaware Gathering operations which began in June 2022.

Cost of materials and other for the gathering and processing segment increased by $28.4 million, or 172.3%, in the six months ended June 30, 2023 compared to the six months ended June 30, 2022, driven primarily by the following:

• increase in cost of materials and other as a result of our Delaware Gathering operations which began in June 2022.

Cost of materials and other for the gathering and processing segment decreased by $15.9 million, or 43.5%, in the third quarter of 2023 compared to the third quarter of 2022, driven primarily by the following:

• decrease in cost of materials and other primarily as a result of decrease in natural gas prices impacting our Delaware Gathering operations.

Cost of materials and other for the gathering and processing segment increased by $12.5 million, or 23.5%, in the nine months ended September 30, 2023 compared to the nine months ended September 30, 2022, driven primarily by the following:

• incremental cost of materials and other as a result of our Delaware Gathering operations which began in June 2022.

Operating Expenses

Operating expenses for the gathering and processing segment increased by $9.7 million, or 88.8%, in the second quarter of 2023 compared to the second quarter of 2022, driven primarily by the following:

• increase due to additional expenses associated with our Delaware Gathering operations, which began in June 2022.

Operating expenses for the gathering and processing segment increased by $15.1 million, or 76.8%, in the six months ended June 30, 2023 compared to the six months ended June 30, 2022, primarily driven by the following:

Operating expenses for the gathering and processing segment increased by $6.0 million, or 40.3%, in the third quarter of 2023 compared to the third quarter of 2022, driven primarily by the following:

• increase in variable expenses due to higher throughput;

• increase in operating expenses due to one time credit received in the third quarter of 2022.

Operating expenses for the gathering and processing segment increased by $21.1 million, or 61.2%, in the nine months ended September 30, 2023 compared to the nine months ended September 30, 2022, primarily driven by the following:

• increase due to additional expenses associated with our Delaware Gathering operations, which began in June 2022.

EBITDA increased by $14.2 million, or 36.8%, in the second quarter of 2023 compared to the second quarter of 2022, driven primarily by the following:

• additional EBITDA associated with the Delaware Gathering operations, which began in June 2022;

• increase in throughput associated with new connections in our Midland Gathering operations.

EBITDA increased by $37.5 million, or 53.2%, in the six months ended June 30, 2023 compared to the six months ended June 30, 2022, primarily driven by the following:

• additional EBITDA associated with the Delaware Gathering operations, which began in June 2022;

EBITDA decreased by $3.6 million, or 6.4%, in the third quarter of 2023 compared to the third quarter of 2022, primarily driven by the following:

• increase in operating expenses due to a one time credit received in the third quarter of 2022.

Management's Discussion and Analysis

EBITDA increased by $33.9 million, or 26.7%, in the nine months ended September 30, 2023 compared to the nine months ended September 30, 2022, primarily driven by the following:

• additional EBITDA associated with the Delaware Gathering operations, which began in June 2022;

• increase in throughput associated with new connections in our Midland Gathering operations.

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We use our wholesale marketing and terminalling assets to generate revenue by providing wholesale marketing and terminalling services to Delek Holdings’ refining operations and to independent third parties.

The following tables and discussion present the results of operations and certain operating statistics of the wholesale marketing and terminalling segment for the three and six months ended June 30, 2023 and 2022:

The following tables and discussion present the results of operations and certain operating statistics of the wholesale marketing and terminalling segment for the three and nine months ended September 30, 2023 and 2022:

Wholesale Marketing and Terminalling

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

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

2023 2022 2023 2022

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Operating Information

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

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

2023 2022 2023 2022

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(2) Consists of terminalling throughputs at our Tyler, Big Spring, Big Sandy and Mount Pleasant, Texas terminals, our El Dorado and North Little Rock, Arkansas terminals and our Memphis and Nashville, Tennessee terminals.

Comparison of the three and six months ended June 30, 2023 compared to the three and six months ended June 30, 2022

Net revenues for the wholesale marketing and terminalling segment decreased by $46.7 million, or 28.2%, in the second quarter of 2023 compared to the second quarter of 2022, driven primarily by the following:

• decreased revenue of $50.9 million in our West Texas marketing operations primarily driven by decreases in the average sales prices per gallon and the average volumes sold:

◦ the average sales prices per gallon of gasoline and diesel sold decreased by $0.93 per gallon and $1.53 per gallon, respectively;

◦ the average volumes of gasoline and diesel sold decreased by 0.6 million gallons and 1.5 million gallons, respectively.

Net revenues for the wholesale marketing and terminalling segment decreased by $65.2 million, or 22.0%, in the six months ended June 30, 2023 compared to the six months ended June 30, 2022, primarily driven by the following:

• decreased revenue of $66.3 million in our West Texas marketing operations primarily driven by decreases in the average sales prices per gallon and the average volumes of gasoline and diesel sold in our West Texas marketing operations:

Comparison of the three and nine months ended September 30, 2023 compared to the three and nine months ended September 30, 2022

Net revenues for the wholesale marketing and terminalling segment decreased by $0.8 million, or 0.5%, in the third quarter of 2023 compared to the third quarter of 2022, driven primarily by the following:

• decreased revenue of $3.6 million in our West Texas marketing operations primarily driven by decreases in the average sales prices per gallon of diesel, partially offset by an increase in the volumes sold:

◦ the average sales prices per gallon of diesel sold decreased by $0.56 per gallon;

◦ the volumes of gasoline increased by 5.3 million gallons, partially offset by a 1.2 million decrease of diesel gallons sold.

Such decreases were partially offset by the following:

• increase in terminalling and marketing revenue primarily due to rate increases.

Net revenues for the wholesale marketing and terminalling segment decreased by $65.9 million, or 14.8%, in the nine months ended September 30, 2023 compared to the nine months ended September 30, 2022, primarily driven by the following:

• decreased revenue of $66.7 million in our West Texas marketing operations primarily driven by decreases in the average sales prices per gallon and the volumes of diesel sold in our West Texas marketing operations:

◦ the average sales prices per gallon of gasoline and diesel sold decreased by $0.39 per gallon and $0.71 per gallon, respectively;

◦ the average volumes of gasoline and diesel sold decreased by 3.4 million gallons and 2.4 million gallons, respectively.

◦ the average volumes of diesel sold decreased by 3.6 million gallons, partially offset by a 1.9 million increase in gallons of gasoline sold.

Such decreases were partially offset by the following:

• increase in gross margin per barrel associated with our West Texas operations;

Management's Discussion and Analysis

The following charts show summaries of the average sales prices per gallon of gasoline and diesel and refined products volume impacting our West Texas operations for the three and six months ended June 30, 2023 and 2022.

• increase in terminalling and marketing revenue primarily due to rate increases.

Cost of Materials and Other

Cost of materials and other for the wholesale marketing and terminalling segment decreased by $54.3 million, or 37.9%, in the second quarter of 2023 compared to the second quarter of 2022, driven primarily by the following:

• decreased costs of materials and other of $53.2 million in our West Texas marketing operations primarily driven by decreases in the average cost per gallon and the average volumes of gasoline and diesel sold:

Cost of materials and other for the wholesale marketing and terminalling segment decreased by $6.9 million, or 5.6%, in the third quarter of 2023 compared to the third quarter of 2022, driven primarily by the following:

• decreased costs of materials and other of $7.3 million in our West Texas marketing operations primarily driven by decreases in the average cost per gallon, partially offset by the volumes of gasoline and diesel sold:

◦ the average cost per gallon of gasoline and diesel sold decreased by $0.41 per gallon and $0.52 per gallon, respectively;

◦ the average volumes of gasoline and diesel sold decreased by 0.6 million gallons and 1.5 million gallons, respectively.

Cost of materials and other for the wholesale marketing and terminalling segment decreased by $73.6 million, or 29.4% , in the six months ended June 30, 2023 compared to the six months ended June 30, 2022, primarily driven by the following:

• decreased costs of materials and other of $69.4 million in our West Texas marketing operations primarily driven by decreases in the average cost per gallon and the average volumes of gasoline and diesel sold in our West Texas marketing operations:

◦ the volumes of gasoline sold increased by 5.3 million gallons, partially offset by a 1.2 million decrease of diesel gallons sold.

Cost of materials and other for the wholesale marketing and terminalling segment decreased by $80.5 million, or 21.6% , in the nine months ended September 30, 2023 compared to the nine months ended September 30, 2022, primarily driven by the following:

• decreased costs of materials and other of $78.4 million in our West Texas marketing operations primarily driven by decreases in the average cost per gallon and the volumes of gasoline and diesel sold:

◦ the average cost per gallon of gasoline and diesel sold decreased by $0.55 per gallon and $0.74 per gallon, respectively;

◦ the average volumes of gasoline and diesel sold decreased by 3.4 million gallons and 2.4 million gallons, respectively.

◦ the volumes of diesel sold decreased by 3.6 million gallons, partially offset by a 1.9 million increase in gallons of gasoline sold.

Management's Discussion and Analysis

The following chart shows a summary of the average prices per gallon of gasoline and diesel purchased in our West Texas operations for the three and six months ended June 30, 2023 and 2022.

The following chart shows a summary of the average prices per gallon of gasoline and diesel purchased in our West Texas operations for the three and nine months ended September 30, 2023 and 2022.

Refer to the Refined Products Volume - Gallons chart above for a summary of volumes impacting our West Texas operations.

Operating Expenses

Operating expenses for the wholesale marketing and terminalling segment decreased by $1.0 million, or 20.7%, in the second quarter of 2023 compared to the second quarter of 2022, driven primarily by the following:

Operating expenses for the wholesale marketing and terminalling segment decreased by $0.8 million, or 13.2%, in the third quarter of 2023 compared to the third quarter of 2022, driven primarily by the following:

• decrease in outside service costs.

Operating expenses for the wholesale marketing and terminalling segment decreased by $0.9 million, or 9.9%, in the six months ended June 30, 2023 compared to the six months ended June 30, 2022, driven primarily by the following:

Operating expenses for the wholesale marketing and terminalling segment decreased by $1.7 million, or 11.2%, in the nine months ended September 30, 2023 compared to the nine months ended September 30, 2022, driven primarily by the following:

• decrease in outside service costs;

• decrease in allocated employee related costs.

EBITDA increased by $9.2 million, or 48.8%, in the second quarter of 2023 compared to the second quarter of 2022, driven primarily by the following:

• Increase in terminalling throughputs and East Texas - Tyler refinery sales volumes;

• increase in gross margin per barrel associated with our West Texas operations;

• partially offset by a decrease in volumes sold in our West Texas operations.

EBITDA for the wholesale marketing and terminalling segment increased by $10.4 million, or 26.3%, in the six months ended June 30, 2023 compared to the six months ended June 30, 2022.

• increase in gross margin per barrel associated with our West Texas operations;

• partially offset by a decrease in volumes sold in our West Texas operations.

EBITDA increased by $7.9 million, or 38.8%, in the third quarter of 2023 compared to the third quarter of 2022, driven primarily by the following:

• increase in terminalling utilization and improved wholesale margins.

EBITDA increased by $18.3 million, or 30.5%, in the nine months ended September 30, 2023 compared to the nine months ended September 30, 2022, primarily driven by the following:

• increases in terminalling utilization and improved wholesale margins.

Management's Discussion and Analysis

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Additionally, we own or lease 264 tractors and 353 trailers used to haul primarily crude oil and other products for related and third parties.

The following tables and discussion present the results of operations and certain operating statistics of the storage and transportation segment for the three and six months ended June 30, 2023 and 2022:

The following tables and discussion present the results of operations and certain operating statistics of the storage and transportation segment for the three and nine months ended September 30, 2023 and 2022:

Storage and Transportation

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

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

2023 2022 2023 2022

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Segment EBITDA $ 17,914 $ 14,575 $ 46,316 $ 40,212

Comparison of the three and six months ended June 30, 2023 compared to the three and six months ended June 30, 2022

Net revenues for the storage and transportation segment decreased by $1.5 million, or 4.2%, in the second quarter of 2023 compared to the second quarter of 2022, primarily driven by the following:

• Decrease in trucking revenue primarily as a result of lower production at Delek Holding's refineries;

Comparison of the three and nine months ended September 30, 2023 compared to the three and nine months ended September 30, 2022

Net revenues for the storage and transportation segment decreased by $3.7 million, or 9.7%, in the third quarter of 2023 compared to the third quarter of 2022, primarily driven by the following:

• decrease in trucking activity;

• partially offset by an increase in storage revenue primarily due to rate increases.

Net revenues for the storage and transportation segment increased by $3.5 million, or 5.0%, in the six months ended June 30, 2023 compared to the six months ended June 30, 2022, driven primarily by the following:

• Increase in storage revenue primarily due to rate increases.

Net revenues for the storage and transportation segment decreased by $0.2 million, or 0.2%, in the nine months ended September 30, 2023 compared to the nine months ended September 30, 2022.

Cost of Materials and Other

Cost of materials and other for the storage and transportation segment increased by $0.1 million, or 0.6%, in the second quarter of 2023 compared to the second quarter of 2022.

Cost of materials and other for the storage and transportation segment increased by $0.4 million, or 1.1%, in the six months ended June 30, 2023 compared to the six months ended June 30, 2022.

Cost of materials and other for the storage and transportation segment decreased by $4.3 million, or 23.1%, in the third quarter of 2023 compared to the third quarter of 2022 primarily due to decrease in trucking activity.

Cost of materials and other for the storage and transportation segment decreased by $3.9 million, or 7.2%, in the nine months ended September 30, 2023 compared to the nine months ended September 30, 2022 primarily due to decrease in trucking activity.

Management's Discussion and Analysis

Operating Expenses

Operating expenses for the storage and transportation segment decreased by $0.7 million, or 13.9%, in the second quarter of 2023 compared to the second quarter of 2022, driven primarily by decrease in contract services.

Operating expenses for the storage and transportation segment increased by $0.7 million, or 8.1%, in the six months ended June 30, 2023 compared to the six months ended June 30, 2022, primarily driven by an increase in repairs and maintenance costs.

EBITDA increased by $0.4 million, or 3.1%, in the second quarter of 2023 compared to the second quarter of 2022.

EBITDA increased by $2.8 million, or 10.8%, in the six months ended June 30, 2023 compared to the six months ended June 30, 2022, primarily driven by increase in storage revenue primarily due to rate increases.

Operating expenses for the storage and transportation segment decreased by $1.1 million, or 25.8%, in the third quarter of 2023 compared to the third quarter of 2022.

Operating expenses for the storage and transportation segment decreased by $0.4 million, or 2.7%, in the nine months ended September 30, 2023 compared to the nine months ended September 30, 2022.

EBITDA increased by $3.3 million, or 22.9%, in the third quarter of 2023 compared to the third quarter of 2022, primarily due to storage and transportation rate increases.

EBITDA increased by $6.1 million, or 15.2%, in the nine months ended September 30, 2023 compared to the nine months ended September 30, 2022, primarily driven by an increase in storage and transportation rates.

Management's Discussion and Analysis

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Investments in pipeline joint ventures segment include the Partnership's joint ventures investments described in Note 8 to our accompanying condensed consolidated financial statements.

Refer to Consolidated Results of Operations above for details and discussion of the investments in pipeline joint ventures segment for the three and six months ended June 30, 2023.

Refer to Consolidated Results of Operations above for details and discussion of the investments in pipeline joint ventures segment for the three and nine months ended September 30, 2023.

Liquidity and Capital Resources

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(iii) potential issuance of additional equity;

At June 30, 2023 our total liquidity amounted to $96.7 million comprised of $89.0 million in unused credit commitments under the DKL Credit Facility and $7.7 million in cash and cash equivalents.

At September 30, 2023 our total liquidity amounted to $93.2 million comprised of $89.0 million in unused credit commitments under the DKL Credit Facility and $4.2 million in cash and cash equivalents.

We have the ability to increase the DKL Credit Facility to $1.0 billion subject to receiving increased or new commitments from lenders and meeting certain requirements under the credit facility.

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Refer to the Business Overview section of this MD&A for a complete discussion of the uncertainties identified by management and the actions taken to respond to these uncertainties.

We believe we were in compliance with the covenants in all our debt facilities as of June 30, 2023.

We believe we were in compliance with the covenants in all our debt facilities as of September 30, 2023.

See Note 6 to our condensed consolidated financial statements for a complete discussion of our third-party indebtedness.

Cash Distributions

On July 26, 2023, the board of directors of our general partner declared a distribution of $1.035 per common unit (the "Distribution"), which equates to approximately $45.1 million per quarter, or approximately $180.4 million per year, based on the number of common units outstanding as of August 7, 2023.

The Distribution will be paid on August 14, 2023 to common unitholders of record on August 7, 2023 and represents a 5.1% increase over the second quarter 2022 distribution.

On October 25, 2023, the board of directors of our general partner declared a distribution of $1.045 per common unit (the "Distribution"), which equates to approximately $45,558 per quarter, or approximately $182.2 million per year, based on the number of common units outstanding as of November 6, 2023.

The Distribution will be paid on November 13, 2023 to common unitholders of record on November 6, 2023 and represents a 5.6% increase over the third quarter 2022 distribution.

This increase in the distribution is consistent with our intent to maintain an attractive distribution growth profile over the long term.

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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

The following table sets forth a summary of our consolidated cash flows for the six months ended June 30, 2023 and 2022 (in thousands):

Six Months Ended June 30,

September 30, 2023 $1.045 $45,558

The following table sets forth a summary of our consolidated cash flows for the nine months ended September 30, 2023 and 2022 (in thousands):

Nine Months Ended September 30,

Net cash provided by operating activities $ 110,630 $ 297,482

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Operating Activities

Net cash provided by operating activities decreased by $69.3 million for the six months ended June 30, 2023 compared to the six months ended June 30, 2022.

Net cash provided by operating activities decreased by $186.9 million for the nine months ended September 30, 2023 compared to the nine months ended September 30, 2022.

The cash receipts from customer activities increased by $29.4 million and cash payments to suppliers and for allocations to Delek Holdings for salaries increased by $165.8 million.

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Investing Activities

Net cash used in investing activities decreased by $604.4 million during the six months ended June 30, 2023 compared to the six months ended June 30, 2022, primarily due to the Delaware Gathering Acquisition, effective June 1, 2022, which was partially financed through borrowings under the DKL Credit Facility amounting to $621.8 million.

There were no acquisitions during the six months ended June 30, 2023.

In addition, there was a $2.4 million decrease in purchases of intangibles.

Such decrease was partially offset by purchases of property, plant and equipment increased by $19.9 million primarily associated with growth projects in our gathering and processing segment.

Net cash used in investing activities decreased by $649.5 million during the nine months ended September 30, 2023 compared to the nine months ended September 30, 2022, primarily due to the Delaware Gathering Acquisition, effective June 1, 2022, which was partially financed through borrowings under the DKL Credit Facility amounting to $625.4 million.

There were no acquisitions during the nine months ended September 30, 2023 .

In addition, there was a $2.1 million decrease in purchases of intangibles, $18.3 million decrease in purchases of property, plant and equipment primarily associated with growth projects in our gathering and processing segment, and a $2.7 million increase in distributions from equity method investments.

Financing Activities

Net cash provided by financing activities decreased by $545.0 million for the six months ended June 30, 2023 compared to the six months ended June 30, 2022.

Net cash provided by financing activities decreased by $477.0 million for the nine months ended September 30, 2023 compared to the nine months ended September 30, 2022.

This decrease was primarily driven by net borrowings under the revolving credit facility which decreased by $458.2 million, primarily associated with financing of the Delaware Gathering Acquisition in the prior year.

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Debt Overview

As of June 30, 2023, we had total indebtedness of $1,753.5 million.

The increase of $83.2 million in our long-term debt balance compared to the balance at December 31, 2022 resulted from the borrowings under the DKL Credit Facility during the six months ended June 30, 2023.

As of June 30, 2023, our total indebtedness consisted of:

• An aggregate principal amount of $811.0 million under the DKL Revolving Facility ("revolving credit facility"), due on October 13, 2027, with an average borrowing rate of 7.57%, which was amended and restated on October 13, 2022.

• An aggregate principal amount of $292.5 million, under the DKL Term Facility, due on October 13, 2024, with an average borrowing rate of 8.41%.

As of September 30, 2023, we had total indebtedness of $1,750.0 million.

The increase of $79.5 million in our long-term debt balance compared to the balance at December 31, 2022 resulted from the borrowings under the DKL Credit Facility during the nine months ended September 30, 2023.

As of September 30, 2023, our total indebtedness consisted of:

• An aggregate principal amount of $811.2 million under the DKL Revolving Facility ("revolving credit facility"), due on 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), with an average borrowing rate of 8.45%, which was amended and restated on October 13, 2022.

• An aggregate principal amount of $288.8 million, under the DKL Term Facility, due on April 15, 2025, with an average borrowing rate of 8.92%.

• An aggregate principal amount of $250.0 million, under the 2025 Notes (6.75% senior notes), due in 2025, with an effective interest rate of 7.18%.

• An aggregate principal amount of $400.0 million, under the 2028 Notes (7.125% senior notes), due in 2028, with an effective interest rate of 7.39%.

We believe we were in compliance with the covenants in all debt facilities as of June 30, 2023.

Management's Discussion and Analysis

On November 6, 2023, the Partnership entered into a First Amendment, a Second Amendment and a Third Amendment to the Delek Logistics Credit Facility (together, the “Amendments”).

The Amendments, (i) increased the DKL Revolving Credit Facility's Revolving Credit Commitments (as defined in the Delek Logistics Credit Facility) by an amount equal to $150.0 million to provide for an aggregate Revolving Credit Commitments amount of $1.050 billion, (ii) increased Delek Logistics' ability to incur certain indebtedness and (iii) extended the DKL Term Loan maturity date from October 13, 2024, to the earlier of (i) April 15, 2025, and (ii) six months prior to the earliest maturity date of any outstanding Permitted Note Indebtedness (as defined in the DKL 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.

We believe we were in compliance with the covenants in all debt facilities as of September 30, 2023.

See Note 6 to our condensed consolidated financial statements for a complete discussion of our third-party indebtedness.

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Our current and future credit ratings may also be affected by Delek Holdings' level of indebtedness, financial performance and credit ratings.

Management's Discussion and Analysis

Capital Spending

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Depending on the magnitude, funding for such projects may include cash generated from operations, borrowings under existing credit facilities, or issuances of additional debt or equity securities.

The following table summarizes our actual capital expenditures, including any material capital expenditure payments made or forecasted to be made in advance of receipt of goods and materials, for the six months ended June 30, 2023 and planned capital expenditures for the full year 2023 by segment and by major category:

(in thousands) Full Year 2023 Forecast Six Months Ended June 30, 2023

Management's Discussion and Analysis

The following table summarizes our actual capital expenditures, including any material capital expenditure payments made or forecasted to be made in advance of receipt of goods and materials, for the nine months ended September 30, 2023 and planned capital expenditures for the full year 2023 by segment and by major category:

(in thousands) Nine Months Ended September 30, 2023

Gathering and Processing

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Sustaining 754

Growth 6,125 1,250

Wholesale Marketing and Terminalling Segment Total $ 2,527

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Total Capital Spending $ 68,628

The amount of our capital expenditure budget is subject to change due to unanticipated increases in the cost, scope and completion time for our capital projects.

The capital expenditure 2023 full year forecast is expected to be between $85.0 million to $90.0 million.

In addtion, we expect to receive up to $10.0 million of other proceeds in 2023 that are not reflected in the full year forecast.

The amount of our capital expenditure forecast is subject to change due to unanticipated increases in the cost, scope and completion time for our capital projects.

For example, we may experience increases in the cost of and/or timing to obtain necessary equipment required for our continued compliance with government regulations or to complete improvement projects.

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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 2. Management’s Discussion and Analysis