What changed in this filing

/stocks — the workspaceLOADING

Item 1. Financial Statements

2025-05-07 compared with 2024-11-07 · 230 added, 409 removed, 391 unchanged (62% of the section changed)

2 unchanged sentences

Condensed Consolidated Balance Sheets (Unaudited)

(in thousands, except unit and per unit data)

September 30, 2024 December 31, 2023

(thousands, except unit and per unit data)

March 31, 2025 December 31, 2024

Current assets:

11 unchanged sentences

Equity method investments 317,466 317,152

Customer relationship intangible, net 191,655 181,336

Marketing contract intangible, net — 102,155

Customer relationship intangibles, net 232,959 186,911

Other intangibles, net 130,681 94,547

7 unchanged sentences

Accounts payable $ 59,948 $ 41,380

Accounts payable to related parties 442 —

Current portion of long-term debt — 30,000

Interest payable 15,860 30,665

9 unchanged sentences

Total non-current liabilities 2,200,560 1,917,253

Preferred units - 70,000 units issued and outstanding at September 30, 2024

Equity (Deficit):

Common unitholders - public;

12,932,311 units issued and outstanding at September 30, 2024 ( 9,299,763 at December 31, 2023)

19,564,761 units issued and outstanding at March 31, 2025 ( 17,374,618 at December 31, 2024)

525,141 440,957

Common unitholders - Delek Holdings;

34,111,278 units issued and outstanding at September 30, 2024 ( 34,311,278 at December 31, 2023)

33,868,203 units issued and outstanding at March 31, 2025 ( 34,111,278 at December 31, 2024)

( 427,706 ) ( 405,429 )

Total deficit ( 115,108 ) ( 161,869 )

Total liabilities, preferred units and deficit $ 1,960,723 $ 1,642,246

Total equity 97,435 35,528

Total liabilities and equity $ 2,395,454 $ 2,041,559

See accompanying notes to the condensed consolidated financial statements

3 unchanged sentences

(In thousands, except unit and per unit data)

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

2024 2023 2024 2023

Three Months Ended March 31,

Affiliate (1)

12 unchanged sentences

Depreciation and amortization 1,218 1,328

Other operating income, net ( 117 ) ( 491 ) ( 1,294 ) ( 804 )

Other operating (income) expense, net ( 4,286 ) 567

Total operating costs and expenses 202,331 187,533

3 unchanged sentences

Income from equity method investments ( 10,150 ) ( 8,490 )

Other expense (income), net 34 ( 3 ) ( 177 ) ( 24 )

Total non-operating (income) expenses, net ( 2,016 ) 27,602 56,898 81,660

Other income, net ( 21 ) ( 171 )

Total non-operating expenses, net 8,383 31,568

Income before income tax expense 39,216 32,974

Income tax expense 182 326

Net income attributable to partners $ 33,674 $ 34,825 $ 107,380 $ 104,088

Comprehensive income attributable to partners $ 33,674 $ 34,825 $ 107,380 $ 104,088

Net income per limited partner unit:

Net income 39,034 32,648

Comprehensive income $ 39,034 $ 32,648

Net income per unit:

Basic $ 0.73 $ 0.74

Diluted $ 0.73 $ 0.73

Weighted average limited partner units outstanding:

Weighted average common units outstanding:

Basic 53,604,659 44,406,356

4 unchanged sentences

Delek Logistics Partners, LP

Condensed Consolidated Statements of Partners' Equity (Deficit) (Unaudited)

Condensed Consolidated Statements of Partners' Equity (Unaudited)

(in thousands)

Common - Public Common - Delek Holdings Total Preferred

Balance as of June 30, 2024 $ 287,195 $ ( 338,502 ) $ ( 51,307 ) $ —

Common - Public Common - Delek Holdings Total

Balance as of December 31, 2024 $ 440,957 $ ( 405,429 ) $ 35,528

Cash distributions (1)

Net income attributable to partners

( 21,609 ) ( 37,693 ) ( 59,302 )

Net income 14,224 24,810 39,034

Issuance of units 91,511 — 91,511

Redemption of units — ( 97,949 ) ( 97,949 ) —

Contributions — 50,873 50,873 —

Balance as of September 30, 2024 $ 282,458 $ ( 397,566 ) $ ( 115,108 ) $ 70,000

Common - Public Common - Delek Holdings Total Preferred

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

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

Net income attributable to partners

7,412 27,413 34,825 —

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

Common - Public Common - Delek Holdings Total Preferred

Unit repurchase — ( 10,000 ) ( 10,000 )

Balance as of March 31, 2025 $ 525,141 $ ( 427,706 ) $ 97,435

Common - Public Common - Delek Holdings Total

Balance as of December 31, 2023 $ 160,402 $ ( 322,271 ) $ ( 161,869 )

1 unchanged sentence

( 10,012 ) ( 36,198 ) ( 46,210 )

Net income attributable to partners 27,812 79,568 107,380 —

Net income 7,404 25,244 32,648

Issuance of units 132,327 — 132,327

Redemption of units — ( 97,949 ) ( 97,949 ) —

Contributions — 50,873 50,873 —

Other 29 2,305 2,334 —

Balance as of September 30, 2024 $ 282,458 $ ( 397,566 ) $ ( 115,108 ) $ 70,000

Common - Public Common - Delek Holdings Total Preferred

Balance as of December 31, 2022 $ 172,119 $ ( 282,819 ) $ ( 110,700 ) $ —

Cash distributions (1)

( 70 ) 707 637

Net income attributable to partners 22,135 81,953 104,088 —

Other ( 87 ) 1,921 1,834 —

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

(1) Cash distributions include $ 0.3 million and $ 0.2 million related to distribution equivalents on vested phantom units for the nine months ended September 30, 2024 and 2023.

Balance as of March 31, 2024 $ 290,051 $ ( 332,518 ) $ ( 42,467 )

(1) Cash distributions include $ 0.2 million related to distribution equivalents on vested phantom units for the three months ended March 31, 2024.

There were no distribution equivalents on vested phantom units for the three months ended March 31, 2025 .

See accompanying notes to the condensed consolidated financial statements

3 unchanged sentences

(in thousands)

Nine Months Ended September 30,

Three Months Ended March 31,

Cash flows from operating activities:

19 unchanged sentences

Cash flows from investing activities:

Asset acquisitions from Delek Holdings ( 83,903 ) —

Purchases of property, plant and equipment ( 55,474 ) ( 11,255 )

1 unchanged sentence

Purchases of intangible assets ( 4,558 ) ( 781 )

Business combination ( 159,495 ) —

Business combination, net of cash acquired ( 181,180 ) —

Distributions from equity method investments 2,127 2,133

7 unchanged sentences

Payments on revolving facility ( 328,800 ) ( 400,200 )

Proceeds from issuance of units 132,202 —

Unit repurchase ( 10,000 ) —

Proceeds from issuance of common units, net of underwriters' discount — 132,327

Payments on other financing agreements — ( 6,214 )

2 unchanged sentences

Net cash provided by (used in) financing activities 199,940 ( 28,080 )

Net increase (decrease) in cash and cash equivalents 3,562 ( 3,788 )

Net (decrease) increase in cash and cash equivalents ( 3,277 ) 5,917

Cash and cash equivalents at the beginning of the period 5,384 3,755

Cash and cash equivalents at the end of the period $ 2,107 $ 9,672

Three Months Ended March 31,

Supplemental disclosures of cash flow information:

Cash paid during the period for:

Interest expense $ 95,267 $ 89,524

Income taxes $ — $ 20

Interest $ 54,623 $ 28,503

Non-cash investing activities:

Equity attributable to W2W Holdings Acquisition $ ( 62,783 ) $ —

Forgiveness of related party receivable in connection with W2W Holdings Acquisition $ 60,000 $ —

Preferred units issued in connection with H2O Acquisition $ 70,000 $ —

Common units issued in connection with Gravity Acquisition $ 91,511 $ —

Increase in accrued capital expenditures $ 16,469 $ 3,910

11 unchanged sentences

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

On August 5, 2024, the Partnership acquired Permian Pipeline Holdings, LLC, which holds 50 % equity interests in Wink to Webster Holdings, LLC ("W2W Holdings"), (the "W2W Investment") from a wholly owned subsidiary of Delek Holdings.

W2W Holdings includes a 15.6 % indirect interest in the Wink to Webster Pipeline, LLC joint venture ("Wink to Webster"), and related joint venture indebtedness.

Wink to Webster owns and operates a long-haul crude oil pipeline system with origin points at Wink and Midland in the Permian Basin and delivery points at multiple Houston area locations.

On September 11, 2024, the Partnership completed the acquisition of 100 % of the limited liability company interests in H2O Midstream Intermediate, LLC, H2O Midstream Permian LLC, and H2O Midstream LLC (the “H2O Midstream Acquisition”) from H2O Midstream Holdings, LLC (the “Seller").

The acquisition included water disposal and recycling operations in the Midland Basin in Texas.

On January 2, 2025, we acquired 100 % of the limited liability company interests in Gravity Water Intermediate Holdings LLC from Gravity Water Holdings LLC (the "Seller") related to the Seller's water disposal and recycling operations in the Permian Basin and the Bakken (the “Gravity Acquisition”).

See Note 2 for further information.

8 unchanged sentences

Operating results for the interim period should not be viewed as representative of results that may be expected for any future interim period or for the full year.

In accordance with ASC 842-20, Leases - Lessee ("ASC 842-20"), we classify leases with contractual terms longer than twelve months as either operating or finance.

Finance leases are generally those leases that are highly specialized or allow us to substantially utilize or pay for the entire asset over its useful life.

All other leases are classified as operating leases.

The Partnership leases land, buildings and various equipment primarily under operating lease arrangements, most of which provide the option, after the initial lease term, to renew the leases.

Some of these lease arrangements include fixed lease rate increases, while others include lease rate increases based upon such factors as changes, if any, in defined inflationary indices.

For all leases that include fixed rental rate increases, these are included in our fixed lease payments.

Our leases may include variable payments, based on changes on price or other indices, that are expensed as incurred.

The Partnership calculates the total lease expense for the entire noncancelable lease period, considering renewals for all periods for which it is reasonably certain to be exercised, and records lease expense on a straight-line basis in the accompanying consolidated statements of income.

Accordingly, a lease liability is recognized for these leases and is calculated to be the present value of the fixed lease payments, as defined by ASC 842-20, using a discount rate based on our incremental borrowing rate.

A corresponding right-of-use asset is recognized based on the lease liability and adjusted for certain costs and prepayments.

The right-of-use asset is amortized over the noncancelable lease period, considering renewals for all periods for which it is reasonably certain to be exercised.

For substantially all classes of underlying assets, we have elected the practical expedient not to separate lease and non-lease components, which allows us to combine the components if certain criteria are met.

Notes to the Condensed Consolidated Financial Statements (Unaudited)

As a lessor under ASC 842, the Partnership may be required to re-classify existing operating leases to sales-type leases upon modification and related reassessment of the leases.

The net investment in sales-type leases with related parties is recorded within lease receivable - affiliate and net lease investment - affiliate on the condensed consolidated balance sheets.

These amounts are comprised of the present value of the sum of the future minimum lease payments representing the value of the lease receivable and the unguaranteed residual value of the leased assets.

Management assesses the net investment in sales-type leases for recoverability quarterly.

See Note 12 for further information.

Accounting Pronouncements Adopted in 2024

ASU 2024-02, Codification Improvements - Amendments to Remove References to the Concepts Statements

In March 2024, the Financial Accounting Standards Board (“FASB”) issued Accounting Standards Update (“ASU”) 2024-02 Codification Improvements - Amendments to Remove References to the Concepts Statements ("ASU 2024-02"), which amends the Accounting Standards Codification ("Codification") to remove references to various concepts statements and impacts a variety of topics in the Codification.

The ASU is intended to simplify the Codification and draw a distinction between authoritative and non-authoritative literature.

ASU 2024-02 is effective for annual reporting periods beginning after December 15, 2024, with early adoption permitted and can be applied on either a prospective or retroactive basis.

This update did not have a material impact on our condensed consolidated financial statements and related disclosures.

Accounting Pronouncements Not Yet Adopted

ASU 2023-07, Segment Reporti ng (Topic 280):

Improvements to Reportable Segment Disclosures

In November 2023, the FASB issued ASU 2023-07 Segment Reporting (Topic 280):

Improvements to Reportable Segment Disclosures ("ASU 2023-07").

ASU 2023-07 expands reportable segment disclosure requirements by requiring disclosures of significant reportable segment expenses that are regularly provided to the chief decision maker ("CODM") and included within each reported measure of a segment's profit or loss, an amount and description of its composition for other segment items, and interim disclosures of a reportable segment's profit or loss and assets.

The ASU also requires disclosure of the title and position of the individual or the group identified as the CODM and an explanation of how the CODM uses the reported measures of a segment's profit or loss in assessing segment performance and deciding how to allocate resources.

ASU 2023-07 is effective for fiscal years beginning after December 15, 2023 and interim periods within fiscal years beginning after December 15, 2024, and should be applied retrospectively to all prior periods presented in the financial statements.

The adoption of ASU 2023-07 will result in additional segment reporting disclosure requirements but is not anticipated to have a significant impact on our condensed consolidated financial statements.

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 condensed consolidated statements, but does not currently expect adopting this new guidance will have a material impact on its condensed consolidated financial statements and related disclosures.

H2O Midstream Acquisition

We completed the H2O Midstream Acquisition on September 11, 2024, in which we acquired water disposal and recycling operations, in the Midland Basin in Texas (the "Midland Water Gathering System"), for total consideration of $ 229.5 million subject to customary adjustments for net working capital and indebtedness ("H2O Transaction").

The purchase price was comprised of approximately of $ 159.5 million in cash and $ 70.0 million of Preferred Units (as defined in Note 8).

See Note 8 for further information on Preferred Units.

The cash portion was financed through a combination of cash on hand and borrowings under the DKL Credit Facility (as defined in Note 6 ).

For the three and nine months ended September 30, 2024, we incurred $ 6.1 million 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 and comprehensive income for these periods.

Our consolidated financial and operating results reflect the H2O Midstream Acquisition operations beginning September 11, 2024.

Our results of operations included revenue and net income of $ 3.6 million and $ 1.3 million, respectively, for the period from September 11, 2024 through September 30, 2024 related to these operations.

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

Notes to Consolidated Financial Statements

ASU 2024-03, Income Statement - Reporting Comprehensive Income - Expense Disaggregation Disclosures (Subtopic 220-40)

In November 2024, the FASB issued ASU 2024-03, Income Statement - Reporting Comprehensive Income - Expense Disaggregation Disclosures (Subtopic 220-40) ("ASU 2024-03").

ASU 2024-03 requires disaggregation of expenses into specific categories such as purchase of inventory, employee compensation, depreciation, and intangible asset amortization, by relevant expense caption on the statement of operations.

This update is effective for fiscal years beginning after December 15, 2026, and interim periods within fiscal years beginning after December 15, 2027.

Early adoption is permitted on either a prospective or retrospective basis.

The adoption will not affect our financial position or our results of operations.

The adoption of ASU 2024-03 will not affect our financial position or our results of operations, but will result in additional disclosures.

Gravity Acquisition

On January 2, 2025, we completed the Gravity Acquisition for a preliminary purchase price of $ 300.8 million, subject to customary adjustments for net working capital.

The purchase price was comprised of $ 209.3 million in cash consisting of a cash deposit of $ 22.8 million paid in December 2024 upon execution of the purchase agreement and $ 186.5 million paid at closing on January 2, 2025 and 2,175,209 of common units.

For the three months ended March 31, 2025, we incurred $ 3.1 million 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 and comprehensive income.

Our consolidated financial and operating results reflect the Gravity Acquisition operations beginning January 2, 2025.

Our results of operations included revenue and net income of $ 22.9 million and $ 9.9 million, respectively, for the period from January 2, 2025 through March 31, 2025 related to these operations.

Notes to the Condensed Consolidated Financial Statements (Unaudited)

This acquisition was accounted for using the acquisition method of accounting, whereby the purchase price is measured at acquisition date fair value of assets acquired and liabilities assumed.

Determination of Purchase Price

1 unchanged sentence

Base purchase price:

closing net working capital (as defined in the H2O Midstream Purchase Agreement)

various closing adjustments

Adjusted Net Working Capital (as defined in the Gravity Acquisition Agreement)

V arious closing adjustments

Adjusted purchase price $ 300,808

Cash paid $ 209,297

Fair value of preferred units issued 70,000

Fair value of common units issued (1)

Preliminary purchase price $ 300,808

(1) These amounts are based upon estimates at closing, but are subject to a subsequent review and revision period pursuant to the H2O Midstream Acquisition agreement at which time final settlements for these components will be determined.

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

(1) The increase from the $ 85.0 million base purchase price outlined in the purchase agreement for the common unit consideration was driven by an appreciation in the common unit price.

Purchase Price Allocation

The following table summarizes the preliminary fair values of assets acquired and liabilities assumed in the H2O Midstream Acquisition as of September 11, 2024 (in thousands):

The following table summarizes the preliminary fair values of assets acquired and liabilities assumed in the Gravity Acquisition as of January 2, 2025 (in thousands):

Assets acquired:

Cash and cash equivalents $ 5,317

Accounts receivables 16,433

15 unchanged sentences

Fair value of net assets acquired $ 300,808

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

• Rights-of-way intangibles valued at $ 30.1 million, of which, the majority has an indefinite life.

• Favorable supply contract intangible that is subject to amortization with a preliminary fair value of $ 4.8 million which will be amortized over a 4.8 years useful life.

The estimated amortization is $ 1.0 million for each of the next four fiscal years, and $ 0.4 million in the fifth succeeding fiscal year.

• The Customer relationship intangible that is subject to amortization with a preliminary fair value of $ 24.0 million, which will be amortized over an 12.6 years useful life.

The estimated amortization is $ 1.9 million for each of the five succeeding fiscal years.

The amortization expense related to the above intangible assets for the three and nine months ended September 30, 2024 was immaterial.

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

To the extent possible, estimates have been considered and recorded, as appropriate, for the items above based on the information available as of September 30, 2024.

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

Notes to Consolidated Financial Statements

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

• Customer relationship intangible that is subject to amortization with a preliminary fair value of $ 50.7 million, which we estimate to be amortized over 10 to 25 years.

• Rights-of-way intangibles are valued at $ 31.9 million, the majority of which have an indefinite life.

Notes to the Condensed Consolidated Financial Statements (Unaudited)

To the extent possible, estimates have been considered and recorded, as appropriate, for the items above based on the information available as of March 31, 2025.

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

5 unchanged sentences

Unaudited Pro Forma Financial Information

The following table summarizes the unaudited pro forma financial information of the Partnership assuming the H2O Midstream Acquisition had occurred on January 1, 2023.

The following table summarizes the unaudited pro forma financial information of the Partnership assuming the Gravity Acquisition had occurred on January 1, 2024.

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

3 unchanged sentences

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

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

2024 2023 2024 2023

Three Months Ended March 31,

(in thousands)

1 unchanged sentence

Net income attributable to partners $ 42,134 $ 38,148

Wink to Webster Pipeline Investment Acquisition

On August 5, 2024, the Partnership acquired Permian Pipeline Holdings, LLC, which holds 50 % equity interests in W2W Holdings, from a wholly owned subsidiary of Delek Holdings.

W2W Holdings includes a 15.6 % indirect interest in Wink to Webster, and related joint venture indebtedness.

Wink to Webster owns and operates a long-haul crude oil pipeline system with origin points at Wink and Midland in the Permian Basin and delivery points at multiple Houston area locations.

Total consideration was comprised of $ 83.9 million in cash (including $ 2.7 million post-closing adjustment), forgiveness of a $ 60.0 million receivable from Delek Holdings and 2,300,000 of common units representing limited partnership interest in us.

This acquisition was considered a transaction between entities under common control.

Accordingly, the equity interests acquired were recorded at amounts based on Delek Holdings' historical carrying value as of the acquisition date.

The carrying value of the equity interests as of the acquisition date was $ 81.1 million.

Pursuant to common control guidance, we recorded a reduction to equity of $ 62.8 million, included in contributions in the accompanying condensed consolidated statements of partners' equity, representing the net carrying amount of the equity interest acquired less the consideration paid.

No value was assigned to the 2,300,000 common units issued.

Prior periods have not been recast as these assets do not constitute a business in accordance with ASC 805, Business Combinations .

H2O Midstream Acquisition

On September 11, 2024, we completed an acquisition in which we acquired 100 % of the limited liability company interests in H2O Midstream Intermediate, LLC, H2O Midstream Permian LLC, and H2O Midstream LLC ("H2O Midstream Acquisition") from H2O Midstream Holdings, LLC.

The H2O Midstream Acquisition included water disposal and recycling operations in the Midland Basin in Texas, for total consideration of $ 229.7 million, subject to customary adjustments for net working capital.

The purchase price was comprised of $ 159.7 million in cash and $ 70.0 million of preferred units (“Preferred Units”).

The cash portion was financed through a combination of cash on hand and borrowings under the DKL Credit Facility (as defined in Note 6 ).

For the three months ended March 31, 2025, we incurred $ 0.1 million 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 and comprehensive income.

Our results of operations included revenue and net income of $ 16.5 million and $ 7.1 million, respectively, for the three months ended March 31, 2025 related to these operations.

This acquisition was accounted for using the acquisition method of accounting, whereby the purchase price is measured at acquisition date fair value of assets acquired and liabilities assumed.

Notes to the Condensed Consolidated Financial Statements (Unaudited)

Determination of Purchase Price

The table below presents the estimated purchase price (in thousands):

Base purchase price:

Adjusted Net Working Capital (as defined in the H2O Midstream Acquisition Agreement)

various closing adjustments

Adjusted purchase price $ 229,735

Cash paid $ 159,735

Fair value of Preferred Units issued 70,000

Preliminary purchase price $ 229,735

Purchase Price Allocation

The following table summarizes the preliminary fair values of assets acquired and liabilities assumed in the H2O Midstream Acquisition as of September 11, 2024 (in thousands):

Assets acquired:

Accounts receivables $ 6,644

Inventories 2,448

Other current assets 879

Property, plant and equipment 172,374

Operating lease right-of-use assets 2,058

Customer relationship intangible (1)

Other intangibles (1)

Other non-current assets 21

Total assets acquired 243,962

Liabilities assumed:

Accounts payable 1,833

Accrued expenses and other current liabilities 7,045

Current portion of operating lease liabilities 278

Asset retirement obligations 4,852

Operating lease liabilities, net of current portion 219

Total liabilities assumed 14,227

Fair value of net assets acquired $ 229,735

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

• Customer relationship intangible that is subject to amortization with a preliminary fair value of $ 26.3 million, which will be amortized over an 13.4 years useful life.

• Rights-of-way intangibles are valued at $ 28.5 million, which have an indefinite life.

• Favorable supply contract intangible that is subject to amortization with a preliminary fair value of $ 4.8 million which will be amortized over a 4.8 years useful life.

To the extent possible, estimates have been considered and recorded, as appropriate, for the items above based on the information available as of March 31, 2025.

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

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

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

Customer relationships were valued using the income approach, with essential assumptions including projected revenues from these relationships, attrition rates, operating margins, and discount rates.

Notes to the Condensed Consolidated Financial Statements (Unaudited)

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

For all other current assets and payables, their fair values were considered equivalent to their carrying amounts due to their short-term nature.

By acquiring Gravity and H20 Midstream, we intend to increase third-party revenue streams, diversify our customer and product mix, and expand our footprint in the Midland and Bakken basins, aligning with our strategic growth objectives.

Related Party Transactions

4 unchanged sentences

Under each of these agreements, we are required to maintain the capabilities of our pipelines and terminals, such that Delek Holdings may throughput and/or store, as the case may be, specified volumes of crude oil, intermediate and refined products.

Notes to Consolidated Financial Statements

See our Annual Report on Form 10-K for a more complete description of our material commercial agreements and other agreements with Delek Holdings.

On August 5, 2024, the Partnership amended and extended expired, or soon to be expired, commercial agreements with subsidiaries of Delek Holdings under which we provide various services, including crude oil gathering and crude oil, intermediate and refined products transportation and storage services, and marketing, terminalling and offloading services to Delek Holdings.

These amendments required the embedded leases within these agreements to be reassessed under ASC 842.

As a result, certain leases were reclassified from operating leases to sales-type leases (see Note 12 for further information on sales-type leases).

These agreements have an initial term of five to seven years , with the ability to extend for an additional five years at Delek Holdings' option and were effective as of July 1, 2024.

Certain of these contracts had rate adjustments to be phased in over 2025 and 2026.

In addition, on August 5, 2024, the Partnership entered into an assignment agreement with Delek Holdings to assign its rights and obligations under the Big Spring Refinery Marketing Agreement to Delek Holdings.

As consideration for this agreement, the Partnership redeemed 2,500,000 common units representing limited partnership interest in us held by Delek Holdings.

Associated with such marketing agreement was a contract intangible with a carrying value of $ 97.9 million at the closing date of the assignment.

This intangible was transferred to Delek Holdings in conjunction with the assignment.

Other Agreements with Delek Holdings

3 unchanged sentences

The Omnibus Agreement governs the provision of certain operational services and reimbursement obligations, among other matters, between the Partnership and Delek Holdings, and obligates us to pay an annual fee of $ 4.4 million to Delek Holdings for its provision of centralized corporate services to the Partnership.

On August 5, 2024 we entered into an amended and restated Omnibus Agreement with Delek Holdings that provides Delek Holdings an option to purchase certain critical assets from us at market value during the period beginning upon any change in control or sale of substantially all assets involving us and extending (i) in the case of a transaction involving a third party, for six months following closing, and (ii) for any other transaction, for four years following closing.

On August 5, 2024, the Partnership entered into an amended and restated Omnibus Agreement with Delek Holdings that provides Delek Holdings an option to purchase certain critical assets from us at market value during the period beginning upon any change in control or sale of substantially all assets involving us and extending (i) in the case of a transaction involving a third party, for six months following closing, and (ii) for any other transaction, for four years following closing.

On May 1, 2025, the Partnership entered into an amended and restated Omnibus Agreement with Delek Holdings that provides for an increase in the Administrative Fee (as defined therein), which will be phased in over the two years beginning July 1, 2025, and a binding obligation for both parties to enter into transition services agreements in the event of a change in control.

Pursuant to the terms of the Omnibus Agreement, we are reimbursed by Delek Holdings for certain capital expenditures.

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 were no reimbursements by Delek Holdings during each of three and nine months periods ended September 30, 2024 or the three and nine month periods ended September 30, 2023.

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 September 30, 2024 and December 31, 2023, there was no receivable from related parties for these matters.

There were no reimbursements by Delek Holdings during the three months ended March 31, 2025 and 2024.

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 Agreeme nt.

As of March 31, 2025 and December 31, 2024, there was no receivable from related parties for these matters.

These reimbursements are recorded as reductions to operating expense.

There were no reimbursements for these matters in each of the three and nine month periods ended September 30, 2024 or the three and nine month periods ended September 30, 2023.

There were no reimbursements for these matters in each of the three month periods ended March 31, 2025 and 2024.

Notes to the Condensed Consolidated Financial Statements (Unaudited)

Other Transactions

4 unchanged sentences

The agreement extends through December 2025.

Total fees paid to the Partnership were $ 0.4 million for both the three months ended September 30, 2024 and 2023 and $ 1.2 million for both the nine months ended September 30, 2024 and 2023, which are recorded in affiliate revenue in our accompanying condensed consolidated statements of income and comprehensive income.

Total fees paid to the Partnership were $ 0.4 million for both the three months ended March 31, 2025 and 2024, which are recorded in affiliate revenue in our accompanying condensed consolidated statements of income and comprehensive 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.

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.

On May 2, 2024, the Boards of Directors of Delek Holdings and our general partner authorized the termination of the intercompany loan agreement between Delek Holdings and the Partnership, which was effective on May 31, 2024.

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

Notes to Consolidated Financial Statements

Summary of Transactions

5 unchanged sentences

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

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

2024 2023 2024 2023

Three Months Ended March 31,

Revenues $ 126,321 $ 139,625

Interest income $ 23,442 $ — $ 23,442 $ —

Purchases $ 84,015 $ 115,149 $ 279,962 $ 298,262

Interest income from sales-type leases $ 22,547 $ —

Purchases from Affiliates $ 89,966 $ 92,882

Operating and maintenance expenses

6 unchanged sentences

May 15, 2025 (1)

August 14, 2024

November 14, 2024 (1)

Total $ 75,287

1 unchanged sentence

May 15, 2024 36,713

August 14, 2023

November 13, 2023 35,855

Total $ 72,911

(1) On October 29, 2024, the board of directors of our general partner declared this quarterly cash distribution based on the available cash as of the date of determination.

Distributions paid are estimated based on common units held by Delek Holdings as of September 30, 2024.

Notes to Consolidated Financial Statements

(1) On April 28, 2025, the board of directors of our general partner declared this quarterly cash distribution based on the available cash as of the date of determination.

Distributions paid are estimated based on common units held by Delek Holdings as of March 31, 2025.

Notes to the Condensed Consolidated Financial Statements (Unaudited)

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 September 30, 2024

Gathering and Processing Wholesale Marketing and Terminalling Storage and Transportation Consolidated

Service Revenue - Third Party $ 19,331 $ — $ 2,298 $ 21,629

Service Revenue - Affiliate (1)

8,481 2,216 13,669 24,366

Product Revenue - Third Party 22,286 55,256 — 77,542

Product Revenue - Affiliate 5,121 31,887 — 37,008

Lease Revenue - Affiliate 26,308 17,579 9,638 53,525

Total Revenue $ 81,527 $ 106,938 $ 25,605 $ 214,070

Three Months Ended September 30, 2023

Gathering and Processing Wholesale Marketing and Terminalling Storage and Transportation Consolidated

Service Revenue - Third Party $ 14,929 $ — $ 3,507 $ 18,436

Service Revenue - Affiliate (1)

1,743 13,975 9,723 25,441

Product Revenue - Third Party 24,477 76,500 — 100,977

Product Revenue - Affiliate 3,776 43,475 — 47,251

Lease Revenue - Affiliate 49,900 13,160 20,659 83,719

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

Nine Months Ended September 30, 2024

Three Months Ended March 31, 2025

Gathering and Processing Wholesale Marketing and Terminalling Storage and Transportation Consolidated

6 unchanged sentences

Total Revenue $ 118,603 $ 106,699 $ 24,628 $ 249,930

Nine Months Ended September 30, 2023

Three Months Ended March 31, 2024

Gathering and Processing Wholesale Marketing and Terminalling Storage and Transportation Consolidated

7 unchanged sentences

Total Revenue $ 95,883 $ 119,270 $ 36,922 $ 252,075

(1) Net of $ 0.6 million and $ 4.2 million of amortization expense for the three and nine months ended September 30, 2024, respectively and $ 1.8 million and $ 5.4 million for the three and nine months ended September 30, 2023, respectively, related to marketing contract intangible recorded in the wholesale marketing and terminalling segment.

As of September 30, 2024, we expect to recognize approximately $ 1.1 billion in service 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 for the three months ended March 31, 2024, related to marketing contract intangible recorded in the wholesale marketing and terminalling segment.

For the three months ended March 31, 2025, no amortization was recorded related to this intangible, as the associated agreement was terminated on August 5, 2024.

As of March 31, 2025, we expect to recognize approximately $ 1.0 billion in service 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.

Notes to Consolidated Financial Statements

Our unfulfilled performance obligations as of September 30, 2024 were as follows (in thousands):

Our unfulfilled performance obligations as of March 31, 2025 were as follows (in thousands):

Remainder of 2025 $ 161,055

2 unchanged sentences

Net Income per Unit

We use the two-class method when calculating the net income per unit applicable to limited partners, because we have more than one participating class of securities.

Our participating securities consist of common units and preferred units.

The two-class method is based on the weighted-average number of common units outstanding during the period.

Basic net income per unit applicable to common limited partners is computed by dividing limited partners’ interest in net income allocated to participating securities by the weighted-average number of outstanding common units.

Undistributed earnings are allocated to our preferred unitholders and limited partners based on their respective ownership interests.

During a period of net loss or negative undistributed earnings, the two-class method is not applicable.

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

As of September 30, 2024, the only potentially dilutive units outstanding consist of unvested phantom units.

Basic net income per unit is computed by dividing net income by the weighted-average number of outstanding common units.

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

For the three months ended March 31, 2025 and 2024, potentially dilutive units outstanding consist of unvested phantom units.

Notes to the Condensed Consolidated Financial Statements (Unaudited)

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

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

2024 2023 2024 2023

Net income attributable to partners $ 33,674 $ 34,825 $ 107,380 $ 104,088

Limited partners' distribution declared on common units 51,263 45,112 147,794 134,216

Undistributed net loss $ ( 17,589 ) $ ( 10,287 ) $ ( 40,414 ) $ ( 30,128 )

Limited partners' earnings on common units:

Distributions $ 51,263 $ 45,112 $ 147,794 $ 134,216

Allocation of undistributed net loss ( 17,589 ) ( 10,287 ) ( 40,414 ) ( 30,128 )

Total limited partners' earnings on common units $ 33,674 $ 34,825 $ 107,380 $ 104,088

Weighted average limited partner units outstanding, basic 47,109,008 43,588,316 46,248,003 43,578,636

Three Months Ended March 31,

Net income $ 39,034 $ 32,648

Weighted average common units outstanding, basic 53,604,659 44,406,356

Dilutive effect of unvested phantom units 29,177 16,461

Weighted average limited partner units outstanding, diluted 47,135,101 43,604,792 46,269,423 43,598,547

Net income per limited partner unit:

Weighted average common units outstanding, diluted 53,633,836 44,422,817

Net income per unit:

Basic $ 0.73 $ 0.74

$ 0.73 $ 0.73

(1) There were 24,506 anti-dilutive common unit equivalents excluded from the diluted earnings per unit calculation during both three and nine months ended September 30, 2024.

There were 48,597 and 35,519 anti-dilutive common unit equivalents excluded from the diluted earnings per unit calculation during the three and nine months ended September 30, 2023, respectively.

Notes to Consolidated Financial Statements

(1) There were 28,692 and 42,315 anti-dilutive common unit equivalents excluded from the diluted earnings per unit calculation during the three months ended March 31, 2025 and 2024, respectively.

Long-Term Obligations

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

September 30, 2024 December 31, 2023

March 31, 2025 December 31, 2024

DKL Revolving Facility $ 705,100 $ 435,400

DKL Term Facility — 281,250

2029 Notes 1,050,000 1,050,000

2028 Notes 400,000 400,000

2025 Notes — 250,000

Principal amount of long-term debt 2,155,100 1,885,400

1 unchanged sentence

Total debt, net of unamortized discount and premium and deferred financing costs $ 2,145,730 $ 1,875,397

Current portion of long-term debt and notes payable — 30,000

Long-term debt, net of current portion $ 1,894,257 $ 1,673,789

DKL Credit Facility

On October 13, 2022, the Partnership entered into a senior secured term loan with an original principal of $ 300.0 million (the "DKL Term Loan Facility").

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

On October 13, 2022, the Partnership entered into a senior secured term loan with Fifth Third, as administrative agent and a syndicate of lenders with an original principal of $ 300.0 million (the "DKL Term Loan Facility").

The outstanding principal balance of $ 281.3 million was paid on March 13, 2024 from a portion of the proceeds received with the issuance of the 2029 Notes as indicated below.

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

dollar prime rate, plus an applicable margin.

The applicable margin was 2.50 % for the first year of the DKL Term Loan Facility and 3.00 % for the second year for U.S.

dollar prime rate borrowings.

SOFR rate borrowings included 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 December 31, 2023, the weighted average borrowing rate was approximately 9.46 %.

Debt extinguishment costs were $ 2.1 million and are recorded in interest expense, net in the accompanying condensed consolidated statements of income and comprehensive income.

Debt extinguishment costs were $ 2.1 million for the three months ended March 31, 2024 and were recorded in interest expense in the accompanying condensed consolidated statements of income and comprehensive income.

On March 29, 2024, the Partnership entered into a Fourth Amendment to the amended and restated senior secured revolving credit agreement (the "DKL Revolving Facility") which among other things increased the U.S.

1 unchanged sentence

This facility has a maturity date of October 13, 2027.

The DKL Revolving Facility requires a quarterly unused commitment fee based on average commitment usage, currently at 0.40 % 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 September 30, 2024 and December 31, 2023, the weighted average interest rate was 7.70 % and 8.46 %, respectively.

There were no letters of credit outstanding as of September 30, 2024 or December 31, 2023.

As of March 31, 2025 and December 31, 2024, the weighted average interest rate was 7.19 % and 7.27 %, respectively.

There were no letters of credit outstanding as of March 31, 2025 or December 31, 2024.

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

The carrying value of outstanding borrowings under the DKL Revolving Facility as of September 30, 2024 and December 31, 2023 approximate their fair values.

The carrying value of outstanding borrowings under the DKL Revolving Facility as of March 31, 2025 and December 31, 2024 approximate their fair values.

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

As of September 30, 2024, 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 provided 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 bore interest at Term SOFR (as defined in the Related Party Revolving Credit Facility) plus 3.00 %.

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

Notes to Consolidated Financial Statements

On March 13, 2024, the Partnership and our wholly owned subsidiary Delek Logistics Finance Corp.

("Finance Corp." and together with the Partnership, the "Issuers") sold $ 650.0 million in aggregate principal amount of 8.625 % senior notes due 2029 (the "2029 Notes") at par, pursuant to an indenture with U.S.

Bank Trust Company, National Association as trustee.

Net proceeds were used to redeem the 2025 Notes including accrued interest, pay off the DKL Term Facility including accrued interest and to repay a portion of the outstanding borrowings under the DKL Revolving Facility.

On April 17, 2024, the Issuers sold $ 200.0 million in aggregate principal amount of additional 8.625 % senior notes due 2029 at 101.25 % and on August 16, 2024, the Issuers sold $ 200.0 million in aggregate principal amount of additional 8.625 % senior notes due 2029, at 103.25 % (collectively, the "Additional 2029 Notes").

The Additional 2029 Notes were issued under the same indenture as the 2029 Notes and formed a part of the same series of notes as the 2029 Notes.

The net proceeds were used to repay a portion of the outstanding borrowings under the DKL Revolving Facility.

The 2029 Notes are general unsecured senior obligations of the Issuers and are unconditionally guaranteed jointly and severally on a senior unsecured basis by the Partnership's subsidiaries other than Finance Corp., and will be unconditionally guaranteed on the same basis by certain of the Partnership’s future subsidiaries.

The 2029 Notes rank equal in right of payment with all existing and future senior indebtedness of the Issuers, and senior in right payment to any future subordinated indebtedness of the Issuers.

The 2029 Notes will mature on March 15, 2029, and interest on the 2029 Notes is payable semi-annually in arrears on each March 15 and September 15, commencing September 15, 2024.

At any time prior to March 15, 2026, the Issuers may redeem up to 35 % of the aggregate principal amount of the 2029 Notes with the net cash proceeds of one or more equity offerings by the Partnership at a redemption price of 108.625 % of the redeemed principal amount, plus accrued and unpaid interest, if any, subject to certain conditions and limitations.

Prior to March 15, 2026, the Issuers may also redeem all or part of the 2029 Notes at a redemption price of the principal amount plus accrued and unpaid interest, if any, plus a "make whole" premium, subject to certain conditions and limitations.

In addition, beginning on March 15, 2026, the Issuers may, subject to certain conditions and limitations, redeem all or part of the 2029 Notes, at a redemption price of 104.313 % of the redeemed principal for the twelve-month period beginning on March 15, 2026, 102.156 % for the twelve-month period beginning on March 15, 2027, and 100.00 % beginning on March 15, 2028 and thereafter, plus accrued and unpaid interest, if any.

In the event of a change of control, subject to certain conditions and limitations, the Issuers will be obligated to make an offer for the purchase of the 2029 Notes from holders at a price equal to 101.00 % of the principal amount thereof, plus accrued and unpaid interest.

We recorded $ 17.5 million of debt issuance costs which will be amortized over the term of the 2029 Notes and included in interest expense in the accompanying condensed consolidated statements of income and comprehensive income.

The premium recognized for the Additional 2029 Notes was $ 9.0 million which will be amortized over the term of the 2029 Notes and included in interest expense in the accompanying condensed consolidated statements of income and comprehensive income.

As of September 30, 2024, the effective interest rate was 8.90 %.

The estimated fair value of the 2029 Notes was $ 1,105.3 million as of September 30, 2024, measured based upon quoted market prices in an active market, defined as Level 1 in the fair value hierarchy.

As of March 31, 2025, we were in compliance with covenants on all of our debt instruments.

Our 2029 Notes are general unsecured senior obligations comprised of $ 1,050.0 million in aggregate principal 8.625 % senior notes maturing on March 15, 2029.

The 2029 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 March 31, 2025, the effective interest rate was 8.81 %.

The estimated fair value of the 2029 Notes was $ 1,088.7 million and $ 1,086.9 million as of March 31, 2025 and December 31, 2024, respectively, measured based upon quoted market prices in an active market, defined as Level 1 in the fair value hierarchy.

Notes to the Condensed Consolidated Financial Statements (Unaudited)

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 September 30, 2024, the effective interest rate was 7.38 %.

The estimated fair value of the 2028 Notes was $ 401.8 million and $ 380.4 million as of September 30, 2024 and December 31, 2023, 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.

As of March 31, 2025, the effective interest rate was 7.38 %.

The estimated fair value of the 2028 Notes was $ 400.2 million and $ 399.1 million as of March 31, 2025 and December 31, 2024, respectively, measured based upon quoted market prices in an active market, defined as Level 1 in the fair value hierarchy.

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

Concurrent with the issuance of the 2029 Notes, the Partnership made a cash tender offer (the "Offer") for all of the outstanding 2025 Notes with a conditional notice of full redemption for the remaining balance not received from the Offer.

1 unchanged sentence

All the remaining 2025 Notes were redeemed by March 29, 2024, pursuant to the notice of conditional redemption.

Debt extinguishment costs were $ 1.5 million and are recorded in interest expense, net in the accompanying condensed consolidated statements of income and comprehensive income.

The estimated fair value of the 2025 Notes was $ 248.7 million as of December 31, 2023, measured based upon quoted market prices in an active market, defined as Level 1 in the fair value hierarchy.

Notes to Consolidated Financial Statements

On March 12, 2024, we completed a public offering of its common units in which it sold 3,584,416 common units (including an overallotment option of 467,532 common units) to the underwriters of the offering at a price to the public of $ 38.50 per unit.

The net proceeds received from this offering (net of underwriting discounts, commissions and expenses) were $ 132.2 million and were used to repay a portion of the outstanding borrowings under the DKL Revolving Facility.

Underwriting discounts totaled $ 5.5 million.

On October 10, 2024, we completed a public offering of its common units in which it sold 4,423,075 common units (including an overallotment option of 576,922 common units) to the underwriters of the offering at a price to the public of $ 39.00 per unit.

The net proceeds received from this offering (net of underwriting discounts, commissions and expenses) were $ 165.3 million and were used to redeem the Preferred Units (defined below) and repay a portion of the outstanding borrowings under the DKL Revolving Facility.

Underwriting discounts totaled $ 6.6 million.

Debt extinguishment costs were $ 1.5 million for the three months ended March 31, 2024 and were recorded in interest expense in the accompanying condensed consolidated statements of income and comprehensive income for the three months ended March 31, 2024.

Notes to the Condensed Consolidated Financial Statements (Unaudited)

Equity Activity

The table below summarizes the changes in the number of limited partner units outstanding from December 31, 2023 through September 30, 2024.

The table below summarizes the changes in the number of limited partner units outstanding from December 31, 2024 through March 31, 2025.

Common - Public Common - Delek Holdings (1)

2 unchanged sentences

14,934 — 14,934

Equity offering units issued 3,584,416 — 3,584,416

Redemption of units associated with BSR Marketing Agreement — ( 2,500,000 ) ( 2,500,000 )

Issuance of units in connection with W2W Acquisition — 2,300,000 2,300,000

Balance at September 30, 2024 12,932,311 34,111,278 47,043,589

(1) As of September 30, 2024, Delek Holdings owned a 70.4 % interest in the Partnership (on an as-converted basis).

(2) Unit-based compensation awards are presented net of 18,976 units withheld for taxes for nine months ended September 30, 2024.

Issuance of units in connection with Gravity Acquisition 2,175,209 — 2,175,209

Unit repurchase — ( 243,075 ) ( 243,075 )

Balance at March 31, 2025 19,564,761 33,868,203 53,432,964

(1) As of March 31, 2025, Delek Holdings owned a 63.4 % interest in the Partnership.

(2) Unit-based compensation awards are presented net of 6,976 units withheld for taxes for three months ended March 31, 2025.

Unit Repurchase

On February 24, 2025, the Partnership and Delek Holdings entered into a Common Unit Purchase Agreement (the “Common Unit Purchase Agreement”) whereby the Partnership may repurchase common units from time to time from Delek Holdings in one or more transactions for an aggregate purchase price of up to $ 150.0 million through December 31, 2026 (each such repurchase, a “Repurchase”).

The purchase price per common unit in each Repurchase will be the 30-day volume weighted average price of the common units at the close of trading on the day prior to the closing date subject to certain limitations set forth in the Common Unit Purchase Agreement.

The Partnership may fund Repurchases using cash on hand or borrowings under its existing credit facility, subject to compliance with applicable covenants.

During the three months ended March 31, 2025, 243,075 common units were repurchased from Delek Holdings and cancelled at the time of the transaction for a total of $ 10.0 million.

No common units were repurchased for the three months ended March 31, 2024.

As of March 31, 2025, there was $ 140.0 million of authorization remaining under the Common Unit Repurchase Agreement.

Cash Distributions

3 unchanged sentences

Quarter Ended Total Quarterly Distribution Per Limited Partner Unit Total Cash Distribution (in thousands)

December 31, 2023 $ 1.055 $ 46,010

March 31, 2024 $ 1.070 $ 50,521

1 unchanged sentence

September 30, 2024 $ 1.100 $ 56,613

December 31, 2024 $ 1.105 $ 59,302

March 31, 2025 (1)

June 30, 2024 $ 1.090 $ 51,263

September 30, 2024 (1)

$ 1.110 $ 59,311

(1) On October 29, 2024, the board of directors of our general partner declared this quarterly cash distribution, payable on November 14, 2024, to unitholders of record on November 8, 2024.

The total cash distribution is estimated based on the number of common units outstanding as of September 30, 2024.

Preferred Units

On September 11, 2024 (the “Closing Date”), the Partnership issued 70,000 preferred units (“Preferred Units”) in connection with the Partnership’s acquisition of H2O Midstream for an amount equal to $ 70.0 million.

Preferred Unit Distribution Rights

Preferred Units rank senior to all common units with respect to distributions and rights upon liquidation.

The holders of the Preferred Units are entitled to receive, when and if declared by the board, a quarterly distribution equal to the amount of distributions they would have received on an as converted basis at a price of $ 41.04 , including any special distributions made to common unitholders.

Preferred Unit Conversion and Redemption

The holders may convert their Preferred Units into common units at any time, in whole or part, at a conversion price of $ 49.25 per common unit.

If the Partnership completes an underwritten public common unit offering, the Partnership may convert the Preferred Units into common units at any time, in whole or part, at a conversion price of $ 41.04 per common unit.

Notes to Consolidated Financial Statements

At any time, the Partnership may redeem, in whole or part, the Preferred Units at a redemption price of $ 1,000 per Preferred Unit plus the amount of accrued but unpaid distributions and a make whole amount, to be settled in cash.

In addition, at any time prior to October 31, 2027, if the Partnership completes an offering of common units or Preferred Units, the Partnership shall redeem an amount of the Preferred Units not to exceed the amount equal to the net cash proceeds to the Partnership from such offering, after deducting underwriting discounts and commissions and offering expenses payable by the Partnership at a redemption price of $ 1,000 per Preferred Unit plus the amount of accrued but unpaid distributions and a make whole amount.

At any time on or after (i) December 31, 2027;

(ii) the date the Partnership defaults on existing or future indebtedness;

(iii) the date the Partnership fails to pay the quarterly distribution;

or (iv) the occurrence of a Fundamental Event (as defined in the Agreement Of Limited Partnership), the holder of the Preferred Units will have the right to cause the Partnership to redeem, in whole or in part, the Preferred Units at a redemption price equal to the $ 1,000 per Preferred Unit, to be settled in cash.

Preferred Unit Voting Rights

The holders of Preferred Units are entitled to vote on an as-converted basis with the common unitholders.

Financial Statement Presentation

Preferred units are considered redeemable securities under GAAP due to the existence of redemption provisions upon a deemed liquidation event, which is outside the Partnership’s control.

Therefore, they are presented as temporary equity in the mezzanine section of the condensed consolidated balance sheets.

The Preferred Units have been recorded at their issuance date fair value.

Income allocations increase the carrying value and declared distributions decrease the carrying value of the Preferred Units.

For a summary of changes in the Preferred Units balance for 2024, see the condensed consolidated statements of partners' equity (deficit).

Redemption of Preferred Units

As a result of our public offering of common units completed on October 10, 2024, the Partnership redeemed all 70,000 of the Preferred Units for at a redemption price of $ 1,000 per unit.

Total redemption payment was $ 70.8 million, including payment made for pro-rata distribution.

(1) On April 28, 2025, the board of directors of our general partner declared this quarterly cash distribution, payable on May 15, 2025, to unitholders of record on May 8, 2025.

The total cash distribution is estimated based on the number of common units outstanding as of March 31, 2025.

Equity Method Investments

The Partnership owns a 33 % membership interest in Red River Pipeline Company LLC ("Red River"), a joint venture operated with Plains Pipeline, L.P.

Red River owns a 16-inch crude oil pipeline running from Cushing, Oklahoma to Longview, Texas with capacity of 235,000 bpd.

The Partnership owns a 33 % membership interest in Red River Pipeline Company LLC ("Red River"), a joint venture operated with Plains Pipeline, L.P, which owns and operates a crude oil pipeline running from Cushing, Oklahoma to Longview, Texas.

Additionally, we have two pipeline joint ventures, in which we own a 50 % membership interest in the entity formed with an affiliate of Plains All American Pipeline, L.P.

1 unchanged sentence

On August 5, 2024, the Partnership acquired Permian Pipeline Holdings, LLC, which holds 50 % equity interests in W2W Holdings, from a wholly owned subsidiary of Delek Holdings.

W2W Holdings includes a 15.6 % indirect interest in the Wink to Webster joint venture, and related joint venture indebtedness.

Our interest in W2W Holdings includes a 15.6 % indirect interest in the Wink to Webster joint venture, and related joint venture indebtedness.

Notes to the Condensed Consolidated Financial Statements (Unaudited)

W2W Holdings was originally formed by Delek Holdings and MPLX Operations LLC to obtain financing and fund capital calls associated with its collective and contributed interests in Wink to Webster.

2 unchanged sentences

While we have the ability to exert significant influence through participation in board and management committees, we are not the primary beneficiary since we do not have a controlling financial interest in W2W Holdings, and no single party has the power to direct the activities that most significantly impact W2W Holdings' economic performance.

As of September 30, 2024, except for the guarantee of member obligations under the joint venture, we do not have other guarantees with or to W2W Holdings, nor any third-party associated with W2W Holdings contracted work.

Distributions received from WWP are first applied to service the debt of W2W Holdings wholly owned finance LLC, with excess distributions made to the W2W Holdings members as provided for in the W2W Holdings LLC Agreement and as allowed for under its debt agreements.

The obligations of the W2W Holdings members under the W2W Holdings LLC Agreement are guaranteed by the parents of the member entities.

As of March 31, 2025, except for the guarantee of member obligations under the joint venture, we do not have other guarantees with or to W2W Holdings, nor any third-party associated with W2W Holdings contracted work.

The Partnership's maximum exposure to any losses incurred by W2W Holdings is limited to its investment.

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

As of September 30, 2024 As of December 31, 2023

As of March 31, 2025 As of December 31, 2024

Red River $ 133,690 $ 136,455

3 unchanged sentences

Total Equity Method Investments $ 317,466 $ 317,152

Notes to Consolidated Financial Statements

We aggregate our operating segments into four reportable segments:

4 unchanged sentences

Operations that are not specifically included in the reportable segments are included in Corporate and other segment.

The Partnership defines its segments based on how internally reported financial information is regularly reviewed by its chief operating decision maker ("CODM") to analyze financial performance, make decisions and allocate resources.

The CODM is the President of the Partnership.

The CODM evaluates performance based on EBITDA for planning and forecasting purposes.

The CODM considers budget to actual variances on a monthly basis when making decisions about allocation of operating and capital resources to each segment.

EBITDA is an important measure used by management to evaluate the financial performance of our core operations.

3 unchanged sentences

Assets by segment are not a measure used to assess the performance of the Partnership by the CODM and thus is not disclosed.

Notes to the Condensed Consolidated Financial Statements (Unaudited)

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

Three Months Ended September 30, 2024

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

Net revenues:

Affiliate (1)

$ 39,910 $ 51,682 $ 23,307 $ — $ — $ 114,899

Third party 41,617 55,256 2,298 — — 99,171

Total revenue $ 81,527 $ 106,938 $ 25,605 $ — $ — $ 214,070

Segment EBITDA $ 42,380 $ 20,245 $ 7,526 $ 15,602 $ ( 16,572 ) $ 69,181

Depreciation and amortization 16,424 2,796 1,218 — 766 21,204

Amortization of customer contract intangible — 601 — — — 601

Interest income ( 11,531 ) ( 3,707 ) ( 8,232 ) — — ( 23,470 )

Interest expense — — — — 37,022 37,022

Income tax expense 150

Net income $ 33,674

Capital spending (2)

$ 62,086 $ 1,202 $ 1,910 $ — $ — $ 65,198

Three Months Ended September 30, 2023

Three Months Ended March 31, 2025

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

4 unchanged sentences

Total revenue 118,603 106,699 24,628 — — 249,930

Segment EBITDA $ 52,906 $ 28,135 $ 17,914 $ 9,288 $ ( 10,002 ) $ 98,241

Depreciation and amortization 19,263 1,769 2,704 — 849 24,585

Amortization of customer contract intangible — 1,803 — — — 1,803

Interest expense — — — — 36,901 36,901

Income tax expense 127

Net income $ 34,825

Capital spending (2)

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

Notes to Consolidated Financial Statements

Nine Months Ended September 30, 2024

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

Net revenues:

Affiliate (1)

Cost of materials and other 24,344 89,653 15,027 — 28 129,052

Operating expenses 30,581 3,799 5,161 — 1,444 40,985

Income from equity method investments — — — ( 10,150 ) — ( 10,150 )

Other segment items (2)

( 4,261 ) 10 26 — 8,782 4,557

Third party 126,061 186,345 7,015 — — 319,421

Total revenue $ 270,053 $ 361,808 $ 98,912 $ — $ — $ 730,773

Segment EBITDA $ 67,939 $ 13,237 $ 4,414 $ 10,150 $ ( 10,254 ) 85,486

Depreciation and amortization $ 24,723 $ 952 $ 1,281 $ — $ 760 27,716

Amortization of marketing contract intangible — 4,206 — — — 4,206

Interest income $ ( 11,365 ) $ ( 4,161 ) $ ( 7,021 ) $ — $ — ( 22,547 )

4 unchanged sentences

$ 71,311 $ 90 $ 542 $ — $ — $ 71,943

Nine Months Ended September 30, 2023

Three Months Ended March 31, 2024

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

4 unchanged sentences

Total revenue 95,883 119,270 36,922 — — 252,075

Cost of materials and other 17,869 91,904 13,893 — 27 123,693

Operating expenses 19,705 3,828 5,021 — 3,362 31,916

Income from equity method investments — — — ( 8,490 ) — ( 8,490 )

Other segment items (2)

550 ( 1,736 ) ( 119 ) — 4,760 3,455

Segment EBITDA $ 57,759 $ 25,274 $ 18,127 $ 8,490 $ ( 8,149 ) 101,501

6 unchanged sentences

$ 14,723 $ ( 84 ) $ 526 $ — $ — $ 15,165

(1) Affiliate revenue for the wholesale marketing and terminalling segment is presented net of amortization expense pertaining to the marketing contract intangible.

This intangible was assigned to Delek Holdings on August 5, 2024.

(1) Affiliate revenue for the wholesale marketing and terminalling segment is presented net of amortization expense pertaining to the marketing contract intangible of $ 1.8 million for the three months ended March 31, 2024.

There was no amortization recorded during the three months ended March 31, 2025 related to this intangible, as the associated agreement was terminated on August 5, 2024.

(2) Other segment items include general and administrative expense, other operating (income) loss and other income.

Additionally, the wholesale marketing and terminalling segment includes amortization of the marketing contract intangible for the three months ended March 31, 2024.

(3) Capital spending includes additions on an accrual basis.

Notes to the Condensed Consolidated Financial Statements (Unaudited)

Commitments and Contingencies

5 unchanged sentences

As a result of this expansion, two tanks owned by the Partnership were impacted.

This litigation was settled in the second quarter of 2024 and resulted in the Partnership recovering $ 8.3 million in condemnation proceeds, which are recorded in other operating income, net in the accompanying condensed consolidated statements of income and comprehensive income.

Notes to Consolidated Financial Statements

This litigation was settled in the second quarter of 2024 and resulted in the Partnership recovering $ 8.3 million in condemnation proceeds, which was recorded in other operating income, net in the condensed consolidated statements of income and comprehensive income.

In the first quarter of 2025, we recovered additional $ 4.3 million related to this settlement, which is recorded in other operating income, net in the accompanying condensed consolidated statements of income and comprehensive income.

Environmental, Health and Safety

1 unchanged sentence

These laws and regulations govern the discharge of materials into the environment, waste management practices and pollution prevention measures, as well as the safe operation of our pipelines and the safety of our workers and the public.

The State of New Mexico promulgated new regulations to limit emissions from oil and gas operations in 2022.

The cost to comply is not expected to be material.

Numerous permits or other authorizations are required under these laws and regulations for the operation of our terminals, pipelines, saltwells, trucks and related operations, and may be subject to revocation, modification and renewal.

5 unchanged sentences

We are the lessor under certain agreements for gathering, transportation, storage, terminalling, and offloading with Delek Holdings.

These agreements have remaining terms ranging from more than two years to more than 11 years with renewal options ranging from two years to 10 years, and some agreements have multiple renewal options.

Revenue from these leases are recorded in affiliate revenue in the condensed consolidated statements of income and comprehensive income.

1 unchanged sentence

Once a modification occurs, the amended agreement is required to be assessed under ASC 842, to determine whether a reclassification of the lease is required.

During the third quarter of 2024, we executed amendments to certain agreements between the Partnership and Delek Holdings.

The amendments required the embedded leases within these agreements to be reassessed under ASC 842.

As a result of these lease assessments, certain leases were reclassified from operating leases to sales-type leases.

Accordingly, the underlying property, plant and equipment, net, and associated deferred revenue, if any, were derecognized and the present value of the future lease payments and the unguaranteed residual value of the assets were recorded as a net investment in sales-type lease.

The net investment in sales-type leases is recorded utilizing the estimated fair value of the underlying leased assets at contract modification date and are nonrecurring fair value measurements.

1 unchanged sentence

We recognized any billings in excess of minimum volume requirements as variable lease payments, and these variable lease payments were recorded in lease revenues.

Notes to the Condensed Consolidated Financial Statements (Unaudited)

Lease income included in the condensed consolidated statements of income and comprehensive income were as follows:

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

Three Months Ended March 31,

(in thousands) 2025

5 unchanged sentences

Sales-type lease income $ 25,587

Notes to Consolidated Financial Statements

We recorded $ 83.7 million and $ 228.7 million in operating lease revenue for the three and nine months ended September 30, 2023, respectively.

We did not elect to use the practical expedient to combine lease and non-lease components for lessor arrangements.

The tables below represent the portion of the contracts allocated to the lease component based on relative standalone selling price.

The following presents the condensed consolidated financial statement impact of sales-type leases on commencement or modification date.

These transactions are non-cash transactions.

The amount recognized on commencement date was recorded in contributions in the condensed consolidated statements of partners' equity, given the underlying agreements are between entities under common control.

There were no amounts to report for the three and nine months ended September 30, 2023.

Three And Nine Months Ended September 30,

(in thousands) 2024

Lease receivables $ 206,633

Unguaranteed residual assets 9,111

Property, plant and equipment, net ( 102,088 )

Amount recognized on commencement date $ 113,656

The following is a schedule of annual undiscounted minimum future lease cash receipts on the non-cancellable operating leases as of September 30, 2024 (in thousands):

2024 $ 28,034

2029 and thereafter 82,853

Total minimum future lease revenue $ 497,435

Annual future minimum undiscounted lease receipts under our sales-type leases were as follows as of September 30, 2024 (in thousands):

2024 $ 28,971

2029 and thereafter 333,162

Total minimum future lease revenue 694,559

Imputed interest 494,094

Lease receivable (1)

Current lease receivables (2)

Long-term lease receivables (3)

Unguaranteed residual assets (3)

(1) This amount does not include the unguaranteed residual assets.

(2) Presented in Lease receivable - affiliate, in the condensed consolidated balance sheets.

(3) Presented in Net lease investment - affiliate in the condensed consolidated balance sheets.

Notes to Consolidated Financial Statements

The following table summarized our investment in assets held under operating lease by major classes (in thousands):

September 30,

Land $ 10,727 $ 12,306

Building and building improvements 1,755 3,582

Pipelines, tanks and terminals 431,488 623,961

Other equipment 2,145 3,768

Property, plant and equipment 446,115 643,617

accumulated depreciation 144,162 241,486

Property, plant and equipment, net $ 301,953 $ 402,131

Capital expenditures related to assets subject to sales-type lease arrangements were $ 0.4 million for the three and nine months ended September 30, 2024.

There were no capital expenditures related to assets subject to sales-type lease arrangements for the three and nine months ended September 30, 2023.

These amounts are reflected as additions to property, plant and equipment in the condensed consolidated statement of cash flows.

We recorded $ 81.2 million in operating lease revenue for the three months ended March 31, 2024.

There were no sales-type leases during the three months ended March 31, 2024.

Subsequent Events

Distribution Declaration

On October 29, 2024, our general partner's board of directors declared a quarterly cash distribution of $ 1.100 per unit, payable on November 14, 2024, to unitholders of record on November 8, 2024.

On April 28, 2025, our general partner's board of directors declared a quarterly cash distribution of $ 1.110 per unit, payable on May 15, 2025, to unitholders of record on May 8, 2025.

Delek Permian Gathering Dropdown

On May 1, 2025, Delek Holdings transferred the Delek Permian Gathering purchasing and blending business to the Partnership (the "DPG Dropdown”).

In connection with the DPG Dropdown, the Partnership will assume all of Delek Holdings’ rights and obligations to purchase crude oil under certain contracts associated with the Partnership’s existing Midland Gathering System.

Total consideration included the execution of the Termination Agreement (as defined below), the execution of the Throughput Agreement (as defined below), the execution of the El Dorado Purchase Agreement (as defined below) and cancellation of $ 58.8 million in existing receivables owed to the Partnership by Delek Holdings.

Commercial Agreements

On May 1, 2025, the Partnership entered into an agreement to terminate, in its entirety, the East Texas Marketing Agreement effective as of January 1, 2026 (the "Termination Agreement").

On May 1, 2025, in connection with the DPG Dropdown, the Partnership amended and restated a throughput agreement with Delek Holdings for the El Dorado rail facility (the “Throughput Agreement”), which includes a minimum volume commitment for refined products until the termination of the Throughput Agreement, which will occur at the closing of the El Dorado Purchase (as defined below).

Additionally, on May 1, 2025, in connection with the DPG Dropdown, the Partnership and Delek Holdings, entered into an asset purchase agreement (the “El Dorado Purchase Agreement”), whereby Delek Holdings will purchase the related El Dorado rail facility assets from the Partnership for cash consideration of $ 25.0 million (the “El Dorado Purchase”).

The El Dorado Purchase is currently set to close January 1, 2026, subject to certain closing conditions as set forth in the El Dorado Purchase Agreement.

Management's Discussion and Analysis of Financial Condition and Results of Operations

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