What changed in this filing

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Item 2. Management’s Discussion and Analysis

2026-08-05 compared with 2026-04-29 · 184 added, 105 removed, 415 unchanged (41% of the section changed)

14 unchanged sentences

These forward-looking statements reflect our current estimates, expectations and projections about our future results, performance, prospects and opportunities.

Forward-looking statements include, among other things, statements regarding the effect, impact, potential duration or other implications of, or expectations expressed with respect to, the actions of members of the Organization of Petroleum Exporting Countries ("OPEC") and other leading oil producing countries (together with OPEC, "OPEC+") with respect to oil production and pricing, and statements regarding our efforts and plans in response to such events, the information concerning our possible future results of operations, business and growth strategies, financing plans, expectations that regulatory developments or other matters will not have a material adverse effect on our business or financial condition, our competitive position and the effects of competition, the projected growth of the industry in which we operate, the benefits and synergies to be obtained from our completed and any future acquisitions, including the H2O Midstream and Gravity acquisitions, statements of management’s goals and objectives, and other similar expressions concerning matters that are not historical facts.

Forward-looking statements include, among other things, statements regarding the effect, impact, potential duration or other implications of, or expectations expressed with respect to, the actions of members of the Organization of Petroleum Exporting Countries ("OPEC") and other leading oil producing countries (together with OPEC, "OPEC+") with respect to oil production and pricing, and statements regarding our efforts and plans in response to such events, the information concerning our possible future results of operations, business and growth strategies, financing plans, expectations that regulatory developments or other matters will not have a material adverse effect on our business or financial condition, our competitive position and the effects of competition, the projected growth of the industry in which we operate, the benefits and synergies to be obtained from our completed and any future acquisitions, including the acquisition of Gravity Water Intermediate Holdings LLC ("Gravity") (the "Gravity Acquisition"), statements of management’s goals and objectives, and other similar expressions concerning matters that are not historical facts.

Words such as “may,” “will,” “should,” “could,” “would,” "forecasts", “predicts,” "strategy", “potential,” “continue,” “expects,” “anticipates,” “future,” “intends,” “plans,” “believes,” “estimates,” “appears,” “projects” and similar expressions, as well as statements in future tense, identify forward-looking statements.

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• the shift from hydrocarbon energy sources to alternative energy sources;

• the suspension, reduction or termination of Delek Holdings' or its assignees' or third-party's obligations under our commercial agreements including the duration, fees or terms thereof;

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

• the suspension, reduction or termination of Delek Holdings' or its assignees' or third-party's obligations under our commercial agreements including the duration, fees or terms thereof;

• the ability to attract and retain key personnel;

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Business and Economic Environment Overview

During the three months ended March 31, 2026, we continued to focus on our commitment to being a full-suite crude, gas and water midstream services provider in the Permian Basin, in addition to diversifying our customer base to include more third-party customers.

During the six months ended June 30, 2026, we continued to focus on our commitment to being a full-suite crude, gas and water midstream services provider in the Permian Basin, in addition to diversifying our customer base to include more third-party customers.

Our strategic acquisitions over the past few years served to significantly enhance our competitive position in the Midland Basin and further our economic separation from our sponsor and contribute to an increase in third party revenue.

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Our positioning allows our customers the ability to control quality and adds optionality to place barrels in a variety of markets.

The Partnership saw a $6.7 million decrease in net income during the three months ended March 31, 2026, as compared to the prior year period, primarily due to increase in depreciation associated with additional assets from our gas plant expansion and increase in interest expense associated with our debt issuance in the second quarter of 2025.

Our EBITDA increased $2.7 million in 2026 as compared to 2025.

Our gathering and processing segment saw a $2.7 million increase in segment EBITDA, largely due to increased crude activity in our Delaware Gathering operations.

Our wholesale marketing and terminalling segment saw a decrease in segment EBITDA of $3.5 million primarily due to the termination of a marketing agreement with Delek Holdings, under which we marketed 100% of the refined products output of the Tyler Refinery (the "East Texas Marketing Agreement").

Our storage and transportation segment saw increase in segment EBITDA of $1.3 million primarily driven by lower transportation costs associated with trucking activity.

Segment EBITDA for our investments in pipeline joint ventures increased by $1.5 million largely due to our investment in Wink to Webster Holdings, LLC ("W2W").

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

The near-term economic outlook remains uncertain due to the introduction of widespread tariffs by the U.S., ongoing geopolitical instability—including escalating conflict involving Iran—and heightened commodity market volatility.

Uncertainty surrounding trade negotiations, the potential for further expansion of tariffs, and geopolitical developments have contributed to increased market and commodity price volatility, heightened supply disruption risk, and broader macroeconomic uncertainty, which could negatively affect global economic conditions.

The near-term economic outlook remains uncertain due to ongoing geopolitical instability, including the ongoing conflict involving Iran and resulting disruptions to maritime transit through the Strait of Hormuz, and heightened commodity market volatility.

Uncertainty surrounding trade negotiations and geopolitical developments have contributed to increased market and commodity price volatility, heightened supply disruption risk, and broader macroeconomic uncertainty, which could negatively affect global economic conditions.

Despite these challenges, we are well positioned to manage through an economic downturn because of built-in recessionary protections within our business, including fee-based arrangements supported by minimum volume commitments on throughput and dedicated acreage agreements.

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See further discussion on macroeconomic factors and market trends, including the impact on 2026, in the ‘Market Trends’ section below.

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

Other Developments

Contractual Rate Adjustments to Keep Pace with Inflation

On July 1, 2026, 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 1.4%.

Under certain of our agreements with Delek Holdings and third parties, the fees that are subject to adjustments using the consumer price index increased 3.1% and the fees that are subject to adjustments using the producer price index increased approximately 3.6%.

These adjustments allow us to maintain compliance with FERC regulations as well as to ensure that our results are reflective of current market conditions.

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

On May 14, 2026, the Partnership sold $800.0 million in aggregate principal amount of 6.875% senior notes due 2034 (the "2034 Notes").

Net proceeds were used to redeem the 2028 Notes including accrued interest and a portion of the 2029 Notes including accrued interest.

DKL Credit Facility

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In March 2026, we entered into an arrangement with a third party to construct, own, and subsequently lease to us certain sour gas gathering equipment at our Libby gas processing plant.

The construction is expected to be completed in the second quarter of 2026, at which time we have committed to enter into a finance lease for the equipment.

The construction is expected to be completed in the second half of 2026, at which time we have committed to enter into a finance lease for the equipment.

During construction, we are not deemed to control the assets and are not obligated to fund construction costs;

therefore, we have not recognized the assets or related obligations on our balance sheet as of March 31, 2026.

therefore, we have not recognized the assets or related obligations on our balance sheet as of June 30, 2026.

The total estimated project cost is approximately $60.0 million.

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The El Dorado Terminal Sale is expected to close on October 1, 2027, subject to the satisfaction of customary closing conditions.

Cybersecurity Incident

In July 2026, we identified a cybersecurity incident in which an unauthorized third party accessed a single employee's account and copied certain files from our email and SharePoint environment.

Upon discovery, we promptly contained the incident, disabled the affected credentials, and engaged a third-party forensic firm and outside legal counsel.

The incident did not affect our refining or logistics operations, or financial reporting systems, and did not result in any loss of availability of our data.

Management has determined, based on information known to date, that the incident is not material and is not reasonably likely to have a material impact on our business, financial condition, or results of operations.

Our assessment of applicable notification and other legal obligations remains ongoing.

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

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The Partnership’s Long-Term Strategic Objectives have been focused on providing a competitive yield and growing our distribution while maintaining healthy coverage and leverage ratios.

To that end, we are focused on growing our asset base through a slew of accretive growth opportunities we are seeing in our areas of operation.

To that end, we are focused on growing our asset base through a range of accretive growth opportunities we are seeing in our areas of operation.

We are supplementing our organic growth opportunities by accretive bolt-on acquisitions which enhance our full-suite services offering to our customers.

A secondary benefit of growing our contribution of third-party cash flows is to continue to increase our economic separation from our sponsor Delek Holdings and to progress deconsolidation.

A secondary benefit of growing our contribution of third-party cash flows is to continue to increase our economic separation from our sponsor Delek Holdings.

2026 Strategic Focus Areas

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Engage in Mutually Beneficial Transactions with Delek Holdings

Optimize Our Existing Assets and Expand Our Customer Base

Optimize Our Existing Assets and Expand Our Third-Party Customer Base

Executed agreements with Delek Holdings to further our economic separation and increase third-party revenue

Completion of debt offering, extending our debt maturity profile and enhancing long-term financial flexibility to support growth initiatives.

Completion of revolver refinancing, further increasing our liquidity to over $1.1 billion

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Additionally, the demand for hydrocarbon-based refined products and related crack spreads significantly impact production decisions of our refining customers and likewise throughputs on our pipelines and other logistics assets.

Finally, fluctuations in demand and commodity prices for refined products, as well as the value attributable to RINs, directly impacts our wholesale marketing operations, where we are subject to short-term commodity price fluctuations at the rack.

Finally, fluctuations in demand and commodity prices for refined products, as well as the value attributable to RINs, directly impact our wholesale marketing operations, where we are subject to short-term commodity price fluctuations at the rack.

Most of the logistics services we provide (including transportation, gathering and processing services) are subject to long-term fee-based contracts with minimum volume commitments or long-term dedicated acreage agreements which mitigate most of our short-term financial risk to price and demand volatility.

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• EBITDA - calculated as net income before net interest expense, income tax expense, depreciation, amortization and proportional interest, taxes, depreciation and amortization of equity method investments.

• Distributable cash flow - calculated as net cash flow from operating activities adjusted for changes in assets and liabilities, maintenance capital expenditures net of reimbursements, sales-type lease receipts, net of income recognized and other adjustments not expected to settle in cash.

The Partnership believes this is an appropriate reflection of a liquidity measure by which users of its financial statements can assess its ability to generate cash.

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Reconciliation of net income to EBITDA (in thousands)

Three Months Ended March 31,

Three Months Ended June 30,

Six Months Ended June 30,

Income tax expense

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Reconciliation of net cash from operating activities to distributable cash flow (in thousands)

Three Months Ended March 31,

Three Months Ended June 30,

Six Months Ended June 30,

Net cash provided by operating activities

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Summary Statement of Operations Data (1)

Three Months Ended March 31,

Three Months Ended June 30,

Six Months Ended June 30,

Net revenues:

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Results of Operations

Consolidated Results of Operations — Comparison of the three months ended March 31, 2026 compared to the three months ended March 31, 2025

Net revenues increased by $47.5 million, or 19.0%, in the three months ended March 31, 2026, compared to the three months ended March 31, 2025.

Consolidated Results of Operations — Comparison of the three and six months ended June 30, 2026, compared to the three and six months ended June 30, 2025

Net revenues increased by $138.4 million, or 56.2%, in the second quarter of 2026 compared to the second quarter of 2025, primarily driven by the following:

• increased revenue of $65.9 million in our West Texas marketing operations primarily driven by an increase in average sales prices of gasoline and diesel, a net increase in volumes sold and an increase in RINs revenue:

◦ the average sales prices of gasoline sold increased by $1.06 per gallon and the average prices of diesel sold increased by $1.52 per gallon;

◦ the average volumes of gasoline sold increased by 4.9 million gallons, while the average volumes of diesel sold decreased by 1.3 million gallons;

◦ RINs revenue increased by $3.3 million primarily due to increased RINs prices;

• increased revenue of $77.4 million in our gathering and processing segment primarily associated with the Delek Permian Gathering purchasing and blending activities which was transferred from Delek Holdings on May 1, 2025 (the "DPG Dropdown") and increased sales in our Delaware Gathering operations;

• partially offsetting these increases was a decrease of $6.7 million associated with the termination of a marketing agreement with Delek Holdings, under which we marketed 100% of the refined products output of the Tyler Refinery (the "East Texas Marketing Agreement") .

Net revenues increased by $185.9 million, or 37.5%, in the six months ended June 30, 2026, compared to the six months ended June 30, 2025.

The increase was primarily driven by the following:

• increased revenue of $18.7 million in our West Texas marketing operations primarily driven by increase in average sales prices per gallon, volumes sold and RINs revenue:

• increased revenue of $84.7 million in our West Texas marketing operations primarily driven by increase in average sales prices, a net increase in volumes sold and an increase in RINs revenue:

◦ the average sales prices per gallon of gasoline and diesel sold increased by $0.57 and $0.95 per gallon, respectively;

◦ the average volumes of gasoline sold increased by 9.6 million gallons, while the average volumes of diesel sold decreased by 2.1 million gallons;

◦ RINs revenue increased $2.4 million due to increased RINs prices.

• increased revenue of $36.1 million in our gathering and processing segment primarily associated with the Delek Permian Gathering purchasing and blending activities which was transferred from Delek Holdings on May 1, 2025 (the "DPG Dropdown") and increased crude activity in our Delaware Gathering operations;

• partially offsetting these increases was a decrease of $6.7 million associated with the termination of the East Texas Marketing Agreement.

◦ RINs revenue increased by $5.7 million primarily due to increased RINs prices;

• increased revenue of $113.4 million in our gathe ring and processing segment primarily associated with the DPG Dropdown and increased sales in our Delaware Gathering operations;

• partially offsetting these increases was a decrease of $13.4 million a ssociated with the termination of the East Texas Marketing Agreement.

Cost of Materials and Other

Cost of materials and other increased by $39.6 million, or 30.7%, in the three months ended March 31, 2026, compared to the three months ended March 31, 2025, primarily driven by the following:

• an increase of $15.6 million in our West Texas marketing operations primarily driven by increase in average cost per gallon and volumes sold;

• an increase of $26.0 million in our gathering and processing segment primarily associated with increased crude oil activity in our Delaware Gathering operations and the DPG Dropdown.

Cost of materials and other increased by $119.6 million, or 100.2%, in the second quarter of 2026 compared to the second quarter of 2025, primarily driven by the following:

• increase of $66.9 million in our West Texas marketing operations primarily driven by an increase in average cost per gallon and volumes sold;

• increase of $50.2 million in our gathering and processing segment primarily associated with increased costs associated with our Delaware Gathering operations.

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

Cost of materials and other increased by $159.2 million, or 64.1%, in the six months ended June 30, 2026, compared to the six months ended June 30, 2025, primarily driven by the following:

• increase of $82.5 million in our West Texas marketing operations primarily driven by an increase in average cost per gallon and volumes sold;

• increase of $76.1 million in our gathering and processing segment primarily associated with increased costs associated with our Delaware Gathering operations.

Operating Expenses

Operating expenses increased by $6.1 million, or 14.8%, in the three months ended March 31, 2026, compared to the three months ended March 31, 2025, primarily driven by the following:

• an increase of $5.4 million in outside services and $2.1 million in variable expenses;

• partially offsetting these increases was a $2.2 million decrease in maintenance and repairs costs.

Operating expenses increased by $5.3 million, or 13.8%, in the second quarter of 2026 compared to the second quarter of 2025, primarily driven by the following:

• increase of $8.4 million in outside services, primarily related to professional consulting and contract services;

• increase in employee expenses of $2.4 million, primarily associated with our Midland Water Gathering operations;

• increase in insurance expense of $0.7 million and $0.9 million increase in supplies expense;

• partially offsetting these increases was a decrease in variable expenses of $4.6 million and a $3.1 million decrease in maintenance and repairs costs.

Operating expenses increased by $11.3 million, or 14.3%, in the six months ended June 30, 2026, compared to the six months ended June 30, 2025, primarily driven by the following:

• increase of $13.8 million in outside services, primarily related to professional consulting and contract services;

• increase in employee expenses of $3.2 million, primarily associated with our Midland Water Gathering operations;

• increase in insurance expense of $1.7 million and an increase in supplies expense of $1.6 million;

• partially offsetting these increases was a $5.3 million decrease in maintenance and repairs costs and a $3.1 million decrease in variable expenses.

General and Administrative Expenses

General and administrative expenses decreased by $4.6 million, or 51.8%, in the three months ended March 31, 2026, compared to the three months ended March 31, 2025, primarily driven by a decrease in insurance expense.

General and administrative expenses decreased by $5.7 million, or 63.3%, in the second quarter of 2026 compared to the second quarter of 2025, primarily driven by the following:

• decrease in employee expenses of $2.0 million;

• decrease in outside services of $2.4 million.

General and administrative expenses decreased by $10.3 million, or 57.6%, in the six months ended June 30, 2026, compared to the six months ended June 30, 2025, primarily driven by the following:

• decrease in employee expenses of $2.7 million;

• decrease in outside services of $3.4 million;

• decrease in insurance expense of $2.9 million.

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

Depreciation and Amortization

Depreciation and amortization increased by $8.8 million, or 31.7%, in the three months ended March 31, 2026, compared to the three months ended March 31, 2025, primarily driven by the following:

Depreciation and amortization increased by $10.3 million, or 38.0%, in the second quarter of 2026 compared to the second quarter of 2025, primarily driven by the following:

• additional assets associated with the gas plant expansion;

• additional equipment under finance leases.

Depreciation and amortization increased by $19.1 million, or 34.8%, in the six months ended June 30, 2026, compared to the six months ended June 30, 2025, primarily driven by the following:

• additional assets associated with the gas plant expansion;

• additional equipment under finance leases.

Other operating expense (income), net

Other operating income, net decreased by $5.3 million, or 123.9%, in the three months ended March 31, 2026, compared to the three months ended March 31, 2025, primarily driven by $4.3 million in condemnation proceeds received in the first quarter of 2025.

Other operating income, net increased by $0.6 million or 127.4%, in the second quarter of 2026 compared to the second quarter of 2025.

Other operating income, net decreased by $4.8 million, or 123.5%, in the six months ended June 30, 2026, compared to the six months ended June 30, 2025, primarily driven by $4.3 million in condemnation proceeds received in the first quarter of 2025.

Interest Income

Interest income increased by $9.7 million, or 43.2%, in the three months ended March 31, 2026, compared to the three months ended March 31, 2025, primarily driven by the following:

Interest income decreased by $1.0 million, or 4.2% in the second quarter of 2026 compared to the second quarter of 2025.

Interest income increased by $8.7 million, or 19.0%, in the six months ended June 30, 2026, compared to the six months ended June 30, 2025, primarily driven by the following:

• the modification of certain sales type leases associated with the Tyler refinery tank and El Dorado tank and terminal assets being sold to Delek Holdings under the Intercompany Agreements;

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Interest Expense

Interest expense increased by $10.5 million, or 25.5%, in the three months ended March 31, 2026, compared to the three months ended March 31, 2025, primarily driven by the following:

• increase of $12.9 million due to the issuance of the $700 million senior note during the second quarter 2025;

• partially offsetting this increase was a decrease associated with our revolver primarily due to decreased average balance.

Interest expense increased by $28.4 million, or 68.0%, in the second quarter of 2026 compared to the second quarter of 2025, primarily driven by:

• increase of $21.4 million due to loss on extinguishment of debt related to the redemption of our 7.125% senior notes and the partial redemption of our 8.625% senior notes;

• increase of $12.2 million primarily due to the issuances of the $700 million senior note during the second quarter of 2025 and the 2034 Notes during the second quarter of 2026;

• partially offsetting these increases was a decrease associated with our revolver primarily due to decreased average balance.

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

Interest expense increased by $38.9 million, or 46.9%, in the six months ended June 30, 2026, compared to the six months ended June 30, 2025, primarily driven by the following:

• increase of $23.0 million due to loss on extinguishment of debt related to the amendment of our revolving credit facility, the redemption of our 7.125% senior notes and the partial redemption of our 8.625% senior notes.

• increase of $25.2 million primarily due to the issuances of the $700 million senior note during the second quarter 2025 and the 2034 Notes during the second quarter of 2026;

• partially offsetting these increases was a decrease associated with our revolver primarily due to decreased average balance.

Results from Equity Method Investments

Income from equity method investments increased by $1.5 million, or 14.5%, in the three months ended March 31, 2026, compared to the three months ended March 31, 2025, primarily due to the following:

• increase of $3.8 million from our investment in W2W;

Income from equity method investments increased by $4.0 million, or 37.5%, in the second quarter of 2026 compared to the second quarter of 2025, primarily due to the following:

• increase of $3.0 million from our investment in in Wink to Webster Holdings, LLC ("W2W");

• increase of $1.0 million from our investment in Red River Pipeline Company LLC ("Red River").

Income from equity method investments increased by $5.4 million, or 26.2%, in the six months ended June 30, 2026, compared to the six months ended June 30, 2025, primarily due to the following:

• increase of $6.8 million and $0.6 million from our investments in W2W and Red River, respectively;

• partially offsetting this increase was a $2.0 million decrease in income from our investments in other joint ventures.

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Gathering and Processing Segment

The following tables and discussion present the results of operations and certain operating statistics of the gathering and processing segment for the three months ended March 31, 2026 and 2025:

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, 2026 and 2025:

Gathering and Processing

Three Months Ended March 31,

Three Months Ended June 30,

Six Months Ended June 30,

Cost of materials and other

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Throughputs (bpd (1) )

Three Months Ended March 31,

Three Months Ended June 30,

Six Months Ended June 30,

El Dorado Assets:

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Delaware Gathering Assets Volumes

Three Months Ended March 31,

Three Months Ended June 30,

Six Months Ended June 30,

Natural Gas Gathering and Processing (Mcfd (2) )

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Midland Water Gathering System Volumes

Three Months Ended March 31,

Three Months Ended June 30,

Six Months Ended June 30,

Water Disposal and Recycling (bpd (1) ) (3)

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

(3) Consists of volumes of H2O Midstream and Gravity.

2025 Gravity volumes are from January 2, 2025, to March 31, 2025.

Comparison of the three months ended March 31, 2026 compared to the three months ended March 31, 2025

Net revenues for the gathering and processing segment increased by $36.1 million, or 30.4%, in the three months ended March 31, 2026, compared to the three months ended March 31, 2025, primarily driven by the DPG Dropdown and increased crude activity in our Delaware Gathering operations.

(3) Includes freshwater sales of 119,653 bpd and 119,383 bpd for the three and six months ended June 30, 2026, respectively, and 14,765 bpd and 13,697 bpd for the three and six months ended June 30, 2025, respectively.

Comparison of the three and six months ended June 30, 2026, compared to the three and six months ended June 30, 2025

Net revenues for the gathering and processing segment increased by $77.4 million, or 65.7%, in the second quarter of 2026 compared to the second quarter of 2025, primarily driven by the DPG Dropdown and increased sales in our Delaware Gathering operations.

Net revenues for the gathering and processing segment increased by $113.4 million, or 48.0%, in the six months ended June 30, 2026, compared to the six months ended June 30, 2025, primarily driven by the DPG Dropdown and increased sales in our Delaware Gathering operations.

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

Cost of Materials and Other

Cost of materials and other for the gathering and processing segment increased by $26.0 million, or 106.6%, in the three months ended March 31, 2026, compared to the three months ended March 31, 2025, driven primarily by increased crude oil activity in our Delaware Gathering operations and the DPG Dropdown.

Cost of materials and other for the gathering and processing segment increased by $50.2 million, or 230.8%, in the second quarter of 2026 compared to the second quarter of 2025, driven primarily by increased costs associated with our Delaware Gathering operations.

Cost of materials and other for the gathering and processing segment increased by $76.1 million, or 165.2%, in the six months ended June 30, 2026, compared to the six months ended June 30, 2025, driven primarily by increased costs associated with our Delaware Gathering operations.

Operating Expenses

Operating expenses for the gathering and processing segment increased by $1.9 million, or 6.1%, in the three months ended March 31, 2026, compared to the three months ended March 31, 2025, primarily driven by the following:

• an increase in outside services costs and variable expenses;

• partially offset by decreased maintenance and repairs costs and lease expense.

EBITDA increased by $2.7 million, or 3.9%, in the three months ended March 31, 2026, compared to the three months ended March 31, 2025, primarily driven by the DPG Dropdown and increased crude activity in our Delaware Gathering operations.

Operating expenses for the gathering and processing segment decreased by $1.8 million, or 5.6%, in the second quarter of 2026 compared to the second quarter of 2025, primarily driven by the following:

• decrease in variable expenses of $3.9 million and maintenance and repair costs of $3.2 million;

• partially offset by increase in outside services costs of $3.0 million primarily related to professional consulting and contract services, and $2.0 million increase in employee costs.

Operating expenses for the gathering and processing segment increased by $0.1 million, or 0.1%, in the six months ended June 30, 2026, compared to the six months ended June 30, 2025, primarily driven by the following:

• increase in outside services costs of $6.6 million and employee costs of $2.8 million;

• partially offset by decrease in variable expenses of $2.8 million and maintenance and repairs costs of $5.6 million.

EBITDA increased by $29.4 million, or 46.0%, in the second quarter of 2026 compared to the second quarter of 2025, primarily driven by the DPG Dropdown.

EBITDA increased by $32.1 million, or 24.4%, in the six months ended June 30, 2026, compared to the six months ended June 30, 2025, primarily driven by the DPG Dropdown.

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

Wholesale Marketing and Terminalling Segment

The following tables and discussion present the results of operations and certain operating statistics of the wholesale marketing and terminalling segment for the three months ended March 31, 2026 and 2025:

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, 2026 and 2025:

Wholesale Marketing and Terminalling

Three Months Ended March 31,

Three Months Ended June 30,

Six Months Ended June 30,

Cost of materials and other

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Operating Information

Three Months Ended March 31,

Three Months Ended June 30,

Six Months Ended June 30,

East Texas - Tyler Refinery sales volumes (average bpd) (1)

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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.

Operational comparison of the three months ended March 31, 2026 compared to the three months ended March 31, 2025

Net revenues for the wholesale marketing and terminalling segment increased by $11.1 million, or 10.4%, in the three months ended March 31, 2026, compared to the three months ended March 31, 2025, primarily driven by the following:

• increased revenue of $18.7 million in our West Texas marketing operations primarily driven by increase in average sales prices per gallon, volumes sold and RINs revenue:

Operational comparison of the three and six months ended June 30, 2026, compared to the three and six months ended June 30, 2025

Net revenues for the wholesale marketing and terminalling segment increased by $58.1 million, or 55.5%, in the second quarter of 2026 compared to the second quarter of 2025, driven primarily by the following:

• Increased revenue of $65.9 million in our West Texas marketing operations primarily driven by an increase in average sales prices of gasoline and diesel, a net increase in volumes sold and an increase in RINs revenue:

◦ the average sales prices of gasoline sold increased by $1.06 per gallon and the average prices of diesel sold increased by $1.52 per gallon;

◦ the average volumes of gasoline sold increased by 4.9 million, while the average volumes of diesel sold decreased by 1.3 million gallons;

◦ RINs revenue increased $3.3 million primarily due to increased RINs prices.

• Partially offsetting this increase was a decrease of $6.7 million associated with the termination of the East Texas Marketing Agreement.

Net revenues for the wholesale marketing and terminalling segment increased by $69.2 million, or 32.8%, in the six months ended June 30, 2026, compared to the six months ended June 30, 2025, primarily driven by the following:

• increased revenue of $84.7 million in our West Texas marketing operations primarily driven by increase in average sales prices, a net increase in volumes sold and an increase in RINs revenue:

◦ the average sales prices per gallon of gasoline and diesel sold increased by $0.57 and $0.95 per gallon, respectively;

◦ the average volumes of gasoline sold increased by 9.6 million gallons, while the average volumes of diesel sold decreased by 2.1 million gallons;

◦ RINs revenue increased $2.4 million due to increased RINs prices.

◦ RINs revenue increased by $5.7 million primarily due to increased RINs prices.

• Partially offsetting this increase was a decrease of $13.4 million associated with the termination of the East Texas Marketing Agreement.

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

The following charts show summaries of the average sales prices per gallon of gasoline and diesel and refined products volume impacting our West Texas operations for the three months ended March 31, 2026 and 2025.

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, 2026 and 2025.

Cost of Materials and Other

Cost of materials and other for the wholesale marketing and terminalling segment increased by $15.5 million, or 17.3% , in the three months ended March 31, 2026, compared to the three months ended March 31, 2025, primarily driven by the following:

Cost of materials and other for the wholesale marketing and terminalling segment increased by $67.1 million, or 79.4%, in the second quarter of 2026 compared to the second quarter of 2025, driven primarily by the following:

• increased costs of materials and other of $66.9 million in our West Texas marketing operations primarily driven by an increase in average cost per gallon of gasoline and diesel sold and a net increase in volumes sold:

◦ the average cost per gallon of gasoline and diesel sold increased by $1.11 per gallon and $1.68 per gallon, respectively;

◦ the volumes of gasoline sold increased by 4.9 million, while diesel sold decreased by 1.3 million gallons, respectively.

Cost of materials and other for the wholesale marketing and terminalling segment increased by $82.5 million, or 47.4% , in the six months ended June 30, 2026, compared to the six months ended June 30, 2025, primarily driven by the following:

• increased costs of materials and other of $82.5 million in our West Texas marketing operations primarily driven by an increase in average cost per gallon and a net increase in volumes sold:

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◦ the volumes of gasoline sold increased by 9.6 million gallons, while diesel sold decreased by 2.1 million gallons.

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 months ended March 31, 2026 and 2025.

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

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

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, 2026 and 2025.

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 $0.9 million or 24.4%, in the three months ended March 31, 2026, compared to the three months ended March 31, 2025, driven primarily by a decrease in outside service costs.

EBITDA decreased by $3.5 million, or 26.3%, in the three months ended March 31, 2026, compared to the three months ended March 31, 2025, primarily driven by the following:

• lower revenue due to the termination of the East Texas Marketing Agreement;

Operating expenses for the wholesale marketing and terminalling segment increased by $1.4 million, or 117.8%, in the second quarter of 2026 compared to the second quarter of 2025, driven primarily by an increase in outside service costs primarily related to professional services and contract labor.

Operating expenses for the wholesale marketing and terminalling segment increased by $0.5 million or 9.1%, in the six months ended June 30, 2026, compared to the six months ended June 30, 2025, driven primarily by an increase in outside service costs primarily related to professional services and contract labor.

EBITDA decreased by $10.3 million, or 54.5%, in the second quarter of 2026 compared to the second quarter of 2025, driven primarily by the following:

• the termination of the East Texas Marketing Agreement;

• a decrease in wholesale margins of $1.24 per barrel.

EBITDA decreased by $13.8 million, or 42.9%, in the six months ended June 30, 2026, compared to the six months ended June 30, 2025, primarily driven by the following:

• the termination of the East Texas Marketing Agreement;

• partially offset by a $0.77 per barrel increase in wholesale margins.

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Storage and Transportation Segment

The following tables and discussion present the results of operations and certain operating statistics of the storage and transportation segment for the three months ended March 31, 2026 and 2025:

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, 2026 and 2025:

Storage and Transportation

Three Months Ended March 31,

Three Months Ended June 30,

Six Months Ended June 30,

Cost of materials and other

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Segment EBITDA

Operation comparison of the three months ended March 31, 2026 compared to the three months ended March 31, 2025

Net revenues for the storage and transportation segment increased by $0.4 million, or 1.5%, in the three months ended March 31, 2026, compared to the three months ended March 31, 2025.

Operational comparison of the three and six months ended June 30, 2026, compared to the three and six months ended June 30, 2025

Net revenues for the storage and transportation segment increased by $2.9 million, or 12.2%, in the second quarter of 2026 compared to the second quarter of 2025, primarily due to higher volume in our trucking operations.

Net revenues for the storage and transportation segment increased by $3.3 million, or 6.8%, in the six months ended June 30, 2026, compared to the six months ended June 30, 2025, primarily due to higher volume in our trucking operations.

Cost of Materials and Other

Cost of materials and other for the storage and transportation segment decreased by $1.9 million, or 12.6%, in the three months ended March 31, 2026, compared to the three months ended March 31, 2025, primarily driven by a decrease in transportation costs in our trucking operations.

Cost of materials and other for the storage and transportation segment increased by $0.8 million, or 6.4%, in the second quarter of 2026 compared to the second quarter of 2025, primarily driven by increased trucking activity.

Cost of materials and other for the storage and transportation segment decreased by $1.0 million, or 3.7%, in the six months ended June 30, 2026, compared to the six months ended June 30, 2025.

Operating Expenses

Operating expenses for the storage and transportation segment increased by $1.0 million, or 18.7%, in the three months ended March 31, 2026, compared to the three months ended March 31, 2025, primarily driven by an increase in outside service costs.

EBITDA increased by $1.3 million, or 30.4%, in the three months ended March 31, 2026, compared to the three months ended March 31, 2025, primarily driven by a decrease in transportation costs in our trucking operations.

Operating expenses for the storage and transportation segment increased by $1.6 million, or 41.7%, in the second quarter of 2026 compared to the second quarter of 2025, primarily driven by an increase in outside service costs.

Operating expenses for the storage and transportation segment increased by $2.5 million, or 28.5%, in the six months ended June 30, 2026, compared to the six months ended June 30, 2025, primarily driven by an increase in outside service costs.

EBITDA increased by $0.6 million, or 8.3%, in the second quarter of 2026 compared to the second quarter of 2025.

EBITDA increased by $1.9 million, or 16.8%, in the six months ended June 30, 2026, compared to the six months ended June 30, 2025, primarily driven by an increase in volume in our trucking operations.

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

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Investments in pipeline joint ventures segment include the Partnership's joint ventures investments described in Note 8 of our condensed consolidated financial statements in Item 1, Financial Statements, of this Quarterly Report on Form 10-Q.

Refer to Consolidated Results of Operations above for details and discussion of the investments in pipeline joint ventures segment for the three months ended March 31, 2026.

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, 2026.

Liquidity and Capital Resources

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(iii) potential issuance of additional equity;

At March 31, 2026, our total liquidity amounted to $1,148.8 million comprised of $1,138.9 million in unused credit commitments under our third-party revolving credit facility (as discussed in Note 6 of our condensed consolidated financial statements in Item 1, Financial Statements, of this Quarterly Report on Form 10-Q), and $9.9 million in cash and cash equivalents.

At June 30, 2026, our total liquidity amounted to $1,065.6 million comprised of $1,051.9 million in unused credit commitments under our third-party revolving credit facility (as discussed in Note 6 of our condensed consolidated financial statements in Item 1, Financial Statements, of this Quarterly Report on Form 10-Q), and $13.7 million in cash and cash equivalents.

Historically, we have generated adequate cash from operations to fund ongoing working capital requirements, pay quarterly cash distributions and operational capital expenditures, and we expect the same to continue in the foreseeable future.

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Cash Distributions

On April 23, 2026, the board of directors of our general partner declared a distribution of $1.130 per common unit (the "Distribution"), which equates to an estimated amount of approximately $60.5 million per quarter, or approximately $241.9 million per year, based on the number of common units outstanding as of March 31, 2026.

The Distribution will be paid on May 11, 2026, to common unitholders of record on May 4, 2026, and represents a 1.8% increase over the first quarter 2025 distribution.

On July 22, 2026, the board of directors of our general partner declared a distribution of $1.135 per common unit (the "Distribution"), which equates to an estimated amount of approximately $60.4 million per quarter, or approximately $241.5 million per year, based on the number of common units outstanding as of June 30, 2026.

The Distribution will be paid on August 10, 2026, to common unitholders of record on August 3, 2026, and represents a 1.8% increase over the second quarter 2025 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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March 31, 2026

June 30, 2026

Unit Repurchase

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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, 2026.

As of March 31, 2026, there was $140.0 million of authorization remaining under the Common Unit Repurchase Agreement.

The following table sets forth a summary of our consolidated cash flows for the three months ended March 31, 2026, and 2025 (in thousands):

Three Months Ended March 31,

During the six months ended June 30, 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 six months ended June 30, 2026.

As of June 30, 2026, there was $140.0 million of authorization remaining under the Common Unit Repurchase Agreement.

The following table sets forth a summary of our consolidated cash flows for the six months ended June 30, 2026, and 2025 (in thousands):

Six Months Ended June 30,

Net cash provided by operating activities

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Net cash (used in) provided by financing activities

Net decrease in cash and cash equivalents

Net increase (decrease) in cash and cash equivalents

Operating Activities

Net cash provided by operating activities increased by $138.8 million for the three months ended March 31, 2026, compared to the three months ended March 31, 2025.

The cash receipts from customer activities increased by $32.2 million and cash payments to suppliers and for allocations to Delek Holdings for salaries decreased by $98.5 million.

Additionally contributing to the increase was a $5.5 million increase in cash dividends received from equity method investments, as well as a $2.6 million decrease in cash paid for debt interest.

Net cash provided by operating activities increased by $102.6 million for the six months ended June 30, 2026, compared to the six months ended June 30, 2025.

The cash receipts from customer activities increased by $203.5 million.

Additionally contributing to the increase was a $10.7 million increase in cash dividends received from equity method investments.

Partially offsetting these increases was a $20.5 million increase in cash paid for debt interest, and an increase of $91.0 million in cash payments to suppliers and for allocations to Delek Holdings for salaries.

Investing Activities

Net cash used in investing activities decreased by $185.5 million during the three months ended March 31, 2026, compared to the three months ended March 31, 2025, primarily due to a decrease of $181.2 million associated with the Gravity Acquisition in the prior year with no corresponding activity in the current year.

Purchases of property, plant and equipment decreased $7.0 million primarily associated with growth projects in our gathering and processing segment.

Net cash used in investing activities decreased by $238.6 million during the six months ended June 30, 2026, compared to the six months ended June 30, 2025, primarily due to a decrease of $181.2 million associated with the Gravity Acquisition in the prior year with no corresponding activity in the current year.

Purchases of property, plant and equipment decreased by $61.9 million primarily associated with higher growth projects in our gathering and processing segment in the prior year period.

Also contributing to this decrease was an increase in distributions received from equity method investments of $2.5 million.

Partially offsetting this decrease was a decrease in proceeds from sale of property, plant and equipment of $4.2 million compared to the prior year and $1.3 million increase in purchase of intangible assets.

Partially offsetting this decrease was a decrease in proceeds from sale of property, plant and equipment of $4.8 million compared to the prior year and a $2.2 million increase in purchase of intangible assets.

Financing Activities

Net cash used in financing activities increased by $322.0 million for the three months ended March 31, 2026, compared to the three months ended March 31, 2025.

This increase was primarily driven by an increase in net payments on our revolving credit facility of $320.5 million.

Additionally contributing to this increase was an increase in deferred financing costs paid of $9.0 million and a $2.2 million increase in payments on finance leases.

Partially offsetting the increase was a decrease of $10.0 million due to unit repurchases from Delek Holdings in the prior period.

Net cash used in financing activities increased by $334.4 million for the six months ended June 30, 2026, compared to the six months ended June 30, 2025.

This increase was primarily driven by an increase in net payments on our term debt of $700 million, resulting from the redemption of certain of our senior notes and issuance of our 6.875% senior notes.

Additionally contributing to this increase was an increase in deferred financing costs paid of $12.6 million, debt extinguishment costs paid of $17.8 million and a $3.2 million increase in cash used for other financing activities.

Partially offsetting the increase was an increase in net proceeds from our revolving credit facility of $390.8 million and a decrease of $10.0 million due to unit repurchases from Delek Holdings in the prior period.

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

Debt Overview

As of March 31, 2026, we had total indebtedness of $2,311.1 million.

The decrease of $50.8 million in our long-term debt balance compared to the balance at December 31, 2025, resulted from a decrease in borrowings under our revolving facility during the three months ended March 31, 2026.

As of March 31, 2026, our total indebtedness consisted of:

As of June 30, 2026, we had total indebtedness of $2,398.1 million.

The increase of $36.3 million in our long-term debt balance compared to the balance at December 31, 2025, resulted primarily from an increase in borrowings under our revolving facility during the six months ended June 30, 2026.

As of June 30, 2026, our total indebtedness consisted of:

• An aggregate principal amount of $248.1 million under the DKL Revolving Facility, due on March 26, 2031, with an average borrowing rate of 6.05%.

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• An aggregate principal amount of $800.0 million, under the 2034 Notes (6.875% senior notes), due in 2034, with an effective interest rate of 7.15%.

We believe we were in compliance with the covenants in all debt facilities as of March 31, 2026.

We believe we were in compliance with the covenants in all debt facilities as of June 30, 2026.

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

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

The following table summarizes our actual capital expenditures, including any material capital expenditure payments made or forecasted to be made in advance of receipt of goods and materials, for the three months ended March 31, 2026:

(in thousands)

Full Year 2026 Forecast

Three Months Ended March 31, 2026 (1)

Six Months Ended June 30, 2026 (1)

Gathering and Processing

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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