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    DKL
    Earnings call· Jun 2026(Q2 FY26)

    Delek Logistics Partners Q2 FY26 earnings call DKL

    Aug 5, 2026 Source

    Executive summary

    Delek Logistics Partners Q2 FY26 — Record Crude Volumes and Reaffirmed EBITDA Guidance

    Delek Logistics Partners delivered a record second quarter, driven by strong performance across its crude, gas, and water segments in the Permian Basin. The company reaffirmed its full-year adjusted EBITDA guidance, anticipating a step change in gas volumes as its sour gas solution comes online. Management remains focused on disciplined capital deployment and maintaining leverage and coverage targets while exploring future growth opportunities.

    Highlights

    5

    • Adjusted EBITDA reached a quarterly record of approximately $144 million, up from $127 million in Q2 2025.

    • Delaware crude gathering business achieved record volumes at over 157,000 barrels per day in Q2, up from 129,000 bbl/d in Q1.

    • Produced water volumes increased to over 687,000 barrels a day in Q2, up from 557,000 bbl/d in Q1.

    • Gas volumes increased to over 80 million cubic feet a day in Q2, up from 64 million cubic feet in Q1.

    • Approved 54th consecutive quarterly distribution increase, raising it to $1.135 per unit.

    Concerns

    3

    • Wholesale Marketing and Terminalling adjusted EBITDA declined to $13 million from $23 million a year ago due to the 2024 amended extend agreement with Delek.

    • Storage & Transportation adjusted EBITDA modestly decreased to $16 million from $17 million in the prior period due to a January 2026 related party transaction.

    • Leverage ratio increased modestly to 4.23x from Q1, reflecting capital investments.

    Guidance & targets

    4
    CategoryTargetConfidence
    Full-year 2026 Adjusted EBITDA
    $520 million to $560 million
    high materiality
    High
    Run rate EBITDA from capital investments
    up to $75 million
    medium materiality
    High
    Growth capital program for 2026
    $180 million to $190 million
    medium materiality
    High
    Run rate EBITDA from $185M growth CapEx
    $75 million
    medium materiality
    High

    Segment performance

    4
    SegmentRevenueYoYQoQMargin
    Gathering and Processing
    Adjusted EBITDA increased primarily due to higher utilization at the Libby gas complex and stronger realized margins in the Permian Basin crude business.
    Adjusted EBITDA: $104 million (Q2 2026)Adjusted EBITDA: $78 million (Q2 2025)
    		———$104 million
    Wholesale Marketing and Terminalling
    Adjusted EBITDA declined largely attributable to the effects of the 2024 amended extend agreement with Delek.
    Adjusted EBITDA: $13 million (Q2 2026)Adjusted EBITDA: $23 million (Q2 2025)
    		———$13 million
    Storage & Transportation
    Modest decrease primarily reflects the January 2026 related party transaction.
    Adjusted EBITDA: $16 million (Q2 2026)Adjusted EBITDA: $17 million (Q2 2025)
    		———$16 million
    Investments in Pipeline Joint Venture
    Contribution increased, led by continued strong results from the Wingo Webster joint venture.
    Adjusted EBITDA: $21 million (Q2 2026)Adjusted EBITDA: $17 million (Q2 2025)
    		———$21 million

    Operational metrics

    12
    Adjusted EBITDA
    $144 millionup from $127 million in Q2 FY25
    Q2 FY26

    Quarterly record adjusted EBITDA.

    Distributable cash flow as adjusted
    $81 million
    Q2 FY26

    Distributable cash flow for the quarter.

    Leverage ratio
    4.23xup modestly from Q1
    Q2 FY26

    Leverage ratio at the end of the quarter, reflecting capital investments.

    Liquidity
    $1.1 billion
    Q2 FY26

    Robust liquidity at quarter-end.

    Total capital spending
    $61 million
    Q2 FY26

    Total capital expenditures for the quarter.

    Growth capital spending
    $51 million
    Q2 FY26

    Portion of capital spending directed towards growth initiatives, primarily sour gas infrastructure and AGI well.

    Annual interest cost reduction
    Reduced
    Ongoing

    Result of refinancing high-yield capital structure by issuing new $800 million senior notes due 2034 and retiring existing notes.

    Maturity profile extension
    Extended
    Ongoing

    Result of refinancing high-yield capital structure by issuing new $800 million senior notes due 2034 and retiring existing notes.

    Third-party EBITDA percentage
    80%
    FY26

    Expected run rate EBITDA from third parties on a pro forma basis, increasing economic separation from sponsor DK.

    Delaware crude gathering volumes
    157,000up from 129,000 bbl/d in Q1
    Q2 FY26

    Record volumes achieved in the Delaware crude gathering business.

    Produced water volumes
    687,000up from 557,000 bbl/d in Q1
    Q2 FY26

    Increased volumes in produced water handling.

    Gas volumes
    80 millionup from 64 million cubic feet in Q1
    Q2 FY26

    Gas volumes continue to ramp up, with further step change expected.

    Industry KPIs

    7
    MetricValueDetails
    D c efficiency rig activityIncreased
    Realized price differentialStrengthened
    Sanctioned expansion backlog$180 million to $190 millionUSD
    Basin level production volume157,000bbl/d
    FCF shareholder distributions$1.135USD/unit
    Take or pay contract structureNot shared
    Distributable cash flow per unit share$1.135USD/unit

    Deals & partnerships

    4
    H2OAcquisition of water assets

    Successfully integrated in late 2024.

    GravityAcquisition of water assets

    Successfully integrated in early 2025.

    DelekAmended extend agreement

    Agreement from 2024, impacting Q2 2026 results.

    Wingo WebsterPipeline joint venture

    Continued strong results from this joint venture.

    Capital programs

    1
    Sour Gas Gathering Infrastructure Build-outunderway
    Period spend: $51 million

    Benefit: Increased sour gas processing and gathering capabilities

    Growth capital spending primarily directed towards the drilling of the first AGI well and continued build-out of sour gas gathering infrastructure, including compressor stations. Expected to unlock future growth for producers in the region.

    Risks & headwinds

    2
    Impact of 2024 amended extend agreement with DelekQ2 FY26

    Wholesale Marketing and Terminalling adjusted EBITDA declined to $13 million from $23 million YoY

    Mitigation: Not explicitly stated, but the agreement is already in effect.

    Impact of January 2026 related party transactionQ2 FY26

    Storage & Transportation adjusted EBITDA decreased modestly to $16 million from $17 million YoY

    Mitigation: Not explicitly stated, but the transaction is already in effect.

    What to watch in Q3 FY26

    4

    Full-year Adjusted EBITDA Guidance

    Q3 FY26 earnings call
    Current$520 million to $560 million
    TargetPotential upgrade

    Why it matters

    Management indicated they would follow last year's sequence of potentially upgrading guidance on the Q3 call, which could signal stronger performance than currently projected.

    We're going to follow the same sequence that we had in the last year that Q4 -- on Q4 call, we are submitting the guidance. And if we see a way to upgrade the guidance, we're going to do -- we did it last year in Q3. So stay tight and more news to come.

    Q&A highlights

    8

    What drove the strength in the gathering and processing segment, particularly regarding commodity environment ties and durability?

    Management highlighted strong performance across all segments, with record crude volumes in Delaware and increasing gas and water volumes. They emphasized their strategically positioned infrastructure and high activity in the Northern Delaware, attributing strength to operational execution and customer activity rather than solely commodity prices.

    “Like across the board, we're performing well in the second quarter and continue to do so. We have great infrastructure which, as you know, is strategically positioned in the right location, and we continue to see a lot of activity amongst our customers in the Northern Delaware with close proximity to our assets.”

    asked by Douglas Irwin · answered by Mark Hobbs

    2 min read5 chapters

    Detailed Narrative

    01

    Sour Gas Solution Progress

    Delek Logistics is nearing completion of its integrated sour gas processing, treating, and in-handling solution at the Libby Gas Complex. This comprehensive system, including increased capacity at Libby and the first AGI well, is designed to support long-term oil and gas production growth in the Delaware Basin. Management expects a 'step change' in gas utilization later this year as the sour gas solution comes online, positioning the company for future growth in the region.

    02

    Record Crude Gathering Volumes

    The Delaware crude gathering business achieved record volumes in the second quarter, exceeding 157,000 barrels per day, a significant increase from 129,000 bbl/d in Q1. Both the Delaware and Midland crude gathering businesses are performing strongly. This performance is attributed to the company's strategically positioned infrastructure and heightened activity by producers in the Northern Delaware, Lea and Eddy Counties.

    03

    Water Business Performance

    The water business continued its strong operating performance, driven by the successful integration of the H2O and Gravity acquisitions in late 2024 and early 2025, respectively. Produced water handling and disposal remains a critical and increasing need for customers. Delek Logistics is exploring growth opportunities in this space, leveraging its scale and capabilities across the Delaware and Midland basins.

    04

    Financial Discipline and Leverage

    The company reported a leverage ratio of 4.23x at quarter-end, a modest increase from Q1, reflecting capital investments. Management is comfortable with its long-term leverage target of 3.5x and expects to manage around 4x during growth periods. Liquidity remains robust at approximately $1.1 billion, providing flexibility for continued growth. The company also proactively refinanced its high-yield capital structure, issuing $800 million in new senior notes due 2034, reducing annual interest costs and extending its maturity profile.

    05

    Strategic Positioning and Growth Potential

    Delek Logistics is uniquely positioned as a '3-stream' service platform (crude, gas, water) in the Permian Basin, particularly in Lea County. The company's strong and growing third-party business is expected to contribute approximately 80% of run-rate EBITDA in 2026 on a pro forma basis, increasing economic separation from its sponsor, DK. Higher crude prices and strengthening Waha prices are anticipated to drive increased demand for its services, supporting future growth.

    AI-generated summary of the company’s earnings call. Not investment advice.