Delek Logistics Partners, LP Q2 2026 Earnings Call Summary

Moby Intelligence

Thu, August 6, 2026 at 6:37 AM GMT+3 3 min read

Delek Logistics Partners, LP Q2 2026 Earnings Call Summary - Moby

Strategic Performance Drivers

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Achieved record adjusted EBITDA of $144 million, driven by record volumes in Delaware crude gathering and increased utilization at the Libby gas complex.
Strengthened competitive positioning through a 'three-stream' service platform in the Permian Basin, offering integrated crude, gas, and water solutions to producers.
Advanced the integrated sour gas solution at the Libby complex, including the completion of the first Acid Gas Injection (AGI) well to address the regional shift from sweet to sour gas production.
Successfully integrated H2O and Gravity water acquisitions, capitalizing on the critical and increasing need for produced water handling and disposal in the Delaware and Midland Basins.
Maintained economic separation from sponsor Delek US, with third-party business expected to represent approximately 80% of run-rate EBITDA on a pro forma basis in 2026.
Executed a proactive refinancing of the high-yield capital structure, issuing $800 million in senior notes to lower interest costs and extend the maturity profile to 2034.

Outlook and Growth Strategy

Reaffirmed full-year 2026 adjusted EBITDA guidance of $520 million to $560 million, with management signaling potential for upgrades depending on Q3 performance.
Expects a 'step change' in gas utilization and volumes through the remainder of 2026 as the comprehensive sour gas gathering and compression infrastructure comes online.
Anticipates $180 million to $190 million in 2026 growth capital will generate approximately $75 million of run-rate EBITDA by 2027.
Projects increased demand for midstream services driven by strengthening Waha gas prices as additional takeaway capacity becomes available by early next year.
Management intends to manage the leverage ratio back toward the 3.5x long-term target as new growth projects begin contributing to EBITDA.

Operational and Financial Context

Announced the 54th consecutive quarterly distribution increase to $1.135 per unit, emphasizing a commitment to consistent stakeholder returns.
Reported a modest uptick in leverage to 4.23x, explicitly attributed to front-loaded capital investments in high-return growth projects.
Noted a decline in Wholesale Marketing and Terminalling EBITDA due to the structural impact of the 2024 'amend and extend' agreement with Delek US.
Highlighted leadership transitions with Mark Hobbs moving to a lead role at DKL and the appointment of Kris Kindrick as SVP of Commercial to drive the next growth chapter.

Q&A Session Highlights

Drivers of Gathering and Processing margin strength and durability

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Management attributed strength to record Delaware crude volumes exceeding 157,000 barrels per day and a ramp in gas volumes to over 80 million cubic feet per day.
Confirmed that the margin strength is supported by strategic asset positioning near high-activity producer acreage in the Northern Delaware Basin.

Impact of commodity prices and Waha basis on activity

Noted that while Waha price strength is a minor direct financial positive, it is a significant driver for volume growth as producers increase activity.
Management observed an increase in rig forecasts within their specific acreage, driven by both commodity price strength and improved takeaway economics.

Long-term demand and expansion plans for sour gas treating

Management explained that the 'rock is going sour' in the region, making their AGI wells and sour gas infrastructure a unique competitive advantage.
Indicated they are already evaluating options for further expansions of the Libby complex based on anticipated customer needs for additional sour processing.

Inorganic growth strategy and M&A discipline

Management emphasized that any M&A must be accretive to leverage, coverage, and free cash flow, noting they previously acquired assets at 5x-6x multiples that now trade at 9x-10x.
Stated that while they remain aggressive in seeking value, they are not pressured to do deals given the high intrinsic value and organic growth potential of their existing footprint.