Delek Logistics Partners (NYSE:DKL) reported second-quarter adjusted EBITDA of approximately $144 million, a quarterly record and up from $127 million in the same period of 2025, as higher utilization at its Libby Gas Complex and stronger Permian crude margins supported results.
The partnership reaffirmed its full-year 2026 adjusted EBITDA guidance of $520 million to $560 million. President and Chairman Avigal Soreq said the results reflected the company’s position as a provider of crude, gas and water services in the Permian Basin, while management said it expects roughly 80% of run-rate EBITDA in 2026, on a pro forma basis, to come from third-party customers.
Gas volumes rise as sour-gas project advances
Management said it is nearing completion of an integrated sour-gas processing, treating and acid-gas injection solution at the Libby Gas Complex in the Delaware Basin. The project includes expanded processing capacity, the company’s first AGI well, sour-gas gathering infrastructure and compressor stations.
Executive Vice President Mark Hobbs said the project is intended to address increasing sour-gas production in the region as some customer production shifts from sweet gas to sour gas. He said the completed system is expected to support producers’ future development plans and drive a “step change” in gas volumes later this year.
Gas volumes exceeded 80 million cubic feet per day during the second quarter, compared with approximately 64 million cubic feet per day in the first quarter, according to Hobbs. Both Libby One and Libby Two were operating well, he said, and the company expects utilization to increase as the sour-gas solution comes online.
Management also said it continues to evaluate future investments that could expand the Libby Complex in response to anticipated customer demand for additional sour-gas processing capacity.
Crude and water operations post higher volumes
Delek Logistics’ Delaware crude-gathering operation delivered record volumes during the quarter. Hobbs said Delaware crude volumes exceeded 157,000 barrels per day, up from roughly 129,000 barrels per day in the first quarter.
Produced-water volumes across the Midland and Delaware basins increased to more than 687,000 barrels per day from 557,000 barrels per day in the prior quarter. The company attributed water-business performance in part to the integration of the H2O and Gravity acquisitions completed in late 2024 and early 2025, respectively.
Management said its combined crude, gas and water offering has improved its competitive position, particularly in Lea County, New Mexico. Hobbs said activity among producers in the Northern Delaware remains strong and that Delek Logistics’ infrastructure is located near customer acreage and drilling activity.
During the question-and-answer session, management said higher commodity prices and stronger Waha natural-gas prices have supported higher production forecasts for the second half of 2026 and for 2027. Mohit Bhardwaj, executive vice president of new energy, strategy and investor relations, said stronger Waha pricing is a relatively modest direct benefit to results but a more significant positive for volumes.
Segment results and capital program
Gathering and processing adjusted EBITDA totaled $104 million in the second quarter, up from $78 million a year earlier. The increase was driven primarily by higher Libby utilization and stronger realized margins in the Permian crude business, Chief Financial Officer Robert Wright said.
- Wholesale marketing and terminaling adjusted EBITDA was approximately $13 million, compared with $23 million in the prior-year quarter. Wright said the decline was largely related to the effects of the 2024 amend-and-extend agreement with Delek.
- Storage and transportation adjusted EBITDA was $16 million, compared with $17 million a year earlier, primarily reflecting a January 2026 related-party transaction.
- Investments in pipeline joint ventures contributed $21 million of adjusted EBITDA, up from $17 million in the second quarter of 2025, led by continued results from the Wink-to-Webster joint venture.
Total capital spending was approximately $61 million in the second quarter, including $51 million of growth capital. The growth spending primarily funded drilling of the first AGI well and construction of sour-gas gathering infrastructure, along with work on power solutions for the Libby Gas Complex.
The partnership expects its $180 million to $190 million full-year growth capital program to generate up to $75 million of run-rate EBITDA. Bhardwaj said the company expects about $15 million of that EBITDA contribution in 2026 and $60 million in 2027.
Distribution rises for 54th consecutive quarter
Distributable cash flow, as adjusted, was approximately $81 million, while the distributable cash flow coverage ratio was about 1.33 times. The board approved a quarterly distribution of $1.135 per unit, marking the partnership’s 54th consecutive quarterly distribution increase.
Delek Logistics ended the quarter with a leverage ratio of 4.23 times, modestly higher than in the first quarter because of growth investments, Wright said. Management reiterated its long-term leverage target of 3.5 times but said it expects to manage around 4 times while pursuing growth opportunities and reduce leverage as the expected EBITDA from new projects is realized.
During the quarter, the company issued $800 million of senior notes due 2034, fully retired its 2028 notes and partially redeemed its 2029 notes. Wright said the refinancing lowered annual interest costs and extended the partnership’s maturity profile. Liquidity stood at approximately $1.1 billion at quarter-end.
Soreq said the company will continue to consider acquisitions, but only when they are accretive to leverage, coverage and free cash flow and align with its broader strategy.
About Delek Logistics Partners (NYSE:DKL)
Delek Logistics Partners L.P. (NYSE: DKL) is a master limited partnership formed in 2011 through contributions of pipeline, terminal and crude oil gathering assets by its sponsor, Delek US Holdings, Inc Headquartered in Brentwood, Tennessee, the partnership is managed by Delek Logistics GP, LLC, an affiliate of Delek US. Delek Logistics Partners owns and operates an integrated network of petroleum pipelines and terminals that support the movement, storage and throughput of crude oil and refined products.
The partnership’s core operations include crude oil gathering and processing systems, long-haul pipeline transportation and storage terminal services.
