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UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
Form 10-Q
(Mark One)
☑QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934
For the quarterly period ended
September 30, 2024
or
☐TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934
For the transition period from                      to                     
Commission file number 001-35721
DELEK LOGISTICS PARTNERS, LP
(Exact name of registrant as specified in its charter)
Delaware
globe05.jpg
45-5379027
(State or other jurisdiction of incorporation or organization)(I.R.S. Employer Identification No.)
310 Seven Springs Way, Suite 500
Brentwood
Tennessee
37027
(Address of principal executive offices)
(Zip Code)
(615) 771-6701
(Registrant’s telephone number, including area code)
Not applicable
(Former name, former address and former fiscal year, if changed since last report)
Securities registered pursuant to Section 12(b) of the Act:
Title of Each ClassTrading SymbolName of Each Exchange on Which Registered
Common Units Representing Limited Partnership InterestsDKLNew York Stock Exchange
Indicate by check mark whether the registrant: (1) has filed all reports required to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during the preceding 12 months (or for such shorter period that the registrant was required to file such reports), and (2) has been subject to such filing requirements for the past 90 days. Yes ☑ No ☐
Indicate by check mark whether the registrant has submitted electronically every Interactive Data File required to be submitted pursuant to Rule 405 of Regulation S-T during the preceding 12 months (or for such shorter period that the registrant was required to submit such files). Yes ☑ No ☐
Indicate by check mark whether the registrant is a large accelerated filer, an accelerated filer, a non-accelerated filer, a smaller reporting company, or an emerging growth company. See the definitions of “large accelerated filer,” “accelerated filer,” “smaller reporting company,” and "emerging growth company" in Rule 12b-2 of the Exchange Act.
Large accelerated filer☐Accelerated filer☑
Non-accelerated filer
☐
Smaller reporting company
☐
Emerging growth company
☐
If an emerging growth company, indicate by check mark if the registrant has elected not to use the extended transition period for complying with any new or revised financial accounting standards provided pursuant to Section 13(a) of the Exchange Act. ☐
Indicate by check mark whether the registrant is a shell company (as defined in Rule 12b-2 of the Exchange Act). Yes ☐ No ☑
At November 1, 2024, there were 51,466,664 common limited partner units outstanding.

Table of Contents
Delek Logistics Partners, LP
Quarterly Report on Form 10-Q
For the Quarterly Period Ended September 30, 2024














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Financial Statements
Part I - FINANCIAL INFORMATION
Item 1. Financial Statements
Delek Logistics Partners, LP
Condensed Consolidated Balance Sheets (Unaudited)
(in thousands, except unit and per unit data)
September 30, 2024December 31, 2023
ASSETS  
Current assets:  
Cash and cash equivalents$7,317 $3,755 
Accounts receivable48,173 41,131 
Accounts receivable from related parties— 28,443 
Lease receivable - affiliate23,852 — 
Inventory4,632 2,264 
Other current assets1,967 676 
Total current assets85,941 76,269 
Property, plant and equipment:  
Property, plant and equipment1,480,553 1,320,510 
Less: accumulated depreciation(440,557)(384,359)
Property, plant and equipment, net1,039,996 936,151 
Equity method investments 322,745 241,337 
Customer relationship intangible, net191,655 181,336 
Marketing contract intangible, net— 102,155 
Other intangibles, net95,538 59,536 
Goodwill12,203 12,203 
Operating lease right-of-use assets15,222 19,043 
Net lease investment - affiliate186,361 — 
Other non-current assets11,062 14,216 
Total assets$1,960,723 $1,642,246 
LIABILITIES AND DEFICIT  
Current liabilities:  
Accounts payable$35,683 $26,290 
Accounts payable to related parties442 — 
Current portion of long-term debt— 30,000 
Interest payable15,559 5,805 
Excise and other taxes payable7,641 10,321 
Current portion of operating lease liabilities5,371 6,697 
Accrued expenses and other current liabilities4,886 11,477 
Total current liabilities69,582 90,590 
Non-current liabilities:  
Long-term debt, net of current portion1,894,257 1,673,789 
Operating lease liabilities, net of current portion5,820 8,335 
Asset retirement obligations15,453 10,038 
Other non-current liabilities20,719 21,363 
Total non-current liabilities1,936,249 1,713,525 
Preferred units - 70,000 units issued and outstanding at September 30, 2024
70,000 — 
Equity (Deficit):  
Common unitholders - public; 12,932,311 units issued and outstanding at September 30, 2024 (9,299,763 at December 31, 2023)
282,458 160,402 
Common unitholders - Delek Holdings; 34,111,278 units issued and outstanding at September 30, 2024 (34,311,278 at December 31, 2023)
(397,566)(322,271)
Total deficit(115,108)(161,869)
Total liabilities, preferred units and deficit $1,960,723 $1,642,246 
See accompanying notes to the condensed consolidated financial statements
3 | deleklogisticswcapsulehor05.jpg
Financial Statements
Delek Logistics Partners, LP
Condensed Consolidated Statements of Income and Comprehensive Income (Unaudited)
(In thousands, except unit and per unit data)
Three Months Ended September 30,Nine Months Ended September 30,
 2024202320242023
Net revenues
   Affiliate (1)
$114,899 $156,411 $411,352 $414,403 
Third party99,171 119,413 319,421 351,857 
Net revenues214,070 275,824 730,773 766,260 
Cost of sales: 
Cost of materials and other - affiliate (1)
84,015 115,149 279,962 298,262 
Cost of materials and other - third party33,495 35,479 99,300 106,587 
Operating expenses (excluding depreciation and amortization presented below)27,746 32,611 88,895 85,302 
Depreciation and amortization19,969 23,261 67,882 65,494 
Total cost of sales165,225 206,500 536,039 555,645 
Operating expenses related to wholesale business (excluding depreciation and amortization presented below)174 392 569 1,397 
General and administrative expenses15,745 5,545 26,624 19,666 
Depreciation and amortization1,235 1,324 4,024 3,923 
Other operating income, net(117)(491)(1,294)(804)
Total operating costs and expenses182,262 213,270 565,962 579,827 
Operating income31,808 62,554 164,811 186,433 
Interest income(23,470)— (23,498)— 
Interest expense37,022 36,901 112,547 104,581 
Income from equity method investments (15,602)(9,296)(31,974)(22,897)
Other expense (income), net34 (3)(177)(24)
Total non-operating (income) expenses, net(2,016)27,602 56,898 81,660 
Income before income tax expense33,824 34,952 107,913 104,773 
Income tax expense150 127 533 685 
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:
Basic$0.71 $0.80 $2.32 $2.39 
Diluted$0.71 $0.80 $2.32 $2.39 
Weighted average limited partner units outstanding: 
Basic47,109,008 43,588,316 46,248,003 43,578,636 
Diluted47,135,101 43,604,792 46,269,423 43,598,547 
(1) See Note 3 for a description of our material affiliate revenue and purchases transactions.

See accompanying notes to the condensed consolidated financial statements

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Financial Statements
Delek Logistics Partners, LP
Condensed Consolidated Statements of Partners' Equity (Deficit) (Unaudited)
(in thousands)

Common - Public Common - Delek HoldingsTotalPreferred
Balance as of June 30, 2024$287,195 $(338,502)$(51,307)$— 
Cash distributions(14,082)(37,181)(51,263)— 
Net income attributable to partners
9,308 24,366 33,674 — 
Issuance of units— — — 70,000 
Redemption of units— (97,949)(97,949)— 
Contributions— 50,873 50,873 — 
Other
37 827 864 — 
Balance as of September 30, 2024$282,458 $(397,566)$(115,108)$70,000 
Common - Public Common - Delek HoldingsTotalPreferred
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 — 
Other
57 738 795 — 
Balance as of September 30, 2023$165,472 $(304,624)$(139,152)$— 
Common - Public Common - Delek HoldingsTotalPreferred
Balance as of December 31, 2023$160,402 $(322,271)$(161,869)$— 
Cash distributions (1)
(37,987)(110,092)(148,079)— 
Net income attributable to partners27,812 79,568 107,380 — 
Issuance of units132,202 — 132,202 70,000 
Redemption of units— (97,949)(97,949)— 
Contributions— 50,873 50,873 — 
Other29 2,305 2,334 — 
Balance as of September 30, 2024$282,458 $(397,566)$(115,108)$70,000 
Common - Public Common - Delek HoldingsTotalPreferred
Balance as of December 31, 2022$172,119 $(282,819)$(110,700)$— 
Cash distributions (1)
(28,695)(105,679)(134,374)— 
Net income attributable to partners22,135 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.









See accompanying notes to the condensed consolidated financial statements
5 | deleklogisticswcapsulehor05.jpg
Financial Statements
Delek Logistics Partners, LP
Condensed Consolidated Statements of Cash Flows (Unaudited)
(in thousands)
 Nine Months Ended September 30,
20242023
Cash flows from operating activities:
Net income$107,380 $104,088 
Adjustments to reconcile net income to net cash provided by operating activities:
Depreciation and amortization71,906 69,417 
Non-cash lease expense5,689 7,407 
Amortization of marketing contract intangible4,206 5,408 
Amortization of deferred revenue(2,055)(1,331)
Amortization of deferred financing costs and debt discount3,955 3,476 
Income from equity method investments (31,974)(22,897)
Dividends from equity method investments 28,309 24,118 
Loss on extinguishment of debt3,571 — 
Other non-cash adjustments(4,015)2,312 
Changes in assets and liabilities:
Accounts receivable(399)21,430 
Inventories and other current assets(332)(2,290)
Accounts payable and other current liabilities(5,982)(29,180)
Accounts receivable/payable to related parties(30,625)(73,144)
Net investment in leases - affiliate6,168 
Non-current assets and liabilities, net639 1,816 
Net cash provided by operating activities156,441 110,630 
Cash flows from investing activities:  
Asset acquisitions from Delek Holdings(83,903)— 
Purchases of property, plant and equipment(83,008)(58,564)
Proceeds from sales of property, plant and equipment 10,191 1,036 
Purchases of intangible assets(1,690)(2,583)
Business combination(159,495)— 
Distributions from equity method investments3,377 4,477 
Net cash used in investing activities(314,528)(55,634)
Cash flows from financing activities:  
Distributions to common unitholders - public(37,987)(28,695)
Distributions to common unitholders - Delek Holdings(110,092)(105,679)
Proceeds from term debt1,059,000 — 
Payments on term debt(531,250)(11,250)
Proceeds from revolving facility1,021,600 304,500 
Payments on revolving facility(1,347,200)(213,800)
Proceeds from issuance of units132,202 — 
Payments on other financing agreements(6,214)— 
Deferred financing costs paid(18,154)(1,669)
Other financing activities(256)(2,191)
Net cash provided by (used in) financing activities161,649 (58,784)
Net increase (decrease) in cash and cash equivalents3,562 (3,788)
Cash and cash equivalents at the beginning of the period3,755 7,970 
Cash and cash equivalents at the end of the period$7,317 $4,182 
Supplemental disclosures of cash flow information:  
Cash paid during the period for:  
Interest expense$95,267 $89,524 
Income taxes$— $20 
Non-cash investing activities:  
Equity attributable to W2W Holdings Acquisition$(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 $— 
Increase in accrued capital expenditures$7,542 $10,084 
Non-cash financing activities:
Non-cash lease liability arising from obtaining right of use assets during the period$1,398 $4,764 
See accompanying notes to the condensed consolidated financial statements
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Notes to the Condensed Consolidated Financial Statements (Unaudited)
Delek Logistics Partners, LP
Notes to the Condensed Consolidated Financial Statements (Unaudited)
1. Organization and Basis of Presentation
As used in this report, the terms "Delek Logistics Partners, LP," the "Partnership," "we," "us," or "our" may refer to Delek Logistics Partners, LP, one or more of its consolidated subsidiaries or all of them taken as a whole. The Partnership is a Delaware limited partnership formed in April 2012 by Delek US Holdings, Inc. ("Delek Holdings") and its subsidiary Delek Logistics GP, LLC, our general partner (our "general partner").
The Partnership provides gathering, pipeline and other transportation services primarily for crude oil and natural gas customers, storage, wholesale marketing and terminalling services primarily for intermediate and refined product customers, and water disposal and recycling services through its owned assets and joint ventures located primarily in the Permian Basin and other select areas in the Gulf Coast region. 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. See Note 2 for further information.
Certain information and footnote disclosures normally included in annual financial statements prepared in accordance with United States Generally Accepted Accounting Principles ("GAAP") have been condensed or omitted, although management believes that the disclosures herein are adequate to make the financial information presented not misleading. Our unaudited condensed consolidated financial statements have been prepared in conformity with GAAP applied on a consistent basis with those of the annual audited financial statements included in our Annual Report on Form 10-K for the year ended December 31, 2023 (our "Annual Report on Form 10-K"), filed with the U.S. Securities and Exchange Commission (the "SEC") on February 28, 2024 and in accordance with the rules and regulations of the SEC. These unaudited condensed consolidated financial statements should be read in conjunction with the audited consolidated financial statements and notes thereto for the year ended December 31, 2023 included in our Annual Report on Form 10-K.
All adjustments necessary for a fair presentation of the financial position and the results of operations for the interim periods presented have been included. All intercompany accounts and transactions have been eliminated. Such intercompany transactions do not include those with Delek Holdings or our general partner, which are presented as related parties in these accompanying condensed consolidated financial statements. All adjustments are of a normal, recurring nature. 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.
Leases
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.
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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 Reporting (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.

2. Acquisitions
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.
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Notes to Consolidated Financial Statements
Determination of Purchase Price (1)
The table below presents the estimated purchase price (in thousands):
Base purchase price:$230,000 
Less: closing net working capital (as defined in the H2O Midstream Purchase Agreement)
(2,508)
Plus: various closing adjustments
2,003 
Adjusted purchase price$229,495 
Cash paid $159,495 
Fair value of preferred units issued70,000 
Preliminary purchase price$229,495 
(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.
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 receivables6,643 
Inventories2,448 
Other current assets879 
Property, plant and equipment174,548 
Operating lease right-of-use assets470 
Customer relationship intangible(1)
24,006 
Other intangibles(1)
34,841 
Other non-current assets21 
Total assets acquired$243,856 
Liabilities assumed:
Accounts payable$3,954 
Accrued expenses and other current liabilities5,059 
Current portion of operating lease liabilities278 
Asset retirement obligations4,851 
Operating lease liabilities, net of current portion219 
Total liabilities assumed14,361 
Fair value of net assets acquired$229,495 
(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").

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Notes to Consolidated Financial Statements
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.
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.
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 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. The most significant pro forma adjustments relate to (i) incremental interest expense associated with revolving credit facility borrowings incurred in connection with this acquisition, (ii) incremental depreciation resulting from the estimated fair values of acquired property, plant and equipment, (iii) incremental amortization resulting from the estimated fair value of the acquired customer relationship intangible and, (iv) transaction costs. The unaudited pro forma financial information excludes any expected cost savings or other synergies as a result of this acquisition. The unaudited pro forma financial information is not necessarily indicative of the results of operations that would have been achieved had this acquisition been effective as of the date presented, nor is it indicative of future operating results of the combined company. Actual results may differ significantly from the unaudited pro forma financial information.
Three Months Ended September 30,Nine Months Ended September 30,
2024202320242023
(in thousands)
Net sales$226,303 $296,752 $775,369 $833,859 
Net income attributable to partners$40,045 $40,290 $119,183 $120,856 
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.

3. Related Party Transactions
Commercial Agreements
The Partnership has a number of long-term, fee-based commercial agreements with 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. Most of these agreements have an initial term ranging from five to ten years, which may be extended for various renewal terms at the option of Delek Holdings. The fees under each agreement are payable to us monthly by Delek Holdings or certain third parties to whom Delek Holdings has assigned certain of its rights and are generally subject to increase or decrease on July 1 of each year, by the amount of any change in various inflation-based indices, however, in no event will the fees be adjusted below the amount initially set forth in the applicable agreement. 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.
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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
In addition to the commercial agreements described above, the Partnership has entered into the following agreements with Delek Holdings:
Omnibus Agreement
On November 7, 2012, the Partnership entered into an omnibus agreement with Delek Holdings, our general partner, Delek Logistics Operating, LLC, Lion Oil Company, LLC and certain of the Partnership’s and Delek Holdings' other subsidiaries, which has been amended and restated from time to time in connection with acquisitions from Delek Holdings (collectively, as amended and restated, the "Omnibus Agreement"). 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.
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. 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.
Other Transactions
The Partnership manages long-term capital projects on behalf of Delek Holdings pursuant to a construction management and operating agreement (the "DPG Management Agreement") for the construction of gathering systems in the Permian Basin. The majority of the gathering systems have been constructed, however, additional costs pertaining to a pipeline connection that was not acquired by the Partnership continue to be incurred and are still subject to the terms of the DPG Management Agreement. The Partnership is also considered the operator for the project and is responsible for oversight of the project design, procurement and construction of project segments and provides other related services. Pursuant to the terms of the DPG Management Agreement, the Partnership receives a monthly operating services fee and a construction services fee, which includes the Partnership's direct costs of managing the project plus an additional percentage fee of the construction costs of each project segment. The agreement extends through December 2024. 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. 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.
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Notes to Consolidated Financial Statements
Summary of Transactions
Income from affiliates consist primarily of revenues from gathering, transportation, storage, offloading, Renewable Identification Numbers, wholesale marketing and products terminalling services provided primarily to Delek Holdings under commercial agreements based on regulated tariff rates or contractually based fees and product sales, and interest income associated with those commercial agreements classified as sales-type leases. Affiliate operating expenses are primarily comprised of amounts we reimburse Delek Holdings, or our general partner, as the case may be, for the services provided to us under the Partnership Agreement. These expenses could also include reimbursement and indemnification amounts from Delek Holdings, as provided under the Omnibus Agreement. Additionally, the Partnership is required to reimburse Delek Holdings for direct or allocated costs and expenses incurred by Delek Holdings on behalf of the Partnership and for charges Delek Holdings incurred for the management and operation of our logistics assets, including an annual fee for various centralized corporate services, which are included in general and administrative expenses. In addition to these transactions, we purchase refined products and bulk biofuels from Delek Holdings, the costs of which are included in cost of materials and other-affiliate.
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,
2024202320242023
Revenues$114,899 $156,411 $411,352 $414,403 
Interest income$23,442 $— $23,442 $— 
Purchases$84,015 $115,149 $279,962 $298,262 
Operating and maintenance expenses
$15,275 $15,944 $48,432 $47,742 
General and administrative expenses
$2,777 $3,233 $9,280 $11,112 
Quarterly Cash Distributions
Date of DistributionDistributions paid to Delek Holdings (in thousands)
February 12, 2024$36,198 
May 15, 202436,713 
August 14, 2024
37,181 
November 14, 2024 (1)
37,352 
Total$147,444 
February 9, 2023$34,998 
May 15, 202335,169 
August 14, 2023
35,512 
November 13, 202335,855 
Total$141,534 
(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.

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Notes to Consolidated Financial Statements
4. Revenues
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 ProcessingWholesale Marketing and TerminallingStorage and TransportationConsolidated
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 Party22,286 55,256 — 77,542 
Product Revenue - Affiliate5,121 31,887 — 37,008 
Lease Revenue - Affiliate26,308 17,579 9,638 53,525 
Total Revenue$81,527 $106,938 $25,605 $214,070 
Three Months Ended September 30, 2023
Gathering and ProcessingWholesale Marketing and TerminallingStorage and TransportationConsolidated
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 Party24,477 76,500 — 100,977 
Product Revenue - Affiliate3,776 43,475 — 47,251 
Lease Revenue - Affiliate49,900 13,160 20,659 83,719 
Total Revenue$94,825 $147,110 $33,889 $275,824 
Nine Months Ended September 30, 2024
Gathering and ProcessingWholesale Marketing and Terminalling Storage and TransportationConsolidated
Service Revenue - Third Party$56,151 $— $7,015 $63,166 
Service Revenue - Affiliate (1)
8,486 29,684 40,924 79,094 
Product Revenue - Third Party69,910 186,345 — 256,255 
Product Revenue - Affiliate13,523 102,184 — 115,707 
Lease Revenue - Affiliate121,983 43,595 50,973 216,551 
Total Revenue$270,053 $361,808 $98,912 $730,773 
Nine Months Ended September 30, 2023
Gathering and ProcessingWholesale Marketing and Terminalling Storage and TransportationConsolidated
Service Revenue - Third Party$45,378 $— $6,916 $52,294 
Service Revenue - Affiliate (1)
8,165 34,132 44,667 86,964 
Product Revenue - Third Party77,754 221,809 — 299,563 
Product Revenue - Affiliate12,119 86,625 — 98,744 
Lease Revenue - Affiliate
137,078 35,680 55,937 228,695 
Total Revenue$280,494 $378,246 $107,520 $766,260 
(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. 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.
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Notes to Consolidated Financial Statements
Our unfulfilled performance obligations as of September 30, 2024 were as follows (in thousands):
Remainder of 2024$57,026 
2025220,037 
2026201,538 
2027201,538 
2028 and thereafter426,350 
Total expected revenue on remaining performance obligations$1,106,489 

5. 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.
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,
2024202320242023
Net income attributable to partners$33,674 $34,825 $107,380 $104,088 
Less: Limited partners' distribution declared on common units51,263 45,112 147,794 134,216 
Undistributed net loss$(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, basic47,109,008 43,588,316 46,248,003 43,578,636 
Dilutive effect of unvested phantom units26,093 16,476 21,420 19,911 
Weighted average limited partner units outstanding, diluted47,135,101 43,604,792 46,269,423 43,598,547 
Net income per limited partner unit:
Basic$0.71 $0.80 $2.32 $2.39 
Diluted (1)
$0.71 $0.80 $2.32 $2.39 
(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.

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Notes to Consolidated Financial Statements
6. Long-Term Obligations
Outstanding borrowings under the Partnership’s debt instruments are as follows (in thousands):
September 30, 2024December 31, 2023
DKL Revolving Facility$454,900 $780,500 
DKL Term Facility— 281,250 
2029 Notes1,050,000 — 
2028 Notes400,000 400,000 
2025 Notes— 250,000 
Principal amount of long-term debt1,904,900 1,711,750 
Less: Unamortized discount and premium and deferred financing costs 10,643 7,961 
Total debt, net of unamortized discount and premium and deferred financing costs1,894,257 1,703,789 
Less: 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. 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.
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. Revolving Credit Commitments (as defined in the DKL Credit Facility) by an amount equal to $100.0 million resulting in aggregate lender commitments under the Delek Logistics Revolving Credit Facility in an amount of $1,150.0 million, including up to $146.9 million for letters of credit and $31.9 million in swing line loans. 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.
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. 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. 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.

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Notes to Consolidated Financial Statements
2029 Notes
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.
2028 Notes
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.
2025 Notes
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. 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. The Partnership received tenders from holders of approximately $156.2 million in aggregate principal amount. 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.




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Notes to Consolidated Financial Statements
7. Equity
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.
Equity Activity
The table below summarizes the changes in the number of limited partner units outstanding from December 31, 2023 through September 30, 2024.
Common - Public
Common - Delek Holdings (1)
Total
Balance at December 31, 20239,299,763 34,311,278 43,611,041 
Unit-based compensation awards (2)
48,132 — 48,132 
Equity offering units issued3,584,416 — 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, 202412,932,311 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.
Cash Distributions
Our Partnership Agreement sets forth the calculation to be used to determine the amount and priority of available cash distributions that our limited partner unitholders will receive. Our distributions earned with respect to a given period are declared subsequent to quarter end.
The table below summarizes the quarterly distributions related to our quarterly financial results:
Quarter EndedTotal Quarterly Distribution Per Limited Partner UnitTotal Cash Distribution (in thousands)
March 31, 2023$1.025$44,664
June 30, 2023$1.035$45,112
September 30, 2023$1.045$45,558
March 31, 2024$1.070$50,521
June 30, 2024$1.090$51,263
September 30, 2024 (1)
$1.100$51,513
(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.

8. 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.
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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.

9. 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. 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. ("CP LLC") to operate one of these pipeline systems and a 33% membership interest in the entity formed with Andeavor Logistics RIO Pipeline LLC ("Andeavor Logistics") to operate the other pipeline system.
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.
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. 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. We determined that W2W Holdings is a VIE. 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. 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, 2024As of December 31, 2023
Red River$138,982 $141,091 
W2W Holdings87,511 — 
CP LLC59,791 61,273 
Andeavor Logistics36,461 38,973 
Total Equity Method Investments$322,745 $241,337 

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Notes to Consolidated Financial Statements
10. Segment Data
We aggregate our operating segments into four reportable segments: (i) gathering and processing; (ii) wholesale marketing and terminalling; (iii) storage and transportation; and (iv) investment in pipeline joint ventures. Operations that are not specifically included in the reportable segments are included in Corporate and other segment.
The CODM evaluates performance based on EBITDA for planning and forecasting purposes. EBITDA is an important measure used by management to evaluate the financial performance of our core operations. EBITDA is not a GAAP measure, but the components of EBITDA are computed using amounts that are determined in accordance with GAAP. A reconciliation of EBITDA to Net Income is included in the tables below. We define EBITDA as net income (loss) before net interest expense, income tax expense, depreciation and amortization expense, including amortization of marketing contract intangible, which is included as a component of net revenues in our accompanying condensed consolidated statements of income and comprehensive income.
Assets by segment are not a measure used to assess the performance of the Partnership by the CODM and thus is not disclosed.
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 ProcessingWholesale Marketing and TerminallingStorage and TransportationInvestments in Pipeline Joint VenturesCorporate and OtherConsolidated
Net revenues:
Affiliate (1)
$39,910 $51,682 $23,307 $— $— $114,899 
Third party41,617 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 amortization16,424 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