Company: DK
Filing Date: 2025-05-07
Form Type: 10-Q
Source: 0001694426-25-000060
Chunk: 4

Company: Delek US Holdings, Inc.
Filing Date: 2025-05-07
Form: 10-Q
Item: Part I, Item 2
Chunk 4
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 Strategic Overview 

Management's View of Our Business

We are an integrated downstream energy business focused on petroleum refining and the transportation, storage and wholesale distribution of crude oil, intermediate and refined products as well as wastewater processing, disposal and recycling.

Business and Economic Environment Overview

Our focus on safe and reliable operations is a pillar which underlines all of our business activities. We continue to identify opportunities to mitigate market risk and focus on efforts that improve our overall cost structure while not compromising operational excellence. During the first quarter of 2025, we continued to make progress on our "sum of the parts" efforts.  Our logistics segment (or "Logistics") successfully closed the Gravity Acquisition which includes integrated full-cycle water systems in the Permian Basin, in addition to produced water gathering, and transportation assets in the Bakken, and along with the H2O Midstream Acquisition, provide a strong opportunity for integrated crude and water services to Delek Logistics customers. This acquisition represents another significant step in Delek Logistics' commitment of being a full suite crude, gas and water midstream services provider in the Permian Basin in addition to diversifying our logistics customer base to include more third-party customers. We expect that the Gravity Acquisition will be immediately accretive, delivering incremental contribution margin and cash flows. Subsequent to March 31, 2025, we entered into additional agreements with Delek Logistics which put additional midstream commercial activities in Delek Logistics and bring refining related activities and assets back to the Refining Segment. Additionally, these transactions increase consolidated financial availability by approximately $250 million.

During the first quarter of 2025, the Refining segment continued to navigate a complex landscape including volatile crude oil prices and economic uncertainty. While crack spreads declined compared to the first quarter of 2024, they increased from the 2024 lows experienced toward the end of the year. Our disciplined approach to cost control, coupled with a focus on our enterprise optimization plan ("EOP") margin enhancements, supported EBITDA growth, while our capital deployment remained aligned with our strategic priorities. The domestic West Texas Intermediate ("WTI") differentials compared to Brent continued to be favorable, and the WTI Midland to Cushing differential widened unfavorably during 2025. Though refining margins softened compared to the first quarter of 2024, demand for refined products continues to be strong. Logistics continued to contribute strong results driven by incremental contributions from H2O Midstream and Gravity. We will continue to execute on our priorities of running safe and reliable operations, making further