Company: DK
Filing Date: 2025-02-26
Form Type: 10-K
Source: 0001694426-25-000013
Chunk: 68

Company: Delek US Holdings, Inc.
Filing Date: 2025-02-26
Form: 10-K
Item: Item 7A
Chunk 68
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747,500 747,500 Natural gas swaps - short (3)— 747,500 747,500 RINs commitment contracts - long (2)(5.3)36,000,000 36,000,000 Total$(7.8)

(1) Volume in barrels.

(2) Volume in RINs.

(3) Volume in MMBtu.

94 |

Management's Discussion and Analysis

Interest Rate Risk

We have market exposure to changes in interest rates relating to our outstanding floating rate borrowings, which totaled approximately $1,366.4 million as of December 31, 2024. 

We help manage this risk through interest rate swap agreements that we may periodically enter into in order to modify the interest rate characteristics of our outstanding long-term debt. In accordance with ASC 815, all interest rate hedging instruments are recorded at fair value and any changes in the fair value between periods are recognized in earnings. We expect that any interest rate derivatives held would reduce our exposure to short-term interest rate movements. As of December 31, 2024, we had one floating-to-fixed interest rate derivative agreement in place for a notional amount of $500.0 million, which matures in November 2027. The estimated fair value of our interest rate derivative asset was $3.2 million as of December 31, 2024.

The annualized impact of a hypothetical one percent change in interest rates on our floating rate debt, after considering the interest rate swap, outstanding as of December 31, 2024 would be to change interest expense by approximately $8.7 million.

We also have interest rate exposure in connection with our Inventory Intermediation Agreement under which we pay a time value of money charge based on Secured Overnight Financing Rate.

Commodity Derivatives Trading Activities

From time to time, we enter into active trading positions in a variety of commodity derivatives, which include forward physical contracts, swap contracts, and futures contracts. These trading activities are undertaken by using a range of contract types in combination to create incremental gains by capitalizing on crude oil supply and pricing seasonality. These contracts are classified as held for trading and are recognized at fair value with changes in fair value recognized in the income statement. We had no outstanding trading commodity derivative contracts as of December 31, 2024.