What Delek Logistics Partners (DKL) Said on Its Q3 Earnings Call

Key Points

• Delek Logistics raised its 2026 adjusted EBITDA guidance to $530 million–$560 million after posting about $143 million in Q3. It also increased its distribution for the 55th consecutive quarter, to $1.14 per unit.
• The Libby sour gas compressor station and associated injection well are complete and expected to start up in the coming weeks. The partnership expects its 2026 growth capital program to add up to $15 million in run-rate EBITDA in 2026 and another $60 million in 2027.
• Quarter-end liquidity was about $1.3 billion and leverage was 3.85 times, the partnership’s lowest level of the year. A $220 million equity offering helped fund growth and extend its maturity profile.

Delek Logistics Partners NYSE: DKL raised its full-year 2026 adjusted EBITDA guidance after reporting approximately $143 million for the third quarter, as the midstream partnership prepares to start up new sour gas infrastructure in the Delaware Basin.

The partnership now expects full-year adjusted EBITDA of $530 million to $560 million, President and Chairman Avigal Soreq said on the earnings call. Third-quarter adjusted EBITDA was in line with the same period a year earlier, while adjusted distributable cash flow was approximately $73 million and the coverage ratio was about 1.11 times, Chief Financial Officer Robert Wright said.

Delek Logistics also announced its 55th consecutive quarterly distribution increase, bringing the payout to $1.14 per unit.

Sour Gas Project Nears Startup

Management said construction was complete on the partnership’s first sour gas compressor station and an associated AGI well at the Libby Gas Complex. The system is being commissioned and is expected to start up in the next few weeks, Soreq said.

Executive Vice President Mark Hobbs said wells are waiting for the sour gas solution to come online. He expects a substantial increase in utilization at the Libby plants through the end of 2026 and into early 2027. Total gas volumes across Libby One and Libby Two averaged more than 90 million standard cubic feet per day in the third quarter, he said.

The partnership is evaluating options to expand sour gas processing capacity at Libby as customers increase production. Soreq said additional gas volumes could increase system utilization and likely create a need for more processing capacity, though management did not provide a decision date for a further expansion.

Delek Logistics expects its 2026 growth capital program of $180 million to $190 million to generate up to $15 million of run-rate EBITDA in 2026 and an additional $60 million of EBITDA growth in 2027, Soreq and Wright said.

Segment Performance and Volumes

Gathering and Processing adjusted EBITDA rose to $88 million from $83 million in the third quarter of 2025, primarily because of higher utilization at Libby and strong realized margins in the crude business, Wright said. Wholesale Marketing and Terminalling generated approximately $21 million, in line with the prior year, while Storage and Transportation contributed $20 million, up from $19 million.

Gas volumes increased from the second quarter, Hobbs said. Crude volumes declined slightly, primarily because of the timing of well connections, while water volumes fell because of production declines and the timing of wells coming online. Hobbs said he expects the water-volume decline to reverse as the partnership moves through the end of the year.

Hobbs said Waha gas prices had turned positive after negative pricing in the first half of the year, as new takeaway capacity came online. He also said elevated crude and natural gas liquids prices were supporting upstream activity and demand for the partnership’s crude, gas and water services.

Equity Offering and Balance Sheet

Delek Logistics raised approximately $220 million in net proceeds through a third-quarter follow-on equity offering, Wright said. Together with the second-quarter refinancing of its 2028 and 2029 senior notes, the offering helped extend the partnership’s maturity profile and fund future growth, he said.

Liquidity stood at approximately $1.3 billion at quarter-end, and leverage was 3.85 times, the partnership’s lowest level of the year, Wright said. After the August offering, sponsor Delek’s ownership of Delek Logistics common units fell to approximately 58%.

Wright said the partnership continues to expect approximately 80% of its 2026 run-rate EBITDA to come from third parties on a pro forma basis. Third-quarter capital spending was approximately $55 million, including $48 million of growth capital primarily directed toward sour gas gathering infrastructure.

About Delek Logistics Partners (NYSE:DKL)

Delek Logistics Partners, L.P. NYSE: DKL is a master limited partnership that owns and operates midstream energy infrastructure and provides logistics services for crude oil, refined products and other hydrocarbons. The partnership is sponsored by Delek US Holdings, Inc, an independent refiner and marketer of petroleum products.

Delek Logistics' operations include crude oil gathering, transportation and storage; refined products transportation and terminalling; wholesale marketing; rail and truck services; and other logistics activities.

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