Delek Logistics Partners LP (DKL) delivered a standout performance in the second quarter of 2026, achieving record EBITDA and marking its 54th consecutive distribution increase. During the recent earnings call, leadership highlighted massive volume growth across crude, water, and gas segments, fueled by strategic infrastructure positioning and strong customer demand.
Operational Milestones and Volume Growth
President and Chairman Avigal Soreq expressed high confidence in the company’s Q2 results, supported by record-breaking throughput across core logistics assets. EVP of Logistics, Mark Hobbs, detailed the significant upward trend in operational volumes:
- Delaware Crude Gathering: Surged to over 157,000 barrels per day (bpd), up from 129,000 in Q1.
- Produced Water: Reached over 687,000 bpd, compared to 557,000 in the previous quarter.
- Gas Volumes: Exceeded 80 million cubic feet per day, rising from 64 million in Q1.
Hobbs attributed this success to the company’s strategically positioned infrastructure and noted that a “step change” in gas volumes is imminent as the sour gas solution nears completion.
Strategic Outlook and Guidance
Addressing the potential for upward revisions to full-year guidance, Soreq noted that current math trends toward the high end of their projections. While the company remains disciplined, it plans to follow the same strategic sequence as last year, with a potential guidance upgrade on the table for Q3 if market conditions continue to favor their growth trajectory.
Capitalizing on Commodity Trends and Sour Gas
The company is seeing increased rig forecasts from customers, bolstered by strengthening commodity prices and improved Waha pricing. Mohit Bhardwaj, EVP of New Energy, Strategy & IR, emphasized that these factors are driving incremental production. Delek Logistics is currently executing a $185 million growth CapEx program, which is expected to generate an additional $75 million in EBITDA.
Management also highlighted a unique competitive advantage in sour gas treating. By integrating location-based assets with new capacity—including the Libby 2 project and the company’s first Acid Gas Injection (AGI) well—Delek is positioning itself to capture long-term demand for complex gas processing.
Financial Discipline and Inorganic Growth
Robert Wright, EVP and CFO, reaffirmed the company’s commitment to a long-term leverage target of 3.5 times, managing near 4 times while actively pursuing growth. With approximately $1.1 billion in liquidity, the company remains in a strong position to fund its portfolio.
Regarding inorganic opportunities, Soreq stressed that any potential M&A must be accretive to leverage, coverage, and free cash flow. He pointed to the company’s track record of value creation, noting that assets previously acquired at 5-6 times EBITDA are now trading at significantly higher multiples, underscoring the success of their current capital deployment strategy.