Financial Data and Key Metrics Changes - The company reported approximately $120 million in quarterly adjusted EBITDA, an increase from $102 million in the same period of 2024, indicating a year-over-year growth of approximately 17.6% [4][12] - Distributable cash flow as adjusted was $73 million, with a DCF coverage ratio of approximately 1.22 times, expected to rise as growth projects contribute to results [12][13] - The capital program for the second quarter was approximately $119 million, with $115 million allocated to growth CapEx [15] Business Line Data and Key Metrics Changes - For the Gathering and Processing segment, adjusted EBITDA was $78 million, up from $55 million in 2024, primarily due to acquisitions [13] - Wholesale Marketing and Terminalling adjusted EBITDA decreased to $23 million from $30 million in the prior year [13] - Storage and transportation adjusted EBITDA remained stable at $17 million compared to the previous year [13] - Investments in the pipeline joint venture segment contributed $11 million this quarter, up from $8 million in 2024 [13] Market Data and Key Metrics Changes - The company is focused on enhancing its competitive position in both the Midland and Delaware Basins through acquisitions and operational improvements [5][6] - The integration of two water gathering systems is progressing well, expected to enhance crude and water offerings in specific counties [11] Company Strategy and Development Direction - The company aims to maintain healthy liquidity to support growth while ensuring leverage aligns with long-term targets [12] - The successful commissioning of the new Libbey plant is expected to fill to capacity in 2025, enhancing natural gas offerings [4][5] - The company plans to continue rewarding stakeholders through peer-leading distributions, with a recent increase to $1.115 per unit [6] Management's Comments on Operating Environment and Future Outlook - Management expressed confidence in achieving full-year EBITDA guidance of $480 million to $520 million, despite market volatility [12][36] - The company noted an uptick in crude volumes for Q3, indicating strong relationships with producers and favorable breakeven costs [36][37] - Management remains open to M&A opportunities that are free cash flow accretive and align with strategic goals [31][32] Other Important Information - The company completed the commissioning of the Libbey II gas plant on schedule, focusing on sour gas processing and infrastructure projects [9][21] - The Board of Directors approved the fiftieth consecutive increase in quarterly distribution, highlighting financial prudence [6] Q&A Session Summary Question: Trends in processing plant volumes post-commissioning - Management confirmed that the plant is flowing gas gradually and expects to reach full capacity by year-end [20][21] Question: Insights on sour gas treating and competitive environment - Management acknowledged the competitive landscape and highlighted their unique capabilities compared to recent asset transactions in the Delaware Basin [24][26] Question: M&A market observations and liquidity utilization - Management emphasized a focus on creating value for investors and being opportunistic in M&A while maintaining a strategic approach [31][33] Question: Producer relationships and guidance amidst commodity price volatility - Management expressed confidence in their guidance, citing strong relationships with producers and low breakeven costs in their operational areas [36][37]

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Trade War Concerns - Concerns are reviving that a global trade war will reduce crude consumption [1] Tariff Impact - Donald Trump's recent barrage of tariff letters contains some of the highest tax rates yet [1]

Strategy and Operations - DKL's strategy focuses on operational excellence, continuous optimization, strategic growth, and financial strength in the Permian Basin[14, 16, 17, 18] - The company aims to increase third-party cash flows to become a strong independent midstream company[21] - DKL is uniquely positioned to capitalize on Delaware natural gas production growth, particularly in sour gas handling[24, 36] - The company is expanding the Libby Complex Gas Plant to enhance its competitive position in the Northern Lea County through Acid Gas Injection (AGI) capabilities, targeting over 20% cash-on-cash returns[32, 36] Financial Performance and Outlook - DKL's adjusted EBITDA is projected to be between $480 million and $520 million in 2025[64] - The company expects to maintain a distribution coverage ratio of approximately 130% by the end of 2025 and anticipates continued distribution growth[64] - In 2024, DKL's adjusted EBITDA was $418 million, up from $385 million in 2023, representing a CAGR of 135% from 2021 to 2025E[63] - DKL's distribution per unit has consistently increased, reaching $4365 in 2024[63] Acquisitions and Joint Ventures - DKL acquired Gravity Water Holdings LLC on January 2, 2025, for $2093 million in cash and 2175209 DKL common units[57] - DKL owns a 156% interest in the Wink to Webster crude pipeline system, enhancing fee-based earnings and distributable cash flow[48, 70] - The company has ownership interests in joint venture assets like RIO Pipeline (33%), Caddo Pipeline (50%), and Red River Pipeline (33%), supporting its crude value chain[46, 47, 48]