Delek Logistics Partners, L.p. · NYSE:DKL

Delek Logistics Partners, L.p — Investor Presentation (May 2017)

41 slides from Delek Logistics Partners, L.p's investor presentation, May 9, 2017

  1. Slide 1: Delek Logistics Partners, LP Investor Presentation May 2017

    Delek Logistics Partners, LP Investor Presentation May 2017

  2. Slide 2: Forward-looking statements

    These slides and any accompanying oral and written presentations contain forward-looking statements by Delek Logistics Partners, LP (defined as “we”, “our”, or ”Delek Logistics”) that are based upon our current expectations and involve a number of risks and uncertainties. Statements concerning curre

  3. Slide 3: Management Presenters

    3 Chairman and Chief Executive Officer Director, Executive Vice President and Chief Financial Officer (1) Executive Vice President Uzi Yemin Assi Ginzburg Mark Smith Executive Vice President and Chief Financial Officer (1) Kevin Kremke (1) Effective June 1, 2017, Kevin Kremke will replace Assi Ginzb

  4. Slide 4: Agenda

    Agenda 4  Sponsor Overview  Delek Logistics Overview  Stable Assets and Long-Term Minimum Volume Commitments  Assets Positioned for Permian Basin Growth  Financial Overview  Appendix

  5. Slide 5: Sponsor Overview

    Sponsor Overview

  6. Slide 6: Delek US Sponsor Overview

    • ~302,000 Bbl/d of refining capacity in Louisiana, Texas and Arkansas following the close of the ALJ acquisition (1) • Access to crude / product terminals, pipeline and storage assets Operational Strength Note: Please see Delek US’ presentation from January 3, 2017 “Delek US Holdings to Acquire the

  7. Slide 7: Delek US and Alon USA combination

    7 • Grown through opportunistic acquisitions across multiple market cycles • Expertise to invest in/improve operations • Strong balance sheet and credit profile • Low-cost, reliable operator • Retail expertise/largest 7-Eleven licensee • Asphalt blending and marketing expertise • Historically capita

  8. Slide 8: Leading refining presence in the Permian Basin

    8 • Creates a leading refining presence in the Permian Basin • 7th largest independent refiner with ~302,000 barrels per day crude throughput capacity • Access to approximately 207,000 barrels per day of Permian-sourced crude • Largest exposure to Permian crude of the independent refiners as percent

  9. Slide 9: Delek Logistics Overview

    Delek Logistics Overview Detek) cD

  10. Slide 10: Stable Asset Base Positioned for Growth

    NY008LRP - 912119_1.wor -L r - r- rLL P 912119_1.wo San Angelo Fort Worth Dallas Waco Tyler Shreveport Monroe El Dorado Beaumont New Orleans Little Rock Memphis Brentwood Nashville Knoxville Abilene Big Spring Krotz Springs NY008LRP - 912119_1.wor - rL 1.P 912119_ SALA GATHERING SYSTEM AR LA Magnoli

  11. Slide 11: Management experience and credit highlights

    11  Management team has substantial midstream experience and a track record of value creation  Management team has on average more than 20 years of combined experience in the midstream and refining logistics sector Experienced Management Team Key Delek Logistics Credit Highlights  Asset base prov

  12. Slide 12: Stable Assets and Long-Term Minimum Volume Commitments

    Stable Assets and Long-Term Minimum Volume Commitments

  13. Slide 13: Contract Highlights

    Contract Highlights • The Lion Pipeline System and SALA Gathering System are supported by a long-term contract that includes three take-or-pay commitments • Initial term of 5 years, maximum term of 15 years (2) • Crude oil transportation throughput of 59 MBbl/d in Q1 2017, supported by a MVC of 46 M

  14. Slide 14: Lion Pipeline and SALA Gathering System volumes

    46.0 46.5 47.9 55.0 56.6 58.7 45.2 49.7 53.5 57.4 52.1 51.4 - 20.0 40.0 60.0 80.0 2012 2013 2014 2015 2016 Q1 2017 (M B b l/ d ) Crude Volume (MBbl/d) Refined Product Volume (MBbl/d) SALA Gathering System • Provides access to local Arkansas, east Texas and north Louisiana crudes to Delek US’ El Dora

  15. Slide 15: Additional Stable Logistics Assets and Agreements

    15 Additional Stable Logistics Assets and Agreements Overview • Tyler Tank Assets: ~2.0 MMBbls of total capacity, 96 storage tanks and ancillary assets, located at the Tyler Refinery in Texas • El Dorado Tank Assets: ~2.5 MMBbls of total capacity, 158 storage tanks and ancillary assets, located at t

  16. Slide 16: Terminalling Assets

    19 13 75 97 107 122 118 115 2011 2012 2013 2014 2015 2016 Q1 2016 Q1 2017 Terminalling Assets (1) • Refined products terminalling services for Delek US and/or third parties • Comprised of terminals located in: • Memphis and Nashville, TN; • Tyler, Big Sandy (1) and Mt. Pleasant, TX; • El Dorado and

  17. Slide 17: Assets Positioned for Permian Basin Growth

    Assets Positioned for Permian Basin Growth

  18. Slide 18: Permian Basin crude production and breakeven prices

    1) Deutsche Bank Research, Permian Basin: “You are still the one” 11/28/16, breakeven based on flat natural gas of $3.00/MMbtu; NGLs priced 35% of WTI; regional commodity differential and 25% royalty. 2) EIA production data through May 5, 2017, Drilling Productivity Report; Baker Hughes rig count as

  19. Slide 19: Caddo and Rio Pipeline joint ventures

    Caddo Pipeline ■ Delek Logistics (50%)/Plains (50%) ■ Est. total cost: $123 million (1) ■ Capacity: 80,000 Bbl/d ■ Length: 80 miles ■ Completed: January 2017 ■ Provides additional logistics support to El Dorado refinery with third crude supply source Rio Pipeline (Delaware Basin) ■ Rangeland (67%)/

  20. Slide 20: Paline Pipeline

     Approximately 195 mile crude oil pipeline - Mainline pipeline flows from north to south  Capacity of ~36,000 bpd  Pipeline has been at capacity since March  Temporary FERC tariff in place to encourage spot shippers  Intend to move to base tariff as Permian activity increases and differentials

  21. Slide 21: Asset Overview: West Texas Wholesale Business

    21 Asset Overview: West Texas Wholesale Business 1) RINs gross margin benefit included in the 2013 west Texas gross margin per barrel was approximately $6.4 million, or $0.99/Bbl, 2014 gross margin included $4.6 million, or $0.75/Bbl, 2015 gross margin included $5.3 million, or $0.89/Bbl, 2016 gross

  22. Slide 22: 2017 Target Acquisitive Growth

    2017 Target Acquisitive Growth  Available capacity on existing pipeline, terminalling & storage assets  Driven by organic growth at Delek Logistics  Contracts expiring in 2017 have been extended by Delek US for additional five year option  Proven ability to make 3rd party asset acquisitions (4 s

  23. Slide 23: Financial Overview

    Financial Overview Detek) cD

  24. Slide 24: Solid EBITDA performance since IPO

    1) Non-GAAP measure. For a reconciliation to the most directly comparable U.S. GAAP measure, see the appendix. 2) Reconciliation provided on page 39. Results in 2013 and 2014 are as reported excluding predecessor costs related to the drop down of the tank farms and product terminals at both Tyler an

  25. Slide 25: Distribution per unit increased sixteen consecutive times

    Distribution per unit has been increased sixteen consecutive times since the IPO $0.375 $0.385 $0.395 $0.405 $0.415 $0.425 $0.475 $0.490 $0.510 $0.530 $0.550 $0.570 $0.590 $0.610 $0.630 $0.655 $0.680 $0.690 MQD 1Q 13 2Q 13 3Q 13 4Q 13 1Q 14 2Q 14 3Q 14 4Q 14 1Q15 2Q15 3Q15 4Q15 1Q16 2Q16 3Q16 4Q16 1

  26. Slide 26: Financial Policy – Commitment to Conservative Balance Sheet

     Maintain conservative financial position at Delek US  Target minimum cash of $400 million  Target DK revolver availability of approximately $400 million  Target consolidated net leverage of no more than 1.0x to 1.5x mid-cycle  Position DKL for Long-Term Financial Success  Target maximum lever

  27. Slide 27: Appendix

    Appendix Detek) cD

  28. Slide 28: Delek US Pro Forma Organizational Structure

    28 Note: Debt figures as of 3/31/17. DK ownership figures shown pro forma for the pending merger with Alon. (1) Wells Term Loan is net of deferred financing costs of $0.1 million and debt discount of $0.5 million. Excludes letters of credit of $92.4 million. Includes $30 million attributable to the

  29. Slide 29: Management biographies

    29 Uzi Yemin Assi Ginzburg Kevin Kremke Fred Green Mark Smith Avigal Soreq Daniel Gordon Delek US Holdings, Inc Chairman, President & Chief Executive Officer Delek US Holdings, Inc Executive Vice President & CFO(1) Delek US Holdings, Inc Executive Vice President & CFO(1) Delek US Holdings, Inc Execu

  30. Slide 30: Synergy Opportunity from the DK/ALJ Combination

    30 Robust Synergy Opportunity from the DK/ALJ Combination Expect to achieve run-rate synergies of approximately $85 - $105 million in 2018 Commercial • Logistics, purchase and trading benefits from a larger platform • $20-$35mm Operational • Sharing of resources across the platform; improved insuran

  31. Slide 31: Tyler Refinery Overview

    54% 55% 54% 55% 39% 39% 40% 40% 7% 6% 6% 5% 2013 2014 2015 2016 Gasoline Diesel Petro/Other 62,304 65,523 60,704 70,773  Overview  Niche market generally priced above Gulf Coast; supported by Delek Logistics' terminals  Crude slate consists of approx. 65 MBbl/d Midland sourced crude; plus east Te

  32. Slide 32: El Dorado Refinery Overview

     Overview  Inland PADD III refinery located in Southern Arkansas  Flexible crude sourcing  Access to Gulf Cost crudes beginning in August 2016  Midland, local Arkansas, east Texas  Rail offloading capability  Mid Valley and Exxon North crude oil pipeline access  Ability to support a portion

  33. Slide 33: Alon USA asset map

    Key Retail Cities Asphalt Terminal Third-Party Terminal Alon USA Terminal Exchange Terminal Refinery Third-Party Pipelines ALON USA Alon Pipelines (idled) Oklahoma 638167_1.wor [NY0086JT] Texas California New Mexico Arizona Nevada Oregon Washington Arkansas Louisiana Midland/i l /aidl ndi li li li l

  34. Slide 34: Big Spring refinery (ALDW)

    ■ ALDW is a limited partnership which operates a crude oil refinery in Big Spring, TX ■ The facility refines crude oil into finished products, which are marketed primarily in West and Central Texas, Oklahoma, New Mexico and Arizona through ALDW’s wholesale distribution network to both ALJ’s retail c

  35. Slide 35: Ethanol RINs prices and regulatory topics

    35 Ethanol RINs Prices (1) 1) Ethanol RINs prices from OPIS as of April 27, 2017. $0.00 $0.20 $0.40 $0.60 $0.80 $1.00 4Q1 2 1Q1 3 2Q1 3 3Q1 3 4Q1 3 1Q1 4 2Q1 4 3Q1 4 4Q1 4 1Q1 5 2Q1 5 3Q1 5 4Q1 5 1Q 1 6 2Q1 6 3Q1 6 4Q1 6 Oct. N o v. D ec. Ja n . Fe b . M ar . A p r. M TD $ p er B b l  Renewable Fue

  36. Slide 36: Summary of Certain Contracts

    Summary of Certain Contracts (8) Initial / Maximum Term (1) Service Three Months Ended March 31, 2017 Throughput (bpd)(2) Minimum Commitment (bpd) Current Tariff / Fee Tariff / Fee Index (10) Refinery Shutdown Force Majeure N/A N/A FERC N/A N/A N/A N/A Five / Fifteen Years Crude Oil Transportation 5

  37. Slide 37: Contract footnotes

    (1) Maximum term assumes an extension of the commercial agreement pursuant to the terms thereof. Please note some terms began as early as Nov. 7, 2012. (2) Represents average daily throughput for the period indicated. (3) Excludes volumes gathered on the SALA Gathering System. (4) Volumes gathered o

  38. Slide 38: Omnibus Agreement key provisions

    Key Provisions  Delek US will indemnify Delek Logistics for certain liabilities, including environmental and other liabilities, relating to contributed assets.  Delek US has a ROFR if Delek Logistics sells any assets that serves Delek US' refineries or the Paline Pipeline.  GP will not receive a

  39. Slide 39: Income Statement and Non-GAAP EBITDA Reconciliation

    Income Statement and Non-GAAP EBITDA Reconciliation (1) Includes approximately $2.0 million of estimated annual incremental general and administrative expenses expected to incur as a result of being a separate publicly traded partnership. (2) Interest expense and cash interest both include commitmen

  40. Slide 40: Reconciliation of Cash Available for Distribution

    Reconciliation of Cash Available for Distribution (1) Distribution for forecast period based on $1.50 per unit; Distribution for year ended December 31, 2013, 2014, 2015 and 2016 based on actual amounts distributed during the periods; does not include a LTIP accrual. Coverage is defined as cash avai

  41. Slide 41: Reconciliation of Forecasted Logistics Dropdown EBITDA

    (1) Based on projected range of potential future logistics assets that could be dropped to Delek Logistics from Delek US in the future. Amounts of EBITDA, net income and timing will vary, which will affect the potential future EBITDA and associated deprecation and interest at Delek Logistics. Actual

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