10-Q

UNITED STATES

SECURITIES AND EXCHANGE COMMISSION

Washington, D.C. 20549

Form 10-Q

(Mark One)

☑	QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934
	For the quarterly period ended	June 30, 2020

or

☐	TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934
	For the transition period from                      to

Commission file number 001-35721

DELEK LOGISTICS PARTNERS, LP

(Exact name of registrant as specified in its charter)

Delaware			45-5379027
(State or other jurisdiction of incorporation or organization)			(I.R.S. Employer Identification No.)
7102 Commerce Way	Brentwood	Tennessee	37027
(Address of principal executive offices)			(Zip Code)

(615) 771-6701

(Registrant’s telephone number, including area code)

Not Applicable

(Former name, former address and former fiscal year, if changed since last report)

Securities registered pursuant to Section 12(b) of the Act:

Title of Each Class	Trading Symbol	Name of Each Exchange on Which Registered
Common Units Representing Limited Partnership Interests	DKL	New York Stock Exchange

Indicate by check mark whether the registrant: (1) has filed all reports required to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during the preceding 12 months (or for such shorter period that the registrant was required to file such reports), and (2) has been subject to such filing requirements for the past 90 days. Yes ☑ No ☐

Indicate by check mark whether the registrant has submitted electronically every Interactive Data File required to be submitted pursuant to Rule 405 of Regulation S-T during the preceding 12 months (or for such shorter period that the registrant was required to submit such files). Yes ☑ No ☐

Indicate by check mark whether the registrant is a large accelerated filer, an accelerated filer, a non-accelerated filer, a smaller reporting company, or an emerging growth company. See the definitions of “large accelerated filer,” “accelerated filer,” “smaller reporting company,” and "emerging growth company" in Rule 12b-2 of the Exchange Act.

Large accelerated filer ☐ Accelerated filer ☑ Non-accelerated filer  ☐ Smaller reporting company  ☐ Emerging growth company  ☐

If an emerging growth company, indicate by check mark if the registrant has elected not to use the extended transition period for complying with any new or revised financial accounting standards provided pursuant to Section 13(a) of the Exchange Act. ☐

Indicate by check mark whether the registrant is a shell company (as defined in Rule 12b-2 of the Exchange Act). Yes ☐ No ☑

At July 31, 2020, there were 29,433,239 common limited partner units and 600,678 general partner units outstanding.

Table of Contents

Delek Logistics Partners, LP

Quarterly Report on Form 10-Q

For the Quarterly Period Ended June 30, 2020

PART I. FINANCIAL INFORMATION				PART II. OTHER INFORMATION
3	Item 1. Financial Statements (unaudited)			50	Item 1. Legal Proceedings
	3	Condensed Consolidated Balance Sheets
	4	Condensed Consolidated Statements of Income and Comprehensive Income		50	Item 1A. Risk Factors
	6	Condensed Consolidated Statements of Partner's Equity (Deficit)
	5	Condensed Consolidated Statements of Cash Flows		51	Item 2. Unregistered Sales of Equity Securities and Use of Proceeds
	7	Notes to Condensed Consolidated Financial Statements
		7	Note 1 - Organization and Basis of Presentation	52	Item 6. Exhibits
		9	Note 2 - Acquisitions
		9	Note 3 - Related Party Transactions	53	Signatures
		12	Note 4 - Revenues
		14	Note 5 - Net Income Per Unit
		15	Note 6 - Inventory
		15	Note 7 - Long-Term Obligations
		16	Note 8 - Equity
		18	Note 9 - Equity Based Compensation
		18	Note 10 - Equity Method Investments
		20	Note 11 - Segments
		20	Note 12 - Income Taxes
		20	Note 13 - Commitments and Contingencies
		21	Note 14 - Leases
		22	Note 15 - Subsequent Events
23	Item 2. Management’s Discussion and Analysis of Financial Condition and Results of Operations
	34	Summary Financial and Other Information
	36	Results of Operations
		36	Consolidated
		39	Pipelines and Transportation
		42	Wholesale Marketing and Terminalling
	45	Liquidity and Capital Resources
49	Item 3. Quantitative and Qualitative Disclosures about Market Risk
49	Item 4. Controls and Procedures

2 |  

Financial Statements

Part I - FINANCIAL INFORMATION

Item 1. Financial Statements

Delek Logistics Partners, LP

Condensed Consolidated Balance Sheets (Unaudited)

(in thousands, except unit and per unit data)

	June 30, 2020			December 31, 2019
ASSETS
Current assets:
Cash and cash equivalents	$	16,196		$	5,545
Accounts receivable	15,907			13,204
Accounts receivable from related parties	8,755			—
Inventory	2,140			12,617
Other current assets	499			2,204
Total current assets	43,497			33,570
Property, plant and equipment:
Property, plant and equipment	680,969			461,325
Less: accumulated depreciation	(207,225		)	(166,281		)
Property, plant and equipment, net	473,744			295,044
Equity method investments	255,323			246,984
Operating lease right-of-use assets	18,884			3,745
Goodwill	12,203			12,203
Marketing Contract Intangible, net	127,393			130,999
Rights-of-way	35,698			15,597
Other non-current assets	6,995			6,305
Total assets	$	973,737		$	744,447
LIABILITIES AND DEFICIT
Current liabilities:
Accounts payable	$	1,795		$	12,471
Accounts payable to related parties	—			8,898
Interest payable	2,596			2,572
Excise and other taxes payable	4,330			3,941
Current portion of operating lease liabilities	5,793			1,435
Accrued expenses and other current liabilities	3,461			5,765
Total current liabilities	17,975			35,082
Non-current liabilities:
Long-term debt	995,200			833,110
Asset retirement obligations	5,802			5,588
Deferred tax liabilities	1,158			215
Operating lease liabilities, net of current portion	13,091			2,310
Other non-current liabilities	18,826			19,261
Total non-current liabilities	1,034,077			860,484
Equity (Deficit):
Common unitholders - public; 8,687,371 units issued and outstanding at June 30, 2020 (9,131,579 at December 31, 2019)	160,870			164,436
Common unitholders - Delek Holdings; 20,745,868 units issued and outstanding at June 30, 2020 (15,294,046 at December 31, 2019)	(235,961		)	(310,513		)
General partner - 600,678 units issued and outstanding at June 30, 2020 (498,482 at December 31, 2019)	(3,224		)	(5,042		)
Total deficit	(78,315		)	(151,119		)
Total liabilities and deficit	$	973,737		$	744,447

 

See accompanying notes to the condensed consolidated financial statements

3 |  

Financial Statements

Delek Logistics Partners, LP

Condensed Consolidated Statements of Income and Comprehensive Income (Unaudited)

(in thousands, except unit and per unit data)

	Three months ended						Six months ended
	June 30,						June 30,
	2020			2019			2020			2019
Net revenues:
Affiliates (1)	$	87,629		$	61,918		$	194,328		$	124,883
Third party	30,008			93,424			86,710			182,942
Net revenues	117,637			155,342			281,038			307,825
Cost of sales:
Cost of materials and other	43,892			93,854			145,185			190,119
Operating expenses (excluding depreciation and amortization presented below)	11,623			16,521			25,577			31,828
Depreciation and amortization	8,223			6,188			14,026			12,312
Total cost of sales	63,738			116,563			184,788			234,259
Operating expenses related to wholesale business (excluding depreciation and amortization presented below)	826			806			1,616			1,557
General and administrative expenses	4,721			5,293			10,851			9,766
Depreciation and amortization	471			451			967			901
Other operating income, net	—			(27		)	(107		)	(25		)
Total operating costs and expenses	69,756			123,086			198,115			246,458
Operating income	47,881			32,256			82,923			61,367
Interest expense, net	10,670			11,354			22,494			22,655
Income from equity method investments	(6,462		)	(4,515		)	(12,015		)	(6,466		)
Other (income) expense, net	(2		)	461			(2		)	461
Total non-operating expenses, net	4,206			7,300			10,477			16,650
Income before income tax expense	43,675			24,956			72,446			44,717
Income tax (benefit) expense	(740		)	71			235			136
Net income attributable to partners	$	44,415		$	24,885		$	72,211		$	44,581
Comprehensive income attributable to partners	$	44,415		$	24,885		$	72,211		$	44,581
Less: General partner's interest in net income, including incentive distribution rights	9,647			8,079			18,724			15,348
Limited partners' interest in net income	$	34,768		$	16,806		$	53,487		$	29,233
Net income per limited partner unit:
Common units - basic	$	1.18		$	0.69		$	1.98		$	1.20
Common units - diluted	$	1.18		$	0.69		$	1.98		$	1.20
Weighted average limited partner units outstanding:
Common units - basic	29,427,298			24,409,359			26,953,934			24,408,270
Common units - diluted	29,430,555			24,414,343			26,956,523			24,414,077
Cash distributions per limited partner unit	$	0.900		$	0.850		$	1.790		$	1.670

⁽¹⁾  See Note 3 for a description of our material affiliate revenue transactions.

See accompanying notes to the condensed consolidated financial statements

4 |  

Financial Statements

Delek Logistics Partners, LP

Condensed Consolidated Statements of Partners' Equity (Deficit) (Unaudited)

(in thousands)

	Common - Public			Common - Delek Holdings			General Partner			Total
Balance at March 31, 2020	$	158,332		$	(199,943	)	$	(2,785	)	$	(44,396	)
Cash distributions (1)	(7,753		)	(14,014		)	(9,139		)	(30,906		)
General partner units issued to maintain 2% interest	—			—			4			4
Net income attributable to partners	10,262			24,506			9,647			44,415
Distribution to Delek Holdings for Trucking Assets Acquisition	—			(46,607		)	(951		)	(47,558		)
Other	29			97			—			126
Balance at June 30, 2020	$	160,870		$	(235,961	)	$	(3,224	)	$	(78,315	)

⁽¹⁾ Cash distributions include a nominal amount related to distribution equivalents on vested phantom units.

	Common - Public			Common - Delek Holdings			General Partner			Total
Balance at March 31, 2019	$	168,388		$	(303,902	)	$	(6,391	)	(141,905		)
Cash distributions (1)	(7,473		)	(12,541		)	(7,424		)	(27,438		)
General partner units issued to maintain 2% interest	—			—			6			6
Net income attributable to partners	6,279			10,527			8,079			24,885
Other	60			89			3			152
Balance at June 30, 2019	$	167,254		$	(305,827	)	$	(5,727	)	$	(144,300	)

⁽¹⁾ Cash distributions include a nominal amount related to distribution equivalents on vested phantom units.     

	Common - Public			Common - Delek Holdings			General Partner			Total
Balance at December 31, 2019	$	164,436		$	(310,513	)	$	(5,042	)	$	(151,119	)
Cash distributions	(15,835		)	(27,549		)	(18,156		)	(61,540		)
General partner units issued to maintain 2% interest	—			—			10			10
Net income attributable to partners	16,914			36,573			18,724			72,211
Delek Holdings Unit purchases	(4,979		)	4,979			—			—
Issuance of units in connection with the Big Spring Gathering Assets Acquisition	—			107,324			2,190			109,514
Distribution to Delek Holdings for Trucking Assets Acquisition	—			(46,607		)	(951		)	(47,558		)
Other	334			(168		)	1			167
Balance at June 30, 2020	$	160,870		$	(235,961	)	$	(3,224	)	$	(78,315	)

	Common - Public			Common - Delek Holdings			General Partner			Total
Balance at December 31, 2018	$	171,023		$	(299,360	)	$	(6,486	)	$	(134,823	)
Cash distributions	(14,825		)	(24,929		)	(14,603		)	(54,357		)
General partner units issued to maintain 2% interest	—			—			8			8
Net income attributable to partners	10,943			18,289			15,349			44,581
Other	113			173			5			291
Balance at June 30, 2019	$	167,254		$	(305,827	)	$	(5,727	)	$	(144,300	)

See accompanying notes to the condensed consolidated financial statements

5 |  

Financial Statements

Delek Logistics Partners, LP

Condensed Consolidated Statements of Cash Flows (Unaudited)

(in thousands)

	Six Months Ended June 30,
	2020			2019
Cash flows from operating activities:
Net income	$	72,211		$	44,581
Adjustments to reconcile net income to net cash provided by operating activities:
Depreciation and amortization	14,993			13,213
Non-cash lease expense	640			1,409
Amortization of customer contract intangible assets	3,605			3,605
Amortization of deferred revenue	(945		)	(803		)
Amortization of deferred financing costs and debt discount	1,172			1,480
Accretion of asset retirement obligations	214			198
Income from equity method investments	(12,015		)	(6,466		)
Dividends from equity method investments	12,500			3,833
Gain on asset disposals	(107		)	(25		)
Deferred income taxes	943			(3		)
Other non-cash adjustments	168			290
Changes in assets and liabilities:
Accounts receivable	(2,703		)	(5,266		)
Inventories and other current assets	12,182			1,311
Accounts payable and other current liabilities	(11,890		)	(8,928		)
Accounts receivable/payable to related parties	(17,653		)	1,803
Non-current assets and liabilities, net	(934		)	1,591
Net cash provided by operating activities	72,381			51,823
Cash flows from investing activities:
Asset acquisitions net of assumed liabilities	(100,527		)	—
Purchases of property, plant and equipment	(4,997		)	(2,437		)
Proceeds from sales of property, plant and equipment	107			75
Distributions from equity method investments	1,690			804
Equity method investment contributions	(10,515		)	(134,998		)
Net cash used in investing activities	(114,242		)	(136,556		)
Cash flows from financing activities:
Proceeds from issuance of additional units to maintain 2% General Partner interest	10			8
Distributions to general partner	(18,156		)	(14,603		)
Distributions to common unitholders - public	(15,835		)	(14,825		)
Distributions to common unitholders - Delek Holdings	(27,549		)	(24,929		)
Distributions to Delek Holdings unitholders and general partner related to Trucking Assets Acquisition	(47,558		)	—
Proceeds from revolving credit facility	413,000			364,300
Payments on revolving credit facility	(251,400		)	(224,300		)
Net cash provided by financing activities	52,512			85,651
Net increase in cash and cash equivalents	10,651			918
Cash and cash equivalents at the beginning of the period	5,545			4,522
Cash and cash equivalents at the end of the period	$	16,196		$	5,440
Supplemental disclosures of cash flow information:
Cash paid during the period for:
Interest	$	21,298		$	21,068
Income taxes	$	26		$	141
Non-cash investing activities:
Decrease in accrued capital expenditures	(1,317		)	$	(191	)
Equity issuance to Delek Holdings unitholders in connection with Big Spring Gathering Assets Acquisition	$	109,514		$	—
Non-cash financing activities:
Non-cash lease liability arising from obtaining right of use assets during the period	15,779			$	—
Non-cash lease liability arising from recognition of right of use assets upon adoption of ASU 2016-02	$	—		$	20,202

See accompanying notes to the condensed consolidated financial statements

6 |  

Notes to Condensed Consolidated Financial Statements (Unaudited)

Note 1 - Organization and Basis of Presentation

As used in this report, the terms "Delek Logistics Partners, LP," the "Partnership," "we," "us," or "our" may refer to Delek Logistics Partners, LP, one or more of its consolidated subsidiaries or all of them taken as a whole.

The Partnership is a Delaware limited partnership formed in April 2012 by Delek US Holdings, Inc. ("Delek Holdings") and its subsidiary Delek Logistics GP, LLC, our general partner (our "general partner").

Effective May 1, 2020, the Partnership, through its wholly-owned subsidiary DKL Transportation, LLC, acquired Delek Trucking, LLC consisting of certain leased and owned tractors and trailers and related assets (the "Trucking Assets") from Delek Holdings, such transaction the "Trucking Assets Acquisition." See Note 2 for further information.

In addition, effective March 31, 2020, the Partnership, through its wholly-owned subsidiary DKL Permian Gathering, LLC, acquired from Delek Holdings a crude oil gathering system located in Howard, Borden and Martin Counties, Texas (the "Big Spring Gathering System"), and certain related assets, such transaction the "Big Spring Gathering Assets Acquisition." See Note 2 for further information.

Certain information and footnote disclosures normally included in annual financial statements prepared in accordance with U.S. generally accepted accounting principles ("GAAP") have been condensed or omitted, although management believes that the disclosures herein are adequate to make the financial information presented not misleading. Our unaudited condensed consolidated financial statements have been prepared in conformity with U.S. GAAP applied on a consistent basis with those of the annual audited financial statements included in our Annual Report on Form 10-K for the year ended December 31, 2019 (our "Annual Report on Form 10-K"), filed with the Securities and Exchange Commission (the "SEC") on February 27, 2020 and in accordance with the rules and regulations of the SEC. These unaudited condensed consolidated financial statements should be read in conjunction with the audited consolidated financial statements and notes thereto for the year ended December 31, 2019 included in our Annual Report on Form 10-K.

All adjustments necessary for a fair presentation of the financial position and the results of operations for the interim periods presented have been included. All intercompany accounts and transactions have been eliminated. Such intercompany transactions do not include those with Delek Holdings' or our general partner, which are presented as related parties in these accompanying condensed consolidated financial statements. All adjustments are of a normal, recurring nature. Operating results for the interim period should not be viewed as representative of results that may be expected for any future interim period or for the full year.

Reclassifications

Certain immaterial reclassifications have been made to prior period presentation in order to conform to the current period presentation.

Risks and Uncertainties Arising from the COVID-19 Pandemic

The recent outbreak of COVID-19 and its development into a pandemic in March 2020 (the "COVID-19 Pandemic") has resulted in significant economic disruption globally, including in the U.S. and specific geographic areas where we operate. Actions taken by various governmental authorities, individuals and companies around the world to prevent the spread of COVID-19 through social distancing have restricted travel, many business operations, public gatherings and the overall level of individual movement and in-person interaction across the globe. This has in turn significantly reduced global economic activity and resulted in airlines dramatically cutting back on flights and a decrease in motor vehicle use at a time when seasonal driving patterns typically result in an increase of consumer demand for gasoline. As a result, there has also been a decline in the demand for, and thus also the market prices of, crude oil and certain products, particularly refined petroleum products that we receive revenue for the transportation and storage services we provide. In addition, the decline in demand impacted the sales volumes in our wholesale marketing business. In April and June 2020, an agreement was reached to cut oil production between the members of the Organization of Petroleum Exporting Countries ("OPEC") and other leading oil producing countries (together with OPEC, “OPEC+”), as part of the efforts to resolve the oil production disputes that significantly affected crude oil prices beginning in the first quarter of 2020 and to provide stability in the oil markets. While OPEC+ have reached an agreement to cut oil production, there is uncertainty about the duration of the COVID-19 Pandemic which caused storage constraints, in the early part of the second quarter of 2020, in the United States resulting from over-supply of produced oil. Therefore, downward pressure on commodity prices has remained and could continue for the foreseeable future.

Uncertainties related to the impact of the COVID-19 Pandemic and other events exist that could impact our future results of operations and financial position, the nature of which and the extent to which are currently unknown. To the extent these uncertainties have been identified and are believed to have an impact on our current period results of operations or financial position based on the requirements for assessing such financial statement impact under GAAP, we have considered them in the preparation of our unaudited financial statements as of and for the three and six months ended June 30, 2020. The application of accounting policies impacted by such considerations include (but are not necessarily limited to) the following:

• The interim evaluation of indefinite-lived intangibles and goodwill for potential impairment, where indicators exist, as defined by GAAP;

• The interim evaluation of long-lived assets for potential impairment, where indicators exist, as defined by GAAP;

7 |  

Notes to Condensed Consolidated Financial Statements (Unaudited)

• The interim evaluation of joint ventures for potential impairment, where indicators exist, as defined by GAAP;

• The evaluation of inventory valuation allowances that may be warranted under the lower of cost or net realizable value analysis, pursuant to GAAP;

• The consideration of debt modifications and or covenant requirements, as applicable;

• The evaluation of commitments and contingencies, including changes in concentrations, as applicable;

• The interim evaluation of the risk of credit losses and the determination of our allowance for credit losses, pursuant to GAAP; and

• The interim evaluation of our ability to continue as a going concern.

New Accounting Pronouncements Adopted During 2020

ASU 2018-13, Fair Value Measurement - Changes to the Disclosure Requirements for Fair Value Measurement

In August 2018, the Financial Accounting Standards Board (the "FASB") issued guidance related to disclosure requirements for fair value measurements. The pronouncement eliminates, modifies and adds disclosure requirements for fair value measurements. The pronouncement is effective for fiscal years, and for interim periods within those fiscal years, beginning after December 15, 2019. We adopted this guidance on January 1, 2020 and the adoption did not have a material impact on our business, financial condition or results of operations.

ASU 2016-13, Financial Instruments - Measurement of Credit Losses on Financial Instruments

In June 2016, the FASB issued guidance requiring the measurement of all expected credit losses for financial assets held at the reporting date based on historical experience, current conditions, and reasonable and supportable forecasts. Organizations will now use forward-looking information to better inform their credit loss estimates. This guidance is effective for interim and annual periods beginning after December 15, 2019. We adopted this guidance on January 1, 2020 using the modified retrospective approach as of the adoption date. The adoption did not have a material impact on the Partnership’s operating results, financial position or disclosures.

ASU 2018-15, Intangible - Customer's Accounting for Implementation Costs Incurred in a Cloud Computing Arrangement That Is a Service Contract

In August 2018, the FASB issued guidance related to customers' accounting for implementation costs incurred in a cloud computing arrangement that is considered a service contract. This pronouncement aligns the requirements for capitalizing implementation costs in such arrangements with the requirements for capitalizing implementation costs incurred to develop or obtain internal-use software. This pronouncement is effective for fiscal years, and for interim periods within those fiscal years, beginning after December 15, 2019. Entities can choose to adopt the new guidance prospectively or retrospectively. We adopted this guidance on January 1, 2020 and elected the prospective method. The adoption did not have a material impact on our business, financial condition or results of operations.

Accounting Pronouncements Not Yet Adopted

ASU 2019-12, Simplifying the Accounting for Income Taxes

In December 2019, the FASB issued guidance intended to simplify various aspects related to accounting for income taxes, eliminate certain exceptions within ASC 740 and clarify certain aspects of the current guidance to promote consistency among reporting entities. The pronouncement is effective for fiscal years, and for interim periods within those fiscal years, beginning after December 2020, with early adoption permitted. We expect to adopt this guidance on the effective date and are currently evaluating the impact that adopting this new guidance will have on our business, financial condition and results of operations.

ASU 2020-01, Investments—Equity Securities (Topic 321), Investments—Equity Method and Joint Ventures (Topic 323), and Derivatives and Hedging (Topic 815)—Clarifying the Interactions between Topic 321, Topic 323, and Topic 815

In January 2020, the FASB issued ASU 2020-01 which is intended to clarify interactions between the guidance to account for certain equity securities under Topics 321, 323 and 815, and improve current GAAP by reducing diversity in practice and increasing comparability of accounting. The pronouncement is effective for fiscal years and interim periods within those fiscal years beginning after December 15, 2020, and early adoption is permitted. We do not expect that the adoption of this ASU on its effective date will have a material impact on our business, financial condition or results of operations.

ASU 2020-04, Facilitation of the Effects of Reference Rate Reform on Financial Reporting (Topic 848)

In March 2020, the FASB issued an amendment which is intended to provide temporary optional expedients and exceptions to GAAP guidance on contracts, hedge accounting and other transactions affected by the expected market transition from the London Interbank Offered Rate (LIBOR) and other interbank rates. This guidance is effective for all entities any time beginning on March 12, 2020 through December 31, 2022 and may be applied from the beginning of an interim period that includes the issuance date of the ASU. The Partnership is currently evaluating the impact this guidance may have on its consolidated financial statements and related disclosures.

8 |  

Notes to Condensed Consolidated Financial Statements (Unaudited)

Note 2 - Acquisitions

Trucking Assets Acquisition

Effective May 1, 2020, the Partnership, through its wholly-owned subsidiary DKL Transportation, LLC, acquired Delek Trucking, LLC consisting of certain leased and owned tractors and trailers and related assets from Delek Holdings. The total consideration is subject to certain post-closing adjustments and was approximately $48.0 million in cash. We financed this acquisition with a combination of cash on hand and borrowings under the DKL Credit Facility (as defined in Note 7 ).

The Trucking Assets are recorded in our pipelines and transportation segment and include approximately 150 trucks and trailers, which are primarily leased or owned, respectively.

In connection with the closing of the transaction, Delek Holdings, the Partnership and various of their respective subsidiaries entered into a Throughput and Deficiency Agreement (the “Trucking Assets T&D Agreement”). Under the Trucking Assets T&D Agreement, the Partnership will gather, coordinate pickup of, transport and deliver petroleum products for Delek Holdings, as well as provide ancillary services as requested. The transaction and related agreements were approved by the Conflicts Committee of the Partnership's general partner, which is comprised solely of independent directors. See Note 3 for more detailed descriptions of these agreements.

The Trucking Assets Acquisition was considered a transaction between entities under common control. Accordingly, the Trucking Assets were recorded at amounts based on Delek Holdings' historical carrying value as of the acquisition date. The carrying value of the Trucking Assets as of the acquisition date was $13.3 million, consisting of $0.5 million of owned assets and $12.8 million of Right of Use asset for leased assets and equivalent operating lease liability. Prior periods have not been recast as these assets do not constitute a business in accordance with Accounting Standard Update 2017-01, Clarifying the Definition of a Business ("ASU 2017-01"). We incurred approximately $0.3 million of acquisition costs related to the Trucking Assets Acquisition.

Big Spring Gathering Assets Acquisition

Effective March 31, 2020, the Partnership, through its wholly-owned subsidiary DKL Permian Gathering, LLC, acquired the Big Spring Gathering Assets from Delek Holdings, located in Howard, Borden and Martin Counties, Texas. The total consideration was subject to certain post-closing adjustments and was comprised of $100.0 million in cash and 5.0 million common units representing limited partnership interest in us. We financed the cash component of this acquisition with borrowings from the DKL Credit Facility.

The Big Spring Gathering Assets are recorded in our pipelines and transportation segment and include:

• Crude oil pipelines;

• Approximately 200 miles of gathering systems (Bayswater Battery, Guidon, Tiger Battery, SM Energy Vizzini);

• Approximately 65 Tank battery connections;

• Terminals (total storage of approximately 650,000 bbls); and

• Applicable rights-of-way.

In connection with the closing of the transaction, Delek Holdings, the Partnership and various of their respective subsidiaries entered into a Throughput and Deficiency Agreement (the “Big Spring T&D Agreement”). Under the Big Spring T&D Agreement, the Partnership will operate and maintain the Big Spring Gathering Assets connecting Delek Holdings' interests in and to certain crude oil with the Partnership's Big Spring, Texas terminal and provide gathering, transportation and other related services with respect to any and all crude produced from shipper’s and certain other producers’ respective interests for delivery at the Big Spring Terminal. The transaction and related agreements were approved by the Conflicts Committee of the Partnership's general partner, which is comprised solely of independent directors. See Note 3 for more detailed descriptions of these agreements.

The Big Spring Gathering Assets Acquisition was considered a transaction between entities under common control. Accordingly, the Big Spring Gathering Assets were recorded at amounts based on Delek Holdings' historical carrying value as of the acquisition date. The carrying value of the Big Spring Gathering Assets as of the acquisition date was $209.5 million. Pursuant to the common control guidance, the 5.0 million units issued (which had a closing market price of $9.10 per unit on the transaction date) were recorded in equity at $109.5 million, representing the net carrying value of the Big Spring Gathering Assets purchased of $209.5 million less the $100.0 million cash consideration. Prior periods have not been recast as these assets do not constitute a business in accordance with ASU 2017-01. We incurred approximately $0.7 million of acquisition costs related to the Big Spring Gathering Assets Acquisition.

Note 3 - Related Party Transactions

Commercial Agreements

The Partnership has a number of long-term, fee-based commercial agreements with Delek Holdings under which we provide various services, including crude oil gathering and crude oil, intermediate and refined products transportation and storage services, and marketing, terminalling

9 |  

Notes to Condensed Consolidated Financial Statements (Unaudited)

and offloading services to Delek Holdings. Most of these agreements have an initial term ranging from five to ten years, which may be extended for various renewal terms at the option of Delek Holdings. In November 2017, Delek Holdings opted to renew certain of these agreements for subsequent five-year terms expiring in November 2022. In the case of our marketing agreement with Delek Holdings with respect to the Tyler Refinery, the initial term has been extended through 2026. The current term of certain of our agreements with Delek Holdings were required to be further extended pursuant to the amended and restated DKL Credit Facility (as defined in Note 7), which extensions were effective in the fourth quarter of 2018. The fees under each agreement are payable to us monthly by Delek Holdings or certain third parties to whom Delek Holdings has assigned certain of its rights and are generally subject to increase or decrease on July 1 of each year, by the amount of any change in various inflation-based indices, including the Federal Energy Regulatory Commission ("FERC") oil pipeline index or various iterations of the consumer price index ("CPI") and the producer price index ("PPI"); provided, however, that in no event will the fees be adjusted below the amount initially set forth in the applicable agreement. In most circumstances, if Delek Holdings or the applicable third party assignee fails to meet or exceed the minimum volume or throughput commitment during any calendar quarter, Delek Holdings, and not any third party assignee, will be required to make a quarterly shortfall payment to us equal to the volume of the shortfall multiplied by the applicable fee, subject to certain exceptions as specified in the applicable agreement. Carry-over of any volumes or revenue in excess of such commitment to any subsequent quarter is not permitted.

Under each of these agreements, we are required to maintain the capabilities of our pipelines and terminals, such that Delek Holdings may throughput and/or store, as the case may be, specified volumes of crude oil, intermediate and refined products. To the extent that Delek Holdings is prevented by our failure to maintain such capacities from throughputting or storing such specified volumes for more than 30 days per year, Delek Holdings' minimum throughput commitment will be reduced proportionately and prorated for the portion of the quarter during which the specified throughput capacity was unavailable, and/or the storage fee will be reduced, prorated for the portion of the month during which the specified storage capacity was unavailable. Such reduction would occur even if actual throughput or storage amounts were below the minimum volume commitment levels.

See our Annual Report on Form 10-K for a more complete description of our material commercial agreements and other agreements with Delek Holdings.

Effective May 1, 2020, we entered into the Trucking Assets T&D Agreement with Delek Holdings. Under the Trucking Assets T&D Agreement, we will operate a truck based operation that transports various products throughout Arkansas, Oklahoma and Texas and gather, coordinate the pickup of, transport and deliver such products, as well as provide ancillary services as requested. Pursuant to the Trucking Assets T&D Agreement, Delek Holdings has committed to minimum revenue of $39.0 million per year. The initial term of the Trucking Assets T&D Agreement is 10 years, and thereafter Delek Holdings has the option to extend the Trucking Assets T&D Agreement for two additional two-year terms.

Effective March 31, 2020, we entered into the Big Spring T&D Agreement with Delek Holdings. Under the Big Spring T&D Agreement, we will operate and maintain the Big Spring Gathering Assets connecting Delek Holdings' interests in and to certain crude oil with the Partnership's Big Spring, Texas terminal and provide gathering, transportation and other related services with respect to any and all crude produced from Delek Holdings' and certain other producers’ respective interests for delivery at the Big Spring Terminal. Pursuant to the Big Spring T&D Agreement, Delek Holdings has committed to ship 120,000 bpd on the Big Spring Gathering Assets and 50,000 bpd to a redelivery point in Howard County, Texas (collectively, the Minimum Volume Commitments “MVCs”). Pursuant to the Big Spring T&D Agreement, we also agreed to spend up to $33.8 million over three years to connect additional receipt points and, in connection with such expenditures, the MVCs will increase to provide the Partnership a 12.5% return on the actual costs directly incurred and paid by the Partnership pursuant to the terms set forth in the Big Spring T&D Agreement. The initial term of the Big Spring T&D Agreement is 10 years, and thereafter Delek Holdings has the option to extend the Big Spring T&D Agreement for two additional five-year terms. Following the initial term and any such extensions, the Big Spring T&D Agreement will continue on a year-to-year basis unless terminated by either party upon 90 days’ written notice.

Other Agreements with Delek Holdings

In addition to the commercial agreements described above, the Partnership has entered into the following agreements with Delek Holdings:

Omnibus Agreement

The Partnership entered into an omnibus agreement with Delek Holdings, our general partner, Delek Logistics Operating, LLC, Lion Oil Company and certain of the Partnership's and Delek Holdings' other subsidiaries on November 7, 2012, which has been amended from time to time in connection with acquisitions from Delek Holdings (collectively, as amended, the "Omnibus Agreement"). The Omnibus Agreement governs the provision of certain operational services and reimbursement obligations, among other matters, between the Partnership and Delek Holdings, and obligates us to pay an annual fee of $4.1 million to Delek Holdings for its provision of centralized corporate services to the Partnership.

Pursuant to the terms of the Omnibus Agreement, we were reimbursed by Delek Holdings for certain capital expenditures of a nominal amount and $0.6 million during the three and six months ended June 30, 2020, respectively, and $0.7 million and $1.5 million during the three and six months ended June 30, 2019, respectively. These amounts are recorded in other long-term liabilities and are amortized to revenue over the life of the underlying revenue agreement corresponding to the asset. Additionally, we are reimbursed or indemnified, as the case may

10 |  

Notes to Condensed Consolidated Financial Statements (Unaudited)

be, for costs incurred in excess of certain amounts related to certain asset failures, pursuant to the terms of the Omnibus Agreement. As of June 30, 2020, we have recorded a nominal receivable from related parties for these matters for which we expect to be reimbursed. These reimbursements are recorded as reductions to operating expense. We were reimbursed a nominal amount and $0.1 million for these matters during the three and six months ended June 30, 2020, respectively, and $2.2 million and $5.7 million during the three and six months ended June 30, 2019, respectively.

Other Transactions

The Partnership manages a long-term capital project on behalf of Delek Holdings pursuant to a construction management and operating agreement (the "DPG Management Agreement") for the construction of a 250-mile gathering system in the Permian Basin. The majority of the gathering system has been constructed, however, additional costs pertaining to a pipeline connection that was not contributed to the Partnership continue to be incurred and are still subject to the terms of the DPG Management Agreement. The Partnership is also considered the operator for the project and is responsible for oversight of the project design, procurement and construction of project segments and provides other related services. Pursuant to the terms of the DPG Management Agreement, the Partnership receives a monthly operating services fee and a construction services fee, which includes the Partnership's direct costs of managing the project plus an additional percentage fee of the construction costs of each project segment. The agreement extends through December 2022. Total fees paid to the Partnership were $0.4 million and $1.2 million for the three and six months ended June 30, 2020, respectively, and $1.0 million and $2.8 million for the three and six months ended June 30, 2019, respectively, which are recorded in affiliate revenue in our condensed consolidated statements of income. Additionally, the Partnership incurs the costs in connection with the construction of the assets and is subsequently reimbursed by Delek Holdings. Amounts reimbursable by Delek Holdings are recorded in accounts receivable from related parties.

Unregistered Sale of Equity Securities

In connection with the Partnership's issuance of the new units ("Additional Units") under the Big Spring Gathering Assets Acquisition and in accordance with the Partnership's First Amended and Restated Agreement of Limited Partnership, as amended (the "Partnership Agreement"), the Partnership issued general partner units to the general partner in an amount necessary to maintain its 2% general partner interest (as defined in the "Partnership Agreement"). The sale and issuance of the Additional Units and such general partner units in connection with the Big Spring Gathering Assets Acquisition is exempt from registration under Section 4(a)(2) of the Securities Act of 1933, as amended.

Additionally, in March 2020, Delek Marketing & Supply, LLC ("Delek Marketing") repurchased 451,822 units from an investor pursuant to a Common Unit Purchase Agreement ("Purchase Agreement") between Delek Marketing and such investor. The purchase price of the units amounted to approximately $5.0 million. As a result of the transaction, Delek Holdings' ownership in our outstanding limited partner units increased to 64.5% from 62.6%. Delek Holdings' ownership in our common limited partner units was further increased to 70.5% as a result of the issuance of 5.0 million Additional Units in connection with the Big Spring Gathering Assets Acquisition described above.

Amendment No. 2 to the First Amended and Restated Agreement of Limited Partnership of Delek Logistics Partners, LP

On March 31, 2020, in connection with the completion of the Big Spring Gathering Assets Acquisition, the Board of the general partner adopted Amendment No. 2 (“Amendment No. 2”) to the Partnership Agreement, effective upon adoption. Amendment No. 2 amends the Partnership Agreement to provide for a waiver of distributions in respect of the Incentive Distribution Rights ("IDRs") for General Partner Additional Units ("GP Additional Units") associated with the 5.0 million Additional Units for at least two years, through at least the distribution for the quarter ending March 31, 2022 (the “IDR Waiver”). The IDR Waiver essentially reduces the distribution made to the holders of the IDRs during this period, as the holders would not receive a share of the distribution made on the GP Additional Units. The IDR Waiver will automatically and permanently expire if, following the payment of a distribution in respect of a quarter ending on or after March 31, 2022, Delek Logistics has generated distributable cash flow in the most recent four consecutive quarters that, in the aggregate, would have resulted in total distribution coverage (on a pro forma basis without giving effect to the IDR Waiver) of at least 110% or 1.1x over such period. The IDR Waiver remains effective if this condition is not met. Following the termination of the IDR Waiver, the holders of the IDRs will receive distributions on all units, including the Additional Units.

In addition, in connection with any sale or exchange of the IDRs to or with the Partnership, the IDRs shall be treated as if such waiver had not and never will expire, regardless of whether such waiver has actually expired. An additional waiver letter was signed that waived all of the distributions for the first quarter of 2020 on the Additional Units with respect to the base distribution and the IDRs.

Pursuant to Amendment Number 2, the IDR majority unitholders have the right, subject to certain conditions following the termination of the IDR Waiver, to make an election (the “IDR Reset Election”) to cause the minimum quarterly distribution and the target distributions to be reset ("the IDR Reset"). In connection with the IDR Reset, the IDR Unitholders will become entitled to receive their respective proportionate share of Common Units (the “IDR Reset Common Units”) derived by dividing (i) the average amount of IDR cash distributions made by the Partnership by (ii) the average of the cash distributions made by the Partnership in respect of each Common Unit, and in each case for the two full Quarters immediately before the Reset Notice.

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Notes to Condensed Consolidated Financial Statements (Unaudited)

Summary of Transactions

Revenues from affiliates consist primarily of revenues from gathering, transportation, storage, offloading, Renewable Identification Numbers ("RINs"), wholesale marketing and products terminalling services provided primarily to Delek Holdings based on regulated tariff rates or contractually based fees and product sales. Affiliate operating expenses are primarily comprised of amounts we reimburse Delek Holdings, or our general partner, as the case may be, for the services provided to us under the Partnership Agreement. These expenses could also include reimbursement and indemnification amounts from Delek Holdings, as provided under the Omnibus Agreement. Additionally, the Partnership is required to reimburse Delek Holdings for direct or allocated costs and expenses incurred by Delek Holdings on behalf of the Partnership and for charges Delek Holdings incurred for the management and operation of our logistics assets, including an annual fee for various centralized corporate services, which are included in general and administrative expenses. In addition to these transactions, we purchase refined products and bulk biofuels from Delek Holdings, the costs of which are included in cost of materials and other.

A summary of revenue, purchases from affiliates and expense transactions with Delek Holdings and its affiliates are as follows (in thousands):

	Three Months Ended June 30,				Six Months Ended June 30,
	2020		2019		2020		2019
Revenues	$	87,629	$	61,918	$	194,328	$	124,883
Purchases from Affiliates	$	29,730	$	73,213	$	110,493	$	152,647
Operating and maintenance expenses	$	10,310	$	10,590	$	23,067	$	20,515
General and administrative expenses	$	2,703	$	1,748	$	6,072	$	3,118

Quarterly Cash Distributions

Our common and general partner unitholders and the holders of IDRs are entitled to receive quarterly distributions of available cash as it is determined by the board of directors of our general partner in accordance with the terms and provisions of our Partnership Agreement. In February and May 2020, we paid quarterly cash distributions of $30.6 million and $30.9 million, respectively, of which $22.6 million and $23.2 million, respectively, were paid to Delek Holdings and our general partner. In February and May 2019, we paid quarterly cash distributions of $26.9 million and $27.4 million, respectively, of which $19.6 million and $20.0 million were paid to Delek Holdings and our general partner. On July 24, 2020, our general partner's board of directors declared a quarterly cash distribution totaling $36.0 million, based on the available cash as of the date of determination for the end of the second quarter of 2020, payable on August 12, 2020, of which $28.2 million is expected to be paid to Delek Holdings and our general partner, including the distribution as holder of the IDRs described in Note 8.

Note 4 - Revenues

We generate revenue by charging fees for gathering, transporting, offloading and storing crude oil; for storing intermediate products and feed stocks; for distributing, transporting and storing refined products; for marketing refined products output of Delek Holdings' Tyler and Big Spring refineries; and for wholesale marketing in the West Texas area. A significant portion of our revenue is derived from long-term commercial agreements with Delek Holdings, which provide for annual fee adjustments for increases or decreases in the CPI, PPI or FERC index (refer to Note 3 for a more detailed description of these agreements). In addition to the services we provide to Delek Holdings, we also generate substantial revenue from crude oil, intermediate and refined products transportation services for, and terminalling and marketing services to, third parties primarily in Texas, New Mexico, Tennessee and Arkansas. Certain of these services are provided pursuant to contractual agreements with third parties. Payment terms require customers to pay shortly after delivery and do not contain significant financing components.

The majority of our commercial agreements with Delek Holdings meet the definition of a lease because: (1) performance of the contracts is dependent on specified property, plant or equipment and (2) it is remote that one or more parties other than Delek Holdings will take more than a minor amount of the output associated with the specified property, plant or equipment. As part of our adoption of Accounting Standards Codification ("ASC") 842, Leases ("ASC 842"), we applied the permitted practical expedient to not separate lease and non-lease components under the predominance principle to designated asset classes associated with the provision of logistics services. We have determined that the predominant component of the related agreements currently in effect is the lease component. Therefore, the combined component is accounted for under the applicable lease accounting guidance. Of our $473.7 million net property, plant, and equipment balance as of June 30, 2020, $358.5 million is subject to operating leases under our commercial agreements. These agreements do not include options for the lessee to purchase our leasing equipment, nor do they include any material residual value guarantees or material restrictive covenants.

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The following table represents a disaggregation of revenue for each reportable segment for the periods indicated (in thousands):

	Three Months Ended June 30, 2020
	Pipelines and Transportation		Wholesale Marketing and Terminalling		Consolidated
Service Revenue - Third Party	$	2,032	$	204	$	2,236
Product Revenue - Third Party	—		27,772		27,772
Product Revenue - Affiliate	—		6,720		6,720
Lease Revenue - Affiliate (1)	61,394		19,515		80,909
Total Revenue	$	63,426	$	54,211	$	117,637

⁽¹⁾ Net of $1.8 million of amortization expense for the three months ended June 30, 2020, related to a customer contract intangible asset recorded in the wholesale marketing and terminalling segment.

	Three Months Ended June 30, 2019
	Pipelines and Transportation		Wholesale Marketing and Terminalling		Consolidated
Service Revenue - Third Party	$	7,477	$	184	$	7,661
Product Revenue - Third Party	—		85,763		85,763
Product Revenue - Affiliate	—		7,187		7,187
Lease Revenue - Affiliate (1)	36,731		18,000		54,731
Total Revenue	$	44,208	$	111,134	$	155,342

⁽¹⁾ Net of $1.8 million of amortization expense for the three months ended June 30, 2019, related to a customer contract intangible asset recorded in the wholesale marketing and terminalling segment.

	Six Months Ended June 30, 2020
	Pipelines and Transportation		Wholesale Marketing and Terminalling		Consolidated
Service Revenue - Third Party	$	11,496	$	396	$	11,892
Product Revenue - Third Party	—		74,818		74,818
Product Revenue - Affiliate	—		58,222		58,222
Lease Revenue - Affiliate (1)	99,897		36,209		136,106
Total Revenue	$	111,393	$	169,645	$	281,038

⁽¹⁾ Net of $3.6 million of amortization expense for the six months ended June 30, 2020, related to a customer contract intangible asset recorded in the wholesale marketing and terminalling segment.

	Six Months Ended June 30, 2019
	Pipelines and Transportation		Wholesale Marketing and Terminalling		Consolidated
Service Revenue - Third Party	$	11,451	$	304	$	11,755
Product Revenue - Third Party	—		171,187		171,187
Product Revenue - Affiliate	—		16,573		16,573
Lease Revenue - Affiliate (1)	73,390		34,920		108,310
Total Revenue	$	84,841	$	222,984	$	307,825

⁽¹⁾ Net of $3.6 million of amortization expense for the six months ended June 30, 2019, related to a customer contract intangible asset recorded in the wholesale marketing and terminalling segment.

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As of June 30, 2020, we expect to recognize $1.6 billion in lease revenues related to our unfulfilled performance obligations pertaining to the minimum volume commitments and capacity utilization under the non-cancelable terms of our commercial agreements with Delek Holdings. Most of these agreements have an initial term ranging from five to ten years, which may be extended for various renewal terms. We disclose information about remaining performance obligations that have original expected durations of greater than one year.

Our unfulfilled performance obligations as of June 30, 2020 were as follows (in thousands):

Remainder of 2020	134,043
2021	267,990
2022	249,850
2023	240,489
2024 and thereafter	$	733,292
Total expected revenue on remaining performance obligations	$	1,625,664

Note 5 - Net Income Per Unit

We use the two-class method when calculating the net income per unit applicable to limited partners because we have more than one participating class of securities. Our participating securities consist of common units, general partner units and IDRs. The two-class method is based on the weighted-average number of common units outstanding during the period. Basic net income per unit applicable to limited partners is computed by dividing limited partners’ interest in net income, after deducting our general partner’s 2% interest and IDRs, by the weighted-average number of outstanding common units. Our net income is allocated to our general partner and limited partners in accordance with their respective partnership percentages after giving effect to priority income allocations for IDRs, which are held by our general partner pursuant to our Partnership Agreement. The IDRs are paid following the close of each quarter.

Pursuant to Amendment No. 2 to the Partnership Agreement, an agreement was reached for a waiver of distributions in respect of the IDRs for the GP Additional Units associated with the 5.0 million Additional Units for at least two years, through at least the distribution for the quarter ending March 31, 2022 ("IDR Waiver"). The IDR Waiver essentially reduces the distribution made to the holders of the IDRs during this period, as the holders would not receive a share of the distribution made on the GP Additional Units. An additional waiver letter was signed that waived all of the distributions for the first quarter of 2020 on the Additional Units with respect to base distributions and the IDRs. Refer Note 3 for additional details.

Earnings in excess of distributions are allocated to our general partner and limited partners based on their respective ownership interests. Payments made to our unitholders are determined in relation to actual distributions declared and are not based on the net income allocations used in the calculation of net income per unit.

Diluted net income per unit applicable to common limited partners includes the effects of potentially dilutive units on our common units. As of June 30, 2020, the only potentially dilutive units outstanding consist of unvested phantom units.

Our distributions earned with respect to a given period are declared subsequent to quarter end. Therefore, the table below represents total cash distributions applicable to the period in which the distributions are earned. The expected date of distribution for the distributions earned during the period ended June 30, 2020 is August 12, 2020. The calculation of net income per unit is as follows (dollars in thousands, except units and per unit amounts):

14 |  

	Three Months Ended June 30,					Six Months Ended June 30,
	2020		2019			2020		2019
Net income attributable to partners	$	44,415	$	24,885		$	72,211	$	44,581
Less: General partner's distribution (including IDRs) (1)	9,479		8,160			18,618		15,583
Less: Limited partners' distribution	26,490		20,754			48,229		40,769
Earnings in excess (deficit) of distributions	$	8,446	$	(4,029	)	$	5,364	$	(11,771	)
General partner's earnings:
Distributions (including IDRs) (1)	$	9,479	$	8,160		$	18,618	$	15,583
Allocation of earnings in excess (deficit) of distributions	168		(81		)	106		(235		)
Total general partner's earnings	$	9,647	$	8,079		$	18,724	$	15,348
Limited partners' earnings on common units:
Distributions	$	26,490	$	20,754		$	48,229	$	40,769
Allocation of earnings in excess (deficit) of distributions	8,278		(3,948		)	5,258		(11,536		)
Total limited partners' earnings on common units	$	34,768	$	16,806		$	53,487	$	29,233
Weighted average limited partner units outstanding:
Common units - basic	29,427,298		24,409,359			26,953,934		24,408,270
Common units - diluted	29,430,555		24,414,343			26,956,523		24,414,077
Net income per limited partner unit:
Common units - basic	$	1.18	$	0.69		$	1.98	$	1.20
Common units - diluted (2)	$	1.18	$	0.69		$	1.98	$	1.20

⁽¹⁾ General partner distributions (including IDRs) consist of the 2.0% general partner interest and IDRs, which represent the right of the general partner to receive increasing percentages of quarterly distributions of available cash from operating surplus in excess of 0.43125 per unit per quarter. See Note 8 for further discussion related to IDRs.

⁽²⁾ Outstanding common unit equivalents totaling 18,270 were excluded from the diluted earnings per unit calculation for the three and six months ended June 30, 2020. There were no outstanding common units excluded from the diluted earnings per unit calculation for the three and six months ended June 30, 2019.

Note 6 - Inventory

Inventories consisted of $2.1 million and $12.6 million of refined petroleum products as of June 30, 2020 and December 31, 2019, each of which are net of lower of cost or net realizable value reserve of a nominal amount. Inventory is stated at the lower of cost or net realizable value, with cost determined on a first-in, first-out basis. We recognize lower of cost or net realizable value charges as a component of cost of materials and other in the consolidated statements of income and comprehensive income.

Note 7 - Long-Term Obligations

DKL Credit Facility

Prior to September 28, 2018, the Partnership had a $700.0 million senior secured revolving credit agreement with Fifth Third Bank ("Fifth Third"), as administrative agent, and a syndicate of lenders (the "2014 Facility"), which had a maturity date of December 30, 2019. The obligations under the 2014 Facility were secured by a first priority lien on substantially all of the Partnership's tangible and intangible assets. Additionally, a subsidiary of Delek Holdings provided a limited guaranty of the Partnership's obligations under the 2014 Facility.

On September 28, 2018, the Partnership entered into a third amended and restated senior secured revolving credit agreement, which amended and restated the 2014 Facility (hereafter, the "DKL Credit Facility") with Fifth Third, as administrative agent, and a syndicate of lenders. The DKL Credit Facility contains a dual currency borrowing tranche that permits draw downs in U.S. or Canadian dollars. Under the terms of the DKL Credit Facility, among other things, the lender commitments were increased to $850.0 million. The DKL Credit Facility also contains an accordion feature whereby the Partnership can increase the size of the credit facility to an aggregate of $1.0 billion, subject to receiving increased or new commitments from lenders and the satisfaction of certain other conditions precedent.

The obligations under the DKL Credit Facility remain secured by first priority liens on substantially all of the Partnership's and its subsidiaries' tangible and intangible assets. Additionally, Delek Marketing, a subsidiary of Delek Holdings, had provided a limited guaranty of the Partnership's obligations under the DKL Credit Facility. Delek Marketing's guaranty was (i) limited to an amount equal to the principal amount, plus unpaid and accrued interest, of a promissory note made by Delek Holdings in favor of Delek Marketing (the "Holdings Note") and (ii) secured by Delek Marketing's pledge of the Holdings Note to the lenders under the DKL Credit Facility. Effective March 30, 2020, Delek Marketing's

15 |  

Notes to Condensed Consolidated Financial Statements (Unaudited)

limited guaranty and pledge of the Holdings Note was terminated pursuant to a guaranty and pledge release approved by the required lenders under the DKL Credit Facility.

The DKL Credit Facility has a maturity date of September 28, 2023. Borrowings denominated in U.S. dollars bear interest at either a U.S. dollar prime rate, plus an applicable margin, or the London Interbank Offered Rate ("LIBOR"), plus an applicable margin, at the election of the borrowers. Borrowings denominated in Canadian dollars bear interest at either a Canadian dollar prime rate, plus an applicable margin, or the Canadian Dealer Offered Rate, plus an applicable margin, at the election of the borrowers.

The applicable margin in each case and the fee payable for any unused revolving commitments vary based upon the Partnership's most recent total leverage ratio calculation delivered to the lenders, as called for and defined under the terms of the DKL Credit Facility. At June 30, 2020, the weighted average interest rate for our borrowings under the facility was approximately 2.78%. Additionally, the DKL Credit Facility requires us to pay a leverage ratio dependent quarterly fee on the average unused revolving commitment. As of June 30, 2020, this fee was 0.40% per year.

As of June 30, 2020, we had $750.0 million of outstanding borrowings under the DKL Credit Facility, with no letters of credit in place. Unused credit commitments under the DKL Credit Facility as of June 30, 2020, were $100.0 million.

6.750% Senior Notes Due 2025

On May 23, 2017, the Partnership and Delek Logistics Finance Corp., a Delaware corporation and a wholly-owned subsidiary of the Partnership (“Finance Corp.” and together with the Partnership, the “Issuers”), issued $250.0 million in aggregate principal amount of 6.75% senior notes due 2025 (the “2025 Notes”) at a discount. The 2025 Notes are general unsecured senior obligations of the Issuers. The 2025 Notes are unconditionally guaranteed jointly and severally on a senior unsecured basis by the Partnership's existing subsidiaries (other than Finance Corp., the "Guarantors") and will be unconditionally guaranteed on the same basis by certain of the Partnership’s future subsidiaries. The 2025 Notes rank equal in right of payment with all existing and future senior indebtedness of the Issuers, and senior in right of payment to any future subordinated indebtedness of the Issuers. Interest on the 2025 Notes is payable semi-annually in arrears on each May 15 and November 15, commencing November 15, 2017.

Beginning on May 15, 2020, the Issuers may, subject to certain conditions and limitations, redeem all or part of the 2025 Notes at a redemption price of 105.063% of the redeemed principal for the twelve-month period beginning on May 15, 2020, 103.375% for the twelve-month period beginning on May 15, 2021, 101.688% for the twelve-month period beginning on May 15, 2022 and 100.00% beginning on May 15, 2023 and thereafter, plus accrued and unpaid interest, if any. In the event of a change of control, accompanied or followed by a ratings downgrade within a certain period of time, subject to certain conditions and limitations, the Issuers will be obligated to make an offer for the purchase of the 2025 Notes from holders at a price equal to 101% of the principal amount thereof, plus accrued and unpaid interest.

On April 25, 2018, we made an offer to exchange the 2025 Notes and the related guarantees that were validly tendered and not validly withdrawn for an equal principal amount of exchange notes that are freely tradeable, as required under the terms of the original indenture. The terms of the exchange notes that were issued in May 2018 as a result of the exchange (also referred to as the "2025 Notes") are substantially identical to the terms of the original 2025 Notes.

As of June 30, 2020, we had $250.0 million in outstanding principal amount of the 2025 Notes. As of June 30, 2020, the effective interest rate related to the 2025 Notes was approximately 7.22%.

Outstanding borrowings under the 2025 Notes are net of deferred financing costs and debt discount of $3.6 million and $1.2 million, respectively, as of June 30, 2020, and $4.0 million and $1.3 million, respectively, as of December 31, 2019.

Note 8 - Equity

We had 8,687,371 common limited partner units held by the public outstanding as of June 30, 2020. Additionally, as of June 30, 2020, Delek Holdings owned a 69.1% interest in us, consisting of 20,745,868 common limited partner units (representing a 70.5% interest), and a 94.8% interest in our general partner, which owns the entire 2.0% general partner interest consisting of 600,678 general partner units. During the second quarter of 2020, Delek Holdings purchased 0.2% in our general partner from an affiliate at fair market value. As of June 30, 2020, affiliates, who are also members of our general partner's management and board of directors, own the remaining 5.2% interest in our general partner.

16 |  

Notes to Condensed Consolidated Financial Statements (Unaudited)

Equity Activity

The table below summarizes the changes in the number of units outstanding from December 31, 2019 through June 30, 2020.

	Common - Public		Common - Delek Holdings	General Partner	Total
Balance at December 31, 2019	9,131,579		15,294,046	498,482	24,924,107
General partner units issued to maintain 2% interest	—		—	102,196	102,196
Unit-based compensation awards (1)	7,614		—	—	7,614
Big Spring Gathering Assets Acquisition equity issuance	—		5,000,000	—	5,000,000
Delek Holdings Unit purchases from public	(451,822	)	451,822	—	—
Balance at June 30, 2020	8,687,371		20,745,868	600,678	30,033,917

⁽¹⁾ Unit-based compensation awards are presented net of 481 units withheld for taxes as of June 30, 2020.

Issuance of Additional Securities

Our Partnership Agreement authorizes us to issue an unlimited number of additional partnership securities for the consideration and on the terms and conditions determined by our general partner without the approval of the unitholders. Costs associated with the issuance of securities are allocated to all unitholders' capital accounts based on their ownership interest at the time of issuance.

Allocations of Net Income

Our Partnership Agreement contains provisions for the allocation of net income and loss to the unitholders and our general partner. For purposes of maintaining partner capital accounts, the Partnership Agreement specifies that items of income and loss shall be allocated among the partners in accordance with their respective percentage interest. Normal allocations according to percentage interests are made after giving effect to priority income allocations in an amount equal to incentive cash distributions allocated 100% to our general partner.

The following table presents the allocation of the general partner's interest in net income (in thousands, except percentage of ownership interest):

	Three Months Ended June 30,						Six Months Ended June 30,
	2020			2019			2020			2019
Net income attributable to partners	$	44,415		$	24,885		$	72,211		$	44,581
Less: General partner's IDRs	(8,937		)	(7,736		)	(17,632		)	(14,751		)
Net income available to partners	$	35,478		$	17,149		$	54,579		$	29,830
General partner's ownership interest	2.0		%	2.0		%	2.0		%	2.0		%
General partner's allocated interest in net income	$	710		$	343		1,092			$	597
General partner's IDRs	8,937			7,736			17,632			14,751
Total general partner's interest in net income	$	9,647		$	8,079		$	18,724		$	15,348

Incentive Distribution Rights

Our general partner is currently entitled to 2.0% of all quarterly distributions that we make prior to our liquidation. Our general partner has the right, but not the obligation, to contribute up to a proportionate amount of capital to us to maintain its current general partner interest. The general partner's 2.0% interest in these distributions may be reduced if we issue additional units in the future and our general partner does not contribute a proportionate amount of capital to us to maintain its 2.0% general partner interest. Our general partner also currently holds IDRs that entitle it to receive increasing percentages, up to a maximum of 48.0%, of the cash we distribute from operating surplus (as defined in our Partnership Agreement) in excess of 0.43125 per unit per quarter. The maximum distribution is 48.0% and does not include any distributions that our general partner or its affiliates may receive on common or general partner units that it owns. The IDRs held by our general partner currently entitle it to receive the maximum distribution.

Pursuant to Amendment No. 2 to the Partnership Agreement, an agreement was reached for a waiver of distributions in respect of the IDRs associated with the 5.0 million Additional Units for at least two years, through at least the distribution for the quarter ending March 31, 2022 (the "IDR Waiver"). The IDR Waiver essentially reduces the distribution made to the holders of the IDRs during this period, as the holders would not receive a share of the distribution made on the Additional Units. An additional waiver letter was signed that waived all of the distributions for the first quarter of 2020 on the Additional Units with respect to base distributions and the IDRs. Refer to Note 3 for additional details.

17 |  

Notes to Condensed Consolidated Financial Statements (Unaudited)

Cash Distributions

Our Partnership Agreement sets forth the calculation to be used to determine the amount and priority of available cash distributions that our limited partner unitholders and general partner will receive. Our distributions earned with respect to a given period are declared subsequent to quarter end. The table below summarizes the quarterly distributions related to our quarterly financial results:

Quarter Ended	Total Quarterly Distribution Per Limited Partner Unit		Total Quarterly Distribution Per Limited Partner Unit, Annualized		Total Cash Distribution, including general partner interest and IDRs (in thousands)		Date of Distribution	Unitholders Record Date
June 30, 2019	$	0.850	$	3.40	$	28,914	August 13, 2019	August 5, 2019
September 30, 2019	$	0.880	$	3.52	$	30,379	November 12, 2019	November 4, 2019
December 31, 2019	$	0.885	$	3.54	$	30,634	February 12, 2020	February 4, 2020
March 31, 2020	$	0.890	$	3.56	$	30,878	May 12, 2020	May 5, 2020
June 30, 2020	$	0.900	$	3.60	$	35,969	August 12, 2020 (1)	August 7, 2020

⁽¹⁾ Expected date of distribution.

The allocations of total quarterly cash distributions made to general and limited partners for the three and six months ended June 30, 2020 and 2019 are set forth in the table below. Distributions earned with respect to a given period are declared subsequent to quarter end. Therefore, the table below presents total cash distributions applicable to the period in which the distributions are earned (in thousands, except per unit amounts):

	Three Months Ended June 30,				Six Months Ended June 30,
	2020		2019		2020		2019
General partner's distributions:
General partner's distributions	$	542	$	424	$	986	$	832
General partner's IDRs	8,937		7,736		17,632		14,751
Total general partner's distributions	9,479		8,160		18,618		15,583
Limited partners' distributions:
Common limited partners' distributions	26,490		20,754		48,229		40,769
Total cash distributions	$	35,969	$	28,914	$	66,847	$	56,352
Cash distributions per limited partner unit	$	0.900	$	0.850	$	1.790	$	1.670

Note 9 - Equity Based Compensation

The Delek Logistics GP, LLC 2012 Long-Term Incentive Plan (the "LTIP") was adopted by the Delek Logistics GP, LLC board of directors in connection with the completion of our initial public offering in November 2012. The LTIP is administered by the Conflicts Committee of the board of directors of our general partner. Equity-based compensation expense is included in general and administrative expenses in the accompanying condensed consolidated statements of income and comprehensive income and is immaterial for the three and six months ended June 30, 2020 and 2019.

Note 10 - Equity Method Investments

In May 2019, the Partnership, through its wholly owned indirect subsidiary DKL Pipeline, LLC (“DKL Pipeline”), entered into a Contribution and Subscription Agreement (the “Contribution Agreement”) with Plains Pipeline, L.P. (“Plains”) and Red River Pipeline Company LLC (“Red River”). Pursuant to the Contribution Agreement, DKL Pipeline contributed $124.7 million, substantially all of which was financed by borrowings under the DKL Credit Facility, to Red River in exchange for a 33% membership interest in Red River and DKL Pipeline’s admission as a member of Red River. In addition, we contributed $0.4 million of start up capital pursuant to the Amended and Restated Limited Liability Company Agreement. Red River owns a crude oil pipeline running from Cushing, Oklahoma to Longview, Texas, with an expansion project planned to increase the pipeline capacity, which is expected to be completed in the third quarter of 2020. We contributed an additional $3.5

18 |  

Notes to Condensed Consolidated Financial Statements (Unaudited)

million related to such expansion project in May 2019. During the six months ended June 30, 2020, we made additional capital contributions totaling $10.5 million based on capital calls received.

Summarized unaudited financial information for Red River on a 100% basis is shown below (in thousands):

	June 30, 2020		December 31, 2019
Current Assets	$	11,376	$	9,278
Non-current Assets	$	416,554	$	381,778
Current liabilities	$	17,869	$	8,291

	Three Months Ended June 30,				Six Months Ended June 30,
	2020		2019		2020		2019
Revenues	$	11,873	$	14,391	$	21,969	$	26,017
Gross profit	$	7,175	$	9,191	$	13,062	$	14,466
Operating income	$	7,000	$	8,942	$	12,697	$	13,652
Net income	$	7,025	$	8,942	$	12,746	$	13,652

We have two joint ventures that have constructed separate crude oil pipeline systems and related ancillary assets, which are serving third parties and subsidiaries of Delek Holdings. We own a 50% membership interest in the entity formed with an affiliate of Plains All American Pipeline, L.P. ("CP LLC") to operate one of these pipeline systems (the "Caddo Pipeline") and a 33% membership interest in the entity formed with Rangeland Energy II, LLC ("Rangeland Energy") to operate the other pipeline system (the "RIO Pipeline"). During 2018, Rangeland Energy was acquired by Andeavor and the legal entity in which we have an equity investment became Andeavor Logistics RIO Pipeline LLC ("Andeavor Logistics").

Combined summarized unaudited financial information for these two equity method investees on a 100% basis is shown below (in thousands):

	June 30, 2020		December 31, 2019
Current assets	$	20,040	$	29,476
Non-current assets	$	258,751	$	262,300
Current liabilities	$	2,381	$	6,391

	Three Months Ended June 30,				Six Months Ended June 30,
	2020		2019		2020		2019
Revenues	$	12,738	$	10,077	$	28,185	$	19,191
Gross profit	$	8,198	$	5,688	$	18,834	$	10,584
Operating income	$	7,724	$	5,223	$	17,864	$	9,624
Net Income	$	7,729	$	5,249	$	17,887	$	9,666

The Partnership's investments in these three entities were financed through a combination of cash from operations and borrowings under the DKL Credit Facility.  As of June 30, 2020 and December 31, 2019, the Partnership's investment balance in these joint ventures was $255.3 million and $247.0 million, respectively.

We do not consolidate any part of the assets or liabilities or operating results of our equity method investees. Our share of net income or loss of the investees will increase or decrease, as applicable, the carrying value of our investments in unconsolidated affiliates. With respect to our equity method investments, we determined that these entities do not represent variable interest entities and consolidation is not required. We have the ability to exercise significant influence over each of these joint ventures through our participation in the management committees, which make all significant decisions. However, since all significant decisions require the consent of the other investor(s) without regard to economic interest, we have determined that we have joint control and have applied the equity method of accounting. Our investment in these joint ventures is reflected in our pipelines and transportation segment.

19 |  

Notes to Condensed Consolidated Financial Statements (Unaudited)

Note 11 - Segment Data

We aggregate our operating segments into two reportable segments: (i) pipelines and transportation and (ii) wholesale marketing and terminalling:

• The assets and investments reported in the pipelines and transportation segment provide crude oil gathering and crude oil, intermediate and refined products transportation and storage services to Delek Holdings' refining operations and independent third parties.

• The wholesale marketing and terminalling segment provides wholesale marketing and terminalling services to Delek Holdings' refining operations and independent third parties.

Our operating segments adhere to the accounting policies used for our consolidated financial statements. Our operating segments are managed separately because each segment requires different industry knowledge, technology and marketing strategies. Decisions concerning the allocation of resources and assessment of operating performance are made based on this segmentation. Management measures the operating performance of each of its reportable segments based on segment contribution margin. Segment contribution margin is defined as net revenues less cost of materials and other and operating expenses, excluding depreciation and amortization.

The following is a summary of business segment operating performance as measured by contribution margin for the periods indicated (in thousands):

	Three Months Ended June 30,					Six Months Ended June 30,
	2020		2019			2020			2019
Pipelines and Transportation
Net revenues:
Affiliate	$	61,394	$	36,731		$	99,897		$	73,390
Third party	$	2,032	7,477			11,496			11,451
Total pipelines and transportation	63,426		44,208			111,393			84,841
Cost of materials and other	11,182		7,357			17,280			12,924
Operating expenses (excluding depreciation and amortization)	9,731		12,728			21,187			23,562
Segment contribution margin	$	42,513	$	24,123		$	72,926		$	48,355
Capital spending	$	417	$	818		$	863		$	1,242
Wholesale Marketing and Terminalling
Net revenues:
Affiliate (1)	$	26,235	$	25,187		$	94,431		$	51,493
Third party	27,976		85,947			75,214			171,491
Total wholesale marketing and terminalling	54,211		111,134			169,645			222,984
Cost of materials and other	32,710		86,497			127,905			177,195
Operating expenses (excluding depreciation and amortization)	2,718		4,599			6,006			9,823
Segment contribution margin	$	18,783	$	20,038		$	35,734		$	35,966
Capital spending	$	235	$	524		$	2,818		$	1,004
Consolidated
Net revenues:
Affiliate	$	87,629	$	61,918		$	194,328		$	124,883
Third party	30,008		93,424			86,710			182,942
Total Consolidated	117,637		155,342			281,038			307,825
Cost of materials and other	43,892		93,854			145,185			190,119
Operating expenses (excluding depreciation and amortization presented below)	12,449		17,327			27,193			33,385
Contribution margin	$	61,296	$	44,161		108,660			84,321
General and administrative expenses	4,721		5,293			10,851			9,766
Depreciation and amortization	8,694		6,639			14,993			13,213
Other operating income, net	—		(27		)	(107		)	(25		)
Operating income	$	47,881	$	32,256		$	82,923		$	61,367
Capital spending	$	652	$	1,342		$	3,681		$	2,246

⁽¹⁾ Affiliate revenue for the wholesale marketing and terminalling segment is presented net of amortization expense pertaining to the Marketing Contract Intangible Acquisition. See Note 3 for additional information.

The following table summarizes the total assets for each segment as of June 30, 2020 and December 31, 2019 (in thousands):

	June 30, 2020		December 31, 2019
Pipelines and transportation	$	836,510	$	537,580
Wholesale marketing and terminalling	137,227		206,867
Total assets	$	973,737	$	744,447

Property, plant and equipment and accumulated depreciation as of June 30, 2020 and depreciation expense by reporting segment for the three and six months ended June 30, 2020 were as follows (in thousands):

	Pipelines and Transportation			Wholesale Marketing and Terminalling			Consolidated
Property, plant and equipment	$	566,780		$	114,189		$	680,969
Less: accumulated depreciation	(159,341		)	(47,884		)	(207,225		)
Property, plant and equipment, net	$	407,439		$	66,305		$	473,744
Depreciation expense for the three months ended June 30, 2020	$	6,947		$	1,674		$	8,621
Depreciation expense for the six months ended June 30, 2020	$	11,553		$	3,367		$	14,920

In accordance with ASC 360, Property, Plant & Equipment, we evaluate the realizability of property, plant and equipment as events occur that might indicate potential impairment. There were no indicators of impairment of our property, plant and equipment as of June 30, 2020.

Note 12 - Income Taxes

For tax purposes, each partner of the Partnership is required to take into account its share of income, gain, loss and deduction in computing its federal and state income tax liabilities, regardless of whether cash distributions are made to such partner by the Partnership. The taxable income reportable to each partner takes into account differences between the tax basis and fair market value of our assets, the acquisition price of such partner's units and the taxable income allocation requirements under our Partnership Agreement.

The Partnership is not a taxable entity for federal income tax purposes. While most states do not impose an entity level tax on partnership income, the Partnership is subject to entity level tax in both Tennessee and Texas.

Note 13 - Commitments and Contingencies

Litigation

In the ordinary conduct of our business, we are from time to time subject to lawsuits, investigations and claims, including environmental claims and employee-related matters. Although we cannot predict with certainty the ultimate resolution of lawsuits, investigations and claims asserted against us, including civil penalties or other enforcement actions, we do not believe that any currently pending legal proceeding or proceedings to which we are a party will have a material adverse effect on our financial statements. See "Crude Oil and Other Releases" below for discussion of an enforcement action.

Environmental, Health and Safety

We are subject to extensive federal, state and local environmental and safety laws and regulations enforced by various agencies, including the Environmental Protection Agency (the "EPA"), the United States Department of Transportation, the Occupational Safety and Health Administration, as well as numerous state, regional and local environmental, safety and pipeline agencies. These laws and regulations govern the discharge of materials into the environment, waste management practices and pollution prevention measures, as well as the safe operation of our pipelines and the safety of our workers and the public. Numerous permits or other authorizations are required under these laws and regulations for the operation of our terminals, pipelines, saltwells, trucks and related operations, and may be subject to revocation, modification and renewal. See "Crude Oil and Other Releases" below for discussion of an enforcement action.

These laws and permits raise potential exposure to future claims and lawsuits involving environmental and safety matters, which could include soil and water contamination, air pollution, personal injury and property damage allegedly caused by substances which we handled, used, released or disposed of, transported, or that relate to pre-existing conditions for which we have assumed responsibility. We believe that our current operations are in substantial compliance with existing environmental and safety requirements. However, there have been and we expect that there will continue to be ongoing discussions about environmental and safety matters between us and federal and state authorities, including notices of violations, citations and other enforcement actions, some of which have resulted or may result in changes to operating procedures and in capital expenditures. While it is often difficult to quantify future environmental or safety related expenditures, we anticipate that continuing capital investments and changes in operating procedures will be required to comply with existing and new requirements, as well as evolving interpretations and more strict enforcement of existing laws and regulations.

Releases of hydrocarbons or hazardous substances into the environment could, to the extent the event is not insured, or is not a reimbursable event under the Omnibus Agreement, subject us to substantial expenses, including costs to respond to, contain and remediate a release, to comply with applicable laws and regulations and to resolve claims by third parties for personal injury, property damage or natural resources damages.

Crude Oil and Other Releases

We have experienced several crude oil and other releases involving our assets. There were no material releases that occurred during the six months ended June 30, 2020, and five releases that occurred throughout the year 2019. Cleanup operations and site maintenance and remediation efforts on these and other releases are at various stages of completion. The majority of the remediation efforts for these releases are substantially completed or have received regulatory closure. With the exception of the Sulphur Springs release defined below, we expect regulatory closure in 2020 for the release sites that have not yet received it.

Many of the releases have occurred on our system of common carrier pipelines which gather crude in southern Arkansas and northern Louisiana, and which are primarily located within 60 miles of Delek Holdings’ El Dorado refinery ("El Dorado Gathering System"). During the year ended December 31, 2019, we decommissioned certain sections of the El Dorado Gathering System in an effort to improve the safety and integrity of the system. The decommissioning of these sections was completed in August 2019. The project did not have a material effect on the financial results.

Regulatory authorities could require additional remediation based on the results of our remediation efforts. We may incur additional expenses as a result of further scrutiny by regulatory authorities and continued compliance with laws and regulations to which our assets are subject. As of June 30, 2020, we have accrued $0.3 million for remediation and other such matters related to these releases.

20 |  

Notes to Condensed Consolidated Financial Statements (Unaudited)

On October 3, 2019, a release of diesel fuel involving one of our pipelines occurred near Sulphur Springs, Texas (the "Sulphur Springs Release"). Cleanup operations and site maintenance and remediation on this release have been substantially completed where such costs incurred totaled $7.1 million during 2019. During the three and six months ended June 30, 2020, we incurred approximately $0.1 million and $0.3 million of additional costs related to final clean-up of this release, respectively. The release is currently in boom maintenance. Ground water monitoring wells were installed in the second quarter of 2020. We expect to conduct quarterly ground water monitoring for at least a year. Additionally, we will be conducting creek bed sediment sampling in the third quarter of 2020. We have filed suit in January 2020 against a third party contractor, seeking damages related to this release. We have not received notification that any legal action with respect to fines and penalties will be pursued by the regulatory agencies.

Expenses incurred for the remediation of these crude oil and other releases are included in operating expenses in our condensed consolidated statements of income and comprehensive income. The majority of our releases have been subsequently reimbursed by Delek Holdings pursuant to the terms of the Omnibus Agreement, with the exception of Sulphur Springs Release above as it is not covered under the Omnibus Agreement. Reimbursements are recorded as a reduction to operating expense. We do not believe the total costs associated with these events, whether alone or in the aggregate, including any fines or penalties and net of available insurance, indemnification or reimbursement, will have a material adverse effect upon our business, financial condition or results of operations.

During both three and six months ended June 30, 2020, we recorded a nominal amount of expenses, net of reimbursable costs of a nominal amount for both the three and six months ended June 30, 2020, respectively. Additionally, during the three and six months ended June 30, 2019, we recorded $0.2 million and $0.3 million of expenses, respectively, which is net of total reimbursable costs of $0.7 million and $4.1 million for the three and six months ended June 30, 2019, respectively, from Delek Holdings pursuant to the terms of the Omnibus Agreement.

Letters of Credit

As of June 30, 2020, we had no letters of credit in place.

Note 14 - Leases

We lease certain pipeline and transportation equipment. Leases with an initial term of 12 months or less are not recorded on the balance sheet; we recognize lease expense for these leases on a straight-line basis over the lease term.

Our leases do not have any outstanding renewal options. Certain leases also include options to purchase the leased equipment.

Certain of our lease agreements include rates based on equipment usage and others include rate inflationary indices based increases. Our lease agreements do not contain any material residual value guarantees or material restrictive covenants.

21 |  

Notes to Condensed Consolidated Financial Statements (Unaudited)

The following table presents additional information related to our operating leases in accordance ASC 842:

	Three Months Ended June 30,						Six Months Ended June 30,
(in thousands)	2020			2019			2020			2019
Lease Cost
Operating lease cost	$	1,926		$	1,472		$	2,526		$	2,899
Short-term lease cost (1)	757			326			1,077			803
Variable lease costs	60			—			272			—
Total lease cost	$	2,743		$	1,798		$	3,875		$	3,702
Other Information
Cash paid for amounts included in the measurement of lease liabilities
Operating cash flows from operating leases	$	(1,926	)	$	(1,472	)	$	(2,526	)	$	(2,899	)
Leased assets obtained in exchange for new operating lease liabilities	$	15,779		$	—		$	15,779		$	—
							June 30, 2020
Weighted-average remaining lease term (years) for operating leases							3.8
Weighted-average discount rate (2) operating leases							5.8		%

⁽¹⁾ Includes an immaterial amount of variable lease cost.

⁽²⁾ Our discount rate is primarily based on our incremental borrowing rate in accordance with ASC 842.     

Note 15 - Subsequent Events

Distribution Declaration

On July 24, 2020, our general partner's board of directors declared a quarterly cash distribution of $0.900 per unit, payable on August 12, 2020, to unitholders of record on August 7, 2020.

22 |  

Management's Discussion and Analysis

ITEM 2. MANAGEMENT’S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS

Management’s Discussion and Analysis of Financial Condition and Results of Operations ("MD&A") is management’s analysis of our financial performance and of significant trends that may affect our future performance. The MD&A should be read in conjunction with our condensed consolidated financial statements and related notes included elsewhere in this Quarterly Report on Form 10-Q and in the Annual Report on Form 10-K filed with the Securities and Exchange Commission ("SEC") on February 27, 2020 (the "Annual Report on Form 10-K"). Those statements in the MD&A that are not historical in nature should be deemed forward-looking statements that are inherently uncertain. See "Forward-Looking Statements" below for a discussion of the factors that could cause actual results to differ materially from those projected in these statements.

Unless otherwise noted or the context requires otherwise, references in this report to "Delek Logistics Partners, LP," the "Partnership," "we," "us," "our," or like terms, may refer to Delek Logistics Partners, LP, one or more of its consolidated subsidiaries or all of them taken as a whole. Unless otherwise noted or the context requires otherwise, references in this report to "Delek Holdings" refer collectively to Delek US Holdings, Inc. and any of its subsidiaries, other than the Partnership and its subsidiaries and its general partner.

Effective May 1, 2020, the Partnership, through its wholly-owned subsidiary DKL Transportation, LLC, acquired Delek Trucking, LLC consisting of certain leased and owned tractors and trailers and related assets (the "Trucking Assets") from Delek Holdings, such transaction the "Trucking Assets Acquisition." See Note 2 for further information.

Effective March 31, 2020, the Partnership, through its wholly-owned subsidiary DKL Permian Gathering, LLC, acquired from Delek Holdings a crude oil gathering system located in Howard, Borden and Martin Counties, Texas (the "Big Spring Gathering Assets"), and certain related assets, such transaction the "Big Spring Gathering Assets Acquisition." See Note 2 for further information.

The Partnership announces material information to the public about the Partnership, its products and services and other matters through a variety of means, including filings with the Securities and Exchange Commission, press release, public conference calls, the Partnership's website (www.deleklogistics.com), the investor relations section of the website (ir.deleklogistics.com), the news section of its website (www.deleklogistics.com/news), and/or social media, including its Twitter account (@DelekUSLogistics). The Partnership encourages investors and others to review the information it makes public in these locations, as such information could be deemed to be material information. Please note that this list may be updated from time to time.

Forward-Looking Statements

This Quarterly Report on Form 10-Q contains “forward-looking statements” within the meaning of Section 27A of the Securities Act of 1933, as amended (the "Securities Act"), and Section 21E of the Exchange Act. These forward-looking statements reflect our current estimates, expectations and projections about our future results, performance, prospects and opportunities. Forward-looking statements include, among other things, statements regarding the effect, impact, potential duration or other implications of, or expectations expressed with respect to, the COVID-19 Pandemic and the actions of members of OPEC+ with respect to oil production and pricing, and statements regarding our efforts and plans in response to such events, the information concerning our possible future results of operations, business and growth strategies, financing plans, expectations that regulatory developments or other matters will not have a material adverse effect on our business or financial condition, our competitive position and the effects of competition, the projected growth of the industry in which we operate, the benefits and synergies to be obtained from our completed and any future acquisitions, statements of management’s goals and objectives, and other similar expressions concerning matters that are not historical facts. Words such as “may,” “will,” “should,” “could,” “would,” “predicts,” “potential,” “continue,” “expects,” “anticipates,” “future,” “intends,” “plans,” “believes,” “estimates,” “appears,” “projects” and similar expressions, as well as statements in future tense, identify forward-looking statements.

Forward-looking statements should not be read as a guarantee of future performance or results, and will not necessarily be accurate indications of the times at, or by, which such performance or results will be achieved. Forward-looking information is based on information available at the time and/or management’s good faith belief with respect to future events, and is subject to risks and uncertainties that could cause actual performance or results to differ materially from those expressed in the statements. Important factors that, individually or in the aggregate, could cause such differences include, but are not limited to:

• our substantial dependence on Delek Holdings or its assignees and their support of and respective ability to pay us under our commercial agreements;

• our future coverage, leverage, financial flexibility and growth, and our ability to improve performance and achieve distribution growth at any level or at all;

• Delek Holdings' future growth, financial performance, share repurchases, crude oil supply pricing and flexibility and product distribution;

• industry dynamics, including Permian Basin growth, ownership concentration, efficiencies and takeaway capacity;

• the age and condition of our assets and operating hazards and other risks incidental to transporting, storing and gathering crude oil, intermediate and refined products, including, but not limited to, costs, penalties, regulatory or legal actions and other effects related to spills, releases and tank failures;

23 |  

Management's Discussion and Analysis

• changes in insurance markets impacting costs and the level and types of coverage available;

• the timing and extent of changes in commodity prices and demand for refined products and the impact of the COVID-19 Pandemic on such demand;

• the wholesale marketing margins we are able to obtain and the number of barrels of product we are able to purchase and sell in our West Texas wholesale business;

• the suspension, reduction or termination of Delek Holdings' or its assignees' or third-party's obligations under our commercial agreements including the duration, fees or terms thereof;

• the results of our investments in joint ventures;

• the ability to secure commercial agreements with Delek Holdings or third parties upon expiration of existing agreements;

• the possibility of inefficiencies, curtailments, or shutdowns in refinery operations or pipelines, whether due to infection in the workforce or in response to reductions in demand as a result of the COVID-19 Pandemic;

• disruptions due to equipment interruption or failure, or other events, including terrorism, sabotage or cyber attacks, at our facilities, Delek Holdings’ facilities or third-party facilities on which our business is dependent;

• changes in the availability and cost of capital of debt and equity financing;

• our reliance on information technology systems in our day-to-day operations;

• changes in general economic conditions, including uncertainty regarding the timing, pace and extent of economic recovery in the United States due to the COVID-19 Pandemic;

• the effects of existing and future laws and governmental regulations, including, but not limited to, the rules and regulations promulgated by the Federal Energy Regulatory Commission ("FERC") and state commissions and those relating to environmental protection, pipeline integrity and safety as well as current and future restrictions on commercial and economic activities in response to the COVID-19 Pandemic;

• competitive conditions in our industry;

• actions taken by our customers and competitors;

• the demand for crude oil, refined products and transportation and storage services;

• our ability to successfully implement our business plan;

• an inability to have growth projects completed on time and on budget;

• our ability to successfully integrate acquired businesses;

• disruptions due to acts of God, including natural disasters, weather-related delays, casualty losses and other matters beyond our control;

• future decisions by OPEC+ regarding production and pricing and disputes between OPEC+ regarding such;

• changes or volatility in interest and inflation rates;

• labor relations;

• large customer defaults;

• changes in tax status and regulations;

• the effects of future litigation; and

• other factors discussed elsewhere in this Quarterly Report on Form 10-Q and in our Annual Report on Form 10-K.

In light of these risks, uncertainties and assumptions, our actual results of operations and execution of our business strategy could differ materially from those expressed in, or implied by, the forward-looking statements, and you should not place undue reliance upon them. In addition, past financial and/or operating performance is not necessarily a reliable indicator of future performance, and you should not use our historical performance to anticipate results or future period trends. We can give no assurances that any of the events anticipated by the forward-looking statements will occur or, if any of them do, what impact they will have on our results of operations and financial condition.

All forward-looking statements included in this report are based on information available to us on the date of this report. We undertake no obligation to revise or update any forward-looking statements as a result of new information, future events or otherwise.

Business Overview

The Partnership primarily owns and operates crude oil, intermediate and refined products logistics and marketing assets. We gather, transport, offload and store crude oil and intermediate products and market, distribute, transport and store refined products primarily in select regions of the southeastern United States and Texas for Delek Holdings and third parties. A substantial majority of our existing assets are both integral to and dependent upon the success of Delek Holdings' refining operations, as many of our assets are contracted exclusively to Delek Holdings in support of its Tyler, El Dorado and Big Spring refineries.

The Partnership is not a taxable entity for federal income tax purposes or the income taxes of those states that follow the federal income tax treatment of partnerships. Instead, for purposes of such income taxes, each partner of the Partnership is required to take into account its share of items of income, gain, loss and deduction in computing its federal and state income tax liabilities, regardless of whether cash distributions are made to such partner by the Partnership. The taxable income reportable to each partner takes into account differences between the tax basis and the fair market value of our assets and financial reporting bases of assets and liabilities, the acquisition price of the partner's units and the taxable income allocation requirements under the Partnership's First Amended and Restated Agreement of Limited Partnership, as amended (the "Partnership Agreement").

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Management's Discussion and Analysis

The recent COVID-19 outbreak and its development into a pandemic in March 2020 (the "COVID-19 Pandemic" or the "Pandemic") has resulted in significant economic disruption globally, including in the U.S. and specific geographic areas where we operate. Actions taken by various governmental authorities, individuals and companies around the world to prevent the spread of COVID-19 through both voluntary and mandated social distancing, curfews, shutdowns and expanded safety measures, have restricted travel, many business operations, public gatherings and the overall level of individual movement and in-person interaction across the globe. This has in turn significantly reduced global economic activity and resulted in airlines dramatically cutting back on flights and a decrease in motor vehicle use at a time when seasonal driving patterns typically result in an increase of consumer demand for gasoline. As a result, there has also been a decline in the demand for refined petroleum products and most notably gasoline and jet fuel. In April and June 2020, agreements were reached to cut oil production between the members of the Organization of Petroleum Exporting Countries ("OPEC") and other leading oil producing countries (together with OPEC, “OPEC+”), as part of the efforts to resolve the oil production disputes that significantly affected crude oil prices beginning in the first quarter of 2020 and to provide stability in the oil markets. While OPEC+ has reached an agreement to cut oil production, uncertainty about the duration of the COVID-19 Pandemic has caused storage constraints in the United States resulting from over-supply of produced oil. Therefore, downward pressure on commodity prices has remained and could continue for the foreseeable future.

During the latter part of the second quarter of 2020, governmental authorities in various states across the U.S., particularly those in our Permian Basin and U.S. Gulf Coast regions, began to lift many of the restrictions created by actions taken to slow down the spread of COVID-19. These actions have resulted in an increase in the level of individual movement and travel and, in turn, an increase in the demand and market prices for some of our products relative to late March 2020. However, many of the states where such restrictions were lifted have recently experienced a marked increase in the spread of COVID-19 and many governmental authorities in such areas have responded by re-imposing certain restrictions they had previously lifted. This response, as well as the increased infection rates, impacts regions that we serve and could significantly impact demand in ways that we cannot predict. Additionally, increased infection rates could impact our logistics operations, particularly in high-infection states, if our employees are personally affected by the illness, both through direct infection and quarantine procedures.

During the three and six months ended June 30, 2020, both our West Texas wholesale marketing business and many of our pipeline and transportation customers have experienced the impact on demand and pricing of these unprecedented conditions. Our pipelines and transportation revenue streams were largely protected by minimum commitments under existing throughput contracts with customers during the current period, but continued pressure on our customers could present risks to our existing and new business opportunities as well as on collectability on our receivables. We continue to experience operational constraints as well, including COVID-19 infections at certain of our company locations that have resulted in re-imposed or expanded remote policies and quarantine protocols. And we continue to be faced with risk from our suppliers and customers who are facing similar challenges.

We have identified the following uncertainties resulting from the COVID-19 Pandemic and other events, including the impact related to crude storage space shortages:

• Customers directly impacted by COVID-19 Pandemic and other events in terms of demand for refined product may reduce throughputs which could, likewise, impact the throughput demand for our pipelines, and may seek to renegotiate minimums under contractual force majeure provisions. Such reductions could have a significant impact on our revenues, cost of sales, operating income and liquidity, as well to the carrying value of long-lived or indefinite-lived assets;

• Customers may experience financial difficulties which could interrupt the volumes ordered by those customers and/or could impact the credit worthiness of such customers and the collectability of their outstanding receivables;

• Equity method investees may be significantly impacted by the COVID-19 Pandemic and/or other events, which may increase the risk of impairment of those investments;

• The decline in demand and pricing on our wholesale marketing segment and a decline in demand for pipelines and transportation impacting current results and/or forecasts could result in impairments in certain of our long-lived or indefinite-lived assets, including goodwill, or have other financial statement impacts that cannot currently be anticipated (see also Note 1 to our Condensed Consolidated Financial Statements included in Part I, Item 1 of this Quarterly Report on Form 10-Q for additional discussion of specific financial statement risks);

• While our current liquidity needs are managed by existing facilities, sources of future liquidity needs may be impacted by the volatility in the debt market and the availability and pricing of such funds as a result of the COVID-19 Pandemic and other events; and

• The U.S. Federal Government has enacted certain stimulus and relief measures and is continuing to consider additional relief legislation. To the extent that the provisions do not directly impact the Partnership in the current period or are intended to stimulate or provide relief to the greater U.S. economy and/or consumer, the impact and success of such efforts remains unknown.

Other uncertainties related to the impact of the COVID-19 Pandemic and other events may exist that have not been identified or that are not specifically listed above, and could impact our future results of operations and financial position, the nature of which and the extent to which are currently unknown. Actions taken by OPEC+ in April and June 2020, including the agreement for management of crude oil supply in the hopes of contributing to market stabilization (the "Oil Production Cuts"), as well as the U.S. Federal Government's passage and/or enactment

25 |  

Management's Discussion and Analysis

of additional stimulus and relief measures, may impact the extent to which the risk underlying these uncertainties are realized. To the extent these uncertainties have been identified and are believed to have an impact on our current period results of operations or financial position based on the requirements for assessing such financial statement impact under U.S. generally accepted accounting principles, we have considered them in the preparation of our unaudited financial statements as of and for the three months ended June 30, 2020, which are included in Item 1. of this Quarterly Report on Form 10-Q.

In addition, management continues to actively respond to the impact of the COVID-19 Pandemic and other events on our business. Such efforts include (but are not limited to) the following:

• Reducing planned capital expenditures for 2020;

• Identifying alternative financing solutions to enhance our access to sources of liquidity;

• Enacting cost reduction measures across the organization, including reducing contract services, reducing overtime and reducing or eliminating non-critical travel which serves the dual purpose of also complying with recommendations made by the state and federal governments because of the COVID-19 Pandemic;

• Implementing regular site cleaning and disinfecting procedures;

• Adopting remote working where possible. Where on-site operations are required, masks are mandatory and our employees have adopted social distancing; and

• Working with our employees to implement other site-specific precautionary measures to reduce the risk of exposure.

The extent to which our future results are affected by COVID-19 will depend on various factors and consequences beyond our control, such as the duration and scope of the Pandemic; additional actions by businesses and governments in response to the Pandemic; and the speed and effectiveness of responses to combat the virus. COVID-19, and the volatile regional and global economic conditions stemming from the Pandemic, could also exacerbate the risk factors identified in our Annual Report on Form 10-K for the fiscal year ended December 31, 2019 and in this Form 10-Q. The COVID-19 Pandemic may also materially adversely affect our results in a manner that is either not currently known or that we do not currently consider to be a significant risk to our business.

See also 'Risk Factors' in Part II, Item 1A. of this Quarterly Report on Form 10-Q for further discussion of risks associated with the COVID-19 Pandemic.

Our Reporting Segments and Assets

Our business consists of two reportable segments:

(i) Pipelines and Transportation

The assets and investments in our pipelines and transportation segment consist of pipelines, tanks, offloading facilities, trucks and ancillary assets, which provide crude oil gathering and crude oil, intermediate and refined products transportation and storage services primarily in support of Delek Holdings' refining operations in Tyler, Texas, El Dorado, Arkansas, Big Spring, Texas and the Big Spring Gathering Assets. Additionally, the assets in this segment provide crude oil transportation services to certain third parties. In providing these services, we do not take ownership of the products or crude oil that we transport or store. Therefore, we are not directly exposed to changes in commodity prices with respect to this operating segment.

(ii) Wholesale Marketing and Terminalling

The assets in our wholesale marketing and terminalling segment consist of refined products terminals and pipelines in Texas, Tennessee, Arkansas and Oklahoma. We generate revenue in our wholesale marketing and terminalling segment by providing marketing services for the refined products output of the Tyler and Big Spring refineries, engaging in wholesale activity at our terminals in West Texas and at terminals owned by third parties, whereby we purchase light products for sale and exchange to third parties, and by providing terminalling services at our refined products terminals to independent third parties and Delek Holdings.

2020 Development

Inflation Adjustments

On July 1, 2020, the tariffs on our FERC regulated pipelines and the throughput fees and storage fees under certain of our agreements with Delek Holdings and third parties that are subject to adjustments using the FERC indexing decreased approximately 2.2%, the amount of the change in the FERC oil pipeline index. Under certain of our other agreements with Delek Holdings and third parties, the fees adjusted based on the consumer price index, which decreased 0.5%, or the producer price index which decreased approximately 4.8%.

Trucking Assets Acquisition

Effective May 1, 2020, the Partnership, through its wholly-owned subsidiary DKL Transportation, LLC, acquired Delek Trucking, LLC consisting of certain leased and owned tractors and trailers and related assets from Delek Holdings. See Note 2 to our accompanying condensed consolidated financial statements for additional information.

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Management's Discussion and Analysis

Big Spring Gathering Assets Acquisition

Effective March 31, 2020, the Partnership, through its wholly-owned subsidiary DKL Permian Gathering, LLC, acquired the Big Spring Gathering Assets from Delek Holdings, located in Howard, Borden and Martin Counties, Texas. Refer to Note 2 to our accompanying condensed consolidated financial statements for additional information.

Amendment No. 2 to the First Amended and Restated Agreement of Limited Partnership of Delek Logistics Partners, LP

On March 31, 2020, in connection with the completion of the Big Spring Gathering Assets Acquisition, the Board of the general partner adopted Amendment No. 2 (“Amendment No. 2”) to the Partnership Agreement, effective upon adoption. Amendment No. 2 amends the Partnership Agreement to provide for a waiver of distributions in respect of the Incentive Distribution Rights ("IDRs") associated with the 5.0 million newly issued common units ("Additional Units") for at least two years, through at least the distribution for the quarter ending March 31, 2022 ("IDR Waiver"). The IDR Waiver essentially reduces the distribution made to the holders of the IDRs during this period, as the holders would not receive a share of the distribution made on the Additional Units. An additional waiver letter was signed that waived all of the distributions for the first quarter of 2020 on the Additional Units with respect to base distributions and the IDRs. Refer to Note 3 to our accompanying condensed consolidated financial statements for additional information.

How We Generate Revenue

The Partnership generates revenue by charging fees to Delek Holdings and third parties for gathering, transporting, offloading and storing crude oil and for marketing, distributing, transporting, throughputting and storing intermediate and refined products. We also wholesale market refined products primarily in the West Texas market. A substantial majority of our contribution margin, which we define as net revenues less cost of materials and other and operating expenses, excluding depreciation and amortization, is derived from commercial agreements with Delek Holdings with initial terms ranging from five to ten years, which gives us a contractual revenue base that we believe enhances the stability of our cash flows. As more fully described below, our commercial agreements with Delek Holdings typically include minimum volume or throughput commitments by Delek Holdings, which we believe will provide a stable revenue stream in the future. The fees charged under our agreements with Delek Holdings and third parties are indexed to inflation-based indices. In addition, the rates charged with respect to our assets that are subject to inflation indexing may increase or decrease, typically on July 1 of each year, by the amount of any change in various inflation-based indices, including FERC, provided that in no event will the fees be adjusted below the amount initially set forth in the applicable agreement.

Commercial Agreements with Delek Holdings

The Partnership has a number of long-term, fee-based commercial agreements with Delek Holdings under which we provide various services, including crude oil gathering and crude oil, intermediate and refined products transportation and storage services, and marketing, terminalling and offloading services to Delek Holdings, and Delek Holdings commits to provide us with minimum monthly throughput volumes of crude oil, intermediate and refined products. Generally, these agreements include minimum quarterly volume, revenue or throughput commitments and have tariffs or fees indexed to inflation-based indices, provided that the tariffs or fees will not be decreased below the initial amount. See our Annual Report on Form 10-K filed with the SEC on February 27, 2020 for a discussion of our material commercial agreements with Delek Holdings.

Other Transactions

Starting in 2018, the Partnership manages a long-term capital project on behalf of Delek Holdings pursuant to a construction management and operating agreement (the "DPG Management Agreement") for the construction of a 250-mile gathering system in the Permian Basin. The majority of the gathering system has been constructed, however, additional costs pertaining to a pipeline connection that was not contributed to the Partnership continue to be incurred and are still subject to the terms of the DPG Management Agreement. The Partnership is also considered the operator for the project and is responsible for oversight of the project design, procurement and construction of project segments and for providing other related services. See Note 4 for additional information on the DPG Management Agreement.

How We Evaluate Our Operations

We use a variety of financial and operating metrics to analyze our segment performance. These metrics are significant factors in assessing our operating results and profitability and include:

(i) volumes (including pipeline throughput and terminal volumes);

(ii) contribution margin per barrel;

(iii) operating and maintenance expenses;

(iv) cost of materials and other; and

(v) EBITDA and distributable cash flow (as such terms are defined below).

Volumes

The amount of revenue we generate primarily depends on the volumes of crude oil and refined products that we handle in our pipeline, transportation, terminalling, storage and marketing operations. These volumes are primarily affected by the supply of and demand for crude

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Management's Discussion and Analysis

oil, intermediate and refined products in the markets served directly or indirectly by our assets. Although Delek Holdings has committed to minimum volumes under certain of the commercial agreements, as described above, our results of operations will be impacted by:

• Delek Holdings' utilization of our assets in excess of its minimum volume commitments;

• our ability to identify and execute acquisitions and organic expansion projects, and capture incremental volume increases from Delek Holdings or third parties;

• our ability to increase throughput volumes at our refined products terminals and provide additional ancillary services at those terminals;

• our ability to identify and serve new customers in our marketing and trucking operations; and

• our ability to make connections to third-party facilities and pipelines.

Contribution Margin per Barrel

Because we do not allocate general and administrative expenses by segment, we measure the performance of our segments by the amount of contribution margin as generated in operations. Contribution margin is defined as net revenues less cost of materials and other and operating expenses, excluding depreciation and amortization.

For our wholesale marketing and terminalling segment, we also measure gross margin per barrel. Gross margin per barrel reflects the gross margin (net revenues less cost of materials and other) of the wholesale marketing operations divided by the number of barrels of refined products sold during the measurement period. Both contribution margin and gross margin per barrel can be affected by fluctuations in the prices and cost of gasoline, distillate fuel, ethanol and Renewable Identification Numbers ("RINs"). Historically, the profitability of our wholesale marketing operations has been affected by commodity price volatility, (specifically as it relates to changes in the price of refined products between the time we purchase such products from our suppliers and the time we sell the products to our wholesale customers), and the fluctuation in the value of RINs. Commodity price volatility may also impact our wholesale marketing operations when the selling price of refined products does not adjust as quickly as the purchase price. Our wholesale marketing gross margin may also be impacted by fixed price ethanol agreements that we enter into to fix the price we pay for ethanol.

Operating and Maintenance Expenses

We seek to maximize the profitability of our operations by effectively managing operating and maintenance expenses. These expenses include the costs associated with the operation of owned terminals and pipelines and terminalling expenses at third-party locations, excluding depreciation and amortization. These costs primarily include outside services, allocated employee costs, repairs and maintenance costs and energy and utility costs. Operating expenses related to the wholesale business are excluded from cost of sales because they primarily relate to costs associated with selling the products through our wholesale business. These expenses generally remain relatively stable across broad ranges of throughput volumes, but can fluctuate from period to period depending on the mix of activities performed during that period and the timing of these expenses. Additionally, compliance with federal, state and local laws and regulations relating to the protection of the environment, health and safety may require us to incur additional expenditures. We will seek to manage our maintenance expenditures on our pipelines and terminals by scheduling maintenance over time to avoid significant variability in our maintenance expenditures and minimize their impact on our cash flow.

Cost of Materials and Other

These costs include:

(i) all costs of purchased refined products in our wholesale marketing and terminalling segment, as well as additives and related transportation of such products;

(ii) costs associated with the operation of our trucking assets, which primarily include allocated employee costs and other

costs related to fuel, truck leases and repairs and maintenance;

(iii) the cost of pipeline capacity leased from any third parties; and

(iv) gains and losses related to our commodity hedging activities.

Financing

The Partnership has declared its intent to make a cash distribution to its unitholders at a distribution rate of $0.900 per unit for the quarter ended June 30, 2020 ($3.60 per unit on an annualized basis). Our Partnership Agreement requires that the Partnership distribute all of its available cash (as defined in the Partnership Agreement) to its unitholders quarterly. As a result, the Partnership expects to fund future capital expenditures primarily from operating cash flows, borrowings under our DKL Credit Facility and any potential future issuances of equity and debt securities. See Note 8 to the condensed consolidated financial statements for a discussion of historic cash distributions.

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Management's Discussion and Analysis

Market Trends

Master Limited Partnerships

Fluctuations in crude oil prices and the prices of related refined products impact our operations and the operations of other master limited partnerships in the midstream energy sector. In particular, crude oil prices and the prices of related refined products have the ability to influence drilling activity in many basins and the amounts of capital spending that crude oil exploration and production companies incur to support future growth. During the first half of 2019, the prices of crude oil and related refined products increased but fell slightly in the second half of 2019.

During the first quarter of 2020, reduced demand for crude oil and refined products related to the COVID-19 Pandemic, combined with production increases from OPEC+, led to a significant reduction in crude oil prices. While OPEC+ have reached an agreement to cut oil production, the uncertainty about the duration of the COVID-19 Pandemic has caused storage constraints in the United States resulting from over-supply of produced oil. Therefore, the downward pressure on commodity prices has remained and could continue for the foreseeable future. During the second quarter of 2020, oil prices have remained extremely volatile, as the closing price of oil (WTI-Cushing) reached a second quarter 2020 low of ($37.63) per barrel on April 20, 2020,and closed at $39.27 per barrel on June 30, 2020. In response to the rapid decline in commodity prices, some companies in the Permian Basin acted swiftly to reduce drilling and completion activity starting late in the first quarter and continued into the second quarter of 2020. The current market conditions have resulted in lower refinery utilization which in turn has impacted the throughput for our assets and operations. This has impacted our operations leading to decrease in revenues albeit with at least an equivalent decrease in cost and expenses in some instances. Due to the decrease in oil prices, we experienced thinner margins in the West Texas area. We believe we are strategically positioned, in these tougher market conditions, to continue developing profitable growth projects that are needed to support future distribution growth in the midstream energy sector and for the Partnership.

West Texas Marketing Operations

Overall demand for gathering and terminalling services in a particular area is generally driven by crude oil production in the area, which can be impacted by crude oil prices, refining economics and access to alternate delivery and transportation infrastructure. Additionally, volatility in crude oil, intermediate and refined products prices in the West Texas area and the value attributable to RINs can affect the results of our West Texas operations. For example, as discussed above, drilling activity and the prices of crude oil and related refined products increased in the first half of 2019 and in spite of a slight decrease in prices in the second half of 2019, demand for refined products from our West Texas operations to industries that support crude oil exploration and production began to rebound early in the first quarter of 2020. However due to the impact of the COVID-19 Pandemic there was lower demand and sales of refined products.

See chart below for the high, low and average price per barrel of WTI crude oil for each of the quarterly periods in 2019 and for the two quarterly periods in 2020.

Also, the volatility of refined products prices may impact our margin in the West Texas operations when the selling price of refined products does not adjust as quickly as the purchase price. See the charts below for the range of prices per gallon of gasoline and diesel for each of the quarterly periods in 2019 and for the two quarterly periods in 2020.

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Management's Discussion and Analysis

Our West Texas operations can benefit from RINs that are generated by ethanol blending activities. As a result, changes in the price of RINs can affect our results of operations. The RINs we generate are sold primarily to Delek Holdings at market prices. We sold approximately $0.6 million and $1.5 million of RINs to Delek Holdings during the three and six ended June 30, 2020, respectively. Additionally, we sold approximately $0.3 million and $0.6 million of RINs to Delek Holdings during the three and six ended June 30, 2019, respectively. See below for the high, low and average prices of RINs for each of the quarterly periods in 2019 and in the two quarterly periods in 2020.

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Management's Discussion and Analysis

All of these factors are subject to change over time. As part of our overall business strategy, management considers aspects such as location, acquisition and expansion opportunities and factors impacting the utilization of the refineries (and therefore throughput volumes), which may impact our performance in the market.

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Management's Discussion and Analysis

Contractual Obligations

There have been no material changes to our contractual obligations and commercial commitments during the three and six months ended June 30, 2020, from those disclosed in our Annual Report on Form 10-K.

Critical Accounting Policies

The preparation of our condensed consolidated financial statements requires us to make estimates and judgments that affect the reported amounts of assets, liabilities, revenues and expenses and related disclosure of contingent assets and liabilities. The SEC has defined critical accounting policies as those that are both most important to the portrayal of our financial condition and results of operations and require our most difficult, complex or subjective judgments or estimates. Based on this definition and as further described in our Annual Report on Form 10-K, we believe our critical accounting policies include the following: (i) evaluating impairment for property, plant and equipment and intangibles, and (ii) evaluating potential impairment of goodwill.

Additionally, due to the economic and industry impact of the COVID-19 Pandemic, we also modified the application of certain of our critical accounting policies during and as of the three and six months ended June 30, 2020 as follows:

Goodwill and Potential Impairment

Our annual goodwill impairment analysis is performed during the fourth quarter of each year. Under ASC 350, Intangibles - Goodwill and Other, goodwill of a reporting unit shall be tested for impairment between annual tests if an event occurs or circumstances change that would more likely than not reduce the fair value of a reporting unit below its carrying amount.

We have identified the COVID-19 Pandemic as a significant event during the three months ended June 30, 2020 that adversely affected the global economy and the oil and gas industry. The COVID-19 Pandemic has resulted in government-imposed temporary business closures and shelter-at-home directives.This has had the secondary effect of impacting prices of crude oil and refined products as well as supply and demand for crude oil and refined products, and triggered several identified uncertainties, as discussed in the 'Business Overview' section of Management's Discussion and Analysis. Our assessment was performed based on the events that had occurred through June 30, 2020 and excluded developments that occurred in the subsequent period, including the impact of a resurgence of COVID-19 cases and re-enactment of temporary business closures. In order to determine whether these events, including the developments around such events that had occurred through June 30, 2020 and our assumptions about future periods based on those events and related developments, would more likely than not reduce the fair value of a reporting unit below its carrying amount, we performed certain analyses on the most significant inputs in our valuation model to evaluate the impact of these events on the fair value of our reporting units. This included sensitivity analysis and stress testing on certain of our inputs to our valuation model, including the weighted-average cost of capital and the barrel per day ("BPD") sold/throughput, which is driven by demand for crude oil and refined products. Except for West Texas, our throughput volume is primarily driven by the minimum throughput in our commercial agreements with Delek Holdings. Based on our analyses (which, as noted above, were based on the conditions and events that had occurred as of June 30, 2020), we determined that there is not an indicator that fair value is more likely than not to have declined below carrying value as of June 30, 2020.

Additionally, because conditions and events are rapidly changing, we continue to monitor developments with these events and their impact on our valuation. However, there is uncertainty in and around the impact of the COVID-19 Pandemic and other events that have not yet occurred or for existing conditions and events that may have future ramifications that cannot yet be anticipated. Continued or sustained adverse change to these factors may result in potential future impairment of some or all of our goodwill balance.

Other than as described above, for all financial statement periods presented, there have been no material modifications to the application of these critical accounting policies or estimates since our most recently filed Annual Report on Form 10-K. See Note 1 of the condensed consolidated financial statements in Item 1, Financial Statements for discussion of updates to our accounting policies.

Non-GAAP Measures

Our management uses certain "non-GAAP" operational measures to evaluate our operating segment performance and non-GAAP financial measures to evaluate past performance and prospects for the future to supplement our GAAP financial information presented in accordance

with U.S. GAAP. These financial and operational non-GAAP measures are important factors in assessing our operating results and profitability and include:

• Earnings before interest, taxes, depreciation and amortization ("EBITDA") - calculated as net income before net interest expense, income tax expense, depreciation and amortization expense, including amortization of customer contract intangible assets, which is included as a component of net revenues in our accompanying condensed consolidated statements of income.

• Distributable cash flow - calculated as net cash flow from operating activities plus or minus changes in assets and liabilities, less maintenance capital expenditures net of reimbursements and other adjustments not expected to settle in cash. Delek Logistics believes this is an appropriate reflection of a liquidity measure by which users of its financial statements can assess its ability to generate cash.

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Management's Discussion and Analysis

EBITDA and distributable cash flow are non-U.S. GAAP supplemental financial measures that management and external users of our

condensed consolidated financial statements, such as industry analysts, investors, lenders and rating agencies, may use to assess:

• our operating performance as compared to other publicly traded partnerships in the midstream energy industry, without regard to historical cost basis or, in the case of EBITDA, financing methods;

• the ability of our assets to generate sufficient cash flow to make distributions to our unitholders;

• our ability to incur and service debt and fund capital expenditures; and

• the viability of acquisitions and other capital expenditure

projects and the returns on investment of various investment opportunities.

We believe that the presentation of EBITDA and distributable cash flow provide information useful to investors in assessing our financial condition and results of operations. EBITDA and distributable cash flow should not be considered alternatives to net income, operating income, cash flow from operating activities or any other measure of financial performance or liquidity presented in accordance with U.S. GAAP. EBITDA and distributable cash flow have important limitations as analytical tools, because they exclude some, but not all, items that affect net income and net cash provided by operating activities. Additionally, because EBITDA and distributable cash flow may be defined differently by other partnerships in our industry, our definitions of EBITDA and distributable cash flow may not be comparable to similarly titled measures of other partnerships, thereby diminishing their utility. For a reconciliation of EBITDA and distributable cash flow to their most directly comparable financial measures calculated and presented in accordance with U.S. GAAP, please refer to "Results of Operations" below.

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Management's Discussion and Analysis

Results of Operations

A discussion and analysis of the factors contributing to our results of operations is presented below. The financial statements, together with the following information, are intended to provide investors with a reasonable basis for assessing our historical operations, but should not serve as the only criteria for predicting our future performance.

The following table and discussion present a summary of our consolidated results of operations for the three and six months ended June 30, 2020 and 2019, including a reconciliation of net income to EBITDA and net cash flow provided by operating activities to distributable cash flow.

Statement of Operations Data (in thousands, except unit and per unit amounts)

	Three Months Ended June 30,						Six Months Ended June 30,
	2020			2019			2020			2019
Net revenues:
Pipelines and transportation	$	63,426		$	44,208		$	111,393		$	84,841
Wholesale marketing and terminalling	54,211			111,134			169,645			222,984
Total	117,637			155,342			281,038			307,825
Operating costs and expenses:
Cost of materials and other	43,892			93,854			145,185			190,119
Operating expenses (excluding depreciation and amortization)	12,449			17,327			27,193			33,385
General and administrative expenses	4,721			5,293			10,851			9,766
Depreciation and amortization	8,694			6,639			14,993			13,213
Other operating income, net	—			(27		)	(107		)	(25		)
Total operating costs and expenses	69,756			123,086			198,115			246,458
Operating income	47,881			32,256			82,923			61,367
Interest expense, net	10,670			11,354			22,494			22,655
Income from equity method investments	(6,462		)	(4,515		)	(12,015		)	(6,466		)
Other (income) expense, net	(2		)	461			(2		)	461
Total non-operating costs and expenses	4,206			7,300			10,477			16,650
Income before income tax expense	43,675			24,956			72,446			44,717
Income tax (benefit) expense	(740		)	71			235			136
Net income attributable to partners	$	44,415		$	24,885		$	72,211		$	44,581
Comprehensive income attributable to partners	$	44,415		$	24,885		$	72,211		$	44,581
EBITDA(1)	$	64,842		$	44,751		$	113,538		$	84,190
Less: General partner's interest in net income, including incentive distribution rights	9,647			8,079			18,724			15,348
Limited partners' interest in net income	$	34,768		$	16,806		$	53,487		$	29,233
Net income per limited partner unit:
Common units - basic	$	1.18		$	0.69		$	1.98		$	1.20
Common units - diluted	$	1.18		$	0.69		$	1.98		$	1.20
Weighted average limited partner units outstanding:
Common units - basic	29,427,298			24,409,359			26,953,934			24,408,270
Common units - diluted	29,430,555			24,414,343			26,956,523			24,414,077

⁽¹⁾ For a definition of EBITDA, please see "Non-GAAP Measures" above.

34 |  

Management's Discussion and Analysis

Non-GAAP Reconciliations

The following table provides a reconciliation of EBITDA and distributable cash flow to the most directly comparable U.S. GAAP measure, or net income and net cash from operating activities, respectively.

Reconciliation of net income to EBITDA (in thousands)

	Three Months Ended June 30,					Six Months Ended June 30,
	2020			2019		2020		2019
Net income	$	44,415		$	24,885	$	72,211	$	44,581
Add:
Income tax (benefit) expense	(740		)	71		235		136
Depreciation and amortization	8,694			6,639		14,993		13,213
Amortization of customer contract intangible assets	1,803			1,802		3,605		3,605
Interest expense, net	10,670			11,354		22,494		22,655
EBITDA (1)	$	64,842		$	44,751	$	113,538	$	84,190

Reconciliation of net cash from operating activities to distributable cash flow (in thousands)

	Three Months Ended June 30,						Six Months Ended June 30,
	2020			2019			2020			2019
Net cash provided by operating activities	$	37,545		$	24,806		72,381			$	51,823
Changes in assets and liabilities	19,345			7,133			20,999			9,489
Distributions from equity method investments in investing activities	1,580			—			1,690			804
Non-cash lease expense	(366		)	(393		)	(640		)	(1,409		)
Maintenance and regulatory capital expenditures (2)	(98		)	(963		)	(726		)	(1,781		)
Reimbursement from Delek Holdings for capital expenditures (3)	16			670			55			1,384
Accretion of asset retirement obligations	(107		)	(99		)	(214		)	(198		)
Deferred income taxes	(943		)	3			(943		)	3
Other operating income, net	—			27			107			25
Distributable cash flow (1)	$	56,972		$	31,184		$	92,709		$	60,140

(1)	For a definition of EBITDA and distributable cash flow, please see "Non-GAAP Measures" above.
(2)	Maintenance and regulatory capital expenditures represent cash expenditures (including expenditures for the addition or improvement to, or the replacement of, our capital assets, and for the acquisition of existing, or the construction or development of new, capital assets) made to maintain our long-term operating income or operating capacity. Examples of maintenance and regulatory capital expenditures are expenditures for the repair, refurbishment and replacement of pipelines and terminals, to maintain equipment reliability, integrity and safety and to address environmental laws and regulations.
(3)	For the three and six month periods ended June 30, 2020 and 2019, Delek Holdings reimbursed us for certain capital expenditures pursuant to the terms of the Omnibus Agreement (as defined in Note 3 to our accompanying condensed consolidated financial statements).

35 |  

Management's Discussion and Analysis

Consolidated Results of Operations — Comparison of the three and six months ended June 30, 2020 compared to the three and six months ended June 30, 2019

The table below presents a summary of our consolidated results of operations. The discussion immediately following presents the consolidated results of operations (in thousands):

Consolidated
	Three Months Ended June 30,					Six Months Ended June 30,
	2020		2019			2020			2019
Net Revenues:
Affiliates	$	87,629	$	61,918		$	194,328		124,883
Third-Party	30,008		93,424			86,710			182,942
Total Consolidated	117,637		155,342			281,038			307,825
Cost of materials and other	43,892		93,854			145,185			190,119
Operating expenses (excluding depreciation and amortization presented below)	12,449		17,327			27,193			33,385
Contribution margin	61,296		44,161			108,660			84,321
General and administrative expenses	4,721		5,293			10,851			9,766
Depreciation and amortization	8,694		6,639			14,993			13,213
Other operating income, net	—		(27		)	(107		)	(25		)
Operating income	$	47,881	$	32,256		$	82,923		$	61,367

Net Revenues

Q2 2020 vs. Q2 2019

Net revenues decreased by $37.7 million, or 24.3%, in the second quarter of 2020 compared to the second quarter of 2019, primarily driven by the following:

• decreases in the average volumes sold and decreases in the average sales prices per gallon of gasoline and diesel in our West Texas marketing operations.

◦ the average volumes of diesel sold decreased 10.2 million gallons, partially offset by a 1.1 million increase of gasoline gallons sold.

◦ the average sales prices per gallon of diesel and gasoline sold decreased $1.11 per gallon and $1.09 per gallon, respectively.

Such decreases were partially offset by the following:

• Increased revenues associated with agreements executed in connection with Big Spring Gathering System and Delek Trucking acquisitions, which were effective March 31, 2020 and May 1, 2020, respectively. Refer to Note 2 of the condensed consolidated financial statements in Item 1, Financial Statements, for additional information.

YTD 2020 vs. YTD 2019

Net revenues decreased by $26.8 million, or 8.7%, in the six months ended June 30, 2020 compared to the six months ended June 30, 2019, primarily driven by the following:

• decreases in the average sales prices per gallon and volumes of diesel gallon sold, partially offset by increases in the average sales volume of gasoline in our West Texas marketing operations:

◦ the average volumes of gasoline sold increased 14.4 million gallons, partially offset by a 11.5 million decrease of diesel gallons sold.

◦ the average sales prices per gallon of gasoline and diesel sold decreased $0.47 per gallon and $0.68 per gallon, respectively.

Such decreases were partially offset by the following:

• Increased revenues associated with agreements executed in connection with Big Spring Gathering System and Delek Trucking acquisitions, which were effective March 31, 2020 and May 1, 2020, respectively. Refer to Note 2 of the condensed consolidated financial statements in Item 1, Financial Statements, for additional information.

• increased revenues at our El Dorado Gathering System and Magnolia Pipeline as result of increased throughput during the six months ended June 30, 2020 when compared to the six months ended June 30, 2019.

36 |  

Management's Discussion and Analysis

Cost of Materials and Other

Q2 2020 vs. Q2 2019

Cost of materials and other decreased by $50.0 million, or 53.2%, in the second quarter of 2020 compared to the second quarter of 2019, primarily driven by the following:

• decreases in the average volumes sold and average cost per gallon of gasoline and diesel sold in our West Texas marketing operations:

◦ the average volumes of diesel sold decreased 10.2 million gallons, partially offset by a 1.1 million increase in gasoline gallons sold.

◦ the average cost per gallon of gasoline and diesel sold decreased $0.96 per gallon and $1.03 per gallon, respectively.

YTD 2020 vs. YTD 2019

Cost of materials and other decreased by $44.9 million, or 23.6%, in the six months ended June 30, 2020 compared to the six months ended June 30, 2019, primarily driven by the following:

• increase in the average volumes sold, partially offset by decreases in the average cost per gallon of gasoline and diesel sold in our West Texas marketing operations:

◦ the average volumes of gasoline sold increased 14.4 million gallons, partially offset by a 11.5 million decrease of diesel gallons sold.

◦ the average cost per gallon of gasoline and diesel sold decreased $0.41 per gallon and $0.61 per gallon, respectively.

Operating Expenses

Q2 2020 vs. Q2 2019

Operating expenses decreased by $4.9 million, or 28.2%, in the second quarter of 2020 compared to the second quarter of 2019, primarily driven by the following:

• decrease in employee and outside services costs due to measures implemented to respond to COVID-19 including delaying non-essential projects; and

• decrease in utilities and other variable expenses due to lower production.

YTD 2020 vs. YTD 2019

Operating expenses decreased by $6.2 million, or 18.5%, in the six months ended June 30, 2020 compared to the six months ended June 30, 2019, primarily driven by the following:

• decrease in employee and outside services costs due to measures implemented to respond to COVID-19 including delaying non-essential projects;

• lower operating costs associated with allocated contract services pertaining to certain of our assets; and

• decreases in variable expenses such as utilities, maintenance and materials costs due to lower production.

General and Administrative Expenses

Q2 2020 vs. Q2 2019

General and administrative expenses decreased by $0.6 million, or 10.8%, in the second quarter of 2020 compared to the second quarter of 2019, primarily driven by the following:

• a reduction in expenses related to travel, training and other expenses.

YTD 2020 vs. YTD 2019

General and administrative expenses increased by $1.1 million, or 11.1%, in the six months ended June 30, 2020 compared to the six months ended June 30, 2019, primarily driven by the following:

• increases in allocated employee headcount in various operational groups as the Partnership continues to experience growth.

• increases in legal and professional consulting fees due to various transactions undertaken by the Partnership.

37 |  

Management's Discussion and Analysis

Depreciation and Amortization

Q2 2020 vs. Q2 2019

Depreciation and amortization increased by $2.1 million or 31.0% in the second quarter of 2020 compared to the second quarter of 2019, primarily driven by the following:

• addition of assets to our asset base as a result of the Trucking Assets Acquisition and Big Spring Gathering Assets Acquisition.

YTD 2020 vs. YTD 2019

Depreciation and amortization increased by $1.8 million or 13.5% in the six months ended June 30, 2020 compared to the six months ended June 30, 2019, primarily driven by the following:

• addition of assets to our asset base as a result of the Trucking Assets Acquisition and the Big Spring Gathering Assets Acquisition.

Interest Expense

Q2 2020 vs. Q2 2019

Interest expense decreased by $0.7 million, or 6.0% in the second quarter of 2020 compared to the second quarter of 2019, primarily driven by the following:

• lower floating interest rates applicable to the DKL Credit Facility;

• partially offset by increased borrowings under the DKL Credit Facility as a result of our Big Spring Gathering Assets Acquisition and Trucking Assets Acquisition.

YTD 2020 vs. YTD 2019

The changes in interest expense for the six months ended June 30, 2020 compared to the six months ended June 30, 2019 were immaterial.

Results from Equity Method Investments

Q2 2020 vs. Q2 2019

We recognized income of $6.5 million from equity method investments during the second quarter of 2020 compared to $4.5 million for the second quarter of 2019, an increase of $1.9 million, or 43.1%. This increase was primarily driven by the following:

• the addition of the Red River Pipeline Joint Venture, acquired in May 2019, as a result of the Partnership's efforts to grow the midstream business.

YTD 2020 vs. YTD 2019

During the six months ended June 30, 2020, we recognized income of $12.0 million from equity method investments, compared to $6.5 million for the six months ended June 30, 2019, an increase of $5.5 million, or 85.8%. This increase was primarily driven by the following:

• the addition of the Red River Pipeline Joint Venture, acquired in May 2019, as a result of the Partnership's efforts to grow the midstream business; and

• an increase in income from our investments in Andeavor Logistics and CP LLC (as defined in Note 10), which operate the RIO Pipeline and the Caddo Pipeline System, respectively, as a result of increased revenues for both pipeline systems.

38 |  

Management's Discussion and Analysis

Operating Segments

We review operating results in two reportable segments: (i) pipelines and transportation and (ii) wholesale marketing and terminalling. Decisions concerning the allocation of resources and assessment of operating performance are made based on this segmentation. Management measures the operating performance of each reportable segment based on the segment contribution margin. Segment reporting is discussed in more detail in Note 11 to our accompanying condensed consolidated financial statements.

Segment contribution margin = Net revenues - Cost of materials and other - Operating expenses, excluding depreciation and amortization

Pipelines and Transportation Segment

Our pipelines and transportation segment assets provide crude oil gathering and crude oil, intermediate and refined products transportation and storage services to Delek Holdings and third parties. These assets include:

• the pipeline assets used to support Delek Holdings' El Dorado refinery (the "El Dorado Assets")

• the gathering system that supports transportation of crude oil to the El Dorado Refinery (the "El Dorado Gathering System")

• the Paline Pipeline System

• the East Texas Crude Logistics System

• the Tyler-Big Sandy Pipeline

• the El Dorado Tank Assets and El Dorado Rail Offloading Racks

• the Tyler Tank Assets and Tyler Crude Tank

• the Greenville-Mount Pleasant Pipeline and Greenville Storage Facility

• refined product pipeline capacity leased from Enterprise TE Products Pipeline Company ("Enterprise") that runs from El Dorado, Arkansas to our Memphis terminal and the Big Spring Pipeline

• pipelines and storage assets acquired in the Big Spring Logistic Assets Acquisition

• assets acquired in the Big Spring Gathering Assets Acquisition

• assets acquired in the Trucking Assets Acquisition

In addition to these operating systems, we own or lease 123 tractors and 324 trailers used to haul primarily crude oil and other products for related and third parties.

The following tables and discussion present the results of operations and certain operating statistics of the pipelines and transportation segment for the three and six months ended June 30, 2020 and 2019:

Pipelines and Transportation
	Three Months Ended June 30,				Six Months Ended June 30,
	2020		2019		2020		2019
Net Revenues:
Affiliates	$	61,394	$	36,731	$	99,897	$	73,390
Third-Party	2,032		7,477		11,496		11,451
Total Pipelines and Transportation	63,426		44,208		111,393		84,841
Cost of materials and other	11,182		7,357		17,280		12,924
Operating expenses (excluding depreciation and amortization presented below)	9,731		12,728		21,187		23,562
Segment contribution margin	$	42,513	$	24,123	$	72,926	$	48,355

Throughputs (average bpd)
	Three Months Ended June 30,		Six Months Ended June 30,
	2020	2019	2020	2019
El Dorado Assets:
Crude pipelines (non-gathered)	79,066	37,625	75,995	33,179
Refined products pipelines to Enterprise Systems	56,093	29,893	55,110	26,511
El Dorado Gathering System	9,447	14,315	13,449	14,798
East Texas Crude Logistics System	10,275	19,550	12,224	18,835
Big Spring Gathering Assets (1)	105,162	—	105,162	—

⁽¹⁾ Throughputs for the Big Spring Gathering Assets are for the 91 days we owned the assets following the Big Spring Gathering Assets Acquisition effective March 31, 2020.

39 |  

Management's Discussion and Analysis

Comparison of the three and six months ended June 30, 2020 compared to the three and six months ended June 30, 2019

Net Revenues

Q2 2020 vs. Q2 2019

Net revenues for the pipelines and transportation segment increased by $19.2 million, or 43.5%, in the second quarter of 2020 compared to the second quarter of 2019, primarily driven by the following:

• increased revenues associated with agreements executed in connection with the Big Spring Gathering Assets Acquisition and the Trucking Assets Acquisition, which were effective March 31, 2020 and May 1, 2020, respectively. Refer to Note 2 of the condensed consolidated financial statements in Item 1, Financial Statements, for additional information.

YTD 2020 vs. YTD 2019

Net revenues for the pipelines and transportation segment increased by $26.6 million, or 31.3%, in the six months ended June 30, 2020 compared to the six months ended June 30, 2019, primarily driven by the following:

• increased revenues associated with agreements executed in connection with the Big Spring Gathering Assets Acquisition and the Trucking Assets Acquisition, which were effective March 31, 2020 and May 1, 2020, respectively. Refer to Note 2 of the condensed consolidated financial statements in Item 1, Financial Statements, for additional information.

• increased revenues at our El Dorado Gathering System and Magnolia Pipeline as result of increased throughput during the six months ended June 30, 2020 when compared to the six months ended June 30, 2019.

Cost of Materials and Other

Q2 2020 vs. Q2 2019

Cost of materials and other for the pipelines and transportation segment increased $3.8 million or 52.0% in the six months ended June 30, 2020 compared to the six months ended June 30, 2019, primarily driven by the following:

• increases in transportation costs related to our trucking assets, including driver wages and benefits and fuel expenses proportionate to increase in fees, insurance, supplies and maintenance expenses.

YTD 2020 vs. YTD 2019

Cost of materials and other for the pipelines and transportation segment increased by $4.4 million, or 33.7%, in the six months ended June 30, 2020 compared to the six months ended June 30, 2019, primarily driven by the following:

• increases in transportation costs related to our trucking assets, including driver wages and benefits and fuel expense proportionate to increase in fees, insurance, supplies and maintenance expenses.

Operating Expenses

Q2 2020 vs. Q2 2019

Operating expenses for the pipelines and transportation segment decreased by $3.0 million, or 23.5%, in the second quarter of 2020 compared to the second quarter of 2019, primarily driven by the following:

• decrease in employee and outside services costs due to measures implemented to respond to COVID-19 including delaying non-essential projects; and

• decrease in utilities and other variable expenses due to lower production.

YTD 2020 vs. YTD 2019

Operating expenses for the pipelines and transportation segment decreased $2.4 million, or 10.1%, in the six months ended June 30, 2020 compared to the six months ended June 30, 2019, primarily driven by the following:

• decrease in employee and outside services costs due to measures implemented to respond to COVID-19 including delaying non-essential projects; and

• decrease in utilities and other variable expenses due to lower production.

40 |  

Management's Discussion and Analysis

Contribution Margin

Q2 2020 vs. Q2 2019

Contribution margin for the pipelines and transportation segment increased by $18.4 million, or 76.2%, in the second quarter of 2020 compared to the second quarter of 2019, primarily driven by the following:

• increases in revenues associated with agreements executed in connection with the Big Spring Gathering Assets Acquisition and the Trucking Assets Acquisition; and

• decreases in operating expenses.

YTD 2020 vs. YTD 2019

Contribution margin for the pipelines and transportation segment increased by $24.6 million, or 50.8%, in the six months ended June 30, 2020 compared to the six months ended June 30, 2019, primarily driven by the following:

• increases in revenues associated with agreements executed in connection with the Big Spring Gathering Assets Acquisition and the Trucking Assets Acquisition, Paline Pipeline, and El Dorado Assets; and

• decreases in operating expenses.

41 |  

Management's Discussion and Analysis

Wholesale Marketing and Terminalling Segment

We use our wholesale marketing and terminalling assets to generate revenue by providing wholesale marketing and terminalling services to Delek Holdings' refining operations and to independent third parties.

The tables and discussion below present the results of operations and certain operating statistics of the wholesale marketing and terminalling segment for the three and six months ended June 30, 2020 and 2019:

Wholesale Marketing and Terminalling
	Three Months Ended September 30,				Six Months Ended June 30,
	2020		2019		2020		2019
Net Revenues:
Affiliates	$	26,235	$	25,187	$	94,431	$	51,493
Third-Party	27,976		85,947		75,214		171,491
Total Wholesale Marketing and Terminalling	54,211		111,134		169,645		222,984
Cost of materials and other	32,710		86,497		127,905		177,195
Operating expenses (excluding depreciation and amortization presented below)	2,718		4,599		6,006		9,823
Segment contribution margin	$	18,783	$	20,038	$	35,734	$	35,966

Operating Information
	Three Months Ended June 30,				Six Months Ended June 30,
	2020		2019		2020		2019
East Texas - Tyler Refinery sales volumes (average bpd) (1)	65,028		71,123		68,839		69,857
Big Spring marketing throughputs (average bpd)	76,004		82,964		71,195		85,339
West Texas marketing throughputs (average bpd)	9,143		11,404		12,612		12,418
West Texas gross margin per barrel	$	0.64	$	6.25	$	1.96	$	4.84
Terminalling throughputs (average bpd) (2)	138,593		156,922		136,961		154,643

(1)	Excludes jet fuel and petroleum coke.
(2)	Consists of terminalling throughputs at our Tyler, Big Spring, Big Sandy and Mount Pleasant, Texas, El Dorado and North Little Rock, Arkansas and Memphis and Nashville, Tennessee terminals.

Comparison of the three and six months ended June 30, 2020 compared to the three and six months ended June 30, 2019

Net Revenues

Q2 2020 vs. Q2 2019

Net revenues for the wholesale marketing and terminalling segment decreased by $56.9 million, or 51.2%, in the second quarter of 2020 compared to the second quarter of 2019, primarily driven by the following:

• decreases in the average volumes sold and in average sales prices per gallon of gasoline and diesel sold in our West Texas marketing operations.

◦ the average volumes of diesel sold decreased 10.2 million gallons, partially offset by a 1.1 million increase of gasoline gallons sold.

◦ the average sales prices per gallon of gasoline and diesel sold decreased $1.09 per gallon and $1.11 per gallon, respectively.

YTD 2020 vs. YTD 2019

Net revenues for the wholesale marketing and terminalling segment decreased by $53.3 million, or 23.9%, in the six months ended June 30, 2020 compared to the six months ended June 30, 2019, primarily driven by the following:

• increases in the average volumes sold offset by decreases in the average sales prices per gallon of gasoline and diesel in our West Texas marketing operations.

◦ the average volumes of gasoline sold increased 14.4 million gallons partially offset by decrease of 11.5 million gallons in diesel sold.

◦ the average sales prices per gallon of gasoline and diesel sold decreased $0.47 per gallon and $0.68 per gallon, respectively.

42 |  

Management's Discussion and Analysis

The following charts show summaries of the average sales prices per gallon of gasoline and diesel and refined products volume impacting our West Texas operations.

Cost of Materials and Other

Q2 2020 vs. Q2 2019

Cost of materials and other for our wholesale marketing and terminalling segment decreased by $53.8 million, or 62.2%, in the second quarter of 2020 compared to the second quarter of 2019, primarily driven by the following:

• decreases in the average volumes and in the average cost per gallon of gasoline and diesel sold in our West Texas marketing operations.

◦ the average volumes of diesel sold decreased 10.2 million gallons, partially offset by a 1.1 million increase of gasoline gallons sold.

◦ the average cost per gallon of gasoline and diesel sold decreased $0.96 per gallon and $1.03 per gallon, respectively.

YTD 2020 vs. YTD 2019

Cost of materials and other for our wholesale marketing and terminalling segment decreased by $49.3 million, or 27.8%, in the six months ended June 30, 2020 compared to the six months ended June 30, 2019, primarily driven by the following:

• decreases in the average volumes and in the average cost per gallon of gasoline and diesel sold in our West Texas marketing operations.

◦ the average volumes of gasoline sold increased 14.4 million gallons partially offset by decrease of 11.5 million gallons in diesel sold.

◦ the average cost per gallon of gasoline and diesel sold decreased $0.41 per gallon and $0.61 per gallon, respectively.

The following chart shows a summary of the average prices per gallon of gasoline and diesel sold in our West Texas operations for the three and six months ended June 30, 2020 and 2019. Refer to the Refined Products Volume chart above for a summary of volumes impacting our West Texas operations.

43 |  

Management's Discussion and Analysis

Operating Expenses

Q2 2020 vs. Q2 2019

Operating expenses decreased by $1.9 million or 40.9% in the in the second quarter of 2020 compared to the second quarter of 2019, primarily driven by the following:

• lower operating costs associated with allocated contract services pertaining to certain of our assets; and

• decreases in variable expenses such as utilities, maintenance and material costs.

YTD 2020 vs. YTD 2019

Operating expenses decreased by $3.8 million, or 38.9%, in the six months ended June 30, 2020 compared to the six months ended June 30, 2019, primarily driven by the following:

• lower operating costs associated with allocated contract services pertaining to certain of our assets; and

• decreases in variable expenses such as utilities, maintenance and materials costs.

Contribution Margin

Q2 2020 vs. Q2 2019

Contribution margin for the wholesale marketing and terminalling segment decreased by $1.3 million, or 6.3%, in the second quarter of 2020 compared to the second quarter of 2019, primarily driven by the following:

• decreases in the volumes of diesel sold and in average prices of diesel and gasoline in our West Texas marketing operations; and

Such decreases were partially offset by:

• decreases in cost of materials and other due to lower volumes of diesel sold as described above.

• decreases in average cost per gallon of diesel and gasoline sold as described above.

YTD 2020 vs. YTD 2019

The changes in contribution margin for the six months ended June 30, 2020 compared to the six months ended June 30, 2019 were immaterial.

44 |  

Management's Discussion and Analysis

Liquidity and Capital Resources

We consider the following when assessing our liquidity and capital resources:

(i)  cash generated from operations;	(iii)   potential issuance of additional equity; and
(ii)  borrowings under our revolving credit facility;	(iv)  potential issuance of additional debt securities.

At June 30, 2020 our total liquidity amounted to $116.2 million comprised of $100.0 million in unused credit commitments under the DKL Credit Facility and $16.2 million in cash and cash equivalents. We have the ability to increase the DKL Credit Facility to $1.0 billion subject to receiving increased or new commitments from lenders and meeting certain requirements under the credit facility. Historically, we have generated adequate cash from operations to fund ongoing working capital requirements, pay minimum quarterly cash distributions and operational capital expenditures, and we expect the same trend to continue in the foreseeable future. Other funding sources, including the issuance of additional debt securities, have been utilized to fund growth capital projects such as dropdowns. In addition, we have historically been able to source funding at rates that reflect market conditions, our financial position and our credit ratings. We continue to monitor market conditions, our financial position and our credit ratings and expect future funding sources to be at rates that are sustainable and profitable for the Partnership. However, there can be no assurances regarding the availability of any future financings or additional credit facilities or whether such financings or additional credit facilities can be made available on terms that are acceptable to us.

We believe we have sufficient financial resources from the above sources to meet our funding requirements in the next 12 months, including working capital requirements, minimum quarterly cash distributions and capital expenditures. Nevertheless, our ability to satisfy working capital requirements, to service our debt obligations, to fund planned capital expenditures, or to pay distributions will depend upon future operating performance, which will be affected by prevailing economic conditions in the oil industry and other financial and business factors, including the current COVID-19 Pandemic and crude oil prices, some of which are beyond our control.

We continuously review our liquidity and capital resources. If market conditions were to change, for instance due to the significant decline in crude oil prices or uncertainty created by the COVID-19 Pandemic, and our revenue was reduced significantly or operating costs were to increase significantly, our cash flows and liquidity could be reduced. Additionally, it could cause the rating agencies to lower our credit ratings. There are no ratings triggers that would accelerate the maturity of any borrowings under our debt agreements.

We believe we were in compliance with the covenants in all our debt facilities as of June 30, 2020. After considering the current and potential effect of the significant decline in oil prices and uncertainty created by the COVID-19 Pandemic on our operations, we currently expect to remain in compliance with our debt covenants. See Note 7 to our accompanying condensed consolidated financial statements for a complete discussion of our third-party indebtedness.

Cash Distributions

On July 24, 2020, we announced that the board of directors of our general partner had declared a distribution of $0.900 per common unit (the "GP Distribution"), which equates to $36.0 million per quarter, based on the number of common and general partner units outstanding as of August 7, 2020. The GP Distribution is expected to be paid on August 12, 2020 to common unitholders of record on August 7, 2020 and represents a 5.9% increase over the second quarter 2019 distribution. We have set a range for distribution growth guidance of $0.01 - $.015 per unit each quarter for 2020. This increase in the distribution is consistent with our intent to maintain an attractive distribution growth profile over the long term. Although our Partnership Agreement requires that we distribute all of our available cash each quarter, we do not otherwise have a legal obligation to distribute any particular amount per common unit.

The table below summarizes the quarterly distributions related to our quarterly financial results:

Quarter Ended	Total Quarterly Distribution Per Limited Partner Unit		Total Quarterly Distribution Per Limited Partner Unit, Annualized		Total Cash Distribution, including general partner interest and IDRs (in thousands)		Date of Distribution	Unitholders Record Date
June 30, 2019	$	0.850	$	3.40	$	28,914	August 13, 2019	August 5, 2019
September 30, 2019	$	0.880	$	3.52	$	30,379	November 12, 2019	November 4, 2019
December 31, 2019	$	0.885	$	3.54	$	30,634	February 12, 2020	February 4, 2020
March 31, 2020	$	0.890	$	3.56	$	30,878	May 12, 2020	May 5, 2020
June 30, 2020	$	0.900	$	3.60	$	35,969	August 12, 2020 (1)	August 7, 2020

⁽¹⁾  Expected date of distribution.

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Management's Discussion and Analysis

Cash Flows

The following table sets forth a summary of our consolidated cash flows for the six months ended June 30, 2020 and 2019 (in thousands):

	Six Months Ended June 30,
	2020			2019
Net cash provided by operating activities	$	72,381		$	51,823
Net cash used in investing activities	(114,242		)	(136,556		)
Net cash provided by financing activities	52,512			85,651
Net (decrease) increase in cash and cash equivalents	$	10,651		$	918

Operating Activities

Net cash provided by operating activities was $72.4 million for the six months ended June 30, 2020, compared to $51.8 million for the six months ended June 30, 2019, resulting in a $20.6 million increase in net cash provided by operating activities. The cash receipts from customers activities decreased by $24.4 million and cash payments to suppliers and for allocations from Delek Holdings for salaries decreased by $36.4 million. In addition, cash dividends received from equity method investments increased by $8.7 million. The cash inflows were netted with the increase in cash paid for debt interest which increased by $0.2 million.

Investing Activities

Net cash used in investing activities decreased by $22.3 million during the six months ended June 30, 2020 compared to the six months ended June 30, 2019. The decrease in cash used in investing activities was primarily due to lower contributions to equity method investments during the six months ended June 30, 2020 compared to the six months ended June 30, 2019 partially offset by the acquisition of the Big Spring Gathering Assets and Trucking Assets during the six months ended June 30, 2020. We disbursed $10.5 million in additional contributions to our equity method investments during the six months ended June 30, 2020 compared to $135.0 million during the six months ended June 30, 2019.The Big Spring Gathering Assets Acquisition was partially financed with cash from drawdown of the DKL Credit Facility amounting to $100.0 million and the Trucking Assets Acquisition was financed with cash from drawdown of the DKL Credit Facility amounting to $48.0 million of which $0.5 million was recorded as investing activity with $47.6 million recorded in financing activities as a distribution to Delek and GP unitholders pursuant to the asset acquisitions under common control guidance. Transaction costs paid amounting to $1.0 million were capitalized for the Big Spring Gathering Assets Acquisition and the Trucking Assets Acquisition. There was no asset acquisition during the six months ended June 30, 2019. In addition there were additions to property, plant and equipment amounting to $5.0 million and distributions from equity method investments amounting $1.7 million during the six months ended June 30, 2020 compared to additions to property, plant and equipment amounting to $2.4 million and distributions from equity method investments amounting to $0.8 million during the six months ended June 30, 2019.

Financing Activities

Net cash provided by financing activities decreased $33.1 million during the six months ended June 30, 2020 compared to the six months ended June 30, 2019. The decrease in cash provided by financing activities was primarily due to the $47.6 million excess of purchase consideration over the carrying amount of the assets acquired in the Trucking Assets Acquisition treated as a distribution to Delek and GP unitholders pursuant to the asset acquisitions under common control guidance. This was partially offset by the increase in net proceeds under the revolving credit facility (defined below). We received net proceeds of $161.6 million under the revolving credit facility during the six months ended June 30, 2020, compared to net proceeds of $140.0 million under the revolving credit facility during the six months ended June 30, 2019. In addition, we paid quarterly cash distributions totaling $61.5 million during the six months ended June 30, 2020, compared to quarterly cash distributions totaling $54.4 million during the six months ended June 30, 2019.

The sources of cash during the six months ended June 30, 2020 primarily consisted of the $100.0 million drawdown under the DKL Credit Facility to part-finance the Big Spring Gathering Assets Acquisition and $48.0 million drawdown to finance the Trucking Asset Acquisition. The Big Spring Gathering Assets Acquisition was also financed by the issuance of 5.0 million units to Delek US Energy (a wholly owned subsidiary of Delek US Holdings, Inc.).

Debt Overview

As of June 30, 2020, we had total indebtedness of $995.2 million comprised of $750.0 million under the amended and restated senior secured revolving agreement (the "DKL Credit Facility") and $245.2 million of 6.75% senior notes due 2025 (the “2025 Notes”), the latter net of deferred financing costs and original issue discount. Deferred financing costs and original issue discount on the 2025 Notes amounted to $3.6 million and $1.2 million, respectively. The increase of $162.1 million in our long-term debt balance compared to the balance at December 31, 2019 resulted from the borrowings under the DKL Credit Facility during the six months ended June 30, 2020 to

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Management's Discussion and Analysis

finance the Big Spring Gathering Assets Acquisition, the Trucking Assets Acquisition and amortization of the deferred financing costs and original issuance discount under our 2025 Notes. As of June 30, 2020, our total indebtedness consisted of:

• An aggregate principal amount of $750.0 million under the Delek Logistics Credit Facility ("revolving credit facility"), due on September 28, 2023, with average borrowing rate of 2.78%.

• An aggregate principal amount of $245.2 million, under the Delek Logistics Notes (6.75% senior notes), due in 2025, with effective interest rate of 7.22%.

We believe we were in compliance with the covenants in all our debt facilities as of June 30, 2020. See Note 7 to our accompanying condensed consolidated financial statements for a complete discussion of our third-party indebtedness.

Agreements Governing Certain Indebtedness of Delek Holdings

Although we are not contractually bound by and are not liable for Delek Holdings' debt under its credit arrangements, we are indirectly affected by certain prohibitions and limitations contained therein. Specifically, certain of Delek Holdings' credit arrangements require that Delek Holdings meet certain minimum covenant levels for (i) consolidated shareholders’ equity and (ii) a ratio of consolidated shareholders' equity to adjusted total assets. Delek Holdings, due to its majority ownership and control of our general partner, has the ability to prevent us from taking actions that would cause Delek Holdings to violate these and any other covenants in its credit arrangements or otherwise be in default under any of its credit arrangements. As a result we cannot assure you that such covenants will not impact our ability to use the full capacity under our revolving credit facility in the future. Delek Holdings' level of indebtedness, the terms of its borrowings and any future credit ratings could adversely affect our ability to grow our business, our ability to make cash distributions to our unitholders and our credit profile. Our current and future credit ratings may also be affected by Delek Holdings' level of indebtedness, financial performance and credit ratings.

Equity Units Overview

On March 31, 2020, we issued 5.0 million units to Delek Holdings as part of the consideration for the Big Spring Gathering Assets Acquisition. In connection with the issuance of these units and in accordance with the Partnership Agreement, we issued additional general partner units in an amount necessary to maintain the 2.0% general partner interest as defined in the Partnership Agreement.

Contemporaneous with the above issuance, the Board of the general partner adopted Amendment No. 2 (“Amendment No. 2”) to the Partnership Agreement, effective upon adoption. Amendment No. 2 provides for a waiver of distributions in respect of the IDRs associated with the 5.0 million Additional Units for at least two years, through at least the distribution for the quarter ending March 31, 2022 ("IDR Waiver"). The IDR Waiver essentially reduces the distribution made to the holders of the IDRs during this period, as the holders would not receive a share of the distribution made on the Additional Units. The IDR Waiver will automatically and permanently expire if, following the payment of a distribution in respect of a quarter ending on or after March 31, 2022, Delek Logistics has generated distributable cash flow in the most recent four consecutive quarters that, in the aggregate, would have resulted in total distribution coverage (on a pro forma basis without giving effect to the IDR Waiver) of at least 110% or 1.1x over such period. The IDR Waiver remains effective if this condition is not met. Following the termination of the IDR Waiver, the holders of the IDRs will receive distributions on all units, including the Additional Units. In addition, pursuant to Amendment No. 2, in connection with any sale or exchange of the IDRs to or with the Partnership, the IDRs shall be treated as if such waiver had not and never will expire, regardless of whether such waiver has actually expired. An additional waiver letter was signed that waived all of the distributions for the first quarter of 2020 on the Additional Units with respect to base distributions and the IDRs. See Note 3 to our accompanying condensed consolidated financial statements for additional details.

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Management's Discussion and Analysis

Capital Spending

A key component of our long-term strategy is our capital expenditure program. The following table summarizes our actual capital expenditures for the six months ended June 30, 2020 and planned capital expenditures for the full year 2020 by segment and by major category (in thousands):

	Full Year 2020 Forecast		Six Months Ended June 30, 2020
Pipelines and Transportation
Regulatory (2)	$	2,431	$	296
Maintenance (1) (2)	1,584		134
Discretionary projects (2) (5)	11,119		433
Pipelines and transportation segment total	$	15,134	$	863
Wholesale Marketing and Terminalling
Regulatory (3)	$	550	$	967
Maintenance (1) (3)	1,111		395
Discretionary (3)	1,461		1,456
Wholesale marketing and terminalling segment total	$	3,122	$	2,818
Total capital spending (4)	$	18,256	$	3,681

⁽¹⁾  Maintenance capital expenditures represent cash expenditures (including expenditures for the addition or improvement to, or the replacement of, our capital assets, and for the acquisition of existing, or the construction or development of new, capital assets) made to maintain our long-term operating income or operating capacity. Examples of maintenance capital expenditures are expenditures for the repair, refurbishment and replacement of pipelines, tanks and terminals, to maintain equipment reliability, integrity and safety and to address environmental laws and regulations. Delek Holdings has agreed to reimburse us with respect to certain assets it has transferred to us pursuant to the terms of the Omnibus Agreement (as defined in Note 3 to our accompanying condensed consolidated financial statements).

⁽²⁾  The majority of the $2.4 million and $11.1 million budgeted for maintenance and discretionary projects in the pipelines and transportation segment is expected to be spent on scheduled maintenance and improvements to certain of our tanks and pipelines and developments to the Big Spring Gathering Assets, respectively. Effective March 31, 2020 and May 1, 2020, the pipelines and transportation segments includes the Big Spring Gathering Assets acquired in the Big Spring Gathering Assets Acquisition and Trucking Assets acquired in the Trucking Assets Acquisition, respectively. See Note 2 to our accompanying condensed consolidated financial statements for further information.

⁽³⁾  The majority of the $1.1 million and $1.5 million budgeted for maintenance and discretionary projects in the wholesale marketing and terminalling segment relates to scheduled maintenance and and improvements to certain of our terminalling facilities and developments on the Big Spring Refinery to Magellan Pipeline, respectively.

⁽⁴⁾  Capital spending excludes transaction costs capitalized in the amount of $0.3 million and $0.7 million that relate to the Trucking Assets Acquisition and the Big Spring Gathering Assets Acquisition, respectively.

⁽⁵⁾  Excludes rights-of-way spending of a nominal amount.

The amount of our capital expenditure budget is subject to change due to unanticipated increases in the cost, scope and completion time for our capital projects. For example, we may experience increases in the cost of and/or timing to obtain necessary equipment required for our continued compliance with government regulations or to complete improvement projects. Additionally, the scope and cost of employee or contractor labor expense related to installation of that equipment could increase from our projections. As a result of the uncertainties associated with the COVID-19 Pandemic, we have decreased our capital spending forecast for 2020 to $18.3 million, down from the prior forecast of $22.7 million. Projects that are not essential to maintaining the current operations have been suspended and are expected to resume in 2021. We continue to evaluate the adverse effects of the COVID-19 Pandemic, and may further revise our forecast as a result of changing circumstances.

Off-Balance Sheet Arrangements

We have no off-balance sheet arrangements through the date of the filing of this Quarterly Report on Form 10-Q.

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Management's Discussion and Analysis

ITEM 3. QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET RISK

Impact of Changing Prices

Our revenues and cash flows, as well as estimates of future cash flows, are sensitive to changes in commodity prices. Shifts in the cost of crude oil, the prices of refined products and the cost of ethanol can generate changes in the operating margin in our wholesale marketing and terminalling segment.

Interest Rate Risk

Debt that we incur under the DKL Credit Facility bears interest at floating rates and will expose us to interest rate risk. The annualized impact of a hypothetical one percent change in interest rates on our floating rate debt outstanding as of June 30, 2020 would be to change interest expense by approximately $7.5 million.

LIBOR Transition

LIBOR is a commonly used indicative measure of the average interest rate at which major global banks could borrow from one another. The United Kingdom's Financial Conduct Authority, which regulates LIBOR, has publicly announced that it intends to discontinue the reporting of LIBOR rates after 2021. Certain of our agreements use LIBOR as a "benchmark" or "reference rate" for various terms. Some agreements contain an existing LIBOR alternative. Where there is not an alternative, we expect to replace the LIBOR benchmark with an alternative reference rate. While we do not expect the transition to an alternative rate to have a significant impact on our business or operations, it is possible that the move away from LIBOR could materially impact our borrowing costs on our variable rate indebtedness.

ITEM 4. CONTROLS AND PROCEDURES

Evaluation of Disclosure Controls and Procedures

Our disclosure controls and procedures are designed to provide reasonable assurance that the information that we are required to disclose in reports we file under the Securities Exchange Act of 1934, as amended (the "Exchange Act") is accumulated and appropriately communicated to management. We carried out an evaluation required by Rule 13a-15(b) of the Exchange Act, under the supervision and with the participation of our management, including the Chief Executive Officer and Chief Financial Officer, of the effectiveness of the design and operation of our disclosure controls and procedures at the end of the reporting period. Based on that evaluation, the Chief Executive Officer and Chief Financial Officer concluded that our disclosure controls and procedures were effective as of the end of the reporting period.

There have been no changes in our internal control over financial reporting identified in connection with the evaluation required by paragraph (d) of Exchange Act Rules 13a-15 or 15d-15 that occurred during the second quarter of 2020 that have materially affected, or are reasonably likely to materially affect, our internal control over financial reporting. Although most of our corporate employees have shifted to a remote working environment due to the COVID-19 Pandemic, we have not experienced a material impact to our internal control over financial reporting.  We are continually monitoring and assessing the COVID-19 situation to minimize the impact on the design and operating effectiveness of our internal controls.

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Legal Proceedings and Risk Factors

PART II - OTHER INFORMATION

ITEM 1. LEGAL PROCEEDINGS

In the ordinary conduct of our business, we are from time to time subject to lawsuits, investigations and claims, including, environmental claims and employee-related matters. Although we cannot predict with certainty the ultimate resolution of lawsuits, investigations and claims asserted against us, including civil penalties or other enforcement actions, we do not believe that any currently pending legal proceeding or proceedings to which we are a party will have a material adverse effect on our business, financial condition or results of operations. See Note 13 to our accompanying condensed consolidated financial statements, which is incorporated by reference in this Item 1, for additional information.

ITEM 1A. RISK FACTORS

There were no material changes during the second quarter of 2020 to the risk factors identified in the Partnership’s fiscal 2019 Annual Report on Form 10-K, except as noted below.

The ongoing COVID-19 Pandemic and certain developments in the global oil markets have had, and may continue to have, an adverse impact on our business, our future results of operations and our overall financial performance.

The COVID-19 Pandemic could materially adversely affect our business and operations during 2020 and possibly beyond. In early 2020, global health care systems and economies began to experience strain from the spread of the COVID-19 coronavirus. As the virus spread, global economic activity began to slow and future economic activity was forecast to slow with a resulting forecast of a decline in oil and gas demand. The global COVID-19 Pandemic has resulted in a dramatic reduction in airline flights and has reduced the number of cars on the road. Governmental actions in response to the COVID-19 Pandemic have resulted in significant business and economic disruptions in the markets we serve, including business closures, supply chain disruptions, travel restrictions, stay-at-home orders, and limitations on the availability and effectiveness of the workforce. These impacts have negatively impacted and will likely continue to negatively impact worldwide economic and commercial activity, financial markets, and demand for and prices of oil and gas products for the foreseeable future. These impacts may also precipitate a prolonged economic slowdown and recession.

In response to the decline in demand, OPEC participating countries have agreed to adjust downwards their overall production of crude oil through April 30, 2022, with the agreement to be reassessed in December 2021. However, uncertainty about the duration of the COVID-19 Pandemic and its effect on economic activity has continued to place downward pressure on commodity prices.

Global economic growth drives demand for energy from all sources, including fossil fuels. Should the U.S. and global economies experience weakness, demand for energy may decline. Similarly, should growth in global energy production outstrip demand, excess supplies may arise. Declines in demand and excess supplies may result in accompanying declines in commodity prices and deterioration of our financial position along with our ability to operate profitably and our ability to obtain financing to support operations. With respect to our business, we have experienced periodic declines in demand thought to be associated with slowing economic growth in certain markets, including the effects of the COVID-19 Pandemic, coupled with new oil and gas supplies coming on line and other circumstances beyond our control that resulted in oil and gas supply exceeding global demand which, in turn, resulted in steep declines in prices of oil and natural gas. There can be no assurance as to how long the current price decline will persist or that a recurrence of price weakness will not arise in the future.

The COVID-19 Pandemic has resulted in modifications to our business practices, including limiting employee and contractor presence at certain work locations, limiting travel, and reducing capital expenditures for 2020. We may take further actions as required by government authorities or that we determine are in the best interests of our employees, contractors, customers, suppliers and communities. However, there is no assurance that such measures will be sufficient to mitigate the risks posed by the virus, and our ability to successfully execute our business operations could be adversely impacted. In addition, while we have had no COVID-related impairments to date, the continued effects of the COVID-19 Pandemic could result in impairments of long-lived or indefinite-lived assets, including goodwill, at some point in the future. Such impairment charges could be material. Also, our relationship with Delek Holdings subjects us to the risk that the COVID-19 Pandemic may impact the financial condition, financial results or cash flows of Delek Holdings, may adversely affect us and our business and, therefore, our ability to sustain or increase cash distributions to our unitholders.

The full impact of the COVID-19 Pandemic is unknown and is rapidly evolving. The ultimate extent of the impact of the COVID-19 Pandemic on our business, financial condition, results of operations and liquidity will depend largely on future developments, including the duration and spread of the virus outbreak, particularly within the geographic areas where we operate, actions taken by national, state, and local governments and health officials to contain the virus or treat its effects, and the related impact on overall economic activity, all of which are uncertain and cannot be predicted with certainty at this time. The ultimate extent of the impact of the volatile conditions in the oil and gas industry on our business, financial condition, results of operation and liquidity will also depend largely on future developments, including the extent and duration of any price reductions, any additional decisions by OPEC and the lack of resolution of disputes between the members of OPEC+.

To the extent the COVID-19 Pandemic and the developments in the global oil markets adversely affects our or Delek Holdings' business, financial condition, results of operation and liquidity, they may also impact our ability to sustain or increase quarterly distributions to our common

50 |  

unitholders or have the effect of heightening many of the other risks described in the “Risk Factors” section included in our Annual Report on Form 10-K for the year ended December 31, 2019 and in this Quarterly Report on Form 10-Q, as those risk factors are amended or supplemented by subsequent Quarterly Reports on Form 10-Q and other reports and documents we file with the SEC after the date hereof.

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ITEM 2. UNREGISTERED SALES OF EQUITY SECURITIES AND USE OF PROCEEDS

Unregistered Sales of Equity Securities

Pursuant to the terms of our limited Partnership Agreement, our general partner has the right to maintain its proportionate 2% general partner interest in the Partnership. The following table provides information regarding the exercise of such right by our general partner during the three months ended June 30, 2020. The sales listed below were exempt from registration under Section 4(a)(2) of the Securities Act.

Date of Sale	Number of General Partner Units Sold	Price per General Partner Unit	Consideration Paid to the Partnership
June 11, 2020	155	$26.01	$4,042

ITEM 6. EXHIBITS

Exhibit No.		Description
10.1	~	Transportation Services Agreement, dated May 15, 2020 and effective as of May 1, 2020, by and between Delek Refining Ltd., Lion Oil Company and DKL Transportation, LLC (incorporated by reference to Exhibit 10.1 of the Partnership's Form 8-K filed on May 18, 2020).
10.2		Third Amendment and Restatement of Schedules to Third Amended and Restated Omnibus Agreement, dated and effective as of May 15, 2020 (incorporated by reference to Exhibit 10.2 to the Partnership's Form 8-K on May 18, 2020).
31.1	#	Certification of Delek Logistics GP, LLC's Chief Executive Officer pursuant to Rule 13a-14(a)/15(d)-14(a) under the Securities Exchange Act of 1934, as amended.
31.2	#	Certification of Delek Logistics GP, LLC's Chief Financial Officer pursuant to Rule 13a-14(a)/15(d)-14(a) under the Securities Exchange Act of 1934, as amended.
32.1	##	Certification of Delek Logistics GP, LLC's Chief Executive Officer pursuant to 18 U.S.C. Section 1350, as adopted pursuant to Section 906 of the Sarbanes-Oxley Act of 2002.
32.2	##	Certification of Delek Logistics GP, LLC's Chief Financial Officer pursuant to 18 U.S.C. Section 1350, as adopted pursuant to Section 906 of the Sarbanes-Oxley Act of 2002.
101		The following materials from Delek Logistics Partners, LP's Quarterly Report on Form 10-Q for the quarterly period ended June 30, 2020, formatted in Inline XBRL (eXtensible Business Reporting Language): (i) Condensed Consolidated Balance Sheets as of June 30, 2020 and December 31, 2019 (Unaudited), (ii) Condensed Consolidated Statements of Income and Comprehensive Income for the three and six months ended June 30, 2020 and 2019 (Unaudited), (iii) Condensed Consolidated Statement of Partners' Equity (Deficit) for the three and six months ended June 30, 2020 and 2019 (Unaudited), (iv) Condensed Consolidated Statements of Cash Flows for the six months ended June 30, 2020 and 2019 (Unaudited), and (v) Notes to Condensed Consolidated Financial Statements (Unaudited).
104		The cover page from Delek Logistics Partners, LP's Quarterly Report on Form 10-Q for the quarter ended June 30, 2020, has been formatted in Inline XBRL.

#	Filed herewith
##	Furnished herewith
~	Certain information contained in these exhibits has been omitted because it is not material and would likely cause competitive harm to the Partnership if publicly disclosed.

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SIGNATURES

Pursuant to the requirements of the Securities Exchange Act of 1934, the registrant has duly caused this report to be signed on its behalf by the undersigned, thereunto duly authorized.

Delek Logistics Partners, LP
By:	Delek Logistics GP, LLC
	Its General Partner
By:	/s/ Ezra Uzi Yemin
	Ezra Uzi Yemin
	Chairman and Chief Executive Officer (Principal Executive Officer)
By:	/s/ Reuven Spiegel
	Reuven Spiegel
	Executive Vice President and Chief Financial Officer (Principal Financial and Accounting Officer)

Dated: August 6, 2020

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EX-31.1

EXHIBIT 31.1

Certification by Chief Executive Officer pursuant to

Rule 13a-14(a) or Rule 15d-14(a) under the Securities Exchange Act of 1934,

As Adopted Pursuant to Section 302 of the Sarbanes-Oxley Act of 2002

I, Ezra Uzi Yemin, certify that:

1. I have reviewed this quarterly report on Form 10-Q of Delek Logistics Partners, LP;

2. Based on my knowledge, this report does not contain any untrue statement of a material fact or omit to state a material fact necessary to make the statements made, in light of the circumstances under which such statements were made, not misleading with respect to the period covered by this report;

3. Based on my knowledge, the financial statements, and other financial information included in this report, fairly present in all material respects the financial condition, results of operations and cash flows of the registrant as of, and for, the periods presented in this report;

4. The registrant’s other certifying officer and I are responsible for establishing and maintaining disclosure controls and procedures (as defined in Exchange Act Rules 13a-15(e) and 15d-15(e)) and internal control over financial reporting (as defined in Exchange Act Rules 13a-15(f) and 15d-15(f)) for the registrant and have:

a) Designed such disclosure controls and procedures, or caused such disclosure controls and procedures to be designed under our supervision, to ensure that material information relating to the registrant, including its consolidated subsidiaries, is made known to us by others within those entities, particularly during the period in which this report is being prepared;

b) Designed such internal control over financial reporting, or caused such internal control over financial reporting to be designed under our supervision, to provide reasonable assurance regarding the reliability of financial reporting and the preparation of financial statements for external purposes in accordance with generally accepted accounting principles;

c) Evaluated the effectiveness of the registrant’s disclosure controls and procedures and presented in this report our conclusions about the effectiveness of the disclosure controls and procedures, as of the end of the period covered by this report based on such evaluation; and

d) Disclosed in this report any change in the registrant’s internal control over financial reporting that occurred during the registrant’s most recent fiscal quarter (the registrant’s fourth fiscal quarter in the case of an annual report) that has materially affected, or is reasonably likely to materially affect, the registrant’s internal control over financial reporting; and

5. The registrant’s other certifying officer and I have disclosed, based on our most recent evaluation of internal control over financial reporting, to the registrant’s auditors and the audit committee of the registrant’s board of directors (or persons performing the equivalent functions):

a) All significant deficiencies and material weaknesses in the design or operation of internal control over financial reporting which are reasonably likely to adversely affect the registrant’s ability to record, process, summarize and report financial information; and

b) Any fraud, whether or not material, that involves management or other employees who have a significant role in the registrant’s internal control over financial reporting.

By:	/s/ Ezra Uzi Yemin
	Ezra Uzi Yemin,
	Chairman and Chief Executive Officer (Principal Executive Officer) of Delek Logistics GP, LLC (the general partner of Delek Logistics Partners, LP)

Dated: August 6, 2020

EX-31.2

EXHIBIT 31.2

Certification by Chief Financial Officer pursuant to

Rule 13a-14(a) or Rule 15d-14(a) under the Securities Exchange Act of 1934,

As Adopted Pursuant to Section 302 of the Sarbanes-Oxley Act of 2002

I, Reuven Spiegel, certify that:

1. I have reviewed this quarterly report on Form 10-Q of Delek Logistics Partners, LP;

2. Based on my knowledge, this report does not contain any untrue statement of a material fact or omit to state a material fact necessary to make the statements made, in light of the circumstances under which such statements were made, not misleading with respect to the period covered by this report;

3. Based on my knowledge, the financial statements, and other financial information included in this report, fairly present in all material respects the financial condition, results of operations and cash flows of the registrant as of, and for, the periods presented in this report;

4. The registrant’s other certifying officer and I are responsible for establishing and maintaining disclosure controls and procedures (as defined in Exchange Act Rules 13a-15(e) and 15d-15(e)) and internal control over financial reporting (as defined in Exchange Act Rules 13a-15(f) and 15d-15(f)) for the registrant and have:

a) Designed such disclosure controls and procedures, or caused such disclosure controls and procedures to be designed under our supervision, to ensure that material information relating to the registrant, including its consolidated subsidiaries, is made known to us by others within those entities, particularly during the period in which this report is being prepared;

b) Designed such internal control over financial reporting, or caused such internal control over financial reporting to be designed under our supervision, to provide reasonable assurance regarding the reliability of financial reporting and the preparation of financial statements for external purposes in accordance with generally accepted accounting principles;

c) Evaluated the effectiveness of the registrant’s disclosure controls and procedures and presented in this report our conclusions about the effectiveness of the disclosure controls and procedures, as of the end of the period covered by this report based on such evaluation; and

d) Disclosed in this report any change in the registrant’s internal control over financial reporting that occurred during the registrant’s most recent fiscal quarter (the registrant’s fourth fiscal quarter in the case of an annual report) that has materially affected, or is reasonably likely to materially affect, the registrant’s internal control over financial reporting; and

5. The registrant’s other certifying officer and I have disclosed, based on our most recent evaluation of internal control over financial reporting, to the registrant’s auditors and the audit committee of the registrant’s board of directors (or persons performing the equivalent functions):

a) All significant deficiencies and material weaknesses in the design or operation of internal control over financial reporting which are reasonably likely to adversely affect the registrant’s ability to record, process, summarize and report financial information; and

b) Any fraud, whether or not material, that involves management or other employees who have a significant role in the registrant’s internal control over financial reporting.

By:	/s/ Reuven Spiegel
	Reuven Spiegel,
	Executive Vice President and Chief Financial Officer (Principal Financial and Accounting Officer) of Delek Logistics GP, LLC (the general partner of Delek Logistics Partners, LP)

Dated: August 6, 2020

EX-32.1

EXHIBIT 32.1

Certification Pursuant to

18 U.S.C. Section 1350,

as Adopted Pursuant to Section 906 of the Sarbanes-Oxley Act of 2002

In connection with the quarterly report of Delek Logistics Partners, LP (the “Partnership”) on Form 10-Q for the three months ended June 30, 2020, as filed with the Securities and Exchange Commission on the date hereof (the “Report”), I, Ezra Uzi Yemin, Chairman and Chief Executive Officer of Delek Logistics GP, LLC, the general partner of the Partnership, certify, pursuant to 18 U.S.C. § 1350, as adopted pursuant to § 906 of the Sarbanes-Oxley Act of 2002, and to the best of my knowledge, that:

(1) The Report fully complies with the requirements of Section 13(a) or 15(d) of the Securities Exchange Act of 1934; and

(2) The information contained in the Report fairly presents, in all material respects, the financial condition and results of operations of the Partnership.

By:	/s/ Ezra Uzi Yemin
	Ezra Uzi Yemin,
	Chairman and Chief Executive Officer (Principal Executive Officer) of Delek Logistics GP, LLC (the general partner of Delek Logistics Partners, LP)

Dated: August 6, 2020

A signed original of this written statement required by Section 906 has been provided to the Partnership and will be retained and furnished to the Securities and Exchange Commission or its staff upon request.

EX-32.2

EXHIBIT 32.2

Certification Pursuant to

18 U.S.C. Section 1350,

as Adopted Pursuant to Section 906 of the Sarbanes-Oxley Act of 2002

In connection with the quarterly report of Delek Logistics Partners, LP (the “Partnership”) on Form 10-Q for the three months ended June 30, 2020, as filed with the Securities and Exchange Commission on the date hereof (the “Report”), I, Reuven Spiegel, Executive Vice President and Chief Financial Officer of Delek Logistics GP, LLC, the general partner of the Partnership, certify, pursuant to 18 U.S.C. § 1350, as adopted pursuant to § 906 of the Sarbanes-Oxley Act of 2002, and to the best of my knowledge, that:

(1) The Report fully complies with the requirements of Section 13(a) or 15(d) of the Securities Exchange Act of 1934; and

(2) The information contained in the Report fairly presents, in all material respects, the financial condition and results of operations of the Partnership.

By:	/s/ Reuven Spiegel
	Reuven Spiegel,
	Executive Vice President and Chief Financial Officer (Principal Financial and Accounting Officer) of Delek Logistics GP, LLC (the general partner of Delek Logistics Partners, LP)

Dated: August 6, 2020

A signed original of this written statement required by Section 906 has been provided to the Partnership and will be retained and furnished to the Securities and Exchange Commission or its staff upon request.

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Cover Page - shares	6 Months Ended
	Jun. 30, 2020	Jul. 31, 2020
Entity Information [Line Items]
Document Type	10-Q
Document Quarterly Report	true
Document Period End Date	Jun. 30, 2020
Document Transition Report	false
Entity File Number	001-35721
Entity Registrant Name	DELEK LOGISTICS PARTNERS, LP
Entity Incorporation, State or Country Code	DE
Entity Tax Identification Number	45-5379027
Entity Address, Address Line One	7102 Commerce Way
Entity Address, City or Town	Brentwood
Entity Address, State or Province	TN
Entity Address, Postal Zip Code	37027
City Area Code	615
Local Phone Number	771-6701
Title of 12(b) Security	Common Units Representing Limited Partnership Interests
Trading Symbol	DKL
Security Exchange Name	NYSE
Entity Current Reporting Status	Yes
Entity Interactive Data Current	Yes
Entity Filer Category	Accelerated Filer
Entity Small Business	false
Entity Emerging Growth Company	false
Entity Shell Company	false
Entity Central Index Key	0001552797
Current Fiscal Year End Date	--12-31
Document Fiscal Year Focus	2020
Document Fiscal Period Focus	Q2
Amendment Flag	false
Common unitholders
Entity Information [Line Items]
Entity Partnership Units Outstanding		29,433,239
General Partner
Entity Information [Line Items]
Entity Partnership Units Outstanding		600,678

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Condensed Consolidated Balance Sheets (Unaudited) - USD ($) $ in Thousands	Jun. 30, 2020	Dec. 31, 2019
Current assets:
Cash and cash equivalents	$ 16,196	$ 5,545
Accounts receivable	15,907	13,204
Accounts receivable from related parties	8,755	0
Inventory	2,140	12,617
Other current assets	499	2,204
Total current assets	43,497	33,570
Property, plant and equipment:
Property, plant and equipment	680,969	461,325
Less: accumulated depreciation	(207,225)	(166,281)
Property, plant and equipment, net	473,744	295,044
Equity method investments	255,323	246,984
Operating lease right-of-use assets	18,884	3,745
Goodwill	12,203	12,203
Marketing Contract Intangible, net	127,393	130,999
Right-of-way	35,698	15,597
Other non-current assets	6,995	6,305
Total assets	973,737	744,447
Current liabilities:
Accounts payable	1,795	12,471
Accounts payable to related parties	0	8,898
Interest Payable	2,596	2,572
Excise and other taxes payable	4,330	3,941
Current portion of operating lease liabilities	5,793	1,435
Accrued expenses and other current liabilities	3,461	5,765
Total current liabilities	17,975	35,082
Non-current liabilities:
Long-term debt	995,200	833,110
Asset retirement obligations	5,802	5,588
Deferred tax liabilities	1,158	215
Operating lease liabilities, net of current portion	13,091	2,310
Other non-current liabilities	18,826	19,261
Total non-current liabilities	1,034,077	860,484
Equity (Deficit):
Total equity (deficit)	(78,315)	(151,119)
Total liabilities and deficit	973,737	744,447
Common unitholders | Common unitholders - public; 8,687,371 units issued and outstanding at June 30, 2020 (9,131,579 at December 31, 2019)
Equity (Deficit):
Total equity (deficit)	160,870	164,436
Common unitholders | Common unitholders - Delek Holdings; 20,745,868 units issued and outstanding at June 30, 2020 (15,294,046 at December 31, 2019)
Equity (Deficit):
Total equity (deficit)	(235,961)	(310,513)
General partner - 600,678 units issued and outstanding at June 30, 2020 (498,482 at December 31, 2019)
Equity (Deficit):
Total equity (deficit)	$ (3,224)	$ (5,042)

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Condensed Consolidated Balance Sheets (Unaudited) (Parentheticals) - shares	Jun. 30, 2020	Dec. 31, 2019
General partner - Delek, units issued	600,678	498,482
Common unitholders - public
Common unitholders, units issued	8,687,371	9,131,579
Common unitholders - Delek
Common unitholders, units issued	20,745,868	15,294,046

XML

Condensed Consolidated Statements of Income and Comprehensive Income (Unaudited) - USD ($) $ in Thousands		3 Months Ended		6 Months Ended
		Jun. 30, 2020	Jun. 30, 2019	Jun. 30, 2020	Jun. 30, 2019
Net revenues:
Affiliates (1)	[1]	$ 87,629	$ 61,918	$ 194,328	$ 124,883
Third party		30,008	93,424	86,710	182,942
Net revenues		117,637	155,342	281,038	307,825
Cost of sales:
Cost of materials and other		43,892	93,854	145,185	190,119
Operating expenses (excluding depreciation and amortization presented below)		11,623	16,521	25,577	31,828
Depreciation and amortization		8,223	6,188	14,026	12,312
Total cost of sales		63,738	116,563	184,788	234,259
Operating expenses (excluding depreciation and amortization presented below)		826	806	1,616	1,557
General and administrative expenses		4,721	5,293	10,851	9,766
Depreciation and amortization		471	451	967	901
Other operating income, net		0	(27)	(107)	(25)
Total operating costs and expenses		69,756	123,086	198,115	246,458
Operating income		47,881	32,256	82,923	61,367
Interest expense, net		10,670	11,354	22,494	22,655
Income from equity method investments		(6,462)	(4,515)	(12,015)	(6,466)
Other (income) expense, net		(2)	461	(2)	461
Total non-operating expenses, net		4,206	7,300	10,477	16,650
Income before income tax expense		43,675	24,956	72,446	44,717
Income tax (benefit) expense		(740)	71	235	136
Net income attributable to partners		44,415	24,885	72,211	44,581
Comprehensive income attributable to partners		44,415	24,885	72,211	44,581
Less: General partner's interest in net income, including incentive distribution rights		9,647	8,079	18,724	15,348
Limited partners' interest in net income		$ 34,768	$ 16,806	$ 53,487	$ 29,233
Weighted average limited partner units outstanding:
Cash distributions per limited partner unit (in dollars per share)		$ 0.900	$ 0.850	$ 1.790	$ 1.670
Common Units
Net income per limited partner unit:
Common units - (basic) (in dollars per share)		1.18	0.69	1.98	1.20
Common units - (diluted) (in dollars per share)		$ 1.18	$ 0.69	$ 1.98	$ 1.20
Weighted average limited partner units outstanding:
Common units - (basic) (in shares)		29,427,298	24,409,359	26,953,934	24,408,270
Common units - (diluted) (in shares)		29,430,555	24,414,343	26,956,523	24,414,077

[1] See Note 3 for a description of our material affiliate revenue transactions.

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Consolidated Statement of Partners Equity (Deficit) Statement - USD ($) $ in Thousands	Total		General Partner	Common unitholders - public Limited Partner	Common unitholders - Delek Limited Partner	General Partnership [Member]
Beginning balance at Dec. 31, 2018	$ (134,823)		$ (6,486)	$ 171,023	$ (299,360)
Cash distributions	(54,357)	[1]	14,603	14,825	24,929
General partner units issued to maintain 2% interest	8		8
Net income attributable to partners	44,581		15,349	10,943	18,289
Other	291		5	113	173
Ending balance at Jun. 30, 2019	(144,300)		(5,727)	167,254	(305,827)
General partner's ownership interest (as percent)						2.00%
Beginning balance at Mar. 31, 2019	(141,905)		(6,391)	168,388	(303,902)
Cash distributions	(27,438)	[1]	(7,424)	(7,473)	(12,541)
General partner units issued to maintain 2% interest	6		6
Net income attributable to partners	24,885		8,079	6,279	10,527
Other	152		3	60	89
Ending balance at Jun. 30, 2019	(144,300)		(5,727)	167,254	(305,827)
General partner's ownership interest (as percent)						2.00%
Beginning balance at Dec. 31, 2019	(151,119)		(5,042)	164,436	(310,513)
Cash distributions	(61,540)	[1]	(18,156)	(15,835)	(27,549)
General partner units issued to maintain 2% interest	10		10
Net income attributable to partners	72,211		18,724	16,914	36,573
Distribution to Delek Holdings for Trucking Assets Acquisition	(47,558)		(951)		(46,607)
Delek Holdings Unit purchases				(4,979)	4,979
Issuance of units in connection with the Big Spring Gathering Assets Acquisition	109,514		2,190		107,324
Other	167		1	334	(168)
Ending balance at Jun. 30, 2020	(78,315)		(3,224)	160,870	(235,961)
General partner's ownership interest (as percent)						2.00%
Beginning balance at Mar. 31, 2020	(44,396)		(2,785)	158,332	(199,943)
Cash distributions	(30,906)		(9,139)	(7,753)	(14,014)
General partner units issued to maintain 2% interest	4		4
Net income attributable to partners	44,415		9,647	10,262	24,506
Distribution to Delek Holdings for Trucking Assets Acquisition	(47,558)		(951)		(46,607)
Other	126		0	29	97
Ending balance at Jun. 30, 2020	$ (78,315)		$ (3,224)	$ 160,870	$ (235,961)
General partner's ownership interest (as percent)						2.00%

[1] Cash distributions include a nominal amount related to distribution equivalents on vested phantom units.

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Condensed Consolidated Statements of Cash Flows ( Unaudited) - USD ($) $ in Thousands	6 Months Ended
	Jun. 30, 2020	Jun. 30, 2019
Cash flows from operating activities:
Net income	$ 72,211	$ 44,581
Adjustments to reconcile net income to net cash provided by operating activities:
Depreciation and amortization	14,993	13,213
Non-cash lease expense	640	1,409
Amortization of customer contract intangible assets	3,605	3,605
Amortization of deferred revenue	(945)	(803)
Amortization of deferred financing costs and debt discount	1,172	1,480
Accretion of asset retirement obligations	214	198
Income from equity method investments	(12,015)	(6,466)
Dividends from equity method investments	12,500	3,833
Gain on asset disposals	(107)	(25)
Deferred Income Tax Expense (Benefit)	943	(3)
Other non-cash adjustments	168	290
Changes in assets and liabilities:
Accounts receivable	(2,703)	(5,266)
Inventories and other current assets	12,182	1,311
Accounts payable and other current liabilities	(11,890)	(8,928)
Accounts receivable/payable to related parties	(17,653)	1,803
Non-current assets and liabilities, net	(934)	1,591
Net cash provided by operating activities	72,381	51,823
Cash flows from investing activities:
Asset acquisitions net of assumed liabilities	100,527	0
Purchases of property, plant and equipment	(4,997)	(2,437)
Proceeds from sales of property, plant and equipment	107	75
Distributions from equity method investments	1,690	804
Equity method investment contributions	(10,515)	(134,998)
Net cash used in investing activities	(114,242)	(136,556)
Cash flows from financing activities:
Proceeds from issuance of additional units to maintain 2% General Partner interest	10	8
Distributions to general partner	(18,156)	(14,603)
Distributions to common unitholders - public	(15,835)	(14,825)
Distributions to common unitholders - Delek Holdings	(27,549)	(24,929)
Distribution to Delek Holdings for Trucking Assets Acquisition	(47,558)	0
Proceeds from revolving credit facility	413,000	364,300
Payments on revolving credit facility	(251,400)	(224,300)
Net cash provided by financing activities	52,512	85,651
Net increase in cash and cash equivalents	10,651	918
Cash and cash equivalents at the beginning of the period	5,545	4,522
Cash and cash equivalents at the end of the period	16,196	5,440
Cash paid during the period for:
Interest	21,298	21,068
Income taxes	26	141
Non-cash investing activities:
Decrease in accrued capital expenditures	(1,317)	(191)
Equity issuance to Delek Holdings unitholders in connection with Big Spring Gathering Assets Acquisition	109,514
Non-cash financing activities:
Non-cash lease liability arising from recognition of right of use assets upon adoption of ASU 2016-02	$ 0	$ 20,202

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Condensed Consolidated Statements of Cash Flows (Unaudited) (Parenthetical)	3 Months Ended		6 Months Ended
	Jun. 30, 2020	Jun. 30, 2019	Jun. 30, 2020	Jun. 30, 2019
General Partnership [Member]
General partner's ownership interest (as percent)	2.00%	2.00%	2.00%	2.00%

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Organization and Basis of Presentation

6 Months Ended

Jun. 30, 2020

Organization, Consolidation and Presentation of Financial Statements [Abstract]

Organization and Basis of Presentation

Organization and Basis of Presentation

As used in this report, the terms "Delek Logistics Partners, LP," the "Partnership," "we," "us," or "our" may refer to Delek Logistics Partners, LP, one or more of its consolidated subsidiaries or all of them taken as a whole.

The Partnership is a Delaware limited partnership formed in April 2012 by Delek US Holdings, Inc. ("Delek Holdings") and its subsidiary Delek Logistics GP, LLC, our general partner (our "general partner").

Effective May 1, 2020, the Partnership, through its wholly-owned subsidiary DKL Transportation, LLC, acquired Delek Trucking, LLC consisting of certain leased and owned tractors and trailers and related assets (the "Trucking Assets") from Delek Holdings, such transaction the "Trucking Assets Acquisition." See Note 2 for further information.

In addition, effective March 31, 2020, the Partnership, through its wholly-owned subsidiary DKL Permian Gathering, LLC, acquired from Delek Holdings a crude oil gathering system located in Howard, Borden and Martin Counties, Texas (the "Big Spring Gathering System"), and certain related assets, such transaction the "Big Spring Gathering Assets Acquisition." See Note 2 for further information.

Certain information and footnote disclosures normally included in annual financial statements prepared in accordance with U.S. generally accepted accounting principles ("GAAP") have been condensed or omitted, although management believes that the disclosures herein are adequate to make the financial information presented not misleading. Our unaudited condensed consolidated financial statements have been prepared in conformity with U.S. GAAP applied on a consistent basis with those of the annual audited financial statements included in our Annual Report on Form 10-K for the year ended December 31, 2019 (our "Annual Report on Form 10-K"), filed with the Securities and Exchange Commission (the "SEC") on February 27, 2020 and in accordance with the rules and regulations of the SEC. These unaudited condensed consolidated financial statements should be read in conjunction with the audited consolidated financial statements and notes thereto for the year ended December 31, 2019 included in our Annual Report on Form 10-K.

All adjustments necessary for a fair presentation of the financial position and the results of operations for the interim periods presented have been included. All intercompany accounts and transactions have been eliminated. Such intercompany transactions do not include those with Delek Holdings' or our general partner, which are presented as related parties in these accompanying condensed consolidated financial statements. All adjustments are of a normal, recurring nature. Operating results for the interim period should not be viewed as representative of results that may be expected for any future interim period or for the full year.

Reclassifications

Certain immaterial reclassifications have been made to prior period presentation in order to conform to the current period presentation.

Risks and Uncertainties Arising from the COVID-19 Pandemic

The recent outbreak of COVID-19 and its development into a pandemic in March 2020 (the "COVID-19 Pandemic") has resulted in significant economic disruption globally, including in the U.S. and specific geographic areas where we operate. Actions taken by various governmental authorities, individuals and companies around the world to prevent the spread of COVID-19 through social distancing have restricted travel, many business operations, public gatherings and the overall level of individual movement and in-person interaction across the globe. This has in turn significantly reduced global economic activity and resulted in airlines dramatically cutting back on flights and a decrease in motor vehicle use at a time when seasonal driving patterns typically result in an increase of consumer demand for gasoline. As a result, there has also been a decline in the demand for, and thus also the market prices of, crude oil and certain products, particularly refined petroleum products that we receive revenue for the transportation and storage services we provide. In addition, the decline in demand impacted the sales volumes in our wholesale marketing business. In April and June 2020, an agreement was reached to cut oil production between the members of the Organization of Petroleum Exporting Countries ("OPEC") and other leading oil producing countries (together with OPEC, “OPEC+”), as part of the efforts to resolve the oil production disputes that significantly affected crude oil prices beginning in the first quarter of 2020 and to provide stability in the oil markets. While OPEC+ have reached an agreement to cut oil production, there is uncertainty about the duration of the COVID-19 Pandemic which caused storage constraints, in the early part of the second quarter of 2020, in the United States resulting from over-supply of produced oil. Therefore, downward pressure on commodity prices has remained and could continue for the foreseeable future.

Uncertainties related to the impact of the COVID-19 Pandemic and other events exist that could impact our future results of operations and financial position, the nature of which and the extent to which are currently unknown. To the extent these uncertainties have been identified and are believed to have an impact on our current period results of operations or financial position based on the requirements for assessing such financial statement impact under GAAP, we have considered them in the preparation of our unaudited financial statements as of and for the three and six months ended June 30, 2020. The application of accounting policies impacted by such considerations include (but are not necessarily limited to) the following:

• The interim evaluation of indefinite-lived intangibles and goodwill for potential impairment, where indicators exist, as defined by GAAP;

• The interim evaluation of long-lived assets for potential impairment, where indicators exist, as defined by GAAP;

• The interim evaluation of joint ventures for potential impairment, where indicators exist, as defined by GAAP;

• The evaluation of inventory valuation allowances that may be warranted under the lower of cost or net realizable value analysis, pursuant to GAAP;

• The consideration of debt modifications and or covenant requirements, as applicable;

• The evaluation of commitments and contingencies, including changes in concentrations, as applicable;

• The interim evaluation of the risk of credit losses and the determination of our allowance for credit losses, pursuant to GAAP; and

• The interim evaluation of our ability to continue as a going concern.

New Accounting Pronouncements Adopted During 2020

ASU 2018-13, Fair Value Measurement - Changes to the Disclosure Requirements for Fair Value Measurement

In August 2018, the Financial Accounting Standards Board (the "FASB") issued guidance related to disclosure requirements for fair value measurements. The pronouncement eliminates, modifies and adds disclosure requirements for fair value measurements. The pronouncement is effective for fiscal years, and for interim periods within those fiscal years, beginning after December 15, 2019. We adopted this guidance on January 1, 2020 and the adoption did not have a material impact on our business, financial condition or results of operations.

ASU 2016-13, Financial Instruments - Measurement of Credit Losses on Financial Instruments

In June 2016, the FASB issued guidance requiring the measurement of all expected credit losses for financial assets held at the reporting date based on historical experience, current conditions, and reasonable and supportable forecasts. Organizations will now use forward-looking information to better inform their credit loss estimates. This guidance is effective for interim and annual periods beginning after December 15, 2019. We adopted this guidance on January 1, 2020 using the modified retrospective approach as of the adoption date. The adoption did not have a material impact on the Partnership’s operating results, financial position or disclosures.

ASU 2018-15, Intangible - Customer's Accounting for Implementation Costs Incurred in a Cloud Computing Arrangement That Is a Service Contract

In August 2018, the FASB issued guidance related to customers' accounting for implementation costs incurred in a cloud computing arrangement that is considered a service contract. This pronouncement aligns the requirements for capitalizing implementation costs in such arrangements with the requirements for capitalizing implementation costs incurred to develop or obtain internal-use software. This pronouncement is effective for fiscal years, and for interim periods within those fiscal years, beginning after December 15, 2019. Entities can choose to adopt the new guidance prospectively or retrospectively. We adopted this guidance on January 1, 2020 and elected the prospective method. The adoption did not have a material impact on our business, financial condition or results of operations.

Accounting Pronouncements Not Yet Adopted

ASU 2019-12, Simplifying the Accounting for Income Taxes

In December 2019, the FASB issued guidance intended to simplify various aspects related to accounting for income taxes, eliminate certain exceptions within ASC 740 and clarify certain aspects of the current guidance to promote consistency among reporting entities. The pronouncement is effective for fiscal years, and for interim periods within those fiscal years, beginning after December 2020, with early adoption permitted. We expect to adopt this guidance on the effective date and are currently evaluating the impact that adopting this new guidance will have on our business, financial condition and results of operations.

ASU 2020-01, Investments—Equity Securities (Topic 321), Investments—Equity Method and Joint Ventures (Topic 323), and Derivatives and Hedging (Topic 815)—Clarifying the Interactions between Topic 321, Topic 323, and Topic 815

In January 2020, the FASB issued ASU 2020-01 which is intended to clarify interactions between the guidance to account for certain equity securities under Topics 321, 323 and 815, and improve current GAAP by reducing diversity in practice and increasing comparability of accounting. The pronouncement is effective for fiscal years and interim periods within those fiscal years beginning after December 15, 2020, and early adoption is permitted. We do not expect that the adoption of this ASU on its effective date will have a material impact on our business, financial condition or results of operations.

ASU 2020-04, Facilitation of the Effects of Reference Rate Reform on Financial Reporting (Topic 848)

In March 2020, the FASB issued an amendment which is intended to provide temporary optional expedients and exceptions to GAAP guidance on contracts, hedge accounting and other transactions affected by the expected market transition from the London Interbank Offered Rate (LIBOR) and other interbank rates. This guidance is effective for all entities any time beginning on March 12, 2020 through December 31, 2022 and may be applied from the beginning of an interim period that includes the issuance date of the ASU. The Partnership is currently evaluating the impact this guidance may have on its consolidated financial statements and related disclosures.

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Acquisitions

6 Months Ended

Jun. 30, 2020

Acquisitions [Abstract]

Acquisitions

Acquisitions

Trucking Assets Acquisition

Effective May 1, 2020, the Partnership, through its wholly-owned subsidiary DKL Transportation, LLC, acquired Delek Trucking, LLC consisting of certain leased and owned tractors and trailers and related assets from Delek Holdings. The total consideration is subject to certain post-closing adjustments and was approximately $48.0 million in cash. We financed this acquisition with a combination of cash on hand and borrowings under the DKL Credit Facility (as defined in Note 7 ).

The Trucking Assets are recorded in our pipelines and transportation segment and include approximately 150 trucks and trailers, which are primarily leased or owned, respectively.

In connection with the closing of the transaction, Delek Holdings, the Partnership and various of their respective subsidiaries entered into a Throughput and Deficiency Agreement (the “Trucking Assets T&D Agreement”). Under the Trucking Assets T&D Agreement, the Partnership will gather, coordinate pickup of, transport and deliver petroleum products for Delek Holdings, as well as provide ancillary services as requested. The transaction and related agreements were approved by the Conflicts Committee of the Partnership's general partner, which is comprised solely of independent directors. See Note 3 for more detailed descriptions of these agreements.

The Trucking Assets Acquisition was considered a transaction between entities under common control. Accordingly, the Trucking Assets were recorded at amounts based on Delek Holdings' historical carrying value as of the acquisition date. The carrying value of the Trucking Assets as of the acquisition date was $13.3 million, consisting of $0.5 million of owned assets and $12.8 million of Right of Use asset for leased assets and equivalent operating lease liability. Prior periods have not been recast as these assets do not constitute a business in accordance with Accounting Standard Update 2017-01, Clarifying the Definition of a Business ("ASU 2017-01"). We incurred approximately $0.3 million of acquisition costs related to the Trucking Assets Acquisition.

Big Spring Gathering Assets Acquisition

Effective March 31, 2020, the Partnership, through its wholly-owned subsidiary DKL Permian Gathering, LLC, acquired the Big Spring Gathering Assets from Delek Holdings, located in Howard, Borden and Martin Counties, Texas. The total consideration was subject to certain post-closing adjustments and was comprised of $100.0 million in cash and 5.0 million common units representing limited partnership interest in us. We financed the cash component of this acquisition with borrowings from the DKL Credit Facility.

The Big Spring Gathering Assets are recorded in our pipelines and transportation segment and include:

• Crude oil pipelines;

• Approximately 200 miles of gathering systems (Bayswater Battery, Guidon, Tiger Battery, SM Energy Vizzini);

• Approximately 65 Tank battery connections;

• Terminals (total storage of approximately 650,000 bbls); and

• Applicable rights-of-way.

In connection with the closing of the transaction, Delek Holdings, the Partnership and various of their respective subsidiaries entered into a Throughput and Deficiency Agreement (the “Big Spring T&D Agreement”). Under the Big Spring T&D Agreement, the Partnership will operate and maintain the Big Spring Gathering Assets connecting Delek Holdings' interests in and to certain crude oil with the Partnership's Big Spring, Texas terminal and provide gathering, transportation and other related services with respect to any and all crude produced from shipper’s and certain other producers’ respective interests for delivery at the Big Spring Terminal. The transaction and related agreements were approved by the Conflicts Committee of the Partnership's general partner, which is comprised solely of independent directors. See Note 3 for more detailed descriptions of these agreements.

The Big Spring Gathering Assets Acquisition was considered a transaction between entities under common control. Accordingly, the Big Spring Gathering Assets were recorded at amounts based on Delek Holdings' historical carrying value as of the acquisition date. The carrying value of the Big Spring Gathering Assets as of the acquisition date was $209.5 million. Pursuant to the common control guidance, the 5.0 million units issued (which had a closing market price of $9.10 per unit on the transaction date) were recorded in equity at $109.5 million, representing the net carrying value of the Big Spring Gathering Assets purchased of $209.5 million less the $100.0 million cash consideration. Prior periods have not been recast as these assets do not constitute a business in accordance with ASU 2017-01. We incurred approximately $0.7 million of acquisition costs related to the Big Spring Gathering Assets Acquisition.

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Related Party Transactions

6 Months Ended

Jun. 30, 2020

Related Party Transactions [Abstract]

Related Party Transactions

Related Party Transactions

Commercial Agreements

The Partnership has a number of long-term, fee-based commercial agreements with Delek Holdings under which we provide various services, including crude oil gathering and crude oil, intermediate and refined products transportation and storage services, and marketing, terminalling

and offloading services to Delek Holdings. Most of these agreements have an initial term ranging from five to ten years, which may be extended for various renewal terms at the option of Delek Holdings. In November 2017, Delek Holdings opted to renew certain of these agreements for subsequent five-year terms expiring in November 2022. In the case of our marketing agreement with Delek Holdings with respect to the Tyler Refinery, the initial term has been extended through 2026. The current term of certain of our agreements with Delek Holdings were required to be further extended pursuant to the amended and restated DKL Credit Facility (as defined in Note 7), which extensions were effective in the fourth quarter of 2018. The fees under each agreement are payable to us monthly by Delek Holdings or certain third parties to whom Delek Holdings has assigned certain of its rights and are generally subject to increase or decrease on July 1 of each year, by the amount of any change in various inflation-based indices, including the Federal Energy Regulatory Commission ("FERC") oil pipeline index or various iterations of the consumer price index ("CPI") and the producer price index ("PPI"); provided, however, that in no event will the fees be adjusted below the amount initially set forth in the applicable agreement. In most circumstances, if Delek Holdings or the applicable third party assignee fails to meet or exceed the minimum volume or throughput commitment during any calendar quarter, Delek Holdings, and not any third party assignee, will be required to make a quarterly shortfall payment to us equal to the volume of the shortfall multiplied by the applicable fee, subject to certain exceptions as specified in the applicable agreement. Carry-over of any volumes or revenue in excess of such commitment to any subsequent quarter is not permitted.

Under each of these agreements, we are required to maintain the capabilities of our pipelines and terminals, such that Delek Holdings may throughput and/or store, as the case may be, specified volumes of crude oil, intermediate and refined products. To the extent that Delek Holdings is prevented by our failure to maintain such capacities from throughputting or storing such specified volumes for more than 30 days per year, Delek Holdings' minimum throughput commitment will be reduced proportionately and prorated for the portion of the quarter during which the specified throughput capacity was unavailable, and/or the storage fee will be reduced, prorated for the portion of the month during which the specified storage capacity was unavailable. Such reduction would occur even if actual throughput or storage amounts were below the minimum volume commitment levels.

See our Annual Report on Form 10-K for a more complete description of our material commercial agreements and other agreements with Delek Holdings.

Effective May 1, 2020, we entered into the Trucking Assets T&D Agreement with Delek Holdings. Under the Trucking Assets T&D Agreement, we will operate a truck based operation that transports various products throughout Arkansas, Oklahoma and Texas and gather, coordinate the pickup of, transport and deliver such products, as well as provide ancillary services as requested. Pursuant to the Trucking Assets T&D Agreement, Delek Holdings has committed to minimum revenue of $39.0 million per year. The initial term of the Trucking Assets T&D Agreement is 10 years, and thereafter Delek Holdings has the option to extend the Trucking Assets T&D Agreement for two additional two-year terms.

Effective March 31, 2020, we entered into the Big Spring T&D Agreement with Delek Holdings. Under the Big Spring T&D Agreement, we will operate and maintain the Big Spring Gathering Assets connecting Delek Holdings' interests in and to certain crude oil with the Partnership's Big Spring, Texas terminal and provide gathering, transportation and other related services with respect to any and all crude produced from Delek Holdings' and certain other producers’ respective interests for delivery at the Big Spring Terminal. Pursuant to the Big Spring T&D Agreement, Delek Holdings has committed to ship 120,000 bpd on the Big Spring Gathering Assets and 50,000 bpd to a redelivery point in Howard County, Texas (collectively, the Minimum Volume Commitments “MVCs”). Pursuant to the Big Spring T&D Agreement, we also agreed to spend up to $33.8 million over three years to connect additional receipt points and, in connection with such expenditures, the MVCs will increase to provide the Partnership a 12.5% return on the actual costs directly incurred and paid by the Partnership pursuant to the terms set forth in the Big Spring T&D Agreement. The initial term of the Big Spring T&D Agreement is 10 years, and thereafter Delek Holdings has the option to extend the Big Spring T&D Agreement for two additional five-year terms. Following the initial term and any such extensions, the Big Spring T&D Agreement will continue on a year-to-year basis unless terminated by either party upon 90 days’ written notice.

Other Agreements with Delek Holdings

In addition to the commercial agreements described above, the Partnership has entered into the following agreements with Delek Holdings:

Omnibus Agreement

The Partnership entered into an omnibus agreement with Delek Holdings, our general partner, Delek Logistics Operating, LLC, Lion Oil Company and certain of the Partnership's and Delek Holdings' other subsidiaries on November 7, 2012, which has been amended from time to time in connection with acquisitions from Delek Holdings (collectively, as amended, the "Omnibus Agreement"). The Omnibus Agreement governs the provision of certain operational services and reimbursement obligations, among other matters, between the Partnership and Delek Holdings, and obligates us to pay an annual fee of $4.1 million to Delek Holdings for its provision of centralized corporate services to the Partnership.

Pursuant to the terms of the Omnibus Agreement, we were reimbursed by Delek Holdings for certain capital expenditures of a nominal amount and $0.6 million during the three and six months ended June 30, 2020, respectively, and $0.7 million and $1.5 million during the three and six months ended June 30, 2019, respectively. These amounts are recorded in other long-term liabilities and are amortized to revenue over the life of the underlying revenue agreement corresponding to the asset. Additionally, we are reimbursed or indemnified, as the case may

be, for costs incurred in excess of certain amounts related to certain asset failures, pursuant to the terms of the Omnibus Agreement. As of June 30, 2020, we have recorded a nominal receivable from related parties for these matters for which we expect to be reimbursed. These reimbursements are recorded as reductions to operating expense. We were reimbursed a nominal amount and $0.1 million for these matters during the three and six months ended June 30, 2020, respectively, and $2.2 million and $5.7 million during the three and six months ended June 30, 2019, respectively.

Other Transactions

The Partnership manages a long-term capital project on behalf of Delek Holdings pursuant to a construction management and operating agreement (the "DPG Management Agreement") for the construction of a 250-mile gathering system in the Permian Basin. The majority of the gathering system has been constructed, however, additional costs pertaining to a pipeline connection that was not contributed to the Partnership continue to be incurred and are still subject to the terms of the DPG Management Agreement. The Partnership is also considered the operator for the project and is responsible for oversight of the project design, procurement and construction of project segments and provides other related services. Pursuant to the terms of the DPG Management Agreement, the Partnership receives a monthly operating services fee and a construction services fee, which includes the Partnership's direct costs of managing the project plus an additional percentage fee of the construction costs of each project segment. The agreement extends through December 2022. Total fees paid to the Partnership were $0.4 million and $1.2 million for the three and six months ended June 30, 2020, respectively, and $1.0 million and $2.8 million for the three and six months ended June 30, 2019, respectively, which are recorded in affiliate revenue in our condensed consolidated statements of income. Additionally, the Partnership incurs the costs in connection with the construction of the assets and is subsequently reimbursed by Delek Holdings. Amounts reimbursable by Delek Holdings are recorded in accounts receivable from related parties.

Unregistered Sale of Equity Securities

In connection with the Partnership's issuance of the new units ("Additional Units") under the Big Spring Gathering Assets Acquisition and in accordance with the Partnership's First Amended and Restated Agreement of Limited Partnership, as amended (the "Partnership Agreement"), the Partnership issued general partner units to the general partner in an amount necessary to maintain its 2% general partner interest (as defined in the "Partnership Agreement"). The sale and issuance of the Additional Units and such general partner units in connection with the Big Spring Gathering Assets Acquisition is exempt from registration under Section 4(a)(2) of the Securities Act of 1933, as amended.

Additionally, in March 2020, Delek Marketing & Supply, LLC ("Delek Marketing") repurchased 451,822 units from an investor pursuant to a Common Unit Purchase Agreement ("Purchase Agreement") between Delek Marketing and such investor. The purchase price of the units amounted to approximately $5.0 million. As a result of the transaction, Delek Holdings' ownership in our outstanding limited partner units increased to 64.5% from 62.6%. Delek Holdings' ownership in our common limited partner units was further increased to 70.5% as a result of the issuance of 5.0 million Additional Units in connection with the Big Spring Gathering Assets Acquisition described above.

Amendment No. 2 to the First Amended and Restated Agreement of Limited Partnership of Delek Logistics Partners, LP

On March 31, 2020, in connection with the completion of the Big Spring Gathering Assets Acquisition, the Board of the general partner adopted Amendment No. 2 (“Amendment No. 2”) to the Partnership Agreement, effective upon adoption. Amendment No. 2 amends the Partnership Agreement to provide for a waiver of distributions in respect of the Incentive Distribution Rights ("IDRs") for General Partner Additional Units ("GP Additional Units") associated with the 5.0 million Additional Units for at least two years, through at least the distribution for the quarter ending March 31, 2022 (the “IDR Waiver”). The IDR Waiver essentially reduces the distribution made to the holders of the IDRs during this period, as the holders would not receive a share of the distribution made on the GP Additional Units. The IDR Waiver will automatically and permanently expire if, following the payment of a distribution in respect of a quarter ending on or after March 31, 2022, Delek Logistics has generated distributable cash flow in the most recent four consecutive quarters that, in the aggregate, would have resulted in total distribution coverage (on a pro forma basis without giving effect to the IDR Waiver) of at least 110% or 1.1x over such period. The IDR Waiver remains effective if this condition is not met. Following the termination of the IDR Waiver, the holders of the IDRs will receive distributions on all units, including the Additional Units.

In addition, in connection with any sale or exchange of the IDRs to or with the Partnership, the IDRs shall be treated as if such waiver had not and never will expire, regardless of whether such waiver has actually expired. An additional waiver letter was signed that waived all of the distributions for the first quarter of 2020 on the Additional Units with respect to the base distribution and the IDRs.

Pursuant to Amendment Number 2, the IDR majority unitholders have the right, subject to certain conditions following the termination of the IDR Waiver, to make an election (the “IDR Reset Election”) to cause the minimum quarterly distribution and the target distributions to be reset ("the IDR Reset"). In connection with the IDR Reset, the IDR Unitholders will become entitled to receive their respective proportionate share of Common Units (the “IDR Reset Common Units”) derived by dividing (i) the average amount of IDR cash distributions made by the Partnership by (ii) the average of the cash distributions made by the Partnership in respect of each Common Unit, and in each case for the two full Quarters immediately before the Reset Notice.

Summary of Transactions

Revenues from affiliates consist primarily of revenues from gathering, transportation, storage, offloading, Renewable Identification Numbers ("RINs"), wholesale marketing and products terminalling services provided primarily to Delek Holdings based on regulated tariff rates or contractually based fees and product sales. Affiliate operating expenses are primarily comprised of amounts we reimburse Delek Holdings, or our general partner, as the case may be, for the services provided to us under the Partnership Agreement. These expenses could also include reimbursement and indemnification amounts from Delek Holdings, as provided under the Omnibus Agreement. Additionally, the Partnership is required to reimburse Delek Holdings for direct or allocated costs and expenses incurred by Delek Holdings on behalf of the Partnership and for charges Delek Holdings incurred for the management and operation of our logistics assets, including an annual fee for various centralized corporate services, which are included in general and administrative expenses. In addition to these transactions, we purchase refined products and bulk biofuels from Delek Holdings, the costs of which are included in cost of materials and other.

A summary of revenue, purchases from affiliates and expense transactions with Delek Holdings and its affiliates are as follows (in thousands):

	Three Months Ended June 30,				Six Months Ended June 30,
	2020		2019		2020		2019
Revenues	$	87,629	$	61,918	$	194,328	$	124,883
Purchases from Affiliates	$	29,730	$	73,213	$	110,493	$	152,647
Operating and maintenance expenses	$	10,310	$	10,590	$	23,067	$	20,515
General and administrative expenses	$	2,703	$	1,748	$	6,072	$	3,118

Quarterly Cash Distributions

Our common and general partner unitholders and the holders of IDRs are entitled to receive quarterly distributions of available cash as it is determined by the board of directors of our general partner in accordance with the terms and provisions of our Partnership Agreement. In February and May 2020, we paid quarterly cash distributions of $30.6 million and $30.9 million, respectively, of which $22.6 million and $23.2 million, respectively, were paid to Delek Holdings and our general partner. In February and May 2019, we paid quarterly cash distributions of $26.9 million and $27.4 million, respectively, of which $19.6 million and $20.0 million were paid to Delek Holdings and our general partner. On July 24, 2020, our general partner's board of directors declared a quarterly cash distribution totaling $36.0 million, based on the available cash as of the date of determination for the end of the second quarter of 2020, payable on August 12, 2020, of which $28.2 million is expected to be paid to Delek Holdings and our general partner, including the distribution as holder of the IDRs described in Note 8.

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Revenues (Notes)

6 Months Ended

Jun. 30, 2020

Revenue from Contract with Customer [Abstract]

Revenues

Revenues

We generate revenue by charging fees for gathering, transporting, offloading and storing crude oil; for storing intermediate products and feed stocks; for distributing, transporting and storing refined products; for marketing refined products output of Delek Holdings' Tyler and Big Spring refineries; and for wholesale marketing in the West Texas area. A significant portion of our revenue is derived from long-term commercial agreements with Delek Holdings, which provide for annual fee adjustments for increases or decreases in the CPI, PPI or FERC index (refer to Note 3 for a more detailed description of these agreements). In addition to the services we provide to Delek Holdings, we also generate substantial revenue from crude oil, intermediate and refined products transportation services for, and terminalling and marketing services to, third parties primarily in Texas, New Mexico, Tennessee and Arkansas. Certain of these services are provided pursuant to contractual agreements with third parties. Payment terms require customers to pay shortly after delivery and do not contain significant financing components.

The majority of our commercial agreements with Delek Holdings meet the definition of a lease because: (1) performance of the contracts is dependent on specified property, plant or equipment and (2) it is remote that one or more parties other than Delek Holdings will take more than a minor amount of the output associated with the specified property, plant or equipment. As part of our adoption of Accounting Standards Codification ("ASC") 842, Leases ("ASC 842"), we applied the permitted practical expedient to not separate lease and non-lease components under the predominance principle to designated asset classes associated with the provision of logistics services. We have determined that the predominant component of the related agreements currently in effect is the lease component. Therefore, the combined component is accounted for under the applicable lease accounting guidance. Of our $473.7 million net property, plant, and equipment balance as of June 30, 2020, $358.5 million is subject to operating leases under our commercial agreements. These agreements do not include options for the lessee to purchase our leasing equipment, nor do they include any material residual value guarantees or material restrictive covenants.

The following table represents a disaggregation of revenue for each reportable segment for the periods indicated (in thousands):

	Three Months Ended June 30, 2020
	Pipelines and Transportation		Wholesale Marketing and Terminalling		Consolidated
Service Revenue - Third Party	$	2,032	$	204	$	2,236
Product Revenue - Third Party	—		27,772		27,772
Product Revenue - Affiliate	—		6,720		6,720
Lease Revenue - Affiliate (1)	61,394		19,515		80,909
Total Revenue	$	63,426	$	54,211	$	117,637

⁽¹⁾ Net of $1.8 million of amortization expense for the three months ended June 30, 2020, related to a customer contract intangible asset recorded in the wholesale marketing and terminalling segment.

	Three Months Ended June 30, 2019
	Pipelines and Transportation		Wholesale Marketing and Terminalling		Consolidated
Service Revenue - Third Party	$	7,477	$	184	$	7,661
Product Revenue - Third Party	—		85,763		85,763
Product Revenue - Affiliate	—		7,187		7,187
Lease Revenue - Affiliate (1)	36,731		18,000		54,731
Total Revenue	$	44,208	$	111,134	$	155,342

⁽¹⁾ Net of $1.8 million of amortization expense for the three months ended June 30, 2019, related to a customer contract intangible asset recorded in the wholesale marketing and terminalling segment.

	Six Months Ended June 30, 2020
	Pipelines and Transportation		Wholesale Marketing and Terminalling		Consolidated
Service Revenue - Third Party	$	11,496	$	396	$	11,892
Product Revenue - Third Party	—		74,818		74,818
Product Revenue - Affiliate	—		58,222		58,222
Lease Revenue - Affiliate (1)	99,897		36,209		136,106
Total Revenue	$	111,393	$	169,645	$	281,038

⁽¹⁾ Net of $3.6 million of amortization expense for the six months ended June 30, 2020, related to a customer contract intangible asset recorded in the wholesale marketing and terminalling segment.

	Six Months Ended June 30, 2019
	Pipelines and Transportation		Wholesale Marketing and Terminalling		Consolidated
Service Revenue - Third Party	$	11,451	$	304	$	11,755
Product Revenue - Third Party	—		171,187		171,187
Product Revenue - Affiliate	—		16,573		16,573
Lease Revenue - Affiliate (1)	73,390		34,920		108,310
Total Revenue	$	84,841	$	222,984	$	307,825

⁽¹⁾ Net of $3.6 million of amortization expense for the six months ended June 30, 2019, related to a customer contract intangible asset recorded in the wholesale marketing and terminalling segment.

As of June 30, 2020, we expect to recognize $1.6 billion in lease revenues related to our unfulfilled performance obligations pertaining to the minimum volume commitments and capacity utilization under the non-cancelable terms of our commercial agreements with Delek Holdings. Most of these agreements have an initial term ranging from five to ten years, which may be extended for various renewal terms. We disclose information about remaining performance obligations that have original expected durations of greater than one year.

Our unfulfilled performance obligations as of June 30, 2020 were as follows (in thousands):

Remainder of 2020	134,043
2021	267,990
2022	249,850
2023	240,489
2024 and thereafter	$	733,292
Total expected revenue on remaining performance obligations	$	1,625,664

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Inventory	6 Months Ended
	Jun. 30, 2020
Inventory Disclosure [Abstract]
Inventory	InventoryInventories consisted of $2.1 million and $12.6 million of refined petroleum products as of June 30, 2020 and December 31, 2019, each of which are net of lower of cost or net realizable value reserve of a nominal amount. Inventory is stated at the lower of cost or net realizable value, with cost determined on a first-in, first-out basis. We recognize lower of cost or net realizable value charges as a component of cost of materials and other in the consolidated statements of income and comprehensive income.

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Long-Term Obligations

6 Months Ended

Jun. 30, 2020

Debt Disclosure [Abstract]

Long-Term Obligations

Long-Term Obligations

DKL Credit Facility

Prior to September 28, 2018, the Partnership had a $700.0 million senior secured revolving credit agreement with Fifth Third Bank ("Fifth Third"), as administrative agent, and a syndicate of lenders (the "2014 Facility"), which had a maturity date of December 30, 2019. The obligations under the 2014 Facility were secured by a first priority lien on substantially all of the Partnership's tangible and intangible assets. Additionally, a subsidiary of Delek Holdings provided a limited guaranty of the Partnership's obligations under the 2014 Facility.

On September 28, 2018, the Partnership entered into a third amended and restated senior secured revolving credit agreement, which amended and restated the 2014 Facility (hereafter, the "DKL Credit Facility") with Fifth Third, as administrative agent, and a syndicate of lenders. The DKL Credit Facility contains a dual currency borrowing tranche that permits draw downs in U.S. or Canadian dollars. Under the terms of the DKL Credit Facility, among other things, the lender commitments were increased to $850.0 million. The DKL Credit Facility also contains an accordion feature whereby the Partnership can increase the size of the credit facility to an aggregate of $1.0 billion, subject to receiving increased or new commitments from lenders and the satisfaction of certain other conditions precedent.

The obligations under the DKL Credit Facility remain secured by first priority liens on substantially all of the Partnership's and its subsidiaries' tangible and intangible assets. Additionally, Delek Marketing, a subsidiary of Delek Holdings, had provided a limited guaranty of the Partnership's obligations under the DKL Credit Facility. Delek Marketing's guaranty was (i) limited to an amount equal to the principal amount, plus unpaid and accrued interest, of a promissory note made by Delek Holdings in favor of Delek Marketing (the "Holdings Note") and (ii) secured by Delek Marketing's pledge of the Holdings Note to the lenders under the DKL Credit Facility. Effective March 30, 2020, Delek Marketing's

limited guaranty and pledge of the Holdings Note was terminated pursuant to a guaranty and pledge release approved by the required lenders under the DKL Credit Facility.

The DKL Credit Facility has a maturity date of September 28, 2023. Borrowings denominated in U.S. dollars bear interest at either a U.S. dollar prime rate, plus an applicable margin, or the London Interbank Offered Rate ("LIBOR"), plus an applicable margin, at the election of the borrowers. Borrowings denominated in Canadian dollars bear interest at either a Canadian dollar prime rate, plus an applicable margin, or the Canadian Dealer Offered Rate, plus an applicable margin, at the election of the borrowers.

The applicable margin in each case and the fee payable for any unused revolving commitments vary based upon the Partnership's most recent total leverage ratio calculation delivered to the lenders, as called for and defined under the terms of the DKL Credit Facility. At June 30, 2020, the weighted average interest rate for our borrowings under the facility was approximately 2.78%. Additionally, the DKL Credit Facility requires us to pay a leverage ratio dependent quarterly fee on the average unused revolving commitment. As of June 30, 2020, this fee was 0.40% per year.

As of June 30, 2020, we had $750.0 million of outstanding borrowings under the DKL Credit Facility, with no letters of credit in place. Unused credit commitments under the DKL Credit Facility as of June 30, 2020, were $100.0 million.

6.750% Senior Notes Due 2025

On May 23, 2017, the Partnership and Delek Logistics Finance Corp., a Delaware corporation and a wholly-owned subsidiary of the Partnership (“Finance Corp.” and together with the Partnership, the “Issuers”), issued $250.0 million in aggregate principal amount of 6.75% senior notes due 2025 (the “2025 Notes”) at a discount. The 2025 Notes are general unsecured senior obligations of the Issuers. The 2025 Notes are unconditionally guaranteed jointly and severally on a senior unsecured basis by the Partnership's existing subsidiaries (other than Finance Corp., the "Guarantors") and will be unconditionally guaranteed on the same basis by certain of the Partnership’s future subsidiaries. The 2025 Notes rank equal in right of payment with all existing and future senior indebtedness of the Issuers, and senior in right of payment to any future subordinated indebtedness of the Issuers. Interest on the 2025 Notes is payable semi-annually in arrears on each May 15 and November 15, commencing November 15, 2017.

Beginning on May 15, 2020, the Issuers may, subject to certain conditions and limitations, redeem all or part of the 2025 Notes at a redemption price of 105.063% of the redeemed principal for the twelve-month period beginning on May 15, 2020, 103.375% for the twelve-month period beginning on May 15, 2021, 101.688% for the twelve-month period beginning on May 15, 2022 and 100.00% beginning on May 15, 2023 and thereafter, plus accrued and unpaid interest, if any. In the event of a change of control, accompanied or followed by a ratings downgrade within a certain period of time, subject to certain conditions and limitations, the Issuers will be obligated to make an offer for the purchase of the 2025 Notes from holders at a price equal to 101% of the principal amount thereof, plus accrued and unpaid interest.

On April 25, 2018, we made an offer to exchange the 2025 Notes and the related guarantees that were validly tendered and not validly withdrawn for an equal principal amount of exchange notes that are freely tradeable, as required under the terms of the original indenture. The terms of the exchange notes that were issued in May 2018 as a result of the exchange (also referred to as the "2025 Notes") are substantially identical to the terms of the original 2025 Notes.

As of June 30, 2020, we had $250.0 million in outstanding principal amount of the 2025 Notes. As of June 30, 2020, the effective interest rate related to the 2025 Notes was approximately 7.22%.

Outstanding borrowings under the 2025 Notes are net of deferred financing costs and debt discount of $3.6 million and $1.2 million, respectively, as of June 30, 2020, and $4.0 million and $1.3 million, respectively, as of December 31, 2019.

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Income Taxes

6 Months Ended

Jun. 30, 2020

Income Tax Disclosure [Abstract]

Income Taxes

Income Taxes

For tax purposes, each partner of the Partnership is required to take into account its share of income, gain, loss and deduction in computing its federal and state income tax liabilities, regardless of whether cash distributions are made to such partner by the Partnership. The taxable income reportable to each partner takes into account differences between the tax basis and fair market value of our assets, the acquisition price of such partner's units and the taxable income allocation requirements under our Partnership Agreement.

The Partnership is not a taxable entity for federal income tax purposes. While most states do not impose an entity level tax on partnership income, the Partnership is subject to entity level tax in both Tennessee and Texas.

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Net Income Per Unit

6 Months Ended

Jun. 30, 2020

Earnings Per Share [Abstract]

Net Income Per Unit

Net Income Per Unit

We use the two-class method when calculating the net income per unit applicable to limited partners because we have more than one participating class of securities. Our participating securities consist of common units, general partner units and IDRs. The two-class method is based on the weighted-average number of common units outstanding during the period. Basic net income per unit applicable to limited partners is computed by dividing limited partners’ interest in net income, after deducting our general partner’s 2% interest and IDRs, by the weighted-average number of outstanding common units. Our net income is allocated to our general partner and limited partners in accordance with their respective partnership percentages after giving effect to priority income allocations for IDRs, which are held by our general partner pursuant to our Partnership Agreement. The IDRs are paid following the close of each quarter.

Pursuant to Amendment No. 2 to the Partnership Agreement, an agreement was reached for a waiver of distributions in respect of the IDRs for the GP Additional Units associated with the 5.0 million Additional Units for at least two years, through at least the distribution for the quarter ending March 31, 2022 ("IDR Waiver"). The IDR Waiver essentially reduces the distribution made to the holders of the IDRs during this period, as the holders would not receive a share of the distribution made on the GP Additional Units. An additional waiver letter was signed that waived all of the distributions for the first quarter of 2020 on the Additional Units with respect to base distributions and the IDRs. Refer Note 3 for additional details.

Earnings in excess of distributions are allocated to our general partner and limited partners based on their respective ownership interests. Payments made to our unitholders are determined in relation to actual distributions declared and are not based on the net income allocations used in the calculation of net income per unit.

Diluted net income per unit applicable to common limited partners includes the effects of potentially dilutive units on our common units. As of June 30, 2020, the only potentially dilutive units outstanding consist of unvested phantom units.

Our distributions earned with respect to a given period are declared subsequent to quarter end. Therefore, the table below represents total cash distributions applicable to the period in which the distributions are earned. The expected date of distribution for the distributions earned during the period ended June 30, 2020 is August 12, 2020. The calculation of net income per unit is as follows (dollars in thousands, except units and per unit amounts):

	Three Months Ended June 30,					Six Months Ended June 30,
	2020		2019			2020		2019
Net income attributable to partners	$	44,415	$	24,885		$	72,211	$	44,581
Less: General partner's distribution (including IDRs) (1)	9,479		8,160			18,618		15,583
Less: Limited partners' distribution	26,490		20,754			48,229		40,769
Earnings in excess (deficit) of distributions	$	8,446	$	(4,029	)	$	5,364	$	(11,771	)
General partner's earnings:
Distributions (including IDRs) (1)	$	9,479	$	8,160		$	18,618	$	15,583
Allocation of earnings in excess (deficit) of distributions	168		(81		)	106		(235		)
Total general partner's earnings	$	9,647	$	8,079		$	18,724	$	15,348
Limited partners' earnings on common units:
Distributions	$	26,490	$	20,754		$	48,229	$	40,769
Allocation of earnings in excess (deficit) of distributions	8,278		(3,948		)	5,258		(11,536		)
Total limited partners' earnings on common units	$	34,768	$	16,806		$	53,487	$	29,233
Weighted average limited partner units outstanding:
Common units - basic	29,427,298		24,409,359			26,953,934		24,408,270
Common units - diluted	29,430,555		24,414,343			26,956,523		24,414,077
Net income per limited partner unit:
Common units - basic	$	1.18	$	0.69		$	1.98	$	1.20
Common units - diluted (2)	$	1.18	$	0.69		$	1.98	$	1.20

⁽¹⁾ General partner distributions (including IDRs) consist of the 2.0% general partner interest and IDRs, which represent the right of the general partner to receive increasing percentages of quarterly distributions of available cash from operating surplus in excess of 0.43125 per unit per quarter. See Note 8 for further discussion related to IDRs.

⁽²⁾ Outstanding common unit equivalents totaling 18,270 were excluded from the diluted earnings per unit calculation for the three and six months ended June 30, 2020. There were no outstanding common units excluded from the diluted earnings per unit calculation for the three and six months ended June 30, 2019.

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Equity

6 Months Ended

Jun. 30, 2020

Equity [Abstract]

Equity

Equity

We had 8,687,371 common limited partner units held by the public outstanding as of June 30, 2020. Additionally, as of June 30, 2020, Delek Holdings owned a 69.1% interest in us, consisting of 20,745,868 common limited partner units (representing a 70.5% interest), and a 94.8% interest in our general partner, which owns the entire 2.0% general partner interest consisting of 600,678 general partner units. During the second quarter of 2020, Delek Holdings purchased 0.2% in our general partner from an affiliate at fair market value. As of June 30, 2020, affiliates, who are also members of our general partner's management and board of directors, own the remaining 5.2% interest in our general partner.

Equity Activity

The table below summarizes the changes in the number of units outstanding from December 31, 2019 through June 30, 2020.

	Common - Public		Common - Delek Holdings	General Partner	Total
Balance at December 31, 2019	9,131,579		15,294,046	498,482	24,924,107
General partner units issued to maintain 2% interest	—		—	102,196	102,196
Unit-based compensation awards (1)	7,614		—	—	7,614
Big Spring Gathering Assets Acquisition equity issuance	—		5,000,000	—	5,000,000
Delek Holdings Unit purchases from public	(451,822	)	451,822	—	—
Balance at June 30, 2020	8,687,371		20,745,868	600,678	30,033,917

⁽¹⁾ Unit-based compensation awards are presented net of 481 units withheld for taxes as of June 30, 2020.

Issuance of Additional Securities

Our Partnership Agreement authorizes us to issue an unlimited number of additional partnership securities for the consideration and on the terms and conditions determined by our general partner without the approval of the unitholders. Costs associated with the issuance of securities are allocated to all unitholders' capital accounts based on their ownership interest at the time of issuance.

Allocations of Net Income

Our Partnership Agreement contains provisions for the allocation of net income and loss to the unitholders and our general partner. For purposes of maintaining partner capital accounts, the Partnership Agreement specifies that items of income and loss shall be allocated among the partners in accordance with their respective percentage interest. Normal allocations according to percentage interests are made after giving effect to priority income allocations in an amount equal to incentive cash distributions allocated 100% to our general partner.

The following table presents the allocation of the general partner's interest in net income (in thousands, except percentage of ownership interest):

	Three Months Ended June 30,						Six Months Ended June 30,
	2020			2019			2020			2019
Net income attributable to partners	$	44,415		$	24,885		$	72,211		$	44,581
Less: General partner's IDRs	(8,937		)	(7,736		)	(17,632		)	(14,751		)
Net income available to partners	$	35,478		$	17,149		$	54,579		$	29,830
General partner's ownership interest	2.0		%	2.0		%	2.0		%	2.0		%
General partner's allocated interest in net income	$	710		$	343		1,092			$	597
General partner's IDRs	8,937			7,736			17,632			14,751
Total general partner's interest in net income	$	9,647		$	8,079		$	18,724		$	15,348

Incentive Distribution Rights

Our general partner is currently entitled to 2.0% of all quarterly distributions that we make prior to our liquidation. Our general partner has the right, but not the obligation, to contribute up to a proportionate amount of capital to us to maintain its current general partner interest. The general partner's 2.0% interest in these distributions may be reduced if we issue additional units in the future and our general partner does not contribute a proportionate amount of capital to us to maintain its 2.0% general partner interest. Our general partner also currently holds IDRs that entitle it to receive increasing percentages, up to a maximum of 48.0%, of the cash we distribute from operating surplus (as defined in our Partnership Agreement) in excess of 0.43125 per unit per quarter. The maximum distribution is 48.0% and does not include any distributions that our general partner or its affiliates may receive on common or general partner units that it owns. The IDRs held by our general partner currently entitle it to receive the maximum distribution.

Pursuant to Amendment No. 2 to the Partnership Agreement, an agreement was reached for a waiver of distributions in respect of the IDRs associated with the 5.0 million Additional Units for at least two years, through at least the distribution for the quarter ending March 31, 2022 (the "IDR Waiver"). The IDR Waiver essentially reduces the distribution made to the holders of the IDRs during this period, as the holders would not receive a share of the distribution made on the Additional Units. An additional waiver letter was signed that waived all of the distributions for the first quarter of 2020 on the Additional Units with respect to base distributions and the IDRs. Refer to Note 3 for additional details.

Cash Distributions

Our Partnership Agreement sets forth the calculation to be used to determine the amount and priority of available cash distributions that our limited partner unitholders and general partner will receive. Our distributions earned with respect to a given period are declared subsequent to quarter end. The table below summarizes the quarterly distributions related to our quarterly financial results:

Quarter Ended	Total Quarterly Distribution Per Limited Partner Unit		Total Quarterly Distribution Per Limited Partner Unit, Annualized		Total Cash Distribution, including general partner interest and IDRs (in thousands)		Date of Distribution	Unitholders Record Date
June 30, 2019	$	0.850	$	3.40	$	28,914	August 13, 2019	August 5, 2019
September 30, 2019	$	0.880	$	3.52	$	30,379	November 12, 2019	November 4, 2019
December 31, 2019	$	0.885	$	3.54	$	30,634	February 12, 2020	February 4, 2020
March 31, 2020	$	0.890	$	3.56	$	30,878	May 12, 2020	May 5, 2020
June 30, 2020	$	0.900	$	3.60	$	35,969	August 12, 2020 (1)	August 7, 2020

⁽¹⁾ Expected date of distribution.

The allocations of total quarterly cash distributions made to general and limited partners for the three and six months ended June 30, 2020 and 2019 are set forth in the table below. Distributions earned with respect to a given period are declared subsequent to quarter end. Therefore, the table below presents total cash distributions applicable to the period in which the distributions are earned (in thousands, except per unit amounts):

	Three Months Ended June 30,				Six Months Ended June 30,
	2020		2019		2020		2019
General partner's distributions:
General partner's distributions	$	542	$	424	$	986	$	832
General partner's IDRs	8,937		7,736		17,632		14,751
Total general partner's distributions	9,479		8,160		18,618		15,583
Limited partners' distributions:
Common limited partners' distributions	26,490		20,754		48,229		40,769
Total cash distributions	$	35,969	$	28,914	$	66,847	$	56,352
Cash distributions per limited partner unit	$	0.900	$	0.850	$	1.790	$	1.670

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Equity Based Compensation	6 Months Ended
	Jun. 30, 2020
Share-based Payment Arrangement [Abstract]
Equity Based Compensation	Equity Based CompensationThe Delek Logistics GP, LLC 2012 Long-Term Incentive Plan (the "LTIP") was adopted by the Delek Logistics GP, LLC board of directors in connection with the completion of our initial public offering in November 2012. The LTIP is administered by the Conflicts Committee of the board of directors of our general partner. Equity-based compensation expense is included in general and administrative expenses in the accompanying condensed consolidated statements of income and comprehensive income and is immaterial for the three and six months ended June 30, 2020 and 2019.

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Equity Method Investments

6 Months Ended

Jun. 30, 2020

Equity Method Investments and Joint Ventures [Abstract]

Equity Method Investments

Equity Method Investments

In May 2019, the Partnership, through its wholly owned indirect subsidiary DKL Pipeline, LLC (“DKL Pipeline”), entered into a Contribution and Subscription Agreement (the “Contribution Agreement”) with Plains Pipeline, L.P. (“Plains”) and Red River Pipeline Company LLC (“Red River”). Pursuant to the Contribution Agreement, DKL Pipeline contributed $124.7 million, substantially all of which was financed by borrowings under the DKL Credit Facility, to Red River in exchange for a 33% membership interest in Red River and DKL Pipeline’s admission as a member of Red River. In addition, we contributed $0.4 million of start up capital pursuant to the Amended and Restated Limited Liability Company Agreement. Red River owns a crude oil pipeline running from Cushing, Oklahoma to Longview, Texas, with an expansion project planned to increase the pipeline capacity, which is expected to be completed in the third quarter of 2020. We contributed an additional $3.5

million related to such expansion project in May 2019. During the six months ended June 30, 2020, we made additional capital contributions totaling $10.5 million based on capital calls received.

Summarized unaudited financial information for Red River on a 100% basis is shown below (in thousands):

	June 30, 2020		December 31, 2019
Current Assets	$	11,376	$	9,278
Non-current Assets	$	416,554	$	381,778
Current liabilities	$	17,869	$	8,291

	Three Months Ended June 30,				Six Months Ended June 30,
	2020		2019		2020		2019
Revenues	$	11,873	$	14,391	$	21,969	$	26,017
Gross profit	$	7,175	$	9,191	$	13,062	$	14,466
Operating income	$	7,000	$	8,942	$	12,697	$	13,652
Net income	$	7,025	$	8,942	$	12,746	$	13,652

We have two joint ventures that have constructed separate crude oil pipeline systems and related ancillary assets, which are serving third parties and subsidiaries of Delek Holdings. We own a 50% membership interest in the entity formed with an affiliate of Plains All American Pipeline, L.P. ("CP LLC") to operate one of these pipeline systems (the "Caddo Pipeline") and a 33% membership interest in the entity formed with Rangeland Energy II, LLC ("Rangeland Energy") to operate the other pipeline system (the "RIO Pipeline"). During 2018, Rangeland Energy was acquired by Andeavor and the legal entity in which we have an equity investment became Andeavor Logistics RIO Pipeline LLC ("Andeavor Logistics").

Combined summarized unaudited financial information for these two equity method investees on a 100% basis is shown below (in thousands):

	June 30, 2020		December 31, 2019
Current assets	$	20,040	$	29,476
Non-current assets	$	258,751	$	262,300
Current liabilities	$	2,381	$	6,391

	Three Months Ended June 30,				Six Months Ended June 30,
	2020		2019		2020		2019
Revenues	$	12,738	$	10,077	$	28,185	$	19,191
Gross profit	$	8,198	$	5,688	$	18,834	$	10,584
Operating income	$	7,724	$	5,223	$	17,864	$	9,624
Net Income	$	7,729	$	5,249	$	17,887	$	9,666

The Partnership's investments in these three entities were financed through a combination of cash from operations and borrowings under the DKL Credit Facility.  As of June 30, 2020 and December 31, 2019, the Partnership's investment balance in these joint ventures was $255.3 million and $247.0 million, respectively.

We do not consolidate any part of the assets or liabilities or operating results of our equity method investees. Our share of net income or loss of the investees will increase or decrease, as applicable, the carrying value of our investments in unconsolidated affiliates. With respect to our equity method investments, we determined that these entities do not represent variable interest entities and consolidation is not required. We have the ability to exercise significant influence over each of these joint ventures through our participation in the management committees, which make all significant decisions. However, since all significant decisions require the consent of the other investor(s) without regard to economic interest, we have determined that we have joint control and have applied the equity method of accounting. Our investment in these joint ventures is reflected in our pipelines and transportation segment.

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Segment Data

6 Months Ended

Jun. 30, 2020

Segment Reporting [Abstract]

Segment Data

Segment Data

We aggregate our operating segments into two reportable segments: (i) pipelines and transportation and (ii) wholesale marketing and terminalling:

• The assets and investments reported in the pipelines and transportation segment provide crude oil gathering and crude oil, intermediate and refined products transportation and storage services to Delek Holdings' refining operations and independent third parties.

• The wholesale marketing and terminalling segment provides wholesale marketing and terminalling services to Delek Holdings' refining operations and independent third parties.

Our operating segments adhere to the accounting policies used for our consolidated financial statements. Our operating segments are managed separately because each segment requires different industry knowledge, technology and marketing strategies. Decisions concerning the allocation of resources and assessment of operating performance are made based on this segmentation. Management measures the operating performance of each of its reportable segments based on segment contribution margin. Segment contribution margin is defined as net revenues less cost of materials and other and operating expenses, excluding depreciation and amortization.

The following is a summary of business segment operating performance as measured by contribution margin for the periods indicated (in thousands):

	Three Months Ended June 30,					Six Months Ended June 30,
	2020		2019			2020			2019
Pipelines and Transportation
Net revenues:
Affiliate	$	61,394	$	36,731		$	99,897		$	73,390
Third party	$	2,032	7,477			11,496			11,451
Total pipelines and transportation	63,426		44,208			111,393			84,841
Cost of materials and other	11,182		7,357			17,280			12,924
Operating expenses (excluding depreciation and amortization)	9,731		12,728			21,187			23,562
Segment contribution margin	$	42,513	$	24,123		$	72,926		$	48,355
Capital spending	$	417	$	818		$	863		$	1,242
Wholesale Marketing and Terminalling
Net revenues:
Affiliate (1)	$	26,235	$	25,187		$	94,431		$	51,493
Third party	27,976		85,947			75,214			171,491
Total wholesale marketing and terminalling	54,211		111,134			169,645			222,984
Cost of materials and other	32,710		86,497			127,905			177,195
Operating expenses (excluding depreciation and amortization)	2,718		4,599			6,006			9,823
Segment contribution margin	$	18,783	$	20,038		$	35,734		$	35,966
Capital spending	$	235	$	524		$	2,818		$	1,004
Consolidated
Net revenues:
Affiliate	$	87,629	$	61,918		$	194,328		$	124,883
Third party	30,008		93,424			86,710			182,942
Total Consolidated	117,637		155,342			281,038			307,825
Cost of materials and other	43,892		93,854			145,185			190,119
Operating expenses (excluding depreciation and amortization presented below)	12,449		17,327			27,193			33,385
Contribution margin	$	61,296	$	44,161		108,660			84,321
General and administrative expenses	4,721		5,293			10,851			9,766
Depreciation and amortization	8,694		6,639			14,993			13,213
Other operating income, net	—		(27		)	(107		)	(25		)
Operating income	$	47,881	$	32,256		$	82,923		$	61,367
Capital spending	$	652	$	1,342		$	3,681		$	2,246

⁽¹⁾ Affiliate revenue for the wholesale marketing and terminalling segment is presented net of amortization expense pertaining to the Marketing Contract Intangible Acquisition. See Note 3 for additional information.

The following table summarizes the total assets for each segment as of June 30, 2020 and December 31, 2019 (in thousands):

	June 30, 2020		December 31, 2019
Pipelines and transportation	$	836,510	$	537,580
Wholesale marketing and terminalling	137,227		206,867
Total assets	$	973,737	$	744,447

Property, plant and equipment and accumulated depreciation as of June 30, 2020 and depreciation expense by reporting segment for the three and six months ended June 30, 2020 were as follows (in thousands):

	Pipelines and Transportation			Wholesale Marketing and Terminalling			Consolidated
Property, plant and equipment	$	566,780		$	114,189		$	680,969
Less: accumulated depreciation	(159,341		)	(47,884		)	(207,225		)
Property, plant and equipment, net	$	407,439		$	66,305		$	473,744
Depreciation expense for the three months ended June 30, 2020	$	6,947		$	1,674		$	8,621
Depreciation expense for the six months ended June 30, 2020	$	11,553		$	3,367		$	14,920

In accordance with ASC 360, Property, Plant & Equipment, we evaluate the realizability of property, plant and equipment as events occur that might indicate potential impairment. There were no indicators of impairment of our property, plant and equipment as of June 30, 2020.

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Commitments and Contingencies

6 Months Ended

Jun. 30, 2020

Commitments and Contingencies Disclosure [Abstract]

Commitments and Contingencies

Commitments and Contingencies

Litigation

In the ordinary conduct of our business, we are from time to time subject to lawsuits, investigations and claims, including environmental claims and employee-related matters. Although we cannot predict with certainty the ultimate resolution of lawsuits, investigations and claims asserted against us, including civil penalties or other enforcement actions, we do not believe that any currently pending legal proceeding or proceedings to which we are a party will have a material adverse effect on our financial statements. See "Crude Oil and Other Releases" below for discussion of an enforcement action.

Environmental, Health and Safety

We are subject to extensive federal, state and local environmental and safety laws and regulations enforced by various agencies, including the Environmental Protection Agency (the "EPA"), the United States Department of Transportation, the Occupational Safety and Health Administration, as well as numerous state, regional and local environmental, safety and pipeline agencies. These laws and regulations govern the discharge of materials into the environment, waste management practices and pollution prevention measures, as well as the safe operation of our pipelines and the safety of our workers and the public. Numerous permits or other authorizations are required under these laws and regulations for the operation of our terminals, pipelines, saltwells, trucks and related operations, and may be subject to revocation, modification and renewal. See "Crude Oil and Other Releases" below for discussion of an enforcement action.

These laws and permits raise potential exposure to future claims and lawsuits involving environmental and safety matters, which could include soil and water contamination, air pollution, personal injury and property damage allegedly caused by substances which we handled, used, released or disposed of, transported, or that relate to pre-existing conditions for which we have assumed responsibility. We believe that our current operations are in substantial compliance with existing environmental and safety requirements. However, there have been and we expect that there will continue to be ongoing discussions about environmental and safety matters between us and federal and state authorities, including notices of violations, citations and other enforcement actions, some of which have resulted or may result in changes to operating procedures and in capital expenditures. While it is often difficult to quantify future environmental or safety related expenditures, we anticipate that continuing capital investments and changes in operating procedures will be required to comply with existing and new requirements, as well as evolving interpretations and more strict enforcement of existing laws and regulations.

Releases of hydrocarbons or hazardous substances into the environment could, to the extent the event is not insured, or is not a reimbursable event under the Omnibus Agreement, subject us to substantial expenses, including costs to respond to, contain and remediate a release, to comply with applicable laws and regulations and to resolve claims by third parties for personal injury, property damage or natural resources damages.

Crude Oil and Other Releases

We have experienced several crude oil and other releases involving our assets. There were no material releases that occurred during the six months ended June 30, 2020, and five releases that occurred throughout the year 2019. Cleanup operations and site maintenance and remediation efforts on these and other releases are at various stages of completion. The majority of the remediation efforts for these releases are substantially completed or have received regulatory closure. With the exception of the Sulphur Springs release defined below, we expect regulatory closure in 2020 for the release sites that have not yet received it.

Many of the releases have occurred on our system of common carrier pipelines which gather crude in southern Arkansas and northern Louisiana, and which are primarily located within 60 miles of Delek Holdings’ El Dorado refinery ("El Dorado Gathering System"). During the year ended December 31, 2019, we decommissioned certain sections of the El Dorado Gathering System in an effort to improve the safety and integrity of the system. The decommissioning of these sections was completed in August 2019. The project did not have a material effect on the financial results.

Regulatory authorities could require additional remediation based on the results of our remediation efforts. We may incur additional expenses as a result of further scrutiny by regulatory authorities and continued compliance with laws and regulations to which our assets are subject. As of June 30, 2020, we have accrued $0.3 million for remediation and other such matters related to these releases.

On October 3, 2019, a release of diesel fuel involving one of our pipelines occurred near Sulphur Springs, Texas (the "Sulphur Springs Release"). Cleanup operations and site maintenance and remediation on this release have been substantially completed where such costs incurred totaled $7.1 million during 2019. During the three and six months ended June 30, 2020, we incurred approximately $0.1 million and $0.3 million of additional costs related to final clean-up of this release, respectively. The release is currently in boom maintenance. Ground water monitoring wells were installed in the second quarter of 2020. We expect to conduct quarterly ground water monitoring for at least a year. Additionally, we will be conducting creek bed sediment sampling in the third quarter of 2020. We have filed suit in January 2020 against a third party contractor, seeking damages related to this release. We have not received notification that any legal action with respect to fines and penalties will be pursued by the regulatory agencies.

Expenses incurred for the remediation of these crude oil and other releases are included in operating expenses in our condensed consolidated statements of income and comprehensive income. The majority of our releases have been subsequently reimbursed by Delek Holdings pursuant to the terms of the Omnibus Agreement, with the exception of Sulphur Springs Release above as it is not covered under the Omnibus Agreement. Reimbursements are recorded as a reduction to operating expense. We do not believe the total costs associated with these events, whether alone or in the aggregate, including any fines or penalties and net of available insurance, indemnification or reimbursement, will have a material adverse effect upon our business, financial condition or results of operations.

During both three and six months ended June 30, 2020, we recorded a nominal amount of expenses, net of reimbursable costs of a nominal amount for both the three and six months ended June 30, 2020, respectively. Additionally, during the three and six months ended June 30, 2019, we recorded $0.2 million and $0.3 million of expenses, respectively, which is net of total reimbursable costs of $0.7 million and $4.1 million for the three and six months ended June 30, 2019, respectively, from Delek Holdings pursuant to the terms of the Omnibus Agreement.

Letters of Credit

As of June 30, 2020, we had no letters of credit in place.

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Leases

6 Months Ended

Jun. 30, 2020

Leases [Abstract]

Leases

Leases

We lease certain pipeline and transportation equipment. Leases with an initial term of 12 months or less are not recorded on the balance sheet; we recognize lease expense for these leases on a straight-line basis over the lease term.

Our leases do not have any outstanding renewal options. Certain leases also include options to purchase the leased equipment.

Certain of our lease agreements include rates based on equipment usage and others include rate inflationary indices based increases. Our lease agreements do not contain any material residual value guarantees or material restrictive covenants.

The following table presents additional information related to our operating leases in accordance ASC 842:

	Three Months Ended June 30,						Six Months Ended June 30,
(in thousands)	2020			2019			2020			2019
Lease Cost
Operating lease cost	$	1,926		$	1,472		$	2,526		$	2,899
Short-term lease cost (1)	757			326			1,077			803
Variable lease costs	60			—			272			—
Total lease cost	$	2,743		$	1,798		$	3,875		$	3,702
Other Information
Cash paid for amounts included in the measurement of lease liabilities
Operating cash flows from operating leases	$	(1,926	)	$	(1,472	)	$	(2,526	)	$	(2,899	)
Leased assets obtained in exchange for new operating lease liabilities	$	15,779		$	—		$	15,779		$	—
							June 30, 2020
Weighted-average remaining lease term (years) for operating leases							3.8
Weighted-average discount rate (2) operating leases							5.8		%

⁽¹⁾ Includes an immaterial amount of variable lease cost.

⁽²⁾ Our discount rate is primarily based on our incremental borrowing rate in accordance with ASC 842.     

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Subsequent Events

6 Months Ended

Jun. 30, 2020

Subsequent Events [Abstract]

Subsequent Events

Subsequent Events

Distribution Declaration

On July 24, 2020, our general partner's board of directors declared a quarterly cash distribution of $0.900 per unit, payable on August 12, 2020, to unitholders of record on August 7, 2020.

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Organization and Basis of Presentation (Policies)

6 Months Ended

Jun. 30, 2020

Organization, Consolidation and Presentation of Financial Statements [Abstract]

Basis of Accounting

Certain information and footnote disclosures normally included in annual financial statements prepared in accordance with U.S. generally accepted accounting principles ("GAAP") have been condensed or omitted, although management believes that the disclosures herein are adequate to make the financial information presented not misleading. Our unaudited condensed consolidated financial statements have been prepared in conformity with U.S. GAAP applied on a consistent basis with those of the annual audited financial statements included in our Annual Report on Form 10-K for the year ended December 31, 2019 (our "Annual Report on Form 10-K"), filed with the Securities and Exchange Commission (the "SEC") on February 27, 2020 and in accordance with the rules and regulations of the SEC. These unaudited condensed consolidated financial statements should be read in conjunction with the audited consolidated financial statements and notes thereto for the year ended December 31, 2019 included in our Annual Report on Form 10-K

Consolidation

All adjustments necessary for a fair presentation of the financial position and the results of operations for the interim periods presented have been included. All intercompany accounts and transactions have been eliminated. Such intercompany transactions do not include those with Delek Holdings' or our general partner, which are presented as related parties in these accompanying condensed consolidated financial statements. All adjustments are of a normal, recurring nature. Operating results for the interim period should not be viewed as representative of results that may be expected for any future interim period or for the full year.

New Accounting Pronouncements

New Accounting Pronouncements Adopted During 2020

ASU 2018-13, Fair Value Measurement - Changes to the Disclosure Requirements for Fair Value Measurement

In August 2018, the Financial Accounting Standards Board (the "FASB") issued guidance related to disclosure requirements for fair value measurements. The pronouncement eliminates, modifies and adds disclosure requirements for fair value measurements. The pronouncement is effective for fiscal years, and for interim periods within those fiscal years, beginning after December 15, 2019. We adopted this guidance on January 1, 2020 and the adoption did not have a material impact on our business, financial condition or results of operations.

ASU 2016-13, Financial Instruments - Measurement of Credit Losses on Financial Instruments

In June 2016, the FASB issued guidance requiring the measurement of all expected credit losses for financial assets held at the reporting date based on historical experience, current conditions, and reasonable and supportable forecasts. Organizations will now use forward-looking information to better inform their credit loss estimates. This guidance is effective for interim and annual periods beginning after December 15, 2019. We adopted this guidance on January 1, 2020 using the modified retrospective approach as of the adoption date. The adoption did not have a material impact on the Partnership’s operating results, financial position or disclosures.

ASU 2018-15, Intangible - Customer's Accounting for Implementation Costs Incurred in a Cloud Computing Arrangement That Is a Service Contract

In August 2018, the FASB issued guidance related to customers' accounting for implementation costs incurred in a cloud computing arrangement that is considered a service contract. This pronouncement aligns the requirements for capitalizing implementation costs in such arrangements with the requirements for capitalizing implementation costs incurred to develop or obtain internal-use software. This pronouncement is effective for fiscal years, and for interim periods within those fiscal years, beginning after December 15, 2019. Entities can choose to adopt the new guidance prospectively or retrospectively. We adopted this guidance on January 1, 2020 and elected the prospective method. The adoption did not have a material impact on our business, financial condition or results of operations.

Accounting Pronouncements Not Yet Adopted

ASU 2019-12, Simplifying the Accounting for Income Taxes

In December 2019, the FASB issued guidance intended to simplify various aspects related to accounting for income taxes, eliminate certain exceptions within ASC 740 and clarify certain aspects of the current guidance to promote consistency among reporting entities. The pronouncement is effective for fiscal years, and for interim periods within those fiscal years, beginning after December 2020, with early adoption permitted. We expect to adopt this guidance on the effective date and are currently evaluating the impact that adopting this new guidance will have on our business, financial condition and results of operations.

ASU 2020-01, Investments—Equity Securities (Topic 321), Investments—Equity Method and Joint Ventures (Topic 323), and Derivatives and Hedging (Topic 815)—Clarifying the Interactions between Topic 321, Topic 323, and Topic 815

In January 2020, the FASB issued ASU 2020-01 which is intended to clarify interactions between the guidance to account for certain equity securities under Topics 321, 323 and 815, and improve current GAAP by reducing diversity in practice and increasing comparability of accounting. The pronouncement is effective for fiscal years and interim periods within those fiscal years beginning after December 15, 2020, and early adoption is permitted. We do not expect that the adoption of this ASU on its effective date will have a material impact on our business, financial condition or results of operations.

ASU 2020-04, Facilitation of the Effects of Reference Rate Reform on Financial Reporting (Topic 848)

In March 2020, the FASB issued an amendment which is intended to provide temporary optional expedients and exceptions to GAAP guidance on contracts, hedge accounting and other transactions affected by the expected market transition from the London Interbank Offered Rate (LIBOR) and other interbank rates. This guidance is effective for all entities any time beginning on March 12, 2020 through December 31, 2022 and may be applied from the beginning of an interim period that includes the issuance date of the ASU. The Partnership is currently evaluating the impact this guidance may have on its consolidated financial statements and related disclosures.

Inventory

Inventory is stated at the lower of cost or net realizable value, with cost determined on a first-in, first-out basis.

Net Income Per Unit

We use the two-class method when calculating the net income per unit applicable to limited partners because we have more than one participating class of securities. Our participating securities consist of common units, general partner units and IDRs. The two-class method is based on the weighted-average number of common units outstanding during the period. Basic net income per unit applicable to limited partners is computed by dividing limited partners’ interest in net income, after deducting our general partner’s 2% interest and IDRs, by the weighted-average number of outstanding common units. Our net income is allocated to our general partner and limited partners in accordance with their respective partnership percentages after giving effect to priority income allocations for IDRs, which are held by our general partner pursuant to our Partnership Agreement. The IDRs are paid following the close of each quarter.

Pursuant to Amendment No. 2 to the Partnership Agreement, an agreement was reached for a waiver of distributions in respect of the IDRs for the GP Additional Units associated with the 5.0 million Additional Units for at least two years, through at least the distribution for the quarter ending March 31, 2022 ("IDR Waiver"). The IDR Waiver essentially reduces the distribution made to the holders of the IDRs during this period, as the holders would not receive a share of the distribution made on the GP Additional Units. An additional waiver letter was signed that waived all of the distributions for the first quarter of 2020 on the Additional Units with respect to base distributions and the IDRs. Refer Note 3 for additional details.

Segment Data

Our operating segments adhere to the accounting policies used for our consolidated financial statements. Our operating segments are managed separately because each segment requires different industry knowledge, technology and marketing strategies. Decisions concerning the allocation of resources and assessment of operating performance are made based on this segmentation. Management measures the operating performance of each of its reportable segments based on segment contribution margin. Segment contribution margin is defined as net revenues less cost of materials and other and operating expenses, excluding depreciation and amortization.

Property, Plant and Equipment, Impairment

In accordance with ASC 360, Property, Plant & Equipment, we evaluate the realizability of property, plant and equipment as events occur that might indicate potential impairment.

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Related Party Transactions (Tables)

6 Months Ended

Jun. 30, 2020

Related Party Transactions [Abstract]

Summary of Related Party Transactions

A summary of revenue, purchases from affiliates and expense transactions with Delek Holdings and its affiliates are as follows (in thousands):

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Revenues (Tables)

6 Months Ended

Jun. 30, 2020

Revenue from Contract with Customer [Abstract]

Disaggregation of Revenue

The following table represents a disaggregation of revenue for each reportable segment for the periods indicated (in thousands):

	Three Months Ended June 30, 2020
	Pipelines and Transportation		Wholesale Marketing and Terminalling		Consolidated
Service Revenue - Third Party	$	2,032	$	204	$	2,236
Product Revenue - Third Party	—		27,772		27,772
Product Revenue - Affiliate	—		6,720		6,720
Lease Revenue - Affiliate (1)	61,394		19,515		80,909
Total Revenue	$	63,426	$	54,211	$	117,637

⁽¹⁾ Net of $1.8 million of amortization expense for the three months ended June 30, 2020, related to a customer contract intangible asset recorded in the wholesale marketing and terminalling segment.

	Three Months Ended June 30, 2019
	Pipelines and Transportation		Wholesale Marketing and Terminalling		Consolidated
Service Revenue - Third Party	$	7,477	$	184	$	7,661
Product Revenue - Third Party	—		85,763		85,763
Product Revenue - Affiliate	—		7,187		7,187
Lease Revenue - Affiliate (1)	36,731		18,000		54,731
Total Revenue	$	44,208	$	111,134	$	155,342

⁽¹⁾ Net of $1.8 million of amortization expense for the three months ended June 30, 2019, related to a customer contract intangible asset recorded in the wholesale marketing and terminalling segment.

Revenue, Remaining Performance Obligation, Expected Timing of Satisfaction

As of June 30, 2020, we expect to recognize $1.6 billion in lease revenues related to our unfulfilled performance obligations pertaining to the minimum volume commitments and capacity utilization under the non-cancelable terms of our commercial agreements with Delek Holdings. Most of these agreements have an initial term ranging from five to ten years, which may be extended for various renewal terms. We disclose information about remaining performance obligations that have original expected durations of greater than one year.

Our unfulfilled performance obligations as of June 30, 2020 were as follows (in thousands):

Remainder of 2020	134,043
2021	267,990
2022	249,850
2023	240,489
2024 and thereafter	$	733,292
Total expected revenue on remaining performance obligations	$	1,625,664

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Net Income Per Unit (Tables)

6 Months Ended

Jun. 30, 2020

Earnings Per Share [Abstract]

Summary of Cash Distributions

Our distributions earned with respect to a given period are declared subsequent to quarter end. Therefore, the table below represents total cash distributions applicable to the period in which the distributions are earned. The expected date of distribution for the distributions earned during the period ended June 30, 2020 is August 12, 2020. The calculation of net income per unit is as follows (dollars in thousands, except units and per unit amounts):

	Three Months Ended June 30,					Six Months Ended June 30,
	2020		2019			2020		2019
Net income attributable to partners	$	44,415	$	24,885		$	72,211	$	44,581
Less: General partner's distribution (including IDRs) (1)	9,479		8,160			18,618		15,583
Less: Limited partners' distribution	26,490		20,754			48,229		40,769
Earnings in excess (deficit) of distributions	$	8,446	$	(4,029	)	$	5,364	$	(11,771	)
General partner's earnings:
Distributions (including IDRs) (1)	$	9,479	$	8,160		$	18,618	$	15,583
Allocation of earnings in excess (deficit) of distributions	168		(81		)	106		(235		)
Total general partner's earnings	$	9,647	$	8,079		$	18,724	$	15,348
Limited partners' earnings on common units:
Distributions	$	26,490	$	20,754		$	48,229	$	40,769
Allocation of earnings in excess (deficit) of distributions	8,278		(3,948		)	5,258		(11,536		)
Total limited partners' earnings on common units	$	34,768	$	16,806		$	53,487	$	29,233
Weighted average limited partner units outstanding:
Common units - basic	29,427,298		24,409,359			26,953,934		24,408,270
Common units - diluted	29,430,555		24,414,343			26,956,523		24,414,077
Net income per limited partner unit:
Common units - basic	$	1.18	$	0.69		$	1.98	$	1.20
Common units - diluted (2)	$	1.18	$	0.69		$	1.98	$	1.20

⁽¹⁾ General partner distributions (including IDRs) consist of the 2.0% general partner interest and IDRs, which represent the right of the general partner to receive increasing percentages of quarterly distributions of available cash from operating surplus in excess of 0.43125 per unit per quarter. See Note 8 for further discussion related to IDRs.

⁽²⁾ Outstanding common unit equivalents totaling 18,270 were excluded from the diluted earnings per unit calculation for the three and six months ended June 30, 2020. There were no outstanding common units excluded from the diluted earnings per unit calculation for the three and six months ended June 30, 2019.

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Equity (Tables)

6 Months Ended

Jun. 30, 2020

Equity [Abstract]

Schedule of Limited Partners' Capital Account by Class [Table Text Block]

The table below summarizes the changes in the number of units outstanding from December 31, 2019 through June 30, 2020.

	Common - Public		Common - Delek Holdings	General Partner	Total
Balance at December 31, 2019	9,131,579		15,294,046	498,482	24,924,107
General partner units issued to maintain 2% interest	—		—	102,196	102,196
Unit-based compensation awards (1)	7,614		—	—	7,614
Big Spring Gathering Assets Acquisition equity issuance	—		5,000,000	—	5,000,000
Delek Holdings Unit purchases from public	(451,822	)	451,822	—	—
Balance at June 30, 2020	8,687,371		20,745,868	600,678	30,033,917

Summary of Allocation of General Partner's Interest in Net Income

The following table presents the allocation of the general partner's interest in net income (in thousands, except percentage of ownership interest):

	Three Months Ended June 30,						Six Months Ended June 30,
	2020			2019			2020			2019
Net income attributable to partners	$	44,415		$	24,885		$	72,211		$	44,581
Less: General partner's IDRs	(8,937		)	(7,736		)	(17,632		)	(14,751		)
Net income available to partners	$	35,478		$	17,149		$	54,579		$	29,830
General partner's ownership interest	2.0		%	2.0		%	2.0		%	2.0		%
General partner's allocated interest in net income	$	710		$	343		1,092			$	597
General partner's IDRs	8,937			7,736			17,632			14,751
Total general partner's interest in net income	$	9,647		$	8,079		$	18,724		$	15,348

Summary of Distributions

The table below summarizes the quarterly distributions related to our quarterly financial results:

Quarter Ended	Total Quarterly Distribution Per Limited Partner Unit		Total Quarterly Distribution Per Limited Partner Unit, Annualized		Total Cash Distribution, including general partner interest and IDRs (in thousands)		Date of Distribution	Unitholders Record Date
June 30, 2019	$	0.850	$	3.40	$	28,914	August 13, 2019	August 5, 2019
September 30, 2019	$	0.880	$	3.52	$	30,379	November 12, 2019	November 4, 2019
December 31, 2019	$	0.885	$	3.54	$	30,634	February 12, 2020	February 4, 2020
March 31, 2020	$	0.890	$	3.56	$	30,878	May 12, 2020	May 5, 2020
June 30, 2020	$	0.900	$	3.60	$	35,969	August 12, 2020 (1)	August 7, 2020

⁽¹⁾ Expected date of distribution.

The allocations of total quarterly cash distributions made to general and limited partners for the three and six months ended June 30, 2020 and 2019 are set forth in the table below. Distributions earned with respect to a given period are declared subsequent to quarter end. Therefore, the table below presents total cash distributions applicable to the period in which the distributions are earned (in thousands, except per unit amounts):

	Three Months Ended June 30,				Six Months Ended June 30,
	2020		2019		2020		2019
General partner's distributions:
General partner's distributions	$	542	$	424	$	986	$	832
General partner's IDRs	8,937		7,736		17,632		14,751
Total general partner's distributions	9,479		8,160		18,618		15,583
Limited partners' distributions:
Common limited partners' distributions	26,490		20,754		48,229		40,769
Total cash distributions	$	35,969	$	28,914	$	66,847	$	56,352
Cash distributions per limited partner unit	$	0.900	$	0.850	$	1.790	$	1.670

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Equity Method Investments (Tables)

6 Months Ended

Jun. 30, 2020

Equity Method Investments and Joint Ventures [Abstract]

Summary of Financial Information for Equity Method Investees

Combined summarized unaudited financial information for these two equity method investees on a 100% basis is shown below (in thousands):

	June 30, 2020		December 31, 2019
Current assets	$	20,040	$	29,476
Non-current assets	$	258,751	$	262,300
Current liabilities	$	2,381	$	6,391

	Three Months Ended June 30,				Six Months Ended June 30,
	2020		2019		2020		2019
Revenues	$	12,738	$	10,077	$	28,185	$	19,191
Gross profit	$	8,198	$	5,688	$	18,834	$	10,584
Operating income	$	7,724	$	5,223	$	17,864	$	9,624
Net Income	$	7,729	$	5,249	$	17,887	$	9,666

Summarized unaudited financial information for Red River on a 100% basis is shown below (in thousands):

	June 30, 2020		December 31, 2019
Current Assets	$	11,376	$	9,278
Non-current Assets	$	416,554	$	381,778
Current liabilities	$	17,869	$	8,291

	Three Months Ended June 30,				Six Months Ended June 30,
	2020		2019		2020		2019
Revenues	$	11,873	$	14,391	$	21,969	$	26,017
Gross profit	$	7,175	$	9,191	$	13,062	$	14,466
Operating income	$	7,000	$	8,942	$	12,697	$	13,652
Net income	$	7,025	$	8,942	$	12,746	$	13,652

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Segment Data (Tables)

6 Months Ended

Jun. 30, 2020

Segment Reporting [Abstract]

Summary Segment Data

The following is a summary of business segment operating performance as measured by contribution margin for the periods indicated (in thousands):

	Three Months Ended June 30,					Six Months Ended June 30,
	2020		2019			2020			2019
Pipelines and Transportation
Net revenues:
Affiliate	$	61,394	$	36,731		$	99,897		$	73,390
Third party	$	2,032	7,477			11,496			11,451
Total pipelines and transportation	63,426		44,208			111,393			84,841
Cost of materials and other	11,182		7,357			17,280			12,924
Operating expenses (excluding depreciation and amortization)	9,731		12,728			21,187			23,562
Segment contribution margin	$	42,513	$	24,123		$	72,926		$	48,355
Capital spending	$	417	$	818		$	863		$	1,242
Wholesale Marketing and Terminalling
Net revenues:
Affiliate (1)	$	26,235	$	25,187		$	94,431		$	51,493
Third party	27,976		85,947			75,214			171,491
Total wholesale marketing and terminalling	54,211		111,134			169,645			222,984
Cost of materials and other	32,710		86,497			127,905			177,195
Operating expenses (excluding depreciation and amortization)	2,718		4,599			6,006			9,823
Segment contribution margin	$	18,783	$	20,038		$	35,734		$	35,966
Capital spending	$	235	$	524		$	2,818		$	1,004
Consolidated
Net revenues:
Affiliate	$	87,629	$	61,918		$	194,328		$	124,883
Third party	30,008		93,424			86,710			182,942
Total Consolidated	117,637		155,342			281,038			307,825
Cost of materials and other	43,892		93,854			145,185			190,119
Operating expenses (excluding depreciation and amortization presented below)	12,449		17,327			27,193			33,385
Contribution margin	$	61,296	$	44,161		108,660			84,321
General and administrative expenses	4,721		5,293			10,851			9,766
Depreciation and amortization	8,694		6,639			14,993			13,213
Other operating income, net	—		(27		)	(107		)	(25		)
Operating income	$	47,881	$	32,256		$	82,923		$	61,367
Capital spending	$	652	$	1,342		$	3,681		$	2,246

⁽¹⁾ Affiliate revenue for the wholesale marketing and terminalling segment is presented net of amortization expense pertaining to the Marketing Contract Intangible Acquisition. See Note 3 for additional information.

The following table summarizes the total assets for each segment as of June 30, 2020 and December 31, 2019 (in thousands):

	June 30, 2020		December 31, 2019
Pipelines and transportation	$	836,510	$	537,580
Wholesale marketing and terminalling	137,227		206,867
Total assets	$	973,737	$	744,447

Property, plant and equipment and accumulated depreciation as of June 30, 2020 and depreciation expense by reporting segment for the three and six months ended June 30, 2020 were as follows (in thousands):

	Pipelines and Transportation			Wholesale Marketing and Terminalling			Consolidated
Property, plant and equipment	$	566,780		$	114,189		$	680,969
Less: accumulated depreciation	(159,341		)	(47,884		)	(207,225		)
Property, plant and equipment, net	$	407,439		$	66,305		$	473,744
Depreciation expense for the three months ended June 30, 2020	$	6,947		$	1,674		$	8,621
Depreciation expense for the six months ended June 30, 2020	$	11,553		$	3,367		$	14,920

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Leases (Tables)

6 Months Ended

Jun. 30, 2020

Leases [Abstract]

Lease, Cost

The following table presents additional information related to our operating leases in accordance ASC 842:

	Three Months Ended June 30,						Six Months Ended June 30,
(in thousands)	2020			2019			2020			2019
Lease Cost
Operating lease cost	$	1,926		$	1,472		$	2,526		$	2,899
Short-term lease cost (1)	757			326			1,077			803
Variable lease costs	60			—			272			—
Total lease cost	$	2,743		$	1,798		$	3,875		$	3,702
Other Information
Cash paid for amounts included in the measurement of lease liabilities
Operating cash flows from operating leases	$	(1,926	)	$	(1,472	)	$	(2,526	)	$	(2,899	)
Leased assets obtained in exchange for new operating lease liabilities	$	15,779		$	—		$	15,779		$	—
							June 30, 2020
Weighted-average remaining lease term (years) for operating leases							3.8
Weighted-average discount rate (2) operating leases							5.8		%

⁽¹⁾ Includes an immaterial amount of variable lease cost.

⁽²⁾ Our discount rate is primarily based on our incremental borrowing rate in accordance with ASC 842.

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Acquisitions - Narrative (Details) $ / shares in Units, $ in Millions			6 Months Ended
	May 01, 2020 USD ($) Truck_Trailer	Mar. 31, 2020 USD ($) storage_tank bbl mi $ / shares shares	Jun. 30, 2020 shares
Schedule of Asset Acquisitions, by Acquisition [Line Items]
Asset Acquisition, Equity Interest Transfered As Consideration, Shares | shares			5,000,000
Delek Trucking [Member]
Schedule of Asset Acquisitions, by Acquisition [Line Items]
Consideration transferred	$ 48.0
Number Of Trucks and Trailers | Truck_Trailer	150
Asset Acquisition, Carry Value Of Assets Acquired	$ 13.3
Asset Acquisition, Carry Value Of Assets Acquired, Owned Assets	0.5
Asset Acquisition, Carry Value Of Assets Acquired, Right-Of-Use Assets	12.8
Asset Acquisition, Transaction Cost	$ 0.3
Big Spring Gathering Asset
Schedule of Asset Acquisitions, by Acquisition [Line Items]
Consideration transferred		$ 100.0
Asset Acquisition, Equity Interest Transfered As Consideration, Shares | shares		5,000,000.0
Asset Acquisition, Equity Interest Transfered As Consideration, Market Price | $ / shares		$ 9.10
Asset Acquisition, Equity Interest Transfered As Consideration, Value		$ 109.5
Number Of Miles Of Gathering Systems | mi		200
Number of storage tanks | storage_tank		65
Total Storage Of Terminals | bbl		650,000
Asset Acquisition, Carry Value Of Assets Acquired		$ 209.5
Asset Acquisition, Transaction Cost		$ 0.7

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Related Party Transactions - Commercial Agreements (Details)	6 Months Ended
	Jun. 30, 2020
Minimum [Member]
Related Party Transaction [Line Items]
Commercial Agreements, Initial Term	5 years
Maximum
Related Party Transaction [Line Items]
Commercial Agreements, Initial Term	10 years

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Related Party Transactions - Throughput and Deficiency Agreement (Details)									3 Months Ended		6 Months Ended
	May 12, 2020 USD ($)	May 01, 2020 USD ($)	Mar. 31, 2020 USD ($) bbl / pure	Feb. 12, 2020 USD ($)	Nov. 12, 2019 USD ($)	Aug. 13, 2019 USD ($)	May 14, 2019 USD ($)	Feb. 12, 2019 USD ($)	Jun. 30, 2020 USD ($)	Jun. 30, 2019 USD ($)	Jun. 30, 2020 USD ($)	Jun. 30, 2019 USD ($)
Related Party Transaction [Line Items]
Distribution Made to Limited Partner, Cash Distributions Paid	$ 30,878,000			$ 30,634,000	$ 30,379,000	$ 28,914,000	$ 27,400,000	$ 26,900,000	$ 47,558,000		$ 47,558,000
Delek US and affiliates
Related Party Transaction [Line Items]
Distribution Made to Limited Partner, Cash Distributions Paid	$ 23,200,000			$ 22,600,000			$ 20,000,000.0	$ 19,600,000
Throughput and Deficiency Agreement | Delek US and affiliates
Related Party Transaction [Line Items]
Commitment To Minimum Revenue		$ 39,000,000.0
Shipments Committed On The Gathering System (in Bbd)			120,000
Shipments Committed To Redelivery Point (in Bbd)			50,000
Commitment To Connect Additional Receipt Points			$ 33,800,000
Return On The Actual Costs (in percent)			12.50%
Collaborative Arrangement, Term		10 years	10 years
Delek US | Other long term liabilities | Omnibus Agreement | Delek US and affiliates
Related Party Transaction [Line Items]
Reimbursement of capital expenditures by Sponsor										$ 700,000	$ 600,000	$ 1,500,000

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Related Party Transactions - Omnibus Agreement (Details) - Delek US and affiliates - USD ($) $ in Thousands		3 Months Ended		6 Months Ended
	Mar. 01, 2018	Jun. 30, 2020	Jun. 30, 2019	Jun. 30, 2020	Jun. 30, 2019
Operating and maintenance expense
Related Party Transaction [Line Items]
Expenses		$ 10,310	$ 10,590	$ 23,067	$ 20,515
Omnibus Agreement
Related Party Transaction [Line Items]
Related Party Annual Service Fee	$ 4,100
Omnibus Agreement | Delek US
Related Party Transaction [Line Items]
Reimbursement for costs incurred for asset failures			700		4,100
Omnibus Agreement | Delek US | Operating and maintenance expense
Related Party Transaction [Line Items]
Reimbursement for costs incurred for asset failures			2,200	100	5,700
Omnibus Agreement | Delek US | Other long term liabilities
Related Party Transaction [Line Items]
Reimbursement of capital expenditures by Delek Holdings			700	600	1,500
DPG Management Agreement, Operating Service And Construction Fee Paid To Partnership
Related Party Transaction [Line Items]
Expenses		$ 400	$ 1,000	$ 1,200	$ 2,800

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Related Party Transactions - Additional Information (Details) - USD ($) $ in Millions		1 Months Ended	3 Months Ended		6 Months Ended
	Mar. 31, 2020	Mar. 31, 2020	Jun. 30, 2020	Jun. 30, 2019	Jun. 30, 2020	Jun. 30, 2019	Mar. 01, 2020	Feb. 29, 2020
Related Party Transaction [Line Items]
Stock Repurchased During Period, Shares					0
Stock Repurchased During Period, Value		$ 5.0
Asset Acquisition, Equity Interest Transfered As Consideration, Shares					5,000,000
Waiver Termination Threshold, Percent	110.00%
Delek US and affiliates
Related Party Transaction [Line Items]
Related Party. Ownership Percentage In Company			70.50%		70.50%		62.60%	64.50%
Delek US and affiliates | DPG Management Agreement, Operating Service And Construction Fee Paid To Partnership
Related Party Transaction [Line Items]
Related Party Transaction, Expenses from Transactions with Related Party			$ 0.4	$ 1.0	$ 1.2	$ 2.8
Big Spring Gathering Asset
Related Party Transaction [Line Items]
Asset Acquisition, Equity Interest Transfered As Consideration, Shares	5,000,000.0

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Related Party Transactions - Summary of Transactions (Details) - USD ($) $ in Thousands		3 Months Ended		6 Months Ended
		Jun. 30, 2020	Jun. 30, 2019	Jun. 30, 2020	Jun. 30, 2019
Related Party Transaction [Line Items]
Revenue from Related Parties	[1]	$ 87,629	$ 61,918	$ 194,328	$ 124,883
Delek US and affiliates
Related Party Transaction [Line Items]
Revenue from Related Parties		87,629	61,918	194,328	124,883
General and administrative expenses		2,703	1,748	6,072	3,118
Cost of Sales [Member] | Delek US and affiliates
Related Party Transaction [Line Items]
Expenses		29,730	73,213
Purchases from Affiliates [Member] | Delek US and affiliates
Related Party Transaction [Line Items]
Expenses				110,493	152,647
Operating and maintenance expense | Delek US and affiliates
Related Party Transaction [Line Items]
Expenses		$ 10,310	$ 10,590	$ 23,067	$ 20,515

[1] See Note 3 for a description of our material affiliate revenue transactions.

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Related Party Transactions - Quarterly Cash Distributions (Details) - USD ($) $ in Thousands								3 Months Ended	6 Months Ended
	Aug. 12, 2020	May 12, 2020	Feb. 12, 2020	Nov. 12, 2019	Aug. 13, 2019	May 14, 2019	Feb. 12, 2019	Jun. 30, 2020	Jun. 30, 2020
Related Party Transaction [Line Items]
Distribution Made to Limited Partner, Cash Distributions Paid		$ 30,878	$ 30,634	$ 30,379	$ 28,914	$ 27,400	$ 26,900	$ 47,558	$ 47,558
Subsequent Event
Related Party Transaction [Line Items]
Distribution Made to Limited Partner, Cash Distributions Paid	$ 35,969
Delek US and affiliates
Related Party Transaction [Line Items]
Distribution Made to Limited Partner, Cash Distributions Paid		$ 23,200	$ 22,600			$ 20,000	$ 19,600
Delek US and affiliates | Subsequent Event
Related Party Transaction [Line Items]
Distribution Made to Limited Partner, Cash Distributions Paid	$ 28,200

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Revenues (Details) - USD ($) $ in Thousands	3 Months Ended		6 Months Ended
	Jun. 30, 2020	Jun. 30, 2019	Jun. 30, 2020	Jun. 30, 2019	Dec. 31, 2019
Disaggregation of Revenue [Line Items]
Property, plant and equipment	$ 473,744		$ 473,744		$ 295,044
Total revenue	117,637	$ 155,342	281,038	$ 307,825
Amortization of customer contract intangible assets	1,800	1,800	3,605	3,605
Revenue, remaining performance obligation	1,625,664		1,625,664
Service Revenue - Third Party
Disaggregation of Revenue [Line Items]
Total revenue	2,236	7,661	11,892	11,755
Product Revenue - Third Party
Disaggregation of Revenue [Line Items]
Total revenue	27,772	85,763	74,818	171,187
Product Revenue - Affiliate
Disaggregation of Revenue [Line Items]
Total revenue	6,720	7,187	58,222	16,573
Lease Revenue - Affiliate (1)
Disaggregation of Revenue [Line Items]
Total revenue	80,909	54,731	136,106	108,310
Pipelines and transportation
Disaggregation of Revenue [Line Items]
Property, plant and equipment	407,439		407,439
Total revenue	63,426	44,208	111,393	84,841
Pipelines and transportation | Service Revenue - Third Party
Disaggregation of Revenue [Line Items]
Total revenue	2,032	7,477	11,496	11,451
Pipelines and transportation | Product Revenue - Third Party
Disaggregation of Revenue [Line Items]
Total revenue	0	0	0	0
Pipelines and transportation | Product Revenue - Affiliate
Disaggregation of Revenue [Line Items]
Total revenue	0	0	0	0
Pipelines and transportation | Lease Revenue - Affiliate (1)
Disaggregation of Revenue [Line Items]
Total revenue	61,394	36,731	99,897	73,390
Wholesale marketing and terminalling
Disaggregation of Revenue [Line Items]
Property, plant and equipment	66,305		66,305
Total revenue	54,211	111,134	169,645	222,984
Wholesale marketing and terminalling | Service Revenue - Third Party
Disaggregation of Revenue [Line Items]
Total revenue	204	184	396	304
Wholesale marketing and terminalling | Product Revenue - Third Party
Disaggregation of Revenue [Line Items]
Total revenue	27,772	85,763	74,818	171,187
Wholesale marketing and terminalling | Product Revenue - Affiliate
Disaggregation of Revenue [Line Items]
Total revenue	6,720	7,187	58,222	16,573
Wholesale marketing and terminalling | Lease Revenue - Affiliate (1)
Disaggregation of Revenue [Line Items]
Total revenue	19,515	$ 18,000	36,209	$ 34,920
Assets Leased to Others [Member]
Disaggregation of Revenue [Line Items]
Property, plant and equipment	$ 358,500		$ 358,500
Maximum
Disaggregation of Revenue [Line Items]
Commercial Agreements, Initial Term			10 years
Minimum [Member]
Disaggregation of Revenue [Line Items]
Commercial Agreements, Initial Term			5 years

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Revenues - Remaining Performance Obligation Expected Timing of Satisfaction - Period (Details) $ in Thousands	Jun. 30, 2020 USD ($)
Revenue, Remaining Performance Obligation, Expected Timing of Satisfaction [Line Items]
Revenue, remaining performance obligation	$ 1,625,664
Revenue, Remaining Performance Obligation, Expected Timing of Satisfaction, Start Date [Axis]: 2020-01-01
Revenue, Remaining Performance Obligation, Expected Timing of Satisfaction [Line Items]
Revenue, remaining performance obligation, expected timing of satisfaction	1 year
Revenue, Remaining Performance Obligation, Expected Timing of Satisfaction, Start Date [Axis]: 2020-04-01
Revenue, Remaining Performance Obligation, Expected Timing of Satisfaction [Line Items]
Revenue, remaining performance obligation	$ 134,043
Revenue, remaining performance obligation, expected timing of satisfaction	1 year
Revenue, Remaining Performance Obligation, Expected Timing of Satisfaction, Start Date [Axis]: 2021-01-01
Revenue, Remaining Performance Obligation, Expected Timing of Satisfaction [Line Items]
Revenue, remaining performance obligation	$ 267,990
Revenue, remaining performance obligation, expected timing of satisfaction	1 year
Revenue, Remaining Performance Obligation, Expected Timing of Satisfaction, Start Date [Axis]: 2022-01-01
Revenue, Remaining Performance Obligation, Expected Timing of Satisfaction [Line Items]
Revenue, remaining performance obligation	$ 249,850
Revenue, remaining performance obligation, expected timing of satisfaction	1 year
Revenue, Remaining Performance Obligation, Expected Timing of Satisfaction, Start Date [Axis]: 2023-01-01
Revenue, Remaining Performance Obligation, Expected Timing of Satisfaction [Line Items]
Revenue, remaining performance obligation	$ 240,489
Revenue, remaining performance obligation, expected timing of satisfaction	1 year
Revenue, Remaining Performance Obligation, Expected Timing of Satisfaction, Start Date [Axis]: 2024-01-01
Revenue, Remaining Performance Obligation, Expected Timing of Satisfaction [Line Items]
Revenue, remaining performance obligation	$ 733,292
Revenue, remaining performance obligation, expected timing of satisfaction

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Inventory (Details) - USD ($) $ in Thousands	Jun. 30, 2020	Dec. 31, 2019
Inventory [Line Items]
Inventories	$ 2,140	$ 12,617

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Long-Term Obligations - Second Amended and Restated Credit Agreement (Details) - Line of Credit - Revolving Credit Facility - Fifth Third Bank - USD ($)		6 Months Ended
	Dec. 30, 2014	Jun. 30, 2020	Sep. 28, 2018	Sep. 27, 2018
Line of Credit Facility [Line Items]
Weighted average interest rate (as percent)		2.78%
Prime Rate | United States of America, Dollars
Line of Credit Facility [Line Items]
Variable rate description	U.S. dollar prime rate
London Interbank Offered Rate (LIBOR) | United States of America, Dollars
Line of Credit Facility [Line Items]
Variable rate description	LIBOR
Canadian prime rate | Canada, Dollars
Line of Credit Facility [Line Items]
Variable rate description	Canadian dollar prime rate
Canadian Dealer Offered Rate (CDOR) | Canada, Dollars
Line of Credit Facility [Line Items]
Variable rate description	Canadian Dealer Offered Rate
DKL Revolver
Line of Credit Facility [Line Items]
Maximum lender commitment			$ 850,000,000.0	$ 700,000,000.0
Maximum amount under accordion feature			$ 1,000,000,000.0
Second Amended and Restated Credit Agreement
Line of Credit Facility [Line Items]
Commitment fee (as percent)		0.40%
Outstanding borrowings		$ 750,000,000.0
Letters of credit outstanding		0
Unused credit commitment		$ 100,000,000.0

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Long-Term Obligations - 6.75% Senior Notes Due 2025 (Details) - Senior Notes - Senior 2025 Notes - USD ($)		6 Months Ended
	May 23, 2017	Jun. 30, 2020	Dec. 31, 2019
Debt Instrument [Line Items]
Face amount of debt	$ 250,000,000.0
Interest rate (as percent)	6.75%
Purchase price (as percent)		101.00%
Long-term Line of Credit		$ 250,000,000.0
Debt Instrument, Interest Rate, Effective Percentage		7.22%
Deferred financing costs		$ 3,600,000	$ 4,000,000.0
Debt discount		$ 1,200,000	$ 1,300,000
Twelve-month period beginning on May 15, 2020
Debt Instrument [Line Items]
Redemption price (as percent)	105.063%
Twelve-month period beginning on May 15, 2021
Debt Instrument [Line Items]
Redemption price (as percent)	103.375%
Twelve-month period beginning on May 15, 2022
Debt Instrument [Line Items]
Redemption price (as percent)	101.688%
Beginning on May 15, 2023 and thereafter
Debt Instrument [Line Items]
Redemption price (as percent)	100.00%

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Net Income Per Unit - Narrative (Details) - shares		3 Months Ended		6 Months Ended
	Mar. 31, 2020	Jun. 30, 2020	Jun. 30, 2019	Jun. 30, 2020	Jun. 30, 2019
Asset Acquisition, Equity Interest Transfered As Consideration, Shares				5,000,000
General Partnership [Member]
General partner's ownership interest (as percent)		2.00%	2.00%	2.00%	2.00%
Big Spring Gathering Asset
Asset Acquisition, Equity Interest Transfered As Consideration, Shares	5,000,000.0

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Net Income Per Unit (Details) - USD ($) $ / shares in Units, $ in Thousands	3 Months Ended		6 Months Ended
	Jun. 30, 2020	Jun. 30, 2019	Jun. 30, 2020	Jun. 30, 2019
Net Income Per Unit [Line Items]
Net income attributable to partners	$ 44,415	$ 24,885	$ 72,211	$ 44,581
Less: Partners' distribution	26,490	20,754	48,229	40,769
Allocation of earnings in excess (deficit) of distributions	$ 8,446	$ (4,029)	$ 5,364	$ (11,771)
Footnote [Abstract]
Common Units Excluded From Computation Of Earnings Per Unit, Units		0	18,270	0
Common Units
Net Income Per Unit [Line Items]
Common units - (basic) (in shares)	29,427,298	24,409,359	26,953,934	24,408,270
Common units - (diluted) (in shares)	29,430,555	24,414,343	26,956,523	24,414,077
Common units - (basic) (in dollars per share)	$ 1.18	$ 0.69	$ 1.98	$ 1.20
Common units - (diluted) (in dollars per share)	$ 1.18	$ 0.69	$ 1.98	$ 1.20
General Partner
Net Income Per Unit [Line Items]
Net income attributable to partners	$ 9,647	$ 8,079	$ 18,724	$ 15,349
Less: General partner's distribution (including IDRs)	9,479	8,160	18,618	15,583
Allocation of earnings in excess (deficit) of distributions	168	(81)	106	(235)
Total partner's earnings	9,647	8,079	18,724	15,348
Common unitholders
Net Income Per Unit [Line Items]
Less: Partners' distribution			48,229	40,769
Allocation of earnings in excess (deficit) of distributions			$ 5,258	$ (11,536)
Common units - (basic) (in shares)			26,953,934	24,408,270
Common units - (diluted) (in shares)			26,956,523	24,414,077
Common units - (basic) (in dollars per share)			$ 1.98	$ 1.20
Common units - (diluted) (in dollars per share)			$ 1.98	$ 1.20
Common unitholders | Common Units
Net Income Per Unit [Line Items]
Less: Partners' distribution	26,490	20,754
Allocation of earnings in excess (deficit) of distributions	8,278	(3,948)
Total partner's earnings	$ 34,768	$ 16,806	$ 53,487	$ 29,233
Common units - (basic) (in shares)	29,427,298	24,409,359
Common units - (diluted) (in shares)	29,430,555	24,414,343
Common units - (basic) (in dollars per share)	$ 1.18	$ 0.69
Common units - (diluted) (in dollars per share)	1.18	$ 0.69
Maximum
Footnote [Abstract]
Distribution Payment Targets	$ 0.43125
General Partnership [Member]
Footnote [Abstract]
General partner's ownership interest (as percent)	2.00%	2.00%	2.00%	2.00%

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Equity - Narrative (Details) - shares	1 Months Ended	3 Months Ended		6 Months Ended
	Mar. 31, 2020	Jun. 30, 2020	Jun. 30, 2019	Jun. 30, 2020	Jun. 30, 2019	Dec. 31, 2019
Delek US
Class of Stock [Line Items]
Ownership Interest in General Partner (as percent)		94.80%		94.80%
Affiliates
Class of Stock [Line Items]
Ownership Interest in General Partner (as percent)		5.20%		5.20%
Limited Partner | Common unitholders - public
Class of Stock [Line Items]
Common units outstanding (in shares)		8,687,371		8,687,371		9,131,579
Limited Partner | Common unitholders - Delek
Class of Stock [Line Items]
Common units outstanding (in shares)		20,745,868		20,745,868		15,294,046
General Partner
Class of Stock [Line Items]
General partner units outstanding (units)		600,678		600,678		498,482
Delek US Holdings, Inc.
Class of Stock [Line Items]
Delek's limited partner ownership interest (as percent)				69.10%
General Partnership [Member]
Class of Stock [Line Items]
General partner's ownership interest (as percent)		2.00%	2.00%	2.00%	2.00%
Delek US Holdings, Inc.
Class of Stock [Line Items]
Ownership Interest in General Partner (as percent)		0.20%		0.20%
Big Spring Gathering Asset | Limited Partner
Class of Stock [Line Items]
Variable Interest Entity, Qualitative or Quantitative Information, Ownership Percentage	70.50%

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Equity - Equity Activity (Details) - shares	3 Months Ended		6 Months Ended
	Jun. 30, 2020	Jun. 30, 2019	Jun. 30, 2020	Jun. 30, 2019
Increase (Decrease) in Partners' Capital (Roll Forward)
Beginning Balance			24,924,107
Ending Balance	30,033,917		30,033,917
General partner units issued to maintain 2% interest			102,196
Unit-based compensation awards (1)			7,614
Big Spring Gathering Assets Acquisition equity issuance			5,000,000
Delek Holdings Unit purchases from public			0
Units withheld for taxes			481
Limited Partner | Common unitholders - public
Increase (Decrease) in Partners' Capital (Roll Forward)
Beginning Balance			9,131,579
Ending Balance	8,687,371		8,687,371
General partner units issued to maintain 2% interest			0
Unit-based compensation awards (1)			7,614
Big Spring Gathering Assets Acquisition equity issuance			0
Delek Holdings Unit purchases from public			(451,822)
Limited Partner | Common unitholders - Delek
Increase (Decrease) in Partners' Capital (Roll Forward)
Beginning Balance			15,294,046
Ending Balance	20,745,868		20,745,868
General partner units issued to maintain 2% interest			0
Unit-based compensation awards (1)			0
Big Spring Gathering Assets Acquisition equity issuance			5,000,000
Delek Holdings Unit purchases from public			451,822
General Partner
Increase (Decrease) in Partners' Capital (Roll Forward)
Beginning Balance			498,482
Ending Balance	600,678		600,678
General partner units issued to maintain 2% interest			102,196
Unit-based compensation awards (1)			0
Big Spring Gathering Assets Acquisition equity issuance			0
Delek Holdings Unit purchases from public			0
General Partnership [Member]
General partner's ownership interest (as percent)	2.00%	2.00%	2.00%	2.00%

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Equity - Allocations of Net Income (Details) - USD ($) $ in Thousands	3 Months Ended		6 Months Ended
	Jun. 30, 2020	Jun. 30, 2019	Jun. 30, 2020	Jun. 30, 2019
Net income attributable to partners	$ 44,415	$ 24,885	$ 72,211	$ 44,581
Less: General partner's IDRs	(8,937)	(7,736)	(17,632)	(14,751)
Net income available to partners	35,478	17,149	54,579	29,830
General partner's allocated interest in net income	710	343	1,092	597
General partner's IDRs	8,937	7,736	17,632	14,751
Total general partner's interest in net income	$ 9,647	$ 8,079	$ 18,724	$ 15,348
General Partnership [Member]
General partner's ownership interest (as percent)	2.00%	2.00%	2.00%	2.00%

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Equity - Incentive Distribution Rights (Details) - $ / shares		3 Months Ended		6 Months Ended
	Mar. 31, 2020	Jun. 30, 2020	Jun. 30, 2019	Jun. 30, 2020	Jun. 30, 2019
Incentive Distribution Made to Managing Member or General Partner [Line Items]
Limited Liability Company (LLC) or Limited Partnership (LP), Managing Member or General Partner, Ownership Interest, Increasing Percentage, Maximum				48.00%
Asset Acquisition, Equity Interest Transfered As Consideration, Shares				5,000,000
Maximum
Incentive Distribution Made to Managing Member or General Partner [Line Items]
Distribution Payment Targets		$ 0.43125
General Partnership [Member]
Equity [Abstract]
General partner's ownership interest (as percent)		2.00%	2.00%	2.00%	2.00%
Big Spring Gathering Asset
Incentive Distribution Made to Managing Member or General Partner [Line Items]
Asset Acquisition, Equity Interest Transfered As Consideration, Shares	5,000,000.0

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Equity - Cash Distributions (Details) - USD ($) $ / shares in Units, $ in Thousands								3 Months Ended		6 Months Ended
	Aug. 12, 2020	May 12, 2020	Feb. 12, 2020	Nov. 12, 2019	Aug. 13, 2019	May 14, 2019	Feb. 12, 2019	Jun. 30, 2020	Jun. 30, 2019	Jun. 30, 2020	Jun. 30, 2019
Distribution Made to Limited Partner [Line Items]
Total Quarterly Distribution Per Limited Partner Unit - Paid (in dollars per share)		$ 0.890	$ 0.885	$ 0.880	$ 0.850
Total Quarterly Distribution Per Limited Partner Unit, Annualized - Paid (in dollars per share)		$ 3.56	$ 3.54	$ 3.52	$ 3.40
Total Cash Distribution, including general partner interest and IDRs		$ 30,878	$ 30,634	$ 30,379	$ 28,914	$ 27,400	$ 26,900	$ 47,558		$ 47,558
Total Quarterly Distribution Per Limited Partner Unit - Declared (in dollars per share)								$ 0.900	$ 0.850	$ 1.790	$ 1.670
Subsequent Event
Distribution Made to Limited Partner [Line Items]
Total Quarterly Distribution Per Limited Partner Unit - Paid (in dollars per share)	$ 0.900
Total Quarterly Distribution Per Limited Partner Unit, Annualized - Paid (in dollars per share)	$ 3.60
Total Cash Distribution, including general partner interest and IDRs	$ 35,969

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Equity - Distributions Earned (Details) - USD ($) $ / shares in Units, $ in Thousands	3 Months Ended		6 Months Ended
	Jun. 30, 2020	Jun. 30, 2019	Jun. 30, 2020	Jun. 30, 2019
Equity [Abstract]
General partner's distributions	$ 542	$ 424	$ 986	$ 832
General partner's IDRs	8,937	7,736	17,632	14,751
Total general partner's distributions	9,479	8,160	18,618	15,583
Common limited partners' distributions	26,490	20,754	48,229	40,769
Total cash distributions	$ 35,969	$ 28,914	$ 66,847	$ 56,352
Cash distributions per limited partner unit (in dollars per share)	$ 0.900	$ 0.850	$ 1.790	$ 1.670

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Equity Method Investments (Details) $ in Thousands	1 Months Ended	6 Months Ended
	May 31, 2019 USD ($)	Jun. 30, 2020 USD ($) joint_venture	Jun. 30, 2019 USD ($)	Dec. 31, 2019 USD ($)
Schedule of Equity Method Investments [Line Items]
Equity method investments, number of joint ventures | joint_venture		3
Investment in joint ventures		$ 255,323		$ 246,984
Payments to Acquire Equity Method Investments		$ 10,515	$ 134,998
Red River
Schedule of Equity Method Investments [Line Items]
Ownership interest (as percent)	33.00%
Investment in joint ventures	$ 124,700
CP LLC And Rangeland Energy
Schedule of Equity Method Investments [Line Items]
Equity method investments, number of joint ventures | joint_venture		2
CP LLC
Schedule of Equity Method Investments [Line Items]
Ownership interest (as percent)		50.00%
Rangeland Rio
Schedule of Equity Method Investments [Line Items]
Ownership interest (as percent)		33.00%
Red River Start Up Capital
Schedule of Equity Method Investments [Line Items]
Payments to Acquire Equity Method Investments	400
Red River Expansion
Schedule of Equity Method Investments [Line Items]
Payments to Acquire Equity Method Investments	$ 3,500	$ 10,500

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Equity Method Investments - Summarized Financial Information (Details) - USD ($) $ in Thousands	3 Months Ended		6 Months Ended
	Jun. 30, 2020	Jun. 30, 2019	Jun. 30, 2020	Jun. 30, 2019	Dec. 31, 2019
Schedule of Equity Method Investments [Line Items]
Current Assets	$ 43,497		$ 43,497		$ 33,570
Current liabilities	17,975		17,975		35,082
Revenues	117,637	$ 155,342	281,038	$ 307,825
Operating income	47,881	32,256	82,923	61,367
Net Income	44,415	24,885	72,211	44,581
Equity Method Investment, Nonconsolidated Investee or Group of Investees [Member] | Red River
Schedule of Equity Method Investments [Line Items]
Current Assets	11,376		11,376		9,278
Non-current Assets	416,554		416,554		381,778
Current liabilities	17,869		17,869		8,291
Revenues	11,873	14,391	21,969	26,017
Gross Profit	7,175	9,191	13,062	14,466
Operating income	7,000	8,942	12,697	13,652
Net Income	7,025	8,942	12,746	13,652
Equity Method Investment, Nonconsolidated Investee or Group of Investees [Member] | Joint Ventures [Member]
Schedule of Equity Method Investments [Line Items]
Current Assets	20,040		20,040		29,476
Non-current Assets	258,751		258,751		262,300
Current liabilities	2,381		2,381		$ 6,391
Revenues	12,738	10,077	28,185	19,191
Gross Profit	8,198	5,688	18,834	10,584
Operating income	7,724	5,223	17,864	9,624
Net Income	$ 7,729	$ 5,249	$ 17,887	$ 9,666

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Segment Data - Narrative (Details)	6 Months Ended
	Jun. 30, 2020 segment
Segment Reporting [Abstract]
Number of reportable segments	2

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Segment Data (Details) - USD ($) $ in Thousands		3 Months Ended		6 Months Ended
		Jun. 30, 2020	Jun. 30, 2019	Jun. 30, 2020	Jun. 30, 2019	Dec. 31, 2019
Segment Reporting Information [Line Items]
Affiliates (1)	[1]	$ 87,629	$ 61,918	$ 194,328	$ 124,883
Third party		30,008	93,424	86,710	182,942
Net revenues		117,637	155,342	281,038	307,825
Cost of materials and other		43,892	93,854	145,185	190,119
Operating expenses (excluding depreciation and amortization presented below)		12,449	17,327	27,193	33,385
Segment contribution margin		61,296	44,161	108,660	84,321
General and administrative expenses		4,721	5,293	10,851	9,766
Depreciation and amortization		8,694	6,639	14,993	13,213
Gain on asset disposals		0	(27)	(107)	(25)
Other Operating Income (Expense), Net		0	27	107	25
Operating income		47,881	32,256	82,923	61,367
Capital spending		652	1,342	3,681	2,246
Total assets		973,737		973,737		$ 744,447
Pipelines and transportation
Segment Reporting Information [Line Items]
Affiliates (1)		61,394	36,731	99,897	73,390
Third party		2,032	7,477	11,496	11,451
Net revenues		63,426	44,208	111,393	84,841
Operating expenses (excluding depreciation and amortization presented below)		9,731	12,728	21,187	23,562
Segment contribution margin		42,513	24,123	72,926	48,355
Capital spending		417	818	863	1,242
Total assets		836,510		836,510		537,580
Wholesale marketing and terminalling
Segment Reporting Information [Line Items]
Affiliates (1)		26,235	25,187	94,431	51,493
Third party		27,976	85,947	75,214	171,491
Net revenues		54,211	111,134	169,645	222,984
Operating expenses (excluding depreciation and amortization presented below)		2,718	4,599	6,006	9,823
Segment contribution margin		18,783	20,038	35,734	35,966
Capital spending		235	524	2,818	1,004
Total assets		137,227		137,227		$ 206,867
Service
Segment Reporting Information [Line Items]
Cost of materials and other		43,892	93,854	145,185	190,119
Service | Pipelines and transportation
Segment Reporting Information [Line Items]
Cost of materials and other		11,182	7,357	17,280	12,924
Service | Wholesale marketing and terminalling
Segment Reporting Information [Line Items]
Cost of materials and other		$ 32,710	$ 86,497	$ 127,905	$ 177,195

[1] See Note 3 for a description of our material affiliate revenue transactions.

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Segment Data - PP&E (Details) - USD ($) $ in Thousands	3 Months Ended	6 Months Ended
	Jun. 30, 2020	Jun. 30, 2020	Dec. 31, 2019
Segment Reporting Information [Line Items]
Property, plant and equipment	$ 680,969	$ 680,969	$ 461,325
Less: accumulated depreciation	(207,225)	(207,225)	(166,281)
Property, plant and equipment, net	473,744	473,744	$ 295,044
Depreciation expense	8,621	14,920
Pipelines and transportation
Segment Reporting Information [Line Items]
Property, plant and equipment	566,780	566,780
Less: accumulated depreciation	(159,341)	(159,341)
Property, plant and equipment, net	407,439	407,439
Depreciation expense	6,947	11,553
Wholesale marketing and terminalling
Segment Reporting Information [Line Items]
Property, plant and equipment	114,189	114,189
Less: accumulated depreciation	(47,884)	(47,884)
Property, plant and equipment, net	66,305	66,305
Depreciation expense	$ 1,674	$ 3,367

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Commitments and Contingencies - Crude Oil Releases (Details) $ in Millions	3 Months Ended		6 Months Ended		12 Months Ended
	Jun. 30, 2020 USD ($)	Jun. 30, 2019 USD ($)	Jun. 30, 2020 USD ($) oil_releases	Jun. 30, 2019 USD ($)	Dec. 31, 2019 USD ($) oil_releases
Loss Contingencies [Line Items]
Number Of Crude Oil Releases | oil_releases			0		5
Accrual for environmental loss contingencies, period increase (decrease)		$ 0.2		$ 0.3
Accrual for Environmental Loss Contingencies, Charges to Expense for New Losses	$ 0.1		$ 0.3		$ 7.1
Operating Expense [Member]
Loss Contingencies [Line Items]
Accrual for environmental loss contingencies	$ 0.3		0.3
Delek US | Omnibus Agreement | Delek US and affiliates
Loss Contingencies [Line Items]
Reimbursement for costs incurred for asset failures		0.7		4.1
Delek US | Omnibus Agreement | Operating Expense [Member] | Delek US and affiliates
Loss Contingencies [Line Items]
Reimbursement for costs incurred for asset failures		$ 2.2	$ 0.1	$ 5.7

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Commitments and Contingencies - Letters of Credit (Details)	Jun. 30, 2020 USD ($)
Second Amended and Restated Credit Agreement | Line of Credit | Revolving Credit Facility | Fifth Third Bank
Debt Instrument [Line Items]
Letters of credit outstanding	$ 0

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Leases - Lease Cost and Other Information (Details) - USD ($) $ in Thousands	3 Months Ended		6 Months Ended
	Jun. 30, 2020	Jun. 30, 2019	Jun. 30, 2020	Jun. 30, 2019
Leases [Abstract]
Operating lease cost	$ 1,926	$ 1,472	$ 2,526	$ 2,899
Short-term lease cost	757	326	1,077	803
Variable lease costs	60	0	272	0
Total lease cost	2,743	1,798	3,875	3,702
Cash paid for amounts included in the measurement of lease liabilities
Operating cash flows from operating leases	(1,926)	$ (1,472)	(2,526)	(2,899)
Leased assets obtained in exchange for new operating lease liabilities	$ 15,779		$ 15,779	$ 0
Weighted-average remaining lease term (years) for operating leases	3 years 9 months 18 days		3 years 9 months 18 days
Weighted-average discount rate (2) operating leases	5.80%		5.80%

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Subsequent Events - Distribution Declaration (Details) - $ / shares						3 Months Ended		6 Months Ended
	Aug. 12, 2020	May 12, 2020	Feb. 12, 2020	Nov. 12, 2019	Aug. 13, 2019	Jun. 30, 2020	Jun. 30, 2019	Jun. 30, 2020	Jun. 30, 2019
Subsequent Event [Line Items]
Distribution Made to Limited Partner, Distributions Paid, Per Unit		$ 0.890	$ 0.885	$ 0.880	$ 0.850
Cash distributions per limited partner unit (in dollars per share)						$ 0.900	$ 0.850	$ 1.790	$ 1.670
Subsequent Event
Subsequent Event [Line Items]
Distribution Made to Limited Partner, Distributions Paid, Per Unit	$ 0.900