Delek US (DK) 5 Aug 192019 Q2 Earnings call transcript

Company Profile

Participants

Keith Johnson	VP of IR
Uzi Yemin	Chairman, President and CEO
Assi Ginzburg	EVP and CFO
Blake Fernandez	SVP of IR
Fred Greene	EVP and COO
Manav Gupta	Credit Suisse
Roger Read	Wells Fargo
Patrick Flam	Simmons Energy
Neil Mehta	Goldman Sachs
Phil Gresh	JP Morgan
Paul Sankey	Mizuho
Doug Leggate	Bank of America
Paul Cheng	Scotia Howard Weil
Matthew Blair	Tudor, Pickering, Holt

Call transcript

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Operator

Good morning. My name is Prince, and I will be your conference operator today. At this time, I would like to welcome everyone to the Second Quarter Earnings Call for Delek Holdings Incorporated. All lines have been placed on mute to prevent any background noise. After the speakers' remarks, there will be a question-and-answer session [Operator Instructions]. you. Thank

turn to to Johnson. call the like Keith over I'd

You may begin.

Keith Johnson

discuss Good Prince. conference to to XXXX morning. thank you, results. call second financial everyone webcast today's like on I'd Thank quarter us for and DK joining

of Yemin, and me and Chairman, as COO, CFO; Fernandez, as CEO; Joining and IR; members and President SVP EVP well our of is our Ginzburg, Fred today's call Blake on management Uzi team. Assi Greene, other EVP

found using Presentation Relations today's on on materials be Web Investor of can be U.S.'s Delek we'll section call site.

may As this Please forward-looking reminder, the term a that X is Slide under call Safe laws. contain securities statements statements. federal as Harbor for defined see

encouraged financial be found In GAAP our results we is Web site. accordance addition can certain GAAP, measures result, reporting the reconciliation which press the of with in posted financial Relations of these review on to to Investor the Investors comparable non-GAAP non-GAAP which release, to are in report financial results. section

Our reviewed as made prepared been market covering segment less in XQ release are information release. assuming earnings and press the remarks that is we has incorporated the are that being

call; Assi, will financial cover an and overview will of review will will quarter; results; operations closing then, Blake, Fred, then the comments. strategic give performance; for Uzi, today's few On offer

I'll the call turn that, With over to Uzi.

Uzi Yemin

the Thanks great result lower of period during crude Keith. Midland a discount. quarter had We this oil financial

income for period. or an compared share adjusted basis share or prior-year on As adjusted per net million, X, million $XX.X $X.XX in the quarter an you of $X.XX XXXX, to $XX.X diluted can on see U.S. the net income adjusted second per Delek reported Slide of diluted

quarter to increased in the EBITDA million the XXXX $XXX.X million in adjusted by to period. prior-year Our compared $XXX.X XX% second

to Fred Red acquisition gathering to the discuss River minutes, associated our enhancement the a and to of will DKL's continue of Wink system our efforts expand participation we our in in initiative develop midterm Webster with few As ongoing JV.

to gives investment. least sheet could options which on existing project to us cash finance include balance Webster facility, preserve to JV the us flexibility our evaluate to Wink This credit expanding allow should at Our our of XX% hand. financing,

turn Now, Blake for to performance quarter. the our over discuss financial I will to it

Blake Fernandez

Delek continued of was Springs the including led $X investments, diluted increase at second the This of market share income an unit the $XX.X of River U.S. contribution per in reported income conditions, by and crack from Uzi. share to XXXX. million Thanks net net or or Krotz including in commercial per billion compared alkylation $XX.X diluted $X.XX execution. along with Red spreads, JV, quarter new

press As related were year reduced mentioned of million to in $XX.X mark-to-market by RINs the a approximately results inventory release, prior position.

a shareholders capital in provide River investing between with cash dividends. solid $XXX generated along continuing include note, point impact $XX.X cash business million investing I our we combined cash supported million of approximately the equity from of X, that acquisition. expenditures including the with $XX cash should out XXXX, the operations. quarter million flow second capital of approximately underlying we cash waterfall. includes movements. Slide Strong On flow In this from negative of working of buybacks in overall with financial position the Red returning quarter investments, activities to million $XX and Of a

debt. basis $XXX of ended of net million Slide approximately and X second with million We on highlights our $XXX capitalization. quarter consolidated cash the a

we $XXX Logistics debt million, net of XX, approximately June $XXX debt Excluding had XXXX. of of at Delek million net

discount our margin per $X few guidance quarter our on to $X.XX and On that Slide the and helpful modeling X, third provide the be that realized to barrel. of forward range some a for points maybe in based gross I purposes. We data would want Midland estimate curve

and compensation quarter second the stock based expenses. legal Secondly, in G&A was elevated to due accrual, bonus

strong G&A Our reflects based third bonus range stemming to is and accrual million, from $XX million performance. stock in compensation, which be expected $XX quarter financial of to the

line portion year-over-year. the from explains a other to of the This Thirdly, the contribution item. commercial is hedging, mainly increase and corporate activities, allocated

Finally, the Red first in XXXX. to that River think the point important pipeline it's out expanded I of is half

Our day of with creates XX,XXX increased exist. barrels Midland cushing an displace barrels should option access a to barrels arbitrage that

every dollar change would is While change useful. the this our exists be of downside. on XX million Hopefully, the $X reduced to per sensitivity $XX earnings to upside. sensitivity a annual barrel barrel still Theoretically, for about that per million

discuss that, I with operations. turn And now will over to Fred to call the

Fred Greene

Thanks Blake.

crude refined quarter, barrels the XXX,XXX per During system total day. second oil approximately was throughput our

Slide XXXX, XXX,XXX and of day. between system As oil XXX,XXX X, refining average crude expect in quarter shown on per we to for throughput barrels the the third

I our expenditures to X, million Capital quarter the quarter during to were highlight XXXX. second million Slide capital On $XX in second want spending. $XX the compared

both Our in our for the level. system Wink investments excludes Spring CapEx amount to $XX Red million. included at for is our I retail $X logistics, million and the XXXX, million at point to the in out expenditures XXXX $XXX Webster. gathering and should capital Big The and $XXX River $XXX million. JV approximately includes corporate million that the segment, at is refining are level spending on segment year be This full million forecast corporate in $XXX

over dedicated system. have gathering acres our XXX,XXX now in We

XXXX, $XX in forward move million initiatives. EBITDA annualized the our with target segment. including continued to quality refining $XX our to by to million midstream oil of crude We've continue uplift We

million. has in integration, to time. This Slide including pipeline. service our attractive on producers by and to stable more benefits, This interest over returns, earnings underpinned we've $XXX is the the Webster potential net XX% shown anticipate additional Wink As We to commitments. to our volume taken systems multiple million in of pipeline project of investment gathering X, long-term $XXX range significant

expect of an interest May, announced basis. system EBITDA of first to XX% pipeline. we Red DKL the million this In X. Slide XXXX, completion acquisition adjusted the to River the $XX expansion annualized Upon million of Moving of of the on $XX in in half

call comments. turn Uzi for closing the Next, over to I'll

Uzi Yemin

Thanks, Fred, everybody. morning, and good

As even line starting resilient of in taken to to Krotz They're environment. strategic The the actions year grade XX, results performance reflected half and JV in our with our illustrated on contributing Slide at portfolio. River performance bottom Midland first the unlock time to alkylation be value high we've are over and unit already the and a we in differential compressing footprint. Red continue midstream expanding our

of projects. for in is return our XX% on generate to pleased well are time. been to such a a JV announce that working Webster Wink We set this We've should strong for participation This above a some investment with partners. great logistic targeted return the

our million assets, us Wink Gathering, including Red toward Webster, midstream annualized River by XXXX. Slide $XXX on of and Big XX, portfolio goal to million shown Spring EBITDA $XXX of our of achieving to As all progress

on cash XX, shown shareholders As to remain returned the Slide priority. -- priority a remains

$XXX of XX XXth, Over about we have to returned market months, million XX% or through June investors. cap our the last

Our Delek to intend in capital shareholders We million quarter stock the to for $XX allocation XXXX. third balances program cash of opportunities repurchase with potential growth.

business opportunities cash remain addition, the exploring in consecutive of to increase stage increase In value which our as balance develop investing returning our the our of XXXX. Board we quarter dividend, to long-term Directors approved since next marks on and shareholders, our creating in focused We quarterly our our first company. X.X% fifth regular

the for open please questions? you could Prince, call that, With

Operator

from have Gupta [Operator Manav from Credit we our question Suisse. Instructions] first And

now is line Your open.

Manav Gupta

I'm $XX Webster. Wink right, project math's on about that to basis. $XX question quick EBITDA to could a my on an from Uzi, If annualized doing be your million million

pay that trying me understand got you the So what pipeline And is, to X this to that if pipeline. tells X.XX generally I'm times you people could get to confirm at XX about that versus, number? into into times

trying to I'm understand has. Delek So the leverage

XX X could you versus in that lower get multiple times? a So much at paying to

Uzi Yemin

great question. that's a Well,

going the that comment above is threshold, going to that's numbers. XX% not XX% to one is I'm about First, just that our threshold well I'm say thing.

of to Assi past. are so But basis, that pipeline about just We talking shortly. Webster unleveraged the straightforward people will were the a all were to choose be the will We financing on returns Wink the it remember. is vocal this need and built. believe We good. about is And fixing pretty pipelines return. to don't to this many that be in very the join Second, announced

only us a that well So project. very footprint join with was naturally fits for and it it to us

Manav Gupta

could you the on if Assi, financing? project comment

Assi Ginzburg

in we can stated that release We and above our of we own finance our as press already So we either believe script. the through discussed acreage it, in or XX% through it facilities. financing project

think We have can construction. done B Loan May. did time this like we we that And be can through we of Term a the in expand that

So a interest hand on cash be cost. we able preserve very low will rate to at

Manav Gupta

strategy follow-up And paying of overall on a shareholder quick returns. the

has going I from XQ think 'XX if but right, XX%. up your dividend I'm

dividend the the trying to or of buybacks to actually strategy would in a what to competitive to putting the near-term? raise understand yield, very you dividend the So get continuously hikes in be be front I'm

Assi Ginzburg

we with lucky And was -- lucky, another one. this got we to back buy We stock. continue quarter every and get

total you down. the coming the So dividend, quarter look if increased few in nominal. actually costs the And in from it's increase to at the its DK last

$XX dividend continue therefore cash we easy flow. with excess our we to overall, So year And put think, we results. our continue million ability good and to as the can of dividend increase pay a pretty is

Operator

Your next the Fargo. Read Wells of Roger from from line question comes

your ask may You questions.

Roger Read

escaped of the the the say congratulations for Fernandez, I'll And corporate. pastures Blake who to Mr. cell greener site

Blake Fernandez

told you, depend I it Roger. it. performance. Thanks we on would To me, past appreciate the

Roger Read

going to we on what this consumer Is operational quickly we'll direction do XX crude I And you the you XX about differential can happens, if see flexibility, or size maybe one think pipeline and then future are River the is quicker or there. the other. understand open. Anyway, both can to just given switch how move hit Well, we days, typical you arb of think transaction? JV always wanted the this Red

Blake Fernandez

between flexibility and… the Midland Well,

Keith Johnson

noise… a Roger, background if speaker, we're getting bit of on you're

Blake Fernandez

Yes, we have background noise…

Roger Read

that Sorry, is better?

Blake Fernandez

better. Much you. Thank

Roger Read

that. sorry about Okay,

Blake Fernandez

between you Cushing Our switch between probably to the one-month, pretty Cushing. of and Midland if and nomination so will. move flexibility eminent, is that And to allows us Midland ability

Roger Read

to in really as than not -- or your good pretty of terms better a the as really will timing just else? be So when opens, anybody arb standard, change ability jump

Blake Fernandez

That is correct.

Roger Read

obviously since I little how up us a or But I in me, an favorite forward. been the idea and give up. good have three mean had and springs of was across of look then that's -- across how season, And excuse quarter you're key how unit you three been kind two I set it's units, going topic, our component just running the the year-to-date? a know curious things Alki you're seasons your earnings earning set

Fred Greene

it's Roger, hey, Fred. So,

Big close four to our in we change continue premium already do ability can So in XX $XX be the I'll level, both Krotz gasoline XX take one. with million refineries, octane this the get to supply meet any octane. do to Of two Springs XX can the market significant PPM, without already year disruption. filer Spring and spend the roughly both preserve PPM El and it to Dorado next well plan and to but them allow to below the

and believe we're we So not a in the in pretty amount huge complexity but money not of position. scope, much good

Operator

Flam question Next Simmons Energy. Patrick comes from from

is now line open. Your

Patrick Flam

thanks refinery my small the Hey on and update taking give guys, regulatory around other for us was your an I that outstanding hoping recently? any exemption have you’d been process question. issues latest thoughts

Uzi Yemin

types Well, these two of different questions, think. are I

exemption the take I'll So small first. refinery

with some exemption. And future. believe for happens what work small we'll we see that our continue refinery We the refineries the the in continue to government near to qualify and of

a they that decision said are planning administrators the over issue the weeks. next to think few I

us. opportunity them. that $XXX of it's have, you gauge The these say, Senate of publicly need And two around that's the think we I the said that believe hard. see if BTC likely for the process, that our we're get the that should House area. work pass over to that say last first for will first is optimistic area we that happens, would both pretty And will one. I credit maybe Around Monday I value excess another believe they'll in the that that what biodiesel need and we'll that he to they -- we million

Patrick Flam

follow-up that frame to in as you market up? your definitely it's where RINs tied there, other near to exemptions expect any the the piece I and know But to give you well. guess us thoughts thoughts small as can that a expense around future? go refinery I

Uzi Yemin

at $X.XX right around know move a the will to number. I now. believe And see of don't $X.XX. it to continue as time, spike Well, I that to don't this expect around that $X.XX. go We it's same you

Operator

question Goldman Neil Next is from Sachs. from Mehta

Neil Mehta

Good morning aboard to Blake well. team, and as Welcome Delek congrats there.

we that showed nonrecurring hedging think there We that should of that the this And bit had more? corporate and forward? commercial about I is you of in those? them carry the some to question we flush a just Can of up an how on first guys gains The was initiatives items, or think and little element out quarter. as need

Uzi Yemin

Well, Commercial Officer, I think Avigal, our one. let take I'll Chief that

Avigal Soreq

as So you discussed quarter, Neil, as initiative we hedge And lease example, its and inventories a last wholesale, give commercial physical toolbox. we about I the will others. buying, think paper,

commercial is in tool so toolbox, vary group as in the the rule. we're market another but goal might right apply that right quarter Our the it between general a to one to looking as a conditions,

Neil Mehta

this here? recurring terms guidance substantial on the because look the hedging is go gains look basis, the -- as nonrecurring, if commercial very think, a substantial in of, -- we very of any did And versus the forward and what gains which in quarter

Assi Ginzburg

you -- $XX is of offset refineries inventory what don't they losses. to the But refining itself, good the what actually because we're the inventory is see Neil, a in the first wide this hedging What of morning. a doing will there's So we system that you losses corporate, you Assi, call offset. don't what in the is some saw see and million

time Delek QX talking results, inventory in hedging. one is don't the the that in we U.S. see anything So or nature a about when

Neil Mehta

question for big about a And picture Uzi, of follow-up kind just consolidation.

same You've the around at role stock the so in comment -- the we've curious But just M&A, be wants price in the there consolidating is one there's is only past could a couple playing made the you comments of in thoughts that? its back. midcon, the Delek refiners terms on advantage but in and made your own see to that that Delek consolidation time buy

Uzi Yemin

CVI with know, all to gain that participating sold. we very are desire not loud And as or around be Well, we was our in CVI. purchased

three consolidation consider come But years. over will happens other we with see expect need to the what in the to do We CVI market. I before next to consolidation more five

Operator

Gresh Phil question from JP Morgan. Next

now line Your is open.

Phil Gresh

picture. about just would still the we should question If be ahead try the Realizing Webster. figure spending that First Generally thinking to be no out and we looking speaking, about? what financing we project think CapEx there financing XXXX Wink and the gathering project potential about to opportunity. think were as you want to for the the and would ballpark projects

Assi Ginzburg

Wink gathering. slight for We tier as excluding Wink Webster is, in numbers next to had earlier, uptick to year. continue the invest about talk let's first, So Fred the mentioned This Webster. X we see we into a excluding CapEx, to the some investments, and

EBITDA. Of course, will more the gathering generate

Second, to on $XXX we the million. as to mentioned, the is $XXX million Wink needed investment Webster, total

on access So only basically even facilities. believe our do we current $XX have to can is million credit that We borrow for quarter. utilized we this revolver

here. higher, least of issues thought no it be XX% to have with we me actually debt, at conservative will So it be doing I asked Uzi

I think do front. we on than can more that even XX%

Phil Gresh

of that the the Is reasonable? So majority vast that basically within mostly and debt financing. $XXX XXXX of million midpoint take with

Assi Ginzburg

will and it CapEx, to, in not to JV. will this go of XXXX, would already be it Part be to

not will financing show all CapEx line. It its will it be And right, will the JV alongside So it. in with investment. the go up

finish to expect in the two next financing quarters. probably the We

Phil Gresh

do another question be Krotz. Webster just that presume, reasonable? there under you consideration about dropdown be Is the XXXX And potential this you've Second to dropdown? how something dropdown. about -- point? continued to a I for of Is perhaps in talk timing Wink at consideration would still opportunities, think

Assi Ginzburg

is completed business. from point, probably to already And At being the is there flow the right cash we long drop the haul way the this generated JV a construction. after

year great that's the drop we'll slightly think a higher. as Krotz flow. don't leverage cash is of it the DKL do have this DKL inside of As we And the project of a Springs, I of lot generating

right you EBITDA now can the in River from we million see As our expect complete once we presentation, of project. $XX Red

now, it see go right So I up for XXXX. don't

Phil Gresh

midstream or gathering majority guess, of vast that EBITDA $XXX the the to up, you've Is to one hand of I sight of guess. in line project over million you like are between you Webster. thinking the have things now it and sounds here XXX, And the of to terms what then terms the Wink just opportunity I hit think more there potential in is next that you what to years? two focused this of is -- that XXX you're you're have do Or about spending there the on? in lined

Uzi Yemin

this Phil, is going We this Uzi. is that by be vocal were XXXX. we -- very to say

our of anything, if well are future. these ahead And we may in We plan. numbers the up

well creating the that that looking Pipeline we in we're example, not expansion as numbers, other Paline at at. Longview half another as the idea and means are is For evaluating

feel achieve both in the threshold we Webster gathering and will our future. especially on number that minimum fact to leverage good, even meet we the in the XXX, light XXX XX% to this and handsomely So of of Wink up in

Uzi Yemin

guys philosophical of philosophically, moving just there. buyback somewhat obviously, keep pipeline get amount you a here for times a and times build project a can even just Uzi. that last drop more you the do X you And better maybe doing stock get stock? and project feel X stock can like mean, I And question, into you some buyback the have even that, I the here. as X, buying and you uplift is But midstream company didn't idea decent by opposed guess back multiple or have it at to if multiple, stock, been you could you or more

Uzi Yemin

clear. Well, let's be

about Wink talk Let's to Webster.

that. Assi was vocal about very

is well we above is XX%. This on feasible. our unleveraged. that think We financing the project We are saying that are

enormous, an leverage. Even very the the that is $X.XX produced million stock. midland that that we and about $XXX return doing us if from if believe vocal is the this quarter that turnaround. in doing we're environment We EBITDA, or it. doesn't the prevent we at the buying were, what That So quarter, an area continuing we're that, we in so we had in and operations a were above again, look

from site flow just coming let's is free cash company substantial. that the not is So loose that the

reason to buy believe that to do So no Wink and won't there's continue gathering, shares. we Webster to

Operator

Next Silvio Micheloto Mizuho. from from question is

open. Your now is line

Paul Sankey

Sankey, Hi Paul everyone, actually. it's

Uzi Yemin

morning, Good Paul.

Paul Sankey

I earlier. for Sorry, asked would question a of me? CapEx, I structure know put welcome. if hear about idea wondering and a was have kind Silvio's always for return, you I be Can I maybe to -- ask just to Uzi, cash Blake, name, difficult. Guys, is structure I maybe practice best cash form an and some return, of nowadays it's a thought

bit all, And much of is give really, question maybe the every to cash how term about comment long you structure us for it? in then you But and thought liked how you can you a want First CapEx secondly, being little have idea I about generate? more Assi's a putting mathematical? an return about something quarter. about think lucky

Assi Ginzburg

Uzi take take Paul. So that directed morning, to it. question, I will Good me so

As your you maybe we so you. apologize to we that name, put and we're put sorry earlier, we'd for have

Uzi Yemin

an You'll shoot to have opportunity Keith.

Assi Ginzburg

between come On number. that XX% $XXX been company growth, a when also we've million our in $XXX be EBITDA in somewhere environment expect including billion last CapEx, of it's shouldn't generating, also that's And what more We to do that's we've that we the what years. right some do have rate $XXX still been $X two so after than to that million $X to think now a we our billion, on. pipeline million to and the run and will

the million. year So one refinery. will would CapEx growth around some I that that $XXX include and for turnaround overall, a say And

cash of see, can on you a that hand. leave with us lot As will free flow

around to have million, for But almost the you million look bought at know which this year, to XX% And year, to so can the we $XXX close tracking XX% buyback you plus yield, together of we're when had XX% look $XXX at then if the far year don't is of I XXXX. brought $XXX us why on last do gets XX%, yield the when do dividends a in year. high. basically million bought dividend you for based extremely with we we that's every

of want our be dividend, peers dividend somewhere we we dividend, we when of on just the be when So high and the the end mid add buyback are to want to and in you yield. the

are since that's We to yield, increasing why quarter XXXX. we've every been loyal dividend

Paul Sankey

feels And more was Did of well, consolidation. but couple there's now consolidation? Uzi, a industry you that, consolidation you endeavor? and -- of wasn't I I marathon reaching expect is since view mean really said bits pieces understand the it that like you I surprised that terminal refining around surprised, that your but

Uzi Yemin

a I consolidate it, of deals said in five I -- two, the there did our yes, thought when to would that I three refining. couple three to be mean industry. more Well, years next

Paul Sankey

But just from you controversial then me just it's I you see demand, appreciate thank And I'll your finally on right very later, And any perspective? guys. observations always obviously subject now.

Uzi Yemin

drilling growth areas we obviously, our in which the to issue have Paul, very we because see and in now strong, our big good demand the a areas. the northeast, used in is to of don't our But right visibility have. We don't areas.

Operator

Bank is from America. question from Doug Leggate Next of

Doug Leggate

Let my bit add the but Blake, on might anyway here to longer, congratulations. a Blake, you without congrats me hang volatility, hello saying without

been couple them framework. So asked I if is into first things wrap may, kind have of already, wrap just a -- to thought that but question, I of more going concise Uzi, my

the raised return the But slightly the the remains buyback part same at share midstream obviously strategy. You've time, the dominant of today. target

visibility as question payout earnings the I've towards that end. we midstream quick please. target the terms in of disclosed, your Maybe about do So that a and as there first should side as think a you line So follow-up visibility you the of $XXX not do really time? you dividend million buyback over is, guess, about you more evolves, all, of to dividend on I'm think is stabilize everything today? what but ratio terms you've an internally, between part that of trying got what and percentage to midstream $XXX of target understand in what got think a I a have think million And on balance part

Uzi Yemin

million. of ideas, the put are of ideas was The we not a the number. $XXX that question of than number think we part because Well, I'll When first and create $XXX the one. projects the take just of more I and I'll let Assi up visibility out, to second -- about the always we answer million first a set set just made question

to answer as that we million to So may on. to your have question, million. we $XXX number clarity work as visibility progress, said absolutely, even as part. that get more And I up we $XXX we first projects the we about That's other

part, combination I'll the and Assi it. buyback let second The take between dividends,

Assi Ginzburg

So at Doug, year. look this you if

So far million. going we to of and to is had close million EBITDA, be $XXX $XXX analyzing

million are pace $XXX basically of million buyback. of plus almost We to $XXX dividend, on pay

So in perspective. EBITDA we roughly a that that's investing basically payout heavily And in the when our give XX% will gathering from business. year are us

to And be dividend when expect is enable over into will EBITDA it's our to this extremely every Also, reduce think from versus the CapEx heavy refining. competitive pay be we year the much we something, to especially on a level us dividend gathering. yield. I such much So investment the higher can don't years as going that to will come have time to when logistics over sustain, to in we a expect

Doug Leggate

volatility always this I mind dividend and over valuing in become is, be in a back I of of modeling guess Assi there's lot a sector. should guess, how the has light Yes, discount at we controversy the inevitable fashion, the something of of my was sector,

about this this attractive, Cushing be years. answer. inference which of becomes about River would you've that offer helpful. barrels who can guess, to comment future the in incremental XX,XXX offered you're on And optionality a the recent perspective be economically from, that in in implies change Red you a I'm in event visibility less follow-up would of quick the the attractive. I quite Midland the a any I just sure think, it's the strategically, My one, that release. is appreciate not So But in comment wants But one. bit I thinking terms But increases by how just more

premium are you drilling to Midland could now up So end a concerned that at Cushing?

Uzi Yemin

very XXX,XXX see we happening to reversed. about We of so barrels be that In were Cushing. flowing at Midland that premium Well, are and the be Cushing there order easy. idea vocal Midland now should don't between to drilling happen,

Paline the Red if time, it Gulf. between the together Pipeline creates the to same change happens us However, River gives Cushing Red quickly. optionality the and the the optionality River with At

at we're if making look LLS, So we the today selling obviously, it versus to WTI money Gulf.

deal from us markets on like that different So market allows hubs different or move different the to depends hubs from condition. crude

Doug Leggate

Uzi, back we guess, EPIC week. announced the things was fell below rate saw of I my mind the at last the $X

So obviously issue taking there's well. again, questions a lot of again appreciate you But I as congrats guys, Blake. Thanks and around this questions. my

Operator

Cheng Paul is Weil. from Scotia question Next from Howard

Your line is now open.

Paul Cheng

Good morning.

Uzi Yemin

good -- morning Good luck, Paul.

Paul Cheng

Thank you.

Uzi Yemin

us You at know, everybody one for -- us that works Howard Weil is day. against

now. careful be So

Paul Cheng

Wish you there. over I congratulations the luck to Well, best say of first. want just but

Uzi Yemin

Will for Tell hello you, Thank you? Paul. my friends me.

Paul Cheng

unique short be so downtime. can margin why will Absolutely. first Margin of the strong capture given in I help extremely anything of Is me. to quarter seems Maybe terms El have the be this in number questions, you Dorado. a strong? Fred, there

Fred Greene

change in why that's inventory that negative came refineries, we that And inventories there so was a Big impact. turnaround. made positive. And in some that the like result, from very as offset other had back Spring was by We refinery. much were money It

play between inventories refineries a each the just refinery. they it's the impacted and So way

Paul Cheng

add -- inventory benefit in how the Dorado? you you is actually, tell El And big me can

Fred Greene

to be for think refinery, but we'll I call discuss during allocate don't the later. it We each ready

Paul Cheng

the Or integrated other or the that foresee? Webster, that's the return. on just Is benefit, trading through on tenders opportunities Secondly, purely to that receive? XX% that going you're you

Uzi Yemin

the -- They initiatives. above XX%, include opportunities. commercial not in that are trading well are there doesn't First, we when say

Paul Cheng

So it does commercial initiatives? include

Uzi Yemin

It does not. does not. It

Paul Cheng

integrated Uzi, as think it any benefit Fred what's include And mentioned does earlier? I tie-up --

Uzi Yemin

question? the I'm sorry, I missed

Paul Cheng

the any system? integrated include your Does it of within benefits

Uzi Yemin

no. No, no,

Paul Cheng

clearly on based is the is whatever tender your XX% receive? that share will The of you

Uzi Yemin

They're well above XX%. is purely the project itself.

Paul Cheng

projects. working of your equal volume, the the terms is And shipping is -- and equal in the your interest? to to Clearly, XX% commitment of

Uzi Yemin

are we going that We never to that's something disclose not commitment, disclose now. and

Paul Cheng

day, Red corresponding to you any take the is incremental to the transportation have continue if that crude? XX,XXX your there event per River, you to among your barrels optionality. commitment What Is there related the pay? On in Midland

Uzi Yemin

you repeat can Paul, that real question just quick?

Paul Cheng

in run option assume Midland. crude, so back optionality -- the the and decide the of event take from away Cushing to the Let's more the that to you that

Now not in continue purchase, is is the of nomination the to crude any month of Midland to longer But decide to crude? that run the commitment in the oil one the you pay there commitment. term transportation have terms only you arrangement, if terms

Uzi Yemin

that start So on crude Tyler. for for and pipeline more or barrels the to these not are said, River when on move with we're if El Dorado Midland Pailine, even going the being are there our basically. Red mostly that for running let's commitments term fact With we're us long

be there system. additional So for the will no tarrif

to You're margin. just going see uplift an in gross

Paul Cheng

system for saying I'm understand. the within just I No, is commitment -- the Tyler? El own Dorado to on your that -- and

Uzi Yemin

the that's No, third-party.

Paul Cheng

decide So crude? is to that I one with you roughly, of a that's you that is the not barrels commitment big how us day if can that guess my question share that XX,XXX Midland that

Uzi Yemin

end then XX,XXX day Midland. XX,XXX XXX,XXX we in moving Krotz that, Of we know, to Springs. the day are you you Big roughly it's And day as the barrels know, have to pipeline run barrels Spring. we through do that a a a As up barrels of

on of The the is our day-to-day it Texas West big a commitment So Gulf portion of those business. are -- remaining pipeline. part the

Paul Cheng

the it of the assets? Seems looked have at that creditor -- the like is through trying [Cisco] Uzi, push one to their bankruptcy? On you

Uzi Yemin

refinery the nowadays. We were best say buy is to We very vocal. refinery our that

lately. So we haven't looked at refineries any

Paul Cheng

that, Assi one, -- is hedging what how gain? me you realized tell much Final can

Assi Ginzburg

$XX million.

Paul Cheng

million… $XX

Assi Ginzburg

million. $XX

Paul Cheng

different the split a have refineries? you between Do

Assi Ginzburg

We the corporate piece is split see the do actually big a not $XX But refineries. can that that provide you between is there level, million.

Paul Cheng

$XX level. in the million corporate

in And other so million the $XX segment? is the refining

Assi Ginzburg

Yes, that was completely the inventory offset by losses.

Operator

question from Blair Next Tudor, Pickering, is Holt. Matthew from

is line Your open. now

Matthew Blair

generally into this Assi, EBITDA talk Gathering of to the and And you and you you half for Spring the mentioned can XQ? Are number Big XXXX? for about provide year, project through XXXX the an back willing just business. the ramp

Assi Ginzburg

Sure.

volume started to the the So far, We is very minimal. in. see just EBITDA coming

day. And a amount. barrels times be it's XX,XXX by around be to going XXXX, year this to volume the that basically expect three We

for million. minimal. somewhere mentioned, now, to expect quite it's to we be XXXX, $XX million we right $XX But As EBITDA

Matthew Blair

capture cracks bit Midland just And little then a low. that the in, like a there impact like was It Spring? little really Big a margin in just Big more improved. sounds could came the Spring throgh flowed quarter? you -- It but also seemed Obviously, about inventory talk

Assi Ginzburg

at this and negative Midland, Spring that Big $X.XX year year, of look Spring. you there's actually was the in in when versus last impact Big inventory So

that to lower hand, inventories allocating you we're other But see we El for saw a uplift. and the mentioned that's that's $X.XX capture And in between Dorado, last same the overall not rate. Spring, I what Big compared year, refineries. why an the On time it's

Matthew Blair

question. And then final a

Assi, the leverage max can you guess, is I limit just consolidated remind the for us entity? what the,

Assi Ginzburg

the leverage There is always X.X times. you no term. at for max long it the debt When no being DK. said, a look are EBITDA, than that we to more net With on targeting

Operator

questions. further to call no I'd management. like showing over Instructions] to turn [Operator I'm the

Uzi Yemin

you, I'd is. soon. Thank thank to like my table you, But support. around your to our I'd I'd the thank who you We'll continued the for to mainly, this in colleagues, interest team. thank to of employees company. each their And here. company great company the Prince. thank make to to like investors like like the and Board Thanks. executive my Directors of one friends for I'd analysts, talk the it

Operator

Thank you This for concludes your today's participation. conference call.

disconnect. You may now

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