XML 51 R13.htm IDEA: XBRL DOCUMENT
v3.22.4

Related Party Transactions | 12 Months Ended
--- | ---
Dec. 31, 2022
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. 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, however, in no event will the fees be adjusted below the amount initially set forth in the applicable agreement. 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. Material commercial agreements with Delek Holdings:
Asset/Operation |  | Initiation Date |  | Initial/Maximum Term (years) (1) |  | Service |  | Minimum Throughput Commitment (bpd) |  | Fee (/bbl)
El Dorado Assets and El Dorado Gathering System:
Crude Oil Pipelines (non-gathered) |  | November 2012 |  | 5 / 15 |  | Crude oil and refined products transportation |  | 46,000 (2) |  | $1.12 (3)
Refined Products Pipelines |  | November 2012 |  | 5 / 15 |  |  |  | 40,000 |  | $0.13
El Dorado Gathering System |  | November 2012 |  | 5 / 15 |  | Crude oil gathering |  | 14,000 |  | $3.01 (3)
East Texas Crude Logistics System:
Crude Oil Pipelines |  | November 2012 |  | 5 / 15 |  | Crude oil transportation and storage |  | 35,000 |  | $0.53 (4)
Storage |  | November 2012 |  | 5 / 15 |  |  |  | N/A |  | $329,665/month
East Texas Marketing |  | November 2012 |  | 10 (5) |  | Marketing products for Tyler Refinery |  | 50,000 |  | $0.90 (5)
Big Sandy Terminal:
Refined Products Transportation |  | November 2012 |  | 5 / 15 |  | Refined products transportation, dedicated terminalling services and storage for the Tyler Refinery |  | 5,000 |  | $0.66
Terminalling |  | November 2012 |  | 5 / 15 |  |  |  | 5,000 |  | $0.66
Storage |  | November 2012 |  | 5 / 15 |  |  |  | N/A |  | $65,874/month
Tyler Throughput and Tankage:
Refined Products Throughput |  | July 2013 |  | 8 / 16 |  | Dedicated Terminalling and storage |  | 50,000 |  | $0.44
Storage |  | July 2013 |  | 8 / 16 |  |  |  | N/A |  | $1,034,886/month
Memphis Pipeline |  | June 1, 2018 |  | 5 |  | Refined Products Transportation |  | 11,000 |  | $1.36
El Dorado Throughput and Tankage:
Refined Products Throughput |  | February 2014 |  | 8 / 16 |  | Dedicated terminalling and storage |  | 11,000 |  | $0.62
Storage |  | February 2014 |  | 8 / 16 |  |  |  | N/A |  | $1,620,006/month
El Dorado Assets Throughput:
Light Crude Throughput |  | March 2015 |  | 9 / 15 |  | Dedicated Offloading Services |  | N/A (6) |  | $1.25
Heavy Crude Throughput |  | March 2015 |  | 9 / 15 |  | Dedicated Offloading Services |  | N/A (6) |  | $2.81
Pipelines, Storage and Throughput Facilities Agreement (Big Spring Logistics Assets):
Crude Oil and Refined Products Throughput |  | March 1, 2018 |  | 10 / 15 |  | Pipeline throughput |  | 104,300 |  | $0.06
Rail Offloading |  | March 1, 2018 |  | 10 / 15 |  | Offloading services |  | 4,500 |  | $0.48
Terminalling |  | March 1, 2018 |  | 10 / 15 |  | Dedicated Terminalling |  | 29,250 |  | $0.78
Storage |  | March 1, 2018 |  | 10 / 15 |  | Storage |  | N/A |  | $1,632,647/month
Asphalt Services Agreement (Big Spring Logistics Assets):
Terminalling |  | March 1, 2018 |  | 10 / 15 |  | Dedicated Asphalt Terminalling and Storage |  | 1,020 to 2,380 based on seasonality |  | $9.86
Storage |  | March 1, 2018 |  | 10 / 15 |  |  | N/A |  | $542,173/month
Marketing Agreement (Big Spring Logistics Assets):
Marketing Services |  | March 1, 2018 |  | 10 / 15 |  | Dedicated Marketing and Selling |  | 65,000 |  | $0.59 - $0.84
Throughput and Deficiency Agreement (Midland Gathering Assets)
Gathering System |  | March 31, 2020 |  | 10 / 20 |  | Gathering and Transportation Services |  | 120,000 (7) |  | $0.76
|  |  |  | 15,000 (8) |  | $0.70
Re-delivery System |  | March 30, 2020 |  | 10 / 20 |  |  | 50,000 |  | $0.27
Pipelines, Throughput and Offloading Facilities Agreement (Big Spring Logistics Assets)
Fintex / Magellen Pipeline |  | April 1, 2020 |  | 2 / 10 |  | Refined Products |  | 20,000 |  | $0.68
Crude Oil Offloading |  | January 1, 2020 |  | 2 / 10 |  | Crude Oil Offloading |  | 15,120 |  | $1.04
Storage |  | April 1, 2020 |  | 2 / 10 |  | Storage |  | N/A |  | $277,620/month
LPG Rack |  | January 1, 2020 |  | 2 / 10 |  | Truck Unloading Facility |  | 4,500 |  | $5.78
Transportation Services Agreement
Trucking Services |  | May 1, 2020 |  | 10 / 14 |  | Transportation Services |  | N/A |  | $39,000,000/Minimum Annual Revenue Commitment
(1) Maximum term gives effect to the extension of the commercial agreement pursuant to the terms thereof. (2) Excludes volumes gathered on the El Dorado Gathering System (the "El Dorado Gathering System"). (3) Volumes gathered on the El Dorado Gathering System will not be subject to an additional fee for transportation on our El Dorado Assets (the "El Dorado Assets") to the El Dorado Refinery. (4) For any volumes in excess of 50,000 bpd, the throughput fee will be $0.79/bbl. (5) For any volumes in excess of 50,000 bpd, the throughput fee will be $0.88/bbl. Following the primary term, the marketing agreement automatically renews for a successive one-year term, unless either party provides notice of non-renewal 10 months prior to the expiration of the then-current term. The initial primary term for the marketing agreement has been extended through 2027. (6) The throughput agreement provides for a minimum throughput fee of $1.8 million per quarter for throughput of a combination of light and heavy crude. (7) For any volumes in excess of 120,000, the throughput fee will be $0.55/bbl. (8) These volumes are associated with a connection expansion project completed in fourth quarter 2022 to construct additional receipt points on our gathering pipeline. Other Agreements with Delek Holdings In addition to the commercial agreements described above, the Partnership has entered into the following agreements with Delek Holdings: Slurry Clarifying Services Agreement We executed a series of agreements, effective January 1, 2022, with DK Trading & Supply, LLC (“DKT&S”) and Alon Refining Krotz Springs, Inc. whereby the Partnership will operate and maintain a facility, located within the Krotz Springs, Louisiana refinery, to process slurry for DKT&S. Using a process that incorporates horizontal and vertical centrifuges, we remove metals, ash, and other solids from the slurry. The clarified product can then be sold to DKT&S or one of its affiliates. As consideration for the processing services, we will receive a fixed rate per barrel processing fee in addition to a margin-based payment. The Partnership and DKT&S have agreed to a minimum delivery commitment volume to be processed in the facility. The initial term of the agreement is for a period of three years, and thereafter, will continue a year-to-year basis unless canceled by either party. Omnibus Agreement The Partnership entered into an omnibus agreement with Delek Holdings, our general partner, Delek Logistics Operating, LLC, Lion Oil Company, LLC and certain of the Partnership’s and Delek Holdings' other subsidiaries on November 7, 2012, which has been amended and restated 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 $4.3 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. 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. There were no reimbursements by Delek Holdings during the year ended December 31, 2022. We were reimbursed a nominal amount and $0.6 million during the years ended December 31, 2021 and 2020, respectively. 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 December 31, 2022, there was no receivable from related parties for these matters and a nominal receivable from related parties for these matters as of December 31, 2021. These reimbursements are recorded as reductions to operating expenses. There were no reimbursements for these matters during the year ended December 31, 2022. We were reimbursed a nominal amount and $0.1 million for these matters during the years ended December 31, 2021 and 2020, respectively. Other Agreements Our general partner operates our business on our behalf and is entitled under our Partnership Agreement to be reimbursed for the cost of providing those services, which include certain labor related costs. We and our subsidiaries paid Delek Holdings approximately $34.6 million, $21.8 million and $29.4 million pursuant to the Partnership Agreement during the years ended December 31, 2022, 2021 and 2020, respectively. These amounts are included in operating expenses in the accompanying consolidated statements of income and comprehensive income. Other Transactions The Partnership manages long-term capital projects on behalf of Delek Holdings pursuant to a construction management and operating agreement (the "DPG Management Agreement") for the construction of gathering systems in the Permian Basin. The majority of the gathering systems have been constructed, however, additional costs pertaining to a pipeline connection that was not acquired by 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 2023. Total fees paid to the Partnership were $1.5 million and $1.6 million for the years ended December 31, 2022 and 2021, respectively, which are recorded in affiliate revenue in our 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 common limited partner units under the Midland Gathering Assets Acquisition and in accordance with the Partnership's First Amended and Restated Agreement of Limited Partnership, as amended (the "Previous 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 Previous Partnership Agreement. The sale and issuance of the Additional Units and such general partner units in connection with the Midland 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 common limited partner units from an unaffiliated investor pursuant to a Common Unit 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 common 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 Midland Gathering Assets Acquisition described above. In August 2020, Delek Holdings ownership in our common limited partner units was further increased to approximately 80% in connection with the IDR Restructuring Transaction, when the Partnership issued 14.0 million of the Partnership's newly issued common limited partner units to Delek Holdings. On December 22, 2021, Delek Holdings issued a press release regarding a program to sell up to 434,590 common limited partner units representing limited partner interests in the Partnership. We will not sell any securities under this program and we will not receive any proceeds from the sale of the securities by Delek Holdings. For the years ended December 31, 2022 and 2021, Delek Holdings sold 385,522 and 49,068 units, respectively, for gross proceeds of $16.4 million ($13.6 million, net of taxes) and $2.1 million ($1.7 million, net of taxes). 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 Midland Gathering Assets Acquisition, the Board of the general partner adopted Amendment No. 2 (“Amendment No. 2”) to the Previous Partnership Agreement, effective upon adoption. Amendment No. 2 amended the Previous 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 reduced 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. Subsequently, the IDRs were eliminated in the IDR Restructuring Transaction on August 13, 2020. Conversion of GP Economic Interest and Elimination of IDRs On August 13, 2020, we closed the transaction contemplated by a definitive exchange agreement with Delek Holdings to eliminate all of the IDRs held by the general partner and convert the 2% general partner economic interest into a non-economic general partner interest, all in exchange for 14.0 million of the Partnership's newly issued common limited partner units and $45.0 million cash. Contemporaneously, Delek Holdings purchased a 5.2% ownership interest in our general partner from certain affiliates who were also members of our general partner's management and board of directors. As a result of the transaction, Delek Holdings owned 100% interest in the general partner and approximately 34.7 million common limited partner units, representing approximately 80% of the Partnership's outstanding common limited partner units. To implement the transaction, our Partnership Agreement was amended and restated. Summary of Transactions Revenues from affiliates consist primarily of revenues from gathering, transportation, storage, offloading, Renewable Identification Numbers, 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):
|  |  | Year Ended December 31,
|  |  |  |  | 2022 |  | 2021 |  | 2020
Revenues |  |  |  |  | $ | 479,411 |  |  | $ | 418,826 |  |  | $ | 382,666 |
Purchases from Affiliates |  |  |  |  | $ | 496,184 |  |  | $ | 321,939 |  |  | $ | 205,581 |
Operating and maintenance expenses |  |  |  |  | $ | 53,803 |  |  | $ | 40,854 |  |  | $ | 43,985 |
General and administrative expenses |  |  |  |  | $ | 13,565 |  |  | $ | 9,330 |  |  | $ | 12,557 |
Quarterly Cash Distribution Prior to August 13, 2020, our common and general partner unitholders and the holders of IDRs were entitled to receive quarterly distributions of available cash as it was determined by the board of directors of our general partner in accordance with the terms and provisions of our Partnership Agreement. Pursuant to the IDR Restructuring Transaction on August 13, 2020, the general partner will no longer receive any cash distributions. During the years ended December 31, 2022, 2021 and 2020, we paid quarterly cash distributions of $170.9 million, $161.6 million and $136.8 million, respectively, of which $135.2 million, $129.3 million and $105.3 million, respectively, were paid to Delek Holdings and our general partner. On January 23, 2023, the board of directors of our general partner declared a quarterly cash distribution totaling $44.4 million based on the available cash as of the date of determination for the end of the fourth quarter of 2022. The distribution was paid on February 9, 2023 to unitholders of record on February 2, 2023, of which $35.0 million was paid to Delek Holdings

X
- References No definition available. + Details
Name: | us-gaap_RelatedPartyTransactionsAbstract
Namespace Prefix: | us-gaap_
Data Type: | xbrli:stringItemType
Balance Type: | na
Period Type: | duration

X
- Definition The entire disclosure for related party transactions. Examples of related party transactions include transactions between (a) a parent company and its subsidiary; (b) subsidiaries of a common parent; (c) and entity and its principal owners; and (d) affiliates. + References Reference 1: http://www.xbrl.org/2003/role/disclosureRef -Publisher FASB -Name Accounting Standards Codification -Topic 850 -SubTopic 10 -Section 50 -Paragraph 1 -Subparagraph (d) -URI https://asc.fasb.org/extlink&oid=6457730&loc=d3e39549-107864 Reference 2: http://www.xbrl.org/2003/role/disclosureRef -Publisher FASB -Name Accounting Standards Codification -Topic 850 -SubTopic 10 -Section 50 -Paragraph 1 -Subparagraph (b) -URI https://asc.fasb.org/extlink&oid=6457730&loc=d3e39549-107864 Reference 3: http://www.xbrl.org/2003/role/disclosureRef -Publisher FASB -Name Accounting Standards Codification -Topic 850 -SubTopic 10 -Section 50 -Paragraph 1 -Subparagraph (a) -URI https://asc.fasb.org/extlink&oid=6457730&loc=d3e39549-107864 Reference 4: http://www.xbrl.org/2003/role/disclosureRef -Publisher FASB -Name Accounting Standards Codification -Topic 850 -URI https://asc.fasb.org/topic&trid=2122745 Reference 5: http://www.xbrl.org/2003/role/disclosureRef -Publisher FASB -Name Accounting Standards Codification -Topic 850 -SubTopic 10 -Section 50 -Paragraph 6 -URI https://asc.fasb.org/extlink&oid=6457730&loc=d3e39691-107864 + Details
Name: | us-gaap_RelatedPartyTransactionsDisclosureTextBlock
Namespace Prefix: | us-gaap_
Data Type: | dtr-types:textBlockItemType
Balance Type: | na
Period Type: | duration