XML 61 R11.htm IDEA: XBRL DOCUMENT v3.24.0.1
Related Party Transactions
 12 Months Ended
Dec. 31, 2023
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
Contract End Date (1)
Service
Pipelines and Storage Facilities Agreement (El Dorado Assets and El Dorado Gathering System):
Crude Oil Pipelines (non-gathered)March 31, 2024Crude oil and refined products transportation
Refined Products Pipelines
El Dorado Gathering SystemCrude oil gathering
Pipeline and Tankage Agreement (East Texas Crude Logistics System):
Crude Oil PipelinesMarch 31, 2024Crude oil transportation and storage
Storage
Marketing Agreement (East Texas Marketing):
East Texas MarketingOctober 1, 2026Marketing products for Tyler Refinery
Throughput and Tankage Agreement (Tyler Throughput and Tankage):
Refined Products Throughput March 31, 2024Dedicated Terminalling and storage
Storage
Throughput and Tankage Agreement (El Dorado Throughput and Tankage):
Refined Products ThroughputMarch 31, 2024Dedicated terminalling and storage
Storage
Throughput and Tankage Agreement - El Dorado Rail Offloading Facility (El Dorado Assets Throughput):
Light Crude and Heavy Crude Throughput March 31, 2024Dedicated Offloading Services
Pipelines, Storage and Throughput Facilities Agreement (Big Spring Logistics Assets):
Crude Oil and Refined Products ThroughputFebruary 28, 2028Pipeline throughput
Rail OffloadingOffloading services
TerminallingDedicated Terminalling
StorageStorage
Asphalt Services Agreement (Big Spring Logistics Assets):
Terminalling February 28, 2028Dedicated Asphalt Terminalling and Storage
Storage
Marketing Agreement (Big Spring Logistics Assets):
Marketing ServicesFebruary 28, 2028Dedicated Marketing and Selling
Throughput and Deficiency Agreement (Midland Gathering Assets)
Gathering SystemMarch 31, 2030Gathering and Transportation Services
Re-delivery System
Pipelines, Throughput and Offloading Facilities Agreement (Big Spring Logistics Assets)
Fintex / Magellen PipelineApril 1, 2030Refined Products
Crude Oil OffloadingJanuary 1, 2030Crude Oil Offloading
StorageApril 1, 2030Storage
LPG RackJanuary 1, 2030Truck Unloading Facility
Transportation Services Agreement
Trucking ServicesDecember 31, 2030Transportation Services
(1) Expired contracts and contracts that will expire in the next 12 months will continue to operate on a month-to-month basis until new contracts are negotiated.
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, 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 $4.4 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. We were reimbursed a nominal amount during the years ended December 31, 2023 and 2021. There were no reimbursements by Delek Holdings during the year ended December 31, 2022. 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, 2023 and 2022, there was no receivable from related parties for these matters. These reimbursements are recorded as reductions to operating expenses. There were no reimbursements for these matters during the years ended December 31, 2023 and 2022. We were reimbursed a nominal amount for these matters during the year ended December 31, 2021.
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 $31.0 million, $34.6 million and $21.8 million pursuant to the Partnership Agreement during the years ended December 31, 2023, 2022 and 2021, 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 2024. Total fees paid to the Partnership were $1.6 million, $1.5 million and $1.6 million for the years ended December 31, 2023, 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.
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.
Delek Holdings Unit Sale to Public
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).
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,
202320222021
Revenues$563,803 $479,411 $418,826 
Purchases from Affiliates$396,333 $496,184 $321,939 
Operating and maintenance expenses
$64,636 $53,803 $40,854 
General and administrative expenses
$14,908 $13,565 $9,330 
Quarterly Cash Distribution
Date of DistributionDistributions paid to Delek Holdings (in thousands)
February 9, 2023$34,998 
May 15, 2023$35,169 
August 14, 2023
$35,512 
November 13, 2023$35,855 
Total$141,534 
February 8, 2022$33,829 
May 12, 2022$33,625 
August 11, 2022$33,797 
November 10, 2022$33,968 
Total$135,219 
February 9, 2021$31,619 
May 14, 2021$31,966 
August 11, 2021$32,661 
November 10, 2021$33,009 
Total$129,255