Delek Logistics Partners LP (DKL) delivered a standout performance in Q2 2026, reporting record EBITDA and announcing its 54th consecutive distribution increase, driven by surging volumes across its gathering and processing segments.
Record-Breaking Operational Growth
During the Q2 2026 earnings call, President and Chairman Avigal Soreq confirmed that the company’s strategic infrastructure positioning has yielded significant volume gains. EVP of Logistics, Mark Hobbs, detailed the impressive growth metrics: Delaware crude gathering reached over 157,000 barrels per day (up from 129,000 in Q1), produced water volumes rose to over 687,000 barrels per day (from 557,000), and gas volumes climbed past 80 million cubic feet per day (up from 64 million). The company anticipates a further “step change” in gas volumes as the sour gas solution nears completion.
Financial Guidance and Future Outlook
When questioned on whether the current full-year guidance remains conservative given the strong Q2 results, Soreq acknowledged that current performance trends toward the high end of their estimates. The company intends to maintain its disciplined approach, with potential guidance upgrades slated for Q3 if the current momentum persists. Leadership encouraged stakeholders to remain attentive as they execute their strategic roadmap.
Capitalizing on Commodity Trends
The company is seeing positive ripple effects from rising commodity prices and strengthening Waha prices. Mohit Bhardwaj, EVP of New Energy, Strategy & IR, noted that these market conditions are incentivizing incremental production and boosting forecasts for 2026 and 2027. Delek is currently deploying a $185 million growth CapEx program, which is projected to generate $75 million in incremental EBITDA.
Strategic Infrastructure and Sour Gas Demand
Delek Logistics is leveraging its competitive advantage in sour gas treating and Acid Gas Injection (AGI) demand. Mark Hobbs highlighted that the company has proactively added capacity, including the Libby 2 project and its first AGI well. These investments position the firm to capture increasing volumes of sour gas production from its customers, further solidifying its growth trajectory through the remainder of the year.
Capital Discipline and Long-Term Leverage
Management remains committed to a disciplined capital allocation strategy. CFO Robert Wright confirmed that the company is comfortable managing leverage around 4 times while pursuing growth, with a long-term target of 3.5 times. With $1.1 billion in robust liquidity, Delek continues to prioritize accretive opportunities. Soreq emphasized that the company’s history of purchasing assets at 5–6 times EBITDA—which now trade at 9–10 times—underscores their focus on long-term value creation, evidenced by their consistent 15% year-over-year growth and track record of 54 consecutive distribution increases.
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