Q1 2025 Delek US Holdings Inc Earnings Call
Good Morning, and thank you for joining us today. Despite continued challenging refining margin environments which was around $4 below mid-cycle, Delek continued on its transformational journey.
On the first quarter, we made further progress in improving our operational performance by conducting two important planned outages, a Tyler and Big Spring.
We continue to make strong progress on our European plans. We also continue to advance our sub-of-the-part efforts to additional inter-company agreements between DK and DK.
Let me highlight the progress we have made on our key priorities, first, safe and reliable operations.
We have made further progress in improving the operations throughout our company. We successfully completed an Alki Ternel Etyler and maintenance, etc. unit at BigSpring.
The big string refinery continue to make good progress in improving its operations, and we expect our reliability investment to serve us well into the future.
After these Q1 outages, we look forward to a cleaner runway into the summer driving season.
Now, I would like to discuss some of the past strategies.
We continue to make progress towards our mainstream deconfidation goal. This week we have announced another inter-company transaction. The transaction further increased third-party cash flow at DKS to around 80%.
The transactions also improve financial liquidity at decade by around $250 million, which will allow us to maintain our balance sheet strength.
DKL, two water acquisition outperforming well and along with the new gas processing plant will support DKL cash flow and distribution growth.
Dekal has a strong runway of growth in its gas processing business led by its prime location in Lee County, New Mexico.
D.K.L. is also enhancing its position by being one of the few mainstream companies with our guest gathering and acid gas injection capabilities.
The steps highlight D.K.L. progress in becoming a active high-growth, mid-sized mid-stream company benefiting from the natural gas growth in the permanent basin.
The Elephragistics is also on track to meet its strong 2025 EBDA guidance of $480 to $520 million.
Despite these great booths, DKL remain undervalued compared to its peers, with minimally any of this value reflected in DK Shells.
We will continue to take additional steps, such as the value of approximately $400 million in third party EBDA. A DKL is fully reflected in DK share price and DKL unit price.
We remain confident that we will complete the DKL de-conferredation in a methodical manner that will create value for both DK Sheldon and DKL Units Holdings.
I'm also excited about the progress we are making on our enterprise optimization plan, OREOP [inaudible]
As a reminder, we started EOP with an aim to improve decay cash flow by $80 to $120 million starting in the second half of 2025
On our last early call, we announced that we expect to be closer to the top end of the original Kesho Improvement Guidance.
We remain confident in achieving at least $120 million in cash flow improvement through EOP annually.
The final piece of our strategy is being showholder friendly and having a strong balance sheet.
During the quarter, we paid $16 million in dividend and bought back $32 million of our share.
We remain committed to a discipline and balanced approach to capital allocation.
Now, I would like to make a comment about small refinery exemption.
As you know, last year the D.C. Circuit Court overturned the EPA denial of our SRI petition.
We're excited about the support of domestic energy production by both the Card and Administration and EPA.
We are confident that the EPA under the leadership of President Trump will provide needed support to small refineries by granting exemption under RFF.
including I would like to thank our entire team for their hard work and dedication. We are excited about the prospects of DK in 2025 and beyond. Now I will turn the call over to Joseph, who will provide additional call on our operations.
Joseph: Thank you, Avigal. In the first quarter, we performed our planned outages and our system is well positioned for the gasoline season.
Joseph: In addition, EOP initiatives are on track to achieve approximately $80 million of incremental and capture in the refining process and commercial footprint by mid-year.
Joseph: In Tyler, the team successfully executed all plant maintenance in the alkylation unit, including the upgrade scope, which allows us to increase production of high-value products by approximately five hundred barrels per day.
Joseph: Total throughput in the first quarter was approximately 69,000 barrels per day, production margin in the quarter was $7.82 cents per barrel, including an unsavorable 70 cents per barrel impact from the planned alky outage.
Joseph: Operating expenses were $5.69 per barrel. For the second quarter, our estimated total throughput in Tyler is in the 73 to 77,000 barrels per day range.
Joseph: In El Dorado, Dr. Thruputh in the first quarter was approximately $7,000 today.
Joseph: A production margin was $3.83 per barrel and operating expenses were $5.16 per barrel.
Joseph: Plan throughput for the second quarter is in the 80 to 84,000 barrels per day range.
Joseph: The Eldorator System is one of our top operational U.P. priorities. In the first quarter, we achieved approximately 80 cents per barrel of improvements, which is in line with our two-dollar of pin barrel run rate targets.
Joseph: In Big Spring, the team executed well on our planned catalyst replacement work in the reformer and design idol trader, and total throughput was consistent with the guidance range at approximately
Joseph: Her production margin was $4.86 per barrel, including an unfavorable $1.70 per barrel impact of the planned
Joseph: Operating expenses were $8.36 per barrel, deflecting the maintenance activities and relatively low throughput denominator.
Joseph: In the second quarter, estimated throughput is in the 67-71,000 barrels per day range.
Joseph: In cross-springs, we continue to demonstrate improved capacity and performance capabilities since internal and completion, late last year.
Joseph: Dr. throughput in the first quarter was approximately 85,000 barrels per day, which is a record eye rate for the plant.
Joseph: Our production margin was $6.40 per barrel and operating expenses in the quarter will $5.36 per barrel. Our plan throughput for the second quarter is in the 82 to 86,000 barrels per day range.
Joseph: A low implied system throughput target for the second quarter is in the 302 to 318,000 barrels
Joseph: Moving on to the commercial front in the first quarter, supply and marketing contributed the loss of 23.7 million dollars.
Joseph: Of that, approximately $8.7 million loss was generated by wholesale marketing and a negative $88.5 million of contribution was generated by asphalt, both driven by Siedemann Flo Demand trends.
Joseph: $6.4 million dollars was attributed to supply. In summary, we continue to execute well on the fundamentals of our business.
Joseph: Our focus on the OP allows us to capture structural liquid yield, product mix, and cost-structuring improvements as we optimize our marketing footprint.
Joseph: Considering the constructive market conditions and our assets positioning, we are excited about the opportunities ahead of us, showed and long-term.
Mark will now address the financial variance.
Mark: Thank you, Joseph. Referring to slide 18, for the first quarter, Delek had a net loss of $173 million or negative $2.78 per share. Adjusted net loss was $144 million, or negative $2.32 per share, and adjusted even though it was $26.5 million.
Mark: On slide 19, the waterfall of Adjusted Evidda from the fourth quarter of 2024 to the first quarter of 2025 shows that there were two main drivers for the increase in evidda [inaudible]
Mark: First, a 42.2 million dollar increase in refining was primarily attributable to a higher margin environment in the first quarter relative to the fourth quarter, along with sequentially higher throughputs. [inaudible]
Mark: Second, in the Logistics segment, we continue to have another strong quarter delivering $117 million in Adjusted EBITDA, a $9 million increase over our previous record of quarterly Adjusted EBITDA.
Mark: These improvements were mitigated by slightly higher cost in the corporate segment of approximately $1.8 million compared to the prior period.
Moving to slide 20 to discuss cash flow [inaudible]
Mark: Cash flow from operations was a use of $62 million. Within this amount is our net loss for the period, in addition to an inflow of approximately $26 million of timing related working capital movements, which include the impacts of the inventory intermediation agreement.
Mark: Investing activities of $315 million includes approximately $180 million paid at the closing of the Gravity Acquisition and PP&E editions of $136 million.
Mark: Financing activities of $265 million, reflects $32 million in share repurchases, $16 million in dividend payments, and $22 million in decal distribution payments to public unit holders.
Mark: Along with Sherry Purchases, this quarter DK agreed to sell $10 million worth of DKO units back to DKO under the DKO $150 million unit repurchase program.
Mark: As mentioned previously, this is a tax-efficient way for DK to proceed with his deconsolidation efforts.
Mark: On Slide 21, we show our actual progress under the 2025 Capital Program. First quarter capital expenditures were $133 million million dollars.
Mark: Approximately $72 million of the spend was in the logistic segment of which $52 million was associated with the construction of the Libby 2 gas plant which remains on track from a cost and time perspective and is currently under the commissioning phase.
Mark: Primarily, all of the remaining capital spend during the quarter was in the refining segment addressing planned sustaining capital initiatives.
Mark: Our DK refining and corporate capital spending outlook for 2025 remains consistent with prior guidance.
Mark: Our net debt position is broken out between Delek and Delek logistics on slide 22 During the quarter we drew approximately 112 million dollars of cash primarily to return approximately 48 million dollars to shareholders for capital expenditures on growth projects for the acquisition of gravity
Mark: We're now to slide 23 where we cover second-quarter outlook items.
Mark: In addition to the guidance Joseph provided, for the second quarter of 2025, we expect operating expenses to be between $215 and $225 million for the next quarter of 2020.
Mark: Operating expenses are based on higher throughput expected for the second quarter, so although in line with first quarter results, we are expecting improvements on a perberal basis.
Mark: GNA is expected to be between $52 and $57 million and $57 million.
Mark: DNA to be between $95 and $105 million, and net interest expense to be between $80 and $90 million. With that, we will now open the call for questions.
Thank you.
Mark: Thank you. Floor is now open for questions. If you have dialed in and would like to ask a question, please press star one on your telephone keypad to raise your hand and join the queue.
Mark: If you would like to withdraw your question, simply press star one again. [inaudible]
Mark: If you are called upon to ask a question and are listening via a loudspeaker on your device, please pick up your handset and ensure that your phone is not on mute when asking your question.
Mark: We do request for today's session that you please limit yourself to one question and one follow-up.
Speaker Change: Your first question comes from the line of Alexa Patrick of Goldman Sachs. Your line is open.
Alexa Patrick: Hey, good morning, team, and thank you for taking my question. I want to talk about. I wanted to talk about D.K.L. and the full year EBITDA guidance, which you reiterated. Can you talk about some of the moving pieces there, and then how should we think about changes in Permian activity, potentially impacting the outlook? Yeah, I'll talk about that.
Speaker Change: Absolutely, I will start with the permanent activity, and then we will talk about the great news that we are seeing on Dekar. In terms of the permanent activity, we can divide that into three parts, right?
Speaker Change: A Crage, but with great activity and great producer and mature producer over there. The big thing that we have over there that we have
Speaker Change: Very strong combined offer with the water and other positions are going to the high end of our expectations
Speaker Change: So over there, with all the discussion we had with our producer, we are very secured and every very nice volume so that's one
Speaker Change: The second part is the Dalloway. Dalloway, as you know better than I do, has the lowest break even in the official in any place, and we are in a very good position over there. We have...
Speaker Change: Volume that we didn't produce until we are finishing the expansion of the plant, so that's a very easy move for us to fill up the plant.
Speaker Change: And we are in a very solid ground over there with what we are discussing with all of our producers So when everyone is scared actually we see a great opportunities on the Delaware as you well know we also have a sour offering which is very unique
Speaker Change: And then no one else, almost in our area, has that offer to our producers. So we're in a very good shape with both of the data written. We reiterate the guidance we gave and we are looking on a very strong year for DKL and more to come.
Thank you.
Speaker Change: That's very helpful. Thank you. My follow-up is just on Capitol Returns. Can you talk about your strategy there? How should we be thinking about the sustainability of the current dividend yield? And then how are you thinking about sharey purchases and balancing share price and de-leveraging efforts?
Speaker Change: Yeah, yeah, absolutely. So, I want to start with the bigger picture with your permission. So, we started like almost a year ago I want to say the EOP enterprise optimization plan. The all point of that is free cash flow.
Speaker Change: Three casualties, King, and we are showing improvement and we have a very good second half with minimal capital.
Speaker Change: And that's the whole point of three questions, so I want to make it very clear [inaudible]
Today, as you saw the announcement,
Speaker Change: We said at least $120 million in improvement on an annual basis, second half [inaudible]
and we have a very nice project.
Speaker Change: And again I'm saying that more use to come around that in the near future so we are very excited about where around where we are with that project so as you know
Speaker Change: EOP is not only cost, but it's also margin. You saw a very good GNA number going down, we put your slide, it basically started with 100 and we basically it's now with 50, low 50.
Speaker Change: You saw the optics coming along very nicely to guidance even though that we are adding more and more activities to the business we are adding another natural gas plant
Speaker Change: We just had another acquisition gravity that we did and we are having a higher throughput. So all of that is coming to the right direction with the entire team coming behind that you have seen the Eldo Ado capture it going up
Speaker Change: Almost a pack on the top of the crack spread improvement. So that's very good. So in terms of capital allocation to your point
We said [inaudible]
Speaker Change: Before the cycle starts, that we are the buybacks for it, before the dividends for us is something that we want to do through the cycle.
That's what exactly what we are doing. [inaudible]
And then we have the balance, the approach. [inaudible]
Speaker Change: Between Bible and improving our balance, that's exactly what we are doing. We see a huge, huge, huge amount of value in our share price, for us return to shareholder, shareholder is not one quarter campaign, it's a philosophy, and we are following through. We did the Bible in all the previous quarter, and we are very...
Speaker Change: Our level of conviction and the amount of discount of our sharepaces, that's huge, doesn't allow us not to act
Thank you.
Speaker Change: Thank you. Your next question comes from a line of Matthew Blair FTPH. Your line is open.
Thank you, and good morning. So, it's morning, Mark Haines, Joseph Smith
Matthew Blair: So let's apply a marketing show some improvement in the first quarter or relative to the more quarter. You talked about some of the drivers there, but I hope you could talk a little bit about how things are trending in the second quarter. Should we expect further improvements in the wholesale marketing and asphalt categories. Thank you.
Matthew Blair: Yeah, absolutely. Matthew, absolutely right about your observation. It's a $10 million on a similar market on the wholesale price, an even worse market on the asphalt. So that's actually even make the position even better.
Matthew Blair: In terms of all Iraq, we see strong Iraq demands [inaudible]
Matthew Blair: We've seen networks going on the right direction, we've seen crack spreads. [inaudible]
going 3-4 dollars in the last few weeks.
Matthew Blair: All of that are very positive in terms of the reaction of supply demand and we are very positive about where we are and about Q2 So that's all going the right direction So we're in a good position, market going well and we see some more to come around that
Mohith: He met, this is moving, now the saddles a little bit on that, says Avigal said...
Mohith: Q4, we all just talk about our supply and marketing line item in three terms, wholesale, asphalt, and supply. Old sale conditions are very similar in the group versus Q4 and asphalt. Q1 is the seasonally weakest quarter for asphalt.
Speaker Change: So despite that, you know, EOB is a big thing in the organization.
Mohith: And, you know, we are doing all the structural things that make us better and that's why you saw that $10 million improvement [inaudible]
Mohith: As far as, you know, go forward guidance is concerned, we don't really provide guidance, but we have seen very strong start.
Mohith: to the group of differentials in the second quarter and asphalt has been improving as well So that is how the quarter has started but we'll see where we end up at the end of the quarter but so far you know the things look really good [inaudible]
Speaker Change: Sounds good. I mean, I hope you could discuss some of the dynamics in the Southwest. It seems like it's off to a little bit of a fluggish start.
Speaker Change: with both gasoline and diesel cracks below fiber averages. Has anything structurally changed on the Southwest, and would you expect to see improvements into the summer here? [inaudible]
Speaker Change: Matt, this is Mohit again. I think South West, we are actually seeing very strong cracks, like if you look at some of the problems that you've seen on the West Coast, it's translating into Arizona markets, especially Azerbaijan, which is...
Speaker Change: Gasoline, Great for Arizona markets, has been very, very strong. We supply that market and we are not seeing any weakness that you are talking about.
. . . .
Speaker Change: Thank you. Your next question comes from Line of Manav Gupta of UBS. Your line is open. Hey Manav, good morning, Manav.
Manav Gupta: Good morning sir, my question here is a little more under an SREs and hopefully your knowledge
Manav Gupta: I'm just trying to understand here when we are talking SRIs, are we talking SRIs on a go forward basis or you also might actually would like to you know go back and claim SRIs for a period of 20 or 20 whatever time frame so I'm just trying to understand. [inaudible]
Manav Gupta: Is it all going to be forward looking or you're also going for what you believe could be retroactive SRIs for you guys?
Yes, our comment that we put is retroactive.
Manav Gupta: And it's going to go to a backlog all the way from 2019 I think if you look on the previous posting that we gave we gave a rounding number around it so for us it's a huge value and as I said on my preferred remark we are very optimistic about that and more news to come so
It's both backwards and forwards.
Speaker Change: Okay, so both backward and forward, so forward also, even if RVO is raised materially and the rent prices do move higher, you still expect those SRIs to give you relief, is that the right thing about it? Yes, absolutely.
Speaker Change: Manav, this is Mohit, thanks for the question. So let me just give you all the details around that.
Speaker Change: So, after the DC Circuit Court ruling last year, our predictions for SREs were sent back to the EPA
Speaker Change: The total amount as we are disclosing the past to comply with those petitions was close to $300 million and that is for the years of 2019 and 2020. From 21, 22, 23 and 24, the cost of our compliance is you know way above our current market cap.
Speaker Change: So, first of all, you know, we obviously are putting forward and talking with the EPA to get the retroactive SREs and we obviously as the law clearly states that we deserve SREs 100% for our capacity to deserve SREs so we also are looking from a forward basis.
Speaker Change: So that is the situation right now and we do think there are competing incentives that EPA has to balance but as far as we are concerned we are very optimistic that EPA will grant us the SREs that we deserve under the RFS law
Please see the complete disclaimer at https://sites.google.com or at https://sites.google.com
Thank you guys, I'll turn it over [inaudible]
Thank you.
Speaker Change: Your next question comes from the line of Doug Leggate of Wolf Research. Your line is open.
Speaker Change: I, good morning, everyone. This is McKinley Trust Clare on for Douglas Leggate. He's currently traveling. My first question is going to be sent into Ronnie O.P. Best, especially on the earlier. The appearance that you're going to currently comfortably reach your $120 million target heading into the second half of the year. But my question is, are there any opportunities for upside beyond that $120 million? And if so, what are the potential drivers of further improving upon that target?
Speaker Change: Yeah, and you picked it right and you picked it nice.
And up the answer is absolutely, we have not get the guidance. [inaudible]
Speaker Change: for the over the 120, but don't be surprised if dead guidance will come at some point.
Speaker Change: because we do see upside on the top of that so the answer is there is some you pick that what we try to hand the market very nicely
Speaker Change: So, good news to you. We are working towards that. The entire organization is focusing on that and more to come.
Speaker Change: Alright, thank you. My follow-up is also generally centered around EOP, so do you have a kind of a guide or an idea of how or if the refining business can generate sustainable free cash flow on medicine around expenses post you recognize all your cost savings from the EOP?
Thanks.
Yes, yes, absolutely [inaudible]
Speaker Change: So, first of all, you need to understand that we are very confident in DOP and that's what the...
Looks great [inaudible]
Speaker Change: We gave you numbers and you've seen the numbers around the improvement that you've already seen, El Dorado, you see the improvement that we've seen, the cost basis.
Speaker Change: You see the improvement that we showed in KFCAR, you see the improvement in Reelability in Big Spring and you see Tyler in a very good, the Constable spot. I will let Mark, I'll see if I'll do a, say a few words about the cash flow going forward and that's going to give you another level of understanding. Thank you.
Mark: Yeah, thanks Avigal. Speaking about cash flow and digging in a little bit more.
Mark: Over recent past and the quarter, keep in mind that over 80% of our capital spend in the first quarter was for highly accrued growth.
Mark: Primarily a D.K.L. that furthers are some of the parts initiatives. [inaudible]
Mark: As you know, we closed the Gravity Acquisition on January 2nd, you know, that was about $180 million just over of cash in the quarter [inaudible] you know, you know,
Mark: In 2025, CAPEX, as we've provided guidance, is heavily waited to the first half of the year So in the first quarter we spent about $72 million in growth CAPEX at D.K.L. 52 million of which was for our Libby 2 expansion
Mark: We also have plant maintenance at both Big Spring and Tyler and our plants are running well so we feel very good about being set up for moving into the summer driving season [inaudible]
Mark: If you take a longer-term view and think about the relatively heavy spend that we had over the last nine months, which included the KSR turnaround late last year,
Mark: The ongoing Libby II expansion, which is critically important for Delaware growth initiatives around gas and power gas, plus acquiring both H2O and gravity in the face of challenging margin environments.
Mark: We've maintained a strong balance sheet, and we're very happy with our liquidity position as we move into the year. This also incorporates the fact...
that we've continued our counter-sickical approach to buybacks. [inaudible]
Mark: So over that period of time, we purchased approximately $75 million of our stock.
along with paying around $50 million in dividends.
Speaker Change: And so we're set up very well as we move through 2025, I mean the EOP initiatives that Avigal is giving a lot of detail around
Speaker Change: Moving through the second half of the year, over a very comfortable with $120 million plus.
Speaker Change: and Improvement. That's very much a free cash flow initiative with a limited capital spend in the second half of the year. We feel very good about how we're set up going forward.
Alright, thanks for your response. Thank you for taking my questions
Speaker Change: Thank you. Your next question comes from Line of Joe Lach of Morgan Stanley . Your line is open.
Hey, good morning team, and thanks for taking my questions.
Speaker Change: So I wanted to ask on some of the parts progress and I was hoping you could unpack the intercompany transactions. Is there more to go on this side or are the right assets and the right buckets now? Thanks.
Speaker Change: Yeah, absolutely, so some of the parts along with EOP are the most important initiatives in our company, so I want to make it very, very clear. Deconceritation is the goal and deconceritation is happening as we speak, just to make it very, very clear.
Joe Leitch: If you don't know and see every day, we went from 79%
Joe Leitch: Just a year ago, more or less, over 60% now, while doing that, we increase the DKL EBDA from 385 to midpoint to 500, while doing that, we increase third party from around 40%
Joe Leitch: to around 80% as we see today, and while doing that we increase the distribution that DKG actually gets. So all of that is very creative.
Thank you.
Speaker Change: So I will let Mark to add more into the transaction that we discussed today.
because it's very important. [inaudible]
Speaker Change: Yeah, so the inter-company transactions, if we announced coinciding with the earnings
It's really about cleaning up contracts between DK and DKL. [inaudible]
Speaker Change: And it's a critically important step to advancing our deconsolidation efforts because, as Avigal said, it's kind of getting assets and activities in the right place and what we've done is we've basically moved
Speaker Change: Refining Related Activities from Decay back to Decay, which is obviously important. We also move midstream-related activities from Decay down to Decay, all through the cleaning up of these contracts.
Speaker Change: The overall impact of this is not really material to either one of the entities [inaudible]
Speaker Change: But through this restructuring, it does unlock approximately $250 million of the availability as we mentioned under our credit facilities.
Speaker Change: And importantly, the results of this, it increases decals, third party EBITDAQ contribution, you know, to approximately 80% on a pro form of basis. And that further drives our economic separation between the two companies which is also critically important.
Thank you.
Speaker Change: Great, thanks, that's helpful. And then I want to follow up on the logistics side. You've done a good job growing midstream through bolt-ons. You talked about what you're seeing in the M&A landscape today, and has that changed it all with a pullback and crude and some INP starting to reduce activity here.
Speaker Change: Thank you. Yeah, absolutely. So we are developing a company which is a midsize, midstream company that provides all services.
Hood, Gas, and Water
Speaker Change: Looking on M&A specifically, we are not going to comment, we have done in the past deal that made a lot of sense for you guys and made a lot of sense for us and the three main criteria that we are looking, three cash flow, accredited to leverage and accredited to coverage ratio.
Speaker Change: So, we are not after the deal, we are after providing value to unit order and show other, that's the goal
And we are...
Speaker Change: Speaking, the right tool on the right time, we can either sell, like we saw written, we can either buy, like we did with gravity in H2O, or we can build when we have the right multiply to build versus...
Speaker Change: versus Baye. So we have the full toolkit ahead of us and we are trying to use the right toolkit for the right mission and not to confuse them. That's the goal. The goal is to give value to Yuga, to investors and that's what we are determined to do.
Great. Thanks.
Speaker Change: Your next question comes from Line of Ryan Todd of Piper Sammler. Your line is open.
Thank you.
Ryan Todd: Great, thanks. Maybe first off, congratulations on the approved margin caps, you're particularly at Al Dorado.
Speaker Change: Can you talk about what you've been able to do to drive improvement there and what are the next steps in terms of continuing to improve capture?
Yeah, absolute, it's all end well, it's a very nice kit [inaudible]
Speaker Change: We visited there just few weeks ago, all the refineries behind the new appreciative and we definitely see
Great progress, the complexity of the refinery is good. [inaudible]
Speaker Change: We've finished the journey of operations and I will let Joseph to...
Speaker Change: It's very close to that comment on that piece of it. Yeah, going from our fourth quarter to the first quarter, realized the growth margin improving by $1 over a benchmark, a crack spreads.
Speaker Change: We went up 327 verses for the Mark of the Gavos of 238. We went up 327 verses for the Mark of the Gavos of 238.
Speaker Change: Meaning there's the European initiatives of starting to really to impact our capture.
Speaker Change: We saw 80 cents per barrel in place in the first quarter, like we mentioned in a row, prepare the remarks, and we are on track to achieve the $2 per barrel annual rate by the end of this quarter.
To remind everyone, this are the... [inaudible]
Speaker Change: Structural Process Logistics and Commercial Improvements, which will support the weather profitability in the long run through the cycles.
and if you're asking in specific. Thank you.
We're talking about...
Jet Fuel Production, which we added.
in El Dorero and really helps. [inaudible]
The Offering of High-Value Products
and we have... [inaudible]
Some capitalists change, which is really helping our liquid yield . . .
and Performances.
Some of our units and other creatives engineering techniques that...
Thank you very much.
Great, thank you, and maybe a follow-up on it earlier.
Speaker Change: Question. There have been a lot of moving pieces over the last few quarters across your business that impact I think how we view the financials. Refining business has certainly seen some improvement, but I think if we go back.
Speaker Change: I believe it was last, last August when you had made a number of these structural changes. There was part of like the amendment extend program. I think maybe you were talking about something on the order of $60 million of EBITDA that would kind of move from D.K.L. towards
Speaker Change: Towards DK, you've announced some additional kind of inner company adjustments here, you know, can we look at one Q earnings and the results here like does it reflect?
Speaker Change: Kind of a normal age run rate in terms of these intercompany adjustments and the amended extend from last year, is that generally reflected in the first quarter underlying kind of profitability, or is there more to go there outside of the EOP? Okay.
Speaker Change: Yeah, for the most part, that's not the changes that we see, the most part is the business that we are improving and making that better, so that's not the essence.
Mohit: Yeah, so as far as these intercompany agreements are concerned, let's just talk about the first one that we just announced is the first the basic idea here is to just put the right assets and the right bucket.
Mohit: We're just making sure all the details tied assets are at decay and all the refining tied assets are coming back or at least economically coming back to Delek.
Mohit: So, for the latest round of intercoming transactions, we basically expect EBDI back to be relatively muted for DKL and for DK.
Mohit: As far as the minute and extent contracts that he announced in August of last year [inaudible]
Mohit: We still expect some of that $60 million to come back to DK progressively throughout this year.
Thank you.
Great. Thank you.
Thank you.
Speaker Change: Your next question comes from a line of Jason Gabelman of TD Cowan. Your line is open.
Good day. Hey, morning. Thanks for taking my questions
A.J. from the Blue and Yellow U.
Speaker Change: Yeah, good. I, you know, I was a bit surprised by the op-ex guidance going forward.
Speaker Change: in light of kind of declining turnaround activity. And if I compare to where you were the back half of last year on a consolidated basis, you're about...
185, and 2Q, you're...
Speaker Change: Gotting to 220 million, I think 3Q, 24 throughput was flat with 2Q, 25 guidance so I would have anticipated that to be a good-
Speaker Change: kind of benchmark and, you know, understanding higher logistics topics at 10 million, higher natural gas prices probably at another 10, they're still, you know, a decent, maybe call it 15 million dollar gap to where we think.
Speaker Change: You should be on OPEC. So is there anything going on in that bucket that we should be thinking about in terms of increases from the second half of the year to the Go Forward Guidance?
Speaker Change: Yeah, thanks for the question, a great question and I'm happy to answer. So the main driver of Hobbs between Q1 and Q2 are simply the natural gas plant that we are adding and I think
Speaker Change: Back of the envelope is like more than 30,000 bells a day of a throughput that you probably noticed that we are giving a very strong guidance towards Q2 All of them are very important and we are doing that we are very happy that we have the opportunity to make more money on an overall basis
Speaker Change: The last thing that you need to expect that we will see...
Speaker Change: Going to the balance of the air Q3 and Q4 So we are very happy about the progress we are doing about OPEX We have seen that we can be low the target we give and we've seen a very nice improvement We probably have noticed that the GNA is pretty much half
Speaker Change: When we started that program, we were making very good progress, we have activity, we are adding, we have throughput, we are adding and you will hear more news shortly.
Thank you.
Speaker Change: Yeah, and here you are on the G&A side for sure, that's coming through. Do you have a sense of where OPEC should kind of trend in the second half of the year?
Speaker Change: Well, I don't think it's the best part is to give guidance so far out, but we are very optimistic.
Speaker Change: Okay, that was it for me, so appreciate the help there. Thanks.
Speaker Change: Yeah, absolutely. I would like to thank the management here on the table to our board of directors, to our investors and most importantly our great employees that make that company what it is and we'll talk again next quarter. Thank you.
This concludes today's conference call. You may notice, connect. Thank you very much.