Delek Logistics Partners, LP (DKL): BCG Matrix [Dec-2025 Updated]

You're looking for a clear-eyed assessment of Delek Logistics Partners, LP (DKL)'s business portfolio as of late 2025, mapped to the classic BCG Matrix. Here is the quick math on where their capital is working: the Gathering and Processing segment is clearly the Star, driving $82.8 million in Q3 Adjusted EBITDA thanks to Permian growth, while the Storage and Transportation segment acts as the reliable Cash Cow, backed by a 1.24x DCF coverage ratio. Still, we need to look closely at the segments facing margin pressure and those high-potential, high-cost Question Marks requiring fresh capital to see the full picture of DKL's path forward.

Background of Delek Logistics Partners, LP (DKL)

You're looking at Delek Logistics Partners, LP (DKL), which is a master limited partnership, or MLP, that manages energy infrastructure. Honestly, it's the logistics arm spun out from Delek US Holdings, Inc. (NYSE: DK) back in 2012. The company's main job is owning and running assets that gather, transport, and store crude oil and refined products, mostly supporting Delek US's refineries in places like Tyler, Texas, and El Dorado, Arkansas, but also serving third parties.

DKL's physical footprint includes about 850 miles of crude oil and refined product pipelines and a 700-mile crude oil gathering system, with operations concentrated in the southeastern United States and West Texas. They've been actively growing this footprint, especially by focusing on the high-growth Permian Basin. For instance, they recently completed the commissioning of the Libby 2 gas plant and integrated acquisitions like H2O Midstream and Gravity Water, which beefed up their water handling and processing capabilities.

Looking at the most recent hard numbers from the third quarter of 2025, Delek Logistics Partners, LP reported a total revenue of $261.3 million, which was a nice jump from the $214.1 million seen in the third quarter of 2024. The net income for that quarter hit $45.6 million, resulting in a diluted earnings per unit of $0.85. Management was feeling good enough about the year to raise the full-year 2025 Adjusted EBITDA guidance to a range of $500 million to $520 million.

When we break down the performance by segment for Q3 2025, the Gathering and Processing segment was definitely the star, bringing in Adjusted EBITDA of $82.8 million, significantly up from $55.0 million the year prior, largely thanks to those recent acquisitions. On the other hand, the Wholesale Marketing and Terminalling segment saw its Adjusted EBITDA dip to $21.4 million from $24.7 million year-over-year. The Storage and Transportation segment was pretty flat, reporting Adjusted EBITDA of about $19.3 million.

The partnership remains focused on returning capital, as they announced their 51st consecutive quarterly distribution increase, setting the latest payout at $1.120 per unit. Still, you should note the leverage; as of September 30, 2025, total debt was around $2.3 billion, putting the leverage ratio at approximately 4.44x. They're definitely working to strengthen the balance sheet while funding growth projects.

Delek Logistics Partners, LP (DKL) - BCG Matrix: Stars

The Gathering and Processing (G&P) segment is positioned as a Star for Delek Logistics Partners, LP (DKL) due to its high growth in market share, evidenced by strong financial contributions and significant infrastructure investment in high-growth areas like the Delaware Basin.

The Gathering and Processing (G&P) segment delivered $82.8 million in Adjusted EBITDA for the third quarter of 2025. This figure represents a substantial year-over-year increase from the $55.0 million reported in the third quarter of 2024. This segment's performance contributed significantly to the total company Adjusted EBITDA of $136.0 million in Q3 2025, a 27% increase year-over-year, leading management to raise the full-year Adjusted EBITDA guidance to $500 - $520 million.

The growth is fundamentally tied to the Permian Basin crude and water gathering systems. Delek Logistics Partners reported record crude gathering volumes in its Delaware crude gathering system during the third quarter of 2025. This operational success is directly supported by strategic capacity additions and integration efforts across the Permian.

A key driver of this high-growth positioning is the successful commissioning and ramp-up of the Libby II gas processing plant in the high-growth Delaware Basin. Commissioning started in the second quarter of 2025, with plans to fill the plant to capacity in the second half of 2025. This expansion adds incremental processing capacity of 100 million to 120 million cfd. The investment required for this growth was visible in Q1 2025 capital expenditures, which included approximately $52 million specifically for the construction of the Libby 2 gas processing plant.

The company is executing a full-suite midstream strategy in the Permian, which is bolstered by recent acquisitions that enhance water handling capabilities. The acquisition of Gravity Water Intermediate Holdings LLC closed on January 2, 2025, for a total consideration of $285 million, which included $200 million in cash and approximately 2.175 million DKL units. This transaction is synergistic with the prior acquisition of H2O Midstream, creating an integrated crude and water offering in the Midland Basin. This strategy has helped secure an additional ~34,000 acreage dedication in the Midland Basin, bringing the total dedication to 400,000 acres.

Here are the key financial metrics supporting the Star classification of the G&P segment as of Q3 2025:

The high growth and investment profile of these assets are reflected in several operational achievements:

• Reported record crude gathering volumes in the Delaware crude gathering system in Q3 2025.
• Successfully completed construction of the Libby 2 natural gas processing plant by August 2025.
• Progressing on comprehensive Acid Gas Injection (AGI) and sour gas treating capabilities at the Libby Complex.
• The Gravity acquisition is expected to be immediately accretive to EBITDA.
• Management raised the full-year 2025 Adjusted EBITDA guidance to $500 - $520 million.

The commitment to growth is also seen in unitholder returns, with the third quarter 2025 distribution increased to $1.120 per common limited partner unit, marking the 51st consecutive quarterly increase.

Delek Logistics Partners, LP (DKL) - BCG Matrix: Cash Cows

You're looking at the bedrock of Delek Logistics Partners, LP's financial stability, the business units that generate more cash than they consume in a mature, high-market-share environment. The Storage and Transportation segment is a prime example here, delivering $19.3 million in Adjusted EBITDA for the third quarter of 2025, showing that stable, fee-based revenue stream is holding steady.

This stability is largely due to the core crude oil and refined product pipelines that service the sponsor, Delek US Holdings, Inc. (DK). These assets operate under long-term, fee-based commercial agreements where Delek US Holdings commits to minimum monthly throughput volumes of crude oil, intermediate, and refined products. This structure locks in cash flow, which is exactly what you want from a Cash Cow; it's defintely low-risk revenue.

Here's a quick snapshot of the key financial indicators supporting the Cash Cow designation for Delek Logistics Partners, LP as of Q3 2025:

The partnership's ability to cover its obligations while rewarding investors is clear in the DCF metrics. The Distributable Cash Flow (DCF) coverage ratio, as adjusted, stood at approximately 1.24x in Q3 2025. This ratio shows that the cash generated is more than sufficient to cover the distributions paid out, providing a reliable funding source for necessary maintenance capital expenditures and a buffer before needing to tap external financing for growth.

You see the direct result of this strong cash generation in the partnership's commitment to its unitholders. Delek Logistics Partners, LP marked its 51st consecutive quarterly increase in the distribution, raising the payout to $1.120 per unit in Q3 2025. This consistent growth, funded by these mature, high-share assets, is precisely why companies strive to maintain and 'milk' these Cash Cows for the capital needed elsewhere in the portfolio.

• Investments into supporting infrastructure, like the progress on the Libby Complex AGI/sour gas treating solution, are aimed at improving efficiency and increasing this cash flow.
• The stable fee-based contracts with Delek US Holdings underpin the low-growth, high-market-share positioning.
• The 1.24x DCF coverage ratio provides the necessary cushion above the 1.0x threshold.
• The distribution was increased by 0.4% from the Q2 2025 payout of $1.115 per unit.

Delek Logistics Partners, LP (DKL) - BCG Matrix: Dogs

The Wholesale Marketing and Terminalling segment reflects characteristics aligning with the Dogs quadrant, showing diminished performance metrics in recent reporting periods.

Wholesale Marketing and Terminalling segment Adjusted EBITDA registered $21.4 million for the third quarter of 2025. This figure represents a decline from the $24.7 million reported in the third quarter of 2024.

The assignment of the Big Spring refinery marketing agreement to Delek US Holdings was cited as a primary factor contributing to the decrease in the Wholesale Marketing and Terminalling segment's Adjusted EBITDA.

For the first quarter of 2025, this segment's Adjusted EBITDA was $17.8 million, a notable drop compared to the $25.3 million recorded in the first quarter of 2024. This softening was attributed to compressed wholesale margins and impacts from intercompany agreements.

The Storage and Transportation segment also showed signs of pressure in the first quarter of 2025, with Adjusted EBITDA at $14.5 million, down from $18.1 million in the first quarter of 2024, primarily due to decreased rates.

Older, non-core assets in mature regions with limited expansion opportunities and lower throughput volume growth are generally candidates for divestiture, a strategy consistent with managing Dogs.

Here's a comparison of the segment performance metrics that suggest a low-growth, low-share profile:

The operational challenges are summarized by the segment results:

• Wholesale Marketing and Terminalling Adjusted EBITDA fell to $17.8 million in Q1 2025 from $25.3 million YoY.
• Storage & Transportation Adjusted EBITDA declined to $14.5 million in Q1 2025 from $18.1 million YoY.
• The assignment of the Big Spring Refinery Marketing Agreement directly impacted Q3 2025 results.
• Q1 2025 results were softened by a decline in wholesale margins and intercompany agreement impacts.

Delek Logistics Partners, LP (DKL) - BCG Matrix: Question Marks

You're looking at the business units within Delek Logistics Partners, LP (DKL) that are currently consuming significant cash for growth but haven't yet secured a dominant market share-the classic Question Marks. These are areas where high market growth potential exists, but DKL's current position is not yet leading.

These units require heavy investment to capture market share quickly, or they risk becoming Dogs. For Delek Logistics Partners, LP, the focus is clearly on expanding its integrated services in the Permian Basin, which demands substantial upfront capital.

Here's a look at the specific areas fitting this high-growth, low-market-share profile for Delek Logistics Partners, LP as of late 2025.

Investments in Pipeline Joint Ventures

The investments in pipeline joint ventures represent a growing, yet minority, stake that requires capital but doesn't offer full operational control. For the third quarter of 2025, this segment contributed income of approximately \$22 million, which is a strong increase from the \$16 million seen in the third quarter of 2024. The Chief Financial Officer suggested this \$21.9 million figure from Q3 2025 is a good run rate to expect going forward. This growth is partly attributed to the Wink to Webster (W2W) dropdown. While the returns are growing, the structure means Delek Logistics Partners, LP is participating in a growing market without full control over the asset's direction.

Development of Comprehensive Acid Gas Injection (AGI) and Sour Gas Treating Solutions at the Libby Complex

The development of permitted Acid Gas Injection (AGI) capabilities at the under-construction Libby 2 gas processing plant is a prime example of a high-cost, high-potential project. The company completed the commissioning of the Libby 2 plant in the third quarter. The AGI and sour gas handling capabilities, enabled by two AGI well permits and an amine unit under construction, are designed to allow customers access to all six benches of the Delaware Basin without hydrogen sulfide and $\text{CO}_2$ liability. Delek Logistics Partners, LP expects to have these AGI capabilities online in the second half of 2025. This investment is crucial because it is enabling DKL to fill the plant to capacity and is paving the way for further processing capacity expansions, which is the path to turning this investment into a Star.

Planned Capital Expenditures for 2025

Funding these growth initiatives requires a significant cash outlay. Delek Logistics Partners, LP planned capital expenditures for the full year 2025 to be in the range of \$220 million to \$250 million, which includes expansion projects. To put this into perspective for the third quarter alone, the capital program was approximately \$50 million, with \$44 million of that spend allocated to growth capex, specifically including spend to optimize the Libby 2 gas processing plant. This high level of spending is necessary to quickly gain market share in these growing segments.

Strategic Push in the Midland Basin Crude and Water Offering

Delek Logistics Partners, LP is actively focused on making its combined crude and water offering in the Midland basin more attractive. This strategic push is supported by recent acquisitions, namely Gravity Water Midstream (closed in Q1 2025) and H2O Midstream, which supplement the integrated crude and produced water gathering and disposal services. The success of these growth drivers is evident in the segment results, though the overall portfolio mix is shifting.

Here's how the key operational segments performed in Q3 2025, illustrating the relative strength of the growth areas versus others:

The growth in the Gathering and Processing segment, which includes the Midland water and crude gathering efforts, saw its Adjusted EBITDA jump from \$55.0 million in Q3 2024 to \$82.8 million in Q3 2025. This rapid growth signals the potential for this business unit to transition into a Star, provided the high investment level is sustained and market share is captured.

The Question Mark category for Delek Logistics Partners, LP is defined by these high-growth, capital-intensive projects:

• Investments in pipeline joint ventures contributing \$21.9 million in Q3 2025 income from equity method investments.
• AGI/sour gas handling at Libby Complex, expected to be fully operational in the second half of 2025.
• Total planned 2025 capital expenditures budgeted between \$220 million and \$250 million.
• Strategic focus on enhancing the combined crude and water offering in the Midland basin.

The overall Adjusted EBITDA for Delek Logistics Partners, LP reached \$136 million in Q3 2025, leading management to raise the full-year guidance midpoint to \$500 million to \$520 million. This increased guidance reflects confidence that these Question Mark investments are beginning to pay off.