dkl-20211231

UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
Form 10-K/A
Amendment No.1
(Mark One)
☑ ANNUAL REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934
For the Fiscal Year Ended December 31, 2021
OR
☐ TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934
For the transition period from to
Commission file number 001-35721
DELEK LOGISTICS PARTNERS, LP
(Exact name of registrant as specified in its charter)
Delaware 45-5379027
(State or other jurisdiction of incorporation or organization) (I.R.S. Employer Identification No.)
7102 Commerce Way
Brentwood
Tennessee
37027
(Address of principal executive offices)
(Zip Code)
(615) 771-6701
(Registrant's telephone number, including area code)
Not Applicable
(Former name, former address and former fiscal year, if changed since last report)
Securities registered pursuant to Section 12(b) of the Act:
Title of each class Trading Symbol Name of each exchange on which registered
Common Units Representing Limited Partner Interests DKL New York Stock Exchange
Securities registered pursuant to Section 12(g) of the Act: None
Indicate by check mark if the registrant is a well-known seasoned issuer, as defined in Rule 405 of the Securities Act. Yes ☐No ☑
Indicate by check mark if the registrant is not required to file reports pursuant to Section 13 or Section 15(d) of the Act. Yes ☐No☑
Indicate by check mark whether the registrant (1) has filed all reports required to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during the preceding 12 months (or for such shorter period that the registrant was required to file such reports), and (2) has been subject to such filing requirements for the past 90 days. Yes☑No ☐
Indicate by check mark whether the registrant has submitted electronically every Interactive Data File required to be submitted pursuant to Rule 405 of Regulation S-T (Section 232.405 of this chapter) during the preceding 12 months (or for such shorter period that the registrant was required to submit such files). Yes☑No ☐
Indicate by check mark whether the registrant is a large accelerated filer, an accelerated filer, a non-accelerated filer, a smaller reporting company, or an emerging growth company. See the definitions of "large accelerated filer," "accelerated filer," "smaller reporting company," and "emerging growth company" in Rule 12b-2 of the Exchange Act.
Large accelerated filer
☐
Accelerated filer ☑
Non-accelerated filer
☐
Smaller reporting company
☐
Emerging growth company
☐
If an emerging growth company, indicate by check mark if the registrant has elected not to use the extended transition period for complying with any new or revised financial accounting standards provided pursuant to Section 13(a) of the Exchange Act. ☐
Indicate by check mark whether the registrant has filed a report on and attestation to its management's assessment of the effectiveness of its internal control over financial reporting under Section 404(b) of the Sarbanes-Oxley Act (15 U.S.C. 4262(b)) by the registered public accounting firm that prepared or issued its audit report. ☑
Indicate by check mark whether the registrant is a shell company (as defined in Rule 12b-2 of the Act). Yes ☐No ☑
The aggregate market value of the registrant's common limited partner units held by non-affiliates as of June 30, 2021 was approximately $347,800,000, based upon the closing price of its common units on the New York Stock Exchange on that date.
At February 18, 2022, there were 43,470,853 common limited partner units.
Documents incorporated by reference: None
EXPLANATORY NOTE

This Amendment No. 1 to the Annual Report on Form 10-K/A (this "Form 10-K/A") amends the Annual Report on Form 10-K for the fiscal year ended December 31, 2021 (the "Original Report") of Delek Logistics Partners, LP (the "Partnership," "we," "our" or "us") filed with the Securities and Exchange Commission (the "SEC") on February 25, 2022 (the "Original Filing Date"). This Form 10-K/A is being filed solely to replace Exhibit 99.1 included in the Original Report with the corrected Exhibit 99.1 filed as an exhibit hereto and to correct the Report of Independent Registered Public Accounting Firm of Ernst & Young LLP ("EY") (the "EY Audit Opinion"). The Report of Independent Public Accounting Firm of Weaver and Tidwell, L.L.P. ("Weaver") in Exhibit 99.1 included in the Original Report inadvertently omitted the reference to the 2019 results of operations and cash flows under the section titled "Opinion on the Financial Statements". Additionally, the EY Audit Opinion inadvertently omitted the Partnership's 2019 equity in the net income of Red River Pipeline Company LLC under the section titled "Opinion on the Financial Statements". In addition, this Amendment No. 1 includes a new consent of EY as Exhibit 23.1 hereto, a new consent of Weaver as Exhibit 23.2 hereto, and new certifications pursuant to Sections 302 and 906 of the Sarbanes-Oxley Act of 2002 as Exhibits 31.1, 31.2, 32.1 and 32.2 hereto.

Pursuant to Rule 12b-15 promulgated under the Securities Exchange Act of 1934, as amended (the "Exchange Act"), we have repeated the entire text of Item 8 of the Original Report in this Amendment No. 1. However, there have been no changes to the Partnership's financial statements and notes thereto or the text of such item (other than the change stated in the immediately preceding paragraph).

Except as described above, no other amendments are being made to the Original Report. This Amendment No. 1 does not reflect events occurring after Original Filing Date or modify or update any disclosure contained in the Original Report in any way other than to reflect the amendments discussed above. Accordingly, this Amendment No. 1 should be read in conjunction with the Original Report and our other filings with the SEC.


Table of Contents
Delek Logistics Partners, LP
Annual Report on Form 10-K/A
For the Annual Period Ending December 31, 2021




























2 |
Table of Contents

ITEM 8. FINANCIAL STATEMENTS AND SUPPLEMENTARY DATA
The information required by Item 8 is incorporated by reference to the section beginning on page F-1.

3 |
Exhibits and Financial Statement Schedules

PART IV
ITEM 15. EXHIBITS AND FINANCIAL STATEMENT SCHEDULES
(a) Certain Documents Filed as Part of this Annual Report on Form 10-K:
1.Financial Statements. The accompanying Index to Financial Statements and Schedule on page F-1 of this Annual Report on Form 10-K is provided in response to this item.
2.List of Financial Statement Schedules. All schedules are omitted because the required information is either not present, not present in material amounts or included within the Consolidated Financial Statements.
3.Exhibits - See below.

EXHIBITS
Exhibit No. Description
2.1
Contribution and Subscription Agreement, dated as of May 24, 2019, by and among Plains Pipeline, L.P., DKL Pipeline, LLC, and Red River Pipeline Company, LLC (incorporated by reference to Exhibit 2.1 to the Partnership's Current Report on Form 8-K filed on May 28, 2019).
2.2
Contribution, Conveyance, and Assumption Agreement, dated as of March 31, 2020, between several Delek subsidiaries (incorporated by reference to Exhibit 2.1 of the Partnership's Form 8-K filed April 6, 2020).
2.3
Throughput and Deficiency Agreement, dated as of March 31, 2020, by and between Lion Oil Trading & Transportation, LLC and DKL Permian Gathering, LLC (incorporated by reference to Exhibit 10.1 of the Partnership's Form 8-K filed on April 6, 2020).
2.4
Exchange Agreement, dated August 13, 2020, between Delek Logistics and Delek Logistics GP, LLC (incorporated by reference to Exhibit 10.2 of the Partnership's Form 8-K filed on August 14, 2020).
3.1
Certificate of Limited Partnership of Delek Logistics Partners, LP (incorporated by reference to Exhibit 3.1 to the Partnership's Form S-1 (File No. 333-182631) filed on July 12, 2012).
3.2
Second Amended and Restated Agreement of Limited Partnership of Delek Logistics Partners, LP, dated August 13, 2020 (incorporated by reference to Exhibit 3.1 of the Partnership's Form 8-K filed on August 14, 2020).
3.3
Certificate of Formation of Delek Logistics GP, LLC (incorporated by reference to Exhibit 3.3 to the Partnership's Registration Statement on Form S-1 (File No. 333-182631) filed on July 12, 2012).
3.4
Fourth Amended and Restated Limited Liability Company Agreement of Delek Logistics GP, LLC, dated August 13, 2020 (incorporated by reference to Exhibit 3.2 of the Partnership's Form 8-K filed on August 14, 2020).
4.1
Description of the Common Units (incorporated by reference to Exhibit 4.1 of the Partnership's Form 10-K filed on March 1, 2021).
4.2
Indenture, dated as of May 23, 2017, among Delek Logistics Partners, LP, Delek Logistics Finance Corp., the Guarantors named therein and U.S. Bank, National Association, as trustee (incorporated by reference to Exhibit 4.1 to the Partnership's Form 8-K filed on May 24, 2017).
4.3
Form of 6.750% Senior Notes due 2025 (incorporated by reference to Exhibit A to Exhibit 4.1 to the Partnership's Form 8-K filed on May 24, 2017).
4.4
Supplemental Indenture, dated March 22, 2018, among DKL Big Spring, LLC, Delek Logistics Partners, LP, Delek Logistics Finance Corp., the other guarantors and U.S. Bank, National Association (incorporated by reference to Exhibit 4.1 to the Partnership's Form 8-K filed on March 26, 2018).
4.5
Second Supplemental Indenture, dated February 28, 2020, among DKL Pipeline, LLC, Delek Logistics Partners, LP, Delek Logistics Finance Corp., the other guarantors and U.S. Bank, N.A. (incorporated by reference to Exhibit 4.1 of the Partnership's Form 8-K filed on April 6, 2020).
4.6
Third Supplemental Indenture, dated March 26, 2020, among DKL Permian Gathering, LLC, Delek Logistics Partners, LP, Delek Logistics Finance Corp., the other guarantors and U.S. Bank, N.A. (incorporated by reference to Exhibit 4.2 of the Partnership's Form 8-K filed on April 6, 2020).
4.7
Indenture, dated as of May 24, 2021, among Delek Logistics Partners, LP, Delek Logistics Finance Corp., the other guarantors, and U.S. Bank, N.A. (incorporated by reference to Exhibit 4.1 of the Partnership's Form 8-K filed on May 25, 2021).
4.8
Form of 7.125% Senior Note due 2028 (incorporated by reference to Exhibit A to Exhibit 4.1 to the Partnership's Form 8-K filed on May 25, 2021).
10.1 ++
Marketing Agreement, dated November 7, 2012, by and between Delek Refining, Ltd. and Delek Marketing & Supply, LP (incorporated by reference to Exhibit 10.6 to the Partnership's Form 8-K filed on November 7, 2012, SEC File No. 001-35721).
10.2
First Amendment to Marketing Agreement, dated July 26, 2013, by and between Delek Refining, Ltd. and Delek Marketing & Supply, LP (incorporated by reference to Exhibit 10.1 to the Partnership's Form 10-Q filed on November 3, 2016).
10.3
Second Amendment to Marketing Agreement, dated as of December 19, 2016, but effective as of October 1, 2016, by and between Delek Refining, Ltd. and Delek Marketing & Supply, LP (incorporated by reference to Exhibit 10.1 to the Partnership's Form 10-K filed on February 28, 2017).
4

10.4
Throughput and Tankage Agreement (El Dorado Terminal and Tankage), dated as of February 10, 2014, by and among Lion Oil Company and Delek Logistics Operating, LLC, and for limited purposes, J. Aron & Company (incorporated by reference to Exhibit 10.3 to the Partnership's Form 8-K filed on February 14, 2014).
10.5
Amendment to Throughput and Tankage Agreement (El Dorado Terminal and Tankage), dated as of July 22, 2016, but effective as of February 11, 2014, by and between Lion Oil Company and Delek Logistics Operating, LLC (incorporated by reference to Exhibit 10.1 to the Partnership's Form 10-Q filed on August 5, 2016).
10.6
First Amendment to Throughput and Tankage Agreement (El Dorado Terminal and Tankage), dated as of December 14, 2018, by and between Lion Oil Company and Delek Logistics Operating, LLC (incorporated by reference to Exhibit 10.10 to the Partnership's Form 10-K filed on March 1, 2019).
10.7 *
General Terms and Conditions for Phantom Unit Awards under the Delek Logistics GP, LLC 2012 Long-Term Incentive Plan (incorporated by reference to Exhibit 10.2 to the Partnership's Form 10-Q filed on August 5, 2016).
10.8
Third Amended and Restated Omnibus Agreement, dated as of March 31, 2015, by and among Delek US Holdings, Inc., Lion Oil Company, Delek Logistics Operating, LLC, Delek Marketing & Supply, LP, Delek Refining, Ltd., Delek Logistics Partners, LP, Paline Pipeline Company, LLC, SALA Gathering Systems, LLC, Magnolia Pipeline Company, LLC, El Dorado Pipeline Company, LLC, Delek Crude Logistics, LLC, Delek Marketing-Big Sandy, LLC, DKL Transportation, LLC and Delek Logistics GP, LLC (incorporated by reference to Exhibit 10.3 to the Partnership's Form 8-K filed on April 6, 2015).
10.9
First Amendment to Third Amended and Restated Omnibus Agreement, dated as of August 3, 2015, by and among Delek US Holdings, Inc., Lion Oil Company, Delek Logistics Operating, LLC, Delek Marketing & Supply, LP, Delek Refining, Ltd., Delek Logistics Partners, LP, Paline Pipeline Company, LLC, SALA Gathering Systems, LLC, Magnolia Pipeline Company, LLC, El Dorado Pipeline Company, LLC, Delek Crude Logistics, LLC, Delek Marketing-Big Sandy, LLC, DKL Transportation, LLC and Delek Logistics GP, LLC (incorporated by reference to Exhibit 10.2 to the Partnership's Form 10-Q filed on August 6, 2015).
10.10
Amendment and Restatement of Schedules to Third Amended and Restated Omnibus Agreement, dated March 20, 2018 and effective as of March 1, 2018 (incorporated by reference to Exhibit 10.4 to the Partnership's Form 8-K filed on March 26, 2018).
10.11 *
Form of Phantom Unit Agreement for Directors under the Delek Logistics GP, LLC 2012 Long-Term Incentive Plan (incorporated by reference to Exhibit 10.1 to the Partnership's Form 10-Q filed on August 6, 2015).
10.12
Pipelines and Tankage Agreement (East Texas Crude Logistics System), dated November 7, 2012, by and between Delek Refining, Ltd. and Delek Crude Logistics, LLC (incorporated by reference to Exhibit 10.7 to the Partnership's Form 8-K filed on November 7, 2012, SEC File No. 001-35721).
10.13
First Amendment to Pipelines and Tankage Agreement (East Texas Crude Logistics System), dated as of December 14, 2018, by and between Delek Refining, LTD and Delek Crude Logistics, LLC (incorporated by reference to Exhibit 10.19 to the Partnership's Form 10-K filed on March 1, 2019).
10.14
Amended and Restated Services Agreement (Big Sandy Terminal and Pipeline), dated July 25, 2013, by and between Delek Refining, Ltd. and Delek Marketing-Big Sandy, LLC (incorporated by reference to Exhibit 10.1 to the Partnership's Form 8-K/A filed on July 31, 2013).
10.15
First Amendment to Amended and Restated Services Agreement (Big Sandy Terminal and Pipeline), dated as of December 14, 2018, by and between Delek Refining, LTD and Delek Marketing-Big Sandy, LLC (incorporated by reference to Exhibit 10.21 to the Partnership's Form 10-K filed on March 1, 2019).
10.16
Pipelines and Storage Facilities Agreement, dated November 7, 2012, by and among Lion Oil Company, Delek Logistics Partners, LP, SALA Gathering Systems, LLC, El Dorado Pipeline Company, LLC, Magnolia Pipeline Company, LLC and J. Aron & Company (incorporated by reference to Exhibit 10.9 to the Partnership's Form 8-K filed on November 7, 2012, SEC File No. 001-35721).
10.17
First Amendment to Pipelines and Storage Facilities Agreement, dated as of December 14, 2018, by and among Lion Oil Company, Delek Logistics Partners, LP, SALA Gathering Systems, LLC, El Dorado Pipeline Company, LLC, Magnolia Pipeline Company, LLC and J. Aron & Company (incorporated by reference to Exhibit 10.23 to the Partnership's Form 10-K filed on March 1, 2019).
10.18 *
Form of Director Phantom Unit Award (incorporated by reference to Exhibit 10.6 to the Partnership's Amendment No. 3 to Registration Statement on Form S-1 (File No. 333-182631), filed on October 16, 2012).
10.19 *
Form of Employee Phantom Unit Award (incorporated by reference to Exhibit 10.7 to the Partnership's Amendment No. 3 to Registration Statement on Form S-1 (File No. 333-182631), filed on October 16, 2012).
10.20
Throughput and Tankage Agreement (Tyler Terminal and Tankage), dated July 26, 2013, by and between Delek Marketing & Supply, LP and Delek Refining, Ltd. (incorporated by reference to Exhibit 10.3 to the Partnership's Form 8-K filed on August 1, 2013).
10.21
First Amendment to Throughput and Tankage Agreement (Tyler Terminal and Tankage), dated as of December 14, 2018, by and between Delek Refining, LTD. and Delek Marketing & Supply, LP (incorporated by reference to Exhibit 10.29 to the Partnership's Form 10-K filed on March 1, 2019).
10.22
Amended and Restated Site Services Agreement (Tyler Terminal and Tankage), dated March 31, 2015, by and between Delek Marketing & Supply, LP and Delek Refining, Ltd. (incorporated by reference to Exhibit 10.4 to the Partnership's Form 10-Q filed on May 8, 2015).
10.23
Amended and Restated Site Services Agreement (El Dorado Terminal and Tankage), dated as of March 31, 2015, by and between Lion Oil Company and Delek Logistics Operating, LLC (incorporated by reference to Exhibit 10.5 to the Partnership's Form 10-Q filed on May 8, 2015).
10.24
Throughput Agreement (El Dorado Rail Offloading Facility), dated as of March 31, 2015, among Lion Oil Company, Lion Oil Trading & Transportation, LLC and Delek Logistics Operating, LLC (incorporated by reference to Exhibit 10.2 to the Partnership's Form 8-K filed on April 6, 2015).
5

10.25 ++
First Amended and Restated Limited Liability Company Agreement of Rangeland RIO Pipeline, LLC, dated March 20, 2015, by and between Rangeland Energy II, LLC and DKL RIO, LLC (incorporated by reference to Exhibit 10.6 to the Partnership's Form 10-Q filed on May 8, 2015).
10.26 ++
Amended and Restated Limited Liability Company Agreement of Caddo Pipeline LLC, dated March 20, 2015, by and between Plains Pipeline, L.P. and DKL Caddo, LLC (incorporated by reference to Exhibit 10.7 to the Partnership's Form 10-Q filed on May 8, 2015).
10.27
Pipelines, Storage and Throughput Facilities Agreement (Big Spring Refinery Logistics Assets and Duncan Terminal), dated March 20, 2018 and effective as of March 1, 2018, by and among Alon USA, LP, DKL Big Spring, LLC, for the limited purposes specified therein, Delek US Holdings, Inc., and for the limited purposes specified therein, J. Aron & Company LLC (incorporated by reference to Exhibit 10.1 to the Partnership's Form 8-K filed on March 26, 2018).
10.28
Big Spring Asphalt Services Agreement, dated March 20, 2018 and effective as of March 1, 2018, by and among Alon USA, LP, DKL Big Spring, LLC, for the limited purposes specified therein, Delek US Holdings, Inc., and for the limited purposes specified therein, J. Aron & Company LLC (incorporated by reference to Exhibit 10.2 to the Partnership's Form 8-K filed on March 26, 2018).
10.29
Marketing Agreement, dated as of March 20, 2018 and effective as of March 1, 2018, by and among Alon USA, LP, DKL Big Spring, LLC, and for the limited purposes specified therein, Delek US Holdings, Inc. (incorporated by reference to Exhibit 10.3 to the Partnership's Form 8-K filed on March 26, 2018).
10.30
Third Amended and Restated Credit Agreement, dated as of September 28, 2018, among Delek Logistics Partners, LP and each other borrower referenced therein, as borrowers; Fifth Third Bank, as administrative agent; a syndicate of lenders; Bank of America, N.A., BBVA Compass, MUFG Bank, Ltd. And Royal Bank of Canada as co-syndication agents; and Barclays Bank PLC, Citizens Bank, N.A., PNC Bank, National Association, U.S. Bank National Association, Bank Hapoalim B.M., Regions Bank and SunTrust Bank as co-documentation agents (incorporated by reference to Exhibit 10.1 to the Partnership's Form 8-K filed on October 4, 2018).
10.31
First Amendment to Third Amended and Restated Credit Agreement, dated August 12, 2020, by and among Delek Logistics Partners, LP and each other borrower referenced therein, as borrowers, Fifth Third Bank, N.A., as Administrative Agent, and the Lenders party thereto (incorporated by reference to Exhibit 10.1 of the Partnership's Form 8-K filed on August 14, 2020).
10.32
Second Amendment and Restatement of Schedules to Third Amended and Restated Omnibus Agreement, dated and effective as of May 31, 2020 (incorporated by reference to the Exhibit 10.2 of the Partnership's Form 8-K filed on April 6, 2020).
10.33
Transportation Services Agreement dated May 15, 2020 and effective May 1, 2020, between Delek Refining, Ltd., Lion Oil Company and DKL Transportation, LLC (incorporated by reference to Exhibit 10.1 of the Partnership's Form 8-K filed on May 18, 2020).
10.34
Third Amendment and Restatement to Schedules to Third Amended and Restated Omnibus Agreement, dated and effective as of May 15, 2020 (incorporated by reference to Exhibit 10.2 of the Partnership's Form 8-K filed on May 18, 2020).
10.35
Delek Logistics GP, LLC Amended and Restated 2012 Long-Term Incentive Plan (incorporated by reference to Exhibit 10.1 to the Partnership's Registration Statement on Form S-8 (Registration No. 333-256954) filed on June 10, 2021).
10.36
Form of Indemnification Agreement for Directors and Officers of Delek Logistics GP, LLC (incorporated by reference to the Exhibit 10.36 of the Partnership's Form 10-K filed on February 25, 2022).
21.1
Subsidiaries of Registrant (incorporated by reference to the Exhibit 21.1 of the Partnership's Form 10-K filed on February 25, 2022).
22.1
Subsidiary Guarantors of Delek Logistics Partners LP (incorporated by reference to the Exhibit 22.1 of the Partnership's Form 10-K filed on February 25, 2022).
23.1 #
23.2 #
31.1 #
31.2 #
32.1 ##
32.2 ##
99.1 #
Weaver and Tidwell, L.L.P. (PCAOB ID: 410) - Houston, Texas
101<
The following materials from Delek Logistics Partners, LP's Annual Report on Form 10-K for the annual period ended December 31, 2021, formatted in XBRL (Inline eXtensible Business Reporting Language): (i) Consolidated Balance Sheets as of December 31, 2021 and 2020; (ii) Consolidated Statements of Income and Comprehensive Income for the years ended December 31, 2021, 2020 and 2019; (iii) Consolidated Statements of Changes in Partners' Equity for the years ended December 31, 2021, 2020 and 2019; (iv) Consolidated Statements of Cash Flows for the years ended December 31, 2021, 2020 and 2019; and (v) Notes to Consolidated Financial Statements.
104
The cover page from Delek Logistics Partners, LP's Annual Report on Form 10-K for the annual period ended December 31, 2021, has been formatted in Inline XBRL.

6

* Management contract or compensatory plan or arrangement.
# Filed herewith.
## Furnished herewith.
++ Confidential treatment has been requested and granted with respect to certain portions of this exhibit pursuant to Rule 24b-2 of the Securities Exchange Act of 1934. Omitted portions have been filed separately with the Securities and Exchange Commission.
< Pursuant to Rule 406T of Regulation S-T, the Interactive Data Files in Exhibit 101 hereto are deemed not filed or part of a registration statement or prospectus for purposes of Sections 11 or 12 of the Securities Act of 1933, as amended, are deemed not filed for purposes of Section 18 of the Securities Exchange Act of 1934, as amended, and otherwise are not subject to liability under those sections.




7
Exhibits and Financial Statement Schedules
Delek Logistics Partners, LP
Consolidated Financial Statements
As of December 31, 2021 and 2020 and
For Each of the Three Years Ended December 31, 2021, 2020 and 2019
INDEX TO FINANCIAL STATEMENTS

All other financial schedules are not required under related instructions, or are inapplicable and therefore have been omitted.

F-1

Report of Independent Registered Public Accounting Firm


To the Unitholders of Delek Logistics Partners, LP and
the Board of Directors of Delek Logistics GP, LLC

Opinion on the Financial Statements
We have audited the accompanying consolidated balance sheets of Delek Logistics Partners, LP (the Partnership) as of December 31, 2021 and 2020, and the related consolidated statements of income and comprehensive income, partners' equity (deficit) and cash flows for each of the three years in the period ended December 31, 2021, and the related notes (collectively referred to as the "consolidated financial statements"). In our opinion, based on our audits and the report of other auditors, the consolidated financial statements present fairly, in all material respects, the financial position of the Partnership at December 31, 2021 and 2020, and the results of its operations and its cash flows for each of the three years in the period ended December 31, 2021, in conformity with U.S. generally accepted accounting principles.
We did not audit the financial statements of Red River Pipeline Company LLC, an entity in which the Partnership has a 33% interest. In the consolidated financial statements, the Partnership's investment in Red River Pipeline Company LLC is stated at $144.0 million and $141.8 million as of December 31, 2021 and 2020, respectively, and the Partnership's equity in the net income of Red River Pipeline Company LLC is stated at $14.4 million in 2021, $8.9 million in 2020, and $8.4 million in 2019. Those statements were audited by other auditors whose report has been furnished to us, and our opinion, insofar as it relates to the amounts included for Red River Pipeline Company LLC, is based solely on the report of other auditors.
We also have audited, in accordance with the standards of the Public Company Accounting Oversight Board (United States) (PCAOB), the Partnership's internal control over financial reporting as of December 31, 2021, based on criteria established in Internal Control-Integrated Framework issued by the Committee of Sponsoring Organizations of the Treadway Commission (2013 framework) and our report dated February 25, 2022 expressed an unqualified opinion thereon.
Basis for Opinion
These financial statements are the responsibility of the Partnership's management. Our responsibility is to express an opinion on the Partnership's financial statements based on our audits. We are a public accounting firm registered with the PCAOB and are required to be independent with respect to the Partnership in accordance with the U.S. federal securities laws and the applicable rules and regulations of the Securities and Exchange Commission and the PCAOB.
We conducted our audits in accordance with the standards of the PCAOB. Those standards require that we plan and perform the audit to obtain reasonable assurance about whether the financial statements are free of material misstatement, whether due to error or fraud. Our audits included performing procedures to assess the risks of material misstatement of the financial statements, whether due to error or fraud, and performing procedures that respond to those risks. Such procedures included examining, on a test basis, evidence regarding the amounts and disclosures in the financial statements. Our audits also included evaluating the accounting principles used and significant estimates made by management, as well as evaluating the overall presentation of the financial statements. We believe that our audits and the report of other auditors provide a reasonable basis for our opinion.
Critical Audit Matter
The critical audit matter communicated below is a matter arising from the current period audit of the financial statements that was communicated or required to be communicated to the audit committee and that: (1) relates to accounts or disclosures that are material to the financial statements and (2) involved our especially challenging, subjective or complex judgments. The communication of the critical audit matter does not alter in any way our opinion on the consolidated financial statements, taken as a whole, and we are not, by communicating the critical audit matter below, providing a separate opinion on the critical audit matter or on the accounts or disclosures to which it relates.
F-2

Impairment review of equity method investments
Description of the Matter As discussed in Notes 2 and 14 to the consolidated financial statements, the Partnership has investments in nonconsolidated entities accounted for using the equity method totaling $250 million as of December 31, 2021, which included an equity method investment in Andeavor Logistics of $44.3 million. The carrying value of each equity method investment is evaluated for impairment when indicators of a loss in value below the carrying value exist, which may include the loss of a key contract, lack of sustained earnings or a deterioration of market conditions, among others. When indicators of impairment are identified, the Partnership estimates the fair value of the equity method investment. The estimated fair value of the investment is determined using a combination of a discounted cash flow analysis based upon projected financial information and a market approach. When the estimated fair value is lower than the carrying value, the Partnership considers whether that impairment is other-than-temporary

Auditing the Partnership's impairment assessment for Andeavor Logistics was complex and required significant judgment, as the valuation included subjective estimates and assumptions in determining the estimated fair value of the investment. In particular, the discounted cash flow analysis is sensitive to significant assumptions such as the weighted average cost of capital and the estimate of future cash flows including the related revenue and EBITDA projections.
How We Addressed the Matter in Our Audit We obtained an understanding, evaluated the design and tested the operating effectiveness of controls over the Partnership's equity method impairment review process, including controls over the identification of factors that may indicate an equity method investment is impaired, and as necessary, the subsequent determination of fair value.

In order to test whether an impairment was indicated, we tested the Partnership's evaluation of the Andeavor Logistics' earnings history and sustainability under current and expected market conditions. To test the estimated fair value of Andeavor Logistics, our audit procedures included, among others, assessing valuation methodologies, performing recalculations, and testing the significant assumptions discussed above and the underlying data used by the Partnership. We compared the significant assumptions in the prospective financial data used by management to current industry and economic trends, historical performance, and other relevant factors. We performed sensitivity analyses of significant assumptions to evaluate the change in the fair value of the investment resulting from changes in the significant assumptions. We also involved our valuation specialists to assist in evaluating the fair value methodologies, testing the weighted average cost of capital used and assessing the market multiples used to calculate the fair value estimate.


/s/ Ernst & Young LLP

We have served as the Partnership's auditor since 2012.

Nashville, Tennessee
February 25, 2022













F-3

Report of Independent Registered Public Accounting Firm

To the Unitholders of Delek Logistics Partners, LP and
the Board of Directors of Delek Logistics GP, LLC

Opinion on Internal Control over Financial Reporting
We have audited Delek Logistics Partners, LP's internal control over financial reporting as of December 31, 2021, based on criteria established in Internal Control-Integrated Framework issued by the Committee of Sponsoring Organizations of the Treadway Commission (2013 framework) (the COSO criteria). In our opinion, Delek Logistics Partners, LP (the Partnership) maintained, in all material respects, effective internal control over financial reporting as of December 31, 2021, based on the COSO criteria.
We also have audited, in accordance with the standards of the Public Company Accounting Oversight Board (United States) (PCAOB), the consolidated balance sheets of Delek Logistics Partners, LP as of December 31, 2021 and 2020, the related consolidated statements of income and comprehensive income, partners' equity (deficit) and cash flows for each of the three years in the period ended December 31, 2021, and the related notes, and our report dated February 25, 2022 expressed an unqualified opinion thereon.
Basis for Opinion
The Partnership's management is responsible for maintaining effective internal control over financial reporting, and for its assessment of the effectiveness of internal control over financial reporting included in the accompanying Management's Annual Report on Internal Control over Financial Reporting. Our responsibility is to express an opinion on the Partnership's internal control over financial reporting based on our audit. We are a public accounting firm registered with the PCAOB and are required to be independent with respect to the Partnership in accordance with the U.S. federal securities laws and the applicable rules and regulations of the Securities and Exchange Commission and the PCAOB.
We conducted our audit in accordance with the standards of the PCAOB. Those standards require that we plan and perform the audit to obtain reasonable assurance about whether effective internal control over financial reporting was maintained in all material respects.
Our audit included obtaining an understanding of internal control over financial reporting, assessing the risk that a material weakness exists, testing and evaluating the design and operating effectiveness of internal control based on the assessed risk, and performing such other procedures as we considered necessary in the circumstances. We believe that our audit provides a reasonable basis for our opinion.
Definition and Limitations of Internal Control Over Financial Reporting
A company's internal control over financial reporting is a process designed to provide reasonable assurance regarding the reliability of financial reporting and the preparation of financial statements for external purposes in accordance with generally accepted accounting principles. A company's internal control over financial reporting includes those policies and procedures that (1) pertain to the maintenance of records that, in reasonable detail, accurately and fairly reflect the transactions and dispositions of the assets of the company; (2) provide reasonable assurance that transactions are recorded as necessary to permit preparation of financial statements in accordance with generally accepted accounting principles, and that receipts and expenditures of the company are being made only in accordance with authorizations of management and directors of the company; and (3) provide reasonable assurance regarding prevention or timely detection of unauthorized acquisition, use, or disposition of the company's assets that could have a material effect on the financial statements.
Because of its inherent limitations, internal control over financial reporting may not prevent or detect misstatements. Also, projections of any evaluation of effectiveness to future periods are subject to the risk that controls may become inadequate because of changes in conditions, or that the degree of compliance with the policies or procedures may deteriorate.


/s/ Ernst & Young LLP


Nashville, Tennessee
February 25, 2022



F-4
Exhibits and Financial Statement Schedules
Delek Logistics Partners, LP
Consolidated Balance Sheets
(in thousands, except unit and per unit data)
December 31,
2021 2020
ASSETS
Current assets:
Cash and cash equivalents $ 4,292 $ 4,243
Accounts receivable 15,384 15,676
Accounts receivable from related parties - 5,932
Inventory 2,406 3,127
Other current assets 951 331
Total current assets 23,033 29,309
Property, plant and equipment:
Property, plant and equipment 715,870 692,282
Less: accumulated depreciation (266,482) (227,470)
Property, plant and equipment, net 449,388 464,812
Equity method investments 250,030 253,675
Operating lease right-of-use assets 20,933 24,199
Goodwill 12,203 12,203
Marketing contract intangible, net 116,577 123,788
Rights-of-way 37,280 36,316
Other non-current assets 25,627 12,115
Total assets $ 935,071 $ 956,417
LIABILITIES AND DEFICIT
Current liabilities:
Accounts payable $ 8,160 $ 6,659
Accounts payable to related parties 64,423 -
Interest payable 5,024 2,452
Excise and other taxes payable 5,280 4,969
Accrued expenses and other current liabilities 7,117 5,529
Current portion of operating lease liabilities 6,811 8,691
Total current liabilities 96,815 28,300
Non-current liabilities:
Long-term debt 898,970 992,291
Asset retirement obligations 6,476 6,015
Operating lease liabilities, net of current portion 14,071 15,418
Other non-current liabilities 22,731 22,694
Total non-current liabilities 942,248 1,036,418
Equity (Deficit):
Common unitholders - public; 8,774,053 units issued and outstanding at December 31, 2021 (8,697,468 at December 31, 2020)
166,067 164,614
Common unitholders - Delek Holdings; 34,696,800 units issued and outstanding at December 31, 2021 (34,745,868 at December 31, 2020)
(270,059) (272,915)
Total deficit (103,992) (108,301)
Total liabilities and deficit $ 935,071 $ 956,417


See accompanying notes to the consolidated financial statement
F-5
Exhibits and Financial Statement Schedules
Delek Logistics Partners, LP
Consolidated Statements of Income and Comprehensive Income
(In thousands, except unit and per unit data)
Year Ended December 31,
2021 2020 2019
Net revenues:
Affiliate (1)
$ 418,826 $ 382,666 $ 261,014
Third party 282,076 180,752 322,978
Net revenues 700,902 563,418 583,992
Cost of sales:
Cost of materials and other 384,409 269,094 336,473
Operating expenses (excluding depreciation and amortization presented below) 58,398 53,846 71,341
Depreciation and amortization 40,945 33,737 24,893
Total cost of sales 483,752 356,677 432,707
Operating expenses related to wholesale business (excluding depreciation and amortization presented below) 2,337 2,433 2,816
General and administrative expenses 22,545 22,587 20,815
Depreciation and amortization 1,825 1,994 1,808
Other operating (income) expense, net (59) (66) 34
Total operating costs and expenses 510,400 383,625 458,180
Operating income 190,502 179,793 125,812
Interest expense, net 50,221 42,874 47,328
Income from equity method investments (24,575) (22,693) (19,832)
Other (income) expense, net (119) 133 600
Total non-operating expenses, net 25,527 20,314 28,096
Income before income tax expense 164,975 159,479 97,716
Income tax expense 153 223 967
Net income attributable to partners $ 164,822 $ 159,256 $ 96,749
Comprehensive income attributable to partners $ 164,822 $ 159,256 $ 96,749
Less: General partner's interest in net income, including incentive distribution rights (2)
- 18,724 33,080
Limited partners' interest in net income $ 164,822 $ 140,532 $ 63,669
Net income per limited partner unit:
Common units - basic $ 3.79 $ 4.18 $ 2.61
Common units - diluted $ 3.79 $ 4.18 $ 2.61
Weighted average limited partner units outstanding:
Common units - basic 43,447,739 33,594,284 24,413,294
Common units - diluted 43,460,470 33,597,418 24,418,641
Cash distributions per limited partner unit $ 3.785 $ 3.605 $ 3.440
(1) See Note 4 for a description of our material affiliate revenue transactions.
(2) See Note 4 for a description of the IDR Restructuring Transaction.

See accompanying notes to the consolidated financial statements

F-6
Exhibits and Financial Statement Schedules
Delek Logistics Partners, LP
Consolidated Statements of Partners' Equity (Deficit)
(in thousands)
Partnership
Common - Public Common - Delek Holdings General Partner - Delek Holdings Total
Balance at December 31, 2018 $ 171,023 $ (299,360) $ (6,486) (134,823)
Cash distributions (1)
(30,626) (51,388) (31,654) (113,668)
GP units issued to maintain 2% interest
- - 8 8
Net income attributable to partners 23,813 39,856 33,080 96,749
Other 226 379 10 615
Balance at December 31, 2019 $ 164,436 $ (310,513) $ (5,042) $ (151,119)
Cash distributions (1)
(31,532) (77,665) (27,635) (136,832)
GP units issued to maintain 2% interest
- - 10 10
Net income attributable to partners 36,324 104,208 18,724 159,256
Delek Holdings unit purchases from public (4,979) 4,979 - -
Issuance of units in connection with the Permian Gathering Assets Acquisition - 107,323 2,190 109,513
Cash distribution to Delek Holdings for Trucking Assets Acquisition - (46,607) (951) (47,558)
Cash distribution to general partner for conversion of its economic interest and IDR elimination - - (45,000) (45,000)
Conversion of GP economic interest - (57,702) 57,702 -
Sponsor contribution of fixed assets - 2,938 - 2,938
Other 365 124 2 491
Balance at December 31, 2020 $ 164,614 $ (272,915) $ - $ (108,301)
Cash distributions (1)
(32,462) (129,255) - (161,717)
Net income attributable to partners 33,086 131,736 - 164,822
Delek Holdings unit sale to public 650 (650) - -
Other 179 1,025 - 1,204
Balance at December 31, 2021 $ 166,067 $ (270,059) $ - $ (103,992)
(1) Cash distributions include a nominal amount for the years ended December 31, 2021, 2020 and 2019, respectively, related to distribution equivalents on vested phantom units.
.
See accompanying notes to the consolidated financial statements
F-7
Exhibits and Financial Statement Schedules
Delek Logistics Partners, LP
Consolidated Statements of Cash Flows
(in thousands)
Year Ended December 31,
2021 2020 2019
Cash flows from operating activities:
Net income $ 164,822 $ 159,256 $ 96,749
Adjustments to reconcile net income to net cash provided by operating activities:
Depreciation and amortization 42,770 35,731 26,701
Non-cash lease expense 9,652 6,075 193
Amortization of customer contract intangible assets 7,211 7,211 7,211
Amortization of deferred revenue (1,953) (1,888) (1,688)
Amortization of deferred financing costs and debt discount 3,016 2,412 2,629
Income from equity method investments (24,575) (22,693) (19,832)
Dividends from equity method investments 20,831 25,436 16,108
Other non-cash adjustments 1,959 1,253 1,757
Changes in assets and liabilities:
Accounts receivable 292 (2,472) 8,382
Inventories and other current assets 55 11,363 (7,702)
Accounts payable and other current liabilities (1,913) (13,479) (4,836)
Accounts receivable/payable to related parties 67,161 (14,628) 1,065
Non-current assets and liabilities, net (14,166) (561) 3,662
Net cash provided by operating activities 275,162 193,016 130,399
Cash flows from investing activities:
Asset acquisitions from Delek Holdings, net of assumed liabilities - (100,527) -
Purchases of property, plant and equipment and intangible assets (24,016) (13,284) (9,070)
Proceeds from sales of property, plant and equipment 275 107 144
Distributions from equity method investments 8,774 2,741 804
Equity method investment contributions (1,393) (12,175) (139,294)
Net cash used in investing activities (16,360) (123,138) (147,416)
Cash flows from financing activities:
Proceeds from issuance of additional units to maintain 2% general partner interest
- 10 8
Distributions to general partner - (27,635) (31,654)
Distributions to common unitholders - public (32,462) (31,532) (30,626)
Distributions to common unitholders - Delek Holdings (129,255) (77,665) (51,388)
Distributions to Delek Holdings unitholders and general partner related to Trucking Assets Acquisition - (47,558) -
Distribution to general partner for conversion of its interest and IDR elimination - (45,000) -
Proceeds from revolving credit facility 341,000 599,600 564,700
Payments on revolving credit facility (829,601) (441,400) (433,000)
Proceeds from issuance of senior notes 400,000 - -
Deferred financing costs paid in connection with debt issuances (6,216) - -
Payments on financing lease liabilities (2,219) - -
Net cash used in financing activities (258,753) (71,180) 18,040
Net increase (decrease) in cash and cash equivalents 49 (1,302) 1,023
Cash and cash equivalents at the beginning of the period 4,243 5,545 4,522
Cash and cash equivalents at the end of the period $ 4,292 $ 4,243 $ 5,545
Year Ended December 31,
2021 2020 2019
Supplemental disclosures of cash flow information:
Cash paid during the period for:
Interest $ 44,633 $ 40,582 $ 44,791
Income taxes $ 34 $ 98 $ 144
Non-cash investing activities:
Increase in accrued capital expenditures and other $ 3,850 $ 198 $ 917
Equity issuance to Delek Holdings unitholders in connection with Permian Gathering Assets Acquisition $ - $ 109,513 $ -
Non-cash financing activities:
Sponsor contribution of property, plant and equipment $ - $ 2,938 $ -
Non-cash lease liability arising from obtaining right of use assets during the period $ 9,457 $ 32,090 $ 1,285
Non-cash lease liability arising from recognition of right of use assets upon adoption of ASU 2016-02 $ - $ - $ 2,654

See accompanying notes to the consolidated financial statements


F-8
Notes to Consolidated Financial Statements
Delek Logistics Partners, LP
Notes to Consolidated Financial Statements
1. General
Organization
As used in this report, the terms "Delek Logistics Partners, LP," the "Partnership," "we," "us," or "our" may refer to Delek Logistics Partners, LP, one or more of its consolidated subsidiaries or all of them taken as a whole.
The Partnership is a Delaware limited partnership formed in April 2012 by Delek US Holdings, Inc. ("Delek Holdings") and its subsidiary Delek Logistics GP, LLC, our general partner (our "general partner").
Effective August 13, 2020, the Partnership closed the transaction contemplated by a definitive exchange agreement with the general partner to eliminate all of the incentive distribution rights ("IDRs") held by the general partner and convert the 2.0% economic general partner interest into a non-economic general partner interest, all in exchange for 14.0 million newly issued common limited partner units and $45.0 million in cash ("IDR Restructuring Transaction"). 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. See Note 4 of the accompanying consolidated financial statements for further information.
Effective May 1, 2020, the Partnership, through its wholly-owned subsidiary DKL Transportation, LLC, acquired Delek Trucking, LLC consisting of certain leased and owned tractors and trailers and related assets (the "Trucking Assets") from Delek Holdings, such transaction the "Trucking Assets Acquisition." See Note 3 of the accompanying consolidated financial statements for further information.
Effective March 31, 2020, the Partnership, through its wholly-owned subsidiary DKL Permian Gathering, LLC, acquired from Delek Holdings a crude oil gathering system located in Howard, Borden and Martin Counties, Texas (the "Permian Gathering Assets", formerly referred to as the"Big Spring Gathering Assets"), and certain related assets, such transaction the "Permian Gathering Assets Acquisition" (formerly referred to as the "Big Spring Gathering Assets Acquisition"). See Note 3 of the accompanying consolidated financial statements for further information.
Description of Business
The Partnership primarily owns and operates crude oil, intermediate and refined products logistics and marketing assets. We gather, transport, offload and store crude oil and intermediate products and market, distribute, transport and store refined products primarily in select regions of the southeastern United States and Texas for Delek Holdings and third parties. A substantial majority of our existing assets are both integral to and dependent upon the success of Delek Holdings' refining operations, as many of our assets are contracted exclusively to Delek Holdings in support of its Tyler, El Dorado and Big Spring refineries.
The Partnership is not a taxable entity for federal income tax purposes or the income taxes of those states that follow the federal income tax treatment of partnerships. Instead, for purposes of such income taxes, each partner of the Partnership is required to take into account its share of items of income, gain, loss and deduction in computing its federal and state income tax liabilities, regardless of whether cash distributions are made to such partner by the Partnership. The taxable income reportable to each partner takes into account differences between the tax basis and the fair market value of our assets and financial reporting bases of assets and liabilities, the acquisition price of the partner's units and the taxable income allocation requirements under the Partnership's Second Amended and Restated Agreement of Limited Partnership (the "Partnership Agreement").

2. Accounting Policies
Basis of Presentation
Our consolidated financial statements include the accounts of the Partnership and its subsidiaries. We have evaluated subsequent events through the filing of this Annual Report on Form 10-K. Any material subsequent events that occurred during this time have been properly recognized or disclosed in our financial statements.
The preparation of our financial statements in conformity with U.S. generally accepted accounting principles ("GAAP") and in accordance with the rules and regulations of the Securities and Exchange Commission (the "SEC") requires management to make estimates and assumptions that affect the reported amounts of assets and liabilities and disclosure of contingent assets and liabilities at the date of the financial statements and the reported amounts of revenues and expenses during the reporting period. Actual results could differ from those estimates. In the opinion of management, all adjustments necessary for a fair presentation of the financial position and the results of operations have been included. All intercompany accounts and transactions have been eliminated. Such intercompany transactions do not include those with Delek Holdings' or our general partner, which are presented as related party in these accompanying consolidated financial statements. All adjustments are of a normal, recurring nature.
F-9
Notes to Consolidated Financial Statements
Reclassifications
Certain immaterial reclassifications have been made to prior period presentation in order to conform to the current year presentation.
Risks and Uncertainties Arising from the COVID-19 Pandemic
The broader market environment was extremely challenging in 2020, and impacted worldwide demand for oil and gas and increased downward pressure on oil prices. U.S. economic activity continued on a recovery trend during the year ended December 31, 2021 albeit remaining subject to heightened levels of uncertainty related to the on-going impact of the COVID-19 Pandemic, and the spread of new variants of the virus. Most of the restrictions imposed in the prior year to prevent its spread have been eased. Compared to the prior year, the economic recovery trends in the year ended December 31, 2021, included a resumption of flights by major airlines and increased motor vehicle use. This has in turn resulted in increased demand and market prices for crude oil and certain of our products. Nonetheless, there remains continued uncertainty about the duration and future impact of the COVID-19 Pandemic. Uncertainties related to the impact of the COVID-19 Pandemic and other events exist that could impact our future results of operations and financial position, the nature of which and the extent to which are currently unknown.
Segment Reporting
We are an energy business focused on crude oil, intermediate and refined products pipeline and storage activities and wholesale marketing, terminalling and offloading activities. Management reviews operating results in three reportable segments: (i)pipelines and transportation; (ii)wholesale marketing and terminalling; and (iii)investments in pipeline joint ventures.
•The assets and investments reported in the pipeline and transportation segment provide crude oil gathering and crude oil, intermediate and refined products transportation and storage services to Delek Holdings' refining operations and independent third parties.
•The wholesale marketing and terminalling segment provides marketing services for the refined products output of the Delek Holdings' refineries, engages in wholesale activity at our terminals and terminals owned by third parties, whereby we purchase light product for sale and exchange to third parties, and provides terminalling services at our refined products terminals to independent third parties and Delek Holdings.
•The investments in pipeline joint ventures segment include the Partnership's joint ventures investments discussed in Note 14.
Decisions concerning the allocation of resources and assessment of operating performance are made based on this segmentation. Management measures the operating performance of each of its reportable segments based on the segment contribution margin. Segment contribution margin is defined as net revenues less cost of materials and other and operating expenses, excluding depreciation and amortization. Segment reporting is discussed in more detail in Note 15.
Cash and Cash Equivalents
We maintain cash and cash equivalents in accounts with large U.S. financial institutions. Any highly liquid investments purchased with an original maturity of three months or less are considered to be cash equivalents.
Accounts Receivable
Accounts receivable primarily consists of trade receivables generated in the ordinary course of business. We perform on-going credit evaluations of our customers and generally do not require collateral on accounts receivable. All accounts receivable amounts are considered to be fully collectible. Accordingly, no allowance for doubtful accounts has been established as of December 31, 2021 and 2020. One third-party customer accounted for approximately 47.4% and 49.9% of the consolidated accounts receivable balance as of December 31, 2021 and December 31, 2020, respectively.
Inventory
Inventory consists of refined products, which are stated at the lower of cost or net realizable value, with cost determined on a first-in, first-out ("FIFO") basis. Delek Holdings accounted for approximately 99.7% and 91.8% of our inventory purchases in our wholesale marketing and terminalling segment during the year ended December 31, 2021 and December 31, 2020, respectively.
Property, Plant and Equipment
Property, plant and equipment primarily consists of crude oil pipelines, tanks, terminals and gathering systems, and trucking assets. Property and equipment is stated at the lower of historical cost less accumulated depreciation, or fair value, if impaired. Assets acquired in conjunction with business acquisitions are recorded at estimated fair market value in accordance with the purchase method of accounting as prescribed in Accounting Standards Codification ("ASC") 805, Business Combinations("ASC 805"). Acquisitions of net assets that do not constitute a business are accounted for by allocating the cost of the acquisition to individual assets acquired and liabilities assumed on a relative fair value basis and shall not give rise to goodwill as prescribed in ASC 805.
Betterments, renewals and extraordinary repairs that extend the life of an asset are capitalized. Maintenance and repairs are charged to expense as incurred.
F-10
Notes to Consolidated Financial Statements
Depreciation is computed using the straight-line method over management's estimated useful lives of the related assets. The estimated useful lives are as follows:
Years
Buildings and building improvements
15-40
Pipelines, tanks and terminals
15-40
Asset retirement obligation assets
15-50
Other equipment
3-15
Intangible Assets
Intangible assets consist of indefinite-lived rights of way and a marketing contract intangible. The marketing contract intangible is amortized on a straight-line basis over a 20 year period as a component of net revenues from affiliates. Acquired intangible assets determined to have an indefinite useful life are not amortized, but are tested for impairment in connection with our evaluation of long-lived assets as events and circumstances indicate that the assets might be impaired.
Property, Plant and Equipment and Intangibles Impairment
Property, plant and equipment and intangibles are evaluated for impairment whenever indicators of impairment exist. In accordance with ASC 360,Property, Plant and Equipmentand ASC 350, Intangibles - Goodwill and Other, we evaluate the realizability of these long-lived assets as events occur that might indicate potential impairment. In doing so, we assess whether the carrying amount of the asset is recoverable by estimating the sum of the future cash flows expected to result from the use of the asset, undiscounted and without interest charges. If the carrying amount is more than the recoverable amount, an impairment charge must be recognized based on the fair value of the asset.
Goodwill and Potential Impairment
Goodwill in an acquisition represents the excess of the aggregate purchase price over the fair value of the identifiable net assets. Goodwill is reviewed at least annually during the fourth quarter for impairment, or more frequently if indicators of impairment exist, such as disruptions in our business, unexpected significant declines in operating results or a sustained market capitalization decline. Goodwill is evaluated for impairment by comparing the carrying amount of the reporting unit to its estimated fair value. The Partnership adopted ASU 2017-04,Goodwill and Other (Topic 350); Simplifying the Test for Goodwill Impairment, during the fourth quarter of 2018. In accordance with this guidance, a goodwill impairment charge is recognized for the amount that the carrying amount of a reporting unit, including goodwill, exceeds its fair value, limited to the total amount of goodwill allocated to that reporting unit. In assessing the recoverability of goodwill, assumptions are made with respect to future business conditions and estimated expected future cash flows to determine the fair value of a reporting unit.
We elected to perform a qualitative assessment for purposes of our annual goodwill impairment test during the fourth quarter in 2020, 2019 and 2018. Our annual assessment of goodwill did not result in an impairment charge during the years ended December 31, 2021, 2020 or 2019. Details of goodwill balances by segment are included in Note 9.
Equity Method Investments
For equity investments that are not required to be consolidated under the variable or voting interest model, we evaluate the level of influence we are able to exercise over an entity's operations to determine whether to use the equity method of accounting. Our judgment regarding the level of influence over an equity method investment includes considering key factors such as our ownership interest, participation in policy-making and other significant decisions and material intercompany transactions. Equity investments for which we determine we have significant influence are accounted for as equity method investments. Amounts recognized for equity method investments are included in equity method investments in our consolidated balance sheets and adjusted for our share of the net earnings and losses of the investee, dividends received and cash distributions from the investee, which are separately stated in our consolidated statements of income and comprehensive income and our consolidated statements of cash flows. The carrying value of each equity method investment is evaluated for impairment when conditions exist that indicate it is more likely than not that an impairment may have occurred, which may include the loss of a key contract, lack of sustained earnings or a deterioration of market conditions, among others. When impairment triggers are present, the fair value of the equity method investment is estimated using the income approach and the market approach. The income approach utilizes a discounted cash flow model incorporating management's expectations of the investee's future revenue (including the throughput barrel per day sold and related reduced tariff rates), operating expenses and earnings before interest, taxes, depreciation and amortization, capital expenditures and an anticipated tax rate ("EBITDA"), the estimated long term growth rate and weighted average cost of capital ("WACC") as the discount rate. The market approach uses estimated EBITDA multiples for guideline comparable companies to estimate the fair value of the equity method investment. A impairment loss is recorded in earnings in the current period if a decline in the value of an equity method investment is determined to be other than temporary. We performed an impairment assessment on one of our equity method investments as of December 31, 2021 and the assessment did not result in an impairment loss. Equity method investments are reported as part of the investments in pipeline joint ventures segment. See Note 14 for further information on our equity method investments.
F-11
Notes to Consolidated Financial Statements
Fair Value of Financial Instruments
The fair values of financial instruments are estimated based upon current market conditions and quoted market prices for the same or similar instruments. Management estimates that the carrying value approximates fair value for all of our assets and liabilities that fall under the scope of ASC 825, Financial Instruments("ASC 825").
Self-Insurance Reserves
We have no employees. Rather, we are managed by the directors and officers of our general partner. However, Delek Holdings employees providing services to the Partnership are covered under Delek Holdings' insurance programs. Delek Holdings has workers' compensation and liability insurance with varying retentions and deductibles with limits that management considers adequate.
Environmental Expenditures
It is our policy to accrue environmental and clean-up related costs of a non-capital nature when it is both probable that a liability has been incurred and the amount can be reasonably estimated. Environmental liabilities represent the current estimated costs to investigate and remediate contamination at sites where we have environmental exposure. This estimate is based on assessments of the extent of the contamination, the selected remediation technology and review of applicable environmental regulations, typically considering estimated activities and costs for 15 years, and up to 30 years if a longer period is believed reasonably necessary. Such estimates may require judgment with respect to costs, time frame and extent of required remedial and clean-up activities. Accruals for estimated costs from environmental remediation obligations generally are recognized no later than completion of the remedial feasibility study and include, but are not limited to, costs to perform remedial actions and costs of machinery and equipment that are dedicated to the remedial actions and that do not have an alternative use. Such accruals are adjusted as further information develops or circumstances change. We discount environmental liabilities to their present value if payments are fixed or reliably determinable. Expenditures for equipment necessary for environmental issues relating to ongoing operations are capitalized. Estimated recoveries of costs from other parties are recorded on an undiscounted basis as assets when their realization is deemed probable. See Note 17 for further information on crude oil releases impacting our properties and related accruals.
Asset Retirement Obligations
We recognize liabilities which represent the fair value of a legal obligation to perform asset retirement activities, including those that are conditional on a future event, when the amount can be reasonably estimated. These obligations are related to the required cleanout of our pipelines and terminal tanks and removal of certain above-grade portions of our pipelines situated on right-of-way property.
The reconciliation of the beginning and ending carrying amounts of asset retirement obligations as of December 31, 2021 and 2020 is as follows (in thousands):
December 31,
2021 2020
Beginning balance $ 6,015 $ 5,588
Accretion expense 461 427
Ending balance $ 6,476 $ 6,015
In order to determine fair value, management must make certain estimates and assumptions including, among other things, projected cash flows, a credit-adjusted risk-free rate and an assessment of market conditions that could significantly impact the estimated fair value of the asset retirement obligation.
Revenue Recognition
Revenue is measured based on consideration specified in a contract with a customer. The Partnership recognizes revenue when it satisfies a performance obligation by transferring control over a product or by providing services to a customer.
Service, Product and Lease Revenues.Revenues for products sold are generally recognized upon delivery of product, which is when title and control of the product is transferred. Transaction prices for these products are typically at market rates for the product at the time of delivery. Service revenues are recognized as crude oil, intermediate and refined products are shipped through, delivered by or stored in our pipelines, trucks, terminals and storage facility assets, as applicable. We do not recognize product revenues for these services, as the product does not represent a promised good in the context of ASC 606, Revenue from Contracts with Customers("ASC 606"). All service revenues are based on regulated tariff rates or contractual rates. Payment terms require customers to pay shortly after delivery and do not contain significant financing components.
Certain agreements for gathering, transportation, storage, terminalling, and offloading with Delek Holdings were considered operating leases under ASC 840,Leases ("ASC 840"). As part of the adoption of ASC 842, we applied the permitted practical expedient to not separate lease and non-lease components under the predominance principle to designated asset classes associated with the provision of logistics services. We have determined that the predominant component of the related agreements currently in effect is the lease component. Therefore, the combined component is accounted for under the applicable lease accounting guidance. Refer to Note 5 for further information.
F-12
Notes to Consolidated Financial Statements
Up-Front payments to Customers.We record up-front payments to customers in accordance with ASC 606. We evaluate the nature of each payment, the rights and obligations under the related contract, and whether the payment meets the definition of an asset. When an asset is recognized for an up-front payment to a customer, the asset is amortized, as a reduction of revenue, in a manner that reflects the pattern and period over which the asset is expected to provide benefit.
Revenues Related to Reimbursements.In addition to the agreements noted above, we have cost reimbursement provisions in certain of our agreements with Delek Holdings that provide for reimbursement to the Partnership for certain costs, including certain capital expenditures. Such reimbursements are recorded in other long-term liabilities and are amortized to revenue over the life of the underlying revenue agreement corresponding to the asset.
Cost of Materials and Other and Operating Expenses
Cost of materials and other includes (i)all costs of purchased refined products, additives and related transportation of such products, (ii) costs associated with the operation of our trucking assets, which primarily include allocated employee costs and other costs related to fuel, truck leases and repairs and maintenance, (iii)the cost of pipeline capacity leased from a third-party, and (iv)gains and losses related to our commodity hedging activities.
Operating expenses include the costs associated with the operation of owned terminals and pipelines and terminalling expense at third-party locations, excluding depreciation and amortization. These costs primarily include outside services, allocated employee costs, repairs and maintenance costs and energy and utility costs. Operating expenses related to the wholesale business are excluded from cost of sales because they primarily relate to costs associated with selling the products through our wholesale business.
Depreciation and amortization is separately presented in our consolidated statement of income and disclosed by reportable segment in Note 15.
Deferred Financing Costs
Deferred financing costs are included in other non-current assets in the accompanying consolidated balance sheets and represent expenses related to issuing and amending our revolving credit facility. Deferred financing costs associated with our 6.750% and 7.125% Senior Notes are included as a reduction to the associated debt balance in the accompanying consolidated balance sheets. These costs represent expenses related to issuing the senior notes. These amounts are amortized ratably over the remaining term of the respective financing and are included in interest expense in the accompanying consolidated statements of income and comprehensive income.
Leases
In accordance with ASC 842-20, Leases - Lessee ("ASC 842-20"), we classify leases with contractual terms longer than twelve months as either operating or finance. Finance leases are generally those leases that are highly specialized or allow us to substantially utilize or pay for the entire asset over its useful life. All other leases are classified as operating leases.
We lease primarily transportation equipment. Our leases do not have any outstanding renewal options. Certain leases also include options to purchase the leased equipment. Certain of our lease agreements include rates based on equipment usage. Our lease agreements do not contain any material residual value guarantees or material restrictive covenants.
For all leases that include fixed rental rate increases, these are included in our fixed lease payments. Our leases may include variable payments, based on changes on price or other indices, that are expensed as incurred.
We calculate the total lease expense for the entire noncancelable lease period, considering renewals for all periods for which it is reasonably certain to be exercised, and record lease expense on a straight-line basis in the accompanying consolidated statements of income. Accordingly, a lease liability is recognized for these leases and is calculated to be the present value of the fixed lease payments, as defined by ASC 842-20, using a discount rate based on our incremental borrowing rate. A corresponding right-of-use asset is recognized based on the lease liability and adjusted for certain costs and prepayments.
Income Taxes
We are not a taxable entity for federal income tax purposes or the income taxes of those states that follow the federal income tax treatment of partnerships. Instead, for purposes of these income taxes, each partner of the Partnership is required to take into account its share of items of income, gain, loss and deduction in computing its federal and state income tax liabilities, regardless of whether cash distributions are made to such partner by the Partnership. The taxable income reportable to each partner takes into account differences between the tax basis and fair market value of our assets and financial reporting bases of assets and liabilities, the acquisition price of such partner's units and the taxable income allocation requirements under the Partnership's Second Amended and Restated Agreement of Limited Partnership, as amended (the "Partnership Agreement").
We are subject to income taxes in certain states that do not follow the federal tax treatment of partnerships. These taxes are accounted for under the provisions of ASC 740, Income Taxes("ASC 740"). This statement generally requires the Partnership to record deferred income taxes for the differences between the book and tax bases of its assets and liabilities, which are measured using enacted tax rates and laws that
F-13
Notes to Consolidated Financial Statements
will be in effect when the differences are expected to reverse. Deferred income tax expense or benefit represents the net change during the year in our deferred income tax assets and liabilities, exclusive of the amounts held in other comprehensive income.
U.S. GAAP requires management to evaluate uncertain tax positions taken by the Partnership. The financial statement effects of a tax position are recognized when the position is more likely than not, based on the technical merits, to be sustained upon examination by the Internal Revenue Service. Management has analyzed the tax positions taken by the Partnership, and has concluded that there are no uncertain positions taken or expected to be taken. The Partnership is subject to routine audits by taxing jurisdictions.
Equity Based Compensation
Our general partner provides equity-based compensation to officers, directors and employees of our general partner or its affiliates, and certain consultants, affiliates of our general partner or other individuals who perform services for us, which may include unit options, restricted units, phantom units, unit appreciation rights, distribution equivalent rights, other unit-based awards and unit awards. The fair value of our phantom units is determined based on the closing market price of our common units on the grant date. The estimated fair value of our phantom units is amortized over the vesting period using the straight line method. Awards vest over one- to five-year service periods, unless such awards are amended in accordance with the 2012 Long-Term Incentive Plan (the "LTIP") (see Note 13). It is our practice to issue new units when phantom units vest.
Net Income per Limited Partner Unit
Basic net income per unit applicable to limited partners is computed by dividing limited partners' interest in net income by the weighted-average number of outstanding common units. Prior to August 13, 2020, we had more than one class of participating securities and used the two class method to calculate the net income per unit applicable to the limited partners. The classes of participating units prior to August 13, 2020 consisted of limited partner units, general partner units and IDRs. Pursuant to the IDR Restructuring Transaction, the IDRs were eliminated and the 2.0% general partner economic interest was converted to a non-economic general partner interest. Effective August 13, 2020, the common limited partner units are the only participating security for cash distributions. Refer to Notes 6 and 12 for further discussion.
Diluted net income per unit applicable to common limited partners includes the effects of potentially dilutive units on our common units. As of December 31, 2021, the only potentially dilutive units outstanding consist of unvested phantom units.
Comprehensive Income
Comprehensive income for the years ended December 31, 2021, 2020 and 2019 was equivalent to net income.
Sales, Use and Excise Taxes
The Partnership's policy is toexclude from revenue all taxes assessed by a governmental authority, including sales, use and excise taxes, that are both imposed on and concurrent with a specific revenue-producing transaction and collected on behalf of a customer.
New Accounting Pronouncements Adopted During 2021
ASU 2020-01, Investments-Equity Securities (Topic 321), Investments-Equity Method and Joint Ventures (Topic 323), and Derivatives and Hedging (Topic 815)-Clarifying the Interactions between Topic 321, Topic 323, and Topic 815
In January 2020, the Financial Accounting Standards Board (the "FASB") issued Accounting Standards Codification ("ASU") 2020-01which is intended to clarify interactions between the guidance to account for certain equity securities under Topics 321, 323 and 815, and improve current GAAP by reducing diversity in practice and increasing comparability of accounting. The pronouncement is effective for fiscal years and interim periods within those fiscal years beginning after December 15, 2020, and early adoption is permitted. We adopted this guidance prospectively on January 1, 2021. The adoption of this guidance did not have a material impact on our business, financial condition or results of operations.
New Accounting Pronouncements Not Yet Adopted
ASU No. 2021-05, Leases (Topic 842): Lessors-Certain Leases with Variable Lease Payments
In July 2021, the FASB issued an amendment which is intended to provide lease classification guidance for Lessors on how to classify and account for a lease with variable lease payments that do not depend on a reference index or a rate. The amendments are effective for fiscal years beginning after December 15, 2021, for all entities, and interim periods within those fiscal years for public business entities. The Partnership is evaluating the impact of this guidance but does not believe this new guidance will have a material impact on its consolidated financial statements and related disclosures.
ASU 2020-04, Facilitation of the Effects of Reference Rate Reform on Financial Reporting (Topic 848)
In March 2020, the FASB issued an amendment which is intended to provide temporary optional expedients and exceptions to GAAP guidance on contracts, hedge accounting and other transactions affected by the market transition from the London Interbank Offered Rate ("LIBOR") and
F-14
Notes to Consolidated Financial Statements
other interbank rates. This guidance is effective for all entities any time beginning on March 12, 2020 through December 31, 2022 and may be applied from the beginning of an interim period that includes the issuance date of the ASU. The Partnership is evaluating the impact of this guidance but does not currently expect that adopting this new guidance will have a material impact on its consolidated financial statements and related disclosures.

3. Acquisitions
Trucking Assets Acquisition
Effective May 1, 2020, the Partnership, through its wholly-owned subsidiary DKL Transportation, LLC, acquired Delek Trucking, LLC consisting of certain leased and owned tractors and trailers and related assets from Delek Holdings. The total consideration was approximately $48.0 million in cash. We financed this acquisition with a combination of cash on hand and borrowings under the DKL Credit Facility (as defined in Note 7).
The Trucking Assets are recorded in our pipelines and transportation segment and include approximately 150 trucks and trailers, which are primarily leased or owned, respectively.
In connection with the closing of the transaction, Delek Holdings, the Partnership and various of their respective subsidiaries entered into a Transportation Services Agreement (the "Trucking Assets TSA Agreement"). Under the Trucking Assets TSA Agreement, the Partnership will gather, coordinate pickup of, transport and deliver petroleum products for Delek Holdings, as well as provide ancillary services as requested. The transaction and related agreements were approved by the Conflicts Committee of the Partnership's general partner, which is comprised solely of independent directors. See Note 3 for more detailed descriptions of these agreements.
The Trucking Assets Acquisition was considered a transaction between entities under common control. Accordingly, the Trucking Assets were recorded at amounts based on Delek Holdings' historical carrying value as of the acquisition date. The carrying value of the Trucking Assets as of the acquisition date was $13.3 million, consisting of $0.5 million of owned assets and $12.8 million Right of Use asset for leased assets. The Right of Use asset offsets with an equivalent operating lease liability. Prior periods have not been recast as these assets do not constitute a business in accordance with Accounting Standard Update 2017-01, Clarifying the Definition of a Business("ASU 2017-01"). We capitalized approximately $0.3 million of acquisition costs related to the Trucking Assets Acquisition.
Permian Gathering Assets Acquisition
Effective March 31, 2020, the Partnership, through its wholly-owned subsidiary DKL Permian Gathering, LLC, acquired the Permian Gathering Assets from Delek Holdings, located in Howard, Borden and Martin Counties, Texas. The total consideration was subject to certain post-closing adjustments and was comprised of $100.0 million in cash and 5.0 million of our common limited partner units (the "Additional Units"). We financed the cash component of this acquisition with borrowings from the DKL Credit Facility.
The Permian Gathering Assets are recorded in our pipelines and transportation segment and include:
•Crude oil pipelines;
•Approximately 200 miles of gathering systems;
•Approximately 65 Tank battery connections;
•Terminals (total storage of approximately 650,000 bbls); and
•Applicable rights-of-way.
In connection with the closing of the transaction, Delek Holdings, the Partnership and various of their respective subsidiaries entered into a Throughput and Deficiency Agreement (the "Big Spring T&D Agreement"). Under the Big Spring T&D Agreement, the Partnership will operate and maintain the Permian Gathering Assets connecting Delek Holdings' interests in and to certain crude oil with the Partnership's Big Spring, Texas terminal and provide gathering, transportation and other related services with respect to any and all crude produced from shipper's and certain other producers' respective interests for delivery at the Big Spring Terminal. The transaction and related agreements were approved by the Conflicts Committee of the Partnership's general partner, which is comprised solely of independent directors. See Note 3 for more detailed descriptions of these agreements.
The Permian Gathering Assets Acquisition was considered a transaction between entities under common control. Accordingly, the Permian Gathering Assets were recorded at amounts based on Delek Holdings' historical carrying value as of the acquisition date. The carrying value of the Permian Gathering Assets as of the acquisition date was $209.5 million. Pursuant to the common control guidance, the 5.0 million units issued (which had a closing market price of $9.10 per unit on the transaction date) were recorded in equity at $109.5 million, representing the net carrying value of the Permian Gathering Assets purchased of $209.5 million less the $100.0 million cash consideration. Prior periods have not been recast as these assets do not constitute a business in accordance with ASU 2017-01. We capitalized approximately $0.7 million of acquisition costs related to the Permian Gathering Assets Acquisition.

F-15
Notes to Consolidated Financial Statements
4. 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 fiveto ten years, which may be extended for various renewal terms at the option of Delek Holdings. In November 2017, Delek Holdings opted to renew certain of these agreements for subsequent five-year terms expiring in November 2022. In the case of our marketing agreement with Delek Holdings with respect to the Tyler Refinery, the initial term was extended through 2026. Effective fourth quarter of 2018, the term of certain of our agreements with Delek Holdings were further extended pursuant to the requirements of the amended and restated DKL Credit Facility (as defined in Note 11). 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, including the Federal Energy Regulatory Commission (the "FERC") oil pipeline index or various iterations of the consumer price index ("CPI") and the producer price index ("PPI"); provided, however, that in no event will the fees be adjusted below the amount initially set forth in the applicable agreement. In most circumstances, if Delek Holdings or the applicable third party assignee fails to meet or exceed the minimum volume or throughput commitment during any calendar quarter, Delek Holdings, and not any third party assignee, will be required to make a quarterly shortfall payment to us equal to the volume of the shortfall multiplied by the applicable fee, subject to certain exceptions as specified in the applicable agreement. Carry-over of any volumes or revenue in excess of such commitment to any subsequent quarter is not permitted.
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. To the extent that Delek Holdings is prevented by our failure to maintain such capacities to throughput or from storing such specified volumes for more than 30 days per year, Delek Holdings' minimum throughput commitment will be reduced proportionately and prorated for the portion of the quarter during which the specified throughput capacity was unavailable, and/or the storage fee will be reduced, prorated for the portion of the month during which the specified storage capacity was unavailable. Such reduction would occur even if actual throughput or storage amounts were below the minimum volume commitment levels.
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 (2):
Crude Oil Pipelines (non-gathered) November 2012
5 / 15
Crude oil and refined products transportation
46,000(3)
$1.05(4)
Refined Products Pipelines November 2012
5 / 15
40,000
$0.12
El Dorado Gathering System November 2012
5 / 15
Crude oil gathering
14,000
$2.82(4)
East Texas Crude Logistics System (2):
Crude Oil Pipelines November 2012
5 / 15
Crude oil transportation and storage
35,000
$0.49(5)
Storage November 2012
5 / 15
N/A
$308,091/month
East Texas Marketing November 2012
10(6)
Marketing products for Tyler Refinery
50,000
$0.84(6)
Big Sandy Terminal: (2)
Refined Products Transportation November 2012
5 / 15
Refined products transportation, dedicated terminalling services and storage for the Tyler Refinery
5,000
$0.61
Terminalling November 2012
5 / 15
5,000
$0.61
Storage November 2012
5 / 15
N/A
$61,563/month
Tyler Throughput and Tankage (2):
Refined Products Throughput July 2013
8 / 16
Dedicated Terminalling and storage
50,000
$0.39
F-16
Notes to Consolidated Financial Statements
Storage July 2013
8 / 16
N/A
$934,013/month
Memphis Pipeline June 1, 2018
5
Refined Products Transportation
11,000
$1.27
El Dorado Throughput and Tankage (2):
Refined Products Throughput February 2014
8 / 16
Dedicated terminalling and storage
11,000
$0.56
Storage February 2014
8 / 16
N/A
$1,462,099/month
El Dorado Assets Throughput:
Light Crude Throughput March 2015
9 / 15
Dedicated Offloading Services
N/A (7)
$1.13
Heavy Crude Throughput March 2015
9 / 15
Dedicated Offloading Services
N/A (7)
$2.53
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
$0.05
Rail Offloading March 1, 2018
10 / 15
Offloading services
4,500
$0.43
Terminalling March 1, 2018
10 / 15
Dedicated Terminalling
29,250
$0.71
Storage March 1, 2018
10 / 15
Storage N/A
$1,473,508/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
$8.90
Storage March 1, 2018
10 / 15
N/A
$489,326/month
Marketing Agreement (Big Spring Logistics Assets):
Marketing Services March 1, 2018
10 / 15
Dedicated Marketing and Selling
65,000
$0.54 - $0.76
Throughput and Deficiency Agreement (Permian Gathering Assets)
Gathering System March 31, 2020
10 / 20
Gathering and Transportation Services
123,100
$0.70
Re-delivery System March 30, 2020
10 / 20
50,000
$0.25
Pipelines, Throughput and Offloading Facilities Agreement (Big Spring Logistics Assets)
Fintex / Magellen Pipeline April 1, 2020
2 / 10
Refined Products
20,000
$0.63
Crude Oil Offloading January 1, 2020
2 / 10
Crude Oil Offloading
15,120
$0.94
Storage April 1, 2020
2 / 10
Storage N/A
$250,560/month
LPG Rack January 1, 2020
2 / 10
Truck Unloading Facility
4,500
$5.22
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) The current term of the agreement was extended through March 31, 2024 in connection with the amendment and restatement of the DKL Credit Facility (as defined in Note 11). While the current terms of the agreement were extended, the upcoming renewal terms were reduced. Therefore, the overall duration of the maximum term remains unchanged.
(3) Excludes volumes gathered on the El Dorado Gathering System (the "El Dorado Gathering System").
(4) 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.
(5) For any volumes in excess of 50,000 bpd, the throughput fee will be $0.74/bbl.
(6) For any volumes in excess of 50,000 bpd, the throughput fee will be $0.78/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.
(7) The throughput agreement provides for a minimum throughput fee of $1.6 million per quarter for throughput of a combination of light and heavy crude.
F-17
Notes to Consolidated Financial Statements
Pursuant to financing arrangements between Delek Holdings and its subsidiaries, Lion Oil Company, LLC, Lion Oil Trading & Transportation, LLC and Alon USA LP, (all hereinafter referred to together as "Delek Holdings"), to which we are not a party, and J. Aron & Company ("J. Aron"), Delek Holdings assigned to J. Aron certain of its rights under our specific terminalling agreements, pipelines, storage and throughput facilities agreements, and asphalt services agreements. Accordingly, even though this is effectively a financing arrangement for Delek Holdings whereby J. Aron sells the product back to Delek Holdings, J. Aron is technically our primary customer under each of these agreements. J. Aron retains these storage and transportation rights for the term of the financing arrangement, which currently runs through December 30, 2022, with J. Aron having the sole discretion to further extend to May 30, 2025, by giving at least six months prior notice to the maturity date. J. Aron pays us for the transportation, throughput and storage services we provide to it. The rights assigned to J. Aron do not alter the obligations of Delek Holding to meet certain throughput minimum volumes under our agreements with respect to the transportation, gathering and storage of crude oil, intermediate and refined products through our facilities, but J. Aron's throughput is credited toward minimum throughput commitments of Delek Holdings. Accordingly, Delek Holdings is responsible for making any shortfall payments incurred under the pipelines and storage agreement or the terminalling agreement which may result from minimum throughputs or volumes not being met.
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 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 $4.6 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 of a nominal amount, $0.6 million and $3.7 million during the years ended December 31, 2021, 2020 and 2019, respectively. 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. 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, 2021 and 2020, we have recorded a nominal receivable from related parties for these matters for which we expect to be reimbursed. These reimbursements are recorded as reductions to operating expenses. We were reimbursed a nominal amount, $0.1 million and $6.3 million for these matters during the year ended December 31, 2021, 2020 and 2019, 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 $21.8 million, $29.4 million and $25.0 million pursuant to the Partnership Agreement during the years ended December 31, 2021, 2020 and 2019, 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 2022. Total fees paid to the Partnership were $1.6 million and $2.0 million for the years ended December 31, 2021 and 2020, 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 Permian 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
F-18
Notes to Consolidated Financial Statements
connection with the Permian 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 Permian 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.
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 Permian 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,
2021 2020 2019
Revenues $ 418,826 $ 382,666 $ 261,014
Purchases from Affiliates $ 321,939 $ 205,581 $ 285,539
Operating and maintenance expenses
$ 40,854 $ 43,985 $ 49,904
General and administrative expenses
$ 9,330 $ 12,557 $ 7,977
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
F-19
Notes to Consolidated Financial Statements
distributions. During the years ended December 31, 2021, 2020 and 2019, we paid quarterly cash distributions of $161.6 million, $136.8 million and $113.7 million, respectively, of which $129.3 million, $105.3 million and $83.0 million, respectively, were paid to Delek Holdings and our general partner. On January 21, 2022, the board of directors of our general partner declared a quarterly cash distribution totaling $42.4 million based on the available cash as of the date of determination for the end of the fourth quarter of 2021. The distribution was paid on February 8, 2022 to unitholders of record on February 1, 2022, of which $33.8 million was paid to Delek Holdings.

5. Revenues
We generate revenue by charging fees for gathering, transporting, offloading and storing crude oil; for storing intermediate products and feed stocks; for distributing, transporting and storing refined products; for marketing refined products output of Delek Holdings' Tyler and Big Spring refineries; and for wholesale marketing in the West Texas area. A significant portion of our revenue is derived from long-term commercial agreements with Delek Holdings, which provide for annual fee adjustments for increases or decreases in the CPI, PPI or the FERC index (refer to Note 4 for a more detailed description of these agreements). In addition to the services we provide to Delek Holdings, we also generate substantial revenue from crude oil, intermediate and refined products transportation services for, and terminalling and marketing services to, third parties primarily in Texas, New Mexico, Tennessee and Arkansas. Certain of these services are provided pursuant to contractual agreements with third parties. Payment terms require customers to pay shortly after delivery and do not contain significant financing components. Delek Holdings, directly or indirectly, accounted for 59.8%, 67.4% and 44.8% of our total revenues for the years ended December 31, 2021, 2020 and 2019, respectively. Sunoco, LLC accounted for 5.2%, 5.6% and 14.5% of our total revenues for the years ended December 31, 2021, 2020 and 2019, respectively.
The majority of our commercial agreements with Delek Holdings meet the definition of a lease because: (1) performance of the contracts is dependent on specified property, plant or equipment and (2) it is remote that one or more parties other than Delek Holdings will take more than a minor amount of the output associated with the specified property, plant or equipment. As part of our adoption of ASC 842, Leases("ASC 842"), we applied the permitted practical expedient to not separate lease and non-lease components under the predominance principle to designated asset classes associated with the provision of logistics services. We have determined that the predominant component of the related agreements currently in effect is the lease component. Therefore, the combined component is accounted for under the applicable lease accounting guidance. Of our $449.4 million net property, plant, and equipment balance as of December 31, 2021, $433.1 million is subject to operating leases under our commercial agreements. These agreements do not include options for the lessee to purchase our leased assets, nor do they include any material residual value guarantees or material restrictive covenants.
The following table represents a disaggregation of revenue for the pipeline and transportation and wholesale marketing and terminalling segments for the periods indicated (in thousands):
Year Ended December 31, 2021
Pipelines and Transportation Wholesale Marketing and Terminalling Consolidated
Service Revenue - Third Party $ 16,612 $ 490 $ 17,102
Service Revenue - Affiliate 13,723 34,033 47,756
Product Revenue - Third Party - 264,974 264,974
Product Revenue - Affiliate - 76,074 76,074
Lease Revenue - Affiliate (1)
257,310 37,686 294,996
Total Revenue $ 287,645 $ 413,257 $ 700,902
(1) Net of $7.2 million of amortization expense for the year ended December 31, 2021, related to a customer contract intangible asset recorded in the wholesale marketing and terminalling segment.
Year Ended December 31, 2020
Pipelines and Transportation Wholesale Marketing and Terminalling Consolidated
Service Revenue - Third Party $ 17,596 $ 634 $ 18,230
Service Revenue - Affiliate 17,768 33,632 51,400
Product Revenue - Third Party - 162,522 162,522
Product Revenue - Affiliate - 71,178 71,178
Lease Revenue - Affiliate (1)
216,105 43,983 260,088
Total Revenue $ 251,469 $ 311,949 $ 563,418
(1) Net of $7.2 million of amortization expense for the year ended December 31, 2020, related to a customer contract intangible asset recorded in the wholesale marketing and terminalling segment.
F-20
Notes to Consolidated Financial Statements
As of December 31, 2021, we expect to recognize approximately $1.5 billion in lease revenues related to our unfulfilled performance obligations pertaining to the minimum volume commitments and capacity utilization under the non-cancelable terms of our commercial agreements with Delek Holdings. Most of these agreements have an initial term ranging from fiveto tenyears, which may be extended for various renewal terms. We disclose information about remaining performance obligations that have original expected durations of greater than one year.
Our unfulfilled performance obligations as of December 31, 2021 were as follows (in thousands):
2022 $ 273,843
2023 267,894
2024 191,632
2025 168,266
2026 and thereafter 572,441
Total expected revenue on remaining performance obligations $ 1,474,076

6. Net Income Per Unit
Basic net income per unit applicable to limited partners is computed by dividing limited partners' interest in net income by the weighted-average number of outstanding common units. Prior to August 13, 2020, we had more than one class of participating securities and used the two class method to calculate the net income per unit applicable to the limited partners. The classes of participating units prior to August 13, 2020 consisted of limited partner units, general partner units and IDRs. Pursuant to the IDR Restructuring Transaction, the IDRs were eliminated and the 2% general partner economic interest was converted to a non-economic general partner interest. Effective August 13, 2020, the common limited partner units are the only participating security for cash distributions. Refer to Note 12 - Equity for a discussion of the elimination of the IDRs and conversion of the 2% general partner economic interest effective August 13, 2020.
The two-class method was based on the weighted-average number of common units outstanding during the period. Basic net income per unit applicable to limited partners was computed by dividing limited partners' interest in net income, after deducting our general partner's 2% interest and IDRs, by the weighted-average number of outstanding common units. Our net income was allocated to our general partner and limited partners in accordance with their respective partnership percentages after giving effect to priority income allocations for IDRs, which are held by our general partner pursuant to our Partnership Agreement. Earnings in excess of distributions were allocated to our general partner and limited partners based on their respective ownership interests. The IDRs were paid following the close of each quarter.
As discussed in Note 4 - Related Party Transactions, pursuant to Amendment No. 2 to the Partnership Agreement, an agreement was reached for a waiver of distributions in respect of the IDRs for the GP Additional Units associated with the 5.0 million Additional Units issued in connection with the Permian Gathering Assets Acquisition for at least two years, through at least the distribution for the quarter ending March 31, 2022. 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. An additional waiver letter was signed that waived all of the distributions for the first quarter of 2021 on the Additional Units with respect to base distributions and the IDRs. Refer to Note 4 for additional details. Subsequently, the IDRs were eliminated in the IDR Restructuring Transaction on August 13, 2020.
Diluted net income per unit applicable to common limited partners includes the effects of potentially dilutive units on our common units. As of December 31, 2021, the only potentially dilutive units outstanding consist of unvested phantom units.
Our distributions earned with respect to a given period are declared subsequent to quarter end. Therefore, the table below represents total cash distributions applicable to the period in which the distributions are earned. The date of distribution for the distributions earned during the quarterly period ended December 31, 2021 is February 8, 2022. The calculation of net income per unit is as follows (dollars in thousands, except units and per unit amounts):
F-21
Notes to Consolidated Financial Statements
Year Ended December 31,
2021 2020 2019
Net income attributable to partners $ 164,822 $ 159,256 $ 96,749
Less: General partner's distribution (including IDRs) (1)
- 18,618 33,492
Less: Limited partners' distribution 164,484 127,070 83,873
Earning in excess (deficit) of distributions $ 338 $ 13,568 $ (20,616)
General partner's earnings:
Distributions (including IDRs)(1)
$ - $ 18,618 $ 33,492
Allocation of earnings in excess (deficit) of distributions - 106 (412)
Total general partner's earnings $ - $ 18,724 $ 33,080
Limited partners' earnings on common units:
Distributions $ 164,484 $ 127,070 $ 83,873
Allocation of earnings in excess (deficit) of distributions 338 13,462 (20,204)
Total limited partners' earnings on common units $ 164,822 $ 140,532 $ 63,669
Weighted average limited partner units outstanding:
Common units - basic 43,447,739 33,594,284 24,413,294
Common units - diluted 43,460,470 33,597,418 24,418,641
Net income per limited partner unit:
Common - basic $ 3.79 $ 4.18 $ 2.61
Common - diluted (2)
$ 3.79 $ 4.18 $ 2.61
(1) Prior to August 13, 2020, general partner distributions (including IDRs) consist of the 2% general partner interest and IDRs, which represent the right of the general partner to receive increasing percentages of quarterly distributions of available cash from operating surplus in excess of 0.43125 per unit per quarter. In connection with the IDR Restructuring Transaction on August 13, 2020, the IDRs were eliminated and the general partner interest became a non-economic general partner interest. See Note 12 for further discussion related to IDRs.
(2) There were 4,458 and 5,201 outstanding common unit equivalents excluded from the diluted earnings per unit calculation during the years ended December 31, 2021 and 2020, respectively. There were no outstanding common unit equivalents excluded from the diluted earnings per unit calculation during the year ended December 31, 2019.

7. Inventory
Inventories consisted of $2.4 million and $3.1 million of refined petroleum products as of December 31, 2021 and 2020, respectively, each of which are net of lower of cost or net realizable value reserve of a nominal amount. Inventory is stated at the lower of cost or net realizable value, with cost determined on a first-in, first-out basis. We recognize lower of cost or net realizable value charges as a component of cost of materials and other in the consolidated statements of income and comprehensive income.
8. Property, Plant and Equipment
Property, plant and equipment, at cost, consist of the following (in thousands):
December 31,
2021 2020
Land $ 14,533 $ 14,533
Building and building improvements 2,742 2,742
Pipelines, tanks and terminals 654,154 606,116
Asset retirement obligation assets 2,073 2,073
Other equipment 30,774 30,803
Construction in process 11,594 36,015
Property, plant and equipment 715,870 692,282
Less: accumulated depreciation (266,482) (227,470)
Property, plant and equipment, net $ 449,388 $ 464,812
F-22

Property, plant and equipment, accumulated depreciation and depreciation expense for the pipelines and transportation and wholesale marketing and terminalling reportable segments as of and for the years ended December 31, 2021 and 2020 are as follows (in thousands):
As of and For the Year Ended December 31, 2021
Pipelines and Transportation Wholesale Marketing and Terminalling Consolidated
Property, plant and equipment $ 595,031 $ 120,839 $ 715,870
Less: accumulated depreciation (205,825) (60,657) (266,482)
Property, plant and equipment, net $ 389,206 $ 60,182 $ 449,388
Depreciation expense $ 30,982 $ 11,788 $ 42,770
As of and For the Year Ended December 31, 2020
Pipelines and Transportation Wholesale Marketing and Terminalling Consolidated
Property, plant and equipment $ 580,631 $ 111,651 $ 692,282
Less: Accumulated depreciation (176,020) (51,450) (227,470)
Property, plant and equipment, net $ 404,611 $ 60,201 $ 464,812
Depreciation expense $ 27,682 $ 8,049 $ 35,731

9. Goodwill
Goodwill represents the excess of the aggregate purchase price over the fair value of the identifiable net assets acquired and is not amortized. Our goodwill relates to the West Texas assets contributed to us by Delek Marketing & Supply, LLC ("Delek Marketing"), a direct wholly owned subsidiary of Delek Holdings, in connection with our initial public offering and to the purchase price allocation of certain of our third party acquisitions.
We perform an annual assessment of whether goodwill retains its value. This assessment is done more frequently if indicators of potential impairment exist. We performed our annual goodwill impairment review in the fourth quarter of 2021, 2020 and 2019. We performed a qualitative assessment for the years ended December 31, 2021, December 31, 2020 and December 31, 2019. In 2021, 2020 and 2019, the annual impairment review resulted in the determination that no indicators of impairment of goodwill were present.
Our goodwill in our wholesale marketing and terminalling segment amounted to $7.5 million as of December 31, 2021, 2020 and 2019. Our goodwill in our pipelines and transportation segment amounted to $4.7 million as of December 31, 2021, 2020 and 2019.
10. Other Intangible Assets
Our identifiable intangible assets are as follows (in thousands):
Useful Accumulated
As of December 31, 2021 Life Gross Amortization Net
Intangible assets subject to amortization:
Marketing contract 20 $ 144,219 $ (27,642) $ 116,577
Intangible assets not subject to amortization:
Rights-of-way assets Indefinite 37,280 37,280
Total $ 181,499 $ (27,642) $ 153,857
Useful Accumulated
As of December 31, 2020 Life Gross Amortization Net
Intangible assets subject to amortization:
Marketing contract 20 $ 144,219 $ (20,431) $ 123,788
Intangible assets not subject to amortization:
Rights-of-way assets Indefinite 36,316 36,316
Total $ 180,535 $ (20,431) $ 160,104
F-23

Amortization of intangible assets was $7.2 million during the years ended December 31, 2021, 2020 and 2019. It is included as a reduction of net revenue on the accompanying consolidated statements of income and comprehensive income. Amortization expense is estimated to be $7.2 million for each of the years ended December 31, 2022 through 2026.

11. Long-Term Obligations
7.125% Senior Notes due 2028
On May 24, 2021, the Partnership and our wholly owned subsidiary Delek Logistics Finance Corp. ("Finance Corp." and together with the Partnership, the "Issuers") issued $400.0 million in aggregate principal amount of 7.125% senior notes due 2028 (the "2028 Notes") at par, pursuant to an indenture with U.S. Bank, National Association as trustee. The 2028 Notes are general unsecured senior obligations of the Issuers and are unconditionally guaranteed jointly and severally on a senior unsecured basis by the Partnership's subsidiaries other than Finance Corp., and will be unconditionally guaranteed on the same basis by certain of the Partnership's future subsidiaries. The 2028 Notes rank equal in right of payment with all existing and future senior indebtedness of the Issuers, and senior in right payment to any future subordinated indebtedness of the Issuers. The 2028 Notes will mature on June 1, 2028, and interest on the 2028 Notes is payable semi-annually in arrears on each June 1 and December 1, commencing December 1, 2021.
At any time prior to June 1, 2024, the Issuers may redeem up to 35% of the aggregate principal amount of the 2028 Notes with the net cash proceeds of one or more equity offerings by the Partnership at a redemption price of 107.125% of the redeemed principal amount, plus accrued and unpaid interest, if any, subject to certain conditions and limitations. Prior to June 1, 2024, the Issuers may also redeem all or part of the 2028 Notes at a redemption price of the principal amount plus accrued and unpaid interest, if any, plus a "make whole" premium, subject to certain conditions and limitations. In addition, beginning on June 1, 2024, the Issuers may, subject to certain conditions and limitations, redeem all or part of the 2028 Notes, at a redemption price of 103.563% of the redeemed principal for the twelve-month period beginning on June 1, 2024, 101.781% for the twelve-month period beginning on June 1, 2025, and 100.00% beginning on June 1, 2026 and thereafter, plus accrued and unpaid interest, if any.
In the event of a change of control, accompanied or followed by a ratings downgrade within a certain period of time, subject to certain conditions and limitations, the Issuers will be obligated to make an offer for the purchase of the 2028 Notes from holders at a price equal to 101.00% of the principal amount thereof, plus accrued and unpaid interest.
As of December 31, 2021, we had $400.0 million in outstanding principal amount under the 2028 Notes, and the effective interest rate was 7.41%. Outstanding debt balances under the 2028 Notes are net of deferred financing costs amounting to $5.7 million as of December 31, 2021.
DKL Credit Facility
On September 28, 2018, the Partnership entered into a third amended and restated senior secured revolving credit agreement (hereafter, the "DKL Credit Facility") with Fifth Third Bank ("Fifth Third"), as administrative agent, and a syndicate of lenders with total lender commitments of $850.0 million. The DKL Credit Facility contains a dual currency borrowing tranche that permits draw downs in U.S. or Canadian dollars. The DKL Credit Facility also contains an accordion feature whereby the Partnership can increase the size of the credit facility to an aggregate of $1.0 billion, subject to receiving increased or new commitments from lenders and the satisfaction of certain other conditions precedent.
The obligations under the DKL Credit Facility remain secured by first priority liens on substantially all of the Partnership's and its subsidiaries' tangible and intangible assets. Additionally, Delek Marketing, a subsidiary of Delek Holdings, had provided a limited guaranty of the Partnership's obligations under the DKL Credit Facility. Delek Marketing's guaranty was (i) limited to an amount equal to the principal amount, plus unpaid and accrued interest, of a promissory note made by Delek Holdings in favor of Delek Marketing (the "Holdings Note") and (ii) secured by Delek Marketing's pledge of the Holdings Note to the lenders under the DKL Credit Facility. Effective March 30, 2020, Delek Marketing's limited guaranty and pledge of the Holdings Note was terminated pursuant to a guaranty and pledge release approved by the required lenders under the DKL Credit Facility.
In connection with the IDR Restructuring Transaction, the Partnership entered into a First Amendment to the DKL Credit Facility (the "First Amendment") which, among other things, permitted the exchange of the IDRs and the general partner interest in the Partnership for the non-economic general partner interest, the newly issued limited partner interests in the Partnership, plus $45.0 million in cash. The First Amendment also modified the total leverage and senior leverage ratios (as defined in the DKL Credit Facility) calculations to reduce the total funded debt (as defined in the DKL Credit Facility) component thereof by the total amount of unrestricted consolidated cash and cash equivalents on the balance sheet of the Partnership and its subsidiaries up to $20.0 million.
The DKL Credit Facility has a maturity date of September 28, 2023. Borrowings denominated in U.S. dollars bear interest at either a U.S. dollar prime rate, plus an applicable margin, or the London Interbank Offered Rate ("LIBOR") plus an applicable margin, at the election of the borrowers. Borrowings denominated in Canadian dollars bear interest at either a Canadian dollar prime rate, plus an applicable margin, or the Canadian Dealer Offered Rate, plus an applicable margin, at the election of the borrowers.
F-24
Notes to Consolidated Financial Statements
The applicable margin in each case and the fee payable for any unused revolving commitments vary based upon the Partnership's most recent total leverage ratio calculation delivered to the lenders, as called for and defined under the terms of the DKL Credit Facility. At December 31, 2021, the weighted average interest rate for our borrowings under the facility was approximately 2.46%. Additionally, the DKL Credit Facility requires us to pay a leverage ratio dependent quarterly fee on the average unused revolving commitment. As of December 31, 2021, this fee was 0.30% per year.
As of December 31, 2021, we had $258.0 million of outstanding borrowings under the DKL Credit Facility, with no letters of credit in place. Unused credit commitments under the DKL Credit Facility as of December 31, 2021 were $592.0 million.
6.750% Senior Notes Due 2025
On May 23, 2017, the Partnership and Delek Logistics Finance Corp., a Delaware corporation and a wholly owned subsidiary of the Partnership ("Finance Corp." and together with the Partnership, the "Issuers"), issued $250.0 million in aggregate principal amount of 6.75% senior notes due 2025 (the "2025 Notes") at a discount. The 2025 Notes are general unsecured senior obligations of the Issuers. The 2025 Notes are unconditionally guaranteed jointly and severally on a senior unsecured basis by the Partnership's existing subsidiaries (other than Finance Corp., the "Guarantors") and will be unconditionally guaranteed on the same basis by certain of the Partnership's future subsidiaries. The 2025 Notes rank equal in right of payment with all existing and future senior indebtedness of the Issuers, and senior in right of payment to any future subordinated indebtedness of the Issuers. The 2025 Notes will mature on May 15, 2025, and Interest on the 2025 Notes is payable semi-annually in arrears on each May 15 and November 15, commencing November 15, 2017.
Beginning on May 15, 2021, the Issuers may, subject to certain conditions and limitations, redeem all or part of the 2025 Notes at a redemption price of 103.375% of the redeemed principal for the twelve-month period beginning on May 15, 2021, 101.688% for the twelve-month period beginning on May 15, 2022 and 100.00% beginning on May 15, 2023 and thereafter, plus accrued and unpaid interest, if any. In the event of a change of control, accompanied or followed by a ratings downgrade within a certain period of time, subject to certain conditions and limitations, the Issuers will be obligated to make an offer for the purchase of the 2025 Notes from holders at a price equal to 101% of the principal amount thereof, plus accrued and unpaid interest.
On April 25, 2018, we made an offer to exchange the 2025 Notes and the related guarantees that were validly tendered and not validly withdrawn for an equal principal amount of exchange notes that are freely tradeable, as required under the terms of the original indenture. The terms of the exchange notes that were issued in May 2018 as a result of the exchange (also referred to as the "2025 Notes") are substantially identical to the terms of the original 2025 Notes.
As of December 31, 2021, we had $250.0 million in outstanding principal amount of the 2025 Notes. As of December 31, 2021, the effective interest rate related to the 2025 Notes was approximately 7.20%.
Outstanding debt balances under the 2025 Notes are net of deferred financing costs and debt discount of $2.5 million and $0.8 million, respectively, as of December 31, 2021.
Principal maturities of the Partnership's existing third party debt instruments for the next five years and thereafter are as follows as of December 31, 2021 (in thousands):
2022 2023 2024 2025 2026 Thereafter Total
DKL Credit Facility
$ - $ 258,000 $ - $ - $ - $ - $ 258,000
2025 Notes
$ - $ - $ - $ 250,000 $ - $ - $ 250,000
2028 Notes $ - $ - $ - $ - $ - $ 400,000 $ 400,000

12. Equity
We had 8,774,053 common limited partner units held by the public outstanding as of December 31, 2021. Additionally, as of December 31, 2021, Delek Holdings owned an 79.8% limited partner interest in us, consisting of 34,696,800 common limited partner units. On December 22, 2021, Delek Holdings issued a press release regarding a program to sell certain common limited partner units representing limited partner interests in the Partnership. As of December 31, 2021, we did not sell any securities under this program and we will not receive any proceeds from the sale of the securities by Delek Holdings.
Effective August 13, 2020, the Partnership closed on the IDR Restructuring Transaction, and contemporaneous with this transaction, 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, at fair market value. Delek Holdings now owns 100% of the outstanding ownership interest in our general partner. As part of this transaction, we expensed approximately $1.1 million of transaction costs.
F-25
Notes to Consolidated Financial Statements
In August 2020, we filed a shelf registration statement with the U.S. Securities and Exchange Commission, which subsequently became effective, for the proposed re-sale or other disposition from time to time by Delek Holdings of up to 14.0 million of our common limited partner units. As of December 31, 2020, we did not sell any securities under this shelf registration statement and we will not receive any proceeds from the sale of securities by Delek Holdings.
Equity Activity
The table below summarizes the changes in the number of units outstanding from December 31, 2019 through December 31, 2021.
Common - Public Common - Delek Holdings General Partner Total
Balance at December 31, 2018 9,109,807 15,294,046 498,038 24,901,891
General partner units issued to maintain 2% interest
- - 444 444
Unit-based compensation awards (1)
21,772 - - 21,772
Balance at December 31, 2019 9,131,579 15,294,046 498,482 24,924,107
General partner units issued to maintain 2% interest
- - 102,196 102,196
Unit-based compensation awards (1)
17,711 - - 17,711
Permian Gathering Assets Acquisition equity issuance - 5,000,000 - 5,000,000
Delek Holdings unit purchases from public (451,822) 451,822 - -
General Partner units converted to non-economic general partner interest - - (600,678) (600,678)
Common limited partner units issued in IDR Restructuring Transaction - 14,000,000 - 14,000,000
Balance at December 31, 2020 8,697,468 34,745,868 - 43,443,336
Delek Holdings resale of units 49,068 (49,068) - -
Unit-based compensation awards (1)
27,517 - - 27,517
Balance at December 31, 2021 8,774,053 34,696,800 - 43,470,853
(1) Unit-based compensation awards are presented net of 5,315 and 926 units withheld for taxes as of December 31, 2021 and 2020, respectively. There were no units withheld for taxes as of December 31, 2019.
Issuance of Additional Securities
Our Partnership Agreement authorizes us to issue an unlimited number of additional partnership securities for the consideration and on the terms and conditions determined by our general partner without the approval of the unitholders. Costs associated with the issuance of securities are allocated to all unitholders' capital accounts based on their ownership interest at the time of issuance.
Allocations of Net Income
Our Partnership Agreement contains provisions for the allocation of net income and loss to the unitholders. For purposes of maintaining partner capital accounts, the Partnership Agreement specifies that items of income and loss shall be allocated among the partners in accordance with their respective percentage interest. Prior to August 13, 2020, normal allocations were made according to percentage interests after giving effect to priority income allocations in an amount equal to incentive cash distributions allocated 100% to our general partner. Effective August 13, 2020, the IDRs were eliminated and the 2% general partner economic interest was converted to a non-economic general partner interest that no longer receives cash distributions. The following table presents the allocation of the general partner's interest in net income (in thousands, except percentage of ownership interest):
Year Ended December 31,
2021 2020 2019
Net income attributable to partners
$ 164,822 $ 159,256 $ 96,749
Less: General partner's IDRs
- (17,632) (31,781)
Net income available to partners
$ 164,822 $ 141,624 $ 64,968
General partner's ownership interest
- % 2.0 % 2.0 %
General partner's allocated interest in net income
- 1,092 1,299
General partner's IDRs
- 17,632 31,781
Total general partner's interest in net income
$ - $ 18,724 $ 33,080
F-26
Notes to Consolidated Financial Statements
Incentive Distribution Rights
Effective August 13, 2020, the Partnership closed on the IDR Restructuring Transaction and the general partner no longer receives any cash distributions. Prior to August 13, 2020, our general partner was entitled to 2.0% of all quarterly distributions that we make prior to our liquidation. Our general partner had the right, but not the obligation, to contribute up to a proportionate amount of capital to us to maintain its current general partner interest. Our general partner held IDRs that entitled it to receive increasing percentages, up to a maximum of 48.0%, of the cash we distributed from operating surplus (as defined in our Partnership Agreement) in excess of 0.43125 per unit per quarter. The maximum distribution was 48.0% and did not include any distributions that our general partner or its affiliates may have received on common or general partner units that it owns. As of August 12, 2020, the IDRs held by our general partner were entitled to receive the maximum distribution.
Pursuant to Amendment No. 2 to the Prior Partnership Agreement, prior to the IDR Restructuring Transaction, an agreement was reached for a waiver of distributions in respect of the IDRs 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"). Refer to Note 4 for additional details.
Cash Distributions
Our Partnership Agreement sets forth the calculation to be used to determine the amount and priority of available cash distributions that our limited partner unitholders and general partner will receive. The cash distributions for periods before August 13, 2020 include distributions to the 2% general partner interest which was converted to non-economic general partner interest and IDRs which were permanently eliminated. Our distributions earned with respect to a given period are declared subsequent to quarter end. The table below summarizes the quarterly distributions related to our quarterly financial results:
Quarter Ended Total Quarterly Distribution Per Limited Partner Unit Total Cash Distribution, including general partner interest and IDRs (in thousands) Date of Distribution Unitholders Record Date
December 31, 2019 $ 0.885 $ 30,634 February 12, 2020 February 4, 2020
March 31, 2020 $ 0.890 $ 30,878 May 12, 2020 May 5, 2020
June 30, 2020 $ 0.900 $ 35,969 August 12, 2020 August 7, 2020
September 30, 2020 $ 0.905 $ 39,308 November 12, 2020 November 6, 2020
December 31, 2020 $ 0.910 $ 39,533 February 9, 2021 February 2, 2021
March 31, 2021 $ 0.920 $ 39,968 May 14, 2021 May 10, 2021
June 30, 2021 $ 0.940 $ 40,846 August 11, 2021 August 5, 2021
September 30, 2021 $ 0.950 $ 41,286 November 10, 2021 November 5, 2021
December 31, 2021 $ 0.975 $ 42,384 February 8, 2022 February 1, 2022
The allocations of total quarterly cash distributions made to general and limited partners for the years ended December 31, 2021, 2020 and 2019 are set forth in the table below. Distributions earned with respect to a given period are declared subsequent to quarter end. Therefore, the table below presents total cash distributions applicable to the period in which the distributions are earned (in thousands, except per unit amounts):
Year Ended December 31,
2021 2020 2019
General partner's distributions:
General partner's distributions $ - $ 986 $ 1,711
General partner's IDRs - 17,632 31,781
Total general partner's distributions - 18,618 33,492
Limited partners' distributions:
Common limited partners' distributions 164,484 127,070 83,873
Total cash distributions $ 164,484 $ 145,688 $ 117,365
Cash distributions per limited partner unit $ 3.785 $ 3.605 $ 3.440

F-27
Notes to Consolidated Financial Statements
13. Equity Based Compensation
The Delek Logistics GP, LLC 2012 Long-Term Incentive Plan (the "LTIP") was adopted by the Delek Logistics GP, LLC board of directors in connection with the completion of our initial public offering in November 2012. The LTIP is administered by the Conflicts Committee of the board of directors. Equity-based compensation expense is included in general and administrative expenses in the accompanying consolidated statements of income and comprehensive income and is immaterial for the years ended December 31, 2021, 2020 and 2019. See Note 2 for additional information on terms and measurement considerations.
On June 9, 2021, the LTIP was amended to increase the number of units representing limited partner interest in the Partnership (the "Common Units") authorized for issuance by 300,000 Common Units to 912,207 Common Units. Additionally, the term of the LTIP was extended to June 9, 2031.

14. Equity Method Investments
In May 2019, the Partnership, through its wholly owned indirect subsidiary DKL Pipeline, LLC ("DKL Pipeline"), entered into a Contribution and Subscription Agreement (the "Contribution Agreement") with Plains Pipeline, L.P. ("Plains") and Red River Pipeline Company LLC ("Red River"). Pursuant to the Contribution Agreement, DKL Pipeline contributed $124.7 million, substantially all of which was financed by borrowings under the DKL Credit Facility, to Red River in exchange for a 33% membership interest in Red River and DKL Pipeline's admission as a member of Red River. In addition, we contributed $0.4 million of start up capital pursuant to the Amended and Restated Limited Liability Company Agreement. During the third quarter of 2020, Red River, which owns a crude oil pipeline running from Cushing, Oklahoma to Longview, Texas, completed a planned expansion project to increase the pipeline capacity and commenced operations on the completed expansion project on October 1, 2020. We contributed $3.5 million related to such expansion project in May 2019 and during 2020 made additional capital contributions of $12.2 million based on capital calls received. During the year ended December 31, 2021, we made additional capital contributions totaling $1.4 million based on capital calls received.
Summarized financial information for Red River on a 100% basis is shown below (in thousands):
Year Ended Year Ended
December 31, 2021 December 31, 2020
Current Assets $ 28,735 $ 13,488
Non-current Assets $ 403,692 $ 413,259
Current liabilities $ 10,040 $ 7,789
Year Ended Year Ended For the period
December 31, 2021 December 31, 2020 April 24, 2019 - December 31, 2019
Revenues $ 68,057 $ 51,001 $ 38,352
Gross profit $ 41,121 $ 31,103 $ 25,919
Operating income $ 40,436 $ 30,382 $ 25,497
Net income $ 40,390 $ 30,404 $ 25,548
We have two additional joint ventures that have constructed separate crude oil pipeline systems and related ancillary assets, which are serving third parties and subsidiaries of Delek Holdings. We own a 50% membership interest in the entity formed with an affiliate of Plains All American Pipeline, L.P. ("CP LLC") to operate one of these pipeline systems and a 33% membership interest in the entity formed with Andeavor Logistics RIO Pipeline LLC ("Andeavor Logistics"), formerly known as Rangeland Energy II, LLC ("Rangeland Energy") to operate the other pipeline system.
F-28
Notes to Consolidated Financial Statements
Combined summarized financial information for these two equity method investees on a 100% basis is shown below (in thousands):
Year Ended Year Ended
December 31, 2021 December 31, 2020
Current assets $ 15,010 $ 20,763
Non-current assets $ 242,599 $ 253,862
Current liabilities $ 1,492 $ 1,496

Year Ended Year Ended Year Ended
December 31, 2021 December 31, 2020 December 31, 2019
Revenues $ 46,335 $ 55,482 $ 48,703
Gross profit $ 26,688 $ 36,904 $ 30,473
Operating income $ 24,587 $ 34,951 $ 28,503
Net Income $ 24,589 $ 34,977 $ 28,601
The Partnership's investments in these three entities were financed through a combination of cash from operations and borrowings under the DKL Credit Facility. The Partnership's investment balances in these joint ventures were as follows (in thousands):
Year Ended Year Ended
December 31, 2021 December 31, 2020
Red River 144,041 141,803
CP LLC 61,670 62,771
Andeavor Logistics 44,319 49,101
We do not consolidate any part of the assets or liabilities or operating results of our equity method investees. Our share of net income or loss of the investees will increase or decrease, as applicable, the carrying value of our investments in unconsolidated affiliates. With respect to our equity method investments, we determined that these entities do not represent variable interest entities and consolidation is not required. We have the ability to exercise significant influence over each of these joint ventures through our participation in the management committees, which make all significant decisions. However, since all significant decisions require the consent of the other investor(s) without regard to economic interest, we have determined that we have joint control and have applied the equity method of accounting. Our investment in these joint ventures is reflected in our investments in pipeline joint ventures segment.

15. Segment Data
We aggregate our operating segments into three reportable segments: (i)pipelines and transportation; (ii)wholesale marketing and terminalling; and (iii)investment in pipeline joint ventures.
Our operating segments adhere to the accounting policies used for our consolidated financial statements. Our operating segments are managed separately because each segment requires different industry knowledge, technology and marketing strategies. Decisions concerning the allocation of resources and assessment of operating performance are made based on this segmentation. Management measures the operating performance of each of its reportable segments based on segment contribution margin, with the exception of investments in pipeline joint ventures segment, which is measured based on net income. Segment contribution margin is defined as net revenues less cost of materials and other and operating expenses, excluding depreciation and amortization.
F-29
Notes to Consolidated Financial Statements
The following is a summary of business segment operating performance as measured by contribution margin, with the exception of investments in pipeline joint ventures segment, which is measured based on net income, for the periods indicated (in thousands):
Year Ended December 31,
2021 2020 2019
Pipelines and Transportation
Net revenues:
Affiliate $ 271,033 $ 233,873 $ 155,211
Third party 16,612 17,596 23,107
Total pipelines and transportation 287,645 251,469 178,318
Cost of materials and other 59,821 45,934 22,826
Operating expenses (excluding depreciation and amortization) 43,818 42,267 54,827
Segment contribution margin $ 184,006 $ 163,268 $ 100,665
Capital spending (1) (2)
$ 22,342 $ 7,631 $ 6,600
Wholesale Marketing and Terminalling
Net revenues:
Affiliate (3)
$ 147,793 $ 148,793 $ 105,803
Third party 265,464 163,156 299,871
Total wholesale marketing and terminalling 413,257 311,949 405,674
Cost of materials and other 324,588 223,160 313,647
Operating expenses (excluding depreciation and amortization) 16,917 14,012 19,330
Segment contribution margin $ 71,752 $ 74,777 $ 72,697
Capital spending (1) (2)
$ 5,109 $ 7,818 $ 3,387
Investments in Pipeline Joint Ventures
Income from equity method investments $ (24,575) $ (22,693) $ (19,832)
Equity method investments contributions $ (1,393) $ (12,175) $ (139,294)
Consolidated
Net revenues:
Affiliate $ 418,826 $ 382,666 $ 261,014
Third party 282,076 180,752 322,978
Total Consolidated 700,902 563,418 583,992
Cost of materials and other 384,409 269,094 336,473
Operating expenses (excluding depreciation and amortization presented below) 60,735 56,279 74,157
Contribution margin 255,758 238,045 173,362
General and administrative expenses 22,545 22,587 20,815
Depreciation and amortization 42,770 35,731 26,701
Other operating (income) expense, net (59) (66) 34
Operating income 190,502 179,793 125,812
Interest expense, net 50,221 42,874 47,328
Income from equity method investments (24,575) (22,693) (19,832)
Other (income) expense, net (119) 133 600
Total non-operating expenses, net 25,527 20,314 28,096
Income before income tax expense 164,975 159,479 97,716
Income tax expense 153 223 967
Net income attributable to partners $ 164,822 $ 159,256 $ 96,749
Capital spending (1) (2)
$ 27,451 $ 15,449 $ 9,987
(1) Capital spending for the year ended December 31, 2020, excludes transaction costs capitalized in the amount of $0.3 million that relate to the Trucking Assets Acquisition and $0.7 million that relate to the Permian Gathering Assets Acquisition.
(2) Capital spending for the years ended December 31, 2021, 2020 and 2019 excludes contributions to equity method investments amounting to $1.4 million, $12.2 million and $139.3 million, respectively.
(3) Affiliate revenue for the wholesale marketing and terminalling segment is presented net of amortization expense pertaining to the Marketing Contract Intangible Acquisition. See Note 3 for additional information.

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Notes to Consolidated Financial Statements
The following table summarizes the total assets for each segment as of December 31, 2021 and 2020 (in thousands). Assets for each segment includes property, plant and equipment, equity method investments, intangible assets and inventory.
Year Ended December 31,
2021 2020
Pipelines and transportation $ 452,690 $ 469,642
Wholesale marketing and terminalling 211,723 206,918
Investments in pipeline joint ventures 250,030 253,675
Other (1)
20,628 26,182
Total assets $ 935,071 $ 956,417
(1) Other includes cash and cash equivalents and related party receivables and other assets which are recorded at the corporate level.

16. Income Taxes
For tax purposes, each partner of the Partnership is required to take into account its share of income, gain, loss and deduction in computing its federal and state income tax liabilities, regardless of whether cash distributions are made to such partner by the Partnership. The taxable income reportable to each partner takes into account differences between the tax basis and fair market value of our assets, the acquisition price of such partner's units and the taxable income allocation requirements under our Partnership Agreement.
The Partnership is not a taxable entity for federal income tax purposes. While most states do not impose an entity level tax on partnership income, the Partnership is subject to entity level tax in both Tennessee and Texas. The Partnership does not file a separate Texas tax return. Our results of operations are included in Delek Holdings' consolidated return. However, the provisions of ASC 740 have been followed as if we were a stand-alone entity. As a result, the Partnership must record deferred income taxes for the differences between book and tax bases of its assets and liabilities based on those states' enacted tax rates and laws that will be in effect when the differences are expected to reverse.
As of December 31, 2021 and 2020, the total non-current deferred tax liability was $1.0 million and $0.6 million, respectively. These amounts are included in other non-current liabilities in our accompanying consolidated balance sheets. The majority component of our non-current deferred tax liabilities as of December 31, 2021 and 2020, respectively, was depreciation and amortization.
The difference between the actual income tax expense and the tax expense computed by applying the statutory federal income tax rate to income before income taxes is attributable to the following (in thousands):
Year Ended December 31,
2021 2020 2019
State income taxes $ 153 $ 223 $ 967
Income tax expense $ 153 $ 223 $ 967
Income tax expense (benefit) is as follows (in thousands):
Year Ended December 31,
2021 2020 2019
Current $ (200) $ (178) $ 471
Deferred $ 353 401 496
Total $ 153 $ 223 $ 967
Delek Holdings files a consolidated Texas gross margin tax return, and tax payments for the Partnership are paid by Delek Holdings. Therefore, a portion of the current tax payable is included in accounts receivable/payable from related parties. As of both December 31, 2021 and 2020, income taxes payable were immaterial and were included in accounts receivable/payable from related parties in the accompanying consolidated balance sheets. Taxes that are determined on a consolidated basis apply the "benefits for loss" allocation method; thus, tax attributes are realized when used in the combined tax return to the extent that they have been subject to a valuation allowance. We are no longer subject to audit through 2015.
We recognize accrued interest and penalties related to unrecognized tax benefits as an adjustment to the current provision for income taxes. There were no uncertain tax positions recorded as of December 31, 2021 or 2020, and there were no interest or penalties recognized related to uncertain tax positions for the years ended December 31, 2021, 2020 or 2019. We have examined uncertain tax positions for any material changes in the next 12 months and none are expected.

F-31
Notes to Consolidated Financial Statements
17. Commitments and Contingencies
Litigation
In the ordinary conduct of our business, we are from time to time subject to lawsuits, investigations and claims, including environmental claims and employee-related matters. Although we cannot predict with certainty the ultimate resolution of lawsuits, investigations and claims asserted against us, including civil penalties or other enforcement actions, we do not believe that any currently pending legal proceeding or proceedings to which we are a party will have a material adverse effect on our financial statements. See "Crude Oil and Other Releases" below for discussion of an enforcement action.
Environmental, Health and Safety
We are subject to extensive federal, state and local environmental and safety laws and regulations enforced by various agencies, including the Environmental Protection Agency (the "EPA"), the United States Department of Transportation, the Occupational Safety and Health Administration, as well as numerous state, regional and local environmental, safety and pipeline agencies. These laws and regulations govern the discharge of materials into the environment, waste management practices and pollution prevention measures, as well as the safe operation of our pipelines and the safety of our workers and the public. Numerous permits or other authorizations are required under these laws and regulations for the operation of our terminals, pipelines, saltwells, trucks and related operations, and may be subject to revocation, modification and renewal.
These laws and permits raise potential exposure to future claims and lawsuits involving environmental and safety matters, which could include soil, surface water and groundwater contamination, air pollution, personal injury and property damage allegedly caused by substances which we may have handled, used, released or disposed of, transported, or that relate to pre-existing conditions for which we may have assumed responsibility. We believe that our current operations are in substantial compliance with existing environmental and safety requirements. However, there have been and we expect that there will continue to be ongoing discussions about environmental and safety matters between us and federal and state authorities, including the receipt and response to notices of violations, citations and other enforcement actions, some of which have resulted or may result in changes to operating procedures and in capital expenditures. While it is often difficult to quantify future environmental or safety related expenditures, we anticipate that continuing capital investments and changes in operating procedures will be required to comply with existing and new requirements, as well as evolving interpretations and enforcement of existing laws and regulations.
Releases of hydrocarbons or hazardous substances into the environment could, to the extent the event is not insured, or is not a reimbursable event under the Omnibus Agreement, subject us to substantial expenses, including costs to respond to, contain and remediate a release, to comply with applicable laws and regulations and to resolve claims by governmental agencies or other persons for personal injury, property damage, response costs, or natural resources damages.
Crude Oil and Other Releases
During the year ended December 31, 2021, there was one significant release of finished product, involving one of our pipelines and it occurred in August 2021. This release of finished product from our Greenville pipeline occurred near Dixon, Texas (the "Greenville Dixon Release"). Cleanup operations, site maintenance and remediation on this release are currently on-going. Costs incurred as of December 31, 2021 totaled $2.7 million. Additionally, as of December 31, 2021 we have accrued $0.8 million for remediation and other potential costs related to this release. The impacted area is undergoing remedial measures that will be protective of human health and the environment, including groundwater, under the oversight of Texas Commission of Environmental Quality (the "TCEQ").
On October 3, 2019, a release of diesel fuel involving one of our pipelines occurred near Sulphur Springs, Texas (the "Sulphur Springs Release"). Cleanup operations and site maintenance and remediation on this release have been substantially completed. Remedial costs incurred totaled $7.1 million during 2019 and $0.5 million during 2020. In the fourth quarter of 2020 we submitted an actual property assessment report that assessed site conditions and recommended closure of the site. Closure of the site was approved in the fourth quarter of 2020 by the TCEQ. The groundwater monitoring wells were abandoned and removed in the second quarter of 2021 in accordance with applicable regulatory requirements. We filed suit in January 2020 against a third party contractor, seeking damages related to this release; two related actions were filed in November and December 2020 by and against the contractor's insurance company seeking judgments related to insurance coverage. We have not received notification that any legal action with respect to fines and penalties will be pursued by the regulatory agencies.
For other releases that occurred in prior years, we have received regulatory closure or a majority of the cleanup and remediation efforts are substantially complete. We expect regulatory closure in 2021 for the release sites that have not yet received it and do not anticipate material costs associated with any fines or penalties or additional remedial activities that may be needed to achieve regulatory closure.
Regulatory authorities could require additional remediation based on the results of our remediation efforts. We may incur additional expenses as a result of further scrutiny by regulatory authorities and continued compliance with laws and regulations to which our assets are subject. As of December 31, 2021, we have accrued $0.3 million for remediation and other such matters related to these releases.
F-32
Notes to Consolidated Financial Statements
Expenses incurred for the remediation of these crude oil and other releases are included in operating expenses in our consolidated statements of income and comprehensive income. The majority of our releases have been subsequently reimbursed by Delek Holdings pursuant to the terms of the Omnibus Agreement, with the exception of the Sulphur Springs Release above as it is not covered under the Omnibus Agreement. Reimbursements are recorded as a reduction to operating expense. We do not believe the total costs associated with these events, whether alone or in the aggregate, including any fines or penalties and net of available insurance, indemnification or reimbursement, will have a material adverse effect upon our business, financial condition or results of operations
During the years ended December 31, 2021 and 2020, the crude oil and other releases remediation expenses, net of reimbursable costs, were immaterial.

18. Leases
We lease certain pipeline and transportation equipment. Leases with an initial term of 12 months or less are not recorded on the balance sheet; we recognize lease expense for these leases on a straight-line basis over the lease term.
Our leases do not have any outstanding renewal options. Certain leases also include options to purchase the leased equipment.
Certain of our lease agreements include rates based on equipment usage and others include rate inflationary indices based increases. Our lease agreements do not contain any material residual value guarantees or material restrictive covenants.
The following table presents additional information related to our operating leases in accordance ASC 842:
Year Ended December 31, Year Ended December 31,
(in thousands) 2021 2020
Lease Cost (1)
Operating lease cost $ 12,586 $ 7,478
Short-term lease cost 1,609 1,852
Variable lease costs 600 1,002
Total lease cost $ 14,795 $ 10,332
Other Information
Cash paid for amounts included in the measurement of lease liabilities:
Operating cash flows from operating leases $ (12,586) $ (7,478)
Leased assets obtained in exchange for new operating lease liabilities $ 6,386 $ 26,528
Leased assets obtained in exchange for new financing lease liabilities $ 3,071 $ 5,562
December 31, 2021 December 31, 2020
Weighted-average remaining lease term (years) for operating leases 3.33 3.56
Weighted-average discount rate (2)operating leases
5.8 % 6.0 %
Weighted-average remaining lease term (years) for finance lease 2.10 2.92
Weighted-average discount rate (2)finance lease
1.8 % 1.8 %
(1) Includes an immaterial amount of financing lease.
(2) Our discount rate is primarily based on our incremental borrowing rate in accordance with ASC 842.
The following is an estimate of the maturity of our lease liabilities for operating leases having remaining noncancellable terms in excess of one year as of December 31, 2021 (in thousands) under ASC 842:
2022 $ 7,775
2023 7,087
2024 4,894
2025 2,371
2026 413
Thereafter 425
Total lease payments $ 22,965
Less: Interest 2,083
Present value of lease liabilities $ 20,882
F-33
Notes to Consolidated Financial Statements
The following is an estimate of the maturity of our lease liabilities for financing leases having remaining noncancellable terms in excess of one year as of December 31, 2021 (in thousands) under ASC 842:
2022 $ 2,965
2023 2,807
2024 320
2025 24
2026 -
Thereafter -
Total lease payment $ 6,116
Less: Interest 116
Present values of lease liabilities $ 6,000

19. Subsequent Events
Distribution Declaration
On January 21, 2022, our general partner's board of directors declared a quarterly cash distribution of $0.975 per unit, paid on February 8, 2022, to unitholders of record on February 1, 2022.

F-34

SIGNATURES

Pursuant to the requirements of Section 13 or 15(d) of the Securities Exchange Act of 1934, the registrant has duly caused this report to be signed on its behalf by the undersigned, thereunto duly authorized.


Delek Logistics Partners, LP
by and through its general partner, Delek Logistics GP, LLC

By: /s/ Robert Wright
Robert Wright
Senior Vice President and Chief Accounting Officer
(Principal Accounting Officer)

Dated: September 23, 2022



F-35

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Delek Logistics Partners LP published this content on 23 September 2022 and is solely responsible for the information contained therein. Distributed by Public, unedited and unaltered, on 23 September 2022 20:54:05 UTC.