Energy Midstream Firm Delek Logistics Misses Earnings Estimates

Tennessee-based midstream energy master limited partnership Delek Logistics reported on Tuesday revenues and earnings per share for the fourth quarter that missed consensus estimates, due to higher interest expense and a goodwill impairment.

Delek Logistics Partners, LP (NYSE: DKL) booked a net income attributable to all partners of $22.1 million, or $0.51 per diluted common limited partner unit. This compares to a net income attributable to all partners of $42.7 million, or $0.98 per diluted common limited partner unit, in the fourth quarter of 2022.

Revenues fell by 5.5% annually to $254 million, missing the consensus estimate by $24 million. Analysts had also expected $0.85 in EPS for the fourth quarter, higher than the reported earnings for the last quarter of 2023.

“We saw substantial growth from new connections in our Midland gathering operations, further validating our strong position in the Permian Basin,” said Avigal Soreq, President of Delek Logistics' general partner.

“The business looks to utilize capital investments in 2024 to support customer growth and expand upon existing assets,” Soreq added.

Delek Logistics owns assets and joint ventures located primarily in and around the Permian Basin, the Delaware Basin, and other select areas in the Gulf Coast region. The company provides gathering, pipeline, and other transportation services primarily for crude oil and natural gas customers, storage, wholesale marketing, and terminaling services primarily for intermediate and refined product customers, as well as water disposal and recycling services.

Earlier this month, Canada’s pipeline operator Enbridge also reported earnings for the fourth quarter below Wall Street forecasts, as lower tolls on the Mainline pipeline system and lower natural gas prices weighed on core and net profits. Higher depreciation from assets acquired or placed into service in 2023 and higher interest expense due to higher interest rates weighed on Enbridge’s adjusted earnings in the last quarter of 2023.  

By Tsvetana Paraskova for Oilprice.com

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