News Column

DELEK LOGISTICS PARTNERS, LP - 10-Q - MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS

August 8, 2014

Unless the context otherwise requires, references in this report to "Delek Logistics Partners, LP," the "Partnership," and "we," "our," "us," or like terms, refer to Delek Logistics Partners, LP and its general partner and subsidiaries. Unless the context otherwise requires, references in this report to "Delek" refer collectively to Delek US Holdings, Inc. and any of its subsidiaries, other than Delek Logistics Partners, LP, its subsidiaries and its general partner. Those statements in this section that are not historical in nature should be deemed forward-looking statements that are inherently uncertain. See "Forward-Looking Statements" below for a discussion of the factors that could cause actual results to differ materially from those projected in such statements. On February 10, 2014, the Partnership, through its wholly owned subsidiary Delek Logistics Operating, LLC ("OpCo") acquired from Delek (i) the refined products terminal (the "El Dorado Terminal") located at Delek'sEl Dorado, Arkansas refinery (the "El Dorado Refinery") and (ii) 158 storage tanks and certain ancillary assets (the "El Dorado Storage Tanks" and together with the El Dorado Terminal, the "El Dorado Terminal and Tank Assets") at and adjacent to the El Dorado Refinery (such transaction, the "El Dorado Acquisition"). On July 26, 2013, the Partnership, through its wholly owned subsidiary Delek Marketing & Supply, LP, acquired from Delek (i) the refined products terminal (the "Tyler Terminal") located at Delek'sTyler, Texas Refinery (the "Tyler Refinery") and (ii) 96 storage tanks and certain ancillary assets (the "Tyler Tank Assets" and together with the Tyler Terminal, the "Tyler Terminal and Tank Assets") adjacent to the Tyler Refinery (such transaction, the "Tyler Acquisition"). The El Dorado Acquisition and the Tyler Acquisition were accounted for as transfers between entities under common control. As an entity under common control with Delek, we record the assets that Delek has contributed to us on our balance sheet at Delek's historical basis instead of fair value. Transfers between entities under common control are accounted for as if the transfer occurred at the beginning of the period, and prior years are retrospectively adjusted to furnish comparable information. Accordingly, the accompanying financial statements and related notes of the Partnership have been retrospectively adjusted to include (i) the historical results of the El Dorado Terminal and Tank Assets for all periods presented through February 10, 2014 (the "El Dorado Predecessor"), and (ii) the historical results of the Tyler Terminal and Tank Assets for all periods presented through July 26, 2013 (the "Tyler Predecessor"). We refer to the historical results of the El Dorado and Tyler Predecessors collectively as our "Predecessors." You should read the following discussion of our financial condition and results of operations in conjunction with our historical condensed consolidated financial statements and notes thereto. Forward-Looking Statements This Quarterly Report on Form 10-Q contains "forward-looking statements" within the meaning of Section 27A of the Securities Act of 1933 and Section 21E of the Securities Exchange Act of 1934. These forward-looking statements reflect our current estimates, expectations and projections about our future results, performance, prospects and opportunities. Forward-looking statements include, among other things, the information concerning our possible future results of operations, business and growth strategies, financing plans, expectations that regulatory developments or other matters will not have a material adverse effect on our business or financial condition, our competitive position and the effects of competition, the projected growth of the industry in which we operate, and the benefits and synergies to be obtained from our completed and any future acquisitions, and statements of management's goals and objectives, and other similar expressions concerning matters that are not historical facts. Words such as "may," "will," "should," "could," "would," "predicts," "potential," "continue," "expects," "anticipates," "future," "intends," "plans," "believes," "estimates," "appears," "projects" and similar expressions, as well as statements in future tense, identify forward-looking statements. Forward-looking statements should not be read as a guarantee of future performance or results, and will not necessarily be accurate indications of the times at or by which such performance or results will be achieved. Forward-looking information is based on information available at the time and/or management's good faith belief with respect to future events, and is subject to risks and uncertainties that could cause actual performance or results to differ materially from those expressed in the statements. Important factors that, individually or in the aggregate, could cause such differences include, but are not limited to: our substantial dependence on Delek or its assignees and its ability to



pay us under our commercial agreements;

the age of our assets and operating hazards and other risks incidental to

transporting, storing and gathering crude oil, intermediate and refined

products, including, but not limited to, spills, releases and tank failures; the timing and extent of changes in commodity prices and demand for Delek's refined products; 27

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the suspension, reduction or termination of Delek's or its assignees' or

any third party's obligations under our commercial agreements;

disruptions due to acts of God, equipment interruption or failure at our

facilities, Delek's facilities or third-party facilities on which our business is dependent;



our reliance on information technology systems in our day-to-day operations;

changes in general economic conditions;

competitive conditions in our industry;

actions taken by our customers and competitors;

the demand for crude oil, refined products and transportation and storage

services;

our ability to successfully implement our business plan;

our ability to complete internal growth projects on time and on budget;

Delek's inability to grow as expected;

natural disasters, weather-related delays, casualty losses and other matters beyond our control; interest rates; labor relations; large customer defaults; changes in the availability and cost of capital and the price and availability of debt and equity financing;



changes in tax status;

the effects of existing and future laws and governmental regulations,

including, but not limited to, the rules and regulations promulgated by

the Federal Energy Regulatory Commission (the "FERC");

changes in insurance markets impacting costs and the level and types of

coverage available;

the effects of future litigation; and

other factors discussed elsewhere in this Quarterly Report on Form 10-Q.

In light of these risks, uncertainties and assumptions, our actual results of operations and execution of our business strategy could differ materially from those expressed in, or implied by, the forward-looking statements, and you should not place undue reliance upon them. In addition, past financial and/or operating performance is not necessarily a reliable indicator of future performance and you should not use our historical performance to anticipate future period results or trends. There can be no assurance that any of the events anticipated by the forward-looking statements will occur or, if any such events do occur, what impact they will have on our results of operations and financial condition. Forward-looking statements speak only as of the date the statements are made. We assume no obligation to update forward-looking statements to reflect actual results, changes in assumptions or changes in other factors affecting forward-looking information except to the extent required by applicable securities laws. If we do update one or more forward-looking statements, no inference should be drawn that we will make additional updates with respect thereto or with respect to other forward-looking statements. Business Overview The Partnership primarily owns and operates crude oil and intermediate and refined products logistics and marketing assets. We gather, transport and store crude oil and market, distribute, transport and store refined products in select regions of the southeastern United States and Texas for Delek and third parties, primarily in support of Delek'sTyler and El Dorado Refineries. A substantial majority of our existing assets are both integral to and dependent on the success of Delek's refining operations, as most of our assets are contracted exclusively to Delek in support of its Tyler and El Dorado Refineries. 28 -------------------------------------------------------------------------------- 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 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 the 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 their units and the taxable income allocation requirements under our partnership agreement. Our Reporting Segments and Assets



Our business consists of two operating segments: (i) our pipelines and transportation segment and (ii) our wholesale marketing and terminalling segment.

Our pipelines and transportation segment primarily consists of assets divided into seven operating systems: (i) our Lion Pipeline System, which includes the results of a pipeline for which we lease the capacity from Enterprise TE Products Pipeline Company, LLC, (ii) our SALA Gathering System, (iii) our Paline Pipeline System, (iv) our East Texas Crude Logistics System (including the Nettleton Pipeline and McMurrey Pipeline System), (v) the Tyler-Big Sandy Pipeline, (vi) the Tyler Tank Assets, and (vii) the El Dorado Storage Tanks. These assets provide crude oil gathering, crude oil and intermediate and refined products transportation and storage services primarily in support of Delek's refining operations in Tyler, Texas and El Dorado, Arkansas. Additionally, this segment provides crude oil transportation services to certain third parties, including a major integrated oil company. In providing these services, we do not take ownership of the products or crude oil that we transport or store; and, therefore, we are not directly exposed to changes in commodity prices. Our wholesale marketing and terminalling segment consists primarily of the following assets: (i) refined products terminals in Abilene, Texas and San Angelo, Texas, which we lease to Noble Petro, Inc. ("Noble Petro"), (ii) product pipelines in west Texas connecting the Abilene and San Angelo terminals to the Magellan Orion pipeline, which we also lease to Noble Petro, (iii) refined products terminals in Big Sandy, Texas, Memphis, Tennessee, Nashville, Tennessee, and North Little Rock, Arkansas, (iv) the Tyler Terminal, and (v) the El Dorado Terminal. We generate revenue in our wholesale marketing and terminalling segment by providing marketing services for the refined products output of the Tyler Refinery, engaging in wholesale activity at our Abilene and San Angelo terminals, and at terminals owned by third parties, whereby we purchase light products for sale and exchange to third parties, and by providing terminalling services at our refined product terminals to independent third parties and Delek.



Recent Developments

On July 1, 2014, the tariffs, throughput fees and storage fees under our agreements with Delek that are subject to FERC increased by approximately 3.9%, the amount of the change in the FERC oil pipeline index. In the case of the east Texas marketing agreement and certain of our other agreements, the fees increased by the consumer price index and the producer price index, respectively, or approximately 1.6% for both.



How We Generate Revenue

The Partnership generates revenue by charging fees for gathering, transporting and storing crude oil and for marketing, distributing, transporting, throughputting and storing intermediate and refined products. A substantial majority of our contribution margin, which we define as net sales less cost of goods sold and operating expenses, is derived from commercial agreements with Delek with initial terms ranging from five to ten years, which we believe enhances the stability of our cash flows. As more fully described below, our commercial agreements with Delek include minimum volume commitments, which we believe will provide a stable revenue stream in the future. Commercial Agreements Commercial Agreements with Delek The Partnership has various long-term, fee-based commercial agreements with Delek pursuant to which we provide crude oil gathering, crude oil and refined products transportation, and storage services and marketing and terminalling services to Delek, and Delek commits to provide us with minimum monthly throughput volumes of crude oil and refined products. See our Annual Report on Form 10-K for the year ended December 31, 2013 (our "Annual Report on Form 10-K") for a description of certain of our commercial and other agreements with Delek and our agreements with third parties. 29 -------------------------------------------------------------------------------- How We Evaluate Our Operations We use a variety of financial and operating metrics to analyze our segment performance. These metrics are significant factors in assessing our operating results and profitability and include: (i) volumes (including pipeline throughput and terminal throughput and storage and sales volumes); (ii) contribution margin and gross margin per barrel; (iii) operating and maintenance expenses; and (iv) EBITDA and Distributable Cash Flow. We define EBITDA and distributable cash flow below. Volumes. The amount of revenue we generate primarily depends on the volumes of crude oil and refined products that we handle or sell, as the case may be, in our pipeline, transportation, terminalling and marketing operations. These volumes are primarily affected by the supply of, and the demand for, crude oil and refined products in the markets served directly or indirectly by us or our assets. Although Delek has committed to minimum volumes under our commercial agreements, our results of operations will be impacted by: Delek's utilization of our assets in excess of its minimum volume commitments;



our ability to identify and execute acquisitions and organic expansion

projects, and capture incremental Delek or third-party volumes; our ability to increase throughput volumes or sales at our refined products terminals and provide additional ancillary services at those terminals, such as ethanol blending and additives injection; our ability to identify and serve new customers in our marketing operations; and



our ability to make connections to third-party facilities and pipelines.

Contribution Margin and Gross Margin per Barrel. Because we do not allocate general and administrative expenses by segment, we measure the performance of our segments by the amount of contribution margin generated in operations. Contribution margin is calculated as net sales less cost of sales and operating expenses. For our wholesale marketing and terminalling segment, we also measure gross margin per barrel. The gross margin per barrel reflects the gross margin (net sales less cost of sales) of the wholesale marketing operations divided by the number of barrels of refined products sold during the measurement period. Both contribution margin and gross margin per barrel can be affected by fluctuations in the prices of gasoline, distillate fuel and Renewable Identification Numbers ("RINs"). Historically, the profitability of our wholesale marketing operations has been affected by commodity price volatility, specifically as it relates to changes in the price of refined products between the time we purchase such products from our suppliers and the time we sell the products to our wholesale customers, and the fluctuation in the value of RINs. Operating and Maintenance Expenses. We seek to maximize the profitability of our operations by effectively managing operating and maintenance expenses. These expenses are comprised primarily of labor expenses, lease costs, utility costs, insurance premiums, repairs and maintenance expenses and property taxes. These expenses generally remain relatively stable across broad ranges of throughput volumes but can fluctuate from period to period depending on the mix of activities performed during that period and the timing of these expenses. We will seek to manage our maintenance expenditures on our pipelines and terminals by scheduling maintenance over time to avoid significant variability in our maintenance expenditures and minimize their impact on our cash flow. Our operating and maintenance expenses will also be affected by the imbalance gain and loss provisions in our commercial agreements with Delek. Under our commercial agreements with Delek relating to our Lion Pipeline System and our East Texas Crude Logistics System, we will bear any crude oil and refined product volume losses on each of our pipelines in excess of 0.25%. Under our commercial agreements with Delek relating to our Memphis and Big Sandy Terminals, we will bear any refined product volume losses in each of our terminals in excess of 0.25%. The value of any crude oil or refined product imbalance gains or losses resulting from these contractual provisions is determined by reference to the monthly average reference price for the applicable commodity. Any gains and losses under these provisions will reduce or increase, respectively, our operating and maintenance expenses in the period in which they are realized. EBITDA and Distributable Cash Flow. We define EBITDA as net income (loss) before net interest expense, income tax expense, depreciation and amortization expense. We define distributable cash flow as EBITDA less net cash paid for interest, maintenance and regulatory capital expenditures and income taxes. Distributable cash flow will not reflect changes in working capital balances. Distributable cash flow and EBITDA are not presentations made in accordance with accounting principles generally accepted in the United States ("U.S. GAAP"). EBITDA and distributable cash flow are non-U.S. GAAP supplemental financial measures that management and external users of our condensed consolidated financial statements, such as industry analysts, investors, lenders and rating agencies, may use to assess: our operating performance as compared to other publicly traded partnerships in the midstream energy industry, without regard to historical cost basis or, in the case of EBITDA, financing methods; 30

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the ability of our assets to generate sufficient cash flow to make

distributions to our unitholders;

our ability to incur and service debt and fund capital expenditures; and

the viability of acquisitions and other capital expenditure projects and

the returns on investment of various investment opportunities.

We believe that the presentation of EBITDA and distributable cash flow provides useful information to investors in assessing our financial condition and results of operations. EBITDA and distributable cash flow should not be considered alternatives to net income, operating income, cash from operations or any other measure of financial performance or liquidity presented in accordance with U.S. GAAP. EBITDA and distributable cash flow have important limitations as analytical tools because they exclude some but not all items that affect net income and net cash provided by operating activities. Additionally, because EBITDA and distributable cash flow may be defined differently by other companies in our industry, our definition of EBITDA may not be comparable to similarly titled measures of other companies, thereby diminishing its utility. For a reconciliation of EBITDA to its most directly comparable financial measures calculated and presented in accordance with U.S. GAAP, please refer to "Results of Operations-Statement of Operations Data" below. Factors Affecting the Comparability of Our Financial Results Our future results of operations may not be comparable to our historical results of operations for the reasons described below: Revenues. There are differences between the way the Predecessors recorded revenues and the way the Partnership records revenues after the acquisitions of our Predecessors' assets. Because our assets, including the El Dorado Terminal and Tank Assets and the Tyler Terminal and Tank Assets, were historically a part of the integrated operations of Delek, the Predecessors generally recognized the costs and most revenue associated with the gathering, pipeline, transportation, terminalling and storage services provided to Delek on an intercompany basis or charged low throughput fees for transportation. Accordingly, the revenues in the Predecessors' condensed consolidated financial statements are different than those reflected in the Partnership's condensed consolidated financial statements as the Predecessors' amounts relate primarily to amounts received from third parties while the Partnership's revenues will reflect amounts associated with our commercial agreements with Delek in addition to amounts received from third parties. The Partnership's revenues are generated from the commercial agreements that we entered into with Delek and from agreements and arrangements with third parties pursuant to which we receive fees for gathering, transporting and storing crude oil and marketing, transporting, storing and terminalling intermediate and refined products. Certain of these contracts contain minimum volume commitments and fees that are indexed for inflation. In addition, the tariff rates for our assets that are subject to inflation indexing will be adjusted annually on July 1 of each year. We expect to generate revenue from ancillary services, such as ethanol blending and additive injection, and from transportation and terminalling fees on our pipeline systems and terminals for volumes in excess of the minimum volume committed under our agreements with Delek. General and Administrative Expenses. The Predecessor's general and administrative expenses included direct monthly charges for the management and operation of our logistics assets and certain expenses allocated by Delek for general corporate services, such as treasury, accounting and legal services. These expenses were charged or allocated to the Predecessors based on the nature of the expenses and our proportionate share of employee time and headcount. Delek continues to charge the Partnership for the management and operation of our logistics assets, including an annual fee of $3.3 million for the provision of various centralized corporate services. Additionally, the Partnership will reimburse Delek for direct or allocated costs and expenses incurred by Delek or our general partner on behalf of the Partnership. The Partnership also incurs additional incremental annual general and administrative expense as a result of being a publicly traded partnership. Financing. The Partnership has declared its intent to make a cash distribution to its unitholders at a distribution rate of $0.475 per limited partner unit for the quarter ended June 30, 2014 ($1.90 per unit on an annualized basis). Our partnership agreement requires that the Partnership distribute to its unitholders quarterly all of its available cash as defined in the partnership agreement. As a result, the Partnership expects to fund future capital expenditures primarily from operating cash flows, borrowings under our amended and restated senior secured revolving credit agreement (the "Amended and Restated Credit Agreement") and future issuances of equity and debt securities. Market Trends. Our results of operations are impacted by our ability to utilize our existing assets to fulfill the long-term fee-based agreements we have entered into with Delek and with third parties. Overall demand for gathering and terminalling services in a particular area is generally driven by crude oil production in the area, refining economics and access to alternate delivery and transportation infrastructure. Any of these factors is subject to change over time. As part of our overall business strategy, management considers aspects such as location, acquisition and expansion opportunities and factors impacting the utilization of the refineries, and therefore throughput volumes, which may impact our performance in the market. 31 -------------------------------------------------------------------------------- Seasonality and Customer Maintenance Programs The volume and throughput of crude oil and refined products transported through our pipelines and sold through our terminals and to third parties is directly affected by the level of supply and demand for all of such products in the markets served directly or indirectly by our assets. Supply and demand for such products fluctuates during the calendar year. Demand for gasoline, for example, is generally higher during the summer months than during the winter months due to seasonal increases in motor vehicle traffic. Demand for asphalt products, which is a substantial product of the El Dorado Refinery, is also lower in the winter months. In addition, our refining customers, such as Delek, occasionally reduce or suspend operations to perform planned maintenance during the winter, when demand for their products is lower. Accordingly, these factors can affect the need for crude oil or finished products by our customers and therefore limit our volumes or throughput during these periods, and our operating results will generally be lower during the first and fourth quarters of the year. We believe, however, that many of the potential effects of seasonality on our revenues and contribution margin will be substantially mitigated due to our commercial agreements with Delek that include minimum volume and throughput commitments. Contractual Obligations There have been no material changes to our contractual obligations and commercial commitments during the six months ended June 30, 2014 from those disclosed in our Annual Report on Form 10-K. Critical Accounting Policies The preparation of our condensed consolidated financial statements requires us to make estimates and judgments that affect the reported amounts of assets, liabilities, revenues and expenses and related disclosure of contingent assets and liabilities. The Securities and Exchange Commission has defined critical accounting policies as those that are both most important to the portrayal of our financial condition and results of operations and require our most difficult, complex or subjective judgments or estimates. Based on this definition and as further described in our Annual Report on Form 10-K, we believe our critical accounting policies include the following: (i) evaluating impairment for property, plant and equipment and definite life intangibles, (ii) valuing goodwill and potential impairment, and (iii) estimating environmental expenditures. For all financial statement periods presented, there have been no material modifications to the application of these critical accounting policies or estimates since our Annual Report on Form 10-K. 32 -------------------------------------------------------------------------------- Results of Operations A discussion and analysis of the factors contributing to our results of operations is presented below. The accompanying condensed consolidated financial statements and related notes of the Partnership have been retrospectively adjusted to include the historical results of the El Dorado Terminal and Tank Assets for all periods presented through February 10, 2014 and the historical results of the Tyler Terminal and Tank Assets for all periods presented through July 26, 2013. The financial statements, together with the following information, are intended to provide investors with a reasonable basis for assessing our historical operations, but should not serve as the only criteria for predicting our future performance. The following table and discussion present a summary of our consolidated results of operations for the three and six months ended June 30, 2014 and 2013 including a reconciliation of EBITDA to net income and net cash provided by (used in) operating activities and distributable cash flow to net income (in thousands, except unit and per unit amounts). Our financial results may not be comparable as our Predecessors recorded revenues, general and administrative expenses and financed operations differently than the Partnership. See "Factors Affecting the Comparability of Our Financial Results" in this Quarterly Report on Form 10-Q for additional information. 33 --------------------------------------------------------------------------------

Three Months Ended Six Months Ended June 30, June 30, 2014 2013 (2) 2014 (1) 2013 (2) Statement of Operations Data: (In thousands, except per unit amounts) Net sales: Pipelines and transportation $ 23,066$ 13,667$ 43,334$ 27,204 Wholesale marketing and terminalling 213,277 216,475 396,536 413,832 Total 236,343 230,142 439,870 441,036 Operating costs and expenses: Cost of goods sold 196,574 207,966 368,783 395,826 Operating expenses 9,544 9,928 18,863 19,009 General and administrative expenses 2,242 1,521 4,905 3,723 Depreciation and amortization 3,532 3,284 7,009 6,825 Loss on sale of assets 74 - 74 - Total operating costs and expenses 211,966 222,699 399,634 425,383 Operating income 24,377 7,443 40,236 15,653 Interest expense 2,342 752 4,325 1,569 Income before taxes 22,035 6,691 35,911 14,084 Income tax expense 281 118 428 240 Net income $ 21,754$ 6,573$ 35,483$ 13,844 Less: (loss) income attributable to Predecessors - (5,183 ) (943 ) (10,116 ) Net income attributable to partners $ 21,754$ 11,756$ 36,426$ 23,960 Comprehensive income attributable to partners $ 21,754$ 11,756$ 36,426$ 23,960 EBITDA(3) $ 27,909$ 10,727$ 47,245$ 22,478 Less: General partner's interest in net income (2%), including incentive distribution rights (620 ) (234 ) (914 ) (478 ) Limited partners' interest in net income $ 21,134$ 11,522



$ 35,512$ 23,482

Net income per limited partner unit: Common units - (basic) $ 0.88$ 0.48$ 1.47$ 0.98 Common units - (diluted) $ 0.87$ 0.47$ 1.46$ 0.97 Subordinated units - Delek (basic and diluted) $ 0.87$ 0.48



$ 1.47$ 0.98

Weighted average limited partner units outstanding: Common units - (basic) 12,159,732 12,006,843 12,156,135 12,003,071 Common units - (diluted) 12,291,273 12,159,084 12,281,598 12,128,764 Subordinated units - Delek (basic and diluted) 11,999,258 11,999,258



11,999,258 11,999,258

Distributable Cash Flow (3) $ 24,031$ 6,140



39,980 $ 13,068

(1) The information presented includes the results of operations of the El Dorado Predecessor. Prior to the El Dorado Acquisition, the El Dorado Predecessor did not record revenues for intercompany terminalling and storage services.

(2) The information presented includes the results of operations of our Predecessors. Prior to the completion of the El Dorado Acquisition and the Tyler Acquisition, our Predecessors did not record revenues for intercompany terminalling and storage services.

(3) For a definition of EBITDA and distributable cash flow, please see "How We Evaluate Our Operations-EBITDA and Distributable Cash Flow" above.

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Three Months Ended Six Months Ended June 30, June 30, 2014 2013 (2) 2014 (1) 2013 (2) (In thousands) Reconciliation of EBITDA to net income: Net income $ 21,754$ 6,573$ 35,483$ 13,844 Add: Income tax expense 281 118 428 240 Depreciation and amortization 3,532 3,284 7,009 6,825 Interest expense, net 2,342 752 4,325 1,569 EBITDA(3) $ 27,909$ 10,727$ 47,245$ 22,478 Reconciliation of EBITDA to net cash from operating activities: Net cash provided by operating activities $ 31,211$ 14,234 $



44,800 $ 12,214

Amortization of unfavorable contract liability to revenue 667 667 1,334 1,334 Amortization of debt issuance costs (317 ) (186 ) (634 ) (374 ) Accretion of asset retirement obligations (89 ) (88 ) (209 ) (149 ) Deferred taxes (57 ) 16 (52 ) 17 Loss on sale of assets (74 ) - (74 ) - Unit-based compensation expense (63 ) (112 ) (121 ) (112 ) Changes in assets and liabilities (5,992 ) (4,674 ) (2,552 ) 7,739 Income taxes 281 118 428 240 Interest expense, net 2,342 752 4,325 1,569 EBITDA(3) $ 27,909$ 10,727$ 47,245$ 22,478 Reconciliation of distributable cash flow to EBITDA: EBITDA (3) $ 27,909$ 10,727$ 47,245$ 22,478 Less: Cash interest expense, net (4) 2,025 566 3,691 1,195 Less: Maintenance and Regulatory capital expenditures (5) 814 2,595 1,597 5,244 Less: Capital improvement expenditures (6) 154 829 336 1,895 Add: Reimbursement from Delek for capital expenditures (6) - 153 - 463 Less: Income tax expense 281 118 428 240 Add: Non-cash unit based compensation expense 63 112 121 112 Less: Amortization of deferred revenue - 77 - 77 Less: Amortization of unfavorable contract liability 667 667 1,334 1,334 Distributable cash flow (3) $ 24,031$ 6,140$ 39,980$ 13,068



(1) The information presented includes the results of operations of the El Dorado Predecessor. Prior to the El Dorado Acquisition, the El Dorado Predecessor did not record revenues for intercompany terminalling and storage services.

(2) The information presented includes the results of operations of our Predecessors. Prior to the completion of the El Dorado Acquisition and the Tyler Acquisition, our Predecessors did not record revenues for intercompany terminalling and storage services.

(3) For a definition of EBITDA and distributable cash flow, please see "How We Evaluate Our Operations-EBITDA and Distributable Cash Flow" above.

(4) Cash interest expense, net excludes the amortization of debt issuance costs.

35 -------------------------------------------------------------------------------- (5) Maintenance and regulatory capital expenditures represent cash expenditures (including expenditures for the addition or improvement to, or the replacement of, our capital assets, and for the acquisition of existing, or the construction or development of new, capital assets) made to maintain our long-term operating income or operating capacity. Examples of maintenance and regulatory capital expenditures are expenditures for the repair, refurbishment and replacement of pipelines and terminals, to maintain equipment reliability, integrity and safety and to address environmental laws and regulations.



(6) For the three and six-month period ended June 30, 2013, Delek reimbursed us for certain capital expenditures pursuant to the terms of the Omnibus Agreement.

The following tables include reconciliations of EBITDA and distributable cash flow to net income and EBITDA to net cash from operating activities for the six months ended June 30, 2014 and for the three and six months ended June 30, 2013, disaggregated to present the results of operations of the Partnership, the El Dorado Terminal and Tank Assets and the Tyler Terminal and Tank Assets (in thousands): 36 --------------------------------------------------------------------------------

Delek Logistics El Dorado Terminal and Six Months Ended June Partners, LP Tank Assets 30, 2014 El Dorado Predecessor Reconciliation of EBITDA to net (loss) income: Net income (loss) $ 36,426 $ (943 ) $ 35,483 Add: Income tax expense 428 - 428 Depreciation and amortization 6,895 114 7,009 Interest expense, net 4,325 - 4,325 EBITDA(1) $ 48,074 $ (829 ) $ 47,245 Reconciliation of EBITDA to net cash from operating activities: Net cash provided by (used in) operating activities $ 45,629 $ (829 ) $ 44,800 Amortization of unfavorable contract liability to revenue 1,334 - 1,334 Amortization of debt issuance costs (634 ) - (634 ) Accretion of asset retirement obligations (215 ) 6 (209 ) Deferred taxes (52 ) - (52 ) Loss on sale of assets (74 ) - (74 ) Unit-based compensation expense (121 ) - (121 ) Changes in assets and liabilities (2,546 ) (6 ) (2,552 ) Income taxes 428 - 428 Interest expense, net 4,325 - 4,325 EBITDA(1) $ 48,074 $ (829 ) $ 47,245 Reconciliation of distributable cash flow to EBITDA: EBITDA (1) $ 48,074 $ (829 ) $ 47,245 Less: Cash interest expense, net (2) 3,691 - 3,691 Less: Maintenance and Regulatory capital expenditures (3) 1,513 84 1,597 Less: Capital improvement expenditures 243 93 336 Less: Income tax expense 428 - 428 Add: Non-cash unit based compensation expense 121 - 121 Less: Amortization of unfavorable contract liability 1,334 - 1,334



Distributable cash flow (1) $ 40,986 $ (1,006 ) $ 39,980

(1) For a definition of EBITDA and distributable cash flow, please see "How We Evaluate Our Operations-EBITDA and Distributable Cash Flow" above.

(2) Cash interest expense, net excludes the amortization of debt issuance costs.

(3) Maintenance and regulatory capital expenditures represent cash expenditures (including expenditures for the addition or improvement to, or the replacement of, our capital assets, and for the acquisition of existing, or the construction or development of new, capital assets) made to maintain our long-term operating income or operating capacity. Examples of maintenance and regulatory capital expenditures are expenditures for the repair, refurbishment and replacement of pipelines and terminals, to maintain equipment reliability, integrity and safety and to address environmental laws and regulations. 37 --------------------------------------------------------------------------------

Delek Logistics Tyler Terminal and El Dorado Terminal Three Months Ended Partners, LP Tank Assets and Tank Assets June 30, 2013 Tyler Predecessor El Dorado Predecessor Reconciliation of EBITDA to net (loss) income: Net income (loss) $ 11,756$ (2,859 )$ (2,324 )$ 6,573 Add: Income tax expense 118 - - 118 Depreciation and amortization 2,372 614 298 3,284 Interest expense, net 752 - - 752 EBITDA(1) $ 14,998$ (2,245 )$ (2,026 )$ 10,727 Reconciliation of EBITDA to net cash from operating activities: Net cash provided by (used in) operating activities $ 18,653$ (2,225 )



$ (2,194 )$ 14,234

Amortization of unfavorable contract liability to revenue 667 - - 667 Amortization of debt issuance costs (186 ) - - (186 ) Accretion of asset retirement obligations (63 ) (23 ) (2 ) (88 ) Deferred taxes 16 - - 16 Unit-based compensation expense (112 ) - - (112 ) Changes in assets and liabilities (4,847 ) 3 170 (4,674 ) Income taxes 118 - - 118 Interest expense, net 752 - - 752 EBITDA(1) $ 14,998$ (2,245 )$ (2,026 )$ 10,727 Reconciliation of distributable cash flow to EBITDA: EBITDA (1) $ 14,998$ (2,245 )$ (2,026 )$ 10,727 Less: Cash interest expense, net (2) 566 - - 566 Less: Maintenance and Regulatory capital expenditures (3) 859 1,403 333 2,595 Less: Capital improvement expenditures (4) 194 487 148 829 Add: Reimbursement from Delek for capital expenditures (4) 153 - - 153 Less: Income tax expense 118 - - 118 Add: Non-cash unit based compensation expense 112 - - 112 Less: Amortization of deferred revenue 77 - - 77 Less: Amortization of unfavorable contract liability 667 - - 667 Distributable cash flow (1) $ 12,782$ (4,135 )$ (2,507 )$ 6,140 38

--------------------------------------------------------------------------------

Delek Logistics Tyler Terminal and El Dorado Terminal Six Months Ended Partners, LP Tank Assets and Tank Assets June 30, 2013 Tyler Predecessor El Dorado Predecessor Reconciliation of EBITDA to net (loss) income: Net income (loss) $ 23,960$ (5,694 )$ (4,422 )$ 13,844 Add: Income tax expense 240 - - 240 Depreciation and amortization 4,724 1,506 595 6,825 Interest expense, net 1,569 - - 1,569 EBITDA(1) $ 30,493$ (4,188 )$ (3,827 )$ 22,478 Reconciliation of EBITDA to net cash from operating activities: Net cash provided by (used in) operating activities $ 20,633$ (4,148 )



$ (4,271 )$ 12,214

Amortization of unfavorable contract liability to revenue 1,334 - - 1,334 Amortization of debt issuance costs (374 ) - - (374 ) Accretion of asset retirement obligations (98 ) (47 ) (4 ) (149 ) Deferred taxes 17 - - 17 Loss on sale of assets - - - - Unit-based compensation expense (112 ) - - (112 ) Changes in assets and liabilities 7,284 7 448 7,739 Income taxes 240 - - 240 Interest expense, net 1,569 - - 1,569 EBITDA(1) $ 30,493$ (4,188 )$ (3,827 )$ 22,478 Reconciliation of distributable cash flow to EBITDA: EBITDA (1) $ 30,493$ (4,188 )$ (3,827 )$ 22,478 Less: Cash interest expense, net (2) 1,195 - - 1,195 Less: Maintenance and Regulatory capital expenditures (3) 1,792 2,905 547 5,244 Less: Capital improvement expenditures (4) 537 1,066 292 1,895 Add: Reimbursement from Delek for capital expenditures (4) 463 - - 463 Less: Income tax expense 240 - - 240 Add: Non-cash unit based compensation expense 112 - - 112 Less: Amortization of deferred revenue 77 - - 77 Less: Amortization of unfavorable contract liability 1,334 - - 1,334 Distributable cash flow (1) $ 25,893$ (8,159 )$ (4,666 )$ 13,068



(1) For a definition of EBITDA and distributable cash flow, please see "How We Evaluate Our Operations-EBITDA and Distributable Cash Flow" above.

(2) Cash interest expense, net excludes the amortization of debt issuance costs.

(3) Maintenance and regulatory capital expenditures represent cash expenditures (including expenditures for the addition or improvement to, or the replacement of, our capital assets, and for the acquisition of existing, or the construction or development 39 -------------------------------------------------------------------------------- of new, capital assets) made to maintain our long-term operating income or operating capacity. Examples of maintenance and regulatory capital expenditures are expenditures for the repair, refurbishment and replacement of pipelines and terminals, to maintain equipment reliability, integrity and safety and to address environmental laws and regulations. (4) For the three- and six-month period ended June 30, 2013, Delek reimbursed us for certain capital expenditures pursuant to the terms of the Omnibus Agreement. Segment Data: Three Months Ended June 30, 2014 Pipelines and Wholesale Marketing (In thousands) Transportation and Terminalling Consolidated Net sales $ 23,066 $ 213,277 $ 236,343 Operating costs and expenses: Cost of goods sold 1,130 195,444 196,574 Operating expenses 7,745 1,799 9,544 Segment contribution margin $ 14,191 $ 16,034 30,225 General and administrative expenses 2,242 Depreciation and amortization 3,532 Loss on sale of assets 74 Operating income $ 24,377 Total assets $ 222,115 $



92,324 $ 314,439

Capital spending (excluding business combinations) $ 212 $ 756 $ 968 Three Months Ended June 30, 2013 (1) Pipelines and Wholesale Marketing (In thousands) Transportation and Terminalling Consolidated Net sales $ 13,667 $ 216,475 $ 230,142 Operating costs and expenses: Cost of goods sold - 207,966 207,966 Operating expenses 8,064 1,864 9,928 Segment contribution margin $ 5,603 $ 6,645 12,248 General and administrative expenses 1,521 Depreciation and amortization 3,284 Operating income $ 7,443 Capital spending (excluding business combinations) (2) $ 2,542 $ 883 $ 3,425



(1) The information presented includes the results of operations of our Predecessors. Prior to the completion of the El Dorado Acquisition and the Tyler Acquisition, our Predecessors did not record revenues for intercompany terminalling and storage services.

(2) Capital spending includes expenditures incurred in connection with the assets acquired in the El Dorado Acquisition and the Tyler Acquisition.

40 --------------------------------------------------------------------------------

Six Months Ended June 30, 2014 (1) Pipelines and Wholesale Marketing (In thousands) Transportation and Terminalling Consolidated Net sales $ 43,334 $ 396,536 $ 439,870 Operating costs and expenses: Cost of goods sold 2,256 366,527 368,783 Operating expenses 14,744 4,119 18,863 Segment contribution margin $ 26,334 $ 25,890 52,224 General and administrative expenses 4,905 Depreciation and amortization 7,009 Loss on sale of assets 74 Operating income $ 40,236 Capital spending (excluding business combinations) (2) $ 1,149 $ 784 $ 1,933



(1) The information presented includes the results of operations of the El Dorado Predecessor. Prior to the El Dorado Acquisition, the El Dorado Predecessor did not record revenues for intercompany terminalling and storage services.

(2) Capital spending includes expenditures incurred in connection with the assets acquired in the El Dorado Acquisition.

Six Months Ended June 30, 2013 (1) Pipelines and Wholesale Marketing (In thousands) Transportation and Terminalling Consolidated Net sales $ 27,204 $ 413,832 $ 441,036 Operating costs and expenses: Cost of goods sold - 395,826 395,826 Operating expenses 15,478 3,531 19,009 Segment contribution margin $ 11,726 $ 14,475 26,201 General and administrative expenses 3,723 Depreciation and amortization 6,825 Loss on sale of assets - Operating income $ 15,653 Capital spending (excluding business combinations) (2) $ 6,058 $ 1,081 $ 7,139



(1) The information presented includes the results of operations of our Predecessors. Prior to the completion of the El Dorado Acquisition and the Tyler Acquisition, our Predecessors did not record revenues for intercompany terminalling and storage services.

(2) Capital spending includes expenditures incurred in connection with the assets acquired in the El Dorado Acquisition.

41 -------------------------------------------------------------------------------- Consolidated Results of Operations - Comparison of the Three Months Ended June 30, 2014 versus the Three Months Ended June 30, 2013 Contribution margin for the second quarter of 2014 was $30.2 million compared to $12.2 million for the second quarter of 2013, an increase of $18.0 million, or 146.8%. The increase in contribution margin was primarily attributable to higher margins achieved on our operations in west Texas as a result of favorable supply/demand balance due to downtime at refineries in the region during the second quarter of 2014 as compared to the second quarter of 2013. Also contributing to the increase were increases in net sales in both the pipelines and transportation segment and the wholesale marketing and terminalling segment during the second quarter of 2014 compared to the second quarter of 2013, as a result of the effect of the throughput and tankage agreements we entered into with Delek in connection with the El Dorado Acquisition and the Tyler Acquisition. For the second quarters of 2014 and 2013, we generated net sales of $236.3 million and $230.1 million, respectively, an increase of $6.2 million, or 2.7%. The increase is primarily attributable to the effect of the new throughput and tankage agreements that went into effect in connection with the acquisitions of the El Dorado Terminal and Tank Assets and the Tyler Terminal and Tank Assets. The new throughput and tankage agreements for the El Dorado Terminal and Tank Assets and the Tyler Terminal and Tank Assets contributed $4.4 million and $4.5 million to net sales, respectively, in the second quarter of 2014. Cost of goods sold was $196.6 million for the second quarter of 2014 compared to $208.0 million for the second quarter of 2013, a decrease of $11.4 million, or 5.5%. The decrease in cost of goods sold is primarily attributable to decreases in sales volumes in our west Texas marketing operations. Operating expenses were $9.5 million for the second quarter of 2014 compared to $9.9 million for the second quarter of 2013, a decrease of $0.4 million, or 3.9%. The decrease in operating expenses was primarily due to decreases in chemical and utilities expense in the second quarter of 2014 compared to the second quarter of 2013. General and administrative expenses were $2.2 million and $1.5 million for the second quarter of 2014 and 2013, respectively, an increase of $0.7 million, or 47.4%. The increase in general and administrative expense was primarily due to increases in professional services fees incurred in connection with pipeline efficiency studies and the El Dorado Acquisition. Depreciation and amortization was $3.5 million for the second quarter of 2014 compared to $3.3 million for the second quarter of 2013, an increase of $0.2 million, or 7.6%. The increase in depreciation and amortization is due to the acquisitions of the North Little Rock Terminal and the Tyler-Big Sandy Pipeline, which occurred in October 2013 and July 2013, respectively. Interest expense was $2.3 million for the second quarter of 2014 compared to $0.8 million for the second quarter of 2013, an increase of $1.5 million, or 211.4%. This increase is primarily attributable to increases in interest costs and deferred financing charges as a result of borrowings incurred, and the debt refinancing completed, in connection with the El Dorado Acquisition and the Tyler Acquisition. Income tax expense was $0.3 million for the second quarter of 2014, compared to $0.1 million for the second quarter of 2013. Our effective tax rate was 1.3% for the second quarter 2014, compared to 1.8% for the second quarter 2013. The Partnership is not subject to federal income taxes as a limited partnership. Accordingly, our taxable income or loss is included in the federal and state income tax returns of our partners. The increase in income tax expense is due to an increase in the gross margins tax paid to the state of Texas. Consolidated Results of Operations - Comparison of the Six Months Ended June 30, 2014 versus the Six Months Ended June 30, 2013 Contribution margin for the six months ended June 30, 2014 was $52.2 million compared to $26.2 million for the six months ended June 30, 2013, an increase of $26.0 million or 99.3%. The increase in contribution margin was attributable to increases in net sales in both the pipelines and transportation segment and the wholesale marketing and terminalling segment during the six months ended June 30, 2014 compared to the six months ended June 30, 2013, as a result of the effect of the throughput and tankage agreements we entered into with Delek in connection with the El Dorado Acquisition and the Tyler Acquisition. Further contributing to the increase in contribution margin were higher margins achieved on our operations in west Texas in the six months ended June 30, 2014 as compared to the same period in 2013 as a result of favorable supply/demand balance due to downtime at refineries in the region during the six months ended June 30, 2014 compared to the six months ended June 30, 2013. For the six months ended June 30, 2014 and 2013, we generated net sales of $439.9 million and $441.0 million, respectively, a decrease of $1.2 million, or 0.3%. The decrease is attributable to decreases in sales volumes in our west Texas operations due to reduced supply and a $0.01 per gallon decrease in the average sales price per gallon of gasoline for the six months ended June 30, 2014, to $2.80 per gallon from $2.81 per gallon in the six months ended June 30, 2013. These decreases were partially offset by 42 -------------------------------------------------------------------------------- increases in net sales attributable to the effect of the new throughput and tankage agreements that went into effect in connection with the acquisitions of the El Dorado Terminal and Tank Assets and the Tyler Terminal and Tank Assets. The new throughput and tankage agreements for the El Dorado Terminal and Tank Assets and the Tyler Terminal and Tank Assets contributed $6.8 million and $9.0 million, respectively, to net sales during the six months ended June 30, 2014. Cost of goods sold was $368.8 million for the six months ended June 30, 2014 compared to $395.8 million for the six months ended June 30, 2013, a decrease of $27.0 million, or 6.8%. The decrease in cost of goods sold is primarily attributable to decreases in sales volumes and in the average cost per barrel sold in our west Texas marketing operations. The average cost per barrel sold decreased $1.47 per barrel for the six months ended June 30, 2014, to $121.05 per barrel from $122.52 per barrel in the six months ended June 30, 2013. Operating expenses were $18.9 million for the six months ended June 30, 2014 compared to $19.0 million for the six months ended June 30, 2013, a decrease of $0.1 million, or 0.8%. The decrease in operating expenses was primarily due to decreases in utilities and chemical expense and contractor services, partially offset by an increase in insurance allocations. General and administrative expenses were $4.9 million and $3.7 million for the six months ended June 30, 2014 and 2013, respectively, an increase of $1.2 million, or 31.7%. The increase in general and administrative expense was primarily due to increases in professional services fees incurred in connection with audit services and costs of the El Dorado Acquisition during the six months ended June 30, 2014 compared to six months ended June 30, 2013. Depreciation and amortization was $7.0 million for the six months ended June 30, 2014 compared to $6.8 million for the six months ended June 30, 2013, an increase of $0.2 million, or 2.7%. The increase in depreciation and amortization is due to the acquisitions of the North Little Rock Terminal and the Tyler-Big Sandy Pipeline, which occurred in October 2013 and July 2013, respectively. Interest expense was $4.3 million for the six months ended June 30, 2014 compared to $1.6 million for the six months ended June 30, 2013, an increase of $2.8 million, or 175.7%. This increase is primarily attributable to increases in interest costs and deferred financing charges as a result of borrowings incurred, and the debt refinancing completed, in connection with the El Dorado Acquisition and the Tyler Acquisition. Income tax expense was $0.4 million for the six months ended June 30, 2014, compared to $0.2 million for the six months ended June 30, 2013. Our effective tax rate was 1.2% for the six months ended June 30, 2014, compared to 1.7% for the six months ended June 30, 2013. The Partnership is not subject to federal income taxes as a limited partnership. Accordingly, our taxable income or loss is included in the federal and state income tax returns of our partners. The increase in state income tax is due to an increase in the gross margins tax paid to the state of Texas. Operating Segments We review operating results in two reportable segments: (i) pipelines and transportation segment and (ii) wholesale marketing and terminalling. Decisions concerning the allocation of resources and assessment of operating performance are made based on this segmentation. Management measures the operating performance of each reportable segment based on the segment contribution margin. Segment contribution margin is defined as net sales less cost of sales and operating expenses, excluding depreciation and amortization. Segment reporting is more fully discussed in Note 9 to our accompanying condensed consolidated financial statements. Pipelines and Transportation Segment The pipelines and transportation segment includes our Lion Pipeline System, our SALA Gathering System, our Paline Pipeline System, our East Texas Crude Logistics System, the El Dorado Storage Tanks and the Tyler Tank Assets. The following table and discussion is an explanation of the results of operations of the pipelines and transportation segment, including the historical results of the El Dorado Storage Tanks, for the three and six months ended June 30, 2014 and 2013 (dollars in thousands): 43 -------------------------------------------------------------------------------- Three Months Ended June 30,



Six Months Ended June 30,

2014 2013 (2) 2014 (1) 2013 (2) Net sales $ 23,066$ 13,667$ 43,334$ 27,204 Operating costs and expenses: Cost of goods sold 1,130 - 2,256 - Operating expenses 7,745 8,064 14,744 15,478 Segment contribution margin $ 14,191$ 5,603$ 26,334$ 11,726 Throughputs (average bpd)



Lion Pipeline System:

Crude pipelines (non-gathered) 59,038 49,270 41,936 47,155 Refined products pipelines to Enterprise Systems 59,888 47,315 45,908 45,348 SALA Gathering System 21,300 22,661 22,201 22,396 East Texas Crude Logistics System 3,223 11,468 7,105 31,198



(1) The information presented includes the results of operations of the El

Dorado Predecessor. Prior to the completion of the El Dorado Acquisition,

the Predecessor did not record revenues for intercompany storage services.

(2) The information presented includes the results of operations of the El

Dorado and Tyler Predecessors. Prior to the completion of the El Dorado

Acquisition and the Tyler Acquisition, the Predecessors did not record

revenues for intercompany storage services.

The following tables include the results of operations of the pipelines and transportation segment for the six months ended June 30, 2014 and for the three and six months ended June 30, 2013, disaggregated to present the results of operations of the Partnership and the El Dorado Storage Tanks through February 10, 2014 (in thousands):

Delek Logistics El Dorado Six Months Ended Partners, LP Storage Tanks (1) June 30, 2014 El Dorado Predecessor Net sales $ 43,334 $ - $ 43,334 Operating costs and expenses: Cost of goods sold 2,256 - 2,256 Operating expenses $ 14,063 681 14,744 Segment contribution margin $ 27,015 $ (681 ) $ 26,334 Throughputs (average bpd) Lion Pipeline System:

Crude pipelines (non-gathered) 41,936 - 41,936 Refined products pipelines to Enterprise Systems 45,908 - 45,908 SALA Gathering System 22,201 - 22,201 East Texas Crude Logistics System 7,105 - 7,105



(1) The information presented includes the results of operations of the El

Dorado Predecessor. Prior to the completion of the El Dorado Acquisition,

the Predecessor did not record revenues for intercompany storage services.

44 -------------------------------------------------------------------------------- Three Months Delek Logistics Tyler Tank El Dorado Ended Partners, LP Assets (1) Storage Tanks(1) June 30, 2013 Tyler Predecessor El Dorado Predecessor Net sales $ 13,667 $ - $ - $ 13,667 Operating costs and expenses: Cost of goods sold - - - - Operating expenses 4,727 1,710 1,627 8,064 Segment contribution margin $ 8,940 $ (1,710 ) $ (1,627 ) $ 5,603 Throughputs (average bpd) Lion Pipeline System: Crude pipelines (non-gathered) 49,270 - - 49,270 Refined products pipelines to Enterprise Systems 47,315 - - 47,315 SALA Gathering System 22,661 - - 22,661 East Texas Crude Logistics System 11,468 - - 11,468 Delek Logistics Tyler Tank El Dorado Six Months Ended Partners, LP Assets (1) Storage Tanks(1) June 30, 2013 Tyler Predecessor El Dorado Predecessor Net sales 27,204 - - $ 27,204 Operating costs and expenses: Cost of goods sold - - - - Operating expenses 9,348 3,185 2,945 15,478 Segment contribution margin $ 17,856 $ (3,185 ) $ (2,945 ) $ 11,726



Throughputs (average bpd)

Lion Pipeline System: Crude pipelines (non-gathered) 47,155 - - 47,155 Refined products pipelines to Enterprise Systems 45,348 - - 45,348 SALA Gathering System 22,396 - - 22,396 East Texas Crude Logistics System 31,198 - - 31,198 (1) The information presented includes the results of operations of the El



Dorado and Tyler Predecessors. Prior to the completion of the El Dorado

Acquisition and the Tyler Acquisition, the Predecessors did not record

revenues for intercompany storage services.

Comparison of the Three Months Ended June 30, 2014 versus the Three Months Ended June 30, 2013 Contribution margin for the pipelines and transportation segment in the second quarter of 2014 was $14.2 million, or 47.0% of our consolidated segment contribution margin, compared to $5.6 million, or 45.7% of our consolidated segment contribution margin in the second quarter of 2013, an increase of $8.6 million, or 153.3%. The increase in the pipelines and transportation segment contribution margin was primarily attributable to increases in net sales as a result of the effect of the throughput and tankage agreements we entered into with Delek in connection with the acquisitions of the El Dorado Storage Tanks and the Tyler Tank Assets. Net sales for the pipelines and transportation segment were $23.1 million for the second quarter of 2014 compared to $13.7 million for the second quarter of 2013, an increase of $9.4 million, or 68.8%. The increase was primarily attributable to the effect of the new throughput and tankage agreements that went into effect in connection with the acquisitions of the El Dorado Storage 45 -------------------------------------------------------------------------------- Tanks and the Tyler Tank Assets. The new throughput and tankage agreements for the El Dorado Storage Tanks and the Tyler Tank Assets contributed $3.9 million and $2.5 million to net sales, respectively, in the second quarter of 2014. Operating expenses were $7.7 million for the second quarter of 2014 compared to $8.1 million for the second quarter of 2013, a decrease of $0.4 million, or 4.0%. The decrease in operating expense was primarily due to decreases in chemical and utilities expense in the second quarter of 2014 compared to the second quarter of 2013. Comparison of the Six Months Ended June 30, 2014 versus the Six Months Ended June 30, 2013 Contribution margin for the pipelines and transportation segment for the six months ended June 30, 2014 was $26.3 million, or 50.4% of our consolidated segment contribution margin, compared to $11.7 million, or 44.8% of our combined segment contribution margin, for the six months ended June 30, 2013, an increase of $14.6 million, or 124.6%. The increase in the pipelines and transportation segment contribution margin was primarily attributable to increases in net sales as a result of the effect of the throughput and tankage agreements we entered into with Delek in connection with the El Dorado Acquisition and the Tyler Acquisition. Net sales for the pipelines and transportation segment were $43.3 million for the six months ended June 30, 2014 compared to $27.2 million for the six months ended June 30, 2013, an increase of $16.1 million, or 59.3%. The increase in net sales is primarily attributable to the effect of the new throughput and tankage agreements that went into effect in connection with the acquisitions of the El Dorado Storage Tanks and the Tyler Tank Assets. The new throughput and tankage agreements for the El Dorado Storage Tanks and the Tyler Tank Assets contributed $6.0 million and $5.0 million, respectively, to net sales during the six months ended June 30, 2014. Operating expenses were $14.7 million for the six months ended June 30, 2014 compared to $15.5 million for the six months ended June 30, 2013, a decrease of $0.8 million, or 4.7%. The decrease in operating expense was due primarily to decreases in chemical and utilities expense during the six months ended June 30, 2014 compared to the same period in 2013. Wholesale Marketing and Terminalling Segment We use our wholesale marketing and terminalling assets to generate revenue by providing wholesale marketing and terminalling services to Delek's refining operations and to independent third parties. The table and discussion below is an explanation of the results of operations of the wholesale marketing and terminalling segment for the three and six months ended June 30, 2014 and 2013 (dollars in thousands, except for per barrel figures): Three Months Ended June



30, Six Months Ended June 30,

2014 2013 (2) 2014 (1) 2013 (2) Net Sales $ 213,277$ 216,475$ 396,536$ 413,832 Operating costs and expenses: Cost of Goods Sold 195,444 207,966 366,527 395,826 Operating expenses 1,799 1,864 4,119 3,531 Segment Contribution Margin $ 16,034$ 6,645$ 25,890$ 14,475 Operating Information: East Texas - Tyler Refinery sales volumes (average bpd) 61,231 64,973 61,828 59,062 West Texas marketing throughputs (average bpd) 17,451 19,082 16,729 17,820



West Texas marketing margin per barrel $ 6.52 $ 2.20 $ 5.06 $ 2.82

Terminalling throughputs (average bpd) 98,962 13,961 94,468 13,898



(1) The information presented includes the results of operations of the El

Dorado Predecessor. Prior to the completion of the El Dorado Acquisition,

the El Dorado Predecessor did not record revenues for intercompany terminalling services. (2) The information presented, excluding throughputs, includes the results of



operations of our Predecessors. Prior to the completion of the El Dorado

Acquisition and the Tyler Acquisition, our Predecessors did not record revenues for intercompany terminalling services. 46

-------------------------------------------------------------------------------- The following tables include the results of operations of the wholesale marketing and terminalling segment for the six months ended June 30, 2014 and for the three and six months ended June 30, 2013, disaggregated to present the results of operations of the Partnership and the El Dorado Terminal through February 10, 2014 (in thousands): Delek Logistics El Dorado Six Months Ended Partners, LP Terminal (1) June 30, 2014 El Dorado Predecessor Net sales $ 396,536 $ - $ 396,536 Operating costs and expenses: Cost of goods sold 366,527 - 366,527 Operating expenses 4,017 102 4,119 Segment contribution margin $ 25,992 $ (102 ) $ 25,890 Operating Information: East Texas - Tyler Refinery sales volumes (average bpd) 61,828 - 61,828 West Texas marketing throughputs (average bpd) 16,729 - 16,729 West Texas marketing margin per barrel $ 5.06 $ - $ 5.06 Terminalling throughputs (average bpd) (2) 95,052 7,298 94,468



(1) The information presented includes the results of operations of the El Dorado

Predecessor. Prior to the completion of the El Dorado Acquisition, the El

Dorado Predecessor did not record revenues for intercompany terminalling

services.

(2) Consists of terminalling throughputs at our Memphis and Nashville, Tennessee

terminals, our refined products terminal in Little Rock, Arkansas (the

"North Little Rock Terminal"), our Tyler Terminal and our El Dorado

Terminal. Throughputs for the El Dorado Predecessor are for the 41 days

prior to our acquisition of the terminal. Throughputs subsequent to the El

Dorado Acquisition are included in the results of Delek Logistics Partners, LP. Three Months Delek Logistics Tyler El Dorado Ended Partners, LP Terminal (1) Terminal (1) June 30, 2013 Tyler Predecessor El Dorado Predecessor Net sales $ 216,475 $ - $ - $ 216,475 Operating costs and expenses: Cost of goods sold 207,966 - - 207,966 Operating expenses 1,340 312 212 1,864 Segment contribution margin $ 7,169 $ (312 ) $ (212 ) $ 6,645 Operating Information: East Texas - Tyler Refinery sales volumes (average bpd) 64,973 - - 64,973 West Texas marketing throughputs (average bpd) 19,082 - - 19,082 West Texas marketing margin per barrel $ 2.20 $ - $ - $ 2.20 Terminalling throughputs (average bpd) 13,961 - - 13,961 47

-------------------------------------------------------------------------------- Delek Logistics Tyler El Dorado Six Months Ended Partners, LP Terminal (1) Terminal (1) June 30, 2013 Tyler Predecessor El Dorado Predecessor Net sales $ 413,832 $ - $ - $ 413,832 Operating costs and expenses: Cost of goods sold 395,826 - - 395,826 Operating expenses 2,581 487 463 3,531 Segment contribution margin $ 15,425 $ (487 ) $ (463 ) $ 14,475 Operating Information: East Texas - Tyler Refinery sales volumes (average bpd) 59,062 - - 59,062 West Texas marketing throughputs (average bpd) 17,820 - - 17,820 West Texas marketing margin per barrel $ 2.82 - - $ 2.82 Terminalling throughputs (average bpd) 13,898 - - 13,898 (1) The information presented, excluding throughputs, includes the results of



operations of our Predecessors. Prior to the completion of the El Dorado

Acquisition and the Tyler Acquisition, our Predecessors did not record

revenues for intercompany terminalling services.

Comparison of the Three Months Ended June 30, 2014 versus the Three Months Ended June 30, 2013 Contribution margin for the wholesale marketing and terminalling segment amounted to $16.0 million, or 53.0% of our consolidated contribution margin, in the second quarter of 2014, versus $6.6 million, or 54.3% of our combined contribution margin, in the second quarter of 2013, an increase of $9.4 million, or 141.3%. The increase in contribution margin was primarily attributable to higher margins achieved on our operations in west Texas as a result of favorable supply/demand balance due to downtime at refineries in the region during the second quarter of 2014 as compared to the second quarter of 2013. Also contributing to the increase were increases in net sales during the second quarter of 2014 compared to the second quarter of 2013 as a result of the effect of the throughput and tankage agreements we entered into with Delek in connection with the El Dorado Acquisition and the Tyler Acquisition. Net sales for our wholesale marketing and terminalling segment in the second quarter of 2014 decreased $3.2 million or 1.5%, to $213.3 million from $216.5 million in the second quarter of 2013. The decrease is primarily attributable to decreases in sales volumes in our west Texas operations due to reduced supply. These decreases were partially offset by the effect of the new throughput and tankage agreements that went into effect in connection with the acquisitions of the El Dorado Terminal and the Tyler Terminal. The new throughput and tankage agreements for the El Dorado Terminal and the Tyler Terminal contributed $0.5 million and $2.0 million to net sales, respectively, in the second quarter of 2014. Cost of goods sold for our wholesale marketing and terminalling segment decreased $12.6 million, or 6.0%, to $195.4 million in the second quarter of 2014, as compared to cost of goods sold of $208.0 million in the second quarter of 2013. The decrease in cost of goods sold is primarily attributable to decreases in sales volumes in our west Texas marketing operations. Operating expenses were $1.8 million in the second quarter of 2014, a decrease of $0.1 million, or 3.5%, as compared to operating expenses of $1.9 million in the second quarter of 2013. The decrease in operating expenses was primarily due to decreases in chemical and utilities expense in the second quarter of 2014 compared to the second quarter of 2013. 48 -------------------------------------------------------------------------------- Comparison of the Six Months Ended June 30, 2014 versus the Six Months Ended June 30, 2013 Contribution margin for the wholesale marketing and terminalling segment amounted to $25.9 million, or 49.6% of our consolidated contribution margin, for the six months ended June 30, 2014, versus $14.5 million, or 55.2% of our combined contribution margin, for the six months ended June 30, 2013, an increase of $11.4 million, or 78.9%. This increase was primarily attributable to higher margins achieved in our operations in West Texas as a result of favorable supply/demand balance due to downtime at refineries in the region during the second quarter of 2014 as compared to the second quarter of 2013. Additionally, the new throughput and tankage agreements that went into effect in connection with the acquisitions of the El Dorado Terminal and the Tyler Terminal contributed to the increase in contribution margin as cost of goods sold is not incurred on these assets, resulting in inherently higher margins. Net sales for our wholesale marketing and terminalling segment for the six months ended June 30, 2014 decreased $17.3 million, or 4.2%, to $396.5 million from $413.8 million for the six months ended June 30, 2013. The decrease is primarily attributable to decreases in sales volumes in our west Texas operations due to the fact that our Abilene terminal was not operational for a portion of the first quarter due to required maintenance. Further contributing to the decrease was a decrease in the average sales price per gallon of gasoline, which decreased $0.01 to $2.80 per gallon in the six months ended June 30, 2014, compared to $2.81 per gallon in the six months ended June 30, 2013. These decreases were partially offset by the effect of the new throughput and tankage agreements that went into effect in connection with the acquisitions of the El Dorado Terminal and the Tyler Terminal. The new throughput and tankage agreements for the El Dorado Terminal and the Tyler Terminal contributed $0.8 million and $4.0 million to net sales, respectively, in the second quarter of 2014. Cost of goods sold for our wholesale marketing and terminalling segment decreased $29.3 million, or 7.4%, to $366.5 million in the six months ended June 30, 2014, as compared to cost of goods sold of $395.8 million in the six months ended June 30, 2013. The decrease in cost of goods sold was primarily attributable to decreases in sales volumes and a decrease in the average cost per barrel sold in our west Texas operations. The average cost per barrel sold decreased $1.47 to $121.05 per barrel for the six months ended June 30, 2014, compared to $122.52 per barrel for the six months ended June 30, 2013. Operating expenses were $4.1 million in the six months ended June 30, 2014, an increase of $0.6 million, or 16.7%, as compared to operating expenses of $3.5 million in the six months ended June 30, 2013. The increase in operating expenses was primarily due to increases in chemical and utilities expense in the six months ended June 30, 2014 compared to the six months ended June 30, 2013. Liquidity and Capital Resources We expect our ongoing sources of liquidity to include cash generated from operations, borrowings under our senior secured revolving credit agreement with Fifth Third Bank, as administrative agent, and a syndicate of lenders, (the "Amended and Restated Credit Agreement") and issuances of additional debt and equity securities. We believe that cash generated from these sources will be sufficient to satisfy the anticipated cash requirements associated with our existing operations, including minimum quarterly cash distributions, for at least the next 12 months. The table below summarizes the quarterly distributions related to our quarterly financial results: Total Cash Total Quarterly Total Quarterly Distribution, Distribution Distribution Per including general Per Limited Limited Partner partner IDRs (in Date of Unitholders Quarter Ended Partner Unit Unit, Annualized thousands) Distribution Record Date February 13, February 4, December 31, 2013 $ 0.415 $ 1.66 $ 10,228 2014 2014 March 31, 2014 $ 0.425 $ 1.70 $ 10,474 May 14, 2014 May 6, 2014 August 14, August 7, June 30, 2014 $ 0.475 $ 1.90 $ 11,721 2014 (1) 2014



(1) Expected date of distribution.

49 -------------------------------------------------------------------------------- Cash Flows The following table sets forth a summary of our consolidated cash flows for the six months ended June 30, 2014 and 2013 (in thousands): Six Months Ended June 30, 2014 2013 Cash Flow Data: Cash flows provided by operating activities $ 44,800$ 12,214 Cash flows used in investing activities (1,933 ) (7,139 ) Cash flows used in financing activities (41,374 )



(1,224 ) Net increase in cash and cash equivalents $ 1,493$ 3,851

Cash Flows from Operating Activities Net cash provided by operating activities was $44.8 million for the six months ended June 30, 2014, compared to net cash of $12.2 million provided for the comparable period of 2013. The increase in cash flows provided by operations in the first six months of 2014 from the same period in 2013, was primarily due to higher revenues as a result of our commercial agreements executed concurrent with the El Dorado Acquisition and the Tyler Acquisition. Net income for the six months ended June 30, 2014 was $35.5 million, compared to $13.8 million in the same period of 2013. Cash Flows from Investing Activities Net cash used in investing activities was $1.9 million for the first six months of 2014, compared to $7.1 million in the comparable period of 2013. Capital expenditures made during the six months ended June 30, 2014 amounted to $1.9 million, of which $1.1 million was spent on projects in the pipelines and transportation segment and $0.8 million was spent in the wholesale marketing and terminalling segment. This compares to capital expenditures made during the six months ended June 30, 2013 of $7.1 million. Of the total expenditures made during the six months ended June 30, 2014, $0.8 million relates to our terminalling assets and $0.6 million relates to our Lion Pipeline System. Capital expenditures made during the six months ended June 30, 2013 relate primarily to the Tyler Acquisition and to our Lion Pipeline System, which accounted for approximately $3.9 million and $1.1 million, respectively, of total capital expenditures. Cash Flows from Financing Activities Net cash used in financing activities was $41.4 million in the six months ended June 30, 2014, compared to net cash of $1.2 million used in the comparable period of 2013. We paid quarterly cash distributions totaling $20.7 million during the six months ended June 30, 2014, compared to distributions totaling $14.9 million paid during the six months ended June 30, 2013. Additionally, we paid $95.9 million in exchange for assets included in the El Dorado Acquisition during the six months ended June 30, 2014. Offsetting the cash used in financing activities were net proceeds of $74.2 million under the Amended and Restated Credit Agreement during the six months ended June 30, 2014. There was no activity under the credit facility in the six months ended June 30, 2013. Cash Position and Indebtedness As of June 30, 2014, our total cash and cash equivalents were $2.4 million and we had total indebtedness of $239.0 million. Borrowing availability under the Amended and Restated Credit Agreement was approximately $147.5 million and we had letters of credit issued of $13.5 million. We believe we were in compliance with our covenants in our debt facility as of June 30, 2014. We and each of our existing subsidiaries are borrowers under the credit facility. The Amended and Restated Credit Agreement contains an accordion feature whereby we can increase the size of the credit facility to an aggregate of $450.0 million, subject to receiving increased or new commitments from lenders and the satisfaction of certain other conditions precedent. The credit facility is generally available to fund working capital, finance acquisitions and other capital expenditures, fund certain future distributions and for other general Partnership purposes. We borrowed $90.0 million under the prior credit facility at the completion of our initial public offering (the "Offering") in order to fund a cash distribution to Delek Marketing & Supply, LLC ("Delek Marketing") in partial consideration of the contribution of assets to us and in part for reimbursement of capital expenditures associated with our assets. In connection with our cash distribution to Delek Marketing at the time of the Offering, 50 -------------------------------------------------------------------------------- we agreed to retain at least $90.0 million in outstanding debt, either under our credit facility or as a result of certain refinancings thereof, until November 2015. The obligations under the Amended and Restated Credit Agreement remain secured by first priority liens on substantially all of the Partnership's and its U.S. subsidiaries' tangible and intangible assets. Additionally, Delek Marketing provides a limited guaranty of the Partnership's obligations under the Amended and Restated Credit Agreement. Delek Marketing's guaranty is (i) limited to an amount equal to the principal amount, plus unpaid and accrued interest, of a promissory note made by Delek in favor of Delek Marketing (the "Holdings Note") and (ii) secured by Delek Marketing's pledge of the Holdings Note to our lenders under the Amended and Restated Credit Agreement. As of June 30, 2014, the principal amount of the Holdings Note was $102.0 million, plus unpaid interest accrued since the issuance date. The Amended and Restated Credit Agreement contains various covenants and restrictive provisions customary for credit facilities of this nature. Financial covenants include an interest coverage ratio defined as the ratio of consolidated EBITDA (as defined in the agreement) to cash interest expense, tested quarterly, for the four fiscal quarters then ended of not less than 2.50 to 1.00 and a leverage ratio defined as total funded debt to consolidated EBITDA, tested quarterly, for the four fiscal quarters then ended of not greater than 4.00 to 1.00. Borrowings denominated in U.S. dollars under the Amended and Restated Credit Agreement bear interest at either a U.S. dollar prime rate, plus an applicable margin, or a LIBOR rate, plus an applicable margin, at the election of the borrowers. Borrowings denominated in Canadian dollars under the Amended and Restated Credit Agreement bear interest at either a Canadian dollar prime rate, plus an applicable margin, or a CDOR (Canadian Dealer Offered Rate), plus an applicable margin, at the election of the borrowers. The applicable margin in each case varies based upon the Partnership's most recently reported leverage ratio. Additionally, the Amended and Restated Credit Agreement requires us to pay a leverage ratio dependent quarterly fee on the average unused revolving commitment. The Amended and Restated Credit Agreement contains events of default customary for credit facilities of this nature. They include, but are not limited to, the failure to pay any principal, interest or fees when due, failure to satisfy any covenant, untrue representations or warranties, impairment of liens, events of default under any other loan document under the credit facility, default under any other material debt agreements, insolvency, certain bankruptcy proceedings, change of control (which will occur if, among other things, (i) Delek ceases to own and control legally and beneficially at least 51% of the equity interests of our general partner, (ii) Delek Logistics GP, LLC ceases to be our sole general partner or (iii) the Partnership fails to own and control legally and beneficially 100% of the equity interests of any other borrower under the Amended and Restated Credit Agreement, unless otherwise permitted thereunder) and material litigation resulting in a final judgment against any borrower or guarantor that remains undischarged or unstayed. Upon the occurrence and during the continuation of an event of default under the Amended and Restated Credit Agreement, the lenders may, among other things, accelerate and declare the outstanding loans to be immediately due and payable and exercise remedies against the Partnership, its subsidiaries and the collateral as may be available to the lenders under the Amended and Restated Credit Agreement and other loan documents. Agreements Governing Certain Indebtedness of Delek Although we are not contractually bound by and are not liable for Delek's debt under its credit arrangements, we are indirectly affected by certain prohibitions and limitations contained therein. Specifically, under the terms of certain of Delek's credit arrangements, we expect that Delek will be in default if we incur any indebtedness for borrowed money in excess of $300.0 million at any time outstanding, which amount is subject to increase for (i) certain acquisitions of additional or newly constructed assets and for growth capital expenditures, in each case, net of asset sales, and for (ii) certain types of debt, such as debt obligations owed under hedge agreements, intercompany debt of the partnership and our subsidiaries and debt under certain types of contingent obligations. These arrangements also require that Delek maintain (i) consolidated shareholders' equity of at least $700.0 million and (ii) a ratio of consolidated shareholders' equity to adjusted total assets, which is defined as total assets less cash and certain liabilities, of at least 0.35 to 1.00. Although these covenants do not currently limit our ability to use the full capacity available under our revolving credit facility, we cannot assure you that such covenants will not impact such ability in the future. Delek, due to its majority ownership and control of our general partner, has the ability to prevent us from taking actions that would cause Delek to violate any covenant in its credit arrangements or otherwise be in default under any of its credit arrangements. Capital Spending A key component of our long-term strategy is our capital expenditure program. Our capital expenditures, excluding capital expenditures related to the assets acquired in the El Dorado Acquisition prior to February 10, 2014, for the six months ended June 30, 2014 were $1.7 million, of which approximately $0.9 million was spent in our pipelines and transportation segment and $0.8 million was spent in our wholesale marketing and terminalling segment. Our capital expenditure forecast is approximately $13.1 million for 2014. 51 --------------------------------------------------------------------------------



The following table summarizes our actual capital expenditures for the six months ended June 30, 2014 and planned capital expenditures for the full year 2014 by operating segment and major category (in thousands):

Full Year



Six Months Ended

2014 Forecast(3) June 30, 2014(3) Pipelines and Transportation: Regulatory $ 1,136 $ 385 Maintenance (1) 5,600 467 Discretionary projects (2) 2,679 84 Pipeline and transportation segment total 9,415 936 Wholesale Marketing and Terminalling: Regulatory 160 - Maintenance (1) 648 661 Discretionary projects (2) 2,829 159 Wholesale marketing and terminalling segment total 3,637 820 Total capital spending $ 13,052 $ 1,756



(1) Maintenance capital expenditures represent cash expenditures (including

expenditures for the addition or improvement to, or the replacement of, our capital assets, and for the acquisition of existing, or the construction or development of new, capital assets) made to maintain our



long-term operating income or operating capacity. Examples of maintenance

capital expenditures are expenditures for the repair, refurbishment and

replacement of pipelines and terminals, to maintain equipment reliability,

integrity and safety and to address environmental laws and regulations.

Delek has agreed to reimburse us with respect to assets it has transferred

to us for all non-discretionary maintenance capital expenditures, other than those required to comply with applicable environmental laws and regulations, in excess of specified dollar amounts for a period of five years.



(2) Delek has agreed to reimburse us for capital expenditures in connection

with certain capital improvements that were in progress as of November 7,

2012. (3) The actual and forecasted capital spending does not include capital expenditures prior to February 10, 2014 of $0.2 million related to the assets acquired in the El Dorado Acquisition. For the full year 2014, we plan to spend approximately $9.4 million in the pipeline and transportation segment. The majority of these capital expenditures will be spent on maintenance and discretionary projects, with $5.6 million and $2.7 million budgeted on these projects, respectively, for the pipeline and transportation segment. The majority of the amount budgeted to this segment is related to tank projects. Of the $3.6 million in capital expenditures budgeted for the wholesale marketing and terminalling segment, $2.8 million is allocated to discretionary projects and $0.6 million is allocated to maintenance projects. The majority of the amount budgeted to this segment is related to the expansion of the Tyler Terminal. On February 10, 2014, in connection with the El Dorado Acquisition, the Partnership entered into the Second Omnibus Amendment. The Second Omnibus Amendment includes, among other things, the following: (i) certain modifications in the reimbursement by Delek and certain of its subsidiaries under the Omnibus Agreement for certain operating expenses and capital expenditures incurred by the Partnership or its subsidiaries, (ii) certain modifications of the indemnification provisions under the Omnibus Agreement in favor of the Partnership with respect to certain environmental matters, and (iii) the increase of the annual administrative fee payable by us to Delek under the Omnibus Agreement for general corporate and administrative services. Under the Second Omnibus Amendment, Delek has agreed to reimburse us for (i) certain expenses that we incur for inspections, maintenance and repairs to any storage tanks we acquired in the El Dorado Acquisition to cause such storage tanks to comply with applicable regulatory and/or industry standards, (ii) certain expenses that we incur for inspections, maintenance and repairs to any of the storage tanks contributed to us by Delek (subject to a deductible of $0.5 million per year) that are necessary to comply with the Department of Transportation pipeline integrity rules and certain American Petroleum Institute storage tank standards for a period of five years, and (iii) for all non-discretionary maintenance capital expenditures with respect to certain of our assets in excess of certain amounts, as disclosed in the full agreement filed as Exhibit 10.2 to our Current Report on Form 8-K, filed with the SEC on February 14, 2014. 52 -------------------------------------------------------------------------------- The amount of our capital expenditure budget is subject to change due to unanticipated increases in the cost, scope and completion time for our capital projects. For example, we may experience increases in the cost of and/or timing to obtain necessary equipment required for our continued compliance with government regulations or to complete improvement projects. Additionally, the scope and cost of employee or contractor labor expense related to installation of that equipment could increase from our projections. We rely primarily upon external financing sources, including borrowings under our revolving credit facility and the issuance of debt and equity securities, to fund significant capital expenditures. Off-Balance Sheet Arrangements We have no off-balance sheet arrangements through the date of the filing of this Quarterly Report on Form 10-Q. 53



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