Delek Logistics Partners, LP has announced the development of acid gas injection capabilities at its Libby 2 gas processing plant, currently under construction. This addition underscores DKL’s commitment to enhancing its position as a leading oil, gas, and water midstream services provider in the Permian Basin.
Avigal Soreq, president of Delek Logistics, highlighted the company’s strategic vision: “Delek Logistics continues to provide the best combination of yield and growth in the midstream sector. We are determined to showcase the value created in the Permian Basin and are confident our strategy will continue to yield benefits for our stakeholders. Pro-forma for these announcements, DKL will be approaching greater than 70 percent of its EBITDA from third-party sources. With liquidity exceeding $700 million, we can pursue these opportunities while maintaining prudent financial management.”
The AGI capabilities at the Libby 2 plant reflect DKL’s “full suite” midstream strategy, positioning the company as a key logistics provider in the Northern Delaware Basin. The new sour gas treating and AGI functionality, supported by existing well permits and an amine unit under construction, addresses critical infrastructure needs in the area. Historically, drilling activity in this region has been limited due to restricted sour natural gas treatment and AGI capacity. With these developments, DKL will enable its customers to access all six Delaware Basin benches while mitigating hydrogen sulfide and carbon dioxide liabilities.
The AGI system, expected to be operational in the second half of 2025, also supports future expansions at the Libby complex and adds standalone economic value by lowering the overall project build multiple.
In a parallel move, DKL announced the acquisition of Gravity Water Midstream for $285 million, consisting of $200 million in cash and $85 million in DKL units. This acquisition complements DKL’s earlier purchase of H2O Midstream and strengthens its integrated crude and produced water gathering and disposal capabilities in the Midland Basin. Acquired at an EBITDA multiple below 5.5x (excluding synergies), the deal is immediately accretive to DKL’s free cash flow, EBITDA, and leverage metrics. The acquisition also offers substantial synergy opportunities, reinforcing DKL’s commitment to delivering long-term value for its customers. The transaction is expected to close in the first quarter of 2025.
Additionally, DKL secured an incremental ~34,000-acre dedication in the Midland Basin, adding to the previously announced ~50,000-acre dedication. This takes DKL’s total acreage dedication in the region to approximately 400,000 acres, supported by the Delek Permian Gathering System (DPG) in West Texas. The expanded acreage dedication not only enhances project economics but also opens opportunities for a future cross-commodity offering.
With these developments, Delek Logistics continues to solidify its position as a premier midstream services provider in the Permian Basin, driving growth and value creation for its stakeholders while ensuring long-term sustainability in its operations.
For more information visit www.deleklogistics.com
