Delek US Holdings executives said Monday they will pump between $340 million and $380 million over the next two years into a Texas pipeline project that includes industry giants ExxonMobil and Plains All American Pipeline.
Brentwood-based Delek is one of three new partners announced for the Wink To Webster Pipeline, which will link the Permian Basin in West Texas to the Houston area’s oil infrastructure. The pipeline will be able to ship more than 1 million barrels of crude oil and condensate per day and is expected to come on line in early 2021. Delek’s investment gives it a 15 percent stake in the project and company leaders said Monday they expect their money to generate a return “well above [their] internal hurdle rate of 15 percent for discretionary logistics projects.”
Delek Chairman and CEO Uzi Yemin and his team announced the Texas investment alongside their second-quarter results, which showed net income of $83.8 million versus $86.7 million in the year-prior period. Those numbers included hedging gains of $8.5 million the quarter versus a loss of $2.4 million in the prior year. Revenues fell 6 percent year over year to $2.48 billion.
Despite the positive Q2 results, Delek shares fell Monday. Heading into the last hour of trading Monday, they (Ticker: DK) were off 8.9 percent to $37.89. Year to date, they’re still up nearly 15 percent.