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Delek (DK) to Partially Divest Delek Logistics Partners' Units

·3 min read

Delek US Holdings, Inc. DK recently announced that it will sell up to 434,590 common limited partner units in Delek Logistics Partners, LP DKL over the next three months in open market transactions.

The initiative aims to monetize a portion of DK's present 80% ownership in DKL and showcase the actual value of that ownership that isn't currently reflected in the stock price of DK.

Delek US Holdings established the Delek Logistics Partners, based in Brentwood, TN, to own, operate, acquire, and build crude oil and refined product logistics and marketing assets.

With the latest program, DKL unitholders will benefit from increased liquidity and float as trading volumes rise and the pool of possible investors grows.

In the future, Delek US Holdings will explore methods to monetize incremental units, with an emphasis on preserving DKL unitholders and the residual ownership share.

Founded in 2001, Delek US Holdings is an independent refiner, transporter and marketer of petroleum products. DK’s operations are organized into three reportable segments, namely Refining, Logistics and Retail.

Also, recently, DK released its capital budget for 2022, with plans to invest $250-260 million the following year. Growth in 2022 will primarily focus on expanding the Delek Permian Gathering business, which has high producer demand.

This independent energy firm chose to execute minor maintenance work at Tyler in the fourth quarter of 2021, deferring its next turnaround activity until 2023. As a result, Delek US Holdings' fourth-quarter refining throughput target is revised to 275-280 million barrels per day.

Zacks Rank & Key Picks

Delek US Holdings currently has a Zack Rank #3 (Hold). Investors interested in the  energy  sector might look at the following stocks worth considering with a Zacks Rank #1 (Strong Buy) at present. You can see the complete list of today’s Zacks #1 Rank stocks here.

Occidental Petroleum Corporation OXY is an integrated oil and gas company with significant exploration and production exposure. OXY is also a producer of various basic chemicals, petrochemicals, polymers and specialty chemicals. As of 2020 end, OXY's preliminary worldwide proved reserves totaled 2.91 billion BOE compared with 3.9 billion BOE at the end of 2019.

In the past year, shares of Occidental Petroleum have surged 99% compared with the industry's growth of 96.6%. OXY's 2021 earnings are expected to soar 151.4% from the year-ago reported figure. OXY has also witnessed eight northward estimate revisions in the past 60 days. In the third quarter, OXY achieved its divestiture target of $10 billion by inking a deal to sell off its interest in two offshore Ghana assets for $750 million.

PDC Energy PDCE is an independent upstream operator dealing in exploration, development and production of natural gas, crude oil and natural gas liquids. PDCE, which reached its present status following the January 2020 merger with SRC Energy, is currently the second-largest producer in the Denver-Julesburg Basin. As of 2020 end, PDCE's total estimated proved reserves were 731,073 thousand barrels of oil equivalent.

In the past year, shares of PDC Energy have gained 169% compared with the industry's growth of 108.6%. PDCE's earnings for 2021 are expected to surge 273.4% from the prior-year reported figure. In the past 60 days, the Zacks Consensus Estimate for PDC Energy's 2021 earnings has been raised 26.8%. Earnings of PDCE beat the Zacks Consensus Estimate in all the last four quarters, the average being 51.06%.

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Delek Logistics Partners, L.P. (DKL) : Free Stock Analysis Report
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