Delek US Holdings, Inc. (NYSE:DK) Q2 2023 Earnings Call Transcript

Joseph Israel: Great. I’ll take it from the OpEx and the sites level, $5.43 per barrel might be, competitive when you look into peers, but it’s really not acceptable for us. We find our run rate closer to the $4.75 to $5 per barrel type of range for our entire system. Obviously, in 2Q, the elephant in the room was Big Spring. I want to make sure we all know how to model that going for the $0.50 per barrel related to the outage is a non-recurring. And then the $2.30 per barrel related to the mechanical integrity, non-recurring. You take those from the $8.90 that we reported, and we are at, approximately $6. $6 is still $1 per barrel higher than the run rate in Big Spring. Most of it is really just a low throughput and the inefficiencies around it, right?

You cannot bring down a variable cost as efficiently. You cannot turn down heaters, et cetera. So, $5 per barrel in Big Spring run rate. El Dorado also with the outage type of works was approximately $1 per barrel higher than the run rate. KSR and Tyler had a good quarter in the range.

Ryan Todd: And as you think about the 3Q guidance, is that — are you implying that those are still relatively elevated in the third quarter or is there anything else driving the OpEx guidance there?

Joseph Israel: Yes, we mentioned $1 per barrel less in Big Spring for the second half. So, take the $5 in Big Spring, add $1, so $6 there is probably a good — a way to go. And the rest of the system, yes, should be in the run rate.

Ryan Todd: Okay. Thank you.

Joseph Israel: Thank you.

Avigal Soreq: Thank you.

Operator: The next question is from Roger Read with Wells Fargo. Please go ahead.

Roger Read: Good morning. I think to go down — continue down the road on the cost savings, but maybe thinking even the next steps, if it’s not too premature to ask. But, obviously, you want to get your cost control, you want to run well. But have you started to look at or consider something on the optimization side? I know feedstock-wise, there’s not as much flexibility for you given inland units and pipelines in a lot of cases. But to the extent you could do something on the feedstock side or anything you can do on sort of the yield or commerciality side? I was just curious how that’s starting to shape up.

Avigal Soreq: Yes, Roger, we obviously, once we announce something and executing something, we are thinking about the next step. So, we have other plans coming up, but that we are not we are not going to give numbers and timeline for the adjuster, but we have a few other initiatives that we are working extremely, diligently in order to be able to share with you guys. And one thing, we’ve finished its mature, like, the zero based budget process was, before it’s mature, we will come back to you with another other leg of initiatives and numbers and be more diligent around that and specific. So, the answer is yes, and we’ll come back to you when it’s ready. Joseph, you want to add to that?

Joseph Israel: Yes. So, correcting our reliability Roger is definitely our best project. So, we are doing it and we feel good about it. And for the 24 CapEx, we will bring some great ideas. We have several projects that are 50% and up in the IRR and return. Most of them are refining related, like, a prior units and liquid recovery type of a upside for our plans. We do have those optimization projects line up for us in the next year to two years to execute.