Thank you for standing by. My name is Jael, and I will be your conference operator today.

At this time, I would like to welcome everyone to the Dell Ecologistic Partners 4th Quarter 2025 earnings call.

All lines have been placed on mute to prevent any background noise. After the speaker's remarks, there will be a question and answer session. If you would like to ask a question during this time, simply press star, followed by the number 1 on your telephone keypad. If you would like to withdraw your question, simply press star 1 again. I would now extend the conference over to Robert Wright, EVP, Chief Financial Officer. You may begin.

Robert Wright Good morning, and welcome to the Delic Logistics Partners fourth quarter earnings conference call. Participants joining me on today's call will include Abigail Sorek, President, Ruben Spiegel, EVP, as well as other members of our management team. As a reminder, this conference call will contain forward-looking statements as defined under federal securities laws including statements regarding guidance and future business outlook any forward-looking statements made during today's call involve risks and uncertainties that may cause our actual results to differ materially from today's comment factors that could cause actual results to differ are included in our sec filings the company assumes no obligation to update any forward-looking statements i will now turn the call over to abigal for opening remarks Thank you, Robert.

2025 was an exceptional year for Delec Logistics, highlighted by the achievement of a record-adjusted EBITDA of $536 million. These results are a reflection of a strong execution across our businesses and the addition of high-quality business such as H2O and Gravity, but most importantly, because of our hard work of our great employees. During the year, we continue to advance our key initiative across our natural gas, crude, and water businesses, increasing our position as a premier full-service provider in the permanent basin. Now, let me talk about each one of those businesses in detail. Starting with natural gas, during the year, we successfully commissioned the new Libby two processing plants, increasing the capacity of the complex to around 160 million scuffs per day. The expansion in the processing capacity is being enhanced by the comprehensive acid gas injection and sour gas handling solution we are building. We are very excited about providing this comprehensive capability to our customers, further supporting long-term oil and gas production growth in the Dalawa Basin. Moving to crude, both DPG and DDG crude gathering operation delivered strong performance during the year. We have increased our overall gathering capacity and look forward to further optimize and grow the business in 2026. Our water business is also doing very well. We have largely completed the integration of H2O and gravity into our operation. The combined gas, crude, and water offering in the Perman Basin has increased our competitive position and built a strong platform of growth. With strategic foundation, strong operation, and record results in 2025, we are well positioned for 2026. Today, we announced a 2026 EBITDA guidance range of $520 to $560 million. This reflects the growth opportunity we have while managing leverage and coverage. We also intend to remain good stewards of our stakeholder capital. Our board of directors have approved our 52nd consecutive quoted distribution increase, raising the distribution to $1.12.5 per unit, marking 13 consecutive years of distribution growth. This is an extraordinary achievement, and we're extremely proud of our team and financial prudence that brought us in. As we close the books on 2025 and begin 2026, Delac Logistics firmly positioned as a strong, independent, full-suite, midstream service provider. With the foundation we have built and the opportunities ahead, we are confident in our ability to continue delivering sustainable growth and long-term value for our unit holders. I will now hand it over to Reuven, who will provide more details on our operations.

As Abigail mentioned, we are very excited about DKL's future and are working to increase our advantaged Permian position. Most significantly, I am very pleased with the rising economic separation we have with our sponsor DK. In 2026, we expect approximately 80% of our run rate EBITDA will come from third parties. This is an extraordinary achievement for the partnership, and its increased independence will allow us to be more nimble in advancing the strong growth path we have been navigating. Turning to our business, we continue to work hard to bring an industry-leading sour gas solution in the Delaware Basin. The first step in the process was to complete our processing capacity expansion. Currently, we're working on completing the first AGI well and building the sour gas gathering infrastructure to fully optimize our capacity. As we have mentioned in the past, while our ramp-up has been slower versus our initial expectations, the need for sour gas solution is urgent, and we expect to see a step change in our utilization once our AGI and sour gas gathering infrastructure is fully complete. We also believe that a step change in utilization is likely to bring forward the need for additional processing capacity. We are looking at our options and have made selected investment that will support future expansion of the Libby Complex. We continue to believe that our expanded gas processing and sour gas handling capabilities provide a unique offering to our customers and provides us with a long runway for growth in the Delaware Basin. Our crude gathering volumes had a record fourth quarter. We are growing our crude infrastructure to provide our customers a more comprehensive solution. Our crude gathering business is in a very strong place and our combined crude and water offering is yielding great results moving to our border business the integration of two water gathering system from h2o and gravity has gone well we're very excited about the opportunities our larger water footprint is bringing to us we believe produced water gathering and disposal will require more innovation and different approaches as producer water cuts increase throughout the basin we look forward to updating the market as we bring forward these solutions With that, I will pass it on to Robert.

Thank you, Ruben. As Abigail and Ruben highlighted, we continue to make strong progress advancing the Delic Logistics growth story. While we are driving meaningful financial and operational growth across the partnership, we remain equally focused on achieving our long-term leverage and coverage objectives. 2025 was a significant year for the partnership. We successfully closed the acquisition of Gravity Water Midstream, which, together with the 2024 acquisition of H2O Midstream were well-timed from a purchase-multiple perspective. In addition, we completed construction of the Libby2 gas plant and are now in the process of converting operations to support sour gas treating, handling, and processing capabilities. Our focus now shifts to fully capturing the value of these investments by optimizing synergies and executing our strategic priorities. At the Libby complex, this includes completing the sour gas conversion and realizing the associated EBITDA uplift over time. From a balance sheet perspective, we ended 2025 in a strong – approximately $940 million available liquidity under our credit facilities. This provides us with significant flexibility to continue executing our growth agenda while maintaining financial discipline. Turning to our fourth quarter results, adjusted EBITDA for the quarter was a record at approximately $142 million, up from $114 million in the same period last year, and $6 million higher than previous record set in the third quarter of this year. Distributable cash flow as adjusted totaled $73 million and our DCF coverage ratio as adjusted was approximately 1.22 times. The processing segment adjusted EBITDA for the quarter was $71 million compared to $66 million in the fourth quarter of 2024. The increase was primarily due to the acquisitions of H2O and Gravity. Wholesale marketing and termiling adjusted EBITDA was $21 million compared to 21 million dollars in the prior storage and transportation adjusted EBITDA in the quarter was 35 million dollars compared with 18 million dollars in the fourth quarter of 2024. The increase primarily reflects the impacts of the sale of certain assets to decay as agreed to under the May 2025 intercompany transaction. The investments in pipeline joint venture segments contributed 26 million dollars this quarter compared with 18 million dollars in the fourth quarter of 2024 driven by strong performance from the Wink to Webster joint venture. Turning to capital expenditures, total capital spending for the fourth quarter was approximately $32 million. Of this amount, $26 million was growth capital, primarily relating to initiating sour gas capabilities at the Libby complex. The remainder of the spend was directed towards other growth projects, including advancing new connections across our Midland and Delaware gathering systems. Looking ahead to 2026, as Avigal mentioned, we remain confident in our earnings trajectory and are initiating our full year 2026 EBITDA guidance to a range of 520 to 560 million dollars. With that, we'll open the call for questions.

Thank you. The floor is now open for questions. If you have dialed in and would like to ask a question, please press star 1 on your telephone keypad to raise your hand and join the queue. If you would like to withdraw your questions, you would press star 1 again. If you're called upon to ask a question and are listening via loudspeaker on your device, please pick up your handset and ensure that your phone is not on mute when asking a question, and again, to ask a question, it is star one. Your first question comes from the line of Doug Irwin of Citi. Your line is open.

Thanks for the question. I just want to start on guidance and maybe more specifically on growth expectations for the GMT segment. Can you maybe just help quantify how much of the variance within the high and low end of the guidance range is dependent on GMT performance and your ability to ramp up salad gas later this year? And then just with regard to the multi-year birth benchmark that you put out there, how should we do things in about the ramps to that 70 million of incremental EBITDA over the next couple of years?

Hey, Doug, thank you for the question. I think it's a great question, but I want to, I will touch exactly what you asked, but I would like to start from a big picture standpoint. We defined a very clear, concise strategy of cool gas and water in the most prolific area of the Perman Basin. And if I want to highlight one number in the guidance we gave, it's the return on the investment that we see with the capital we invest now. You see it around one to three times on the investment we see, which is very good. It's good to our coverage ratio, it's good to leverage ratio, and very accretive to EBITDA. You see that over the course of more than one year, on a run rate basis, it's a very accretive number. And the main outcome of that is the results of our strategy. The second point I want to highlight is the growth and yield combination that we are seeing. That's probably best in class, if not best in class, probably among others that's best in class, but very, very good. We are on a very, very good trajectory in pattern, so we are very happy about that. The last point I want to make sure coming across, and then I will hand it to Reuven will be more specific around the sour, is the fact that if you are taking the intrinsic value of each asset that we either build or bought, we need to get seven handles on our unit price. So, there is much more room to go. We are very consistent with rewarding our investor. We have a very clear target for leverage ratio and coverage ratio, and we are prudently moving to those targets. Ruben, you want to talk about sour gas just a little bit? Yes, thank you, Abigail.

We're actually very excited about the growth opportunity that gas will provide us. We mentioned in previous calls that gas in the region is turning to be more sour than originally anticipated, which made us accelerate our sour project's timeline. Presently, we're drilling the AGI well and constructing our associated sour gas gathering and compression system. As we mentioned in the prepared remarks, we expect to see increased utilization as these projects are completed throughout the year. Even with the completion of this project we still anticipate incremental processing capacity need needed in our area. This is a long answer but the short answer is we expect to be completed over the next few months and the Delaware gas business will be one of our growth engines for years to come.

Got it, thanks for that detail. And maybe as a follow-up on an item from the DK release, you called out a transaction with DK for some assets that shows the Tyler and other auto facilities. Just curious if you could talk about the EBITDA impact to DKL from those transactions and the use of proceeds, and then just looking forward, are there more opportunities like this that you could potentially do between the two companies?

Yeah, absolutely. Let's say Robert, they take that question.

Yeah, thanks, Abigail. Well, yeah, these transactions really just helped us further the economic separation of the two entities. You know, you'll see in our slides that DKL now has 82% of their EBITDAs now from third party businesses as a result of this transaction. You know, with this, our view is that, you know, we're materially complete with the inside defense assets being sold to DK. We kind of have the right assets under the right roof now. And from an EBITDA perspective, it's really not material to either entity. Got it.

Thanks for the time. Thank you, Doug. Appreciate you.

Your next question comes from the line of Gabriel Maureen of Mizuho. Your line is open.

Hi, Gabriel. Good morning, Abigail. Hey, how are you?

I'm well, you?

Good, thanks. I'm just going to ask in terms of maybe just pressing you guys a little bit on what the next steps would be on the Libby processing expansion, how big you would think the next chunk of processing addition would be and what would need to happen and when to make that come to fruition?

Yeah, so I will tell you two things. First, you probably remember that we said a few quarters ago about the investment we already put for future expansion for Libby. You remember $15 million, so we will not try to take advantage around that. That's the first nugget I'm going to give you. The other one that I'm going to tell you that we are looking very, very carefully, and it's all public information, what our customer and producer are doing in the area. And in our area, it looks very good, which means two things, which means more sour and which means more volume, both on the crude and gas. So I'm not going to commit to a timeline like you asked, but you didn't expect me to fall into distress. But I'm going to tell you that we are looking very good in all the macro that we are seeing and also the micro from our customer. So stay tuned.

Will do. thank you Abigail and of course I have to ask you there's been a lot of I would say sour gas midstream M&A over the last couple of months so I'm just curious what your thoughts are on that what you're seeing potentially out there in terms of packages on gas or water that may or may not be out there yeah so a the cheapest a company in the area it's called DKL we still don't see we're We're still not close to the valuation versus our peers.

Obviously, you probably were very happy about the two midstream acquisition that we did, both H2O and Gravity. We did it both on the right timing, on the right valuation. We are not shy of doing that, but we are not going to force ourselves into a deal that is too expensive. So more to come. Everything that we do needs to be accretive to free cash flow, leverage ratio, and coverage ratio, and we are not going to shy from those principles in the future. And I will leave it to that.

Great. Thanks, Avigal. I appreciate it.

With no further questions, I'd like to pass it back to Avigal for closing remarks.

Yeah, thank you. I just want to thank the great team that are in this room. Thank you to our great board of directors that support, with great support for the DKL journey, to the investors, and to the great, and mostly the great employees we have. I'm really proud of the progress we are doing and more to come. Thank you.

This concludes today's conference call. You may now disconnect.