Delek US Holdings' US petroleum business is a delectable mix of refining, fuel marketing, and retail operations. The company, a subsidiary of Israeli-based conglomerate Delek Group, operates refineries in Tyler, Texas and El Dorado, Arkansas with a total production capacity of 140,000 barrels per day. Delek US Holdings' marketing segment sells refined products on a wholesale basis in west Texas through company-owned and third-party operated terminals. On the retail side, its MAPCO Express unit operates almost 380 convenience store/gas stations under MAPCO Express, East Coast, Discount Food Mart and other names in 10 southern US states.
Delek US Holdings operates the 60,000 barrels-per-day Tyler, Texas refinery and the Lion Oil Company (which owns a 80,000 barrels-per-day refinery in El Dorado, Arkansas), as well as other pipeline and product assets. The company also sells wholesale fuel and operates a chain of retail gas stations.
Sales and Marketing
In 2011 the company's largest customer accounted for 21.3% of marketing segment net sales and its top ten customers accounted for 61.3%.
Delek US Holdings' revenues increased by 92% in 2011 due to the acquisition of the El Dorado refinery that year and increases in fuel sales prices across all of its segments, as well as increased sales volumes from the Tyler refinery and the marketing segment.
Net income increased by 304% in 2011 thanks to higher revenues and the company recognizing a gain of $12.9 million as a result of remeasuring its prior cost basis interest in Lion Oil at its fair value as of the Lion Oil acquisition date.
To grow its refinery operations, in 2011 the company bought Ergon's 54% stake in Lion Oil, boosting its ownership of that company to 88%. Later that year it boosted its holdings in Lion Oil to 100%.
To generate cash, in 2012 the company filed to spin off wholly-owned crude oil and refined products logistics and marketing subsidiary, Delek Logistics Partners, LP.
Delek US has historically grown by pursuing acquisitions to strengthen its retail business and its refinery assets. In 2010 the company sought to expand its refinery base through the acquisition of Shell Canada's Montreal East refinery, but the deal fell through.
The company is pursuing a retrofitting program to physically improve and upgrade the appearance of its convenience stores and gas stations in order to boost market share. During 2011 it spent $23.4 million on renovating 51 stores and constructing 2 new stores.
Delek Group owns 68.5% of the company. – less