Delek Expands Water Management Footprint

Delek Logistics Partners broadens its asset base through a strategic acquisition in the Permian and Bakken regions.

January 03, 2025

Strategic Growth Through Diversification

Delek Logistics Partners has announced the successful completion of its $285 million acquisition of Gravity Water Intermediate Holdings, a move aimed at solidifying its presence in the water disposal and recycling sector. The deal, finalized on January 2, 2025, includes assets strategically located in the resource-rich Permian Basin and the Bakken regions, underpinning Delek's commitment to growth and sustainability in its operations.

This acquisition aligns with Delek’s strategy to diversify operations and expand its service offerings. By integrating Gravity Water’s recycling and disposal operations, the company positions itself to provide comprehensive water management solutions for energy producers. This move not only extends its market reach but also strengthens its environmental stewardship credentials—a key consideration in the evolving energy landscape.

The $285 million purchase price was structured to include both cash and equity. Approximately $209.3 million was paid in cash, complemented by over 2.17 million common units representing partnership interests. These units were issued under exemptions from securities registration, showcasing the transaction's adherence to regulatory requirements while optimizing capital efficiency.

Immediate and Long-Term Implications

The acquired assets bolster Delek’s infrastructure, enhancing its ability to support upstream operations in the Permian and Bakken. These regions are pivotal for the U.S. energy industry, making water management a critical operational component. By adding Gravity Water’s capabilities, Delek aims to achieve cost efficiencies, improve service reliability, and offer integrated solutions to its partners.

Moreover, Delek’s equity issuance under a Registration Rights Agreement reflects a commitment to liquidity and shareholder value. A registration statement will soon be filed to facilitate the resale of equity interests, aligning with the company’s transparent financial practices.

Positioned for Future Opportunities

This acquisition underscores Delek's proactive approach to growth. As demand for sustainable energy solutions rises, the company’s investment in advanced water recycling and disposal systems positions it as a key player in supporting environmentally responsible energy production. These assets not only enhance operational capabilities but also create opportunities for strategic partnerships in the energy sector.

By focusing on infrastructure that aligns with industry trends and environmental priorities, Delek demonstrates its ability to adapt and thrive in a competitive market. The integration of Gravity Water’s assets marks a significant step forward in its journey to deliver long-term value to stakeholders.