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Executives

Uzi Yemin - President & CEO

Mark Cox - EVP & CFO

Fred Green - President & COO

Analysts

Jeff Dietert Simmons & Company

Roger Read - Wells Fargo

Paul Cheng - Barclays

Rakesh Advani - Credit Suisse

Paul Sankey - Deutsche Bank

Delek US Holdings, Inc. (DK) Q2 2012 Earnings Call August 8, 2012 11:00 AM ET

Unidentified Company Representative

Good morning everyone and thank you for joining us on today's conference call and webcast to discuss Delek US Holdings’ second quarter 2012 financial results. My name is Keith Johnson and I recently joined Delek US as Vice President of Investor Relations. Joining me on today's call will be Uzi Yemin, our President and CEO, Mark Cox and CFO and other members of our management team.

As a reminder this call may contain forward-looking statements as that term is defined under Federal Securities Law. For this purpose, any statements made during this call that are not statements of historical fact maybe deemed to be forward-looking statements. Without limiting the foregoing, the words believes, anticipates, plans, expects and similar expressions are intended to identify forward-looking statements.

You are cautioned that these statements may be affected by important factors set forth in our filings with the Securities and Exchange Commission and in our latest earnings release. As a result, our actual operations or results may differ materially from the results discussed in the forward-looking statements. We undertake no obligation to publicly update any forward-looking statements whether as a result of new information, future events or otherwise.

Today’s call is being recorded and will be available for replay beginning today and ending November 8, 2012 by dialing 855-859-2056 with the confirmation ID number 97669346. An online replay may also be accessed for the next 90 days at the company’s website at delekus.com.

Also, as you know on July 12th, our wholly-owned subsidiary Delek Logistics Partners LP filed a registration statement on Form S1 with the US Securities and Exchange Commission relating to its proposed initial public offering of common units representing Limited Partner interest, because no such registration statement has become effective, we will not take questions on this proposed offering during today's call. These securities may not be sold or may offers to buy be accepted prior to the time the registration statement becomes effective. The statements made during this call shall not constitute an offer to sell or solicitation of an offer to buy, nor shall there be any sale of these securities or any state or jurisdiction in which such an offer solicitation or sell would be unlawful prior the registration of qualification under the Securities Laws of any such state and jurisdiction.

Last night, we distributed a press release that provided a summary of our second quarter 2012 results. This press release is available on our corporate website and through various news outlets. On today’s call, Mark will begin by walking through second quarter financial performance and Uzi will follow with a closing strategic comments.

With that, I’ll turn the call over to Mark.

Mark Cox

Thank you Keith and welcome to our team. We’re glad to have you. I would also like to thank everyone on the phone for joining us today. We appreciate you being with us.

For the second quarter of 2012, Delek US reported net income of $67.8 million or $1.15 per diluted share. This compares to net income of $62.1 million or $1.08 per diluted share in the second quarter of last year. Excluding the $1.2 million of after-tax expense associated with potential IPO of our Logistics assets, our adjusted net income was $69 million or $1.17 per diluted share. This compares to adjusted net income of $52.9 million or $0.92 per diluted share in the second quarter of 2011. We included a table on our release to help you on the year-over-year adjusted comparisons.

The improvement in our profitability was driven by the full ownership of the El Dorado for the entire quarter as well as solid performance in both our retail and marketing operations. Refining represented nearly 82% of the total contribution margin generated in the period and benefited from a combination of elevated refining margins, improved asphalt pricing and ongoing strong regional demand for refined products.

On a combined basis, our refining system had total throughput of approximately 127,000 barrels per day despite the unplanned maintenance outage at the Tyler refinery and a supplier’s pipeline issue that reduced the supplier crude oil to El Dorado.

Refining segment contribution margin showed solid growth during the second quarter of 2012 as an increased over 9% to $133.2 million when compared to the year ago period. This was also a very exciting quarter from a shareholder value perspective. First, we announced our third special dividend in the last 14 months and secondly we filed a registration statement to IPO our Logistics assets.

And finally, given our strong cash flow, we reduced our net debt to $101.7 million. It was clearly a strong quarter and we hope to continue our focus on the creation of shareholder value as we move into the second half of this year.

Turning to the income statement; total operating expenses increased by $6.9 million to $90.1 million in the second quarter when comparing the prior year period. This increase was primarily due to the inclusion of El Dorado refinery operating expense and expenses related to the maintenance issue in Tyler. The increase was partially offset by a reduction in the retail operating expenses.

Depreciation and amortization expense increased to $21.6 million in the second quarter of this year and that compares to $19 million last year. This increase was again primarily related to the inclusion of El Dorado and the Paline Pipeline assets in our results this year.

General and administrative expenses decreased slightly to $24.7 million in the second quarter of this year and that compared to $24.8 million in the prior year period. However, it’s worth noting again that G&A expenses included $1.8 million in cost associated with the potential IPO of our Logistics assets.

Interest expense was $12.3 million in the second quarter of 2012 and again that compares to $15 million in the second quarter last year. The decrease in interest expense was primarily attributable to the reduction in overall debt levels, a reduction in deferred financing charges and reduced expenses associated with our interest rate swaps.

Our effective tax rate was 35.1% in the second quarter of this year and again that compares to 31.4% for the second quarter of last year. The increase in our effective tax rate is primarily due to the gain on our investment in Lion Oil in the second quarter of last year which was not recognized for tax purposes.

Looking now at capital spending; our capital expenditures for the six months ending June 30, 2012 were $50.4 million which was approximately $34 million for spend in refining, $11.2 million was spend in retail, $400,000 was spend in marketing and $4.8 million at the corporate level.

Let's look now at the refining segment. I would like to provide an update on both our refineries and how we progressed on some of the challenges we faced last quarter. As we previously announced, our Tyler refinery experienced a power outage on May 7th. As a result, we ran the refinery at reduced rates until May 26th, however in June and July we averaged over 60,000 barrels per day of crude throughput.

For the quarter total throughput at Tyler averaged 56,729 barrels per day and that compares to 60,034 barrels per day in the second quarter of last year. Total sales volumes averaged 58,644 barrels per day for the quarter including almost 4,000 barrels per day of intermediate products sold to our El Dorado refinery.

Our El Dorado refinery was impacted by the previously announced supply disruption that was caused when Exxon’s North Line as shutdown in late April. When we first updated you about this event, we noted that we had secured additional feedstocks that would allow the refinery to average total throughput of at least 60,000 barrels per day during both May and June.

However, during the months of May and June we were able to exceed our expectations by averaging over 64,000 barrels per day of throughput. This was accomplished by sourcing more local crude, introducing rail supply crude, shipping intermediates from Tyler and receiving additional crude barrels from Longview. These activities provides with access to much wider source of crude, such as Canadian, Mid-Continent, West Texas and the Gulf Coast.

To give you a little more color around our initial success using rail, during May and June, we received an average of approximately 2,000 barrels per day by rail that was priced at or below competitive Gulf Coast supplied crude oil. In July, we were able to increase this amount to approximately 9,000 barrels per day and expect an additional increase in the month of August.

As a result of these actions, during the month of July, we increased our total throughput to more than 70,000 barrels per day at El Dorado and we combined with the Tyler refinery operations, our total refining throughput was more than 137,000 barrels per day.

Lastly, our Quick Hit capital projects have been completed successfully and we expect them to bring incremental contribution margin during the third quarter of this year. The LSR project was completed in July and we expect this project will provide approximately $15 million to $18 million a year of additional contribution margin annually based upon today’s economics.

The Vacuum Tower Bottoms project was mechanically completed in July. However, as many of you know in the asphalt season, current economic favors selling asphalt. We expect to begin shipping asphalt to Tyler as the asphalt season winds down in the next few months.

Our engineering team continues to identify new capital projects that will add incremental margin in the future. Beyond the first two projects I just discussed, we’ve identified two new projects that should increase El Dorado’s annual contribution margin by approximately $12 million a year with a combined cost of only $6 million.

The first project is expected to increase our ULSD production capabilities from 30,000 barrels a day to 34,000 barrels per day, which are initial forecast projects addition margin of at least $8 million a year when fully implemented. This project will be built in two phases. The first phase will increase production to $33,000 barrels per day of ULSD and should be completed by year end with respect to contribution of approximately $6 million The second phase we expect to be completed in conjunction with our turnaround in 2014 and should contribute approximately $2 million. The total cost of this project is expected to be approximately $3 million.

The second project involves the replacement of the (inaudible) compressor. This will allow us to further optimize the operation of SCC unit and increase gasoline production. Current estimates indicate made in more than $4 million per year margin improvement once completed in the third quarter 2013. The total cost of this project is again expected to be approximately $3 million dollars.

Looking now at retail; retail’s contribution margin improved $18.2 million in the second quarter of this year and that compares to $14.6 million in the second quarter of last year. Second quarter improvements were driven by increased same store fuel volumes, increased same store merchandised sales growth and lower operating expenses.

Same store merchandise sales increased to 4.3% in the second quarter when compared to the year ago period. This was MAPCO’s 12cosequitive quarter of same store merchandise sales growth driven by ongoing promotional efforts, private label product sales as well as continued momentum in our food service category which was up 9.3% over last year.

Private label products in area other than cigarettes increased 36.4% in the second quarter of 2012 versus the prior year period. Private labels sales as a percent of total merchandise sales again excluding cigarettes increased from 4.6% to 5.8%. Merchandized margins declined to 29.7% during the second quarter of this year versus 30.2% last year primarily due to the continued impact of a change in retail pricing programs of our cigarette manufacturers.

Fuel margins came in at $18.02 per gallon which was very similar to last year. And overall decline in the fuel prices and the introduction of our loyalty program led to an increase in same store fuel gallon sold of approximately 2.2%.

As of June 30, 2012 the retail segment operated 374 stores versus 390 stores in the prior year period. Of the 374 stores in operation, 188 stores or half of store base is either re-imagined its location or large format prototypes. During the second quarter over 10 million gallons or approximately 10% of the fuel sold in the retail segment was supplied by the El Dorado refinery.

Lastly, the marketing segment contribution margin was $7.5 million in the second quarter of 2012 up substantially from $5.1 million in the same period last year. This increase was driven by 4.5% increase in total sales volumes which came in at 16,670 barrels per day. Stronger demand for products, mainly gasoline in West Texas drove the overall increase. With that I will turn the call over to Uzi for his closing comments.

Uzi Yemin

Thank you Mark and again welcome. The resilience of our business was tested this quarter as both power refineries were hit with temporary disruptions. However, I am proud of how our team rose up to the challenge and performed very well during the quarter. In fact, the strong efforts of our team coupled with the favorable location of our assets allows us to deliver record second quarter net income. Our efforts to increase our [reactor] to WTI linked crude continues to put the company in a strong financial position.

We were able to strengthen our balance sheet and we remain committed to returning value to shareholders. The recent distribution of our third special dividend in just over a year is an example of that commitment.

Farther, our multi-asset refining system has brought significantly more flexibility to our business and allows us to barely mitigate the impact of various operations and supply issues than we could have in the past. Also we continue to improve our crude supply flexibility in our refining system with the addition of well supply crude to our El Dorado operation during the second quarter.

As Mark mentioned, our strategic actions taking the last few months allow us access to increase cost of crude delivered by rail to El Dorado refinery. During the second quarter of 2012, we added capability to source up to 250,000 barrels per day of crude oil by rail from areas including Bakken, Canada, Eagle Ford and Cushing.

We expect that in the beginning of 2013, we will be able to add additional 10,000 barrels per day of heavy crude to a new unloading facility at there El Dorado refinery. As a reminder, our crude and vacuum units have access capacity and stability to process a wide range of crude oil ranging from light weight to heavy sour.

We believe that our improved access to well supply crude in El Dorado will allow us reduced dependency on Gulf Coast crude and provide us with access to more economical types of crude at this refinery.

As you all know, during the quarter we filed the (inaudible) that puts in a position for a potential IPO of our logistics assets, a strategic step for Delek US Holdings and our shareholder. Finally, as promised in the past, we remain on track to increase or capability to supply cost advantage goods to both of our refineries in early 2013.

With that, Kenneth can you please open the call for questions.

Question-and-Answer Session

Operator

(Operator instructions) And your first question comes from the line of Jeff Dietert with Simmons & Company. Your line is open.

Jeff Dietert Simmons & Company

You have quite an impressive hustling team, good progress this quarter. I was trying to try out some of the numbers on rail your press release said up to 15,000 barrels a day via rail and Mark I believed you mentioned 2,000 barrels a day in May and June and 9,000 barrels a day in July and I believe I heard the new unloading facility will be another 10,000 barrels a day in the first quarter of ‘13, just wanted to tie all those numbers out and understand a little bit better are you taking that through third party unloading facilities at St. James or you doing that actually at El Dorado, how are you gaining access to the rail barrels?

Uzi Yemin

Good morning, Jeff and thank you for your question. We expected that and we want to clarify this. The unloading facility is actually in El Dorado, so there is nobody well our facility is not going through St. James that allows us to turn the cars in and out very quickly, 24 hours to 48 hours. Our core facility is two miles away roughly two miles away from the refineries and as we, other facility three months ago, we start to get railcars, we do have the capability of 15,000 as we said we started that three months ago with 2,000 a day. In July, we are 9,000; in August it will be more than 9,000. Our target or we have the capability to unload 15,000 a day. Obviously, it depends on the pricing on the crudes that we want to get. So, 15,000 exist. On top of that we are building another unloading facility at the refinery itself for another 10,000 of heavy crude that will be ready in some time early 2013.

So we go back to what we said early and we were going to tie up the numbers for you and for everybody else. The El Dorado refinery we call it 80,000 barrels even though the crude unit is 100,000 that means we can have wide variety of crudes and Fred can add color. So early 2013, our goal is to have the ability based on economics not to have any Gulf Coast crude. (inaudible) from 20 of local production which increased from 15, 16, 17 due to increased production in the area and more exploration. 35 of the WTI, WTS that we announced earlier that's 55 and another 25 of rail that will make it 80.

Obviously we don’t want to lose the capability of moving crude if they become cheaper. But we will have the flexibility to have all these crudes coming outside the Gulf Coast earlier area to fill up the refinery. More color in regard to these types of crude we can load in El Dorado. Fred do you want to add?

Fred Green

Yeah, Jeff this is Fred Green. In the last three months we have brought in through ranging from about 15 API so heavy sour crude out of Canada all the way up to Eagle Ford type crude mid to high 40s in gravity. So a lot of flexibility in terms of what we have been able to bring in and offload with these new rail facilities.

Jeff Dietert Simmons & Company

And so you are focused on rail unloading facilities are you going to plan and participate through rail cars or are use third party rail cars?

Uzi Yemin

Both. We actually have and I'm going by memory 170 rail cars of our own. So and again that's my memory but we are planning based on economic deals either third party or our own rail cars. So the flexibility is there. Obviously, we didn't want to talk about in the past because we didn't know it will be very effective we did it but we are planning to bring Bakken, Canadian and other crudes depends on the rail car either our own rail cars or other.

Operator

And your next question comes from Roger Read with Wells Fargo. Your line is open.

Roger Read - Wells Fargo

One quick question as part of your initial discussion, what percentage of the fuel and retail was being provided by EL Dorado?

Uzi Yemin

I think we are going by 10% of gasoline so call it 3,500 barrels a day.

Roger Read - Wells Fargo

And then following on the discussion Jeff started there on the rail car access, what sort of actual flexibility do you have? I mean I understand you will run what's advantageous but how nimble are you actually able to be, is it month forward, two weeks forward, quicker than that, slower than that, just maybe some help along those lines?

Uzi Yemin

Well, the fact, and this is the most important thing in this discussion. The fact that we can get in and out in 24 hours allows us to be very opportunistic. Now, we do have agreements that are little more than two weeks, one month, three months. And we’re planning to work on this relationship going forward. As we know now, we have that capability to unload very quickly. Obviously, this is a start. And we didn’t want to talk about it too much. Now that we know we have the capability, we will provide the market more and more information in the coming quarters but our planning is to have a combination of ad hoc i.e. week-to-week to a long-term agreement based on new market structure.

Roger Read - Wells Fargo

Okay, and then the other questions along those lines. Maybe more for you, Fred. This much change in the crude inputs in terms of exactly which crudes and even within the heavy sours whether it’s a West Texas or maybe a Canadian, but what impact does that having on the yield front?

Fred Green

You know what we brought in the second quarter started off looking about like our average crude but we ended up with more of the Bakken or lighter type crudes and the result was our asphalt yield was much less, you know, I think were down the 11% range for asphalt where we typically between 15 and 20 depending on the crude types. So, much more like product than historic just because of the lighter crude slate.

Roger Read - Wells Fargo

Okay, so you are telling us its going to be harder for us to forecast going forward, right?

Fred Green

It’s a problem for you; it's not a problem for us. It’s just a matter of what’s the most economical type of crude that we can access by rail and there is such a wide variety. Yeah it’s going to be difficult from a modeling perspective.

Operator

Your next question comes from Paul Cheng with Barclays. Your line is open.

Paul Cheng - Barclays

(Inaudible) a short question; may be I missed it, the current unloading facility two miles away from El Dorado, do you guys own it or is that a third party?

Uzi Yemin

It’s a third party that build it for us obviously or utilize it for us.

Paul Cheng - Barclays

And I presume that you already signed a long-term contract that you can continue to use it.

Uzi Yemin

We can use it, we are the only users and we are negotiating with the owner over economics here because we initially we know that it can be as advantageous as it is.

Paul Cheng - Barclays

And that how about in terms of, do you already have any long-term committed contract with the railroad operator for the use of the line?

Uzi Yemin

No, we don’t have a long-term agreement. As you know there are two ways of bringing railcars, unit train or many train and right now we are doing our internal due diligence to make sure that we are getting the best cost reduction if you will or the biggest benefit taking one of the two strategies or a combined strategy.

Paul Cheng - Barclays

And then the current unloading facility, those are not the site for unit train, are they?

Uzi Yemin

Well we can modify them to be for unit train.

Paul Cheng - Barclays

And then can you share with us what is your total all in rail transportation cost from end to end, let's say from Alberta down to El Dorado or from Bakken or from Eagle Ford?

Uzi Yemin

Well, not yet and the reason because we are just ramping it up. So as we ramp it up the cost is getting lower. So I wouldn't commit to any number just yet, obviously in the six to 12 months we will be up and running completely and then we will update the market.

Paul Cheng - Barclays

Fred, given the potential of converting at a rate that should 100% inland crude, the economics seems to suggest that you should be able to finish the previous owner upgrade project or expense project that you are making to a full configure rate at 100,000 barrel per day facility and have you guys already started looking at that, how much it may cost to really complete that project.

Fred Green

Well I think the numbers that we've provided in the past are in the order of $150 million.

Paul Cheng - Barclays

Any change or still that is the number?

Fred Green

I think it's still the number. You know we really haven't seen any cost escalation on labor and really that's all we will have, we've got a lot of the materials already we have purchased, the engineered equipment. So we will be looking at a little bit of pipe and structural steel, but the majority will be labor.

Uzi Yemin

Some of this quick hit project like the [DHT] that we announced today going from 30 to 34. That was part of the big expansion. The LSR project was a part of the expansion. So we are taking these small projects or we are taking these big projects and if you will dividing it into small projects and eat them one at a time.

Paul Cheng - Barclays

That’s makes sense. Uzi, do you have some numbers you can share? What was the same-store gasoline sales year over year for those that had been open for more than a year in the second quarter and also July to August so far?

Uzi Yemin

Well second quarter 2.2. We can give you the number, it's not material. We can give the number. I know that you need it for your statistics. We will provide with you a number. I don’t remember July.

Paul Cheng - Barclays

And Mark, at the end of the second quarter is your -- because I think that you sell most product than your production in the second quarter. So I presume you jot down the inventory. So at the end of the second quarter, from an inventory standpoint at a normal level or now that you are slow, so that we should assume we have to rebuild inventory?

Mark Cox

As you can see in the press release and in the script, Lion Oil had to buy gasoline in order to resell it because we ran it at lower levels and therefore we did not increase materially our inventory. We just bought gasoline and sold it.

So if you look at the overall sales excluding buy and sell activity, it was only at Lion around 73,000 barrels a day.

Paul Cheng - Barclays

Okay so you are pretty normal then?

Mark Cox

We are normal in the inventory, correct.

Paul Cheng - Barclays

Uzi, I am just curious that one of your competitors that often (inaudible) they came out with a somewhat unique structure with a variable MLP for the refining. I assume that you guys definitely have looked at it, that what is your initial thought about that structure, does that make sense to you guys?

Uzi Yemin

Well I won't comment about our IPO obviously. One thing I would say that refining is a very volatile business. So I assume that the work for this competitor or ours or one of our peers and I wish them good luck.

I don't see us at this point going that route.

Paul Cheng - Barclays

Two final questions. One, Mark can you tell me that what is your market value of inventory over that and secondly that you say on a $35 million?

Mark Cox

It's $32.5 million.

Paul Cheng - Barclays

And I know that you guys had announced a special dividend in a short period of time, but what is the management view? Do you believe and agree that perhaps that with your much improved underlying base earning power given the well time in everything that you are doing, maybe that if you raised your regular dividend, it's going to give you more bang for the buck and that will be more recognition in the market and get more credit?

Uzi Yemin

First of all we agree with you, Paul. If you look at our cash situation. Despite the fact that we have the pipeline issue during the second quarter, we reduced our debt or increased our cash position by $100 million. So if this continues regardless of IPO, we will be negative net debt by the end of the year. And if this is the case we will revisit again our policy to increase our regular dividend. We want to return cash to the shareholders and if this continues I don't see any reason why we are not going to increase our regular dividend on top of the special dividend.

Paul Cheng - Barclays

I would just add that I truly believe this is a golden opportunity for the refining company executives that could potentially change dramatically the market perception of the refining group as a pure trading group and everyone would be willing to go for a much higher regular dividend.

Uzi Yemin

Well, we hear you loud and clear and honestly we agree with you. We wanted to be in a position that we have enough cash on our balance sheet. If you can look at our (inaudible) needs, but for us the (inaudible) needs are coming down dramatically as well.

So that means that the vendors everywhere get more confident with our ability. So that by itself releases a means and availability to retain or to distribute cash back to the shareholders. So we feel extremely well and as I said, if this continues I don't see any reason why we won't increase the regular dividend.

Operator

Your next question comes from the line of Edward Westlake with Credit Suisse.

Rakesh Advani - Credit Suisse

Hi this is actually Rakesh Advani. Just quick questions on, can you remind us your retail stores, what percentage are owned by the company?

Uzi Yemin

About 60%. Now thanks for asking about the retail because I'll take the opportunity to answer a question you didn’t ask which is the advantage of building the megastores that we are building now or the advantage of the megastore that we are building now. These megastores are coming online very nicely. These are mainly stores that we own and we are replacing stores that in average sell a little bit more than a million gallons and a little more than $1 million inside with stores that are selling to 4 million to 5 million gallons and $2 million to $3 million inside.

So that program is going very well and in the next of couple of quarters – three quarters as we complete our crude optimization we are refocused on this program and announce renewed interest in building megastores.

Rakesh Advani - Credit Suisse

Would you even look at the possibility I mean of creating or spending off the retail business like something similar to what Valera was talking about.

Uzi Yemin

Not at this point. No sorry.

Rakesh Advani - Credit Suisse

And on getting the better crude costs at the Tyler Refinery I know you guys have mentioned for early 2013. What's really causing to take that long? Is it just infrastructure or what exactly?

Uzi Yemin

The infrastructure is a private pipe that is being refurbished as we speak and we wanted to make sure that we have the capability that we want to have – if we decide to do more than 50,000 in Tyler. So that's the reason.

Operator

(Operator Instructions) Your next question comes from Paul Sankey with Deutsche Bank.

Paul Sankey - Deutsche Bank

Uzi, you have got a lot going on organically. Obviously it is very positive, can you update us on how you are viewing the acquisition market given as I say, everything that you've got going on internally?

Uzi Yemin

Absolutely, Paul I do think that we are in great time for refining business. It depends and I told you that in the past it depends, what will happen with the crude market. If the crude market continues with the exploration we see and the new fields that are coming on line, then refining is a wonderful business to be in.

But right now it’s on fire, especially in the areas that we are in. So I don’t see us right now unless a huge opportunity is coming. Obviously if it’s coming, we will jump all over it. But at this point we are focusing our efforts in the areas that bring more and more wealth to the shareholders increasing their amount of crude, the good crude if you will or the cost advantage crude to our refineries. We will revisit that strategy early 2013.

Paul Sankey - Deutsche Bank

Yeah but you've teed me up from my follow up which was how do you see the -- what do you see as the major dynamics going forward of all these crude discounts and how there will be result over time. I guess you yourselves are obviously taking advantage of them, but ultimately you may normalize them as well by your own actions. So from your strategic point of view, how do you see all this balancing out, Uzi?

Uzi Yemin

Honestly Paul, I am surprised myself with the amount of activity that we see, not only in Delek, but everywhere in the United States. So for me if this continued and if we stay around the $90, $80 and all these drilling is going on, then the landscape and more discoveries will come online I think and there is a possibility that the United States will be an exporter of crude oils in the next decade may be 15 years.

Paul Sankey - Deutsche Bank

Yes, yes, actually what you are saying is the scale of the growth in production is such that it's priced to be upside and if it keeps going there is every reason to believe that the differentials will remain extremely wide.

Uzi Yemin

What I am surprised as you know I told you a year ago it will stay that wide and here we are.

Paul Sankey - Deutsche Bank

Actually I wasn’t going to mention that.

Uzi Yemin

You are a good man. You have British manners. So, I am surprised but we will take advantage of it.

Operator

And we have no further questions in queue at this time. I will turn the call back to our presenters.

Uzi Yemin

Thank you so much. Well, I would like to thank everybody obviously the team, my colleagues, our employees and you our investors for the confidence in our company. These are very exciting times for our company and we look forward to talk to you in the near future. Thanks so much, have a great day.

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