Fourth quarter results benefited from a benchmark Gulf Coast 5-3-2 crack spread that averaged $26.71 per barrel during the quarter. This compares with a 5-3-2 crack spread of $20.34 during fourth quarter 2011. On a year-over-year basis margins also improved as the WTI Midland crude discount to Cushing expanded to $3.55 per barrel in fourth quarter 2012 from $0.59 per barrel in the prior year period.
“Looking back, 2012 was a great year as we were able to grow our company, improve our balance sheet and return value to our shareholders. Solid operating performance, strong cash flow generation and the completion of Delek Logistics' initial public offering resulted in a record cash level at year end," said Uzi Yemin, Chairman, President and Chief Executive Officer of Delek US. "During the fourth quarter our operations continued to perform well as we benefited from elevated Gulf Coast refined product margins. We continued to increase our rail supplied crude ability and reached approximately 19,000 barrels per day in November. Our Tyler refinery continued to perform well as we averaged approximately 60,000 barrels per day of crude throughput during the second half of 2012, fully utilizing the refinery's capacity.”
Crude Supply Update
Over the past year, Delek US has been working on strategic initiatives to increase pipeline access to Midland sourced crude supplies and improve crude supply flexibility. Improved pipeline access to Midland crudes will begin at the Tyler refinery in April and at the El Dorado refinery in May. This will increase Midland sourced crude in Delek US' refinery system by approximately 42,000 barrels per day and is expected to replace crude sources that are currently more expensive.In addition to improved pipeline access, an initiative to increase rail supplied crude has been underway during 2012. During the fourth quarter, approximately 17,200 barrels per day of rail supplied crude were purchased for the El Dorado refinery, which was an increase from approximately 1,000 barrels per day in May 2012. Construction of a new rail facility with two off loading racks at this refinery is underway with one rack that has the ability to handle approximately 7,500 barrels per day of heavy Canadian crude currently in service. The second rack is expected to be completed in the second quarter of 2013. The combined capacity of both racks will be able to handle approximately 12,000 barrels per day of heavy crude or up to 25,000 barrels per day of light crude. This is in addition to a third party rail facility adjacent to the El Dorado refinery that can offload up to 20,000 barrels per day of light crudes. These facilities allow the El Dorado refinery the ability to receive primarily Canadian, Bakken, Eagleford, Cushing and other cost advantaged crude by rail. The combination of improved pipeline access and increased rail supplied crude will allow the El Dorado refinery to operate at capacity without relying on Gulf Coast crude supplies.