Derivative Instruments

3 Months Ended

Mar. 31, 2025

Derivative Instruments and Hedging Activities Disclosure [Abstract]

We use the majority of our derivatives to reduce normal operating and market risks with the primary objective of reducing the impact of market price volatility on our results of operations. As such, our use of derivative contracts is aimed at:

•limiting our exposure to commodity price fluctuations on inventory above or below target levels (where appropriate) within each of our segments;

•managing our exposure to commodity price risk associated with the purchase or sale of crude oil, feedstocks/intermediates and finished grade fuel within each of our segments;

•managing our exposure to market crack spread fluctuations;

•managing the cost of our Renewable Identification Numbers ("RINs") credits required by the U.S. Environmental Protection Agency ("EPA") to blend biofuels into fuel products ("RINs Obligation") using future commitments to purchase or sell RINs at fixed prices and quantities; and

•limiting the exposure to interest rate fluctuations on our floating rate borrowings.

We primarily utilize commodity swaps, futures, forward contracts and options contracts, generally with maturity dates of three years or less, and from time to time interest rate swaps or caps to achieve these objectives. Futures contracts are standardized agreements, traded on a futures exchange, to buy or sell the commodity at a predetermined price and location at a specified future date. Options provide the right, but not the obligation to buy or sell a commodity at a specified price in the future. Commodity swaps and futures contracts require cash settlement for the commodity based on the difference between a fixed or floating price and the market price on the settlement date, and options require payment/receipt of an upfront premium. Because these derivatives are entered into to achieve objectives specifically related to our inventory and production risks, such gains and losses (to the extent not designated as accounting hedges and recognized on an unrealized basis in other comprehensive income) are recognized in cost of materials and other.

On August 20, 2024, we entered into an interest rate swap agreement to hedge floating rate debt by exchanging interest rate cash flows, based on a notional amount from a floating rate to a fixed rate, which effectively fixed the variable SOFR interest component of the Delek Term Loan Credit Facility. The aggregate notional amount under this agreement covers $500.0 million of the outstanding principal throughout the duration of the interest rate swap. Because this swap was entered into to achieve objectives specifically related to our interest expense, such gains and losses are recognized in interest expense, net on the condensed consolidated statements of income.

Forward contracts are agreements to buy or sell a commodity at a predetermined price at a specified future date, and for our transactions, generally require physical delivery. Forward contracts where the underlying commodity will be used or sold in the normal course of business qualify as normal purchases and normal sales ("NPNS") pursuant to ASC 815. If we elect the NPNS exception, such forward contracts are not accounted for as derivative instruments but rather are accounted for under other applicable GAAP. Commodity forward contracts accounted for as derivative instruments are recorded at fair value with changes in fair value recognized in earnings in the period of change. Our Canadian crude trading operations are accounted for as derivative instruments, and the related unrealized and realized gains and losses are recognized in other operating income, net on the condensed consolidated statements of income. Additionally, as of and for the three months ended March 31, 2025, other forward contracts accounted for as derivatives that are specific to managing crude costs rather than for trading purposes are recognized in cost of materials and other on the condensed consolidated statements of income in our refining segment, and are included in our disclosures of commodity derivatives in the tables below.

Futures, swaps or other commodity related derivative instruments that are utilized to specifically provide economic hedges on our Canadian forward contract or investment positions are recognized in other operating income, net because that is where the related underlying transactions are reflected.

From time to time, we also enter into future commitments to purchase or sell RINs at fixed prices and quantities, which are used to manage the costs associated with our RINs Obligation. These future RINs commitment contracts meet the definition of derivative instruments under ASC 815, and are recorded at estimated fair value in accordance with the provisions of ASC 815. Changes in the fair value of these future RINs commitment contracts are recorded in cost of materials and other on the condensed consolidated statements of income. As of March 31, 2025, we do not believe there is any material credit risk with respect to the counterparties to any of our derivative contracts.

The following table presents the fair value of our derivative instruments as of March 31, 2025 and December 31, 2024. The fair value amounts below are presented on a gross basis and do not reflect the netting of asset and liability positions permitted under our master netting arrangements, including cash collateral on deposit with our counterparties. We have elected to offset the recognized fair value amounts for multiple derivative instruments executed with the same counterparty in our financial statements. As a result, the asset and liability amounts below differ from the amounts presented in our condensed consolidated balance sheets. See Note 12 for further information regarding the fair value of derivative instruments (in millions).


		March 31, 2025				December 31, 2024
Derivative Type	Balance Sheet Location	Assets		Liabilities		Assets		Liabilities
Derivatives not designated as hedging instruments:
Commodity derivatives (1)	Other current assets	$	24.1	$	(24.7)	$	19.5	$	(22.0)
Commodity derivatives (1)	Other current liabilities	—		—		5.4		(5.4)

Commodity derivatives (1)	Other long-term liabilities	0.1		(0.6)		—		—
RINs commitment contracts (2)	Other current assets	1.3		—		0.3		—
RINs commitment contracts (2)	Other current liabilities	—		(0.1)		—		(5.6)
Interest rate swap derivatives	Other current assets	2.7		—		3.5		—

Interest rate swap derivatives	Other long-term liabilities	0.4		(3.3)		4.8		(5.1)
Total gross fair value of derivatives		28.6		(28.7)		33.5		(38.1)
Less: Counterparty netting and cash collateral (3)		24.0		(24.8)		19.9		(27.4)
Total net fair value of derivatives		$	4.6	$	(3.9)	$	13.6	$	(10.7)

(1)As of March 31, 2025 and December 31, 2024, we had open derivative positions representing 21,438,450 and 18,471,700 barrels, respectively, of crude oil and refined petroleum products. Additionally, as of March 31, 2025, we had no open derivative positions representing natural gas products. We had 1,495,000 open derivative positions of natural gas products as of December 31, 2024.

(2)As of March 31, 2025 and December 31, 2024, we had open RINs commitment contracts representing 28,815,458 and 36,000,000 RINs, respectively.

(3)As of March 31, 2025 and December 31, 2024, $0.8 million and $7.5 million, respectively, of cash collateral held by counterparties has been netted with the derivatives with each counterparty.

Total gains (losses) on our non-trading commodity derivatives and RINs commitment contracts recorded in the condensed consolidated statements of income are as follows (in millions) (3):


	Three Months Ended March 31,
		2025		2024
Gains (losses) on hedging derivatives not designated as hedging instruments recognized in cost of materials and other (1)		$	15.3	$	(21.7)
Losses on interest rate derivatives not designated as hedging instruments recognized in interest expense, net (2)		(2.2)		—




Total gains (losses)		$	13.1	$	(21.7)

(1) Gains (losses) on commodity derivatives that are economic hedges but not designated as hedging instruments include unrealized gains of $1.6 million and losses of $(9.0) million for the three months ended March 31, 2025 and 2024, respectively.

(2) Losses on interest rate derivatives that are economic hedges but not designated as hedging instruments include unrealized losses of $(3.4) million for the three months ended March 31, 2025. There were no unrealized gains (losses) on interest rate derivatives that are economic hedges, but not designated as hedging instruments for the three months ended March 31, 2024.

(3) See separate table below for disclosures about "trading derivatives".

Total gains (losses) on our trading derivatives (none of which were designated as hedging instruments) recorded in other operating income, net on the condensed consolidated statements of income are as follows (in millions):


	Three Months Ended March 31,
		2025		2024

Trading Physical Forward Contract Commodity Derivatives
Realized gains		$	—	$	0.2
Unrealized gains (losses)		—		—
Total		$	—	$	0.2