Shares of Delek US Holdings rose 6 percent Thursday to their highest level in six weeks after the company reported better-than-expected earnings and executives said they will invest $70 million to expand their Texas refinery and double their share buyback program.
Brentwood-based Delek reported second-quarter profits of $54.9 million, an increase of 18 percent from the year before. This year's number included a one-time, non-cash expense of more than $22 million related to a new supply and offtake agreement. Operating profits climbed to $106 million from $77.8 million, helped by higher refining margins, a busier Arkansas refinery and a stronger quarter from the company's logistics operations.
"We continue to benefit from a wide discount for Midland WTI, which is currently trading at greater than $10 per barrel below Cushing," said Chairman, President and CEO Uzi Yemin. "We have significantly increased the potential amount of cash that may be returned to shareholders in 2014. We also continue to invest in our business for future growth."
The next example of that investment strategy is a project to boost the crude oil capacity of Delek's refinery in Tyler, Texas, by a quarter to 75,000 barrels per day. The $70 million project is expected to be completed by the end of the first quarter.
Separately, the board of Delek recently voted to increase the company's repurchase plan, which will expire at the end of this year, to $100 million. That amounts to about 5 percent of the company's current market capitalization. At about 1:20 p.m., shares of Delek (Ticker: DK) were changing hands at $31.15, up 6.5 percent on the day. So far this year, however, they're still down about 10 percent.