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Intrinsic Value is all-important and is the only logical way to evaluate the relative attractiveness of investments and businesses.
Good day, and welcome to the Delek US Holdings 2022 First Quarter Earnings Call. All participants will be in listen-only mode. [Operator Instructions] Please note this event is being recorded.
I would now like to turn the conference over to Blake Fernandez, SVP of Investor Relations. Please go ahead.
Good morning. I would like to thank everyone for joining us on today's conference call and webcast to discuss Delek US Holdings' First Quarter '22 Financial Results. Joining me on today's call is Uzi Yemin, our Chairman, President and CEO; Reuven Spiegel, EVP and CFO; Todd O'Malley, EVP and Chief Operating Officer; as well as other members of our management team.
The presentation materials used during today's call can be found on the Investor Relations section of the Delek US website. As a reminder, this conference call may contain forward-looking statements as that term is defined under Federal Securities laws. Please see Slide 2 for the Safe Harbor statement.
In addition to reporting financial results in accordance with Generally Accepted Accounting Principles, or GAAP, we report certain non-GAAP financial results. Investors are encouraged to review the reconciliation of these non-GAAP financial measures to the comparable GAAP results, which can be found in the press release posted on the Investor Relations section of the website.
Our prepared remarks are being made assuming that the earnings release has been reviewed, and we are covering less segment and market information that is incorporated into the press release. On today's call, Reuven will review financial performance. I will cover capitalization and guidance. Todd will cover operations and CapEx. And Uzi will offer a few closing strategic comments.
With that, I will turn the call over to Reuven.
Thank you, Blake. On an adjusted basis, for the first quarter of 2022, Delek US had a net income of $42.9 million or $0.58 per share compared to a net loss of $80 million or $1.08 per share in the prior-year period. Our adjusted EBITDA was $172.8 million in the first quarter compared to $12.6 million in the prior-year period.
I would like to highlight that during the quarter, the Tyler refinery inventory was retrospectively converted from a LIFO accounting basis to FIFO. This puts all our refineries on the same basis with FIFO inventory accounting. This is an opportune time to improve the communication of our results with The Street.
In an effort to simplify messaging, we plan to discuss underlying performance on an adjusted EBITDA and EPS basis going forward. And we'll no longer highlight the impact of other inventory and hedging within our discussion of results.
Moving to Slide 4, we provide the cash flow waterfall. In the first quarter of 2022, we had a positive cash flow of approximately $27 million from continuing operation, which includes a working capital detriment of $77 million. Please note the financing activities bucket includes $64 million shares purchased from Icahn Group in March.
With that, I will turn it over to Blake.
Thanks, Reuven. Slide 5 highlights our capitalization. We ended the first quarter with $854 million of cash on a consolidated basis and $1.36 billion of net debt. Excluding net debt at Delek Logistics of $903 million, we had net debt of approximately $456 million at March 31 of this year.
Moving to Slide 6, we provide first quarter guidance for modeling. Operating costs are forecasted to be in the range of $165 million to $175 million. Regarding the $64 million share purchase from the Icahn Group on May 7, this represented 4.7% of our shares outstanding. Given that the transaction occurred fairly late in the first quarter, the full impact of our share count will not be witnessed until the second quarter results.
Finally, the planned acquisition of 3Bear places us well on track to achieve our longer-term midstream EBITDA target of $365 million to $395 million across our segments. This transaction should help transform DKL into a larger, more scalable entity with approximately 40% of pro forma contribution margin coming from third parties on a fixed fee basis, along with broader diversification within the Permian Basin and expanded product mix into natural gas and water. Collectively, these attributes should further propel DKL toward becoming a true stand-alone entity and enhance the underlying value of DK's interest in the company.
With that, I will turn the call over to Todd to discuss operations and CapEx.
Thanks, Blake. During the first quarter, our total refining system crude oil throughput was approximately 272,000 barrels per day. In the second quarter of '22, we expect crude oil throughput to average between 280,000 and 290,000 barrels per day or approximately 94% utilization at the midpoint. With no major turnaround activity planned for the balance of the year, we are in a strong position to capture the elevated margin environment.
On Slide 7, capital expenditures during the first quarter were $33 million. The full-year '22 capital program is expected to be in the range of $250 million to $260 million on a consolidated basis. This excludes capital spending associated with the planned 3Bear acquisition that is expected to close around midyear.
Before turning it over to Uzi, I would like to highlight the significant growth being witnessed in our Permian Gathering system. Strong producer demand drove a significant ramp-up in volumes with a 20% increase sequentially, and we expect volumes to at least double from 4Q '21 to 4Q '22.
With that, I'll turn the call over to Uzi for his closing comments.
Thank you, Todd, and good morning, everybody. Adjusted EBITDA reflected a significant improvement, and we expect ongoing momentum into the second quarter based on prevailing margins and no planned maintenance. The 5% share purchase in March is proving to be solid investment based on recent equity performance. As we generate free cash flow, we will continue to look for opportunities to enhance our balance sheet and return cash to shareholders.
The increase in the payment activity is providing multiple benefits to our company. In our Legacy DPG system, we're seeing opportunities for organic growth. Not only does this provide an avenue for incremental earnings in our gathering business, but should ultimately lead to more attractive crude discounts in our refining system. Additionally, strong producer nominations gave us the confidence to pursue the announced 3Bear acquisition. This strategic opportunity will help springboard DKL to be more competitive among midstream peers, and provides a platform for further growth into the future.
After a challenging several quarters through the pandemic-led downturn, our company is firing on all cylinders and well positioned to capture opportunities that exist in the market.
With that, operator, would you please open the call for questions?
Thank you. We will now begin the question-and-answer session. [Operator Instructions] Our first question comes from Carly Davenport with Goldman Sachs. Please go ahead.
Hey, good morning. Thanks for taking the questions here. I wanted to just start on the refining side. The 2Q volume guide that you provided looks quite strong. So I guess can you just talk a bit about how operations have been trending so far this quarter? And really, if you can run well at these utilization rates, where could you see cash flow or EBITDA power trending for the quarter given what we're seeing on the margin side?
Good morning, Carly, thanks for taking the time to ask us these questions. So we said all along that there will be no turnaround during this year, no major turnaround. We took the opportunity to fix a couple of things in the first quarter, the reason you see the $272 million number. Actually, we are right now over 100% our nameplate running for quite some time. Now I don't want to commit on behalf of our lead operator, Nithia Thaver, who just got nominated. I want him to beat the expectations, but it looks pretty strong right now.
Great, I appreciate that color. And then the follow-up was just kind of around capital allocation. You reduced some shares outstanding with the repurchase during the first quarter. So just wanted to get the latest temperature around potential for further capital returns from here, if you consider something sustainable or if the preference is to be more opportunistic like we saw in the first quarter?
Well, Carly, I said to the guys here that I'm going to be -- to give reality the way we see it. The margin we see now are -- and I've been doing it a long, long time, I've never seen any margins like that in my entire career. And the market has changed dramatically. And we positioned ourselves -- we didn't know that the margins will be as strong, but we've positioned ourselves with no major maintenance. We obviously took the opportunity to buy the shares from the Icahn Group at $18 and change, we're already up 40%, 35% on that investment. That's what you investors expect from us, and that's what we do.
The dividend as well as the buyback is certainly on the table. In our malls, we look on doing that toward the second quarter or the third quarter when we announced the second quarter results. If things stay like that, there's no reason to believe that we won't look at both. In doing that, depends on what the market looks like. But right now, the margins are so strong and operation looks good. So we are bullish about returning cash to shareholders on top of doing other investments similar to what we did with 3Bear, we don't have anything on the horizon with the acquisition. We just did this one. So cash to shareholders is certainly on the table.
Great. Thanks for that. And last I just wanted to congratulate, Uzi, on your retirement, and thank you very much for all of the value perspectives over the years.
Thank you so much. Thanks for your kind word, Carly.
Our next question comes from Roger Read with Wells Fargo. Please go ahead.
Yes, good morning Uzi, and I assume this is going to be your last major call with us. If so, then I offer my congratulations as well, although I know you're not leaving the company altogether.
Honestly, this is going to be my -- the one before the last one. My last one will be the second quarter. I want this quarter to be the prior quarter, if you will. So we'll see. Maybe I'll do a winning lap over this quarter.
All right. We'll do a penultimate here and then the [indiscernible] next time. I just had a couple of questions. One historically, Delek has had a fairly high distillate yield as a refiner and certainly among what we consider the smaller mid-cap refiners. So I was curious how that still appears to -- assuming that still is intact, how that's running through the system. And then as you look at an environment today that's very different than what we've typically seen when we think of outsized earnings power for Delek, it's always been more of a crude feedstock driven. This is very much a crack spread and capture-driven event, how you all plan to run things to take advantage of that?
Well, certainly, you saw in the past 4 handle with crack spread 4 handle when I say 40% and more, 41%, 42%, 43% for distillate with crack spread being $80 per distillate or $70, we're pushing everywhere we can through the DHTs, the different DHTs in the different places. And gladly or luckily, we had some room for days like that, both in El Dorado and in Tyler. So we are trying to even buy some feedstock that you don't see in the numbers yet into these two systems. So absolutely, we're planning to be with the four handle 40-something percent for the quarter. Obviously, higher than 42%, 43% will be just great achievements.
Okay. And then as we think about the -- I think Big Spring is a little more gasoline, a little less diesel than the rest. Is there any -- are there any tweaks you're doing there? Or is it just let's assume it runs as is as we think about sort of capture issues here?
That's another point that we want to point for the first quarter. And Nithi, I don't know if you want to say something about that. But we did take the opportunity to fix a couple of things on the DHT in Big Spring during the first quarter. So we can fill it up. Nithi, I don't know or if you want to add anything to that.
Yes. We did some preemptive maintenance and the plants running full now and reliably.
The DHT in Big Spring, you should look at the historic numbers running at full.
Okay. Great. And then just a final follow-up question on that. Is there anything that you'll change in terms of the crude you're running to put a higher distillate cut into the system or the downstream units enough for that? Meaning, is there any reason to search for a Canadian barrel or any other heavy barrel out there?
Roger, I'll be bold in this. During times like that, all you want is to run what you know is reliable. Everywhere that we can put through the system is very valuable. So we are not trying any new types of crude. What I'm going to tell you, though, that because of our experience and because of the work we have done over the last few quarters, we do run, as I said, more than 100% utilization.
Loud and clear, thanks Uzi.
Our next question comes from Manav Gupta with Credit Suisse. Please go ahead.
Good morning. I just want to say that I know I've been covering this space for about 10 years. I know people on the call who have been covering it for longer. But over these last 40 earnings season or so, I've always looked forward to your comments on macro and refining, Uzi. So I would say, post 2Q, the refining earnings season would just not be the same without your insights.
Well, I appreciate that, Manav. We have been -- we know each other for a long, long time. And your support and other's support is just something that I couldn't do it without you. So really, really thank you for the nice words.
So Uzi, a quick question here is, over the last 10 years, let's go back a little. Delek was seen as a Permian refiner who was also trying to build its Midstream infrastructure to maximize the Permian crude usage and grow its earnings. Now as the company has evolved, particularly in the last two, three years, the perception that is here is that now Delek is a Permian Midstream company that also happens to run Permian crude. So the picture has inverted a little and your midstream earnings have continuously grown. So if you can talk about a little about how people perceive Delek today versus what they perceived it probably seven or eight years ago? And I'll leave at that. Thank you, Uzi.
Thank you, Manav. So let me take it that way. We always said, and I remember one of your note saying that this is -- that we are changing the company. We always say that Midstream is a key component of our strategy. With the addition of 3Bear, we certainly feel that we achieved our target of $375 million EBITDA. And we are going to integrate that into our system. We probably need to remember that we still have Wink to Webster sitting at DK and not DKL. That's something that will have a lot of value in it. Especially in light of the activity that we see in the Permian, that's an opportunity for me to say that we actually saw gathering going to -- if you remember, Manav, it was 80,000 barrels by the end of last year.
The combination between pipe and trucking now is exceeding 150,000 and counting. So the activity in the Permian is certainly picking up, and we are going to continue with this Midstream strategy all along. You saw that we are -- we sold some units and the EBITDA of the Midstream is growing.
At the same time, we are -- we want to capitalize on refining. During the downturn, there were some talks about different refineries to be shut. I felt and still feel that during downturn, we just tight your belt and you stick to it. And then all of a sudden, when the upturn comes, it comes in spades. So I would say that the Midstream is certainly a big component of our strategy. But refining, for sure, is something that we will continue to look at and make sure that this is the bread and butter of our company.
Thank you so much, Uzi.
Our next question comes from Doug Leggate with Bank of America. Please go ahead.
Thank you. Good morning everyone. Uzi, I guess I'll add my congratulations. I didn't think you were retiring. I thought you were just becoming the Chairman. But maybe I got that wrong. But anyway, congratulations. I guess it's a long time since we first met back in 2004. So I'll put myself in that category.
Yes. 15 years now, Doug. We were both young and handsome. We're just now handsome.
One of us still is, I'm not sure which one. But I want to ask you a big picture question. Look, when we did meet it was during the original Golden Age, it didn't last very long, I guess. It seems to us a lot of structural changes. So I just wonder if you could offer your perspective on how you see the U.S. as a generic refining center as you walk out or take a back seat? Do you think we've moved to a sustainable cost advantage with the capacity closures and gas and so on? I'm just curious on your view.
That's a great one, Doug. Let's -- and by the way, I read your note about the new Golden Age. I would even call it Diamond Age. We're not too sure our ages now, you and I. But when we spoke about Rita and Katrina, we thought, hey, wow, this is crazy. And then it lasted three, four weeks. Now we are into this thing. And I don't know, $80 distillate crack. Now big picture, the war in Ukraine in my mind is not going to end tomorrow morning. And even if it ends tomorrow morning, there will be some time before things pick up in Ukraine or in Russia, I'm sorry.
At the same time, there were a lot of closures of refineries, including here in the U.S. And the crude situation didn't get much better because of the downturn and because of the lack of investments. So I think what will happen now as producers still, we hear a capital discipline. But $100, you'll say one day capital disciplined, the second day. And then after a week, it start to loosen up and so on. That's what we see immediately from the small guys on our gathering.
So what we will see in the U.S. is picking up -- in our mind, picking up of drilling, and that will lead to differentials widening up. That's on top of the ESG movement, which we all know exist. And ESG, and we all know that, if you run LIFO with build, your emission, your greenhouse emission is much lower than when you run heavy sour crude. So I think that there will be a push for that as well in the U.S.
So overall, I think that you'll note and your timing was just spot on looking at the industry, I think we're right for a good 12, 18 months ahead of us.
Well, let's say, I think it takes longer than that. But thank you for the comments Uzi. As always delight, I do have to challenge you on something, right? So I'm going to challenge you on the stock over that along -- over most of that period. The stock has obviously been up and down with the cycle. But in absolute terms, it's pretty much been range grown for almost 10 years. And when I look at things like the cost of the industry, your G&A is about a thirds of Marathon, but the company is about a tenth of the size of Marathon, just to use that as an example.
I'm just kind of curious how you see the future for Delek. Is our refinery focused on the way you've focused on the lower 48 inline crude discounts, which have obviously tightened some. Is there still a role do you think for a $2 billion to $3 billion refiner? Or do you see Delek ultimately as part of a broader longer-term consolidation story?
Okay. So you asked two different questions. First, I'm going to challenge you back. If you take the combined operating cost, together with G&A, you will see that we not only were in line, but screened better than others. And happy to share that data with you as we check it on a quarterly basis. We want to challenge ourselves on that, but I'll leave it to that.
You're asking a much bigger question than the G&A, because the G&A is just allocation between the buckets. DK, and I said it, and I was bold in the past, DK as well as other small companies don't need to be stand-alone companies. And it's not a secret that during the pandemic with CVR buying shares, I thought that it's better to be together. You can't force somebody to merge with another company if they don't want to do that.
I'm still saying that small companies, not only on the refining side, also on the midstream side, we see that the market favors the big names of Valero, PSX and NPC. The market also favors midstream big guys, even though DKL performed very, very well. Like enterprise or EPD, Magellan, and other names, Kinder Morgan. So I think the industry, especially in light of these golden ages or diamond ages in the last 12, 18 months or, as you say, 24, 36 months, this industry is ripe and should be consolidated.
Good luck, Uzi. Appreciate your comments.
Thank you.
Our next question comes from Paul Sankey with Sankey Resources. Please go ahead.
Very morning. Uzi, perhaps you or maybe the new CEO could talk about the outlook for your cash return structure. You talked on Q1 about $800 million to $900 million of EBITDA as being a mid-cycle view. You're obviously way above that. Are you planning to put some sort of framework in the way that so many other companies now have? Thanks.
Absolutely. We -- the capital allocation and the capital return, as you said, these are really extraordinary times. And there's no reason to believe, you know it, that over the years, you've been with us a long, long, long time that we increase the dividend on a quarterly basis. We -- and with the times the way they are today and the amount of free cash flow, the cash or returning cash to shareholders is certainly something on the radar. To be honest, we considered to do it even this quarter, but we decided not to do it just to be prudent and to see how things shake up. But the way it's going, our Board certainly looks at it very favorably.
Got it. And could you just say your usual round up of -- well, we know that demand in your region is a bit different. But obviously, what we're looking at is demand disruption, pricing levels. Again, given your location, it may be somewhat misleading. But nevertheless, can you just talk a little bit about the macro, which is to say what you're seeing on the demand side? And then it's always interesting to hear your perspective on what's happening in the Permian on the supply side. Thank you, Uzi. And I'm sorry, I'm not being very jokey, but I did enjoy your line about being old and handsome.
Well, as we say, with the Permian activity picking up, the demand is certainly there. I said it, we're running wide open, completely full nowadays. So -- and we put something that I think in the midpoint is that 94%. So demand is certainly there for our products. I do want to say that demand -- there will be them in my mind with prices being where they are demand disruption. However, I think that the lot of these 4 million barrels of refining capacity as well as the things that are happening in Russia more than offset the demand disruption.
Yes. And presumably, you're still seeing strong demand through your system?
That is correct.
Just finally, sorry, for me. What's the year-over-year on that at the moment, at the same-store comp?
Paul, it's up 0.8%. If you look at the retail footprint on a same-store sales basis.
Graciously. Thanks guys.
Our next question comes from Paul Cheng with Scotiabank. Please go ahead.
Hey guys, good afternoon.
Mr. Cheng, are you going to give me hard time as you know now that I'm leaving?
Yes. I mean that just wish you have a wonderful time in retirement, but you're too young to actually fully retire. So I'm sure that we'll see you again at some form, but also that we should be able to spend a lot more time with your families in this world. So perhaps...
Certainly, there's somebody over there waiting for me.
Yes. Have fun on that. Several questions. In the first step, I mean, do you guys expect to have -- any insurance came to be received in the second quarter?
Hey, Paul, it's Blake. Yes, we are expecting some additional proceeds come in. I think you probably noticed that in our 1Q, we have just under $10 million of business interruption. That is adjusted out of results. Hits the other income line item. And the bulk of what we expect to continue coming in will also be business interruption treated the same way.
I see. And just curious that once that -- now you are -- everything is in FIFO, one of your competitors, CVR, they treat the FIFO impact as a special item. Do you guys intend to do that? And so that excludes that in the just earning going forward? Or that this will be part of the adjusted earning?
Paul, the approach we're taking is that it will not be adjusted out. That's our -- SEC group's opinion is that we should not be stripping that out of our adjusted results. And so going forward, our communication with yourself and your peers is largely going to be around what adjusted EBITDA is going to be. That will be inclusive of movements in other inventory. But that will swing up and down. But on a full-year basis, that will even out. So on a full-year basis, the number should look fairly comparable with peers.
And final question, Uzi, how important is the retail business? I mean you hear that the last several years has shifted the attention and the focus to the midstream. And so yes, retail just like -- you just continue to run it? And at some point, if the price is good, you will try to exit it? Or that this will be considered part of the longer-term core holding?
As you know, Paul, when you look back at NAPCO, we are going to continue to invest in retail. But if the opportunity comes, then, for sure, that's something that I'm sure the new management will look at. And say to themselves, am I getting the multiples and the returns from retail? As you know, building a store costs $6 million, to be conservative. The EBITDA for that store is $1.2 million, $1.3 million, therefore it's 5x. There's not a lot of projects that you can do that, especially with the free cash flow that is coming our way. But at the same time, if we can get a nice multiple and it makes sense for somebody else to take it, then for sure, we will look at that.
Yes. I think you've been saying that for some time, but you're saying that you need a certain critical mass before you will consider a sale. How big is the sufficient critical mass for you?
Well, if you remember, NAPCO, we had like 35 NTIs, the prototype, if you will. And these NTIs, as I said, generate $1.2 million. So you're talking about another $40 million, $45 million of EBITDA on top of the $50 million that we have right now. So if you're approaching $100 million, then you probably have a great chain that you can monetize it if you decide to do so.
Thank you and congratulations and wish you the most fun in your retirement.
Thank you. Thanks so much.
Our next question comes from Phil Gresh with JPMorgan. Please go ahead.
Hey guys, this is actually John Royall filling in for Phil. How are you? So just a quick one on the balance sheet. You should be generating a lot of cash going into the period curve coming out of refining. But sounds like returns of capital are looking imminent and you have an outflow coming up to the acquisition. So I just -- what are your current thoughts around leverage targets on a consolidated basis? And then relatedly, do you have a minimum cash balance that you guys think about to operate the business?
Okay. So that's a great question. If you look at our midstream, obviously, the leverage will go up now because we are going to finance the 3Bear deal mainly through debt. So -- but long-term, we always say to ourselves that between 3x and 3.5x on the midstream side makes sense.
And then if you look at the stand-alone, the other business, if you will, like refining, retail and renewables, we don't want to be more than 1x on that. Obviously, with the EBITDA that we're generating, we will be something lower than that. So we are pretty comfortable where we are. We used to have a target of $1 billion. We are now at $850 million. And so we will shore up the balance sheet. But we see that, honestly, with the amount of cash that is being generated, we can do several things or show up the balance sheet, making sure that we have money for investments and at the same time, return cash to shareholders.
Okay. Thanks. And is there a minimum cash balance you guys operate the business with?
We used to think that $1 billion is a good number, and I don't think that we change that much.
Okay. Great. And then just a quick follow-up. I don't think you guys have gotten much into Midland differentials in this call. So it would be great if you could just give some color around your updated expectations there and your view on Permian production growth, I guess, over the...
Yes, I'll let Todd to take that one.
Yes, sure, John. As I'm sure you're aware, the Midland differentials have been bouncing around kind of at $0.50 premium to about $1.50 premium. Right now, they're pretty much somewhere right in the middle of that at $1. As we go out the curve, because of exactly what you just mentioned, the fact that we see incredible growth in the Permian, especially around our Midland gathering system, we see that differential between Midland and the coastal markets widening out significantly.
In addition to that, Brent-TI is also fairly wide on a recent history basis in the backs of the curve, so about a $5 differential. So we feel good about where we're at. We feel good that, as Uzi said earlier, differentials will continue to erode. That's a big tailwind for the refining system. And then in addition to that, with the incremental growth that we're seeing, that's a big tailwind for the DKL piece of the business as we start to load into Wink to Webster and also just on the Delek Permian Gathering system. So if you have any follow-ups, we can go deeper, but I think that covers it.
That's great. Thank you.
Our next question comes from Jason Gabelman with Cowen. Please go ahead.
Hey, thanks. Uzi, just wanted to echo the comments that others have made. It's been great listening to your commentary over the years. I wish you all the best moving forward. The first question I have is on the 3Bear acquisition. And I was wondering if you could discuss some of the benefits, if there are any, that the acquisition brings not to the MLP, but to the C-Corp from an operational synergy standpoint. And then kind of more broadly, if there's the ability to deploy additional capital into midstream and the 3Bear acquisition given there's going to be robust cash flow generation this year? Thanks.
You're asking actually three questions, Jason. So I'll try to answer -- we'll try to answer them in the sequence that you asked. First, getting into 3Bear, we felt that, that's the right timing. We actually have been working on couple of opportunities in that area. And the moment we felt that the market is changing, that was the time that we put the trigger. Similar to what happened with the -- with the Icahn Group, we were been working with them for a while.
And then when we thought that the time was right, we put the trigger to buy their shares. I hope they are happy as much as we are. So the timing is because of what the things that are happening and the activity in the Permian. We felt that we need to complement what the DPG system that we have with another Delaware system, if you will. So that's one thing.
The second thing is, obviously, the timing is with everything that is happening in the Permian, we hope that producers will continue to drill and accelerate that. We got into this business because it has two other areas of interest for us, natural gas and water. And we feel that natural gas would be a constraint in the Permian. And also, we are with the lack of water in the Permian, we are going to move as an industry from fresh water to produce water, which 3Bear know to do very well. That will open up the opportunity for us to lend these two lines of business, not excessive -- not too expensive entry point and maybe to apply it to the DPG and to the existing producers we have.
Got it. Great. That's really helpful. My second question is just on the SPR release. And I'm wondering if you've seen any movement in the Brent-TI differentials or maybe across the U.S. more broadly as a result of the SPR release and if you're able to access and benefit from those barrels? Thanks.
Hey, Jason, it's Todd. I'll address that one. And if Uzi has any other comments, he can jump in on the back end. The most recent SPR portion of the release was about 30 million barrels. 27 million of it was sour. 3 million to 4 million of it was sweets. Those barrels cleared at quite expensive differentials relative to the benchmarks that they're marked against. The sweets marked against MEH. So the government clearly looking at an export-type barrel. We saw quite a bit of volume actually loaded across the dock.
So for us, we were involved in the process, but those barrels look relatively expensive to us. The benefit that we see is the fact that as those barrels come out of the SPR, we have seen -- we did see a couple of weeks after the fact when they started hitting the market, that Brent-TI spread widening out. We saw Cushing differentials come off. Both of those are tailwinds to the business.
And in addition to that, we also saw the differentials come off, which I think is, by and large, a product of the fact that a number of those barrels out of the SPR release went offshore and satisfied some of that demand and that left some of the inland barrels hunting for home. So again, that was extremely advantageous for us, and that was our view. So that's how we expressed ourselves in the market.
Great. Thanks.
This concludes our question-and-answer session. I would like to turn the conference back over to Uzi Yemin for any closing remarks.
Well, I'd like to thank my colleagues around the table. With the new nominations of Avigal Soreq, as our new CEO; Todd O'Malley, as our COO; and Mr. Thaver, as our President of Refining, I think we have a very experienced and very capable management team. I know all of them for many, many years, and I believe that they will do an excellent job for our company. Also, I'd like to thank you investors in believing in us, the analysts for asking questions.
The Board of Directors, obviously, for sticking with us during the downturn. But mainly and mostly, I'd like to thank each one of the employees of this great company, who makes it what it is. Thank you. Have a great day.
The conference is now concluded. Thank you for attending today's presentation. You may now disconnect.