Good morning. My name is Tanisha and I will be your conference operator today. At this time, I would like to welcome everyone to the Delek U.S. Holdings Fourth Quarter Earnings Conference Call. All lines have been placed on mute to prevent any background noise. After the speakers’ remarks, there will be a question-and-answer session. [Operator Instructions] Thank you, Mr. Keith Johnson; you may begin.

Thank you, Tanisha. Good morning. I would like to thank everyone for joining us on today’s conference call and webcast to discuss Delek U.S. Holdings’ fourth quarter and year end 2014 results. Joining me on today’s call will be Uzi Yemin, our Chairman, President and CEO; Assi Ginzburg, our CFO; Fred Green, our Executive VP and President of Refining; Danny Norris, our CAO as well as other members of our management team. As a reminder, this conference call may contain forward-looking statements, as that term is defined under Federal Securities laws. For this purpose, any statements made during this call that are not statements of historical fact may be deemed to be forward-looking statements. Without limiting the foregoing, the words believes, anticipates, plans, expects and similar expressions are intended to identify our 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, 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 May 24th by dialing 855-859-2056 with the confirmation ID number 70269248. An online replay may also be accessed for the next 90 days at the company’s website at delekus.com. Last night, we distributed a press release that provides a summary of our fourth quarter and year end 2014 results. This press release is available on our corporate website and through various news outlets. On today’s call, Assi will begin with a few opening remarks on financial performance for the quarter. Danny will cover additional financial details before turning it over to Fred, to discuss initiatives in our Refining segment. Then Uzi will offer a few closing strategic comments. With that, I’ll turn the call over to Assi.

Thank you, Keith. We had an outstanding fourth quarter 2014 as our results benefited from wider crude differential, increased throughout in our refining system, hedging gain and very strong local market condition in all three segments. In addition, lower crude cost in the year-on-year base improved margin for residual product, especially at El Dorado. EBITDA was approximately $101 million for the fourth quarter and $478 million for 2014. Our financial position remains strong and we ended up the fourth quarter with $444 million of cash on a consolidated basis and $146 million of net debt. Excluding debt and cash at Delek Logistics, we had net cash position of $104 million of Delek U.S. During Q4, we purchased approximately $33 million of stock and approximately $75 million during 2014 under our $100 million share repurchased authorization, which expired on December 31, 2014. Our board has approved a new $125 million repurchase program that will expire on December 31, 2015. Now I will turn it over to Danny to discuss additional financial details.

Thank you, Assi. For the fourth quarter of 2014, Delek U.S. reported net income of $37.5 million or $0.64 per diluted share. This compares to a net loss of $4.7 million or $0.08 per basic share in the fourth quarter last year. All three segments improved on year-over-year basis in the fourth quarter of 2014. For the full year 2014, Delek U.S. reported net income of $198.6 million or $3.35 per diluted share versus net income of $117.7 million, or $1.96 per diluted share in 2013. Now I would like to discuss a few items on the fourth quarter income statement before reviewing segment performance. During the fourth quarter of 2014, we benefited from a $60.9 million of hedging gains, of which $42.6 million were realized. This partially offset approximately $72.9 million reduction in gross margin due to inventory adjustments resulting from a decline in market prices. Excluding the net impact of inventory adjustments and unrealized gains, our fourth quarter after-tax earnings would have been $37.7 million higher than the expected results. General and administrative expenses increased to $35.8 million in the fourth quarter of 2014, compared to $30.8 million in the prior year period. This increase was primarily due to employee related expenses and professional services. Depreciation expense was $29.5 million in the fourth quarter of 2014, compared to $25.6 million in the fourth quarter of 2013. This increase was primarily due to capital spending in the first quarter of 2014 for turnaround and other capital projects at the El Dorado refinery. Finally our income tax rate excluding the minority interest income associated with Delek Logistics of $7.8 million was 31.1% in the fourth quarter of 2014, which was lower as a result of passage of the Tax Increase Prevention Act also known as extenders legislation during December 2014.…

Thanks Danny. I would like to discuss our fourth quarter 2014 performance at the refineries and our plans for the Tyler refinery turnaround and expansion. Our El Dorado refinery processed approximately 69,700 barrels per day of mostly like crude and our asphalt yield was 8.7% during the quarter. This compares to 64,800 barrels per day of crude in the fourth quarter of 2013. On a quarter-to-date basis through February 20, El Dorado has processed approximately 77,000 barrels per day of crude. At Tyler we processed approximately 58,700 barrels per day in the quarter compared to approximately 55,600 barrels per day in the fourth quarter of 2013. At our Tyler refinery, operating units were shut down on January 23 to start to turnaround. We’re in the final stages in the turnaround which we expect to cost approximately $43 million, of which $33 million is to be spent during the first quarter of 2015. Also, we’re nearing completion on the expansion project to expand the crude nameplate capacity at the Tyler refinery to $75,000 barrels per day. This expansion project is expected to cost approximately $70 million, of which roughly $50 million was spent during 2014. In addition, we have replaced the FCC reactor with the state of the art technology at a cost of approximately $9.3 million. Refineries expected to return in normal operations by mid March. Based on current market conditions, this project is expected to generate significant return. Using a range of 10,000 to 15,000 barrels per day of incremental crude throughput, we believe the annual EBITDA generated from this project could range from $40 million to $65 million. In addition, the improved yields from the new FCC reactor are expected to increase EBITDA by an additional $10 million on an annual basis. Now, I’ll turn the call over to Uzi for his closing remarks.

Thank you, Fred. All three of our segments performed well during the fourth quarter. With the contribution margin in both logistics and retail reaching record fourth quarter level. Also our refining segments results improved year-over-year despite the declining 5-3-2 crack spread involvement. For 2014, we generated contribution margin of $610 million, which is a 39% improvement from $439 million in 2015. During the year, we invested in our business by spending approximately $257 million on capital expenditures while returning a record amount of 134 million to shareholder through dividend and share repurchases. During the first half of 2015, we will reach the end of the large capital spending program, after completion of this program will believe that the base maintenance level of capital expenditures required for our operations to be less than $100 million after year. Turning the expected completion of Dallas expression and turnaround in early March, we will have completed turnaround and replaced FCC reactors on both refineries, added crude flexibility at El Dorado and increased nameplate capacity at Tyler. These steps combined with our access to cost advantage crude and improved our competitive position and should increase our free cash flow position. In addition, our cash flow should benefit from continued growth at Delek Logistics. This growth should support DKLs ability to reach high fleet when requires the distribution exceed $0.56 per unit, which we expect to happen in the second half of 2015. In December, market or markets have continued to improve as the refineries to local cost savings increasing 72 per barrel, to $21.66 barrel program as of yesterday. Also, the crude oil future market has moved back into contango. Our financial position remains strong and we continue to focus on our capital allocation strategy to support growth of our businesses and return of cash to shareholder through dividend and share repurchases. With that operator will you please open the call for questions? Q - Roger Read – Wells Fargo: Fine.

Good morning, Roger.

Uzi, I would like to you’ve done a great job here in terms of rolling out the logistics business, Tyler expansion you improved on the crude sourcing side, you get a large cash balance and part of that kind of allocated to the shareholder side. You highlighted before desire to grow the MLP business. Is that where we should look for some of that additional cash to be deployed in ‘15 and possibly again in ‘16 or is there another option here for growth that we should be focused on?

Well, let’s start with the easy part of the answer, as we said in the past we’re looking for great project to invest our money. We thought that return of one time EBITDA is always great. That we coming to again for their would be a lot of free cash flow are based on the projection that we are now coming always the second part of 2015. We don’t foresee a huge capital project in the next couple of years now refinery, so that would free up that cash. That cash will find itself into three components, first of all the DNA of this company, as we all know is the M&A and that’s in time both on the MLP which is all natural, but we’re looking for other refining assets – our investment in refining is cutting down dramatically will discuss a project coming to an end. The second part is, obviously organic growth and project that we are well going to build especially on the MLP site, we are looking at several projects that we are not ready to announce just get by this coming that will great return our shareholder. In the third one, is that we say we just increased our repurchased program to $125 million we are committed to return cash the shareholders. So this is the order of how we look at our capital allocation.

So, I can sum that up as stay tuned with where you go next?

Probably.

Last question for me is the hedging, obviously great effort or great return there in the fourth quarter and we’ve had a couple of quarters here in a row of pretty good hedging, but if we go back over prior years, hedging gains weren’t that significant. Is there a change in how you’re looking at the hedging strategy? Is it simply been market conditions and is there a way we should think about it going forward – this is – I’m not asking you to predict $30 million or 40 million a quarter in hedging gains, but are we looking for something in that magnitude or that’s not really how the program setup and it really just been a function of the way products and feedstock prices have moved around recently?

Well, we are not afraid that we are [indiscernible] in the world with hedging. We believe that this is an incremental business. It’s not the business itself, but it supports the business. I’d like to clarify something about the hedging. This is a big number, $52 million. The quarter before that wasn’t as high, but the end of second quarter wasn’t a big hedging game as well. We had a big position of Brent-TI that we got into it at $14. As it got to the levels of $4 and $5 a month ago, we were out of that position. So even though, some of the profit we call it unrealized, it’s actually – that position is – we got out of that position. Obviously we’re back to our Brent-TI for the year $8, quarterly is $10, and 2016 is $8. We are looking at that. But that big position is basically realized now, obviously we call it unrealized until it’s matured, but that contribution – a portion of that hedging game. Now we are going in and out of positions. So, I wouldn’t be surprised if hedging will continue to bring value to our company.

So, just to follow-up on that, so as most of your hedging been kind of crude on crude or has it been crack spreads or, I mean, what’s the way you typically approach it is I guess is what I’m trying to get to here?

By the end of the day, this is hedging and not trading. We are looking at the pre-stock cost. We’re looking at crack spread. We’re looking at spread in between different markets. We have a pretty sophisticated program here. So, I wouldn’t try to guess exactly what we are doing. The only reason I mention in this Brent-TI is because we’re out of that position. So we’re doing several component of hedging to protect our asset. I will just be clear, all that hedging is around our assets. We’re not a trading company.

Okay, thank you for the clarification.

And your next question comes from the line of Blake Fernandez with Howard Weil.

Guys, good morning. Congratulations on the results. I wanted to clarify, for one, the EBITDA target or contribution from Tyler, I think you previously stated around $40 million of EBITDA which I believe was underpinned by $16 crack and a $4 Midland spread. Can you just clarify this new higher range – is that simply a function of new assumptions and if you don’t mind could you clarify what that is?

Now it’s very simple. As the market was in backwardation in the past, we took that into account. Now the market is in contiguous, I think in 2016 is around $0.80, $0.90 so that’s a big slip between the backwardation and contango. Also as we see the work progress, we’re more comfortable that we will achieve the growth of closer to 15,000 barrels than versus the 10,000 barrels that we published earlier. These are the two main factors. Audited crack spread improved dramatically since then as well, but that’s just the two factors – the first two that I mentioned.

On non-contango, Uzi, you want 100% exposed at Tyler and also is El Dorado at all exposed on contango.

In fact the local market – in fact the local market gathering, yes.

Okay. And then…

Let me be clear, 100% and El Dorado I think is 85%.

85%, okay. And back to your comments on free cash flow and then really base CapEx if I heard you correct about 100 million a year. Is it fair to think I mean as we kind of digest Tyler and get that past us, I mean, I’m assuming that will be some kind of growth capital, so we shouldn’t be thinking that CapEx into ‘15 and beyond goes choice at 100 million level you just clarifying what the base spent essentially is right?

Correct and $100 million probably with some turnaround dollars with it and since we don’t expect to your turnaround in the next four years, probably maintenance CapEx for the next four years combined with the refinery closer to 80. And when you add the logistics and retail, but we looking overall base probably you will see higher CapEx or don’t know much higher, because that refineries that will be mentioned high in the end of the capital program.

Okay. Would you mentioned is organic growth potential at the MLP level, I’m assuming at this point the parent company DK will be funding the add and ultimately dropping into DKL rather than DKL funding organic growth at this point that assessment.

[Indiscernible] overall we increased our great facility at the DKL level to $700 million. So we have tremendous amount of improvement I think we borrowed at the end of the quarter, $140 million to $160 million, so we have $460 million availability at the DKL level or so we have availability at the DKL level. I will be surprised that we create project that will combined project between the parent or the sponsor and the MLP itself.

Okay, sorry to ask last one, one of peers recently kind of reallocated their shareholder distribution strategy away from special dividends toward more buybacks and I’m just curious if you have if you haven’t thought the $0.10 per quarter special dividend that you’ve been declared, do you expect to maintain that?

Well, we want to see how the reaction to this repurchase program before we make our mind on just special dividend. The policy has not changed yet. We haven’t decided to change that policy, it may happen if we see that the more efficient way is to do repurchase the special dividend.

Okay, thank you.

Thank you, Blake.

And the next question comes from the line of Ryan Todd, Deutsche Bank.

Hi, thanks, good morning, gentlemen. Quick question on product markets, historically you guys seen a premium product market that Tyler sells into and it was particularly stronger during the fourth quarter relative to the Gulf Coast. Can you talk a little bit about what you saw in the fourth quarter, whether any of that was related to kind of lag in product prices on the way down or whether view that as being sustainable going forward?

Well, first of all, let me divide it into two stages, if you will, Ryan. First of all, in regards to the local markets, local markets pretty much protected. It didn’t change much, so the returning this product market or the local market is sustainable and I wouldn’t expect it to change. But it’s changing is our way of doing business and we acquire through different means more space of Colonial. And I think we mentioned that in the past, our strategy changing, if the Colonial if we did between the New York harbor as we see with distillate and Gulf is widening dramatically, then it makes sense for us to shore the local market, especially in El Dorado and ship on Colonial to local markets that are much, much, much stronger than the Gulf Coast. So, we open and close that value based on the local markets.

Okay, and in the first quarter, is there incremental room to move more on the Colonial pipeline or…

Well, we are increasing that level every – basically every quarter. I will measure that month-by-month, at the end of the day, it’s all part of a strategy to diversify our local markets. So honestly, I didn’t follow it myself if we increased little bit or not. But the trend is to increase every quarter, somebody tells me market tell me here that we actually did increase Colonial in the first quarter. Do you want to say something about that, mark? Okay, no.

Thanks. Maybe one – we always appreciate your view on Midland differentials. Can you talk a little bit about what you are seeing right now and maybe your outlook for the rest of the year and I will leave it…

It’s now around $2 today. For the year, it’s probably between $1.50 and $2. We think that it’s the low end of this. Obviously it depends on the Brent-TI and if WTI is paid $15 while Brent at $15. Midland will not widen much behind that because of the structure. However, I think that with the two projects – the two pipeline projects that are coming to online, one of them is this month and the other one is in third quarter. I don’t see any other big projects coming take off capacity coming out of Midland. So I think this is the low that we can see and then from here, we will widen back to the $3 or $4 normality.

Great. Thanks a lot.

And your next question comes from the line of Jeff Dietert with Simmons.

Good morning, Jeff Dietert with Simmons.

Yeah, good morning.

Good morning. Question for Fred. Could you talk about your maintenance cycles at El Dorado and Tyler? I believe with the major maintenance here at El Dorado last year and Tyler this quarter. You should have some running room before the next big turnarounds.

Yeah, Jeff. We’re looking at roughly five year cycle on each refinery. So we would expect to see El Dorado and turnaround in 2019 and Tyler in the 2020 range. So you’re right, several years without any significant plan maintenance.

Got you. Secondly I was wondering if you could break out the inventory charges between El Dorado and Tyler, is that possible?

So it’s probably a 50-50 between the two.

Okay, alright. And finally, I’m anxious to see the price elasticity on demand and what was hoping you could talk about your same-store retail sales and how they performed, especially if you got information for first quarter to-date.

Yeah, despite this horrible weather, we are year-to-date 9% up. Jeff Dietert – Simmons: Year-to-date, how much percent up?

9%.

Terrific.

Same-store is 9%. We see demand coming back.

And you think that’s all comparable year-on-year or perhaps some benefit from upgrading some of the stores or primarily just the price elasticity.

Probably combination of the three, the – obviously we have stores that are maturing, the mega stores that we opened two years ago are maturing, performing very well. You saw some in the first quarter – in the fourth quarter, I’m sorry. Second is despite the weather, people are actually feeling better with the spending. We are going into much numbers. Same-store merchandise is performing very nicely despite the weather. And third, I think that we are – we see record sales even in the old stores. So that tells me that the market is – the customers are actually feeling some relief with what’s going on at the pump.

Very well, thank you.

And your next question comes from the line of Doug Leggate with Bank of America.

Thanks. Good morning, everybody. Good morning, Uzi.

Good morning, Doug.

A couple of questions, if I may, just going back to the credit expansion at DKL, Uzi, can you help us with how you are prioritizing the potential for organic drop downs to DKL versus DKL’s capacity to go out and be acquisitive. I’m just curious just to the scale of the step-up in the credit line is suggestion you may have a little bit better visibility than perhaps you are telling us at this point. Any color would be appreciated.

Great question, Doug. First of all, we are – we usually be careful when we announce our project. We announce them only when they are ready and everything is set. We have several projects that – we have several projects that are [indiscernible] if you will, that we are not ready to announce but we know that coming. So that will allow us to get to the $150 million EBITDA that we are targeting. Second, we say that we are targeting both for organic or project and also acquisition 8 to 9 – 8 to 10 times EBITDA multiples. We didn’t change our mind with the pressure in the marketplace or crude, we think that we will see in the near future, more assets coming to the market that will allow us to continue with this target. One thing I would like to mention that by the end of the day, we are DKL is a fee-based very stable vehicle. We are not planning to put any commodity risk in that vehicle. So that by itself, our strategy both for projects and M&A activity.

Appreciate the answer. If I could squeeze two quick ones in, one point of clarification and one on the hedging. I guess for Fred, I just wanted to – did I hear you correctly on the quarters to date threw put or is that total throughput $70,000 a day.

$70,000 barrels a day for El Dorado, that crude throughput for the quarter so far.

That’s true. Is there a reason that, that’s up so much relative to the total – crude versus other feed stock if that is crude what’s driving the increase?

While that [indiscernible] the capacity of El Dorado is 580,000, so we are running it close to capacity, what happened in the fourth remember mid valley shutdown with a couple of other hiccups. But the no reason what we are mid valley shutting down. That is back to the mile, or some kind of mile, so we are back to normal.

That’s helpful. My last one – just go to again [indiscernible] terrific hedging gain in the quarter, how much was the – your color or commentary around the WTI brand that was pretty interesting because it’s not clear to me how much of the hedging game was the WTI brand relative to products. What I’m really getting at, Uzi, if your hedging strategy is around your assets, you don’t run Brent so what’s the reason to get exposure to the WTI brand spread and I will leave it there. Thank you.

No problem, just because of the fact that when it opens, the cracks that opening with it and it’s much more liquid market versus the other local markets, very simple.

Sure, Can you quantify the oil contribution to the hedge as opposed to the product side?

We are not doing, if we have several positions that we are maintain something that we pay attention very carefully to keep our secrets for the mind, that’s something that we maintain within the house. However, that’s a vehicle that’s we are – we will continue to you.

Got it, thanks Uzi, congrats on great quarter.

Thank you, Doug, thank you for your support.

And the next question comes from the line of [indiscernible].

Hi, great, thanks. [Indiscernible] right now. I just one more question on hedging, so the gain, is it showing up in the gross margin for each refinery and can you give us a split between the two itself.

Yeah, sure, Assi answer that one.

We allocate the hedging based on throughput, so the best thing theoretically based on the throughput refinery.

Okay, but definitely flowing through gross margin, that’s correct?

That your progress model, correct.

Okay, great. The same store sales growth and retails is very impressive. Uzi, you mentioned to hint that this is out right demand growth. Is that the case or we just taking market share from other competitors?

I mentioned that this is a combination of three things, the market share from others, maturing of the megastores and actually the customer selling that. I don’t know how to quantify what is left but as we see our merchandise in same stores growing we know that the customers feel good about themselves.

Right, that’s good trend. On Tyler, can you remind us where you are sending the incremental light products from the expansion going forward here?

Yes, what we did is we bought two – actually 1½ terminal if you will, in East Texas, in the Mount Pleasant terminal, we worked for Magellan three months ago. Obviously, we haven’t started the refinery yet. We said that this is going to happen in mid March, but that’s one part and the second part we have an agreement of all off-loading capacity in the Dallas area for the incremental capacity. So we have home for both – we have home for both distillate and gasoline, that’s probably the place to mention – in the past, but we didn’t do it today that the extra crude is coming from Midland. So we have home or we have crude coming from Midland and home for both distillate and gasoline.

Okay, so you don’t see the extra product spend causing any issue on margin degradation in your market.

Probably not.

Okay. And then finally, any thoughts on the timing on the 5X execution, you’ve been kind of steady the last couple of quarters here. Is that kind of the run rate we should expect going forward?

Well, we – it depends on the market condition and the opportunities we have during that time. We executed, I think, going by memory $33 million in the fourth quarter. If you analyze that, that’s $125 million. That is the reason we got to $125 million.

Right, okay. One maybe one final one, Assi any minimum cash balance you’re comfortable with operating the business kind of on the setting that base.

Yeah, I’ll say that at the current size, we probably like to have our balance sheet, $300 million to $450 million and everything about it, $300 million to $450 million and everything about it is probably available for distribution.

Okay, great, thanks a lot. I appreciate it.

And your next question comes from the line of Neil Mehta with Goldman Sachs.

Good morning, Uzi and Assi.

Good morning.

Just to circle back on Brent WTI, certainly we’ve seen a widening here in the last five weeks. How much is that do you think is because of the contango versus well production versus turnaround or is the combination of all stuff and then can you just talk about how you guys are thinking about the product market in response to this crude oil glut. Is there a risk that refiners take up the utilization across the mid-continent and then jump up overproducing product?

We got to a Brent-TI, we actually think that the range that we’re going to see over the next two years is $5 to $10. So dip below that range to a – developing at a going forward base, it’s not spot, I know that we got to a premium for a day and a half. But going forward, we had $3, now we are back to $8 for 2015. We’re within the range, it will move up and down. We think within that range, but we’re still in that range. Second, the local market and we follow is increasing their runs. Obviously we as an industry when we see these margins, we have a tendency to run many barrels as we can. As long as the export market stays as strong as it is, because of the Brent-TI differential, we are okay as an industry. For local markets that we serve, we are pretty much an island if you will, so I don’t know that this influences us much. However, let me be clear perhaps coming down or coming up that’s obviously influence us.

Right. And then you talked about the M&A opportunity here just to conform, a lot of the opportunities that you are looking at on a go forward basis, is it fair to assume that they are related to the logistics side of the business as supposed to refining just based on that opportunity exactly that exists.

That’s a great question. We are asked that question all the time. We are – we want to be on the M&A side both on refining as well as logistics, so logistics as well as refining. It depends what we see in terms of growth and our ability to chase things. For logistics assets, our target is not to pay as I mentioned earlier, 8 to 10 times EBITDA because we think they’re paying 15 or 17 that’s maybe growth strategy for other I don’t know that fits us. On the refinery side, we always say, and this is almost both correctly and we have four criterias, when we buy the refineries. Anybody can buy a refinery what we screen today. But our four criteria is that we can improve the crude state, that we can add utilize [indiscernible] product side that we can good CapEx to work and that we have any value in type of the operation. These are our four criteria. We haven’t changed our mind, so we think that refineries in the country, that we can bring value to be kind of similar to what happened when it would be over the El Dorado. But answer your question more specifically, probably logistics is a good place to start with 8 to 10 times as long as we don’t five refineries that met these four criteria.

That’s great, thank you and congrats on a great quarter.

Thanks again.

And the next question comes from line of [indiscernible] with Morgan Stanley.

Hi, guys, on the USW strike you are commentary not impacted by it, but can you be effected if the things spreads you have – maybe negotiated the contracts, any kind of color would help.

Sure, I think that one. We negotiated all of the local issues with the steam workers, steam workers on represented at the Tyler refinery. We have a different union the operating engineering El Dorado. So this issue is a Tyler only issue. We negotiated the local issues and we are effectively waiting for the national package to be completed. So, whatever shell on USW resolve and that will flow back as more finished. If there was strike expand we do have contingency plans in place, we have a trained replacement workers, security logistics etcetera. So we are – we believe we are in get position with respect to USW.

Follow-up on this, this has been something going for about four weeks, 14 refinery, have been impacted, how long do you think it will take the result is what are the main issues the diverting up the process, I think shell as sent in seven offers, seven have been rejected, so have you get any inside do what is holding up the process here?

Obviously, the negotiations are ongoing between USW shell, so we now one gets a full picture other than the ones directly participating. Our understanding is one of the major sticking points is the utilization of contract workers and refineries the USW ones, refiners to only use contract workers that are unionized or have a formal affiliation with the USW and we also we want the local refinery workers to have equal staffing to all of the contract workers. So another words – I think for utilization, but remains the local union worker to be standing in working side by side with any contract worker. So I think those are the largest issues.

Okay, okay and one last thing, obviously the big contango trade is playing out, so much refining feels that actually crude with no intention of using it, because the other storage is some of this and just putting it in those storage and then making profits down the road. Are you also looking at such opportunities at this point?

Thank you.

Okay, okay, thank you guys.

Thank you.

And next question comes from the line of Paul Cheng with Barclays.

Hi, guys.

Good morning for Cheng.

Good morning. Do you have any existing storage space in Cushing?

We don’t.

You don’t, okay. And maybe this is for Assi, can you remind me last quarter, what’s the rationale behind you’re changing and put hedging gains or inventory gains and the segment from starting to [indiscernible].

[indiscernible] and we see portion of refining margin and I think what made Q4 so good, is the fact that, if you look at growth [indiscernible] actually to get $6, where would you season physical, so I think that would very good this quarter fact that remain money both on hedging and both on physical, then you can see it with $6 wholesale margins and you saw it in West Texas, but it was all across the system.

Just for my $0.02, I think for most investors and then – what you have is that separate so that we can understand with our hedging, what is the underlying business and then of course your hedging is the hedging that you will show that will be a far more clean cut I think for most investors trying to understand your business. And I just want to make sure that earlier that you said the inventory lost and the unrealized hedging gain was 50-50 between the two facility and then the realized gain is based on throughput or that I got it wrong?

So the inventory losses are basically 50%-50% and the hedging gain in total are also around 50-50 between the two refineries. I did not break-up the unrealized compared to the realized, but you can probably use the same methodology.

So that we should assume that both the hedging and the inventory gain is 50-50?

Yes.

Why that will be the case given that the rate that you bought it at a $110 oil. So I would have thought the inventory loss is much bigger you know the way though combined to China.

If we remember when we bought El Dorado, we also put a strategy when we had – hedging most of our inventory not all of these for until 2017. So when we reported the numbers, we did not basically we took into consideration, the JA running back. So you’re correct, inventory have down more than $70 million. Without being said, there was hedging plays and basically that the JA around that inventory.

And the inventory is a net number that if indeed that you have any inventory increase or decrease in the fourth quarter, right? That is net of everything already.

Can you repeat the question?

So in other words, that I mean, in the event that you add inventory in the fourth quarter to your layer and you do choose that you – use the beginning of the year applies as the new cost, here you have an inventory gain report like some of your peer have done. I just want to make sure that there is no meaningful inventory movement. So all of that, if there is inventory movement on the left or the number that you showed, the 72 million loss is net of everything already.

72 million is not of everything. In the end of the year, WTI was $53 of barrel. Today, it is shy of $50 so therefore we haven’t seen recovery on the crude oil. We did see recovery on product. As you probably remember, year-end gas crack was negative and diesel crack was in the teens and right now if you look at gas crack is close to – is just about 20 and diesel crack is closed to 27. So there is some recovery on the product, but I’ll tell you the majority of voluntary is crude and asphalt and we haven’t seen recovery there.

And Uzi, when we’re looking at the Brent-TI or that all the other, is there a rule of thumb that you can say, okay, this is – let’s say you indicate that Brent-TI you think is $5 to $10. So we assume that once you approach 10 or about that, you’re start to adding into your hedging position?

That’s a great question. You should assume that we obviously could have done the opposite side we chose not to do it when it went to $3, but because that is basically – we are becoming traders and not hedging. But you can assume that if you see a good crack spread and Brent-TI widening that we will have good look at it.

Okay. And in the quarter, I think you had indicated rightfully that the wholesale margin was very strong and by product margin have improved because of the sharp drop in oil prices. Fred, can you quantify that on a per barrel basis? What is the benefit on those two items?

We don’t calculate that for purpose of this discussion. We do have internally and we ship between markets as we do that. One point of reference, the [indiscernible] which we quantified that was above $6 per barrel, that’s by itself an indication of how strong the market can get to.

Uzi, do you have any biodiesel tax benefit in the quarter?

We do.

Can you quantify it?

We are – it’s basically that number is going between three components. If you remember, we have two biodiesel plants, which we – which over the year, we ran them – high utilization and in anticipation of it going or to come back. So not only we enjoyed on the blending side, but we enjoyed also on the manufacturing side. Development for this, for the fourth quarter is – if you look back is $15 million.

15, 1-5 or 5-0, I am sorry.

15, 15.

15, okay and do you – because that’s just where you are staying in the fourth quarter, and 2015 so far that we don’t have that benefit right.

It is correct, but we didn’t have that benefit in the first quarter – through the third quarter of last year. And we don’t treat this as a specializing or something like that.

No, no, it’s not – I just want to know that this is all that you are all including your full year that is which will add in fact.

Yeah.

Okay and on the M&A for the PKL, one of your peer that is trying to targeting the third party revenue to 70%, 30% in the longer term, is there any tie-ups, say you target that internally, you can put up on that prospect, and also that, they also move into becoming full-fledged including say on the natural gas gathering and handling. So just trying to understand that when you make organic or organic acquisition, what – up to what area that you will expand into.

Probably, I will start with the direct logistics. And target long term is to be around 50:50 between DK and non-DK, and if you look at the segments, we just added $13.6 million of income from pay line, basically, we finished the year with around 75:25, and just thereby to moving to more like 60:40. So we are getting closer to our target. All of our new project that we intended to enter with direct logistics, those have in general less than 50% component of DK in them. So we are well towards that target. With respect to what segments we are looking after, we feel very comfortable with crude logistics and product logistics, and we are looking at other companies that look at the NGL but right now I’ll say that we are more comfortable with where we are and with our business, feel simple, no commodity risk, more transportation based MLP.

Okay perfect, thank you.

Thank you, Paul.

And your next question comes from the line of Brad Heffern from RBC Capital Markets.

Good morning, everybody.

Hey good morning.

So obviously in the first quarter, there is going to be a lot of moving parts with Tyler being down. Sooner, if you could talk a little bit about how much of the downtime is going to be made up with sales from inventory, and also I think that you take some of the bottoms from El Dorado and send them up to Tyler typically, so is there going to be a negative impact on El Dorado margin?

Well and I will let Fred talk about the time. First of all, we do sell up from inventories, you can assume probably 20,000 bills for the down period, that’s the combination of the gasoline and diesel, we do have home because of the vivid market being strong that we don’t need to send that vis-a-vis to Tyler. Obviously, we can build some inventory at very cheap prices with [indiscernible] and there is no impact as we said earlier on El Dorado, so far for the quarter ended 77,000 barrels. As far as the situation of the expansion in the federal, Fred, do you want to take that one?

Yeah I might need him to repeat that portion of the question.

I think that you covered everything that I had there, Uzi, I guess my second one, you know obviously Brent prices are quite a bit higher now than they were, a couple months ago, can you talk a little bit about or remind us about exactly what the net run exposure is for DK.

In general, it’s an overall statement, DK is not short materially, it’s as we announced in the quarter, but we benefit at the retail, and we benefit at the logistics, and basically, we are short in El Dorado. But when you combine all of these, it’s a single digit number in the quarter, so it’s already in our numbers that’s in our material.

Okay thank you, guys.

You are welcome.

And your next question comes from the line of Cory Garcia.

Good morning fellas. Quick question related to sort of the crude backdrop, oil piling up on itself from pushing down the Gulf Coast all across your fairway. I was curious in you have seen incremental any incremental moves to differentials and sort of that East Texas market recognized in that local barrels are a smaller part of your slate these days. But are you seeing incremental pricing benefits versus the typical differential with WTI?

In the past, East Texas close to Cushing now East Texas is closer to Midland, so we enjoy that benefit regardless of the transportation in East Texas. We – East Texas now is following Midland, we are obviously don’t see it following the Gulf.

Okay. So, it’s just a gradual shift as some of these Midland pipes sort of entered in the market.

Yeah, Longview, you can think of Longview as a Midland market now.

Got it. Thank you.

And your final question comes from the line of Paul Sankey with Wolfe Research.

Hi, good morning guys. I know we are over the hour, so I will try to keep it brief. Can we clarify a couple of things? Firstly, did you say demand was up 9% same store sales is that merchandised or is it – did it include merchandise or gasoline number.

Fuel.

So that was fuel sales. And you said it was 9%...

Gallons are off this year versus same period last year, 9% despite of the weather.

And obviously that’s a Q4 number. Is that the run rate in Q1?

That’s the Q1 number.

I got you. And Uzi, you said you wouldn’t, but can you just guess what underlying demand is doing? It’s a huge number for us obviously, I mean given that you said there was some distortion from better performance in the stores and stuff.

You know, Paul, I always want to give my opinion, it’s 3% to 4% in my opinion.

Interesting, okay, Uzi, thanks a lot. One other quick one, I know we are over time. Specifically you mentioned hedging, you mentioned contango, do you actually physically play that by storing crude?

Yes.

You said you don’t have storage at Cushing, but the same you can still store.

Obviously we have storage in the home view and we already said that Midland and Longview are similar markets. So yes, we do play the contango.

So you build crude industries in this market.

This is what Assi just mentioned couple of questions ago that inventory is crude now.

Got it. Okay listen, I know we are over time, Uzi, thanks a lot.

Thank you Paul.

And there are no further questions at this time. Please proceed with closing remarks.

Well, I’d like to thank everybody around the table here for the great work they did, they performed during the fourth quarter. I think that my colleagues here, board of directors, investors showed tremendous amount of support for this company, but mainly I’d like to thank for this great year our employees who make this company the great company it is. Thank you and we’ll talk to you soon.

And this does conclude today’s conference call. You may now disconnect.