What changed in this filing

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Item 1. Financial Statements

2022-05-05 compared with 2021-11-04 · 180 added, 365 removed, 679 unchanged (45% of the section changed)

Financial Statements

September 30,

(in millions, except share amounts)

16 unchanged sentences

Long-term debt

Deferred tax liability

Other noncurrent liabilities

2 unchanged sentences

Class A shares ( 33,767,846 shares issued and outstanding as of

September 30, 2021;

March 31, 2022;

33,672,068 shares issued and outstanding

1 unchanged sentence

Class B shares ( 219,641,928 shares issued and outstanding as of

September 30, 2021;

266,416,928 shares issued and outstanding as of

December 31, 2020)

March 31, 2022 and December 31, 2021)

Total partners' capital

6 unchanged sentences

CONSOLIDATED STATEMENTS OF OPERATIONS

Three Months Ended September 30,

Nine Months Ended September 30,

Three Months Ended March 31,

(in millions, except per share data)

10 unchanged sentences

Interest expense, net

Gain on sale of property, plant and equipment

Income before income tax expense

8 unchanged sentences

HESS MIDSTREAM LP

CONSOLIDATED STATEMENT S OF COMPREHENSIVE INCOME

Three Months Ended

September 30,

Nine Months Ended

September 30,

(in millions)

Other comprehensive income

Effect of hedge (gains) losses reclassified to income

Total other comprehensive income

Comprehensive income

Comprehensive income (loss) attributable

to noncontrolling interest

Comprehensive income attributable to Hess Midstream LP

See accompanying notes to unaudited consolidated financial statements.

PART I—FINANCIAL INFORMATION (CONT'D)

HESS MIDSTREAM LP

CONSOLIDATED STATEMENTS OF CHANGES IN PARTNERS’

1 unchanged sentence

Noncontrolling

Accumulated Other Comprehensive Income

(in millions)

2 unchanged sentences

Distributions - $ 0.5167 per share

Recognition of deferred tax asset

Sales of shares held by Sponsors

Transaction costs (see Note 14, Subsequent Events)

Balance at March 31, 2022

Equity-based compensation

Distributions - $ 0.4526 per share

Balance at June 30, 2021

Equity-based compensation

Distributions - $ 0.5042 per share

Recognition of deferred tax asset

Class B unit repurchase

Class B unit repurchase transaction costs

Balance at September 30, 2021

Balance at December 31, 2020

1 unchanged sentence

Distributions - $ 0.4471 per share

Other comprehensive income (loss)

Recognition of deferred tax asset

Sales of shares held by Sponsors

Balance at March 31, 2021

Equity-based compensation

Distributions - $ 0.4310 per share

Other comprehensive income (loss)

Hess Water Services Acquisition Final Settlement

Balance at June 30, 2020

Equity-based compensation

Distributions - $ 0.4363 per share

Balance at September 30, 2020

See accompanying notes to unaudited consolidated financial statements.

2 unchanged sentences

CONSOLIDATED S TATEMENTS OF CASH FLOWS

Nine Months Ended September 30,

Three Months Ended March 31,

(in millions)

3 unchanged sentences

Depreciation expense

(Gain) loss on sale of property, plant and equipment

(Gain) loss on interest rate swaps

(Income) loss from equity investments

13 unchanged sentences

Additions to property, plant and equipment

Proceeds from sale of property, plant and equipment

Net cash provided by (used in) investing activities

1 unchanged sentence

Net proceeds from (repayments of) bank borrowings with maturities of 90

Repayments of bank borrowings with maturities of greater than 90 days

Proceeds from issuance of bonds

Financing costs

Class B unit repurchase

Class B unit repurchase transaction costs

Bank borrowings with maturities of greater than 90 days

Distributions to shareholders

Distributions to noncontrolling interest

Hess Water Services Acquisition Final Settlement

Net cash provided by (used in) financing activities

24 unchanged sentences

Basis of Presentation

The consolidated financial statements included in this report reflect all normal and recurring adjustments which, in the opinion of management, are necessary for a fair presentation of our consolidated financial position at September 30, 2021 and December 31, 2020, the consolidated results of operations for the three and nine months ended September 30, 2021 and 2020, and the consolidated cash flows for the nine months ended September 30, 2021 and 2020.

The consolidated financial statements included in this report reflect all normal and recurring adjustments which, in the opinion of management, are necessary for a fair presentation of our consolidated financial position at March 31, 2022 and December 31, 2021, the consolidated results of operations and the consolidated cash flows for the three months ended March 31, 2022 and 2021.

The Company has no items of other comprehensive income (loss);

therefore, net income (loss) is equal to comprehensive income (loss).

The unaudited results of operations for the interim periods reported are not necessarily indicative of results to be expected for the full year.

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We currently do not have any independent assets or operations other than our interest in the Partnership.

Our noncontrolling interest represents the approximate 90.1 % interest in the Partnership retained by Hess and GIP at September 30, 2021 and 93.7 % at December 31, 2020.

Our noncontrolling interest represents the approximate 86.7 % interest in the Partnership retained by Hess and GIP at March 31, 2022 and December 31, 2021.

See Note 3, Equity Transactions and Note 14, Subsequent Events for a description of changes in noncontrolling interest related to the equity transactions.

PART I –

FINANCIAL INFORMATION (CONT’D)

HESS MIDSTREAM LP

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (UNAUDITED)

Equity Transactions

Equity Offering

On March 15, 2021, the Sponsors completed an underwritten public equity offering of 6,900,000 of our Class A shares, inclusive of the underwriters’

option to purchase up to 900,000 of additional shares, at a price of $ 21.00 per Class A share, less underwriting discounts.

The Sponsors received net proceeds from the offering of $ 139.9 million, after deducting underwriting discounts;

we did no t receive any proceeds in the offering.

On March 15, 2021, the Sponsors sold an aggregate of 6,900,000 of our Class A shares representing limited partner interests (“Class A Shares”), inclusive of the underwriters’

option to purchase up to 900,000 of additional shares, which was fully exercised, in an underwritten public offering at a price of $ 21.00 per Class A share, less underwriting discounts.

The Sponsors received net proceeds from the offering of approximately $ 139.9 million, after deducting underwriting discounts.

The Company did no t receive any proceeds in the offering.

The offering was conducted pursuant to a registration rights agreement among us and the Sponsors.

The Class A Shares sold in the offering were obtained by the Sponsors by exchanging to us 6,900,000 of their Class B Units in the Partnership, together with an equal number of our Class B Shares.

As a result of the exchange, the total number of Class A and Class B shares did not change, but Hess Midstream LP’s consolidated ownership in the Partnership increased from 6.3 % at December 31, 2020 to 8.8 % at the time of offering.

Hess Midstream LP retained control in the Partnership based on the delegation of control provisions, as described in Note 2, Basis of Presentation .

As a result of the transaction, we recognized an adjustment to the carrying amount of noncontrolling interest and Class A shareholders’

The Class A Shares sold in the offering were obtained by the Sponsors by exchanging to us the respective number of their Class B Units in the Partnership, together with an equal number of our Class B Shares and, a s a result, the total number of Class A and Class B shares did not change.

The Company retained control in the Partnership based on the delegation of control provisions, as described in Note 2, Basis of Presentation .

As a result of the offering, we recognized an adjustment to the carrying amount of noncontrolling interest and Class A shareholders’

capital balance of $ 31.8 million to reflect the change in ownership interest.

We also recognized an additional deferred tax asset of $ 26.4 million for the temporary differences related to the change between carrying amount and tax basis of our investment in the Partnership.

We also recognized an additional deferred tax asset of $ 26.4 million related to the change in the temporary difference between carrying amount and tax basis of our investment in the Partnership.

The effect of recognizing the additional deferred tax asset was included in Class A shareholders’

1 unchanged sentence

capital due to the transaction being characterized as a transaction among or with shareholders.

See also Note 14, Subsequent Events, for a description of an underwritten public equity offering by the Sponsors that occurred in October 2021.

Class B Unit Repurchase

On July 27, 2021, the Company, the Partnership and our Sponsors entered into a unit repurchase agreement pursuant to which the Partnership agreed to purchase from each Sponsor 15,625,000 Class B units representing limited partner interests in the Partnership for an aggregate purchase price of $ 750.0 million (the “Repurchase Transaction”).

The purchase price per Class B Unit was $ 24.00 , representing an approximate 4 % discount to the 30-day volume weighted average trading price of Class A shares representing limited partner interests in the Company through July 27, 2021.

Pursuant to the terms of the repurchase agreement, immediately following the purchase of the Class B units from the Sponsors, the Partnership cancelled those units, and the Company cancelled, for no consideration, an equal number of Class B Shares representing limited partner interests in the Company held by the Company’s general partner.

The Repurchase Transaction closed on August 10, 2021 and was funded through issuance by the Partnership of $ 750.0 million aggregate principal amount of senior unsecured notes (see Note 7, Debt and Interest Expense ).

As a result of the Repurchase Transaction, at September 30, 2021, the Company held a 9.9 % controlling interest in the Partnership and the Sponsors held a 90.1 % noncontrolling economic interest in the Partnership.

The Repurchase Transaction was accounted for in accordance with ASC 810 whereby changes in a parent’s ownership interest while the parent retains its controlling financial interest in its subsidiary are accounted for as equity transactions.

The carrying amount of the noncontrolling interest was adjusted to reflect the change in the ownership interest from approximately 91.2 % to approximately 90.1 % with the difference between the amount of consideration paid and the amount by which the noncontrolling interest was adjusted recognized in equity attributable to Class A shareholders.

We incurred approximately $ 2.2 million of costs directly attributable to the Repurchase Transaction that were charged to equity.

We also recognized an additional deferred tax asset of approximately $ 14.8 million for the temporary differences related to the change between carrying amount and tax basis of our investment in the Partnership, the effect of which was included in Class A shareholders’

equity balance in the accompanying consolidated statement of changes in partners’

PART I –

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NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (UNAUDITED)

See Note 14, Subsequent Events for a description of equity transactions completed in April 2022.

Related Party Transactions

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nominations in each development plan that apply on a three-year rolling basis through the Secondary Term.

For the three and nine months ended September 30, 2021 and 2020, approximately 100 % of our revenues were attributable to our fee‑based commercial agreements with Hess, including revenues from third‑party volumes contracted with Hess and delivered to us under these agreements.

For the three months ended March 31, 2022 and 2021, approximately 100 % of our revenues were attributable to our fee‑based commercial agreements with Hess, including revenues from third‑party volumes contracted with Hess and delivered to us under these agreements.

We retain control of our assets and the flow of volumes based on available capacity within our integrated gathering, processing and terminaling systems.

5 unchanged sentences

Revenues from contracts with customers on a disaggregated basis are as follows:

Three Months Ended September 30,

Nine Months Ended September 30,

Three Months Ended March 31,

(in millions)

6 unchanged sentences

The following table presents MVC shortfall fees earned during each period:

Three Months Ended September 30,

Nine Months Ended September 30,

Three Months Ended March 31,

(in millions)

1 unchanged sentence

Terminaling and export services

Processing and storage services

Water gathering and disposal services

Processing and storage services

The following table presents third-party pass-through costs for which we recognize revenues in an amount equal to the costs.

These third-party costs are included in Operating and maintenance expenses in the accompanying unaudited consolidated statements of operations.

Three Months Ended September 30,

Nine Months Ended September 30,

Three Months Ended March 31,

(in millions)

8 unchanged sentences

Under our omnibus and employee secondment agreements, Hess provides substantial operational and administrative services to us in support of our assets and operations.

For the three and nine months ended September 30, 2021 and 2020, we had the following charges from Hess.

For the three months ended March 31, 2022 and 2021, we had the following charges from Hess.

The classification of these charges between operating and maintenance expenses and general and administrative expenses is based on the fundamental nature of the services being performed for our operations.

Three Months Ended September 30,

Nine Months Ended September 30,

Three Months Ended March 31,

(in millions)

5 unchanged sentences

In addition, we share profits and losses and receive distributions from LM4 under the LM4 amended and restated limited liability company agreement based on our ownership interest.

For the three and nine months ended September 30, 2021 and 2020, we had the following activity related to our agreements with LM4:

Three Months Ended September 30,

Nine Months Ended September 30,

For the three months ended March 31, 2022 and 2021, we had the following activity related to our agreements with LM4:

Three Months Ended March 31,

(in millions)

5 unchanged sentences

Estimated useful lives

September 30, 2021

March 31, 2022

December 31, 2021

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Accrued liabilities are as follows:

September 30, 2021

March 31, 2022

December 31, 2021

(in millions)

Accrued capital expenditures

Accrued interest

Accrued capital expenditures

Other accruals

1 unchanged sentence

Fixed‑Rate Senior Notes

On August 5, 2021, the Partnership issued $ 750.0 million aggregate principal amount of 4.250 % fixed‑rate senior notes due 2030 to qualified institutional investors.

The notes are guaranteed by certain subsidiaries of the Partnership.

As of March 31, 2022, the Partnership had $ 750.0 million aggregate principal amount of 4.250 % fixed‑rate senior notes due 2030 that were issued to qualified institutional investors.

Interest is payable semi‑annually on February 15 and August 15.

The Partnership used the proceeds to fund the Repurchase Transaction (see Note 3, Equity Transactions ).

As of September 30, 2021, the Partnership also had $ 550.0 million aggregate principal amount of 5.125 % fixed‑rate senior notes due 2028 that were issued to qualified institutional investors.

The notes are guaranteed by certain subsidiaries of the Partnership.

As of March 31, 2022, the Partnership also had $ 550.0 million aggregate principal amount of 5.125 % fixed‑rate senior notes due 2028 that were issued to qualified institutional investors.

Interest is payable semi‑annually on June 15 and December 15.

PART I –

FINANCIAL INFORMATION (CONT’D)

HESS MIDSTREAM LP

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (UNAUDITED)

In addition, as of September 30, 2021, the Partnership had $ 800.0 million aggregate principal amount of 5.625 % fixed‑rate senior notes due 2026 that were issued to qualified institutional investors.

The notes are guaranteed by certain subsidiaries of the Partnership.

In addition, as of March 31, 2022, the Partnership had $ 800.0 million aggregate principal amount of 5.625 % fixed‑rate senior notes due 2026 that were issued to qualified institutional investors.

Interest is payable semi‑annually on February 15 and August 15.

The notes described above are guaranteed by certain subsidiaries of the Partnership.

Each of the indentures for the senior notes described above contains customary covenants that restrict our ability and the ability of our restricted subsidiaries to (i) declare or pay any dividend or make any other restricted payments;

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or (iv) make restricted investments, unless, at the time of and immediately after giving pro forma effect to such restricted payments and any related incurrence of indebtedness or other transactions, no default has occurred and is continuing or would occur as a consequence of such restricted payment and if the leverage ratio does not exceed 4.25 to 1.00.

As of September 30, 2021, we were in compliance with all debt covenants under the indentures.

As of March 31, 2022, we were in compliance with all debt covenants under the indentures.

In addition, the covenants included in the indentures governing the senior notes contain provisions that allow the Company to satisfy the Partnership’s reporting obligations under the indenture, as long as any such financial information of the Company contains information reasonably sufficient to identify the material differences, if any, between the financial information of the Company, on the one hand, and the Partnership and its subsidiaries on a stand-alone basis, on the other hand and the Company does not directly own capital stock of any person other than the Partnership and its subsidiaries, or material business operations that would not be consolidated with the financial results of the Partnership and its subsidiaries.

1 unchanged sentence

Other than the interest in the Partnership and the effect of federal and state income taxes that are recognized at the Company level, there are no material differences between the consolidated financial statements of the Partnership and the consolidated financial statements of the Company.

See Note 14, Subsequent Events for a description of senior unsecured notes issued in April 2022.

Credit Facilities

As of September 30, 2021, the Partnership had senior secured credit facilities (the “Credit Facilities”) consisting of a $ 1,000.0 million 5 -year revolving credit facility and a fully drawn $ 400.0 million 5 -year Term Loan A facility maturing in 2024 .

As of March 31, 2022, the Partnership had senior secured credit facilities (the “Credit Facilities”) consisting of a $ 1,000.0 million 5 -year revolving credit facility and a $ 400.0 million 5 -year Term Loan A facility, which was initially fully drawn, maturing in 2024 .

Facility fees accrue on the total capacity of the revolving credit facility.

Borrowings under the 5 -year Term Loan A facility will generally bear interest at LIBOR plus the applicable margin ranging from 1.55 % to 2.50 %, while the applicable margin for the 5 -year syndicated revolving credit facility ranges from 1.275 % to 2.000 %.

Borrowings under the 5 -year Term Loan A facility generally bear interest at LIBOR plus the applicable margin ranging from 1.55 % to 2.50 %, while the applicable margin for the 5 -year syndicated revolving credit facility ranges from 1.275 % to 2.000 %.

Pricing levels for the facility fee and interest rate margins are based on the Partnership’s ratio of total debt to EBITDA (as defined in the Credit Facilities).

If the Partnership obtains an investment grade credit rating, the pricing levels will be based on the Partnership’s credit ratings in effect from time to time.

At September 30, 2021, borrowings of $ 152.0 million were drawn and outstanding under the Partnership’s revolving credit facility, and borrowings of $ 392.5 million, excluding deferred issuance costs, were drawn and outstanding under the Partnership’s Term Loan A facility.

At March 31, 2022, borrowings of $ 105.0 million were drawn and outstanding under the Partnership’s revolving credit facility, and borrowings of $ 385.0 million, excluding deferred issuance costs, were drawn and outstanding under the Partnership’s Term Loan A facility.

PART I –

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The Credit Facilities contain representations and warranties, affirmative and negative covenants and events of default that the Partnership considers to be customary for an agreement of this type, including a covenant that requires the Partnership to maintain a ratio of total debt to EBITDA (as defined in the Credit Facilities) for the prior four fiscal quarters of not greater than 5.00 to 1.00 as of the last day of each fiscal quarter ( 5.50 to 1.00 during the specified period following certain acquisitions) and, prior to the Partnership obtaining an investment grade credit rating, a ratio of secured debt to EBITDA for the prior four fiscal quarters of not greater than 4.00 to 1.00 as of the last day of each fiscal quarter.

As of September 30, 2021, the Partnership was in compliance with these financial covenants.

As of March 31, 2022, the Partnership was in compliance with these financial covenants.

Fair Value Measurement

At September 30, 2021, our total debt had a carrying value of $ 2,612.6 million and had a fair value of approximately $ 2,707.5 million, based on Level 2 inputs in the fair value measurement hierarchy.

The carrying value of the amounts under the Term Loan A facility and revolving credit facility at September 30, 2021, approximated their fair value.

At March 31, 2022, our total debt had a carrying value of $ 2,560.9 million and had a fair value of approximately $ 2,566.8 million, based on Level 2 inputs in the fair value measurement hierarchy.

The carrying value of the amounts under the Term Loan A facility and revolving credit facility at March 31, 2022, approximated their fair value.

Any changes in interest rates do not impact cash outflows associated with fixed rate interest payments or settlement of debt principal, unless a debt instrument is repurchased prior to maturity.

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First Quarter 2022 (1)

Second Quarter 2021

August 9, 2021

August 13, 2021

Third Quarter 2021 (1)

November 4, 2021

November 12, 2021

(1) For more information, see Note 14, Subsequent Events.

Equity‑Based Compensation

Equity‑based award activity for the nine months ended September 30, 2021 is as follows:

Equity‑based award activity for the three months ended March 31, 2022 is as follows:

Weighted Average

1 unchanged sentence

Outstanding and unvested shares at December 31, 2021

Outstanding and unvested shares at September 30, 2021

As of September 30, 2021, $ 2.2 million of compensation cost related to unvested restricted shares awarded under our long-term incentive plan remains to be recognized over an expected weighted‑average period of 1.9 years.

Outstanding and unvested shares at March 31, 2022

As of March 31, 2022, $ 3.2 million of compensation cost related to unvested restricted shares awarded under our long-term incentive plan remains to be recognized over an expected weighted‑average period of 2.3 years.

PART I –

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whichever is more dilutive.

Three Months Ended September 30,

Nine Months Ended September 30,

Three Months Ended March 31,

(in millions, except per share amounts)

4 unchanged sentences

Weighted average Class A shares outstanding:

For the three and nine months ended September 30, 2021 the weighted average number of Class A shares outstanding included 99,697 and 99,889 dilutive restricted shares, respectively, compared with 98,306 and 76,198 dilutive restricted shares for the three and nine months ended September 30, 2020, respectively.

For the three months ended March 31, 2022 and 2021 the weighted average number of Class A shares outstanding included 101,612 and 122,222 dilutive restricted shares, respectively.

Concentration of Credit Risk

Hess represented approximately 100 % of our total revenues and accounts receivable for the three and nine months ended September 30, 2021 and 2020.

Hess represented approximately 100 % of our total revenues and accounts receivable for the three months ended March 31, 2022 and 2021.

Commitments and Contingencies

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The Company is subject to federal, state and local laws and regulations relating to the environment.

As of September 30, 2021, our reserves for estimated remediation liabilities included in Accrued liabilities and Other noncurrent liabilities were $ 0.4 million and $ 3.1 million, respectively, compared with $ 0.9 million and $ 3.1 million, respectively, as of December 31, 2020.

As of March 31, 2022 and December 31, 2021, our reserves for estimated remediation liabilities included in Accrued liabilities and Other noncurrent liabilities were $ 0.8 million and $ 3.1 million, respectively.

Legal Proceedings

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If a range of amounts can be reasonably estimated and no amount within the range is a better estimate than any other amount, then the minimum of the range is accrued.

As of September 30, 2021 and December 31, 2020, we did no t have material accrued liabilities for legal contingencies.

As of March 31, 2022 and December 31, 2021, we did no t have material accrued liabilities for legal contingencies.

Based on currently available information, we believe it is remote that the outcome of known matters would have a material adverse impact on our financial condition, results of operations or cash flows.

14 unchanged sentences

(in millions)

For the Three Months Ended September 30, 2021

For the Three Months Ended March 31, 2022

Revenues and other income

3 unchanged sentences

Depreciation expense

Proportional share of equity affiliates' depreciation

Proportional share of equity

affiliates' depreciation

Income from equity investments

7 unchanged sentences

(in millions)

For the Three Months Ended September 30, 2020

For the Three Months Ended March 31, 2021

Revenues and other income

3 unchanged sentences

Depreciation expense

Proportional share of equity affiliates' depreciation

Proportional share of equity

affiliates' depreciation

Income from equity investments

3 unchanged sentences

Capital expenditures*

* Includes acquisition, expansion and maintenance capital expenditures, as applicable.

PART I –

2 unchanged sentences

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (UNAUDITED)

Processing and Storage

Terminaling and Export

Interest and Other

(in millions)

For the Nine Months Ended September 30, 2021

Revenues and other income

Net income (loss)

Net income (loss) attributable to

Hess Midstream LP

Depreciation expense

Proportional share of equity affiliates' depreciation

Income from equity investments

Interest expense, net

Income tax expense

Adjusted EBITDA

Capital expenditures*

Processing and Storage

Terminaling and Export

Interest and Other

(in millions)

For the Nine Months Ended September 30, 2020

Revenues and other income

Net income (loss)

Net income (loss) attributable to

Hess Midstream LP

Depreciation expense

Proportional share of equity affiliates' depreciation

Income from equity investments

Interest expense, net

Income tax expense (benefit)

Gain on sale of property, plant and equipment

Adjusted EBITDA

Capital expenditures*

* Includes acquisition, expansion and maintenance capital expenditures, as applicable.

Total assets for the reportable segments are as follows:

September 30, 2021

March 31, 2022

December 31, 2021

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Interest and Other

(1) Includes investment in equity investees of $ 102.4 million as of September 30, 2021 and $ 108.4 million as of December 31, 2020.

PART I –

FINANCIAL INFORMATION (CONT’D)

HESS MIDSTREAM LP

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (UNAUDITED)

(1) Includes investment in equity investees of $ 97.3 million as of March 31, 2022 and $ 101.6 million as of December 31, 2021.

Subsequent Events

On October 8, 2021, the Sponsors completed an underwritten public equity offering of 8,625,000 of our Class A shares, inclusive of the underwriters’

option to purchase up to 1,125,000 of additional shares which was fully exercised, at a price of $ 26.00 per Class A share, less underwriting discounts.

On April 4, 2022, the Sponsors sold an aggregate of 10,235,000 of our Class A shares, inclusive of the underwriters’

option to purchase up to 1,335,000 of additional shares, which was fully exercised, in an underwritten public offering at a price of $ 29.50 per Class A share, less underwriting discounts.

The Sponsors received net proceeds from the offering of approximately $ 291.7 million, after deducting underwriting discounts.

we did no t receive any proceeds in the offering.

The Company did no t receive any proceeds in the offering.

The offering was conducted pursuant to a registration rights agreement among us and the Sponsors.

The Class A Shares sold in the offering were obtained by the Sponsors by exchanging to us 8,625,000 of their Class B Units in the Partnership, together with an equal number of our Class B Shares.

As a result of the exchange, the total number of Class A and Class B shares did not change, but Hess Midstream LP’s consolidated ownership in the Partnership increased from 9.9 % at September 30, 2021 to 13.3 % at October 8, 2021.

On October 25, 2021 , the board of directors of our general partner declared a quarterly cash distribution of $ 0.5104 per Class A share for the quarter ended September 30, 2021, a 1.2 % increase compared to the distribution on the Class A shares for the quarter ended June 30, 2021, which equals a targeted 5 % growth in annual distributions per Class A share.

The distribution will be payable on November 12, 2021 , to shareholders of record as of the close of business on November 4, 2021 .

Simultaneously, the Partnership will make a distribution of $ 0.5104 per Class B unit of the Partnership to the Sponsors as holders of an aggregate of 219,641,928 Class B units of the Partnership following the October 8, 2021, equity offering.

On March 29, 2022, the Company, the Partnership and our Sponsors entered into a unit repurchase agreement pursuant to which the Partnership purchased directly from the Sponsors 13,559,322 Class B units representing limited partner interests in the Partnership for an aggregate purchase price of $ 400.0 million.

The purchase price per Class B unit was $ 29.50 , which is equal to the public offering price per Class A share in the secondary offering described above.

Pursuant to the terms of the repurchase agreement, immediately following the purchase of the Class B units from the Sponsors, the Partnership cancelled those units, and the Company cancelled, for no consideration, an equal number of Class B shares representing limited partner interests in the Company held by the Company’s general partner.

The repurchase transaction closed on April 4, 2022 and was funded using borrowings under the Partnership’s revolving credit facility, which were subsequently repaid with proceeds from a senior unsecured notes offering described below.

As a result of the public equity offering and the unit repurchase transaction described above, the Company’s consolidated ownership in the Partnership increased to approximately 18.3 % at April 4, 2022 from approximately 13.3 % at March 31, 2022, and the noncontrolling interest decreased to 81.7 % from 86.7 %, respectively.

On April 8, 2022, the Partnership issued $ 400.0 million aggregate principal amount of 5.500 % fixed-rate senior unsecured notes due 2030 to qualified institutional investors.

The notes are guaranteed by certain subsidiaries of the Partnership.

Interest is payable semi‑annually on April 15 and October 15, commencing October 15, 2022.

The Partnership used the proceeds to repay the borrowings under its revolving credit facility used to finance the repurchase of 13,559,322 Class B units from the Sponsors described above.

On April 25, 2022 , the board of directors of our general partner declared a quarterly cash distribution of $ 0.5492 per Class A share for the quarter ended March 31, 2022, an approximate 6.3 % increase compared to the distribution on the Class A shares for the quarter ended December 31, 2021.

The distribution will be payable on May 13, 2022 , to shareholders of record as of the close of business on May 5, 2022 .

Simultaneously, the Partnership will make a distribution of $ 0.5492 per Class B unit of the Partnership to the Sponsors.

PART I –

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Factors that could cause or contribute to such differences include, but are not limited to, those identified below and those discussed in our 2021 Annual Report.

We are a fee-based, growth-oriented, limited partnership that owns, operates, develops and acquires a diverse set of midstream assets and provide fee-based services to Hess Corporation (“Hess”) and third-party customers.

We are a fee-based, growth-oriented, limited partnership that owns, operates, develops and acquires a diverse set of midstream assets and provides fee-based services to Hess Corporation (“Hess”) and third-party customers.

We are managed and controlled by Hess Midstream GP LLC, the general partner of our general partner that is owned 50/50 by Hess and GIP II Blue Holding, L.P.

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Our assets are primarily located in the Bakken and Three Forks shale plays in the Williston Basin area of North Dakota, which we collectively refer to as the Bakken.

On March 15, 2021, the Sponsors completed an underwritten public equity offering of 6,900,000 of our Class A shares, inclusive of the underwriters’

option to purchase up to 900,000 of additional shares, at a price of $21.00 per Class A share, less underwriting discounts.

The Sponsors received net proceeds from the offering of approximately $139.9 million, after deducting underwriting discounts;

the Company did not receive any proceeds in the offering.

On August 10, 2021, we repurchased an aggregate of 31,250,000 Class B units of the Partnership from our Sponsors at a purchase price of $24.00 per Class B unit, for total consideration of $750.0 million (the "Repurchase Transaction").

The Repurchase Transaction was funded through issuance by the Partnership of $750.0 million aggregate principal amount of 4.25% senior unsecured notes due 2030.

During the third quarter of 2021, we safely and successfully completed the planned maintenance turnaround at the Tioga Gas Plant ("TGP").

As a result, in the third quarter of 2021, we incurred operating expenses of approximately $16.0 million and maintenance capital expenditures of approximately $6.8 million related specifically to the turnaround.

The 150 MMcf/d TGP expansion tie-in was also completed and placed in service in October 2021 with the additional capacity expected to be available concurrent with the completion of the WBI residue export tie-in.

On October 8, 2021, the Sponsors completed an underwritten public equity offering of 8,625,000 of our Class A shares, inclusive of the underwriters’

option to purchase up to 1,125,000 of additional shares which was fully exercised, at a price of $26.00 per Class A share, less underwriting discounts.

In March 2022, we brought online one of two new greenfield compressor stations planned for 2022.

In aggregate, the new stations are expected to provide an additional 85 MMcf/d of installed capacity in 2022 and can be expanded up to 130 MMcf/d in the future.

On April 4, 2022, the Sponsors sold an aggregate of 10,235,000 of our Class A shares, inclusive of the underwriters’

option to purchase up to 1,335,000 of additional shares, which was fully exercised, in an underwritten public offering at a price of $29.50 per Class A share, less underwriting discounts.

The Sponsors received net proceeds from the offering of approximately $291.7 million, after deducting underwriting discounts.

The Company did not receive any proceeds in the offering.

The offering was conducted pursuant to a registration rights agreement among us and the Sponsors.

On March 29, 2022, the Company, Hess Midstream Operations LP (the “Partnership”) and our Sponsors entered into a unit repurchase agreement pursuant to which the Partnership purchased directly from the Sponsors 13,559,322 Class B units representing limited partner interests in the Partnership for an aggregate purchase price of $400.0 million.

The purchase price per Class B unit was $29.50, which is equal to the public offering price per Class A share in the secondary offering described above.

Pursuant to the terms of the repurchase agreement, immediately following the purchase of the Class B units from the Sponsors, the Partnership cancelled those units, and the Company cancelled, for no consideration, an equal number of Class B shares representing limited partner interests in the Company held by the Company’s general partner.

As a result of the public equity offering and the unit repurchase transaction described above, the Company’s consolidated ownership in the Partnership increased to approximately 18.3% at April 4, 2022 from approximately 13.3% at March 31, 2022, and the noncontrolling interest decreased to 81.7% from 86.7%, respectively.

On April 8, 2022, the Partnership issued $400.0 million aggregate principal amount of 5.500% fixed-rate senior unsecured notes due 2030 to qualified institutional investors.

The notes are guaranteed by certain subsidiaries of the Partnership.

Interest is payable semi‑annually on April 15 and October 15, commencing October 15, 2022.

The Partnership used the proceeds to repay the borrowings under its revolving credit facility used to finance the repurchase of 13,559,322 Class B units from the Sponsors described above.

In addition, we utilized the excess free cash flow beyond our growing distributions to provide increased return of capital to our shareholders through a 5% increase in our quarterly distribution level.

See Note 14, Subsequent Events in the accompanying consolidated financial statements for additional information.

Our assets and operations are organized into the following three reportable segments:

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FINANCIAL INFORMATION (CONT’D)

Third Quarter Results

Significant financial and operating highlights for the third quarter of 2021 included:

Safely and successfully completed the planned TGP maintenance turnaround;

Completed the previously announced repurchase of an aggregate of 31,250,000 Class B units of the Partnership from the Sponsors for $750 million;

First Quarter Results

Significant financial and operating highlights for the first quarter of 2022 included:

Consolidated net income of $159.6 million;

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Distributable cash flow of $211.6 million;

Cash distribution of $0.5104 per Class A share announced on October 25, 2021, a 1.2% increase compared to the distribution on the Class A shares for the quarter ended June 30, 2021, which equals a targeted 5% growth in annual distributions per Class A share.

Revenues and other income in the third quarter of 2021 were $303.9 million compared with $264.8 million in the prior-year quarter.

Third quarter 2021 revenues and other income were up $39.1 million compared to the prior-year quarter primarily due to higher minimum volume commitment levels and tariff rates of $39.7 million, partially offset by lower pass-through revenues, including electricity, produced water trucking and disposal costs, rail transportation and certain other fees of $0.6 million.

Total costs and expenses in the third quarter of 2021 were $144.7 million, up from $127.6 million in the prior-year quarter.

The increase was attributable to higher operating and maintenance expenses of $14.2 million, including $13.7 million attributable to the TGP turnaround, higher depreciation of $2.0 million and higher general and administrative expenses of $0.9 million.

As a result, consolidated net income increased $15.3 million and Adjusted EBITDA increased $23.4 million.

Throughput volumes decreased 4% for gas processing and 2% for gas gathering in the third quarter of 2021 compared with the third quarter of 2020 primarily related to the TGP turnaround.

Throughput volumes decreased 23% for crude oil gathering and 21% for crude oil terminaling in the third quarter of 2021 compared with the third quarter of 2020 due to reduced drilling activity.

The impact of the reduction in physical volumes in the third quarter of 2021 compared to the third quarter of 2020 was offset by shortfall fee payments related to minimum volume commitments and higher tariff rates.

Water gathering volumes decreased 4% compared with the year-ago quarter.

For additional information regarding our non‑GAAP financial measures, see “How We Evaluate Our Operations”

and “Reconciliation of Non‑GAAP Financial Measures”

Cash distribution of $0.5492 per Class A share declared on April 25, 2022, an approximate 6.3% increase compared with the fourth quarter of 2021, reflecting a 5% increase in the per share distribution level in addition to the 5% annual distribution per share growth target.

Revenues and other income in the first quarter of 2022 were $312.4 million compared with $288.8 million in the prior-year quarter.

First quarter 2022 revenues and other income were up $23.6 million compared to the prior-year quarter primarily due to higher minimum volume commitment (“MVC”) levels and slightly higher tariff rates of $19.7 million, as well as higher pass-through revenues, including electricity, produced water trucking and disposal costs, rail transportation and certain other fees of $3.9 million.

Total costs and expenses in the first quarter of 2022 were $116.9 million, up from $106.3 million in the prior-year quarter.

The increase was primarily attributable to higher depreciation expense for additional assets placed in service of $4.2 million, higher pass-through expenses of $3.9 million, for which we recognize revenues in the same amount, as described above, and higher operating and other expenses primarily related to our expanding gathering infrastructure of $2.5 million.

Interest expense increased $8.2 million primarily attributable to the $750.0 million 4.25% fixed-rate senior notes issued in August of 2021.

Income tax expense increased $2.5 million driven by increased ownership of the Partnership by Hess Midstream LP following equity offering and unit repurchase transactions in 2021.

Income from equity investments decreased $2.3 million.

As a result, consolidated net income remained flat but Adjusted EBITDA increased $14.9 million for the first quarter of 2022 compared with the first quarter of 2021.

Throughput volumes increased 5% for gas processing and 3% for gas gathering in the first quarter of 2022 compared with the first quarter of 2021, driven primarily by higher gas capture.

Throughput volumes increased 3% for water gathering.

Throughput volumes decreased 14% for crude oil gathering and terminaling in the first quarter of 2022 compared with the first quarter of 2021 due to lower production.

The impact of the reduction in physical oil volumes in the first quarter of 2022 compared to the first quarter of 2021 was partially offset by MVC shortfall fee payments and higher tariff rates.

For additional discussion of the results of operations at the segment level, see “

Results of Operations ”

For additional information regarding Adjusted EBITDA and distributable cash flow, our non‑GAAP financial measures, see “

How We Evaluate Our Operations ”

Reconciliation of Non‑GAAP Financial Measures ”

PART I –

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We have entered into long‑term, fee‑based commercial agreements with Hess effective January 1, 2014, for oil and gas services agreements, and effective January 1, 2019, for water services agreements.

Except for the water services agreements and except for a certain gathering sub-system, as described below, each of our commercial agreements with Hess has an initial 10-year term and we have the unilateral right to renew each of these agreements for one additional 10-year term.

Except for the water services agreements and except for a certain gathering sub-system, as described below, each of our commercial agreements with Hess has an initial 10-year term (“Initial Term”) and we have the unilateral right to renew each of these agreements for one additional 10-year term (“Secondary Term”).

In September 2018, we amended our gas gathering and gas processing and fractionation agreements to enable us to provide certain services to Hess in respect of volumes to be delivered to and processed at the LM4 plant.

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Together with Hess, we are pursuing strategic relationships with third-party producers and other midstream companies with operations in the Bakken in order to maximize our utilization rates.

PART I –

FINANCIAL INFORMATION (CONT’D)

How We Evaluate Our Operations

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increase gas throughput volumes by interconnecting with new or existing third‑party gathering pipelines.

PART I –

FINANCIAL INFORMATION (CONT’D)

Operating and Maintenance Expenses.

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the viability of acquisitions and other capital expenditure projects and the returns on investment of various investment opportunities.

PART I –

FINANCIAL INFORMATION (CONT’D)

We believe that the presentation of Adjusted EBITDA and distributable cash flow provides useful information to investors in assessing our financial condition and results of operations.

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Additionally, because Adjusted EBITDA and distributable cash flow may be defined differently by other companies in our industry, our definition of Adjusted EBITDA and distributable cash flow may not be comparable to similarly titled measures of other companies, thereby diminishing their utility.

PART I –

FINANCIAL INFORMATION (CONT’D)

Results of Operations

Three Months Ended September 30, 2021 Compared to Three Months Ended September 30, 2020

Results of operations for the three months ended September 30, 2021 and 2020 are presented below (in millions, unless otherwise noted).

For the Three Months Ended September 30, 2021

Three Months Ended March 31, 2022 Compared to Three Months Ended March 31, 2021

Results of operations for the three months ended March 31, 2022 and 2021 are presented below (in millions, unless otherwise noted).

For the Three Months Ended March 31, 2022

Processing and Storage

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FINANCIAL INFORMATION (CONT’D)

For the Three Months Ended September 30, 2020

For the Three Months Ended March 31, 2021

Processing and Storage

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(2) Thousand barrels per day

Revenues and other income increased $14.4 million in the third quarter of 2021 compared to the third quarter of 2020, of which $14.1 million is attributable to higher tariff rates, $2.8 million is attributable to higher water services revenue and $0.8 million is attributable to higher crude oil MVC levels.

This increase is partially offset by $2.4 million attributable to lower pass-through revenues, including produced water trucking and disposal, electricity and other fees, and $0.9 million attributable to lower gas gathering and compression volumes due to the TGP turnaround, partially offset by MVC shortfall fees.

Operating and maintenance expenses decreased $6.0 million, of which $4.3 million is attributable to lower project-based maintenance activity, $2.4 million is attributable to lower pass-through costs, including produced water trucking and disposal, electricity and other fees, partially offset by $0.7 million higher employee costs allocated to us under our omnibus and employee secondment agreements.

Depreciation expense increased $1.2 million due to new compressors, produced water disposal facilities and other new gathering assets being brought into service.

Processing and Storage

Revenues and other income increased $20.9 million in the third quarter of 2021 compared to the third quarter of 2020, of which $10.6 million is attributable to higher tariff rates and $6.8 million is attributable to higher pass-through revenue, including electricity and other fees related to temporary gas offloads during the TGP turnaround.

The remaining $3.6 million is attributable to higher MVC levels and $0.1 million lower other income.

PART I –

FINANCIAL INFORMATION (CONT’D)

Operating and maintenance expenses increased $25.3 million, of which $13.7 million is attributable to the TGP turnaround, $6.8 million is attributable to higher pass-through costs, including electricity and other fees related to temporary gas offloads during the TGP turnaround, $3.7 million is attributable to other maintenance activity and higher property taxes and $2.0 million is attributable to higher third-party processing fees This increase is partially offset by $0.9 million attributable to lower employee costs allocated to us under our omnibus and employee secondment agreements.

Terminaling and Export

Revenues and other income increased $3.8 million in the third quarter of 2021 compared to the third quarter of 2020, of which $4.7 million is attributable to higher tariff rates and $4.1 million is attributable to higher MVC levels, partially offset by $5.0 million attributable to lower rail transportation pass‑through revenues.

Operating and maintenance expenses decreased $5.1 million primarily attributable to lower rail transportation pass-through costs due to lower rail usage and certain rail transportation fees being paid directly by end customers.

Interest and Other

General and administrative expenses increased $1.1 million in the third quarter of 2021 compared to the third quarter of 2020 primarily due to higher professional fees.

Interest expense, net of interest income, increased $4.8 million primarily attributable to the $750.0 million 4.25% fixed-rate senior notes issued in connection with the Repurchase Transaction.

Income tax expense increased $1.3 million driven by higher income before income tax expense and increased ownership of Hess Midstream Operations LP by Hess Midstream LP following the equity offering in the first quarter of 2021 and the Repurchase Transaction.

PART I –

FINANCIAL INFORMATION (CONT’D)

Nine Months Ended September 30, 2021 Compared to Nine Months Ended September 30, 2020

Results of operations for the nine months ended September 30, 2021 and 2020 are presented below (in millions, unless otherwise noted).

For the Nine Months Ended September 30, 2021

Processing and Storage

Terminaling and Export

Interest and Other

Consolidated Hess Midstream LP

Affiliate services

Total revenues

Costs and expenses

Operating and maintenance expenses (exclusive

of depreciation shown separately below)

Depreciation expense

General and administrative expenses

Total costs and expenses

Income (loss) from operations

Income from equity investments

Interest expense, net

Income (loss) before income tax expense (benefit)

Income tax expense (benefit)

Net income (loss)

Net income (loss) attributable to

noncontrolling interest

Net income (loss) attributable to Hess Midstream LP

Throughput volumes

Gas gathering (MMcf/d) (1)

Crude oil gathering (MBbl/d) (2)

Gas processing (MMcf/d) (1)

Crude oil terminaling (MBbl/d) (2)

NGL loading (MBbl/d) (2)

Water gathering (MBbl/d) (2)

(1) Million cubic feet per day

(2) Thousand barrels per day

PART I –

FINANCIAL INFORMATION (CONT’D)

For the Nine Months Ended September 30, 2020

Revenues and other income increased $10.9 million in the first quarter of 2022 compared to the first quarter of 2021, of which $15.2 million is attributable to higher gas gathering and compression volumes and higher MVC levels and $2.8 million is attributable to higher tariff rates.

This increase is partially offset by $4.2 million attributable to lower water services revenue and $2.3 million is attributable to lower crude oil gathering volumes driven by reduced drilling activity, partially offset by MVC shortfall fees.

The remaining $0.6 million is attributable to lower pass-through revenues, including produced water trucking and disposal and electricity fees.

Operating and maintenance expenses increased $4.0 million, of which $3.2 million is attributable to higher operating expenses on our expanding gathering infrastructure and $1.4 million is attributable to higher employee costs allocated to us under our omnibus and employee secondment agreements.

This increase is partially offset by $0.6 million lower pass-through costs, including produced water trucking and disposal and electricity fees.

Depreciation expense increased $1.0 million due to new compressors and other new gathering assets being brought into service.

Processing and Storage

Terminaling and Export

Interest and Other

Consolidated Hess Midstream LP

Affiliate services

Total revenues

Costs and expenses

Operating and maintenance expenses (exclusive

of depreciation shown separately below)

Depreciation expense

General and administrative expenses

Total costs and expenses

Income (loss) from operations

Income from equity investments

Interest expense, net

Gain on sale of property, plant and equipment

Income (loss) before income tax expense (benefit)

Income tax expense (benefit)

Net Income (loss)

Net income (loss) attributable to

noncontrolling interest

Net income (loss) attributable to Hess Midstream LP

Throughput volumes

Gas gathering (MMcf/d) (1)

Crude oil gathering (MBbl/d) (2)

Gas processing (MMcf/d) (1)

Crude oil terminaling (MBbl/d) (2)

NGL loading (MBbl/d) (2)

Water gathering (MBbl/d) (2)

(1) Million cubic feet per day

(2) Thousand barrels per day

Revenues and other income increased $43.7 million in the first nine months of 2021 compared to the first nine months of 2020, of which $43.9 million is attributable to higher tariff rates, $14.0 million is attributable to higher water services revenue and $6.5 million is attributable to higher gas gathering and compression volumes and higher MVC levels.

This increase is partially offset by $16.2 million lower pass-through revenues primarily attributable to lower third-party produced water trucking and disposal due to more operated water disposal facilities coming on-line and being utilized.

In addition, $4.5 million is attributable to lower crude oil gathering volumes driven by reduced drilling activity, partially offset by MVC shortfall fees.

Operating and maintenance expenses decreased $18.1 million, of which $16.2 million is attributable to lower pass-through costs primarily related to lower third-party produced water trucking and disposal costs and $8.1 million is attributable to lower project-based maintenance activity.

This decrease is partially offset by $4.1 million higher employee costs allocated to us under our omnibus and employee secondment agreements and $2.1 million higher insurance and property tax.

Depreciation expense increased $4.3 million due to new compressors, produced water disposal facilities and other new gathering assets being brought into service.

Revenues and other income increased $10.3 million in the first quarter of 2022 compared to the first quarter of 2021, of which $11.0 million is attributable to higher throughput volumes and higher MVC levels and $0.3 million is attributable to higher electricity pass-through revenue.

This increase is partially offset by $1.0 million attributable to lower tariff rates.

PART I –

FINANCIAL INFORMATION (CONT’D)

Processing and Storage

Revenues and other income increased $45.9 million in the first nine months of 2021 compared to the first nine months of 2020, of which $37.5 million is attributable to higher tariff rates, $6.9 million is attributable to higher pass-through revenue, including electricity and other fees related to temporary gas offloads during the TGP turnaround and $1.8 million is attributable to higher MVC levels.

This increase was partially offset by $0.3 million lower other income.

Operating and maintenance expenses increased $18.8 million, of which $9.5 million is attributable to higher TGP turnaround activity compared to the same period last year, $6.9 million is attributable to higher pass-through costs, including electricity and other fees related to temporary gas offloads during the TGP turnaround, $5.5 million is attributable to higher third-party processing fees and $0.5 million is attributable to other maintenance activity, property tax and insurance.

This increase is partially offset by $3.6 million attributable to lower employee costs allocated to us under our omnibus and employee secondment agreements.

Operating and maintenance expenses decreased $1.8 million, of which $2.1 million is attributable to lower third-party processing fees and $1.0 million is attributable to lower employee costs allocated to us under our omnibus and employee secondment agreements.

This decrease is partially offset by $1.0 million attributable to higher operating costs and higher property taxes and $0.3 million is attributable to higher electricity pass-through costs.

Depreciation expense increased $3.2 million primarily due to the TGP expansion and turnaround assets placed in service.

Income from equity investments decreased $2.3 million in the first quarter of 2022 compared to the first quarter of 2021 primarily due to lower volumes processed and higher maintenance expenses at the LM4 plant.

Terminaling and Export

Revenues and other income decreased $27.5 million in the first nine months of 2021 compared to the first nine months of 2020, of which $49.2 million is attributable to lower rail transportation pass‑through revenues.

This decrease is partially offset by $14.4 million attributable to higher tariff rates and $7.3 million primarily attributable to higher MVC levels.

Operating and maintenance expenses decreased $50.0 million primarily attributable to lower rail transportation pass-through costs due to lower rail usage and certain rail transportation fees being paid directly by end customers.

Revenues and other income increased $2.4 million in the first quarter of 2022 compared to the first quarter of 2021, of which $4.2 million is attributable to higher rail transportation pass‑through revenues and $0.3 million is attributable to other income.

The first quarter of 2022 results were also impacted by $1.7 million lower volumes, partially offset by MVC shortfall fees, and $0.4 million lower tariff rates.

Operating and maintenance expenses increased $4.5 million primarily attributable to higher rail transportation pass-through costs.

Interest and Other

Interest expense, net of interest income, increased $2.7 million in the first nine months of 2021 compared to the first nine months of 2020 primarily attributable to the $750.0 million 4.25% fixed-rate senior notes issued in connection with the Repurchase Transaction.

Income tax expense increased $4.0 million in the same periods driven by higher income before income tax expense and increased ownership of Hess Midstream Operations LP by Hess Midstream LP following the equity offering in the first quarter of 2021 and the Repurchase Transaction.

Interest expense, net of interest income, increased $8.2 million in the first quarter of 2022 compared to the first quarter of 2021 primarily attributable to the $750.0 million 4.25% fixed-rate senior notes issued in August 2021.

Income tax expense increased $2.5 million driven by increased ownership of the Partnership by Hess Midstream LP following equity offering and unit repurchase transactions in 2021.

Other Factors Expected to Significantly Affect Our Future Results

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The markets for oil and natural gas are volatile and will likely continue to be volatile in the future.

In the second quarter of 2020, as a result of the sharp decline in crude oil prices, Hess reduced its rig count from 6 rigs to 1 rig in the Bakken.

In addition, third parties in the Bakken have also curtailed production and reduced drilling activity.

Our contract structure is expected to largely offset the impact of the reduction in volumes on our financial performance metrics, as our minimum volume commitments provide minimum levels of cash flows and the fee recalculation mechanisms under our agreements support our cash flow stability.

To the extent our previous plans included revenues for volumes, including third-party volumes contracted through Hess, above currently established minimum volume commitment levels, such revenues could decline to the minimum volume commitment levels.

Subsequently, in the first quarter of 2021, Hess increased its rig count in the Bakken to 2 rigs and added a third operated rig in September 2021.

PART I –

FINANCIAL INFORMATION (CONT’D)

In the second quarter of 2020, as a result of the sharp decline in crude oil prices, Hess reduced its rig count from six rigs to one rig in the Bakken.

In addition, third parties in the Bakken also curtailed production and reduced drilling activity.

Our contract structure has largely offset and is expected to continue to offset potential impact of the reduction in volumes on our financial performance metrics through the Initial Term of our commercial agreements, as our minimum volume commitments provide minimum levels of cash flows and the fee recalculation mechanisms under our agreements support our cash flow stability.

Subsequently, in the first quarter of 2021, Hess increased its rig count in the Bakken to two rigs and added a third operated rig in September 202 1, and we expect to be above minimum volume commitment levels in 2023 and 2024.

To the extent our plans include revenues for volumes, including third-party volumes contracted through Hess, above currently established MVC levels, such revenues could decline to the MVC levels as a result of market volatility.

The throughput volumes at our facilities depend primarily on the volumes of crude oil and natural gas produced by Hess in the Bakken, which, in turn, is ultimately dependent on Hess’

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The commodities trading markets, as well as global and regional supply and demand factors, may also influence the selling prices of crude oil, natural gas and NGLs.

While the initial term of our commercial agreements provides for an annual fee recalculation mechanism to target a return on capital deployed, the secondary term of our commercial agreements changes to an inflation-based fixed fee structure with minimum volume commitments continuing through the second term, which may provide greater exposure to price volatility.

The Secondary Term of our commercial agreements includes continuing MVCs while the fees change to a fixed fee structure based on the average fees paid by Hess during the last three years of the Initial Term of the commercial agreements adjusted annually for inflation up to 3% a year.

Such a fee structure may provide less downside risk protection in the future.

Furthermore, our ability to execute our growth strategy in the Bakken, including attracting third-party volumes, will depend on crude oil and natural gas production in that area, which is also affected by the supply of and demand for crude oil and natural gas.

PART I –

FINANCIAL INFORMATION (CONT’D)

Reconciliation of Non‑GAAP Financial Measures

The following table presents a reconciliation of Adjusted EBITDA and distributable cash flow to net income and net cash provided by operating activities, the most directly comparable GAAP financial measures, for each of the periods indicated.

Three Months Ended

Nine Months Ended

September 30,

(in millions)

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Income tax expense (benefit)

Loss (gain) on sale of property, plant and equipment

Adjusted EBITDA

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Distributable cash flow

Reconciliation of Adjusted EBITDA and Distributable

Cash Flow to net cash provided by operating activities:

Reconciliation of Adjusted EBITDA and Distributable Cash Flow

to net cash provided by operating activities:

Net cash provided by operating activities

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Our partnership agreement requires that we distribute all of our available cash, as defined in the agreement, to our shareholders.

On October 25, 2021, we declared a quarterly cash distribution of $0.5104 per Class A share, to be paid on November 12, 2021 to shareholders of record on November 4, 2021.

On April 25, 2022, we declared a quarterly cash distribution of $0.5492 per Class A share, to be paid on May 13, 2022 to shareholders of record on May 5, 2022.

Simultaneously, the Partnership will make a distribution of $0.5492 per Class B unit of the Partnership to the Sponsors.

On August 10, 2021, we repurchased 31,250,000 Class B units of the Partnership from our Sponsors for an aggregate purchase price of $750.0 million, which was funded through issuance by the Partnership of $750.0 million aggregate principal amount of 4.250% unsecured senior notes due 2030.

On April 4, 2022, we repurchased 13,559,322 Class B units of the Partnership from our Sponsors for an aggregate purchase price of $400.0 million, which was funded using borrowings under the Partnership’s revolving credit facility, which were subsequently repaid with proceeds from $400.0 million aggregate principal amount of 5.500% unsecured senior notes due 2030 issued on April 8, 2022.

Fixed‑Rate Senior Notes

On August 5, 2021, the Partnership issued $750.0 million aggregate principal amount of 4.250% fixed‑rate senior notes due 2030 to qualified institutional investors.

The notes are guaranteed by certain subsidiaries of the Partnership.

Interest is payable semi‑annually on February 15 and August 15.

The Partnership used the proceeds to fund the Repurchase Transaction.

As of September 30, 2021, the Partnership also had $800.0 million aggregate principal amount of 5.625% fixed‑rate senior notes due 2026 that were issued to qualified institutional investors.

The notes are guaranteed by certain of our subsidiaries.

As of March 31, 2022, the Partnership had $750.0 million aggregate principal amount of 4.250% fixed‑rate senior notes due 2030 that were issued to qualified institutional investors.

Interest is payable semi‑annually on February 15 and August 15.

In addition, as of September 30, 2021, the Partnership had $550.0 million aggregate principal amount of 5.125% fixed‑rate senior notes due 2028 that were issued to qualified institutional investors.

The notes are guaranteed by certain of our subsidiaries.

As of March 31, 2022, the Partnership also had $550.0 million aggregate principal amount of 5.125% fixed‑rate senior notes due 2028 that were issued to qualified institutional investors.

Interest is payable semi‑annually on June 15 and December 15.

In addition, as of March 31, 2022, the Partnership had $800.0 million aggregate principal amount of 5.625% fixed‑rate senior notes due 2026 that were issued to qualified institutional investors.

Interest is payable semi‑annually on February 15 and August 15.

The notes described above are guaranteed by certain subsidiaries of the Partnership.

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As of September 30, 2021, we were in compliance with all debt covenants under the indentures.

As of March 31, 2022, we were in compliance with all debt covenants under the indentures.

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See Note 14, Subsequent Events in the accompanying consolidated financial statements for a description of senior unsecured notes issued in April 2022.

PART I –

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Credit Facilities

As of September 30, 2021, we had senior secured syndicated credit facilities (the “Credit Facilities”) consisting of a $1,000.0 million 5-year revolving credit facility and a fully drawn $400.0 million 5-year Term Loan A facility maturing in 2024.

As of March 31, 2022, we had senior secured syndicated credit facilities (the “Credit Facilities”) consisting of a $1,000.0 million 5-year revolving credit facility and a $400.0 million 5-year Term Loan A facility, which was initially fully drawn, maturing in 2024.

Facility fees accrue on the total capacity of the revolving credit facility.

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If the Partnership obtains an investment grade credit rating, the pricing levels will be based on the Partnership’s credit ratings in effect from time to time.

At September 30, 2021, borrowings of $152.0 million were drawn and outstanding under the Partnership’s revolving credit facility, and borrowings of $392.5 million, excluding deferred issuance costs, were drawn and outstanding under the Partnership’s Term Loan A facility.

At March 31, 2022, borrowings of $105.0 million were drawn and outstanding under the Partnership’s revolving credit facility, and borrowings of $385.0 million, excluding deferred issuance costs, were drawn and outstanding under the Partnership’s Term Loan A facility.

The Credit Facilities can be used for borrowings and letters of credit for general corporate purposes.

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The Credit Facilities contain representations and warranties, affirmative and negative covenants and events of default that the Partnership considers to be customary for an agreement of this type, including a covenant that requires the Partnership to maintain a ratio of total debt to EBITDA (as defined in the Credit Facilities) for the prior four fiscal quarters of not greater than 5.00 to 1.00 as of the last day of each fiscal quarter (5.50 to 1.00 during the specified period following certain acquisitions) and, prior to the Partnership obtaining an investment grade credit rating, a ratio of secured debt to EBITDA for the prior four fiscal quarters of not greater than 4.00 to 1.00 as of the last day of each fiscal quarter.

As of September 30, 2021, we were in compliance with these financial covenants.

As of March 31, 2022, we were in compliance with these financial covenants.

Operating Activities.

Net cash provided by operating activities increased $104.8 million for the nine months ended September 30, 2021 compared to the same period in 2020.

The change in operating cash flows resulted primarily from an increase in revenues and other income of $62.1 million, a decrease in cash operating expenses of $46.4 million and an increase in distributions received from equity investments of $7.8 million, partially offset by a use of cash of $11.5 million from changes in working capital.

Net cash provided by operating activities increased $25.2 million for the three months ended March 31, 2022 compared to the same period in 2021.

The change in operating cash flows resulted primarily from an increase in revenues and other income of $23.6 million, an increase in cash provided by changes in working capital of $18.6 million, partially offset by an increase in cash operating expenses of $14.2 million and a decrease in distributions received from equity investments of $2.8 million.

Investing Activities.

Net cash used in investing activities decreased $125.9 million for the nine months ended September 30, 2021 compared to the same period in 2020 driven by lower payments for capital expenditures primarily due to completion of the Tioga Gas Plant expansion.

Net cash used in investing activities increased $28.1 million for the three months ended March 31, 2022 compared to the same period in 2021 driven by higher payments for additions to property, plant, and equipment.

Financing Activities.

Net cash used in financing activities increased $230.4 million for the nine months ended September 30, 2021 compared to the same period in 2020.

In the first nine months of 2021, we issued $750.0 million aggregate principal amount of unsecured senior notes that we used to fund the Repurchase Transaction.

In the first nine months of 2021, we also had lower borrowings under our credit facilities of $195.2 million, net of any changes in financing costs, higher distributions to shareholders and noncontrolling interest of $31.8 million, and $1.8 million of transaction costs related to the Repurchase Transaction compared to the same period last year.

The remaining change of $1.6 million represents a final settlement received from Hess in 2020 related to our previous acquisition of Hess Water Services.

Net cash used in financing activities decreased $4.8 million for the three months ended March 31, 2022 compared to the same period in 2021.

In the first three months of 2022, we had lower repayments of our debt of $8.5 million, partially offset by higher distributions to shareholders and noncontrolling interest of $3.7 million.

PART I –

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The following table sets forth a summary of maintenance and expansion capital expenditures and reconciles capital expenditures on an accrual basis to additions to property, plant and equipment on a cash basis:

Nine Months Ended September 30,

Three Months Ended March 31,

(in millions)

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Additions to property, plant and equipment

Capital expenditures in 2021 are primarily attributable to continued expansion of our gathering and compression capacity, as well as maintenance capital expenditures related to the TGP turnaround.

Capital expenditures in the prior year were primarily attributable to construction and fabrication activities for the TGP expansion.

Capital expenditures in 2022 are primarily attributable to continued expansion of our compression capacity and gas capture capabilities to meet Hess’

and third parties’

current and future production growth and gas capture targets.

The activities focus on the construction of two new greenfield compressor stations and associated pipeline infrastructure, one of which was placed in service in March 2022.

In aggregate, the new stations are expected to provide an additional 85 MMcf/d of installed capacity in 2022 and can be expanded up to 130 MMcf/d in the future.

Capital expenditures in 2021 were also attributable to continued expansion of our compression capacity.

PART I –

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the ability of Hess and other parties to satisfy their obligations to us, including Hess’

ability to meet its drilling and development plans on a timely basis or at all and the operation of joint ventures that we may not control;

ability to meet its drilling and development plans on a timely basis or at all, its ability to deliver its nominated volumes to us, and the operation of joint ventures that we may not control;

our ability to generate sufficient cash flow to pay current and expected levels of distributions;

reductions in the volumes of crude oil, natural gas, NGLs and produced water we gather, process, terminal or store;

the actual volumes we gather, process, terminal and store for Hess in excess of our MVCs and relative to Hess' nominations;

fluctuations in the prices and demand for crude oil, natural gas and NGLs, including as a result of the COVID-19 global pandemic;

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Interest rate swaps may be used to convert interest payments on certain long‑term debt.

At September 30, 2021, we did not have in place any derivative instruments to hedge any exposure to changes in interest rates.

At September 30, 2021, our total debt had a carrying value of $2,612.6 million and a fair value of approximately $2,707.5 million, based on Level 2 inputs in the fair value measurement hierarchy.

At March 31, 2022, we did not have in place any derivative instruments to hedge any exposure to changes in interest rates.

At March 31, 2022, our total debt had a carrying value of $2,560.9 million and a fair value of approximately $2,566.8 million, based on Level 2 inputs in the fair value measurement hierarchy.

A 15% increase or decrease in interest rates would decrease or increase the fair value of our fixed rate debt by approximately $76.7 million or $62.2 million, respectively.

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Compared sentence by sentence after normalising whitespace, quotation marks, case and digits, so re-formatting and restated figures do not read as changed language. Wording changes appear as one removal and one addition. The current filing and the prior one are authoritative.

What changed 10-Q

Item 1. Financial Statements