What changed in this filing

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Item 1. Financial Statements

2022-11-03 compared with 2022-08-04 · 186 added, 152 removed, 869 unchanged (28% of the section changed)

Financial Statements

September 30,

(in millions, except share amounts)

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Class A shares ( 44,002,846 shares issued and outstanding as of

June 30, 2022;

September 30, 2022;

33,672,068 shares issued and outstanding

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Class B shares ( 195,847,606 shares issued and outstanding as of

June 30, 2022;

September 30, 2022;

219,641,928 shares issued and outstanding

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CONSOLIDATED STATEMENTS OF OPERATIONS

Three Months Ended June 30,

Six Months Ended June 30,

Three Months Ended September 30,

Nine Months Ended September 30,

(in millions, except per share data)

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Balance at June 30, 2022

Equity-based compensation

Distributions - $ 0.5559 per share

Balance at September 30, 2022

Balance at December 31, 2020

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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

See accompanying notes to unaudited consolidated financial statements.

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CONSOLIDATED S TATEMENTS OF CASH FLOWS

Six Months Ended June 30,

Nine Months Ended September 30,

(in millions)

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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 June 30, 2022 and December 31, 2021, the consolidated results of operations for the three and six months ended June 30, 2022 and 2021, and the consolidated cash flows for the six months ended June 30, 2022 and 2021.

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, 2022 and December 31, 2021, the consolidated results of operations for the three and nine months ended September 30, 2022 and 2021, and the consolidated cash flows for the nine months ended September 30, 2022 and 2021.

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

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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 81.7 % interest in the Partnership retained by Hess and GIP at June 30, 2022 ( 86.7 % at December 31, 2021).

Our noncontrolling interest represents the approximate 81.7 % interest in the Partnership retained by Hess and GIP at September 30, 2022 ( 86.7 % at December 31, 2021).

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

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As a result of the equity offering transactions described above, we recognized adjustments increasing the amount of the Class A shareholders’

capital balance by $ 27.0 million and decreasing the carrying amount of noncontrolling interest by an equal amount (six months ended June 30, 2021:

capital balance by $ 27.0 million and decreasing the carrying amount of noncontrolling interest by an equal amount (nine months ended September 30, 2021:

$ 31.8 million) to reflect the change in ownership interest.

Class B Unit Repurchase

On March 29, 2022, the Company, the Partnership and our Sponsors entered into a unit repurchase agreement pursuant to which the Partnership agreed to purchase from the Sponsors, subject to the secondary equity offering transaction described above, an aggregate number of Class B Units representing limited partner interests in the Partnership to be determined by dividing (a) $ 400.0 million by (b) the public offering price of the Class A Shares to be set in the secondary offering (the “Repurchase Transaction”).

On July 2 7, 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 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 ).

On April 4, 2022, the repurchase transaction closed, and the Partnership purchased directly from the Sponsors 13,559,322 Class B Units at a purchase price per Class B Unit of $ 29.50 , which is equal to the public offering price per Class A Share in the transaction described above.

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The repurchase transaction was funded using borrowings under the Partnership’s revolving credit facility, which were subsequently repaid with proceeds from a $ 400.0 million senior unsecured notes offering (see Note 7, Debt and Interest Expense ).

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 with the difference between the amount of consideration paid and the amount by which the noncontrolling interest was adjusted recognized as a reduction in equity attributable to Class A shareholders.

We incurred approximately $ 1.5 million of costs directly attributable to the Repurchase Transaction that were charged to equity.

As a result of the equity offering transactions and the Repurchase Transaction described above, we also recognized an additional deferred tax asset of $ 86.4 million (six months ended June 30, 2021:

$ 26.4 million) related to the change in the temporary difference between carrying amount and tax basis of our investment in the Partnership.

The repurchase transactions were 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 amounts of the noncontrolling interest were adjusted to reflect the changes in the ownership interest with the difference between the amounts of consideration paid and the amounts by which the noncontrolling interest were adjusted recognized as a reduction in equity attributable to Class A shareholders.

We incurred approximately $ 1.5 million of costs directly attributable to the repurchase transaction (nine months ended September 30, 2021:

$ 2.2 million) that were charged to equity.

As a result of the equity offering transactions and the repurchase transactions described above, we also recognized an additional deferred tax asset of $ 86.4 million (nine months ended September 30, 2021:

$ 41.2 million) related to the change in the difference between the 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’

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

PART I –

FINANCIAL INFORMATION (CONT’D)

HESS MIDSTREAM LP

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (UNAUDITED)

Related Party Transactions

In addition to the Repurchase Transaction and distributions to the Sponsors disclosed elsewhere in the Notes to consolidated financial statements, we had the following related party transactions:

In addition to the Class B unit repurchase transactions and distributions to the Sponsors disclosed elsewhere in the Notes to consolidated financial statements, we had the following related party transactions:

Commercial Agreements

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The applicable MVCs may, however, be increased as a result of the nominations contained in any such updated development plan.

PART I –

FINANCIAL INFORMATION (CONT’D)

HESS MIDSTREAM LP

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (UNAUDITED)

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 effective January 1, 2014 (“Initial Term”).

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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 six months ended June 30, 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.

For the three and nine months ended September 30, 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.

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

Three Months Ended June 30,

Six Months Ended June 30,

Three Months Ended September 30,

Nine Months Ended September 30,

(in millions)

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

Three Months Ended June 30,

Six Months Ended June 30,

Three Months Ended September 30,

Nine Months Ended September 30,

(in millions)

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

Three Months Ended June 30,

Six Months Ended June 30,

Three Months Ended September 30,

Nine Months Ended September 30,

(in millions)

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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 six months ended June 30, 2022 and 2021, we had the following charges from Hess.

For the three and nine months ended September 30, 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 June 30,

Six Months Ended June 30,

Three Months Ended September 30,

Nine Months Ended September 30,

(in millions)

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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 six months ended June 30, 2022 and 2021, we had the following activity related to our agreements with LM4:

Three Months Ended June 30,

Six Months Ended June 30,

For the three and nine months ended September 30, 2022 and 2021, we had the following activity related to our agreements with LM4:

Three Months Ended September 30,

Nine Months Ended September 30,

(in millions)

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Estimated useful lives

June 30, 2022

September 30, 2022

December 31, 2021

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Accrued liabilities are as follows:

June 30, 2022

September 30, 2022

December 31, 2021

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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 Transaction (see Note 3, Equity Transactions ).

As of June 30, 2022, the Partnership had $ 750.0 million aggregate principal amount of 4.250 % fixed‑rate senior unsecured notes due 2030 that were issued to qualified institutional investors.

The Partnership used the proceeds to repay the borrowings under its revolving credit facility used to finance the April 4, 2022, repurchase transaction (see Note 3, Equity Transactions ).

As of September 30, 2022, the Partnership had $ 750.0 million aggregate principal amount of 4.250 % fixed‑rate senior unsecured notes due 2030 that were issued to qualified institutional investors.

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

As of June 30, 2022, the Partnership also had $ 550.0 million aggregate principal amount of 5.125 % fixed‑rate senior unsecured notes due 2028 that were issued to qualified institutional investors.

As of September 30, 2022, the Partnership also had $ 550.0 million aggregate principal amount of 5.125 % fixed‑rate senior unsecured 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 June 30, 2022, the Partnership had $ 800.0 million aggregate principal amount of 5.625 % fixed‑rate senior unsecured notes due 2026 that were issued to qualified institutional investors.

In addition, as of September 30, 2022, the Partnership had $ 800.0 million aggregate principal amount of 5.625 % fixed‑rate senior unsecured notes due 2026 that were issued to qualified institutional investors.

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

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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 June 30, 2022, we were in compliance with all debt covenants under the indentures.

As of September 30, 2022, we were in compliance with all debt covenants under the indentures.

In addition, the covenants included in the indentures governing the senior unsecured 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.

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Credit Facilities

As of June 30, 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 .

On July 14, 2022, the Partnership amended and restated its existing credit agreement for its 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, resulting in an incremental $ 20.0 million outstanding on the term loan facility at September 30, 2022.

The amended and restated Credit Facilities mature in July 2027 .

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

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 %.

Borrowings under the 5 -year Term Loan A facility generally bear interest at Secured Overnight Financing Rate (”SOFR”) plus the applicable margin ranging from 1.65 % to 2.55 %, while the applicable margin for the 5 ‑year syndicated revolving credit facility ranges from 1.375 % to 2.050 %.

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 June 30, 2022, borrowings of $ 91.0 million were drawn and outstanding under the Partnership’s revolving credit facility, and borrowings of $ 380.0 m illion, excluding deferred issuance costs, were drawn and outstanding under the Partnership’s Term Loan A facility.

At September 30, 2022, borrowings of $ 43.0 million were drawn and outstanding under the Partnership’s revolving credit facility, and borrowings of $ 400.0 m illion, 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 June 30, 2022, the Partnership was in compliance with these financial covenants.

On July 14, 2022, the Partnership amended and restated its Credit Facilities.

See Note 14, Subsequent Events .

As of September 30, 2022, the Partnership was in compliance with these financial covenants.

Fair Value Measurement

At June 30, 2022, our total debt had a carrying value of $ 2,937.4 million and had a fair value of approximately $ 2,691.7 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 June 30, 2022, approximated their fair value.

At September 30, 2022, our total debt had a carrying value of $ 2,909.0 million and had a fair value of approximately $ 2,641.3 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, 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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August 12, 2022

Third Quarter 2022 (1)

November 3, 2022

November 14, 2022

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

Equity‑Based Compensation

Equity‑based award activity for the six months ended June 30, 2022 is as follows:

Equity‑based award activity for the nine months ended September 30, 2022 is as follows:

Weighted Average

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Outstanding and unvested shares at December 31, 2021

Outstanding and unvested shares at June 30, 2022

As of June 30, 2022, $ 2.7 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 2.1 years.

Outstanding and unvested shares at September 30, 2022

As of September 30, 2022, $ 2.3 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 2.0 years.

PART I –

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whichever is more dilutive.

Three Months Ended June 30,

Six Months Ended June 30,

Three Months Ended September 30,

Nine Months Ended September 30,

(in millions, except per share amounts)

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Weighted average Class A shares outstanding:

For the three and six months ended June 30, 2022 the weighted average number of Class A shares outstanding included 50,874 and 76,243 dilutive restricted shares, respectively, compared with 77,748 and 99,985 dilutive restricted shares for the three and six months ended June 30, 2021, respectively.

For the three and nine months ended September 30, 2022 the weighted average number of Class A shares outstanding included 58,300 and 70,262 dilutive restricted shares, respectively, compared with 99,697 and 99,889 dilutive restricted shares for the three and nine months ended September 30, 2021, respectively.

Concentration of Credit Risk

Hess represented approximately 100 % of our total revenues and accounts receivable for the three and six months ended June 30, 2022 and 2021.

Hess represented approximately 100 % of our total revenues and accounts receivable for the three and nine months ended September 30, 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 June 30, 2022 our reserves for estimated remediation liabilities included in Accrued liabilities and Other noncurrent liabilities were $ 0.6 million and $ 4.5 million, respectively, compared with $ 0.8 million and $ 3.1 million, respectively, as of December 31, 2021.

On August, 12, 2022, the Company became aware of a produced water release from an underground pipeline located approximately 8 miles north of Ray, North Dakota.

At this time, it is estimated that approximately 34,000 barrels of produced water were released, causing impacts to soils, crops, and groundwater.

While the Company is still in the initial phases of site investigation, the Company has recorded reserves for the estimated future costs to investigate and remediate any impacts of the release.

As of September 30, 2022 our total reserves for all estimated remediation liabilities, inclusive of the produced water release above, in Accrued liabilities and Other noncurrent liabilities were $ 1.9 million and $ 7.2 million, respectively, compared with $ 0.8 million and $ 3.1 million, respectively, as of December 31, 2021.

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 June 30, 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.

The Company has not received any notice of litigation or regulatory enforcement in connection with the produced water release described under Environmental Contingencies above.

Unless and until an enforcement action is started, the Company cannot fully predict the potential cost of such fines or penalties and what rights, claims, and defenses it may have.

PART I –

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NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (UNAUDITED)

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

Accordingly, as of September 30, 2022 and December 31, 2021, we did no t have material accrued liabilities for legal contingencies.

Our operations are located in the United States and are organized into three reportable segments:

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(in millions)

For the Three Months Ended June 30, 2022

For the Three Months Ended September 30, 2022

Revenues and other income

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(in millions)

For the Three Months Ended June 30, 2021

For the Three Months Ended September 30, 2021

Revenues and other income

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(in millions)

For the Six Months Ended June 30, 2022

For the Nine Months Ended September 30, 2022

Revenues and other income

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(in millions)

For the Six Months Ended June 30, 2021

For the Nine Months Ended September 30, 2021

Revenues and other income

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Total assets for the reportable segments are as follows:

June 30, 2022

September 30, 2022

December 31, 2021

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Interest and Other

(1) Includes investment in equity investees of $ 96.9 million as of June 30, 2022 and $ 101.6 million as of December 31, 2021.

(1) Includes investment in equity investees of $ 98.3 million as of September 30, 2022 and $ 101.6 million as of December 31, 2021.

PART I –

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Subsequent Events

On July 14, 2022, the Partnership amended and restated its existing credit agreement for its $ 1.4 billion Credit Facilities.

The amended and restated credit agreement, among other things, (a) extended the maturity date from December 2024 to July 2027 , (b) increased the accordion feature to up to an additional $ 750.0 million, which does not represent a lending commitment from the lenders, and (c) replaced the London Interbank Offered Rate, or LIBOR, with Secured Overnight Financing Rate, or SOFR, as the benchmark rate.

In connection with the amendment and restatement of the credit facilities, the Partnership retired its existing senior secured Term Loan A facility, which had borrowings of $ 380.0 million excluding deferred issuance costs at June 30, 2022, and entered into a fully drawn $ 400.0 million 5 -year Term Loan A facility, receiving cash of $ 20.0 million at closing.

As a result of this refinance, $ 25.0 million of current maturities of long-term debt have been reclassified to long-term debt as of June 30, 2022.

The amended and restated credit agreement has substantially similar terms to the prior agreement, including commitment amounts, guarantees, secured collateral and covenants.

On July 25, 2022, the board of directors of our general partner declared a quarterly cash distribution of $ 0.5559 per Class A share for the quarter ended June 30, 2022, an approximate 1.2 % increase compared to the distribution on the Class A shares for the quarter ended March 31, 2022.

The distribution will be payable on August 12, 2022, to shareholders of record as of the close of business on August 4, 2022.

On October 24, 2022 , the board of directors of our general partner declared a quarterly cash distribution of $ 0.5627 per Class A share for the quarter ended September 30, 2022, an approximate 1.2 % increase compared to the distribution on the Class A shares for the quarter ended June 30, 2022.

The distribution will be payable on November 14, 2022 , to shareholders of record as of the close of business on November 3, 2022 .

Simultaneously, the Partnership will make a distribution of $ 0.5627 per Class B unit of the Partnership to the Sponsors.

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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.

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

We recently completed construction and commenced commissioning of the second compressor station, which we expect to bring online in the third quarter of 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.

In March 2022, we brought online one of two new greenfield compressor stations and in September 2022 we brought online the second of the two new greenfield compressor stations planned for 2022.

In aggregate, the new stations provide an additional 85 MMcf/d of installed capacity 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’

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

On April 4, 2022, 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 “Repurchase Transaction”).

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.

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FINANCIAL INFORMATION (CONT’D)

Second Quarter Results

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

Third Quarter Results

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

Consolidated net income of $159.4 million;

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Distributable cash flow of $214.8 million;

Cash distribution of $0.5559 per Class A share declared on July 25, 2022, an approximate 1.2% increase compared with the first quarter of 2022, consistent with the Company’s targeted 5% growth in annual distributions per Class A share.

Revenues and other income in the second quarter of 2022 were $313.4 million compared with $294.8 million in the prior-year quarter.

Second quarter 2022 revenues and other income were up $18.6 million compared to the prior-year quarter primarily due to higher minimum volume commitment (“MVC”) levels and slightly higher tariff rates of $17.3 million, as well as higher pass-through revenues, including electricity, produced water trucking and disposal costs, rail transportation and certain other fees of $1.3 million.

In the second quarter of 2022, we earned $57.7 million of shortfall fee payments related to MVCs compared with $18.7 million in the prior-year quarter, which were higher as a result of reduced throughput volumes due to severe weather in the Bakken.

Total costs and expenses in the second quarter of 2022 were $118.1 million, up from $109.2 million in the prior-year quarter.

The increase was primarily attributable to higher depreciation expense for additional assets placed in service of $4.6 million, higher operating and other expenses primarily related to our expanding gathering infrastructure of $3.0 million and higher pass-through expenses of $1.3 million, for which we recognize revenues in the same amount, as described above.

Cash distribution of $0.5627 per Class A share declared on October 24, 2022, an approximate 1.2% increase compared with the second quarter of 2022, consistent with the Company’s targeted 5% growth in annual distributions per Class A share.

Revenues and other income in the third quarter of 2022 were $334.8 million compared with $303.9 million in the prior-year quarter.

Third quarter 2022 revenues and other income were up $30.9 million compared to the prior-year quarter, of which $37.5 million is primarily due to higher volumes, slightly higher tariff rates and generally higher minimum volume commitment (”MVC”) levels in gas gathering offset by generally lower MVC levels in oil gathering and terminaling.

This increase is partially offset by lower pass-through revenues, including electricity, produced water trucking and disposal costs, rail transportation and certain other fees of $6.6 million.

In the third quarter of 2022, we earned $27.0 million of shortfall fee payments related to MVCs compared with $31.6 million in the prior-year quarter, which were lower primarily due to higher gas capture.

Total costs and expenses in the third quarter of 2022 were $130.8 million, down from $144.7 million in the prior-year quarter.

The decrease is primarily attributable to lower operating and other expenses of $11.9 million, driven by the Tioga Gas Plant maintenance turnaround expenses in the prior year quarter and lower pass-through expenses of $6.6 million, for which we recognize revenues in the same amount, as described above.

This decrease is partially offset by $4.0 million higher depreciation expense for additional assets placed in service and $0.6 million higher general and administrative expenses.

Interest expense increased $11.9 million primarily attributable to the $750.0 million 4.25% fixed-rate senior notes issued in August of 2021 and the $400.0 million 5.500% fixed-rate senior notes issued in April of 2022.

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Income from equity investments decreased $0.2 million.

As a result, consolidated net income decreased $10.2 million, but Adjusted EBITDA increased $12.4 million for the second quarter of 2022 compared with the second quarter of 2021.

Throughput volumes decreased 21% for crude oil gathering, 20% for terminaling, 12% for water gathering, 5% for gas gathering and 4% for gas processing in the second quarter of 2022 compared with the second quarter of 2021 due to unplanned production shut-ins during April and May as a result of power outages caused by severe weather in the Bakken.

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

As a result, consolidated net income increased $28.3 million while Adjusted EBITDA increased $48.6 million for the third quarter of 2022 compared with the third quarter of 2021.

Throughput volumes increased 24% for gas processing and 20% for gas gathering in the third quarter of 2022 compared with the third quarter of 2021, primarily due to higher gas capture in the current year quarter and the Tioga Gas Plant turnaround in the prior year quarter.

Water gathering volumes increased 12% reflecting continued steady organic growth of our water handling business.

Throughput volumes in the third quarter of 2022 compared with the third quarter of 2021 decreased 4% for crude oil gathering and 1% for terminaling due to lower third party volumes.

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

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Adjusted EBITDA and Distributable Cash Flow.

We define Adjusted EBITDA as net income (loss) before net interest expense, income tax expense (benefit), depreciation and amortization and our proportional share of depreciation of our equity affiliates, as further adjusted to eliminate the impact of certain items that we do not consider indicative of our ongoing operating performance, such as transaction costs, other income and other non‑cash, non‑recurring items, if applicable.

We define distributable cash flow as Adjusted EBITDA less net interest, excluding amortization of deferred financing costs, cash paid for federal and state income taxes and maintenance capital expenditures.

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Results of Operations

Three Months Ended June 30, 2022 Compared to Three Months Ended June 30, 2021

Results of operations for the three months ended June 30, 2022 and 2021 are presented below (in millions, unless otherwise noted).

For the Three Months Ended June 30, 2022

Three Months Ended September 30, 2022 Compared to Three Months Ended September 30, 2021

Results of operations for the three months ended September 30, 2022 and 2021 are presented below (in millions, unless otherwise noted).

For the Three Months Ended September 30, 2022

Processing and Storage

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FINANCIAL INFORMATION (CONT’D)

For the Three Months Ended June 30, 2021

For the Three Months Ended September 30, 2021

Processing and Storage

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(2) Thousand barrels per day

Revenues and other income increased $11.6 million in the second quarter of 2022 compared to the second quarter of 2021, of which $13.8 million is attributable to higher gas gathering MVC levels while physical volumes were lower due to unplanned production shut-ins during April and May as a result of power outages caused by severe weather in the Bakken.

In addition, $2.6 million of the increase is attributable to higher tariff rates and $1.0 million is attributable to higher pass-through revenues.

This increase is partially offset by $3.2 million attributable to lower crude oil gathering volumes and $2.6 million lower water gathering and disposal revenue due to unplanned production shut-ins during the same period as a result of power outages caused by severe weather in the Bakken, partially offset by MVC shortfall fees.

Operating and maintenance expenses increased $7.0 million, of which $5.0 million is attributable to higher operating expenses on our expanding gathering infrastructure, $1.0 million is attributable to higher pass-through costs, including produced water trucking and disposal and electricity fees, and $1.0 million is attributable to higher employee costs allocated to us under our omnibus and employee secondment agreements.

Depreciation expense increased $1.4 million due to new compressors and other new gathering assets being brought into service.

Revenues and other income increased $24.7 million in the third quarter of 2022 compared to the third quarter of 2021, of which $26.2 million is attributable to higher gas gathering MVC levels and gas gathering volumes, driven by higher gas capture.

In addition, $3.7 million of the increase is attributable to higher tariff rates.

This increase is partially offset by $3.9 million attributable to lower crude oil gathering volumes, $0.9 million is attributable to lower water gathering and disposal revenue primarily due to lower MVC levels and $0.4 million is attributable to lower pass-through revenues.

Operating and maintenance expenses increased $10.8 million, of which $5.9 million is attributable to the produced water release in August 2022, $3.5 million is attributable to higher operating expenses on our expanding gathering infrastructure and $1.8 million is attributable to higher employee costs allocated to us under our omnibus and employee secondment agreements.

This increase is partially offset by $0.4 million attributable to lower pass-through costs, including electricity and other fees.

Depreciation expense increased $1.5 million due to new compressors and other new gathering assets brought into service.

PART I –

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Processing and Storage

Revenues and other income increased $11.2 million in the second quarter of 2022 compared to the second quarter of 2021, of which $12.0 million is attributable to higher MVC levels while physical volumes were lower due to unplanned production shut-ins during April and May as a result of power outages caused by severe weather in the Bakken, and $0.3 million is attributable to higher electricity pass-through revenue.

This increase is partially offset by $1.1 million attributable to lower tariff rates.

Operating and maintenance expenses decreased $3.4 million, of which $2.4 million is attributable to lower third-party processing fees due to lower volumes processed at the LM4 plant and $1.0 million is attributable to lower employee costs allocated to us under our omnibus and employee secondment agreements.

Revenues and other income increased $10.6 million in the third quarter of 2022 compared to the third quarter of 2021, of which $18.2 million is attributable to higher physical volumes, as volumes moved above MVC levels in the third quarter of 2022.

This increase is partially offset by $6.2 million attributable to lower pass-through revenue, including electricity and other fees related to temporary offloads during the TGP turnaround in 2021 and $1.4 million is attributable to lower tariff rates.

Operating and maintenance expenses decreased $30.6 million, of which $18.7 million is attributable to the TGP turnaround in 2021 and $6.2 million is attributable to lower pass-through costs including electricity and other fees related to temporary offloads during the TGP turnaround.

In addition, $2.6 million is attributable to lower operating expenses, $1.8 million is attributable to lower employee costs allocated to us under our omnibus and employee secondment agreements and $1.3 million is attributable to lower third-party processing fees due to lower Hess volumes processed at the LM4 plant.

Depreciation expense increased $2.5 million, primarily due to the TGP expansion and turnaround assets placed in service.

Income from equity investments decreased $1.9 million in the second quarter of 2022 compared to the second quarter of 2021, primarily due to lower volumes processed at the LM4 plant.

Terminaling and Export

Revenues and other income decreased $4.2 million in the second quarter of 2022 compared to the second quarter of 2021, which is attributable to lower volumes due to unplanned production shut-ins during April and May as a result of power outages caused by severe weather in the Bakken, partially offset by MVC shortfall fees.

Revenues and other income decreased $4.4 million in the third quarter of 2022 compared to the third quarter of 2021, of which $5.0 million is attributable to lower MVC shortfall fees, partially offset by $0.6 million higher volumes.

Operating and maintenance expenses increased $1.3 million, primarily due to higher employee costs allocated to us under our omnibus and employee secondment agreements.

Interest and Other

Interest expense, net of interest income, increased $14.5 million in the second quarter of 2022 compared to the second quarter of 2021, primarily attributable to the $750.0 million 4.25% fixed-rate senior notes issued in August 2021 and the $400.0 million 5.50% fixed-rate senior notes issued in April 2022.

Interest expense, net of interest income, increased $11.9 million in the third quarter of 2022 compared to the third quarter of 2021, primarily attributable to the $400.0 million 5.50% fixed-rate senior notes issued in April 2022 and the $750.0 million 4.25% fixed-rate senior notes issued in August 2021.

Income tax expense increased $4.4 million driven by increased ownership of the Partnership by Hess Midstream LP following equity offering and unit repurchase transactions in 2021 and 2022.

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FINANCIAL INFORMATION (CONT’D)

Six Months Ended June 30, 2022 Compared to Six Months Ended June 30, 2021

Results of operations for the six months ended June 30, 2022 and 2021 are presented below (in millions, unless otherwise noted).

For the Six Months Ended June 30, 2022

Nine Months Ended September 30, 2022 Compared to Nine Months Ended September 30, 2021

Results of operations for the nine months ended September 30, 2022 and 2021 are presented below (in millions, unless otherwise noted).

For the Nine Months Ended September 30, 2022

Processing and Storage

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FINANCIAL INFORMATION (CONT’D)

For the Six Months Ended June 30, 2021

For the Nine Months Ended September 30, 2021

Processing and Storage

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(2) Thousand barrels per day

Revenues and other income increased $22.5 million in the first six months of 2022 compared to the first six months of 2021, of which $29.0 million is attributable to higher gas gathering MVC levels while physical volumes were lower due to unplanned production shut-ins during April and May as a result of power outages caused by severe weather in the Bakken, and $5.4 million is attributable to higher tariff rates.

The remaining increase of $0.4 million is attributable to higher pass-through revenues.

This increase is partially offset by $6.8 million attributable to lower water gathering and disposal revenue and $5.5 million attributable to lower crude oil gathering volumes due to unplanned production shut-ins during the same period as a result of power outages caused by severe weather in the Bakken, partially offset by MVC shortfall fees.

Operating and maintenance expenses increased $11.0 million, of which $8.0 million is attributable to higher operating expenses on our expanding gathering infrastructure, $2.6 million is attributable to higher employee costs allocated to us under our omnibus and employee secondment agreements and $0.4 million is attributable to higher pass-through costs, including produced water trucking and disposal and electricity fees.

Depreciation expense increased $2.4 million due to new compressors, produced water disposal facilities and other new gathering assets being brought into service.

Revenues and other income increased $47.2 million in the first nine months of 2022 compared to the first nine months of 2021, of which $54.7 million is attributable to higher gas gathering MVC levels and gas gathering volumes due to higher gas capture and $9.6 million is attributable to higher tariff rates.

This increase is partially offset by $9.4 million attributable to lower crude oil gathering MVC levels and $7.5 million attributable to lower water gathering and disposal revenue due to lower MVC levels in 2022 when compared to the same period in 2021.

The remaining decrease of $0.2 million is attributable to lower pass-through revenues.

Operating and maintenance expenses increased $21.8 million, of which $11.8 million is attributable to higher operating expenses on our expanding gathering infrastructure and $5.9 million is attributable to the produced water release in August 2022.

There was also an increase of $4.3 million attributable to higher employee costs allocated to us under our omnibus and employee secondment agreements.

This increase is partially offset by $0.2 million attributable to lower pass-through costs, including produced water trucking and disposal and electricity fees.

Depreciation expense increased $3.9 million due to new compressors, produced water disposal facilities and other new gathering assets brought into service.

General and administrative expenses increased $1.2 million attributable to higher employee costs allocated to us under our omnibus and employee secondment agreements.

PART I –

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Processing and Storage

Revenues and other income increased $21.5 million in the first six months of 2022 compared to the first six months of 2021, of which $23.1 million is attributable to higher MVC levels and $0.6 million is attributable to higher pass-through revenue.

This increase is partially offset by $2.2 million attributable to lower tariff rates.

Operating and maintenance expenses decreased $5.2 million, of which $4.5 million is attributable to lower third-party processing fees due to lower volumes processed at the LM4 plant and $2.1 million is attributable to lower employee costs allocated to us under our omnibus and employee secondment agreements.

This decrease is partially offset by $0.9 million attributable to higher other operating costs and property taxes and $0.6 million is attributable to higher pass-through costs.

Depreciation expense increased $6.4 million due to the TGP expansion and turnaround assets placed in service.

Income from equity investments decreased $4.2 million in the first six months of 2022 compared to the first six months of 2021, primarily due to lower volumes processed and higher maintenance expenses at the LM4 plant.

Revenues and other income increased $32.1 million in the first nine months of 2022 compared to the first nine months of 2021, of which $41.6 million is attributable to higher physical volumes due to higher gas capture.

This increase is partially offset by $5.7 million attributable to lower pass-through revenue, including electricity and other fees related to temporary offloads during the TGP turnaround in 2021.

In addition, the remaining decrease of $3.4 million is attributable to lower tariff rates and $0.4 million is attributable to other income.

Operating and maintenance expenses decreased $35.8 million, of which $19.3 million is attributable to the TGP turnaround in 2021 and $6.1 million is attributable to lower third-party processing fees due to lower volumes processed at the LM4 plant.

In addition, $5.7 million is attributable to lower pass-through costs, including electricity and other fees related to temporary offloads during the TGP turnaround in 2021, $3.8 million is attributable to lower employee costs allocated to us under our omnibus and employee secondment agreements and $0.9 million is attributable to lower operating costs.

Depreciation expense increased $8.9 million due to the TGP expansion and turnaround assets placed in service in 2021.

General and administrative expenses decreased $1.2 million attributable to lower employee costs allocated to us under our omnibus and employee secondment agreements.

Income from equity investments decreased $4.4 million in the first nine months of 2022 compared to the first nine months of 2021, primarily due to lower volumes processed and higher maintenance expenses at the LM4 plant.

Terminaling and Export

Revenues and other income decreased $1.8 million in the first six months of 2022 compared to the first six months of 2021, of which $6.7 million is attributable to lower volumes due to unplanned production shut-ins during April and May as a result of power outages caused by severe weather in the Bakken, partially offset by MVC shortfall fees.

This decrease was also partially offset by $4.2 million attributable to higher rail transportation pass-through revenues and $0.7 million attributable to other income.

Operating and maintenance expenses increased $5.1 million, of which $4.2 million is attributable to higher rail transportation pass-through costs and $0.9 million attributable to other operating costs.

Revenues and other income decreased $6.2 million in the first nine months of 2022 compared to the first nine months of 2021, of which $10.0 million is attributable to lower MVC shortfall levels and $1.7 million attributable to lower tariff rates.

This decrease was partially offset by $4.2 million attributable to higher rail transportation pass-through revenues and $1.3 million attributable to other income.

Operating and maintenance expenses increased $6.4 million, of which $4.2 million is attributable to higher rail transportation pass-through costs and $2.7 million is attributable to higher employee costs allocated to us under our omnibus and employee secondment agreements, partially offset by $0.5 million attributable to other operating costs.

Interest and Other

Interest expense, net of interest income, increased $22.7 million in the first six months of 2022 compared to the first six months of 2021, primarily attributable to the $750.0 million 4.25% fixed-rate senior notes issued in August 2021 and the $400.0 million 5.50% fixed-rate senior notes issued in April 2022.

Interest expense, net of interest income, increased $34.6 million in the first nine months of 2022 compared to the first nine months of 2021, primarily attributable to the $400.0 million 5.50% fixed-rate senior notes issued in April 2022 and the $750.0 million 4.25% fixed-rate senior notes issued in August 2021.

Income tax expense increased $10.4 million in the same periods driven by increased ownership of the Partnership by Hess Midstream LP following equity offering and unit repurchase transactions in 2021 and 2022.

PART I –

FINANCIAL INFORMATION (CONT’D)

Other Factors Expected to Significantly Affect Our Future Results

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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, Hess increased its rig count in the Bakken to three operated rigs in 2021 and announced an addition of a fourth operated drilling rig in July 2022, and we expect to be above MVC levels in 2023 and 2024.

Subsequently, Hess increased its rig count in the Bakken to three operated rigs in September 2021 and to four operated rigs in July 2022.

We expect to be above MVC levels in 2023 and 2024.

To the extent our plans include revenues for volumes above currently established MVC levels, such revenues could decline to the MVC levels as a result of market volatility.

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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.

PART I –

FINANCIAL INFORMATION (CONT’D)

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.

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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 June 30,

Six Months Ended June 30,

Three Months Ended September 30,

Nine Months Ended September 30,

(in millions)

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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 July 25, 2022, we declared a quarterly cash distribution of $0.5559 per Class A share, to be paid on August 12, 2022 to shareholders of record on August 4, 2022.

On October 24, 2022, we declared a quarterly cash distribution of $0.5627 per Class A share, to be paid on November 14, 2022 to shareholders of record on November 3, 2022.

Simultaneously, the Partnership will make a distribution of $0.5627 per Class B unit of the Partnership to the Sponsors.

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.

On August 16, 2022 the United States enacted the Inflation Reduction Act of 2022 (the “Inflation Reduction Act”), which includes a 15% book-income alternative minimum tax on corporations with average adjusted financial statement income over $1 billion for any 3-year period ending with 2022 or later and a 1% excise tax on the fair market value of stock that is repurchased by publicly traded U.S.

corporations.

The alternative minimum tax and the excise tax are effective in taxable years beginning after December 31, 2022.

The alternative minimum tax is designed to be a temporary acceleration of cash tax as amounts paid under such regime are creditable against the regular U.S.

corporate income tax liability in following tax years.

The Department of the Treasury is expected to publish regulations relevant to many aspects of the minimum tax on corporations, including the calculation of adjusted financial statement income.

We are currently awaiting such guidance and continue to evaluate the effect of the new law to our future cash flows and financial results.

Fixed‑Rate Senior Notes

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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 Transaction.

As of June 30, 2022, the Partnership had $750.0 million aggregate principal amount of 4.250% fixed‑rate senior unsecured notes due 2030 that were issued to qualified institutional investors.

The Partnership used the proceeds to repay the borrowings under its revolving credit facility used to finance the April 4, 2022, repurchase transaction.

As of September 30, 2022, the Partnership had $750.0 million aggregate principal amount of 4.250% fixed‑rate senior unsecured notes due 2030 that were issued to qualified institutional investors.

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

As of June 30, 2022, the Partnership also had $550.0 million aggregate principal amount of 5.125% fixed‑rate senior unsecured notes due 2028 that were issued to qualified institutional investors.

As of September 30, 2022, the Partnership also had $550.0 million aggregate principal amount of 5.125% fixed‑rate senior unsecured 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 June 30, 2022, the Partnership had $800.0 million aggregate principal amount of 5.625% fixed‑rate senior unsecured notes due 2026 that were issued to qualified institutional investors.

In addition, as of September 30, 2022, the Partnership had $800.0 million aggregate principal amount of 5.625% fixed‑rate senior unsecured notes due 2026 that were issued to qualified institutional investors.

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

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As of June 30, 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.

The Company is a holding company and has no independent assets or operations.

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.

As of September 30, 2022, we were in compliance with all debt covenants under the indentures.

PART I –

FINANCIAL INFORMATION (CONT’D)

that would not be consolidated with the financial results of the Partnership and its subsidiaries.

The Company is a holding company and has no independent assets or operations.

Credit Facilities

As of June 30, 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.

On July 14, 2022, the Partnership amended and restated its existing credit agreement for its 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, resulting in an incremental $20.0 million outstanding on the term loan facility at September 30, 2022.

The amended and restated Credit Facilities mature in July 2027.

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 an 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 Secured Overnight Financing Rate (”SOFR”) plus the applicable margin ranging from 1.65% to 2.55%, while the applicable margin for the 5-year syndicated revolving credit facility ranges from 1.375% to 2.050%.

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 June 30, 2022, borrowings of $91.0 million were drawn and outstanding under the Partnership’s revolving credit facility, and borrowings of $380.0 million, excluding deferred issuance costs, were drawn and outstanding under the Partnership’s Term Loan A facility.

At September 30, 2022, borrowings of $43.0 million were drawn and outstanding under the Partnership’s revolving credit facility, and borrowings of $400.0 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 June 30, 2022, we were in compliance with these financial covenants.

On July 14, 2022, the Partnership amended and restated its Credit Facilities.

See Note 14, Subsequent Events .

As of September 30, 2022, we were in compliance with these financial covenants.

Operating Activities.

Net cash provided by operating activities increased $13.8 million for the six months ended June 30, 2022 compared to the same period in 2021.

Net cash provided by operating activities increased $66.5 million for the nine months ended September 30, 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 $73.1 million, an increase in cash provided by changes in working capital of $26.4 million, partially offset by an increase in cash operating expenses of $25.9 million and a decrease in distributions received from equity investments of $7.1 million.

Investing Activities.

Net cash used in investing activities increased $58.0 million for the six months ended June 30, 2022 compared to the same period in 2021 driven by higher payments for additions to property, plant, and equipment.

Net cash used in investing activities increased $56.6 million for the nine months ended September 30, 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 decreased $43.2 million for the six months ended June 30, 2022 compared to the same period in 2021.

In the first six months of 2022, we issued $400.0 million aggregate principal amount of unsecured senior notes that we used to fund the $400.0 million Class B Unit Repurchase Transaction.

In the first six months of 2022, we also had lower repayments of our debt of $51.1 million, net of any changes in financing costs, partially offset by higher distributions to shareholders and noncontrolling interest of $6.7 million and $1.2 million of transaction costs related to the Repurchase Transaction compared to the same period last year.

Net cash used in financing activities increased $9.5 million for the nine months ended September 30, 2022 compared to the same period in 2021.

In the first nine months of 2022, we had higher repayments on our debt of $13.5 million, net of any changes in financing costs, partially offset by lower distributions to shareholders and noncontrolling interest of $3.5 million and $0.5 million lower transaction costs related to the $400.0 million Class B Unit Repurchase Transaction in 2022 compared to the $750.0 million Class B Unit Repurchase Transaction in 2021.

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:

Six Months Ended June 30,

Nine Months Ended September 30,

(in millions)

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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.

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

In aggregate, the new stations provide an additional 85 MMcf/d of installed capacity 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, as well as maintenance capital expenditures related to the Tioga Gas Plant turnaround.

PART I –

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

At June 30, 2022, we did not have in place any derivative instruments to hedge any exposure to changes in interest rates.

At June 30, 2022, our total debt had a carrying value of $2,937.4 million and a fair value of approximately $2,691.7 million, based on Level 2 inputs in the fair value measurement hierarchy.

At September 30, 2022, we did not have in place any derivative instruments to hedge any exposure to changes in interest rates.

At September 30, 2022, our total debt had a carrying value of $2,909.0 million and a fair value of approximately $2,641.3 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 $114.5 million or $123.6 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