What changed in this filing

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Item 1. Financial Statements

2023-11-02 compared with 2023-08-03 · 216 added, 147 removed, 869 unchanged (29% of the section changed)

Financial Statements

September 30,

(in millions, except share amounts)

21 unchanged sentences

Class A shares ( 68,358,493 shares issued and outstanding as of

June 30, 2023;

September 30, 2023;

44,002,846 shares issued and outstanding

1 unchanged sentence

Class B shares ( 161,311,848 shares issued and outstanding as of

June 30, 2023;

September 30, 2023;

195,847,606 shares issued and outstanding as of

8 unchanged sentences

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)

38 unchanged sentences

Balance at June 30, 2023

Equity-based compensation

Distributions - $ 0.6011 per share

Recognition of deferred tax asset

Sale of shares held by Sponsors

Class B unit repurchase

Transaction costs

Balance at September 30, 2023

Balance at December 31, 2021

10 unchanged sentences

Balance at June 30, 2022

Equity-based compensation

Distributions - $ 0.5559 per share

Balance at September 30, 2022

See accompanying notes to unaudited consolidated financial statements.

2 unchanged sentences

CONSOLIDATED S TATEMENTS OF CASH FLOWS

Six Months Ended June 30,

Nine Months Ended September 30,

(in millions)

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or like terms, refer to Hess Midstream LP and its subsidiaries.

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, 2023 and December 31, 2022, the consolidated results of operations for the three and six months ended June 30, 2023 and 2022, and the consolidated cash flows for the six months ended June 30, 2023 and 2022.

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, 2023 and December 31, 2022, the consolidated results of operations for the three and nine months ended September 30, 2023 and 2022, and the consolidated cash flows for the nine months ended September 30, 2023 and 2022.

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

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(“GIP”

and together with Hess, the “Sponsors”) at June 30, 2023 ( 81.7 % at December 31, 2022).

and together with Hess, the “Sponsors”) at September 30, 2023 ( 81.7 % at December 31, 2022).

See Note 2, Equity Transactions for a description of changes in noncontrolling interest related to the equity transactions.

7 unchanged sentences

The Sponsors received net proceeds from the offering of approximately $ 333.4 million, after deducting underwriting discounts.

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

On August 17, 2023, GIP sold an aggregate of 10,000,000 of our Class A Shares in an underwritten public offering at a price of $ 28.80 per Class A Share, less underwriting discounts.

GIP also granted the underwriter an option to purchase up to an additional 1,500,000 Class A Shares at the same price per Class A Share, less underwriting discounts, which was exercised in full on August 22, 2023.

GIP received net proceeds from the offering of approximately $ 328.8 million, after deducting underwriting discounts.

PART I –

FINANCIAL INFORMATION (CONT’D)

HESS MIDSTREAM LP

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (UNAUDITED)

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

The above equity offering transactions were conducted pursuant to a registration rights agreement among us and the Sponsors.

3 unchanged sentences

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

capital balance by $ 11.0 million (six months ended June 30, 2022:

capital balance by $ 17.8 million (nine months ended September 30, 2022:

$ 27.0 million) and decreasing the carrying amount of noncontrolling interest by an equal amount to reflect the change in ownership interest.

PART I –

FINANCIAL INFORMATION (CONT’D)

HESS MIDSTREAM LP

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (UNAUDITED)

Class B Unit Repurchases

5 unchanged sentences

The purchase price per Class B Unit was $ 27.63 , the closing price of the Class A Shares on March 27, 2023.

The March 2023 repurchase transaction was funded using borrowings under the Partnership’s existing revolving credit facility (see Note 6, Debt and Interest Expense ).

On June 26, 2023, the Company, the Partnership and our Sponsors entered into a unit repurchase agreement pursuant to which the Partnership agreed to purchase from the Sponsors 3,350,084 Class B Units for an aggregate purchase price of approximately $ 100.0 million.

1 unchanged sentence

The purchase price per Class B Unit was $ 29.85 , the closing price of the Class A Shares on June 26, 2023.

The June 2023 repurchase transaction was funded using borrowings under the Partnership’s existing revolving credit facility (see Note 6, Debt and Interest Expense ).

On September 19, 2023, the Company, the Partnership and our Sponsors entered into a unit repurchase agreement pursuant to which the Partnership agreed to purchase from the Spons ors 3,301,420 Class B Units for an aggregate purchase price of approximately $ 100.0 million.

The repurchase transaction was consummated on S eptember 22, 2023.

The purchase price per Class B Unit was $ 30.29 , the closing price of the Class A Shares on September 19, 20 23.

The 2023 repurchase transactions were funded using borrowings under the Partnership’s existing revolving credit facility (see Note 6, Debt and Interest Expense ).

Pursuant to the terms of the repurchase agreements described above, immediately following each purchase of the Class B Units from the Sponsors, the Partnership cancelled the repurchased units, and the Company cancelled, for no consideration, an equal number of its Class B Shares.

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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 $ 1.8 million of costs directly attributable to the repurchase transactions that were charged to equity ( six months ended June 30, 2022:

We incurred approximately $ 2.5 million of costs directly attributable to the repurchase transactions that were charged to equity (nine months ended September 30, 2022:

$ 1.5 million).

As a result of the equity offerings and the unit repurchase transactions described above, we also recognized an additional deferred tax asset of $ 91.5 million ( six months ended June 30, 2022:

As a result of the equity offering and the unit repurchase transactions described above, we also recognized an additional deferred tax asset of $ 177.7 million (nine months ended September 30, 2022:

$ 86.4 million ) related to the change in the temporary difference between the carrying amount and the tax basis of our investment in the Partnership.

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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, 2023 and 2022, 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, 2023 and 2022 , 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)

6 unchanged sentences

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)

5 unchanged sentences

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)

4 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 six months ended June 30, 2023 and 2022, we had the following charges from Hess.

For the three and nine months ended September 30, 2023 and 2022 , 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)

9 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 six months ended June 30, 2023 and 2022, 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, 2023 and 2022, we had the following activity related to our agreements with LM4:

Three Months Ended September 30,

Nine Months Ended September 30,

(in millions)

5 unchanged sentences

Estimated useful lives

June 30, 2023

September 30, 2023

December 31, 2022

19 unchanged sentences

Accrued liabilities are as follows:

June 30, 2023

September 30, 2023

December 31, 2022

9 unchanged sentences

Fixed‑Rate Senior Notes

As of June 30, 2023, the Partnership had $ 400.0 million aggregate principal amount of 5.500 % fixed‑rate senior unsecured notes due 2030 that were issued to qualified institutional investors.

As of September 30, 2023 , the Partnership had $ 400.0 million aggregate principal amount of 5.500 % fixed‑rate senior unsecured notes due 2030 that were issued to qualified institutional investors.

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

As of June 30, 2023, 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.

As of September 30, 2023 , 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, 2023, 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, 2023 , 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, 2023, 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, 2023 , 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, 2023, we were in compliance with all debt covenants under the indentures.

As of September 30, 2023, 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, 2023, the Partnership had $ 1.4 billion senior secured credit facilities (the “Credit Facilities”) consisting of a $ 1.0 billion 5 -year revolving credit facility and a $ 400.0 million 5 ‑year Term Loan A facility.

As of September 30, 2023 , the Partnership had $ 1.4 billion senior secured credit facilities (the “Credit Facilities”) consisting of a $ 1.0 billion 5 -year revolving credit facility and a $ 400.0 million 5 ‑year Term Loan A facility.

The Credit Facilities mature in July 2027 .

3 unchanged sentences

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.

As of June 30, 2023, borrowings of $ 198.0 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.

As of September 30, 2023, borrowings of $ 276.0 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.

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, 2023, the Partnership was in compliance with these financial covenants.

As of September 30, 2023, the Partnership was in compliance with these financial covenants.

Fair Value Measurement

At June 30, 2023, our total debt had a carrying value of $ 3,068.7 million and had a fair value of approximately $ 2,924.3 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 June 30, 2023, approximated their fair value.

At September 30, 2023, our total debt had a carrying value of $ 3,148.3 million and had a fair value of approximately $ 2,954.5 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, 2023 , 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 14, 2023

Third Quarter 2023 (1)

November 2, 2023

November 14, 2023

(1) For more information, see Note 12, Subsequent Events.

PART I –

FINANCIAL INFORMATION (CONT’D)

HESS MIDSTREAM LP

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (UNAUDITED)

Earnings per Share

6 unchanged sentences

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)

4 unchanged sentences

Weighted average Class A shares outstanding:

For the three and six months ended June 30, 2023 the weighted average number of Class A Shares outstanding included 19,640 and 40,103 dilutive restricted shares, respectively, compared with 50,874 and 76,243 dilutive restricted shares for the three and six months ended June 30, 2022, respectively.

PART I –

FINANCIAL INFORMATION (CONT’D)

HESS MIDSTREAM LP

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (UNAUDITED)

For the three and nine months ended September 30, 2023 the weighted average number of Class A Shares outstanding included 34,752 and 38,319 dilutive restricted shares, respectively, compared with 58,300 and 70,262 dilutive restricted shares for the three and nine months ended September 30, 2022 , 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, 2023 and 2022.

Hess represented approximately 100 % of our total revenues and accounts receivable for the three and nine months ended September 30, 2023 and 2022 .

Commitments and Contingencies

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Remediation infrastructure was put in place and remediation and monitoring is ongoing.

As of June 30, 2023 our reserves for all estimated remediation liabilities, inclusive of the produced water release above, in Accrued liabilities and Other noncurrent liabilities were $ 0.9 million and $ 3.5 million, respectively, compared with $ 1.4 million and $ 4.3 million, respectively, as of December 31, 2022.

As of September 30, 2023 our reserves for all estimated remediation liabilities, inclusive of the produced water release above, in Accrued liabilities and Other noncurrent liabilities were $ 1.3 million and $ 6.1 million, respectively, compared with $ 1.4 million and $ 4.3 million, respectively, as of December 31, 2022.

Legal Proceedings

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

PART I –

FINANCIAL INFORMATION (CONT’D)

HESS MIDSTREAM LP

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 June 30, 2023 and December 31, 2022, we did no t have material accrued liabilities for legal contingencies.

Accordingly, as of September 30, 2023 and December 31, 2022 , 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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operating performance based on multiple measures including Adjusted EBITDA, defined as net income (loss) before net interest expense, income tax expense (benefit), depreciation and amortization and our proportional share of depreciation of 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.

PART I –

FINANCIAL INFORMATION (CONT’D)

HESS MIDSTREAM LP

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (UNAUDITED)

The following tables reflect certain financial data for each reportable segment:

3 unchanged sentences

(in millions)

For the Three Months Ended June 30, 2023

For the Three Months Ended September 30, 2023

Revenues and other income

3 unchanged sentences

Depreciation expense

Proportional share of equity affiliates' depreciation

Proportional share of equity affiliates'

Income from equity investments

7 unchanged sentences

(in millions)

For the Three Months Ended June 30, 2022

For the Three Months Ended September 30, 2022

Revenues and other income

3 unchanged sentences

Depreciation expense

Proportional share of equity affiliates' depreciation

Proportional share of equity affiliates'

Income from equity investments

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(in millions)

For the Six Months Ended June 30, 2023

For the Nine Months Ended September 30, 2023

Revenues and other income

3 unchanged sentences

Depreciation expense

Proportional share of equity affiliates' depreciation

Proportional share of equity affiliates'

Income from equity investments

7 unchanged sentences

(in millions)

For the Six Months Ended June 30, 2022

For the Nine Months Ended September 30, 2022

Revenues and other income

3 unchanged sentences

Depreciation expense

Proportional share of equity affiliates' depreciation

Proportional share of equity affiliates'

Income from equity investments

5 unchanged sentences

Total assets for the reportable segments are as follows:

June 30, 2023

September 30, 2023

December 31, 2022

3 unchanged sentences

Interest and Other

(1) Includes investment in equity investees of $ 92.8 million as of June 30, 2023 and $ 93.9 million as of December 31, 2022.

(1) Includes investment in equity investees of $ 91.4 million as of September 30, 2023 and $ 93.9 million as of December 31, 2022 .

PART I –

FINANCIAL INFORMATION (CONT’D)

HESS MIDSTREAM LP

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (UNAUDITED)

Subsequent Events

On July 24, 2023 , the board of directors of our general partner declared a quarterly cash distribution of $ 0.6011 per Class A Share for the quarter ended June 30, 2023.

The distribution represents an approximate 2.7 % increase in the quarterly distribution per Class A Share for the second quarter of 2023 as compared with the first quarter of 2023.

The distribution will be payable on August 14, 2023 , to shareholders of record as of the close of business on August 3, 2023 .

On October 22, 2023, Hess entered into an Agreement and Plan of Merger (the “Chevron Merger Agreement”) with Chevron Corporation (“Chevron”) and Yankee Merger Sub Inc., a direct, wholly-owned subsidiary of Chevron (“Merger Subsidiary”).

The Chevron Merger Agreement provides that, among other things and subject to the terms and conditions of the Chevron Merger Agreement, Merger Subsidiary will be merged with and into Hess, with Hess surviving and continuing as the surviving corporation in the merger as a direct, wholly-owned subsidiary of Chevron (such transaction, the “Chevron Merger”).

The Chevron Merger is expected to close in the first half of 2024, subject to shareholder and regulatory approvals and other customary closing conditions.

Upon consummation of the proposed transaction, Chevron will acquire Hess ’

37.8 % ownership in the Company, including its right to appoint four directors to the Company’s Board.

On October 23, 2023 , the board of directors of our general partner declared a quarterly cash distribution of $ 0.6175 per Class A Share for the quarter ended September 30, 2023.

The distribution represents an approximate 2.7 % increase in the quarterly distribution per Class A Share for the third quarter of 2023 as compared with the second quarter of 2023.

The distribution will be payable on November 14, 2023 , to shareholders of record as of the close of business on November 2, 2023 .

Simultaneously, the Partnership will make a distribution of $ 0.6175 per Class B Unit of the Partnership to the Sponsors.

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Our actual results could differ materially from those discussed below.

Factors that could cause or contribute to such differences include, but are not limited to, those identified below and those discussed in our 2022 Annual Report.

Factors that could cause or contribute to such differences include, but are not limited to, those identified below and those discussed in the section entitled “Risk Factors”

in this Quarterly Report on Form 10-Q and in our 2022 Annual Report.

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.

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The purchase price per Class B Unit was $29.85, the closing price of the Class A Shares on June 26, 2023.

On September 22, 2023, the Partnership purchased directly from the Sponsors 3,301,420 Class B Units for an aggregate purchase price of approximately $100 million.

The purchase price per Class B Unit was $30.29, the closing price of the Class A Shares on September 19, 2023.

The repurchase transactions were funded using borrowings under the Partnership’s existing revolving credit facility.

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The Sponsors received net proceeds from the offering of approximately $333.4 million, after deducting underwriting discounts.

The Company did not receive any proceeds from the offering.

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

In addition, we utilized the excess free cash flow beyond our growing distributions to provide increased return of capital to our shareholders through an immediate 1.5% increase in our quarterly distribution level per Class A Share in each of the first two quarters of 2023 in addition to the quarterly 1.2% increase per Class A Share consistent with our target of at least 5% growth in annual distributions per Class A Share.

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

(1) gathering (2) processing and storage and (3) terminaling and export.

On August 17, 2023, GIP sold an aggregate of 10,000,000 of our Class A Shares in an underwritten public offering at a price of $28.80 per Class A Share, less underwriting discounts.

GIP received net proceeds from the offering of approximately $328.8 million, after deducting underwriting discounts.

The Company did not receive any proceeds from the offering transactions.

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

As a result of the equity offering and unit repurchase transactions described above, our public ownership increased from approximately 18% at December 31, 2022, to approximately 29.4% at September 30, 2023, on a consolidated basis.

We utilized the excess free cash flow beyond our growing distributions to provide increased return of capital to our shareholders through an immediate 1.5% increase in our quarterly distribution level per Class A Share in each of the first three quarters of 2023 in addition to the quarterly 1.2% increase per Class A Share consistent with our target of at least 5% growth in annual distributions per Class A Share.

PART I –

FINANCIAL INFORMATION (CONT’D)

Second Quarter Results

Significant financial and operating highlights for the second quarter of 2023 included:

The Chevron Merger is expected to close in the first half of 2024, subject to shareholder and regulatory approvals and other customary closing conditions.

Upon consummation of the proposed transaction, Chevron will acquire Hess’

37.8% ownership in the Company, including its right to appoint four directors to the Company’s Board.

The Company’s contract structure remains in place.

As part of the annual nomination process set forth in the Company’s long-term commercial agreements, the Company plans to set its MVCs and rates, which are expected to be set based on Hess’

current 4-rig program in the Bakken, and will release both in January 2024, consistent with prior practice.

Risk Factors for a discussion of risks related to the Chevron Merger.

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

(1) gathering (2) processing and storage and (3) terminaling and export.

Third Quarter Results

Significant financial and operating highlights for the third quarter of 2023 included:

Consolidated net income of $164.8 million;

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Distributable cash flow of $224.1 million;

Cash distribution of $0.6011 per Class A Share declared on July 24, 2023, an approximate 2.7% increase in the quarterly distribution per Class A Share for the second quarter of 2023 as compared with the first quarter of 2023.

Cash distribution of $0.6175 per Class A Share declared on October 23, 2023, an approximate 2.7% increase in the quarterly distribution per Class A Share for the third quarter of 2023 as compared with the second quarter of 2023.

The increase consists of an approximate 1.5% increase in the Company’s distribution level per Class A Share in addition to the quarterly 1.2% increase per Class A Share consistent with its target of at least 5% growth in annual distributions per Class A Share.

Revenues and other income in the second quarter of 2023 were $324.0 million compared with $313.4 million in the prior-year quarter.

Second quarter 2023 revenues and other income were up $10.6 million compared to the prior-year quarter primarily due to higher tariff rates partly offset by lower shortfall fees due to the transition from higher MVC levels in 2022 to actual physical volumes in 2023 that are at or above MVCs.

Total operating costs and expenses in the second quarter of 2023 were $125.9 million, compared with $118.1 million in the prior-year quarter.

The increase was primarily attributable to higher operating expenses and higher depreciation expense for additional assets placed in service.

Interest expense in the second quarter of 2023 was $43.8 million, up from $37.4 million in the prior-year quarter primarily attributable to higher interest rates on the Term Loan A and revolving credit facilities.

Income tax expense increased $1.0 million resulting from ownership changes following Class B Unit repurchase and secondary equity offering transactions.

As a result, consolidated net income decreased $3.9 million while Adjusted EBITDA increased $5.5 million for the second quarter of 2023 compared with the second quarter of 2022.

Throughput volumes increased 23% for gas processing and 19% for gas gathering in the second quarter of 2023 compared with the second quarter of 2022 primarily due to higher production, including third-party volumes, higher gas capture, and recovery from severe weather in the second quarter of 2022.

Revenues and other income in the third quarter of 2023 were 363.1 million compared with $334.8 million in the prior-year quarter.

Third quarter 2023 revenues and other income were up $28.3 million compared to the prior-year quarter primarily due to higher physical volumes and tariff rates, partially offset by lower shortfall fees due to the transition from higher MVC levels in 2022 to actual physical volumes in 2023 that are at or above MVCs.

Total operating costs and expenses in the third quarter of 2023 were $143.1 million, compared with $130.8 million in the prior-year quarter.

The increase was primarily attributable to higher maintenance expenses, pass-through expenses and higher depreciation expense for additional assets placed in service, partially offset by higher remediation costs associated with a produced water release in the prior-year quarter.

Interest expense in the third quarter of 2023 was $45.8 million, up from $39.9 million in the prior-year quarter, primarily attributable to higher interest rates on our credit facilities and higher borrowings on our revolving credit facility.

Income tax expense increased $3.9 million resulting from ownership changes following Class B Unit repurchases and secondary equity offering transactions.

As a result, consolidated net income increased $5.4 million while Adjusted EBITDA increased $17.4 million for the third quarter of 2023 compared with the third quarter of 2022.

Throughput volumes increased 9% for gas gathering and gas processing in the third quarter of 2023 compared with the third quarter of 2022, primarily due to higher production, including third-party volumes, and higher gas capture.

Throughput volumes increased 4% for crude oil gathering and 17% for terminaling in the third quarter of 2023 compared with the third quarter of 2022, primarily due to higher production and higher third-party volumes.

Water gathering volumes increased 19% reflecting continued steady organic growth of our water handling business.

Throughput volumes in the second quarter of 2023 compared with the second quarter of 2022 increased 16% for terminaling and 7% for crude oil gathering primarily due to higher production and higher third-party volumes.

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

36 unchanged sentences

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

PART I –

FINANCIAL INFORMATION (CONT’D)

Operating and Maintenance Expenses.

Our management seeks to maximize the profitability of our operations by effectively managing operating and maintenance expenses.

These expenses are comprised primarily of costs charged to us under our omnibus agreement and employee secondment agreement, third‑party contractor costs, utility costs, insurance premiums, third‑party service provider costs, related property taxes and other non‑income taxes and maintenance expenses, such as expenditures to repair, refurbish and replace storage facilities and to maintain equipment reliability, integrity and safety.

These expenses are comprised primarily of costs charged to us

PART I –

FINANCIAL INFORMATION (CONT’D)

under our omnibus agreement and employee secondment agreement, third‑party contractor costs, utility costs, insurance premiums, third‑party service provider costs, related property taxes and other non‑income taxes and maintenance expenses, such as expenditures to repair, refurbish and replace storage facilities and to maintain equipment reliability, integrity and safety.

These expenses generally remain relatively stable across broad ranges of throughput volumes but can fluctuate from period to period depending on the mix of activities performed during that period and the timing of substantial expenses, such as gas plant turnarounds.

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Results of Operations

Three Months Ended June 30, 2023 Compared to Three Months Ended June 30, 2022

Results of operations for the three months ended June 30, 2023 and 2022 are presented below (in millions, unless otherwise noted).

For the Three Months Ended June 30, 2023

Three Months Ended September 30, 2023 Compared to Three Months Ended September 30, 2022

Results of operations for the three months ended September 30, 2023 and 2022 are presented below (in millions, unless otherwise noted).

For the Three Months Ended September 30, 2023

Processing and Storage

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FINANCIAL INFORMATION (CONT’D)

For the Three Months Ended June 30, 2022

For the Three Months Ended September 30, 2022

Processing and Storage

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(2) Thousand barrels per day

Revenues and other income increased $8.3 million in the second quarter of 2023 compared to the second quarter of 2022, of which $15.6 million is attributable to higher tariff rates, $2.7 million is attributable to higher water gathering and disposal revenue and $0.6 million is attributable to other income, including pass-through income.

While physical crude oil gathering volumes increased in the second quarter of 2023, they remained below MVCs resulting in a partially offsetting $5.4 million decline in revenues due to the reduction in the MVC levels from the second quarter of 2022.

The remaining decrease of $5.2 million is attributable to gas gathering volumes where actual physical volumes were above MVCs in the second quarter of 2023 and below MVCs in the second quarter of 2022, with physical volumes in 2023 lower than MVC levels in 2022.

Operating and maintenance expenses increased $2.0 million primarily attributable to higher employee costs allocated to us under our omnibus and employee secondment agreements.

Revenues and other income increased $15.5 million in the third quarter of 2023 compared to the third quarter of 2022, of which $16.8 million is attributable to higher tariff rates, $3.2 million is attributable to higher pass-through revenue, $2.6 million is attributable to higher water gathering and disposal revenue and $0.2 million is attributable to other income.

Despite the overall higher gas gathering physical volumes in the third quarter of 2023, these revenue increases were partially offset by $4.9 million as the higher gas gathering volumes were still below the MVC levels in the third quarter of 2022 in one of the sub-systems.

The remaining decrease of $2.4 million is attributable to crude oil gathering volumes where actual physical volumes were above MVCs in the third quarter of 2023 and below MVC’s in the third quarter of 2022, with physical volumes in 2023 lower than MVC levels in 2022.

Operating and maintenance expenses increased $3.6 million, of which $3.2 million is attributable to higher pass-through costs, including produced water trucking and disposal and electricity fees, $3.0 million is attributable to the Hawkeye Gas Facility turnaround, compressor stations overhauls and other maintenance activities, partially offset by $2.6 million attributable to the August 2022 produced water release remediation reserve.

Depreciation expense increased $2.0 million due to new compressors, produced water disposal facilities and other new gathering assets brought into service.

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Processing and Storage

Revenues and other income increased $6.3 million in the second quarter of 2023 compared to the second quarter of 2022, of which $3.1 million is attributable to higher gas processing volumes where actual physical volumes were above MVC levels in the second quarter of 2023, $1.9 million is attributable to higher tariff rates and $1.3 million is attributable to other income, including pass-through income.

Operating and maintenance expenses increased $3.0 million, of which $1.3 million is attributable to higher maintenance costs, $0.8 million is attributable to higher third-party processing fees due to higher volumes processed at the LM4 plant and $0.9 million is attributable to all other operating expenses.

Income from equity investments increased $0.7 million in the second quarter of 2023 compared to the second quarter of 2022 primarily due to higher volumes processed at the LM4 plant.

Revenues and other income increased $11.5 million in the third quarter of 2023 compared to the third quarter of 2022, of which $8.7 million is attributable to higher gas processing volumes where actual physical volumes were above MVC levels in the third quarter of 2023 and 2022, $2.0 million is attributable to higher tariff rates and $0.8 million is attributable to other income, including pass-through income.

Operating and maintenance expenses increased $1.6 million, of which $1.3 million is attributable to higher maintenance costs and $0.5 million is attributable to higher third-party processing fees, partially offset by $0.2 million attributable to lower pass-through expenses.

Income from equity investments decreased $0.8 million in the third quarter of 2023 compared to the third quarter of 2022 primarily due to lower volumes processed at the LM4 plant.

Terminaling and Export

Revenues and other income decreased $4.0 million in the second quarter of 2023 compared to the second quarter of 2022.

Although physical volumes increased in the second quarter of 2023, they remained below the MVC levels of the second quarter of 2022, resulting in a $6.0 million decline in revenues.

Additionally, $1.6 million of the decrease is attributable to lower rail transportation pass-through revenues.

This decrease was partially offset by $3.6 million attributable to higher tariff rates and other income.

Total operating costs and expenses in the Terminaling an Export segment were relatively flat in the second quarter of 2023 compared to the second quarter of 2022, as higher maintenance costs were offset by lower rail transportation pass-through costs.

Revenues and other income increased $1.3 million in the third quarter of 2023 compared to the third quarter of 2022, of which $3.9 million is attributable to higher tariff rates.

This revenue increase was partially offset by $2.6 million attributable to crude oil terminaling volumes where actual physical volumes were above MVCs in the third quarter of 2023 and below MVCs in the third quarter of 2022, with physical volumes in 2023 lower than MVC levels in 2022.

Operating and maintenance expenses increased $4.6 million in the third quarter of 2023 compared to the third quarter of 2022, of which $3.8 million is attributable to rail car inspection and recertification activities and $0.8 million is attributable to other maintenance expenses.

Interest and Other

Interest expense, net of interest income, increased $6.4 million in the second quarter of 2023 compared to the second quarter of 2022, primarily attributable to higher interest rates on the Term Loan A and revolving credit facilities.

Interest expense, net of interest income, increased $5.9 million in the third quarter of 2023 compared to the third quarter of 2022, primarily attributable to higher interest rates on our credit facilities and higher borrowings on our revolving credit facility.

Income tax expense increased $3.9 million in the same period driven by increased ownership of the Partnership by Hess Midstream LP following equity offering and unit repurchase transactions in 2022 and 2023.

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FINANCIAL INFORMATION (CONT’D)

Six Months Ended June 30, 2023 Compared to Six Months Ended June 30, 2022

Results of operations for the six months ended June 30, 2023 and 2022 are presented below (in millions, unless otherwise noted).

For the Six Months Ended June 30, 2023

Nine Months Ended September 30, 2023 Compared to Nine Months Ended September 30, 2022

Results of operations for the nine months ended September 30, 2023 and 2022 are presented below (in millions, unless otherwise noted).

For the Nine Months Ended September 30, 2023

Processing and Storage

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FINANCIAL INFORMATION (CONT’D)

For the Six Months Ended June 30, 2022

For the Nine Months Ended September 30, 2022

Processing and Storage

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(2) Thousand barrels per day

Revenues and other income increased $9.4 million in the first six months of 2023 compared to the first six months of 2022, of which $30.0 million is attributable to higher tariff rates, $3.8 million is attributable to higher water gathering and disposal revenue, $1.5 million is attributable to higher pass-through revenues and $0.7 million is attributable to other income.

Despite higher gas gathering physical volumes in the first six months of 2023, these revenue increases were partially offset by $15.7 million as the higher gas gathering volumes were still below the MVC levels in the first six months of 2022.

In addition, while crude oil gathering physical volumes increased in the first six months of 2023, they remained below MVCs resulting in a $10.9 million decline in revenues due to the reduction in the MVC levels from the first six months of 2022.

Operating and maintenance expenses increased $3.4 million in the first six months of 2023 compared to the first six months of 2022, of which $1.9 million is primarily attributable to higher employee costs allocated to us under our omnibus and employee secondment agreements and $1.5 million is attributable to higher pass-through costs, including produced water trucking and disposal and electricity fees.

Revenues and other income increased $24.9 million in the first nine months of 2023 compared to the first nine months of 2022, of which $46.9 million is attributable to higher tariff rates, $6.6 million is attributable to higher water gathering and disposal revenue, $4.7 million is attributable to higher pass-through revenues and $0.9 million is attributable to other income.

Despite the overall higher gas gathering physical volumes in the first nine months of 2023, these revenue increases were partially offset by $20.8 million as the higher gas gathering volumes were still below the MVC levels in the first nine months of 2022 in one of the sub-systems.

In addition, while crude oil gathering physical volumes increased in the first nine months of 2023, they remained at or below MVCs resulting in a $13.4 million decline in revenues due to the reduction in the MVC levels from the first nine months of 2022.

Operating and maintenance expenses increased $7.0 million in the first nine months of 2023 compared to the first nine months of 2022, of which $4.7 million is attributable to higher pass-through costs, including produced water trucking and disposal and electricity fees, $2.9 million is primarily attributable to higher employee costs allocated to us under our omnibus and employee secondment agreements, $2.0 million is attributable to higher maintenance activity and $0.3 million is attributable to all other costs.

The increase was partially offset by $2.9 million attributable to the August 2022 produced water release remediation reserve.

Depreciation expense increased $6.5 million due to new compressors, produced water disposal facilities and other new gathering assets brought into service.

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Processing and Storage

Revenues and other income increased $6.9 million in the first six months of 2023 compared to the first six months of 2022, of which $3.7 million is attributable to higher tariff rates, $1.7 million is attributable to higher gas processing volumes where actual physical volumes were above MVC levels in the first six months of 2023 and $1.5 million is attributable to other income, including pass-through income.

Operating and maintenance expenses increased $2.5 million, of which $1.3 million is attributable to higher maintenance costs, $0.5 million is attributable to higher third-party processing fees due to higher volumes processed at the LM4 plant and $0.7 million is attributable all other operating expenses.

Income from equity investments increased $1.9 million in the first six months of 2023 compared to the first six months of 2022 primarily due to higher volumes processed at the LM4 plant.

Revenues and other income increased $18.4 million in the first nine months of 2023 compared to the first nine months of 2022, of which $10.3 million is attributable to higher gas processing volumes where actual physical volumes were above MVC levels in the first nine months of 2023 and 2022, $5.8 million is attributable to higher tariff rates and $2.3 million is attributable to other income, including pass-through income.

Operating and maintenance expenses increased $4.1 million, of which $2.6 million is attributable to higher maintenance costs, $1.0 million is attributable to higher third-party processing fees due to higher volumes processed at the LM4 plant and $0.5 million is attributable to all other operating expenses.

Income from equity investments increased $1.1 million in the first nine months of 2023 compared to the first nine months of 2022 primarily due to higher volumes processed at the LM4 plant.

Terminaling and Export

Revenues and other income decreased $13.1 million in the first six months of 2023 compared to the first six months of 2022.

Although physical volumes increased in the first six months of 2023, they remained below the MVC levels of the first six months of 2022, resulting in a $12.4 million decline in revenues.

Revenues and other income decreased $11.8 million in the first nine months of 2023 compared to the first nine months of 2022.

Although physical volumes were above MVCs in the first nine months of 2023, they remained below the MVC levels of the first nine months of 2022, resulting in a $14.8 million decline in revenues.

Additionally, $7.7 million of the decrease is attributable to lower rail transportation pass-through revenues.

These decreases were partially offset by $10.7 million attributable to higher tariff rates and other income.

Operating and maintenance expenses decreased $4.6 million, of which $7.7 million is attributable to lower rail transportation pass-through costs, partially offset by $3.1 million higher maintenance and other operating costs.

Operating and maintenance expenses in the Terminaling and Export segment were flat in the first nine months of 2023 compared to the first nine months of 2022, as higher maintenance costs of $6.6 million, including rail car inspection and recertification activities, and higher employee costs allocated to us under our omnibus and employee secondment agreements of $1.1 million were offset by lower rail transportation pass-through costs.

Interest and Other

Interest expense, net of interest income, increased $16.7 million in the first six months of 2023 compared to the first six months of 2022, of which $10.7 million is attributable to higher interest rates on the Term Loan A and revolving credit facilities and $6.0 million is attributable to the $400.0 million 5.50% fixed-rate senior notes issued in April 2022.

Interest expense, net of interest income, increased $22.6 million in the first nine months of 2023 compared to the first nine months of 2022, of which $16.6 million is primarily attributable to higher interest rates on our revolving credit facilities and higher borrowings on our revolving credit facility, and $6.0 million is attributable to the $400.0 million 5.50% fixed-rate senior notes issued in April 2022.

Income tax expense increased $6.4 million in the same period driven by increased ownership of the Partnership by Hess Midstream LP following equity offering and unit repurchase transactions in 2022 and 2023.

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During the first quarter of 2020, worldwide crude oil prices declined significantly due in part to reduced global demand stemming from the COVID-19 global pandemic.

Sustained periods of low prices for oil and natural gas could materially and adversely affect the quantities of oil and natural gas that Hess can economically produce.

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.

Sustained periods of low prices for oil and natural gas could materially and

PART I –

FINANCIAL INFORMATION (CONT’D)

adversely affect the quantities of oil and natural gas that Hess can economically produce.

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.

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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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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We believe that cash generated from these sources will be sufficient to meet our operating requirements, our planned short‑term capital expenditures, debt service requirements, our quarterly cash distribution requirements, future internal growth projects or potential acquisitions.

Risk Factors for a discussion of risks related to the Chevron Merger.

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

On July 24, 2023, we declared a quarterly cash distribution of $0.6011 per Class A Share, to be paid on August 14, 2023 to shareholders of record on August 3, 2023.

On October 23, 2023, we declared a quarterly cash distribution of $0.6175 per Class A Share, to be paid on November 14, 2023 to shareholders of record on November 2, 2023.

Simultaneously, the Partnership will make a distribution of $0.6175 per Class B Unit of the Partnership to the Sponsors.

Fixed‑Rate Senior Notes

As of June 30, 2023, the Partnership had $400.0 million aggregate principal amount of 5.500% fixed‑rate senior unsecured notes due 2030 that were issued to qualified institutional investors.

As of September 30, 2023, the Partnership had $400.0 million aggregate principal amount of 5.500% fixed‑rate senior unsecured notes due 2030 that were issued to qualified institutional investors.

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

As of June 30, 2023, 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.

As of September 30, 2023, 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, 2023, 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, 2023, 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, 2023, 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, 2023, 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, 2023, we were in compliance with all debt covenants under the indentures.

As of September 30, 2023, 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.

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Credit Facilities

As of June 30, 2023, the Partnership had $1.4 billion senior secured credit facilities (the “Credit Facilities”) consisting of a $1.0 billion 5-year revolving credit facility and a $400.0 million 5‑year Term Loan A facility.

As of September 30, 2023, the Partnership had $1.4 billion senior secured credit facilities (the “Credit Facilities”) consisting of a $1.0 billion 5-year revolving credit facility and a $400.0 million 5‑year Term Loan A facility.

The Credit Facilities mature in July 2027.

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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.

As of June 30, 2023, borrowings of $198.0 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.

As of September 30, 2023, borrowings of $276.0 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, 2023, we were in compliance with these financial covenants.

As of September 30, 2023, we were in compliance with these financial covenants.

Operating Activities.

Net cash provided by operating activities decreased $0.5 million for the six months ended June 30, 2023, compared to the same period in 2022.

The change in operating cash flows resulted primarily from an increase in expenses, other than depreciation, amortization, equity-based compensation and other non-cash gains and losses of $18.8 million, a decrease in distributions received from equity investments of $1.7 million, partially offset by an increase in cash provided by changes in working capital of $16.8 million, and an increase in revenue of $3.2 million.

Net cash provided by operating activities decreased $19.7 million for the nine months ended September 30, 2023, compared to the same period in 2022.

The change in operating cash flows resulted primarily from an increase in expenses, other than depreciation, amortization, equity-based compensation and other non-cash gains and losses of $35.0 million, an increase in cash used by changes in working capital of $16.2 million, partially offset by an increase in revenue and other income of $31.5 million.

Investing Activities.

Net cash used in investing activities decreased $3.4 million for the six months ended June 30, 2023, compared to the same period in 2022 driven by lower payments for additions to property, plant, and equipment.

Net cash used in investing activities decreased $16.6 million for the nine months ended September 30, 2023, compared to the same period in 2022 driven by lower payments for additions to property, plant, and equipment.

Financing Activities.

Net cash used in financing activities increased $3.2 million for the six months ended June 30, 2023, compared to the same period in 2022.

In the first six months of 2023, we had lower net proceeds from bank borrowings of $191.1 million, net of any changes in financing costs, higher distributions to shareholders and noncontrolling interest of $12.2 million and spent $200.0 million less for repurchases of Class B Units of the Partnership compared to the same period in 2022.

Net cash used in financing activities decreased $2.9 million for the nine months ended September 30, 2023, compared to the same period in 2022.

In the first nine months of 2023, we had lower net proceeds from bank borrowings of $78.0 million, net of any changes in financing costs, higher distributions to shareholders and noncontrolling interest of $18.9 million and spent $99.8 million less for repurchases of Class B Units of the Partnership, including any associated transaction costs, compared to the same period in 2022.

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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our projected budget and capital expenditures and the impact of such expenditures on our performance;

and future economic and market conditions in the oil and gas industry.

future economic and market conditions in the oil and gas industry;

and expected timing and completion of the Chevron Merger.

Forward-looking statements are based on our current understanding, assessments, estimates and projections of relevant factors and reasonable assumptions about the future.

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liability resulting from litigation;

other factors described in Item 1A—Risk Factors in our Annual Report on Form 10-K, as well as any additional risks described in our other filings with the Securities and Exchange Commission.

risks and uncertainties associated with the Chevron Merger, including the following:

o the risk that regulatory approvals are not obtained or are obtained subject to conditions that are not anticipated by Chevron and Hess;

o potential delays in consummating the potential transaction, including as a result of regulatory approvals;

o Chevron’s ability to integrate Hess’

operations in a successful manner and in the expected time period;

o the possibility that any of the anticipated benefits and projected synergies of the potential transaction will not be realized or will not be realized within the expected time period;

o the occurrence of any event, change or other circumstance that could give rise to the termination of the Chevron Merger Agreement;

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FINANCIAL INFORMATION (CONT’D)

o risks that the anticipated tax treatment of the potential transaction is not obtained, or other unforeseen or unknown liabilities;

o customer, shareholder, regulatory and other stakeholder approvals and support, or unexpected future capital expenditures;

o potential litigation relating to the potential transaction that could be instituted against Chevron and Hess or their respective directors, and the possibility that the transaction may be more expensive to complete than anticipated, including as a result of unexpected factors or events;

o the effect of the announcement, pendency or completion of the potential transaction on the parties’

business relationships and business generally, and the risks that the potential transaction disrupts current plans and operations of Chevron or Hess and potential difficulties in Hess employee retention as a result of the transaction, as well as the risk of disruption of Chevron’s or Hess’

management and business disruption during the pendency of, or following, the potential transaction;

o the receipt of required Chevron board of directors’

authorizations to implement capital allocation strategies, including future dividend payments, and uncertainties as to whether the potential transaction will be consummated on the anticipated timing or at all, or if consummated, will achieve its anticipated economic benefits, including as a result of risks associated with third-party contracts containing material consent, anti-assignment, transfer, other provisions that may be related to the potential transaction which are not waived or otherwise satisfactorily resolved or changes in commodity prices;

o negative effects of the announcement of the transaction, and the pendency or completion of the proposed acquisition on the market price of Chevron’s or Hess’

common stock and/or operating results;

o rating agency actions and Chevron’s and Hess’

ability to access short- and long-term debt markets on a timely and affordable basis;

other factors described in the section entitled “Risk Factors”

in this Quarterly Report on Form 10-Q and in Item 1A.Risk Factors in our Annual Report on Form 10-K, as well as any additional risks described in our other filings with the Securities and Exchange Commission.

As and when made, we believe that our forward-looking statements are reasonable.

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Except as required by law, we undertake no obligation to publicly update or revise any forward-looking statements, whether because of new information, future events or otherwise.

PART I –

FINANCIAL INFORMATION (CONT’D)

Quantitative and Qualitati ve Disclosures about Market Risk

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

At June 30, 2023, we did not have in place any derivative instruments to hedge any exposure to changes in interest rates.

At June 30, 2023, our total debt had a carrying value of $3,068.7 million and a fair value of approximately $2,924.3 million, based on Level 2 inputs in the fair value measurement hierarchy.

At September 30, 2023, we did not have in place any derivative instruments to hedge any exposure to changes in interest rates.

At September 30, 2023, our total debt had a carrying value of $3,148.3 million and a fair value of approximately $2,954.5 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 $96.1 million or $102.5 million, respectively.

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Our exposure to market risk related to changes in interest rates has not materially changed from what we previously disclosed in our 2022 Annual Report.

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FINANCIAL INFORMATION (CONT’D)

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