Hess Midstream LP 10-K

ITEM 7. MANAGEMENT’S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS Management’s Discussion and Analysis of Financial Condition and Results of Operations should be read in conjunction with the consolidated financial statements and notes thereto included in Item 8 of this Annual Report on Form 10‑K. Unless otherwise stated or the context otherwise indicates, references in this report to “Hess Midstream Operations LP,” the “Partnership,” “us,” “we,” “our” or similar terms, when referring to periods between the IPO date on April 10, 2017 and December 16, 2019, refer to Hess Midstream Operations LP (formerly known as Hess Midstream Partners LP, the predecessor registrant to Hess Midstream LP), including its consolidated subsidiaries. All references to “Hess Midstream LP,” the “Company,” “us,” “our,” “we” or similar terms, when referring to periods subsequent to December 16, 2019, refer to Hess Midstream LP, including its consolidated subsidiaries. This discussion contains forward-looking statements that involve risks and uncertainties. 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 the section entitled “Risk Factors” included elsewhere in this report. Overview We are a fee-based, growth-oriented, limited partnership formed by Hess Infrastructure Partners GP LLC (“HIP GP LLC”) and our general partner to own, operate, develop and acquire a diverse set of midstream assets and provide fee-based services to Hess and third-party customers. We are managed and controlled by Hess Midstream GP LLC, the general partner of our general partner. 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. Significant Activities 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 subject to shareholder and regulatory approvals and other 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 set its MVCs and rates, which were set based on Hess’ current 4-rig program in the Bakken. See Item 1A. Risk Factors for a discussion of risks related to the Chevron Merger. In 2023, we added 70 MMcf/d of compression capacity by constructing one new greenfield compressor station and expanding an existing compressor station. Construction was also completed on an additional greenfield compressor station that, once put into operation in early 2024, will further increase compression capacity by approximately 30 MMcf/d. Additionally, in 2024, we plan to complete two more greenfield compressor stations, which are expected to provide, in aggregate, an additional 85 MMcf/d of gas compression capacity when brought online in 2025 and are expandable to 140 MMcf/d in the future. 2023 Equity Transactions During 2023, the Company, the Partnership and the Sponsors completed the following equity transactions: • On May 19, 2023, the Sponsors sold an aggregate of 12,765,000 of our Class A Shares representing limited partner interests (“Class A Shares”), inclusive of the underwriters’ option to purchase up to 1,665,000 of additional shares, which was fully exercised, in an underwritten public offering at a price of $27.00 per Class A Share, less underwriting discounts. • 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. In 2023, the Sponsors received net proceeds from the offerings of approximately $662.2 million after deducting underwriting discounts. The Company did not receive any proceeds in the offerings. • On March 30, 2023, the Partnership repurchased an aggregate 3,619,254 Class B Units representing limited partner interests in the Partnership (“Class B Units”) from the Sponsors at a purchase price of $27.63 per Class B Unit, for total consideration of approximately $100.0 million, which was funded using borrowings under the Partnership’s existing revolving credit facility. 49 Table of Contents • On June 29, 2023, the Partnership repurchased an aggregate 3,350,084 Class B Units from the Sponsors at a purchase price of $29.85 per Class B Unit, for total consideration of approximately $100.0 million, which was funded using borrowings under the Partnership’s existing revolving credit facility. • On September 22, 2023, the Partnership repurchased an aggregate 3,301,420 Class B Units from the Sponsors at a purchase price of $30.29 per Class B Unit, for total consideration of approximately $100.0 million, which was funded using borrowings under the Partnership’s existing revolving credit facility. • On November 16, 2023, the Partnership repurchased an aggregate 3,370,407 Class B Units from the Sponsors at a purchase price of $29.67 per Class B Unit, for total consideration of approximately $100.0 million, which was funded using borrowings under the Partnership’s existing revolving credit facility. See Item 8. Financial Statements and Supplementary Data. Note 3, Equity Transactions, Note 7, Debt and Interest Expense, and Note 8, Partners' Capital and Distributions for additional details. At December 31, 2023: • the Company held a 30.2% controlling interest in the Partnership and the Sponsors held a 69.8% noncontrolling economic interest in the Partnership; • public limited partners held a 29.8% voting interest and a 98.7% economic interest in the Company, which represents an indirect 29.8% economic interest in the Partnership; • the Sponsors and their respective affiliates held a 70.2% voting interest and a 1.3% economic interest in the Company, which, taken with their direct limited partnership interest in the Partnership, represents an indirect 70.2% economic interest in the Partnership. See Organizational Structure. Business Strategies Our principal business objective is to grow our business and available cash supported by fee-based contracts and disciplined financial strategy. We expect to achieve this objective through the following business strategies: • Focus on Cash Flow Stability and Growth Supported by Long-Term, Fee-Based Contracts and a Disciplined Financial Strategy . We seek to grow our available cash to be able to fund our capital projects and provide consistent and ongoing return of capital to shareholders while maintaining balance sheet strength. Our commercial agreements include dedications covering substantially all of Hess’ existing and future owned or controlled production in the Bakken, minimum volume commitments, inflation escalators and fee recalculation mechanisms, all of which are intended to provide us with cash flow stability and downside risk protection. • Capitalize on Hess’ Bakken Production Growth. Our midstream infrastructure footprint services Hess’ leading acreage position in the Bakken. We believe our volumes and investment opportunities will continue to expand as Hess drills new wells in the Bakken. We intend to invest additional capital to continue extending and expanding our strategically positioned infrastructure, including additional gas capture capabilities, to meet Hess’ current and future production growth and to reduce flaring from upstream production operations. • Leverage Core Asset Base to Attract Additional Third‑Party Business. We currently handle volumes from third‑party producers and midstream companies under our commercial agreements with Hess, and we are pursuing both additional projects and strategic relationships with third‑party customers with operations in the Bakken in order to maximize our utilization rates. • Grow Through Accretive Acquisitions from Our Sponsors and Third Parties. We evaluate potential acquisitions of complementary midstream assets from our Sponsors as well as from third parties. Climate Change and Energy Transition We are committed to building a sustainable enterprise that helps meet the world’s energy needs in a safe, environmentally responsible, socially sensitive and profitable way. As a growth-oriented provider of midstream services to Hess and other third-party crude oil and natural gas producers, we believe sustainable and responsible operations create value for the benefit of all our stakeholders – our shareholders, our business partners, and the local communities and economies where we operate – which in turn benefits society at large. 50 Table of Contents We are aligned with Hess’ environment, health, safety and social responsibility strategy. We play a critical role in progress toward shared goals and performance improvements, including Hess’ emissions reduction efforts, by providing the infrastructure to move oil, NGLs and natural gas to market and reduce wellhead flaring as well as through efforts to reduce our own greenhouse gas (“GHG”) emissions, which are included in Hess’ overall emissions footprint. Hess’ significant reductions in flaring in recent years, which have supported its overall GHG reduction efforts, have primarily been related to our focus on natural gas capture through increased availability and reliability at our compressor stations; expansion of gathering and processing infrastructure; and enhanced communication and coordination with third-party gatherers. We continue to execute capital projects to increase natural gas capture rates, which provide economic returns through the sale of the additional natural gas and NGLs captured and to reduce flaring in the Bakken region. Hess’ executive led task force that includes Hess Midstream LP’s executives provides oversight for Hess’ climate change strategy implementation and works to identify and recommend GHG reduction opportunities, evaluating and implementing technologies, as appropriate, and evaluating future capital and infrastructure requirements. Segments Our assets and operations are organized into the following three reportable segments: (i) gathering, (ii) processing and storage and (iii) terminaling and export. Gathering Our gathering segment includes Hess North Dakota Pipeline Operations LP, or Gathering Opco, and Hess Water Services Holdings LLC, which own the following assets: • Natural Gas Gathering and Compression . A natural gas gathering and compression system located primarily in McKenzie, Williams and Mountrail Counties, North Dakota connecting Hess and third‑party owned or operated wells to the Tioga Gas Plant, Little Missouri 4 (“LM4”) gas processing plant and third‑party pipeline facilities. The system also includes the Hawkeye Gas Facility. • Crude Oil Gathering. A crude oil gathering system located primarily in McKenzie, Williams and Mountrail Counties, North Dakota, connecting Hess and third-party owned or operated wells to the Ramberg Terminal Facility, the Tioga Rail Terminal and the Johnson’s Corner Header System. The system also includes the Hawkeye Oil Facility. • Produced Water Gathering and Disposal . A produced water gathering system and disposal facilities located primarily in Williams and Mountrail counties, North Dakota. Processing and Storage Our processing and storage segment includes Hess TGP Operations LP, or HTGP Opco, and Hess Mentor Storage Holdings LLC, or Mentor Holdings, which own the following assets, respectively: • Tioga Gas Plant . A natural gas processing and fractionation plant located in Tioga, North Dakota. • Equity Investment in LM4 Joint Venture. A 50% equity method investment in LM4 joint venture that owns a natural gas processing plant located in McKenzie County, North Dakota, that was placed in service in the third quarter of 2019. Targa Resources Corp. is the operator of the plant. • Mentor Storage Terminal . A propane storage cavern and rail and truck loading and unloading facility located in Mentor, Minnesota. Terminaling and Export Our terminaling and export segment includes Hess North Dakota Export Logistics Operations LP, or Logistics Opco, which owns each of the following assets: • Ramberg Terminal Facility . A crude oil pipeline and truck receipt terminal located in Williams County, North Dakota that is capable of delivering crude oil into an interconnecting pipeline for transportation to the Tioga Rail Terminal, Dakota Access Pipeline (“DAPL”) and other third‑party pipelines and storage facilities. • Tioga Rail Terminal. A crude oil and NGL rail loading terminal in Tioga, North Dakota that is connected to the Tioga Gas Plant, the Ramberg Terminal Facility and our crude oil gathering system. • Crude Oil Rail Cars. A total of 550 crude oil rail cars, constructed to DOT‑117 safety standards, which we operate as unit trains consisting of approximately 100 to 110 crude oil rail cars. • Johnson’s Corner Header System. An approximately six‑mile crude oil pipeline header system located in McKenzie County, North Dakota that receives crude oil by pipeline from Hess and third parties and delivers crude oil to DAPL and other third‑party interstate pipeline systems. 51 Table of Contents • Other DAPL Connections . Various connections into DAPL that receive crude oil by pipeline from the crude oil gathering system for delivery into DAPL. Significant 2023 Financial and Operating Results Significant financial and operating results for the year ended December 31, 2023 include: • Throughput volumes increased 15% for gas processing, 12% for terminaling and 28% for water gathering in 2023 compared with 2022, primarily due to increased Hess drilling activity, higher gas capture and higher third-party volumes. • Consolidated net income of $607.7 million. • Net income attributable to Hess Midstream LP after deduction for noncontrolling interest of $118.6 million, or $2.11 basic earnings per Class A Share. • Net cash provided by operating activities of $866.4 million. • Adjusted EBITDA of $1,022.2 million. • Paid cash distributions of $1.8037 per Class A share in total for the first three quarters of 2023 and declared a cash distribution of $0.6343 per Class A share for the fourth quarter of 2023, which was paid in February 2024. • Completed the repurchase of an aggregate of 13,641,165 Class B Units of the Partnership from the Sponsors for approximately $400 million. Revenues and other income in 2023 were $1,348.6 million compared with $1,275.2 million in 2022. Current year revenues and other income were up $73.4 million compared with the prior year, of which $86.7 million was primarily attributable to higher tariff rates and $9.1 million was attributable to higher third-party revenues, pass-through revenues and other income, partially offset by $22.4 million primarily attributable to crude oil physical volumes that were below prior-year MVC levels. Total operating costs and expenses in 2023 were $531.7 million, up from $484.0 million in the prior year. The increase was attributable to higher operating and maintenance expenses of $33.4 million, including higher maintenance activity on our gathering and processing infrastructure, rail car inspection and recertification activity and costs charged to us under our omnibus and employee secondment agreements. Additionally, part of the increase was attributable to higher depreciation of $11.2 million and higher general and administrative expenses of $3.1 million. Interest expense, net of interest income, increased $29.7 million, primarily attributable to higher interest rates on our credit facilities and higher borrowings on our revolving credit facility, as well as the $400.0 million 5.50% fixed-rate senior notes issued in April 2022. Income tax expense in 2023 was $37.9 million, up from $26.6 million in 2022, which was primarily driven by increased ownership of the Partnership by Hess Midstream LP following the equity offering and unit repurchase transactions in 2022 and 2023. As a result, consolidated net income decreased $12.9 million while Adjusted EBITDA increased $39.3 million during the year ended December 31, 2023, compared with the year ended December 31, 2022. Throughput volumes increased 15% for gas processing and 14% for gas gathering in 2023 compared with 2022 primarily due to increased Hess drilling activity, higher gas capture and higher third-party volumes. Throughput volumes increased 12% for crude oil terminaling and 4% for crude oil gathering in 2023 compared with 2022 primarily due to increased Hess drilling activity and higher third-party volumes. Water gathering volumes increased 28%, reflecting higher production and steady organic growth of our water handling business. For additional discussion of the results of operations at the segment level, see “ Results of Operations ” below. For additional information regarding Adjusted EBITDA, our non‑GAAP financial measure, see “ How We Evaluate Our Operations ” and “ Reconciliation of Non‑GAAP Financial Measure ” below. How We Generate Revenues We generate substantially all of our revenues by charging fees for gathering, compressing and processing natural gas and fractionating NGLs; gathering, terminaling, loading and transporting crude oil and NGLs; storing and terminaling propane; and gathering and disposing of produced water. We have entered into long-term, fee-based commercial agreements with Hess effective January 1, 2014, for oil and gas services agreements, and effective January 1, 2019, for water services agreements. 52 Table of Contents Except for the water services agreements and except for a certain gathering sub-system, as described below, each of our commercial agreements with Hess had an initial 10-year term. We exercised our renewal options to extend each of these commercial agreements for one additional 10-year term effective January 1, 2024, through December 31, 2033. There were no changes to any provisions of the existing commercial agreements as a result of the exercise of the renewal options. For this gathering sub-system, the initial term is 15 years effective January 1, 2014, and the Secondary Term is 5 years. For the water services agreements the initial term is 14 years effective January 1, 2019, and the Secondary Term is 10 years. We have the sole option to renew these remaining agreements for their Secondary Term that is exercisable at a later date. Upon the expiration of the Secondary Term, if any, the agreements will automatically renew for subsequent one-year periods unless terminated by either party no later than 180 days prior to the end of the applicable Secondary Term. These agreements include dedications covering substantially all of Hess’ existing and future owned or controlled production in the Bakken, minimum volume commitments, inflation escalators and fee recalculation mechanisms, all of which are intended to provide us with cash flow stability and growth, as well as downside risk protection. In particular, Hess’ minimum volume commitments under our commercial agreements provide minimum levels of cash flows and the fee recalculation mechanisms under the agreements allow fees to be adjusted annually to provide us with cash flow stability during the initial term of the agreements. During the Secondary Term of the agreements, the fee recalculation model will be replaced by an inflation-based fee structure. See Item 8. Financial Statements and Supplementary Data. Note 4, Related Party Transactions for additional description of our commercial agreements. Our revenues also include revenues from (i) third-party volumes contracted directly with us, (ii) third-party volumes contracted with Hess and delivered to us under the commercial agreements with Hess described above, and (iii) pass-through third-party rail transportation costs, third-party produced water trucking and disposal costs, electricity fees and certain other third-party fees, for which we recognize revenues in an amount equal to the costs. For the year ended December 31, 2023, our gas gathering and gas processing revenues comprised approximately 75% of total affiliate revenues, excluding passthrough revenues. Together with Hess, we are pursuing strategic relationships with third-party producers and other midstream companies with operations in the Bakken in order to maximize our utilization rates. How We Evaluate Our Operations Our management uses a variety of financial and operating metrics to analyze our operating results and profitability. These metrics include (i) volumes, (ii) operating and maintenance expenses and (iii) Adjusted EBITDA. Volumes . The amount of revenues we generate primarily depends on the volumes of crude oil, natural gas, NGLs and produced water that we handle at our gathering, processing, terminaling, storage and disposal facilities. These volumes are affected primarily by the supply of and demand for crude oil, natural gas and NGLs in the markets served directly or indirectly by our assets, including changes in crude oil prices, which may further affect volumes delivered by Hess. Although Hess has committed to minimum volumes under our commercial agreements described above, our results of operations will be impacted by our ability to: • utilize the remaining uncommitted capacity on, or add additional capacity to, our existing assets, and optimize our existing assets; • identify and execute expansion projects, and capture incremental throughput volumes from Hess and third parties for these expanded facilities; • increase throughput volumes at our Ramberg Terminal Facility, Tioga Rail Terminal and the Johnson’s Corner Header System by interconnecting with new or existing third‑party gathering pipelines; and • increase gas processing throughput volumes by interconnecting with new or existing third‑party gathering pipelines. 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 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. We seek to manage our maintenance expenditures by scheduling periodic maintenance on our assets in order to minimize significant variability in these expenditures and minimize their impact on our cash flow. Adjusted EBITDA . 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 and non‑recurring items, if applicable. We use Adjusted EBITDA to analyze our performance and liquidity. 53 Table of Contents Adjusted EBITDA is a non‑GAAP supplemental financial measure that management and external users of our consolidated financial statements, such as industry analysts, investors, lenders and rating agencies, may use to assess: • our operating performance as compared to other publicly traded companies in the midstream energy industry, without regard to historical cost basis or, in the case of Adjusted EBITDA, financing methods; • the ability of our assets to generate sufficient cash flow to make distributions to our shareholders; • our ability to incur and service debt and fund capital expenditures; and • the viability of acquisitions and other capital expenditure projects and the returns on investment of various investment opportunities. We believe that the presentation of Adjusted EBITDA provides useful information to investors in assessing our financial condition and results of operations. The GAAP measures most directly comparable to Adjusted EBITDA are net income (loss) and net cash provided by (used in) operating activities. Adjusted EBITDA should not be considered as an alternative to GAAP net income (loss), income (loss) from operations, net cash provided by (used in) operating activities or any other measure of financial performance or liquidity presented in accordance with GAAP. Adjusted EBITDA has important limitations as an analytical tool because it excludes some but not all items that affect net income and net cash provided by operating activities. You should not consider Adjusted EBITDA in isolation or as a substitute for analysis of our results as reported under GAAP. Additionally, because Adjusted EBITDA may be defined differently by other companies in our industry, our definition of these measures may not be comparable to similarly titled measures of other companies, thereby diminishing their utility. 54 Table of Contents Results of Operations The following tables summarize our consolidated results of operations for the years ended December 31, 2023, 2022 and 2021. The results of operations are discussed in further detail following this overview (in millions, unless otherwise noted). For the Year Ended December 31, 2023 Gathering Processing and Storage Terminaling and Export Interest and Other Consolidated Hess Midstream LP Revenues Affiliate services $ 727.7 $ 496.0 $ 114.4 $ - $ 1,338.1 Third-party services 2.3 5.7 - - 8.0 Other income - - 2.5 - 2.5 Total revenues 730.0 501.7 116.9 - 1,348.6 Costs and expenses Operating and maintenance expenses (exclusive of depreciation shown separately below) 185.3 99.0 28.7 - 313.0 Depreciation expense 115.6 59.9 17.0 - 192.5 General and administrative expenses 10.9 5.3 1.3 8.7 26.2 Total operating costs and expenses 311.8 164.2 47.0 8.7 531.7 Income (loss) from operations 418.2 337.5 69.9 (8.7 ) 816.9 Income from equity investments - 7.7 - - 7.7 Interest expense, net - - - 179.0 179.0 Income (loss) before income tax expense 418.2 345.2 69.9 (187.7 ) 645.6 Income tax expense - - - 37.9 37.9 Net income (loss) 418.2 345.2 69.9 (225.6 ) 607.7 Less: Net income (loss) attributable to noncontrolling interest 316.6 261.7 53.1 (142.3 ) 489.1 Net income (loss) attributable to Hess Midstream LP $ 101.6 $ 83.5 $ 16.8 $ (83.3 ) $ 118.6 Throughput volumes Gas gathering (MMcf/d) 381 381 Crude oil gathering (MBbl/d) 100 100 Gas processing (MMcf/d) 367 367 Crude oil terminaling (MBbl/d) 115 115 NGL loading (MBbl/d) 13 13 Water gathering (MBbl/d) 95 95 55 Table of Contents For the Year Ended December 31, 2022 Gathering Processing and Storage Terminaling and Export Interest and Other Consolidated Hess Midstream LP Revenues Affiliate services $ 677.9 $ 470.8 $ 124.5 $ - $ 1,273.2 Other income - - 2.0 - 2.0 Total revenues 677.9 470.8 126.5 - 1,275.2 Costs and expenses Operating and maintenance expenses (exclusive of depreciation shown separately below) 170.2 85.0 24.4 - 279.6 Depreciation expense 107.4 57.7 16.2 - 181.3 General and administrative expenses 10.7 4.3 0.9 7.2 23.1 Total operating costs and expenses 288.3 147.0 41.5 7.2 484.0 Income (loss) from operations 389.6 323.8 85.0 (7.2 ) 791.2 Income from equity investments - 5.3 - - 5.3 Interest expense, net - - - 149.3 149.3 Income (loss) before income tax expense 389.6 329.1 85.0 (156.5 ) 647.2 Income tax expense - - - 26.6 26.6 Net income (loss) 389.6 329.1 85.0 (183.1 ) 620.6 Less: Net income (loss) attributable to noncontrolling interest 323.2 272.5 70.6 (129.6 ) 536.7 Net income (loss) attributable to Hess Midstream LP $ 66.4 $ 56.6 $ 14.4 $ (53.5 ) $ 83.9 Throughput volumes Gas gathering (MMcf/d) 333 333 Crude oil gathering (MBbl/d) 96 96 Gas processing (MMcf/d) 319 319 Crude oil terminaling (MBbl/d) 103 103 NGL loading (MBbl/d) 11 11 Water gathering (MBbl/d) 74 74 56 Table of Contents For the Year Ended December 31, 2021 Gathering Processing and Storage Terminaling and Export Interest and Other Consolidated Hess Midstream LP Revenues Affiliate services $ 630.6 $ 435.7 $ 137.5 $ - $ 1,203.8 Total revenues 630.6 435.7 137.5 - 1,203.8 Costs and expenses Operating and maintenance expenses (exclusive of depreciation shown separately below) 143.1 128.4 16.8 - 288.3 Depreciation expense 101.0 48.4 16.2 - 165.6 General and administrative expenses 8.9 5.7 0.8 7.3 22.7 Total operating costs and expenses 253.0 182.5 33.8 7.3 476.6 Income (loss) from operations 377.6 253.2 103.7 (7.3 ) 727.2 Income from equity investments - 10.6 - - 10.6 Interest expense, net - - - 105.4 105.4 Income (loss) before income tax expense 377.6 263.8 103.7 (112.7 ) 632.4 Income tax expense - - - 14.6 14.6 Net income (loss) 377.6 263.8 103.7 (127.3 ) 617.8 Less: Net income (loss) attributable to noncontrolling interest 341.3 238.3 93.6 (101.8 ) 571.4 Net income (loss) attributable to Hess Midstream LP $ 36.3 $ 25.5 $ 10.1 $ (25.5 ) $ 46.4 Throughput volumes Gas gathering (MMcf/d) 324 324 Crude oil gathering (MBbl/d) 110 110 Gas processing (MMcf/d) 305 305 Crude oil terminaling (MBbl/d) 116 116 NGL loading (MBbl/d) 13 13 Water gathering (MBbl/d) 73 73 57 Table of Contents Year ended December 31, 2023 Compared to Year Ended December 31, 2022 Gathering Revenues and other income increased $52.1 million in 2023 compared to 2022, of which $64.1 million is attributable to higher tariff rates, $11.5 million is attributable to higher water gathering and disposal revenues, $7.6 million is attributable to higher pass-through revenues included in affiliate and third-party services, and $1.8 million is attributable to higher third-party services contracted directly with us. Despite the overall higher gas gathering physical volumes in 2023, these revenue increases were partially offset by $18.0 million as the higher gas gathering volumes were still below the MVC levels in 2022 in one of the sub-systems. The remaining decrease of $14.9 million is attributable to crude oil gathering volumes where actual physical volumes were at or slightly below MVCs in 2023 and below MVCs in 2022, with physical volumes in 2023 lower than MVC levels in 2022. Operating and maintenance expenses increased $15.1 million, of which $7.6 million is attributable to higher pass-through costs, including produced water trucking and disposal and electricity fees, $6.0 million is attributable primarily to higher maintenance activity on our gathering and compression infrastructure, and $4.5 million is attributable to higher employee costs allocated to us under our omnibus and employee secondment agreements. These increases were partially offset by $3.0 million attributable to the August 2022 produced water release remediation reserve. Depreciation expense increased $8.2 million due to new compressors and other new gathering assets placed in service. Processing and Storage Revenues and other income increased $30.9 million in 2023 compared to 2022, of which $16.9 million is attributable to higher gas processing physical volumes that were above the 2023 and 2022 MVC levels, $7.9 million is attributable to higher tariff rates, $5.3 million is attributable to higher third-party services contracted directly with us, and $0.8 million is attributable to higher pass-through revenues included in affiliate and third-party services . Operating and maintenance expenses increased $14.0 million, of which $7.5 million is attributable to higher maintenance activity, $3.6 million is attributable to higher third-party processing fees due to higher volumes processed at the LM4 plant, $2.1 million is attributable to higher employee costs allocated to us under our omnibus and employee secondment agreements, and $0.8 million is attributable to higher pass-through costs. Depreciation expense increased $2.2 million due to new assets placed in service. Income from equity investments increased $2.4 million in 2023 compared to 2022 primarily due to higher volumes processed at the LM4 plant. Terminaling and Export Revenues and other income decreased $9.6 million in 2023 compared to 2022. Although physical volumes were generally above MVCs in 2023, they remained below the MVC levels of 2022, resulting in a $17.9 million decline in revenues. Additionally, $6.9 million of the decrease is attributable to lower rail transportation pass-through revenues. These decreases were partially offset by $14.7 million attributable to higher tariff rates and $0.5 million attributable to other income. Operating and maintenance expenses increased $4.3 million, of which $7.5 million is attributable to rail car inspection and recertification activities, $2.0 million is attributable to higher employee costs allocated to us under our omnibus and employee secondment agreements, and $1.7 million is attributable to other maintenance activity. These increases were partially offset by $6.9 million attributable to lower rail transportation pass-through costs. Interest and Other Interest expense, net of interest income, increased $29.7 million, of which $23.7 million is attributable primarily to higher interest rates on our 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 $11.3 million in the same period primarily driven by increased ownership of the Partnership by Hess Midstream LP following the equity offerings and unit repurchase transactions in 2022 and 2023. 58 Table of Contents Year ended December 31, 2022 Compared to Year Ended December 31, 2021 Gathering Revenues increased $47.3 million in 2022 compared to 2021, of which $58.7 million is attributable to higher gas gathering MVC levels and physical gas gathering volumes due to higher gas capture and $13.4 million is attributable to higher tariff rates. This increase is partially offset by $13.6 million attributable to lower crude oil gathering MVC levels and $9.1 million attributable to lower water gathering and disposal MVC levels in 2022 when compared to 2021. The remaining decrease of $2.1 million is attributable to lower pass-through revenues. Operating and maintenance expenses increased $27.1 million, of which $13.6 million is attributable to higher maintenance activity on our expanding gathering infrastructure, $8.0 million is attributable to higher employee costs allocated to us under our omnibus and employee secondment agreements and $7.6 million is attributable to higher remediation expenses, including the produced water release in August 2022. The Company is working with the North Dakota regulatory agencies and affected landowners to remediate impacts of the release. This increase is partially offset by $2.1 million lower pass-through costs. Depreciation expense increased $6.4 million due to new compressors and other new gathering assets being brought into service. General and administrative expenses increased $1.8 million primarily attributable to higher charges from Hess under our omnibus and employee secondment agreements. Processing and Storage Revenues and other income increased $35.1 million in 2022 compared to 2021, of which $47.0 million is attributable to higher MVC levels and higher physical volumes due to higher gas capture. This increase was partially offset by $7.3 million attributable to lower pass-through revenue, including electricity and other fees related to temporary gas offloads during the TGP turnaround in 2021, and $4.6 million attributable to lower tariff rates. Operating and maintenance expenses decreased $43.4 million, of which $21.0 million is attributable to the TGP turnaround in 2021 and $7.3 million is attributable to lower pass-through costs, including electricity and other fees related to temporary offloads during the TGP turnaround in 2021. In addition, $7.2 million is attributable to lower third-party processing fees due to lower volumes processed at the LM4 plant, $ 4.3 million is attributable to lower employee costs allocated to us under our omnibus and employee secondment agreements and $3.6 million is attributable to lower other operating costs. Depreciation expense increased $9.3 million primarily due to the TGP expansion and turnaround assets placed in service in 2021. General and administrative expenses decreased $1.4 million attributable to lower employee costs allocated to us under our omnibus and employee secondment agreements. Income from equity investments decreased $5.3 million in 2022 compared to 2021 primarily due to lower volumes processed and higher maintenance expenses at the LM4 plant. Terminaling and Export Revenues and other income de creased $11.0 million in 2022 compared to 2021, of which $14.2 million is attributable to lower MVC levels and $2.2 million is attributable to lower tariff rates. This decrease was partially offset by $3.4 million attributable to higher rail transportation pass-through revenues and $2.0 million attributable to other income. Operating and maintenance expenses increased $7.6 million, of which $4.0 million is attributable to higher employee costs allocated to us under our omnibus and employee secondment agreements, $3.4 million is attributable to higher rail transportation pass-through costs and $0.2 million is attributable to other maintenance activity. Interest and Other Interest expense, net of interest income, increased $43.9 million, primarily attributable to the $750.0 million 4.25% fixed-rate senior notes issued in August 2021, the $400.0 million 5.50% fixed-rate senior notes issued in April 2022 and higher interest rates on the Term Loan A credit facility. Income tax expense increased $12.0 million, primarily driven by increased ownership of the Partnership by Hess Midstream LP following the equity offering and unit repurchase transactions in 2021 and 2022. 59 Table of Contents Other Factors Expected to Significantly Affect Our Future Results We currently generate substantially all of our revenues under fee‑based commercial agreements with Hess, including third parties contracted with affiliates of Hess. These contracts provide cash flow stability and minimize our direct exposure to commodity price fluctuations, since we generally do not own any of the crude oil, natural gas, or NGLs that we handle and do not engage in the trading of crude oil, natural gas, or NGLs. However, commodity price fluctuations indirectly influence our activities and results of operations over the long-term, since they can affect production rates and investments by Hess and third parties in the development of new crude oil and natural gas reserves. The markets for oil and natural gas are volatile and will likely continue to be volatile in the future. The throughput volumes at our facilities depend primarily on the volumes of crude oil and natural gas produced by Hess and third parties in the Bakken, which, in turn, are ultimately dependent on Hess’ and third parties’ exploration and production margins. Exploration and production margins depend on the price of crude oil, natural gas, and NGLs. These prices are volatile and influenced by numerous factors beyond our or our customers’ control, including the domestic and global supply of and demand for crude oil, natural gas and NGLs. Sustained periods of low prices for oil and natural gas could materially and adversely affect the quantities of oil and natural gas that Hess and third parties 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. 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. In the second quarter of 2020, as a result of the sharp decline in crude oil prices, Hess reduced its rig count from six rigs to one rig in the Bakken. In addition, third parties in the Bakken also curtailed production and reduced drilling activity. Our contract structure has largely offset and is expected to continue to offset potential impact of the reduction in volumes on our financial performance metrics through the initial term of our commercial agreements, as our minimum volume commitments provide minimum levels of cash flows and the fee recalculation mechanisms under our agreements support our cash flow stability. Subsequently, Hess increased its rig count in the Bakken to three operated rigs in September 2021, and to four operated rigs in July 2022. 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. All of our volumes are expected to be above currently established MVC levels in 2024, 2025 and 2026. The majority of our systems are entering the Secondary Term of our commercial agreements, which includes a fixed fee structure based on the average fees paid by Hess during 2021-2023 adjusted annually for inflation up to 3% a year. Such a fee structure may provide less downside risk protection in the future. For our terminaling and water gathering systems, the rates will continue to be reset through our annual rate redetermination process through 2033. For all of our systems, MVCs will continue to provide downside protection through 2033. 60 Table of Contents Reconciliation of Non‑GAAP Financial Measure The following table presents a reconciliation of Adjusted EBITDA to net income and net cash provided by operating activities, the most directly comparable GAAP financial measures, for each of the periods indicated. Year Ended December 31, (in millions) 2023 2022 2021 Reconciliation of Adjusted EBITDA and to net income: Net income $ 607.7 $ 620.6 $ 617.8 Plus: Depreciation expense 192.5 181.3 165.6 Proportional share of equity affiliates' depreciation 5.1 5.1 5.1 Interest expense, net 179.0 149.3 105.4 Income tax expense 37.9 26.6 14.6 Adjusted EBITDA $ 1,022.2 $ 982.9 $ 908.5 Reconciliation of Adjusted EBITDA to net cash provided by operating activities: Net cash provided by operating activities $ 866.4 $ 861.1 $ 795.5 Changes in assets and liabilities (14.5 ) (14.5 ) 18.0 Amortization of deferred financing costs (8.4 ) (8.8 ) (7.3 ) Proportional share of equity affiliates' depreciation 5.1 5.1 5.1 Interest expense, net 179.0 149.3 105.4 Distribution from equity investments (11.4 ) (13.0 ) (17.4 ) Income from equity investments 7.7 5.3 10.6 Other (1.7 ) (1.6 ) (1.4 ) Adjusted EBITDA $ 1,022.2 $ 982.9 $ 908.5 61 Table of Contents Liquidity and Capital Resources We expect our ongoing sources of liquidity to include: • cash on hand; • cash generated from operations; • borrowings under our revolving credit facility; • issuances of additional debt securities; and • issuances of additional equity securities. We believe that cash generated from these sources will be sufficient to meet our operating requirements, our planned capital expenditures, debt service requirements, our quarterly cash distribution requirements, future internal growth projects or potential acquisitions. See Item 1A. Risk Factors for a discussion of risks related to the Chevron Merger. Our partnership agreement requires that we distribute all of our available cash to shareholders. During the year ended December 31, 2023, we made distributions of $127.5 million, to the holders of our equity securities representing limited partner interests in us. In addition, the Partnership made distributions of $429.5 million to the Sponsors as holders of the Class B Units of the Partnership. On January 29, 2024, we declared a quarterly cash distribution of $0.6343 per Class A Share that was paid on February 14, 2024, to shareholders of record on February 8, 2024, and the Partnership made distributions of $0.6343 per Class B Unit of the Partnership to the Sponsors. Fixed‑Rate Senior Notes In April 2022, the Partnership issued $400.0 million aggregate principal amount of 5.500% fixed-rate senior unsecured notes due 2030 to qualified institutional investors. 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 April 4, 2022, repurchase transaction. In August 2021, the Partnership issued $750.0 million aggregate principal amount of 4.250% fixed‑rate senior unsecured notes due 2030 to qualified institutional investors. Interest is payable semi‑annually on February 15 and August 15. The Partnership used the proceeds to fund the August 10, 2021 repurchase transaction. In December 2019, the Partnership issued $550.0 million aggregate principal amount of 5.125% fixed‑rate senior unsecured notes due 2028 to qualified institutional investors. Interest is payable semi‑annually on June 15 and December 15. The Partnership used the net proceeds to finance the acquisition of HIP, including to repay borrowings under HIP’s credit facilities, and pay related fees and expenses. In December 2019, in connection with the Restructuring, the Partnership assumed $800.0 million aggregate principal amount of 5.625% outstanding fixed-rate senior unsecured notes of HIP in a par-for-par exchange for newly issued 5.625% senior notes due 2026 of the Partnership. Interest is payable semi‑annually on February 15 and August 15. The notes described above are guaranteed by certain subsidiaries of the Partnership. Each of the indentures for the senior notes described above contains customary covenants that restrict our ability and the ability of our restricted subsidiaries to (i) declare or pay any dividend or make any other restricted payments; (ii) transfer or sell assets or subsidiary stock; (iii) incur additional debt; 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 December 31, 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 indentures, 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. 62 Table of Contents Credit Facilities 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 $1.0 billion 5-year revolving credit facility and a fully drawn $400.0 million 5-year Term Loan A facility. The 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 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 December 31, 2023, borrowings of $340.0 million were drawn and outstanding under the Partnership’s revolving credit facility, and borrowings of $397.5 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. The Credit Facilities are guaranteed by each direct and indirect wholly owned material domestic subsidiary of the Partnership, and are secured by first priority perfected liens on substantially all of the presently owned and after-acquired assets of the Partnership and its direct and indirect wholly owned material domestic subsidiaries, including equity interests directly owned by such entities, subject to certain customary exclusions. 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 December 31, 2023, we were in compliance with these financial covenants. Cash Flows The following table sets forth a summary of our cash flows (in millions): Year Ended December 31, 2023 2022 2021 Cash flows from operating activities $ 866.4 $ 861.1 $ 795.5 Cash flows used in investing activities (223.5 ) (238.2 ) (163.2 ) Cash flows used in financing activities (640.6 ) (622.0 ) (632.7 ) Net increase (decrease) in cash and cash equivalents $ 2.3 $ 0.9 $ (0.4 ) Operating Activities. Cash flows from operating activities increased $5.3 million in 2023 compared to 2022. The change in cash flows from operating activities resulted from an increase in revenues and other income of $73.4 million, partially offset by an increase in expenses, other than depreciation and other non-cash gains and losses of $66.5 million and a decrease in distributions received from equity investments of $1.6 million. Cash flows provided by operating activities increased $65.6 million in 2022 compared to 2021. The change in cash flows from operating activities resulted from an increase in revenues and other income of $71.4 million, an increase in cash provided by changes in working capital of $32.5 million, partially offset by an increase in expenses, other than depreciation, amortization, equity-based compensation and other non-cash gains and losses of $33.9 million and a decrease in distributions received from equity investments of $4.4 million. Investing Activities. Cash flows used in investing activities decreased $14.7 million in 2023 compared to 2022, driven by lower payments for additions to property, plant, and equipment primarily related to our compression capacity expansion program. Cash flows used in investing activities increased $75.0 million in 2022 compared to 2021, driven by higher payments for additions to property, plant, and equipment primarily related to our compression capacity expansion program. Financing Activities. Cash flows used in financing activities increased $18.6 million in 2023 compared to 2022. In 2023, we had higher distributions to shareholders and noncontrolling interest of $25.8 million and paid higher transactions costs of $1.6 million related to unit repurchase transactions. In 2023, we also had higher net borrowings under our credit facilities of $395.5 million that we used primarily to finance the 2023 unit repurchase transactions; whereas in 2022, we had $386.7 million of proceeds from issuance of unsecured senior notes, net of any financing costs, that we used to repay the borrowings under our revolving credit facility used to finance the 2022 repurchase transaction. Cash flows used in financing activities decreased $10.7 million in 2022 compared to 2021. In 2022, we issued $400.0 million aggregate principal amount of unsecured senior notes that we used to repay the borrowings under our revolving credit facility used to finance the 2022 repurchase transaction. In 2022, we also had lower net repayments on our debt of $12.3 million, net of any changes in financing costs, and $0.6 million lower transaction costs related to unit repurchase transactions, partially offset by higher distributions to shareholders and noncontrolling interest of $2.2 million. 63 Table of Contents Capital Expenditures Our operations can be capital intensive, requiring investments to expand, upgrade, maintain or enhance existing operations and to meet environmental and operational regulations. The following table sets forth a summary of capital expenditures and reconciles capital expenditures on an accrual basis to additions to property, plant and equipment on a cash basis: Year Ended December 31, 2023 2022 2021 (in millions) Total capital expenditures 245.7 231.8 183.0 (Increase) decrease in accrued capital expenditures (18.8 ) 2.4 (12.9 ) (Increase) decrease in capital expenditures included in accounts payable - affiliate (3.4 ) 4.0 (6.9 ) Additions to property, plant and equipment $ 223.5 $ 238.2 $ 163.2 Capital expenditures in 2023 are primarily attributable to continued expansion of our compression capacity and gas capture capabilities to meet Hess' and third parties' current and future production growth and gas capture targets. The activities focused on the construction of two new greenfield compressor stations and associated pipeline infrastructure and expanding an existing compressor station. Capital expenditures in 2022 and 2021 were also attributable to continued expansion of our compression capacity and gas capture capabilities. Capital expenditures in 2021 also included the TGP turnaround activities. Cash Requirements Our cash requirements within the next twelve months include accounts payables, accrued liabilities, the current portion of long-term debt, interest, purchase obligations, which include a portion of our planned capital expenditure program in 2024, and other liabilities. Our long-term contractual obligations and commitments include: • Debt and interest: See Item 8. Financial Statements and Supplementary Data. Note 7 , Debt and Interest Expense. • Purchase obligations: See Item 8. Financial Statements and Supplementary Data. Note 11, Commitments and Contingencies. Off-Balance Sheet Arrangements We have not entered into any transactions, agreements or other contractual arrangements that would result in off‑balance sheet liabilities. Critical Accounting Estimates Accounting policies and estimates affect the recognition of assets and liabilities in our consolidated balance sheets and revenues and expenses in our consolidated statements of operations. The accounting methods used can affect net income, partners’ capital and various financial statement ratios. However, the accounting methods generally do not change cash flows or liquidity. We consider the following policies to be the most critical in understanding the judgments that are involved in preparing our financial statements and the uncertainties that could impact our financial condition and results of operations. Property, Plant and Equipment Property, plant and equipment are stated at the lower of historical cost less accumulated depreciation, subject to the results of impairment testing. We capitalize all construction-related direct labor and material costs, as well as indirect construction costs. Indirect construction costs include general engineering, taxes and the cost of funds used during construction of material projects. Costs, including complete asset replacements and enhancements or upgrades that increase the original efficiency, productivity or capacity of property, plant and equipment, are also capitalized. The costs of repairs, minor replacements and other projects, which do not increase the original efficiency, productivity or capacity of property, plant and equipment, are expensed as incurred. The determination of cost componentization and related estimated useful lives is a significant element in arriving at the results of operations. The estimates affect depreciation expense in our accompanying consolidated statements of operations and balance sheets, as described below. 64 Table of Contents Depreciation Expense We calculate depreciation using the straight‑line method based on the estimated useful lives after considering salvage values of our assets. When assets are placed into service, we make estimates with respect to their useful lives that we believe are reasonable. Depreciation lives related to our significant assets primarily range between 12 to 35 years. However, factors such as maintenance levels, economic conditions impacting the demand for these assets, and regulatory or environmental requirements are inherently uncertain and could cause us to change our estimates, and impact our future calculation of depreciation. The determination of estimated useful lives is a significant element in arriving at depreciation expense. The estimates affect depreciation expense and cost componentization in our accompanying consolidated statements of operations and balance sheets. These estimates and assumptions have not changed during the periods included in the accompanying consolidated financial statements. Impairment of Long‑Lived Assets We review long-lived assets for impairment whenever events or changes in business circumstances indicate the net book values of the assets may not be recoverable. Factors that indicate potential impairment include a significant decrease in the market value of the asset, operating or cash flow losses associated with the use of the asset, and a significant change in the asset’s physical condition or use. Impairment is indicated when the undiscounted cash flows estimated to be generated by those assets are less than the assets’ net book value. Undiscounted cash flows are based on identifiable cash flows that are largely independent of the cash flows of other assets and liabilities. If impairment occurs, a loss is recognized for the difference between fair value and net book value. Such fair value is generally determined by discounting anticipated future net cash flows, an income valuation approach, or by a market-based valuation approach, which are Level 3 fair value measurements. Assumptions and estimates about future cash flows and fair values are complex and subject to significant uncertainty. These assumptions and estimates can be affected by a variety of factors, including external factors such as industry and economic trends that are outside of our control and internal factors such as changes in our business strategy and our internal forecasts. No impairments of long-lived assets were recorded during the periods included in the accompanying consolidated financial statements. The determination of impairments could be a significant element in arriving at the results of operations. Impairment charges would impact total operating costs and expenses and net Property, Plant & Equipment in our accompanying consolidated statements of operations and balance sheets. Contingencies In the ordinary course of business, we may become party to lawsuits, administrative proceedings and governmental investigations, including environmental, regulatory and other matters, the outcomes of which are inherently uncertain. Damages or penalties may be sought from us in some matters for which the likelihood of loss may be probable or possible but the amount of loss is not currently estimable. Costs that relate to an existing condition caused by past operations are expensed. Contingent liabilities are recorded when probable and reasonably estimable, the determination of which requires significant judgment and is subject to inherent uncertainty. 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. It is estimated that approximately 34,000 barrels of produced water were released, causing impacts to soils, crops, and groundwater. Remediation infrastructure was put in place and remediation and monitoring is ongoing. The Company has recorded reserves for the estimated ongoing and future costs to remediate impacts of the release. See Item 8. Financial Statements and Supplementary Data. Note 11 , Commitments and Contingencies. Estimates related to contingencies affect operating expenses in our accompanying consolidated statements of operations and liabilities in our balance sheets. 65 Table of Contents ITEM 7A. QUANTITATIVE AND QUALITAT IVE DISCLOSURES ABOUT MARKET RISK Market risk is the risk of loss arising from adverse changes in market rates and prices. We generally do not take ownership of the crude oil, natural gas or NGLs that we currently gather, process, terminal, store or transport for our customers. Because we generate substantially all of our revenues by charging fees under long-term commercial agreements with Hess with minimum volume commitments, Hess bears the risks associated with fluctuating commodity prices and we have minimal direct exposure to commodity prices. In the normal course of our business, we are exposed to market risks related to changes in interest rates. Our financial risk management activities may include transactions designed to reduce risk by reducing our exposure to interest rate movements. Interest rate swaps may be used to convert interest payments on certain long‑term debt. At December 31, 2023, we did not have in place any derivative instruments to hedge any exposure to changes in interest rates. At December 31, 2023, our total debt had a carrying value of $3,211.4 million and a fair value of approximately $3,143.3 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 $81.5 million or $85.6 million, respectively. The carrying value of the amounts under our Term Loan A facility and revolving credit facility at the year-end 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. A hypothetical change of 100 basis points in the rate of our variable interest rate debt would impact annual interest expense by $7.4 million based on our December 31, 2023, debt balances. 66 Table of Contents ITEM 8. FINANCIAL STATEMEN TS AND SUPPLEMENTARY DATA HESS MIDSTREAM LP INDEX TO CONSOLIDATED FINANCIAL STATEMENTS Page Report of Independent Registered Public Accounting Firm (PCAOB ID 42 ) 68 Consolidated Balance Sheets as of December 31, 2023 and 2022 71 Consolidated Statements of Operations for the Years Ended December 31, 2023, 2022 and 2021 72 Consolidated Statements of Changes in Partners’ Capital for the Years Ended December 31, 2023, 2022 and 2021 73 Consolidated Statements of Cash Flows for the Years Ended December 31, 2023, 2022 and 2021 74 Notes to Consolidated Financial Statements 75 Note 1 Description of Business 75 Note 2 Summary of Significant Accounting Policies and Basis of Presentation 76 Note 3 Equity Transactions 78 Note 4 Related Party Transactions 80 Note 5 Property, Plant and Equipment 83 Note 6 Accrued Liabilities and Other Current Liabilities 83 Note 7 Debt and Interest Expense 83 Note 8 Partners' Capital and Distributions 85 Note 9 Earnings per Share 87 Note 10 Concentration of Credit Risk 87 Note 11 Commitments and Contingencies 87 Note 12 Segments 88 Note 13 Income Taxes 91 Note 14 Subsequent Events 92 67 Table of Contents R eport of Independent Registered Public Accounting Firm To the Board of Directors of Hess Midstream GP LLC and Shareholders of Hess Midstream LP Opinion on Internal Control over Financial Reporting We have audited Hess Midstream LP’s internal control over financial reporting as of December 31, 2023, based on criteria established in Internal Control—Integrated Framework issued by the Committee of Sponsoring Organizations of the Treadway Commission (2013 framework) (the COSO criteria). In our opinion, Hess Midstream LP (the Company) maintained, in all material respects, effective internal control over financial reporting as of December 31, 2023, based on the COSO criteria. We also have audited, in accordance with the standards of the Public Company Accounting Oversight Board (United States) (PCAOB), the consolidated balance sheets of the Company as of December 31, 2023 and 2022, the related consolidated statements of operations, changes in partners’ capital, and cash flows for each of the three years in the period ended December 31, 2023, and the related notes and our report dated February 29, 2024 expressed an unqualified opinion thereon. Basis for Opinion The Company’s management is responsible for maintaining effective internal control over financial reporting and for its assessment of the effectiveness of internal control over financial reporting included in the accompanying Management’s Report on Internal Control over Financial Reporting. Our responsibility is to express an opinion on the Company’s internal control over financial reporting based on our audit. We are a public accounting firm registered with the PCAOB and are required to be independent with respect to the Company in accordance with the U.S. federal securities laws and the applicable rules and regulations of the Securities and Exchange Commission and the PCAOB. We conducted our audit in accordance with the standards of the PCAOB. Those standards require that we plan and perform the audit to obtain reasonable assurance about whether effective internal control over financial reporting was maintained in all material respects. Our audit included obtaining an understanding of internal control over financial reporting, assessing the risk that a material weakness exists, testing and evaluating the design and operating effectiveness of internal control based on the assessed risk, and performing such other procedures as we considered necessary in the circumstances. We believe that our audit provides a reasonable basis for our opinion. Definition and Limitations of Internal Control over Financial Reporting A company’s internal control over financial reporting is a process designed to provide reasonable assurance regarding the reliability of financial reporting and the preparation of financial statements for external purposes in accordance with generally accepted accounting principles. A company’s internal control over financial reporting includes those policies and procedures that (1) pertain to the maintenance of records that, in reasonable detail, accurately and fairly reflect the transactions and dispositions of the assets of the company; (2) provide reasonable assurance that transactions are recorded as necessary to permit preparation of financial statements in accordance with generally accepted accounting principles, and that receipts and expenditures of the company are being made only in accordance with authorizations of management and directors of the company; and (3) provide reasonable assurance regarding prevention or timely detection of unauthorized acquisition, use, or disposition of the company’s assets that could have a material effect on the financial statements. Because of its inherent limitations, internal control over financial reporting may not prevent or detect misstatements. Also, projections of any evaluation of effectiveness to future periods are subject to the risk that controls may become inadequate because of changes in conditions, or that the degree of compliance with the policies or procedures may deteriorate. /s/ Ernst & Young LLP Houston, Texas February 29, 2024 68 Table of Contents Report of Independent Registered Public Accounting Firm To the Board of Directors of Hess Midstream GP LLC and Shareholders of Hess Midstream LP Opinion on the Financial Statements We have audited the accompanying consolidated balance sheets of Hess Midstream LP (the Company) as of December 31, 2023 and 2022, the related consolidated statements of operations, changes in partners’ capital, and cash flows for each of the three years in the period ended December 31, 2023, and the related notes (collectively referred to as the “consolidated financial statements”). In our opinion, the consolidated financial statements present fairly, in all material respects, the financial position of the Company at December 31, 2023 and 2022, and the results of its operations and its cash flows for each of the three years in the period ended December 31, 2023, in conformity with U.S. generally accepted accounting principles. We also have audited, in accordance with the standards of the Public Company Accounting Oversight Board (United States) (PCAOB), the Company’s internal control over financial reporting as of December 31, 2023, based on criteria established in Internal Control—Integrated Framework issued by the Committee of Sponsoring Organizations of the Treadway Commission (2013 framework), and our report dated February 29, 2024 expressed an unqualified opinion thereon. Basis for Opinion These financial statements are the responsibility of the Company’s management. Our responsibility is to express an opinion on the Company’s financial statements based on our audits. We are a public accounting firm registered with the PCAOB and are required to be independent with respect to the Company in accordance with the U.S. federal securities laws and the applicable rules and regulations of the Securities and Exchange Commission and the PCAOB. We conducted our audits in accordance with the standards of the PCAOB. Those standards require that we plan and perform the audit to obtain reasonable assurance about whether the financial statements are free of material misstatement, whether due to error or fraud. Our audits included performing procedures to assess the risks of material misstatement of the financial statements, whether due to error or fraud, and performing procedures that respond to those risks. Such procedures included examining, on a test basis, evidence regarding the amounts and disclosures in the financial statements. Our audits also included evaluating the accounting principles used and significant estimates made by management, as well as evaluating the overall presentation of the financial statements. We believe that our audits provide a reasonable basis for our opinion. Critical Audit Matter The critical audit matter communicated below is a matter arising from the current period audit of the financial statements that was communicated or required to be communicated to the audit committee and that: (1) relates to accounts or disclosures that are material to the financial statements and (2) involved our especially challenging, subjective or complex judgments. The communication of the critical audit matter does not alter in any way our opinion on the consolidated financial statements, taken as a whole, and we are not, by communicating the critical audit matter below, providing a separate opinion on the critical audit matter or on the accounts or disclosures to which it relates. Presentation and Disclosure of Related Party Transactions with Hess Corporation Description of the Matter As described in Note 4 to the consolidated financial statements, the Company is part of the consolidated operations of Hess Corporation and its affiliates (“Hess”) and engages, in the normal course of business, in related party transactions with Hess. Auditing the presentation and disclosure of these related party transactions, including the completeness thereof, was challenging due to Hess’ involvement in many aspects of the Company’s business, including the revenue earned from providing various services under long-term, fee-based contracts, and the direct and allocated expenses charged from Hess for services provided under commercial agreements and employee secondment and omnibus agreements. 69 Table of Contents How We Addressed the Matter in Our Audit We obtained an understanding, evaluated the design and tested the operating effectiveness of controls over the Company’s process of identifying and disclosing related party transactions with Hess. To test the completeness of these related party transactions, we obtained a listing of the Company’s related party relationships and compared the listing to the Company’s legal structure and evidence obtained from other audit procedures including, among others, inquiries of management and the audit committee, review of the board of directors and other committee meeting minutes, review of contracts, and testing of revenue and expense transactions. In addition, we tested transactions for appropriate classification as related-party or third-party transactions in revenue, expense and balance sheet accounts, and their compliance with the related terms of the agreements, by inspecting source documentation and evaluating the aggregation and presentation of related party financial statement line items. /s/ Ernst & Young LLP We have served as the Company’s auditor since 2014. Houston, Texas February 29, 2024 70 Table of Contents HESS M IDSTREAM LP CONSOLIDATED BALANCE SHEETS December 31, December 31, 2023 2022 (in millions, except share amounts) Assets Cash and cash equivalents $ 5.4 $ 3.1 Accounts receivable from contracts with customers: Accounts receivable—trade 1.9 0.3 Accounts receivable—affiliate 122.5 122.7 Other current assets 7.0 6.2 Total current assets 136.8 132.3 Equity investments 90.2 93.9 Property, plant and equipment, net 3,229.2 3,172.8 Long-term receivable—affiliate 0.3 0.7 Deferred tax asset 324.4 177.2 Other noncurrent assets 8.6 11.3 Total assets $ 3,789.5 $ 3,588.2 Liabilities Accounts payable—trade $ 38.5 $ 35.0 Accounts payable—affiliate 41.2 27.7 Accrued liabilities 105.9 82.9 Current maturities of long-term debt 12.5 2.5 Other current liabilities 12.1 11.4 Total current liabilities 210.2 159.5 Long-term debt 3,198.9 2,883.1 Deferred tax liability 0.5 0.5 Other noncurrent liabilities 16.7 16.1 Total liabilities 3,426.3 3,059.2 Partners' capital Class A shares ( 68,367,647 shares issued and outstanding as of December 31, 2023; 44,002,846 shares issued and outstanding as of December 31, 2022) 340.2 245.1 Class B shares ( 157,941,441 shares issued and outstanding as of December 31, 2023; 195,847,606 shares issued and outstanding as of December 31, 2022) - - Total Class A and Class B partners' capital 340.2 245.1 Noncontrolling interest 23.0 283.9 Total partners' capital 363.2 529.0 Total liabilities and partners' capital $ 3,789.5 $ 3,588.2 See accompanying notes to consolidated financial statements. 71 Table of Contents HESS MIDS TREAM LP CONSOLIDATED STATEMENTS OF OPERATIONS Year Ended December 31, 2023 2022 2021 (in millions, except per share data) Revenues Affiliate services $ 1,338.1 $ 1,273.2 $ 1,203.8 Third-party services 8.0 - - Other income 2.5 2.0 - Total revenues 1,348.6 1,275.2 1,203.8 Costs and expenses Operating and maintenance expenses (exclusive of depreciation shown separately below) 313.0 279.6 288.3 Depreciation expense 192.5 181.3 165.6 General and administrative expenses 26.2 23.1 22.7 Total operating costs and expenses 531.7 484.0 476.6 Income from operations 816.9 791.2 727.2 Income from equity investments 7.7 5.3 10.6 Interest expense, net 179.0 149.3 105.4 Income before income tax expense 645.6 647.2 632.4 Income tax expense 37.9 26.6 14.6 Net income 607.7 620.6 617.8 Less: Net income attributable to noncontrolling interest 489.1 536.7 571.4 Net income attributable to Hess Midstream LP $ 118.6 $ 83.9 $ 46.4 Net income attributable to Hess Midstream LP per Class A share: Basic $ 2.11 $ 2.03 $ 1.81 Diluted $ 2.08 $ 2.01 $ 1.76 Weighted average Class A shares outstanding Basic 56.2 41.3 25.6 Diluted 56.3 41.4 25.7 See accompanying notes to consolidated financial statements. 72 Table of Contents HESS MIDSTREAM LP CONSOLIDATED STATEMENTS OF CHA NGES IN PARTNERS’ CAPITAL Partners' Capital Class A Shares Class B Shares Noncontrolling Interest Total (in millions) Balance at December 31, 2020 $ 125.0 $ - $ 1,201.0 $ 1,326.0 Net income 46.4 - 571.4 617.8 Equity-based compensation 1.4 - - 1.4 Distributions - $ 1.9143 per share ( 49.4 ) - ( 479.6 ) ( 529.0 ) Recognition of deferred tax asset 89.0 - - 89.0 Sale of shares held by Sponsors 52.4 - ( 52.4 ) - Class B unit repurchase ( 60.4 ) ( 689.6 ) ( 750.0 ) Transaction costs ( 0.3 ) ( 1.8 ) ( 2.1 ) Balance at December 31, 2021 $ 204.1 $ - $ 549.0 $ 753.1 Net income 83.9 - 536.7 620.6 Equity-based compensation 1.6 - - 1.6 Distributions - $ 2.1845 per share ( 91.0 ) - ( 440.2 ) ( 531.2 ) Recognition of deferred tax asset 86.4 - - 86.4 Sale of shares held by Sponsors 27.0 - ( 27.0 ) - Class B unit repurchase ( 66.6 ) - ( 333.4 ) ( 400.0 ) Transaction costs ( 0.3 ) - ( 1.2 ) ( 1.5 ) Balance at December 31, 2022 $ 245.1 $ - $ 283.9 $ 529.0 Net income 118.6 - 489.1 607.7 Equity-based compensation 1.7 - - 1.7 Distributions - $ 2.3733 per share ( 127.5 ) - ( 429.5 ) ( 557.0 ) Recognition of deferred tax asset 185.1 - - 185.1 Sale of shares held by Sponsors 17.8 - ( 17.8 ) - Class B unit repurchase ( 99.8 ) - ( 300.2 ) ( 400.0 ) Transaction costs ( 0.8 ) ( 2.5 ) ( 3.3 ) Balance at December 31, 2023 $ 340.2 $ - $ 23.0 $ 363.2 See accompanying notes to consolidated financial statements. 73 Table of Contents HESS MIDST REAM LP CONSOLIDATED STATEMENTS OF CASH FLOWS Year Ended December 31, 2023 2022 2021 (in millions) Cash flows from operating activities Net income $ 607.7 $ 620.6 $ 617.8 Adjustments to reconcile net income to net cash provided by (used in) operating activities: Depreciation expense 192.5 181.3 165.6 Income from equity investments ( 7.7 ) ( 5.3 ) ( 10.6 ) Distributions from equity investments 11.4 13.0 17.4 Amortization of deferred financing costs 8.4 8.8 7.3 Equity-based compensation expense 1.7 1.6 1.4 Deferred income tax expense 37.9 26.6 14.6 Changes in assets and liabilities: Accounts receivable – trade ( 1.6 ) - - Accounts receivable – affiliate 0.6 ( 2.6 ) ( 27.0 ) Other current and noncurrent assets ( 0.2 ) 3.5 ( 5.1 ) Accounts payable – trade 3.5 8.1 ( 3.1 ) Accounts payable – affiliate 10.1 ( 5.8 ) 9.7 Accrued liabilities 4.0 9.1 9.2 Other current and noncurrent liabilities ( 1.9 ) 2.2 ( 1.7 ) Net cash provided by operating activities 866.4 861.1 795.5 Cash flows from investing activities Additions to property, plant and equipment ( 223.5 ) ( 238.2 ) ( 163.2 ) Net cash used in investing activities ( 223.5 ) ( 238.2 ) ( 163.2 ) Cash flows from financing activities Net proceeds from (repayments of) bank borrowings with maturities of 90 days or less 322.0 ( 86.0 ) ( 80.0 ) Bank borrowings with maturities of greater than 90 days Borrowings - 20.0 - Repayments ( 2.5 ) ( 10.0 ) ( 10.0 ) Proceeds from issuance of senior notes - 400.0 750.0 Deferred financing costs - ( 13.3 ) ( 11.6 ) Transaction costs ( 3.1 ) ( 1.5 ) ( 2.1 ) Class B unit repurchase ( 400.0 ) ( 400.0 ) ( 750.0 ) Distributions to shareholders ( 127.5 ) ( 91.0 ) ( 49.4 ) Distributions to noncontrolling interest ( 429.5 ) ( 440.2 ) ( 479.6 ) Net cash used in financing activities ( 640.6 ) ( 622.0 ) ( 632.7 ) Increase (decrease) in cash and cash equivalents 2.3 0.9 ( 0.4 ) Cash and cash equivalents, beginning of period 3.1 2.2 2.6 Cash and cash equivalents, end of period $ 5.4 $ 3.1 $ 2.2 Supplemental disclosure of non-cash investing and financing activities: (Increase) decrease in accrued capital expenditures and related liabilities $ ( 22.2 ) $ 6.5 $ ( 19.8 ) Recognition of deferred tax asset $ 185.1 $ 86.4 $ 89.0 Tioga System Acquisition contingent liability adjustment $ - $ ( 2.9 ) $ ( 4.1 ) See accompanying notes to consolidated financial statements. 74 Table of Contents HESS MIDSTREAM LP NOTES TO CONSOLIDATED FI NANCIAL STATEMENTS Unless the context otherwise requires, references in this report to the “Company,” “we,” “our,” “us” or like terms, refer to Hess Midstream LP and its subsidiaries. The “Partnership” refers to Hess Midstream Operations LP (formerly Hess Midstream Partners LP), a consolidated subsidiary of the Company. Our “general partner” refers to Hess Midstream GP LP. “Hess” refers collectively to Hess Corporation and its subsidiaries, other than us. Note 1. Descr iption of Business Description of Business. We are a fee-based, growth-oriented, Delaware limited partnership formed by Hess Infrastructure Partners GP LLC, the general partner of Hess Infrastructure Partners LP (“HIP”), and our general partner to own, operate, develop and acquire a diverse set of midstream assets and provide fee-based services to Hess and third-party customers. HIP was originally formed in 2015 as a 50 / 50 joint venture between Hess and Global Infrastructure Partners (“GIP” and, together with Hess, the “Sponsors”). We are managed and controlled by Hess Midstream GP LLC, the general partner of our general partner. On April 10, 2017, we completed an initial public offering (“IPO”) as a master limited partnership, pursuant to which HIP contributed to the Partnership a 20 % controlling economic interest in each of (i) Hess North Dakota Pipelines Operations LP; (ii) Hess TGP Operations LP; and (iii) Hess North Dakota Export Logistics Operations LP (collectively, the “Joint Interest Assets”) and a 100 % interest in Hess Mentor Storage Holdings LLC. HIP owned the remaining 80 % economic interest in the Joint Interest Assets, a 100 % interest in certain other businesses, including Hess’ Bakken water services business (“Hess Water Services”), which it acquired from Hess on March 1, 2019, and a 100 % interest in Hess Midstream Partners GP LP (“MLP GP LP”), which held all of the Partnership’s outstanding incentive distribution rights and the general partner interest in the Partnership, and controlled the Partnership. On December 16, 2019, the Company and the Partnership completed the transactions (the “Restructuring”) contemplated by the Partnership Restructuring Agreement, dated October 3, 2019, by and among the Company, the Partnership and the other parties thereto. Pursuant to the Restructuring, the Partnership acquired HIP, including HIP’s 80 % interest in the Joint Interest Assets, 100 % interest in Hess Water Services and the outstanding economic general partner interest and incentive distribution rights in the Partnership. The Partnership’s organizational structure converted from a master limited partnership into an “Up-C” structure in which the Partnership’s public unitholders received newly issued Class A Shares in the Company in a one-for-one exchange. Class A Shares commenced trading on the New York Stock Exchange under the former symbol “HESM” on December 17, 2019. As a result of the Restructuring, the Company was delegated control of the Partnership and replaced the Partnership as its publicly traded successor. The Partnership changed its name to “Hess Midstream Operations LP” and became a consolidated subsidiary of the Company. After consummation of the Restructuring, the Sponsors and their affiliates own an aggregate of 898,000 Class A shares in the Company, all of the Class B units representing noncontrolling limited partner interests in the Partnership, 100 % interest in the general par tner of the Company and, through their ownership of the general partner, continue to have the right to elect the entire board of directors. 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 subject to shareholder and regulatory approvals and other closing conditions. Upon consummation of the proposed transaction, Chevron will acquire Hess’ 37.8 % ow nership in the Company, including its right to appoint four directors to the Company’s Board. The Company’s contract structure remains in place. 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. Our assets and operations are organized into the following three segments: (i) gathering, (ii) processing and storage and (iii) terminaling and export (see Note 12 , Segments ). Significant Activities. In 2023, we added 70 MMcf/d of compression capacity by constructing one new greenfield compressor station and expanding an existing compressor station. Construction was also completed on an additional greenfield compressor station that, once put into operation in early 2024, will further increase compression capacity by approximately 30 MMcf/d. In 2022, we brought online two new greenfield compressor stations. 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. In 2020, we completed construction of a 150 MMcf/d natural gas processing capacity expansion at our Tioga Gas Plant (“TGP”). In the third quarter of 2021, we safely and successfully completed the planned maintenance turnaround at TGP, during which a series of plant tie-ins for the TGP expansion were also completed. The expansion was placed in service in October 2021. Total processing capacity of 400 MMcf/d became available concurrent with the completion of a third-party residue export expansion in February 2022. 75 Table of Contents LM4 Joint Venture. On January 25, 2018, we entered into a 50 / 50 joint venture with Targa Resources Corp. (“Targa”) to construct a new 200 MMcf/d gas processing plant called Little Missouri 4 (“LM4”). LM4 was placed in service in the third quarter of 2019. Targa is the operator of the plant. See Note 4 , Related Party Transactions . Note 2. Summary of Sign ificant Accounting Policies and Basis of Presentation Consolidation . The consolidated financial statements include our accounts and the accounts of entities over which we have a controlling financial interest through our ownership or the majority voting interests of the entity. We consolidate the activities of the Partnership as a variable interest entity (“VIE”) under U.S. Generally Accepted Accounting Principles (“GAAP”). We have concluded that we are the primary beneficiary of the VIE, as defined in the accounting standards, since we have the power, through our ownership, to direct those activities that most significantly impact the economic performance of the Partnership. This conclusion was based on a qualitative analysis that considered the Partnership’s governance structure and the delegation of control provisions, which provide us the ability to control the operations of the Partnership. All financial statement activities associated with the VIE are captured within gathering, processing and storage, and terminaling and export segments (see Note 12 , Segments ). At December 31, 2023, our noncontrolling interest represents the 69.8 % interest in the Partnership retained by Hess and GIP (2022: 81.7 % ) . All intercompany transactions and balances have been eliminated. Use of Estimates. We prepare our consolidated financial statements in conformity with the U.S. GAAP, which require management to make estimates and assumptions that affect the reported amounts of assets and liabilities and disclosures of contingent assets and liabilities at the date of the financial statements and the reported amounts of revenues and expenses during the years presented. Changes in facts and circumstances may result in revised estimates and actual results could differ from those estimates. Cash and Cash Equivalents. Cash equivalents consist of highly liquid investments, which are readily convertible into cash and have maturities of three months or less when acquired. Accounts Receivable – Trade . Trade accounts receivable represent valid claims against nonaffiliated customers for services rendered. We present accounts receivable net of an allowance for credit losses to reflect the net amount expected to be collected. There were no doubtful accounts written off, nor have we provided an allowance for credit losses, as of December 31, 2023 and 2022. Accounts Receivable – Affiliate. We record affiliate accounts receivable upon performance of services to affiliated companies. Generally, we receive payments from affiliated companies on a monthly basis, shortly after performance of services. There were no doubtful accounts written off, nor have we provided an allowance for doubtful accounts, as of December 31, 2023 and 2022. Property, Plant and Equipment. Property, plant and equipment are stated at the lower of historical cost less accumulated depreciation subject to the results of impairment testing. We capitalize all construction-related direct labor and material costs, as well as indirect construction costs. Indirect construction costs include general engineering, taxes and the cost of funds used during construction. Costs, including complete asset replacements and enhancements or upgrades that increase the original efficiency, productivity or capacity of property, plant and equipment, are also capitalized. The costs of repairs, minor replacements and other projects, which do not increase the original efficiency, productivity or capacity of property, plant and equipment, are expensed as incurred. Capitalization of Interest. Interest charges from borrowings are capitalized on material projects using the weighted average cost of outstanding borrowings until the project is substantially complete and ready for its intended use. Capitalized interest is depreciated over the useful lives of the assets in the same manner as the depreciation of the underlying assets. Impairment of Long‑Lived Assets. We review long-lived assets for impairment whenever events or changes in business circumstances indicate the net book values of the assets may not be recoverable. Factors that indicate potential impairment include a significant decrease in the market value of the asset, operating or cash flow losses associated with the use of the asset, and a significant change in the asset’s physical condition or use. Impairment is indicated when the undiscounted cash flows estimated to be generated by those assets are less than the assets’ net book value. Undiscounted cash flows are based on identifiable cash flows that are largely independent of the cash flows of other assets and liabilities. If impairment occurs, a loss is recognized for the difference between the fair value and net book value. Such fair value is generally determined by discounting anticipated future net cash flows, an income valuation approach, or by a market-based valuation approach, which are Level 3 fair value measurements. No impairments of long‑lived assets were recorded during the years ended December 31, 2023, 2022 and 2021. Leases . We determine if an arrangement is a lease at inception. Operating lease right-of-use assets represent our right to use an underlying asset for the lease term and lease liabilities represent our obligation to make lease payments arising from the lease. Operating lease right-of-use assets and liabilities are recognized at commencement date based on the present value of lease payments over the lease term. As most of our leases do not provide an implicit rate, we use our incremental borrowing rate based on the information available at commencement date in determining the present value of lease payments. The operating lease right-of-use asset includes any initial direct costs and excludes lease incentives received. The lease term used in measurement of our lease obligations may include periods covered by an option to extend or terminate the lease when it is reasonably certain that we will exercise that option. Lease expense for lease payments is recognized on a straight-line basis over the lease term. The Company has elected not to recognize lease assets and lease liabilities for leases with a term of 12 months or less for all classes of underlying assets. Our lease agreements may include lease and non-lease components, which are generally accounted for separately. 76 Table of Contents Equity Investments. We account for our investment in LM4 under the equity method of accounting, as we do not control, but have a significant influence over, its operations. Difference in the basis of the investment and the underlying net asset value of the equity investee is amortized into net income over the remaining useful lives of the underlying assets. Earnings from equity investments represent our proportionate share of net income generated by the equity investee. We classify distributions received from equity method investees on the basis of the nature of the activity of the investee that generated the distribution as either a return on investment classified as cash inflows from operating activities or a return of investment classified as cash inflows from investing activities when such information is available to us. Deferred Financing Costs. We capitalize debt issuance costs and fees incurred related to the procurement of our credit facilities. We amortize such costs as additional interest expense over the life of the credit agreement using the straight-line method, which approximates the effective interest method. Unamortized deferred financing costs related to our revolving credit facility are presented in Other noncurrent assets (2023: $ 7.4 million, 2022: $ 9.5 million) and unamortized deferred financing costs and discounts related to our fixed-rate senior notes and our term loan are presented as a direct reduction to the Long-term debt (2023: $ 26.1 million, 2022: $ 32.4 million) in the accompanying consolidated balance sheets. Asset Retirement Obligations. We record legal obligations to remove and dismantle long-lived assets. We recognize a liability for the fair value of legally required asset retirement obligations associated with long-lived assets in the period in which the retirement obligations are incurred if the liability can be reasonably estimated. The associated asset retirement costs are capitalized as part of the carrying amount of the long-lived assets. Accretion expense is included in Depreciation expense in the consolidated statement of operations. At December 31, 2023, the asset retirement obligation balance included in Other noncurrent liabilities was $ 10.9 million and the current portion included in Accrued liabilities was $ 3.0 million (2022: $ 10.8 million and $ 3.0 million, respectively). Revenue Recognition—Contracts with Customers. We earn substantially all of our revenues by charging fees for gathering, compressing and processing natural gas and fractionating NGLs; gathering, terminaling, loading and transporting crude oil and NGLs, gathering and disposing produced water, and storing and terminaling propane. We do not own or take title to the volumes that we handle. Effective January 1, 2014, we entered into (i) gas gathering, (ii) crude oil gathering, (iii) gas processing and fractionation, (iv) storage services and (v) terminal and export services fee‑based commercial agreements with certain subsidiaries of Hess, and effective January 1, 2019, we entered into water gathering and disposal services fee-based agreements with a subsidiary of Hess. Our responsibilities to provide each of the above services for each year under each of the commercial agreements are considered separate, distinct performance obligations. We recognize revenues for each performance obligation under our commercial agreements over‑time as services are rendered using the output method, measured using the amount of volumes serviced during the period. The minimum volume commitments are subject to fluctuation based on nominations covering substantially all of Hess’ production and projected third-party volumes that will be purchased by Hess in the Bakken. As the minimum volume commitments are subject to fluctuation, and these commercial agreements contain fee inflation escalators and fee recalculation mechanisms, substantially all of the transaction price, as this term is defined in Accounting Standards Codification (“ASC”) Topic, ASC 606, is variable at inception of each of the commercial agreements. As the variability is resolved prior to the recognition of revenue, we do not apply a constraint to the transaction price at the inception of the commercial agreements. We elected the practical expedient to recognize revenue in the amount to which we have a right to invoice as permitted under ASC 606. Due to this election and as the transaction price allocated to our unsatisfied performance obligations is entirely variable, we have elected the exemption provided by ASC 606 from the disclosure of revenue recognizable in future periods as our unsatisfied performance obligations are fulfilled. There are no significant financing components in any of our commercial agreements. The minimum volumes that Hess provides to our assets under our commercial agreements include dedicated production covering substantially all of Hess’ existing and future owned or controlled production in the Bakken and projected third-party volumes owned or controlled by Hess through dedicated third-party contracts. If Hess delivers volumes less than the applicable minimum volume commitments under our commercial agreements during any quarter, Hess is obligated to pay us a shortfall fee equal to the volume deficiency multiplied by the related gathering, processing and/or terminaling fee, as applicable. Our responsibility to stand-ready to service a minimum volume over each quarterly commitment period represents a separate, distinct performance obligation. Currently, and for the remainder of the Initial Term of each commercial agreement as described in Note 4, volume deficiencies are measured quarterly and recognized as revenue in the same period, as any associated shortfall payments are not subject to future reduction or offset. During the Secondary Term of each commercial agreement as described in Note 4, Hess will be entitled to receive a credit, calculated in barrels or Mcf, as applicable, with respect to the amount of any shortfall fee paid by Hess, which will initially be reported in deferred revenue. Hess may apply such credit against the fees payable for any volumes delivered to us under the applicable agreement in excess of Hess’ nominated volumes up to four quarters after such credit is earned. Unused credits by Hess will be recognized as revenue when they expire after four quarters. However, Hess will not be entitled to receive any such credit with respect to crude oil terminaling services under our terminal and export services agreement or water handling services under our water gathering and disposal services agreements. In addition, we provide gathering and processing services directly to third-party customers. We recognize revenues for each performance obligation under our direct contracts with third-party customers over-time as services are rendered using the output method, measured using the amount of volumes serviced during the period . 77 Table of Contents Our revenues also include pass‑through third‑party rail transportation costs, third-party produced water trucking and disposal costs, electricity fees and certain other fees for which we recognize revenues in an amount equal to the costs. Depreciation Expense. We calculate depreciation using the straight-line method based on the estimated useful lives after considering salvage values of our assets. Depreciation lives range from 12 to 35 years . However, factors such as maintenance levels, economic conditions impacting the demand for these assets, and regulatory or environmental requirements could cause us to change our estimates, thus impacting the future calculation of depreciation. Income Taxes . Deferred income taxes are determined using the liability method and reflect temporary differences between the financial statement carrying amount and income tax basis of assets and liabilities recorded using the statutory income tax rate. Regular assessments are made of the likelihood of those deferred tax assets being realized. If it is more likely than not that some or all of the deferred tax assets will not be realized, a valuation allowance is established to reduce the deferred tax assets to the amount expected to be realized. Environmental and Legal Contingencies. We accrue and expense environmental costs on an undiscounted basis to remediate existing conditions related to past operations when the future costs are probable and reasonably estimable. In the ordinary course of business, the Company is from time to time party to various judicial and administrative proceedings. We regularly assess the need for accounting recognition or disclosure of these contingencies. In the case of a known contingency, we accrue a liability when the loss is probable and the amount is reasonably estimable. 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. Fair Value Measurements. We measure assets and liabilities requiring fair value presentation using an exit price (i.e., the price that would be received to sell an asset or paid to transfer a liability) and disclose such amounts according to the level of valuation inputs under the following hierarchy: Level 1: Quoted prices in an active market for identical assets or liabilities. Level 2: Inputs other than quoted prices that are directly or indirectly observable. Level 3: Unobservable inputs that are significant to the fair value of assets or liabilities. The classification of an asset or liability within the fair value measurement hierarchy is based on the lowest level of input significant to its fair value. There were no nonrecurring fair value measurements during the years ended December 31, 2023 and 2022. We had other short‑term financial instruments, primarily cash and cash equivalents, accounts receivable and accounts payable, for which the carrying value approximated their fair value as of December 31, 2023 and 2022. New Accounting Pronouncements In November 2023, the Financial Accounting Standards Board (“FASB”) issued Accounting Standard Update (“ASU”) 2023-07, Segment Reporting (Topic 280): Improvements to Reportable Segment Disclosures. This ASU adds required disclosures of significant expenses for each reportable segment, as well as certain other disclosures to help users of financial statements understand how the chief operating decision maker evaluates segment expenses and operating results. The ASU does not change how an entity identifies its operating segments. The ASU is effective for fiscal years beginning after December 15, 2023, and interim periods within fiscal years beginning after December 15, 2024, with early adoption permitted. We are currently assessing the impact of adopting this new ASU on our consolidated financial statements. In December 2023, the FASB issued ASU 2023-09, Income Taxes (Topic 740): Improvements to Income Tax Disclosures. This ASU requires, among other disclosures, greater disaggregation of information, the use of certain categories in the rate reconciliation, and the disaggregation of income taxes paid by jurisdiction. The ASU is effective for public business entities for fiscal years beginning after December 15, 2024, and interim periods within fiscal years beginning after December 15, 2025, with early adoption permitted. We are currently assessing the impact of adopting this new ASU on our consolidated financial statements. Note 3. Equity Transactions Equity Offering Transactions During the years ended December 31, 2023, 2022 and 2021, our Sponsors sold the following aggregate number of our Class A shares representing limited partner interests (“Class A Shares”) in underwritten public offering transactions: Public Offering Date Number of Shares Offered Overallotment Option (1) Total Number of Shares Offered Public Offering Price (2) March 15, 2021 6,000,000 900,000 6,900,000 $ 21.00 October 8, 2021 7,500,000 1,125,000 8,625,000 $ 26.00 April 4, 2022 8,900,000 1,335,000 10,235,000 $ 29.50 May 19, 2023 11,100,000 1,665,000 12,765,000 $ 27.00 August 17, 2023 (3) 10,000,000 1,500,000 11,500,000 $ 28.80 78 Table of Contents (1) Overallotment options were exercised in full on the same date as the public offering date unless stated otherwise. (2) Public offering price excluding underwriting discounts. (3) The overallotment option for this transaction was exercised in full on August 22, 2023. The Sponsors received net proceeds from the 2023 equity offering transactions of approximately $ 662.2 million in total, after deducting underwriting discounts (2022: $ 291.7 million, 2021: $ 356.5 million in total, after deducting underwriting discounts) . 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. The Class A Shares sold in the offerings were obtained by the Sponsors by exchanging to us the respective number of their Class B Units in the Partnership, together with an equal number of our Class B Shares and, a s a result, the total number of Class A and Class B Shares did not change. The Company retained control in the Partnership based on the delegation of control provisions, as described in Note 2, Summary of Significant Accounting Policies and Basis of Presentation . 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 $ 17.8 million (2022: $ 27.0 million, 2021: $ 52.4 m illion) and decreasing the carrying amount of noncontrolling interest by an equal amount to reflect the change in ownership interest. Class B Unit Repurchases For the years ended December 31, 2023, 2022 and 2021, we had the following activity related to Class B unit repurchases (aggregate purchase price in millions): Closing Date Number of Units Repurchased Aggregate Purchase Price Purchase Price Per Unit August 10, 2021 31,250,000 $ 750.0 $ 24.00 April 4, 2022 13,559,322 $ 400.0 $ 29.50 March 30, 2023 3,619,254 $ 100.0 $ 27.63 June 29, 2023 3,350,084 $ 100.0 $ 29.85 September 22, 2023 3,301,420 $ 100.0 $ 30.29 November 16, 2023 3,370,407 $ 100.0 $ 29.67 On July 27, 2021, the Company, the Partnership and our Sponsors entered into a unit repurchase agreement pursuant to which the Partnership agreed to purchase from the Sponsors 31,250,000 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. 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 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. 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. The repurchase transaction was funded using borrowings under the Partnership’s revolving credit facility, which were subsequently repaid with proceeds from an issuance by the Partnership of $ 400.0 million senior unsecured notes (see Note 7, Debt and Interest Expense ). On March 27, 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 3,619,254 Class B Units for an aggregate purchase price of approximately $ 100.0 million. The repurchase transaction was consummated on March 30, 2023. The purchase price per Class B Unit was $ 27.63 , the closing price of the Class A Shares on March 27, 2023. 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. The repurchase transaction was consummated on June 29, 2023. The purchase price per Class B Unit was $ 29.85 , the closing price of the Class A Shares on June 26, 2023. 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 Sponsors 3,301,420 Class B Units for an aggregate purchase price of approximately $ 100.0 million. The repurchase transaction was consummated on September 22, 2023. The purchase price per Class B Unit was $ 30.29 , the closing price of the Class A Shares on September 19, 2023. On November 13, 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 3,370,407 Class B Units for an aggregate purchase price of approximately $ 100.0 million. The repurchase transaction was consummated on Novemb er 16, 2023. The purchase price per Class B Unit was $ 29.67 , t he closing price of the Class A Shares on November 13, 2023. 79 Table of Contents The 2023 unit repurchase transactions were funded using borrowings under the Partnership’s existing revolving credit facility (see Note 7, 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 Class B Shares representing limited partner interests in the Company held by the Company’s general partner. 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 $ 3.3 million of costs directly attributable to the repurchase transaction (2022: $ 1.5 million, 2021: $ 2.1 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 $ 185.1 m illion (2022: $ 86.4 million, 2021: $ 89.0 million) related to the change in the temporary difference between the carrying amount and the tax basis of our investment in the Partnership. The effect of recognizing the additional deferred tax asset was included in Class A shareholders’ equity balance in the accompanying consolidated statement of changes in partners’ capital due to the transaction being characterized as a transaction among or with shareholders. See Note 8. Partners’ Capital and Distributions for the impact of the above equity transactions on the number of shares outstanding. Note 4. Related Party Transactions We are part of the consolidated operations of Hess, and substantially all of our revenues as shown on the accompanying consolidated statements of operations for the years ended December 31, 2023, 2022 and 2021 were derived from transactions with Hess and its affiliates. During the year ended December 31, 2023, we began providing our services directly to third-party customers and we plan to increase our services to third parties in the future. Hess also provides substantial operational and administrative services to us in support of our assets and operations. In addition, we had Class B unit repurchase transactions and distributions to the Sponsors, which are disclosed elsewhere in the Notes to consolidated financial statements. Commercial Agreements We have long-term fee-based commercial agreements with certain subsidiaries of Hess to provide i) gas gathering, ii) crude oil gathering, iii) gas processing and fractionation, iv) storage services, v) terminaling and export services, and (vi) water handling services. For the services performed under these commercial agreements, we receive a fee per barrel of crude oil, barrel of water, Mcf of natural gas, or Mcf equivalent of NGLs, as applicable, delivered during each month, and Hess is obligated to provide us with minimum volumes of crude oil, water, natural gas and NGLs. MVCs are equal to 80 % of Hess' nominations in each development plan that apply on a three-year rolling basis such that MVCs are set for the three years following the most recent nomination. Without our consent, the MVCs resulting from the nominated volumes for any quarter or year contained in any prior development plan cannot be reduced by any updated development plan unless dedicated production is released by us. The applicable MVCs may, however, be increased as a result of the nominations contained in any such updated development plan. If Hess fails to deliver its applicable MVCs during any quarter, then Hess will pay us a shortfall fee equal to the volume of the deficiency multiplied by the applicable fee. Except for the water services agreements and except for a certain gathering sub-system as described below, each of our commercial agreements with Hess had an initial 10 -year term effective January 1, 2014 (“Initial Term”). For this gathering sub-system, the Initial Term is 15 years effective January 1, 2014 and for the water services agreements the Initial Term is 14 years effective January 1, 2019. Each of our commercial agreements other than our storage services agreement includes an inflation escalator capped at 3 % in any calendar year and a fee recalculation mechanism that allows fees to be adjusted annually during the Initial Term for updated estimates of cumulative throughput volumes and our capital and operating expenditures in order to target a return on capital deployed over the Initial Term of the applicable commercial agreement (or, with respect to the crude oil services fee under our terminal and export services agreement, the 20 -year period commencing on the effective date of the agreement). For certain crude oil gathering, terminaling, storage, gas processing and gas gathering commercial agreements with Hess, we exercised our renewal options to extend each of these commercial agreement for one additional 10 -year term (“Secondary Term”) effective January 1, 2024 through December 31, 2033. There were no changes to any provisions of the existing commercial agreements as a result of the exercise of the renewal options. For the remaining gathering sub-system, the Secondary Term is 5 -years, and for the water services agreements the Secondary Term is 10 years, and we have the sole option to renew these remaining agreements for their Secondary Term that is exercisable at a later date. Upon the expiration of the Secondary Term, if any, the agreements will automatically renew for subsequent one-year periods unless terminated by either party no later than 180 days prior to the end of the applicable Secondary Term. Consistent with the existing terms of the commercial agreements, during the Secondary Term of each of our commercial agreements other than our storage services agreement and terminal and export services agreement (with respect to crude oil terminaling services), the fee recalculation model under each applicable agreement will be replaced by an inflation-based fee structure. The initial fee for the 80 Table of Contents first year of the Secondary Term will be determined based on the average fees paid by Hess under the applicable agreement during the last three years of the Initial Term (with such fees adjusted for inflation through the first year of the Secondary Term). For each year following the first year of the Secondary Term, the applicable fee will be adjusted annually based on the percentage change in the consumer price index, provided that we may not increase any fee by more than 3 % in any calendar year solely by reason of an increase in the consumer price index, and no fee will ever be reduced below the amount of the applicable fee payable by Hess in the prior year as a result of a decrease in the consumer price index. During the Secondary Term, MVCs will continue to be set at 80 % of Hess' nominated volumes in each development plan set three years in advance. Except for the crude oil terminaling and water handling services, Hess will be entitled to receive a credit, calculated in barrels or Mcf, as applicable, with respect to the amount of any shortfall fee paid by Hess and may apply such credit against any volumes delivered to us under the applicable agreement in excess of Hess’s nominated volumes during any of the following four quarters after such credit is earned, after which time any unused credits will expire. The shortfall amounts received under MVCs during the Secondary Term (except for the crude oil terminaling and water handling services) will be recorded as deferred revenue and recognized as revenue as the credits are utilized or expire. For the years ended December 31, 2023, 2022 and 2021, approximately 99 % , 100 % , and 100 % , respectively, 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. In 2023, we began providing our services directly to third-party customers. Together with Hess, we are pursuing strategic relationships with third-party producers and other midstream companies with operations in the Bakken in order to maximize our utilization rates. Revenues from contracts with customers, including affiliated services and third-party services, on a disaggregated basis were as follows: Year Ended December 31, 2023 2022 2021 (in millions) Affiliate services Oil and gas gathering services $ 633.8 $ 600.8 $ 540.4 Processing and storage services 496.0 470.8 435.7 Terminaling and export services 114.4 124.5 137.5 Water gathering and disposal services 93.9 77.1 90.2 Total affiliate services $ 1,338.1 $ 1,273.2 $ 1,203.8 Third-party services 8.0 - - Total revenues from contracts with customers $ 1,346.1 $ 1,273.2 $ 1,203.8 Other income 2.5 2.0 - Total revenues $ 1,348.6 $ 1,275.2 $ 1,203.8 The following table presents MVC shortfall fees earned during each period: Year Ended December 31, 2023 2022 2021 (in millions) Oil and gas gathering services $ 8.2 $ 93.0 $ 43.0 Processing and storage services ( 0.3 ) 34.9 4.4 Terminaling and export services 3.2 32.0 32.8 Water gathering disposal services - 0.4 6.8 Total $ 11.1 $ 160.3 $ 87.0 The following table presents third-party pass-through costs for which we recognize revenues in an amount equal to the costs. These third-party costs are included in Operating and maintenance expenses in the accompanying consolidated statements of operations. Year Ended December 31, 2023 2022 2021 (in millions) Electricity and other related fees $ 47.8 $ 44.8 $ 50.3 Produced water trucking and disposal costs 38.5 33.1 37.0 Rail transportation costs ( 3.4 ) 3.5 0.1 Total $ 82.9 $ 81.4 $ 87.4 Omnibus and Employee Secondment Agreements 81 Table of Contents We entered into an omnibus agreement with Hess under which we pay Hess on a monthly basis an amount equal to the total allocable costs of Hess’ employees and contractors, subcontractors or other outside personnel engaged by Hess and its subsidiaries to the extent such employees and outside personnel perform operational and administrative services for us in support of our assets, plus a specified percentage markup of such amount depending on the type of service provided, as well as an allocable share of direct costs of providing these services. We also entered into an employee secondment agreement with Hess under which certain employees of Hess are seconded to our general partner to provide services with respect to our assets and operations, including executive oversight, business and corporate development, unitholder and investor relations, communications and public relations, routine and emergency maintenance and repair services, routine operational services, routine administrative services, construction services, and such other operational, commercial and business services that are necessary to develop and execute the Company’s business strategy. On a monthly basis, we pay a secondment fee to Hess that is intended to cover and reimburse Hess for the total costs actually incurred by Hess and its affiliates in connection with employing the seconded employees to the extent such total costs are attributable to the provision of services with respect to the Company’s assets and operations. For the years ended December 31, 2023, 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. Year Ended December 31, 2023 2022 2021 (in millions) Operating and maintenance expenses $ 79.7 $ 71.2 $ 63.6 General and administrative expenses 17.5 15.9 15.4 Total $ 97.2 $ 87.1 $ 79.0 LM4 Agreements Separately from our commercial agreements with Hess, effective January 24, 2018, we entered into a gas processing agreement with LM4, a 50 / 50 joint venture with Targa, under which we deliver natural gas to LM4, and LM4 processes and redelivers certain volumes of residue gas and NGLs resulting from such processing services. The agreement has a 16 -year initial term, after which it is automatically renewed for subsequent one-year terms unless terminated by either party . Under this agreement, we pay a processing fee per Mcf of natural gas and reimburse LM4 for our proportionate share of electricity costs. These processing fees are included in Operating and maintenance expenses in the accompanying consolidated statements of operations. We are entitled to 50 % of the available processing capacity of the LM4 gas processing plant. Should Targa not use all of the remaining processing capacity at the plant on any day, such unutilized portion of the available capacity will be available for our use. Regardless of the actual portion of the plant available capacity utilized by each joint venture member during a given period, under the LM4 amended and restated limited liability company agreement, profits and losses and cash distributions of the LM4 joint venture are allocated 50 / 50 between Targa and us. LM4 was placed in service in the third quarter of 2019. For the years ended December 31, 2023, 2022 and 2021, we had the following activity related to our agreements with LM4: Year Ended December 31, 2023 2022 2021 (in millions) Processing fee incurred $ 24.0 $ 20.5 $ 27.7 Earnings from equity investments $ 7.7 $ 5.3 $ 10.6 Distributions received from equity investments $ 11.4 $ 13.0 $ 17.4 82 Table of Contents Note 5. Property, Plant and Equipment Property, plant and equipment, at cost, is as follows: Estimated useful lives December 31, 2023 December 31, 2022 (in millions, except for number of years) Gathering assets Pipelines 22 years $ 1,703.7 $ 1,591.7 Compressors, pumping stations and terminals 22 to 25 years 1,026.4 923.1 Gas plant assets Pipelines, pipes and valves 22 to 25 years 460.0 460.0 Equipment 12 to 30 years 428.2 428.2 Processing and fractionation facilities 25 years 424.7 414.4 Buildings 35 years 182.3 182.3 Logistics facilities and railcars 20 to 25 years 409.2 389.3 Storage facilities 20 to 25 years 19.9 19.7 Other 20 to 25 years 28.0 25.5 Construction-in-progress N/A 136.3 136.3 Total property, plant and equipment, at cost 4,818.7 4,570.5 Accumulated depreciation ( 1,589.5 ) ( 1,397.7 ) Property, plant and equipment, net $ 3,229.2 $ 3,172.8 Note 6. Accrued Liabilities and Other Current Liabilities Accrued liabilities are as follows: December 31, 2023 December 31, 2022 (in millions) Accrued capital expenditures $ 42.9 $ 24.1 Accrued interest 35.8 35.4 Other accruals 27.2 23.4 Total $ 105.9 $ 82.9 Other current liabilities are as follows: December 31, 2023 December 31, 2022 (in millions) Property and sales and use tax payable $ 11.5 $ 10.7 Other current liabilities 0.6 0.7 Total $ 12.1 $ 11.4 Note 7. Debt and Interest Expense Total long-term debt is as follows: December 31, 2023 December 31, 2022 (in millions) Fixed-rate senior notes: 5.625 % due 2026 $ 800.0 $ 800.0 5.125 % due 2028 550.0 550.0 4.250 % due 2030 750.0 750.0 5.500 % due 2030 400.0 400.0 Total fixed-rate senior notes 2,500.0 2,500.0 Term Loan A facility 397.5 400.0 Revolving credit facility 340.0 18.0 Total Borrowings 3,237.5 2,918.0 Unamortized deferred financing costs and discounts ( 26.1 ) ( 32.4 ) Total debt 3,211.4 2,885.6 Less: current maturities of long-term debt 12.5 2.5 Total long-term debt $ 3,198.9 $ 2,883.1 83 Table of Contents As of December 31, 2023, the maturity profile of total debt, excluding deferred financing costs and discounts, is as follows: (in millions) Total 2024 2025 2026 2027 2028 2029 and thereafter Fixed-rate senior notes $ 2,500.0 $ - $ - $ 800.0 $ - $ 550.0 $ 1,150.0 Term Loan facility 397.5 12.5 22.5 32.5 330.0 - - Revolving credit facility 340.0 - - - 340.0 - - Total debt (excluding interest) $ 3,237.5 $ 12.5 $ 22.5 $ 832.5 $ 670.0 $ 550.0 $ 1,150.0 Fixed‑Rate Senior Notes In April 2022, the Partnership issued $ 400.0 million aggregate principal amount of 5.500 % fixed-rate senior unsecured notes due 2030 to qualified institutional investors. 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 2022 repurchase transaction (see Note 3, Equity Transactions ). In August 2021, the Partnership issued $ 750.0 million aggregate principal amount of 4.250 % fixed‑rate senior unsecured notes due 2030 to qualified institutional investors. Interest is payable semi‑annually on February 15 and August 15 . The Partnership used the proceeds to fund the 2021 repurchase transaction (see Note 3 , Equity Transactions ). In December 2019, the Partnership issued $ 550.0 million aggregate principal amount of 5.125 % fixed‑rate senior unsecured notes due 2028 to qualified institutional investors. Interest is payable semi‑annually on June 15 and December 15. The Partnership used the net proceeds to finance the acquisition of HIP, including to repay borrowings under HIP’s credit facilities, and pay related fees and expenses. In December 2019, in connection with the Restructuring, the Partnership, assumed $ 800.0 million aggregate principal amount of 5.625 % outstanding fixed-rate senior notes of HIP in a par-for-par exchange for newly issued 5.625 % senior unsecured notes due 2026 of the Partnership. Interest is payable semi‑annually on February 15 and August 15. At December 31, 2023 and 2022, the Partnership’s fixed-rate senior unsecured notes had a weighted average interest rate of 5.1 % . The notes described above are guaranteed by certain subsidiaries of the Partnership. Each of the indentures for the senior notes described above contains customary covenants that restrict our ability and the ability of our restricted subsidiaries to (i) declare or pay any dividend or make any other restricted payments; (ii) transfer or sell assets or subsidiary stock; (iii) incur additional debt; 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 December 31, 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 indentures, 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. Credit Facilities In July 2022, the Partnership amended and restated its existing credit agreement for its senior secured credit facilities (the “Credit Facilities”) consisting of a $ 1.0 billion 5 -year revolving credit facility and a fully drawn $ 400.0 million 5 ‑year Term Loan A facility. 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 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 December 31, 2023, borrowings of $ 340.0 million were drawn and outstanding under the Partnership’s revolving credit facility, and borrowings of $ 397.5 million, excluding deferred issuance costs, were drawn and outstanding under the Partnership’s Term Loan A facility. 84 Table of Contents The Credit Facilities can be used for borrowings and letters of credit for general corporate purposes. The Credit Facilities are guaranteed by each direct and indirect wholly owned material domestic subsidiary of the Partnership, and are secured by first priority perfected liens on substantially all of the assets of the Partnership and its direct and indirect wholly owned material domestic subsidiaries, including equity interests directly owned by such entities, subject to certain customary exclusions. 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 December 31, 2023, the Partnership was in compliance with these financial covenants. Fair Value Measurement At December 31, 2023, our total debt had a carrying value of $ 3,211.4 million and had a fair value of approximately $ 3,143.3 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 December 31, 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. Interest Paid The total amount of interest paid on all fixed-rate senior notes and credit facilities, including facility fees, during the years ended December 31, 2023, 2022 and 2021 was $ 170.6 million, $ 136.8 million and $ 84.5 million, respectively. Note 8. Partners’ Capital and Distributions Shares Outstanding As of December 31, 2023, our Sponsors and their affiliates, including our general partner, collectively held 898,000 Class A Shares (economic and voting) and 157,941,441 Class B Shares (non-economic, voting only) representing limited partner interests in the Company, and 157,941,441 Cl ass B Units of the Partnership representing limited partner interests in the Partnership. Class B Units of 85 Table of Contents the Partnership together with the equal number of Class B Shares of the Company are convertible to Class A Shares of the Company on a one -for-one basis. The changes in the number of shares of the Company outstanding from December 31, 2020 through December 31, 2023 are as follows: Class A Shares Public Sponsors Total Class A Shares Class B Shares Sponsors Total Class A and Class B Shares Balance, December 31, 2020 17,130,308 898,000 18,028,308 266,416,928 284,445,236 Equity-based compensation 118,760 - 118,760 - 118,760 Equity offering transaction - March 2021 6,900,000 - 6,900,000 ( 6,900,000 ) - Equity offering transaction - October 2021 8,625,000 - 8,625,000 ( 8,625,000 ) - Repurchase Transaction - - - ( 31,250,000 ) ( 31,250,000 ) Balance, December 31, 2021 32,774,068 898,000 33,672,068 219,641,928 253,313,996 Equity-based compensation 95,778 - 95,778 - 95,778 Equity offering transaction - April 2022 10,235,000 - 10,235,000 ( 10,235,000 ) - Repurchase Transaction - - - ( 13,559,322 ) ( 13,559,322 ) Balance, December 31, 2022 43,104,846 898,000 44,002,846 195,847,606 239,850,452 Equity-based compensation 99,801 - 99,801 - 99,801 Repurchase Transaction - March 2023 - - - ( 3,619,254 ) ( 3,619,254 ) Equity offering transaction - May 2023 12,765,000 - 12,765,000 ( 12,765,000 ) - Repurchase Transaction - June 2023 - - - ( 3,350,084 ) ( 3,350,084 ) Equity offering transaction - August 2023 11,500,000 - 11,500,000 ( 11,500,000 ) - Repurchase Transaction - September 2023 - - - ( 3,301,420 ) ( 3,301,420 ) Repurchase Transaction - November 2023 - - - ( 3,370,407 ) ( 3,370,407 ) Balance, December 31, 2023 67,469,647 898,000 68,367,647 157,941,441 226,309,088 Distributions Our partnership agreement requires that, within 45 days after the end of each quarter, we distribute all of our available cash to shareholders of record on the applicable record date. The following table details the distributions declared and/or paid for the periods presented: Period Record Date Distribution Date Distribution per Class A Share First Quarter 2021 May 3, 2021 May 13, 2021 $ 0.4526 Second Quarter 2021 August 9, 2021 August 13, 2021 $ 0.5042 Third Quarter 2021 November 4, 2021 November 12, 2021 $ 0.5104 Fourth Quarter 2021 February 3, 2022 February 14, 2022 $ 0.5167 First Quarter 2022 May 5, 2022 May 13, 2022 $ 0.5492 Second Quarter 2022 August 4, 2022 August 12, 2022 $ 0.5559 Third Quarter 2022 November 3, 2022 November 14, 2022 $ 0.5627 Fourth Quarter 2022 February 2, 2023 February 13, 2023 $ 0.5696 First Quarter 2023 May 4, 2023 May 12, 2023 $ 0.5851 Second Quarter 2023 August 3, 2023 August 14, 2023 $ 0.6011 Third Quarter 2023 November 2, 2023 November 14, 2023 $ 0.6175 Fourth Quarter 2023 (1) February 8, 2024 February 14, 2024 $ 0.6343 (1) For more information, see Note 14 , Subsequent Events . 86 Table of Contents Note 9. Earnings per Share We calculate earnin gs per Class A Share as we do not have any other participating securities. Substantially all of income tax expense is attributed to earnings of Class A Shares reflective of our organizational structure. Class B Units of the Partnership together with the equal number of Class B Shares of the Company are convertible to Class A Shares of the Company on a one -for-one basis. In addition, our restricted equity-based awards may have a dilutive effect on our earnings per share. Diluted earnings per Class A Share are calculated using the “treasury stock method” or “if-converted method”, whichever is more dilutive. Year Ended December 31, (in millions, except per share amounts) 2023 2022 2021 Net income 607.7 620.6 617.8 Less: Net income attributable to noncontrolling interest 489.1 536.7 571.4 Net income attributable to Hess Midstream LP 118.6 83.9 46.4 Net income attributable to Hess Midstream LP per Class A share: Basic: $ 2.11 $ 2.03 $ 1.81 Diluted: $ 2.08 $ 2.01 $ 1.76 Weighted average Class A shares outstanding: Basic: 56.2 41.3 25.6 Diluted: 56.3 41.4 25.7 For the year ended December 31, 2023, the weighted average number of Class A Shares outstanding included 40,210 dilutive restricted shares (2022: 70,795 shares; 2021: 103,672 shares). In computing the dilutive effect, if any, of an exchange of Class B Units of the Partnership together with the equal number of Class B Shares of the Company to Class A Shares of the Company, net income attributable to Class A shareholders is adjusted, including for additional income tax expense, due to elimination of the noncontrolling interest associated with Class B Units of the Partnership. For the years ended December 31, 2023 and 2021, the “if-converted” method was more dilutive. A reconciliation of the numerator and the denominator of the diluted earnings per Class A Share calculation under the “if-converted” method, is presented below: Year Ended December 31, 2023 2022 2021 (in millions, except per share data) Diluted net income per share Numerator: Net income attributable to Hess Midstream LP $ 118.6 $ 83.9 $ 46.4 Effect of exchange of Class B Units of the Partnership and the equal number of Class B Shares of the Company to Class A Shares of the Company 489.1 536.7 571.4 Effect of income tax expense on additional income attributable to Hess Midstream LP (1) ( 119.3 ) ( 130.9 ) ( 139.4 ) Diluted net income attributable to Hess Midstream LP $ 488.4 $ 489.7 $ 478.4 Denominator: Basic weighted average Class A Shares outstanding 56.2 41.3 25.6 Effect of dilutive securities: Weighted average Class B Units/Shares 177.9 202.0 246.7 Restricted equity-based awards 0.1 0.1 0.1 Diluted weighted average shares outstanding 234.2 243.4 272.4 Diluted net income attributable to Hess Midstream LP per Class A Share $ 2.08 $ 2.01 $ 1.76 (1) Income tax effect is calculated assuming 24.39 % blended U.S. federal and state income tax rate. Note 10. Concen tration of Credit Risk As of December 31, 2023 and 2022, Hess and its affiliates represented approximately 98 % and 100 % , respectively, of accounts receivable from contracts with customers. Total revenues attributable to Hess for the years ended December 31, 2023, 2022 and 2021 were approximately 99 % , 100 % , and 100 % , respectively. Note 11. Commitments and Contingencies Environmental Contingencies 87 Table of Contents The Company is subject to federal, state and local laws and regulations relating to the environment. 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. It is estimated that approximately 34,000 barrels of produced water were released, causing impacts to soils, crops, and groundwater. Remediation infrastructure was put in place and remediation and monitoring is ongoing. As of December 31, 2023, our reserves for all estimated remediation liabilities, inclusive of the produced water release discussed above, in Accrued liabilities and Other noncurrent liabilities were $ 1.7 million and $ 5.3 million, respectively, compared with $ 1.4 million and $ 4.3 million, respectively, as of December 31, 2022. Legal Proceedings In the ordinary course of business, the Company is from time to time party to various judicial and administrative proceedings. We regularly assess the need for accounting recognition or disclosure of these contingencies. In the case of a known contingency, we accrue a liability when the loss is probable and the amount is reasonably estimable. 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. On or about March 14, 2023, the Company received a Notice of Violation (the “Notice”) from the North Dakota Department of Environmental Quality (“DEQ”) in connection with the produced water release described under Environmental Contingencies above. The Notice alerted the Company that it may have violated the State’s water pollution control laws, but neither imposed nor waived any enforcement action. On January 11, 2024, the DEQ proposed an Administrative Consent Agreement (“ACA”) that included an administrative penalty of $ 0.4 million and further line monitoring practices with respect to certain water gathering pipelines. The Company is evaluating the proposed ACA and is engaging in further discussions with DEQ. 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 December 31, 2023 and December 31, 2022, we did no t have material accrued liabilities for legal contingencies. Lease and Purchase Obligations As of December 31, 2023 and 2022, we did no t have material lease obligations. As of December 31 2023, we had unconditional purchase commitments of $ 15.8 million for the year ending December 31, 2024, and none for the years thereafter. Note 12. Segm ents Our operations are located in the United States and are organized into three reportable segments: (i) gathering, (ii) processing and storage and (iii) terminaling and export. Our reportable segments comprise the structure used by our Chief Operating Decision Maker (“CODM”) to make key operating decisions and assess performance. These segments are strategic business units with differing products and services. The accounting policies of the segments are identical to those described in Note 2 , Summary of Significant Accounting Policies and Basis of Presentation . Our CODM evaluates the segments’ operating performance based on multiple measures including Adjusted EBITDA, defined as net income (loss) before interest expense, income tax (benefit), depreciation and amortization, and our proportional share of depreciation of our equity affiliates as further adjusted for other non‑cash, non‑recurring items, if applicable. Gathering . Our gathering segment consists of the following assets: • Natural Gas Gathering and Compression . A natural gas gathering and compression system located primarily in McKenzie, Williams and Mountrail Counties, North Dakota connecting Hess and third‑party owned or operated wells to the Tioga Gas Plant, LM4 gas processing plant, and third‑party pipeline facilities. The system also includes the Hawkeye Gas Facility. • Crude Oil Gathering : A crude oil gathering system located primarily in McKenzie, Williams, and Mountrail Counties, North Dakota, connecting Hess and third‑party owned or operated wells to the Ramberg Terminal Facility and the Johnson’s Corner Header System. The system also includes the Hawkeye Oil Facility. • Produced Water Gathering and Disposal. A produced water gathering system and disposal facilities located primarily in Williams and Mountrail Counties, North Dakota. Processing and Storage . Our processing and storage segment consists of the following assets: • Tioga Gas Plant (TGP) . A natural gas processing and fractionation plant located in Tioga, North Dakota. • Mentor Storage Terminal . A propane storage cavern and rail and truck loading and unloading facility located in Mentor, Minnesota. • Equity Investment in LM4 Joint Venture. The Partnership’s 50 % equity method investment in LM4 joint venture that owns a natural gas processing plant located in McKenzie County, North Dakota. 88 Table of Contents Terminaling and Export . Our terminaling and export segment consists of the following assets: • Ramberg Terminal Facility . A crude oil pipeline and truck receipt terminal located in Williams County, North Dakota that is capable of delivering crude oil into an interconnecting pipeline for transportation to the Tioga Rail Terminal, Dakota Access Pipeline (“DAPL”) and other third‑party pipelines and storage facilities. • Tioga Rail Terminal. A crude oil and NGL rail loading terminal in Tioga, North Dakota that is connected to the Tioga Gas Plant, the Ramberg Terminal Facility and our crude oil gathering system. • Crude Oil Rail Cars. A total of 550 crude oil rail cars, constructed to the DOT‑117 safety standards, which we operate as unit trains consisting of approximately 100 to 110 crude oil rail cars. • Johnson’s Corner Header System. An approximately six ‑mile crude oil pipeline header system located in McKenzie County, North Dakota that receives crude oil by pipeline from Hess and third parties and delivers crude oil to DAPL and other third‑party interstate pipeline systems. • Other DAPL Connections . Various connections into DAPL that receive crude oil by pipeline from the crude oil gathering system for delivery into DAPL. 89 Table of Contents The following tables reflect certain financial data for each reportable segment: Gathering Processing and Storage Terminaling and Export Interest and Other Consolidated (in millions) For the Year Ended December 31, 2023 Revenues and other income $ 730.0 $ 501.7 $ 116.9 $ - $ 1,348.6 Net income (loss) 418.2 345.2 69.9 ( 225.6 ) 607.7 Net income (loss) attributable to Hess Midstream LP 101.6 83.5 16.8 ( 83.3 ) 118.6 Depreciation expense 115.6 59.9 17.0 - 192.5 Proportional share of equity affiliates' depreciation - 5.1 - - 5.1 Income from equity investments - 7.7 - - 7.7 Interest expense, net - - - 179.0 179.0 Income tax expense - - - 37.9 37.9 Adjusted EBITDA 533.8 410.2 86.9 ( 8.7 ) 1,022.2 Capital expenditures 224.5 11.2 10.0 - 245.7 Gathering Processing and Storage Terminaling and Export Interest and Other Consolidated (in millions) For the Year Ended December 31, 2022 Revenues and other income $ 677.9 $ 470.8 $ 126.5 $ - $ 1,275.2 Net income (loss) 389.6 329.1 85.0 ( 183.1 ) 620.6 Net income (loss) attributable to Hess Midstream LP 66.4 56.6 14.4 ( 53.5 ) 83.9 Depreciation expense 107.4 57.7 16.2 - 181.3 Proportional share of equity affiliates' depreciation - 5.1 - - 5.1 Income from equity investments - 5.3 - - 5.3 Interest expense, net - - - 149.3 149.3 Income tax expense - - - 26.6 26.6 Adjusted EBITDA 497.0 391.9 101.2 ( 7.2 ) 982.9 Capital expenditures 210.2 8.8 12.8 - 231.8 Gathering Processing and Storage Terminaling and Export Interest and Other Consolidated (in millions) For the Year Ended December 31, 2021 Revenues and other income $ 630.6 $ 435.7 $ 137.5 $ - $ 1,203.8 Net income (loss) 377.6 263.8 103.7 ( 127.3 ) 617.8 Net income (loss) attributable to Hess Midstream LP 36.3 25.5 10.1 ( 25.5 ) 46.4 Depreciation expense 101.0 48.4 16.2 - 165.6 Proportional share of equity affiliates' depreciation - 5.1 - - 5.1 Income from equity investments - 10.6 - - 10.6 Interest expense, net - - - 105.4 105.4 Income tax expense - - - 14.6 14.6 Adjusted EBITDA 478.6 317.3 119.9 ( 7.3 ) 908.5 Capital expenditures 154.0 28.8 0.2 - 183.0 90 Table of Contents Total assets for reportable segments are as follows: December 31, 2023 December 31, 2022 (in millions) Gathering $ 2,138.6 $ 2,022.0 Processing and Storage (1) 1,048.4 1,099.2 Terminaling and Export 264.4 275.8 Interest and Other 338.1 191.2 Total assets $ 3,789.5 $ 3,588.2 (1) Includes investment in equity investees of $ 90.2 million as of December 31, 2023 and $ 93.9 million as of December 31, 2022. Note 13. Inc ome Taxes Although the Company is a Delaware limited partnership, we are subject to corporate income tax on our share of the Partnership’s earnings because of our election to be treated as a corporation for U.S. federal and state income tax purposes. The provision (benefit) for income taxes consisted of: Year Ended December 31, (in millions) 2023 2022 2021 Federal Current $ 0.1 $ 0.1 $ 0.1 Deferred taxes and other accruals 31.2 22.8 12.5 State 6.6 3.7 2.0 Total provision (benefit) for income taxes $ 37.9 $ 26.6 $ 14.6 The difference between the effective income tax rate and the U.S. statutory rate is reconciled below: Year Ended December 31, 2023 2022 2021 U.S. statutory rate 21.0 % 21.0 % 21.0 % Noncontrolling interest in partnership ( 15.9 ) ( 17.4 ) ( 19.0 ) State income taxes, net of federal income tax 0.8 0.5 0.3 Effective rate 5.9 % 4.1 % 2.3 % A s a result of the equity offering and unit repurchase transactions (see Note 3, Equity Transactions ), we recognized an additional deferred tax asset in the total amount of $ 185.1 million (2022: $ 86.4 million) related to the change in the temporary difference between carrying amount and tax basis of our investment in the Partnership. The effect of recognizing the additional deferred tax asset was included in Class A shareholders’ equity balance in the accompanying consolidated statement of changes in partners’ capital due to the transactions being characterized as transactions among or with shareholders. The components of deferred tax assets and liabilities are as follows: December 31, 2023 2022 (in millions) Deferred tax liabilities Investments $ ( 0.5 ) $ ( 0.5 ) Total deferred tax liabilities ( 0.5 ) ( 0.5 ) Deferred tax assets Investments 278.2 148.9 Net operating loss carryforwards 46.2 28.3 Total deferred tax assets 324.4 177.2 Net deferred tax assets (liabilities) $ 323.9 $ 176.7 At December 31, 2023, we have recognized a deferred tax asset of $ 38.3 million related to U.S. federal net operating loss carryforwards which do not expire and $ 7.9 million related to U.S. state net operating loss carryforwards which begin to expire in 2029 . We have no unrecognized tax benefits or interest and penalties related to tax liabilities recorded in the financial statements. For the years presented, we earned all net income before taxes in the United States. We file income tax returns in the U.S. and various states. We are not subject to corporate income tax examination for years prior to 2020. 91 Table of Contents N ote 14. Sub sequent Events On January 29, 2024 , the board of directors of our general partner declared a quarterly cash distribution of $ 0.6343 per Class A Share for the quarter ended December 31, 2023, an increase of approximately 11.4 % compared with the quarter ended December 31, 2022. The distribution was paid on February 14, 2024 to shareholders of record as of the close of business on February 8, 2024 . On February 14, 2024 , the Partnership also made a distribution of $ 0.6343 per Class B Unit of the Partnership to the Sponsors. On February 8, 2024, GIP sold an aggregate of 11,500,000 of our Class A shares, inclusive of the underwriters’ option to purchase up to 1,500,000 of additional shares, which was fully exercised, in an underwritten public offering at a price of $ 33.10 per Class A share, less underwriting discounts. GIP received net proceeds from the offering of approximately $ 377.5 million, after deducting underwriting discounts. The Company did not receive any proceeds in the offering. The offering was conducted pursuant to a registration rights agreement among us and the Sponsors. As a result of this public equity offering transaction, the Company’s consolidated ownership in the Partnership increased to approximately 35.3 % at February 8, 2024 from approximately 30.2 % at December 31, 2023, and the noncontrolling interest decreased to 64.7 % from 69.8 %, respectively. 92 Table of Contents ITEM 9. CHANGES IN AND DISAGREEMENTS WITH ACCO UNTANTS ON ACCOUNTING AND FINANCIAL DISCLOSURE None.