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Item 7. Management’s Discussion and Analysis

2025-02-27 compared with 2024-02-29 · 282 added, 219 removed, 1179 unchanged (30% of the section changed)

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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.

Unless otherwise stated or the context otherwise indicates, references in this report to “Hess Midstream LP,” “the Company,” “us,” “our,” “we” or similar terms refer to Hess Midstream LP, including its consolidated subsidiaries.

References to “Partnership” refer to Hess Midstream Operations LP.

This discussion contains forward-looking statements that involve risks and uncertainties.

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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.

On May 28, 2024, holders of a majority of Hess’ outstanding common stock voted to approve the Chevron Merger.

Hess Guyana Exploration Limited (“HGEL”), a wholly-owned subsidiary of Hess, is currently in arbitration relating to the applicability of a right of first refusal (the “Stabroek ROFR”) contained in the operating agreement among HGEL and affiliates of Exxon Mobil Corporation and China National Offshore Oil Corporation.

The arbitration merits hearing about the applicability of the Stabroek ROFR to the Chevron Merger has been scheduled for May 2025, with a decision expected in the third quarter.

Hess cannot predict the date on which the Chevron Merger will be completed because it is subject to conditions beyond Hess’ control, including the outcome of the arbitration.

If the Chevron Merger is completed, 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.

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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.

We continue execution of our multi-year projects to build new compressor stations and associated pipeline infrastructure or expand existing compressor stations in support of Hess’ and third parties’ expected production growth.

In 2024, we added approximately 50 MMcf/d of net compression capacity.

Construction activities continued on two more greenfield compressor stations, which are expected to initially provide, in aggregate, an additional 85 MMcf/d of gas compression capacity when brought online in 2025, and are expandable to 140 MMcf/d, further enhancing gas capture capability and supporting increasing gas volumes.

Equity Transactions

During 2024, 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.

• On February 8, 2024, GIP sold an aggregate of 11,500,000 of our Class A Shares representing limited partner interests in the Company (“Class A Shares”), inclusive of the underwriter’s option to purchase up to 1,500,000 of additional shares, which was fully exercised, in an underwritten public offering at a price to the underwriter of $32.83 per Class A Share.

• On May 31, 2024, GIP sold an aggregate of 10,000,000 of our Class A shares in an underwritten public offering at a price to the underwriter of $34.025 per Class A Share.

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, which was exercised in full on June 3, 2024.

• On September 20, 2024, GIP sold an aggregate of 12,650,000 of our Class A shares, inclusive of the underwriter’s option to purchase up to 1,650,000 of additional shares, which was fully exercised, in an underwritten public offering at a price to the underwriter of $35.12 per Class A Share.

In 2024, GIP received net proceeds from the offerings of approximately $1.2 billion 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.

• 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.

• On March 14, 2024, the Partnership repurchased an aggregate 2,816,901 Class B Units representing limited partner interests in the Partnership (“Class B Units”) from the Sponsors at a purchase price of $35.50 per Class B Unit, for total consideration of approximately $100.0 million.

• On June 26, 2024, the Partnership repurchased an aggregate 2,724,052 Class B Units from the Sponsors at a purchase price of $36.71 per Class B Unit, for total consideration of approximately $100.0 million.

• On September 11, 2024, the Partnership repurchased an aggregate 2,823,262 Class B Units from the Sponsors at a purchase price of $35.42 per Class B Unit, for total consideration of approximately $100.0 million.

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

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.

Note 3, Equity Transactions, Note 7, Debt and Interest Expense and Note 8, Partners’ Capital and Distributions.

In addition, on January 15, 2025, the Partnership repurchased an aggregate 2,572,677 Class B Units from the Sponsors at a purchase price of $38.87 per Class B Unit, for total consideration of approximately $100.0 million.

On February 12, 2025, GIP sold an aggregate of 11,000,000 of our Class A Shares in an underwritten public offering at a public offering price of $39.45 per Class A Share.

GIP also granted the underwriter an option to purchase up to an additional 1,650,000 Class A Shares at the same price per Class A Share, which was exercised in full on February 19, 2025.

Financial Statements and Supplementary Data.

Note 14, Subsequent Events for additional details.

At December 31, 2024:

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• 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.

We currently handle volumes from third‑party producers and midstream companies contracted directly with us and contracted with Hess and delivered to us under our commercial agreements with Hess.

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.

• Grow Through Accretive Acquisitions from Our Sponsors and Third Parties.

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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.

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 of our stakeholders – our shareholders, our business partners, and the local communities and economies where we operate – which in turn benefits society at large.

We are aligned with Hess’ environment, health, safety and social responsibility strategy.

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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.

Hess and Hess Midstream LP’s executives provide oversight for Hess’ climate change strategy implementation and work to identify and recommend GHG reduction opportunities, evaluating and implementing technologies, as appropriate, and evaluating future capital and infrastructure requirements.

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

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Significant financial and operating results for the year ended December 31, 2024 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.

• Throughput volumes increased 14% for gas processing, 7% for terminaling and 32% for water gathering in 2024 compared with 2023, primarily due to increased Hess drilling activity and higher gas capture.

• Consolidated net income of $659.0 million.

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Revenues and other income in 2024 were $1,495.5 million compared with $1,348.6 million in 2023.

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.

Current year revenues and other income were up $146.9 million compared with the prior year, of which $143.3 million was attributable to higher physical volumes that were above prior-year MVC levels, $17.2 million was attributable to higher third-party revenues and other income and $14.9 million was attributable to higher affiliate pass-through revenues, partially offset by $28.5 million attributable to lower tariff rates.

Total operating costs and expenses in 2024 were $576.5 million, up from $531.7 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.

The increase was attributable to higher operating and maintenance expenses of $34.3 million, including higher pass-through costs, higher costs charged to us under our omnibus and employee secondment agreements and higher third-party processing and offload fees.

Additionally, part of the increase was attributable to higher depreciation of $10.6 million.

Interest expense, net of interest income, increased $23.2 million, primarily attributable to the new $600.0 million 6.500% fixed-rate senior unsecured notes issued in May 2024.

Income tax expense in 2024 was $71.8 million, up from $37.9 million in 2023, which was primarily driven by increased ownership of the Partnership by Hess Midstream LP following the equity offering and unit repurchase transactions in 2023 and 2024.

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.

As a result, consolidated net income increased $51.3 million and Adjusted EBITDA increased $119.0 million during the year ended December 31, 2024, compared with the year ended December 31, 2023.

Throughput volumes increased 15% for gas gathering and 14% for gas processing in 2024 compared with 2023 primarily due to increased Hess drilling activity and higher gas capture.

Throughput volumes increased 14% for crude oil gathering and 7% for crude oil terminaling in 2024 compared with 2023 primarily due to increased Hess drilling activity.

Water gathering volumes increased 32%, reflecting higher crude oil production and increased utilization of our water gathering infrastructure.

For additional discussion of the results of operations at the segment level, see “ Results of Operations ” below.

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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.

Year 2023 was the final year of the annual rate redetermination process for the majority of our systems.

During the Secondary Term of the agreements, the fee recalculation model is replaced by an inflation-based fee structure.

Financial Statements and Supplementary Data.

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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.

For the year ended December 31, 2024, our gas gathering and gas processing revenues comprised 77% of total affiliate revenues, excluding affiliate pass-through 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.

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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 previously reported the non-GAAP measure of “Adjusted EBITDA,” which we defined as reported 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.

As this definition varied from other definitions of Adjusted EBITDA, we determined it was appropriate to discontinue reporting Adjusted EBITDA as previously defined.

Beginning with the second quarter of 2024, and as presented in this report, “Adjusted EBITDA” is defined as reported net income (loss) before net interest expense, income tax expense (benefit), and depreciation and amortization, 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.

Prior period calculations of Adjusted EBITDA have been recast to conform to the new presentation, as applicable.

We use Adjusted EBITDA to analyze our performance and liquidity.

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Affiliate services

Third-party services

Total revenues

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Year ended December 31, 2024 Compared to Year Ended December 31, 2023

Revenues and other income increased $69.1 million in 2024 compared to 2023, of which $56.5 million is attributable to higher gas gathering volumes that were above MVCs in 2024 and 2023, $20.1 million is attributable to higher water gathering and disposal revenues, $13.4 million is attributable to higher pass-through revenues included in affiliate services, $8.8 million is attributable to higher crude oil gathering volumes that were above MVCs in 2024 and above the 2023 MVC levels, and $4.9 million is attributable to services provided directly to third parties.

These revenue increases were partially offset by $34.6 million primarily attributable to lower crude oil tariff rates due to setting the initial rate for the first year of the Secondary Term for certain subsystems.

Operating and maintenance expenses increased $18.2 million, of which $13.4 million is attributable to higher pass-through costs, including produced water trucking and disposal and electricity fees, $7.4 million is attributable to higher employee costs allocated to us under our omnibus and employee secondment agreements and $3.0 million is attributable to other costs.

These increases were partially offset by lower general maintenance of $5.6 million.

Depreciation expense increased $11.1 million, primarily due to new compressor stations and other new gathering assets placed in service.

Processing and Storage

Revenues and other income increased $76.0 million in 2024 compared to 2023, of which $53.9 million is attributable to higher gas processing physical volumes that were above the 2024 and 2023 MVC levels, $13.1 million is attributable to higher tariff rates and $10.9 million is attributable to services provided directly to third parties.

These revenue increases were partially offset by $1.9 million attributable to lower pass-through revenues included in affiliate services .

Operating and maintenance expenses increased $13.9 million, of which $10.3 million is attributable to higher third-party processing and offload fees primarily due to higher volumes processed at the LM4 plant, $4.3 million is attributable to higher maintenance activity and other costs and $1.2 million is attributable to higher employee costs allocated to us under our omnibus and employee secondment agreements.

These increases were partially offset by $1.9 million attributable to pass-through costs.

Income from equity investments increased $6.3 million in 2024 compared to 2023, primarily due to higher volumes processed at the LM4 plant.

Terminaling and Export

Revenues and other income increased $1.8 million in 2024 compared to 2023, of which $4.0 million is attributable to higher volumes that were above MVCs in 2024 and above the 2023 MVC levels, $3.4 million is attributable to pass-through revenues and $1.4 million is attributable to other income and services provided directly to third parties.

These revenue increases were partially offset by $7.0 million attributable to lower tariff rates.

Operating and maintenance expenses increased $2.2 million, of which $3.4 million is attributable to rail transportation pass‑through costs, partially offset by $1.2 million attributable to lower rail car inspection and recertification costs.

Interest and Other

Interest expense, net of interest income, increased $23.2 million, of which $25.6 million is attributable to the $600.0 million 6.500% fixed-rate senior unsecured notes issued in May 2024.

This increase was partially offset by $1.4 million higher interest income and $1.0 million lower interest expense on lower borrowings under our revolving credit facility.

Income tax expense increased $33.9 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 2023 and 2024.

Year ended December 31, 2023 Compared to Year Ended December 31, 2022

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.

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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.

Deprec iation expense increased $8.2 million due to new compressors and other new gathering assets placed in service.

Processing and Storage

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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.

Inter est 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.

Year ended December 31, 2022 Compared to Year Ended December 31, 2021

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.

Other Factors Expected to Significantly Affect Our Future Results

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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.

The majority of our systems entered 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 compared with the fee structure we had during the initial term of the commercial agreements.

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.

Generally, all of our volumes are expected to be above currently established MVC levels in 2025, 2026 and 2027.

Reconciliation of Non‑GAAP Financial Measure

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(in millions)

Reconciliation of Adjusted EBITDA and to net income:

Reconciliation of Adjusted EBITDA to net income:

Depreciation expense

Proportional share of equity affiliates' depreciation

Interest expense, net

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Amortization of deferred financing costs

Proportional share of equity affiliates' depreciation

Interest expense, net

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Fixed‑Rate Senior Notes

In May 2024 the Partnership issued $600.0 million aggregate principal amount of 6.500% fixed‑rate senior unsecured notes due 2029 to qualified institutional investors.

Interest is payable semi‑annually on June 1 and December 1, commencing December 1, 2024.

The Partnership used the proceeds to reduce indebtedness outstanding under the Partnership’s revolving credit facility, with the remaining net proceeds for general corporate purposes.

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.

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

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

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

The Partnership used the proceeds to fund the August 10, 2021 repurchase transaction.

The Partnership used the proceeds to fund a 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.

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(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, 2024, we were in compliance with all debt covenants under the indentures.

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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.

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 Credit Facilities mature in July 2027.

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Year Ended December 31,

Cash flows from operating activities

Cash flows used in investing activities

Cash flows used in financing activities

Net cash provided by operating activities

Net cash used in investing activities

Net cash used in financing activities

Net increase (decrease) in cash and cash equivalents

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.

Net cash provided by operating activities increased $73.9 million in 2024 compared to 2023.

The change in net cash provided by operating activities resulted from an increase in revenues and other income of $146.9 million, an increase in distributions received from equity investments of $5.8 million, partially offset by an increase in expenses, other than depreciation, equity-based compensation and other non-cash gains and losses of $56.3 million and an increase in cash used by changes in working capital of $22.5 million.

Net cash provided by operating activities increased $5.3 million in 2023 compared to 2022.

The change in net cash provided by 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.

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.

Net cash used in investing activities increased $82.6 million in 2024 compared to 2023, driven by the timing of payments for additions to property, plant, and equipment primarily related to our compression capacity and related pipeline infrastructure expansion program.

Net cash used in investing activities decreased $14.7 million in 2023 compared to 2022, driven by the timing of payments for additions to property, plant, and equipment primarily related to our compression capacity and related pipeline infrastructure expansion program.

Financing Activities.

Cash flows used in financing activities increased $18.6 million in 2023 compared to 2022.

Net cash used in financing activities decreased $5.3 million in 2024 compared to 2023.

In 2024, we received proceeds of $590.5 million, net of financing costs, from our issuance of $600.0 million aggregate principal amount of 6.500% fixed-rate senior unsecured notes, that we used to reduce indebtedness outstanding under our revolving credit facility and for general corporate purposes.

In 2024, we repaid $337.5 million of net borrowings under out Credit Facilities compared to $319.5 million net proceeds from borrowings under our Credit Facilities in 2023.

In addition, in 2024, we spent $100.0 million less for repurchases of Class B Units of the Partnership and had lower transaction costs of $0.9 million, partially offset by higher distributions to shareholders and noncontrolling interest of $29.1 million.

Net cash 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.

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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.

Capital Expenditures

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Additions to property, plant and equipment

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.

Capital expenditures in 2024 are primarily attributable to continued expansion of our compression capacity and gas capture capabilities and related pipeline infrastructure to meet Hess’ and third parties’ current and future production growth and gas capture targets.

The activities focused on the construction of two new compressor stations and associated pipeline infrastructure, which are expected to be placed in service in 2025.

Capital expenditures in 2023 and 2022 were also attributable to continued expansion of our compression capacity and related pipeline infrastructure.

Cash Requirements

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Note 7 , Debt and Interest Expense.

On February 12, 2025, the Partnership issued $800.0 million aggregate principal amount of 5.875% fixed‑rate senior unsecured notes due 2028 at par to qualified institutional investors.

The Partnership intends to use the net proceeds from the issuance of the new notes, along with borrowings under its revolving credit facility, to redeem its outstanding $800.0 million aggregate principal amount of 5.625% senior notes due 2026 (the “2026 Notes”).

The Partnership delivered a notice of redemption in respect of the 2026 Notes on February 3, 2025.

Financial Statements and Supplementary Data.

Note 14, Subsequent Events.

• Purchase obligations:

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Report of Independent Registered Public Accounting Firm (PCAOB ID 238 )

Report of Independent Registered Public Accounting Firm (PCAOB ID 42 )

Consolidated Balance Sheets as of December 31, 2024 and 2023

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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.

Opinions on the Financial Statements and Internal Control over Financial Reporting

We have audited the accompanying consolidated balance sheet of Hess Midstream LP and its subsidiaries (the “Company”) as of December 31, 2024, and the related consolidated statements of operations, of changes in partners’ capital (deficit) and of cash flows for the year then ended, including the related notes (collectively referred to as the “consolidated financial statements”).

We also have audited the Company’s internal control over financial reporting as of December 31, 2024, based on criteria established in Internal Control - Integrated Framework (2013) issued by the Committee of Sponsoring Organizations of the Treadway Commission (COSO).

In our opinion, the consolidated financial statements referred to above present fairly, in all material respects, the financial position of the Company as of December 31, 2024, and the results of its operations and its cash flows for the year then ended in conformity with accounting principles generally accepted in the United States of America.

Also in our opinion, the Company maintained, in all material respects, effective internal control over financial reporting as of December 31, 2024, based on criteria established in Internal Control - Integrated Framework (2013) issued by the COSO.

Basis for Opinions

The Company’s management is responsible for these consolidated financial statements, for maintaining effective internal control over financial reporting, and for its assessment of the effectiveness of internal control over financial reporting, included in Management’s Report on Internal Control over Financial Reporting appearing under Item 9A.

Our responsibility is to express opinions on the Company’s consolidated financial statements and on the Company’s internal control over financial reporting based on our audit.

We are a public accounting firm registered with the Public Company Accounting Oversight Board (United States) (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.

Those standards require that we plan and perform the audit to obtain reasonable assurance about whether the consolidated financial statements are free of material misstatement, whether due to error or fraud, and whether effective internal control over financial reporting was maintained in all material respects.

Our audit of the consolidated financial statements included performing procedures to assess the risks of material misstatement of the consolidated 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 consolidated financial statements.

Our audit also included evaluating the accounting principles used and significant estimates made by management, as well as evaluating the overall presentation of the consolidated financial statements.

Our audit of internal control over financial reporting included obtaining an understanding of internal control over financial reporting, assessing the risk that a material weakness exists, and testing and evaluating the design and operating effectiveness of internal control based on the assessed risk.

Our audit also included performing such other procedures as we considered necessary in the circumstances.

We believe that our audit provides a reasonable basis for our opinions.

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.

A company’s internal control over financial reporting includes those policies and procedures that (i) pertain to the maintenance of records that, in reasonable detail, accurately and fairly reflect the transactions and dispositions of the assets of the company;

(ii) 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 (iii) 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

Critical Audit Matters

The critical audit matter communicated below is a matter arising from the current period audit of the consolidated financial statements that was communicated or required to be communicated to the audit committee and that (i) relates to accounts or disclosures that are material to the consolidated financial statements and (ii) involved our especially challenging, subjective, or complex judgments.

The communication of critical audit matters 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.

Affiliate Services Revenue Recognition

As described in Notes 2 and 4 to the consolidated financial statements, the Company’s affiliate services revenue was $1,467.8 million for the year ended December 31, 2024.

The Company recognizes revenues for each performance obligation under commercial agreements over-time as services are rendered using the output method, measured using the amount of volumes serviced for the period.

The Company has long-term fee-based commercial agreements with certain subsidiaries of Hess Corporation 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, the Company receives 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 Corporation is obligated to provide the Company with minimum volumes of crude oil, water, natural gas and NGLs.

The principal consideration for our determination that performing procedures relating to revenue recognition is a critical audit matter is a high degree of auditor effort in performing procedures related to the Company’s affiliate services revenue recognition.

Addressing the matter involved performing procedures and evaluating audit evidence in connection with forming our overall opinion on the consolidated financial statements.

These procedures included testing the effectiveness of controls relating to the revenue recognition process, including controls over revenue recognized under commercial agreements with Hess Corporation.

These procedures also included, among others (i) obtaining an understanding of the Company’s accounting policy for recognizing and recording revenue;

(ii) evaluating whether the revenue recognized under the commercial agreements is consistent with the policy;

(iii) testing the amount and timing of revenue recognized, including price and quantity, for a sample of transactions by obtaining confirmations from subsidiaries of Hess Corporation;

and (iv) confirmation of outstanding customer invoice balances as of December 31, 2024.

/s/ PricewaterhouseCoopers LLP

Houston, Texas

February 27, 2025

Report of Independent Registered Public Accounting Firm

We have served as the Company’s auditor since 2024.

Report of Independent Registered P ublic Accounting Firm

To the Board of Directors of Hess Midstream GP LLC and

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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.

We have audited the accompanying consolidated balance sheet of Hess Midstream LP (the Company) as of December 31, 2023 the related consolidated statements of operations, changes in partners’ capital, and cash flows for each of the two 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 the results of its operations and its cash flows for each of the two 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

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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.

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.

We served as the Company’s auditor from 2014 to 2024.

Houston, Texas

February 29, 2024

February 29, 2024, except for the effects of the Company’s adoption of ASU 2023-07, Improvements to Reportable Segment Disclosures , as described in Note 2 and Note 12, as to which the date is August 8, 2024

HESS M IDSTREAM LP

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HESS MIDSTREAM LP

CONSOLIDATED STATEMENTS OF CHA NGES IN PARTNERS’ CAPITAL

CONSOLIDATED STATEMENTS OF CHA NGES IN PARTNERS’ CAPITAL (DEFICIT)

Partners’ Capital

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Cash flows from operating activities

Adjustments to reconcile net income to net cash provided by (used in)

Adjustments to reconcile net income to net cash provided by

operating activities:

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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”).

HIP was originally formed in 2015 as a 50 / 50 joint venture between Hess and Global Infrastructure Partners, a part of BlackRock (“GIP” and, together with Hess, the “Sponsors”).

We are managed and controlled by Hess Midstream GP LLC, the general partner of our general partner.

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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.

On May 28, 2024, holders of a majority of Hess’ outstanding common stock voted to approve the Chevron Mer ger.

The arbitration merits hearing about the applicability of the Stabroek ROFR to the Chevron Merger has been scheduled for May 2025, with a decision expected in the third quarter.

Hess cannot predict the date on which the Chevron Merger will be completed because it is subject to conditions beyond Hess’ control, including the outcome of the arbitration.

If the Chevron Merger is completed, 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.

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(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.

LM4 Joint Venture.

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(“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.

LM4 was placed in service in 2019.

Targa is the operator of the plant.

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There are no significant financing components in any of our commercial agreements.

The costs and expenses related to fulfilling our obligations under the commercial agreements are reflected in Operating and maintenance expenses in the accompanying Consolidated Statements of Operations.

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.

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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 is 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 is initially 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.

Unused credits by Hess are recognized as revenue when they expire after four quarters.

However, Hess is not 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.

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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.

We adopted this ASU on April 1, 2024, and applied the amendments retrospectively to all prior periods presented in our consolidated financial statements (see Note 12, Segments ).

In December 2023, the FASB issued ASU 2023-09, Income Taxes (Topic 740):

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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.

The ASU is effective for public business entities for fiscal years beginning after December 15, 2024, with early adoption permitted.

We do not expect this ASU to have a material impact on our consolidated financial statements.

In November 2024, the FASB issued ASU 2024-03, Income Statement—Reporting Comprehensive Income—Expense Disaggregation Disclosures (Subtopic 220-40):

Disaggregation of income statement expenses.

This ASU requires disclosure, in the notes to financial statements, of specified information about certain costs and expenses.

The ASU is effective for public business entities for fiscal years beginning after December 15, 2026, and interim periods beginning after December 15, 2027, with early adoption permitted.

We are currently assessing the impact of this new ASU on our consolidated financial statements.

Equity Transactions

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Total Number of Shares Offered

Public Offering Price (2)

March 15, 2021

October 8, 2021

April 4, 2022

August 17, 2023 (3)

February 8, 2024

May 31, 2024 (3)

September 20, 2024

(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:

(2) Offering price for the 2022 and 2023 transactions represents price to the public excluding underwriting discounts.

Offering price for the 2024 transactions represents price to the underwriter.

(3) The overallotment options for these transactions were exercised in full on August 22, 2023 and June 3, 2024, respectively.

Hess and GIP sold their Class A Shares 50/50 as part of the April 4, 2022, and May 19, 2023 transactions .

For the remaining equity offering transactions listed above, GIP was the sole selling shareholder.

GIP received net proceeds from the 2024 equity offering transactions of approximately $ 1.2 billion in total (2023:

$ 662.2 million, 2022:

$ 356.5 million in total, after deducting underwriting discounts) .

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

$ 291.7 million in total for both Sponsors, after deducting underwriting discounts).

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

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 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, as 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.

As a result of the equity offering transactions described above, we recognized an adjustment decreasing the carrying amount of the Class A shareholders’ capital balance by $ 8.6 million during the year ended December 31, 2024 and increasing the carrying amount of noncontrolling interest by an equal amount to reflect the change in ownership interest.

During the year ended December 31, 2023 and December 31, 2022 we recognized adjustments increasing the carrying amount of the Class A shareholders’ capital balance by $ 17.8 million and $ 27.0 million, respectively, and decreasing the carrying amount of noncontrolling interest by an equal amount.

Class B Unit Repurchases

For the years ended December 31, 2024, 2023 and 2022, we had the following activity related to Class B unit repurchases (aggregate purchase price in millions):

Unit Repurchase

Agreement Date

Number of Units Repurchased

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Purchase Price

August 10, 2021

March 29, 2022

April 4, 2022

March 27, 2023

March 30, 2023

June 26, 2023

June 29, 2023

September 19, 2023

September 22, 2023

November 13, 2023

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.

November 16, 2023

March 11, 2024

March 14, 2024

June 24, 2024

June 26, 2024

September 9, 2024

September 11, 2024

The March 29, 2022, unit repurchase agreement between the Company, the Partnership and the Sponsors was subject to the secondary equity offering transaction described above.

The aggregate number of Class B Units to be purchased by the Partnership from the Sponsors was determined by dividing (a) $ 400.0 million by (b) the public offering price of the Class A Shares set in the secondary equity offering 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.

The 2023 unit repurchase transactions were funded using borrowings under the Partnership’s existing revolving credit facility (see Note 7, Debt and Interest Expense ).

For the 2023 and 2024 unit repurchase transactions, the purchase price per Class B Unit was set as the closing price of the Class A Shares on each respective unit repurchase agreement date.

The 2023 and 2024 unit repurchase transactions were funded using borrowings under the Partnership’s existing revolving credit facility and cash on hand (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.

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

We incurred approximately $ 3.3 million of costs directly attributable to the repurchase transaction (2022:

Distributions to noncontrolling interest holders related to the 2024 repurchase transactions exceeded the noncontrolling interest’s carrying value resulting in a deficit balance as shown in the accompanying consolidated statement of changes in partners’ capital (deficit).

We incurred approximately $ 2.4 million of costs directly attributable to the repurchase transactions (2023:

$ 3.3 million, 2022:

$ 1.5 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:

As a result of the equity offering transactions and the unit repurchase transactions described above, we also recognized an additional deferred tax asset of $ 329.8 million (2023:

$ 185.1 million, 2022:

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

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.

Partners’ Capital and Distributions for the impact of the above equity transactions on the number of shares outstanding.

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 (deficit) due to the transactions being characterized as transactions 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.

See Note 14, Subsequent Events for description of the January 2025 unit repurchase transaction and February 2025 equity offering transaction.

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, 2024, 2023 and 2022 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.

In 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.

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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

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).

The initial fee for the first year of the Secondary Term is 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.

During the Secondary Term, MVCs 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 is 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) are recorded as deferred revenue and recognized as revenue as the credits are utilized or expire.

At December 31, 2024, deferred revenue included in Accrued liabilities in the accompanying consolidated balance sheet was $ 2.6 million (December 31, 2023:

For the years ended December 31, 2024, 2023 and 2022 , approximately 98 % , 99 % , 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.

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Total revenues

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

The following table presents MVC shortfall fee revenue earned during each period:

Year Ended December 31,

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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.

These pass-through revenues are included in Affiliate services and the related pass-through costs are included in Operating and maintenance expenses in the accompanying consolidated statements of operations.

Year Ended December 31,

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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.

For the years ended December 31, 2024, 2023 and 2022, we had the following charges from Hess included in the operating and maintenance expenses and general and administrative expenses in the accompanying consolidated statement of operations.

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.

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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.

LM4 was placed in service in 2019.

For the years ended December 31, 2024, 2023 and 2022, we had the following activity related to our agreements with LM4:

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(in millions)

Accrued capital expenditures

Accrued interest

Accrued capital expenditures

Other accruals

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4.250 % due 2030

5.500 % due 2030

Total fixed-rate senior notes

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(in millions)

2029 and thereafter

Fixed-rate senior notes

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Fixed‑Rate Senior Notes

In May 2024 the Partnership issued $ 600.0 million aggregate principal amount of 6.500 % fixed‑rate senior unsecured notes due 2029 to qualified institutional investors.

Interest is payable semi‑annually on June 1 and December 1, commencing December 1, 2024 .

The Partnership used the proceeds to reduce indebtedness outstanding under the Partnership’s revolving credit facility, with the remaining net proceeds for general corporate purposes.

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.

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

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 ).

1 unchanged sentence

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 ).

The Partnership used the proceeds to fund a 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.

3 unchanged sentences

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 % .

On February 3, 2025, the Partnership delivered a notice of redemption in respect of these notes.

See Note 14, Subsequent Events .

At December 31, 2024 and 2023, the Partnership’s fixed-rate senior unsecured notes had a weighted average interest rate of 5.4 % and 5.1 % , respectively.

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

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(iii) incur additional debt;

As of December 31, 2024, we were in compliance with all debt covenants under the indentures.

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As of December 31, 2024, our Sponsors and their affiliates, including our general partner, collectively held 898,000 Class A Shares (economic and voting) and 113,927,226 Class B Shares (non-economic, voting only) representing limited partner interests in the Company, and 113,927,226 Cl ass B Units of the Partnership representing limited partner interests in the Partnership.

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.

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.

The changes in the number of shares of the Company outstanding from December 31, 2021 through December 31, 2024 are as follows:

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Equity offering transaction -

Repurchase Transaction

1 unchanged sentence

Equity-based compensation

Repurchase Transaction -

Equity offering transaction -

Repurchase Transaction -

Equity offering transaction -

Repurchase Transaction -

September 2023

Repurchase Transaction -

November 2023

Balance, December 31, 2023

Equity-based compensation

Repurchase Transaction -

Equity offering transaction -

February 2024

Repurchase Transaction -

1 unchanged sentence

Repurchase Transaction -

Equity offering transaction -

September 2024

Repurchase Transaction -

November 2023

September 2024

Balance, December 31, 2024

91 unchanged sentences

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.

In December 2024, the Company finalized a settlement agreement with the DEQ for a total administrative penalty amount of $ 0.3 million.

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.

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(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.

Our reportable segments comprise the structure used by our Chief Executive Officer and Chief Financial Officer, who, collectively, have been determined to be 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.

Interest and Other includes certain functional departments that do not recognize revenues.

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.

Our CODM evaluates the segments’ operating performance based on Adjusted EBITDA, defined as net income (loss) before interest expense, income tax expense (benefit), and depreciation and amortization, as further adjusted for other non‑cash, non‑recurring items, if applicable.

For all of the segments, the CODM uses segment Adjusted EBITDA in the annual budgeting and monthly forecasting process.

The CODM considers budget-to-current forecast and prior forecast-to-current forecast variances for Adjusted EBITDA on a monthly basis for evaluating performance of each segment and making decisions about allocating capital and other resources to each segment.

Our gathering segment consists of the following assets:

30 unchanged sentences

Terminaling and Export

Total Reportable Segments

Interest and Other

2 unchanged sentences

Revenues and other income

Net income (loss)

Net income (loss) attributable to

Hess Midstream LP

Operating and maintenance expenses

(exclusive of depreciation shown

separately below)

Depreciation expense

Proportional share of equity affiliates'

General and administrative expenses

Income from equity investments

5 unchanged sentences

Terminaling and Export

Total Reportable Segments

Interest and Other

2 unchanged sentences

Revenues and other income

Net income (loss)

Net income (loss) attributable to

Hess Midstream LP

Operating and maintenance expenses

(exclusive of depreciation shown

separately below)

Depreciation expense

Proportional share of equity affiliates'

General and administrative expenses

Income from equity investments

5 unchanged sentences

Terminaling and Export

Total Reportable Segments

Interest and Other

2 unchanged sentences

Revenues and other income

Net income (loss)

Net income (loss) attributable to

Hess Midstream LP

Operating and maintenance expenses

(exclusive of depreciation shown

separately below)

Depreciation expense

Proportional share of equity affiliates'

General and administrative expenses

Income from equity investments

3 unchanged sentences

Capital expenditures

The following table presents a reconciliation of reportable segment Adjusted EBITDA to income before income tax expense:

Year Ended December 31,

(in millions)

Reconciliation of reportable segment Adjusted

EBITDA to income before income tax expense:

Total reportable segment Adjusted EBITDA

Depreciation expense

Unallocated general and administrative expenses

Interest expense, net

Income before income tax expense

Total assets for reportable segments are as follows:

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Terminaling and Export

Total reportable segments assets

Interest and Other

Total consolidated assets

(1) Includes investment in equity investees of $ 87.0 million as of December 31, 2024 and $ 90.2 million as of December 31, 2023 .

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federal and state income tax purposes.

The provision (benefit) for income taxes consisted of:

The provision for income taxes consisted of:

Year Ended December 31,

1 unchanged sentence

Deferred taxes and other accruals

Total provision (benefit) for income taxes

Total provision for income taxes

The difference between the effective income tax rate and the U.S.

5 unchanged sentences

Effective rate

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.

As 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 $ 329.8 million ( 2023:

$ 185.1 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 transactions being characterized as transactions among or with shareholders.

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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.

On January 13, 2025, the Company, the Partnership and our Sponsors entered into a unit repurchase agreement pursuant to which the Partnership agreed to purchase from the Sponsors 2,572,677 Class B Units for an aggregate purchase price of approximately $ 100.0 million.

The repurchase transaction was consummated on January 15, 2025.

The purchase price per Class B Unit was $ 38.87 , the closing price of the Class A Shares on January 13, 2025.

The unit repurchase transaction was funded using borrowings under the Partnership’s existing revolving credit facility (see Note 7, Debt and Interest Expense ).

On January 27, 2025 , the board of directors of our general partner declared a quarterly cash distribution of $ 0.7012 per Class A Share for the quarter ended December 31, 2024.

The distribution was paid on February 14, 2025 to shareholders of record as of the close of business on February 6, 2025 .

On February 14, 2025 , the Partnership also made a distribution of $ 0.7012 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.

On February 12, 2025, the Partnership issued $ 800.0 million aggregate principal amount of 5.875 % fixed‑rate senior unsecured notes due 2028 at par to qualified institutional investors.

The Partnership intends to use the net proceeds from the issuance of the new notes, along with borrowings under its revolving credit facility, to redeem its outstanding $ 800.0 million aggregate principal amount of 5.625 % senior notes due 2026 (the “2026 Notes”) .

The Partnership delivered a notice of redemption in respect of the 2026 Notes on February 3, 2025.

On February 12, 2025, GIP sold an aggregate of 11,000,000 of our Class A Shares in an underwritten public offering at a price of $ 39.45 per Class A Share, less underwriting discounts.

GIP also granted the underwriter an option to purchase up to an additional 1,650,000 Class A Shares at the same price per Class A Share, which was exercised in full on February 19, 2025.

GIP received net proceeds from the offering of approximately $ 494.7 million, after deducting underwriting discounts.

The Company did not receive any proceeds in the offering.

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

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

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.

As a result of this public equity offering transaction and the unit repurchase transaction described above, the Company’s consolidated ownership in the Partnership increased to approximately 54.2 % at February 19, 2025 from approximately 47.7 % at December 31, 2024, and the noncontrolling interest decreased to 45.8 % from 52.3 %, respectively.

CHANGES IN AND DISAGREEMENTS WITH ACCO UNTANTS ON ACCOUNTING AND FINANCIAL DISCLOSURE

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

What changed 10-K

Item 7. Management’s Discussion and Analysis