What changed in this filing

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Item 2. Management’s Discussion and Analysis

2025-05-08 compared with 2024-11-06 · 67 added, 159 removed, 299 unchanged (43% of the section changed)

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

On 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.

GIP received net proceeds from the offering of approximately $377.5 million.

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.

GIP received net proceeds from the offering of approximately $391.3 million.

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.

GIP received net proceeds from the offering of approximately $444.3 million.

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

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

On March 14, 2024, the Partnership purchased directly from the Sponsors 2,816,901 Class B units representing limited partner interests in the Partnership (“Class B Units”) for an aggregate purchase price of approximately $100 million.

The purchase price per Class B Unit was $35.50, the closing price of the Class A shares on March 11, 2024.

On June 26, 2024, the Partnership, purchased directly from the Sponsors 2,724,052 Class B Units for an aggregate purchase price of approximately $100.0 million.

The purchase price per Class B Unit was $36.71, the closing price of the Class A Shares on June 24, 2024.

On September 11, 2024, the Partnership, purchased directly from the Sponsors 2,823,262 Class B Units for an aggregate purchase price of approximately $100.0 million.

The purchase price per Class B Unit was $35.42, the closing price of the Class A Shares on September 9, 2024.

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

As a result of the equity offerings and unit repurchase transactions described above, our public ownership increased from approximately 29.8% at December 31, 2023, to approximately 47.3% at September 30, 2024, on a consolidated basis.

We utilized the excess free cash flow beyond our growing distributions to provide increased return of capital to our shareholders through an immediate increase in our quarterly distribution level per Class A Share in each of the first three quarters of 2024, which, on an annualized basis, is significantly above our target of at least 5% growth in annual distributions per Class A Share through 2026.

On January 15, 2025, the Partnership purchased directly from the Sponsors 2,572,677 Class B units representing limited partner interests in the Partnership (“Class B Units”) for an aggregate purchase price of approximately $100.0 million.

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

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

On February 12, 2025, GIP sold an aggregate of 11,000,000 of our Class A Shares representing limited partner interests (the “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 from the offering transaction.

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

As a result of the equity offering and unit repurchase transactions described above, our public ownership increased from approximately 47.3% at December 31, 2024, to approximately 53.8% at March 31, 2025, on a consolidated basis.

On May 5, 2025, the Partnership entered into an agreement to purchase 5,151,842 Class B Units directly from the Sponsors at a purchase price of $36.88 per Class B Unit, for an aggregate purchase price of approximately $190.0 million.

In addition, on May 5, 2025, we entered into an accelerated share repurchase (“ASR”) agreement with a financial institution to repurchase $10.0 million of our publicly traded Class A Shares.

Under the terms of the ASR, we agreed to make an upfront payment of $10.0 million in cash to the financial institution and will receive an initial share delivery of 189,804 Class A Shares.

Final share delivery is expected in May 2025 and will be based generally on the average of the daily volume-weighted average prices of Class A Shares during the term of the transaction, subject to adjustments pursuant to the terms and conditions of the ASR agreement.

See Note 12, Subsequent Events .

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

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PART I – FINANCIAL INFORMATION (CONT’D)

Third Quarter Results

Significant financial and operating highlights for the third quarter of 2024 included:

First Quarter Results

Significant financial and operating highlights for the first quarter of 2025 included:

• Consolidated net income of $161.4 million;

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• Adjusted EBITDA of $292.3 million;

• Cash distribution of $0.6846 per Class A Share declared on October 28, 2024, an increase of $0.0169 per Class A Share for the third quarter of 2024 as compared with the second quarter of 2024.

Revenues and other income in the third quarter of 2024 were $378.5 million compared with $363.1 million in the prior‑year quarter.

Third quarter 2024 revenues and other income were up $15.4 million compared with the prior-year quarter primarily due to higher physical volumes.

Total operating costs and expenses in the third quarter of 2024 were $146.8 million, compared with $143.1 million in the prior-year quarter, primarily attributable to higher depreciation expense for additional assets placed in service.

Interest expense, net of interest income, in the third quarter of 2024 was $51.8 million, up from $45.8 million in the prior-year quarter, primarily attributable to the new $600.0 million 6.500% fixed-rate senior unsecured notes issued in May 2024, partially offset by lower interest on lower borrowings under our revolving credit facility.

Income tax expense increased $7.5 million resulting from ownership changes following secondary equity offering and Class B Unit repurchase transactions.

As a result, consolidated net income decreased $0.1 million and Adjusted EBITDA increased $17.2 million for the third quarter of 2024 compared with the third quarter of 2023.

Throughput volumes increased 9% for gas gathering, crude oil gathering and gas processing in the third quarter of 2024 compared with the third quarter of 2023, primarily due to higher production and higher gas capture.

Throughput volumes decreased 5% for terminaling in the third quarter of 2024 compared with the third quarter of 2023, primarily due to lower third-party volumes.

Water gathering volumes increased 29%, reflecting higher crude oil production and increased utilization of our water gathering infrastructure.

• Cash distribution of $0.7098 per Class A Share declared on April 28, 2025, an increase of $0.0086 per Class A Share for the first quarter of 2025 as compared with the fourth quarter of 2024.

Revenues and other income in the first quarter of 2025 were $382.0 million, up from $355.6 million in the prior‑year quarter, primarily due to higher physical volumes.

Total operating costs and expenses in the first quarter of 2025 were $144.6 million, up from $133.6 million in the prior-year quarter, primarily due to higher employee costs charged to us under our omnibus and employee secondment agreements, pass-through electricity and produced water trucking and disposal costs, and higher depreciation expense for additional assets placed in service.

Interest expense, net of interest income, in the first quarter of 2025 was $56.4 million, up from $48.5 million in the prior-year quarter, primarily due to $600.0 million 6.500% fixed-rate senior unsecured notes issued in May 2024, $800.0 million 5.875% fixed-rate senior unsecured notes issued in February 2025, and charges associated with early redemption of $800.0 million 5.625% fixed-rate senior unsecured notes, partially offset by lower interest on lower borrowings under the company's credit facilities and lower interest on the redeemed $800.0 million 5.625% fixed-rate senior unsecured notes.

Income tax expense was $23.0 million, up from $14.3 million in the prior-year quarter, resulting from ownership changes following secondary equity offering and Class B Unit repurchase transactions.

As a result, consolidated net income remained approximately flat and Adjusted EBITDA increased $17.8 million for the first quarter of 2025 compared with the first quarter of 2024.

Throughput volumes increased 8% for gas processing, 7% for oil terminaling and 9% for water gathering in the first quarter of 2025 compared with the first quarter of 2024, primarily due to higher Hess and third-party production.

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

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Results of Operations

Three Months Ended September 30, 2024 Compared to Three Months Ended September 30, 2023

Results of operations for the three months ended September 30, 2024 and 2023 are presented below (in millions, unless otherwise noted).

For the Three Months Ended September 30, 2024

Three Months Ended March 31, 2025 Compared to Three Months Ended March 31, 2024

Results of operations for the three months ended March 31, 2025 and 2024 are presented below (in millions, unless otherwise noted).

For the Three Months Ended March 31, 2025

Processing and Storage

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PART I – FINANCIAL INFORMATION (CONT’D)

For the Three Months Ended September 30, 2023

For the Three Months Ended March 31, 2024

Processing and Storage

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(2) Thousand barrels per day

Revenues and other income increased $6.0 million in the third quarter of 2024 compared to the third quarter of 2023, of which $7.8 million is attributable to higher gas gathering volumes that were above MVCs in the third quarter of 2024 and 2023, $4.8 million is attributable to higher water gathering and disposal revenue, $1.6 million is attributable to services provided directly to third parties, $0.3 million is attributable to higher pass‑through revenue, and $0.2 million is attributable to higher crude oil gathering volumes that were above MVCs in the third quarter of 2024 and 2023.

These revenue increases were partially offset by $8.7 million attributable to lower tariff rates.

Operating and maintenance expenses decreased $1.2 million, of which $3.5 million is attributable to lower costs related to the produced water release remediation reserve, partially offset by $1.9 million attributable to higher employee costs allocated to us under our omnibus and employee secondment agreements and $0.4 million attributable to all other costs.

Depreciation expense increased $3.3 million due to new compressors and other new gathering assets brought into service.

PART I – FINANCIAL INFORMATION (CONT’D)

Processing and Storage

Revenues and other income increased $11.9 million in the third quarter of 2024 compared to the third quarter of 2023, of which $5.5 million is attributable to higher gas processing volumes that were above MVCs in the third quarter of 2024 and 2023, $3.7 million is attributable to higher tariff rates and $3.3 million is attributable to services provided directly to third parties.

These revenue increases were partially offset by $0.6 million attributable to lower pass-through revenue.

Operating and maintenance expenses increased $3.6 million, of which $2.4 million is attributable to higher third-party processing fees and $1.5 million is attributable to higher maintenance activity, slightly offset by $0.3 million attributable to lower other costs.

Income from equity investments increased $1.7 million in the third quarter of 2024 compared to the third quarter of 2023 primarily due to higher volumes processed at the LM4 plant.

Terminaling and Export

Revenues and other income decreased $2.5 million in the third quarter of 2024 compared to the third quarter of 2023, of which $2.0 million is attributable to lower tariff rates and $0.9 million is attributable to lower crude oil terminaling volumes that were above MVCs in the third quarter of 2024 and 2023.

These revenue decreases were partially offset by $0.4 million attributable to other income and services provided directly to third parties.

Operating and maintenance expenses decreased $2.8 million in the third quarter of 2024 compared to the third quarter of 2023, primarily attributable to the rail car recertification program.

Interest and Other

Interest expense, net of interest income, increased $6.0 million in the third quarter of 2024 compared to the third quarter of 2023, of which $9.8 million is attributable to the new $600.0 million 6.500% fixed-rate senior unsecured notes issued during the second quarter of 2024, partially offset by $3.2 million attributable to lower interest on lower borrowings under our revolving credit facility and $0.6 million higher interest income.

Income tax expense increased $7.5 million in the same period driven by increased ownership of the Partnership by Hess Midstream LP following equity offering and unit repurchase transactions in 2023 and 2024.

PART I – FINANCIAL INFORMATION (CONT’D)

Nine Months Ended September 30, 2024 Compared to Nine Months Ended September 30, 2023

Results of operations for the nine months ended September 30, 2024 and 2023 are presented below (in millions, unless otherwise noted).

For the Nine Months Ended September 30, 2024

Processing and Storage

Terminaling and Export

Interest and Other

Consolidated Hess Midstream LP

Affiliate services

Third-party services

Total revenues

Costs and expenses

Operating and maintenance expenses (exclusive

of depreciation shown separately below)

Depreciation expense

General and administrative expenses

Total operating costs and expenses

Income (loss) from operations

Income from equity investments

Interest expense, net

Income (loss) before income tax expense

Income tax expense

Net income (loss)

Net income (loss) attributable to

noncontrolling interest

Net income (loss) attributable to Hess Midstream LP

Throughput volumes

Gas gathering (MMcf/d) (1)

Crude oil gathering (MBbl/d) (2)

Gas processing (MMcf/d) (1)

Crude oil terminaling (MBbl/d) (2)

NGL loading (MBbl/d) (2)

Water gathering (MBbl/d) (2)

(1) Million cubic feet per day

(2) Thousand barrels per day

PART I – FINANCIAL INFORMATION (CONT’D)

For the Nine Months Ended September 30, 2023

Processing and Storage

Terminaling and Export

Interest and Other

Consolidated Hess Midstream LP

Affiliate services

Third-party services

Total revenues

Costs and expenses

Operating and maintenance expenses (exclusive

of depreciation shown separately below)

Depreciation expense

General and administrative expenses

Total operating costs and expenses

Income (loss) from operations

Income from equity investments

Interest expense, net

Income (loss) before income tax expense

Income tax expense

Net income (loss)

Net income (loss) attributable to

noncontrolling interest

Net income (loss) attributable to Hess Midstream LP

Throughput volumes

Gas gathering (MMcf/d) (1)

Crude oil gathering (MBbl/d) (2)

Gas processing (MMcf/d) (1)

Crude oil terminaling (MBbl/d) (2)

NGL loading (MBbl/d) (2)

Water gathering (MBbl/d) (2)

(1) Million cubic feet per day

(2) Thousand barrels per day

Revenues and other income increased $50.4 million in the first nine months of 2024 compared to the first nine months of 2023, of which $39.3 million is attributable to higher gas gathering volumes that were above MVCs in the first nine months of 2024 and 2023, $17.0 million is attributable to higher water gathering and disposal revenue, $7.7 million is attributable to higher pass‑through revenue, and $7.6 million is attributable to higher crude oil gathering volumes that were above MVCs in the first nine months of 2024 and above MVC levels of the first nine months of 2023.

Additionally, $4.2 million of the increase is attributable to services provided directly to third parties.

These revenue increases were partially offset by $25.4 million primarily attributable to lower crude oil tariff rates.

Operating and maintenance expenses increased $13.7 million in the first nine months of 2024 compared to the first nine months of 2023, of which $7.7 million is attributable to higher pass-through costs, including produced water trucking and disposal and electricity fees, $5.1 million is attributable to compressor stations overhauls and other maintenance activities, and $4.2 million is attributable to higher employee costs allocated to us under our omnibus and employee secondment agreements.

These increases were partially offset by $3.3 million attributable to lower costs related to the produced water release remediation reserve.

Revenues and other income increased $15.5 million in the first quarter of 2025 compared to the first quarter of 2024, of which $6.6 million is attributable to higher gas gathering physical volumes, $2.7 million is attributable to higher water gathering and disposal revenue, $2.4 million is attributable to higher crude oil gathering physical volumes, and $1.3 million is attributable to crude oil MVCs recognized in revenue upon expiration of shortfall fee credits.

Additionally, $1.1 million of the increase is attributable to higher tariff rates, $0.9 million is attributable to higher pass‑through revenue, and $0.5 million is attributable to services provided directly to third parties.

Operating and maintenance expenses increased $4.1 million, primarily due to higher employee costs charged to us under our omnibus and employee secondment agreements.

Depreciation expense increased $1.6 million due to new compressors and other new gathering assets brought into service.

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Processing and Storage

Revenues and other income increased $53.3 million in the first nine months of 2024 compared to the first nine months of 2023, of which $34.5 million is attributable to higher gas processing volumes that were above MVCs in the first nine months of 2024 and 2023, $10.5 million is attributable to higher tariff rates, and $9.5 million is attributable to services provided directly to third parties, slightly offset by $1.2 million lower pass-through revenue.

Operating and maintenance expenses increased $12.1 million in the first nine months of 2024 compared to the first nine months of 2023, of which $7.2 million is attributable to higher third-party processing fees, $5.4 million is attributable to higher maintenance activity, and $0.7 million is attributable to higher employee costs allocated to us under our omnibus and employee secondment agreements, slightly offset by $1.2 million lower pass-through costs.

Income from equity investments increased $4.8 million in the first nine months of 2024 compared to the first nine months of 2023 primarily due to higher volumes processed at the LM4 plant.

Revenues and other income increased $8.7 million in the first quarter of 2025 compared to the first quarter of 2024, of which $8.7 million is attributable to higher gas processing physical volumes and $1.4 million is attributable to higher pass‑through revenue.

These revenue increases were partially offset by $1.4 million attributable to lower tariff rates as the first quarter 2024 rates were prior to a one-time reduction related to setting the final 2024 tariff rate.

Operating and maintenance expenses increased $2.5 million, of which $1.4 million is attributable to higher third-party processing fees and $1.4 million is attributable to higher pass-through costs, slightly offset by $0.3 million attributable to lower other costs.

Terminaling and Export

Revenues and other income increased $3.8 million in the first nine months of 2024 compared to the first nine months of 2023, of which $4.7 million is attributable to higher crude oil terminaling volumes that were above MVCs in the first nine months of 2024 and above MVC levels of the first nine months of 2023, $3.4 million is attributable to pass-through revenue, and $1.1 million is attributable to other income and services provided directly to third parties.

These revenue increases were partially offset by $5.4 million attributable to lower tariff rates.

Operating and maintenance expenses increased $3.8 million in the first nine months of 2024 compared to the first nine months of 2023, of which $3.4 million is attributable to rail transportation pass-through costs and $0.4 million is attributable to all other costs.

Revenues and other income increased $2.2 million in the first quarter of 2025 compared to the first quarter of 2024, of which $1.2 million is attributable to higher physical volumes and $1.0 million is attributable to higher tariff rates.

Operating and maintenance expenses remained relatively flat in the first quarter of 2025 compared to the first quarter of 2024.

Interest and Other

Interest expense, net of interest income, increased $18.8 million in the first nine months of 2024 compared to the first nine months of 2023, of which $15.3 million is attributable to the new $600.0 million 6.500% fixed-rate senior unsecured notes issued during the second quarter of 2024 and $4.7 million is attributable to higher interest on our credit facilities due to higher interest rates, partially offset by lower borrowings under our revolving credit facility.

These increases were further offset by $1.2 million higher interest income.

Interest expense, net of interest income, increased $7.9 million in the first quarter of 2025 compared to the first quarter of 2024, of which $9.8 million is attributable to interest on $600.0 million 6.500% fixed-rate senior unsecured notes issued in May 2024, $6.4 million is attributable to interest on $800 million 5.875% fixed-rate senior unsecured notes issued in February 2025, $2.0 million is attributable to extinguishment loss related to early redemption of $800.0 million 5.625% fixed-rate senior unsecured notes, and $0.9 million is attributable to higher amortization of deferred finance costs.

These increases were partially offset by $6.7 million attributable to lower interest on lower borrowings under our Credit Facilities, $3.2 million attributable to lower interest on $800.0 million 5.625% fixed-rate senior unsecured notes that were redeemed in March 2025, and $1.3 million higher interest income.

Income tax expense increased $8.7 million in the same period driven by increased ownership of the Partnership by Hess Midstream LP following equity offering and unit repurchase transactions in 2024 and 2025.

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

Three Months Ended September 30,

Nine Months Ended September 30,

Three Months Ended March 31,

(in millions)

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

On October 28, 2024, we declared a quarterly cash distribution of $0.6846 per Class A Share, to be paid on November 14, 2024 to shareholders of record on November 7, 2024.

On April 28, 2025, we declared a quarterly cash distribution of $0.7098 per Class A Share, to be paid on May‍ 14, 2025 to shareholders of record on May 8, 2025.

Simultaneously, the Partnership will make a distribution of $0.7098 per Class B Unit of the Partnership to the Sponsors.

Fixed‑Rate Senior Notes

On May 16, 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.

As of September 30, 2024, the Partnership had:

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

Interest is payable semi‑annually on March 1 and September 1, commencing September 1, 2025.

The Partnership used 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% fixed‑rate senior unsecured notes due 2026 (the “2026 Notes”).

The Partnership redeemed the 2026 Notes on March 5, 2025, and recognized an extinguishment loss of approximately $2.0 million included in Interest expense, net in the accompanying unaudited consolidated statements of operations.

As of March 31, 2025, the Partnership had:

• $400.0 million aggregate principal amount of 5.500% fixed‑rate senior unsecured notes due 2030 that were issued to qualified institutional investors.

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• $800.0 million aggregate principal amount of 5.875% fixed‑rate senior unsecured notes due 2028 that were issued to qualified institutional investors.

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

Interest is payable semi‑annually on March 1 and September 1.

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

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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 September 30, 2024, we were in compliance with all debt covenants under the indentures.

As of March 31, 2025, we were in compliance with all debt covenants under the indentures.

PART I – FINANCIAL INFORMATION (CONT’D)

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

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

PART I – FINANCIAL INFORMATION (CONT’D)

Credit Facilities

As of September 30, 2024, the Partnership had $1.4 billion senior secured credit facilities (the “Credit Facilities”) consisting of a $1.0 billion 5-year revolving credit facility and a $400.0 million 5‑year Term Loan A facility.

As of March 31, 2025, the Partnership had $1.4 billion senior secured credit facilities (the “Credit Facilities”) consisting of a $1.0 billion 5-year revolving credit facility and a $400.0 million 5‑year Term Loan A facility.

The Credit Facilities mature in July 2027.

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

As of September 30, 2024, borrowings of $30.0 million were drawn and outstanding under the Partnership’s revolving credit facility, and borrowings of $390.0 million, excluding deferred issuance costs, were drawn and outstanding under the Partnership’s Term Loan A facility.

As of March 31, 2025, borrowings of $128.0 million were drawn and outstanding under the Partnership’s revolving credit facility, and borrowings of $380.0 million, excluding deferred issuance costs, were drawn and outstanding under the Partnership’s Term Loan A facility.

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

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

As of September 30, 2024, we were in compliance with these financial covenants.

As of March 31, 2025, we were in compliance with these financial covenants.

Operating Activities.

Net cash provided by operating activities increased $63.0 million for the nine months ended September 30, 2024, compared to the same period in 2023.

The change in operating cash flows resulted primarily from an increase in revenues and other income of $107.5 million, an increase in distributions received from equity investments of $4.0 million, partially offset by an increase in expenses, other than depreciation and other non-cash gains and losses of $47.0 million, and an increase in cash used by changes in working capital of $1.5 million.

Net cash provided by operating activities increased $17.1 million for the three months ended March 31, 2025, compared to the same period in 2024.

The change in operating cash flows resulted primarily from an increase in revenues and other income of $26.4 million, a decrease in cash used by changes in working capital of $3.9 million, an increase in distributions received from equity investments of $1.4 million, partially offset by an increase in expenses, other than depreciation, equity-based compensation and other non-cash gains and losses of $14.6 million.

Investing Activities.

Net cash used in investing activities increased $51.0 million for the nine months ended September 30, 2024, compared to the same period in 2023 driven by higher 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 $9.3 million for the three months ended March 31, 2025, compared to the same period in 2024 driven by the timing of payments for additions to property, plant, and equipment primarily related to our compression capacity and associated pipeline infrastructure expansion program.

Financing Activities.

Net cash used in financing activities increased $7.3 million for the nine months ended September 30, 2024, compared to the same period in 2023.

In the first nine months of 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 the first nine months of 2024, we repaid $317.5 million of net borrowings under our Credit Facilities compared to $258.0 million net proceeds from borrowings under our Credit Facilities during the same period in 2023.

In addition, in the first nine months of 2024, we paid higher distributions to shareholders and noncontrolling interests of $21.7 million and paid higher transaction costs of $0.6 million as compared to the same period in 2023.

Net cash used in financing activities increased $23.4 million for the three months ended March 31, 2025, compared to the same period in 2024.

In the first three months of 2025, we received proceeds of $788.6 million, net of financing costs, from our issuance of the new 5.875% fixed-rate senior unsecured notes due 2028.

We used the net proceeds from the issuance of the new notes, along with borrowings under our revolving credit facility, to redeem the $800.0 million notes due 2026.

Our repayments of the term loan facility were $2.5 million higher and our net borrowings under our revolving credit facility were $2.0 million lower in the first three months of 2025 compared to the same period in 2024.

In addition, in the first three months of 2025, we paid higher distributions to shareholders and noncontrolling interests of $7.5 million compared to the same period in 2024.

Capital Expenditures

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

Nine Months Ended September 30,

Three Months Ended March 31,

(in millions)

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

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

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

expected timing and completion of Hess’ proposed merger with Chevron Corporation (“Chevron”);

and information about sustainability goals and targets and planned social, safety environmental policies, programs and initiatives.

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

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• liability resulting from litigation;

• risks and uncertainties associated with Hess’ proposed merger with Chevron Corporation (“Chevron”), including the following:

• risks and uncertainties associated with Hess’ proposed merger with Chevron, including the following:

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

2 unchanged sentences

o Chevron’s ability to integrate Hess’ operations in a successful manner and in the expected time period following consummation of the Merger;

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

PART I – FINANCIAL INFORMATION (CONT’D)

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

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

18 unchanged sentences

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

At September 30, 2024, we did not have in place any derivative instruments to hedge any exposure to changes in interest rates.

At September 30, 2024, our total debt had a carrying value of $3,489.8 million and a fair value of approximately $3,497.3 million, based on Level 2 inputs in the fair value measurement hierarchy.

At March 31, 2025, we did not have in place any derivative instruments to hedge any exposure to changes in interest rates.

At March 31, 2025, our total debt had a carrying value of $3,571.8 million and a fair value of approximately $3,565.5 million, based on Level 2 inputs in the fair value measurement hierarchy.

A 15% increase or decrease in interest rates would decrease or increase the fair value of our fixed rate debt by approximately $91.3 million or $95.0 million, respectively.

4 unchanged sentences

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

What changed 10-Q

Item 2. Management’s Discussion and Analysis