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Item 2. Management’s Discussion and Analysis

2025-08-06 compared with 2025-05-08 · 185 added, 93 removed, 273 unchanged (50% of the section changed)

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

References to “Sponsor” or “Sponsors” refer to Hess Corporation (“Hess”) and GIP II Blue Holding, L.P.

(“GIP”) when referring to periods prior to May 30, 2025, Hess from May 30, 2025 to July 17, 2025, and Chevron Corporation (“Chevron”) from July 18, 2025 to present.

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

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Factors that could cause or contribute to such differences include, but are not limited to, those identified below and those discussed in our 2024 Annual Report.

We are a fee-based, growth-oriented, limited partnership that owns, operates, develops and acquires a diverse set of midstream assets and provides fee-based services to Hess Corporation (“Hess”) and third-party customers.

We are managed and controlled by Hess Midstream GP LLC, the general partner of our general partner that is owned 50/50 by Hess and GIP II Blue Holding, L.P.

(“GIP” and together with Hess, the “Sponsors”).

Organization.

We are a fee-based, growth-oriented, limited partnership that owns, operates, develops and acquires a diverse set of midstream assets and provides fee-based services to our Sponsor, its subsidiaries, and third-party customers.

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

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

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

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

Prior to May 30, 2025, the general partner of our general partner was owned 50/50 by affiliates of Hess and GIP.

As described below, as of the closing of the May 2025 GIP equity offering transaction, GIP no longer holds any Class A Shares of the Company or any Class B Units of the Partnership and no longer holds a direct or indirect ownership interest in GP LLC, our general partner, the Company, or the Partnership.

From May 30, 2025 to July 17, 2025, the general partner of our general partner was wholly owned by Hess.

Chevron Merger.

On July 18, 2025, Hess and Chevron completed the previously announced merger contemplated by the Agreement and Plan of Merger, dated as of October 22, 2023 (the “Merger”).

As a result of the Merger, Chevron is the direct parent of Hess and, therefore, indirectly owns 100% of the limited liability company interests in GP LLC, 100% of the partnership interests in our general partner, and an approximate 37.8% interest in the Company on a consolidated basis.

There were no changes to our existing commercial agreements with Hess or our existing partnership agreement as a result of the Merger or GIP’s departure.

Equity Transactions.

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.

On May 9, 2025, the Partnership purchased directly from the Sponsors 5,151,842 Class B Units for an aggregate purchase price of approximately $190.0 million.

The purchase price per Class B Unit was $36.88, the closing price of the Class A Shares on May 5, 2025.

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

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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:

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

On May 30, 2025, GIP sold an aggregate of 15,022,517 of our Class A Shares in an underwritten public offering at a price of $37.25 per Class A Share, less underwriting discounts.

GIP received net proceeds from the offering of approximately $553.7 million, after deducting underwriting discounts.

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

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

PART I – FINANCIAL INFORMATION (CONT’D)

First Quarter Results

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

In May 2025, we repurchased $10.0 million of our publicly traded Class A Shares through an accelerated share repurchase (“ASR”) transaction with a financial institution.

Under the terms of the ASR, we paid $10.0 million in cash to the financial institution and received 267,532 Class A Shares as determined by the average of the daily volume-weighted average prices of Class A Shares during the term of the transaction.

The ASR transaction was funded using borrowings under the Partnership’s existing revolving credit facility.

As a result of the equity offering and unit and share repurchase transactions described above, our public ownership increased from approximately 47.3% at December 31, 2024, to approximately 62.2% at June 30, 2025, on a consolidated basis.

On August 4, 2025, the Partnership entered into an agreement to purchase 695,894 Class B Units directly from our Sponsor at a purchase price of $43.11 per Class B Unit, for an aggregate purchase price of approximately $30.0 million.

In addition, on August 4, 2025, we entered into an ASR agreement with a financial institution to repurchase $70.0 million of our publicly traded Class A Shares.

Under the terms of the ASR, we agreed to make an upfront payment of $70.0 million in cash to the financial institution and expect an initial share delivery of 1,136,627 Class A Shares on August 8, 2025, representing approximately 70% of the expected Class A Share repurchases under the ASR agreement, based on the closing price of the Class A Shares on August 4, 2025.

Final share delivery is expected in the third quarter of 2025.

The total number of Class A Shares to ultimately be purchased by the Company under the ASR agreement 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 .

Investment Grade Rating.

On July 24, 2025, the Partnership received an investment grade rating from S&P Global Ratings (“S&P”).

S&P assigned a rating of ‘BBB-’ to the Partnership’s unsecured debt and raised the Partnership’s issuer level credit rating to ‘BBB-’, with a stable outlook.

As a result of this investment grade rating and subject to the satisfaction of certain customary conditions, the Partnership is not expected to be required to comply with certain restrictive covenants set forth in the unsecured notes indentures.

Additionally, as a result of the investment grade rating, certain restrictive covenants on the Partnership’s Credit Facilities fall away and become more permissive.

See Note 12, Subsequent Events for additional description.

Second Quarter Results

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

• Consolidated net income of $179.7 million;

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• Adjusted EBITDA of $316.0 million;

• 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.

• Cash distribution of $0.7370 per Class A Share declared on July 28, 2025, an increase of $0.0272 per Class A Share for the second quarter of 2025 as compared with the first quarter of 2025.

Revenues and other income in the second quarter of 2025 were $414.2 million, up from $365.5 million in the prior‑year quarter, primarily due to higher physical volumes and higher tariff rates.

Total operating costs and expenses in the second quarter of 2025 were $154.0 million, up from $143.2 million in the prior-year quarter, primarily due to higher pass-through electricity and produced water trucking and disposal costs, higher employee costs and depreciation expense for additional assets placed in service.

Interest expense, net of interest income, in the second quarter of 2025 was $55.4 million, up from $49.7 million in the prior-year quarter, primarily due to $600.0 million 6.500% fixed-rate senior unsecured notes issued in May 2024.

Income tax expense was $29.1 million, up from $16.0 million in the prior-year quarter, primarily resulting from ownership changes following GIP secondary equity offering and Class B Unit repurchase transactions.

As a result, consolidated net income increased $19.4 million and Adjusted EBITDA increased $39.5 million for the second quarter of 2025 compared with the second quarter of 2024.

Throughput volumes increased 7% for gas processing, 9% for oil terminaling and 11% for water gathering in the second quarter of 2025 compared with the second quarter of 2024, primarily due to higher production.

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

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How We Generate Revenues

We generate substantially all of our revenues by charging fees for gathering, compressing and processing natural gas and fractionating NGLs;

We generate substantially all of our revenues by charging fees for gathering, compressing and processing natural gas and fractionating natural gas liquids (“NGLs”);

gathering, terminaling, loading and transporting crude oil and NGLs;

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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.

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.

Together with our Sponsor, 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.

PART I – FINANCIAL INFORMATION (CONT’D)

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Adjusted EBITDA.

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, 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 define “Adjusted EBITDA” 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.

We use Adjusted EBITDA to analyze our performance and liquidity.

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• the viability of acquisitions and other capital expenditure projects and the returns on investment of various investment opportunities.

PART I – FINANCIAL INFORMATION (CONT’D)

We believe that the presentation of Adjusted EBITDA provides useful information to investors in assessing our financial condition and results of operations.

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Results of Operations

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

Three Months Ended June 30, 2025 Compared to Three Months Ended June 30, 2024

Results of operations for the three months ended June 30, 2025 and 2024 are presented below (in millions, unless otherwise noted).

For the Three Months Ended June 30, 2025

Processing and Storage

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PART I – FINANCIAL INFORMATION (CONT’D)

For the Three Months Ended March 31, 2024

For the Three Months Ended June 30, 2024

Processing and Storage

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(2) Thousand barrels per day

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.

Revenues and other income increased $26.9 million in the second quarter of 2025 compared to the second quarter of 2024, of which $9.0 million is attributable to higher tariff rates, $6.9 million is attributable to higher gas gathering physical volumes, and $3.9 million is attributable to higher water gathering and disposal revenue.

Additionally, $3.9 million of the increase is attributable to higher pass‑through revenue, $2.9 million is attributable to higher crude oil gathering physical volumes, and $0.3 million is attributable to services provided directly to third parties.

Operating and maintenance expenses (exclusive of depreciation) increased $3.9 million, of which $3.9 million is attributable to higher pass-through costs, including produced water trucking and disposal and electricity fees, and $2.9 million is attributable to higher employee costs charged to us under our omnibus and employee secondment agreements, offset by $2.9 million primarily attributable to lower maintenance activities.

Depreciation expense increased $1.2 million due to new gathering assets brought into service.

PART I – FINANCIAL INFORMATION (CONT’D)

Processing and Storage

Revenues and other income increased $18.4 million in the second quarter of 2025 compared to the second quarter of 2024, of which $9.2 million is attributable to higher gas processing physical volumes, $7.3 million is attributable to higher tariff rates, $1.0 million is attributable to higher pass‑through revenue, and $0.9 million is attributable to services provided directly to third parties.

Operating and maintenance expenses (exclusive of depreciation) increased $3.3 million, of which $1.0 million is attributable to higher pass-through costs, $1.0 million is attributable to higher employee costs charged to us under our omnibus and employee secondment agreements, and $1.3 million is attributable to all other costs.

Terminaling and Export

Revenues and other income increased $3.4 million in the second quarter of 2025 compared to the second quarter of 2024, of which $2.3 million is attributable to higher physical volumes and $1.1 million is primarily attributable to higher tariff rates.

Operating and maintenance expenses (exclusive of depreciation) remained relatively flat in the second quarter of 2025 compared to the second quarter of 2024.

Interest and Other

Interest expense, net of interest income, increased $5.7 million in the second quarter of 2025 compared to the second quarter of 2024, of which $5.3 million is attributable to interest on senior unsecured notes primarily related to the $600.0 million 6.500% fixed-rate senior unsecured note issued in May 2024, $0.9 million is attributable to higher amortization of deferred finance costs and $0.7 million is attributable to lower interest income.

These increases were partially offset by $1.2 million attributable to lower interest on lower borrowings under our Credit Facilities.

Income tax expense increased $13.1 million in the second quarter of 2025 compared to the second quarter of 2024, primarily driven by increased ownership of the Partnership by Hess Midstream LP following equity offering and unit repurchase transactions in 2024 and 2025.

PART I – FINANCIAL INFORMATION (CONT’D)

Six Months Ended June 30, 2025 Compared to Six Months Ended June 30, 2024

Results of operations for the six months ended June 30, 2025 and 2024 are presented below (in millions, unless otherwise noted).

For the Six Months Ended June 30, 2025

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 Six Months Ended June 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

Revenues and other income increased $42.4 million in the first six months of 2025 compared to the first six months of 2024, of which $13.5 million is attributable to higher gas gathering physical volumes, $11.2 million is attributable to higher tariff rates, $5.5 million is attributable to higher water gathering and disposal revenue, and $5.3 million is attributable to higher crude oil gathering physical volumes.

Additionally, $4.8 million of the increase is attributable to higher pass‑through revenue, $1.3 million is attributable to crude oil MVCs recognized in revenue upon expiration of shortfall fee credits and $0.8 million is attributable to services provided directly to third parties.

Operating and maintenance expenses (exclusive of depreciation) increased $8.0 million in the first six months of 2025 compared to the first six months of 2024, of which $7.3 million is attributable to higher employee costs charged to us under our omnibus and employee secondment agreements and $4.8 million is attributable to higher pass-through costs, including produced water trucking and disposal and electricity fees, partially offset by $4.1 million primarily attributable to lower compressor stations overhauls and other maintenance activities.

Depreciation expense increased $2.8 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 $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.

Revenues and other income increased $27.1 million in the first six months of 2025 compared to the first six months of 2024, of which $18.3 million is attributable to higher gas processing physical volumes, $5.5 million is attributable to higher tariff rates, $2.4 million is attributable to higher pass-through revenue and $0.9 million is attributable to services provided directly to third parties.

Operating and maintenance expenses (exclusive of depreciation) increased $5.8 million in the first six months of 2025 compared to the first six months of 2024, of which $2.4 million is attributable to higher pass-through costs, $2.2 million is attributable to higher third‑party processing fees and $1.2 million is attributable to all other costs.

Terminaling and Export

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.

Revenues and other income increased $5.6 million in the first six months of 2025 compared to the first six months of 2024, of which $3.4 million is attributable to higher physical volumes and $2.2 million is attributable to higher tariff rates.

Operating and maintenance expenses (exclusive of depreciation) remained relatively flat in the first six months of 2025 compared to the first six months of 2024.

Interest and Other

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.

Interest expense, net of interest income, increased $13.6 million in the first six months of 2025 compared to the first six months of 2024, of which $18.1 million is attributable to interest on $800.0 million 5.875% fixed-rate senior unsecured notes issued in February 2025, $14.7 million is attributable to interest on $600.0 million 6.500% fixed-rate senior unsecured notes issued in May 2024, $2.0 million is attributable to extinguishment loss related to early redemption of $800.0 million 5.625% fixed-rate senior unsecured notes and $1.8 million is attributable to higher amortization of deferred finance costs.

These increases were partially offset by $14.5 million attributable to lower interest on $800.0 million 5.625% fixed-rate senior unsecured notes that were redeemed in March 2025, $7.9 million attributable to lower interest on lower borrowings under our Credit Facilities and $0.6 million higher interest income.

Income tax expense increased $21.8 million in the first six months of 2025 compared to the first six months of 2024, primarily driven by increased ownership of the Partnership by Hess Midstream LP following equity offering and unit repurchase transactions in 2024 and 2025.

PART I – FINANCIAL INFORMATION (CONT’D)

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These contracts provide cash flow stability and minimize our direct exposure to commodity price fluctuations, since we generally do not own any of the crude oil, natural gas, or NGLs that we handle and do not engage in the trading of crude oil, natural gas, or NGLs.

However, commodity price fluctuations indirectly influence our activities and results of operations over the long-term, since they can affect production rates and investments by Hess and third parties in the development of new crude oil and natural gas reserves.

However, commodity price fluctuations indirectly influence our activities and results of operations over the long-term, since they can affect production rates and investments by our Sponsor and third parties in the development of new crude oil and natural gas reserves.

The markets for oil and natural gas are volatile and will likely continue to be volatile in the future.

The throughput volumes at our facilities depend primarily on the volumes of crude oil and natural gas produced by Hess and third parties in the Bakken, which, in turn, are ultimately dependent on Hess’ and third parties’ exploration and production margins.

The throughput volumes at our facilities depend primarily on the volumes of crude oil and natural gas produced by our Sponsor and third parties in the Bakken, which, in turn, are ultimately dependent on our Sponsor’s and third parties’ exploration and production margins.

Exploration and production margins depend on the price of crude oil, natural gas, and NGLs.

These prices are volatile and influenced by numerous factors beyond our or our customers’ control, including the domestic and global supply of and demand for crude oil, natural gas and NGLs.

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

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

The commodities trading markets, as well as global and regional supply and demand factors, may also influence the selling prices of crude oil, natural gas and NGLs.

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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 March 31,

Three Months Ended June 30,

Six Months Ended June 30,

(in millions)

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

On 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.

On July 28, 2025, we declared a quarterly cash distribution of $0.7370 per Class A Share, to be paid on August 14, 2025 to shareholders of record on August 7, 2025.

Simultaneously, the Partnership will make a distribution of $0.7370 per Class B Unit of the Partnership to the Sponsors.

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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:

As of June 30, 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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The notes described above are guaranteed by certain subsidiaries of the Partnership.

Each of the indentures for the senior notes described above contains customary covenants that restrict our ability and the ability of our restricted subsidiaries to (i) declare or pay any dividend or make any other restricted payments;

Each of the indentures for the senior unsecured notes described above contains customary covenants that restrict our ability and the ability of our restricted subsidiaries to (i) declare or pay any dividend or make any other restricted payments;

(ii) transfer or sell assets or subsidiary stock;

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or (iv) make restricted investments, unless, at the time of and immediately after giving pro forma effect to such restricted payments and any related incurrence of indebtedness or other transactions, no default has occurred and is continuing or would occur as a consequence of such restricted payment and if the leverage ratio (as defined in the indentures) does not exceed 4.25 to 1.00.

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

As of June 30, 2025, the Partnership was 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.

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

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

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Credit Facilities

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.

As of June 30, 2025, the Partnership had $1.4 billion senior secured credit facilities (the “Credit Facilities”) consisting of a $1.0 billion five-year revolving credit facility and a $400.0 million five‑year Term Loan A facility.

The Credit Facilities mature in July 2027.

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

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

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

Pricing levels for the facility fee and interest rate margins are based on the Partnership’s ratio of total debt to EBITDA (as defined in the Credit Facilities).

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

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.

As of June 30, 2025, borrowings of $273.0 million were drawn and outstanding under the Partnership’s revolving credit facility, and borrowings of $375.0 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.

The Credit Facilities are guaranteed by each direct and indirect wholly owned material domestic subsidiary of the Partnership, and are secured by first priority perfected liens on substantially all of the presently owned and after-acquired assets of the Partnership and its direct and indirect wholly owned material domestic subsidiaries, including equity interests directly owned by such entities, subject to certain customary exclusions.

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

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

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 a ratio of secured debt to EBITDA for the prior four fiscal quarters of not greater than 4.00 to 1.00 as of the last day of each fiscal quarter.

As of June 30, 2025, the Partnership was in compliance with these financial covenants.

On July 24, 2025, the Partnership received an investment grade credit rating from S&P.

See Note 12, Subsequent Events for additional description.

Operating Activities.

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.

Net cash provided by operating activities increased $22.4 million for the six months ended June 30, 2025, compared to the same period in 2024, primarily due to an increase in revenues and other income of $75.1 million, an increase in distributions received from equity investments of $2.2 million, partially offset by an increase in expenses, other than depreciation, equity-based compensation and other non-cash gains and losses of $28.6 million and an increase in cash used by changes in working capital of $26.3 million.

Investing Activities.

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.

Net cash used in investing activities decreased $9.8 million for the six months ended June 30, 2025, compared to the same period in 2024, primarily 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.

PART I – FINANCIAL INFORMATION (CONT’D)

Financing Activities.

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.

Net cash used in financing activities increased $126.2 million for the six months ended June 30, 2025, compared to the same period in 2024.

In the first six months of 2025, we received proceeds of $787.5 million, net of financing costs, from our issuance of the new 5.875% fixed-rate senior unsecured notes due 2028, compared to $591.1 million in proceeds, net of financing costs, from our issuance of the 6.500% fixed-rate senior unsecured notes in 2024.

In addition, we received $258.0 million net proceeds from borrowings under our Credit Facilities compared to repayments of $340.0 million from borrowings under our Credit Facilities in 2024.

We used the net proceeds from the issuance of the new 5.875% fixed-rate senior unsecured 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 $5.0 million higher in the first six months of 2025 compared to the same period in 2024.

In addition, in the first six months of 2025, we spent $100.0 million more for share and unit repurchases, paid higher distributions to shareholders and noncontrolling interests of $14.8 million, as well as paid higher transaction costs of $0.8 million compared to the same period in 2024.

Capital Expenditures

Our operations can be capital intensive, requiring investments to expand, upgrade, maintain or enhance existing operations and to meet environmental and operational regulations.

PART I – FINANCIAL INFORMATION (CONT’D)

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:

Three Months Ended March 31,

Six Months Ended June 30,

(in millions)

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Additions to property, plant and equipment

Capital expenditures in 2025 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.

Capital expenditures in 2025 are primarily attributable to continued expansion of our compression capacity and gas capture capabilities and related pipeline infrastructure to meet our Sponsor’s and third parties’ current and future production growth and gas capture targets.

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

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

our ability to deliver ongoing return of capital to our shareholders;

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.

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The following important factors could cause actual results to differ materially from those in our forward-looking statements:

• the ability of Hess and other parties to satisfy their obligations to us, including Hess’ ability to meet its drilling and development plans on a timely basis or at all, its ability to deliver its nominated volumes to us, and the operation of joint ventures that we may not control;

• the ability of Chevron and other parties to satisfy their obligations to us, including Chevron’s ability to meet its drilling and development plans on a timely basis or at all, its ability to deliver its nominated volumes to us, and the operation of joint ventures that we may not control;

• our ability to generate sufficient cash flow to pay current and expected levels of distributions;

• reductions in the volumes of crude oil, natural gas, NGLs and produced water we gather, process, terminal or store;

• the actual volumes we gather, process, terminal and store for Hess in excess of our MVCs and relative to Hess’ nominations;

• the actual volumes we gather, process, terminal and store for Chevron in excess of our MVCs and relative to Chevron’s nominations;

• fluctuations in the prices and demand for crude oil, natural gas and NGLs;

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• liability resulting from litigation;

• 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;

o potential delays in consummating the potential transaction, including as a result of regulatory approvals or the ongoing arbitration proceedings regarding preemptive rights in the Stabroek Block joint operating agreement;

o risks that such ongoing arbitration is not satisfactorily resolved and the potential transaction fails to be consummated;

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

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;

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

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

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

o the effect of the announcement, pendency or completion of the potential transaction on the parties’ business relationships and business generally, and the risks that the potential transaction disrupts current plans and operations of Chevron or Hess and potential difficulties in Hess employee retention as a result of the transaction, as well as the risk of disruption of Chevron’s or Hess’ management and business disruption during the pendency of, or following, the potential transaction;

o the receipt of required Chevron board of directors’ authorizations to implement capital allocation strategies, including future dividend payments;

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

o negative effects of the announcement of the transaction, and the pendency or completion of the proposed acquisition on the market price of Chevron’s or Hess’ common stock and/or operating results;

o rating agency actions and Chevron’s and Hess’ ability to access short- and long-term debt markets on a timely and affordable basis;

• risks and uncertainties associated with Hess’ completed Merger and integration with Chevron, including the following:

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

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

o the effect of the completion of the transaction on the parties’ business relationships and business generally, and the risks that the transaction disrupts current plans and operations of Chevron or Hess and potential difficulties in Hess employee retention as a result of the transaction, as well as the risk of disruption of Chevron’s or Hess’ management and business disruption following the transaction;

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

PART I – FINANCIAL INFORMATION (CONT’D)

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

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We generally do not take ownership of the crude oil, natural gas or NGLs that we currently gather, process, terminal, store or transport for our customers.

Because we generate substantially all of our revenues by charging fees under long-term commercial agreements with Hess with minimum volume commitments, Hess bears the risks associated with fluctuating commodity prices and we have minimal direct exposure to commodity prices.

Because we generate substantially all of our revenues by charging fees under long-term commercial agreements with Hess with minimum volume commitments, our Sponsor bears the risks associated with fluctuating commodity prices and we have minimal direct exposure to commodity prices.

In the normal course of our business, we are exposed to market risks related to changes in interest rates.

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

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.

At June 30, 2025, we did not have in place any derivative instruments to hedge any exposure to changes in interest rates.

At June 30, 2025, our total debt had a carrying value of $3,714.4 million and a fair value of approximately $3,752.2 million, based on Level 2 inputs in the fair value measurement hierarchy.

A 15% increase or decrease in interest rates would decrease or increase the fair value of our fixed rate debt by approximately $81.5 million or $79.7 million, respectively.

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Our exposure to market risk related to changes in interest rates has not materially changed from what we previously disclosed in our 2024 Annual Report.

PART I – FINANCIAL INFORMATION (CONT’D)

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What changed 10-Q

Item 2. Management’s Discussion and Analysis