What changed in this filing

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Item 2. Management’s Discussion and Analysis

2026-08-06 compared with 2026-05-07 · 125 added, 35 removed, 261 unchanged (38% of the section changed)

26 unchanged sentences

Credit Ratings.

At March 31, 2026, the Partnership’s senior unsecured debt is rated ‘BBB-’ by S&P Global Ratings and ‘Ba1’ by Moody’s Investors Service.

First Quarter Results

Significant financial and operating highlights for the first quarter of 2026 included:

At June 30, 2026, the Partnership’s senior unsecured debt is rated ‘BBB-’ by S&P Global Ratings and ‘Ba1’ by Moody’s Investors Service.

Second Quarter Results

Significant financial and operating highlights for the second quarter of 2026 included:

• Consolidated net income of $173.7 million;

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PART I – FINANCIAL INFORMATION (CONT’D)

• Cash distribution of $0.7792 per Class A Share declared on April 27, 2026, an increase of $0.0151 per Class A Share for the first quarter of 2026 as compared with the fourth quarter of 2025.

Revenues and other income in the first quarter of 2026 were $390.1 million, up from $382.0 million in the prior‑year quarter, primarily due to higher tariff rates, third-party services and pass-through revenues, partially offset by lower throughput volumes.

Total operating costs and expenses in the first quarter of 2026 were $152.0 million, up from $144.6 million in the prior-year quarter, primarily due to higher depreciation expense.

Interest expense, net of interest income, in the first quarter of 2026 was $55.4 million, approximately flat compared with $56.4 million in the prior-year quarter.

Income tax expense was $28.2 million, up from $23.0 million in the prior-year quarter, primarily resulting from ownership changes following the GIP secondary equity offering and Class A Share and Class B Unit repurchase transactions.

As a result, consolidated net income decreased $3.7 million while Adjusted EBITDA increased $7.5 million for the first quarter of 2026 compared with the first quarter of 2025.

Throughput volumes decreased 5% for oil terminaling and 9% for water gathering in the first quarter of 2026 compared with the first quarter of 2025, primarily due to lower production.

Throughput volumes increased 1% for gas processing in the first quarter of 2026 compared with the first quarter of 2025, primarily due to higher third-party volumes.

• Cash distribution of $0.7888 per Class A Share declared on July 27, 2026, an increase of $0.0096 per Class A Share for the second quarter of 2026 as compared with the first quarter of 2026.

Revenues and other income in the second quarter of 2026 were $399.0 million, down from $414.2 million in the prior‑year quarter, primarily due to lower throughput volumes, partially offset by higher tariff rates and third-party services.

Total operating costs and expenses in the second quarter of 2026 were $145.8 million, down from $154.0 million in the prior-year quarter, primarily due to lower employee costs and lower maintenance expense, partially offset by higher depreciation expense.

Income from equity investments in the second quarter of 2026 was $6.1 million, up from $4.0 million in the prior‑year quarter, primarily due to higher volumes processed at the LM4 plant.

Interest expense, net of interest income, in the second quarter of 2026 was $54.5 million, approximately flat compared with $55.4 million in the prior-year quarter.

Income tax expense was $31.1 million, up from $29.1 million in the prior-year quarter as a result of changes in income attributable to the Company.

As a result, consolidated net income decreased $6.0 million while Adjusted EBITDA decreased $2.3 million for the second quarter of 2026 compared with the second quarter of 2025.

Throughput volumes decreased 15% for oil terminaling and 12% for water gathering in the second quarter of 2026 compared with the second quarter of 2025, primarily due to lower production as a result of lower new-well activity.

Throughput volumes decreased 4% for gas processing in the second quarter of 2026 compared with the second quarter of 2025, primarily due to planned maintenance at the Tioga Gas Plant.

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 March 31, 2026 Compared to Three Months Ended March 31, 2025

Results of operations for the three months ended March 31, 2026 and 2025 are presented below (in millions, unless otherwise noted).

For the Three Months Ended March 31, 2026

Three Months Ended June 30, 2026 Compared to Three Months Ended June 30, 2025

Results of operations for the three months ended June 30, 2026 and 2025 are presented below (in millions, unless otherwise noted).

For the Three Months Ended June 30, 2026

Processing and Storage

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PART I – FINANCIAL INFORMATION (CONT’D)

For the Three Months Ended March 31, 2025

For the Three Months Ended June 30, 2025

Processing and Storage

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(2) Thousand barrels per day

Revenues and other income increased $0.5 million in the first quarter of 2026 compared to the first quarter of 2025, of which $4.9 million is attributable to higher pass‑through revenue, $3.9 million is attributable to higher tariff rates, and $3.0 million is attributable to services provided directly to third parties.

These increases are partially offset by $6.8 million attributable to lower gas gathering physical volumes delivered by Chevron, $1.8 million attributable to lower crude oil gathering physical volumes delivered by Chevron, $1.4 million attributable to lower water gathering and disposal revenue and $1.3 million attributable to lower MVC revenue recognized in the first quarter of 2026.

Revenues and other income decreased $12.6 million in the second quarter of 2026 compared to the second quarter of 2025, of which, $16.0 million is attributable to lower gas gathering physical volumes delivered by Chevron, $6.7 million is attributable to lower crude oil gathering physical volumes delivered by Chevron and $2.3 million is attributable to lower water gathering and disposal revenue.

These decreases are partially offset by $4.9 million attributable to higher tariff rates, $3.5 million attributable to services provided directly to third parties, $2.7 million attributable to higher MVC revenue recognized in the second quarter of 2026 and $1.3 million attributable to higher pass‑through revenue.

Operating and maintenance expenses (exclusive of depreciation) decreased $4.3 million, of which $5.6 million is attributable to lower employee costs charged to us under our omnibus and employee secondment agreements, partially offset by $1.3 million attributable to higher pass-through costs, including produced water trucking and disposal and electricity fees.

Depreciation expense increased $3.9 million due to new gathering assets brought into service.

PART I – FINANCIAL INFORMATION (CONT’D)

Processing and Storage

Revenues and other income decreased $6.6 million in the second quarter of 2026 compared to the second quarter of 2025, of which $16.0 million is attributable to lower gas processing physical volumes delivered by Chevron, partially offset by $5.2 million attributable to services provided directly to third parties, $3.9 million attributable to higher tariff rates and $0.3 million attributable to higher pass‑through revenue.

Operating and maintenance expenses (exclusive of depreciation) decreased $2.6 million primarily due to lower maintenance activity.

Income from equity investments increased $2.1 million in the second quarter of 2026 compared to the second quarter of 2025 primarily due to higher volumes processed at the LM4 plant.

Terminaling and Export

Revenues and other income increased $4.0 million in the second quarter of 2026 compared to the second quarter of 2025, of which $7.0 million is attributable to higher tariff rates, $0.6 million is attributable to higher MVC revenue and another $0.6 million is attributable to services provided directly to third parties.

These increases were partially offset by $4.2 million attributable to lower physical volumes delivered by Chevron.

Operating and maintenance expenses (exclusive of depreciation) remained relatively flat in the second quarter of 2026 compared to the second quarter of 2025.

Interest and Other

Interest expense, net of interest income, remained relatively flat in the second quarter of 2026 compared to the second quarter of 2025.

Income tax expense increased $2.0 million in the second quarter of 2026 compared to the second quarter of 2025 as a result of changes in income attributable to the Company.

PART I – FINANCIAL INFORMATION (CONT’D)

Six Months Ended June 30, 2026 Compared to Six Months Ended June 30, 2025

Results of operations for the six months ended June 30, 2026 and 2025 are presented below (in millions, unless otherwise noted).

For the Six Months Ended June 30, 2026

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, 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

Revenues and other income decreased $12.1 million in the first six months of 2026 compared to the first six months of 2025, of which $22.8 million is attributable to lower gas gathering physical volumes delivered by Chevron, $8.5 million is attributable to lower crude oil gathering physical volumes delivered by Chevron and $3.7 million is attributable to lower water gathering and disposal revenue.

These decreases are partially offset by $8.8 million attributable to higher tariff rates, $6.5 million attributable to services provided directly to third parties, $6.2 million attributable to higher pass‑through revenue and $1.4 million attributable to higher MVC revenue recognized in the first six months of 2026.

Operating and maintenance expenses (exclusive of depreciation) decreased $5.0 million, of which $10.6 million is attributable to lower employee costs charged to us under our omnibus and employee secondment agreements and $4.6 million is attributable to lower maintenance activity.

These decreases are partially offset by $4.9 million attributable to higher pass-through costs, including produced water trucking and disposal and electricity fees and $1.3 million attributable to higher third-party offload fees.

These decreases are partially offset by $6.2 million attributable to higher pass‑through costs, including produced water trucking and disposal and electricity fees and $4.0 million attributable to all other costs.

Depreciation expense increased $9.2 million due to new gathering assets brought into service.

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Processing and Storage

Revenues and other income increased $0.6 million in the first quarter of 2026 compared to the first quarter of 2025, of which $4.8 million is attributable to services provided directly to third parties, $3.9 million is attributable to higher tariff rates and $0.2 million attributable to higher pass‑through revenue, partially offset by $8.3 million attributable to lower gas processing physical volumes delivered by Chevron.

Operating and maintenance expenses (exclusive of depreciation) increased $1.6 million, of which $3.1 million is attributable to higher third-party processing and offload fees, partially offset by $1.5 million attributable to lower maintenance activity and all other costs.

Depreciation expense increased $1.7 million, primarily related to cancellation of the Capa gas plant project and write off of the related costs.

Revenues and other income decreased $6.0 million in the first six months of 2026 compared to the first six months of 2025, of which $24.3 million is attributable to lower gas processing physical volumes delivered by Chevron, partially offset by $10.0 million attributable to services provided directly to third parties, $7.8 million attributable to higher tariff rates and $0.5 million attributable to higher pass‑through revenue.

Operating and maintenance expenses (exclusive of depreciation) decreased $1.0 million, of which $3.7 million is attributable to lower maintenance activity and $1.3 million is attributable to lower employee costs charged to us under our omnibus and employee secondment agreements, partially offset by $4.0 million attributable to higher third-party processing and offload fees.

Income from equity investments increased $1.9 million in in the first six months of 2026 compared to the first six months of 2025 primarily due to higher volumes processed at the LM4 plant.

Terminaling and Export

Revenues and other income increased $7.0 million in the first quarter of 2026 compared to the first quarter of 2025, of which $7.2 million is attributable to higher tariff rates, $0.5 million is attributable to MVC revenues that were previously deferred, and $0.4 million is attributable to services provided directly to third parties, partially offset by $1.1 million attributable to lower physical volumes delivered by Chevron.

Operating and maintenance expenses (exclusive of depreciation) remained relatively flat in the first quarter of 2026 compared to the first quarter of 2025.

Revenues and other income increased $11.0 million in the first six months of 2026 compared to the first six months of 2025, of which $14.2 million is attributable to higher tariff rates, $1.1 million is attributable to higher MVC revenue and $1.0 million is attributable to services provided directly to third parties, partially offset by $5.3 million attributable to lower physical volumes delivered by Chevron.

Operating and maintenance expenses (exclusive of depreciation) decreased $2.2 million primarily due to lower employee costs charged to us under our omnibus and employee secondment agreements.

Interest and Other

Interest expense, net of interest income, decreased $1.0 million in the first quarter of 2026 compared to the first quarter of 2025, of which $2.8 million is attributable to lower interest on our senior unsecured notes and $2.0 million is attributable to extinguishment loss, each related to the early redemption of $800.0 million 5.625% fixed-rate senior unsecured notes in the prior year, partially offset by $2.5 million attributable to higher interest on higher borrowings under our Credit Facilities and $1.3 million attributable to lower interest income.

Income tax expense increased $5.2 million in the first quarter of 2026 compared to the first quarter of 2025, primarily driven by increased ownership of the Partnership by Hess Midstream LP following equity offering and share and unit repurchase transactions in 2025.

Interest expense, net of interest income, decreased $1.9 million in the first six months of 2026 compared to the first six months of 2025, of which $2.8 million is attributable to lower interest on our senior unsecured notes and $2.0 million is attributable to extinguishment loss, each related to the early redemption of $800.0 million 5.625% fixed-rate senior unsecured notes in the prior year, partially offset by $1.5 million attributable to higher interest on higher borrowings under our Credit Facilities and $1.4 million attributable to lower interest income.

Income tax expense increased $7.2 million in the first six months of 2026 compared to the first six months of 2025 as a result of changes in income attributable to the Company.

PART I – FINANCIAL INFORMATION (CONT’D)

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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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Operating Activities.

Net cash provided by operating activities increased $50.9 million for the three months ended March 31, 2026, compared to the same period in 2025, primarily due to an increase in cash provided by changes in working capital of $44.3 million and an increase in revenues and other income of $8.1 million, partially offset by an increase in expenses, other than depreciation, amortization, equity-based compensation and other non-cash gains and losses of $1.3 million and a decrease in distributions received from equity investments of $0.2 million.

Net cash provided by operating activities increased $52.6 million for the six months ended June 30, 2026, compared to the same period in 2025, primarily due to an increase in cash provided by changes in working capital of $51.7 million and a decrease in expenses, other than depreciation, amortization, equity-based compensation and other non-cash gains and losses of $10.0 million, partially offset by a decrease in revenues and other income of $7.1 million and a decrease in distributions received from equity investments of $2.0 million.

Investing Activities.

Net cash used in investing activities decreased $16.7 million for the three months ended March 31, 2026, compared to the same period in 2025, primarily driven by completion of our multi-year expansion of compression capacity and the timing of payments for additions to property, plant, and equipment related to ongoing capital projects.

Net cash used in investing activities decreased $57.0 million for the six months ended June 30, 2026, compared to the same period in 2025, primarily driven by completion of our multi-year projects for expansion of compression capacity and the timing of payments for additions to property, plant, and equipment related to ongoing capital projects.

Financing Activities.

Net cash used in financing activities increased $66.7 million for the three months ended March 31, 2026, compared to the same period in 2025.

In the first three months of 2026, net borrowings under our revolving credit facility were $5.0 million compared to $113.0 million in the first three months of 2025, and repayments of the term loan facility were $7.5 million compared to $5.0 million, respectively.

Net cash used in financing activities increased $106.7 million for the six months ended June 30, 2026, compared to the same period in 2025.

In the first six months of 2026, net repayments of our revolving credit facility balances were $82.0 million compared to $258.0 million of borrowings in the first six months of 2025, and repayments of the term loan were $15.0 million compared to $10.0 million, respectively.

The prior period also included impacts of refinancing of senior unsecured notes of $12.5 million.

In addition, in the first three months of 2026, we spent $40.0 million less for share and unit repurchases and paid higher distributions to shareholders and noncontrolling interests of $7.6 million compared to the same period in 2025.

In addition, in the first six months of 2026, we spent $241.0 million less for share and unit repurchases and paid higher distributions to shareholders and noncontrolling interests of $15.2 million compared to the same period in 2025.

PART I – FINANCIAL INFORMATION (CONT’D)

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:

Three Months Ended March 31,

Six Months Ended June 30,

(in millions)

4 unchanged sentences

Additions to property, plant and equipment

PART I – FINANCIAL INFORMATION (CONT’D)

Capital expenditures in 2026 primarily relate to ongoing gathering system well connects to service Chevron and third-party customers, with the remainder attributable to completion of the compression and gathering pipeline buildout.

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

At March 31, 2026, we did not have in place any derivative instruments to hedge any exposure to changes in interest rates.

At March 31, 2026, our total debt had a carrying value of $3,772.0 million and a fair value of approximately $3,789.0 million, based on Level 2 inputs in the fair value measurement hierarchy.

At June 30, 2026, we did not have in place any derivative instruments to hedge any exposure to changes in interest rates.

At June 30, 2026, our total debt had a carrying value of $3,680.0 million and a fair value of approximately $3,694.8 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 $62.6 million or $49.3 million, respectively.

3 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