Hess Midstream LP (NYSE: HESM) (“Hess Midstream”), today
announced the execution of a definitive agreement providing for the
repurchase of approximately $100 million of Class B units by its
subsidiary, Hess Midstream Operations LP, from affiliates of Hess
Corporation and Global Infrastructure Partners, Hess Midstream’s
sponsors (the “Sponsors”). The terms of the proposed unit
repurchase transaction were unanimously approved by the Board of
Directors of Hess Midstream’s general partner, based on the
unanimous approval and recommendation of its conflicts committee
composed solely of independent directors.
“We continue to execute unit repurchase transactions as part of
our unique and differentiated financial strategy, which prioritizes
consistent and ongoing return of capital to our shareholders,” said
Jonathan Stein, Chief Financial Officer of Hess Midstream. “Since
the beginning of 2021 through this current transaction, we will
have returned $1.55 billion to shareholders through accretive unit
repurchases from our Sponsors that have reduced the total unit
count by approximately 20%. Following this unit repurchase, which
is expected to provide immediate accretion to our shareholders, we
expect to continue to have more than $1 billion of financial
flexibility through 2025 that can be used to support potential
incremental unit repurchases.”
Pursuant to the terms of the repurchase agreement, the
repurchased units will be cancelled upon the closing of the unit
repurchase transaction, which is expected to result in increased
distributable cash flow per Class A share providing capacity for
incremental distribution growth above Hess Midstream’s annual
distribution target of at least 5% through 2025, consistent with
Hess Midstream’s return of capital framework.
Unit Repurchase Summary
Hess Midstream Operations LP, Hess Midstream’s consolidated
subsidiary, agreed to repurchase 3,370,407 Class B units of Hess
Midstream Operations LP, equal to approximately 1.5% of the
consolidated company, held by the Sponsors for an aggregate
purchase price of approximately $100 million. The purchase price
per Class B unit is $29.67, the closing price of the Class A shares
on November 13, 2023. After completing the unit repurchase
transaction, ownership of Hess Midstream on a consolidated basis
will be approximately 29.8% for the public, 32.4% for Global
Infrastructure Partners and 37.8% for Hess Corporation. The unit
repurchase is anticipated to close on November 16, 2023. Hess
Midstream expects to fund the unit repurchase through borrowings
under its existing revolving credit facility.
About Hess Midstream
Hess Midstream LP is a fee-based, growth-oriented midstream
company that owns, operates, develops and acquires a diverse set of
midstream assets to provide services to Hess Corporation and
third-party customers. Hess Midstream owns oil, gas and produced
water handling assets that are primarily located in the Bakken and
Three Forks Shale plays in the Williston Basin area of North
Dakota. More information is available at www.hessmidstream.com.
Cautionary Note Regarding Forward-Looking Information
This press release contains “forward-looking statements” within
the meaning of U.S. federal securities laws. Words such as
“anticipate,” “estimate,” “expect,” “forecast,” “guidance,”
“could,” “may,” “should,” “would,” “believe,” “intend,” “project,”
“plan,” “predict,” “will,” “target” and similar expressions
identify forward-looking statements, which are not historical in
nature. Our forward-looking statements may include, without
limitation: our future financial and operational results, including
our ability to increase our distributions or achieve our targeted
distribution growth rate; our business strategy and profitability;
the expected timing and completion of the Class B unit repurchase
from the Sponsors; and our ability to execute future accretive
opportunities, including incremental return of capital to
shareholders and potential incremental unit repurchases.
Forward-looking statements are based on our current
understanding, assessments, estimates and projections of relevant
factors and reasonable assumptions about the future.
Forward-looking statements are subject to certain known and unknown
risks and uncertainties that could cause actual results to differ
materially from our historical experience and our current
projections or expectations of future results expressed or implied
by these forward-looking statements. The following important
factors could cause actual results to differ materially from those
in our forward-looking statements: the ability of Hess Corporation
(“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; our ability to generate sufficient cash flow to pay
current and expected levels of distributions; reductions in the
volumes of crude oil, natural gas, natural gas liquids (“NGLs”) and
produced water we gather, process, terminal or store; the actual
volumes we gather, process, terminal or store for Hess in excess of
our minimum volume commitments and relative to Hess’ nominations;
fluctuations in the prices and demand for crude oil, natural gas
and NGLs; changes in global economic conditions and the effects of
a global economic downturn or inflation on our business and the
business of our suppliers, customers, business partners and
lenders; the direct and indirect effects of an epidemic or outbreak
of an infectious disease, such as COVID-19 and its variants, on our
business and those of our business partners, suppliers and
customers, including Hess; our ability to comply with government
regulations or make capital expenditures required to maintain
compliance, including our ability to obtain or maintain permits
necessary for capital projects in a timely manner, if at all, or
the revocation or modification of existing permits; our ability to
successfully identify, evaluate and timely execute our capital
projects, investment opportunities and growth strategies, whether
through organic growth or acquisitions; our ability to satisfy the
closing conditions of the Class B unit repurchase; costs or
liabilities associated with federal, state and local laws,
regulations and governmental actions applicable to our business,
including legislation and regulatory initiatives relating to
environmental protection and health and safety, such as spills,
releases, pipeline integrity and measures to limit greenhouse gas
emissions and climate change; our ability to comply with the terms
of our credit facility, indebtedness and other financing
arrangements, which, if accelerated, we may not be able to repay;
reduced demand for our midstream services, including the impact of
weather or the availability of the competing third-party midstream
gathering, processing and transportation operations; potential
disruption or interruption of our business due to catastrophic
events, such as accidents, severe weather events, labor disputes,
information technology failures, constraints or disruptions and
cyber-attacks; any limitations on our ability to access debt or
capital markets on terms that we deem acceptable, including as a
result of weakness in the oil and gas industry or negative outcomes
within commodity and financial markets; liability resulting from
litigation; risks and uncertainties associated with Hess’ proposed
merger with Chevron Corporation; and other factors described in
Item 1A—Risk Factors in our Annual Report on Form 10-K and any
additional risks described in our other filings with the Securities
and Exchange Commission.
As and when made, we believe that our forward-looking statements
are reasonable. However, given these risks and uncertainties,
caution should be taken not to place undue reliance on any such
forward-looking statements since such statements speak only as of
the date when made and there can be no assurance that such
forward-looking statements will occur and actual results may differ
materially from those contained in any forward-looking statement we
make. Except as required by law, we undertake no obligation to
publicly update or revise any forward-looking statements, whether
because of new information, future events or otherwise.
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version on businesswire.com: https://www.businesswire.com/news/home/20231114857407/en/
Investor Contact: Jennifer Gordon (212)
536-8244
Media Contact: Lorrie Hecker (212)
536-8250
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