Financial Performance & Guidance - Hess Midstream projects 2025 Adjusted EBITDA to be between $1,235 million and $1,285 million[7,64] - The company anticipates 2025 Adjusted Free Cash Flow to range from $735 million to $785 million[7,64] - Hess Midstream targets at least 5% annual DPS (Distribution Per Share) growth through at least 2027[7,9,11] - The company expects approximately 10% growth in oil and gas volumes in 2025[10,65] Contractual & Operational Highlights - Approximately 80% of Hess Midstream's revenues are protected by Minimum Volume Commitments (MVCs) in 2025[7,10,65] - Hess Midstream's commercial contracts with Hess extend through 2033, providing long-term stability[7,20,21,22] - The company has approximately 500 MMcf/d of gas processing capacity[33,41] - Hess Midstream has financial flexibility exceeding $1.25 billion expected through 2027 for potential share repurchases[7,10,12] Capital Allocation & Leverage - Hess Midstream targets a conservative leverage ratio of 30x[7] - The company expects leverage to decline to below 30x Adjusted EBITDA by the end of 2025[10,65]

Core Insights - Blackstone's total market value of holdings reached $24.1 billion for Q1 2025, up from $22.0 billion in the previous quarter, representing a 9% increase [1][2] - The investment portfolio included 47 new stocks, 36 stocks were increased, 25 stocks were reduced, and 39 stocks were completely sold out [1][2] - The top ten holdings accounted for 68.8% of the total market value [1][2] Holdings Overview - The largest holding is Cheniere Energy Partners (CQP.US) with approximately 102 million shares valued at about $6.759 billion, making up 28.07% of the portfolio, unchanged from the previous quarter [2][3] - Corebridge Financial Inc. (CRBG.US) is the second-largest holding with around 61.96 million shares valued at approximately $1.956 billion, also unchanged [2][3] - Williams (WMB.US) ranks third with about 20.08 million shares valued at approximately $1.200 billion, reflecting a 5.94% increase in holdings [3][4] Sector Focus - The portfolio shows a strong inclination towards energy stocks, with significant positions in companies like Targa Resources (TRGP.US), Energy Transfer Equity LP (ET.US), and MPLX LP (MPLX.US) [3][4] - The top five purchases included SPDR S&P 500 ETF put options, CoreWeave (CRWV.US), Kinder Morgan (KMI.US), Hess Midstream (HESM.US), and Enbridge (ENB.US) [4][5] - The top five sales included Expand Energy, First Industrial Realty (FR.US), Western Midstream (WES.US), Energy Transfer (ET.US), and NextEra Energy (NEE.US) [5][6]

PART I—FINANCIAL INFORMATION [Item 1. Financial Statements](index=3&type=section&id=Item%201.%20Financial%20Statements) The company's unaudited Q1 2025 financial statements show increased assets and operating cash flow, with a significant rise in net income attributable to its shareholders [Consolidated Balance Sheets](index=3&type=section&id=Consolidated%20Balance%20Sheets) Total assets grew to $4.3 billion, driven by a deferred tax asset, while total liabilities and partners' capital also increased due to debt and equity transactions Consolidated Balance Sheet Highlights (in millions) | Account | March 31, 2025 | December 31, 2024 | | :--- | :--- | :--- | | **Total current assets** | $150.1 | $149.4 | | **Property, plant and equipment, net** | $3,324.4 | $3,325.4 | | **Total assets** | **$4,263.6** | **$4,151.0** | | **Total current liabilities** | $186.1 | $219.3 | | **Long-term debt** | $3,546.8 | $3,449.4 | | **Total liabilities** | **$3,750.7** | **$3,685.7** | | **Total partners' capital** | **$512.9** | **$465.3** | [Consolidated Statements of Operations](index=4&type=section&id=Consolidated%20Statements%20of%20Operations) Q1 2025 revenues rose to $382.0 million, and net income attributable to Hess Midstream LP grew significantly to $71.6 million, reflecting ownership changes Q1 2025 vs Q1 2024 Statement of Operations (in millions, except per share data) | Metric | Q1 2025 | Q1 2024 | | :--- | :--- | :--- | | **Total revenues** | $382.0 | $355.6 | | **Income from operations** | $237.4 | $222.0 | | **Interest expense, net** | $56.4 | $48.5 | | **Net income** | $161.4 | $161.9 | | **Net income attributable to Hess Midstream LP** | $71.6 | $44.6 | | **Diluted EPS** | $0.65 | $0.59 | [Consolidated Statements of Cash Flows](index=6&type=section&id=Consolidated%20Statements%20of%20Cash%20Flows) Operating cash flow increased to $202.4 million in Q1 2025, while financing activities included debt refinancing, unit repurchases, and higher shareholder distributions Q1 2025 vs Q1 2024 Cash Flows (in millions) | Cash Flow Activity | Q1 2025 | Q1 2024 | | :--- | :--- | :--- | | **Net cash provided by operating activities** | $202.4 | $185.3 | | **Net cash used in investing activities** | $(45.5) | $(54.8) | | **Net cash used in financing activities** | $(155.1) | $(131.7) | | **Increase (decrease) in cash** | $1.8 | $(1.2) | [Notes to Consolidated Financial Statements](index=7&type=section&id=Notes%20to%20Consolidated%20Financial%20Statements) Notes detail significant equity transactions, debt refinancing, a high dependency on Hess for revenues, and a subsequent increase in shareholder distributions - In February 2025, GIP sold **12,650,000 Class A Shares** in an underwritten public offering; the company did not receive any proceeds from this transaction[31](index=31&type=chunk) - In January 2025, the Partnership repurchased **2,572,677 Class B Units** from its Sponsors for approximately **$100.0 million**, funded by its revolving credit facility[35](index=35&type=chunk) - Revenues from commercial agreements with Hess accounted for **98% of total revenues** for the first quarters of both 2025 and 2024[47](index=47&type=chunk) - In February 2025, the Partnership issued **$800.0 million of 5.875% senior notes** due 2028 and used the proceeds to redeem its $800.0 million 5.625% senior notes due 2026, recognizing a **$2.0 million extinguishment loss**[58](index=58&type=chunk) - Subsequent to quarter-end, the company declared a Q1 2025 cash distribution of **$0.7098 per Class A Share** and entered into agreements for a **$190.0 million Class B Unit repurchase** and a **$10.0 million accelerated share repurchase (ASR)**[82](index=82&type=chunk)[83](index=83&type=chunk)[84](index=84&type=chunk) [Item 2. Management's Discussion and Analysis of Financial Condition and Results of Operations](index=19&type=section&id=Item%202.%20Management's%20Discussion%20and%20Analysis%20of%20Financial%20Condition%20and%20Results%20of%20Operations) Management attributes a 7.4% revenue growth to higher volumes across all segments, resulting in increased Adjusted EBITDA and strong liquidity [Overview and First Quarter Results](index=19&type=section&id=Overview%20and%20First%20Quarter%20Results) Recent equity transactions increased public ownership to 53.8%, while strong Q1 2025 results were driven by higher throughput volumes and led to an increased distribution - As a result of equity offering and unit repurchase transactions, public ownership increased from approximately **47.3%** at December 31, 2024, to approximately **53.8%** at March 31, 2025[93](index=93&type=chunk) - Throughput volumes increased YoY in Q1 2025: gas processing up **8%**, oil terminaling up **7%**, and water gathering up **9%**, primarily due to higher Hess and third-party production[100](index=100&type=chunk) Q1 2025 Financial Highlights | Metric | Value | | :--- | :--- | | Consolidated net income | $161.4 million | | Net income attributable to Hess Midstream LP | $71.6 million | | Basic EPS | $0.65 per Class A Share | | Net cash provided by operating activities | $202.4 million | | Adjusted EBITDA | $292.3 million | | Declared Cash Distribution | $0.7098 per Class A Share | [Results of Operations](index=24&type=section&id=Results%20of%20Operations) Total revenues grew by $26.4 million year-over-year, driven by higher volumes across all segments, though offset by increased interest and income tax expenses - Gathering segment revenue increased by **$15.5 million**, driven by higher gas, water, and crude oil physical volumes[122](index=122&type=chunk) - Processing and Storage segment revenue increased by **$8.7 million**, primarily due to higher gas processing physical volumes[125](index=125&type=chunk) - Interest expense increased by **$7.9 million**, mainly due to new senior notes issued in May 2024 and February 2025, and a **$2.0 million loss** on early debt redemption[128](index=128&type=chunk) Q1 2025 vs Q1 2024 Throughput Volumes | Service | Unit | Q1 2025 | Q1 2024 | % Change | | :--- | :--- | :--- | :--- | :--- | | Gas gathering | MMcf/d | 431 | 404 | +6.7% | | Crude oil gathering | MBbl/d | 117 | 106 | +10.4% | | Gas processing | MMcf/d | 424 | 393 | +7.9% | | Crude oil terminaling | MBbl/d | 125 | 117 | +6.8% | | Water gathering | MBbl/d | 126 | 116 | +8.6% | [Capital Resources and Liquidity](index=29&type=section&id=Capital%20Resources%20and%20Liquidity) The company maintains strong liquidity through operating cash flow and credit facilities, recently refinancing $800 million in debt while funding capital expansion - Ongoing sources of liquidity include cash on hand, cash from operations, borrowings under the revolving credit facility, and issuances of additional debt and equity securities[142](index=142&type=chunk)[146](index=146&type=chunk) - In February 2025, the Partnership issued **$800.0 million of 5.875% senior notes** due 2028 and used the proceeds to redeem its outstanding **$800.0 million 5.625% notes** due 2026[144](index=144&type=chunk) - 2025 capital expenditures are focused on constructing two new compressor stations and associated pipeline infrastructure, expected to be in service in 2025[157](index=157&type=chunk) Capital Expenditures (in millions) | Period | Total Capital Expenditures | | :--- | :--- | | Q1 2025 | $50.1 | | Q1 2024 | $35.2 | [Item 3. Quantitative and Qualitative Disclosures about Market Risk](index=34&type=section&id=Item%203.%20Quantitative%20and%20Qualitative%20Disclosures%20about%20Market%20Risk) The company's primary market risk is interest rate exposure from variable-rate debt, with minimal direct commodity price risk due to its fee-based model - The company has minimal direct exposure to commodity prices as it generates substantially all revenues from fee-based agreements with minimum volume commitments[164](index=164&type=chunk) - The primary market risk exposure is to changes in interest rates on its variable-rate debt; as of March 31, 2025, the company had no derivative instruments to hedge this exposure[165](index=165&type=chunk) - At March 31, 2025, total debt had a carrying value of **$3,571.8 million** and a fair value of **$3,565.5 million**; a 15% change in interest rates would alter the fair value of fixed-rate debt by approximately **$91-95 million**[166](index=166&type=chunk) [Item 4. Controls and Procedures](index=35&type=section&id=Item%204.%20Controls%20and%20Procedures) Management concluded that disclosure controls and procedures were effective as of March 31, 2025, with no material changes to internal controls during the quarter - The CEO and CFO concluded that the Company's disclosure controls and procedures were effective as of March 31, 2025[169](index=169&type=chunk) - No changes in internal control over financial reporting occurred during the quarter ended March 31, 2025, that have materially affected, or are reasonably likely to materially affect, internal control over financial reporting[170](index=170&type=chunk) PART II—OTHER INFORMATION [Item 1. Legal Proceedings](index=36&type=section&id=Item%201.%20Legal%20Proceedings) The company is involved in ordinary course legal proceedings but does not expect any material adverse financial impact from known matters - The company is subject to various judicial and administrative proceedings in the ordinary course of business but did not have material accrued liabilities for legal contingencies as of March 31, 2025[74](index=74&type=chunk)[75](index=75&type=chunk) - The company is remediating a produced water release from a pipeline in North Dakota; as of March 31, 2025, total reserves for all estimated remediation liabilities were **$3.2 million**[72](index=72&type=chunk)[73](index=73&type=chunk) [Item 1A. Risk Factors](index=36&type=section&id=Item%201A.%20Risk%20Factors) There have been no material changes to the risk factors previously disclosed in the company's 2024 Annual Report on Form 10-K - The risk factors that could materially affect the business, as disclosed in the 2024 Annual Report on Form 10-K, have not materially changed[174](index=174&type=chunk) [Item 5. Other Information](index=36&type=section&id=Item%205.%20Other%20Information) No directors or officers adopted or terminated Rule 10b5-1 or non-Rule 10b5-1 trading arrangements during the first quarter of 2025 - No directors or officers adopted or terminated a "Rule 10b5-1 trading arrangement" or "non-Rule 10b5-1 trading arrangement" during the three months ended March 31, 2025[175](index=175&type=chunk) [Item 6. Exhibits](index=37&type=section&id=Item%206.%20Exhibits) This section lists exhibits filed with the Form 10-Q, including debt indentures, repurchase agreements, and required certifications

Core Viewpoint - Hess Midstream LP is conducting its Q1 2025 earnings conference call, indicating a focus on financial performance and operational updates for the quarter [1]. Group 1: Company Overview - The conference call is hosted by Jennifer Gordon, Vice President of Investment Relations, who acknowledges the participation of attendees and mentions the availability of the earnings release on the company's website [3]. - John Gatling, President and COO, is also present to provide insights into the company's operations during the call [5]. Group 2: Financial Reporting - The earnings release for Q1 2025 was issued earlier in the day, highlighting the company's financial performance for the quarter [3]. - The call includes discussions on projections and forward-looking statements, which are subject to various risks and uncertainties [4].

Financial Data and Key Metrics Changes - For Q1 2025, net income was $161 million, down from $172 million in Q4 2024. Adjusted EBITDA decreased to $292 million from $298 million in the previous quarter, primarily due to lower volumes and revenues, partially offset by lower costs and annual rate increases due to inflation [12][13] - Total revenues, excluding pass-through revenues, decreased by approximately $13 million, driven by lower throughput volumes from severe winter weather [12] Business Line Data and Key Metrics Changes - Throughput volumes averaged 424 million cubic feet per day for gas processing, 125,000 barrels per day for crude terminaling, and 126,000 barrels per day for water gathering, reflecting a decrease compared to Q4 2024 due to lower production from Hess [6][12] - Processing revenues decreased by approximately $7 million, while gathering revenues decreased by approximately $6 million [12] Market Data and Key Metrics Changes - Hess reported first quarter net production for the Bakken averaged 195,000 barrels of oil equivalent per day, with expectations for Q2 production to be in the range of 210,000 to 215,000 barrels, representing a 9% increase at the midpoint compared to Q1 [6][12] Company Strategy and Development Direction - The company remains focused on disciplined, low-risk investments to meet basin demand while maintaining reliable operations and strong financial performance. The capital program includes completion of two new compressor stations and starting civil construction on the Capa gas plant, with total capital expenditures expected to be approximately $300 million for 2025 [9][12] - The company aims to generate sustainable cash flow and create opportunities to return additional capital to shareholders, with a targeted annual distribution growth of at least 5% through 2027 [10][11] Management's Comments on Operating Environment and Future Outlook - Management expressed optimism about the recovery in throughput volumes following severe winter weather, indicating a strong performance in March and a positive trajectory into Q2 [43] - The company highlighted its ability to maintain stability and visibility even during volatile periods, supported by contracts with no direct commodity price exposure and a low leverage ratio of approximately 3.1 times adjusted EBITDA [22][11] Other Important Information - The company has returned $1.95 billion to shareholders through accretive repurchases since the beginning of 2021, with a total shareholder return yield among the highest in the midstream sector [10] - Adjusted free cash flow for Q1 2025 was approximately $191 million, with expectations for excess adjusted free cash flow of approximately $135 million after fully funding targeted growing distributions for the year [13] Q&A Session Summary Question: Bakken outlook amidst macroeconomic volatility - Management noted that activity levels remain consistent, with Hess reaffirming plans to run four rigs for the rest of the year, supported by established MVCs through 2027 [20][21] Question: Volumes in excess of MVCs - Management indicated that MVCs are set at approximately 80% of nomination, with expectations for long-term growth in both Hess and third-party volumes [26] Question: Rig count and potential reductions - Management expressed confidence in maintaining the four rig count, emphasizing a focus on long-term supply-demand dynamics despite short-term volatility [31][32] Question: Buybacks and secondaries - Management clarified that there are no specific plans for secondaries, and they expect to continue multiple repurchases per year, maintaining financial flexibility [36][38] Question: Gas processing volumes recovery - Management reported a strong recovery in processing volumes following weather challenges, with optimism for meeting annual guidance [43] Question: Capital allocation and leverage - Management explained that the $1.25 billion of financial flexibility is driven by both leverage capacity and excess cash flow, with plans to maintain a leverage ratio below 2.5 times by the end of 2026 [58]

Financial Data and Key Metrics Changes - For Q1 2025, net income was $161 million, down from $172 million in Q4 2024 [11] - Adjusted EBITDA for Q1 2025 was $292 million, compared to $298 million in Q4 2024, primarily due to lower volumes and revenues [11] - Total revenues, excluding pass-through revenues, decreased by approximately $13 million, driven by lower throughput volumes [11] - Adjusted free cash flow for Q1 2025 was approximately $191 million [12] Business Line Data and Key Metrics Changes - Gas processing throughput averaged 424 million cubic feet per day, crude terminaling averaged 125,000 barrels per day, and water gathering averaged 126,000 barrels per day [5] - Processing revenues decreased by approximately $7 million, and gathering revenues decreased by approximately $6 million due to lower throughput volumes [11] Market Data and Key Metrics Changes - Hess reported first quarter net production for the Bakken averaged 195,000 barrels of oil equivalent per day, with expectations for Q2 production to be in the range of 210,000 to 215,000 barrels, reflecting a 9% increase at the midpoint compared to Q1 [5] Company Strategy and Development Direction - The company remains focused on disciplined, low-risk investments to meet basin demand while maintaining reliable operations and strong financial performance [7] - Capital expenditures for 2025 are expected to total approximately $300 million, unchanged from previous guidance [12] Management's Comments on Operating Environment and Future Outlook - Management expressed optimism about a strong recovery in volumes following challenging weather conditions in January and February [42] - The company anticipates adjusted EBITDA in the second half of 2025 to be approximately 11% higher than in the first half [13] Other Important Information - The company has returned $1.95 billion to shareholders since the beginning of 2021 through share repurchases and has increased distributions per Class A share by approximately 57% since 2021 [9] - The company expects to generate over $1.25 billion of financial flexibility through 2027 for incremental shareholder returns [10] Q&A Session Summary Question: Bakken outlook in light of ongoing macroeconomic volatility - Management noted that activity levels remain stable, with no changes in Hess's plans to run four rigs for the rest of the year, supported by established MVCs through 2027 [19][20] Question: Volumes in excess of MVCs and performance against MVCs - Management indicated that MVCs are set at approximately 80% of nomination, with third parties expected to represent about 10% of total volume [24] Question: Risk of rig reduction in the current macro environment - Management reaffirmed that they are looking past short-term volatility and expect consistent activity levels in the Bakken [30][31] Question: Buybacks and secondaries - Management clarified that there is no specific plan for secondaries and expects to continue multiple repurchases per year, with flexibility for $1.25 billion through 2027 [36][37] Question: Gas processing volumes recovery - Management reported a strong recovery in volumes and expressed optimism about meeting guidance for the year [42][43] Question: Impact of oil prices on rig count - Management stated that they are prepared for price volatility and expect to maintain the four-rig program, with improved well economics reducing breakeven costs [45][48] Question: Gas growth in the basin and egress - Management anticipates gas volumes to continue increasing over time, supported by existing export agreements [55][66]

Financial Performance - First quarter 2025 net income was $161.4 million, a slight decrease from $161.9 million in the first quarter of 2024, with net income attributable to Hess Midstream LP at $71.6 million or $0.65 per Class A share, up from $0.60 per Class A share in the prior year[1][6]. - Adjusted EBITDA for the first quarter of 2025 was $292.3 million, compared to $274.5 million in the first quarter of 2024, reflecting a year-over-year increase[7][17]. - Revenues for the first quarter of 2025 were $382.0 million, an increase of $26.4 million from $355.6 million in the prior-year quarter, primarily due to higher physical volumes[5][19]. - Total revenues for Q1 2025 were $382.0 million, an increase of 7.5% from $355.6 million in Q4 2024[27]. - Net income attributable to Hess Midstream LP for Q1 2025 was $71.6 million, compared to $44.6 million in Q1 2024, representing a 60.2% increase[27]. - Income from operations for Q1 2025 was $237.4 million, up from $222.0 million in Q4 2024, reflecting a growth of 6.9%[27]. - Affiliate services revenue in Q1 2025 was $374.3 million, compared to $349.4 million in Q4 2024, marking a 7.0% increase[27]. Operational Metrics - Throughput volumes increased by 8% for gas processing, 7% for oil terminaling, and 9% for water gathering compared to the first quarter of 2024, driven by higher production levels[4][9]. - Gas gathering throughput volumes increased to 431 Mcf of natural gas per day in Q1 2025, up from 404 Mcf per day in Q1 2024[33]. - Crude oil gathering volumes rose to 117 bopd in Q1 2025, compared to 106 bopd in Q1 2024[33]. - The company reported an increase in gas processing volumes to 424 Mcf of natural gas per day in Q1 2025, compared to 393 Mcf per day in Q1 2024[33]. - Crude terminals throughput was 125 bopd in Q1 2025, slightly up from 117 bopd in Q1 2024[33]. Expenses and Cash Flow - Capital expenditures for the first quarter of 2025 totaled $50.1 million, up from $35.2 million in the prior-year quarter, mainly due to the expansion of gas compression and pipeline infrastructure[10][17]. - Interest expense for the first quarter of 2025 was $56.4 million, an increase from $48.5 million in the prior-year quarter, primarily due to new debt issuances[5][17]. - Adjusted Free Cash Flow for the first quarter of 2025 was $190.7 million, slightly down from $192.9 million in the first quarter of 2024[7][17]. - Operating and maintenance expenses for Q1 2025 were $85.6 million, up from $78.1 million in Q4 2024, indicating a rise of 9.6%[27]. - Interest expense for Q1 2025 was $56.4 million, compared to $48.5 million in Q4 2024, an increase of 16.3%[27]. - Operating and maintenance expenses totaled $92.7 million in Q4 2024, with depreciation expenses at $51.3 million[31]. - The company experienced a net interest expense of $52.2 million in Q4 2024, impacting overall profitability[31]. Guidance and Future Outlook - Hess Midstream reaffirmed its full year 2025 guidance, projecting net income between $715 million and $765 million, Adjusted EBITDA between $1,235 million and $1,285 million, and capital expenditures of $300 million[12][20]. - The company anticipates continued growth in revenues and profitability, driven by strategic investments and market expansion[23]. - Hess Midstream LP is actively pursuing opportunities for organic growth and potential acquisitions to enhance its service offerings[23]. - The company is closely monitoring the impact of global economic conditions and regulatory changes on its operations and financial performance[23]. Debt and Financing - The company had a drawn balance of $128.0 million on its revolving credit facility as of March 31, 2025, following the issuance of $800.0 million in senior unsecured notes[8][12].

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Operational Segments - The company operates through three segments: gathering, processing and storage, and terminaling and export[33]. - The natural gas gathering system has a capacity of approximately 675 MMcf/d and includes 1,415 miles of pipelines, with an added compression capacity of 50 MMcf/d in 2024[39]. - The crude oil gathering system consists of approximately 590 miles of pipelines with a capacity of up to 290 MBbl/d[40]. - The Tioga Gas Plant has a total processing capacity of 400 MMcf/d, making it one of the largest in North Dakota, with a recent de-bottlenecking project completed in 2021[46][47]. - The LM4 gas processing plant has a processing capacity of 200 MMcf/d, with the company entitled to 100 MMcf/d of that capacity[50]. - The produced water gathering system has a combined permitted disposal capacity of 180 MBbl/d across 12 facilities[42]. - The Hawkeye Oil Facility has a total receipt capacity of approximately 75 MBbl/d and can be filled through the crude oil gathering system or truck unloading bays[41]. - The Ramberg Terminal Facility has a combined pipeline and truck receipt capability of approximately 200 MBbl/d, with 130 MBbl/d from the crude oil gathering system and 70 MBbl/d from truck unloading bays[58]. - The facility's redelivery capability is up to approximately 285 MBbl/d, supported by various pipeline connections[59]. - The Tioga Rail Terminal has a crude oil loading capacity of 140 MBbl/d and NGL loading capacity of 30 MBbl/d, with a total storage capacity of approximately 290 MBbls[60][61]. - The company owns 550 crude oil rail cars, with an effective working capacity of approximately 32 MBbl/d based on an average round-trip duration of 11 days[65][70]. - The Johnson's Corner Header System has a delivery capacity of approximately 100 MBbl/d and entered into service in 2017[66]. Revenue Sources - The company has long-term fee-based commercial agreements with Hess, ensuring stable cash flows and minimum volume commitments (MVCs) for crude oil gathering and terminaling services[72][78]. - For 2024, Hess's MVCs for crude oil gathering are set at 103 MBbl/d, increasing to 112 MBbl/d by 2027[78]. - In 2023, 98% of the company's revenues were derived from fee-based commercial agreements with Hess, with gas gathering and processing revenues comprising 77% of total affiliate revenues[80]. - The company expects to continue deriving substantially all revenues in the near term under multiple commercial agreements with Hess[132]. - Approximately 100% of the company's revenues for the years ended December 31, 2024, 2023, and 2022 were derived from fee-based commercial agreements with Hess[149]. Environmental Regulations and Compliance - The company is subject to extensive and frequently-changing federal, state, and local environmental regulations, which increase overall business costs, including capital expenditures and net income[81]. - Compliance with the Clean Air Act and other regulations may require significant future capital expenditures, particularly affecting the company's Bakken operations, which generate substantially all revenues[85]. - Legislative measures addressing greenhouse gas emissions are under discussion, with potential requirements for the company to report emissions and reduce greenhouse gas outputs, impacting operational costs[86]. - The Inflation Reduction Act of 2022 provides funding and incentives for low-carbon energy production and includes a methane emissions reduction program, which may impose additional costs on the company[86]. - The company may face substantial expenses related to the release of hydrocarbons or hazardous substances, including cleanup costs and claims for damages, which could adversely affect financial position and liquidity[82]. - The Comprehensive Environmental Response, Compensation, and Liability Act (CERCLA) imposes liability for hazardous substance releases, potentially leading to significant cleanup costs for the company[90]. - The Resource Conservation and Recovery Act (RCRA) regulates the disposal of hazardous wastes, and any changes in regulations could increase capital expenditures and operating expenses for the company[91]. - The company maintains Spill Prevention Control and Countermeasure (SPCC) plans and discharge permits under the Clean Water Act, which impose regulatory burdens on operations[95]. - The company acknowledges the potential for future regulatory changes that could impact operations and financial performance, particularly in light of evolving climate change legislation[88]. - The company is monitoring international climate agreements, such as the Paris Agreement, which may influence domestic regulatory frameworks and operational costs[87]. - The company has implemented emergency oil response plans and SPCC plans for facilities covered by OPA-90 to manage risks associated with hazardous substance releases[96]. - Regulatory requirements for wetlands may delay pipeline projects and increase costs, impacting project timelines and budgets[97]. - The company is subject to OSHA regulations and has established safety protocols to protect employee health and safety[98]. - The Endangered Species Act may impose additional costs or operational restrictions if new endangered species are identified in operational areas[99]. Financial Performance and Risks - The company may face reduced revenues if Hess' production volumes decrease due to competition or market conditions[117]. - The company is significantly dependent on Hess for its operations, and any adverse developments in Hess could materially affect its financial condition[162]. - The company may not be able to significantly increase third-party revenues due to competition and other factors, which could limit growth and extend dependence on Hess[144]. - Any decrease in the volumes of natural gas or crude oil handled could adversely affect the company's business and operating results[138]. - The company is subject to risks related to the Chevron merger with Hess, which could adversely affect its business and financial condition[128]. - The company has limited control over the level of drilling activity in its areas of operation, which may impact throughput levels and cash flows[139]. - The company may face challenges in attracting new unaffiliated customers due to its relationship with Hess and the preference for fee-based contracts[145]. - The company’s ability to service its indebtedness will depend on future financial performance, which may be affected by economic conditions and other factors beyond its control[176]. - The company’s credit facilities contain various operating and financial restrictions that could limit its ability to finance future operations or capital needs[172]. - The company may incur significant costs and liabilities due to pipeline integrity management program testing and related repairs, with compliance costs not expected to materially affect overall financial results[190]. - The maximum administrative civil penalties for violations of pipeline safety laws will increase to $272,926 per violation per day, effective December 28, 2023[193]. - The company’s operations may be adversely affected by geopolitical conflicts, such as the ongoing war between Russia and Ukraine, impacting commodity prices and demand for midstream services[168]. - The company may experience increased obligations related to produced water facilities, potentially raising operating costs and impacting financial performance[216]. Corporate Governance and Structure - The company holds a 47.7% controlling interest in the Partnership, while public limited partners hold a 47.3% voting interest[35]. - The partnership agreement requires the distribution of all available cash to shareholders, potentially limiting the company's growth and acquisition capabilities[225]. - The general partner has the authority to conduct the company's business without shareholder approval, including decisions on asset purchases and sales[223]. - Shareholders have very limited voting rights and cannot remove the general partner without its consent, which may affect the trading price of Class A Shares[232]. - The general partner and its affiliates may compete with the company and are not obligated to present business opportunities to it, potentially impacting operational results[230]. - The partnership agreement eliminates the fiduciary duties of the general partner to shareholders, replacing them with contractual standards[231]. - The company may incur additional costs if the exclusive forum provision in the partnership agreement is found unenforceable, affecting financial condition and cash distributions[226]. - The waiver of the right to a jury trial may limit shareholders' ability to pursue claims, potentially resulting in less favorable outcomes[227]. - The partnership agreement does not restrict the issuance of additional shares, which could increase the risk of maintaining or increasing per share distribution levels[225]. Strategic Initiatives and Future Outlook - The company aims to expand its business by capitalizing on organic growth from Hess and third parties in the Bakken region[34]. - The company is pursuing strategic relationships with third-party producers to maximize utilization rates in the Bakken region[80]. - Future acquisitions are critical for growth, but the company may face challenges such as decreased divestitures of midstream assets and competition for attractive acquisition candidates[179]. - The company recognizes the growing importance of ESG practices and may face pressure from stakeholders to adopt more aggressive climate-related goals, which could impact operational costs[213]. - The company is involved in the Global Methane Pledge, committing to reduce methane emissions by at least 30% from 2020 levels by 2030, reflecting its alignment with international climate goals[209]. - The company intends to make a minimum quarterly distribution of at least $0.30 per Class A Share, equating to $1.20 annually, contingent on generating approximately $65.4 million in available cash per quarter[219]. - The company must handle fluctuations in cash generation based on volumes of crude oil, natural gas, NGLs, and produced water processed, as well as competition in the midstream energy market[219].