Hess Midstream LP(HESM) - 2025 Q2 - Quarterly Report

PART I—FINANCIAL INFORMATION Item 1. Financial Statements (unaudited) Presents unaudited consolidated financial statements, including balance sheets, operations, cash flows, and notes, showing increased revenues and net income Consolidated Balance Sheets Highlights key financial positions, showing increases in total assets, liabilities, and partners' capital Consolidated Balance Sheet Highlights (in millions) | Metric | June 30, 2025 | December 31, 2024 | Change | % Change | | :-------------------------------- | :------------ | :---------------- | :----- | :------- | | Total assets | $4,423.1 | $4,151.0 | $272.1 | 6.55% | | Total liabilities | $3,915.5 | $3,685.7 | $229.8 | 6.24% | | Total partners' capital | $507.6 | $465.3 | $42.3 | 9.09% | | Cash and cash equivalents | $4.5 | $4.3 | $0.2 | 4.65% | | Deferred tax asset | $837.3 | $582.6 | $254.7 | 43.72% | | Long-term debt | $3,686.9 | $3,449.4 | $237.5 | 6.89% | Consolidated Statements of Operations Details revenues, operating income, and net income for the three and six months ended June 30, 2025, showing significant growth Consolidated Statements of Operations Highlights (in millions, except per share data) | Metric | 3 Months Ended June 30, 2025 | 3 Months Ended June 30, 2024 | Change | % Change | | :----------------------------------- | :--------------------------- | :--------------------------- | :----- | :------- | | Total revenues | $414.2 | $365.5 | $48.7 | 13.32% | | Income from operations | $260.2 | $222.3 | $37.9 | 17.05% | | Net income | $179.7 | $160.3 | $19.4 | 12.10% | | Net income attributable to Hess Midstream LP | $90.3 | $49.5 | $40.8 | 82.42% | | Basic EPS | $0.74 | $0.59 | $0.15 | 25.42% | | Metric | 6 Months Ended June 30, 2025 | 6 Months Ended June 30, 2024 | Change | % Change | | :----------------------------------- | :--------------------------- | :--------------------------- | :----- | :------- | | Total revenues | $796.2 | $721.1 | $75.1 | 10.41% | | Income from operations | $497.6 | $444.3 | $53.3 | 11.99% | | Net income | $341.1 | $322.2 | $18.9 | 5.87% | | Net income attributable to Hess Midstream LP | $161.9 | $94.1 | $67.8 | 72.05% | | Basic EPS | $1.39 | $1.19 | $0.20 | 16.81% | Consolidated Statements of Changes in Partners' Capital (Deficit) Summarizes changes in partners' capital, reflecting net income, distributions, deferred tax asset recognition, and share repurchases Changes in Partners' Capital (Deficit) for Six Months Ended June 30, 2025 (in millions) | Item | Amount | | :-------------------------------- | :----- | | Balance at December 31, 2024 | $465.3 | | Net income | $179.7 | | Distributions | $(153.0) | | Recognition of deferred tax asset | $168.9 | | Share and unit repurchases | $(200.0) | | Balance at June 30, 2025 | $507.6 | - Total partners' capital increased from $465.3 million at December 31, 2024, to $507.6 million at June 30, 2025, primarily due to net income and recognition of deferred tax assets, partially offset by distributions and share/unit repurchases[18] Consolidated Statements of Cash Flows Outlines cash flows from operating, investing, and financing activities, showing an increase in operating cash but a decrease in overall cash Consolidated Statements of Cash Flows Highlights (Six Months Ended June 30, in millions) | Cash Flow Activity | 2025 | 2024 | Change | | :-------------------------------- | :----- | :----- | :----- | | Net cash provided by operating activities | $479.3 | $456.9 | $22.4 | | Net cash used in investing activities | $(108.9) | $(118.7) | $9.8 | | Net cash used in financing activities | $(370.2) | $(244.0) | $(126.2) | | Increase in cash and cash equivalents | $0.2 | $94.2 | $(94.0) | | Cash and cash equivalents, end of period | $4.5 | $99.6 | $(95.1) | Notes to Consolidated Financial Statements Provides detailed explanations for the financial statements, covering presentation basis, equity, related parties, debt, and segment information Note 1. Basis of Presentation Outlines the basis for financial statement preparation, consolidation of Hess Midstream Operations, and recent ownership changes - Hess Midstream LP consolidates Hess Midstream Operations LP as a variable interest entity, being its primary beneficiary[28] - GIP sold all its interests on May 30, 2025, and Chevron Corporation completed its merger with Hess on July 18, 2025, making Chevron the indirect parent of Hess and owning approximately 37.8% interest in Hess Midstream LP[29] - New accounting pronouncements (ASU 2023-09 and ASU 2024-03) are being evaluated for potential impact on financial statements, with ASU 2023-09 not expected to have a material impact[30][31] Note 2. Equity Transactions Details significant equity transactions, including GIP's share offerings, unit repurchases, and ASR, increasing public ownership - GIP completed four Class A Share offerings between February 2024 and May 2025, generating approximately $1.8 billion in net proceeds for GIP, with the Company receiving no proceeds[33][34][35][36][37] - The Partnership repurchased Class B Units from Sponsors for a total of $290.0 million in the first six months of 2025, and the Company repurchased $10.0 million of Class A Shares via an ASR in May 2025[40][41][44] - Public ownership of the Company increased from approximately 47.3% at December 31, 2024, to 62.2% at June 30, 2025, due to these equity transactions[118] - An additional deferred tax asset of $306.7 million was recognized during the six months ended June 30, 2025, due to changes in ownership interest[48] Note 3. Related Party Transactions Details long-term, fee-based commercial agreements with Hess, including MVCs and inflation escalators, with Hess accounting for 98% of revenues - The Company has long-term, fee-based commercial agreements with Hess for various midstream services, including gas gathering, crude oil gathering, processing, storage, terminaling, export, and water handling[50] - Most commercial agreements with Hess were renewed for a 10-year Secondary Term (January 1, 2024, through December 31, 2033), transitioning to an inflation-based fee structure (capped at 3% annually) while retaining 80% MVCs[54][55] - Revenues from Hess and its affiliates accounted for 98% of total revenues for the three and six months ended June 30, 2025 and 2024[56] Affiliate Services Revenue (in millions) | Service Type | 3 Months Ended June 30, 2025 | 3 Months Ended June 30, 2024 | 6 Months Ended June 30, 2025 | 6 Months Ended June 30, 2024 | | :-------------------------------- | :--------------------------- | :--------------------------- | :--------------------------- | :--------------------------- | | Oil and gas gathering services | $185.9 | $165.3 | $357.4 | $324.6 | | Processing and storage services | $152.3 | $135.2 | $295.9 | $270.6 | | Terminaling and export services | $33.1 | $29.6 | $62.6 | $57.0 | | Water gathering and disposal services | $34.0 | $28.4 | $63.7 | $55.7 | | Total affiliate services | $405.3 | $358.5 | $779.6 | $707.9 | Charges from Hess (in millions) | Expense Type | 3 Months Ended June 30, 2025 | 3 Months Ended June 30, 2024 | 6 Months Ended June 30, 2025 | 6 Months Ended June 30, 2024 | | :-------------------------------- | :--------------------------- | :--------------------------- | :--------------------------- | :--------------------------- | | Operating and maintenance expenses | $25.0 | $20.5 | $49.9 | $39.6 | | General and administrative expenses | $5.3 | $3.5 | $10.3 | $7.0 | | Total | $30.3 | $24.0 | $60.2 | $46.6 | Note 4. Property, Plant and Equipment Provides a breakdown of property, plant, and equipment, showing an increase in net PP&E due to construction-in-progress Property, Plant and Equipment, Net (in millions) | Metric | June 30, 2025 | December 31, 2024 | | :-------------------------------- | :------------ | :---------------- | | Total property, plant and equipment, at cost | $5,239.3 | $5,117.2 | | Accumulated depreciation | $(1,894.6) | $(1,791.8) | | Property, plant and equipment, net | $3,344.7 | $3,325.4 | | Construction-in-progress | $313.3 | $250.1 | Note 5. Accrued Liabilities Details accrued liabilities, which increased to $102.2 million due to higher accrued interest and other accruals Accrued Liabilities (in millions) | Item | June 30, 2025 | December 31, 2024 | | :----------------------- | :------------ | :---------------- | | Accrued interest | $40.1 | $38.6 | | Accrued capital expenditures | $26.5 | $27.1 | | Other accruals | $35.6 | $28.1 | | Total | $102.2 | $93.8 | Note 6. Debt and Interest Expense Details debt structure, including new note issuance and credit facilities, and highlights the recent investment grade credit rating - On February 12, 2025, the Partnership issued $800.0 million of 5.875% fixed-rate senior unsecured notes due 2028 and redeemed $800.0 million of 5.625% notes due 2026, incurring a $2.0 million extinguishment loss[67] - As of June 30, 2025, the Partnership had $3.1 billion in fixed-rate senior unsecured notes outstanding and $648.0 million drawn under its $1.4 billion senior secured credit facilities[70][72] - On July 24, 2025, the Partnership received an investment grade credit rating ('BBB-' from S&P), which is expected to lead to the relaxation of certain restrictive covenants and lower interest rate margins on its credit facilities[74][97][98] Note 7. Partners' Capital and Distributions Outlines the quarterly cash distribution policy, with a declared distribution of $0.7370 per Class A Share for Q2 2025 - The partnership agreement requires quarterly distribution of all available cash to shareholders[76] Quarterly Cash Distributions per Class A Share | Period | Distribution per Class A Share | | :---------------- | :--------------------------- | | First Quarter 2024 | $0.6516 | | Second Quarter 2024 | $0.6677 | | Third Quarter 2024 | $0.6846 | | Fourth Quarter 2024 | $0.7012 | | First Quarter 2025 | $0.7098 | | Second Quarter 2025 | $0.7370 | - A quarterly cash distribution of $0.7370 per Class A Share was declared for Q2 2025, an increase of $0.0272 per share from Q1 2025[99] Note 8. Earnings per Share Reports increased basic and diluted earnings per Class A Share for both three and six-month periods ended June 30, 2025 Earnings per Class A Share (EPS) | Metric | 3 Months Ended June 30, 2025 | 3 Months Ended June 30, 2024 | 6 Months Ended June 30, 2025 | 6 Months Ended June 30, 2024 | | :----------------------------------- | :--------------------------- | :--------------------------- | :--------------------------- | :--------------------------- | | Basic EPS | $0.74 | $0.59 | $1.39 | $1.19 | | Diluted EPS | $0.74 | $0.59 | $1.39 | $1.19 | - Weighted average Class A shares outstanding (basic and diluted) increased significantly from 83.8 million to 121.8 million for the three months ended June 30, 2025, compared to 2024, and from 79.5 million to 116.3 million for the six months[81] Note 9. Concentration of Credit Risk Highlights significant credit risk concentration with Hess and its affiliates, accounting for 96% of receivables and 98% of revenues - Hess and its affiliates accounted for 96% of accounts receivable from contracts with customers as of June 30, 2025 (97% as of December 31, 2024)[82] - Total revenues attributable to Hess were 98% for the three and six months ended June 30, 2025 and 2024[82] Note 10. Commitments and Contingencies Addresses environmental liabilities, including $2.8 million in remediation reserves, and assesses legal contingencies as having remote material impact - Reserves for estimated remediation liabilities, including a produced water release in North Dakota, totaled $2.8 million at June 30, 2025 ($1.4 million in current and $1.4 million in noncurrent liabilities)[84] - The Company believes it is remote that known legal proceedings would have a material adverse impact on its financial condition, results of operations, or cash flows[86] Note 11. Segments Details the Company's three reportable segments, with performance evaluated by Adjusted EBITDA, showing increased EBITDA across all segments - The Company's operations are organized into three reportable segments: gathering, processing and storage, and terminaling and export[88] - Segment operating performance is evaluated based on Adjusted EBITDA, which is defined as net income (loss) before net interest expense, income tax expense (benefit), and depreciation and amortization, adjusted for certain non-indicative items[89] Adjusted EBITDA by Segment (in millions) | Segment | 3 Months Ended June 30, 2025 | 3 Months Ended June 30, 2024 | 6 Months Ended June 30, 2025 | 6 Months Ended June 30, 2024 | | :----------------------- | :--------------------------- | :--------------------------- | :--------------------------- | :--------------------------- | | Gathering | $164.5 | $142.4 | $314.7 | $282.1 | | Processing and Storage | $129.4 | $114.9 | $251.2 | $230.3 | | Terminaling and Export | $24.9 | $20.9 | $47.7 | $42.5 | | Total Reportable Segments Adjusted EBITDA | $318.8 | $278.2 | $613.6 | $554.9 | Capital Expenditures by Segment (in millions) | Segment | 3 Months Ended June 30, 2025 | 3 Months Ended June 30, 2024 | 6 Months Ended June 30, 2025 | 6 Months Ended June 30, 2024 | | :----------------------- | :--------------------------- | :--------------------------- | :--------------------------- | :--------------------------- | | Gathering | $65.1 | $69.5 | $112.8 | $101.2 | | Processing and Storage | $4.8 | $3.2 | $7.2 | $6.6 | | Terminaling and Export | $0.1 | $- | $0.1 | $0.1 | | Total Capital Expenditures | $70.0 | $72.7 | $120.1 | $107.9 | Note 12. Subsequent Events Highlights post-period events including tax law changes, Hess-Chevron merger, investment grade rating, Q2 distributions, and further share repurchases - The 'One Big Beautiful Bill Act' was enacted on July 4, 2025, with the Company currently evaluating its impact on financial statements[96] - The Hess-Chevron merger completed on July 18, 2025, making Chevron the indirect parent of Hess and owning approximately 37.8% interest in Hess Midstream LP[97][100] - On July 24, 2025, the Partnership received an investment grade credit rating ('BBB-' with stable outlook) from S&P, which is expected to relax certain debt covenants and reduce interest margins[97][98] - A quarterly cash distribution of $0.7370 per Class A Share was declared on July 28, 2025, for the quarter ended June 30, 2025, representing an increase of $0.0272 per share from the prior quarter[99] - In August 2025, the Company initiated further share and unit repurchases totaling $100.0 million ($30.0 million Class B Units from Sponsor and $70.0 million Class A Shares via ASR)[102][103] Item 2. Management's Discussion and Analysis of Financial Condition and Results of Operations Management's analysis of financial condition and operations, covering key events, revenue, performance metrics, and financial results across segments Overview Introduces Hess Midstream LP as a fee-based partnership, highlighting the Chevron merger, GIP's exit, increased public ownership, and investment grade rating - Hess Midstream LP is a fee-based, growth-oriented limited partnership with assets primarily in the Bakken, organized into gathering, processing and storage, and terminaling and export segments[109] - The Chevron Merger completed on July 18, 2025, resulting in Chevron indirectly owning approximately 37.8% of the Company, with no changes to existing commercial or partnership agreements[111][112] - Equity transactions, including GIP's Class A Share offerings and Class B Unit repurchases, increased public ownership from 47.3% to 62.2% by June 30, 2025[113][114][115][118] - The Partnership received an investment grade rating ('BBB-') from S&P on July 24, 2025, which is expected to relax certain restrictive debt covenants and improve credit facility terms[120] How We Generate Revenues Revenues are primarily generated from long-term, fee-based commercial agreements with Hess, featuring MVCs, inflation escalators, and fee recalculation mechanisms - Revenues are primarily generated from long-term, fee-based commercial agreements with Hess, covering various midstream services[126] - Agreements include dedications of Hess' Bakken production, minimum volume commitments (MVCs), inflation escalators, and fee recalculation mechanisms to ensure cash flow stability and growth[128] - Most commercial agreements entered a Secondary Term (2024-2033) with an inflation-based fee structure, while MVCs continue to provide downside risk protection through 2033[127][170] How We Evaluate Our Operations Operations are evaluated using throughput volumes, operating and maintenance expenses, and Adjusted EBITDA to assess performance and liquidity - Key metrics for evaluating operations include throughput volumes, operating and maintenance expenses, and Adjusted EBITDA[132] - Throughput volumes are primarily driven by crude oil, natural gas, NGLs, and produced water handled, with Hess' MVCs providing minimum cash flow levels[133] - Adjusted EBITDA is a non-GAAP measure used to assess operating performance, liquidity, ability to make distributions, incur/service debt, and fund capital expenditures[135][138] Results of Operations (Three Months Ended June 30, 2025 Compared to Three Months Ended June 30, 2024) Analyzes Q2 2025 results, showing increased revenues, net income, and Adjusted EBITDA driven by higher volumes and tariff rates across segments Consolidated Financial Performance (Three Months Ended June 30, in millions) | Metric | 2025 | 2024 | Change | % Change | | :-------------------------------- | :----- | :----- | :----- | :------- | | Total revenues | $414.2 | $365.5 | $48.7 | 13.32% | | Total operating costs and expenses | $154.0 | $143.2 | $10.8 | 7.54% | | Income from operations | $260.2 | $222.3 | $37.9 | 17.05% | | Net income attributable to Hess Midstream LP | $90.3 | $49.5 | $40.8 | 82.42% | | Adjusted EBITDA | $316.0 | $276.5 | $39.5 | 14.29% | Throughput Volumes (Three Months Ended June 30, YoY Change) | Volume Type | 2025 | 2024 | Change | % Change | | :-------------------------- | :--- | :--- | :----- | :------- | | Gas gathering (MMcf/d) | 464 | 440 | 24 | 5.45% | | Crude oil gathering (MBbl/d) | 127 | 116 | 11 | 9.48% | | Gas processing (MMcf/d) | 449 | 419 | 30 | 7.16% | | Crude oil terminaling (MBbl/d) | 137 | 126 | 11 | 8.73% | | NGL loading (MBbl/d) | 17 | 15 | 2 | 13.33% | | Water gathering (MBbl/d) | 138 | 124 | 14 | 11.29% | Gathering Gathering revenues increased by $26.9 million due to higher tariffs and volumes, while operating expenses rose from pass-through and employee costs - Gathering revenues increased by $26.9 million, primarily due to higher tariff rates ($9.0 million), increased gas gathering volumes ($6.9 million), higher water gathering revenue ($3.9 million), and higher crude oil gathering volumes ($2.9 million)[144] - Operating and maintenance expenses for gathering increased by $3.9 million, mainly from higher pass-through costs ($3.9 million) and employee costs ($2.9 million), partially offset by lower maintenance activities ($2.9 million)[145] Processing and Storage Processing and Storage revenues increased by $18.4 million from higher volumes and tariffs, with operating expenses rising due to pass-through and employee costs - Processing and Storage revenues increased by $18.4 million, driven by higher gas processing physical volumes ($9.2 million) and tariff rates ($7.3 million)[147] - Operating and maintenance expenses for processing and storage increased by $3.3 million, attributed to higher pass-through costs ($1.0 million) and employee costs ($1.0 million)[148] Terminaling and Export Terminaling and Export revenues increased by $3.4 million from higher volumes and tariffs, while operating expenses remained stable - Terminaling and Export revenues increased by $3.4 million, mainly from higher physical volumes ($2.3 million) and tariff rates ($1.1 million)[149] - Operating and maintenance expenses for terminaling and export remained relatively flat[149] Interest and Other Net interest expense increased by $5.7 million due to new notes, and income tax expense rose by $13.1 million from increased ownership - Net interest expense increased by $5.7 million, mainly due to interest on the $600.0 million 6.500% fixed-rate senior unsecured notes issued in May 2024[150] - Income tax expense increased by $13.1 million, primarily due to increased ownership of the Partnership by Hess Midstream LP following equity offering and unit repurchase transactions[151] Results of Operations (Six Months Ended June 30, 2025 Compared to Six Months Ended June 30, 2024) Analyzes H1 2025 results, showing increased revenues, net income, and Adjusted EBITDA driven by higher volumes and tariff rates across segments Consolidated Financial Performance (Six Months Ended June 30, in millions) | Metric | 2025 | 2024 | Change | % Change | | :-------------------------------- | :----- | :----- | :----- | :------- | | Total revenues | $796.2 | $721.1 | $75.1 | 10.41% | | Total operating costs and expenses | $298.6 | $276.8 | $21.8 | 7.88% | | Income from operations | $497.6 | $444.3 | $53.3 | 11.99% | | Net income attributable to Hess Midstream LP | $161.9 | $94.1 | $67.8 | 72.05% | | Adjusted EBITDA | $608.3 | $551.0 | $57.3 | 10.40% | Throughput Volumes (Six Months Ended June 30, YoY Change) | Volume Type | 2025 | 2024 | Change | % Change | | :-------------------------- | :--- | :--- | :----- | :------- | | Gas gathering (MMcf/d) | 448 | 422 | 26 | 6.16% | | Crude oil gathering (MBbl/d) | 122 | 110 | 12 | 10.91% | | Gas processing (MMcf/d) | 437 | 406 | 31 | 7.64% | | Crude oil terminaling (MBbl/d) | 131 | 121 | 10 | 8.26% | | NGL loading (MBbl/d) | 15 | 15 | 0 | 0.00% | | Water gathering (MBbl/d) | 132 | 120 | 12 | 10.00% | Gathering Gathering revenues increased by $42.4 million from higher volumes and tariffs, while operating expenses rose due to employee and pass-through costs - Gathering revenues increased by $42.4 million, driven by higher gas gathering volumes ($13.5 million), tariff rates ($11.2 million), water gathering revenue ($5.5 million), and crude oil gathering volumes ($5.3 million)[158] - Operating and maintenance expenses for gathering increased by $8.0 million, mainly due to higher employee costs ($7.3 million) and pass-through costs ($4.8 million), partially offset by lower maintenance activities ($4.1 million)[159] Processing and Storage Processing and Storage revenues increased by $27.1 million from higher volumes and tariffs, with operating expenses rising due to pass-through and third-party fees - Processing and Storage revenues increased by $27.1 million, primarily from higher gas processing physical volumes ($18.3 million) and tariff rates ($5.5 million)[161] - Operating and maintenance expenses for processing and storage increased by $5.8 million, attributed to higher pass-through costs ($2.4 million) and third-party processing fees ($2.2 million)[162] Terminaling and Export Terminaling and Export revenues increased by $5.6 million from higher volumes and tariffs, while operating expenses remained stable - Terminaling and Export revenues increased by $5.6 million, mainly from higher physical volumes ($3.4 million) and tariff rates ($2.2 million)[163] - Operating and maintenance expenses for terminaling and export remained relatively flat[163] Interest and Other Net interest expense increased by $13.6 million due to new notes and extinguishment loss, and income tax expense rose by $21.8 million from increased ownership - Net interest expense increased by $13.6 million, primarily due to interest on new notes issued in February 2025 ($18.1 million) and May 2024 ($14.7 million), and a $2.0 million extinguishment loss[164] - Income tax expense increased by $21.8 million, primarily due to increased ownership of the Partnership by Hess Midstream LP following equity transactions[165] Other Factors Expected to Significantly Affect Our Future Results Future results are influenced by fee-based agreements with Hess, commodity price impacts, and the transition to an inflation-based fee structure - Substantially all revenues are generated under fee-based commercial agreements with Hess, minimizing direct exposure to commodity price fluctuations[168] - Commodity price volatility indirectly affects throughput volumes and exploration/production investments by Hess and third parties[169] - Most systems entered a Secondary Term with an inflation-based fee structure (up to 3% annually), which may provide less downside risk protection than the initial term's fee recalculation model, but MVCs continue to offer protection through 2033[170] Reconciliation of Non‑GAAP Financial Measure Reconciles Adjusted EBITDA to GAAP net income and net cash from operating activities, showing strong operational performance Reconciliation of Adjusted EBITDA to Net Income (in millions) | Metric | 3 Months Ended June 30, 2025 | 3 Months Ended June 30, 2024 | 6 Months Ended June 30, 2025 | 6 Months Ended June 30, 2024 | | :----------------------- | :--------------------------- | :--------------------------- | :--------------------------- | :--------------------------- | | Net income | $179.7 | $160.3 | $341.1 | $322.2 | | Plus: Depreciation expense | $51.8 | $50.5 | $103.3 | $100.3 | | Plus: Interest expense, net | $55.4 | $49.7 | $111.8 | $98.2 | | Plus: Income tax expense | $29.1 | $16.0 | $52.1 | $30.3 | | Adjusted EBITDA | $316.0 | $276.5 | $608.3 | $551.0 | Reconciliation of Adjusted EBITDA to Net Cash Provided by Operating Activities (in millions) | Metric | 3 Months Ended June 30, 2025 | 3 Months Ended June 30, 2024 | 6 Months Ended June 30, 2025 | 6 Months Ended June 30, 2024 | | :----------------------------------- | :--------------------------- | :--------------------------- | :--------------------------- | :--------------------------- | | Net cash provided by operating activities | $276.9 | $271.6 | $479.3 | $456.9 | | Adjusted EBITDA | $316.0 | $276.5 | $608.3 | $551.0 | Capital Resources and Liquidity Discusses liquidity sources, financing activities, cash flow changes, and capital expenditure focus on expanding infrastructure - Primary liquidity sources include cash on hand, cash from operations, revolving credit facility borrowings, and issuances of additional debt or equity securities[178][182] - Net cash provided by operating activities increased by $22.4 million for the six months ended June 30, 2025, compared to the same period in 2024[189] - Net cash used in financing activities increased by $126.2 million for the six months ended June 30, 2025, primarily due to higher share and unit repurchases ($100.0 million increase) and increased distributions ($14.8 million increase)[193] Capital Expenditures (Six Months Ended June 30, in millions) | Metric | 2025 | 2024 | Change | | :-------------------------------- | :----- | :----- | :----- | | Total capital expenditures | $120.1 | $107.9 | $12.2 | | Additions to property, plant and equipment | $108.9 | $118.7 | $(9.8) | - Capital expenditures in 2025 are primarily focused on expanding compression capacity and gas capture capabilities, along with related pipeline infrastructure[194] Item 3. Quantitative and Qualitative Disclosures about Market Risk Discusses minimal direct commodity price exposure and primary market risk from interest rate changes on debt, with fair value sensitivity analysis - The Company has minimal direct exposure to commodity prices as it generally does not own crude oil, natural gas, or NGLs and operates under fee-based agreements with MVCs[201] - The primary market risk is related to changes in interest rates, with no derivative instruments in place to hedge this exposure as of June 30, 2025[202] - As of June 30, 2025, total debt had a carrying value of $3,714.4 million and a fair value of approximately $3,752.2 million. A 15% increase or decrease in interest rates would decrease or increase the fair value of fixed-rate debt by approximately $81.5 million or $79.7 million, respectively[203] Item 4. Controls and Procedures CEO and CFO concluded disclosure controls and procedures were effective, with no material changes in internal control over financial reporting - Disclosure controls and procedures were deemed effective as of June 30, 2025, by the CEO and CFO[204] - No material changes in internal control over financial reporting occurred during the quarter ended June 30, 2025[205] PART II—OTHER INFORMATION Item 1. Legal Proceedings References legal proceedings from Note 10, applying a $1 million disclosure threshold for environmental matters, with no material accrued liabilities - Information on legal proceedings is incorporated from Note 10, Commitments and Contingencies[208] - The Company uses a $1 million threshold for disclosing environmental proceedings with governmental authorities[208] Item 1A. Risk Factors Notes no material changes to prior risk factors, but highlights new risks related to the Hess-Chevron merger's potential integration and operational challenges - Risk factors from the 2024 Annual Report on Form 10-K have not materially changed[209] - New risks are identified related to the Hess-Chevron merger, including potential integration difficulties, failure to achieve anticipated benefits, and disruption to current plans or operations, which could negatively impact the Company's business and Class A Share price[210] Item 2. Unregistered Sales of Equity Securities and Use of Proceeds Details the repurchase of $10.0 million of Class A Shares via an ASR in May 2025, acquiring 267,532 shares Class A Share Repurchase Activities (Three Months Ended June 30, 2025) | Period | Total Number of Shares Purchased | Average Price Paid per Share | Total Number of Shares Purchased as Part of Publicly Announced Plans or Programs | | :---------------- | :------------------------------- | :--------------------------- | :----------------------------------------------------------------- | | May 1-30, 2025 | 267,532 | $37.38 | 267,532 | - The Company repurchased $10.0 million of Class A Shares via an Accelerated Share Repurchase (ASR) in May 2025[211] Item 5. Other Information Reports no adoption or termination of Rule 10b5-1 or non-Rule 10b5-1 trading arrangements by directors or officers - No directors or officers adopted or terminated Rule 10b5-1 or non-Rule 10b5-1 trading arrangements during the three months ended June 30, 2025[212] Item 6. Exhibits Lists exhibits filed with Form 10-Q, including a repurchase agreement, SEC-required certifications, and Inline XBRL documents - Exhibits include a Repurchase Agreement dated May 5, 2025, and various certifications required by SEC rules (Rule 13a-14(a), Rule 15d-14(a), and 18 U.S.C. 1350)[214] - The filing also includes Inline XBRL Instance Document, Taxonomy Extension Schema Document, and Cover Page Interactive Data File[214] Signatures Report signed by Jonathan C. Stein (CEO) and Michael J. Chadwick (CFO) on August 6, 2025, on behalf of Hess Midstream LP's General Partner - The report is signed by Jonathan C. Stein, Chief Executive Officer, and Michael J. Chadwick, Chief Financial Officer, on behalf of Hess Midstream LP's General Partner[217][218] - The signing date for the report is August 6, 2025[217]