Hess Midstream LP(HESM) - 2023 Q3 - Quarterly Report

Financial Performance - Total revenues for Q3 2023 reached $363.1 million, a 8.4% increase from $334.8 million in Q3 2022[13] - Net income attributable to Hess Midstream LP was $35.3 million in Q3 2023, up 51.0% from $23.2 million in Q3 2022[13] - Basic net income per Class A share for Q3 2023 was $0.57, compared to $0.53 in Q3 2022[13] - Net income for the nine months ended September 30, 2023, was $454.9 million, a decrease of 3.9% compared to $470.8 million in the same period of 2022[19] - Revenues and other income for the nine months ended September 30, 2023, were $992.1 million, a 3.5% increase from $960.6 million in the same period of 2022[80] - Consolidated net income for the third quarter of 2023 was $164.8 million, compared to $159.4 million in the third quarter of 2022, marking a 3.4% increase[101] Expenses and Liabilities - Operating and maintenance expenses for Q3 2023 were $89.4 million, an increase of 12.3% compared to $79.6 million in Q3 2022[13] - Total current liabilities increased to $173.8 million as of September 30, 2023, compared to $159.5 million at the end of 2022[11] - Interest expense increased by $5.9 million, primarily due to higher interest rates and increased borrowings[132] - Operating and maintenance expenses rose by $7.0 million in the first nine months of 2023, primarily due to higher pass-through costs and employee costs[140] Assets and Capital Expenditures - Total assets as of September 30, 2023, amounted to $3,775.5 million, up from $3,588.2 million as of December 31, 2022[11] - Additions to property, plant, and equipment were $160.0 million, a decrease from $176.6 million in the prior year[19] - Total capital expenditures for the nine months ended September 30, 2023, were $173.9 million, with expansion capital expenditures of $164.1 million and maintenance capital expenditures of $9.8 million[174] Debt and Financing - Long-term debt increased to $3,138.3 million as of September 30, 2023, compared to $2,883.1 million at the end of 2022[11] - The Partnership had $1.4 billion in senior secured credit facilities, including a $1.0 billion revolving credit facility and a $400.0 million Term Loan A facility, maturing in July 2027[61] - As of September 30, 2023, total debt had a carrying value of $3,148.3 million and a fair value of approximately $2,954.5 million[64] Revenue Sources - Oil and gas gathering services generated $170.5 million in revenue for the three months ended September 30, 2023, up from $160.5 million in 2022, reflecting a year-over-year growth of 6.2%[46] - Processing and storage services revenue increased to $132.2 million in Q3 2023 from $121.7 million in Q3 2022, representing a growth of 8.5%[46] - The company has long-term, fee-based commercial agreements with Hess, providing cash flow stability and growth through minimum volume commitments[108] Strategic Initiatives - The company is pursuing strategic relationships with third-party producers and midstream companies in the Bakken to maximize utilization rates[44] - The fee recalculation model for commercial agreements will transition to an inflation-based fee structure, with annual adjustments capped at 3%[43] Shareholder Distributions - Distributions to shareholders totaled $85.2 million, an increase from $66.2 million in the same period of 2022[19] - The partnership agreement mandates distribution of all available cash to shareholders within 45 days after each quarter, with a declared distribution of $0.6175 per Class A share for the third quarter of 2023[65] Merger and Acquisition - The Chevron Merger Agreement was entered into on October 22, 2023, with the transaction expected to close in the first half of 2024, subject to approvals[84] - Chevron's potential acquisition of Hess is subject to various risks, including unforeseen liabilities and the need for approvals from customers, shareholders, and regulators[184] - The merger agreement restricts Hess from entering into certain transactions, which may limit its operational flexibility until the merger is completed[191] Operational Performance - Throughput volumes for gas gathering and processing increased by 9% in the third quarter of 2023 compared to the same quarter in 2022, driven by higher production and third-party volumes[102] - Gas gathering throughput volumes remained stable at 404 MMcf/d for the three months ended September 30, 2023[122] - The company plans to continue focusing on operational efficiency and cost management to enhance profitability in the upcoming quarters[126]