UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
Form
For the quarter ended
or
For the transition period from to
Commission File Number
(Exact name of Registrant as specified in its charter)
(State or other jurisdiction of incorporation or organization) |
(I.R.S. Employer Identification Number) |
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(Zip Code) |
(Registrant’s telephone number, including area code, is (
Securities registered pursuant to Section 12(b) of the Act:
Title of each class |
Trading Symbol(s) |
Name of each exchange on which registered |
Indicate by check mark whether the Registrant (1) has filed all reports required to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during the preceding 12 months (or for such shorter period that the registrant was required to file such reports), and (2) has been subject to such filing requirements for the past 90 days.
Indicate by check mark whether the registrant has submitted electronically every Interactive Data File required to be submitted pursuant to Rule 405 of Regulation S-T (§232.405 of this chapter) during the preceding 12 months (or for such shorter period that the registrant was required to submit such files).
Indicate by check mark whether the registrant is a large accelerated filer, an accelerated filer, a non-accelerated filer, a smaller reporting company, or an emerging growth company. See the definitions of “large accelerated filer,” “accelerated filer,” “smaller reporting company,” and “emerging growth company” in Rule 12b‑2 of the Exchange Act.
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Accelerated filer |
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Non-accelerated filer |
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Smaller reporting company |
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Emerging growth company |
If an emerging growth company, indicate by checkmark if the registrant has elected not to use the extended transition period for complying with any new or revised financial accounting standards provided pursuant to Section 13(a) of the Exchange Act. ☐
Indicate by check mark whether the registrant is a shell company (as defined in Rule 12b‑2 of the Exchange Act). Yes ☐ No
HESS MIDSTREAM LP
FORM 10-Q
TABLE OF CONTENTS
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PART I—FINANCIAL INFORMATION |
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1. |
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Financial Statements (unaudited) |
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Consolidated Balance Sheets at June 30, 2023 and December 31, 2022 |
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Consolidated Statements of Operations for the three and six months ended June 30, 2023 and 2022 |
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Consolidated Statements of Cash Flows for the six months ended June 30, 2023 and 2022 |
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6 |
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2. |
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Management’s Discussion and Analysis of Financial Condition and Results of Operations |
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3. |
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31 |
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4. |
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31 |
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PART II—OTHER INFORMATION |
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1. |
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32 |
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1A. |
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32 |
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5. |
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32 |
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6. |
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33 |
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34 |
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Certifications |
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1
PART I—FINANCIAL INFORMATION (CONT'D)
HESS MIDSTREAM LP
CONSOLIDATED BALANCE SHEETS (UNAUDITED)
Item 1. Financial Statements
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June 30, |
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December 31, |
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2023 |
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2022 |
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(in millions, except share amounts) |
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Assets |
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Cash and cash equivalents |
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$ |
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From contracts with customers |
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Other current assets |
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Total current assets |
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Equity investments |
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Property, plant and equipment, net |
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Long-term receivable—affiliate |
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Deferred tax asset |
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Other noncurrent assets |
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Total assets |
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$ |
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Liabilities |
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Accounts payable—trade |
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Accrued liabilities |
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Current maturities of long-term debt |
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Other current liabilities |
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Total current liabilities |
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Long-term debt |
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Deferred tax liability |
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Other noncurrent liabilities |
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Total liabilities |
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Partners' capital |
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Class A shares ( |
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Class B shares ( |
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Total Class A and Class B partners' capital |
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Noncontrolling interest |
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Total partners' capital |
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Total liabilities and partners' capital |
$ |
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$ |
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See accompanying notes to unaudited consolidated financial statements.
2
PART I—FINANCIAL INFORMATION (CONT'D)
HESS MIDSTREAM LP
CONSOLIDATED STATEMENTS OF OPERATIONS
(UNAUDITED)
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Three Months Ended June 30, |
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Six Months Ended June 30, |
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2023 |
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2022 |
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2023 |
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2022 |
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(in millions, except per share data) |
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Revenues |
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$ |
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$ |
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$ |
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$ |
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Other income |
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Total revenues |
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Costs and expenses |
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Operating and maintenance expenses (exclusive of |
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Depreciation expense |
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General and administrative expenses |
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Total operating costs and expenses |
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Income from operations |
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Income from equity investments |
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Interest expense, net |
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Income before income tax expense |
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Income tax expense |
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Net income |
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Less: Net income attributable to noncontrolling interest |
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Net income attributable to Hess Midstream LP |
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$ |
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$ |
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$ |
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$ |
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Net income attributable to Hess Midstream LP |
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Basic |
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$ |
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$ |
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$ |
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Diluted |
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$ |
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$ |
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$ |
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Weighted average Class A shares outstanding |
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Basic |
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Diluted |
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See accompanying notes to unaudited consolidated financial statements.
3
PART I—FINANCIAL INFORMATION (CONT'D)
HESS MIDSTREAM LP
CONSOLIDATED STATEMENTS OF CHANGES IN PARTNERS’ CAPITAL
(UNAUDITED)
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Partners' Capital |
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Class A |
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Class B |
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Noncontrolling |
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Total |
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(in millions) |
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Balance at December 31, 2022 |
$ |
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$ |
- |
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$ |
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$ |
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Net income |
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- |
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Equity-based compensation |
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- |
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Distributions - $ |
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- |
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Recognition of deferred tax asset |
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- |
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Class B unit repurchase |
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- |
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Transaction costs |
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- |
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Balance at March 31, 2023 |
$ |
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$ |
- |
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$ |
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$ |
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Net income |
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- |
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Equity-based compensation |
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- |
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Distributions - $ |
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- |
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Recognition of deferred tax asset |
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- |
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Sale of shares held by Sponsors |
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- |
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Class B unit repurchase |
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- |
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Transaction costs |
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- |
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Balance at June 30, 2023 |
$ |
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$ |
- |
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$ |
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$ |
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Balance at December 31, 2021 |
$ |
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$ |
- |
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$ |
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$ |
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Net income |
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- |
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Equity-based compensation |
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- |
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Distributions - $ |
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- |
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Transaction costs |
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- |
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Balance at March 31, 2022 |
$ |
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$ |
- |
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$ |
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$ |
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Net income |
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- |
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Equity-based compensation |
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- |
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Distributions - $ |
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- |
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Recognition of deferred tax asset |
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- |
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Sale of shares held by Sponsors |
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- |
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Class B unit repurchase |
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- |
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( |
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Transaction costs |
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- |
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Balance at June 30, 2022 |
$ |
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$ |
- |
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$ |
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$ |
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See accompanying notes to unaudited consolidated financial statements.
4
PART I—FINANCIAL INFORMATION (CONT'D)
HESS MIDSTREAM LP
CONSOLIDATED STATEMENTS OF CASH FLOWS
(UNAUDITED)
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Six Months Ended June 30, |
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2023 |
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2022 |
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(in millions) |
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Cash flows from operating activities |
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Net income |
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$ |
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$ |
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Adjustments to reconcile net income to net cash provided by (used in) |
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Depreciation expense |
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(Income) loss from equity investments |
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Distributions from equity investments |
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Amortization of deferred financing costs |
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Equity-based compensation expense |
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Deferred income tax expense (benefit) |
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Changes in assets and liabilities: |
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Accounts receivable – affiliate |
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Other current and noncurrent assets |
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Accounts payable – trade |
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Accounts payable – affiliate |
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( |
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Accrued liabilities |
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( |
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Other current and noncurrent liabilities |
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( |
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Net cash provided by (used in) operating activities |
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Cash flows from investing activities |
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Additions to property, plant and equipment |
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Net cash provided by (used in) investing activities |
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Cash flows from financing activities |
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Net proceeds from (repayments of) bank borrowings with maturities of 90 |
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Bank borrowings with maturities of greater than 90 days |
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Repayments |
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- |
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( |
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Proceeds from issuance of senior notes |
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- |
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Deferred financing costs |
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- |
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( |
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Transaction costs |
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( |
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( |
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Class B unit repurchase |
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( |
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( |
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Distributions to shareholders |
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( |
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Distributions to noncontrolling interest |
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( |
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( |
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Net cash provided by (used in) financing activities |
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( |
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Increase (decrease) in cash and cash equivalents |
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Cash and cash equivalents, beginning of period |
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Cash and cash equivalents, end of period |
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$ |
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$ |
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Supplemental disclosure of non-cash investing and financing activities: |
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(Increase) decrease in accrued capital expenditures and related liabilities |
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$ |
( |
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$ |
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Recognition of deferred tax asset |
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$ |
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$ |
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See accompanying notes to unaudited consolidated financial statements.
5
PART I – FINANCIAL INFORMATION (CONT’D)
HESS MIDSTREAM LP
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (UNAUDITED)
Note 1. Basis of Presentation
Unless the context otherwise requires, references in this report to the “Company,” “we,” “our,” “us” or like terms, refer to Hess Midstream LP and its subsidiaries.
The consolidated financial statements included in this report reflect all normal and recurring adjustments which, in the opinion of management, are necessary for a fair presentation of our consolidated financial position at June 30, 2023 and December 31, 2022, the consolidated results of operations for the three and six months ended June 30, 2023 and 2022, and the consolidated cash flows for the six months ended June 30, 2023 and 2022. The Company has no items of other comprehensive income (loss); therefore, net income (loss) is equal to comprehensive income (loss). The unaudited results of operations for the interim periods reported are not necessarily indicative of results to be expected for the full year.
The consolidated financial statements were prepared in accordance with the requirements of the Securities and Exchange Commission (“SEC”) for interim reporting. As permitted under those rules, certain notes or other financial information that are normally required by U.S. generally accepted accounting principles (“GAAP”) have been condensed or omitted from these interim consolidated financial statements. These financial statements, therefore, should be read in conjunction with the financial statements and related notes included in the Company’s annual report on Form 10‑K for the year ended December 31, 2022.
We consolidate the activities of Hess Midstream Operations LP (“the Partnership”), as a variable interest entity (“VIE”) under U.S. GAAP. We have concluded that we are the primary beneficiary of the VIE, as defined in the accounting standards, since we have the power, through our ownership, to direct those activities that most significantly impact the economic performance of the Partnership. This conclusion was based on a qualitative analysis that considered the Partnership’s governance structure and the delegation of control provisions, which provide us the ability to control the operations of the Partnership. All financial statement activities associated with the VIE are captured within gathering, processing and storage, and terminaling and export segments (see Note 11, Segments). We currently do not have any independent assets or operations other than our interest in the Partnership. Our noncontrolling interest represents the approximate
Note 2. Equity Transactions
Equity Offering Transactions
On April 4, 2022, the Sponsors sold an aggregate of
On May 19, 2023, the Sponsors sold an aggregate of
The Company did
6