Higher cash flow and distributions at Hess Midstream (NYSE: HESM) in Q1 2026
Hess Midstream LP reported steady first-quarter 2026 results, with total revenues of $390.1 million versus $382.0 million a year earlier, driven by higher tariff rates and third-party services, partly offset by lower Chevron throughput.
Net income was $157.7 million, with $87.6 million attributable to Hess Midstream LP, or $0.68 per basic and diluted Class A share, up from $0.65. Adjusted EBITDA rose to $299.8 million from $292.3 million, and operating cash flow increased to $253.3 million.
The partnership continued capital discipline, limiting capital expenditures to $10.4 million while maintaining a sizable debt load of $3,772.0 million. It repurchased 1,065,724 Class A shares via a $42.0 million accelerated share repurchase and raised its quarterly cash distribution to $0.7792 per Class A share.
Positive
- None.
Negative
- None.
Key Figures
Key Terms
Adjusted EBITDA financial
minimum volume commitments financial
accelerated share repurchase financial
variable interest entity financial
Secondary Term financial
Bakken other
UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
Form
For the quarter ended
or
For the transition period from to
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(Registrant’s telephone number, including area code, is (
Securities registered pursuant to Section 12(b) of the Act:
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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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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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Financial Statements (unaudited) |
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Consolidated Balance Sheets at March 31, 2026 and December 31, 2025 |
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Consolidated Statements of Operations for the three months ended March 31, 2026 and 2025 |
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Consolidated Statements of Changes in Partners’ Capital (Deficit) for the three months ended March 31, 2026 and 2025 |
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Consolidated Statements of Cash Flows for the three months ended March 31, 2026 and 2025 |
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Notes to Consolidated Financial Statements |
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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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Quantitative and Qualitative Disclosures about Market Risk |
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4. |
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Controls and Procedures |
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PART II—OTHER INFORMATION |
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1. |
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Legal Proceedings |
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1A. |
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Risk Factors |
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2. |
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Unregistered Sales of Equity Securities and Use of Proceeds |
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Other Information |
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6. |
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Exhibits |
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Signatures |
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Certifications |
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1
PART I—FINANCIAL INFORMATION (CONT’D)
HESS MIDSTREAM LP
Table of Contents
CONSOLIDATED BALANCE SHEETS (UNAUDITED)
Item 1. Financial Statements
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March 31, |
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December 31, |
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2026 |
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2025 |
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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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Accounts receivable from contracts with customers: |
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Accounts receivable—trade |
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Accounts receivable—affiliate |
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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, at cost |
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Accumulated depreciation |
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Property, plant and equipment, net |
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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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$ |
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Accounts payable—affiliate |
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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
Table of Contents
CONSOLIDATED STATEMENTS OF OPERATIONS
(UNAUDITED)
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Three Months Ended March 31, |
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2026 |
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2025 |
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(in millions, except per share data) |
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Revenues |
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Affiliate services |
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$ |
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$ |
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Third-party services |
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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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Net income attributable to Hess Midstream LP |
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Basic |
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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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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
Table of Contents
CONSOLIDATED STATEMENTS OF CHANGES IN PARTNERS’ CAPITAL (DEFICIT)
(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, 2025 |
$ |
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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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Distributions - $ |
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- |
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Deferred tax asset |
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( |
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- |
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( |
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Share and unit repurchases |
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( |
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- |
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( |
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( |
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Transaction costs (1) |
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( |
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- |
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( |
) |
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( |
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Balance at March 31, 2026 |
$ |
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$ |
- |
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$ |
( |
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$ |
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Balance at December 31, 2024 |
$ |
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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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- |
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Distributions - $ |
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( |
) |
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- |
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( |
) |
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( |
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Deferred tax asset |
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- |
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- |
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Sale of shares held by Sponsors |
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( |
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- |
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- |
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Share and unit repurchases |
|
( |
) |
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- |
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( |
) |
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( |
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Transaction costs |
|
( |
) |
|
|
- |
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( |
) |
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( |
) |
Balance at March 31, 2025 |
$ |
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$ |
- |
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$ |
( |
) |
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$ |
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||
(1)
See accompanying notes to unaudited consolidated financial statements.
4
PART I—FINANCIAL INFORMATION (CONT’D)
HESS MIDSTREAM LP
Table of Contents
CONSOLIDATED STATEMENTS OF CASH FLOWS
(UNAUDITED)
|
|
Three Months Ended March 31, |
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|||||
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|
2026 |
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2025 |
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(in millions) |
|
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Cash flows from operating activities |
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|
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Net income |
|
$ |
|
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$ |
|
||
Adjustments to reconcile net income to net cash provided by |
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|
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Depreciation expense |
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||
Income from equity investments |
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( |
) |
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( |
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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 |
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||
Changes in assets and liabilities: |
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|
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|
||
Accounts receivable – trade |
|
|
( |
) |
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( |
) |
Accounts receivable – affiliate |
|
|
( |
) |
|
|
( |
) |
Other current and noncurrent assets |
|
|
|
|
|
|
||
Accounts payable – trade |
|
|
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|
( |
) |
|
Accounts payable – affiliate |
|
|
|
|
|
( |
) |
|
Accrued liabilities |
|
|
|
|
|
|
||
Other current and noncurrent liabilities |
|
|
( |
) |
|
|
( |
) |
Net cash provided by operating activities |
|
|
|
|
|
|
||
Cash flows from investing activities |
|
|
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|
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||
Additions to property, plant and equipment |
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( |
) |
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( |
) |
Net cash used in investing activities |
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( |
) |
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( |
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Cash flows from financing activities |
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Net proceeds from (repayments of) borrowings with maturities of 90 |
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|
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Borrowings with maturities of greater than 90 days: |
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|
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Proceeds |
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||
Repayments |
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|
( |
) |
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( |
) |
Deferred financing costs |
|
|
|
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|
( |
) |
|
Transaction costs |
|
|
( |
) |
|
|
( |
) |
Share and unit repurchases |
|
|
( |
) |
|
|
( |
) |
Distributions to shareholders |
|
|
( |
) |
|
|
( |
) |
Distributions to noncontrolling interest |
|
|
( |
) |
|
|
( |
) |
Net cash used in financing activities |
|
|
( |
) |
|
|
( |
) |
Increase (decrease) in cash and cash equivalents |
|
|
|
|
|
|
||
Cash and cash equivalents, beginning of period |
|
|
|
|
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||
Cash and cash equivalents, end of period |
|
$ |
|
|
$ |
|
||
Supplemental disclosure of non-cash investing and financing activities: |
|
|
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|
|
|
||
(Increase) decrease in accrued capital expenditures and related liabilities |
|
$ |
|
|
$ |
( |
) |
|
Recognition of deferred tax asset |
|
$ |
( |
) |
|
$ |
|
|
See accompanying notes to unaudited consolidated financial statements.
5
PART I – FINANCIAL INFORMATION (CONT’D)
HESS MIDSTREAM LP
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (UNAUDITED)
Table of Contents
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. References to “Sponsor” or “Sponsors” refer to (a) Hess Corporation (“Hess”) and GIP II Blue Holding, L.P. (“GIP”) when referring to periods prior to May 30, 2025, (b) Hess from May 30, 2025 to July 17, 2025, and (c) Chevron from July 18, 2025.
As used in this report, the term “Chevron” may refer to Chevron Corporation, one or more of its consolidated subsidiaries, or to all of them taken as a whole. All of these terms are used for convenience only and are not intended as a precise description of any of the separate companies, each of which manages its own affairs.
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 March 31, 2026 and December 31, 2025, the consolidated results of operations and cash flows for the three months ended March 31, 2026 and 2025. 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, 2025.
We consolidate the activities of Hess Midstream Operations LP (the “Partnership”), as a variable interest entity (“VIE”) under 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 with 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 10, Segments). We currently do not have any independent assets or operations other than our interest in the Partnership. At March 31, 2026, our noncontrolling interest represented an approximate
New Accounting Pronouncements
In November 2024, the FASB issued ASU 2024-03, Income Statement—Reporting Comprehensive Income—Expense Disaggregation Disclosures (Subtopic 220-40): Disaggregation of income statement expenses. This ASU requires disclosure, in the notes to financial statements, of specified information about certain costs and expenses. The ASU is effective for public business entities for fiscal years beginning after December 15, 2026, and interim periods beginning after December 15, 2027, with early adoption permitted. We are currently evaluating the impact of this new ASU on our consolidated financial statements.
Note 2. Equity Transactions
Equity Offering Transactions
On February 12, 2025, GIP sold an aggregate of
6
PART I – FINANCIAL INFORMATION (CONT’D)
HESS MIDSTREAM LP
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (UNAUDITED)
Table of Contents
The Company did
Class B Unit Repurchases
On January 13, 2025, the Company, the Partnership and our Sponsors entered into a unit repurchase agreement, pursuant to which the Partnership agreed to purchase from the Sponsors
On March 2, 2026, the Company, the Partnership and our Sponsor entered into a unit repurchase agreement, pursuant to which the Partnership agreed to purchase from the Sponsor
Pursuant to the terms of the unit repurchase agreements described above, immediately following each purchase of the Class B Units from the Sponsors, the Partnership cancelled the repurchased units, and the Company cancelled, for no consideration, an equal number of its Class B Shares.
Accelerated Share Repurchases
In the first quarter of 2026, we repurchased $
Following the settlement of the ASR transaction, the Company cancelled the repurchased Class A Shares, and the Partnership cancelled, for no consideration, an equal number of its Class A units representing limited partner interests in the Partnership.
The Class B Unit repurchase and ASR transactions described above were funded using borrowings under the Partnership’s existing revolving credit facility (see Note 5, Debt and Interest Expense).
The Class B Unit repurchase and ASR transactions were accounted for in accordance with Accounting Standards Codification 810, whereby changes in a parent’s ownership interest while the parent retains its controlling financial interest in its subsidiary are accounted for as equity transactions. The carrying amounts of the noncontrolling interest were adjusted to reflect the changes in the ownership interest with the difference between the amounts of consideration paid and the amounts by which the noncontrolling interest were adjusted recognized as a reduction in equity attributable to Class A shareholders.
As a result of the transactions described above, we recognized a direct reduction to deferred tax asset of $
7
PART I – FINANCIAL INFORMATION (CONT’D)
HESS MIDSTREAM LP
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (UNAUDITED)
Table of Contents
Note 3. Related Party Transactions
In addition to the Class B Unit repurchase transactions and distributions to the Sponsors disclosed elsewhere in the Notes to consolidated financial statements, we had the following related party transactions:
Commercial Agreements
We have long-term fee-based commercial agreements with certain subsidiaries of Chevron to provide (i) gas gathering, (ii) crude oil gathering, (iii) gas processing and fractionation, (iv) storage services, (v) terminaling and export services, and (vi) water handling services.
For the services performed under these commercial agreements, we receive a fee per barrel of crude oil, barrel of water, Mcf of natural gas, or Mcf equivalent of natural gas liquids (“NGLs”), as applicable, delivered during each month, and Chevron is obligated to provide us with minimum volumes of crude oil, water, natural gas and NGLs.
Except for the water services agreements and except for a certain gathering sub-system as described below,
For certain crude oil gathering, terminaling, storage, gas processing and gas gathering commercial agreements with Chevron, we exercised our renewal options to extend each of these commercial agreements for
8
PART I – FINANCIAL INFORMATION (CONT’D)
HESS MIDSTREAM LP
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (UNAUDITED)
Table of Contents
Consistent with the existing terms of the commercial agreements, during the Secondary Term of each of our commercial agreements other than our storage services agreement and terminal and export services agreement (with respect to crude oil terminaling services),
At March 31, 2026, deferred revenue included in Accrued liabilities in the accompanying unaudited consolidated balance sheet was $
For the three months ended March 31, 2026 and 2025, approximately
Revenues from contracts with customers, including affiliate services and third-party services, on a disaggregated basis are as follows:
|
|
Three Months Ended March 31, |
|
|||||
|
|
2026 |
|
|
2025 |
|
||
(in millions) |
|
|
|
|
|
|
||
Affiliate services |
|
|
|
|
|
|
||
Oil and gas gathering services |
|
$ |
|
|
$ |
|
||
Processing and storage services |
|
|
|
|
|
|
||
Terminaling and export services |
|
|
|
|
|
|
||
Water gathering and disposal services |
|
|
|
|
|
|
||
Total affiliate services |
|
$ |
|
|
$ |
|
||
Third-party services |
|
|
|
|
|
|
||
Total revenues from contracts with customers |
|
$ |
|
|
$ |
|
||
Other income |
|
|
|
|
|
|
||
Total revenues |
|
$ |
|
|
$ |
|
||
The following table presents third-party pass-through costs for which we recognize revenues in an amount equal to the costs. These pass-through revenues are included in Affiliate services, and the related pass-through costs are included in Operating and maintenance expenses in the accompanying unaudited consolidated statements of operations.
|
|
Three Months Ended March 31, |
|
|||||
|
|
2026 |
|
|
2025 |
|
||
(in millions) |
|
|
|
|
|
|
||
Electricity and other related fees |
|
$ |
|
|
$ |
|
||
Produced water trucking and disposal costs |
|
|
|
|
|
|
||
Total |
|
$ |
|
|
$ |
|
||
9
PART I – FINANCIAL INFORMATION (CONT’D)
HESS MIDSTREAM LP
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (UNAUDITED)
Table of Contents
Omnibus and Employee Secondment Agreements
Under our omnibus and employee secondment agreements, Chevron provides substantial operational and administrative services to us in support of our assets and operations.
|
|
Three Months Ended March 31, |
|
|||||
|
|
2026 |
|
|
2025 |
|
||
(in millions) |
|
|
|
|
|
|
||
Operating and maintenance expenses |
|
$ |
|
|
$ |
|
||
General and administrative expenses |
|
|
|
|
|
|
||
Total |
|
$ |
|
|
$ |
|
||
LM4 Agreements
Separately from our commercial agreements with Chevron, we entered into a gas processing agreement with Little Missouri 4 (“LM4”), a
|
|
Three Months Ended March 31, |
|
|||||
|
|
2026 |
|
|
2025 |
|
||
(in millions) |
|
|
|
|
|
|
||
Processing fee incurred |
|
$ |
|
|
$ |
|
||
Earnings from equity investments |
|
|
|
|
|
|
||
Distributions received from equity investments |
|
|
|
|
|
|
||
Note 4. Accrued Liabilities
Accrued liabilities are as follows:
|
|
March 31, 2026 |
|
|
December 31, 2025 |
|
||
(in millions) |
|
|
|
|
|
|
||
Accrued interest |
|
$ |
|
|
$ |
|
||
Deferred revenue |
|
|
|
|
|
|
||
Accrued capital expenditures |
|
|
|
|
|
|
||
Other accruals |
|
|
|
|
|
|
||
Total |
|
$ |
|
|
$ |
|
||
10
PART I – FINANCIAL INFORMATION (CONT’D)
HESS MIDSTREAM LP
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (UNAUDITED)
Table of Contents
Note 5. Debt and Interest Expense
At March 31, 2026, the carrying value of our total debt was $
At March 31, 2026, the fair value of our total debt was approximately $
Note 6. Partners’ Capital and Distributions
Our partnership agreement requires that, within
z
Period |
|
Record Date |
|
Distribution Date |
|
Distribution per Class A Share |
|
|
First Quarter 2025 |
|
|
|
$ |
|
|||
Second Quarter 2025 |
|
|
|
$ |
|
|||
Third Quarter 2025 |
|
|
|
$ |
|
|||
Fourth Quarter 2025 |
|
|
|
$ |
|
|||
First Quarter 2026(1) |
|
|
|
$ |
|
|||
(1)
Note 7. Earnings per Share
We calculate earnings per Class A Share as we do not have any other participating securities. Substantially all of income tax expense is attributed to earnings of Class A Shares reflective of our organizational structure. Class B Units of the Partnership together with the equal number of Class B Shares of the Company are convertible to Class A Shares of the Company on a
|
|
Three Months Ended March 31, |
|
|
|||||
(in millions, except per share amounts) |
|
2026 |
|
|
2025 |
|
|
||
Net income |
|
$ |
|
|
$ |
|
|
||
Less: Net income attributable to noncontrolling interest |
|
|
|
|
|
|
|
||
Net income attributable to Hess Midstream LP |
|
|
|
|
|
|
|
||
Net income attributable to Hess Midstream LP |
|
|
|
|
|
|
|
||
Basic: |
|
$ |
|
|
$ |
|
|
||
Diluted: |
|
$ |
|
|
$ |
|
|
||
Weighted average Class A shares outstanding: |
|
|
|
|
|
|
|
||
Basic: |
|
|
|
|
|
|
|
||
Diluted: |
|
|
|
|
|
|
|
||
For the three months ended March 31, 2026 and 2025, we did not have any material dilutive restricted shares.
Note 8. Concentration of Credit Risk
As of both March 31, 2026 and December 31, 2025, Chevron and its affiliates represented approximately
11
PART I – FINANCIAL INFORMATION (CONT’D)
HESS MIDSTREAM LP
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (UNAUDITED)
Table of Contents
Note 9. Commitments and Contingencies
Environmental Contingencies
The Company is subject to federal, state and local laws and regulations relating to the environment. As of March 31, 2026 our reserves for all estimated remediation liabilities were $
Legal Proceedings
In the ordinary course of business, the Company is from time to time party to various judicial and administrative proceedings. We regularly assess the need for accounting recognition or disclosure of these contingencies. In the case of a known contingency, we accrue a liability when the loss is probable and the amount is reasonably estimable. If a range of amounts can be reasonably estimated and no amount within the range is a better estimate than any other amount, then the minimum of the range is accrued.
Based on currently available information, we believe it is remote that the outcome of known matters would have a material adverse impact on our financial condition, results of operations or cash flows. Accordingly, as of March 31, 2026 and December 31, 2025, we did
Note 10. Segments
Our operations are located in the United States and are organized into
12
PART I – FINANCIAL INFORMATION (CONT’D)
HESS MIDSTREAM LP
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (UNAUDITED)
Table of Contents
The following tables reflect certain financial data for each reportable segment:
|
|
Gathering |
|
|
Processing and Storage |
|
|
Terminaling and Export |
|
|
Total Reportable Segments |
|
|
Interest and Other |
|
|
Consolidated |
|
||||||
(in millions) |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
||||||
For the Three Months Ended March 31, 2026 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
||||||
Revenues and other income |
|
$ |
|
|
$ |
|
|
$ |
|
|
$ |
|
|
$ |
|
|
$ |
|
||||||
Operating and maintenance expenses |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
||||||
Depreciation expense |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
||||||
General and administrative expenses |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
||||||
Income from equity investments |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
||||||
Interest expense, net |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
||||||
Income tax expense |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
||||||
Adjusted EBITDA |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
||||||
Capital expenditures |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
||||||
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
||||||
|
|
Gathering |
|
|
Processing and Storage |
|
|
Terminaling and Export |
|
|
Total Reportable Segments |
|
|
Interest and Other |
|
|
Consolidated |
|
||||||
(in millions) |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
||||||
For the Three Months Ended March 31, 2025 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
||||||
Revenues and other income |
|
$ |
|
|
$ |
|
|
$ |
|
|
$ |
|
|
$ |
|
|
$ |
|
||||||
Operating and maintenance expenses |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
||||||
Depreciation expense |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
||||||
General and administrative expenses |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
||||||
Income from equity investments |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
||||||
Interest expense, net |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
||||||
Income tax expense |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
||||||
Adjusted EBITDA |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
||||||
Capital expenditures |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
||||||
The following table presents a reconciliation of reportable segment Adjusted EBITDA to income before income tax expense:
|
|
Three Months Ended March 31, |
|
|||||
(in millions) |
|
2026 |
|
|
2025 |
|
||
Reconciliation of reportable segment Adjusted |
|
|
|
|
|
|
||
Total reportable segment Adjusted EBITDA |
|
$ |
|
|
$ |
|
||
Less: |
|
|
|
|
|
|
||
Depreciation expense |
|
|
|
|
|
|
||
Unallocated general and administrative expenses |
|
|
|
|
|
|
||
Interest expense, net |
|
|
|
|
|
|
||
Income before income tax expense |
|
$ |
|
|
$ |
|
||
13
PART I – FINANCIAL INFORMATION (CONT’D)
HESS MIDSTREAM LP
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (UNAUDITED)
Table of Contents
Total assets for the reportable segments are as follows:
|
|
|
|
|||||
|
|
March 31, 2026 |
|
|
December 31, 2025 |
|
||
(in millions) |
|
|
|
|
|
|
||
Gathering |
|
$ |
|
|
$ |
|
||
Processing and Storage(1) |
|
|
|
|
|
|
||
Terminaling and Export |
|
|
|
|
|
|
||
Total reportable segments assets |
|
|
|
|
|
|
||
Interest and Other |
|
|
|
|
|
|
||
Total consolidated assets |
|
$ |
|
|
$ |
|
||
(1)
Note 11. Subsequent Events
On
14
PART I – FINANCIAL INFORMATION (CONT’D)
Table of Contents
Item 2. Management’s Discussion and Analysis of Financial Condition and Results of Operations
Management’s Discussion and Analysis of Financial Condition and Results of Operations should be read in conjunction with the unaudited financial statements and accompanying footnotes included under Item 1. Financial Statements and in conjunction with the audited consolidated financial statements and accompanying footnotes in our Annual Report on Form 10‑K for the year ended December 31, 2025 (our “2025 Annual Report”).
Unless otherwise stated or the context otherwise indicates, references in this report to “Hess Midstream LP,” “the Company,” “us,” “our,” “we” or similar terms refer to Hess Midstream LP, including its consolidated subsidiaries. References to “Partnership” refer to Hess Midstream Operations LP. References to “Sponsor” or “Sponsors” refer to (a) Hess Corporation (“Hess”) and GIP II Blue Holding, L.P. (“GIP”) when referring to periods prior to May 30, 2025, (b) Hess from May 30, 2025 to July 17, 2025, and (c) Chevron from July 18, 2025.
As used in this report, the term “Chevron” may refer to Chevron Corporation, one or more of its consolidated subsidiaries, or to all of them taken as a whole. All of these terms are used for convenience only and are not intended as a precise description of any of the separate companies, each of which manages its own affairs.
This discussion contains forward‑looking statements that involve risks and uncertainties. Our actual results could differ materially from those discussed below. Factors that could cause or contribute to such differences include, but are not limited to, those risk factors discussed in our 2025 Annual Report.
Overview
Organization. We are a fee-based, growth-oriented, limited partnership that owns, operates, develops and acquires a diverse set of midstream assets and provides fee-based services to our Sponsor, its subsidiaries, and third-party customers. We are managed and controlled by Hess Midstream GP LLC, the general partner of our general partner that is owned by Chevron. Our assets are primarily located in the Bakken and Three Forks shale plays in the Williston Basin area of North Dakota, which we collectively refer to as the Bakken. Our assets and operations are organized into the following three reportable segments: (1) gathering (2) processing and storage and (3) terminaling and export.
Operational Highlights. In the first quarter of 2026, we placed in service a new compressor station, which provides approximately 50 MMcf/d of installed compression capacity and can be expanded to provide an additional 20 MMcf/d in the future.
Equity Transactions. On March 4, 2026, the Partnership purchased directly from the Sponsor 455,811 Class B units representing limited partner interests in the Partnership (“Class B Units”) for an aggregate purchase price of approximately $18.0 million. The purchase price per Class B Unit was $39.49, the closing price of the Class A shares representing limited partner interests in the Company (the “Class A Shares”) on March 2, 2026.
In the first quarter of 2026, we repurchased $42.0 million of our publicly traded Class A Shares through an accelerated share repurchase (“ASR”) transaction with a financial institution. Under the terms of the ASR, we paid $42.0 million in cash to the financial institution and received 1,065,724 Class A Shares as determined by the average of the daily volume-weighted average prices of Class A Shares during the term of the transaction.
The Class B Unit repurchase and the ASR transactions described above were funded using borrowings under the Partnership’s existing revolving credit facility.
Credit Ratings. At March 31, 2026, the Partnership’s senior unsecured debt is rated ‘BBB-’ by S&P Global Ratings and ‘Ba1’ by Moody’s Investors Service.
First Quarter Results
Significant financial and operating highlights for the first quarter of 2026 included:
15
PART I – FINANCIAL INFORMATION (CONT’D)
Table of Contents
Revenues and other income in the first quarter of 2026 were $390.1 million, up from $382.0 million in the prior‑year quarter, primarily due to higher tariff rates, third-party services and pass-through revenues, partially offset by lower throughput volumes. Total operating costs and expenses in the first quarter of 2026 were $152.0 million, up from $144.6 million in the prior-year quarter, primarily due to higher depreciation expense. Interest expense, net of interest income, in the first quarter of 2026 was $55.4 million, approximately flat compared with $56.4 million in the prior-year quarter. Income tax expense was $28.2 million, up from $23.0 million in the prior-year quarter, primarily resulting from ownership changes following the GIP secondary equity offering and Class A Share and Class B Unit repurchase transactions. As a result, consolidated net income decreased $3.7 million while Adjusted EBITDA increased $7.5 million for the first quarter of 2026 compared with the first quarter of 2025.
Throughput volumes decreased 5% for oil terminaling and 9% for water gathering in the first quarter of 2026 compared with the first quarter of 2025, primarily due to lower production. Throughput volumes increased 1% for gas processing in the first quarter of 2026 compared with the first quarter of 2025, primarily due to higher third-party volumes.
For additional discussion of the results of operations at the segment level, see “Results of Operations” below. For additional information regarding Adjusted EBITDA, our non‑GAAP financial measure, see “How We Evaluate Our Operations” and “Reconciliation of Non‑GAAP Financial Measure” below.
How We Generate Revenues
We generate substantially all of our revenues by charging fees for gathering, compressing and processing natural gas and fractionating natural gas liquids (“NGLs”); gathering, terminaling, loading and transporting crude oil and NGLs; storing and terminaling propane; and gathering and disposing of produced water. We have entered into long‑term, fee‑based commercial agreements with Chevron effective January 1, 2014, for oil and gas services agreements, and effective January 1, 2019, for water services agreements.
Except for the water services agreements and except for a certain gathering sub-system, as described below, each of our commercial agreements with Chevron had an initial 10-year term. We exercised our renewal options to extend each of these commercial agreements for one additional 10-year term (“Secondary Term”) effective January 1, 2024, through December 31, 2033. There were no changes to any provisions of the existing commercial agreements as a result of the exercise of the renewal options. For this gathering sub-system, the initial term is 15 years effective January 1, 2014, and the Secondary Term is 5 years. For the water services agreements the initial term is 14 years effective January 1, 2019, and the Secondary Term is 10 years. We have the sole option to renew these remaining agreements for their Secondary Term that is exercisable at a later date. Upon the expiration of the Secondary Term, if any, the agreements will automatically renew for subsequent one-year periods unless terminated by either party no later than 180 days prior to the end of the applicable Secondary Term.
These agreements include dedications covering substantially all of Chevron’s existing and future owned or controlled production in the Bakken, minimum volume commitments, inflation escalators and fee recalculation mechanisms, all of which are intended to provide us with cash flow stability and growth, as well as downside risk protection. In particular, Chevron’s minimum volume commitments under our commercial agreements provide minimum levels of cash flows and the fee recalculation mechanisms under the agreements allow fees to be adjusted annually to provide us with cash flow stability during the initial term of the agreements. During the Secondary Term of the agreements, the fee recalculation model is replaced by an inflation-based fee structure. See Note 3, Related Party Transactions for additional description of our commercial agreements.
Our revenues also include revenues from (i) third-party volumes contracted directly with us, (ii) third-party volumes contracted with Chevron and delivered to us under the commercial agreements with Chevron described above, and (iii) pass-through third-party rail transportation costs, third-party produced water trucking and disposal costs, electricity fees and certain other third-party fees, for which we recognize revenues in an amount equal to the costs. Together with our Sponsor, we are pursuing strategic relationships with third-party producers and other midstream companies with operations in the Bakken in order to maximize our utilization rates.
16
PART I – FINANCIAL INFORMATION (CONT’D)
Table of Contents
How We Evaluate Our Operations
Our management uses a variety of financial and operating metrics to analyze our operating results and profitability. These metrics include (i) volumes, (ii) operating and maintenance expenses, and (iii) Adjusted EBITDA.
Volumes. The amount of revenues we generate primarily depends on the volumes of crude oil, natural gas, NGLs and produced water that we handle at our gathering, processing, terminaling, storage facilities and disposal facilities. These volumes are affected primarily by the supply of and demand for crude oil, natural gas and NGLs in the markets served directly or indirectly by our assets, including changes in crude oil prices, which may further affect volumes delivered by Chevron. Although Chevron has committed to minimum volumes under our commercial agreements described above, our results of operations will be impacted by our ability to:
Operating and Maintenance Expenses. Our management seeks to maximize the profitability of our operations by effectively managing operating and maintenance expenses. These expenses are comprised primarily of costs charged to us under our omnibus agreement and employee secondment agreement, third‑party contractor costs, utility costs, insurance premiums, third‑party service provider costs, related property taxes and other non‑income taxes and maintenance expenses, such as expenditures to repair, refurbish and replace storage facilities and to maintain equipment reliability, integrity and safety. These expenses generally remain relatively stable across broad ranges of throughput volumes but can fluctuate from period to period depending on the mix of activities performed during that period and the timing of substantial expenses, such as gas plant turnarounds. We seek to manage our maintenance expenditures by scheduling periodic maintenance on our assets in order to minimize significant variability in these expenditures and minimize their impact on our cash flow.
Adjusted EBITDA. We define “Adjusted EBITDA” as reported net income (loss) before net interest expense, income tax expense (benefit), and depreciation and amortization, as further adjusted to eliminate the impact of certain items that we do not consider indicative of our ongoing operating performance, such as transaction costs, other income and other non‑cash and non‑recurring items, if applicable. We use Adjusted EBITDA to analyze our performance and liquidity.
Adjusted EBITDA is a non‑GAAP supplemental financial measure that management and external users of our consolidated financial statements, such as industry analysts, investors, lenders and rating agencies, may use to assess:
We believe that the presentation of Adjusted EBITDA provides useful information to investors in assessing our financial condition and results of operations. The GAAP measures most directly comparable to Adjusted EBITDA are net income (loss) and net cash provided by (used in) operating activities. Adjusted EBITDA should not be considered as an alternative to GAAP net income (loss), income (loss) from operations, net cash provided by (used in) operating activities or any other measure of financial performance or liquidity presented in accordance with GAAP. Adjusted EBITDA has important limitations as an analytical tool because it excludes some but not all items that affect net income and net cash provided by operating activities. You should not consider Adjusted EBITDA in isolation or as a substitute for analysis of our results as reported under GAAP. Additionally, because Adjusted EBITDA may be defined differently by other companies in our industry, our definition of Adjusted EBITDA may not be comparable to similarly titled measures of other companies, thereby diminishing its utility.
17
PART I – FINANCIAL INFORMATION (CONT’D)
Table of Contents
Results of Operations
Three Months Ended March 31, 2026 Compared to Three Months Ended March 31, 2025
Results of operations for the three months ended March 31, 2026 and 2025 are presented below (in millions, unless otherwise noted).
For the Three Months Ended March 31, 2026 |
|
Gathering |
|
|
Processing and Storage |
|
|
Terminaling and Export |
|
|
Interest and Other |
|
|
Consolidated Hess Midstream LP |
|
|||||
Revenues |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|||||
Affiliate services |
|
$ |
197.9 |
|
|
$ |
139.1 |
|
|
$ |
36.1 |
|
|
$ |
- |
|
|
$ |
373.1 |
|
Third-party services |
|
|
6.2 |
|
|
|
9.3 |
|
|
|
0.1 |
|
|
|
- |
|
|
|
15.6 |
|
Other income |
|
|
- |
|
|
|
- |
|
|
|
1.4 |
|
|
|
- |
|
|
|
1.4 |
|
Total revenues |
|
|
204.1 |
|
|
|
148.4 |
|
|
|
37.6 |
|
|
|
- |
|
|
|
390.1 |
|
Costs and expenses |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|||||
Operating and maintenance expenses |
|
|
49.7 |
|
|
|
29.3 |
|
|
|
6.6 |
|
|
|
- |
|
|
|
85.6 |
|
Depreciation expense |
|
|
37.7 |
|
|
|
16.4 |
|
|
|
4.4 |
|
|
|
- |
|
|
|
58.5 |
|
General and administrative expenses |
|
|
4.1 |
|
|
|
1.4 |
|
|
|
0.3 |
|
|
|
2.1 |
|
|
|
7.9 |
|
Total operating costs and expenses |
|
|
91.5 |
|
|
|
47.1 |
|
|
|
11.3 |
|
|
|
2.1 |
|
|
|
152.0 |
|
Income (loss) from operations |
|
|
112.6 |
|
|
|
101.3 |
|
|
|
26.3 |
|
|
|
(2.1 |
) |
|
|
238.1 |
|
Income from equity investments |
|
|
- |
|
|
|
3.2 |
|
|
|
- |
|
|
|
- |
|
|
|
3.2 |
|
Interest expense, net |
|
|
- |
|
|
|
- |
|
|
|
- |
|
|
|
55.4 |
|
|
|
55.4 |
|
Income (loss) before income tax expense |
|
|
112.6 |
|
|
|
104.5 |
|
|
|
26.3 |
|
|
|
(57.5 |
) |
|
|
185.9 |
|
Income tax expense |
|
|
- |
|
|
|
- |
|
|
|
- |
|
|
|
28.2 |
|
|
|
28.2 |
|
Net income (loss) |
|
|
112.6 |
|
|
|
104.5 |
|
|
|
26.3 |
|
|
|
(85.7 |
) |
|
|
157.7 |
|
Less: Net income (loss) attributable to |
|
|
42.4 |
|
|
|
39.4 |
|
|
|
9.9 |
|
|
|
(21.6 |
) |
|
|
70.1 |
|
Net income (loss) attributable to |
|
$ |
70.2 |
|
|
$ |
65.1 |
|
|
$ |
16.4 |
|
|
$ |
(64.1 |
) |
|
$ |
87.6 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|||||
Throughput volumes |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|||||
Gas gathering (MMcf/d)(1) |
|
|
438 |
|
|
|
|
|
|
|
|
|
|
|
|
438 |
|
|||
Crude oil gathering (MBbl/d)(2) |
|
|
110 |
|
|
|
|
|
|
|
|
|
|
|
|
110 |
|
|||
Gas processing (MMcf/d)(1) |
|
|
|
|
|
430 |
|
|
|
|
|
|
|
|
|
430 |
|
|||
Crude oil terminaling (MBbl/d)(2) |
|
|
|
|
|
|
|
|
119 |
|
|
|
|
|
|
119 |
|
|||
NGL loading (MBbl/d)(2) |
|
|
|
|
|
|
|
|
15 |
|
|
|
|
|
|
15 |
|
|||
Water gathering (MBbl/d)(2) |
|
|
115 |
|
|
|
|
|
|
|
|
|
|
|
|
115 |
|
|||
(1) Million cubic feet per day
(2) Thousand barrels per day
18
PART I – FINANCIAL INFORMATION (CONT’D)
Table of Contents
For the Three Months Ended March 31, 2025 |
|
Gathering |
|
|
Processing and Storage |
|
|
Terminaling and Export |
|
|
Interest and Other |
|
|
Consolidated Hess Midstream LP |
|
|||||
Revenues |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|||||
Affiliate services |
|
$ |
201.2 |
|
|
$ |
143.6 |
|
|
$ |
29.5 |
|
|
$ |
- |
|
|
$ |
374.3 |
|
Third-party services |
|
|
2.4 |
|
|
|
4.2 |
|
|
|
0.1 |
|
|
|
- |
|
|
|
6.7 |
|
Other income |
|
|
- |
|
|
|
- |
|
|
|
1.0 |
|
|
|
- |
|
|
|
1.0 |
|
Total revenues |
|
|
203.6 |
|
|
|
147.8 |
|
|
|
30.6 |
|
|
|
- |
|
|
|
382.0 |
|
Costs and expenses |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|||||
Operating and maintenance expenses |
|
|
50.4 |
|
|
|
27.7 |
|
|
|
7.5 |
|
|
|
- |
|
|
|
85.6 |
|
Depreciation expense |
|
|
32.4 |
|
|
|
14.7 |
|
|
|
4.4 |
|
|
|
- |
|
|
|
51.5 |
|
General and administrative expenses |
|
|
3.0 |
|
|
|
1.7 |
|
|
|
0.3 |
|
|
|
2.5 |
|
|
|
7.5 |
|
Total operating costs and expenses |
|
|
85.8 |
|
|
|
44.1 |
|
|
|
12.2 |
|
|
|
2.5 |
|
|
|
144.6 |
|
Income (loss) from operations |
|
|
117.8 |
|
|
|
103.7 |
|
|
|
18.4 |
|
|
|
(2.5 |
) |
|
|
237.4 |
|
Income from equity investments |
|
|
- |
|
|
|
3.4 |
|
|
|
- |
|
|
|
- |
|
|
|
3.4 |
|
Interest expense, net |
|
|
- |
|
|
|
- |
|
|
|
- |
|
|
|
56.4 |
|
|
|
56.4 |
|
Income (loss) before income tax expense |
|
|
117.8 |
|
|
|
107.1 |
|
|
|
18.4 |
|
|
|
(58.9 |
) |
|
|
184.4 |
|
Income tax expense |
|
|
- |
|
|
|
- |
|
|
|
- |
|
|
|
23.0 |
|
|
|
23.0 |
|
Net income (loss) |
|
|
117.8 |
|
|
|
107.1 |
|
|
|
18.4 |
|
|
|
(81.9 |
) |
|
|
161.4 |
|
Less: Net income (loss) attributable to |
|
|
57.3 |
|
|
|
52.0 |
|
|
|
9.0 |
|
|
|
(28.5 |
) |
|
|
89.8 |
|
Net income (loss) attributable to |
|
$ |
60.5 |
|
|
$ |
55.1 |
|
|
$ |
9.4 |
|
|
$ |
(53.4 |
) |
|
$ |
71.6 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|||||
Throughput volumes |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|||||
Gas gathering (MMcf/d)(1) |
|
|
431 |
|
|
|
|
|
|
|
|
|
|
|
|
431 |
|
|||
Crude oil gathering (MBbl/d)(2) |
|
|
117 |
|
|
|
|
|
|
|
|
|
|
|
|
117 |
|
|||
Gas processing (MMcf/d)(1) |
|
|
|
|
|
424 |
|
|
|
|
|
|
|
|
|
424 |
|
|||
Crude oil terminaling (MBbl/d)(2) |
|
|
|
|
|
|
|
|
125 |
|
|
|
|
|
|
125 |
|
|||
NGL loading (MBbl/d)(2) |
|
|
|
|
|
|
|
|
14 |
|
|
|
|
|
|
14 |
|
|||
Water gathering (MBbl/d)(2) |
|
|
126 |
|
|
|
|
|
|
|
|
|
|
|
|
126 |
|
|||
(1) Million cubic feet per day
(2) Thousand barrels per day
Gathering
Revenues and other income increased $0.5 million in the first quarter of 2026 compared to the first quarter of 2025, of which $4.9 million is attributable to higher pass‑through revenue, $3.9 million is attributable to higher tariff rates, and $3.0 million is attributable to services provided directly to third parties. These increases are partially offset by $6.8 million attributable to lower gas gathering physical volumes delivered by Chevron, $1.8 million attributable to lower crude oil gathering physical volumes delivered by Chevron, $1.4 million attributable to lower water gathering and disposal revenue and $1.3 million attributable to lower MVC revenue recognized in the first quarter of 2026.
Operating and maintenance expenses (exclusive of depreciation) decreased $0.7 million, of which $5.4 million is attributable to lower employee costs charged to us under our omnibus and employee secondment agreements and $1.5 million is attributable to lower maintenance activity. These decreases are partially offset by $4.9 million attributable to higher pass-through costs, including produced water trucking and disposal and electricity fees and $1.3 million attributable to higher third-party offload fees. Depreciation expense increased $5.3 million due to new gathering assets brought into service.
19
PART I – FINANCIAL INFORMATION (CONT’D)
Table of Contents
Processing and Storage
Revenues and other income increased $0.6 million in the first quarter of 2026 compared to the first quarter of 2025, of which $4.8 million is attributable to services provided directly to third parties, $3.9 million is attributable to higher tariff rates and $0.2 million attributable to higher pass‑through revenue, partially offset by $8.3 million attributable to lower gas processing physical volumes delivered by Chevron.
Operating and maintenance expenses (exclusive of depreciation) increased $1.6 million, of which $3.1 million is attributable to higher third-party processing and offload fees, partially offset by $1.5 million attributable to lower maintenance activity and all other costs. Depreciation expense increased $1.7 million, primarily related to cancellation of the Capa gas plant project and write off of the related costs.
Terminaling and Export
Revenues and other income increased $7.0 million in the first quarter of 2026 compared to the first quarter of 2025, of which $7.2 million is attributable to higher tariff rates, $0.5 million is attributable to MVC revenues that were previously deferred, and $0.4 million is attributable to services provided directly to third parties, partially offset by $1.1 million attributable to lower physical volumes delivered by Chevron.
Operating and maintenance expenses (exclusive of depreciation) remained relatively flat in the first quarter of 2026 compared to the first quarter of 2025.
Interest and Other
Interest expense, net of interest income, decreased $1.0 million in the first quarter of 2026 compared to the first quarter of 2025, of which $2.8 million is attributable to lower interest on our senior unsecured notes and $2.0 million is attributable to extinguishment loss, each related to the early redemption of $800.0 million 5.625% fixed-rate senior unsecured notes in the prior year, partially offset by $2.5 million attributable to higher interest on higher borrowings under our Credit Facilities and $1.3 million attributable to lower interest income.
Income tax expense increased $5.2 million in the first quarter of 2026 compared to the first quarter of 2025, primarily driven by increased ownership of the Partnership by Hess Midstream LP following equity offering and share and unit repurchase transactions in 2025.
20
PART I – FINANCIAL INFORMATION (CONT’D)
Table of Contents
Other Factors Expected to Significantly Affect Our Future Results
We currently generate substantially all of our revenues under fee‑based commercial agreements with Chevron, including third parties contracted with affiliates of Chevron. These contracts provide cash flow stability and minimize our direct exposure to commodity price fluctuations, since we generally do not own any of the crude oil, natural gas, or NGLs that we handle and do not engage in the trading of crude oil, natural gas, or NGLs. However, commodity price fluctuations indirectly influence our activities and results of operations over the long-term, since they can affect production rates and investments by our Sponsor and third parties in the development of new crude oil and natural gas reserves. The markets for oil and natural gas are volatile and will likely continue to be volatile in the future.
The throughput volumes at our facilities depend primarily on the volumes of crude oil and natural gas produced by our Sponsor and third parties in the Bakken, which, in turn, are ultimately dependent on our Sponsor’s and third parties’ exploration and production margins. Exploration and production margins depend on the price of crude oil, natural gas, and NGLs. These prices are volatile and influenced by numerous factors beyond our or our customers’ control, including the domestic and global supply of and demand for crude oil, natural gas and NGLs. Sustained periods of low prices for oil and natural gas could materially and adversely affect the quantities of oil and natural gas that our Sponsor and third parties can economically produce. The commodities trading markets, as well as global and regional supply and demand factors, may also influence the selling prices of crude oil, natural gas and NGLs. To the extent our plans include revenues for volumes above currently established MVC levels, such revenues could decline to the MVC levels as a result of market volatility. Furthermore, our ability to execute our growth strategy in the Bakken, including attracting third-party volumes, will depend on crude oil and natural gas production in that area, which is also affected by the supply of and demand for crude oil and natural gas.
The majority of our systems entered the Secondary Term of our commercial agreements, which includes a fixed fee structure based on the average fees paid by Chevron during 2021-2023 adjusted annually for inflation up to 3% a year. Such a fee structure may provide less downside risk protection in the future compared to the fee structure we had during the Initial Term of the commercial agreements. For our terminaling and water gathering systems, the rates will continue to be reset through our annual rate redetermination process through 2033. For all of our systems, MVCs will continue to provide downside risk protection through 2033.
21
PART I – FINANCIAL INFORMATION (CONT’D)
Table of Contents
Reconciliation of Non‑GAAP Financial Measure
The following table presents a reconciliation of Adjusted EBITDA to net income and net cash provided by operating activities, the most directly comparable GAAP financial measures, for each of the periods indicated.
|
|
Three Months Ended March 31, |
|
|||||
(in millions) |
|
2026 |
|
|
2025 |
|
||
Reconciliation of Adjusted EBITDA to net income: |
|
|
|
|
|
|
||
Net income |
|
$ |
157.7 |
|
|
$ |
161.4 |
|
Plus: |
|
|
|
|
|
|
||
Depreciation expense |
|
|
58.5 |
|
|
|
51.5 |
|
Interest expense, net |
|
|
55.4 |
|
|
|
56.4 |
|
Income tax expense |
|
|
28.2 |
|
|
|
23.0 |
|
Adjusted EBITDA |
|
$ |
299.8 |
|
|
$ |
292.3 |
|
|
|
|
|
|
|
|
||
Reconciliation of Adjusted EBITDA to net cash |
|
|
|
|
|
|
||
Net cash provided by operating activities |
|
$ |
253.3 |
|
|
$ |
202.4 |
|
Changes in assets and liabilities |
|
|
(4.2 |
) |
|
|
40.1 |
|
Amortization of deferred financing costs |
|
|
(3.0 |
) |
|
|
(4.9 |
) |
Interest expense, net |
|
|
55.4 |
|
|
|
56.4 |
|
Distribution from equity investments |
|
|
(4.7 |
) |
|
|
(4.9 |
) |
Income from equity investments |
|
|
3.2 |
|
|
|
3.4 |
|
Other |
|
|
(0.2 |
) |
|
|
(0.2 |
) |
Adjusted EBITDA |
|
$ |
299.8 |
|
|
$ |
292.3 |
|
22
PART I – FINANCIAL INFORMATION (CONT’D)
Table of Contents
Capital Resources and Liquidity
We expect our ongoing sources of liquidity to include:
We believe that cash generated from these sources will be sufficient to meet our operating requirements, our planned short‑term capital expenditures, debt service requirements, our quarterly cash distribution requirements, future internal growth projects or potential acquisitions.
Our partnership agreement requires that we distribute all of our available cash to shareholders. For information related to the Company’s distributions, see Note 6, Partners’ Capital and Distributions and Note 11, Subsequent Events in the Notes to Consolidated Financial Statements.
Fixed‑Rate Senior Notes
For information related to the Company's fixed-rate senior notes, see Note 5, Debt and Interest Expense in the Notes to Consolidated Financial Statements.
Credit Facilities
For information related to the Company's credit facilities, see Note 5, Debt and Interest Expense in the Notes to Consolidated Financial Statements.
Cash Flows
Operating Activities. Net cash provided by operating activities increased $50.9 million for the three months ended March 31, 2026, compared to the same period in 2025, primarily due to an increase in cash provided by changes in working capital of $44.3 million and an increase in revenues and other income of $8.1 million, partially offset by an increase in expenses, other than depreciation, amortization, equity-based compensation and other non-cash gains and losses of $1.3 million and a decrease in distributions received from equity investments of $0.2 million.
Investing Activities. Net cash used in investing activities decreased $16.7 million for the three months ended March 31, 2026, compared to the same period in 2025, primarily driven by completion of our multi-year expansion of compression capacity and the timing of payments for additions to property, plant, and equipment related to ongoing capital projects.
Financing Activities. Net cash used in financing activities increased $66.7 million for the three months ended March 31, 2026, compared to the same period in 2025. In the first three months of 2026, net borrowings under our revolving credit facility were $5.0 million compared to $113.0 million in the first three months of 2025, and repayments of the term loan facility were $7.5 million compared to $5.0 million, respectively. The prior period also included impacts of refinancing of senior unsecured notes of $11.4 million. In addition, in the first three months of 2026, we spent $40.0 million less for share and unit repurchases and paid higher distributions to shareholders and noncontrolling interests of $7.6 million compared to the same period in 2025.
Capital Expenditures
Our operations can be capital intensive, requiring investments to expand, upgrade, maintain or enhance existing operations and to meet environmental and operational regulations.
The following table sets forth a summary of capital expenditures and reconciles capital expenditures on an accrual basis to additions to property, plant and equipment on a cash basis:
|
Three Months Ended March 31, |
|
|||||
|
2026 |
|
|
2025 |
|
||
(in millions) |
|
|
|
|
|
||
Total capital expenditures |
$ |
10.4 |
|
|
$ |
50.1 |
|
(Increase) decrease in accrued capital expenditures |
|
11.6 |
|
|
|
5.9 |
|
(Increase) decrease in capital expenditures included |
|
6.8 |
|
|
|
(10.5 |
) |
Additions to property, plant and equipment |
$ |
28.8 |
|
|
$ |
45.5 |
|
23
PART I – FINANCIAL INFORMATION (CONT’D)
Table of Contents
Capital expenditures in 2026 primarily relate to ongoing gathering system well connects to service Chevron and third-party customers, with the remainder attributable to completion of the compression and gathering pipeline buildout. Capital expenditures in 2025 were attributable to our multi-year expansion of compression capacity and focused on construction of two new compressor stations and associated pipeline infrastructure.
24
PART I – FINANCIAL INFORMATION (CONT’D)
Table of Contents
Cautionary Note Regarding Forward-looking Statements
This Quarterly Report on Form 10-Q, including information incorporated by reference herein, contains “forward-looking statements.” Words such as “anticipate,” “estimate,” “expect,” “forecast,” “guidance,” “drive,” “could,” “may,” “should,” “would,” “enable,” “believe,” “intend,” “focus,” “potential,” “project,” “plan,” “trend,” “predict,” “will,” “target,” “opportunity” and similar expressions, and variations or negatives of these words, are intended to identify forward-looking statements, but not all forward-looking statements include such words.
Forward-looking statements relating to the Company’s operations, assets, and strategy are based on management’s current expectations, assessments, estimates, projections and assumptions about the industry. These statements are not guarantees of future performance and are subject to numerous risks, uncertainties and other factors, many of which are beyond the Company’s control and difficult to predict. Therefore, actual outcomes and results may differ materially from our current projections or expectations of future results expressed or forecasted by these forward-looking statements. Among the important factors that could cause actual results to differ materially from those in our forward-looking statements are:
Other unpredictable or unknown factors not discussed in this report could also cause actual results to differ materially from those in our forward-looking statements. Caution should be taken not to place undue reliance on any such forward-looking statements since such statements speak only as of the date of this report. Except as required by law, we undertake no obligation to publicly update or revise any forward-looking statements, whether because of new information, future events or otherwise.
25
PART I – FINANCIAL INFORMATION (CONT’D)
Table of Contents
Item 3. Quantitative and Qualitative Disclosures about Market Risk
Market risk is the risk of loss arising from adverse changes in market rates and prices. We generally do not take ownership of the crude oil, natural gas or NGLs that we currently gather, process, terminal, store or transport for our customers. Because we generate substantially all of our revenues by charging fees under long-term commercial agreements with Chevron with minimum volume commitments, our Sponsor bears the risks associated with fluctuating commodity prices and we have minimal direct exposure to commodity prices.
In the normal course of our business, we are exposed to market risks related to changes in interest rates. Our financial risk management activities may include transactions designed to reduce risk by reducing our exposure to interest rate movements. Interest rate swaps may be used to convert interest payments on certain long‑term debt. At March 31, 2026, we did not have in place any derivative instruments to hedge any exposure to changes in interest rates.
At March 31, 2026, our total debt had a carrying value of $3,772.0 million and a fair value of approximately $3,789.0 million, based on Level 2 inputs in the fair value measurement hierarchy. A 15% increase or decrease in interest rates would decrease or increase the fair value of our fixed rate debt by approximately $67.8 million or $66.7 million, respectively. The carrying value of the amounts under our Term Loan A facility and revolving credit facility at the quarter-end approximated their fair value. Any changes in interest rates do not impact cash outflows associated with fixed rate interest payments or settlement of debt principal, unless a debt instrument is repurchased prior to maturity. Our exposure to market risk related to changes in interest rates has not materially changed from what we previously disclosed in our 2025 Annual Report.
Item 4. Controls and Procedures
Based upon their evaluation of the Company’s disclosure controls and procedures (as defined in Rules 13a‑15(e) and 15d‑15(e) of the Securities Exchange Act of 1934, as amended (the “Exchange Act”)) as of March 31, 2026, Jonathan C. Stein, Chief Executive Officer, and Michael J. Chadwick, Chief Financial Officer, concluded that these disclosure controls and procedures were effective as of March 31, 2026.
There was no change in internal control over financial reporting, as defined in Rules 13a‑15(f) and 15d‑15(f) under the Exchange Act, in the quarter ended March 31, 2026 that has materially affected, or is reasonably likely to materially affect, the Company’s internal control over financial reporting.
26
PART II – OTHER INFORMATION
Table of Contents
Item 1. Legal Proceedings
Information regarding legal proceedings is contained in Note 9, Commitments and Contingencies in the Notes to Consolidated Financial Statements and is incorporated herein by reference. Pursuant to Item 103(c)(3)(iii) of Regulation S-K under the Exchange Act, we are required to disclose certain information about environmental proceedings to which a governmental authority is a party if we reasonably believe such proceedings may result in monetary sanctions, exclusive of interest and costs, above a stated threshold. We have elected to apply a threshold of $1 million for purposes of determining whether disclosure of any such proceedings is required.
Item 1A. Risk Factors
Part I, Item 1A. Risk Factors in our 2025 Annual Report includes certain risk factors that could materially affect our business, financial condition, or future results. Those risk factors have not materially changed.
Item 2. Unregistered Sales of Equity Securities and Use of Proceeds
Issuer Purchases of Equity Securities
Our Class A Share repurchase activities for the three months ended March 31, 2026 were as follows:
Period |
|
Total Number of Shares Purchased |
|
|
Average Price Paid per Share |
|
|
Total Number of Shares Purchased as Part of Publicly Announced Plans or Programs |
|
|
Maximum Number of Shares that May Yet be Purchased Under the Plans or Programs |
|
||||
January 1-31, 2026 |
|
|
- |
|
|
|
- |
|
|
|
- |
|
|
|
- |
|
February 1-28, 2026 |
|
|
- |
|
|
|
- |
|
|
|
- |
|
|
|
- |
|
March 1-31, 2026 |
|
|
1,065,724 |
|
|
$ |
39.41 |
|
|
|
1,065,724 |
|
|
|
- |
|
Total |
|
|
1,065,724 |
|
|
$ |
39.41 |
|
|
|
1,065,724 |
|
|
|
- |
|
In March 2026, we entered into an ASR agreement with a financial institution to repurchase $42.0 million of our publicly traded Class A Shares. See Note 2, Equity Transactions in the Notes to Consolidated Financial Statements for additional information.
Item 5. Other Information
During the three months ended March 31, 2026, none of our directors or officers (as defined in Rule 16a-1(f) under the Exchange Act)
On May 5, 2026, our general partner, Hess Midstream GP LLC, Hess, Hess Trading Corporation (“HTC”) and Chevron entered into a First Amendment (the “Amendment”) to the Amended and Restated Employee Secondment Agreement, dated as of December 16, 2019 (the “employee secondment agreement”), pursuant to which Hess and HTC agreed to second certain personnel to our general partner in support of our operations. Pursuant to the Amendment, effective as of January 1, 2026, Hess and HTC assigned, and Chevron assumed, all of their respective rights and obligations under the employee secondment agreement, including the obligation to second personnel to our general partner. The Amendment also amends certain references and other terms of the employee secondment agreement to reflect the assignment. All other terms of the employee secondment agreement remain in full force and effect. The foregoing description of the Amendment does not purport to be complete and is qualified in its entirety by reference to the full text of the Amendment, a copy of which is filed as Exhibit 10.2 to this Quarterly Report on Form 10-Q and is incorporated herein by reference.
27
PART II – OTHER INFORMATION (CONT’D)
Table of Contents
Item 6. Exhibits
Exhibits |
|
|
|
|
|
10.1 |
|
Unit Repurchase Agreement, dated as of March 2, 2026, by and among Hess Midstream LP, Hess Midstream Operations LP and Hess Investments North Dakota LLC (incorporated by reference herein to Exhibit 10.1 to the Company’s Current Report on Form 8-K filed on March 4, 2026) |
10.2†* |
|
First Amendment to Amended and Restated Employee Secondment Agreement, entered into as of May 5, 2026, by and among Hess Corporation, Hess Trading Corporation, Chevron U.S.A. Inc. and Chevron Corporation, Hess Midstream GP LP and Hess Midstream GP LLC |
31.1* |
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Certification required by Rule 13a‑14(a) (17 CFR 240.13a‑14(a)) or Rule 15d‑14(a) (17 CFR 240.15d‑14(a)) |
31.2* |
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Certification required by Rule 13a‑14(a) (17 CFR 240.13a‑14(a)) or Rule 15d‑14(a) (17 CFR 240.15d‑14(a)) |
32.1** |
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Certification required by Rule 13a‑14(b) (17 CFR 240.13a‑14(b)) or Rule 15d‑14(b) (17 CFR 240.15d‑14(b)) and Section 1350 of Chapter 63 of Title 18 of the United States Code (18 U.S.C. 1350) |
32.2** |
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Certification required by Rule 13a‑14(b) (17 CFR 240.13a‑14(b)) or Rule 15d‑14(b) (17 CFR 240.15d‑14(b)) and Section 1350 of Chapter 63 of Title 18 of the United States Code (18 U.S.C. 1350) |
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101(INS)* |
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Inline XBRL Instance Document – the instance document does not appear in the Interactive Data File because its XBRL tags are embedded within the Inline XBRL document |
101(SCH)* |
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Inline XBRL Taxonomy Extension Schema Document With Embedded Linkbase Documents |
104* |
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Cover Page Interactive Data File (embedded within the Inline XBRL document) |
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† Certain confidential portions of this Exhibit were omitted by means of marking such portions with brackets (“[***]”) because the identified confidential portions (i) are not material and (ii) is the type of information that the registrant treats as private or confidential.
* Filed herewith
** Furnished herewith
28
SIGNATURES
Table of Contents
Pursuant to the requirements of Section 13 or 15(d) of the Securities Exchange Act of 1934, the Registrant has duly caused this report to be signed on its behalf by the undersigned, thereunto duly authorized.
HESS MIDSTREAM LP (Registrant) |
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By: HESS MIDSTREAM GP LP, its General Partner |
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By: HESS MIDSTREAM GP LLC, its General Partner |
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By |
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/s/ Jonathan C. Stein |
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Jonathan C. Stein |
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Chief Executive Officer |
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By |
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/s/ Michael J. Chadwick |
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Michael J. Chadwick |
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Chief Financial Officer |
Date: May 7, 2026
29