hesm-10q_20190630.htm

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. Yes ☒ No ☐

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). Yes ☒ No ☐

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.

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 ☒

At June 30, 2019, the registrant had 27,345,309 common units and 27,279,654 subordinated units outstanding.

	June 30,		December 31,
	2019		2018
(in millions, except unit amounts)	(unaudited)
Assets
Cash and cash equivalents	$	14.9	$	20.3
Accounts receivable—affiliate:
From contracts with customers		59.8		62.2
Other receivables		0.3		0.8
Other current assets		1.1		2.8
Total current assets		76.1		86.1
Equity investments		90.3		67.3
Property, plant and equipment, net		2,757.4		2,664.1
Other noncurrent assets		2.1		2.2
Total assets	$	2,925.9	$	2,819.7
Liabilities
Accounts payable—trade	$	26.4	$	15.3
Accounts payable—affiliate		21.5		15.8
Accrued liabilities		41.6		64.5
Other current liabilities		4.6		6.8
Total current liabilities		94.1		102.4
Other noncurrent liabilities		14.5		6.4
Total liabilities		108.6		108.8
Partners' capital
Common unitholders—public (17,062,655 and 17,014,377 units issued and outstanding as of June 30, 2019 and December 31, 2018)		355.1		357.1
Common unitholders—affiliate (10,282,654 units issued and outstanding as of June 30, 2019 and December 31, 2018)		38.1		39.5
Subordinated unitholders—affiliate (27,279,654 units issued and outstanding as of June 30, 2019 and December 31, 2018)		101.2		105.3
General partner		15.3		14.9
Total Hess Midstream Partners LP partners' capital		509.7		516.8
Noncontrolling interest		2,307.6		2,194.1
Total partners' capital		2,817.3		2,710.9
Total liabilities and partners' capital	$	2,925.9	$	2,819.7

	Three Months Ended June 30,				Six Months Ended June 30,
	2019		2018		2019		2018
(in millions, except per unit amounts)
Revenues
Affiliate services	$	172.7	$	164.5	$	346.7	$	321.3
Other income		0.1		0.2		0.3		0.4
Total revenues		172.8		164.7		347.0		321.7
Costs and expenses
Operating and maintenance expenses (exclusive of depreciation shown separately below)		43.6		37.1		85.5		71.7
Depreciation expense		34.0		30.2		66.6		60.2
General and administrative expenses		3.7		2.4		7.7		5.5
Total costs and expenses		81.3		69.7		159.8		137.4
Income from operations		91.5		95.0		187.2		184.3
Interest expense, net		0.6		0.4		1.0		0.7
Net income		90.9		94.6		186.2		183.6
Less: Net income attributable to noncontrolling interest		74.1		76.8		151.3		148.8
Net income attributable to Hess Midstream Partners LP		16.8		17.8		34.9		34.8
Less: General partner's interest in net income attributable to Hess Midstream Partners LP		1.0		0.4		1.8		0.7
Limited partners' interest in net income attributable to Hess Midstream Partners LP	$	15.8	$	17.4	$	33.1	$	34.1

Net income attributable to Hess Midstream Partners LP per limited partner unit (basic and diluted):
Common	$	0.29	$	0.32	$	0.61	$	0.63
Subordinated	$	0.29	$	0.32	$	0.61	$	0.63
Weighted average limited partner units outstanding:
Basic:
Common		27.3		27.3		27.3		27.3
Subordinated		27.3		27.3		27.3		27.3
Diluted:
Common		27.5		27.4		27.5		27.4
Subordinated		27.3		27.3		27.3		27.3

	Partners' Capital
	Limited Partners
	Common Unitholders Public			Common Unitholders Affiliate			Subordinated Unitholders Affiliate			General Partner			Noncontrolling Interest			Total
(in millions)
Balance at December 31, 2018	$	357.1		$	39.5		$	105.3		$	14.9		$	2,194.1		$	2,710.9
Net income		5.3			3.4			8.6			0.8			77.2			95.3
Unit-based compensation		0.3			-			-			-			-			0.3
Distributions to unitholders - $0.3701 per unit		(6.3	)		(3.8	)		(10.1	)		-			-			(20.2	)
Distributions to general partner		-			-			-			(0.6	)		-			(0.6	)
Distributions to noncontrolling interest		-			-			-			-			(57.1	)		(57.1	)
Contributions from noncontrolling interest		-			-			-			-			55.5			55.5
Balance at March 31, 2019	$	356.4		$	39.1		$	103.8		$	15.1		$	2,269.7		$	2,784.1
Net income		4.9			3.0			7.9			1.0			74.1			90.9
Unit-based compensation		0.3			-			-			-			-			0.3
Distributions to unitholders - $0.3833 per unit		(6.5	)		(4.0	)		(10.5	)		-			-			(21.0	)
Distributions to general partner		-			-			-			(0.8	)		-			(0.8	)
Distributions to noncontrolling interest		-			-			-			-			(49.0	)		(49.0	)
Contributions from noncontrolling interest		-			-			-			-			12.8			12.8
Balance at June 30, 2019	$	355.1		$	38.1		$	101.2		$	15.3		$	2,307.6		$	2,817.3

Balance at December 31, 2017	$	357.7		$	40.5		$	107.8		$	14.8		$	2,034.5		$	2,555.3
Net income		5.2			3.2			8.3			0.3			72.0			89.0
Unit-based compensation		0.1			-			-			-			-			0.1
Distributions to unitholders - $0.3218 per unit		(5.4	)		(3.3	)		(8.8	)		-			-			(17.5	)
Distributions to general partner		-			-			-			(0.4	)		-			(0.4	)
Distributions to noncontrolling interest		-			-			-			-			(61.7	)		(61.7	)
Contribution from noncontrolling interest		-			-			-			-			20.6			20.6
Balance at March 31, 2018	$	357.6		$	40.4		$	107.3		$	14.7		$	2,065.4		$	2,585.4
Net income		5.4			3.3			8.7			0.4			76.8			94.6
Unit-based compensation		0.3			-			-			-			-			0.3
Distributions to unitholders - $0.3333 per unit		(5.7	)		(3.4	)		(9.1	)		-			-			(18.2	)
Distributions to general partner		-			-			-			(0.4	)		-			(0.4	)
Distributions to noncontrolling interest		-			-			-			-			(41.5	)		(41.5	)
Contribution from noncontrolling interest		-			-			-			-			14.6			14.6
Balance at June 30, 2018	$	357.6		$	40.3		$	106.9		$	14.7		$	2,115.3		$	2,634.8

	Six Months Ended June 30,
	2019			2018
(in millions)
Cash flows from operating activities
Net income	$	186.2		$	183.6
Adjustments to reconcile net income to net cash provided by (used in) operating activities:
Depreciation expense		66.6			60.2
Amortization of deferred financing costs		0.6			0.5
Unit-based compensation expense		0.6			0.4
Changes in assets and liabilities:
Accounts receivable – affiliate		3.0			(2.7	)
Other current and noncurrent assets		1.7			3.7
Accounts payable – trade		10.9			5.8
Accounts payable – affiliate		5.7			2.0
Accrued liabilities		1.1			1.8
Other current and noncurrent liabilities		(2.0	)		(3.3	)
Net cash provided by (used in) operating activities		274.4			252.0
Cash flows from investing activities
Acquisitions from third parties, net of cash acquired		(61.0	)		-
Payments for equity investments		(23.0	)		(41.3	)
Additions to property, plant and equipment		(115.4	)		(96.9	)
Net cash provided by (used in) investing activities		(199.4	)		(138.2	)
Cash flows from financing activities
Proceeds from (repayments of) bank borrowings - revolver		-			-
Distributions to unitholders		(41.2	)		(35.7	)
Distributions to general partner		(1.4	)		(0.8	)
Distributions to noncontrolling interest		(106.1	)		(103.2	)
Contributions from noncontrolling interest		68.3			35.2
Net cash provided by (used in) financing activities		(80.4	)		(104.5	)
Increase (decrease) in cash and cash equivalents		(5.4	)		9.3
Cash and cash equivalents, beginning of period		20.3			47.2
Cash and cash equivalents, end of period	$	14.9		$	56.5

Hess Midstream Partners LP (the “Partnership”) is a fee‑based, growth-oriented traditional master limited partnership formed by Hess Infrastructure Partners LP (“Hess Infrastructure Partners”), a midstream joint venture with a 50% ownership interest held by affiliates of Hess Corporation (collectively “Hess”) and a 50% ownership interest held by GIP II Blue Holding Partnership LP (“GIP”), to own, operate, develop and acquire a diverse set of midstream assets to provide services to Hess and third‑party customers.

Our assets include a 20% controlling economic interest in each of (i) Hess North Dakota Pipelines Operations LP (“Gathering Opco”), which owns crude oil and natural gas gathering pipelines and compressor stations in North Dakota, (ii) Hess TGP Operations LP (“HTGP Opco”) which owns the Tioga Gas Plant (“TGP”), a natural gas processing and fractionation plant, including a residue gas pipeline in North Dakota, and (iii) Hess North Dakota Export Logistics Operations LP (“Logistics Opco”), which owns a crude oil and natural gas liquids (“NGL”) rail loading facility, crude oil rail cars and a crude oil pipeline and truck receipt terminal in North Dakota, and a 100% ownership interest in Hess Mentor Storage Holdings LLC (“Mentor Storage Terminal”), which owns a propane storage cavern and related rail and truck loading and unloading and storage terminal in Minnesota (collectively, the “Contributed Businesses”). Hess Infrastructure Partners owns the remaining 80% economic interest in the Contributed Businesses.

On January 25, 2018, we entered into a 50/50 joint venture with Targa Resources Corp. to construct a new 200 million standard cubic feet per day gas processing plant called Little Missouri 4 (“LM4”). Our 50% interest in the joint venture is held through HTGP Opco, in which we own a 20% controlling economic interest and Hess Infrastructure Partners owns the remaining 80% economic interest. Targa Resources Corp. is managing the construction of LM4 and will operate the plant when completed. As of June 30, 2019, the plant was under construction. See Note 14, Subsequent Events.

The terms “we,” “our” and “us” as used in this report refer to the Partnership, unless the context suggests otherwise. These terms are used for convenience only and are not intended as a precise description of any separate legal entity within the Partnership. The term “parent” refers to Hess Infrastructure Partners.

Our assets and operations are organized into the following three reportable segments: (1) gathering, (2) processing and storage and (3) terminaling and export (see Note 13, Segments).

Presentation. 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, 2019 and December 31, 2018, the consolidated results of operations for the three and six months ended June 30, 2019 and 2018, and consolidated cash flows for the six months ended June 30, 2019 and 2018. 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 Partnership’s annual report on Form 10‑K for the year ended December 31, 2018.

Consolidation. We consolidate the activities of Gathering Opco, HTGP Opco and Logistics Opco, which qualify as variable interest entities (“VIE”) under U.S. GAAP. We have concluded that we are the primary beneficiary of each VIE, as defined in the accounting standards, since we have the power through our general partner interests to direct those activities that most significantly impact the economic performance of the Contributed Businesses and have a right to receive benefits and an obligation to absorb losses that could potentially be significant. All financial statement activities associated with VIEs are captured within gathering, processing and storage, and terminaling and export segments (see Note 13, Segments). We reflect a noncontrolling interest representing the retained limited partner interest owned by Hess Infrastructure Partners in the Contributed Businesses in the consolidated financial statements of the Partnership. All intercompany transactions and balances within the Partnership have been eliminated.

Equity Investments. We account for our investment in LM4 under the equity method of accounting, as we do not control, but have a significant influence over, its operations. Through June 30, 2019, we have contributed $90.3 million of cash for our gross interest in LM4. We do not have a basis difference between the amount at which the investment is carried and the amount of underlying equity in net assets of the investee.

Income Taxes. We are not a separate taxable entity for U.S. Federal and state income tax purposes; therefore, we do not provide for income tax benefit or expense. Each partner is subject to income taxes on its share of the Partnership’s earnings.

Comprehensive Income. We have not reported comprehensive income, since there were no items of other comprehensive income during the periods presented in this report.

In February 2016, the Financial Accounting Standards Board (“FASB”) issued Accounting Standard Update (“ASU”) 2016-02, Leases, as a new Accounting Standards Codification (“ASC”) Topic, ASC 842. We adopted ASC 842 on January 1, 2019 using the modified retrospective method. Accordingly, comparative financial statements for periods prior to the adoption date of ASC 842 were not affected. In addition, we have elected to apply the ‘package’ of practical expedients allowing us to avoid reassessing whether existing contracts are (or contain) leases, whether the lease classification for existing leases would differ under ASC 842, and whether initial direct costs incurred for existing leases are capitalizable under ASC 842. Finally, we have elected to apply the practical expedient allowing us to avoid reassessing land easements that were not previously accounted for as leases under ASC 840. We have not elected the ‘hindsight’ practical expedient when determining lease term. As a result, no cumulative effect adjustment to Partners’ capital was recognized.

Leases. We determine if an arrangement is a lease at inception. Operating lease right-of-use assets represent our right to use an underlying asset for the lease term and lease liabilities represent our obligation to make lease payments arising from the lease. Operating lease right-of-use assets and liabilities are recognized at commencement date based on the present value of lease payments over the lease term. As most of our leases do not provide an implicit rate, we use our incremental borrowing rate based on the information available at commencement date in determining the present value of lease payments. The operating lease right-of-use asset includes any initial direct costs and excludes lease incentives received. The lease term used in measurement of our lease obligations may include periods covered by an option to extend or terminate the lease when it is reasonably certain that we will exercise that option. Lease expense for lease payments is recognized on a straight-line basis over the lease term. The Partnership has elected not to recognize lease assets and lease liabilities for leases with a term of 12 months or less for all classes of underlying assets. Our lease agreements may include lease and non-lease components, which are generally accounted for separately.

As of June 30, 2019, we had $0.4 million of operating lease right-of-use assets included within other noncurrent assets on our consolidated balance sheet. Operating lease liabilities were $0.1 million and $0.3 million included within other current liabilities and other noncurrent liabilities, respectively, on our consolidated balance sheet. As of June 30, 2019, we did not have any finance leases.

On March 22, 2019, Hess North Dakota Pipelines LLC, a subsidiary of Gathering Opco, acquired 100% of the membership interests of Tioga Hydrocarbon Gathering Company LLC from Summit Midstream Partners, LP (the “Tioga System Acquisition”). This transaction was accounted for as an asset acquisition. The Tioga System, located in Williams County in western North Dakota, is complementary to the Partnership’s infrastructure, and is currently delivering volumes into the Partnership’s gathering system.

Hess North Dakota Pipelines LLC paid $61.0 million in cash at closing, net of cash acquired, and recognized a contingent liability for additional potential payments of $6.8 million in future periods subject to certain performance metrics. The purchase price was funded pro rata by the Partnership and Hess Infrastructure Partners, as indirect owners of Hess North Dakota Pipelines LLC.

Effective January 1, 2014, we entered into (i) gas gathering, (ii) crude oil gathering, (iii) gas processing and fractionation, (iv) storage services, and (v) terminal and export services fee‑based commercial agreements with certain subsidiaries of Hess. Under these commercial agreements, we provide gathering, compression, processing, fractionation, storage, terminaling, loading and transportation services to Hess, for which we receive a fee per barrel of crude oil, Mcf of natural gas, or Mcf equivalent of NGLs, as applicable, delivered during each month, and Hess is obligated to provide us with minimum volumes of crude oil, natural gas and NGLs. These agreements also include inflation escalators and fee recalculation mechanisms that allow fees to be adjusted annually. We elected the practical expedient to recognize revenue in the amount to which we have a right to invoice as permitted under ASC 606, Revenue from Contracts with Customers. Due to this election and as the transaction price allocated to our unsatisfied performance obligations is entirely variable, we have elected the exemption provided by ASC 606 from the disclosure of revenue recognizable in future periods as our unsatisfied performance obligations are fulfilled.

In September 2018, we amended and restated our gas gathering and gas processing and fractionation agreements with Hess to enable us to provide certain services to Hess in respect of volumes to be delivered to and processed at the LM4 plant. Effective January 1, 2019, Hess pays us a combined processing fee per Mcf of natural gas, or Mcf equivalent of NGLs, as applicable, for aggregate volumes processed (or to be processed) at TGP and LM4. Except with regard to a certain gathering sub-system as described below, each of our commercial agreements with Hess retains its initial 10‑year term (“Initial Term”) and we have the unilateral right to extend each commercial agreement for one additional 10‑year term (“Secondary Term”). The amended and restated gas gathering agreement also extends the Initial Term of the gathering agreement with respect to a certain gathering sub-system by 5 years to provide for a 15-year Initial Term and decreases the Secondary Term for that gathering sub-system by 5 years to provide for a 5-year Secondary Term. In addition, the fee recalculation mechanism continues to apply to the amended and restated agreements and, effective January 1, 2019, incorporates the revenues received and expected to be received by Hess from sourcing third-party dedicated production in order to further align the interests of us and Hess in promoting the growth of third-party volumes on our Bakken assets.

For the three and six months ended June 30, 2019 and 2018, approximately 100% of our revenues were attributable to our fee‑based commercial agreements with Hess, including revenues from third‑party volumes contracted with Hess and delivered to us under these agreements. We retain control of our assets and the flow of volumes based on available capacity within our integrated gathering, processing and terminaling systems. Together with Hess, 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.

During the three and six months ended June 30, 2019, we earned $0.7 million and $3.5 million, respectively, of minimum volume shortfall fee payments, compared with $12.8 million and $29.4 million for the three and six months ended June 30, 2018, respectively. In addition, during the three and six months ended June 30, 2019, we recognized, as part of affiliate revenues, $4.3 million and $12.1 million, respectively, of reimbursements from Hess related to third‑party rail transportation costs, compared with $3.4 million and $7.6 million for the three and six months ended June 30, 2018, respectively. Finally, during the three and six months ended June 30, 2019, we recognized, as part of affiliate revenues, $8.1 million and $14.9 million, respectively, of reimbursements from Hess related to electricity fees, compared with $6.7 million and $13.4 million for the three and six months ended June 30, 2018, respectively. The related third-party transportation costs and electricity fees were included in Operating and maintenance expenses in the accompanying unaudited consolidated statements of operations.

See Note 13, Segments, for the presentation of our revenues on a disaggregated basis. All Affiliate services revenue, which reflects activity associated with our commercial agreements with Hess, represents revenue from contracts with customers under the scope of ASC 606.

Under our omnibus and employee secondment agreements, Hess provides substantial operational and administrative services to us in support of our assets and operations. For the three and six months ended June 30, 2019 and 2018, we had the following charges from Hess. The classification of these charges between operating and maintenance expenses and general and administrative expenses is based on the fundamental nature of the services being performed for our operations.

Under our contribution, conveyance and assumption agreement, Hess Infrastructure Partners agreed to bear the cost of certain maintenance capital projects associated with the Contributed Businesses. During the six months ended June 30, 2019, Hess Infrastructure Partners contributed $0.4 million to us related to the reimbursement for those maintenance capital projects (2018: $2.2 million). This provision of the agreement expired in April 2019, the second anniversary of the Partnership’s IPO.

	Estimated useful lives	June 30, 2019			December 31, 2018
(in millions, except for number of years)
Gathering assets
Pipelines	22 years	$	1,128.4		$	1,003.9
Compressors, pumping stations and terminals	22 to 25 years		654.3			557.5
Gas plant assets
Pipelines, pipes and valves	22 to 25 years		460.0			460.0
Equipment	12 to 30 years		428.2			428.2
Buildings	35 years		182.3			182.3
Processing and fractionation facilities	25 years		187.5			185.5
Logistics facilities and railcars	20 to 25 years		385.5			385.8
Storage facilities	20 to 25 years		19.5			19.5
Other	20 to 25 years		11.4			10.7
Construction-in-progress	N/A		93.3			157.3
Total property, plant and equipment, at cost			3,550.4			3,390.7
Accumulated depreciation			(793.0	)		(726.6	)
Property, plant and equipment, net		$	2,757.4		$	2,664.1

On March 15, 2017, we entered into a four‑year, $300.0 million senior secured revolving credit facility that became available to us upon the closing of the IPO on April 10, 2017. Borrowings on the credit facility generally bear interest at the London Interbank Offered Rate (“LIBOR”) plus an applicable margin of 1.275%. The interest rate is subject to adjustment based on the Partnership’s leverage ratio, which is calculated as total debt to EBITDA (as defined in the credit agreement). Facility fees accrue at 0.275% per annum and are paid quarterly. If the Partnership obtains credit ratings, pricing levels will be based on our credit ratings in effect from time to time. The Partnership is subject to customary covenants in the credit agreement, including a financial covenant that generally requires a leverage ratio of no more than 4.5 to 1.0 for the prior four fiscal quarters. As of June 30, 2019, we were in compliance with all covenants. The credit facility is secured by first priority perfected liens on substantially all directly owned assets of the Partnership and its wholly‑owned subsidiaries, including equity interests in subsidiaries, subject to certain customary exclusions. At June 30, 2019, the revolving credit facility was undrawn.

Our partnership agreement requires that, within 45 days after the end of each quarter, we distribute all of our available cash to unitholders of record on the applicable record date. The following table details the distributions declared and/or paid for the periods presented:

In 2017, the Partnership adopted the Hess Midstream Partners LP 2017 Long‑Term Incentive Plan (the “LTIP”). Awards under the LTIP are available for officers, directors and employees of our general partner or its affiliates, and any individuals who perform services for the Partnership. The LTIP provides the Partnership with the flexibility to grant unit awards, restricted units, phantom units, unit options, unit appreciation rights, distribution equivalent rights, profits interest units and other unit‑based awards. The LTIP initially limits the number of common units that may be delivered pursuant to vested awards to 3,000,000 common units.

Under the LTIP, we granted awards of phantom units with distribution equivalent rights to certain officers, employees and directors. These phantom units and distribution equivalent rights vest ratably over a three‑year period for officers and employees, and vest after one year for directors. Cash distributions on the phantom units accumulate and are paid upon vesting. Fair value of phantom units is based on the fair value of the Partnership’s common units on the grant date.

Unit‑based award activity for the six months ended June 30, 2019 was as follows:

As of June 30, 2019, $2.6 million of compensation cost related to unvested phantom units awarded under the LTIP remains to be recognized over an expected weighted‑average period of 2.1 years.

Net income per limited partner unit is computed by dividing the respective limited partners’ interest in net income attributable to Hess Midstream Partners LP by the weighted average number of common and subordinated units outstanding. Because we have more than one class of participating securities, we use the two‑class method when calculating net income per limited partner unit. The classes of participating securities include common units, subordinated units, general partner interest and incentive distribution rights.

The following table illustrates the Partnership’s calculation of net income per limited partner unit:

	Three Months Ended June 30,				Six Months Ended June 30,
(in millions, except per unit amounts)	2019		2018		2019		2018
Net income	$	90.9	$	94.6	$	186.2	$	183.6
Less: Net income attributable to noncontrolling interest		74.1		76.8		151.3		148.8
Net income attributable to Hess Midstream Partners LP		16.8		17.8		34.9		34.8
Less: General partner's interest in net income attributable to Hess Midstream Partners LP		1.0		0.4		1.8		0.7
Limited partners' interest in net income attributable to Hess Midstream Partners LP	$	15.8	$	17.4	$	33.1	$	34.1
Common unitholders' interest in net income attributable to Hess Midstream Partners LP	$	7.9	$	8.7	$	16.6	$	17.1
Subordinated unitholders' interest in net income attributable to Hess Midstream Partners LP	$	7.9	$	8.7	$	16.5	$	17.0
Net income attributable to Hess Midstream Partners LP per limited partner unit:
Common (basic and diluted)	$	0.29	$	0.32	$	0.61	$	0.63
Subordinated (basic and diluted)	$	0.29	$	0.32	$	0.61	$	0.63
Weighted average number of limited partner units outstanding:
Basic:
Common		27.3		27.3		27.3		27.3
Subordinated		27.3		27.3		27.3		27.3
Diluted:
Common		27.5		27.4		27.5		27.4
Subordinated		27.3		27.3		27.3		27.3

Hess represented approximately 100% of our total revenues and accounts receivable for the three and six months ended June 30, 2019 and 2018.

The Partnership is subject to federal, state and local laws and regulations relating to the environment. As of June 30, 2019, our reserves for estimated remediation liabilities included in Accrued liabilities and Other noncurrent liabilities were $0.4 million and $2.8 million, respectively, compared with $0.6 million and $2.0 million, respectively, as of December 31, 2018.

In the ordinary course of business, the Partnership 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.

As of June 30, 2019 and December 31, 2018, we did not have material accrued liabilities for legal contingencies. 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.

From time to time, we enter into certain lease contracts in connection with ongoing business activities. As of June 30, 2019, we have future minimum lease payments of $0.1 million for the year ended December 31, 2019, and $0.3 million of minimum lease payments for the years thereafter.

Our operations are located in the United States and are organized into three reportable segments: (1) gathering, (2) processing and storage and (3) terminaling and export. Our reportable segments comprise the structure used by our Chief Operating Decision Maker (“CODM”) to make key operating decisions and assess performance. These segments are strategic business units with differing products and services. Our CODM evaluates the segments’ operating performance based on multiple measures including Adjusted EBITDA, defined as net income (loss) before net interest expense, income tax (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 other income and other non-cash, non‑recurring items, if applicable.

The following tables reflect certain financial data for each reportable segment:

	Gathering		Processing and Storage		Terminaling and Export		Interest and Other			Consolidated Hess Midstream Partners LP
(in millions)
For the Three Months Ended June 30, 2019
Revenues and other income	$	80.2	$	67.5	$	25.1	$	-		$	172.8
Net income (loss)		40.7		40.3		11.7		(1.8	)		90.9
Net income (loss) attributable to Hess Midstream Partners LP		8.1		8.0		2.5		(1.8	)		16.8
Depreciation expense		18.9		11.1		4.0		-			34.0
Interest expense, net		-		-		-		0.6			0.6
Adjusted EBITDA		59.6		51.4		15.7		(1.2	)		125.5
Adjusted EBITDA attributable to Hess Midstream Partners LP		11.9		10.2		3.3		(1.2	)		24.2
Capital expenditures		57.0		7.6		-		-			64.6

	Gathering		Processing and Storage		Terminaling and Export		Interest and Other			Consolidated Hess Midstream Partners LP
(in millions)
For the Three Months Ended June 30, 2018
Revenues and other income	$	81.9	$	62.9	$	19.9	$	-		$	164.7
Net income (loss)		49.5		38.2		8.4		(1.5	)		94.6
Net income (loss) attributable to Hess Midstream Partners LP		9.7		7.7		1.9		(1.5	)		17.8
Depreciation expense		15.4		10.9		3.9		-			30.2
Interest expense, net		-		-		-		0.4			0.4
Adjusted EBITDA		64.9		49.1		12.3		(1.1	)		125.2
Adjusted EBITDA attributable to Hess Midstream Partners LP		12.7		9.9		2.7		(1.1	)		24.2
Capital expenditures		75.3		4.1		1.9		-			81.3

	Gathering		Processing and Storage		Terminaling and Export			Interest and Other			Consolidated Hess Midstream Partners LP
(in millions)
For the Six Months Ended June 30, 2019
Revenues and other income	$	159.2	$	134.0	$	53.8		$	-		$	347.0
Net income (loss)		83.7		81.4		24.5			(3.4	)		186.2
Net income (loss) attributable to Hess Midstream Partners LP		16.7		16.6		5.0			(3.4	)		34.9
Depreciation expense		36.3		22.3		8.0			-			66.6
Interest expense, net		-		-		-			1.0			1.0
Adjusted EBITDA		120.0		103.7		32.5			(2.4	)		253.8
Adjusted EBITDA attributable to Hess Midstream Partners LP		24.0		21.0		6.6			(2.4	)		49.2
Capital expenditures		150.8		8.7		(0.3	)		-			159.2

	Gathering		Processing and Storage		Terminaling and Export			Interest and Other			Consolidated Hess Midstream Partners LP
(in millions)
For the Six Months Ended June 30, 2018
Revenues and other income	$	160.4	$	121.2	$	40.1		$	-		$	321.7
Net income (loss)		98.7		71.4		16.5			(3.0	)		183.6
Net income (loss) attributable to Hess Midstream Partners LP		19.7		14.7		3.4			(3.0	)		34.8
Depreciation expense		30.6		21.8		7.8			-			60.2
Interest expense, net		-		-		-			0.7			0.7
Adjusted EBITDA		129.3		93.2		24.3			(2.3	)		244.5
Adjusted EBITDA attributable to Hess Midstream Partners LP		25.7		19.1		5.0			(2.3	)		47.5
Capital expenditures		108.3		7.4		2.2			-			117.9

On July 25, 2019, the board of directors of our general partner declared a quarterly cash distribution of $0.3970 per common and subordinated unit for the quarter ended June 30, 2019, an increase of 15% compared with the quarter ended March 31, 2018. The distribution will be payable on August 13, 2019, to unitholders of record as of the close of business on August 5, 2019.

In July 2019, the operator, Targa Resources Corp., completed construction of LM4 and introduced first gas into the plant.

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, 2018 (our “2018 Annual Report”).

Unless the context otherwise requires, references in this report to (i) “we,” “us,” “our” or like terms, refer to Hess Midstream Partners LP and its subsidiaries (the “Partnership”); (ii) “our general partner” refers to Hess Midstream Partners GP LP; (iii) “Hess” refers collectively to Hess Corporation and its subsidiaries, other than us, our subsidiaries and our general partner; (iv) “GIP” refers to GIP II Blue Holding Partnership, L.P., which owns interests in us and in Hess Infrastructure Partners, which in turn indirectly owns our general partner, and the funds managed by Global Infrastructure Management, LLC, and such funds’ subsidiaries and affiliates, that hold interests in GIP II Blue Holding Partnership, L.P.; (v) “Hess Infrastructure Partners” or “parent” refers to Hess Infrastructure Partners LP, a midstream joint venture between Hess and GIP that, directly or indirectly, holds all of the interests in our general partner, and its subsidiaries, other than us and our subsidiaries.

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 identified below and those discussed in the section entitled “Risk Factors” included in our 2018 Annual Report.

We are a fee‑based, growth‑oriented, traditional master limited partnership formed by Hess Infrastructure Partners to own, operate, develop and acquire a diverse set of midstream assets to provide services to Hess and third‑party customers. Our assets are primarily located in the Bakken and Three Forks shale plays in the Williston Basin area of North Dakota, which we refer to collectively as the Bakken.

On January 25, 2018, we entered into a 50/50 joint venture with Targa Resources Corp. to construct a new 200 million standard cubic feet per day (“MMcf/d”) gas processing plant called Little Missouri 4 (“LM4”). Our 50% interest in the joint venture is held through HTGP Opco, in which we own a 20% controlling economic interest and Hess Infrastructure Partners owns the remaining 80% economic interest. In July 2019, the operator, Targa Resources Corp., completed construction of LM4 and introduced first gas into the plant. Volumes are expected to ramp up in the second half of 2019.

On March 22, 2019, Hess North Dakota Pipelines LLC, a subsidiary of Gathering Opco, acquired the crude oil and gas gathering assets of Summit Midstream Partners, LP’s Tioga Gathering System for cash consideration of $61.0 million, with the potential for an additional $6.8 million of contingent payments in future periods subject to certain future performance metrics. The purchase price was funded pro rata by the Partnership and Hess Infrastructure Partners, as indirect owners of Hess North Dakota Pipelines LLC.

In March 2019, Hess Infrastructure Partners granted us a right of first offer to acquire its membership interests in Hess Water Services Holdings LLC, which owns the water services business Hess Infrastructure Partners purchased from Hess and the water gathering assets Hess Infrastructure Partners purchased from Summit Midstream Partners LP, in the event Hess Infrastructure Partners decides to sell those assets in the future.

On April 25, 2019, we announced plans to expand natural gas processing capacity at the TGP by 150 MMcf/d for total processing capacity of 400 MMcf/d. Capital expenditures for the expansion are expected to be approximately $150 million gross, or $30 million attributable to Hess Midstream Partners LP, and the expansion is expected to be in service by mid-2021.

Our assets and operations are organized into the following three reportable segments: (1) gathering (2) processing and storage and (3) terminaling and export.

Significant financial and operating highlights for the second quarter of 2019 included:

For additional information regarding our non‑GAAP financial measures, see “How We Evaluate Our Operations” and “Reconciliation of Non‑GAAP Financial Measures” below.

We generate substantially all of our revenues by charging fees for gathering, compressing and processing natural gas and fractionating NGLs; gathering, terminaling, loading and transporting crude oil and NGLs; and storing and terminaling propane. We have entered into long‑term, fee‑based commercial agreements with Hess dated effective January 1, 2014. Except with regard to a certain gathering sub-system, as described below, each of our commercial agreements with Hess has an initial 10-year term and we have the unilateral right to renew each of these agreements for one additional 10‑year term. In September 2018, we amended our gas gathering and gas processing and fractionation agreements to enable us to provide certain services to Hess in respect of volumes to be delivered to and processed at the LM4 plant. The amended and restated gas gathering agreement also extends the initial term of the gathering agreement with respect to a certain gathering sub-system by 5 years to provide for a 15-year initial term and decreases the secondary term for that gathering sub-system by 5 years to provide for a 5-year secondary term. These agreements include dedications covering substantially all of Hess’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, Hess’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. Our revenues also include revenues from third‑party volumes contracted with Hess and delivered to us under these commercial agreements with Hess, as well as pass‑through third‑party rail transportation costs and electricity fees for which we recognize revenues in an amount equal to the costs. Together with Hess, 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.

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, (iii) Adjusted EBITDA and (iv) distributable cash flow.

Volumes. The amount of revenues we generate primarily depends on the volumes of crude oil, natural gas and NGLs that we handle at our gathering, processing, terminaling, and storage 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 Hess. Although Hess 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.

Adjusted EBITDA and Distributable Cash Flow. We define Adjusted EBITDA as 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 other income and other non‑cash, non‑recurring items, if applicable. We define Adjusted EBITDA attributable to Hess Midstream Partners LP as Adjusted EBITDA less Adjusted EBITDA attributable to Hess Infrastructure Partners’ retained interests in our joint interest assets. We use distributable cash flow to analyze our liquidity and performance. We define distributable cash flow as Adjusted EBITDA attributable to Hess Midstream Partners LP less cash paid for interest and maintenance capital expenditures. Distributable cash flow does not reflect changes in working capital balances.

Adjusted EBITDA and distributable cash flow are non‑GAAP supplemental financial measures 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 and distributable cash flow provides useful information to investors in assessing our financial condition and results of operations. Adjusted EBITDA and distributable cash flow should not be considered as alternatives 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 and distributable cash flow have important limitations as analytical tools because they exclude some but not all items that affect net income and net cash provided by operating activities. Adjusted EBITDA or distributable cash flow should not be considered in isolation or as a substitute for analysis of our results as reported under GAAP. Additionally, because Adjusted EBITDA and distributable cash flow may be defined differently by other companies in our industry, our definition of Adjusted EBITDA and distributable cash flow may not be comparable to similarly titled measures of other companies, thereby diminishing their utility.

Results of operations for the three months ended June 30, 2019 and 2018 are presented below (in millions, unless otherwise noted).

For the Three Months Ended June 30, 2019	Gathering		Processing and Storage		Terminaling and Export		Interest and Other			Consolidated Hess Midstream Partners LP
Revenues
Affiliate services	$	80.2	$	67.5	$	25.0	$	-		$	172.7
Other income		-		-		0.1		-			0.1
Total revenues		80.2		67.5		25.1		-			172.8
Costs and expenses
Operating and maintenance expenses (exclusive of depreciation shown separately below)		19.3		15.1		9.2		-			43.6
Depreciation expense		18.9		11.1		4.0		-			34.0
General and administrative expenses		1.3		1.0		0.2		1.2			3.7
Total costs and expenses		39.5		27.2		13.4		1.2			81.3
Income (loss) from operations		40.7		40.3		11.7		(1.2	)		91.5
Interest expense, net		-		-		-		0.6			0.6
Net income (loss)		40.7		40.3		11.7		(1.8	)		90.9
Less: net income (loss) attributable to noncontrolling interest		32.6		32.3		9.2		-			74.1
Net income (loss) attributable to Hess Midstream Partners LP	$	8.1	$	8.0	$	2.5	$	(1.8	)	$	16.8

Throughput volumes
Gas gathering (MMcf/d)⁽¹⁾		258									258
Crude oil gathering (MBbl/d)⁽²⁾		109									109
Gas processing (MMcf/d)⁽¹⁾				238							238
Crude oil terminaling (MBbl/d)⁽²⁾						123					123
NGL loading (MBbl/d)⁽²⁾						15					15

For the Three Months Ended June 30, 2018	Gathering		Processing and Storage		Terminaling and Export		Interest and Other			Consolidated Hess Midstream Partners LP
Revenues
Affiliate services	$	81.9	$	62.9	$	19.7	$	-		$	164.5
Other income		-		-		0.2		-			0.2
Total revenues		81.9		62.9		19.9		-			164.7
Costs and expenses
Operating and maintenance expenses (exclusive of depreciation shown separately below)		16.1		13.4		7.6		-			37.1
Depreciation expense		15.4		10.9		3.9		-			30.2
General and administrative expenses		0.9		0.4		-		1.1			2.4
Total costs and expenses		32.4		24.7		11.5		1.1			69.7
Income (loss) from operations		49.5		38.2		8.4		(1.1	)		95.0
Interest expense, net		-		-		-		0.4			0.4
Net Income (loss)		49.5		38.2		8.4		(1.5	)		94.6
Less: net income (loss) attributable to noncontrolling interest		39.8		30.5		6.5		-			76.8
Net income (loss) attributable to Hess Midstream Partners LP	$	9.7	$	7.7	$	1.9	$	(1.5	)	$	17.8

Throughput volumes
Gas gathering (MMcf/d)⁽¹⁾		253									253
Crude oil gathering (MBbl/d)⁽²⁾		82									82
Gas processing (MMcf/d)⁽¹⁾				237							237
Crude oil terminaling (MBbl/d)⁽²⁾						94					94
NGL loading (MBbl/d)⁽²⁾						15					15
⁽¹⁾ Million cubic feet per day
⁽²⁾ Thousand barrels per day

Minimum volume commitments for 2018 were higher compared to 2019 based on higher historical nominations. While gathering throughput volumes increased in the second quarter of 2019 compared to the second quarter of 2018, we remained below the minimum volume commitment levels in both periods and, as a result, revenues decreased $1.7 million. Operating and maintenance expenses increased $3.2 million primarily attributable to higher maintenance activity and electricity costs due to additional compressors coming online. Depreciation expense increased $3.5 million due to gathering assets acquired from Summit Midstream Partners, LP at the end of the first quarter of 2019 and other new assets being brought into service. The dollar change in administrative expenses was insignificant compared to the same quarter last year.

Revenues and other income increased $4.6 million in the second quarter of 2019 compared to the second quarter of 2018, of which $3.5 million is attributable to higher tariff rates. The remaining $1.1 million of the increase is attributable to higher pass-through electricity fees and increased utilization of TGP available capacity. Operating and maintenance expenses increased $1.7 million primarily due to higher maintenance activity and electricity costs. The dollar change in depreciation expense and general and administrative expenses was insignificant compared to the same quarter last year.

Revenues and other income increased $5.2 million in the second quarter of 2019 compared to the second quarter of 2018, of which $3.3 million is attributable to higher crude oil throughput volumes at our terminals, driven by growing Hess production and additional third‑party volumes contracted with Hess and delivered to us. In addition, $2.5 million of the increase is attributable to higher tariff rates in 2019 compared to 2018, and $0.9 million is attributable to higher rail transportation pass‑through revenue. These increases were partially offset by $1.5 million primarily attributable to lower NGL loading shortfall fees. Operating and maintenance expenses increased $1.6 million primarily attributable to higher rail transportation pass-through costs. The dollar change in depreciation expense and general and administrative expenses was insignificant compared to the same quarter last year.

The change in general and administrative expenses and interest expense, net of interest income, was insignificant for the second quarter of 2019 compared to the second quarter of 2018.

Results of operations for the six months ended June 30, 2019 and 2018 are presented below (in millions, unless otherwise noted).

For the Six Months Ended June 30, 2019	Gathering		Processing and Storage		Terminaling and Export		Interest and Other			Consolidated Hess Midstream Partners LP
Revenues
Affiliate services	$	159.2	$	133.8	$	53.7	$	-		$	346.7
Other income		-		0.2		0.1		-			0.3
Total revenues		159.2		134.0		53.8		-			347.0
Costs and expenses
Operating and maintenance expenses (exclusive of depreciation shown separately below)		36.4		28.2		20.9		-			85.5
Depreciation expense		36.3		22.3		8.0		-			66.6
General and administrative expenses		2.8		2.1		0.4		2.4			7.7
Total costs and expenses		75.5		52.6		29.3		2.4			159.8
Income (loss) from operations		83.7		81.4		24.5		(2.4	)		187.2
Interest expense, net		-		-		-		1.0			1.0
Net income (loss)		83.7		81.4		24.5		(3.4	)		186.2
Less: net income (loss) attributable to noncontrolling interest		67.0		64.8		19.5		-			151.3
Net income (loss) attributable to Hess Midstream Partners LP	$	16.7	$	16.6	$	5.0	$	(3.4	)	$	34.9

Throughput volumes
Gas gathering (MMcf/d)⁽¹⁾		253									253
Crude oil gathering (MBbl/d)⁽²⁾		110									110
Gas processing (MMcf/d)⁽¹⁾				237							237
Crude oil terminaling (MBbl/d)⁽²⁾						123					123
NGL loading (MBbl/d)⁽²⁾						14					14
⁽¹⁾ Million cubic feet per day
⁽²⁾ Thousand barrels per day

For the Six Months Ended June 30, 2018	Gathering		Processing and Storage		Terminaling and Export		Interest and Other			Consolidated Hess Midstream Partners LP
Revenues
Affiliate services	$	160.4	$	121.2	$	39.7	$	-		$	321.3
Other income		-		-		0.4		-			0.4
Total revenues		160.4		121.2		40.1		-			321.7
Costs and expenses
Operating and maintenance expenses (exclusive of depreciation shown separately below)		29.3		26.7		15.7		-			71.7
Depreciation expense		30.6		21.8		7.8		-			60.2
General and administrative expenses		1.8		1.3		0.1		2.3			5.5
Total costs and expenses		61.7		49.8		23.6		2.3			137.4
Income (loss) from operations		98.7		71.4		16.5		(2.3	)		184.3
Interest expense, net		-		-		-		0.7			0.7
Net income (loss)		98.7		71.4		16.5		(3.0	)		183.6
Less: net income (loss) attributable to noncontrolling interest		79.0		56.7		13.1		-			148.8
Net income (loss) attributable to Hess Midstream Partners LP	$	19.7	$	14.7	$	3.4	$	(3.0	)	$	34.8

Throughput volumes
Gas gathering (MMcf/d)⁽¹⁾		243									243
Crude oil gathering (MBbl/d)⁽²⁾		81									81
Gas processing (MMcf/d)⁽¹⁾				226							226
Crude oil terminaling (MBbl/d)⁽²⁾						93					93
NGL loading (MBbl/d)⁽²⁾						13					13
⁽¹⁾ Million cubic feet per day
⁽²⁾ Thousand barrels per day

Minimum volume commitments for 2018 were higher compared to 2019 based on higher historical nominations. While gathering throughput volumes increased in the first six months of 2019 compared to the first six months of 2018, we remained below the minimum volume commitment levels in both periods and, as a result, revenues decreased $1.2 million compared to the same period last year. Operating and maintenance expenses increased $7.1 million primarily attributable to higher maintenance activity and electricity costs due to additional compressors coming online. Depreciation expense increased $5.7 million due to gathering assets acquired from Summit Midstream Partners, LP at the end of the first quarter of 2019 and other new assets being brought into service. The dollar change in administrative expenses was insignificant compared to the same period last year.

Revenues and other income increased $12.8 million in the first six months of 2019 compared to the first six months of 2018, of which $6.9 million is attributable to higher tariff rates and $5.6 million is attributable to higher volumes, driven by increased utilization of available capacity of TGP. The remaining $0.3 million of the increase is primarily attributable to higher pass-through electricity fees and other income. Operating and maintenance expenses increased $1.5 million primarily due to higher maintenance activity and electricity costs. The dollar change in depreciation expense and general and administrative expenses was insignificant compared to the same period last year.

Revenues and other income increased $13.7 million in the first six months of 2019 compared to the first six months of 2018, of which $6.6 million is attributable to higher crude oil throughput volumes at our terminals, driven by growing Hess production and additional third‑party volumes contracted with Hess and delivered to us, and $4.9 million is attributable to higher tariff rates in 2019 compared to 2018. In addition, $4.5 million of the increase is attributable to higher rail transportation pass‑through revenue and $0.3 million higher other income. These increases were partially offset by $2.6 million attributable to lower NGL loading shortfall fees. Operating and maintenance expenses increased $5.2 million primarily attributable to higher rail transportation pass-through costs. The dollar change in depreciation expense and general and administrative expenses was insignificant compared to the same period last year.

The change in general and administrative expenses and interest expense, net of interest income, was insignificant for the first six months of 2019 compared to the first six months of 2018.

The following table presents a reconciliation of Adjusted EBITDA attributable to Hess Midstream Partners LP and distributable cash flow attributable to Hess Midstream Partners LP 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						Six Months Ended
	June 30,						June 30,
	2019			2018			2019			2018
(in millions)
Reconciliation of Adjusted EBITDA attributable to Hess Midstream Partners LP and Distributable Cash Flow attributable to Hess Midstream Partners LP to net income:
Net income	$	90.9		$	94.6		$	186.2		$	183.6
Plus:
Depreciation expense		34.0			30.2			66.6			60.2
Interest expense, net		0.6			0.4			1.0			0.7
Adjusted EBITDA		125.5			125.2			253.8			244.5
Less:
Adjusted EBITDA attributable to noncontrolling interest		101.3			101.0			204.6			197.0
Adjusted EBITDA attributable to Hess Midstream Partners LP	$	24.2		$	24.2		$	49.2		$	47.5
Less:
Cash interest paid, net		0.3			0.1			0.5			0.2
Maintenance capital expenditures		0.6			0.2			0.7			0.2
Distributable cash flow attributable to Hess Midstream Partners LP	$	23.3		$	23.9		$	48.0		$	47.1

Reconciliation of Adjusted EBITDA attributable to Hess Midstream Partners LP and Distributable Cash Flow attributable to Hess Midstream Partners LP to net cash provided by operating activities:
Net cash provided by operating activities	$	148.3		$	141.5		$	274.4		$	252.0
Changes in assets and liabilities		(22.8	)		(16.2	)		(20.4	)		(7.3	)
Amortization of deferred financing costs		(0.3	)		(0.2	)		(0.6	)		(0.5	)
Unit-based compensation		(0.3	)		(0.3	)		(0.6	)		(0.4	)
Interest expense, net		0.6			0.4			1.0			0.7
Adjusted EBITDA		125.5			125.2			253.8			244.5
Less:
Adjusted EBITDA attributable to noncontrolling interest		101.3			101.0			204.6			197.0
Adjusted EBITDA attributable to Hess Midstream Partners LP	$	24.2		$	24.2		$	49.2		$	47.5
Less:
Cash interest paid, net		0.3			0.1			0.5			0.2
Maintenance capital expenditures		0.6			0.2			0.7			0.2
Distributable cash flow attributable to Hess Midstream Partners LP	$	23.3		$	23.9		$	48.0		$	47.1

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 unitholders. On July 25, 2019, we declared a quarterly cash distribution of $0.3970 per common and subordinated unit, to be paid on August 13, 2019 to unitholders of record on August 5, 2019.

On March 15, 2017, we entered into a four‑year, $300.0 million senior secured revolving credit facility that became available to us upon the closing of the IPO on April 10, 2017. We have the option to extend the revolving credit facility for two additional one‑year terms and to increase the overall capacity of the revolving credit facility by up to an additional $100.0 million subject to, among other things, the consent of the lenders. The credit facility can be used for borrowings and letters of credit to fund operating activities and capital expenditures of the Partnership.

Borrowings on the credit facility generally bear interest at the London Interbank Offered Rate (“LIBOR”) plus an applicable margin of 1.275%. The interest rate is subject to adjustment based on the Partnership’s leverage ratio, which is calculated as total debt to EBITDA (as defined in the credit agreement). Facility fees accrue at 0.275% per annum and are paid quarterly. If the Partnership obtains credit ratings, pricing levels will be based on our credit ratings in effect from time to time. The Partnership is subject to customary covenants in the credit agreement, including a financial covenant that generally requires a leverage ratio of no more than 4.5 to 1.0 for the prior four fiscal quarters (5.0 to 1.0 during the specified period following certain acquisitions). As of June 30, 2019, we were in compliance with all covenants. The credit facility is secured by first priority perfected liens on substantially all directly owned assets of the Partnership and its wholly‑owned subsidiaries, including equity interests in subsidiaries, subject to certain customary exclusions. At June 30, 2019, the credit facility was undrawn.

Operating Activities. Cash flows provided by operating activities increased $22.4 million for the first six months of 2019 compared to the same period in 2018. The change in operating cash flows resulted from an increase in revenues and other income of $25.3 million and an increase in cash provided by changes in working capital of $13.1 million, offset by an increase in expenses, other than depreciation, amortization and unit‑based compensation, of $16.0 million.

Investing Activities. Cash flows used in investing activities increased $61.2 million for the first six months of 2019 compared to the same period in 2018. The increase in investing cash outflows resulted from our acquisition of Summit Midstream Partners’ Tioga Gathering System for $61.0 million, net of cash acquired, and an increase in payments for capital expenditures of $18.5 million, partially offset by lower payments for our investment in the LM4 joint venture of $18.3 million.

Financing Activities. Cash flows used in financing activities decreased $24.1 million for the first six months of 2019 compared to the same period in 2018 due to higher contributions from Hess Infrastructure Partners of $33.1 million primarily related to funding of the Summit Midstream Partners’ Tioga Gathering System acquisition, offset by increased distributions of $9.0 million.

Our operations can be capital intensive, requiring investments to expand, upgrade, maintain or enhance existing operations and to meet environmental and operational regulations. Our capital requirements consist of maintenance capital expenditures and expansion capital expenditures. Our partnership agreement requires that we distinguish between maintenance capital expenditures and expansion capital expenditures. Maintenance capital expenditures are capital expenditures made to maintain, over the long term, our operating capacity, operating income or revenue. Examples of maintenance capital expenditures are expenditures to repair, refurbish or replace existing assets, to maintain equipment reliability, integrity and safety and to address environmental laws and regulations. In contrast, expansion capital expenditures are expenditures incurred for acquisitions or capital improvements that we expect will increase our operating capacity, operating income or revenue over the long term. Examples of expansion capital expenditures include the acquisition of equipment, construction, development or acquisition of additional capacity, or expenditures for connecting additional wells to our gathering systems, to the extent such capital expenditures are expected to expand our long‑term operating capacity, operating income or revenue.

The following table sets forth a summary of maintenance and expansion capital expenditures and reconciles capital expenditures on an accrual basis to additions to property, plant and equipment on a cash basis:

Capital expenditures in 2019 are primarily attributable to expansion of our gathering system and compression capacity to support Hess and third‑party growth. Additionally, in the first six months of 2019, we acquired the crude oil and gas gathering assets of Summit Midstream Partners’ Tioga Gathering System for cash consideration of $61.0 million, with the potential for an additional $6.8 million of contingent payments in future periods subject to certain future performance metrics.

Certain sections in this Quarterly Report on Form 10‑Q, including information incorporated by reference herein, contain “forward‑looking” statements, as defined under the Private Securities Litigation Reform Act of 1995. Generally, the words “anticipate,” “estimate,” “expect,” “forecast,” “guidance,” “could,” “may,” “should,” “believe,” “intend,” “project,” “plan,” “predict,” “will,” “target” and similar expressions identify forward‑looking statements, which generally are not historical in nature. Forward‑looking statements related to our operations and financial conditions are based on our current understanding, assessments, estimates and projections. Forward‑looking statements are subject to certain risks and uncertainties that could cause actual results to differ materially from our historical experience and our current projections or expectations. As and when made, we believe that these forward‑looking statements are reasonable. However, caution should be taken not to place undue reliance on any such forward‑looking statements since such statements speak only as of the date when made and there can be no assurance that such forward‑looking statements will occur. We are not obligated to publicly update or revise any forward‑looking statements, whether as a result of new information, future events or otherwise. Risk factors that could materially impact future actual results are discussed in the section entitled “Risk Factors” included in our 2018 Annual Report.

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. We generate substantially all of our revenues by charging fees under long‑term commercial agreements with Hess with minimum volume commitments. Hess bears the risks associated with fluctuating commodity prices and we have minimal direct exposure to commodity prices.

Any debt that we incur under our revolving credit facility will bear interest at a variable rate, which will expose us to interest rate risk. Unless interest rates increase significantly in the future, our exposure to interest rate risk should be minimal. We do not currently have in place any derivative instruments to hedge any exposure to variable interest rates.

Based upon their evaluation of the Partnership’s disclosure controls and procedures (as defined in Exchange Act Rules 13a‑15(e) and 15d‑15(e)) as of June 30, 2019, John B. Hess, Chief Executive Officer, and Jonathan C. Stein, Chief Financial Officer, concluded that these disclosure controls and procedures were effective as of June 30, 2019.

There was no change in internal control over financial reporting identified in connection with the evaluation required by paragraph (d) of Rules 13a-15 or 15d-15 in the quarter ended June 30, 2019 that has materially affected, or is reasonably likely to materially affect, internal control over financial reporting.

Information regarding legal proceedings is contained in Note 12, Commitments and Contingencies in the Notes to Consolidated Financial Statements and is incorporated herein by reference.

There have been no material changes from the risk factors disclosed in Item 1A. Risk Factors of our 2018 Annual Report.

Pursuant to the requirements 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.

DELAWARE	36-4777695
(State or other jurisdiction of incorporation or organization)	(I.R.S. Employer Identification Number)

1501 McKinney Street	77010
Houston, TX (Address of principal executive offices)	(Zip Code)


Title of each class	Trading Symbol(s)	Name of each exchange on which registered
Common Units	HESM	New York Stock Exchange

Period	Record Date	Distribution Date	Distribution per Common and Subordinated Unit
First Quarter 2018	May 4, 2018	May 14, 2018	$	0.3333
Second Quarter 2018	August 2, 2018	August 13, 2018	$	0.3452
Third Quarter 2018	November 5, 2018	November 13, 2018	$	0.3575
Fourth Quarter 2018	February 4, 2019	February 13, 2019	$	0.3701
First Quarter 2019	May 3, 2019	May 14, 2019	$	0.3833
Second Quarter 2019⁽¹⁾	August 5, 2019	August 13, 2019	$	0.3970

				Weighted Average
				Award Date
	Number of Units			Fair Value
Outstanding and unvested units at December 31, 2018		114,237		$	21.06
Granted		74,528			22.76
Forfeited		(290	)		23.00
Vested		(48,278	)		21.15
Outstanding and unvested units at June 30, 2019		140,197		$	21.93

a.	Exhibits
	31.1	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	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	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	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)
	101(INS)	XBRL Instance Document
	101(SCH)	XBRL Schema Document
	101(CAL)	XBRL Calculation Linkbase Document
	101(LAB)	XBRL Labels Linkbase Document
	101(PRE)	XBRL Presentation Linkbase Document
	101(DEF)	XBRL Definition Linkbase Document

Large accelerated filer	☐	Accelerated filer	☒
Non-accelerated filer	☐	Smaller reporting company	☐
		Emerging growth company	☒

Item		Page
No.		Number

	PART I—FINANCIAL INFORMATION

1.	Financial Statements (unaudited)
	Consolidated Balance Sheets at June 30, 2019 and December 31, 2018	2
	Consolidated Statements of Operations for the three and six months ended June 30, 2019 and 2018	3
	Consolidated Statements of Changes in Partners’ Capital for the three and six months ended June 30, 2019 and 2018	4
	Consolidated Statements of Cash Flows for the six months ended June 30, 2019 and 2018	5
	Notes to Consolidated Financial Statements	6

2.	Management’s Discussion and Analysis of Financial Condition and Results of Operations	14
3.	Quantitative and Qualitative Disclosures about Market Risk	25
4.	Controls and Procedures	25

	PART II—OTHER INFORMATION

1.	Legal Proceedings	26
1A.	Risk Factors	26
6.	Exhibits	27

	Signatures	28
	Certifications

HESS MIDSTREAM PARTNERS LP (Registrant)

By: HESS MIDSTREAM PARTNERS GP LP, its General Partner

By: HESS MIDSTREAM PARTNERS GP LLC, its General Partner

By		/s/ John B. Hess
		John B. Hess
		Chairman of the Board of Directors and Chief Executive Officer

By		/s/ Jonathan C. Stein
		Jonathan C. Stein
		Chief Financial Officer