Hess Midstream LP

12 Months Ended

Dec. 31, 2022

Organization, Consolidation and Presentation of Financial Statements [Abstract]

Hess Midstream LP

4.  Hess Midstream LP

In December 2019, Hess Midstream Partners’ organizational structure converted from a master limited partnership into an “Up-C” structure in which Hess Midstream Partners’ public unitholders received newly issued Class A shares in a new public entity named Hess Midstream LP (Hess Midstream), which is taxed as a corporation for U.S. federal and state income tax purposes.  Hess Midstream Partners changed its name to “Hess Midstream Operations LP” (HESM Opco) and became a consolidated subsidiary of Hess Midstream, the new publicly listed entity.  As consideration for the acquisition, Hess and Global Infrastructure Partners (GIP) each received a cash payment of $301 million and approximately 115 million newly issued HESM Opco Class B units.  After giving effect to the acquisition and related transactions, public shareholders of Class A shares in Hess Midstream owned 6% of the

consolidated entity on an as-exchanged basis and Hess and GIP each owned 47% of the consolidated entity on an as-exchanged basis, primarily through their ownership of Class B units in HESM Opco that are exchangeable into Class A shares of Hess Midstream on a one-for-one basis.

In March 2021, Hess Midstream completed an underwritten public equity offering of 6.9 million Hess Midstream Class A shares held by Hess and GIP. Hess received net proceeds of $70 million from the public offering. The transaction resulted in an increase in Capital in excess of par and Noncontrolling interests of $56 million and $41 million, respectively. The increase to Noncontrolling interests of $41 million is comprised of $14 million resulting from the change in ownership interest and $27 million from an increase to deferred tax assets resulting from a change in the difference between the carrying amount and tax basis of Hess Midstream's investment in HESM Opco.

In August 2021, HESM Opco repurchased 31.25 million HESM Opco Class B units held by Hess and GIP for $750 million. HESM Opco issued $750 million in aggregate principal amount of 4.250% fixed-rate senior unsecured notes due 2030 in a private offering to finance the repurchase. The transaction resulted in an increase in Capital in excess of par and a decrease in Noncontrolling interests of $28 million, and an increase in deferred tax assets and Noncontrolling interests of $15 million resulting from a change in the difference between the carrying amount and tax basis of Hess Midstream's investment in HESM Opco. The $375 million paid to GIP reduced Noncontrolling interests.

In October 2021, Hess Midstream completed an underwritten public equity offering of approximately 8.6 million Hess Midstream Class A Shares held by Hess and GIP. Hess received net proceeds of $108 million from the public offering. The transaction resulted in an increase in Capital in excess of par and Noncontrolling interests of $96 million and $62 million, respectively. The increase to Noncontrolling interests of $62 million is comprised of $12 million resulting from the change in ownership interest and $50 million from an increase to deferred tax assets resulting from a change in the difference between the carrying amount and tax basis of Hess Midstream's investment in HESM Opco.

In April 2022, Hess Midstream completed an underwritten public equity offering of approximately 10.2 million Hess Midstream Class A shares held by Hess and GIP. Hess received net proceeds of $146 million from the public offering. The transaction resulted in an increase in Capital in excess of par and Noncontrolling interests of $130 million and $88 million, respectively. The increase to Noncontrolling interests of $88 million is comprised of $16 million resulting from the change in ownership interest and $72 million from an increase to deferred tax assets resulting from a change in the difference between the carrying amount and tax basis of Hess Midstream's investment in HESM Opco.

Concurrent with the April 2022 public offering, HESM Opco repurchased approximately 13.6 million HESM Opco Class B units held by Hess and GIP for $400 million. HESM Opco issued $400 million in aggregate principal amount of 5.500% fixed-rate senior unsecured notes due 2030 in a private offering to repay borrowings under its revolving credit facility used to finance the repurchase. The transaction resulted in an increase in Capital in excess of par and a decrease in Noncontrolling interests of $32 million, and an increase in deferred tax assets and Noncontrolling interests of $17 million resulting from a change in the difference between the carrying amount and tax basis of Hess Midstream's investment in HESM Opco. The $200 million paid to GIP reduced Noncontrolling interests.

After giving effect to the above transactions in 2022 and 2021, public shareholders of Class A shares of Hess Midstream own approximately 18%, and Hess and GIP each own approximately 41%, of the consolidated entity on an as-exchanged basis at December 31, 2022.

Little Missouri 4 (LM4) is a 200 million standard cubic feet per day gas processing plant located south of the Missouri River in McKenzie County, North Dakota, that was constructed as part of a 50/50 joint venture between Hess Midstream and Targa Resources Corp. Hess Midstream has a natural gas processing agreement with LM4 under which it pays a processing fee and reimburses LM4 for its proportionate share of electricity costs. In 2022, processing fees were $21 million (2021: $28 million; 2020: $26 million) and are included in Operating costs and expenses in the Statement of Consolidated Income.

At December 31, 2022, Hess Midstream liabilities totaling $3,027 million (2021: $2,694 million) are on a nonrecourse basis to Hess Corporation, while Hess Midstream assets available to settle the obligations of Hess Midstream included cash and cash equivalents totaling $3 million (2021: $2 million), property, plant and equipment, net totaling $3,173 million (2021: $3,125 million) and the equity-method investment in LM4 of $94 million (2021: $102 million).