8-K: Hess Midstream LP Appoints PricewaterhouseCoopers as New Auditor Following BlackRock Acquisition of GIP

Hess Midstream LP has replaced Ernst & Young with PricewaterhouseCoopers as its independent auditor due to the pending acquisition of Global Infrastructure Management by BlackRock.

Summary

• Hess Midstream LP has changed its independent registered public accounting firm from Ernst & Young LLP (EY) to PricewaterhouseCoopers LLP (PwC).
• The change was approved by the Audit Committee of Hess Midstream GP LLC on May 16, 2024.
• This change is a result of the pending acquisition of Global Infrastructure Management (GIP) by BlackRock, Inc.
• Upon completion of the acquisition, EY would no longer meet the SEC's auditor independence requirements.
• EY's audit reports for the fiscal years ended December 31, 2022 and 2023 did not contain any adverse opinions, disclaimers, or qualifications.
• There were no disagreements or reportable events between Hess Midstream and EY regarding accounting principles, financial statements, or auditing procedures.
• Hess Midstream has confirmed that they did not consult with PwC on any accounting or auditing matters prior to the appointment.
• EY has agreed to cooperate with the transition to PwC, including providing necessary documents and responding to inquiries.

Sentiment

Score: 7

Explanation: The document indicates a smooth and expected transition of auditors due to a merger, which is a neutral to slightly positive event. There are no indications of financial distress or negative impacts.

Positives

• The transition to a new auditor is being handled smoothly, with EY agreeing to cooperate fully.
• EY's previous audits were clean, indicating no issues with the company's financial reporting.
• The company is proactively addressing potential auditor independence issues arising from the GIP acquisition.

Risks

• The change in auditors could introduce some short-term disruption during the transition period.
• The acquisition of GIP by BlackRock introduces a change in the ownership structure which could have unforeseen consequences.

Future Outlook

The company expects a smooth transition to the new auditor, PwC, and anticipates no disruption to its financial reporting processes.

Management Comments

• The Audit Committee approved the engagement of PwC as the company's new independent registered public accounting firm.
• EY has informed the Company that it will cooperate and assist with an orderly transition of audit firms.

Industry Context

Changes in auditors are not uncommon during mergers and acquisitions, especially when independence rules are affected. This change is a direct result of the BlackRock acquisition of GIP, which is a significant event in the infrastructure investment sector.

Comparison to Industry Standards

• The change of auditors due to a merger or acquisition is a standard practice to ensure auditor independence.
• Companies like Brookfield Infrastructure Partners and Kinder Morgan have also changed auditors following significant corporate events.
• The smooth transition and cooperation from the outgoing auditor, EY, is consistent with industry best practices.

Stakeholder Impact

• Shareholders can expect continued financial reporting with a new auditor.
• Employees will likely see no immediate impact from the auditor change.
• Creditors and suppliers should not be affected by this change.

Next Steps

• PwC will begin its engagement as the new independent auditor for Hess Midstream LP.
• EY will cooperate with PwC to ensure a smooth transition of audit responsibilities.

Key Dates

Keywords

auditor, PricewaterhouseCoopers, Ernst & Young, Hess Midstream, BlackRock, Global Infrastructure Management, acquisition, audit, SEC, independence