SCHEDULE 13D/A: Hess Midstream LP Completes $100 Million Unit Repurchase from Key Sponsors

Hess Midstream LP announced the completion of a $100 million unit repurchase from Hess Investments and Blue Holding, alongside a related Class B Share distribution.

Summary

• Hess Midstream LP (the "Issuer") and HESM Opco entered into a Unit Repurchase Agreement on January 13, 2025, which subsequently closed on January 15, 2025.
• Under the agreement, HESM Opco purchased a total of 2,572,677 Opco Class B Units for an aggregate price of approximately $100 million, equating to $38.87 per unit.
• Specifically, 967,541 units were repurchased from Hess Investments North Dakota LLC and 1,605,136 units from Blue Holding, L.P.
• Upon the repurchase, the Issuer cancelled an equal number of Class B Shares held by Hess Investments and Blue Holding for no consideration.
• In connection with this transaction, a Class B Share Distribution Agreement was executed on January 15, 2025, where New HESM GP LP distributed 3,210,272 Class B Shares to HIP GP LLC, which then immediately distributed 1,605,136 Class B Shares to each of Hess Investments and Blue Holding.
• As of January 13, 2025, there were 104,086,900 Class A Shares outstanding.
• Hess Midstream GP LP beneficially owns 898,000 Class A Shares, representing 0.9% of the class.
• Hess Investments North Dakota LLC and Hess Corporation collectively beneficially own 81,916,146 shares, representing 44.3% of the class, which includes 81,018,146 Opco Class B Units redeemable for Class A Shares on a one-for-one basis.

Sentiment

Score: 7

Explanation: The unit repurchase is generally a positive capital management action, indicating a return of capital to unitholders and potential accretion to per-unit metrics. No negative information or risks were disclosed.

Positives

• The unit repurchase reduces the total number of outstanding units, which can be accretive to earnings per unit and distributions per unit for remaining unitholders.
• The transaction demonstrates a commitment to optimizing the capital structure and returning value to key unitholders.

Future Outlook

The document does not provide specific forward-looking statements or guidance beyond the completion of the described repurchase and distribution transactions.

Industry Context

This unit repurchase by Hess Midstream LP reflects a common capital management strategy in the midstream energy sector, where companies may buy back units to optimize their capital structure, return value to unitholders, and potentially improve per-unit metrics. Such transactions are often undertaken when management believes the company's units are undervalued or as part of a broader capital allocation plan.

Related Party Transactions

• The Unit Repurchase Agreement involved Hess Investments North Dakota LLC and Blue Holding, L.P., which are related parties to Hess Midstream LP, as they are significant unitholders and involved in the joint venture structure.

Stakeholder Impact

• Shareholders: The repurchase of units can lead to a reduction in outstanding units, potentially increasing earnings per unit and distributions per unit for remaining unitholders.
• Hess Investments North Dakota LLC and Blue Holding, L.P.: These entities received approximately $100 million from the sale of their Opco Class B Units.

Key Dates

Recommendation

Keywords

Hess Midstream LP, HESM, Unit Repurchase, Share Buyback, SEC Filing, Schedule 13D, Midstream, Energy Infrastructure, Hess Corporation, GIP, Blue Holding, Class A Shares, Opco Class B Units, Capital Management