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What changed in Hess Midstream LP's 10-K — 2023 vs 2024

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Paragraph-level year-over-year comparison of Hess Midstream LP's 2023 and 2024 10-K annual filings, covering the Business, Risk Factors, Legal Proceedings, Cybersecurity, MD&A and Market Risk sections. Every new, removed and edited paragraph is highlighted side-by-side so you can see exactly what management changed in the 2024 report.

+404 added−199 removedSource: 10-K (2025-02-27) vs 10-K (2024-02-29)

Top changes in Hess Midstream LP's 2024 10-K

404 paragraphs added · 199 removed · 163 edited across 6 sections

Item 1A. Risk Factors

Risk Factors — what could go wrong, per management

81 edited+32 added−21 removed246 unchanged
Biggest changeThe obligation of Hess to consummate the merger is also subject to the receipt of a tax opinion from legal counsel that the Chevron Merger will qualify as a “reorganization” within the meaning of Section 368(a) of the Internal Revenue Code of 1986, as amended.
Biggest changeThe completion of the Chevron Merger is subject to a number of conditions, including (i) the authorization for listing on the New York Stock Exchange of the shares of Chevron common stock to be issued in connection with the Chevron Merger, (ii) the absence of any order or law prohibiting consummation of the Chevron Merger, (iii) with respect to each party’s obligation to consummate the Chevron Merger, the performance by the other party of its respective obligations under the Chevron Merger Agreement in all material respects, and the accuracy of such other party’s representations and warranties in the Chevron Merger Agreement (subject to certain materiality qualifiers) and (iv) with respect to Hess’ obligation to consummate the Chevron Merger, the receipt by Hess of a tax opinion from legal counsel that the Chevron Merger will qualify as a “reorganization” within the meaning of Section 368(a) of the Internal Revenue Code of 1986, as amended.
For example, our partnership agreement: • provides that whenever our general partner makes a determination or takes, or declines to take, any other action in its capacity as our general partner, our general partner is required to make such determination, or take or decline to take such other action, in good faith, meaning that it subjectively believed that the determination or the decision to take or decline to take such action was in the best interests of us, and will not be subject to any other or different standard imposed by our partnership agreement, Delaware law, or any other law, rule or regulation, or at equity; • provides that our general partner will not have any liability to us or our limited partners for decisions made in its capacity as a general partner so long as it acted in good faith; 41 Table of Contents • provides that our general partner and our officers and directors will not be liable for monetary damages to us or our limited partners resulting from any act or omission unless there has been a final and non-appealable judgment entered by a court of competent jurisdiction determining that our general partner or our officers and directors, as the case may be, acted in bad faith or engaged in fraud or willful misconduct or, in the case of a criminal matter, acted with knowledge that the conduct was criminal; and • provides that our general partner will not be in breach of its obligations under our partnership agreement or its fiduciary duties to us or its limited partners if a transaction with an affiliate or the resolution of a conflict of interest is approved in accordance with, or otherwise meets the standards set forth in, our partnership agreement.
For example, our partnership agreement: • provides that whenever our general partner makes a determination or takes, or declines to take, any other action in its capacity as our general partner, our general partner is required to make such determination, or take or decline to take such other action, in good faith, meaning that it subjectively believed that the determination or the decision to take or decline to take such action was in the best interests of us, and will not be subject to any other or different standard imposed by our partnership agreement, Delaware law, or any other law, rule or regulation, or at equity; • provides that our general partner will not have any liability to us or our limited partners for decisions made in its capacity as a general partner so long as it acted in good faith; 44 Table of Contents • provides that our general partner and our officers and directors will not be liable for monetary damages to us or our limited partners resulting from any act or omission unless there has been a final and non-appealable judgment entered by a court of competent jurisdiction determining that our general partner or our officers and directors, as the case may be, acted in bad faith or engaged in fraud or willful misconduct or, in the case of a criminal matter, acted with knowledge that the conduct was criminal; and • provides that our general partner will not be in breach of its obligations under our partnership agreement or its fiduciary duties to us or its limited partners if a transaction with an affiliate or the resolution of a conflict of interest is approved in accordance with, or otherwise meets the standards set forth in, our partnership agreement.
The degree to which we are leveraged, combined with lease and other financial obligations and contractual commitments, could have important consequences to us, including the following: • our ability to obtain additional financing, if necessary, for working capital, capital expenditures, acquisitions or other purposes may be impaired or such financing may not be available on favorable terms; • satisfying our obligations with respect to indebtedness may be more difficult and any failure to comply with the obligations of any debt instruments could result in an event of default under the agreements governing such indebtedness; • we will need a portion of cash flow to make interest payments on debt, reducing the funds that would otherwise be available for operations, future business opportunities or making cash distributions; • our debt level will make us more vulnerable to competitive pressures or a downturn in our business or the economy generally; and • our debt level may limit flexibility in planning for, or responding to, changing business and economic conditions. 29 Table of Contents Our ability to service our indebtedness will depend upon, among other things, our future financial and operating performance, which will be affected by prevailing economic conditions and financial, business, regulatory and other factors, some of which are beyond our control.
The degree to which we are leveraged, combined with lease and other financial obligations and contractual commitments, could have important consequences to us, including the following: • our ability to obtain additional financing, if necessary, for working capital, capital expenditures, acquisitions or other purposes may be impaired, or such financing may not be available on favorable terms; • satisfying our obligations with respect to indebtedness may be more difficult and any failure to comply with the obligations of any debt instruments could result in an event of default under the agreements governing such indebtedness; • we will need a portion of cash flow to make interest payments on debt, reducing the funds that would otherwise be available for operations, future business opportunities or making cash distributions; • our debt level will make us more vulnerable to competitive pressures or a downturn in our business or the economy generally; and • our debt level may limit flexibility in planning for, or responding to, changing business and economic conditions. 32 Table of Contents Our ability to service our indebtedness will depend upon, among other things, our future financial and operating performance, which will be affected by prevailing economic conditions and financial, business, regulatory and other factors, some of which are beyond our control.
Our operations are subject to all of the risks and operational hazards inherent in gathering, compressing, processing, fractionating, terminaling, storing, loading and transporting crude oil, natural gas and NGLs and gathering and disposing of produced water, including: • damages to pipelines, terminals and facilities, related equipment and surrounding properties caused by earthquakes, tornados, floods, fires, severe weather, explosions and other natural disasters, the frequency and severity of which may be impacted by climate change, and acts of terrorism; • maintenance, repairs, mechanical or structural failures at our or Hess’ facilities or at third‑party facilities on which our or Hess’ operations are dependent, including electrical shortages, power disruptions and power grid failures; • damages to and loss of availability of interconnecting third‑party pipelines, railroads, terminals and other means of delivering crude oil, natural gas and NGLs; • crude oil rail car derailments, fires, explosions and spills; • disruption or failure of information technology systems and network infrastructure due to various causes, including unauthorized 27 Table of Contents access or attack; • curtailments of operations due to severe seasonal weather; • protests, riots, strikes, lockouts or other industrial disturbances; and • other hazards.
Our operations are subject to all of the risks and operational hazards inherent in gathering, compressing, processing, fractionating, terminaling, storing, loading and transporting crude oil, natural gas and NGLs and gathering and disposing of produced water, including: • damages to pipelines, terminals and facilities, related equipment and surrounding properties caused by earthquakes, tornados, floods, fires, severe weather, explosions and other natural disasters, the frequency and severity of which may be impacted by climate change, and acts of terrorism; • maintenance, repairs, mechanical or structural failures at our or Hess’ facilities or at third‑party facilities on which our or Hess’ operations are dependent, including electrical shortages, power disruptions and power grid failures; • damages to and loss of availability of interconnecting third‑party pipelines, railroads, terminals and other means of delivering crude oil, natural gas and NGLs; • crude oil rail car derailments, fires, explosions and spills; • disruption or failure of information technology systems and network infrastructure due to various causes, including unauthorized 30 Table of Contents access or attack; • curtailments of operations due to severe seasonal weather; • protests, riots, strikes, lockouts or other industrial disturbances; and • other hazards.
Hess’ directors and officers have a fiduciary duty to make these decisions in the best interests of the stockholders of Hess; • our partnership agreement replaces the fiduciary duties that would otherwise be owed by our general partner with contractual standards governing its duties, limiting our general partner’s liabilities and restricting the remedies available to the shareholders of the Company for actions that, without the limitations, might constitute breaches of fiduciary duty; • except in limited circumstances, our general partner has the power and authority to conduct the Company’s business without shareholder approval; • our general partner determines the amount and timing of asset purchases and sales, borrowings, issuance of additional partnership securities and the creation, reduction or increase of cash reserves, each of which can affect the amount of cash that is distributed to the shareholders of the Company; • our general partner determines which costs incurred by it are reimbursable by the Company; • our general partner may cause the Company to borrow funds in order to permit the payment of cash distributions; • our partnership agreement does not restrict our general partner from causing the Company to pay it or its affiliates for any services rendered to the Company or entering into additional contractual arrangements with any of these entities on behalf of the Company; • our general partner intends to limit its liability regarding the Company’s contractual and other obligations; • our general partner may exercise its right to call and purchase all of the Company’s shares not owned by it and its affiliates if it and its affiliates own sufficient shares to exercise the call right; • our general partner controls the enforcement of obligations owed to the Company by our general partner and its affiliates, including the commercial agreements between the Company and Hess; and • our general partner decides whether to retain separate counsel, accountants or others to perform services for the Company.
Hess’ directors and officers have a fiduciary duty to make these decisions in the best interests of the stockholders of Hess; • our partnership agreement replaces the fiduciary duties that would otherwise be owed by our general partner with contractual standards governing its duties, limiting our general partner’s liabilities and restricting the remedies available to the shareholders of the Company for actions that, without the limitations, might constitute breaches of fiduciary duty; • except in limited circumstances, our general partner has the power and authority to conduct the Company’s business without shareholder approval; • our general partner determines the amount and timing of asset purchases and sales, borrowings, issuance of additional partnership securities and the creation, reduction or increase of cash reserves, each of which can affect the amount of cash that is distributed to the shareholders of the Company; • our general partner determines which costs incurred by it are reimbursable by the Company; • our general partner may cause the Company to borrow funds in order to permit the payment of cash distributions; • our partnership agreement does not restrict our general partner from causing the Company to pay it or its affiliates for any services rendered to the Company or entering into additional contractual arrangements with any of these entities on behalf of the Company; • our general partner intends to limit its liability regarding the Company’s contractual and other obligations; • our general partner may exercise its right to call and purchase all of the Company’s shares not owned by it and its affiliates if it and its affiliates own sufficient shares to exercise the call right; • our general partner controls the enforcement of obligations owed to the Company by our general partner and its affiliates, including the commercial agreements between the Company and Hess; and 41 Table of Contents • our general partner decides whether to retain separate counsel, accountants or others to perform services for the Company.
If a court were to find this choice of forum provision inapplicable to, or unenforceable in respect of, one or more of the specified types of actions or proceedings, we may incur additional costs associated with resolving such matters in other jurisdictions, which could adversely affect our business, financial condition and results of operations and our ability to make cash distributions to our shareholders. 39 Table of Contents Our partnership agreement provides that our shareholders irrevocably waive the right to trial by jury in any claim, suit, action or proceeding under either state or federal laws, including any claim under U.S. federal securities laws, which could result in less favorable outcomes to our shareholders in any such action.
If a court were to find this choice of forum provision inapplicable to, or unenforceable in respect of, one or more of the specified types of actions or proceedings, we may incur additional costs associated with resolving such matters in other jurisdictions, which could adversely affect our business, financial condition and results of operations and our ability to make cash distributions to our shareholders. 42 Table of Contents Our partnership agreement provides that our shareholders irrevocably waive the right to trial by jury in any claim, suit, action or proceeding under either state or federal laws, including any claim under U.S. federal securities laws, which could result in less favorable outcomes to our shareholders in any such action.
While Hess will evaluate and defend against any actions vigorously, the costs of the defense of such lawsuits and other effects of such litigation could, because we are substantially dependent on Hess as our primary customer and 50% owner of our general partner, have an adverse effect on our business, financial condition and operating results. 25 Table of Contents Completion of the Chevron Merger is subject to a number of conditions, and if these conditions are not satisfied or waived, the Chevron Merger will not be completed.
While Hess will evaluate and defend against any actions vigorously, the costs of the defense of such lawsuits and other effects of such litigation could, because we are substantially dependent on Hess as our primary customer and 50% owner of our general partner, have an adverse effect on our business, financial condition and operating results. 28 Table of Contents Completion of the Chevron Merger is subject to a number of conditions, and if these conditions are not satisfied or waived, the Chevron Merger will not be completed.
In addition, we have no control over Hess or other producers or their drilling or production decisions, which are affected by, among other things: • the availability and cost of capital; • prevailing and projected crude oil, natural gas and NGL prices; • demand for crude oil, natural gas and NGLs; • levels of reserves; • geological considerations; • environmental or other governmental regulations, including the timely availability of drilling permits and the regulation of hydraulic fracturing and flaring; and 23 Table of Contents • the availability of drilling rigs and other costs of production and equipment.
In addition, we have no control over Hess or other producers or their drilling or production decisions, which are affected by, among other things: • the availability and cost of capital; • prevailing and projected crude oil, natural gas and NGL prices; • demand for crude oil, natural gas and NGLs; • levels of reserves; • geological considerations; 26 Table of Contents • environmental or other governmental regulations, including the timely availability of drilling permits and the regulation of hydraulic fracturing and flaring; and • the availability of drilling rigs and other costs of production and equipment.
All of these competitive pressures could have a material adverse effect on our business, results of operations, financial condition and our ability to make cash distributions to our shareholders. 26 Table of Contents Seasonal weather conditions, which may be impacted by climate change, may adversely affect our customers’ ability to conduct drilling activities in some of the areas where we operate and our ability to operate our assets and to construct additional facilities.
All of these competitive pressures could have a material adverse effect on our business, results of operations, financial condition and our ability to make cash distributions to our shareholders. 29 Table of Contents Seasonal weather conditions, which may be impacted by climate change, may adversely affect our customers’ ability to conduct drilling activities in some of the areas where we operate and our ability to operate our assets and to construct additional facilities.
Chevron’s ownership of Hess may result in conflicts of interest. • We will be subject to business uncertainties while the Chevron Merger is pending, which could adversely affect our business. • Hess may be subject to lawsuits relating to the Chevron Merger, which, because we are substantially dependent on Hess, could adversely affect our business, financial condition and operating results. • Failure to complete, or significant delays in completing, the Chevron Merger could negatively affect the trading prices of our Class A Shares and our future business and financial results.
Chevron’s ownership of Hess may result in conflicts of interest. • We will be subject to business uncertainties while the Chevron Merger is pending, which could adversely affect our business. • Hess has and may become subject to lawsuits relating to the Chevron Merger, which, because we are substantially dependent on Hess, could adversely affect our business, financial condition and operating results. • Failure to complete, or significant delays in completing, the Chevron Merger could negatively affect the trading prices of our Class A Shares and our future business and financial results.
Our loss of these rights, through our inability to renew right‑of‑way contracts or otherwise, could have a material adverse effect on our business, results of operations, financial condition and ability to make cash distributions to our shareholders. 28 Table of Contents We utilize contract operator services at certain of our assets, and we may face higher costs associated with terminal services in the future.
Our loss of these rights, through our inability to renew right‑of‑way contracts or otherwise, could have a material adverse effect on our business, results of operations, financial condition and ability to make cash distributions to our shareholders. 31 Table of Contents We utilize contract operator services at certain of our assets, and we may face higher costs associated with terminal services in the future.
While significant uncertainty exists as to the specifics on any regulation of methane or other greenhouse gas emissions under federal regulations such as the Clean Air Act or other local, regional or international regulatory regimes, their impact, if enacted, is likely to result in increased compliance costs, increased utility costs, additional operating restrictions on our business and an increase in the cost of products generally.
While significant uncertainty exists as to the specifics on any regulation of methane or other greenhouse gas emissions under federal regulations such as the Clean Air Act or other local, regional or international regulatory regimes, their impact, if implemented, is likely to result in increased compliance costs, increased utility costs, additional operating restrictions on our business and an increase in the cost of products generally.
On August 16, 2022 the United States enacted the IRA, which includes a 15% book-income alternative minimum tax on corporations with average adjusted financial statement income over $1 billion for any 3-year period ending with 2022 or later and a 1% excise tax on the fair market value of stock that is repurchased by publicly traded U.S. corporations.
On August 16, 2022, the United States enacted the IRA, which includes a 15% corporate alternative minimum tax on corporations with average adjusted financial statement income over $1 billion for any 3-year period ending with 2022 or later and a 1% excise tax on the fair market value of stock that is repurchased by publicly traded U.S. corporations.
The obligation to satisfy increased regulatory requirements associated with our produced water facilities could result in an increase of our operating costs and adversely affect our financial condition and results of operations. On August, 12, 2022, the Company became aware of a produced water release from an underground pipeline located approximately 8 miles north of Ray, North Dakota.
The obligation to satisfy increased regulatory requirements associated with our produced water facilities could result in an increase of our operating costs and adversely affect our financial condition and results of operations. On August 12, 2022, the Company became aware of a produced water release from an underground pipeline located approximately eight miles north of Ray, North Dakota.
By purchasing a Class A Share, a shareholder is treated as having consented to the provisions in our partnership agreement, including the provisions discussed above. 40 Table of Contents Holders of our Class A Shares have very limited voting rights and, even if they are dissatisfied, they cannot currently remove our general partner without its consent.
By purchasing a Class A Share, a shareholder is treated as having consented to the provisions in our partnership agreement, including the provisions discussed above. 43 Table of Contents Holders of our Class A Shares have very limited voting rights and, even if they are dissatisfied, they cannot currently remove our general partner without its consent.
Furthermore, for the years ended December 31, 2023, 2022 and 2021, substantially all of our revenues were attributable to our fee‑based commercial agreements with Hess, including revenues from third‑party volumes delivered under these agreements. Following the completion of the Chevron Merger, our future prospects will depend upon Chevron’s business strategy for Hess.
Furthermore, for the years ended December 31, 2024, 2023 and 2022, substantially all of our revenues were attributable to our fee‑based commercial agreements with Hess, including revenues from third‑party volumes delivered under these agreements. Following the completion of the Chevron Merger, our future prospects will depend upon Chevron’s business strategy for Hess.
We are prioritizing sustainable energy practices to further reduce our carbon footprint while at the same time remaining a successfully operating public company. However, various key stakeholders, including our stockholders, employees, suppliers, customers, local communities and others, may have differing approaches to climate change and sustainability initiatives.
We are prioritizing sustainable energy practices to further reduce our carbon footprint while at the same time remaining a successfully operating public company. However, various key stakeholders, including our shareholders, employees, suppliers, customers, local communities and others, may have differing approaches to climate change and sustainability initiatives.
For the year ended December 31, 2023, substantially all of our revenues were attributable to our fee‑based commercial agreements with Hess, including revenues from third‑party volumes delivered under these agreements. We expect that we will continue to derive substantially all of our revenues in the near term under multiple commercial agreements with Hess.
For the year ended December 31, 2024, substantially all of our revenues were attributable to our fee‑based commercial agreements with Hess, including revenues from third‑party volumes delivered under these agreements. We expect that we will continue to derive substantially all of our revenues in the near term under multiple commercial agreements with Hess.
Such a development could adversely affect our ability to grow our business and to make cash distributions to our shareholders. 24 Table of Contents Risks Related to the Hess and Chevron Merger If the Chevron Merger is completed, Chevron will own and control Hess. Chevron’s ownership of Hess may result in conflicts of interest.
Such a development could adversely affect our ability to grow our business and to make cash distributions to our shareholders. 27 Table of Contents Risks Related to the Hess and Chevron Merger If the Chevron Merger is completed, Chevron will own and control Hess. Chevron’s ownership of Hess may result in conflicts of interest.
Regulatory, Legal and Environmental Risks • Our assets and operations are subject to federal, state, and local laws and regulations relating to environmental protection and health and safety, including those relating to pipeline integrity, and may become subject to FERC regulation. • Evolving environmental laws and regulations, including on crude oil stabilization, transportation, hydraulic fracturing and climate change, could have an adverse effect on our business. 21 Table of Contents • Climate change and sustainability initiatives may adversely affect our business, including significant operational changes and expenditures, reduce demand for our services and an increase our cost of capital. • We or Hess may be unable to obtain or renew permits or approvals necessary for our respective operations, including our produced water facilities. • Certain plant or animal species could be designated as endangered or threatened, which could limit our ability to expand some or limit our customers’ ability to develop new crude oil and natural gas wells.
Regulatory, Legal and Environmental Risks • Our assets and operations are subject to federal, state, and local laws and regulations relating to environmental protection and health and safety, including those relating to pipeline integrity, and may become subject to additional FERC regulation. • Evolving environmental laws and regulations, including on crude oil stabilization, transportation, hydraulic fracturing and climate change, could have an adverse effect on our business. 24 Table of Contents • Climate change and sustainability initiatives may adversely affect our business, including significant operational changes and expenditures, reduce demand for our services and an increase in our cost of capital. • We or Hess may be unable to obtain or renew permits or approvals necessary for our respective operations, including our produced water facilities. • Certain plant or animal species could be designated as endangered or threatened, which could limit our ability to expand or limit our customers’ ability to develop new crude oil and natural gas wells.
In August 2022, PHMSA published another final rule (the third and final part of the Mega Rule) expanding the Management of Change process, extending corrosion control requirements for gas transmission pipelines, adding requirements that operators ensure no conditions exist following an extreme weather event that could adversely affect the safe operation of the pipeline, and adopting repair criteria for non-HCAs similar to those applicable to HCAs.
In August 2022, PHMSA issued the third and final part of the Mega Rule expanding the Management of Change process, extending corrosion control requirements for gas transmission pipelines, adding requirements that operators ensure no conditions exist following an extreme weather event that could adversely affect the safe operation of the pipeline, and adopting repair criteria for non-HCAs similar to those applicable to HCAs.
Such executive actions, as well as uncertainty regarding the future course of federal regulation, legislation and associated litigation, could indirectly affect our business and our results of operations by reducing demand for our services. 34 Table of Contents At both the federal and state-level, there are also an increasing number of legislative initiatives and proposals that may lead to reduced demand for oil and gas.
Future executive actions, as well as uncertainty regarding the future course of federal regulation, legislation and associated litigation, could indirectly affect our business and our results of operations by reducing demand for our services. 37 Table of Contents At both the federal and state-level, there are also an increasing number of legislative initiatives and proposals that may lead to reduced demand for oil and gas.
The Federal Railroad Administration, (“FRA”) of the DOT and PHMSA issued several Safety Advisories and Emergency Orders directing offerors and rail carriers to take additional precautionary measures to enhance the safe shipment of bulk quantities of crude oil.
For example, the Federal Railroad Administration (“FRA”) of the DOT and PHMSA issued several Safety Advisories and Emergency Orders directing offerors and rail carriers to take additional precautionary measures to enhance the safe shipment of bulk quantities of crude oil.
In November 2021, PHMSA issued a final rule (the second part of the Mega Rule) that expands certain federal pipeline safety requirements to all onshore gas gathering pipelines, regardless of size or location.
In November 2021, PHMSA issued the second part of the Mega Rule that expands certain federal pipeline safety requirements to all onshore gas gathering pipelines, regardless of size or location.
Hess, Chevron and/or their respective directors and officers, including certain of Hess’ officers that serve as members of our board of directors, may be subject to lawsuits relating to the Chevron Merger. Such litigation is common in connection with acquisitions of public companies, regardless of any merits related to the underlying acquisition.
Hess, Chevron and/or their respective directors and officers, including certain of Hess’ officers that serve as members of our board of directors, have and may become subject to lawsuits relating to the Chevron Merger. Such litigation is common in connection with acquisitions of public companies, regardless of any merits related to the underlying acquisition.
This may create actual and potential conflicts of interest between the Company and affiliates of our general partner and result in less than favorable treatment of the Company and its shareholders. 38 Table of Contents Our partnership agreement requires that we distribute all of our available cash, which could limit our ability to grow and make acquisitions.
This may create actual and potential conflicts of interest between the Company and affiliates of our general partner and result in less than favorable treatment of the Company and its shareholders. Our partnership agreement requires that we distribute all of our available cash, which could limit our ability to grow and make acquisitions.
Hess may be subject to lawsuits relating to the Chevron Merger, which, because we are substantially dependent on Hess as our primary customer and the 50% owner of our general partner, could adversely affect our business, financial condition and operating results.
Hess has and may become subject to lawsuits relating to the Chevron Merger, which, because we are substantially dependent on Hess as our primary customer and the 50% owner of our general partner, could adversely affect our business, financial condition and operating results.
Furthermore, a higher level of indebtedness at Hess in the future would increase the risk that it may default on its obligations to us under our commercial agreements. As of December 31, 2023, Hess had total consolidated indebtedness of approximately $8.6 billion, including our indebtedness of $3.2 billion, which is non‑recourse to Hess.
Furthermore, a higher level of indebtedness at Hess in the future would increase the risk that it may default on its obligations to us under our commercial agreements. As of December 31, 2024, Hess had total consolidated indebtedness of approximately $8.6 billion, including our indebtedness of $3.5 billion, which is non‑recourse to Hess.
In January 2019, the NDIC issued revisions to the order giving operators more flexibility for evaluating and demonstrating compliance with the state’s vapor pressure requirements. Furthermore, rail car derailments in Canada and the United States several years ago led to increased regulatory scrutiny over the safety of transporting Bakken crude oil by rail.
In January 2019, the NDIC issued revisions to the order giving operators more flexibility for evaluating and demonstrating compliance with the state’s vapor pressure requirements. Furthermore, rail car derailments in Canada and the United States have led to increased regulatory scrutiny over the safety of transporting Bakken crude oil by rail.
Additionally, California recently enacted three climate-related disclosure laws, the Climate Corporate Data Accountability Act, Climate Related Financial Risk Act and Voluntary Carbon Market Disclosures Act, which together will require certain entities doing business in California or taking certain actions in California to report and attain third-party assurance of greenhouse gas emissions information, reporting on climate-related financial risks and reporting regarding the use of voluntary carbon offsets and/or carbon reduction claims.
Additionally, California recently enacted three climate-related disclosure laws, the Climate Corporate Data Accountability Act (“SB 253”), Climate Related Financial Risk Act (“SB 261”) and Voluntary Carbon Market Disclosures Act (“AB 13015”), which together will require certain entities doing business in California or taking certain actions in California to report and attain third-party assurance of greenhouse gas emissions information, reporting on climate-related financial risks and reporting regarding the use of voluntary carbon offsets and/or carbon reduction claims.
Accordingly, we are indirectly subject to the operational and business risks of Hess, the most significant of which include the following: • the effects of changing commodity prices and production margins; • Hess’ ability to successfully increase its Bakken production; • the inherent uncertainties in estimating quantities of proved reserves and the possibility that actual Bakken production may be lower than estimated; • Hess’ ability to control decisions made under joint operating agreements and failure of the parties under such agreements to meet their obligations; 22 Table of Contents • changing laws and regulations and other governmental actions; • substantial capital requirements and Hess’ ability to obtain needed financing on satisfactory terms, if at all; • political instability in areas where Hess operates that can adversely affect Hess’ business; • environmental risks and environmental laws and regulations that can result in significant costs and liabilities; • climate change and sustainability initiatives and changes in laws and regulations may adversely affect Hess’ business including significant operational changes and expenditures, reduce demand for Hess’ products or increase cost of capital for Hess; • highly competitive environment where many of Hess’ competitors are larger and have greater resources and a more diverse portfolio than Hess; • catastrophic and other events, whether naturally occurring or man-made, may materially affect Hess’ operations and financial condition; • significant time delays between the estimated and actual occurrence of critical events associated with Hess’ development projects may result in material negative economic consequences; • departure of key members from Hess’ senior management team, and/or difficulty in recruiting and retaining adequate numbers of experienced technical personnel, could negatively impact Hess’ ability to deliver on its strategic goals; • Hess’ dependency on oilfield service companies for items including drilling rigs, equipment, supplies and skilled labor and its ability to secure these services, or a high cost thereof, may result in material negative economic consequences; and • disruption, failure or cybersecurity attacks affecting or targeting information technology systems and infrastructure used by Hess or its business partners may materially impact Hess’ business and operations.
Accordingly, we are indirectly subject to the operational and business risks of Hess, the most significant of which include the following: • the effects of changing commodity prices and production margins; • Hess’ ability to successfully increase its Bakken production; • the inherent uncertainties in estimating quantities of proved reserves and the possibility that actual Bakken production may be lower than estimated; • Hess’ ability to control decisions made under joint operating agreements and failure of the parties under such agreements to meet their obligations; 25 Table of Contents • changing laws and regulations and other governmental actions; • substantial capital requirements and Hess’ ability to obtain needed financing on satisfactory terms, if at all; • political instability in areas where Hess operates that can adversely affect Hess’ business; • environmental risks and environmental laws and regulations that can result in significant costs and liabilities; • climate change and sustainability initiatives and changes in laws and regulations may adversely affect Hess’ business including significant operational changes and expenditures, reduce demand for Hess’ products or increase cost of capital for Hess; • highly competitive environment where many of Hess’ competitors are larger and have greater resources and a more diverse portfolio than Hess; • catastrophic and other events, whether naturally occurring or man-made, may materially affect Hess’ operations and financial condition; • significant time delays between the estimated and actual occurrence of critical events associated with Hess’ development projects may result in material negative economic consequences; • departure of key members from Hess’ senior management team, and/or difficulty in recruiting and retaining adequate numbers of experienced technical personnel, could negatively impact Hess’ ability to deliver on its strategic goals; • Hess’ dependency on oilfield service companies for items including drilling rigs, equipment, supplies and skilled labor and its ability to secure these services, or a high cost thereof, may result in material negative economic consequences; • Hess’ involvement in six claims in federal and state courts in North Dakota related to post-production deductions from royalty and working interest payments for various oil and gas processing and transportation related costs and expenses; and • disruption, failure or cybersecurity attacks affecting or targeting information technology systems and infrastructure used by Hess or its business partners may materially impact Hess’ business and operations.
The alternative minimum tax and the excise tax are effective in taxable years beginning after December 31, 2022. From time to time since enactment, the Department of Treasury and the Internal Revenue Service have issued interim guidance related to the alternative minimum tax and intend to issue proposed regulations addressing the alternative minimum tax in the future.
The alternative minimum tax and the excise tax are effective in taxable years beginning after December 31, 2022. From time to time since enactment, the Department of Treasury and the Internal Revenue Service have issued interim guidance and proposed regulations related to the corporate alternative minimum tax.
The new rule also eliminates preconstruction notice requirements for NWP 12 for several conditions that used to require such notice, but also now requires new oil and gas pipeline projects that exceed 250 miles in length to give preconstruction notice and obtain approval before proceeding.
The rule also eliminated preconstruction notice requirements for NWP 12 for several conditions that used to require such notice, but also required new oil and gas pipeline projects that exceed 250 miles in length to give preconstruction notice and obtain approval before proceeding.
Recent growing concerns about global economic growth and inflation could have a significant adverse impact on global financial markets and commodity prices, which could reduce demand for our midstream services and affect the ability of our business partners, suppliers and customers to conduct business.
Recent growing concerns about global economic growth, political instability, tariffs and escalations of trade disputes and inflation could have a significant adverse impact on global financial markets and commodity prices, which could reduce demand for our midstream services and affect the ability of our business partners, suppliers and customers to conduct business.
The Inflation Reduction Act (“IRA”), signed by President Biden in August 2022, provides significant funding and incentives for research and development of low-carbon energy production methods, carbon capture, and other programs directed at addressing climate change.
The IRA, signed by President Biden in August 2022, provides significant funding and incentives for research and development of low-carbon energy production methods, carbon capture, and other programs directed at addressing climate change.
In order to support the payment of the minimum quarterly distribution, we must generate available cash (as defined in our partnership agreement) of approximately $67.9 million per quarter, or approximately $271.6 million per year, based on Hess’ and GIP’s noncontrolling interest in us and the number of Class A Shares outstanding as of December 31, 2023.
In order to support the payment of the minimum quarterly distribution, we must generate available cash (as defined in our partnership agreement) of approximately $65.4 million per quarter, or approximately $261.6 million per year, based on Hess’ and GIP’s noncontrolling interest in us and the number of Class A Shares outstanding as of December 31, 2024.
As of December 31, 2023, our Sponsors and their affiliates, including our general partner, collectively held 898,000 Class A Shares, 157,941,441 Class B Shares, and 157,941,441 Class B Units in the Partnership. The Class B Units in the Partnership are exchangeable, together with an equal number of Class B Shares, into Class A Shares on a one-to-one basis.
As of December 31, 2024, our Sponsors and their affiliates, including our general partner, collectively held 898,000 Class A Shares, 113,927,226 Class B Shares, and 113,927,226 Class B Units in the Partnership. The Class B Units in the Partnership are exchangeable, together with an equal number of Class B Shares, into Class A Shares on a one-to-one basis.
As of December 31, 2023, our general partner and its affiliates collectively owned approximately 70% of the outstanding Class B Shares and the Class A Shares, considered as a single class.
As of December 31, 2024, our general partner and its affiliates collectively owned approximately 52.7% of the outstanding Class B Shares and the Class A Shares, considered as a single class.
Additional conflicts may also arise in the future following the Chevron Merger associated with (i) the allocation of capital and the allocation of costs between legacy Chevron and legacy Hess, (ii) the relationship between Chevron and GIP and their respective affiliates, (iii) the amount of time devoted by the officers and directors of Chevron to its business in relation to us and (iv) future business opportunities that are pursued by Chevron, GIP and us.
Additional conflicts may also arise in the future following the Chevron Merger associated with (i) the allocation of capital and the allocation of costs between legacy Chevron and legacy Hess, (ii) the relationship between Chevron and GIP and their respective affiliates, (iii) the amount of time devoted by the officers and directors of Chevron to its business in relation to us, (iv) future business opportunities that are pursued by Chevron, GIP and us, and (v) potential discrepancies between Chevron’s approach towards handling sustainability initiatives and Hess’ current approach.
Technical system flaws, power loss and cybersecurity risks, including cyber or phishing-attacks, unauthorized access, malicious software, data privacy breaches by employees or others with authorized access, ransomware and other cybersecurity issues, could compromise our Digital Systems or those of our business partners and result in disruptions to our business operations or the access, disclosure or loss of our Confidential Information and communications.
Technical system flaws, power loss and cybersecurity risks, including cyber or social engineering/phishing attacks, unauthorized access, malicious or misconfigured software, malfeasance by employees or others with authorized access, ransomware and other cybersecurity issues, threaten the confidentiality, integrity and availability of our Digital Systems and Confidential Information and could compromise our Digital Systems or those of our business partners and result in disruptions to our business operations or the access, disclosure or loss of our Confidential Information and communications.
If it is subsequently determined that an individual facility is not exempt from FERC regulation under the NGA or ICA, such determination could decrease revenue, increase operating costs, and, depending upon the facility in question, adversely affect our results of operations and cash flows.
If it is subsequently determined that an individual facility is not exempt from FERC regulation under the NGA, NGPA, or ICA, or subject to additional regulation under those statutes with the elimination of the existing waivers, such determination could decrease revenue, increase operating costs, and depending upon the facility in question, adversely affect our results of operations and cash flows.
For example, in December 2023, the EPA issued a final rule to establish comprehensive standards of performance and emission guidelines for methane and volatile organic compound emissions from existing operations in the oil and gas sector, including the exploration and production, transmission, processing, and storage segments.
For example, in March 2024, the EPA published a final rule in the Federal Register to establish comprehensive standards of performance and emission guidelines for methane and volatile organic compound emissions from new and existing operations in the oil and gas sector, including the exploration and production, transmission, processing, and storage segments.
There is also increasing interest in nature-related matters beyond protected species, such as general biodiversity, which may similarly require us or our customers to incur costs or take other measures which may adversely impact our and our customers’ business or operations.
The designation of previously unidentified endangered or threatened species under such laws may affect our and our customers’ operations. There is also increasing interest in nature-related matters beyond protected species, such as general biodiversity, which may similarly require us or our customers to incur costs or take other measures which may adversely impact our and our customers’ business or operations.
Furthermore, as we continue to focus on developing ESG practices, and as voluntary and regulatory ESG disclosure standards, requirements and policies continue to evolve, we have expanded and expect to further expand our public disclosures in these areas.
Furthermore, as we continue to focus on developing ESG practices, and as voluntary and regulatory ESG disclosure standards, requirements and policies continue to evolve, we have provided various public disclosures in these areas.
For example, the SEC issued a proposed rule in March 2022 that would mandate extensive disclosure for certain public companies of climate-related data, risks and opportunities, including financial impacts, physical and transition risks, related governance and strategy, and greenhouse gas emissions.
For example, the SEC issued a final rule in March 2024 that would mandate extensive disclosure for certain public companies of climate-related data, risks and opportunities, including financial impacts, physical and transition risks, related governance and strategy, and greenhouse gas emissions; the rule is currently stayed pending litigation challenges.
The new rule splits NWP 12 into three parts; NWP 12 will continue to be available for oil and gas pipelines, while new NWP 57 will be available for electric utility line and telecommunications activities, and a new NWP 58 will be available for utility line activities for water and other substances.
The rule split NWP 12 into three parts: NWP 12 continues to be available for oil and gas pipelines, while NWP 57 is available for electric utility line and telecommunications activities, and NWP 58 is available for utility line activities for water and other substances.
For example, in October 2019, PHMSA published three major rules focused on: the safety of gas transmission pipelines (the first of three parts of the Mega Rule), the safety of hazardous liquid pipelines, and enhanced emergency order procedures.
For example, in October 2019, PHMSA started the rulemaking process for the first part of the three‑part Mega Rule, which focused on: the safety of gas transmission pipelines, the safety of hazardous liquid pipelines, and enhanced emergency order procedures.
We continue to evaluate the effect of the new law and any additional guidance on our future cash flows and financial results, including if we become a taxpayer subject to the alternative minimum tax. 43 Table of Contents ITEM 1B. UNRESOLVE D STAFF COMMENTS None.
We will continue to evaluate the effect of the law, including any changes to proposed regulations or the issuance of final regulations, on our future cash flows and financial results, including if we become a taxpayer subject to the corporate alternative minimum tax. 46 Table of Contents ITEM 1B. UNRESOLVE D STAFF COMMENTS None.
Pursuant to the Pipeline Safety, Regulatory Certainty and Job Creation Act of 2011, or 2011 Pipeline Safety Act, PHMSA finalized rules that increased the maximum administrative civil penalties for violations of the pipeline safety laws and regulations to $200,000 per violation per day, with a maximum of $2,000,000 for a related series of violations.
Pursuant to the Pipeline Safety, Regulatory Certainty and Job Creation Act of 2011, or 2011 Pipeline Safety Act, PHMSA finalized rules that increased the maximum administrative civil penalties for violations of the pipeline safety laws and regulations, effective December 28, 2023, to $272,926 per violation per day, with a maximum of $2,729,245 for a series of violations, to account for inflation.
On January 11, 2024, the DEQ proposed an Administrative Consent Agreement (“ACA”) that included an administrative penalty of $445,000 and further line monitoring practices with respect to certain water gathering pipelines. The Company is evaluating the proposed ACA and is engaging in further discussions with DEQ. See Item 8. Financial Statements and Supplementary Data. Note 11, Commitments and Contingencies .
On January 11, 2024, the DEQ proposed an Administrative Consent Agreement (“ACA”) that included an administrative penalty of $445,000 and further line monitoring practices with respect to certain water gathering pipelines. In December 2024, the Company finalized a settlement agreement with the DEQ for a total administrative penalty amount of $320,000. See Item 8. Financial Statements and Supplementary Data.
As of December 31, 2023, we had $2,477.3 million carrying value of outstanding senior notes of the Partnership, $340.0 million carrying value of borrowings outstanding under the Partnership’s senior secured revolving credit facility and $394.1 million carrying value of borrowings outstanding under the Partnership’s senior secured term loan facility.
As of December 31, 2024, we had $3,074.3 million carrying value of outstanding senior notes of the Partnership, $15.0 million carrying value of borrowings outstanding under the Partnership’s senior secured revolving credit facility and $382.6 million carrying value of borrowings outstanding under the Partnership’s senior secured Term Loan A facility.
As technologies evolve and these cybersecurity attacks become more sophisticated, we or Hess may incur significant costs to upgrade or enhance our security measures to protect against such attacks.
As technologies evolve and these cybersecurity attacks become more sophisticated, we or Hess may incur significant costs to upgrade or enhance our security measures to protect against such attacks. We and Hess may also face difficulties in fully anticipating or implementing adequate preventive measures or mitigating potential harm.
Such legislation, regulations and initiatives, as well as uncertainty regarding the future success of such regulations and initiatives in reducing demand for oil and gas, could indirectly affect our business and our results of operations by reducing demand for our services.
To the extent the waste emissions charge and other climate change programs are retained or implemented, legislation, regulations and initiatives, as well as uncertainty regarding the future success of such regulations and initiatives in reducing demand for oil and gas, could indirectly affect our business and our results of operations by reducing demand for our services.
Certain plant or animal species could be designated as endangered or threatened, which could limit our ability to expand some of our existing operations or limit our customers’ ability to develop new crude oil and natural gas wells. The federal Endangered Species Act restricts activities that may affect endangered or threatened species or their habitats.
Note 11, Commitments and Contingencies . Certain plant or animal species could be designated as endangered or threatened, which could limit our ability to expand some of our existing operations or limit our customers’ ability to develop new crude oil and natural gas wells.
Additionally, noncompliance or incomplete documentation of our compliance status with respect to our existing permits or approvals may result in the imposition of fines, penalties and injunctive relief. In April 2020, a federal district court vacated Nationwide Permit (“NWP”) 12, the general permit issued by the U.S. Army Corps of Engineers (“Corps”) for pipelines and utility projects.
Additionally, noncompliance or incomplete documentation of our compliance status with respect to our existing permits or approvals may result in the imposition of fines, penalties and injunctive relief. 39 Table of Contents Since April 2020, the Nationwide Permit (“NWP”) 12, the general permit issued by the U.S.
Threat actors are becoming increasingly adept in using techniques and tools, including artificial intelligence, that circumvent security controls, evade detection and remove forensic evidence.
Cyberattacks are expected to accelerate on a global basis in frequency and magnitude as threat actors are becoming increasingly adept in using techniques and tools, including artificial intelligence, that circumvent security controls, evade detection and remove forensic evidence.
Legislation similar to California’s Climate Corporate Data Accountability Act is also under consideration in other states. Our customers or other business partners may require us to provide additional climate-related information from us if they are also subject to these or additional climate-related disclosure laws or regulations.
Our customers or other business partners may require us to provide additional climate-related information from us if they are also subject to these or additional climate-related disclosure laws or regulations.
Similar protections are offered to migratory birds under the Migratory Bird Treaty Act. Many states have analogous laws designed to protect endangered or threatened species or their habitats. The designation of previously unidentified endangered or threatened species under such laws may affect our and our customers’ operations.
The federal Endangered Species Act restricts activities that may affect endangered or threatened species or their habitats. Similar protections are offered to migratory birds under the Migratory Bird Treaty Act. Many states have analogous laws designed to protect endangered or threatened species or their habitats.
If these discussions do not result in an acceptable resolution and arbitration (if pursued) does not result in a confirmation that such right of first refusal provision is inapplicable to the Merger, then there would be a failure of a closing condition under the Chevron Merger Agreement, in which case the Chevron Merger would not close.
If the arbitration does not result in a confirmation that the Stabroek ROFR is inapplicable to the Chevron Merger, and if Chevron, Hess, Exxon Mobil and/or CNOOC do not otherwise agree upon an acceptable resolution, then there would be a failure of a closing condition under the Chevron Merger Agreement, in which case the Chevron Merger would not close.
In addition, the actual amount of available cash we generate will also depend on other factors, some of which are beyond our control, including: • the amount of our operating expenses and general and administrative expenses, including reimbursements to Hess, which are not subject to any caps or other limits, in respect of those expenses; • the level of capital expenditures we make; • the cost of acquisitions, if any; • fluctuations in our working capital needs; • our ability to borrow funds and access capital markets; 37 Table of Contents • restrictions contained in our credit facilities and other debt instruments; • our debt service requirements and other liabilities; • the amount of cash reserves established by our general partner; • federal and state income taxes; • changes in commodity prices; and • other business risks affecting our cash levels.
The amount of cash we can distribute on our Class A Shares principally depends upon the amount of cash we generate from our operations, which will fluctuate from quarter to quarter based on, among other things: • the volumes of crude oil, natural gas, NGLs and produced water that we handle on our assets; • the fees with respect to volumes that we handle on our assets; • the level of competition from other midstream energy companies in our geographic markets; and • outages at our facilities caused by mechanical failure, maintenance, construction and other similar activities. 40 Table of Contents In addition, the actual amount of available cash we generate will also depend on other factors, some of which are beyond our control, including: • the amount of our operating expenses and general and administrative expenses, including reimbursements to Hess, which are not subject to any caps or other limits, in respect of those expenses; • the level of capital expenditures we make; • the cost of acquisitions, if any; • fluctuations in our working capital needs; • our ability to borrow funds and access capital markets; • restrictions contained in our credit facilities and other debt instruments; • our debt service requirements and other liabilities; • the amount of cash reserves established by our general partner; • federal and state income taxes; • changes in commodity prices; and • other business risks affecting our cash levels.
This program requires the EPA to impose a “waste emissions charge” on certain natural gas and oil sources that are already required to report under EPA’s Greenhouse Gas Reporting Program. In January of 2024, the EPA released its proposed rule to implement the methane emissions fee with a proposed effective date in 2025 for reporting year 2024 emissions.
This program requires the EPA to impose a “waste emissions charge” on certain natural gas and oil sources that are already required to report under EPA’s Greenhouse Gas Reporting Program. In November 2024, the EPA finalized a rule to implement Congress’ directive in the IRA to impose a fee on excess methane emissions from the oil and gas sector.
Additionally, any future issuances of additional Class A Shares or other securities, including to affiliates, are not subject to the NYSE’s shareholder approval rules that apply to a corporation. Accordingly, our shareholders do not have the same protections afforded to certain shareholders of corporations that are subject to all of the NYSE corporate governance requirements.
Additionally, any future issuances of additional Class A Shares or other securities, including to affiliates, are not subject to the NYSE’s shareholder approval rules that apply to a corporation.
If new or more stringent federal, state or local legal and regulatory restrictions relating to the hydraulic fracturing process are adopted in areas where Hess and our other customers operate, Hess and our other customers could incur potentially significant added costs to comply with such requirements and experience delays or curtailment in the pursuit of production or development activities, which could reduce demand for our midstream services. 33 Table of Contents Developments related to climate change including evolving laws and regulations could adversely affect us and our financial performance.
Many states have already adopted laws and/or regulations that require disclosure of the chemicals used in hydraulic fracturing and are considering legal requirements that could impose more stringent permitting, disclosure and well construction requirements on crude oil and/or natural gas drilling activities. 36 Table of Contents If new or more stringent federal, state or local legal and regulatory restrictions relating to the hydraulic fracturing process are adopted in areas where Hess and our other customers operate, Hess and our other customers could incur potentially significant added costs to comply with such requirements and experience delays or curtailment in the pursuit of production or development activities, which could reduce demand for our midstream services.
In addition, if any of our facilities were found to have violated the NGA or the Natural Gas Policy Act, or the NGPA, FERC has civil penalty authority under the NGA and NGPA to impose penalties for current violations of up to $1,496,035 per violation per day and disgorgement of profits associated with any violation.
In addition, if we or any of our facilities were found to have violated the NGA or the NGPA, FERC has civil penalty authority to impose penalties for such violations of up to $1,584,648 per violation per day for 2025 (with annual inflation adjustments going forward), as well as disgorgement of profits associated with any violation.
If we consummate any future acquisitions, shareholders will not have the opportunity to evaluate the economic, financial and other relevant information that we will consider in evaluating any such acquisitions. 30 Table of Contents The completion of capital projects by us may not result in revenue increases and will be subject to regulatory, environmental, political, legal and economic risks, which could adversely affect our operations and financial condition.
The completion of capital projects by us may not result in revenue increases and will be subject to regulatory, environmental, political, legal and economic risks, which could adversely affect our operations and financial condition.
In addition to recent and potential domestic regulation of greenhouse gases, there continues to be international interest in a global framework for greenhouse gas reductions. For example, the Paris Agreement seeks to combat climate change through the establishment of nationally-determined greenhouse gas emissions reduction goals.
In addition to recent and potential domestic regulation of greenhouse gases, there continues to be international interest in a global framework for greenhouse gas reductions.
We also invested in construction of the LM4 gas processing plant south of the Missouri River as part of our joint venture with Targa and we expanded natural gas processing capacity at TGP by 150 MMcf/d for total processing capacity of 400 MMcf/d.
We also invested in construction of the LM4 gas processing plant south of the Missouri River as part of our joint venture with Targa and we expanded natural gas processing capacity at TGP by 150 MMcf/d for total processing capacity of 400 MMcf/d. 33 Table of Contents There are inherent risks associated with undertaking these and other capital projects, including numerous regulatory, environmental, political and legal uncertainties, most of which are beyond our control.
If new oil and gas pipeline projects are unable to utilize NWP 12 or identify an alternate means of CWA compliance, such projects could be significantly delayed, which could have an adverse impact on our operations. 36 Table of Contents In the future we may face increased obligations relating to our produced water facilities and may be required to provide an increased level of financial assurance to guarantee the appropriate closure activities occur for our produced water facilities.
If new oil and gas pipeline projects are unable to utilize NWP 12 or identify an alternate means of CWA compliance, such projects could be significantly delayed, which could have an adverse impact on our operations.
Government action could result in tax increases retroactively or prospectively through tax claims, changes to applicable statutory tax rates, modification of the tax base, or imposition of new tax types.
We are subject to U.S. federal income tax as a corporation at the current corporate tax rate of 21% and to state income tax in various states at various rates. Government action could result in tax increases retroactively or prospectively through tax claims, changes to applicable statutory tax rates, modification of the tax base, or imposition of new tax types.
However, the extent and magnitude of that impact cannot currently be reliably or accurately estimated. 35 Table of Contents Climate change and sustainability initiatives may result in significant operational changes and expenditures, reduced demand for our services and adversely affect our business. We recognize that climate change and sustainability are growing global environmental concerns.
The long-term impact of such actions on our or our customers’ operations, if any, is difficult to predict at this time. 38 Table of Contents Climate change and sustainability initiatives may result in significant operational changes and expenditures, reduced demand for our services and adversely affect our business. We recognize that climate change and sustainability are growing global environmental concerns.
Relatedly, at COP26, the United States and the European Union jointly announced the launch of the Global Methane Pledge, by which signatory countries commit to reducing global methane emissions by at least 30% from 2020 levels by 2030. Since its formal launch at COP26, over 150 countries have joined the pledge.
In November 2021, at the 26th Conference of the Parties on the UN Framework Convention on Climate Change (“COP26”) in Glasgow, the United States and the European Union jointly announced the launch of the Global Methane Pledge, by which signatory countries commit to reducing global methane emissions by at least 30% from 2020 levels by 2030.
Governmental and regulatory bodies, investors, consumers, industry and other stakeholders have been increasingly focused on climate change matters.
Developments related to climate change, including evolving laws and regulations, could adversely affect us and our financial performance. Governmental and regulatory bodies, investors, consumers, industry and other stakeholders have been increasingly focused on climate change matters.
In addition, state regulation of gathering facilities and intrastate transportation pipelines generally include various safety, environmental, and in some circumstances, nondiscriminatory take and common purchaser requirements, as well as complaint-based rate regulation. Evolving laws and regulations on crude oil, including stabilization and transportation, could have an effect on our financial performance.
In addition to the FERC-regulation of interstate transportation, state regulation of gathering facilities and intrastate transportation pipelines generally include various safety, environmental, and in some circumstances, nondiscriminatory take and common purchaser requirements, as well as complaint-based rate regulation. Further changes in such state regulation could also affect our costs, revenues, or operations.
There can be no assurance that the conditions to the completion of the Chevron Merger will be satisfied or waived or that the Chevron Merger will be completed.
There can be no assurance that the conditions to the completion of the Chevron Merger will be satisfied or waived or that the Chevron Merger will be completed. The failure to satisfy all of the required conditions could delay the completion of the Chevron Merger for a significant period of time or prevent it from occurring at all.
Similarly, we believe that the crude oil and NGL pipelines in our gathering system are not subject to FERC tariff requirements under the ICA, because they fall outside FERC’s tariff jurisdiction. However, the classification and regulation of our gathering facilities may be subject to change based on future determinations or policy changes by FERC, the courts, or Congress.
In addition, the classification and regulation of our facilities may be subject to change based on future determinations or policy changes by FERC, the courts, or Congress.
Such disclosures may reflect aspirational goals, targets, cost estimates and other expectations and assumptions, including over long timelines, which aspirational goals, targets, cost estimates, and other expectations and assumptions are necessarily uncertain and may not be realized. Failure to realize or timely achieve progress on such aspirational goals, targets, cost estimates, and other expectations or assumptions may adversely impact us.
Such disclosures may reflect aspirational goals, targets, cost estimates and other expectations and assumptions, including over long timelines, which aspirational goals, targets, cost estimates, and other expectations and assumptions are necessarily uncertain and may not be realized. The lack of an established single approach to identifying, measuring, and reporting on many ESG matters may further create uncertainty and ambiguities.
If our assets become subject to FERC regulation, or if federal, state or local regulations or policies change, or if we fail to comply with such regulations, our financial condition, results of operations and cash flows could be materially and adversely affected. 32 Table of Contents Although the FERC has not made any formal determinations with respect to our natural gas gathering facilities upstream of the Tioga Gas Plant and LM4, we believe that the natural gas pipelines in our gathering systems meet the traditional tests FERC has used to establish whether a pipeline is not subject to tariff requirements under the NGA.
If our assets become subject to additional FERC regulation, or if federal, state or local regulations or policies change, or if we fail to comply with such regulations, our financial condition, results of operations and cash flows could be materially and adversely affected.
We are treated as a corporation for U.S. federal and state income tax purposes. 42 Table of Contents We are subject to U.S. federal income tax as a corporation at the current corporate tax rate of 21% and to state income tax in various states at various rates.
Accordingly, our shareholders do not have the same protections afforded to certain shareholders of corporations that are subject to all of the NYSE corporate governance requirements. 45 Table of Contents We are treated as a corporation for U.S. federal and state income tax purposes.
We expect that such costs will include initial expenses for compliance, and lower on-going expenses that are not expected to be material to our overall financial results. In addition, the Protecting Our Infrastructure of Pipelines and Enhancing Safety Act of 2020 was signed into law on December 27, 2020.
In addition, the Protecting Our Infrastructure of Pipelines and Enhancing Safety Act of 2020 (the “PIPES Act”) was signed into law on December 27, 2020.
We and Hess may also face difficulties in fully anticipating or implementing adequate preventive measures or mitigating potential harm. 31 Table of Contents Regulatory, Legal and Environmental Risks Our assets and operations are subject to federal, state, and local laws and regulations relating to environmental protection and health and safety that could require us to make substantial expenditures.
Finally, we cannot guarantee that any costs and liabilities incurred in relation to an attack or incident will be covered by our existing insurance policies or that applicable insurance will be available to us in the future on economically reasonable terms or at all. 34 Table of Contents Regulatory, Legal and Environmental Risks Our assets and operations are subject to federal, state, and local laws and regulations relating to environmental protection and health and safety that could require us to make substantial expenditures.

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Item 1C. Cybersecurity

Cybersecurity — threats and controls disclosure

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Biggest changeAdditional information about cybersecurity risks we face is discussed in Part I, Item 1A. Risk Factors, under the heading “Disruption, failure or cybersecurity attacks affecting or targeting information technology and infrastructure used by us, Hess or our business partners may materially impact our business and operations” which should be read in conjunction with the information above.
Biggest changeAdditional information about cybersecurity risks we face is discussed in Part I, Item 1A. Risk Factors, under the heading “Disruption, failure or cybersecurity attacks affecting or targeting information technology systems and infrastructure used by us, Hess or our business partners may materially impact our business and operations” which should be read in conjunction with the information above.
The Company has not identified risks from known cybersecurity threats during the year ended December 31, 2023, including as a result of any prior cybersecurity incidents, that have materially affected us or are reasonably likely to materially affect us, including our operations, business strategy, results of operations, or financial condition.
The Company has not identified risks from known cybersecurity threats during the year ended December 31, 2024, including as a result of any prior cybersecurity incidents, that have materially affected us or are reasonably likely to materially affect us, including our operations, business strategy, results of operations, or financial condition.
The audit committee reports to the full board of directors regarding its activities, including those related to cybersecurity. 44 Table of Contents We rely on Hess’ management team – including the Chief Risk Officer, the Head of Information Technology and the Chief Information Security Officer (“CISO”) – for assessing and managing our material risks from cybersecurity threats.
The audit committee reports to the full board of directors regarding its activities, including those related to cybersecurity. 47 Table of Contents We rely on Hess’ management team – including the Chief Risk Officer, the Head of Information Technology and the Chief Information Security Officer (“CISO”) – for assessing and managing our material risks from cybersecurity threats.

Item 3. Legal Proceedings

Legal Proceedings — active lawsuits and investigations

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Biggest changeSee Note 11. Commitments and Contingencies for additional details. ITEM 4. MINE SAF ETY DISCLOSURES Not Applicable 45 Table of Contents PAR T II
Biggest changeWe have elected to apply a threshold of $1 million for purposes of determining whether disclosure of any such proceedings is required. See Note 11, Commitments and Contingencies for additional details. ITEM 4. MINE SAF ETY DISCLOSURES Not Applicable 48 Table of Contents PAR T II
Added
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.

Item 5. Market for Registrant's Common Equity

Market for Common Equity — stock, dividends, buybacks

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Biggest changeExcept for splits and combinations as contemplated by our partnership agreement, no distribution shall be made under any circumstances in respect of any Class B Shares or our general partner interest. 46 Table of Contents The following table sets forth the cash distributions per share declared on the Class A Shares, for the three most recent years through December 31, 2023: Quarterly Cash Three most recent years Distribution per Share (1) March 31, 2021 $ 0.4526 June 30, 2021 $ 0.5042 September 30, 2021 $ 0.5104 December 31, 2021 $ 0.5167 March 31, 2022 $ 0.5492 June 30, 2022 $ 0.5559 September 30, 2022 $ 0.5627 December 31, 2022 $ 0.5696 March 31, 2023 $ 0.5851 June 30, 2023 $ 0.6011 September 30, 2023 $ 0.6175 December 31, 2023 $ 0.6343 (1) Represents a cash distribution attributable to the quarter-end pursuant to our partnership agreement.
Biggest changeExcept for splits and combinations as contemplated by our partnership agreement, no distribution shall be made under any circumstances in respect of any Class B Shares or our general partner interest. 49 Table of Contents The following table sets forth the cash distributions per share declared on the Class A Shares, for the three most recent years through December 31, 2024: Quarterly Cash Three most recent years Distribution per Share (1) March 31, 2022 $ 0.5492 June 30, 2022 $ 0.5559 September 30, 2022 $ 0.5627 December 31, 2022 $ 0.5696 March 31, 2023 $ 0.5851 June 30, 2023 $ 0.6011 September 30, 2023 $ 0.6175 December 31, 2023 $ 0.6343 March 31, 2024 $ 0.6516 June 30, 2024 $ 0.6677 September 30, 2024 $ 0.6846 December 31, 2024 $ 0.7012 (1) Represents a cash distribution attributable to the quarter-end pursuant to our partnership agreement.
However, our general partner may in the future own other equity interests in us and may be entitled to receive distributions on any such interests. 47 Table of Contents Adjustment of the Minimum Quarterly Distribution If we combine our shares or other interests in us (“Company Interests”) into fewer shares or Company Interests (commonly referred to as a “reverse split”) or subdivide our shares or Company Interests into a greater number of shares or Company Interests (commonly referred to as a “split”), we will proportionately adjust the minimum quarterly distribution.
However, our general partner may in the future own other equity interests in us and may be entitled to receive distributions on any such interests. 50 Table of Contents Adjustment of the Minimum Quarterly Distribution If we combine our shares or other interests in us (“Company Interests”) into fewer shares or Company Interests (commonly referred to as a “reverse split”) or subdivide our shares or Company Interests into a greater number of shares or Company Interests (commonly referred to as a “split”), we will proportionately adjust the minimum quarterly distribution.
(2) The amount includes 103,377 phantom unit awards that vest ratably over a three-year period for officers and employees, and vest after one year for directors following the date of grant. Upon vesting, each phantom unit is paid in the form of a Class A Share in us, or an equivalent amount of cash, subject to applicable tax withholdings.
(2) The amount includes 88,741 phantom unit awards that vest ratably over a three-year period for officers and employees, and vest after one year for directors following the date of grant. Upon vesting, each phantom unit is paid in the form of a Class A Share in us, or an equivalent amount of cash, subject to applicable tax withholdings.
Equity Compensation Plan Information The following table summarizes information about our equity compensation plan as of December 31, 2023: Number of securities to be Weighted-average Number of securities issued upon exercise of exercise price of remaining available for outstanding options, outstanding options future issuance under Plan category warrants, and rights warrants, and rights equity compensation plans Equity compensation plans not approved by security holders (1) - - - Hess Midstream LP 2017 Long Term Incentive Plan 103,377 (2) $ - 2,448,976 Total 103,377 $ - 2,448,976 (1) The general partner of our predecessor adopted the Long-Term Incentive Plan in connection with the IPO.
Equity Compensation Plan Information The following table summarizes information about our equity compensation plan as of December 31, 2024: Number of securities to be Weighted-average Number of securities issued upon exercise of exercise price of remaining available for outstanding options, outstanding options future issuance under Plan category warrants, and rights warrants, and rights equity compensation plans Equity compensation plans not approved by security holders (1) - - - Hess Midstream LP 2017 Long Term Incentive Plan 88,741 (2) $ - 2,394,359 Total 88,741 $ - 2,394,359 (1) The general partner of our predecessor adopted the Long-Term Incentive Plan in connection with the IPO.
Holders As of December 31, 2023, there were 10 shareholders of record who owned a total of 68,367,647 of our Class A Shares, one of which is Hess Midstream GP LP. The number of holders does not include the holders for whom shares are held in a “nominee” or “street” name.
Holders As of December 31, 2024, there were 174 shareholders of record who owned a total of 104,086,900 of our Class A Shares, one of which is Hess Midstream GP LP. The number of holders does not include the holders for whom shares are held in a “nominee” or “street” name.
General Partner Interest Our general partner owns a non-economic general partner interest in us and, as of December 31, 2023, 898,000 Class A Shares and 145,620,222 Class B Shares.
General Partner Interest Our general partner owns a non-economic general partner interest in us and, as of December 31, 2024, 898,000 Class A Shares and 63,883,078 Class B Shares.
In addition, as of December 31, 2023, Hess Midstream GP LP owned an aggregate of 145,620,222 Class B Shares and Hess owned directly an aggregate of 12,321,219 Class B Shares. Hess and GIP indirectly own the Class A Shares and Class B Shares owned by Hess Midstream GP LP.
In addition, as of December 31, 2024, Hess Midstream GP LP owned an aggregate of 63,883,078 Class B Shares and Hess owned directly an aggregate of 50,044,148 Class B Shares. Hess and GIP indirectly own the Class A Shares and Class B Shares owned by Hess Midstream GP LP.
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ITEM 6. [RESERVED] 51 Table of Contents ITEM 7. 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 consolidated financial statements and notes thereto included in Item 8 of this Annual Report on Form 10‑K.
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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. This discussion contains forward-looking statements that involve risks and uncertainties.
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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 elsewhere in this report.
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Overview We are a fee-based, growth-oriented, limited partnership formed by Hess Infrastructure Partners GP LLC (“HIP GP LLC”) and our general partner to own, operate, develop and acquire a diverse set of midstream assets and provide fee-based services to Hess and third-party customers. We are managed and controlled by Hess Midstream GP LLC, the general partner of our general partner.
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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.
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Significant Activities On October 22, 2023, Hess entered into an Agreement and Plan of Merger (the “Chevron Merger Agreement”) with Chevron Corporation (“Chevron”) and Yankee Merger Sub Inc., a direct, wholly-owned subsidiary of Chevron (“Merger Subsidiary”).
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The Chevron Merger Agreement provides that, among other things and subject to the terms and conditions of the Chevron Merger Agreement, Merger Subsidiary will be merged with and into Hess, with Hess surviving and continuing as the surviving corporation in the merger as a direct, wholly-owned subsidiary of Chevron (such transaction, the “Chevron Merger”).
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On May 28, 2024, holders of a majority of Hess’ outstanding common stock voted to approve the Chevron Merger.
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Hess Guyana Exploration Limited (“HGEL”), a wholly-owned subsidiary of Hess, is currently in arbitration relating to the applicability of a right of first refusal (the “Stabroek ROFR”) contained in the operating agreement among HGEL and affiliates of Exxon Mobil Corporation and China National Offshore Oil Corporation.
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The arbitration merits hearing about the applicability of the Stabroek ROFR to the Chevron Merger has been scheduled for May 2025, with a decision expected in the third quarter. Hess cannot predict the date on which the Chevron Merger will be completed because it is subject to conditions beyond Hess’ control, including the outcome of the arbitration.
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If the Chevron Merger is completed, Chevron will acquire Hess’ 37.8% ownership in the Company, including its right to appoint four directors to the Company’s Board. The Company’s contract structure remains in place.
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As part of the annual nomination process set forth in the Company’s long-term commercial agreements, the Company set its MVCs and rates, which were set based on Hess’ current 4-rig program in the Bakken. See Item 1A. Risk Factors for a discussion of risks related to the Chevron Merger.
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We continue execution of our multi-year projects to build new compressor stations and associated pipeline infrastructure or expand existing compressor stations in support of Hess’ and third parties’ expected production growth. In 2024, we added approximately 50 MMcf/d of net compression capacity.
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Construction activities continued on two more greenfield compressor stations, which are expected to initially provide, in aggregate, an additional 85 MMcf/d of gas compression capacity when brought online in 2025, and are expandable to 140 MMcf/d, further enhancing gas capture capability and supporting increasing gas volumes.
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Equity Transactions During 2024, the Company, the Partnership and the Sponsors completed the following equity transactions: • On February 8, 2024, GIP sold an aggregate of 11,500,000 of our Class A Shares representing limited partner interests in the Company (“Class A Shares”), inclusive of the underwriter’s option to purchase up to 1,500,000 of additional shares, which was fully exercised, in an underwritten public offering at a price to the underwriter of $32.83 per Class A Share. • On May 31, 2024, GIP sold an aggregate of 10,000,000 of our Class A shares in an underwritten public offering at a price to the underwriter of $34.025 per Class A Share.
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GIP also granted the underwriter an option to purchase up to an additional 1,500,000 Class A shares at the same price per Class A share, which was exercised in full on June 3, 2024. • On September 20, 2024, GIP sold an aggregate of 12,650,000 of our Class A shares, inclusive of the underwriter’s option to purchase up to 1,650,000 of additional shares, which was fully exercised, in an underwritten public offering at a price to the underwriter of $35.12 per Class A Share. 52 Table of Contents In 2024, GIP received net proceeds from the offerings of approximately $1.2 billion after deducting underwriting discounts.
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The Company did not receive any proceeds in the offerings. • On March 14, 2024, the Partnership repurchased an aggregate 2,816,901 Class B Units representing limited partner interests in the Partnership (“Class B Units”) from the Sponsors at a purchase price of $35.50 per Class B Unit, for total consideration of approximately $100.0 million. • On June 26, 2024, the Partnership repurchased an aggregate 2,724,052 Class B Units from the Sponsors at a purchase price of $36.71 per Class B Unit, for total consideration of approximately $100.0 million. • On September 11, 2024, the Partnership repurchased an aggregate 2,823,262 Class B Units from the Sponsors at a purchase price of $35.42 per Class B Unit, for total consideration of approximately $100.0 million.
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The repurchase transactions were funded using borrowings under the Partnership’s existing revolving credit facility and cash on hand. See Item 8. Financial Statements and Supplementary Data. Note 3, Equity Transactions, Note 7, Debt and Interest Expense and Note 8, Partners’ Capital and Distributions.
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In addition, on January 15, 2025, the Partnership repurchased an aggregate 2,572,677 Class B Units from the Sponsors at a purchase price of $38.87 per Class B Unit, for total consideration of approximately $100.0 million.
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On February 12, 2025, GIP sold an aggregate of 11,000,000 of our Class A Shares in an underwritten public offering at a public offering price of $39.45 per Class A Share.
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GIP also granted the underwriter an option to purchase up to an additional 1,650,000 Class A Shares at the same price per Class A Share, which was exercised in full on February 19, 2025. See Item 8. Financial Statements and Supplementary Data. Note 14, Subsequent Events for additional details.
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At December 31, 2024: • the Company held a 47.7% controlling interest in the Partnership and the Sponsors held a 52.3% noncontrolling economic interest in the Partnership; • public limited partners held a 47.3% voting interest and a 99.1% economic interest in the Company, which represents an indirect 47.3% economic interest in the Partnership; • the Sponsors and their respective affiliates held a 52.7% voting interest and a 0.9% economic interest in the Company, which, taken with their direct limited partnership interest in the Partnership, represents an indirect 52.7% economic interest in the Partnership.
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See Organizational Structure. Business Strategies Our principal business objective is to grow our business and available cash supported by fee-based contracts and disciplined financial strategy. We expect to achieve this objective through the following business strategies: • Focus on Cash Flow Stability and Growth Supported by Long-Term, Fee-Based Contracts and a Disciplined Financial Strategy .
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We seek to grow our available cash to be able to fund our capital projects and provide consistent and ongoing return of capital to shareholders while maintaining balance sheet strength.
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Our commercial agreements include dedications covering substantially all of Hess’ 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 downside risk protection. • Capitalize on Hess’ Bakken Production Growth.
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Our midstream infrastructure footprint services Hess’ leading acreage position in the Bakken. We believe our volumes and investment opportunities will continue to expand as Hess drills new wells in the Bakken.
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We intend to invest additional capital to continue extending and expanding our strategically positioned infrastructure, including additional gas capture capabilities, to meet Hess’ current and future production growth and to reduce flaring from upstream production operations. • Leverage Core Asset Base to Attract Additional Third‑Party Business.
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We currently handle volumes from third‑party producers and midstream companies contracted directly with us and contracted with Hess and delivered to us under our commercial agreements with Hess.
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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. • Grow Through Accretive Acquisitions from Our Sponsors and Third Parties.
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We evaluate potential acquisitions of complementary midstream assets from our Sponsors as well as from third parties. 53 Table of Contents Climate Change and Energy Transition We are committed to building a sustainable enterprise that helps meet the world’s energy needs in a safe, environmentally responsible, socially sensitive and profitable way.
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As a growth-oriented provider of midstream services to Hess and other third-party crude oil and natural gas producers, we believe sustainable and responsible operations create value for the benefit of all of our stakeholders – our shareholders, our business partners, and the local communities and economies where we operate – which in turn benefits society at large.
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We are aligned with Hess’ environment, health, safety and social responsibility strategy.
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We play a critical role in progress toward shared goals and performance improvements, including Hess’ emissions reduction efforts, by providing the infrastructure to move oil, NGLs and natural gas to market and reduce wellhead flaring as well as through efforts to reduce our own greenhouse gas (“GHG”) emissions, which are included in Hess’ overall emissions footprint.
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Hess’ significant reductions in flaring in recent years, which have supported its overall GHG reduction efforts, have primarily been related to our focus on natural gas capture through increased availability and reliability at our compressor stations; expansion of gathering and processing infrastructure; and enhanced communication and coordination with third-party gatherers.
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We continue to execute capital projects to increase natural gas capture rates, which provide economic returns through the sale of the additional natural gas and NGLs captured and to reduce flaring in the Bakken region.
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Hess and Hess Midstream LP’s executives provide oversight for Hess’ climate change strategy implementation and work to identify and recommend GHG reduction opportunities, evaluating and implementing technologies, as appropriate, and evaluating future capital and infrastructure requirements. Segments Our assets and operations are organized into the following three reportable segments: (i) gathering, (ii) processing and storage and (iii) terminaling and export.
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Gathering Our gathering segment includes Hess North Dakota Pipeline Operations LP, or Gathering Opco, and Hess Water Services Holdings LLC, which own the following assets: • Natural Gas Gathering and Compression .
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A natural gas gathering and compression system located primarily in McKenzie, Williams and Mountrail Counties, North Dakota connecting Hess and third‑party owned or operated wells to the Tioga Gas Plant, Little Missouri 4 (“LM4”) gas processing plant and third‑party pipeline facilities. The system also includes the Hawkeye Gas Facility. • Crude Oil Gathering.
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A crude oil gathering system located primarily in McKenzie, Williams and Mountrail Counties, North Dakota, connecting Hess and third-party owned or operated wells to the Ramberg Terminal Facility, the Tioga Rail Terminal and the Johnson’s Corner Header System. The system also includes the Hawkeye Oil Facility. • Produced Water Gathering and Disposal .
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A produced water gathering system and disposal facilities located primarily in Williams and Mountrail counties, North Dakota. Processing and Storage Our processing and storage segment includes Hess TGP Operations LP, or HTGP Opco, and Hess Mentor Storage Holdings LLC, or Mentor Holdings, which own the following assets, respectively: • Tioga Gas Plant .
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A natural gas processing and fractionation plant located in Tioga, North Dakota. • Equity Investment in LM4 Joint Venture. A 50% equity method investment in LM4 joint venture that owns a natural gas processing plant located in McKenzie County, North Dakota, that was placed in service in the third quarter of 2019.
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Targa Resources Corp. is the operator of the plant. • Mentor Storage Terminal . A propane storage cavern and rail and truck loading and unloading facility located in Mentor, Minnesota.
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Terminaling and Export Our terminaling and export segment includes Hess North Dakota Export Logistics Operations LP, or Logistics Opco, which owns each of the following assets: • Ramberg Terminal Facility .
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A crude oil pipeline and truck receipt terminal located in Williams County, North Dakota that is capable of delivering crude oil into an interconnecting pipeline for transportation to the Tioga Rail Terminal, Dakota Access Pipeline (“DAPL”) and other third‑party pipelines and storage facilities. • Tioga Rail Terminal.
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A crude oil and NGL rail loading terminal in Tioga, North Dakota that is connected to the Tioga Gas Plant, the Ramberg Terminal Facility and our crude oil gathering system. 54 Table of Contents • Crude Oil Rail Cars.
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A total of 550 crude oil rail cars, constructed to DOT‑117 safety standards, which we operate as unit trains consisting of approximately 100 to 110 crude oil rail cars. • Johnson’s Corner Header System.
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An approximately six‑mile crude oil pipeline header system located in McKenzie County, North Dakota that receives crude oil by pipeline from Hess and third parties and delivers crude oil to DAPL and other third‑party interstate pipeline systems. • Other DAPL Connections .
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Various connections into DAPL that receive crude oil by pipeline from the crude oil gathering system for delivery into DAPL.
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Significant 2024 Financial and Operating Results Significant financial and operating results for the year ended December 31, 2024 include: • Throughput volumes increased 14% for gas processing, 7% for terminaling and 32% for water gathering in 2024 compared with 2023, primarily due to increased Hess drilling activity and higher gas capture. • Consolidated net income of $659.0 million. • Net income attributable to Hess Midstream LP after deduction for noncontrolling interest of $223.1 million, or $2.51 basic earnings per Class A Share. • Net cash provided by operating activities of $940.3 million. • Adjusted EBITDA of $1,136.1 million. • Paid cash distributions of $2.0039 per Class A share in total for the first three quarters of 2024 and declared a cash distribution of $0.7012 per Class A share for the fourth quarter of 2024, which was paid in February 2025. • Completed the repurchase of an aggregate of 8,364,215 Class B Units of the Partnership from the Sponsors for approximately $300 million.
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Revenues and other income in 2024 were $1,495.5 million compared with $1,348.6 million in 2023.
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Current year revenues and other income were up $146.9 million compared with the prior year, of which $143.3 million was attributable to higher physical volumes that were above prior-year MVC levels, $17.2 million was attributable to higher third-party revenues and other income and $14.9 million was attributable to higher affiliate pass-through revenues, partially offset by $28.5 million attributable to lower tariff rates.
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Total operating costs and expenses in 2024 were $576.5 million, up from $531.7 million in the prior year. The increase was attributable to higher operating and maintenance expenses of $34.3 million, including higher pass-through costs, higher costs charged to us under our omnibus and employee secondment agreements and higher third-party processing and offload fees.
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Additionally, part of the increase was attributable to higher depreciation of $10.6 million. Interest expense, net of interest income, increased $23.2 million, primarily attributable to the new $600.0 million 6.500% fixed-rate senior unsecured notes issued in May 2024.
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Income tax expense in 2024 was $71.8 million, up from $37.9 million in 2023, which was primarily driven by increased ownership of the Partnership by Hess Midstream LP following the equity offering and unit repurchase transactions in 2023 and 2024.
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As a result, consolidated net income increased $51.3 million and Adjusted EBITDA increased $119.0 million during the year ended December 31, 2024, compared with the year ended December 31, 2023. Throughput volumes increased 15% for gas gathering and 14% for gas processing in 2024 compared with 2023 primarily due to increased Hess drilling activity and higher gas capture.
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Throughput volumes increased 14% for crude oil gathering and 7% for crude oil terminaling in 2024 compared with 2023 primarily due to increased Hess drilling activity. Water gathering volumes increased 32%, reflecting higher crude oil production and increased utilization of our water gathering infrastructure.
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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.
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How We Generate Revenues 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; storing and terminaling propane; and gathering and disposing of produced water.
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We have entered into long-term, fee-based commercial agreements with Hess effective January 1, 2014, for oil and gas services agreements, and effective January 1, 2019, for water services agreements. 55 Table of Contents Except for the water services agreements and except for a certain gathering sub-system, as described below, each of our commercial agreements with Hess had an initial 10-year term.
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We exercised our renewal options to extend each of these commercial agreements for one additional 10-year 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.
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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.
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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.
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These agreements include dedications covering substantially all of Hess’ 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.
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In particular, Hess’ 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.
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Year 2023 was the final year of the annual rate redetermination process for the majority of our systems. During the Secondary Term of the agreements, the fee recalculation model is replaced by an inflation-based fee structure. See Item 8. Financial Statements and Supplementary Data. Note 4, Related Party Transactions for additional description of our commercial agreements.
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Our revenues also include revenues from (i) third-party volumes contracted directly with us, (ii) third-party volumes contracted with Hess and delivered to us under the commercial agreements with Hess 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.
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For the year ended December 31, 2024, our gas gathering and gas processing revenues comprised 77% of total affiliate revenues, excluding affiliate pass-through revenues. 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.
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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 .
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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 and disposal facilities.
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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.
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Although Hess has committed to minimum volumes under our commercial agreements described above, our results of operations will be impacted by our ability to: • utilize the remaining uncommitted capacity on, or add additional capacity to, our existing assets, and optimize our existing assets; • identify and execute expansion projects, and capture incremental throughput volumes from Hess and third parties for these expanded facilities; • increase throughput volumes at our Ramberg Terminal Facility, Tioga Rail Terminal and the Johnson’s Corner Header System by interconnecting with new or existing third‑party gathering pipelines; and • increase gas processing throughput volumes by interconnecting with new or existing third‑party gathering pipelines.
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Operating and Maintenance Expenses. Our management seeks to maximize the profitability of our operations by effectively managing operating and maintenance expenses.
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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.

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Item 7. Management's Discussion & Analysis

Management's Discussion & Analysis (MD&A) — revenue / margin commentary

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Biggest changeGrowth Drivers We intend to expand our business and have multiple potential alternatives to pursue, including capitalizing on organic growth from Hess and third parties in the Bakken and utilizing our existing capacity, as well as pursuing opportunities to add additional Hess and third‑party throughput volumes in the future.
Biggest changeGrowth Drivers We intend to expand our business and have multiple potential alternatives to pursue, including capitalizing on organic growth from Hess and third parties in the Bakken and utilizing our existing capacity, as well as pursuing opportunities to add additional Hess and third‑party throughput volumes in the future. 7 Table of Contents Organizational Structure The following chart summarizes our corporate structure at December 31, 2024. 8 Table of Contents Our Business and Properties Gathering Our gathering business consists of the Partnership’s 100% interest in (i) Hess North Dakota Pipelines Operations LP (“Gathering Opco”), which owns our North Dakota natural gas, NGL and crude oil gathering systems, and (ii) Hess Water Services, which owns our produced water gathering and disposal facilities.
The plant receives natural gas produced from Hess‑operated and third‑party operated wells in the Bakken through our North Dakota gathering systems as well as third‑party gathering systems. The TGP was initially constructed in 1954.
The plant receives natural gas produced from Hess‑operated and third‑party operated wells in the Bakken through our North Dakota gathering systems as well as third‑party gathering systems. TGP was initially constructed in 1954.
Since the September 11, 2001, terrorist attacks on the United States, the U.S. government has issued warnings that energy infrastructure assets may be future targets of terrorist organizations. These developments have subjected our operations to increased risks. Increased security measures taken by us as a precaution against possible terrorist attacks may have resulted in increased costs to our business.
Security Since the September 11, 2001, terrorist attacks on the United States, the U.S. government has issued warnings that energy infrastructure assets may be future targets of terrorist organizations. These developments have subjected our operations to increased risks. Increased security measures taken by us as a precaution against possible terrorist attacks may have resulted in increased costs to our business.
As a result, at Hess’ direction, we generally fill the cavern with propane during the warmer months when demand for propane is low, and gradually withdraw propane from the cavern during colder months when demand is higher. 10 Table of Contents The following table sets forth certain information regarding our processing and storage assets, which operate under long‑term, fee‑based commercial agreements with Hess: Processing and Storage Assets Asset Commodity Description Approximate Throughput Capacity Approximate Storage Capacity Third-Party and Affiliate Connections Tioga Gas Plant Natural gas Cryogenic 400 MMcf/d - Upstream : Natural gas gathering systems Downstream : Third-party long-haul pipelines NGLs Cryogenic & Fractionation 60 MBbl/d 80 MBbls (1) Downstream : Alliance Pipeline (propane); Vantage Pipeline (ethane); Tioga Rail Terminal; truck loading Y-Grade NGLs Stabilization 25 MBbl/d 80 MBbls (1) Downstream : ONEOK Elk Creek Pipeline CNG Compression 40 Mdge/d - Upstream : Tioga Gas Plant Downstream : Truck loading; light duty vehicles Little Missouri 4 Natural gas Cryogenic 100 MMcf/d (2) - Upstream : Natural gas gathering systems Downstream : Northern Border Pipeline NGLs Cryogenic 40 MBbl/d - Downstream : ONEOK Elk Creek Pipeline Mentor Storage Terminal Propane Storage; rail and truck loading and unloading 6 MBbl/d 330 MBbls (3) BNSF Railway; truck loading (1) Represents the total aggregate above-ground shell storage capacity of storage tanks at the Tioga Gas Plant.
As a result, at Hess’ direction, we generally fill the cavern with propane during the warmer months when demand for propane is low, and gradually withdraw propane from the cavern during colder months when demand is higher. 11 Table of Contents The following table sets forth certain information regarding our processing and storage assets, which operate under long‑term, fee‑based commercial agreements with Hess: Processing and Storage Assets Asset Commodity Description Approximate Throughput Capacity Approximate Storage Capacity Third-Party and Affiliate Connections Tioga Gas Plant Natural gas Cryogenic 400 MMcf/d - Upstream : Natural gas gathering systems Downstream : Third-party long-haul pipelines NGLs Cryogenic & Fractionation 60 MBbl/d 80 MBbls (1) Downstream : Alliance Pipeline (propane); Vantage Pipeline (ethane); Tioga Rail Terminal; truck loading Y-Grade NGLs Stabilization 25 MBbl/d 80 MBbls (1) Downstream : ONEOK Elk Creek Pipeline CNG Compression 40 Mdge/d - Upstream : Tioga Gas Plant Downstream : Truck loading; light duty vehicles Little Missouri 4 Natural gas Cryogenic 100 MMcf/d (2) - Upstream : Natural gas gathering systems Downstream : Northern Border Pipeline NGLs Cryogenic 40 MBbl/d - Downstream : ONEOK Elk Creek Pipeline Mentor Storage Terminal Propane Storage; rail and truck loading and unloading 6 MBbl/d 330 MBbls (3) BNSF Railway; truck loading (1) Represents the total aggregate above-ground shell storage capacity of storage tanks at the Tioga Gas Plant.
Other DAPL Connections In addition to the connections at the Ramberg Terminal Facility and the Johnson’s Corner Header System, we also have other DAPL connections, which are crude oil delivery points within our terminal system located in Williams and Mountrail Counties, North Dakota that receive crude oil by pipeline from our crude oil gathering system for delivery into DAPL. 12 Table of Contents The following table sets forth certain information regarding our terminaling and export assets, which operate under a long‑term, fee‑based commercial agreement with Hess: Terminaling and Export Assets Asset Commodity Description Approximate Throughput Capacity Approximate Storage Capacity Third-Party and Affiliate Connections Ramberg Terminal Facility Crude oil Truck unloading bays; pipeline connections 285 MBbl/d (1) 40 MBbls (2) Upstream: Crude oil gathering system Downstream : Tioga Rail Terminal connection; third-party long-haul pipelines Tioga Rail Terminal Crude oil NGLs Dual loop Ladder track 140 MBbl/d 30 MBbl/d 290 MBbls (3) Upstream : Crude oil gathering system; Tioga Gas Plant; Ramberg Terminal Facility Downstream : BNSF Railway Crude oil rail cars Crude oil Rail cars (4) 32 MBbl/d (5) - Johnson's Corner Header System Crude oil Pipeline connections 100 MBbl/d (6) - Upstream : Crude oil gathering system; third-party gathering systems Downstream : Third-party long-haul pipelines Other DAPL Connections Crude oil Pipeline connections 120 MBbl/d (7) - Upstream : Crude oil gathering systems; third-party gathering systems Downstream : Third-party long-haul pipeline (1) Represents the aggregate redelivery capacity of the Ramberg Terminal Facility.
Other DAPL Connections In addition to the connections at the Ramberg Terminal Facility and the Johnson’s Corner Header System, we also have other DAPL connections, which are crude oil delivery points within our terminal system located in Williams and Mountrail Counties, North Dakota that receive crude oil by pipeline from our crude oil gathering system for delivery into DAPL. 13 Table of Contents The following table sets forth certain information regarding our terminaling and export assets, which operate under a long‑term, fee‑based commercial agreement with Hess: Terminaling and Export Assets Asset Commodity Description Approximate Throughput Capacity Approximate Storage Capacity Third-Party and Affiliate Connections Ramberg Terminal Facility Crude oil Truck unloading bays; pipeline connections 285 MBbl/d (1) 40 MBbls (2) Upstream: Crude oil gathering system Downstream : Tioga Rail Terminal connection; third-party long-haul pipelines Tioga Rail Terminal Crude oil NGLs Dual loop Ladder track 140 MBbl/d 30 MBbl/d 290 MBbls (3) Upstream : Crude oil gathering system; Tioga Gas Plant; Ramberg Terminal Facility Downstream : BNSF Railway Crude oil rail cars Crude oil Rail cars (4) 32 MBbl/d (5) - Johnson’s Corner Header System Crude oil Pipeline connections 100 MBbl/d (6) - Upstream : Crude oil gathering system; third-party gathering systems Downstream : Third-party long-haul pipelines Other DAPL Connections Crude oil Pipeline connections 120 MBbl/d (7) - Upstream : Crude oil gathering systems; third-party gathering systems Downstream : Third-party long-haul pipeline (1) Represents the aggregate redelivery capacity of the Ramberg Terminal Facility.
Except for the crude oil terminaling and water handling services, Hess will be entitled to receive a credit, calculated in barrels or Mcf, as applicable, with respect to the amount of any shortfall fee paid by Hess and may apply such credit against any volumes delivered to us under the applicable agreement in excess of Hess’s nominated volumes during any of the following four quarters after such credit is earned, after which time any unused credits will expire.
Except for the crude oil terminaling and water handling services, Hess is entitled to receive a credit, calculated in barrels or Mcf, as applicable, with respect to the amount of any shortfall fee paid by Hess and may apply such credit against any volumes delivered to us under the applicable agreement in excess of Hess’s nominated volumes during any of the following four quarters after such credit is earned, after which time any unused credits will expire.
Each of our commercial agreements other than our storage services agreement includes an inflation escalator capped at 3% in any calendar year and a fee recalculation mechanism that allows fees to be adjusted annually during the Initial Term for updated estimates of cumulative throughput volumes and our capital and operating expenditures in order to target a return on capital deployed over the Initial Term of the applicable commercial agreement (or, with respect to the crude oil services fee under our terminal and export services agreement, the 20-year period commencing on the effective date of the agreement). 13 Table of Contents For certain crude oil gathering, terminaling, storage, gas processing and gas gathering commercial agreements with Hess, we exercised our renewal options to extend each of these commercial agreement for one additional 10-year term (“Secondary Term”) effective January 1, 2024, through December 31, 2033.
Each of our commercial agreements other than our storage services agreement includes an inflation escalator capped at 3% in any calendar year and a fee recalculation mechanism that allows fees to be adjusted annually during the Initial Term for updated estimates of cumulative throughput volumes and our capital and operating expenditures in order to target a return on capital deployed over the Initial Term of the applicable commercial agreement (or, with respect to the crude oil services fee under our terminal and export services agreement, the 20-year period commencing on the effective date of the agreement). 14 Table of Contents For certain crude oil gathering, terminaling, storage, gas processing and gas gathering commercial agreements with Hess, we exercised our renewal options to extend each of these commercial agreement for one additional 10-year term (“Secondary Term”) effective January 1, 2024, through December 31, 2033.
Additionally, a release of hydrocarbons or hazardous substances into the environment could, to the extent the event is not insured, subject us to substantial expenses, including costs to clean-up and remediate the release, comply with applicable laws and regulations and to resolve claims by third parties for personal injury or property damage, or by the U.S. federal government or state governments for natural resources damages.
Furthermore, a release of hydrocarbons or hazardous substances into the environment could, to the extent the event is not insured, subject us to substantial expenses, including costs to clean up and remediate the release, comply with applicable laws and regulations and to resolve claims by third parties for personal injury or property damage, or by the U.S. federal government or state governments for natural resources damages.
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 protection through 2033.
For our terminaling and water gathering systems, the rates continue to be reset through our annual rate redetermination process through 2033. For all of our systems, MVCs continue to provide downside protection through 2033.
The facility has a combined shell storage capacity of approximately 40 MBbls, with an additional combined 240 MBbls of storage capacity with third parties. 11 Table of Contents Tioga Rail Terminal The Tioga Rail Terminal is a 140 MBbl/d crude oil and 30 MBbl/d NGL rail loading terminal in Tioga, North Dakota that is connected to the Tioga Gas Plant, the Ramberg Terminal Facility and our crude oil gathering system.
The facility has a combined shell storage capacity of approximately 40 MBbls, with an additional combined 240 MBbls of storage capacity with third parties. 12 Table of Contents Tioga Rail Terminal The Tioga Rail Terminal is a 140 MBbl/d crude oil and 30 MBbl/d NGL rail loading terminal in Tioga, North Dakota that is connected to the Tioga Gas Plant, the Ramberg Terminal Facility and our crude oil gathering system.
Similar protections are offered to migratory birds under the Migratory Bird Treaty Act, and to bald and golden eagles under the Bald and Golden Eagle Protection Act. While some of our facilities are in areas that may be designated as habitat for endangered species, we have not incurred any material costs to comply or restrictions on our operations.
Similar protections are offered to migratory birds under the Migratory Bird Treaty Act, and to bald and golden eagles under the Bald and Golden Eagle Protection Act. While some of our facilities are in areas that may be designated as habitat for protected species, we have not incurred any material costs to comply or restrictions on our operations.
During the Secondary Term, MVCs will continue to be set at 80% of Hess’ nominated volumes in each development plan set three years in advance.
During the Secondary Term, MVCs continue to be set at 80% of Hess’ nominated volumes in each development plan set three years in advance.
The shortfall amounts received under MVCs during the Secondary Term (except for the crude oil terminaling and water handling services) will be recorded as deferred revenue and recognized as revenue as the credits are utilized or expire. Year 2023 was the final year of the annual rate redetermination process for the majority of our systems.
The shortfall amounts received under MVCs during the Secondary Term (except for the crude oil terminaling and water handling services) are recorded as deferred revenue and recognized as revenue as the credits are utilized or expire. Year 2023 was the final year of the annual rate redetermination process for the majority of our systems.
Our crude oil rail cars have been constructed to DOT‑117 standards. (5) For the year ended December 31, 2023, the average round‑trip duration was approximately 11 days and, based on this, the aggregate working capacity of our crude oil rail cars was approximately 32 Mbbl/d.
Our crude oil rail cars have been constructed to DOT‑117 standards. (5) For the year ended December 31, 2024, the average round‑trip duration was approximately 11 days and, based on this, the aggregate working capacity of our crude oil rail cars was approximately 32 MBbl/d.
In August 2022, PHMSA published another final rule (the third and final part of the Mega Rule) expanding the Management of Change process, extending corrosion control requirements for gas transmission pipelines, adding requirements that operators ensure no conditions exist following an extreme weather event that could adversely affect the safe operation of the pipeline, and adopting repair criteria for non-HCAs similar to those applicable to HCAs.
In August 2022, PHMSA issued the third and final part of the Mega Rule expanding the Management of Change process, extending corrosion control requirements for gas transmission pipelines, adding requirements that operators ensure no conditions exist following an extreme weather event that could adversely affect the safe operation of the pipeline, and adopting repair criteria for non-HCAs similar to those applicable to HCAs.
For the year ended December 31, 2023, the average round‑trip duration was approximately 11 days and, based on this, the aggregate working capacity of our crude oil rail cars was approximately 32 MBbl/d.
For the year ended December 31, 2024, the average round‑trip duration was approximately 11 days and, based on this, the aggregate working capacity of our crude oil rail cars was approximately 32 MBbl/d.
See “Risk Factors—Regulatory, Legal and Environmental Risks—Developments related to climate change including evolving laws and regulations could adversely affect us and our financial performance.” Further, the EPA has new and proposed regulations under the Clean Air Act addressing greenhouse gases, to which some of our 15 Table of Contents facilities may become subject.
See “Risk Factors—Regulatory, Legal and Environmental Risks—Developments related to climate change including evolving laws and regulations could adversely affect us and our financial performance.” Further, the EPA has new and proposed regulations under the Clean Air Act addressing greenhouse gases, to which some of our facilities may become subject.
We also file with the New York Stock Exchange (the “NYSE”) an annual certification that our Chief Executive Officer is unaware of any violation of the NYSE’s corporate governance standards. 20 Table of Contents
We also file with the New York Stock Exchange (the “NYSE”) an annual certification that our Chief Executive Officer is unaware of any violation of the NYSE’s corporate governance standards. 23 Table of Contents
In November 2021, PHMSA issued a final rule (the second part of the Mega Rule) that expands certain federal pipeline safety requirements to all onshore gas gathering pipelines, regardless of size or location.
In November 2021, PHMSA issued the second part of the Mega Rule that expands certain federal pipeline safety requirements to all onshore gas gathering pipelines, regardless of size or location.
Additionally, California recently enacted three climate-related disclosure laws, the Climate Corporate Data Accountability Act, Climate Related Financial Risk Act and Voluntary Carbon Market Disclosures Act, which together will require certain entities doing business in California or taking certain actions in California to report and attain third-party assurance of greenhouse gas emissions information, reporting on climate-related financial risks and reporting regarding the use of voluntary carbon offsets and/or carbon reduction claims.
Additionally, California recently enacted three climate-related disclosure laws, the Climate Corporate Data Accountability Act (“SB 253”), Climate Related Financial Risk Act (“SB 261”) and Voluntary Carbon Market Disclosures Act (“AB 13015”), which together will require certain entities doing business in California or taking certain actions in California to report and attain third-party assurance of greenhouse gas emissions information, reporting on climate-related financial risks and reporting regarding the use of voluntary carbon offsets and/or carbon reduction claims.
There is also increasing interest in nature-related matters beyond protected species, such as general biodiversity, which may similarly require us or our customers to incur costs or take other measures which may adversely impact our and our customers’ business or operations. 17 Table of Contents Other Regulation Rail Regulation We believe all of our rail cars in crude oil service meet the current U.S.
There is also increasing interest in nature-related matters beyond protected species, such as general biodiversity, which may similarly require us or our customers to incur costs or take other measures which may adversely impact our and our customers’ business or operations. 19 Table of Contents Other Regulation Rail Regulation We work to ensure all of our rail cars in crude oil service meet the current U.S.
Rules and regulations have been proposed, amended and challenged, including rules and regulations governing methane emissions from oil and natural gas production and natural gas processing and transmission facilities.
Such rules and regulations have been proposed, amended and challenged, and finalized, including rules and regulations governing methane emissions from oil and natural gas production and natural gas processing and transmission facilities.
The initial fee for the first year of the Secondary Term will be determined based on the average fees paid by Hess under the applicable agreement during the last three years of the Initial Term (with such fees adjusted for inflation through the first year of the Secondary Term).
The initial fee for the first year of the Secondary Term is determined based on the average fees paid by Hess under the applicable agreement during the last three years of the Initial Term (with such fees adjusted for inflation through the first year of the Secondary Term).
However, the classification and regulation of our gathering facilities may be subject to change based on future determinations or policy changes by FERC, the courts, or Congress.
In addition, the classification and regulation of our facilities may be subject to change based on future determinations or policy changes by FERC, the courts, or Congress.
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), the fee recalculation model under each applicable agreement will be replaced by an inflation-based fee structure.
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), the fee recalculation model under each applicable agreement is replaced by an inflation-based fee structure.
We also believe that we have satisfactory title to all of our assets. 19 Table of Contents Other Items Competition As a result of our contractual relationship with Hess under our commercial agreements and our direct connections to Hess’ production operations in the Williston Basin, we believe that we will not face significant competition from other midstream service providers for Hess’ crude oil, natural gas or NGL gathering, processing or terminaling services or for other midstream services relating to Hess’ production operations in the Bakken.
Other Items Competition As a result of our contractual relationship with Hess under our commercial agreements and our direct connections to Hess’ production operations in the Williston Basin, we believe that we will not face significant competition from other midstream service providers for Hess’ crude oil, natural gas or NGL gathering, processing or terminaling services or for other midstream services relating to Hess’ production operations in the Bakken.
Although we have utilized operating and disposal practices that we believe were standard in the industry at the time, hydrocarbons or other waste may have been disposed of or released on or under the properties owned or leased by us or on or under other locations where these wastes have been taken for disposal.
Although we have aimed to utilize operating and disposal practices that we believe were standard in the 18 Table of Contents industry at the time, hydrocarbons or other waste may have been disposed of or released on or under the properties owned or leased by us or on or under other locations where these wastes have been taken for disposal.
Website Access to Our Reports We make available free of charge through our website, at www.hessmidstream.com , our annual reports on Form 10‑K, quarterly reports on Form 10‑Q, current reports on Form 8‑K and amendments to those reports filed or furnished pursuant to Section 13(a) or 15(d) of the Securities Exchange Act of 1934, as amended (the “Exchange Act”), as soon as reasonably practicable after such material is electronically filed with or furnished to the SEC.
Office The principal office of our Company is located at 1501 McKinney Street, Houston, Texas 77010. 22 Table of Contents Website Access to Our Reports We make available free of charge through our website, at www.hessmidstream.com , our annual reports on Form 10‑K, quarterly reports on Form 10‑Q, current reports on Form 8‑K and amendments to those reports filed or furnished pursuant to Section 13(a) or 15(d) of the Securities Exchange Act of 1934, as amended (the “Exchange Act”), as soon as reasonably practicable after such material is electronically filed with or furnished to the SEC.
In December 2023, the EPA issued a final rule to establish comprehensive standards of performance and emission guidelines for methane and volatile organic compound emissions from existing operations in the oil and gas sector, including the exploration and production, transmission, processing, and storage segments.
In March 2024, the EPA published a final rule in the Federal Register to establish comprehensive standards of performance and emission guidelines for methane and volatile organic compound emissions from new and existing operations in the oil and gas sector, including the exploration and production, transmission, processing, and storage segments.
The facility receives crude oil through pipeline and truck deliveries from Hess and third parties and transports it by pipeline to the Johnson’s Corner Header System.
The Hawkeye Oil Facility entered into service in 2017. The facility receives crude oil through pipeline and truck deliveries from Hess and third parties and transports it by pipeline to the Johnson’s Corner Header System.
The facility has a redelivery capability of approximately 75 MBbl/d through a pipeline system connected to Hess Midstream's crude oil export terminals. The facility also has two crude oil storage tanks with a combined working storage capacity of approximately 10 MBbls.
The facility has a redelivery capability of approximately 75 MBbl/d through a pipeline system connected to Hess Midstream’s crude oil export terminals. The facility also has two crude oil storage tanks with a combined working storage capacity of approximately 10 MBbls. Our gathering system capacity can be increased through the installation of additional pumping equipment.
The United States is one of almost 200 nations that, in December 2015, agreed to the Paris Agreement, an international climate change agreement reached in Paris, France that calls for countries to set their own emissions targets and be transparent about the measures each country will take to achieve its emissions targets through the establishment of nationally-determined emissions reduction goals.
The United States was one of almost 200 nations that, in December 2015 at the 21 st Conference of the Parties on the UN Framework Convention on Climate Change (“COP21”), agreed to the Paris Agreement, an international climate change agreement reached in Paris, France that calls for countries to set their own emissions targets and be transparent about the measures each country will take to achieve its emissions targets through the establishment of nationally determined greenhouse gas emissions reduction goals.
If it is subsequently determined that an individual facility is not exempt from FERC regulation under the NGA, such determination could decrease revenue, increase operating costs, and, depending upon the facility in question, adversely affect our results of operations and cash flows.
If it is subsequently determined that an individual facility is not exempt from FERC regulation under the NGA, NGPA, or ICA, or subject to additional regulation under those statutes with the elimination of the existing waivers, such a determination could decrease revenue, increase operating costs, and, depending upon the facility in question, adversely affect our results of operations and cash flows.
The following table sets forth additional information regarding Hess’ MVCs: Hess Minimum Volume Commitment (1) Agreement 2024 2025 2026 Gas Gathering Agreement - MMcf/d of gas 365 380 412 Crude Oil Gathering Agreement - MBbl/d of crude oil 101 100 105 Gas Processing and Fractionation Agreement - MMcf/d of gas 340 364 396 Terminaling and Export Services Agreement (2) - MBbl/d of crude oil 114 111 117 Water Services Agreement (3) - MBbl/d of water 92 99 101 (1) Under each of our commercial agreements other than our storage services agreement, Hess is obligated to provide minimum volumes of crude oil, natural gas, NGLs and produced water, as applicable, to our assets on a quarterly basis and such volumes are reflected in the table above as annual averages of each year’s quarterly MVCs.
The following table sets forth additional information regarding Hess’ MVCs: Hess Minimum Volume Commitment (1) Agreement 2025 2026 2027 Gas Gathering Agreement - MMcf/d of gas 382 418 418 (4) Crude Oil Gathering Agreement - MBbl/d of crude oil 103 110 112 Gas Processing and Fractionation Agreement - MMcf/d of gas 364 396 404 (4) Terminaling and Export Services Agreement (2) - MBbl/d of crude oil 111 118 124 Water Services Agreement (3) - MBbl/d of water 104 102 98 (1) Under each of our commercial agreements other than our storage services agreement, Hess is obligated to provide minimum volumes of crude oil, natural gas, NGLs and produced water, as applicable, to our assets on a quarterly basis and such volumes are reflected in the table above as annual averages of each year’s quarterly MVCs.
For example, the SEC issued a proposed rule in March 2022 that would mandate extensive disclosure of climate-related data, risks, and opportunities, including financial impacts, physical and transition risks, related governance and strategy, and greenhouse gas emissions, for certain public companies.
For example, the SEC adopted a final rule in March 2024 that would mandate extensive disclosure of climate-related data, risks, and opportunities, including financial impacts, physical and transition risks, related governance and strategy, and greenhouse gas emissions, for certain public companies; the rule is currently stayed pending litigation challenges.
Our internal review of our assets and operations revealed small pipelines or sections of facilities that may be subject to PHMSA regulation. PHMSA may initiate proceedings with respect to any non-compliance at a future date.
Our internal review of our assets and operations revealed small pipelines or sections of facilities that may be subject to PHMSA regulation. PHMSA may initiate proceedings with respect to any non-compliance at a future date. Nevertheless, we do not expect these developments to have a material effect on our operations or revenues.
The following table sets forth certain information regarding our gathering assets, which operate under long‑term, fee‑based commercial agreements with Hess: Gathering Assets Asset Commodity Description Approximate Miles of Pipelines Approximate Throughput Capacity Third-Party and Affiliate Connections Natural gas gathering pipelines Natural gas NGLs Natural gas and NGL gathering 1,410 miles 660 MMcf/d Upstream : Hess and third-party wells Downstream : Tioga Gas Plant; LM4 plant; third-party facilities Natural gas compression Natural gas NGLs Gas compression; NGL extraction - 480 MMcf/d Crude oil gathering pipelines Crude oil Crude oil gathering 570 miles 290 MBbl/d (1) Upstream : Hess and third-party wells Downstream : Ramberg Terminal Facility; Tioga Rail Terminal; Johnson's Corner Header System Hawkeye Oil Facility Crude oil Pump station; truck unloading - 75 MBbl/d Water gathering pipelines Water Produced water gathering 300 miles 250 MBbl/d Upstream : Hess and third-party wells Downstream : Hess and third-party water disposal facilities Water disposal facilities Water Produced water disposal - 170 MBbl/d (1) Includes 75 MBbl/d of capacity at the Hawkeye Oil Facility.
We also transport produced water to 13 water handling and disposal facilities operated by third parties that have a combined permitted disposal capacity of approximately 180 MBbl/d. 9 Table of Contents The following table sets forth certain information regarding our gathering assets, which operate under long‑term, fee‑based commercial agreements with Hess: Gathering Assets Asset Commodity Description Approximate Miles of Pipelines Approximate Throughput Capacity Third-Party and Affiliate Connections Natural gas gathering pipelines Natural gas NGLs Natural gas and NGL gathering 1,415 miles 675 MMcf/d Upstream : Hess and third-party wells Downstream : Tioga Gas Plant; LM4 plant; third-party facilities Natural gas compression Natural gas NGLs Gas compression; NGL extraction - 530 MMcf/d Crude oil gathering pipelines Crude oil Crude oil gathering 590 miles 290 MBbl/d (1) Upstream : Hess and third-party wells Downstream : Ramberg Terminal Facility; Tioga Rail Terminal; Johnson’s Corner Header System Hawkeye Oil Facility Crude oil Pump station; truck unloading - 75 MBbl/d Water gathering pipelines Water Produced water gathering 330 miles 265 MBbl/d Upstream : Hess and third-party wells Downstream : Hess and third-party water disposal facilities Water disposal facilities Water Produced water disposal - 180 MBbl/d (1) Includes 75 MBbl/d of capacity at the Hawkeye Oil Facility.
We and Hess have implemented a cybersecurity risk management program (see Item 1C. Cybersecurity ). While we continually seek to improve our cybersecurity risk management program, we cannot guarantee it will be fully implemented, complied with or effective. A significant cyber‑attack could have a material adverse effect on our operations and those of our customers.
We and Hess have implemented a cybersecurity risk management program (see Item 1C. Cybersecurity ). While we continually seek to improve our cybersecurity risk management program, we cannot guarantee it will be fully implemented, complied with or effective.
We believe we have satisfactory permits and/or title to all our rights-of-way.
We work to maintain satisfactory permits and/or title to all our rights-of-way and satisfactory title to all of our assets.
In October 2019, PHMSA published three major rules focused on: the safety of gas transmission pipelines (the first of three parts of the Mega Rule), the safety of hazardous liquid pipelines, and enhanced emergency order procedures.
In October 2019, PHMSA started the rulemaking process for the three part Mega Rule, which focused on: the safety of gas transmission pipelines (the first part of the Mega Rule), the safety of hazardous liquid pipelines, and enhanced emergency order procedures.
Our gathering system capacity can be increased through the installation of additional pumping equipment. 8 Table of Contents Produced Water Gathering and Disposal A produced water gathering system located primarily in Williams and Mountrail counties, North Dakota that transports produced water from well sites by approximately 300 miles of pipelines in gathering systems or by third-party trucking to water handling facilities for disposal.
Produced Water Gathering and Disposal A produced water gathering system located primarily in Williams and Mountrail counties, North Dakota that transports produced water from well sites by approximately 330 miles of pipelines in gathering systems or by third-party trucking to water handling facilities for disposal.
Legislation similar to California’s Climate Corporate Data Accountability Act is also under consideration in other states. Additionally, our customers or other business partners may require additional climate-related information from us if they are also subject to these or additional climate-related disclosure laws or regulations.
Additionally, our customers or other business partners may require additional climate-related information from us if they are also subject to these or additional climate-related disclosure laws or regulations.
Our inspections sometimes include the use of internal line inspection tools that provide information on the physical condition of our pipelines. State regulations and our commercial agreements with Hess contain product quality specification limits.
We inspect our pipelines to determine their condition and use the inspection information to evaluate appropriate preventative maintenance activities to validate line integrity and safety. Our inspections include the use of internal line inspection tools that provide information on the physical condition of our pipelines. State regulations and our commercial agreements with Hess contain product quality specification limits.
Title to Properties and Permits Certain of the pipelines connecting our facilities are constructed on rights‑of‑way granted by the apparent record owners of the property and in some instances these rights‑of‑way are revocable at the election of the grantor.
A significant cyber‑attack could have a material adverse effect on our operations and those of our customers. 21 Table of Contents Title to Properties and Permits Certain of the pipelines connecting our facilities are constructed on rights‑of‑way granted by the apparent record owners of the property and in some instances these rights‑of‑way are revocable at the election of the grantor.
We cannot provide any assurance that the costs and liabilities associated with the future imposition of such remedial or regulatory compliance obligations upon us would not have a material adverse effect on our operations or financial position. 16 Table of Contents RCRA.
Other emerging contaminants could also become subject to regulation under CERCLA, TSCA or comparable state laws. We cannot provide any assurance that the costs and liabilities associated with the future imposition of such remedial or regulatory compliance obligations upon us would not have a material adverse effect on our operations or financial position. RCRA.
As of December 31, 2023, Hess Midstream GP LLC and its affiliates had approximately 211 full‑time employee equivalents supporting our operations, including employees in the field performing services and support staff from other offices. Office The principal office of our Company is located at 1501 McKinney Street, Houston, Texas 77010.
As of December 31, 2024, Hess Midstream GP LLC and its affiliates had approximately 220 full‑time employee equivalents supporting our operations, including employees in the field performing services and support staff from other offices.
The plant also includes four NGL truck loading racks with an aggregate loading capacity of approximately 10 MBbl/d of propane to serve the local propane market, as well as 14 NGL bullet storage tanks and 5 NGL storage tanks with a combined shell capacity of approximately 35 MBbls of propane, 10 MBbls of butane and 35 MBbls of natural gasoline.
Y-grade liquids are shipped on the Elk Creek Pipeline from the ONEOK NGL lateral to Bushton, KS with access to Mont Belvieu, TX. 10 Table of Contents The plant also includes four NGL truck loading racks with an aggregate loading capacity of approximately 10 MBbl/d of propane to serve the local propane market, as well as 14 NGL bullet storage tanks and 5 NGL storage tanks with a combined shell capacity of approximately 35 MBbls of propane, 10 MBbls of butane and 35 MBbls of natural gasoline.
The transportation and storage of crude oil and other hydrocarbon products involve a risk that hazardous liquids may be released into the environment, potentially causing harm to the public or the environment.
Generally, rail operations are subject to federal regulations and the Association of American Railroad rules. 20 Table of Contents The transportation and storage of crude oil and other hydrocarbon products involve a risk that hazardous liquids may be released into the environment, potentially causing harm to the public or the environment.
Hess has been required in the past, and may be required in the future, to incur significant capital expenditures to comply with new legislative and regulatory requirements relating to its operations. To the extent these capital expenditures have a material effect on Hess, they could have a material effect on our business and results of operations.
Hess has been required in the past, and may be required in the future, to incur significant capital expenditures to comply with new legislative and regulatory requirements relating to its operations.
Legislative and regulatory measures to address greenhouse gas emissions (including carbon dioxide, methane and other gases) are in various phases of discussion or implementation, and some regulatory bodies have proposed or passed climate-related laws, rules and/or regulations.
To the extent these capital expenditures have a material effect on Hess, they could have a material effect on our business and results of operations. 16 Table of Contents Legislative and regulatory measures to address greenhouse gas emissions (including carbon dioxide, methane and other gases) are in various phases of discussion or implementation, and some regulatory bodies have proposed or passed climate-related laws, rules and/or regulations.
In addition, if any of our facilities were found to have violated the NGA or the Natural Gas Policy Act (“NGPA”), FERC has civil penalty authority under the NGA and NGPA to impose penalties for current violations of up to $1,496,035 per violation per day and disgorgement of profits associated with any violation.
In addition, if we or any of our facilities were found to have violated the NGA or the NGPA, FERC has civil penalty authority to impose penalties for such violations of up to $1,584,648 per violation per day for 2025 (with annual inflation adjustments going forward), as well as disgorgement of profits associated with any violation.
This program requires the EPA to impose a “waste emissions charge” on certain natural gas and oil sources that are already required to report under EPA’s Greenhouse Gas Reporting Program. In January 2024, the EPA released its proposed rule to implement the methane waste emissions charge with a proposed effective date in 2025 for reporting year 2024 emissions.
This program requires the EPA to impose a “waste emissions charge” on certain natural gas and oil sources that are already required to report under EPA’s Greenhouse Gas Reporting Program. In November 2024, the EPA finalized a rule to implement Congress’ directive in the IRA to impose a fee on excess methane emissions from the oil and gas sector.
This gathering system consists of approximately 1,410 miles of high and low pressure natural gas and NGL gathering pipelines with a current capacity of up to approximately 660 MMcf/d.
This gathering system consists of approximately 1,415 miles of high and low pressure natural gas and NGL gathering pipelines with a current capacity of up to approximately 675 MMcf/d. The system has an aggregate compression capacity of approximately 530 MMcf/d, including approximately 50 MMcf/d of net compression capacity added in 2024.
These water handling and disposal facilities are owned and operated by Hess Water Services and primarily service the water pipeline gathering systems. We also transport produced water to 13 water handling and disposal facilities operated by third parties that have a combined permitted disposal capacity of approximately 180 MBbl/d.
As of December 31, 2024, we had 12 water handling and disposal facilities in service, with a combined permitted disposal capacity of 180 MBbl/d. These water handling and disposal facilities are owned and operated by Hess Water Services and primarily service the water pipeline gathering systems.
It subsequently underwent a large‑scale expansion, refurbishment and optimization project that was completed in 2014, during which a new cryogenic processing train with a nameplate processing capacity of 250 MMcf/d was installed.
It subsequently underwent a large‑scale expansion, refurbishment and optimization project that was completed in 2014, during which a new cryogenic processing train with a nameplate processing capacity of 250 MMcf/d was installed. In 2021, the TGP de-bottlenecking project was completed and commissioned, increasing total plant processing to 400 MMcf/d and adding y-grade liquids recovery of up to approximately 25 MBbl/d.
Relatedly, at COP26, the United States and European Union jointly announced the launch of the “Global Methane Pledge,” which aims to cut global methane pollution at least 30% by 2030 relative to 2020 levels, including “all feasible reductions” in the energy sector. Since its formal launch at COP26, over 150 countries have joined the pledge.
In November 2021, at the 26th Conference of the Parties on the UN Framework Convention on Climate Change (“COP26”) in Glasgow, the United States and European Union jointly announced the launch of the “Global Methane Pledge,” which aims to cut global methane emissions at least 30% by 2030 relative to 2020 levels, including “all feasible reductions” in the energy sector.
Similarly, we believe that the crude oil and NGL pipelines in our gathering system are not subject to FERC tariff requirements under the Interstate Commerce Act (“ICA”), because they fall outside FERC’s tariff jurisdiction.
In that same order, FERC also confirmed the non-jurisdictional status of the Tioga Gas Plant and our gathering system upstream of the plant. We believe that the crude oil and NGL pipelines in our gathering system similarly are not subject to FERC jurisdiction under the Interstate Commerce Act (“ICA”), because they do not provide transportation in interstate commerce.
Included within our crude oil gathering system is our Hawkeye Oil Facility, which is a crude oil pumping and truck unloading facility located in McKenzie County, North Dakota. The Hawkeye Oil Facility entered into service in 2017.
The crude oil gathering system consists of approximately 590 miles of crude oil gathering pipelines with a current capacity of up to approximately 290 MBbl/d. Included within our crude oil gathering system is our Hawkeye Oil Facility, which is a crude oil pumping and truck unloading facility located in McKenzie County, North Dakota.
Additionally, it is possible that emerging contaminants, like per- and polyfluoroalkyl substances such as PFAS and PFOA compounds, could become subject to CERCLA regulation in addition to existing federal and state chemicals regulation, such as those under the Toxic Substances Control Act or comparable state laws.
Additionally, emerging contaminants, like per- and polyfluoroalkyl substances (“PFAS”) such as perfluorooctanesulfonic acid (“PFOS”) and perfluorooctanoic acid (“PFOA”) compounds, have become subject to CERCLA regulation in addition to existing federal and state chemicals regulation, and PFAS has recently been regulated under the Toxic Substances Control Act (“TSCA”).
State regulation of gathering facilities and intrastate transportation pipelines generally includes various safety, environmental and, in some circumstances, nondiscriminatory take and common purchaser requirements, as well as complaint‑based rate regulation. Other state regulations may not directly apply to our business, but may nonetheless affect the availability of natural gas, crude oil and NGLs for purchase, compression and sale.
In addition to FERC-regulation of interstate transportation, state regulation of gathering facilities and intrastate transportation pipelines generally includes various safety, environmental and, in some circumstances, nondiscriminatory take and common purchaser requirements, as well as complaint‑based rate regulation.
For the year ended December 31, 2023, substantially all of our revenues were attributable to our fee‑based commercial agreements with Hess, including revenues from third‑party volumes delivered under these agreements. Our gas gathering and gas processing revenues comprised approximately 75% of total affiliate revenues, excluding passthrough revenues.
(4) Includes the impact of planned regulatory inspections and maintenance at the Tioga Gas Plant of approximately 10 MMcf/d. For the year ended December 31, 2024, 98% of our revenues were attributable to our fee‑based commercial agreements with Hess, including revenues from third‑party volumes delivered under these agreements.
Other fractionated products such as propane, butane and natural gasoline can be shipped via truck or rail to local and regional markets. Y-grade liquids are shipped on the Elk Creek Pipeline from the ONEOK NGL lateral to Bushton, KS with access to Mont Belvieu, TX.
Other fractionated products such as propane, butane and natural gasoline can be shipped via truck or rail to local and regional markets.
Safety and Maintenance Our terminal operations, including associated pipelines, are subject to strict safety laws and regulations, including regulations under OSHA and comparable state and local regulations. We believe our terminal facilities are operated in a manner consistent with industry safe practices and standards and have fire protection in compliance with local, state and federal regulations.
We believe our terminal facilities are operated in a manner consistent with industry safe practices and standards and have fire protection in compliance with local, state and federal regulations. The tanks designed for crude oil storage at our terminals are equipped with appropriate controls that minimize emissions and promote safety.
During the year ended December 31, 2023, we began providing our services directly to third-party customers and we plan to increase our services to third parties in the future. 14 Table of Contents Regulation of Our Operations Environmental Regulation General Our operations are subject to extensive and frequently‑changing federal, state and local laws, regulations and ordinances relating to the protection of the environment.
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. 15 Table of Contents Regulation of Our Operations Environmental Regulation General Our operations are subject to extensive and frequently‑changing federal, state and local laws, regulations and ordinances relating to the protection of the environment.
Although FERC has not made any formal determinations with respect to our natural gas gathering facilities upstream of the Tioga Gas Plant, we believe that the natural gas pipelines in our gathering systems meet the traditional tests FERC has used to establish whether a pipeline is not subject to tariff requirements under the NGA.
Our natural gas facilities upstream of the Tioga Gas Plant (and upstream of the LM4 processing plant) meet the traditional tests FERC has used to establish whether a pipeline qualifies as “gathering” that is exempt from its jurisdiction under the NGA.
Congress periodically considers legislation on greenhouse gas emissions, although the ultimate adoption and form of any federal legislation cannot presently be predicted. In addition to recent and potential domestic regulation of greenhouse gases, there continues to be international interest in a global framework for greenhouse gas reductions.
Twenty-three states have filed a lawsuit challenging the rule, and the change in U.S. presidential administration provides additional uncertainty as to the rule’s future. Congress periodically considers legislation on greenhouse gas emissions, although the ultimate adoption and form of any federal legislation cannot presently be predicted.
Pipeline Regulation Section 1(b) of the Natural Gas Act (“NGA”) exempts natural gas gathering facilities from regulation by the Federal Energy Regulatory Commission (“FERC”).
While most of our facilities and operations are not subject to FERC jurisdiction, recent developments have increased the extent of FERC regulation of certain of them. Section 1(b) of the Natural Gas Act (“NGA”) exempts natural gas gathering facilities from regulation by FERC.
Removed
Our Business and Properties Gathering Our gathering business consists of the Partnership’s 100% interest in (i) Hess North Dakota Pipelines Operations LP (“Gathering Opco”), which owns our North Dakota natural gas, NGL and crude oil gathering systems, and (ii) Hess Water Services, which owns our produced water gathering and disposal facilities.
Added
TGP has a multitude of residue gas and NGL export options.
Removed
The system has an aggregate compression capacity of approximately 480 MMcf/d, including approximately 70 MMcf/d of compression capacity added in 2023 by constructing one new greenfield compressor station and expanding an existing compressor station.
Added
Our gas gathering and gas processing revenues comprised 77% of total affiliate revenues, excluding affiliate pass-through revenues. In 2023, we began providing our services directly to third-party customers.
Removed
Construction was also completed on an additional greenfield compressor station that, once put into operation in early 2024, will further increase compression capacity by approximately 30 MMcf/d. Our natural gas gathering system includes approximately 80 miles of gas gathering pipelines that we acquired from Summit Midstream Partners, LP in 2019.
Added
While we are confident in our compliance with current environmental laws and regulations, we acknowledge the potential for policy shifts that could impact our operations.
Removed
The crude oil gathering system consists of approximately 570 miles of crude oil gathering pipelines with a current capacity of up to approximately 290 MBbl/d. Our crude oil gathering system includes approximately 75 miles of crude oil gathering pipelines that we acquired from Summit Midstream Partners, LP in 2019.
Added
On January 20, 2025, President Trump issued a series of executive orders and memoranda signaling a shift in environmental and energy policy in the United States, including the revocation of approximately 80 Biden administration-era executive orders related to public health, the environment, climate change and climate-related financial risks.
Removed
Our produced water gathering system includes approximately 75 miles of water gathering pipelines that we acquired from Summit Midstream Partners, LP in 2019. As of December 31, 2023, we had 11 water handling and disposal facilities in service, with a combined permitted disposal capacity of 170 MBbl/d.
Added
President Trump also declared a “national energy emergency,” directing agencies to expedite conventional energy projects. While the extent of the Trump Administration’s changes to the environmental regulatory landscape in the United States is unknown at this time, it is possible that additional changes in the future could impact our results of operation and those of our customers.
Removed
In 2021, the TGP de-bottlenecking project was completed and commissioned, increasing total plant processing to 400 MMcf/d and adding y-grade liquids recovery of up to approximately 25 MBbl/d. 9 Table of Contents The TGP has a multitude of residue gas and NGL export options.
Added
On September 27, 2024, Governor Gavin Newsom signed into law SB 219, which notably provided the California Air and Resources Board (“CARB”) an additional six months (until July 1, 2025, instead of January 1, 2025) to issue implementing regulations for SB 253 but left the reporting deadlines in both SB 253 and SB 261 unchanged.
Removed
Since the United States’ re-entry into the Paris Agreement, President Biden has announced, in April 2021, a goal of reducing the United States’ greenhouse gas emissions by at least 50% below 2005 levels by 2030.

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Item 7A. Quantitative and Qualitative Disclosures About Market Risk

Market Risk — interest-rate, FX, commodity exposure

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Biggest changeA hypothetical change of 100 basis points in the rate of our variable interest rate debt would impact annual interest expense by $7.4 million based on our December 31, 2023, debt balances. 66 Table of Contents
Biggest changeA hypothetical change of 100 basis points in the rate of our variable interest rate debt would impact annual interest expense by $4.0 million based on our December 31, 2024, debt balances. 69 Table of Contents
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 December 31, 2023, we did not have in place any derivative instruments to hedge any exposure 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 December 31, 2024, we did not have in place any derivative instruments to hedge any exposure to changes in interest rates.
A 15% increase or decrease in interest rates would decrease or increase the fair value of our fixed rate debt by approximately $81.5 million or $85.6 million, respectively. The carrying value of the amounts under our Term Loan A facility and revolving credit facility at the year-end approximated their fair value.
A 15% increase or decrease in interest rates would decrease or increase the fair value of our fixed rate debt by approximately $87.3 million or $85.1 million, respectively. The carrying value of the amounts under our Term Loan A facility and revolving credit facility at the year-end approximated their fair value.
At December 31, 2023, our total debt had a carrying value of $3,211.4 million and a fair value of approximately $3,143.3 million, based on Level 2 inputs in the fair value measurement hierarchy.
At December 31, 2024, our total debt had a carrying value of $3,471.9 million and a fair value of approximately $3,421.2 million, based on Level 2 inputs in the fair value measurement hierarchy.

Other HESM 10-K year-over-year comparisons