Hess Midstream LP Form 8-K Summary
Business Context and Reporting Period
Hess Midstream LP filed a Current Report on Form 8-K dated December 23, 2020. The filing concerns amendments to four commercial agreements with Hess Corporation subsidiaries. The amendments become effective January 1, 2021.
Material Agreement Changes
- The agreements cover gas processing and fractionation, terminal and export services, crude oil gathering, and gas gathering.
- The amendments revise the fee redetermination methodology used to calculate fees payable by Hess Trading Corporation to Hess Midstream subsidiaries.
- Beginning January 1, 2021, the methodology will use actual operating expenses and maintenance capital expenditures incurred after that date rather than forecasted amounts.
- The filing does not provide specific revised fee rates, expected revenue impacts, or quantified effects on earnings, cash flow, margins, debt, or liquidity.
Related-Party Relationships and Ownership
The counterparties are subsidiaries of Hess Corporation and subsidiaries of Hess Midstream LP. Hess Midstream is managed and controlled by Hess Midstream GP LLC, which is jointly owned through Hess Infrastructure Partners GP LLC by Hess and Global Infrastructure Partners.
Hess and GIP each beneficially own 449,000 Class A shares, 133,208,464 Class B shares, and 133,208,464 Class B units. Collectively, these interests represent approximately 94% of Hess Midstream LP’s voting interest, approximately 5% of its economic interest, and approximately 93.68% of the economic interest in Hess Midstream Operations LP.
Guidance, Outlook, Risks, and Unusual Items
- No formal financial guidance or operating outlook is provided.
- The use of actual costs introduces potential variability in future fees relative to prior forecasts.
- The agreements are related-party arrangements, and overlapping ownership, management, and director relationships should be considered when evaluating the amendments.
- The filing states that the agreement descriptions are qualified by the complete amendment documents filed as Exhibits 10.1 through 10.4.
Important Facts for Investors to Verify
- Review Exhibits 10.1 through 10.4 for the detailed fee formulas, cost definitions, adjustment mechanics, and other amended terms.
- Assess how actual operating expenses and maintenance capital expenditures could affect future fees and distributable cash flow.
- Verify subsequent disclosures quantifying the financial impact of the amendments.
- Consider the related-party nature of the agreements and the significant voting and ownership interests held by Hess and GIP.