UNITED STATES

SECURITIES AND EXCHANGE COMMISSION

Washington, D.C. 20549

 

Form 8-K

 

CURRENT REPORT

PURSUANT TO SECTION 13 OR 15(d) OF THE

SECURITIES EXCHANGE ACT OF 1934

Date of Report (Date of Earliest Event Reported):  January 30, 2019

Hess Midstream Partners LP

(Exact Name of Registrant as Specified in Its Charter)

1501 McKinney Street

Houston, Texas 77010

(Address of Principal Executive Offices) (Zip Code)

Registrant's Telephone Number, Including Area Code:  (713) 496-4200

N/A

(Former Name or Former Address, if Changed Since Last Report)

Check the appropriate box below if the Form 8‑K filing is intended to simultaneously satisfy the filing obligation of the registrant under any of the following provisions:

Indicate by check mark whether the registrant is an emerging growth company as defined in Rule 405 of the Securities Act of 1933 (§230.405 of this chapter) or Rule 12b‑2 of the Securities Exchange Act of 1934 (§240.12b‑2 of this chapter).

Emerging growth company ☒

If an emerging growth company, indicate by check mark if the registrant has elected not to use the extended transition period for complying with any new or revised financial accounting standards provided pursuant to Section 13(a) of the Exchange Act. ☒

 

 

 

 

 

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Item 2.02.  Results of Operations and Financial Condition.

On January 30, 2019, Hess Midstream Partners LP issued a news release reporting estimated results for the fourth quarter of 2018. A copy of this news release is attached hereto as Exhibit 99.1 and is hereby incorporated by reference.

Item 9.01.  Financial Statements and Exhibits.

(d)Exhibit

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SIGNATURE

Pursuant to the requirements of the Securities Exchange Act of 1934, the Registrant has duly caused this report to be signed on its behalf by the undersigned hereunto duly authorized.

Date:  January 30, 2019

 

 

 

Exhibit 99.1

I

 

HESS MIDSTREAM PARTNERS LP

 

HESS MIDSTREAM PARTNERS LP REPORTS ESTIMATED RESULTS FOR THE FOURTH QUARTER OF 2018

Fourth Quarter Highlights:

HOUSTON, January 30, 2019—Hess Midstream Partners LP (NYSE: HESM) (“Hess Midstream”) today reported fourth quarter 2018 net income of $91.9 million compared with net income of $77.1 million for the fourth quarter of 2017. After deduction for noncontrolling interests, net income attributable to Hess Midstream was $17.2 million, or $0.31 per common unit. Hess Midstream generated Adjusted EBITDA of $24.0 million and DCF of $24.0 million for the fourth quarter of 2018.

Commenting on the fourth quarter 2018 results, John Gatling, Chief Operating Officer of Hess Midstream said, “The fourth quarter concluded a year of strong growth at Hess Midstream as we added new capacity, advanced strategic infrastructure projects, and successfully executed a large capital program. We delivered double-digit percentage growth in our annual throughputs compared to 2017 as our sponsor and third-party producers increased production.  Looking forward, our guidance projects continued strong organic growth while maintaining our financial strength, positioning us well for 2019 and beyond.”

 

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Financial Results

Hess Midstream’s results included in this release are consolidated to include the noncontrolling interests in Hess Midstream’s assets retained by Hess Infrastructure Partners LP (“Hess Infrastructure Partners”). We refer to certain results as “attributable to Hess Midstream Partners LP,” which excludes the noncontrolling interests in Hess Midstream’s assets retained by Hess Infrastructure Partners.

Revenues and other income in the fourth quarter of 2018 were $171.2 million, including $6.6 million of shortfall fees. Revenues were up from $150.5 million in the prior‑year quarter primarily attributable to higher throughput volumes and tariff rates. Total costs and expenses in the fourth quarter of 2018 were $79.0 million up from $72.9 million in the prior-year quarter primarily attributable to higher depreciation driven by new gathering assets placed in service in 2018, and a combination of higher maintenance, third-party rail transportation and seasonal overhead costs. In addition, the fourth quarter of 2018 included higher public company costs, a portion of which were non-recurring, and which were allocated 100% to Hess Midstream. Net income for the fourth quarter of 2018 was $91.9 million and net cash provided by operating activities was $126.2 million.

Adjusted EBITDA was $124.4 million, of which $24.0 million is attributable to Hess Midstream. DCF of $24.0 million resulted in a 1.15x DCF coverage ratio relative to distributions.

At December 31, 2018, Hess Midstream’s $300.0 million revolving credit facility was undrawn and available to fund organic growth projects or acquisitions from Hess Corporation (“Hess”), Hess Infrastructure Partners or third parties.

Operational Highlights

Throughput volumes were up across all segments in the fourth quarter of 2018 compared to the fourth quarter of 2017. In the gathering segment, throughput volumes increased 54% for crude oil gathering and 10% for gas gathering compared to the prior-year quarter, driven by growing Hess production and higher third-party volumes. In the crude oil terminaling segment, throughput volumes increased 42% compared to the prior-year quarter, also driven by growing Hess production and higher third-party volumes. In the gas processing segment, throughput volumes increased 9% compared to the prior-year quarter driven by increased utilization of available capacity, partially offset by maintenance activity at the Tioga Gas Plant in the fourth quarter of 2018.

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Capital Expenditures

Gross capital expenditures for the fourth quarter of 2018 totaled $65.8 million, including $63.8 million of expansion capital expenditures and $2.0 million of maintenance capital expenditures. Equity investments associated with the Little Missouri 4 (“LM4”) gas processing plant were paid in advance in the prior quarters and no additional investments were made in the fourth quarter of 2018. Under the contribution agreement we entered into with Hess Infrastructure Partners in connection with our initial public offering (“IPO”), Hess Infrastructure Partners reimbursed $1.1 million of the $2.0 million gross maintenance capital expenditures incurred during the fourth quarter of 2018. Capital expenditures in the prior-year quarter were $43.4 million, including $35.6 million of expansion capital expenditures and $7.8 million of maintenance capital expenditures. The increase in expansion capital expenditures was primarily attributable to expansion of our gathering system and compression capacity to support Hess and third-party growth. Net capital expenditures attributable to Hess Midstream Partners LP in the fourth quarter of 2018 totaled $13.2 million, including $12.8 million of expansion capital expenditures and $0.4 million of maintenance capital expenditures.

Quarterly Cash Distributions

On January 24, 2019, our general partner’s board of directors declared a cash distribution of $0.3701 per unit for the fourth quarter of 2018, an increase of 3.5% over the distribution for the prior quarter and 15% compared to the fourth quarter of 2017. The distribution is expected to be paid on February 13, 2019 to unitholders of record as of the close of business on February 4, 2019.

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Guidance

Hess Midstream is targeting long‑term 15% annual distribution growth per unit with at least a 1.1x distribution coverage ratio. Hess Midstream anticipates a distribution coverage ratio closer to its 1.1x long-term target in the first half of 2019, followed by higher coverage in the second half of the year, in line with the expected volume ramp-up of the LM4 gas processing plant.

Hess Midstream reaffirms its previously announced guidance for full year 2019 as follows:

 

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Investor Webcast

Hess Midstream will review fourth quarter financial and operating results and other matters on a webcast today at 12:00 p.m. Eastern Time. The live audio webcast is accessible on the Investor page of our website www.hessmidstream.com. Conference call numbers for participation are 866-395-9624, or 213-660-0871 for international callers. The passcode number is 1785025. A replay of the conference call will be available at the same location following the event.

About Hess Midstream

Hess Midstream Partners LP is a fee‑based, growth oriented traditional master limited partnership that was formed to own, operate, develop and acquire a diverse set of midstream assets to provide services to Hess Corporation and third‑party customers. Hess Midstream’s assets are primarily located in the Bakken and Three Forks Shale plays in the Williston Basin area of North Dakota. More information is available at www.hessmidstream.com.

Reconciliation of U.S. GAAP to Non‑GAAP Measures

In addition to our financial information presented in accordance with U.S. generally accepted accounting principles (GAAP), management utilizes additional non‑GAAP measures to facilitate comparisons of past performance and future periods. We use two non‑GAAP financial measures in this earnings release. “Adjusted EBITDA” presented in this release is defined as reported net income (loss) plus net interest expense, income tax expense and depreciation and amortization, as further adjusted to eliminate the impact of certain items that we do not consider indicative of our ongoing operating performance, such as other income and other non‑cash, non‑recurring items, if applicable. We define Adjusted EBITDA attributable to Hess Midstream Partners LP as Adjusted EBITDA less Adjusted EBITDA attributable to Hess Infrastructure Partners’ retained interests in our joint interest assets. “Distributable Cash Flow” (“DCF”) is defined as Adjusted EBITDA attributable to Hess Midstream Partners LP less cash paid for interest and maintenance capital expenditures. Distributable cash flow does not reflect changes in working capital balances. We believe that investors’ understanding of our performance is enhanced by disclosing these measures as they may assist in assessing our operating performance as compared to other publicly traded partnerships in the midstream energy industry, without regard to historical cost basis or, in the case of Adjusted EBITDA, financing methods, and assessing the ability of our assets to generate sufficient cash flow to make distributions to our unitholders. These measures are not, and should not be viewed as, a substitute for U.S. GAAP net income or cash flow from operating activities and should not be considered in isolation. Reconciliations of both reported net income attributable to Hess Midstream Partners LP (GAAP) to Adjusted EBITDA and net cash provided by operating activities (GAAP) to Distributable Cash Flow, are provided below.

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Forward‑looking Statements

This press release may include forward‑looking statements within the meaning of the federal securities laws. Generally, the words “anticipate,” “estimate,” “expect,” “forecast,” “guidance,” “could,” “may,” “should,” “believe,” “intend,” “project,” “plan,” “predict,” “will” and similar expressions identify forward‑looking statements, which generally are not historical in nature. Forward‑looking statements are subject to certain risks and uncertainties that could cause actual results to differ materially from historical results and current projections or expectations. When considering these forward‑looking statements, you should keep in mind the risk factors and other cautionary statements in the Hess Midstream’s annual report on Form 10-K for the year ended December 31, 2017, and in other reports we file with the Securities and Exchange Commission. Hess Midstream undertakes no obligation and does not intend to update these forward‑looking statements to reflect events or circumstances occurring after this press release. You are cautioned not to place undue reliance on these forward‑looking statements, which speak only as of the date of this press release.

For Hess Midstream Partners LP

Investor Contact:

Jennifer Gordon

(212) 536-8244

Media Contact:

Robert Young

(713) 496-6076

 

 

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HESS MIDSTREAM PARTNERS LP

SUPPLEMENTAL FINANCIAL DATA (UNAUDITED)

(IN MILLIONS, EXCEPT PER-UNIT DATA)

 

 

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HESS MIDSTREAM PARTNERS LP

SUPPLEMENTAL FINANCIAL DATA (UNAUDITED)

(IN MILLIONS, EXCEPT PER-UNIT DATA)

 

 

9

 

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HESS MIDSTREAM PARTNERS LP

SUPPLEMENTAL FINANCIAL DATA (UNAUDITED)

(IN MILLIONS, EXCEPT PER-UNIT DATA)

 

 

 

 

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HESS MIDSTREAM PARTNERS LP

SUPPLEMENTAL FINANCIAL DATA (UNAUDITED)

(IN MILLIONS, EXCEPT PER-UNIT DATA)

 

 

 

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HESS MIDSTREAM PARTNERS LP

SUPPLEMENTAL OPERATING DATA (UNAUDITED)

 

 

 

 

 

 

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