Hess Midstream LP subsidiary Hess Midstream Operations LP is repurchasing approximately $100 million worth of Class B units held by affiliates of Hess Corp. and Global Infrastructure Partners, according to a March 12 press release.
Hess Midstream Operations will repurchase approximately 2 million Class B units equal to 1.2% of the consolidated company. Upon the closing of this repurchase transaction, the public will own approximately 35.4% of Hess Midstream, Global Infrastructure Partners will own 26.8% and Hess Corp. 37.8%, on a consolidated basis.
“We continue to execute unit repurchase transactions as part of our unique and differentiated financial strategy, which prioritizes shareholder returns and a strong balance sheet,” said Jonathan Stein, CFO of Hess Midstream.
Hess Midstream has returned $1.65 billion to shareholders through ongoing unit repurchases, which reduced the company’s total unit count by over 20%, Stein said. The current unit repurchase is expected to bring more than $1.25 billion of financial flexibility through 2026, which the company plans to use for further repurchases, the midstream company said.
According to the terms of the repurchase agreement, the repurchased units will be cancelled upon closing of the transaction. Hess Midstream expects the cancelled units to increase distributable cash flow per Class A share, increasing incremental distribution growth capacity over Hess Midstream’s annual distribution target of at least 5% through 2026.
Recommended Reading
Chevron CEO: Permian, D-J Basin Production Fuels US Output Growth
2024-04-29 - Chevron continues to prioritize Permian Basin investment for new production and is seeing D-J Basin growth after closing its $6.3 billion acquisition of PDC Energy last year, CEO Mike Wirth said.
Enverus: 1Q Upstream Deals Hit $51B, but Consolidation is Slowing
2024-04-23 - Oil and gas dealmaking continued at a high clip in the first quarter, especially in the Permian Basin. But a thinning list of potential takeout targets, and an invigorated Federal Trade Commission, are chilling the red-hot M&A market.
Enverus: Permian Gains Will Sustain US Oil Production Through 2030
2024-05-09 - Crude output gains from the Permian Basin will keep U.S. oil production relatively flat entering the 2030s, offsetting declines from mature oily basins, according to Enverus Intelligence Research.
Mighty Midland Still Beckons Dealmakers
2024-04-05 - The Midland Basin is the center of U.S. oil drilling activity. But only those with the biggest balance sheets can afford to buy in the basin's core, following a historic consolidation trend.
Decoding the Delaware: How E&Ps Are Unlocking the Future
2024-05-01 - The basin is deeper, gassier, more geologically complex and more remote than the Midland Basin to the east. But the Delaware is too sweet of a prize to pass up for many of the nation’s top oil and gas producers.