Hess Midstream LP (NYSE: HESM) has announced the signing of a definitive agreement for the repurchase of approximately $100 million of Class B units by its subsidiary, Hess Midstream Operations LP, from affiliates of Hess Corporation and Global Infrastructure Partners. The terms of the proposed unit repurchase transaction were unanimously approved by the board of directors of Hess Midstream's general partner, based on the unanimous approval and recommendation of its conflicts committee composed solely of independent directors.
The CFO of Hess Midstream, Jonathan Stein, highlighted the company's unique financial strategy, noting that, since the beginning of 2021 through this current transaction, they will have returned $1.95 billion to shareholders through ongoing unit repurchases from their sponsors. Following this unit repurchase, they expect to continue to have more than $1.25 billion of financial flexibility through 2026 that can be used to support potential incremental unit repurchases.
As part of the repurchase agreement, 2,572,677 Class B units of Hess Midstream Operations LP, equal to approximately 1.2% of the consolidated company, will be repurchased for an aggregate purchase price of approximately $100 million, at a purchase price per Class B unit of $38.87, the closing price of the Class A shares on January 13, 2025.
Upon completion of the unit repurchase transaction, ownership of Hess Midstream on a consolidated basis will be approximately 47.9% for the public, 14.3% for Global Infrastructure Partners, a part of BlackRock, and 37.8% for Hess Corporation. The unit repurchase is anticipated to close on January 15, 2025, and is expected to be funded with borrowings under its existing revolving credit facility.
Hess Midstream expects the repurchase to result in increased distributable cash flow per Class A share, providing capacity for incremental distribution growth above the company's annual distribution target of at least 5% through 2026, consistent with its return of capital framework.
Hess Midstream LP is a fee-based, growth-oriented midstream company that owns, operates, develops, and acquires a diverse set of midstream assets to provide services to Hess Corporation and third-party customers, primarily located in the Bakken and Three Forks shale plays in the Williston Basin area of North Dakota. The market has reacted to these announcements by moving the company's shares 0.9% to a price of $39.83. For the full picture, make sure to review Hess Midstream LP's 8-K report.
