Hess Midstream LP outlines a $100 million unit repurchase plan
Hess Midstream LP (NYSE: HESM) has signed a definitive agreement to buy back approximately $100 million of its Class B units from its sponsors, Hess Corporation and Global Infrastructure Partners. The Board of Directors of the general partner approved the transaction unanimously, reinforcing that the repurchase is a deliberate step within the company’s broader capital plan.
Why this buyback, and why now
Chief Financial Officer Jonathan Stein underscored the company’s confidence in using repurchases as a recurring tool. “We continue to execute unit repurchase transactions as part of our financial strategy, which showcases our capacity to deliver meaningful returns to our shareholders while also reinforcing our balance sheet strength,” he said. Since 2021, Hess Midstream has returned $1.85 billion to shareholders through repurchases, a pace that speaks to a consistent approach rather than a one-off move.
How the repurchase works
Units repurchased under this agreement will be cancelled at closing. That cancellation reduces the total unit count and, in turn, increases distributable cash flow per Class A share. The action supports the company’s stated goal of growing distributions at a rate of at least 5% through 2026, aligning the transaction with its long-term payout framework rather than treating it as a standalone event.
Key terms and ownership impact
Hess Midstream Operations LP, a consolidated subsidiary, will repurchase 2,823,262 Class B units for about $100 million. The transaction reflects roughly 1.3% of the company’s ownership. Each Class B unit will be purchased for $35.42, a figure based on the recent closing price of the Class A shares. After the buyback, ownership is expected to be approximately 41.5% for public shareholders, 20.7% for Global Infrastructure Partners, and 37.8% for Hess Corporation. The shift is modest in percentage terms, but it’s designed to be accretive on a per-share basis for existing public holders.
Where the business is focused
Hess Midstream LP is a fee-based, growth-oriented midstream provider that serves both Hess Corporation and third-party customers. Its assets are concentrated in the Bakken and Three Forks Shale plays, where it handles oil, gas, and produced water. The company plans to fund the repurchase through borrowings under its revolving credit facility, a choice that reflects a flexible capital structure and a measured approach to balance sheet management. The through-line is clear: support ongoing growth while staying disciplined about how cash returns and capital spending fit together.
Looking ahead
Management remains constructive on the road ahead. The current repurchase is part of a repeatable playbook, and the company intends to keep flexibility for future transactions as opportunities arise. The stated financial vision emphasizes steady distribution growth and a pipeline of actions that aim to enhance shareholder value without compromising financial strength.
Frequently Asked Questions
What’s the aim of the $100 million unit repurchase?
The repurchase is designed to increase per-share economics for existing investors by cancelling the units at closing, which lifts distributable cash flow per Class A share. It fits within Hess Midstream’s strategy of returning capital while keeping the balance sheet strong. The buyback also supports the company’s objective of growing distributions at least 5% annually through 2026.
Who approved the transaction?
The Board of Directors of the general partner approved the repurchase unanimously. That decision was made following recommendations from an independent conflicts committee. The process signals standard governance around sponsor-related transactions.
How will this affect current shareholders?
Because the repurchased units will be cancelled, shareholders should see immediate accretion in per-share cash flow. The company has also reaffirmed its plan to deliver distribution growth of at least 5% through 2026. Together, those elements point to more cash flow per share and a clear dividend growth path.
How is Hess Midstream paying for the buyback?
The company plans to fund the repurchase with borrowings under its existing revolving credit facility. Using the revolver preserves flexibility, allowing Hess Midstream to execute the transaction efficiently while managing leverage within its broader financial framework.
What supports Hess Midstream’s growth outlook?
The company operates a fee-based midstream business in the Bakken and Three Forks Shale plays, serving both Hess Corporation and third parties. It has a track record of returning capital—$1.85 billion since 2021 through ongoing repurchases—and a stated goal to grow distributions at least 5% through 2026. Management also emphasizes flexibility for potential future transactions that align with enhancing shareholder value.
